TIDMGACA
RNS Number : 2977D
General Accident PLC
02 March 2022
2 March 2022
GENERAL ACCIDENT PLC
2021 ANNUAL REPORT AND FINANCIAL STATEMENTS
On 2 March 2022, General Accident plc (the "Company") released
its 2021 Preliminary Results Announcement for the year ended 31
December 2021. The Company announces it has today issued the 2021
Annual Report and Financial Statements.
The document is available to view on the Company's website at
https://www.aviva.com/investors/reports/ and copies have been
submitted to the National Storage Mechanism and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
Printed copies of the 2021 Annual Report and Financial
Statements can be requested free of charge by shareholders by
contacting the Company's Registrar, Computershare Investor Services
PLC, on 0371 495 0105 or at AvivaSHARES@computershare.co.uk, or by
writing to the Group Company Secretary, Aviva plc, St Helen's, 1
Undershaft, London EC3P 3DQ.
Enquiries:
Kirsty Cooper, Group General Counsel and Company Secretary
Telephone - 020 7662 6646
Roy Tooley, Head of Secretariat - Corporate
Telephone - +44 (0)7800 699781
Information required under Disclosure & Transparency Rule
6.3
This announcement should be read in conjunction with the
Company's preliminary results announcement issued on 2 March 2022.
Together these constitute the material required by DTR 6.3 to be
communicated to the media in full unedited text through a
Regulatory Information Service. This material is not a substitute
for reading the Company's 2021 Annual report and financial
statements. Page and note references in the text below refer to
page numbers and notes in the 2021 Annual report and financial
statements.
Statement of directors' responsibilities in respect of the
financial statements
The directors are responsible for preparing the strategic
report, directors' report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the financial statements in accordance with
UK-adopted international accounting standards. Under company law,
directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for
that period. In preparing the financial statements, the directors
are required to:
- select suitable accounting policies and then apply them consistently;
- state whether applicable UK-adopted international accounting
standards have been followed, subject to any material departures
disclosed and explained in the financial statements;
- make judgements and accounting estimates that are reasonable and prudent; and
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for safeguarding the assets of the
company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
The directors are responsible for the maintenance and integrity
of the company's financial statements published on the ultimate
parent company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
Directors' confirmations
Each of the directors, whose names and functions are listed in
Directors and officers confirm that, to the best of their
knowledge:
- the company financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give
a true and fair view of the assets, liabilities, financial position
and profit of the company; and
- the Strategic report includes a fair review of the development
and performance of the business and the position of the company,
together with a description of the principal risks and
uncertainties that it faces.
Corporate governance
The Company is a wholly-owned subsidiary of Aviva plc, a company
with a premium listing on the London Stock Exchange, and as such is
subject to Aviva plc's system of risk management, internal control
and financial reporting. Aviva plc is subject to the UK Corporate
Governance Code. The Aviva plc Annual Report and Accounts set out
details of how the Aviva Group has applied the principles and
complied with the provisions of the UK Corporate Governance Code
during 2021. Further information on the Code can be found on the
Financial Reporting Council's website, www.frc.org.uk .
13. Risk management
(a) Risk management framework
The Company operates a risk management framework that forms an
integral part of the management and Board processes and
decision-making framework, aligned to the Group's risk management
framework.
The Company's risk management approach is aimed at actively
identifying, measuring, managing, monitoring and reporting
significant existing and emerging risks. Risks are managed
considering the significance of the risk to the business and its
internal and external stakeholders.
To promote a consistent and rigorous approach to risk management
across all businesses, the Group has a set of risk policies and
business standards which set out the risk strategy, appetite,
framework and minimum requirements for the Group's worldwide
operations, including the Company.
For the purposes of risk identification and measurement, and
aligned to the Company's risk policies, risks are usually grouped
by risk type: credit, market, liquidity and operational risk. Risks
falling within these types may affect a number of metrics including
those relating to statement of financial position strength,
liquidity and profit.
The directors recognise the critical importance of having
efficient and effective risk management systems in place and
acknowledge that they are responsible for the Company's framework
of internal control and of reviewing its effectiveness. The
framework is designed to manage rather than eliminate the risk of
failure to achieve the Company's objectives and can only provide
reasonable assurance against misstatement or loss. The directors of
the Company are satisfied that their adherence to this Group
framework provides an adequate means of managing risk in the
Company.
Further information on the types and management of specific risk
types is given in sections (b) to (f) below.
(b) Credit risk
Credit risk is the risk of financial loss as a result of the
default or failure of third parties to meet their payment
obligations to the Company, or variations in market values as a
result of changes in expectation related to these risks.
The credit quality of receivables and other financial assets is
monitored by the Company, and provisions are made for expected
credit losses. Expected credit losses on material receivables and
other assets are calculated with reference to the Company's
historical experience of losses, along with an analysis of payment
terms. Short term financial assets (where all amounts are
receivable within 12 months from the reporting date) do not
generally attract an expected credit loss charge, unless there is
objective evidence that losses are likely to arise.
The Company makes use of the simplified approach when
calculating expected credit losses on trade receivables which don't
include a significant financing component, and therefore calculates
expected credit losses over the lifetime of the instrument in
question. As at the reporting date, no lifetime expected credit
losses have been recognised in relation to receivables.
The Company has not purchased or originated any credit-impaired
financial assets as at the reporting date.
The Company's financial assets primarily comprise loans and
receivables due from its parent, Aviva plc, which has an external
issuer credit rating of A (issuer credit ratings represent an
issuer's ability to meet its overall financial commitments as they
fall due), and as such the credit risk arising from the
counterparty failing to meet all or part of their obligations is
considered remote. There are no material expected credit losses
recognised in relation to loans due from Aviva plc.
In addition, the loan amounting to GBP9,484 million (2020:
GBP9,529 million) is secured by a legal charge against the ordinary
share capital of Aviva Group Holdings Limited. Due to the nature of
the financial assets, and the fact that the loans are intended to
be held until settled, by the issuer (on maturity or earlier if
redeemed before maturity), and not traded, the Company is not
exposed to the risk of changes to the market value caused by
changing perceptions of the credit worthiness of Aviva plc.
Expected credit losses at 31 December 2021 were GBPnil (2020:
GBPnil).
(c) Market risk
Market risk is the risk of an adverse financial impact resulting
directly or indirectly from fluctuations in interest rates,
inflation, foreign currency exchange rates, equity prices and
property values. At the statement of financial position date, the
Company did not have any material exposure to currency exchange
rates, equity prices or property values.
Interest rate risk arises from the inter-company loans
receivable (see note 8). The net asset value of the Company's
financial resources is not materially affected by fluctuations in
interest rates. In January 2021, the loan due from the Company's
parent (see note 14(a)) was reset at a fixed interest rate until it
matures on 31 December 2022, consequently the Company's interest
income and profits are no longer sensitive to changes in interest
rates up to the date the loan matures.
(d) Liquidity risk
Liquidity risk is the risk of not being able to make payments as
they become due because there are insufficient assets in cash
form.
The Company does not hold any assets in cash form. Cash
settlements of its dividend obligations to holders of preference
shares, which are discretionary and subject to director resolution,
pass through an intercompany account.
(e) Operational risk
Operational risk is the risk of a direct or indirect loss,
arising from inadequate or failed internal processes, people and
systems, or external events, including changes in the regulatory
environment.
Given its limited activities, the key operational risks to the
Company are inadequate governance and lack of sufficiently robust
financial controls. The risks are mitigated by the Company's
implementation of the Group's risk management policies and
framework and compliance with the Group's Financial Reporting
Control Framework.
(f) Capital management
The Company's capital risk is determined with reference to the
requirements of the Company's stakeholders. In managing capital,
the Company seeks to maintain sufficient, but not excessive,
financial strength to support the payment of preference dividends
and the requirements of other stakeholders. The sources of capital
used by the Company are equity shareholders' funds and preference
shares. At 31 December 2021 the Company had GBP13,932 million
(2020: GBP13,932 million) of total capital employed.
14. Related party transactions
T he Company had the following transactions with related
parties, which include parent companies, subsidiaries, and fellow
Group companies in the normal course of business.
(a) Loans due from parent company
On 14 December 2017, the Company provided a loan to Aviva plc,
its parent company, of GBP9,990 million with a maturity date of 31
December 2022. For 2020 and 2019, the loan has accrued interest at
65 basis points above 3 month LIBOR (and in the event that the
LIBOR rate is less than zero, the rate shall be deemed to be zero).
From January 2021, as a result of LIBOR being abolished, this loan
was reset at a fixed interest rate. This rate was set as follows;
5- year
Gilt (-0.105% as of 1 January 2021) + Basis adjustment 0.15% +
0.65% floor. The principal loan has a maturity date of 31 December
2022, however it is the intention of both parties that this
facility will be renewed in full upon maturity and has been
presented within over 5 years maturity in the table below.
As at the statement of financial position date, the loan balance
outstanding was GBP9,484 million (2020: GBP9,529 million). This
facility has been secured against the ordinary share capital of
Aviva Group Holdings Limited. The loan agreement also includes a
penalty interest charge of 1% above the interest rate if any
amounts payable under the loan agreement remain outstanding. As at
31 December 2021, no amounts remain outstanding.
The maturity analysis of the related party loans receivable is
as follows:
2021 2020
GBPm GBPm
1-5 years - 9,529
Over 5 years 9,484 -
9,484 9,529
----------------------- ------------------------------------
Effective interest rate 0.70% 1.25%
----------------------- ------------------------------------
The interest received on these loans shown in the income
statement is GBP66 million (2020: GBP120 million). See note 1.
(b) Other transactions
(i) Services provided to related parties
Services
provided
to related
parties 2021 2020
---------- --------------------------------------------- ---------------------------------- ----------------------------------------------------------------- -------------------------------------------
Expenses incurred Receivable Expenses incurred Receivable
in the year at year end in the year at year end
GBP'000 GBPm GBPm GBPm
Immediate
parent 40 4,448 - 4,403
40 4,448 - 4,403
--------------------------------------------- ---------------------------------- ---------------------------------------------------------------------------- -------------------------------------------
The related parties' receivables are not secured and no
guarantees were received in respect thereof. The receivables will
be settled in accordance with normal credit terms.
(ii) Audit fees
Expenses incurred in the year represents audit fees. There were
no non-audit fees paid to the Company's auditors during the year
(2020: GBPnil). Audit fees as described in note 4 are borne by the
Company's ultimate parent, Aviva plc.
(iii) Dividends paid
Dividends paid relates to an intercompany transaction of GBP45
million (2020: GBP101 million) with the Company's parent, Aviva
plc. Preference dividends of GBP21 million (2020: GBP21 million)
were approved on behalf of the Company by its parent, Aviva plc.
Refer to note 6.
(c) Key management compensation
Key management, which comprises the directors of the Company,
are not remunerated directly for their services as directors of the
Company and the amount of time spent performing their duties is
incidental to their role across the Group. All such costs are borne
by Aviva plc and are not recharged to the Company. See note 3 for
details of directors' remuneration.
(d) Ultimate parent entity
The ultimate parent entity and controlling party is Aviva plc, a
public limited Group incorporated and domiciled in the United
Kingdom. This is the parent undertaking of the smallest and largest
Group to consolidate these financial statements. Copies of Aviva
plc consolidated financial statements are available on application
to the Group Company Secretary, Aviva plc, St Helen's, 1
Undershaft, London EC3P 3DQ, and on the Aviva plc website at
www.aviva.com .
15. Subsequent events
There are no subsequent events to report.
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END
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