TIDM72FP
RNS Number : 3128H
Skipton Building Society
03 August 2021
PRESS RELEASE
Tuesday 3 August 2021
SKIPTON REPORTS SIGNIFICANTLY IMPROVED RESULTS WHILST SUPPORTING
ITS MEMBERS, COLLEAGUES AND COMMUNITIES DURING ANOTHER PERIOD OF
UNCERTAINTY DOMINATED BY THE PANDEMIC
Skipton, the UK's fourth largest building society, today
announces its half year results for the six months ended 30 June
2021 as it continues to actively support its members, colleagues
and communities.
The last 16 months or so have been dominated by the coronavirus
pandemic, directly impacting upon the health and finances of people
within our communities. The first half of the year has again seen
various levels of national lockdowns in the UK as the pandemic
continued to impact different parts of the Group's operations.
However, through the resilience and adaptability of Skipton's
colleagues, together with its strong capital position and healthy
levels of liquidity, the Society has continued to deliver for its
members with excellent customer service (net customer satisfaction
of 87%).
In a challenging environment, total Group profit before tax
(PBT) was GBP159.2m (six months ended 30 June 2020: GBP34.4m). The
Group recorded underlying profits before tax (as defined below) of
GBP122.4m (six months ended 30 June 2020: GBP47.9m). Profits in the
period, under both performance measures, have benefitted from a
credit to loan impairment of GBP14.8m (six months ended 30 June
2021: charge of GBP19.1m) reflecting the updates to the economic
outlook in light of the improving COVID-19 situation, principally
due to the successful roll out of the vaccine.
In the year that the Society marks 25 years of owning its estate
agency business Connells, Connells completed the acquisition of
Countrywide plc on 8 March 2021, creating the UK's largest estate
agency network of 1,235 branches. Connells and the Society believe
that a well-invested high street estate agency branch network,
coupled with a diversified brand portfolio, will allow the combined
business to provide an attractive offering to its customers.
The acquisition of Countrywide will provide further
diversification to the Group's business model, and the Society
believes that the strong management team at Connells will deliver
enhanced returns over the medium and longer term, further enhancing
the Society's capital strength at a time when it is likely we shall
see margins within the mortgages and savings business come under
pressure going forward, primarily due to increased competition in
the industry combined with a historical low Bank Base Rate. The
higher returns from the estate agency business will support the
Society's ongoing investment in its customer proposition and its
people, and continue to allow it to offer competitive mortgage
products to our borrowing members and competitive savings returns
to our savings members, in addition to further enhancing its
financial advice proposition.
Profit before tax in our enlarged Estate Agency division
increased in the period to GBP80.2m (six months ended 30 June 2020:
GBP17.2m) partly due to a strong housing market boosted by Stamp
Duty Land Tax (SDLT) relief.
Connells' PBT also benefitted from GBP26.9m[1] of fair value
gains on two businesses where both Connells and Countrywide
previously held a non-controlling investment, and control was
obtained when combined on acquisition, together with a further
GBP3.3m of fair value gains on share warrants and other
investments. Underlying profits of Connells were GBP50.0m (six
months ended 30 June 2020: GBP20.8m).
The Group's policy is not to adjust for amortisation when
calculating underlying profits. However, to provide additional
context in terms of performance, we report that all of the above
mentioned figures for Skipton Group and Connells PBT and underlying
profits are after incurring IFRS 3 amortisation accounting charges
of GBP38.3m which will not be repeated in the medium term.
David Cutter, Skipton Group Chief Executive, said:
"At a time of continued uncertainty for our customers,
colleagues and their families, Skipton's performance seems a
secondary interest while we all adjust to the ongoing impact of the
global pandemic. But it is against such a challenging social and
economic backdrop that we've seen Skipton's mutuality, agility, and
first-rate customer service come to the fore and be reflected in
our results today.
Skipton's founding purpose in 1853 was to tackle the housing and
savings issues Victorian society faced. Today we continue to serve
that purpose, albeit evolved, for our one million customers,
helping them have a home and to save with confidence for their
futures. During the first six months of the year, Skipton has
become the UK's eleventh largest mortgage lender, with more people
than ever having turned to us to help them have a home.
We continue to play a significant role in getting first time
buyers across the UK the keys to their first homes, with Skipton
cash Lifetime ISA (LISA) customers benefiting from GBP64.4m in
government bonuses towards their deposits over the last six months
alone.
For our savers we've paid on average 0.39% more than the rest of
market average on their hard-earned savings over the first five
months of the year.
The global pandemic has continued to disrupt all our lives, and
our priorities continue to be keeping our customers and colleagues
safe and being there when and where they need us. While we continue
to adapt to meet evolving customer needs, our financial strength,
mutuality and commitment to sustainability, together with excellent
customer service and colleague engagement, see us look forward with
confidence."
Supporting customers, colleagues and communities through the
pandemic
In this rapidly changing world, it's really important Skipton is
able to continue to support its members in the ways they expect and
need. The challenges faced since March 2020 have only strengthened
the Society's resolve to build a better Society; one that is more
sustainable - socially, financially, and environmentally.
Customers
-- The Society continued to maintain essential services to
support its members throughout the various lockdown stages in the
period. Skipton has been able to help its customers safely
face-to-face in all its 88 COVID-secure branch locations, while
offering reviews and new account openings through video using
Skipton Link or by telephone using Skipton Direct;
-- During quieter times, Skipton branches have utilised spare
capacity to support customers in other ways, including talking to
over 10,000 savings and mortgage customers each month over the
telephone;
-- Skipton has continued to support customers seeking mortgages,
staying fully open for business and being flexible in our
application process to accommodate the unusual trading conditions.
This is demonstrated by the strong 4.4% mortgage growth and 16,087
homeowners we've helped to purchase or remortgage their properties
in the period;
-- The Society is making strong progress towards reaching its
aspiration of being accredited Communication Accessible by
Communication Access UK, so it can better support colleagues and
customers with communication difficulties. Over 1,300 Skipton
colleagues have now successfully completed specialist
Communications Access training; and
-- Skipton is proud to have maintained extremely high customer
satisfaction throughout 2021:
o 93%[2] of customers rated Skipton branches 6 or 7 out of 7 for
customer service, with 82% giving the maximum 7 out of 7.
o Our customer contact centre, Skipton Direct, was shortlisted
for The Contact Centre Association (CCA) Excellence Awards,
recognising world-class professional achievement in customer
service, achieving 'Outstanding Team Award - Bronze'.
o Many of our Skipton financial advisers have been recognised
nationally after appearing in the Financial Times' prestigious Top
Rated Financial Advisers Guide; with an outstanding 62 of our
advisers featuring.
o Customers rate our overall service on average 4.6 stars out of
5 on Trustpilot.
Colleagues
-- The Society has supported colleagues throughout the pandemic
with working from home provisions for those that are able to,
flexible working to allow for childcare and other commitments, and
ensuring the highest levels of safety in all working practices;
and
-- Skipton has created digital delivery of bespoke mental health
colleague support sessions which are designed in partnership with
our corporate charity partner, Mental Health UK.
Communities and the environment
-- During the first six months of the year, the Skipton Building
Society Charitable Foundation donated GBP84,262 to 40 charities
across the UK;
-- All Skipton branches donated to their local foodbanks at the
beginning of the year to help much needed food supplies. The
Society also match funded colleagues' fundraising efforts, donating
GBP7,850 to their good causes and local communities in the
period;
-- The Society donated GBP30,000 to the Skipton Building Society
Camerata and GBP5,000 to Craven Citizens Advice at a time when the
arts and money charities desperately needed funding;
-- The Society's ongoing commitment to sustainability is set out
in the Sustainability Report in the 2020 Annual Report &
Accounts, and during 2021 the Society has continued to embrace
sustainability in all its forms, setting ourselves challenging
targets where we can have the greatest impact on society; and
-- In June 2021 the Society announced that it had partnered with
the Yorkshire Dales Millennium Trust to plant 15,000 trees, to
offset its carbon emissions and make the Society carbon neutral,
with work continuing on further reducing the Society's carbon
emissions as part of its efforts to take more carbon out of the
atmosphere than the Society puts into it by 2025 .
Mortgages and Savings division
Absolute Customer Focus
-- Skipton continued to support its membership through a
difficult time, with member numbers at 30 June 2021 increasing to
1,075,231 (31 December 2020: 1,061,138). On 1 June 2021 4,535
customers of Amber Homeloans Limited and North Yorkshire Mortgages
Limited became members of the Society following the hive-up of the
operations of those subsidiaries into the Society;
-- Skipton continued to offer outstanding customer service to
its members in the first half of the year, as demonstrated through
its net customer satisfaction score of 87%[3] (31 December 2020:
85%);
-- Total LISA balances held with Skipton as at 30 June 2021 were
GBP1,141.0m (31 December 2020: GBP1,022.8m), with government
bonuses of GBP64.4m being received by our LISA savers during the
first half of 2021, providing a significant boost to their
homeownership aspirations;
-- The Society helped 16,087 homeowners (six months ended 30
June 2020: 12,376) to purchase or remortgage their properties,
including 3,932 first time buyers (six months ended 30 June 2020:
2,369) and 3,358 buy-to-let borrowers (six months ended 30 June
2020: 3,627);
-- For the five months ended 31 May 2021 the Society paid an
average savings rate of 0.71% (12 months ended 31 December 2020:
0.96%) which was 0.39% (12 months ended 31 December 2020: 0.38%)
above the rest of market average ([4]) for which comparable data is
available; and
-- The Society's financial advisers have provided pensions and
investments advice to 2,606 customers (six months ended 30 June
2020: 1,586) on how to achieve their financial goals.
Brilliant People
-- The Society aims to deliver an outstanding colleague
experience; our overall colleague engagement increased to 90% when
last measured in September 2020 (2019: 89%) and this has a direct
beneficial impact on the service we provide to our customers;
-- In 2021 the Society has held regular 'Pulse' surveys, giving
colleagues a chance to be open and honest, to make their feedback
count, helping the Society understand what's working well to make
the Society a great place to work; and
-- The Society received recognition as the UK's 7(th) best big
company to work for in 2021, as part of The Sunday Times 25 Best
Big Companies to Work For. In addition, in March Skipton was
awarded a 3-star accreditation from Best Companies for its levels
of employee engagement, being the first time the Society has ever
achieved this.
Powered by Digital Technology and Data
-- The Society continued to improve the digital experience for
members across mortgages, savings and financial advice in the first
half of the year. Investment in enhanced digital capability
continues to be a particular area of focus to support and drive
improvements to the customer experience;
-- The Society has 53% of its online customers registered for
the Skipton app as at 30 June 2021, with over 223,000 registrations
since the launch of the app in July 2019;
-- Skipton has achieved record customer satisfaction scores in
digital channels at 86%[5]. This includes work over the last 18
months to provide the human touch in its digital interactions;
-- Skipton's Mortgage Product Finder went live in 2021, more
easily giving customers the information they need to apply for a
mortgage directly. The Mortgage Product Finder supports both new
and existing customers wanting to apply for a mortgage or switch
from an existing product to a new one, allowing them to tailor
their search by answering a few simple questions;
-- In 2021 Skipton's new customer appointment booking system
'Click to Schedule' went live online, allowing customers to book
appointments direct with one of Skipton's mortgage advisers;
and
-- Data and analytics have been used to improve the efficiency
and effectiveness of our mortgage and risk evaluation process,
improving capacity whilst enhancing the customer experience.
Financial Strength
-- The Mortgages and Savings division reported an underlying PBT
of GBP79.5m (six months ended 30 June 2020: GBP26.0m). A credit of
GBP14.8m was recognised in the period for loan impairment charges
(six months ended 30 June 2020: charge of GBP18.7m) , principally
as a result of updates to the economic outlook in light of the
improving COVID-19 situation;
-- Statutory PBT for the Mortgages and Savings division was
GBP85.8m, compared to GBP15.6m for the six months to 30 June
2020;
-- The Group net interest margin was 0.97% (six months ended 30
June 2020: 0.87%; year ended 31 December 2020: 0.89%). Margins on
mortgage applications in late 2020 were significantly stronger than
at the start of 2020, hence the mortgage pipeline at the start of
2021 was comparatively stronger than the prior period. However,
mortgage margins gradually reduced throughout the six month period
ended 30 June 2021 due to increasing competition. Retail margins
widened slightly during the period as the market remained awash
with surplus liquidity arising from UK savings accrued during the
pandemic;
-- Skipton International Limited (SIL) continues to make a
strong contribution to the division's profits, with PBT of GBP11.4m
( six months ended 30 June 2020 : GBP9.9m) and mortgages and
savings balances of GBP1.7bn and GBP1.9bn respectively (31 December
2020: GBP 1.6bn and GBP1.9bn respectively) ;
-- Financial advice income levels have improved in 2021 to
GBP15.2m (six months ended 30 June 2020: GBP12.7m) after being
heavily impacted from limited opportunities to generate new
business during COVID-19 restrictions. Through the use of remote
technology, servicing and interaction with existing financial
advice customers has been maintained at a high standard;
-- The Mortgages and Savings division's management expense ratio
([6]) was 0.60% (six months ended 30 June 2020: 0.60%) and the cost
income ratio improved to 56.4% (six months ended 30 June 2020:
62.9%). Carefully managing costs has been a priority and in the
prior year the Society took precautionary steps in reducing and/or
delaying non-essential spend because of the pandemic. The cost
income ratio has improved due to an increase in the division's net
interest income, despite delayed 2020 costs being incurred in the
first six months of this year;
-- Group gross mortgage lending was GBP3.0bn (six months ended
30 June 2020: GBP2.1bn), with mortgage balances growing by 4.4%
since the end of 2020 (six months ended 30 June 2020: 4.7%);
-- The Group's net residential UK mortgage lending accounted for
2.0% of the growth in the UK residential mortgage market (six
months ended 30 June 2020: 7.4%) compared to our 1.4% ([7]) share
of UK residential mortgage balances;
-- The Group's arrears position, contrary to that of the market
as a whole, improved slightly during the period and continues to be
well below the industry average. The Group's UK residential
mortgages in arrears by three months or more represent only 0.28%
of mortgage accounts (31 December 2020: 0.29%), which compares to
an industry average of 0.85%[8] (31 December 2020: 0.83%);
-- The quality of the SIL mortgage book remains good, with only
one case in arrears by three months or more (31 December 2020: one
case);
-- Society savings balances grew by 3.9% to GBP19.4bn (six
months ended 30 June 2020: 1.4%). The growth in the Society's
savings balances in the period accounted for 1.0% of the growth in
the UK deposit savings market (six months ended 30 June 2020:
0.8%), compared to our market share of savings balances of 1.1%
([9]) ;
-- The Liquidity Coverage Ratio was 187% (31 December 2020:
194%), well above both the regulatory minimum of 100% and the
internal limit set by the Board throughout the period;
-- At 30 June 2021, GBP1.15bn remained outstanding under the
Government's Term Funding Scheme (31 December 2020: GBP1.25bn). The
Society also has access to the Bank of England's Term Funding
Scheme with additional incentives for SMEs (TFSME) until October
2021. During the year the Society has not made any new drawing
under the scheme and has GBP850m outstanding (31 December 2020:
GBP850m); and
-- The Society's Common Equity Tier 1 (CET 1) ratio at 30 June
2021 improved to 42.2% (31 December 2020: 39.7%) as a result of
strong profitability and a reduction in risk weighted assets. The
leverage ratio increased to 6.0% (31 December 2020: 5.7%) driven by
growth in capital resources. The CET 1 and leverage ratios are well
above the Regulator's minimum.
Estate Agency division
-- The Connells group reported a PBT of GBP80.2m (six months
ended 30 June 2020: GBP17.2m) inclusive of the profits attributable
to Countrywide since acquisition, and related IFRS 3 charges on the
acquisition;
-- Growing confidence in the housing market has led to increased
sales in the Connells group. The market has been boosted by the
stamp duty concessions, which saw a push for completions ahead of
the initial reduction in stamp duty cut-off in March 2021, and
subsequent extension to June, with a further tapering to
September;
-- As previously noted, on 8 March 2021, Connells acquired the
entire issued share capital of Countrywide for total consideration
of GBP131.8m . Countrywide Limited (formerly Countrywide plc) is
one of the UK's largest integrated property services groups,
including the largest estate agency and lettings branch network,
with over 600 branches across the UK operating through 60 local or
national brands;
-- The reported PBT of GBP80.2m includes a GBP27.1m fair value
gain on Connells' 64.7% investment in TM Group (UK) Limited, which
the Group subsequently sold on 8 July 2021 for a cash consideration
of GBP58.0m; and a GBP2.2m gain arising on its 22.9% shareholding
in Fixflo, which was sold on 21 May 2021 for a cash consideration
of GBP7.8m;
-- The half year results also include IFRS 3 amortisation
accounting charges in relation to Countrywide's intangibles
recognised on acquisition, including their sales pipeline,
totalling GBP38.3m, together with costs relating to the acquisition
of GBP2.1m within the division; and
-- Exchanges were 34% higher[10] in the period compared to the
first six months of 2019, a more meaningful comparative period due
to the fact the housing market was effectively closed for almost
two months in 2020. Confidence in the housing market is strong,
with buyer registrations up 49%[11] on the first half of 2019.
Supported by low interest rates and competitive mortgage products,
buyers are driving increased sales activity. However, the
availability of stock remains a key market challenge with the
number of properties available for sale 14% lower[12] than June
2019 .
Other subsidiaries
-- Skipton Business Finance (SBF), a provider of debt factoring
and invoice discounting to small and medium-sized enterprises,
recorded a PBT of GBP1.9m (six months ended 30 June 2020:
GBP1.1m);
-- Following the cessation of the Government backed Coronavirus
Business Interruption Loan Scheme (CBILS) and Bounce Back Loan
Scheme (BBLS), SBF successfully gained accreditation to offer both
term loans and invoice finance facilities under the newly
introduced Recovery Loan Scheme (RLS). This accreditation enables
SBF to offer facilities to small and medium-sized enterprises
(SMEs) under this scheme with the Government guaranteeing 80% of
any future losses; and
-- Jade Software Corporation (a software solutions provider
based in New Zealand that specialises in digital solutions and
large IT enterprise solutions, as well as being the provider of the
Society's core database and software development language) reported
a loss of GBP0.2m for the period (six months ended 30 June 2020:
GBP0.1m profit).
Outlook
David Cutter, Skipton Group Chief Executive, added:
"The financial results of the Skipton Group for the six months
ended 30 June 2021 were outstanding, benefitting from a credit to
loan impairment of GBP14.8m reflecting our updates to the economic
outlook in light of the improving COVID-19 situation, principally
due to the successful roll out of vaccines, as well as a gain of
GBP27.1m on recognising TM Group as a subsidiary (previously a
joint venture) at the date of acquiring Countrywide plc, whilst
incurring GBP38.3m of amortisation accounting charges associated
with the acquisition.
The outlook for the Society is positive and it is well
positioned to face into the uncertainties that exist as the UK
moves to the next stage of living with the pandemic, as social
distancing restrictions are eased, government furlough support
comes to an end, and evidence emerges on whether inflation
increases are transitory or structural.
The significant improvement in the economic outlook since the
year end has increased the confidence of both consumers and
lenders, increasing the competition in the mortgage market, and we
expect the downward pressure on mortgage margins to continue. The
hectic housing market in recent months is unlikely to be sustained
and is expected to level off in the second half of the year. But
societal changes, such as the desire for more space and different
commuting habits, appear more permanent and the core fundamentals
supporting the housing market remain positive.
The Society's strong financial position, diversified business
model and compelling customer proposition mean it is well placed to
continue to deliver for its members during these uncertain
times".
Skipton Building Society
Results for the half year ended 30 June 2021
Consolidated income statement
6 months to 30.06.21 6 months 12 months to 31.12.20
to 30.06.20
Re-presented^
GBPm GBPm GBPm
------------------------------------------------------- --------------------- -------------- ----------------------
Interest receivable and similar income:
Accounted for using the effective interest rate
method 221.4 228.5 441.7
Other (2.3) (0.2) (2.1)
===================== ============== ======================
Total interest receivable and similar income 219.1 228.3 439.6
Interest payable and similar charges (81.4) (117.1) (201.7)
------------------------------------------------------- ===================== ============== ======================
Net interest receivable 137.7 111.2 237.9
Fees and commissions receivable 501.3 185.8 420.8
Fees and commissions payable (5.0) (3.5) (7.3)
Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL:
Hedging instruments and hedged items (2.1) 0.5 (0.1)
Derivatives associated with the equity release
portfolio 24.9 (28.0) (22.4)
Equity release portfolio (18.6) 17.6 19.7
Share warrants 1.1 (0.6) 0.1
Put options held by minority shareholders (0.9) 0.4 (0.3)
Equity share investments 2.2 - 0.1
Fair value gains on step-acquisition of Group 26.9 - -
undertakings
Realised profits on treasury assets held at FVOCI 0.1 - 0.6
Profit on disposal of subsidiary undertakings 0.3 0.5 0.8
Share of profits from joint ventures 0.9 0.6 3.4
Other income 1.3 2.8 1.0
===================== ============== ======================
Total income 670.1 287.3 654.3
Administrative expenses (525.6) (230.6) (506.3)
------------------------------------------------------- ===================== ============== ======================
Operating profit before impairment and provisions 144.5 56.7 148.0
Impairment credit / (losses) on loans and advances to
customers 14.8 (19.1) (25.7)
Impairment credit / (losses) on liquid assets 0.1 0.1 (0.1)
Impairment of goodwill - (2.0) (2.0)
Impairment of joint ventures - (1.0) (1.5)
Realised losses on equity release portfolio (0.2) - (0.1)
Provisions for liabilities - (0.3) 0.2
------------------------------------------------------- ===================== ============== ======================
Profit before tax 159.2 34.4 118.8
Tax expense (25.7) (6.4) (21.8)
===================== ============== ======================
Profit for the period 133.5 28.0 97.0
------------------------------------------------------- ===================== ============== ======================
Profit for the period attributable to:
Members of Skipton Building Society 133.4 28.0 97.0
Non-controlling interests 0.1 - -
------------------------------------------------------- ===================== ============== ======================
133.5 28.0 97.0
------------------------------------------------------- --------------------- -------------- ----------------------
^ The 30 June 2020 comparative amounts for 'Fees and commissions
receivable' and 'Provisions for liabilities' have been
re-presented. There is no impact on overall profit and no impact on
reserves.
Underlying Group PBT for the six months ended 30 June 2021 was
GBP122.4m (six months ended 30 June 2020: GBP47.9m; year ended 31
December 2020: GBP124.0m) as shown below:
6 months to 30.06.21 6 months to 30.06.20 12 months to 31.12.20
GBPm GBPm GBPm
------------------------------------------------ --------------------- --------------------- ----------------------
Total Group profit before tax 159.2 34.4 118.8
Less profit on disposal of subsidiary
undertakings (0.3) (0.5) (0.8)
(Less) / add back fair value (gains) / losses
in relation to the equity release portfolio
(note 1) (6.3) 10.4 2.7
Add back impairment of goodwill - 2.0 2.0
Add back impairment of joint ventures - 1.0 1.5
(Less) / add back fair value (gains) / losses
on share warrants and equity share investments (3.3) 0.6 (0.2)
Less fair value gains on step-acquisition of (26.9) - -
Group undertakings
------------------------------------------------ --------------------- --------------------- ----------------------
Underlying Group profit before tax 122.4 47.9 124.0
------------------------------------------------ --------------------- --------------------- ----------------------
Notes
1. The GBP6.3m gain (six months ended 30 June 2020: GBP10.4m
loss; year ended 31 December 2020: GBP2.7m loss) is comprised of
fair value losses of GBP18.6m (six months ended 30 June 2020:
GBP17.6m gains; year ended 31 December 2020: GBP19.7m gains) as
shown in the 'Fair value (losses) / gains on financial instruments
mandatorily held at FVTPL: Equity release portfolio' line in the
Income Statement, and fair value gains of GBP24.9m (six months
ended 30 June 2020: GBP28.0m losses; year ended 31 December 2020:
GBP22.4m losses) on the associated derivatives held to economically
hedge these fair value movements, as shown in the 'Fair value
(losses) / gains on financial instruments mandatorily held at
FVTPL: Derivatives associated with the equity release portfolio'
line in the Income Statement.
Skipton Building Society
Results for the half year ended 30 June 2021
Consolidated statement of comprehensive income
6 months to 30.06.21 6 months to 30.06.20 12 months to 31.12.20
GBPm GBPm GBPm
------------------------------------------------ --------------------- --------------------- ----------------------
Profit for the period 133.5 28.0 97.0
===================== ===================== ======================
Other comprehensive income:
Items that will not be reclassified to profit
or loss:
Remeasurement gains / (losses) on defined
benefit obligations 15.9 (28.8) (22.7)
Income tax on items that will not be
reclassified to profit or loss (0.3) 8.5 7.1
------------------------------------------------ --------------------- --------------------- ----------------------
15.6 (20.3) (15.6)
Items that may be reclassified subsequently to
profit or loss:
Movement in cash flow hedging reserve:
Gains / (losses) taken to equity 13.9 (10.6) (12.9)
Realised gains transferred to Income
Statement (0.1) (2.7) (3.2)
Movement in fair value reserve (debt
securities):
Gains taken to equity 2.1 0.9 4.6
Impairment loss allowance on debt securities
held at FVOCI - - (0.1)
Movement in cost of hedging reserve:
Gains taken to equity 0.5 3.1 0.9
Exchange differences on translation of foreign
operations (0.3) 0.3 0.4
Income tax on items that may be reclassified to
profit or loss (4.2) 2.7 2.4
------------------------------------------------ --------------------- --------------------- ----------------------
11.9 (6.3) (7.9)
------------------------------------------------ --------------------- --------------------- ----------------------
Other comprehensive income / (expense) for the
year, net of tax 27.5 (26.6) (23.5)
------------------------------------------------ --------------------- --------------------- ----------------------
Total comprehensive income for the period 161.0 1.4 73.5
------------------------------------------------ --------------------- --------------------- ----------------------
Total comprehensive income attributable to:
Members of Skipton Building Society 160.9 1.4 73.5
Non-controlling interests 0.1 - -
------------------------------------------------ --------------------- --------------------- ----------------------
161.0 1.4 73.5
------------------------------------------------ ===================== ===================== ======================
Skipton Building Society
Results for the half year ended 30 June 2021
Consolidated statement of financial position
As at As at As at 31.12.20
30.06.21 30.06.20
GBPm GBPm GBPm
----------------------------------------------------------- ---------- ---------- ---------------
Assets
Cash in hand and balances with the Bank of England 2,286.9 819.8 3,237.8
Loans and advances to credit institutions 593.3 729.5 724.7
Debt securities 1,999.4 2,439.7 1,505.0
Derivative financial instruments 78.2 90.3 64.1
Loans and advances to customers held at amortised cost 22,722.1 21,155.0 21,865.0
Loans and advances to customers held at FVTPL 1.2 1.3 1.3
Equity release portfolio held at FVTPL 414.5 430.6 433.8
Current tax asset - 0.5 -
Deferred tax asset 46.1 48.8 46.4
Investments in joint ventures 9.1 12.1 13.3
Equity share investments 1.5 1.5 1.7
Assets held for sale 106.4 - -
Property, plant and equipment 75.9 75.5 72.5
Right-of-use assets 101.0 63.8 60.9
Investment property 7.8 9.3 8.1
Intangible assets 361.9 159.5 157.7
Retirement benefit surplus 0.5 - -
Other assets 167.0 67.4 71.1
========== ========== ===============
Total assets 28,972.8 26,104.6 28,263.4
----------------------------------------------------------- ========== ========== ===============
Liabilities
Shares 19,432.2 17,645.1 18,709.4
Amounts owed to credit institutions 2,066.0 1,313.5 2,149.2
Amounts owed to other customers 2,126.9 1,857.8 2,130.3
Debt securities in issue 2,293.2 2,813.5 2,452.5
Derivative financial instruments 342.0 514.3 445.9
Current tax liability 5.3 4.2 4.0
Lease liabilities 124.9 63.9 62.5
Other liabilities 110.8 52.6 50.9
Accruals 90.5 26.7 42.9
Deferred income 4.6 2.0 2.3
Provisions for liabilities 36.9 20.7 18.9
Deferred tax liability 0.2 2.1 1.2
Liabilities directly associated with assets held for sale 16.6 - -
Retirement benefit obligations 39.0 113.0 96.4
Subordinated liabilities 343.8 - 349.7
Subscribed capital 41.6 41.6 41.6
========== ========== ===============
Total liabilities 27,074.5 24,471.0 26,557.7
Members' interests
General reserve 1,863.9 1,641.6 1,715.3
Fair value reserve 5.2 2.1 4.1
Cash flow hedging reserve (4.6) (13.0) (15.1)
Cost of hedging reserve (2.9) (1.9) (3.5)
Translation reserve 4.6 4.8 4.9
========== ========== ===============
Attributable to members of Skipton Building Society 1,866.2 1,633.6 1,705.7
----------------------------------------------------------- ========== ========== ===============
Non-controlling interests 32.1 - -
----------------------------------------------------------- ========== ========== ===============
Total members' interests 1,898.3 1,633.6 1,705.7
----------------------------------------------------------- ========== ========== ===============
Total members' interests and liabilities 28,972.8 26,104.6 28,263.4
----------------------------------------------------------- ========== ========== ===============
Skipton Building Society
Results for the half year ended 30 June 2021
Consolidated statement of cash flows
6 months to 6 months to 12 months to
30.06.21 30.06.20 31.12.20
GBPm GBPm GBPm
--------------------------------------------------------------------------- ------------ ------------ -------------
Cash flows from operating activities
Profit before tax 159.2 34.4 118.8
Adjustments for:
Impairment (credit) / charge on loans and advances to customers (14.8) 19.1 25.7
Loans and advances written off, net of recoveries (0.7) (0.1) (0.7)
Impairment (credit) / losses on liquid assets (0.1) (0.1) 0.1
Impairment losses on trade receivables - 0.4 0.9
Impairment of goodwill - 2.0 2.0
Impairment of joint ventures - 1.0 1.5
Depreciation and amortisation 63.8 18.9 38.1
Impairment of property, plant and equipment, right-of-use assets and
investment property 0.1 - 2.6
Income Statement charge / (credit) charge for fair value of subsidiary
management incentive
scheme liability 8.1 (0.4) 1.2
Fair value gains on equity share investments (2.2) - (0.1)
Interest on subordinated liabilities and subscribed capital 5.8 2.2 6.3
Interest on lease liabilities 0.8 0.6 1.3
Profit on disposal of property, plant and equipment, investment property
and intangible assets - - 0.5
Profit on disposal of treasury assets (0.1) - (0.6)
Share of profits from joint ventures (0.9) (0.6) (3.4)
Profit on disposal of subsidiary undertakings (0.3) (0.5) (0.8)
Fair value losses / (gains) on equity release portfolio 18.6 (17.6) (19.7)
Fair value gains on step-acquisition of Group undertakings (26.9) - -
Fair value (gains) / losses on share warrants (1.1) 0.6 (0.1)
Realised losses on equity release portfolio 0.2 - 0.1
Other non-cash movements (24.5) (13.2) (20.0)
============ =============
185.0 46.7 153.7
Changes in operating assets and liabilities:
Net movement in prepayments and accrued income (21.1) 2.2 5.8
Net movement in accruals and deferred income (2.9) (41.4) (35.1)
Net movement in provisions for liabilities (1.2) (3.0) (4.8)
Net movement in fair value of derivatives (118.0) 101.4 59.2
Net movement in fair value adjustments for hedged risk 102.8 (110.8) (39.6)
Fair value movements in debt securities 16.3 (12.4) (14.7)
Net movement in loans and advances to customers (961.5) (936.7) (1,725.7)
Net movement in shares 750.2 267.4 1,376.3
Net movement in amounts owed to credit institutions and other customers (85.2) (323.3) 785.7
Repayment of amounts owed to credit institutions acquired on purchase of (94.0) - -
subsidiary undertaking
Net movement in debt securities in issue (116.8) 490.4 97.7
Net movement in loans and advances to credit institutions 134.7 (189.3) (152.5)
Net movement in other assets (2.7) 5.9 1.3
Net movement in other liabilities (65.5) (2.1) (15.6)
Income taxes paid (26.6) (16.5) (31.7)
============ =============
Net cash flows from operating activities (306.5) (721.5) 460.0
--------------------------------------------------------------------------- ============ ============ =============
Skipton Building Society
Results for the half year ended 30 June 2021
Consolidated statement of cash flows (continued)
6 months to 6 months to 12 months to
30.06.21 30.06.20 31.12.20
GBPm GBPm GBPm
--------------------------------------------------------------------------- ------------ ------------ -------------
Net cash flows from operating activities (306.5) (721.5) 460.0
--------------------------------------------------------------------------- ============ ============ =============
Cash flows from investing activities
Purchase of debt securities (776.9) (1,507.4) (2,414.6)
Proceeds from maturities and disposal of debt securities 266.3 1,263.0 3,108.2
Purchase of property, plant and equipment and investment property (5.0) (6.2) (11.6)
Purchase of intangible assets (3.1) (2.0) (3.9)
Proceeds from disposal of property, plant and equipment, investment
property and intangible
assets 1.4 0.5 0.9
Dividends received from joint ventures 2.1 - 1.1
Contingent consideration received following disposal of subsidiary 6.4 6.4 6.4
Purchase of subsidiary undertakings in the year, net of cash acquired (121.8) - -
Investment in equity share investments (0.1) - (0.1)
Purchase of other business units (0.2) (1.2) (1.3)
Proceeds from disposal of associate 7.8 - -
============ ============ =============
Net cash flows from investing activities (623.1) (246.9) 685.1
--------------------------------------------------------------------------- ============ ============ =============
Cash flows from financing activities
Exercise of share options in subsidiary management incentive scheme (0.8) (0.6) (0.6)
Purchase of non-controlling interests (0.6) - -
Proceeds from issue of subordinated liabilities - - 348.6
Interest paid on subordinated liabilities and subscribed capital (5.8) (2.2) (4.6)
Interest paid on lease liabilities (0.8) (0.6) (1.3)
Payment of lease liabilities (20.8) (7.7) (16.3)
============ ============ =============
Net cash flows from financing activities (28.2) (11.1) 325.8
--------------------------------------------------------------------------- ============ ============ =============
Net (decrease) / increase in cash and cash equivalents (958.4) (979.5) 1,470.9
Cash and cash equivalents at 1 January 3,315.8 1,845.1 1,845.1
Decrease / (increase) in impairment loss allowance on cash and cash
equivalents 0.1 0.2 (0.2)
============ ============ =============
Cash and cash equivalents at end of period 2,357.5 865.8 3,315.8
--------------------------------------------------------------------------- ============ ============ =============
Analysis of the cash balances as shown within the Statement of
Financial Position:
As at As at As at
30.06.21 30.06.20 31.12.20
GBPm GBPm GBPm
---------------------------------------------------- ---------- ---------- ----------
Cash in hand and balances with the Bank of England 2,286.9 819.8 3,237.8
Mandatory reserve deposit with the Bank of England (81.1) (65.7) (71.9)
2,505.8 754.1 3,165.9
Loans and advances to credit institutions 151.7 111.7 149.9
Cash and cash equivalents at end of period 2,357.5 865.8 3,315.8
---------------------------------------------------- ---------- ---------- ----------
[1] Included in the 'Fair value gains on step-acquisition of
Group undertakings' line in the Income Statement.
[2] Measured between January 2021 and June 2021.
[3] The net customer satisfaction score is calculated using an
in-house survey of c.3,000 Society members, by subtracting the
percentage of members who are dissatisfied (those scoring
satisfaction with the Society as 1-3 on a scale of 1-7) from the
percentage of members who are satisfied (those scoring satisfaction
as 5-7 on the same scale).
[4] Source: CACI's Current Account & Savings Database,
latest available comparable market data for the five months ended
31 May 2021.
[5] The digital satisfaction score is calculated using an
in-house survey of c.31,000 Society members and shows the
percentage of members who are satisfied (those scoring satisfaction
as 6-7 on a scale of 1-7).
[6] Administrative expenses as a percentage of mean total
assets. Mean total assets is the average of total assets as at 31
December 2020 and 30 June 2021 as shown within the Statement of
Financial Position.
[7] Source: Bank of England statistics, 'Lending secured on
dwellings' for the 6 months to 30 June 2021.
[8] Source: UK Finance industry arrears data (residential
mortgages in arrears by more than three months) as at 31 March
2021.
[9] Source: Bank of England statistics, 'UK deposits from
households' for the 6 months to 30 June 2021.
[10] Stated on a like-for-like basis, taking into account
Countrywide's figures prior to its acquisition and adjusted for
closed branches.
[11] Connells group excluding Countrywide.
[12] Stated on a like-for-like basis, taking into account
Countrywide's figures prior to its acquisition and adjusted for
closed branches.
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