Interim Results
FBD Holdings PLC
31 August 2005
Press Release
INTERIM RESULTS ANNOUNCEMENT
For half year ended 30th June 2005
2005 2004
FINANCIAL HIGHLIGHTS €000's €000's
• Gross written premium 192,360 187,819
• Net earned premiums 164,515 158,639
•Operating profit 86,849 67,312
Cent Cent
•Operating earnings per share 192.07 140.84
•Dividend proposed per share 20.00 12.72
Commenting on the results, Philip Fitzsimons, Chief Executive, said:
'The Group's success in pursuing it's development plans is reflected in the half
year results, with new business volumes offsetting the impact of rate reductions
on premium income. The results also benefited from a particularly favourable
claims outcome. Whilst the latter is unlikely to be repeated and rate reductions
will have greater significance for earned premium income in the second half
year, we are confident of achieving satisfactory full year results.
The good insurance performance delivered rewards to both shareholders and
policyholders, alike. Returns to shareholders increased while policyholders
enjoyed further reductions in premiums. Maintaining progress on the Claims
Reform & Safety Agendas is critical to delivering ongoing benefits to all.'
ENDS 31st August 2005
For Reference
Telephone
FBD
Philip Fitzsimons, Chief Executive 353 1 409 3200
Andrew Langford, Finance Director 353 1 409 3200
Murray Consultants
Joe Murray 353 1 498 0300
FBD HOLDINGS PLC
INTERIM STATEMENT
FBD Holdings plc is pleased to report that the Group continued to grow strongly
in the half year ended 30th June 2005.
Results
Operating profits increased to €86.8m compared to 67.3m in the previous half
year. The major contributors are detailed below.
The underwriting result increased to €52.1m from €42.5m, reflecting good premium
growth and a favourable claims outcome in general, which included settlement
savings on prior year provisions. The impact of rate reductions on earned
premium was not as significant a factor in the six months as it will be in the
second half year. The drive for new business brought further growth in market
share and supported an increase of 2.4 per cent in gross premiums written.
Growth was achieved despite lower like for like revenues arising from premium
reductions for customers. After allocating investment income of €16.3m , the
insurance technical account shows a surplus of €68.4m, up from €57.9m in the
same period last year.
Non-underwriting income increased to €12.7m from €5.5m. Property and leisure
interests in Spain and Ireland contributed positively but they have been facing
challenging times with increased pressure on margins. A small fall in profits
from financial services activities reflected reduced broking income. Returns
from the investment of non allocated capital and property loans made a
satisfactory contribution.
Positive short term fluctuations in investment return of €21.7m arising from a
buoyant investment performance was a key factor in boosting pre-tax profits.
This in turn had a substantial impact on earnings per share (FRS3). Operating
earnings per share, which more clearly reflects the underlying trading
performance of the Group, increased to 192.07c. The 4.2m share buy-back in March
2005 also contributed to eps growth.
The results for the period have been prepared in accordance with the recently
introduced International Financial Reporting Standards ('IFRS') for European
Union Listed Groups. First half and full year figures for 2004 have been
restated on the IFRS basis, for comparative purposes.
Arising from the introduction of IFRS, we have prepared a Preliminary
Restatement of 2004 Financial Information. This document is attached (Appendix
1). As per the summary on page 13, the impact of IFRS on operating profit and on
profit before tax was negligible; the impact on net assets was a positive 9.2%,
arising mainly from the requirement to state unquoted securities at fair value
and the change in the accounting treatment of dividends payable to shareholders.
The results of the Group's two operating divisions are detailed below.
Insurance Underwriting.
Insurance underwriting is the Group's primary business activity. This activity
is undertaken, in the main, by FBD Insurance plc and, to a minor extent, by the
Group's captive reinsurance company, Abbey Reinsurance S.A.
Gross premiums written increased by 2.4% to €192.4m. (€187.8m.) in the period.
Good growth in business volumes more than offset reductions in premium rates to
deliver this premium growth.
Net earned premiums grew by 3.7% to €164.5m. (€158.6m). This reflected higher
retention levels under our reinsurance programme.
Claims incurred amounted to €91.7m., compared to €99.6m. in first half 2004. The
claims charge benefited from settlement savings on prior year claims provisions.
Furthermore, the lower personal injury claims frequency which emerged over the
past couple of years has, in most classes of insurance, been maintained. On the
property claims front, and similar to last year, weather related claim costs
fared better than expected, with no severe storms occurring in the period.
Overall, the claims outcome was particularly favourable.
After net operating expenses of €20.7m., the resultant underwriting profit was
€52.1m. (€42.5m).
Adding attributable investment income of €16.3m. to the underwriting figure, the
insurance technical result of €68.4m. for the period is arrived at.
Non-underwriting
The Group's non-underwriting activities include property development/leisure,
financial services, and other interests.
Property Development and Leisure interests encompass the Group's activities in
La Cala Resort and Sunset Beach Resort in Spain and in the Tower Hotel Group in
Ireland. Property sales in La Cala were slower than anticipated, reflecting a
reduction in the number of non-Spanish purchasers in the Costa del Sol. On the
leisure front, in both Spain and Ireland, challenging times are currently being
experienced in general, with margins, in particular, under pressure due to
present market capacity levels.
The Group's financial service businesses include insurance broking (FBD
Brokers), life assurance/pension broking/ investment advice (FBD Life) and
instalment finance (Abbey Finance). These businesses contributed €2.5m. (€2.8m)
to the half year figure. The fall in income reflects the negative impact which
lower premium levels in the market had on broker revenues, with insurance rates
for large commercial risks being considerably reduced.
The Group's other non-underwriting interests include investment of non-allocated
capital and property related loans. Returns from these assets in the half year
were satisfactory.
The combined contribution to Group profit from property development/leisure and
other interests amounted to €10.2m. (€2.7m) for the six months. The improvement,
compared to the first half of 2004, is largely attributable to the inclusion of
returns arising on the investment of non-allocated capital and on property
related loans.
Interim Dividend
In view of the continuing positive results and in line with the Board's
previously stated intentions regarding dividend payout levels, an increase in
interim dividend to 20 cent (12.72 cent) per share has been decided on by the
Directors.
The interim dividend will be paid on the 30th September 2005 to shareholders on
the Company Register at close of business on the 9th September 2005. The interim
dividend is subject to withholding tax (DWT), except for shareholders who are
exempt from DWT and have furnished a properly completed Capital Composite
Resident Form to the Company's Registrar.
Balance Sheet
Ordinary shareholders' funds have grown to €411.9m. since January 2005, an
increase of €5.5m. The contribution of both the strong trading results and the
buoyant investment performance was reduced by the Company's purchase of 4.2m of
its own shares in March 2005 at a cost of €81.2m This buyback contributed to the
growth in net asset value per share, which increased from €9.70 to €10.87 in the
period.
Outlook
Whilst it is unlikely that the particular positive factors experienced in the
first half year, which we mentioned above, will be repeated in the second half,
we are confident that the outcome for the year will be satisfactory.
As regards the Group's core underwriting activity, we expect a satisfactory
outcome for the year. On the premium front, notwithstanding rate reductions
which have already been put in train, we are targeting an increase on 2004
premium levels for the full year. To achieve this, we are aiming to maintain the
volume growth levels which we have achieved in the year to date. The first half
year performance benefited from premium growth and a particularly favourable
claims outcome. Premium reductions which have been implemented will have a
bigger financial impact on our second half year results.
Claim costs are the major determinant of underwriting performance. Over the past
couple of years, the improvement in the claims environment has benefited FBD, as
reflected in better underwriting results. The claims improvement has also
benefited FBD policyholders, by way of significantly reduced premiums. The
favourable impact of settlement savings on prior year claim estimates in recent
times continued in the period under review. Ultimately, the critical ratio for
insurers in any year is the combined ratio (i.e. claims plus overhead as a
percentage of premium) for that particular underwriting year. It is widely
recognised that the premium reductions which insurers have been effecting is
driving combined ratios towards European norms. Perceptions exist that premium
reductions in the market are tailing off. In our experience, this is not the
reality and price competition continues to be intense across all categories of
business.
In relation to claim cost trends, a major determinant will be the degree of
success in delivering fully on the Government/Industry's Claims Reform and
Safety Agendas. The MIAB (Motor Insurance Advisory Board) recommended precise
measures that needed to be implemented by both insurers and Government Agencies
in order to achieve success in these areas. To date, insurers have delivered on
the agenda items that were within their remit. Items that remain to be delivered
on are within the control of Government Bodies; their follow through will
determine whether further claim cost savings emerge.
FBD will continue to support Government and Industry actions on Reform measure,
whilst pursuing our own claims cost savings plans. Simultaneously, we will
remain focused on growing our market share and on maximising the competitive
advantages of our direct sales business model.
As regards the Group's non-underwriting businesses, as already stated, our
property/leisure interests are currently facing particularly challenging times.
Management's focus on marketing and sales has intensified and new markets are
being pursued. We are confident regarding the intrinsic value of underlying
assets. We expect our financial service businesses to perform in line with last
year.
With clearly defined business development plans and a committed organisation, we
are well positioned to continue to successfully pursue the Group's primary
objective, namely, to utilise capital to deliver long term sustainable returns
at levels that reward shareholders.
ENDS
FBD - NEWS UPDATE
•FBD implemented further reductions in premium rates during the first half
of 2005.
In the recent IFSRA Survey for Home Insurance, FBD was highlighted as the
best value provider in four out of six samples and second and third in the
other two.
•FBD moved to new, larger offices in Limerick in the first half of 2005
and also entered agreements to relocate to larger offices in Clonmel,
Carlow, Letterkenny and Portlaoise. The Company has also acquired new
premises in Dundalk (a new location for FBD) and will open for business
there later this year.
•In Dublin, FBD has continued to expand its Dublin commercial team in
response to the very positive reception they are receiving from Dublin
businesses. There is currently a major canvass underway in the Dublin market
for small to medium size business of all types.
•FBD's Dublin based personal lines office, which celebrated its first
anniversary recently, continues to deal with large volumes of enquires on
the 1850 617617 number and through the internet. Additional staff are
currently being recruited to meet demand.
•FBD announced recently that it is to continue for another year with its
sponsorship of RTE's flagship soap, Fair City. The sponsorship of this
programme for the last year has helped lift the profile of FBD, particularly
in Dublin and around the country.
FBD has also announced that it is to sponsor the 'FBD Dublin Business of the
Month' awards in association with City Channel, the new TV Station for
Dublin, which will be broadcast through the digital NTL network. This
sponsorship is being carried out in association with Crest Ireland Limited.
•FBD Brokers continues to consolidate its position as the largest
insurance provider to the food and dairy processing sectors.
•FBD Life & Pensions continues to grow as an independent adviser to a
broad spectrum of individuals and businesses. Additional expertise has been
brought into the business over the past half year to assist clients in
overall financial planning, pensions and investments.
•At the FBD La Cala Resort, in Southern Spain, a third 18 hole
championship golf course, ('The Europa') was opened earlier in the year and
complements the existing North and South courses and the five star hotel
located there. Also at La Cala, work is well underway on the building of 102
luxury townhouses, (Monte Alto) and 108 luxury apartments (Real Alta Vista).
In addition, a luxury Spa facility will be available early next year.
•Upgrading of all rooms at FBD's Sunset Beach Club on the Costa del Sol is
underway and a new promenade and related beach facilities have been
completed, further enhancing the Resort.
•FBD is now owner of 100% of the Tower Hotel Group which includes the new
four star Castleknock Hotel and Country Club, opened earlier this year. The
adjoining golf course recently opened for play.
FBD HOLDINGS PLC
GROUP INCOME STATEMENT
For half year ended 30th June 2005
Half Year Half Year Year
Ended Ended Ended
30/6/05 30/6/04 31/12/04
(Unaudited) (Unaudited) (Audited)
€000's €000's €000's
Turnover 263,463 240,465 471,858
========= ======== ========
Balance on the
technical account - Note 1 68,385 57,864 97,072
general business
Longer term 21,781 19,204 40,713
investment return
Allocated
investment return
transferred to the (16,341) (15,362) (31,135)
technical
account - general
business
Other income 13,024 5,606 18,144
--------- -------- --------
Operating profit Note 2 86,849 67,312 124,794
Other charges (1,818) (1,800) (3,116)
Short term
fluctuations in 21,738 (8,517) 10,298
investment return --------- -------- --------
Profit before 106,769 56,995 131,976
taxation
Taxation (12,849) (6,611) (16,968)
--------- -------- --------
Profit after 93,920 50,384 115,008
taxation
Minority interests 84 (210) (1,751)
--------- -------- --------
Profit after
taxation and 94,004 50,174 113,257
minority
interests
Dividends paid in (10,298) (7,023) (12,613)
period --------- -------- --------
Profit retained for 83,706 43,151 100,644
period ========= ======== ========
Cent Cent Cent
Earnings per 60c 237.41 120.81 271.23
ordinary share ========= ======== ========
Dividend paid per
60c ordinary 27.28 17.00 29.72
share ========= ======== ========
Dividend proposed
per 60c ordinary 20.00 12.72 27.28
share ========= ======== ========
Net assets per 60c 1,087.21 850.85 969.64
ordinary share ========= ======== ========
FBD HOLDINGS PLC
GROUP BALANCE SHEET
As at 30th June 2005
As at As at As at
30/6/05 30/6/04 31/12/04
ASSETS (Unaudited) (Unaudited) (Audited)
€000's €000's €000's
Property and equipment
Land and buildings 198,108 165,598 176,517
Fixtures and fittings 9,638 8,423 10,547
---------- -------- --------
207,746 174,021 187,064
---------- -------- --------
Investments
Investment property 48,800 23,000 24,200
Financial investments 977,785 930,554 999,080
---------- -------- --------
1,026,585 953,554 1,023,280
---------- -------- --------
Reinsurers' share of
technical provisions
Provision for unearned 19,927 22,743 21,302
premiums
Claims outstanding 50,271 43,529 44,463
---------- -------- --------
70,198 66,272 65,765
---------- -------- --------
Debtors
Debtors arising out of direct
insurance operations 25,684 30,501 26,703
Other debtors 29,914 28,358 20,023
---------- -------- --------
55,598 58,859 46,726
---------- -------- --------
Other assets
Cash and cash equivalents 36,553 37,476 51,362
Inventories 56,977 51,318 70,543
---------- -------- --------
93,530 88,794 121,905
---------- -------- --------
Prepayments and accrued
income
Accrued interest and rent 5,441 3,916 9,048
Deferred acquisition costs 10,590 9,320 10,591
Other prepayments and accrued 2,839 5,634 2,460
income ---------- -------- --------
18,870 18,870 22,099
---------- -------- --------
Total assets 1,472,527 1,360,370 1,466,839
========== ======== ========
FBD HOLDINGS PLC
GROUP BALANCE SHEET
As at 30th June 2005
As at As at As at
30/6//05 30/6/04 31/12/04
EQUITY (Unaudited) (Unaudited) (Audited)
€000's €000's €000's
Share capital 23,557 25,125 25,151
Share premium 5,540 5,367 5,540
Revaluation and other 43,197 39,793 40,603
reserves
Translation reserves 1,766 (135) 371
Retained earnings 337,874 284,969 334,788
---------- -------- --------
Shareholders' funds - equity 411,934 355,119 406,453
interests
Preference share capital 2,923 2,923 2,923
---------- -------- --------
Total shareholders' funds 414,857 358,042 409,376
Minority interests 6,293 15,199 16,333
---------- -------- --------
Total equity 421,150 373,241 425,709
---------- -------- --------
LIABILITIES
Technical provisions
Provision for unearned 188,363 183,619 184,954
premiums
Claims outstanding 677,834 637,415 658,431
---------- -------- --------
866,197 821,034 843,385
---------- -------- --------
Provision for other risks and 29,305 19,848 25,787
charges ---------- -------- --------
Creditors
Creditors arising out of
direct 9,875 17,423 12,606
insurance operations
Other creditors including tax
and 146,000 128,824 159,352
social security ---------- -------- --------
155,875 146,247 171,958
---------- -------- --------
Total liabilities 1,472,527 1,360,370 1,466,839
========== ======== ========
FBD HOLDINGS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For half year ended 30th June 2005
Revaluation Attributable Preference
Share Share and other Translation Retained to ordinary share Minority
capital premium reserves reserve earnings shareholders capital interests Total
Balance at
at 1
January 2004 25,125 5,367 37,928 - 239,906 308,326 2,923 15,077 326,326
Profit after
taxation - - - - 50,174 50,174 - 210 50,384
Exchange
translation
adjustment - - - (135) - (135) - - (135)
Ordinary
dividends paid - - - - (7,023) (7,023) - - (7,023)
Reissue of
ordinary
shares - - - - 1,912 1,912 - - 1,912
Recognition of
share based
payments - - 139 - - 139 - - 139
Gain on
available-for-
sale
investments - - 1,726 - - 1,726 - - 1,726
Purchase of
minority
interests - - - - - - - (88) (88)
------ ------ -------- ------- ------- -------- ------ ------ ------
Balance at 30
June 2004 25,125 5,367 39,793 (135) 284,969 355,119 2,923 15,199 373,241
====== ====== ======== ======= ======= ======== ======= ====== ======
Revaluation Attributable Preference
Share Share and other Translation Retained to ordinary share Minority
Capital Premium Reserves Reserve earnings shareholders capital interests Total
Balance at 1
January 2005 25,151 5,540 40,603 371 334,788 406,453 2,923 16,333 425,709
Profit after
taxation - - - - 94,004 94,004 - (84) 93,920
Exchange
translation
adjustment - - - 1,395 - 1,395 - - 1,395
Ordinary
dividends paid - - - - (10,298) (10,298) - - (10,298)
Buyback of own
shares - - - - (81,238) (81,238) - - (81,238)
Cancellation
of own shares (1,594) - 1,594 - - - - - -
Reissue of
ordinary
shares - - - - 618 618 - - 618
Recognition of
share based
payments - - 139 - - 139 - - 139
Transfer to
income
statement on
sale of
available-for-
sale
investments - - (5,583) - - (5,583) - - (5,583)
Gain on
available-for-
sale
investments - - 6,444 - - 6,444 - - 6,444
Purchase of
minority
interests - - - - - - - (9,956) (9,956)
------ ------ -------- ------- ------- -------- ------- ------ ------
Balance at 30
June 2005 23,557 5,540 43,197 1,766 337,874 411,934 2,923 6,293 421,150
====== ====== ======== ======= ======= ======== ======= ====== ======
FBD HOLDINGS PLC
GROUP CASH FLOW STATEMENT
For half year ended 30th June 2005
Half Year Half Year Year end
Ended Ended Ended
30/06/05 30/06/04 31/12/04
(Unaudited) (Unaudited) (Audited)
Operating €000s €000s €000s
activities
Profit for the 106,769 56,995 131,976
period
Adjustments for
Investment (gains) and
losses (22,084) 1,723 (17,231)
Depreciation of
property, plant and
equipment 1,801 1,308 3,075
Share-based payment
expense 139 139 278
Increase in fair value
of investment property - - (1,200)
Increase in technical
provisions 18,379 31,496 54,354
Actuarial loss - - (9,031)
------- ------- ------
Operating cash flows
before movement in
working capital 105,004 91,661 162,221
Increase in receivables (5,644) (17,558) (8,613)
(Decrease)/Increase in
payables (35,822) 6,387 16,013
------- ------- ------
Cash generated from
operations 63,538 80,490 169,621
Income taxes paid (4,949) (4,404) (12,228)
------- ------- ------
Net cash from operating
activities 58,589 76,086 157,393
------- ------- ------
Investing
activities
Investments held for
trading (87,650) (186,829) (146,227)
Investments available
for sale (299) (1,151) (139)
Purchase of property,
equipment & inventory (33,517) (20,484) (55,550)
Loans and advances 1,403 5,220 (23,601)
Deposits invested with
financial institutions 130,909 127,767 68,781
------- ------- ------
Net cash from (used in)
investing activities 10,846 (75,477) (156,736)
------- ------- ------
Financing
activities
Dividends paid (10,466) (7,192) (12,612)
Repurchase of shares (81,238) - -
Proceeds of issue of
shares 617 1,912 2,716
Increase in bank loans 5,448 17,007 34,955
------- ------- ------
Net cash (used in) from
financing activities (85,639) 11,727 25,059
------- ------- ------
Net (decrease)/increase
in cash and cash
equivalents (16,204) 12,336 25,716
Cash and cash
equivalents at the
beginning of the year 51,362 25,275 25,275
Effect of foreign
exchange rate changes 1,395 (135) 371
------- ------- ------
Cash and cash
equivalents at the end
of the year 36,553 37,476 51,362
======= ======= ======
FBD HOLDINGS PLC
SUPPLEMENTARY INFORMATION
For half year ended 30th June 2005
Half Year Half Year Year
Ended Ended Ended
30/6/05 30/6/04 31/12/04
(Unaudited) (Unaudited) (Audited)
€000's €000's €000's
Note 1 - Technical Result
-----------------------------
Gross written premiums 192,360 187,819 351,487
========== ========= ========
Net earned premiums 164,515 158,639 296,237
Net claims incurred (91,727) (99,644) (197,786)
Net operating expenses (20,744) (16,493) (32,514)
---------- --------- --------
Underwriting result 52,044 42,502 65,937
Allocated investment 16,341 15,362 31,135
income
---------- --------- --------
Technical result 68,385 57,864 97,072
========== ========= ========
Note 2 - Operating Profit by Activity
-----------------------------------------
Underwriting 74,148 61,794 107,007
Non underwriting 12,701 5,518 17,787
---------- --------- --------
86,849 67,312 124,794
========== ========= ========
FBD HOLDINGS PLC
Interim Statement
Appendix 1
Introduction of International Financial Reporting Standards (IFRS)
Preliminary Restatement of 2004 Financial Information
31 August 2005
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Introduction
Basis of preparation
Reconciliation of impact of IFRS on:
- Consolidated Income Statement for the year ended 31 December 2004
- Consolidated Balance Sheet at 31 December 2004
- Consolidated Balance Sheet at 1 January 2004
Explanatory notes on the impact of the IFRS adjustments
Accounting policies
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
INTRODUCTION
From 1 January 2005 FBD Holdings plc ('the Group'), together with all other
European Union listed groups, is required to prepare its consolidated financial
statements in accordance with International Financial Reporting Standards
('IFRS') as adopted for use in the European Union. This document summarises the
key impacts on the Group's previously reported net assets and profits from the
adoption of IFRS and details the Group's provisional accounting policies for the
year ending 31 December 2005.
The principal adjustments arising from adoption relate to changes in:
•the accounting treatment of unquoted equity investments;
•the accounting treatment of surpluses on the revaluation of owner
occupied property;
•the accounting treatment of equalisation provisions; and
•dividend recognition.
The Directors believe that these are the major adjustments which will arise on
the transition to IFRS. They have not yet finished quantifying a range of minor
adjustments, nor have they finalised their review of the completeness of
adjustments. The standards, or guidance on their application, may also be
revised, therefore it is possible that other adjustments may come to light which
will impact the Group in the preparation of the first full set of IFRS financial
statements for the year ended 31 December 2005.
The change in accounting standards will not change the underlying operations or
cash-flows of the business.
The introduction of IFRS has impacted key 2004 figures as follows:
As published IFRS Change
under Irish
GAAP
€000's €000's %
Operating profit 125,961 124,794 -0.9%
Profit before tax 135,009 131,976 -2.2%
Total assets 1,460,063 1,466,839 0.5%
Total equity 391,474 425,709 8.7%
Cent Cent %
Operating earnings per 60c
ordinary share based on longer
term investment return 258.84 256.18 -1.0%
Basic earnings per 60c
ordinary share 278.37 271.23 -2.6%
Net assets per 60c ordinary
share 887.97 969.64 9.2%
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
BASIS OF PREPARATION
The preliminary restated consolidated financial information presented comprises
the restated consolidated balance sheet as at 31 December 2004, the restated
income statement for the year ended 31 December 2004 and the restated
consolidated balance sheet as at 1 January 2004.
The information has been prepared in accordance with IFRS including all
International Accounting Standards (IAS) and interpretations issued by the
International Accounting Standards Board (IASB), the Standing Interpretations
Committee (SIC) and the International Financial Reporting Interpretations
Committee (IFRIC) as published by 31 August 2005 and currently endorsed by the
European Commission effective for 2005 year ends ('the Standards'). The
Standards themselves are evolving and are subject to possible amendment by
interpretative guidance from the IASB, emerging practice or other external
bodies. Accordingly, the interpretation of the Standards to be applied may be
subject to change prior to the publication of the Group's first IFRS results in
March 2006.
The rules for first time adoption of IFRS are set out in IFRS 1 'First-time
Adoption of International Financial Reporting Standards'. IFRS 1 requires
application of the same accounting policies in the IFRS opening balance sheet at
1 January 2004 and for all periods thereafter.
The Group's transition to IFRS has been prepared on the basis of taking the
following exemptions available under IFRS 1:
a. •Cumulative translation differences on foreign operations are deemed to be
nil at 1 January 2004. Any gains and losses recognised in the Consolidated
Income Statement on subsequent disposals of foreign operations will
therefore exclude translation differences arising prior to the transition
date.
b. •As permitted under the transitional arrangements, IFRS 2, Share Based
Payments has only been applied to options granted after 7 November 2002
which had not vested by 1 January 2005 and which are expected to vest.
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Consolidated Income Statement for the year ended 31st December
2004
As published Effect of IFRS
under Irish Transition
GAAP to
IFRS
€000's €000's €000's
Balance on
the
general
business
technical 96,630 442 97,072
account
Longer term
investment
return 39,820 893 40,713
Allocated
investment
return
transferred
to
the general
business
technical (31,976) 841 (31,135)
account
Other 21,487 (3,343) 18,144
income
------------ ----------- ----------
Operating
profit 125,961 (1,167) 124,794
Other (3,116) - (3,116)
charges
Short term
fluctuation
in
investment 12,164 (1,866) 10,298
return
------------ ----------- ----------
Profit
before 135,009 (3,033) 131,976
taxation
Taxation (17,025) 57 (16,968)
------------ ----------- ----------
Profit
after 117,984 (2,976) 115,008
taxation ============ =========== ==========
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Analysis of adjustments to Consolidated Income Statement for the year ended 31st
December 2004 as a result of transition to IFRS
Financial Cash and Property Inventories
Investments Cash and (Development Insurance Dividend
Valuation Equivalents Equipment Land) Contracts Recognition Other Total
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
€000's €000's €000's €000's €000's €000's €000's €000's
Balance on
the
general
business
technical 442 442
account
Longer term
investment
return 893 893
Allocated
investment
return
transferred
to
the general
business
technical 841 841
account
Other (294) (2,896) (153) (3,343)
income ------- ------- --------- ---------- ------- ------ ------- -------
Operating
profit 599 - (2,896) - 1,283 - (153) (1,167)
Other
charges
Short term
fluctuation
in
investment (1,957) 91 (1,866)
return
------- ------- ------- --------- ---------- ------- ------- ------
Profit
before (1,358) - (2,896) - 1,283 - (62) (3,033)
taxation
Taxation 171 302 (451) 35 57
------- ------- ------- --------- ------- ------- ------ ----------
Profit
after (1,096) - (2,896) 302 832 - (118) (2,976)
taxation ======= ======= ======== ======= ====== ======= ====== ========
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial
information
Consolidated Balance Sheet at 31st December 2004
As published Effect of IFRS
under Irish Transition to
GAAP IFRS
ASSETS €000's €000's €000's
Property and
equipment
Land and
buildings 224,985 (48,468) 176,517
Fixtures and
fittings 10,547 - 10,547
--------- --------- ----------
235,532 (48,468) 187,064
--------- --------- ----------
Investments
Investment
property 24,200 - 24,200
Financial
investments 1,027,160 (28,080) 999,080
--------- --------- ----------
1,051,360 (28,080) 1,023,280
--------- --------- ----------
Reinsurers' share of
technical provisions
Provision for
unearned
premiums 21,302 - 21,302
Claims
outstanding 44,463 - 44,463
--------- --------- ----------
65,765 - 65,765
--------- --------- ----------
Debtors
Debtors
arising out of
direct
insurance
operations 26,703 - 26,703
Other debtors 19,371 652 20,023
--------- --------- ----------
46,074 652 46,726
--------- --------- ----------
Other assets
Cash and cash
equivalents 2,795 48,567 51,362
Inventories 36,438 34,105 70,543
--------- --------- ----------
39,233 82,672 121,905
--------- --------- ----------
Prepayments and accrued
income
Accrued
interest and
rent 9,048 - 9,048
Deferred
acquisition
costs 10,591 - 10,591
Other
prepayments
and accrued
income 2,460 - 2,460
--------- --------- ----------
22,099 - 22,099
--------- --------- ----------
--------- --------- ----------
Total assets 1,460,063 6,776 1,466,839
--------- --------- ----------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Consolidated Balance Sheet at 31st December 2004
(continued)
As published Effect of IFRS
under Irish Transition to
GAAP IFRS
EQUITY €'000's €'000's €'000's
Share capital 25,151 - 25,151
Share premium 5,540 - 5,540
Revaluation
and other
reserves 1,627 38,976 40,603
Translation
reserves 371 - 371
Retained
earnings 339,529 (4,741) 334,788
--------- --------- ----------
Shareholders'
funds - equity
interests 372,218 34,235 406,453
Preference
share capital 2,923 - 2,923
--------- --------- ----------
Total
shareholders'
funds 375,141 34,235 409,376
Minority
interests 16,333 - 16,333
--------- --------- ----------
Total equity 391,474 34,235 425,709
--------- --------- ----------
LIABILITIES
Technical provisions
Provision for
unearned
premiums 184,954 - 184,954
Claims
outstanding 683,386 (24,955) 658,431
--------- --------- ----------
868,340 (24,955) 843,385
--------- --------- ----------
Provision for
other risks
and charges 17,306 8,481 25,787
--------- --------- ----------
Creditors
Creditors
arising out of
direct
insurance
operations 12,606 - 12,606
Other
creditors
including tax
and social
security 170,337 (10,985) 159,352
--------- --------- ----------
182,943 (10,985) 171,958
--------- --------- ----------
--------- --------- ----------
Total
liabilities 1,460,063 6,776 1,466,839
--------- --------- ----------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Analysis of adjustments to Consolidated Balance Sheet (Assets) at 31st December 2004 as a
result of transition to IFRS
Financial Cash and Cash Property and Inventories Insurance Other Total
Investments Equivalents Equipment (Development Contracts Dividend
Valuation Land) Recognition
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
€000's €000's €000's €000's €000's €000's €000's €000's
ASSETS
Property and
equipment
Land and
buildings (48,468) (48,468)
Fixtures and -
fittings
Investments
Investment -
property
Financial
investments 20,487 (48,567) (28,080)
Reinsurers'
share of
technical
provisions
Provision for -
unearned
premiums
Claims -
outstanding
Debtors
Debtors -
arising out
of direct
insurance
operations
Other 652 652
debtors
Other
assets
Cash and cash
equivalents 48,567 48,567
Inventories 34,105 34,105
Prepayments
and accrued
income
Accrued -
interest and
rent
Deferred -
acquisition
costs
Other -
prepayments
and accrued
income
-------- -------- ------- -------- ------- -------- ------ ------
Total 20,487 - - (14,363) - - 652 6,776
assets -------- -------- ------- -------- ------- -------- ------ ------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Analysis of adjustments to Consolidated Balance Sheet (Equity and Liabilities) at 31st December 2004 as a result
of transition to IFRS
Financial Cash and Cash Property and Inventories Insurance Dividend Other Total
Investments Equivalents Equipment (Development Contracts Recognition
Valuation Land)
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
€000's €000's €000's €000's €000's €000's €000's €000's
EQUITY
Share capital -
Share premium -
Revaluation
and other
reserves 17,462 21,236 278 38,976
Translation
reserves -
Retained
earnings 464 (22,861) (10,408) 16,219 11,436 409 (4,741)
------- ------- ------- -------- ------- ------- ------ ------
Shareholders'
funds - equity
interests 17,926 - (1,625) (10,408) 16,219 11,436 687 34,235
Preference share -
capital ------- ------- ------- -------- ------- ------- ------ ------
Total
shareholders'
funds 17,926 - (1,625) (10,408) 16,219 11,436 687 34,235
Minority interests -
------- ------- ------- -------- ------- ------- ------ ------
Total equity 17,926 - (1,625) (10,408) 16,219 11,436 687 34,235
------- ------- ------- -------- ------- ------- ------ ------
LIABILITIES
Technical
provisions
Provision for
unearned premiums -
Claims
outstanding (24,955) (24,955)
Provision for
other risks
and charges 2,561 1,625 (3,955) 8,285 (35) 8,481
Creditors
Creditors arising
out of direct
insurance
operations -
Other
creditors
including tax
and social
security 451 (11,436) (10,985)
------- ------- ------- -------- ------- ------- ------ ------
2,561 1,625 (3,955) (16,219) (11,436) (35) (27,459)
------- ------- ------- -------- ------- ------- ------ ------
------- ------- ------- -------- ------- ------- ------ ------
Total
liabilities 20,487 - - (14,363) - - 652 6,776
------- ------- ------- -------- ------- ------- ------ ------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Consolidated Balance Sheet at 1st January 2004
As published Effect of IFRS
under Irish Transition to
GAAP IFRS
ASSETS €000's €000's €000's
Property and equipment
Land and
buildings 199,843 (38,056) 161,787
Fixtures and
fittings 8,400 - 8,400
--------- --------- ----------
208,243 (38,056) 170,187
--------- --------- ----------
Investments
Investment
property 23,000 - 23,000
Financial
investments 881,742 (6,426) 875,316
--------- --------- ----------
904,742 (6,426) 898,316
--------- --------- ----------
Reinsurers' share of
technical provisions
Provision for
unearned
premiums 23,533 - 23,533
Claims
outstanding 43,240 - 43,240
--------- --------- ----------
66,773 - 66,773
--------- --------- ----------
Debtors
Debtors
arising out of
direct
insurance
operations 30,050 - 30,050
Other debtors 15,684 436 16,120
--------- --------- ----------
45,734 436 46,170
--------- --------- ----------
Other assets
Cash and cash
equivalents 2,354 22,921 25,275
Inventories 8,355 27,620 35,975
--------- --------- ----------
10,709 50,541 61,250
--------- --------- ----------
Prepayments and accrued
income
Accrued
interest and
rent 3,542 - 3,542
Deferred
acquisition
costs 8,155 - 8,155
Other
prepayments
and accrued
income 2,303 - 2,303
--------- --------- ----------
14,000 - 14,000
--------- --------- ----------
--------- --------- ----------
Total assets 1,250,201 6,495 1,256,696
--------- --------- ----------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Consolidated Balance Sheet at 1st January 2004 (continued)
As published Effect of IFRS
under Irish Transition to
GAAP IFRS
EQUITY €000's €000's €000's
Share capital 25,125 - 25,125
Share premium 5,367 - 5,367
Revaluation
and other
reserves 1,627 36,301 37,928
Translation reserves - - -
Retained
earnings 246,836 (6,930) 239,906
-------- --------- ----------
Shareholders'
funds - equity
interests 278,955 29,371 308,326
Preference
share capital 2,923 - 2,923
-------- --------- ----------
Total
shareholders'
funds 281,878 29,371 311,249
Minority
interests 15,077 - 15,077
-------- --------- ----------
Total equity 296,955 29,371 326,326
-------- --------- ----------
LIABILITIES
Technical provisions
Provision for
unearned
premiums 181,569 - 181,569
Claims
outstanding 632,141 (23,671) 608,470
-------- --------- ----------
813,710 (23,671) 790,039
-------- --------- ----------
Provision for
other risks
and charges 13,479 7,817 21,296
-------- --------- ----------
Creditors
Creditors
arising out of
direct
insurance
operations 23,744 - 23,744
Other
creditors
including tax
and social
security 102,313 (7,022) 95,291
-------- --------- ----------
126,057 (7,022) 119,035
-------- --------- ----------
-------- --------- ----------
Total
liabilities 1,250,201 6,495 1,256,696
-------- --------- ----------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Analysis of adjustments to Consolidated Balance Sheet (Assets) at 1 January 2004 as a result of transition to IFRS
Financial Cash and Property Inventories
Investments Cash and (Development Insurance Dividend
Valuation Equivalents Equipment Land) Contracts Recognition Other Total
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
€000's €000's €000's €000's €000's €000's €000's €000's
ASSETS
Property and
equipment
Land and
buildings (38,056) (38,056)
Fixtures and
fittings -
Investments
Investment
property -
Financial
investments 16,495 (22,921) (6,426)
Reinsurers'
share of
technical
provisions
Provision for
unearned
premiums -
Claims
outstanding -
Debtors
Debtors
arising out
of direct
insurance
operations -
Other 436 436
debtors
Other
assets
Cash and cash
equivalents 22,921 22,921
Inventories 27,620 27,620
Prepayments
and accrued
income
Accrued
interest and
rent -
Deferred
acquisition
costs -
Other
prepayments
and accrued
income -
------- ------- -------- -------- -------- -------- ------ -------
Total 16,495 - - (10,436) - - 436 6,495
assets ------- ------- -------- -------- -------- ------- ------- -------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
Analysis of adjustments to Consolidated Balance sheet (Equity and Liabilities) at 1 January 2004 as a
result of transition to IFRS
Financial Cash and Cash Property and Inventories Insurance Dividend Other Total
Investments Equivalents Equipment (Development Contracts Recognition
Valuation Land)
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 6)
€000's €000's €000's €000's €000's €000's €000's €000's
Share
capital
Share
premium
Revaluation
and other
reserves 12,660 23,641 36,301
Translation
reserves
Retained
earnings 1,773 (24,764) (6,783) 15,386 7,022 436 (6,930)
-------- --------- -------- -------- ------- ------- ------- ------
Shareholders'
funds -
equity 14,433 - 1,123 (6,783) 15,386 7,022 436 29,371
interests
Preference
share -------- --------- -------- -------- ------- ------- ------ -------
capital
Total
shareholders'
funds 14,433 - 1,123 (6,783) 15,386 7,022 436 29,371
Minority
interests -------- --------- -------- -------- ------- ------- ------ -------
Total 14,433 - 1,123 (6,783) 15,386 7,191 436 29,371
equity -------- --------- -------- -------- ------- ----- ------- ------
LIABILITIES
Technical
provisions
Provision for
unearned
premiums
Claims
outstanding (23,671) (23,671)
Provision for
other risks
and charges 2,062 (1,123) (3,653) 8,285 7,817
Creditors
Creditors
arising out
of direct
insurance
operations
Other
creditors
including tax
and social
security (7,022) (7,022)
-------- --------- -------- -------- ------- ------- ------ -------
2,062 (1,123) (3,653) (15,386) (7,022) - (22,876)
-------- --------- -------- -------- ------- ------ ------ --------
-------- --------- -------- -------- ------- ------- ------ -------
Total
liabilities 16,495 - - (10,436) - - 436 6,495
-------- --------- -------- -------- ------- ------- ------- -------
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
EXPLANATORY NOTES ON THE IMPACT OF THE IFRS ADJUSTMENTS
1)FINANCIAL INVESTMENTS
In the Group's Irish GAAP financial statements, listed investments were stated
at their current market value. Current market value was deemed to be the
mid-market price prevailing at the balance sheet date. Unquoted investments were
valued at the lower of cost or net realisable value. All realised or unrealised
gains or losses on investments were taken to the income statement.
For the purposes of measuring financial assets under IAS 39, Financial
Instruments: Recognition and Measurement, all financial assets are classified
into the following four categories:
1. Available-for-sale investments;
2. Held-to-maturity investments;
3. At fair value through the income statement; and
4. Loans and receivables
A full review of the Group's investments has been performed as part of the
adoption of IFRS, and all listed equities and debt securities are categorised as
financial assets at fair value through the income statement except for certain
debt securities that are categorised as held-to-maturity investments. All
unquoted equities are categorised as available-for-sale investments.
Under IFRS, listed investments are valued at bid price prevailing at the balance
sheet date as opposed to mid-market price as was the case under Irish GAAP.
For financial assets categorised as at fair value through the income statement,
any realised or unrealised gains or losses on revaluation are taken to the
income statement. This is similar to the treatment adopted under Irish GAAP.
Under IAS 39, available-for-sale investments must be fair valued, with any
unrealised gains or losses taken to equity. When a decline in the fair value of
an available-for-sale financial asset has been recognised directly in equity and
there is objective evidence that the asset is impaired, the cumulative loss that
had been recognised directly in equity shall be removed from equity and
recognised in the income statement. Where a previously revalued
available-for-sale investment is sold, and a gain is realised, any previously
unrealised gain included in the revaluation reserve is taken to the income
statement. In the Group's Irish GAAP financial statements unquoted equities were
valued at the lower of cost and net realisable value.
Under IAS 39, held-to-maturity investments are valued at amortised cost. In the
Group's Irish GAAP financial statements, held-to-maturity investments were
valued at fair value.
2. CASH AND CASH EQUIVALENTS
In the Group's Irish GAAP financial statements deposits with credit institutions
were included within investments. These deposits were predominantly comprised of
short dated certificates of deposit.
Under IFRS, cash equivalents are included with cash at bank and in hand as cash
and cash equivalents. IAS 7, Cash Flow Statements defines cash equivalents as
held for the purpose of meeting short-term cash commitments rather than for
investment or other purposes. Therefore, the Group has categorised certain
deposits as cash and cash equivalents as they are held for the purpose of
meeting short terms cash commitments. This adjustment has no impact on
shareholders' funds or profit after tax.
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
3)PROPERTY & EQUIPMENT - OWNER OCCUPIED PROPERTY
The Group's owner occupied property includes group headquarters, FBD Insurance
plc's branch offices and FBD Property & Leisure Ltd's hotels and golf courses.
In the Group's Irish GAAP financial statements, owner occupied property was
carried at current market value, with any resulting unrealised revaluation
surplus or deficit being taken to the income statement.
Under IFRS, the owner occupied property is accounted for under IAS 16, Property,
Plant & Equipment. Under IAS 16, owner occupied property continues to be carried
at current market value but any unrealised surplus, arising on revaluation, is
taken to equity. Any unrealised revaluation deficit will be taken to the income
statement, to the extent that there is no previous revaluation surplus to offset
the deficit.
4) INVENTORIES
In the Group's Irish GAAP financial statements, development land was treated as
investment property and was carried at current market value, with any unrealised
revaluation surplus or deficit taken to the income statement.
IAS 40, Investment Property, does not permit classification of property intended
for sale in the ordinary course of business or in the process of construction or
development for such sale as investment property but states that it is to be
accounted for under IAS 2, Inventories. Under IAS 2, development land is valued
at the lower of cost or net realisable value. Accordingly, in our IFRS financial
statements, development land is classified as inventory and valued at the lower
of cost and net realisable value.
5)INSURANCE CONTRACTS
In the Group's Irish GAAP financial statements, an equalisation provision was
recorded in the balance sheet to eliminate, or reduce, the volatility in
incurred claims arising from exceptional levels of claims in certain classes of
business.
Under IFRS 4 Insurance Contracts, provisions for possible future claims arising
from insurance contracts that are not in existence at the reporting date (such
as catastrophe and equalisation provisions) are not recognised as liabilities.
6)DIVIDEND RECOGNITION
In the Group's Irish GAAP financial statements, dividends payable to
shareholders were recognised in the income statement in the period to which they
relate irrespective of when they were declared and approved.
IAS 10, Events after the Balance Sheet Date does not allow the recognition of
dividends to holders of equity instruments declared after the balance sheet date
because they do not meet the criteria of a present obligation in IAS 37,
Provisions, Contingent Liabilities and Contingent Assets. Accordingly only
dividends declared (i.e. appropriately approved by shareholders and no longer at
the discretion of the Group) are recognised in the income statement.
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
ACCOUNTING POLICIES
The principal accounting policies adopted by the Group in the preparation of the
preliminary restatement of 2004 financial information are listed below. These
are also the Group's provisional accounting policies for the year ended 31
December 2005 in accordance with IFRS including all International Accounting
Standards (IAS) and interpretations issued by the International Accounting
Standards Board (IASB), the Standing Interpretations Committee (SIC) and the
International Financial Reporting Interpretations Committee (IFRIC) as published
by 31 August 2005 and currently endorsed by the European Commission effective
for 2005 year ends ('the Standards').
A)ACCOUNTING CONVENTION
The group financial statements are prepared under the historical cost
convention as modified by the revaluation of shares, debt securities and
land and buildings.
B) BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of
the company and its subsidiary undertakings, made up to 31 December 2004.
All intra group transactions, balances, income and expenses are eliminated
on consolidation.
C) REVENUE RECOGNITION
Turnover represents gross premiums written, broking commissions, fees, other
commissions, interest and dividends receivable, rents receivable, sales of
goods and services and sales by the property, hotel and leisure operations.
Interest income is recognised on an accruals basis.
Dividend income from investments is recognised when the shareholders' rights
to receive payment have been established.
Rental income is recognised on an accruals basis.
D) TECHNICAL RESULT
The technical result is determined on an annual basis whereby the incurred
cost of claims, commission and related expenses are charged against the
earned proportion of premiums, net of reinsurance as follows:
(i)Premiums written
Premiums written relate to business incepted during the year,
together with any difference between booked premiums for prior
years and those previously accrued, and include estimates of
premiums due.
(ii)Unearned premiums
Unearned premiums are those portions of premium income written
in the year that relate to insurance cover after 31 December
2004. Unearned premiums are computed on a 365ths basis of
premium written.
(iii)Deferred acquisition costs
Deferred acquisition costs represent the proportion of net
acquisition costs which are attributable to the unearned
premiums.
(iv)Unexpired risks
Provision for unexpired risks is made where the expected claims,
related expenses and deferred acquisition costs are expected to
exceed unearned premiums, after taking account of future
investment income.
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
(v)Claims incurred
Claims incurred comprise the cost of all claims occurring during
the year, whether reported or not, and any adjustments to claims
outstanding from previous years.
Full provision, net of reinsurance recoveries, is made at the
balance sheet date for the estimated cost of claims incurred but
not settled, including claims incurred but not yet reported and
expenses to be incurred after the balance sheet date in settling
those claims. The group takes all reasonable steps to ensure
that it has appropriate information regarding notified claims
and uses this information when estimating the cost of those
claims.
The group uses estimation techniques, based on statistical
analysis of past experience, to calculate the estimated cost of
claims outstanding at the year-end. It is assumed that the
development pattern of the current claims will be consistent
with previous experience. Allowance is made, however, for any
changes or uncertainties that may cause the cost of unsettled
claims to increase or reduce. These changes or uncertainties may
arise from issues such as the effects of inflation, changes in
the mix of business or the legal environment.
Provision is also made in respect of the group's share of the
estimated liability for outstanding claims of the Motor
Insurers' Bureau of Ireland.
(vi)Transfer of investment return to technical account
A transfer of longer term investment return is made from the
non-technical account to the technical account - general
business to reflect the return made on those assets directly
attributable to the insurance business.
E)INVESTMENT RETURN
Operating profits are reported on the basis of a longer term investment
return. The short term fluctuation between the longer term investment return
and the actual investment return, which includes realised and unrealised
gains and losses, is incorporated as an adjustment figure in arriving at
profit before taxation. As a result, the operating profit is not subject to
distortion from short term fluctuations in investment returns.
F) PROPERTY AND EQUIPMENT
(i)Land and buildings
Land and buildings held for own use in the supply of services or
for administrative purposes are stated at their revalued
amounts, being the fair value at the date of revaluation
determined by professional valuers. Revaluations are performed
with sufficient regularity such that the carrying amount does
not differ materially from that which would be determined using
fair values at the balance sheet date. Any revaluation increase
arising on the revaluation of such land and buildings is
credited to the revaluation reserve. A decrease on revaluation
is charged as an expense to the extent that it exceeds the
balance, if any, held in the revaluation reserve relating to
previous revaluation of that asset.
Land and buildings held under financing arrangements which
transfer substantially all of the risks and rewards of ownership
to the group are treated as if they had been purchased outright
and are included in the balance sheet at valuation. The
corresponding commitments are shown as liabilities.
It is the group's policy and practice to maintain all group
properties in a continual state of sound repair. As a result,
the directors consider that the residual values of these
properties are such that any depreciation is immaterial and is
therefore not provided.
ii. •Tangible fixed assets
Tangible fixed assets are stated at cost less accumulated
depreciation. Depreciation is provided in respect of all
tangible fixed assets, and is calculated in order to write off
the cost or valuation of the assets over their expected useful
lives as follows:-
Fixtures and fittings: 5 to 10 years
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
G)INVESTMENTS
(i) Shares and debt securities
Quoted shares and debt securities are classified as at fair value
through the income statement or held to maturity. Those at fair
value through the income statement are marked to market and gains
and losses arising from changes in value are recognised in the
income statement in the period in which they arise. Financial
instruments held to maturity are stated at amortised cost.
Unquoted investments are classified as available for sale and stated
at fair value where fair value can be measured reliably. Gains and
losses arising from changes in fair value are recognised directly in
equity, until the security is disposed of or determined to be
impaired, at which time the cumulative gain or loss previously
recognised in equity is included in the income statement for the
period.
(ii)Associated Undertakings
The group's financial statements include the group's share of
associated undertakings' results and net assets.
(iii)Investment property
Investment property is stated at fair value. Gains or losses
arising from changes in the fair value are included in the
income statement for the period in which they arise.
It is the group's policy and practice to maintain all group
properties, including investment properties, in a continual
state of sound repair. As a result, the directors consider that
the residual values of these properties are such that any
depreciation is immaterial and is therefore not provided.
(iv)Loans
Loans are carried at fair value using the effective interest
rate method. When it is not possible to estimate reliably the
cash flows or the expected life of a loan the actual cash flows
over the full term of the loan are used to determine fair value.
Loans are stated in the balance sheet after deduction of
provisions for bad and doubtful debts. Specific provisions are
made on a case-by-case basis after taking into account factors
such as the financial condition of the borrower, security held
and costs of realisation.
H) INVENTORIES
Inventories comprise work in progress and land held for development and are
stated at the lower of cost and net realisable value. Cost includes all
expenditure incurred in bringing the inventory to its present condition. Net
realisable value is the estimated selling price less all further costs to
completion and the estimated costs necessary to make the sale.
I)DEFERRED TAXATION
Deferred tax is recognised in respect of all timing differences, including
unrealised investment gains, that have originated but not reversed at the
balance sheet date where transactions or events have occurred at the balance
sheet date that result in an obligation to pay more tax or a right to pay
less tax in the future.
Timing differences are differences between profit as computed for taxation
purposes and profit as stated in the financial statements which arise
because certain items of income and expenditure in the financial statements
are dealt with in different periods for taxation purposes.
A net deferred tax asset is regarded as recoverable and therefore recognised
only when, on the basis of all available evidence, it can be regarded as
more likely than not that there will be suitable taxable profits from which
the future reversal of the underlying timing differences can be deducted.
Deferred tax is measured at the tax rates that are expected to apply in the
periods in which the timing differences are expected to reverse based on tax
rates and laws enacted or substantially enacted at the balance sheet date.
Deferred tax is measured on a non-discounted basis.
FBD HOLDINGS PLC
Preliminary restatement of 2004 financial information
J)PENSIONS
The group operates defined benefit pension schemes for the majority of its
Irish based employees. A full actuarial valuation of the schemes is
undertaken every three years and is updated to reflect current conditions in
the intervening periods. Scheme assets are valued at market value. Scheme
liabilities are measured on an actuarial basis and discounted at the current
rate of return on a high quality corporate bond of equivalent term and
currency to the liability. The surplus or deficit on the schemes is shown on
the balance sheet as an asset or liability net of the deferred tax impact.
Actuarial gains and losses are recognised immediately in equity through the
statement of total recognised income and expense.
The current service cost and past service cost of the schemes and the
expected return on assets net of the change in the present value of the
scheme liabilities arising from the passage of time, are charged to
operating profit.
K)CURRENCY
All amounts are stated in Euro. Transactions in currencies other than euro
are recorded at the rates of exchange prevailing on the dates of the
transactions. Balances in foreign currencies have been translated into Euro
at contract rates where the amounts are covered by forward contracts.
On consolidation, the assets and liabilities of the Group's overseas
operation are translated at exchange rates prevailing on the balance sheet
date. Income and expense items are translated at the average exchange rates
for the period unless exchange rates fluctuate significantly. Exchange
differences are classified as equity and transferred to the translation
reserve. At the 1st January 2004 this reserve has been deemed to be zero in
accordance with IFRS1.
L) SHARE-BASED PAYMENT
The Group operates a share option scheme based on non-market vesting
criteria. The group has availed of the transitional arrangements under IFRS
1 and IFRS 2 and no charge is included for share options granted before 7
November 2002 which had not vested by 1 January 2005. For all other options,
the fair value of the options is determined at the date of grant and
expensed in the income statement over the period during which the employees
become unconditionally entitled to the options. The expense is credited to a
separate reserve in the balance sheet. At each period end the group revises
its estimate of the number of options that it expects to vest and any
adjustment relating to current and past vesting period is charged to the
income statement. Share options are all equity settled.
M) TREASURY SHARES
Where any Group Company purchases the Company's equity share capital, the
consideration paid is shown as a deduction from ordinary shareholders'
equity. No gain or loss is recognised on the sale issue or cancellation of
treasury shares. Consideration received on the subsequent sale or issue of
treasury shares is credited to ordinary shareholders equity. Treasury shares
are excluded when calculating earnings per share.
ENDS
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