Setting new standards - Friends Life

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FINANCIAL STATEMENTS IFRS FINANCIAL STATEMENTS EEV SUPPLEMENTARY INFORMATION Notes to the parent company accounts continued 3. Convertible bonds and loan notes The convertible bonds are carried at £283m (2005: £276m). Details of the convertible bonds are set out in note 32 to the Group’s consolidated financial statements. The loan notes were issued as part consideration for Lombard (see note 41(a) to the Group’s consolidated financial statements). 4. Provisions Future consideration Share for Lombard entitlements Total £m £m £m At 1 January 2005 - 10 10 Acquisition for the year 146 - 146 Utilised in the year - (1) (1) At 31 December 2005 146 9 155 Adjustment to consideration (12) - (12) Utilised in the year (59) - (59) At 31 December 2006 75 9 84 Future consideration for Lombard includes future earn-out payments (see note 41(a) to the Group’s consolidated financial statements). The share entitlement provision represents expected future claims on share entitlements not claimed following demutualisation. Total creditors amounts to £402m (2005: £443m). 5. Share capital and share premium Details of the Company’s share capital and share premium are set out in note 37 to the Group’s consolidated financial statements. 6. Other equity 2003 STICS 2005 STICS Total £m £m £m At 1 January 2006 299 511 810 Interest due on STICS 21 31 52 Interest paid on STICS (21) (31) (52) At 31 December 2006 299 511 810 Other equity consists of Step-up Tier one Insurance Capital Securities (STICS) of £810m (2005: £810m) that were issued in 2003 and 2005. Details of the Company’s STICS are set out in note 39 to the Group’s consolidated financial statements. 188 Friends Provident Annual Report & Accounts 2006
PARENT COMPANY ACCOUNTS ABBREVIATIONS AND DEFINITIONS Notes to the parent company accounts continued 7. Reserves Revaluation Retained reserve earnings £m £m At 1 January 2006 1,070 308 Profit for the financial year - 240 Dividend - (164) Share based payments - 4 Revaluation of investments 104 - Transfer 92 (92) At 31 December 2006 1,266 296 In accordance with the Companies Act 1985, the directors have considered the valuation of all fixed assets and are satisfied that the aggregate value of all assets is not less than the book value as stated in the Company’s balance sheet on page 185. Therefore, in accordance with the Companies Act 1985 section 275, certain losses on fixed assets have been treated as unrealised losses. In order to reflect this, a transfer of £92m has been made to the revaluation reserve from the profit and loss account. In 2005, a transfer of £203m was made to the profit and loss account. Transfers to the revaluation reserve include an £80m increase in the current value of F&C Asset Management plc. Included within retained earnings are distributable reserves of £234m (2005: £249m). 8. Directors and employees The Company does not directly employ any staff. The directors and employees who provide services to the Company are employed by, and receive their remuneration from Friends Provident Management Services Limited (FPMS), a Group undertaking. Included within the management recharges from FPMS for 2006 is an allowance for directors’ and employees’ emoluments in respect of their services to the Company. Full details of directors’ emoluments are contained in the Remuneration Report of the Board, set out on page 63 to the Group’s consolidated financial statements. 9. Auditor’s remuneration Auditor’s remuneration, exclusive of VAT, for audit services for the year was £305,000 (2005: £262,000). 10. Related party transactions The Company is exempt from the requirements of FRS 8, concerning the disclosure of transactions with other companies that qualify as related parties within the Group, as the Company’s financial statements are presented together with the Group’s consolidated financial statements. Details of key management transactions are set out in note 44 to the Group’s consolidated financial statements. 11. Guarantees The Company has given a guarantee to its subsidiary undertaking, Friends Provident Management Services Limited, for at least 12 months from the date of approval of its financial statements. Friends Provident Annual Report & Accounts 2006 189
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Setting new standards Friends Provi
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ANNUAL REVIEW CORPORATE GOVERNANCE
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Group financial highlights Group
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INTERNATIONAL LIFE & PENSIONS ASSET
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