TIDMFBH
RNS Number : 4918C
FBD Holdings PLC
08 March 2011
8 March 2011
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
2010 2009
FINANCIAL HIGHLIGHTS EUR000s EUR000s
-- Gross premium
written 358,385 357,244
-- Operating
profit 40,666 28,880
-- Loss
before
taxation (3,083) (34,644)
Cent Cent
-- Operating
earnings
per share 106 75
-- Ordinary
dividend per
60c ordinary
share 31.5 30
-- Net
assets per
60c
ordinary
share 547 576
OPERATIONAL HIGHLIGHTS
-- Strong operational performance with operating profit up 41%
to EUR40.7m
-- Operating profit and cash flow generation in all
divisions
-- Gross premium written 0.3% higher, the first increase since
2007
-- Market share grows to 11.8% (2009: 11.5%), market share has
increased in nine of the last ten years
-- Market rates hardened in 2010 and weather events will
necessitate further rate increases
-- Improvement in loss ratio from 83.8% to 77.4%
-- Implementation of claims initiatives and cost improvements
continued
-- Operating EPS increased 41% to 106 cent despite severe
weather conditions
-- Reductions in asset values of EUR50.0m lead to pre-tax loss
of EUR3.1m
-- Following impairments, the potential for further downside is
limited
-- Proposed final dividend of 21 cent per share
-- Strong capital base and prudent reserving brings solvency
level in FBD Insurance to 61% of net earned premium, from 52% in
2009
Commenting on the results, Andrew Langford, Group Chief
Executive said;
"FBD delivered another strong operational performance and made
significant progress in advancing its strategic priorities in 2010,
a challenging year for Ireland's economy and the insurance sector.
The severe weather conditions in January and December partially
masked the benefit of rate increases, underwriting discipline and
proactive management of claims and expenses. We have grown market
share for nine of the last ten years reaching 11.8% in 2010. The
Group has a strong capital base and balance sheet and a prudent
reserving strategy and is well positioned to outperform its peers
in delivering superior returns to shareholders".
Ends.
A presentation will be made to analysts at 10am today, a copy of
which will be available
on our Group website, www.fbdgroup.com from that time.
About FBD Holdings plc
FBD is one of Ireland's largest non-life insurers looking after
the insurance needs of private individuals, farmers and business
owners. The Group has developed complementary financial service
businesses and has hotel and leisure property interests that
include four hotels in Ireland and two resorts in southern Spain.
The Group was established in the 1960s and is quoted on the Irish
and London stock exchanges.
Forward Looking Statements
Some statements in this announcement are forward-looking. They
represent expectations for the Group's business, and involve risks
and uncertainties. These forward-looking statements are based on
current expectations and projections about future events. The Group
believes that current expectations and assumptions with respect to
these forward-looking statements are reasonable. However, because
they involve known and unknown risks, uncertainties and other
factors, which are in some cases beyond the Group's control, actual
results or performance may differ materially from those expressed
or implied by such forward-looking statements.
For Reference Telephone
FBD
Andrew Langford, Group Chief Executive +353 1 4093208
Cathal O'Caoimh, Group Finance Director
Peter Jackson, Head of Investor Relations
Murray Consultants
Joe Murray +353 1 4980300
Review of Operations
Overview
FBD delivered another strong operational performance and made
significant progress in advancing its strategic priorities in 2010,
a challenging year for Ireland's economy and the insurance sector.
However, the benefit of rate increases, underwriting discipline and
proactive management of claims and expenses were partially masked
by the impact of the severe weather conditions in both January and
December 2010. In a second consecutive year of abnormal weather
related claims, FBD's underwriting discipline and prudent
reinsurance policy protected the Group's trading results, its
capital base and solvency.
At EUR40.7m, operating profit was up by 41% on 2009. Operating
profit in our primary underwriting business increased 61% to
EUR36.1m (2009: EUR22.4m) as a EUR14.5m turnaround in the
underwriting result was offset by a reduction in investment
returns.
Gross written premium of EUR358.4m is up 0.3% on 2009, the first
increase since 2007, in a market that declined by a further 2.6% in
2010. FBD has continued its growth in market share, now standing at
11.8%, with market share gains in nine of the last ten years. At
the same time as gaining market share, FBD's insurance risk
exposure reduced during 2010.
Net claims incurred in 2010 reduced by 11.1% relative to 2009
due to a combination of (i) lower insurance exposure, (ii) better
2010 large claims experience, (iii) decrease in non-weather related
property claims frequency, (iv) FBD's decision not to grow volume
in certain segments at uneconomic rates and (v) the benefit of
claims management initiatives. Recent industry weather claims
experience has contributed to a hardening of insurance rates across
the Irish market in 2010.
Gross underwriting management expenses reduced by 0.7% in 2010
(2009: 20.3%) as the benefits of cost containment exercises began
to crystallise. The net expense ratio has risen to 22.0% (2009:
20.3%) because of the impact of a rise in the cost of reinsurance
and lower net premium earned.
In challenging market conditions, FBD's non-underwriting
operations have delivered an operating profit of EUR4.6m (2009:
EUR6.5m). The Group's property and leisure businesses delivered
operating profits and positive cash flows again in 2010. The key
challenge facing the business in Ireland is oversupply in the
market. This is further exacerbated by a reduction in the number of
foreign visitors. New marketing and sales initiatives and
operational cost efficiencies continue to be identified and
implemented to achieve targets.
FBD's financial services businesses continued to deliver a
positive performance in difficult market environments. FBD Brokers
won additional new business during 2010 and FBD Financial Solutions
achieved strong growth in profitability, significantly
outperforming the industry. These businesses have proactively
managed their cost structures to reflect the economic
circumstances.
The value of the Group's property assets has reduced in line
with market values in Ireland and Spain, although the pace of the
market decline has slowed considerably. Asset impairments of
EUR50.0m (2009: EUR57.8m) have been charged to the consolidated
income statement. Members of the Group's defined benefit pension
scheme agreed to a restructuring of pension benefits and the
introduction of pension contributions. As a result the Group's
obligations for retirement benefits reduced by EUR11.1m. After
charging finance costs of EUR3.2m (2009: EUR3.4m), the Group
recorded a loss before tax of EUR3.1m (2009: EUR34.6m).
Operating earnings per ordinary share increased from 75 cent to
106 cent. The Group continues to have a strong capital base and
balance sheet. FBD Insurance had a solvency level of 61% of net
premium earned at 31 December 2010, up from 52% at 31 December
2009.
Business Review
Underwriting
Premium income
The Irish insurance market contracted by 2.6% during 2010 as the
benefit of hardening rates was offset by the continuing reduction
in insurable risk and values, in line with economic activity in
Ireland. FBD's gross premium written increased by 0.3% to EUR358.4m
(2009: EUR357.2m) as improved retention rates and higher conversion
rates combined with rate increases led to growth for the first time
since 2007. Net premium earned reduced to EUR302.5m from EUR314.6m
because 2009 benefited from the higher level of gross premium
written in 2008. Premium rates continued to harden in the Irish
insurance market, particularly for home and business insurance,
while motor insurance rates have been slower to increase. The flood
and freeze conditions over the 2009 and 2010 winters accelerated
the implementation of necessary rate increases in the property
account.
A key feature of 2010 has been the reductions in insurance risk
and values reflecting the decline in economic activity in Ireland.
Despite rate increases, average policy premiums have not increased
significantly. The market for large insurance risks has become more
competitive and FBD has chosen not to compete for business at
unsustainable rates.
Claims
Net claims incurred amounted to EUR234.3m, an 11.1% reduction on
2009 because of a combination of lower exposure and an improved
loss ratio. The loss ratio (claims incurred, net of reinsurance as
a percentage of earned premiums net of reinsurance) for 2010 was
77.4% (2009: 83.8%).
FBD experienced an improvement in non-weather related property
claims, particularly towards the end of the financial year. Ireland
continued to experience a reduction in the number of road deaths
and large claim experience improved considerably. The frequency of
both (non-weather related) property claims and motor injury claims
has reduced. The improvement in the loss ratio is also attributable
to rate increases and underwriting and claims management
initiatives.
Not unlike the previous year, 2010 was adversely affected by
severe weather events with abnormal freezes in both January and
December, the latter being the coldest December on record. Adding
the severe flooding in November 2009 and the prolonged freezing
conditions in December 2009 means that, in a fourteen month period,
FBD made good the weather related losses of 14,000 of our customers
amounting to over EUR90m.
Ultimately, an insurance company's promise to its customers is
that it will meet their expectations in their time of need and this
objective was achieved over the fourteen month period. The
Directors wish to express gratitude to the staff and suppliers who
responded by providing customers with outstanding and professional
service in difficult conditions.
During the fourteen month period, the cost to FBD was EUR39m,
net of reinsurance. FBD's risk management policy determines the
Group's appetite for risk and limits the exposure that FBD is
prepared to accept from any event or series of events. In respect
of weather related events, the objective is to limit the Group's
exposure so as to protect profitability, solvency and shareholders'
capital. This objective was achieved in both 2009 and 2010.
Claims reserves provided a positive run off again in 2010
demonstrating the strength of the Group's reserving position. FBD
has benefited from a positive run off since 2003.
Expenses
Gross underwriting management expenses reduced by 0.7% in 2010
to EUR77.5m (2009: EUR78.0m) as the benefits of cost containment
exercises began to crystallise. In the last year, the Group has
negotiated a comprehensive programme of changes with its employees
which includes changes in pay ranges, hours of work and other
productivity measures designed to underpin the Group's competitive
cost advantage and provide it with the flexibility to grow premium
income in a difficult economic environment. The changes agreed
include a combination of salary reductions and freezes, the
restructuring of employment and pension conditions and the
introduction of pension contributions.
The Directors acknowledge the co-operation of staff to accept
these progressive changes so as to ensure the Group's future
prosperity.
A rise in the cost of reinsurance and the impact of reducing net
premium earned have contributed to an increase in the net expense
ratio (other underwriting expenses as a percentage of earned
premium, net of reinsurance) for 2010 to 22.0% (2009: 20.3%). The
Group remains committed to maintaining its cost
competitiveness.
The Group's combined operating ratio for 2010 was 99.4% (2009:
104.1%) resulting in an underwriting profit of EUR1.6m (2009: loss
of EUR12.9m).
Investment Return
Longer term investment return at EUR34.5m was lower than the
EUR35.3m in 2009 as a result of the slight reduction in assets
available for investment and because the average asset mix through
the year was more conservative. In line with insurers worldwide,
FBD's investment mix has become more conservative in recent years
in recognition of the volatility of investment markets and the
imperative to protect the Group's solvency and asset base. The
consequent reduction in investment returns discourages irrational
underwriting in the market.
Ambition and customer focus
In response to changing customer behaviour, FBD's multi-channel
distribution strategy has continued to develop with progress during
2010 within all channels. The Group's sales office network has been
particularly successful in further developing farming and business
insurance during 2010, a key strategic priority. The agricultural
sector has performed very strongly during Ireland's economic
decline and FBD's commitment to this sector has led to an increase
in premium from agriculture and connected business.
FBD's progress in Dublin and other large urban centres has
continued with 14% of total premium income now coming from Dublin
and market share of over 5%. The initiative to increase business
insurance in Dublin, via intermediaries, has proved successful and
further brokers have been added to our panel. As planned,
NoNonsense.ie and FBD.ie (our on-line offerings) continue to
attract a higher proportion of customers from Dublin and other
urban centres.
Non-underwriting
Market conditions for the non-underwriting businesses in Ireland
and Spain continue to be challenging. However, in this environment,
non-underwriting operations generated an operating profit of
EUR4.5m (2009: EUR6.5m).
The Group's leisure and property interests include La Cala and
Sunset Beach Resorts in Spain and FBD Hotels in Ireland. In the
difficult trading conditions these businesses delivered a solid
result generating an operating profit of EUR1.3m (2009: EUR2.8m)
and cash flow from operations of EUR1.2m. The operating profit was
lower than the previous year principally because the hotels located
in Ireland were impacted by market oversupply. Oversupply in the
marketplace is the key challenge facing the hotel business in
Ireland and market capacity needs to be reduced to match falling
customer demand. Overseas visitors to Ireland reduced from 7.7m
arrivals in 2007 to 5.6m in 2010, while revenue generated from the
domestic leisure market has reduced due to the economic downturn.
Sunset Beach Resort continued to perform strongly and 46 properties
in La Cala were sold generating cash of EUR13.9m, significantly
ahead of both last year and expectations.
Financial services/other, includes the contributions from
general insurance broking (FBD Brokers), life assurance/pension,
broking/investment advice (FBD Financial Solutions), instalment
finance and holding company costs. Operating profits of EUR3.2m
were generated (2009: EUR3.7m). Both FBD Brokers and FBD Financial
Solutions had a strong 2010, growing profitability despite
Ireland's economic decline through focus on customer service and
cost efficiency.
Pre-tax result
The result before tax was adversely impacted by a negative
fluctuation in investment return amounting to EUR30.1m (2009:
EUR28.8m) and impairment of property, plant and equipment of
EUR19.9m (2009: EUR29.0m) reflecting reducing property prices.
During 2010, as stated above, the Group agreed a variety of
changes in pay and conditions with its employees. Some of these
changes had an impact on the defined benefit retirement obligations
recorded as a liability in the Group's statement of financial
position. The reduction in the Group's liability for retirement
benefits as a result of the changes agreed by management and staff
is reflected as a credit of EUR11.1m in the consolidated income
statement. In addition, the salary reductions agreed by senior
management reduced the Group's retirement benefit obligations by a
further EUR2.6m, which is credited to the consolidated statement of
comprehensive income.
After charging finance costs of EUR3.2m (2009: EUR3.4m), the
Group recorded a loss before tax of EUR3.1m (2009: EUR34.6m).
Earnings per share
Operating earnings per 60 cent ordinary share based on longer
term investment return amounted to 106 cent compared to 75 cent the
previous year. The diluted loss per 60 cent ordinary share was 8
cent (2009: 91 cent).
Dividends
The Board is committed to ensuring that the Group's capital
position continues to be robust and its balance sheet well managed.
This reflects the Board's view that it is in the long-term interest
of all shareholders to maintain strong solvency and liquidity
margins. The Group is committed to a progressive dividend policy
and efficient capital management.
The Board is recommending a 2010 final dividend payout of 21.0
cent per 60 cent ordinary share (2009: 20.0 cent) bringing the full
2010 dividend to 31.5 cent (2009: 30.0 cent), an increase of 5%
over 2009. Subject to the approval of shareholders at the Annual
General Meeting to be held on 29 April 2011, this final dividend
for 2010 will be paid on 5 May 2011 to the holders of shares on the
register on 18 March 2011.
The dividend is subject to a withholding tax ("DWT") except for
shareholders who are exempt from DWT and who have furnished a
properly completed declaration of exemption to the Company's
Registrar from whom further details may be obtained.
Statement of Financial Position
The Group's financial position remains very strong. Ordinary
shareholders' funds amounted to EUR182.1m (2009: EUR191.5m) and net
assets per ordinary share were 547 cent (2009: 576 cent).
FBD Insurance maintains a low risk investment strategy with 88%
of its total investment portfolio invested in government gilts and
cash assets at year end. Table 1 shows how the assets of the
underwriting business were invested at the beginning and end of the
year.
Table 1 - Underwriting Business Asset Allocation
31 December 2010 31 December 2009
EURm % EURm %
Government gilts 497 61% 581 70%
Deposits & cash 217 27% 110 13%
Investment property 42 5% 43 5%
Equities & corporate bonds 22 3% 36 4%
Secured loans 21 2% 37 5%
Own land & buildings 18 2% 22 3%
817 100% 829 100%
------- -------
Reinsurers' share of technical
provisions 96 93
Trade, other debtors and DAC 91 101
Plant and equipment 17 17
---------- ----------
1,021 1,040
---------- ----------
In 2010, the Group as a whole booked EUR49.9m (2009: EUR57.8m)
of reductions in asset values through the consolidated income
statement. These adjustments are set out in Table 2 below.
Table 2 - Group Assets/Asset Value Reductions
Assets Assets Asset Value
31 December 31 December Reductions
2010 2009 2010
EURm EURm EURm
Government gilts 497 581 (8)
Deposits & cash 231 120 -
Hotel & golf resort assets 120 136 (17)
Trade, other debtors and DAC 112 107 -
Reinsurers' share of technical
provisions 96 93 -
Inventories 46 59 -
Investment property 42 43 (1)
Equities & corporate bonds 25 40 (2)
Secured loans 21 37 (19)
Own land & buildings 18 22 (3)
Plant & equipment 18 18 -
------------- ------------- ------------
1,226 1,256 (50)
------------- ------------- ------------
The Group's portfolio of prime property assets was valued at
fair value which was determined either by independent professional
valuers or at a lower amount if, in the opinion of the Directors, a
lower amount more accurately reflected fair value. The most
significant asset write down in 2010 was in respect of the secured
loans as the Directors believed that it was appropriate to
eliminate any uncertainty about valuations by writing the secured
loans down to the value of the underlying security on a current use
market value basis. On this basis, the underlying assets are, in
some cases, valued as agricultural land or car parks. As a result,
additional provisions of EUR19.1m have been made in respect of
secured loans bringing cumulative provisions to 72% of the 2007
year end value.
Investment properties are incorporated in the balance sheet at
particularly high yields, with the property located in Dublin
delivering an 11.4% yield at its current valuation. Subsequent to
the year end, two of the Group's four investment properties located
in the UK were sold and a third is in the course of being sold.
Combined, the three sales will generate EUR20.6m in cash and a
profit of EUR0.5m over the 2010 valuation.
The cumulative reductions in asset values over the three years
2008-2010 are summarised in the following table:
Table 3 - Cumulative asset value reductions as a percentage of
December 2007 values
%
Decrease
Hotel & golf resort assets
- Sunset Beach resort 0%
- La Cala Hotel and golf resort 43%
- FBD Hotels 45%
Own land and buildings 45%
Investment property 48%
Secured loans 72%
The Directors believe that as a result of the impairment
provisions recognised over the last three years and the de-risking
of the investment book, the potential for further downside from the
Group's investments is limited. Within the underwriting business,
such downside is negligible.
La Cala development land is included within inventories at the
lower of cost and net realisable value. The independent external
valuation conducted at 31 December 2010 reported a value which
exceeded this by EUR24m. Government gilts held to maturity are
included in the statement of financial position at amortised cost.
If these gilts were recognised on a mark-to-market basis, a surplus
of EUR20.8m would arise.
After asset value reductions, gearing in the property and
leisure operations at end 2010 was 73% (2009: 64%). Interest is
covered by operating cash flows generated by the business 4.4 times
in 2010 (2009: 1.4 times).
FBD Group has a strong capital base and balance sheet. FBD
Insurance had a solvency level of 61% of net premium earned at the
end of 2010, up from 52% at the end of 2009.
FBD also has a prudent reserving strategy and in the same
period, its reserving ratio (net technical provisions divided by
net premium earned) strengthened three percentage points to 243%.
This is supported by a positive run-off of prior year claims
reserves of EUR48.6m in 2010. The Group has a long history of
recording positive run off on its claims reserves.
In line with all European Insurers, the Group's underwriting
business, FBD Insurance, is preparing for the introduction of the
new Solvency II regulations which are to come into effect from 1
January 2013. During 2010, FBD Insurance conducted a Quantitative
Impact Study (QIS 5) designed to test the adequacy of its reserves
at the end of 2009 compared to QIS 5 capital requirements from
2013. The results showed that FBD Insurance met the required
standard and had excess capital over the QIS 5 requirement. FBD
Insurance expects to be in a position to meet all of Solvency II
requirements in advance of their introduction on 1 January
2013.
Outlook
Underwriting
Economic uncertainty has reduced but Irish domestic demand (the
best indicator of insurance market exposure) is still likely to
decline further, albeit at a diminishing rate. It is likely that
austerity measures will influence economic activity and underlying
insurance values. On the other hand, rate increases will positively
impact market premiums. Market size will depend on whether the
benefit of rate increases will exceed the contraction in volume and
cover. As a result, the opportunity for FBD premium income growth
in 2011 will be limited. However, the Directors are confident that
underwriting disciplines and cost containment will deliver improved
profitability in 2011. The Group's underwriting business is, by its
nature, defensive and its spread of business is not overly exposed
to any one sector.
As insurance companies become more conservative in their
investment mix and as international investment returns remain low,
insurers become more reliant on positive underwriting results to
achieve an adequate return on investment. This dependence on
underwriting results and the impact of severe weather events in
2009 and 2010 are likely to lead to further rate increases in the
market.
FBD Insurance will focus on profitable growth, constantly
evolving its business to reflect customers' needs. The Group will
continue to implement its plan to increase penetration of key urban
markets, in particular Dublin, and the commercial insurance market.
At the same time, the Group continues to devote considerable
resources to developing its core farming account, a key strategic
priority.
Non-underwriting
The environment for the non-underwriting businesses is expected
to remain difficult in 2011. Oversupply in the market place is the
key challenge facing the property and leisure businesses,
particularly in Ireland and recovery will be dependent on a
reduction in market capacity. No significant change to the
oversupply is anticipated in 2011 and concerted action is required
to increase the number of tourists visiting Ireland. Despite that,
as a result of actions taken, we anticipate an improved
contribution from FBD Hotels in 2011. Sales of properties in La
Cala are expected to continue in 2011.
FBD Brokers is developing new market segments while providing
enhanced customer value, and is well positioned to benefit from the
buoyancy of the agri business sector. FBD Financial Solutions will
continue to focus on customer needs and cost efficiency to deliver
growth in profitability in 2011.
The Group will continue to outperform competitors by focusing on
initiatives that will enhance revenue and/or reduce costs, so as to
maintain profitable and cash generative businesses through the
recessionary period.
Group
FBD Group has a strong capital base and balance sheet and a
prudent reserving strategy. The Board is satisfied that as a result
of the impairment provisions recognised and the de-risking of the
investment book, the potential for further downside from the
Group's investment portfolio is limited. The Board is confident
that FBD will continue to outperform its peers in delivering
superior returns to shareholders. FBD has demonstrated its capacity
to deliver operating profits in difficult market conditions and is
well positioned to deliver long-term profitable growth.
Unless exceptional claims events arise during 2011, the Board is
confident that as underwriting performance continues to improve,
the Group will deliver full year 2011 operating earnings per share
of 130 cent to 140 cent.
FBD Holdings plc
Consolidated Income Statement
For the Year Ended 31 December 2010
2010 2009
EUR000s EUR000s
Revenue 478,566 476,159
---------- ----------
Income
Gross premium written 358,385 357,244
Reinsurance premiums (55,172) (54,107)
---------- ----------
Net premium written 303,213 303,137
Change in provision for unearned
premiums (673) 11,467
---------- ----------
Net premium earned 302,540 314,604
Net investment return 4,421 6,515
Non-underwriting income 79,014 72,774
---------- ----------
Total income 385,975 393,893
Expenses
Net claims and benefits (234,268) (263,492)
Other underwriting expenses (66,653) (64,020)
Non-underwriting expenses (74,481) (66,285)
Impairment of property, plant and
equipment (19,868) (29,048)
Retirement benefit-past service
gain 11,063 -
Restructuring and other costs (1,615) (2,315)
Finance costs (3,236) (3,377)
Loss before tax (3,083) (34,644)
Income tax (charge)/credit (152) 3,714
---------- ----------
Loss for the year (3,235) (30,930)
---------- ----------
Attributable to:
Equity holders of the parent (2,408) (30,190)
Non-controlling interest (827) (740)
---------- ----------
(3,235) (30,930)
---------- ----------
2010 2009
Cent Cent
Basic loss per 60 cent ordinary
share (8.08) (91.59)
---------- ----------
Diluted loss per 60 cent ordinary
share (8.08) (91.59)
---------- ----------
FBD Holdings plc
Consolidated Statement of Comprehensive Income
For the Year Ended 31 December 2010
2010 2009
EUR000s EUR000s
Loss for the year (3,235) (30,930)
--------------- ----------
Loss on available for sale financial
assets - (1,554)
Revaluation of property, plant and
equipment - (5,241)
Actuarial gain/(loss) on retirement
benefit obligations 4,131 (8,556)
Exchange differences on translation of
foreign operations (164) 747 747
--------------
Other comprehensive income (expense)
before tax 3,967 (14,604)
Tax (charge)/credit relating to other
comprehensive expense (1,531) 6,884
--------------- ----------
Other comprehensive income (expense)
after tax 2,436 (7,720)
--------------- ----------
Total comprehensive expense for the
year (799) (38,650)
--------------- ----------
Attributable to:
Equity holders of the parent 28 (37,664)
Non-controlling interests (827) (986)
--------------- ----------
(799) (38,650)
--------------- ----------
FBD Holdings plc
Pro Forma Reconciliation of Consolidated Operating Profit to
Loss before Tax
For the Year Ended 31 December 2010
2010 2009
EUR000s EUR000s
Underwriting 36,133 22,391
Non-underwriting 4,533 6,489
--------- ---------
Operating profit before tax 40,666 28,880
Investment return - fluctuations (30,093) (28,784)
Impairment of property, plant and equipment (19,868) (29,048)
Retirement benefit-past service gain 11,063 -
Restructuring and other costs (1,615) (2,315)
Finance costs (3,236) (3,377)
Loss before tax (3,083) (34,644)
--------- ---------
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2010
ASSETS
2010 2009
EUR000s EUR000s
Property, plant and equipment 155,959 176,479
Investment property 42,368 43,267
Loans 24,618 43,863
Deferred tax asset 9,247 6,907
Financial assets
Investments held to maturity 496,852 581,096
Available for sale investments 7,282 9,476
Investments held for trading 17,859 30,000
Deposits with banks 195,172 75,462
---------- ----------
717,165 696,034
---------- ----------
Reinsurance assets
Provision for unearned premiums 24,706 25,503
Claims outstanding 70,916 67,686
---------- ----------
95,622 93,189
Inventories 46,045 59,226
Current tax asset 6,003 175
Deferred acquisition costs 20,531 19,963
Other receivables 71,279 72,681
Cash and cash equivalents 36,714 44,036
---------- ----------
Total assets 1,225,551 1,255,820
---------- ----------
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2010
EQUITY AND LIABILITIES 2010 2009
EUR000s EUR000s
Equity
Ordinary share capital 21,409 21,409
Capital reserves 15,313 14,297
Revaluation reserves 742 742
Translation reserves (98) 66
Retained earnings 144,757 154,994
---------- ----------
Shareholders' funds - equity interests 182,123 191,508
Preference share capital 2,923 2,923
---------- ----------
Equity attributable to equity holders
of the parent 185,046 194,431
Non-controlling interests 2,053 3,030
---------- ----------
Total equity 187,099 197,461
---------- ----------
Liabilities
Insurance contract liabilities
Provision for unearned premiums 176,479 176,603
Claims outstanding 657,656 671,429
---------- ----------
834,135 848,032
Borrowings 117,766 120,051
Retirement benefit obligation 10,859 23,103
Deferred tax liability 11,751 10,507
Payables 63,941 56,666
Total liabilities 1,038,452 1,058,359
---------- ----------
Total equity and liabilities 1,225,551 1,255,820
---------- ----------
FBD Holdings plc
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2010
2010 2009
EUR000s EUR000s
Cash flows from operating activities
Loss before tax (3,083) (34,644)
Adjustments for:
Profit on investments held for trading (1,075) (4,925)
Loss on investments held to maturity 7,901 417
Loss on investments available for sale 2,076 -
Provision for loans & advances 16,329 21,000
Depreciation of property, plant and equipment 6,476 6,206
Share-based payment expense 1,016 698
Impairment of investment property 899 8,479
Impairment of property, plant and equipment 19,868 29,048
Retirement benefit - past service gain (11,063) -
(Decrease) in insurance contract liabilities (16,330) (368)
Effect of foreign exchange rate changes (148) -
(Profit)/loss on disposal of property, plant and
equipment (83) 25
Operating cash flows before movement in working
capital 22,783 25,936
Decrease/(increase) in receivables and deferred
acquisition costs 817 (5,552)
Increase/(decrease) in payables 9,961 (24,003)
Decrease in inventories 13,181 3,157
Cash generated/(used by) from operations 46,742 (462)
Income taxes (paid)/received (8,610) 3,779
---------- ----------
Net cash from operating activities 38,132 3,317
---------- ----------
Cash flows from investing activities
Investments held for trading 13,216 (963)
Investments held to maturity 76,343 (101,887)
Investments available for sale 118 21
Sale of property, plant and equipment 678 -
Purchase of property, plant and equipment (6,415) (8,474)
Sale of investment property - 792
Repayment of loans 2,916 5,626
Deposits invested with banks (119,710) 107,681
---------- ----------
Net cash (used in)/generated from investing
activities (32,854) 2,796
---------- ----------
Cash flows from financing activities
Ordinary dividends paid (10,147) (6,936)
Dividends paid to non-controlling interests (150) -
Increase in borrowings - 22,980
(Decrease) in borrowings (2,285) (13,897)
---------- ----------
Net cash (used in)/generated from financing
activities (12,582) 2,147
---------- ----------
Net (decrease)/increase in cash and cash equivalents (7,304) 8,260
Cash and cash equivalents at the beginning of the
year 44,036 35,713
Effect of foreign exchange rate changes on the
balance of cash held in foreign currencies (18) 63
---------- ----------
Cash and cash equivalents at the end of the year 36,714 44,036
---------- ----------
Included in the above statement is the following information:
Interest and similar income received during the year was
EUR31,403,000 (2009: EUR24,619,000).
Interest paid during the year was EUR2,898,000 (2009:
EUR3,495,000).
FBD Holdings plc
Consolidated Statement of Changes in Equity
For the Year Ended 31 December 2010
Ordinary Revaluation Attributable Preference
share Capital and other Translation Retained to ordinary share Non-controlling Total
capital reserves reserves reserve earnings shareholders capital interest equity
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1
January 2009 21,409 13,599 3,295 (681) 197,788 235,410 2,923 4,151 242,484
Loss after
taxation - - - - (30,190) (30,190) - (740) (30,930)
Other
comprehensive
expense - - (2,553) 747 (5,668) (7,474) - (246) (7,720)
--------- --------- ------------ ------------ --------- ------------- ----------- ---------------- ---------
21,409 13,599 742 66 161,930 197,746 2,923 3,165 203,834
Dividends paid
on ordinary
and
preference
shares - - - - (6,936) (6,936) - - (6,936)
Dividend paid
to minority
interests - - - - - - - (135) (135)
Recognition of
share based
payments - 698 - - - 698 - - 698
Balance at 31
December
2009 21,409 14,297 742 66 154,994 191,508 2,923 3,030 197,461
Loss after
taxation - - - - (2,408) (2,408) - (827) (3,235)
Other
comprehensive
income - - - (164) 2,600 2,436 - - 2,436
--------- --------- ------------ ------------ --------- ------------- ----------- ---------------- ---------
21,409 14,297 742 (98) 155,186 191,536 2,923 2,203 196,662
Dividends paid
and approved
on ordinary
and
preference
shares - - - - (10,429) (10,429) - - (10,429)
Dividend paid
to minority
interests - - - - - - - (150) (150)
Recognition of
share based
payments - 1,016 - - - 1,016 - - 1,016
Balance at 31
December
2010 21,409 15,313 742 (98) 144,757 182,123 2,923 2,053 187,099
--------- --------- ------------ ------------ --------- ------------- ----------- ---------------- ---------
FBD Holdings plc
SUPPLEMENTARY INFORMATION
For the Year Ended 31 December 2010
Note 1 Operating Profit by Activity
2010 2009
EUR000s EUR000s
Underwriting 36,133 22,391
Non-underwriting 4,533 6,489
40,666 28,880
-------- --------
Non-underwriting profit is analysed as
follows:
2010 2009
EUR000s EUR000s
Leisure and leisure property development 1,316 2,786
Financial services/other 3,217 3,703
4,533 6,489
-------- --------
Note 2 Underwriting Operating Profit
2010 2009
EUR000s EUR000s
Gross written premiums 358,385 357,244
---------- ----------
Net premium earned 302,540 314,604
Adjusted net claims incurred (234,268) (263,492)
Net operating expenses (66,653) (64,020)
---------- ----------
Underwriting profit/(loss) 1,619 (12,908)
Longer term investment return 34,514 35,299
---------- ----------
Underwriting operating profit 36,133 22,391
---------- ----------
2010 2009
Other underwriting expenses EUR000s EUR000s
Management expenses 77,527 78,091
Reinsurance commissions receivable (12,743) (13,943)
Deferred acquisition costs (568) (2,231)
Broker commission payable 2,437 2,103
--------- ---------
66,653 64,020
--------- ---------
FBD Holdings plc
SUPPLEMENTARY INFORMATION
For the Year Ended 31 December 2010
Note 3 Dividends
2010 2009
Paid during year: EUR000s EUR000s
Dividend of Nil cent (2009: 4.8 cent) per share on
8% non-cumulative preference shares of 60 cent each - 169
Dividend of Nil cent (2009: 8.4 cent) per share on
14% non-cumulative preference shares of 60 cent each - 113
2009 Final dividend of 20.0 cent (2008: 10.0 cent)
per share on ordinary shares of 60 cent each 6,654 3,327
2010 Interim dividend of 10.5 cent (2009: 10.0 cent)
per share on ordinary shares of 60 cent each 3,493 3,327
10,147 6,936
-------- --------
2010 2009
Approved but not paid: EUR000s EUR000s
Dividend of 4.8 cent (2009: Nil cent) per share on 169 -
8% non-cumulative preference shares of 60 cent each
Dividend of 8.4 cent (2009: Nil cent) per share on 113 -
14% non-cumulative preference shares of 60 cent each
282 -
-------- --------
2010 2009
Proposed: EUR000s EUR000s
Dividend of 4.8 cent (2009: 4.8 cent) per share on
8% non-cumulative preference shares of 60 cent each 169 169
Final dividend of 21.0 cent (2009: 20.0 cent) per share
on ordinary shares of 60 cent each 6,987 6,654
-------- --------
7,156 6,823
-------- --------
The proposed final dividend is subject to approval by
shareholders at the Annual General Meeting and has not been
included as a liability in these financial statements.
FBD Holdings plc
SUPPLEMENTARY INFORMATION
For the Year Ended 31 December 2010
Note 4 Loss per 60 cent Ordinary Share
The calculation of the basic and diluted loss per share
attributable to the ordinary shareholders is based on the following
data:
2010 2009
Earnings EUR000s EUR000s
Loss for the year (3,235) (30,930)
Non-controlling interest 827 740
Preference dividend (282) (282)
--------------- ---------------
Loss for the purpose of basic and
diluted loss per share (2,690) (30,472)
--------------- ---------------
Number of shares 2010 2009
Weighted average number of ordinary
shares for the purpose of
basic loss per share 33,269,000 33,269,000
Effect of dilutive potential of share
options outstanding 150,000 198,000
--------------- ---------------
Weighted average number of ordinary
shares for the purpose of
diluted loss per share 33,419,000 33,467,000
--------------- ---------------
The 'A' ordinary shares of 1 cent each that are in issue have no
impact on the loss per share calculation.
Cent Cent
Basic loss per share (8.08) (91.59)
----------- ------------
Diluted loss per share (8.08) (91.59)
----------- ------------
The calculation of the operating earnings per share, which is
supplementary to the requirements of International Financial
Reporting Standards, is based on the following data:
2010 2009
EUR000s EUR000s
Operating profit after taxation* 35,623 25,299
Non-controlling interest (125) (193)
Preference dividend (282) (282)
35,216 24,824
-------- --------
Cent Cent
-------- --------
Operating earnings per share 105.85 74.61
-------- --------
*2010 effective tax rate of 12.4% (2009: 12.4%).
FBD Holdings plc
SUPPLEMENTARY INFORMATION
For the Year Ended 31 December 2010
Note 5 Ordinary Share Capital
Number 2010 2009
(2010 only) EUR000s EUR000s
(i) Ordinary shares of 60 cent each
Authorised:
At the beginning and the end of the
year 51,326,000 30,796 30,796
------------ -------- --------
Issued and fully paid:
At the beginning and the end of the
year 35,461,206 21,277 21,277
------------ -------- --------
(ii) 'A' Ordinary shares of 1 cent
each
Authorised:
At the beginning and the end of the
year 120,000,000 1,200 1,200
------------ -------- --------
Issued and fully paid:
At the beginning and the end of the
year 13,169,428 132 132
------------ -------- --------
21,409 21,409
-------- --------
The 'A' ordinary shares of 1 cent each are non-voting. They are
non-transferable except only to the Company. Other than a right to
a return of paid up capital of 1 cent per 'A' ordinary share in the
event of a winding up, the 'A' ordinary shares have no right to
participate in the capital or the profits of the Company.
The holders of the two classes of non-cumulative preference
shares rank ahead of the two classes of ordinary shares in the
event of a winding up. Before any dividend can be declared on the
ordinary shares of 60 cent each, the dividend on the non-cumulative
preference shares must firstly be declared or paid.
The number of ordinary shares of 60 cent each held as treasury
shares at the beginning and end of the year (and the maximum number
held during the year) was 2,191,730. This represented 6.18% of the
shares of this class in issue and had a nominal value of EUR1.315m.
There were no movements during the year in the Company's holding of
treasury shares.
The weighted average number of ordinary shares of 60 cent each
in the earnings per share calculation has been reduced by the
number of such shares held in treasury.
At 31 December 2010, the total number of ordinary shares of 60
cent each under option amounted to 1,161,864 (2009: 1,199,422). The
related options had been granted under the FBD Holdings plc
Executive Share Option Scheme ("ESOS") and the FBD Group Save as
You Earn (SAYE) Scheme (the "SAYE Scheme"). 249,825 (2009: 249,825)
of the options outstanding under the ESOS may be exercised prior to
October 2013 at a subscription price of EUR2.50 per share. 875,000
(2009: 905,000) of the options outstanding under the ESOS may be
exercised between August 2012 and September 2014 at a subscription
price of EUR7.45 per share conditional on certain performance
conditions being met. The 37,039 (2009: 44,597) options outstanding
under the SAYE Scheme may be exercised after February 2011 at a
subscription price of EUR18.46 per share.
All issued shares have been fully paid.
FBD Holdings plc
SUPPLEMENTARY INFORMATION
For the Year Ended 31 December 2010
Note 6 Transactions with Related Parties
Farmer Business Developments plc has a substantial shareholding
in the Group at 31 December 2010 details of which are set out in
the Annual Report.
Included in the financial statements is an unsecured loan of
EUR60,000,000 (2009: EUR60,000,000) from Farmer Business
Developments plc to FBD Property and Leisure Limited, a 100% owned
subsidiary of the Group. This loan is guaranteed by the Company.
The loan is due to be repaid in full in July 2012. Interest is
charged at market rate which is defined under the terms of the loan
agreement as the 3 month Euribor rate plus a margin capped at 225
basis points.
Included in the financial statements at the year end is
EUR671,227 (2009: EUR331,601) due from Farmer Business Developments
plc. This balance is made up of recharges for services provided and
recoverable costs. Interest is charged on this balance at the
market rate. The amount due is repayable on demand.
Note 7 Subsequent Events
Subsequent to the year end, two of the Group's investment
properties located in the UK were sold and a third is in the course
of being sold. Combined, the three sales will generate
EUR20,600,000 in cash and a profit of EUR500,000 over the December
2010 valuation.
Note 8 - General Information and Accounting Policies
The financial information set out in this document does not
constitute full statutory financial statements for the years ended
31 December 2010 or 2009 but is derived from same. The Group
financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs), applicable
Irish law and Listing Rules of the Irish and London Stock
Exchanges. The Group financial statements have also been prepared
in accordance with IFRSs adopted by the European Union and
therefore comply with Article 4 of the EU IAS Regulation.
The 2010 and 2009 financial statements have been audited and
received unqualified audit reports. The 2010 financial statements
were approved by the Board of Directors on 7 March 2011.
The consolidated financial statements are prepared under the
historical cost convention as modified by the revaluation of
property, investments held for trading, available for sale
investments and investment property which are measured at fair
value.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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