RNS Number:4610Z
FBD Holdings PLC
08 March 2006
Validation No. 180441
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2005
2005 2004
FINANCIAL HIGHLIGHTS Euro000s Euro000s %
* Gross written premiums 389,472 351,487 +10.8%
* Net earned premiums 332,371 296,237 +12.2%
* Operating profit* 162,624 124,794 +30.3%
Cent Cent
* Operating earnings per share* 363.54 256.18 +41.9%
* Dividend per share 57.50 40.00 +43.8%
* Net assets per share 1,250.62 969.64 +29.0%
* Based on longer term investments return.
Commenting on the results, Philip Fitzsimons, Chief Executive, said:
"2005 was another excellent year for FBD. Operating profit grew strongly and
net assets increased significantly.
Our insurance results underpinned this performance. New business volumes were
strong and more than offset reductions in premiums that were implemented during
the year. The claims charge was broadly in line with the previous year and
reflected the improvement in overall claims costs that has occurred in recent
years.
For shareholders this has meant higher returns; for customers it has meant
lower premium rates. We anticipate further premium reductions in certain
business lines if claims and pricing trends continue."
ENDS
8th March 2006
For Reference Telephone
FBD
Philip Fitzsimons, Chief Executive 01 4093200
Andrew Langford, Finance Director 01 4093200
Murray Consultants
Joe Murray 01 4980300
FBD HOLDINGS PLC
PRELIMINARY RESULTS ANNOUNCEMENT
FBD Holdings plc ("FBD" or "the Group") is pleased to announce that the Group's
performance in the year ended 31st December 2005 was very satisfactory.
Results
Group operating profit increased to Euro162.6m., compared to Euro124.8m. in 2004.
Total income amounted to Euro404.5m (2004: Euro355.1m). It included net premium
earned of Euro332.4m (2004: Euro296.3m.) and investment income (calculated on the
basis of longer term returns) of Euro44.4m. (2004: Euro40.7m.), arising in the Group's
insurance underwriting business. The remaining Euro27.7m. (2004: Euro18.1m)
represents the net income, i.e. after expenses, arising from the Group's non
underwriting activities.
Expenses amounting to Euro241.9m. (2004: Euro230.3m) related to the Group's
underwriting business. They consist of claim costs amounting to Euro202.5m.
(2004: Euro197.8m.) and operating expenses of Euro39.4m. (2004: Euro32.5m).
Of the Group's operating profit, Euro134.9m. (2004: Euro106.7m.) is attributable to
underwriting and Euro27.7m. (2004: Euro18.1m) to non-underwriting, as detailed below.
Operating earnings per share based on longer term investment returns amounted to
363.54c (2004: 256.18c) in the period.
Underwriting
Insurance underwriting (FBD Insurance) is the Group's primary business
activity.
Gross written premiums (i.e. before reinsurance) amounted to Euro389.5m., compared
to Euro351.5m. in 2004. A Euro30m. loyalty discount had been provided for in the
latter year. Against the background of a reduction in overall market premium
income in 2005, we are pleased with our performance. It has been achieved
through new business volume growth which has more than offset the impact of
reductions in average premiums which occurred in the period.
Net earned premiums amounted to Euro332.4m. (2004: Euro296.3m) and reflected lower
reinsurance cessions.
The net claims incurred charge, which is comprised of the movement in net
outstanding claims provisions of Euro38.8m. (2004: Euro52.1m) plus net claims paid of
Euro163.7m. (2004: Euro145.7m.), amounted to Euro202.5m. (2004: Euro197.8m). The claims
charge benefited from ongoing settlement savings on prior year provisions.
Net operating expenses amounted to Euro39.4m. (2004: Euro32.5m).
The foregoing premium/claim/expenses figures resulted in an underwriting profit
of Euro90.5m. (2004: Euro65.9m.). In achieving this underwriting result, as expected,
the second half of the year proved more challenging. Net claims incurred
increased at a faster rate in the second half and were 2.4% higher overall for
the full year. Net earned premiums decreased in the second half year, compared
to the first half, as we had anticipated.
The 2005 net operating ratios were: loss ratio - 60.9% (2004: 66.8%); expense
ratio - 11.9% (2004: 11.0%); combined ratio - 72.8% (2004: 77.8%).
After crediting investment income of Euro44.4m. (2004: Euro40.7m), the operating
profit of FBD's underwriting business amounted to Euro134.9m. (2004: Euro106.7m).
Non-underwriting
The Group's non-underwriting activities include property development/leisure,
financial services and the investment of non-allocated capital ("capital fund").
The contribution to operating profit from these interests amounted to Euro27.7m.
(2004: Euro18.1m.)
Property and leisure interests, which include the La Cala and Sunset Beach
resorts in Spain and the Tower Hotel Group in Ireland, contributed Euro13.6m
(2004: Euro10.6m.) to operating profits. Property sales at La Cala were below
budget, with 40 handovers in the year. This reflected the general slowdown in
second-home sales in Costa del Sol in 2005. On the leisure side, trading in
Spain and in Ireland was challenging, with an oversupply of product exerting
downward pressure on margins.
The Group's financial service businesses, which include insurance broking (FBD
Brokers), life assurance/pension broking/investment advice (FBD Life) and
instalment finance (Abbey Finance) contributed Euro3.3m. (2004: Euro3.9m.) to
operating profits. Insurance broking income was negatively affected by lower
revenues, which resulted from the reduction in premium levels in the market,
particularly for large commercial risks.
Investment returns on the capital fund amounted to Euro10.8m. (2004: Euro3.7m.) This
fund was invested in equities.
Balance Sheet
Total assets at year end amounted to Euro1,564.4m. (2004: 1,466.8m.), an increase
of 6.7% on 2004. Ordinary shareholders' funds amounted to Euro476.1m. (2004:
Euro406.5m), an increase of 17.1% for the year. The growth in shareholders' funds
arising from the contribution of the strong operating performance and the
positive short term fluctuations of Euro26.0m. (Euro2004: Euro10.3m.) was reduced by the
Company's purchase of its own shares in March 2005 at a cost of Euro81m.
Final Dividend
In the light of the Group's continuing favourable results and the Board's stated
intention to increase the proportion of earnings distributed to shareholders, a
final dividend of 37.50c (2004: 27.28c) per share is being recommended by the
Directors. This will bring the total dividend for the year to 57.50c (2004:
40.00c), a significant increase of 43.8%.
The final dividend will be paid on 3rd May 2006 to shareholders on the Company's
Register at close of business on 17th March 2006. The final dividend is
subject to withholding tax ("DWT") except for shareholders who are exempt from
DWT and who have furnished a properly completed Composite Resident Form to the
Company's Registrar.
Outlook
The progress made by the Group in 2005 has been maintained in the year to date.
In our core activity, we are focused on implementing strategies and plans that
are designed to grow our underwriting business efficiently and profitably.
We are targeting to achieve challenging new business volumes. In an
environment where price competition continues to be intense and premiums are
trending lower, this volume growth is essential in order to maintain overall
premium income at current levels. The impact on 2006 earned income of premium
reductions which were implemented in recent months, and further premium
reductions which are likely to be undertaken this year, must also be borne in
mind. In the light of this challenging background, our insurance operations are
being strengthened and resourced in order to increase our customer base and to
grow our market share.
Against the background of increasing risk exposure and falling average premiums,
the critical drivers of the margin that will be achieved are claim trends and
claims experience. It is widely acknowledged that changes in the public
mindset and the various measures undertaken over the past couple of years have
improved the claims environment in Ireland to the benefit of insured and insurer
alike. It is also widely recognised that competition is reducing the current
underwriting margins and driving them towards European norms. The improved
loss ratios reported by Irish insurers in recent years have been favoured by
savings in prior year claim provisions that arise at time of settlement. The
critical factors that will ultimately determine the timescales for combined
ratios in the Irish market to fall into line with European norms are (a) the
speed of implementation and (b) the degree of success surrounding the remaining
reforms which the Government has pledged to undertake, allied to the impact of
competition on premium levels. While we await these reforms, in addition to
those implemented to date, and pending sufficient evidence emerging that
reductions in claims frequency and claim costs will be permanent, FBD will
continue to provide for its outstanding claims on the basis of its historical
reserving policy. It is a matter which we will keep under regular review.
FBD will remain supportive of the Government's efforts to deliver the
outstanding structural reform measures. Meanwhile, the Group will continue to
pursue its own claims cost savings plans and will work to achieve cost
efficiencies across its insurance operations in general.
In relation to our non-underwriting businesses, our property/leisure interests
face the particular challenges that currently pertain to the industry, as
mentioned earlier. Revised strategies and plans are being implemented for each
individual business unit. Options to maximise shareholders' interests are kept
under ongoing review. This is evidenced by our public announcement on 23rd
February last that we had entered into a conditional agreement to sell the major
portion of La Cala's development land bank in Spain for a total consideration of
Euro201m. in cash, to be received in phased payments. The Board has informed
shareholders of its intention to distribute the net proceeds of this sale,
amounting to up to Euro120m, by way of two special dividends.
Our financial services businesses continue to adapt to the environment that they
face and are focused on availing of opportunities for growth.
How best to maximise non-allocated capital for the benefit of shareholders is a
matter which the Board regularly reviews. At this particular juncture, the
Board has decided to retain the capital. The Group will investigate all
possible opportunities to invest some or all of this capital fund in the Group's
primary business of insurance underwriting or in related financial service
activities. Whilst it is investigating such possibilities, the Board does not
rule out other options for use of capital if it deems them to be in the best
interests of shareholders.
2005 was a year in which FBD's platform for growth in the years ahead was
further strengthened and the successes of previous years were built on. The
Group looks forward to the future with confidence.
ENDS
Note
Management will present these results to analysts at 10.30 am. to-day. A copy
of the presentation will be posted on the Group's website, www.fbd.ie, at that
time.
FBD Update
* FBD introduced two new major benefits for customers who have a car insurance
policy with FBD. Car Breakdown Assist and Car Accident Assist are 24
hours services, automatically included for all customers with comprehensive
insurance and can be added to third party policies for a charge of Euro30.
* FBD implemented further reductions in premium rates during 2005. In the July
2005 Survey of house insurance, FBD came out on top once again,
being No. 1 in four out of 6 samples and second and third in the other two.
Since the Financial Regulator's Surveys began in August 2004, FBD has
consistently been rated No. 1 for house insurance.
* FBD moved to new larger offices in Limerick in the first half of 2005 and
entered agreements to relocate to larger offices in Clonmel, Carlow,
Letterkenny and Portlaoise. The Company also acquired a new premises in
Dundalk (a new location for FBD) which will open for business in March of
this year (2006).
* FBD's Dublin based Personal Lines office celebrated its first anniversary in
August of 2005. Due to its success and the continued larger
volumes of calls to the 1850 617617 line, staff numbers are currently being
increased from over 30 to in excess of 50.
* FBD has continued to expand its Dublin commercial business base and now has
10 teams in place, targeting a broad spectrum of small to medium sized
businesses.
* FBD announced a continuance of its sponsorship of RTE's Flagship Soap, Fair
City, for 2005/2006 season. This sponsorship continues to lift the
profile of FBD in Dublin and around the country.
FBD also commenced its sponsorship of the "FBD Dublin Business of the Month",
Awards in association with City Channel, the new TV Station for Dublin, which
is broadcast through the digital NTL network. This sponsorship is being
carried out in association with Crest Ireland Limited. FBD has sponsored the
FBD Crest Retail Excellence Awards for the past 5 years.
* In 2005, for the second successive year, FBD, in conjunction with Advance
Pitstop, carried out the Annual Survey of Motorists' Behaviour & Attitudes.
The findings, once again, added greatly to the data available for
those involved in setting the safety agenda. The Report highlighted the
worsening habits of Irish drivers and in addition to receiving substantial
media attention when it was launched, it was also presented to all interested
parties, including Government Departments, the Road Safety Authority and the
Gardai.
* At the FBD La Cala Resort in Southern Spain, a third 18 hole championship
golf course (the Europa) was opened in 2005. This new course
complements the existing North and South courses and the 5 Star hotel located
there. The Real Altavista apartment development (108 units) has been
completed, with a substantial number of sales and handovers achieved to date.
Work on building the Monte Alto townhouses (108 units) is well advanced and
marketing of these properties has commenced. In addition, the luxury CaraCala
Spa at the hotel is due to open in April of this year.
* Upgrading of all rooms at FBD Sunset Beach Club on the Costa del Sol is well
advanced and a new promenade and related beach facilities have been
developed, further enhancing the Resort.
* Since March 2005, FBD is 100% owner of the Tower Hotel Group which
includes the new 4 Star Castleknock Hotel & Country Club, opened during the
year. The adjoining golf course also recently opened for play.
FBD HOLDINGS PLC
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2005
2005 2004
Euro000s Euro000s
as restated
Turnover 531,747 471,858
======= =======
Income
Net premium earned 332,371 296,237
Non-underwriting operating income 27,739 18,142
Investment income - longer term rate of return 44,435 40,713
------- -------
404,545 355,092
Expenses
Change in insurance liabilities net of reinsurance (38,809) (52,142)
Claims paid, net of recoveries from reinsurers (163,666) (145,642)
Operating expenses (39,446) (32,514)
------- -------
Operating profit 162,624 124,794
Investment income - short term fluctuation 25,956 10,298
Finance costs (3,425) (3,116)
------- -------
Profit before tax 185,155 131,976
Income tax expense (23,701) (16,968)
------- -------
Profit for the year 161,454 115,008
======= =======
Attributable to:
Equity holders of the parent 161,500 113,257
Minority interest (46) 1,751
------- -------
161,454 115,008
======= =======
2005 2004
Cent Cent
Earnings per 60c ordinary share 416.09 271.23
======= =======
Diluted earnings per 60c ordinary share 411.45 266.94
======= =======
FBD HOLDINGS PLC
GROUP BALANCE SHEET - ASSETS
AT 31ST DECEMBER 2005
2005 2004
Euro000s Euro000s
as restated
Property and equipment
Land and buildings 196,923 176,517
Fixtures and fittings 13,302 10,547
--------- ---------
210,225 187,064
--------- ---------
Intangible assets
Deferred acquisition costs 11,849 10,591
--------- ---------
Investments
Investment property 48,856 24,200
Investments held for trading 477,310 339,825
Available for sale investments 47,290 30,476
Investments held to maturity 13,740 13,684
Deposits with banks 443,042 538,420
--------- ---------
1,030,238 946,605
--------- ---------
Inventories 62,496 70,543
--------- ---------
Loans and receivables 141,673 134,909
--------- ---------
Reinsurers' share of technical provisions
Provision for unearned premiums 19,412 21,302
Claims outstanding 46,622 44,463
--------- ---------
66,034 65,765
--------- ---------
Cash and cash equivalents 41,897 51,362
--------- ---------
Total assets 1,564,412 1,466,839
========= =========
FBD HOLDINGS PLC
GROUP BALANCE SHEET - LIABILITIES
AT 31ST DECEMBER 2005
2005 2004
Euro000s Euro000s
as restated
Equity
Share capital 23,557 25,151
Capital reserves 9,813 7,445
Revaluation reserves 47,706 38,581
Translation reserves 435 371
Retained earnings 394,616 334,905
--------- ---------
Shareholders' funds - equity interests 476,127 406,453
Preference share capital 2,923 2,923
--------- ---------
Total shareholders' funds 479,050 409,376
Minority interests 6,423 16,333
--------- ---------
Total equity 485,473 425,709
--------- ---------
Liabilities
Technical provisions
Provision for unearned premiums 188,953 184,954
Claims outstanding 699,397 658,431
--------- ---------
888,350 843,385
--------- ---------
Bank and other loans 99,831 80,476
--------- ---------
Creditors 54,829 91,482
--------- ---------
Deferred tax 33,873 25,787
--------- ---------
Retirement benefit obligation 2,056 -
--------- ---------
Total liabilities 1,564,412 1,466,839
========== =========
FBD HOLDINGS PLC
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31ST DECEMBER 2005
Revaluation Attributable Preference
2004 Share Capital and other Translation Retained to ordinary share Minority
capital reserves reserves reserve earnings shareholders capital interests Total
Euro000s Euro000s Euro000s Euro000s Euro000s Euro000s Euro000s Euro000s
Euro000s
Balance at
1 January 2004 25,125 6,994 35,801 - 240,776 308,696 2,923 15,077 326,696
Profit after
taxation - - - - 113,257 113,257 - 1,751 115,008
Exchange
translation
adjustment - - - 371 - 371 - - 371
Dividends paid - - - - (12,614) (12,614) - - (12,614)
Reissue of ordinary
shares 26 173 - - 2,517 2,716 - - 2,716
Recognition of
share based
payments - 278 - - - 278 - - 278
Transfer to income
statement on sale
of available for
sale investments - - (3,854) - - (3,854) - - (3,854)
Gain on
available-for-sale
investments - - 8,535 - - 8,535 - - 8,535
Purchase of
minority interest - - - - - - - (495) (495)
Actuarial loss
on pension fund
valuation - - - - (9,031) (9,031) - - (9,031)
Revaluation of
owner occupied
property - - (1,901) - - (1,901) - - (1,901)
------- ------- ------- ------- ------- ------- ------- ------- -------
Balance at
31 December 2004 25,151 7,445 38,581 371 334,905 406,453 2,923 16,333 425,709
2005
Profit after
taxation - - - - 161,500 161,500 - (46) 161,454
Exchange
translation
adjustment - - - 64 64 - 64
Dividends paid - - - - (18,158) (18,158) - - (18,158)
Buyback of own
shares - - - - (81,238) (81,238) - - (81,238)
Cancellation
of own shares (1,594) 1,594 - - - - - - -
Reissue of
ordinary shares - - - - 1,409 1,409 - - 1,409
Recognition of
share based
payments - 774 - - - 774 - - 774
Transfer to income
statement on sale
of available for
sale investments - - (5,583) - - (5,583) - - (5,583)
Gain on available
for sale
investments - - 15,779 - - 15,779 - - 15,779
Purchase of
minority interest - - - - - - - (9,864) (9,864)
Actuarial loss on
pension fund
valuation - - - - (3,802) (3,802) - - (3,802)
Sale of land
and buildings - - (1,071) - - (1,071) - - (1,071)
------- ------- ------- ------- ------- ------- ------- ------- -------
Balance at
31 December 2005 23,557 9,813 47,706 435 394,616 476,127 2,923 6,423 485,473
====== ====== ====== ====== ======= ======= ====== ====== =======
FBD HOLDINGS PLC
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2005
2005 2004
Euro000s Euro000s
as restated
Operating activities
Profit before tax for the year 185,155 131,976
Adjustments for:
Gains on investments held for
trading and held to maturity (41,031) (17,231)
Depreciation of property and equipment 3,487 3,075
Share-based payment expense 774 278
Increase in fair value of investment property - (1,200)
Increase in technical provisions 44,696 54,354
Retirement benefit charges (3,802) (9,031)
--------- ---------
Operating cash flows before movement in
working capital 189,279 162,221
Increase in receivables (4,274) (8,612)
(Decrease) increase in payables (22,863) 16,013
--------- ---------
Cash generated from operations 162,142 169,622
Income taxes paid (20,516) (12,228)
--------- ---------
Net cash from operating activities 141,626 157,394
--------- ---------
Investing activities
Investments held for trading (96,510) (146,225)
Investments available for sale (5,162) (138)
Purchase of land, buildings and inventory (13,430) (50,328)
Purchase of fixtures and fittings (6,242) (5,222)
Purchase of investment property (24,656) -
Loans and advances (3,789) (23,601)
Deposits invested with financial institutions 95,378 68,779
--------- ---------
Net cash used in investing activities (54,411) (156,735)
--------- ---------
Financing activities
Dividends paid (18,158) (12,614)
Repurchase of ordinary shares (81,238) -
Proceeds of issue of ordinary shares - 199
Proceeds of re-issue of ordinary shares 1,409 2,517
Increase in bank loans 1,243 34,955
--------- ---------
Net cash (used in) from financing activities (96,744) 25,057
--------- ---------
Net (decrease) increase in cash and cash
equivalents (9,529) 25,716
Cash and cash equivalents at the beginning
of the year 51,362 25,275
Effect of foreign exchange rate changes 64 371
--------- ---------
Cash and cash equivalents at the end of the year 41,897 51,362
========= =========
FBD HOLDINGS PLC
SUPPLEMENTARY INFORMATION
FOR THE YEAR ENDED 31ST DECEMBER 2005
2005 2004
Euro000s Euro000s
as restated
Note 1 - Operating profit by activity
Underwriting 134,885 106,652
Non underwriting 27,739 18,142
--------- ---------
162,624 124,794
========= =========
Note 2 - Underwriting
Gross written premiums 389,472 357,487
========= =========
Net earned premiums 332,371 296,237
Net claims incurred (202,475) (197,784)
Net operating expenses (39,446) (32,514)
--------- ---------
Underwriting result 90,450 65,939
========= =========
Ratios % %
Net loss ratio 60.9 66.8
Net expense ratio 11.9 11.0
Combined ratio 72.8 77.8
ENDS
This announcement has been issued through the Companies Announcement Service of
the Irish Stock Exchange
This information is provided by RNS
The company news service from the London Stock Exchange
END
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