REG - Close Bros Grp PLC - Final Results <Origin Href="QuoteRef">CBRO.L</Origin> - Part 2
22/09/2015 07:00
- Part 2: For the preceding part double click ID:nRSV7296Za
(30.2) (27.4)
Gains less losses arising from dealing in securities 72.0 87.3
Other income 55.5 38.0
Non-interest income 293.0 275.8
Operating income 689.5 627.9
Administrative expenses (422.7) (390.1)
Impairment losses on loans and advances 7 (41.9) (44.1)
Total operating expenses before amortisation of intangible assets on acquisition (464.6) (434.2)
Operating profit before amortisation of intangible assets on acquisition 224.9 193.7
Amortisation of intangible assets on acquisition (5.0) (4.9)
Operating profit before tax 219.9 188.8
Tax 3 (45.4) (43.2)
Profit after tax from continuing operations 174.5 145.6
Profit from discontinued operations, net of tax 4 11.2 4.6
Profit after tax 185.7 150.2
Profit attributable to non-controlling interests from continuing operations - 0.4
Profit attributable to shareholders 185.7 149.8
From continuing operations
Basic earnings per share 5 117.8p 98.4p
Diluted earnings per share 5 116.5p 96.9p
From continuing and discontinued operations
Basic earnings per share 5 125.4p 101.5p
Diluted earnings per share 5 124.0p 100.0p
Interim dividend per share paid 6 18.0p 16.5p
Final dividend per share 6 35.5p 32.5p
1 Restated - see note 4.
Consolidated Statement of COMPREHENSIVE INCOME
for the year ended 31 July 2015
2015 20141
£ million £ million
Profit after tax 185.7 150.2
Other comprehensive (expense)/income that may be
reclassified to income statement from continuing operations
Currency translation losses (3.0) (1.7)
(Losses)/gains on cash flow hedging (5.5) 4.7
(Losses)/gains on equity shares classified as available for sale (0.5) 0.4
Available for sale investment gains transferred to income statement on disposal (6.8) -
Tax relating to items that may be reclassified 2.5 (0.8)
(13.3) 2.6
Other comprehensive (expense)/income that will not be reclassified to income statement from continuing operations
Defined benefit pension scheme losses (2.0) (1.6)
Tax relating to items that will not be reclassified 0.4 0.3
(1.6) (1.3)
Other comprehensive (expense)/income, net of tax from continuing operations (14.9) 1.3
Other comprehensive expense, net of tax from discontinued operations (1.2) (2.5)
Total comprehensive income 169.6 149.0
Attributable to
Non-controlling interests - 0.4
Shareholders 169.6 148.6
169.6 149.0
1 Restated - see note 4.
Consolidated Balance Sheet
at 31 July 2015
2015 2014
Note £ million £ million
Assets
Cash and balances at central banks 1,038.0 1,171.8
Settlement balances 398.3 465.8
Loans and advances to banks 84.6 87.4
Loans and advances to customers 7 5,737.8 5,289.7
Debt securities 8 149.5 94.2
Equity shares 9 41.2 76.1
Loans to money brokers against stock advanced 38.4 63.9
Derivative financial instruments 19.7 27.8
Intangible assets 10 144.2 146.3
Property, plant and equipment 148.4 117.0
Deferred tax assets 39.4 31.7
Prepayments, accrued income and other assets 117.8 128.7
Total assets 7,957.3 7,700.4
Liabilities
Settlement balances and short positions 12 404.3 494.0
Deposits by banks 13 35.1 49.6
Deposits by customers 13 4,481.4 4,513.7
Loans and overdrafts from banks 13 381.2 9.4
Debt securities in issue 13 1,365.0 1,354.4
Loans from money brokers against stock advanced - 28.4
Derivative financial instruments 7.1 19.5
Current tax liabilities 17.9 24.1
Accruals, deferred income and other liabilities 209.0 212.5
Subordinated loan capital 46.4 77.2
Total liabilities 6,947.4 6,782.8
Equity
Called up share capital 37.7 37.7
Share premium account 284.0 283.8
Retained earnings 694.4 589.8
Other reserves (6.3) 5.2
Total shareholders' equity 1,009.8 916.5
Non-controlling interests 0.1 1.1
Total equity 1,009.9 917.6
Total liabilities and equity 7,957.3 7,700.4
COnsolidated Statement of CHANGES IN EQUITY
for the year ended 31 July 2015
Other reserves
Called up share capital Share premium account Retained earnings Available for sale movements reserve Share-basedpayments reserve Exchange movements reserve Cashflow hedging reserve Total attributable to equity holders Non-controlling interests Total equity
£ million £ million £ million £ million £ million £ million £ million £ million £ million £ million
At 1 August 2013 37.7 283.7 511.9 9.1 (13.1) 5.2 (1.7) 832.8 3.7 836.5
Profit for the year - - 149.8 - - - - 149.8 0.4 150.2
Other comprehensive (expense)/income - - (1.3) 0.5 - (4.2) 3.8 (1.2) - (1.2)
Total comprehensive income/(expense) for the year - - 148.5 0.5 - (4.2) 3.8 148.6 0.4 149.0
Exercise of options - - - - - - - - - -
Dividends paid - - (67.1) - - - - (67.1) (0.2) (67.3)
Shares purchased - - - - (7.8) - - (7.8) - (7.8)
Shares issued - 0.1 - - - - - 0.1 - 0.1
Shares released - - - - 13.7 - - 13.7 - 13.7
Other movements - - (5.7) - (0.3) - - (6.0) (2.8) (8.8)
Income tax - - 2.2 - - - - 2.2 - 2.2
At 31 July 2014 37.7 283.8 589.8 9.6 (7.5) 1.0 2.1 916.5 1.1 917.6
Profit for the year - - 185.7 - - - - 185.7 - 185.7
Other comprehensive (expense)/income - - (1.6) (6.3) - (3.8) (4.4) (16.1) - (16.1)
Total comprehensive income/(expense) for the year - - 184.1 (6.3) - (3.8) (4.4) 169.6 - 169.6
Exercise of options - 0.1 - - - - - 0.1 - 0.1
Dividends paid - - (74.3) - - - - (74.3) (0.1) (74.4)
Shares purchased - - - - (18.2) - - (18.2) - (18.2)
Shares issued - 0.1 - - - - - 0.1 - 0.1
Shares released - - - - 20.5 - - 20.5 - 20.5
Other movements - - (8.3) - 0.7 - - (7.6) (0.9) (8.5)
Income tax - - 3.1 - - - - 3.1 - 3.1
At 31 July 2015 37.7 284.0 694.4 3.3 (4.5) (2.8) (2.3) 1,009.8 0.1 1,009.9
Consolidated Cash Flow Statement
for the year ended 31 July 2015
2015 20141
Note £ million £ million
Net cash (outflow)/inflow from operating activities 15(a) (18.0) 339.6
Net cash (outflow)/inflow from investing activities
Purchase of:
Property, plant and equipment (14.8) (5.9)
Intangible assets - software (19.1) (19.9)
Equity shares held for investment - (0.1)
Non-controlling interests 15(b) (1.0) (7.5)
Sale of:
Property, plant and equipment 0.1 -
Equity shares held for investment 5.6 8.7
Subsidiary 15(c) 23.2 -
(6.0) (24.7)
Net cash (outflow)/inflow before financing activities (24.0) 314.9
Financing activities
Issue of ordinary share capital, net of transaction costs 15(d) 0.1 0.1
Purchase of own shares for employee share award schemes (18.2) (7.8)
Equity dividends paid (74.2) (67.1)
Dividends paid to non-controlling interests (0.1) (0.2)
Interest paid on subordinated loan capital and debt financing (18.6) (18.6)
Net (decrease)/increase in cash (135.0) 221.3
Cash and cash equivalents at beginning of year 1,238.7 1,017.4
Cash and cash equivalents at end of year 15(e) 1,103.7 1,238.7
1 Restated - see note 4.
THE NOTES
1. Basis of preparation and accounting policies
The financial information contained in this announcement does not constitute the statutory accounts for the years ended 31
July 2015 or 31 July 2014 within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts.
The accounting policies used are consistent with those set out in the Annual Report 2014 except for the adoption of the
following standards, amendments and interpretations with effect from 1 August 2014:
· IFRS 10 "Consolidated financial statements"
· IFRS 11 "Joint arrangements"
· IFRS 12 "Disclosure of interests in other entities"
· IAS 27 "Separate financial statements"
· IAS 28 "Investments in associates"
· IAS 32 "Presentation: Offsetting financial assets and financial liabilities"
· IFRIC 21 "Levies"
· IFRS Annual Improvements 2010 to 2012 and 2011 to 2013.
The adoption of these standards, amendments and interpretations did not have a material impact on the financial
statements.
The financial statements are prepared on a going concern basis.
Whilst the financial information has been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS"), this announcement does not itself contain sufficient information to
comply with IFRS. The company expects to publish full financial statements that comply with IFRS by 16 October 2015.
The financial information for the year ended 31 July 2015 has been derived from the audited financial statements of Close
Brothers Group plc for that year. Statutory accounts for 2014 have been delivered to the Registrar of Companies and those
for 2015 will be delivered following the company's Annual General Meeting. The auditor, Deloitte LLP, has reported on those
accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain
statements under Section 498(2) or (3) of the Companies Act 2006.
2. Segmental analysis
The Executive Committee, which is considered to be the group's chief operating decision maker, manages the group by class
of business as determined by the products and services offered and presents the segmental analysis on that basis. The
group's activities are organised in three primary operating divisions: Banking, Securities and Asset Management. The Group
segment includes the group's central functions which comprise Group Executive, Finance, Marketing, Communications, Investor
Relations, Legal, Human Resources, Audit, Compliance, Corporate Development, Company Secretariat and Risk. Group
administrative expenses include staff costs, legal and professional fees and property costs attributable to the central
functions which support and assist the development of the divisions. Income within Group is typically immaterial and will
include interest on cash balances at Group. In the segmental reporting information which follows, Group consists of the
central functions described above as well as various non-trading head office companies and consolidation adjustments, in
order that the information presented reconciles to the consolidated income statement and balance sheet.
Divisions charge market prices for services rendered to other parts of the group. Funding charges between Banking
businesses are determined by the Banking division's Treasury operation taking into account commercial demands. Funding
arrangements between other segments is limited. More than 90% of all the group's activities, revenue and assets are
located in the UK.
Banking Securities Asset Management Group Continuing operations Discontinuedoperations Total
£ million £ million £ million £ million £ million £ million £ million
Summary Income Statement for year ended 31 July 2015
Net interest income/(expense) 396.5 (0.9) 0.2 0.7 396.5 - 396.5
Non-interest income 102.1 95.5 95.4 - 293.0 11.7 304.7
Operating income 498.6 94.6 95.6 0.7 689.5 11.7 701.2
Administrative expenses (214.6) (69.0) (76.4) (26.3) (386.3) (10.4) (396.7)
Depreciation and amortisation (33.4) (1.0) (1.4) (0.6) (36.4) - (36.4)
Impairment losses on loans and advances (41.9) - - - (41.9) - (41.9)
Total operating expenses (289.9) (70.0) (77.8) (26.9) (464.6) (10.4) (475.0)
Adjusted operating profit/(loss)1 208.7 24.6 17.8 (26.2) 224.9 1.3 226.2
Amortisation of intangible assets on acquisition (0.5) - (4.5) - (5.0) - (5.0)
Profit on disposal of discontinued operations - - - - - 10.3 10.3
Operating profit/(loss) before tax 208.2 24.6 13.3 (26.2) 219.9 11.6 231.5
Tax (43.3) (4.7) (2.6) 5.2 (45.4) (0.4) (45.8)
Non-controlling interests - - - - - - -
Profit/(loss) after tax and non-controlling interests 164.9 19.9 10.7 (21.0) 174.5 11.2 185.7
External operating income/expense 511.8 94.6 96.5 (13.4) 689.5 11.7 701.2
Inter segment operating (expense)/income (13.2) - (0.9) 14.1 - - -
Segment operating income 498.6 94.6 95.6 0.7 689.5 11.7 701.2
1 Adjusted operating profit/(loss) is stated before amortisation of intangible assets on acquisition, profit on disposal
of discontinued operations and tax.
The following table provides further detail on operating income:
2015 2014
£ million £ million
Banking
Retail 181.1 164.6
Commercial 207.3 187.3
Property 96.8 75.4
Treasury income 13.4 19.4
Securities
Market-making and related activities 94.6 96.1
Asset Management
Advice and other services 36.1 36.6
Investment management 54.1 47.2
Other income 5.4 0.6
Group 0.7 0.7
Operating income from continuing operations 689.5 627.9
Operating income from discontinued operations 11.7 31.3
Operating income 701.2 659.2
Banking Securities Asset Management Group Total
£ million £ million £ million £ million £ million
Summary Balance Sheet at 31 July 2015
Assets
Cash and loans and advances to banks 1,080.8 20.6 20.9 0.3 1,122.6
Settlement balances, long trading positions and loans to money brokers - 481.9 - - 481.9
Loans and advances to customers 5,737.8 - - - 5,737.8
Non-trading debt securities 135.4 - - - 135.4
Intangible assets 65.7 25.5 52.9 0.1 144.2
Other assets 283.4 10.7 27.3 14.0 335.4
Total assets 7,303.1 538.7 101.1 14.4 7,957.3
Liabilities
Settlement balances, short trading positions and loans from money brokers - 404.3 - - 404.3
Deposits by banks 35.1 - - - 35.1
Deposits by customers 4,481.4 - - - 4,481.4
Borrowings 1,583.7 3.3 - 205.6 1,792.6
Other liabilities 140.8 35.5 41.9 15.8 234.0
Intercompany balances 351.0 23.7 11.6 (386.3) -
Total liabilities 6,592.0 466.8 53.5 (164.9) 6,947.4
Equity 711.1 71.9 47.6 179.3 1,009.9
Total liabilities and equity 7,303.1 538.7 101.1 14.4 7,957.3
Other segmental information for the year ended 31 July 2015
Property, plant, equipment and intangible asset expenditure 74.7 3.5 2.6 0.1 80.9
Employees (average number) 1,910 232 562 63 2,767
Banking Securities Asset Management Group Continuing operations Discontinuedoperations Total
£ million £ million £ million £ million £ million £ million £ million
Summary Income Statement for the year ended 31 July 2014
Net interest income/(expense) 352.9 (1.2) (0.3) 0.7 352.1 - 352.1
Non-interest income 93.8 97.3 84.7 - 275.8 31.3 307.1
Operating income 446.7 96.1 84.4 0.7 627.9 31.3 659.2
Administrative expenses (194.7) (68.6) (73.1) (24.4) (360.8) (23.9) (384.7)
Depreciation and amortisation (26.3) (0.9) (1.4) (0.7) (29.3) (0.5) (29.8)
Impairment losses on loans and advances (44.1) - - - (44.1) - (44.1)
Total operating expenses (265.1) (69.5) (74.5) (25.1) (434.2) (24.4) (458.6)
Adjusted operating profit/(loss)1 181.6 26.6 9.9 (24.4) 193.7 6.9 200.6
Amortisation of intangible assets on acquisition (0.5) - (4.4) - (4.9) - (4.9)
Profit on disposal of discontinued operations - - - - - - -
Operating profit/(loss) before tax 181.1 26.6 5.5 (24.4) 188.8 6.9 195.7
Tax (42.0) (5.5) (0.9) 5.2 (43.2) (2.3) (45.5)
Non-controlling interests (0.3) - - (0.1) (0.4) - (0.4)
Profit/(loss) after tax and non-controlling interests 138.8 21.1 4.6 (19.3) 145.2 4.6 149.8
External operating income/expense 459.5 96.1 85.5 (13.2) 627.9 31.3 659.2
Inter segment operating (expense)/income (12.8) - (1.1) 13.9 - - -
Segment operating income 446.7 96.1 84.4 0.7 627.9 31.3 659.2
1 Adjusted operating profit/(loss) is stated before amortisation of intangible assets on acquisition, profit on disposal
of discontinued operations and tax.
Banking Securities Asset Management Group Total
£ million £ million £ million £ million £ million
Summary Balance Sheet at 31 July 2014
Assets
Cash and loans and advances to banks 1,225.1 16.2 17.5 0.4 1,259.2
Settlement balances, long trading positions and loans to money brokers - 634.8 - - 634.8
Loans and advances to customers 5,289.7 - - - 5,289.7
Non-trading debt securities 45.6 - - - 45.6
Intangible assets 61.7 28.1 56.4 0.1 146.3
Other assets 251.6 19.6 34.0 19.6 324.8
Total assets 6,873.7 698.7 107.9 20.1 7,700.4
Liabilities
Settlement balances, short trading positions and loans from money brokers - 522.4 - - 522.4
Deposits by banks 49.6 - - - 49.6
Deposits by customers 4,510.3 3.4 - - 4,513.7
Borrowings 1,229.7 6.0 - 205.3 1,441.0
Other liabilities 145.5 40.8 52.7 17.1 256.1
Intercompany balances 330.6 27.1 18.8 (376.5) -
Total liabilities 6,265.7 599.7 71.5 (154.1) 6,782.8
Equity 608.0 99.0 36.4 174.2 917.6
Total liabilities and equity 6,873.7 698.7 107.9 20.1 7,700.4
Other segmental information for the year ended 31 July 2014
Property, plant, equipment and intangible asset expenditure 70.1 0.8 0.3 0.7 71.9
Employees (average number) 1,776 321 567 67 2,731
3. Taxation
2015 20141
£ million £ million
Tax charged/(credited) to the income statement
Current tax:
UK corporation tax 49.1 48.8
Foreign tax 2.6 1.2
Adjustments in respect of previous years (0.2) 0.4
51.5 50.4
Deferred tax:
Deferred tax credit for the current year (6.5) (7.2)
Adjustments in respect of previous years 0.4 -
45.4 43.2
Tax on items not (credited)/charged to the income statement
Current tax relating to:
Share-based transactions tax allowance in excess of expense recognised (4.1) (3.0)
Deferred tax relating to:
Cash flow hedging (1.1) 0.9
Defined benefit pension scheme (0.4) (0.3)
Financial instruments classified as available for sale (1.0) (0.1)
Share-based transactions tax allowance in excess of expense recognised 1.0 0.8
Currency translation losses (0.4) -
(6.0) (1.7)
Reconciliation to tax expense
UK corporation tax for the year at 20.7% (2014: 22.3%) on operating profit 45.5 42.2
Effect of different tax rates in other jurisdictions (0.8) (0.6)
Disallowable items and other permanent differences 0.3 0.6
Deferred tax impact of reduced UK corporation tax rate 0.2 0.6
Prior year tax provision 0.2 0.4
45.4 43.2
1 Restated - see note 4.
The effective tax rate for the year is 20.6% (2014: 22.9%) which is in line with the UK corporation tax rate of 20.7%
(2014: 22.3%). On 8 July 2015, the Government proposed reductions in the UK corporation tax rate to 19% from April 2017
and 18% from April 2020, and an additional 8% tax surcharge on profits of banking companies from January 2016. These
proposals are expected to be enacted later in 2015.
Movements in deferred tax assets and liabilities were as follows:
Capital allowances Pension scheme Share-based payments and deferred compensation Available for sale assets Cash flow hedging Intangible assets Other Total
£ million £ million £ million £ million £ million £ million £ million £ million
At 1 August 2013 21.2 (1.2) 11.9 (1.8) 0.4 (5.2) 0.5 25.8
Credit/(charge) to the income statement 6.6 (0.1) (0.2) - - 1.0 (0.1) 7.2
Credit/(charge) to other comprehensive income - 0.3 - 0.1 (0.9) - - (0.5)
Charge to equity - - (0.8) - - - - (0.8)
Acquisition - - - - - - - -
At 31 July 2014 27.8 (1.0) 10.9 (1.7) (0.5) (4.2) 0.4 31.7
Credit/(charge) to the income statement 4.9 - 0.3 - - 0.9 - 6.1
Credit/(charge) to other comprehensive income 0.4 0.4 - 1.0 1.1 - - 2.9
Charge to equity - - (1.0) - - - - (1.0)
Acquisition - - - - - (0.3) - (0.3)
At 31 July 2015 33.1 (0.6) 10.2 (0.7) 0.6 (3.6) 0.4 39.4
As the group has been and is expected to continue to be consistently profitable, it is appropriate to recognise the
full deferred tax assets.
4. Discontinued operations
On 5 January 2015, the group completed the sale of Close Brothers Seydler ("Seydler") to Oddo & Cie for a gross cash
consideration of E46.5 million (£36.4 million), which includes a post year end adjustment of £0.5 million following
finalisation of completion accounts. The profit on disposal was £10.3 million.
Based in Frankfurt, Seydler provided equity and debt capital markets services, securities trading and research primarily in
German small and mid-sized companies and was part of the Securities division.
The transaction fulfilled the requirements of IFRS 5 to be classified as "Discontinued operations" in the consolidated
income statement, the results of which are set out below:
Results of discontinued operations
20151 2014
£ million £ million
Operating income 11.7 31.3
Operating expenses (10.4) (24.4)
Operating profit before tax 1.3 6.9
Tax (0.4) (2.3)
Profit after tax 0.9 4.6
Profit on disposal of discontinued operations, net of tax 10.3 -
Profit from discontinued operations 11.2 4.6
1 Profit after tax is up until the point of disposal.
Cash flow from discontinued operations
20151 2014
£ million £ million
Net cash flow from operating activities 6.6 (9.5)
Net cash flow from investing activities (0.1) (0.2)
Net cash flow from financing activities - -
1 Up until the point of disposal.
5. Earnings per share
The calculation of basic earnings per share is based on the profit attributable to shareholders and the number of basic
weighted average shares. When calculating the diluted earnings per share, the weighted average number of shares in issue is
adjusted for the effects of all dilutive share options and awards.
2015 20141
Continuing operations
Basic 117.8p 98.4p
Diluted 116.5p 96.9p
Adjusted basic2 120.5p 101.0p
Adjusted diluted2 119.2p 99.5p
Continuing and discontinued operations
Basic 125.4p 101.5p
Diluted 124.0p 100.0p
Discontinued operations
Basic 7.6p 3.1p
Diluted 7.5p 3.1p
1 Restated - see note 4.
2 Excludes amortisation of intangible assets on acquisition, discontinued operations and their tax effects.
2015 20141
£ million £ million
Profit attributable to shareholders 185.7 149.8
Less profit from discontinued operations, net of tax 11.2 4.6
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