During the first six months of this financial year the decision was made to transfer the business of Bristol & West plc (the ‘Company’) and its subsidiaries to other statutory entities within the Bank of Ireland Group. This corporate restructure, which was successfully completed on 1 October 2007 under the terms of the Financial Services and Markets Act 2000 and was approved by the High Court, is explained in more detail in Note 7 of the financial statements. As part of the corporate restructure the Company disposed of all its subsidiaries to its immediate parent company, Bank of Ireland UK Holdings plc.
The Company’s result for the year ended 31 March 2008 is a profit before tax of £25.6m against a profit before tax in the previous financial year of £31.0m.
The component parts of the result are as follows:
| 2008 £m |
2007 £m |
||
| Profit/(loss) before tax on continuing operations | 5.6 | (0.1) | |
| Profit before tax arising from the corporate restructure Profit before tax on transferred businesses (Note 1) Profit before tax on discontinued operations |
13.5 6.5 20.0 |
- 31.1 31.1 |
|
| Profit before tax |
25.6 |
31.0 |
Note 1: For year ended 31 March 2007 the profit before tax on the transferred businesses of £31.1m was split £16.3m in H1 and £14.8m in H2.
The four key elements of the adverse year on year variance in profit before tax of £5.4m were as follows.
Firstly the fact that the results for year ended 31 March 2007 contain twelve months of profit in respect of the transferred business, whereas the results for year ended 31 March 2008 contain just the first six months of profit. This resulted in the £14.8m profit before tax in H2 of the prior year not being repeated.
Secondly the Company made a profit before tax on the transferred business up until the date of its disposal of £6.5m. This was £9.8m (40%) lower than the profit of £16.3m for the same period in the previous financial year (which is part of the full year profit of £31.1m shown above). Whilst the Company experienced good growth in residential lending up to the date of transfer of the business, particularly in the buy-to-let market, the key factor adversely influencing the performance in the period prior to the corporate restructuring was a narrowing of interest margins reflecting a more competitive market place and higher funding costs.
Thirdly, partially offsetting the two negative variances above, the Company made a profit before tax of £13.5m relating to the corporate restructure itself.
Finally the non-operational net assets retained by Bristol & West plc include interest-bearing cash deposits held to meet its liabilities as they fall due, including the payment of future preference share dividends. The full year profit before tax in respect of these non-operational assets, which are included within ‘continuing operations’ increased to £5.6m from a loss of £0.1m for the same period in the previous financial year. This improvement results from interest earned on a higher level of inter-group deposits following the corporate restructure.
Following the transfer of the business of the Company on 1 October 2007 Bristol & West plc ceased to be authorised and regulated by the Financial Services Authority and in addition ceased to hold a Banking Licence from that date.
Up until the date of the transfer of its business the Company continued to support the community through a number of initiatives. These included its participation in the Bank of Ireland Group’s "Give Together Initiative" which gave each employee one day’s leave per year to volunteer their time to a cause of their choice.
These initiatives continue to be undertaken within The Governor and Company of Bank of Ireland following the transfer of the business and employees.
I would like to thank all our staff for their contribution during the financial year. Their commitment and enthusiasm has been a significant factor in the achievement of success for Bristol & West plc and they will continue to be central to delivering on the Bank of Ireland Group’s ambitions in the UK market.
Following the transfer of the business to other parts of the Bank of Ireland Group the Company ceased to have any operations or customers.
However, as mentioned above, the Company will continue to hold interest-bearing cash deposits to meet its liabilities as they fall due, including the payment of future preference share dividends
Desmond E Crowley