Final Results

FBD Holdings PLC 05 March 2003 PRELIMINARY ANNOUNCEMENT RESULTS FOR THE YEAR ENDED 31ST DECEMBER 2002 2002 2001 HIGHLIGHTS €000's €000's • Gross premiums written 325,809 247,959 +31.4% • Operating profit 37,531 30,184 +24.3% cent cent • Operating earnings per share 75.34 59.59 +26.4% • Dividend per share 22.00 19.50 +12.8% • Net assets per share 510.13 485.51 +5.1% Commenting on the results, Paul O'Callaghan, Chief Executive, stated: 'Strong performances across all areas of Group activity have produced excellent operating results. Gross premium written increased by 31.4 per cent to €325.8m, reflecting the competitiveness of our product offerings in the market. Operating profit and earnings have grown strongly following an improved underwriting performance. After years of substantial losses, motor underwriting appears to have benefited from the positive initiatives introduced by the Industry and the Government. We are confident of strengthening and consolidating all of our businesses further in the current year.' ENDS 5th March 2003 For Reference Telephone No. FBD Paul O'Callaghan, Chief Executive Philip Fitzsimons, Deputy Chief Executive 01 409 3200 Murray Consultants Joe Murray/ 01 498 0300 Geraldine Kearney FBD HOLDINGS PLC PRELIMINARY ANNOUNCEMENT FBD Holdings plc announces a 24 per cent increase in Operating Profits at €37.5m for the year ended December 31st, 2002, compared with €30.2m in the previous year. This improvement was helped by a reduction in Underwriting Losses which fell from €15.1m to €5.3m. This is reflected in an increase in profit on the technical insurance account from €9.7m in 2001 to €22.0m in the year ended December 2002. The latter account also benefited from an increase in attributable investment income, up €2.5m at €27.3m Gross premiums written increased by 31.4 per cent to €325.8m. This substantial growth reflects strong flows of new business from the small to medium sized business sector and from the home insurance market. Operating earnings per share rose by 26.4 per cent to 75.34c. A final dividend of 12.9c per share is being recommended which combined with the interim dividend amounts to 22c, up 12.8% on 2001. Insurance Underwriting Underwriting losses reduced by €9.8m to €5.3m. This arises from a reduction in losses on motor of €12.1m to €10.2m and a €3.4m improvement in the contribution from property. The reduction in motor losses is encouraging against a background of losses totalling €93.8m in the previous 5 years. Liability underwriting losses continued to increase, rising €3.3m. FBD's experience in motor reflects the positive impact of the initiatives introduced by both the Insurance Industry and the Government to tackle the underlying causes of poor underwriting results. This trend must continue to achieve any long term effect on motor underwriting performance. With investment returns unlikely to revert to historic highs, the focus on lowering the claims loss ratio will continue. Other Financial Services The contribution of the Group's other financial services businesses, which include FBD Brokers, Abbey Finance, FBD Securities, FBD Life and FBD IFSC, amounted to €3.3m., an increase of 32% on 2001. A feature of the past year was the success of FBD Brokers in overcoming some of the difficulties which underwriting capacity shortfalls created for all brokers of large industrial, commercial and corporate risks. Property/Leisure The Group's property and hotels/leisure division added €9.0m. (€10.1m. in 2001) to the year's profits. This division includes the Tower Hotel Group in Ireland and in Spain, Sunset Beach Hotel and La Cala Resort, in addition to property development interests in Ireland and abroad. In September 2002 the Group increased its shareholding in the Tower Hotel Group from 50% to 75%. Accordingly, the Tower's post acquisition results have been consolidated into the Group's figures for the year. The completion and hand over of 60 Los Altos apartments at La Cala is scheduled for the first half of 2003 Balance Sheet Total assets at year end exceeded €1bn., having grown by 23.9% from €877.9m. to €1,087.8m. Ordinary shareholders' funds amounted to €208.9m. compared to €202.0m. at the end of 2001. The growth in shareholders' funds has been set back by the fall in equity values, despite the Group's strong operating performance. The buy-back of Company shares in the open market also reduced shareholder net equity by €3.6m. However, the share buy-back enhanced the net asset value of the remaining shares. Net asset value per share was 510.13 cent at year-end. Dividend The excellent results enabled the Company to maintain its dividend growth policy and accordingly, the Board is recommending a final dividend of 12.9 cent per share. It will be paid on 2nd May 2003 to shareholders on the Company's Register at the close of business on 14th March 2003. The final dividend is subject to withholding tax (DWT) except for shareholders who are exempt from DWT and have furnished a properly completed Composite Resident Form to the Company's Register. Together with the interim dividend of 9.10 cent, the total dividend per share amounts to 22.0 cent, an increase of 12.8%. Outlook The Group continues to make significant progress in the current year and is performing in line with targets. The trend towards improved underwriting results, which emerged in 2002, augurs well for the future. However, this is dependent on there being no repetition within the industry of the unwarranted price cutting which occurred in past cycles, to the ultimate detriment of insurers and customers. FBD is committed to controlling costs as an essential element in keeping premium increases to the economic minimum. Price stabilisation of motor insurance will depend on a continuance of the positive experience, which has followed the introduction of the penalty points system late last year. If the positive trend delivers acceptable loss ratios, it is realistic to hope for reductions in premiums in the short to medium term. An upturn in equity markets is also awaited after the prolonged downward experience. This would benefit results significantly. FBD will strengthen and consolidate further all of its businesses in the coming year and is confident of maintaining its profitable growth record into the future. FBD Update Insurance • Key areas for continued growth for FBD Insurance will include: • The Dublin market and larger urban centres where we now have an increased presence. • Small to medium sized businesses all around the country. • The home insurance market where we are competitively priced. • At year end, FBD employed 1,550 staff. Of these, 750 were employed in insurance/financial services and the remainder employed in property/hotels/ leisure, in Ireland and abroad. • FBD Insurance, with 50 branch offices nationwide, has the largest direct distribution network of any insurer in Ireland. New premises in Drogheda and Tralee are planned for 2003. • The Dublin business unit of FBD Insurance has established itself as one of the leading providers of insurance to SMEs in Dublin city. The unit currently has 7 customer service executives in the field and plans are in hand to expand the team. • Diversification of FBD's customer base continued in 2002. Commercial business represented 50% of premium income, with agri-related business and home insurance representing 38% and 12% respectively. • The IT networking of FBD's branch offices is now fully completed and has enhanced the service we deliver to customers. Further developments designed to maintain our reputation for personalised customer care are being undertaken. Property/Leisure • The Tower Hotel, Waterford, has undergone a major refurbishment programme over the past eighteen months. • At Faithlegg House Hotel in Co. Waterford, major improvements to its 18 hole championship golf course were completed. • At La Cala Resort on the Costa del Sol, work has commenced on the latest residential building project - the Colinas del Golf 32 unit, villa and townhouse development. • Development of a third golf course at La Cala is proceeding according to plan. The first 9 holes will be playable in October of this year, with the remaining 9 holes scheduled to be available in October 2004. • The final phase of a major renovation programme at Sunset Beach Hotel in Benalmadena, Spain, was completed during the year and has attracted increased interest from golf groups and families in Ireland and elsewhere. GROUP PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST DECEMBER 2002 2002 2001 €000's €000's Turnover 421,612 342,604 ====== ====== Balance on the technical account - general business 22,015 9,667 Longer term investment return 30,293 27,878 Allocated investment return transferred to the general business technical account (27,281) (24,755) Other income 12,667 17,770 Other charges (163) (376) _______ _______ Operating profit Note 1 37,531 30,184 Short term fluctuations in investment return (12,356) (1,502) _______ _______ Profit before taxation 25,175 28,682 Taxation (4,206) (2,815) _______ _______ Profit after taxation 20,969 25,867 Minority interests (627) (323) _______ _______ Profit after taxation and minority interests 20,342 25,544 Dividends (9,243) (8,413) _______ _______ Retained profit 11,099 17,131 ====== ====== Cent Cent Operating earnings per 60c ordinary share based on longer term investment return 75.34 59.59 ====== ====== Earnings per 60c ordinary share 48.76 60.47 ====== ====== Dividend per 60c ordinary share 22.00 19.50 ====== ====== Net assets per 60c ordinary share 510.13 485.51 ====== ====== Note 1 - Operating profit by activity €000's €000's Insurance/Reinsurance 25,340 17,635 Financial services 3,258 2,460 Property and Hotels/Leisure 8,933 10,089 _______ _______ 37,531 30,184 ====== ====== GROUP BALANCE SHEET AS AT 31ST DECEMBER 2002 2002 2001 €000's €000's ASSETS Investments 938,688 765,884 Reinsurers' share of technical provisions 67,204 37,461 Debtors 41,790 35,509 Other assets 20,973 17,195 Prepayments and accrued income 19,153 21,892 __________ __________ TOTAL ASSETS 1,087,808 877,941 LIABILITIES Technical provisions (736,083) (594,957) Provision for other risks and charges (11,671) (13,320) Creditors (113,695) (59,821) __________ __________ NET ASSETS 226,359 209,843 ======== ======== CAPITAL AND RESERVES Ordinary share capital 25,125 25,090 Share premium 5,367 5,266 Reserves 178,436 171,667 _________ _________ ORDINARY SHAREHOLDERS' FUNDS 208,928 202,023 Preference share capital 2,923 2,923 Minority interests 14,508 4,897 _________ _________ 226,359 209,843 ======== ======== GROUP CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER 2002 2002 2001 €000's €000's Net cash inflow from operating activities 167,139 103,895 Dividends paid (8,704) (7,879) Corporation tax paid (6,148) (6,587) Capital expenditure (1,814) (5,395) Financing (3,129) (821) _________ ________ 147,344 83,213 ======== ======= Cash flows were invested as follows (Decrease) increase in cash holdings (3,860) 2,842 _________ ________ Acquisition of subsidiary 9,000 - _________ ________ Net portfolio investment Quoted shares 27,643 (18,737) Quoted debt securities (207,331) 113,652 Unquoted shares 2,565 1,757 Deposits with banks 270,536 (33,984) Loans and advances 32,889 (2,579) Land and property 15,902 20,262 _________ ________ 142,204 80,371 _________ ________ Net investment of cash flows 147,344 83,213 ======== ======= STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES FOR THE YEAR ENDED 31ST DECEMBER 2002 2002 2001 €000's €000's Retained profit 11,099 17,131 Exchange translation adjustment (717) 274 __________ ________ Total recognised gains relating to the year 10,382 17,405 Prior year adjustment - 20,475 __________ ________ Total gains and losses recognised since annual report for year ended 31st December 2001 10,382 37,880 ======== ======= RECONCILIATION OF MOVEMENT IN ORDINARY SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 31ST DECEMBER 2002 2002 2001 €000's €000's Profit after taxation and minority interests 20,342 25,544 Less: preference dividends (282) (282) _______ ________ 20,060 25,262 Dividends (8,961) (8,131) New share capital issued 136 68 Adjustment on renominalisation of preference share capital - 170 Other recognised (losses) gains (717) 274 Repurchase of ordinary shares (3,613) (889) _______ ________ Net addition to shareholders' funds 6,905 16,754 Ordinary shareholders' funds at beginning of year as originally reported 202,023 164,794 Prior year adjustment - 20,475 _______ ________ Ordinary shareholders' funds at end of year 208,928 202,023 ====== ======= TECHNICAL RESULT BY CLASS OF BUSINESS YEAR ENDED 31ST DECEMBER 2002 Net Earned Net Claims Net Op Underwriting Allocated Technical Premiums Incurred Expenses Result Inv Income Result €000's €000's €000's €000's €000's €000's Direct insurance Motor 144,041 (136,060) (18,154) (10,173) 17,040 6,867 Liability 53,456 (59,202) (8,111) (13,857) 8,121 (5,736) Fire & Property 39,273 (22,729) 1,592 18,136 1,920 20,056 Other 3,555 (2,542) (385) 628 200 828 _______ ________ _______ ________ ________ _______ Total direct insurance 240,325 (220,533) (25,058) (5,266) 27,281 22,015 ====== ======= ====== ======= ======= ====== YEAR ENDED 31ST DECEMBER 2001 Net Earned Net Claims Net Op Underwriting Allocated Technical Premiums Incurred Expenses Result Inv Income Result €000's €000's €000's €000's €000's €000's Direct insurance Motor 120,448 (124,687) (18,040) (22,279) 15,050 (7,229) Liability 36,295 (40,643) (6,173) (10,521) 6,839 (3,682) Fire & Property 32,760 (17,804) (202) 14,754 1,633 16,387 Other 3,152 (1,977) (371) 804 180 984 _______ ________ _______ ________ ________ _______ Total direct insurance 192,655 (185,111) (24,786) (17,242) 23,702 6,460 Reinsurance acceptances 209 2,129 (184) 2,154 1,053 3,207 _______ ________ _______ ________ ________ _______ Total 192,864 (182,982) (24,970) (15,088) 24,755 9,667 ====== ======= ====== ======= ======= ====== This information is provided by RNS The company news service from the London Stock Exchange

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