REG - Arbuthnot BankingSecure Trust Bank - Final Results for the year to 31 December 2015 <Origin Href="QuoteRef">ARBB.L</Origin> <Origin Href="QuoteRef">STBS.L</Origin> - Part 8
17/03/2016 07:05
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46,466 46,466 39,966 39,966
Total assets 69,920 59,069 74,774 63,843
LIABILITIES
Due to subsidiary undertakings 5,431 2,832 3,878 2,872
Total liabilities 5,431 2,832 3,878 2,872
Issued guarantee contracts - - 2,500 -
The disclosure of the year-end balance and the highest balance during the year is considered the most meaningful
information to represent the transactions during the year. The above transactions arose during the normal course of
business and are on substantially the same terms as for comparable transactions with third parties.
The Company undertook the following transactions with other companies in the Group during the year:
2015 2014
£000 £000
Arbuthnot Latham & Co., Ltd - Recharge of property and IT costs 1,587 2,089
Arbuthnot Latham & Co., Ltd - Recharge for costs paid on the Company's behalf 3,288 3,218
Arbuthnot Latham & Co., Ltd - Group recharges for shared services (1,421) (1,321)
OBC Insurance Consultants Ltd - Dividend received (132) -
Secure Trust Bank PLC - Group recharges for shared services (412) (308)
Secure Trust Bank PLC - Dividends received (6,517) (6,440)
West Yorkshire Insurance Company Ltd - Legal fees settled 25 55
Total (3,582) (2,707)
39. Investment in subsidiary undertakings
Investment at cost Impairment provisions Net
Company £000 £000 £000
At 1 January 2014 33,559 (2,564) 30,995
Capital contribution in Arbuthnot Latham & Co., Limited 10,500 - 10,500
Sale of shares in Secure Trust Bank PLC (1,529) - (1,529)
At 31 December 2014 42,530 (2,564) 39,966
Capital contribution in Arbuthnot Latham & Co., Limited 6,500 - 6,500
At 31 December 2015 49,030 (2,564) 46,466
2015 2014
Company £000 £000
Subsidiary undertakings:
Banks 44,166 37,666
Other 2,300 2,300
Total 46,466 39,966
(a) List of subsidiaries
The table below provides details of the significant subsidiaries of Arbuthnot Banking Group PLC at 31 December:
Country of incorporation Ownership interest %
2015 2014 Principal activity
Arbuthnot Latham & Co., Limited UK 100 100 Private banking
Secure Trust Bank PLC UK 52 52 Retail banking
The table below provides details of other subsidiaries and related undertakings of Arbuthnot Banking Group PLC at 31 December:
Country of incorporation
Principal activity
Owned directly
Arbuthnot Fund Managers Limited UK Dormant
Arbuthnot Investments Limited UK Dormant
Arbuthnot Limited UK Dormant
Arbuthnot Properties Limited UK Dormant
Arbuthnot Unit Trust Management Limited UK Dormant
Gilliat Financial Solutions Limited UK Dormant
Peoples Trust and Savings Plc UK Dormant
West Yorkshire Insurance Company Limited UK Dormant
Windward Insurance Company PCC Limited Guernsey Insurance
Owned indirectly via intermediate holding companies
Arbuthnot Latham (Nominees) Limited UK Dormant
Arbuthnot Securities Limited UK Dormant
Artillery Nominees Limited UK Dormant
Debt Managers (Services) Limited UK Debt collection company
Everyday Lending Limited * UK Provider of unsecured and secured loans
Everyday Loans Holdings Limited * UK Holding company
Everyday Loans Limited * UK Sourcing and servicing of secured and unsecured loans
John K Gilliat & Co., Limited UK Dormant
Secure Homes Services Limited UK Property rental
STB Leasing Limited UK Leasing
Tarn Crag Limited Isle of Man Property management
V12 Finance Group Limited UK Holding company
V12 Personal Finance Limited UK Dormant
V12 Retail Finance Limited UK Sourcing and servicing of unsecured loans
* Included in assets classified as held for sale
All other subsidiary and related undertakings are unlisted and none banking institutions. The entities were all wholly
owned via Ordinary shares, except for Tarn Crag in which the Company indirectly holds 50% of the Ordinary shares. All
entities are included in the consolidated financial statements and have an accounting reference date of 31 December.
(b) Non-controlling interests in subsidiaries
The only subsidiary in the Group with non-controlling interests is Secure Trust Bank PLC, with external parties having
48.1% (2014: 48.1%) ownership interests in the bank. Summary financial information on the subsidiary is shown in the table
below.
Year ended 31 December Year ended 31 December
2015 2014
Summary of profit £000 £000
Operating income 132,484 97,897
Profit after income tax 29,009 20,455
Total comprehensive income 29,009 20,831
Profit allocated to non-controlling interests 13,798 8,382
31 December 31 December
2015 2014
Summary of assets and liabilities £000 £000
Loans and advances to customers 960,610 622,495
Other assets 286,721 159,769
Liabilities (1,106,147) (657,402)
Net assets 141,184 124,862
Carrying amount of non-controlling interests 67,887 60,038
Year ended 31 December Year ended 31 December
2015 2014
Summary of cash flows £000 £000
Cash flows from operating activities 53,188 (21,356)
Cash flows from investing activities (3,397) (4,533)
Cash flows from financing activities, before dividends to non-controlling interests (12,552) 52,073
Cash flows from financing activities - cash dividends to non-controlling interests (6,036) (3,752)
Net increase in cash and cash equivalents 31,203 22,432
(c) Significant restrictions
The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities
other than those resulting from the supervisory frameworks within which banking subsidiaries operate. The supervisory
frameworks require banking subsidiaries to keep certain levels of regulatory capital and liquid assets, limit their
exposure to other parts of the Group and comply with other ratios. The carrying amounts of banking subsidiaries' assets and
liabilities are £2,252m and £2,058m respectively (2014: £1,452m and £1,268m respectively).
(d) Risks associated with interests
During the year Arbuthnot Banking Group PLC made a £6.5m (2014: £10.5m) capital contribution to Arbuthnot Latham & Co.,
Ltd. The contribution was made to assist the private bank during a period of growth (which included the acquisition of a
loan book in 2014 at fair value of £106m) to ensure that all regulatory capital requirements were met.
(e) Changes in ownership interest
On 9 July 2014, Secure Trust Bank PLC issued 2,083,333 new shares to external shareholders for £50m and at the same time
Arbuthnot Banking Group PLC sold 1,041,667 shares for £25m, thereby reducing its shareholding in Secure Trust Bank PLC from
67% to 53.3%. The effect of these transactions on the Group's reserves can be seen in the Consolidated Statement of Changes
in Equity. As can been seen from the table under paragraph (b) above, the full year equivalent profit attributable to
equity holders of the Group had therefore reduced from £13.7m to £10.9m in 2014 due to these transactions.
On 4 November 2014, 460,416 share options issued by Secure Trust Bank, under its equity settled share option scheme were
exercised (see Note 35). This resulted in the shareholding in Secure Trust Bank PLC reducing from 53.3% to 51.9%. The
effect of the exercise of the share options on the Group's reserves can be seen in the Consolidated Statement of Changes in
Equity. As can been seen from the table under paragraph (b) above, the full year equivalent profit attributable to equity
holders of the Group had therefore reduced from £10.9m to £10.6m in 2014 due to these shares being issued.
40. Operating segments
The Group is organised into three main operating segments, arranged over two separate companies with each having its own
specialised banking service, as disclosed below:
1) Retail banking - incorporating household cash management, personal lending and banking and insurance services.
2) UK Private banking - incorporating private banking and wealth management.
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.
Discontinued operations Continuing operations
ELL Retail banking UK Private banking Group Centre Total Group Total
Year ended 31 December 2015 £000 £000 £000 £000 £000 £000
Interest revenue 39,230 100,442 32,974 126 133,542
Inter-segment revenue - (211) (181) (118) (510)
Interest revenue from external customers 39,230 100,231 32,793 8 133,032
Fee and commission income 1,523 16,867 9,999 - 26,866
Revenue from external customers 40,753 117,098 42,792 8 159,898
Interest expense - (21,560) (7,691) 236 (29,015)
Add back inter-segment revenue - 211 181 (392) -
Subordinated loan note interest - - - (324) (324)
Fee and commission expense (358) (3,660) (206) - (3,866)
Segment operating income 40,395 92,089 35,076 (472) 126,693
Impairment losses (7,537) (16,782) (1,250) (34) (18,066)
Other income - - 1,894 (1,894) -
Operating expenses (21,195) (50,133) (29,722) (6,204) (86,059)
Segment profit / (loss) before tax 11,663 25,174 5,998 (8,604) 22,568 34,231
Income tax (expense) / income (2,271) (5,557) 109 12 (5,436) (7,707)
Segment profit / (loss) after tax 9,392 19,617 6,107 (8,592) 17,132 26,524
Loans and advances to customers - 960,610 618,902 - 1,579,512
Other assets 118,066 168,655 385,547 (20,221) 533,981
Segment total assets 118,066 1,129,265 1,004,449 (20,221) 2,113,493 2,231,559
Customer deposits 1,033,073 896,766 - 1,929,839
Other liabilities 8,247 64,827 55,330 (18,088) 102,069
Segment total liabilities 8,247 1,097,900 952,096 (18,088) 2,031,908 2,040,155
Other segment items:
Capital expenditure (3,639) (3,186) (102) (6,927)
Depreciation and amortisation (2,865) (1,320) (29) (4,214)
The "Group Centre" segment above includes the parent entity and all intercompany eliminations.
Discontinued operations Continuing operations
ELL Retail banking UK Private banking Group Centre Total Group Total
Year ended 31 December 2014 £000 £000 £000 £000 £000 £000
Interest revenue 30,226 63,316 24,303 155 87,774
Inter-segment revenue - (51) (177) (148) (376)
Interest revenue from external customers 30,226 63,265 24,126 7 87,398
Fee and commission income 4,122 16,082 9,759 - 25,841
Revenue from external customers 34,348 79,347 33,885 7 113,239
Interest expense - (14,170) (4,916) 116 (18,970)
Add back inter-segment revenue - 51 177 (228) -
Subordinated loan note interest - - - (401) (401)
Fee and commission expense (111) (1,568) (251) - (1,819)
Segment operating income 34,237 63,660 28,895 (506) 92,049
Impairment losses (6,638) (8,650) (3,378) 75 (11,953)
Other income - - 2,088 (2,088) -
Operating expenses (19,016) (37,255) (23,977) (4,933) (66,165)
Segment profit / (loss) before tax 8,583 17,755 3,628 (7,452) 13,931 22,514
Income tax (expense) / income (2,054) (3,618) 209 (35) (3,444) (5,498)
Segment profit / (loss) after tax 6,529 14,137 3,837 (7,487) 10,487 17,016
Loans and advances to customers 622,495 536,488 - 1,158,983
Other assets 159,504 162,984 (34,849) 287,639
Segment total assets 781,999 699,472 (34,849) 1,446,622 1,446,622
Customer deposits 608,418 585,867 - 1,194,285
Other liabilities 48,719 73,639 (43,590) 78,768
Segment total liabilities 657,137 659,506 (43,590) 1,273,053 1,273,053
Other segment items:
Capital expenditure (4,533) (4,482) (2) (9,017)
Depreciation and amortisation (3,087) (708) (12) (3,807)
Segment profit is shown prior to any intra-group eliminations.
The UK private bank opened a branch in Dubai in the year, which generated £1.85m (2014: £0.61m) fee income and had
operating costs of £1.82m (2014: £1.59m). Other than the Dubai branch opened in 2013, all operations of the Group are
conducted wholly within the United Kingdom and geographical information is therefore not presented.
41. Country by Country Reporting
Article 89 of the EU Directive 2013/36/EU otherwise known as the Capital Requirements Directive IV ('CRD IV') was
implemented into UK domestic legislation through statutory instrument 2013 No. 3118, the Capital Requirements
(Country-by-Country Reporting) Regulations 2013 (the Regulations), which were laid before the UK Parliament on 10 December
2013 and which came into force on 1 January 2014.
Article 89 requires credit institutions and investment firms in the EU to disclose annually, specifying, by Member State
and by third country in which it has an establishment, the following information on a consolidated basis for the financial
year: name, nature of activities, geographical location, turnover, number of employees, profit or loss before tax, tax on
profit or loss and public subsidies received.
31 December 2015 Turnover Number FTE Profit/(loss) Tax paid
Name Nature of activity Location (£m) employees before tax (£m) (£m)
Arbuthnot Banking Group PLC Banking Services UK 167.1 924 36.0 7.4
Arbuthnot Banking Group PLC Banking Services Dubai - 13 (1.8) -
31 December 2014 Turnover Number FTE Profit/(loss) Tax paid
Name Nature of activity Location (£m) employees before tax (£m) (£m)
Arbuthnot Banking Group PLC Banking Services UK 126.3 791 23.9 3.0
Arbuthnot Banking Group PLC Banking Services Dubai - 9 (1.4) -
The Dubai branch income is booked through the UK branch, hence the turnover is nil in the above analysis. Reallocating this
income to the Dubai branch would result in a £33k profit (2014: £1m loss). No public subsidies were received during 2015 or
2014.
42. Ultimate controlling party
The Company regards Sir Henry Angest, the Group Chairman and Chief Executive Officer, who has a beneficial interest in
53.7% of the issued share capital of the Company, as the ultimate controlling party. Details of his remuneration are given
in the Remuneration Report and Note 38 of the consolidated financial statements includes related party transactions with
Sir Henry Angest.
43. Events after the balance sheet date
On 15 January 2016 Arbuthnot Latham & Co., Ltd signed a contract with Oracle to replace its current banking system. The
committed cost is £2m.
Five Year Summary
In the table below, all the figures are presented in accordance with IFRS.
2011 2012 2013 2014 2015
£000 £000 £000 £000 £000
Profit before tax from continuing operations 5,116 11,146 11,780 13,931 22,568
Total Earnings per share
Basic (p) (34.0) 54.6 53.8 58.6 86.3
Earnings per share from continuing operations
Basic (p) 37.1 47.0 44.1 32.4 53.3
Dividends per share (p) - ordinary 24.0 25.0 26.0 27.0 29.0
- special - - 18.0 - -
Other KPI:
2011 2012 2013 2014 2015
£000 £000 £000 £000 £000
Net asset value per share (p) 312.2 449.3 570.5 1,136.0 1,252.7
This information is provided by RNS
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