Newcastle 125/8 Regulatory News (NBSR)

31 Jul 2007 07:00

Newcastle Building Society31 July 2007 Strictly embargoed until 7am, Tuesday 31 July 2007 Newcastle Building Society today announces its resultsfor the 6 months ended 30 June 2007 Key highlights: • Group profit after tax amounted to £6.5m, an increase of 80.6% when compared to 30 June 2006. • 14.4% year-on-year increase in assets. • 100 new jobs created in the first half of the year. • Strong growth in other income generating activities. Commenting on the results, Chief Executive Colin Seccombe said: 'I am very pleased to report that we have seen a marked improvement in theperformance of the Society, as compared to the corresponding period last year,with operating profits having increased by 91.8%, from £4.9m to £9.4m. There are several reasons for this upturn: i We have concentrated on improving our interest margin through changing the mix of our lending, in a risk-controlled manner, and by also refocusing on generating retail funding. As a consequence, the reported net interest margin has improved from 80p at 30 June 2006 to 96p at 30 June 2007. ii We have benefited from the merger with the Universal Building Society, effective on 31 December 2006, through cost savings and increased financial services income. iii Other income generation has been strong as the benefits of our new partnership with Legal & General on general insurance begin to emerge; and the growth in financial advice consultants has resulted in a notable improvement in the performance of our financial services subsidiary. iv Our outsourced savings management offering to third parties is developing well with funds under administration increasing from £6bn at the end of 2006 to almost £10bn at this half-year end. v On prepaid cards, we now operate the most Mastercard approved card programmes in the UK and were awarded 'Best Multi-Channel Marketing Program' at their recent European conference. With this progress has come job creation. Not only were there no redundancies asa result of the merger with the Universal, but we have also created anadditional 100 new jobs in the first half of 2007. What is more, I am further encouraged by events since the end of June - our netlending for July was strong, we have launched another savings managementcontract, commenced development work on our first major mortgage processingcontract and we have benefited still further from our relationship with BMWFinancial Services. I am especially pleased that this improvement in performance is so broadly basedacross the whole of our business rather than resulting from exceptionalperformance in one particular area.' NEWCASTLE BUILDING SOCIETY GROUPINTERIM FINANCIAL INFORMATION Summary Consolidated Income Statements Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30-June-2007 30-June-2006 31-Dec-2006 £m £m £m Interest and similar income 123.7 93.5 194.1Interest expense and similarcharges -102.5 -78.1 -161.2 --------- --------- ---------Net interest receivable 21.2 15.4 32.9 Other income and charges 8.0 5.6 12.5 --------- --------- ---------Total operating income 29.2 21.0 45.4 Administrative expenses -19.8 -16.1 -33.5Impairment losses - - -0.3 --------- --------- ---------Profit before taxation 9.4 4.9 11.6 Taxation -2.9 -1.3 -3.5 --------- --------- ---------Profit for the financial period 6.5 3.6 8.1 ========= ========= ========= Statement of Recognised Income and Expense Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30-June-2007 30-June-2006 31-Dec-2006 £m £m £m Actuarial gain on retirementbenefit obligations - - 0.4 Payments made to qualifyingmembers and borrowers in respectof merger - - -8.3 Taxation - - 2.3 --------- --------- ---------Net expense recognised directly inreserves - - -5.6 Profit for the period 6.5 3.6 8.1 --------- --------- ---------Total recognised income andexpense since last annual accounts 6.5 3.6 2.5 ========= ========= ========= NEWCASTLE BUILDING SOCIETY GROUPINTERIM FINANCIAL INFORMATION Summary Consolidated Balance Sheets Unaudited Unaudited Audited 30-June-2007 30-June-2006 31-Dec-2006 £m £m £m ASSETS Liquid assets 812.2 653.1 773.3 Derivative financial instruments 28.2 28.2 28.4 Fair value adjustments for hedgedrisk 9.9 10.1 12.4 Loans and advances to customers 3,479.7 3,070.6 3,542.2 Investment securities - - 0.1 Property, plant and equipment 27.8 23.4 27.0 Investment property 4.7 0.1 2.1 Other assets 46.9 66.7 35.5 Non-current assets held for sale 0.4 1.1 0.5 ---------- ---------- ---------- TOTAL ASSETS 4,409.8 3,853.3 4,421.5 ========== ========== ========== Unaudited Unaudited Audited 30-June-2007 30-June-2006 31-Dec-2006 £m £m £m LIABILITIES Shares 2,770.9 2,401.2 2,671.5 Deposits and debt securities 1,265.8 1,157.8 1,391.8 Derivative financial instruments 13.5 12.6 14.6 Fair value adjustments for hedgedrisk 10.2 9.6 12.4 Other liabilities 58.2 24.0 46.5 Retirement benefit obligations 8.8 6.6 8.8 Subordinated liabilities 60.7 49.7 60.7 Subscribed capital 19.9 19.9 19.9 Reserves 201.8 171.9 195.3 ---------- ---------- ---------- TOTAL LIABILITIES 4,409.8 3,853.3 4,421.5 ========== ========== ========== NEWCASTLE BUILDING SOCIETY GROUPINTERIM FINANCIAL INFORMATION Summary Consolidated Cash Flow Statements Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30-June-2007 30-June-2006 31-Dec-2006 £m £m £m Net cash flows from operatingactivities 39.1 -6.7 96.3 Taxation paid 0.5 -1.0 -1.1 Payment into defined benefitpension scheme - -9.0 -9.0 Net cash flows from investingactivities -113.4 -95.9 -87.6 Net cash flows from financingactivities -3.4 -2.8 -5.8 ---------- ---------- ---------- Net decrease in cash and cashequivalents -77.2 -115.4 -7.2 ---------- ---------- ---------- Net decrease increase in cash andcash equivalents -77.2 -115.4 -7.2 Cash and cash equivalents at thestart of period 221.0 228.2 228.2 ---------- ---------- ---------- Cash and cash equivalents at theend of the period 143.8 112.8 221.0 ========== ========== ========== Key performance figures Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30-June-2007 30-June-2006 31-Dec-2006 % % % Gross capital as a percentage ofshares and borrowings 7.22 7.06 7.01 Profit after tax as a percentageof mean total assets 0.30 0.19 0.20 Management expenses as apercentage of mean total assets 0.91 0.85 0.81 Cost income ratio 67.80 76.67 73.79 ========== ========== ========== * Expressed on an annualised basis Notes on the financial statements 1. The interim financial information set out above, which was approved by the Board of Directors on 30 July 2007, does not constitute accounts within the meaning of the Building Societies Act 1986. 2. The financial information for the 12 months to 31 December 2006 has been extracted from the accounts for that year which have been filed with the Financial Services Authority and on which the auditors gave an unqualified opinion. 3. The interim financial information for the 6 months to 30 June 2006 is unaudited. 4. The interim financial information has been prepared on the basis of the accounting policies adopted for the year ended 31 December 2006. 5. The balance sheets at 31 December 2006 and 30 June 2007 include assets taken on as a result of the transfer of engagements from the Universal Building Society on 31 December 2006. However, there is nothing included in the trading performance for the year ended 31 December 2006 in respect of Universal, since the transfer took place on 31 December 2006. 6. 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, Newcastle upon Tyne NE1 8AL. Independent review report to Newcastle Building Society IntroductionWe have been instructed by the Society to review the Group financial informationfor the six months ended 30 June 2007 which comprises the Consolidated BalanceSheet as at 30 June 2007 and the related Consolidated Income Statement,Statement of Recognised Income and Expense and Cash Flow Statement for the sixmonths then ended. We have read the other information contained in the interim report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditand therefore provides a lower level of assurance. Accordingly we do not expressan audit opinion on the financial information. This report, including theconclusion, has been prepared for and only for the Society for the purpose ofthe Listing Rules of the Financial Services Authority and for no other purpose.We do not, in producing this report accept or assume responsibility for anyother purpose or to any other person to whom this report is shown or into whosehands it may come save where expressly agreed by our prior consent in writing. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. PricewaterhouseCoopers LLPChartered AccountantsNewcastle upon Tyne30 July 2007 (a) The maintenance and integrity of the Newcastle Building Society website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. (b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 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