Ecclesiastical Insurance Office PLC 23 March 2005 Ecclesiastical Insurance Office plc preliminary announcement of results for the year ended 31 December 2004 --- CONSOLIDATED PROFIT AND LOSS ACCOUNT for the year ended 31 December 2004 2004 2003 (Restated) £000 £000 Turnover Gross premiums written - general 343,945 354,187 business --------- --------- - long term 19,185 19,463 business -------- -------- 363130 373,650 Net premiums written - general 226,455 221,357 business --------- --------- - long term 19,006 19,012 business -------- -------- 245,461 240,369 --------- --------- Results --- --- Balance on the general business technical account --- --- before equalisation provision 32,950 17,563 Balance on the long term business technical account (1,391) (3,851) Tax attributable to the shareholders - - long term business profits -------------- -------------- 31,559 13,712 Investment income 19,898 20,157 Unrealised profit on investments 12,879 21,011 Investment expenses and charges (1,428) (1,543) Other operations (407) - Other charges including exceptional charge (418) (4,573) ------- --------- Operating profit 64,988 53,534 Change in equalisation provision (2,905) (4,770) --------- --------- Profit on ordinary activities before tax 62,083 48,764 Tax charge on profit on ordinary activities (19,660) (13,811) ---------- ---------- Profit attributable to shareholders 42,423 34,953 Dividends (4,327) (4,393) Charitable grants net of tax relief (3,503) (2,975) --------- --------- Retained profit for the financial year 34,593 27,585 -------- ======== Dividends Ordinary • paid 0.292p per share (2003: 1.460p per share) 410 410 2.8 per cent First Cumulative Preference • paid (in the period) - 7 10 per cent Redeemable Second Cumulative Preference • paid (in the period) 300 300 • declared for the half year to 30 June 2005 150 150 9.5 per cent Redeemable Third Non-Cumulative Preference • paid (in the period) 760 1,520 8.625 per cent Non-Cumulative Irredeemable Preference • paid (in the period) 2,857 2,156 • declared for the half year to 30 June 2005 1,779 1,078 On 29 June 2004 all of the issued and unissued ordinary shares of 50p in the capital of the company were sub-divided into five ordinary shares of 10p each. On 23 July 2004, each of the First Preference shares and Third Preference shares were redesignated as 8.625% Non-Cumulative Irredeemable Preference shares of £1.00 each. In respect of the period from 1 July 2004 until 31 December 2004, holders of the redesignated First Preference shares and Third Preference share were eligible only for the dividend on the Non-Cumulative Irredeemable Preference shares paid on 31 December 2004. CONSOLIDATED BALANCE SHEET at 31 December 2004 2004 2003 Restated £000 £000 Assets Intangible assets: goodwill 1,671 2,089 Land and buildings 25,141 19,271 Shares in group undertakings 250 250 Other financial investments 597,978 600,178 Assets held to cover linked liabilities 46,915 40,903 Reinsurers' share of technical provisions 153,023 137,758 Other assets 272,786 211,334 --------- --------- Total assets 1,097,764 1,011,783 =========== =========== Liabilities Capital and reserves 194,210 159,740 Fund for future appropriations 14,510 10,238 Technical provisions 758,457 725,410 Technical provision for linked liabilities 46,915 40,903 Other liabilities 83,672 75,492 -------- -------- Total liabilities 1,097,764 1,011,783 =========== =========== CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2004 2004 2003 (excluding long term business) £000 £000 Net cash inflow from operating activities 85,382 68,041 Servicing of finance (4,022) (4,086) Taxation paid (9,801) (5,111) Capital expenditure (2,030) (1,705) Acquisitions and disposals - 137 Equity dividends paid (410) (410) Charitable grants paid (4,355) (4,000) Financing (675) (426) ------- ------- 64,089 52,440 ======== ======== Cash flows were invested as follows: Decrease/increase in cash holdings 50,424 (11,850) Net portfolio investment Purchases of shares and other variable yield securities 6,112 31,597 Purchases of fixed income securities 150,630 282,969 Purchases of properties 1,850 18 Sales of shares and other variable yield securities (3,666) (24,416) Sales of fixed income securities (141,261) (224,696) Sales of properties - (1,182) ------------ --------- Net investment of cash flows 64,089 52,440 ======== ======== Ecclesiastical Insurance Office plc announces its results for the year ended 31 December 2004 The positive trend in the profitability of our general insurance business advanced strongly in 2004. The balance on the technical account improved significantly to £35.9 million, before equalisation charges, from a restated £22.3 million in 2003. Growth in total premium income was held back mainly by the effect of realigning our business portfolio in Canada. Gross written premiums fell by 3% but net written premiums rose by 2%. The increased premium rates applied in previous periods were generally maintained in 2004 with further increases being obtained where necessary. Following implementation of the new ABI Statement of Recommended Practice, the results of London market and reinsurance business accepted are now accounted for on the annual basis instead of the fund basis used previously. The 2003 comparatives have been restated accordingly. The negative balance on the technical account for long term business is an improvement on the prior year result which was affected by adjustments arising on the formation of Ecclesiastical Life Limited. The emergence of profits from the in-force book of business in 2004 was more than offset by increases in reserves to meet the cost of improving mortality on annuity business and other provisions. New business growth achieved by Ecclesiastical Life Limited and its subsidiaries was 29% on the industry standard measure (Annual Premium Equivalent). Unrealised profits on investments were £12.9m following the gain of £21.0m (restated) in 2003. Our fund management operation continued to be recognised for its long term performance with the Higher Income Fund being awarded first place in the Standard & Poor's Awards 2005 in the UK Equity and Bond Income sector over five years. After tax, dividends and a further increase in the grant to Allchurches Trust, retained profit for the year was £34.6m compared with £27.6m (restated) in 2003. Shareholders' funds rose significantly to £194.2m from £159.7m (restated), their highest ever level. The general business solvency ratio (based on net assets as a percentage of general business net premiums written) improved to 86% from 72% (restated). On 15th March 2005, Standard & Poor's Ratings Services revised its outlook for the Company to positive from stable and affirmed the Company's BBB+ long-term counterparty credit and insurer financial strength ratings. The Directors remain positive about the financial and trading prospects for the current financial year. This announcement is prepared on the basis of the accounting policies as stated in the previous year's financial statements. The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2004 or 2003, but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered shortly. The auditors have reported on those accounts; their reports were unqualified and did not contain statements under s.237(2) or (3) of Companies Act 1985. This announcement was approved at a meeting of the board of directors held on 23 March 2005. 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 are not listed. Copies of the Audited Accounts are available from the Secretary. This information is provided by RNS The company news service from the London Stock Exchange