REG - Arbuthnot BankingSecure Trust Bank - Final Results <Origin Href="QuoteRef">ARBB.L</Origin> <Origin Href="QuoteRef">STBS.L</Origin> - Part 7
19/03/2015 07:01
- Part 7: For the preceding part double click ID:nRSS8401Hf
3,766 4,672
Later than 1 year and no later than 5 years 8,715 9,636
Later than 5 years 8,876 19,351
21,357 33,659
In 2013, Arbuthnot Latham & Co., Ltd entered into a 16 year lease on 7 Wilson Street (the head office for Arbuthnot Banking
Group PLC, the principal location for Arbuthnot Latham & Co., Ltd and London offices for Secure Trust Bank PLC), with a
break at 11 years and rent reviews after 5, 10 and 15 years. The initial rent is £1.75 million per annum. This lease forms
the most significant part of the operating leases disclosed in the table above.
35. Share capital
Number of shares Ordinary share capital Share premium
Group and Company £000 £000
At 1 January 2012 15,279,322 153 -
At 31 December 2013 & December 2014 15,279,322 153 -
The total authorised number of ordinary shares at 31 December 2014 and 31 December 2013 was 418,439,000 with a par value of
1 pence per share (2013: 1 pence per share). At 31 December 2014 the Company held 390,274 shares (2013: 390,274) in
treasury.
36. Reserves and retained earnings
2014 2013
Group £000 £000
Revaluation reserve 98 191
Capital redemption reserve 20 20
Available-for-sale reserve (250) (169)
Cash flow hedging reserve - (378)
Treasury shares (1,131) (1,131)
Retained earnings 114,641 67,901
Total reserves at 31 December 113,378 66,434
The revaluation reserve represents the unrealised change in the fair value of properties.
The capital redemption reserve represents a reserve created after the Company purchased its own shares which resulted in a
reduction of share capital.
2014 2013
Company £000 £000
Capital redemption reserve 20 20
Available-for-sale reserve - 81
Treasury shares (1,131) (1,131)
Retained earnings 50,755 31,325
Total reserves as 31 December 49,644 30,295
37. Share-based payment options
Company
The Company had the following equity settled share-based payment awards outstanding at 31 December 2014:
• On 16 April 2013 Mr. Salmon was granted an option to subscribe for 100,000 ordinary 1p shares in the Company between
April
2016 and April 2021 at 930p. The fair value of the option at grant date was £83k.
• On 16 April 2013 Mr. Cobb was granted an option to subscribe for 50,000 ordinary 1p shares in the Company between April
2016 and April 2021 at 930p. The fair value of the option at grant date was £41k.
• On 1 April 2014 Mr Fleming was granted an option to subscribe for 50,000 ordinary 1p shares in the Company between April
2017 and April 2022 at 1185p. The fair value of these shares at grant date was £53k.
There are no other vesting conditions for these awards.
Group
Apart from the share-based payment awards for the Company listed above, the Group also include awards allocated under the
Secure Trust Bank Share Option Scheme, which was established on 17 October 2011 and entitles key management personnel and
senior employees of Secure Trust Bank PLC to purchase shares in that company.
The performance conditions of the Scheme are that for the duration of the vesting period, the dividends paid by Secure
Trust Bank PLC must have increased in percentage terms when compared to an assumed dividend of £8m in respect of the
financial year ending 31 December 2012, by a minimum of the higher of:
a) the increase in the Retail Prices Index during that period; or
b) 5% per annum during that period.
All dividends paid by Secure Trust Bank each year during the vesting period must be paid from Secure Trust Bank's earnings
referable to that year. Also from the grant date to the date the Option is exercised, there must be no public criticism by
any regulatory authority on the operation of Secure Trust Bank or any of its subsidiaries which has a material impact on
the business of the Company.
Options are forfeited if they remain unexercised after a period of more than 10 years from the date of grant. If the
participant ceases to be employed by the Group by reason of injury, disability, ill-health or redundancy; or because his
employing company ceases to be a shareholder of the Group; or because his employing business is being transferred out of
the Group, his option may be exercised within 6 months after such cessation. In the event of the death of a participant,
the personal representatives of a participant may exercise an option, to the extent exercisable at the date of death,
within 6 months after the death of the participant.
On cessation of employment for any other reason (or when a participant serves, or has been served with, notice of
termination of such employment), the option will lapse although the Remuneration Committee has discretion to allow the
exercise of the option for a period not exceeding 6 months from the date of such cessation.
In such circumstances, the performance conditions may be modified or waived as the Remuneration Committee, acting fairly
and reasonably and taking due consideration of the circumstances, thinks fit. The number of Ordinary Shares which can be
acquired on exercise will be pro-rated on a time elapsed basis, unless the Remuneration Committee, acting fairly and
reasonably and taking due consideration of the circumstances, decides otherwise. In determining whether to exercise its
discretion in these respects, the Remuneration Committee must satisfy itself that the early exercise of an option does not
constitute a reward for failure.
On 2 November 2011 934,998 share options were granted at an exercise price of 720p per share. Approximately half of the
share options were exercisable on 2 November 2014 with the remainder being exercisable on 2 November 2016, being classed as
share option tranches SOS1 and SOS2 respectively. A total of 14,167 share options have been forfeited since their grant
date. At the grant date these share options had a fair value of £1.6m. Of the share options granted on 2 November 2011, the
following remaining share options (SOS2) were to Group directors:
· Mr. Lynam was granted an option to subscribe for 141,667 shares at 720p between 2 November 2016 and 1 November
2021.
· Mr. Salmon was granted an option to subscribe for 141,667 shares at 720p between 2 November 2016 and 1 November
2021.
The Share Option Scheme is an equity settled scheme. The original grant date valuation was determined to be £1.69 per
option and this valuation has been used in the calculation. An attrition rate of option holders has been assumed of nil
for the second tranche of share options. Due to the options being fully conditional knockout options, a probability of
pay-out has been assigned based on the likelihood of meeting the performance criteria, which is 95% for SOS2. The Company
incurred an expense in relation to share based payments of £1.5m during 2014.
Summary details of the Secure Trust Bank Share Option Scheme are shown in the table below:
31 December 2014
No. SOS2
Key Management Personnel 3 318,751
Senior Management 5 141,668
Share Options in Issue 8 460,419
Exercise Price (£) 7.20
Value per option (£) 1.69
Total included in reserves (£000) 778
Probability of payout 95%
Assumed value of share options on exercise date (£000) 739
Value of share options at 31 December 2014 (£000) 468
38. Dividends per share
Final dividends are not accounted for until they have been approved at the Annual General Meeting. At the meeting on 14 May
2015, a dividend in respect of 2014 of 16 pence per share (2013: actual dividend 15 pence per share) amounting to a total
of £2.38m (2013: actual £2.23m) is to be proposed. The financial statements for the year ended 31 December 2014 do not
reflect the final dividend which will be accounted for in shareholders' equity as an appropriation of retained profits in
the year ending 31 December 2015.
39. Cash and cash equivalents
For the purposes of the Statement of Cash Flows, cash and cash equivalents are comprised of the following balances with
less than three months maturity from the date of acquisition.
2014 2013
Group £000 £000
Cash and balances at central banks (Note 18) 115,938 193,046
Loans and advances to banks (Note 19) 31,844 105,061
147,782 298,107
2014 2013
Company £000 £000
Due from subsidiary undertakings - bank balances 19,244 16,551
40. Related party transactions
Related parties of the Company and Group include subsidiaries, Key Management Personnel, close family members of Key
Management Personnel and entities which are controlled, jointly controlled or significantly influenced, or for which
significant voting power is held, by Key Management Personnel or their close family members.
Other than the directors' remuneration, payment of dividends and transactions with subsidiaries, there were no related
party transactions within the Parent Company. A number of banking transactions are entered into with related parties in the
normal course of business on normal commercial terms. These include loans and deposits. Except for the directors'
disclosures, there were no other Key Management Personnel disclosures; therefore the tables below relate to directors.
2014 2013
Group £000 £000
Loans
Loans outstanding at 1 January 5,188 2,648
Loans advanced during the year 1,083 3,160
Loan repayments during the year (768) (620)
Loans outstanding at 31 December 5,503 5,188
Interest income earned 255 138
The loans to directors are secured on property, shares or cash and bear interest at rates linked to base rate. No
provisions have been recognised in respect of loans given to related parties (2013: £nil). Details of directors'
remuneration are given in the Remuneration Report. The Directors do not believe that any other key management disclosures
are required.
2014 2013
Group £000 £000
Deposits
Deposits at 1 January 2,522 1,767
Deposits placed during the year 3,531 3,237
Deposits repaid during the year (3,388) (2,482)
Deposits at 31 December 2,665 2,522
Interest expense on deposits 15 20
Details of principal subsidiaries are given in Note 41. Transactions and balances with subsidiaries are shown below:
2014 2013
Highest balance during the year Balance at 31 December Highest balance during the year Balance at 31 December
£000 £000 £000 £000
ASSETS
Due from subsidiary undertakings 34,808 23,877 21,130 21,130
Shares in subsidiary undertakings 39,966 39,966 31,847 30,995
Total assets 74,774 63,843 52,977 52,125
LIABILITIES
Due to subsidiary undertakings 3,878 2,872 8,003 7,768
Total liabilities 3,878 2,872 8,003 7,768
Issued guarantee contracts 2,500 - 2,500 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.
41. Investment in subsidiary undertakings
Investment at cost Impairment provisions Net
Company £000 £000 £000
At 1 January 2013 33,411 (2,564) 30,847
Capital contribution in Arbuthnot Latham & Co., Limited 1,000 - 1,000
Sale of shares in Secure Trust Bank PLC (852) - (852)
At 31 December 2013 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
2014 2013
Company £000 £000
Subsidiary undertakings:
Banks 37,666 28,695
Other 2,300 2,300
Total 39,966 30,995
(a) List of significant subsidiaries
The table below provides details of the significant subsidiaries of Arbuthnot Banking Group PLC at 31 December:
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