Financial Statements
Notes to the Financial Statements
Notes 7 to 12
- Dividends
- Goodwill and other intangible assets
- Property and equipment
- Investment property
- Investments in associates
- Financial assets
7. Dividends
| 2005 p |
2004 p |
2005 £m |
2004 £m |
|
|---|---|---|---|---|
| Ordinary dividend: | ||||
| Final paid in respect of prior year | 2.96 | 2.90 | 86 | 83 |
| Interim paid in respect of current year | 1.69 | 1.65 | 49 | 47 |
| 135 | 130 | |||
| Preference dividend | 9 | 9 | ||
| 144 | 139 |
At the Annual General Meeting (AGM) on 22 May 2006, a dividend in respect of 2005 of 3.05p per share amounting to a total dividend of £89m is to be proposed. The dividend will be paid and accounted for in shareholders’ equity as an appropriation of retained earnings in the year ending 31 December 2006.
The trustees of the Royal & SunAlliance ESOP Trust and the Royal & SunAlliance ESOP Trust No 2 waived their entitlement to dividends which reduced the total dividend paid by £1m (2004: £1m).
Top8. Goodwill and other intangible assets
| Goodwill £m |
Intangible asset arising from acquired claims provisions £m |
Software development £m |
Other £m |
Total £m |
|
|---|---|---|---|---|---|
| Gross carrying amount at 1 January 2005 | 708 | 208 | 212 | 56 | 1,184 |
| Accumulated amortisation at 1 January 2005 | – | (150) | (85) | (34) | (269) |
| Accumulated impairment at 1 January 2005 | (593) | – | – | – | (593) |
| Net carrying amount at 1 January 2005 | 115 | 58 | 127 | 22 | 322 |
| Exchange adjustments | 2 | 1 | – | 4 | 7 |
| Additions and transfers | 38 | – | 122 | 22 | 182 |
| Disposals and transfers | (3) | – | (2) | – | (5) |
| Amortisation | – | (12) | (39) | (5) | (56) |
| Impairment losses recognised | – | – | – | – | – |
| Gross carrying amount at 31 December 2005 | 745 | 209 | 332 | 82 | 1,368 |
| Accumulated amortisation at 31 December 2005 | – | (162) | (124) | (39) | (325) |
| Accumulated impairment at 31 December 2005 | (593) | – | – | – | (593) |
| Net book amount at 31 December 2005 | 152 | 47 | 208 | 43 | 450 |
| Goodwill £m |
Intangible asset arising from acquired claims provisions £m |
Software development £m |
Other £m |
Total £m |
|
|---|---|---|---|---|---|
| Gross carrying amount at 1 January 2004 | 708 | 206 | 102 | 50 | 1,066 |
| Accumulated amortisation at 1 January 2004 | – | (134) | (64) | (28) | (226) |
| Accumulated impairment at 1 January 2004 | (590) | – | – | – | (590) |
| Net carrying amount at 1 January 2004 | 118 | 72 | 38 | 22 | 250 |
| Exchange adjustments | – | 2 | – | 1 | 3 |
| Additions and transfers | 2 | – | 117 | 6 | 125 |
| Disposals and transfers | (2) | – | (7) | (1) | (10) |
| Amortisation | – | (16) | (21) | (6) | (43) |
| Impairment losses recognised | (3) | – | – | – | (3) |
| Gross carrying amount at 31 December 2004 | 708 | 208 | 212 | 56 | 1,184 |
| Accumulated amortisation at 31 December 2004 | – | (150) | (85) | (34) | (269) |
| Accumulated impairment at 31 December 2004 | (593) | – | – | – | (593) |
| Net book amount at 31 December 2004 | 115 | 58 | 127 | 22 | 322 |
9. Property and equipment
| Group occupied property – land and buildings £m |
Equipment £m |
Total £m |
|
|---|---|---|---|
| Cost/valuation | |||
| At 1 January 2005 | 319 | 366 | 685 |
| Additions | 3 | 58 | 61 |
| Acquisition/(disposal) of subsidiaries | 1 | (1) | – |
| Disposals | – | (85) | (85) |
| Transfer to assets held for sale | (33) | (17) | (50) |
| Revaluation adjustments | 13 | – | 13 |
| Exchange adjustment | (2) | 8 | 6 |
| At 31 December 2005 | 301 | 329 | 630 |
| Accumulated depreciation | |||
| At 1 January 2005 | – | 267 | 267 |
| Depreciation charge | 5 | 32 | 37 |
| Depreciation on disposals | – | (69) | (69) |
| Disposal of subsidiaries | – | (1) | (1) |
| Transfer to assets held for sale | – | (12) | (12) |
| Revaluation adjustment | (5) | – | (5) |
| Exchange adjustment | – | 3 | 3 |
| At 31 December 2005 | – | 220 | 220 |
| Net book amount at 31 December 2005 | 301 | 109 | 410 |
| Group occupied property – land and buildings £m |
Equipment £m |
Total £m |
|
|---|---|---|---|
| Cost/valuation | |||
| At 1 January 2004 | 338 | 407 | 745 |
| Additions | 25 | 32 | 57 |
| Acquisition/(disposal) of subsidiaries | – | (4) | (4) |
| Disposals | (18) | (67) | (85) |
| Transfer to investment property | (14) | – | (14) |
| Revaluation adjustments | (10) | – | (10) |
| Exchange adjustment | (2) | (2) | (4) |
| At 31 December 2004 | 319 | 366 | 685 |
| Accumulated depreciation | |||
| At 1 January 2004 | – | 287 | 287 |
| Depreciation charge | 6 | 33 | 39 |
| Depreciation on disposals | – | (50) | (50) |
| Acquisition/(disposal) of subsidiaries | – | (3) | (3) |
| Revaluation adjustment | (6) | – | (6) |
| At 31 December 2004 | – | 267 | 267 |
| Net book amount at 31 December 2004 | 319 | 99 | 418 |
The Group occupied property was revalued on 31 December 2005 by independent valuers.
Depreciation and impairment expense of £37m (2004: £39m) has been charged to underwriting and policy acquisition costs.
The carrying amount of Group occupied property that would have been recognised had the assets been carried under the cost model at 31 December 2005 was £260m (2004: £283m).
10. Investment property
Investment property consists of the following:
| 2005 £m |
2004 £m |
|
|---|---|---|
| Land and buildings: | ||
| Freehold and long leasehold | 431 | 412 |
| Short leasehold | 4 | 5 |
| Total land and buildings | 435 | 417 |
Movement in the carrying value of investment property is detailed below:
| 2005 £m |
2004 £m |
|
|---|---|---|
| Investment property at 1 January | 417 | 353 |
| Additions from subsequent expenditure | 10 | 1 |
| Transfer from property and equipment | – | 14 |
| Sales and purchases | (2) | 33 |
| Fair value gains | 12 | 16 |
| Exchange adjustment | (2) | – |
| Investment property at 31 December | 435 | 417 |
11. Investments in associates
The Group has the following investments in associates:
| Country | Ordinary shareholding |
|
|---|---|---|
| Royal & Sun Alliance Insurance (Malaysia) Bhd | Malaysia | 45.0% |
| Royal Sundaram Alliance Insurance Company Ltd | India | 26.0% |
| Syn Mun Kong Public Company Ltd | Thailand | 20.0% |
Summarised below are the assets, liabilities, revenue and profit and loss of the companies above. During 2004 the Group disposed of its 37.5% interest in Mutual & Federal Insurance Company Limited, a South African undertaking, and accordingly it is excluded from the table below.
| 2005 £m |
2004 £m |
|
|---|---|---|
| Total assets | 185 | 165 |
| Total liabilities | 121 | 105 |
| Total revenue | 128 | 113 |
| Goodwill on acquisition | 5 | 5 |
| Profit for the year after tax | 6 | 6 |
The Group’s share of net assets and profit and loss are accounted for under the equity method.
12. Financial assets
| 2005 £m |
2004 £m |
|
|---|---|---|
| Equity securities | 1,683 | 1,657 |
| Debt securities | 11,609 | 11,158 |
| Other financial assets | 146 | 137 |
| Short term investments | 95 | 183 |
| Total financial assets – available for sale | 13,533 | 13,135 |
At the period end, the Group had pledged £2,503m (2004: £2,368m) of financial assets as collateral for liabilities or contingent liabilities and had accepted £1,802m (2004: £1,900m) collateral that could be sold or pledged.
