Announcing the results John Goodfellow, chief executive of Skipton, said the mutual had broken previous records in every one of its key financial areas. He commented: “Beginning with our first subsidiary in 1988, the Skipton Group has grown year-on-year and 2006 is shaping up to be a most satisfying year. I’m extremely confident that these excellent results for the first six months will continue for the remainder of the year.”
Financial highlights include:
At 30 June 2006:
• Group assets £9.9 billion
• Group pre-tax profits £73.4 million
• Group interest rate margin 1.03 per cent
• Society pre-tax profits £29.5 million
• Society interest rate margin 0.71 per cent
• Society management expenses ratio 55p per £100 assets
Year-on-year:
• Group assets grew by 14.3 per cent
• Group mortgage balances grew by 17.6 per cent
• Group retail investment balances grew by 14.8 per cent
• Society mortgage balances grew by 14.6 per cent
Results – The Skipton Group, which comprises the building society and its 17 subsidiaries, has delivered excellent financial results. Strong performances are evident in many areas: assets are up 14.3 per cent year on year, core Society management expenses continue their downward trend to 55p per £100 assets, and the Society’s interest rate margin has narrowed once again to 0.71 per cent, demonstrating the value the Society continues to pass back to its members. The half year Group profit figures include a one-off credit of £15.1 million following the sale of 4 per cent of the equity in the property website Rightmove.co.uk as part of its flotation in March. (The Group, through Connells, still retains a 20.7 per cent share.)
Skipton Building Society – A further reduction in the Society’s interest rate margin, already one of the lowest in the industry, proves once again the value Skipton delivers to its members – the smaller the margin, the smaller the difference between the rates savers are paid on their investments and borrowers are charged on their mortgages. Savings products such as the Branch Access account, which has appeared in 138 best buy tables in the national press in the first six months of the year, have played their part in increasing retail balances by 14.8 per cent year on year. In addition, products from Skipton’s consistently competitive mortgage range, which have appeared in over 50 best buy tables, have led to gross mortgage applications for the first half of 2006 totalling over £1.3 billion - far exceeding business levels for any previous half-year lending period. The value of mortgage assets has subsequently seen a year-on-year increase of 14.6 per cent.
Group Companies – Earlier in July, the Group welcomed its latest acquisition, Sterling International Brokers (Sterling), bringing the number of subsidiaries to 17. A money broking service based in London, Sterling continues the strategy of investing in complementary businesses to add value to the core saving and borrowing businesses.
A previous acquisition which is now really delivering results is the Sequence chain of estate agencies, which was purchased by Connells in 2003. Comprising 11 high street estate agency brands, Sequence has been re-organised to follow Connells’ already successful model, transforming it from a loss-making to a profit-making business in less than three years. This, coupled with Connells’ own strong performance (aided by a healthy housing market), has produced excellent first half results.
Homeloan Management Ltd (HML) consistently succeeds and has recently acquired new business resulting in it managing total mortgage assets approaching £40 billion.
Based in Leeds, the Skipton Information Group (comprising Eurodirect, GMAP and Callcredit) continues to grow. In particular, Callcredit has recently announced a strategic agreement with Lloyds TSB to supply consumer credit referencing services, with the bank using a number of Callcredit data solutions in its customer management and acquisition processes.
After a 20 year working relationship, the Group acquired a significant shareholding in Jade Software Corporation, a technology company based in New Zealand, in late 2004. Jade has recently sold its healthcare division, boosting its profit figures and allowing it to concentrate on its core services, primarily in the fields of finance, logistics and education.
Goodfellow concluded: “The broad spectrum of services offered by the organisations within the Group is allowing each of them to play its part in delivering these record results. For me, this illustrates the ethos of ‘modern mutuality’ Skipton has long championed and is a crucial tool in creating the maximum value possible for members.”
