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FBD Holdings plc Annual Report 2009

Our focus is you

Contents1 Financial Highlights

2 Chairman’s Statement

4 Review of Operations

13 Directors and Other Information

14 Report of the Directors

22 Corporate Governance Statement

27 Statement of Directors’ Responsibilities

28 Independent Auditors’ Report

Financial Statements:

30 Statement of Accounting Policies

43 Consolidated Income Statement

44 Consolidated Statement of Comprehensive Income

45 Pro-forma Reconciliation of Consolidated Operating Profit to Loss Before Tax

46 Consolidated Statement of Financial Position

48 Consolidated Statement of Cash Flows

49 Consolidated Statement of Changes in Equity

50 Company Statement of Financial Position

51 Company Statement of Cash Flows

52 Company Statement of Changes in Equity

53 Notes to the Financial Statements

102 Notice of Annual General Meeting

FBDHoldingsplcAnnualReport2009 1

Financial Highlights2009

€000s2008

€000s

Grosspremiumswritten 357,244 385,638

Netpremiumsearned 314,604 343,075

OperatingProfit 28,880 65,783

Lossbeforetaxation (34,644) (38,607)

2009Cent

2008Cent

Operatingearningsper60centordinaryshare 75 172

Ordinarydividendper60centordinaryshare 30 40

Netassetsper60centordinaryshare 576 709

Calendar

Preliminaryannouncement 3 March 2010

AnnualGeneralMeeting 30 April 2010

FinalDividendPaymentDate 5 May 2010

2 FBDHoldingsplcAnnualReport2009

Chairman’s Statement

“…2009 was another year of

significant strategic and operational

progress for FBD Group.”

Iamverypleasedtoreportthat2009wasanotheryearofsignificantstrategicandoperationalprogressforFBDGroup.ThecontractionoftheIrisheconomyandtheinsuranceindustry,particularlyintheearlypartof2009,providedachallengingbusinessenvironmentbutitisnotablethattherateofeconomicdeclineslowedastheyearprogressed.TheGroup’sunderwritingbusinessis,byitsnature,defensiveanditsspreadofbusinessisnotover-exposedtoanyparticularsector.Itdeliveredasolidoperatingprofitin2009,achievinganimprovedunderlyingcombinedoperatingratio.

FBDhasmadesignificantprogressinitsstrategicinitiativetoincreasepenetrationofurbanmarkets,particularlyDublin.NoNonsense.ieandFBD.ie(ouron-lineofferings)continuetoattractahigherproportionofcustomersfromDublinandotherurbancentres.Likewisethebrokerinitiativesundertaken

inthelasteighteenmonthshavedeliveredincreasednewbusinessinsurancefromurbancentres.Followingthesuccessfulrealignmentofourofficenetwork,localofficestaffarefocusedonprovidinganenhancedlevelofservicetoourfarmingandcommercialcustomers,akeystrategicpriority.

TheindustrywasheavilyimpactedbysevereweatherclaimsasaresultofthefloodinginNovember2009andfreezesinDecember2009andJanuary2010.Theweatherincidentsinthateightweekperiodwillcosttheindustryupto€550m,farinexcessofanypreviousweatherrelatedeventintheIrishmarket.Bycomparison,thecostofallsimilareventsoverthelasttenyearscombinedwas€358m.Inthisenvironment,FBD’sunderwritingdisciplineandprudentreinsurancepolicyhaveservedtheirpurposeandprotectedtheGroup’stradingresult,itscapitalbaseandsolvency.


Therecentfrequencyandseverityofextremeweatherconditionsraisesissuesabouthowthefuturecostofsuchincidentscanbeavoided.Asanationwecannotpreventnaturalcatastrophesbuttherearemeasuresthatcouldbetakentominimisethedamagecausedbyweathereventsinthefuture.Irelandneedsaconcerted,nationalapproachtoaddressissuessuchasimprovingplanninganddevelopmenttotakegreateraccountoffloodrisks,investmentinflooddefences,planninganddevelopmentrulesandmanagementandmaintenanceofwatercoursesanddrainage.TheinsuranceindustryhasindicatedthatitiseagertoplayacollaborativerolewiththeGovernmentandpublicsectoragenciestoaddresstheseissues.

RegainingnationalcompetitivenessiskeytoIrisheconomicprospects.Claimsreformsinitiatedinrecentyearshavedeliveredsignificantbenefitstobusinessesandtheconsumerintheformoflowerinsurancepremiums.However,claimscostsinIrelandremainhighrelativetoothereconomies.Whilecreditmustbegivenforprogressinreducingroadfatalitiesandaccidentrates,continuedreformisrequired,forexample,theprivatisationofspeedcameras.Personalinjuryawardsmustbebroughtintolinewithotherjurisdictionstodelivercomparablepremiumlevels.

MarketconditionsfortheGroup’sleisureandpropertybusinesseshaveremainedchallenging.Excesscapacityexistsinthehotelmarket,particularlyinIreland,andthetimingofrecoveryisdependentonareductioninindustrycapacity.WesupporttheIrishHotelFederation’scallfortheremovaloftaxprovisionsthatactasamajor‘barriertoexit’forinherentlyunviable‘taxbased’hotelbusinesses.

WhiletheGroupdeliveredasolidoperatingperformancewithanoperatingprofitof€28.9min2009,theresultbeforetaxwasadverselyimpactedbynegativefluctuationsininvestmentreturns,reflectingthevolatilityinpropertymarkets.TheDirectorshavetakenaconservativeapproachtothevaluationofassetsandthepotentialforfurtherdownsidehasbeengreatlyreduced.

TheGroup’sunderlyingoperatingperformanceimprovedsignificantlyinthesecondhalfofthefinancialyearasaresultofactiononrates,theimplementationofclaimsinitiativesandthebenefitofcostreductions.FBDhasthepeople,plans,infrastructureandfinancialstrengthtocontinuetodeliverlong-termprofitablegrowth,particularlyinanenvironmentwhereratesarehardening.

TheGroupiscommittedtoaprogressivedividendstrategywhilemaintainingastrongbalancesheetandrobustsolvencymargins.TheBoardisrecommendinga2009finaldividendpayoutof20centperordinaryshare,bringingthefull2009dividendto30centperordinaryshare.Thisequatestoadividendpayoutratioof46%andreflectstheBoard’sexpectationthatearningsvolatilitywillreducenowthatthelevelofactivityintheeconomyasawholehasstabilised.

TherewerenochangesinthecompositionoftheBoardduring2009.

Finally,IwouldliketoextendmysincerethankstotheBoard,themanagementandthestafffortheircombinedeffortsindemonstratingtheGroup’scapacitytodeliveroperatingresultsfortheGroupinadifficultenvironment.Wewillcontinuetofocusonmaximisingbenefitsforallstakeholders,andIamconfidentthatFBDwillcontinuetooutperformitspeersindeliveringsuperiorreturnsforshareholders.

Michael Berkery Chairman

2March2010


Review of Operations

“…FBD’s underwriting discipline and

prudent reinsurance policy protected

the Group’s trading results, its

capital base and solvency. ”

Overview

FBDcontinuedtodeliversolidoperationalperformancein2009,achallengingyearforboththeinsuranceindustryandIreland’seconomy.Againstabackgroundofanunprecedentedlevelofweatherrelatedclaimsandtheeconomicdecline,FBD’sunderwritingdisciplineandprudentreinsurancepolicyprotectedtheGroup’stradingresults,itscapitalbaseandsolvency.Atthesametime,theGroupmadesignificantprogressinadvancingitsstrategicpriorities.

At€28.9m,operatingprofitwaslowerthan2008.Operatingprofitinourprimaryunderwritingbusinesswas€22.4mandnon-underwritingoperatingprofitwas€6.5m.Profitabilityintheunderwritingbusinesswaslowerprincipallybecauseof(i)lowerpremiumincomeasaresultofthereductionineconomicactivity,(ii)FBD’sdecisionnottogrowvolumeincertainareas

atuneconomicrates,(iii)adeteriorationinthelossratioand(iv)alowerlongerterminvestmentreturn.Thedeteriorationinthelossratiorelatesparticularlytoanunusuallevelofweathereventsandahighercostoflargeclaims.TheindustryclaimsexperiencehascontributedtoahardeningofinsuranceratesacrosstheIrishmarket.Notably,therateofdeclineingrosspremiumincomediminishedastheyearprogressed.

Despitetheimpactofreducingvolumes,industrydatashowsthatFBDmaintaineditspositionasthesecondlargestpropertyandcasualtyinsurerinIreland,apositionachievedforthefirsttimein2008.Atthesametimeasmaintainingitsmarketposition,FBD’sinsuranceriskexposurereduced.


Underwritingmanagementexpensesremainedinlinewith2008astheexpectedbenefitsoftheofficerealignmentprocessandothercostcontainmentexerciseswerecrystallised.

Inchallengingmarketconditions,FBD’snon-underwritingoperationshavedeliveredasolidresult.TheGroup’sproperty&leisurebusinessesinIrelandandSpaindeliveredoperatingprofitsandpositivecashflowsin2009.Oversupplyinthemarketplaceisthekeychallengefacingthebusinessesandmarketcapacityneedstoreducetomatchfallingconsumerdemand.Newmarketingandsalesinitiativesandoperationalcostefficienciescontinuetobeidentifiedandimplementedtoachievetargets.SunsetBeachResortperformedparticularlystrongly.

FBD’sfinancialservicesbusinessescontinuedtodeliverasolidperformanceindifficultmarketenvironments.Thesebusinesseshaveproactivelymanagedtheircoststructurestoreflecttheeconomiccircumstances.

ThevalueoftheGroup’spropertyassetshasreducedinlinewithmarketvaluesinIrelandandSpain.Valuationadjustmentsof€63.1m(2008:€126.5m),including€57.8mchargedtotheconsolidatedincomestatementand€5.3mdirectlytoreserves,havebeenbookedin2009onthebasisofmark-to-marketorfairvalueaccountingprinciples.Afterchargingfinancecostsof€3.4m(2008:€4.5m)theGrouprecordedalossbeforetaxof€34.6m(2008:€38.6m).FBDGroupcontinuestohaveastrongcapitalbaseandbalancesheet.FBDInsurancehadasolvencylevelof52%ofnetpremiumearnedat31December2009,upfrom50%at31December2008.

TheGroup’sunderlyingoperatingperformanceimprovedsignificantlyinthesecondhalfofthefinancialyearasaresultofactiononrates,theimplementationofclaimsinitiativesandthebenefitofcostreductions.

Business Review

Underwriting

TheIrishinsurancemarketcontractedby7.1%during2009asthereductionininsurableriskandvaluesmorethanoffsetincreasingprices.FBD’sgrosspremiumwrittenreducedby7.4%to€357.2m(2008:€385.6m)astheGroupwasnotpreparedtogrowvolumeincertainlessprofitablepersonallinessegments.Netpremiumearnedamountedto€314.6m(2008:€343.1m).

FBD’sprogressinDublinandotherlargeurbancentreshascontinuedwith13%oftotalpremiumincomenowcomingfromDublinandmarketsharejustbelow5%.TheinitiativelaunchedinApril2008toincreasecommerciallinesbusinessinDublin,viaintermediaries,hasprovedsuccessfulandfurtherbrokershavebeenaddedtoourpanel.NoNonsense.ieandFBD.ie(ouron-lineofferings)continuetoattractahigherproportionofcustomersfromDublinandotherurbancentres.Followingtherealignmentofourofficenetwork,localofficestaffarefocusedonprovidinganenhancedlevelofservicetoourfarmingandcommercialcustomers,akeystrategicpriority.

Over75%ofmotorandhomeinsurancecustomersarenowusingtheinternetortelephonetopurchaseinsurance.Forcustomerswishingtousetheinternet,FBD.ieandNoNonsense.ieprovideanon-linefullservicefacilityenablingcustomerstochoosethelevelofcovertheyrequireandpayon-line.InSeptember2009,FBD.ielaunchedanon-linerenewalfacilitythathasimprovedcustomerserviceandefficiency.Take-uptodateisaheadofexpectations.Forcustomerswishingtoorganisetheirinsuranceoverthephone,FBD’ssupportcentreprovidestheGroupwiththesalesandservicecapacitytogrowpersonallinesbusinessinthemostcostefficientandcustomerfocusedmanner.


Netclaimsincurredamountedto€263.5m(2008:€271.2m).Thelossratio(claimsincurred,netofreinsuranceasapercentageofearnedpremiumnetofreinsurance)for2009was83.8%(2008:79.1%)andwasheavilyimpactedbysevereweathereventsandhigherthannormallargeclaimsexperience,attributabletodeteriorationinasmallnumberofprioryearclaims.Ontheotherhand,Irelandcontinuestoexperienceareductioninthenumberofroaddeaths.FBD’sfrequencyofmotorinjuryclaimshasreduced.

Severeweatherclaimswereamajorfeatureof2009.ThecostoftheunprecedentedfloodingandfreezeincidentsinNovemberandDecember,arefarinexcessofanypreviousweatherrelatedeventintheIrishmarket.The2009costtoFBDwas€13.5m,netofreinsurance.FBD’sriskmanagementpolicydeterminestheGroup’sappetiteforriskandlimitstheexposurethatFBDispreparedtoacceptfromanyeventorseriesofevents.Inrespectofweatherrelatedevents,theobjectiveistolimittheGroup’sexposuresoastoprotectprofitability,solvencyandshareholders’capital.Thisobjectivewasachievedinrecentmonths.

WhiletheGroup’sreportedlossratiohasdisimprovedfrom79.1%in2008to83.8%in2009,therehasbeenacontinuingimprovementintheunderlyinglossratio(excludingexceptionallargeclaimsexperienceandclaimsrelatedtounusuallevelsofweatherevents),whichisdownfrom69.3%in2008to63.9%in2009andreducedfurtherinthesecondhalfof2009to61.8%.Theunderlyinglossratiohasimprovedineachoftheproperty,motorandliabilityaccountsandhasbenefitedfromtheGroup’stimelyactiononratesanditsinitiativestoreducethecostofclaims.

Claimsreservesprovidedapositiverunoffagainin2009despitedeteriorationinasmallnumberofprioryearlargeclaims,demonstratingthestrengthoftheGroup’sreservingposition.

Underwritingmanagementexpensesin2009wereinlinewiththepreviousyear.Thebenefitoftheofficenetworkrealignmentprocess,togetherwithothercostinitiativesundertakenbytheGroupwerefullyrealisedinthesecondhalfoftheyear.

Ariseinthecostofreinsuranceandtheimpactofreducingnetpremiumearnedhavecontributedtoanincreaseinthenetexpenseratio(otherunderwritingexpensesasapercentageofearnedpremium,netofreinsurance)for2009to20.3%(2008:17.0%).Groupheadcount(full-timeequivalents)hasreducedfrom1,941at31December2008to1,743at31December2009.

TheGroup’scombinedoperatingratiofor2009was104.1%(2008:96.1%)resultinginanunderwritinglossof€12.9m(2008:profitof€13.4m).

Longerterminvestmentreturnat€35.3mwaslowerthanthe€43.9min2008astherateofreturnattributabletoinvestmentshasreducedinlightofalowerexpectationforfutureinterestrates.Theaverageassetmixthroughouttheyearwasalsomoreconservative.

Non-underwriting

Marketconditionsforthenon-underwritingbusinessesinIrelandandSpaincontinuetobechallenging.However,inthisenvironment,non-underwritingoperationsgeneratedanoperatingprofitof€6.5m(2008:€8.5m).

TheGroup’sleisureandpropertyinterestsincludeLaCalaandSunsetBeachResortinSpainandFBDHotelsinIreland.Intheunprecedenteddifficulttradingconditionsthesebusinessesdeliveredasolidresultgeneratinganoperatingprofitof€2.8m(2008:€6.0m)andpositivecashflowfromoperations.TheoperatingprofitwaslowerthanthepreviousyearprincipallybecausethehotelslocatedinIrelandwereimpactedbymarketoversupply.SunsetBeachResortcontinuedtoperformstronglyandthesaleofpropertiesinLaCalaimprovedinthelatterpartoftheyear.

Review of Operations [continued]

Keeping our

promises


Financialservices/other,includesthecontributionsfromgeneralinsurancebroking(FBDBrokers),lifeassurance/pension,broking/investmentadvice(FBDFinancialSolutions),instalmentfinanceandholdingcompanycosts.Operatingprofitsof€3.7mweregenerated(2008:€3.4m).ReducedholdingcompanycostsmorethanoffsettheimpactofreducedcustomerappetiteforretailinvestmentproductsinFBDFinancialSolutions.

Pre-tax result

Theresultbeforetaxeswasadverselyimpactedbyanegativefluctuationininvestmentreturnamountingto€28.8m(2008:€92.3m)andrevaluationofproperty,plantandequipmentof€29.0m(2008:Nil).Thisreflectstheimpactofreducingpropertyprices.Restructuringcostsof€2.3m(2008:€7.6m)havebeenchargedtotheconsolidatedincomestatementin2009inrespectofthefinalisationoftheofficenetworkrealignmentprocessandtheimplementationofcostrestructuringinthepropertyandleisureoperations.

Afterchargingfinancecostsof€3.4m(2008:€4.5m),theGrouprecordedalossbeforetaxof€34.6m(2008:€38.6m).

Earnings per share

Operatingearningsper60centordinarysharebasedonlongerterminvestmentreturnamountedto74.61centcomparedto171.50centthepreviousyear.Dilutedearningsper60centordinarysharewere(91.05)cent(2008:100.59cent).

Dividends

TheBoardiscommittedtoensuringthattheGroup’scapitalpositioncontinuestoberobustanditsbalancesheetwellmanaged.ThisreflectstheBoard’sviewthatitisinthelong-terminterestofallshareholderstomaintainstrongsolvencyandliquiditymargins.TheGroupiscommittedtoaprogressivedividendpolicyandefficientcapitalmanagement.

TheBoardisrecommendinga2009finaldividendpayoutof20centper60centordinaryshare(2008:10cent)bringingthefull2009dividendto30cent(2008:40.25cent).Thisequatestoadividendpayoutratio(dividendasapercentageofoperatingearningsafterfinancecharges)of46%(2008:25%).InlinewiththeGroup’stargetpayoutratio,theincreaseinthepayoutratioreflectstheBoard’sexpectationthatearningsvolatilitywillreducenowthatthelevelofactivityintheIrisheconomyasawholehasstabilised.SubjecttotheapprovalofshareholdersattheAnnualGeneralMeetingtobeheldon30April2010,thisfinaldividendfor2009willbepaidon5May2010totheholdersofsharesontheregisteron12March2010.

Thedividendissubjecttoawithholdingtax(“DWT”)exceptforshareholderswhoareexemptfromDWTandwhohavefurnishedaproperlycompleteddeclarationofexemptiontotheCompany’sRegistrarfromwhomfurtherdetailsmaybeobtained.

Statement of Financial Position (Balance Sheet)

TheGroup’sstatementoffinancialpositionremainsverystrong.Ordinaryshareholders’fundsamountedto€191.5m(2008:€235.4m)andnetassetsperordinarysharewere576cent(2008:709cent).

FBDInsurancemaintainsalowriskinvestmentstrategywith86%ofitstotalinvestmentportfolioinvestedingovernmentgiltsandcashassets.In2009theGroupinvestedafurther€115.0mingovernmentgilts.Table1showshowtheassetsoftheunderwritingbusinesswereinvestedatthebeginningandendoftheyear.



Table 1 – Underwriting Business Asset Allocation

31 December 2009 €m %

31 December 2008 €m %

Governmentgilts

Deposits&cash

Trade,otherdebtorsandDAC

Reinsurers’shareoftechnicalprovisions

Investmentproperty

Securedloans

Equities&corporatebonds

Ownland&buildings

Plant&equipment

581

110

101

93

43

37

36

22

17

56%

11%

10%

9%

4%

3%

3%

2%

2%

466

206

102

59

53

58

45

24

16

45%

20%

10%

6%

5%

6%

4%

2%

2%

1,040 100% 1,029 100%

In2009,undermark-to-marketorfairvalueaccountingprinciples,theGroupasawholebooked€57.8m(2008:€92.3m)ofvaluationadjustmentsthroughtheconsolidatedincomestatementandwroteoffafurther€5.3m(2008:€34.2m)directlytoreserves,atotalof€63.1m(2008:€126.5m).TheseadjustmentsaresetoutinTable2below.

Table 2 – Group Assets/Valuation Adjustments

Assets 31 December

2009€m

Assets 31 December

2008€m

Valuation adjustments

2009€m

Governmentgilts

Hotel&golfresortassets

Deposits&cash

Trade,otherdebtorsandDAC

Reinsurers’shareoftechnicalprovisions

Inventories

Investmentproperty

Equities&corporatebonds

Securedloans

Ownland&buildings

Plant&equipment

581.1

136.3

119.5

106.7

93.2

59.2

43.3

39.5

36.9

21.8

18.3

465.8

167.1

218.9

103.5

59.0

62.4

52.5

49.1

57.9

24.4

17.2

–

(31.4)

–

–

–

–

(8.5)

4.3

(24.5)

(2.5)

(0.5)

1,255.8 1,277.8 (63.1)


TheGroup’sportfolioofprimepropertyassetsheldforthelong-termwerevaluedbyprofessionalexternalvaluersorataloweramountiftheDirectorsdeemeditappropriatetotakeamoreprudentview.Investmentpropertiesareincorporatedinthebalancesheetatacurrentyieldof7.83%andsecuredloansarevaluedatalevelapproximatingthevalueoftheunderlyingsecurity.Thecumulativevaluationadjustmentsmadeinthelasttwoyearsaresummarisedinthefollowingtable:

Table 3 – Cumulative valuation adjustments as a percentage of December 2007 values

%

Hotel&golfresortassets

Investmentproperty

Securedloans

29%

47%

47%

UKpropertyvaluesstabilisedlateinthesecondhalfof2009and,whileSpanishpropertyvaluesdeclinedduring2009,theratehasslowed.InIreland,however,professionalvaluershavebecomesignificantlymoreprudentsinceJune.Webelievethatasaresultofthevaluationimpairmentsrecognisedandthede-riskingofourinvestmentbook,thepotentialforfurtherdownsidefromtheGroup’sinvestmentshasbeengreatlyreduced.

AllGroupinvestmentsareaccountedforonamark-to-marketorfairvaluebasis,withtheexceptionofdevelopmentlandatLaCalaandgovernmentgilts.LaCaladevelopmentlandisincludedwithininventoriesatthelowerofcostandnetrealisablevalue.Theindependentexternalvaluationconductedat31December2009reportedavaluewhichexceededcostby€30.8m.Governmentgiltsheldtomaturityareincludedinthebalancesheetatamortisedcost.Ifthesegiltswererecognisedonamark-to-marketbasis,asurplusof€30.7mwouldarise.

FBDGrouphasastrongcapitalbaseandbalancesheet.FBDInsurancehadasolvencylevelof52%ofnetpremiumearnedattheendof2009,upfrom50%attheendof2008.FBDalsohasaprudentreservingstrategyandinthesameperiod,itsreservingratio(nettechnicalprovisionsdividedbynetpremiumearned)increasedfrom220%to240%.Thisissupportedbyapositiverun-offofclaimsreservesagainin2009,despitethedeteriorationinasmallnumberofprioryearlargeclaims.

Outlook

Underwriting

Whileeconomicuncertaintyremains,therateofIrisheconomiccontractionhasslowedconsiderably.TheGroup’sunderwritingbusinessis,byitsnature,defensiveanditsspreadofbusinessisnotoverlyexposedtoanyonesector.

Withanindustrycombinedoperatingratioofover100%in2009andtheprospectoflowerinvestmentreturns,furtherindustryrateincreasesarerequiredtodeliveranacceptablereturnoncapital.TheDirectorsexpecttheGroup’sfocusonratingdiscipline,managingclaimscostsandexpensecontainmenttodeliveranimprovedcombinedratioin2010.WeexpectthattherateofFBD’svolumedecline,whichhasslowedsinceearly2009,willcontinuetoslow,ifnotreverse.

ThesevereweatherconditionscontinuedintoJanuaryof2010andtherelatedclaimscostsin2010arecurrentlyestimatedat€12m,netofreinsurance.Thereisevidenceinthemarketthattheweatherrelatedclaimsinlate2009andearly2010,whichwillcosttheindustryintheregionof€550m,havealreadyledtomarketrateincreasesandfurtherincreasesareanticipated.GivenFBD’srelativelyfixedcostbase,theGroupwillbenefitfrompositiveoperatingleverageaspricesrise.



FBDInsurancewillfocusonprofitablegrowth,constantlyevolvingitsbusinesstoreflectcustomers’needs.TheGroupwillcontinuetoimplementitsplantoincreasepenetrationofkeyurbanmarkets,inparticularDublin,andthecommercialinsurancemarket.Atthesametime,theGroupcontinuestodevoteconsiderableresourcestodevelopingitscorefarmingaccount,akeystrategicpriority.

Non-underwriting

Theenvironmentforthenon-underwritingbusinessesisexpectedtoremaindifficultin2010.Oversupplyinthemarketplaceisthekeychallengefacingthepropertyandleisurebusinesses,particularlyinIrelandandrecoverywillbedependentonareductioninmarketcapacity.TheGroupwillcontinuetooutperformcompetitorsbyfocusingoninitiativesthatwillenhancerevenueand/orreducecosts,soastomaintainprofitableandcashgenerativebusinessesthroughtherecessionaryperiod.

Group

FBDGrouphasastrongcapitalbaseandbalancesheetandaprudentreservingstrategy.TheBoardisconfidentthatFBDwillcontinuetooutperformitspeersindeliveringsuperiorreturnstoshareholders.FBDhasdemonstrateditscapacitytodeliveroperatingprofitsindifficultmarketconditionsandiswellpositionedtodeliverlong-termprofitablegrowth,particularlyinanenvironmentwherepremiumratesarehardening.

Andrew Langford Group Chief Executive

2March2010

the wayLeading


Directors

MichaelBerkery(Chairman)

Executive Directors

AndrewLangford(Group Chief Executive)CathalO’CaoimhAdrianTaheny

Non-Executive Directors

JohnDonnellySeanDorganPhilipLynchPatrickO’KeeffeVincentSheridan(Senior Independent Director)JohanThijsPadraigWalshe

Company Secretary

ConorGouldson

Registered Office

FBDHouseBluebellDublin12Ireland

Auditors

Deloitte & Touche CharteredAccountantsandRegisteredAuditorsDeloitte&ToucheHouseEarlsfortTerraceDublin2Ireland

Solicitors

Dillon Eustace 33SirJohnRogerson’sQuayDublin2Ireland

Stockbrokers

Bloxham InternationalFinancialServicesCentre2/3ExchangePlaceDublin1Ireland

Goodbody Stockbrokers BallsbridgeParkBallsbridgeDublin4Ireland

Registrar

Computershare Investor Services (Ireland) Limited HeronHouseCorrigRoadSandyfordIndustrialEstateBluebellDublin18Ireland

Directors and Other Information


Report of the Directors

TheDirectorspresenttheirreportandtheauditedfinancialstatementsfortheyearended31December2009.

Principal Activities

TheCompanyisaholdingcompanyincorporatedinIreland.TheprimarybusinessoftheGroupisgeneralinsuranceunderwriting.TheGroupalsohasnon-underwritingoperationsincludingleisure/propertyinterestsandfinancialservicesbusinesses.

Business Review

ThereviewoftheperformanceoftheGroupincludingandanalysisoffinancialinformationandtheoutlookforitsfuturedevelopmentiscontainedintheChairman’sStatementonpages2and3andintheGroupChiefExecutive’sReviewofOperationsonpages4to11.Informationinrespectofthesignificanteventssincetheyearendandareviewofthekeyperformanceindicatorsarealsoincludedinthesesections.Thekeyperformanceindicatorsincludegrosspremiumwritten,operatingprofitpershareandnetassetvalue.

Results and Dividends

Theresultsfortheyearareshownintheconsolidatedincomestatementonpage43.TheDirectorsproposethepaymentofafinaldividendfortheyearonthe60centordinarysharesof20cent(2008:10cent).Duringtheyearaninterimdividendof10centwaspaid(2008:30.25cent).Thetotaldividendfortheyearamountsthereforeto30.0cent(2008:40.25cent).ThepolicyoftheBoardinrelationtodividendsisoutlinedintheChairman’sStatementonpages2to3.

During2008theCompanymadeadistributionfromfinancialreservesof150centperordinaryshareof60centeach.

Risk and Uncertainties

TheDirectorsconsiderthatthefollowingaretheprincipalriskfactorsthatcouldmateriallyandadverselyaffecttheGroup’sfutureoperatingprofitsorfinancialposition.

General Insurance Risk

Theriskattachedtoanygeneralinsurancepolicyoutstandingisthepossibilitythataninsuredeventoccursandtheuncertaintyoftheamountoftheresultingclaim.Thefrequencyandseverityofclaimscanbeaffectedbyseveralfactors,mostnotablyweatherevents,thelevelofawardsandinflationonsettlingclaims.

Whenestimatingthecostofclaimsoutstandingatyearend,theprincipalassumptionunderlyingtheestimatesistheGroup’spastdevelopmentpattern.Thisincludesassumptionsinrespectofcertainhistoricaverageclaimscosts,claimshandlingcostsandclaimsinflationfactors.

Profitabilityofgeneralinsuranceis,byitsnature,cyclicalandcanvarybecauseoftheactionsoromissionsofcompetitors,particularlyinappropriatepricingdecisionsbycompetitors.

TheextentoftheGroup’sexposuretogeneralinsuranceriskiscontrolledwithindefinedparametersbymeansofstrictunderwritingcriteria,analysisofhistoricalunderwritingexperience,formalisedpricingstructuresandappropriatereinsurancetreaties.

Capital Management Risk

TheGroupiscommittedtomanagingitscapitalsoastomaximisereturntoshareholders.TheriskisthatinappropriatemanagementoftheGroup’scapitalcouldresultinlosses,erosionofcapitalorinadequatesolvency.TheBoardreviewsthecapitalstructurefrequentlytodeterminetheappropriatelevelofcapitalrequiredtopursuetheGroup’sgrowthplans.


Operational Risk

Operationalriskcouldariseasaresultofinadequatelycontrolledinternalprocessesorsystems,humanerrororfromexternalevents.Operationalrisksareregularlyassessedagainstfinancial,operationalandreputationalcriteria.

Market Risk

TheGrouphasinvestedinquoteddebtsecurities,quotedsharesandinvestmentproperties.Theseinvestmentsaresubjecttomarketrisk,wherebythevalueoftheinvestmentsmayfluctuateasaresultofchangesinmarketprices,changesinmarketinterestratesorchangesintheforeignexchangeratesofthecurrencyinwhichtheinvestmentsaredenominated.Theextentoftheexposuretomarketriskismitigatedbytheformulationof,andadherenceto,strictinvestmentpolicies,asapprovedbytheBoardofDirectors,employmentofappropriatelyqualifiedandexperiencedpersonneltomanagetheGroup’sinvestmentportfolio,andtheuseofforwardforeignexchangecontracts.

Liquidity Risk

TheGroupisexposedtodailycallsonitscashresources,mainlyfromclaims.TheBoardsetslimitsontheminimumproportionofmaturingfundsavailabletomeetsuchcalls.

Interest Rate Risk

Atanytime,theGrouphasfixedinterestquoteddebtsecuritiesandfinancialinstrumentsthatareexposedtofairvalueinterestraterisk.LoansmadebytheGroupareatfloatinginterestrates.

Credit Risk

AlloftheGroup’scurrentreinsurershavecreditratingsofA-orbetter.TheGrouphasassessedthesecreditratingsasbeingsatisfactoryindiminishingtheGroup’sexposuretothecreditriskofitsreinsurancereceivables.

TheGroupusesindependentactuariestoreviewitsliabilitiestoensurethatthecarryingamountoftheliabilityisadequate.Wheretheliabilitiesnetofanyrelateddeferredacquisitioncostsaredeemedtobeinadequate,thedeficiencyisrecognisedimmediatelyintheconsolidatedincomestatement.

TheGrouphasprovidedloansthataresecuredonlandoverwhichtheGrouphasfirstcharge.Thereisnosignificantconcentrationofcreditriskrelatingtotheseloans.

Other Risks

n TheriskthatthestrategyadoptedbytheBoardisincorrectornotimplementedappropriatelyresultinginsuboptimalperformance.

n TheriskthatdeteriorationineconomicconditionsgloballyandparticularlyinIreland,UKandSpainmayleadtoareductioninrevenueandprofits.

n Theriskthatthelossofakeyexecutiveofficerorotherkeyemployees,theadoptionofinappropriateHRpoliciesorregulatorychangesaffectingtheworkforceorthelimitedavailabilityofqualifiedpersonnelmaydisruptoperationsorincreasecoststructure.

n Theriskthataninterruptionorfailureofinformationsystemsmayresultinasignificantlossofbusiness,assets,orcompetitiveposition.

Alloftheaboverisksarefurtherdetailedinnote37.

TheGrouphascontrolsembeddedwithinitssystemstolimiteachofthesepotentialexposures.ManagementandtheBoardregularlyreview,reassessandproactivelylimittheassociatedrisks.


Subsidiaries

TheCompany’sprincipalsubsidiaries,asat31December2009,arelistedonpage88(note31).

Directors

ThepresentDirectorsoftheCompanyarelistedonpage13.TherewerenochangestomembershipoftheBoardduringtheyear.

InaccordancewithprovisionA.7.2oftheCombinedCodeonCorporateGovernance,Mr.MichaelBerkery,Mr.JohnDonnelly,Mr.PhilipLynchandDr.PatrickO’Keeffe,allhavingservedlongerthannineyears,willretireattheAnnualGeneralMeetingand,beingeligible,theyeachofferthemselvesforre-election.

Withregardtonon-executiveDirectorsproposedbytheBoardforre-election,theBoardconfirmsitsviewthat,followingaformalperformanceevaluationeachindividualDirector’sperformancecontinuestobeeffectiveanddemonstratescommitmenttotherole.

NoservicecontractsexistforanyoftheDirectorsthatprovideforanoticeperiodofmorethanoneyear.

Biographies of the Directors

Michael Berkery, Chairman

MichaelBerkerywaselectedChairmanoftheCompanyin1996.HewasChiefExecutiveOfficeroftheIrishFarmers’Associationfor25yearsuntilhisretirementinMarch2009.HealsoservedontheNationalEconomicandSocialCouncilandtheCentralReviewCommitteeoftheGovernmentNationalPartnershipProgramme.HeisadirectorofFBDTrustCompanyLimitedandanumberofothercompanies.Mr.BerkeryjoinedtheBoardin1989.

John Donnelly, Non-executive Director

JohnDonnellyisafarmer.HeisaformerPresidentoftheIrishFarmers’AssociationandwasamemberoftheEU’sEconomicandSocialCommitteebetween1994and2006.HeisadirectorofFBDTrustCompanyLimitedandisadirectorofanumberofothercompanies.Mr.DonnellyjoinedtheBoardin1989.

Sean Dorgan, Non-executive Director

SeanDorganiscurrentlynon-executiveChairmanofbothUlsterBankLimitedandTescoIrelandLimitedandheisalsoChairmanoftheGoverningBodyofDublinInstituteofTechnology.Heisanon-executiveDirectorofShortBrothersplcandFineosCorporationLimited.HewasChiefExecutiveofIDAIrelandfornineyearsuntilhisretirementattheendof2007.PriortojoiningIDAhewasSecretaryGeneraloftheDepartmentsofIndustryandCommerceandofTourismandTradeandwasChiefExecutiveofTheInstituteofCharteredAccountantsinIreland.Mr.DorganjoinedtheBoardin2008.

Andrew Langford, Group Chief Executive

AndrewLangfordjoinedFBDHoldingsplcasGroupFinancialAccountantin1996.InJuly2003,hewasappointedExecutiveDirector–FinanceofFBDInsuranceplc.InDecember2004,hewasappointedtotheBoardofFBDHoldingsplcasExecutiveDirector–Finance.In2008hewasappointedGroupChiefExecutive.PriortoworkinginFBD,heworkedinDeloitte&TouchewherehequalifiedasaCharteredAccountant.

Philip Lynch, Non-executive Director

PhilipLynchistheChiefExecutiveOfficerofOne51plc.HeisalsoChiefExecutiveandanExecutiveDirectoroftheIrishAgriculturalWholesaleSocietyLimited.HeisaNon-ExecutiveDirectorofC&CGroupplcandOpenHydroGroupLimitedandheisChairmanoftheNationalPaediatricHospitalDevelopmentBoard.Mr.LynchjoinedtheBoardin1996.

Report of the Directors [continued]


Cathal O’Caoimh, Group Finance Director

CathalO’CaoimhjoinedtheGroupinOctober2008andwasappointedtotheBoardasGroupFinanceDirector.ACharteredAccountant,hejoinedFBDfromHorizonTechnologyGroupplcwherehewasChiefFinancialOfficersince2001.PriortothatMr.O’CaoimhwasGroupFinanceDirectorofHibernianInsuranceGroup,havingpreviouslybeenGroupFinanceDirectorofNorwichUnionInsuranceGroupinIreland.

Dr. Patrick O’Keeffe, Non-executive Director

PatrickO’KeefferetiredasChairmanoftheCompanyin1996havingservedinthatrolesincetheCompany’sincorporationin1988.HewasChairmanoftheoriginalFBDcompanies,whichcomprisetheGroup,sincetheirincorporationintheearly1970s.AformerEditorandChiefExecutiveoftheIrishFarmers’Journal,heiscurrentlyChairmanoftheAgriculturalTrustLimited,FarmerBusinessDevelopmentsplc,FBDTrustCompanyLimitedandisalsoadirectorofanumberofothercompanies.Mr.O’KeeffejoinedtheBoardin1989.

Vincent Sheridan, Non-executive Director

VincentSheridanretiredasChiefExecutiveofVhiHealthcareduring2008aftersevenyearsinthatrole.PriortothathewasGroupChiefExecutiveoftheNorwichUnionInsuranceGroupinIrelandfortenyears.HeisapastpresidentoftheInstituteofCharteredAccountantsinIreland,theIrishInsuranceFederation,theInsuranceInstituteofIrelandandtheIrishAssociationofInvestmentManagers.HewasadirectoroftheIrishStockExchangefornineyearstoJune2004.HeisalsoaformercouncilmemberoftheInternationalFederationofHealthPlansandtheFinancialReportingCouncilintheUK.Heservesasadirectorofanumberofcompanies.Mr.SheridanjoinedtheBoardin2004.

Adrian Taheny, Executive Director Marketing & Sales

AdrianTahenyjoinedFBDHoldingsplcasGroupDevelopmentManagerin1997.InJuly2003hewasappointedExecutiveDirector–Marketing&SalesofFBDInsuranceplc.InDecember2004hewasappointedtotheBoardofFBDHoldingsplcasExecutiveDirector–InsuranceMarketing&Sales.PriortojoiningFBD,heworkedwithEBSBuildingSociety,whereheheldthepositionofGeneralManager–Marketing.

Johan Thijs, Non-executive Director

JohanThijsisChiefExecutiveOfficerBelgiumBusinessUnit–KBCBank&InsuranceGroup.HeobtainedaMasterofScience(AppliedMathematics)degreeandqualifiedasanActuaryatKULeuven.HejoinedKBCInsurancein1998andheldanumberofexecutivepositionspriortohisappointmenttohiscurrentrole.Mr.ThijsjoinedtheBoardin2004.

Padraig Walshe, Non-executive Director

PadraigWalshewaselectedasPresidentofCopa,theorganisationrepresentingEuropeanfarmers,inApril2009.HeistheimmediatepastpresidentoftheIrishFarmers’Associationhavingheldofficefrom2006toJanuary2010.Heisanon-executivedirectorofFarmerBusinessDevelopmentsplcandFBDTrustCompanyLimited.HewasoneofthefirstIrishNuffieldScholarshipAwardrecipientsin1996.Between1987and1989hewasPresidentofMacranaFeirme.Mr.WalshejoinedtheBoardin2006.


Directors’ and Company Secretary’s Interests

TheinterestsoftheDirectors(togetherwiththeirrespectivefamilyinterests)inthesharecapitaloftheCompany,at31December2009and1January2009,wereasfollows:

Number of ordinary shares of 60 cent each

Beneficial31 December

20091 January

2009

MichaelBerkery 30,000 30,000

JohnDonnelly 24,256 24,256

AndrewLangford 21,500 9,250

PhilipLynch 20,000 20,000

PatrickO’Keeffe 72,770 72,770

VincentSheridan 4,150 –

AdrianTaheny 13,500 13,500

PadraigWalshe 600 600

TheinterestsoftheDirectorsandtheCompanySecretaryinshareoptionsandconditionalawardsoverthesharecapitaloftheCompanyundertheshareholderapprovedshareschemesaredetailedinnote30tothefinancialstatements.

European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006

ForthepurposesofRegulation21oftheEuropeanCommunities(TakeoverBids(Directive2004/25/EC))Regulations2006,theinformationontheBoardofDirectorsonpages16and17,ShareOptionSchemes,SavingsRelatedShareOptionSchemesandthePerformanceSharePlaninnote34andtheReportonDirectors’Remunerationinnote30aredeemedtobeincorporatedinthispartoftheReportoftheDirectors.

Substantial Shareholdings

Asat2March2010theCompanyhasbeennotifiedofthefollowinginterestsof3%ormoreinitssharecapital:

Ordinary shares of 60 cent each %

FarmerBusinessDevelopmentsplc 25.64%

FBDTrustCompanyLimited 8.97%

Prudentialplcgroupofcompanies 4.06%

BankofIrelandAssetManagementLimited 3.90%

MorganStanleyInvestmentManagementLimited 3.37%

14% Non-cumulative preference shares of 60 cent each

FarmerBusinessDevelopmentsplc 100%

8% Non-cumulative preference shares of 60 cent each

FBDTrustCompanyLimited 58.38%

FarmerBusinessDevelopmentsplc 41.62%

Share Capital

TheCompanyhadfourclassesofsharesinissueattheendoftheyear.Theseclassesandthepercentageofthetotalissuedsharecapitalrepresentedbyeachareasfollows:

Voting sharesNumber in issue

% of total

Ordinarysharesof60centeach 33,269,476* 87.2

14%Non-cumulativepreferencesharesof60centeach 1,340,000 3.5

8%Non-cumulativepreferencesharesof60centeach 3,532,292 9.3

38,141,768 100.0

* excluding 2,191,730 shares held in treasury.



TheCompany’sordinarysharesof60centeacharelistedontheIrishStockExchangeandtheUKListingAuthorityandaretradedonboththeIrishStockExchangeandtheLondonStockExchange.Neitherclassofpreferenceshareistradedonaregulatedmarket.

Eachoftheaboveclassesofsharesenjoythesamerightstoreceivenoticeof,attendandvoteatmeetingsoftheCompany.

Non-voting shares Number in issue

‘A’ordinarysharesof1centeach 13,169,428

Therightsattachingtothe‘A’ordinarysharesareclearlysetoutintheArticlesofAssociationoftheCompany.TheyarenottransferableexceptonlytotheCompany.Otherthanarighttoareturnofpaidupcapitalof1centper‘A’ordinaryshareintheeventofawindingup,the‘A’ordinaryshareshavenorighttoparticipateinthecapitalortheprofitsoftheCompany.

Auditors

Theauditors,Deloitte&Touche,CharteredAccountants,willcontinueinofficeinaccordancewiththeprovisionsofSection160(2)oftheCompaniesAct,1963.

Proper Books and Records

TheDirectorshavetakenappropriatemeasurestoensurecompliancewithSection202oftheCompaniesAct1990–therequirementtokeepproperbooksofaccount–throughtheemploymentofsuitablyqualifiedaccountingpersonnelandthemaintenanceofappropriateaccountingsystems.ThebooksofaccountarelocatedatFBDHouse,Bluebell,Dublin12.

Corporate Governance

TheCorporateGovernanceStatementonpages22to26formspartofthisreportandinthistheBoardhassetouthowithasappliedtheprinciplessetoutonSection1oftheCombinedCodeonCorporateGovernance(June2008)whichwasadoptedbyboththeIrishStockExchangeandtheUKListingAuthority.

Going Concern

TheGroup’sbusinessactivities,togetherwiththefactorslikelytoaffectitsfuturedevelopment,performanceandfinancialpositionaresetoutintheChairman’sStatementandtheReviewofOperationsasarethefinancialpositionoftheGroup,itscashflows,liquiditypositionandborrowingfacilities.Inadditionnote37ofthefinancialstatementsincludestheGroup’spoliciesandprocessesforriskmanagement.

TheDirectorshaveareasonableexpectationthattheCompanyandtheGrouphaveadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Asaresulttheycontinuetoadoptthegoingconcernbasisofaccountinginpreparingthefinancialstatements.Informingthisview,theDirectorshavereviewedtheGroup’sbudgetfor2010,forecastsfor2011whichtakeaccountofreasonablyforeseeablechangesintradingperformance,thekeyrisksfacingthebusinessandthemediumtermplansapprovedbytheBoardinitsreviewoftheGroup’scorporatestrategy.

Annual General Meeting

ThenoticeoftheAnnualGeneralMeetingoftheCompanywhichwillbeheldat12.00noonon30April2010inFBDHouse,Bluebell,Dublin12,issetoutonpages102to105.


Additional Item of Ordinary Business for the Annual General Meeting

TheBoardhasdecidedtoputtheReportonDirectors’RemunerationtoashareholdervotethroughResolution4.ThereisnolegalobligationontheCompanytoputsucharesolutiontoShareholders,soitisanadvisoryresolutionandisnotbindingontheCompany.Notwithstandingthis,theRemunerationCommitteeandtheBoardrecognisethatthetablingofsucharesolutionisbestpracticeinthisarea.

Special Business for the Annual General Meeting

Inadditiontotheusualbusiness,yourBoardproposesthefollowingResolutionsnumbered7to12whicharesummarisedasfollows:

Limited disapplication of pre-emption rights

Resolution7willbeproposedatthemeetingasaSpecialResolutiontorenewtheauthorityfortheDirectorstoissuesharesforcashotherwisethanstrictlypro-ratatoexistingshareholdings,uptoamaximumof5%oftheissuedordinarysharecapital.

Authority to purchase own shares

Resolution8willbeproposedatthemeetingasaSpecialResolutiontorenewtheauthorityfortheCompany,oranysubsidiaryoftheCompany,tomakemarketpurchasesoftheCompany’ssharesupto10%oftheaggregatenominalvalueoftheissuedsharecapitalandthetextoftheresolutionsetstheminimumandmaximumpricespayableforsuchpurchases.

Re-issue price for treasury shares

Resolution9willbeproposedatthemeetingasaSpecialResolutiontosetthepricerangeatwhichtheCompany’sshareswhichareheldintreasurycanbere-issuedoff-market.

Shareholders Rights Directive Regulations

TheBoardisproposingtwoSpecialResolutions(Resolutions10and11)toreflecttheimplementationoftheShareholders’Rights(Directive2007/36/EC)Regulations2009(the“Regulations”).

Resolution10willbeproposedtomaintaintheexistingauthorityintheCompany’sArticlesofAssociationwhichpermitstheCompanytoconveneanextraordinarygeneralmeetingon14daysnoticeinwritingwherethepurposeofthemeetingistoconsideranOrdinaryResolution.Infutureyears,thisresolutionwillbetabledundertheordinarybusinessoftheAGM.

Resolution11willbeproposedtoamendtheCompany’ArticlesofAssociationsoastoupdatetheArticlestomakethemconsistentwiththeRegulationsthroughincorporationofthefollowingchanges:

a) allowingfortheconveningofshareholdermeetingstoconsideranOrdinaryResolutionwith14daysnoticeprovidedthattheCompanyoffersitsshareholdersthefacilitytovoteelectronicallyandprovidedthatthemembersagreetothisatageneralmeeting.ThatconsentwillbevalidonlyuptothedateofthefollowingAnnualGeneralMeeting.Therefore,theconsentwillberenewedannually;

b) removalofthecastingvoteoftheChairmanatgeneralmeetingsoftheCompany;

c) allowingforthefixingoftherecorddateandtimewhichshalldeterminetheeligibilityofshareholderstoparticipateandvoteatageneralmeeting;

d) requiringthatanyrequestbyamembertotableadraftresolutionunderSection133(1)(b)oftheCompaniesAct,1963shallbereceivedbytheCompanyinwritingorinelectronicformatleast42dayspriortothemeeting.



Non-Executive Directors’ Remuneration

AsacompletelyseparatemattertotheadvisoryResolution4,theCompany’sArticlesofAssociationprovidethat“theordinaryremunerationoftheDirectorsshallfromtimetotimebedeterminedbyanordinaryresolutionoftheCompany”.Thisreferstothebasicfeesofthenon-executiveDirectorsonly.Resolution12willbeproposedasanOrdinaryResolutiontoauthorisetheBoardtodeterminethesefeessubjecttoanoverallaggregatelimit.

TheDirectorsunanimouslyrecommendthatShareholdersvoteinfavourofeachoftheResolutionssetoutintheNoticeofAnnualGeneralMeetingastheyintendtodoinrespectofalloftheordinarysharesheldbythem,amountingintotalto186,776ordinarysharesasatthedateofthisreport,whichrepresentsapproximately0.49%ofthevotingrightsoftheCompany.

Approval of Financial Statements

ThefinancialstatementswereapprovedbytheBoardon2March2010.

SignedonbehalfoftheBoard



2March2010


Corporate Governance Statement

Compliance with the Combined Code on Corporate Governance

TheBoardofFBDHoldingsplciscommittedtomaintainingthehigheststandardsofcorporategovernancethroughouttheGroup.ThisstatementsetsoutindetailhowFBDhasappliedtheprinciplessetoutinSection1oftheCombinedCodeonCorporateGovernance(June2008)(the“CombinedCode”orthe“Code”)whichwaspublishedbytheFinancialReportingCouncilintheUKandadoptedbyboththeIrishStockExchangeandtheUKListingAuthority.

The Board of Directors

TheBoardprovidesleadershipandmaintainseffectivecontrolovertheactivitiesoftheGroup.TheBoardmeetsonaregularbasisandhasaformalscheduleofmattersreservedtoitforconsiderationanddecision.ThisincludestheapprovaloftheGroup’sobjectivesandstrategy,approvaloffinancialstatements,dividends,appointmentandremovalofDirectorsandtheCompanySecretary,approvaloftheannualbudgetincludingcapitalexpenditureandthereviewoftheGroup’ssystemsofinternalcontrol.

TheBoardhasdelegatedresponsibilityforthemanagementoftheGrouptotheGroupChiefExecutiveand,throughhim,toexecutivemanagement.TheBoardhasalsodelegatedsomeadditionalresponsibilitiestoCommitteesoftheBoardestablishedbyitwhosepowers,obligationsandresponsibilitiesaresetoutinwrittentermsofreference.

TheBoardiscomprisedofthreeexecutiveDirectorsandeightnon-executiveDirectors,includingitsChairman.BriefbiographiesoftheDirectorsaresetoutonpages16and17.TheBoardhasconsideredandbelievesthatduringtheyearithadtheappropriaterangeofskills,experienceandobjectivitytofulfilitsroleeffectively.

TheBoardhasdeterminedthatwiththesoleexceptionoftheChairman,byvirtueoftheofficeheholds,eachofthenon-executiveDirectorsisindependent.Inarrivingatthisdetermination,theBoardtookfullaccountofallfactors,includingthecircumstanceslistedinProvisionA.3.1oftheCodeaspotentialindicatorsofnon-independence.TheBoardbelievesthataDirectorcanandshouldbeconsideredtobeindependentnotwithstandingthatoneormoreofthesecircumstancesapplies.TheBoardfurtherbelievesthatitisthestrengthofcharacter,integrityandjudgementoftheindividualDirectorwhichdetermineshisindependence.Twoofthenon-executiveDirectorswereDirectorsofFarmerBusinessDevelopmentsplcattheyearendandfourofthenon-executiveDirectorswereDirectorsofFBDTrustCompanyLimited.Thesecompanieshold25.64%and8.97%respectivelyoftheordinarysharecapitaloftheCompany.Theirshareholdingsrepresentafinancialinvestmentbasedonthenormalexpectationofdividendincomeandcapitalappreciation.Fourofthenon-executiveDirectorshaveservedontheBoardforaperiodofgreaterthannineyears.TheBoardhastakenaccountoftheforegoingcircumstancesandhasconcludedthat,whencombinedwiththeotherrelevantfactorshighlightedearlier,itissatisfiedthatinthecaseofeachofitsnon-executiveDirectorstheirindependenceofcharacterandjudgementwasnotandisnotcompromisedinanyway.

Onappointment,andregularlythereafter,DirectorsarebriefedinwritingandorallybytheChairmanandexecutivemanagement.PapersaresenttoeachmemberoftheBoardinsufficienttimebeforeBoardmeetings.EachmemberoftheBoardmaytakeindependentprofessionaladviceattheCompany’sexpenseifdeemednecessaryinthefurtheranceoftheirduties.TheyhaveaccesstotheadviceandtheservicesoftheCompanySecretarywhohasresponsibilitytoensurethatBoardproceduresarefollowedandthatapplicablerules,regulationsandotherobligationsarecompliedwith.


Senior Independent Director

TheBoardhasappointedMr.VincentSheridanastheSeniorIndependentDirector.Mr.SheridanisavailabletoshareholderswhohaveconcernswhichcannotbeaddressedthroughcontactwiththeChairman,theGroupChiefExecutiveortheGroupFinanceDirector.

Performance Appraisal

TheBoardhasconductedanevaluationofitsperformanceandthatofitsCommitteesandindividualDirectors.Thiswasachievedthroughdiscussionandwrittenevaluationsubmissions.TheChairman’sperformancewasevaluatedbythenonexecutive-Directors,ledbyMr.Sheridan,theSeniorIndependentDirector,andtakingintoaccounttheviewsoftheexecutiveDirectors.

Board Committees

Asstatedearlier,theBoardhasestablishedthreeCommitteestoassistintheexecutionofitsresponsibilities.Theseare

n theAuditCommittee;

n theRemunerationCommittee;and

n theNominationCommittee.

EachoftheCommitteeshaswrittentermsofreferencewhichwereapprovedbytheBoardwhichsetouttheCommittee’spowers,responsibilitiesandobligations.AllofthesetermsofreferenceareavailableontheGroup’swebsitewww.fbdgroup.com.

The Audit Committee

TheAuditCommitteeconsistssolelyofnon-executiveDirectorsallofwhomareconsideredbytheBoardtobeindependent–VincentSheridan(itschairman),SeanDorganandPatrickO’Keeffe.TheBoardhasdeterminedthatMr.SheridanistheAuditCommittee’sfinancialexpert.

TheGroupChiefExecutive,theGroupFinanceDirector,theCompanySecretaryandtheHeadofInternalAuditnormallyattendmeetingsoftheCommitteewhiletheexternalauditorsattendasrequiredandhaveunrestrictedaccesstotheCommitteechairmanatalltimes.

ThemainrolesandresponsibilitiesfortheAuditCommitteearesetoutinitstermsofreferenceandinclude:

n monitoringtheintegrityoftheGroup’sfinancialstatementsandreviewingthesignificantfinancialreportingissuesandjudgementscontainedinthem;

n reviewingthehalfyearlyreportandthefinancialstatementspriortotheirsubmissiontotheBoard;

n consideringandmakingrecommendationstotheBoardinrelationtotheappointment,reappointmentandremovaloftheexternalauditors;

n reviewingthetermsofengagementoftheexternalauditors;

n assessingannuallytheindependenceandobjectivityoftheexternalauditors;

n reviewingannuallytheauditplanwiththeexternalauditors;

n reviewingthestatementoninternalcontrolpriortoitsconsiderationbytheBoard;

n assessingthesignificantrisksfacingtheGroupintheachievementofitsobjectives;

n reviewingandwhereappropriateapprovingtheactivities,effectiveness,structureandresourcingoftheinternalauditfunction;and

n approvingtheGroup’sarrangementsforemployeestoraiseconcerns,inconfidence,aboutpossiblewrongdoing.

TheseresponsibilitiesaredischargedbytheCommitteethroughouttheyearthroughaformalprogrammeofworkwhichfocusesonalloftheseareas.TheCommitteealsomeetsseparately,atleastannually,withtheexternalauditorsandwiththeHeadofInternalAudit,withoutexecutivemanagementpresent.


Aspreviouslynoted,oneoftheresponsibilitiesoftheCommitteeistomakerecommendationstotheBoardinrelationtothereappointmentoftheexternalauditors.Duringtheyear,aspartofthisprocess,theCommitteehasconsideredexternalauditorobjectivityandindependenceinthecircumstanceoftheauditfirmprovidingnon-auditservices.AspartofitsdeliberationstheCommitteetookintoaccounttherelevantsectionsoftheFRC’sGuidanceonAuditCommittees.TheCommitteeconcludedthatsufficientsafeguardsareinplacetosafeguardauditorobjectivityandindependence,mostnotably:

n prohibitionsonthetypesofnon-auditworkwhichtheexternalauditorcanundertake;

n feelimitsforsuchworkabovewhichCommitteepre-approvalisrequired;and

n annualreviewbytheCommitteeoftheleveloffeespayabletotheexternalauditorforbothauditandnon-auditwork.

TheAuditCommitteehasrecommendedtotheBoardthattheexternalauditorscontinueinoffice.

The Remuneration Committee

TheRemunerationCommitteeconsistssolelyofnon-executiveDirectors–MichaelBerkery(itschairman),PhilipLynchandPatrickO’Keeffe.

TheprincipalresponsibilitiesoftheCommitteearesetoutinitstermsofreferenceandinclude:

n determiningtheGroup’sframeworkorpolicyfortheremunerationofexecutives;

n determiningtheindividualremunerationpackagesofeachexecutiveDirector,theCompanySecretaryandotherseniormembersofexecutivemanagement;

n reviewingthedesignofsharebasedincentiveplansandmakingrecommendationsforchangeinthisareatotheBoardforsubsequentapprovalbyshareholdersasnecessary;and

n grantingawardsundertheFBDPerformanceSharePlanandgrantingoptionsoversharesundertheFBDHoldingsplcExecutiveShareOptionScheme.

TheCommitteehasaccesstotheadviceofindependentfirmsofcompensationandbenefitconsultantswhennecessary.TheReportonDirectors’Remunerationissetoutinnote30tothefinancialstatements.

ItisintendedtotablearesolutionattheAnnualGeneralMeetingoftheCompanyforshareholderstovoteontheremunerationreport.AsthereisnolegalobligationontheCompanytoputsucharesolutiontoshareholders,itisanadvisoryresolutionandisnotbindingontheCompany.Notwithstandingthis,theRemunerationCommitteeandtheBoardrecognisethatthetablingofsucharesolutionisbestpracticeinthisarea.

The Nomination Committee

TheNominationCommitteeconsistssolelyofnon-executiveDirectors–MichaelBerkery(itschairman),JohnDonnelly,PhilipLynchandPatrickO’Keeffe.

TheCommitteemakesrecommendationstotheBoardtoensurethatthecompositionoftheBoardanditsCommitteesisappropriatetotheneedsoftheCompanyandtheGroup.

Theprocessusedistoassesstheskills,knowledgeandexperiencerequiredanddeterminehowthesearecurrentlyrepresentedontheBoard.WheredisparitiesarerecognisedandagreedwiththeBoard,theCommitteeestablishesthemeansofidentifyingsuitablecandidatesforappointment.

NorecommendationsweremadetotheBoardduringtheyearforchangestothemembershipoftheBoard.

Corporate Governance Statement [continued]


Accountability and Audit

AstatementdealingwiththeresponsibilitiesoftheDirectorsinrelationtothepreparationofthefinancialstatementsissetoutonpage27.TheresponsibilitiesoftheCompany’sindependentauditorsaresetoutintheirreportonpages28and29.

Relations with Shareholders

Communicationswithshareholdersaregivenhighpriority.Throughitsannualreportandregulatoryannouncementsduringtheyear,theGroupprovidesareviewoftheGroup’sperformanceandprospects.TheGroup’swebsitewww.fbdgroup.comprovidesthefulltextofitsAnnualandInterimReports,inadditiontothesignificantregulatoryannouncementsmadeincludingannualfinancialstatements,halfyearlyreports,tradingstatementsandinterimmanagementstatements.

TheGroupChiefExecutive,GroupFinanceDirectorandotherseniorexecutivesmeetwithinstitutionalshareholdersandanalystsprincipallyatthetimeofthereleaseoftheannualandhalfyearlyresults.Duringtheyear,theBoardreceivedreportsfrommanagementontheissuesraisedbyinvestorsandanalystsinthecourseofsuchmeetings.

AnalystandbrokernotesontheCompanyarecirculatedtotheBoardatregularintervalsthroughouttheyear.

InvestorsareencouragedtoattendtheAnnualGeneralMeetingatwhichtheycanmeetandquestiontheChairmanandtheBoardonitsperformanceandthatoftheCompanyandtheGroup.NoticeoftheAnnualGeneralMeeting,togetherwiththeAnnualReportandfinancialstatements,issenttoshareholdersatleast20businessdaysbeforethemeeting.Aseparateresolutionisproposedoneachsubstantiallyseparateissueincluding

Attendance at Board and Board Committee Meetings During 2009

Board Audit Remuneration Nomination

A B A B A B A B

MichaelBerkery 7 7 – – 2 2 2 2

JohnDonnelly 7 7 – – – – 2 2

SeanDorgan 7 7 4 4 – – – –

AndrewLangford 7 7 – – – – – –

PhilipLynch 7 7 – – 2 2 2 1

CathalO’Caoimh 7 7 – – – – – –

PatrickO’Keeffe 7 7 4 4 2 2 2 2

VincentSheridan 7 7 4 4 – – – –

AdrianTaheny 7 7 – – – – – –

JohanThijs 7 5 – – – – – –

PadraigWalshe 7 5 – – – – – –

A indicates the number of meetings held during the period the Director was a member of the Board or Committee. B indicates the number of meetings attended during the period the Director was a member of the Board or Committee.


aparticularresolutionrelatingtotheDirectors’Reportandfinancialstatements.Detailsoftheproxyvotescastforandagainsteachresolutionareannouncedatthemeetingaftertheresultisdeclaredontheshowofhands.ThesedetailsarealsonotifiedtotheStockExchangesandarepublishedontheGroup’swebsite.

Going Concern

TheFinancialStatementshavebeenpreparedonthegoingconcernbasisand,asrequiredbytheCombinedCode,theDirectorsreportthattheyhavesatisfiedthemselvesthattheGroupisagoingconcern,havingadequateresourcestocontinueinoperationalexistencefortheforeseeablefuture.Thismatteriselaboratedfurtheronpage19intheReportoftheDirectors.

Internal Control

TheBoardisresponsiblefortheGroup’ssystemofinternalcontrolandforreviewingitseffectiveness.Suchasystemisdesignedtomanageratherthaneliminatetheriskoffailuretoachievebusinessobjectivesandcanprovideonlyreasonableandnotabsoluteassuranceagainstmaterialmisstatementorloss.

InaccordancewiththerevisedFRCguidanceforDirectorsoninternalcontrolpublishedinOctober2005,“InternalControlRevisedGuidanceforDirectorsontheCombinedCode”,theBoardconfirmsthatthereisanongoingprocessforidentifying,evaluatingandmanaginganysignificantrisksfacedbytheGroup,thatithasbeeninplacefortheyearunderreviewanduptothedateofapprovalofthefinancialstatements,thatthisprocessisregularlyreviewedbytheBoard.Thekeyriskmanagementandinternalcontrolproceduresinclude:

n skilledandexperiencedmanagementandstaff;

n anorganisationstructurewithclearlydefinedlinesofresponsibilityandauthority;

n acomprehensivesystemoffinancialcontrolincorporatingbudgeting,periodicfinancialreportingandvarianceanalysis;

n theoperationofapprovedriskmanagementpoliciesintheareasofunderwriting,claims,investmentandtreasury;

n aninternalcontrolgroupcomprisingseniormanagementwhosemainroleistoidentify,keepunderreviewandmanagesignificantinternalcontrolrisksfacingtheGroup;

n aninternalauditfunction;

n ariskmanagementfunction;

n anauditcommitteewhoseformaltermsofreferenceincluderesponsibilityforassessingthesignificantrisksfacingtheGroupintheachievementofitsobjectives.

TheBoardhasreviewedtheeffectivenessoftheGroup’ssystemofinternalcontrol.ThisreviewtookaccountoftheprincipalrisksfacingtheGroup,thecontrolsinplacetomanagethoserisksandtheproceduresinplacetomonitorthem.

Compliance

FBDhascomplied,throughouttheyearended31December2009,withtheprovisionssetoutinSection1oftheCombinedCodeonCorporateGovernancewiththeexceptionofthefollowingmatter.TheChairmancontinuestobeChairmanoftheRemunerationCommittee.TheBoardremainsoftheviewthatheisthemostappropriatepersonforthispositionandfurtherbelievesthatthecompositionoftheCommitteeensuresthatanappropriatebalanceofexperienceandskillsareavailabletotheCommitteeandalsoensuresthatnooneperson’sopinionisallowedtodominateproceedings.

Corporate Governance Statement [continued]


Statement of Directors’ Responsibilities

TheDirectorsareresponsibleforpreparingtheAnnualReportandfinancialstatements,inaccordancewithapplicablelawandregulations.

CompanylawrequirestheDirectorstopreparefinancialstatementsforeachfinancialyear.Undersuchlaw,theDirectorshavepreparedtheCompanyandGroupfinancialstatementsinaccordancewithInternationalFinancialReportingStandardsasadoptedbytheEU(“IFRSs”)andinaccordancewiththeprovisionsoftheCompaniesActs,1963to2009.

TheCompanyandGroupfinancialstatementsarerequiredbylawandIFRSstopresentfairlythefinancialpositionandperformanceoftheCompanyandtheGroup.TheCompaniesActs,1963to2009provideinrelationtosuchfinancialstatementsthatreferencesintherelevantpartofthatActtofinancialstatementsgivingatrueandfairviewarereferencestotheirachievingafairpresentation.

InpreparingeachoftheCompanyandGroupfinancialstatements,theDirectorsarerequiredto:

n selectsuitableaccountingpoliciesandthenapplythemconsistently;

n makejudgmentsandestimatesthatarereasonableandprudent;

n statethatthefinancialstatementscomplywithapplicableIFRSsasadoptedbytheEU;and

n preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethattheGroupandCompanywillcontinueinbusiness.

TheDirectorsareresponsibleforkeepingproperbooksofaccountwhichdisclosewithreasonableaccuracyatanytimethefinancialpositionoftheCompanyandtheGroupandenablethemtoensurethatthefinancialstatementsarefreefrommaterialmisstatementorerrorandcomplywiththeCompaniesActs,1963to2009.TheDirectorsarealsoresponsiblefortakingsuchstepsasarereasonablyopentothemtosafeguardtheassetsoftheCompanyandtheGroupandtopreventanddetectfraudandotherirregularities.

TheDirectorsarealsorequiredbytheTransparency(Directive2004/109/EC)Regulations2007toincludeamanagementreportcontainingafairreviewofthebusinessandadescriptionoftheprincipalrisksanduncertaintiesfacingtheGroup.

UnderapplicablelawandtherequirementsoftheListingRulesissuedbytheIrishStockExchange,theDirectorsarealsoresponsibleforpreparingaDirectors’ReportandreportsrelatingtoDirectors’remunerationandcorporategovernancethatcomplywiththatlawandthoseRules.TheDirectorsareresponsibleforthemaintenanceandintegrityofthecorporateandfinancialinformationincludedontheCompany’swebsite.LegislationinIrelandgoverningthepreparationanddisseminationoffinancialstatementsmaydifferfromlegislationinotherjurisdictions.

TheDirectorsconfirmthat,tothebestoftheirknowledgeandbelief:

n thefinancialstatements,preparedinaccordancewithIFRSs,giveatrueandfairviewoftheassets,liabilitiesandfinancialpositionfortheGroupasat31December2009andoftheresultfortheyearthenended;and

n theReportoftheDirectors,theChairman’sStatementandtheReviewofOperationsincludeafairreviewofthedevelopmentandperformanceoftheGroup’sbusinessandthestateofaffairsoftheGroupat31December2009,togetherwithadescriptionoftheprincipalrisksanduncertaintiesfacingtheGroup.

OnbehalfoftheBoard



2March2010


Independent Auditors’ ReportTOTHEMEMBERSOFFBDHOLDINGSPLC

WehaveauditedthefinancialstatementsofFBDHoldingsPlcfortheyearended31December2009whichcomprisetheGroupFinancialStatementsincludingtheStatementofAccountingPolicies,theConsolidatedIncomeStatement,theConsolidatedStatementofComprehensiveIncome,thePro-formaReconciliationofConsolidatedOperatingProfittoLossbeforeTax,theConsolidatedStatementofFinancialPosition,theConsolidatedStatementofCashFlows,theConsolidatedStatementofChangesinEquity,theCompanyFinancialStatementsincludingtheCompanyStatementofFinancialPosition,theCompanyStatementofCashFlows,theCompanyStatementofChangesinEquityandtherelatednotes1to38.ThesefinancialstatementshavebeenpreparedundertheaccountingpoliciessetoutintheStatementofAccountingPolicies.

ThisreportismadesolelytotheCompany’smembers,asabody,inaccordancewithSection193oftheCompaniesAct,1990.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.

Respective Responsibilities of Directors and Auditors

Thedirectorsareresponsible,assetoutintheStatementofDirectors’Responsibilities,forpreparingtheAnnualReport,includingthepreparationoftheGroupFinancialStatementsandtheParentCompanyFinancialStatementsinaccordancewithapplicablelawandInternationalFinancialReportingStandards(“IFRSs”)asadoptedbytheEuropeanUnion.

Ourresponsibility,asindependentauditor,istoauditthefinancialstatementsinaccordancewithrelevantlegalandregulatoryrequirementsandInternationalStandardsonAuditing(UKandIreland).

WereporttoyououropinionastowhethertheGroupFinancialStatementsandtheParentCompanyFinancialStatementsgiveatrueandfairview,inaccordancewithIFRSsasadoptedbytheEuropeanUnion,andareproperlypreparedinaccordancewithIrishstatutecomprisingtheCompaniesActs,1963to2009,andArticle4oftheIASRegulation.Wealsoreporttoyouwhetherinouropinion:properbooksofaccounthavebeenkeptbytheCompany;whether,atthebalancesheetdate,thereexistsafinancialsituationrequiringtheconveningofanextraordinarygeneralmeetingoftheCompany;andwhethertheinformationgivenintheReportoftheDirectorsisconsistentwiththefinancialstatements.TheinformationincludedintheReportoftheDirectorsincludesthatspecificinformationpresentedintheReviewofOperationsascrossreferencedfromtheReportoftheDirectorsandthatspecificinformationpresentedintheCorporateGovernanceStatementascrossreferencedfromtheReportoftheDirectors.Inaddition,westatewhetherwehaveobtainedalltheinformationandexplanationsnecessaryforthepurposeofourauditandwhethertheCompany’sStatementofFinancialPositionisinagreementwiththebooksofaccount.

Wealsoreporttoyouif,inouropinion,anyinformationspecifiedbylawortheListingRulesoftheIrishStockExchangeregardingdirectors’remunerationanddirectors’transactionsisnotdisclosedand,wherepracticable,includesuchinformationinourreport.

WereviewwhethertheCorporateGovernanceStatementreflectstheCompany’scompliancewiththenineprovisionsoftheJune2008CombinedCodespecifiedforourreviewbytheListingRulesoftheIrishStockExchange,andwereportifitdoesnot.Wearenotrequiredtoconsiderwhethertheboard’sstatementsoninternalcontrolcoverallrisksandcontrols,orformanopinionontheeffectivenessoftheGroup’scorporategovernanceproceduresoritsinternalriskandcontrolprocedures.


Wereadtheotherinformationcontainedintheannualreportfortheaboveyearasdescribedinthecontentssectionandconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementormaterialinconsistencieswiththefinancialstatements.Ourresponsibilitiesdonotextendtoanyotherinformation.

Basis of Audit Opinion

WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UKandIreland)issuedbytheAuditingPracticesBoard.Anauditincludesexamination,onatestbasis,ofevidencerelevanttotheamountsanddisclosuresinthefinancialstatements.ItalsoincludesanassessmentofthesignificantestimatesandjudgementsmadebythedirectorsinthepreparationofthefinancialstatementsandofwhethertheaccountingpoliciesareappropriatetotheCompany’sandtheGroup’scircumstances,consistentlyappliedandadequatelydisclosed.

Weplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichweconsiderednecessaryinordertoprovideuswithsufficientevidencetogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityorerror.Informingouropinionweevaluatedtheoveralladequacyofthepresentationofinformationinthefinancialstatements.

Opinion

Inouropinion:

n theGroupFinancialStatementsgiveatrueandfairview,inaccordancewithIFRSsasadoptedbytheEuropeanUnion,ofthestateoftheaffairsoftheGroupasat31December2009andofitslossfortheyearthenended;

n theGroupFinancialStatementshavebeenproperlypreparedinaccordancewiththeCompaniesActs,1963to2009andArticle4oftheIASRegulations;

n theParentCompanyFinancialStatementsgiveatrueandfairview,inaccordancewithIFRSsasadoptedbytheEuropeanUnion,asappliedinaccordancewiththeprovisionsoftheCompaniesActs1963to2009,ofthestateoftheparentCompany’saffairsasat31December2009;and

n theParentCompanyFinancialStatementshavebeenproperlypreparedinaccordancewiththeCompaniesActs,1963to2009.

Wehaveobtainedalltheinformationandexplanationsweconsiderednecessaryforthepurposeofouraudit.InouropinionproperbooksofaccounthavebeenkeptbytheCompany.TheCompany’sStatementofFinancialPositionisinagreementwiththebooksofaccount.

InouropiniontheinformationgivenintheReportoftheDirectorsisconsistentwiththefinancialstatements.

ThenetassetsoftheCompany,asstatedintheStatementofFinancialPositionaremorethanhalftheamountofitscalled-upsharecapitaland,inouropinion,onthatbasistheredidnotexistat31December2009afinancialsituationwhich,underSection40(1)oftheCompanies(Amendment)Act,1983,wouldrequiretheconveningofanextraordinarygeneralmeetingoftheCompany.

Deloitte & Touche Chartered Accountants and Registered Auditors Dublin

2March2010


Statement of Accounting PoliciesFORTHEYEARENDED31DECEMBER2009

Basis of Preparation

TheGroupandCompanyfinancialstatementshavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(“IFRSs”)adoptedbytheEuropeanUnionandthereforetheGroupfinancialstatementscomplywithArticle4oftheEUIASRegulation.

Inthecurrentyear,thelayoutoftheconsolidatedincomestatementhasbeenamendedandanadditionalstatementhasbeenaddedtothefinancialstatements.Theadditionalstatement,apro-formareconciliationofconsolidatedoperatingprofittolossbeforetax,whichisnotgovernedbyIFRSsisdesignedtoprovidesupplementaryinformationtousersofthefinancialstatementsincludingoperatingprofit,akeyperformancemeasuremonitoredbytheBoard.Furtherdetailonthisadditionalstatementisincludedinnote38tothefinancialstatements.

Adoption of New and Revised International Financial Reporting Standards (“IFRSs”)

ThefollowingnewandrevisedStandardsandInterpretationshavebeenadoptedinthecurrentperiodandhaveaffectedtheamountsreportedinthesefinancialstatements:

Standards affecting presentation and disclosure

Standard Nature of change

IAS 1 (as revised in 2007): Presentation of Financial Statements

IAS1(2007)hasintroducedterminologychanges(includingrevisedtitlesforthefinancialstatements)andchangesintheformatandcontentofthefinancialstatements.

Improving Disclosures about Financial Instruments (Amendments to IFRS 7 Financial Instruments: Disclosures)

TheamendmentstoIFRS7expandthedisclosuresrequiredinrespectoffairvaluemeasurementsandliquidityrisk.

IFRS 8: Operating Segments IFRS8isadisclosurestandardthathasresultedintheprovisionofadditionalinformationontheGroup’sreportablesegments.


Standards and Interpretations adopted with no effect on financial statements

ThefollowingnewandrevisedStandardsandInterpretationshavealsobeenadoptedinthesefinancialstatements.Theiradoptionhasnothadanysignificantimpactontheamountsreportedinthesefinancialstatementsbutmayimpacttheaccountingforfuturetransactionsorarrangements.

Standard Description

IAS 23 (as revised in 2007): Borrowing Costs Theprincipalchangetothestandardwastoeliminatetheoptiontoexpenseallborrowingcostswhenincurred.

Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation

TherevisionstoIAS32amendthecriteriafordebt/equityclassificationbypermittingcertainputtablefinancialinstrumentsandinstruments(orcomponentsofinstruments)thatimposeonanentityanobligationtodelivertoanotherpartyapro-ratashareofthenetassetsoftheentityonlyonliquidation,tobeclassifiedasequity,subjecttospecifiedcriteriabeingmet.

Amendments to IFRS 1: First-time Adoption of International Financial Reporting Standards and IAS 27: Consolidated and Separate Financial Statements – Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate

Theamendmentsdealwiththemeasurementofthecostofinvestmentsinsubsidiaries,jointlycontrolledentitiesandassociateswhenadoptingIFRSsforthefirsttimeandwiththerecognitionofdividendincomefromsubsidiariesinaparent’sseparatefinancialstatements.

Amendments to IFRS 2: Share-based Payment – Vesting Conditions and Cancellations

TheamendmentsclarifythedefinitionofvestingconditionsforthepurposesofIFRS2,introducetheconceptof‘non-vesting’conditions,andclarifytheaccountingtreatmentforcancellations.

Amendments to IAS 38: Intangible Assets AspartofImprovementstoIFRSs(2008),IAS38hasbeenamendedtostatethatanentityispermittedtorecogniseaprepaymentassetforadvertisingorpromotionalexpenditureonlyuptothepointatwhichtheentityhastherighttoaccessthegoodspurchasedoruptothepointofreceiptofservices.

Amendments to IAS 40: Investment Property AspartofImprovementstoIFRSs(2008),IAS40hasbeenamendedtoincludewithinitsscopeinvestmentpropertyinthecourseofconstruction.


Standards and Interpretations not yet effective

Atthedateofauthorisationofthesefinancialstatements,thefollowingnewStandardsandInterpretationsandamendmentstoexistingStandardsandInterpretationswhichhavenotbeenappliedinthesefinancialstatementswereinissuebutnotyeteffective:

Standard

IFRS 3 (as revised in 2008): Business Combinations (effective date: accounting periods beginning on or after 1 July 2009)

Amendments to IFRS 5: Non-current Assets Held for Sale and Discontinued Operations (effective date: accounting periods beginning on or after 1 January 2010)

Amendments to IAS 7: Statement of Cash Flows (effective date: accounting periods beginning on or after 1 January 2010)

IAS 27 (as revised in 2008): Consolidated and Separate Financial Statements (effective date: accounting periods beginning on or after 1 July 2009)

IAS 28 (as revised in 2008): Investments in Associates (effective date: accounting periods beginning on or after 1 July 2009)

IFRIC 17: Distributions of Non-cash Assets to Owners (effective date: accounting periods beginning on or after 1 July 2009)

IFRIC 18: Transfers of Assets from Customers (effective date: accounting periods beginning on or after 1 July 2009)

TheDirectorsanticipatethattheadoptionoftheseStandardsandInterpretationsinfutureperiodswillhavenomaterialimpact(otherthanpresentationanddisclosure)onthefinancialstatementsoftheGroupwhentherelevantstandardscomeintoeffect.

Statement of Accounting Policies [continued]

Accounting Policies

TheprincipalaccountingpoliciesadoptedbytheBoardare:

A) Accounting Convention

TheGroupandCompanyfinancialstatementsarepreparedunderthehistoricalcostconventionasmodifiedby

(i) therevaluationofproperty,investmentsheldfortrading,availableforsaleinvestmentsandinvestmentproperty,whicharemeasuredatfairvalueand

(ii) investmentsheldtomaturity,whicharemeasuredatamortisedcost.

B) Basis of Consolidation

TheconsolidatedfinancialstatementsincludethefinancialstatementsoftheCompanyanditssubsidiaryundertakings,madeupto31December.InsubsidiaryundertakingscontrolisachievedwheretheCompanyhasthepowertogovernthefinancialandoperatingpoliciesofaninvesteeentitysoastoobtainbenefitsfromitsactivities.

AllintraGrouptransactions,balances,incomeandexpensesareeliminatedonconsolidation.


IndividualsubsidiaryaccountsarepreparedunderlocalGAAP,withrelevantadjustmentsmadeduringpreparationoftheGroupfinancialstatementstoaligntheiraccountingpolicieswiththoseoftheGroup.Theresultsofsubsidiariesacquiredordisposedofduringtheyearareincludedintheconsolidatedincomestatementfromtheeffectivedateofacquisitionoruptotheeffectivedateofdisposal.

Theacquisitionofsubsidiariesisaccountedforusingthepurchasemethod.Thecostoftheacquisitionismeasuredattheaggregateofthefairvalues,atthedateofexchange,ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissuedbytheGroupinexchangeforcontroloftheacquiree,plusanycostsdirectlyattributabletothebusinesscombination.Theacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesthatmeettheconditionsforrecognitionunderIFRS3arerecognisedattheirfairvalueattheacquisitiondate,exceptfornon-currentassets(ordisposalgroups),thatareclassifiedasheldforsaleinaccordancewithIFRS5,NonCurrentAssetsHeldforSaleandDiscontinuedOperations,whicharerecognisedandmeasuredatfairvaluelesscostsofsale.

Goodwillarisingonacquisitionisrecognisedasanassetandinitiallymeasuredatcost,beingtheexcessofthecostofthebusinesscombinationovertheGroup’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilitiesrecognised.If,afterreassessment,theGroup’sinterestinthenetfairvalueoftheacquiree’sidentifiableassets,liabilitiesandcontingentliabilitiesexceedsthecostofthebusinesscombination,theexcessisrecognisedimmediatelyintheconsolidatedincomestatement.

Minorityinterestsarecreditedwiththeirshareofincomeandexpense.MinorityinterestsinthenetassetsofconsolidatedsubsidiariesareidentifiedseparatelyfromtheGroup’sequitytherein.Minorityinterestsconsistoftheamountofthoseinterestsatthedateoftheoriginalbusinesscombinationandtheminority’sshareofchangesinequitysincethedateofthecombination.Losses

applicabletotheminorityinexcessoftheminority’sinterestinthesubsidiary’sequityareallocatedagainsttheinterestsoftheGroupexcepttotheextentthattheminorityhasabindingobligationandisabletomakeanadditionalinvestmenttocoverthelosses.

C) Revenue Recognition

Revenuerepresentsgrosspremiumswritten,brokingcommissions,fees,othercommissions,interestanddividendsreceivable,rentsreceivable,salesofgoodsandservicesandsalesbytheproperty,hotelandleisureoperations,netofdiscounts,levies,VATandothersalesrelatedtaxes.Salesofgoodsandservicesarerecognisedwhenthegoodsandservicesaredeliveredandtitlehaspassed.

RevenuefrominsurancecontractsisaccountedforinaccordancewithAccountingPolicy(D).Interestincomeisaccruedonatimebasiswithreferencetotheprincipaloutstandingattheeffectiveinterestrateapplicable.

Insuranceagencycommissionsthatdonotrequireanyfurtherservicesarerecognisedasrevenueontheeffectivecommencementorrenewaldateoftherelatedpolicies.Iffurtherservicesaretoberendered,thecommission,orpartofit,isdeferredandrecognisedovertheperiodduringwhichthepolicyisinforce.

Feesforliabilityclaimshandlingarerecognisedintheyeartowhichtheyrelate.

Hotelrevenueisrecognisedinlinewiththeprovisionoftherelatedservice.Receiptsfromadvancebookingsaredeferredandrecognisedasrevenueatthetimeofuse.

Dividendincomefrominvestmentsisrecognisedwhentheshareholders’rightstoreceivepaymenthavebeenestablished.

Rentalincomeisrecognisedonastraight-linebasisovertheperiodofthelease.


D) Insurance Contracts

(i) Premiums written Premiumswrittenrelatetobusinessinceptedduringtheyear,togetherwithanydifferencebetweenbookedpremiumsforprioryearsandthosepreviouslyaccrued,andincludeestimatesofpremiumsdue.Premiumswrittenexcludetaxesanddutiesleviedonpremiumsanddirectlyrelatedexpenses,e.g.commissions.

(ii) Unearned premiums Unearnedpremiumsarethoseportionsofpremiumincomewrittenintheyearthatrelatetoinsurancecoveraftertheperiodend.Unearnedpremiumsarecomputedonadailypro-ratabasisofpremiumwritten.At31Decembereachyear,anassessmentismadeofwhethertheprovisionforunearnedpremiumsisadequate.

(iii) Deferred acquisition costs Deferredacquisitioncostsrepresenttheproportionofnetacquisitioncostswhichareattributabletotheunearnedpremiums.Acquisitioncostscomprisethedirectandindirectcostsofobtainingandprocessingnewinsurancebusiness.Thesecostsarerecognisedasadeferredacquisitioncostassetandamortisedonthesamebasisastherelatedpremiumsareearned,andaretestedforimpairmentat31Decembereachyear.

(iv) Unexpired risks At31Decembereachyear,anassessmentismadeofwhethertheprovisionforunearnedpremiumsisadequate.Provisionforunexpiredrisksismadewheretheexpectedclaims,relatedexpensesanddeferredacquisitioncostsareexpectedtoexceedunearnedpremiums,aftertakingaccountoffutureinvestmentincome.

(v) Claims incurred Claimsincurredcomprisethecostofallinsuranceclaimsoccurringduringtheyear,whetherreportedornot,andanyadjustmentstoclaimsoutstandingfrompreviousyears.

Fullprovision,netofreinsurancerecoveries,ismadeatthereportingdatefortheestimatedcostofclaimsincurredbutnotsettled,includingclaimsincurredbutnotyetreportedandexpensestobeincurredafterthereportingdateinsettlingthoseclaims.TheGrouptakesallreasonablestepstoensurethatithasappropriateinformationregardingnotifiedclaimsandusesthisinformationwhenestimatingthecostofthoseclaims.

TheGroupusesestimationtechniques,basedonstatisticalanalysisofpastexperience,tocalculatetheestimatedcostofclaimsoutstandingattheyearend.Itisassumedthatthedevelopmentpatternofthecurrentclaimswillbeconsistentwithpreviousexperience.Allowanceismade,however,foranychangesoruncertaintiesthatmaycausethecostofunsettledclaimstoincreaseorreduce.Thesechangesoruncertaintiesmayarisefromissuessuchastheeffectsofinflation,changesinthemixofbusinessorthelegalenvironment.

Ateachreportingdate,liabilityadequacytestsareperformedtoensuretheadequacyoftheinsuranceliabilities.Inperformingthesetests,currentbestestimatesoffuturecashflowsandclaimshandlingandadministrationexpensesareused.Anydeficiencyisimmediatelyrecognisedintheconsolidatedincomestatement.

ProvisionisalsomadeinrespectoftheGroup’sshareoftheestimatedliabilityforoutstandingclaimsoftheMotorInsurers’BureauofIreland(“MIBI”).ThisprovisionisbasedonourestimatedcurrentmarketshareandthecurrentoutstandingclaimsoftheMIBI.



(vi) Reinsurance Premiumspayableinrespectofreinsuranceceded,arerecognisedintheperiodinwhichthereinsurancecontractisenteredintoandincludeestimateswheretheamountsarenotdeterminedatthereportingdate.Premiumsareexpensedovertheperiodofthereinsurancecontract,calculatedprincipallyonadailypro-ratabasis.

Areinsuranceasset(reinsurers’shareofclaimsoutstandingandprovisionforunearnedpremium)isrecognisedtoreflecttheamountestimatedtoberecoverableunderthereinsurancecontractsinrespectoftheoutstandingclaimsreportedunderinsuranceliabilities.Theamountrecoverablefromreinsurersisinitiallyvaluedonthesamebasisastheunderlyingclaimsprovision.TheamountrecoverableisreducedwhenthereisaneventarisingaftertheinitialrecognitionthatprovidesobjectiveevidencethattheGroupmaynotreceiveallamountsdueunderthecontractandtheeventhasareliablymeasurableimpactontheexpectedamountthatwillberecoverablefromthereinsurer.

Thereinsurers’shareofeachunexpiredriskprovisionisrecognisedonthesamebasis.

E) Operating Profit

Operatingprofitisreportedonthebasisofalongerterminvestmentreturn.Thelong-termnatureofmuchoftheGroup’soperationsmeansthat,formanagementdecision-makingandinternalperformancemanagement,short-termrealisedandunrealisedinvestmentgainsandlossesaretreatedasnon-operatingitems.TheGroupfocusesinsteadonanoperatingprofitmeasurethatincorporatesanexpectedreturnoninvestments.Financecosts(note4)andthefluctuationbetweenthelongerterminvestmentreturnandtheactualinvestmentreturn(note2(c)),whichincludesrealisedandunrealisedgainsandlossesandprofitsorlossesarisingfromsubstantialnonrecurringtransactionsarechargedorcreditedtothepro-formareconciliationofconsolidated

operatingprofittolossbeforetax.Asaresult,theoperatingprofitisnotsubjecttodistortionfromfluctuationsininvestmentreturns.

F) Property, Plant and Equipment

(i) Property Hotelandgolfresortassetsandpropertyheldforownuseinthesupplyofservicesorforadministrativepurposesarestatedattheirrevaluedamounts,beingthefairvalueatthedateofrevaluationasdeterminedbyprofessionalvaluersorataloweramountif,intheopinionoftheDirectors,aloweramountmoreaccuratelyreflectsfairvalue.Revaluationsareperformedwithsufficientregularitysuchthatthecarryingamountdoesnotdiffermateriallyfromthatwhichwouldbedeterminedusingfairvaluesatthereportingdate.Anyrevaluationincreasearisingontherevaluationofsuchpropertyiscreditedtotherevaluationreserveexcepttotheextentthatitreversesarevaluationdecreaseforthesameassetpreviouslyrecognised.Adecreaseonrevaluationischargedasanexpensetotheextentthatitexceedsthebalance,ifany,heldintherevaluationreserverelatingtopreviousrevaluationofthatasset.

PropertyheldunderfinancingarrangementswhichtransfersubstantiallyalloftherisksandrewardsofownershiptotheGrouparetreatedasiftheyhadbeenpurchasedoutrightandareincludedintheconsolidatedstatementoffinancialpositionatfairvalue.Thecorrespondingcommitmentsareshownasliabilities.

ItistheGroup’spolicyandpracticetomaintainallGrouppropertiesinacontinualstateofsoundrepair.Asaresultandtakingintoconsiderationtheregularrevaluationsundertaken,theDirectorsconsiderthattheresidualvaluesofthesepropertiesaresuchthatanydepreciationisimmaterialandisthereforenotprovided.


(ii) Plant and equipment Plantandequipmentarestatedatcostlessaccumulateddepreciationandaccumulatedimpairmentlosses.Depreciationisprovidedinrespectofallplantandequipment,andiscalculatedinordertowriteoffthecostorvaluationoftheassetsovertheirexpectedusefullivesonastraightlinebasisoverafivetotenyearperiod.

G) Financial Assets

FinancialassetsandfinancialliabilitiesarerecognisedintheGroup’sstatementoffinancialpositionwhentheGroupbecomesapartytothecontractualprovisionsoftheinstrument.

TheGroupderecognisesafinancialassetonlywhenthecontractualrightstothecashflowsoftheassetexpire,orwhenittransfersthefinancialassetandsubstantiallyalltherisksandrewardsoftheownershipoftheassettoanotherentity.IftheGroupneithertransfersnorretainssubstantiallyalltheriskandrewardsofownershipandcontinuestocontrolthetransferredasset,theGrouprecognisesitsretainedinterestintheassetandanassociatedliabilityforamountsitmayhavetopay.IftheGroupretainssubstantiallyalltherisksandrewardsofownershipofatransferredfinancialasset,theGroupcontinuestorecognisethefinancialasset.

(i) Investment property Investmentpropertywhichispropertyheldtoearnrentalsand/orforcapitalappreciationisstatedatfairvalueatthereportingdatebeingthevaluedeterminedbyqualifiedindependentprofessionalvaluers.Gainsorlossesarisingfromchangesinthefairvalueareincludedintheconsolidatedincomestatementfortheperiodinwhichtheyarise.Thegainorlossarisingonthedisposalorretirementofanassetisdeterminedasthedifferencebetweenthesalesproceedsandthecarryingamountoftheassetandisrecognisedintheconsolidatedincomestatement.

(ii) Investments held for trading at fair value Investmentsheldfortradingarestatedatfairvalueandincludequotedsharesanddebtsecurities.Theyarerecognisedandderecognisedonatradedatebasisatcostandarerevaluedatsubsequentreportingdatesatfairvalue,usingtheclosingbidprice,withgainsandlossesbeingincludedintheconsolidatedincomestatementintheperiodinwhichtheyarise.

Investmentsareheldfortradingif:

n theyhavebeenacquiredprincipallyforthepurposeofsellinginthenearfuture;or

n theyarepartofanidentifiedportfoliooffinancialinstrumentsthattheGroupmanagestogetherandhavearecentactualpatternofshort-termprofit-taking;or

n theyarederivativesthatarenotdesignatedandeffectiveashedginginstruments.

InvestmentsotherthaninvestmentsheldfortradingmaybedesignatedasanFVTPL(fairvaluethroughprofitorloss)uponinitialrecognitionif:

n suchdesignationeliminatesorsignificantlyreducesameasurementorrecognitioninconsistencythatwouldotherwisearise;or

n theinvestmentformspartofagroupofinvestmentsorfinancialliabilitiesorboth,whichismanagedanditsperformanceisevaluatedonafairvaluebasis,inaccordancewiththeGroup’sdocumentedinvestmentpolicy,andinformationabouttheGroupisprovidedinternallyonthatbasis;or

n itformspartofacontractcontainingoneormoreembeddedderivatives,andIAS39FinancialInstruments:RecognitionandMeasurementpermitstheentirecombinedcontract(assetorliability)tobedesignatedasanFVTPL.



(iii) Investments held to maturity Investmentsheldtomaturityincludedebtsecuritieswheretheintentionistoholdthemtomaturity.Theyarerecognisedonatradedatebasisatfairvalueandaresubsequentlymeasuredatamortisedcost.Atsubsequentreportingdates,theseinvestmentsaremeasuredatamortisedcostusingtheeffectiveinterestratemethod,lessanyimpairmentloss.

(iv) Available for sale investments Availableforsaleinvestmentsincludeunquotedinvestments,andarestatedatfairvaluewherefairvaluecanbereliablymeasured.Fairvalueiscalculatedusingpricesachievedinmostrecenttransactions.Theyarerecognisedonatradedatebasisatcost,andaresubsequentlyrevaluedtofairvalue,withgainsandlossesbeingincludeddirectlyinequityuntiltheinvestmentisdisposedofordeterminedtobeimpaired,atwhichtimethecumulativegainorlosspreviouslyrecognisedinequity,isincludedintheconsolidatedincomestatementfortheperiod.

(v) Derivative financial instruments Fromtimetotime,theGroupentersintoavarietyofderivativefinancialinstrumentstomanageitsexposuretointerestrateandforeignexchangeraterisk,includingforeignexchangeforwardcontracts,interestrateswapsandforeigncurrencyswaps.

Derivativesareinitiallyrecognisedatfairvalueatthedateaderivativecontractisenteredintoandaresubsequentlyremeasuredtotheirfairvalueattheendofthereportingperiod.Theresultinggainorlossisrecognisedintheconsolidatedincomestatementimmediatelyunlessthederivativeisdesignatedandeffectiveasahedginginstrument,inwhicheventthetimingoftherecognitionintheincomestatementdependsonthenatureofthehedgerelationship.TheGroupdesignatescertainderivativesaseitherhedgesofthefairvalueofrecognisedassetsorliabilitiesorfirmcommitments(fairvaluehedges),

hedgesofhighlyprobableforecasttransactionsorhedgesofforeigncurrencyriskoffirmcommitments(cashflowhedges),orhedgesofnetinvestmentsinforeignoperations.

Aderivativewithapositivefairvalueisrecognisedasafinancialasset;aderivativewithanegativefairvalueisrecognisedasafinancialliability.Aderivativeispresentedasanon-currentassetoranon-currentliabilityiftheremainingmaturityoftheinstrumentismorethan12monthsandisnotexpectedtoberealisedorsettledwithin12months.Otherderivativesarepresentedascurrentassetsorcurrentliabilities.

(vi) Deposits with banks Termdepositswithbankscomprisecashheldforthepurposeofinvestment.Demanddepositswithbanksareheldforoperatingpurposesandincludedincashandcashequivalents.

H) Loans and Receivables

(i) Loans Loansarecarriedatamortisedcostusingtheeffectiveinterestratemethod.Whenitisnotpossibletoestimatereliablythecashflowsortheexpectedlifeofaloan,theprojectedcashflowsoverthefulltermoftheloanareusedtodeterminefairvalue.Loansarestatedintheconsolidatedstatementoffinancialpositionrecognisinganyimpairmentlosstoreflectestimatedirrecoverableamounts.Specificprovisionsaremadeonacase-by-casebasisaftertakingintoaccountfactorssuchasthefinancialconditionoftheborrower,securityheldandcostsofrealisation.

Theeffectiveinterestmethodisamethodofcalculatingtheamortisedcostofadebtinstrumentandofallocatinginterestincomeovertherelevantperiod.Theeffectiveinterestrateistheratethatexactlydiscountsestimatedfuturecashreceiptsthroughtheexpectedlifeofthedebtinstrument,or,whereappropriate,ashorterperiod,tothenetcarryingamountatinitialrecognition.


(ii) Other receivables Amountsarisingoutofdirectinsuranceoperationsandotherdebtorsaremeasuredatinitialrecognitionatfairvalueandaresubsequentlymeasuredatamortisedcostasreducedbyappropriateallowancesforestimatedirrecoverableamounts.

I) Leases

AlloftheGroup’sleasesareclassifiedasoperatingleases.

(i) The Group as Lessor Rentalincomefromoperatingleasesisrecognisedonastraight-linebasisoverthetermoftherelevantlease.Initialdirectcostsincurredinnegotiatingandarranginganoperatingleaseareaddedtothecarryingamountoftheleasedassetandrecognisedonastraight-linebasisovertheleaseterm.

(ii) The Group as Lessee Rentalspayableunderoperatingleasesarechargedtoincomeonastraight-linebasisoverthetermoftherelevantlease.Benefitsreceivedandreceivableasanincentivetoenterintoanoperatingleasearealsospreadonastraight-linebasisovertheleaseterm.

J) Inventories

Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costincludesallexpenditureincurredinbringingtheinventorytoitspresentcondition.Netrealisablevalueistheestimatedsellingpricelessallfurthercoststocompletionandtheestimatedcostsnecessarytomakethesale.

Inadditiontoworkinprogress,landheldfordevelopmentandresaleisincludedwithininventories.

K) Cash and Cash Equivalents

Cashandcashequivalentscomprisecashonhandanddemanddepositsheldforthepurposeofmeetingshort-termcashcommitmentsratherthanforinvestmentorotherpurposes.

L) Taxation

Incometaxexpenseorcreditrepresentsthesumofthetaxcurrentlypayableorreceivableandthatelementofdeferredtaxchargedorcreditedtotheconsolidatedincomestatement.Deferredtaxchargedorcreditedtoequityisrecognisedintheconsolidatedstatementofcomprehensiveincome.

Thetaxcurrentlypayableorreceivableisbasedontaxableprofitorlossfortheyear.Taxableprofitorlossdiffersfromprofitorlossasreportedintheconsolidatedincomestatementbecauseitexcludesitemsofincomeorexpensethataretaxableordeductibleinotheryearsanditfurtherexcludesitemsthatarenevertaxableordeductible.TheGroup’sliabilityforcurrenttaxiscalculatedusingtaxratesthathavebeenenactedorsubstantivelyenactedbythereportingdate.

Deferredtaxisrecognisedondifferencesbetweenthecarryingamountsofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbasesusedinthecomputationoftaxableprofitorloss,andisaccountedforusingthebalancesheetliabilitymethod.Deferredtaxliabilitiesarerecognisedforalltaxabletemporarydifferences,anddeferredtaxassetsarerecognisedforalldeductibletemporarydifferencestotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthosedeductibletemporarydifferencescanbeutilised.

DeferredtaxliabilitiesarerecognisedfortaxabletemporarydifferencesarisingoninvestmentsinsubsidiariesexceptwheretheGroupisabletocontrolthereversalofthetemporarydifferencesanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.



Thecarryingamountofdeferredtaxassetsisreviewedateachreportingdateandreducedtotheextentthatitisnolongerprobablethatsufficienttaxableprofitswillbeavailabletoallowallorpartoftheassettoberecovered.

Deferredtaxismeasuredatthetaxratesthatareexpectedtoapplyintheperiodsinwhichthetemporarydifferencesareexpectedtoreversebasedontaxratesandlawsenactedorsubstantiallyenactedatthereportingdate.

Deferredtaxischargedorcreditedtotheconsolidatedincomestatement,exceptwhenitrelatestoitemschargedorcrediteddirectlytoequity,inwhichcasethedeferredtaxisalsodealtwithinequity.DeferredtaxassetsandliabilitiesareoffsetwhenthereisalegallyenforceablerighttosetoffcurrenttaxassetsagainstcurrenttaxliabilitiesandwhentheyrelatetoincometaxesleviedbythesametaxationauthorityandtheGroupintendstosettleonanetbasis.

M) Retirement Benefits

TheGroupprovidesbothdefinedbenefitanddefinedcontributionretirementbenefitschemesforthemajorityofitsIrishbasedemployees.

Defined benefit scheme

Afullactuarialvaluationoftheschemeisundertakeneverythreeyearsandisupdatedannuallytoreflectcurrentconditionsintheinterveningperiodsforthepurposesofpreparingthefinancialstatements.Schemeassetsarevaluedatfairvalue.Schemeliabilitiesaremeasuredonanactuarialbasisanddiscountedatthecurrentrateofreturnonahighqualitycorporatebondofequivalenttermandcurrencytotheliability.Thesurplusordeficitontheschemeiscarriedintheconsolidatedstatementoffinancialpositionasanassetorliability.

Anyassetresultingfromthiscalculationislimitedtopastservicecost,plusthepresentvalueofavailablerefundsandreductionstofuturecontributionstothescheme.Actuarialgainsandlossesarerecognisedimmediatelyinequitythroughtheconsolidatedstatementofcomprehensiveincome.

Thecurrentservicecostandpastservicecostoftheschemeandtheexpectedreturnonassetsnetofthechangeinthepresentvalueoftheschemeliabilitiesarisingfromthepassageoftime,arechargedtoprofit.

Pastservicecostisrecognisedimmediatelytotheextentthatthebenefitsarealreadyvested,andotherwiseisamortisedonastraight-linebasisovertheaverageperioduntilthebenefitsbecomevested.

Theprojectedunitcreditmethodisusedtocalculateschemeliabilities.

Defined Contribution Schemes

CostsarisinginrespectoftheGroup’sdefinedcontributionretirementbenefitschemesarechargedtotheconsolidatedincomestatementintheperiodinwhichtheyareincurred.

N) Currency

ThefunctionalandthepresentationcurrencyoftheGroupfinancialstatementsiseurodenotedbythesymbol€.Transactionsincurrenciesotherthaneuroarerecordedattheratesofexchangeprevailingonthedatesofthetransactions.Monetaryassetsandliabilitiesinforeigncurrencieshavebeentranslatedintoeuroatclosingratesatthereportingdate.Gainsandlossesontranslationarerecognisedintheconsolidatedincomestatementintheperiodinwhichtheyariseexceptwhentheyrelatetoitemsforwhichgainsandlossesarerecognisedinequity.Non-monetaryitemsaretranslatedattheexchangerateatthedateoftransaction.


Onconsolidation,theassetsandliabilitiesoftheGroup’snoneuro-zoneoperationsaretranslatedatexchangeratesprevailingonthereportingdate.Incomeandexpenseitemsaretranslatedattheaverageexchangeratesfortheperiodunlessexchangeratesfluctuatesignificantly,inwhichcasetheexchangeratesatthedateoftransactionsareused.Exchangedifferencesthatareclassifiedasequityandtransferredtothetranslationreserve.Suchtranslationdifferencesarerecognisedasincomeorexpenseintheperiodinwhichtheoperationisdisposed.

O) Share-Based Payment

TheGroupoperatesshareoptionschemesbasedonmarketandnon-marketvestingconditions.ThefairvalueoftheoptionsisdeterminedatthedateofgrantusingeithertheBlackScholesorMonteCarloSimulationmodelsandexpensedintheconsolidatedincomestatementoverthevestingperiodattheconclusionofwhichtheemployeesbecomeunconditionallyentitledtotheoptions.Thecorrespondingamounttotheexpenseiscreditedtoaseparatereserveintheconsolidatedstatementoffinancialposition.Ateachperiodend,theGroupreviewsitsestimateofthenumberofoptionsthatitexpectstovestandanyadjustmentrelatingtocurrentandpastvestingperiodsisbroughttotheconsolidatedincomestatement.Shareoptionsareallequitysettled.

P) Treasury Shares

WhereanyGroupcompanypurchasestheCompany’sequitysharecapital,theconsiderationpaidisshownasadeductionfromordinaryshareholders’equity.Nogainorlossisrecognisedonthesale,issueorcancellationoftreasuryshares.Considerationreceivedonthesubsequentsaleorissueoftreasurysharesiscreditedtoordinaryshareholders’equity.Treasurysharesareexcludedwhencalculatingearningspershare.

Q) Impairment of Assets

(i) Impairment of tangible and intangible assets Ateachreportingdate,theGroupreviewsthecarryingamountsofitstangibleandintangibleassetstodeterminewhetherthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss,ifany.Wheretheassetdoesnotgeneratecashflowsthatareindependentfromotherassets,theGroupestimatestherecoverableamountofthecashgeneratingunittowhichtheassetbelongs.

Recoverableamountisthehigherofthefairvaluelesscoststosellandvalueinuse.Inassessingvalueinuse,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichtheestimatesoffuturecashflowshavenotbeenadjusted.

Iftherecoverableamountofanasset(orcash-generatingunit)isestimatedtobelessthanitscarryingamount,thecarryingamountoftheasset(orcash-generatingunit)isreducedtoitsrecoverableamount.Animpairmentlossisrecognisedasanexpenseimmediately,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasetheimpairmentlossistreatedasarevaluationdecrease.

Whereanimpairmentlosssubsequentlyreverses,thecarryingamountoftheasset(orcash-generatingunit)isincreasedtotherevisedestimateofitsrecoverableamount,butsothattheincreasedcarryingamountdoesnotexceedthecarryingamountthatwouldhavebeendeterminedhadnoimpairmentlossbeenrecognisedfortheasset(orcash-generatingunit)inprioryears.Areversalofanimpairmentloss,otherthaninrelationtogoodwillisrecognisedasincomeimmediately,unlesstherelevantassetiscarriedatarevaluedamount,inwhichcasethereversaloftheimpairmentlossistreatedasarevaluationincrease.



(ii) Impairment of financial assets Financialassets,otherthanthoseatFVTPL(fairvaluethroughprofitorloss),areassessedforindicatorsofimpairmentateachreportingdate.Financialassetsareimpairedwherethereisobjectiveevidencethat,asaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialassets,theestimatedfuturecashflowsoftheinvestmenthavebeenimpacted.

Forallotherfinancialassets,includingredeemablenotesclassifiedasbeingavailableforsaleassets,objectiveevidenceofimpairmentcouldinclude:

n significantfinancialdifficultyoftheissuerorcounterparty;or

n defaultordelinquencyininterestorprincipalpayments;or

n itbecomingprobablethattheborrowerwillenterbankruptcyorfinancialre-organisation.

Forcertaincategoriesoffinancialasset,suchastradereceivables,assetsthatareassessednottobeimpairedindividuallyare,inaddition,assessedforimpairmentonacollectivebasis.

Forfinancialassetscarriedatamortisedcost,theamountoftheimpairmentisthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedatthefinancialasset’soriginaleffectiveinterestrate.

Thecarryingamountofafinancialassetisdirectlyreducedbyanyimpairmentlossforallfinancialassets.

WhenanAFS(availableforsale)financialassetisconsideredtobeimpaired,cumulativegainsorlossespreviouslyrecognisedinothercomprehensiveincomearereclassifiedtoprofitorlossintheperiod.

WiththeexceptionofAFSequityinstruments,if,inasubsequentperiod,theamountoftheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringaftertheimpairmentwasrecognised,thepreviouslyrecognisedimpairmentlossisreversedthroughprofitorloss,totheextentthatthecarryingamountoftheinvestmentatthedatetheimpairmentisreverseddoesnotexceedwhattheamortisedcostwouldhavebeenhadtheimpairmentnotbeenrecognised.

InrespectofAFSequitysecurities,impairmentlossespreviouslyrecognisedinprofitorlossarenotreversedthroughprofitorloss.Anyincreaseinfairvaluesubsequenttoanimpairmentlossisrecognisedinothercomprehensiveincome.

R) Borrowing Costs

Borrowingcostsdirectlyattributabletotheacquisition,constructionorproductionofqualifyingassets,whichareassetsthatnecessarilytakeasubstantialperiodoftimetogetreadyfortheirintendeduseorsale,areaddedtothecostofthoseassets,untilsuchtimeastheassetsaresubstantiallyreadyfortheirintendeduseorsale.

Allotherborrowingcostsarerecognisedinprofitorlossintheperiodinwhichtheyareincurred.

S) Restructuring Costs

ThecostsofthefundamentalrestructuringoftheGroup’soperations,suchasredundancycosts,leaseterminationcostsorotherrationalisationcosts,arechargedtoprofitorlosswhenthedecisiontorestructureisirrevocableandhasbeencommunicatedtothepartiesinvolved.


T) Critical Accounting Estimates and Judgements in Applying Accounting Policies

TheGroupmakesestimatesandjudgementsthataffectthereportedamountsofassetsandliabilities.Estimatesandjudgementsarecontinuallyevaluatedandbasedonhistoricalexperienceandotherfactors,includingexpectationsoffutureeventsthatarebelievedtobereasonableunderthecircumstances.

Asummaryoftheprincipleaccountingestimatesandjudgementsisasfollows:

Accounting estimates

n Theestimationoftheultimateliabilityarisingfromclaimsmadeunderinsurancecontractswritten.Furtherdetailsaresetoutinnote23tothefinancialstatements.

n Theassumptionsusedinestimatingretirementbenefitobligations,ofwhichdetailsaresetoutinnote25tothefinancialstatements.

n Revenuerecognition,whichiscoveredunderaccountingpolicyC.

Judgements

n Thevaluationofpropertyheldforownuseandinvestmentproperties,ofwhichdetailsaresetoutinnote10and13ofthefinancialstatements,respectively.

n Theamountrecoverablefromloansandreceivables,ofwhichdetailsaresetoutinnote11andnote17ofthefinancialstatements.

n Therecoverabilityofthedeferredtaxasset,detailsofwhicharesetoutinnote12tothefinancialstatements.

FurtherconsiderationoftheGroup’scriticalaccountingestimatesandjudgementshavebeendealtwithinnote37,riskmanagement.



Consolidated Income StatementFORTHEYEARENDED31DECEMBER2009

Notes2009

€000s

Restated2008

€000s

Revenue 1(a) 476,159 521,571

Income

Grosspremiumwritten

Reinsurancepremiums

357,244

(54,107)

385,638

(57,083)

Netpremiumwritten

Changeinprovisionforunearnedpremiums

1(c)

1(c)

303,137

11,467

328,555

14,520

Netpremiumearned

Netinvestmentreturn

Non-underwritingincome

2(a)

314,604

6,515

72,774

343,075

(48,377)

80,203

Total income 393,893 374,901

Expenses

Netclaimsandbenefits

Otherunderwritingexpenses

Non-underwritingexpenses

Revaluationofproperty,plantandequipment

Restructuringcosts

Financecosts

1(c)

1(c)

1(d)

10

3

4

(263,492)

(64,020)

(66,285)

(29,048)

(2,315)

(3,377)

(271,205)

(58,470)

(71,750)

–

(7,609)

(4,474)

Loss before tax 5 (34,644) (38,607)

Income tax credit 7 3,714 5,607

Loss for the year 8 (30,930) (33,000)

Attributable to:

Equityholdersoftheparent

Minorityinterest

(30,190)

(740)

(33,270)

270

(30,930) (33,000)

2009Cent

2008Cent

Basic loss per 60 cent ordinary share 9 (91.59) (100.94)

Dilutedlossper60centordinaryshare 9 (91.05) (100.59)

Comparativefiguresfortheyearended31December2008havebeenrestatedasdetailedinnote38.Allresultsderivedfromcontinuingoperations.ThefinancialstatementswereapprovedbytheBoardandauthorisedforissueon2March2010.

Theyweresignedonitsbehalfby:

Michael Berkery Andrew Langford Chairman Group Chief Executive


Consolidated Statement of Comprehensive IncomeFORTHEYEARENDED31DECEMBER2009

2009€000s

Restated2008

€000s

Loss for the year (30,930) (33,000)

(Loss)/gainonavailableforsalefinancialassets


Actuariallossonretirementbenefitobligations

Exchangedifferencesontranslationofforeignoperations

(1,554)

(5,241)

(8,556)

747

199

(34,166)

(10,174)

(1,070)

Other comprehensive expense before tax (14,604) (45,211)

Taxcreditrelatingtoothercomprehensiveexpense 6,884 5,813

Other comprehensive expense after tax (7,720) (39,398)

Total comprehensive expense for the year (38,650) (72,398)

Attributable to:

Equityholdersoftheparent

Minorityinterests

(37,664)

(986)

(71,205)

(1,193)

(38,650) (72,398)

Comparativefiguresfortheyearended31December2008havebeenrestatedasdetailedinnote38.ThefinancialstatementswereapprovedbytheBoardandauthorisedforissueon2March2010.




Notes2009

€000s2008

€000s

Underwriting

Non-underwriting

1(a)

1(a)

22,391

6,489

57,330

8,453

Operating profit before tax 28,880 65,783

Investmentreturn–fluctuations


Restructuringcosts

Financecosts

2(c)

10

3

4

(28,784)

(29,048)

(2,315)

(3,377)

(92,307)

–

(7,609)

(4,474)

Loss before tax (34,644) (38,607)

Refertonote38forthebasisofpreparationofthispro-formastatement,whichissupplementarytotheprimarystatementsrequiredunderInternationalFinancialReportingStandards.

Pro Forma Reconciliation of Consolidated Operating Profit to Loss before TaxFORTHEYEARENDED31DECEMBER2009


Consolidated Statement of Financial PositionAT31DECEMBER2009

Assets

Notes2009

€000s2008

€000s

Property, plant and equipment 10 176,479 208,659

Loans 11 43,863 70,489

Deferred tax asset 12 6,907 –

Financial assets

Investmentsheldtomaturity

Availableforsaleinvestments

Investmentproperty

Investmentsheldfortrading

Depositswithbanks

13(a)

13(a)

13(c)

13(a)

581,096

9,476

43,267

30,000

75,462

479,626

11,051

52,538

24,112

183,143

739,301 750,470

Reinsurance assets

Provisionforunearnedpremiums

Claimsoutstanding

1(c)

23

25,503

67,686

25,450

33,544

93,189 58,994

Inventories 14 59,226 62,383

Current tax asset 15 175 4,820

Deferred acquisition costs 16 19,963 17,733

Other receivables 17 72,681 68,539

Cash and cash equivalents 18 44,036 35,713

Total assets 1,255,820 1,277,800


Consolidated Statement of Financial PositionAT31DECEMBER2009

Equity and Liabilities

Notes2009

€000s2008

€000s

Equity

Ordinarysharecapital

Capitalreserves

Revaluationreserves

Translationreserves

Retainedearnings

19

20

21

21,409

14,297

742

66

154,994

21,409

13,599

3,295

(681)

197,788

Shareholders’ funds – equity interests

Preferencesharecapital 22

191,508

2,923

235,410

2,923

Equity attributable to equity holders of the parent

Minorityinterests

194,431

3,030

238,333

4,151

Total equity 197,461 242,484

Liabilities

Insurance contract liabilities

Provisionforunearnedpremiums

Claimsoutstanding

1(c)

23

176,603

671,429

188,017

626,188

848,032 814,205

Borrowings 24 120,051 110,968

Retirement benefit obligation 25 23,103 16,112

Deferred tax liability 26 10,507 15,062

Payables 27 56,666 78,969

Total liabilities 1,058,359 1,035,316

Total equity and liabilities 1,255,820 1,277,800

ThefinancialstatementswereapprovedbytheBoardandauthorisedforissueon2March2010.




Consolidated Statement of Cash FlowsFORTHEYEARENDED31DECEMBER2009

Notes2009

€000s

Restated2008

€000s

Cash flows from operating activities

LossbeforetaxAdjustmentsfor:(Profit)/lossoninvestmentsheldfortradingLossoninvestmentsheldtomaturityProvisionforloans&advancesDepreciationofproperty,plantandequipmentShare-basedpaymentexpenseDecreaseinfairvalueofinvestmentpropertyDecreaseinfairvalueofproperty,plantandequipment(Decrease)ininsurancecontractliabilitiesLossondisposalofproperty,plantandequipment

282828

(34,644)

(4,925)417

21,0006,206

6988,479

29,048(368)

25

(38,607)

46,819276

–5,432

44230,481

–(6,233)

246

Operatingcashflowsbeforemovementinworkingcapital(Increase)inreceivablesanddeferredacquisitioncosts(Decrease)/increaseinpayablesDecreaseininventories

25,936(5,552)

(24,003)3,157

38,856(1,187)4,6773,362

Cash(usedby)/generatedfromoperationsIncometaxesreceived/(paid)

(462)3,779

45,708(20,119)

Net cash from operating activities 3,317 25,589

Cash flows from investing activitiesInvestmentsheldfortradingInvestmentsheldtomaturityInvestmentsavailableforsaleSaleofproperty,plantandequipmentPurchaseofproperty,plantandequipmentSaleofinvestmentpropertyRepaymentofloansDepositsinvestedwithbanks

28282828

10, 28282828

(963)(101,887)

21–

(8,474)792

5,626107,681

113,039–

(1,310)985

(6,144)–

6,214(110,109)

Net cash generated from investing activities 2,796 2,675

Cash flows from financing activitiesOrdinarydividendspaidSpecialdividendonordinarysharesSpecialdividendon‘A’ordinarysharesBuybackof‘A’ordinarysharesProceedsofre-issueofordinarysharesIncreaseinborrowings(Decrease)inborrowings

292929

2828

(6,936)––––

22,980(13,897)

(27,623)(416)

(19,622)(30,150)

18050,532

–

Net cash used in financing activities 2,147 (27,099)

NetincreaseincashandcashequivalentsCashandcashequivalentsatthebeginningoftheyearEffectofforeignexchangeratechanges

8,26035,713

63

1,16535,618(1,070)

Cash and cash equivalents at the end of the year 18 44,036 35,713

Comparativefiguresfortheyearended31December2008havebeenrestatedasdetailedinnote38.


Consolidated Statement of Changes in EquityFORYEARENDED31DECEMBER2009

Ord

inar

y

shar

e ca

pit

al

Cap

ital

res

erve

s

Res

tate

d r

eval

uat

ion

an

d o

ther

res

erve

s

Tran

slat

ion

res

erve

Ret

ain

ed e

arn

ing

s

Att

rib

uta

ble

to

or

dina

ry s

hare

hold

ers

Pre

fere

nce

sh

are

cap

ital

Res

tate

d m

ino

rity

in

tere

st

Tota

l eq

uit

y

€000s €000s €000s €000s €000s €000s €000s €000s €000s

2008 Restated

Balanceat1January2008

Lossaftertaxation

Othercomprehensiveexpense

21,277

–

–

12,956

–

–

29,986

–

(26,691)

389

–

(1,070)

318,981

(33,270)

(10,174)

383,589

(33,270)

(37,935)

2,923

–

–

5,689

270

(1,463)

392,201

(33,000)

(39,398)

21,277 12,956 3,295 (681) 275,537 312,384 2,923 4,496 319,803

Dividendspaidonordinaryandpreferenceshares

Specialdividendpaidonordinaryshares

Specialdividendspaidon‘A’ordinaryshares

Issueof‘A’ordinaryshares

Buybackof‘A’ordinaryshares

Cancellationof‘A’ordinaryshares

Reissueofordinaryshares

Dividendpaidtominorityinterests

Recognitionofsharebasedpayments

–

–

–

333

–

(201)

–

–

–

–

–

–

–

–

201

–

–

442

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(27,741)

(416)

(19,622)

–

(30,150)

–

180

–

–

(27,741)

(416)

(19,622)

333

(30,150)

–

180

–

442

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(345)

–

(27,741)

(416)

(19,622)

333

(30,150)

–

180

(345)

442

Balance at 31 December 2008 21,409 13,599 3,295 (681) 197,788 235,410 2,923 4,151 242,484

2009

Lossaftertaxation

Othercomprehensiveexpense

–

–

–

–

–

(2,553)

–

747

(30,190)

(5,668)

(30,190)

(7,474)

–

–

(740)

(246)

(30,930)

(7,720)

21,409 13,599 742 66 161,930 197,746 2,923 3,165 203,834


Dividendpaidtominorityinterests


–

–

–

–

–

698

–

–

–

–

–

–

(6,936)

–

–

(6,936)

–

698

–

–

–

–

(135)

–

(6,936)

(135)

698

Balance at 31 December 2009 21,409 14,297 742 66 154,994 191,508 2,923 3,030 197,461

Comparativefiguresfortheyearended31December2008havebeenrestatedasdetailedinnote38.


Company Statement of Financial PositionAT31DECEMBER2009

Assets

Notes2009

€000s2008

€000s

Investments

Interestinsubsidiaries

Depositswithbanks

31 100,053

9

56,692

203

100,062 56,895

Cash and cash equivalents

Receivables

6

654

84

608

Total assets 100,722 57,587

Equity and Liabilities

Equity

Ordinarysharecapital

Capitalreserves

Reserves

19

20

21,409

14,297

61,782

21,409

11,593

19,346

Shareholders’ funds – equity interests

Preferencesharecapital 22

97,488

2,923

52,348

2,923

Equity attributable to equity holders of the parent 100,411 55,271

Payables 27 311 2,316

Total equity and liabilities 100,722 57,587

ThefinancialstatementswereapprovedbytheBoardandauthorisedforissueon2March2010.




Company Statement of Cash FlowsFORTHEYEARENDED31DECEMBER2009

2009€000s

2008€000s

Cash flows from operating activities

Profitbeforetaxfortheyear

(Increase)/Decreaseinreceivables

(Decrease)/Increaseinpayables

Incometaxesreceived

49,462

(21,021)

(2,005)

231

63,075

12,490

2,013

321

Net cash from operating activities 26,667 77,899

Cash flows from investment activities

(Increase)ininvestments

Depositswithdrawnfrom/(investedwith)financialinstitutions

(20,003)

194

–

(200)

Net cash used in investing activities (19,809) (200)

Cash flows from financing activities


Specialdividendonordinaryshares

Specialdividendon‘A’ordinaryshares


Proceedsofre-issueofordinaryshares

(6,936)

–

–

–

–

(27,623)

(416)

(19,622)

(30,150)

180

Net cash used in financing activities (6,936) (77,631)

Net(decrease)/increaseincashandcashequivalents

Cashandcashequivalentsatthebeginningoftheyear

(78)

84

68

16

Cash and cash equivalents at the end of the year 6 84


Company Statement of Changes in EquityFORTHEYEARENDED31DECEMBER2009

Ord

inar

y sh

are

ca

pit

al

Cap

ital

res

erve

s

Sh

are

op

tio

n

rese

rve

Ret

ain

ed e

arn

ing

s

Att

rib

uta

ble

to

o

rdin

ary

shar

eho

lder

s

Pre

fere

nce

sh

are

cap

ital

Tota

l eq

uit

y

€000s €000s €000s €000s €000s €000s €000s

2008


Profitaftertaxation

Ordinaryandpreferencedividendspaid

Issueof‘A’ordinaryshares


Cancellationof‘A’ordinaryshares

Specialdividendpaidonordinaryshares

Specialdividendpaidon‘A’ordinaryshares

Re-issueofordinaryshares

21,277

–

–

333

–

(201)

–

–

–

11,392

–

–

–

–

201

–

–

–

–

–

–

–

–

–

–

–

–

33,495

63,600

(27,741)

–

(30,150)

–

(416)

(19,622)

180

66,164

63,600

(27,741)

333

(30,150)

–

(416)

(19,622)

180

2,923

–

–

–

–

–

–

–

–

69,087

63,600

(27,741)

333

(30,150)

–

(416)

(19,622)

180

Balance at 31 December 2008 21,409 11,593 – 19,346 52,348 2,923 55,271

2009

Profitaftertaxation


Ordinaryandpreferencedividendspaid

–

–

–

–

–

–

–

2,704

–

49,372

–

(6,936)

49,372

2,704

(6,936)

–

–

–

49,372

2,704

(6,936)

Balance at 31 December 2009 21,409 11,593 2,704 61,782 97,488 2,923 100,411


Notes to the Financial StatementsFORTHEYEARENDED31DECEMBER2009

1 Segmental Information(a) Operating segments

Formanagementpurposes,theGroupiscurrentlyorganisedintwooperatingsegments–underwritingandnon-underwriting.Thesetwosegmentsarethebasisuponwhichinformationisreportedtothechiefoperatingdecisionmaker,theGroupChiefExecutive,forthepurposeofresourceallocationandassessmentofsegmentalperformance.Discretefinancialinformationispreparedandreviewedonaregularbasisforthesetwosegments.TherehasbeennochangeintheGroup’sreportablesegmentsduringtheyear.

TheprincipalactivitiesoftheGroupareunderwritingofgeneralinsurancebusinessandnon-underwritingoperations,includingleisure/propertyandfinancialservices.

2009

Underwriting€000s

Non-underwriting

€000sTotal

€000s

Revenue 403,385 72,774 476,159

Operatingprofit


Revaluationofproperty

Restructuringcosts

Financecosts

22,391

(28,784)

(128)

(1,976)

–

6,489

–

(28,920)

(339)

(3,377)

28,880

(28,784)

(29,048)

(2,315)

(3,377)

Lossbeforetax

Incometaxcredit

(8,497)

3,651

(26,147)

63

(34,644)

3,714

Lossaftertax (4,846) (26,084) (30,930)

Other information

Capitaladditions 7,710 764 8,474

Depreciationandamortisation 5,969 237 6,206

Statement of financial position

Segmentassets 1,031,462 224,358 1,255,820

Segmentliabilities 904,598 153,761 1,058,359

Included above are non-cash items relating to property revaluations, investment property revaluations and loan impairments totalling €58,559,000 (underwriting €29,639,000, non-underwriting €28,920,000).


1 Segmental Information [continued]

2008

Underwriting€000s

Non-underwriting

€000sTotal

€000s

Revenue 441,368 80,203 521,571

Operatingprofit


Restructuringcosts

Interdivisionalfinancecosts

Financecosts

57,330

(92,307)

(7,171)

2,554

–

8,453

–

(438)

(2,554)

(4,474)

65,783

(92,307)

(7,609)

–

(4,474)

(Loss)/Profitbeforetax

Incometaxcredit/(charge)

(39,594)

5,752

987

(145)

(38,607)

5,607

(Loss)/Profitaftertax (33,842) 842 (33,000)

Other information

Capitaladditions 4,300 1,843 6,143

Depreciationandamortisation 5,176 256 5,432

Statement of financial position

Segmentassets 1,018,774 259,026 1,277,800


TheaccountingpoliciesofthereportablesegmentsarethesameastheGroupaccountingpolicies.Segmentprofitrepresentstheprofitearnedbyeachsegment.CentraladministrationcostsandDirectors’salariesareallocatedbasedonactualactivity.Financecosts,restructuringcostsandincometaxaredirectcostsofeachsegment.Segmentprofitisthemeasurereportedtothechiefoperatingdecisionmaker,theGroupChiefExecutive,forthepurposeofresourceallocationandassessmentofsegmentalreporting.

Inmonitoringsegmentperformanceandallocatingresourcesbetweensegments:

n Allassetsareallocatedtoreportablesegments.Assetsusedjointlybyreportablesegmentsareallocatedonthebasisofactivitybyeachreportablesegment;and

n Allliabilitiesareallocatedtoreportablesegments.Liabilitiesforwhichreportablesegmentsarejointlyliableareallocatedinproportiontosegmentassets.

Notes to the Financial Statements [continued]



AnanalysisoftheGroup’srevenuebyproductisasfollows:

2009€000s

2008€000s

Directinsurance–motor

Directinsurance–liability

Directinsurance–fireandotherdamagetoproperty

Directinsurance–other

Directinsurance–interestandotherrevenue

Non-underwritingrevenue

159,598

65,658

126,025

5,963

46,141

72,774

182,436

71,106

126,605

5,491

55,730

80,203

Total 476,159 521,571

TheGroup’scustomerbaseisdiverse,withnorelianceonanyidentifiablemajorcustomer.Insuranceriskisnotconcentratedonanyoneareaoranyonelineofbusiness.

(b) Geographical segments

TheGroup’soperationsarelocatedinIrelandandtherestoftheEuropeanUnion.TheGroup’sunderwritingoperationislocatedinIrelandwhileitsnon-underwritingoperationsarelocatedinIrelandandtherestoftheEuropeanUnion.ThefollowingtableprovidesananalysisoftheGroup’srevenue,assetsandliabilitiesbygeographicalmarket,irrespectiveoftheoriginoftheservices.

Ireland€000s

European Union€000s

Total€000s

2009

Revenue 444,977 31,182 476,159

Segmentassets 1,109,739 146,081 1,255,820

Segmentliabilities 1,025,531 32,828 1,058,359

2008

Revenue 488,022 33,549 521,571

Segmentassets 1,132,601 145,199 1,277,800




(c) Underwriting result

2009€000s

2009€000s

2008€000s

2008€000s

Earnedpremiums,netofreinsurance

Grosspremiumswritten

Outwardreinsurancepremiums

357,244

(54,107)

385,638

(57,083)

Net premiums written 303,137 328,555

Changeinprovisionforunearnedpremiums

Grossamount

Reinsurers’share

11,414

53

11,060

3,460

Change in net provision for unearned premiums 11,467 14,520

Premium earned, net of reinsurance 314,604 343,075

Claims paid, net of recoveries from reinsurers

Claimspaid

Grossamount

Reinsurers’share

(293,333)

40,940

(302,240)

39,316

Claims paid, net of recoveries from reinsurers (252,393) (262,924)

Changeinprovisionforclaims

Grossamount

Reinsurers’share

(45,241)

34,142

(13,336)

5,055

Change in insurance liabilities, net of reinsurance (11,099) (8,281)

Claims incurred net of reinsurance (263,492) (271,205)

Grossmanagementexpenses

Reinsurers’share

Brokercommissionspayable

(75,860)

13,943

(2,103)

(75,516)

18,756

(1,710)

Net operating expenses (64,020) (58,470)

Underwriting result (12,908) 13,400

Theabovenoteshowsthemovementontheinsuranceliabilitiesbetween1January2009and31December2009andthemovementonthereinsuranceassetsforthesameperiod.Themovementindeferredacquisitioncostsfortheperiodwasacredittotheincomestatementof€2,230,000(2008:Creditof€2,462,000).

Allreinsurancecontractsarefornomorethanoneyearsohavenomaterialeffectontheamount,timinganduncertaintyofcashflows.Therearenosecurityarrangementsforreinsurancetransactions.Theimpactofbuyingreinsurancewasacredittotheincomestatementof€34,971,000(2008:Creditof€7,928,000).




(d) Non-underwriting expenses

2009€000s

2008€000s

Staffcosts

Other

30,751

35,534

33,486

38,264

66,285 71,750

2 Investment Income(a) Actual return

2009€000s

2008€000s

Incomefrominvestmentproperties

Interestandsimilarincome

Dividendincome

Unrealisedlossesoninvestments

Realisedlossesoninvestments

2,937

31,413

348

(19,942)

(8,241)

3,594

19,700

3,877

(52,280)

(23,268)

6,515 (48,377)

By Classification of investment

Investmentproperties

Depositswithbanks


Availableforsaleinvestments


Loans

(5,574)

3,483

5,348

281

23,720

(20,743)

(26,885)

6,867

(41,356)

12

20,803

(7,818)

6,515 (48,377)

Interestandsimilarincomereceivedduringtheperiodwas€24,619,000(2008:€23,878,000).


2 Investment Income [continued]

(b) Longer term investment return

Theratesofinvestmentreturnunderlyingthecalculationofthelongerterminvestmentreturnaresetoutbelow.TheseratesarereviewedannuallyandreflectbothhistoricalexperienceandtheDirectors’currentexpectationsforinvestmentreturns.

2009%

2008%

Governmentgilts

Otherquoteddebtsecurities

Quotedshares

Depositswithbanks

Investmentproperties


4.00

6.00

6.75

3.25

6.25

Actual

4.00

6.00

7.50

3.63

6.00

Actual

(c) Comparison of longer term investment return with actual return

2009€000s

2008€000s

Longerterminvestmentreturn

Investmentreturnfluctuation

35,299

(28,784)

43,930

(92,307)

Actualinvestmentreturn 6,515 (48,377)

3 Restructuring Costs

TheconsolidatedincomestatementincludesarestructuringchargeforthecostofrealigningtheFBDInsurancelocalofficenetwork,reducingthenumberofofficesfrom47to34,andimplementingcostrestructuringinthepropertyandleisureoperations.Thebreakdownoftherestructuringcostsareasfollows:

2009€000s

2008€000s

Redundancycosts

Terminationofleases

Other

2,315

–

–

6,269

685

655

Total 2,315 7,609

4 Finance Costs2009

€000s2008

€000s

Interestonborrowings 3,377 4,474

Interestpaidduringtheperiodwas€3,495,000(2008:€3,421,000).



5 Loss Before Tax

2009€000s

2008€000s

Lossbeforetaxhasbeenstatedaftercharging:

Feespaidtoauditfirmsinrespectof:

–Auditservices 460 477

460 477

–Nonauditservices: Taxation

Actuarial

229

–

506

104

229 610

Depreciation

Foreignexchange(gains)/losses

Inventorycharge

6,206

(19)

3,224

5,432

95

3,286

TheremunerationofDirectorsissetoutindetailonpages82to87(note30).

6 Staff Costs and Numbers

TheaveragenumberofpersonsemployedbytheGroupbyreportablesegmentisasfollows:

2009 2008

Underwriting

Non-underwriting

739

1,004

811

1,130

Total 1,743 1,941

Theaggregatepayrollofthesepersonswasasfollows:

2009€000s

2008€000s

Wagesandsalaries

Socialwelfarecosts

Pensioncosts

Sharebasedpayments

71,847

8,545

4,502

698

70,898

8,927

5,912

442

85,592 86,179


7 Income Tax Credit2009

€000s2008

€000s

Irishcorporationtax

Foreigntax

Adjustmentsinrespectofprioryears

(374)

(163)

(523)

2,118

(3,281)

(66)

Currenttaxcharge

Deferredtaxcredit

(1,060)

4,774

(1,229)

6,836

3,714 5,607

ThetaxassessedfortheyearintheconsolidatedincomestatementishigherthanthestandardrateofcorporationtaxinIreland.Thedifferencesareexplainedbelow:

2009€000s

2008€000s

Lossbeforetax (34,644) (38,607)

Corporationtaxcreditatstandardrateof12.5%(2008:12.5%)

Effectsof:

Depreciationforperiodinexcessofcapitalallowances

Non-taxableincome/unrealisedgains/lossesnotchargeable/deductiblefortaxpurposes

Higherratesoftaxonotherincome

Adjustmentsinrespectofprioryears

(4,330)

77

944

118

(523)

(4,826)

88

(850)

47

(66)

Incometaxcredit (3,714) (5,607)

Inadditiontotheamountchargedtotheincomestatement,thefollowingtaxationamountshavebeenrecogniseddirectlyinothercomprehensiveincome:

2009€000s

2008€000s

Current tax – –

Deferred tax

Revaluationofproperty

Revaluationofavailableforsalefinancialassets

Actuariallossonretirementbenefitobligations

3,802

194

2,888

5,838

(25)

–

Totalincometaxrecogniseddirectlyinothercomprehensiveincome 6,884 5,813



7 Income Tax Credit [continued]

Deferred tax assets not recognised at the reporting date

2009€000s

2008€000s

Taxlosses

Unusedtaxcredits

21,710

2,503

14,524

2,778

24,213 17,302

Oftheunusedtaxlosses,€5,667,000(2008:€6,555,295)willexpireby2021andafurther€14,112,000(2008:€7,968,989)willexpirein2024.Theremaininglosses/creditsmaybecarriedforwardindefinitely.

8 Profit for the Year

TheCompany’sprofitforthefinancialyeardeterminedinaccordancewithIFRSis€49,372,000(2008:€63,600,000).Inaccordancewithsection148(8)oftheCompaniesAct,1963andsection7(1A)oftheCompanies(Amendment)Act,1986,theCompanyisavailingoftheexemptionfrompresentingitsindividualincomestatementtotheAnnualGeneralMeetingandfromfilingitwiththeRegistrarofCompanies.

9 Loss/Earnings per 60 cent Ordinary Share

Thecalculationofthebasicanddilutedlosspershareattributabletotheordinaryshareholdersisbasedonthefollowingdata:

2009€000s

2008€000s

Earnings

Lossfortheyear

Minorityinterest

Preferencedividend

(30,930)

740

(282)

(33,000)

(270)

(282)

Lossforthepurposeofbasicanddilutedlosspershare (30,472) (33,552)

2009 2008

Number of shares

Weightedaveragenumberofordinarysharesforthepurposeofbasiclosspershare

Effectofdilutivepotentialofshareoptionsoutstanding

33,269,000

198,000

33,241,000

114,000

Weightedaveragenumberofordinarysharesforthepurposeofdilutedlosspershare 33,467,000 33,355,000

The‘A’ordinarysharesof1centeachthatareinissuehavenoimpactonthelosspersharecalculation.


9 Loss/Earnings per 60 cent Ordinary Share [continued]

Thecalculationoftheoperatingearningspershare,whichissupplementarytotherequirementsofInternationalFinancialReportingStandards,isbasedonthefollowingdata:

2009€000s

2008€000s

Operatingprofitaftertaxation*

Minorityinterest

Preferencedividend

25,299

(193)

(282)

57,560

(270)

(282)

24,824 57,008

Cent Cent

Operatingearningspershare 74.61 171.50

* 2009 effective tax rate of 12.4% (2008: 12.5%).

10 Property, Plant and Equipment

Property held for

own use€000s

Hotels and golf resort

assets€000s

Total property

€000s

Plant and equipment

€000s

Total property

plant and equipment

€000s

Cost or valuation

At1January2008 32,806 192,352 225,158 55,276 280,434

Additions

Disposals

Revaluationincrease

Revaluationdecrease

639

–

–

(9,110)

1,010

(1,218)

474

(25,530)

1,649

(1,218)

474

(34,640)

4,494

(62)

–

–

6,143

(1,280)

474

(34,640)

At 1 January 2009 24,335 167,088 191,423 59,708 251,131

Additions

Disposals

Revaluation decrease

–

–

(2,367)

728

(134)

(2,874)

728

(134)

(5,241)

7,746

(270)

–

8,474

(404)

(5,241)

At 31 December 2009 21,968 164,808 186,776 67,184 253,960

Comprising:

At cost

At valuation

–

21,968

137

164,671

137

186,639

67,184

–

67,321

186,639

At 31 December 2009 21,968 164,808 186,776 67,184 253,960



10 Property, Plant and Equipment [continued]

Property held for

own use€000s

Hotels and golf resort

assets€000s

Total property

€000s

Plant and equipment

€000s

Total property

plant and equipment

€000s

Accumulated depreciation and impairment

At1January2008

Depreciationchargefortheyear

Eliminationondisposals

–

–

–

–

–

–

–

–

–

37,090

5,432

(50)

37,090

5,432

(50)

At 1 January 2009 – – – 42,472 42,472

Depreciation charge for the year

Elimination on disposals

Impairments

–

–

128

–

–

28,462

–

–

28,590

6,206

(245)

458

6,206

(245)

29,048

At 31 December 2009 128 28,462 28,590 48,891 77,481

Carrying amount

At 31 December 2009 21,840 136,346 158,186 18,293 176,479

At31December2008 24,335 167,088 191,423 17,236 208,659

Propertyheldforownuseandhotelsandgolfresortassetswerevaluedat31December2008and2009byindependentprofessionalvaluersandwereincludedintheStatementofFinancialPositionatfairvalueorataloweramountif,intheopinionoftheDirectors,aloweramountmoreaccuratelyreflectedfairvalue.TheexternalprofessionalvaluersforpropertyheldforownuseandIrishhotelsandgolfresortassetswereCBRichardEllis,ValuationSurveyorswhilehotelsandgolfresortassetslocatedoutsideIrelandwerevaluedbyAmericanAppraisal,ValuationSurveyors.Informingtheiropiniononfairvalues,theDirectorstookintoaccountthereportoftheprofessionalvaluersand,inrelationtocertainspecificproperties,tookmoreprudentassumptionsontheunderlyingprofitprojectionsand/ortimingofunderlyingcashflows.

Thevaluationstatementreceivedfromtheexternalprofessionalvaluersstatesthat”Market value is defined as the estimated amount for which the property could exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein parties had each acted knowledgeably, prudently and without compulsion”.

Theexternalprofessionalvaluersstateintheirreportthattherehasbeenalackoftransactionalevidenceand,asaresult,othervaluationtechniqueswereused.Thesetechniquesmadevariousassumptionsastotenure,letting,townplanning,conditionandrepairaswellasachievableandmaintainableearnings.

Ateachreportingdate,theGroupreviewsthecarryingvalueofitspropertytodetermineifthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.TheGroupmadeimpairmentprovisionsin2009of€34,289,000(2008:€34,640,000).

Includedinhotelsandgolfresortassetsareassetsvaluedat€14,500,000(2008:€22,836,221)onwhichtheGrouphasrecognisedobligationsunderpropertyfinancingarrangements.Hotelandgolfresortassetshavebeenusedassecurityforbankloanstotalling€40,947,000.


10 Property, Plant and Equipment [continued]

Hadthepropertybeencarriedathistoricalcostlessaccumulateddepreciationandaccumulatedimpairmentlosses,theircarryingamountwouldhavebeenasfollows:

2009€000s

2008€000s

Propertyheldforownuse

Hotels&golfresortassets

21,840

135,521

22,088

148,508

Total 157,361 170,596

11 Loans2009

€000s2008

€000s

Secured loans

At1January

Accruedinterest

Originationofloans

Repaymentofloans

Lessloanprovision

57,863

3,495

–

–

(24,495)

72,458

7,310

136

(6,350)

(15,691)

At31December 36,863 57,863

Other Loans 7,000 12,626

Total Loans 43,863 70,489

TheGrouphasextendedloanswithagrossmaximumcreditriskexposureof€84,049,000(2008:€86,180,000).Netofimpairmentprovisionsthenetmaximumcreditriskexposedis€43,863,000(2008:€70,489,000).Ofthesenetexposures,€36,863,000(2008:€57,863,000)aresecuredonlandoverwhichtheGrouphascollateraloffirstcharges.Theremainingloansoutstandingareunsecured.Therearenoloanspastdueat31December2009.Loansdonothaveafixedrepaymentscheduleandareexpectedtoberecoveredinmorethanoneyear.

Thesecuredloanswereprovidedforthepurchaseofsites,locatedinprimeareasofLondon,ManchesterandtheIsleofMan,overwhichtheGrouphascollateraloffirstcharges.Thesecuredloansarerepayablebeforecommencementofconstruction,withreviewsatregularintervals.Theweightedaverageinterestrateapplicabletothesesecuredloansis4.62%.Thefairvalueofthecollateralheldisapproximatelyequaltothefairvalueofthesecuredloans,whichisthecarryingvalue.TherearenoconditionsassociatedwiththeuseoftheGroup’scollateralandtheGrouphasanobligationtoreturnthesecuritywhentheloansarefullydischarged.

Thecreditqualityoftheloansisassessedateachreportingdateandin2009theDirectorsmadeanadditionalimpairmentprovisionof€24,495,000bringingthecumulativeimpairmentprovisionto€40,186,000inrecognitionthatthevalueofthelandprovidedbytheborrowersassecurityfortheloanshaddiminished.Giventhisimpairmentprovision,theDirectorsaresatisfiedthatthebalancesat31December2009arerecoverableandconsiderthecarryingamountoftheloanstobetheirfairvalue.



12 Deferred Tax Asset2009

€000s2008

€000s

Openingbalance

Creditedtoothercomprehensiveincome

Creditedtoincomestatement

–

2,888

4,019

–

–

–

6,907 –

Adeferredtaxassetof€2,888,000hasbeenrecognisedinrespectoftheretirementbenefitobligationdeficitof€23,103,000.Afurtherdeferredtaxassetof€4,019,000hasbeenrecognisedinrespectoflossesforwardtotheextentthatitisprobable,basedonmanagementprojections,thattaxableprofitswillbeavailableagainstwhichthelossescanbeutilisedinthefuture.

13 Financial Assets(a) Financial Instruments

2009€000s

2008€000s

(i) At amortised cost


Loans

581,096

43,863

479,626

70,489

(ii) At fair value

Availableforsaleinvestments–unquotedshares

Investmentsheldfortrading–quotedshares

Investmentsheldfortrading–quoteddebtsecurities

9,476

26,191

3,809

11,051

20,303

3,809

(iii) At cost

Cashandcashequivalents

Depositswithbanks

44,036

75,462

35,713

183,143

Thefairvalueofinvestmentsheldtomaturityatclosingbidpriceswas€611,835,000(2008:€508,648,000).

Thefollowingtableprovidesananalysisoffinancialinstrumentsthataremeasuredsubsequenttoinitialrecognitionatfairvalue,groupedintoLevels1to3basedonthedegreetowhichthefairvalueisobservable.

n Level1fairvaluemeasurementsarethosederivedfromquotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities.

n Level2fairvaluemeasurementsarethosederivedfrominputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(i.e.asprices)orindirectly(i.e.derivedfromprices).

n Level3fairvaluemeasurementsarethosederivedfromvaluationtechniquesthatincludeinputsfortheassetorliabilitythatarenotbasedonobservablemarketdata(unobservableinputs).


13 Financial Assets [continued]Level 1€000s

Level 2€000s

Level 3€000s

Total€000s

Investments held for trading

Quotedshares

Quoteddebtsecurities

26,191

3,809

–

–

–

–

26,191

3,809

AFS investments

Unquotedshares – – 9,476 9,476

30,000 – 9,476 39,476

Availableforsaleinvestmentscompriseunquotedsecuritiesandconsistofanumberofinvestmentseachofrelativelysmallvalue.Thevaluesattributabletotheseinvestmentsarederivedfromanumberofvaluationtechniquesincludingnetassetornetbookvalueorthenetpresentvalueoffuturecashflows.

(b) Financial Liabilities

Financialliabilitiesatamortisedcostconsistofborrowingswhichattheyearendamountedto€120,051,000(2008:€110,968,000).

(c) Investment Property2009

€000s2008

€000s

Fairvalueofinvestmentproperty

Atbeginningofyear

Decreaseinfairvalueduringtheyear

Saleofinvestmentproperty

52,538

(8,479)

(792)

83,019

(30,481)

–

Atendofyear 43,267 52,538

Investmentpropertiesheldforrentalwerevaluedatfairvalueat31December2009byexternalprofessionalvaluers,Savills,ValuationSurveyors.Valuersdefinefairvalueforinvestmentpropertiesinexactlythesamewayasforpropertyheldforownuse(seenote10above).

Intheirreport,theexternalprofessionalvaluersstatethattherehasbeenalackoftransactionalevidenceand,asaresult,othervaluationtechniqueswereused.Thesetechniquesmadevariousassumptionsastotenure,letting,townplanning,conditionandrepairaswellasachievableandmaintainablerentalincome.

Ateachreportingdate,theGroupreviewsthecarryingvalueofitsinvestmentpropertiestodetermineifthereisanyindicationthatthoseassetshavesufferedanimpairmentloss.TheGroupmadeimpairmentprovisionsin2009of€8,479,000(2008:€30,481,000).

TherentalincomeearnedbytheGroupfromitsinvestmentpropertiesamountedto€3,339,000(2008:€3,895,000).Directoperatingcostsassociatedwithinvestmentpropertiesamountedto€402,000(2008:€301,000).

Allpropertiesintheportfoliogeneratedrentalincomeduringboth2008and2009.Investmentpropertiesareleasedtotenantsonlong-termfullrepairleasesvaryingintermfromonetoeighty-twoyears.Nocontingentrentswererecognisedasincomeintheperiod.



13 Financial Assets [continued]

Thehistoricalcostofinvestmentpropertyisasfollows:2009

€000s2008

€000s

Historicalcostat1January


80,023

(1,241)

80,023

–

Historicalcostat31December 78,782 80,023

Non-cancellable operating lease receivables

Notlongerthan1year

Longerthan1yearandnotlongerthan5years

Longerthan5years

3,449

10,546

5,171

3,368

11,970

22,890

19,166 38,228

14 Inventories2009

€000s2008

€000s

Workinprogress

Developmentlandheldforresale

28,756

30,470

31,577

30,806

59,226 62,383

Inventoriesvaluedat€4,357,770areexpectedtoberecoveredwithin1year(2008:€879,849).TheamountofinventorychargedasanexpenserelatingtosaleofpropertiesinLaCalais€3,224,000(2008:€3,286,000).

15 Current Tax Asset2009

€000s2008

€000s

Incometaxreceivable 175 4,820

16 Deferred Acquisition Costs

Themovementsindeferredacquisitioncostsduringtheyearwere:

2009€000s

2008€000s

Grosscarryingamountat1January

Netacquisitioncostsdeferredduringtheyear

17,733

2,230

15,271

2,462

Grosscarryingamountat31December 19,963 17,733

Alldeferredacquisitioncostsareexpectedtoberecoveredwithinoneyearfrom31December2009.


17 Other Receivables2009

€000s2008

€000s

Policyholders

Intermediaries

Duefromreinsurers

Otherdebtors

Accruedinterestandrent

Prepaymentsandaccruedincome

34,415

1,987

1

20,798

913

14,567

33,347

1,133

(1)

21,514

576

11,970

72,681 68,539

ReceivablesarisingoutofdirectinsuranceoperationsareconsideredbytheDirectorstohavealowcreditrisk.Assuch,theGrouphasnotmadeprovisionforbadordoubtfuldebts.Thereisnosignificantconcentrationofriskinreceivablesarisingoutofdirectinsuranceoperationsoranyotheractivities.

TheDirectorsconsiderthatthecarryingamountofreceivablesapproximatestotheirfairvalue.Allotherreceivablesareduewithinoneyearandnonearepastdue.

18 Cash and Cash Equivalents2009

€000s2008

€000s

Demanddeposits

Cashinhand

43,376

660

35,183

530

44,036 35,713

Therearenorestrictionsontheuseofdemanddeposits.

19 Ordinary Share CapitalNumber

(2009 only)2009

€000s2008

€000s

(i)Ordinarysharesof60centeach

Authorised:

Atthebeginningandtheendoftheyear 51,326,000 30,796 30,796

Issued and fully paid:


(ii)‘A’Ordinarysharesof1centeach

Authorised:


Issuedandfullypaid:

Atthebeginningoftheyear

Issuedduringtheyear

Cancellationofshares

13,169,428

–

–

132

–

–

–

333

(201)

Attheendoftheyear 13,169,428 132 132

21,409 21,409



19 Ordinary Share Capital [continued]

The‘A’ordinarysharesof1centeacharenon-voting.Theyarenon-transferableexceptonlytotheCompany.Otherthanarighttoareturnofpaidupcapitalof1centper‘A’ordinaryshareintheeventofawindingup,the‘A’ordinaryshareshavenorighttoparticipateinthecapitalortheprofitsoftheCompany.

Theholdersofthetwoclassesofnon-cumulativepreferencesharesrankaheadofthetwoclassesofordinarysharesintheeventofawindingup(seenote22).Beforeanydividendcanbedeclaredontheordinarysharesof60centeach,thedividendonthenon-cumulativepreferencesharesmustfirstlybedeclaredorpaid.

Thenumberofordinarysharesof60centeachheldastreasurysharesatthebeginningandendoftheyear(andthemaximumnumberheldduringtheyear)was2,191,730.Thisrepresented6.18%ofthesharesofthisclassinissueandhadanominalvalueof€1.315m.TherewerenomovementsduringtheyearintheCompany’sholdingoftreasuryshares.

Theweightedaveragenumberofordinarysharesof60centeachintheearningspersharecalculationhasbeenreducedbythenumberofsuchsharesheldintreasury.

At31December2009,thetotalnumberofordinarysharesof60centeachunderoptionamountedto1,199,422(2008:397,477).TherelatedoptionshadbeengrantedundertheFBDHoldingsplcExecutiveShareOptionScheme(“ESOS”)andtheFBDGroupSaveasYouEarn(SAYE)Scheme(the“SAYEScheme”).249,825(2008:294,825)oftheoptionsoutstandingundertheESOSmaybeexercisedpriortoOctober2013atasubscriptionpriceof€2.50pershare.905,000(2008:nil)oftheoptionsoutstandingundertheESOSmaybeexercisedbetweenAugust2012andSeptember2014atasubscriptionpriceof€7.45pershareconditionaloncertainperformanceconditionsbeingmet.The44,597(2008:147,652)optionsoutstandingundertheSAYESchememaybeexercisedafterFebruary2011atasubscriptionpriceof€18.46pershare.

Allissuedshareshavebeenfullypaid.

20 Capital Reserves(a) Group

Share premium

€000s

Capital conversion

reserve€000s

Capital redemption

reserve€000s

Share option

reserve€000s

Total Group€000s


Recognitionofshare-basedpayments

Sharebuybackof‘A’ordinaryshares

5,540

–

–

1,627

–

–

4,225

–

201

1,564

442

–

12,956

442

201

Balanceat31December2008 5,540 1,627 4,426 2,006 13,599

Recognition of share-based payments – – – 698 698

Balance at 31 December 2009 5,540 1,627 4,426 2,704 14,297


20 Capital Reserves [continued]

(b) Company

Share premium

€000s

Capital conversion

reserve€000s

Capital redemption

reserve€000s

Share option

reserve€000s

Total Company

€000s


Sharebuybackof‘A’ordinaryshares

5,540

–

1,627

–

4,225

201

–

–

11,392

201

Balanceat31December2008 5,540 1,627 4,426 – 11,593

Recognition of share-based payments – – – 2,704 2,704

Balance at 31 December 2009 5,540 1,627 4,426 2,704 14,297

Capitalconversionreservearoseontheredenominationofordinary,14%and8%non-cumulativepreferencesharesfromIR50pintoordinaryornon-cumulativepreferencesharesof63.4869cent.Eachsuchsharewasthenrenominalisedtoanordinaryoranon-cumulativepreferenceshareof60cent,anamountequaltothereductionintheissuedsharecapitalwastransferredtothecapitalconversionreservefund.

Capitalredemptionreservearoseonthebuybackandcancellationofissuedsharecapital.

Shareoptionreservearoseontherecognitionofshare-basedpayments.

21 Revaluation ReservesRestated property, plant and

equipment€000s

Available for sale

investments€000s

Restated total

€000s

Balanceat1January2008 28,791 1,195 29,986



Minorityinterestshareofrevaluationofproperty,plantandequipment

Deferredtaxonrevaluationofproperty,plantandequipment

RevaluationofAFSinvestments

DeferredtaxonrevaluationofAFSinvestments

474

(34,640)

2,251

5,050

–

–

–

–

–

–

199

(25)

474

(34,640)

2,251

5,050

199

(25)

Balanceat1January2009 1,926 1,369 3,295



21 Revaluation Reserves [continued]Property, plant and

equipment€000s

Available for sale

investments€000s

Total€000s

Balance at 1 January 2009 1,926 1,369 3,295

Revaluation of property, plant and equipment

Deferred tax on revaluation of property, plant and equipment

Minority interest share of revaluation of property, plant and equipment

Revaluation of AFS investments

Deferred tax on revaluation of AFS investments

(5,241)

3,802

246

–

–

–

–

–

(1,554)

194

(5,241)

3,802

246

(1,554)

194

Balance at 31 December 2009 733 9 742

Therevaluationreservearisesontherevaluationofpropertyandinvestmentproperties.Whensuchassetsaresold,theportionoftherevaluationreservethatrelatestothatasset,andthatiseffectivelyrealised,istransferreddirectlytoretainedearnings.

DistributionsfromtherevaluationreservecanbemadewheretheyareinaccordancewiththerequirementsoftheCompany’sMemorandumandArticlesofAssociationandtheCompaniesActsandrelevantcaselaw.TheDirectorsdonotcurrentlyintendtomakeanydistributionsfromtherevaluationreserve.Thedeferredtaxliabilityinrespectoftherevaluationreserveissetoutinnote26.

Detailsoftheimpairmentofproperty,plantandequipmentandinvestmentpropertiesaresetoutinnotes10and13(c)respectively.

22 Preference Share Capital

Number2009

€000s2008

€000s

Authorised:

Atthebeginningandtheendoftheyear

14%Non-cumulativepreferencesharesof60centeach


1,340,000

12,750,000

804

7,650

804

7,650

8,454 8,454

Issued and fully paid:

Atthebeginningandtheendoftheyear



1,340,000

3,532,292

804

2,119

804

2,119

2,923 2,923

IntheeventoftheCompanybeingwoundup,theholdersofthe14%non-cumulativepreferencesharesrankaheadoftheholdersofthe8%non-cumulativepreferenceshares,whointurn,rankaheadoftheholdersofboththe‘A’ordinarysharesof1centeachandtheholdersoftheordinarysharesof60centeach.


23

C

laim

s O

uts

tan

din

g(a

) G

ross

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ims

Ou

tsta

nd

ing

200

9

Pri

or

year

s€0

00s

2001

€000

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2003

€000

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04€0

00s

2005

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00s

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€000

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Est

imat

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At

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unde

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year

–20

4,55

026

9,75

626

2,13

232

9,08

732

9,50

139

3,94

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3,91

837

8,83

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–20

0,66

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2,44

122

5,26

727

7,41

527

8,28

130

6,44

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6,39

437

3,37

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year

sla

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–19

8,40

620

9,28

420

6,22

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5,51

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3,24

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9,09

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8,66

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182,

112

198,

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185,

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223,

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229,

877

297,

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yea

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ter

–16

8,01

317

4,13

216

5,68

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4,57

7–

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–16

2,93

316

5,74

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6,73

420

7,64

4–

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–15

8,13

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1,62

5–

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Lat

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155,

619

157,

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154,

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154,

184

157,

472

151,

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207,

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308,

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373,

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378,

839

–

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ive

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ents

–(1

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(150

,188

)(1

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(181

,544

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(228

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(226

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–

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14,0

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,642

7,28

411

,559

26,1

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69,0

3499

,886

146,

700

241,

193

671,

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2008

:20

,633

15,4

9312

,568

21,4

1642

,903

68,2

4791

,647

128,

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224,

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–62

6,18

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Mov

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t:(6

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8,09

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345

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23

C

laim

s O

uts

tan

din

g [c

ontin

ued]

(b)

Net

Cla

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Ou

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nd

ing

200

9

Pri

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year

s€0

00s

2001

€000

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00s

2005

€000

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06€0

00s

2007

€000

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00s

2009

€000

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€000

s

Est

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At

end

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unde

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year

–18

7,57

321

1,71

422

1,43

926

5,06

929

0,02

829

7,86

430

7,26

933

8,16

230

8,49

4–

One

yea

rla

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–18

4,89

819

5,51

620

3,16

122

7,65

728

6,60

025

7,37

928

1,26

431

9,00

2–

–

Two

year

sla

ter

–18

5,85

918

7,34

618

2,74

621

3,82

822

1,35

925

4,39

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7,39

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Thre

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173,

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170,

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167,

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183,

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7,57

314

7,56

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1,20

614

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617

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5,66

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–

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7,77

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4,16

411

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23 Claims Outstanding [continued]

Fullprovision,netofreinsurancerecoveries,ismadeatthereportingdatefortheestimatedcostofclaimsincurredbutnotsettled,includingclaimsincurredbutnotyetreportedandexpensestobeincurredafterthereportingdateinsettlingthoseclaims.TheGrouptakesallreasonablestepstoensurethatithasappropriateinformationregardingnotifiedclaimsandusesthisinformationwhenestimatingthecostofthoseclaims.

TheGroupusesestimationtechniques,basedonstatisticalanalysisofpastexperience,tocalculatetheestimatedcostofclaimsoutstandingattheyearend.Itisassumedthatthedevelopmentpatternofthecurrentclaimswillbeconsistentwithpreviousexperience.Allowanceismade,however,foranychangesoruncertaintiesthatmaycausethecostofunsettledclaimstoincreaseorreduce.Thesechangesoruncertaintiesmayarisefromissuessuchastheeffectsofinflation,changesinthemixofbusinessorthelegalenvironment.

Ateachreportingdate,liabilityadequacytestsareperformedtoensuretheadequacyoftheinsuranceliabilities.Inperformingthesetests,currentbestestimatesoffuturecashflowsandclaimshandlingandadministrationexpensesareused.Anydeficiencyisimmediatelyrecognisedintheincomestatement.

ProvisionisalsomadeinrespectoftheGroup’sshareoftheestimatedliabilityforoutstandingclaimsoftheMotorInsurers’BureauofIreland(“MIBI”).ThisprovisionisbasedonourestimatedcurrentmarketshareandthecurrentoutstandingclaimsoftheMIBI.

(c) Reconciliation of claims outstanding

Gross€000s

Net€000s


Changeinprovisionforclaims

612,852

13,336

584,362

8,282

Balanceat31December2008 626,188 592,644

Changeinprovisionforclaims 45,241 11,099

Balanceat31December2009 671,429 603,743

24 Borrowings2009

€000s2008

€000s

Bankloans

Obligationunderpropertyfinancingarrangements

101,534

18,517

92,451

18,517

Borrowings 120,051 110,968

Liabilitiesinrespectoftheobligationunderpropertyfinancingarrangementsfalldueforsettlementin2012andrelatestoaloanwhichisguaranteedbytheGroupasdescribedinnote35.



24 Borrowings [continued]2009

€000s2008

€000s

Bankloans 101,534 92,451

Theborrowingsarerepayableasfollows:OndemandorwithinoneyearInthesecondyearInthethirdyearInthefourthyearInthefifthyearAfterfiveyears

2,51662,16212,9641,3821,382

21,128

3,8162,647

52,9826,6326,609

19,765

101,534 92,451

Allborrowingsat31December2009and2008aredenominatedineuroandareatfloatinginterestrates,exposingtheGrouptocashflowinterestraterisk.

2009 2008

Theaverageinterestrateswereasfollows: 2.94% 5.81%

Allinterestontheborrowingswaschargedtotheincomestatement.

25 Retirement Benefit Obligation

TheGroupoperatesafundeddefinedbenefitretirementbenefitschemeforqualifyingemployeesofitsIrishbasedstaff.Underthenon-contributorydefinedbenefitplan,employeesareentitledtoretirementbenefitsof1/60thoffinalsalaryforeachyearofserviceonattainmentofaretirementageof65.Afullactuarialvaluationwascarriedouton1January2009,usingtheprojectedunitcreditmethod,andupdatedto31December2009bytheschemes’independentandqualifiedactuary.Thelong-terminvestmentobjectiveoftheTrusteesandtheGroupistolimittheriskoftheassetsfailingtomeettheliabilitiesoftheschemeoverthelongterm,andtomaximisereturnsconsistentwithanacceptablelevelofrisksoastocontrolthelong-termcostsofthescheme.Tomeettheseobjectives,thescheme’sassetsareinvestedinadiversifiedportfolio,consistingprimarilyofequityanddebtsecurities.Thesereflectthecurrentlong-termassetallocationranges,havingregardtothestructureofliabilitieswithinthescheme.Themajorassumptionsusedbytheactuarywere:

(a) Assumptions used to calculate scheme liabilities

2009%

2008%

InflationrateincreaseSalaryrateincreasePensionpaymentincreaseDiscountrate

2.003.002.005.25

1.753.751.755.75

(b) Expected rate of return on scheme assets

2009%

2008%

QuotedsharesGovernmentgiltsInvestmentproperties

6.754.006.25

7.504.006.00


25 Retirement Benefit Obligation [continued]

(c) Mortality Assumptions

2009 2008

Theaveragelifeexpectancyofcurrentandfutureretireesusedintheschemeatage65isasfollows:

Male

Female

24.1

27.8

21.4

26.4

Thebasisusedtodeterminetheexpectedreturnonplanassetsisthemoneyweightedrateofreturnachievedontheassetvaluesusedforthepurposeofcalculatingthelong-termfundingrate.Theactualreturnontheschemeassetsfortheyearwas€11,210,000(2008:lossof€29,977,000).

(d) Consolidated income statement

2009€000s

2008€000s

Chargedtoincomestatement:

Currentservicecost

Pastservicecost

Deathinservicecost

3,289

–

24

4,537

1,120

103

3,313 5,760

Interestonschemeliabilities

Expectedreturnonschemeassets

(5,630)

4,686

(6,373)

7,099

(944) 726

4,257 5,034

Chargestotheincomestatementhavebeenincludedinotherunderwritingandnon-underwritingexpenses.

(e) Analysis of amount recognised in Group Statement of Comprehensive Income

2009€000s

2008€000s


Actualreturnonschemeassets

4,686

11,210

7,099

(29,977)

Actualreturnlessexpectedreturnonschemeassets

Experiencegainsandlossesonschemeliabilities

Changesindemographicandfinancialassumptions

6,524

(1,315)

(13,765)

(37,076)

2,889

24,013

Actuarialloss

Deferredtaxcredit

(8,556)

2,888

(10,174)

–

Actuariallossnetofdeferredtax (5,668) (10,174)




(f) History of Experience Gains and Losses

2009€000s

2008€000s

2007€000s

2006€000s

2005€000s

Presentvalueofdefinedbenefitobligations

Fairvalueofplanassets

120,755

97,652

98,956

82,844

115,871

109,630

112,706

109,119

94,995

92,645

Deficit 23,103 16,112 6,241 3,587 2,350

Differencebetweenexpectedandactualreturnonassets 6,524 (37,076) (9,735) 7,114 9,399

Experiencegainsandlossesonschemeliabilities (1,315) 2,889 (2,300) (5,000) (3,289)

Actuarialloss (8,556) (10,174) (4,677) (3,869) (3,802)

Thecumulativechargetotheconsolidatedstatementofcomprehensiveincomeis€66,014,000(2008:€57,458,000).

(g) Assets in scheme at market value

2009€000s

2008€000s

Equities

Bonds

Propertyandother

42,158

36,019

19,475

43,500

23,851

15,493

97,652 82,844

Actuarialvalueofliabilities (120,755) (98,956)

Netpensionliability (23,103) (16,112)

(h) Movement in Deficit During the Year

2009€000s

2008€000s

Netdeficitinschemeat1January

Currentservicecost

Pastservicecost

Employercontributions



Actuarialloss

(16,112)

(3,289)

–

5,798

(5,630)

4,686

(8,556)

(6,241)

(4,537)

(1,120)

5,234

(6,373)

7,099

(10,174)

Netdeficitat31December (23,103) (16,112)



(i) Movement on Assets and Liabilities

2009€000s

2008€000s

Assets

Assetsinschemeat1January

Actualreturnlessexpectedreturnonschemeassets

Contributions

Employeecontributions


Benefitspaid

82,844

6,524

5,798

261

4,686

(2,461)

109,630

(37,076)

5,234

242

7,099

(2,285)

Assetsinschemeat31December 97,652 82,844

Liabilities

Liabilitiesinschemeat1January

Experiencegainsandlossesonschemeliabilities

Changesindemographicandfinancialassumptions

Currentservicecost

Pastservicecost

Employeecontributions


Benefitspaid

98,956

1,315

13,765

3,289

–

261

5,630

(2,461)

115,871

(2,889)

(24,013)

4,537

1,120

242

6,373

(2,285)

Liabilitiesinschemeat31December 120,755 98,956

Thesensitivitiesregardingtheprincipalassumptionsusedtomeasuretheschemeliabilitiesareasfollows:

n A1%increaseinthediscountratewouldreducethevalueoftheschemeliabilitiesby€23.2m.A1%reductioninthediscountratewouldincreasethevalueoftheschemeliabilitiesby€32.0m.

n Theeffectofinflationandsalarieshavebeenanalysedtogetherbecausetheyarelinked.Ariseinthelongterminflationassumptionwillincreasethelongtermsalaryincreaseassumptionandsimilarlyforafallinthelongterminflationassumption.

n A1%increaseininflation/salarieswouldincreasethevalueoftheschemeliabilitiesby€31.4m.A1%reductionininflation/salarieswouldreducethevalueoftheschemeliabilitiesby€23.2m.

n Theeffectofassumingallmembersoftheschemewillliveoneyearlongerwouldincreasethescheme’sliabilitiesby€2.0m.

n Thecurrentbestestimateof2010contributionstobemadebytheGrouptothepensionfundis€6,075,000(2009:€5,483,000).TheGroupisindiscussionswithstaffandtheirrepresentativesandtheTrusteesofthedefinedbenefitpensionsschemesoastodevelopaplantodealwiththedefinedbenefitpensiondeficit.

TheGroupalsooperatesdefinedcontributionretirementbenefitplansforqualifyingemployeesinIrelandwhoopttojointheplans.TheassetsoftheplansareheldseparatelyfromthoseoftheGroupinfundsunderthecontrolofTrustees.TheGrouprecognisedanexpenseof€1,097,000(2008:€981,931)relatingtoitsdefinedcontributionpensionschemes.



26 Deferred Tax Liability

ThefollowingarethemajordeferredtaxliabilitiesrecognisedbytheGroup,andthemovementsthereon,duringthecurrentandpriorreportingperiods.

Restated revaluation of property,

plant and equipment

€000s

Revaluation of

investment property

€000s

Revaluation of financial

investments€000s

Insurance contracts

€000s

Pension contribution prepayment

€000s

Other timing

differences€000s

Total€000s

At1January2008

(Credited)toothercomprehensiveincome

(Credited)tominorityinterest

Charged/(credited)toincomestatement

11,949

(5,050)

(790)

–

1,668

–

–

(880)

2,512

–

–

(2,847)

7,024

–

–

–

1,476

–

–

231

3,109

–

–

(3,340)

27,738

(5,050)

(790)

(6,836)

At31December2008 6,109 788 (335) 7,024 1,707 (231) 15,062

(Credited) to other comprehensive income

Charged/(credited) to income statement

(3,802)

(2,215)

–

(788)

(194)

530

–

3,326

–

(1,707)

–

295

(3,996)

(559)

At 31 December 2009 92 – 1 10,350 – 64 10,507

27 Payables(a) Group

2009€000s

2008€000s

Payablesarisingoutofdirectinsuranceoperations 11,752 16,703

Amountsfallingduewithinoneyear:

Payablesandaccruals

PAYE/PRSI

Proposeddividendsonpreferenceshares

42,878

1,867

169

60,573

1,524

169

44,914 62,266

56,666 78,969


27 Payables [continued]

(b) Company

2009€000s

2008€000s

Amountsfallingduewithinoneyear:

Payablesandaccruals

Proposeddividendsonpreferenceshares

142

169

2,147

169

311 2,316

28 (a) Analysis of Cash Flows for headings netted in the Cash Flow Statement

2009€000s

2008€000s

Investment activities

Purchaseofinvestmentsheldfortrading

Saleofinvestmentsheldfortrading

Purchaseofinvestmentsheldtomaturity

Saleofinvestmentsheldtomaturity

Purchaseofavailableforsaleinvestments

Saleofavailableforsaleinvestments

Saleofproperty,plantandequipment

Purchaseofproperty,plantandequipment


(Increase)/decreaseindepositswithbanks

Decreaseinloans

(Increase)inloans

(21,131)

20,168

(115,887)

14,000

–

21

–

(8,474)

792

107,681

5,748

(122)

(92,972)

206,011

–

–

(1,348)

38

985

(6,144)

–

(110,109)

6,664

(450)

2,796 2,675



28 (b) Movement in Cash, Portfolio Investment and Financing 2009

1 January 2009

€000s

Cash flow

€000s

Changes to market value

€000s

31 December 2009

€000s

Cash



Investmentsavailableforsale

Depositswithbanks

Loans

Property

Inventory

Investmentproperty

Borrowings

35,713

24,112

479,626

11,051

183,143

70,489

191,423

62,383

52,538

(92,451)

8,323

963

101,887

(21)

(107,681)

(5,626)

728

(3,157)

(792)

(9,083)

–

4,925

(417)

(1,554)

–

(21,000)

(33,965)

–

(8,479)

–

44,036

30,000

581,096

9,476

75,462

43,863

158,186

59,226

43,267

(101,534)

1,018,027 (14,459) (60,490) 943,078

2008

1 January 2008

€000s

Cash flow

€000s

Changes to market value

€000s

31 December 2008

€000s

Cash



Investmentsavailableforsale

Depositswithbanks

Loans

Property

Inventory

Investmentproperty

Borrowings

35,618

183,970

479,902

9,542

73,034

76,703

225,158

65,745

83,019

(41,919)

95

(113,039)

–

1,310

110,109

(6,214)

431

(3,362)

–

(50,532)

–

(46,819)

(276)

199

–

–

(34,166)

–

(30,481)

–

35,713

24,112

479,626

11,051

183,143

70,489

191,423

62,383

52,538

(92,451)

1,190,772 (61,202) (111,543) 1,018,027


29 Dividends2009

€000s2008

€000s

Paid during year:

Dividendof4.8cent(2008:4.8cent)pershareon8%non-cumulativepreferencesharesof60centeach 169 169


2008Finaldividendof10.0cent(2007:52.0cent)pershareonordinarysharesof60centeach 3,327 17,277

2009Interimdividendof10.0cent(2008:30.25cent)pershareonordinarysharesof60centeach 3,327 10,064

Specialdividendof1.25centonordinarysharesof60centeach – 416

Specialdividendof149centon‘A’ordinarysharesof1centeach – 19,622

6,936 47,661

Proposed:


Finaldividendof20.0cent(2008:10.0cent)pershareonordinarysharesof60centeach 6,654 3,327

6,823 3,496

TheproposedfinaldividendissubjecttoapprovalbyshareholdersattheAnnualGeneralMeetingandhasnotbeenincludedasaliabilityinthesefinancialstatements.

30 Report on Directors’ Remuneration Role of Remuneration Committee

ResponsibilityfordeterminingthelevelsofremunerationoftheexecutiveDirectorshasbeendelegatedbytheBoardtotheRemunerationCommitteewhosemembershipissetoutintheCorporateGovernanceStatementonpage24.ItistheaimoftheRemunerationCommitteetoensurethattheremunerationpolicyservestoattract,retainandmotivatetheexecutiveDirectorsandotherseniormembersofmanagementandaligns,ascloselyaspossible,theirindividualinterestswiththoseofshareholders.



30 Report on Directors’ Remuneration [continued]

Insettingremunerationlevels,theRemunerationCommitteeattemptstoensurethattheremunerationofexecutiveDirectorsreflectstheirindividualperformanceandmarketrates,takingintoconsiderationtheremunerationpracticesofotherquotedcompaniesinIreland.TheCommitteealsohasaccesstoindependentprofessionaladvisersasitdeemsappropriate.Whilenoindependentprofessionaladviserwasconsultedduringtheyearunderreview,theCommitteehasinrecentyearssoughtsuchprofessionaladvice.

Executive Director Remuneration

ThevariouselementsoftheremunerationpackageforexecutiveDirectorscomprisethefollowing:

n Basic Salary and Benefits. InadditiontothebasicsalarydeterminedbytheCommittee,thebenefitsoftheexecutiveDirectorsrelateprimarilytothepartsubsidisationofhealthinsurancepremiumsandpaymentofacarallowance.

n Annual Bonus. ExecutiveDirectorscanreceivebonuspaymentsbasedonapredeterminedpercentageofbasicsalary.For2009thispercentagerangedfrom45%to70%.Between40%and50%ofthebonuspotentialiscontingentonachievementofannualfinancialtargetsandbetween50%and60%iscontingentontheachievementofindividualagreedstrategicpriorities.

n Pension Scheme. TheGroupoperatesadefinedbenefitpensionschemewhichclosedtonewmembersin2005.Theschemeisbasedonanaccrualrateof1/60thofpensionablesalaryforeachyearofpensionableserviceuptoamaximumoftwothirdsofsalaryatretirementforfullservice.Pensionablesalaryisdefinedasbasicsalaryasreducedby1.5timesthestatepensionbenefit.Noelementsofremunerationotherthanbasicsalaryarepensionable.OneexecutiveDirectorjoinedtheGroupsincetheclosureofthedefinedbenefitpensionschemeandthisDirectorisamemberoftheGroup’sdefinedcontributionpensionplan,towhichcontributionsaremadeatanagreedfixedrate.

n Share Options and Awards. TheexecutiveDirectorsparticipateintheFBDHoldingsplcExecutiveShareOptionScheme(“ESOS”)(underwhichtheabilitytograntoptionsexpiredinSeptember2009)andtheFBDGroupPerformanceSharePlan(“LTIP”)whichwasintroducedin2007.BothSchemeswereapprovedbyshareholdersandcomplywithIAIMguidelinesandfurtherdetailsonbotharesetoutlaterinthisnoteandinnote34,ShareBasedPayments.TheCommitteebelievesthatparticipationintheseSchemesmotivateshighperformanceandalignstheinterestsoftheDirectorswiththoseofshareholders.

Non-executive Director Remuneration

Theremunerationofthenon-executiveDirectorsisdeterminedbytheBoard,andreflectsthetimecommitmentandresponsibilitiesoftherole.



ThefollowingtablesetsoutindetailtheremunerationpayableinrespectofanyDirectorwhoheldofficeforanypartofthefinancialyear.

Fees1

€000sSalary€000s

Bonus€000s

Benefits6

€000s

Pension contribution

€000s

2009 Total

€000s

Executive Directors:

AndrewLangford2

CathalO’Caoimh3

AdrianTaheny4

–

–

–

464

270

351

67

48

50

34

26

26

82

40

59

647

384

486

Non-executive Directors:


JohnDonnelly

SeanDorgan

PhilipLynch

PatrickO’Keeffe

VincentSheridan

JohanThijs

PadraigWalshe

126

40

40

40

40

75

40

40

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

126

40

40

40

40

75

40

40

441 1,085 165 86 181 1,958

Thefollowingtablesetsoutthedetailforthepreviousfinancialyear:

Fees€000s

Salary€000s

Bonus€000s

Benefits6

€000s

Pension contribution

€000s

2008 Total

€000s

Executive Directors:

PhilipFitzsimons7

AndrewLangford

CathalO’Caoimh

AdrianTaheny

–

–

–

–

200

469

75

375

500

119

16

85

9

21

6

26

34

79

11

63

743

688

108

549

Non-executive Directors:


JohnDonnelly

SeanDorgan

PhilipLynch

PatrickO’Keeffe

VincentSheridan

JohanThijs

PadraigWalshe

149

44

44

44

44

83

44

44

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

149

44

44

44

44

83

44

44

496 1,119 720 62 187 2,584




Notes

1 Feesarepayabletothenon-executiveDirectorsonly.AtthemeetingoftheBoardheldon3March2009,itwasagreedthattheChairmanwouldwaive15%ofhisfeesfor2009andthattheothernon-executiveDirectorswouldwaive10%oftheirfees.

2 Mr.LangfordwasappointedasGroupChiefExecutivewitheffectfrom16May2008.TheRemunerationCommitteeincreasedhissalaryto€525,000witheffectfromthatdate.AftertheRemunerationCommitteeawardedacostoflivingincreaseof4%witheffectfrom1January2009,Mr.Langfordvoluntarilywaived15%ofhisrevisedsalaryfor2009.

3 Mr.O’CaoimhwasappointedasGroupFinanceDirectorwitheffectfrom1October2008onabasicsalaryof€300,000.Hevoluntarilywaived10%ofthissalaryduring2009.

4 Mr.Tahenywasawardedacostoflivingincreaseof4%bytheRemunerationCommitteewitheffectfrom1January2009.Hevoluntarilywaived10%ofhisrevisedsalaryfor2009.

5 Witheffectfrom1January2010,theexecutiveDirectorshaveallagreedtomakethevoluntarywaiversofsalarypermanentandhavealsoacceptedfurthersalaryreductionsofupto9.5%for2010.

6 Benefitsrelateprincipallytomotorallowanceandhealthinsurancesubsidy.

7 Mr.Fitzsimonsdiedon20April2008.

TheexecutiveDirectors’definedbenefitpensionearnedduringtheyearandaccruedatyearendareasfollows:

Service costs 2009

€000s

Increase in accrued pension benefits

during 2009€000s

Total accrued pension

benefit at year end

€000s

Transfer value of

increase in accrued benefits

€000s

AndrewLangford

AdrianTaheny

136

115

14

15

128

201

92

196

251 29 329 288

Thetransfervaluesshownabove,whichhavebeencalculatedinaccordancewithActuarialGuidanceNoteGN11,donotrepresentsumspaidorduetotheindividualDirectors.Rathertheyrepresenttheamountwhichthepensionschemewouldtransfertoanotherpensionscheme,inrelationtothebenefitsaccruedduring2009,intheeventoftheDirectorleavingservice.

Service Contracts

NoservicecontractsexistforanyoftheexecutiveDirectorswhichprovideforanoticeperiodofmorethanoneyear.



Share Options

The FBD Holdings plc Executive Share Option Scheme (“ESOS”)

Toencouragefocusonlong-termshareholdervalue,seniorexecutivesincludingexecutiveDirectorsareeligibleforgrantsofshareoptionsunderthetermsoftheExecutiveShareOptionScheme,whichwasapprovedbyshareholders.Theexerciseofoptionsgrantedsince18April2000isconditionalongrowthinearningspershareofatleast2%p.a.,compound,abovetheincreaseintheConsumerPriceIndexovernotlessthan3yearsfromdateofgrant.ThepercentageofsharecapitalwhichmaybeissuedundertheSchemecomplieswiththeguidelinesoftheIrishAssociationofInvestmentManagers.

Duringtheyear,theRemunerationCommitteegrantedoptionsundertheESOStoseniorexecutives,includingtheexecutiveDirectorsandtheCompanySecretary.NofurtheroptionscanbegrantedundertheESOSafter5September2009.DependentontheperformanceconditionfortheexerciseofoptionsundertheESOShavingbeenmet,alloutstandingoptionsundertheESOSmustbeexercisednolaterthan5September2014.

Directors’ and Company Secretary’s Share Options

DetailsofoptionsheldbyexecutiveDirectorsandtheCompanySecretaryundertheESOSaregivenbelow:

At 1 January

2009

Exercised during

year

Granted during

year

At 31 December

2009

Weighted average exercise

price €

Normal exercise period

Executive Directors

AndrewLangford

CathalO’Caoimh

AdrianTaheny

30,000

–

70,000

–

–

–

90,000

75,000

65,000

120,000

75,000

135,000

6.21

7.45

4.88

Oct2006-Sept2014

Aug2012-Sept2014

Oct2006-Sept2014

Company Secretary

ConorGouldson – – 35,000 35,000 7.45 Aug2012-Sept2014

The FBD Group Save as You Earn (SAYE) Scheme

TheSAYESchemewasapprovedbyshareholdersin2007.Latein2007,optionsweregrantedundertheSchemetothoseeligibleGroupemployees,includingexecutiveDirectors,whojoinedtheSchemeandenteredintothenecessary3yearsavingscontractundertheSchemerules.SavingscommencedinJanuary2008.Theoptionsweregrantedatanoptionpriceof€19.95pershare,whichrepresentedadiscountof20%tothethenmarketpriceforthesharesaspermittedundertheSchemeRules.ConsequenttotheReturnofCapitalandtheSpecialDividendof€1.49declaredandpaidinOctober2008,theOptionPricewasreducedby€1.49pershareaspermittedundertheSchemeRuleshavingobtainedthenecessarypriorapprovaloftheRevenueCommissioners.




Directors’ SAYE Scheme Options

DetailsofSAYEoptionsheldbyexecutiveDirectorsaregivenbelow:

At 1 January

2009

Exercised during

year

Granted during

year

At 31 December

2009

Exercise price

€

AndrewLangford

AdrianTaheny

599

599

–

–

–

–

599

599

18.46

18.46

AlloftheaboveoptionsareexercisablefromFebruary2011.

FBD Performance Share Plan

TheFBDPerformanceSharePlan(‘LTIP’)wasapprovedbyshareholdersin2007.ConditionalawardsundertheLTIParedependentontheGroupmeetingonerousperformancetargetsintermsofEPSgrowth,totalshareholderreturnsandmaintenanceofthecombinedoperatingratioaheadofpeercompaniesintheEuropeangeneralinsurancesector.Theextenttowhichtheseconditionshavebeenmetandanyaward(orpartofanaward)hasthereforevestedwillbedeterminedbytheRemunerationCommittee.Theperformancetargetsapplyingensureabsolutealignmentbetweentheinterestsoftheplanparticipantsandthoseofshareholders.

InviewofthegrantofshareoptionstoseniorexecutivesundertheFBDHoldingsplcExecutiveShareOptionSchemeduringtheyear,noconditionalawardsweremadein2009undertheLTIP.DetailsoftheconditionalshareawardsmadebytheRemunerationCommitteeundertheLTIPin2008totheexecutiveDirectors,andtheCompanySecretary,aregivenbelow.Thenumberofsharesisthemaximumpossiblenumberwhichcouldvestfortheindividualconcernedifalloftheperformanceconditionspreviouslydescribedaremet.

Directors’ and Company Secretary’s Conditional LTIP Awards

At 1 January

2009

Granted during

year

Lapsed during

year

At 31 December

2009

Executive Directors

AndrewLangford

CathalO’Caoimh

AdrianTaheny

26,453

11,627

14,534

–

–

–

–

–

–

26,453

11,627

14,534

Company Secretary

ConorGouldson 4,156 – – 4,156


31 Principal Subsidiaries

Subsidiaries Nature of operations % owned

FBDInsuranceplc

FBDInsuranceBrokersLimited

FBDLife&PensionsLimited

FBDProperty&LeisureLimited

LaCalaGolfClubS.L.

RanchosReunidosS.A.

SunsetBeachClubS.A.

FBDHotels(Ireland)Limited

Generalinsuranceunderwriter

Generalinsurancebrokers

Investmentservices,pensionsandlifebrokers

Propertyinvestmentandmarketing

Golfresort

Property

Hoteliers

Hoteliers

100

100

100

100

75

100

100

100

TheRegisteredOfficeofeachoftheabovesubsidiariesisatFBDHouse,Bluebell,Dublin12,withtheexceptionofRanchosReunidosS.A.andLaCalaGolfClubS.L.whichareatLaCalaResort,LaCaladeMijas,29647Mijas-Costa,Malaga,SpainandSunsetBeachClubS.A.whichisatAvenidaDelSolNo.5,Benalmadena-Costa,Malaga,Spain.

Allshareholdingsareintheformofordinaryshares.

Thefinancialyearendforallsubsidiariesis31December.

FBDHoldingsplcisanIrishregisteredpubliclimitedcompany.TheCompany’sordinarysharesof60centeacharelistedontheIrishStockExchangeandtheUKListingAuthorityandaretradedonboththeIrishStockExchangeandLondonStockExchange.

32 Capital Commitments2009

€000s2008

€000s

Capitalcommitmentsat31DecemberauthorisedbytheDirectorsbutnotprovidedforinthefinancialstatements:

Contractedfor 559 172

Notcontractedfor – 141

33 Contingent Liabilities and Contingent Assets

Therewerenocontingentliabilitiesorcontingentassetsateither31December2009or31December2008.



34 Share Based Payments FBD Holdings plc Executive Share Option Scheme

InSeptember1989,theGroupestablishedanequitysettledexecutiveshareoptionscheme,theFBDHoldingsplcExecutiveShareOptionScheme(“ESOS”)underwhichoptionstopurchaseordinarysharesof60centeach(“ordinaryshares”)intheCompanyaregrantedtocertainexecutiveDirectorsandseniormanagement.UnderthetermsoftheESOStheoptionsareexercisableatthemarketpriceprevailingatthedateofthegrantoftheoption(the“optionprice”).UnderthetermsofanamendmenttotheESOSapprovedbyshareholdersinApril2006,theoptionpricemaybereducedbytheamountofanyspecialdividendspaidtoshareholders.OptionsweregrantedundertheESOSinSeptember1989,September1995,May2000,October2003andAugust2009.Theexerciseofoptionsgrantedsince18April2000isconditionalongrowthinearningspershareofatleast2%perannum,compound,overtheincreaseintheconsumerpriceindexovernotlessthanthreeyearsfromthedateofgrant.

AsummaryoftheoptionsundertheESOSduringtheyearisasfollows:

2009Average

exercise price in € per share

2009Options

2008Average

exercise price in € per share

2008Options

At1January

Granted

Exercised

Lapsed

2.50

7.45

–

–

249,825

905,000

–

–

3.99

–

3.99

–

294,825

–

45,000

–

At31December 6.38 1,154,825 *2.50 249,825

Totalexercisableat31December 2.50 249,825 2.50 249,825

* During 2008 the option price was reduced by €1.49 as a consequence of the payment of a special dividend of €1.49 per share in October 2008 as permitted under the Scheme rules.

ThefairvaluesoftheoptionsgrantedundertheESOSinOctober2003andAugust2009werecalculatedat€12.03and€1.62respectively.Thesefairvalueswereindependentlycalculatedusingtheassumptionsoverleaf.

NofurtheroptionscanbegrantedundertheESOS.

FBD Group Save as You Earn (SAYE) Scheme

InMay2007,shareholdersapprovedtheestablishmentoftheFBDGroupSaveasYouEarn(SAYE)Scheme(the“SAYEScheme”).UndertheSAYEScheme,eligibleGroupemployeescanbegrantedoptionstosubscribeforordinarysharesintheCompanyatadiscountofupto25%totheprevailingmarketpriceoftheCompany’sordinaryshares,asprovidedforundertheSAYESchemeRuleswhichareRevenueCommissionersapproved.Theoptionpricecanbereduced,inaccordancewiththeSAYESchemeRules,bytheamountofanyspecialdividendspaidtoshareholdersprovidedthatanysuchreductionhastheapprovaloftheRevenueCommissioners.


34 Share Based Payments [continued]

TheonlygrantofoptionsundertheplantodatewasmadeinOctober2007andwasalignedtothreeyearsavingscontractswhichcommencedinJanuary2008.Optionsweregrantedoveratotalof164,573ordinarysharesatanoptionpriceof€19.95whichrepresentedadiscountof20%totheprevailingmarketpriceatthetimeofgrant.Asaconsequenceofthepaymentofaspecialdividendof€1.49pershareduringtheyeartheoptionpricewasreduced,byagreementwiththeRevenueCommissioners,to€18.46.Optionsover103,055shareslapsedduringtheyear(2008:16,921).NooptionsundertheSAYESchemewereexercisedduringtheyear.Optionsremainoutstandingoveratotalof44,597ordinarysharesat31December2009(2008:147,652),noneofwhichareexercisable.

ThefairvalueoftheoptionsundertheSAYESchemehasbeenindependentlycalculatedat€5.84usingtheassumptionsdetailedbelow.

FBD Group Performance Share Plan

TheFBDGroupPerformanceSharePlan(the“LTIP”)wasapprovedbyshareholdersinMay2007.ConditionalawardsofordinarysharesundertheLTIParedependentontheGroupmeetingonerousperformancetargetsintermsofEPSgrowth,totalshareholderreturnsandmaintenanceofthecombinedoperatingratioaheadofpeercompaniesintheEuropeangeneralinsurancesector.Theextenttowhichtheseconditionshavebeenmetandanyaward(orpartofanaward)hasthereforevestedwillbedeterminedinduecoursebytheRemunerationCommittee.OnlyoneconditionalawardhasbeenmadeundertheLTIPtodate,inAugust2008.Thisawardwasoveratotalof98,149ordinaryshares.Thefairvalueoftheawardhasbeenindependentlycalculatedtobe€6.45pershareusingtheassumptionsdetailedbelow.

Fair value calculations

Thefairvaluesoftheoptionsandconditionalshareawardsnotedabovehavebeencalculatedusingthefollowingassumptions:

ESOS grant October 2003

SAYE grant October 2007

LTIP award August 2008

ESOS grant August 2009

Sharepriceatgrant

Initialoption/awardprice

Expectedvolatility

Expectedlifeinyears

Riskfreeinterestrate

Dividendyield%

Fairvalue

€10.59

€10.59

20%

3

2.98%

2%

€12.03

€24.42

€19.95

20%

3

4.1%

3%

€5.84

€12.90

€12.90

35%

2.58

4.0%

n/a

€6.45

€7.40

€7.45

35%

3

2.5%

4.5%

€1.62



34 Share Based Payments [continued]

Accounting Charge for Share based payments

Grant date

Vesting period (years)

Number of options granted

Number outstanding

at 31 December

2009

Grant price*

€

Market value at

grant date

€

Fair value at

grant date

€2009€000

2008€000

26.10.07SAYE 3.00 164,573 44,597 18.46 24.94 5.84 299 363

27.08.08LTIP 2.58 98,149 98,149 – 12.90 6.45 229 79

26.08.09ESOS 3.00 905,000 905,000 7.45 7.40 1.62 170 –

Total 698 442

* adjusted for special dividends paid since grant date.

35 Guarantees

TheCompanyhasprovidedfourguaranteesasfollows:

n Firstlyandsecondly,twoguaranteesforthevalueof€18,517,000havebeenprovidedbytheCompanyinrespectofCastleknockHotel.ThefirstisinrespectofabankloandrawndownbyanunrelatedthirdpartythathasborrowedmoneyfromabankforthepurchaseofCastleknockHotel.ThesecondisinrespectofaputandcalloptionbetweenthesamethirdpartyandasubsidiaryofFBDHoldingsplc.FBDHoldingsplchasguaranteedthatifitssubsidiarycannotmeetitsobligationtoexerciseitsputandcalloption,itshallprovidethefundingtoenableittodoso.Thebenefitsandobligationshavebeenincludedinfullinthefinancialstatementstoreflectthesubstanceofthetransaction.Theannualchargepaidtothethirdpartyhasbeenincludedinthefinancecostsintheconsolidatedincomestatement.

n Thirdly,theCompanyhasguaranteedaworkingcapitalloanof€3,985,000drawndownforthepurposeoffittingoutCastleknockHotel.

n Finally,theCompanyhasguaranteedaloanfromFarmerBusinessDevelopmentsplctoasubsidiary,FBDProperty&LeisureLimited,of€60,000,000.

TheguaranteesaredeemedtohaveafairvalueofnilbecausethereisnoresidualliabilityapplyingtotheGroupastheobligationshavealreadybeenincludedinfullintheconsolidatedstatementoffinancialpositionandtheassociatedfinancechargesareincludedintheconsolidatedincomestatement.


36 Transactions with Related Parties

FarmerBusinessDevelopmentsplchasasubstantialshareholdingintheGroupat31December2009detailsofwhicharesetoutintheReportoftheDirectors.

Includedinthefinancialstatementsisanunsecuredloanof€60,000,000(2008:€50,000,000)fromFarmerBusinessDevelopmentsplctoFBDProperty&LeisureLimited,a100%ownedsubsidiaryoftheGroup.ThisloanisguaranteedbytheCompany.Thetermoftheloanis3yearsanditisduetoberepaidinfullinAugust2011.Interestischargedonthisbalanceatmarketratewhichisdefinedunderthetermsoftheloanagreementas3monthEuriborrateplusamargincappedat225basispoints.

Includedinthefinancialstatementsattheyearendis€331,601(2008:€484,170)duefromFarmerBusinessDevelopmentsplc.Thisbalanceismadeupofrechargesforservicesprovidedandrecoverablecosts.Interestischargedonthisbalanceatthemarketrate.Theamountdueisrepayableondemand.

ForthepurposesofthedisclosurerequirementsofIAS24,theterm“keymanagementpersonnel”(i.e.thosepersonshavingauthorityandresponsibilityforplanningdirectingandcontrollingtheactivitiesoftheCompany)comprisestheBoardofDirectorswhichmanagesthebusinessandaffairsoftheCompany.Fulldisclosureinrelationtothe2009and2008compensationentitlementsoftheBoardofDirectorsisprovidedintheReportonDirectors’Remunerationinnote30.Incommonwithallshareholders,Directorsreceivedpayments/distributionsrelatedtotheirholdingsofsharesintheCompanyduringtheyear,amountingintotalto€35,090(2008:€374,397).DetailsofDirectors’shareoptionsareoutlinedinnote34.ThesharebasedpaymentchargetoprofitorlossrelatingtotheExecutiveDirectorsduringtheyearwas€168,007(2008:€44,503).

37 Risk Management

TheGrouprecognisesthecriticalimportanceofefficientandeffectiveriskmanagement.Riskiscategorisedasfollows:

n GeneralInsurancerisk

n CapitalManagementrisk

n Operationalrisk

n Liquidityrisk

n Marketrisk

n Creditrisk

n Concentrationrisk

Throughitsinterestinitssubsidiaries,theCompanyisexposedtothesamerisksastheGroup.



37 Risk Management [continued]

(a) General Insurance risk

Theriskattachedtoanyinsurancepolicywrittenisthepossibilitythataninsuredeventoccursandtheuncertaintyoftheamountoftheresultingclaim.

TheGrouphasdevelopeditsinsuranceunderwritingstrategytodiversifythetypeofinsuranceriskswrittenandwithineachofthetypesofrisk,toachieveasufficientlylargepopulationofriskstoreducethevariabilityoftheexpectedoutcome.Theprincipalriskscoveredincludemotor,employers’andpublicliabilityandproperty.AllrisksunderwrittenarelocatedintheRepublicofIreland,withnosignificantconcentrationinanyonearea.

Thefrequencyandseverityofclaimscanbeaffectedbyseveralfactors,mostnotablythelevelofawardsandinflationonsettlingclaims.Thehistoryofclaimsdevelopmentissetout,bothgrossandnetofreinsuranceinnote23,claimsoutstanding.

TheGroupmanagestheserisksthroughitsunderwritingstrategy,proactiveclaimshandlinganditsreinsurancearrangements.TheonlysignificantconcentrationofinsuranceriskisthatalloftheGroup’sunderwritingbusinessisconductedinIreland.

TheGroup’sunderwritingstrategyisincorporatedintheoverallcorporatestrategywhichisapprovedbytheBoardofDirectorsandincludestheemploymentofappropriatelyqualifiedunderwritingpersonnel;thetargetingofcertaintypesofbusiness;constantreviewoftheGroup’spricingpolicyusingup-to-datestatisticalanalysisandclaimsexperience;andthesurveyingofriskscarriedoutbyexperiencedpersonnel.AllrisksunderwrittenarewithinthetermsoftheGroup’sreinsurancetreaties.

Foritsmotor,employers’liabilityandpublicliabilitybusiness,theGrouphasinplaceexcessoflossreinsurancetreatiesandforitspropertybusiness,quotashareandcatastrophereinsurancetreatiesoperate.TheGroup’sretentiononallreinsurancetreatiesisapprovedbytheBoardofDirectorsonanannualbasis.

TheGroupusesindependentactuariestoreviewitsliabilitiestoensurethatthecarryingamountoftheliabilitiesisadequate.Wheretheliabilitiesnetofanyrelateddeferredacquisitioncostsaredeemedtobeinadequate,thedeficiencyisrecognisedimmediatelyintheconsolidatedincomestatement.

(b) Capital management

TheGroupiscommittedtomanagingitscapitalsoastomaximisereturnstoshareholders.ThecapitaloftheGroupcomprisesofissuedcapital,reservesandretainedearnings.TheBoardofDirectorsreviewsthecapitalstructurefrequentlytodeterminetheappropriatelevelofcapitalrequiredtopursuetheGroup’sgrowthplans.

TheGroup’sprincipalsubsidiary,FBDInsuranceplc,mustmaintainanadequateregulatorysolvencypositionandmustsatisfytheFinancialRegulatorthatithasdoneso.ThecapitalpositionofFBDInsuranceplcisreviewedfrequentlybyitsBoardofDirectors.Toprovideprotectionagainstmaterialeventsorshocks,theGroupensuresthatitsinsurancesubsidiaryholdssufficientcapitaltomaintainsignificantregulatorysurpluses.



Asat31December2009,FBDInsuranceplchadadmissibleassetstocovertherequiredsolvencymarginof€162,085,000(2008:€169,785,000).Therequiredsolvencymarginis€64,475,000(2008:€64,475,000)andiscalculatedwithreferencetotheEuropeanCommunities(Non-LifeInsurance)Framework(Amendment)Regulations2004.TheCompanymaintaineditsrobustcapitalpositionandcompliedwithallregulatorysolvencymarginrequirementsthroughouttheyearunderreviewandtheprioryear.

TheGrouphasaninvestmentcommitteeandaninternalcontrolgroupandtheinsurancesubsidiaryhasapricingcommitteeandaSolvencyIIprojectgroup,allofwhichassisttheBoardintheidentificationandmanagementofexposuresandcapital.

TheGroupusesanumberofsensitivitybasedrisk-analysistoolsaspartofitsdecisionmakingandplanningprocessestounderstandandmanagethevolatilityofearningsandcapitalrequirementsmoreefficiently.TheGroupmeasureskeyperformanceindicators,includingcompliancewithminimumstatutorysolvencyrequirements,underanumberofeconomicandoperatingscenariossoastoidentifyandquantifytheriskstowhichthebusinessanditscapitalareexposed.

InpreparationfortheBoard’sannualreviewoftheinternalcontrolsystem,seniormanagementcarryoutaselfassessment,incompliancewiththeTurnbullProcess,ofthesignificantrisks,includingcapitalrisks,facingtheorganisationandthecontrolsinplacetomitigateormanagesuchexposures.

TheGroupregularlybenchmarkseachofitsoperatingbusinessesrelativetoitspeers.InthisprocesstheGroupfocusesonitscapitalrequirementandefficiencyaswellasprofitability,coststructuresandmarketposition.

TheGroupalsodevotesconsiderableresourcestomanagingitsrelationshipswiththeprovidersofcapitalwithinthecapitalmarkets,forexample,existingandpotentialshareholders,financialinstitutions,stockbrokers,corporatefinancehouses,etc.

(c) Operational risk

Operationalriskcouldariseasaresultofinadequatelycontrolledinternalprocessesorsystems,humanerror,orfromexternalevents.

ThisdefinitionisintendedtoincludeallriskstowhichtheGroupisexposedandstrategicandGrouprisksthatareconsideredelsewhere.Hence,operationalrisksincludeforexample,informationtechnology,informationsecurity,humanresources,projectmanagement,outsourcing,tax,legal,fraudandcompliancerisks.

InaccordancewithGrouppolicies,businessunitmanagementhasprimaryresponsibilityfortheeffectiveidentification,management,monitoringandreportingofrisks.Thereisanannualreviewbyexecutivemanagementofallmajorrisks.Theauditcommitteereviewexecutivemanagement’sriskassessmenttoensurethatallrisksareidentifiedandevaluated.Eachoperationalriskisassessedbyconsideringthepotentialimpactandtheprobabilityoftheeventoccurring.Impactassessmentsaremadeagainstfinancial,operationalandreputationalcriteria.




(d) Liquidity risk

TheGroupisexposedtodailycallsonitscashresources,mainlyforclaimspayments.TheGroupmanagesliquidityriskbycontinuouslymonitoringforecastandactualcashflowsandmatchingthematurityprofilesoffinancialassetsandliabilities.Inadditiontoitsstrongliquidityposition,theGrouphascommittedborrowingfacilitiesfromahighlyratedbanktofurthermitigatethisrisk.

Thefollowingtablesprovideananalysisofassetsandliabilitiesintotheirrelevantmaturitygroupsbasedontheremainingperiodatthebalancesheetdatetotheircontractualmaturities.

Assets – 2009

Carrying value total

€000s

Contracted value€000s

Cashflow within1 year€000s

Cashflow 1-5 years

€000s

Cashflow after

5 years€000s

Inventories

Financialassets

Reinsuranceassets

Deferredacquisitioncosts

Loansandreceivables


59,226

739,301

93,189

19,963

116,544

44,036

59,226

806,678

93,189

19,963

123,916

44,036

4,357

135,766

71,508

19,963

74,155

44,036

54,869

616,390

16,870

–

49,761

–

–

54,522

4,811

–

–

–

1,072,259 1,147,008 349,785 737,890 59,333

Assets – 2008

Carrying value total

€000s


Cashflow within1 year€000s

Cashflow 1-5 years

€000s

Cashflow after

5 years€000s

Inventories

Financialassets

Reinsuranceassets

Deferredacquisitioncosts

Loansandreceivables


62,383

750,470

58,994

17,733

139,028

35,713

62,383

838,153

58,994

17,733

139,028

35,713

880

248,731

47,939

17,733

68,539

35,713

61,503

530,046

9,291

–

70,489

–

–

59,376

1,764

–

–

–

1,064,321 1,152,004 419,535 671,329 61,140



Liabilities – 2009

Carryingvalue€000s


Cashflowwithin 1 year€000s

Cashflow1-5 years

€000s

Cashflowafter

5 years€000s

Insurancecontractliabilities

Borrowings

Retirementbenefitobligations

Payables

848,032

120,051

23,103

56,666

848,032

138,593

23,103

56,671

301,196

4,934

2,310

56,671

357,714

104,403

9,240

–

189,122

29,256

11,553

–

1,047,852 1,066,399 365,111 471,357 229,931

Liabilities – 2008

Carryingvalue€000s


Cashflowwithin 1 year€000s

Cashflow1-5 years

€000s

Cashflowafter

5 years€000s

Insurancecontractliabilities

Borrowings

Retirementbenefitobligations

Payables

814,205

110,968

16,112

78,969

814,205

134,223

16,112

78,969

273,190

7,451

1,611

78,969

354,482

98,557

6,444

–

186,533

28,215

8,057

–

1,020,254 1,043,509 361,221 459,483 222,805

(e) Market risk

TheGrouphasinvestedinquoteddebtsecurities,investmentpropertyandquotedandunquotedshares.Theseinvestmentsaresubjecttomarketrisk,wherebythevalueoftheinvestmentsmayfluctuateasaresultofchangesinmarketprices,changesinmarketinterestratesorchangesintheforeignexchangeratesofthecurrencyinwhichtheinvestmentsaredenominated.Theextentoftheexposuretomarketriskismanagedbytheformulationof,andadherenceto,aninvestmentpolicyincorporatingclearlydefinedinvestmentguidelines,asapprovedannuallybytheBoardofDirectorsandemploymentofappropriatelyqualifiedandexperiencedpersonneltomanagetheGroup’sinvestmentportfolio.

Interest rate risk

InterestrateriskarisesprimarilyfromtheGroup’sinvestmentsinquoteddebtsecurities,depositsandborrowings.TheInvestmentCommitteeregularlyreviewstheappropriatelevelofexposuretointerestrateriskfromtrading.Factorstakenintoconsiderationareyieldvolatilityandhistoricalreturns.




At31December2009,theGroupheldthefollowingquoteddebtsecuritiesfortradinganddeposits:

2009Weighted

market value€000s

2009Weighted

average interest

rate

2008Market

value€000s

2008Average interest

rate

Time to maturityInoneyearorlessInmorethanoneyear,butnotmorethantwoyearsInmorethantwoyears,butnotmorethanthreeyearsInmorethanthreeyears,butnotmorethanfouryearsInmorethanfouryears,butnotmorethanfiveyearsMorethanfiveyears

75,462–––

3,809–

3.07%–––

6.85%–

183,143––––

3,809

3.15%––––

6.85%

79,271 186,952

Thesefinancialinstrumentsareexposedtofairvalueinterestraterisk.LoansanddepositsmadebytheGroupareatfloatinginterestrates.Allborrowingsarealsoatfloatinginterestrates.

Equity price risk

TheGroupissubjecttoequitypriceriskduetodailychangesinthemarketvaluesofitsholdingsofquotedshares.EquitypriceriskisactivelymanagedbytheInvestmentCommitteeusingtheframeworksetoutintheGroup’sinvestmentpolicywhichisapprovedannuallybytheBoardofDirectors.TheInvestmentCommitteeplaceslimitsonthetypeofsharesheld,liquidityofshares,sizeofshare-holdingandexposuretoanyonesector.InadditionlocalassetadmissibilitysolvencyregulationsrequiretheGrouptoholdadiversifiedportfolioofassetstherebyreducingexposuretoindividualsectors.Partoftheportfolioishelddirectlywhilepartisoutsourcedtoanumberofexternalinvestmentmanagers.Theamountsexposedbyequitypriceriskaresetoutinnote13(a).

Foreign currency risk

TheGroupholdsinvestmentassetsandequitiesinforeigncurrencieshenceexposuretoexchangeratefluctuationsarise.TheGroupisprimarilyexposedtoSterlingandUSdollars.DerivativeinstrumentsareusedforthepurposesofprotectingtheEurovalueofassetsdenominatedinnonEurocurrenciesincircumstanceswherethecostofthehedgeisdeemedcommercialhavingregardtothepotentialforeigncurrencyrisk.

TheGroupdidnotholdanyderivativeinstrumentsat31December2009or31December2008.

ThecarryingamountoftheGroup’sforeigncurrencydenominatedmonetaryassetsandliabilitiesatthereportingdateisasfollows:

Assets Assets

2009€000s

2008€000s

GBP

USD

Other

2,474

–

–

4,761

–

857



(f) Credit risk

Creditriskistheriskoflossinthevalueoffinancialassetsduetocounterpartiesfailingtomeetallorpartoftheirobligations.

Financialassetsaregradedaccordingtocurrentcreditratingsissued.AAAisthehighestpossiblerating.InvestmentgradefinancialassetsareclassifiedwithintherangeofAAAtoBBBratings.Financialassetswhichfalloutsidethisrangeareclassifiedasspeculativegrade.AlloftheGroup’sbankdepositsareeitherwithfinancialinstitutionswhichhaveaminimumAratingorhaveasoverignguarantee.Quoteddebtsecuritiescomprise€581,096,000governmentgiltswhichcarryasovereignratingand€3,809,000corporatebondswhichareunrated.

AlloftheGroup’scurrentreinsurershavecreditratingsofA-orbetter.TheGrouphasassessedthesecreditratingsasbeingsatisfactoryindiminishingtheGroup’sexposuretothecreditriskofitsreinsurancereceivables.ThemaximumbalanceowedtotheGroupbyanindividualreinsurerat31December2009was€12,981,000.

Thecarryingamountoffinancialassetsrecordedinthefinancialstatements,netofanyallowancesforlosses,representstheGroup’smaximumexposuretocreditrisk.

(g) Concentration risk

Concentrationriskistheriskoflossduetooverdependenceonasingularentityorcategoryofbusiness.TheonlyconcentrationriskstowhichtheGroupisexposedareasfollows:

n At31December2009,theGroupheld€497,777,000inGermangovernmentgilts.

n AlloftheunderwritingbusinessisconductedinIreland.

Theresultantconcentrationriskfromadverseweatherevents,i.e.floods,stormsorfreezesinIreland,aremitigatedbyanappropriatere-insurancestrategyasoutlinedinnote37(a).

Receivablesarisingoutofdirectinsuranceoperationsarealowcreditriskandthereisnosignificantconcentrationofrisk.Assuch,theGrouphasnotmadeprovisionforbadordoubtfuldebts.Thereisnosignificantconcentrationofriskinotherreceivables.

(h) Sensitivity analysis

ThetablebelowidentifiestheGroup’skeysensitivityfactors.Foreachsensitivitytesttheimpactofachangeinasinglefactorisshown,withotherassumptionsleftunchanged.

Sensitivity factor Description of sensitivity factor applied

Interestrateandinvestmentreturn TheimpactofachangeintheECBbenchmarkreferenceinterestrateby±0.5%(e.g.ifacurrentinterestrateis5%,theimpactofanimmediatechangeto4.5%and5.5%).

Exchangeratesmovement Theimpactofachangeinforeignexchangeratesby±5%.

Equitymarketvalues Theimpactofachangeinequitymarketvaluesby±10%

Propertymarketvalues Theimpactofachangeinpropertymarketvaluesby±10%

Netlossratios Theimpactofanincreaseinnetlossratiosforgeneralinsurancebusinessby5%.




Theabovesensitivityfactorsareappliedusingactuarialandstatisticalmodels,withthefollowingpre-taximpactsonprofitandshareholders’equityat31December2009andat31December2008:

2009€000s

2008€000s

Interestrates

Interestrates

FXrates

FXrates

Equity

Equity

InvestmentProperty

InvestmentProperty

Netlossratio

0.5%

(0.5%)

5%

(5%)

10%

(10%)

10%

(10%)

5%

430

(430)

124

(124)

2,619

(2,619)

4,327

(4,327)

(16,376)

726

(726)

281

(281)

2,030

(2,030)

5,254

(5,254)

(17,035)

Inadditiontheimpactofchangesintheassumptionsusedtocalculategeneralinsuranceliabilitiesandsensitivitiesareindicatedinthetablebelow:

31 December 2009Change in

assumptions

Increase in gross

technical reserves

€000s

Increase in net

technical reserves

€000s

Impact on profit

before tax€000s

Reduction in shareholders’

equity€000s

InjuryclaimsIBNR

PropertyclaimsIBNR

LegalfeesreverttoprePIABlevels

+10%

+10%

2,635

884

10,806

2,635

598

9,732

(2,635)

(598)

(9,732)

2,306

(523)

(8,516)

Limitations of sensitivity analysis

Theabovetablesdemonstratetheeffectofachangeinakeyassumptionwhileotherassumptionsremainunchanged.Inreality,thereisacorrelationbetweentheassumptionsandotherfactors.Itshouldalsobenotedthatthesesensitivitiesarenon-linear,andlargerorsmallerimpactsshouldnotbeinterpolatedorextrapolatedfromtheseresults.ThesensitivityanalysesdonottakeintoconsiderationthattheGroup’sassetsandliabilitiesareactivelymanaged.Additionally,thefinancialpositionoftheGroupmayvaryatthetimethatanyactualmarketmovementoccurs.

OtherlimitationsintheabovesensitivityanalysesincludetheuseofhypotheticalmarketmovementstodemonstratepotentialriskthatonlyrepresenttheGroup’sviewofpossiblenear-termmarketchangesthatcannotbepredictedwithanycertaintyandtheassumptionthatallinterestratesmoveinanidenticalfashion.


38 Prior Year Restatement(a) New layout of Consolidated Income Statement and additional Pro-forma Statement

TheGroupcontinuouslyreviewsitsexternalfinancialreportingwithaviewtoimprovingthequalityoftheinformationitprovides.Inthecurrentyear,thelayoutoftheconsolidatedincomestatementhasbeenamendedandanadditionalstatementhasbeenaddedtothefinancialstatements.Theadditionalstatement,producedonpage45,pro-formareconciliationofconsolidatedoperatingprofittolossbeforetaxissupplementarytotheprimarystatementsrequiredunderInternationalFinancialReportingStandards.Itisdesignedtoprovidesupplementaryinformationtousersofthefinancialstatementsincludingoperatingprofit,akeyperformancemeasuremonitoredbytheBoard,whichwasdisclosedonthefaceoftheconsolidatedincomestatementuptoandincluding2008.

Operatingprofitisreportedonthebasisofalongerterminvestmentreturn.ThenatureoftheGroup’sunderwritingoperationsmeansthat,formanagementdecisionmakingandinternalperformancemanagement,short-termrealisedandunrealisedinvestmentgainsandlossesaretreatedasnon-operatingitems.TheGroupfocusesinsteadonanoperatingprofitmeasureincorporatinganexpectedreturnoninvestment.Thefluctuationsbetweenlongerterminvestmentreturnandtheactualinvestmentreturn,whichincluderealisedandunrealisedgainsandlossesandprofitsorlossesarisingfromsubstantialnon-recurringtransactions,arechargedorcreditedafteroperatingprofitisarrivedat.Asaresult,operatingprofitisnotsubjecttodistortionsforfluctuationsininvestmentreturns.

Theratesofinvestmentreturnunderlyingthecalculationofthelongerterminvestmentreturnaresetoutinnote2(b)andarereviewedannuallyandreflectbothhistoricalexperienceandtheDirectors’currentexpectationsforfutureinvestmentreturns.ThelongertermrateofreturnisappliedtoallinvestmentassetsheldbytheGroup’sunderwritingoperationsincludinginvestmentpropertiesheldforresale,investmentsheldfortrading,availableforsaleinvestments,investmentsheldtomaturity,loansandreceivablesandbankdeposits.Acomparisonofthelongerterminvestmentreturnandactualreturnsforthelasttwoyearsissetoutinnote2(c)ofthefinancialstatements.

Thistreatmentofinvestmentreturnshasnoimpactonprofitbeforetax,earningspershareorshareholders’fundsreportedinthefinancialyearending31December2008or31December2009.InlinewithIAS8,theamountsoftheamendmentsforeachfinancialstatementlineitemisdetailedbelow:

Consolidated Income Statement

2008As previously

stated€000s

2008Impact

of change€000s

2008Restated

€000s

Investmentincome–longertermrateofreturn


Netinvestmentreturn

43,930

(92,307)

–

(43,930)

92,307

(48,377)

–

–

(48,377)

(48,377) – (48,377)



38 Prior Year Restatement [continued]

(b) Other changes

Thecomparativefiguresfortheyearended31December2008havebeenrestatedsoasto(i)correctamis-classificationofitemsinthedetailedanalysisoftheconsolidatedstatementofcashflows,(ii)providemoredetailoftherevaluationofproperty,plantandequipmentandthedeferredtaxthereon,includingtheportionattributabletominorityinterestsand(iii)tomoreaccuratelyreflectexchangedifferencesonrevaluationrecogniseddirectlyinequity.

InlinewithIAS8,theamountoftheamendmentforeachfinancialstatementlineitemisdetailedbelow.Theseadjustmentshavenoimpactontheprofitbeforetax,earningspershareorshareholders’fundspreviouslyreportedforthefinancialyearended31December2008.

2008As previously

stated€000s

2008Impact

of change€000s

2008Restated

€000s

Consolidated statement of cash flows

Lossondisposalofproperty,plantandequipment

Incometaxespaid

Saleofproperty,plantandequipment

Decreaseininventories

Increaseinpayables

–

(24,007)

259

–

12,899

246

3,888

726

3,362

(8,222)

246

(20,119)

985

3,362

4,677

Consolidated statement of comprehensive income

Exchangedifferencesontranslationofforeignoperations

Incomeattributabletominorityinterests

–

270

(1,070)

1,463

(1,070)

(1,193)

Note 21 revaluation reserves

Minorityinterestsshareofrevaluationofproperty,plantandequipment

Deferredtaxonrevaluationofproperty,plantandequipment

–

7,301

2,251

(2,251)

2,251

5,050

Note 26 deferred tax


(Credited)toothercomprehensiveincome

(Credited)tominorityinterests

(5,840)

–

790

(790)

(5,050)

(790)

TheDirectorshaveconsideredtherequirementunderIAS1todisclosetheconsolidatedstatementoffinancialpositionforthelastthreereportingperiodsintheeventofarestatementofthefinancialstatements.Therestatementsexplainedabovehavenoimpactontheconsolidatedstatementoffinancialpositioninanyofthelastthreereportingperiods.TheDirectorshavedecidednottopresenttheconsolidatedstatementoffinancialpositionasat31December2007,asitwouldprovidenoincrementalinformation.


Notice of Annual General Meeting

NOTICEISHEREBYGIVENthattheAnnualGeneralMeetingoftheCompanywillbeheldinFBDHouse,Bluebell,Dublin12,onFriday30April2010,at12noonforthefollowingpurposes:

As Ordinary Business

1 ToreceiveandconsidertheReportoftheDirectorsandtheFinancialStatementsfortheyearended31December2009.

2 Todeclareadividendonthe8%non-cumulativepreferenceshares.

3 Todeclarethefinaldividendof20centperordinarysharewhichisrecommendedbytheDirectors.

4 ToapprovetheReportonDirectors’Remunerationappearinginnote30totheFinancialStatementsfortheyearended31December2009(advisoryresolution).

5 Tore-electthefollowingpersonsasDirectorsoftheCompanyunderArticle80(c)

Mr.MichaelBerkery Resolution5(a) Mr.JohnDonnelly Resolution5(b) Mr.PhilipLynch Resolution5(c) Dr.PatrickO’Keeffe Resolution5(d)

6 ToauthorisetheDirectorstofixtheremunerationoftheAuditors.

As Special Business

7 Toconsiderand,ifthoughtfit,passthefollowingSpecialResolution:

“InaccordancewiththeprovisionsoftheCompanies(Amendment)Act,1983,theDirectorsbeandareherebyempoweredtoallot“equitysecurities”(asdefinedinSection23(13)oftheCompanies(Amendment)Act,1983)pursuanttotheauthorityconferredonthembytheOrdinaryResolutionoftheCompanypassedon29April2009asifSection23(1)oftheCompanies(Amendment)Act,1983didnotapplytoanyallotmentmadepursuanttothesaidauthorityprovidedthatthispowershallbelimitedtotheallotmentofequitysecuritiesuptobutnotexceedinganaggregatenominalvalueof5percentoftheissuedordinarysharecapitalasatthedateofthisResolutionandthattheauthorityherebyconferredshallexpireatthecloseofbusinessontheearlierofthedateofthenextAnnualGeneralMeetingoftheCompanyoradate15monthsfromthedateofpassinghereofandthattheDirectorsbeentitledtomakeatanytimepriortotheexpiryofthepowerherebyconferred,anyofferoragreementwhichwouldormightrequireequitysecuritiestobeallottedaftertheexpiryofsuchpower.Providedthatsuchpowershall,subjectasaforesaid,ceasetohaveeffectwhenthesaidauthorityisrevokedorwould,ifrenewed,expirebutiftheauthorityisrenewedthesaidpowermayalsoberenewed,foraperiodnotlongerthanthatforwhichtheauthorityisrenewed,byafurtherSpecialResolutionoftheCompanypassedinGeneralMeeting”

and

“thattheexpirydatenotedinArticle8(c)beamendedtoread“30July2011”,beingfifteenmonthsafterthedateofthisAnnualGeneralMeetinginaccordancewiththeforegoing.”



“ThattheCompanyand/oranyofitssubsidiariesbeandareherebygenerallyauthorisedtomakemarketpurchases(asdefinedinSection212oftheCompaniesAct,1990)ofsharesofanyclassoftheCompany(“theShares”)onsuchtermsandconditionsandinsuchmannerastheDirectorsmayfromtimetotimedeterminebutsubject,however,totheprovisionsoftheCompaniesAct,1990,theArticlesofAssociationoftheCompanyandtothefollowingrestrictionsandprovisions:

(a) theaggregatenominalvalueoftheSharesauthorisedtobeacquiredpursuanttothetermsofthisresolutionshallnotexceed10percentoftheaggregatenominalvalueoftheissuedsharecapitaloftheCompanyasatthecloseofbusinessonthedateofthepassingofthisresolution;

(b) theminimumpricewhichmaybepaidforanyShareshallbethenominalvalueoftheShare;

(c) themaximumpricewhichmaybepaidforanyShare(a“RelevantShare”)shallbeanamountequalto105percentoftheaverageofthefiveamountsresultingfromdeterminingwhicheverofthefollowing((i),(ii)or(iii)specifiedbelow)inrelationtotheSharesofthesameclassastheRelevantShareshallbeappropriateforeachofthefiveconsecutivebusinessdaysimmediatelyprecedingthedayonwhichtheRelevantShareispurchased,asdeterminedfromtheinformationpublishedintheIrishStockExchangeDailyOfficialListreportingthebusinessdoneoneachofthosefivebusinessdays;

(i) ifthereshallbemorethanonedealingreportedfortheday,theaverageofthepricesatwhichsuchdealingstookplace;or

(ii) ifthereshallbeonlyonedealingreportedfortheday,thepriceatwhichsuchdealingtookplace;or

(iii) ifthereshallnotbeanydealingreportedfortheday,theaverageoftheclosingbidandofferpricesfortheday

andifthereshallbeonlyabid(butnotanoffer)oranoffer(butnotabid)pricereported,orifthereshallnotbeanybidorofferpricereported,foranyparticulardaythenthatdayshallnotcountasoneofthesaidbusinessdaysforthepurposesofdeterminingthemaximumprice.Ifthemeansofprovidingtheforegoinginformationastodealingsandpricesbyreferencetowhichthemaximumpriceistobedeterminedisalteredorisreplacedbysomeothermeans,thenamaximumpriceshallbedeterminedonthebasisoftheequivalentinformationpublishedbytherelevantauthorityinrelationtodealingsontheIrishStockExchangeoritsequivalent.

TheauthorityherebyconferredwillexpireatthecloseofbusinessonthedateofthenextAnnualGeneralMeetingoftheCompanyorthedatewhichisfifteenmonthsafterthedateonwhichthisresolutionispassedordeemedtohavebeenpassedwhicheveristheearlier,unlesspreviouslyvaried,revokedorrenewedinaccordancewiththeprovisionsofSection215oftheCompaniesAct,1990.TheCompanyoranysuchsubsidiarymaybeforesuchexpiryenterintoacontractforthepurchaseofShareswhichwouldormightbewhollyorpartlyexecutedaftersuchexpiryandmaycompleteanysuchcontractasiftheauthorityconferredherebyhadnotexpired.”



“ThatforthepurposesofSection209oftheCompaniesAct,1990there-issuepricerangeatwhichanytreasuryshares(asdefinedbythesaidSection209)forthetimebeingheldbytheCompanymaybere-issuedoff-marketshallbeasfollows:

(a) themaximumpriceshallbeanamountequalto120percentoftheAppropriatePriceasdefinedinparagraph(c);and

(b) subjecttoparagraph(c)hereof,theminimumpriceshallbe:

(i) inthecaseofanOptionScheme(asdefinedinparagraph(d)below),anamountequaltotheoptionpriceasprovidedforinsuchOptionScheme;or

(ii) inallothercasesandcircumstanceswheretreasurysharesarereissuedoff-market,anamountequalto95%oftheAppropriatePrice(asdefinedinparagraph(c));and

(c) “AppropriatePrice”meanstheaverageofthefiveamountsresultingfromdeterminingwhicheverofthefollowing((i),(ii)or(iii)specifiedbelow)inrelationtosharesoftheclassofwhichsuchtreasurysharestobere-issuedshallbeappropriateinrespectofeachofthefivebusinessdaysimmediatelyprecedingthedayonwhichthetreasuryshareisre-issued,asdeterminedfrominformationpublishedintheIrishStockExchangeDailyOfficialListreportingthebusinessdoneoneachofthosefivebusinessdays;

(i) ifthereshallbemorethanonedealingreportedfortheday,theaverageofthepricesatwhichsuchdealingstookplace;or

(ii) ifthereshallbeonlyonedealingreportedfortheday,thepriceatwhichsuchdealingtookplace;or

(iii) ifthereshallnotbeanydealingreportedfortheday,theaverageoftheclosingbidandofferpricesfortheday;

andifthereshallbeonlyabid(butnotanoffer)oranoffer(butnotabid)pricereported,orifthereshallnotbeanybidorofferpricereportedforanyparticularday,thenthatdayshallnotcountasoneofthesaidbusinessdaysforthepurposesofdeterminingtheAppropriatePrice.IfthemeansofprovidingtheforegoinginformationastodealingsandpricesbyreferencetowhichtheAppropriatePriceistobedeterminedisalteredorisreplacedbysomeothermeans,thentheAppropriatePriceshallbedeterminedonthebasisoftheequivalentinformationpublishedbytherelevantauthorityinrelationtodealingsontheIrishStockExchangeoritsequivalent;and

(d) “OptionScheme”meansanyschemeorplanwhichinvolveseithertheissueofoptionstoacquireordinarysharesintheCompanyortheconditionalawardofordinarysharesintheCompanywhichhasbeenapprovedbytheCompany’sshareholdersinGeneralMeeting.

TheauthorityherebyconferredshallexpireatthecloseofbusinessonthedateofthenextAnnualGeneralMeetingoftheCompany,orthedatewhichisfifteenmonthsafterthedateonwhichthisresolutionispassedordeemedtohavebeenpassedwhicheveristheearlier,unlesspreviouslyvariedorrenewedinaccordancewiththeprovisionsofSection209oftheCompaniesAct,1990”.

Notice of Annual General Meeting [continued]



“ThatitisherebyresolvedthattheprovisioninArticle50(a)oftheCompany’sArticlesofAssociationallowingfortheconveningofanExtraordinaryGeneralMeetingbyatleastfourteencleardays’notice(wheresuchmeetingisnotconvenedforthepurposesofthepassingofaspecialresolution)shallcontinuetobeeffective.”


“ThattheArticlesofAssociationoftheCompanybeandareherebysubstitutedwiththeproposednewArticlesofAssociationoftheCompanywhichhavebeensignedbytheChairmanoftheCompanyforthepurposesofidentificationandwhichhavebeenavailableforinspectionattheRegisteredOfficeoftheCompanysincethedateofthisNotice.”

12 Toconsiderand,ifthoughtfit,passthefollowingOrdinaryResolution:

“ThatinaccordancewithArticle71oftheArticlesofAssociationoftheCompanytheordinaryremunerationoftheDirectors,thatistosaythebasicfeespayabletothenon-executiveDirectors,shallbedeterminedbytheBoardandshallnot,inaggregate,exceed€450,000perannum”.

ByOrderoftheBoard

Conor Gouldson Secretary

FBDHouse,Bluebell,Dublin12

30March2010


Information for Shareholders Pursuant to the Shareholders’ Rights Directive

ThefollowinginformationifprovidedtoshareholdersinaccordancewiththeprovisionsoftheShareholders’Rights(Directive2007/36/EC)Regulations2009:

1. Conditions for Participating in the Annual General Meeting (“AGM”)

Everyshareholder,irrespectiveofhowmanyFBDHoldingsplcshareshe/sheholds,hastherighttoattend,speak,askquestionsandvoteattheAGM.Completionofaformofproxywillnotaffectyourrighttoattend,speak,askquestionsand/orvoteatthemeetinginperson.TherighttoparticipateintheAGMissubjecttotheregistrationofthesharespriortotherecorddateforthemeeting(the“RecordDate”)–seenote3following.

2. Appointment of Proxy

IfyoucannotattendtheAGMinperson,youmayappointaproxy(orproxies)toattend,speak,askquestionsandvoteonyourbehalf.ForthispurposeaFormofProxyhasbeensenttoallregisteredshareholders.AproxyneednotbeamemberoftheCompany.YoumayappointtheChairmanoftheCompanyoranotherindividualasyourproxy.YoumayappointaproxybycompletingtheFormofProxy,makingsuretosignanddatetheformatthebottomandreturnitinthepre-paidenvelopeprovidedtotheCompany’sRegistrar,ComputershareInvestorServices(Ireland)Limited,P.O.Box954,HeronHouse,CorrigRoad,SandyfordIndustrialEstate,Dublin18,Irelandtobereceivednolaterthan12.00noonon28April2010.IfyouareappointingsomeoneotherthantheChairmanasyourproxy,thenyoumustfillinthedetailsofthatpersonintheboxlocatedunderneaththewording“I/WeherebyappointtheChairmanoftheMeetingORthefollowingperson”ontheFormofProxy.

Alternatively,youmayappointaproxyviaCREST,ifyouholdyoursharesinCREST,oryoumaydosoelectronically,byvisitingthewebsiteoftheCompany’sRegistraratwww.computershare.com/ie/voting/fbd.YouwillneedyourshareholderreferencenumberandyourPINnumber,whichcanbefoundontheFormofProxy.

IfyouappointtheChairmanoranotherpersonasaproxytovoteonyourbehalf,pleasemakesuretoindicatehowyouwishyourvotestobecastbytickingtherelevantboxesontheFormofProxy.

CompletingandreturningaFormofProxywillnotprecludeyoufromattendingandvotingatthemeetingshouldyousowish.

3. Record Date for AGM

PursuanttoSection134AoftheCompaniesAct,1963andpursuanttoRegulation14oftheCompaniesAct,1990(UncertificatedSecurities)Regulations,1996,theCompanyhasspecifiedthatonlythoseShareholdersregisteredintheRegisterofMembersoftheCompanyasat6p.m.onthedaywhichistwodaysbeforethedateofthemeetingshallbeentitledtoattendorvoteattheAnnualGeneralMeetinginrespectofthenumberofsharesregisteredintheirnameatthattime.ChangesintheRegisterafterthattimewillbedisregardedindeterminingtherightofanypersontoattendand/orvoteatthemeetingorthenumberofvotesanyShareholdermayhaveinthecaseofapollvote.


4. How to Exercise Your Voting Rights

AsaShareholder,youhaveseveralwaystoexerciseyourrighttovote:

4.1 ByattendingtheAGMinperson;

4.2 ByappointingtheChairmanorsomeotherpersonasaproxytovoteonyourbehalf;

4.3 ByappointingaproxyviatheCRESTSystemifyouholdyoursharesinCREST.

Inthecaseofjointholders,thevoteoftheseniorwhotendersavote,whetherinpersonorbyproxy,willbeacceptedtotheexclusionofthevotesoftheotherregisteredholder(s)and,forthispurpose,senioritywillbedeterminedbytheorderinwhichthenamesstandintheregisterofmembers.

5. Tabling Agenda Items

IfyouoragroupofShareholdershold1,143,054ormoreordinaryorpreferencesharesof60centeachinFBDHoldingsplc(i.e.atleast3%oftheissuedsharecapitaloftheCompanycarryingvotingrights),youorthegroupofShareholdersactingtogetherhavetherighttoputanitemontheagendafortheAGM.Inordertoexercisethisright,writtendetailsoftheitemyouwishtohaveincludedontheagendafortheAGMtogetherwithawrittenexplanationsettingoutwhyyouwishtohavetheitemincludedontheagenda,andevidenceofyourshareholding,mustbereceivedbytheCompanySecretaryatFBDHoldingsplc,FBDHouse,Bluebell,Dublin12,Irelandorbye-mailtocompany.secretary@fbd.ienolaterthan12.00noononFriday19March2010(i.e.42daysbeforethetimescheduledfortheholdingoftheAGM).AnitemcannotbeincludedontheagendafortheAGMunlesstheforegoingconditionsaresatisfiedanditisreceivedbythestateddeadline.

6. Tabling Draft Resolutions

IfyouoragroupofShareholdershold1,143,054ormoreordinaryorpreferencesharesof60centeachinFBDHoldingsplc(i.e.atleast3%oftheissuedsharecapitaloftheCompanycarryingvotingrights),youorthegroupofShareholdersactingtogetherhavetherighttotableadraftresolutionforinclusionontheagendafortheAGMsubjecttoanycontraryprovisionincompanylaw.

Inordertoexercisethisright,thetextofthedraftresolutionandevidenceofyourshareholdingmustbereceivedbypostbytheCompanySecretaryatFBDHoldingsplc,FBDHouse,Bluebell,Dublin12,Irelandorbye-mailtocompany.secretary@fbd.ienolaterthan12.00noononFriday19March2010(i.e.42daysbeforethetimescheduledfortheholdingoftheAGM).AresolutioncannotbeincludedontheagendafortheAGMunlessitisreceivedineitheroftheforegoingmannersbythestateddeadline.Furthermore,Shareholdersareremindedthatthereareprovisionsincompanylawwhichimposeotherconditionsontherightofshareholderstoproposeresolutionsatageneralmeetingofacompany.

7. Right to Ask Questions

Pursuanttosection134CoftheCompaniesAct1963,shareholdershavearighttoaskquestionsrelatedtoitemsontheAGMagendaandtohavesuchquestionsansweredbytheCompanysubjecttoanyreasonablemeasurestheCompanymaytaketoensuretheidentificationofshareholders.


8. How to Request/Inspect Documentation Relating to the Meeting

TheannualFinancialStatements,ReportoftheAuditorsandtheReportoftheRemunerationCommitteearecontainedintheCompany’sAnnualReportwhichwasdispatchedtoshareholders30March2010.TheAnnualReportisalsoavailableontheCompany’swebsitewww.fbdgroup.com.

ShouldyounotreceiveaFormofProxy,orshouldyouwishtobesentcopiesofanydocumentsrelatingtothemeeting,youmayrequestthesebytelephoningtheCompany’sRegistraron+35314475101orbywritingtotheCompanySecretaryeitherbypostatFBDHouse,Bluebell,Dublin12,[email protected].

TheMemorandumandArticlesofAssociationoftheCompanytogetherwithacopyoftheproposedMemorandumandArticlesofAssociationoftheCompanyshowingtheamendmentsthatwouldbemadeifalloftheResolutionsontheagendafortheAGMareapproved,areavailableontheCompany’swebsitewww.fbdgroup.comandmayalsobeinspectedduringusualbusinesshoursonanyweekday(Saturdays,Sundaysandpublicholidaysexcepted)attheCompany’sRegisteredOfficeatFBDHouse,Bluebell,Dublin12,IrelanduptoandincludingthedateoftheAnnualGeneralMeetingandattheAnnualGeneralMeetingitself.

9. Further Information

ThisAGMnotice,detailsofthetotalnumberofsharesandvotingrightsatthedateofgivingthisnotice,thedocumentstobesubmittedtothemeeting,copiesofanydraftresolutionsandacopyoftheFormofProxyareavailableontheCompany’swebsiteatwww.fbdgroup.com.

Information for Shareholders Pursuant to the Shareholders’ Rights Directive [continued]

03/10 Printed on paper sourced from sustainably managed forests.

www.fbdgroup.com

FBD Holdings plc

FBD House

Bluebell

Dublin 12

T: +353 1 409 3200

W: www.fbdgroup.com

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