At the first of two EGMs to approve emergency measures aimed at boosting its cash reserves, chief executive Fiona Muldoon admitted it will be difficult to return the business to full-year profitability, but reiterated her stance at the time of the group’s recent catastrophic interim results, by saying management remains confident of a return to quarterly profit by the last three months of 2016.
In August, FBD reported record first half pre-tax losses of €96m for the six months to the end of June.
A startling reversal from a €4m profit a year before, the heavy losses were attributed to increased claims costs and the reporting of which was described by management as “a difficult day for FBD, our shareholders and our staff”.
FBD shareholders yesterday unanimously voted in favour of the €48.5m sale of the group’s 50% share in its hotels and leisure division to main shareholder and joint-venture partner, Farmers Business Development.
Those funds will be immediately used to bolster reserves, while investors will vote on an agreed €70m investment from Canada’s Fairfax Financial Holdings, via the sale of long-term debt, next month.
Chairman Michael Berkery told shareholders the quick sale of the hotels business was needed to monetise an asset that couldn’t be used, as was, to meet new capital rules for insurance firms.
FBD’s share price, down by over 40% in the year to-date, was showing some semblance of stability, yesterday, ending the day down just 1c at €6.85; having been up by over 2% at one point.
Shareholders in FBD Holdings PLC approve the sale of the hotels and leisure business for €48.5m https://t.co/oBukyKXR3Z— Irish Farmers Journal (@farmersjournal) October 22, 2015
FBD is looking to identify and implement €7m in cost savings by the first quarter of 2016. Ms Muldoon yesterday warned no assets would be off limits in terms of finding those savings.
“Office closures did not form part of the cost cutting measures at the time of the interim results,” she said.
“However, cost-cutting is an ongoing process and in a highly competitive market, with rising claims, there can be no sacred cows.”