INFORMATION FOR GENERAL ACCIDENT PLC PREFERENCE SHAREHOLDERS
GENERAL ACCIDENT PLC
Preliminary Announcement of results for the year ended 31 December 2020
These results are published for the benefit of preference shareholders of General Accident plc ("the Company") for the year ended 31 December 2020. The preference shares have remained listed on the London Stock Exchange following the merger of the Company with Commercial Union plc, in June 1998 to form CGU plc ("CGU"), and the subsequent merger of CGU with Norwich Union plc in May 2000 to form Aviva plc (formerly CGNU plc).
The Company transferred its interest in its subsidiaries to its parent company, Aviva plc, in 2005, in return for an inter-company loan. The income of the Company for the year ended 31 December 2020 consists of interest received on this loan.
The principal risks and uncertainties facing the Company are:
- Credit risk: the net asset value of the Company's financial resources is exposed to the potential default on the loans and short-term receivables due from its parent, Aviva. The external issuer credit rating (representing an issuer's ability to meet its overall financial commitments as they fall due) is A.
- Interest rate risk: The net asset value of the Company's financial resources has previously been exposed to fluctuations in interest rates. Interest rate risk is a risk the Company has historically chosen to accept rather than reduce or mitigate, as although it may materially impact the results of the Company, it does not impact the Company as a going concern, as the Company has no operating expenses and a loan structure in place which generates more than adequate income, even at zero LIBOR rates, to cover the annual cost of those dividends. From January 2021 the loan has been set at a fixed rate for 5 years, due to LIBOR being abolished, and going forwards the interest rate risk will be mitigated.
- COVID-19: On 11 March 2020, the World Health Organization declared the outbreak of a strain of novel coronavirus disease, COVID-19, a global pandemic. Governments in affected areas have imposed a number of measures designed to contain the outbreak, including business closures, travel restrictions, stay at home orders and prohibition of gatherings and events. The spread of COVID-19 has had a significant impact on the global economy, causing volatile equity markets and falls in interest rates. The Company continues to maintain a positive net asset value and since the onset of the pandemic the Company has remained operational, despite the loan interest rate dropping. The 5 year fixed interest rate which commenced in January 2021 will result in the loan bearing sufficient interest to cover the preference share dividends due per annum, hence the company will continue to remain operational.
Exposure to credit risk, interest rate risk, and COVID-19 is managed through the monitoring of several risk measures.
The Company is part of the Aviva group ("Group") and Aviva plc owns 100% of the Company's ordinary issued share capital.
| | | | |
| Summarised income statement | Audited | Audited | |
|
| results | results | |
|
| 12 months to | 12 months to | |
|
| 31 December | 31 December | |
| Statutory results | 2020 | 2019 | |
|
| £m | £m | |
|
|
|
| |
| Investment income
| 120 | 161
| |
| |
|
| |
| Total income | 120 | 161 | |
|
|
|
| |
| Profit on ordinary activities before tax | 120 | 161 | |
| Tax on profit on ordinary activities | - | - | |
| Profit for the period | 120 | 161 | |
| Basic earnings per share (pence) | 0.52 | 0.73 |
| Summarised statement of financial position |
Audited |
Audited | |
| 31 December | 31 December | ||
| 2020 | 2019 | ||
| £m | £m | ||
|
|
|
| |
| Total assets | 13,932 | 13,934 | |
|
|
|
| |
| Equity attributable to ordinary shareholders | 13,682 | 13,684 | |
| Preference share capital | 250 | 250 | |
|
|
|
| |
| Total equity | 13,932 | 13,934 | |
|
|
|
| |
| Liabilities | - | - | |
| Total equity and liabilities | 13,932 | 13,934 | |
|
| |
| |
|
| | | |
| Statement of changes in equity | Audited | Audited | |
| results | results | ||
| 12 months to | 12 months to | ||
| 31 December | 31 December | ||
| 2020 | 2019 | ||
| £m | £m | ||
|
| | | |
| Total equity at 1 January | 13,934 | 13,934 | |
|
|
|
| |
| Profit for the period | 120 | 161 | |
|
Total comprehensive income for the period |
120 |
161 | |
|
|
|
| |
| Dividends | (122) | (161) | |
|
|
|
| |
| Total equity at 31 December | 13,932 | 13,934 | |
|
| | |
| Summarised statement of cash flows | Audited | Audited |
| results | results | |
| 12 months to | 12 months to | |
| 31 December | 31 December | |
| 2020 | 2019 | |
| £m | £m | |
|
| | |
| Cash flows from financing activities | - | - |
| Net cash from financing activities | - | - |
| Total net increase/(decrease) in cash and cash equivalents | - | - |
| Cash and cash equivalents at 1 January | - | - |
| Cash and cash equivalents at 31 December1 | - | - |
|
|
|
|
¹The closing balance as at 31 December 2020 is £475 (2019: £179). The majority of the Company's cash requirements are met by fellow Group companies.
Basis of preparation
The preliminary announcement for the year ended 31 December 2020 was approved by the Board of Directors on 3 March 2021. The preliminary announcement for the year ended 31 December 2020 is prepared on the basis of the accounting policies set out in the annual accounts. Audited statutory accounts, together with the auditor's report thereon, will be filed with the Registrar of Companies when approved and published.
The Company's Annual Report and Accounts for 2019 have been filed with the Registrar of Companies. The results for the year ended 31 December 2019 and 2020 were audited by PricewaterhouseCoopers LLP. The auditor's report was unqualified and did not contain a statement under section 498(2) or section 498(3) of the Companies Act 2006.
The audited annual reports and accounts of both the Company and of Aviva plc for the year ended 31 December 2020, once published, will be available on application to the Group General Counsel and Company Secretary, Aviva plc, St Helen's, 1 Undershaft, London, EC3P 3DQ. Copies will be made available on the Aviva plc website once published at http://www.aviva.com/investor-relations/reports/.
Enquiries: Jakub Rosochowski , Investor Relations Director, Aviva plc, jakub.rosochowski@aviva.com, 020 7662 8115
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