Last checked at 4 Mar 2008 07:00
Admiral Group PLC04 March 2008 Admiral Group plc Results for the Year to 31 December 2007 4 March 2008 Admiral Reports Record Profits and Strong Growth Admiral Group plc ("Admiral" or "the Group") today announces a record annualresult with a profit of £182.1 million for the year to December 2007, anincrease of 24% over the previous year. Turnover, comprising total premiumswritten, gross other income and investment income, rose 16% to £824.9 million. 2007 Highlights • Profit before tax up 24% at £182.1 million (2006: £147.3 million)• Total final dividend of 23.2p comprising normal dividend of 11.6p; special dividend of 11.6p per share• Total 2007 dividend of 43.8p (£115 million) up 22% on 2006• Turnover* up 16% at £824.9 million• Net revenue up 17% at £364 million• Revenue from products and services not underwritten by the Group up 34% at £176.9 million• Year-end vehicle count up 16% to 1.5m from 1.3m at 31 December 2006• Confused.com gave 13 million quotes (up 42%) and made a profit of £36.7 million (2006: £23.1 million)• All employee Share Scheme - over 2,200 staff are to receive around 310,000 free shares based on the H2 2007 results. This means that staff will have received the full allocation of £3,000 worth of free shares for 2007 * Turnover is defined as total premiums written (including co-insurers' share), other revenue and net investment return. It is reconciled in the financial review below. Comment from Henry Engelhardt, Group Chief Executive "2007 was a good year for the Admiral Group. We continue to grow our UKbusiness and invest in our overseas ventures. We had a bumper year in absoluteterms and we made great strides towards the creation of an even better future. "In the UK, our car insurance business grew substantially whilst maintaining itscombined ratio advantage over the market. The UK business also achieved recordancillary income, growing consistently in line with the growth in the policybase. "Confused has continued to perform very well, considering the influx ofaggregator sites. Confused's market share has declined during 2007, but thishas been in a growing market and its quote volumes have held up well. As we'vepreviously said, we will spend money to defend this market-leading position, butrealistically, 2008 will be a much tougher year within which to grow. "Balumba in Spain and AdmiralDirekt.de in Germany are building our future andour operation launching in Italy this year will further help grow the AdmiralGroup." Comment from Alastair Lyons, Group Chairman "After a year in which the Group made significant progress in implementing itsagreed strategy we are very pleased to be able to propose a total final dividendof 23.2p per share, comprising a normal dividend of 11.6p and a special of11.6p, the latter following our principle of returning available surpluses toshareholders. Our total dividends for the year at 43.8p per share mean that wewill have distributed £115 million to shareholders, up 22% on 2006. "A highlight of 2007 was admission in December to the FTSE 100, an achievementof which everyone at Admiral can justifiably be proud in slightly over threeyears since flotation. Over this period, taking dividends and shareappreciation together we achieved a 335% total return for shareholders." Final dividend Subject to approval at the Company's AGM, the final dividend of 23.2p per sharewill be paid on 7 May 2008. The ex-dividend date is 9 April 2008, the recorddate 11 April 2008. Chairman's statement I ended my statement last year by saying that our strategy remained clear andstraightforward - to continue to grow our share of the UK direct private motormarket, maximising the value derived from each customer relationship, whilstalso identifying profitable opportunities, in particular our expansion overseas,to exploit the knowledge, skills and resources attaching to our core business.As Henry Engelhardt sets out in detail in his statement, 2007 was a year inwhich the Group made significant progress in that strategic direction. In the UK, despite market conditions remaining challenging, Admiral increasedboth underwriting and ancillary profits whilst substantially growing the numberof vehicles insured. At the end of the year our brands covered 1.49 millionvehicles, 16% up on December 2006. The 13% increase achieved in profit derivedfrom ancillary products and services is testament to the success we continue toderive from our focus on maximising the value of each customer relationship. An upward trend in pricing does now seem to have become established with ageneral increase of 4% over the year as a whole. Whilst only sufficient tooffset general claims inflation, this breaks a 5 year pattern of flat or evenslightly falling rates. Against this backdrop we were happy to take back 5% ofthe underwriting risk when it came available at the end of last year, increasingthe proportion of gross premiums underwritten by Admiral in 2008 from 22 1/2% to27 1/2%. We have made significant progress during 2007 with our international strategy.Balumba.es, the on-line Spanish motor insurer that we launched in October 2006,ended 2007 with 47,000 customers - a great achievement in little over a yearfrom a standing start. We followed this with the launch in October 2007 ofAdmiralDirekt.de, our new on-line German motor insurer based in Cologne, and weannounced at the time of our half-year results that we were well advanced withplans to launch into Italy during 2008. Our teams in each country have built onthe learning of their colleagues who launched before them and I would take thisopportunity to give them credit for their enthusiasm, resilience, and consequentachievements. Staying with the international theme I should also mention theestablishment of our new customer service centre in Halifax, Canada where we nowemploy directly over 100 staff helping to share the load of our long openinghours with our teams in the UK. During the year we announced that we had entered discussions with potentialprivate equity investors regarding the sale of a minority interest in our pricecomparison business, Confused.com. Having, however, understood in detail theimplications of such an investment for the flexibility of Confused's ongoingmanagement, the Board determined that taking such a step would materiallyconstrain our ability to maximise Confused's contribution to the Group in themedium to long term. We, therefore, determined that it was in our shareholders'best interests to terminate the discussions and retain a 100% interest inConfused. We will continue our strategy of maintaining Confused's strong marketposition in car insurance price comparison and developing its potential toextend into price comparison within other product areas. 2007 was another verysuccessful year for Confused, profits growing by 59% to £37million. As we havesaid previously, there is growing competition in this sector and we willcontinue to work hard to defend our leadership position in this rapidlyexpanding market. In a strongly competitive market we are pleased to be able to announce a 24%increase in Group pre-tax profits to £182million off an 11% growth in totalwritten premiums. Taking into account the increased solvency capital required bythe higher underwriting retained in 2008, this allows us to lift our dividendsfor the year by 22% to 43.8p per share (23.2p final: 20.6p interim). We have maintained our approach of considering dividends in two parts. The firstelement, being the normal dividend, is based on a 45% pay-out ratio. The secondelement - the special dividend - derives from our principle of returning toshareholders available surpluses, calculated as the Group's net assets less itsrequired solvency; cover against any specific expansion plans, being at thisyear-end £5m in respect of overseas; and a prudent margin - currently £25m -against contingencies. Special dividends since flotation in September 2004amount to £146.6m, this being in addition to £149.5m normal dividends over thesame period. A highlight of 2007 was our admission in December to the FTSE 100, anachievement of which the executive team can be justifiably proud in slightlyover three years since flotation. Over this period, taking dividends and shareappreciation together, we achieved a 335% total return for shareholders. Alignment of the interests of our staff and our shareholders is one of our coreprinciples. Our Free Share Schemes are designed to strengthen that alignmentover time. We are delighted that strong out-performance against our plan during2007 resulted in eligible employees once again realising the maximum award of£3,000 free shares under our Approved Scheme. The 2007 financial year marked theend of the first 3-year period for the Discretionary Free Share Scheme. A 54.8%outperformance of growth in earnings per share over and above the risk-freereturn qualified the scheme to vest the maximum share entitlement under theindividual awards. Following the 2007 awards there are now 1,645 employeesparticipating in the Discretionary Free Share Scheme, itself consistent with ourphilosophy of achievement through teamwork. As at the end of the year we employed 2,500 staff, 90% of whom live and work inSouth Wales. This makes Admiral a significant part of the local community and weencourage our staff to be associated with the local projects that are importantto both them and their families. During 2007 we provided financial support to110 such projects. In addition Admiral sponsored a number of high profile localevents within South Wales - the Admiral Cardiff Big Weekend and the SwanseaWaterfront Winterland, of both of which, Admiral was the main sponsor in 2007,together attracted over 365,000 visitors. More details of which will be found inthe report on corporate responsibility. This report also describes the steps wetake to minimise the impact of our operations on the environment. May I end by thanking everyone who has contributed so much to achieve thesuccesses that I have been able to outline above - first and foremost our staffwho make Admiral the Company it is: our executive management team whose qualityof leadership justifies our being placed for 8 consecutive years amongst TheSunday Times Top 100 Companies to Work For in the UK: and our non-executivedirectors for their commitment and wise counsel. Chief Executive's statement 2007 was a good year for the Admiral Group. I should quit right there! But I won't. Why was it a good year? Well, the Group made more money than everbefore. A lot more. We made more money by serving more customers than everbefore, which resulted in a larger turnover than ever before. All these newrecords were set within the context of a challenging, highly competitiveenvironment. But those items don't tell the whole story. As compelling as they may be, theyonly account for part of the reason why I think the year was successful. Forme, the reason it was such a good year is that we did all the good thingsalready mentioned while simultaneously making large investments of time andmoney in our future. These investments could easily have retarded our 2007trading performance. But they didn't. We had a bumper year in absolute termsAND we made great strides towards the creation of an even better future. The list of achievements: • Profit before tax up 24% to £182m;• Number of customers up 16% to 1.5m;• Net revenue up 17% to £364m;• Turnover* up 16% to £825m;• Confused record pre-tax profit of £37m on 13m quotes;• Combined ratio improved to 85% from 87%;• Top 10 in the FT Best Companies To Work For; 57th in The Sunday Times Best Companies To Work For in the UK;• Invested in Balumba in Spain where we ended the year with 47,000 customers and £16.6m turnover;• Invested in AdmiralDirekt.de, our new operation in Germany that launched on October 16 and had 9,000 customers on January 1, 2008;• Began investing in an operation in Italy which is planned to launch in 2008. * Turnover is defined and reconciled in the financial review below Only in a few years time, when Spain, Germany, Italy, etc. are running at fullthrottle, will we really appreciate how good 2007 was. Here's a closer look atour results and the UK car insurance market. UK CAR INSURANCE: SLOTH-LIKE The UK car insurance market cycle is turning with sloth-like speed. Have youever seen a sloth up close? Their muscle control is quite incredible. You trymoving that slowly! (See http://animals.nationalgeographic.com/animals/mammals/three-toed-sloth.html) Sloths are an appropriate metaphor for the UK carinsurance market today. The market is moving. But slooooowwwwllllyyyy. It is just possible that in 2007, on a written basis, premium inflation for themarket will have outpaced claims inflation for the first time since 2000. But,when all the results are tallied, I think that this move will be modest, and, asan earned basis lags rate movements, it won't fully flow through to the market'sresults until 2008. We put 4% on our rates during the year against a claims inflation factor above3%. So the market is moving, keeping up with claims inflation, but will we see adefinitive improvement in results? It looks like the market has found the cornerand is, well, considering turning. But it hasn't quite turned yet. It issomewhat reminiscent of what happened in 1997-98-99 (showing my age). In 1997the market moved up, maybe a bit faster than claims costs but in 1998 the marketfailed to follow through on those increases, leading to a combined ratio inexcess of 120%. Only in 1999 did the market start to move in earnest. 1997 -98 was something of a false dawn, which we might see again in the 2007-08 years. According to Deloitte, the UK market average pure year combined ratio for 2006(latest data available) was 113%, again confirming the UK's status as one of (ifnot the) most competitive car insurance markets in the world; a market wherecompanies are willing to subsidise consumers. This is the true power of a freemarket. For those that think regulation is the key to lower prices, just lookat the UK. Strange as it might seem, collectively UK Insurers seem happy tosubsidise consumers, not once in a while, but for years on end. As we are fond of saying: Admiral's different. We actually are not keen tosubsidise consumers. We're very happy to offer a precise rate for every riskand give a great service to every customer, but we believe we should do thesethings without making a loss ourselves. The sustainable way to offer consumerslower rates is to operate more efficiently than the competition. This philosophy manifests itself in our advantage over the market in both claimsratio and loss ratio in the UK. Our UK loss ratio for the year was 66.7% andour expense ratio was 16.7% for a combined ratio of 83.4%. On a comparablebasis, Deloitte predicts that the market loss ratio will be 79% and the expenseratio will be 28%, resulting in a combined ratio, including releases, of 107%. In addition to a combined ratio more than 20 points better than the marketaverage, we also grew the business. Our UK turnover increased by 14% (£708m to£808m) and the number of vehicles we insure rose 13% (1.28m to 1.44m). Our conservative reserving philosophy meant we released £29.5m from prior yearsinto this year's profit. We build claims reserves because history tells us thatthis is an area that changes quite quickly. It has not been unusual to seechanges in the claims environment result in additional costs to all your openclaims, some of which are four or more years old. So there is a method to ourmadness, we reserve in case the world changes and then release if it does not.From what I know at the moment, I do not see any reason to believe that thispattern will not continue. The biggest development in the market in 2007 has been the rapid growth of pricecomparison websites as a leading channel of distribution in the industry. Withthe growth in the number of price comparison sites during the year and with moresites planned to launch in 2008, I can only see this growth trend accelerating. The important point of this change in distribution is that small insurers canget exposure to consumers equal to that of big insurers. Previously smallerinsurers wouldn't have the muscle to get equal exposure. The big insurers, whocould spend a lot of money advertising and/or be on lots of broker sites, coulddominate the market by the very fact that they were always visible to consumers.Now small insurers, without spending a penny of marketing money, can get equaltime. For car insurance this is revolutionary stuff. This means that the market is pinned to the lowest quote for any given risk.That is, a single firm could undercut the entire market or, for any given risk,one firm could undercut the rest. Either way, this chain is going to move onlyas quickly as the slowest link. Typically the UK cycle is around seven years (1985 cyclical worst point, to 1991worst point, to 1998 worst point). On an earned basis it looks like 2007 or2008 will be the worst point in this cycle, which is 9 or 10 years on from theprevious worst point of 1998. Think sloths. And if the 2007 rate rises proveto be a false dawn, think slow-moving sloths! CHANGING DISTRIBUTION: THE GROWTH OF PRICE COMPARISON However, when one bemoans the effect of price comparison sites on the marketkeep in mind that the leader in car insurance price comparison is our ownConfused.com. Confused had it rather cosy for a number of years, amassing a market share ofsome 65%. But we predicted back in March 2006 that this market would be acompetition magnet and we've only been surprised at how long it took for thecompetition to materialise. But materialise it has! At last count there were more than half a dozen price comparison sites activelytouting for business. Not surprisingly, consumers have been seduced by the easein which they can now get countless quotes. Overall ad spend in the market,which had been on the decline in 2006 began to rise again in 2007 and continuesto rise, setting new records along the way. Price comparison sites accountedfor approximately 35% of the car insurance tv and press spend in 2007. However,this figure grew throughout the year and in January 2008 it was 67%.Advertising as a stand-alone car insurance brand to generate direct quotes hasbecome awfully expensive, as it is almost impossible for a single brand tobetter the proposition of multiple quotes put forward by price comparison sites. Given the development of the price comparison sector, it is not surprising thatConfused's market share declined during 2007. However, this decline has beeninto a growing market and as a result its quote and sale volumes have held uprather well. We accept that some erosion of share is unavoidable in the shortterm but, as we've said previously, we will spend money to defend ourmarket-leading position. BEYOND THE UK: SPAIN, GERMANY AND ITALY 2007 was a dramatic year in the development of the Group's business beyond theUK. Balumba in Spain, which launched at the end of October 2006, grew quickly. Ayear after Balumba's start, AdmiralDirekt.de successfully launched in Germanyand during the year we began implementation of our plan to launch in Italyduring 2008. Balumba in Spain ended the year with 47,000 policyholders and a turnover of£16.6m. It posted a loss of just £0.7m in its first full year of trading.Balumba's combined ratio totalled 232%, with a loss ratio of 141% and an expenseratio of 91%. The ratio of expenses to premium written during the year was 51%,a very credible figure. Balumba's result was helped by contribution fromancillary products. As you can imagine, there is still a lot of work to do on Balumba, particularlyin the pricing and claims areas, although high loss ratios are not unusual in aCompany's first year of trading. The key question surrounding Balumba beginningthe year was: could it market to consumers efficiently? It appears that theanswer to that question is a resounding 'yes' as we gave over 396,000 quotes inthe year. The launch in Germany, some 50 weeks after the launch in Spain, was verysatisfying. Most of the German market renews its car insurance on January 1.In addition, consumers have to give their insurers one month notice if they areplanning to switch. So the window for attracting new business is about 8 weekslong, from early October through early December. It was imperative that welaunch the operation in October to get some experience in the 'season'. Once again, the key test was marketing. And, once again, we were pleased by theresults. AdmiralDirekt.de made 9,000 sales with income of £1.7m, all with apolicy start date of January 1, 2008. Lo and behold, the first claim occurredthe morning of January 2, 2008, when one of our customers hit a boar at 5:30a.m. I suspect this will be a first claim not soon forgotten! Project Chianti, otherwise known as The Italian Job, is moving forward at pacewith an anticipated launch later in 2008. The operation will be based in Rome. GLADIATOR GROWS AND WE BEGIN TO TAKE CALLS IN CANADA Other notable accomplishments during the year include the growth in customernumbers of Gladiator Commercial and the creation of a call centre in Halifax,Nova Scotia primarily to handle evening calls from the UK. Gladiator is our commercial vehicle intermediary and it turned in a profitbefore tax of £2m. However, Gladiator increased its customer base significantlyduring the year and now boasts over 62,000 customers up from 43,000 last year(+44%), which bodes well for the future A combination of a strong service ethic and a four-hour time difference led usto open a call centre in eastern Canada. We now have almost 100 agents on thephones, taking over from the UK in the early evening (mid-afternoon there). ALMOST THE END OF THIS REPORT I'm proud to say that it was another very good year for return on capital. Thisis the benefit of our model, where we have reinsurers put up the capitalpro-rata for their share of the underwriting, but we get profit commissions fromthem when we make profits and we keep the revenue from everything else we do,like Confused, for ourselves. Although we do sacrifice some profit to get thisreinsurance support it gives us a layer of protection against losses and servesto make us capital efficient. A good measure of this is our return on capital,which in 2007 was 58% (2006: 57%). Another important indicator is our return onincome - 57% in 2007, up from 53% in 2006. Finally, the best possible tribute to our staff: the first lot of free sharesdistributed since our 2004 float will vest in 2008. We want all our staff tofeel like they own part of the Company and the best way to do that is to givethem part of the Company to own. We are very pleased that those who qualifiedin 2005 and earned free shares will take control of those shares later thisyear. Our staff give a lot of themselves to the organisation and it is great toshare the fruits of our communal efforts with every person in the Company. Last point of note, at the end of 2007 we joined the FTSE 100. We are the onlyWelsh Company in this elite club. In fact, we are only the second Welsh Companyin history to be in the 100, the first one having been a member for 9 monthsback in 1992-93. (I hope that by the time you read this we're still a member!)Our rapid rise into the FTSE 100 is a tribute to all the staff across our sixsites in five countries who are building a great business by working hard everyday to give customers great service. This is a very exciting time for the Admiral Group and we're looking forward toanother great year in 2008. Henry Engelhardt Financial review Key financial highlights Group profit before tax again grew strongly in 2007 - moving up 24% to £182.1mfrom £147.3m last year. Earnings per share grew 22% to 48.6p from 39.8p. 2007 2006 £000 £000 Underwriting profit 37,502 28,351Profit commissions 20,448 19,926Ancillary and other net income 93,363 79,262Confused.com profit 36,727 23,080Share scheme, pre-launch and other charges (5,942) (3,277) Profit before tax 182,098 147,342 Group underwriting profits grew significantly in 2007 (by around one third) -this despite a very slowly turning pricing environment in the UK motor marketand the inclusion of a first full year's result for Balumba.es (the Group'sSpanish motor insurer). In UK motor, the Group reduced its share of the underwriting to 22.5% (from25.0%) in a year when this cycle possibly hit its worst point. The number ofcustomers grew significantly once again: 2007 2006 000s 000s UK year end private vehicle count 1,382 1,240Spanish private vehicles 47 2Gladiator Commercial vehicles 62 43 Total vehicle count 1,491 1,285 Within the overall increase of 16%, UK vehicles insured grew by 11 1/2%, andGladiator grew by 47%. Balumba increased its customer base to end the year at47,000 (having ended 2006, two months after launch, with around 2,200). October 2007 saw the successful launch of AdmiralDirekt.de - the Group's Germancar insurer, based in Cologne. In the relatively short period before the end ofthe year, AdmiralDirekt sold 9,000 policies, generating around £1.7m in premiumand ancillary income. Cover for these risks started 1 January 2008. A more detailed split of Group profit, including geographical analysis followsbelow. Each element is discussed in the following notes. 2007 2006 UK GROUP EUROPE TOTAL UK GROUP EUROPE TOTAL £000 £000 £000 £000 £000 £000 Underwriting profit 39,976 (2,474) 37,502 28,541 (190) 28,351Profit commissions 20,448 - 20,448 19,926 - 19,926Ancillary and other netincome 91,517 1,846 93,363 79,186 76 79,262Confused.com profit 36,727 - 36,727 23,080 - 23,080Share scheme, pre- launch (4,534) (1,408) (5,942) (2,782) (495) (3,277)and other charges Profit before tax 184,134 (2,036) 182,098 147,951 (609) 147,342 Europe figures include the results of Balumba in Spain, and set up andpre-launch costs relating to AdmiralDirekt (Germany) and the Italian business. Turnover, comprising total premiums written (including premium underwritten byco-insurers), gross other income and net investment return (as a measure of thecombined size of the Group's businesses) continued to grow strongly: 2007 2006 UK GROUP EUROPE TOTAL UK GROUP EUROPE TOTAL £000 £000 £000 £000 £000 £000 Total premiums written 617,023 14,228 631,251 566,048 560 566,608Other revenue 174,641 2,237 176,878 131,536 85 131,621Net investment return 16,662 133 16,795 9,925 - 9,925 Turnover 808,326 16,598 824,924 707,509 645 708,154 A reconciliation of turnover to figures appearing in the income statement isshown at the end of this review. Overall growth of 16% was made up of an 11% increase in total premium, a 34%rise in other revenue (predominantly ancillary income and Confused.com revenue)and a 69% increase in investment return after a disappointing investment year in2006. Net revenue in the income statement increased by 17% to £364m. Balumba (providing all the European figures above) contributed 2% of totalturnover. Underwriting Underwriting arrangements During 2007 the Group retained 22.5% (2006: 25%) of UK motor underwriting on anet basis. 60% of the total is underwritten by Great Lakes Reinsurance (UK) Plc(a UK subsidiary of Munich Re) under a long-term co-insurance arrangement. Theremaining 17.5% is ceded to two reinsurers - Swiss Re, 10.0% and Partner Re,7.5%. The nature of the co-insurance arrangement is such that 60% of all motor premiumand claims for the 2007 year accrues directly to Great Lakes and does not appearin the Group's income statement. Similarly, Great Lakes reimburses the Groupfor its proportional share of expenses. The Group also retains 35% of the risks generated by Balumba in Spain andAdmiralDirekt in Germany, with 65% being reinsured. In 2008, the share of the UK motor underwriting retained increases to 27.5% asGreat Lakes' share declines by the 5% set out in the revised co-insurancearrangement. Underwriting results Total premiums increased by around 11% to £631m from £567m - Balumba accountedfor around £14m of this total (having written less than £1m in 2006). The totalnumber of vehicles insured (excluding Gladiator) rose by around 15% to 1.43mfrom 1.24m. Balumba grew its customer count from around 2,000 to 47,000 at theend of the year. Vehicle growth exceeded premium growth due in part to lower average premiums inSpain and also in the UK due to mix effects. As noted above, German motor riskssold in the latter part of 2007 do not incept until 2008 and are not included inthe premium or results. Premium rate rises of around 4% have been implemented in the UK and datasuggests similar increases have been seen across the market. Net insurance premium revenue fell marginally to £142m - due to the decrease inthe proportion of UK premium retained. The overall loss ratio improved to 68% - four points down from the 72% reportedin 2006. The UK motor ratio improved significantly to 67% from 72%. Balumba'sreported loss ratio in its first full year of trading is 141%. Positive development of prior year reserves continued, and the 2007 resultincludes releases of almost £30m (up from £21m last year) - improving the lossratio by around 21 percentage points. The pure year loss ratio (includingBalumba) declined to 88% from 86% in 2006. The UK expense ratio was 16.7%, up 1 percentage point on the previous year,primarily as a result of lower average premiums resulting from changes in themix of the portfolio. When the Balumba figures are included, the Group expenseratio totals 17.7%. The expense ratio is reconciled to the figures included in the income statementin note 9 below, whilst the underwriting result is reconciled later in thisreview. As a consequence, the Group's combined ratio improved by two points to 85% (87%in 2006). Taken together with the increase in premiums, this resulted in a 32%rise in underwriting profits, to £37.5m from £28.4m. Part VII transfer During November 2007, the Group completed the transfer of the remainingliabilities of Syndicate 2004 (through which the Group underwrote UK privatemotor insurance from 2000 to 2002) into one of its active insurers - AdmiralInsurance Company Limited. Whilst the transfer has a number of advantages interms of simplifying Group structure and administrative requirements, thetransfer has not had a material financial impact on the results in 2007. Profit commission The Group earns profit commission through its co-insurance and reinsurancearrangements. The amount receivable is dependent on the volume andprofitability of the insurance business, measured by reference to loss andexpense ratios. Around £20.4m was recognised in 2007, which is £0.5m higher than 2006, althoughas reported last year, the 2006 total included £2.0m relating to earlier yearcontracts (£0.5m in 2007). The reinsurance contracts entered into with Munich Re in Spain and Germany alsohave profit commission clauses, though these require the underwriting results tomove into cumulative profitability before any commission will be earned. Ancillary and other net income 2007 2006 UK GROUP EUROPE TOTAL UK GROUP EUROPE TOTAL £000 £000 £000 £000 £000 £000 Ancillary profit 75,836 1,767 77,603 66,946 76 67,022Interest income 7,745 32 7,777 4,539 - 4,539Instalment income 5,936 47 5,983 5,676 - 5,676Gladiator Commercial profit 2,000 - 2,000 2,025 - 2,025 91,517 1,846 93,363 79,186 76 79,262 Ancillary profit & instalment income This is primarily made up of commissions and fees earned on sales of insuranceproducts and services complementing the motor policy, but which are underwrittenby external parties. It continues to be a major component of Group profit. Net ancillary contribution increased by 16% in 2007 to £78m from £67m, broadlyin line with the growth in vehicles insured. Gross UK ancillary income peraverage active vehicle was £69 for both years, with no notable change in thecomponent elements. Balumba has also been successful in selling ancillaryproducts, with income per policy sold of around £45. Gladiator Commercial Gladiator made a contribution to profit of £2m in 2007, consistent with 2006.In a highly competitive market, Gladiator grew market share by increasing itscustomer base by 44% to 62,000. This was partly as a result of new distributionthrough price comparison sites, and partly the result of improved conversionfrom a larger and more comprehensive panel. Gladiator offered 230,000 quotes in 2007, up 68% on last year. Increasedinvestment in new business growth meant that Gladiator's net margin reduced to27% from 34% in 2006. Confused.com 2007 2006 £000 £000 Confused.com profit 36,727 23,080 Confused enjoyed another year of significant growth in 2007. Increased mediaactivity (along with the return of large numbers of previous visitors to thesite) led to an increase in the total number of insurance quotes provided byConfused of 43%, to 13.0m from 9.1m in 2006. Revenue increased by 81% to £69.2mfrom £38.5m. Operating profit rose 59% to £36.7m from £23.1m in 2006. Confused also increased its share of the home and travel insurance markets byimproving market coverage and panel depth, and revenue growth has also beenachieved in a number of other general insurance areas including van andmotorbike insurance. Home insurance quotes increased by almost 80% to 0.9m from0.5m, whilst Confused also gave 0.5m travel insurance quotes (up substantiallyfrom just over 0.1m last year). As noted in the Chief Executive's statement, Confused faced a significantincrease in the level of competition in the motor insurance price comparisonmarket during 2007. In spite of this, Confused maintained its position asmarket leader. Advertising spend by the main competitors in this market hasgrown substantially over the past year and continues to grow into 2008. International operations Balumba has completed its first full year of trading and has progressed well.Management are pleased with the development of the business, which has grownahead of plan and is well positioned to continue to grow market share and movetowards profitability. The European figures above show Balumba made a loss ofaround £0.7m in the year (the net effect of the underwriting loss, offset byancillary profits). AdmiralDirekt launched successfully in Cologne, Germany during October, justunder one year after Balumba. The German market brings new challenges, notleast the large proportion of motor policies that incept 1 January.AdmiralDirekt sold around 9,000 policies in its short period of trading,managing to commence operating in time to target the January renewals. Thebusiness will continue to develop its infrastructure over the coming months,building towards the next peak period in Q4 2008. The Group's Italian motor insurer is expected to launch later in the year. Thebusiness, based in Rome, is making made good progress towards launch in all thekey areas (management team, premises, IT system, pricing and marketing). Earnings per share (EPS) Earnings per share rose 22% to 48.6p from 39.8p in 2006. The difference in theincrease compared to pre-tax profit growth (which was 23.5%) is due to the issueof new share capital in the year to the trustees of the Group's share schemes. Taxation The taxation charge reported in the income statement is £54.7m (2006: £43.6m)representing 30.0% of pre-tax profit (2006: 29.6%). Refer to note 13 to the financial statements for further detail on taxation. Investments and cash The Group invests its insurance funds in three AAA-rated sterling liquidityfunds which have performed very consistently in 2007. Against a background ofextreme volatility in other asset classes during the year, the three fundsdelivered a net return of 5.6%, with the variance between the highest and lowestfund's performance in the year being just 0.1%. The funds target a 7-day LIBID return with capital security and low volatilityand they continue to achieve this. Of the total Group cash and investments of £491m at the end of the year (2006:£449m), £336m (2006: £258m) was held in these money market funds. Total investment return and interest income was £24.6m up substantially from the£14.5m earned last year. This increase is due in part to the higher level ofcash and investments held, but more to the increase in investment return rates. Dividends The Directors propose a final dividend for 2007 of 23.2p per share, which ismade up of 11.6p per share normal element, plus 11.6p per share specialdistribution based on the Group's resources at the end of the year. The total distribution for 2007 will be 43.8p per share - up 21% on the 36.1pdeclared in 2006. Reconciliation of turnover 2007 2006 £000 £000 Insurance premium revenue 233,075 188,288Change in gross unearned premium provision 27,826 8,090 Group premiums written 260,901 196,378Add: co-insurer's share of premium written 370,350 370,230 Total premiums written 631,251 566,608Other revenue 176,878 131,621Net investment return 16,795 9,925 Turnover 824,924 708,154 Reconciliation of underwriting profit 2007 2006 £000 £000 Net insurance premium revenue 142,236 144,955Net insurance claims (99,795) (107,145)Net expenses related to insurance contracts (21,734) (19,384)Investment return (see note 8) 16,795 9,925 Underwriting profit 37,502 28,351 Reconciliation of loss ratios reported 2007 2006 £000 £000 Net insurance claims 99,795 107,145Deduct: claims handling costs (3,471) (3,538) Adjusted net insurance claims 96,324 103,607Net premium revenue 142,236 144,955Loss ratio 67.7% 71.5% Reconciliation of alternative operating ratios 2007 2006 £000 £000 Profit before tax 182,098 147,342 Income:Net insurance premium revenue 142,236 144,955Other revenue 176,878 131,621 319,114 276,576 Return on income 57% 53% Consolidated income statement (audited) Year ended: 31 December 2007 31 December 2006 Note: £000 £000 Insurance premium revenue 233,075 188,288Insurance premium ceded to reinsurers (90,839) (43,333)Net insurance premium revenue 5 142,236 144,955 Other revenue 6 176,878 131,621Profit commission 7 20,448 19,926Investment and interest income 8 24,572 14,464 Net revenue 364,134 310,966 Insurance claims and claims handling expenses (172,611) (136,472)Insurance claims and claims handling expensesrecovered from reinsurers 72,816 29,327Net insurance claims (99,795) (107,145) Expenses 9 (78,986) (54,528)Share scheme charges 9, 25 (2,971) (933)Total expenses (181,752) (162,606) Operating profit 182,382 148,360 Finance charges 12 (284) (1,018) Profit before tax 10 182,098 147,342 Taxation expense 13 (54,682) (43,620) Profit after tax attributable to equity holders ofthe Company 127,416 103,722 Earnings per share:Basic 15 48.6p 39.8p Diluted 15 48.6p 39.8p Dividends declared (total) 14 116,016 70,104Dividends declared (per share) 14 44.6p 27.0p Consolidated balance sheet (audited) As at: 31 December 2007 31 December 2006 Note £000 £000ASSETS Property, plant and equipment 16 7,708 7,448Intangible assets 17 69,063 66,757Financial assets 18 481,848 395,938Reinsurance assets 19 131,668 74,689Deferred income tax 24 1,629 -Trade and other receivables 20, 18 22,633 16,931Cash and cash equivalents 21, 18 155,773 191,242 Total assets 870,322 753,005 EQUITY Share capital 25 263 261Share premium account 26 13,145 13,145Retained earnings 26 223,828 205,682Other reserves 26 396 (33) Total equity attributable to equity holders of the 237,632 219,055Company LIABILITIES Insurance contracts 19 363,060 294,425Deferred income tax 24 - 981Trade and other payables 22, 18 239,593 215,137Current tax liabilities 30,037 23,407 Total liabilities 632,690 533,950 Total equity and total liabilities 870,322 753,005 Consolidated statement of recognised income and expense (audited) As at: 31 December 2007 31 December 2006 £000 £000 Exchange differences on translation of foreign 429 (50)operations Net income / (expense) recognised directly in 429 (50)equity Profit for the period 127,416 103,722 Total recognised income and expense for the period 127,845 103,672 Consolidated cash flow statement (audited) 31 31 December December Note 2007 2006 £000 £000 Profit after tax 127,416 103,722Adjustments for non-cash items:- Depreciation 3,227 2,489- Amortisation of software 725 446- Unrealised gains on investments (1,123) (624)- Share scheme charge 25 5,560 2,667Loss on disposal of property, plant and equipment andsoftware 6 151Change in gross insurance contract liabilities 68,635 40,295Change in reinsurance assets (56,979) (20,523)Change in trade and other receivables, including frompolicyholders (14,772) (23,150)Change in trade and other payables, including tax andsocial security 25,506 33,652Interest expense 284 1,018Taxation expense 54,682 43,620 Cash flows from operating activities, before movementsin investments 213,167 183,763 Net cash flow into investments held at fair value (76,849) (1,073)Cash flows from operating activities, net of movementsin investments 136,318 182,690 Interest payments (284) (1,018)Taxation payments (49,477) (40,931) Net cash flow from operating activities 86,557 140,741 Cash flows from investing activities: Purchases of property, plant and equipment and software (5,390) (6,046) Net cash used in investing activities (5,390) (6,046) Cash flows from financing activities: Repayments of borrowings - (22,000)Capital element of new finance leases 457 1,519Repayment of finance lease liabilities (1,506) (2,970)Equity dividends paid (116,016) (70,104) Net cash used in financing activities (117,065) (93,555) Net (increase) / decrease in cash and cash equivalents (35,898) 41,140 Cash and cash equivalents at 1 January 191,242 150,152Effects of changes in foreign exchange rates 429 (50) Cash and cash equivalents at end of period 21 155,773 191,242 Notes to the financial statements 1. General information and basis of preparation Admiral Group plc is a Company incorporated in England and Wales. Itsregistered office is at Capital Tower, Greyfriars Road, Cardiff CF10 3AZ and itsshares are listed on the London Stock Exchange. The financial statements comprise the results and balances of the Company andits subsidiaries (together referred to as the Group) for the year ended 31December 2007 and comparative figures for the year ended 31 December 2006. Thefinancial statements of the Company's subsidiaries are consolidated in the Groupfinancial statements. The Company controls 100% of the voting share capital ofall its subsidiaries. The Parent Company financial statements presentinformation about the Company as a separate entity and not about its Group. Inaccordance with International Accounting Standard (IAS) 24, transactions orbalances between Group companies that have been eliminated on consolidation arenot reported as related party transactions. The consolidated financial statements have been prepared and approved by theDirectors in accordance with International Financial Reporting Standards (IFRS)as adopted by the European Union (EU). The Company has elected to prepare itsParent Company financial statements in accordance with UK Generally AcceptedAccounting Practice (GAAP). The Group has applied all adopted IFRS and interpretations endorsed by the EU at31 December 2007, including all amendments to extant standards that are noteffective until later accounting periods, except for those listed below: • IFRS 8 (Operating Segments); and • IFRIC 11 (IFRS 2: Group and Treasury Share Transactions') IFRS 8 becomes effective for the period commencing 1 January 2009, whilst IFRIC11 will become effective for the period commencing 1 January 2008. Theapplication of either the standard or the interpretation would not have had amaterial impact on these financial statements. There are a number of standards, amendments to standards and interpretationsthat were issued by 31 December 2007 but have yet to be endorsed by the EU. Ofthese, only the amendment to IAS 1 (Presentation of financial statements: arevised presentation) is expected to have any impact on the Group's financialstatements. This amendment introduces a number of changes to the primaryfinancial statements, but does not change the recognition, measurement ordisclosure of transactions or events that are required by other IFRS. The following IFRS have been adopted and applied by the Group for the first timein these financial statements: • IFRS 7 (Financial instruments: Disclosure); and • Amendment to IAS 1 (Capital disclosures) The accounting policies set out below have, unless otherwise stated, beenapplied consistently to all periods presented in these Group financialstatements. The financial statements are prepared on the historical cost basis, except forthe revaluation of financial assets classified as at fair value through profitor loss. Subsidiaries are entities controlled by the Group. Control exists when theGroup has the power, directly or indirectly, to govern the financial andoperating policies of an entity so as to obtain benefits from its activities.In assessing control, potential voting rights that are currently exercisable orconvertible are taken into account. The financial statements of subsidiariesare included in the consolidated financial statements from the date that controlcommences until the date that control ceases. The preparation of financial statements in conformity with adopted IFRS requiresmanagement to make judgements, estimates and assumptions that affect theapplication of policies and reported amounts of assets and liabilities, incomeand expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable underthe circumstances, the results of which form the basis of making the judgementsabout carrying values of assets and liabilities that are not readily apparentfrom other sources. The estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the year in which theestimate is reviewed if this revision affects only that year, or in the year ofthe revision and future years if the revision affects both current and futureyears. 2. Critical accounting judgements and estimates Judgements: In applying the Group's accounting policies as described in note 3, managementhas primarily applied judgement in the classification of the Groups contractswith reinsurers as quota share reinsurance contracts. A contract is required totransfer significant insurance risk in order to be classified as such.Management reviews all terms and conditions of the contract, and if necessaryobtains the opinion of an independent expert at the negotiation stage in orderto be able to make these judgements. Estimation techniques used in calculation of claims provisions: Estimation techniques are used in the calculation of the provisions for claimsoutstanding, which represents a projection of the ultimate cost of settlingclaims that have occurred prior to the balance sheet date and remain unsettledat the balance sheet date. The key area where these techniques are used relates to the ultimate cost ofreported claims. A secondary area relates to the emergence of claims thatoccurred prior to the balance sheet date, but had not been reported at thatdate. The estimates of the ultimate cost of reported claims are based on the settingof claim provisions on a case-by-case basis, for all but the simplest of claims. The sum of these provisions are compared with projected ultimate costs using avariety of different projection techniques (including incurred and paid chainladder and an average cost of claim approach) to allow an actuarial assessmentof their likely accuracy. They include allowance for unreported claims. The most significant sensitivity in the use of the projection techniques arisesfrom any future step change in claims costs, which would cause future claim costinflation to deviate from historic trends. This is most likely to arise from achange in the regulatory or judicial regime that leads to an increase in awardsor legal costs for bodily injury claims that is significantly above or below thehistorical trend. The claims provisions are subject to independent review by the Group's actuarialadvisors. 3. Significant accounting policies a) Revenue recognition Premiums, ancillary income and profit commission: Premiums relating to insurance contracts are recognised as revenueproportionally over the period of cover. Income earned on the sale of ancillary products and income from policies paid byinstalments is credited to the income statement over the period matching theGroup's obligations to provide services. Where the Group has no remainingcontractual obligations, the income is recognised immediately. An allowance ismade for expected cancellations where the customer may be entitled to a refundof ancillary amounts charged. Under some of the co-insurance and reinsurance contracts under which motorpremiums are shared or ceded, profit commission may be earned on a particularyear of account, which is usually subject to performance criteria such as lossratios and expense ratios. The commission is dependent on the ultimate outcomeof any year, with income being recognised based on loss and expense ratios usedin the preparation of the financial statements. Income is allocated to profit commission in the income statement when the rightto consideration is achieved, and is capable of reliable measurement. Revenue from Gladiator Commercial and Confused.com: Commission from these activities is credited to income on the sale of theunderlying insurance policy. Investment income: Investment income from financial assets comprises interest income and net gains(both realised and unrealised) on financial assets classified as fair valuethrough profit and loss. b) Segment reporting The Group's primary format for segment reporting is business segments. There isno secondary segment. A business segment is defined as a group of assets andoperations engaged in providing products and services that are subject to risksand returns that are different from other business segments. For the Group, the risks and returns of its insurance broking activities, namelyGladiator Commercial and Confused.com, are clearly distinguishable from itsmotor insurance segment. This is reflected in the Group's management andorganisation structure and internal financial reporting systems. Management classify the private motor insurance underwriting and private motorinsurance ancillary income results as one business segment (private motorinsurance). This is because although the results are distinguishable betweenunderwriting and non-underwriting, the activities carried out in generating theincome are not independent of each other and are carried on as one business.This mirrors the approach in management reporting. c) Foreign currency translation Functional and presentation currency Items included in the financial statements of each of the Group's entities aremeasured using the currency of the primary economic environment in which theentity operates ('the functional currency'). The consolidated financialstatements are presented in thousands of pounds sterling, which is the Group'spresentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency usingthe exchange rates prevailing at the dates of the transactions. Foreignexchange gains and losses resulting from the settlement of such transactions,and from the translation at year end exchange rates of monetary assets andliabilities denominated in foreign currencies are recognised in the incomestatement. Translation differences on non-monetary items, such as equities held at fairvalue through profit or loss, are reported as part of the fair value gain orloss. Translation differences on non-monetary items are included in the fairvalue reserve in equity. Translation of financial statements of foreign branches The financial statements of foreign branches whose functional currency is notpounds sterling are translated into the Group presentation currency (sterling)as follows: (i) Assets and liabilities for each balance sheet presentedare translated at the closing rate at the date of that balance sheet; (ii) Income and expenses for each income statement aretranslated at average exchange rates (unless this average is not a reasonableapproximation of the cumulative effect of the rates prevailing on thetransaction dates, in which case income and expenses are translated at the dateof the transaction); and (iii) All resulting exchange differences are recognised as aseparate component of equity. d) Insurance contracts and reinsurance assets Premium: The proportion of premium receivable on in-force policies relating to unexpiredrisks is reported in insurance contract liabilities and reinsurance assets asthe unearned premium provision - gross and reinsurers' share respectively. Claims: Claims and claims handling expenses are charged as incurred, based on theestimated direct and indirect costs of settling all liabilities arising onevents occurring up to the balance sheet date. The provision for claims outstanding comprises provisions for the estimated costof settling all claims incurred but unpaid at the balance sheet date, whetherreported or not. Anticipated reinsurance recoveries are disclosed separately asassets. Whilst the Directors consider that the gross provisions for claims and therelated reinsurance recoveries are fairly stated on the basis of the informationcurrently available to them, the ultimate liability will vary as a result ofsubsequent information and events and may result in significant adjustments tothe amounts provided. Adjustments to the amounts of claims provisions established in prior years arereflected in the income statement for the period in which the adjustments aremade and disclosed separately if material. The methods used, and the estimatesmade, are reviewed regularly. Provision for unexpired risks is made where necessary for the estimated amountrequired over and above unearned premiums to meet future claims and relatedexpenses. Co-insurance: The Group has entered into certain co-insurance contracts under which insurancerisks are shared on a proportional basis, with the co-insurer taking a specificpercentage of each premium written and being responsible for the same proportionof each claim. As the contractual liability is several and not joint, neitherthe premiums nor claims relating to the co-insurance are included in the incomestatement. Under the terms of these agreements the co-insurers reimburse theGroup for the same proportionate share of the costs of acquiring the business. Reinsurance assets: Contracts entered into by the Group with reinsurers under which the Group iscompensated for losses on the insurance contracts issued by the Group areclassified as reinsurance contracts. A contract is only accounted for as aninsurance or reinsurance contract where there is significant insurance risktransfer between the insured and the insurer. The benefits to which the Group is entitled under these contracts are held asreinsurance assets. The Group assesses its reinsurance assets for impairment on a regular basis, andin detail every six months. If there is objective evidence that the asset isimpaired, then the carrying value will be written down to its recoverableamount. e) Intangible assets Goodwill: All business combinations are accounted for using the purchase method. Goodwillhas been recognised in acquisitions of subsidiaries, and represents thedifference between the cost of the acquisition and the fair value of the netidentifiable assets acquired. The classification and accounting treatment of acquisitions occurring before 1January 2004 have not been reconsidered in preparing the Group's opening IFRSbalance sheet at 1 January 2004 due to the exemption available in IFRS 1 (Firsttime adoption). In respect of acquisitions prior to 1 January 2004, goodwill is included at thetransition date on the basis of its deemed cost, which represents the amountrecorded under UK GAAP, which was tested for impairment at the transition date.On transition, amortisation of goodwill has ceased as required by IFRS 3. Goodwill is stated at cost less any accumulated impairment losses. Goodwill isallocated to cash generating units (CGU's) according to business segment and isreviewed annually for impairment. The Goodwill held on the balance sheet at 31 December 2007 is allocated solelyto the private motor insurance segment. Impairment of goodwill: The annual impairment review involves comparing the carrying amount to theestimated recoverable amount (by allocating the goodwill to CGU's) andrecognising an impairment loss if the recoverable amount is lower. Impairmentlosses are recognised through the income statement and are not subsequentlyreversed. The recoverable amount is the greater of the net realisable value and the valuein use of the CGU. The value in use calculations use cash flow projections based on financialbudgets approved by management covering a three year period. Cash flows beyondthis period are considered, but not included in the calculation. The discountrate applied to the cashflow projections in the value in use calculations is10.3%, based on the Group's weighted average cost of capital. The key assumptions used in the value in use calculations are those regardinggrowth rates and expected changes in pricing and expenses incurred during theperiod. Management estimates growth rates and changes in pricing based on pastpractices and expected future changes in the market. Deferred acquisition costs: Acquisition costs comprise all direct and indirect costs arising from theconclusion of insurance contracts. Deferred acquisition costs represent theproportion of acquisition costs incurred that corresponds to the unearnedpremiums provision at the balance sheet date. This balance is held as anintangible asset. It is amortised over the term of the contract as premium isearned. Software: Purchased software is recognised as an intangible asset and amortised over itsexpected useful life (generally between two and four years). The carrying valueis reviewed every six months for evidence of impairment, with the value beingwritten down if any impairment exists. Impairment may be reversed if conditionssubsequently improve. f) Property, plant and equipment and depreciation All property, plant and equipment is stated at cost less accumulateddepreciation. Depreciation is calculated using the straight-line method towrite off the cost less residual values of the assets over their useful economiclives. These useful economic lives are as follows: Motor vehicles - 4 yearsFixtures, fittings and equipment - 4 yearsComputer equipment - 2 to 4 yearsImprovements to short leasehold properties - 4 years Impairment of property, plant and equipment In the case of property plant and equipment, carrying values are reviewed ateach balance sheet date to determine whether there are any indications ofimpairment. If any such indications exist, the asset's recoverable amount isestimated and compared to the carrying value. The carrying value is the higherof the net realisable value and the asset's value in use. Impairment losses arerecognised through the income statement. g) Leased assets The rental costs relating to assets held under operating leases are charged tothe income statement on a straight-line basis over the life of the lease. Leases under the terms of which the Group assumes substantially all of the risksand rewards of ownership are classed as finance leases. Assets acquired underfinance leases are included in property, plant and equipment at fair value onacquisition and are depreciated in the same manner as equivalent owned assets.Finance lease and hire purchase obligations are included in creditors, and thefinance costs are spread over the periods of the agreements based on the netamount outstanding. h) Financial assets - investments and receivables Financial assets are classified according to the purpose for which they wereacquired. The Group's investments in money market liquidity funds aredesignated as financial assets at fair value through profit or loss (FVTPL) atinception. This designation is permitted under IAS 39, as the investments in money marketfunds are managed as a group of assets and internal performance evaluation ofthis group is conducted on a fair value basis. Financial assets at FVTPL are stated at fair value, with any resultant gain orloss recognised through the income statement. Receivables are stated at their historic cost (discounted if material) unlessthey are impaired. Impairment losses are recognised through the incomestatement. i) Cash and cash equivalents Cash and cash equivalents includes cash in hand, deposits held at call withbanks, and other short-term deposits with original maturities of three months orless. j) Share capital Shares are classified as equity when there is no obligation to transfer cash orother assets. k) Loans and borrowings Interest bearing loans and borrowings are recognised initially at fair valueless attributable transaction costs. Subsequent to initial recognition,interest bearing loans and borrowings are stated at amortised cost with anydifference between cost and redemption value being recognised in the incomestatement over the life of the borrowings on an effective interest basis. l) Employee benefits Pensions: The Group contributes to a number of defined contribution personal pension plansfor its employees. The contributions payable to these schemes are charged inthe accounting period to which they relate. Employee share schemes: The Group operates a number of equity settled compensation schemes for itsemployees. For schemes commencing 1 January 2004 and after, the fair value ofthe employee services received in exchange for the grant of free shares underthe schemes is recognised as an expense, with a corresponding increase inequity. The total charge expensed over the vesting period is determined by reference tothe fair value of the free shares granted as determined at the grant date(excluding the impact of non-market vesting conditions). Non-market conditionssuch as profitability targets as well as staff attrition rates are included inassumptions over the number of free shares to vest under the applicable scheme. At each balance sheet date, the Group revises its assumptions on the number ofshares to be granted with the impact of any change in the assumptions recognisedthrough income. Refer to note 25 for further details on share schemes. m) Taxation Income tax on the profit or loss for the periods presented comprises current anddeferred tax. Current tax: Current tax is the expected tax payable on the taxable income for the period,using tax rates that have been enacted or substantively enacted by the balancesheet date, and includes any adjustment to tax payable in respect of previousperiods. Deferred tax: Deferred tax is provided in full using the balance sheet liability method,providing for temporary differences arising between the carrying amount ofassets and liabilities for accounting purposes, and the amounts used fortaxation purposes. It is calculated at the tax rates that are expected to applyin the period when the liability is settled or the asset is realised. A deferred tax asset is recognised only to the extent that it is probable thatfuture taxable profits will be available against which the asset can beutilised. The principal temporary differences arise from depreciation of property andequipment, share scheme charges and the tax treatment of Lloyd's profits. Theresulting deferred tax is charged or credited in the income statement, except inrelation to share scheme charges where the amount of tax benefit credited to theincome statement is limited to an equivalent credit calculated on the accountingcharge. Any excess is recognised directly in equity. o) Government grants Government grants are recognised in the financial statements in the period whereit becomes reasonably certain that the conditions attaching to the grant will bemet, and that the grant will be received. Grants relating to assets are deducted from the carrying amount of the asset.The grant is therefore recognised as income over the life of the depreciableasset by way of a reduced depreciation charge. Grants relating to income are shown as a deduction in the reported expense. 4. Segment reporting Revenue and results for the year ended 31 December 2007, split by businesssegment are shown below. Consolidation adjustments represent the elimination ofinter-segment trading, specifically interest charged on inter-company loans. As noted above, the Directors consider there to be two business segments. Theseare private motor insurance and insurance broking (Confused.com and GladiatorCommercial). No geographical business split has been presented as the resultsof the Group's European operations are not material to the 2007 figures. 31 December 2007 Private motor Insurance Consolidation Group insurance broking adjustment £000 £000 £000 £000 Net revenue 286,451 77,683 - 364,134 Profit after tax 99,644 27,772 - 127,416 Other segment items: Depreciation 3,011 216 - 3,227Amortisation 9,174 - - 9,174 The segment assets and liabilities at 31 December 2007 and capital expenditurefor the year are as follows. Consolidation adjustments represent theelimination of inter-company balances. 31 December 2007 Private motor Insurance Consolidation Group insurance broking adjustment £000 £000 £000 £000 Total assets excluding deferred tax 842,742 27,722 (1,771) 868,693balances Total liabilities excluding current and 597,647 6,778 (1,771) 602,654deferred tax balances Capital expenditure: Intangible assets 11,480 - - 11,480Plant, property and equipment 3,099 394 - 3,493 Revenue and results for the corresponding business segments for the year ended31 December 2006 are reported below. 31 December 2006 Private motor Insurance Consolidation Group insurance broking adjustment £000 £000 £000 £000 Net revenue 266,168 45,069 (271) 310,966 Profit after tax 85,699 18,023 - 103,722 Other segment items : Depreciation 2,366 123 - 2,489Amortisation 6,508 - - 6,508 The segment assets and liabilities at 31 December 2006 and capital expenditurefor the year are as follows. 31 December 2006 Private motor Insurance Consolidation Group insurance broking adjustment £000 £000 £000 £000 Total assets 736,160 18,780 (1,935) 753,005 Total liabilities excluding current and 506,426 5,071 (1,935) 509,562deferred tax balances Capital expenditure: Intangible assets 6,764 - - 6,764Plant, property and equipment 5,088 364 - 5,452 5. Net insurance premium revenue 31 31 December December 2007 2006 £000 £000 Total motor insurance premiums before co-insurance 631,251 566,608 Group gross premiums written after co-insurance 260,901 196,378Outwards reinsurance premiums (119,049) (57,731) Net insurance premiums written 141,852 138,647 Change in gross unearned premium provision (27,826) (8,090)Change in reinsurers' share of unearned premium provision 28,210 14,398 Net insurance premium revenue 142,236 144,955 The Group's share of the UK and Spanish private motor insurance business wasunderwritten by Admiral Insurance (Gibraltar) Limited (AIGL) and AdmiralInsurance Company Limited (AICL). All contracts are short-term in duration,lasting for 10 or 12 months. 6. Other revenue 31 31 December December 2007 2006 £000 £000 Ancillary revenue 94,216 81,527Revenue from Confused.com 69,159 38,517Instalment income earned 5,983 5,676Revenue from Gladiator Commercial 7,520 5,901 Total other revenue 176,878 131,621 Ancillary revenue primarily constitutes commission from sales of insuranceproducts that complement the motor policy, but which are underwritten byexternal parties. 7. Profit commission 31 31 December December 2007 2006 £000 £000 Total profit commission 20,448 19,926 8. Investment and interest income 31 31 December December 2007 2006 £000 £000 Net investment return 16,795 9,925Interest receivable 7,777 4,539 Total investment and interest income 24,572 14,464 9. Expenses and share scheme charges 31 December 2007 31 December 2006 Insurance Other Total Insurance Other Total contracts contracts £000 £000 £000 £000 £000 £000Acquisition of insurancecontracts 8,420 - 8,420 7,375 - 7,375Administration and othermarketing costs 13,314 57,252 70,566 12,009 35,144 47,153 Expenses 21,734 57,252 78,986 19,384 35,144 54,528 Share scheme charges - 2,971 2,971 - 933 933 Total expenses and sharescheme charges 21,734 60,223 81,957 19,384 36,077 55,461 Analysis of other administration and other marketing costs: 31 31 December December 2007 2006 £000 £000 Ancillary sales expenses 16,613 14,505Confused.com operating expenses 32,432 15,437Gladiator Commercial operating expenses 5,520 3,876Central overheads 2,687 1,326 Total 57,252 35,144 The £13,314,000 (2006: £12,009,000) administration and marketing costs allocatedto insurance contracts is principally made up of salary costs. The gross amount of expenses, before recoveries from co-insurers and reinsurersis £167,773,000 (2006: £122,343,000). This amount can be reconciled to the totalexpenses and share scheme charges above of £81,957,000 (2006: £55,461,000) asfollows: 31 31 December December 2007 2006 £000 £000 Gross expenses 167,773 122,343Co-insurer share of expenses (66,430) (59,075) Expenses, net of co-insurer share 101,343 63,268 Adjustment for deferral of acquisition costs (3,687) (1,044) Expenses, net of co-insurer share (earned basis) 97,656 62,224 Reinsurer share of expenses (earned basis) (15,699) (6,763) Total expenses and share scheme charges 81,957 55,461 Reconciliation of expenses related to insurance contracts to reported expenseratio: 31 31 December December 2007 2006 £000 £000 Insurance contract expenses from above 21,734 19,384Add: claims handling expenses 3,471 3,538 Adjusted expenses 25,205 22,922 Net insurance premium revenue 142,236 144,955Reported expense ratio 17.7% 15.8% 10. Staff costs and other expenses Included in profit, before co-insurance arrangements are the following: 31 31 December December 2007 2006 £000 £000 Salaries 45,022 36,083Social security charges 6,231 3,337Pension costs 588 517Share scheme charges (see note 25) 5,560 2,667 Total staff expenses 57,401 42,604 Depreciation charge:- Owned assets 2,127 1,009- Leased assets 1,100 1,480Amortisation charge:- Software 725 446- Deferred acquisition costs 8,449 6,062Operating lease rentals:- Buildings 3,018 3,292Auditor's remuneration:- Fees payable for the audit of the Company's annualaccounts 25 19- Fees payable for the audit of the Company'ssubsidiary accounts 169 154- Fees payable for other services 85 60Loss on disposal of property, plant and equipment 6 151Net foreign exchange gains 171 - Analysis of fees paid to the auditor for otherservices: Tax services 85 45Other services - 15 Total as above 85 60 The amortisation of software and deferred acquisition cost assets is charged toexpenses in the income statement. 11. Staff numbers (including Directors) Average for the year 2007 2006 Number Number Direct customer contact staff 1,839 1,593Support staff 525 404 Total 2,364 1,997 12. Finance charges 31 31 December December 2007 2006 £000 £000 Term loan interest - 166Finance lease interest 243 481Letter of credit charges 41 221Other interest payable - 150 Total finance charges 284 1,018 13. Taxation 31 31 December December 2007 2006 £000 £000 UK Corporation taxCurrent charge at 30% 56,194 45,430Over provision relating to prior periods - corporation tax (87) (648)Current tax charge 56,107 44,782 Deferred taxCurrent period deferred taxation movement (1,422) (1,249)(Over) / Underprovision relating to prior periods - deferredtax (3) 87 Total tax charge per income statement 54,682 43,620 Factors affecting the tax charge are: 31 31 December December 2007 2006 £000 £000 Profit before taxation 182,098 147,342 Corporation tax thereon at 30% 54,629 44,203Adjustments in respect of prior year insurance technical - 17provisionsExpenses and provisions not deductible for tax purposes 178 114Other differences (36) (153)Adjustments relating to prior periods (89) (561) Tax charge for the period as above 54,682 43,620 14. Dividends Dividends were declared and paid as follows. 31 31 December December 2007 2006 £000 £000 March 2006 (14.9p per share, paid May 2006) - 38,667September 2006 (12.1p per share, paid October 2006) - 31,437March 2007 (24.0p per share, paid May 2007) 62,412 -September 2007 (20.6p per share, paid October 2007) 53,604 - Total dividends 116,016 70,104 The dividends declared in March represent the final dividends paid in respect ofthe 2006 and 2005 financial years. Dividends declared in September are interimdistributions in respect of 2007 and 2006. A final dividend of 23.2p per share has been proposed in respect of the 2007financial year. Refer to the Chairman's statement and financial review forfurther detail. 15. Earnings per share 31 31 December December 2007 2006 Profit for the financial year after taxation (£000s) 127,416 103,722 Weighted average number of shares - basic 261,981,843 260,632,740Unadjusted earnings per share - basic 48.6p 39.8p Weighted average number of shares - diluted 262,291,843 260,906,740Unadjusted earnings per share - diluted 48.6p 39.8p The difference between the basic and diluted number of shares at the end of 2007(being 310,000) relates to awards committed, but not yet issued under theGroup's share schemes. Refer to note 25 for further detail. 16. Property, plant and equipment Improvements to Computer Office Furniture Motor Total short leasehold equipment equipment and fittings vehicles buildings £000 £000 £000 £000 £000 £000CostAt 1 January 2006 680 9,534 2,623 1,372 12 14,221Additions 1,655 1,672 1,684 441 - 5,452Disposals (2) (15) (138) (1) - (156) At 31 December 2006 2,333 11,191 4,169 1,812 12 19,517 DepreciationAt 1 January 2006 428 5,603 2,320 1,230 4 9,585Charge for the year 220 1,750 396 120 3 2,489Disposals - (5) - - - (5) At 31 December 2006 648 7,348 2,716 1,350 7 12,069 Net book amountAt 1 January 2006 252 3,931 303 142 8 4,636 Net book amountAt 31 December 2006 1,685 3,843 1,453 462 5 7,448 CostAt 1 January 2007 2,333 11,191 4,169 1,812 12 19,517Additions 413 2,129 781 170 - 3,493Disposals - (6) - (3) - (9) At 31 December 2007 2,746 13,314 4,950 1,979 12 23,001 DepreciationAt 1 January 2007 648 7,348 2,716 1,350 7 12,069Charge for the year 577 1,858 611 178 3 3,227Disposals - (2) - (1) - (3) At 31 December 2007 1,225 9,204 3,327 1,527 10 15,293 Net book amountAt 31 December 2007 1,521 4,110 1,623 452 2 7,708 The net book value of assets held under finance leases is as follows: 31 31 December December 2007 2006 £000 £000 Computer equipment 2,149 2,996 17. Intangible assets Goodwill Deferred Software Total acquisition costs £000 £000 £000 £000 Carrying amount: At 1 January 2006 62,354 3,328 808 66,490Additions - 6,179 596 6,775Amortisation charge - (6,062) (446) (6,508) At 31 December 2006 62,354 3,445 958 66,757 Additions - 9,584 1,896 11,480Amortisation charge - (8,449) (725) (9,174) At 31 December 2007 62,354 4,580 2,129 69,063 18. Financial instruments The Group's financial instruments can be analysed as follows: 31 31 December December 2007 2006Financial assets: £000 £000 Investments held at fair value 335,608 257,634Receivables - amounts owed by policyholders 146,240 138,304 Total financial assets per consolidated balance sheet 481,848 395,938 Trade and other receivables 22,633 16,931Cash and cash equivalent 155,773 191,242 660,254 604,111Financial liabilities: Trade and other payables 239,593 215,137 All receivables from policyholders are due within 12 months of the balance sheetdate. All investments held at fair value are invested in money market liquidity funds. 19. Reinsurance assets and insurance contract liabilities A) Sensitivity of recognised amounts to changes in assumptions: The following table sets out the impact on equity at 31 December 2007 that wouldresult from a 1 per cent change in the loss ratios used for each underwritingyear for which material amounts remain outstanding. UNDERWRITING YEAR TOTAL 2003 2004 2005 2006 2007 Loss ratio 56.0% 62.5% 74.0% 86.0% 89.0% Impact of 1% change (£000s) 1,214 1,552 2,017 1,822 529 7,134 The impact is stated net of reinsurance and includes the change in net insuranceclaims along with the associated profit commission movements that result fromchanges in loss ratios. The figures are stated net of tax at the current rate. B) Analysis of recognised amounts: 31 31 December December 2007 2006 £000 £000 Gross: Claims outstanding 242,576 202,421Unearned premium provision 120,484 92,004 Total gross insurance liabilities 363,060 294,425 Recoverable from reinsurers: Claims outstanding 76,055 47,710Unearned premium provision 55,613 26,979 Total reinsurers' share of insurance liabilities 131,668 74,689 Net: Claims outstanding 166,521 154,711Unearned premium provision 64,871 65,025 Total insurance liabilities - net 231,392 219,736 C) Analysis of re-estimation of claims provisions: The following tables set out the cumulative impact, to 31 December 2007, of theretrospective re-estimation of claims provisions initially established at theend of the financial years stated. Figures are shown gross and net ofreinsurance. These tables present data on an accident year basis. Financial year ended 31 DecemberGross amounts: 2003 2004 2005 2006 2007 £000 £000 £000 £000 £000 Gross claims provision as originally 115,169 142,968 170,216 202,421 242,576estimated Provision re-estimated as of:One year later 111,599 137,075 162,205 192,283 -Two years later 105,748 127,613 149,317 - -Three years later 100,880 119,625 - - -Four years later 97,850 - - - -Five years later - - - - - As re-estimated at 31 December 2007 97,850 119,625 149,317 192,283 - Gross cumulative overprovision (17,319) (23,343) (20,899) (10,138) - Financial year ended 31 DecemberNet amounts: 2003 2004 2005 2006 2007 £000 £000 £000 £000 £000 Net claims provision as originally estimated 75,549 98,120 128,631 154,711 166,521 Provision re-estimated as of:One year later 72,579 93,910 122,423 146,435 -Two years later 67,726 87,761 111,964 - -Three years later 63,954 82,004 - - -Four years later 61,620 - - - -Five years later - - - - - As re-estimated at 31 December 2007 61,620 82,004 111,964 146,435 - Net cumulative overprovision (13,929) (16,116) (16,667) (8,276) - D) Analysis of net claims provision releases: The following table analyses the impact of movements in prior year claimsprovisions, in terms of their net value, and their impact on the reported lossratio. This data is presented on an underwriting year basis. Financial year ended 31 December 2003 2004 2005 2006 2007 £000 £000 £000 £000 £000Underwriting year: 2000 5,176 1,480 370 1,110 7402001 7,938 2,967 5,043 1,879 1,4832002 2,975 3,229 5,166 2,260 1,2922003 - 1,513 4,622 5,084 3,2352004 - - 2,076 7,948 7,5892005 - - - 2,623 12,5452006 - - - - 2,588 Total net release 16,089 9,189 17,277 20,904 29,472 Net premium revenue 79,327 107,501 139,454 144,955 142,236Release as % of net premium revenue 20.3% 8.5% 12.4% 14.4% 20.7% E) Reconciliation of movement in net claims provision: 31 31 December December 2007 2006 £000 £000 Net claims provision at start of period 154,711 128,631 Net claims incurred 96,324 103,607Net claims paid (84,514) (77,527) Net claims provision at end of period 166,521 154,711 F) Reconciliation of movement in net unearned premium provision: 31 31 December December 2007 2006 £000 £000 Net unearned premium provision at start of period 65,025 71,333 Written in the period 141,851 138,647Earned in the period (142,005) (144,955) Net unearned premium provision at end of period 64,871 65,025 20. Trade and other receivables 31 31 December December 2007 2006 £000 £000 Trade receivables 20,747 14,982Prepayments and accrued income 1,886 1,949 Total trade and other receivables 22,633 16,931 21. Cash and cash equivalents 31 31 December December 2007 2006 £000 £000 Cash at bank and in hand 150,902 164,989Cash on short term deposit 4,871 26,253 Total cash and cash equivalents 155,773 191,242 Cash and cash equivalents includes cash in hand, deposits held at call withbanks, and other short-term deposits with original maturities of three months orless. 22. Trade and other payables 31 31 December December 2007 2006 £000 £000 Trade payables 5,960 4,601Amounts owed to co-insurers and reinsurers 134,659 124,238Finance leases due within 12 months 345 1,337Finance leases due after 12 months 4 61Other taxation and social security liabilities 8,557 4,742Other payables 15,545 13,708Accruals and deferred income (see below) 74,523 66,450 Total trade and other payables 239,593 215,137 Analysis of accruals and deferred income: 31 31 December December 2007 2006 £000 £000 Premium receivable in advance of policy inception 38,477 31,772Accrued expenses 26,948 25,456Deferred income 9,098 9,222 Total accruals and deferred income as above 74,523 66,450 23. Obligations under finance leases Analysis of finance lease liabilities: At 31 December 2007 At 31 December 2006 Minimum Interest Principal Minimum Interest Principal lease lease payments payments £000 £000 £000 £000 £000 £000 Less than one year 360 15 345 1,383 46 1,337Between one and five years 4 - 4 63 2 61 More than five years - - - - - - 364 15 349 1,446 48 1,398 The average term of leases outstanding is two years. All leases are on a fixedrepayment basis and no arrangements have been entered into for contingent rentalpayments. The fair value of the Group's lease obligations approximates to their carryingamount. 24. Deferred income tax (asset) / liability 31 31 December December 2007 2006 £000 £000 Brought forward at start of period 981 3,550Movement in period (2,610) (2,569) Carried forward at end of period (1,629) 981 The net balance provided at the end of the year is made up as follows: Analysis of net deferred tax (asset) / liability: 31 31 December December 2007 2006 £000 £000 Tax treatment of Lloyd's Syndicates 541 1,936Tax treatment of share scheme charges (2,091) (853)Capital allowances 126 149Other differences (205) (251) Deferred tax (asset) / liability at end of period (1,629) 981 The amount of deferred tax income / (expense) recognised in the income statementfor each of the temporary differences reported above is: Amounts credited to income or expense: 31 31 December December 2007 2006 £000 £000 Tax treatment of Lloyd's Syndicates 1,395 1,880Tax treatment of share scheme charges 53 (239)Capital allowances 23 (541)Other differences (46) 62 Net deferred tax credited to income 1,425 1,162 The closing deferred tax balance reflects the change in UK corporation tax ratefrom 30% to 28% which becomes effective on 1 April 2008. The change in rate doesnot have a significant impact on the value of the asset. 25. Share capital 31 31 December December 2007 2006 £000 £000Authorised: 500,000,000 ordinary shares of 0.1p 500 500 Issued, called up and fully paid: 262,721,426 ordinary shares of 0.1p 263 -261,186,599 ordinary shares of 0.1p - 261 263 261 During 2007, 1,534,827 new ordinary shares of 0.1p were issued to the trustsadministering the Group's share schemes. 570,827 of these were issued to the Admiral Group Share Incentive Plan Trust forthe purposes of this share scheme. These shares are entitled to receivedividends. 964,000 were issued to the Admiral Group Employee Benefit Trust for the purposesof the Discretionary free share scheme. The Trustees have waived the right todividend payments, other than to the extent of 0.001p per share, unless and tothe extent otherwise directed by the Company from time to time. Staff share schemes: Analysis of share scheme costs (per income statement): 31 31 December December 2007 2006 £000 £000 SIP charge (note i) 1,268 495DFSS charge (note ii) 1,703 438 Total share scheme charges 2,971 933 The share scheme charges reported above are net of the co-insurance share andtherefore differ from the gross charge reported in note 10 (2007: £5,560,000,2006: £2,667,000) and the gross credit to reserves reported in note 26. The consolidated cashflow statement also shows the gross charge in thereconciliation between 'profit after tax' and 'cashflows from operatingactivities'. The co-insurance share of the charge is included in the 'change intrade and other payables' line. (i) The Approved Share Incentive Plan (the SIP) Eligible employees qualify for awards under the SIP based upon the performanceof the Group in each half-year against budget. The current maximum award foreach half-year amounts to 600,000 shares (or a maximum annual award of £3,000per employee if smaller). The awards are made with reference to the Group's performance against itsbudget. Employees must remain in employment for the holding period (three yearsfrom the date of award), otherwise the shares will be forfeited. The fair value of shares awarded is either the share price at the date of award,or is estimated at the latest share price available when drawing up thefinancial statements for awards not yet made (and later adjusted to reflect theactual share price on the award date). Awards under the SIP are entitled toreceive dividends, and hence no adjustment has been made to this fair value. (ii) The Discretionary Free Share Scheme (the DFSS) Under the scheme, details of which are contained in the remuneration report,individuals receive an award of free shares at no charge. A total of 1,645employees received awards under this scheme during 2007. Staff must remain inemployment until the vesting date in order to receive the shares. The maximumnumber of shares that can vest relating to the 2007 scheme is 964,000. Individual awards are calculated based on the growth in the Company's earningsper share (EPS) relative to a risk free return (RFR), for which LIBOR has beenselected as a benchmark. This performance is measured over the same three-yearperiod. The range of awards is as follows: • If the growth in EPS is less than the RFR, no awards vest• EPS growth is equal to RFR - 10% of maximum award vests• To achieve the maximum award, EPS growth has to be 36 points higher than RFR over the three year period Between 10% and 100% of the maximum awards, a linear relationship exists. Awards under the DFSS are not eligible for dividends and hence the fair value offree shares to be awarded under this scheme has been revised downwards to takeaccount of these distributions. The unadjusted fair value is based on the shareprice at the date on which awards were made (as stated in the remunerationreport). Number of free share awards committed at 31 December 2007: Awards Vesting outstanding (*1) date SIP H105 scheme 581,565 September 2008SIP H205 scheme 330,306 March 2009SIP H106 scheme 316,328 September 2009SIP H206 scheme 224,808 April 2010SIP H107 scheme 346,019 September 2010SIP H207 scheme 310,000 April 2011DFSS 2005 scheme 685,000 June 2008DFSS 2006 scheme, 1st award 604,187 April 2009DFSS 2006 scheme, 2nd award 77,248 September 2009DFSS 2007 scheme 964,000 June 2010 Total awards committed 4,439,461 *1 - being the maximum number of awards expected to be made before accountingfor expected staff attrition. Of the 4,439,461 share awards outstanding above,4,129,461 have been issued to the trusts administering the schemes, and areincluded in the issued share capital figures above. 26. Analysis of movements in capital and reserves Share Share Capital Foreign Retained Total capital premium exchange profit and equity account redemption reserve loss reserve £000 £000 £000 £000 £000 £000 As at 1 January 2006 260 13,145 17 - 167,990 181,412 Retained profit for the period - - - - 103,722 103,722Dividends - - - - (70,104) (70,104)Issues of share capital 1 - - - - 1Currency translation - - - (50) - (50)differencesShare scheme charges - - - - 2,667 2,667Deferred tax credit on sharescheme charges - - - - 1,407 1,407 As at 31 December 2006 261 13,145 17 (50) 205,682 219,055 Retained profit for the period - - - - 127,416 127,416Dividends - - - - (116,016) (116,016)Issues of share capital 2 - - - - 2Currency translation - - - 429 - 429differencesShare scheme charges - - - - 5,560 5,560Deferred tax credit on sharescheme charges - - - - 1,186 1,186 As at 31 December 2007 263 13,145 17 379 223,828 237,632 The capital redemption reserve arose in 2002 on the redemption of sharespreviously in issue at below par. The foreign exchange reserve represents the net gains or losses on translationof the Group's net investment in foreign operations. 27. Financial commitments The Group was committed to total minimum obligations under operating leases onland and buildings as follows: 31 31 December DecemberOperating leases expiring: 2007 2006 £000 £000 Within one years - -Within two to five years 2,139 -Over five years 27,357 33,425 Total commitments 29,496 33,425 Operating lease payments represent rentals payable by the Group for its officeproperties. In addition, the Group had contracted to spend the following on property, plantand equipment at the end of each period: 31 31 December December 2007 2006 £000 £000 Expenditure contracted to 489 1,539 28. Related party transactions There were no related party transactions occurring during 2007 that requiredisclosure. Details relating to the remuneration and shareholdings of keymanagement personnel are set out in the remuneration report, which will beincluded in the statutory accounts referred to below. No key managementpersonnel sit outside of the Board of Directors. Key management personnel areable to obtain discounted motor insurance at the same rates as all other Groupstaff, typically at a reduction of 15%. 29. Non-statutory accounts The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 31 December 2007 or 2006. Statutoryaccounts for 2006 have been delivered to the registrar of companies and thosefor 2007 will be delivered following the Company's Annual General Meeting. Theauditors have reported on those accounts; their reports were unqualified and didnot contain statements under section 237 (2) or (3) of the Companies Act 1985. 30. Annual Report The Company's annual report and accounts for the year ended 31 December 2007 isexpected to be posted to shareholders by 7 April 2008. Copies of both thisannouncement and the annual report and accounts will be available to the publicat the Company's registered office at Capital Tower, Greyfriars Road, CardiffCF10 3AZ and through the Company's website at www.admiralgroup.co.uk. Consolidated financial summary Basis of preparation: The 2007, 2006, 2005 and 2004 figures below are as stated in the financialstatements preceding this financial summary and issued previously. Onlyselected lines from the income statement and balance sheet have been included. Figures for 2003 have not been restated under IFRS, although have beenreclassified into the formats used in these financial statements. Income statement IFRS UK GAAP 2007 2006 2005 2004 2003 £m £m £m £m £mTotal motor premiums 631.3 566.6 533.6 470.4 371.6 Net insurance premium revenue 142.2 145.0 139.5 107.5 79.3Other revenue 176.9 131.6 93.4 69.5 50.8Profit commission 20.5 19.9 14.7 21.7 1.4Investment and interest income 24.6 14.5 15.5 11.9 6.8 Net revenue 364.2 311.0 263.1 210.6 138.3 Net insurance claims (99.8) (107.1) (100.5) (74.3) (43.5)Total expenses (82.0) (55.5) (40.9) (28.9) (34.4) Operating profit 182.4 148.4 121.7 107.4 60.4 Balance sheet IFRS UK GAAP 2007 2006 2005 2004 2003 £m £m £m £m £m Property, plant and equipment 7.7 7.5 4.6 3.3 5.8Intangible assets 69.1 66.8 66.5 66.5 62.4Financial assets 481.8 395.9 378.7 300.7 241.6Reinsurance assets 131.7 74.7 54.2 66.1 56.7Deferred income tax 1.6 - - - -Trade and other receivables 22.6 16.9 9.4 16.7 12.5Cash and cash equivalents 155.8 191.2 150.2 119.3 70.1 Total assets 870.3 753.0 663.6 572.6 449.1 Equity 237.6 219.1 181.4 144.6 108.1Insurance contracts 363.1 294.4 254.1 216.1 174.8Financial liabilities - - 22.0 33.1 35.4Provisions for other liabilitiesand charges - - - - 11.7Deferred income tax - 1.0 3.6 4.8 6.4Trade and other payables 239.6 215.1 182.9 164.3 104.0Current tax liabilities 30.0 23.4 19.6 9.7 8.7 Total liabilities 870.3 753.0 663.6 572.6 449.1 This information is provided by RNS The company news service from the London Stock Exchange
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Share Price Information for Admiral (ADM)
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Share Price:
2,697.00
Bid:
2,695.00
Ask:
2,702.00
Change:
6.00 (0.22%)
Spread:
7.00 (0.26%)
Open:
2,707.00
High:
2,707.00
Low:
2,693.00
Prev. Close:
2,691.00
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| Date | Source | Headline | |
|---|---|---|---|
| 26th Apr 2024 | 11:33 am | GNW | Board Committee Changes |
| 25th Apr 2024 | 3:53 pm | GNW | Result of AGM |
| 22nd Mar 2024 | 12:14 pm | GNW | Notice of AGM and Annual Report and Accounts |
| 13th Mar 2024 | 12:44 pm | GNW | Director/PDMR Shareholding |
| 12th Mar 2024 | 12:40 pm | GNW | Director/PDMR Shareholding |
| 7th Mar 2024 | 4:30 pm | GNW | Block listing Interim Review |
| 7th Mar 2024 | 2:00 pm | GNW | Directorate change |
| 7th Mar 2024 | 7:00 am | GNW | Annual Financial Report |
| 6th Mar 2024 | 11:10 am | GNW | Holding(s) in Company |
| 28th Feb 2024 | 4:14 pm | GNW | Holding(s) in Company |
| 22nd Feb 2024 | 2:23 pm | GNW | Holding(s) in Company |
| 20th Feb 2024 | 5:01 pm | GNW | Electronic Communications Letter |
| 26th Jan 2024 | 3:03 pm | GNW | Holding(s) in Company |
| 5th Jan 2024 | 3:24 pm | GNW | Holding(s) in Company |
| 3rd Jan 2024 | 2:49 pm | GNW | Holding(s) in Company |
| 28th Dec 2023 | 5:08 pm | GNW | Holding(s) in Company |
| 22nd Dec 2023 | 10:23 am | GNW | Director/PDMR Shareholding |
| 8th Dec 2023 | 7:30 am | GNW | Holding(s) in Company |
| 6th Dec 2023 | 10:18 am | GNW | Holding(s) in Company |
| 1st Dec 2023 | 3:42 pm | GNW | Holding(s) in Company |
| 27th Nov 2023 | 2:54 pm | GNW | Holding(s) in Company |
| 24th Oct 2023 | 6:57 pm | GNW | Directorate change |
| 13th Oct 2023 | 2:46 pm | GNW | Director/PDMR Shareholding |
| 10th Oct 2023 | 12:33 pm | GNW | Director/PDMR Shareholding |
| 10th Oct 2023 | 12:30 pm | GNW | Director/PDMR Shareholding |
| 2nd Oct 2023 | 10:00 am | GNW | Directorate change |
| 29th Sep 2023 | 3:01 pm | GNW | Total voting rights |
| 28th Sep 2023 | 12:41 pm | GNW | Additional Listing |
| 25th Sep 2023 | 5:39 pm | GNW | Director/PDMR Shareholding |
| 5th Sep 2023 | 4:17 pm | GNW | Director/PDMR Shareholding |
| 5th Sep 2023 | 4:14 pm | GNW | Director/PDMR Shareholding |
| 4th Sep 2023 | 2:35 pm | GNW | Block listing Interim Review |
| 31st Aug 2023 | 8:00 am | GNW | Total voting rights |
| 23rd Aug 2023 | 4:21 pm | GNW | Holding(s) in Company |
| 22nd Aug 2023 | 9:00 am | GNW | Director/PDMR Shareholding |
| 21st Aug 2023 | 3:38 pm | GNW | Additional Listing |
| 16th Aug 2023 | 3:49 pm | GNW | Director/PDMR Shareholding |
| 16th Aug 2023 | 7:00 am | GNW | Half-year report |
| 5th Jul 2023 | 12:51 pm | GNW | Result of Tender Offer |
| 4th Jul 2023 | 1:12 pm | GNW | Publication of Prospectus |
| 27th Jun 2023 | 9:23 am | GNW | Tender Offer |
| 16th Jun 2023 | 11:53 am | GNW | Directorate change |
| 15th Jun 2023 | 4:05 pm | GNW | Director/PDMR Shareholding |
| 14th Jun 2023 | 10:22 am | GNW | Holding(s) in Company |
| 6th Jun 2023 | 3:20 pm | GNW | Director/PDMR Shareholding |
| 5th Jun 2023 | 3:05 pm | GNW | Director/PDMR Shareholding |
| 2nd Jun 2023 | 11:23 am | GNW | Holding(s) in Company |
| 30th May 2023 | 10:01 am | GNW | Director/PDMR Shareholding |
| 19th May 2023 | 2:58 pm | GNW | Director/PDMR Shareholding |
| 27th Apr 2023 | 4:29 pm | GNW | Directorate change |
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