Company name FBD Holdings PLC
Headline Half Yearly Report


RNS Number : 8152K
FBD Holdings PLC
28 August 2012
 



 

 

FBD HOLDINGS PLC

28 August 2012

 

FBD HOLDINGS PLC

 

Half Yearly Report

For the Six Months Ended 30 June 2012

 

 

 

 

FINANCIAL HIGHLIGHTS


2012

€000s

Restated *
2011

€000s




·    Gross written premium

174,729

177,486

·    Net earned premium

150,856

149,780

·    Operating profit

28,660

28,038

·    Profit before taxation

22,185

21,837





Cent

Cent

·    Operating earnings per share

75

74

·    Diluted earnings per share

58

58

·    Ordinary dividend per share

12.25

11.25

·    Net assets per share

666

582

 

 

OPERATIONAL HIGHLIGHTS

 

§ Very strong performance with half year profit before taxation of €22.2m.

§ Underwriting performance, driven by an improved loss ratio, was the primary contributor.

§ Improvement in combined operating ratio from 92.8% to 92.2%.

§ Operating earnings per share of 75 cent (2011: 74 cent).

§ Interim dividend increased 8.9% to 12.25 cent.

§ Capital base further strengthened with solvency level of 63.3%, up from 60.4% at 30 June 2011.

§ Increase in net asset value per share to €6.66.

§ Full year operating earnings per share guidance re-affirmed at 145 - 155 cent per share.

 

 

Commenting on the results, Andrew Langford, Group Chief Executive, said:  "These are excellent results in difficult economic conditions. We believe that gross written premium is well ahead of a contracting market and that FBD's market share has again increased.  A further fall in domestic demand is expected to limit premium income growth in the second half.  The Group's market position continues to be strengthened through our multi-channel distribution strategy.  Prudent management of risk and reserving is being maintained.  In the current unpredictable investment environment, FBD's investment allocation prioritises capital protection.  The Board is confident that FBD will continue to outperform its peers in delivering superior returns to shareholders".

 

 

*   Comparative figures have been restated to exclude operations that were sold during 2011.

 



 

 

Enquiries

Telephone



FBD


Andrew Langford, Group Chief Executive

+353 1 409 3208

Cathal O'Caoimh, Group Finance Director


Peter Jackson, Head of Investor Relations




Murray Consultants


Joe Murray

+353 1 498 0300

Joe Heron


 

 

A presentation will be made to analysts at 10am today, a copy of which will be available on our Group website, www.fbdgroup.com from that time.

 

 

 

About FBD Holdings plc ("FBD")

The Group was established in the 1960s and is one of Ireland's largest property and casualty insurers looking after the insurance needs of farmers, private individuals and business owners.

 

Forward Looking Statements

Some statements in this announcement are forward-looking.  They represent expectations for the Group's business, and involve risks and uncertainties.  These forward-looking statements are based on current expectations and projections about future events.  The Group believes that current expectations and assumptions with respect to these forward-looking statements are reasonable.  However, because they involve known and unknown risks, uncertainties and other factors, which are in some cases beyond the Group's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

 

 

The following details relate to FBD's ordinary shares of €0.60 each which are publicly traded:

 

Listing

Irish Stock Exchange

UK Listing Authority

Listing Category

Premium

Premium (Equity)

Trading Venue

Irish Stock Exchange

London Stock Exchange

Market

Main Securities Market

Main Market

ISIN

IE0003290289

IE0003290289

Ticker

FBD.I or EG7.IR

FBH.L

 

 



FBD HOLDINGS PLC

 

Half Yearly Report

For the Six Months Ended 30 June 2012

 

 

INTERIM MANAGEMENT REPORT

 

 

OVERVIEW

 

FBD delivered a profit before taxation of €22.2m, repeating the excellent performance delivered in the first half of 2011.  In a continuing difficult economic and investment climate, the Group continued to demonstrate its capability to deliver superior returns for shareholders.

 

 

Underwriting

The underwriting result, at €11.7m, represents an 8.9% improvement on the same period of last year, a very strong performance given that 2011 benefited from a benign claims environment.  After allowing for a lower long-term rate of investment return, underwriting operating profit before taxation amounted to €26.1m, marginally lower than the €26.5m achieved in the first half of 2011.

 

Gross written premium in the first half of 2012 was €174.7m, 1.6% lower than the corresponding period of the previous year.  The Board believes that this performance is well ahead of the market, which contracted further.  As a result, the Group's market share is likely to have risen further in the first half of 2012.

 

The difficult economic environment in Ireland has led to reducing insurable values and risk in the market.  Prices in the market for certain insurance products have also moved lower due to competitive pressures and to reflect the lower risk.  For example, FBD has reduced prices for its car insurance customers where there has been a genuine reduction in the associated risk.  The direction of future claims expense and market rates are likely to be determined by economic factors such as vehicle usage as well as safety measures and driver behaviour. 

 

FBD continued to successfully develop its multi-channel distribution strategy in response to customer needs.  The sales office network has made further progress in developing farming insurance, winning over 1,000 additional farm insurance customers in the first six months of the year.  FBD.ie and NoNonsense.ie continue to attract a growing number of customers from their respective target markets, particularly urban areas.  The initiative to enter into partnerships with insurance brokers to increase our penetration of the business insurance market is progressing positively and accounted for 47% of business insurance new business premium income in the first six months of 2012.

 

Net earned premium increased 0.7% to €150.9m, as FBD's growth came in areas where more risk is retained and because of the Group's decision in 2011 to increase the proportion of our property insurance book that is retained.

 

Net claims incurred amounted to €100.9m (2011: €103.2m).  The net loss ratio further improved from an excellent 68.9% in the first half of 2011 to 66.9% in the first half of 2012.  Continued improvement in risk selection and claims management, together with improvements in the operating environment, further reduced the cost of attritional claims.  The very favourable large claims experience in 2011 was not repeated in the period.  The increase in large claims was partially offset by the favourable weather experience in the period.  Although a flood event in the month of June cost the industry an estimated €50m, the cost to FBD was only €3m gross of reinsurance, €2m net of reinsurance.

 

An increase in the cost of reinsurance resulted in a fall of €0.9m in reinsurance commission receivable in the first half 2012.  This accounted for 60 basis points of the increase in the net expense ratio from 23.9% to 25.3%.  The Group increased its ongoing investment in marketing to maintain its "share of voice" in a very competitive market. 

 

FBD's combined operating ratio for the first half of 2012 was 92.2%, an improvement on the 92.8% achieved in the first half of 2011.  Long-term investment return at €14.4m was lower than the €15.7m booked in the first half of 2011 as the average asset mix in the period was more conservative than the previous year, due to the continuing uncertain market outlook.

 

 

Financial Services

The Group's financial services operations, which includes premium instalment services and life, pension and investment broking (FBD Financial Solutions) less holding company costs, generated an operating profit of €2.6m (2011: €1.6m).  This is a strong performance in difficult market conditions.

 

Joint Venture

The Group's share of the loss of the property and leisure joint venture was €0.7m.  This is a seasonal business with most of the profits generated in the summer months, which predominately fall in the second half of the year.  Trading performance of the joint venture has improved compared to 2011, with growth in occupancy, rate and revenue per room, particularly in the Irish market.  Sales of units in La Cala continue to be strong and the joint venture was cash generative in the period.  The joint venture finalised refinancing of its debt facility, a significant achievement in the current credit market. 

 

 

Profit before taxation

The excellent operating result was somewhat offset by adverse investment return fluctuations of €2.4m (2011: €5.6m), which arise primarily because current rates of return on bank deposits are lower than longer term expectations.  After writing off €2.6m, being the Group's investment as a limited partner in Bloxham Stockbrokers and charging restructuring costs of €0.7m, the Group recorded a profit before tax of €22.2m (2011: €21.8m). 

 

 

Dividends

The Board is committed to ensuring that the Group's capital position continues to be robust and its balance sheet well managed.  This reflects the Board's view that it is in the long-term interests of all shareholders to maintain strong solvency and liquidity margins.  The Board is also committed to a progressive dividend policy and efficient capital management.

 

The Board has approved a 2012 interim dividend of 12.25 cent per ordinary share (2011: 11.25 cent).  This will be paid on 2 October 2012 to the holders of shares on the register on 7 September 2012.  The interim dividend is subject to dividend withholding tax ("DWT") except for shareholders who are exempt from DWT and who have furnished a properly completed declaration of exemption to the Company's Registrar, from whom further details may be obtained. 

 

 

Earnings per share

Operating earnings per share based on long-term investment return amounted to 75 cent per ordinary share, compared to 74 cent in the first half of 2011.  The fully diluted earnings per share was 58 cent (2011: 58 cent) per ordinary share.

 

 

STATEMENT OF FINANCIAL POSITION

 

The Group's financial position has further strengthened during the period.  Ordinary shareholders' funds have grown to €221.8m (December 2011: €209.9m).  Net assets per ordinary share have increased to 666 cent up from 630 cent at December 2011.

 

The investment and other assets at the beginning and end of the six month period are set out in the following table:

 



Asset allocation

 


          30 June 2012

           31 Dec 2011

 

Underwriting investment assets

€m

%

€m

%






Cash deposits

466

56%

345

42%

Government bonds

230

28%

406

49%

Corporate bonds

46

6%

3

0%

Equities

33

4%

25

3%

Secured loans

24

3%

22

3%

Own land and buildings

17

2%

17

2%

Investment property

8

1%

9

1%

 

Underwriting investment assets


824


100%

 

827

 

100%






Trade and other receivables and DAC

112


103


Reinsurers' share of technical provisions

59


64


Joint venture

45


46


Plant and equipment

15


16


 

Total Group assets


1,055


 

1,056


 

International financial market volatility continued throughout the first half of 2012.  In such an unpredictable environment, FBD's investment philosophy, like its peers globally, remains focussed on capital preservation.  As a result, the Group has maintained a short-term, low-risk investment allocation and will continue to do so until the sovereign debt crisis abates and investment volatility normalises.

 

At 30 June 2012, 90% of the underwriting investment assets were invested in bank deposits, government bonds and corporate bonds.  The average term of these assets is far shorter than the corresponding liabilities thereby reducing the risk of investment volatility.

 

During the first half of 2012, nearly half of the sovereign bonds held by FBD for the last five years reached their maturity dates.  Reflecting the Group's low-risk investment policy, the proceeds from these maturities were invested in a portfolio of short-dated investment-grade corporate bonds and a diversified mix of bank deposits.

 

FBD Group has a strong capital base and its balance sheet has further strengthened in the period.  The Group has no debt.  FBD Insurance has a solvency level of 63.3% of net earned premium at the end of June 2012, compared with 60.4% at June 2011.  FBD has a prudent reserving policy that has delivered positive runoffs in each year since 2003.  Reserving at 30 June 2012 was maintained at the same robust level as at the previous year end.  The reserving ratio (net technical provisions divided by net earned premium) remains strong at 232%.

 

 

OUTLOOK

 

In the second half of 2012, Irish domestic demand is likely to decline further, albeit at a slower pace than in recent years.  As a result, the opportunity for FBD's business to grow premium income in the remainder of 2012 is expected to be limited.  Nonetheless, FBD is committed to achieving profitable growth by constantly evolving its business to reflect customers' needs.  The Group will continue to implement its plan to increase penetration of key urban markets, in particular Dublin, and the business insurance market.  The Board believes that the opportunities provided by NoNonsense.ie and the expansion of the broker channel will provide the Group with the ability to outperform the market again in 2012.  At the same time, the Group continues to devote considerable resources to developing its core farming base, a key strategic priority.

 

The Group will continue to deliver improvements in those aspects of claims costs that it can control and, barring exceptional claims, expects the loss ratio in the second half of the year to be similar to that of the first half.

 

As financial markets continue to be volatile, insurance companies should remain conservative in their investment mix and become more reliant on positive underwriting results to achieve an adequate return on investment.  FBD will continue to prioritise capital protection over investment return.  Low returns on deposits and bonds will lead to negative investment fluctuations in the short term.

 

FBD has a strong capital base and balance sheet, a low-risk investment allocation and a prudent reserving strategy.  The Group is in a very strong position to progress its strategic plans and the Board is confident that FBD will continue to outperform its peers in delivering superior returns to shareholders.  FBD has demonstrated its capacity to deliver returns in difficult market conditions and is well positioned to deliver long-term profitable growth. 

 

The Group re-affirms its previous guidance, subject to exceptional events arising, for full year 2012 operating earnings per share of between 145 and 155 cent.

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

 

Under the Transparency (Directive 2004/109/EC) Regulations 2007 the Group is required to give a description of the principal risks and uncertainties it faces.

 

The Group has a risk management policy which provides a systematic, effective and efficient way for managing risk in the organisation and ensures it is consistent with the overall business strategy and the risk appetite of the Group.

 

Risk appetite is a measure of the amount and type of risks the Group is willing to accept or not accept over a defined period of time in the pursuit of its objectives.  The Group's risk appetite seeks to encourage measured and appropriate risk taking to ensure that risks are aligned to business strategy and objectives. 

 

The risk appetite in the Group's underwriting subsidiary is driven by an overarching desire to protect the solvency of the Company at all times.  Through the proactive management of risk the Company ensures that it does not have or will not take on an individual risk or combination of risks that could threaten the solvency of the Company.  This ensures that the Company has and will have in the future sufficient capital to pay its policyholders and all other creditors in full as liabilities fall due.

 

The Board considers that the risks and uncertainties disclosed in the Annual Report for the year ended 31 December 2011 continue to reflect the principal risks and uncertainties of the Group over the remainder of the financial year.  In the Annual Report 2011 risk is categorised as general insurance risk, capital management risk, operational risk, liquidity risk, market risk, credit risk, concentration risk and macro-economic risk. 

 

Further information on these risks is included in pages 116 to 125 of the Annual Report 2011, which quantifies the sensitivity of parameters such as loss ratio, equity and property values and exchange and interest rates.  The risks and uncertainties have not altered and further movement in the parameters described above may be experienced in future periods.

 

RELATED PARTY TRANSACTIONS

 

There were no related party transactions in the half year that have materially affected the financial position or performance of the Group.

 

AUDIT REVIEW

 

This half yearly financial report has not been audited or reviewed by the auditors of the Group.



FBD HOLDINGS PLC

 

Condensed Consolidated Income Statement

For the half year ended 30 June 2012

 


 

 

 

Notes

 

Half year
ended
30/06/12

(unaudited)


Restated
half year ended 30/06/11

(unaudited)


 

Year

ended 31/12/11 (audited)



€000s


€000s


€000s








Revenue

4

198,860


203,669


402,535

Income







Gross premium written


174,729


177,486


351,111

Reinsurance premiums


(24,006)


(23,267)


(46,955)








Net premium written


150,723


154,219


304,156

Gross change in provision for unearned premiums



5



(2,565)



2,117

Reinsurers' share of change in provision for unearned premiums


 

128


 

(1,874)


 

(4,321)








Net premium earned


150,856


149,780


301,952

Net investment return

3

11,956


10,171


25,450

Financial services income


6,644


5,297


13,276








Total income


169,456


165,248


340,678








Expenses







Net claims and benefits


(100,941)


(103,207)


(201,123)

Other underwriting expenses


(38,212)


(35,826)


(73,002)

Financial services expenses


(4,079)


(3,743)


(9,106)

Impairment of property, plant and equipment


-


(635)


(975)

Impairment of financial asset


(2,582)


-


-

Restructuring costs


(739)


-


(3,725)

Share of results of joint venture


(718)


-


(467)








Profit before tax


22,185


21,837


52,280








Income tax charge


(2,773)


(2,580)


(8,615)

Profit for the period from continuing operations


 

19,412


 

19,257


 

43,665








Discontinued operations







(Loss)/profit for the period from discontinued operations, including profit from sale



-


 

(1,480)


 

7,362








Profit for the period


19,412


17,777


51,027

Attributable to:







Equity holders of the parent


19,362


17,827


51,096

Non-controlling interests - continuing operations



50


 

30


 

38

Non-controlling interests - discontinued operations



-


 

(80)


 

(107)










19,412


17,777


51,027










FBD HOLDINGS PLC

 

Condensed Consolidated Income Statement

For the half year ended 30 June 2012

 

Earnings per share


Cent


Cent


Cent

From continuing operations







Basic


58


58


130

Diluted


58


58


130

From continuing and discontinued operations







Basic


58


54


153

Diluted


58


53


152

 



 

FBD HOLDINGS PLC

 

Condensed Consolidated Statement of Comprehensive Income

For the half year ended 30 June 2012

 


Half year ended 30/06/12

(unaudited)


Half year ended 30/06/11

(unaudited)


Year

ended 31/12/11 (audited)


€000s


€000s


€000s







Profit for the period

19,412


17,777


51,027







Actuarial loss on retirement benefit obligations

-


-


(14,323)

Exchange differences on translation of foreign operations


-


 

289


 

-







Other comprehensive income/(expense) before tax

 

-


 

289


 

(14,323)







Tax charge relating to other comprehensive income/(expense)

 

-


 

-


 

1,354







Other comprehensive income/(expense) after tax

-


289


(12,969)







Total comprehensive income for the period

19,412


18,066


38,058













Attributable to:






Equity holders of the parent

19,362


18,116


38,127

Non-controlling interests - continuing operations

50


30


38

Non-controlling interests - discontinued operations

-


(80)


(107)








19,412


18,066


38,058







 



 

FBD HOLDINGS PLC

 

 

Pro Forma Reconciliation of Consolidated Operating Profit to PROFIT after Tax

For the half year ended 30 June 2012

 


 

 

 

Notes

 

Half year

ended
30/06/12

(unaudited)


Restated half year ended 30/06/11

(unaudited)


 

Year

ended 31/12/11 (audited)



€000s


€000s


€000s








Continuing operations














Operating profit














Underwriting

5

26,095


26,484


58,337








Financial services

4

2,565


1,554


4,170








Operating profit before tax


28,660


28,038


62,507















Investment return - fluctuations

3

(2,436)


(5,566)


(5,060)








Impairment of property, plant and equipment


-


(635)


(975)








Restructuring costs and impairment


(3,321)


-


(3,725)








Share of results of joint venture


(718)


-


(467)















Profit before tax


22,185


21,837


52,280








Income tax charge


(2,773)


(2,580)


(8,615)

 

Profit after tax on continuing operations


 

19,412


 

19,257


 

43,665








Discontinued operations







(Loss)/profit for the period from discontinued operations, including profit from sale


 

-


 

(1,480)


 

7,362








Profit for the period


19,412


17,777


51,027










Cent


Cent


Cent

Operating earnings per share














From continuing operations


75


74


164

From continuing and discontinued operations


 

75


 

76


 

170

 



 

FBD HOLDINGS PLC

 

Condensed Consolidated Statement of Financial Position

At 30 June 2012

 

 

ASSETS

30/06/12

(unaudited)


30/06/11

(unaudited)


31/12/11

(audited)


€000s


€000s


€000s







Property, plant and equipment

32,346


155,260


33,797







Investment property

8,300


20,360


8,818







Investment in joint venture

44,903


-


45,621







Loans

23,838


23,559


23,086







Deferred tax asset

8,478


6,571


8,348







Financial assets






Investments held to maturity

230,125


496,398


405,848

Available for sale investments

46,218


7,282


6,282

Investments held for trading

32,946


33,962


34,608

Deposits with banks

450,563


176,615


305,321








759,852


714,257


752,059







Reinsurance assets






Provision for unearned premiums

20,514


22,832


20,385

Claims outstanding

38,858


51,597


43,606








59,372


74,429


63,991







Inventories

-


40,911


-







Current tax asset

914


7,041


2,134







Deferred acquisition costs

22,349


20,694


22,199







Other receivables

70,755


79,618


60,827







Cash and cash equivalents

23,410


41,912


35,658







Total assets

1,054,517


1,184,612


1,056,538







 

 



 

FBD HOLDINGS PLC

 

Condensed Consolidated Statement of Financial Position (continued)

At 30 June 2012

 

 

EQUITY AND LIABILITIES

 

Notes

30/06/12

(unaudited)

30/06/11

(unaudited)


31/12/11 (audited)



€000s

€000s


€000s







Equity






Ordinary share capital

7

21,409

21,409


21,409

Capital reserves


16,169

15,615


15,927

Revaluation reserves


-

742


-

Translation reserves


-

191


-

Retained earnings


184,241

155,597


172,596







Shareholders' funds - equity interests


221,819

193,554


209,932

Preference share capital


2,923

2,923


2,923







Equity attributable to equity holders of the parent



224,742


196,477


 

212,855

Non-controlling interests


428

2,003


458







Total equity


225,170

198,480


213,313







Liabilities






Insurance contract liabilities






Provision for unearned premiums


174,552

179,045


174,362

Claims outstanding


589,048

619,128


603,190









763,600

798,173


777,552







Borrowings


-

117,068


-







Retirement benefit obligation


21,692

10,859


21,692







Deferred tax liability


9,643

11,751


9,643







Payables


34,412

48,281


34,338







Total liabilities


829,347

986,132


843,225













Total equity and liabilities


1,054,517

1,184,612


1,056,538

                                                  






 



FBD HOLDINGS PLC

 

Condensed Consolidated Statement of Cash Flows

For the half year ended 30 June 2012

 



Half year
ended
30/06/12

(unaudited)


Half year ended 30/06/11

(unaudited)


Year

ended 31/12/11 (audited)



€000s


€000s


€000s

Cash flows from operating activities







Profit before tax


22,185


20,549


59,718

Adjustments for:







Loss on investments held for trading


99


870


4,050

Loss on investments held to maturity


738


454


971

Loss on investments available for sale


2,944


-


1,000

Interest and dividend income


(12,026)


(13,491)


(25,979)

Interest expense


225


2,174


3,774

Provision for loans & advances


-


950


(1,374)

Depreciation of property, plant and equipment


3,561


3,285


6,451

Share-based payment expense


242


302


614

Impairment of investment property


518


1,741


2,182

Profit on sale of investment property


-


(148)


(5,200)

Impairment of property, plant and equipment


-


635


975

Decrease in insurance contract liabilities


(9,333)


(14,769)


(24,952)

Effect of foreign exchange rate changes


-


329


(98)

Loss on disposal of property, plant and equipment


-


-


1

Profit on sale of subsidiaries


-


-


(8,374)

Joint venture trading result before tax


718


-


467

Operating cash flows before movement in working capital


 

9,871


 

2,881


 

14,226

(Increase)/decrease in receivables and deferred acquisition costs


 

(4,677)


 

(1,847)


 

1,311

Decrease in payables


(56)


(15,324)


(10,057)

Decrease in inventories


-


5,134


6,375

Cash generated from /(used by) operations


5,138


(9,156)


11,855

Interest and dividend income received


6,625


6,836


27,040

Interest paid


(225)


(2,510)


(3,448)

Income taxes paid


(1,553)


(1,134)


(2,701)








Net cash from/(used in) operating activities


9,985


(5,964)


32,746








Cash flows from investing activities







Purchase of investments held for trading


(14,757)


(21,079)


(32,995)

Sale of investments held for trading


16,320


4,106


12,188

Purchase of investments held to maturity


-


-


(69,967)

Realisation of investments held to maturity


174,985


-


160,000

Purchase of available for sale investments


(79,036)


-


-

Sale of available for sale investments


36,156


-


-

Purchase of property, plant and equipment


(2,110)


(3,259)


(5,409)

Sale of property, plant and equipment


-


38


55

Sale of investment property


-


20,415


36,568

(Increase)/decrease in loans and advances


(752)


109


347

(Increase)/decrease in deposits invested with banks


(145,242)


18,557


(110,150)

Net cash outflow from sale of subsidiaries


-


-


(12,396)








Net cash (used in)/generated from investing activities


(14,436)


18,887


(21,759)










 

Cash flows from financing activities







Ordinary and preference dividends paid


(7,742)


(6,987)


(11,012)

Dividends paid to non-controlling interests


(80)


-


-

Proceeds of re-issue of ordinary shares


25


-


80

Decrease in borrowings


-


(698)


(1,111)








Net cash used in financing activities


(7,797)


(7,685)


(12,043)








Net (decrease)/increase in cash and cash equivalents


 

(12,248)


 

5,238


 

(1,056)

Cash and cash equivalents at the beginning of the period


 

35,658


 

36,714


 

36,714

Effect of foreign exchange rate changes


-


(40)


-








Cash and cash equivalents at the end of the period


 

23,410


 

41,912


 

35,658



 

FBD HOLDINGS PLC

 

Condensed Consolidated Statement of Changes in Equity (UNAUDITED)

For the half year ended 30 June 2012

 

 


Ordinary share capital

Capital reserves

Revaluation and other reserves

Translation reserve

Retained earnings

Attributable  to ordinary shareholders

Preference share capital

Non-controlling interests

Total equity


€000s

€000s

€000s

€000s

€000s

€000s

€000s

€000s

€000s











Balance at 1 January 2011

21,409

15,313

742

(98)

144,757

182,123

2,923

2,053

187,099











Profit after taxation

-

-

-

-

17,827

17,827

-

(50)

17,777

Other comprehensive income

-

-

-

289

-

289

-

-

289





















Total comprehensive income for the period

 

21,409

 

15,313

 

742

 

191

 

162,584

 

200,239

 

2,923

 

2,003

 

205,165

 

Recognition of share based payments

 

-

 

302

 

-

 

-

 

-

 

302

 

-

 

-

 

302

Dividends paid on ordinary shares

-

-

-

-

(6,987)

(6,987)

-

-

(6,987)





















Balance at 30 June 2011

21,409

15,615

742

191

155,597

193,554

2,923

2,003

198,480












Balance at 1 January 2012

21,409

15,927

-

-

172,596

209,932

2,923

458

213,313











Profit after taxation

-

-

-

-

19,362

19,362

-

50

19,412











Total comprehensive income for the period

 

21,409

 

15,927

 

-

 

-

 

191,958

 

229,294

 

2,923

 

508

 

232,725











Recognition of share based payments

-

242

-

-

-

242

-

-

242

Re-issue of ordinary shares

-

-

-

-

25

25

-

-

25

Dividends paid on ordinary shares

-

-

-

-

(7,742)

(7,742)

-

-

(7,742)

Dividends paid to non-controlling interests

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(80)

 

(80)











Balance at 30 June 2012

21,409

16,169

-

-

184,241

221,819

2,923

428

225,170

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

Note 1 - General information

 

The information for the year ended 31 December 2011 does not constitute statutory accounts as defined in Section 19 of the Companies (Amendment) Act 1986.   A copy of the statutory accounts for that year has been delivered to the Register of Companies.   The auditors' report on those accounts was not qualified and did not contain any matters to which attention was drawn by way of emphasis.

 

This half yearly financial report has not been audited or reviewed by the auditors of the Group.

 

 

Note 2 - Accounting policies

 

Basis of preparation

The annual financial statements of FBD Holdings plc are prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union.

 

Comparative figures for the half year ended 30 June 2011 in the Condensed Consolidated Income Statement and relevant notes as indicated have been restated to exclude operations that were sold during 2011.

 

Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than twelve months from the date of this report.  Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

Consistency of accounting policy

The accounting policies and methods of computation used by the Group to prepare the interim financial statements for the six month period ended 30 June 2012 are the same as those used to prepare the Group Annual Report for the year ended 31 December 2011 except as described below. 

 

The following new and revised Standards and Interpretations have been adopted in these financial statements in the current period:

 

Amendments to IFRS 7: Disclosures - Transfers of Financial Assets

Amendments to IAS 12: Deferred Tax: Recovery of Underlying Assets

 

The adoption of these standards has not had any significant impact on the amounts reported in this interim report.

 

Critical accounting estimates and judgements in applying accounting policies.

The critical accounting estimates and judgements used by the Group in applying accounting policies are the same as those used to prepare the Group Annual Report for the year ended 31 December 2011.  While there have been some changes in estimates of amounts in the current financial period, these changes do not have a significant impact in the results for the period.

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

Note 3 - Longer term investment return


Half year
ended
30/06/12

(unaudited)


Half year ended 30/06/11

(unaudited)


Year

ended 31/12/11 (audited)


€000s


€000s


€000s







Longer term investment return

14,392


15,737


30,510







Investment return fluctuations

(2,436)


(5,566)


(5,060)







Actual investment return

11,956


10,171


25,450

 






 

The rates of investment return underlying the calculation of the longer term investment return are set out below.  These rates are reviewed annually and reflect both historical experience and the Directors' current expectations for investment returns.

 


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)


%


%


%







Government bonds - available for sale

3.00


4.00


4.00







Government bonds - held to maturity

Actual rates


Actual rates


Actual rates







Listed corporate bonds - available for sale

4.00


-


-

 






Quoted shares

6.75


6.75


6.75







Deposits with banks

3.00


3.00


3.00







Investment properties

6.25


6.25


6.25

 

 

Note 4 - Segmental information

 

(a)          Operating segments

 

For management purposes in both 2011 and 2012, the Group is organised in two operating segments - underwriting and financial services.  These two segments are the basis upon which information is reported to the chief operating decision maker, the Group Chief Executive, for the purpose of resource allocation and assessment of segmental performance.  Discrete financial information is prepared and reviewed on a regular basis for these two segments.

 



FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

The principal activities of the Group are underwriting of general insurance business and financial services.

The following is an analysis of the Group's revenue and results from continuing operations by reportable segments:

 

Half Year ended 30/06/2012


Underwriting

Financial
Services


Total


€000s

€000s

€000s





Revenue 

193,139

5,721

198,860





Operating profit

26,095

2,565

28,660

Investment return - fluctuations

(2,436)

-

(2,436)

Restructuring and other costs

(739)

(2,582)

(3,321)

Share of results of joint venture

-

(718)

(718)





Profit/(loss) before tax

22,920

(735)

22,185

Income tax (charge)/credit

(2,865)

92

(2,773)





Profit/(loss) after tax

20,055

(643)

19,412

 

Half Year ended 30/06/2011

 

 

Underwriting

Restated
Financial
Services

 

 

Total


€000s

€000s

€000s





Revenue 

198,390

5,279

203,669





Operating profit

26,484

1,554

28,038

Investment return - fluctuations

(5,566)

-

(5,566)

Impairment of property

(635)

-

(635)





Profit before tax

20,283

1,554

21,837

Income tax (charge)/credit

(2,583)

3

(2,580)





Profit after tax

17,700

1,557

19,257

 

Year ended 31/12/2011


Underwriting

Financial
Services


Total


€000s

€000s

€000s





Revenue 

391,913

10,622

402,535





Operating profit

58,337

4,170

62,507

Investment return - fluctuations

(5,060)

-

(5,060)

Impairment of property

(975)

-

(975)

Restructuring and other costs

(2,656)

(1,069)

(3,725)

Share of results of joint venture

-

(467)

(467)





Profit before tax

49,646

2,634

52,280

Income tax charge

(7,868)

(747)

(8,615)





Profit after tax

41,778

1,887

43,665

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

 

The accounting policies of the reportable segments are the same as the Group accounting policies.  Segment profit represents the profit earned by each segment.  Central administration costs and Directors' salaries are allocated based on actual activity.  Restructuring costs and income tax are direct costs of each segment.  Segment profit is the measure reported to the chief operating decision maker, the Group Chief Executive, for the purposes of resource allocation and assessment of segmental reporting.

 

There has been no material change to the assets by reportable segment from the disclosure in the 2011 Annual Report.

 

(b)          Geographical segments

 

The Group's operations are located in Ireland and the rest of the European Union. The Group's underwriting operation is located in Ireland while its financial services operations are located in Ireland and the rest of the European Union.  The following table provides an analysis of the Group's revenue by geographical market, irrespective of the origin of the services.

 

 

Revenue

 

Half year ended 30/06/12

Restated

half year

ended 30/06/11

 

Year

ended
31/12/11

 

(unaudited)

(unaudited)

(audited)

 

€000s

€000s

€000s

 




Ireland

198,665

203,669

401,503

European Union other than Ireland

195

-

1,032

 




Total revenue

198,860

203,669

402,535

 

 

 

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

Note 5 - Underwriting result


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)

 

€000s


€000s


€000s

 






Gross premium written

174,729


177,486


351,111

 






 






Net premium earned

150,856


149,780


301,952

Net claims incurred

(100,941)


(103,207)


(201,123)

 






 

49,915


46,573


100,829

 






Gross management expenses

(41,203)


(39,722)


(82,593)

Deferred acquisition costs

150


164


1,668

Reinsurers share of expenses

4,497


5,256


10,631

Broker commissions payable

(1,656)


(1,524)


(2,708)

 






Net operating expenses

(38,212)


(35,826)


(73,002)

 






Underwriting result

11,703


10,747


27,827

 






Longer-term investment return

14,392


15,737


30,510

 






Operating profit before tax

26,095


26,484


58,337

 

The Group's half yearly results are not subject to any significant impact arising from the seasonality or cyclicality of operations.

 

 

Note 6 - Dividends


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)


€000s


€000s


€000s

Paid in Period:






2011 Interim dividend of 11.25 cent per share on ordinary shares of €0.60 each

 

-


 

-


 

3,743

2011 Final dividend of 23.25 cent (2010: 21.0 cent) per share on ordinary shares of €0.60 each

 

7,742


 

6,987


 

6,987

Dividend of 8.4 cent per share on 14% non-cumulative

Preference shares of €0.60 each

 

-


 

113


 

113

Dividend of 4.8 cent per share on 8% non-cumulative preference shares of €0.60 each

 

-


 

169


 

169








7,742


7,269


11,012









 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)


€000s


€000s


€000s

Approved but not paid:






2010 Dividend of 4.8 cent per share on 8% non-cumulative preference shares of €0.60 each

 

169


 

-


 

169

2011 Dividend at 8.4 cent per share on 14% non-cumulative preference shares of €0.60 each

 

113


 

-


 

113








282


-


282

Proposed:






2011 Dividend of 4.8 cent per share on 8% non-cumulative preference shares of €0.60 each

 

169


 

169


 

169

2011 Final dividend of 23.25 cent per share on ordinary shares of €0.60 each

 

-


 

-


 

7,742

2012 Interim dividend of 12.25 cent (2011: 11.25 cent) per share on ordinary shares of €0.60 each

 

4,080


 

3,743


 

-








4,249


3,912


7,911

 

 

Note 7 - Ordinary share capital


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)


Number


€000s


€000s


€000s

(i)  Ordinary shares of €0.60 each
















Authorised:








At beginning and end of period

51,326,000


30,796


30,796


30,796

















Issued and fully paid:








At beginning and end of period

35,461,206


21,277


21,277


21,277









(ii)  'A' Ordinary shares of €0.01 each
















Authorised:








At beginning and end of period

120,000,000


1,200


1,200


1,200









Issued and fully paid:








At beginning and end of period

13,169,428


132


132


132









Total Ordinary share capital



21,409


21,409


21,409

 

The number of ordinary shares of €0.60 each held as treasury shares at 30 June 2012 was 2,154,312.

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

Note 8 -Earnings per 60 cent ordinary share

a) The calculation of the basic and diluted earnings per share attributable to the ordinary shareholders is
     based on the following data:

 


 

Half year
ended
30/06/12 (unaudited)


Restated
half year ended 30/06/11 (unaudited)


 

Year

ended 31/12/11 (audited)


€000s


€000s


€000s

Earnings






Profit for the period

19,412


17,777


51,027

Non-controlling interests

(50)


50


69

Preference dividend

-


-


(282)







Profit for the purpose of basic and diluted






earnings per share

19,362


17,827


50,814







Adjustments to exclude loss/(profit) for the period from discontinued operations

 

-



1,480


 

(7,362)

Adjustments to exclude non-controlling interests for the period from discontinued operations

 

-


 

(80)


 

(107)







Earnings from continuing operations for the purpose of basic and diluted earnings per share excluding discontinued operations

 

 

19,362


 

 

19,227


 

 

43,345







Number of shares

30/06/12

3

30/06/11


31/12/11

Weighted average number of ordinary shares for






the purpose of basic earnings per share

33,300,795


33,269,476


33,296,894

Effect of dilutive potential of share options






outstanding

225,221


162,474


148,206







Weighted average number of ordinary shares for






the purpose of diluted earnings per share

33,526,016


33,431,950


33,445,100







From continuing operations

Cent


Cent


Cent

Basic earnings per share

58


58


130

 






Diluted earnings per share

58


58


130







From continuing and discontinued operations






Basic earnings per share

58


54


153







Diluted earnings per share

58


53


152

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

Note 8 -Earnings per 60 cent ordinary share (continued)

 

 

 

The 'A' ordinary shares of €0.01 each that are in issue have no impact on the earnings per share calculation.

 

b) The calculation of the operating earnings per share, which is supplementary to the requirements of International Financial Reporting Standards, is based on the following data:

 


 

Half year
ended
30/06/12 (unaudited)


Restated
half year ended 30/06/11 (unaudited)


 

Year

ended 31/12/11 (audited)


€000s


€000s


€000s

Earnings






Operating profit after taxation*

25,106


25,139


56,852

Non-controlling interests

(50)


50


69

Preference dividend

-


-


(282)








25,056


25,189


56,639







Adjustments to exclude operating profit and non-controlling interests for the period from discontinued operations

 

-


 

(657)

 

 

 

(2,203)








25,056


24,532


54,436








Cent


Cent


Cent

Operating earnings per share - continuing operations

75


74


164

Operating earnings per share - from continuing and discontinued operations


75



76



170








* Effective tax rate of 12.4%.



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

Note 9 - Capital commitments

 


Half year ended 30/06/12 (unaudited)


Half year ended 30/06/11 (unaudited)


Year

ended 31/12/11 (audited)


€000s


€000s


€000s

Capital commitments at period end authorised by






the Directors but not provided for in the financial   






statements:






Contracted for

-


-


-







Not contracted for

19,000


-


-

 

 

The capital commitments authorised by the Directors but not contracted for at 30 June 2012 relates to an investment in the underwriting policy administrative system to be undertaken over a three to four year period.

 

 

Note 10 - Retirement benefit obligation

 

A review of retirement benefit obligations concluded that no significant movements have occurred since 31 December 2011.

 

 

Note 11 - Transactions with related parties

 

Farmer Business Developments plc has a substantial shareholding in the Group at 30 June 2012.


During 2011 a joint venture was formed between the Group and Farmer Business Developments plc to own and manage the hotel and golf assets previously 100% owned by the Group.  Further details on this joint venture are disclosed in the 2011 Annual Report.  As part of the establishment of the joint venture, a loan of €7,500,000, guaranteed by FBD Holdings plc, was provided to the joint venture by Farmer Business Developments plc.


Included in the financial statements at the period end is €209,794 (2011: €41,230) due on demand from Farmer Business Developments plc. This balance is made up of recharges for services provided, and recoverable costs and interest.  Interest on any overdue balance is charged at the market rate.

 

For the purposes of the disclosure requirements of IAS 24, the term "key management personnel" (i.e. those persons having authority and responsibility for planning directing and controlling the activities of the Group) comprises the Board of Directors.  Full disclosure in relation to the 2011 compensation of the Board of Directors and details of Directors' share options are provided in the Report on Directors' Remuneration in the 2011 Annual Report.

 

 

Note 12 - Contingent liabilities and contingent assets

 

There were no contingent liabilities or contingent assets at 30 June 2012, 30 June 2011 or 31 December 2011.

 

 



 

FBD HOLDINGS PLC

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

For the half year ended 30 June 2012

 

 

 

 

Note 13 - Approval of Half Yearly Report

 

The half yearly report was approved by the Board of Directors of FBD Holdings plc on 27 August 2012.

 

 

Note 14 - Information

 

This half yearly report along with the Annual Report for the year ended 31 December 2011 are available on the Company's website at www.fbdgroup.com.

 

 

RESPONSIBILITY STATEMENT

 

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Transparency (Directive 2004/109/EC) Regulations 2007, the related Transparency Rules of the Irish Financial Services Regulatory Authority and with IAS 34, Interim Financial Reporting as adopted by the European Union.

 

We confirm that to the best of our knowledge:

a)    the Group condensed set of interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union;

b)    the interim management report includes a fair review of the important events that have occurred during the first six months of the financial year, and their impact on the condensed set of interim financial statements and the principal risks and uncertainties for the remaining six months of the financial year;

c)    the interim management report includes a fair review of related party transactions that have occurred during the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and any changes in the related parties' transactions described in the last Annual Report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.

 

 

On behalf of the Board

 

 

 

 

 

Michael Berkery                                     Andrew Langford           

Chairman                                              Group Chief Executive

 

27 August 2012


This information is provided by RNS
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