Bank Irel13.375 Regulatory News (BOI)

31 May 2006 07:04

Bristol & West PLC31 May 2006 BRISTOL & WEST PLC PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2006 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 2006, 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. COMMENT ON RESULTS BY DES CROWLEY, CHIEF EXECUTIVE OverviewThis has been a significant twelve months for Bristol & West plc, during whichwe have seen considerable growth, development and change. We continued to deliver good business growth, particularly in our mortgagebusiness; we improved our cost base by successfully concluding our BusinessImprovement Programme; and we completed the transfer of the branch network anddirect savings business of Bristol & West plc to Britannia Building Society. Our business continues to be a strong contributor to Bank of Ireland Groupprofit and is an important part of the Bank of Ireland UK Financial ServicesDivision, which also includes the growing Bank of Ireland's UK Business Bankingoperations and joint ventures with the UK Post Office. The UK Division has afocused business strategy and is central to the Group's expansion and growthagenda. Business ReviewProfit before taxation from continuing operations is £94.5m, an increase of£12.3m from 2004/05, a key driver being the growth in the mortgage book. Costsdecreased by £53.9m, a fall of 32%, £51m of which relates to the loss in 2004/05on the sale of Bristol & West International to another part of Bank of IrelandGroup with the remainder reflecting effective cost management. Following the successful transfer of the branch network and savings deposit bookto Britannia Building Society, there was a gain of £120.4 million. LendingWe have continued to build on our strong track record, and have successfullydeveloped our proposition of lending in more profitable, specialist mortgagemarkets. The Bristol & West brand continues to play a strong role in thisbusiness. The residential loan book grew by 24% during the year, and our specialistlending now accounts for 45% of the total mortgage book, up from 39% last year.The quality of the loan book remains very strong, and our arrears across allsectors are consistently below the industry average. We have grown our marketshare of net lending (new business less net redemptions) over 4%, and we haveambitions to increase this further through the continued delivery of our welldefined mortgage strategy. Cost efficiencies, alongside increased productivity in our mortgage processingoperations, have also been delivered, driven in the main by maximising thebenefits of our investment in a new mortgage processing system. Lending (continued)Innovation in new product development has continued, and is evidenced by theFirst Start and Islamic home finance products. We will continue to build on ourstrengths by launching more products in new and emerging markets within the UKand growing our direct consumer mortgage proposition. SavingsIn May 2005 we announced our intention to transfer the Bristol & West branchnetwork, Direct Savings contact centre and the associated customer deposit bookto Britannia Building Society. This decision was taken following a strategicreview which confirmed that this business was no longer part of the Group'splans for growth in the UK. The transfer followed a process that was controlled by both legal and regulatoryprocedures and the interests of our customers and staff were considered at alltimes. A pledge was made that customers would be no worse off as a result of thetransfer, and in fact many would be better off. All Bristol & West staffaffected have been transferred to Britannia, ensuring that staff skills wereretained to maintain continuity of customer service. On 21 September 2005, following Court Approval in August 2005, more than 850,000savings and investment customer accounts were successfully transferred toBritannia Building Society. Bristol & West Third Party Distribution was retained within Bank of IrelandGroup, with the management of the business transferring to the Bank of IrelandWholesale Division in October 2005. Cost ManagementCompletion of our Business Improvement Programme has enabled the successfuldelivery of sustainable annual cost savings at a lower cost to the business thanoriginally expected. CustomersOur business depends on our customers and giving excellent customer service is akey differentiator for our business. Our customer programme incorporates a rangeof initiatives, supported by the principles of Treating Customers Fairly. RegulationWe have maintained a robust regulatory record during the year, and havesuccessfully implemented new mortgage regulation. We are working towardscompliance with new financial procedures under BASEL II. Bristol & West in the CommunityWe continue to be involved in an extensive programme of community activities aspart of our broader Corporate Responsibility agenda. This includes our businesspartnership project working in a disadvantaged community within Bristol, whichhas helped to raise educational achievement and given young people a positiveperspective on the world of work. A five year commitment was made this year by Bristol & West plc to act as acorporate sponsor of the Merchants Academy, a new build senior school to beestablished in the Withywood area of Bristol. During the year we supported Childline as our "Charity of the Year" and this sawUK staff raising more than £103,000 through their own fundraising activities. Our StaffI 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. I would particularly like to thank our previous Chief Executive, Roy Keenan, whoretired from Bank of Ireland Group on 31 March 2006. OutlookIt is an exciting time to take on the task of leading Bristol & West plc and Iam looking forward to working with the UK team. We have a clear strategy, andthe prospects for our business are good, underpinned by the strength of ourposition in the markets in which we operate. We are building on our success to date and will remain focused on generatinggrowth in our business to the benefit of all our stakeholders. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 £m £m Continuing operationsInterest and similar income 1,051.0 838.1Interest expense and similar charges (830.2) (646.0) -------- --------Net interest income 220.8 192.1 Fee and commission income 15.5 33.1Fee and commission expense (13.3) (14.5) -------- --------Net fee and commission income 2.2 18.6 Net trading income (18.4) -Other operating income 4.4 20.1Impairment losses on loans and advances (1.8) 18.0Other operating expenses (112.7) (166.6) -------- --------Profit before taxation from continuing operations 94.5 82.2Taxation (22.8) (35.8) -------- --------Profit for the year from continuing operations 71.7 46.4 Discontinued operationsResult for the year from discontinued operations 121.7 (8.6) -------- --------Profit for the year 193.4 37.8 ======== ======== CONSOLIDATED BALANCE SHEET AT 31 MARCH 2006 Group Company 2006 2005 2006 2005 £m £m £m £mAssets Cash and balances withcentral banks - 11.0 - 3.1Debt securities 341.5 335.3 341.5 335.3Derivative financialinstruments 117.6 - 117.6 -Loans and advances to banks 1,655.4 1,033.2 1,139.9 527.9Loans and advances tocustomers 21,541.4 17,418.8 21,270.6 17,217.8Shares in group undertakings - - 591.7 597.6Intangible assets 37.3 44.1 37.3 44.1Property, plant andequipment 53.7 76.1 13.9 25.8Current tax asset 7.7 - 9.1 -Deferred tax assets - 28.7 - 27.5Other assets 38.5 83.7 16.2 57.9 ------- ------- ------- -------Total assets 23,793.1 19,030.9 23,537.8 18,837.0 ======= ======= ======= ======= LIABILITIES Deposits from other banks 18,978.3 10,723.3 19,095.2 10,838.9Derivative financialinstruments and othertrading liabilities 76.9 - 76.9 -Due to customers 2,924.7 6,704.4 2,924.7 6,704.8Debt securities in issue 61.3 79.2 - -Other liabilities 338.4 310.3 322.8 297.0Provisions 43.0 29.5 43.0 29.5Current tax liabilities 22.0 19.5 - 1.2Deferred tax liabilities 8.7 - 2.7 -Retirement benefitobligations 56.0 73.0 43.5 60.9Subordinated liabilities 414.2 413.5 414.2 413.5Other borrowed funds 78.6 - 78.6 - ------- ------- ------- -------Total liabilities 23,002.1 18,352.7 23,001.6 18,345.8 ======= ======= ======= ======= EQUITYShare capital 306.6 385.2 306.6 385.2Retained earnings 458.8 267.9 208.9 86.1Other reserves 25.6 25.1 20.7 19.9 ------- ------- ------- -------Total equity 791.0 678.2 536.2 491.2 ======= ======= ======= ======= ------- ------- ------- -------Total equity and liabilities 23,793.1 19,030.9 23,537.8 18,837.0 ======= ======= ======= ======= STATEMENTS OF RECOGNISED INCOME AND EXPENSES Group Company 2006 2005 2006 2005 £m £m £m £mFor the year ended 31 MarchProfit for the financial year 193.4 37.8 142.6 32.0Actuarial valuation of pension fund 1.2 (10.9) 3.9 (10.4)Deferred tax on actuarial gains andlosses (0.3) 3.3 (1.2) 3.0Revaluation of property, plant andequipment 4.2 0.2 0.9 0.7Deferred tax on revaluation ofproperty, plant and equipment (1.0) (0.2) - - -------- -------- -------- --------Total recognised income and expensefor 197.5 30.2 146.2 25.3yearFirst time adoption of IAS 39 73.8 - 57.4 - -------- -------- -------- -------- Total 271.3 30.2 203.6 25.3 ======== ======== ======== ======== CASHFLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2006 Group Company 2006 2005 2006 2005 £m £m £m £m Net cash flow from operatingactivitiesProfit / (loss) before tax - continuing operations 94.5 82.2 23.1 48.1 - discontinuedoperations 123.3 (5.2) 123.3 (5.2) ------- ------- ------- ------- 217.8 77.0 146.4 42.9 Adjusted forDepreciation andamortisation 7.0 14.3 6.4 12.2Impairment losses onloans and advances tocustomers 1.8 (18.0) 1.4 (18.3)Profit on sale ofbranch network (120.4) - (120.4) -Profit on disposal ofintangible assets andproperty, plant andequipment (7.7) - (10.2) -Other non-cashmovements 37.0 28.5 37.1 58.3 ------- ------- ------- ------- 135.5 101.8 60.7 95.1Changes in operating assets andliabilitiesLoans and advances tobanks (667.4) 396.8 (667.4) (112.9)Loans and advances tocustomers (4,027.0) (110.2) (3,980.3) (578.8)Other assets 43.6 (15.2) 40.1 (2.2)Deposits from otherbanks 8,209.5 1,220.3 8,210.8 757.8Due to customers (3,823.9) (879.4) (3,824.3) (91.5)Debt securities inissue (17.9) (138.6) - -Other liabilities 64.7 66.7 70.9 36.1Provisions (2.8) (2.1) (2.8) (1.5) ------- ------- ------- ------- (221.2) 538.3 (153.0) 7.0Taxes paid (24.9) (37.8) (9.9) (12.4) ------- ------- ------- -------Net cash from/(used in)operating activities (246.1) 500.5 (162.9) (5.4)Cash flows from investingactivities Net investment inintangible assets andproperty, plant andequipment 24.7 (57.5) 14.0 (5.1)*Net cash inflow fromsale of branch network 146.0 - 146.0 -Subordinatedliabilities (35.9) (35.0) (35.9) (34.9) ------- ------- ------- -------Net cash from/(used in)investing activities 134.8 (92.5) 124.1 (40.0)Cash flows from financingactivities Subordinated debt issue - 59.8 - 59.8Equity dividends paid (80.0) (20.0) (80.0) (20.0)Capital repayment offinance lease (0.4) - (0.4) - ------- ------- ------- -------Net cash from/(used in)financing activities (80.4) 39.8 (80.4) 39.8 ------- ------- ------- -------Net (decrease) /increase in cash andcash equivalents (56.2) 549.6 (58.5) 89.5Opening cash and cashequivalents 910.8 361.2 388.3 298.8 ------- ------- ------- -------Closing cash and cashequivalents 854.6 910.8 329.8 388.3 ======= ======= ======= ======= *Included in the net cash inflow from the sale of the branch network are £155.6million of cash consideration received and £9.6 million of cash outflow fromdisposal costs at 31 March 2006. ACCOUNTING POLICIES This preliminary announcement has been prepared using International FinancialReporting Standards ("IFRS") that, under European Union Regulations, areeffective at the Group's first reporting date under IFRS, 31 March 2006. Theaccounting policies adopted for use in the preparation of the 2006 Preliminaryresults are included in the Annual Financial Statements for the year ended 31March 2006. SEGMENTAL ANALYSIS The group has two principal business segments: Mortgages and Consumer. A profitof £116.8m on continuing operations before taxation arose in respect ofMortgages and a loss of £7.8m arose in respect of Consumer. A loss of £14.5mrelated to Group and Central activities. DISCONTINUED OPERATIONS FOR THE YEAR ENDED 31 MARCH 2006 2006 2005 £m £mGroupPost tax results from discontinued operations 2.0 (8.6) Gain on disposal branch operations 120.4 -Taxation thereon (0.7) - --------- --------Net gain on disposal 119.7 - --------- --------Post tax gain/(loss) for the period from discontinuedoperations 121.7 (8.6) ========= ======== Discontinued operations contributed £21.4m (2005: £91.9m) to revenue, £2.9m topre tax profit(2005: £5.2m loss) after expenses of £18.5m (2005: £97.1m). The taxationrelating to discontinued trading operations was £0.9m (2005: £3.4m). Thediscontinued operations relate to the disposal of the branch operations. DISPOSAL OF BRANCH OPERATIONS Pre tax results from discontinued operations 2006 2005 £m £m Profit / (loss) before tax for discontinued operation 2.9 (5.2)Pre tax gain on disposal of branch operations 120.4 - --------- -------- 123.3 (5.2) ========= ======== 2006 £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 8.7 --------- 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. 2006 2005 £m £m Current tax:UK Corporation tax at 30% (2005: 30%) 22.0 7.6Corporation tax adjustments in respect of prior periods (2.2) 2.4Overseas taxation - 20.0Deferred tax:Current year 5.1 9.5Adjustments in respect of prior periods (0.5) (0.3) --------- -------- 24.4 39.2 ========= ======== DATE OF APPROVAL This preliminary announcement was approved by the Board of Directors on 30 May2006. This information is provided by RNS The company news service from the London Stock Exchange