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PROPOSAL FOR PROFIT APPROPRIATION
Appropriation of profit will be determined in accordance with the articles 31 and 32 of the Articles of Incorporation of AEGON N.V. The provisions can be summarized as follows:
| 1. |
The General Meeting of Shareholders shall adopt the annual accounts. |
| 2. |
If the adopted profit and loss account shows a profit, the Supervisory Board may decide, upon the proposal of the Executive Board, to set aside part of the profit to augment and/or form reserves. |
| 3. |
From the remaining net profit, if it is sufficient to this end, first of all the holders of preferred shares shall receive a dividend on the amount paid-in on their preferred shares, the percentage of which, on an annual basis, shall be equal to the European Central Bank’s fixed interest percentage for basic refinancing transactions to be increased by 1.75 percentage points, all applicable to the first trading day on Euronext Amsterdam in the financial year to which the dividend relates. Apart from this, no other dividend is to be paid on the preferred shares. |
| 4. |
The remaining profit shall be put at the disposal of the General Meeting of Shareholders. |
| 5. |
The Executive Board may, subject to the approval of the Supervisory Board, make one or more interim distributions to the holders of common shares and/or to the holders of preferred shares, the latter subject to the maximum dividend amount set forth under 3. |
| 6. |
A distribution on common shares may take place as a cash payment or as a payment in common shares. In addition, the Executive Board may, subject to the approval of the Supervisory Board, decide to give shareholders the option to elect to receive a distribution as a cash payment or as a payment in common shares. In all cases distribution will be made out of the profit and/or the reserves. |
It is proposed to the annual General Meeting of Shareholders on April 22, 2004, to pay a dividend for the year 2003 of EUR 0.40 per common share of EUR 0.12 par value, which after taking into account the EUR 0.20 interim dividend, leads to a final dividend of EUR 0.20 per common share.
It is also proposed that the final dividend will be made available entirely in cash or entirely in stock, at the option of the shareholder. The value of the stock dividend will be approximately 5% higher than the value of the cash dividend and will be paid out of the paid-in surplus fund. The period during which shareholders can elect is from April 26 up to and including May 3, 2004.
In order to fully reflect the prevailing market price of AEGON N.V. common shares within the indication provided, the number of dividend coupons that gives entitlement to a new common share of EUR 0.12 will be determined on May 10, 2004, after 5.30 p.m., based upon the average share price (quotation Euronext Amsterdam) in the five trading days from May 4 up to and including May 10, 2004.
In accordance with article 32, paragraph 3 of the Articles of Incorporation, a dividend equal to 4.5% of the paid up amount of the preferred stock will be distributed in cash. Upon approval of this proposal, profit will be appropriated as follows:
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|
| |
2003 |
| Dividend on preferred shares |
95 |
| Interim dividend on common shares (cash portion) |
147 |
| Final dividend on common shares (cash portion) |
297 |
| Earnings to be retained |
1,254 |
| NET INCOME |
1,793 |
SUBSEQUENT EVENTS
On January 2, 2004, AEGON closed the acquisition of a 45% participation in Unirobe, a group of insurance intermediary companies in the Netherlands.
On August 5, 2003, AEGON announced an agreement to sell most of the commercial lending business of Transamerica Finance Corporation (TFC) to GE Commercial Finance. The sale price of approximately USD 5.4 billion resulted in an after-tax book gain of around USD 200 million. On January 14, 2004, the transaction was closed and the book gain will be added directly to shareholders' equity in 2004.
On January 28, 2004, AEGON announced that it had reached final agreement on a strategic partnership with Caja de Ahorros del Mediterráneo (CAM), a large savings bank in Spain. The agreement comprises the establishment of a new Spanish holding company, which will be owned 50.01% by CAM and 49.99% by AEGON. CAM will contribute 100% of its insurance subsidiary Mediterráneo Vida to the holding company and provide exclusive access to its customer base through its network of 851 branches. AEGON will contribute EUR 150 million in cash to the holding company and an additional EUR 250 million in high quality financial assets. At the end of the fifth year, the final consideration for the insurance subsidiary will be determined on the basis of achieved performance and according to a pre-agreed formula. After the tenth year, parties have agreed to reassess the legal structure in place and both have the right to unwind the holding company without terminating the partnership. If it is decided to unwind the holding company, CAM and AEGON each will own 50% of the life insurance company directly. The EUR 250 million in high quality financial assets plus accrued investment income will return to AEGON. The remainder of the assets of the holding company will be transferred to CAM. The partnership is subject to regulatory approval. The participation in the joint venture will be recognized as net asset value under group companies and participations.
MAJOR SHAREHOLDERS
VERENIGING AEGON
Vereniging AEGON is the continuation of the former mutual insurer AGO. In 1978, AGO demutualized and Vereniging AGO became the only shareholder of AGO Holding N.V., which was the holding company for its insurance operations. In 1983, AGO Holding N.V. and Ennia N.V. merged into AEGON N.V. Vereniging AGO initially received approximately 49% of the common shares (which gradually was reduced to less than 40%) and all of the preferred shares in AEGON N.V., giving it voting majority in AEGON N.V., and changed its name into Vereniging AEGON.
The objective of Vereniging AEGON is the balanced representation of the interests of AEGON N.V. and all of its stakeholders, including shareholders, AEGON group companies, insured parties, employees and other relations of the companies.
In accordance with the 1983 Merger Agreement, Vereniging AEGON had certain option rights on preferred shares to prevent dilution of voting power as a result of new share issuances by AEGON N.V. This enabled Vereniging AEGON to maintain voting control at the General Meeting of Shareholders of AEGON N.V. In September 2002, AEGON N.V. effected a non-dilutive capital restructuring whereby Vereniging AEGON sold 350,000,000 of its common shares, of which 143,600,000 common shares were sold directly by Vereniging AEGON in a secondary offering outside the United States and 206,400,000 common shares were purchased by AEGON N.V. from Vereniging AEGON. AEGON N.V. subsequently sold these common shares in a global offering. The purchase price for the 206,400,000 common shares sold by Vereniging AEGON to AEGON N.V. was EUR 2,064,000,000, which amount Vereniging AEGON contributed as additional paid-in capital on the existing AEGON N.V. preferred shares, all held by Vereniging AEGON. As a result of these transactions, Vereniging AEGON’s beneficial ownership interest in AEGON N.V.’s common shares decreased from approximately 37% to approximately 12% and its beneficial ownership interest in AEGON N.V.’s voting shares (excluding issued common shares held in treasury by AEGON N.V.) decreased from approximately 52% to approximately 33%.
On May 9, 2003, AEGON’s shareholders approved certain changes to AEGON’s corporate governance structure and AEGON’s relationship with Vereniging AEGON in an extraordinary General Meeting of Shareholders. AEGON’s Articles of Incorporation were subsequently amended on May 26, 2003. The relationship between Vereniging AEGON and AEGON N.V. was changed as follows:
| • |
The 440,000,000 preferred shares with nominal value of EUR 0.12 held by Vereniging AEGON were converted into 21 1,680,000 new class A preferred shares with nominal value of EUR 0.25 and the paid-in par capital on the preferred shares was increased by EUR 120,000 to EUR 52,920,000. The voting rights pertaining to the new preferred shares (the class A preferred shares as well as the class B preferred shares which may be issued to Vereniging AEGON under the option agreement as discussed below) were adjusted accordingly to 25/12 vote per preferred share. |
| • |
AEGON N.V. and Vereniging AEGON have entered into a preferred shares voting rights agreement, pursuant to which Vereniging AEGON has voluntarily waived its right to cast 25/12 vote per class A or class B preferred share. Instead, Vereniging AEGON has agreed to exercise one vote only per preferred share, except in the event of a ’special cause’, such as the acquisition of a 15% interest in AEGON N.V., a tender offer for AEGON N.V. shares or a proposed business combination by any person or group of persons whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board. If, in its sole discretion, Vereniging AEGON determines that a ’special cause’ has occurred, Vereniging AEGON will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of 25/12 vote per preferred share for a limited period of six months. |
| • |
AEGON N.V. and Vereniging AEGON have amended the option arrangements under the 1983 Merger Agreement. Under the amended option arrangements Vereniging AEGON, in case of an issuance of new shares by AEGON N.V., has the right to have issued to it as many class B preferred shares as shall enable Vereniging AEGON to prevent or correct dilution to below its actual percentage of total voting shares. Class B preferred shares will then be issued at par value (EUR 0.25), unless a higher issue price is agreed. On September 19, 2003, and December 29, 2003, Vereniging AEGON exercised its option rights following the dilution caused by the stock dividend issuances of AEGON N.V. and acquired 10,220,000 respectively 880,000 class B preferred shares at par value to correct this dilution. |
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|
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| Development of shareholding in AEGON N.V. |
Common |
|
Preferred A |
Preferred B |
NUMBER OF SHARES
As of January 1, 2003 |
171,974,055 |
|
211,680,000 |
|
| Stock dividend 2002 received |
6,878,962 |
|
|
|
| Exercise option right Pref B shares |
|
|
|
10,220,000 |
| Sale of stock, offering price of EUR 9.72 per share |
(6,878,962 |
) |
|
|
| Interim stock dividend 2003 received |
3,070,965 |
|
|
|
| Exercise option right Pref B shares |
|
|
|
880,000 |
| Sale of stock, offering price of EUR 1 1.6536 per share |
(3,070,965 |
) |
|
|
| AS OF DECEMBER 31, 2003 |
171,974,055 |
|
211,680,000 |
11,100,000 |
Accordingly, under normal circumstances the voting power of Vereniging AEGON, based on the number of outstanding and voting shares (excluding issued common shares held in treasury by AEGON N.V.) at December 31, 2003, amounts to approximately 23%. In the event of a ’special cause’, Vereniging AEGON’s voting rights will increase to currently 32.60% for up to six months per ’special cause’.
At December 31, 2003 the General Meeting of Members of Vereniging AEGON consisted of 21 members. The majority of the voting rights is with nineteen of the members not being employees or former employees of AEGON N.V. or one of the AEGON group companies, nor current or former members of the Supervisory Board or the Executive Board of AEGON N.V. The two other members are both elected by the General Meeting of Members from among the members of the Executive Board of AEGON N.V.
Vereniging AEGON has an Executive Committee consisting of seven members, five of whom, including the chairman and the vicechairman, are not nor have ever been, related to the AEGON group. The other two members are also member of the Executive Board of AEGON N.V. When a vote in the Executive Committee results in a tie, the General Meeting of Members has the deciding vote.
The annual report 2003 of Vereniging AEGON and further information may be obtained through the Secretary (telephone: +31 70 3448288, e-mail: Secretariaat VerenigingAEGON.nl, fax: +31 70 3477929).
OTHER MAJOR SHAREHOLDERS
Based on Schedule 13G as amended February 13, 2004, filed with the SEC by Capital Group International, Inc. on behalf of itself and certain of its wholly-owned subsidiaries (Capital International Limited, Capital International S.A., Capital International Research and Management, Inc. dba Capital International, Inc., and Capital Guardian Trust Company), Capital Group International may be deemed to be the beneficial owner of 142,329,520, or approximately 9.4%, of AEGON’s outstanding common shares at December 31, 2003, as a result of its being the parent holding company of a group of investment management companies that hold investment power and, in some cases, voting power over these common shares. The Schedule 13G further reports that Capital Group International, Inc. does not itself have investment power or voting power over these common shares. The Schedule 13G also reports that Capital Guardian Trust Company is deemed to be the beneficial owner of 89,172,310, or approximately 5.9%, of AEGON’s outstanding common shares at December 31, 2003, as a result of its serving as the investment manager of various institutional accounts. Both Capital Group International, Inc. and Capital Guardian Trust Company disclaimed beneficial ownership of the common shares in the Schedule 13G pursuant to Rule 13d-4 under the Securities Exchange Act of 1934.
AUDITOR’S REPORT
INTRODUCTION
We have audited the financial statements of AEGON N.V., The Hague, for the year 2003. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
SCOPE
We conducted our audit in accordance with auditing standards generally accepted in the Netherlands. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
OPINION
In our opinion, the financial statements give a true and fair view of the financial position of the company as at December 31, 2003, and of the result for the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in Part 9, Book 2 of the Netherlands Civil Code.
THE HAGUE, MARCH 11, 2004
ERNST & YOUNG ACCOUNTANTS
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