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02/18/2015
Corporate news

Coface Posts 2014 Results in Line With Objectives; Proposes Distribution of €0.48 per Share

Coface Posts 2014 Results in Line With Objectives;  Proposes Distribution of €0.48 per Share
  • Revenue up 1.6% at constant scope and exchange rates
  • Solid client retention rate, at 89.2% and production of contracts up 7%
  • Improvement in combined ratio after reinsurance to 79.7% (-2.8 points[1])
  • Current operating income[2] up 20.7%[3] and net income group share up 23.2%[4], at constant scope and exchange rates
  • Net income per share of €0.80, distribution rate 60%[5] of net income

Variations in percentages expressed in comparison to results as of December 31, 2013.

 

Jean-Marc Pillu, CEO of the Coface Group, commented:

We are pleased to publish full-year results in line with our expectations. Coface has once again demonstrated the pertinence of its profitable growth model this year. Our innovative product offering, appropriate distribution channels, extensive international presence and prudent risk management have all contributed to the significant improvement in our results.”

 

Key Figures as of December 31, 2014

The board of directors of Coface SA examined the consolidated financial statements for the period ending December 31, 2014 during its February 17, 2015 meeting. The data relating to the full-year 2014 have been reviewed by the Audit Committee. Financial statements are unaudited.

Table 1
  1. 1. Revenue

 

In 2014, Coface registered consolidated revenue of 1,440.5 million euros, up 1.6% compared with 2013[12] (stable at constant scope and exchange rates), and in line with objectives communicated by the Group in June 2014 at the time of its stock market introduction.

 

The positive commercial dynamic that began in 2013 is demonstrated by a 7% increase in new contract production compared with the previous year, and a solid client retention rate[13] of 89.2% (vs. 86.8% in 2013).

 

These good results were achieved in a context of competitive pressure in historic credit insurance markets, and are explained by Coface’s strong position in emerging markets and in North America, regions that are contributing most to the Group’s growth.

table2

 

Throughout the year, Coface implemented its commercial strategy around three main points: innovation, deployment of a multi-distribution model, and geographic expansion.

 

Coface’s product offering was extended with the innovative EasyLiner, a product designed for SMEs and already available in 12 countries, as well as four new services: CofaMove (application for smartphones) ,CofaServe (solution integrating Coface services into client information systems),Policy Master and Cash Master (two new services simplifying day-to-day contract management and access to bank financing.)

 

The Group also extended its global footprint. Coface obtained three new licenses allowing it to sell credit insurance policies directly in Colombia (January 2014), Morocco (December 2014) and Israel (January 2015). Two commercial representation offices were opened in the Philippines and Kazakhstan, and a new partnership agreement was signed in Serbia. Coface also strengthened its presence in North America, increasing the number of distribution agents by 50% in the US. Coface now offers credit insurance in 98 countries worldwide, directly and via partners.

 

 

2. Results

 

Risk management, a key to Coface’s strategic refocusing that began in 2011, remains a priority for the Group. At the end of an economically lackluster year, Coface registered a net loss ratio after reinsurance of 50.4%, a decrease of 3.5 points compared to 2013.

 

Internal overheads remained at the same level over the period and the cost-ratio was quasi-stable (+0.6 points[15]) at 29.3%.

 

Overall, the net combined ratio was down 2.8 points to 79.7%, in line with forecasts.

 

Current operating income rose by 20.7% to 206 million euros and net income (Group share) was up by 23.2% to 140 million euros, excluding restated items.

 

Based on net income per share of €0.80, a dividend[16] of €0.48 per share will be proposed for 2014, corresponding to a distribution rate of 60%.

 

 

  1. 3. Financial Solidity

 

As of December 31, 2014, total IFRS equity of the Group was €1,724.2 million. The change in equity is explained mainly by positive net income of €125.9 million, reduced by a share premium distribution of €227 million in Q2 2014.

 

Coface issued subordinated debt of €380 million in Q1, enabling it to strengthen its regulatory equity and optimize its capital structure.

 

The ratio of economic capital coverage necessary to cover insurance and factoring risks stands at 144%[17] quasi-stable as compared with 2013[18].

 

In December 2014, ratings agencies Fitch and Moody’s confirmed their IFS ratings of Coface, at AA- and A2, respectively, both with stable outlook.

 

  1. 4. Perspectives

 

Last year saw the anticipated improvement in the economic environment. However, this slow and laborious recovery has not yet eased the numerous pockets of fragility around the world, whether they be countries, sectors or companies in difficulty.

 

In this more favorable, yet demanding, context Coface’s business model demonstrated its strength in 2014 and will enable the Group to meet the challenges of 2015:

-       Proximity to companies and proactive decision-making will continue to be the rules in risk management

-       Our policy of product innovation and multi-channel distribution will allow us to broaden our customer base, and more generally the credit insurance market, while protecting the profitability of our portfolio

-       Thanks to the Group’s expanded geographic presence, Coface will capture growth in the most dynamic markets

 

These elements constitute our strategy to ensure Coface continues to progress on its path of growth and profitability.

 

FINANCIAL SCHEDULE 2015

May 15, 2015: publication of Q1 2015 results
May 19 2015: General Assembly

 

FINANCIAL INFORMATION

This press release and regulatory information of Coface SA are available on the Group's website http://www.coface.com/Investors

 

DISCLAIMER -Certain declarations featured in this press release may contain forecasts that notably relate to future events, trends, projects or targets. By nature, these forecasts include identified or unidentified risks and uncertainties, and may be affected by many factors likely to give rise to a significant discrepancy between the real results and those stated in these declarations. Please refer to the "Disclaimers" section on page 2 of the Coface Group's Base Document registered by the AMF on May 6, 2014 under number I.14-029 in order to obtain a description of certain major factors, risks and uncertainties likely to influence the Coface Group's businesses. The Coface Group disclaims any intention or obligation to publish an update of these forecasts, or provide new information on future events or any other circumstance. 

 

[1] Excluding costs of moving the company’s head office (€8.3M) as of December 31, 2013

[2] Current operating income including finance costs and excluding restated items.

[3] Change at constant scope and exchange rates. Current operating income including finance costs is restated to exclude the following items:  cost of moving (€8.3M) and outsourcing of capital gains (€27.8M) on December 31, 2013, interest charges for the hybrid debt (€12.1M) on December 31, 2014.

[4] Change at constant scope and exchange rates. Net income group share is restated to exclude the following items: cost of moving (€8.3M) and outsourcing of capital gains (€27.8M) on December 31, 2013, interest charges for the hybrid debt (€12.1M), charges linked to the IPO (€8.1M) and charges linked to the creation of Coface Re on December 31, 2014. A 2013 normalized tax rate has been applied to these elements.

[5] Distribution taken from “Issue, Merger and transfer premiums” subject to approval by the Annual General Meeting of shareholders on May 19, 2105.

[6] The change on a comparable basis is calculated at constant scope and exchange rates. Scope effect is linked to the disposal of the public guarantees activity in Brazil (managed by the SBCE subsidiary) in Q3 2014.

[7] Outsourcing of financial portfolio capital gains in 2013, following introduction of centralized management (€27.8M).

[8] Current operating income including finance costs and excluding restated items.

[9] Current operating income including financing costs is restated to exclude the following items:  cost of moving (€8.3M) and outsourcing of capital gains (€27.8M) on December 31, 2013, interest charges for the hybrid debt (€12.1M) on December 31, 2014.

[10] Net income group share is restated to exclude the following items: cost of moving (€8.3M) and outsourcing of capital gains (€27.8M) on December 31, 2013, interest charges for the hybrid debt (€12.1M), charges linked to the IPO (€8.1M) and charges linked to the creation of  Coface Re on December 31, 2014. A 2013 normalized tax rate has been applied to these elements.

[11] Excluding costs of moving the company’s head office (€8.3M) as of December 31, 2013.

[12] At constant scope and exchange rates.

[13] As of December 31, 2014.

[14] The change on a comparable basis is calculated at constant scope and exchange rates. Scope effect is linked to the disposal of the public guarantees activity in Brazil (SBCE subsidiary) in Q3 2014.

[15] Excluding costs of moving the company’s head office (€8.3M) as of December 31, 2013.

[16] Distribution taken from “Issue, Merger and transfer premiums” subject to approval by the Annual General Meeting of shareholders on May 19, 2105.

[17] Non-audited

[18] After taking into account the issue of €380M of subordinated debt and the distribution of a special dividend of €227M.

Contact


Annie Lorenzana

COMMUNICATIONS MANAGER
North America
MOB: +1 (407) 221-3496
Annie.Lorenzana@coface.com

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