TIDMFBH
RNS Number : 3736Q
FBD Holdings PLC
29 February 2016
FBD HOLDINGS PLC
29 February 2016
PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2015
STRATEGIC DEVELOPMENTS
-- FBD has stabilised during the second half of 2015
-- Key second half goals have been achieved:
- Sale of FBD Hotels completed
- Capital strengthening effected through bond issuance
- Major pension changes made
- Cost reduction target achieved
-- Continued corrective pricing and risk selection actions
reflecting current trading environment
-- Significant governance changes announced separately today -
the amalgamation of the Holdings and Insurance plc Boards will lead
to new appointments, four Directors will not go forward for
re-election at 2016 AGM and the Chairman will retire at 2017
AGM
-- Clear strategy articulated - FBD continues to strengthen its
customer base in the Irish agricultural and small business sectors
and pursue a single brand consumer strategy
-- Path to full year profitability by 2017
FINANCIAL RESULTS 2015 2014*
EUR000s EUR000s
Gross premium written 363,263 363,735
Net premium earned 313,154 303,444
Net loss before taxation (84,789) (3,007)
Cent Cent
Diluted loss per share (213) (7)
Net asset value per share 623 786
* The Group benefited by EUR32m following a change in the basis
of estimate in providing for the Group's share of the Motor
Insurance Bureau of Ireland "MIBI" outstanding claims (see note 6
following) and the 2014 comparatives have been restated
accordingly.
-- Gross premium written stable at EUR363m for the full year
-- Full year average premium rate increases of 9%, offset by an 9% decline in policy volumes
-- The full year net loss before tax of EUR85m is driven largely
by prior year claims development of EUR96m (of which EUR88m was
reported in H1)
-- Full year investment return of 2.2% is a strong result in the
ongoing low-return environment
-- Net loss before tax includes a restructuring charge of EUR11m
in 2015. Ongoing cost savings of EUR8m identified with the savings
realised from Quarter 1 2016 onwards
-- NAV per share at 31 December 2015 is 623c compared to 786c
for prior year and 512c at 30 June 2015
-- The NAV increase in the second half of the year is largely
driven by one-off pension scheme IAS 19 accounting benefits of
EUR28m (81c) and the accounting treatment of the convertible bond,
a component of which is taken directly to equity EUR18m (52c)
-- Capital levels within target range of 110-130% of SCR
Fiona Muldoon, Group Chief Executive, said:
"After an exceptionally difficult year FBD has stabilised. We
have delivered on the commitments made to our shareholders last
summer. Our corrective pricing and risk selection actions are
building momentum towards restoring profitability.
The cost of claims and all of the ancilliary costs associated
are affecting everyone in Ireland. Court award levels are at an
all-time high. We will work with the industry and the government to
tackle the cost of claims for the benefit of all our customers. We
urge the next government to make dealing with this a priority.
We have separately announced today significant board
reorganisation and governance changes centred on the amalgamation
of the FBD Holdings and FBD Insurance Boards. These changes reflect
FBD's focus on our general insurance company and our life and
pensions intermediary."
A presentation will be made to analysts at 9am today, a copy of
which will be available on our Group website www.fbdgroup.com.
Enquiries Telephone
FBD
Fiona Muldoon, Group Chief Executive +353 1 409 3208
Peter Jackson, Head of Investor
Relations
Kathryn Speedie, Corporate Communications
Officer
Powerscourt
Rory Godson/Jack Hickey +353 1 669 4633
About FBD Holdings plc ("FBD")
FBD is one of Ireland's largest property and casualty insurers,
looking after the insurance needs of farmers, consumers and
business owners. Established in the 1960s by farmers for farmers,
FBD has built on those roots in agriculture to become a leading
general insurer serving the needs of its direct agricultural, small
business and consumer customers throughout Ireland. It has a
network of 33 branches nationwide.
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.
The following details relate to FBD's ordinary shares of EUR0.60
each which are publicly traded:
Listing Irish Stock Exchange UK Listing Authority
Listing Category Premium Premium (Equity)
Trading Venue Irish Stock Exchange London Stock Exchange
Market Main Securities Main Market
Market
ISIN IE0003290289 IE0003290289
Ticker FBD.I or EG7.IR FBH.L
OVERVIEW
During the second half of 2015 the Group delivered on the
important capital and strategic initiatives previously announced.
There remains further work to return the business to profitability
and we have set our business firmly on that path. Following the
strengthening of prior year reserves as reported in the Group's
2015 half yearly report, substantial progress has been made in
improving price adequacy and in strengthening the Group's capital
position. The Group is focused on what it does best, servicing the
insurance needs of FBD's agricultural and small business customers
as well as a single brand consumer strategy for motorists and home
owners. Important actions to reduce expenditure in line with this
simplified strategy were successfully effected during the second
half of the financial year.
Significant progress has been made by the Group during the
second half of 2015:
-- Focused on serving the insurance needs of core agricultural
and small business customers. FBD will continue to invest in
strengthening its customer relationships in the Irish agricultural
and business sector.
-- Implementation of the single brand consumer strategy has
begun; FBD will service the needs of consumer car and home
customers exclusively through the FBD brand.
-- FBD has implemented decisive rating and pricing actions to
restore profitability. This will continue as necessary in 2016.
-- The Group has identified and implemented cost savings of
EUR8m, as targeted in the 2015 half yearly report. A voluntary
redundancy program was completed in the second half of 2015. The
majority of savings will be realised from the end of the first
quarter of 2016.
Before exceptional items, the Group made a loss before tax of
EUR5.3m in the second half of 2015 following the loss of EUR96.4m
in the first half of the year. After exceptional items the Group
made a profit of EUR11.6m in the second half of 2015.
In August 2015, the Group outlined a number of measures to
strengthen its capital position; divesting its stake in FBD
Property & Leisure Limited, overhauling the legacy staff
pension scheme, and exploring options for raising regulatory
capital in debt capital markets.
The Group has completed each of these steps successfully:
-- On 24 August 2015, the Group announced that it had reached
agreement with Farmer Business Developments plc to divest its half
of the Property & Leisure joint venture for EUR48.5m. This was
approved by shareholders on 22 October 2015, and closed immediately
afterwards.
-- On 16 September 2015, the Group announced that it had reached
an agreement with Fairfax Financial Holdings Limited ("Fairfax"),
whereby Fairfax invested EUR70m in FBD Insurance plc by private
placement of a convertible bond instrument. This convertible bond
(convertible into equity of FBD Holdings plc) was approved by
shareholders on 30 December 2015.
-- The Group reached agreement with its staff in relation to the
future of its defined benefit pension scheme. 95% of the active
members in the scheme chose to leave the scheme in exchange for an
enhanced transfer value to a defined contribution arrangement. The
impact of the change in benefits coupled with the reduced number of
members in the scheme has resulted in the elimination of the
deficit of EUR54.3m as reported at 31 December 2014. A surplus of
EUR9.1m was recorded at year end. The change in scheme benefits,
net of the payment of enhanced transfer values has resulted in a
credit to the income statement of EUR28.3m.
BUSINESS REVIEW
The Group recorded a loss before tax from continuing and
discontinued operations of EUR84.8m in 2015 (2014: EUR3.0m). This
is after an exceptional charge of EUR11.4m relating to
restructuring costs and an exceptional gain of EUR28.3m relating to
the restructure of the defined benefit pension scheme. Excluding
these exceptional items, the Group made a loss of EUR101.7m in
2015, with EUR96.4m of this loss recorded in the first half of the
financial year and EUR5.3m in the second half of the financial
year.
Underwriting
Premium income
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FBD has continued to prioritise profitability over volume and
while policy volumes have declined by 8.9% in 2015, this has been
offset by average rate increases of 8.9%. The net result is that
gross written premium levels remained stable at EUR363.3m. FBD
continues to maintain its focus on the insurance needs of its
agricultural, small business and consumer customers and this
delivered growth in premium during the period. Net earned premium
was EUR313.2m, an increase of 3.2% on 2014, reflecting the earning
through of the rate increases implemented throughout 2014 and
2015.
Claims
Net claims incurred increased to EUR341.3m (2014: EUR252.1m).
Included in this was a full year charge of EUR95.8m relating to the
strengthening of prior year reserves and an increase in the margin
for uncertainty.
Adverse claims development
As set out in the Group's half yearly report, an adverse claims
development pattern, first evident in the second half of 2014, was
significantly more pronounced in 2015. It was driven by a number of
structural changes in the claims environment. These changes
included:
-- A new Court of Appeal was established on 28 October 2014 with
9 judges who previously sat in the High Court. The positions left
by these departures were backfilled mainly from existing judges in
the Circuit Court which in turn created new vacancies in the
Circuit Court. In all over 20 new judicial appointments were made
between the Circuit and High Courts. Many of these new appointments
were made in 2015.
-- In February 2014 the District Court jurisdiction over claims
increased from EUR6,400 to EUR15,000 whilst the Circuit Court limit
increased from EUR38,000 to EUR60,000 for personal injury claims
and EUR75,000 for property damage. This was widely flagged in the
media and by the Minister for Justice at the time as a cost saving
measure. This increased jurisdiction applied to all new proceedings
issued after that date and as such very few cases were seen for
trial in 2014 under the new jurisdiction limits. It was during the
course of 2015 that the volume of cases began to be heard in the
Circuit Court and trends began to emerge in relation to higher
Court awards.
In addition, from August 2014 the introduction of the Recovery
of Benefit and Assistance Scheme enables the Department of Social
Protection to recover some welfare payments from personal injury
awards directly from the insurer. Very significantly, the discount
rate used in valuing personal injury awards was reduced from the
previous 3% to between 1% and 1.5% following the Russell vs HSE
case in December 2014 also.
Taken together during the course of 2015, FBD began to see
strong trends emerging in relation to the level of damages being
awarded. Volatility in court awards has led claimants' expectations
to increase as court awards, in turn, influence out of court
settlement levels.
In addition, in 2015:
-- The Heads of Bill for Periodic Payment Orders (PPOs) were
published. Submissions were invited before 31 July 2015. The
finalised bill has not been published. The proposed introduction of
PPOs will bring about the effective annuitisation of lump sum
awards.
-- The Injuries Board is collating data on personal injury
awards and settlements from the Insurance Industry, and it is
likely a revised Book of Quantum will be published over the next 12
months.
-- The Group experienced a significant increase in motor injury
claims frequency in 2014 and also began to see a shift in the
claimant culture with more claimants likely to make an injury claim
arising out of rear end motor collisions and reporting a greater
degree of injury than in the past.
The combination of the above factors suggested that significant
claims inflation was underway in the Irish market and at 30 June
2015 led FBD to increase prior year reserves by EUR88m.
In November 2015 a Court of Appeal judgement was delivered
following the appeal of the Russell vs HSE ruling on the discount
rate applied to settlement awards. The outcome of the appeal was to
broaden the judged application, with the lower discount rate now
applicable to a broader range of claims than envisaged in the
original judgement. This has resulted in an increase in FBD's prior
year reserves of EUR8m in the second half of the year. While the
Group had provided for this within the margin for uncertainty at 30
June 2015, given the level of uncertainty still prevalent in the
claims environment, the Group has decided not to release this
element from the margin for uncertainty at 31 December 2015. As a
result prior year reserves have been increased by a further EUR8m
in the second half of 2015, bringing the total prior year reserve
and margin for uncertainty charge in 2015 to EUR95.8m. Other than
the impact of this discount rate judgement the prior year
development since 30 June 2015 has been negligible. The clarity
provided by the November 2015 Court of Appeal judgement has led to
some early indications of an emerging willingness by claimants to
settle since that date.
The Group is engaged with policy makers, through the Government
Working Group and Insurance Ireland to investigate ways of
improving the claims environment, to ensure that Government policy
and the legal system is effective at working to reduce the cost of
insurance and of insurance legal costs for all customers and
policyholders.
Movement in reserves
Full year
H1 2015 2015
EURm EURm
Opening Reserves (restated) 716.3 716.3
Prior Year Strengthening 87.9 95.8
Current Year Claims 123.2 245.4
Payments (96.6) (210.6)
Increase/(decrease) in
UPR 4.4 (0.4)
-------- ---------
Closing Reserves (insurance
contract liabilities less
reinsurance assets) 835.2 846.6
-------- ---------
Weather, Claims Frequency and Large Claims
Ireland was hit by a number of storms during November and
December 2015. Individually, none of the storms were of sufficient
size to breach the Group's catastrophe reinsurance retention limit
of EUR5m. The total net cost of these weather events in the last
quarter was EUR11.4m.
Motor injury frequency declined as the underwriting and risk
selection actions taken by the Group since the second half of 2014
started to prove effective.
While large claims (greater than EUR1m) were in line with
average historic norms in the first half of 2015, the experience in
the second half of 2015 was less favourable. The net cost of large
claims for 2015 was EUR6.8m higher than the average over the
previous three years.
Expenses
The Group's expense ratio was 27.4% (2014: 27.0%). Net expenses
increased by EUR3.9m to EUR85.7m (2014: EUR81.8m).
Much of this was driven by the movement in deferred acquisition
costs arising from the earn through of higher levels of broker
channel business in 2015 compared to 2014. Net earned premium
increased by 3.2%.
General
FBD's combined operating ratio, excluding prior year reserve
strengthening and the increase in the margin for uncertainty, was
105.8% for 2015.
The Group's charge for the Motor Insurers Bureau of Ireland
("MIBI") was EUR11.6m (2014: EUR7.3m). This charge was previously
included within claims incurred, however, following the adoption of
new Irish GAAP by FBD Insurance plc, this is no longer included as
a technical provision but is instead included in other provisions.
The Group now provides for its share of the estimated levy call for
the following year. Previously the Group provided for its share of
the total outstanding claims of MIBI. Prior year comparatives have
been restated to reflect this change in accounting policy.
Investment return
FBD's actual investment return for 2015 was 2.2% or EUR20.3m
(2014: EUR26.1m). This better than expected performance reflected a
number of one off gains from the sale of investment property in the
UK, revaluation of Irish commercial property and equity gains. The
outlook for investment income remains very challenging, as
world-wide monetary policy keeps interest rates low. As long as
quantitative easing persists as the cornerstone of the European
Central Bank's monetary policy, a prolonged period of low
investment returns appears likely. Therefore, the investment income
outlook continues to be poor and the returns the Group expects to
deliver in the near term are likely to be below the returns
achieved over the last 5 years.
The Group recognised a loss of EUR1.8m (2014: profit of EUR1.0m)
within the statement of other comprehensive income relating to mark
to market movements on available for sale investments, in
accordance with its accounting policy. This reflects net investment
returns of EUR18.5m in 2015 (2014: EUR27.1m).
Financial Services
The Group's financial services operations include premium
instalment services and life, pension and investment broking (FBD
Financial Solutions) less holding company costs. These generated a
solid performance in a tough environment, delivering a profit of
EUR3.9m (2014: EUR5.2m) before exceptional items.
Property and Leisure Joint Venture
On 24 August 2015, the Group announced that it had reached an
agreement with Farmer Business Developments plc to sell its 50%
share of the Property and Leisure joint venture for EUR48.5m,
representing fair value of the Group's share of the joint venture's
net assets. The proceeds of the sale were invested in equity in FBD
Insurance plc, in order to fulfil its capital requirement on
transition to Solvency II on 1 January 2016.
Loss per share
FBD is no longer reporting an operating EPS based on the longer
term rate of investment return. This brings FBD in line with
practice in most general insurers.
The diluted loss per share was 213 cent per ordinary share,
compared to a loss of 7 cent (restated) per ordinary share in
2014.
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STATEMENT OF FINANCIAL POSITION
Capital Position
Ordinary shareholders' funds at 31 December 2015 amounted to
EUR215.9m (2014: EUR270.6m restated). The reduction in
shareholders' funds for the full year is mainly attributable to the
losses in the period of EUR74.2m and the payment of the final 2014
dividend of EUR11.8m offset by both other comprehensive income of
EUR12.9m and the accounting treatment of a portion of the
convertible bond recognised in equity of EUR18.2m. Net assets per
ordinary share are 623 cent, compared to 786 cent per share
(restated) at December 2014. In the second half of the year the NAV
per share increased from 512c to 623c, an increase of 111c per
share.
The Group's net asset value has benefited by EUR32m following a
change in accounting policy for the Group's share of the MIBI
outstanding claims. This follows a change in accounting standards
framework applicable to the Group's principal subsidiary, FBD
Insurance plc. Previously FBD Insurance plc provided for its market
share of the total outstanding claims of MIBI. Under new accounting
standards applicable from 1 January 2015, FBD Insurance plc may
only provide for its share of the following year's MIBI levy. This
change increased the net asset value per share by 93c.
As announced on 16 September 2015, the Group reached an
agreement with Fairfax Financial Holdings Limited ("Fairfax"),
whereby Fairfax would invest EUR70m in FBD by private placement of
a convertible bond instrument in FBD Insurance plc. This was
approved by shareholders on 30 December 2015.
The Convertible Bond is a 10 year Solvency II compliant
instrument and carries a coupon of 7.0% per annum which is payable
semi-annually. The conversion price has been set at EUR8.50, a 37%
premium over the closing share price on 15 September 2015. Unless
previously redeemed, the Convertible Bond is exercisable from year
3 to year 10 and, in the event that the 30 day volume weighted
average share price exceeds the conversion price for a period of
180 days, the Convertible Bond will automatically convert into
ordinary shares in FBD Holdings plc at the conversion price. It has
been accounted for in accordance with IFRS, whereby it is split
into a liability component and an equity component. The fair value
of the liability component has been determined with reference to
the fair value of a similar liability without an equity conversion
option. The equity component is recognised initially as the
difference between the fair value of the convertible note as a
whole and the fair value of the liability component. This
investment is a significant vote of confidence in the Group from a
very well established global insurance investor.
Solvency
Solvency I:
FBD Insurance plc had a Solvency I level of 46.9% of net premium
earned at 31 December 2015, which represents 209% (2014: 366%) of
the Solvency I minimum solvency margin, and had a reserving ratio
of 270% (2014: 240%).
Solvency II:
The solvency capital requirement ("SCR") is the amount of
capital which the company needs to hold to withstand a 1 in 200
year event or series of events. This is a risk based calculation
which stresses the main risks faced by a general insurance company,
namely underwriting and reserving risk, catastrophe risk, market
risk, operational risk and default risk. The solvency capital ratio
is the ratio of the capital available to the capital requirement. A
solvency capital ratio of over 100% means that FBD has sufficient
capital within the business to withstand a 1 in 200 year event as
described by Solvency II.
Solvency II became effective from 1 January 2016 and is a higher
capital standard and one which creates more volatility in the
solvency calculation. The capital actions taken by the Group over
the past number of months, which included the issue of the EUR70m
Solvency II compliant convertible bond, the divestment of its share
in the property and leisure joint venture for EUR48.5m and the
subsequent investment of the proceeds as equity in FBD Insurance
plc, and the restructuring of the Group's defined benefit pension
scheme, have led to a substantial increase in the Group's economic
capital over the course of the second half of 2015. The Group's
economic capital is within its long term target range of 110-130%
of SCR.
Investment Allocation
This table shows the assets of the Group.
31 December 2015 31 December 2014
Underwriting investment assets EURm % EURm %
Deposits and cash 398 39% 511 58%
Corporate bonds 432 43% 224 25%
Government bonds 101 10% 46 5%
Equities 24 2% 41 5%
Unit trusts 25 2% 25 3%
Own land & buildings 16 2% 16 2%
Investment property 15 2% 20 2%
---------- ------- ---------- -------
Underwriting investment assets 1,011 100% 883 100%
------- -------
Working capital & other assets 117 118
Reinsurers' share of provisions 80 57
Investment in joint venture - 47
Plant and equipment 56 47
---------- ----------
Total assets 1,264 1,152
---------- ----------
Investment Background
The introduction of quantitative easing by the ECB and
continuing low interest rates for the Euro area present challenging
investment yield conditions. The divergence in monetary policy
between Europe and the US brings market volatility. This
divergence, when coupled with uneven global growth and elevated
geopolitical risks, justifies our cautious strategy that seeks to
minimise volatility in our investment portfolio.
FBD's Investment Allocation
In early 2015 the Group reduced allocation to equities due to
our perception of stretched valuations and the poor macro-economic
outlook. The Group also divested some development land. Both
actions reduced risk assets from 9% to 6%. The Group believes this
is an appropriate strategy at this time. The Group holds 92% of its
underwriting assets in cash and short dated bonds at 31 December
2015. This large liquid position creates flexibility to act as
conditions change and as investment opportunities present
themselves. The interest rate environment and the introduction of
Solvency II in 2016 provides an opportunity to further develop our
strategic asset allocation and reposition the portfolio to deliver
sustainable returns over the medium term. The sell-off in financial
markets in Q4 allowed the Group to reposition its allocation to
corporate bonds at modestly improved book yields.
Dividends
As noted in the half yearly report published in August 2015, the
Board has decided that no final dividend will be recommended for
2015.
OUTLOOK
Economic indicators continue to point to an expanding domestic
economy. This improved outlook for Ireland will be positive for FBD
in the medium term. The Irish insurance market continued to grow in
2015, as insurers increased rates following market losses. There
was increasing evidence of claims inflation coupled with the higher
increased level of frequency experienced in a recovering economy.
Insurance rates have hardened considerably in 2015 for both motor
insurance and business insurance. The Group expects this trend to
continue into 2016.
Despite rate hardening, industry profitability continues to be
challenging, and the Group believes that the industry will continue
to be loss making for 2016, as the market has not yet increased
rates sufficiently to compensate for the significant deterioration
in the claims environment. The Group's weather loss experience
since the start of 2016 was not severe.
A lot of progress has been made in delivering the key
intermediate objectives outlined in 2015. There is still
considerable work to be undertaken to return the Group to
profitability. The Group's focus on a more simplified strategy will
enable it to achieve its goals. FBD will dedicate its resources
primarily to its direct agricultural, small business and consumer
customers, and will concentrate on those markets where it has
developed a significant competitive advantage. The Group will also
focus on a single FBD brand strategy. This strategy will deliver
sustainable efficiencies and better returns. FBD's business model
remains sound, and it has the customers, infrastructure and
underwriting experience to return to profitability.
The Group is committed to taking whatever action is required to
return the business to profitability. The Group intends to maintain
underwriting discipline and to deliver sustainable shareholder
value through growth in book value.
The Group restates its ambition to achieve a sub-100% combined
operating ratio by Q4 2016, and a full year's underwriting
profitability in 2017. The expectation for 2016 is that for the
full financial year the business will make a modest loss after tax.
Previously FBD had targeted Return on Equity (ROE) of 18% through
the underwriting cycle. The advent of Solvency II brings higher
capital levels. Combined with a prolonged low interest rate
environment this means a ROE target of 10-12% is more appropriate
in the medium term.
FBD has a proud track record of profitable business and
excellent customer relationships with its farming, small business
and consumer customers. Although 2015 has been a very challenging
year and market conditions remain difficult in an inherently
cyclical industry, the Board is confident that FBD is on the right
path to recovery.
FBD HOLDINGS PLC
29 February 2016
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PRELIMINARY ANNOUNCEMENT
For the year ended 31 December 2015
FBD Holdings plc
Consolidated Income Statement
For the year ended 31 December 2015
Restated
Continuing Operations 2015 2014
EUR000s EUR000s
Revenue 403,532 406,263
---------- ----------
Income
Gross premium written 363,263 363,735
Reinsurance premiums (50,497) (52,312)
---------- ----------
Net premium written 312,766 311,423
Change in provision for unearned
premiums 388 (7,979)
---------- ----------
Net premium earned 313,154 303,444
Net investment return 20,260 26,068
Financial services income 14,277 15,380
---------- ----------
Total income 347,691 344,892
Expenses
Net claims and benefits (341,260) (252,091)
Other underwriting expenses (85,725) (81,786)
Other charges (11,581) (7,259)
Financial services expenses (10,325) (10,173)
Revaluation of property, plant
and equipment 175 1,480
Restructuring and other costs (11,415) -
Finance costs (1,357) -
Pension curtailment 28,340 -
Result before taxation from
continuing operations (85,457) (4,937)
Income taxation credit 11,222 1,013
---------- ----------
Result for the financial year
from continuing operations (74,235) (3,924)
---------- ----------
Discontinued operations
Result for the financial year
from discontinued operations,
including loss from sale 668 1,930
---------- ----------
Result for the financial year (73,567) (1,994)
---------- ----------
Attributable to:
Equity holders of the parent (73,685) (2,089)
Non-controlling interests 118 95
--------- ---------
(73,567) (1,994)
--------- ---------
Loss per share Restated
2015 2014
From continuing operations Cent Cent
Basic (215) (13)
--------- ---------
Diluted (215) (13)
--------- ---------
From continuing and discontinued
operations
Basic (213) (7)
--------- ---------
Diluted (213) (7)
--------- ---------
FBD Holdings plc
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2015
Restated
2015 2014
EUR000s EUR000s
Result for the financial year (73,567) (1,994)
----------- -----------
Items that will or may be
reclassified to profit or
loss in subsequent periods:
Net (loss)/gain on available
for sale financial assets
during the year (1,762) 1,028
Taxation credit/(charge) relating
to items that will or may
be reclassified to profit
or loss in subsequent periods 698 (257)
Items that will not be reclassified
to profit or loss in subsequent
periods:
Actuarial gain/(loss) on retirement
benefit obligations 15,914 (25,058)
Taxation (charge)/credit relating
to items not to be reclassified
in subsequent periods (1,989) 3,214
----------- -----------
Other comprehensive income/(expense)
after taxation 12,861 (21,073)
----------- -----------
Total comprehensive expense
for the financial year (60,706) (23,067)
----------- -----------
Attributable to:
Equity holders of the parent (60,824) (23,162)
Non-controlling interests 118 95
(60,706) (23,067)
----------- -----------
FBD Holdings plc
Consolidated Statement of Financial Position
At 31 December 2015
ASSETS Restated
2015 2014
EUR000s EUR000s
Property, plant and equipment 72,617 62,625
Investment property 14,550 19,959
Investment in joint venture - 47,167
Loans 832 971
Deferred taxation asset 13,139 5,572
Financial assets
Available for sale investments 489,837 224,977
Investments held for trading 94,375 116,428
Deposits with banks 371,333 494,909
----------------------- ------------------
955,545 836,314
----------------------- ------------------
Reinsurance assets
Provision for unearned premiums 15,332 16,010
Claims outstanding 64,751 41,300
----------------------- ------------------
80,083 57,310
----------------------- ------------------
Retirement Benefit Asset 9,110 -
Current taxation asset 8,813 8,742
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Deferred acquisition costs 27,545 28,427
Other receivables 59,506 58,951
Cash and cash equivalents 22,244 26,190
----------------------- ------------------
Total assets 1,263,984 1,152,228
----------------------- ------------------
FBD Holdings plc
Consolidated Statement of Financial Position (continued)
At 31 December 2015
EQUITY AND LIABILITIES Restated
2015 2014
EUR000s EUR000s
Equity
Called up share capital
presented as equity 21,409 21,409
Capital reserves 18,553 18,756
Retained earnings 157,670 230,444
Other reserves 18,232 -
---------- ----------
Shareholders' funds -
equity interests 215,864 270,609
Preference share capital 2,923 2,923
---------- ----------
Equity attributable to
equity holders of the
parent 218,787 273,532
Non-controlling interests 451 483
---------- ----------
Total equity 219,238 274,015
---------- ----------
Liabilities
Insurance contract liabilities
Provision for unearned
premiums 178,584 179,650
Claims outstanding 748,144 593,983
---------- ----------
926,728 773,633
Other provisions 10,938 7,920
Convertible debt 50,036 -
Retirement benefit obligation - 54,254
Deferred taxation liability 2,990 5,266
Payables 54,054 37,140
Total liabilities 1,044,746 878,213
---------- ----------
Total equity and liabilities 1,263,984 1,152,228
---------- ----------
FBD Holdings plc
Consolidated Statement of Cash Flows
For the year ended 31 December 2015
Restated
2015 2014
EUR000s EUR000s
Cash flows from operating activities
Loss before taxation (84,789) (3,007)
Adjustments for:
Gain on investments held for trading (535) (3,709)
Loss on investments held to maturity - 288
Loss on investments available for sale 5,493 2,284
Interest and dividend income (13,123) (13,352)
Depreciation of property, plant and equipment 8,392 8,197
Share-based payment (credit)/expense (203) 944
Revaluation of investment property (3,450) (9,261)
Revaluation of property, plant and equipment (175) (1,480)
Profit on the sale of investment property (8,915) (324)
Increase in insurance contract liabilities 130,320 63,523
Movement in other provisions 3,018 (920)
Effect of foreign exchange rate changes (485) (160)
Profit on disposal of property, plant and equipment - (19)
Joint venture trading result (1,461) (1,930)
Operating cash flows before movement in working capital 34,087 41,074
Decrease in receivables and deferred acquisition costs 1,004 3,900
Decrease in payables (30,408) (3,229)
Cash generated from operations 4,683 41,745
Interest and dividend income received 12,339 16,795
Income taxes refunded /(paid) 126 (2,684)
Net cash from operating activities 17,148 55,856
---------- ----------
Cash flows from investing activities
Purchase of investments held for trading (32,561) (45,545)
Sale of investments held for trading 55,149 143,057
Realisation of investments held to maturity - 30,000
Purchase of available for sale investments (408,318) (129,453)
Sale of available for sale investments 136,202 45,117
Purchase of property, plant and equipment (18,209) (24,094)
Sale of property, plant and equipment - 339
Sale of investment property 18,259 1,353
Decrease in loans and advances 139 65
Decrease/(increase) in deposits invested with banks 123,577 (56,932)
Net cash inflow from sale of joint venture 48,500 -
Net cash used in investing activities (77,262) (36,093)
---------- ----------
Cash flows from financing activities
Ordinary and preference dividends paid (11,950) (17,505)
Dividends paid to non-controlling interests (150) (75)
Proceeds from issue of convertible bond 68,268 -
Proceeds of re-issue of ordinary shares - 2,421
Net cash used in financing activities 56,168 (15,159)
---------- ----------
Net (decrease)/increase in cash and cash equivalents (3,946) 4,604
Cash and cash equivalents at the beginning of the year 26,190 21,586
Cash and cash equivalents at the end of the year 22,244 26,190
---------- ----------
FBD Holdings plc
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Called up Capital Retained Attributable Preference Non-controlling Total
share reserves earnings to ordinary share interests equity
capital shareholders capital
presented
as equity
Other
Reserves
EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s EUR000s
Balance at 1
January 2014 -
restated 21,409 17,812 268,690 - 307,911 2,923 463 311,297
Loss after
taxation -
restated - - (2,089) - (2,089) - 95 (1,994)
Other
comprehensive
expense - - (21,073) - (21,073) - - (21,073)
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
21,409 17,812 245,528 - 284,749 2,923 558 288,230
Dividends paid
and approved on
ordinary and
preference
shares - - (17,505) - (17,505) - - (17,505)
Reissue of
ordinary shares - - 2,421 - 2,421 - - 2,421
Recognition of
share based
payments - 944 - - 944 - - 944
Dividend paid to
non-controlling
interests - - - - - - (75) (75)
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
Balance at 31
December 2014 -
restated 21,409 18,756 230,444 - 270,609 2,923 483 274,015
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
Loss after
taxation - - (73,685) - (73,685) - 118 (73,567)
Other
comprehensive
income - - 12,861 - 12,861 - - 12,861
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
21,409 18,756 169,620 - 209,785 2,923 601 213,309
Issue of
convertible
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bond - - - 18,232 18,232 - - 18,232
Dividends paid
and approved on
ordinary and
preference
shares - - (11,950) - (11,950) - - (11,950)
Recognition of
share based
payments - (203) - - (203) - - (203)
Dividend paid to
non-controlling
interests - - - - - - (150) (150)
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
Balance at 31
December 2015 21,409 18,553 157,670 18,232 215,864 2,923 451 219,238
---------- --------- ----------- --------- ------------- ----------- ---------------- -----------
FBD Holdings plc
Supplementary Information
For the year ended 31 December 2015
Note 1 Underwriting LOSS
Restated
2015 2014
EUR000s EUR000s
Gross premium written 363,263 363,735
---------- ----------
Net premium earned 313,154 303,444
Net claims incurred (341,260) (252,091)
Net underwriting expenses (85,725) (81,786)
---------- ----------
Underwriting loss (113,831) (30,433)
---------- ----------
2015 2014
Net underwriting expenses EUR000s EUR000s
Management expenses 92,307 91,089
Deferred acquisition costs 882 (1,998)
--------- ---------
Gross underwriting expenses 93,189 89,091
Reinsurance commissions receivable (12,799) (13,121)
Broker commission payable 5,335 5,816
--------- ---------
Net underwriting expenses 85,725 81,786
--------- ---------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2015
Note 2 LOSS PER EUR0.60 ORDINARY SHARE
The calculation of the basic and diluted earnings per share
attributable to the ordinary shareholders is based on the following
data:
Restated
2015 2014
Earnings EUR000s EUR000s
Loss for the year (73,567) (1,994)
Non-controlling interests (118) (95)
Preference dividends (169) (282)
----------- -----------
Loss for the purpose of basic
and diluted earnings per share (73,854) (2,371)
Adjustments to exclude profit
for the year from discontinued
operations (668) (1,930)
----------- -----------
Earnings from continued operations
for the purpose of basic and diluted
earnings per share excluding discontinued
operations (74,522) (4,301)
----------- -----------
Number of shares 2015 2014
Weighted average number of ordinary
shares for the purpose of
basic earnings per share (excludes
treasury shares) 34,648,122 34,414,709
From continuing operations Cent Cent
Basic earnings per share (215) (13)
----------- -----------
Diluted earnings per share (215) (13)
----------- -----------
From discontinued operations Cent Cent
Basic earnings per share 2 6
----------- -----------
Diluted earnings per share 2 6
----------- -----------
The 'A' ordinary shares of EUR0.01 each that are in issue have
no impact on the earnings per share calculation.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2015
Note 3 DIVIDENDS
2015 2014
Paid during year: EUR000s EUR000s
2014 final dividend of 34.0 cent
(2013: 33.25 cent) per share on
ordinary shares of EUR0.60 each 11,781 11,333
2015 interim dividend of nil cent
(2014: 17.00 cent) per share on
ordinary shares of EUR0.60 each - 5,890
Dividend of 4.8 cent (2014: 4.8
cent) per share on 8% non-cumulative
preference shares of EUR0.60 each 169 169
Dividend of nil cent (2014: 8.4
cent) per share on 14% non-cumulative
preference shares of EUR0.60 each - 113
Total dividends paid 11,950 17,505
--------- ---------
2015 2014
Proposed: EUR000s EUR000s
Dividend of nil cent (2014: 4.8
cent) per share on 8% non-cumulative
preference shares of EUR0.60 each - 169
Final dividend of nil cent (2014:
33.25 cent) per share on ordinary
shares of EUR0.60 each - 11,780
-------- --------
Total dividends proposed - 11,949
-------- --------
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2015
Note 4 CALLED UP SHARE CAPITAL PRESENTED AS EQUITY
Number 2015 2014
EUR000s EUR000s
(i) Ordinary shares of EUR0.60
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
EUR0.01 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 EUR0.01 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 EUR0.01 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 EUR0.60 each, the dividend on the non-cumulative
preference shares must firstly be declared or paid.
The number of ordinary shares of EUR0.60 each held as treasury
shares at the beginning and the end of the year (and the maximum
number held during the year) was 813,084. This represented 2.3% of
the shares of this class in issue and had a nominal value of
EUR487,850. There were no ordinary shares of EUR0.60 each purchased
by the Company during the year. No shares were re-issued from
treasury during the year under the FBD Holdings plc Executive Share
Option Scheme or the FBD Performance Share Plan.
The weighted average number of ordinary shares of EUR0.60 each
in the earnings per share calculation has been reduced by the
number of such shares held in treasury.
All issued shares have been fully paid.
FBD Holdings plc
Supplementary Information (continued)
For the year ended 31 December 2015
Note 5 TRANSACTIONS WITH RELATED PARTIES
Farmer Business Developments plc has a substantial shareholding
in the Group at 31 December 2015. Details of their shareholding and
related party transactions are set out in the Annual Report.
Included in the Financial Statements at the year-end is EUR Nil
(2014: EUR67,500) due from Farmer Business Developments plc. This
balance is made up of recharges for services provided and
recoverable costs. The amount due is repayable on demand.
Transactions with Farmer Business 2015 2014
Developments plc
EUR000s EUR000s
Opening balance 67 530
Management charges 75 67
Payments by related party (142) (530)
-------- --------
Closing balance 0 67
-------- --------
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