Mar 2008 Financial News

GHL Releases Year End Results

Mar 26, 2008

Guardian Holdings Limited
Results for the Year Ended December 31, 2007

Earnings Per Share
For the Year Ended December 31, 2007, Guardian Holdings Limited (GHL) reported a diluted Earnings Per Share (EPS) of $0.59 compared to a diluted Loss Per Share (LPS) of $1.05 in fiscal 2006.

The Chairman has attributed the turnaround in the Group’s performance to a sustained focus on operational efficiency and the implementation of streamlined business processes. He also stated that this recovery was achieved across the Group with all divisions returning profits well ahead of those achieved in 2006.

Financial Highlights (YE07 on YE06):
• Net Insurance Premium Revenue, up 13.4 per cent or $550.5 million to $4.6 billion
• Fee and Commission Income, up an outstanding 198.7 per cent or $131.9 million from $66.4 million to $198.3 million
• Total Revenue, up 16.3 per cent or $838.6 million to $6.0 billion
• Net Insurance Benefits and Claims, up 19.0 per cent or $558.6 million to $3.5 billion
• Operating Profit (before fair value losses), up a substantial 324.9 per cent or $315.9 million from $97.2 million to $413.1 million
• Fair Value Losses of $128.4 million compared to a Loss of $103.6 million in FY06
• Operating Profit of $284.7 million compared to an Operating Loss of $6.4 million in FY06
• Share of Results of Associated Companies, up a considerable 308.4 per cent or $74.3 million to $98.4 million
• Profit After Taxation of $130.5 million compared to a Loss After Taxation of $216.2 million in FY06

Financial Highlights (Q407 on Q406):
• Net Insurance Premium Revenue, down 3.6 per cent to $1.5 billion
• Fee and Commission Income increased from $3.2 million to $105.3 million
• Total Revenue, up 2.3 per cent or $45.1 million to $2.0 billion
• Net Insurance Benefits and Claims, up by a small 2.5 per cent to $1.1 billion
• Operating Profit (before fair value losses), up 10.4 per cent or $14.4 million to $153.2 million
• Fair Value Gain of $54.6 million compared to a Gain of $482.4 million in Q406
• Operating Profit, down 66.6 per cent or $413.4 million to $207.8 million
• Share of Results of Associated Companies increased from $9.5 million to $77.7 million
• Profit After Taxation of $210.7 million, down 62.4 per cent from $560.0 million

Pending RBTT / RBC Transaction
On October 2, 2007, RBTT and Royal Bank of Canada (RBC) reached an agreement to combine their Retail Banking operations. On March 26, 2008 a Special Meeting of Shareholders will be held in order for the RBTT shareholders to authorize and approve this amalgamation.

If approved, GHL will receive approximately $1.8 billion if its 46 million RBTT shares are sold at the $40 per share consideration.

Dividends
In light of these results, the Directors have decided to pay a final dividend of 25 cents per share to shareholders on the Register of Members as at April 10, 2008. This brings the total dividend paid for 2007 to 30 cents per share (2006: 15 cents).

The Annual General Meeting of the Company will take place on May 12, 2008.

Outlook and Recommendation
For fiscal 2007, the Group has seen significantly improved results over the previous financial year and as stated by the Chairman, the Group should benefit in 2008 from the costly restructuring of the Company’s UK subsidiaries (Link and Zenith) which was completed in early 2007.

The shares of GHL last closed at a price of $24.02. The Group continues to have a strong Balance Sheet with a Net Asset Value per share of $18.62 which translates into a market to book ratio of 1.29 times at the current price. We continue to recommend a LONG TERM BUY on this share.


Nancy Chen
WISE Equity Research Team