REG - CYBG PLCClydesdale Bank PLC - Half-year Report <Origin Href="QuoteRef">CYBGC.L</Origin> - Part 4
16/05/2017 07:06
- Part 4: For the preceding part double click ID:nRSP1995Fc
accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
Leeds
15 May 2017
Interim condensed consolidated financial statements
Contents
Interim condensed consolidated income statement 29
Interim condensed consolidated statement of comprehensive income 30
Interim condensed consolidated balance sheet 31
Interim condensed consolidated statement of changes in equity 32
Interim condensed consolidated statement of cash flows 33
Notes to the interim condensed consolidated financial statements
1. Basis of preparation and accounting policies 34
2. Segment information 36
3. Net interest income 38
4. Non-interest income 39
5. Operating and administrative expenses 40
6. Taxation 41
7. Earnings per share 42
8. Related party transactions 42
9. Other financial assets and liabilities at fair value 43
10. Derivative financial instruments 43
11. Loans and advances to customers 46
12. Deferred tax 47
13. Due to other banks 47
14. Provisions for liabilities and charges 48
15. Debt securities in issue 52
16. Retirement benefit obligations 53
17. Called up share capital 53
18. Total equity 54
19. Contingent liabilities and commitments 55
20. Fair value of financial instruments 56
21. Events after the balance sheet date 59
Interim condensed consolidated income statement
for the six months ended 31 March 2017
Note 6 months to31 Mar 2017(unaudited)£m 6 months to31 Mar 2016(unaudited)£m 12 months to30 Sep 2016(audited)£m
Interest income and similar income 534 550 1,101
Interest expense and similar charges (123) (150) (295)
───────── ───────── ─────────
Net interest income 3 411 400 806
Gains less losses on financial instruments at fair value 3 3 9
Other operating income 83 89 182
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Non-interest income 4 86 92 191
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Total operating income 497 492 997
Personnel expenses (135) (137) (280)
Restructuring expenses (53) - (45)
Depreciation and amortisation expense (42) (41) (88)
Other operating and administrative expenses (195) (225) (468)
───────── ───────── ─────────
Total operating and administrative expensesbefore impairment losses 5 (425) (403) (881)
───────── ───────── ─────────
Operating profit before impairment losses 72 89 116
Impairment losses on credit exposures (26) (31) (39)
───────── ───────── ─────────
Profit on ordinary activities before tax 46 58 77
Tax expense 6 (16) (22) (241)
───────── ───────── ─────────
Profit/(loss) for the period 30 36 (164)
═════════ ═════════ ═════════
Profit/(loss) attributable to ordinary shareholders 12 6 (206)
Profit attributable to other equity holders 18 30 42
───────── ───────── ─────────
Profit/(loss) for the period attributable to equityholders 30 36 (164)
═════════ ═════════ ═════════
Basic earnings/(loss) per share (pence) 7 1.7 1.4 (22.5)
═════════ ═════════ ═════════
Diluted earnings/(loss) per share (pence) 7 1.7 1.4 (22.5)
═════════ ═════════ ═════════
All material items dealt with in arriving at the profit before tax for the period relate to continuing activities.
The notes on pages 34 to 59 form an integral part of these interim condensed consolidated financial statements.
Interim condensed consolidated statement of comprehensive income
for the six months ended 31 March 2017
Profit/(loss) for the period 30 36 (164)
───────── ───────── ─────────
Items that may be reclassified to the income statement
Change in cash flow hedge reserve
(Losses)/gains during the period (40) 34 105
Transfers to the income statement (1) (1) (1)
Taxation thereon 9 (8) (25)
───────── ───────── ─────────
(32) 25 79
Change in available for sale reserve
Gains during the period 5 3 29
Transfers to the income statement - (1) (8)
Taxation thereon (1) (1) (6)
───────── ───────── ─────────
4 1 15
───────── ───────── ─────────
Total items that may be reclassified to the income statement (28) 26 94
───────── ───────── ─────────
Items that will not be reclassified to the income statement
Remeasurement of defined benefit pension plans 61 58 (179)
Taxation thereon (13) (15) 43
───────── ───────── ─────────
48 43 (136)
Change in asset revaluation reserve
Transfer to retained profits - (1) -
Taxation thereon - - -
───────── ───────── ─────────
- (1) -
───────── ───────── ─────────
Total items that will not be reclassified to the income statement 48 42 (136)
───────── ───────── ─────────
Other comprehensive income/(losses) net of tax 20 68 (42)
───────── ───────── ─────────
Total comprehensive income/(losses) for the period net of tax 50 104 (206)
═════════ ═════════ ═════════
Total comprehensive income/(losses) attributable to ordinary shareholders 32 74 (248)
Total comprehensive income attributable to other equity holders 18 30 42
───────── ───────── ─────────
Total comprehensive income/(losses) attributable to equity holders 50 104 (206)
═════════ ═════════ ═════════
═════════
═════════
═════════
The notes on pages 34 to 59 form an integral part of these interim condensed consolidated financial statements.
Interim condensed consolidated balance sheet
as at 31 March 2017
Assets
Cash and balances with central banks 5,422 5,955
Due from other banks 1,172 952
Financial assets available for sale 2,029 1,731
Other financial assets at fair value 9 570 750
Derivative financial instruments 10 356 585
Loans and advances to customers 11 29,914 29,202
Due from customers on acceptances 4 4
Current tax assets 2 2
Property, plant and equipment 91 99
Investment properties 19 22
Intangible assets 298 256
Deferred tax assets 12 162 183
Other assets 189 188
───────── ─────────
Total assets 40,228 39,929
═════════ ═════════
Liabilities
Due to other banks 13 2,980 1,309
Other financial liabilities at fair value 9 32 48
Derivative financial instruments 10 411 598
Due to customers 26,383 27,090
Liabilities on acceptances 4 4
Provisions for liabilities and charges 14 639 852
Debt securities in issue 15 4,180 4,501
Retirement benefit obligations 16 31 79
Deferred tax liabilities 12 24 27
Other liabilities 2,295 2,210
───────── ─────────
Total liabilities 36,979 36,718
───────── ─────────
Equity
Share capital 17 88 88
Other equity instruments 18 450 450
Capital reorganisation reserve 18 (839) (839)
Merger reserve 18 633 633
Other reserves 18 74 100
Retained earnings 18 2,843 2,779
───────── ─────────
Total equity 3,249 3,211
───────── ─────────
Total liabilities and equity 40,228 39,929
═════════ ═════════
39,929
═════════
═════════
The notes on pages 34 to 59 form an integral part of these interim condensed consolidated financial statements.
These interim condensed consolidated financial statements were approved by the Board of Directors on 15 May 2017 and were
signed on its behalf by:
David Duffy Ian Smith
Chief Executive Officer Chief Financial Officer
Company name: CYBG PLC, Company number: 09595911
Interim condensed consolidated statement of changes in equity
for the six months ended 31 March 2017
Note Sharecapital£m Share premiumaccount£m Capitalreorganisationreserve£m Mergerreserve£m Other equityinstruments£m Equity-basedcompensationreserve£m Assetrevaluation reserve£m Available for sale reserve£m Cash flowhedgereserve£m Retainedearnings£m Totalequity£m
At 1 October 2015 (audited) 223 670 - - 450 3 2 12 (13) 2,096 3,443
Profit for the period - - - - - - - - - 36 36
Other comprehensive income/(losses) - - - - - - (1) 1 25 43 68
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
Total comprehensive income/(losses) for the period - - - - - - (1) 1 25 79 104
AT1 distribution paid (net of tax relief) - - - - - - - - - (18) (18)
Insertion of new parent company (223) (670) 893 - - - - - - - -
Share for share exchange 1,099 - (1,732) 633 - - - - - - -
Share capital reduction (1,011) - - - - - - - - 1,011 -
Capital note repurchase (net of tax relief) - - - - (450) - - - - (5) (455)
Capital note issued - - - - 450 - - - - - 450
Transfer from equity-based compensation reserve - - - - - (4) - - - 4 -
Equity-based compensation expensed - - - - - 5 - - - - 5
Equity-based compensation settled - - - - - 2 - - - - 2
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
As at 31 March 2016 (unaudited) 88 - (839) 633 450 6 1 13 12 3,167 3,531
Loss for the period - - - - - - - - - (200) (200)
Other comprehensive income/(losses) - - - - - - 1 14 54 (179) (110)
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
Total comprehensive income/(losses) for the period - - - - - - 1 14 54 (379) (310)
AT1 distribution paid (net of tax relief) - - - - - - - - - (10) (10)
Transfer from asset revaluation reserve - - - - - - (1) - - 1 -
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
As at 30 September 2016 (audited) (1) 17,18 88 - (839) 633 450 6 1 27 66 2,779 3,211
Profit for the period - - - - - - - - - 30 30
Other comprehensive income/(losses) - - - - - - - 4 (32) 48 20
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
Total comprehensive income/(losses) for the period - - - - - - - 4 (32) 78 50
AT1 distribution paid (net of tax relief) - - - - - - - - - (15) (15)
Transfer from equity-based compensation reserve - - - - - (1) - - - 1 -
Equity-based compensation expensed - - - - - 3 - - - - 3
─────── ────── ──────── ─────── ──────── ──────── ────── ───── ───── ───── ─────
As at 31 March 2017 (unaudited) 17,18 88 - (839) 633 450 8 1 31 34 2,843 3,249
═══════ ══════ ════════ ═══════ ════════ ════════ ══════ ═════ ═════ ═════ ═════
(1) The closing balances as at 30 September 2016 have been audited; the movements in the individual six months periods to 31 March and 30 September 2016 are unaudited.
The notes on pages 34 to 59 form an integral part of these interim condensed consolidated financial statements.
Interim condensed consolidated statement of cash flows
for the six months ended 31 March 2017
6 months to31 Mar 2017(unaudited)£m 6 months to31 Mar 2016 (unaudited)£m 12 months to30 Sep 2016 (audited)£m
Operating activities
Profit on ordinary activities before tax 46 58 77
Adjustments for:
Non-cash or non-operating items included in profit beforetax (340) (327) (643)
Changes in operating assets (614) (1,990) (2,285)
Changes in operating liabilities 744 343 1,587
Interest received 520 534 1,101
Interest paid (134) (98) (200)
Tax received/(paid) - group relief - 5 4
───────── ───────── ─────────
Net cash provided/(used in) by operating activities 222 (1,475) (359)
───────── ───────── ─────────
Cash flows from investing activities
Interest received 5 7 11
Proceeds from sale or maturity of investments 20 101 101
Proceeds from sale of tangible fixed assets (1) 6 8 17
Purchase of tangible fixed assets (1) (8) (7) (22)
Purchase of investments (350) (100) (357)
Proceeds from sale of available for sale investments - - 56
Purchase and development of intangible assets (72) (49) (99)
───────── ───────── ─────────
Net cash used in investing activities (399) (40) (293)
───────── ───────── ─────────
Cash flows from financing activities
Interest received - 1 1
Interest paid (44) (51) (98)
Proceeds from other equity instruments issued - 450 450
Repurchase of other equity instruments - (457) (457)
Repurchase of subordinated debt - (474) (474)
Redemption and principal repayment on residentialmortgage backed securities and covered bonds (297) (435) (1,029)
Issuance of residential mortgage backed securities andcovered bonds - - 750
Issuance of subordinated debt - 475 475
Net decrease in amounts due from related entities - 786 786
Net decrease in amounts due to related entities - (115) (106)
Equity based compensation - - 2
AT1 distributions (18) (23) (35)
───────── ───────── ─────────
Net cash (used in)/provided by financing activities (359) 157 265
───────── ───────── ─────────
Net decrease in cash and cash equivalents (536) (1,358) (387)
───────── ───────── ─────────
Cash and cash equivalents at the beginning of the period 5,950 6,337 6,337
───────── ───────── ─────────
Cash and cash equivalents at the end of the period (2) 5,414 4,979 5,950
═════════ ═════════ ═════════
(1) Tangible fixed assets include property, plant and equipment, investment properties and property inventory
(2) Cash and cash equivalents is cash and balances with central banks less mandatory deposits plus cash equivalents within other assets, less due to other banks, and other liabilities.
The notes on pages 34 to 59 form an integral part of these interim condensed consolidated financial statements.
Notes to the interim condensed consolidated financial statements
1. Basis of preparation and accounting policies
These interim condensed consolidated financial statements for the six months ended 31 March 2017 have been prepared in
accordance with the Disclosure and Transparency Rules of the FCA and IAS 34 "Interim Financial Reporting" as adopted by the
European Union ("EU"). They do not include all the information required by International Financial Reporting Standards
("IFRS") in full annual financial statements and should be read in conjunction with the annual report and accounts for the
year ended 30 September 2016, which were prepared in accordance with IFRS as adopted by the EU. Copies of the 2016 annual
report and accounts are available from the Group's website - http://www.cybg.com/annual-results-2016/
The information in these interim condensed consolidated financial statements is unaudited and does not constitute annual
accounts within the meaning of Section 434 of the Companies Act 2006 ("the Act"). Statutory accounts for the year ended 30
September 2016 have been delivered to the Registrar of Companies and contained an unqualified audit report under Section
495 of the Act, which did not draw attention to any matters by way of emphasis and they did not contain any statements
under Section 498 of the Act.
Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and
position are set out in the business and financial review section of these interim condensed consolidated financial
statements. This should be read in conjunction with the strategic report which can be found in the annual report and
accounts for the year ended 30 September 2016. In addition, the risk report contained in the 2016 annual report includes
the Group's risk management objectives. The Group's objectives, policies and processes for managing capital can be found
in the business and financial review and supplementary risk management disclosures sections of this report.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for
the foreseeable future and therefore believe that the Group is well placed to manage its business risks successfully.
Accordingly, they continue to adopt the going concern basis in preparing these interim condensed consolidated financial
statements.
Accounting policies
The accounting policies adopted in the preparation of these interim condensed consolidated financial statements are
consistent with, and are a continuation of, those policies followed in the preparation of the CYBG PLC annual report and
accounts for the year ended 30 September 2016. Comparatives are presented on a basis that conforms to the current
presentation.
Accounting developments
The Group has adopted the following IASB pronouncements in the current financial period. These do not have a material
impact on the interim condensed consolidated financial statements:
· Amendments to IAS 16 and IAS 38: 'Clarification of Acceptable Methods of Depreciation and Amortisation', issued May
2014 and effective for financial years beginning on or after 1 January 2016. IAS 16 and IAS 38 both establish the principle
for the basis of depreciation and amortisation being the expected pattern of consumption of the future economic benefits of
an asset. This amendment provides clarification that the use of certain revenue based methods to calculate depreciation is
not appropriate.
· 'Annual Improvements to IFRS Standards 2012-2014 Cycle', issued September 2014 and effective for financial years
beginning on or after 1 January 2016. The IASB has made amendments to the following standards that are relevant to the
Group: IFRS 5: 'Non-current Assets Held for Sale and Discontinued Operations'; IFRS 7: 'Financial Instruments:
Disclosures'; IAS 19: 'Employee Benefits'; and IAS 34: 'Interim Financial Reporting'.
· Amendments to IAS 1: 'Disclosure Initiative', issued December 2014 and effective for financial years beginning on or
after 1 January 2016. This includes a narrow scope amendment providing clarification to existing IAS 1: 'Presentation of
Financial Statements' requirements.
An overview of pronouncements that will be relevant to the Group in future periods is provided on pages 213 to 216 of
CYBG's annual report and accounts for the year ended 30 September 2016. Separate updates on the Group's implementation of
IFRS 9, IFRS 15 and IFRS 16 are also provided below.
During the period the IASB has issued the following further pronouncements relevant to the Group. The impact of these
pronouncements is being assessed by the Group.
· 'Annual Improvements to IFRS Standards 2014-2016 Cycle', issued December 2016 and effective for financial years
beginning on or after 1 January 2017 or 1 January 2018. The IASB has made amendments to the following standards: IFRS 12:
'Disclosure of Interests in Other Entities' (clarification of the scope of the standard - effective 1 January 2017, and IAS
28: 'Investments in Associates and Joint Ventures' (measuring an associate or joint venture at fair value - effective 1
January 2018).
Notes to the interim condensed consolidated financial statements (continued)
1. Basis of preparation and accounting policies (continued)
Accounting developments (continued)
· IFRIC interpretation
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