REG - Phoenix Grp Hldgs - Phoenix Group Holdings - 2014 Annual Results <Origin Href="QuoteRef">PHNX.L</Origin> - Part 17
18/03/2015 07:01
- Part 17: For the preceding part double click ID:nRSR7166Hp
Dividend income from other Group entities 94 58
Interest income from other Group entities 48 49
142 107
Fair value gains/(losses)
Derivatives 5 (2)
Net investment income 147 105
E. ADMINISTRATIVE EXPENSES
2014 2013
£m £m
Employee costs1 1 2
Professional fees 7 7
Office costs 1 1
Write down of loans due from other Group entities 10 -
Other 3 3
22 13
1 In addition to the Non-Executive Directors, one employee was employed by Phoenix Group Holdings during the period (2013:
one). Other Group employees are employed by other Group entities.
F. BORROWINGS
Carrying value Fair value
2014 2013 2014 2013
£m £m £m £m
Loan due to Impala Holdings Limited 3 3 3 3
Amount due for settlement after 12 months 3 3
All borrowings are due to Group entities and are measured at amortised cost using the effective interest method.
On 16 July 2010, the Company was granted a loan from Impala Holdings Limited of £3 million. The loan accrues interest at
six-month LIBOR plus 3.25% (2013: 2%) which is capitalised semi-annually on 7 April and 7 October. The loan has a maturity
date of 31 December 2016. Interest of £0.1 million (2013: £0.1 million) was accrued during the year. The balance
outstanding at 31 December 2014 was £3 million (2013: £3 million).
All borrowings are categorised as Level 3 financial instruments. The fair value of borrowings with no external market is
determined by internally developed discounted cash flow models using a risk adjusted discount rate corroborated with
external market data where possible.
G. DERIVATIVES
Carrying value Fair value
2014 2013 2014 2013
£m £m £m £m
Warrants over shares in Phoenix Group Holdings - 5 - 5
Amount due for settlement after 12 months - 5
The Company has in issue warrants over its ordinary shares. Details of these warrants are included in note 24.2 to the
consolidated financial statements.
Warrants are categorised as Level 2 financial instruments. Details of the factors considered in determination of the fair
value are included in note 34.2.1 to the consolidated financial statements.
H. ACCRUALS AND DEFERRED INCOME
2014 2013
£m £m
Accruals and deferred income - 5
Amount due for settlement after 12 months - -
I. INVESTMENTS IN GROUP ENTITIES
2014 2013
£m £m
Cost
At 1 January 1,308 1,018
Additions 9 290
At 31 December 1,317 1,308
Impairment
At 1 January and 31 December - -
Carrying amount at 31 December 1,317 1,308
On 25 April 2014, the Company received a £9 million dividend (2013: £8 million) from Opal Reassurance Limited in the form
of preference shares in the company.
On 27 February 2013, the Company made capital contributions of £116 million to each of PGH (TC1) Limited and PGH (TC2)
Limited.
On 6 December 2013, the Company made capital contributions of £25 million to each of PGH (LCA) Limited and PGH (LCB)
Limited.
For a list of principal Group entities, refer to note 45 of the consolidated financial statements. The entities directly
held by Phoenix Group Holdings are highlighted separately by an asterisk.
J. COLLECTIVE INVESTMENT SCHEMES
Carrying value Fair value
2014 2013 2014 2013
£m £m £m £m
Investment in collective investment schemes 5 6 5 6
Amount due for settlement after 12 months - -
All investments are categorised as Level 1 financial instruments. Details of the factors considered in determination of the
fair value are included in note 34.2.1 to the consolidated financial statements.
K. LOANS AND RECEIVABLES
Carrying value Fair value
2014 2013 2014 2013
£m £m £m £m
Loans due from PGH (LCA) Limited and PGH (LCB) Limited 164 148 257 246
Loans due from PGH (MC1) Limited and PGH (MC2) Limited 99 84 194 186
Loans due from other Group Entities 7 12 7 1
270 244 458 433
Amount due for settlement after 12 months 270 244
All loans and receivables balances are due from Group entities and are measured at amortised cost using the effective
interest method. The fair value of these loans and receivables are also disclosed.
On 22 March 2010, the Company subscribed for £325 million of Eurobonds which were issued equally by PGH (LCA) Limited and
PGH (LCB) Limited. On 23 March 2010, the Eurobonds were listed on the Channel Islands Stock Exchange. Interest accrues on
these Eurobonds at a rate of LIBOR plus a margin of 2.5% and the final maturity date to 30 June 2025. The Eurobonds were
initially recognised at fair value and are accreted to par over the period to 2025. At 31 December, £160 million was due
(2013: £144 million).
On 12 December 2011, the Company, PGH (LCA) Limited and PGH (LCB) Limited, became party to a joint £77 million loan
agreement to formalise an inter-company balance which had arisen in 2009 relating to fees payable to a syndicate of
external banks. The loan accrues interest at a rate of LIBOR plus a margin of 1.25% and matures on 30 June 2016. Interest
of £0.1 million was capitalised during the year (2013: £0.2 million) and £nil was repaid (2013: £29 million). At 31
December 2014, £4 million was due (2013: £4 million).
On 22 March 2010, the Company subscribed for £250 million of Eurobonds which were issued equally by PGH (MC1) Limited and
PGH (MC2) Limited. On 23 March 2010, the Eurobonds were listed on the Channel Islands Stock Exchange. Interest accrues on
these Eurobonds at a rate of LIBOR plus a margin of 2.5% and the final maturity date to 30 June 2025. The Eurobonds were
initially recognised at fair value and are accreted to par over the period to 2025. At 31 December, £99 million was due
(2013: £84 million).
On 22 April 2010, Pearl Group Holdings (No.1) Limited issued a balancing instrument under which notes with a principal of
£75 million were issued to PGH. The notes have no fixed maturity date and are included in the Company's financial
statements at a nil value. PGH paid no consideration for the notes and has waived its right to receive a coupon on the
notes.
On 16 July 2010, the Company entered into an interest free facility arrangement with Phoenix Group Holdings' Employee
Benefit ('EBT'). In 2014, £6 million was drawn down against this facility (2013: £11 million). The loan is recoverable
until the awards held by the EBT vest to the participants, at which point the loan is reviewed for impairment. Any
impairments are determined by comparing the carrying value to the estimated recoverable amount of the loan. Following the
vesting of awards in 2014, the value of the EBT loan of £10 million has been written off.
No other loans are considered to be past due or impaired.
For the purposes of the additional fair value disclosures for assets recognised at amortised costs, all loans and
receivables are categorised as Level 3 financial instruments. The fair value of loans and receivables with no external
market is determined by internally developed discounted cash flow models using a risk adjusted discount rate corroborated
with external market data where possible.
Details of the factors considered in determination of the fair value are included in note 34.2.1 to the consolidated
financial statements.
L. CASH AND CASH EQUIVALENTS
2014 2013
£m £m
Bank and cash balances - 1
Short-term deposits (including demand and time deposits) 3 8
3 9
M. CASH FLOWS FROM OPERATING ACTIVITIES
2014 2013
£m £m
Profit for the year before tax 125 92
Adjustments to reconcile profit for the year to cash flows from operating activities
Interest income from other Group entities (48) (49)
Fair value gains/(losses) on derivatives (5) 2
Dividends received (94) (58)
Write down of loans to Group entities 10 -
Share-based payment charge 7 6
Net decrease/(increase) in investment assets 26 (6)
Net (increase)/decrease in working capital (6) 88
Cash generated by operations 15 75
N. CAPITAL AND RISK MANAGEMENT
The Company's capital comprises share capital and all reserves. At 31 December 2014, total capital was £1,454 million
(2013: £1,441 million). The movement in capital in the year comprises the total comprehensive income for the year
attributable to owners of £125 million (2013: £92 million), proceeds from the issue of ordinary share capital, net of
associated commission and expenses, of £1 million (2013: £233 million), payment of dividends of £120 million (2013: £120
million) and a credit to equity for equity-settled share-based payments of £7 million (2013: £6 million).
There are no externally imposed capital requirements on the Company. The Company's capital is monitored by the Directors
and managed on an ongoing basis via a monthly close process to ensure that it remains positive at all times.
Details of the Group risk management policies are outlined in note 40 to the consolidated financial statements.
The primary operation of the Company is to act as the listed company for the Group. The Company's other assets and
liabilities mainly consist of receivables and borrowings from and to other Group entities.
The principal risks and uncertainties facing the Company are:
interest rate risk, since the movement in interest rates will impact the value of interest receivable and payable by the
Company;
- liquidity risk, exposure to liquidity risk as a result of normal business activities, specifically the risk arising from
an inability to meet short-term cash flow requirements; and
- credit risk, arising from the default of the counterparty to a particular financial asset and is significantly reduced
as assets are primarily inter-company receivables from other group entities.
The Company's exposure to all these risks is monitored by the Directors, who agree policies for managing each of these
risks on an ongoing basis.
O. SHARE-BASED PAYMENTS
For detailed information on the long-term incentive plans, Save As You Earn schemes and deferred bonus share schemes refer
to note 19 in the consolidated financial statements.
P. DIRECTORS' REMUNERATION
Details of the remuneration of the Directors of Phoenix Group Holdings is included in the Directors' remuneration report on
pages 60 to 82 of the Annual Report and Accounts.
Q. RELATED PARTY TRANSACTIONS
The Company has related party transactions with Group entities and its key management personnel. Details of the total
compensation of key management personnel, being those having authority and responsibility for planning, directing and
controlling the activities of the Group, including the Executive and Non-Executive Directors, are included in note 43.
During the year ended 31 December 2014, the Company entered into the following transactions with Group entities:
2014 2013
£m £m
Dividends received 94 58
Interest received on loans and receivables due from Group entities 48 49
142 107
Amounts due from related parties at the end of the year:
2014 2013
£m £m
Loans due from Group entities 270 244
Other amounts due from Group entities 8 5
278 249
Amount due for settlement after 12 months 270 244
Amounts due to related parties at the end of the year:
2014 2013
£m £m
Loans due to Group entities 3 3
Other amounts due to Group entities 146 118
149 121
Amount due for settlement after 12 months 3 3
R. AUDITOR'S REMUNERATION
Details of auditor's remuneration, for Phoenix Group Holdings and its subsidiary undertakings, is included in note 11 to
the consolidated financial statements.
S. EVENTS AFTER THE REPORTING PERIOD
Details of events after the reporting date are included in note 46 to the consolidated financial statements.
H Davies
C Bannister
J McConville
A Barbour
R P Azria
I Cormack
T Cross Brown
I Hudson
D Woods
K Sorenson
St Helier, Jersey
17 March 2015
Asset disclosures
ASSET DISCLOSURES
ADDITIONAL LIFE COMPANY ASSET DISCLOSURES
The analysis of the asset portfolio provided below comprises the assets held by the Group's life companies including stock
lending collateral. It excludes other Group assets such as cash held in the holding and service companies; the assets held
by the non-controlling interest in collective investment schemes and UK Commercial Property Trust Limited ('UKCPT'); and
are net of derivative liabilities.
The following table provides an overview of the exposure by asset category of the Group's life companies' shareholder and
policyholder funds:
2014
Carrying value Shareholder Participatingsupported1£m Participatingnon-supported2£m Unit-linked2£m Total3£m
and non-profitfunds1£m
Cash and cash equivalents 1,429 728 2,861 1,176 6,194
Debt securities - gilts 1,485 2,348 8,756 661 13,250
Debt securities - bonds 6,379 1,936 7,082 815 16,212
Equity securities 367 67 5,613 7,787 13,834
Property investments 191 67 997 346 1,601
Other investments4 402 (22) 806 - 1,186
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