Group Financial Statements
of
Advent Capital (Holdings) PLC
as of and for the six months ended 30 June 2002 (unaudited),
together with related notes.
ADVENT CAPITAL (HOLDINGS) PLC
SUMMARY FINANCIAL STATEMENTS
30 JUNE 2002
Summary Financial Statements
30 June 2002
ADVENTCAPITAL (HOLDINGS) PLC
Group Profit & Loss Account
General Business Technical Account
| | Six months ended 30.6.2002 | Year Ended 31.12.2001 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| | £'000s | £'000s | £'000s | £'000s | |||||
| Gross premiums written | 124,722 | 206,398 | |||||||
| Outwards reinsurance premiums | (20,324 | ) | (36,530 | ) | |||||
Net premiums written | 104,398 | 169,868 | |||||||
Change in the gross provision for unearned premiums | (51,926 | ) | 16,153 | ||||||
| Reinsurers' share | (2,125 | ) | (28,452 | ) | |||||
Earned premiums, net of reinsurance | 50,347 | 157,569 | |||||||
Allocated Investment Income | 2,912 | 7,153 | |||||||
| Total technical income | 53,259 | 164,722 | |||||||
Claims paid | |||||||||
| —gross amount | (89,045 | ) | (191,302 | ) | |||||
| —reinsurers' share | 45,562 | 85,212 | |||||||
| (43,483 | ) | (106,090 | ) | ||||||
Change in the provision for claims | |||||||||
| —gross amount | (180,684 | ) | (306,685 | ) | |||||
| —reinsurers' share | 137,177 | 198,513 | |||||||
| (43,507 | ) | (108,172 | ) | ||||||
Claims incurred, net of reinsurance | (86,990 | ) | (214,262 | ) | |||||
Change in other Technical Provisions | 41,767 | 47,548 | |||||||
Net operating expenses | (10,050 | ) | (44,464 | ) | |||||
Balance on technical account | (2,014 | ) | (46,456 | ) | |||||
Non Technical Account | |||||||||
Investment Income | 444 | 1,169 | |||||||
Other Income | 585 | 1,033 | |||||||
Other charges | 3,350 | 4,619 | |||||||
Profit/(Loss) on Ordinary Activities before Tax | (4,335 | ) | (48,873 | ) | |||||
Tax on profit on ordinary activities | 197 | 103 | |||||||
Profit/(Loss) on Ordinary Activities after Tax | (4,532 | ) | (48,976 | ) | |||||
Retained (Loss)/Profit brought forward | (51,273 | ) | (2,297 | ) | |||||
| Retained (Loss)/Profit carried forward | (55,805 | ) | (51,273 | ) | |||||
2
ADVENTCAPITAL (HOLDINGS) PLC
Group Balance Sheet
30 June 2002
| | 30 June 2002 | 31 December 2001 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | At Lloyd's | Corporate | Total | At Lloyd's | Corporate | Total | |||||||
| | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | |||||||
| Assets | |||||||||||||
| Tangible Fixed Assets | 686 | 686 | 810 | 810 | |||||||||
| Intangible Fixed Assets | 10,476 | 10,476 | 10,875 | 10,875 | |||||||||
| Investments | 121,417 | 0 | 121,417 | 106,090 | 0 | 106,090 | |||||||
Reinsurer's share of technical provisions: | |||||||||||||
| Provision for unearned premiums | 10,735 | 10,735 | 13,329 | 13,329 | |||||||||
| Provision for outstanding claims | 453,063 | 453,063 | 284,819 | 284,819 | |||||||||
| Debtors | 221,091 | 634 | 221,725 | 134,107 | 996 | 135,103 | |||||||
| Cash | 17,211 | 24,759 | 41,970 | 7,324 | 24,500 | 31,824 | |||||||
| Overseas deposits | 10,077 | 10,077 | 7,215 | 7,215 | |||||||||
| Prepayments & accrued income | 23,867 | 3,122 | 26,989 | 28,146 | 3,695 | 31,841 | |||||||
| Total assets | 857,461 | 39,677 | 897,138 | 581,030 | 40,876 | 621,906 | |||||||
Liabilities | |||||||||||||
Capital & reserves: | |||||||||||||
| Called-up share capital | 11,316 | 11,316 | 11,316 | 11,316 | |||||||||
| Share premium account | 28,802 | 28,802 | 28,802 | 28,802 | |||||||||
| Other reserves (merger) | (4,308 | ) | (4,308 | ) | (4,308 | ) | (4,308 | ) | |||||
| Profit & loss account | (53,846 | ) | (1,959 | ) | (55,805 | ) | (47,439 | ) | (3,834 | ) | (51,273 | ) | |
| Share holders funds | (53,846 | ) | 33,851 | (19,995 | ) | (47,439 | ) | 31,976 | (15,463 | ) | |||
| Technical provisions: | |||||||||||||
| Other technical provisions | (71,225 | ) | (71,225 | ) | (63,035 | ) | (63,035 | ) | |||||
| Provision for unearned premiums | 157,890 | 157,890 | 105,456 | 105,456 | |||||||||
| Provision for outstanding claims | 708,309 | 708,309 | 507,392 | 507,392 | |||||||||
| 794,974 | 794,974 | 549,813 | 549,813 | ||||||||||
| Provision for other charges | 0 | 0 | 90 | 90 | |||||||||
| Creditors | 98,133 | 8,228 | 106,361 | 76,798 | 1,427 | 78,225 | |||||||
| Accruals & deferred income | 15,698 | 100 | 15,798 | 8,705 | 536 | 9,241 | |||||||
| Total liabilities | 854,959 | 42,179 | 897,138 | 587,877 | 34,029 | 621,906 | |||||||
| 2,502 | (2,502 | ) | 0 | (6,847 | ) | 6,847 | |||||||
3
ADVENTCAPITAL (HOLDINGS) PLC
The Summary Financial Statements have been prepared in accordance with the Group's accounting policies as stated in the 31 December 2001 group accounts.
Post Balance Sheet Event
In July 2002, Advent Capital (Holdings) PLC (the "Company") conducted an Open Offer and Placing for an additional 60,058,737 of its Ordinary Shares at 50 pence a share. All conditions to the issuance of the additional shares were met on August 23, 2002 when Lloyd's and the Financial Services Authority provided the necessary approvals. The Company realized net proceeds of £29,704,200 (gross proceeds of £30,029,368 less expenses of £325,168) from the Open Offer and Placing and increased its net assets by that amount.
Underwriting Results
For 2001 and prior years of account ultimate loss ratios are based on the mid range Syndicate Quarterly Reporting (SQR) forecast results as reported to Lloyd's at 30 June 2002. Some years show profits for the six months as a result of the mid range SQR forecast result being better than the Lloyd's Solvency based ultimate loss ratios adopted at the year end.
For the 2002 years of account of Syndicates 780 and 2 an ultimate net loss ratio of 70% was applied to the net earned premium at 30 June 2002. The premium earning profile of each syndicate resulted in the earned element of premiums written being 37% for Syndicate 2 and 15% for Syndicate 780. The lower percentage of Syndicate 780 is largely attributable to its level of Hurricane exposure causing the incidence of risk against which premiums are earned to be skewed towards the second half of the year.
In summary, 2002 premiums written and earned at 30 June 2002 were:
| | Written Premium Income | Unearned | Earned | |||
|---|---|---|---|---|---|---|
| | £m | £m | £m | |||
| Syndicate 2 | 95 | 60 | 35 | |||
| Syndicate 780 | 120 | 102 | 18 |
[Figures are at Syndicate level and are gross of brokerage and other acquisition costs. ROE £1=$1.52 and C$2.32]
4
ADVENTCAPITAL (HOLDINGS) PLC
Group Balance
on Technical Account
| | | | Years Ended 31 December | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Year of Account Total | Six months ended 30.6.2002 | |||||||||||
| | 2001 | 2000 | 1999 | 1998 | |||||||||
| | £'000s | £'000s | £'000s | £'000s | £'000s | £'000s | |||||||
| Syndicate 780—Non Marine Underwriting Year of Account | |||||||||||||
| 2002 open | 959 | 959 | |||||||||||
| 2001 open | (22,507 | ) | (5,311 | ) | (17,196 | ) | |||||||
| 2000 open | (2,377 | ) | 371 | (4,147 | ) | 1,399 | |||||||
| 1999 closed | (3,092 | ) | 2,970 | (3,723 | ) | (2,339 | ) | ||||||
| Balance on technical account | (3,981 | ) | (18,373 | ) | |||||||||
| Syndicate 2—Marine Underwriting Year of Account | |||||||||||||
| 2002 open | 2,123 | 2,123 | |||||||||||
| 2001 open | (15,905 | ) | (1,002 | ) | (14,903 | ) | |||||||
| 2000 open | (17,194 | ) | (5,621 | ) | (8,770 | ) | (2,803 | ) | |||||
| 1999 closed | (6,241 | ) | (1,090 | ) | 515 | (5,666 | ) | ||||||
| Balance on technical account | (4,500 | ) | (24,763 | ) | |||||||||
| Syndicate 271—Aviation Underwriting Year of Account | |||||||||||||
| 2000 open | (64,925 | ) | (7,897 | ) | (33,316 | ) | (23,712 | ) | |||||
| 1999 open | (13,602 | ) | (88 | ) | (9,865 | ) | (434 | ) | (3,215 | ) | |||
| 1998 open | (3,633 | ) | (1,178 | ) | (3,601 | ) | 39 | 488 | 619 | ||||
| Balance on technical account | (9,163 | ) | (46,782 | ) | |||||||||
| Syndicate 506—Non Marine Underwriting Year of Account | |||||||||||||
| 2001 open | (12,038 | ) | 845 | (12,883 | ) | ||||||||
| 2000 open | (15,024 | ) | 354 | (13,955 | ) | (1,423 | ) | ||||||
| 1999 open | (14,468 | ) | (967 | ) | (8,278 | ) | (163 | ) | (5,060 | ) | |||
| Balance on technical account | 232 | (35,116 | ) | ||||||||||
| All Syndicates Balance on technical account | (17,412 | ) | (125,034 | ) | |||||||||
Underwriting Indemnity | 15,398 | 78,563 | |||||||||||
| Distribution adjustment | 15 | ||||||||||||
| Group Balance on Technical Account | (2,014 | ) | (46,456 | ) | |||||||||
5
ADVENTCAPITAL (HOLDINGS) PLC
| | Six months ended 30.6.2002 | |
|---|---|---|
| | £'000s | |
| Investment Income | ||
| Interest receivable | 443 | |
Other Income | ||
| Managing Agency Fees (non group) | 585 | |
Other Charges | ||
| Amortisation of goodwill | 329 | |
| LOC charges | 445 | |
| Amortisation of capacity costs | 70 | |
| Bank charges | 150 | |
| Provision for KUAL pension deficit | 1,452 | |
| Other operating costs | 904 | |
| 3,350 |
6
ADVENTCAPITAL (HOLDINGS) PLC
| | 30.6.2002 | 31.12.2001 | |||
|---|---|---|---|---|---|
| | £'000s | £'000s | |||
| Assets | |||||
Investments | 14,406 | 14,406 | |||
| Debtors | 6,289 | 6,224 | |||
| Cash | 13,238 | 13,594 | |||
| Other Tangible Assets | 491 | 592 | |||
| Total assets | 34,424 | 34,816 | |||
Liabilities | |||||
Capital & reserves: | |||||
| Called-up share capital | 11,316 | 11,316 | |||
| Share premium account | 27,553 | 27,553 | |||
| Profit & loss account | (50,799 | ) | (48,792 | ) | |
| Shareholders funds | (11,930 | ) | (9,923 | ) | |
Provision for other charges | 45,557 | 43,543 | |||
| Creditors | 732 | 889 | |||
| Accruals & deferred income | 65 | 307 | |||
| Total liabilities | 34,424 | 34,816 | |||
7
ADVENTCAPITAL (HOLDINGS) PLC
Detailed Profit & Loss Account
| | Six months ended 30 June 2002 | Year ended 31 December 2001 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | £ | £ | £ | £ | ||||||
| Income | ||||||||||
Interest Receivable | 235,873 | 656,697 | ||||||||
| Management Recharges: | ||||||||||
| Payroll & related costs | 300,446 | 568,048 | ||||||||
| Depreciation | 97,209 | 113,410 | ||||||||
| 633,528 | 1,338,155 | |||||||||
| Expenses | ||||||||||
| Direct: | ||||||||||
| Payroll | 335,009 | 770,326 | ||||||||
| Pension | 29,289 | 46,190 | ||||||||
| Accommodation costs—America Square | 13,050 | |||||||||
| Audit | 25,000 | |||||||||
| Legal & Professional Fees | 35,795 | 75,704 | ||||||||
| Insurance | 53,475 | 12,270 | ||||||||
| Bank fees and charges | 6,375 | 6,495 | ||||||||
| Depreciation | 101,513 | 118,432 | ||||||||
| Printing & stationery | 380 | |||||||||
| Other | 2,285 | |||||||||
| Recharges: | ||||||||||
| Payroll & related costs | 32,211 | 31,617 | ||||||||
| Accommodation costs—America Square | 12,704 | 2,616 | ||||||||
| Accommodation costs—Room 813 | 9,707 | |||||||||
| Accommodation costs—KUAL | 3,056 | |||||||||
| Legal & Professional Fees | 3,445 | 1,743 | ||||||||
| Printing & stationery | 968 | 390 | ||||||||
| Marketing | 2,798 | |||||||||
| Travel & subsistence | 11,485 | 13,972 | ||||||||
| Entertaining | 171 | 9,075 | ||||||||
| Telephone & Fax | 1,047 | |||||||||
| Depreciation | 1,837 | 4,422 | ||||||||
| Computer | 1,518 | |||||||||
| Other | 884 | 1,108 | ||||||||
| 626,208 | 1,152,154 | |||||||||
| Profit before investment write down, provisions and corporation tax | 7,320 | 186,001 | ||||||||
Provision for Advent Capital PLC underwriting losses | 2,014,000 | 43,542,907 | ||||||||
| Advent Capital PLC debtor written off | 5,969,282 | |||||||||
| Advent Capital PLC investment written off | 426,250 | |||||||||
| Loss before Corporation Tax | (2,006,680 | ) | (49,752,438 | ) | ||||||
Corporation Tax | 60,000 | |||||||||
| Loss after Corporation Tax | (2,006,680 | ) | (49,812,438 | ) | ||||||
8
