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RNS Number : 4064H
Manchester Building Society
12 March 2018
Manchester Building Society Group ("the Society") Results for the year ended 31 December 2017
2017 2016 GBP000 GBP000 Total operating income 9,580 9,210 Administrative expenses and depreciation (7,955) (8,663) Operating profit before impairment 1,625 547 Impairment losses (2,376) (3,448) Financial Services Compensation Scheme levy (29) (67) Loss for the period before taxation (780) (2,968) Tax expense - (382) Loss for the period (780) (3,350) --------- --------- Total assets 304,191 382,304
The increase in total operating income included a release of GBP0.5m of provisions following the completion of a remediation project. This was partially offset by an underlying GBP0.2m reduction in interest income reflecting the continued planned reduction in the size of the loan book which fell 13% from GBP289m to GBP251m, largely mitigated by a reduction in funding from GBP340m to GBP265m.
Administrative expenses reduced by GBP0.7m in the year mainly as a result of reduced professional fees and cost reductions following a detailed review of the Society's cost base. There were, however, additional legal fees associated with the claim against Grant Thornton LLP, the Society's previous external auditors.
Impairment losses (net) were GBP2.4m. There was a charge of GBP2.8m, principally relating to the EUR58m Spanish lifetime book which was adversely affected by property values. Other items included GBP0.4m credit following an increase in the value of the Society's head office building.
The Society's reserves reduced in 2017 by GBP0.8m to negative reserves of GBP10.0m.
The Society continues to have a strong liquidity position.
The 2017 accounts have been prepared on a going concern basis of accounting and, as with the 2016 accounts, set out a "material uncertainty" regarding the long-term future of the Society.
Strategic future and capital position
The Society met all regulatory requirements throughout the year on a total capital basis, but did not meet the qualitative standards for the level of Common Equity Tier 1 ("CET 1") regulatory capital.
The Board continues to discuss and consult with the PRA on the strategic future and capital position of the Society. In ongoing dialogue with the PRA, we continue to consider further the potential measures for addressing the shortfall to the CET 1 capital requirements.
Regulatory compliance of second charge loan portfolios
During 2017 the Society completed a project to ensure regulatory compliance of two acquired second charge loan portfolios.
As at 31 December 2017, the redress provision on these accounts was GBP0.1m (2016: GBP1.7m).
Legal claim against Grant Thornton UK LLP
The Board continued to take legal advice regarding the Society's claim for damages against the previous external auditors, Grant Thornton UK LLP. The trial commenced in January 2018 with judgment not expected for several months.
Permanent Interest Bearing Share ("PIBS") coupon payments April 2018
As a result of the shortfall against qualitative standards for the level of CET 1 regulatory capital, the requirements under CRD IV article 141 regarding capital conservation, mean the Society may be prohibited from making the PIBS coupon payments due in April 2018. A further announcement will be made in due course regarding the April PIBS coupon payments.
2017 Annual Report & Accounts
The accounts for the 12 months ending 31 December 2017 are available to view on the Society's website:
http://manchesterbuildingsociety.co.uk/Main/FinancialInformation
Enquiries
Andy Donald - Maitland 020 7379 5151 adonald@maitland.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
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March 12, 2018 06:45 ET (10:45 GMT)
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