REG - Close Bros Grp PLC - Trading Statement and Dividend Announcement

Close BrothersAnnouncement

15/02/2024 07:00

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RNS Number : 1928D  Close Brothers Group PLC  15 February 2024

This announcement contains inside information

Press Release
 

 Trading update and dividend announcement
 15 February 2024

Embargoed for release until 7.00 am on 15 February 2024.

The Board of Close Brothers Group plc ("the group") is updating the market
following the announcement by the Financial Conduct Authority (the "FCA") of
its review of historical motor finance commission arrangements.

There is significant uncertainty about the outcome of the FCA's review, and
the timing, scope and quantum of any potential financial impact on the group
cannot be reliably estimated at present. In accordance with the relevant
accounting standards, the Board has concluded that it is currently not
required or appropriate to recognise a provision in the group's Half-Year 2024
results in relation to this matter.

Our business continues to perform well, and we are confident in the strength
of our business franchise. Our Banking division continues to deliver
disciplined growth at strong margins and stable credit performance, and
generated approximately £112 million of adjusted operating profit ("AOP") for
the six months to 31 January 2024. Close Brothers Asset Management delivered
strong annualised net inflows of 9% and Winterflood remains well placed for a
recovery in investor confidence. We expect to report overall group AOP of
approximately £94 million, after Group (central functions) net expenses.

The group has a strong capital, funding and liquidity position. At 31 December
2023, our Common Equity Tier 1 ("CET1") and Total capital ratios were 12.5%
and 16.4% respectively, providing significant headroom over the minimum
regulatory requirements(1). Our leverage ratio, which is a measure of capital
strength not affected by risk weightings, remained strong at 12.7%. Our
conservative approach to funding is based on the principle of "borrow long,
lend short" and we hold liquidity levels comfortably ahead of both internal
risk appetite and regulatory requirements, with a Liquidity Coverage Ratio in
excess of 1,000%(2).

While there is no certainty regarding any potential financial impact as a
result of the FCA's review, the Board recognises the need to plan for a range
of possible outcomes. It is a long-standing priority of the group to maintain
a strong balance sheet and prudent approach to managing its financial
resources. To that end, the Board considers it prudent for the group to
further build capital strength, while supporting our customers and business
franchise.

Therefore, the group will not pay any dividends on its ordinary shares for the
current financial year, and the reinstatement of dividends in the 2025
financial year and beyond will be reviewed once the FCA has concluded its
process and any financial consequences for the group have been assessed(3).

In addition, the Board is implementing a range of actions to further accrete
capital including optimising Risk Weighted Assets and continued delivery of
our cost management initiatives.

The Board is confident that these actions will further build our capital
strength, leaving the group in a strong position to continue to support our
customers and protect our valuable franchise. The group will provide a further
update at its Half-Year 2024 results.

Inside information

This announcement contains information which is deemed by the Company to
constitute inside information within the meaning of the UK version of the
European Union's Market Abuse Regulation ((EU) No. 596/2014). Upon the
publication of this announcement via the Regulatory Information Service, the
inside information is now considered to be in the public domain.  The person
responsible for arranging the release of this information on behalf of the
Company is Sarah Peazer-Davies, Company Secretary.

Footnotes

1 The group's capital ratios are presented on a transitional basis after the
application of IFRS 9 transitional arrangements which allow banks to add back
to their capital base a proportion of the IFRS 9 impairment charges during the
transitional period. Without their application, the CET1 and Total capital
ratios would be 12.4% and 16.2%, respectively. The applicable minimum CET1 and
Total capital ratio regulatory requirements, excluding any applicable PRA
buffer, were 9.5% and 13.4% respectively at 31 December 2023. The group's
capital ratios are unaudited and include unverified profits net of foreseeable
dividends. At 31 December 2023, the related foreseeable dividend accrual was
c.£40 million or c.40 bps of CET1.

2 Liquidity Coverage ratio presented as a 12-month average to 31 December
2023.

3 This decision does not affect the payment of interest on any other capital
instrument issued by the group including its Fixed Rate Resetting Additional
Tier 1 Perpetual Subordinated Contingent Convertible Securities.

Financial Calendar (provisional)*

Close Brothers will release its Half-Year results for the six months ending 31
January 2024 on 19 March 2024. The provisional financial calendar for the
remainder of the 2024 financial year is as follows:

 

 Half Year Results 2024    19 March 2024
 Q3 2024 Trading Update    22 May 2024
 Preliminary Results 2024  24 September 2024

* All dates are subject to change.

Further information

Investor Relations FAQs | Close Brothers Group
(https://www.closebrothers.com/investor-relations-faqs)

Enquiries

Sophie Gillingham                               Close Brothers
Group plc                              020 3857 6574

Camila Sugimura                                 Close
Brothers Group plc                              020 3857 6577

Kimberley Taylor
                                 Close
Brothers Group plc
020 3857 6233

Sam
Cartwright
H/Advisors
Maitland
07827 254561

Neil Bennett
H/Advisors Maitland
 07900 000777

 

About Close Brothers

Close Brothers is a leading UK merchant banking group providing lending,
deposit taking, wealth management services and securities trading.  We employ
approximately 4,000 people, principally in the United Kingdom and Ireland.
Close Brothers Group plc is listed on the London Stock Exchange and is a
constituent of the FTSE 250.

Cautionary Statement

Certain statements included or incorporated by reference within this
announcement may constitute "forward-looking statements" in respect of the
group's operations, performance, prospects and/or financial condition. All
statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward-looking statements are sometimes, but
not always, identified by their use of a date in the future or such words as
"anticipates", "aims", "due", "could", "may", "will", "should", "expects",
"believes", "intends", "plans", "potential", "targets", "goal" or "estimates".
By their nature, forward-looking statements involve a number of risks,
uncertainties and assumptions and actual results or events may differ
materially from those expressed or implied by those statements. There are also
a number of factors that could cause actual future operations, performance,
financial conditions, results or developments to differ materially from the
plans, goals and expectations expressed or implied by these forward-looking
statements and forecasts. These factors include, but are not limited to, those
contained in the Group's annual report (available at:
https://www.closebrothers.com/investor-relations
(https://www.closebrothers.com/investor-relations) ). Accordingly, no
assurance can be given that any particular expectation will be met and
reliance should not be placed on any forward-looking statement. Additionally,
forward-looking statements regarding past trends or activities should not be
taken as a representation that such trends or activities will continue in the
future.

Except as may be required by law or regulation, no responsibility or
obligation is accepted to update or revise any forward-looking statement
resulting from new information, future events or otherwise. Nothing in this
announcement should be construed as a profit forecast. Past performance cannot
be relied upon as a guide to future performance and persons needing advice
should consult an independent financial adviser.

This announcement does not constitute or form part of any offer or invitation
to sell, or any solicitation of any offer to subscribe for or purchase any
shares or other securities in the company or any of its group members, nor
shall it or any part of it or the fact of its distribution form the basis of,
or be relied on in connection with, any contract or commitment or investment
decisions relating thereto, nor does it constitute a recommendation regarding
the shares or other securities of the company or any of its group members.
Statements in this announcement reflect the knowledge and information
available at the time of its preparation. Liability arising from anything in
this announcement shall be governed by English law. Nothing in this
announcement shall exclude any liability under applicable laws that cannot be
excluded in accordance with such laws.

 

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