SHARE BUYBACK PROGRAMME
Alm. Brand has defined a dividend policy based on a capital model that meets the regulatory capital requirements and provides financial latitude to cope with unforeseen events.
Capital model
The capital model defines capital targets for each business area which are aggregated into one overall capital target for the Alm. Brand Group. We compare the overall capital target with the Group's capital base to determine our excess of capital target. If we have any excess capital we deem cannot be invested in assets to create value, a resolution will be made to distribute capital to our shareholders based on our excess of capital target.
Distribution of capital
The distribution of capital will take place in the form of a share buyback programme.
Compared with payment of dividends, distribution through a share buyback offers investors more scope for choosing when to realise a cash flow from their shareholding.
Guidelines for the share buyback programme:
Agreement with Alm. Brand Bank A/S
The share buyback programme will be implemented in accordance with "In-house rules for trading in treasury shares of Alm. Brand A/S" dated 19 May 2005. The programme will end on 1 February 2009. An agreement made with our subsidiary Alm. Brand Bank A/S defines instructions for the share buyback, which does not fulfil the socalled Safe Harbour requirements (Commission Regulation (EC) No. 2273/2003). The instructions contain guidelines to protect against the risk of insider dealing and price manipulation.
Authorisation
The share buyback is based on the authorisation given to the Board of Directors each year at the annual general meeting to acquire treasury shares up to a limit of 10% of the share capital pursuant to section 48 of the Danish Public Companies Act. The general meeting's authorisation also stipulates that the consideration may not deviate by more than 10% from the price quoted by the Copenhagen Stock Exchange at the time of acquisition. The Board of Directors has subsequently authorised the Management Board to let the company acquire treasury shares within the limits of the authorisation given to the Board of Directors and within the announced buyback ceiling of shares up to a market value of DKK 600 million. At general meetings of 2008 and 2009, the company intends to propose a resolution to reduce the share capital by the shares acquired. The capital reduction can then be implemented after a statutory period of notice to the company's creditors of three months.
In-house rules
"In-house rules for trading in treasury shares of Alm. Brand A/S" specify the following key points:
- that treasury shares should not be bought at any time when the company might be an insider (section 35 of the Danish Securities Trading Act) and that price manipulation should not take place (section 39 of the Danish Securities Trading Act)
- that no shares should be bought during the three weeks preceding any release of financial results by the company
- that the portfolio of treasury shares should be reported to the Copenhagen Stock Exchange pursuant to the provisions of section 28 of the Danish Securities Trading Act.
Pro-rated daily purchases
The instructions provide that daily purchases in the market should be matched by purchases from Alm. Brand af 1792 fmba on a pro-rated basis in order to ensure that Alm. Brand af 1792 fmba's ownership interest (after cancellation of the shares bought back) remains unchanged at 60%. The instructions also provide that purchases in the market and purchases from Alm. Brand af 1792 fmba should take place at the same average price.
Limitations
In order to minimise the impact on the pricing of the company's shares, the instructions contain rules limiting daily purchases in the market to a number of shares equal to 25% of the average daily volume of Alm. Brand shares traded on the Copenhagen Stock Exchange during the preceding three-month period. The instructions furthermore limit the price of shares bought in the market to the higher of the price of the latest independent transaction and the highest independent bid.
