Sant Uk.10te% Regulatory News (SAN)

24 Mar 2006 07:30

Abbey National PLC24 March 2006 Abbey National plc - Preliminary Announcement Year Ended 31 December 2005 On 8 February 2006, Abbey National plc ("Abbey") issued a statement summarisingthe results for the year ended 31 December 2005. That statement was unauditedand did not comprise a preliminary results announcement. It contained a proformaincome statement, as well as narrative on business trends and new business. This statement is a follow-up to the original results announcement and comprisesAbbey's preliminary results announcement. It contains audited primary financialstatements, including a statutory income statement, balance sheet and cash flowstatement. For further details of business trends it should be read inconjunction with the Trading Statement issued on 8 February 2006. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRS), this announcement does not itself contain sufficient information tocomply with IFRS. The Company expects to publish full financial statements thatcomply with IFRS imminently. Summarised consolidated statutory income statement and selected ratios 31 December 31 December 2005 2004 £m £mNet interest income 1,207 1,463Non-interest income 1,533 1,382Total operating income 2,740 2,845Administrative expenses (1,724) (2,221)Depreciation and amortisation (199) (547)Provision for bad and doubtful debts (218) 55Provisions for other liabilities and charges (3) (233)Amounts written off fixed asset investments - 80Profit/(loss) on ordinary activities before tax 596 (21)Tax on profit/(loss) on ordinary activities (176) (33)Profit/(loss) on ordinary activities after tax 420 (54)Tier 1 capital ratio 10.0% 10.4%Equity Tier 1 capital ratio 6.6% 7.0%Closing risk weighted assets (£m) 55,972 56,171 2005 compared to 2004 Total profit before tax of £596m compared to a loss of £21m in 2004 marks asignificant improvement on 2004. Material movements by line include: • net interest income of £1,207m (2004: £1,463m) fell due to a reduction of £99m in Portfolio Business Unit reflecting lower level of interest earning asset, the non-recurrence of £50m of gains relating to the close-out of hedges, and a 6 basis point fall in the retail banking spread; • non-interest income of £1,533m (2004: £1,382m), up 11% as a result of improved fee performance in relation to mortgages, banking and unsecured personal lending. In addition, reduced losses on disposal of Portfolio Business Unit loans and securities contributed positively; • administrative expenses of £1,724m (2004: £2,221m) were down 22%. Personal Financial Services expenses fell £439m to £1,686m largely reflecting the benefits of the cost reduction programme and higher costs in 2004 associated with the sale of Abbey National plc to Banco Santander Central Hispano, S.A. including costs realised post acquisition. Portfolio Business Unit expenses fell due to the reduced size of operations; • depreciation and amortisation of £199m (2004: £547m) was down 64%. 2004 included a charge of £147m in connection with an impairment of goodwill in relation to Scottish Provident Limited distribution channels not repeated in 2005 and depreciation on operating lease assets of £123m (2004: £184m), down 33% reflecting the sale of leasing companies in the Portfolio Business Unit through the year; • a credit provision charge in relation to bad and doubtful debts of £218m (2004: £55m release). The 2004 release included a release of general provisions of £136m together with the release of £60m of provisions relating to Scottish Provident Limited contingent loans. Other movements in the credit provision charge include an increase in mortgage provisions of £12m. The remaining increase relates to unsecured lending, reflecting some modest credit quality deterioration in line with the industry, together with seasoning of the asset; • provisions for contingent liabilities and commitments decreased to £3m (2004: £233m). 2004 included a charge of £154m related to endowment misselling. Remediation costs related to misselling of £70m in 2005 were also charged to administrative expenses; • amounts written off fixed asset investments were nil in 2005 (2004: £80m release). The release reflected the disposal of Portfolio Business Unit assets for amounts in excess of their written down value. Consolidated Income Statement For the years ended 31 December 2005 and 2004 2005 2004 £m £mInterest and similar income 5,457 5,637Interest expense and similar charges (4,250) (4,174)Net interest income 1,207 1,463Fee and commission income 759 653Fee and commission expense (107) (115)Net fee and commission income 652 538Dividend income 1 1Net earned life assurance premiums 1,224 750Net trading income 3,124 846Other operating income 215 341Total operating income 6,423 3,939Net life assurance claims incurred and movement in policyholder liabilities (3,683) (1,094)Total income net of insurance claims 2,740 2,845Administration expenses (1,724) (2,221)Depreciation and amortisation (199) (547)Total operating expenses (1,923) (2,768)Impairment losses on loans and advances (218) 55Impairment recoveries / (losses) on fixed asset investments - 80Provisions for other liabilities and charges (3) (233)Operating profit/(loss) 596 (21)Share of profit of associates - -Profit/(loss) before tax 596 (21)Taxation expense (176) (33)Profit/(loss) for the year 420 (54)Attributable to:Equity holders of the company 420 (54)Minority interest - - Consolidated Balance Sheet As at 31 December 2005 and 2004 2005 2004 £m £mAssetsCash and balances at central banks 991 454Trading assets 58,231 -Derivative financial instruments 11,855 2,377Financial assets designated at fair value 30,597 -Loans and advances to banks 444 11,751Loans and advances to customers 95,467 109,416Debt securities - 37,010Equity securities and other variable yield securities - 10,792Available for sale securities 13 -Investment in associated undertakings 24 25Intangible assets 171 175Value of in force business 1,721 1,844Property, plant and equipment 314 262Operating lease assets 2,172 2,275Investment property - 1,228Current tax assets 235 242Deferred tax assets 796 501Other assets 4,003 6,381Total assets 207,034 184,733Deposits by banks 5,617 18,412Customer accounts 65,889 78,660Derivative financial instruments 11,264 3,665Trading liabilities 52,664 -Financial liabilities designated at fair value 7,948 -Debt securities in issue 21,276 37,067Other borrowed funds 2,244 722Subordinated liabilities 6,205 5,484Insurance and reinsurance liabilities 21,501 24,923Macro hedge of interest rate risk 13 -Other liabilities 3,190 8,844Investment contract liabilities 3,306 -Other provisions 253 302Current tax liabilities 288 161Deferred tax liabilities 886 1,064Retirement benefit obligations 1,380 1,197Minority interests - non-equity - 512Total liabilities 203,924 181,013Share capital 148 473Share premium account 1,857 2,164Retained earnings 1,105 1,083Total shareholders equity 3,110 3,720Total liabilities and equity 207,034 184,733 Consolidated Statement of Recognised Income and Expense For the years ended 31 December 2005 and 2004 2005 2004 £m £mExchange differences on translation of foreign operations 3 (2)Actuarial gains and losses on defined benefit pension plans (154) (70)Tax on items taken directly to equity 46 21Net Income/(loss) recognised directly in equity (105) (51)Profit/(loss) for the period 420 (54)Total recognised income and expense for the period 315 (105)Effect of changes in accounting policyIFRS transition adjustments at 1 January 2005:Retained earnings (293) - 22 (105)Attributable to:Equity holders of the parent 22 (105)Minority interest - - 22 (105) Consolidated cash flow statement For the years ended 31 December 2005 and 2004 2005 2004 £m £mNet cash flow from / (used in) operating activitiesProfit before tax 596 (21)Adjustments for:Non cash items included in net profit 92 (180)Change in operating assets (10,056) (677)Change in operating liabilities 4,270 (3,941)Income taxes paid (132) (12)Net cash flow from / (used in) operating activities (5,230) (4,831)Cash flows from / (used in) investing activitiesDisposal of subsidiaries, net of cash disposed 845 3,180Purchase of tangible and intangible fixed assets (329) (155)Proceeds from tangible and intangible fixed assets 190 240Proceeds from sale of investment properties 1,332 72Purchase of non-dealing securities (2) (2,237)Proceeds from sale and redemption of non-dealing securities - 3,031Net cash flow from / (used in) investing activities 2,036 4,131Cash flows from / (used in) financing activitiesIssue of ordinary share capital - 13Issue of loan capital 554 -Repayment of loan capital (458) (813)Dividends paid - (697)Net cash flows from / (used in) financing activities 96 (1,497)Net increase / (decrease) in cash and cash equivalents (3,098) (2,197)Cash and cash equivalents at beginning of the period 11,259 14,089Effects of exchange rate changes on cash and cash equivalents 80 (633)Cash and cash equivalents at the end of the period 8,241 11,259 Disclaimer Abbey National plc ("Abbey") is a wholly owned subsidiary of Banco SantanderCentral Hispano, S.A. ("Santander") SAN.MC, STD.N Founded in 1857, Santander hasover 60 million customers, approximately 10,000 offices and a presence in over40 countries. It is the largest financial group in Spain and Latin America, andis a major player elsewhere in Europe, including in the United Kingdom (throughAbbey) and in Portugal, where it is the 3rd largest banking group. ThroughSantander Consumer it also operates a leading consumer finance franchise inGermany, Italy, Spain and nine other European countries. Santander obtained a secondary listing of its ordinary shares on the LondonStock Exchange in 2005 and Abbey continues to have its preference shares listedon the London Stock Exchange. Nothing in this press release constitutes orshould be construed as constituting a profit forecast. Abbey and Santander both caution that this press release may containforward-looking statements. The US Private Securities Litigation Reform Act of1995 contains a safe harbour for forward-looking statements on which we rely inmaking such statements in documents filed with the US Securities and ExchangeCommission. Such forward looking statements are found in various placesthroughout this press release. Words such as "believes", "anticipates","expects", "intends", "aims" and "plans" and similar expressions are intended toidentify forward looking statements, but they are not the exclusive means ofidentifying such statements. Forward looking statements include, withoutlimitation, statements concerning our future business development and economicperformance. These forward looking statements are based on management's currentexpectations, estimates and projections and both Abbey and Santander cautionthat these statements are not guarantees of future performance. We also cautionreaders that a number of important factors could cause actual results to differmaterially from the plans, objectives, expectations, estimates and intentionsexpressed in such forward-looking statements. These factors include, but are notlimited to, (1) borrower credit quality and general economic conditions; (2)interest rates, foreign exchange rates, bond and equity prices and marketfactors; (3) operational risks; (4) legislation, regulatory and governmentaloversight; (5) strategic decisions regarding organic growth, the competitiveenvironment and potential acquisitions and disposals; (6) claims provisions ininsurance business; and (7) our success at managing the risks of the foregoing.The foregoing list of important factors is not exhaustive. When relying onforward-looking statements to make decisions with respect to Abbey or Santander,investors and others should carefully consider the foregoing factors and otheruncertainties and events. Such forward-looking statements speak only as of thedate on which they are made, and we do not undertake any obligation to update orrevise any of them, whether as a result of new information, future events orotherwise. Please refer to the Abbey Annual Report on Form 20-F annually filed with the USSecurities and Exchange Commission for a discussion of such factors. This announcement is not a set of statutory accounts. Statutory accounts will bedelivered to the Registrar of Companies. The auditors have issued an unqualifiedopinion on the statutory accounts. The statutory accounts have been prepared onan IFRS EU basis. This announcement was approved by the board on 23 March 2006. Contacts Israel Santos (Investor Relations) 020 7756 4181 Matt Young (Media Relations) 020 7756 4232 For more information contact: investor@abbey.com. This information is provided by RNS The company news service from the London Stock Exchange