Bank Irel13.375 Regulatory News (BOI)

31 May 2007 18:05

Bristol & West PLC31 May 2007 BRISTOL & WEST PLC PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2007 INTRODUCTION This announcement constitutes non-statutory accounts, as defined by Section 240of the Companies Act 1985, which have been extracted from the Group's latestfinancial statements. The financial statements have not yet been delivered tothe Registrar of Companies. The auditors' report under Section 235 of the Companies Act 1985 on the fullannual accounts of the Group for the year ended 31 March 2007, which has beensigned, was unqualified. It did not include any statement under sections 237(2)(inadequate accounting records or returns or accounts not agreeing with recordsand returns) or 237(3) (failure to obtain necessary information andexplanations) of the Companies Act 1985. CHIEF EXECUTIVE'S COMMENTARY ON RESULTS Overview This has been a successful year for Bristol & West plc. Our focused businessstrategy is ensuring continued volume and profit growth despite continuedcompetitive pressures in our core mortgage markets. Business and Financial Review We have delivered strong growth in our lending operations. Despite a competitivemarket our mortgage book has increased by 10% to £23.7bn representing over 2% ofthe market. The mortgage book remains well diversified between standard andspecialised products and continues to outperform the market in asset qualityterms. We are no longer a major retail deposit taker following the successful transferof our deposit business to Britannia Building Society in 2005. Deposits arestill taken within our professional and corporate business unit, an area thathas grown by 23% to £3.6bn year on year. Profit before taxation from continuing operations is £100.5m, an increase of 6%over the previous year. Effective cost management was a priority during the yearand costs fell by 7% to £104.8m. Customers Delivering excellent customer service is paramount, and our commitment to ourcustomers is reflected in a range of customer programme initiatives, includingthe Financial Services Authority's initiative Treating Customers Fairly, whichcontinues to be embedded into all our products and services. Regulation Programmes have been established to ensure compliance with the requirements ofBasle II and Sarbanes Oxley, the latter being necessary for Bank of IrelandGroup under US listing rules. Simplifying our corporate structure In February 2007, our parent company announced its intention to simplify theBank of Ireland operating structure in the UK. This planned re-organisationwill involve the transfer of the Bristol & West businesses, and the business ofour wholly owned subsidiary, Bank of Ireland Home Mortgages Limited to theGovernor and Company of the Bank of Ireland, our ultimate parent company. The transfer process is in its initial stages, and will be conditional onobtaining High Court approval and other regulatory clearances. Subject to theseapprovals, we expect the transfer to take effect in the second half of 2007. We will continue to use the "Bristol & West" and "Bank of Ireland HomeMortgages" trading names and brands. A comprehensive communications programme is in place to ensure all stakeholdersare provided with further information on the proposed transfer. Bristol & West in the Community Bristol & West has continued to support the community through a wide range ofinitiatives. For example, our partnership with Withywood School in Bristol hasseen members of staff involved in volunteering activities outside the workenvironment to support students and teachers in extra curricular activities.During the past 12 months our Charities of the Year were the Association ofChildren's Hospices and Starlight, and funds raised went towards helpingterminally ill children. Our Staff I would like to thank all our staff for their contribution towards yet anothersuccessful year. Their commitment and enthusiasm has been, and will continue tobe, a significant factor in the achievement of our future success. Ourcontinued focus on employee engagement ensures that we continually work towardsensuring we create a working environment in which employees feel valued for thecontribution they make. Outlook We have continued to make excellent progress, and I am confident that ourbusiness strategy will enable us to build further on our success and delivercontinued profit growth. Desmond E CrowleyChief Executive30 May 2007 CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2007 2007 2006 £m £mContinuing operationsInterest and similar income 1,371.4 1,051.0Interest expense and similar charges (1,171.9) (830.2)Net interest income 199.5 220.8 Fee and commission income 10.8 15.5Fee and commission expense (3.4) (13.3)Net fee and commission income 7.4 2.2 Net trading income (3.2) (18.4)Other operating income 2.7 4.4Impairment losses on loans and advances (1.1) (1.8)Other operating expenses (104.8) (112.7)Profit before taxation from continuing operations 100.5 94.5Taxation (28.2) (22.8)Profit for the year from continuing operations 72.3 71.7 Discontinued operationsResult for the year from discontinued operations 4.6 121.7Profit for the year 76.9 193.4 BALANCE SHEETS AT 31 MARCH 2007 Group Company 2007 2006 2007 2006 £m £m £m £m Assets Debt securities 120.5 341.5 120.5 341.5Derivative financial instruments 130.5 117.6 130.5 117.6Loans and advances to banks 8,537.8 1,655.4 7,953.6 1,139.9Loans and advances to customers 23,710.9 21,541.4 23,452.4 21,270.6Shares in group undertakings - - 591.7 591.7Intangible assets 37.1 37.3 37.1 37.3Property, plant and equipment 51.1 53.7 6.5 13.9Asset classified as held for sale 3.2 - 3.2 -Current tax asset - 7.7 2.7 9.1Other assets 76.3 38.5 54.7 16.2TOTAL ASSETS 32,667.4 23,793.1 32,352.9 23,537.8 LIABILITIES Deposits from other banks 21,591.8 18,978.3 21,643.1 19,095.2Derivative financial instruments 73.7 76.9 65.0 76.9Due to customers 3,593.1 2,924.7 3,593.1 2,924.7Debt securities in issue 5,535.6 61.3 (1.6) -Other liabilities 418.1 338.4 5,909.7 322.8Provisions 24.6 43.0 24.6 43.0Current tax liabilities 23.2 22.0 - -Deferred tax liabilities 14.9 8.7 7.3 2.7Retirement benefit obligations 36.5 56.0 26.1 43.5Subordinated liabilities 440.9 414.2 440.9 414.2Other borrowed funds 78.6 78.6 78.6 78.6TOTAL LIABILITIES 31,831.0 23,002.1 31,786.8 23,001.6 EQUITYShare capital 306.6 306.6 306.6 306.6Retained earnings 501.6 458.8 240.0 208.9Other reserves 28.2 25.6 19.5 20.7TOTAL EQUITY 836.4 791.0 566.1 536.2 TOTAL EQUITY AND LIABILITIES 32,667.4 23,793.1 32,352.9 23,537.8 STATEMENTS OF RECOGNISED INCOME AND EXPENSES AT 31 MARCH 2007 Group Company 2007 2006 2007 2006 £m £m £m £m For the year ended 31 MarchProfit for the financial year 76.9 193.4 25.2 142.6Actuarial valuation of pensionfund 6.8 1.2 6.7 3.9Deferred tax on actuarial gainsand losses (2.1) (0.3) (2.0) (1.2)Revaluation of property, plant andequipment 5.0 4.2 - 0.9Deferred tax on revaluation ofproperty, plant and equipment (1.2) (1.0) - -Total recognised income andexpense for year 85.4 197.5 29.9 146.2First time adoption of IAS 39 - 73.8 - 57.4Total 85.4 271.3 29.9 203.6 CASHFLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 2007 Group Company 2007 2006 2007 2006 £m £m £m £m Net cash flow from operating activitiesProfit before tax- continuing operations 100.5 94.5 25.2 23.1- discontinued operations 5.9 123.3 5.9 123.3 106.4 217.8 31.1 146.4 Adjusted forDepreciation and amortisation 8.6 7.0 8.2 6.4Impairment losses on loans and advancesto customers 1.1 1.8 0.1 1.4Profit on sale of branch network - (120.4) - (120.4)Profit on disposal of intangible assetsand property, plant and equipment - (7.7) - (10.2)Interest expense: subordinated 37.2 35.6 37.2 35.6liabilitiesOther non-cash movements (0.1) 1.4 (1.5) 1.5 153.2 135.5 75.1 60.7Changes in operating assets and liabilitiesDebt securities 213.7 - 213.7 -Loans and advances to banks (6,592.6) (667.4) (6,677.4) (667.4)Loans and advances to customers (2,170.6) (4,027.0) (2,181.9) (3,980.3)Other assets (37.8) 43.6 (38.5) 40.1Deposits from other banks 2,613.5 8,209.5 2,547.9 8,210.8Due to customers 651.5 (3,823.9) 651.5 (3,824.3)Debt securities in issue 5,482.7 (17.9) (1.6) -Other liabilities 63.6 64.7 5,573.9 70.9Provisions (18.4) (2.8) (18.4) (2.8) 205.6 (221.2) 69.2 (153.0)Taxes paid (17.7) (24.9) 3.1 (9.9)Net cash from/(used in) operating activities 187.9 (246.1) 72.3 (162.9) Cash flows from investing activitiesNet investment in intangible assets andproperty, plant and equipment (4.0) 24.7 (3.8) 14.0*Net cash inflow from sale of branchnetwork - 146.0 - 146.0Interest on subordinated liabilities (36.6) (35.9) (36.6) (35.9)Net cash from/(used in) investing (40.6) 134.8 (40.4) 124.1activities Cash flows from financing activitiesSubordinated debt issue 80.0 - 80.0 -Subordinated debt repayment (50.0) - (50.0) -Equity dividends paid (40.0) (80.0) - (80.0)Capital repayment of finance lease (0.7) (0.4) (0.7) (0.4)Net cash from/(used in) financing (10.7) (80.4) 29.3 (80.4)activities Net (decrease) / increase in cash andcash equivalents 289.8 (56.2) 136.3 (58.5)Opening cash and cash equivalents 854.6 910.8 329.8 388.3Closing cash and cash equivalents 1,144.4 854.6 466.1 329.8 *Included in the net cash inflow from the sale of the branch network are £155.6mof cash consideration received and £9.6m of cash outflow from disposal costs at31 March 2006. ACCOUNTING POLICIES The accounting policies adopted for use in the preparation of the 2007Preliminary results are included in the Annual Financial Statements for the yearended 31 March 2007. SEGMENTAL ANALYSIS The Group has two principal business segments, Mortgages and Consumer. A profitof £120.7m on continuing operations before taxation arose in respect ofMortgages and a profit of £3.8m arose in respect of Consumer. A loss before taxof £24.0m related to Group and Central activities. DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 MARCH 2007 On 21 September 2005 the branch network and savings book was transferred toBritannia Building Society. The profit in 2007 results from the release ofprovisions relating to the transfer and businesses previously disposed of. 2007 2006 £m £mGroupPost tax results from discontinued operations 4.6 2.0 Gain on disposal branch operations - 120.4Taxation thereon - (0.7)Net gain on disposal - 119.7 Post tax gain for the period from discontinued operations 4.6 121.7 Discontinued operations contributed £5.9m (2006: £2.9m) to pre-tax profit,comprising £nil (2006: £21.4m) to revenue, with a release through expenses of£5.9m (2006: cost of £18.5m). The taxation relating to discontinued tradingoperations was £1.3m (2006: £0.9m). Pre tax results from discontinued operations 2007 2006 £m £m Profit before tax for discontinued operations 5.9 2.9Pre tax gain on disposal of branch operations - 120.4 5.9 123.3 DISPOSAL OF BRANCH OPERATIONS 2007 2006 £m £m Carrying value of net tangible assets sold - 5.6 Cost of disposal- Staff costs - 3.3- Legal and professional fees - 5.3- Systems costs - 8.6- Impairment of software - 3.7- Other - 8.7Total cost of disposal - 29.6 Gain on disposal of branch operations - 120.4 Cash consideration received - 155.6 The disposal of branch operations took place on 21 September 2005. TAXATION The change in the effective tax rate from year to year is a result of a numberof matters as illustrated in the following breakdown of the tax charge for theyear and reconciliation of current statutory and effective tax rates. 2007 2006 £m £m Current tax:UK Corporation tax at 30% (2006: 30%) 25.7 22.0Corporation tax adjustments in respect of prior periods 0.4 (2.2)Deferred tax:Current year 6.5 5.1Adjustments in respect of prior periods (3.1) (0.5) 29.5 24.4 OTHER RESERVES AND RETAINED EARNINGS Share Revaluation Profit & loss Other capital premium reserve account reserveGroup £m £m £m £m At 31 March 2005 18.5 4.2 267.9 2.4Adoption of IAS 32 and IAS 39 - - 73.8 -At 1 April 2005 18.5 4.2 341.7 2.4Profit for the year - - 193.4 -Dividends paid on ordinary shares - - (80.0) -Actuarial valuation of pension fund - - 1.2 -Deferred tax on valuation of pension fund - - (0.3) -Revaluation of property - 4.2 - -Deferred tax on revaluation of property - (1.0) - -Transfer of reserve following sale ofproperty - (2.8) 2.8 0.1At 31 March 2006 / 1 April 2006 18.5 4.6 458.8 2.5Profit for the year - - 76.9 -Dividend paid to fellow subsidiary - - (40.0) -Actuarial valuation of pension fund - - 6.8 -Deferred tax on valuation of pension fund - - (2.1) -Revaluation of property - 5.0 - -Deferred tax on revaluation of property - (1.2) - -Transfer of reserve following sale ofproperty - (1.2) 1.2 -At 31 March 2007 18.5 7.2 501.6 2.5 OTHER RESERVES AND RETAINED EARNINGS (continued) Share premium Revaluation Profit & loss Other reserve account capital reserveCompany £m £m £m £m At 31 March 2005 18.5 1.4 86.1 -Adoption of IAS 32 and IAS39 - - 57.4 -At 1 April 2005 18.5 1.4 143.5 -Profit for the year - - 142.6 -Dividends paid on ordinary shares - - (80.0) -Actuarial valuation of pension fund - - 3.9 -Deferred tax on valuation of pensionfund - - (1.2) -Revaluation of property - 0.9 - -Transfer of reserve following sale ofproperty - (0.1) 0.1 -At 31 March 2006 /1 April 2006 18.5 2.2 208.9 -Profit for the year - - 25.2 -Actuarial valuation of pension fund - - 6.7 -Deferred tax on valuation of pensionfund - - (2.0) -Transfer of reserve following sale ofproperty - (1.2) 1.2 -At 31 March 2007 18.5 1.0 240.0 - Share premium This comprises the premium arising on the issue of all equity shares. Revaluation reserve This comprises the revaluation of property to market value. Profit and loss account Profit and loss account reserves comprise accumulated retained profits. Other capital reserve This represents non-distributable reserves established on the acquisition of theBristol & West Building Society. DATE OF APPROVAL This preliminary announcement was approved by the Board of Directors on 30 May2007. This information is provided by RNS The company news service from the London Stock Exchange