TIDMARBB
RNS Number : 8069U
Arbuthnot Banking Group PLC
17 July 2018
17 July 2018
For immediate release
ARBUTHNOT BANKING GROUP ("Arbuthnot", "the Group" or "ABG")
Results for the six months to 30 June 2018
Arbuthnot Banking Group announces a half yearly profit before
tax of GBP3.5m compared to GBP2.5m in the prior year.
Included in the profit figure for the six months ended 30 June
is an estimated* income of GBP2.3m for Secure Trust Bank PLC
("STB") being an associated undertaking.
Arbuthnot Banking Group PLC is the holding company for Arbuthnot
Latham & Co., Limited and Secure Trust Bank PLC is an
associated company.
FINANCIAL HIGHLIGHTS
-- Profit before tax GBP3.5m (H1 2017: GBP2.5m)
-- Underlying profit before tax GBP4.2m (H1 2017: GBP3.2m)
-- Earnings per share GBP0.22 (H1 2017: GBP0.17)
-- Interim dividend per share increased to 15p (H1 2017: 14p)
-- Net assets GBP235m (H1 2017: GBP234m)
-- Net assets per share GBP15.40 (H1 2017: GBP15.33)
OPERATIONAL HIGHLIGHTS
-- Customer loans GBP1,097m (H1 2017: GBP879m), increased by 25%
-- Customer deposits GBP1,547m (H1 2017: GBP1,234m), increased by 25%
-- Assets Under Management GBP1,069m (H1 2017: GBP1,001m), increased by 7%
-- Launched Asset Based Lending business, with first client loan funded in May 2018
-- Management team joining to set up a Specialist Secured Lending business
Commenting on the results, Sir Henry Angest, Chairman and Chief
Executive of Arbuthnot, said: "The Group has continued to develop.
The Asset Based Lending business has commenced trading ahead of
schedule. We have also reached an agreement with a management team
to establish a Specialist Secured Lending business. Given the
continued growth and diversification of the Group, I believe our
long term prospects are encouraging."
The interim results are available at
http://www.arbuthnotgroup.com.
*The estimate for associate income is based on our 18.6% share
of the after tax earnings of STB calculated using the full year
market consensus of the equity research performed on STB, with an
assumed straight-line growth in profits over the first half of the
year. STB is scheduled to announce its interim results on 8 August
2018. For the avoidance of doubt, ABG's estimate for the income
from STB is not an estimate being made on its behalf. The Group's
profit before tax, profit after tax and earnings per share
therefore include this estimated income from STB.
ENQUIRIES:
Arbuthnot Banking Group 0207 012 2400
Sir Henry Angest, Chairman and Chief Executive
Andrew Salmon, Group Chief Operating Officer
James Cobb, Group Finance Director
Stifel Nicolaus Europe Ltd trading as KBW (Nomad and Joint
Broker) 0207 710 7600
Robin Mann
Gareth Hunt
Stewart Wallace
Numis Securities Ltd (Joint Broker) 0207 260 1000
Chris Wilkinson
Stephen Westgate
Maitland (Financial PR) 0207 379 5151
Neil Bennett
Jais Mehaji
Sam Cartwright
Chairman's Statement
Arbuthnot Banking Group PLC
I am pleased to report that Arbuthnot Banking Group ("ABG") has
delivered a profit before tax of GBP3.5m for the first six months
of 2018. This compares to a profit of GBP2.5m for the same period
of 2017, an increase of 39%. This includes an estimated profit from
our associate, Secure Trust Bank PLC ("STB"), which will publish
its interim results on 8 August.
As highlighted in the Annual Report and Accounts for 2017, the
Group believes in diversification of its income streams and has
accordingly been developing new businesses. I am encouraged with
the progress being made by our new Asset Based Lending team. The
team joined us on 2 January and from a standing start have set up
their business in an efficient manner. The policies, processes and
operating systems were all in place ahead of plan so they were able
to fund their first deal on 4 May. At the end of June they had
drawn balances of GBP8.9m from four clients and a pipeline of new
business totalling GBP76.5m. The core team is now nearly complete
and will consist of 10 employees by the end of the year. With sales
executives covering the North, Midlands, London, South and soon to
be added South West, the business has a national sales
coverage.
In line with our diversification strategy we have also reached
an agreement with an incoming management team to establish a new
lending division that will be named "Arbuthnot Specialist Lending".
This business will focus on providing short-term secured lending
solutions to professional property businesses and entrepreneurs.
The team will join us on 1 August with a core team of 6 employees.
We expect that it will open for business in the fourth quarter of
2018. Its costs will be an organic investment in the current year,
and the business should reach monthly break even and become fully
profitable during 2020.
Given that the long-term prospects for the Group are encouraging
and in line with previous years, the Board has decided to increase
the interim dividend by 1p to 15p, which will be paid on 28
September 2018 to shareholders on the register on 31 August
2018.
Arbuthnot Latham & Co., Limited
Arbuthnot Latham ("AL") has reported a profit before tax for the
first half of the year of GBP5.4m (H1 2017: GBP4.9m), which
represents an increase of 10%.
Total assets of the bank have increased to GBP1.96bn (H1 2017:
GBP1.43bn), an increase of 37%. This increase is the result of
continued growth in both the customer loans and deposit
balances.
Customer loans ended the first half at GBP1.10bn, an increase of
24% from the prior year and GBP47m higher than the year ended
December 2017. The bank has originated GBP207m of loans during the
first half, but has continued to experience a number of repayments
as the lending markets remain competitive. During the period we
have followed our principles of pricing appropriately for risk and
return on capital employed and not relaxing our credit criteria
such as loan to value limits. The resulting output from these input
criteria is the volume of loans originated. We believe this is the
prudent way to grow the business as compared to setting volume and
balance sheet targets that require reductions in returns or higher
credit risks to be taken.
Customer deposits have increased to GBP1.55bn (H1 2017:
GBP1.24bn), an increase of 25% and GBP156m higher than the end of
2017. The increase in customer deposits reflects the diversity of
sources of deposit funding. The Private Bank continues to attract
deposits but the Commercial Bank has also been successful in
developing new business and has now raised GBP471m of deposits.
Assets under management have grown to GBP1.07bn (H1 2017:
GBP1bn).
Renaissance Asset Finance ("RAF") has continued to grow its loan
balances, which stood at GBP78m (H1 2017: GBP60m), an increase of
30%. This is GBP7m higher than at the year end and represents good
growth in increasingly competitive markets. The business has
invested in developing its sales force and is seeing the benefit of
the recruitment of four new Sales Executives and a new Sales
Director at the end of 2017.
Overall, impairments continue to show an improvement with only
GBP0.2m of losses incurred even after the introduction of IFRS
9.
Secure Trust Bank PLC
We have recorded GBP2.3m of income related to STB (H1 2017:
GBP2.1m). This represents an estimate of our 18.6% share of the
after tax earnings of the investment in our associate undertaking.
In calculating this estimate, the Group has used the full year
market consensus of the equity research on STB, with an assumed
straight-line growth in profits over the first half, noting the
trading statement made by STB on 16 May 2018 in relation to STB's
first quarter trading being in line with STB's management
expectations. This method is consistent with that used for the
Group's 2017 Interim Report.
Capital Efficiency
The Board continually reviews the Group's capital structure and
options to optimise the capital base in order to support the
Group's strategy most effectively. The Board has noted recent
announcements by a number of the smaller UK banks that have raised
capital in the debt markets. To that extent, the Board is
considering opportunities to raise Sterling denominated Additional
Tier 1 or Tier 2 Capital, subject to market conditions and the
Board determining that it is advantageous to do so.
Outlook
The Group has successfully been deploying the surplus capital
generated from the sale of STB shares in 2016. New opportunities to
deploy this capital have been created with the establishment of our
Asset Based Lending and Specialist Lending businesses. Therefore
the Group remains confident in its long-term prospects, despite the
continuing uncertainty in the geopolitical and macroeconomic
environment.
Consolidated Statement of Comprehensive Income
Six months Six months
ended ended
30 June 30 June
2018 2017
Note GBP000 GBP000
----------------------------------------------------- ----- ----------- -----------
Interest income 28,628 22,106
Interest expense (3,651) (2,839)
----------------------------------------------------- ----- ----------- -----------
Net interest income 24,977 19,267
----------------------------------------------------- ----- ----------- -----------
Fee and commission income 6,513 6,183
Fee and commission expense (112) (322)
----------------------------------------------------- ----- ----------- -----------
Net fee and commission income 6,401 5,861
----------------------------------------------------- ----- ----------- -----------
Operating income 31,378 25,128
----------------------------------------------------- ----- ----------- -----------
Net impairment loss on financial assets (208) (343)
Other income 6 1,649 1,104
Profit from associates 5 2,329 2,145
Operating expenses (31,636) (25,499)
----------------------------------------------------- ----- ----------- -----------
Profit before income tax 3,512 2,535
Income tax expense (275) (90)
----------------------------------------------------- ----- ----------- -----------
Profit after income tax from continuing operations 3,237 2,445
Profit for the period 3,237 2,445
----------------------------------------------------- ----- ----------- -----------
Other comprehensive income
Items that may be reclassified to profit or loss
Available-for-sale reserve - Associate - 389
Tax on other comprehensive income - (78)
Items that will not be reclassified to profit or
loss
Changes in fair value of equity investments at fair
value through other comprehensive income 135 -
Tax on other comprehensive income (26) -
----------------------------------------------------- ----- ----------- -----------
Other comprehensive income for the period, net of
tax 109 311
----------------------------------------------------- ----- ----------- -----------
Total comprehensive income for the period 3,346 2,756
----------------------------------------------------- ----- ----------- -----------
Profit attributable to:
Equity holders of the Company 3,237 2,445
3,237 2,445
----------------------------------------------------- ----- ----------- -----------
Total comprehensive income attributable to:
Equity holders of the Company 3,346 2,756
3,346 2,756
----------------------------------------------------- ----- ----------- -----------
Earnings per share for profit attributable to the
equity holders of the Company during the period
(expressed in pence per share):
- basic 8 21.7 16.5
- diluted 8 21.7 16.5
Consolidated Statement of Financial Position
At 30 At 30 At 31
June June December
2018 2017 2017
GBP000 GBP000 GBP000
ASSETS
Cash and balances at central banks 361,892 253,309 313,101
Loans and advances to banks 76,840 35,898 70,679
Debt securities at amortised cost / held-to-maturity 307,560 158,515 227,019
Assets classified as held for sale 8,017 - 2,915
Derivative financial instruments 1,906 1,816 2,551
Loans and advances to customers 1,096,739 879,348 1,049,269
Other assets 23,036 20,102 20,624
Financial investments 2,459 2,173 2,347
Deferred tax asset 2,032 1,689 1,527
Investment in associate 84,032 82,132 83,804
Intangible assets 15,941 16,953 15,995
Property, plant and equipment 5,311 7,629 3,962
Investment properties 59,439 50,200 59,439
-------------------------------------------------------- ---------- ---------- ----------
Total assets 2,045,204 1,509,764 1,853,232
-------------------------------------------------------- ---------- ---------- ----------
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Share capital 153 153 153
Retained earnings 236,007 235,178 237,171
Other reserves (840) (1,051) (949)
-------------------------------------------------------- ---------- ---------- ----------
Total equity 235,320 234,280 236,375
-------------------------------------------------------- ---------- ---------- ----------
LIABILITIES
Deposits from banks 232,152 6,579 195,097
Derivative financial instruments 1,383 - 931
Deposits from customers 1,546,607 1,234,445 1,390,781
Current tax liability 550 450 705
Other liabilities 16,103 21,042 16,239
Debt securities in issue 13,089 12,968 13,104
-------------------------------------------------------- ---------- ---------- ----------
Total liabilities 1,809,884 1,275,484 1,616,857
-------------------------------------------------------- ---------- ---------- ----------
Total equity and liabilities 2,045,204 1,509,764 1,853,232
-------------------------------------------------------- ---------- ---------- ----------
Consolidated Statement of Changes in Equity
Attributable to equity holders
of the Group
------------------------------------------------------------------------
Capital Fair
Share Revaluation redemption value Treasury Retained
capital reserve reserve reserve* shares earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Balance at 31 December 2017 153 - 20 162 (1,131) 237,171 236,375
IFRS 9 adjustment - - - - - (2,257) (2,257)
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Balance at 1 January 2018 153 - 20 162 (1,131) 234,914 234,118
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Total comprehensive income for
the
period
Profit for the six months ended
30
June 2018 - - - - - 3,237 3,237
Other comprehensive income, net
of
income tax
Changes in the fair value of
financial
assets at FVOCI - - - 109 - - 109
Total other comprehensive income - - - 109 - - 109
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Total comprehensive income for
the
period - - - 109 - 3,237 3,346
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Transactions with owners,
recorded
directly in equity
Contributions by and
distributions
to owners
Equity settled share based
payment
transactions - - - - - 685 685
Final dividend relating to 2017 - - - - - (2,829) (2,829)
Total contributions by and
distributions
to owners - - - - - (2,144) (2,144)
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
Balance at 30 June 2018 153 - 20 271 (1,131) 236,007 235,320
---------------------------------- --------- ------------ ------------ ---------- --------- ---------- --------
* - The Available-for-sale reserve was reclassified as the Fair value
reserve as from 1 January 2018.
Attributable to equity holders
of the Group
---------------------------------------------------------------------------------
Capital
Share Revaluation redemption Available-for-sale Treasury Retained
capital reserve reserve reserve shares earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Balance at 1 January
2017 153 - 20 (251) (1,131) 235,567 234,358
Total comprehensive
income for the
period
Profit for the six
months ended 30
June 2017 - - - - - 2,445 2,445
Other comprehensive
income, net of
income tax
Available-for-sale
reserve - - - 389 - - 389
Available-for-sale
reserve - Associate - - - (78) - - (78)
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Total other
comprehensive income - - - 311 - - 311
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Total comprehensive
income for the
period - - - 311 - 2,445 2,756
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Transactions with
owners, recorded
directly in equity
Contributions by and
distributions
to owners
Equity settled share
based payment
transactions - - - - - (154) (154)
Final dividend relating
to 2016 - - - - - (2,680) (2,680)
Total contributions by
and distributions
to owners - - - - - (2,834) (2,834)
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Balance at 30 June 2017 153 - 20 60 (1,131) 235,178 234,280
------------------------- --------- ------------ ------------ ------------------- --------- ---------- --------
Consolidated Statement of Cash Flows
Six months Six months
ended ended
30 June 30 June
2018 2017
GBP000 GBP000
------------------------------------------------------ ----------- -----------
Cash flows from operating activities
Interest received 39,584 20,004
Interest paid (3,889) (3,347)
Fees and commissions received 6,740 4,966
Net trading and other income 1,649 1,104
Cash payments to employees and suppliers (40,947) (16,392)
Cash flows from operating profits before changes in
operating assets and liabilities 3,137 6,335
Changes in operating assets and liabilities:
- net decrease / (increase) in derivative financial
instruments 1,097 (527)
- net increase in loans and advances to customers (50,442) (121,290)
- net increase in other assets (7,742) (7,720)
- net increase in deposits from banks 37,055 3,379
- net increase in amounts due to customers 155,826 236,796
- net (decrease) / increase in other liabilities (136) 3,960
-------------------------------------------------------- ----------- -----------
Net cash inflow from operating activities 138,795 120,933
-------------------------------------------------------- ----------- -----------
Cash flows from investing activities
Purchase of financial investments (107) -
Disposal of financial investments 136 -
Purchase of computer software (748) (8,797)
Purchase of property, plant and equipment (1,799) (361)
Proceeds from sale of property, plant and equipment 39 -
Purchases of debt securities (153,823) (108,363)
Proceeds from redemption of debt securities 75,288 55,772
-------------------------------------------------------- ----------- -----------
Net cash outflow from investing activities (81,014) (61,749)
-------------------------------------------------------- ----------- -----------
Cash flows from financing activities
Dividends paid (2,829) (2,680)
-------------------------------------------------------- ----------- -----------
Net cash used in financing activities (2,829) (2,680)
-------------------------------------------------------- ----------- -----------
Net increase in cash and cash equivalents 54,952 56,504
Cash and cash equivalents at 1 January 383,780 232,703
-------------------------------------------------------- ----------- -----------
Cash and cash equivalents at 30 June 438,732 289,207
-------------------------------------------------------- ----------- -----------
1. Basis of preparation
The interim financial statements have been prepared on the basis
of accounting policies set out in the Group's 2017 statutory
accounts as amended by standards and interpretations effective
during 2018 as set out below and in accordance with IAS 34 "Interim
Financial Reporting". The directors do not consider the fair value
of the assets and liabilities presented in these financial
statements to be materially different from their carrying
value.
The statements were approved by the Board of Directors on 16
July 2018 and are unaudited. The interim financial statements will
be posted to shareholders and copies may be obtained from The
Company Secretary, Arbuthnot Banking Group PLC, Arbuthnot House, 7
Wilson Street, London EC2M 2SN.
2. Risks and uncertainties
The Group regards the monitoring and controlling of risks and
uncertainties as a fundamental part of the management process.
Consequently, senior management are involved in the development of
risk management policies and in monitoring their application. A
detailed description of the risk management framework and
associated policies is set out in note 6.
The principal risks inherent in the Group's business are
strategic, credit, market, liquidity, operational, cyber, conduct
and regulatory.
Strategic risk
Strategic risk is the risk that may affect the Group's ability
to achieve its corporate and strategic objectives. This risk is
important to the Group as it continues its growth strategy.
However, the Group seeks to mitigate strategic risk by focusing on
a sustainable business model which is aligned to the Group's
business strategy. Also, the Board of Directors meets once a year
to hold a two day board meeting to ensure that the Group's strategy
is appropriate for the market and economy.
Credit risk
Credit risk is the risk that a counterparty will be unable to
pay amounts in full when due. This risk exists in Arbuthnot Latham,
which currently has a loan book of GBP1,049m. The lending portfolio
in AL is extended to clients, the majority of which is secured
against cash, property or other assets. Credit risk is managed
through the Credit Committee of AL.
Market risk
Market risk arises in relation to movements in interest rates,
currencies and equity markets. The Group's treasury function
operates mainly to provide a service to clients and does not take
significant unmatched positions in any market for its own account.
As a result, the Group's exposure to adverse movements in interest
rates and currencies is limited to interest earnings on its free
cash and interest rate re-pricing mismatches. The Group actively
monitors its exposure to future interest rate rises.
The Group is exposed to changes in the market value of
properties. The current carrying value of Investment Properties is
GBP59m. Any changes in the market value of the properties will be
accounted for in the Income Statement and as a result could have a
significant impact on the profit or loss of the Group.
The Group has an 18.6% interest in STB. This is currently
recorded in the Group's balance sheet as an interest in associates
and at 30 June 2018 was carried at GBP84.0m or the equivalent of
GBP24.40 per share (31 December 2017: carried at GBP83.8m or the
equivalent of GBP24.33 per share). At 30 June 2018 the market price
of STB was GBP18.20 per share (31 December 2017: GBP17.97 per
share). The Board has determined that the current carrying value
remains appropriate after having carried out extensive analysis to
be satisfied that the long term value in use does not suggest that
this carrying value is impaired. These valuations included the
Gordon's Growth model and Dividend Discount model. The resultant
output from the models indicated valuations in a range that was in
excess of GBP24 but this will be ultimately dependent on the
surplus capital within STB being deployed in the business over the
long term. There is a risk that the output of the value in use
models could require an impairment charge to be recognised in the
future.
If the Group was considered to no longer have significant
influence over STB it would lead to the investment being accounted
for as a financial asset at fair value. The value would then be
marked to market with changes in the share price giving rise to
gains or losses being recorded in Other Comprehensive Income.
Liquidity risk
Liquidity risk is the risk that the Group cannot meet its
obligations as they fall due. The Group takes a conservative
approach to managing its liquidity profile. Retail client deposits
and drawings from the Bank of England Term Funding Scheme fund the
Group. The loan to deposit ratio is maintained at a prudent level,
and consequently the Group maintains a high level of liquidity. The
Arbuthnot Latham Board annually approves the Individual Liquidity
Adequacy Assessment Process ("ILAAP"). The Directors model various
stress scenarios and assess the resultant cash flows in order to
evaluate the Group's potential liquidity requirements. The
Directors firmly believe that sufficient liquid assets are held to
enable the Group to meet its liabilities in a stressed
environment.
Operational risk
Operational risk is the risk that the Group may be exposed to
financial losses from conducting its business. The Group is exposed
to operational risks from its Information Technology and Operations
platforms. There are additional internal controls in these
processes that are designed to protect the Group from these risks.
The Group's overall approach to managing internal control and
financial reporting is described in the Corporate Governance
section of the Annual Report.
Cyber risk
Cyber risk is an increasing risk that the Group is subject to
within its operational processes. This is the risk that the Group
is subject to some form of disruption arising from an interruption
to its IT and data infrastructure. The Group regularly test the
infrastructure to ensure that it remains robust to a range of
threats, and have continuity of business plans in place including a
disaster recovery provision.
Conduct risk
As a financial services provider we face conduct risk, including
selling products to customers which do not meet their needs;
failing to deal with customers' complaints effectively; not meeting
customers' expectations; and exhibiting behaviours which do not
meet market or regulatory standards.
The Group adopts a zero risk appetite for any unfair customer
outcomes. It maintains clear compliance guidelines and provides
ongoing training to all staff. Periodic spot checks and internal
audits are performed to ensure these guidelines are being followed.
The Group also has insurance policies in place to provide some
cover for any claims that may arise.
Regulatory risk
Regulatory risk is the risk that the Group will have
insufficient capital resources to support the business or does not
comply with regulatory requirements. The Group adopts a
conservative approach to managing its capital. The Board approves
an Individual Capital Adequacy Assessment Process ("ICAAP")
annually, which includes the performance of stringent stress tests
to ensure that capital resources are adequate over a three year
horizon. Capital and liquidity ratios are regularly monitored
against the Board's approved risk appetite as part of the risk
management framework.
Regulatory change also exists as a risk to the Group's business.
Notwithstanding the assessments carried out by the Group to manage
the regulatory risk, it is not possible to predict how regulatory
and legislative changes may alter and impact the business.
Significant and unforeseen regulatory changes may reduce the
Group's competitive situation and lower its profitability.
Macroeconomic and competitive environment
The Group is also exposed to indirect risks that may arise from
the macroeconomic and competitive environment. The economic
environment is relatively stable in the UK. However, the
international landscape is increasingly uncertain. The uncertain
performance of the economies in the EU and the increasingly
protectionist stance being taken by other major economies may have
an adverse affect on the UK. In particular, this may cause a
further softening of central London property prices, which may
spread out further to the South East.
The Group monitors its exposure to future interest rate rises
and currently has minimal lending to customers in products that
would be directly sensitive to interest rate rises. However, at the
current levels of interest rates, the affordability enjoyed by the
Group's customers is beneficial.
Brexit
It is currently difficult to analyse the impacts that Brexit may
have on Arbuthnot Banking Group. However, our only overseas
operation is in Dubai, so the vast majority of the Group's income
and expenditure is based in the UK. It is therefore anticipated
that the financial impact would be minimal, assuming no significant
macro economic shock in the UK.
3. Changes in significant accounting policies
IFRS 9, 'Financial instruments'
In July 2014, the IASB issued the final version of IFRS 9
Financial Instruments (IFRS 9). IFRS 9 replaces IAS 39 Financial
instruments: "Recognition and measurement", and is effective for
annual periods beginning on or after 1 January 2018, with early
adoption permitted. The Group applied IFRS 9 from 1 January 2018.
In October 2017, the IASB issued "Prepayment Features with Negative
Compensation" (Amendment to IFRS 9). The amendments are effective
for annual periods beginning on or after 1 January 2019, with early
adoption permitted. This Amendment does not have an impact on
Group's financial assets' classification and measurement. The Group
has taken advantage of the exemption allowing it not to restate
comparative information for prior periods with respect to
classification and measurement (including impairment) changes. The
changes in measurement arising on initial application of IFRS 9,
has been incorporated through an adjustment to the opening reserves
and retained earnings position as at 1 January 2018.
The following table summarises the impact, net of tax, of transition
to IFRS 9 on the opening balance of retained earnings:
Retained Earnings GBP000
------------------------------------------------------------- ---------
Recognition of expected credit losses under
IFRS 9 2,787
Related tax (530)
---------------------------------------------------------------- ---------
Impact at 1 January 2018 2,257
---------------------------------------------------------------- ---------
i) Classification and Measurement of Financial Assets and
Liabilities
There are three measurement classifications under IFRS 9:
amortised cost, fair value through profit or loss ("FVPL") and for
financial assets, fair value through other comprehensive income
("FVOCI"). The existing IAS 39 financial asset categories have been
removed. Financial assets are classified into these measurement
classifications based on the business model within which they are
held, and their contractual cash flow characteristics. The business
model reflects how groups of financial assets are managed to
achieve a particular business objective.
Financial assets can only be held at amortised cost if the
instruments are held in order to collect the contractual cash flow
("held to collect") and where those contractual cash flows are
solely payments of principal and interest ("SPPI"). Financial asset
debt instruments where the business model objectives are achieved
by both collecting the contractual cash flows and selling the
assets ("held to collect and sell"), are held at FVOCI, with
unrealised gains and losses deferred within reserves until the
asset is derecognised. All financial assets not classified as
measured at amortised cost or FVOCI, as described above, are
measured at FVPL.
The Group has assessed the business models that it operates and
most of the loans to banks and customers are held within a "held to
collect" business model. Investment debt securities categorised as
held--to--maturity under IAS 39 are held within a "held to collect"
portfolio. The majority of the remaining investment debt securities
are held within a "held to collect and sell" business model or
trading portfolio. Where the objective of a business is to hold the
assets to collect the contractual cash flows or where the objective
is to hold the assets to collect contractual cash flows and sell, a
further assessment has been undertaken to determine whether the
cash flows of the assets are deemed to meet the SPPI criteria.
Where these instruments have cash flows that meet the SPPI
criteria, the instruments are measured at amortised cost (for held
to collect business models) or FVOCI (for held to collect and sell
business models). Instruments that do not meet the SPPI criteria
are measured at FVPL regardless of the business model in which they
are held.
IFRS 9 largely retains the existing requirements in IAS 39 for
the classification of financial liabilities, except for changes in
presentation of fair value changes of financial liabilities
designated at FVPL attributable to changes in liability credit risk
(under IFRS 9 these changes are presented within other
comprehensive income). There has been no change in the way the
Group classifies and measures its financial liabilities.
As mentioned above, IFRS 9 was adopted without restating
comparative information. The reclassifications and the adjustments
arising from the new impairment rules are therefore not reflected
in a restated statement of financial position as at 31 December
2017, but are recognised in the opening balances on 1 January 2018.
The following tables show the adjustments and reclassifications
recognised for each individual line item in the statement of
financial position. All financial assets and liabilities are
disclosed below.
Total
Amortised carrying Fair
FVPL FVOCI cost amount value
At 1 January 2018 (under
IFRS 9) GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------ ------- ------- ---------- ---------- ----------
ASSETS
Cash and balances at
central banks - - 313,101 313,101 313,101
Loans and advances to
banks - - 70,679 70,679 70,679
Debt securities at amortised
cost - - 227,019 227,019 227,951
Derivative financial
instruments 2,551 - - 2,551 2,551
Loans and advances to
customers - - 1,046,482 1,046,482 1,022,816
Other assets 11,964 - - 11,964 11,964
Financial investments 128 2,219 - 2,347 2,347
---------------------------------- ------- ------- ---------- ---------- ----------
14,643 2,219 1,657,281 1,674,143 1,651,409
------------------------------ ------- ------- ---------- ---------- ----------
LIABILITIES
Deposits from banks - - 195,097 195,097 195,097
Derivative financial
instruments 931 - - 931 931
Deposits from customers - - 1,390,781 1,390,781 1,390,781
Other liabilities 1,207 - - 1,207 1,207
Debt securities in issue - - 13,104 13,104 13,104
---------------------------------- ------- ------- ---------- ---------- ----------
2,138 - 1,598,982 1,601,120 1,601,120
------------------------------ ------- ------- ---------- ---------- ----------
Liabilities
Loans at Total
and amortised carrying Fair
FVPL Held-to-maturity receivables Available-for-sale cost amount value
At 31 December
2017 (under
IAS 39) GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------ ------- ----------------- ------------ ------------------- ------------ ---------- ----------
ASSETS
Cash and balances
at
central banks - - 313,101 - - 313,101 313,101
Loans and advances
to
banks - - 70,679 - - 70,679 70,679
Debt securities
held-to-maturity - 227,019 - - - 227,019 227,951
Derivative
financial
instruments 2,551 - - - - 2,551 2,551
Loans and advances
to
customers - - 1,049,269 - - 1,049,269 1,022,816
Other assets - - 11,964 - - 11,964 11,964
Financial
investments - - - 2,347 - 2,347 2,347
-------------------- ------- ----------------- ------------ ------------------- ------------ ---------- ----------
2,551 227,019 1,445,013 2,347 - 1,676,930 1,651,409
------------------ ------- ----------------- ------------ ------------------- ------------ ---------- ----------
LIABILITIES
Deposits from banks - - - - 195,097 195,097 195,097
Derivative
financial
instruments 931 - - - - 931 931
Deposits from
customers - - - - 1,390,781 1,390,781 1,390,781
Other liabilities - - 1,207 - - 1,207 1,207
Debt securities in
issue - - - - 13,104 13,104 13,104
-------------------- ------- ----------------- ------------ ------------------- ------------ ---------- ----------
931 - 1,207 - 1,598,982 1,601,120 1,601,120
------------------ ------- ----------------- ------------ ------------------- ------------ ---------- ----------
ii) Impairment of Financial Assets, Loan Commitments and
Financial Guarantee Contracts
IFRS 9 introduced a new forward--looking expected credit loss
("ECL") impairment framework for all financial assets not measured
at FVPL and certain off--balance sheet loan commitments and
guarantees. It replaced the "incurred loss model" from IAS 39. The
new ECL framework resulted in an allowance for ECL recorded on
financial assets regardless of whether there has been an actual
loss event. This differs from the previous approach where the
allowance recorded on performing loans was designed to capture only
losses that have been incurred, whether or not they have been
specifically identified. The new impairment model applies to the
following financial instruments that are not measured at fair value
through profit or loss:
-- Financial assets that are debt instruments; and;
-- Loan commitments and financial guarantee contracts
issued.
The IFRS 9 impairment model adopts a three stage approach based
on the extent of credit deterioration since origination:
-- Stage 1: 12--month ECL applies to all financial assets that
have not experienced a significant increase in credit risk ("SICR")
since origination and are not credit impaired. The ECL will be
computed based on the probability of default events occurring over
the next 12 months. This Stage 1 approach is different from the
previous approach, which estimated a collective allowance to
recognise losses that have been incurred but not reported on
performing loans.
-- Stage 2: When a financial asset experiences a SICR subsequent
to origination but is not credit impaired, it is considered to be
in Stage 2. This requires the computation of ECL based on the
probability of all possible default events occurring over the
remaining life of the financial asset. Provisions are higher in
this stage because of an increase in credit risk and the impact of
a longer time horizon being considered (compared to 12 months in
Stage 1).
-- Stage 3: Financial assets that exhibit objective evidence of
impairment are included in this stage. Similar to Stage 2, the
allowance for credit losses will continue to capture the lifetime
expected credit losses. At each reporting date, the Group will
assess whether financial assets carried at amortised cost are
credit impaired. A financial asset will be considered to be credit
impaired when an event(s) that has a detrimental impact on
estimated future cash flows have occurred. Evidence that a
financial asset is credit impaired includes, but is not limited to,
the following observable data:
-- Initiation of bankruptcy proceedings;
-- Notification of bereavement;
-- Identification of loan meeting debt sale criteria; or
-- Initiation of repossession proceedings.
In addition, a loan that is 90 days or more past due will be
considered credit impaired for all portfolios. The credit risk of
financial assets that become credit impaired are not expected to
improve such that they are no longer considered credit
impaired.
The ECL requirements of IFRS 9 are complex and require
management judgments, estimates and assumptions, particularly in
the areas of assessing whether the credit risk of an instrument has
increased significantly since initial recognition and incorporating
forward--looking information into the measurement of ECLs.
Under IFRS 9, the Group consider a financial asset to be in
default when:
-- The borrower is unlikely to pay its credit obligations to the
Group in full, without recourse by the Group to actions such as
realising collateral (if any is held); or
-- The borrower is more than 90 days past due on any material
credit obligation to the Group.
This definition is largely consistent with the definition that
is used for the Group's credit risk management process and for
regulatory purposes.
Significant increase in credit risk
Under IFRS 9, when determining whether the credit risk (risk of
default) on a financial instrument has increased significantly
since initial recognition, the Group consider reasonable and
supportable information that is relevant and available without
undue cost or effort, including both quantitative and qualitative
information and analysis based on the Group's historical
experience, expert credit assessment and forward--looking
information.
The Group has established a methodology and framework that
incorporates both quantitative and qualitative information to
determine whether the credit risk on a particular financial
instrument has increased significantly since initial recognition
and this is aligned to the internal credit risk management
process.
The criteria for determining whether credit risk has increased
significantly will vary according to the individual circumstances
of each loan, given the nature of the loan book, but also include a
backstop based on delinquency of 30 days past due. In certain
instances, using its judgement and, where possible, relevant
historical experience, the Group may determine that an exposure has
undergone a significant increase in credit risk if particular
qualitative factors indicate so, as the quantitative analysis may
not always capture this on a timely basis.
Measuring ECL
The key inputs to the measurement of ECLs are the following
variables:
-- Probability of default ("PD");
-- Loss given default ("LGD"); and
-- Exposure at default ("EAD").
Off--balance sheet items, such as financial guarantees and loan
commitments, are included within the ECL computation.
Forward--looking information ("FLI")
IFRS 9 requires an unbiased and probability weighted estimate of
credit losses by evaluating a range of possible outcomes that
incorporates forecasts of future economic conditions. FLI is
required to be incorporated into the measurement of ECL as well as
the determination of whether there has been a significant increase
in credit risk since origination. Measurement of ECLs at each
reporting period should reflect reasonable and supportable
information at the reporting date about past events, current
conditions and forecasts of future economic conditions. Forecasts
for key macroeconomic variables that most closely correlate with
the Bank's portfolio are used to produce five economic scenarios,
comprising a central case, upside case, downside case, moderate
stress and severe stress, and the impacts of these scenarios are
then probability weighted. The estimation and application of this
forward--looking information will require significant judgement.
External information is used to produce the forecast
information.
iii) Hedge Accounting
IFRS 9 introduces a new hedge accounting model that expands the
scope of hedged items and risks eligible for hedge accounting and
aligns hedge accounting more closely with risk management. The new
model no longer specifies quantitative measures for effectiveness
testing and does not permit hedge de--designation.
iv) Impact of new impairment model, including impact on
capital
The Group has recorded an adjustment to its opening retained
earnings as at 1 January 2018 to reflect the application of the new
requirements at the adoption date and has not restated comparative
periods. The application of IFRS 9 resulted in additional
impairment allowance as at 1 January 2018 of GBP2.8m, as disclosed
below:
Impairment allowance GBP000
----------------------------------------------------------------- -------
Loss allowance at 3 December 2017 under
IAS 39 1,362
Additional impairment recognised at 1 January 2018 on loans and
advances to customers 2,787
-------------------------------------------------------------------- -------
Loss allowance at 1 January 2018 under IFRS
9 4,149
-------------------------------------------------------------------- -------
CET 1 ratio at 30 June 2018:
-- 15.22% before transitional relief;
-- 15.43% after transitional relief.
Transitional relief relates to the phasing of the impact of the
initial adoption of ECL as permitted by Regulation (EU) 2017/2395
of the European Parliament and Council. The Group adopted the
transitional relief. Under this approach, the balance of ECL
allowances in excess of the regulatory excess EL and standardised
portfolios are phased into the CET1 capital base over 5 years. The
proportion phased in for the balance at each reporting period is
2018: 10%; 2019 20%; 2020 40%; 2021 60%; 2022 80%. From 2023
onwards, there is no transitional relief.
v) Impact on Governance and Controls
The Group applied its existing governance framework to ensure
that appropriate controls and validations were in place over key
processes and judgments to determine the ECL. As part of the
implementation, the Group refined internal controls and implemented
new controls where required in areas that were impacted by IFRS 9,
including controls over the development and probability weighting
of macroeconomic scenarios, credit risk data and systems, and the
determination of a significant increase in credit risk.
IFRS 15, 'Revenue from contracts with customers'
This standard replaces IAS 11 Construction Contracts, IAS 18
Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements
for the Construction of Real Estate, IFRIC 18 Transfer of Assets
from Customers and SIC--31 Revenue - Barter of Transactions
Involving Advertising Services. The Group applied IFRS 15 from 1
January 2018.
The standard contains a single model that applies to contracts
with customers and two approaches to recognising revenue: at a
point in time or over time. The model features a contract--based
five step analysis of transactions to determine whether, how much
and when revenue is recognised. Revenue recognition for current
revenue streams were unchanged after the implementation of IFRS
15.
4. Valuation of financial instruments
The Group measures the fair value of an instrument using quoted
prices in an active market for that instrument. A market is
regarded as active if quoted prices are readily and regularly
available and represent actual and regularly occurring market
transactions. If a market for a financial instrument is not active,
the Group establishes fair value using a valuation technique. These
include the use of recent arm's length transactions, reference to
other instruments that are substantially the same for which market
observable prices exist, net present value and discounted cash flow
analysis. The objective of valuation techniques is to determine the
fair value of the financial instrument at the reporting date as the
price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants. In
the event that fair values of assets and liabilities cannot be
reliably measured, they are carried at cost.
The Group measures fair value using the following fair value
hierarchy that reflects the significance of the inputs used in
making measurements:
-- Level 1: Quoted prices in active markets for identical assets
or liabilities.
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
This category includes instruments valued using: quoted market
prices in active markets for similar instruments; quoted prices for
identical or similar instruments in markets that are considered
less than active; or other valuation techniques in which all
significant inputs are directly or indirectly observable from
market data.
-- Level 3: Inputs that are unobservable. This category includes
all instruments for which the valuation technique includes inputs
not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category
includes instruments that are valued based on quoted prices for
similar instruments for which significant unobservable adjustments
or assumptions are required to reflect differences between the
instruments.
The consideration of factors such as the magnitude and frequency
of trading activity, the availability of prices and the size of
bid/offer spreads assists in the judgement as to whether a market
is active. If in the opinion of management, a significant
proportion of the instrument's carrying amount is driven by
unobservable inputs, the instrument in its entirety is classified
as valued using significant unobservable inputs. 'Unobservable' in
this context means that there is little or no current market data
available from which to determine the level at which an arm's
length transaction would be likely to occur. It generally does not
mean that there is no market data available at all upon which to
base a determination of fair value (consensus pricing data may, for
example, be used).
The tables below analyse financial instruments measured at fair
value by the level in the fair value hierarchy into which the
measurement is categorised:
Level Level Level
1 2 3 Total
At 30 June 2018 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- -------
ASSETS
Derivative financial instruments - 1,452 - 1,452
Financial assets at FVOCI 17 - 2,442 2,459
---------------------------------- ------- ------- ------- -------
17 1,452 2,442 3,911
---------------------------------- ------- ------- ------- -------
LIABILITIES
Derivative financial instruments - 2,787 - 2,787
---------------------------------- ------- ------- ------- -------
- 2,787 - 2,787
---------------------------------- ------- ------- ------- -------
Level Level Level
1 2 3 Total
At 30 June 2017 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- -------
ASSETS
Derivative financial instruments - 1,816 - 1,816
Financial investments 112 - 2,061 2,173
---------------------------------- ------- ------- ------- -------
112 1,816 2,061 3,989
---------------------------------- ------- ------- ------- -------
Level Level Level
1 2 3 Total
At 31 December 2017 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------- ------- ------- -------
ASSETS
Derivative financial instruments - 2,551 - 2,551
Financial investments 144 - 2,203 2,347
---------------------------------- ------- ------- ------- -------
144 2,551 2,203 4,898
---------------------------------- ------- ------- ------- -------
LIABILITIES
Derivative financial instruments - 931 - 931
---------------------------------- ------- ------- ------- -------
- 931 - 931
---------------------------------- ------- ------- ------- -------
There were no transfers between level 1 and level 2 during
the year.
The following table reconciles the movement in level 3 financial instruments
measured at fair value (financial investments) during the year:
At 30 At 30 At 31
June June December
2018 2017 2017
Movement in level 3 GBP000 GBP000 GBP000
------------------------------------------------------ ------- ------- ----------
At 1 January 2,203 2,012 2,012
Consideration received 104 - -
Movements recognised in Other Comprehensive
Income 135 - 136
Movements recognised in the Income Statement - 49 55
------------------------------------------------------- ------- ------- ----------
At 30 June / 31 December 2,442 2,061 2,203
------------------------------------------------------- ------- ------- ----------
5. Operating segments
The Group is organised into three main operating segments as
disclosed below:
1) Retail banking (associate) - incorporating household cash
management, personal lending and banking services.
2) UK Private banking - incorporating private banking, wealth
management and commercial banking.
3) Group Centre - ABG Group Centre management.
Transactions between the operating segments are on normal
commercial terms. Centrally incurred expenses are charged to
operating segments on an appropriate pro-rata basis. Segment assets
and liabilities comprise operating assets and liabilities, being
the majority of the balance sheet.
In calculating the Income from associates, the Company has used
an estimate based on the full year market consensus of the equity
research performed on STB with an assumed straight-line growth in
profits over the first half, noting the trading statement made by
STB on 16 May 2018 in relation to STB's first 4 months trading
being in-line with STB's management's expectations. The Group's
profit before tax, profit after tax and earnings per share
therefore include this estimated income from STB.
Continuing operations
Retail
Bank
Associate UK Private Group
Income banking Centre Total
Six months ended 30 June 2018 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ----------- ----------- --------- ----------
Interest revenue - 28,720 54 28,774
Inter-segment revenue - (92) (54) (146)
------------------------------------------ ----------- ----------- --------- ----------
Interest revenue from external customers - 28,628 - 28,628
------------------------------------------ ----------- ----------- --------- ----------
Fee and commission income - 6,513 - 6,513
------------------------------------------ ----------- ----------- --------- ----------
Revenue from external customers - 35,141 - 35,141
------------------------------------------ ----------- ----------- --------- ----------
Interest expense - (3,525) 54 (3,471)
Add back inter-segment revenue - 92 (92) -
Subordinated loan note interest - - (180) (180)
Fee and commission expense - (112) - (112)
------------------------------------------ ----------- ----------- --------- ----------
Segment operating income - 31,596 (218) 31,378
------------------------------------------ ----------- ----------- --------- ----------
Impairment losses - (208) - (208)
Other income - 1,980 (331) 1,649
Income from associates 2,329 - - 2,329
Operating expenses - (27,986) (3,650) (31,636)
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) before tax 2,329 5,382 (4,199) 3,512
------------------------------------------ ----------- ----------- --------- ----------
Income tax (expense) / income - (237) (38) (275)
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) after tax 2,329 5,145 (4,237) 3,237
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) after tax 2,329 5,145 (4,237) 3,237
------------------------------------------ ----------- ----------- --------- ----------
Loans and advances to customers - 1,096,739 - 1,096,739
Other assets - 867,281 81,184 948,465
------------------------------------------ ----------- ----------- --------- ----------
Segment total assets - 1,964,020 81,184 2,045,204
------------------------------------------ ----------- ----------- --------- ----------
Customer deposits - 1,546,607 - 1,546,607
Other liabilities - 284,108 (20,831) 263,277
------------------------------------------ ----------- ----------- --------- ----------
Segment total liabilities - 1,830,715 (20,831) 1,809,884
------------------------------------------ ----------- ----------- --------- ----------
Other segment items:
Capital expenditure - (2,456) (95) (2,551)
Depreciation and amortisation - (1,459) (13) (1,472)
------------------------------------------ ----------- ----------- --------- ----------
Continuing operations
Retail
Bank
Associate UK Private Group
Income banking Centre Total
Six months ended 30 June 2017 GBP000 GBP000 GBP000 GBP000
------------------------------------------ ----------- ----------- --------- ----------
Interest revenue - 22,184 117 22,301
Inter-segment revenue - (78) (117) (195)
------------------------------------------ ----------- ----------- --------- ----------
Interest revenue from external customers - 22,106 - 22,106
------------------------------------------ ----------- ----------- --------- ----------
Fee and commission income - 6,183 - 6,183
------------------------------------------ ----------- ----------- --------- ----------
Revenue from external customers - 28,289 - 28,289
------------------------------------------ ----------- ----------- --------- ----------
Interest expense - (2,782) 117 (2,665)
Add back inter-segment revenue - 78 (78) -
Subordinated loan note interest - - (174) (174)
Fee and commission expense - (322) - (322)
------------------------------------------ ----------- ----------- --------- ----------
Segment operating income - 25,263 (135) 25,128
------------------------------------------ ----------- ----------- --------- ----------
Impairment losses - (343) - (343)
Other income - 1,588 (484) 1,104
Income from associates 2,145 - - 2,145
Operating expenses - (21,632) (3,867) (25,499)
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) before tax 2,145 4,876 (4,486) 2,535
------------------------------------------ ----------- ----------- --------- ----------
Income tax (expense) / income - (90) - (90)
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) after tax 2,145 4,786 (4,486) 2,445
------------------------------------------ ----------- ----------- --------- ----------
Segment profit / (loss) after tax 2,145 4,786 (4,486) 2,445
------------------------------------------ ----------- ----------- --------- ----------
Loans and advances to customers - 879,348 - 879,348
Other assets - 551,239 79,177 630,416
------------------------------------------ ----------- ----------- --------- ----------
Segment total assets - 1,430,587 79,177 1,509,764
------------------------------------------ ----------- ----------- --------- ----------
Customer deposits - 1,234,445 - 1,234,445
Other liabilities - 111,199 (70,160) 41,039
------------------------------------------ ----------- ----------- --------- ----------
Segment total liabilities - 1,345,644 (70,160) 1,275,484
------------------------------------------ ----------- ----------- --------- ----------
Other segment items:
Capital expenditure - (2,658) - (2,658)
Depreciation and amortisation - (1,046) (1) (1,047)
------------------------------------------ ----------- ----------- --------- ----------
Segment profit is shown prior to any intra-group
eliminations.
The UK private bank has a branch in Dubai, which generated
GBP2.2m (2017: GBP2.1m) income and had operating costs of GBP1.5m
(2017: GBP1.4m). All Dubai branch income is booked in the UK. Other
than the Dubai branch, all operations of the Group are conducted
wholly within the United Kingdom and geographical information is
therefore not presented.
6. Other income
Other income mainly consists out of rental income received from
the investment properties and from STB for office space
occupied.
7. Underlying profit reconciliation
The profit before tax from continuing operations as reported in
the operating segments can be reconciled to the underlying profit
from continuing operations for the year as disclosed in the tables
below.
Arbuthnot Arbuthnot
Latham Banking
Underlying profit reconciliation & Co. Group
Six months ended 30 June 2018 GBP000 GBP000
---------------------------------------------- ---------- ----------
Profit before tax from continuing operations 5,382 3,512
Investment in new ventures 670 670
---------------------------------------------- ---------- ----------
Underlying profit 6,052 4,182
---------------------------------------------- ---------- ----------
Arbuthnot Arbuthnot
Latham Banking
Underlying profit reconciliation & Co. Group
Six months ended 30 June 2017 GBP000 GBP000
--------------------------------------------------- ----------- -----------
Profit before tax from continuing operations 4,876 2,535
Investment in operating systems 97 97
Acquisition costs 67 67
RAF - full year equivalent income* 466 466
--------------------------------------------------- ----------- -----------
Underlying profit 5,506 3,165
--------------------------------------------------- ----------- -----------
* RAF profit contribution adjustment as if received from 1 January 2017
and not as included from 28 April 2017 (pro forma basis).
8. Earnings per ordinary share
Basic
Basic earnings per ordinary share are calculated by dividing the
profit after tax attributable to equity holders of the Company by
the weighted average number of ordinary shares 14,889,048 (2017:
14,815,045) in issue during the period. On 30 March 2017, Sir Henry
Angest bought 150,500 shares previously held in an ESOP trust.
Diluted
Diluted earnings per ordinary share are calculated by dividing
the dilutive profit after tax attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue
during the period, as well as the number of dilutive share options
in issue during the period. There were no dilutive share options in
issue at the end of June (2017: nil).
Six months Six months
ended ended
30 June 30 June
2018 2017
Profit attributable GBP000 GBP000
---------------------------------------------------------- ----------- -----------
Total profit after tax attributable to equity holders of
the Company 3,237 2,445
Profit after tax attributable to equity holders of the
Company 3,237 2,445
---------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2018 2017
Dilutive profit attributable GBP000 GBP000
---------------------------------------------------------- ----------- -----------
Total profit after tax attributable to equity holders of
the Company 3,237 2,445
Profit after tax attributable to equity holders of the
Company 3,237 2,445
---------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2018 2017
Basic Earnings per share p p
---------------------------------------------------------- ----------- -----------
Total Basic Earnings per share 21.7 16.5
Basic Earnings per share from continuing operations 21.7 16.5
---------------------------------------------------------- ----------- -----------
Six months Six months
ended ended
30 June 30 June
2018 2017
Diluted Earnings per share p p
---------------------------------------------------------- ----------- -----------
Total Diluted Earnings per share 21.7 16.5
Diluted Earnings per share from continuing operations 21.7 16.5
---------------------------------------------------------- ----------- -----------
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFVDDVIRLIT
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