Arbuthnot Banking Group has achieved a profit before tax for 2018 of £6.8m, compared to the 2017 figure of £2.5m profit.
Arbuthnot’s Asset Based Lending (ABL) division commenced trading in May 2018, and has already issued facilities to the value of £43m and has drawn balances of £25m. In January ABL issued a further £29m of facilities. Services offered at Arbuthnot ABL include invoice discounting, supported by stock, plant & machinery, property and cash flow lending.
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The investment made in this business totalled £0.9m net of revenues earned in the year for Arbuthnot. The investment in Asset Based Lending, Specialist Finance and Arbuthnot Direct lowered the reported profits by £1.6m as the start-up costs of new staff and operating systems was absorbed by the profit of the Group.
These businesses have been planned to move toward a breakeven point in 2019 or early 2020 and then reach profitability in 2021.
Henry Angest, chairman and chief executive of Arbuthnot, said: “The Group has had another good year with further deployment of capital. Diversity of earnings increased with good progress being made by the commercial bank, along with the launch of our new ventures, asset based lending, Arbuthnot Direct and specialist finance. These new businesses should give the Group a strong basis from which to develop in the future.”
For the group as a whole operating income increased by 24% to £67.9m. Written loan volume at Arbuthnot Latham increased 1% to £469m. Net assets were £196m, compared to £236m in 2017. The results include a £25.7m net loss on the de-recognition of Secure Trust Bank, relating to the departure of Henry Angest and Andrew Salmon leaving the STB board.
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By GlobalData“As a result of this the Group was deemed to no longer have significant influence over the associated company and thus the shareholding is now recognised as a financial investment,” said Angest. “This required the investment to be marked to market. Given the decline in the share price of STB over the previous years, this assessment resulted in a mark to market loss of £28.7m. I always felt it was inappropriate that we were required to recognise this unrealised gain in 2016 and now feel justified as we write off a previous profit that we never should have been required to take.”
Recent Arbuthnot Bank ABL deals include a £10m (€11.7m) asset finance based deal with VNA Trucks, and a £2m invoice discounting facility for a management buyout of a retail food supply chain company, Ralph Coleman International.
RAF
Angest also added that Renaissance Asset Finance (RAF), which the business acquired in 2017, had not attained the levels of business performance that were expected for its £6.5m management pay-out agreed at its point of sale.
“While (RAF) continues to perform robustly, increasing its customer loan balances by 21% in the year, this will not be sufficient to attain the levels forecast in the earn out agreement,” said Angest.
“Accordingly, the liability has been reduced by £2.6m and the corresponding amount recorded as a one off profit in the Income Statement.”
