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RNS Number : 7540V

Manchester Building Society

11 August 2022

Manchester Building Society Results for the 6 months ended 30 June 2022

 
                                            Unaudited   Unaudited     Audited 
                                             6 months    6 months   12 months 
                                                   to          to          to 
                                            30-Jun-22   30-Jun-21   31-Dec-21 
                                               GBP000      GBP000      GBP000 
 
 Net interest income                            2,468       3,111       6,173 
 Legal damages and interest                         -      14,272      14,272 
 Loss on assets classified 
  as held for sale                                  -           -       (194) 
  Other operating income and 
   charges                                        363       (510)       (811) 
 Legal costs recovered                          2,400       7,540       7,540 
 Administrative expenses and 
  depreciation                                (2,453)     (2,292)     (4,854) 
 
 Operating profit before impairment             2,778      22,121      22,126 
 Impairment losses                              (757)       (112)     (1,289) 
 
 Profit for the period before 
  taxation                                      2,021      22,009      20,837 
 Tax expense                                        -     (1,563)     (1,467) 
 
 Profit for the period                          2,021      20,446      19,370 
                                           ----------  ----------  ---------- 
 
 Total assets                                 189,004     232,701     204,606

6 months results summary:

- Profit after taxation of GBP2.0m compared with a GBP20.4m profit in the equivalent period in 2021.

- The profit in both the 6 months to 30 June 2022 and the equivalent period in 2021 include receipts in relation to the judgment of the Supreme Court in June 2021 regarding the legal action that the Society took against its former auditors, Grant Thornton (UK) LLP ("GT").

- GBP2.4m of costs recovered from GT are included in the period compared with GBP21.8m relating to associated damages, cost and interest included in the equivalent period in 2021. No further costs or recoveries are outstanding in relation to this case.

- Excluding the items relating to the legal case, a loss before taxation of GBP0.4m was recorded in the period (H1 2021: GBP0.2m profit).

- Net interest income of GBP2.5m was GBP0.6m lower than H1 2021. Interest received reduced from GBP3.8m to GBP3.6m with the reduction owing to lower balances, partially offset by higher rates on base rate linked products following Bank of England base rate increases. Interest expenditure increased from GBP0.7m to GBP1.1m. Interest on the Society's subordinated debt included additional interest due on redemption and was GBP0.4m higher than in the comparative period. Additional interest paid on the Society's PIBS (no interest was paid on PIBS in H1 2021) was partially offset by lower interest paid on savings accounts owing to balance reductions since H1 2021.

- Other operating income of GBP0.4m relates to GBP-EUR FX gains. In H1 2021, FX losses of GBP0.5m were recognised. The FX gains were offset by GBP0.3m of FX losses shown within impairment (GBP0.5m gains in 2021).

- Administrative expenses of GBP2.5m increased by GBP0.2m compared with the same period in 2021 reflecting the transition to a new banking system.

- Impairment losses in the period were GBP0.8m (H1 2021: GBP0.1m). As stated above, GBP0.3m of GBP-EUR FX losses are largely offset in other operating income. Of the underlying GBP0.5m charge, GBP0.6m (H1 2021: GBP0.7m) relates to the Spanish lifetime portfolio, partially offset by a GBP0.1m release (H1 2021: GBP0.1m release) in relation to UK mortgages.

   -      Total assets decreased by 8% since 31 December 2021.

- The accounts for the 6 month period have been prepared on a going concern basis of accounting. The Society is considering its strategic options following the judgment of the Supreme Court and announced on 8 August 2022 that it has signed an exclusivity agreement with Newcastle Building Society to explore the possibility of a merger by way of a transfer of the Society's engagements to Newcastle. The discussions are at an early stage and as such, there can be no certainty that any merger will occur. Until an alternative strategy is agreed, the Society continues to follow its existing medium to long term strategic plan.

- The Group continues to meet all its regulatory capital requirements and to have a strong liquidity position.

2022 Half Year Financial Information

The accounts for the 6 months ending 30 June 2022 are available to view on the Society's website:

http://manchesterbuildingsociety.co.uk/Main/FinancialInformation

Enquiries

Sam Cartwright - Maitland/AMO

020 7379 5151

scartwright@maitland.co.uk

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