Irish Life & Permanent restates 2004 results due to new reporting standards

IRISH Life & Permanent has restated its 2004 results to adjust them for new international financial reporting standards (IFRS) now in effect.

Under the new IFRS methods, 2004 profits were 14% or €58m lower, in line with what the company had previously forecast.

In March, IL&P reported pre-tax profits of €400.2m for 2004 under the old accounting methods.

Group finance director Peter Fitzpatrick said the changes had no impact on the group’s underlying financial position.

The company also presented 2004 figures under the European Embedded Value (EEV) method, as it says IFRS does not provide a true picture of its life insurance business. Under this method, profit after tax was 4% higher than the previously announced 2004 figure, because of a 12% higher contribution from life new business.

Shareholders’ equity is reduced by €472m or 21%, the group said in a statement.

“These changes are principally due to the IFRS accounting treatment of ‘investment’ contracts which were previously accounted for on an embedded value basis under ROI GAAP.”

As a life company IL&P had previously reported on an embedded value basis which meant it recognised future profits up front.

Under IFRS, the company will no longer be able to include those future earnings in their accounts.

“The changes have no impact on the group’s underlying capital strength and in particular on its fundamental economics and cash flows,” group finance director, Peter Fitzpatrick said.

“The IFRS accounting principles as they relate to the group’s life insurance business do not present a reasonable picture of the real underlying value of a fast growing business.”

Analysts had expected the impact of IFRS to be at the higher end of a range given by IL&P last year, when it indicated the effect would be an 8 to 22% reduction in net profit and a 17 to 20% dip in equity.

Commenting on the figures Merrion Capital’s banking analyst, Seamus Murphy said the restated figures were “broadly in line”, with market expectations. “In terms of the profit hit, it’s middle of the range”, he said.

Stuart Draper of Dolmen Butler Briscoe said the changes were of a technical nature and had been well flagged by the group.

Shares in the group closed 22 cents higher at €14.72 yesterday.

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