REG - Arbuthnot BankingSecure Trust Bank - Final Results <Origin Href="QuoteRef">ARBB.L</Origin> <Origin Href="QuoteRef">STBS.L</Origin> - Part 3
19/03/2015 07:01
- Part 3: For the preceding part double click ID:nRSS8401Hb
borrowings 25,654 2,000
Dividends paid (7,623) (9,060)
Proceeds from share placing by Secure Trust Bank 48,758 14,405
Proceeds from sale of Secure Trust Bank shares 24,327 -
Proceeds from exercise of Secure Trust Bank share options 3,315 -
Net cash used in financing activities 94,431 7,345
Net decrease in cash and cash equivalents (150,325) (49,967)
Cash and cash equivalents at 1 January 298,107 348,074
Cash and cash equivalents at 31 December 39 147,782 298,107
Company statement of cash flows
Year ended 31 December Year ended 31 December
2014 2013
Note £000 £000
Cash flows from operating activities
Dividends received from subsidiaries 6,440 11,418
Interest received 149 99
Interest paid (661) (714)
Net trading and other income 1,629 1,364
Cash payments to employees and suppliers (7,866) (8,089)
Taxation received - (160)
Cash flows from operating (losses)/profits before changes in operating assets and liabilities (309) 3,918
Changes in operating assets and liabilities:
- net (increase)/decrease in group company balances (4,950) 3,128
- net (increase)/decrease in other assets (3) 254
- net (decrease)/increase in other liabilities (1) 348
Net cash (outflow)/inflow from operating activities (5,263) 7,648
Cash flows from investing activities
Increase investment in subsidiary 41 (10,500) (1,000)
Disposal of share in subsidiaries 41 24,327 14,405
Net cash from investing activities 13,827 13,405
Cash flows from financing activities
Dividends paid (3,871) (6,402)
(Decrease)/Increase in borrowings (2,000) 2,000
Net cash used in financing activities (5,871) (4,402)
Net increase in cash and cash equivalents 2,693 16,651
Cash and cash equivalents at 1 January 16,551 (100)
Cash and cash equivalents at 31 December 39 19,244 16,551
Notes to the Consolidated Financial Statements
1. Reporting entity
Arbuthnot Banking Group PLC is a company domiciled in United Kingdom. The registered address of the Arbuthnot Banking Group
PLC is 7 Wilson Street, London, EC2M 2SN. The consolidated financial statements of the Arbuthnot Banking Group PLC as at
and for the year ended 31 December 2014 comprise the Arbuthnot Banking Group PLC and its subsidiaries (together referred to
as the "Group" and individually as "subsidiaries"). The Company is primarily involved in banking and financial services.
2. Basis of presentation
(a) Statement of compliance
The Group's consolidated financial statements and the Company's financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs as adopted and endorsed by the EU) and the Companies Act 2006 applicable
to companies reporting under IFRS.
The consolidated financial statements were authorised for issue by the Board of Directors on 18 March 2015.
(b) Basis of measurement
The consolidated and company financial statements have been prepared under the historical cost convention, as modified by
the revaluation of land and buildings, available-for-sale financial assets, financial assets and financial liabilities at
fair value through profit or loss, and derivatives assets and liabilities.
(c) Functional and presentational currency
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary
economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are
presented in Pound Sterling, which is the Company's functional and the Group's presentational currency.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in Note 4.
(e) Accounting developments
• IFRS 10, 'Consolidated Financial Statements' and IAS 27 (Revised), 'Separate Financial Statements' (effective 1 January
2013). IFRS 10 supersedes IAS 27 and SIC-12, and provides a single model to be applied in the control analysis for all
investees. There are some minor clarifications in IAS27, and the requirements of IAS 28 and IAS 31 have been incorporated
into IAS 27. Due to the adoption of IFRS 10 the Group had to change its accounting policy for determining whether it has
control over and consequently whether it consolidates other investees. According to this standard, control is now defined
as when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee. However, this standard did not have any material
impact on the financial statements as there was no change in the investees consolidated.
• IFRS 11, 'Joint Arrangements' (effective 1 January 2013). This standard replaces the existing accounting for subsidiaries
and joint ventures (now joint arrangements) and removes the choice of equity or proportionate accounting for jointly
controlled entities, as was the case under IAS 31. This standard did not have any material impact on the financial
statements.
• IFRS 12, 'Disclosure of Interests in Other Entities' (effective 1 January 2013). This standard replaces the existing
accounting for subsidiaries and joint ventures (now joint arrangements) and contains the disclosure requirements for
entities that have interests in subsidiaries, joint arrangements, associates and/or unconsolidated structured entities. Due
to the adoption of IFRS 12 the Group has expanded its disclosures surrounding associates (see Note 27) and subsidiaries
(see Note 41).
• IAS 32 (Revised), 'Offsetting Financial Assets and Financial Liabilities' (effective 1 January 2014). This standard was
amended to clarify the offsetting criteria, specifically when an entity currently has a legal right of set off; and when
gross settlement is equivalent to net settlement. This standard did not have any material impact on the financial
statements.
• IFRIC 21, 'Levies' (effective 1 January 2014). The interpretation defines a levy as an outflow from an entity imposed by
a government in accordance with legislation. That levy is recognised as a liability when, and only when, the triggering
event specified in the legislation occurs. This standard did not have any material impact on the Group, due to the fact
that in the prior year the Group already adjusted the trigger date for FSCS levies from 31 December to 1 April.
(f) Going concern
The financial statements have been prepared on the 'going concern' basis as disclosed in the Directors' Report.
3. Significant accounting policies
The accounting policies applied in the preparation of these consolidated financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
3.1. Consolidation
(a) Subsidiaries
Subsidiaries are all investees (including special purpose entities) controlled by the Group. The Group controls an investee
when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect
those returns through its power over the investee. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired,
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the
acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over
the fair value of the Group's shares of the identifiable net assets acquired is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly
in the Statement of Comprehensive Income as a gain on bargain purchase.
The Parent's investments in subsidiaries are recorded at cost less, where appropriate, provisions for impairment in value.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(b) Changes in ownership and non-controlling interests
Changes in ownership interest in a subsidiary that do not result in the loss of control are accounted for as equity
transactions and no gain or loss is recognised. Adjustments to non-controlling interests are based on a proportionate
amount of the net assets of the subsidiary.
When control of a subsidiary is lost, the Group derecognises the assets, liabilities, non-controlling interest and all
other components of equity relating to the former subsidiary from the consolidated statement of financial position. Any
resulting gain or loss is recognised in profit or loss. Any investment retained in the former subsidiary is recognised at
its fair value when control is lost.
(c) Special purpose entities
Special purpose entities (SPEs) are entities that are created to accomplish a narrow and well-defined objective such as the
securitisation of particular assets, or the execution of a specific borrowing or lending transaction. SPEs are consolidated
when the substance of the relationship between the Group and the entity and the evaluation of the Group's exposure to the
risks and rewards of the SPE indicates control. The following circumstances may indicate control by the Group and would
therefore require consolidation of the SPE:
• in substance, the activities of the SPE are being conducted on behalf of the entity according to its specific business
needs so that
the entity obtains benefits from the SPE's operation;
• in substance, the entity has the decision-making powers to obtain the majority of the benefits of the activities of the
SPE or, by
setting up an 'autopilot' mechanism, the entity has delegated these decision-making powers;
• in substance, the entity has rights to obtain the majority of the benefits of the SPE and therefore may be exposed to
risks incident
to the activities of the SPE; or
• in substance, the entity retains the majority of the residual or ownership risks related to the SPE or its assets in
order to obtain
benefits from its activities.
The assessment of whether the Group has control over an SPE is carried out at inception and the initial assessment is only
reconsidered at a later date if there were any changes to the structure or terms of the SPE, or there were additional
transactions between the Group and the SPE.
(d) Associates
Associates are those entities in which the Group has significant influence, but not control, over the financial and
operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting
power of another entity. Associates are accounted for using the equity method and are initially recognised at cost. The
Group's investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated
financial statements include the Group's share of the total comprehensive income and equity movements of equity accounted
investees, from the date that significant influence commences until the date that significant influence ceases. When the
Group's share of losses exceeds its interest in an equity accounted investee, the Group's carrying amount is reduced to nil
and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive
obligations or made payments on behalf of the investee.
3.2. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Group Board. The Group
Board, which is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the chief operating decision maker. All transactions between segments are conducted on an arm's length basis.
Income and expenses directly associated with each segment are included in determining segment performance. There are three
main operating segments:
• Retail Banking
• Private Banking
• Group Centre
3.3. Foreign currency translation
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates
of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the Statement of Comprehensive Income.
3.4. Interest income and expense
Interest income and expense are recognised in the Statement of Comprehensive Income for all instruments measured at
amortised cost using the effective interest method.
The effective interest method calculates the amortised cost of a financial asset or a financial liability and allocates the
interest income or interest expense over the relevant period. The effective interest rate is the rate that discounts
estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a
shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective
interest rate, the Group takes into account all contractual terms of the financial instrument but does not consider future
credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part
of the effective interest rate, transaction costs and all other premiums or discounts. The carrying amount of the financial
asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. The adjusted carrying
amount is calculated based on the original effective interest rate and the change in carrying amount is recorded as
interest income or expense.
Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss,
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