TIDMCBG
RNS Number : 3300Z
Close Brothers Group PLC
14 March 2017
Half year results for the six months to 31 January 2017
Strong Performance in the First Half
-- The group reported a strong performance in the first half,
with GBP134.2 million adjusted(1) operating profit, 21% higher than
the prior year period, and an RoE(2) of 18.0%
-- Banking adjusted operating profit increased 13% to GBP122.7
million driven by strong lending income, with broadly stable
margin, as well as provision releases in the period
-- All Banking segments reported adjusted operating profit
growth, with Retail Finance up 3%, Commercial Finance up 9% and
Property Finance up 29%
-- The loan book grew by 1.7% in the period and 9.6% year on
year, as we continue to apply our disciplined approach to lending
in a more competitive environment
-- Winterflood reported operating profit of GBP14.4 million,
significantly higher than the prior year period, reflecting strong
retail investor risk appetite
-- Asset Management has made good progress delivering GBP9.1
million adjusted operating profit, reflecting favourable market
conditions
-- Continued dividend growth with a 5% increase to 20.0p while
maintaining prudent dividend cover
Financial Highlights(2)
First half First half Change
2017 2016 %
--------------------------------------- ------------------------ ----------- -------
Adjusted operating profit GBP134.2m GBP111.2m 21
Operating profit before tax GBP131.4m GBP108.7m 21
Adjusted basic earnings per share 66.6p 61.1p 9
Basic earnings per share 65.1p 59.7p 9
Dividend per share 20.0p 19.0p 5
Return on opening equity 18.0% 17.9%
Net interest margin 8.2% 8.3%
Bad debt ratio 0.5% 0.6%
31 January 31 July
2017 2016
Loan book GBP6.5bn GBP6.4bn 1.7
Total client assets GBP10.2bn GBP9.9bn 3.2
Common equity tier 1 ratio 12.6%(3) 13.5%
Total capital ratio 15.3% 13.8%
--------------------------------------- ------------------------ ----------- -------
1 Adjusted operating profit excludes GBP2.8 million (2016: GBP2.5
million) of amortisation of intangible assets on acquisition.
2 Please refer to definitions on page 16.
3 Includes one-off impact of increase in property risk weighted assets
as previously announced on 5 January 2017.
Preben Prebensen, Chief Executive, said:
"We are pleased to report a strong performance for the first
half of the 2017 financial year, with continued growth in our
earnings and dividend.
All parts of our business performed well in the period. Our
three banking segments, Retail Finance, Commercial Finance and
Property Finance, all reported profit growth and strong returns,
while both Winterflood and Asset Management benefited from
favourable markets.
Trading conditions have clearly been favourable in the first
half, but as always our priority remains to protect, sustain and
invest in our business for the long term. Our service driven model,
focused on specialist markets, has allowed us to support our
clients, invest in our business and generate strong returns for
shareholders over many years."
Enquiries
Sophie Gillingham Close Brothers Group plc 020 7655 3844
Eva Hatfield Close Brothers Group plc 020 7655 3350
Liya Dashkina Close Brothers Group plc 020 7655 3468
Andy Donald Maitland 020 7379 5151
A presentation to analysts and investors will be held today at
9.30 am GMT at our offices at 10 Crown Place, London EC2A 4FT. A
listen-only dial-in facility will be available by dialling +44 20
3059 8125. A recording of this call will be available for replay
for two weeks by dialling +44 121 260 4861, access code
5237641#.
Basis of Presentation
Results are presented both on a statutory and an adjusted basis.
The adjusted basis is to aid comparability between periods and
excludes amortisation of intangible assets on acquisition and any
goodwill impairment or exceptional items.
About Close Brothers
Close Brothers is a leading UK merchant banking group providing
lending, deposit taking, wealth management services and securities
trading. We employ over 3,000 people, principally in the UK. Close
Brothers Group plc is listed on the London Stock Exchange and is a
member of the FTSE 250.
BUSINESS OVERVIEW
Close Brothers has had a strong first half, with profit
increasing in all business segments. Overall, adjusted operating
profit grew 21% to GBP134.2 million and adjusted earnings per
share, which now reflects the full year impact of the banking tax
surcharge, increased 9% to 66.6p. We are pleased to declare an
interim dividend of 20.0p per share, up 5% on last year, reflecting
our ongoing commitment to progressive and sustainable dividend
growth.
Strong Profitability Across Lending Businesses
The Banking division continued to perform strongly, with
adjusted operating profit up 13% on the first half of last year.
Conditions remain favourable, with a stable economic environment
and low interest rates supporting low bad debts, but also
attracting an increased supply of credit into some of our markets.
In this environment, our focus remains on maintaining our margins
and strict underwriting which support our business model through
the cycle.
The loan book growth in the first half was somewhat slower than
in recent years, up 1.7% since the year end, but the new business
pipeline remains strong. We continue to focus on the discipline of
our lending at this more competitive stage in the cycle. The net
interest margin was broadly stable year on year at 8.2%, bad debts
remain below historical levels and overall return on net loan book
remains well ahead of its long-term average at 3.7%.
In these results we have for the first time reported on the
financial performance of our three lending segments: Retail
Finance, Commercial Finance and Property Finance, and are pleased
to report increasing profits in all three of these. Market
conditions and the competitive environment affect our businesses in
different ways, but they all share the same focus on specialist
markets, prudent underwriting and strong returns.
As we look at each of these segments in turn, in Retail Finance
we are continuing to see good growth in the premium finance
business and expansion of the motor finance business in Ireland.
The core UK motor business continues to focus on maintaining
margins and the quality of underwriting in a competitive
environment.
Although competition in the Commercial Finance segment has
increased in recent years, particularly in the broker distributed
part of the market, we have continued to see strong demand for our
specialist lending products, with continued good new business
volumes. We are progressing a number of new growth initiatives in
this area, including in technology leasing where we started writing
business in 2016.
The Property Finance business, which focuses on residential
development finance, had a particularly strong half year. Profit
increased significantly over the prior year, reflecting the
continued growth in loan book and income, as well as provision
releases relating to our historical loan portfolio.
Improved Market Conditions Benefit Winterflood and Asset
Management
The first half saw a significant improvement in financial
markets and investor sentiment, with rising equity markets and high
levels of retail trading activity. As the leading market-maker to
retail brokers, Winterflood achieved a strong performance, with no
loss days in the period. As a result, profits more than doubled to
GBP14.4 million.
In Asset Management, profit increased 8% to GBP9.1 million,
benefiting from continued net inflows and rising markets. We have
made good progress in the business, increasing the number of
advisers to over 100 following the successful completion of two IFA
acquisitions. We continue to see significant long-term growth
potential in the private client market and remain focused on
driving growth both organically and, where appropriate, through
small acquisitions.
Prudent Funding, Liquidity and Capital
The prudent management of our funding, liquidity and capital is
a core part of our business model allowing us to grow, invest and
pay a dividend, while meeting all regulatory requirements. We have
maintained good access to a diverse range of funding markets, and
during the period we strengthened our funding and capital position
through the issuance of a GBP250 million senior bond, as well as
GBP175 million of tier 2 capital, which further increases the
flexibility of our total capital position.
During the period, the European Banking Authority issued new
guidance which mandates the risk weighting of property development
loans at 150%. This higher risk weighting will apply to the
majority of our property lending, notwithstanding our long track
record of prudent and profitable growth in this area. This will
have no impact on our strategy or pricing for the Property business
or the Banking division as a whole.
Our common equity tier 1 ("CET1") capital ratio at 12.6% and
total capital ratio at 15.3% both remain comfortably ahead of
regulatory requirements and our leverage ratio, which is unaffected
by risk weightings, remains very strong at over 10%.
Board changes
As separately announced this morning, we are pleased to confirm
that Mike Biggs has been appointed to succeed Strone Macpherson as
Chairman. Mike, who is also Chairman of Direct Line, has joined the
Board effective today and will become Chairman effective 1 May,
following Strone's retirement on 30 April.
The Board would like to thank Strone for his unwavering
commitment and very substantial contribution to the group over many
years and wish him every success for the future.
Outlook
We have achieved a strong performance in the first half of the
year and are confident in delivering a good result for the full
year.
Macroeconomic and financial market conditions in the UK remain
benign, but we continue to monitor developments carefully.
OVERVIEW OF FINANCIAL PERFORMANCE
Key Financials
First half First half(1)
2017 2016 Change
GBP million GBP million %
----------------------------------- ----- ------------- -------------------- --------
Operating income 378.3 331.6 14
Adjusted operating expenses (226.8) (203.7) 11
Impairment losses on loans and
advances (17.3) (16.7) 4
------------------------------------ ---- ------------- -------------------- --------
Adjusted operating profit 134.2 111.2 21
------------------------------------ ---- ------------- -------------------- --------
Banking 122.7 108.4 13
------------- -------------------- --------
Retail Finance 39.9 38.9 3
Commercial Finance 36.5 33.5 9
Property Finance 46.3 36.0 29
------------- -------------------- --------
Securities 14.4 6.8 112
Asset Management 9.1 8.4 8
Group (12.0) (12.4) (3)
------------------------------------ ---- ------------- -------------------- --------
Amortisation of intangible assets
on acquisition (2.8) (2.5) 12
------------------------------------ ---- ------------- -------------------- --------
Operating profit before tax 131.4 108.7 21
------------------------------------------ ------------- -------------------- --------
Adjusted basic earnings per
share 66.6p 61.1p 9
Basic earnings per share 65.1p 59.7p 9
Dividend per share 20.0p 19.0p 5
Return on opening equity 18.0% 17.9%
1 Relevant figures and ratios for 2016 are re-presented for
changes in treatment of operating lease assets and Treasury income,
as announced on 13 September 2016.
Strong First Half Performance
Close Brothers reported a strong performance in the period with
good profit growth across all segments.
Adjusted operating profit increased 21% to GBP134.2 million
(2016: GBP111.2 million), with an operating margin of 35% (2016:
34%). The Banking division accounted for c.90% of profits in the
period, with adjusted operating profit up 13% to GBP122.7 million
driven by good income growth and provision releases. Winterflood
achieved GBP14.4 million operating profit, more than doubling the
profit reported in the first half of 2016. Asset Management
continued to grow client assets and delivered adjusted operating
profit of GBP9.1 million. Group net expenses, which include the
central functions such as finance, legal and compliance, risk and
HR, remained broadly unchanged at GBP12.0 million.
Operating income increased 14% to GBP378.3 million (2016:
GBP331.6 million), driven by higher income from the Banking
businesses, with good demand, particularly in our premium finance
and property finance businesses. Income in Securities also
increased with strong trading supported by a significant
improvement in market conditions.
Adjusted operating expenses increased 11% to GBP226.8 million
(2016: GBP203.7 million) driven by both Banking and Winterflood. In
Banking, we continue to invest to protect and sustain our model,
while maintaining a tight focus on cost control across our
businesses. In Winterflood, the increase in costs reflects the
significantly improved performance compared to the prior year
period. Both the expense/income and compensation ratios reduced
slightly to 60% (2016: 61%) and 38% (2016: 39%) respectively.
Bad debt remained low with a ratio of 0.5% (2016: 0.6%), down on
the first half of the prior year as a result of provision releases
principally in our property book. Underlying credit performance
remained strong and broadly in line with full year 2016.
The tax charge in the period was GBP34.8 million (2016: GBP20.1
million) which corresponds to an effective tax rate of 26% (2016:
18%), reflecting the first full year impact of the bank corporation
tax surcharge.
Despite this, adjusted basic earnings per share ("EPS")
increased 9% to 66.6p (2016: 61.1p), generating a stable return on
opening equity ("RoE") of 18.0% (2016: 17.9%). Basic EPS, which
includes GBP2.8 million amortisation of intangible assets on
acquisition, also increased 9% to 65.1p (2016: 59.7p).
The interim dividend of 20.0p represents an increase of 5% from
the prior year (2016: 19.0p), reflecting our progressive dividend
policy while maintaining appropriate cover to ensure sustainable
dividend growth. This interim dividend is due to be paid on 26
April 2017 to shareholders on the register at 24 March 2017.
Group Balance Sheet
31 January 31 July
2017 2016
GBP million GBP million
--------------------------------- ------------- -------------
Loans and advances to customers 6,543.8 6,431.6
Treasury assets(1) 1,306.8 1,048.4
Market-making assets(2) 564.1 576.9
Other assets 710.7 691.3
---------------------------------- ------------- -------------
Total assets 9,125.4 8,748.2
---------------------------------- ------------- -------------
Deposits by customers 4,864.9 4,894.6
Borrowings 2,341.4 1,938.3
Market-making liabilities(2) 476.4 505.6
Other liabilities 301.7 312.8
---------------------------------- ------------- -------------
Total liabilities 7,984.4 7,651.3
---------------------------------- ------------- -------------
Equity 1,141.0 1,096.9
---------------------------------- ------------- -------------
Total liabilities and equity 9,125.4 8,748.2
---------------------------------- ------------- -------------
1 Treasury assets comprise cash and balances at central banks
and debt securities held to support lending in the Banking
division.
2 Market-making assets and liabilities comprise settlement
balances, long and short trading positions and loans to or from
money brokers.
Our balance sheet is simple and transparent with prudent
management of capital, funding and liquidity. We borrow long and
lend short and our balance sheet is predominantly made up of loans
and advances to customers which are short term in nature, with an
average maturity of 14 months and around 90% secured. It also
includes treasury assets held for liquidity purposes as well as
settlement balances held within our Securities division. Other
assets principally comprise intangibles, property, plant and
equipment, and prepayments.
Total assets increased to GBP9.1 billion largely driven by
higher levels of short-term liquidity to fund the repayment of a
bond maturing in February 2017 and future loan book growth. Total
equity increased to over GBP1.1 billion reflecting profit in the
period, partially offset by dividend payments of GBP56.0 million.
The group's return on assets remained stable at 2.1% (31 July 2016:
2.1%).
Group Capital Position
31 January 31 July
2017 2016
GBP million GBP million
------------------------------ ------------- -------------
Common equity tier 1 capital 938.8 901.4
Total capital 1,142.7 925.4
Risk weighted assets 7,456.0 6,682.5
Common equity tier 1 capital
ratio 12.6% 13.5%
Total capital ratio 15.3% 13.8%
Leverage ratio 10.3% 10.2%
------------------------------- ------------- -------------
Maintaining a strong capital position is a core element of our
business model and supports our ability to grow, invest in the
business and pay a dividend to shareholders, while continuing to
meet all regulatory requirements.
The group's strong profitability supports significant capital
generation, and in the first half our CET1 capital increased by 4%
to GBP938.8 million (31 July 2016: GBP901.4 million), reflecting
the increase in retained earnings in the period. However, risk
weighted assets also increased significantly due to the European
Banking Authority ("EBA") guidance which mandates 150% risk
weighting for property development loans under the standardised
approach. This resulted in a c. GBP660 million increase in RWAs, a
one-off impact of 1.2% on the CET1 capital ratio. Overall, total
RWAs increased 12% to GBP7,456.0 million (31 July 2016: GBP6,682.5
million), and the CET1 capital ratio reduced to 12.6% (31 July
2016: 13.5%).
In January we issued GBP175 million of subordinated debt
qualifying as tier 2 capital to diversify and further strengthen
our total capital position. As a result, our total capital ratio
increased to 15.3% (31 July 2016: 13.8%).
The leverage ratio, which is unaffected by the increase in risk
weightings, remains strong and well ahead of regulatory
requirements at 10.3%.
In early February we received our updated Individual Capital
Guidance from the PRA, which confirmed an overall 1.9% add-on to
minimum capital requirements corresponding to a CET1 add-on of
1.1%. Accordingly, all our capital ratios remain comfortably ahead
of regulatory requirements. Going forward the profitability of our
business, quality and security of our loan book and ongoing prudent
management of our capital resources give us confidence that we can
continue to support our business growth and development.
Group Funding(1)
31 January 31 July
2017 2016
GBP million GBP million
----------------------------- ------------- -------------
Customer deposits 4,864.9 4,894.6
Secured funding(2) 1,383.1 1,296.3
Unsecured funding(3) 1,320.2 866.0
Equity 1,141.0 1,096.9
------------------------------ ------------- -------------
Total available funding 8,709.2 8,153.8
------------------------------ ------------- -------------
Of which term funding
(>1 year) 4,964.2 4,315.7
Total funding as % of
loan book 133% 127%
Term funding as % of
loan book 76% 67%
Average maturity of term 39 months 31 months
funding (excluding equity)
1 Numbers relate to core funding and exclude working capital
facilities at the business level.
2 Includes GBP100 million (31 July 2016: GBPnil) of Treasury
Bills drawn under the Funding for Lending Scheme but not currently
in repurchase agreements.
3 Unsecured funding excludes GBP33.1 million (2016: GBP21.0
million) of non-facility overdrafts included in borrowings and
includes GBP295.0 million (2016: GBP245.0 million) of undrawn
facilities.
Our conservative approach to funding and liquidity is a core
part of our business model and we seek to maintain both diversity
of funding and a prudent maturity profile. We continue to have good
access to a wide range of funding sources, which include retail and
corporate deposits, unsecured bonds and other wholesale facilities.
We also have a range of secured funding facilities including the
Bank of England's Funding for Lending Scheme and Term Funding
Scheme.
In the first half, total funding increased GBP555.4 million to
GBP8,709.2 million and accounted for 133% of the loan book. The
increase primarily reflects the issue of GBP175 million tier 2 debt
capital and a GBP250 million senior unsecured bond. These
facilitated the repayment of a GBP200 million senior unsecured bond
which matured in February and the funding of future loan book
growth.
Term funding, with an average maturity of 39 months, increased
significantly and now covers over three quarters of the loan book,
reflecting the two debt issuances and renewal of facilities in the
period.
In the period, both Moody's Investors Services ("Moody's") and
Fitch Ratings ("Fitch") reaffirmed our credit ratings. Moody's
rates Close Brothers Group ("CBG") A3/P2 and Close Brothers Limited
("CBL") Aa3/P1, with stable outlooks. Fitch rates both CBG and CBL
at A/F1 with stable outlooks.
Group Liquidity
31 January 31 July
2017 2016
GBP million GBP million
------------------------------- ------------- -------------
Bank of England deposits 1,120.8 847.4
Sovereign and central bank 40.7 -
debt
High quality liquid assets(1) 1,161.5 847.4
Certificates of deposit 145.3 201.0
Treasury assets 1,306.8 1,048.4
-------------------------------- ------------- -------------
1 In addition to and not included in the above, at 31 January
2017 the group held GBP100 million (31 July 2016: GBPnil) of
Treasury Bills drawn under the Funding for Lending Scheme but not
currently in repurchase agreements which are classified as high
quality liquid assets.
Treasury assets increased GBP258.4 million to GBP1,306.8
million, with the majority held as high quality liquid assets on
deposit with the Bank of England. The increase reflects the timing
of debt issuance in the period.
Our liquidity position remains in excess of internal and
regulatory requirements, and we comfortably exceed the minimum
level for the liquidity coverage ratio requirements under Capital
Requirement Directive ("CRD") IV.
BUSINESS REVIEW
BANKING
Strong Financial Performance in the First Half
First half First half
2017 2016 Change
GBP million GBP million %
--------------------------------- ---------------- ---------------- ---------
Operating income 274.0 248.7 10
Adjusted operating expenses (134.0) (123.6) 8
Impairment losses on loans
and advances (17.3) (16.7) 4
---------------------------------- ---------------- ---------------- ---------
Adjusted operating profit 122.7 108.4 13
---------------------------------- ---------------- ---------------- ---------
Net interest margin 8.2% 8.3%
Expense/income ratio 49% 50%
Bad debt ratio 0.5% 0.6%
Return on net loan book 3.7% 3.6%
Return on opening equity 23% 25%
Average loan book and operating
lease assets 6,655 5,987 11
---------------------------------- ---------------- ---------------- ---------
The Banking division achieved a strong performance, with both
good returns and profit growth. Adjusted operating profit increased
13% to GBP122.7 million (2016: GBP108.4 million) driven by
continued strong net interest margin and low provisions for bad
debt.
Operating income grew 10% to GBP274.0 million (2016: GBP248.7
million), with good growth across all lending areas. The net
interest margin remained strong at 8.2% (2016: 8.3%), slightly
lower than the prior year period but in line with full year 2016
reflecting our consistent pricing approach with strict lending
criteria across our businesses.
We maintain a focus on cost control while at the same time
continuing to invest for the future. Adjusted operating expenses
increased 8% to GBP134.0 million (2016: GBP123.6 million), with
approximately half of this increase attributable to strategic
initiatives and investment in infrastructure to support future
growth. Overall, the expense/income ratio decreased to 49% (2016:
50%) compared to the prior year and the compensation ratio was
stable at 30% (2016: 30%).
The bad debt ratio reduced to 0.5% (2016: 0.6%), driven by
provision releases in Property Finance. All businesses continue to
benefit from the benign credit environment and underlying
performance remains broadly in line with the prior year, supported
by consistent application of our prudent underwriting criteria.
Loan Book Analysis
31 January 31 July
2017 2016(1) Change
GBP million GBP million %
-------------------- ------------ ------------ -------------
Retail Finance 2,571 2,511 2.4
------------ ------------ -------------
Motor finance 1,719 1,705 0.8
Premium finance 852 806 5.7
------------ ------------ -------------
Commercial Finance 2,468 2,463 0.2
------------ ------------ -------------
Asset finance 2,049 2,020 1.5
Invoice finance 419 443 (5.5)
------------ ------------ -------------
Property Finance 1,505 1,457 3.3
-------------------- ------------ ------------ -------------
Closing loan book 6,544 6,432 1.7
-------------------- ------------ ------------ -------------
1 Minor differences compared to 2016 reported numbers reflect
re-presentation of rentals and consumer point of sale loan books in
line with internal management reporting.
At the current point in the cycle, some businesses are
delivering good growth, notably premium and property, and other
businesses are affected by high levels of competition. Although new
business volumes remained solid, repayments were also higher in the
period. Overall, the loan book grew 1.7% in the first half, or 9.6%
year on year, to GBP6.5 billion.
The Banking division continued to generate strong returns with
the return on net loan book of 3.7% remaining ahead of the
long-term average of 3.4%. RoE was also strong at 23% (2016: 25%),
albeit a slight decrease from the prior year as a result of the
higher tax rate.
Banking: Retail Finance
First half First half
2017 2016 Change
GBP million GBP million %
----------------------------- ------------- ------------- -------
Operating income 110.3 100.4 10
Adjusted operating expenses (58.5) (53.3) 10
Impairment losses on loans
and advances (11.9) (8.2) 45
----------------------------- ------------- ------------- -------
Adjusted operating profit 39.9 38.9 3
----------------------------- ------------- ------------- -------
Net interest margin 8.7% 8.7%
Expense/income ratio 53% 53%
Bad debt ratio 0.9% 0.7%
Average loan book 2,541 2,299 11
----------------------------- ------------- ------------- -------
Retail Finance provides intermediated finance, principally to
individuals, through motor dealers, insurance brokers and retailers
and incorporates our premium and motor finance businesses.
The Retail Finance loan book increased 2.4% in the first half to
GBP2.6 billion (2016: GBP2.5 billion), representing 10.2% growth
year on year. Growth was driven by the premium finance business,
which grew 5.7% to GBP0.9 billion, with a number of new broker wins
and increasing volumes from our existing brokers. The motor finance
loan book grew slightly to GBP1.7 billion. In the UK competition is
affecting loan book growth as we continue to prioritise margin over
market share, while growth remains strong in Ireland.
Adjusted operating profit increased 3% to GBP39.9 million (2016:
GBP38.9 million), with strong income and stable net interest margin
of 8.7%. The bad debt ratio increased slightly to 0.9%, however
remains below historical levels. Adjusted operating expenses
increased 10% to GBP58.5 million (2016: GBP53.3 million), in line
with income growth, driven mainly by staff costs across the segment
as well as ongoing investment in the premium finance infrastructure
and consumer point of sale initiative. The expense/income ratio
remained unchanged from the prior year at 53%.
Retail Finance remains well positioned long term. We continue to
consistently apply our disciplined lending principles, and invest
to improve the existing business model and the customer
experience.
Banking: Commercial Finance
First half First half
2017 2016 Change
GBP million GBP million %
--------------------------------- -------------- ------------- -------
Operating income 105.6 97.2 9
Adjusted operating expenses (61.5) (57.2) 8
Impairment losses on loans and
advances (7.6) (6.5) 17
--------------------------------- -------------- ------------- -------
Adjusted operating profit 36.5 33.5 9
--------------------------------- -------------- ------------- -------
Net interest margin 8.0% 8.2%
Expense/income ratio 58% 59%
Bad debt ratio 0.6% 0.6%
Average loan book and operating
leases 2,632 2,359 12
--------------------------------- -------------- ------------- -------
Commercial Finance, which focuses on specialist, secured lending
to the SME market, performed well in the period and delivered good
profit growth of 9% to GBP36.5 million (2016: GBP33.5 million),
despite ongoing competition at this point in the cycle. The loan
book remained stable at GBP2.5 billion, with growth driven by more
specialist areas such as green energy.
The net interest margin reduced to 8.0% (2016: 8.2%), reflecting
pricing pressure from competition as well as an increased
contribution from lower margin products. The bad debt ratio
remained low at 0.6%, with continued good credit performance. The
expense/income ratio reduced marginally to 58% (2016: 59%),
reflecting significant investment in the prior year period.
In February 2017 Close Brothers agreed to acquire a specialist
provider of secured finance to law firms and their clients, which
had a loan book of GBP32.7 million and reported profit before tax
of GBP2.7 million for the year ended 31 March 2016. The total
consideration, which is subject to certain performance conditions,
is up to GBP31 million, and is expected to be satisfied by a
combination of shares and cash. The acquisition is expected to
close in the second half of the financial year.
Overall, we achieved solid performance from Commercial Finance
in the period, with good profit growth and a stable loan book,
despite ongoing competitive pressure. Our focus is on protecting
the existing business while driving new growth initiatives, to
maintain sustainability through the cycle.
Banking: Property Finance
First half First half
2017 2016 Change
GBP million GBP million %
---------------------------- ------------- ------------- ---------
Operating income 58.1 51.1 14
Operating expenses (14.0) (13.1) 7
Impairment losses on loans
and advances 2.2 (2.0)
---------------------------- ------------- ------------- ---------
Operating profit 46.3 36.0 29
---------------------------- ------------- ------------- ---------
Net interest margin 7.8% 7.7%
Expense/income ratio 24% 26%
Bad debt ratio (0.3%) 0.3%
Average loan book 1,481 1,329 11
---------------------------- ------------- ------------- ---------
Property Finance is focused on specialist residential
development finance to well established professional developers in
the UK. We do not lend to the buy-to-let sector, or provide
residential or commercial mortgages.
At this point in the cycle, the business is performing very
well, with historically low impairments and strong growth in
profitability. We continue to see good demand for core residential
development finance, in both London and the regions, as well as for
shorter-term bridging and refurbishment finance. The loan book
increased 3.3% to GBP1.5 billion, with strong new business volumes,
partly offset by a number of large loan settlements towards the end
of the period. The net interest margin increased slightly to
7.8%.
Property Finance operating profit increased 29% to GBP46.3
million, driven by higher lending income as well as provision
releases following the successful sale of a number of legacy
properties. Accordingly, the bad debt ratio of (0.3%) reflects a
net recovery in the period, while underlying credit performance
remained strong and in line with 2016. The expense/income ratio
remained low at 24% (2016: 26%) reflecting the relatively low
volumes and larger transaction sizes in this business.
We remain confident in the quality of our loan book, with
prudent underwriting and consistently low loan to value ratios,
underpinning our ability to continue successfully lending to our
customers in all market conditions.
SECURITIES
Significant Improvement in Trading
First half First half
2017 2016 Change
GBP million GBP million %
-------------------------- ------------- ------------- ---------
Operating income 53.9 35.2(1) 53
Operating expenses (39.5) (28.4) 39
-------------------------- ------------- ------------- ---------
Operating profit 14.4 6.8(1) 112
-------------------------- ------------- ------------- ---------
Bargains per day ('000) 58 51 13
Operating margin 27% 19%
Return on opening equity 30% 14%
-------------------------- ------------- ------------- ---------
1 2016 operating income and operating profit includes GBP3.7
million and GBP1.9 million respectively relating to the disposal of
Euroclear shares.
Winterflood achieved a significant improvement on the first half
of last year with strong growth in income and operating profit,
which increased to GBP14.4 million (2016: GBP6.8 million). This
reflects strong trading supported by better market sentiment and
retail investor risk appetite throughout the period, driven by
political events and rising equity markets.
Operating income increased 53% to GBP53.9 million (2016: GBP35.2
million) reflecting higher trading income across all sectors but
particularly in AIM, which benefited from increased retail trading
activity. Average daily bargains increased 13% to 57,782 (2016:
51,359), with no loss days in the period (2016: 13 loss days).
Operating expenses increased 39% reflecting Winterflood's
improved performance compared to the prior year period. The
expense/income ratio decreased to 73% (2016: 81%), while the
compensation ratio remained broadly stable at 48% (2016: 49%).
Although it remains sensitive to changes in market conditions,
Winterflood's strong performance demonstrates its ability to
benefit from increased trading activity and maintain a market
leading position.
ASSET MANAGEMENT
Good Progress Supported by Favourable Market Environment
First half First half
2017 2016 Change
GBP million GBP million %
------------------------------ ------------- ------------- ---------
Investment management 30.8 28.2 9
Advice and other services(1) 17.4 16.7 4
Other income(2) 1.9 2.1 (10)
------------------------------- ------------- ------------- ---------
Operating income 50.1 47.0 7
Adjusted operating expenses (41.0) (38.6) 6
------------------------------- ------------- ------------- ---------
Adjusted operating profit 9.1 8.4 8
------------------------------- ------------- ------------- ---------
Revenue margin (bps) 96 90
Operating margin 18% 18%
Return on opening equity 27% 29%
------------------------------- ------------- ------------- ---------
1 Income from advice and self-directed services, excluding
investment management income.
2 Net interest income and expense, income on principal
investments and other income. Includes GBP1.6 million profit on
disposal of OLIM Investment Managers, which completed in November
2016. The first half 2016 includes the GBP1.9 million profit on
disposal of our corporate advice and investment management
activities.
Asset Management reported improved results, with adjusted
operating profit growth of 8% to GBP9.1 million. We made good
progress in the period with new adviser hires, complementary
acquisitions and continued investment in technology. All our
channels performed well and delivered positive net flows, albeit
lower than the previous period, of GBP125 million.
Excluding OLIM Investment Managers ("OLIM") which was sold in
November, and our corporate business sold in 2016, the underlying
profit increased 26% to GBP7.2 million (2016: GBP5.7 million). In
the period, OLIM contributed GBP2.3 million (2016: GBP1.2 million)
of income and profit of GBP0.3 million (2016: GBP0.4 million) with
a profit on disposal of GBP1.6 million.
Operating income increased 7% to GBP50.1 million, with
investment management income up 9%, driven by an increase in our
managed assets over the last 12 months. The revenue margin rose to
96bps following the sale of OLIM.
Adjusted operating expenses increased 6% to GBP41.0 million,
principally relating to staff costs, including a net increase of 17
advisers in the last year, and property related costs. The
expense/income ratio remains flat at 82% and the compensation ratio
increased to 54% (2016: 52%).
Movement in Client Assets
31 January
2017
GBP million
--------------------------------------------------------------- ----------------
Opening managed assets 8,047
Inflows 795
Outflows (670)
--------------------------------------------------------------- ----------------
Net inflows 125
Market movements 207
Disposals(1) (492)
--------------------------------------------------------------- ----------------
Total managed assets 7,887
Advised only assets 2,327
--------------------------------------------------------------- ----------------
Total client assets(2) 10,214
--------------------------------------------------------------- ----------------
Net flows as % of opening managed assets (annualised) 3%
--------------------------------------------------------------- ----------------
1 Sale of OLIM in November 2016.
2 Total client assets include GBP3.2 billion (31 July 2016: GBP3.0 billion)
of assets that are both advised and managed.
Managed assets benefited from both favourable market movements
and positive net inflows. Following a slower start to the year, all
our channels performed well in the second quarter with a
particularly strong contribution from our own advisers. Overall for
the first half we achieved net inflows of GBP125 million, an
annualised 3% of opening managed assets, and also benefited from
GBP207 million of positive market movements. However, managed
assets were broadly stable at GBP7.9 billion due to the sale of
OLIM with c. GBP0.5 billion assets.
Total client assets closed 3% higher at GBP10.2 billion (31 July
2016: GBP9.9 billion) reflecting an increase in advised only assets
to GBP2.3 billion (31 July 2016: GBP1.9 billion). The growth
largely related to the acquisition of two independent financial
advisory businesses during the period.
The business has made good progress since the beginning of the
financial year and we continue to see significant long-term growth
potential. We remain focused on growing organically through our
business development efforts, selective hiring of advisers and fund
managers, and, if appropriate, small complementary
acquisitions.
DEFINITIONS
Adjusted: Adjusted measures are used to aid comparability
between periods and exclude amortisation of intangible assets on
acquisition, and any goodwill impairments and exceptional items
Bad debt ratio: Impairment losses on average net loans and
advances to customers and operating lease assets
Compensation ratio: Total staff costs on operating income
Earnings per share ("EPS"): Profit after tax plus
non-controlling interests on number of basic shares
Exceptional items: Income or costs which are material in size
and non-recurring in nature
Expense/income ratio: Total adjusted operating expenses,
excluding impairment losses on loans and advances, on adjusted
operating income
High quality liquid assets: Assets which qualify as high quality
liquid assets for FCA liquidity purposes, including deposits with
the Bank of England, gilts and Treasury Bills drawn under the
Funding for Lending Scheme
Leverage ratio: Tier 1 capital as a percentage of total balance
sheet assets, adjusting for certain capital deductions, including
intangible assets, and off balance sheet exposures
Net interest margin: Net income generated by lending activities,
including net interest income, net fees and commissions and net
operating lease income (deducting depreciation), on average net
loans and advances to customers and operating lease assets
Return on net loan book: Adjusted operating profit from lending
activities on average net loans and advances to customers and
operating lease assets
Return on opening equity ("RoE"): Adjusted operating profit
after tax and non-controlling interests on opening equity,
excluding non-controlling interests
Revenue margin: Income from advice, investment management and
related services on average total client assets
Term funding: Funding with a remaining maturity greater than 12
months
Principal Risks and Uncertainties
The group is exposed to a number of risks in its day-to-day
business which are managed by:
-- Adhering to its prudent and established business model;
-- Following a "three lines of defence" risk management approach; and
-- Operating within a clearly defined risk appetite which is
monitored against agreed metrics and limits.
A detailed description of the principal risks and uncertainties
that the group faces and its approach to managing and mitigating
those risks is set out on pages 28 to 31 of the Annual Report 2016
which can be accessed via the link on the Investor Relations home
page of the group's website at www.closebrothers.com.
In the six months to 31 January 2017 there have been no
significant changes to our business model, risk management approach
or risk appetite. The risks and uncertainties detailed in the
Annual Report 2016 also remain unchanged and are summarised below.
This summary should not be regarded as a comprehensive list of all
potential risks and uncertainties faced by the group but rather
those risks which it currently believes may have a significant
impact on its performance and future prospects.
Key risk and uncertainty Description
------------------------- ----------------------------------------------------------------
Credit losses At 31 January 2017 the group has GBP6.5 billion of
loans to a range of small businesses and individuals.
The group is exposed to credit losses if customers
are unable to repay these loans and any outstanding
interest and fees. The group is also exposed to counterparties
with which it places deposits or trades.
------------------------- ----------------------------------------------------------------
Economic environment Any downturn in economic conditions may impact the
group's performance through lower demand for the group's
products and services, lower investor risk appetite,
higher bad debts and increased volatility in funding
markets. While the performance of the UK economy has
been resilient since the UK's decision to leave the
EU, our relationship with the EU going forward remains
unclear and as such the economic outlook remains uncertain.
Recent and potential future changes to the political
landscape both in the UK and abroad also have the ability
to impact funding markets and investor risk appetite.
------------------------- ----------------------------------------------------------------
Legal and regulatory Changes in legal, regulatory and tax environments could
adversely impact on the group's performance, capital
and liquidity as well as demand from its customers
and counterparties. Failing to safeguard client assets
or providing advice and products which are not in our
customers' best interests has the potential to damage
the group's reputation and may lead to sanctions including
litigation and customer redress.
------------------------- ----------------------------------------------------------------
Competition We continue to experience high levels of competition
across our businesses, particularly in the Banking
division. Any further intensification in competition
may impact the group's performance.
------------------------- ----------------------------------------------------------------
Technology Maintaining robust and secure IT infrastructure is
fundamental in allowing the group to operate effectively,
respond to new technology, protect client and company
data and counter cyber threats. Failure to evolve with
our customers' technological expectations or effectively
manage transitions to new infrastructure also has the
potential to impact group performance.
------------------------- ----------------------------------------------------------------
Employees The calibre and expertise of our employees is critical
to the success of the group. The loss of key individuals
or teams may have an adverse impact on the group's
operations and ability to deliver its strategy.
------------------------- ----------------------------------------------------------------
Funding Access to stable funding markets remains key to support
our lending activities and liquidity requirements.
Any significant or sudden change in these markets has
the potential to impact the group's ongoing performance.
------------------------- ----------------------------------------------------------------
Market exposure Volatility or the absence of liquidity in financial
markets may impact the group's profitability, particularly
in our trading operations. Changes in interest and
exchange rates have the potential to impact the group's
earnings although the majority of these exposures are
hedged.
------------------------- ----------------------------------------------------------------
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
-- The condensed set of consolidated financial statements has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting";
-- The Half Yearly Report 2017 includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.7R (indication of important events during the first six months
and description of principal risks and uncertainties for the
remaining six months of the year); and
-- The Half Yearly Report 2017 includes a fair review of the
information required by Disclosure Guidance and Transparency Rule
4.2.8R (disclosure of related parties' transactions and changes
therein).
On behalf of the board
P.S.S. Macpherson P. Prebensen
Chairman Chief Executive
14 March 2017
Independent Review Report
Independent Review Report to Close Brothers Group plc
We have been engaged by the company to review the condensed set
of financial statements in the half yearly financial report for the
six months ended 31 January 2017 which comprises the Consolidated
Income Statement, the Consolidated Balance Sheet, the Consolidated
Statement of Changes in Equity, the Consolidated Cash Flow
Statement and related notes 1 to 16. We have read the other
information contained in the half yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Auditing Practices
Board. Our work has been undertaken so that we might state to the
company those matters we are required to state to it in an
independent review report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company, for our review work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half yearly financial report for the six months ended 31
January 2017 is not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure Guidance and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
14 March 2017
Consolidated Income Statement
for the six months ended 31 January 2017
Six months ended Year ended
31 January 31 July
---------------------------
2017 2016 2016
Unaudited Unaudited Audited
Note GBP million GBP million(1) GBP million
------------------------------------------------------ ----------- -------------- -----------
Interest income 289.6 272.1 550.1
Interest expense (62.5) (65.1) (127.5)
----------------------------------------------------- ----------- -------------- -----------
Net interest income 227.1 207.0 422.6
----------------------------------------------------- ----------- -------------- -----------
Fee and commission income 100.2 92.9 189.2
Fee and commission expense (15.0) (14.7) (28.5)
Gains less losses arising from dealing in securities 48.7 25.6 67.9
Other income 29.2 30.2 55.8
Depreciation of operating lease assets (11.9) (9.4) (19.6)
Non-interest income 151.2 124.6 264.8
----------------------------------------------------- ----------- -------------- -----------
Operating income 2 378.3 331.6 687.4
----------------------------------------------------- ----------- -------------- -----------
Administrative expenses (226.8) (203.7) (415.9)
Impairment losses on loans and advances 6 (17.3) (16.7) (37.9)
----------------------------------------------------- ----------- -------------- -----------
Total operating expenses before amortisation
of intangible assets
on acquisition (244.1) (220.4) (453.8)
----------------------------------------------------- ----------- -------------- -----------
Operating profit before amortisation of intangible
assets on
acquisition 134.2 111.2 233.6
Amortisation of intangible assets on acquisition (2.8) (2.5) (5.1)
----------------------------------------------------- ----------- -------------- -----------
Operating profit before tax 131.4 108.7 228.5
Tax 3 (34.8) (20.1) (42.2)
----------------------------------------------------- ----------- -------------- -----------
Profit after tax for the period 96.6 88.6 186.3
Loss attributable to non-controlling interests (0.2) - (0.2)
Profit attributable to shareholders 96.8 88.6 186.5
Basic earnings per share 4 65.1p 59.7p 125.7p
----------------------------------------------------- ----------- -------------- -----------
Diluted earnings per share 4 64.9p 58.9p 124.3p
----------------------------------------------------- ----------- -------------- -----------
Ordinary dividend per share 5 20.0p 19.0p 57.0p
----------------------------------------------------- ----------- -------------- -----------
1 Re-presented - see note 1.
Consolidated Statement of COMPREHENSIVE INCOME
for the six months ended 31 January 2017
Six months ended Year ended
31 January 31 July
------------------------
2017 2016 2016
Unaudited Unaudited Audited
GBP million GBP million GBP million
---------------------------------------------------- ----------- ----------- -----------
Profit after tax for the period 96.6 88.6 186.3
---------------------------------------------------- ----------- ----------- -----------
Other comprehensive income/(expense) that may
be reclassified
to income statement
Currency translation gains 0.2 1.6 3.2
Gains/(losses) on cash flow hedging 3.9 (4.0) (6.1)
(Losses)/gains on financial instruments classified
as available for sale:
Sovereign and central bank debt (0.7) - -
Equity shares 0.1 - 0.2
Available for sale investment gains transferred
to income statement
on disposal - (4.0) (4.2)
Tax relating to items that may be reclassified (0.9) 1.9 0.9
---------------------------------------------------- ----------- ----------- -----------
2.6 (4.5) (6.0)
---------------------------------------------------- ----------- ----------- -----------
Other comprehensive income/(expense) that will
not be
reclassified to income statement
Defined benefit pension scheme gains/(losses) 2.8 (1.7) (1.9)
Tax relating to items that will not be reclassified (0.6) 0.3 0.3
---------------------------------------------------- ----------- ----------- -----------
2.2 (1.4) (1.6)
---------------------------------------------------- ----------- ----------- -----------
Other comprehensive income/(expense) for the
period, net of tax 4.8 (5.9) (7.6)
Total comprehensive income for the period 101.4 82.7 178.7
---------------------------------------------------- ----------- ----------- -----------
Attributable to
Non-controlling interests (0.2) - (0.2)
Shareholders 101.6 82.7 178.9
---------------------------------------------------- ----------- ----------- -----------
101.4 82.7 178.7
---------------------------------------------------- ----------- ----------- -----------
Consolidated Balance Sheet
at 31 January 2017
31 January 31 July
------------------------
2017 2016 2016
Unaudited Unaudited Audited
Note GBP million GBP million GBP million
---------------------------------------------------- ----------- ----------- -----------
Assets
Cash and balances at central banks 1,120.8 809.7 847.4
Settlement balances 460.7 332.2 478.1
Loans and advances to banks 103.6 88.3 121.5
Loans and advances to customers 6 6,543.8 5,968.8 6,431.6
Debt securities 7 200.5 213.1 221.3
Equity shares 8 35.6 37.7 28.2
Loans to money brokers against stock advanced 55.4 47.7 52.4
Derivative financial instruments 29.8 30.0 44.7
Intangible assets 161.4 143.7 147.9
Property, plant and equipment 201.0 164.9 185.8
Deferred tax assets 51.5 51.3 55.2
Prepayments, accrued income and other assets 161.3 133.4 134.1
Total assets 9,125.4 8,020.8 8,748.2
Liabilities
Settlement balances and short positions 9 466.3 350.2 475.6
Deposits by banks 10 70.0 48.8 71.1
Deposits by customers 10 4,864.9 4,615.2 4,894.6
Loans and overdrafts from banks 10 418.9 315.9 469.1
Debt securities in issue 10 1,703.1 1,394.3 1,422.8
Loans from money brokers against stock advanced 10.1 10.0 30.0
Derivative financial instruments 17.9 9.6 16.3
Current tax liabilities 25.1 25.1 20.0
Accruals, deferred income and other liabilities 188.7 178.8 205.4
Subordinated loan capital 10 219.4 46.4 46.4
Total liabilities 7,984.4 6,994.3 7,651.3
------------------------------------------------ ----------- ----------- -----------
Equity
Called up share capital 37.7 37.7 37.7
Share premium account 284.0 284.0 284.0
Retained earnings 840.7 728.9 797.5
Other reserves (21.1) (24.1) (22.1)
Total shareholders' equity 1,141.3 1,026.5 1,097.1
------------------------------------------------ ----------- ----------- -----------
Non-controlling interests (0.3) - (0.2)
------------------------------------------------ ----------- ----------- -----------
Total equity 1,141.0 1,026.5 1,096.9
------------------------------------------------ ----------- ----------- -----------
Total liabilities and equity 9,125.4 8,020.8 8,748.2
------------------------------------------------ ----------- ----------- -----------
Consolidated Statement of CHANGES IN EQUITY
for the six months ended 31 January 2017
Other reserves
--------------------------------------------
Available Share-based Cash Total
Called up Share for sale payments Exchange flow attributable Non-controlling
share premium Retained movements reserve movements hedging to equity interests Total
capital account earnings reserve reserve reserve holders equity
GBP million GBP GBP GBP GBP million GBP GBP GBP million GBP million GBP
million million million million million million
------------------------ -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
At 1 August
2015
(audited) 37.7 284.0 694.4 3.3 (4.5) (2.8) (2.3) 1,009.8 0.1 1,009.9
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Profit/(loss)
for the
period - - 88.6 - - - - 88.6 - 88.6
Other
comprehensive
(expense)/income
for the period - - (1.4) (3.3) - 1.6 (2.8) (5.9) - (5.9)
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Total
comprehensive
income/(expense)
for the period - - 87.2 (3.3) - 1.6 (2.8) 82.7 - 82.7
Exercise of - - - - - - - - - -
options
Dividends paid - - (52.3) - - - - (52.3) - (52.3)
Shares purchased - - - - (24.6) - - (24.6) - (24.6)
Shares issued - - - - - - - - - -
Shares released - - - - 10.6 - - 10.6 - 10.6
Other movements - - (1.1) - 0.7 - - (0.4) (0.1) (0.5)
Income tax - - 0.7 - - - - 0.7 - 0.7
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
At 31 January
2016
(unaudited) 37.7 284.0 728.9 - (17.8) (1.2) (5.1) 1,026.5 - 1,026.5
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Profit for the
period - - 97.9 - - - - 97.9 (0.2) 97.7
Other
comprehensive
income/(expense)
for the period - - (0.2) - - 0.1 (1.6) (1.7) - (1.7)
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Total
comprehensive
income/(expense)
for the period - - 97.7 - - 0.1 (1.6) 96.2 (0.2) 96.0
Exercise of - - - - - - - - - -
options
Dividends paid - - (28.0) - - - - (28.0) - (28.0)
Shares purchased - - - - 0.2 - - 0.2 - 0.2
Shares issued - - - - - - - - - -
Shares released - - - - 2.2 - - 2.2 - 2.2
Other movements - - (1.4) - 1.1 - - (0.3) - (0.3)
Income tax - - 0.3 - - - - 0.3 - 0.3
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
At 31 July 2016
(audited) 37.7 284.0 797.5 - (14.3) (1.1) (6.7) 1,097.1 (0.2) 1,096.9
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Profit for the
period - - 96.8 - - - - 96.8 (0.2) 96.6
Other
comprehensive
(expense)/income
for the period - - 2.2 (0.4) - 0.2 2.8 4.8 - 4.8
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Total
comprehensive
income/(expense)
for the period - - 99.0 (0.4) - 0.2 2.8 101.6 (0.2) 101.4
Exercise of - - - - - - - - - -
options
Dividends paid - - (56.0) - - - - (56.0) - (56.0)
Shares purchased - - - - (12.7) - - (12.7) - (12.7)
Shares issued - - - - - - - - - -
Shares released - - - - 13.3 - - 13.3 - 13.3
Other movements - - (0.7) - (2.2) - - (2.9) 0.1 (2.8)
Income tax - - 0.9 - - - - 0.9 - 0.9
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
At 31 January
2017
(unaudited) 37.7 284.0 840.7 (0.4) (15.9) (0.9) (3.9) 1,141.3 (0.3) 1,141.0
----------------- ----- -------- --------- --------- ----------- ---------- -------- ------------ ---------------- --------
Consolidated Cash Flow Statement
for the six months ended 31 January 2017
Six months ended Year ended
31 January 31 July
------------------------
2017 2016 2016
Unaudited Unaudited Audited
Note GBP million GBP million GBP million
----------------------------------------------------------- ----------- ----------- ------------
Net cash inflow/(outflow) from operating activities 14(a) 359.2 (142.3) (18.8)
---------------------------------------------------- ----- ----------- ----------- ------------
Net cash (outflow)/inflow from investing activities
Purchase of:
Property, plant and equipment (5.4) (4.6) (13.6)
Intangible assets - software (11.5) (7.4) (21.7)
Subsidiaries and non-controlling interest 14(b) (6.3) - (3.6)
Sale of:
Property, plant and equipment 0.1 0.1 0.1
Equity shares held for investment - 6.1 7.6
Subsidiary 14(c) (0.3) 2.3 2.3
(23.4) (3.5) (28.9)
---------------------------------------------------- ----- ----------- ----------- ------------
Net cash inflow/(outflow) before financing
activities 335.8 (145.8) (47.7)
---------------------------------------------------- ----- ----------- ----------- ------------
Financing activities 14(d)
Purchase of own shares for employee share
award schemes (12.7) (24.6) (24.4)
Equity dividends paid (56.0) (52.3) (80.3)
Interest paid on subordinated loan capital
and debt financing (8.2) (8.2) (28.0)
Net increase/(decrease) in cash 258.9 (230.9) (180.4)
Cash and cash equivalents at beginning of
period 923.3 1,103.7 1,103.7
---------------------------------------------------- ----- ----------- ----------- ------------
Cash and cash equivalents at end of period 14(e) 1,182.2 872.8 923.3
---------------------------------------------------- ----- ----------- ----------- ------------
THE NOTES
1. Basis of preparation and accounting policies
The half yearly financial information has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of
the Financial Conduct Authority and in accordance with the
International Financial Reporting Standards ("IFRS") endorsed by
the European Union. These include International Accounting Standard
("IAS") 34, Interim Financial Reporting, which specifically
addresses the contents of condensed half yearly financial
statements. The consolidated financial statements incorporate the
individual financial statements of Close Brothers Group plc and the
entities it controls, using the acquisition method of accounting.
The accounting policies applied are consistent with those set out
on pages 94 to 98 of the Annual Report 2016.
After making enquiries, the directors have a reasonable
expectation that the company and the group as a whole have adequate
resources to continue in operational existence for the foreseeable
future, a period of not less than 12 months from the date of this
report. For this reason, they continue to adopt the going concern
basis in preparing the condensed consolidated half yearly financial
statements.
The preparation of the half yearly report requires management to
make estimates and assumptions that affect the reported income and
expense, assets and liabilities and disclosure of contingencies at
the date of the half yearly report. Although these estimates and
assumptions are based on the management's best judgement at that
date, actual results may differ from these estimates. There have
been no significant changes in the basis upon which estimates have
been determined compared to that applied at 31 July 2016.
The half yearly report is unaudited and does not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006. However, the information has been reviewed by
the company's auditor, Deloitte LLP, and their report appears on
page 19.
The financial information for the year ended 31 July 2016
contained within this half yearly report does not constitute
statutory accounts as defined in Section 434 of the Companies Act
2006. A copy of those statutory accounts has been reported on by
Deloitte LLP and delivered to the Registrar of Companies. The
report of the auditor on those statutory accounts was unqualified,
did not contain an emphasis of matter paragraph and did not contain
a statement under Section 498(2) or (3) of the Companies Act
2006.
As disclosed in the Annual Report 2016, following a review of
our financial reporting, we have implemented minor changes to the
calculation of key metrics in the Banking division to better
represent the contribution of operating lease assets and the role
of Treasury. This has resulted in depreciation of operating lease
assets, previously included in administrative expenses, to be
reported as a cost of sales and included in operating income in the
consolidated income statement.
To enable comparisons and in line with the treatment adopted in
the consolidated income statement for the period ended 31 January
2017, the comparative information for the period ended 31 January
2016 has also been re-presented. This has resulted in non-interest
income and operating income decreasing by GBP9.4 million with a
corresponding decrease in administrative expenses and total
operating expenses before amortisation of intangible assets on
acquisition. There has been no impact on profit attributable to
shareholders or equity.
2. Segmental analysis
The directors manage the group by class of business and we
present the segmental analysis on that basis. As announced on 20
February 2017, following the growth of the group and particularly
the Banking division in recent years, the group's activities are
now presented in five (2016: three) operating divisions: Commercial
Finance, Retail Finance, Property Finance (previously all Banking),
Securities and Asset Management. The day-to-day operations of these
businesses remain unchanged. Prior periods have been re-presented
for comparability.
In the segmental reporting information that follows, Group
consists of central functions as well as various non-trading head
office companies and consolidation adjustments and is presented in
order that the information presented reconciles to the consolidated
income statement. The Group balance sheet primarily includes
treasury assets and liabilities comprising cash and balances at
central banks, debt securities, customer deposits and other
borrowings.
Divisions continue to charge market prices for the limited
services rendered to other parts of the group. Funding charges
between segments take into account commercial demands. More than
90% of the group's activities, revenue and assets are located in
the UK.
Summary Income Statement for the six months ended 31 January
2017
Banking
Retail Commercial Property Asset Group
Finance Finance Finance Securities Management Total
GBP million GBP GBP GBP million GBP GBP GBP
million million million million million
---------------------------- ----------- --------- ------------ ----------- --------- ---------
Net interest
income/(expense) 98.2 72.2 57.0 (0.5) (0.1) 0.3 227.1
Non-interest
income 12.1 33.4 1.1 54.4 50.2 - 151.2
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Operating income 110.3 105.6 58.1 53.9 50.1 0.3 378.3
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Administrative
expenses (52.7) (57.7) (12.9) (38.6) (39.9) (12.1) (213.9)
Depreciation and
amortisation (5.8) (3.8) (1.1) (0.9) (1.1) (0.2) (12.9)
Impairment losses
on
loans and
advances (11.9) (7.6) 2.2 - - - (17.3)
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Total operating
expenses (70.4) (69.1) (11.8) (39.5) (41.0) (12.3) (244.1)
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Adjusted operating
profit/(loss)(1) 39.9 36.5 46.3 14.4 9.1 (12.0) 134.2
Amortisation of
intangible
assets on
acquisition - (0.3) - - (2.5) - (2.8)
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Operating
profit/(loss)
before tax 39.9 36.2 46.3 14.4 6.6 (12.0) 131.4
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
External operating
income/(expense) 134.2 130. 7 69.8 53.9 50.3 (60.6) 378.3
Inter segment
operating
income/(expense) (23.9) (25.1) (11.7) - (0.2) 60.9 -
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
Segment operating
income 110.3 105.6 58.1 53.9 50.1 0.3 378.3
------------------- -------- ----------- --------- ------------ ----------- --------- -----------
1 Adjusted operating profit/(loss) is stated before amortisation
of intangible assets on acquisition, profit on disposal of
discontinued
operations and tax.
Balance Sheet Information at 31 January 2017
Banking
Retail Commercial Property Asset Group(2)
Finance Finance Finance Securities Management Total
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
assets(1) 2,570.8 2,643.2 1,504.8 626.7 105.3 1,674.6 9,125.4
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
liabilities - - - 556.8 49.7 7,377.9 7,984.4
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
1 Total assets for the Banking operating segments comprise the
loan book and operating lease assets only.
2 Includes GBP1,665.5 million assets and GBP7,485.3 million
liabilities attributable to the Banking division primarily
comprising the
treasury balances described in the second paragraph of this
note.
Equity is allocated across the Group as set out below with
equity managed for the Banking division as a whole rather than on a
segmental basis. Equity for the Banking division is inclusive of
the loan book and operating lease assets of GBP6,718.8 million, as
well as assets and liabilities of GBP1,665.5 million and GBP7,485.3
million respectively primarily comprising treasury balances which
are included within the Group column above.
Banking Asset Management
total Securities Group Total
GBP million GBP million GBP million GBP million GBP million
-------- ------------ ------------- ----------------- ------------ ------------
Equity 899.0 69.9 55.6 116.5 1,141.0
-------- ------------ ------------- ----------------- ------------ ------------
Summary Income Statement for the six months ended 31 January
2016(1)
Banking
Retail Commercial Property Asset Group
Finance Finance Finance Securities Management Total
GBP million GBP GBP GBP million GBP GBP GBP
million million million million million
----------------------------- ----------- --------- ------------ ----------- --------- ----------
Net interest
income/(expense) 89.4 67.2 50.4 (0.2) - 0.2 207.0
Non-interest
income 11.0 30.0 0.7 35.4 47.0 0.5 124.6
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Operating income 100.4 97.2 51.1 35.2 47.0 0.7 331.6
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Administrative
expenses (47.4) (54.2) (12.2) (27.7) (37.8) (13.1) (192.4)
Depreciation and
amortisation (5.9) (3.0) (0.9) (0.7) (0.8) - (11.3)
Impairment losses
on
loans and
advances (8.2) (6.5) (2.0) - - - (16.7)
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Total operating
expenses (61.5) (63.7) (15.1) (28.4) (38.6) (13.1) (220.4)
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Adjusted operating
profit/(loss)(1) 38.9 33.5 36.0 6.8 8.4 (12.4) 111.2
Amortisation of
intangible
assets on
acquisition (0.1) (0.1) - - (2.3) - (2.5)
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Operating
profit/(loss)
before tax 38.8 33.4 36.0 6.8 6.1 (12.4) 108.7
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
External operating
income/(expense) 124.8 122.5 63.5 35.2 47.3 (61.7) 331.6
Inter segment
operating
income/(expense) (24.4) (25.3) (12.4) - (0.3) 62.4 -
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
Segment operating
income 100.4 97.2 51.1 35.2 47.0 0.7 331.6
------------------- --------- ----------- --------- ------------ ----------- --------- ------------
1 Re-presented - see note 1.
2 Adjusted operating profit/(loss) is stated before amortisation
of intangible assets on acquisition, profit on disposal of
discontinued
operations and tax.
Balance Sheet Information at 31 January 2016
Banking
Retail Commercial Property Asset Group(2)
Finance Finance Finance Securities Management Total
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
assets(1) 2,332.3 2,418.3 1,358.2 477.5 105.7 1,328.8 8,020.8
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
liabilities - - - 408.1 53.2 6,533.0 6,994.3
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
1 Total assets for the Banking operating segments comprise the
loan book and operating lease assets only.
2 Includes GBP1,323.0 million assets and GBP6,705.2 million
liabilities attributable to the Banking division primarily
comprising the treasury
balances described in the second paragraph of this note.
Banking Asset Management
total Securities Group Total
GBP million GBP million GBP million GBP million GBP million
----------- ------------ ------------- ----------------- ------------ ------------
Equity(1) 726.6 69.4 52.5 178.0 1,026.5
----------- ------------ ------------- ----------------- ------------ ------------
1 Equity for the Banking division is inclusive of the loan book
and operating lease assets of GBP6,108.8 million, as well as assets
and
liabilities of GBP1,323.0 million and GBP6,705.2 million
respectively primarily comprising treasury balances which are
included within the
Group column.
Summary Income Statement for the year ended 31 July 2016
Banking
Retail Commercial Property Asset Group
Finance Finance Finance Securities Management Total
GBP million GBP GBP GBP million GBP GBP GBP
million million million million million
------------------------------ ----------- --------- ------------ ----------- ---------- ----------
Net interest
income/(expense) 181.1 139.2 101.9 (0.6) 0.4 0.6 422.6
Non-interest
income 23.5 63.1 2.4 82.9 91.9 1.0 264.8
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Operating income 204.6 202.3 104.3 82.3 92.3 1.6 687.4
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Administrative
expenses (95.5) (110.3) (23.9) (61.7) (75.9) (24.2) (391.5)
Depreciation and
amortisation (12.2) (5.9) (2.5) (1.6) (2.0) (0.2) (24.4)
Impairment losses
on
loans and
advances (17.8) (16.5) (3.6) - - - (37.9)
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Total operating
expenses (125.5) (132.7) (30.0) (63.3) (77.9) (24.4) (453.8)
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Adjusted operating
profit/(loss)(1) 79.1 69.6 74.3 19.0 14.4 (22.8) 233.6
Amortisation of
intangible
assets on
acquisition (0.3) (0.2) - - (4.6) - (5.1)
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Operating
profit/(loss)
before tax 78.8 69.4 74.3 19.0 9.8 (22.8) 228.5
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
External operating
income/(expense) 251.9 272.1 128.3 82.3 92.9 (140.1) 687.4
Inter segment
operating
income/(expense) (47.3) (69.8) (24.0) - (0.6) 141.7 -
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
Segment operating
income 204.6 202.3 104.3 82.3 92.3 1.6 687.4
------------------- ---------- ----------- --------- ------------ ----------- ---------- ------------
1 Adjusted operating profit/(loss) is stated before amortisation
of intangible assets on acquisition, profit on disposal of
discontinued
operations and tax.
Balance Sheet Information at 31 July 2016
Banking
Retail Commercial Property Asset Group(2)
Finance Finance Finance Securities Management Total
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
assets(1) 2,511.0 2,623.2 1,457.2 647.5 104.8 1,404.5 8,748.2
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
Total
liabilities - - - 577.8 49.1 7,024.4 7,651.3
--------------- ------------ ------------ ------------ ------------- -------------- ------------ ------------
1 Total assets for the Banking operating segments comprise the
loan book and operating lease assets only.
2 Includes GBP1,400.0 million assets and GBP7,198.2 million
liabilities attributable to the Banking division primarily
comprising the treasury
balances described in the second paragraph of this note.
Banking Asset Management
total Securities Group Total
GBP million GBP million GBP million GBP million GBP million
----------- ------------ ------------- ----------------- ------------ ------------
Equity(1) 793.2 69.7 55.7 178.3 1,096.9
----------- ------------ ------------- ----------------- ------------ ------------
1 Equity for the Banking division is inclusive of the loan book
and operating lease assets of GBP6,591.4 million, as well as assets
and
liabilities of GBP1,400.0 million and GBP7,198.2 million
respectively primarily comprising treasury balances which are
included within the
Group column.
3. Taxation
Six months ended Year ended
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
-------------------------------------------------------- ------------ ------------ ------------
Tax charged/(credited) to the income statement
Current tax:
UK corporation tax 32.8 31.6 56.5
Foreign tax 1.2 1.5 2.5
Adjustments in respect of previous periods - (2.1) (1.1)
-------------------------------------------------------- ------------ ------------ ------------
34.0 31.0 57.9
Deferred tax:
Deferred tax charge/(credit) for the current
period 0.7 (13.0) (16.5)
Adjustments in respect of previous periods 0.1 2.1 0.8
-------------------------------------------------------- ------------ ------------ ------------
34.8 20.1 42.2
-------------------------------------------------------- ------------ ------------ ------------
Tax on items not (credited)/charged to the income
statement
Current tax relating to:
Financial instruments classified as available (0.2) - -
for sale
Share-based payments (0.9) (1.9) (2.1)
Deferred tax relating to:
Cash flow hedging 1.1 (1.2) (1.7)
Defined benefit pension scheme 0.6 (0.3) (0.3)
Financial instruments classified as available
for sale - (0.7) (0.7)
Share-based payments - 1.2 1.1
Currency translation gains/(losses) - - 1.5
-------------------------------------------------------- ------------ ------------ ------------
0.6 (2.9) (2.2)
-------------------------------------------------------- ------------ ------------ ------------
Reconciliation to tax expense
UK corporation tax for the period at 19.7% (2016:
20.0%) on
operating profit 25.9 21.7 45.7
Gain on sale of subsidiaries and available for
sale investment (0.3) - (0.5)
Effect of different tax rates in other jurisdictions (0.1) (0.3) (0.6)
Disallowable items and other permanent differences 0.6 0.7 1.5
Banking surcharge 7.6 3.4 8.2
Deferred tax impact of (increased)/decreased tax rates 1.1 (5.4) (11.8)
Prior period tax provision - - (0.3)
-------------------------------------------------------- ------------ ------------ ------------
34.8 20.1 42.2
-------------------------------------------------------- ------------ ------------ ------------
The effective tax rate for the period is 26.5% (six months ended
31 January 2016: 18.5%; year ended 31 July 2016: 18.5%),
representing the best estimate of the annual effective tax rate
expected for the full year.
The standard UK corporation tax rate for the financial year is
19.7% (six months ended 31 January 2016: 20.0%; year ended 31 July
2016: 20.0%). However an additional 8% surcharge applies to banking
company profits as defined in legislation. The effective tax rate
is above the UK corporation tax rate primarily due to the surcharge
applying to most of the group's profits, and a write down of
deferred tax assets due to a 1% cut in the standard corporation tax
rate applying from April 2020 which was passed into law in the
period.
4. Earnings per share
The calculation of basic earnings per share is based on the
profit attributable to shareholders and the number of basic
weighted average shares. When calculating the diluted earnings per
share, the weighted average number of shares in issue is adjusted
for the effects of all dilutive share options and awards.
Six months ended Year ended
31 January 31 July
------------------
2017 2016 2016
-------------------- -------- -------- ----------
Earnings per share
Basic 65.1p 59.7p 125.7p
-------------------- -------- -------- ----------
Diluted 64.9p 58.9p 124.3p
-------------------- -------- -------- ----------
Adjusted basic(1) 66.6p 61.1p 128.4p
-------------------- -------- -------- ----------
Adjusted diluted(1) 66.4p 60.3p 127.0p
-------------------- -------- -------- ----------
1 Excludes amortisation of intangible assets on acquisition,
discontinued operations and their tax effects.
Six months ended Year ended
31 January 31 July
------------------------
2017 2016 2016
GBP million GBP million GBP million
------------------------------------------------- ----------- ----------- -----------
Profit attributable to shareholders 96.8 88.6 186.5
Adjustment:
Amortisation of intangible assets on acquisition 2.8 2.5 5.1
Tax effect of adjustment (0.6) (0.5) (1.0)
------------------------------------------------- ----------- ----------- -----------
Adjusted profit attributable to shareholders 99.0 90.6 190.6
------------------------------------------------- ----------- ----------- -----------
Six months ended Year ended
31 January 31 July
------------------------
2017 2016 2016
million million million
------------------------------------------------- ----------- ----------- -----------
Average number of shares
Basic weighted 148.6 148.4 148.4
Effect of dilutive share options and awards 0.6 1.9 1.7
------------------------------------------------- ----------- ----------- -----------
Diluted weighted 149.2 150.3 150.1
------------------------------------------------- ----------- ----------- -----------
5. Dividends
Six months ended Year ended
31 January 31 July
------------------------
2017 2016 2016
GBP million GBP million GBP million
-------------------------------------------------- ----------- ----------- -----------
For each ordinary share
Interim dividend for previous financial year paid
in April 2016: 19.0p - - 28.0
Final dividend for previous financial year paid
in November 2016: 38.0p
(November 2015: 35.5p) 56.0 52.3 52.3
56.0 52.3 80.3
-------------------------------------------------- ----------- ----------- -----------
An interim dividend relating to the six months ended 31 January
2017 of 20.0p, amounting to an estimated GBP29.5 million, is
declared. This interim dividend, which is due to be paid on 26
April 2017 to shareholders on the register at 24 March 2017, is not
reflected in these financial statements.
6. Loans and advances to customers
The contractual maturity of loans and advances to customers is
set out below:
Between
three
Within months Between Between After
On three and one one and two and more than Impairment
demand months year two years five five years provisions Total
years
GBP million GBP million GBP million GBP million GBP million GBP million GBP million GBP million
-------------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 31
January
2017 58.3 1,900.7 1,872.4 1,324.6 1,355.9 81.9 (50.0) 6,543.8
------------- ----- ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 31
January
2016 87.0 1,614.5 1,801.2 1,160.3 1,304.6 55.0 (53.8) 5,968.8
------------- ----- ------------ ------------ ------------ ------------ ------------ ------------ ------------
At 31 July
2016 58.1 1,746.0 2,014.4 1,279.3 1,328.2 65.3 (59.7) 6,431.6
------------- ----- ------------ ------------ ------------ ------------ ------------ ------------ ------------
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
--------------------------------------------- ------------ ------------ ------------
Impairment provisions on loans and advances
to customers
Opening balance 59.7 56.1 56.1
Charge for the period 17.3 16.7 37.9
Amounts written off net of recoveries (27.0) (19.0) (34.3)
--------------------------------------------- ------------ ------------ ------------
Impairment provisions 50.0 53.8 59.7
--------------------------------------------- ------------ ------------ ------------
At 31 January 2017, gross impaired loans were GBP126.2 million
(31 January 2016: GBP160.0 million; 31 July 2016: GBP158.5 million)
and equate to 2% (31 January 2016: 3%; 31 July 2016: 2%) of the
gross loan book before impairment provisions. The majority of the
group's lending is secured and therefore the gross impaired loans
quoted do not reflect the expected loss.
7. Debt securities
Held for Available Loans and
trading for sale receivables Total
GBP million GBP million GBP million GBP million
------------------------------------------- ------------ ------------ ------------- ------------
Long trading positions in debt securities 14.5 - - 14.5
Certificates of deposit - - 145.3 145.3
Sovereign and central bank debt - 40.7 - 40.7
At 31 January 2017 14.5 40.7 145.3 200.5
------------------------------------------- ------------ ------------ ------------- ------------
Held for Available Loans and
trading for sale receivables Total
GBP million GBP million GBP million GBP million
------------------------------------------- ------------ ------------ ------------- ------------
Long trading positions in debt securities 12.2 - - 12.2
Certificates of deposit - - 200.9 200.9
Sovereign and central bank debt - - - -
At 31 January 2016 12.2 - 200.9 213.1
------------------------------------------- ------------ ------------ ------------- ------------
Held for Available Loans and
trading for sale receivables Total
GBP million GBP million GBP million GBP million
------------------------------------------- ------------ ------------ ------------- ------------
Long trading positions in debt securities 20.3 - - 20.3
Certificates of deposit - - 201.0 201.0
Sovereign and central bank debt - - - -
------------------------------------------- ------------ ------------ ------------- ------------
At 31 July 2016 20.3 - 201.0 221.3
------------------------------------------- ------------ ------------ ------------- ------------
Movements in the book value of sovereign and central bank debt
held as available for sale during the period
comprise:
Sovereign and
central bank debt
GBP million
----------------------------------- ------------
At 1 August 2015 20.1
Additions -
Disposals -
Redemptions at maturity (20.0)
Currency translation differences -
Movement in value (0.1)
At 31 January 2016 -
----------------------------------- ------------
Additions -
Disposals -
Redemptions at maturity -
Currency translation differences -
Movement in value -
At 31 July 2016 -
----------------------------------- ------------
Additions 41.6
Disposals -
Redemptions at maturity -
Currency translation differences -
Movement in value (0.9)
At 31 January 2017 40.7
----------------------------------- ------------
8. Equity shares
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
------------------------ ------------ ------------ ------------
Long trading positions 33.5 35.5 26.1
Other equity shares 2.1 2.2 2.1
35.6 37.7 28.2
------------------------ ------------ ------------ ------------
Movements in the book value of other equity shares held during
the period comprise:
Fair value
Available through
for sale profit or Total
loss
GBP million GBP million GBP million
------------------------------------------- ------------ ------------ ------------
At 1 August 2015 10.0 0.1 10.1
Additions - - -
Disposals (7.5) - (7.5)
Currency translation differences 0.2 - 0.2
Movement in value of:
Equity shares classified as available for
sale (0.6) - (0.6)
At 31 January 2016 2.1 0.1 2.2
------------------------------------------- ------------ ------------ ------------
Additions - - -
Disposals (0.2) - (0.2)
Currency translation differences 0.2 - 0.2
Movement in value of:
Equity shares classified as available for
sale (0.1) - (0.1)
At 31 July 2016 2.0 0.1 2.1
------------------------------------------- ------------ ------------ ------------
Additions - - -
Disposals - (0.1) (0.1)
Currency translation differences - - -
Movement in value of:
Equity shares classified as available for
sale 0.1 - 0.1
At 31 January 2017 2.1 - 2.1
------------------------------------------- ------------ ------------ ------------
9. Settlement balances and short positions
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
----------------------------------- ------------ ------------ ------------
Settlement balances 442.3 325.2 456.3
Short positions held for trading:
Debt securities 11.2 10.6 5.8
Equity shares 12.8 14.4 13.5
----------------------------------- ------------ ------------ ------------
24.0 25.0 19.3
----------------------------------- ------------ ------------ ------------
466.3 350.2 475.6
----------------------------------- ------------ ------------ ------------
10. Financial liabilities
The contractual maturity of financial liabilities is set out
below:
On Within Between Between Between After
demand three three months one and two and more than Total
months and one two years five five years
year years
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
----------------------------- ------------ -------------- ------------ ------------ ------------ ------------
Deposits by banks 17.1 17.2 34.2 1.5 - - 70.0
Deposits by
customers 112.8 770.7 2,284.3 1,111.8 585.3 - 4,864.9
Loans and
overdrafts
from banks 13.1 54.7 50.8 90.2 210.1 - 418.9
Debt securities
in issue 10.4 208.8 111.1 189.0 897.4 286.4 1,703.1
Subordinated loan
capital(1) (0.9) 1.4 0.2 - - 218.7 219.4
-------------------- -------- ------------ -------------- ------------ ------------ ------------ ------------
At 31 January 2017 152.5 1,052.8 2,480.6 1,392.5 1,692.8 505.1 7,276.3
-------------------- -------- ------------ -------------- ------------ ------------ ------------ ------------
1 Comprises issuances of GBP175 million and GBP45 million with
contractual maturity dates of 2027 and 2026 and optional prepayment
dates of 2022 and 2021 respectively.
Within Between Between Between After
On three three months one and two and more than
demand months and one two years five five years Total
year years
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
----------------------------- ------------ -------------- ------------ ------------ ------------ ------------
Deposits by banks 18.7 3.5 15.1 11.5 - - 48.8
Deposits by
customers 496.0 896.3 2,005.0 859.2 358.7 - 4,615.2
Loans and overdrafts
from banks 12.3 153.3 - 60.3 90.0 - 315.9
Debt securities
in issue 20.5 6.6 201.0 602.2 246.2 317.8 1,394.3
Subordinated loan
capital(1) - 1.4 - - - 45.0 46.4
--------------------- ------- ------------ -------------- ------------ ------------ ------------ ------------
At 31 January 2016 547.5 1,061.1 2,221.1 1,533.2 694.9 362.8 6,420.6
--------------------- ------- ------------ -------------- ------------ ------------ ------------ ------------
1 Comprises two issuances totalling GBP45 million with a
contractual maturity date of 2026 and an optional prepayment date
of 2021.
Within Between Between Between After
On three three months one and two and more than Total
demand months and one two years five five years
year years
GBP million GBP million GBP million GBP million GBP million GBP million GBP million
----------------------------- ------------ -------------- ------------ ------------ ------------ ------------
Deposits by banks 31.9 1.9 26.5 10.1 0.7 - 71.1
Deposits by customers 130.8 918.0 2,117.3 1,233.4 495.1 - 4,894.6
Loans and overdrafts
from banks 11.0 207.8 160.1 90.2 - - 469.1
Debt securities
in issue 30.2 7.1 557.1 201.5 589.1 37.8 1,422.8
Subordinated loan
capital(1) - 1.4 - - - 45.0 46.4
---------------------- ------ ------------ -------------- ------------ ------------ ------------ ------------
At 31 July 2016 203.9 1,136.2 2,861.0 1,535.2 1,084.9 82.8 6,904.0
---------------------- ------ ------------ -------------- ------------ ------------ ------------ ------------
1 Comprises two issuances totalling GBP45 million with a
contractual maturity date of 2026 and an optional prepayment date
of 2021.
At 31 January 2017, asset finance loan receivables of GBP745.7
million (31 January 2016: GBP745.2 million; 31 July 2016: GBP737.4
million) and part of the GBP168.1 million (31 January 2016: GBPnil;
31 July 2016: GBP168.1 million) asset-backed securities in issue
retained for liquidity purposes were positioned with the Bank of
England. These loan receivables and asset-backed securities were
used as collateral within the Bank of England's Funding for Lending
Scheme and Term Funding Scheme, against which GBP275.0 million of
UK Treasury Bills (31 January 2016: GBP375.0 million; 31 July 2016:
GBP451.0 million) and GBP210.0 million cash (31 January 2016:
GBPnil; 31 July 2016: GBPnil) had been drawn at the reporting date.
The term of these transactions is four years from the date of each
drawdown.
The group also had repurchase agreements whereby GBP175.0
million (31 January 2016: GBP300.0 million; 31 July 2016: GBP451.0
million) from a total of GBP275.0 million (31 January 2016:
GBP375.0 million; 31 July 2016: GBP451.0 million) UK Treasury Bills
drawn, have been lent in exchange for cash included within loans
and overdrafts from banks.
The Treasury Bills are not recorded on the group's consolidated
balance sheet as ownership remains with the Bank of England. The
risk and rewards of the loans and advances to customers remain with
the group and continue to be recognised in the consolidated balance
sheet.
The group has securitised without recourse and restrictions
GBP1,458.2 million (31 January 2016: GBP1,200.8 million; 31 July
2016: GBP1,443.9 million) of its insurance premium and motor loan
receivables in return for asset-backed securities in issue of
GBP1,065.5 million (31 January 2016: GBP848.4 million; 31 July
2016: GBP1,015.9 million) which includes GBP168.1 million (31
January 2016: GBPnil; 31 July 2016: GBP168.1 million) asset-backed
securities in issue retained for liquidity purposes. As the group
has retained exposure to substantially all the credit risk and
rewards of the residual benefit of the underlying assets it
continues to recognise these assets in loans and advances to
customers in its consolidated balance sheet.
11. Capital
The group's individual regulated entities and the group as a
whole complied with all of the externally imposed capital
requirements to which they were subject for the periods to 31
January 2017 and 31 January 2016, and the year ended 31 July 2016.
The table below summarises the composition of regulatory capital
and Pillar 1 risk weighted assets at those financial period
ends.
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
----------------------------------------------- ------------ ------------ ------------
Common equity tier 1 capital
Called up share capital 37.7 37.7 37.7
Share premium account 284.0 284.0 284.0
Retained earnings(1) 840.7 728.9 797.5
Other reserves recognised for common equity
tier 1 capital 19.3 20.6 21.8
Deductions from common equity tier 1 capital
Intangible assets, net of associated deferred
tax liabilities (158.2) (140.8) (145.3)
Foreseeable dividend(2) (44.8) (43.8) (56.1)
Investment in own shares (36.6) (39.6) (37.2)
Pension asset, net of associated deferred
tax liabilities (3.1) (1.1) (0.9)
Prudent valuation adjustment (0.2) (0.1) (0.1)
Common equity tier 1 capital 938.8 845.8 901.4
----------------------------------------------- ------------ ------------ ------------
Tier 2 capital
Subordinated debt(3) 203.8 23.9 24.0
Unrealised gains on available for sale equity 0.1 - -
shares
----------------------------------------------- ------------ ------------ ------------
Tier 2 capital 203.9 23.9 24.0
----------------------------------------------- ------------ ------------ ------------
Total regulatory capital 1,142.7 869.7 925.4
----------------------------------------------- ------------ ------------ ------------
Risk weighted assets (notional) - unaudited
Credit and counterparty risk 6,585.2 5,385.8 5,824.9
Operational risk(4) 784.9 753.5 784.9
Market risk(4) 85.9 78.8 72.7
7,456.0 6,218.1 6,682.5
----------------------------------------------- ------------ ------------ ------------
Common equity tier 1 capital ratio 12.6% 13.6% 13.5%
----------------------------------------------- ------------ ------------ ------------
Total capital ratio 15.3% 14.0% 13.8%
----------------------------------------------- ------------ ------------ ------------
1 Retained earnings for periods ended 31 January 2017 and 31
January 2016 include all profits (both verified and unverified) for
the
respective six month period.
2 Under the Regulatory Technical Standard on own funds, a
deduction has been recognised for a foreseeable dividend. In
accordance with this standard, for 31 January 2017 and 31
January 2016 a foreseeable dividend has been determined based
on the average payout ratio over the previous three years
applied to the retained earnings for the period. For 31 July 2016
a
foreseeable dividend was determined as the proposed final
dividend.
3 Shown after applying the Capital Requirements Regulation's
transitional and qualifying own funds arrangements.
4 Operational and market risk include a notional adjustment at
8% in order to determine notional risk weighted assets.
During the period ending 31 January 2017, credit risk RWAs
increased due to the application of the EBA's guidance mandating
150% risk weighting of property development loans. During the same
period, the group issued GBP175 million of tier 2 capital. More
information on these developments can be found on page 7.
The following table shows a reconciliation between equity and
common equity tier 1 capital after deductions:
31 January 31 July
--------------------------
2017 2016 2016
GBP million GBP million GBP million
------------------------------------------------- ------------ ------------ ------------
Equity 1,141.0 1,026.5 1,096.9
Regulatory deductions from equity:
Intangible assets, net of associated deferred
tax liabilities (158.2) (140.8) (145.3)
Foreseeable dividend(1) (44.8) (43.8) (56.1)
Pension asset, net of associated deferred
tax liabilities (3.1) (1.1) (0.9)
Prudent valuation adjustment (0.2) (0.1) (0.1)
Other reserves not recognised for common equity
tier 1 capital:
Available for sale movements reserve (0.1) - -
Cash flow hedging reserve 3.9 5.1 6.7
Non-controlling interests 0.3 - 0.2
Common equity tier 1 capital 938.8 845.8 901.4
------------------------------------------------- ------------ ------------ ------------
1 Under the Regulatory Technical Standard on own funds, a
deduction has been recognised for a foreseeable dividend. In
accordance with this standard, for 31 January 2017 and 31
January 2016 a foreseeable dividend has been determined based
on the average payout ratio over the previous three years
applied to the retained earnings for the period. For 31 July 2016
a
foreseeable dividend was determined as the proposed final
dividend.
The following table shows the movement in common equity tier 1
capital during the period:
GBP million
----------------------------------------------------------- ------------
Common equity tier 1 capital at 31 July 2016 901.4
Profit in the period attributable to shareholders 96.8
Dividends paid and foreseen (44.7)
Other movements in retained reserves 2.4
Decrease in share-based payments reserve (1.6)
Increase in exchange movements reserve 0.2
Decrease in available for sale movements reserve (0.5)
Increase in prudent valuation adjustment (0.1)
Increase in intangible assets, net of associated deferred
tax liabilities (12.9)
Increase in pension assets, net of associated deferred
tax liabilities (2.2)
------------------------------------------------------------ ------------
Common equity tier 1 capital at 31 January 2017 938.8
------------------------------------------------------------ ------------
12. Contingent liabilities
Financial Services Compensation Scheme ("FSCS")
As disclosed in note 23 of the Annual Report 2016, the group is
exposed to the FSCS which provides compensation to customers of
financial institutions in the event that an institution is unable,
or is likely to be unable, to pay claims against it. The FSCS
raises levies on UK licensed deposit-taking institutions to meet
such claims based on their share of UK deposits on 31 December of
the year preceding the scheme year (which runs from 1 April to 31
March).
Following the default of a number of deposit takers in 2008, the
FSCS borrowed funds from HM Treasury to meet the compensation costs
for customers of those firms. While it is expected that the
substantial majority of the principal will be repaid from funds the
FSCS receives from asset sales, surplus cash flow or other
recoveries in relation to the assets of the institutions that
defaulted, to the extent that there remains a shortfall, the FSCS
will raise compensation levies on all deposit-taking
participants.
The amount of any future compensation levies payable by the
group also depends on a number of factors including participation
in the market at 31 December, the level of protected deposits and
the population of deposit-taking participants. The group continues
to accrue for its share of levies that have been raised by the
FSCS.
13. Related party transactions
Related party transactions, including salary and benefits
provided to directors and key management, did not have a material
effect on the financial position or performance of the group during
the period. There were no changes to the type and nature of the
related party transactions disclosed in the Annual Report 2016 that
could have a material effect on the financial position and
performance of the group in the six months to 31 January 2017.
14. Consolidated cash flow statement reconciliation
31 January 31 July
------------------------
2017 2016 2016
GBP million GBP million GBP million
----- -------------------------------------------------- ----------- ----------- -----------
(a) Reconciliation of operating profit before
tax to net cash
inflow from operating activities
Operating profit before tax 131.4 108.7 228.5
Tax paid (27.5) (21.4) (53.7)
Depreciation and amortisation 27.6 23.2 49.1
(Increase)/decrease in:
Interest receivable and prepaid expenses (15.5) (5.5) (16.0)
Net settlement balances and trading positions 6.5 9.5 (9.7)
Net loans to/from money broker against stock
advanced (22.9) 0.7 16.0
(Decrease)/increase in interest payable and
accrued expenses (17.7) (35.8) 3.2
----------- ----------- -----------
Net cash inflow from trading activities 81.9 79.4 217.4
(Increase)/decrease in:
Loans and advances to banks not repayable on
demand 3.4 (6.3) (26.7)
Loans and advances to customers (112.2) (231.0) (693.8)
Assets held under operating leases (27.1) (22.4) (51.9)
Certificates of deposit 55.7 (85.6) (85.7)
Sovereign and central bank debt (41.6) 20.0 20.0
Other assets less other liabilities 9.2 2.4 28.9
Increase/(decrease) in:
Deposits by banks (1.1) 13.7 36.0
Deposits by customers (29.7) 133.8 413.2
Loans and overdrafts from banks (50.2) (65.3) 87.9
Debt securities in issue, net of transaction
costs 470.9 19.0 35.9
Net cash inflow/(outflow) from operating activities 359.2 (142.3) (18.8)
(b) Analysis of net cash outflow in respect of
the purchase of subsidiaries and non-controlling
interests
Cash consideration paid (6.3) - (3.6)
(c) Analysis of net cash (outflow)/inflow in
respect of the sale of a subsidiary
Cash consideration received 0.3 2.4 2.4
Cash and cash equivalents disposed of (0.6) (0.1) (0.1)
----------- ----------- -----------
(0.3) 2.3 2.3
(d) Analysis of changes in financing activities
Share capital (including premium), CBG bond
and subordinated
loan capital(1) :
Opening balance 566.6 566.6 566.6
Prepayment of subordinated loan capital - - -
Shares issued for cash - - -
Closing balance 566.6 566.6 566.6
31 January 31 July
------------------------
2017 2016 2016
GBP million GBP million GBP million
--- ------------------------------------------------ ----------- ----------- -----------
(e) Analysis of cash and cash equivalents(2)
Cash and balances at central banks 1,113.8 802.5 840.6
Loans and advances to banks repayable on demand 68.4 70.3 82.7
1,182.2 872.8 923.3
1 Excludes accrued interest.
2 Excludes Bank of England cash reserve account and amounts held
as collateral.
15. Fair value of financial assets and liabilities
The fair values of the group's financial assets and liabilities
are not materially different from their carrying values. The main
differences are as follows:
31 January 2017 31 January 2016 31 July 2016
Fair Carrying Fair value Carrying Fair Carrying
value value value value value
GBP million GBP million GBP million GBP million GBP million GBP million
------------ ------------ ------------ ------------ ------------
Subordinated loan capital 230.9 219.4 54.1 46.4 52.4 46.4
------------ ------------ ------------ ------------ ------------
Debt securities in issue 1,722.3 1,703.1 1,400.6 1,394.3 1,432.2 1,422.8
------------ ------------ ------------ ------------ ------------
The group issued GBP175 million of subordinated loan capital in
the period ended 31 January 2017.
The group holds financial instruments that are measured at fair
value subsequent to initial recognition. Each instrument has been
categorised within one of three levels using a fair value hierarchy
that reflects the significance of the inputs used in making the
measurements. These levels are based on the degree to which the
fair value is observable and are defined in note 28 "Financial risk
management" of the Annual Report 2016.
The table below shows the classification of financial
instruments held at fair value into the valuation hierarchy:
Level 1 Level 2 Level 3 Total
GBP million GBP million GBP million GBP million
At 31 January 2017
Assets
Debt securities:
Long trading positions in debt securities
held for trading 12.7 1.8 - 14.5
Sovereign and central bank debt classified
as
available for sale 40.7 - - 40.7
Equity shares:
Held for trading 5.8 27.7 - 33.5
Fair value through profit or loss - - - -
Available for sale - - 2.1 2.1
Derivative financial instruments - 29.8 - 29.8
Contingent consideration - - 2.4 2.4
59.2 59.3 4.5 123.0
-----------
Liabilities
Short positions:
Debt securities 8.6 2.6 - 11.2
Equity shares 3.7 9.1 - 12.8
Derivative financial instruments - 17.9 - 17.9
Contingent consideration - - 4.6 4.6
12.3 29.6 4.6 46.5
-----------
Level 1 Level 2 Level 3 Total
GBP million GBP million GBP million GBP million
At 31 January 2016
Assets
Debt securities:
Long trading positions in debt securities
held for trading 9.8 2.4 - 12.2
Sovereign and central bank debt classified
as - - - -
available for sale
Equity shares:
Held for trading 7.8 27.7 - 35.5
Fair value through profit or loss - 0.1 - 0.1
Available for sale - - 2.1 2.1
Derivative financial instruments - 30.0 - 30.0
Contingent consideration - - - -
17.6 60.2 2.1 79.9
----------- -----------
Liabilities
Short positions:
Debt securities 8.5 2.1 - 10.6
Equity shares 5.2 9.2 - 14.4
Derivative financial instruments - 9.6 - 9.6
Contingent consideration - - - -
13.7 20.9 - 34.6
----------- -----------
Level 1 Level 2 Level 3 Total
GBP million GBP million GBP million GBP million
At 31 July 2016
Assets
Debt securities:
Long trading positions in debt securities
held for trading 16.1 4.2 - 20.3
Sovereign and central bank debt classified
as - - - -
available for sale
Equity shares:
Held for trading 3.4 22.7 - 26.1
Fair value through profit or loss - 0.1 - 0.1
Available for sale - - 2.0 2.0
Derivative financial instruments - 44.7 - 44.7
Contingent consideration - - - -
19.5 71.7 2.0 93.2
----------- -----------
Liabilities
Short positions:
Debt securities 3.0 2.8 - 5.8
Equity shares 3.7 9.8 - 13.5
Derivative financial instruments - 16.3 - 16.3
Contingent consideration - - - -
6.7 28.9 - 35.6
----------- -----------
At 31 January 2017, financial instruments classified as Level 3
predominantly comprise a legacy investment property fund (as
described in note 28 "Financial risk management" of the Annual
Report 2016) and contingent consideration payable and receivable in
relation to two acquisitions and the disposal of a subsidiary.
The valuation of contingent consideration is determined on a
discounted expected cash flow basis. The group believes that there
is no reasonably possible change to the inputs used in the
valuation of this position which would have a material effect on
the group's consolidated income statement.
In the year ended 31 July 2016 a number of listed equity shares
were classified as Level 2 (classified as Level 1 in the previous
year) following an assessment of the frequency of transactions in
these shares. These shares remain classified as Level 2 in the
current period and the prior period has been re-presented for
comparability. Aside from this there were no significant transfers
between Level 1, 2 and 3 during the periods.
Movements in financial instruments categorised as Level 3 during
the periods were:
Equity shares
available Contingent
for sale consideration
GBP million GBP million
At 1 August 2015 10.0 -
Total losses recognised in the consolidated
income statement (0.4) -
Total losses recognised in other comprehensive - -
income
Purchases and issues - -
Sales and settlements (7.5) -
At 31 January 2016 2.1 -
Total losses recognised in the consolidated
income statement 0.1 -
Total gains recognised in other comprehensive - -
income
Purchases and issues - -
Sales and settlements (0.2) -
At 31 July 2016 2.0 -
Total losses recognised in the consolidated - -
income statement
Total gains recognised in other comprehensive
income 0.1 -
Purchases and issues - (4.6)
Sales and settlements - 2.4
At 31 January 2017 2.1 (2.2)
There were GBPnil unrealised losses recognised in the
consolidated income statement relating to instruments held at 31
January 2017 (31 January 2016: GBP0.4 million losses; 31 July 2016:
GBP0.3 million losses).
16. Post balance sheet event
On 3 February 2017, the group agreed to acquire a specialist
provider of secured finance to law firms and their clients which
had net assets of GBP3.8 million including a loan book of GBP32.7
million at 31 March 2016. The acquisition is expected to complete
during the current financial year.
Cautionary Statement
Certain statements included or incorporated by reference within
this announcement may constitute "forward-looking statements" in
respect of the group's operations, performance, prospects and/or
financial condition. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such
words as "anticipates", "aims", "due", "could", "may", "will",
"should", "expects", "believes", "intends", "plans", "potential",
"targets", "goal" or "estimates". By their nature, forward-looking
statements involve a number of risks, uncertainties and assumptions
and actual results or events may differ materially from those
expressed or implied by those statements. Accordingly, no assurance
can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement.
Additionally, forward-looking statements regarding past trends or
activities should not be taken as a representation that such trends
or activities will continue in the future. No
responsibility or obligation is accepted to update or revise any
forward-looking statement resulting from new information, future
events or otherwise. Nothing in this announcement should be
construed as a profit forecast. Past performance is no guide to
future performance and persons needing advice should consult an
independent financial adviser.
This announcement does not constitute or form part of any offer
or invitation to sell, or any solicitation of any offer to
subscribe for or purchase any shares or other securities in the
company or any of its group members, nor shall it or any part of it
or the fact of its distribution form the basis of, or be relied on
in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation
regarding the shares or other securities of the company or any of
its group members. Past performance cannot be relied upon as a
guide to future performance and persons needing advice should
consult an independent financial adviser. Statements in this
announcement reflect the knowledge and information available at the
time of its preparation. Liability arising from anything in this
announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that
cannot be excluded in accordance with such laws.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFFTVIIVLID
(END) Dow Jones Newswires
March 14, 2017 03:00 ET (07:00 GMT)
Close Brothers (LSE:CBG)
Historical Stock Chart
From Apr 2024 to May 2024
Close Brothers (LSE:CBG)
Historical Stock Chart
From May 2023 to May 2024