Coventry Bs12e% Regulatory News (CVBP)

21 Feb 2006 07:30

Coventry Building Society 21 February 2006 A year of outstanding success for the Coventry Coventry Building Society, the UK's fifth largest building society, todayannounces outstanding results for the year ended 31 December 2005 - one of itsbest ever years. Highlights • Record gross lending of just over £3 billion - up £811 million on 2004 • Record net lending of £1.3 billion - 64% above 'natural' market share • Savings' balances increased by £897 million - 42% above 'natural' market share • Growth in total assets of 17.5% to over £11 billion • Management expenses ratio reduced to 0.57% of average assets - the best ratio of any building society • Profit before tax increased by £2.1 million to £53.7 million • Over 76,000 new customers bringing total membership to over one million For the first time, these annual results have been prepared under InternationalFinancial Reporting Standards (See Editors' Notes). Commenting on the Society's performance, Martin Ritchley, Chief Executive said:"The mortgage and savings' markets remained as competitive as ever in 2005;however, despite this, the Society achieved an unprecedented level of newlending - just over £3 billion, significantly ahead of last year's £2.2 billion.As a result, our mortgage balances increased by a record £1.3 billion, 64%above our 'natural' market share. This is a particularly impressive performanceagainst the background of a more subdued housing market. "The continued high levels of employment and comparatively low interest rateenvironment have sustained mortgage repayments and kept arrears' levels low.Even against that background, the Society's mortgage arrears remain less thanhalf the industry average, reflecting the high quality of our mortgage book. "The Society was equally successful in attracting new savings' customers, withretail funding balances increasing by £897 million, 42% above our 'natural'market share. This very strong performance on both sides of our businessenabled total assets to grow by 17.5% to £11.1 billion - a result we confidentlyexpect to be amongst the best in the building society sector. "Once again, our success has been built upon the advantages which our buildingsociety status bring and our focus upon delivering ongoing benefits to a growingnumber of members. Our net interest margin (principally the difference betweenthe interest we earn from borrowers and the interest we pay to savers) at 0.96%of average assets remains one of the narrowest in the financial services sectordemonstrating our ongoing commitment to members. "The management expenses ratio reduced for the tenth successive year to 0.57% ofaverage assets, maintaining our position as the most cost efficient buildingsociety in the country. Our growth and cost efficiency helped us to achieve anincrease of £2.1 million in pre-tax profit, which amounted to £53.7 million,even after charging £2.9 million for loan impairment provisions. The increasedprofit contributed to our strong capital ratios. "Without doubt, the innovative approach we adopted to both existing and newcustomers contributed to our success, with Coventry Building Society being atthe forefront in the development of new savings' and mortgage products. OurFamily 1st account, designed to encourage savings from families in receipt ofchild benefit, and our very successful Sixty-Plus range of savings' accounts,both achieved widespread acclaim as well as bringing a substantial number of newcustomers to the Society. "Our results for 2005 are truly outstanding. As a building society committed toputting members first, our performance reflects the winning formula we havedeveloped to deliver commercial success as well as member satisfaction. Our aimis to grow the Society for the benefit of saving and borrowing members and ourresults demonstrate that we can look forward to the future with confidence." Editors' Notes • Martin Ritchley, Chief Executive is available for interview and comment • Photographs of Martin Ritchley can be downloaded from the Media Room at www.coventrybuildingsociety.co.uk or from www.headlinemoney.co.uk • Full results and comparison with 2004 are attached - most of thechanges under IFRS are applied retrospectively from the start of 2004 and arefully reflected in the restated financial statements for that year. However thestandards that apply to financial instruments, IAS 32 Financial Instruments:Disclosure and Presentation and IAS 39 Financial Instruments: Recognition andMeasurement, are being implemented from 1 January 2005 without restatement ofthe 2004 comparatives. These are the two standards that have the mostsignificant impact on a retail financial services organisation such as theSociety. Therefore, the 2004 results and position at the end of the year arenot directly comparable with the 2005 figures. A full explanation of the impactof the transition to the IFRS will be given in the Annual Report and Accounts. Coventry Building Society Results for the year ended 31st December 2005 Key Results Year Ended Year Ended 31.12.05 31.12.04 (as restated)(1) £m £m Pre tax profits 53.7 51.6 Provisioning 2.9 0.4 Gross lending 3,009 2,198 Net lending 1,326 409 Net receipts from shares (2) 897 101 Total assets 11,090 9,440 Key Ratios Year Ended 31.12.05 Year Ended 31.12.04 % (as restated)(1) % Asset growth 17.48 5.69 Commercial asset growth 17.10 5.56 Gross capital 5.70 6.10 Free capital 5.54 6.02 Net interest margin 0.96 0.95 Management expenses to average assets 0.57 0.59 Profit before tax to average assets 0.52 0.56 Income Statement Year Ended 31.12.05 Year Ended 31.12.04 £m (as restated) (1) £m Net interest receivable 98.1 87.0 Other income and charges 17.2 19.1 Gains less losses from derivativefinancial instruments (0.6) - Total income 114.7 106.1 Management expenses (58.1) (54.1) Impairment losses on loans and advances (2.9) (0.4) Profit before tax 53.7 51.6 Tax (16.6) (16.0) Profit after tax 37.1 35.6 Statement of Recognised Income & Year Ended 31.12.05 Year Ended 31.12.04Expense £m £m Profit for the year 37.1 35.6 Effect of adopting IAS 39 on 1January 2005 (4.7) - Actuarial losses on defined benefit pension plan (6.1) (1.1) Tax on actuarial losses loss on defined benefit pension plan 1.9 0.3 Fair value movements taken to 1.1 -reserves Tax on fair value movements taken to reserves (0.2) - Net income recognised directly inequity (8.0) (0.8) Total recognised income andexpense 29.1 34.8 Balance Sheet As at 31.12.05 As at 31.12.04 (as restated) (1) £m £m Assets Liquid assets 1,952.2 1,622.8 Derivative financial instruments 15.4 - Loans and advances to customers 9,078.8 7,753.2 Tangible and intangible fixed assets 30.0 30.4 Other assets 13.6 33.3 Total assets 11,090.0 9,439.7 Liabilities Shares 7,455.4 6,558.3 Borrowings 2,984.5 2,314.9 Derivative financial instruments 15.4 - Other liabilities 39.5 25.6 Subordinated liabilities 90.6 65.4 Subscribed capital 41.6 41.6 Total liabilities 10,627.0 9,005.8 Equity General reserve 463.0 433.9 Total liabilities & equity 11,090.0 9,439.7 Cash Flow Statement Year Ended 31.12.05 Year Ended 31.12.04 £m (as restated) (1) £m Cash flows from operatingactivities 218.0 227.8 Cash flows from investing activities (160.8) (233.8) Cash flows from financingactivities 25.0 29.8 Net increase in cash 82.2 23.8 Cash and cash equivalents at thestart of the period 50.7 26.9 Cash and cash equivalents at the end of the period 132.9 50.7 Notes to the accounts. (1) 2004 comparatives have been restated on adoption of International Financial Reporting Standards. An explanation of the effect of adoption on the 2005 and 2004 results is contained in the full Report and Accounts. (2) Includes interest added to the accounts. This announcement will be sent to holders of the Society's Permanent InterestBearing Shares. Copies are available from the Society's Head Office: Coventry Building Society, Economic House, PO Box 9, High Street, Coventry, CV15QN. Contact : John Thomson FCMA, Deputy Chief Executive Telephone (0845) 7665522 www.coventrybuildingsociety.co.uk For more information or additional comment please contact: Yvonne White, Media Relations Manager on 0870 607 7727 or out of hours 07790 880880 Telephone calls may be monitored or recorded for your protection or for trainingpurposes The Society is authorised and regulated by the Financial Services Authority. The Society introduces only to Norwich Union Marketing Group, members of whichare authorised and regulated by the Financial Services Authority for lifeassurance, pensions and investment. Member of the Building Societies Association. Shares and Deposits are Trusteeinvestments. This information is provided by RNS The company news service from the London Stock Exchange