TIDMARBB TIDMSTB
RNS Number : 5187I
Arbuthnot Banking Group PLC
26 July 2012
26 July 2012
For immediate release
ARBUTHNOT BANKING GROUP ("Arbuthnot" or "the Group")
Results for the six months to 30 June 2012
Transformation continues
Arbuthnot Banking Group has continued with the transformation of
its business and has traded strongly in the first half of 2012.
During this period the Group completed the disposal of the
securities and Swiss businesses, cancelled the share premium
account and considerably expanded the retail banking division
through the acquisition of Everyday Loans. It has recorded a profit
before tax of GBP10.8m and both of its Banks have continued to
demonstrate strong, controlled organic growth.
Arbuthnot Banking Group PLC is the holding company for Arbuthnot
Latham & Co., Limited and Secure Trust Bank PLC.
FINANCIAL HIGHLIGHTS
-- Group pre-tax profit GBP10.8m (2011: GBP0.2m)
-- Gain on acquisition GBP8.5m (net)
-- Customer assets GBP543.4m (2011: GBP356.2m)
-- Group earnings per share (EPS) 50.9p (2011: 8.4p)
-- Interim dividend per share (DPS) 11p (2011: 11p)
OPERATIONAL HIGHLIGHTS
Retail Banking - Secure Trust Bank
-- Pre-tax profit increased to GBP12.5m (2011: GBP5.0m)
-- Acquisition of Everyday Loans has broadened distribution
channels and added further diversification to its lending
portfolios and contributed a gain on acquisition of GBP8.5m
(net)
-- Underlying profit grew by 50%
-- Overall loan book increased to GBP260.3m from GBP123.9m
including GBP71m from Everyday Loans
-- Retail deposits funded loan growth and closed the period at GBP297.9m (2011: GBP217m)
-- Total customer numbers grew by 58% to 198,767.
Private Banking - Arbuthnot Latham
-- Pre-tax profits increased to GBP1.4m (2011: GBP1.0m)
-- James Fleming joined the business as Chief Executive at the end of the first quarter
-- Strong capital base and excess liquidity enabled the business
to maintain its ability to take advantage of the lending
opportunities
-- Gilliat Financial Solutions has consistently increased its
sales volumes and completed its first overseas product offering
Commenting on the results, Henry Angest, Chairman and Chief
Executive of Arbuthnot, said: "This year has been one of continued
transformation where significant milestones across the Group have
been achieved. All of these have enabled the Group to make good
progress.
The current market environment has allowed the Group to attract
high calibre people, who along with strong capital and liquidity
are enabling it to enhance significantly both its banking
businesses. However, we remain cautious and monitor the
developments in the wider economy with some concern."
The interim results and presentation are available at
http://www.arbuthnotgroup.com.
Secure Trust Bank PLC is today releasing its interim statement
and it should be read in conjunction with these results.
ENQUIRIES:
Arbuthnot Banking Group
Henry Angest, Chairman and Chief Executive
Andrew Salmon, Chief Operating Officer
James Cobb, Group Finance Director
David Marshall, Director of Communications 020 7012 2400
Canaccord Genuity Hawkpoint Partners Ltd
(Nominated Advisor)
Lawrence Guthrie
Sunil Duggal 020 7665 4500
Numis Securities Ltd (Broker)
Chris Wilkinson
Mark Lander 020 7260 1000
Pelham Bell Pottinger (Financial PR)
Ben Woodford
Dan de Belder 020 7861 3232
Chairman's Statement
Arbuthnot Banking Group PLC
I am pleased to report that Arbuthnot Banking Group PLC has
traded strongly in the first half of 2012. The Group has reported a
profit before tax of GBP10.8m (2011: GBP0.2m).
In our recent Annual Report I concluded that 2011 had been a
year of transformation. This process continued in 2012. Across the
Group significant objectives have been achieved. In the first part
of the year, the disposals of Arbuthnot Securities and the Swiss
subsidiary were completed. Then in June we finalised the
cancellation of the share premium account and considerably expanded
the business of Secure Trust Bank through the acquisition of
Everyday Loans. These transactions enable the Group to take
advantage of current market conditions.
The Board is maintaining the interim dividend at 11p (gross)
which will be paid on 5 October 2012 to shareholders on the
register at 7 September 2012.
Retail Banking Subsidiary - Secure Trust Bank PLC
Pre-tax profits for Secure Trust Bank rose to GBP12.5m (2011:
GBP5.0m). This includes GBP8.5m (net) gain on acquisition, which
arose from the accounting required for the purchase of Everyday
Loans. We expect most of this will be amortised over the next 2-3
years. Excluding the impact of this the underlying profit before
tax rose by 50%.
The acquisition of Everyday Loans continues to broaden Secure
Trust Bank's distribution channels and further diversifies its
lending portfolios.
As at 30 June 2012, the Bank's overall loan book had increased
to GBP260.3m (2011: GBP123.9m) as organic lending also contributed
significantly to the overall growth. The Management are confident
that this growth can be maintained as evidenced by the recent
signing of an affinity agreement with Shop Direct.
The loan book continues to be funded by growth in retail
deposits which closed the period at GBP297.9m (2011: GBP217m), an
increase of 37%.
The total customer numbers increased to 198,767 a 58%
growth.
Private Banking Subsidiary - Arbuthnot Latham & Co.,
Limited
Arbuthnot Latham's profits grew to GBP1.4m (2011:GBP1.0m), a 40%
increase over the corresponding period.
James Fleming joined the business as Chief Executive at the end
of the first quarter.
The business has maintained its ability to take advantage of
good quality lending opportunities, which has been facilitated by
the strong capital base and by utilising some of the excess
liquidity held at the year end.
Gilliat Financial Solutions, the independent provider of
structured products, has consistently increased its sales volumes
as it has developed its brand awareness across the UK IFA network.
It also completed its first overseas product offering during the
period.
Outlook
The outlook for both banks remains favourable as opportunities
for growth continue to present themselves. The current market
environment has allowed the Group to attract high calibre people,
who along with strong capital and liquidity are significantly
enhancing both its banking businesses. However, we remain cautious
and monitor the developments in the wider economy with some
concern.
Consolidated Statement of Comprehensive Income
Six months Six months
ended ended
30 June 30 June
2012 2011
Note GBP000 GBP000
----------------------------------------------------- ----- ----------- -----------
Interest and similar income 22,438 16,507
Interest expense and similar charges (6,840) (4,673)
----------------------------------------------------- ----- ----------- -----------
Net interest income 15,598 11,834
----------------------------------------------------- ----- ----------- -----------
Fee and commission income 10,857 9,766
Fee and commission expense (254) (163)
----------------------------------------------------- ----- ----------- -----------
Net fee and commission income 10,603 9,603
----------------------------------------------------- ----- ----------- -----------
Gains less losses from dealing in securities (314) 24
----------------------------------------------------- ----- ----------- -----------
Operating income 25,887 21,461
----------------------------------------------------- ----- ----------- -----------
Net impairment loss on financial assets (3,679) (1,997)
Other income 2 9,947 408
Operating expenses 3 (21,387) (16,239)
----------------------------------------------------- ----- ----------- -----------
Profit before income tax from continuing operations 10,768 3,633
Income tax expense (133) (1,120)
----------------------------------------------------- ----- ----------- -----------
Profit after income tax from continuing operations 10,635 2,513
Loss from discontinued operations after tax (210) (2,429)
----------------------------------------------------- ----- ----------- -----------
Profit for the period 10,425 84
----------------------------------------------------- ----- ----------- -----------
Foreign currency translation reserve 570 (202)
Revaluation reserve
- Adjustment - (2)
Cash flow hedging reserve
- Effective portion of changes in fair value (97) -
Available-for-sale reserve - 5
----------------------------------------------------- ----- ----------- -----------
Other comprehensive income for the period, net of
income tax 473 (199)
----------------------------------------------------- ----- ----------- -----------
Total comprehensive income for the period 10,898 (115)
----------------------------------------------------- ----- ----------- -----------
Profit attributable to:
Equity holders of the Company 7,783 1,259
Non-controlling interests 2,642 (1,175)
----------------------------------------------------- ----- ----------- -----------
10,425 84
----------------------------------------------------- ----- ----------- -----------
Total comprehensive income attributable to:
Equity holders of the Company 8,256 1,060
Non-controlling interests 2,642 (1,175)
----------------------------------------------------- ----- ----------- -----------
10,898 (115)
----------------------------------------------------- ----- ----------- -----------
Earnings per share for profit attributable to the
equity holders of the Company during the period
(expressed in pence per share):
- basic and fully diluted 4 50.9 8.4
Consolidated Statement of Financial Position
At 30 June
2012 2011
GBP000 GBP000
ASSETS
Cash 129,137 118,629
Loans and advances to banks 50,249 51,669
Loans and advances to customers 543,379 356,162
Trading securities - long positions - 2,148
Debt securities held-to-maturity 32,757 125,192
Current tax asset 483 -
Other assets 10,141 16,984
Financial investments 3,269 5,737
Intangible assets 8,618 3,002
Property, plant and equipment 6,055 5,546
Deferred tax asset 5,967 1,303
--------------------------------------------- -------- --------
Total assets 790,055 686,372
--------------------------------------------- -------- --------
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 153 150
Share premium account - 21,085
Retained earnings 48,358 11,647
Other reserves (1,397) (1,546)
--------------------------------------------- -------- --------
Non-controlling interests 8,640 943
--------------------------------------------- -------- --------
Total equity 55,754 32,279
--------------------------------------------- -------- --------
LIABILITIES
Deposits from banks 1,113 2,024
Trading securities - short positions - 999
Derivative financial instruments 1,008 264
Deposits from customers 703,661 624,215
Current tax liability - 414
Other liabilities 16,727 12,821
Deferred tax liability - 126
Debt securities in issue 11,792 13,230
--------------------------------------------- -------- --------
Total liabilities 734,301 654,093
--------------------------------------------- -------- --------
Total equity and liabilities 790,055 686,372
--------------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
Attributable to equity holders of the Group
------------------------------------------------------------------------------------------------------------------
Foreign Cash
Share currency Capital flow
Share premium translation Revaluation redemption Available-for-sale hedging Treasury Retained Non-controlling
capital account reserve reserve reserve reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- --------- ------------ ------------ ----------- ------------------- -------- --------- ---------- ---------------- --------
Balance at 1
January
2012 153 21,085 (570) 140 20 - (329) (1,097) 21,571 5,998 46,971
Total
comprehensive
income for the
period
Profit for the
six
months ended
30
June 2012 - - - - - - - - 7,783 2,642 10,425
Other
comprehensive
income, net of
income
tax
Foreign
currency
translation
reserve - - 570 - - - - - - - 570
Revaluation
reserve
Cash flow
hedging
reserve
- Effective
portion
of changes in
fair
value - - - - - - (97) - - - (97)
Total other
comprehensive
income - - 570 - - - (97) - - - 473
--------------- -------- --------- ------------ ------------ ----------- ------------------- -------- --------- ---------- ---------------- --------
Total
comprehensive
income for
the period - - 570 - - - (97) - 7,783 2,642 10,898
--------------- -------- --------- ------------ ------------ ----------- ------------------- -------- --------- ---------- ---------------- --------
Transactions
with
owners,
recorded
directly in
equity
Contributions
by
and
distributions
to owners
Transfer of
share
premium - (21,085) - - - - - - 21,085 - -
Purchase of
own
shares - - - - - - - (34) - - (34)
Final dividend
relating
to 2011 - - - - - - - - (2,081) - (2,081)
Total
contributions
by and
distributions
to owners - (21,085) - - - - - (34) 19,004 - (2,115)
--------------- -------- --------- ------------ ------------ ----------- ------------------- -------- --------- ---------- ---------------- --------
Balance at 30
June
2012 153 - - 140 20 - (426) (1,131) 48,358 8,640 55,754
--------------- -------- --------- ------------ ------------ ----------- ------------------- -------- --------- ---------- ---------------- --------
Attributable to equity holders of the
Group
-------------------------------------------------------------------------------------------------------
Foreign
Share currency Capital
Share premium translation Revaluation redemption Available-for-sale Treasury Retained Non-controlling
capital account reserve reserve reserve reserve shares earnings interests Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Balance at 1
January
2011 150 21,085 (558) 146 20 142 (1,097) 12,142 2,118 34,148
Total
comprehensive
income for the
period
Profit /
(loss) for
the six
months ended
30 June 2011 - - - - - - - 1,259 (1,175) 84
Other
comprehensive
income, net of
income
tax
Foreign
currency
translation
reserve - - (202) - - - - - - (202)
Revaluation
reserve
- Adjustment - - - (2) - - - - - (2)
- Amount
transferred
to profit and
loss on
sale - - - - - 5 - - - 5
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Total other
comprehensive
income - - (202) (2) - 5 - - - (199)
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Total
comprehensive
income for
the period - - (202) (2) - 5 - 1,259 (1,175) (115)
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Transactions
with owners,
recorded
directly in
equity
Contributions
by and
distributions
to owners
Final dividend
relating
to 2010 - - - - - - - (1,754) - (1,754)
Total
contributions
by and
distributions
to owners - - - - - - - (1,754) - (1,754)
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Balance at 30
June 2011 150 21,085 (760) 144 20 147 (1,097) 11,647 943 32,279
--------------- -------- -------- ------------ ------------ ----------- ------------------- --------- ---------- ---------------- --------
Consolidated Statement of Cash Flows
Six months Six months
ended ended
30 June 30 June
2012 2011
GBP000 GBP000
------------------------------------------------------ ----------- -----------
Cash flows from operating activities
Interest and similar income received 22,540 16,445
Interest and similar charges paid (7,302) (4,668)
Fees and commissions received 10,603 13,430
Net trading and other income 9,516 693
Cash payments to employees and suppliers (29,061) (23,649)
Taxation paid (159) (866)
------------------------------------------------------ ----------- -----------
Cash flows from operating profits before changes in
operating assets and liabilities 6,137 1,385
Changes in operating assets and liabilities:
- net decrease in trading securities - 1,308
- net decrease in derivative financial instruments 1,959 80
- net increase in loans and advances to customers (156,946) (57,724)
- net decrease in other assets 2,178 964
- net increase/(decrease) in deposits from banks 1,105 (1,682)
- net increase in amounts due to customers 9,861 120,958
- net increase in other liabilities 543 3,288
------------------------------------------------------ ----------- -----------
Net cash (outflow)/inflow from operating activities (135,163) 68,577
------------------------------------------------------ ----------- -----------
Cash flows from investing activities
Disposal of financial investments 567 -
Purchase of computer software (152) (260)
Purchase of property, plant and equipment (1,251) (66)
Proceeds from sale of property, plant and equipment - 23
Purchases of debt securities (43,127) (159,847)
Proceeds from redemption of debt securities 50,449 177,772
------------------------------------------------------ ----------- -----------
Net cash from investing activities 6,486 17,622
------------------------------------------------------ ----------- -----------
Cash flows from financing activities
Dividends paid (2,081) (1,754)
------------------------------------------------------ ----------- -----------
Net cash used in financing activities (2,081) (1,754)
------------------------------------------------------ ----------- -----------
Net (decrease)/increase in cash and cash equivalents (130,758) 84,445
Cash and cash equivalents at 1 January 310,144 85,853
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at 30 June 179,386 170,298
------------------------------------------------------ ----------- -----------
1. Operating segments
The Group is organised into two main operating segments,
arranged over two separate companies with each having its own
specialised banking service, as disclosed below:
1) Retail banking - incorporating household cash management,
personal lending and banking and insurance services.
2) UK Private banking - incorporating private banking and wealth
management.
Transactions between the operating segments are on normal
commercial terms. Centrally incurred expenses are charged to
operating segments on an appropriate pro-rata basis. Segment assets
and liabilities comprise operating assets and liabilities, being
the majority of the statement of financial position.
Discontinued
operations Continuing operations
------------- ------------------------------------------------
Group
Investment Retail UK Private (reconciling Group
banking banking banking items) Total Total
Six months ended 30 June 2012 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------------------- ------------- --------- ----------- -------------- -------- --------
Interest revenue - 15,647 6,943 162 22,752
Inter-segment revenue - (73) (79) (162) (314)
--------------------------------- ------------- --------- ----------- -------------- --------
Interest revenue from external
customers - 15,574 6,864 - 22,438
--------------------------------- ------------- --------- ----------- -------------- --------
Fee and commission income - 5,390 5,467 - 10,857
--------------------------------- ------------- --------- ----------- -------------- --------
Revenue from external customers - 20,964 12,331 - 33,295
--------------------------------- ------------- --------- ----------- -------------- --------
Interest expense - (4,222) (2,573) 217 (6,578)
Subordinated loan note interest - - - (262) (262)
Segment operating income - 16,815 9,583 (511) 25,887
Impairment losses - (3,070) (609) - (3,679)
Segment profit / (loss) before
tax (210) 12,523 1,437 (3,192) 10,768
Income tax (expense) / income - (717) - 584 (133)
--------------------------------- ------------- --------- ----------- -------------- -------- --------
Segment profit / (loss) after
tax (210) 11,806 1,437 (2,608) 10,635 10,425
--------------------------------- ------------- --------- ----------- -------------- -------- --------
Segment total assets - 342,162 480,438 (32,545) 790,055 790,055
Segment total liabilities - 312,480 457,346 (35,525) 734,301 734,301
Other segment items:
Capital expenditure - (975) (379) (12) (1,366) (1,366)
Depreciation and amortisation - (324) (172) (8) (504) (504)
--------------------------------- ------------- --------- ----------- -------------- -------- --------
The "Group" segment above includes the parent entity and all intercompany
eliminations and fulfils the requirement of IFRS8.28.
Discontinued
operations Continuing operations
------------- ----------------------------------------------------------------
International Group
Investment Retail Private UK Private (reconciling Group
banking banking banking banking items) Total Total
Six months ended 30 June GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2011
--------------------------- ------------- --------- -------------- ----------- -------------- -------- --------
Interest revenue 4 9,895 - 6,720 131 16,746
Inter-segment revenue - (32) - (72) (135) (239)
--------------------------- ------------- --------- -------------- ----------- -------------- --------
Interest revenue from
external
customers 4 9,863 - 6,648 (4) 16,507
--------------------------- ------------- --------- -------------- ----------- -------------- --------
Fee and commission income 3,991 5,560 - 4,206 - 9,766
--------------------------- ------------- --------- -------------- ----------- -------------- --------
Revenue from external
customers 3,995 15,423 - 10,854 (4) 26,273
--------------------------- ------------- --------- -------------- ----------- -------------- --------
Interest expense (63) (1,903) (27) (2,576) 103 (4,403)
Subordinated loan note
interest - - - - (270) (270)
Segment operating income 4,025 13,552 (27) 8,187 (247) 21,465
Impairment losses - (1,548) - (449) - (1,997)
Segment profit / (loss)
before tax (3,391) 5,020 (20) 983 (2,350) 3,633 242
Income tax (expense) /
income 962 (1,222) - (133) 235 (1,120)
--------------------------- ------------- --------- -------------- ----------- -------------- -------- --------
Segment profit / (loss)
after tax (2,429) 3,798 (20) 850 (2,115) 2,513 84
--------------------------- ------------- --------- -------------- ----------- -------------- -------- --------
Segment total assets 12,851 237,473 85 489,170 (53,207) 673,521 686,372
Segment total liabilities 9,373 219,538 2,634 465,974 (43,426) 644,720 654,093
Other segment items:
Capital expenditure (10) (65) - (240) (12) (317) (327)
Depreciation and
amortisation (38) (303) (5) (220) (7) (535) (573)
--------------------------- ------------- --------- -------------- ----------- -------------- -------- --------
Segment profit is shown prior to any intra-group
eliminations.
Other than the international private banking operations which
were in Switzerland, all the Group's other operations are conducted
wholly within the United Kingdom and geographical information is
therefore not presented.
2. Other income
On 20 March 2012 Arbuthnot Banking Group PLC ("ABG") agreed
terms for the sale of Arbuthnot AG. The company was sold to
Ducartis Holding AG for a total cash consideration of CHF 2.0m
which resulted in a profit for the Group of approximately GBP0.7m,
which is recorded in other income. Up to the date of sale, the
purchaser funded most of the running costs for this entity. This is
also included in other income, and amounted to GBP0.3m.
On 8 June 2012 Secure Trust Bank PLC ("STB") acquired 100% of
the shares in Everyday Loans Holdings Limited and its wholly owned
subsidiaries Everyday Loans Limited and Everyday Lending Limited
(together "EDL"). STB acquired EDL for consideration of GBP1. Upon
acquisition STB provided funding so that EDL could redeem the
remaining GBP34 million of subordinated debt and also provided a
loan facility of GBP37 million to refinance EDL's existing bank
debt and to fund future loans. A payment of up to a maximum of
GBP1.5 million will be made to the management team of EDL in March
2013, subject to achieving certain performance targets in 2012.
Included in other income is a gain on acquisition of GBP8.9m, which
arose from fair value adjustments and the recognition of
intangibles assets. This is expected to amortise through the profit
and loss account over the next 2 to 3 years.
Acquired Recognised
assets Fair values
/ value on
liabilities adjustments acquisition
GBP000 GBP000 GBP000
----------------------------------------- ------------ ------------ ------------
Intangible assets 50 5,115 5,165
Property, plant and equipment 491 - 491
Loans and advances to customers 63,720 7,545 71,265
Cash at bank 991 - 991
Other assets 24 - 24
Prepayments and accrued income 2,939 - 2,939
Deferred tax asset - 5,400 5,400
------------ ------------ ------------
Total assets 68,215 18,060 86,275
Loans and debt securities 71,618 - 71,618
Other liabilities 960 - 960
Accruals and deferred income 1,741 - 1,741
Deferred tax liabilities - 3,039 3,039
------------ ------------ ------------
Total liabilities 74,319 3,039 77,358
Net identifiable (liabilities) / assets (6,104) 15,021 8,917
------------ ------------ ------------
Consideration - GBP1 -
Gain on acquisition 8,917
----------------------------------------- ------------ ------------ ------------
3. Operating expenses
Included in operating expenses are GBP0.5m acquisition costs,
GBP0.1m amortisation cost, GBP0.3m management incentive provisions
and GBP0.7m normal operating costs relating to EDL. Also included
in operating expenses are GBP0.5m increased property costs due to
excess floor space after the sale of Arbuthnot Securities and
GBP0.3m of unrealised losses on equity securities.
4. Earnings per ordinary share
Basic and fully diluted
Earnings per ordinary share are calculated on the net basis by
dividing the profit attributable to equity holders of the Company
of GBP7,783,000 (2011: GBP1,259,000) by the weighted average number
of ordinary shares 15,279,322 (2011: 14,999,619) in issue during
the year. There is no difference between basic and fully diluted
earnings per ordinary share.
5. Basis of reporting
The interim financial statements have been prepared on the basis
of accounting policies set out in the Group's 2011 statutory
accounts as amended by standards and interpretations effective
during 2012. The statements were approved by the Board of Directors
on 25 July 2012 and are unaudited. The interim financial statements
will be posted to shareholders and copies may be obtained from The
Company Secretary, Arbuthnot Banking Group PLC, Arbuthnot House, 20
Ropemaker Street, London EC2Y 9AR.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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