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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March 02, 2022 03:01 ET (08:01 GMT)

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