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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Aldermore | LSE:ALD | London | Ordinary Share | GB00BQQMCJ47 | ORD GBP0.10 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 312.40 | 312.40 | 312.60 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMALD
RNS Number : 5585B
Aldermore Group PLC
04 April 2017
4 April 2017
Aldermore Group PLC (the "Company")
ANNUAL REPORT AND ACCOUNTS FOR THE YEARED 31 DECEMBER 2016 AND NOTICE OF AGM
The Company announces that, in accordance with Listing Rule 9.6.1, the documents listed below have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.
- 2016 Annual Report and Accounts - Notice of 2017 Annual General Meeting - 2017 Annual General Meeting Form of Proxy
The mailing to shareholders of the documents mentioned above has commenced and the 2016 Annual Report and Accounts and the Notice of 2017 Annual General Meeting will shortly be available to view on the Company's website at www.investors.aldermore.co.uk.
The Company's 2017 Annual General Meeting will be held at 11.00am on Tuesday 16 May 2017 at the offices of Linklaters LLP, 1 Silk Street, London EC2Y 8HQ.
The information set out below should be read in conjunction with the Company's full year results announcement issued on 2 March 2017. Together these constitute the material required by DTR 6.3 to be communicated to the media in full unedited text through a Regulatory Information Service. This material is not a substitute for reading the Company's 2016 Annual Report and Accounts. Page references in the text below refer to page numbers in the 2016 Annual Report and Accounts.
For further information:
Rachel Spencer
Company Secretary
+44 (0)20 3553 4202
Ryan Jones
Deputy Head of Investor Relations
+44 (0) 20 8185 3146
Risk management, internal control and viability reporting
Assessment of principal risks
As described further in the risk management section, the Board is responsible for determining the nature and extent of the principal risks it is willing to take in order to achieve its strategic objectives. The Board is also ultimately responsible for maintaining sound risk management and internal control systems. In line with requirements of the UK Corporate Governance Code, published by the Financial Reporting Council in September 2014 (the "Code"), the Directors have performed a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.
The principal risks are further described on page 33 and the current emerging risks are described on pages 34 and 35.
Principal risks
Principal risk Mitigation Commentary --------------------- ----------------------------------------------------------- ------------ -------------------- Credit Risk ICON Group cost of risk The risk that * Focus lending where we have specific expertise Up arrow remains low at 23bps customers (2015: 19bps) are unable to make reflecting their loan * Limit concentration of lending by size, geography an the maturation of repayments. d the book and a move sector to less benign conditions. The heightened * Obtain appropriate level of security cover and uncertainty perform affordability testing at origination for the UK economy following the referendum * Embed clear lending policies in each business area vote, and the implementation of the result, has * Regularly review performance against risk appetite increased the possibility of higher future * Stress test the portfolio to test resilience credit losses. --------------------- ----------------------------------------------------------- ------------ -------------------- Capital and Liquidity ICON The Group's capital Risk * Monthly monitoring of capital adequacy against Right arrow remains stable and The risk that we targets and forecasts well above fail to hold regulatory sufficient minimum or appropriate * Maintenance of a liquidity buffer based on stressed requirements. reserves requirements We successfully to support growth, raised additional meet regulatory GBP60m Tier 2 requirements, or * Daily monitoring of liquidity buffer capital repay obligations in October 2016. as they fall due. The Group's * Stress testing and sensitivity analysis of both liquidity capital and liquidity position remains stable. * Maintenance and annual review of the Contingency Funding Plan * Ongoing review, analysis and impact assessment of regulatory changes --------------------- ----------------------------------------------------------- ------------ -------------------- Market Risk ICON The Group's approach The risk that market * We do not seek to take or expose the Group to market Right arrow remains prudent movements adversely risk and we do not carry out proprietary trading and underlying risks impact the Group. remain unchanged. * We match interest rate structures of assets and liabilities to create a natural hedge where possible * Unmatched interest rate exposures are hedged with derivative 'Swap' contracts --------------------- ----------------------------------------------------------- ------------ -------------------- Operational Risk ICON The Group continues The risk of loss * Embed and ensure all staff understand and follow the Right arrow to invest in its due to failure in Operational Risk Management Framework IT infrastructure processes, systems including Cyber or human error, controls and including * Analysis of Risk Event Reporting and follow-up resilience. outsourcing. actions * Monitoring of the operational risk profile, and risk event reporting * Continuing to invest in information security and cyber controls following our Cyber strategy * Implementation of a Third Party Supplier Framework --------------------- ----------------------------------------------------------- ------------ -------------------- Compliance, Conduct ICON Whilst the financial and Financial Crime * The Group provides simple and transparent products Right arrow services sector Risk and operates solely in the UK market. remains subject The risk of sanctions to increasing or financial loss regulation as a result of a * Provide and monitor against clear policy frameworks, and scrutiny we failure to comply including Conduct Risk and Product Governance believe our risks
with applicable remain unchanged laws, including from the prior year. anti-money laundering * Continued investment in staff training and awareness and the risk of causing unfair outcomes * Horizon scanning and impact assessment of potential or detriment to regulatory change customers. --------------------- ----------------------------------------------------------- ------------ -------------------- Reputational Risk ICON We believe the risks Failure to meet * All governance committees have reputational risk Right arrow remain unchanged the expectations considerations as a key part of their remit from the prior year. and standards of our customers, investors, * Group Corporate Affairs monitors reputational risk, regulators or other under the executive direction of the Group CEO counterparties. * All employees are made aware of their responsibilities under the Bank's Reputational Risk Policy * Maintenance of open and transparent relationships with regulators and other key stakeholders --------------------- ----------------------------------------------------------- ------------ --------------------
Emerging Risks
Themes Risk What we did in What we expect Likelihood change 2016 in 2017 and Direction from last year ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Regulatory change/ intervention ---------------------------------------------------------------------------------------------------------------------- Basel Committee In December 2015 We conducted The IFRS9 work ICON on Banking Supervision. the BCBS issued an impact assessment on credit models Up arrow a second consultative of the proposed (see Emerging December 2015 document, (Revisions changes, followed Risks IFRS9) Second consultation to the Standardised by scenario analysis takes us closer on Revisions Approach for including feasible to the sophistication to the Standardised Credit Risk) management actions. required for Approach for containing, amongst an IRB approach Credit Risk proposals others, proposals The Bank also to capital which to increase the undertook a feasibility may help to mitigate capital treatment study on transitioning the risk of future of buy-to-let from Standardised changes in capital and commercial to an Internal requirements. real estate lending. Ratings Based We will continue If these proposals (IRB) approach to monitor the were implemented to capital. This cost and benefits as outlined, included a gap associated to the capital analysis against moving to IRB, requirements current regulatory as the regulatory for these market requirements changes and timeframes segments would and has informed for implementation increase significantly our thinking become clear. and require the into possible execution of responses, including management actions the possibility to mitigate their of applying for impact. regulatory approval to operate in an IRB environment. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- IFRS 9 New reporting We assessed the We are on track ICON requirements impact of IFRS with enhancements Right arrow under IFRS 9 9 and have initiated to our credit introduce forward a project plan risk models and looking credit to ensure compliance expect to be loss models which with the new IFRS9 compliant will lead to standard ahead ahead of January changes in the of its proposed 2018 when the timing of impairment implementation new accounting recognition. date of 1 January standard is introduced. The requirement, 2018. which comes in to effect from 1 January 2018, requires the development of new risk models. The risk is that the Group is unable to deliver these before new regulation takes effect. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Buy-To-Let Mortgages Potentially adverse Continued monitoring Further review ICON Tax Changes and impact on buy-to-let of Buy-to-Let of PRA's expectations Right arrow revised PRA market of changes business levels. in terms of portfolio Underwriting to UK tax regime landlords and Standards and failure to Amendment to use of personal comply with Buy-to-Let income in affordability expectations affordability calculation, of the regulator calculation (interest with expectation set out in PRA cover ratio and that all changes Supervisory Statement stress rate) to approach considered on buy-to-let in December 2016 necessary will Underwriting to meet expectations be introduced Standards issued in PRA's supervisory by the 30 September in September statement. 2017 deadline. 2016. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Economic and political environment ---------------------------------------------------------------------------------------------------------------------- The UK's decision Heightened economic The Group incorporated The Group will ICON to leave and political these risks in continue to monitor Right arrow the European risks following stress testing the situation Union the UK's decision conducted during and will decide to leave the 2016. on an appropriate European Union. response, based As a UK focused on internal scenario Group, we are planning, as sheltered from the situation the more direct develops. impacts of the Referendum, such as access to European markets but we are exposed to the wider economic impacts. To date we have seen no direct impact on either the lending or deposit sides of our business. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- International The geopolitical We have monitored The medium-term ICON economic and environment presents these risks, outlook is unclear Up arrow political environment risks to global and the UK economy and there remains
markets, including has remained a possibility the impact of robust in the that material a new administration face of these international in the USA, domestic and events could deflationary global headwinds. adversely affect concerns in the As a UK-focused the UK, in addition EU and continued business we have to any EU exit political risks not felt any impacts. These in Russia and adverse consequences could act as the Middle East. across our trading a drag on the franchise. UK economy and affect the sectors to which we lend. We aim to manage these risks by maintaining a well-diversified product base, and remaining firmly focused on the UK. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Exposure to real We have a substantial The Group continued The risks are ICON estate lending exposure to monitor and expected to remain Right arrow to the residential, manage the performance unchanged in buy-to-let, and of our real estate 2017. commercial property backed lending, sectors. Any and identified property value no significant falls, or increase change in performance in unemployment in 2016. may lead to a rising number We also continued of defaults. to enforce our underwriting criteria, which includes affordability testing at the point of origination. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Interest rate The low interest We conducted We will continue ICON environment rate environment, specific stress to monitor the Right arrow introduced to testing on our external environment stimulate growth loan portfolio and respond to following the and maintained any interest financial crisis, strict underwriting rate rises as has persisted criteria, which appropriate. for longer than includes stressing first expected. affordability If interest rates rates at interest are increased, rates above those or growth slows, being paid today. unemployment may rise and loan servicing costs may increase, which could cause an increase in credit losses. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Competitive environment ---------------------------------------------------------------------------------------------------------------------- New entrants The competitive The risk of competition We will continue ICON and increased landscape contains has been incorporated to monitor the Right arrow competition risks from new in our forward external environment entrants, increased planning process and adapt accordingly. competition from and the external incumbent lenders market is monitored and disruptive on a consistent products/software basis. solutions potentially affecting both lending and deposit taking activities. The effect of this could result in lower volume, higher customer attrition and/or lower net interest margins. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- Technology risk ---------------------------------------------------------------------------------------------------------------------- Cyber-crime Cyber-crime is During 2015, This remains ICON a significant and continuing a key risk area Right arrow threat in our into 2016, we and the Group increasingly strengthened will continue interconnected our defences to invest in world and exposes against cyber-crime. ongoing security all businesses improvements. and in particular We have a cyber financial services risk response companies to plan, which involves financial as working with well as reputational our technology damage. partners, and Cyber threats ensures that continue to evolve there is a practical as demonstrated response and by high-profile appropriate escalation. cases. The increased size of the Group, and growing customer base, increases the profile of the Group to would-be cyber attackers. ----------------------- ----------------------- ----------------------- ------------------------ ----------------- System The Group has The Group has Continued focus ICON failure/outsourcing a number of major controls in place during 2017 as Right arrow outsource partners in relation to the updated framework and critical sourcing and is implemented supplier relationships onboarding suppliers. across the supplier who are key elements In 2016, work estate. of the overall was begun to supply chain. further enhance The failure of the supplier one of these management framework. key partners could significantly impact the Group's operations and reputation. ----------------------- ----------------------- ----------------------- ------------------------ -----------------
Statement of Directors' responsibilities in respect of the Annual Report and Accounts and the financial statements
The Directors are responsible for preparing the Annual Report and Accounts and the Group and parent company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of the Group and parent company financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent; -- state whether they have been prepared in accordance with IFRSs as adopted by the EU; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a strategic report, Directors' Report, Remuneration Report and corporate governance statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
-- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
-- the Strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.
Phillip Monks,
Chief Executive Officer
1 March 2017
41. Related parties
(a) Controlling parties
Prior to IPO, the Group was controlled by AnaCap Financial Partners, II L.P. (52.3 per cent. of voting rights) and AnaCap Financial Partners, L.P. (47.7 per cent. of voting rights) who were the sole voting shareholders of Aldermore Group PLC.
On 13 March 2015, the Company was admitted to the LSE, offering 117,934,783 Ordinary shares, of which 78,872,283 shares were sold by the Selling shareholders. Upon admission, AnaCap Financial Partners L.P., AnaCap Financial Partners II L.P., AnaCap Derby Co-Investment (No.1.) L.P. and AnaCap Derby Co-Investment (No.2.) (collectively "the Principal Shareholders") and the Company entered into the 'Relationship agreement'. Details of the Relationship agreement were provided within the Prospectus issued prior to the admission to the LSE.
On 15 September 2015, the Principal Shareholders sold 40,885,613 Ordinary GBP0.10 shares on the open market.
At 31 December 2016, AnaCap Financial Partners L.P., AnaCap Financial Partners II L.P., AnaCap Derby Co-Investment (No.1.) L.P. and AnaCap Derby Co-Investment (No.2.) L.P held 8.33 per cent, 11.01 per cent, 11.26 per cent and 9.54 per cent of the Company's ordinary share capital respectively. Although the Principal Shareholders are no longer a controlling party for the Group they continue to have significant influence and are therefore considered to be a related party.
The Group had agreements in place with Syscap Limited which was previously under the control of Anacap Financial Partners II L.P and Anacap Financial Partners, L.P. Syscap Limited ceased to be a related party when Anacap sold their interest on 20 February 2015. Details of the previous agreements in place are listed in the Aldermore Group PLC 2015 report and accounts.
During 2016, the Group also incurred fees of GBP0.1 million in relation to the Directors who represent the Principal Shareholders (2015: GBP0.1 million).
b) Key management personnel
Key Management Personnel ("KMP") comprise Directors of the Group and members of the Executive Committee. Details of the compensation paid (in accordance with IAS 24) to KMP are:
2016 2015 GBP'000 GBP'000 ---------------------------------------- -------- -------- Emoluments 5,207.8 5,035.8 ---------------------------------------- -------- -------- Payments in respect of personal pension plans 104.4 45.9 ---------------------------------------- -------- -------- Contributions to money purchase scheme 37.3 71.3 ---------------------------------------- -------- -------- Loan forgiveness - 162.3 ---------------------------------------- -------- -------- Termination benefits 1,161.9 - ---------------------------------------- -------- -------- Share-based payments 2,439.1 1,196.5 ---------------------------------------- -------- -------- 8,950.5 6,511.8 ---------------------------------------- -------- --------
The Group made payments of GBP37,300 in aggregate in respect of seven key persons' personal pension plans during the year ended 31 December 2016 (31 December 2015: GBP45,900, four key persons).
Key persons' emoluments includes GBP1.0 million of deferred bonus (31 December 2015: GBP0.8 million).
Share-based payments ("SBP")
As at 1 January 2015, certain KMP held a number of shares in the B, C and E classes. In preparation for the IPO, the rights to these shares were varied and the holdings re-designated.
A number of KMP were awarded shares in the Company under new share incentive plans created upon IPO. In total, KMP were granted awards over 1,822,022 shares. Further details of the share schemes, including performance conditions are provided in Note 37. In addition, a number of KMP participated in the Sharesave Plan, holding options over a total of 88,828 shares at 31 December 2016.
Transactions with KMP
The aggregate value of transactions and outstanding balances related to KMP (as defined by IAS 24: "Related Party Disclosures") were as follows:
2016 2015 GBP'000 GBP'000 --------------- --------- -------- Deposits --------------- --------- -------- At 1 January 2,019.2 1,565.0 --------------- --------- -------- Net movement (1,053.7) 454.2 --------------- --------- -------- At 31 December 965.5 2,019.2 --------------- --------- --------
The table above includes transactions and balances relating to KMP in post at the end of the year.
From 1 January 2015 until admission to the LSE, a number of KMP had loans with the Company. Upon admission, the Company forgave loans totalling GBP0.2 million. A number of KMP continue to have loans and deposits in the ordinary course of business with the Group.
At 31 December 2016, there is one loan with KMP for the value of GBP40,000 (31 December 2015: two loans, GBP126,000). All current transactions, loans and deposits, with KMP are conducted through the ordinary course of business with the Group.
During 2015 and up to admission, interest rates charged on loan balances outstanding from related parties were lower than the rates that would be charged in arm's length transactions. Interest was charged on these loans at an annual rate of 0.8 per cent above one month LIBOR.
All deposit arrangements have been operated by the Group on commercial terms and conditions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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