TIDMARBB
RNS Number : 5231E
Arbuthnot Banking Group PLC
19 July 2016
19 July 2016
ARBUTHNOT BANKING GROUP ("Arbuthnot", "the Group" or "ABG")
Results for the six months to 30 June 2016
"Period of Transition"
Arbuthnot Banking Group announces a half yearly profit of
GBP225m.
Arbuthnot Banking Group PLC is the holding company for Arbuthnot
Latham & Co., Limited and its associated company Secure Trust
Bank PLC.
FINANCIAL HIGHLIGHTS
-- Profit for the period GBP225m (H1 2015: GBP12.7m)
-- Underlying profit before tax GBP2.0m (H1 2015: GBP1.4m)
-- Reported loss before tax on continuing ops GBP2.4m (H1 2015: GBP0.4m)
-- Earnings per share GBP11.11 (H1 2015: GBP0.44)
-- Interim dividend per share 13p (H1 2015: 12p)
-- Special dividend 25p to be paid on 27 July 2016 *
-- Net assets GBP282m (H1 2015: GBP179m)
-- Net assets per share GBP18.52 (H1 2015: GBP11.74)
-- Net assets increased almost six fold since December 2011 (GBP3.12 per share)
OPERATIONAL HIGHLIGHTS
-- Completed sale of Everyday Loans - gain on sale GBP117m
-- Placed 33% stake in Secure Trust Bank generating a gain of GBP100m
-- Purchased a GBP50m investment property in the West End
-- Customer loans GBP657m (H1 2015: GBP584m)
-- Customer deposits GBP940m (H1 2015: GBP770m)
-- Assets Under Management GBP797m (H1 2015: GBP701m)
Commenting on the results, Sir Henry Angest, Chairman and Chief
Executive of Arbuthnot, said:
"The Group has completed two significant transactions this year,
which have substantially increased its financial resources. We are
well positioned to accelerate the growth of Arbuthnot Latham and
also to invest in other opportunities that may arise given the
current volatile economic environment."
The interim results and presentation are available at
http://www.arbuthnotgroup.com.
Secure Trust Bank PLC is today releasing its interim statement
and it should be read in conjunction with these results.
*The Special dividend was indicated in the 2015 Final results as
announced on 17 March 2016 and was dependant on the completion of
the sale of Everyday Loans. The dividend was declared on 17 June
2016. ABG shares are currently trading "ex-div" of this
dividend.
ENQUIRIES
Arbuthnot Banking Group
Sir Henry Angest, Chairman and Chief
Executive
Andrew Salmon, Group Chief Operating
Officer
James Cobb, Group Finance Director
David Marshall, Director of Communications 020 7012 2400
Canaccord Genuity Ltd (Nominated Advisor)
Sunil Duggal 020 7665 4500
Numis Securities Ltd (Broker)
Chris Wilkinson
Mark Lander 020 7260 1000
Bell Pottinger (Financial PR)
Ben Woodford
Sam Cartwright 020 3772 2588
Chairman's Statement
Arbuthnot Banking Group PLC
I can report that Arbuthnot Banking Group has delivered a profit
for the period of GBP225m (H1 2015: GBP12.7m). This performance is
the result of the completion of two significant corporate
transactions. In April, following the agreement we reached with
Non-Standard Finance in December 2015, the sale of Everyday Loans
was completed. This generated a gain of GBP117m. In May we took the
opportunity to reduce our holding in Secure Trust Bank from 51.9%
to 18.9%. This transaction resulted in the sale of 6 million shares
by way of an institutional placing at the price of GBP25.
The reduction in ownership means that STB is no longer a fully
consolidated subsidiary of the Group and is now an associated
company. As a result of this transaction the Group was able to
recognise a gain of GBP100m. This marks a significant milestone in
the history and development of the Group, as Arbuthnot Banking
Group has now converted its investment in two subsidiaries into
cash and most importantly regulatory capital. Currently, this makes
it one of the most highly capitalised banking groups in the UK,
with net assets of GBP282m, the equivalent of GBP18.52 per share.
Since the end of 2011 the net assets of the Group have risen nearly
six-fold from a little over GBP3 per share.
The Group will continue to invest in its remaining wholly owned
subsidiary to accelerate the growth in the Private and also
Commercial Banking business. Given the current market conditions,
the Group will also explore other opportunities to enhance and
diversify its income streams.
Meanwhile, given our reduced ownership, STB will now explore the
opportunity of achieving a listing on the main market and will be
able to expand its horizon for growth opportunities that enhanced
access to capital markets will allow. We look forward to watching
its continued success while maintaining a significant ownership
investment.
Once again the quirks of IFRS accounting rules have done us no
favours, and indeed do not make understanding these results easy
for the readers. Both of the significant transactions and the
earnings of the business in the first half are required to be
presented as discontinued operations. This results in a loss before
tax from continuing operations of GBP2.4m. However, going forward
the Group will recognise 18.9% of the after tax profits of STB in
its continuing profits, which are not included in these results.
The Group also incurred certain remuneration costs totalling
GBP2.3m in its continuing business segments that were dependant on,
and fully attributable to the successful completion of the Everyday
Loans transaction. These will not be recurring. Therefore on a pro
forma basis the underlying performance of the Group's continuing
operations is GBP2.0m, which is 45% up on the prior year.
Given the confidence in the future the Board has decided to
increase the dividend by 1p to 13p, which will be paid on 30
September 2016 to shareholders on the register on 2 September.
The interim dividend comes on top of the special dividend of 25p
that is due to be paid on 27 July 2016.
Private banking subsidiary - Arbuthnot Latham & Co.,
Limited
Arbuthnot Latham has reported a profit before tax for the half
year of GBP4.5m (H1 2015: GBP3.7m) which includes the impact of the
investment programme that commenced during 2015, with the building
out of the commercial banking business and the banking
infrastructure upgrade project. This has offset a 13% increase in
revenues.
Customer assets have continued on a healthy growth trajectory,
increasing by 14% to GBP657m (H1 2015: GBP584m), while deposits
increased by 23% as the bank continued to attract new clients.
Assets under management increased to GBP797m (H1 2015:
GBP701m).
The investment in the commercial banking activities totalled
GBP0.6m in the first half of the year. The proposition focuses on
servicing SMEs and owner managed businesses providing its clients
with excellent service. Three sector teams have already been
established in London while further teams are due to establish a
presence in Manchester and Exeter to cover the North and South West
regions respectively. Staff numbers will reach thirty by the end of
the third quarter and this will include seventeen relationship
managers, all with twenty years or more commercial banking
experience. We are confident that the proposition resonates well
with both prospective clients and potential employees.
The bank was also delighted to complete the purchase of the
property at 20 King Street in the West End on 23 June 2016 for
GBP50.2m plus associated purchase costs. This is expected initially
to be held as an investment property receiving approximately
GBP1.8m rental income per year. In due course the bank will explore
plans to establish a West End client office within the building,
using the entrance on St James's Street.
Retail banking subsidiary - Secure Trust Bank PLC
Following the reduction in our shareholding in Secure Trust
Bank, the Group will report its ongoing investment in the bank as
Income from Associated Undertakings. This will represent the after
tax earnings, which for the period from 15 June to the end of the
first half was GBP0.3m.
The earnings of the bank up until this date have been reported
as discontinued operations as per the accounting requirements.
On a pro forma basis the continuing Income from Associated
Undertakings for the first half of 2016 would have been GBP2.5m (H1
2015: GBP1.6m).
Outlook
Given the result of the EU Referendum on 23 June 2016 the UK
economy faces short-term economic volatility. However, Arbuthnot
Banking Group is well positioned to prosper. It has not only
divested its high margin lending business, which is the more likely
to experience an uptick in impairments in an economic downturn, but
also realised for cash a significant proportion of its investment
in Secure Trust Bank. It is therefore highly capitalised and well
placed to take advantage of any opportunities that may arise while
continuing to invest in the growth of Arbuthnot Latham.
Consolidated Statement of Comprehensive Income
*Re-presented
Six months Six months
ended ended
30 June 30 June
2016 2015
Note GBP000 GBP000
--------------------------------------------------------------- ----- ----------- --------------
Interest income 15,988 13,371
Interest expense (4,105) (3,315)
--------------------------------------------------------------- ----- ----------- --------------
Net interest income 11,883 10,056
--------------------------------------------------------------- ----- ----------- --------------
Fee and commission income 7,708 6,891
Fee and commission expense (376) (180)
--------------------------------------------------------------- ----- ----------- --------------
Net fee and commission income 7,332 6,711
--------------------------------------------------------------- ----- ----------- --------------
Operating income 19,215 16,767
--------------------------------------------------------------- ----- ----------- --------------
Net impairment loss on financial assets (388) (708)
Other income 2 1,665 -
Profit from associates 265 -
Operating expenses 3 (23,121) (16,472)
--------------------------------------------------------------- ----- ----------- --------------
Loss from continuing operations before income tax (2,364) (413)
Income tax (expense) / credit (539) 94
--------------------------------------------------------------- ----- ----------- --------------
Loss after income tax from continuing operations (2,903) (319)
Profit from discontinued operations after tax 6 228,110 13,017
--------------------------------------------------------------- ----- ----------- --------------
Profit for the period 225,207 12,698
--------------------------------------------------------------- ----- ----------- --------------
Other comprehensive income
Items that are or may be reclassified to profit or
loss
Available-for-sale reserve (2,321) -
Available-for-sale reserve - Associate (209) -
Tax on other comprehensive income 262 -
--------------------------------------------------------------- ----- ----------- --------------
Other comprehensive income for the period, net of
tax (2,268) -
--------------------------------------------------------------- ----- ----------- --------------
Total comprehensive income for the period 222,939 12,698
--------------------------------------------------------------- ----- ----------- --------------
Profit attributable to:
Equity holders of the Company 163,781 6,507
Non-controlling interests 61,426 6,191
--------------------------------------------------------------- ----- ----------- --------------
225,207 12,698
--------------------------------------------------------------- ----- ----------- --------------
Total comprehensive income attributable to:
Equity holders of the Company 161,513 6,507
Non-controlling interests 61,426 6,191
--------------------------------------------------------------- ----- ----------- --------------
222,939 12,698
--------------------------------------------------------------- ----- ----------- --------------
* Prior year numbers have been re-presented for discontinuing
operations (see note 6).
Earnings per share for profit attributable to the
equity holders of the Company during the period
(expressed in pence per share):
- basic 5 1,111.2 44.1
- diluted 5 1,107.5 43.6
Consolidated Statement of Financial Position
At 30 June
2016 2015
GBP000 GBP000
ASSETS
Cash and balances at central banks 293,348 224,678
Loans and advances to banks 33,499 35,865
Debt securities held-to-maturity 103,131 98,143
Derivative financial instruments 1,228 1,634
Loans and advances to customers 657,122 1,436,381
Other assets 14,403 17,269
Financial investments 2,469 1,108
Deferred tax asset 1,714 1,770
Investment in associate 87,114 943
Intangible assets 7,004 11,100
Property, plant and equipment 5,216 13,475
Investment property 50,200 -
--------------------------------------------- ---------- ----------
Total assets 1,256,448 1,842,366
----------------------------------------------- ---------- ----------
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 153 153
Retained earnings 283,079 118,822
Other reserves (1,320) (1,263)
----------------------------------------------- ---------- ----------
Non-controlling interests - 61,716
----------------------------------------------- ---------- ----------
Total equity 281,912 179,428
----------------------------------------------- ---------- ----------
LIABILITIES
Deposits from banks 1,986 10,871
Deposits from customers 939,539 1,604,929
Current tax liability 488 5,487
Other liabilities 20,335 31,256
Debt securities in issue 12,188 10,395
----------------------------------------------- ---------- ----------
Total liabilities 974,536 1,662,938
----------------------------------------------- ---------- ----------
Total equity and liabilities 1,256,448 1,842,366
----------------------------------------------- ---------- ----------
Consolidated Statement of Changes in Equity
Attributable to equity holders
of the Group
-------------------------------------------------------------------------------
Capital
Share Revaluation redemption Available-for-sale Treasury Retained Non-controlling
capital reserve reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Balance at 1
January 2016 153 98 20 1,047 (1,131) 123,330 67,887 191,404
Total comprehensive
income for
the period
Profit for the six
months ended
30 June 2016 - - - - - 163,781 61,426 225,207
Other comprehensive
income, net
of income tax
Revaluation reserve
Cash flow hedging
reserve
Available-for-sale
reserve - - - (1,572) - - (487) (2,059)
Available-for-sale
reserve -
Associate - - - (209) - - - (209)
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Total other
comprehensive
income - - - (1,781) - - (487) (2,268)
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Total comprehensive
income for
the period - - - (1,781) - 163,781 60,939 222,939
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Transactions with
owners, recorded
directly in equity
Contributions by
and distributions
to owners
STB loss of control - (98) - 525 - (427) (124,046) (124,046)
Equity settled
share based
payment
transactions - - - - - (1,074) 31 (1,043)
Final dividend
relating to 2015 - - - - - (2,531) (4,811) (7,342)
Total contributions
by and
distributions
to owners - (98) - 525 - (4,032) (128,826) (132,431)
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Balance at 30 June
2016 153 - 20 (209) (1,131) 283,079 - 281,912
-------------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- ----------
Attributable to equity holders
of the Group
-------------------------------------------------------------------------------
Capital
Share Revaluation redemption Available-for-sale Treasury Retained Non-controlling
capital reserve reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- --------
Balance at 1
January 2015 153 98 20 (250) (1,131) 114,641 60,038 173,569
Total
comprehensive
income for
the period
Profit for the
six months
ended
30 June 2015 - - - - - 6,507 6,191 12,698
Other
comprehensive
income, net
of income tax
Cash flow
hedging
reserve
Total
comprehensive
income for
the period - - - - - 6,507 6,191 12,698
--------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- --------
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Equity settled
share based
payment
transactions - - - - - 56 36 92
Final dividend
relating to
2014 - - - - - (2,382) (4,549) (6,931)
Total
contributions
by and
distributions
to owners - - - - - (2,326) (4,513) (6,839)
--------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- --------
Balance at 30
June 2015 153 98 20 (250) (1,131) 118,822 61,716 179,428
--------------- -------- ------------ ----------- ------------------- --------- ---------- ---------------- --------
Consolidated Statement of Cash Flows
Six months Six months
ended ended
30 June 30 June
2016 2015
GBP000 GBP000
------------------------------------------------------------ ----------- -----------
Cash flows from operating activities
Interest received 87,027 73,555
Interest paid (16,490) (12,512)
Fees and commissions received 12,987 11,482
Cash payments to employees and suppliers (63,503) (49,020)
Taxation paid (6,053) (1,163)
-------------------------------------------------------------- ----------- -----------
Cash flows from operating profits before changes in
operating assets and liabilities 13,968 22,342
Changes in operating assets and liabilities:
- net decrease in derivative financial instruments 127 6
- net decrease/(increase) in loans and advances to
customers 956,385 (283,097)
- net decrease/(increase) in other assets 22,212 (403)
- net decrease in deposits from banks (53,319) (16,786)
- net (decrease)/increase in amounts due to customers (990,299) 410,644
- net decrease in other liabilities (20,342) (3,728)
-------------------------------------------------------------- ----------- -----------
Net cash (outflow)/inflow from operating activities (71,268) 128,978
-------------------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of financial investments (462) (1,580)
Disposal of financial investments 837 1,602
Purchase of computer software (5,071) (1,200)
Proceeds from sale of software 8,062 -
Purchase of property, plant and equipment (51,139) (1,648)
Proceeds from sale of property, plant and equipment 8,815 -
Disposal of subsidiaries, net of cash and cash equivalents
disposed 65,695 -
Purchases of debt securities (59,893) (152,243)
Proceeds from redemption of debt securities 41,424 145,783
-------------------------------------------------------------- ----------- -----------
Net cash inflow/(outflow) from investing activities 8,268 (9,286)
-------------------------------------------------------------- ----------- -----------
Cash flows from financing activities
Dividends paid (7,342) (6,931)
-------------------------------------------------------------- ----------- -----------
Net cash used in financing activities (7,342) (6,931)
-------------------------------------------------------------- ----------- -----------
Net (decrease)/increase in cash and cash equivalents (70,342) 112,761
Cash and cash equivalents at 1 January 397,189 147,782
-------------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 30 June 326,847 260,543
-------------------------------------------------------------- ----------- -----------
1. Operating segments
The Group is organised into three main operating segments as
disclosed below:
1) Retail banking - incorporating household cash management,
personal lending and banking and insurance services.
2) UK Private banking - incorporating private banking, wealth
management and commercial banking.
3) Group Centre - ABG Group Centre management.
Transactions between the operating segments are on normal
commercial terms. Centrally incurred expenses are charged to
operating segments on an appropriate pro-rata basis. Segment assets
and liabilities comprise operating assets and liabilities, being
the majority of the balance sheet.
Discontinued operations
(Retail Banking) Continuing operations
Retail
Bank
Associate UK Private Group Group
ELL STB Total Income banking Centre Total Total
Six months ended 30 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
June 2016
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Interest revenue 11,137 57,498 68,635 - 16,112 68 16,180
Inter-segment revenue - - - - (128) (64) (192)
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Interest revenue from
external customers 11,137 57,498 68,635 - 15,984 4 15,988
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Fee and commission
income 147 7,981 8,128 - 7,708 - 7,708
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Revenue from external
customers 11,284 65,479 76,763 - 23,692 4 23,696
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Interest expense - (12,107) (12,107) - (3,996) 64 (3,932)
Add back inter-segment
revenue - - - - 128 (128) -
Subordinated loan note
interest - - - - - (173) (173)
Fee and commission
expense (124) (779) (903) - (376) - (376)
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Segment operating
income 11,160 52,593 63,753 - 19,448 (233) 19,215
------------------------ -------- --------- --------- ----------- ----------- ---------- ----------
Impairment losses (2,610) (12,172) (14,782) - (388) - (388)
Other income - - - - 1,665 - 1,665
Income from associates - - - 265 - - 265
Operating expenses (6,016) (29,073) (35,089) - (16,218) (6,903) (23,121)
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Segment profit / (loss)
before tax 2,534 11,348 13,882 265 4,507 (7,136) (2,364) 11,518
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Income tax (expense)
/ income (507) (2,199) (2,706) - (48) (491) (539) (3,245)
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Segment profit / (loss)
after tax 2,027 9,149 11,176 265 4,459 (7,627) (2,903) 8,273
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Profit on sale of
discontinued
operations 116,754 100,180 216,934
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Segment profit / (loss)
after tax 118,781 109,329 228,110 265 4,459 (7,627) (2,903) 225,207
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Loans and advances to
customers - - 657,122 - 657,122 657,122
Other assets - - 515,489 83,837 599,326 599,326
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Segment total assets - - - - 1,172,611 83,837 1,256,448 1,256,448
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Customer deposits - - 939,539 - 939,539 939,539
Other liabilities - - 179,577 (144,580) 34,997 34,997
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Segment total
liabilities - - - - 1,119,116 (144,580) 974,536 974,536
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
Other segment items:
Capital expenditure - (53,721) - (53,721) (53,721)
Depreciation and
amortisation - (753) (1) (754) (754)
------------------------ -------- --------- --------- ----------- ----------- ---------- ---------- ----------
The "Group Centre" segment above includes the parent entity and
all intercompany eliminations. Segment profit is shown prior to any
intra-group eliminations. The UK private bank opened a branch in
Dubai in 2013. Other than the Dubai branch, all other operations of
the Group are conducted wholly within the United Kingdom and
therefore geographical information is not presented.
Discontinued operations
(Retail Banking) Continuing operations
Retail
Bank
Associate UK Private Group Group
ELL STB Total Income banking Centre Total Total
Six months ended 30 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
June 2015
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Interest revenue 19,574 44,588 64,162 - 13,460 60 13,520
Inter-segment revenue - (159) (159) - (89) (60) (149)
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Interest revenue from
external customers 19,574 44,429 64,003 - 13,371 - 13,371
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Fee and commission
income 1,086 8,396 9,482 - 6,891 - 6,891
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Revenue from external
customers 20,660 52,825 73,485 - 20,262 - 20,262
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Interest expense - (9,769) (9,769) - (3,162) 172 (2,990)
Add back inter-segment
revenue - 159 159 - 89 (248) (159)
Subordinated loan note
interest - - - - - (166) (166)
Fee and commission
expense (1,249) (386) (1,635) - (180) - (180)
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Segment operating
income 19,411 42,829 62,240 - 17,009 (242) 16,767
------------------------ --------- --------- ---------- ----------- ----------- --------- ---------
Impairment losses (3,223) (7,995) (11,218) - (708) - (708)
Operating expenses (10,608) (24,265) (34,873) - (12,640) (3,832) (16,472)
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Segment profit / (loss)
before tax 5,580 10,569 16,149 - 3,661 (4,074) (413) 15,736
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Income tax (expense)
/ income (1,131) (2,001) (3,132) - - 94 94 (3,038)
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Segment profit / (loss)
after tax 4,449 8,568 13,017 - 3,661 (3,980) (319) 12,698
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Loans and advances to
customers 852,291 - 584,090 - 584,090 1,436,381
Other assets 149,701 - 281,135 (24,851) 256,284 405,985
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Segment total assets - - 1,001,992 - 865,225 (24,851) 840,374 1,842,366
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Customer deposits 835,083 - 769,846 - 769,846 1,604,929
Other liabilities 38,555 - 52,495 (33,041) 19,454 58,009
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Segment total
liabilities - - 873,638 - 822,341 (33,041) 789,300 1,662,938
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
Other segment items:
Capital expenditure (1,435) - (1,313) - (1,313) (2,748)
Depreciation and
amortisation (799) - (587) (5) (592) (1,391)
------------------------ --------- --------- ---------- ----------- ----------- --------- --------- ----------
2. Other income
As a result of the completion of the Visa Europe transaction the
group realised a gain of GBP1.6m.
3. Operating expenses
Operating expenses include Group bonuses paid relating to the
sale of the Everyday Loans Group amounting to GBP2.3m.
4. Underlying profit reconciliation
The profit before tax from continuing operations as reported in
the operating segments can be reconciled to the underlying profit
from continuing operations for the year as disclosed in the tables
below.
Arbuthnot Arbuthnot
Latham Banking
Underlying profit reconciliation & Co. Group
Six months ended 30 June 2016 GBP000 GBP000
------------------------------------------------------- ---------- ----------
Profit / (loss) before tax from continuing operations 4,507 (2,364)
ABG Group bonuses relating to sale of ELL - 2,304
STB full year equivalent associate income* - 2,261
AL realised profit on AFS investment (Visa) (1,665) (1,665)
Investment in operating systems 260 260
AL commercial banking investment 567 567
AL incremental office space 650 650
------------------------------------------------------- ---------- ----------
Underlying profit 4,319 2,013
------------------------------------------------------- ---------- ----------
* - STB associate income adjustment (excl. ELL & bonuses relating to
ELL sale) as if received from 1 January 2016.
Arbuthnot Arbuthnot
Latham Banking
Underlying profit reconciliation & Co. Group
Six months ended 30 June 2015 GBP000 GBP000
------------------------------------------------------- ---------- ----------
Profit / (loss) before tax from continuing operations 3,661 (413)
STB full year equivalent associate income* - 1,622
Investment in operating systems 170 170
AL commercial banking investment 13 13
------------------------------------------------------- ---------- ----------
Underlying profit 3,844 1,392
------------------------------------------------------- ---------- ----------
* - STB associate income adjustment (excl. ELL) as if
received from 1 January 2015.
5. Earnings per ordinary share
Basic
Basic earnings per ordinary share are calculated by dividing the
profit after tax attributable to equity holders of the Company by
the weighted average number of ordinary shares 14,738,548 (2015:
14,738,548) in issue during the period. The weighted average number
of ordinary shares has been restated for 2015 from 15,279,322,
after taking into account treasury shares (390,274) and shares held
in an ESOP trust (150,500).
Diluted
Diluted earnings per ordinary share are calculated by dividing
the dilutive profit after tax attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue
during the period, as well as the number of dilutive share options
in issue during the period. The number of dilutive share options in
issue at the end of June was 50,000 (2015: 200,000).
Six months Six months
ended ended
30 June 30 June
2016 2015
Profit attributable GBP000 GBP000
------------------------------------------------------------------- ----------- -----------
Total profit after tax attributable to equity holders of
the Company 163,781 6,507
Loss after tax from continuing operations attributable
to equity holders of the Company (2,903) (319)
Profit after tax from discontinuing operations (ELL) attributable
to equity holders of the Company 61,667 2,310
Profit after tax from discontinuing operations (STB) attributable
to equity holders of the Company 105,017 4,516
------------------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2016 2015
Dilutive profit attributable GBP000 GBP000
------------------------------------------------------------------- ----------- -----------
Total profit after tax attributable to equity holders of
the Company 163,781 6,507
Profit after tax from continuing operations attributable
to equity holders of the Company (2,903) (319)
Profit after tax from discontinuing operations (ELL) attributable
to equity holders of the Company 61,667 2,310
Profit after tax from discontinuing operations (STB) attributable
to equity holders of the Company 105,017 4,516
------------------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2016 2015
Basic Earnings per share p p
------------------------------------------------------------------- ----------- -----------
Total Basic Earnings per share 1,111.2 44.1
Basic Earnings per share from continuing operations (19.7) (2.2)
Basic Earnings per share from discontinuing operations
- ELL 418.4 15.7
Basic Earnings per share from discontinuing operations
- STB 712.5 30.6
------------------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2016 2015
Diluted Earnings per share p p
------------------------------------------------------------------- ----------- -----------
Total Diluted Earnings per share 1,107.5 43.6
Diluted Earnings per share from continuing operations (19.6) (2.1)
Diluted Earnings per share from discontinuing operations
- ELL 417.0 15.5
Diluted Earnings per share from discontinuing operations
- STB 710.1 30.2
------------------------------------------------------------------- ----------- -----------
6. Discontinued operations
The profit after tax from discontinued operations is made up as
follows:
Six months Six months
ended ended
30 June 30 June
2016 2015
Discontinued operations GBP000 GBP000
----------------------------------------------------- ----------- -----------
Profit after tax from discontinued operations - ELL
(up to 13 April 2016) 2,027 4,449
Profit after tax on sale of discontinued operations
- ELL 116,754 -
Profit after tax from discontinued operations - STB
(up to 15 June 2016) 9,149 8,568
Profit after tax on sale of discontinued operations
- STB 100,180 -
----------------------------------------------------- ----------- -----------
Profit after tax from discontinued operations 228,110 13,017
------------------------------------------------------- ----------- -----------
On 4 December 2015, the Bank agreed to the conditional sale of
its non-standard consumer lending business, ELL, which comprises
Everyday Loans Holdings Limited and subsidiary companies Everyday
Lending Limited and Everyday Loans Limited, to Non Standard Finance
PLC (NSF) for GBP106.9 million in cash subject to a net asset
adjustment and GBP16.3 million in NSF ordinary shares. The Disposal
completed on 13 April 2016, and on completion, NSF repaid
intercompany debt of GBP108.1 million to STB. After selling costs
of GBP6.2m, this resulted in a gain recognised on disposal of
GBP113.3m.
Details of the profits of discontinued operations, net assets
disposed of and consequential gain recognised on disposal and cash
flow from discontinued operations is set out below.
From
1 January Six months
to 13 ended
April 30 June
2016 2015
Note GBP000 GBP000
--------------------------------------------- ------ ----------- -----------
Interest income 11,137 19,574
Net interest income 11,137 19,574
--------------------------------------------- ------ ----------- -----------
Fee and commission income 147 1,086
Fee and commission expense (124) (1,249)
--------------------------------------------- ------ ----------- -----------
Net fee and commission income 23 (163)
--------------------------------------------- ------ ----------- -----------
Operating income 11,160 19,411
--------------------------------------------- ------ ----------- -----------
Net impairment loss on financial assets (2,610) (3,223)
Operating expenses (6,016) (10,608)
--------------------------------------------- ------ ----------- -----------
Profit before tax 2,534 5,580
Tax expense (507) (1,131)
--------------------------------------------- ------ ----------- -----------
Profit after tax 2,027 4,449
--------------------------------------------- ------ ----------- -----------
Profit on sale of business 116,754 -
--------------------------------------------- ------ ----------- -----------
Total profit from discontinued operation 118,781 4,449
--------------------------------------------- ------ ----------- -----------
Profit attributable to:
Equity holders of the Company 61,667 2,310
Non-controlling interests 57,114 2,139
--------------------------------------------- ------ ----------- -----------
Profit after tax 118,781 4,449
--------------------------------------------- ------ ----------- -----------
Earnings per share for profit attributable to the equity holders of the
Company from discontinued operations during the year
(expressed in pence per share):
- basic 5 418.4 15.7
- diluted 5 417.0 15.5
The following unaudited assets were sold as part of the sale of ELL:
Recognised
values
on sale
2016
GBP000
----------------------------------------------------------------------- -----------
Loans and advances to banks 457
Loans and advances to customers 116,744
Property, plant and equipment 452
Intangible assets 1,258
Deferred tax assets 371
Prepayments and accrued income 451
Other assets 11
----------------------------------------------------------------------- -----------
Total assets 119,744
Intercompany funding 108,088
Current tax liability 3,212
Other liabilities 4,748
----------------------------------------------------------------------- -----------
Total liabilities 116,048
Net identifiable assets / (liabilities) 3,696
----------------------------------------------------------------------- -----------
Consideration 123,206
Costs (2,756)
Profit on sale of ELL 116,754
----------------------------------------------------------------------- -----------
The intercompany funding was repaid by NSF at the time of completion.
From
1 January Six months
to 13 ended
Cash flow from discontinued operations - ELL April 30 June
2016 2015
GBP000 GBP000
------------------------------------------------------ ----------- -----------
Cash flows from operating activities
Interest received 11,137 19,574
Fees and commissions received 23 (163)
Cash payments to employees and suppliers (8,626) (13,831)
Taxation (paid)/received (507) (1,131)
-------------------------------------------------------- ----------- -----------
Cash flows from operating profits before changes in
operating assets and liabilities 2,027 4,449
Changes in operating assets and liabilities:
- net increase in loans and advances to customers (3,618) (11,427)
- net decrease in other assets (249) 407
- net increase in other liabilities 2,621 5,146
-------------------------------------------------------- ----------- -----------
Net cash inflow/(outflow) from operating activities 781 (1,425)
-------------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (9) (179)
Net cash from investing activities (9) (179)
-------------------------------------------------------- ----------- -----------
Cash flows from financing activities
Increase in borrowings
Dividends paid
Net increase/(decrease) in cash and cash equivalents 772 (1,604)
Cash and cash equivalents at 1 January 1,661 1,623
-------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 13 April / 30 June 2,433 19
-------------------------------------------------------- ----------- -----------
On 15 June 2016 Arbuthnot Banking Group ('ABG') sold 6 million
shares in Secure Trust Bank PLC ('STB'), which reduced its
shareholding in STB from 51.92% to 18.93%. From this date the Group
accounted for its remaining shareholding in STB as an associate.
After the sale of the 6 million shares, the Group retained Board
representation and as such is seen to have significant influence
over STB. The profit and cash flow from discontinued operations
relating to ELL have been shown in the tables above. The ELL
entities were subsidiaries of STB and therefore formed part of the
STB number reported in the operating segments of ABG. The tables
below therefore reflect the profit and cash flow from the STB group
excluding ELL. The combined impact can be seen in the operating
segments (see note 1 - Retail banking).
From
1 January Six months
to 15 ended
June 30 June
2016 2015
Note GBP000 GBP000
--------------------------------------------- ------ ----------- -----------
Interest income 57,498 44,588
Interest expense (12,107) (9,769)
--------------------------------------------- ------ ----------- -----------
Net interest income 45,391 34,819
--------------------------------------------- ------ ----------- -----------
Fee and commission income 7,981 8,396
Fee and commission expense (779) (386)
--------------------------------------------- ------ ----------- -----------
Net fee and commission income 7,202 8,010
--------------------------------------------- ------ ----------- -----------
Operating income 52,593 42,829
--------------------------------------------- ------ ----------- -----------
Net impairment loss on financial assets (12,172) (7,995)
Operating expenses (29,074) (24,265)
--------------------------------------------- ------ ----------- -----------
Profit before tax 11,347 10,569
Tax expense (2,198) (2,001)
--------------------------------------------- ------ ----------- -----------
Profit after tax 9,149 8,568
--------------------------------------------- ------ ----------- -----------
Profit on sale of shares 100,180 -
--------------------------------------------- ------ ----------- -----------
Total profit from discontinued operation 109,329 8,568
--------------------------------------------- ------ ----------- -----------
Profit attributable to:
Equity holders of the Company 105,017 4,516
Non-controlling interests 4,312 4,052
--------------------------------------------- ------ ----------- -----------
Profit after tax 109,329 8,568
--------------------------------------------- ------ ----------- -----------
Earnings per share for profit attributable to the equity holders of the
Company from discontinued operations during the year
(expressed in pence per share):
- basic 5 712.5 30.6
- diluted 5 710.1 30.2
The following unaudited assets were deconsolidated as part of the sale
of 6 million shares in STB:
Recognised
values
on sale
2016
GBP000
------------------------------------------------------------ ------------
Cash and balances at central banks 176,647
Loans and advances to banks 27,618
Loans and advances to customers 1,117,700
Other assets 5,805
Financial investments 15,030
Deferred tax asset 606
Intangible assets 7,017
Property, plant and equipment 8,606
------------------------------------------------------------ ------------
Total assets 1,359,029
Deposits from banks 25,000
Deposits from customers 1,046,009
Current tax liability 293
Other liabilities 29,748
------------------------------------------------------------ ------------
Total liabilities 1,101,050
Net identifiable assets 257,979
------------------------------------------------------------ ------------
Profit on sale of shares were calculated as follows:
2016
GBP000
------------------------------------------------------------ ------------
Consideration received 150,000
Less costs (2,001)
Less net identifiable assets (257,979)
Add back non-controlling interest 124,046
Add back fair value of remaining investment in STB 86,114
Profit on sale of STB 100,180
------------------------------------------------------------ ------------
From
1 January Six months
Cash flow from discontinued operations - STB excluding to 15 ended
ELL June 30 June
2016 2015
GBP000 GBP000
-------------------------------------------------------- ----------- -----------
Cash flows from operating activities
Interest received 68,635 44,667
Interest paid (12,107) (9,841)
Fees and commissions received 7,226 7,995
Cash payments to employees and suppliers (51,552) (32,413)
Taxation (paid)/received (6,034) (1,977)
---------------------------------------------------------- ----------- -----------
Cash flows from operating profits before changes in
operating assets and liabilities 6,168 8,431
Changes in operating assets and liabilities:
- net increase in loans and advances to customers (165,976) (229,688)
- net decrease in other assets 117,395 (661)
- net / in deposits from banks (10,000) 24,285
- net / in amounts due to customers 12,936 226,690
- net increase in other liabilities (5,031) (1,164)
---------------------------------------------------------- ----------- -----------
Net cash (outflow)/inflow from operating activities (44,508) 27,893
---------------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of computer software (1,754) (433)
Purchase of property, plant and equipment (531) (884)
Disposal of property, plant and equipment 2,179 -
Proceeds from disposal of businesses 106,912 -
Proceeds from sale of property, plant and equipment 456 -
Net cash inflow/(outflow) from investing activities 107,262 (1,317)
---------------------------------------------------------- ----------- -----------
Cash flows from financing activities
Increase in borrowings
Dividends paid (10,005) (9,500)
Net cash used in financing activities (10,005) (9,500)
---------------------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents 52,749 17,076
Cash and cash equivalents at 1 January 141,595 104,530
---------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 15 June / 30 June 194,344 121,606
---------------------------------------------------------- ----------- -----------
7. Basis of reporting
The interim financial statements have been prepared on the basis
of accounting policies set out in the Group's 2015 statutory
accounts as amended by standards and interpretations effective
during 2016 and in accordance with IAS 34 "Interim Financial
Reporting" (except for comparatives in the statement of financial
position). The directors do not consider the fair value of the
assets and liabilities presented in these financial statements to
be materially different from their carrying value.
The statements were approved by the Board of Directors on 18
July 2016 and are unaudited. The interim financial statements will
be posted to shareholders and copies may be obtained from The
Company Secretary, Arbuthnot Banking Group PLC, Arbuthnot House, 7
Wilson Street, London EC2M 2SN.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAKXPFDPKEFF
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