FBH.L Regulatory News (FBH)

22 May 2007 12:01

FBD Holdings PLC22 May 2007 At the Annual General Meeting of FBD Holdings plc being held in Dublin at 12noon today, 22nd May 2007, the Chairman will make the following Address. CHAIRMAN'S ADDRESS As I have stated in our Annual Report, FBD Holdings plc delivered anotheroutstanding performance in the year under review. A key measure of this performance is the net earnings figure of €246.8m for theperiod. These earnings resulted from the strong operating performance, theland sale at La Cala in Spain and the significant returns on our investmentportfolio. Shareholders' funds increased to €497.5m, after repatriations to shareholderstotalling €207.0m, consisting of €77.8m in dividends and €129.2m in a sharebuyback. Based on the excellent results and in keeping with our stated policy to increasethe dividend payout ratio, the Board is recommending a final dividend of 45.0cper ordinary share, bringing the total dividend for the year to 69.0c. Thisrepresents a 20% increase on the 2005 figure, which itself was an increase of43.75% over 2004. In addition to the ordinary dividend just mentioned, on 17th April 2007 last theBoard announced its decision to distribute a further €177 million of reserves toshareholders, subject to shareholder approval at a forthcoming EGM, scheduledfor 31st May. We estimate that this will impact 2007 operating EPS byapproximately 12 cent per share. The distribution will be made on 27th June toshareholders on the register on 8th June 2007. The decision to distribute wastaken following the Board's assessment of the capital required by the Group todeliver its ambitious development plans; and, the mode of repatriation wasdetermined by the Board after due deliberation as to the option it believes isin the best interests of shareholders. The decision to return capital deemedsurplus to requirements is further evidence of the Group's disciplined capitalmanagement and will enhance the return on equity for shareholders. Inmentioning returns to shareholders, I would remind you that the average totalshareholder returns per annum over the last 5 years were 52%, an outstandingperformance by any measure. You will have received your documentation for the EGM and I urge you to completeand return your proxy form to the Registrar, if you are not attending, no laterthan Tuesday morning, 29th May 2007. UNDERWRITING As in previous years, the performance of FBD Insurance, our primary business,underpinned the Group's results. I am pleased to report that in a highlycompetitive market we succeeded in growing our market share and are nowIreland's fourth largest general insurer. We have achieved this positionthrough organic growth based on sustainable development of our customer focused,direct sell, business model. It is widely recognised that insurers and policyholders have benefited from thepositive insurance environment that has pertained in Ireland in recent years.It is equally important to recognise that the key element that has made thispossible is the reduction in accident claim costs that has occurred, relative towhat they were a few short years ago. The heartening reality is that accidentfrequency and average claim costs have reduced. The factors that have broughtabout the improved situation are well known; the reduction in fraudulentclaims, the road safety and law enforcement measures that have been implemented,and the reduction in legal costs arising from the establishment of the PersonalInjuries Assessment Board (PIAB). If further savings in claim costs are to beachieved, it is essential that progress on all these fronts is sustained.Concerted efforts by some lawyers to thwart the PIAB in its objectives continue. The government must remain firm in its support for PIAB and ensure that anylegislative changes that are necessary to underpin its capacity to deliver onthe purposes for which it was established, are implemented. NON-UNDERWRITING You are all aware that the Group's non-underwriting interests encompass leisure/property development, financial services and the investment of non-allocatedcapital. As our results show, these activities reported satisfactory outcomesin 2006. In relation to our property business, I wish to refer to the disposal of themajor portion of the development land owned by the Group at La Cala Resort inSpain. This land sale was agreed in February of last year and effected in June. The net profit arising from the transaction, when finally concluded, isestimated to be €90m. The Board decided when entering into the transactionthat the entire net proceeds of the sale would be distributed to shareholders.Accordingly, a special dividend, amounting to €55m, was paid in August 2006 inrespect of the Tranche I land. Payment by the purchaser for the second Trancheof land is due on final approval being granted by the Regional PlanningAuthority. Whilst we had initially expected an earlier outcome, due to delaysbeing experienced in this final approval process, we are of the view that it isunlikely to be received before year end. A distribution of the remaining netsale proceeds, estimated at €65m, will be made when payment of the final monies,triggered by the planning approval, is received. The land disposal evidencesthe ongoing commercial assessment the Group undertakes in relation to all itsbusinesses and the focus it maintains on optimising shareholder returns. CORPORATE On the corporate front, a significant change in the Group's shareholdingstructure occurred in 2006 when Farmer Business Developments plc placed 4.5mshares (i.e. 12% of FBD Holdings plc's issued capital at that time) on themarket in June. As stated earlier, the Group bought, and subsequentlycancelled, 3.8m. of these shares and the remainder were purchased by otherinvestors. This transaction resulted in the shares' free float moving to 67%and Farmer Business Developments' shareholding reducing to 24.4%, therebyincreasing share liquidity. I welcome the new investors who have joined theCompany and acknowledge your confidence in us. OUTLOOK As the results have reflected, 2006 was a year in which the growth momentum thatthe Group established over the years was maintained. This is borne out acrossall our businesses by the increase in customer numbers, the new markets thathave been sourced and the organisational and infrastructural developments thathave been implemented to underpin our progress. These latter developments,including the establishment of our Business Support Centre in Mullingar, Co.Westmeath, which opened in February of this year, ensure that our platform forsuccess continues to be strengthened. Outlook continued overleaf....... As regards the current year, I am pleased to report that we have continued tomake solid progress to date. We are vigorously pursuing our strategies forgrowth and, albeit that price competition remains intense across all our areasof business, I am confident that the progress we have made will be built on andthat we will fulfil our full year earnings expectations. CONCLUSION In conclusion, I extend my sincere thanks to the Board, Management and Staff fortheir efforts and dedication in, once again, delivering an outstandingperformance for the Group. By maintaining our focus on maximising benefits forall our stakeholders, I am confident that FBD is very well positioned tocontinue developing successfully. This announcement has been issued through the Companies Announcement Service of The Irish Stock Exchange This information is provided by RNS The company news service from the London Stock Exchange