Group 2013 2012
£m £m
Wages and salaries 145.7 119.5
Social security costs 8.6 8.5
Other pension costs 7.4 7.8
161.7 135.8
The average number of employees (including executive directors) of the Group during the year was as follows:
2013 2012
No. No.
Administration and finance 2,341 2,224
Underwriting 3,741 3,128
Claims 1,183 974
Investments 127 111
7,392 6,437
The Company has no employees.
Employee numbers
s411(2) The Companies Act 2006 requires an analysis of average number of employees having regard to the manner in
which the company’s activities are organised.
FRS 20 ‘Share-based payment’
The standard applies to all share-based payment transactions, which fall into three broad types:
equity-settled share-based payment transactions – Transactions in which an entity receives goods or services, including employee services, as consideration for its own equity instruments. Such transactions include employee share option and share incentive plans;
cash-settled share-based payment transactions – Transactions in which an entity acquires goods or services by incurring liabilities (typically to be settled in cash), but where the amount paid is based on the value of the entity's shares or other equity instruments. Typical examples include 'phantom' share schemes, share appreciation rights and certain long-term incentive schemes; and
transactions in which either party may choose settlement in the form of cash (or other assets) or equity instruments of the entity.
Recognition of share-based payment transactions
The goods or services acquired in a share-based payment transaction should be recognised when they are received. For an equity-settled transaction, the corresponding entry will be within equity (shareholders’ funds).
SSAP 21, 55
s411(5)
Measurement of equity-settled share-based payment transactions
The measurement objective of FRS 20 is to determine the fair value of the goods or services acquired by an entity. If the fair value of goods and services cannot be measured reliably, it should be measured indirectly by reference to the fair value of the equity instruments granted in consideration.
Vesting conditions
Vesting conditions are conditions that must be satisfied before a counterparty becomes unconditionally entitled to the equity instruments or payment to which they relate. Where equity instruments vest immediately, in the absence of evidence to the contrary, an entity should presume that they represent consideration for goods already received or services already rendered. In this case, on the date on which the options are granted the entity should recognise the goods or services received in full. However, if there is a specified period of service over which an award vests, the goods or services should be recognised over that vesting period.
Cash-settled share-based payment transactions
Expenses in respect of cash-settled share-based payment transactions should be recognised over the period during which goods are received or services are rendered and measured at the fair value of the liability. Unlike equity-settled transactions, the fair value of the liability should be re-measured at each reporting date until settled. Changes in fair value are recognised in the profit and loss account. Unlike equity-settled share-based payment transactions, the credit entry in respect of a cash-settled share-based payment transaction is presented as a liability.
Share-based payment transactions with alternative methods of settlement
Sometimes either the reporting entity or the counterparty has a choice as to whether to settle a share-based payment transaction in cash or with an issue of equity instruments.
Where the counterparty has the choice of settlement method, the standard concludes that the reporting entity has issued a compound financial instrument, comprising a debt component (the counterparty's right to demand payment in cash) and an equity component (the counterparty's right to demand settlement in equity
instruments). There are detailed rules on the valuation and subsequent treatment of the instrument's debt and equity parts.
Where the reporting entity has the choice, the transaction should be treated as cash-settled if the option to settle in equity is not substantive or if the entity has a past practice or a stated policy of settling in cash. Otherwise, the transaction should be treated as equity-settled. Adjustments will then be necessary if the chosen method of settlement does not match the method of accounting.
Share-based payment arrangements involving equity instruments of the parent
UITF 44 UITF 44 provides guidance on how to account for share-based payment arrangements that involve two or more
entities within the same group. For example, where employees of a subsidiary are granted rights to equity instruments of its parent as consideration for the services provided to the subsidiary.
The accounting for such share-based payment arrangements hinges around which entity grants the award and therefore has the obligation to settle. When a parent entity grants rights over the parent’s equity instruments to
Disclosures
The standard requires extensive disclosure under three broad headings:
the nature and extent of share-based payment arrangements that existed during the period;
how the fair value of the goods or services received, or the fair value of the equity instruments granted during the period, was determined; and
the effect of expenses arising from share-based payment transactions on the entity's profit or loss for the period.
UITF 38 Employee share ownership plans and similar arrangements
FRS 20 deals only with the expense of share based payments and not with the accounting for assets and liabilities of employee share ownership plans. Guidance exists instead in UITF Abstract 38 ‘Accounting for ESOP trusts’, which provides that where an entity has de facto control of an ESOP trust, certain of the ESOP's assets and liabilities should be brought back onto the entity's balance sheet. This is on the basis that, for all practical purposes, the sponsoring entity is in the same position as if it had purchased the shares directly and, therefore, should account for them in a similar way.
UITF 32 The UITF applied similar principles when it considered other arrangements involving employee benefit trusts.
The resultant guidance in UITF Abstract 32, ‘Employee benefit trusts and other intermediate payment arrangements’, requires that when an entity transfers funds to an intermediary, there should be a rebuttable presumption that the sponsoring entity has exchanged one asset for another and that the payment itself does not represent an immediate expense. Hence, as for an ESOP trust, an employee benefit trust is treated as if it was an extension of the reporting entity itself.