Ecclesiastl.8fe Regulatory News (ELLA)

22 Mar 2006 15:42

Ecclesiastical Insurance Office PLC22 March 2006 ECCLESIASTICAL INSURANCE OFFICE PLC PRELIMINARY ANNOUNCEMENT OF RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 ------------------------------------------------------------------------------------------------------------- The financial statements within this preliminary announcement have been prepared in accordance with International Financial Reporting Standards (IFRS). Gross written premiums from general and long term business operations amounted to £361.7m (2004: £359.9m). Within the total, general insurance written premiums have increased by 0.8%, reversing the decline of 2.2% in 2004. Premium growth was constrained by increased competition and by the continued impact of the realignment of the business written by our branch in Canada. Gross written premiums from long term operations fell by 5.3% reflecting a trend towards increasing proportions of sales of Open Ended Investment Company (OEIC) investment products (which are not recognised within premium income). Overall net investment return totalled £108.6m, up £38.9m on prior year. Continuing growth in global equity markets was the primary contributor to fair value gains of £61.4m, an increase of £30.9m on the previous year. Strong operating cash flow helped total investment income rise to £47.2m, £8.0m higher than in the prior year. Group profit before tax rose to £101.1m, up £29.6m on the prior year. General business operations contributed £92.6m (2004: £71.1m) to this result. Underwriting profits, which form part of the general business profit before tax result, were £38.3m, down from £40.9m in 2004. This profit was achieved despite a rise in the number and cost of large individual losses and a higher frequency of weather-related incidents. Profit before tax from long term business amounted to £6.5m after a £1.7m loss in 2004. Current year results were aided by a £2.0 million profit from actuarial valuation basis and methodology changes. Other operations, which include the results of activities that are not related to core business segments, contributed £2.0m (2004: £2.1m) to group profit before tax. Profit after taxation amounted to £72.0m (2004: £48.7m). The continuation of the positive trend in financial performance enabled the Board to approve an increased grant (before tax relief) of £5.4m (2004: £4.9m) to Allchurches Trust, the ultimate parent undertaking of the group. Strong profitability, together with the net proceeds of £22.4m from the issue in April 2005 of 19 million 8.625% Non-Cumulative Irredeemable Preference shares, enabled shareholders' equity to rise to £301.5m (2004: £208.7m). On 20th December 2005, Standard & Poor's Rating Services raised the company's long term counterparty credit and insurer financial strength rating to A-. The Directors recognise the increased levels of competition in general insurance but remain positive about the financial prospects for the current year. Graham Doswell Group Chief Executive CONSOLIDATED INCOME STATEMENT For the year ended 31 December 2005 2005 2004 £000 £000 Net earned premiums 241,509 242,076 Fees and commission income 38,279 36,973 Net investment return 108,564 69,661 ------------ ------------ Total revenue 388,352 348,710 ------------ ------------ Claims and change in insurance liabilities (180,252) (200,468) Reinsurance recoveries 36,537 53,755 Fees, commissions and other acquisition costs (66,230) (68,237) Other operating and administrative expenses (46,699) (46,951) Change in provisions for investment contract liabilities (6,992) (4,702) Change in net asset value attributable to unitholders (7,340) (4,593) ------------ ------------ Total operating expenses (270,976) (271,196) ------------ ------------ Operating profit 117,376 77,514 Finance costs (765) (2,499) Transfers to the unallocated divisible surplus (15,541) (3,524) ------------ ------------ Profit before income tax 101,070 71,491 United Kingdom income tax expense (26,234) (20,091) Overseas income tax expense (2,827) (2,714) ------------ ------------ Profit for the financial period attributable to equity 72,009 48,686 holders ------------ ------------ CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the year ended 31 December 2005 2005 2004 £000 £000 Net fair value gains on property 83 84 Gain/(loss) on currency translation differences 3,769 (26) ------------ ------------ Net income recognised directly in equity 3,852 58 Profit for the period after income tax 72,009 48,686 ------------ ------------ Total recognised income and expense for the year 75,861 48,744 ------------ ------------ CONSOLIDATED BALANCE SHEET At 31 December 2005 2005 2004 £000 £000 Assets Goodwill and other intangible assets 4,710 5,513 Deferred acquisition costs 29,121 28,601 Deferred tax assets 1,480 1,005 Pension assets 17,316 12,471 Property, plant and equipment 9,047 7,339 Investment property 29,959 22,643 Financial investments 814,945 673,392 Reinsurers' share of contract provisions 150,553 153,023 Current tax recoverable 1,129 569 Other assets 79,252 75,974 Cash and cash equivalents 169,301 172,193 ------------ ------------ Total assets 1,306,813 1,152,723 ------------ ------------ Equity Share capital 76,977 55,277 Share premium account 3,792 352 Retained earnings and other reserves 220,741 153,117 ------------ ------------ Total shareholders' equity 301,510 208,746 ------------ ------------ Liabilities Insurance contract provisions 768,639 745,165 Investment contract liabilities 48,846 42,219 Unallocated divisible surplus 29,706 14,164 Borrowings 1,573 4,443 Provisions for other liabilities and charges 5,422 5,013 Retirement benefit obligations 7,103 5,986 Deferred tax liabilities 42,259 29,747 Current tax liabilities 7,607 9,459 Deferred income 15,187 14,366 Other liabilities 30,088 36,764 Net asset value attributable to unitholders 48,873 36,651 ------------ ------------ Total liabilities 1,005,303 943,977 ------------ ------------ ------------ ------------ Total shareholders' equity and liabilities 1,306,813 1,152,723 ------------ ------------ CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2005 2005 2004 £000 £000 Net cash from operating activities 69,614 74,740 Cash flows from investing activities Purchases of property, plant and equipment (2,990) (1,221) Proceeds from the sale of property, plant and equipment 75 91 Purchases of intangible assets (1,283) (1,137) Purchases of financial investments and investment (268,445) (200,305) property Sale of financial investments and investment property 187,815 206,720 ------------ ------------ Net cash (used in)/from investing activities (84,828) 4,148 ------------ ------------ Cash flows from financing activities Proceeds from the issue of equity shares 22,440 - Repayment of finance lease liabilities (429) (444) Repayment of other borrowings (3) - Dividends paid to company's shareholders (4,797) (3,266) Donations paid to ultimate parent undertaking (8,250) (4,250) ------------ ------------ Net cash from/(used in) financing activities 8,961 (7,960) ------------ ------------ ------------ ------------ Net (decrease)/increase in cash and cash equivalents (6,253) 70,928 ------------ ------------ Cash and cash equivalents at beginning of year 172,193 103,507 Exchange gains/(losses) on cash and cash equivalents 3,361 (2,242) ------------ ------------ Cash and cash equivalents at end of year 169,301 172,193 ------------ ------------ NOTES TO THE PRELIMINARY ANNOUNCEMENT OF RESULTS For the year ended 31 December 2005 1. Basis of preparation The company has prepared this preliminary announcement using the same accounting policies and methods of computation as the International Financial Reporting Standards (IFRS) transitional information published in September 2005, except as disclosed in note 2. This transitional information also contained reconciliations of the opening and closing balance sheets and financial information for the 2004 comparatives used in this announcement, which are also included in the full financial statements for the year ended 31 December 2005. 2. Accounting policies and presentational changes to previously published information Since publishing the group impact of adopting IFRS in September 2005, the following changes have been made: Recognition of charitable grants to the ultimate parent undertaking Previously these were included as an expense in the income statement. However, such grants are now considered to be an appropriation of profit as they represent a transaction with equity shareholders. As such, the amounts, net of tax relief, are presented as a distribution of reserves. As a result, expenses decrease by £4,900,000 and profit after tax increases by £3,430,000 for the year ended 31 December 2004. This adjustment has no impact on shareholders' equity. Other presentational adjustments In addition, the following presentational changes have been made, which have no impact on shareholders' equity, revenue, expense or profit after tax: Income previously presented as other operating income is more appropriately presented as fee and commission income. Acquisition costs, previously included in other operating and administrative expenses, have been reclassified to fees, commissions and other acquisition costs. 3. Dividends 2005 2004 £000 £000 Ordinary • interim declared 0.292p per share (2004: 0.292p per share) 410 410 10 per cent Redeemable Second Cumulative Preference • paid in the year 150 300 8.625 per cent Non-Cumulative Irredeemable Preference • paid in the year 4,797 2,856 On 19 April 2005 the 25,000,000 unissued Sterling Preference shares of £1 each were redesignated as 8.625% Non-Cumulative Irredeemable Preference shares of £1 each. On the same date the issued share capital of the company wasincreased by the allotment of 19,000,000 8.625% Non-Cumulative Irredeemable Preference shares of £1 each. On 28 July 2005 all 3,000,000 of the issued 10% Redeemable Preference shares of £1 each were redesignated into 8.625%Non-Cumulative Irredeemable Preference shares of £1 each and Redeemable Deferred shares of £1 each in the ratio of nine8.625% Non-Cumulative Irredeemable Preference shares and one Redeemable Deferred share for every ten 10% Redeemable Second Cumulative Preference shares of £1 held. On the same date the Redeemable Deferred Shares of £1 each wereredeemed. The dividend on the 10% Redeemable Second Cumulative Preference shares is treated as a finance cost within the incomestatement in accordance with IFRS principles. The directors do not recommend a final dividend on the ordinary shares for the year ended 31 December 2005 (2004: £nil). 4. Statement of changes in equity 2005 2004 £000 £000 Opening shareholders' equity 208,746 149,195 Total recognised income and expense for the year 75,861 48,744 Dividends payable (5,207) (3,266) Charitable grant to ultimate parent undertaking, net of tax (3,745) (3,430) Redesignation of preference share liabilities into share 2,700 16,250 capital Premium on redesignation of preference shares 715 1,253 Shares issued 22,440 - Closing shareholders' equity 301,510 208,746 5. General information The financial information set out above does not constitute the company's statutory accounts for the year ended 31 December 2005 or 2004. Whilst the financial information included in this preliminary announcement has been computed in accordance with International Financial Reporting Standards (IFRS), this announcement does not itself contain sufficient information to comply with IFRS. Full financial statements that comply with IFRS were approved by the Board of Directors on 22 March 2006 and are expected to be published in April 2006. The statutory accounts for 2005 will be delivered to the Registrar of Companies shortly. The auditors have reported in accordance with s.235 of the Companies Act 1985 on the statutory accounts for 2004 and 2005; their reports were unqualified and did not contain statements under s.237(2) or (3) of the Companies Act 1985. This announcement was approved at a meeting of the Board of Directors held on 22 March 2006. Ecclesiastical Insurance Office plc is a subsidiary of Ecclesiastical Insurance Group plc which is an investment holding company whose ordinary shares are not listed. The ordinary shares of Ecclesiastical Insurance Office plc are not listed. Copies of the audited financial statements are available from the secretary. This information is provided by RNS The company news service from the London Stock Exchange