Preliminary Results
FBD Holdings PLC
07 March 2007
FBD HOLDINGS PLC
PRELIMINARY ANNOUNCEMENT
RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2006
2006 2005
FINANCIAL HIGHLIGHTS €000s €000s %
•Gross written premiums 407,256 389,472 +4.6%
•Net earned premiums 345,959 332,371 +4.1%
•Operating profit* 158,515 162,624 -2.5%
•Profit on sale of land at La 81,774 - n/a
Cala
Cent Cent
•Operating earnings per share* 376.60 363.54 +3.6%
•Dividend per share 69.00 57.50 +20.0%
•Special dividend per share
(paid) - La Cala 160.00 - n/a
land sale
•Net assets per share 1,424.76 1,250.62 +13.9%
* Based on longer term investment return.
Commenting on the results, Philip Fitzsimons, Chief Executive said:
'We are pleased to announce another year of excellent results
for 2006. During the year we continued to grow new business
volumes and Premium Income while further reducing premiums.
Sustainable and competitive pricing combined with good service
levels supported expansion of our customer base. Continued
premium reductions impacted the underwriting result, increasing
the combined ratio to 77.9 per cent. Ongoing savings from
national initiatives in road safety and claims costs are
essential to enable further premium reductions. '
ENDS 7th March 2007
For Reference Telephone
--------------- -----------
FBD
Philip Fitzsimons, Chief Executive 01 4093200
Andrew Langford, Finance Director 01 4093200
Murray Consultants
Joe Murray 01 4980300
FBD HOLDINGS PLC
PRELIMINARY RESULTS ANNOUNCEMENT
FBD Holdings plc ('FBD' or 'the Group') is pleased to announce excellent results
for the year ended 31st December 2006.
RESULTS
Group operating profit amounted to €158.5m., compared to €162.6m. in 2005.
Total operating income grew to €427.9m (2005: €404.5m). It is comprised of net
earned premiums of €346.0m (2005: €332.4m) and investment income (calculated on
the basis of longer term returns) of €48.0m (2005: €44.4m) arising in the
Group's insurance underwriting business plus net income (i.e after expenses) of
€33.9m (2005: €27.7m) from the Group's non-underwriting activities.
Expenses amounting to €269.4m. (2005: €241.9m) related to the Group's
underwriting business. They comprise claim costs of €224.7m (2005: €202.5m.) and
operating expenses of €44.7m. (2005: €39.4m).
Of the Group's operating profit of €158.5m, €124.6m (2005: €134.9m) is
attributable to underwriting and €33.9m (2005: €27.7m) to non-underwriting, as
detailed below.
Operating earnings per share, based on longer term investment returns amounted
to 376.60c (2005: 363.54c)
Group profit before tax reflects the operating profit of €158.5m (2005:
€162.6m), profit on the sale of land at La Cala of €81.8m (2005: no
comparative), short-term fluctuations in investment returns of €61.4m (2005:
€26.0m) and finance costs of €4.9m (2005: €3.4m).
UNDERWRITING
Insurance underwriting (FBD Insurance) is the Group's primary business activity.
Gross written premiums (i.e. before reinsurance) increased to €407.3m., compared
to €389.5m. in 2005. In the light of the reductions in average premium levels
that prevailed in the market in 2006, this increase is satisfactory and reflects
continued growth in customer numbers in the period.
Net earned premiums amounted to €346.0m. (2005: €332.4m).
The net claims incurred charge, amounted to €224.7m. (2005: €202.5m). comprised
of net claims paid of €193.6m. (2005: €163.7m.) plus the movement in net
outstanding claims provisions of €31.1m (2005: €38.8m). Increased exposures due
to the increase in customer numbers together with less benign weather conditions
than those experienced in 2005 contributed to the increase.
Net operating expenses amounted to € 44.7m. (2005: €39.4m).
The foregoing premium/claim/expenses figures resulted in an underwriting profit
of €76.6m. (2005: €90.5m.).
The 2006 net operating ratios were: loss ratio - 65.0% (2005: 60.9%); expense
ratio - 12.9% (2005: 11.9%); combined ratio - 77.9% (2005: 72.8%).
After crediting investment income of €48.0m. (2005: €44.4m), the operating
profit of FBD's underwriting business amounted to €124.6m. (2005: €134.9m).
NON-UNDERWRITING
The Group's non-underwriting activities include leisure/property development,
financial services and the investment of non-allocated capital ('capital fund').
The contribution to operating profit from these activities amounted to €33.9m.
(2005: €27.7m.)
Leisure and property interests, which include the La Cala and Sunset Beach
resorts in Spain and the Tower Hotel Group in Ireland, contributed €10.1m (2005:
€13.6m.) to operating profits. The 2005 comparative figure included fees arising
on completion of a property related loan. As noted earlier, the profit of €81.8m
achieved on the Tranche 1 portion of land sold at La Cala contributed
significantly to the Group's pre-tax profits. La Cala's golf and hotel results
improved and residential property sales of 38 units were achieved. The Sunset
Beach Resort and Tower Hotels Group's results were ahead of 2005.
The Group's financial service businesses, which include general insurance
broking (FBD Brokers), life assurance/pension broking/investment advice (FBD
Life) and instalment finance (Abbey Finance) contributed €4.3m. (2005: €3.3m.)
to operating profits. FBD Life maximised the opportunities for growth in the
favourable climate that has existed in its markets, particularly for retail
investment products. Meanwhile, FBD Brokers continued to be impacted by ongoing
reductions in premium levels.
The capital fund, which is invested in 'blue chip' equities delivered strong
returns which amounted to €19.5m. (2005: €10.8m.)
BALANCE SHEET
Total assets at year end amounted to €1,686.6m (2005: €1,564.4m), an increase of
7.8% on 2005. Ordinary shareholders' funds amounted to €497.5m (2005: €476.1m),
an increase of 4.5% for the year. The strong operating performance, the profit
on the sale of land at La Cala and the performance of our equity portfolio
contributed to the increase. Included in short term fluctuations in investment
returns is a gain of €33.7m in respect of the disposal of 'available for sale
investments'. Shareholders' funds at 31st December 2005 included €27.0m of this
gain. The share buyback, amounting to €129.0m undertaken by the Company in June
2006 and the La Cala special dividend of €55.0m impacted the year end
shareholders' funds' figure. Net Assets per share have grown to 1,424.76c (2005:
1,250.62c), an increase of 13.9%. The buyback and cancellation of shares,
already mentioned, contributed to this increase.
FINAL DIVIDEND
Reflecting the Group's excellent results and the Board's commitment to increase
the dividend to earnings ratio, a final dividend of 45.0c (2005: 37.5c) per
share is being recommended by the Directors. This will bring the total dividend
for the year to 69.0c (2005: 57.5c) an increase of 20%.
The final dividend will be paid on the 25th May 2007 to shareholders on the
Company's Register at close of business on 16th March 2007. The final dividend
is subject to withholding tax ('DWT') except for shareholders who are exempt
from DWT and who have furnished a properly completed Composite Resident Form to
the Company's Registrar.
OUTLOOK
The Board is confident that the Group will continue its successful development
in the year ahead.
Underwriting:
Year to date, the trend of premium reductions which has been a feature of the
Irish insurance market in recent years has continued, with intense price
competition occurring across all classes of business. We will continue to target
challenging new business volumes at premium levels we deem to be appropriate and
are pleased to report that, year to date, premium income is ahead of last year's
corresponding figure.
The insurance environment experienced in Ireland in recent years is the result
of unique factors. These include fraudulent claim prevention measures that were
introduced, road safety initiatives (e.g. random breath testing, better law
enforcement, extension of penalty points), health and safety measures in the
workplace/home and the establishment of the Personal Injuries Assessment Board
('PIAB'). The assumptions which each individual insurer makes as to the ongoing
impact these matters will have on future claims costs, influences its pricing
decisions. Unless further ongoing savings from these and other initiatives are
achieved, the pace of premium reductions will advance the convergence of Irish &
European combined ratios.
FBD is exercising its own judgements in this environment and will continue to
focus on strategies and plans that are designed to grow our underwriting
business on the basis of efficiency, sustainability and profitability. These are
the critical measures we apply in pursuing our growth objectives. Our approach
for growing our business in the prevailing market is built around these key
performance criteria.
Our ongoing investment in people, technology and facilities underpins our growth
plans. This investment commitment is evidenced by the recent establishment of
our new Business Support Centre in Mullingar, Co. Westmeath. The new Centre,
which has a start-up complement of 50 new staff, will increase the capacity of
our network and play an important role in enabling us to deliver on our business
development plans.
Non-Underwriting:
As regards our non-underwriting businesses, we will continue to effect
strategies that are focused on maximising returns to shareholders. Our property,
leisure and financial service interests face challenges and opportunities that
are unique to their individual sectors. Each of these businesses are pursuing
ambitious plans to ensure success and we are confident that they will perform to
expectations.
Regarding La Cala, the decision last year to dispose of development land at the
resort, at significant profit, confirms the ongoing commercial assessment the
Group undertakes in relation to all its businesses and the focus it maintains on
optimising shareholders' interests. As investors are aware, a special dividend,
amounting to €55m in total, was paid in August 2006 in respect of Tranche 1 land
net proceeds. Payment for the second Tranche of land awaits final approval from
the Regional Planning Authority. As previously advised, due to delays being
experienced in this process, final approval is unlikely to be received before
year end. A distribution of the remaining net sale proceeds, estimated at €65m,
will be made when payment of final monies, triggered by the planning approval,
is received. As regards La Cala's ongoing activities, we expect golf and hotel
performance and residential property sales to deliver their budgets for the
year. Likewise, we are optimistic that Sunset Beach Resort and Tower Hotel Group
will achieve their profit targets.
Our financial services businesses have commenced the year well and we are
confident that they will deliver satisfactory performances.
Capital:
Capital efficiency is a fundamental principle which the Group applies in all its
businesses. The Company has repatriated €265m of capital to shareholders, in
addition to significantly increased ordinary dividend payments, over the past 2
years. The utilisation of capital generated for the maximum benefit of
shareholders will continue to be determined in the context of the development
strategies which the Group pursues. It is a matter to which the Board gives
ongoing attention. Meanwhile, shareholders' funds will continue to be invested
prudently.
ENDS
Note
Management will present these results to analysts at 10 am. to-day. A copy of
the presentation will be posted on the Group's website, www.fbd.ie, at that
time.
FBD HOLDINGS PLC
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2006
2006 2005
€000s €000s
Turnover 693,926 531,747
====== ======
Income
Net premium earned 345,959 332,371
Non-underwriting 33,919 27,739
operating income
Investment income -
longer term rate of return 48,054 44,435
------------ ------------
427,932 404,545
Expenses
Change in insurance
liabilities net of (31,064) (38,809)
reinsurance
Claims paid, net of
recoveries from (193,648) (163,666)
reinsurers
Operating expenses (44,705) (39,446)
------------ ------------
Operating profit Note 1 158,515 162,624
Profit on the sale of Note 3 81,774 -
land at La Cala
Investment income - 61,350 25,956
short term fluctuation
Finance costs (4,859) (3,425)
------------ ------------
Profit before tax 296,780 185,155
Income tax expense (49,948) (23,701)
------------ ------------
Profit for the year 246,832 161,454
====== ======
Attributable to:
Equity holders of the parent 246,641 161,500
Minority interest 191 (46)
------------ ------------
246,832 161,454
====== ======
2006 2005
Cent Cent
Earnings per 60c 678.82 416.09
ordinary share ====== ======
Diluted earnings per 60c 671.28 411.45
ordinary share ====== ======
FBD HOLDINGS PLC
GROUP BALANCE SHEET - ASSETS
AT 31ST DECEMBER 2006
2006 2005
€000s €000s
Property and equipment
Land and buildings 213,564 196,923
Fixtures and fittings 16,815 13,302
------------- -------------
230,379 210,225
------------- -------------
Intangible assets
Deferred acquisition costs 13,517 11,849
------------- -------------
Investments
Investment property 81,181 48,856
Investments held for trading 558,850 477,310
Available for sale investments 3,727 47,290
Investments held to maturity 171,799 13,740
Deposits with banks 327,973 443,042
------------- -------------
1,143,530 1,030,238
------------- -------------
Inventories 66,433 62,496
------------- -------------
Loans and receivables 122,762 141,673
------------- -------------
Reinsurers' share of technical
provisions
Provision for unearned premiums 21,953 19,412
Claims outstanding 50,600 46,622
------------- ------------
72,553 66,034
------------- ------------
Cash and cash equivalents 37,423 41,897
------------- ------------
Total assets 1,686,597 1,564,412
======= ======
FBD HOLDINGS PLC
GROUP BALANCE SHEET - LIABILITIES
AT 31ST DECEMBER 2006
2006 2005
€000s €000s
Equity
Share capital 21,277 23,557
Capital reserves 12,605 9,813
Revaluation reserves 27,540 47,706
Translation reserves 162 435
Retained earnings 435,935 394,616
------------ ------------
Shareholders' funds - equity interests 497,519 476,127
Preference share capital 2,923 2,923
------------ ------------
Total shareholders' funds 500,442 479,050
Minority interests 6,476 6,423
------------ ------------
Total equity 506,918 485,473
------------ ------------
Liabilities
Technical provisions
Provision for unearned premiums 197,507 188,953
Claims outstanding 734,439 699,397
------------ ------------
931,946 888,350
------------ ------------
Bank and other loans 112,350 99,831
------------ ------------
Creditors 90,841 51,434
------------ ------------
Current tax 7,728 3,395
------------ ------------
Deferred tax 33,227 33,873
------------ ------------
Retirement benefit obligation 3,587 2,056
------------ ------------
Total liabilities 1,686,597 1,564,412
====== ======
FBD HOLDINGS PLC
GROUP CASH FLOW STATEMENT
FOR THE YEAR ENDED 31ST DECEMBER 2006
2006 2005
€000s €000s
Operating activities
Profit before tax for the year 296,780 185,155
Adjustments for:
Gains on investments held for trading and held
to maturity (30,128) (41,031)
Depreciation of property and equipment 3,525 3,487
Share-based payment expense 512 774
Increase in fair value of investment property (4,200) -
Increase in technical provisions 37,077 44,696
Profit on sale of land at La Cala (81,774) -
--------- ---------
Operating cash flows before movement in
working capital 221,792 193,081
Increase in receivables (26,261) (4,274)
Increase (decrease) in payables 29,326 (26,665)
--------- ---------
Cash generated from operations 224,857 162,142
Income taxes paid (44,348) (20,516)
--------- ---------
Net cash from operating activities 180,509 141,626
--------- ---------
Investing activities
Investments held for trading (51,495) (96,510)
Investments held to maturity (157,976) -
Investments available for sale 13,456 (5,162)
Sale (purchase) of land, buildings and 69,469 (13,430)
inventory
Purchase of fixtures and fittings (7,038) (6,242)
Purchase of investment property (28,125) (24,656)
Loans and advances 43,504 (3,789)
Deposits invested with financial institutions 115,069 95,378
--------- ---------
Net cash used in investing activities (3,136) (54,411)
--------- ---------
Financing activities
Dividends paid (77,672) (18,158)
Repurchase of ordinary shares (129,213) (81,238)
Proceeds of re-issue of ordinary shares 5,432 1,409
Increase in bank loans 19,879 1,243
--------- ---------
Net cash used in financing activities (181,574) (96,744)
--------- ---------
Net decrease in cash and cash equivalents (4,201) (9,529)
Cash and cash equivalents at the beginning of 41,897 51,362
the year
Effect of foreign exchange rate changes (273) 64
--------- ---------
Cash and cash equivalents at the end of the 37,423 41,897
year ======== ========
FBD HOLDINGS PLC
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
FOR THE YEAR ENDED 31ST DECEMBER 2006
2006 2005
€000s €000s
Income recognised directly in equity
Gain on available for sale investments 806 18,033
Revaluation of owner occupied property 8,476 -
Actuarial loss (3,869) (3,802)
Taxation on income/expense recognised directly
to equity (2,400) (2,254)
--------- ---------
Net income recognised directly in equity 3,013 11,977
--------- ---------
Transfers
Transfers to income statement on sale of
available for sale investments (30,913) (6,384)
Transfer to income statement on sale of land
and buildings - (1,071)
Taxation on transfers to income statement 3,865 801
--------- ---------
(27,048) (6,654)
--------- ---------
Profit after taxation 246,832 161,454
--------- ---------
Total recognised income and expense 222,797 166,777
======== ========
Attributable to:
Equity holders of the parent 222,744 166,823
Minority interest 53 (46)
--------- ---------
222,797 166,777
========= ========
FBD HOLDINGS PLC
GROUP RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS
FOR THE YEAR ENDED 31ST DECEMBER 2006
2005
Revaluation Attributable Preference
Share Capital and other Translation Retained to ordinary share Minority
capital reserves reserves reserve earnings shareholders capital interests Total
€000s €000s €000s €000s €000s €000s €000s €000s €000s
Balance at
1st January
2005. 25,151 7,445 38,581 371 334,905 406,453 2,923 16,333 425,709
Profit after
taxation - - - - 161,500 161,500 - (46) 161,454
Exchange
translation
adjustment - - - 64 64 - - 64
Dividends
paid - - - - (18,158) (18,158) - - (18,158)
Buyback of
own shares - - - - (81,238) (81,238) - - (81,238)
Cancellation
of own
shares (1,594) 1,594 - - - - - - -
Reissue of
ordinary
shares - - - - 1,409 1,409 - - 1,409
Recognition of
share based
payments - 774 - - - 774 - - 774
Transfer to income
statement on sale of
available
for sale - - (5,583) - - (5,583) - - (5,583)
investments
Gain on available
for sale - - 15,779 - - 15,779 - - 15,779
investments
Purchase of
minority
interest - - - - - - - (9,864) (9,864)
Actuarial loss
on pension
fund valuation - - - - (3,802) (3,802) - - (3,802)
Sale of land
and buildings - - (1,071) - - (1,071) - - (1,071)
---------- ---------- -------- ------- -------- ------- ------ ----- ------
Balance at
31 December
2005 23,557 9,813 47,706 435 394,616 476,127 2,923 6,423 485,473
2006
Profit after
taxation - - - - 246,641 246,641 - 191 246,832
Exchange
translation
adjustment - - - (273) - (273) - - (273)
Dividends - - - - (77,672) (77,672) - - (77,672)
paid
Buyback of
own shares - - - - (129,213) (129,213) - - (129,213)
Cancellation
of own
shares (2,280) 2,280 - - - - - - -
Reissue of
ordinary
shares - - - - 5,432 5,432 - - 5,432
Recognition
of share
based - 512 - - - 512 - - 512
payments
Transfer to
income statement
onsale of
available for sale
investments - - (27,048) - - (27,048) - - (27,048)
Gain on
available
for sale
investments - - 706 - - 706 - - 706
Actuarial
loss
on pension - - - - (3,869) (3,869) - - (3,869)
fund
valuation
Revaluation
of owner
occupied
property - - 6,176 - - 6,176 - (138) 6,038
------- ------- --------- -------- -------- --------- ------- -------- ------
Balance at
31
December
2006 21,277 12,605 27,540 162 435,935 497,519 2,923 6,476 506,918
===== ===== ===== ===== ====== ===== ===== ===== =====
FBD HOLDINGS PLC
SUPPLEMENTARY INFORMATION
FOR YEAR ENDED 31ST DECEMBER 2006
Note 1 - Operating profit by activity
2006 2005
€000s €000s
Underwriting 124,598 134,885
Non underwriting 33,917 27,739
-------- --------
158,515 162,624
======== ========
Note 2 - Underwriting result
2006 2005
€000s €000s
Gross written premiums 407,256 389,472
======== ========
Net earned premiums 345,959 332,371
Net claims incurred (224,712) (202,475)
Net operating expenses (44,705) (39,446)
-------- --------
Underwriting result 76,542 90,450
======== ========
% %
Ratios:
Net loss ratio 65.0 60.9
Net expense ratio 12.9 11.9
Combined ratio 77.9 72.8
Note 3 Profit on sale of land at La Cala
On 23rd February 2006, Ranchos Reunidos S.A., a 100% subsidiary of the Group,
entered into a conditional agreement to sell a major portion of the building
development land which it owned at La Cala Resort, Mijas, Costa del Sol, Spain,
for a total consideration of €201,000,000. The consideration was constituted in
two parts, apportioned between two tranches of land.
On 22nd June 2006, the initial consideration payment of €100,000,000 arising on
the Tranche I land was received. The remainder of the Tranche I consideration,
amounting to €21,000,000 is due to be received on 30th June 2007. The Group has
recognised a profit of €81,774,000 on the sale Tranche I development land in the
year to 31st December 2006.
The consideration, amounting to €80,000,000, for the Tranche II land, becomes
payable at a later date, contingent on receipt of final planning approval from
the Spanish Regional Planning Authority.
FBD HOLDINGS PLC
SUPPLEMENTARY INFORMATION (continued)
FOR YEAR ENDED 31ST DECEMBER 2006
Note 4 - Dividends
2006 2005
€000s €000s
Paid in Period
2006 Interim dividend of 24.00c (2005: 20.00c) per
share on ordinary shares of 60c each 8,247 7,578
2005 Final dividend of 37.50c (2005: 27.28c) per
share on ordinary shares of 60c each 14,277 10,298
Dividend of nil (2005: 8.4c) per share on 14%
non-cumulative preference shares of 60c each - 113
Dividend of 4.8c (2005: 4.8c) per share on 8%
non-cumulative preference shares of 60c each 169 169
Special dividend of 160.00c (2005: nil) per share
on ordinary shares 54,978 -
--------- --------
77,672 18,158
========= ========
Proposed:
Dividend of 8.4c (2005: nil) per share on 14%
non-cumulative preference shares of 60c each 113 -
Dividend of 4.8c per (2005: 4.8c) per share on 8%
non-cumulative preference shares of 60c each 169 169
2006 Final dividend of 45.00c (2005 37.50c) per
share on ordinary shares of 60c each 15,714 14,277
---------- ----------
15,996 14,446
========== =========
Note 5 - Share capital
2006 2005
Number €000s €000s
Authorised
At beginning of year:
Ordinary shares of 60c each 51,326,000 30,796 30,796
---------- --------- ----------
Issued and fully paid:
At beginning of year 39,261,206 23,557 25,151
Cancellation of shares (3,800,000) (2,280) (1,594)
---------- ---------- ----------
At end of year 35,461,206 21,277 23,557
========== =========== =========
The total number of shares held as treasury shares at 31st December 2006 was
541,775.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 3 hours ago Alphawave IP Group
- 4 hours ago WH Smith
- 5 hours ago Staffline Group
- 5 hours ago Manchester & London Investment Trust
- 5 hours ago Associated British Foods