Final Results

FBD Holdings PLC 03 March 2004 FBD HOLDINGS PLC PRELIMINARY ANNOUNCEMENT RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2003 2003 2002 HIGHLIGHTS €000's €000's •Turnover 500,494 421,612 •Operating profit 110,456 37,531 cent cent •Operating earnings per share 227.38 75.34 •Dividend per share 27.60 22.00 •Net assets per share 701.94 510.13 Commenting on the results, Philip Fitzsimons, Chief Executive, stated: '2003 was a very good year for FBD shareholders and FBD customers. The underwriting loss trend of previous years was reversed and the turnaround to profit enabled significant premium reductions to be given to a wide range of policyholders. This will result in annual savings in excess of €30m for customers. The indications are that the underwriting experience will continue to be favourable and consequently customers can anticipate further premium savings. In this regard, it is essential that all interested parties maintain momentum in implementing the claims reform agenda. We are confident of maintaining business growth patterns in this year and in the future.' ENDS 3rd March 2004 For Reference Telephone No. FBD Philip Fitzsimons, Chief Executive 353 1 409 3200 MURRAY CONSULTANTS Joe Murray / Donnchadh O'Neill 353 1 498 0300 FBD HOLDINGS PLC FBD Holdings plc is pleased to announce excellent results for the year ended 31st December 2003. Operating profit amounted to €110.5m. compared to €37.5m. for 2002, resulting in operating earnings per share of 227.38 cent (2002: 75.34 cent). Net assets per share increased to 701.94 cent from 510.13 cent. The Board is recommending a final dividend of 17 cent, giving a total dividend for the year of 27.60 cent. All of the Group's business divisions, namely, insurance underwriting, financial services and property/leisure, delivered improved performances in 2003, with FBD Insurance producing particularly strong results in the period. Insurance Underwriting ---------------------- FBD Insurance operating profit grew to €93.7m. (2002: €25.3m.). This result is attributable to the considerable improvement in underwriting performance which recorded a turnaround from losses of €5.3m. in 2002 to a profit of €59.3m. in 2003. This turnaround was achieved across motor, liability and property classes of business and is most welcome against a background of underwriting losses in the previous years. Two elements combined to deliver the underwriting figures; growth in net earned premiums from €240.3m to €290.3m. and a fall in claims incurred from €220.5m. to €194.1m. Earned premium growth reflected the buoyant sales achieved in 2002 (up 31 per cent), which boosted 2003 earned premium in all business classes. The fall in claims incurred was driven primarily by improvements in both Motor and Liability. The positive underwriting result of €32m in 2003, contrasts with accumulated losses of €140m experienced over the previous five years. The reduction in claim costs reflects a fall in both the incidence of personal injury claims and, also, the lower than anticipated settlement and award levels that have emerged over the past 12/18 months in motor and liability claims. Consequently, savings were achieved on pre-2003 claim provisions, in addition to an improvement in the current year's claims experience. Property insurance benefited from the benign weather experienced in 2003. The improved claims environment has been brought about by the reform measures which the Insurance Industry, Government, business and consumers have been pursuing. The end result of this concerted effort to eradicate Ireland's hitherto rampant claims culture is evidenced in the underwriting outcome. Gross written premium in 2003 amounted to €368.6m., an increase of 13.1 per cent. This premium growth is entirely attributable to new policies written, which more than offset the premium reductions which had been implemented across a wide range of covers in the course of the year. Compared to a year ago, average premium reductions of 12 per cent in car insurance, and 10 per cent upwards on farm, rural and urban house insurance, shops and pubs have been implemented on foot of the improved underwriting situation. The growth in policy numbers reflects successful expansion in the SME sector in city, urban and rural areas, as well as in the home insurance and motor markets. Property & Leisure ------------------- Operating profits in the Group's property and hotel/leisure division amounted to €12.6m. (€8.9m.). The completion and sales of the Los Altos apartments development at La Cala Resort in Mijas, Spain, boosted the profit in this division. The other main contributors to profit were La Cala's golf activities, Sunset Beach Club in Spain and the Tower Hotel Group in Ireland. Their performance was satisfactory in a year that was particularly challenging for the tourism and leisure sectors at home and abroad. Financial Services ------------------- FBD Brokers, Abbey Finance, FBD Securities, FBD Life and FBD IFSC performed to expectations, contributing operating profits of €4.2m. (€3.3m.). Balance Sheet ------------- Total assets at year end amounted to €1,250m. (€1,087.8m). Ordinary shareholders' funds amounted to €290m. (€209m). Short term fluctuations in investment returns had a negative impact of €5.9m. This was largely attributable to a shortfall in the return on Government Bonds in highly volatile market conditions. Dividend -------- The excellent results enable the Company to maintain its dividend growth policy and, accordingly, the Board is recommending a final dividend of 17.0 cent per share. It will be paid on 30th April 2004 to shareholders on the Company's Register at the close of business on 12th March 2004. The final dividend is subject to withholding tax (DWT) except for shareholders who are exempt from DWT and have furnished a properly completed Composite Resident Form to the Company's Register. Together with the interim dividend of 10.6 cent, the total dividend per share amounts to 27.6 cent, an increase of 25.5 per cent. Prospects/Outlook ----------------- We are confident that we will maintain good growth momentum in all of our business activities this year and in the years ahead. We are on course to achieve our targets and objectives. The Insurance Sector in Ireland has received unprecedented attention over the past couple of years and, in that time, the insurance environment has altered considerably. The legislative, safety and law enforcement measures that have already been, or are currently in the process of being put in place, have yielded benefits for policyholders and insurers alike. Further advancement of the reform agenda can deliver additional premium savings for business and personal customers and simultaneously reward shareholders with adequate returns on capital. It is widely accepted that the emergence of a stable, sustainable, insurance underwriting environment is essential for economic wellbeing. FBD believes that this is achievable and that the Group is well positioned to benefit from it. Against this background, FBD Insurance is engaged in ongoing analysis of underwriting trends and anticipates implementing further premium reductions in areas of business where they are warranted. As already noted, the 2003 results gained from notable savings on prior year claims settlements. We do not expect these savings to be repeated to the same extent in 2004 and beyond. Much will depend on the impact which the new Personal Injuries Assessment Board will have. In light of the changed insurance landscape, FBD's focus for premium growth will be increasingly based on growing customer numbers. In this regard, we are pursuing growth plans nationwide and, in particular, we are accelerating our development plans in the Dublin insurance market. In addition to our insurance underwriting activities, development of our financial service businesses and our property/leisure investments are being advanced apace. We are confident regarding the ongoing earnings value of these interests. ENDS FBD Update ---------- Insurance --------- •FBD Insurance continues to expand its policyholder base, targeting:- * Small, medium size businesses in city, urban and rural areas * The home insurance and motor market. In 2003, commercial business represented 51 per cent of premium income, with agri-related business and home insurance representing 36 per cent and 13 per cent respectively. •Plans to increase our presence in the Dublin market are being pursued, with first phase recruitment of 15 additional customer service executives and support staff underway. •FBD is a direct-sell Company with a nationwide network extending to 50 branches. In the past 12 months, FBD Insurance relocated to new offices in Tralee and Drogheda and Waterford. Property/Leisure ---------------- •Building work on Tower Hotel Group's latest development, The Castleknock Hotel & Country Club, is on schedule for completion by year end. This 140 bedroom 4 Star Hotel, with extensive conference and leisure facilities, will be the seventh hotel in the Group. •At La Cala Resort, on Costa del Sol, the Colinas del Golf - 32 unit villa and town house development will be completed by year end and sale of the units has commenced. Building of a new apartment complex, Real Alta Vista, is also underway. The 9 units in the complex will have a total of 108 - 2 and 3 bedroom apartments. Additional villa plots are also now being offered for sale. GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 2003 2003 2002 €000's €000's Turnover 500,494 421,612 ======= ======= Balance on the technical account - general business Note 1 88,815 22,015 Longer term investment return 33,797 30,293 Allocated investment return transferred to the general business technical account (29,488) (27,281) Other income 18,970 12,667 Other charges (1,638) (163) -------- -------- Operating profit Note 2 110,456 37,531 Short term fluctuations in investment return (5,905) (12,356) -------- -------- Profit before taxation 104,551 25,175 Taxation (12,374) (4,206) -------- -------- Profit after taxation 92,177 20,969 Minority interests (846) (627) -------- -------- Profit after taxation and minority interests 91,331 20,342 Dividends (11,683) (9,243) -------- -------- Retained profit 79,648 11,099 ======== ======== cent cent Operating earnings per 60c ordinary share based on longer term investment return 227.38 75.34 ======== ======== Earnings per 60c ordinary share 221.17 48.76 ======== ======== Dividend per 60c ordinary share 27.60 22.00 ======== ======== Net assets per 60c ordinary share 701.94 510.13 ======== ======== GROUP BALANCE SHEET AS AT 31ST DECEMBER 2003 2003 2002 €000's €000's ASSETS Investments 1,104,585 938,688 Reinsurers' share of technical provisions 66,773 67,204 Debtors 45,734 41,790 Other assets 19,109 20,973 Prepayments and accrued income 14,000 19,153 --------- -------- TOTAL ASSETS 1,250,201 1,087,808 LIABILITIES Technical provisions (813,710) (736,083) Provision for other risks and charges (13,479) (11,671) Creditors (115,047) (113,695) --------- --------- NET ASSETS 307,965 226,359 ========= ========= CAPITAL AND RESERVES Ordinary share capital 25,125 25,125 Share premium 5,367 5,367 Reserves 259,473 178,436 --------- --------- ORDINARY SHAREHOLDERS' FUNDS 289,965 208,928 Preference share capital 2,923 2,923 Minority interests 15,077 14,508 --------- --------- 307,965 226,359 ========= ========= GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2003 2003 2002 €000's €000's Net cash inflow from operating activities 160,355 167,139 Dividends paid (9,944) (8,704) Corporation tax paid (9,377) (6,148) Capital expenditure (2,536) (1,814) Financing 11,666 (3,129) --------- -------- 150,164 147,344 ========= ======== Cash flows were invested as follows Increase (decrease) in cash holdings 1,329 (3,860) --------- -------- Acquisition of subsidiary - 9,000 --------- -------- Net portfolio investment Quoted shares 48,169 27,643 Quoted debt securities (30,835) (207,331) Unquoted shares (516) 2,565 Deposits with banks 139,022 270,536 Loans and advances (14,206) 32,889 Land and property 7,201 15,902 --------- -------- 148,835 142,204 --------- -------- Net investment of cash flows 150,164 147,344 ========= ======== STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31ST DECEMBER 2003 2003 2002 €000's €000's Profit after taxation and minority interests 91,331 20,342 Exchange translation adjustment (4) (717) --------- -------- Total recognised gains relating to the year 91,327 19,625 ========= ======== RECONCILIATION OF MOVEMENT IN ORDINARY SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 31ST DECEMBER 2003 2003 2002 €000's €000's Profit after taxation and minority interests 91,331 20,342 Less: preference dividends (282) (282) -------- -------- 91,049 20,060 Dividends (11,401) (8,961) New share capital issued - 136 Other recognised losses (4) (717) Re-issue (repurchase) of ordinary shares 1,393 (3,613) -------- -------- Net addition to shareholders' funds 81,037 6,905 Ordinary shareholders' funds at beginning of year 208,928 202,023 -------- -------- Ordinary shareholders' funds at end of year 289,965 208,928 ======== ======== Note 1- Technical result by class of business YEAR ENDED 31ST DECEMBER 2003 Gross Written Net Earned Net Claims Net Op Underwriting Allocated Technical Premiums Premiums Incurred Expenses Result Inv Income Result €000's €000's €000's €000's €000's €000's €000's Direct insurance Motor 180,074 166,024 (119,547) (24,442) 22,035 18,074 40,109 Liability 80,842 71,147 (48,937) (11,794) 10,416 9,094 19,510 Fire & Property 103,349 49,534 (23,347) (214) 25,973 2,123 28,096 Other 4,354 3,615 (2,296) (416) 903 197 1,100 --------- -------- -------- ------- -------- -------- ------- 368,619 290,320 (194,127) (36,866) 59,327 29,488 88,815 ========= ======== ======== ======= ======== ======== ======= YEAR ENDED 31ST DECEMBER 2002 Gross Written Net Earned Net Claims Net Op Underwriting Allocated Technical Premiums Premiums Incurred Expenses Result Inv Income Result €000's €000's €000's €000's €000's €000's €000's Direct insurance Motor 165,747 144,041 (136,060) (18,154) (10,173) 17,040 6,867 Liability 67,067 53,456 (59,202) (8,111) (13,857) 8,121 (5,736) Fire & Property 88,780 39,273 (22,729) 1,592 18,136 1,920 20,056 Other 4,215 3,555 (2,542) (385) 628 200 828 --------- -------- -------- ------- -------- -------- ------- 325,809 240,325 (220,533) (25,058) (5,266) 27,281 22,015 ========= ======== ======== ======= ======== ======== ======= 2003 2002 €000's €000's Note 2 - Operating profit by activity ----------------------------------------- Insurance underwriting 93,698 25,340 Financial services 4,186 3,258 Property and leisure 12,572 8,933 -------- ------- 110,456 37,531 ======== ======= This information is provided by RNS The company news service from the London Stock Exchange

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