Interim Results
31 Luglio 2008 - 12:26PM
UK Regulatory
RNS Number : 3177A
Skipton Building Society
31 July 2008
SKIPTON REPORTS RESILIENT BUSINESS PERFORMANCE AND STRONG ASSET QUALITY
Skipton Building Society Group's half-year results, to 30 June 2008, show the Society and its 19 subsidiaries giving a resilient
performance against difficult trading conditions.
Chief executive John Goodfellow commented, "The first six months of the year has been more about stability through good asset quality
and less about profitability. We are in good shape, profitability is down, as I warned it would be, but we are generating earnings, have no
exposure to US sub-prime markets and have been able to generate more than enough retail funding to cover the Group's net mortgage advances.
"When considered in the context of the current financial climate, these results show that a modern mutual can deal with even the
toughest market conditions. The indications are that, despite no imminent end to economic pressures, the Group can expect a reasonable
second half of the year as we maintain our healthy liquidity position."
Financial highlights include:
At 30 June 2008
* Group assets �13.4bn
* Group pre-tax profit �44.1m (including exceptional profits of �9.0m)
* Mortgage balances �9.4 billion
* Retail savings balances �7.8 billion
* Liquidity 27.05%
For the half year
* Group assets up 6.6% (year-on-year 17.7%)
* Group mortgage balances up 2.2% (year-on-year 9.5%)
* Customer investment balances up 8.9% (year-on-year 17.5%)
Cont*
Retail Savings and Mortgages
The popularity of Skipton savings products in the first half has enabled the Group to generate retail savings inflows that more than
funded the Group's mortgage growth, being 170% of net advances. The successes of limited edition Spring and Summer fixed-rate savings bonds
were particular highlights; the bonds generated �400 million of inflows between them and savings balances have increased by 17.5%
year-on-year to �7.8 billion.
The excellent performance of retail inflows, combined with prudent lending policies and a lengthening of the wholesale funding position,
mean that the Group's lending remains sustainable for the foreseeable future. The current climate has seen mortgage growth targets below the
levels of recent years, with Group mortgage assets growing at 2.2% in the first half, to stand at �9.4 billion.
In addition, the quality of these loans has endured, borne out by the fact that, at Group level, the number of cases 6 months or more in
arrears or in possession was 282, representing only 0.46% of the book by value.
The Skipton Group
With financial advice a key area for the Group, the first half of 2008 has seen two acquisitions support the growth plan - Torquil Clark
and Thomson Shepherd. Torquil Clark is an IFA, employs 117 staff and has �660 million of funds under management and is one of only three
IFAs in the UK to hold the Gold Standard Award for independent financial advice.
Scottish-based Thomson Shepherd is a high quality financial planning business which employs 35 staff and has �400 million of funds under
advice. There are now five Group financial advice businesses - including Skipton Financial Services, Pearson Jones and Parnell Fisher Child.
Between them they boast a total turnover of �51 million, with 30% recurring annual income. The aim is to consolidate and grow this part of
the Group's offering even further.
Cont*.
The other four areas of focus for the Group are savings and lending, mortgage servicing, estate agency and data provision. To keep the
focus on these, we took a strategic decision to sell both Direct Life & Pension Services and Amber Select during the first half of the year.
Whilst both had grown under the Group's ownership, it was felt their buyers were better positioned to develop the businesses to their full
potential.
A notable success has been the Callcredit Information Group (CIG, formerly Skipton Information Group) which is responding to lenders'
needs for quality credit data and is now a profitable part of the Group, doubling its income year-on-year. In addition, one of CIG's
subsidiaries, Broadsystem, recently completed the development of the News International data warehouse and won a significant project to
develop a large intranet service for the Learning Skills Council.
A further subsidiary which continues to develop is Homeloan Management Limited (HML), as demand for its credit management services
increases. The company recently started construction on new offices in Skipton, to house 800 of its 2,000 staff.
Despite a near 40% reduction in housing transactions and the average asking price dropping by 15%, Connells Group has demonstrated its
adaptability and continued to be profitable. This has been achieved through increased activity in surveys and valuations (as many
homeowners remortgage), lettings, asset management and strong cost control.
The future
The first half of 2008 has seen a robust performance from the Skipton Group demonstrate the strength of its asset quality and the value
of mutual status. Mr Goodfellow concluded, "The first half of the year has been about strength over growth, caution over risk and quality
over quantity. We expect more of the same for the rest of the year, something which plays to the very strengths of the mutual model.
"We believe we will remain one of the UK's top performing building societies despite the expected reduction in year-on-year profit. The
Group continues to benefit from its diverse business model where, even in these difficult times, a number of areas continue to flourish.
Cont*..
"As time goes on, the economic conditions become less about liquidity and more about the wider economic environment; the second half of
2008 will bring tougher trading conditions than the first. However, the inherent strengths of our business model put us in a good position
to weather the economic storm and we are confident our full year results will prove this true."
ENDS
For further information, please contact the Skipton Press Office on 08456 017247,
email newsline@skipton.co.uk or visit the press section of our website at www.skipton.co.uk
Jason Clarke, head of media relations
Tel: 01756 705761
If outside Press Office hours (8am - 6pm, Monday to Friday), please call 07867 851628
Skipton Building Society
Results for the Half Year ended 30 June 2008
Unaudited results for the half-year to 30 June 2008
Condensed consolidated income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30.06.08 to 30.06.07 to 31.12.07
�m �m �m
Interest receivable and similar 386.4 310.4 683.2
income
Interest payable and similar (338.3) (257.5) (573.5)
charges
Net interest receivable 48.1 52.9 109.7
Fees and commissions receivable 210.9 247.0 496.0
Fees and commissions payable (15.6) (20.9) (46.5)
Fair value gains and losses on 6.0 2.0 (3.9)
financial instruments
Other operating income 12.4 4.2 16.1
Total operating income 261.8 285.2 571.4
Administrative expenses (222.4) (216.8) (442.0)
Impairment losses on loans and (7.9) (0.7) (5.4)
advances
Provisions for liabilities 0.2 0.8 0.2
Share of profits from joint 3.4 3.1 5.3
ventures and associates
Profit on part disposal of - 36.0 36.0
associate
Profit on disposal of subsidiaries 9.0 - -
Profit before tax 44.1 107.6 165.5
Tax expense (9.2) (19.0) (38.9)
Profit for the period 34.9 88.6 126.6
Attributable to:
Members of Skipton Building 34.7 87.9 125.5
Society
Minority interests 0.2 0.7 1.1
34.9 88.6 126.6
Cont*.
Unaudited results for the half-year to 30 June 2008
Condensed consolidated balance sheet
Unaudited Unaudited Audited
as at as at as at
30.06.08 30.06.07 31.12.07
�m �m �m
Assets
Cash in hand and balances with the Bank 153.5 33.3 136.0
of England
Loans and advances to credit institutions 1,315.1 447.4 409.3
Debt securities 1,819.7 1,754.4 2,124.8
Derivative financial instruments 228.1 103.7 122.3
Loans and advances to customers 9,358.1 8,590.2 9,291.9
Deferred tax asset 18.8 25.1 18.7
Investments in subsidiaries, joint 7.3 8.6 6.1
ventures and associates
Intangible assets 252.3 198.9 230.4
Property, plant and equipment 76.4 75.9 79.6
Investment property 7.5 4.9 5.1
Other assets 120.6 107.7 106.3
Total assets 13,357.4 11,350.1 12,530.5
Liabilities
Shares 7,823.7 6,662. 1 7,191.1
Amounts owed to credit institutions 689.3 505.5 402.8
Amounts owed to other customers 2,331.5 1,793.0 2,207.8
Debt securities in issue 1,311.2 1,249.1 1,533.5
Derivative financial instruments 31.8 24.4 50.4
Current tax 1.9 13.4 9.1
Other liabilities 122.1 122.0 117.8
Accruals and deferred income 46.5 26.5 51.1
Deferred tax liability 7.2 17.5 6.9
Retirement benefit obligations 33.7 14.9 22.3
Provisions for liabilities 2.3 4.1 2.5
Subordinated liabilities 183.3 183.2 183.7
Subscribed capital 26.3 26.3 26.3
Total liabilities 12,610.8 10,642.0 11,805.3
Capital and reserves attributable to members of
SkiptonBuildingSociety
General reserve 757.5 695.1 731.4
Available-for-sale reserve (16.5) (1.2) (5.7)
Cash flow hedging reserve 1.1 6.4 (4.9)
Translation reserve 0.7 1.3 0.9
742.8 701.6 721.7
Minority interests 3.8 6.5 3.5
Total liabilities and reserves 13,357.4 11,350.1 12,530.5
Cont*..
Unaudited results for the half year to 30 June 2008
Condensed consolidated statement of recognised income and expense
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30.06.08 to 30.06.07 to 31.12.07
�m �m �m
Available-for-sale investments:
Valuation losses taken to equity (15.2) (0.4) (7.2)
Cash flow hedges:
Gains / (losses) taken to equity 8.4 5.7 (10.5)
Exchange differences on translation of (0.3) 1.3 0.3
foreign operations
Actuarial gains / (losses) on (13.9) 17.2 8.7
retirement benefit obligations
Tax on items taken directly to or 7.3 (6.7) 4.3
transferred from equity
Net income / (expense) not recognised (13.7) 17.1 (4.4)
directly in the income statement
Profit for the period 34.9 88.6 126.6
Total recognised income and expense 21.2 105.7 122.2
for the period
Total income and expense for the
period attributable to:
Members of Skipton Building Society 21.0 105.0 121.1
Minority interests 0.2 0.7 1.1
21.2 105.7 122.2
Movements in general reserve note
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30.06.08 to 30.06.07 to 31.12.07
�m �m �m
At 1 January 731.4 598.1 598.1
Profit for the period 34.7 87.9 125.5
Actuarial gains / (losses) on (8.6) 9.1 5.7
retirement benefit obligations
Other taxation - - 2.1
At end of period 757.5 695.1 731.4
Movements in general reserve note
Cont*..
Unaudited results for the half-year to 30 June 2008
Condensed consolidated cash flow statement
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30.06.08 to 30.06.07 to 31.12.07
�m �m �m
Cash flows from operating activities
Profit before taxation 44.1 107.6 165.5
Movement in prepayments and accrued 1.4 3.0 (7.0)
income
Movement in accruals and deferred (89.2) (54.3) 107.6
income
Impairment losses on loans and 7.9 0.7 5.4
advances
Loans and advances written off, net 0.1 1.5 (5.5)
of recoveries
Depreciation and amortisation 11.0 10.1 21.7
Interest on capital and subordinated 6.9 6.9 14.0
liabilities
Profit on sale of property, plant (0.1) (0.6) (0.4)
and equipment and investment
property
Movement in provisions for (0.3) 0.5 (1.1)
liabilities and charges
Share of profits from joint ventures (3.4) (3.1) (5.3)
and associates
Profit on disposal of subsidiaries (9.0) - -
Profit on part disposal of associate - (36.0) (36.0)
Other non-cash movements (133.8) (9.9) (14.4)
Net cash inflows / (outflows) from (164.4) 26.4 244.5
trading activities
Net movement in loans and advances (66.1) (492.9) (1,322.7)
to customers
Net movement in shares 745.2 574.6 973.5
Net movement in amounts owed to 387.4 548.8 868.6
credit institutions and other
customers
Net movement in debt securities in (232.1) (346.6) (99.1)
issue
Net movement in loans and advances (897.4) (142.0) (102.9)
to credit institutions
Purchase of mortgage portfolios (8.1) (412.6) (412.6)
Sale of mortgage portfolios - 296.9 427.1
Net movement in other assets 2.9 (28.9) (5.4)
Net movement in other liabilities 11.2 (39.5) 8.7
Income taxes paid (16.0) (9.8) (40.5)
Net cash inflows / (outflows) from (237.4) (25.6) 539.2
operating activities
Cont*.
Unaudited results for the half-year to 30 June 2008
Condensed consolidated cash flow statement (continued)
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30.06.08 to 30.06.07 to 31.12.07
�m �m �m
Net cash inflows / (outflows) (237.4) (25.6) 539.2
from operating activities
Cash flows from investing
activities
Purchase of debt securities (2,965.6) (1,711.0) (3,545.7)
Proceeds from disposal of debt 3,255.5 1,751.2 3,208.7
securities
Purchase of intangible assets (3.8) (1.7) (10.4)
Purchase of property, plant (8.4) (6.3) (17.5)
and equipment and investment
property
Proceeds from disposal of 2.7 0.7 2.2
property, plant and equipment
and investment property
Purchase of subsidiary (18.2) (8.8) (31.0)
undertakings
Net cash acquired with 0.4 0.8 3.2
subsidiaries
Further investment in existing (9.7) (32.2) (67.3)
subsidiaries
Purchases of other business - - (1.0)
units
Net cash acquired with other - - 0.3
business units
Cash received from disposal of 16.4 - -
subsidiaries
Net cash disposed with (3.4) - -
subsidiaries
Cash received from part 0.1 - -
disposal of subsidiaries
Cash received from part - 38.0 38.0
disposal of associate and
joint venture
Net cash flows from investing 266.0 30.7 (420.5)
activities
Cash flows from financing
activities
Interest paid on subordinated (5.3) (5.3) (10.7)
liabilities
Interest paid on permanent (1.6) (1.5) (3.2)
interest bearing shares
Dividends paid to minority - - (2.1)
interests
Net cash flows from financing (6.9) (6.8) (16.0)
activities
Net increase in cash and cash 21.7 (1.7) 102.7
equivalents
Cash and cash equivalents at 154.3 51.6 51.6
start of period
Cash and cash equivalents at 176.0 49.9 154.3
end of period
Analysis of the cash balances as shown in the Balance Sheet:
Unaudited Audited
6 months Cash 12 months
to 30.06.08 flows to 31.12.07
�m �m �m
Cash in hand and balances with the Bank of England 153.5 17.5 136.0
Mandatory reserve deposit with the Bank of England (8.3) 0.5 (8.8)
145.2 18.0 127.2
Loans and advances to credit institutions repayable 30.8 3.7 27.1
on demand
Included in cash and cash equivalents as at end of 176.0 21.7 154.3
period
Editors' notes
1. Skipton is the UK's sixth largest building society, with a national presence represented by its 84 branches, covering the country
from Aberdeen to Plymouth. It heads the Skipton Building Society Group, whose subsidiary companies have significant interests in estate
agency and related businesses (through the Connells and Sequence groups), third party mortgage servicing (Homeloan Management), credit
referencing (Callcredit) and market data supply, independent financial and related advisory businesses and support services to the mutual
sector.
2. Skipton is the first UK-wide financial services provider to receive the Customer First Framework - a quality assurance standard aimed
at putting the customer first.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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