annual report 2007 - the Admiral Group plc

54 FINANCIAL STATEMENTSNotes to the financialstatements1. General information and basisof preparationAdmiral Group plc is a Company incorporatedin England and Wales. Its registered office isat Capital Tower, Greyfriars Road, Cardiff CF103AZ and its shares are listed on the LondonStock Exchange.The financial statements comprise theresults and balances of the Company andits subsidiaries (together referred to as theGroup) for the year ended 31 December 2007and comparative figures for the year ended 31December 2006. The financial statements ofthe Company’s subsidiaries are consolidated inthe Group financial statements. The Companycontrols 100% of the voting share capital of allits subsidiaries. The Parent Company financialstatements present information about theCompany as a separate entity and not aboutits Group. In accordance with InternationalAccounting Standard (IAS) 24, transactionsor balances between Group companies thathave been eliminated on consolidation are notreported as related party transactions.The consolidated financial statements havebeen prepared and approved by the Directorsin accordance with International FinancialReporting Standards (IFRS) as adopted bythe European Union (EU). The Companyhas elected to prepare its Parent Companyfinancial statements in accordance with UKGenerally Accepted Accounting Practice(GAAP).The Group has applied all adopted IFRS andinterpretations endorsed by the EU at 31December 2007, including all amendments toextant standards that are not effective untillater accounting periods, except for thoselisted below:· IFRS 8 (Operating Segments); and· IFRIC 11 (IFRS 2: Group and Treasury ShareTransactions’)IFRS 8 becomes effective for the periodcommencing 1 January 2009, whilst IFRIC 11 willbecome effective for the period commencing1 January 2008. The application of eitherthe standard or the interpretation would nothave had a material impact on these financialstatements.There are a number of standards, amendmentsto standards and interpretations that wereissued by 31 December 2007 but have yet tobe endorsed by the EU. Of these, only theamendment to IAS 1 (Presentation of financialstatements: a revised presentation) is expectedto have any impact on the Group’s financialstatements. This amendment introduces anumber of changes to the primary financialstatements, but does not change therecognition, measurement or disclosure oftransactions or events that are required byother IFRS.The following IFRS have been adopted andapplied by the Group for the first time inthese financial statements:· IFRS 7 (Financial instruments: Disclosure); and· Amendment to IAS 1 (Capital disclosures)The accounting policies set out belowhave, unless otherwise stated, been appliedconsistently to all periods presented in theseGroup financial statements.The financial statements are prepared on thehistorical cost basis, except for the revaluationof financial assets classified as at fair valuethrough profit or loss.Subsidiaries are entities controlled by theGroup. Control exists when the Group hasthe power, directly or indirectly, to govern thefinancial and operating policies of an entityso as to obtain benefits from its activities.In assessing control, potential voting rightsthat are currently exercisable or convertibleare taken into account. The financialstatements of subsidiaries are included in theconsolidated financial statements from thedate that control commences until the datethat control ceases.The preparation of financial statementsin conformity with adopted IFRS requiresmanagement to make judgements, estimatesand assumptions that affect the application ofpolicies and reported amounts of assets andliabilities, income and expenses. The estimatesand associated assumptions are based onhistorical experience and various other factorsthat are believed to be reasonable under thecircumstances, the results of which form thebasis of making the judgements about carryingvalues of assets and liabilities that are notreadily apparent from other sources.