Newcastle 125/8 Regulatory News (NBSR)

9 Mar 2007 07:00

Newcastle Building Society09 March 2007 Strictly embargoed until 7:00am Friday 9 March 2007 Newcastle Building Society today announces its results for the year ended 31December 2006 Key highlights: • Merger with Universal Building Society successfully completed on 31 December with all systems fully integrated on that date and additional branches open for business as usual on 2 January 2007. • Significant new contracts secured with leading financial institutions. • Group profit after tax amounted to £8.1 million, an increase of 15.7% when compared to the previous year. • Retail funding inflows increased by more than £200 million during the year and our 50+ Account continues to prove a popular choice for many of our customers. • Following the merger, assets now stand at £4.42 billion, up 14.5% when compared to 2005. • Despite industry concerns of rising debts, the credit quality of our lending book remains very good with only 0.34% of our portfolio with arrears of more than 2.5% of the balance. Commenting on the results, Chief Executive Colin Seccombe said: 'The most significant development during the year crystallised on 31 December2006 when the Newcastle merged with our close neighbour, the Universal BuildingSociety. I am delighted to announce the success of this merger, which wasendorsed by an overwhelmingly positive response from Universal members with 98%of them voting to accept it, and which has enhanced the Society's position asthe largest building society in the North East. Expanding our branch network to37 branches and increasing its financial strength, the merger provides thecombined Society's membership and its staff with greater opportunities in thefuture. Throughout 2006, the Society continued to promote its IT capabilities and corebusiness processing services to a range of new business partners and withconsiderable success. A number of major new contracts to provide fully managedinternet savings accounts to other financial institutions, including theIcelandic Bank, Landsbanki (under the 'Icesave' banner), were tendered for andconcluded during the year. These fully complement our existing and verysuccessful arrangements with Bradford & Bingley and others. This has resulted in a healthy increase in income during the year and prompted asignificant recruitment drive to attract 70 new permanent staff across allbusiness activities. We now employ over 1,000 people in the North East andcontinue to expand. Our prepaid cards division celebrated its first anniversary in 2006 with theproduction of the millionth card. The Society now has the most Mastercardapproved card schemes in the UK. This is a very young market and has a greatdeal of potential within a number of different sectors, from parents who wish totrack children's spending, unbanked adults to migrant workers and employers. 2006 was an exciting year for the Society with a great many developments whichdrive the business forward. In 2007 we shall be building on these areas andexploiting other opportunities that arise. We continue to look for everyopportunity to provide the products and services needed by our members andbusiness partners.' NEWCASTLE BUILDING SOCIETY GROUP GROUP INCOME STATEMENTS 2006 2005 £m £m Interest and similar income 194.1 188.4Interest expense and similar charges -161.2 -155.3 ____________________Net interest receivable 32.9 33.1 Other income and charges 12.5 9.6 ____________________Total operating income 45.4 42.7 Administrative expenses -33.5 -28.0Impairment losses -0.3 0.1 ____________________Profit before taxation 11.6 14.8 Taxation -3.5 -4.4 ____________________Profit for the financial year from continuing operations 8.1 10.4 Discontinued operations - -3.4 ____________________Profit for the financial year 8.1 7.0 ==================== STATEMENT OF RECOGNISED INCOME AND EXPENSE 2006 2005 £m £m Change in accounting policy on adoption of IAS 32 and IAS 39 - -5.6Actuarial loss on retirement benefit obligations 0.4 -4.0Merger bonus payable to qualifying members and borrowers -8.3 -Transferred from investment property revaluation reserve onreclassification of property - 0.4Taxation 2.3 1.8 ___________________Net income recognised directly in reserves -5.6 -7.4 Profit for the year 8.1 7.0 ___________________Total recognised income and expense since last annualaccounts 2.5 -0.4 =================== NEWCASTLE BUILDING SOCIETY GROUP GROUP BALANCE SHEETS 2006 2005 £m £m ASSETS Liquid assets 773.3 653.3 Derivative financial instruments 12.4 29.0 Fair value adjustments for hedged risk 28.4 29.8 Loans and advances to customers 3,542.2 3,076.6 Investment securities 0.1 10.3 Property, plant and equipment 27.0 23.7 Investment property 2.1 0.1 Other assets 35.5 38.4 Non-current assets available for sale 0.5 2.2 _________________________ TOTAL ASSETS 4,421.5 3,863.4 ========================= 2005 2005 £m £m LIABILITIES Shares 2,671.5 2,060.3 Deposits and debt securities 1,391.8 1,488.9 Derivative financial instruments 14.6 33.1 Fair value adjustments for hedged risk 12.4 3.8 Other liabilities 46.5 23.4 Retirement benefit obligations 8.8 15.6 Subordinated liabilities 60.7 49.7 Subscribed capital 19.9 19.9 Reserves 195.3 168.7 _________________________ TOTAL LIABILITIES 4,421.5 3,863.4 ========================= NEWCASTLE BUILDING SOCIETY GROUP CONSOLIDATED CASH FLOW STATEMENTS 2006 2005 £m £m Cash flows from operating activities 96.3 109.9 Taxation paid -1.1 -3.9 Payment into defined benefit pension scheme -9.0 -4.5 Cash flows from investing activities -87.6 -15.9 Cash flows from financing activities -5.8 -5.9 ________________________Net (decrease) / increase in cash -7.2 79.7 ________________________ Net (decrease) / increase in cash -7.2 79.7 Cash and cash equivalents at start of year 228.2 148.5 ________________________ Cash and cash equivalents at end of year 221.0 228.2 ======================== NOTES 1. The financial information set out above, which was approved by the Board of Directors on 8 March 2007, does not constitute accounts within the meaning of the Building Societies Act 1986. 2. The financial information for the years ended 31 December 2006 and 31 December 2005 has been extracted from the Accounts for those years and on which the auditors have given an unqualified opinion. 3. The announcement will be sent to holders of the Society's permanent interest bearing shares. Copies are available from the Society's Principal Office at Portland House, New Bridge Street, Newcastle upon Tyne NE1 8AL. ENDS For more information please contact Charlotte McGregor, The WriglesworthConsultancy on 020 7845 7900 or email: www.wriglesworth.com This information is provided by RNS The company news service from the London Stock Exchange