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Portman Building Sty (31BH)

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Friday 31 January, 2003

Portman Building Sty

Final Results

Portman Building Society
31 January 2003


For Immediate Release


                      OUTSTANDING PERFORMANCE FROM PORTMAN

          Annual results show assets more than doubling in five years


Portman, the UK's fourth largest building society, announces outstanding results
for 2002, which clearly demonstrate its success in delivering benefits to the
existing membership whilst continuing to attract new members in a highly
competitive market place. Substantial asset growth has been driven by the
Society's attractively priced products and the impressive performance of its
subsidiary, Sun Bank.

                                Group highlights

•    £40 million returned to members in 2002 through product pricing
     
•    £150 million returned to members over the last 5 years

•    Total assets up by 15% to £10.4 billion and more than doubled in 5
     years

•    Sun Bank delivered £12 million pre-tax profit to Portman members

•    Gross new mortgage lending of £2.9 billion, 46% higher than 2001

•    Net new mortgage lending over two-thirds ahead of natural market share

•    Savings balances increased by £0.9 billion to £7.7 billion

•    Net interest margin reduced from 1.22% to 1.11%

•    Pre-tax profit up 9% to £64.1 million

•    Only 11 properties in possession at the year end

Commenting on the Group's performance, Robert Sharpe, Chief Executive said,
'These results clearly underline our position and strength as an independent,
mutual, organisation. Despite the unusual economic environment during 2002, we
achieved business levels significantly above our natural market share by
maintaining a balanced approach to savers and borrowers alike. Our net margin
has reduced considerably over the last five years, a clear indication that our
members continue to benefit from the pricing of our products.

During its first year as part of the Portman Group, our new subsidiary Sun Bank
produced an exceptional performance and delivered substantial profits, which
have been distributed to the Society's members through products and pricing.'


Member initiatives during 2002:

•    Membership Matters events have continued throughout 2002, enabling almost 
     1,000 members to meet Executive Directors face-to-face. More events are
     planned for 2003

•    Members' newsletter - providing members with up-to-date news about the
     Society

•    The Member Handbook - a reference guide designed to welcome new members

•    Members' suggestion scheme - encouraging members to have their say on any 
     Society issue

•    Member research programme - by the end of the year we had received feedback 
     from some 9,000 members

•    24 Hour Savings Information Line - enabling members to obtain details of 
     current savings products, rates and promotions

•    Portman Contact Card - a guide to the different ways in which members can 
     contact the Society

Robert Sharpe continued, 'We are committed to understanding our members' needs
and will continue to learn from their feedback. We have now invited almost
80,000 members to share their views with us, either face-to-face, over the
telephone or through questionnaires. As a result, we have introduced several new
initiatives and enhanced a number of existing processes. I am confident that
2003 will see further improvements to the service we deliver to members.'


                                     -ENDS-


Editor's notes:

Portman Building Society has been established for over 150 years and is the 4th
largest UK building society with assets of £10.4 billion. The Group employs over
1,500 staff serving more than 1.2 million members through a network of over 110
branches, based predominantly in the south of England.

The Group Income and Expenditure Account, Balance Sheet and Cash Flow Statement
follow this press release.


For further information please contact:

Robert Sharpe                                         Glyn Smith
Chief Executive                                       Group Finance Director
Tel: 01202 563603                                     Tel: 01202 563607



GROUP INCOME AND EXPENDITURE ACCOUNT
for the year ended 31 December

                                                                2002               2001
                                                                            as restated               % Change
                                                                  £m                 £m


Net interest receivable                                       108.2                92.0                   18%

Other income and charges                                       36.7                29.6                   24%

Total income                                                  144.9               121.6                   19%

Administrative expenses                                       (71.0)              (56.7)                  25%

Depreciation & amortisation                                    (8.2)               (5.2)                  58%

Operating profit before provisions                             65.7                59.7                   10%

Provisions for bad and doubtful debts                          (1.6)               (0.7)                 129%

Profit before tax                                              64.1                59.0                    9%

Taxation                                                      (19.9)              (17.7)                  12%

Profit after tax                                               44.2                41.3                    7%

Financial ratios:

Profit after tax as % of mean total assets                     0.46%               0.55%

Management expenses as % of mean total assets                  0.82%               0.82%



GROUP BALANCE SHEET
as at 31 December

                                                            2002              2001
                                                                       as restated                 % Change
                                                              £m                £m

ASSETS

Liquid assets                                              1,971             1,898                       4%

Mortgages                                                  8,237             6,952                      18%

Other loans                                                    -                65                    -100%

Fixed and other assets                                       165               137                      20%

Total assets                                              10,373             9,052                      15%


LIABILITIES AND RESERVES

Shares                                                     7,660             6,799                      13%

Borrowings                                                 2,013             1,585                      27%

Other liabilities                                             60                72                     -17%

Subordinated debt                                            130               130                        -

Subscribed capital                                            60                60                        -

Reserves                                                     450               406                      11%

Total liabilities and reserves                            10,373             9,052                      15%


Movements:

Net investors inflow                                         637               676                      -6%

Gross residential lending                                  2,913             1,993                      46%


Financial ratios:

Liquid assets                                              20.4%             22.6%

Gross Capital                                               6.6%              7.1%

Solvency                                                   13.3%             13.8%

Tier 1 capital                                             10.2%             10.4%



CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December

                                                                          2002              2001
                                                                            £m                £m


Net cash inflow from operating activities                               507.2             343.6

Returns on investments and servicing of finance                         (12.9)             (4.3)

Taxation                                                                (19.3)            (16.7)

Net financial investment                                               (454.1)           (387.2)

Net capital expenditure                                                 (18.7)            (23.9)

Acquisition
      Purchase of subsidiary undertaking                                     -            (93.8)
      Net cash acquired with subsidiary                                      -             46.8

Financing                                                                    -            135.0

Increase/(decrease) in cash                                               2.2              (0.5)



NOTES TO THE FINANCIAL INFORMATION
for the year ended 31 December 2002


1.   The financial information set out above, which was approved by the Board
     on 30 January 2003, does not constitute accounts within the meaning of the
     Building Societies Act 1986.

2.   The financial information has been prepared on the basis of the accounting 
     policies adopted by the Group and set out in the Annual Accounts to 31 
     December 2002.

3.   The financial information for the years ended 31 December 2002 and 31
     December 2001, as restated for the adoption of FRS 19 'Deferred Tax', has 
     been extracted from the Annual Accounts for those years.  Annual Accounts 
     for the year ended   31 December 2001 have been filed, and those for the 
     year ended 31 December 2002 will be filed following publication, with the 
     Financial Services Authority.  The Auditors' Reports on the Annual Accounts 
     for the years ended 31 December 2002 and 31 December 2001 were unqualified.

4.   The Society acquired Sun Bank plc on 30 November 2001.  Group results from 
     that date include the results of Sun Bank plc.

5.   The Group has, during 2002, implemented the requirements of FRS 19 
     'Deferred Tax'. Under FRS 19, full provision is made for tax timing 
     differences and, in particular, deferred tax assets can be recognised where 
     it is more likely than not that there will be sufficient future taxable 
     profits against which to recover them. Previously, they were recognised 
     only where it was probable that they would be recovered without replacement 
     in the foreseeable future.

     The impact of the change is that, as at 31 December 2001, Group deferred 
     tax assets have increased by £9.0m, goodwill on acquisition of Sun Bank plc 
     has reduced by £3.2m and Group general reserves have increased by £5.8m. 
     The effect on 2001 results was to increase Group profit for the year by 
     £0.5m.

6.   Reconciliation of profit before tax to net cash inflow from operating
     activities:
                                                                          2002                 2001
                                                                            £m                   £m

Profit on ordinary activities before tax                                  64.1                 59.0

Depreciation and amortisation                                              8.5                  5.8

Net (increase)/decrease in:

         Loans and advances to customers                              (1,221.3)              (653.3)

         Loans and advances to credit institutions                       388.0                 (9.1)

Net increase/(decrease) in:

         Shares                                                          874.2                912.8

         Owed to credit institutions/other customers                      50.0               (122.7)

         Debt securities in issue                                        385.8                125.9

Other                                                                    (42.1)                25.2

Net cash inflow from operating activities                                507.2                343.6

Analysis of cash balances included in the balance sheet:

Cash in hand and balances with the Bank of England                         8.4                  7.8

Loans and advances to credit institutions repayable on demand             10.2                  8.6

                                                                          18.6                 16.4

Increase in cash                                                           2.2


                                                                   
                      This information is provided by RNS
            The company news service from the London Stock Exchange                                                                                                                                                                               

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