Interim Results
July 30 2002 - 4:00AM
UK Regulatory
RNS Number:2664Z
Portman Building Society
30 July 2002
THE PORTMAN EXCEEDS MARKET SHARE BY 75%
Press Release
The Portman, the UK's fourth largest building society, has announced interim
figures which clearly demonstrate that more and more people are attracted to the
advantages a mutual can offer, a fact borne out by the new business volumes
achieved in the first 6 months of the year.
HIGHLIGHTS
* Retail savings balances increased to more than #7bn, a first for the
Society
* Gross new mortgage lending increased by 50% to #1.4bn, a record for the
Society
* Net mortgage lending was 75% ahead of natural market share
* Members benefited for the first time from the profits of Sun Bank, the
specialist mortgage subsidiary acquired at the end of 2001
* Despite strong mortgage growth, balances in arrears fell in the first
half, reflecting the quality of lending on the Group's books
Commenting on the first half performance, Robert Sharpe, Chief Executive said,
"We are delighted to report another record set of financial results that again
demonstrate our success as a strong, independent building society. The buoyant
housing market has obviously helped our mortgage lending but our impressive
growth in market share of net lending shows the competitiveness of our products.
"Not only are we attracting record new mortgage business but it is clear that
our existing customers, both savers and borrowers, see that there is a value in
staying with the Portman rather than shopping around in what is a highly
competitive market. Looking forward, I believe that the second half of 2002 will
see further strong growth."
Editor's notes:
* The interim results in their entirety are appended.
* The Portman Building Society is the UK's fourth largest building
society with Group assets of #9.4 billion.
* The Portman Group consists of:
(i) Portman Building Society which primarily operates through a
network of over 100 branches (predominantly in the south of England);
(ii) Sun Bank plc, a specialist mortgage lender based in Stevenage;
(iii)Portman Channel Islands Ltd, the Group's offshore deposit taker.
For further information please contact:
Lynsey Hallam Robert Sharpe Glyn Smith
Press Office Chief Executive Group Finance
Director
01202 562256 01202 563602 01202 563606
07887 830000
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2002
Review
The first six months of the year have been extremely successful for the Society,
a success that once again clearly demonstrates the value to its members of the
Portman's commitment to mutuality as:
* share balances increased to over #7bn for the first time;
* members benefited from strong growth in Sun Bank profits;
* gross new mortgage lending reached #1.4bn, a record for the Group; and
* net mortgage lending exceeded natural market share by 75%.
As well as achieving an outstanding performance in terms of growth and market
share, the Society has continued to improve its communication and interaction
with members, ensuring that it delivers what members want - good value and
service.
Business volumes
In terms of retail savings, a milestone has been reached; total share balances
topped #7 billion for the first time in the Society's history.
The Notice ISA and new two-year fixed rate ISA products proved extremely
popular, attracting over #630 million of balances. Earlier this year, the
decision to develop the offshore deposit taking business, Portman Channel
Islands, was announced. The results have been spectacular, with balances
increasing by 74% in only six months.
The popularity of the Portman's mortgage products is clearly demonstrated by the
volume of business written in the first half of the year, leading to a new
lending record. Gross new residential lending increased by 50% to #1.4 billion;
in all but two years of the Society's history, this amount would have been a
record for a full year's lending.
Whilst the buoyancy of the mortgage market undoubtedly helped in achieving these
levels of business, the Society's continued growth in market share demonstrates
just how successful this period has been.
Financial performance
Sun Bank's strong contribution to pre-tax profit has enabled the Society to
reduce further margins within its core business and absorb a #0.8 million charge
for goodwill in respect of the acquisition. As a result, Group pre-tax profit
has been held at similar levels to the first half of 2001 and the key management
expenses ratio is only marginally up on the full year 2001 level. In addition:
* total assets have increased by 4%, to #9.4 billion, notwithstanding the
sale of #200 million non-core commercial mortgage and asset finance
books, which were purchased as part of the Sun Bank acquisition;
* the solvency ratio has increased to a very healthy 14.0%, with a tier 1
ratio of 10.6%; and
* despite strong mortgage growth, balances in arrears fell in the first
half, reflecting the quality of lending on the Group's books.
Sun Bank
Acquired in late 2001, the Society's specialist mortgage subsidiary has made a
strong contribution to the first half results. The disposal of the non-core
commercial mortgage and asset finance portfolios was successfully achieved,
allowing the management to focus on the residential mortgage operation, which
benefited from a comprehensive review of its product range. As a result, Sun
Bank's profits for the period have exceeded expectations and the Society has
been able to pass on these profits to members in the form of competitive rates
for both savers and borrowers.
The outlook for the next six months
Undoubtedly the first half of 2002 has seen a more buoyant housing market than
was originally envisaged at the end of 2001; however, the fears of overheating
have not subsided and most commentators believe it to be a case of 'when',
rather than 'if', the market cools down. Importantly, a calming in house price
inflation is expected, rather than a return to the falling house prices that
have historically followed other high growth cycles. The Group moves into this
period with a competitive savings product range and a mortgage application
pipeline that positions it well to repeat the success and growth experienced in
the first half.
GROUP INCOME AND EXPENDITURE ACCOUNT
for the six months ended 30 June 2002
6 months 6
months Year
ended
ended ended
30 June 30
June 31 December
2002
2001 2001
as
restated as restated
#m
#m #m
Net interest receivable 50.3
44.0 92.0
Other income and charges 18.7
14.7 29.6
Total income 69.0
58.7 121.6
Administrative expenses (37.9)
(27.5) (61.9)
Operating profit before provisions 31.1
31.2 59.7
Provisions for bad and doubtful debts 0.1
0.3 (0.7)
Profit before tax 31.2
31.5 59.0
Taxation (9.9)
(9.2) (17.7)
Profit after tax 21.3
22.3 41.3
Financial ratios:
Profit after tax as % of mean total assets 0.47%
0.63% 0.55%
Management expenses as % of mean total assets 0.83%
0.77% 0.82%
GROUP BALANCE SHEET
as at 30 June 2002
30 June
30 June 31 December
2002
2001 2001
as
restated as restated
#m
#m #m
ASSETS
Liquid assets 1,818
1,653 1,898
Loans to customers - residential mortgages 7,133
5,176 6,477
- other 331
367 540
Fixed and other assets 142
94 137
Total assets 9,424
7,290 9,052
LIABILITIES AND RESERVES
Shares 7,118
6,331 6,799
Borrowings 1,636
481 1,585
Other liabilities 53
36 72
Subordinated debt 130
55 130
Subscribed capital 60
- 60
Reserves 427
387 406
Total liabilities and reserves 9,424
7,290 9,052
Movements:
Net inflow - shares 207
313 676
Gross residential lending 1,375
916 1,993
Financial ratios:
Liquid assets 20.8%
24.3% 22.6%
Gross capital 7.0%
6.5% 7.1%
Solvency 14.0%
12.9% 13.8%
Tier 1 capital 10.6%
10.9% 10.4%
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 June 2002
6 months
6 months Year
ended
ended ended
30 June
30 June 31 December
2002
2001 2001
#m
#m #m
Net cash inflow from operating activities 229.4
59.0 343.6
Returns on investments and servicing of finance (3.9)
(1.8) (4.3)
Taxation (12.5)
(5.5) (16.7)
Net financial investment (199.3)
(43.1) (387.2)
Net capital investment (9.1)
(5.9) (23.9)
Acquisition:
Purchase of subsidiary undertaking -
- (93.8)
Net cash acquired with subsidiary -
- 46.8
Financing -
- 135.0
Increase/(decrease) in cash 4.6
2.7 (0.5)
NOTES TO THE FINANCIAL INFORMATION
for the six months ended 30 June 2002
1. The interim financial information, which has not been audited, was
approved by the Board of Directors on 29 July 2002 and does not constitute
accounts within the meaning of the Building Societies Act 1986.
2. The interim financial information has been prepared on the basis of the
group accounting policies set out in the Annual Accounts to 31 December 2001,
with the exception of the adoption of FRS 19 'Deferred Tax', which is
effective for accounting periods ending on or after 23 January 2002.
Comparative information has been restated to reflect this adjustment.
3. The Society acquired Sun Bank plc on 30 November 2001. Group results from
that date include the results of Sun Bank plc.
4. Reconciliation of profit before tax to net cash inflow from operating
activities.
6 months 6 months
Year
ended ended
ended
30 June 30 June
31 December
2002 2001
2001
#m #m
#m
Profit on ordinary activities before tax 31.2 31.5
59.0
Depreciation and amortisation 3.9 2.5
5.8
Net (increase)/decrease in:
Loans and advances to customers (444.1) (291.3)
(653.3)
Loans and advances to credit institutions 284.4 (96.2)
(9.1)
Net increase/(decrease) in:
Shares 413.5 517.6
912.8
Owed to credit institutions and other customers 60.5 (16.7)
(122.7)
Debt securities in issue 0.1 (1.0)
125.9
Other (120.1) (87.4)
25.2
Net cash inflow from operating activities 229.4 59.0
343.6
Analysis of cash balances included in the balance sheet:
30 June 2002 Flows
31 December 2001
#m #m
#m
Cash in hand and balances with Bank of England 12.0 4.2
7.8
Loans and advances to credit institutions
repayable on demand 9.0 0.4
8.6
21.0 4.6
16.4
5. General reserves:
#m
Balance at 31 December 2001
399.9
Prior year adjustment
5.8
Balance as restated at 1 January 2002
405.7
Profit to 30 June 2002
21.3
Balance at 30 June 2002
427.0
6. The financial information for the year ended 31 December 2001, as restated
for the adoption of FRS19 'Deferred Tax', has been extracted from the
statutory accounts for that year, which have been filed with the Financial
Services Authority and on which the auditors gave an unqualified opinion.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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