TIDMFBH
RNS Number : 6396Y
FBD Holdings PLC
05 March 2012
5 March 2012
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011
FINANCIAL HIGHLIGHTS 2011 2010
EUR000s EUR000s
* Gross premium written 351,111 358,385
* Net premium earned 301,952 302,540
* Operating profit before taxation 64,900 40,666
* Profit/(loss) before taxation 59,718 (3,083)
Cent Cent
* Operating earnings per share 170 106
* Diluted earnings/(loss) per share 152 (8)
* Dividend per share 34.5 31.5
* Net assets per share 630 547
OPERATIONAL HIGHLIGHTS
-- Excellent performance with operating profit up 60% to
EUR64.9m
-- Market share grows to 12.2% (2010: 11.8%), continuing the
growth in ten of the last eleven years, benefiting from the first
increase in policy volume since 2007
-- Improvements in loss ratio from 77.4% to 66.6% and combined
operating ratio from 99.4% to 90.8%
-- Operating EPS increased 60% to 170 cent. Excluding
discontinued operations, operating earnings per share up 55% to 164
cent
-- Solvency level in FBD Insurance increases to 66% of net
earned premium, from 61% in 2010
-- Proposed final dividend of 23.25 cent per share bringing
total dividend to 34.5 cent, an increase of 9.5%
-- Net asset value per share increased by 15% to 630 cent
Strategic Highlights
-- The establishment of a property and leisure joint venture and
the sale of FBD Brokers will allow the Group to focus on its core
insurance underwriting business
-- Progress on development of a multi-channel distribution
model, with growth in business via brokers and on-line
Commenting on the results, Andrew Langford, Group Chief
Executive said:
"FBD delivered an excellent performance and made significant
progress in advancing its strategic priorities in 2011, a
challenging year for Ireland's economy and the insurance sector.
The growth in profits achieved in 2011 puts the Group in a very
strong position to progress its plans. For the first year since
2007, the results have benefited from favourable weather conditions
and a low level of large claims. The Group has a strong capital
base and balance sheet, a low-risk investment allocation and a
prudent reserving strategy. It is well positioned to delivery
sustainable profitable growth".
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")
The Group was established in the 1960s and is one of Ireland's
largest property and casualty insurers looking after the insurance
needs of farmers, private individuals and business owners.
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
FBD Telephone
Andrew Langford, Group Chief
Executive +353 1 4093208
Cathal O'Caoimh, Group Finance
Director +353 1 4093208
Peter Jackson, Head of Investor
Relations +353 1 4093208
Murray Consultants
Joe Murray +353 1 4980300
Joe Heron +353 1 4980300
FBD Holdings plc
Review of Operations
Overview
FBD delivered an excellent performance in 2011 and made
significant progress in advancing its strategic priorities. In
continuing difficult economic conditions, FBD generated a profit
before taxation of EUR59.7m, a significant turnaround from the loss
of EUR3.1m incurred in 2010.
At EUR64.9m, operating profit before tax was up by 60% on 2010.
Operating profit in our core underwriting business increased 61.5%
to EUR58.3m (2010: EUR36.1m), influenced by benign weather and an
exceptionally low level of large claims. Like most sectors in the
Irish economy, the property and casualty insurance market
contracted again in 2011. By focusing on the development of
opportunities within FBD's risk appetite and through disciplined
underwriting, the Group increased market share and delivered
substantially improved profitability.
Gross premium written of EUR351.1m is down 2.0% on 2010 in a
market that declined by 4.9%. FBD has continued its growth in
market share, now standing at 12.2%, with market share gains in ten
of the last eleven years.
Net claims incurred in 2011 reduced by 14.1% or EUR33.1m. The
Company made significant progress in the key elements that
contributed to this reduction and were within its control including
claims management initiatives, risk selection and other
underwriting improvements. Factors over which the company has less
influence such as weather events, the frequency of large claims and
the reduction in economic activity, contributed positively to the
reduction in 2011 claims incurred. All of these three factors are
not expected to behave in such a positive manner in each financial
year and therefore claim costs are likely to revert towards the
norm in 2012.
FBD's financial services operations have delivered an operating
profit of EUR4.2m in challenging market conditions, which was ahead
of the EUR2.3m (restated) achieved in 2010. Operating profit from
discontinued activities was EUR2.4m (2010: EUR2.2m).
Following a strategic review, the Board concluded that FBD
should focus on the Group's core insurance underwriting operations.
As a result, two transactions were undertaken during 2011. Firstly,
FBD entered into a joint venture, which now owns and manages the
Group's former property and leisure operations. Secondly, the Group
sold its general insurance broking business. These two transactions
represent significant strategic steps for the Group, allowing it to
focus on insurance underwriting and to pursue further growth in the
business insurance market through the wider broker channel.
Operating earnings per 60 cent ordinary share ("share")
increased by 60.4% from 106 cent to 170 cent. Fully diluted
earnings per share at 152 cent represents a significant turnaround
from the loss of 8 cent per share in 2010. The Group further
strengthened its capital base and balance sheet with net asset
value per share increasing by 15% to 630 cent. From this position
of strength, the Board has decided to increase the full-year
dividend by 9.5% to 34.5 cent (2010: 31.5 cent). FBD Insurance had
a solvency level of 66% of net premium earned at 31 December 2011,
up from 61% at 31 December 2010.
Business Review
Underwriting
Premium income
The Irish insurance market contracted by 4.9% in 2011 as the
benefit of hardening rates during the year was offset by the
continued reduction in insurable risk and values, in line with
economic activity in Ireland. FBD's gross premium written reduced
by 2.0% to EUR351.1m (2010: EUR358.4m) thereby increasing FBD's
market share from 11.8% to 12.2%. This growth in market share, all
organic, is primarily driven by the continuing development of the
Group's multi-channel distribution strategy, particularly the
development of NoNonsense.ie and an expanded presence in the broker
market.
The rate of contraction in FBD's gross premium written reduced
as the year progressed - from 3.1% in the first half to 0.9% in the
second half. Improved retention rates and higher conversion rates
contributed to this trend, with policy volumes increasing in 2011,
the first increase since 2007.
This increase in volume was offset by lower average premium per
policy as the reduction in insurable values exceeded the benefit of
harder rates. FBD maintained its underwriting discipline, choosing
not to grow volumes at uneconomic rates, particularly in the larger
commercial risk segment. FBD continued to focus on segments that
provided value and were within the Group's risk appetite. The
reduction in gross premium written was compensated for by the
decision to increase the proportion of the property insurance book
that is retained. Net premium earned was EUR302.0m, in line with
2010.
FBD Holdings plc
Review of Operations (continued)
Platform for growth
In response to changing customer behaviour, FBD has continued to
implement its multi-channel distribution strategy and made
significant progress within all channels during 2011. The Group's
sales office network has been particularly successful in further
developing farming and related insurance during 2011, a key
strategic priority for FBD. Despite Ireland's economic challenges,
the agricultural sector has performed very strongly and FBD's
commitment to the sector has led to continuing growth in the number
of farms insured and to an increase in premium from agriculture and
connected businesses.
FBD's progress in Dublin and other large urban centres has
continued with NoNonsense.ie and FBD.ie continuing to attract
growth in customer numbers. NoNonsense.ie has surpassed 20,000
customers and more FBD customers are using on-line facilities.
The initiative to develop business insurance in Dublin and
elsewhere, via intermediaries, continues to prove successful and
additional brokers have been added to FBD's panel. Business
insurance premium income has shown strong growth, albeit slightly
behind the level originally anticipated because of intense
competitor activity and FBD's decision not to grow volumes at
uneconomic rates. The Group will continue to expand and develop the
broker channel within it's risk appetite.
Claims
Net claims incurred amounted to EUR201.1m, a 14.1% reduction on
2010 because of an improved loss ratio, that is, net claims
incurred as a percentage of net earned premium, which for 2011 was
66.6% (2010: 77.4%). Hardening premium levels and a range of claims
management initiatives contributed to this reduction. 2011 was an
unusual year from a claims perspective with benign weather, low
incidence of large claims and falling economic activity combining
to provide an unusually low claims cost.
Ireland continued to experience a reduction in the number of
road deaths due to additional road safety measures and lower road
usage. Miles driven in Ireland, as evidenced by fuel consumption,
are down approximately 28% from peak in 2007, resulting in reduced
frequency of motor claims.
Unlike each of the previous three years, FBD's result in 2011
was not adversely affected by severe weather events. Flooding
during the month of October, is likely to cost the insurance
industry approximately EUR125m. However, FBD's cost was only EUR6m
because the flooding primarily occurred in Dublin. The Group's risk
appetite excludes some of the major risks involved and limits the
exposure that FBD is prepared to accept from any event or series of
events.
Claims provisions strengthened further during the year. Despite
this, claims reserves provided a positive run-off again in 2011,
demonstrating the strength of the Group's reserving position. FBD
has benefited from a large positive run-off in every year since
2003.
Expenses
Gross underwriting management expenses increased by 5.2% in 2011
to EUR80.9m compared to EUR77.0m in 2010 and the net expense ratio
(net operating expenses as a percentage of net premium earned)
increased from 22.0% to 24.2%. The increase relates to the Group's
ongoing investment in marketing and a fall in reinsurance
commissions receivable as reinsurance became more expensive and FBD
ceded less risk to reinsurers. Reinsurance costs have risen for
three successive years reflecting the poor weather-related claims
history in Ireland and internationally over the same period.
Marketing expenses increased to enable the Group to maintain its
share of voice as competitors increased their advertising
presence.
The Group's combined operating ratio (net claims incurred plus
net operating expenses as a percentage of net premium earned) for
2011 was 90.8% (2010: 99.4%) resulting in an underwriting profit of
EUR27.8m, a significant improvement on the EUR1.6m achieved in
2010.
Investment return
The longer term investment return of EUR30.5m in 2011 was lower
than the EUR34.5m in 2010 due to the decision to maintain a more
conservative investment portfolio and the maturation of some of the
Group's high yielding German bonds. FBD, like other responsible
insurance companies worldwide, has adopted a more prudent
investment strategy in the face of the current financial market
turmoil. The Group's overriding investment principle is to protect
its solvency and asset base even if this has an impact on
investment returns. On an industry wide basis, the consequent
reduction in investment returns should discourage irrational
underwriting in this and other markets.
FBD Holdings plc
Review of Operations (continued)
Strategic initiatives
During the year the Group sold its insurance broking operation
and established a joint venture to own and manage its Irish and
Spanish property and leisure operations. The initiatives followed a
strategic review by the Board and its consequent decision to
increase the focus on the Group's core insurance underwriting
business, a significant strategic step forward for FBD.
As a result of the property and leisure joint venture, which was
completed in October 2011, the property and leisure operations is
now owned 50%/50% by FBD and Farmer Business Developments plc, a
related party that owns 29.7% of the voting rights in FBD. The two
joint venture partners will hold a combination of equity and
convertible loan notes. These loan notes are irredeemable and will
convert into equity between the fifth and tenth anniversaries of
completion, unless otherwise agreed between the parties.
The ownership of the property and leisure operations following
the conversion of the loan notes will be determined according to a
pre-agreed formula depending on the valuation of the business at
the date of conversion. FBD's share could vary between 25% and 50%
depending on valuation at conversion.
Following completion, the Group accounts for its share of the
joint venture under the equity method of accounting including its
share of the net assets in the consolidated statement of financial
position and its share of the profits or losses in the consolidated
income statement. A profit on the sale of EUR2.5m was credited to
the consolidated income statement.
The key benefits of the joint venture for the Group are as
follows:
-- The Group can now increase focus on its core insurance underwriting business;
-- The Group's exposure to property valuation fluctuations has reduced;
-- The operating profit of the Group, post completion of the
transaction, more clearly reflects the contribution from its core
business;
-- Group debt reduced from EUR117.8m to Nil and guarantees
provided by the Group reduced by EUR52.5m; and
-- The ability of the property and leisure operation to realise
value over time has been enhanced because its funding structure has
been substantially strengthened.
In December, the Group announced the sale of its insurance
broking operation, FBD Brokers. This business manages the
commercial insurance needs of large commercial and corporate
clients and is a leading provider of insurance broking services to
the food processing, waste management and renewable energy sectors.
The total consideration for the sale is up to EUR8.5m comprising an
initial payment, received in 2011, of EUR6.75m, an additional
payment of EUR0.5m based on working capital at completion and a
deferred payment of up to EUR1.25m, payable in 2013 based on FBD
Brokers' financial performance in the year following completion.
Profit on the sale of EUR5.9m was credited to the consolidated
income statement.
The sale of FBD Brokers allows the Group to focus on its core
insurance underwriting business and to pursue further growth in the
business insurance market through the wider broker channel. The
Group will continue to provide insurance to the food processing
sector directly and via brokers and the transaction will give FBD
Brokers, as part of the Jardine Lloyd Thompson Group, an enhanced
capacity to provide global services to its clients.
The implementation of the decisions arising from the Board's
strategic review is now complete and no further sales are
anticipated.
Financial services
Market conditions for FBD's financial services businesses
continue to be challenging. However, in this environment, the
Group's continuing financial services operations generated an
operating profit of EUR4.2m (2010: EUR2.3m).
Financial services includes life, pension and investment broking
(FBD Financial Solutions) and premium instalment services less
holding company costs. FBD Financial Solutions had a strong
performance during 2011, growing profitability despite Ireland's
economic decline through focus on customer service and cost
efficiency.
Joint venture
Following the establishment of the property and leisure joint
venture, the Group's EUR0.5m share of the loss of the joint
venture, is included within continuing operations within the
consolidated income statement.
Profit after taxation
The benefit of the excellent operating performance was somewhat
reduced by EUR5.1m (2010: EUR30.1m) of negative fluctuations on
investment return, mostly attributable to movements in equities and
the difference between current and long-term deposit rates. In
addition, the impairment of property, plant and equipment of
EUR1.0m (2010: EUR19.9m) reflects the impact of reducing property
prices on the Group's property held for own use.
FBD Holdings plc
Review of Operations (continued)
After recognising restructuring charges of EUR3.7m, the Group
recorded a profit before tax on continuing operations of EUR52.3m
(2010: EUR16.5m). After a taxation charge on continuing operations
of EUR8.6m (2010: EUR0.2m) and profit after taxation from
discontinued operations, including the profit on the sale of
subsidiaries, of EUR7.4m (2010: loss of EUR19.6m), the total profit
after taxation to EUR51.0m (2010: loss of EUR3.2m).
Earnings per share
Operating earnings per share based on longer term investment
return amounted to 170 cent compared to 106 cent the previous year.
The fully diluted earnings per share was 152 cent (2010: loss of 8
cent). Excluding discontinued operations, operating earnings per
share amounted to 164 cent (2010: 100 cent), while fully diluted
earnings per share was 130 cent (2010: 48 cent).
Return on equity (earnings over ordinary shareholders' funds)
was 24% in 2011. On the basis of continuing operating earnings,
return on equity amounted to 30%.
Dividends
The Board's view that it is in the long-term interest of all
shareholders to maintain strong solvency and liquidity margins and
is determined to ensure that the Group's capital position continues
to be robust and its financial position well managed. The Group is
committed to a progressive dividend policy and efficient capital
management.
The Board is recommending a 2011 final dividend payout of 23.25
cent per share (2010: 21.0 cent) bringing the full 2011 dividend to
34.5 cent (2010: 31.5 cent), an increase of 9.5% over 2010. Subject
to the approval of shareholders at the Annual General Meeting to be
held on 30 April 2012, this final dividend for 2011 will be paid on
7 May 2012 to the holders of shares on the register on 16 March
2012.
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 strengthened significantly again
in 2011. Ordinary shareholders' funds grew to EUR209.9m (2010:
EUR182.1m) and net assets per share were increased 15% to 630 cent
(2010: 547 cent).
Table 1 shows how the assets of the underwriting business were
invested at the beginning and end of the year.
Table 1 - Underwriting Asset Allocation
31 December 2011 31 December 2010
Investment assets EURm % EURm %
German government bonds 406 49% 497 61%
Deposits and cash 345 42% 217 27%
Equities & corporate bonds 28 3% 22 3%
Secured loans 22 3% 21 2%
Own land & buildings 17 2% 18 2%
Investment property 9 1% 42 5%
Investment assets 827 100% 817 100%
------- -------
Trade, other debtors and DAC 93 91
Reinsurers' share of technical provisions 64 96
Plant and equipment 16 17
---------- ----------
Total underwriting assets 1,000 1,021
---------- ----------
International financial market volatility continued throughout
2011. In such an unpredictable environment, FBD, like its peers
globally, is focussed on capital preservation. As a result, the
Group has adopted a short-term, low-risk investment policy. This
policy will be maintained until the sovereign debt crisis abates
and investment volatility subsides.
At the year end, 91% of the underwriting investment assets were
invested in bank deposits, German government bonds and money market
funds. The average term of these assets is less than six months,
far shorter than the average term of FBD's liabilities, thereby
reducing the risk of investment volatility, albeit at the cost of a
lower investment return.
FBD Holdings plc
Review of Operations (continued)
The Group has reduced its portfolio of investment properties
from EUR42m to EUR9m during the year, selling four of its five
properties, generating EUR37m of cash and a profit over 2010 book
value of EUR5.2m. The remaining investment property, located in a
prime commercial area in Dublin, is delivering an 11% yield at its
current valuation.
There has been no cash movement on secured loans during 2011. In
previous years, the Group wrote down these secured loans to the
value of the underlying security on a current use market value
basis. Cumulative provisions stand at 70% of the 2007 year end
value and, in some cases, the underlying assets are valued as
agricultural land or car parks.
The establishment of the property and leisure joint venture and
the sale of FBD Brokers have strengthened the quality of the
Group's balance sheet considerably. Borrowings have reduced from
EUR117.8m to nil as all debt related to the property and leisure
operations. Bank guarantees have reduced from EUR104m to
EUR51.5m.
In common with most companies that operate defined benefit
pension schemes, FBD's obligation for retirement benefits have
increased during 2011 primarily because of a reduction in the
discount rate applied in calculating the International Accounting
Standard 19 pension liability. As a result of the unpredictability
of international financial markets, corporate bond yields, which
are used to determine the discount rate, fell during 2011, leading
to a significant portion of the increase in scheme liabilities from
EUR10.9m to EUR21.7m.
A notable change in the Group's statement of financial position
during 2011 is that claims outstanding have reduced by EUR54.5m and
reinsurers' share of claims outstanding have reduced by EUR27.3m.
This reflects the timing of the December 2010 freeze. The
associated claims were provided for in the 2010 financial year but
paid out to claimants in the 2011 financial year. As a result, the
Group's reserving ratio (net technical provisions divided by net
premium earned) has reduced to 236% from 244% in 2010.
FBD Group has a strong capital base and balance sheet. FBD
Insurance had a solvency level of 66% of net premium earned at the
end of 2011, up from 61% at the end of 2010. FBD also has a
conservative reserving strategy and this is supported by a positive
run-off of prior-year claims reserves of EUR32m in 2011, despite a
further strengthening of claims provisions. The Group has a long
history of recording positive run-offs 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 over the
next few years. FBD Insurance has calculated its solvency capital
requirement on the basis that Solvency II, as currently proposed,
was fully implemented at 31 December 2011. The results showed that
FBD Insurance had excess capital over the proposed requirement.
Outlook
Economic uncertainty has reduced but Irish domestic demand (the
best indicator of risk available to the insurance market) is still
likely to decline further. Austerity measures, coupled with high
levels of household debt, will influence economic activity and
underlying insurance values. As a result, the opportunity for FBD
premium income growth in 2012 will be limited. However, FBD is
committed to achieving profitable growth by 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 business insurance market. The
opportunities provided by NoNonsense.ie and the expansion of the
broker channel will provide the Group with the ability to
outperform the market again in 2012. At the same time, the Group
continues to devote considerable resources to developing its core
farming base, a key strategic priority.
During 2011, the Group benefited from favourable weather, a low
level of large claims and falling economic activity. All three
factors are unlikely to be so positive in 2012 and therefore the
Group expects claims costs to revert towards the norm in 2012.
However, the Group's initiatives on those aspects of claims costs
which are within our control will continue to have a positive
impact on the loss ratio. Reinsurance costs have increase further
in 2012 as a result of recent adverse reinsurance experience in
both the global and Irish markets.
As financial markets continue to be volatile, insurance
companies will remain conservative in their investment mix and
become more reliant on positive underwriting results to achieve an
adequate return on investment. FBD will continue to prioritise
capital protection over investment return. Lower returns on
deposits and bonds in 2012 will lead to negative short-term
investment fluctuations.
FBD Group has a strong capital base and statement of financial
position, a low-risk investment allocation and a prudent reserving
strategy. The growth in profits achieved in 2011 puts the Group in
a very strong position to progress its strategic plans and 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 events arise during 2012, the Group is
guiding full-year 2012 operating profit per share of between 145
and 155 cent, in line with market expectation.
FBD Holdings plc
Consolidated Income Statement
For the Year Ended 31 December 2011
Continuing Operations Restated
2011 2010
EUR000s EUR000s
Revenue 402,535 413,685
-------------- -----------
Income
Gross premium written 351,111 358,385
Reinsurance premiums (46,955) (55,172)
-------------- -----------
Net premium written 304,156 303,213
Change in provision for unearned premiums (2,204) (673)
-------------- -----------
Net premium earned 301,952 302,540
Net investment return 25,450 4,421
Financial services income 13,276 14,066
-------------- -----------
Total income 340,678 321,027
Expenses
Net claims and benefits (201,123) (234,268)
Other underwriting expenses (73,002) (66,653)
Financial services expenses (9,106) (9,883)
Impairment of property, plant and equipment (975) (3,160)
Retirement benefit - past service gain - 11,063
Restructuring and other costs (3,725) (1,615)
Share of results of joint venture (467) -
Profit before tax 52,280 16,511
Income tax charge (8,615) (174)
-------------- -----------
Profit for the year from continuing operations 43,665 16,337
Discontinued operations
Profit/(loss) for the year from discontinued
operations, including profit from sale 7,362 (19,572)
-------------- -----------
Profit/(loss) for the year 51,027 (3,235)
-------------- -----------
Attributable to:
Equity holders of the parent 51,096 (2,408)
Non-controlling interests - continuing
operations 38 89
Non-controlling interests - discontinued
operations (107) (916)
-------------- -----------
51,027 (3,235)
-------------- -----------
Cent Cent
Earnings per share from continuing operations
Basic 130.40 47.99
--------------- ----------
Diluted 129.83 47.78
--------------- ----------
From continuing and discontinued operations
Basic 152.19 (8.08)
--------------- ----------
Diluted 151.52 (8.08)
--------------- ----------
FBD Holdings plc
Consolidated Statement of Comprehensive Income
For the Year Ended 31 December 2011
2011 2010
EUR000s EUR000s
Profit/(loss) for the year 51,027 (3,235)
--------- ----------
Actuarial (loss)/gain on retirement
benefit obligations (14,323) 4,131
Exchange differences on translation of
foreign operations - (164) 747
---------
Other comprehensive (expense)/income
before tax (14,323) 3,967
Tax charge/(credit) relating to other
comprehensive (expense)/income 1,354 (1,531)
--------- ----------
Other comprehensive (expense)/income
after tax (12,969) 2,436
--------- ----------
Total comprehensive income/(expense)
for the year 38,058 (799)
--------- ----------
Attributable to:
Equity holders of the parent 38,127 28
Non-controlling interests (69) (827)
--------- ----------
38,058 (799)
--------- ----------
FBD Holdings plc
Pro Forma Reconciliation of Consolidated Operating Profit to
Profit/(Loss) before Tax
For the Year Ended 31 December 2011
Continuing operations Discontinued operations Total Continuing & discontinued
operations
2011 2010
EUR000s EUR000s EUR000s EUR000s
Operating profit
Underwriting 58,337 - 58,337 36,133
Financial services 4,170 2,393 6,563 4,533
---------------------- ------------------------ -------- ----------------------------
Operating profit before tax 62,507 2,393 64,900 40,666
Investment return -
fluctuations (5,060) - (5,060) (30,093)
Impairment of property,
plant and equipment (975) - (975) (19,868)
Retirement benefit - past
service gain - - - 11,063
Restructuring and other
costs (3,725) - (3,725) (1,615)
Finance costs - (3,329) (3,329) (3,236)
Profit on sale of
subsidiaries - 8,374 8,374 -
Share of results of joint
venture (467) - (467) -
---------------------- ------------------------
Profit/(loss) before tax 52,280 7,438 59,718 (3,083)
Taxation (8,615) (76) (8,691) (152)
---------------------- ------------------------ -------- ----------------------------
Profit/(loss) after tax 43,665 7,362 51,027 (3,235)
---------------------- ------------------------ -------- ----------------------------
Cent Cent Cent Cent
Operating earnings per
share 163.72 5.97 169.69 105.85
---------------------- ------------------------ -------- ----------------------------
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2011
ASSETS
2011 2010
EUR000s EUR000s
Property, plant and equipment 33,797 155,959
Investment property 8,818 42,368
Investment in joint venture 45,621 -
Loans 23,086 24,618
Deferred tax asset 8,348 9,247
Financial assets
Investments held to maturity 405,848 496,852
Available for sale investments 6,282 7,282
Investments held for trading 34,608 17,859
Deposits with banks 305,321 195,172
---------- ----------
752,059 717,165
---------- ----------
Reinsurance assets
Provision for unearned premiums 20,385 24,706
Claims outstanding 43,606 70,916
---------- ----------
63,991 95,622
---------- ----------
Inventories - 46,045
Current tax asset 2,134 6,003
Deferred acquisition costs 22,199 20,531
Other receivables 60,827 71,279
Cash and cash equivalents 35,658 36,714
---------- ----------
Total assets 1,056,538 1,225,551
---------- ----------
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2011
EQUITY AND LIABILITIES 2011 2010
EUR000s EUR000s
Equity
Ordinary share capital 21,409 21,409
Capital reserves 15,927 15,313
Revaluation reserves - 742
Translation reserves - (98)
Retained earnings 172,596 144,757
---------- ----------
Shareholders' funds - equity interests 209,932 182,123
Preference share capital 2,923 2,923
---------- ----------
Equity attributable to equity holders
of the parent 212,855 185,046
Non-controlling interests 458 2,053
---------- ----------
Total equity 213,313 187,099
---------- ----------
Liabilities
Insurance contract liabilities
Provision for unearned premiums 174,362 176,479
Claims outstanding 603,190 657,656
---------- ----------
777,552 834,135
Borrowings - 117,766
Retirement benefit obligation 21,692 10,859
Deferred tax liability 9,643 11,751
Payables 34,338 63,941
Total liabilities 843,225 1,038,452
---------- ----------
Total equity and liabilities 1,056,538 1,225,551
---------- ----------
FBD Holdings plc
Consolidated Statement of Cash Flows
For the Year Ended 31 December 2011
2011 2010
Cash flows from operating activities EUR000s EUR000s
Profit/(loss) before tax 59,718 (3,083)
Adjustments for:
Loss/(profit) on investments held for trading 4,050 (1,075)
Loss on investments held to maturity 971 7,901
Loss on investments available for sale 1,000 2,076
Interest and dividend income (25,979) (30,152)
Interest expense 3,774 3,236
Provision for loans & advances (1,374) 16,329
Depreciation of property, plant and equipment 6,441 6,476
Share-based payment expense 614 1,016
Impairment of investment property 2,182 899
Profit on sale of investment property (5,200) -
Impairment of property, plant and equipment 975 19,868
Retirement benefit - past service gain - (11,063)
Decrease in insurance contract liabilities (24,951) (16,330)
Effect of foreign exchange rate changes (98) (146)
Loss/(profit) on disposal of property, plant and equipment 1 (85)
Profit on sale of subsidiaries (8,373) -
Joint venture trading result before tax 467 -
---------- ----------
14,218 (4,133)
Interest and dividend income received 26,977 31,043
Interest paid (3,448) (2,898)
Operating cash flows before movement in working capital 37,747 24,012
Decrease/(increase) in receivables and deferred acquisition costs 1,311 (57)
(Decrease)/increase in payables (10,058) 9,605
Decrease in inventories 6,375 13,181
Cash generated from operations 35,375 46,741
Income taxes paid (2,701) (8,611)
---------- ----------
Net cash from operating activities 32,674 38,130
---------- ----------
Cash flows from investing activities
Purchase of investments held for trading (32,995) (7,440)
Sale of investments held for trading 12,188 20,656
Purchase of investments held to maturity (69,967) (14,893)
Realisation of investments held to maturity 160,000 91,236
Sale of available for sale investments - 118
Purchase of property, plant and equipment (5,337) (6,415)
Sale of property, plant and equipment 55 680
Sale of investment property 36,568 -
Decrease in loans and advances 347 2,916
Increase in deposits invested with banks (110,150) (119,710)
Net cash outflow from sale of subsidiaries (12,396) -
---------- ----------
Net cash used in investing activities (21,687) (32,852)
---------- ----------
Cash flows from financing activities
Ordinary dividends paid (11,012) (10,147)
Dividends paid to non-controlling interests - (150)
Proceeds of re-issue of ordinary shares 80 -
Decrease in borrowings (1,111) (2,285)
---------- ----------
Net cash used in financing activities (12,043) (12,582)
---------- ----------
Net decrease in cash and cash equivalents (1,056) (7,304)
Cash and cash equivalents at the beginning of the year 36,714 44,036
Effect of foreign exchange rate changes - (18)
---------- ----------
Cash and cash equivalents at the end of the year 35,658 36,714
---------- ----------
FBD Holdings plc
Consolidated Statement of Changes in Equity
For the Year Ended 31 December 2011
Ordinary Capital Revaluation Translation Retained Attributable Preference Non-controlling Total
share reserves and other reserve earnings to ordinary share interests equity
capital reserves shareholders capital
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1
January 2010 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
expense - - - (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
on ordinary and
preference
shares - - - - (10,429) (10,429) - - (10,429)
Dividend paid to
non-controlling
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
Profit after
taxation on
continuing
operations - - - - 43,627 43,627 - 38 43,665
Profit after
taxation on
discontinued
operations - - - - 7,469 7,469 - (107) 7,362
Transfer to
retained
earnings - - (742) 98 644 - - - -
Other
comprehensive
expense - - - - (12,969) (12,969) - - (12,969)
--------- --------- ------------ ------------ --------- ------------- ----------- ---------------- ---------
21,409 15,313 - - 183,528 220,250 2,923 1,984 225,157
Dividends paid
on ordinary and
preference
shares - - - - (11,012) (11,012) - - (11,012)
Exercise of
share options - - - - 80 80 - - 80
Recognition of
share based
payments - 614 - - - 614 - - 614
Reduction in
non-controlling
interests on
sale - - - - - - - (1,526) (1,526)
Balance at 31
December 2011 21,409 15,927 - - 172,596 209,932 2,923 458 213,313
--------- --------- ------------ ------------ --------- ------------- ----------- ---------------- ---------
FBD Holdings plc
Supplementary Information
For the Year Ended 31 December 2011
Note 1 Operating Profit by Activity - continuing operations
Restated
2011 2010
EUR000s EUR000s
Underwriting 58,337 36,133
Financial services 4,170 2,329
62,507 38,462
-------- ---------
Note 2 Underwriting Operating Profit
2011 2010
EUR000s EUR000s
Gross written premiums 351,111 358,385
---------- ----------
Net premium earned 301,952 302,540
Net claims incurred (201,123) (234,268)
Net underwriting expenses (73,002) (66,653)
---------- ----------
Underwriting profit 27,827 1,619
Longer term investment return 30,510 34,514
---------- ----------
Underwriting operating profit 58,337 36,133
---------- ----------
2011 2010
Net underwriting expenses EUR000s EUR000s
Management expenses 82,593 77,527
Deferred acquisition costs (1,668) (568)
--------- ---------
80,925 76,959
Reinsurance commissions receivable (10,631) (12,743)
Broker commission payable 2,708 2,437
--------- ---------
73,002 66,653
--------- ---------
FBD Holdings plc
Supplementary Information
For the Year Ended 31 December 2011
Note 3 Dividends
2011 2010
Paid during year: EUR000s EUR000s
Dividend of 4.8 cent (2010: Nil cent) per share 169 -
on 8% non-cumulative preference shares of 60
cent each
Dividend of 8.4 cent (2010: Nil cent) per share 113 -
on 14% non-cumulative preference shares of
60 cent each
2010 final dividend of 21.0 cent (2009: 20.0
cent) per share on ordinary shares of 60 cent
each 6,987 6,654
2011 interim dividend of 11.25 cent (2010:
10.5 cent) per share on ordinary shares of
60 cent each 3,743 3,493
11,012 10,147
-------- --------
2011 2010
Approved but not paid: EUR000s EUR000s
Dividend of 4.8 cent (2010: 4.8 cent) per share
on 8% non-cumulative preference shares of 60
cent each 169 169
Dividend of 8.4 cent (2010: 8.4 cent) per share
on 14% non-cumulative preference shares of
60 cent each 113 113
282 282
-------- --------
2011 2010
Proposed: EUR000s EUR000s
Dividend of 4.8 cent (2010: 4.8 cent) per share
on 8% non-cumulative preference shares of 60
cent each 169 169
Final dividend of 23.25 cent (2010: 21.0 cent)
per share on ordinary shares of 60 cent each 7,742 6,987
-------- --------
7,911 7,156
-------- --------
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 2011
Note 4 Earnings/(loss) per 60 cent ordinary share
The calculation of the basic and diluted earnings/(loss) per
share attributable to the ordinary shareholders is based on the
following data:
Restated
2011 2010
Earnings EUR000s EUR000s
Profit/(loss) for the year 51,027 (3,235)
Non-controlling interests (69) 827
Preference dividend (282) (282)
---------------- ----------------
Profit/(loss) for the purpose of basic and diluted
earnings/(loss) per share 50,676 (2,690)
Adjustments to exclude (profit)/loss for the
year from discontinued operations (7,362) 19,572
Adjustments to exclude non-controlling interests
for the year from discontinued operations 107 (916)
---------------- ----------------
Earnings from continuing operations for the
purpose of basic and diluted earnings per share 43,421 15,966
---------------- ----------------
Number of shares 2011 2010
Weighted average number of ordinary shares for
the purpose of basic earnings/(loss) per share
(excludes treasury shares) 33,296,894 33,269,476
Effect of dilutive potential of share options
outstanding 148,206 149,089
---------------- ----------------
Weighted average number of ordinary shares for
the purpose of diluted earnings/(loss) per share 33,445,100 33,418,565
The denominators used are the same as those detailed above for both
basic and diluted earnings per share from continuing and discontinued
operations.
From continuing operations Cent Cent
Basic earnings per share 130.40 47.99
---------------- ----------------
Diluted earnings per share 129.83 47.78
---------------- ----------------
From discontinued operations Cent Cent
Basic earnings/(loss) per share 21.79 (56.08)
---------- ------------
Diluted earnings/(loss) per share 21.69 (56.08)
---------- ------------
Options outstanding at the end of 2010 were excluded from the
calculation of diluted loss per share in 2010 because they were
anti-dilutive.
The 'A' ordinary shares of 1 cent each that are in issue have no
impact on the earnings/(loss) per share calculation.
FBD Holdings plc
Supplementary Information
For the Year Ended 31 December 2011
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:
Restated
2011 2010
EUR000s EUR000s
Operating profit after taxation* 56,852 35,623
Non-controlling interests (69) (125)
Preference dividend (282) (282)
56,501 35,216
Adjustments to exclude operating profit for
the year from discontinued operations (1,987) (1,894)
--------- ---------
54,514 33,322
--------- ---------
Cent Cent
Operating earnings per share - continuing operations 163.72 100.16
Operating earnings per share - discontinued
operations 5.97 5.69
--------- ---------
Operating earnings per share - total 169.69 105.85
--------- ---------
*2011 effective tax rate of 12.4% (2010: 12.4%).
FBD Holdings plc
Supplementary Information
For the Year Ended 31 December 2011
Note 5 Ordinary Share Capital
Number 2011 2010
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
------------ -------- --------
Total - Issued and fully paid 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 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 ordinary shares of EUR0.60 each purchased by the
Company during the year. A total of 9,000 ordinary shares of
EUR0.60 each were re-issued from treasury during the year for
EUR2.50 under the FBD Holdings plc Executive Share Option Scheme. A
further 18,418 ordinary shares of EUR0.60 each were re-issued from
treasury during the year for EUR6.55 per share under the FBD
Performance Share Plan. Proceeds were credited directly to
distributable reserves. This left a balance of 2,164,312 ordinary
shares of EUR0.60 each in treasury which had a nominal value of
EUR1.298m and represented 6.1% of the ordinary shares of EUR0.60
each in issue.
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 2011, the total number of ordinary shares of 60
cent each under option amounted to 1,118,923 (2010: 1,161,864). 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").
Of the options outstanding under the ESOS, 240,825 (2010:
249,825) may be exercised prior to October 2013 at a subscription
price of EUR2.50 per share. 875,000 (2010: 875,000) 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 3,098
(2010: 37,039) options outstanding under the SAYE Scheme as at 31
December 2011 were exercisable at a subscription price of EUR18.46
per share and have lapsed since the year end.
FBD Holdings plc
Supplementary Information
For the Year Ended 31 December 2011
Note 6 Transactions with Related Parties
Farmer Business Developments plc has a substantial shareholding
in the Group at 31 December 2011 details of which are set out in
the Annual Report.
During 2011 shareholders approved the establishment of a joint
venture between the Group and Farmer Business Developments plc to
own and manage the property and leisure assets previously 100%
owned by the Group.
Included in the financial statements at the year end is
EUR127,294 (2010: EUR671,227) 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 payable on demand.
Note 7 Subsequent Events
There have been no subsequent events which would have a material
impact on these accounts.
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 2011 or 2010 but is derived from same. The Group
financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs), applicable
Irish law and the listing Rules of the Irish Stock Exchange and the
Financial Services Authority. 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 2011 and 2010 financial statements have been audited and
received unqualified audit reports. The 2011 financial statements
were approved by the Board of Directors on 2 March 2012.
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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