Notes to the consolidated
financial statements
continued
30 Employee retirement benefit obligations continued
CPI revalution in deferment is used for contracted-out members. Contracted-in members are linked to RPI as well as for all pension
in payment increase.
The Group has estimated the sensitivity of the net obligation recognised in the consolidated balance sheet to isolated changes in these
assumptions at 31 December 2012 as follows:
Present value (Increase)
of unfunded Present value /decrease
obligations of unfunded in obligation
before change obligations recognised on
in assumption after change balance sheet
£000 £000 £000
Effect of a change in discount rate
Use of discount rate of 4.75% 16,907 6,634 –
Effect of an increase in inflation
Use of RPI inflation assumption of 3.15% 16,907 20,039 –
31 Earnings per share
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number
of shares in issue during the year, excluding ordinary shares held by the Group and held in treasury as own shares.
Basic 2012 2011
Profit for the year attributable to the owners of the Company (£000) 207,772 21,272
Weighted average number of ordinary shares (thousands) 391,592 383,602
Basic earnings per share (pence per share) 53.1p 5.5p
Diluted
Diluted earnings per share is calculated adjusting for the assumed conversion of all dilutive potential ordinary shares. The Company has
one category of dilutive potential ordinary shares, share options and awards. For the share options, a calculation is made to determine
the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company’s
shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated
as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
2012 2011
Profit for the year attributable to the owners of the Company (£000) 207,772 21,272
Weighted average number of ordinary shares in issue (thousands) 391,592 383,602
Adjustments for share options (thousands) 16,427 15,610
Weighted average number of ordinary shares for diluted earnings per share (thousands) 408,019 399,212
Diluted earnings per share (pence per share) 50.9p 5.3p
Diluted earnings per share has been calculated after taking account of 15,915,875 (2011: 15,029,986) options and awards under employee
share option and performance plan schemes and 510,925 (2011: 579,518) options under SAYE schemes.
32 Dividends paid to owners of the Company
2012 2011
£000 £000
Interim dividend for the year ended:
31 December 2012 of 6.0p (net) per share 23,567 –
31 December 2011 of 5.1p (net) per share – 19,738
Final dividend for the year ended:
31 December 2011 of 11.9p (net) per share 46,606 –
31 December 2010 of 11.5p (net) per share – 44,111
70,173 63,849
100 Notes to the consolidated financial statements Hiscox Ltd Report and Accounts 2012