RNS Number:2996I
Irish Life & Permanent PLC
5 March 2003
IRISH LIFE & PERMANENT PLC
2002 Preliminary Announcement
year ended 31 December 2002
Financial Highlights
for the Year Ended 31 December 2002
* Total profit after exceptional items of Euro290.0m (2001: Euro48.6m).
* ROI/UK Pre-tax Contribution Euro350.2m (2001: Euro308.3m) + 14%.
* Total Earnings per Share 105.5 cent (2001: 17.1 cent).
* Total Contribution Earnings per share 115.3 cent (2001: 86.4 cent).
Life
New Business (1) Euro417.6m +25%
Retail Life New Business Euro226.6m +15%
Value of New Business (1) Euro61.1m +1%
Banking
Bancassurance Sales Euro85.7m +50%
New Loans Issued Euro4,494m +25%
Loan Book Growth Euro1,692m +13%
ROI Mortgage New Business Euro2,822m +28%
ROI Mortgage Book Growth Euro1,395m +16%
Final Dividend per share 33.2 cent
Total Dividend per Share 47.5 cent
Shareholders Funds per Share 706 cent
Total & Tier 1 Capital Ratio 10%
Life Solvency Cover (times) 1.7
Further information including the results presentation and press releases are
available at www.irishlifepermanent.ie
(1) Republic of Ireland (ROI) and UK.
Financial Highlights
for the Year Ended 31 December 2002
Summary of Results
31 Dec 31 Dec %
2002 2001 Change
Eurom Eurom
Pre-tax contribution before short term investment
fluctuations and other charges/credits
ROI/UK
Banking & other Activities 97.4 91.1 7
Life Assurance Activities 220.0 195.2 13
Core pre-tax contribution 317.4 286.3 11
Other Investment Earnings 3.8 15.2 (75)
321.2 301.5 7
Share of Associated Company 29.0 6.8 -
Pre-tax Contribution - ROI/UK 350.2 308.3 14
Contribution - US 5.1 (37.9) -
Total Pre-Tax Contribution 355.3 270.4 31
Short Term Investment Fluctuations
Life Assurance Activities (96.7) (43.3)
Share of Associated Company (33.0) (14.0)
Other Charges/Credits
Goodwill amortisation (11.7) (14.8)
Exceptional Items 123.5 (113.0)
Economic Assumption Changes 20.8 (6.2)
Profit before Tax & Minority Interest 358.2 79.1
Taxation (68.5) (29.7)
Minority Interest 0.3 (0.8)
Total Profit after Tax 290.0 48.6
Commenting on the results, David Went, Group Chief Executive said:-
"2002 was a year of solid achievement. At an operational level each of our key
businesses enjoyed exceptional sales performances during the year; life sales in
Ireland were particularly strong with growth of 25% while mortgage sales rose by
28% and bancassurance sales were up a very strong 50%.
At a strategic level we completed the creation and rollout of permanent tsb -
and more recently - the disposal of Guarantee Reserve in the United States.
At a financial level we enjoyed another year of strong profit growth which
enabled us to grow our dividend by 10%. Throughout the year we also made
important progress on the re-engineering of our key business operations which
will help position us strongly for the challenges ahead."
Commentary On Results
Accounting Policies
The Association of British Insurers ("ABI") Achieved Profits Guidance
The Group accounts for the results of its life assurance activities on an
embedded value (or achieved profits) basis. The ABI's guidance on financial
reporting on this basis came into force in 2002. In accordance with best
practice, the Group has decided to adopt the guidance in respect of its life
assurance activities for the purposes of its financial statements for the year
ended 31 December 2002.
The adoption of the guidance does not impact on the overall profit reported for
the Group's life activities but does require certain presentational changes.
Significantly, financial reporting under the guidance focuses on profit before
tax and on the contribution to profit before the impact of short term
fluctuations in investment markets. The guidance requires a restatement of the
previously reported 2001 results and a reconciliation of the previously reported
2001 results to the guidance presentation is set out in note 17 to this
statement.
FRS19: Deferred Taxation
In addition the Group has implemented FRS19 "Deferred Taxation" which is
applicable for all accounting periods after 23 January 2002. The net impact of
this change was to increase deferred tax attributable to banking and other
activities by Euro9.9m and to increase the carrying value of the group's associated
company, Allianz Irish Life, by Euro2.8m at 31 December 2001. The corresponding
effect on opening reserves is Euro7.1m. Tax on profit on ordinary activities for
2001 has been increased by Euro1.0m.
Group Overview
The Group remains committed to its Ireland First strategy and continued
throughout 2002 to invest significantly in its businesses in the Irish
marketplace where there continues to be significant growth potential. Throughout
2002 the Group's businesses engaged in significant actions in order to prepare
for the challenges which will face them in the future.
* Within the banking division the launch of permanent tsb was completed and
the division remains on target to deliver on its ambitious transformation
plans.
* The retail life division commenced the Horizon project which has, as its
core objective, a transformation of this business to streamline operational
efficiency and enhance the productivity of its distribution channels.
* The corporate business division continued to invest in point of sale and
administrative systems in order to maintain the key competitive advantages
which it enjoys in its marketplace.
In line with its strategy of focusing upon its Irish operations, subsequent to
the year end, on 28 February 2003, the Group reached agreement to dispose of
Guarantee Reserve Life Insurance Company Limited, its last remaining US
operating company. Details of this transaction are discussed further later in
this commentary and are set out in note 2 to this statement. Strategically the
Group's exit from this underperforming business is a welcome development.
Total profit after tax for the year ended 2002 was Euro290m which compares to
Euro48.6m for the year ended 2001. Pre-tax profits were Euro358.2m compared to Euro79.1m
in 2001. Reflecting this improved result total EPS increased to 105.5 cent from
17.1 cent in 2001.
Pre-Tax Contribution
The total pre-tax contribution was ahead 31% to Euro355.3m (2001: Euro270.4m).
The Group's core ROI/UK pre-tax contribution increased 11% to Euro317.4m from
Euro286.3m in 2001 as the Group enjoyed strong growth in pre-tax contribution in
both its core banking and life assurance activities which were ahead 7% (to
Euro97.4m) and 13% (to Euro220.0m) respectively. The key driver of this performance
was strong growth in new business with new lending ahead 25% in the banking
division (leading to a 13% growth in lending assets) and new business sales
ahead 25% in the life division, combined with focused management of costs in all
businesses.
Other investment earnings, which reflects investment earnings in the banking
division fell to Euro3.8m from Euro15.2m in 2001. The 2001 outcome included profits of
Euro9.5m achieved on the disposal of investment properties and Euro5.6m on the
disposal of equity holdings. The 2002 outcome of Euro3.8m reflects the profit on
disposal of equity holdings.
The contribution from the Group's holding in Allianz Irish Life increased to
Euro29.0m from Euro6.8m in 2001. This reflects a better than expected underwriting
result in the fourth quarter of the year. When the short term investment
fluctuations are included (see below) the total share of losses amounted to Euro4m
(2001: Euro7.2m).
Overall the ROI/UK pre-tax contribution was ahead 14% to Euro350.2m (2001:
Euro308.3m).
The contribution from US operations, principally Guarantee Reserve the Group's
remaining US operating company, improved to Euro5.1m from a negative Euro37.9m
reported in 2001. The negative result in 2001 principally reflected changes to
the embedded value assumptions to take account of the changed operating and
investment environment within the US marketplace and the cost of structural
changes undertaken to improve the efficiency within the business. The 2002
outcome reflects the beginning of a return to a more normal level of
contribution. As set out in note 2 to this statement and discussed further in
this commentary, subsequent to the year end the Group reached agreement to
dispose of Guarantee Reserve.
Short Term Investment Fluctuations
The weak investment markets in 2002 resulted in negative short term investment
fluctuations ("STIFs") within both the Group's life assurance activities
(principally unit linked management fee variances) and its share of associated
company market fluctuations (principally mark to market losses in the investment
portfolio). Within the life operations STIFs were a negative Euro96.7m compared to
a negative Euro43.3m in 2001 while the Group's share of associated company STIFs
was a negative Euro33.0m in 2002 compared to a negative Euro14.0m in the prior year.
This increase in market related losses reflects the fact that market falls in
2002 were more severe than those experienced in 2001 and these market falls were
compounded by adverse currency effects.
Other Charges/Credits
Exceptional items arising in 2002 were a positive Euro123.5m compared to a negative
Euro113.0m in 2001. The 2002 outcome comprises an increase in the embedded value of
the Group's life assurance activities of Euro103.2m arising on the sale of the
Industrial Branch, or Home Service, business to Royal Liver Assurance which took
effect on 28 February 2002 and a profit of Euro30.3m arising on the disposal of
surplus branch property as part of the integration of the former TSB Bank which
was offset by an additional charge of Euro10.0m in relation to the costs of this
integration.
The exceptional items which arose in 2001 comprise Euro63.0m in respect of the
costs of the TSB integration and a loss of Euro50m relating to the disposal of the
Group's two annuity businesses in the US.
The risk discount rate utilised in the preparation of the embedded value of the
Group's life activities was reduced by 1% to 7.5% in Ireland, by 0.75% to 7.5%
in the UK and from 10% to 9% in the US to reflect movements in underlying rates
of interest in these markets. These changes give rise to a positive economic
variance of Euro20.8m in the year to 31 December 2002 which compares to a negative
Euro6.2m arising in respect of economic assumption changes in 2001.
Taxation
The Group tax charge increased to Euro68.5m from Euro29.7m in 2001. The life taxation
charge for 2002 amounted to Euro44.2m which includes a charge of Euro30.3m relating to
a write down in the value of unrelieved tax losses. In light of the fall in
investment markets and allowing for lower assumed rates of investment returns
going forward the recoverability of any tax relief on unrelieved losses is
uncertain. Adopting a prudent approach the Group has fully written down the
value of the unrelieved tax losses in 2002. Excluding this item the effective
rate of tax on profits from life assurance activities was 9%. The overall
taxation charge on all banking and other activities (including exceptional
items) amounted to Euro19.6m giving an effective tax rate of 17%.
Banking & Other Activities
31 Dec 31 Dec
2002 2001
Eurom Eurom
Net Interest Income 325.2 280.4
Other Operating Income 29.9 27.7
355.1 308.1
Administrative Expenses (244.4) (205.3)
Provision for Bad, Doubtful Debts (13.3) (11.7)
Pre-tax Contribution 97.4 91.1
The pre-tax contribution generated by the Group's banking and other activities
was Euro97.4m an increase of 7% over the year ended 2001 of Euro91.1m. Reflecting
strong growth in new business the contribution from retail banking operations
increased 14% to Euro89.9m (Euro78.9m). This was offset by a reduction in the
contribution (net of capital funding costs) from Treasury to Euro13.2m from Euro17.2m
which reflected a higher average level of Tier 2 debt in 2002.
Net interest income in the year increased 16% to Euro325.2m from Euro280.4m in 2001
reflecting a full year contribution from the business of the TSB, (which was
consolidated from April 2001, the date of acquisition), and strong underlying
growth in lending due to robust new business growth and good underlying margins.
The net interest margin for the year was 1.78% which compares to a margin of
1.90% for the full year 2001. Declining Euro interest rates during the year led
to some downward pressure on margins due to the impact of deposit rate floors.
In addition, the strong level of growth in asset balances and the resultant
requirement to largely fund this growth in the wholesale markets diluted
margins.
Total loans and advances to customers at 31 December 2002 increased 13% to
Euro14.6bln when compared to balances outstanding at 31 December 2001 of Euro12.9bln.
Total gross new lending business increased 25% to Euro4.5bln compared to Euro3.6bln
issued in 2001. The growth in balances over the principal business lines was as
follows:-
31 Dec 31 Dec
2002 2001 Growth
Eurom Eurom %
Mortgage Lending - ROI * 10,087 8,692 16
Consumer Finance 1,312 1,289 2
Commercial Lending 1,255 1,169 7
Total Lending - ROI 12,654 11,150 13
Mortgage Lending - UK (Stg#m)* 1,286 1,094 18
Total Lending - Eurom 14,631 12,939 13
In the Republic of Ireland the underlying demand for residential mortgages
remained strong throughout the year. Mortgage balances increased by 16% to
Euro10.1bln* (2001: Euro8.7bln*). Total gross new mortgages issued for the year were
Euro2.8bln, a 28% increase on the Euro2.2bln issued in 2001 and the Group believes
that it has maintained its market share at around 24%.
The Group's UK Banking operations had a very successful year with mortgage
balances outstanding increasing 20% to Stg#1.3bln* (2001: Stg#1.1bln*) and gross
new mortgage issues increasing 27% to Stg#441m (2001: Stg#346m). Due to the
impact of exchange movements the 18% growth in UK Stg# residential mortgages,
when translated into Euro, reduces to a growth of 11% on 2001 levels.
The consumer finance portfolio, which predominantly represents motor vehicle
finance loans grew 2% to Euro1.3bln with new business issues growing 17% to Euro657m
from Euro560m in 2001. This was an extremely strong performance against the back
drop of a 6% fall in the market for new car sales. The commercial loan portfolio
grew 7% to Euro1.3bln with new business issued ahead 15% to Euro316m (2001: Euro274m).
Resources continued to grow strongly with customer account balances outstanding
increasing 8% to Euro10.2bln compared to Euro9.5bln in 2001. Whilst growth in
commercial deposits was strong, a significant part of this increase was driven
by growth in credit balances in current accounts.
Other operating income of Euro29.9m compares to Euro27.7m in 2001. Fees and
commissions payable, which are offset against other income, increased 32% to
Euro27.4m from Euro20.7m in 2001 reflecting the increase in mortgage new business
levels and the cost of mortgage indemnity guarantee bonds which, from the
beginning of 2002, were borne by the bank. Excluding these items other operating
income increased by 18% to Euro57.3m from Euro48.4m in 2001, as a result of the full
year consolidation of the business of the former TSB combined with strong demand
for the Group's fee based banking products.
The revenue enhancement opportunities presented by the acquisition of TSB,
together with an increase in productivity within the bancassurance channel, led
to sales of life and pensions products with the banking division growing 50% to
Euro85.7mS in 2002 from Euro57.1m in 2001. Included in this total were Euro54.0m (2001:
Euro24.7m) of sales of low margin SSIA accounts. In line with the Group's
accounting policies earnings arising on bancassurance sales are reflected in the
pre-tax contribution within the Group's life assurance activities. The pre-tax
contribution derived from the bancassurance book for the year ended 2002 was
Euro39.8m an increase of 26% over the 2001 level of Euro31.6m.
Administrative expenses of Euro244.4m compare to Euro205.3m in 2001 with the increase
being principally driven by the full year consolidation of the TSB acquisition.
Excluding this impact underlying cost growth in 2002 was 3% with synergies
achieved on the integration of TSB of Euro8.0m serving to reduce underlying cost
growth.
__________________________________________________________________________
* Including Securitised Mortgage Assets
Unless otherwise indicated all life and pension sales are expressed on a
weighted annual premium equivalent ("APE") basis
__________________________________________________________________________
The charge for bad and doubtful debts of Euro13.3m represents an increase of 14%
over the 2001 charge and is broadly in line with underlying asset growth. The
Group continues to apply conservative credit criteria in its lending policies
and the quality of the loan portfolio remains high.
The level of contribution achieved and new business generated by the Group's
banking division permanent tsb during 2002 was particularly impressive given the
distraction necessarily encountered in the business due to the TSB integration
programme and the launch of permanent tsb. The launch of the new bank was
successfully completed during the year and the Group's plans in relation to
permanent tsb are progressing on target. Total annualised cost savings achieved
in the period to 31 December 2002 were Euro20m with savings of Euro8.0m being realised
in the 2002 reported costs. In addition to its previously announced anticipated
annualised cost savings of Euro27m and revenue synergies of Euro20 - Euro25m the Group
has identified additional cost saving opportunities and now anticipates
annualised costs savings of Euro29m. The Group remains on track to deliver these
benefits by the end of 2003.
Life Assurance Activities - Republic of Ireland/UK Operations
The pre-tax contribution from the Group's ROI/UK life assurance activities
operations for the year ended 31 December 2002 are summarised below:-
31 Dec 31 Dec
2002 2001
Eurom Eurom
Contribution from In Force Business
Unwind of Discount Rate 91.7 83.1
Experience Variances 31.7 23.9
Operating Assumption Changes 22.2 16.1
Expected Investment Return 5.1 1.7
Other Income 8.2 10.0
Pre-tax Contribution 158.9 134.8
New Business Contribution 61.1 60.4
Total Pre-Tax Contribution 220.0 195.2
The pre-tax contribution from the Group's ROI/UK Life Assurance activities
increased 13% from Euro195.2m in 2001 to Euro220.0m in 2002.
The contribution from the Group's inforce business increased 18% to Euro158.9m from
Euro134.8m in 2001. The unwind of the discount rate contributed Euro91.7m (2001:
Euro83.1m) to this total with the 10% increase year on year arising due to growth
in the inforce book reflecting strong growth in new business volumes. Experience
variances in 2002 remained strongly positive at Euro31.7m as actual experience
across all principal headings continued to outperform the embedded value
assumptions. The principal reason for the increase in experience variances when
compared to the prior year was that the 2001 variances of Euro23.9m included the
negative impact of once off costs associated with significant investment
expenditure on point of sale technology within the retail and corporate
businesses.
Changes in operating assumptions led to a positive contribution of Euro22.2m in
2002 (principally relating to changes in mortality assumptions reflecting
ongoing positive experience) compared to Euro16.1m in 2001 (principally relating to
changes in persistency and expense assumptions). The assumptions underlying the
embedded value continue to be conservatively based and it is anticipated that
experience against assumptions will continue to be positive.
The expected investment return is calculated by reference to the embedded value
assumed long term investment return for equities and property combined with the
actual earnings on short term cash. The expected investment return in 2002 of
Euro5.1m compares to Euro1.7m in 2001, the increase reflecting a higher level of short
term cash held in 2002 arising from the receipt of the proceeds of the sale of
the Industrial Branch business in February 2002.
The contribution from new business of Euro61.1m compares to Euro60.4m in 2001 and
reflects strong growth in new business sales, which increased 25% to Euro417.6m
from Euro335.0m in 2001, the positive impact of which was offset by lower margins
due to changes in the product mix, principally sales of SSIA products.
Life new business margins for the year ended 2002 were 14.6% (2001: 18.0%) made
up as follows:-
2002 2001
% %
Life Operations 16.3 19.2
Investment Management 8.4 9.9
14.6 18.0
Within the Group's life operations 2002 sales included a high volume of
comparatively lower margin SSIA sales (Euro101.7m in 2002 against Euro65.8m in 2001)
which was the principal factor in the reduction in the reported margin. The
investment management division achieved a number of large ticket but low margin
sales in 2002 and this served to dilute the overall reported margin.
Sales in the Group's principal life businesses were as follows:-
2002 2001 Growth
Eurom Eurom %
Retail Business 226.6 196.5 15
Corporate Business 90.8 81.8 11
Investment Management 87.7 42.4 107
Irish Life International 9.0 10.5 (14)
Ireland 414.1 331.2 25
UK 3.5 3.8 (8)
417.6 335.0 25
Retail Business
Within the Irish retail business sales increased 15%. This was a very strong
outturn when viewed in the context of the continued very weak investment markets
which prevailed throughout the year and which led to a significant decline in
demand for single premium investment products. Sales, particularly in the first
half of the year were boosted by the SSIA scheme which generated sales of
Euro101.7m (2001: Euro65.8m). Bancassurance sales, as noted previously, increased by
50% to Euro85.7m compared to Euro57.1m in 2001 which was a very successful outturn.
During the year the Irish retail business commenced implementation of the
Horizon Project which is designed fundamentally to redesign the business
processes within this division. The principal objective of this programme is to
streamline businesses processes in order to generate operational efficiencies
and increase sales productivity through leveraged use of proven technology. The
programme, which is scheduled for completion in 2004, is proceeding on target.
Elements of the technology are already in use and generating benefits - the
first new business release on the new operating platform is expected by the end
of March 2003.
Corporate Business
Sales in the corporate business division increased 11% to Euro90.8m from Euro81.8m.
This was a particularly strong performance as the 2001 result was positively
impacted by a number of once off factors which did not recur in 2002. The key
driver of the 2002 performance was strong growth in scheme increments and risk
sales.
Throughout the year the corporate business division continued with its rolling
investment programme which is focused upon improved customer service both at the
point of sale and in subsequent servicing of their ongoing needs. This
investment programme has assured that corporate business remains to the fore as
the premier provider of Group defined contribution pension plans in Ireland.
Investment Management
Full value sales (including off balance sheet) were Euro972m in 2002 a 79% increase
on the Euro542m achieved in 2001. Sales in 2002 included the benefit of a small
number of very large ticket but low margin sales which led to a reduction in
reported margins. While investment markets were difficult during the year the
Group's consensus funds continue to perform well, while the comparative
performance of the Group's actively managed funds has continued to improve.
Post Balance Sheet Event - Disposal of US Business
As set out in note 2 to this statement on 28 February 2003 the Group announced
that it had reached agreement on the sale of its remaining operating business in
the US, Guarantee Reserve Life Insurance Company. This company, which is focused
on the US final expense market is to be acquired by Reassure America Life
Insurance Company a wholly owned subsidiary of Swiss Re Life & Health America
Inc.
The consideration, which is payable in cash, is $121.0m adjusted for any change
in the capital and surplus of the company from 30 June 2002 to the date of
completion of the transaction. This compares to a carrying value in the Group's
accounts of $176.0m at 31 December 2002. No tax is estimated to be payable on
the disposal.
The transaction, which is subject to US regulatory approval is expected to
complete in the second quarter 2003. In accordance with generally accepted
accounting practice the financial outcome of this transaction will be reflected
in the Group financial statements in 2003.
The decision to dispose of this business is in line with the Group's strategic
focus on consolidating its leadership position in the Irish market. On
completion of the transaction the Group will have no direct operational
involvement in the US.
Capital and Liquidity
At 31 December 2002 the Group continued to be well capitalised with a tier 1 and
total capital ratio of 10% (2001: 12%). The liquidity ratio within the Group's
banking operations was 26% (2001: 25%). The reduction in the capital ratios from
the 31 December 2001 level principally reflects the completion of the Group's
share buyback programme which is discussed further below.
The solvency margin in Irish Life Assurance plc, the Group's principal life
assurance company was covered 1.7 times by available assets, the reduction from
the 2.1 times reported at 31 December 2001 principally reflecting the sale of
the Industrial Branch business and the distribution of surpluses to the bank to
support the share buyback programme.
During the year ended 31 December 2002 the Group repurchased 10.7m shares for a
consideration of Euro150.0m. The average price paid for these shares, all of which
were cancelled, was Euro13.87 (excluding stamp duty and commission). This buyback
activity brought the total number of shares repurchased under the Group's
rolling share buyback programme to 28.7m shares with a total value of Euro367.1m at
an average price per share of Euro12.64 (excluding stamp duty and commission). Of
these shares 5.4m (value Euro66.9m) were reissued to the TSB Employee Ownership
Trust as part of the final consideration for the acquisition of TSB during the
year ended 31 December 2001. The remaining 23.3m shares have been cancelled.
Dividends
The directors have proposed a final dividend of 33.2 cent per share. Subject to
shareholder approval the dividend will be paid on 28 May 2003 to shareholders on
the register as at 25 April 2003. This final dividend will bring the total
dividend for the year to 47.5 cent per share an increase of 10% on the 2001
total dividend of 43.0 cent. The dividend is covered 2.3 times by total earnings
and represents an approximate yield of 5.0% on the basis of the share price at
the beginning of March 2003.
Outlook
For the current year (2003) our expectation is that while the market is likely
to be more challenging, the outlook for the Group remains positive and, thanks
to the strategic work which we have undertaken in recent years, the Group is in
an exceptionally strong position to maximise the opportunities which the Irish
economy still promises going forward.
The challenges for our banking business on the one hand and our life & pensions
business on the other are linked to the very low interest rate environment and
the depressed market for investment products respectively.
However the sheer breadth of the Group's product range and the diversity of its
distribution channels means that it is very strongly positioned to respond to
these challenges and to focus its attention on those areas of the market where
most growth is likely.
The Group will also benefit from the continuing strength of the Irish economy
and the consequent demand for key product offerings including Mortgages,
Protection Insurance, Consumer Finance and general banking products. The
Pensions market is also likely to show increased growth following the launch of
the Governments new PRSA initiative and the publicity which will follow.
Finally, the continuing strength of the Group's capital base will give us
significant advantages over many of our key competitors and provide us with us
the financial muscle to respond imaginatively to the challenges we face. We look
forward to the outcome for the current year with confidence.
For further information contact:
Name: Telephone No. Mobile No. Email address
Barry Walsh +353 1 704 2678 087 681 8157 barry.walsh@irishlife.ie
David McCarthy +353 1 856 3050 087 256 7292 david.mccarthy@irishlife.ie
Media:
Ray Gordon +353 1 678 8099 087 241 7373 ray@mrpa.ie
Further information including the results presentation (slides, text and
webcast) and press releases are available at www.irishlifepermanent.ie
Group Profit and Loss Account
year ended 31 December 2002
As
restated
Notes 2002 2001
Eurom Eurom
Banking and other activities
Interest receivable & similar income 7 830.3 907.5
Interest payable & similar charges (505.1) (627.1)
Net interest income 325.2 280.4
Fees and commission receivable 43.5 32.4
Fees and commission payable (27.4) (20.7)
Dealing profits 3.3 4.8
Other banking income 4.7 6.2
Investment return 8 3.8 15.2
Income from other activities 5.8 5.0
358.9 323.3
Administrative expenses 9 (244.4) (205.3)
Provision for bad and doubtful debts 10 (13.3) (11.7)
Profit arising from banking and other activities 101.2 106.3
Life assurance activities
Earned premiums
Continuing operations 2,544.5 1,568.8
Discontinued operations - USA - 235.6
2,544.5 1,804.4
Investment return 8 (1,798.7) (372.1)
Increase in shareholders' value of in-force business 39.4 90.2
Claims incurred (1,137.5) (1,606.9)
Change in other technical provisions
Non unit linked business (33.4) 546.4
Unit linked business 899.4 97.5
Operating expenses 9 (341.3) (427.7)
Tax attributable to life assurance activities 11 (67.4) (26.7)
Profit arising from life assurance activities after taxation 105.0 105.1
Tax attributable to the profit on life assurance activities 11 44.2 2.7
Profit arising from life assurance activities before taxation 149.2 107.8
Goodwill amortisation (11.7) (14.8)
Profit arising from operating activities
Continuing operations 238.7 198.0
Discontinued operations - USA - 1.3
238.7 199.3
Group Profit and Loss Account
year ended 31 December 2002 (continued)
As
restated
Notes 2002 2001
Eurom Eurom
Profit arising from operating activities brought forward 238.7 199.3
Share of losses of associated undertakings (4.0) (7.2)
234.7 192.1
Contribution to embedded value arising on
disposal of Industrial Branch business 5 103.2 -
Costs arising on integration and restructuring
of the group's banking operations 5 (10.0) (63.0)
Profit on disposal of fixed assets 5 30.3 -
Loss arising on disposal of US businesses 5 - (50.0)
Profit on ordinary activities before taxation 358.2 79.1
Tax on profit on ordinary activities 11 (68.5) (29.7)
289.7 49.4
Profit/(loss) attributable to minority interests 0.3 (0.8)
Profit for the financial year after taxation 290.0 48.6
Dividends (128.0) (120.6)
Transfer (to)/from non-distributable reserves (117.5) 74.4
Relating to share capital movements (150.0) (56.9)
Profit retained brought forward 397.9 452.4
Profit retained carried forward 292.4 397.9
Earnings per share (cent) 12 105.5 17.1
Fully diluted earnings per share (cent) 12 105.1 17.0
Earnings per share based on total contribution (cent) 12 115.3 86.4
Group Balance Sheet as at 31 December 2002
As
restated
2002 2001
Eurom Eurom
ASSETS
Attributable to banking and other activities
Cash and balances at central banks 170.2 183.7
Government bills and other eligible bills 103.0 21.1
Loans and advances to credit institutions 1,771.9 2,615.0
Loans and advances to customers 13,130.6 11,775.1
Securitised assets - mortgage assets 1,500.0 1,164.0
Less: non recourse funding (1,481.9) (1,149.8)
18.1 14.2
Debt securities - listed 2,671.6 1,232.9
Equity shares - 0.5
Interest in associated undertakings 55.0 59.9
Investment properties 23.6 23.6
Tangible fixed assets 150.2 175.9
Other assets/debtors
- Amounts falling due within one year 64.7 267.0
- Amounts falling due after one year 18.7 19.4
Prepayments and accrued income 168.5 195.4
Total assets attributable to banking and other activities 18,346.1 16,583.7
Attributable to life assurance activities
Investments:
Investment properties 113.2 162.4
Equity shares and units in unit trusts 155.6 681.6
Debt and other fixed income securities 1,839.5 1,808.1
Loans secured by mortgages and policies 13.1 17.0
Deposits with credit institutions 380.7 361.5
2,502.1 3,030.6
Assets held to cover linked liabilities 10,701.4 11,701.3
Shareholders' value of in-force business 972.0 1,029.4
Reinsurer's share of technical provisions 1,243.8 1,372.7
Other assets/debtors
- Amounts due within one year 222.6 238.8
- Amounts falling due after one year 62.4 59.0
285.0 297.8
Tangible fixed assets 44.3 34.5
Cash at bank 66.6 65.6
Prepayments and accrued income 75.9 73.3
Total assets attributable to life assurance activities 15,891.1 17,605.2
Intangible assets
Goodwill on acquisition 211.4 220.8
Total assets 34,448.6 34,409.7
Group Balance Sheet as at 31 December 2002
As
restated
2002 2001
Notes Eurom Euro
LIABILITIES
Attributable to banking and other activities
Deposits by credit institutions 1,727.3 1,139.9
Customer accounts 10,202.4 9,470.7
Debt securities in issue 5,261.4 4,646.4
Provision for liabilities and charges 17.1 43.8
Other liabilities/creditors
- Amounts falling due within one year 72.4 92.3
Accruals and deferred income 166.9 46.6
Dividends 89.3 83.7
Subordinated liabilities 649.5 771.2
Total liabilities attributable to banking and other 18,186.3 16,294.6
activities
Attributable to life assurance activities
Life assurance technical provisions 3,373.8 3,986.5
Technical provision for linked liabilities 10,701.4 11,701.3
Provision for deferred taxation 5.0 -
Other liabilities/creditors
- Amounts falling due within one year 235.5 496.9
Accruals and deferred income 38.3 28.0
Total liabilities attributable to life assurance 14,354.0 16,212.7
activities
Capital and reserves
Share capital 13 86.1 89.3
Share premium 13 49.4 44.9
Other capital reserves 13 6.9 3.5
Non-distributable reserve 14 1,465.4 1,354.3
Profit and loss account 14 292.4 397.9
Shareholders' funds attributable to equity interests 1,900.2 1,889.9
Equity minority interests - life assurance activities 8.1 12.5
Total liabilities 34,448.6 34,409.7
Statement of Total Recognised Gains & Losses
year ended 31 December 2002
As
restated
2002 2001
Notes Eurom Eurom
Profit for the financial year 290.0 49.6
Prior period restatement 1 (1.0)
Profit for the financial year as restated 290.0 48.6
Exchange adjustments on net investment in overseas subsidiaries
net of exchange adjustments on related foreign currency (6.4) (2.5)
borrowings
Total recognised gains and losses relating to the year 283.6 46.1
Reconciliation of Movement in Shareholders' Funds
year ended 31 December 2002
As
restated
2002 2001
Notes Eurom Eurom
At 1 January 1,897.0 2,008.7
Prior year restatement 1 (7.1) (6.1)
At 1 January as restated 1,889.9 2,002.6
Total recognised gains and losses 283.6 46.1
Dividends paid and proposed (128.0) (120.6)
Previously eliminated goodwill written off to profit and loss - 16.2
account
Issue of share capital 4.7 2.5
Shares repurchased and cancelled (150.0) (121.5)
Shares repurchased during the year - (2.3)
Re-issue of shares held as treasury shares - 66.9
At 31 December 1,900.2 1,889.9
Group Cash Flow Statement year ended 31 December 2002
2002 2001
Eurom Eurom
Net cash inflow from banking and other activities 1,085.0 495.7
Net cash inflow from life assurance activities 161.0 47.6
Net cash inflow from operating activities 1,246.0 543.3
Dividends received from associated undertakings 0.9 3.1
Returns on investment and servicing of finance
Interest paid on subordinated loans (50.6) (19.7)
Taxation
Tax paid (9.7) (7.2)
Capital expenditure and financing investment
Purchase of tangible fixed assets (21.1) (14.2)
Sale of tangible fixed assets 54.3 0.3
Sale of investment property - 22.7
Sale of equity investments 4.3 23.4
Acquisitions and disposals
Purchase of TSB - (400.2)
Purchase of shares in ILI (5.8)
Equity dividends paid (122.3) (117.4)
Financing
Shares issued 4.7 2.5
Shares repurchased and cancelled (150.0) (121.5)
Shares repurchased during the year - (2.3)
Shares issued in respect of TSB acquisition - 66.9
Issue of subordinated liabilities 23.8 515.6
Redemption of subordinated liabilities (122.5) -
Increase in cash and cash equivalents 852.0 495.3
This information is provided by RNS
The company news service from the London Stock Exchange
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