Ecclesiastl.8fe Regulatory News (ELLA)

5 Sep 2006 16:04

Ecclesiastical Insurance Office PLC05 September 2006 ECCLESIASTICAL INSURANCE OFFICE PLC INTERIM ANNOUNCEMENT OF RESULTS FOR THE PERIOD ENDED 30 JUNE 2006 INTERIM REPORT The Interim Report has been prepared in accordance with International Financial Reporting Standards (IFRS). Net earned premiums relating to general insurance and long term business products increased by 2.8% to £121.9m (2005: £118.5m). General Insurance premiums increased by 3.3% to £115.6m (2005: £111.9m) as the result of a reduction in premiums ceded to reinsurers and business growth. Total net investment return was £26.0m (2005: £45.7m). The fall in net investment return arose as a result of the less favourable stock market environment and increased bond yields leading to fair value losses in 2006. Total investment income increased by 4.1% to £24.3m. Group profit before tax was £27.8m. The reduction on the prior period profit of £44.3m is mainly attributable to the fall in net investment return. General business operations contributed £27.6m (2005: £40.4m) to group profit before tax. Underwriting profits included in this figure were £16.4m, down slightly on the prior period (2005: £17.7m). A break-even result has been consolidated in group profit before tax from Ecclesiastical Life (2005: £3.8m profit). New business sales in financial services were up by 11% on the industry standard measure (2005: 24%). Profit after tax was £19.3m (2005: £31.2m). The continued profitability produced an increase in shareholders' equity to £313.0m (31 December 2005: £301.5m) after payment of an additional grant of £2.1m, net of tax relief, to Allchurches Trust Limited, the ultimate parent undertaking. Shareholders' equity at the end of the interim prior period, 30 June 2005, was £260.0m. The directors remain positive about the general insurance performance for the current financial year despite continued evidence of price-based competition. Graham Doswell Group Chief Executive ----------------------------------------------------------- CONSOLIDATED SUMMARY INCOME STATEMENT for 6 months to 30 June 2006 30.06.06 30.06.05 6 Months 6 Months (Restated) £000 £000 Revenue Net earned premiums 121,894 118,545 Fees and commission income 15,967 15,686 Net investment return 26,029 45,749 ---------- ---------- Total revenue 163,890 179,980 ---------- ---------- Expenses Claims and change in insurance liabilities (92,306) (81,134) Reinsurance recoveries 21,812 12,474 Fees, commissions and other acquisition costs (32,849) (31,490) Other operating and administrative expenses (25,357) (24,647) Change in provisions for investment contract liabilities (2,385) (2,349) Change in net asset value attributable to unitholders (2,782) (2,837) ---------- ---------- Total operating expenses (133,867) (129,983) ---------- ---------- Operating profit 30,023 49,997 Finance costs (207) (241) Transfers to the unallocated divisible surplus (2,004) (5,430) ---------- ---------- Profit before income tax 27,812 44,326 Income tax expense (8,502) (13,169) ---------- ---------- Profit for the financial period attributable to equity holders of the parent 19,310 31,157 ---------- ---------- All the amounts above are in respect of continuing operations. ----------------------------------------------------------- CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE for 6 months to 30 June 2006 30.06.06 30.06.05 6 Months 6 Months (Restated) £000 £000 (Loss)/gain on currency translation differences (2,491) 1,719 ---------- ---------- Net (expense)/income recognised directly in equity (2,491) 1,719 Profit for the period after income tax 19,310 31,157 ---------- ---------- Total recognised income and expense for the period 16,819 32,876 ---------- ---------- ----------------------------------------------------------- CONSOLIDATED BALANCE SHEET At 30 June 2006 30.06.06 30.06.05 £000 £000 Assets Goodwill and other intangible assets 5,204 4,585 Deferred acquisition costs 30,612 30,058 Deferred tax assets 1,405 1,048 Pension assets 17,883 13,040 Property, plant and equipment 9,493 8,141 Investment property 30,965 23,677 Financial investments 817,049 744,741 Reinsurers' share of contract provisions 156,513 146,165 Current tax recoverable 513 767 Other assets 98,901 97,273 Cash and cash equivalents 194,022 168,389 ---------- ---------- Total assets 1,362,560 1,237,884 ---------- ---------- Equity Share capital 76,977 74,277 Share premium account 3,792 3,792 Retained earnings and other reserves 232,245 181,960 ---------- ---------- Total shareholders' equity 313,014 260,029 ---------- ---------- Liabilities Insurance contract provisions 790,213 756,504 Investment contract liabilities 50,783 44,609 Unallocated divisible surplus 31,710 19,595 Borrowings 1,587 4,421 Provisions for other liabilities and charges 6,144 5,927 Retirement benefit obligations 7,748 6,282 Deferred tax liabilities 43,517 33,248 Current tax liabilities 5,149 10,854 Deferred income 15,724 15,878 Other liabilities 43,674 37,743 Net asset value attributable to unitholders 53,297 42,794 ---------- ---------- Total liabilities 1,049,546 977,855 ---------- ---------- ---------- ---------- Total shareholders' equity and liabilities 1,362,560 1,237,884 ---------- ---------- ----------------------------------------------------------- CONSOLIDATED CASHFLOW STATEMENT for 6 months to 30 June 2006 30.06.06 30.06.05 6 Months 6 Months (Restated) £000 £000 Net cash from operating activities 39,294 28,611 ---------- ---------- Cash flows from investing activities Net purchases of property, plant and equipment (1,145) (1,616) Net purchases of intangible assets (1,174) (446) Net purchases of financial investments and investment property (5,945) (46,722) ---------- ---------- Net cash used in investing activities (8,264) (48,784) ---------- ---------- Cash flows from financing activities Proceeds from the issue of preference shares - 22,440 Payment of finance lease liabilities (208) (374) Dividends paid to company's shareholders (3,624) (2,081) Donations paid to ultimate parent undertaking - (5,100) ---------- ---------- Net cash (used in)/from financing activities (3,832) 14,885 ---------- ---------- ---------- ---------- Net increase/(decrease) in cash and cash equivalents 27,198 (5,288) ---------- ---------- Cash and cash equivalents at the beginning of the period 169,301 172,194 Exchange (losses)/gains on cash and cash equivalents (2,477) 1,483 ---------- ---------- Cash and cash equivalents at the end of the period 194,022 168,389 ---------- ---------- ----------------------------------------------------------- NOTES TO THE INTERIM ANNOUNCEMENT OF RESULTS FOR THE PERIOD ENDED 30 JUNE 2006 1. General Information The group results for the 6 month period to 30 June 2006 and 30 June 2005 are unaudited, but have been reviewed by Deloitte & Touche LLP whose report forms part of this announcement. This announcement was approved by the Board of Directors on 5 September 2006. 2. Accounting Policies The interim report has been prepared in accordance with the recognition and measurement criteria of IFRS and thedisclosure requirements of the Listing Rules. The group has not chosen early adoption of IAS34, Interim Financial Reporting. Prior period restatement The company has prepared this interim report using the same accounting policies and methods of computation as published in the 2005 financial statements. In the 2005 interim statement, the charitable grant to the ultimate parent undertaking was included as an expense in the income statement. However, in the 2005 financial statementsthe company changed its accounting policy such that grants are treated as an appropriation of profit and are presented, net of tax relief, as a distribution of reserves. The profit attributable to equity holders of the parent for the period to 30 June 2005 increases by £1.5m, although there is no impact on shareholders' equity. 3. Movement in Equity 30.06.06 30.06.05 6 Months 6 Months (Restated) £000 £000 Opening equity 301,510 208,745Total recognised income and expense for the period 16,819 32,876Dividends payable (see note 4) (3,215) (2,492)Charitable grant to ultimate parent undertaking, net of tax relief (2,100) (1,540)Increase in share capital - 22,440 ---------- ----------Total equity attributable to shareholders 313,014 260,029 ---------- ---------- 4. Dividends Dividends paid on the 8.625% Non-Cumulative Irredeemable Preference shares amounted to £2.7m (2005: £2.1m). A net interim dividend of 0.357p (2005: 0.292p) per share on the Ordinary share capital was paid on 27 June 2006, amounting to £0.5m (2005: £0.4m). This dividend is paid to the company's immediate holding company, Ecclesiastical Insurance Group plc. 5. Events after the balance sheet date On 27 July 2006 the company made a further issue of 3.5 million 8.625% Non-Cumulative Irredeemable Preference shares for a net consideration of £4.3m. 6. Holding company The ultimate holding company is Allchurches Trust Limited, a company limited by guarantee and a registered charity. -----------------------------------------------------------INDEPENDENT REVIEW REPORT TO ECCLESIASTICAL INSURANCE OFFICE PLC Introduction We have been instructed by the company to review the financial information for the six months ended 30 June 2006which comprises the consolidated summary income statement, the consolidated statement of recognised income and expense, the consolidated balance sheet, the consolidated cashflow statement and related notes 1 to 6. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to stateto them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2006. Deloitte & Touche LLP Chartered Accountants London 5 September 2006 This information is provided by RNS The company news service from the London Stock Exchange