PING AN<02318> - Results Announcement
Ping An Insurance (Group) Company of China, Limited announced on 29/03/2006:
(stock code: 02318 )
Year end date: 31/12/2005
Currency: RMB
Auditors' Report: Unqualified
(Audited )
(Audited ) Last
Current Corresponding
Period Period
from 01/01/2005 from 01/01/2004
to 31/12/2005 to 31/12/2004
Note ('Million ) ('Million )
Turnover 3 : 64,590 63,193
Profit/(Loss) from Operations : 4,812 3,747
Finance cost : N/A N/A
Share of Profit/(Loss) of
Associates : N/A N/A
Share of Profit/(Loss) of
Jointly Controlled Entities : N/A N/A
Profit/(Loss) after Tax & MI 4,5 : 4,226 3,116
% Change over Last Period : +35.6 %
EPS/(LPS)-Basic (in dollars) 7 : 0.68 0.56
-Diluted (in dollars) 7 : N/A N/A
Extraordinary (ETD) Gain/(Loss) : N/A N/A
Profit/(Loss) after ETD Items : 4,226 3,116
Final Dividend per Share 6 : NIL RMB 0.14
2006 Special Interim Dividend
per Share 6 : RMB 0.20 N/A
(Specify if with other : N/A N/A
options)
B/C Dates for 2006 Special
Interim Dividend 6 : 25/04/2006 to 25/05/2006 bdi.
Payable Date : 02/06/2006
B/C Dates for Annual
General Meeting : 25/04/2006 to 25/05/2006 bdi.
Other Distribution for : N/A
Current Period
B/C Dates for Other
Distribution : N/A
Remarks:
1. Basis of preparation
These consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRSs"), which comprise
standards and interpretations approved by the International Accounting
Standards Board ("IASB"), and International Accounting Standards and
Standing Interpretations Committee interpretations approved by the
International Accounting Standards Committee that remain in effect. The
financial statements have been prepared under the historical cost
convention, except for the measurement at fair values of available-for-
sale investments, financial assets carried at fair value through profit or
loss and derivative financial assets and liabilities. The above basis of
preparing financial statements differs from that used in the statutory
accounts of Ping An Insurance (Group) Company of China, Ltd. (the "
Company", together with its subsidiaries, the "Group") and the Group,
which are prepared in accordance with PRC accounting standards ("PRC GAAP
"). The major adjustments made include measuring certain financial assets
at estimated fair values, restating insurance contract liabilities and
deferred policy acquisition costs, related deferred tax, etc.
As in prior years, to the extent a specific topic is not covered
specifically by IFRSs, the IFRS framework permits reference to another
comprehensive body of accounting principles, and therefore:
- The Group has chosen to use the revenue accounting practices
currently adopted by insurance companies reporting under the Companies
Ordinance and Insurance Companies Ordinance of Hong Kong; and
- The Group has made reference to specific accounting principles
generally accepted in the United States for guidance on the measurement of
its insurance liabilities and associated deferred policy acquisition
costs, specifically, the measurement guidance provisions contained within
Statements of Financial Accounting Standards No. 60 and 97.
2. Changes in accounting policies
In the current year, the Group has adopted new and revised standards
issued by the IASB that are relevant to its operations and effective for
accounting periods beginning on January 1, 2005. The adoption of these
new and revised standards has resulted in changes to the Group's
accounting policies in the following areas that have affected the amounts
reported for the current and prior years:
- IFRS 4, Insurance Contracts
Effective January 1, 2005, the Group adopted IFRS 4. IFRS 4 represents
the completion of phase 1 of the first IFRS to deal with insurance
contracts. The main features of IFRS 4 include but are not limited to the
definition of an insurance contract, the use of liability adequacy tests
and impairment tests for reinsurance assets, and prohibition of
catastrophe and equalization provisions. Based on this standard, the
Group continues to account for investment contracts containing
discretionary participation features as if they are insurance contracts.
In addition, premium income from certain contracts, which are regarded as
investment contracts by IFRS 4, is accounted for as financial liabilities,
and related policyholders' benefits to the extent covered by the said
contracts are accounted for as a direct debit to the financial
liabilities. Further, certain investment-linked contracts meet the
definition of an insurance contract under IFRS 4 and the Group separately
presents assets and liabilities related to such investment-linked
contracts, which were originally grouped in "separate account (investment
-linked) assets and liabilities". The assets and liabilities related to
the remaining investment-linked contracts, which are regarded as
investment contracts, are presented as policyholder account assets and
liabilities in respect of investment contracts.
As a result of the adoption of IFRS 4, certain contracts were reclassified
as investment contracts.
The Group recorded the following effects in the consolidated income
statement to reflect the reclassification of contracts:
For the year ended December 31, (in RMB million) 2005 2004
(Debit)/Credit
Gross written premiums and policy fees - (16)
Claims and policyholders' benefits 1 1
Increase in policyholders' reserves (1) 15
------- ------
Net impact on net profit - -
======= ======
Further, the Group recorded the following effects in the consolidated
balance sheet:
As at December 31, (in RMB million) 2005 2004
Debit/(Credit)
Policyholders' reserves 14 15
Investment contract reserves (14) (15)
Policyholder account assets in respect
of insurance contracts 12,820 9,758
Policyholder account assets in respect of
investment contracts 3,078 3,145
Separate account (investment-linked) assets (15,898) (12,903)
Policyholder account liabilities in respect
of insurance contracts (12,820) (9,758)
Policyholder account liabilities in respect
of investment contracts (3,078) (3,145)
Separate account (investment-linked)
liabilities 15,898 12,903
======== ==========
- IAS 39 (revised 2004), Financial Instruments: Recognition and
Measurement
Effective January 1, 2005, the Group has adopted IAS 39 (revised 2004).
Among the changes, IAS 39 (revised 2004) has eliminated "loans and
receivables originated by the enterprise" and defined a "loans and
receivables" category. By such definition, loans and receivables exclude
investments quoted in an active market. As a result, the Group has
reclassified quoted bonds as held-to-maturity or available-for-sale
investments in accordance with the related requirements and investment
strategy. The Group recorded the following effects in the consolidated
balance sheet:
As at December 31, (in RMB million) 2005 2004
Debit/(Credit)
Fixed maturity investments - bonds 233 (67)
Deferred income tax assets (35) 10
Reserves - net unrealized losses (196) 56
Minority interests (2) 1
======== =======
- IFRS 2, Share-based Payment
Effective January 1, 2005, the Group has adopted IFRS 2. It requires the
Group to recognize share-based payment transactions in its financial
statements, including transactions with employees or other parties to be
settled in cash, other assets or equity instruments of the Company. This
standard has given more guidance on recognition, measurement and
disclosure of the Group's share appreciation rights scheme. There was no
significant impact on the Group's financial statements upon the adoption
of IFRS 2. The charge to income statement is as follows:
For the year ended December 31, (in RMB million) 2005 2004
Charge for the year 61 29
==== ====
- IFRS 3, Business Combinations
IFRS 3, Business Combinations, was already effective since March 31, 2004.
Among its requirements, the Group has, since 2005, ceased amortization of
the Group's goodwill.
- IAS 27 (revised 2004), Consolidated and Separate Financial
Statements
IAS 27 (revised 2004) requires that the investments in subsidiaries be
accounted for at cost or in accordance with IAS 39 in the parent's
separate financial statements. In prior years, the Company's investments
in subsidiaries were accounted for using the equity method. Upon the
implementation of IAS 27 (revised 2004), the Company's investments in
subsidiaries are accounted for at cost in its unconsolidated, separate
financial statements. The Company recorded the following effects on its
separate balance sheet as at December 31, 2005 and 2004:
As at December 31, (in RMB million) 2005 2004
Debit/(Credit)
Investments in subsidiaries (7,673) (2,315)
Reserves 713 (1,064)
Retained profits 6,960 3,379
======== ========
In addition to the standards referred to above, the key revised standards
that the Group has also adopted during the year which mainly affect the
presentation and disclosures of the financial statements are as follows:
- IAS 1 (revised 2004), Presentation of Financial Statements
IAS 1 (revised 2004) affects the presentation of minority interests in the
income statement (separate allocation at the bottom of the income
statement) and in the statement of changes in equity (separate column for
minority interests) and other disclosures.
- IAS 8 (revised 2004), Accounting Policies, Changes in Accounting
Estimates and Errors
IAS 8 (revised 2004) requires disclosure of an impending change in
accounting policy when the Group has yet to implement a new IFRS or
interpretation that has been issued but not yet come into effect. In
addition, it has required disclosure of known or reasonably estimable
information relevant to assessing the possible impact that application of
the new IFRS or interpretation will have on the Group's financial
statements in the period of initial application.
- IAS 32 (revised 2004), Financial Instruments: Disclosure and
Presentation
IAS 32 (revised 2004) requires additional disclosures of information in
respect of financial assets and financial liabilities, including
information about the use of valuation techniques, and the carrying
amounts of financial assets and financial liabilities that are classified
as held-for-trading and those designated by the entity upon initial
recognition as financial assets and financial liabilities at fair value
through profit or loss.
3. Turnover
For the year ended December 31,
(in RMB million) Notes 2005 2004
(Restated)
Gross written premiums and
policy fees 3(a) 59,021 60,033
Less: Premiums ceded to
reinsurers (4,241) (4,122)
-------- -------
Net written premiums and
policy fees 54,780 55,911
Increase in unearned premium
reserves, net (1,581) (1,191)
--------- --------
Net earned premiums 53,199 54,720
Reinsurance commission income 1,371 1,376
Net investment income 3(b) 9,338 7,219
Realized gains/(losses) 3(c) (505) (56)
Unrealized gains/(losses) 3(d) 822 (717)
Foreign currency gains/(losses) (405) 3
Other income 770 648
--------- ---------
Total revenue 64,590 63,193
========= =========
3(a) Gross written premiums and policy fees
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Gross written premiums, policy fees and
premium deposits, as reported in
accordance with PRC GAAP 71,624 65,618
Less: Business tax and surcharges (857) (739)
--------- ---------
Gross written premiums, policy fees and
premium deposits (net of business tax
and surcharges) 70,767 64,879
--------- ---------
Less: Premium deposits allocated to
policyholder accounts (3,214) (3,416)
Premium deposits allocated to
investment contracts - (16)
Premium deposits allocated to policyholder
contract deposits (8,532) (1,414)
--------- ---------
Gross written premiums and policy fees 59,021 60,033
========= =========
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Long term life business gross written
premiums and policy fees 42,420 46,018
Short term life business gross written
premiums 4,525 3,865
Property and casualty business gross
written premiums 12,076 10,150
--------- ----------
Gross written premiums and policy fees 59,021 60,033
========= ==========
3(b) Net investment income
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Interest income on fixed maturity investments
Bonds
- Held-to-maturity 4,568 2,393
- Available-for-sale 901 614
- Carried at fair value through profit or loss 50 67
Term deposits
- Loans and receivables 3,463 3,592
Others
- Loans and receivables 63 72
Dividend income on equity investments
Equity investment funds
- Available-for-sale 82 88
- Carried at fair value through profit or loss 90 294
Equity securities
- Available-for-sale 84 9
- Carried at fair value through profit or loss 11 2
Operating lease income from investment
properties 107 130
Interest expenses on securities sold under
agreements to repurchase (81) (42)
---------- ---------
Total 9,338 7,219
========== =========
Yield of net investment income (% per annum) 4.2 4.1
========== =========
Lease income from investment properties and foreign currency gains/losses
on investment assets denominated in foreign currencies are excluded in the
calculation of the above yield.
3(c) Realized gains/(losses)
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Fixed maturity investments
- Available-for-sale 253 15
- Carried at fair value through profit or loss 43 42
Equity investments
- Available-for-sale (258) (84)
- Carried at fair value through profit or loss (543) (29)
-------- -------
Total (505) (56)
======== =======
3(d) Unrealized gains/(losses)
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Fixed maturity investments
- Carried at fair value through profit or loss 10 (35)
Equity investments
- Carried at fair value through profit or loss 808 (676)
Derivative financial assets
- Carried at fair value through profit or loss 4 (6)
-------- ---------
Total 822 (717)
======== =========
3(e) Total investment income
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Net investment income 9,338 7,219
Realized gains/(losses) (505) (56)
Unrealized gains/(losses) 822 (717)
---------- ----------
Total 9,655 6,446
========== ==========
Yield of total investment income (% per annum) 4.3 3.6
========== ==========
Lease income from investment properties and foreign currency gains/losses
on investment assets denominated in foreign currencies are excluded in the
calculation of the above yield.
4. Operating profit
(1) Operating profit is arrived at after charging/(crediting) the
following items:
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Employee costs, excluding directors'
emoluments (Note 4(2)) 3,095 2,720
Depreciation of investment properties 50 66
Depreciation of property, plant and equipment 486 460
Amortization of land use rights 20 19
Loss on disposal of property, plant and
equipment and investment properties 19 10
Impairment losses for investment properties,
property, plant and equipment,
construction-in-progress, and land use rights 75 73
Amortization of goodwill - 24
Provision/(write-back) of provision for
doubtful debts, net 122 (39)
Write-back of provision for loans and
advances to customers (73) (12)
Auditors' remuneration 10 10
Operating lease payments in respect of
land and buildings 506 521
========= ========
(2) Employee costs, excluding directors' emoluments
For the year ended December 31,
(in RMB million) 2005 2004
Wages, salaries and bonuses 2,626 2,225
Retirement benefits, social security
contributions and welfare benefits 469 495
---------- ---------
Total 3,095 2,720
========== =========
5. Income taxes
According to the "Provisional Regulations of the PRC on Enterprise Income
Tax", the taxable income of the Group represents its income for financial
reporting purposes, net of deductible items for income tax purposes. The
enterprise income tax rates applicable to the Group, the subsidiaries and
their branches during the year are as follows:
Tax Subsidiaries and branches Tax rate
Enterprise - Located in Special Economic Zones 15%
income tax - Located outside the Special Economic 33%
in the PRC Zones
Hong Kong - Subsidiaries in Hong Kong Special 17.5%
profits tax Administrative Region
For the year ended December 31,
(in RMB million) 2005 2004
(Restated)
Consolidated income statement
Current income tax 392 572
-------- --------
Deferred income tax
Relating to the origination and reversal
of temporary differences:
Policyholders' reserves (450) (246)
Claim reserves (64) (81)
Unearned premium reserves 46 41
Deferred policy acquisition costs 575 339
Fair value adjustment on financial assets
and liabilities carried at fair value
through profit or loss 46 7
Others 2 (31)
--------- ---------
Total deferred income tax 155 29
--------- ---------
Income taxes reported in consolidated
income statement 547 601
========= =========
Consolidated statement of changes in equity
Deferred income tax related to items
credited/(charged) directly to equity:
Unrealized gains and losses (256) 87
========== ==========
A reconciliation between tax expense and the product of accounting profit
multiplied by the main applicable tax rate of 15% is as follows:
For the year ended December 31, (in RMB million)
2005 2004
(Restated)
Accounting profit before income taxes 4,812 3,747
==============================
Tax computed at the main applicable tax rate of 15% (2004: 15%)
722 562
Tax effect of income not taxable in determining taxable income
(580) (423)
Tax effect of expenses not deductible in determining taxable income
228 393
Tax effect of higher tax rate on branches and entities (in the PRC) that
are located outside the Special Economic Zones
177 69
------------------------------
Income taxes reported in consolidated income statement
547 601
==============================
6. Dividends
During the year, the Company paid dividends of RMB865 million (2004: RMB
518 million) to its shareholders, relating to dividends previously
proposed of RMB867 million or RMB0.14 per share (2004: RMB592 million or
RMB0.12 per share).
On March 29, 2006, the directors proposed 2006 special interim dividend
distribution of RMB0.20 per share totaling RMB1,239 million, which will be
paid by the Company out of dividends amounting to RMB4,364 million to be
received by the Company from one of its subsidiaries in early May 2006.
This proposal is subject to Company shareholders' approval on May 25,
2006.
7. Earnings per share
The basic earnings per share for the year is computed by dividing the net
profit for the year by the weighted average number of 6,195,053,334 shares
in issue during 2005 (2004: weighted average number of 5,588,324,591
shares in issue during the year).
The Company had no dilutive potential shares, hence no diluted earnings
per share amount is presented.
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