3.1 References to Capital Resources

(1) In these PRU(INT) Rules, "Capital Resources" must be calculated as the sum of the following capital elements, subject to deductions listed in (2) below:

1. (a) the ordinary equity share capital of the Authorised Firm, to the extent fully paid up;
2. (b) share premium accounts related to the equity share capital referred in paragraph (a); and
3. (c) any retained earnings and reserves created out of earnings of past periods of the Authorised Firm, and accumulated other comprehensive income, as defined in the International Financial Reporting Standards, to the extent shown in its audited financial statements and accounts.

(2) In determining its Capital Resources, an Authorised Firm must deduct the following items from the sum of the capital elements in (1) above:

1. (a) any interim losses incurred by the Authorised Firm in the current financial year, irrespective of whether or not shown in audited financial statements and accounts;
2. (b) each of the following, to the extent that its value contributes to the sum of the capital elements in (1) above:
3. (i) goodwill and other intangible assets as defined in the International Financial Reporting Standards;

(ii) tangible fixed assets, including equipment and vehicles;

(iii) deferred tax assets that rely on future profitability;

(iv) defined benefit pension fund assets of the Authorised Firm;

1. (v) investments by the Authorised Firm or by any of its Subsidiaries in the Authorised Firm's own shares;

(vi) holdings of equity shares of Affiliates or Related Persons which give rise to a reciprocal cross holding with the Authorised Firm which has the effect of artificially inflating the Capital Resources of the Authorised Firm; and

(vii) holdings of other investments and assets that are not readily realisable into cash; and

1. (c) any amount to be deducted from Capital Resources as directed by the AFSA.