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RNS Number : 0004L

Manchester Building Society

27 September 2016

This announcement contains inside information

Manchester Building Society Results for the 6 months ending 30 June 2016

Following the announcement on 11 August 2016 Manchester Building Society Group ('the Society') confirms that, in line with expectations, the Society is reporting a loss for the 6 months ending 30 June 2016.

 
                                    Unaudited   Unaudited   Audited 
                                     6 months    6 months    12 months 
                                     to 30       to 30       to 31 
                                     June        June        December 
                                     2016        2015        2015 
                                                             GBP000 
                                     GBP000      GBP000 
 Total operating income             4,525       5,881       9,758 
 Administrative expenses 
  and depreciation                  (4,387)     (3,406)     (6,841) 
                                   ----------  ----------  ----------- 
 Operating profit before 
  impairment                        138         2,475       2,917 
 Impairment losses                  (1,430)     (126)       (3,219) 
 Financial Services Compensation 
  Scheme levy                       (108)       (371)       (277) 
                                   ----------  ----------  ----------- 
 (Loss) / profit for the 
  period before taxation            (1,400)     1,978       (579) 
 Tax credit / (expense)                         105         (4,295) 
                                   ----------  ----------  ----------- 
 (Loss) / profit for the 
  period                            (1,400)     2,083       (4,874) 
                                   ----------  ----------  ----------- 
 
   Total assets                       379,697     465,430     416,576 
 

6 months results summary:

- The decline in total operating income reflected the continued planned reduction in the size of the loan book and the 2015 results include GBP0.7m profit achieved from the sale of a minority stake in a trade investment in April 2015.

- Administrative expenses increased in the first half of 2016, mainly due to professional costs incurred in exploring options to secure the future of the Society. In addition, the Society has continued to incur costs in pursuing its legal claim against Grant Thornton LLP, the Society's previous external auditors.

- Impairment losses were GBP1.4m of which half relates to the Spanish lifetime mortgage portfolio with the remainder on other loan assets.

   -      The Society's reserves fell by GBP1.7m. 

- The accounts for the 6 month period have been prepared on a going concern basis of accounting and, as with the 2015 year end accounts, set out a "material uncertainty" regarding the long term future of the Society.

- The Society met its Individual Capital Guidance ("ICG") as at 30 June 2016. However, as a result of the loss in the 6 months ending 30 June 2016 the Society has a Common Equity Tier 1 ("CET 1") regulatory capital shortfall against its Combined Buffer requirement. The Society is preparing a Capital Conservation Plan to submit to the Prudential Regulation Authority ("PRA") which will consider potential measures to address this shortfall. The Board expects to discuss and consult on this plan with the PRA. The outcome and timing of the regulatory process is uncertain.

   -      The Society continues to have a strong liquidity position. 

Permanent Interest Bearing Share ("PIBS") coupon payments October 2016

- As announced separately today, the Society will not be paying the October coupon on the two tranches of PIBS in issue as, in order to conserve capital, such a distribution is prohibited under the Capital Requirements Directive ("CRD IV") article 141.

Commenting on the results, David Harding, Chairman said:

"The continued run-off of the Society's assets, certain specific legacy loan exposures and costs incurred in the development of strategic options with a view to securing the Society's future have impacted financial performance and profitability in the first half.

"The Board is continuing to explore a number of options which individually or in combination aim to secure the future of the Society, enable it to continue to meet capital requirements and improve the quality of its regulatory capital."

2016 Half Year Financial Information

The accounts for the 6 months ending 30 June 2016 are available to view on the Society's website:

http://manchesterbuildingsociety.co.uk/Main/FinancialInformation

The person responsible for arranging the release of this announcement on behalf of Manchester

Building Society is Christopher Gee, Society Secretary.

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

END

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September 27, 2016 12:23 ET (16:23 GMT)

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