 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
12 PENSIONS The Group participates in a number of pension schemes, including defined benefit, defined contribution and personal pension schemes. The total pension cost for the Group in the year was £4.7 million (2001: £2.5 million), of which £3.4 million (2001: £1.3 million) related to the defined benefit schemes and £1.3 million (2001: £1.2 million) related to the defined contribution and personal pension schemes. a) The Amlin plc funded defined benefit scheme The scheme is a multi-employer scheme, operated by the Lloyd’s Superannuation fund, which maintains separate notional funds for the active members from each employer. However, the deferred and pensioner members’ funds are held in a combined fund irrespective of their previous employer. For this reason, it is not possible to identify the assets and liabilities of the Amlin Group members, and the scheme is treated as a multi-employer scheme for the purposes of Financial Reporting Standard No.17 (FRS 17) – Retirement benefits. The Group is in discussion with the operators of the scheme with a view to ‘sectionalising’ the assets between ongoing employers of the scheme and ‘orphaned’ deferred members where the former employer has ceased to trade. This process will, if pursued, lead to a segregated, independent Amlin scheme, but would require the consent of Court. It is not yet possible to say what the outcome may be. This scheme is valued every three years by an independent qualified actuary. Contributions are made at the funding rates recommended by the actuary, which vary across different sections of the scheme. The recommended rates reflect an adjustment to amortise any small surplus or deficit over the average remaining lifetimes of the current active membership. The latest actuarial assessment of the scheme, at 31 March 2001, used the projected unit actuarial method and was based on the principal assumption that long-term returns on investments would be, on average, 1.8% higher than increases in earnings. The valuation showed that the assets of the active members of the scheme were £18.8 million, being £5.1 million less than the members’ accrued liabilities, resulting in a deficit of 21%. To rectify this deficit, and the subsequent further deteriorations on the stock markets, a payment of £2 million was made in 2002. Additionally, a further payment of £2 million was made in January 2003 and an estimated £2.3 million will be paid in 2004. In 2002, funding rates and charges to the profit and loss account were as recommended by the 2001 valuation and ranged between 18.3% and 39.3% of pensionable salaries, and totalled £1.2 million, which in combination with the additional payment noted above, gives a total charge to the profit and loss account of £3.2 million. Funding rates remain unchanged in 2003. b) The Angerstein Underwriting Limited funded defined benefit scheme SSAP 24 disclosures The scheme consists of a closed funded defined benefit scheme for past employees of Angerstein Underwriting Limited. Contributions to the scheme are determined by an independent qualified actuary, based upon triennial valuations, using the attained age actuarial method. The most recent valuation was at 1 July 2001, when the market value of the scheme assets was £1.4 million representing 89% of the benefits accrued to the members, allowing for future earnings increases. Group contributions made to this scheme in respect of the year ended 31 December 2002 were £0.2 million (2001: £0.3 million), and the agreed contribution rate for future years is 22.5% of pensionable salaries. A 1.5% per annum differential between investment returns and salary increases is assumed. FRS 17 disclosures During the year, the full implementation of FRS 17 was delayed indefinitely. Although the Group has continued to account for pensions in accordance with SSAP 24, the following FRS 17 transitional disclosures are still required. The 1 July 2001 valuation has been reviewed and updated to 31 December 2002. The members of this scheme are all employed for the benefit of the managed syndicates. The FRS 17 disclosures are based upon the following annual financial assumptions:
Under these assumptions the valuation of the scheme at 31 December would have been:
The members of the scheme are, or were, employed for the benefit of Syndicate 2001 or its predecessors. Because of the varying ownership of the years of account to which the contributions are charged, the following amounts which would have been recognised in the performance statements for the year ended 31 December 2002 under FRS 17, are shown both as a scheme total and amounts attributable to the Group, on the assumption that any charges would be taken to the 2003 year of account.
c) The defined contribution scheme With effect from 1 February 1997 new employees have been invited to join this scheme. Contributions made by the Group vary by age and by the level of contribution that employees voluntarily make to the scheme. Contributions range from 4% to 26% and are fully expensed to the profit and loss account when due and payable. Amounts charged to the profit and loss account for the year ended 31 December 2002 were £1.1 million (2001: £1.0 million). Outstanding contributions at 31 December 2002 were £0.1 million (2001: £0.1 million). d) Other arrangements Other pension arrangements include a small self-administered scheme, an occupational money purchase scheme and personal pension arrangements. Regular contributions, expressed as a percentage of employees’ earnings, are paid into these schemes and are allocated to accounts in the names of the individual members which are independent of the Group’s finances. The contributions are charged against profits in the period in which they are payable. There were no outstanding contributions at 31 December 2002 (2001: nil). 13 PROFIT (LOSS) ON ORDINARY ACTIVITIES BEFORE TAXATION Profit (loss) on ordinary activities before taxation is stated after charging:
Company audit fees amounted to £50,000 (2001: £28,875). Group audit fees include fees paid in relation to the audit of managed syndicates. A further £0.4 million of costs were paid to the auditors for their work relating to the share issues in 2002, which have been charged to the share premium account. 14 TAXATION ON PROFIT (LOSS) ON ORDINARY ACTIVITIES
b) Factors affecting current period tax charge The UK standard rate of corporation tax is 30% (2001: 30%), whereas the current tax assessed for the year ended 31 December 2002 as a percentage of profit (loss) before tax is 5.6% (2001: (1.1%)). The reasons for this difference are explained below:
c) Factors which may affect future tax charges Deferred tax is provided on the annually accounted technical result with reference to the forecast ultimate result of each of the years of account included in the annually accounted technical result. Where the forecast ultimate result for a year of account is a taxable profit, deferred tax is provided in full on the movement on that year of account included in this period’s annually accounted technical result. Where the forecast ultimate result for a year of account is a loss, deferred tax is only provided for on the movement on that year of account included in this period’s annually accounted technical result to the extent that forecasts show that the taxable loss will be utilised in the foreseeable future. Deferred tax has been provided on the annually accounted technical result for this accounting period of £57.7m. In addition, deferred tax has been provided, in this accounting period, on £16.6m of the 2001 annual accounting result that was not provided for in that accounting period, as forecasts now show that losses represented by this amount will be utilised in the foreseeable future. Deferred tax is provided for on actual taxable underwriting results. Where the taxable underwriting result is a loss then deferred tax is provided for on the taxable underwriting loss to the extent that forecasts show that the taxable underwriting losses will be utilised in the foreseeable future. Deferred tax assets on non-aligned technical loss provisions are only provided for to the extent that forecasts show that it is more likely than not that the ultimate taxable underwriting losses represented by these provisions will be utilised within the foreseeable future. Deferred tax has been provided in full on non-aligned loss provisions of £1.5m (in 2001 no deferred tax was provided on non-aligned loss provisions of £1m). The Inland Revenue has introduced final regulations to give effect to the General Insurance Reserves provisions contained in the Finance Act 2000. The Group’s corporate vehicles fall within the remit of these regulations by virtue of their greater than 4% participation on aligned and non-aligned syndicates. The corporation tax charge for this period contains an estimated adjustment in respect of a notional taxable charge as calculated under regulations of £(0.4)m (2001: nil). A deferred tax asset of £0.1m (2001: nil) has been taken on existing capital losses to match against deferred tax provisions of £0.1m on unrealised capital gains arising within the Group during this accounting period. Deferred tax has not been provided on capital losses of £46.6m (2001: £46.7m). The Group expects to continue to suffer depreciation in excess of capital allowances in future periods albeit at a diminishing rate. The Group has suffered US tax on its share of syndicate deemed US underwriting profits. This US tax is recoverable against UK tax on the taxable syndicate profits for the appropriate years of account. Some US tax suffered will be irrecoverable due to the difference between UK and US tax rates and the difference between the timing of US and UK syndicate profits for tax purposes. During the period £0.1m of US tax has been written off (2001: £0.3m of US tax was written back as recoverable). 15 EQUITY DIVIDENDS
16 EARNINGS AND NET ASSETS PER ORDINARY SHARE Earnings per share is based on the profit attributable to shareholders for the year ended 31 December 2002 of £44.2 million (2001: loss of £67.0 million) and the weighted average number of shares in issue during the period. Shares held by the Employee Share Ownership Trust (‘ESOT’) are excluded from the weighted average number of shares. Basic and diluted earnings per share are as follows:
Basic and tangible net assets per share are as follows:
17 INTANGIBLE ASSETS
18 OTHER FINANCIAL INVESTMENTS
As explained in note 34, some of the Group investments are charged to Lloyd’s to support the Group’s underwriting activities.
19 OTHER INVESTMENTS
The principal undertakings of Amlin plc at 31 December 2002 which are consolidated in these financial statements, all of which operate in the UK and are registered in England and Wales, are listed below:
All subsidiary undertakings are wholly owned. 20 DEBTORS ARISING OUT OF DIRECT INSURANCE OPERATIONS
21 TANGIBLE ASSETS
The net book value in respect of assets held under finance leases and hire purchase contracts is £0.2 million (2001: £0.2 million).
22 ORDINARY SHARE CAPITAL
At an Extraordinary General Meeting held on 14 January 2002 resolutions were passed conditionally to increase the authorised share capital to 365 million ordinary shares of 25p each and to issue via a rights issue 59,582,887 new shares. The rights issue closed on 4 February 2002 and the new shares were issued on the following day. The 2 for 7 issue raised £45.9 million gross, and £43.2 million net of expenses. The balance of the capital raised not included in share capital, £28.3 million, is included in the share premium reserve, analysed as gross £31.0 million and expenses of £2.7 million. At an Extraordinary General Meeting held on 4 July 2002, resolutions were passed conditionally to increase the authorised share capital to 505 million ordinary shares of 25p each and to issue, via a Firm Placing and a Placing and Open Offer, 104,047,728 new shares. These new shares were issued on 5 July 2002, at a price of 81 pence per share. This raised £80.0 million net of expenses of £4.3 million. At an Extraordinary General Meeting held on 21 August 2002, resolutions were passed conditionally to increase the authorised share capital to 562 million ordinary shares of 25p each and to approve the issue, for the purposes of an offer for capacity on Syndicate 2001 (Capacity Offer), of up to 56,708,346 new shares. The terms of the Capacity Offer allowed members to accept 20 pence per £1 of capacity held, 0.2558 shares per £1 of capacity held or a combination of the two. The offer became unconditional on 14 October 2002 following the receipt of acceptances on behalf of 91.8% of the minority held capacity. In total, £32.2 million was paid to members in cash and 15,508,545 new shares were issued. The expenses of the offer, totalling £1.4 million, were allocated £0.8 million to the cost of capacity acquired and £0.6 million to the cost of the share issue. In total, the cost of the capacity purchased of £46.0 million was split as £32.2 million cash consideration, £13.0 million share consideration and £0.8 million expenses. The expenses allocated to the share consideration of £0.6 million are charged to the share premium reserve. 23 SHARE OPTIONS At 31 December 2002, participants in the Amlin Executive Share Option Schemes held options to subscribe for 9,077,946 (2001: 5,558,444) new ordinary shares at prices ranging from 77.9p to 115.6p per share. Further details of the schemes are set out in the Directors’ Remuneration Report. The options over new shares, which are potentially exercisable between 3 and 10 years after grant, or earlier in special circumstances such as redundancy, were outstanding at the year end as follows:
The change during the year in the total number of new shares under option pursuant to these schemes resulted from the grant on 2 May 2002 of options over 3,326,700 new shares, the exercise of options over 52,134 new shares, the lapse during the year of options over 81,507 new shares and adjustments to the number of shares under option following increases in the Company’s share capital resulting from a rights issue and a firm placing and placing and open offer of shares during the year. In addition to the above detailed executive options, at 31 December 2002 employee Sharesave options were outstanding over a total of 1,840,333 new shares, as follows:
The following changes in shares under option pursuant to the Sharesave scheme took place during the year:
The trustee of the Group’s Employee Share Ownership Trust (‘ESOT’) held 6,098,302 Amlin ordinary shares as at 31 December 2002 (2001: 6,088,521), of which almost all were reserved to meet potential future exercises of options, in addition to the options over new shares detailed above. The ESOT shares are valued at the lower of cost and net realisable value. The market value of Amlin plc ordinary shares at 31 December 2002 was 119.0p per share (2001: 86.5p). The assets, liabilities, income and costs of the ESOT are incorporated into the consolidated financial statements. The ESOT waives the right to dividends in excess of 0.01p per share per interim or final dividend in respect of its total shareholding. 24 RESERVES
The cumulative amount of goodwill written off to reserves is £45.7 million (2001: £45.7 million).
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
