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Principality Bld Soc (89VX)

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Wednesday 27 September, 2006

Principality Bld Soc

Interim Results

Principality Building Society
27 September 2006




27 September 2006



                      PRINCIPALITY DELIVERS SOLID RESULTS

            Unaudited interim results for six months to 30 June 2006

Principality, Wales's largest building society, today issued results which
reflect a strong performance for the first half of 2006.



Year-on-year highlights:

  • Group assets grew by 9.86%, exceeding £4.65 billion (June 2005 - £4.2
    billion)
  • Group profit before tax increased by 13% to £11.0 million (June 2005 -
    £9.7 million)
  • Group mortgage balances grew to £3,742.6 million (June 2005 - £3,396.1
    million)
  • Mortgage advances grew by 39% to £623.1million (June 2005 - £446.7million)
  • Savings up by £187 million to £3.3 billion
  • Winner of Employer of the Year for Wales and the West Country.



Commenting on the results, Peter Griffiths, Chief Executive of Principality
Building Society, said: 'We have delivered a good set of results for the first
half of 2006 and are on course to hit our targets for the year. Group assets
have increased to over £4.65 billion and pre-tax profits are up by 13% to £11.0
million. The steady housing market and a competitive range of mortgage products
have also ensured a growth in mortgage advances to £623.1 million - an increase
of 39%. Our savings book is also strong and has hit £3.3 billion.



'Principality's subsidiaries have performed ahead of plan. Nemo Personal Finance
Ltd, a personal secured loans business, now employs 140 staff in Cardiff and is
continuing to deliver good returns. Peter Alan estate agency broke all records
with an outstanding first half to the year and the commercial lending division
broke through the £600m lending barrier in June.



'Our newest subsidiary, Moneypilot.co.uk, launched in June. This is an example
of how we are using technology in an innovative way to enable customers to
access advice about the whole of the mortgage market via web and phone from the
comfort of their own home or office. We are aiming to develop this proposition
further later this year to offer pensions and investment advice.



'As our subsidiaries prosper, the profit generated enables us to build a more
sustainable business and provide real member value to our core building society
customers. We continue to look for other opportunities to invest in new
businesses to offer a wider range of products and services for our members.



'Earlier this summer we raised £120 million in capital to support the group's
growth plans over the medium term. The deal has extended our footprint in the
capital markets - a total of 24 investors participated in the transaction, of
whom 20 were new to Principality. Our credit story was well received by the
London and Edinburgh based investors - reflecting our strong Welsh franchise and
robust 2005 performance.



'The building society is continuing to widen its presence in Wales. We are
investing on the high streets of Wales and the borders and have relocated two of
our branches to more prominent locations in Neath and Mold. We also announced a
new sponsorship deal with the Football Association of Wales in August and now
sponsor the Welsh Football Premier League. This is in addition to our
sponsorship of the rugby premiership in Wales which associates us with a sport
which is at the heart of many Welsh communities.



'We are also developing our services, to extend beyond our traditional branch
network, via the web. We launched a bilingual online mortgage application
facility earlier in the year and we will be building our e-commerce capability
and bringing online savings accounts to customers in early 2007.



'Our AGM in March was well attended and a record 16% of our members voted
helping us to raise £35,000 for our elected charity of the year, Breast Cancer
Care Cymru/Wales. We have also strengthened the Board of Directors and David
Williams, previously Deputy Chairman, has been appointed Chairman of the
Society.'



Peter Griffiths added: 'We continue to invest in the development of our staff
and are proud to have won the Employer of the Year award for Wales and the West
Country. We also received the Bilingual Business of the Year award for our
commitment to the Welsh language. We move into the second half of the year
encouraged by the progress made by the Society. We will sustain our focus on
providing first class service to our customers and maintaining our position as
the leading Welsh provider of mortgages and savings.'



The half year results are prepared under International Financial Reporting
Standards, effective from 1 January 2005.

Ends

Notes to editors

  • Financial information follows below.
  • Formed in 1860, Principality is Wales's largest building society.
  • The Society is committed to supporting the communities of Wales.
  • With more branches in Wales than any other building society, Principality
    is the 12th largest building society in the UK.
  • The Society has assets of over £4.6 billion.
  • Principality is committed to remaining a mutual organisation.
  • Peter Alan is Principality's wholly owned estate agent subsidiary with 25
    branches throughout South Wales.
  • Late in 2004, the Society acquired Loan Link Limited and formed a new
    subsidiary - Nemo Personal Finance - creating around 160 jobs in Wales over
    two years.



For more information, contact:

Llio Penri, PR Officer, Principality Building Society.

Tel: 029 2077 3208; Mob: 07836 713343; email: [email protected]




Principality Building Society
Group interim results for six months to 30 June 2006


                                                                      6 months to           6 months to          Year to
                                                                       30.06.06              30.06.05           31.12.05
                                                                      (Unaudited)           (Unaudited)
                                                                          £m                    £m                  £m

Results for the period

Net interest income                                                       30.1                  24.1              53.0

Other income and charges                                                  14.9                  10.1              23.4

Unrealised fair value gains and losses                                     0.2                   0.3               0.3

Administrative expenses                                                  (31.2)                (24.3)            (52.1)

Impairment losses on loans and advances                                   (3.0)                 (0.5)             (2.0)

Profit before tax                                                          11.0                   9.7              22.6

Taxation                                                                  (3.4)                 (2.9)             (7.0)

Profit for the period                                                       7.6                   6.8              15.6

Financial position at the end of the period

Assets

Liquid assets                                                             860.1                 780.6             803.6

Mortgages                                                               3,742.6               3,396.1           3,515.0

Derivative financial instruments                                            7.7                   7.5               8.0

Fair value adjustment for hedged risk on mortgages                        (1.6)                  10.3               7.2

Fixed assets and other assets                                              48.6                  44.8              50.5

Total assets                                                            4,657.4               4,239.3           4,384.3

Liabilities

Shares                                                                  3,312.9               3,125.7           3,223.9

Borrowings                                                                887.8                 779.9             814.8

Derivative financial instruments                                            1.7                  10.2               6.7

Fair value adjustment for hedged risk                                       2.3                   6.1               6.7

Other liabilities                                                          31.5                  33.5              36.5

Subordinated debt                                                         119.1                     -                 -
                                                                                                                   
Subscribed capital                                                         58.8                  58.7              58.7

Reserves                                                                  243.3                 225.2             237.0

Total liabilities                                                       4,657.4               4,239.3           4,384.3



Group interim results for six months to 30 June 2006 - continued


                                                                      6 months to           6 months to          Year to
                                                                       30.06.06              30.06.05           31.12.05
                                                                      (Unaudited)           (Unaudited)
                                                                          £m                    £m                  £m

Statement of recognised income and expense

Profit for the period                                                       7.6                   6.8              15.6

Recognition of adoption of IAS 32 and IAS 39                                 -                    6.3               6.3

(Loss)/gains on revaluation of available-for-sale investments             (1.3)                   1.0               0.5

Actuarial gain on retirement benefit obligation                               -                     -               5.0


Movement in deferred tax relating to retirement benefit obligations           -                     -             (1.5)


Total recognised income for the period                                      6.3                  14.1              25.9


Cash Flow Statement

Cash flows from operating activities                                    (107.5)                  18.1              43.5

Cash flows from investing activities                                     (11.8)                (10.1)            (35.8)

Cash flows from financing activities                                      119.1                     -                 -
                                                                                                                      
Net increase / (decrease) in cash                                         (0.2)                   8.0               7.7

Cash or cash equivalents at the start of the period                        52.3                  44.6              44.6

Cash or cash equivalents at the end of the period                          52.0                  52.6              52.3


Key Results & Ratios

Mortgage advances                                                      £ 623.1m              £ 446.7m          £ 965.6m

Movement in share balances                                              £ 89.0m              £ 113.7m          £ 211.9m

Gross capital as a percentage of shares
   and borrowings                                                          10.0%                  7.2%              7.3%

Liquid assets as a percentage of shares
   and borrowings                                                          20.5%                 20.0%             19.9%





                      This information is provided by RNS
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