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Half Yearly Report

16 Aug 2010 10:19

RNS Number : 1187R
Manchester Building Society
16 August 2010
 



 

 

 

MANCHESTER BUILDING SOCIETY GROUP

 

HALF-YEARLY FINANCIAL INFORMATION

 

30 JUNE 2010

 

 

 

Business Review

 

The Group reported a profitable start to 2010.

 

Highlights for the period include:

 

·; Profit before tax for the half year of £0.245m

·; The Society's management expense ratio fell further to 0.56%

·; Liquid funds increased by 7.5% over the past 12 months

 

Retail savings and liquid funds

 

There were no notable movements in either the number of retail depositing customers or the total balance of their funds during the period. However, over a three year period, the Society has grown its retail balances by 58%.

 

The Society maintained its low level of reliance on the wholesale funding markets during the period, operating such balances within the range of 10.5 - 12.3%, expressed as a percentage of Shares Deposits and Loans; the comparable level of wholesale funding from three years earlier had been 29.3%.

 

Robust levels of liquidity have been maintained throughout the period.

 

Mortgage lending and arrears

 

New mortgage lending during the first half of the year has been subdued. The small reduction in overall mortgage balances reported during the period was in line with the Society's business plans, with levels of redemptions and repayments received being in excess of new mortgage advances made. A cautious approach has continued to be taken to the underwriting criteria applied to all new products offered, with interest rates offered reflecting this underwriting caution.

 

The Society continues to take a sympathetic and pragmatic approach to working with those borrowers that fall into arrears.

 

The level of arrears seen on mortgage balances has remained stable during the first half of 2010 and the number of properties in possession at the end of June 2010 was marginally lower than the position a year earlier (June 2010: 16; June 2009: 18).

 

Board and staff changes

 

There have been no material changes to either the Group's organisational structure or its headcount. The Board considers that the current staffing compliment will support existing business levels and can accommodate increased activity in the short term as and when the housing market recovers.

 

John Bee, previously the Society's Chairman and a non-executive director for the past 10 years, retired from the Board in April 2010. The Board would like to thank him for his long standing commitment and for the contribution that he has made to the Group's development during his time on the Board.

 

Risks and uncertainties

 

In common with all institutions funded primarily through retail deposits, the Group's interest margin has been squeezed by the low interest rate environment. Nevertheless, the underlying business model has been sufficiently robust to maintain profitability, albeit at reduced levels, and further steps have been taken to improve the net interest margin, with a consequential improvement anticipated to profitability in the second half of 2010.

 

Both the UK and global economic outlooks continue to be uncertain. Whilst average UK retail savings rates have reduced since the start of 2010, competition for retail deposits continues to be fierce and it is the Board's view that this will continue for the foreseeable future.

 

The future direction of the housing market also remains uncertain, with general sentiment fearing a further relapse in house prices following their unexpected recovery between H1 2009 and H2 2010. The Society's approach will remain cautious and its lending levels are likely to remain subdued during the remainder of the year.   Focus into 2011 will be maintained on cautious, controlled, profitable growth with the reduction of the management expense ratio and a strengthening of capital ratios all being key targets.

 

Forward-looking statements

 

Within the half yearly information we make comments about anticipated future events, which we believe to be reasonable. As these statements are based on the Group's current view of the UK economy and banking market, we can give no assurances that the markets will develop in the way that we document and actual outcomes may differ to those that we anticipate.

 

The Group does not undertake to update any of the statements that it has made about future events prior to reporting of the full year results.

 

Responsibility statement of the directors in respect of the half yearly financial information

 

The directors confirm that, to the best of their knowledge:

 

·; The condensed set of consolidated accounts has been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union.

·; The half yearly accounts include the information required by the Financial Services Authority Disclosure and Transparency Rules (DTR 4.2.7 and DTR 4.2.8)

 

The results for the half year ended 30 June 2010 and those comparable figures for the half year ended 30 June 2009 are unaudited. The figures for the year ended 2009 are extracted from the 2009 Annual Report and Accounts, on which the Independent Auditors gave an unqualified opinion.

 

 

The Board of Directors responsible for the half yearly accounts are listed below:

 

J. Allen Non-executive director

D.E. Cowie Chief Executive

R.W. Dyson Non-executive director

A. Finch Non-executive director

C.W. Gee Finance Director

P.A. Lynch Operations Director

S.M. Molloy Non-executive director

M.J. Prior Chairman

I.M. Richardson Executive Director

J. Smith Vice Chairman

 

Signed on behalf of the Board of Directors

 

M.J. Prior

Chairman

13 August 2010

 

 

NOTES

 

HALF-YEARLY FINANCIAL INFORMATION

 

30 JUNE 2010

 

 

Basis of preparation

 

The half yearly financial information for the 6 months ended 30 June 2010 has been prepared in accordance with both the Financial Services Authority's Disclosure and Transparency Rules and IAS 34 Interim Financial Reporting, as adopted by the European Union.

 

The half yearly financial information set out above does not constitute Accounts within the meaning of the Building Societies Act 1986.

 

The financial information for the 12 months to 31 December 2009 has been extracted from the 2009 Annual Report and Accounts on which the external auditors gave an unqualified opinion.

 

The half-yearly financial information for the 6 months ended 30 June 2010 and the 6 months ended 30 June 2009 is unaudited.

 

This financial information should be read in conjunction with the 2009 Annual Report and Accounts.

 

Accounting policies

 

The half yearly financial information has been prepared consistent with the accounting policies described on pages 18 to 21 of the 2009 Annual Report and Accounts. The Group expects that these accounting policies will be applied at the time of compiling the 2010 Annual Report and Accounts.

 

There were no new reporting standards that affected the results reported for the half year ended 30 June 2010.

 

Taxation

 

Corporation tax has been accrued at the rate of 28% (first half 2009 - 28%). The tax charge has been calculated as far as possible to approximate to the expected full year tax rate.

 

Related Party Transactions

 

The Group had no material or unusual related party transactions during the 6 months ended 30 June 2010.

 

Segmental information

 

The operations of the Group is not sufficiently diverse to require segmental analysis or reporting.

 

Financial commitments and contingencies

 

There is no material change from the Group's financial commitments or its contingent liabilities reported in the 2009 Annual Report and Accounts

 

Events after the end of the reporting period

 

There have been no events occurring after the end of the reporting period that would have impacted upon the results reported.

 

Approval of interim financial statements

 

The interim financial statements were approved by the Board of directors on 13 August 2010.

 

 

 

MANCHESTER BUILDING SOCIETY GROUP

HALF-YEARLY FINANCIAL INFORMATION

Summary Consolidated Statements of Comprehensive Income

Unaudited

Unaudited

Audited

6 months to

6 months to

12 months to

30 Jun 10

30 Jun 09

31 Dec 09

£000s

£000s

£000s

Interest and similar income

13,803

17,924

36,030

Interest expense and similar charges

9,662

12,822

26,912

Net interest receivable

4,141

5,102

9,118

Other income and charges

526

-816

-2,021

(Losses)/gains from derivatives and hedge accounting

-747

136

-78

Total operating income

3,920

4,422

7,019

Administrative expenses

3,128

3,721

6,831

Impairment losses

547

148

-537

Profit before taxation

245

553

725

Taxation

69

155

841

Profit for the period

176

398

-116

Summary Consolidated Statement of Changes in Equity

Unaudited

Unaudited

Audited

6 months to

6 months to

12 months to

30 Jun 10

30 Jun 09

31 Dec 09

£000s

£000s

£000s

Profit for the period

176

398

-116

176

398

-116

 

 

 

 

MANCHESTER BUILDING SOCIETY GROUP

HALF-YEARLY FINANCIAL INFORMATION

Summary Consolidated Statements of Financial Position

Unaudited

Unaudited

Audited

30 Jun 10

30 Jun 09

31 Dec 09

Assets

£000s

£000s

£000s

Liquid assets

241,118

224,093

236,257

Derivative financial instruments

1,420

2,651

2,082

Loans and advances to customers

677,783

688,058

688,568

Property, plant and equipment

8,979

9,262

9,122

Investments

250

250

250

Other assets

6,333

4,876

1,041

935,883

929,190

937,320

Unaudited

Unaudited

Audited

Liabilities

30 Jun 10

30 Jun 09

31 Dec 09

£000s

£000s

£000s

Shares

727,645

735,242

736,240

Deposits

122,368

118,366

122,960

Derivative financial instruments

20,561

9,814

11,331

Other liabilities

2,793

2,850

4,449

Subordinated liabilities

15,700

15,700

15,700

Subscribed capital

14,788

14,788

14,788

Reserves

32,028

32,430

31,852

935,883

929,190

937,320

 

 

 

 

MANCHESTER BUILDING SOCIETY GROUP

HALF-YEARLY FINANCIAL INFORMATION

Summary Consolidated Statements of Cash Flows

Unaudited

Unaudited

Audited

6 months to

6 months to

12 months to

30 Jun 10

30 Jun 09

31 Dec 09

£000s

£000s

£000s

Net cash flows from operating activities

-592

-62

17,078

Taxation paid

-742

-78

-311

Net cash flows from investing activities

-20,524

-6,759

26,091

Net cash flows from financing activities

0

0

0

Net decrease in cash and cash equivalents

-21,858

-6,899

42,858

Net decrease in cash and cash equivalents

-21,858

-6,899

42,858

Cash and cash equivalents at the start of the period

106,191

63,333

63,333

Cash and cash equivalents at the end of the period

84,333

56,434

106,191

Other percentages

Unaudited

Unaudited

Audited

6 months to

6 months to

12 months to

30 Jun 10

30 Jun 09

31 Dec 09

%

%

%

Gross capital as a percentage of shares and borrowings

7.48

7.42

7.08

Liquid funds as a percentage of shares and borrowings

29.65

27.32

27.50

Wholesale deposits as a percentage of shares and borrowings

10.54

10.35

11.10

Profit after tax as a percentage of mean total assets*

0.04

0.08

-0.01

Group management expenses as a percentage of mean total assets*

0.67

0.79

0.72

 

 

 

 

 

 

 

 

* Expressed on an annualised basis

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR GCGDILBBBGGL
12
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12

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