Scarborough Announces Impressive Annual Results

Press release published on 26 June 2006 by Scarborough Building Society

And Accompanies Them With A Message About Britain’s Growing Debt Culture

Announcing impressive annual results for top 20 building society Scarborough, Chief Executive John Carrier also gave a message about contemporary Britain’s debt culture.

Outlining the Scarborough Group’s performance for the 2005/6 financial year, today, Mr Carrier said that record asset growth and increases in mortgage and savings balances were a direct result of a ‘can do’ business approach where change and adaptation were the norm.

But he added that such a flexible approach would be even more essential in future to enable the Society, and the financial services sector as a whole, to cater for rapidly changing socio-economic factors leading to higher levels of debt – particularly among young people.

He commented: ‘Our strategy of targeted investment in the development of new systems and infrastructure, to enhance our client and customer service offering, has contributed to our achievement of an 8% increase in our Group assets to a record £1.73 billion, a 10% rise in pre-tax profit to £5.6 million – and a 15% uplift in savings balances, taking these to a record £1.22 billion.

However, he added: ‘In modern Britain, increasing levels of personal debt are frequently being taken for granted. Young people are borrowing an average of £20,000 to fund higher education costs before they even start work, and continuing house value increases are making home ownership a real difficulty for many people.’

‘That means traditional mortgage products will need to be adapted by more and more mainstream lenders in the future.’

‘Providers like ourselves are going to have to be able to offer ‘out of the box’ solutions to enable people to get a footing on the first or second rung of the property ladder – either for first time buyers or for those who are rebuilding their credit history after suffering financial difficulties in the past.’

‘I am delighted to announce another year of strong performance during which we have started to offer new kinds of financial solutions, such as a new range of credit repair mortgages and competitive buy-to-let products to suit the needs of every kind of landlord.’

‘Our mortgage product range will continue to evolve in the future as we respond to cater for every kind of modern customer.’

• Highlights of Scarborough’s annual results
• Group pre-tax profit up 10%, to £5.6 million
• Society management expenses ratio reduced again, to 0.62%
• Group mortgage balances up 7%, to £1.35 billion
• Group assets increased by 8%, to a record £1.73 billion
• Group savings balances up 15%, to a record £1.22 billion.

NB: These results are prepared under International Financial Reporting Standards (see Editor’s notes).

Scarborough Building Society Financial Results For The Year Ended 30 April 2006 Summary

	2006	2005
	£m	£m
INCOME STATEMENT
Net Interest Receivable	16.2	14.0
Other Income and Charges	5.0	6.4
	21.2	20.4
Administrative Expenses	(15.6)	(15.3)
Provisions	-	-
Profit before Taxation	5.6	5.1
Taxation	(1.7)	(1.6)
Retained Profit for the Financial Year	3.9	3.5
BALANCE SHEET
Liquid Assets	358	305
Mortgages	1,346	1,260
Fixed and Other Assets	29	47
Total Assets	1,733	1,612
Shares and Borrowings	1,609	1,510
Other Liabilities	22	18
Subordinated Liabilities	35	15
Subscribed Capital	15	15
Reserves	52	54
Total Liabilities	1,733	1,612

Editor’s Notes

International Financial Reporting Standards (IFRS) - These results are our first to be published under IFRS and the accounting policies are in accordance with all standards and related interpretations that have been adopted by the European Union as at 30 April 2006. Whilst profits under IFRS are expected to be more volatile the net impact on this year’s result has not been material.

Comparison between 2006 and 2005 is not necessarily like for like due to the provisions in IFRS 1 First time adoption of International Reporting Standards for adoption of International Accounting Standard (IAS) IAS39 Financial Instruments; Recognitionand Measurement and IAS32 Financial Instruments: Disclosure and Presentation on 1 May 2005.

Reconciliations showing the impact on the Group and Society opening balance sheets are shown in the full Annual Report and Accounts.

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