Newcastle 125/8 Regulatory News (NBSR)

26 Feb 2008 07:00

Newcastle Building Society26 February 2008 Strictly embargoed until 7:00am 26 February 2008 NEWCASTLE BUILDING SOCIETY ANNOUNCES FINANCIAL RESULTS FOR THE YEAR ENDING 31 DECEMBER 2007 Key highlights: • Group profit up 52% to £17.6m. • 48% increase in other income, supported by expansion of the Solutions business and high demand for investment products through Newcastle Financial Services. • Total assets increased by 9%. • Gross lending exceeded £1bn for the first time. • A 20% increase in jobs to 1,200. Commenting on the results, Chief Executive, Colin Seccombe said: "I am delighted to report very strong results for 2007. Despite marketturbulence in the second half of the year, the Group has shown real progress inall parts of its business, both the traditional member based savings and lendingactivity, as well as the innovative Solutions divisions. This has meant we havebeen successful in our key aim of extending sources of income to support thedelivery of competitive products to members and strengthened further the levelof capital we hold to protect them. "This performance is as a result of: - The merger with the Universal Building Society, effective on 31 December 2006, which delivered cost efficiencies and a strong demand from Universal members for the broader product range and advice based services offered by Newcastle. - A strong performance in lending, with new lending being above £1bn for the first time, and a focus on good quality business. Once again, no lending was undertaken to the non-conforming sectors and we have no exposure of any kind to the US sub-prime market. - Other income generation has been strong as the benefits emerge of our investment over recent years in the Solutions business, which now manages over £10bn in savings accounts alone on behalf of major financial institutions. Our position as providers of financial advice also significantly strengthened, with Newcastle Financial Services nearly doubling the volume of business compared with 2006. - Through our Card Solutions operation, we now issue the most MasterCard approved card programmes in the UK and were awarded 'Best Multi-Channel Marketing Programme' at its recent European conference, and Best Prepaid Card Marketing Campaign at The Cards Awards 2008 in London. "With this progress has come job creation and long term investment. Not onlywere there no redundancies as a result of the merger with the Universal, but wealso created over two hundred additional positions in 2007. We are now one ofthe largest private sector employers in the North East. We are also delighted toreport that we acquired the lease of a new site this year, where we intend tocreate a further 500 jobs over the next five years. "We come into the year with strong, high quality liquidity and a very soundfunding base thanks to our traditional focus on retail savers rather thanwholesale money markets. The net lending undertaken in 2007 was financedentirely by retail savers. "I am especially pleased that the Society's improvement in performance is sobroadly based across the whole of our business. As an innovative business wecontinue to expand and diversify in the face of increased competition. And, trueto our roots as a mutual building society we are, and will remain, committed togrowing our core member business." NEWCASTLE BUILDING SOCIETY GROUPCONSOLIDATED INCOME STATEMENTS 2007 2006 £m £m Interest receivable and similar income 264.8 193.5Interest expense and similar charges (221.1) (161.2) --------- ---------Net interest receivable 43.7 32.3 Other income and charges 18.5 12.5Gains less losses from financial instruments (2.9) 0.6 --------- ---------Total operating income 59.3 45.4 Administrative expenses (41.2) (33.5)Impairment losses (0.5) (0.3) --------- ---------Profit before taxation 17.6 11.6 Taxation expense (5.5) (3.5) --------- ---------Profit for the financial year 12.1 8.1 ========= ========= STATEMENTS OF RECOGNISED INCOME AND EXPENSE 2007 2006 £m £m Actuarial gain on retirement benefit obligations 4.8 0.4 Payments made to qualifying members and borrowers inrespect of merger - (8.3) Taxation on items taken directly through reserves (1.5) 2.3 --------- ---------Net income / (expense) recognised directly in reserves 3.3 (5.6) Profit for the financial year 12.1 8.1 --------- ---------Total recognised income and expense since last annual 15.4 2.5accounts ========= ========= NEWCASTLE BUILDING SOCIETY GROUPCONSOLIDATED BALANCE SHEET 2007 2006 £m £m ASSETS Liquid assets 922.8 773.3 Derivative financial instruments 14.5 28.4 Fair value adjustments for hedged risk 34.1 12.4 Loans and advances to customers 3,772.5 3,542.2 Investment securities - 0.1 Property, plant and equipment 30.0 27.0 Investment property 8.9 2.1 Other assets 32.5 35.5 Non-current assets available for sale 0.4 0.5 --------- ---------TOTAL ASSETS 4,815.7 4,421.5 ========= ========= 2007 2006 £m £m LIABILITIES Shares 2,921.7 2,671.5 Deposits and debt securities 1,525.9 1,391.8 Derivative financial instruments 37.3 14.6 Fair value adjustments for hedged risk 3.0 12.4 Other liabilities 33.0 46.5 Retirement benefit obligations 3.4 8.8 Subordinated liabilities 60.8 60.7 Subscribed capital 19.9 19.9 Reserves 210.7 195.3 --------- ----------TOTAL LIABILITIES 4,815.7 4,421.5 ========= ========== NEWCASTLE BUILDING SOCIETY GROUPCONSOLIDATED CASH FLOW STATEMENT 2007 2006 £m £m Cash flows from operating activities 188.6 96.3 Taxation paid (0.9) (1.1) Payment into defined benefit pension scheme (0.4) (9.0) Payments made to qualifying members and borrowers inrespect of merger (14.5) - Cash flows from investing activities (156.0) (87.6) Cash flows from financing activities (7.5) (5.8) --------- ---------Net increase / (decrease) in cash 9.3 (7.2) --------- --------- Net increase / (decrease) in cash 9.3 (7.2) Cash and cash equivalents at start of year 221.0 228.2 --------- ---------Cash and cash equivalents at end of year 230.3 221.0 ========= ========= NOTES 1. The financial information set out above, which was approved by the Board of Directors on 25 February 2008, does not constitute accounts within the meaning of the Building Societies Act 1986. 2. The financial information for the years ended 31 December 2007and 31 December 2006 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: Newcastle Building SocietyNicola Green, Corporate Communications Manager0191 244 2024 The Wriglesworth ConsultancySuman Katyal020 7845 7900 This information is provided by RNS The company news service from the London Stock Exchange