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Principality announces 2004 annual results

Amanda Jarvis

February 9, 2005

Highlights include:-
Total assets increased by £473.3m to £4,051.5m, a new record for the Society
Gross mortgage lending increased by 11% to £1,117m
Profit before tax increased to £18.9m
Reserves increased from £199.3m to £211.1m
Members’ savings exceed £3bn for the first time in the Society’s history
Awarded the Western Mail ‘Welsh People Development Company of the Year’

Commenting on the Society’s performance, Principality’s Chief Executive, Peter Griffiths, said: “The business has gone from strength to strength during 2004 against a backdrop of exceptional regulatory change for the sector. The amount of resource dedicated to delivering the new mortgage regulation changes was significant and I am delighted the team has produced a very commendable set of financial results in a fiercely competitive marketplace.

“At the end of the year, the business was positioned exactly as detailed in our three year business plan and the financial results show both strong growth and profits ahead of schedule. I am delighted that we have built a reputation as a business which invests heavily in its staff. We have made a significant investment in improved customer service and we now look to deliver a modernised corporate image building on our reputation for trusted and credible advice. We will also introduce a broader product range and greater accessibility and service choice for our members across Wales and the borders.”

The financial highlights for the year include two key milestones as Principality assets exceeded £4bn and members’ savings exceeded £3bn for the first time in the Society’s history. This is mainly due to the Society’s growing portfolio of products and competitive rates. The Society also raised £60million of additional capital through a successful issue of Permanent Interest Bearing Shares to fund the growth of its business.

Peter Griffiths added: “The Society is continuing to identify new income streams as we build complementary businesses to support our core business of providing mortgages and investments. Over the year we have benefited from strong performances in related businesses with the successful introduction of a new surveying and valuations team, and the commercial lending division celebrated a £250million increase in its lending since its expansion two years ago.”

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The Society’s subsidiary estate agency, Peter Alan Limited, delivered a strong profit before tax of £0.8m in a market which declined in the last quarter. The housing market remains uncertain and the likelihood is that 2005 profit in this subsidiary will fall back.

“We have also recently made a significant investment in the personal secured loans marketplace through an acquisition of a local company, Loan Link Limited. Our plans were aided by a Regional Selective Assistance Grant and we value the support of the Welsh Assembly Government and key agencies that assisted us with the project. We are looking to create approximately 160 new jobs in South Wales over the next couple of years as we build a subsidiary company – Nemo Personal Finance Limited – that will manufacture and distribute a range of secured personal loan products,” said Peter Griffiths.

Peter Griffiths concluded: “We have remained prudent lenders in a buoyant marketplace and have very low levels of default and arrears, leaving us well positioned to deal with a slowdown in the housing market should it arise during the coming year.

“We now move into the final year of our three year change programme bringing some exciting developments to the Society. We are currently rolling-out our new corporate identity with a focus on improving our image and awareness to a wider marketplace, whilst delivering distribution channels that members, both current and future, may wish to use in addition to our branch network. Our focus will be on delivering a consistent, high quality service to our members and to continue to provide competitive products for member benefit.”

Peter Davies, Chairman of Principality Building Society, said: “The Board remains firmly of the opinion that by remaining a building society we shall be best able to meet current and future members’ needs through the provision of competitive mortgage and savings products coupled with first class service. This is illustrated by a further extension to our branch network, opening two new branches during 2004 in Wrexham and Llanelli and relocating our branches in Ebbw Vale and Shrewsbury to bigger, better locations. We have also planned for the opening of a brand new branch in Llandudno in 2005.”

The Principality Group employs more than 800 members of staff throughout Wales and the borders, and is a major contributor to community projects through its sponsorship programme which supported a total of 126 grass-roots activities during 2004.


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