Newcastle 125/8 Regulatory News (NBSR)

2 Mar 2005 07:00

Newcastle Building Society02 March 2005 Strictly embargoed Strictly embargoed until 7:00am Wednesday March 2, 2005 Newcastle Building Society today announces its results for the year ended 31 December 2004 Key features: • Growth in total assets of 6.36% to £3.27bn. • Management expenses ratio falls to 0.85% from 0.89%. • Strong solvency ratio of 13.02%. • No residential properties in possession at year end. • Launch of managed savings service for Bradford & Bingley plc. • Credit rating upgrades from both Moodys and Fitch. Commenting on the results Chief Executive, Robert Hollinshead, said: "For some time it has been evident that competitiveness within our coreresidential market has been driving reductions in margin for most lenders with aconsequential impact on profitability. In response to this challenge, weembarked on a strategy of developing for other organisations system, product andservice offerings rooted in our core skills and founded upon our unique IT capability. 2004 saw the fruition of this with the successful launch of a fully managedinternet savings account for Bradford & Bingley plc. With an elapsed time ofonly four months from inception to public availability, this clearly illustratesthe flexibility and creativity we can offer our customers. These attributes area powerful attraction to others, as advanced negotiations with two otherprestigious institutions currently demonstrates. Those same strengths saw us working together with 14 other building societiesduring the year in activities as diverse as providing a mortgage broking servicefor customers who fall outside the normal lending criteria to manufacturingcapital guaranteed savings products; from syndicating commercial investmentproperty loans to making available complete managed computer systems. With all financial organisations subject to the same market pressures, as wellas the ever present burden of regulatory compliance, we believe there will begrowing demand for the facilities we offer. Our core business remains important to us and continues to benefit frominnovative and award winning products, such as our family offset mortgage, andstrong risk management. It is particularly satisfying that at the end of theyear we had no residential properties in possession and arrears cases had fallento a record low level. Of our new lending, less than 10% was at higher than 75%LTV. The constant demands to become ever more efficient do not abate and our progress- largely achieved through harnessing the benefits of a continuous programme ofinvestment in technology - is well illustrated by the fall in our managementexpense ratio to 0.85% from 0.89% last year. As compared to previous years, our growth in 2004 was more modest, but this isentirely consistent with our commitment not to chase volume through loss makingproducts or become over dependent on generating the associated arrangement feeincome. We do not create long term value for all our members by offering shortterm gains to some. With our strategy now delivering and the benefit of a strong solvency margin, itwas pleasing that in recent months the society's long and short term creditratings were upgraded by both Moodys and Fitch." ENDS Summary Group Income and Expenditure Accounts 2004 2003 As restated £m £m Net interest receivable 35.0 35.6Other income and charges 9.9 10.9Administrative expenses -28.7 -27.3Provisions 0.2 - --------- ---------Profit on ordinary activities before tax 16.4 19.2Tax on profit on ordinary activities -4.4 -5.7 --------- ---------Profit for the financial year 12.0 13.5 ========= ========= Summary Group Balance Sheets 2004 2003 As restated £m £mASSETS Liquid assets 562.4 517.9Mortgages 2,481.0 2,376.2 --------- ---------Mortgages subject to non-recourse finance 223.3 222.5Non-recourse finance -202.8 -202.7 --------- --------- 20.5 19.8Other loans 102.7 81.0 --------- ---------Other loans subject to non-recourse finance 45.5 46.7Non-recourse finance -5.1 -23.1 --------- --------- 40.4 23.6Fixed and other assets 66.4 59.2 --------- ---------TOTAL ASSETS 3,273.4 3,077.7 ========= ========= LIABILITIES Shares 1,948.7 1,932.8Borrowings 1,054.9 883.2Other liabilities 27.9 30.8Subordinated liabilities 49.7 49.7Subscribed capital 19.9 19.9Investment property revaluation reserve 0.3 0.3General reserve 172.0 161.0 --------- ---------TOTAL LIABILITIES 3,273.4 3,077.7 ========= ========= Group Cash Flow Statements 2004 2003 £m £m Net cash inflow / (outflow) from operating activities 69.3 -7.7Returns on investments and servicing of finance -------- --------Interest paid on subordinated liabilities -3.0 -1.5Issue costs of subordinated liabilities - -0.1Interest paid on subscribed capital -2.3 -2.3Interest paid on lease purchase contracts - -0.1 -------- -------- -5.3 -4.0Tax paid -5.5 -4.8Capital expenditure and financial investment -------- --------Purchase of tangible fixed assets -3.2 -4.9Sale of tangible fixed assets 0.2 0.3Purchase of financial fixed assets -1,019.1 -1,342.7Sale and maturity of financial fixed assets 963.9 1,336.1 -------- -------- -58.2 -11.2 -------- --------Net cash inflow / (outflow) before financing 0.3 -27.7Financing -------- --------Issue of subordinated liabilities - 25.0Principal repayments under lease purchase contracts -0.3 -0.5 -------- -------- -0.3 24.5 -------- --------Decrease in cash - -3.2 ======== ======== Key performance figures 2004 2003 As restated % % Gross capital as a percentage of shares and borrowings 8.05 8.20Profit after tax as a percentage of mean total assets 0.38 0.48Management expenses as a percentage of mean total assets under management 0.85 0.89 Notes 1. The financial information has been prepared on the basis of the accounting policies adopted for the years ended 31 December 2004 and 31 December 2003 and extracted from the accounts for those years and on which the auditors have given an unqualified opinion. 2. In 2004, the Society adopted the provisions of Financial Reporting Standard No.17 ' Retirement Benefits' with the comparative figures restated accordingly. 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. This information is provided by RNS The company news service from the London Stock Exchange