REG - Close Bros Grp PLC - Preliminary Results Year Ended 31 July 2014 <Origin Href="QuoteRef">CBRO.L</Origin> - Part 3
29/10/2014 13:38
- Part 3: For the preceding part double click ID:nRSW2889Sb
11.4 - 204.8 1,170.2
Other liabilities 148.5 37.4 45.5 19.3 250.7
Intercompany balances 294.3 40.5 24.6 (359.4) -
Total liabilities 5,478.2 581.6 70.1 (135.3) 5,994.6
Equity 551.0 98.0 31.7 155.8 836.5
Total liabilities and equity 6,029.2 679.6 101.8 20.5 6,831.1
Other segmental information for the year ended 31 July 2013
Property, plant, equipment and intangible asset expenditure 55.9 1.3 0.5 0.1 57.8
Employees (average number) 1,654 304 578 65 2,601
1 Restated - see notes 1 and 17.
3. Exceptional income
£1.6 million exceptional income in 2013 principally reflects realised foreign exchange gains offset by a revaluation on
reclassification of Mako from an associate to an available for sale equity investment.
4. Tax expense
2014 20131
£ million £ million
Tax charged/(credited) to the income statement
Current tax:
UK corporation tax 48.8 42.2
Foreign tax 3.5 3.3
Adjustments in respect of previous years 0.4 (7.8)
52.7 37.7
Deferred tax:
Deferred tax credit for the current year (7.2) (1.9)
Adjustments in respect of previous years - 6.9
45.5 42.7
Tax on items not charged/(credited) to the income statement
Current tax relating to:
Financial instruments classified as available for sale - 0.2
Share-based transactions tax allowance in excess of expense recognised (3.0) (0.5)
Deferred tax relating to:
Cash flow hedging 0.9 1.2
Defined benefit pension scheme (0.3) 0.5
Financial instruments classified as available for sale (0.1) 0.1
Share-based transactions tax allowance in excess of expense recognised 0.8 (2.9)
(1.7) (1.4)
Reconciliation to tax expense
UK corporation tax for the year at 22.3% (2013: 23.7%) on operating profit 43.7 38.8
Gain on sale of subsidiary and associate - (0.4)
Effect of different tax rates in other jurisdictions 0.2 0.5
Share of associate consolidated profit after tax - (0.2)
Disallowable items and other permanent differences 0.6 1.2
Deferred tax impact of reduced UK corporation tax rate 0.6 3.7
Prior year tax provision 0.4 (0.9)
45.5 42.7
1 Restated - see notes 1 and 17.
The effective tax rate for the year is 23.2% (2013: 26.1%) which is above the UK corporation tax rate of 22.3% (2013:
23.7%) principally due to normal disallowables and to deferral of the tax deduction for certain expenses until future
periods when the standard UK corporation tax rate is lower than for the current period.
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.
2014 20131
Earnings per share
Basic 101.5p 82.0p
Diluted 100.0p 80.6p
Adjusted basic2 104.1p 83.5p
Adjusted diluted2 102.6p 82.1p
1 Restated - see notes 1 and 17.
2 Excludes exceptional income, amortisation of intangible assets on acquisition and their tax effects.
2014 20131
£ million £ million
Profit attributable to shareholders 149.8 120.0
Adjustments:
Exceptional income - (1.6)
Amortisation of intangible assets on acquisition 4.9 5.0
Tax effect of adjustments (1.0) (1.1)
Adjusted profit attributable to shareholders 153.7 122.3
1 Restated - see notes 1 and 17.
2014 2013
million million
Average number of shares
Basic weighted 147.6 146.4
Effect of dilutive share options and awards 2.2 2.5
Diluted weighted 149.8 148.9
6. Dividends
2014 2013
£ million £ million
For each ordinary share
Final dividend for previous financial year paid in November 2013: 29.5p (2012: 27.5p) 42.9 39.7
Interim dividend for current financial year paid in April 2014: 16.5p (2013: 15.0p) 24.2 21.8
67.1 61.5
A final dividend relating to the year ended 31 July 2014 of 32.5p, amounting to an estimated £47.7 million, is proposed.
This final dividend, which is due to be paid on 25 November 2014, is not reflected in these financial statements.
7. Loans and advances to customers
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Impairment provisions Total
£ million £ million £ million £ million £ million £ million £ million £ million
At 31 July 2014 60.9 1,463.3 1,660.8 1,038.3 1,093.3 21.4 (48.3) 5,289.7
At 31 July 2013 78.2 1,414.1 1,344.9 936.7 916.8 16.8 (61.9) 4,645.6
2014 2013
£ million £ million
Impairment provisions on loans and advances to customers
At 1 August 61.9 70.3
Charge for the year 44.1 50.6
Amounts written off net of recoveries (57.7) (59.0)
At 31 July 48.3 61.9
Loans and advances to customers comprise
Hire purchase agreement receivables 2,341.4 2,040.5
Finance lease receivables 466.5 415.6
Other loans and advances 2,481.8 2,189.5
At 31 July 5,289.7 4,645.6
At 31 July 2014, gross impaired loans were £159.9 million (31 July 2013: £201.0 million) and equate to 3% (31 July 2013:
4%) of the gross loan book before impairment provisions. The majority of the group's lending is secured and therefore the
gross impaired loans quoted do not reflect the expected loss.
8. Debt securities
Held for trading Available for sale Loans and receivables Total
£ million £ million £ million £ million
Long trading positions 48.6 - - 48.6
Certificates of deposit - - - -
Floating rate notes - - - -
Gilts - 45.6 - 45.6
At 31 July 2014 48.6 45.6 - 94.2
Held for trading Available for sale Loans and receivables Total
£ million £ million £ million £ million
Long trading positions 28.7 - - 28.7
Certificates of deposit - - 10.1 10.1
Floating rate notes - 39.4 - 39.4
Gilts - 46.7 - 46.7
At 31 July 2013 28.7 86.1 10.1 124.9
Movements on the book value of gilts and floating rate notes ("FRNs") comprise:
Available for sale
Gilts Floating rate notes Total
£ million £ million £ million
At 1 August 2012 100.1 122.6 222.7
Disposals - (66.7) (66.7)
Redemptions at maturity (50.0) (25.5) (75.5)
Currency translation differences - 7.8 7.8
Movement in value (3.4) 1.2 (2.2)
At 31 July 2013 46.7 39.4 86.1
Disposals - (37.8) (37.8)
Redemptions at maturity - - -
Currency translation differences - (1.6) (1.6)
Movement in value (1.1) - (1.1)
At 31 July 2014 45.6 - 45.6
At 31 July 2013, £39.4 million of FRNs were due to mature within one year with £21.9 million issued by corporates and the
remainder issued by banks and building societies.
9. Equity shares
31 July 31 July
2014 2013
£ million £ million
Long trading positions 56.5 43.7
Other equity shares 19.6 27.7
76.1 71.4
Movements on the book value of other equity shares held during the year comprise:
Available for sale Fair value through profit or loss Total
£ million £ million £ million
At 1 August 2012 13.3 5.2 18.5
Additions 0.2 0.1 0.3
Disposals (0.3) (7.3) (7.6)
Currency translation differences 1.4 - 1.4
Movement in value of:
Equity shares classified as available for sale 0.2 - 0.2
Unlisted equity shares held at fair value - 2.6 2.6
Reclassification from investment in Mako 12.3 - 12.3
At 31 July 2013 27.1 0.6 27.7
Additions 0.1 - 0.1
Disposals (8.2) (0.5) (8.7)
Currency translation differences (1.8) - (1.8)
Movement in value of:
Equity shares classified as available for sale 2.3 - 2.3
Unlisted equity shares held at fair value - - -
At 31 July 2014 19.5 0.1 19.6
10. Intangible assets
Goodwill Software Intangible assets on acquisition Total
£ million £ million £ million £ million
Cost
At 1 August 2012 156.0 38.7 42.4 237.1
Additions - 13.1 - 13.1
Disposals - (0.2) - (0.2)
Foreign exchange 0.5 - - 0.5
At 31 July 2013 156.5 51.6 42.4 250.5
Additions - 19.9 - 19.9
Disposals - (2.7) - (2.7)
Foreign exchange (0.4) - - (0.4)
At 31 July 2014 156.1 68.8 42.4 267.3
Amortisation and impairment
At 1 August 2012 68.0 21.5 7.9 97.4
Amortisation charge for the year - 6.5 5.0 11.5
Disposals - - - -
At 31 July 2013 68.0 28.0 12.9 108.9
Amortisation charge for the year - 9.8 4.9 14.7
Disposals - (2.6) - (2.6)
At 31 July 2014 68.0 35.2 17.8 121.0
Net book value at 31 July 2014 88.1 33.6 24.6 146.3
Net book value at 31 July 2013 88.5 23.6 29.5 141.6
Net book value at 1 August 2012 88.0 17.2 34.5 139.7
Intangible assets on acquisition relates to broker and customer relationships.
In the 2014 financial year, £4.9 million (2013: £5.0 million) of the amortisation charge is included in amortisation of
intangible assets on acquisition and £9.8 million (2013: £6.5 million) of the amortisation charge is included in
administrative expenses shown in the consolidated income statement.
11. Property, plant and equipment
Leaseholdproperty Fixtures,fittings andequipment Assetsheld underoperatingleases Motorvehicles Total
£ million £ million £ million £ million £ million
Cost
At 1 August 2012 8.5 42.5 77.0 1.0 129.0
Additions 0.8 3.0 40.6 0.3 44.7
Disposals - (4.6) (18.5) (0.1) (23.2)
At 31 July 2013 9.3 40.9 99.1 1.2 150.5
Additions 0.8 4.6 46.1 0.5 52.0
Disposals - (10.6) (12.5) (0.5) (23.6)
At 31 July 2014 10.1 34.9 132.7 1.2 178.9
Depreciation
At 1 August 2012 3.4 31.8 18.2 0.6 54.0
Charge for the year 1.0 5.3 10.2 0.1 16.6
Disposals - (4.5) (5.3) - (9.8)
At 31 July 2013 4.4 32.6 23.1 0.7 60.8
Charge for the year 1.3 4.5 13.9 0.3 20.0
Disposals - (10.4) (8.1) (0.4) (18.9)
At 31 July 2014 5.7 26.7 28.9 0.6 61.9
Net book value at 31 July 2014 4.4 8.2 103.8 0.6 117.0
Net book value at 31 July 2013 4.9 8.3 76.0 0.5 89.7
Net book value at 1 August 2012 5.1 10.7 58.8 0.4 75.0
Assets held under operating leases relate to our rentals businesses within the Banking division. In addition to the
depreciation charged in the year of £13.9 million (2013: £10.2 million), these assets generated other income of £32.4
million (2013: £27.5 million) and interest and fee expense of £11.1 million (2013: £8.6 million). The gains from the sale
of assets held under operating leases for the year ended 31 July 2014 was £0.3 million (2013: £0.4 million).
12. Deferred tax assets
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 20121 26.0 (0.2) 9.0 (1.7) 1.6 (6.3) 1.3 29.7
(Charge)/credit to the income statement (4.8) (0.5) - - - 1.1 (0.8) (5.0)
Charge to other comprehensive income - (0.5) - (0.1) (1.2) - - (1.8)
Credit to equity - - 2.9 - - - - 2.9
At 31 July 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)
At 31 July 2014 27.8 (1.0) 10.9 (1.7) (0.5) (4.2) 0.4 31.7
1 Restated - see notes 1 and 17.
As the group has been and is expected to continue to be consistently profitable, it is appropriate to recognise the
full deferred tax assets.
13. Settlement balances and short positions
31 July 31 July
2014 2013
£ million £ million
Settlement balances 444.1 438.4
Short positions held for trading:
Debt securities 34.3 22.4
Equity shares 15.6 14.5
49.9 36.9
494.0 475.3
14. Financial liabilities
On demand Within threemonths Between three months and one year Betweenone and two years Between two and five years After more than five years Total
£ million £ million £ million £ million £ million £ million £ million
Deposits by banks 21.1 20.0 8.5 - - - 49.6
Deposits by customers 165.0 1,256.5 1,532.5 1,399.3 160.4 - 4,513.7
Loans and overdrafts from banks 4.4 5.0 - - - - 9.4
Debt securities in issue - 6.7 350.5 227.8 470.4 299.0 1,354.4
At 31 July 2014 190.5 1,288.2 1,891.5 1,627.1 630.8 299.0 5,927.1
On demand Within threemonths Betweenthree months and one year Betweenone and two years Betweentwo and five years Aftermore than five years Total
£ million £ million £ million £ million £ million £ million £ million
Deposits by banks 47.5 10.0 5.1 4.0 - - 66.6
Deposits by customers 188.4 896.5 1,840.9 879.0 210.6 - 4,015.4
Loans and overdrafts from banks 19.3 18.3 - - - - 37.6
Debt securities in issue - 6.6 - 350.0 698.7 - 1,055.3
At 31 July 2013 255.2 931.4 1,846.0 1,233.0 909.3 - 5,174.9
Of the debt securities in issue, £299.0 million mature on 27 June 2021, £199.0 million mature on 10 February 2017 and
£848.6 million relate to the insurance premium and motor loan receivables securitisations.
At 31 July 2013 the group has a repurchase agreement whereby FRNs to the value of £21.9 million were lent in exchange for
cash of £18.3 million which were included within loans and overdrafts from banks. Residual maturities of the repurchase
agreement were as follows:
On demand Within three months Between three months and one year Between one and two years Between two and five years After more than five years Total
£ million £ million £ million £ million £ million £ million £ million
At 31 July 2013 - 18.3 - - - - 18.3
15. Capital
At 31 July 2014, the group's common equity tier 1 capital ratio remained broadly stable at 13.1% (31 July 2013: core tier 1
capital ratio 13.3%) even after the implementation of Capital Requirements Directive IV ("CRD IV"), the overall impact of
which was neutral, as shown in the final table of this note.
Common equity tier 1 capital increased to £710.8 million (31 July 2013: core tier 1 capital £687.5 million) due to growth
in profit attributable to shareholders which was partly offset by the foreseeable dividend deduction required under CRD IV,
being the 2014 proposed final dividend of £47.7 million.
Risk weighted assets increased to £5,445.8 million (31 July 2013: £5,184.5 million) as a result of growth in credit and
counterparty risk associated with the loan book, which was partly offset by the discount to the risk weighting for lending
to SMEs set out in CRD IV. Notional risk weighted assets for market risk also increased reflecting increased trading
positions in Securities.
The composition of capital remained stable with 91.1% (31 July 2013: 90.6%) of the total capital consisting of common
equity tier 1 capital (2013: core tier 1 capital).
31 July 31 July
2014 20131
£ million £ million
Common equity tier 1 capital2
Called up share capital 37.7 37.7
Share premium account 283.8 283.7
Retained earnings 589.8 511.9
Other reserves recognised for common equity tier 1 capital2 21.4 26.0
Non-controlling interests - 3.7
Deductions from common equity tier 1 capital2
Intangible assets3 (142.1) (141.6)
Foreseeable dividend4 (47.7) -
Investment in own shares (27.9) (33.9)
Pension asset, net of associated deferred tax liabilities (3.9) -
Additional valuation adjustments (0.3) -
Common equity tier 1 capital2 710.8 687.5
Deductions from tier 1 capital
50% of material holdings - (6.2)
Tier 1 capital 710.8 681.3
Tier 2 capital
Subordinated debt5 60.0 75.0
Unrealised gains on available for sale equity shares 9.6 9.1
Deductions from tier 2 capital
50% of material holdings - (6.1)
Tier 2 capital 69.6 78.0
Deductions from total of tier 1 and tier 2 capital
Other regulatory adjustments - (0.4)
Total regulatory capital 780.4 758.9
Risk weighted assets (notional) - unaudited
Credit and counterparty credit risk 4,564.5 4,366.5
Operational risk6 695.5 679.1
Market risk6 185.8 138.9
5,445.8 5,184.5
Common equity tier 1 capital ratio2 13.1% 13.3%
Total capital ratio 14.3% 14.6%
1 Restated - see notes 1 and 17.
2 Under CRD IV, the highest quality capital is now defined as "common equity tier 1" being previously referred to as "core
tier 1". Accordingly 2013 comparatives are based on the legislative definition of core tier 1 capital in force at that
time.
3 At 31 July 2014, under CRD IV requirements intangible assets have been reduced by the level of associated deferred tax
liabilities.
4 Under the Regulatory Technical Standard on own funds, a deduction has been recognised at 31 July 2014 for a foreseeable
dividend being the proposed final dividend (as set out in note 9).
5 Under CRD IV transitional arrangements, 80% of the principal value of subordinated debt is recognised at 31 July 2014.
6 Operational and market risk include a notional adjustment at 8% in order to determine notional risk weighted assets.
The following table shows a reconciliation between equity and common equity tier 1 capital after deductions:
31 July 31 July
2014 20131
£ million £ million
Equity 917.6 836.5
Regulatory deductions from equity:
Intangible assets2 (142.1) (141.6)
Foreseeable dividend3 (47.7) -
Pension asset, net of associated deferred tax liabilities (3.9) -
Additional valuation adjustments (0.3) -
Other reserves not recognised for common equity tier 1 capital4:
Available for sale movements reserve (9.6) (9.1)
Cash flow hedging reserve (2.1) 1.7
Non-controlling interests (1.1) -
Common equity tier 1 capital4 710.8 687.5
1 Restated - see notes 1 and 17.
2 At 31 July 2014, under CRD IV requirements intangible assets have been reduced by the level of associated deferred tax
liabilities.
3 Under the Regulatory Technical Standard on own funds, a deduction has been recognised at 31 July 2014 for a foreseeable
dividend being the proposed final dividend (as set out in note 9).
4 Under CRD IV, the highest quality capital is now defined as "common equity tier 1" being previously referred to as "core
tier 1". Accordingly 2013 comparatives are based on the legislative definition of core tier 1 capital in force at that
time.
The following table shows a summary of the impact of CRD IV at 31 July 2014:
31 July
2014
£ million
Core tier 1 capital (pre CRD IV) 759.6
CRD IV impact:
Foreseeable dividend1 (47.7)
Associated deferred tax liabilities on intangible assets 4.2
Pension asset, net of associated deferred tax liabilities (3.9)
Non-controlling interests (1.1)
Additional valuation adjustments (0.3)
Common equity tier 1 capital (post CRD IV) 710.8
Risk weighted assets (pre CRD IV) 5,798.1
CRD IV impact:
SME lending discount (426.1)
Other2 73.8
Risk weighted assets (post CRD IV) - unaudited 5,445.8
Core tier 1 capital ratio (pre CRD IV) 13.1%
Common equity tier 1 capital ratio (post CRD IV) 13.1%
1 Under the Regulatory Technical Standard on own funds, a deduction has been recognised at 31 July 2014 for a foreseeable
dividend being the proposed final dividend (as set out in note 9).
2 Includes higher risk weighting on deferred tax assets and credit valuation adjustments on derivatives.
16. Consolidated cash flow statement reconciliation
31 July 31 July
2014 20131
£ million £ million
(a) Reconciliation of operating profit before tax to net cash inflow from operating activities
Operating profit before tax 195.7 163.8
Tax paid (35.3) (36.0)
Depreciation and amortisation 34.7 28.1
Decrease/(increase) in:
Interest receivable and prepaid expenses 4.9 (3.3)
Net settlement balances and trading positions (8.8) (3.8)
Net money broker loans against stock advanced 0.2 (3.2)
Increase in interest payable and accrued expenses 15.9 12.8
Net cash inflow from trading activities 207.3 158.4
(Increase)/decrease in:
Loans and advances to banks not repayable on demand (2.6) 0.9
Loans and advances to customers (644.1) (519.7)
Assets let under operating leases (41.4) (27.0)
Floating rate notes classified as available for sale 37.8 92.2
Debt securities held for liquidity - 50.0
Other assets less other liabilities 30.5 46.6
(Decrease)/increase in:
Deposits by banks (17.0) (21.4)
Deposits by customers 498.3 567.3
Loans and overdrafts from banks (28.2) (167.4)
Debt securities in issue, net of transaction costs 299.0 -
Net cash inflow from operating activities 339.6 179.9
(b) Analysis of net cash outflow in respect of the purchase of non-controlling interests
Cash consideration paid (7.5) (5.0)
(c) Analysis of net cash inflow in respect of the sale of associate
Cash consideration received - 4.8
(d) Analysis of changes in financing activities
Share capital (including premium) and subordinated loan capital2:
Opening balance 396.4 396.0
Shares issued for cash 0.1 0.4
Closing balance 396.5 396.4
(e) Analysis of cash and cash equivalents3
Cash and balances at central banks 1,164.7 929.1
Loans and advances to banks repayable on demand 74.0 78.2
Certificates of deposit - 10.1
1,238.7 1,017.4
1 Restated - see notes 1 and 17.
2 Excludes accrued interest.
3 Excludes Bank of England cash reserve account and amounts held as collateral.
17. Restatement of prior period information
As explained in note 1, the group adopted IAS 19 (Revised) on 1 August 2013. The group has restated information for the
preceding comparative year. The amount of the restatement for each financial statement line item affected by retrospective
application of IAS 19 (Revised) is provided below. The group has not presented a balance sheet for the beginning of the
earliest comparative period as the impact is not material.
As reported 2013 IAS 19(Revised) Restated 2013
£ million £ million £ million
Consolidated Income Statement
Administrative expenses (365.8) 0.7 (365.1)
Total operating expenses before exceptional income and amortisation of intangible assets on acquisition (416.4) 0.7 (415.7)
Operating profit before exceptional income and amortisation of intangible assets on acquisition 166.5 0.7 167.2
Operating profit before tax 163.1 0.7 163.8
Tax (42.6) (0.1) (42.7)
Profit after tax for the period 120.5 0.6 121.1
Profit attributable to shareholders 119.4 0.6 120.0
Basic earnings per share 81.6p 0.4p 82.0p
Diluted earnings per share 80.2p 0.4p 80.6p
Consolidated Statement of Comprehensive Income
Profit after tax for the period 120.5 0.6 121.1
Other comprehensive income that will not be reclassified to income statement
Defined benefit pension scheme gains - 2.4 2.4
Tax relating to items that will not be reclassified - (0.5) (0.5)
Total other comprehensive income that will not be reclassified to income statement - 1.9 1.9
Other comprehensive income for the period, net of tax 2.8 1.9 4.7
Total comprehensive income for the period 123.3 2.5 125.8
Attributable to shareholders 122.2 2.5 124.7
As reported at 31 July 2013 IAS 19(Revised) Restated at 31 July 2013
£ million £ million £ million
Consolidated Balance Sheet
Deferred tax assets
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