SKIPTON ANNOUNCES 48% INCREASE IN HALF-YEAR PERFORMANCE
Skipton Building Society continues to enhance its financial strength while maintaining its focus on meeting members' needs, our latest Half-Year Results show. Tier One capital increased by 34% to 11.4% (30 June 2009: 8.5%).
The Society's clear plan for steering the business through the aftershocks of the historic economic downturn has boosted performance, compared to the equivalent period of 2009. Group Profit before tax amounted to £21.7m, a 48% increase compared to £14.7m for the six months ended 30 June 2009.
Financial Performance in the six months to 30 June 2010 at a glance:
Improved profits
- Group pre-tax profit of £21.7m (H1 2009: £14.7 m );
Improved capital strength
- Core Tier One capital ratio up 38% to 9.9% (June 2009: 7.2%);
- Tier One capital ratio up 34% to 11.4% (June 2009: 8.5%);
- Solvency ratio up 26% to 15.1% (June 2009: 12.0%).
Strong retail savings franchise
- 83.2% of funding is comprised of retail balances (June 2009: 78.8%).
- Saving membership up 1% to 744,000 (June 2009: 739,000).
- Retail balances represent 99.9% of mortgage balances (June 2009: 89.8%)
Prudent, measured reduction in mortgage assets
- Group mortgage assets reduced by £0.6bn since the year end to £10.1bn.
Maintained high levels of liquidity
- Liquidity represents 28.7% of shares, deposits and liabilities (June 2009: 22.6%).
Business Highlights
- Our merger with Chesham Building Society completed on 1 June 2010, further increasing the enlarged Skipton's capital strength; boosting our member base by 21,000 and adding three new branches to our network.
- The Mortgage and Savings division reported a loss of £5.7m, compared to a loss of £9.1m for the six months end 30 June 2009.
- Group net interest margin reduced by £12.3m to £26.5m compared to the first six months of 2009, but increased by £12.3m compared to the second six months of 2009.
- The charge for mortgage losses amounted to £3.2m, compared to £22.1m for the six months ended 30 June 2009, a reduction of £18.9m. This reflects a 12% reduction in arrears and greater macro economic stability.
- The Financial Advice division continued to enhance its performance, reporting a profit of £1.7m compared to a loss of £0.1m for the comparative period and is well placed to comply with the Retail Distribution Review requirements which come into force on 31 December 2012.
- Our Estate Agency Division continued to perform strongly, with revenues and profits well up against the first half of 2009. New instructions increased 23% and the level of exchanges rose 13%. Profits for the period amounted to £31.7m (six months to 30 June 2009: £20.8m).
Skipton's diversified business model continues to play a significant part in the Group's success in the face of continued economic challenges, as does its prudent management of the business and its balance sheet.
Group Chief Executive David Cutter said: "A 48% increase in profit and 34% increase in our Tier One capital ratio is a very pleasing performance compared to our June 2009 results. But there is no room for complacency. Uncertainty stemming from fears over the financial stability of certain European nations and the impact of the Government's austerity package has highlighted the need for continued vigilance.
"However, these most recent results once again demonstrate our ability to prosper despite such adverse conditions while, at the same time, remaining true to our ethos of offering consistent good value and service to our members.
"Therefore I remain confident that steps we took in the first six months of this year, coupled with our unique business model, will ensure a sustainable and strong future for our business."
ENDS
For further information or to arrange interviews, please contact the Skipton Press Office on
08456 017247,
email newsline@skipton.co.uk or visit the press section of our website at www.skipton.co.uk
Tracy Fletcher , Head of Corporate Communications
Tel: 01756 705855
If outside Press Office hours (8am – 6pm , Monday to Friday), please call 07867 851628
Editors' notes
Skipton Building Society
1. Skipton is the UK's fourth largest building society, with approximately 860,000 members, over £14.6bn of assets and a national presence represented by its 92 branches, covering the country from Aberdeen to Plymouth. It heads the Skipton Building Society Group, whose divisions have significant interests in estate agency and related businesses (through the Connells and Sequence groups); third party mortgage servicing (Homeloan Management); independent financial and related advisory businesses and support services to the mutual sector.
Skipton Building Society
Results for the Half Year ended 30 June 2010
Unaudited results for the half-year to 30 June 2010
Condensed consolidated income statement
| |
Unaudited |
Unaudited |
Audited |
| |
6 months |
6 months |
12 months |
| |
to 30.06.10 |
to 30.06.09 |
to 31.12.09 |
| |
£m |
£m |
£m |
| Continuing operations |
|
|
|
| Interest receivable and similar income |
186.8 |
233.0 |
421.8 |
| Interest payable and similar charges |
(160.3) |
(194.0) |
(368.5) |
| Net interest receivable |
26.5 |
39.0 |
53.3 |
| Fees and commissions receivable |
191.3 |
167.8 |
389.0 |
| Fees and commissions payable |
(8.9) |
(7.8) |
(19.4) |
| Fair value gains / (losses) on financial instruments |
0.2 |
(0.3) |
3.9 |
| Share of profits from joint ventures and associates |
0.2 |
0.1 |
0.2 |
| Other operating income |
7.2 |
14.8 |
13.0 |
| Total income |
216.5 |
213.6 |
440.0 |
| Administrative expenses |
(196.1) |
(179.9) |
(383.7) |
| Negative goodwill arising on merger |
3.1 |
- |
- |
| Impairment losses on loans and advances |
(3.2) |
(22.1) |
(43.6) |
| Impairment recoveries on debt securities |
- |
3.1 |
1.3 |
| Provisions for liabilities |
1.4 |
- |
4.0 |
| Profit before tax |
21.7 |
14.7 |
18.0 |
| Tax expense |
(5.8) |
(5.2) |
(4.3) |
| Profit for the period from continuing operations |
15.9 |
9.5 |
13.7 |
| |
|
|
|
| Discontinued operation |
|
|
|
| Profit from discontinued operation |
- |
1.7 |
43.9 |
| Profit for the period |
1 5.9 |
11.2 |
57.6 |
| |
|
|
|
| Profit for the period attributable to: |
|
|
|
| Members of Skipton Building Society |
|
|
|
| Profit for the period from continuing operations |
16.0 |
9.2 |
13.5 |
| Profit for the period from discontinued operations |
- |
1.7 |
43.9 |
| |
16.0 |
10.9 |
57.4 |
| Non-controlling interests |
|
|
|
| Profit for the period from continuing operations |
(0.1) |
0.3 |
0.2 |
| |
(0.1) |
0.3 |
0.2 |
| |
15.9 |
11.2 |
57.6 |
| Profit for the period |
15.9 |
11.2 |
57.6 |
| |
|
|
|
| Other comprehensive income: |
|
|
|
| Available-for-sale investments: valuation gains taken to equity |
8.2 |
1.8 |
9.4 |
| Cash flow hedges: gains taken to equity |
28.0 |
14.1 |
7.1 |
| Exchange differences on translation of foreign operations |
0.5 |
0.1 |
2.6 |
| Movement in reserves attributable to non-controlling interests |
(0.3) |
0.1 |
(1.1) |
| Non-controlling interest share restructure |
- |
- |
0.5 |
| Actuarial losses on defined benefit pension plans |
(13.3) |
(29.9) |
(17.9) |
| Income tax relating to components of other comprehensive income |
(6.3) |
4.0 |
0.7 |
| Other comprehensive income for the period, net of tax |
16.8 |
(9.8) |
1.3 |
| Total comprehensive income for the period |
32.7 |
1.4 |
58.9 |
| |
|
|
|
| Total comprehensive income attributable to: |
|
|
|
| Members of Skipton Building Society |
32.8 |
1.1 |
58.7 |
| Non-controlling interests |
(0.1) |
0.3 |
0.2 |
| |
32.7 |
1.4 |
58.9 |
| Assets |
|
|
|
| Cash in hand and balances with the Bank of England |
1,565.7 |
1,113.5 |
1,272.1 |
| Loans and advances to credit institutions |
354.0 |
387.5 |
447.5 |
| Debt securities |
1,798.8 |
1,584.4 |
2,339.3 |
| Derivative financial instruments |
163.7 |
272.6 |
265.5 |
| Loans and advances to customers |
10,281.2 |
11,316.3 |
10,813.3 |
| Corporation tax asset |
- |
- |
5.6 |
| Investments in group undertakings |
1.5 |
1.6 |
1.7 |
| Intangible assets |
193.7 |
243.2 |
182.2 |
| Property, plant and equipment |
95.9 |
81.5 |
88.7 |
| Investment property |
5.7 |
12.4 |
10.3 |
| Deferred tax asset |
43.4 |
49.8 |
45.0 |
| Other assets |
105.7 |
121.4 |
97.6 |
| Total assets |
14,609.3 |
15,184.2 |
15,568.8 |
| |
|
|
|
| Liabilities |
|
|
|
| Shares |
10,099.3 |
10,075.3 |
10,470.2 |
| Amounts owed to credit institutions |
813.2 |
1,031.8 |
942.2 |
| Amounts owed to other customers |
1,159.9 |
1,708.3 |
1,203.9 |
| Debt securities in issue |
869.8 |
846.1 |
1,405.6 |
| Derivative financial instruments |
338.1 |
256.2 |
263.7 |
| Corporation tax liability |
3.4 |
1.6 |
- |
| Other liabilities |
98.5 |
95.2 |
89.7 |
| Accruals and deferred income |
36.5 |
54.9 |
50.0 |
| Deferred tax liability |
15.3 |
12.3 |
13.8 |
| Provisions for liabilities |
17.9 |
27.0 |
19.3 |
| Retirement benefit obligations |
56.3 |
72.6 |
47.4 |
| Subordinated liabilities |
211.8 |
211.0 |
213.0 |
| Subscribed capital |
84.1 |
83.0 |
83.6 |
| Total liabilities |
13,804.1 |
14,475.3 |
14,802.4 |
| |
|
|
|
| Members' interests |
|
|
|
| General reserve |
794.0 |
726.4 |
781.5 |
| Available-for-sale reserve |
(0.2) |
(12.0) |
(6.2) |
| Cash flow hedging reserve |
4.2 |
(10.9) |
(16.0) |
| Translation reserve |
4.1 |
1.1 |
3.6 |
| Attributable to Members of Skipton Building Society |
802.1 |
704.6 |
762.9 |
| Non-controlling interests |
3.1 |
4.3 |
3.5 |
| Total members' interests |
805.2 |
708.9 |
766.4 |
| |
|
|
|
| Total members' interests and liabilities |
14,609.3 |
15,184.2 |
15,568.8 |
Condensed consolidated statement of changes in members' interests
| Unaudited 6 months as at 30 June 2010 |
General reserve |
Available-for-sale financial assets |
Cash flow hedges |
Translation of foreign operations |
SubTotal |
Non-controlling interests |
Total |
| £m |
£m |
£m |
£m |
£m |
£m |
£m |
| Balance at 1 January 2010 |
781.5 |
(6.2) |
(16.0) |
3.6 |
762.9 |
3.5 |
766.4 |
| Profit for the period |
16.0 |
- |
- |
- |
16.0 |
(0.1) |
15.9 |
| Other comprehensive income |
|
|
|
|
|
|
|
| Actuarial loss on retirement benefit obligations |
(9.6) |
- |
- |
- |
(9.6) |
- |
(9.6) |
| Net gains from changes in fair value |
- |
6.0 |
20.2 |
- |
26.2 |
- |
26.2 |
| Exchange differences on translation of foreign operations |
- |
- |
- |
0.5 |
0.5 |
- |
0.5 |
| Movement in reserves attributable to non-controlling interests |
- |
- |
- |
- |
- |
(0.3) |
(0.3) |
| Total other comprehensive income |
(9.6) |
6.0 |
20.2 |
0.5 |
17.1 |
(0.3) |
16.8 |
| Total comprehensive income for the period |
6.4 |
6.0 |
20.2 |
0.5 |
33.1 |
(0.4) |
32.7 |
| Transfer of engagements |
6.1 |
- |
- |
- |
6.1 |
- |
6.1 |
| Balance at 30 June 2010 |
794.0 |
(0.2) |
4.2 |
4.1 |
802.1 |
3.1 |
805.2 |
| Unaudited 6 months as at 30 June 2009 |
General reserve |
Available-for-sale financial assets |
Cash flow hedges |
Translation of foreign operations |
Sub Total |
Non-controlling interests |
Total |
| £m |
£m |
£m |
£m |
£m |
£m |
£m |
| Balance at 1 January 2009 |
737.0 |
(13.2) |
(21.2) |
1.0 |
703.6 |
3.9 |
707.5 |
| Profit for the period |
10.9 |
- |
- |
- |
10.9 |
0.3 |
11.2 |
| Other comprehensive income |
|
|
|
|
|
|
|
| Actuarial loss on retirement benefit obligations |
(21.5) |
- |
- |
- |
(21.5) |
- |
(21.5) |
| Net gains/ (losses) from changes in fair value |
- |
(0.2) |
10.3 |
- |
10.1 |
- |
10.1 |
| Exchange differences on translation of foreign operations |
- |
- |
- |
0.1 |
0.1 |
- |
0.1 |
| Movement in reserves attributable to non-controlling interests |
- |
- |
- |
- |
- |
0.1 |
0.1 |
| Transfer of engagements |
- |
1.4 |
- |
- |
1.4 |
- |
1.4 |
| Total other comprehensive income |
(21.5) |
1.2 |
10.3 |
0.1 |
(9.9) |
0.1 |
(9.8) |
| Total comprehensive income for the period |
(10.6) |
1.2 |
10.3 |
0.1 |
1.0 |
0.4 |
1.4 |
| Balance at 30 June 2009 |
726.4 |
(12.0) |
(10.9) |
1.1 |
704.6 |
4.3 |
708.9 |
| Audited 12 months as at 31 December 2009 |
General reserve |
Available-for-sale financial assets |
Cash flow hedges |
Translation of foreign operations |
Sub Total |
Non-controlling interests |
Total |
| £m |
£m |
£m |
£m |
£m |
£m |
£m |
| Balance at 1 January 2009 |
737.0 |
(13.2) |
(21.2) |
1.0 |
703.6 |
3.9 |
707.5 |
| Profit for the financial year |
57.4 |
- |
- |
- |
57.4 |
0.2 |
57.6 |
| Other comprehensive income |
|
|
|
|
|
|
|
| Actuarial loss on retirement benefit obligations |
(12.9) |
- |
- |
- |
(12.9) |
- |
(12.9) |
| Net gains from changes in fair value |
- |
5.6 |
5.2 |
- |
10.8 |
- |
10.8 |
| Exchange differences on translation of foreign operations |
- |
- |
- |
2.6 |
2.6 |
- |
2.6 |
| Movement in reserves attributable to non-controlling interests |
- |
- |
- |
- |
- |
(1.1) |
(1.1) |
| Non-controlling interest share restructure |
- |
- |
- |
- |
- |
0.5 |
0.5 |
| Transfer of engagements |
- |
1.4 |
- |
- |
1.4 |
- |
1.4 |
| Total other comprehensive income |
(12.9) |
7.0 |
5.2 |
2.6 |
1.9 |
(0.6) |
1.3 |
| Total comprehensive income for the period |
44.5 |
7.0 |
5.2 |
2.6 |
59.3 |
(0.4) |
58.9 |
| Balance at 31 December 2009 |
781.5 |
(6.2) |
(16.0) |
3.6 |
762.9 |
3.5 |
766.4 |
Unaudited results for the half-year to 30 June 2010
Condensed consolidated cash flow statement
|
Unaudited |
Unaudited |
Audited |
| |
6 months |
6 months |
12 months |
| |
to 30.06.10 |
to 30.06.09 |
to 31.12.09 |
| |
£m |
£m |
£m |
| Cash flows from operating activities |
|
|
|
| Profit before taxation from continuing operations |
21.7 |
14.7 |
18.0 |
| Profit before taxation from discontinued operations |
- |
2.3 |
45.5 |
| Adjustments for: |
|
|
|
| Impairment losses on loans and advances |
3.2 |
22.1 |
43.6 |
| Impairment recoveries on debt securities |
- |
(3.1) |
(1.3) |
| Loans and advances written off, net of recoveries |
(12.8) |
(14.2) |
(29.9) |
| Goodwill impairment |
4.8 |
- |
12.0 |
| Depreciation and amortisation |
9.6 |
11.5 |
23.2 |
| Interest on capital and subordinated liabilities |
12.3 |
10.5 |
23.3 |
| Loss on sale of property, plant and equipment and investment property |
- |
0.1 |
0.2 |
| Negative goodwill arising on merger |
(3.1) |
- |
- |
| Share of profits from joint ventures and associates |
(0.2) |
(0.1) |
(0.2) |
| Profit on disposal of subsidiary undertakings |
- |
- |
(39.7) |
| Dividends received from joint venture |
0.5 |
- |
- |
| Other non-cash movements |
41.7 |
6.6 |
54.2 |
| |
77.7 |
50.4 |
148.9 |
| Changes in operating assets and liabilities: |
|
|
|
| Movement in prepayments and accrued income |
(13.8) |
5.3 |
7.9 |
| Movement in accruals and deferred income |
(28.5) |
(154.1) |
(197.8) |
| Movement in provisions for liabilities |
(1.6) |
(0.6) |
(8.3) |
| Movement in loans and advances to customers |
568.8 |
53.4 |
329.2 |
| Interest received from loans and advances to customers |
227.3 |
245.2 |
997.2 |
| Movement in shares |
(419.3) |
463.0 |
482.4 |
| Interest paid on shares |
(137.4) |
(140.3) |
(283.3) |
| Net movement in amounts owed to credit institutions and other customers |
(178.6) |
(581.2) |
(1,152.8) |
| Net movement in debt securities in issue |
(478.7) |
(500.8) |
47.7 |
| Net movement in loans and advances to credit institutions |
127.2 |
836.9 |
851.7 |
| Net movement in other assets |
5.1 |
(10.6) |
3.2 |
| Net movement in other liabilities |
25.0 |
28.7 |
16.1 |
| Income taxes paid |
1.0 |
8.4 |
(0.3) |
| Net cash flows from operating activities |
(225.8) |
303.7 |
1,241.8 |
| |
|
|
|
| Cash flows from investing activities |
|
|
|
| Purchase of debt securities |
(1,368.4) |
(3,355.4) |
(6,036.0) |
| Proceeds from disposal of debt securities |
1,930.8 |
3,837.4 |
5,771.8 |
| Purchase of intangible assets |
(4.2) |
(5.7) |
(11.7) |
| Purchase of property, plant and equipment and investment property |
(6.8) |
(9.9) |
(23.9) |
| Proceeds from disposal of property, plant and equipment and investment property |
0.2 |
0.5 |
0.9 |
| Dividends paid to non-controlling interests |
(2.5) |
- |
(3.8) |
| Cash acquired on transfer of engagements |
- |
17.9 |
17.9 |
| Further investment in subsidiary undertakings |
(20.9) |
(6.5) |
(6.9) |
| Cash received from sale of subsidiary undertakings |
- |
- |
97.8 |
| Debt repaid on sale of subsidiary undertaking |
- |
- |
(19.7) |
| Net cash flows from investing activities |
528.2 |
478.3 |
(213.6) |
| |
|
|
|
| Cash flows from financing activities |
|
|
|
| Interest paid on subordinated liabilities |
(8.3) |
(7.7) |
(16.2) |
| Interest paid on Permanent Interest Bearing Shares |
(4.1) |
(2.8) |
(7.1) |
| Net cash flows from financing activities |
(12.4) |
(10.5) |
(23.3) |
| |
|
|
|
| Net increase in cash and cash equivalents |
290.0 |
771.5 |
1,004.9 |
| Cash and cash equivalents at 1 January |
1,396.3 |
391.4 |
391.4 |
| Cash and cash equivalents at end of period |
1,686.3 |
1,162.9 |
1,396.3 |
Analysis of the cash balances as shown in the statement of financial position:
| |
Unaudited |
Unaudited |
Audited |
| |
6 months |
6 months |
12 months |
| |
to 30.06.10 |
to 30.06.09 |
to 31.12.09 |
| |
£m |
£m |
£m |
| Cash in hand and balances with the Bank of England |
1,565.7 |
1,113.5 |
1,272.1 |
| Mandatory reserve deposit with the Bank of England |
(11.6) |
(10.8) |
(11.7) |
| |
1,554.1 |
1,102.7 |
1,260.4 |
| Loans and advances to credit institutions repayable on demand |
132.2 |
60.2 |
135.9 |
| Included in cash and cash equivalents at end of period |
1,686.3 |
1,162.9 |
1,396.3 |