Final Results

22 Feb 2008 07:30

Nottingham Building Society22 February 2008 Nottingham Building SocietyYear End Results The Nottingham delivers robust performance in 2007. Achievements and highlights include: • Total assets exceed £3bn • Record mortgage lending of £697m • The mortgage book grew by 10.5% • The quality of the mortgage book remains high and arrears levels are well below the industry average • No exposure to the sub prime mortgage market • Savings balances grew by over 10% and represent 75% of funding • Group pre-tax profit for the year was £8.2m • General reserves increased by 5.7% to £144.1m Commenting Ian Rowling, Chief Executive, said: "Against a backdrop of challenging market conditions, we made solid progress anddelivered a number of records in 2007. "In the second half of the year the markets experienced unprecedentedturbulence. As a building society the majority of our funding comes from theretail savings of our members. This placed us in a better position than somewhen the credit crunch took effect. "Record new lending, along with a successful retention strategy resulted inmortgage book growth of 10.5%. We continue to diversify our lending but not atthe expense of quality. Our residential mortgage book has an average loan tovalue ratio of 34% (using an index valuation basis). The buy to let book isperforming better than the residential book and we have no exposure to the subprime market. "At the year end 75% of our funding came from members. Savings balances grew byover 10% during the year. "Group profit before tax ended the year at £8.2m. The key factors impactingprofit include the following: • Net interest income was broadly unchanged compared to 2006, notwithstanding a reduced net interest margin and adjustments under International Financial Reporting Standards (IFRS); • Reduced house sales resulted in a reduction in income from our estate agency. • Management expenses increased by 3.25% largely driven by IT expenditure and depreciation, which were partly offset by a release of non mortgage related provisions. • Impairment charges were low and reflect the quality of the mortgage asset book. "Group management expenses reduced from 90p to 83p; the Society only ratio from77p to 70p. "The general economic outlook for 2008 remains uncertain. We are adapting tothe new environment, ensuring that as we do the quality of our lending remains apriority." Consolidated income statement 2007 2006 £000 £000 Interest receivable and similar income 161,272 126,581Interest payable and similar charges (135,731) (100,993)Net interest income 25,541 25,588 Fees and commissions receivable 7,295 8,068Fees and commissions payable (1,182) (1,061)Other operating income - 87Total net income 31,654 32,682 Other operating costs (218) -Administrative expenses (20,984) (20,907)Depreciation and amortisation (2,389) (1,730)Finance income and expense 175 78Operating profit before provisions 8,238 10,123 Impairment losses on loans and advances (2) 10Profit before tax 8,236 10,133 Tax expense (2,365) (2,820) Profit for the financial year 5,871 7,313 Consolidated statement of recognised income andexpense 2007 2006 £000 £000 Valuation gains/(losses) on available for sale 615 (223)securitiesActuarial gain on retirement benefit obligations 2,663 1,629Tax on items taken directly to or transferred from (996) (420)equityNet income recognised directly in equity 2,282 986 Profit for the financial year 5,871 7,313 Total recognised income and expense for the year 8,153 8,299 Consolidated balance sheet 2007 2006 £000 £000 Assets Liquid assets 611,720 438,326Derivative financial instruments 24,933 19,854Loans and advances to customers 2,369,849 2,144,293Fixed and other assets 19,278 16,155 Total assets 3,025,780 2,618,628 Liabilities Shares 2,121,131 1,901,058Borrowings 719,219 539,824Derivative financial instruments 6,905 1,847Other liabilities 9,291 14,821Subscribed capital 24,811 24,808Total liabilities 2,881,357 2,482,358 EquityGeneral reserves 144,141 136,427Available-for-sale reserves 282 (157) Total equity and liabilities 3,025,780 2,618,628 Consolidated cash flow statement 2007 2006 £000 £000 Cash flows from operating activitiesProfit before tax 8,236 10,133Depreciation and amortisation 2,389 1,730Interest on subscribed capital 1,969 1,969Net (gains) on disposal and amortisation of debt (72) (17)securitiesIncrease in impairment of loans and advances 17 3Taxation (2,235) (862) 10,304 12,956Changes in operating assets(Increase) in other assets (17,672) (2,257) Increase/(decrease) in other liabilities 26,314 (4,284)(Increase) in liquid assets (11,460) (20,247)(Increase) in loan and advances to customers (217,296) (157,673)Increase in shares 199,840 155,242Increase in borrowings 175,662 32,075 165,692 15,812 Capital expenditure and financial investment (105,754) 63,916 Financing activities (1,969) (1,969) Increase in cash and cash equivalents 57,969 77,759 Cash and cash equivalents at beginning of year 224,054 146,295 Cash and cash equivalents at end of year 282,023 224,054 Summary ratios 2007 2006 % % Gross capital as a percentage of shares and borrowings 5.96 6.60Liquid assets as a percentage of shares and borrowings 21.54 17.96Group profit for the year as a percentage of mean total 0.21 0.29assetsGroup management expenses as a percentage of mean total 0.83 0.90assetsSociety management expenses as a percentage of mean total 0.70 0.77assets Notes • The financial information set out above, which was approved by the Board of Directors on 20 February 2008, does not constitute accounts within the meaning of the Building Societies Act 1986. • The financial information for the years ended 31 December 2007 and 31 December 2006 has been extracted from the Accounts for those years and on which the auditors have given an unqualified opinion. 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