Manchester Building Society back in profit but still facing uncertain future

Manchester city centre

Crisis his Manchester Building Society made a profit of £500,000 compared with a £1.6m loss in the equivalent period in 2018.

But the building society has said in a six month update there is still a serious doubt about its long term future following  its costly legal battle with accountants Grant Thornton.

It revealed it has now splashed out more than £2.5 in costs to Grant Thornton.

The society said total operating income of £3.9m was £800,000 lower than in the same period last year.

£400,000 of the reduction related to one-off benefits in 2018 whilst £400,000 resulted from lower balances and higher funding costs.

Administrative expenses fell by £3.6m compared with the same period in 2018.

The reduction was largely a result of lower fees in relation to the legal case against Grant Thornton.

Total assets fell by 5% since 31 December 2018 and by 9% since 30 June 2018.

The building society said the accounts for the six month period have been prepared on a going concern basis of accounting and, in line with previous accounts, set out a “material uncertainty” regarding the long term future of the organisation.

The society said it is continuing to discuss its strategic future and capital position with the financial authorities.

In July Manchester Building Society was granted permission by the Supreme Court to appeal a decision in its case against Grant Thornton.

The long-running case is related to issues over hedge accounting at the society, which was forced to shore up its finances with an emergency £18m capital injection in 2013.

As a result it launched a £49m negligence claim against Grant Thornton over advice in relation to hedge accounting in early 2015.

The High Court awarded damages of just £335,727 to the society in May last year.

Costs were also awarded to Grant Thornton which have amounted to around £2.5m.

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