A highlight of 2007 was our admission in December to the FTSE 100, an achievement of which the executive team can be justifiably proud in slightly over three years since flotation. Over this period, taking dividends and share appreciation together, we achieved a 335% total return for shareholders.
The biggest development in the market in 2007 has been the rapid growth of price comparison websites as a leading channel of distribution in the industry. With the growth in the number of price comparison sites during the year and with more sites planned to launch in 2008, I can only see this growth trend accelerating.
Typically the UK cycle is around seven years (1985 cyclical worst point, to 1991 worst point, to 1998 worst point).
" The UK car insurance market cycle is turning with sloth-like speed "
Gladiator is our commercial vehicle intermediary and it turned in a profit before tax of £2m. However, Gladiator increased its customer base significantly during the year and now boasts over 62,000 customers up from 43,000 last year (+44%), which bodes well for the future
Premium rate rises of around 4% have been implemented in the UK and data suggests similar increases have been seen across the market.
Details of the Chairman’s other commitments are included in the Chairman’s biography. The Chairman does perform a number of other non-executive roles outside of the Group but the Board is satisfied that these are not such as to interfere with the performance of his duties within the Group.
Summary of key activities during 2007 During the year the Committee reviewed the following: · Annual report and interim results; · Reports from the Group’s internal audit department on the effectiveness of the Group’s risk management procedures, details of key audit findings and actions taken by management; · Effectiveness of the Group’s system of internal control; C o rp o ra te g o ve rn a n c e -
The Board recognises that the day-to-day responsibility for implementing these policies must lie with the management team, whose operational decisions must take into account risk and how this can effectively be controlled. The Company Secretary and Risk Officer take responsibility for ensuring management are aware of their risk management obligations, providing them with support and advice, and ensuring that the risk management strategy is properly communicated. The head of each business unit or business area is required, with the support of the Risk Manager, to undertake a full assessment process to identify and quantify the risks that their departments face or pose to the Group and the adequacy of the controls in place to mitigate or reduce those risks. Reports are produced showing the most significant risks identified and the controls in place. Internal Audit and the Compliance function use the risk registers to plan their programme of audits to ensure that the controls described are actually in place.
Internal Audit The Internal Audit function assists management by providing them with timely, independent assurance that the controls established are operating effectively. This includes regular reviews of internal control systems and business processes, including compliance systems and procedures, and identification of control weakness and recommendations to management on improvements.
Remuneration policy The Group is committed to the primary objective of maximising shareholder value over time. The Committee reviews the framework and remuneration packages of the Executive Directors and the most senior managers. The main principles underlying the remuneration policy are: · Competitive – The Group pays below-median salaries but with attractive incentives which provide opportunity for highly competitive total reward packages for superior performance.
In light of this, their remuneration packages consist of below-median base salary (compared to market rates by the Committee) and benefits such as private medical cover, permanent health insurance and death in service cover. The Group does not contribute to any pension arrangements on behalf of these Executive Directors, and they have not, nor is it intended that they will participate in any Group share schemes. Their remuneration was reviewed in September 2007. Henry Engelhardt was awarded a rise of 5.2% taking his salary to £305,000 and David Stevens awarded a rise of 6% taking his salary to £265,000
David Stevens (46) Chief Operating Officer David is a founder Director of Admiral. Initially the Marketing Director, he was appointed
He was part of the management team that led the MBO in 1999. Prior to joining Admiral, he was Marketing and Sales Manager for Churchill
Share capital Other than the holdings of the Directors as disclosed in the remuneration report, so far as the Directors are aware, or have been notified pursuant to section 198 of the Companies Act 1985, the following shareholders have interests in 3% or more of the ordinary share capital of the Company at 4 March 2008: Number of shares %
Total equity attributable to equity holders of the Company 237,632 219,055
Loss on disposal of property, plant and equipment and software 6 151
Change in trade and other payables, including tax and social security 25,506 33,652
Net (increase) / decrease in cash and cash equivalents (35,898) 41,140
b) Segment reporting The Group’s primary format for segment reporting is business segments. There is no secondary segment. A business segment is defined as a group of assets and operations engaged in providing products and services that are subject to risks and returns that are different from other business segments.
Translation of financial statements of foreign branches The financial statements of foreign branches whose functional currency is not pounds sterling are translated into the Group presentation currency (sterling) as follows: (i) Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; (ii) Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the date of the transaction); and
Other segment items: The segment assets and liabilities at 31 December 2006 and capital expenditure for the year are as follows.
Both the FSA and the FSC impose specific solvency requirements for capital resources on regulated subsidiary companies. All companies have comfortably exceeded agreed solvency targets at all times during the years ended 31 December 2006 and 2007.
Between one and five years 4 - 4 63 2 61
Awards under the DFSS are not eligible for dividends and hence the fair value of free shares to be awarded under this scheme has been revised downwards to take account of these distributions. The unadjusted fair value is based on the share price at the date on which awards were made as stated in the remuneration report.
Figures for 2003 have not been restated under IFRS, although have been reclassified into the formats used in these financial statements.