REG - Arbuthnot BankingSecure Trust Bank - Final Results <Origin Href="QuoteRef">ARBB.L</Origin> <Origin Href="QuoteRef">STBS.L</Origin> - Part 2

Arbuthnot BankingAnnouncement

19/03/2015 07:01

- Part 2: For the preceding part double click  ID:nRSS8401Ha 

the interim
dividend of 11 pence paid on 3 October 2014, represents total dividends for the year of 27 pence (2013: 44 pence including
a special dividend of 18p). The final dividend, if approved by members at the Annual General Meeting, will be paid on 15
May 2015 to shareholders on the register at close of business on 17 April 2015. 
 
Going Concern 
 
After making appropriate enquiries which assessed strategy, profitability, funding, risk management (see note 6) and
capital resources (see note 7), the directors are satisfied that the Company and the Group have adequate resources to
continue in operation for the foreseeable future.  The financial statements are therefore prepared on the going concern
basis. 
 
Share Option Scheme 
 
At the Annual General Meeting shareholders will be asked to approve an Ordinary Resolution extending the Unapproved
Executive Share Option Scheme, introduced in 1995, for a further 10 years, details of which are given in the circular to
shareholders dated 2 April 2015. 
 
Share Capital 
 
Shareholders will be asked to approve a Special Resolution renewing the authority of the Directors to make market purchases
of shares not exceeding 10% of the existing issued share capital. The Directors will keep the position under review in
order to maximise the Company's resources in the best interests of shareholders. 
 
Financial Risk Management 
 
Details of how the Group manages risk are set out in in the Strategic Report and in note 6. 
 
Substantial Shareholders 
 
The Company was aware at 17 March 2015 of the following substantial holdings in the ordinary shares of the Company, other
than those held by one director shown below: 
 
 Holder                                                        Ordinary Shares  %    
 Unicorn UK Income Fund                                        913,460          6.0  
 Liontrust UK Smaller Companies Fund  775,257                  5.2              
 Prudential plc                                                624,161          4.1  
 Mr. R Paston                                                  529,130          3.5  
                                                                                     
 Directors                                                                           
 H Angest                             Chairman & CEO           
 J R Cobb                             Finance Director         
 J W Fleming                                                                         
 Ms R J Lea                                                                          
 P A Lynam                                                                           
 Sir Christopher Meyer                                                               
 A A Salmon                           Chief Operating Officer  
 R J J Wickham                        Deputy Chairman          
 
 
All directors served throughout the year. 
 
Mr. J.R. Cobb and Mr. J.W. Fleming retire under Article 78 of the Articles of Association and, being eligible, offer
themselves for re-election.  Mr. Cobb has a service agreement terminable on six months' notice, while Mr. Fleming has a
service agreement terminable on twelve months' notice. 
 
According to the information kept under Section 3 of the Disclosure and Transparency Rules 2006, the interests of directors
and their families in the ordinary 1p shares of the Company at the dates shown were, and the percentage of the current
issued share capital held is, as follows: 
 
 Beneficial Interests  1 January 2014  31 December 2014  17 March 2015  %     
 H Angest              8,200,901       8,200,901         8,200,901      53.7  
 J W Fleming           4,500           4,500             4,500          -     
 P A Lynam             10,000          10,000            10,000         0.1   
 A A Salmon            51,699          51,699            51,699         0.3   
 R J J Wickham         3,600           3,600             3,600          -     
 
 
At the year end Mr. Lynam held 9,110 and Mr. Salmon 7,500 ordinary 40p shares in Secure Trust Bank PLC, a 52% subsidiary of
the Company. 
 
On 16 April 2013 Mr. Salmon and Mr. Cobb were granted options to subscribe between April 2016 and April 2021 for 100,000
and 50,000 ordinary 1p shares respectively in the Company at 930p. The fair value of the options at grant date was £125k. 
 
On 2 November 2014 Mr. Lynam and Mr. Salmon each exercised options granted to them on 2 November 2011 to subscribe for
141,666 ordinary 40p shares in Secure Trust Bank PLC at 720p and sold the shares at a price of £25.  Mr. Lynam and Mr.
Salmon continue to hold options granted to them on 2 November 2011 to subscribe for 141,667 ordinary 40p shares in Secure
Trust Bank PLC at 720p between 2 November 2016 and 2 November 2021. The fair value of the options at grant date was £1.6m. 
 
On 1 April 2014 Mr Fleming was granted an option to subscribe between April 2017 and April 2022 for 50,000 ordinary 1p
shares in the Company at 1185p. The fair value of these shares at grant date was £53k. 
 
Apart from the interests disclosed above, no director was interested at any time in the year in the share capital of Group
companies. 
 
No director, either during or at the end of the financial year, was materially interested in any contract with the Company
or any of its subsidiaries, which was significant in relation to the Group's business. At 31 December 2014 three directors
had loans from Arbuthnot Latham & Co., Limited amounting to £5,503,000, on normal commercial terms as disclosed in note 40
to the financial statements. At 31 December 2014 three directors had deposits with Secure Trust Bank PLC amounting to
£354,000 and five directors had deposits with Arbuthnot Latham & Co., Limited amounting to £2,287,000, all on normal
commercial terms as disclosed in note 40 to the financial statements. 
 
The Company maintains insurance to provide liability cover for directors and officers of the Company. 
 
Board Committees 
 
The report of the Remuneration Committee on pages 23 and 24 will be the subject of an Ordinary Resolution at the Annual
General Meeting. 
 
Information on the Audit, Nomination, Risk and Donations Committees is included in the Corporate Governance section of the
Annual Report on pages 20 to 22. 
 
Employees 
 
The Company gives due consideration to the employment of disabled persons and is an equal opportunities employer.  It also
regularly provides employees with information on matters of concern to them, consults on decisions likely to affect their
interests and encourages their involvement in the performance of the Company through share participation and in other
ways. 
 
Branches outside of the UK 
 
During the year the Arbuthnot Latham & Co., Ltd operated a branch in Dubai which is regulated by the Dubai Financial
Services Authority. 
 
Events after the balance sheet date 
 
There were no material post balance sheet events to report. 
 
Political Donations 
 
The Company made political donations of £48,000 to the Conservative Party during the year (2013: £27,000). 
 
The Board proposes to seek renewal of the authority granted by shareholders at the 2011 Annual General Meeting to make
donations to EU political parties or organisations or incur EU political expenditure within the meaning of the Political
Parties, Elections and Referendums Act 2000 for a further four years limited to £250,000 in aggregate. 
 
Auditor 
 
A resolution for the re-appointment of KPMG LLP as auditor will be proposed at the forthcoming Annual General Meeting at a
fee to be agreed in due course by the directors. 
 
The directors have disclosed to the auditors to the best of their knowledge and belief all relevant information necessary
to assist the auditors in the preparation of their report. 
 
By order of the Board 
 
J R Kaye 
 
Secretary 
 
18 March 2015 
 
Corporate Governance 
 
AIM companies are not required to comply with The UK Corporate Governance Code ("The Code"). Nevertheless, the Board
endorses the principles of openness, integrity and accountability which underlie good corporate governance and intends to
take into account the provisions of The Code in so far as they are appropriate to the Group's size and circumstances.
Moreover, the Group contains subsidiaries authorised to undertake regulated business under the Financial Services and
Markets Act 2000 and regulated by the Prudential Regulatory Authority and the Financial Conduct Authority, including two
which are authorised deposit taking businesses. Accordingly, the Group operates to the high standards of corporate
accountability and regulatory compliance appropriate for such businesses. 
 
Directors 
 
The Group is led and controlled by an effective Board which comprises five executive directors and three non-executive
directors. 
 
The senior independent non-executive director is Robert Wickham, who in addition is Deputy Chairman. Although Mr. Wickham
has served on the Board for twenty one years from the date of his first election, he displays independence in both
character and judgement and there are no other relationships or circumstances which could affect his judgement.
Accordingly, the Board considers him to be independent. 
 
The Board 
 
The Board meets regularly throughout the year. Substantive agenda items have briefing papers, which are circulated in a
timely manner before each meeting. The Board is satisfied that it is supplied with all the information that it requires and
requests, in a form and of a quality to enable it to discharge its duties. In addition to ongoing matters concerning the
strategy and management of the Company and of the Group, the Board has determined certain items which are reserved for
decision by itself. These matters include the acquisition and disposal of other than minor businesses, the issue of capital
by any Group company and any transaction by a subsidiary company that cannot be made within its own resources, or that is
not in the normal course of its business. 
 
The Company Secretary is responsible for ensuring that Board processes and procedures are appropriately followed and
support effective decision making. All directors have access to the Company Secretary's advice and services and there is an
agreed procedure for directors to obtain independent professional advice in the course of their duties, if necessary, at
the Company's expense. 
 
The Board has delegated certain of its responsibilities to Committees. All Committees have written terms of reference. 
 
Audit Committee 
 
Membership of the Audit Committee is limited to non-executive directors and comprises Ruth Lea (as Chairman), Sir
Christopher Meyer and Robert Wickham. 
 
The Audit Committee provides a forum for discussing with the Group's external auditors their report on the annual accounts,
reviewing the scope, results and effectiveness of the internal audit work programme and considering any other matters which
might have a financial impact on the Company, including the Group's arrangements by which staff may, in confidence, raise
concerns about possible improprieties in matters of financial reporting or other matters. The Audit Committee's
responsibilities include reviewing the Group's system of internal control and the process for evaluating and monitoring
risk. The Committee also reviews the appointment, terms of engagement and objectivity of the external auditors, including
the level of non-audit services provided, and ensures that there is an appropriate audit relationship. 
 
Remuneration Committee 
 
Information on the Remuneration Committee and details of the Directors' remuneration are set out in the separate
Remuneration Report. 
 
Nomination Committee 
 
The Nomination Committee is chaired by Henry Angest and its other members are Robert Wickham and Ruth Lea. Before a Board
appointment is made the skills, knowledge and experience required for a particular appointment are evaluated and a
recommendation made to the Board. 
 
Risk Committee 
 
The Risk Committee is chaired by Henry Angest and its other members are James Cobb, James Fleming, John Reed (non-executive
of Arbuthnot Latham until 31 December 2014), Paul Lynam (appointed 27 February 2014), Andrew Salmon and Robert Wickham. The
principal role of the Risk Committee is to approve significant individual credit or other exposures. 
 
Donations Committee 
 
The Donations Committee is chaired by Henry Angest and its other members are Robert Wickham and Ruth Lea. The Committee
considers any political donation or expenditure as defined within the Political Parties, Elections and Referendums Act
2000. 
 
Shareholder Communications 
 
The Company maintains a regular dialogue with its shareholders and makes full use of the Annual General Meeting and any
other General Meetings to communicate with investors. 
 
The Company aims to present a balanced and understandable assessment in all its reports to shareholders, its regulators and
the wider public. Key announcements and other information can be found at: www.arbuthnotgroup.com. 
 
Internal Control and Financial Reporting 
 
The Board of directors has overall responsibility for the Group's system of internal control and for reviewing its
effectiveness. Such a system is designed to manage rather than eliminate risk of failure to achieve business objectives and
can only provide reasonable but not absolute assurance against the risk of material misstatement or loss. 
 
The Directors and senior management of the Group have formally adopted a Group Risk and Controls Policy which sets out the
Board's attitude to risk and internal control. Key risks identified by the Directors are formally reviewed and assessed at
least once a year by the Board, in addition to which key business risks are identified, evaluated and managed by operating
management on an ongoing basis by means of procedures such as physical controls, credit and other authorisation limits and
segregation of duties. The Board also receives regular reports on any risk matters that need to be brought to its
attention. Significant risks identified in connection with the development of new activities are subject to consideration
by the Board. There are well-established budgeting procedures in place and reports are presented regularly to the Board
detailing the results of each principal business unit, variances against budget and prior year, and other performance
data. 
 
The effectiveness of the internal control system is reviewed regularly by the Board and the Audit Committee, which also
receives reports of reviews undertaken by the internal audit function which was outsourced to EY. The Audit Committee also
receives reports from the external auditors, KPMG LLP, which include details of internal control matters that they have
identified, as part of the Financial Statement audit. Certain aspects of the system of internal control are also subject to
regulatory supervision, the results of which are monitored closely by the Board. 
 
Statement of Directors' Responsibilities in Respect of the Strategic Report and the Directors' Report and the Financial
Statements 
 
The directors are responsible for preparing the Strategic Report and the Directors' Report and the financial statements in
accordance with applicable law and regulations. Company law requires the Directors to prepare Group and Parent Company
financial statements for each financial year. As required by the AIM Rules of the London Stock Exchange they are required
to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected
to prepare the Parent Company financial statements on the same basis. 
 
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and Parent Company and of their profit or loss for that period. In
preparing each of the Group and Parent Company financial statements, the Directors are required to: 
 
• select suitable accounting policies and then apply them consistently; 
 
• make judgments and estimates that are reasonable and prudent; 
 
• state whether they have been prepared in accordance with IFRSs as adopted by the EU; and 
 
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the
Parent 
 
Company will continue in business. 
 
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility
for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud
and other irregularities. 
 
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ
from legislation in other jurisdictions. 
 
Statement of Disclosure of Information to Auditor 
 
The Directors confirm that: 
 
• so far as each director is aware, there is no relevant audit information of which the Company's auditors are unaware;
and 
 
• the Directors have taken all the steps they ought to have taken as directors to make themselves aware of any relevant
audit 
 
information and to establish that the Company's auditor are aware of that information. 
 
This confirmation is given and shall be interpreted in accordance with the provisions of section 418 of the Companies Act
2006. 
 
Remuneration Report 
 
Remuneration Committee 
 
Membership of the Remuneration Committee is limited to non-executive directors together with Henry Angest as Chairman. The
present members of the Committee are Henry Angest, Robert Wickham and Ruth Lea. 
 
The Committee has responsibility for producing recommendations on the overall remuneration policy for directors and for
setting the remuneration of individual directors, both for review by the Board. Members of the Committee do not vote on
their own remuneration. 
 
Remuneration Policy 
 
The Remuneration Committee determines the remuneration of individual directors having regard to the size and nature of the
business; the importance of attracting, retaining and motivating management of the appropriate calibre without paying more
than is necessary for this purpose; remuneration data for compar