BWSA.L Regulatory News (BWSA)

14 Nov 2007 11:26

Bristol & West PLC14 November 2007 BRISTOL & WEST GROUP RESULTS Condensed Consolidated Financial Information for the six months to 30 September 2007 Commentary Key Events During the six months ended 30 September 2007 the decision was made to transferthe business of the Bristol & West Group (the "Group") to other statutoryentities within the Bank of Ireland Group. This transfer took place on 1 October2007 and further details are given in Note 8. Accordingly the results of theGroup have been split between "continuing operations" (relating to a limitednumber of non-operational assets and liabilities that remain) and "discontinuedoperations" relating to the transferred business. Business Commentary Whilst the Group has experienced good growth in residential lending,particularly in the buy-to-let market, profit before tax is £6.9 million (13%)lower for the six months ended 30 September 2007 compared to the equivalentperiod last year. The key factor adversely influencing the performance has beena narrowing of interest margins reflecting both a more competitive market placeand higher funding costs. In addition costs increased period on period due tothe expense associated with the corporate restructuring of Bristol & West notedabove which was effected to obtain the optimum capital and funding treatment forthe Bank of Ireland Group under Basel II. Following the transfer of business referred to above, the results fromcontinuing operations are expected to reflect the income from retained bankdeposits and cost of dividends payable to preference shareholders. Principal Risks The Group considers its strategic, operational and financial risks andidentifies actions to mitigate these risks. Details of the Group's risk profilecan be found in our Annual Report. As a result of the corporate restructure referred to above the principal risksof the continuing business are substantially reduced, but will continue to bereviewed by management with the appropriate action being taken to ensure theirmitigation. Related Parties The Group has had no material or unusual related party transactions during thesix month period to 30 September 2007. Related party transactions for the sixmonth period to 30 September 2007 are similar in nature to those for the yearended 31 March 2007. Unaudited Unaudited 6 months to 6 months to 30 Sept 2007 30 Sept 2006 Note £m £m Continuing operationsInterest and similar income 3.2 3.2Interest expense and similar charges (3.2) (3.2) ---------- ---------Net interest income - - Other operating expenses (0.2) - ---------- ---------Loss before taxation from continuing operations (0.2) -Taxation (0.9) (1.0) ---------- ---------Loss for the period from continuing operations (1.1) (1.0) Discontinued operationsPost tax results from discontinued operations 3 35.5 39.6 ---------- ---------Profit for the period attributable to equity 34.4 38.6shareholders ---------- --------- Earnings per share expressed in pence per share -Basic 5.6p 6.3p-Diluted 4.9p 5.5p Earnings per share from continuing operations -Basic (0.2p) (0.2p)-Diluted (0.2p) (0.1p) The notes on pages 7 to 11 form an integral part of this condensed consolidatedhalf yearly financial information. Note Unaudited Audited Unaudited 30 Sept 2007 31 March 2007 30 Sept 2006 £m £m £mAssets Debt securities - 120.5 332.4Derivative financial instruments - 130.5 112.6Loans and advances to banks - 8,537.8 2,301.7Loans and advances to customers - 23,710.9 22,677.0Intangible assets - 37.1 36.4Property, plant and equipment - 51.1 52.5Asset classified as held forsale - 3.2 -Other assets 1.7 76.3 51.2Assets of a disposal group heldfor sale 33,592.4 - - ========= ========== ========== Total assets 33,594.1 32,667.4 25,563.8 ========= ========== ========== LIABILITIES Deposits from other banks 12.5 21,591.8 20,282.2Derivative financial instruments - 73.7 68.6Due to customers - 3,593.1 3,316.7Debt securities in issue - 5,535.6 53.9Other liabilities 9.1 418.1 375.5Provisions 0.8 24.6 34.2Current tax liabilities 2.1 23.2 21.9Deferred tax liabilities (0.1) 14.9 8.6Retirement benefit obligations - 36.5 53.8Subordinated liabilities - 440.9 443.1Other borrowed funds 78.6 78.6 78.6Liabilities of a disposal groupheld for sale 32,684.2 - - ========= ========== ========== Total liabilities 32,787.2 31,831.0 24,737.1 ========= ========== ========== EQUITYShare capital 306.6 306.6 306.6Retained earnings 5 474.1 501.6 494.5Other reserves 5 21.0 28.2 25.6Amounts recognised directly inequity relating to assets of adisposal group held for sale 5.2 - - ========= ========== ========== Total equity 806.9 836.4 826.7 ========= ========== ========== --------- ---------- ----------Total equity and liabilities 33,594.1 32,667.4 25,563.8 ========= ========== ========== The notes on pages 7 to 11 form an integral part of this condensed consolidatedhalf yearly financial information. Unaudited Unaudited 6 months 6 months to 30 Sept 2007 to 30 Sept 2006 Note £m £m For the period ended 30 SeptemberProfit for the period 34.4 38.6Actuarial valuation of pension fund 5 10.2 (3.6)Deferred tax on actuarial gains and losses 5 (3.1) 1.1 ---------- --------- Total 41.5 36.1 ========== ========= The notes on pages 7 to 11 form an integral part of this condensed consolidatedhalf yearly financial information. Unaudited Unaudited 6 months 6 months to 30 Sept 2007 to 30 Sept 2006 Note £m £m Net cash flow from operating activitiesProfit / (loss) before tax-continuing operations (0.2) --discontinued operations 3 46.7 53.4 ---------- --------- 46.5 53.4 Adjusted for (all discontinued)Depreciation and amortisation 3.4 4.4Impairment losses on loans and advances tocustomers (0.5) (0.1)Profit on disposal of intangible assetsand property, plant and equipment (3.4) (0.2)Interest expense: subordinated liabilities 19.9 18.1Other non-cash movements (1.8) (0.3) ---------- --------- 64.1 75.3 Continuing:Changes in operating assets and liabilitiesLoans and advances to banks 3.2 3.2Other liabilities 0.1 - ---------- --------- 3.3 3.2Taxes paid (1.0) (1.0) ---------- ---------Net cash from operating activities 2.3 2.2 Cash flows from investing activitiesInterest on subordinated liabilities (3.2) (3.2) ---------- ---------Net cash from investing activities (3.2) (3.2) The notes on pages 7 to 11 form an integral part of this condensed consolidatedhalf yearly financial information. Unaudited Unaudited 6 months 6 months to 30 Sept 2007 to 30 Sept 2006 Note £m £m Discontinued:Changes in operating assets and liabilitiesDebt securities 121.6 -Loans and advances to banks 567.9 (477.4)Loans and advances to customers (996.5) (1,135.5)Other assets (58.5) (12.7)Deposits from other banks 822.5 1,303.9Due to customers 327.8 399.1Debt securities in issue (299.6) (7.4)Other liabilities 110.5 32.6Provisions (7.9) (8.8) ---------- --------- 587.8 93.8Taxes paid (11.0) (5.1) ---------- ---------Net cash from operating activities 576.8 88.7 Cash flows from investing activitiesNet investment in intangible assets andproperty, plant and equipment 4.4 (2.1)Interest on subordinated liabilities (20.4) (18.6) ---------- ---------Net cash from investing activities (16.0) (20.7) Cash flows from financing activitiesSubordinated debt issue - 30.0Equity dividends paid 6 (70.0) -Capital repayment of finance lease (0.2) (0.2) ---------- ---------Net cash from financing activities (70.2) 29.8 Net increase inContinuing cash and cash equivalent (1.1) (1.0)Discontinuing cash and cash equivalent 554.9 173.1 Opening cash equivalents 1,144.4 910.8 ---------- ---------Closing cash equivalents 1,698.2 1,082.9 ========== ========= The notes on pages 7 to 11 form an integral part of this condensed consolidatedhalf yearly financial information. 1 General Information and basis of preparation of financial statements These financial statements are the unaudited interim consolidated financialstatements (hereafter referred to as the "Interim Financial Statements") ofBristol & West plc, a company registered in the United Kingdom and itssubsidiaries (hereafter, 'the Group') for the six month period ended 30September 2007. The address of its registered office is One Temple Back East,Temple Quay, Bristol BS1 6DX. These Financial Statements are prepared in accordance with the InternationalAccounting Standard 34 (IAS 34) 'Interim Financial Reporting' and should be readin conjunction with the Consolidated Financial Statements for the year ended 31March 2007 (hereafter 'the Annual Financial Statements'), as they provide anupdate of previously reported information. The Interim Financial Statements wereapproved for issue by the Board of Directors on 13 November 2007. These Interim Financial Statements do not comprise statutory accounts within themeaning of section 240 of the Companies Act 1985. The Annual FinancialStatements were approved by the Board of Directors on 30 May 2007 and deliveredto the Registrar of Companies. The report of the auditors on those accounts wasunqualified, did not contain an emphasis of matter paragraph and did not containany statement under section 237 of the Companies Act 1985. 2 Accounting Policies The accounting policies adopted are consistent with those of the AnnualFinancial Statements for the year ended 31 March 2007. The preparation of Interim Financial Statements requires management to makejudgements, estimates and assumptions that impact the application of accountingpolicies and the reported amounts of assets, liabilities, income and expense.Actual results may differ from these estimates. There have been no significantchanges in the bases upon which estimates have been determined, compared tothose applied at 31 March 2007. If in the future such estimates and assumptions, which are based on management'sbest judgements at the date of the Interim Financial Statements, deviate fromthe actual circumstances, the original estimates and assumptions will bemodified as appropriate in the period in which the circumstances change. The Group operates in industries where significant seasonal or cyclicalvariations in total sales are not experienced during the financial year. Incometax expense is recognised based upon the best estimate of the weighted averageincome tax rate expected for the full financial year. 3 Discontinued operations 6 months to 6 months to 30 Sept 2007 30 Sept 2006 £m £m Group Post tax results from discontinued operations 35.5 39.6 ------------ ------------Result for the period from discontinuedoperations 35.5 39.6 ------------ ------------ Discontinued operations contributed £93.8m (2006: £107.2m) to revenue, £46.7m topre tax profit (2006: £53.4m) after impairment losses of £0.5m credit (2006:£0.1m credit) and expenses of £47.6m (2006: £53.9m). The taxation relating tothe discontinued operations was £11.2m (2006: £13.8m). The assets and liabilities of the disposal group* included in discontinuedresults comprise the following: Unaudited 30 Sept 2007 £m Assets Derivative financial instruments 130.3Loans and advances to banks 8,520.5Loans and advances to customers 24,707.9Intangible assets 36.9Property, plant and equipment 50.1Retirement benefit asset 13.6Other assets 133.1 -------------Total assets 33,592.4 ============= Liabilities Deposits from other banks 22,401.8Derivative financial instruments 119.6Due to customers 3,929.7Debt securities in issue 5,180.6Other liabilities 556.3Provisions 15.9Current tax liabilities 10.9Deferred tax liabilities 28.4Subordinated liabilities 441.0 -------------Total liabilities 32,684.2 ============= * IFRS 5 defines a disposal group as a group of assets to be disposed of, bysale or otherwise, together as a group in a single transaction, and liabilitiesdirectly associated with those assets will be transferred in the transaction. 4 Business Segments The Group has two principal business segments, Mortgages and Consumer. TheConsumer segment comprises customer deposits and Guaranteed Equity Bond savingsdeposits. Mortgages Consumer Divisional Total Centre £m £m £m £mGroupAt 30 September 2007Continuing operationsRevenue - - - - ======== ======== ========= ========Segment result (0.2) (0.2) ======== ======== ========= ========Loss before tax - - (0.2) (0.2)Taxation - - (0.9) (0.9) -------- -------- --------- --------Loss for the period - - (1.1) (1.1) ======== ======== ========= ======== Discontinued operations Revenue 92.2 2.9 (1.3) 93.8 ======== ======== ========= ========Segment result 64.3 2.3 (19.9) 46.7 ======== ======== ========= ======== Profit / (loss) before tax 64.3 2.3 (19.9) 46.7 Taxation (19.3) (0.7) 8.8 (11.2) -------- -------- --------- --------Profit / (loss) for theperiod 45.0 1.6 (11.1) 35.5 ======== ======== ========= ======== Segment assets 24,707.9 - 8,886.2 33,594.1 ======== ======== ========= ========Segment liabilities 20,814.6 3,893.3 8,079.3 32,787.2 ======== ======== ========= ======== Other segment itemsCapital expenditure 0.3 - 0.9 1.2Depreciation 0.4 - 1.1 1.5Amortisation 1.2 - 1.7 2.9 Mortgages Consumer Divisional Total Centre £m £m £m £mGroupAt 30 September 2006Continuing operationsRevenue - - - - ======== ======== ========= ========Segment result - - - - ======== ======== ========= ========Profit/ (loss) before tax - - - -Taxation - - (1.0) (1.0) -------- -------- --------- --------Loss for the period - - (1.0) (1.0) ======== ======== ========= ======== 4 Business Segments (continued) Mortgages Consumer Divisional Total Centre £m £m £m £mDiscontinued operations Revenue 94.6 2.3 10.3 107.2 ======== ======== ========= ========Segment result 60.7 1.9 (9.2) 53.4 ======== ======== ========= ========Profit / (loss) before tax 60.7 1.9 (9.2) 53.4Taxation (18.2) (0.6) 5.0 (13.8) -------- -------- --------- --------Profit / (loss) for theperiod 42.5 1.3 (4.2) 39.6 ======== ======== ========= ======== Segment assets 22,677.0 - 2,886.8 25,563.8 ======== ======== ========= ========Segment liabilities 19,365.8 3,311.2 2,060.1 24,737.1 ======== ======== ========= ======== Other segment itemsCapital expenditure 0.9 - 0.3 1.2Depreciation 0.5 - 1.0 1.5Amortisation 1.1 - 1.8 2.9 Revenue comprises the net income from interest, fees, commissions, tradingincome and other operating income and is generated lending and deposit-takingbusiness with external retail customers and the related financial assets andliabilities. Recharges from Divisional Centre to other business segments are made at cost ona consistent basis year on year. 5 Other Reserves and Retained Earnings Share Revaluation Profit & loss Cash flow Other capital premium reserve account hedging reserve reserve £m £m £m £m £m At 1 April 18.5 7.2 501.6 - 2.52007Profit forthe - - 34.4 - -periodDividend paidto parentcompany - - (70.0) - -Actuarialvaluation ofpension fund - - 10.2 - -Deferred taxon valuationof pensionfunds - - (3.1) - -Transfer ofreservefollowingsale - (1.0) 1.0 - -of propertyChange invaluation ofcash flowhedge - - - (1.0) - -------- --------- ------- -------- -------At 30September 18.5 6.2 474.1 (1.0) 2.52007 ======== ========= ======= ======== ======= 6 Dividends A dividend of £70m was paid in September 2007 (six months to 30 September 2006:£nil). 7 Income taxes Income tax expense is recognised based on management's best estimate of theweighted average annual income tax rate expected for the full financial year.The estimated average annual tax rate used for the year to 31 March 2008 is52.9% (the estimated average annual tax rate for the half year to 30 September2006 was 15.1%). This increase of 37.8% is mainly due to the impact of the saleof discontinued operations referred to in Note 3. 8 Events after the Balance Sheet Date On 1 October 2007, with the exception of a limited number of non-operationalassets and liabilities, the entire business of Bristol & West plc ("B&W") andthe Bank of Ireland Home Mortgages Limited ("BIM"), referred to within theseInterim Financial Statements as "Discontinued Operations", was transferred toother statutory entities within the Bank of Ireland Group ("BOIG"). As part of this corporate restructure the following transactions have been orwill be undertaken subsequent to 1 October 2007: (a) The business of B&W and BIM was transferred to the Governor & Company of theBank of Ireland on 1 October 2007 at its book value. In addition all of thesubsidiaries of B&W and BIM were transferred to B&W's parent, Bank of Ireland UKHoldings plc ("BOI UKH"), at their book value. (b) In accordance with section 135 of the Companies Act 1985, B&W reduced itsissued ordinary share capital from £306.5m to £50,000 and cancelled its sharepremium of £18.5m and repaid these to BOI UKH. (c) Amounts not required to be retained by the continuing business will bedistributed by way of dividend to BOI UKH. Statement of Directors' responsibilities The Directors' confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union. Changes to the Directors of Bristol and West plc as listed in the Bristol & WestGroup Annual Report and Accounts for 31 March 2007 are as follows: Roy Bailie OBE resigned 1 October 2007Orna Ni Chionna resigned 1 October 2007Bernard A Cragg resigned 1 October 2007Dr Alan McClure resigned 1 October 2007 By Order of the Board Desmond E Crowley13 November 2007Chief Executive Kieran Coleman13 November 2007Finance Director An electronic version of these Interim Financial Statements may be found on theBristol & West plc website: www.bristol-west.co.uk/bwplc This information is provided by RNS The company news service from the London Stock Exchange