KPMG and E&Y await Resolution on audit work

KPMG and Ernst & Young, the auditors of Britannic plc and Resolution
Life, who announced their merger last week, must wait until at least August to
discover which firm will be handed the audit contract for the enlarged life
assurer.

Last year, Ernst & Young earned £715,000 for its audit of Resolution Life
and took home £1.6m in non-audit fees. KPMG was paid £1.1m for auditing and
advising Britannic.

But last week’s confirmation of a £1.8bn reverse takeover by Resolution,
while laying out management changes and the full details of the takeover, failed
to clear up which firm would take on the audit. ‘No decision on the auditor will
be made until August at the very earliest,’ a Resolution Life spokesman said.

Resolution Life directors will share a windfall of £100m, with Colin Cowdery,
the company’s founder and the enlarged group’s new executive chairman, owning
shares worth £72m.

Resolution’s chief financial officer Mike Biggs will take over as group FD of
the enlarged group, and receive a £4m cash handout and £8m worth of shares. Two
other executives, Brendan Meehan, chief operating officer of Resolution, and Ian
Maidens, group chief actuary, will receive similar windfalls.

Biggs, CFO at Resolution for the past 18 months, was handed the chief
financial reins at the group ahead of Britannic FD Graham Singleton, who will
become the managing director of the group’s life division.

Biggs’ and Singleton’s pay packages will only be disclosed in the Resolution
prospectus, which is due for release in early July. Singleton earned £373,000
last year. Biggs’ remuneration was not disclosed as Resolution Life is not
listed.

As Resolution is immediately expected to be on the brink of the FTSE100,
Biggs could be in line for gains at the top end of FTSE250 remuneration stakes,
with earnings starting anywhere from £600,000 upwards.

Britannic’s spokeswoman could not confirm details of Singleton’s remunerati
on for his new position within the enlarged group.

The merged group will manage approximately six million policies and have
£35bn worth of company assets. It expects pre-tax operating profits of at least
£30m, including £20m expected in annual cost savings achievable by 2007.

COMPANY REPORTS

Exceptional interest rate swaps sees Halfords earn £2.2m, while municipal
waste company tightens belt

FTSE100

Peter Clarke, the UK’s best-paid finance director, has seen his overall pay
fall. Man Group’s latest annual report and accounts revealed that Clarke, who
earned almost£2.5m in salary and bonuses last year, took home just £2.36m in
2005. While Clarke’s basic salary was up on 2004, from £295,000 to £310,000, his
£2m bonus fell by £100,000. Man Group’s pre-tax profit for the
year ended 31 March 2005 was $784m (£429.9m), up from $715m in 2004.

BAE Systems is to restate its reporting sectors to dovetail
with the company’s new organisational structure. BAE said that after the
Eurosystems transaction it had undergone ‘a number of changes’ to its
organisational structure and wanted to realign its ‘externally reported sectors’
with these changes. The aerospace giant is to restate seven reporting sectors,
which will see 2004 sales increase from £13.4bn to £13.5bn.

FTSE250

Auto and leisure retailer Halfords earned £2.2m in
exceptional income through the use of interest rate swaps. After floating on the
LSE in June 2004, Halfords replaced its existing borrowing facilities and hedged
its new lendings using interest rate swaps. The group is planning to invest £80m
over three years.

A share-based payments charge of £5.1m was the biggest impact on fashion
house Burberry after it restated its accounts for the year
ended 31 March 2005 under international financial reporting standards. Burberry
saw earnings before interest, tax and amortisation reduced from £165.5m to £161
.3m as a result of the charge, but was otherwise little-impacted by the
accounting overhaul.

FTSE ALL-SHARE

Simon Kingdon, the former finance director of Kensington
Group, took home a £2m pay package last year after working at the
company for only 10 months. The mortgage provider paid Kingdon, who moved to
lenders Money Partners, £313,000 in salary, bonuses and benefits and £1.7m from
the exercise of long-term share options. Kensington reported an increase in
pre-tax profits from £30m to £37.1m for 2004.

AIM

Municipal waste company Compact Power Holdings has warned
the market that funding resources are ‘tight’ as it negotiates to secure the
funding required for a new plant. Compact Power Holdings is currently relying on
a loan from its largest shareholder, Cooper Holdings, for additional funding.

Sunrise Diamonds, advised by PKF corporate finance, was
admitted to AIM last week and has seen its share price climb from 2.38p to 3.25p
per share since listing. The company holds exploration rights for the Kuusamo
Kimberlite cluster in northern Finland, and began prospecting for diamonds in
the area immediately after its appearance on the AIM boards.