4th Sep 2006 07:02
Amlin PLC04 September 2006 CONDENSED CONSOLIDATED INCOME STATEMENT For the six months ended 30 June 2006 Six months Six months 12 months 2006 2005 (restated) 2005 (restated) Notes £m £m £m ------------------------ ------- ---------- ---------- -----------Gross premiums earned 4 533.6 471.2 986.7Insurance premium revenuefrom the receipt of reinsurance to close 4 78.8 78.6 78.6Reinsurance premium ceded 4 (51.8) (75.7) (164.6)------------------------ ------- ---------- ---------- -----------Net earned premium 4 560.6 474.1 900.7revenue ------------------------ ------- ---------- ---------- -----------Investment return 5 37.7 41.3 90.9Other operating income 1.0 1.1 1.4------------------------ ------- ---------- ---------- -----------Net income 599.3 516.5 993.0------------------------ ------- ---------- ---------- -----------Insurance claims and lossadjustment expenses 6 (271.4) (231.0) (912.1)Insurance claims and lossadjustment expensesrelating tothe receipt of reinsurance toclose 6 (78.8) (78.6) (78.6)Insurance claims and lossadjustment expensesrecovered from reinsurers 6 37.1 54.5 436.4------------------------ ------- ---------- ---------- -----------Net insurance claims 6 (313.1) (255.1) (554.3)------------------------ ------- ---------- ---------- ----------- Expenses for theacquisition of 7 (97.4) (83.6) (170.2)insurance contractsOther operating expenses 8 (56.3) (35.9) (71.4)------------------------ ------- ---------- ---------- -----------Expenses (153.7) (119.5) (241.6)------------------------ ------- ---------- ---------- ----------------------------------- ------- ---------- ---------- -----------Results of operating activities 132.5 141.9 197.1------------------------ ------- ---------- ---------- -----------Finance costs (12.4) (3.5) (10.4)------------------------ ------- ---------- ---------- -----------Profit before tax 120.1 138.4 186.7Tax 9 (25.2) (38.4) (46.5)------------------------ ------- ---------- ---------- -----------Profit for the periodattributable to equityshareholders 2 94.9 100.0 140.2------------------------ ------- ---------- ---------- ----------- Earnings per shareBasic 11 17.9p 25.2p 34.3pDiluted 11 17.7p 24.8p 33.7p CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 30 June 2006------------------------ ----- ------- -------- -------- -------- -------- Notes Share capital Share premium Other reserves Retained Total earnings £m account £m £m £m £m------------------------ ----- ------- -------- -------- -------- --------At 1 January2006 132.5 344.0 51.0 265.1 792.6IAS19 Employeebenefits priorperiodadjustment 2 - - - (7.8) (7.8)------------------------ ----- ------- -------- -------- -------- --------At 1 January2006 restated 132.5 344.0 51.0 257.3 784.8------------------------ ----- ------- -------- -------- -------- --------Gains onrevaluation ofemployee shareownershiptrustrecogniseddirectly inequity - - 1.3 - 1.3Currencytranslationdifferences onoverseasoperations - - (42.1) - (42.1)Deferred tax - - (0.2) - (0.2)Profit for thefinancialperiod - - - 94.9 94.9------------------------ ----- ------- -------- -------- -------- --------Totalrecognisedincome for theperiod - - (41.0) 94.9 53.9------------------------ ----- ------- -------- -------- -------- --------Employee share optionschemes: - share based payment reserve - - - 0.5 0.5 - proceeds from shares issued 0.8 2.1 - - 2.9Dividends paid 10 - - - (25.0) (25.0)------------------------ ----- ------- -------- -------- -------- -------- 0.8 2.1 - (24.5) (21.6) ------------------------ ----- ------- -------- -------- -------- --------At 30 June 2006 133.3 346.1 10.0 327.7 817.1------------------------ ----- ------- -------- -------- -------- -------- ------------------------ ----- ------- -------- -------- -------- -------- Notes Share capital Share premium Other reserves Retained Total account earnings £m £m £m £m £m ------------------------ ----- ------- -------- -------- -------- --------At 1 January2005 98.8 154.2 43.5 163.3 459.8IAS19 Employeebenefits priorperiodadjustment 2 - - - (10.6) (10.6)------------------------ ----- ------- -------- -------- -------- --------At 1 January2005 restated 98.8 154.2 43.5 152.7 449.2------------------------ ----- ------- -------- -------- -------- --------Gains onrevaluation ofemployee shareownershiptrustrecogniseddirectly inequity - - 1.2 - 1.2Profit for thefinancialperiod(restated) 2 - - - 100.0 100.0------------------------ ----- ------- -------- -------- -------- --------Totalrecognisedincome for theperiod - - 1.2 100.0 101.2------------------------ ----- ------- -------- -------- -------- --------Employee share optionschemes: - share based payment reserve - - 0.3 - 0.3 - proceeds from shares issued 1.4 6.0 - - 7.4Dividends paid 10 - - - (19.7) (19.7)------------------------ ----- ------- -------- -------- -------- -------- 1.4 6.0 0.3 (19.7) (12.0)------------------------ ----- ------- -------- -------- -------- --------At 30 June2005(restated) 100.2 160.2 45.0 233.0 538.4------------------------ ----- ------- -------- -------- -------- -------- CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six months ended 30 June 2006 (continued) ------------------------ ----- ------- ------- -------- --------- -------- Notes Share capital Share premium Other reserves Retained Total earnings £m £m £m £m £m ------------------------ ----- ------- ------- -------- --------- --------At 1 January2005 98.8 154.2 43.5 163.3 459.8IAS19 Employeebenefits priorperiodadjustment 2 - - - (10.6) (10.6)------------------------ ----- ------- ------- -------- --------- --------At 1 January2005 restated 98.8 154.2 43.5 152.7 449.2------------------------ ----- ------- ------- -------- --------- --------Gains onrevaluation ofemployee shareownershiptrustrecogniseddirectly inequity - - 1.3 - 1.3Currencytranslationdifferences onoverseasoperations - - 3.8 - 3.8Deferred tax - - 1.7 - 1.7Profit for thefinancial year(restated) 2 - - - 140.2 140.2------------------------ ----- ------- ------- -------- --------- --------Totalrecognisedincome for theyear - - 6.8 140.2 147.0------------------------ ----- ------- ------- -------- --------- --------Rights issueproceeds, netof issue costs 31.9 182.8 - - 214.7Employee share optionschemes: - share based payment reserve - - 0.7 - 0.7 - proceeds from shares issued 1.8 7.0 - - 8.8Dividends paid 10 - - - (35.6) (35.6)------------------------ ----- ------- ------- -------- --------- -------- 33.7 189.8 0.7 (35.6) 188.6------------------------ ----- ------- ------- -------- --------- --------At 31 December2005(restated) 132.5 344.0 51.0 257.3 784.8------------------------ ----- ------- ------- -------- --------- -------- CONDENSED CONSOLIDATED BALANCE SHEET At 30 June 2006 30 June 2005 31 December 30 June 2006 (restated) 2005 (restated)ASSETS Notes £m £m £m-------------------------- ------- ---------- ---------- -----------Cash and cashequivalents 31.8 35.7 65.6Financialinvestments atfair valuethrough income 12 2,247.0 1,526.7 2,078.2Reinsurance assets- reinsurers' share of outstanding claims 13 448.8 297.9 604.6- reinsurers' share of unearned premiums 13 53.4 68.5 24.2- debtors arising from reinsurance operations 13 415.3 329.7 387.3Loans and receivables, including insurance receivables- insurance receivables 372.6 311.3 214.3- loans and receivables 78.1 66.9 132.9Current incometax assets 1.5 8.9 3.7Deferred taxassets 14 20.1 21.0 24.4Property andequipment 6.5 5.5 6.0Intangibleassets 15 66.0 66.0 66.0-------------------------- ------- ---------- ---------- -----------Total assets 3,741.1 2,738.1 3,607.2-------------------------- ------- ---------- ---------- ----------- EQUITYShare capital 16 133.3 100.2 132.5Share premiumaccount 346.1 160.2 344.0Other reserves 9.2 46.3 51.3Treasury shares 0.8 (1.3) (0.3)Retainedearnings 327.7 233.0 257.3-------------------------- ------- ---------- ---------- -----------Totalshareholders'equity 2 817.1 538.4 784.8-------------------------- ------- ---------- ---------- ----------- LIABILITIESInsurance contracts- outstanding claims 13 1,552.1 1,194.0 1,704.3- unearned premiums 13 832.8 721.8 523.8- creditors arising from insurance operations 13 47.5 32.5 114.8Trade and otherpayables 50.0 59.6 67.1Current incometax liabilities 28.3 13.6 19.6Financialliabilities -borrowings 17 330.4 67.6 298.2Retirementbenefitobligations 7.9 12.3 12.4Deferred taxliabilities 14 75.0 98.3 82.2-------------------------- ------- ---------- ---------- -----------Totalliabilities 2,924.0 2,199.7 2,822.4-------------------------- ------- ---------- ---------- ----------- Totalliabilities andshareholders'equity 3,741.1 2,738.1 3,607.2-------------------------- ------- ---------- ---------- ----------- CONDENSED CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2006 Six months 2006 Six months 2005 12 months 2005 (restated) (restated) Notes £m £m £m------------------------- ------- --- ---------- ---------- -----------Cash generatedfromoperations 18 (104.7) (37.0) (474.2) Cash flows from investing activitiesInterestreceived 53.3 31.0 65.3Dividendsreceived 2.7 1.5 2.0Acquisition ofsubsidiary,net of cashacquired - - (0.2)Purchase ofproperty,plant andequipment (1.9) (0.5) (1.9)------------------------- ------- --- ---------- ---------- -----------Net cash usedin investingactivities 54.1 32.0 65.2------------------------- ------- --- ---------- ---------- ----------- Cash flows from financing activitiesProceeds fromissue ofordinaryshares 2.9 2.3 223.5Proceeds fromborrowings 227.7 26.2 266.1Repayment ofborrowings (188.8) (20.8) (32.0)Dividends paidtoshareholders (25.0) (14.6) (30.6)------------------------- ------- --- ---------- ---------- -----------Net cash fromfinancingactivities 16.8 (6.9) 427.0------------------------- ------- --- ---------- ---------- ----------- Net increasein cash andcashequivalents (33.8) (11.9) 18.0Cash and cashequivalents atbeginning ofperiod 65.6 47.6 47.6------------------------- ------- --- ---------- ---------- -----------Cash and cashequivalents atend of period 31.8 35.7 65.6------------------------- ------- --- ---------- ---------- ----------- 1. Basis of preparation of Condensed Interim Financial Statements The interim financial statements have been prepared in accordance with theListing Rules of the Financial Services Authority (FSA) and InternationalFinancial Reporting Standards, (IFRS). The financial information for the year ended 31 December 2005 presented in thisinterim report does not constitute statutory accounts as defined in section 240of the Companies Act 1985. A copy of the statutory accounts for that year hasbeen delivered to the Registrar of Companies. The auditors' report on thoseaccounts was not qualified and did not contain statements under section 237(2)or (3) of the Companies Act 1985. 2. Accounting policies The accounting policies adopted in preparing these interim financial statementsare those that the Group expects to apply for the year ending 31 December 2006.They are consistent with those followed in the preparation of the Group's annualfinancial statements for the year ended 31 December 2005 with the exception ofIAS19, Employee Benefits (IAS19) as detailed below. IAS19, Employee Benefits: change in accounting policy and prior periodadjustment The Group participates in a number of pension schemes, full details of which areprovided in the Group's financial statements for the year ended 31 December2005. One of the schemes in which the Group participates, the Lloyd'sSuperannuation Fund (the Fund), is a defined benefit scheme which is classifiedas a multi-employer scheme under the criteria set out in IAS19. As such, theGroup recognises its pension costs for this scheme as if it were a definedcontribution scheme. Historically, the implication of this has been that theGroup did not report the assets and liabilities of the fund in its own balancesheet, but did charge contributions made to the fund in the period in which theywere made. In December 2004 an amendment was introduced to IAS19 that requires fullprovision to be made for the net present value of any future contractualcontributions into a multi-employer pension scheme. This amendment is nowmandatory and has been fully adopted by the Group. In 2004, Amlin agreed withthe Fund's trustee a schedule of annual payments into the Fund commencing in2004 and concluding in 2009. Previously, these payments were being expensed asthey were paid and were not provided for in advance. However, in accordance withthe requirements of the amendment to IAS19, a prior period adjustment has beenmade to the net assets at 1 January 2005, 30 June 2005 and 31 December 2005 andthe reported profit for the six months to 30 June 2005 and the year ended 31December 2005. The effects of the restatement on the condensed consolidated income statementand balance sheet are detailed below:-------------------------------- --------- -------- -------- Six months Six months 12 months 2006 2005 2005 £m £m £m-------------------------------- --------- -------- --------Reported profit for the period underprevious accounting policy after tax 91.4 96.9 137.4Payments made included within otheroperating expenses 4.6 4.6 4.6Movement in discount on present value offuture payments 0.2 (0.3) (0.5)Movement in deferred tax (1.3) (1.2) (1.3)-------------------------------- --------- -------- --------Restated profit for the period under newaccounting policy after tax 94.9 100.0 140.2-------------------------------- --------- -------- -------- -------------------------------- --------- -------- -------- 30 June 31 December 2005 2005 £m £m-------------------------------- --------- -------- --------Net assets as reported 545.9 792.6Increase in retirement benefit liabilities (10.8) (11.1)Increase in associated deferred tax asset 3.3 3.3------------------------------------- --------- ---------Restated net assets 538.4 784.8------------------------------------- --------- --------- 3. Segmental reporting The tables below show segmental information by business segment. Businesssegments are primary segments and represent the way in which the business ismanaged. The London market business segments comprise aviation, non-marine,marine and UK commercial business. Amlin Bermuda Limited writes reinsurancebusiness, including reinsurance ceded by Syndicate 2001. Further information onthe performance of each segment is provided in the statement accompanying thisinterim report. Income and expenses by Aviation Non-marine Marine UK London Amlin Intra Other Total business segment commercial total Bermuda group technical Six months ended 30 Ltd June 2006 £m £m £m £m £m £m £m £m £m ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------Gross premiums written 42.4 475.0 161.0 89.8 768.2 161.8 (83.7) (0.1) 846.2 ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------Gross premiums earned 45.1 281.0 97.3 87.4 510.8 45.9 (23.0) (0.1) 533.6 Reinsurance premiums ceded (15.3) (34.3) (13.8) (8.4) (71.8) - 20.0 - (51.8) ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------ Net premiums earned 29.8 246.7 83.5 79.0 439.0 45.9 (3.0) (0.1) 481.8 Insurance claims and loss adjusting expenses (36.9) (99.0) (76.0) (52.5) (264.4) (16.9) 10.2 (0.3) (271.4) Reinsurance recoveries 12.1 0.9 28.7 3.2 44.9 - (8.0) 0.2 37.1 Underwriting expenses (12.6) (82.2) (33.4) (19.0) (147.2) (5.4) 0.8 6.1 (145.7)----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------ Profit attributable to (7.6) 66.4 2.8 10.7 72.3 23.6 - 5.9 101.8 underwriting ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------ Investment return 24.5 13.2 37.7 Personal expenses (1) (1.1) (5.9) (1.5) (1.9) (10.4) - 10.4 - - Other non-underwriting expenses (2) (7.0) Financing costs (2) (12.4) ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------Profit before taxation 120.1 ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------Combined ratio 126% 73% 97% 87% 84% 49% 79% ----------------- ------- ------ ------- ------- ------- ------- ------- ------ ------ 3. Segmental reporting (continued)Income and expenses by Aviation Non-marine Marine UK London Amlin Intra Other Total business segment commercial total Bermuda group technical Six months ended 30 Ltd June 2005 £m £m £m £m £m £m £m £m £m ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------Gross premiums written 42.4 413.4 120.7 98.4 674.9 - - 0.9 675.8 ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------Gross premiums earned 44.1 259.6 76.7 89.9 470.3 - - 0.9 471.2 Reinsurance premiums ceded (15.0) (44.7) (7.4) (8.3) (75.4) - - (0.3) (75.7) ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------ Net premiums earned 29.1 214.9 69.3 81.6 394.9 - - 0.6 395.5 Insurance claims and loss adjusting expenses (19.8) (121.5) (34.1) (55.7) (231.1) - - 0.1 (231.0) Reinsurance recoveries 4.2 36.3 5.1 8.9 54.5 - - - 54.5 Underwriting expenses (7.6) (55.2) (20.8) (17.9) (101.5) - - (0.9) (102.4)----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------ Profit attributable to underwriting 5.9 74.5 19.5 16.9 116.8 - - (0.2) 116.6 ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------ Investment return 41.3 41.3 Personal expenses (1) (1.3) (9.6) (2.3) (1.9) (15.1) 15.1 - Other non-underwriting expenses (2) (16.0) Financing costs (2) (3.5) ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------Profit before taxation 138.4 ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------Combined ratio (3) 80% 62% 68% 79% 69% 69% ----------------- ------ ------ ------- ------- ------- ------- ------- ------ ------ 3 . Segmental reporting (continued) Income and expenses Aviation Non-marine Marine UK London Amlin Intra Other Total by business segment commercial total Bermuda group technical Year ended 31 LtdDecember 2005 £m £m £m £m £m £m £m £m £m----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Gross premiums written 83.0 558.0 172.8 175.5 989.3 2.9 (0.3) 1.6 993.5 ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Gross premiums earned 93.0 546.6 164.7 181.1 985.4 0.1 (0.3) 1.5 986.7 Reinsurance premiums ceded (23.6) (100.6) (25.9) (14.2) (164.3) - - (0.3) (164.6) ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Net premiums earned 69.4 446.0 138.8 166.9 821.1 0.1 (0.3) 1.2 822.1 Insurance claims and loss adjusting expenses (50.1) (651.2) (105.7) (105.0) (912.0) - (2.7) 2.6 (912.1) Reinsurance recoveries 15.1 347.0 55.3 19.1 436.5 - - (0.1) 436.4 Underwriting expenses (14.4) (113.6) (40.8) (37.6) (206.4) (0.1) (1.0) (1.8) (209.3) ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Profit attributable to underwriting 20.0 28.2 47.6 43.4 139.2 - (4.0) 1.9 137.1 ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Investment return 90.9 - 90.9 Personal expenses (1) (3.9) (24.9) (4.2) (5.0) (38.0) - 38.0 - - Other non-underwriting (30.9) expenses (2) Financing costs (2) (10.4) ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Profit before taxation 186.7 ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ Combined ratio (3) 70% 93% 63% 72% 82% - 82% ----------------- ------ ------ ------ -------- ------- ------ ------- ------ ------ (1) Personal expenses allocated to segments represent fees and commissionspayable to Amlin Underwriting Limited. (2) Other non-underwriting expenses and financing costs are incurred insupport of the entire business of the Group and cannot be allocated toparticular segments. (3) The combined ratios are calculated assuming a constant 100% ownershipover the period from which premiums have been earned. 4. Net earned premium --------------------------------- --------- --------- --------- Six months Six months 12 months 2006 2005 2005 £m £m £m--------------------------------- --------- --------- ---------Insurance contracts premiumsGross premiums written 846.2 675.8 993.5Change in unearned premium provision (312.6) (204.6) (6.8)--------------------------------- --------- --------- ---------Gross premiums earned 533.6 471.2 986.7Insurance premium revenue from thereceipt of reinsurance to close 78.8 78.6 78.6Reinsurance premiums cededReinsurance premiums payable (79.8) (119.3) (164.2)Change in unearned reinsurance premiumprovision 28.0 43.6 (0.4)--------------------------------- --------- --------- --------- (51.8) (75.7) (164.6)--------------------------------- --------- --------- ---------Net earned premiums 560.6 474.1 900.7--------------------------------- --------- --------- --------- The insurance premium revenue from the receipt of reinsurance to close at 30June 2006 represents the premium received from the third party syndicate memberson the 2003 year of account (30 June 2005 and 31 December 2005: 2002 year ofaccount) who sold the remainder of their capacity to Amlin, for use by Amlin'scorporate members for the following year of account. An identical amount isrecorded as a movement in claims, representing the additional liabilities takenon by Amlin from the third party members. Overall these transactions have noimpact on profit for the period. 5. Investment return -------------------------- ----- ----------- ----------- ----------- Six months Six months 12 months 2006 2005 2005 £m £m £m-------------------------- ----- ----------- ----------- -----------Investment income- dividend income 2.7 1.5 2.1- interest income 51.1 23.7 66.6Cash and cash equivalents interestincome 2.2 7.3 2.5-------------------------- ----- ----------- ----------- ----------- 56.0 32.5 71.2-------------------------- ----- ----------- ----------- -----------Net realised (losses)/gains on financial assets- equity securities 8.6 6.0 12.2- debt securities (14.2) (1.3) (6.0)-------------------------- ----- ----------- ----------- ----------- (5.6) 4.7 6.2-------------------------- ----- ----------- ----------- -----------Net fair value (losses)/gains on assets at fair value through income statement- equity securities (0.1) 1.6 12.5- debt securities (12.6) 2.5 1.0-------------------------- ----- ----------- ----------- ----------- (12.7) 4.1 13.5-------------------------- ----- ----------- ----------- -----------Total 37.7 41.3 90.9-------------------------- ----- ----------- ----------- ----------- Included within net fair value gains on equity securities is an amount of £0.3mbeing the net profit to date from the purchase of an equity put option. Theoption was taken out in the second quarter of 2006 to protect the Group's equityinvestments against falls in market value. The cost of this option was £1m. 6. Insurance claims and loss adjustment expenses -------------------------- ----------- ---------- --------- Six months Six months 12 months 2006 2005 2005 £m £m £m-------------------------- ----------- ---------- ---------GrossCurrent year insuranceclaims and loss 288.4 261.0 991.6adjustment expensesReduced costs for priorperiod insurance claims (17.0) (30.0) (79.5)-------------------------- ----------- ---------- --------- 271.4 231.0 912.1Insurance claims and lossadjustmentexpenses relating to the receipt of reinsurance to close 78.8 78.6 78.6ReinsuranceCurrent year insuranceclaims and lossadjustment expenses (28.1) (54.5) (436.2)recoverable fromreinsurersReduced costs for priorperiod claims (9.0) - (0.2)recoverable from reinsurers-------------------------- ----------- ---------- --------- (37.1) (54.5) (436.4)-------------------------- ----------- ---------- ---------Total net insurance claimsand loss adjustment expenses 313.1 255.1 554.3-------------------------- ----------- ---------- --------- 7. Expenses for the acquisition of insurance contracts -------------------------- ---------- ------------- --------- Six months Six months 12 months 2006 2005 2005 £m £m £m-------------------------- ---------- ------------- ---------Expenses for the acquisition ofinsurance contracts 162.0 146.5 173.4Changes in deferred expenses for theacquisition of insurance contracts (64.6) (62.9) (3.2) 97.4 83.6 170.2 8. Other operating expenses-------------------------- ---------- ------------- --------- Six months Six months 12 months 2006 2005 2005 £m (restated) (restated) £m £m-------------------------- ---------- ------------- ---------Foreign exchange losses/(gains) onnon-monetary assets 19.7 (17.7) (25.8)Other foreign exchange (gains)/losses (8.0) 1.1 (6.1)-------------------------- ---------- ------------- --------- 11.7 (16.6) (31.9)Administrative and other expenses 44.6 52.5 103.3-------------------------- ---------- ------------- --------- 56.3 35.9 71.4-------------------------- ---------- ------------- --------- 9. Tax -------------------------- ---------- ------------- --------- Six months Six months 12 months 2006 2005 2005 £m (restated) (restated) £m £m-------------------------- ---------- ------------- --------- Current tax- UK corporation tax 28.3 6.8 34.3- Foreign tax 0.1 0.2 (1.6)-------------------------- ---------- ------------- --------- 28.4 7.0 32.7-------------------------- ---------- ------------- --------- Current year deferred tax- movement in asset 4.0 5.6 4.1- movement in liability (7.2) 25.8 9.7-------------------------- ---------- ------------- --------- (3.2) 31.4 13.8-------------------------- ---------- ------------- --------- 25.2 38.4 46.5-------------------------- ---------- ------------- --------- 10. Dividends The amounts recognised as distributions to equity holders are as follows: -------------------------- ---------- ------------ ---------- Six months Six months 12 months 2006 2005 2005 £m £m £m-------------------------- ---------- ------------ ----------Final dividend for the year ended:- 31 December 2005 of 6.2 pence per ordinary share 25.0 - -- 31 December 2004 of 5.0 pence perordinary share - 19.7 19.7Interim dividend for the year ended:- 31 December 2005 of 4.0 pence per ordinary share - - 15.9-------------------------- ---------- ------------ ---------- 25.0 19.7 35.6-------------------------- ---------- ------------ ---------- The interim dividend of 4.2p per ordinary share for 2006, amounting to £22.4million, was approved by the Board on 1 September 2006 and has not been includedas a liability as at 30 June 2006. 11. Earnings per share Earnings per share are based on the profit attributable to shareholders and theweighted average number of shares in issue during the period. Shares held by theEmployee Share Ownership Trust ('ESOT') are excluded from the weighted averagenumber of shares. ------------------------- ---------- ------------ --------------Basic and diluted earnings Six months Six months 12 monthsper share are as follows: 2006 2005 (restated) 2005 (restated)------------------------- ---------- ------------ --------------Profit for the period £94.9m £100.0m £140.2m------------------------- ---------- ------------ --------------Weighted average number ofshares in issue 530.8m 396.3m 408.8mDilutive shares 7.5m 6.0m 6.6m------------------------ ---------- ------------ --------------Adjusted average number ofshares in issue 538.3m 402.3m 415.4m------------------------ ---------- ------------ --------------Basic earnings per share 17.9p 25.2p 34.3pDiluted earnings per share 17.7p 24.8p 33.7p ------------------------ ---------- ------------ --------------Basic and tangible net 30 June 30 June 31 Decemberassets per share are as 2006 2005 (restated) 2005 (restated)follows: ------------------------ ---------- ------------ --------------Net assets £817.1m £538.4m £784.8mAdjustments for intangible assets £(66.0m) £(66.0m) £(66.0m)-------------------------- ----------- ------------ ------------Tangible net assets £751.0m £472.4m £718.8m-------------------------- ----------- ------------ ------------Number of shares in issueat end of period 533.0m 400.6m 530.1mAdjustment for ESOT shares (0.8m) (2.5m) (2.2m)-------------------------- ----------- ------------ ------------Basic number of sharesafter ESOT adjustment 532.2m 398.1m 527.9m-------------------------- ----------- ------------ ------------Net assets per share 153.5p 135.2p 148.7p-------------------------- ----------- ------------ ------------Tangible net assets per share 141.1p 118.7p 136.2p-------------------------- ----------- ------------ ------------ 12. Financial investments--------------------------------- --------- --------- --------- At valuation At valuation At valuation 30 June 2006 30 June 2005 31 December 2005 £m £m £m--------------------------------- --------- --------- ---------Shares and other variableyield securities 185.3 89.0 116.2Debt and other fixed incomesecurities 1,214.8 799.4 1,142.1Participation in investmentpools 783.5 429.5 703.8Deposits with creditinstitutions 2.5 157.2 62.3Overseas deposits 59.1 48.3 51.9Other 1.8 3.3 1.9--------------------------------- --------- --------- --------- 2,247.0 1,526.7 2,078.2--------------------------------- --------- --------- ---------In Group owned companies 1,082.4 453.8 920.7In Syndicate 2001 1,159.0 1,066.7 1,151.7In non-aligned syndicates 5.6 6.2 5.8--------------------------------- --------- --------- --------- 2,247.0 1,526.7 2,078.2--------------------------------- --------- --------- ---------Listed investments included in Groupowned total are as follows: --------------------------------- --------- --------- ---------Shares and other variableyield securities 171.0 89.0 116.2Debt and other fixed incomesecurities 171.2 109.8 104.1--------------------------------- --------- --------- --------- 342.2 198.8 220.3--------------------------------- --------- --------- --------- All financial investments are recognised at fair value, with all gains andlosses, realised and unrealised, recorded through the income statement. Fixedmaturity and equity securities are classified as trading assets as the Groupbuys with the intention to resell. Using Standard & Poor's and Moody's as rating sources, the credit ratings of theGroup's debt and other fixed income securities is set out below: ---------------------------------- -------- --------- ---------Credit rating 30 June 30 June 31 December 2006 2005 2005 £m £m £m---------------------------------- -------- --------- ---------AAA/Aaa 1,015.9 499.7 870.5AA/Aa 79.6 129.2 134.8A 89.1 142.7 120.1BBB/Baa 25.0 22.4 16.7---------------------------------- -------- --------- --------- 1,209.6 794.0 1,142.1---------------------------------- -------- --------- ---------Non-aligned syndicates 5.2 5.4 ----------------------------------- -------- --------- --------- 1,214.8 799.4 1,142.1---------------------------------- -------- --------- --------- 13. Insurance contracts and reinsurance assets----------------------- ----------- ---------- ---------- --------- Claims reserves Unearned Other insurance Total premium assets and reserves liabilities £m £m £m £m----------------------- ----------- ---------- ---------- ---------Insurance liabilitiesAt 1 January2005 1,098.7 517.3 46.0 1,662.0Movement inperiod 50.4 204.5 (15.3) 239.6Exchangeadjustments 44.9 - 1.8 46.7----------------------- ----------- ---------- ---------- ---------At 30 June 2005 1,194.0 721.8 32.5 1,948.3Movement inperiod 475.1 (198.0) 80.9 358.0Exchangeadjustments 35.2 - 1.4 36.6----------------------- ----------- ---------- ---------- ---------At 31 December2005 1,704.3 523.8 114.8 2,342.9Movement inperiod (77.1) 309.0 (61.6) 170.3Exchangeadjustments (75.1) - (5.7) (80.8)----------------------- ----------- ---------- ---------- ---------At 30 June 2006 1,552.1 832.8 47.5 2,432.4----------------------- ----------- ---------- ---------- --------- Reinsurance assetsAt 1 January2005 318.6 24.9 261.3 604.8Movement inperiod (35.4) 43.6 56.8 65.0Exchangeadjustments 14.7 - 11.6 26.3----------------------- ----------- ---------- ---------- ---------At 30 June 2005 297.9 68.5 329.7 696.1Movement inperiod 297.4 (44.3) 50.0 303.1Exchangeadjustments 9.3 - 7.6 16.9----------------------- ----------- ---------- ---------- ---------At 31 December2005 604.6 24.2 387.3 1,016.1Movement inperiod (125.4) 29.2 47.5 (48.7)Exchangeadjustments (30.4) - (19.5) (49.9)----------------------- ----------- ---------- ---------- ---------At 30 June 2006 448.8 53.4 415.3 917.5----------------------- ----------- ---------- ---------- --------- The claims reserves are further analysed between notified outstanding claims andincurred but not reported claims below: ------------------------------ ---------- ---------- --------- 30 June 30 June 31 December 2006 2005 2005 £m £m £m------------------------------ ---------- ---------- ---------Notified outstanding claims 960.2 709.9 1,121.8Claims incurred but not reported 591.9 484.1 582.5------------------------------ ---------- ---------- ---------Insurance contracts claims reserve 1,552.1 1,194.0 1,704.3------------------------------ ---------- ---------- --------- 14. Deferred tax The deferred tax asset is attributable to timing differences arising on thefollowing: ---------------- -------- -------- -------- --------- -------- -------- Provisions for Other Capital losses Pensions Other timing Total losses provisions provisions differences £m £m £m £m £m £m ---------------- -------- -------- -------- --------- -------- --------At 1 January2006(restated) 1.2 7.8 5.7 3.3 6.4 24.4---------------- -------- -------- -------- --------- -------- --------Movements inthe period - (1.8) (1.3) (1.3) 0.4 (4.0)Movementthrough equityin the period - - - - (0.3) (0.3)--------------- -------- -------- -------- --------- -------- ---------At 30 June 2006 1.2 6.0 4.4 2.0 6.5 20.1--------------- -------- -------- -------- --------- -------- ---------At 30 June2005(restated) 1.3 7.0 5.6 3.3 3.8 21.0--------------- -------- -------- -------- --------- -------- --------- The deferred tax liability is attributable to timing differences arising on thefollowing: ----------------------- --------- -------- -------- -------- ------- Underwriting Unrealised Syndicate Overseas Total results capital gains capacity earnings £m £m £m £m £m ----------------------- --------- -------- -------- -------- -------At 1 January2006 73.5 5.7 3.0 - 82.2Movements inthe period (9.6) (1.3) 0.4 3.3 (7.2)---------------------- --------- -------- --------- -------- -------At 30 June 2006 63.9 4.4 3.4 3.3 75.0--------------------- --------- -------- --------- --------- -------At 30 June 2005 90.1 5.6 2.6 - 98.3--------------------- --------- -------- --------- --------- ------- 15. Intangible assets -------------------------------- --------- -------- --------- Purchased Goodwill Total syndicate participations £m £m £m-------------------------------- --------- -------- ---------Net book valueAt 30 June 2006 63.2 2.8 66.0-------------------------------- --------- -------- ---------At 30 June 2005 and 31December 2005 63.2 2.8 66.0-------------------------------- --------- -------- --------- 16. Ordinary share capital Authorised ordinary shares of 25p each Number £m-------------------- ----------------------- ---------At 30 June and 31 December 2005 562,000,000 140.5-------------------- ----------------------- ---------At 30 June 2006 800,000,000 200.0-------------------- ----------------------- --------- Allotted, called up and fully paid Number £m-------------------- ----------------------- ---------At 1 January 2006 530,113,127 132.5Shares issued on exercise of options 2,928,361 0.8-------------------- ----------------------- ---------At 30 June 2006 533,041,488 133.3-------------------- ----------------------- --------- 17. Financial liabilities - borrowings ------------------------------- --------- -------- --------- 30 June 30 June 31 December 2006 2005 2005 £m £m £m------------------------------- --------- -------- ---------Bank loans falling due in less than oneyear 49.6 10.3 241.0Bank loans falling due after more thanone year 0.1 2.0 0.1Subordinated bonds 280.7 55.3 57.1------------------------------- --------- -------- --------- 330.4 67.6 298.2------------------------------- --------- -------- --------- The Group's borrowings comprise three issues of subordinated debt and a debtfacility arrangement with a consortium of banks. Details of the subordinated debt issues are as follows: Issue date Principal Reset date Maturity date Interest rate Interest rate amount to reset date from reset date to maturity date % % ----------- ---------- ----------- ----------- --------- ----------- 23 November2004 $50m November 2014 November 2019 7.11 LIBOR + 3.4815 March $50m March 2015 March 2020 7.28 LIBOR + 3.32200520 April 2006 £230m April 2016 April 2026 6.50 LIBOR + 3.48 The bonds will be redeemed on the maturity dates at the principal amounts,together with accrued interest. The Company has the option to redeem the bondsin whole, subject to certain requirements, on the reset dates or any interestpayment date thereafter at the principal amount plus accrued interest. The debt facility arrangement was entered into in November 2005 and consists ofthe following arrangements: • A £170 million term loan bridge facility. The rate of interest was LIBOR plus 0.75% up to 30 June 2006 and LIBOR plus 1.0% thereafter. Only £150 million of the facility has been utilised to date and of this £100 million was repaid in June 2006, £36 million in July 2006 and the balance of £14 million was repaid in August 2006. • A £20 million term loan. The rate of interest is LIBOR plus 1.5%, plus mandatory costs. The loan was repaid in full in April 2006. • A $125 million revolving credit facility. The rate of interest is LIBOR plus 1.5%, plus mandatory costs. $105 million of the loan was repaid in April 2006 and the balance of $20 million was repaid in June 2006. • A £150 million letter of credit (LOC) facility. This was deposited with Lloyd's in November 2005 as part of the Group's Funds at Lloyd's (FAL) required to support underwriting on Syndicate 2001. The LOC was replaced with part of the proceeds from the issue of the subordinated debt in April 2006. Currently the facility is not being utilised but is being retained to provide additional financial strength and flexibility. The debt facility is secured by fixed and floating charges over all of theassets of the Company and its subsidiary, Amlin Corporate Services Limited(ACS). In addition Amlin Bermuda Holdings Limited (ABH) has granted a chargeover the shares it holds in Amlin Bermuda Ltd (ABL). The facility is alsoguaranteed by ACS, ABH and its intermediate holding company, Amlin (OverseasHoldings) Limited, and Amlin Investments Limited. The floating charge over theCompany's assets ranks behind the floating charge in favour of Lloyd's. 18. Cash generated from operations ---------------------------- ---------- ---------- ---------- Six months Six months 12 months 2006 2005 (restated) 2005 (restated) £m £m £m---------------------------- ---------- ---------- ----------Profit on ordinary activitiesbefore taxation 120.1 138.4 186.7Net movement on Premium Trust Fundsfor non-aligned participations - (2.9) (2.9)Depreciation charge 1.4 1.2 2.1Interest paid 9.9 2.7 9.2Interest received (53.3) (31.0) (65.3)Dividends received (2.7) (1.5) (2.0)Net losses/(gains) on investments 18.3 (8.8) (13.5)Net purchases of financialinvestment (227.7) (185.4) (757.7)Increase in loans and receivables (151.8) (77.5) (64.9)Decrease/(increase) in reinsurancecontract assets 98.6 (63.5) (411.5)Increase in insurance contractliabilities 89.7 215.2 679.2Increase/(decrease) in trade andother payables 24.6 (14.2) (2.7)Increase in retirement benefits (4.4) (4.3) (4.1)---------------------------- ---------- ---------- ---------- (77.3) (31.6) (447.4)Income taxes paid (17.5) (2.7) (17.6)Interest paid (9.9) (2.7) (9.2)---------------------------- ---------- ---------- ----------Cash generated from operations (104.7) (37.0) (474.2)---------------------------- ---------- ---------- ---------- The Group classifies the cash flows for the purchase and disposal of financialassets in its operating cash flows, as the purchases are funded from the cashflows associated with the origination of insurance contracts or the capitalrequired to support underwriting, net of the cash flows for payments ofinsurance claims. Therefore cash generated from operations is net of £227.7million used to purchase financial investments. Cash flows relating to participations on syndicates not managed by the group areincluded only to the extent that cash is transferred between the Premium TrustFunds and the Group. 19. Contingent liabilities Amlin is one of many insurer and broker defendants in litigation filed in thesecond quarter of 2006 in Federal Court in Georgia, USA, relating to the use ofcontingent commissions. Amlin is robustly defending the various allegations thatit considers are without merit. Amlin expects the litigation to persist for atleast 12 months. Amlin consider that their financial exposure will be limited todefence fees only. Given the nature of complex federal litigation in the US, itis not possible at this time to provide a precise figure on the extent of thosedefence fees, save that they are not expected to be material. 20. Related party transactions Reinsurance contracts between Syndicate 2001 and Amlin Bermuda Ltd Syndicate 2001 placed a number of reinsurance contracts with Amlin Bermuda Ltd(ABL), a wholly owned subsidiary of the Group, during 2005 and 2006. The reinsurance contracts placed with ABL are: - eight proportional treaty reinsurance contracts for marine, directproperty, special risks, specie, war, excess of loss treaty and miscellaneousclasses of business; - a whole account quota share; and - an excess of loss reinsurance contract. All reinsurance contracts were agreed on an arms length basis with terms thatare consistent with those negotiated with third parties. These reinsurancecontracts are eliminated on consolidation of the Group's results and the effectson the income statements of such eliminations can be seen in the note 3Segmental reporting under the column "intra group". 21. Principal exchange rates The principal exchange rates used in translating foreign currency assets,liabilities, income and expenditure in the production of these financialstatements were: ------ ---------- --------- --------- ---------- --------- --------- H1 At 30 June H1 At 30 June 2005 At 31 2006 Average 2006 2005 Average 2005 Average rate December rate rate 2005------ ---------- --------- --------- ---------- --------- ---------US dollar 1.79 1.85 1.87 1.79 1.82 1.72Canadian dollar 2.04 2.06 2.31 2.20 2.21 2.01Euro 1.46 1.45 1.46 1.40 1.46 1.46------ ---------- --------- --------- ---------- --------- --------- Independent Review Report to Amlin plc for the six months ended 30 June 2006 INDEPENDENT REVIEW REPORT TO AMLIN PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprise the consolidated incomestatement, the consolidated balance sheet, the consolidated cash flow statement,the consolidated statement of changes in equity and related notes 1 to 21. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLP Chartered Accountants London 1 September 2006 Shareholder information The additional information consisting of the shareholder information anddirectors and advisers has been prepared from the records of the Company. Whilstit does not form part of the interim statement, it should be read in conjunctionwith it and with the responsibilities section of the independent review reportthereon. Financial Calendar 2006 20 October Payment of 2006 interim dividend 2007 March Announcement of results for the year ending 31 December 2006 May/June Payment of 2006 final dividend, subject to shareholder approval Shareholders' dealings The Company's stockbroker, Hoare Govett Limited, offers a low cost postaldealing service, which enables UK resident investors to buy or sell certificatedholdings of the Company's shares in what may be a convenient manner. Basiccommission is 1% of the transaction value, with a minimum charge of £15.Transactions are executed and settled by Pershing Securities Limited. Forms maybe obtained from the Company Secretarial Department, Amlin plc, St Helen's, 1Undershaft, London EC3A 8ND (Tel. 020 7746 1006) or direct from Hoare GovettLimited, 250 Bishopsgate, London EC2M 4AA (Tel 020 7678 8300). This service isnot available to non-UK residents who may, however, contact Hoare Govett Limitedfor details of other services that may be available. Hoare Govett Limited andPershing Securities Limited are each authorised and regulated by the FinancialServices Authority. Shareholder enquiries, register and website Please call our Investor Relations Unit on 0207 746 1111, or, for enquiriesconcerning share registration, call our Registrar, Computershare InvestorServices PLC, on 0870 702 0000. Amlin's website is at www.amlin.com DIRECTORS AND ADVISERS Directors Registered OfficeRoger Taylor (Chairman)* St Helen'sNigel Buchanan+* 1 UndershaftBrian Carpenter LondonRichard Davey* EC3A 8NDRichard Hextall (Finance Director)Tony HoltRoger Joslin*Thomas Kemp*Ramanam Mylvaganam*Charles Philipps (Chief Executive)Sir Mark Wrightson Bt*+ Senior independent non-executive* non-executive Auditors Deloitte & Touche LLP Stonecutter Court 1 Stonecutter Street London EC4A 4TR Investment Bankers Lexicon Partners Limited No. 1 Paternoster Square London EC4M 7XDAudit Committee StockbrokersNigel Buchanan (Chairman) Hoare Govett LimitedRichard Davey 250 BishopsgateRoger Joslin London EC2M 4AARamanam MylvaganamRemuneration Committee Corporate LawyersRamanam Mylvaganam (Chairman) LinklatersNigel Buchanan One Silk StreetSir Mark Wrightson Bt London EC2Y 7HQNomination Committee Principal BankersRoger Taylor (Chairman) Lloyds TSB Bank PLCNigel Buchanan 25 Gresham StreetRoger Joslin London EC2V 7MNRamanam MylvaganamCharles PhilippsSecretary RegistrarCharles Pender FCIS FSI Computershare Investor Services PLC PO Box 82 The Pavilions Bridgwater Road Bristol BS99 7NH This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Aston Martin Lagonda