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The directors of Amlin plc (the ‘Company’)
present their report, the audited accounts
of the Company and the consolidated
accounts of the Company and its
subsidiaries (the ‘Group’) for the year
ended 31 December 2002. Principal activities, corporate and business review The Group’s principal activity is underwriting at Lloyd’s. A review of the Group’s business, and developments during the year, is included in the Chairman’s Statement, Chief Executive’s Review and the Financial Review. Share issues and acquisition of Lloyd’s capacity On 5 February 2002 the Company completed a 2 for 7 rights issue of 59,582,887 new ordinary shares at 77p per share (‘Rights Issue’), which raised £43.2 million net of expenses. On 5 July 2002 the Company completed a firm placing and placing and open offer of a total of 104,047,728 new ordinary shares at 81p per share (‘Placing and Open Offer’), which raised £80.0 million net of expenses. Between September and November 2002 a total of 15,508,545 new ordinary shares were issued as part of the consideration for the outstanding capacity on the Group’s managed Lloyd’s syndicate, Syndicate 2001. Such capacity was acquired through a formal offer made in August 2002 and through a subsequent compulsory buy-out on the same terms, both of which were approved by Lloyd’s. The offer and buy-out also involved cash alternative consideration totalling £32.2 million and the retention of the right of syndicate members to underwrite part of their previous capacity for one further year of account, 2003, only. Further details of each of these share issues, and of other shares issued during the year, are included in note 22 to the Accounts. Dividends An interim dividend of 0.75p per share was paid on 25 October 2002. The directors propose a final dividend of 1.25p per ordinary share, to be paid on 6 June 2003 to shareholders on the register at the close of business on 11 April 2003. This makes total dividends for the year of 2.0p per ordinary share (2001: nil). A scrip dividend alternative is being offered in respect of the proposed final dividend but was not offered in respect of the interim dividend. Directors The biographical details of the present directors are set out here. There were no changes to the Board during 2002 or in 2003 to date. Messrs Carpenter, Hextall, Holt, Philipps and Stace retire at the Annual General Meeting by rotation and, being eligible, offer themselves for re-election. Directors’ interests The interests of directors and their related parties in the ordinary shares of the Company, all of which are beneficial, as disclosed and recorded in accordance with the Companies Act 1995, were as set out below. The interests of Mr Stace as at all the dates shown include 650,000 shares held in a trust of which he is the sole beneficiary. In addition, Messrs Carpenter, Hextall, Holt, Philipps and Stace are deemed, as employees of Group companies and therefore potential beneficiaries, to be interested in the whole of the holding of the Group’s Employee Share Ownership Trust (‘ESOT’), details of which are given in the next section. The directors’ own ESOT and other share options are set out in the Directors’ Remuneration Report. Details of transactions between the Group and directors who served during the year are set out in note 35 to the Accounts. No directors have any other interests in the shares of the Group or any of its subsidiaries.
Shares held by Employee Share Ownership Trust The trustee of the Group’s ESOT, Kleinwort Benson (Guernsey) Trustees Limited, held 6,098,302 shares in the Company on 31 December 2002 (2001: 6,088,521 shares). On 19 March 2003, the ESOT’s shareholding remained 6,098,302 shares. All of the changes in the ESOT’s shareholding between 31 December 2001 and 19 March 2003 were as a result of exercises of options, other than acquisitions of 91,327 shares through the Rights Issue in February 2002 and 167,525 shares through the Placing and Open Offer in July 2002. Substantial shareholdings At 19 March 2003 the Company had been notified of holdings of 3 per cent or more of its issued ordinary share capital as shown below.
** The above interest of the partners of Rostrum Investors limited partnerships is the aggregate interest of the following limited partners, whether or not such shares are held within the partnerships, all of which have disclosed interests in the same shares:
Rostrum Limited, BriTel Fund Trustees Limited, British Airways PensionTrustees Limited, Kleinwort Benson (Jersey) Trustees
Limited, Possfund Custodian Trustee Limited and Stargas Nominees Limited. In addition, Mr M J Wade isinterested in such
shares by reason of his effective shareholding in Rostrum Limited.Corporate Governance A Statement on Corporate Governance, including details of the roles and responsibilities of the Board’s Nomination and Audit Committees, immediately follows this report. The Directors’ Remuneration Report, which includes details of the Board’s Remuneration Committee and is subject to approval by shareholders at the forthcoming Annual General Meeting, can be found here. Employment policies The Group is committed to keeping employees informed about the business. It encourages its employees to develop their full potential by providing opportunities for training and professional development. The Group’s equal opportunities policy aims to ensure that no potential or existing employee receives less favourable treatment on the grounds of sex, age, race, colour, disability, ethnic or religious beliefs, nationality or national origin, or is disadvantaged by conditions or requirements which, in the case of disability, cannot be shown to be justifiable. The Group also has a comprehensive health and safety policy which is publicised to staff through its intranet and on staff notice boards. Group employees are encouraged to participate in the Group’s pension arrangements, details of which are set out in the Directors’ Remuneration Report and in note 12 to the Accounts. The Company encourages employees to participate in its equity through direct share ownership and share option schemes, including a Sharesave scheme open to all permanent employees. Details of the schemes are set out in the Directors’ Remuneration Report, as are details of the Group’s remuneration policies. Social responsibility General The Group recognises the potential impact of its dealings not only on shareholders and employees, but also on customers, external capital providers, suppliers, competitors and the wider community. This section summarises some of the areas, in addition to employment policies, which are most relevant to such considerations. Environmental Amlin recognises the need to manage the impact of its activities on the environment in such areas as internal processes, recycling, energy use and giving appropriate encouragement to its insureds to act responsibly regarding environmental risk. The Company adopted a Group Environmental Policy in 2001, which it continued to implement and develop during the year including the setting of targets in a number of key environmental areas. During the year Amlin joined Business in the Environment (part of Business in the Community), the business led campaign for environmental responsibility which assists its members in monitoring and improving environmental performance. In February 2003 the Company was awarded the City of London Corporation’s Liveable City Award for Environmental Management. The Group’s Environmental Committee is chaired by the Company’s Vice Chairman, Mr Stace. Ethical The Group operates a Business Ethics Policy, which sets out the high ethical standards to which the Group is committed in carrying out its business. The policy is intended to assist the protection of the trust and confidence of those with whom the Group deals, which is considered of fundamental importance to Amlin’s reputation and business. Community projects The Group encourages employee involvement in community projects, particularly in conjunction with the Lloyd’s Community Programme in the London Borough of Tower Hamlets through which Amlin staff act as reading partners to primary school pupils. Charitable activities and donations The Group made charitable donations during the year of £29,791 (2001: £28,063). The Group’s charities budget is managed by a Charities Committee which includes staff representatives. Special consideration is given to projects and fund raising in which members of staff themselves are involved, such as community projects as mentioned above. Macmillan cancer relief continued during the year as Amlin’s special partnership charity, having originally been selected by the committee in 2000. Risk management As part of the Group’s general risk management review as at 31 December 2002, the significant risks to the Company’s short and long term value arising from social, environmental and ethical matters, and the opportunities to enhance value from an appropriate response, were incorporated as a specific separate consideration. Such factors had previously been taken into account, but only to the extent that issues had been specifically identified on the initiative of management. More details of risk management are included in the Statement on Corporate Governance. Copies of the Group Environmental Policy, the latest environmental progress report and the Business Ethics Policy are available on the Company’s website or from the Secretary on request. Political donations The Group made no political donations during the year (2001: nil). The Board does not propose to seek any discretion from shareholders to make political donations pursuant to the Companies Act 1985 (as amended by the Political Parties, Elections and Referendums Act 2000) as any incidental expenditure deemed to be within the scope of the legislation would be well within the applicable £5,000 annual threshold. Supplier payment policy and performance The Group’s policy is to pay suppliers in accordance with agreed terms of business. Whenever possible, purchase orders are placed on the basis of the Group’s standard terms and conditions which include provision for the payment of suppliers within 30 days of the end of the month in which the Group receives the goods or services provided. Average trade creditors of the Group during 2002, which excludes insurance creditors, represented approximately 28 days (2001: 29 days), based on the ratio of Group trade creditors to the amounts invoiced during the year. Annual General Meeting The Notice of Annual General Meeting, to be held at noon on Thursday 22 May 2003 at the offices of the Company at St Helen’s, 1 Undershaft, London, EC3A 8ND, is contained in a separate circular to shareholders which is being mailed with this report. Auditors In accordance with Section 385 of the Companies Act 1985, a resolution is to be proposed at the Annual General Meeting for the re-appointment of Deloitte & Touche as auditors of the Company and to authorise the directors to fix their remuneration. Deloitte & Touche were first appointed the Company’s auditors in 2000 and were last re-appointed by shareholders at the Annual General Meeting in June 2002. Their appointment was confirmed by the Board on 1 August 2002 pursuant to Section 26(5) of the Companies Act 1989 following a substantial change in the membership of the Deloitte & Touche partnership with effect from that date. By Order of the Board C C T Pender Secretary 26 March 2003 |
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