LBS.L Regulatory News (LBS)

1 Mar 2006 07:00

Leeds Building Society01 March 2006 Embargoed until 7:00am on Wednesday 1st March 2006 £50m pre-tax profit confirms decade of unbroken success Audited annual results for 2005 Leeds Building Society, the UK's 8th largest society, today (Wednesday 1 March2006) announces record full year results for 2005 across all areas of thebusiness. 2005 Highlights €15% rise in assets to a new record level of £7.1bn •Pre-tax profits up by 18% to a record £50.2m •Record mortgage lending of £1.7bn (£1.6bn in 2004) •Savings balances rise by £446m to a record £4.5bn •Cost asset ratio improved again to 62p per £100 of assets (67p in 2004), one of the lowest levels of any bank or building society •Cost income ratio improved even further to 44% from 47% one of the best in the industry •Increase in reserves to a record £351m For the first time, these annual results have been prepared under InternationalFinancial Reporting Standards (See Note to Editors). Chief Executive, Ian Ward, said: "In 2005 we achieved a further milestone withour assets now exceeding £7bn, up from £6.1bn a year ago and £5.3bn in 2003. TheSociety's pre-tax profits rose by 18% and exceeded £50m for the first time. Thiscontinues our decade of year-on-year increases, which is unique amongst themajor societies. "These levels of growth and profit have been achieved without a similar rise incosts. We significantly improved our cost asset ratio to 62p per £100 of assetsfrom 67p. The other key measure of efficiency is the cost income ratio and theSociety's is one of the lowest in the industry, which means that for every £1 inincome earned we spend only 44p, down from 47p. "We achieved a record level of new mortgage advances of £1.7bn through a varietyof distribution channels to meet customers' requirements, all of which producedan increase in volume in 2005 when compared to the previous year. Thisdemonstrates that we are providing our customers with a wide choice ofcompetitively priced mortgages supported by a fast and efficient service." "During 2005 the Society's savings balances rose to a record £4.5bn and ourvolume of net receipts was 20% greater than our natural market share. Ourflexible, straightforward, good value for money products were well received. Inthe independent customer satisfaction surveys undertaken on our behalf, oursavers regularly say that their experience of our products and service issignificantly better than that provided by many other organisations. "The Directors of Leeds and Mercantile Building Societies have announced thatthey have agreed a merger, which is expected to be effective on 1 August 2006,subject to approval by the Mercantile members and confirmation by the FinancialServices Authority (FSA). Mercantile members will be invited to vote on theproposal at their Society's AGM at the end of April. The FSA has consented toLeeds Building Society proceeding by Board resolution and the combined Societywill be named Leeds Building Society. "We are very proud of the record breaking financial results that we delivered in2005. Our financial strength, combined with the investments we have made intechnology, service and staff, means that we are extremely well placed toachieve the objectives we have set to make Leeds Building Society even moresuccessful in the short, medium and long term." ENDS Note to Editors A copy of the Society's results for 2005 is attached. Full results and comparison with 2004 are attached - most of the changes underIFRS are applied retrospectively from the start of 2004 and are fully reflectedin the restated financial statements for that year. However the standards thatapply to financial instruments, IAS 32 Financial Instruments: Disclosure andPresentation and IAS 39 Financial Instruments: Recognition and Measurement, arebeing implemented from 1 January 2005 without restatement of the 2004comparatives. These are the two standards that have the most significant impacton a retail financial services organisation such as the Society. A fullexplanation of the impact of the transition to the IFRS will be given in theAnnual Report and Accounts. The Society's press office would be happy to arrange interviews with theSociety's Chief Executive, Ian Ward or Deputy Chief Executive & FinanceDirector, David Pickersgill. The Society is the UK's eighth largest building society and changed its namefrom Leeds & Holbeck Building Society on 12 September 2005. For further information please contact: Karen Wint (Head of Marketing & PR)0113 225 7731 or 07989 386772 (out of office hours)kwint@leedsbuildingsociety.co.uk Gary Brook (PR Manager)0113 225 7606 or 07866 455111 (out of office hours)gbrook@leedsbuildingsociety.co.uk For further comment on the results please contact:Ian Ward (Chief Executive) - 0113 225 7501 (direct line)David Pickersgill (Deputy Chief Executive & Finance Director) - 0113 225 7502(direct line) GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 Summary Consolidated Income Audited AuditedStatement --------- --------- (Restated) Year to Year to 31 December 31 December 2005 2004 ------------------ ------------------ £M £MInterest receivable andsimilar income 355.1 300.2 Interest payable and similarcharges (282.4) (238.8) ----------- -----------Net interest receivable 72.7 61.4Other income and charges 18.8 20.9 ----------- -----------Total income 91.5 82.3Administrative expenses (40.6) (38.3)Impairment losses on loans andadvances to customers (0.7) (1.6) ----------- -----------Profit before tax 50.2 42.4Tax expense (15.1) (12.8) ----------- -----------Profit for the year 35.1 29.6 =========== =========== Summary Consolidated Balance Sheet (Restated) 31 December 31 December 2005 2004 ------------------ ------------------ £M £MAssetsLiquid assets 1,503.4 1,194.5Derivative financial instruments 15.7 n/aLoans and advances to customers 5,509.2 4,885.4Property, plant and equipment 24.0 25.0Deferred income tax assets 9.1 9.9Prepayments, accrued incomeand other assets 3.3 13.3 ----------- -----------Total assets 7,064.7 6,128.1 =========== =========== LiabilitiesShares 4,535.5 4,089.0Derivative financial instruments 49.2 n/aDeposits and securities 2,007.8 1,671.4Current income tax liabilities 7.0 5.7Deferred income tax liabilities 3.8 0.9Provision for liabilities,accruals and deferred income 33.4 20.4Retirement benefit obligations 11.6 8.0Subordinated liabilities 40.6 -Subscribed capital 25.0 25.0Revaluation reserve 13.5 13.6General reserve 334.5 294.1Other reserves 2.8 n/a ----------- -----------Total reserves and liabilities 7,064.7 6,128.1 =========== =========== Statement of Recognised Income and Expense Audited Audited --------- --------- (Restated) 31 December 31 December 2005 2004 ------------------ ------------------ £M £MChange in accounting policy onadoption of IAS 39 11.8 n/aValuation losses onrevaluation of (0.2) n/aavailable for sale investmentsGains on cash flow hedges 1.1 n/aActuarial loss on retirementbenefit obligations (6.4) -Tax on items taken directly toequity 1.6 - ----------- -----------Net income recognised directlyin equity 7.9 -Transfer from revaluationreserve 0.1 -on disposalProfit for the period 35.1 29.6 ----------- -----------Total recognised income andexpense for the period 43.1 29.6 =========== =========== Summary Consolidated Cash Flow (Restated) 31 December 31 December 2005 2004 ------------------ ------------------ £M £MNet cash flows from operatingactivities 269.9 186.8Net cash flows from investingactivities (81.9) (128.1)Net cash flows from financingactivities 40.0 - ----------- -----------Net increase in cash and cashequivalents 228.0 58.7 ----------- -----------Cash and cash equivalents atthe beginning of the year 342.9 284.2 ----------- -----------Cash and cash equivalents atthe end of the year 570.9 342.9 ----------- ----------- Summary of key ratiosGross capital as a percentage of shares and borrowings 6.31% 5.78%Liquid assets as a percentage of shares and borrowings 22.98% 20.74%Profit for the financial year as a percentage of meantotal assets 0.53% 0.52%Management expenses as a percentage of mean total assets 0.62% 0.67% Notes to the Financial Information 1. The financial information set out above, which was approved by the Board of directors on 28 February 2006, does not constitute accounts within the meaning of the Building Societies Act 1986. 2. The Annual Accounts have been prepared for the first time under International Financial Reporting Standards (IFRS). Comparative information has also been restated, as required by IFRS. The reconciliation of comparative information from previous UK GAAP accounting requirements to IFRS can be found in the 2005 Annual Accounts and the 2005 Interim Report. This information is provided by RNS The company news service from the London Stock Exchange