Half Yearly Report
30 Julho 2010 - 3:11AM
UK Regulatory
TIDMNBSR
RNS Number : 2235Q
Newcastle Building Society
30 July 2010
Newcastle Building Society today announces its results for the six months ended
30 June 2010.
Key highlights:
· The Society reports a loss before tax of GBP0.9m before one-off
repositioning costs;
· Innovative and proactive commercial capital strengthening exercise
completed, providing GBP46m of contingent core tier 1 capital;
· Repositioning Programme launched to streamline the business. This
programme will generate GBP8m of recurring cost savings on an annual basis but
involves an up front, one-off cost of GBP4m which has been recognised at 30th
June 2010, resulting in a reported loss of GBP4.9m before tax. Underlying
performance in Q2 is already seeing the benefits of this programme;
· Commercial lending wind down strategy is proceeding to plan with GBP45m
of redemptions in the first half of 2010. Commercial 3 month arrears rate
continues at a low level of less than 0.3%;
· The number of residential borrowers in arrears of 3 months or more has
fallen to 0.79% from 0.86% and 3 month arrears across the entire mortgage
portfolio has fallen from 0.90% to 0.82%, (this is significantly better than the
CML average);
· Liquid assets ratio remains strong at 27% with over 80% of treasury
assets held in the highest quality, zero risk weighted assets; and
· The Society continues to reduce reliance on more volatile treasury
markets with the wholesale funding ratio reducing further from 8.8% to 8.3%.
Chief Executive's Business Review:
Since taking over as Chief Executive in March conditions have continued to prove
challenging within the financial services sector. These challenges may continue
for some time against the tough economic backdrop and ongoing fragility of
treasury markets. To prepare for these challenges the Society announced a two
phase Repositioning Programme in the first half year.
The first part was a successful Capital Agreement with its non-retail bond
holders, which was announced in April. This prudent, proactive and innovative
initiative by the Society was made to underpin its financial strength and
further enhance its standing as a market-counterparty; we were very pleased the
majority of bond-holders decided to proceed with the commercial capital
exchange. Additionally, a reversible element of the agreement was also uniquely
introduced, which means once the Society hits a predetermined Core Tier 1
Capital trigger the deal falls away. Due to this initiative we have had a
significant enhancement to the quality of our capital base, which in turn has
placed us on a solid footing and will support our strategy of providing
long-term member value as a strong, traditional building society.
Like many other financial institutions, the Society has been affected by the
challenging environment including; low interest rates, escalating costs of
retail funding and the impact of the new liquidity standards regime. Against
this background the Society needed to reconsider its cost base and performance
across all areas of the business and ask some tough questions. This led to us
announcing the second phase of our Repositioning Programme in May.
This programme, which was developed to support the Society's strategy of
providing long-term member value, aims to streamline the business, which will
reduce costs, enhance income and strengthen its foundation further. As a result,
the Society has to account for a one-off cost to the business of GBP4m however,
on a yearly basis we anticipate this will result in an GBP8m recurring saving.
We're pleased this programme is progressing to plan and we are confident the
changes it will bring will support our simplified strategy of providing good
value products and advice for our members, while building a successful
diversified income stream via our Solutions division.
Part of this 'back to basics' strategy was to re-enter the prime residential
lending arena. While this started at the end of last year we have been proactive
in researching, developing and launching a variety of mortgage products, some of
which have been Best Buys. Additionally all our lending continues to be funded
100% by retail deposits; this time last year this figure was 91%.
As part of ongoing commitment to heartland branches we launched our flagship
branch on Northumberland Street. This was a long-held ambition of the Society's
and the branch continues to exceed the challenging targets it was set.
The Society's lending portfolio remains of high quality and is performing
consistently. The last 6 months have also seen an improvement in residential
arrears. The number of residential borrowers in arrears of 3 months or more has
fallen to 0.79% from 0.86% and 3 month arrears across the entire mortgage
portfolio has fallen from 0.90% to 0.82%. Commercial lending wind down strategy
is proceeding to plan with GBP45m of redemptions in the first half of 2010.
Commercial 3 month arrears rate continues at a low level of less than 0.3%.
Only six owner occupied repossessions were instigated by the Society in the
period. The Society had only 12 owner occupied properties in possession at 30
June 2010 with 50% of these possessions being attributable to borrowers
voluntarily handing back keys or due to action taken by second charge lenders.
Arrears are lower than the industry average as measured by the Council of
Mortgage Lenders.
The Society continues to have no sub-prime or self-certification exposures and a
low level of Buy-to-Let exposure, representing around 9% of the portfolio.
Liquidity remains strong at 27% with over 80% of treasury assets held in the
highest quality, zero risk weighted assets. The Society continues to reduce
reliance on more volatile treasury markets with the wholesale funding ratio
reducing from 8.8% to 8.3%.
We have to date received in excess of GBP8.4m from the administrators of the
Icelandic banks and further recoveries are expected. Positive news from the
administrators of Heritable and Kaupthing, Singer & Friedlander has led to a
write back of GBP1.35m at the half year given improved expected recoveries.
The Society's Strategic Solutions division, which provides financial outsourcing
services based on the Society's core competencies, continues to offer a
diversified income stream to supplement our core traditional model. There is a
pipeline of contracts due to come on board throughout 2010; with one major
savings administration contract launched in May 2010 with another expected in
August requiring 80 new members of staff. Further contracts are also in train
for the second half.
The Newcastle also celebrated investment in its staff following the graduation
of 30 of its managers in a Management Development course, in partnership with
University of Northumbria. The Board wishes to thank all of our staff for the
commitment, dedication and patience they have shown during what has been a
period of change within the sector and in our Society.
We have continued to add to the wealth of experience on our Board with some key
appointments. Angela Russell was appointed as Finance Director on 1 July; she is
a Chartered Accountant with over 20 years of accounting and risk experience, of
which nine is in the Building Society sector. John Warden was appointed as
Interim Operations Director in May; he has significant experience of operational
and corporate change in the building society sector and has worked previously
for Coventry and Yorkshire building societies. Kate Avery was appointed as a
non-executive director in January and has spent her entire career in the
financial services sector and is currently Chairman of Openwork having
previously worked for L&G and Barclays. David Buffham was appointed as a
non-executive director in May and has a wealth of experience gained from a
career spanning over 30 years in a variety of roles at the Bank of England. We
are delighted we continue to attract the calibre of expertise that we are used
to and look forward to the valuable contribution they will make to our Society.
We expect challenging trading conditions to remain throughout 2010 but we
believe the developments the Society is making will undoubtedly support our
future ambitions and will continue to allow us to focus on the things that are
important to us being a regional building society; such as providing value and
choice to our members and third-parties. The Board of the Society is committed
to remaining an independent mutual organisation operated for the benefit of its
members.
Jim Willens
Chief Executive
Forward-looking statements
Certain statements in this half-yearly information are forward-looking. Although
the Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations will
prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements.
We undertake no obligation to update any forward-looking statements whether as a
result of new information, future events or otherwise.
Summary Consolidated Income Statement
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| | Unaudited | Unaudited | Audited |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| | 6 | 6 | 12 |
| | months | months | months |
| | to | to | to |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| | 30 Jun | 30 Jun | 31 Dec |
| | 10 | 09 | 09 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| | GBPm | GBPm | GBPm |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Interest and similar income | 50.2 | 82.9 | 139.7 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Interest expense and similar charges | (41.2) | (67.7) | (119.3) |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Net interest receivable | 9.0 | 15.2 | 20.4 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Other income and charges | 9.4 | 10.0 | 19.5 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Gains less losses from financial | 0.3 | (0.2) | 0.2 |
| instruments | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Hedge ineffectiveness | (0.3) | (0.5) | (0.3) |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Total operating income | 18.4 | 24.5 | 39.8 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Administrative expenses | (18.9) | (21.9) | (38.3) |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Depreciation | (1.6) | (1.7) | (3.3) |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Impairment credit on loans and | 1.4 | 2.3 | 7.3 |
| advances to banks | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Impairment credit on debt securities | 0.0 | 0.4 | 1.8 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Impairment charge on loans and | (0.2) | (2.9) | (8.0) |
| advances to customers | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| FSCS levy | - | - | 1.3 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Repositioning programme | (4.0) | - | - |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Other provisions for liabilities and | - | - | (0.5) |
| charges | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| (Loss) / profit before taxation | (4.9) | 0.7 | 0.1 |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| Taxation credit / (expense) | 1.3 | (0.2) | (0.1) |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
| (Loss) / profit for the financial | (3.6) | 0.5 | 0.0 |
| period | | | |
+--------------------------------------+-----------------------+-----------------------+-----------------------+
The notes on pages 9 to 11 form an integral part of this condensed consolidated
half-yearly financial information.
Summary Consolidated Statement of Comprehensive Income
+----------------------------------+-----------+-----------------------+---------+
| | Unaudited | Unaudited | Audited |
+----------------------------------+-----------+-----------------------+---------+
| | 6 | 6 | 12 |
| | months | months | months |
| | to | to | to |
+----------------------------------+-----------+-----------------------+---------+
| | 30 Jun | 30 Jun | 31 Dec |
| | 10 | 09 | 09 |
+----------------------------------+-----------+-----------------------+---------+
| | GBPm | GBPm | |
| | | | GBPm |
+----------------------------------+-----------+-----------------------+---------+
| | | | |
+----------------------------------+-----------+-----------------------+---------+
| (Loss) / profit for the period | (3.6) | 0.5 | 0.0 |
+----------------------------------+-----------+-----------------------+---------+
| | | | |
+----------------------------------+-----------+-----------------------+---------+
| Other comprehensive income | | | |
+----------------------------------+-----------+-----------------------+---------+
| Movement on available for sale | 2.2 | (7.2) | (5.5) |
| reserve | | | |
+----------------------------------+-----------+-----------------------+---------+
| Movement on cash flow hedge | | 1.2 | 1.2 |
| reserve | - | | |
+----------------------------------+-----------+-----------------------+---------+
| Actuarial loss on retirement | - | - | (6.6) |
| benefit obligations | | | |
+----------------------------------+-----------+-----------------------+---------+
| Income tax relating to | | | 1.6 |
| components of other | - | - | |
| comprehensive income | | | |
+----------------------------------+-----------+-----------------------+---------+
| Other comprehensive income for | 2.2 | (6.0) | (9.3) |
| the period, net of tax | | | |
+----------------------------------+-----------+-----------------------+---------+
| | | | |
+----------------------------------+-----------+-----------------------+---------+
| Total comprehensive income for | (1.4) | (5.5) | (9.3) |
| the period | | | |
+----------------------------------+-----------+-----------------------+---------+
The notes on pages 9 to 11 form an integral part of this condensed consolidated
half-yearly financial information.
+----------------------------------+----------------------------------+-----------+---------+
| | Unaudited | Unaudited | Audited |
+ +----------------------------------+-----------+---------+
| | 30 Jun 10 | 30 Jun | 31 Dec |
| | | 09 | 09 |
+----------------------------------+----------------------------------+-----------+---------+
| | GBPm | GBPm | |
| | | | GBPm |
+----------------------------------+----------------------------------+-----------+---------+
| ASSETS | | | |
+----------------------------------+----------------------------------+-----------+---------+
| Liquid assets | 1,008.2 | 710.5 | 1,012.5 |
+----------------------------------+----------------------------------+-----------+---------+
| Derivative financial instruments | 40.4 | 19.2 | 17.9 |
+----------------------------------+----------------------------------+-----------+---------+
| Loans and advances to customers | 3,394.4 | 3,692.2 | 3,459.8 |
+----------------------------------+----------------------------------+-----------+---------+
| Fair value adjustments for | 77.5 | 41.9 | 43.2 |
| hedged risk | | | |
+----------------------------------+----------------------------------+-----------+---------+
| Property, plant and equipment | 27.2 | 30.8 | 28.2 |
+----------------------------------+----------------------------------+-----------+---------+
| Investment properties | 14.8 | 14.3 | 14.6 |
+----------------------------------+----------------------------------+-----------+---------+
| Other assets | 41.0 | 42.0 | 43.9 |
+----------------------------------+----------------------------------+-----------+---------+
| TOTAL ASSETS | 4,603.5 | 4,550.9 | 4,620.1 |
+----------------------------------+----------------------------------+-----------+---------+
| | |
+---------------------------------------------------------------------------------+---------+
| | Unaudited | Unaudited | Audited |
+ +----------------------------------+-----------+---------+
| | 30 Jun 10 | 30 Jun | 31 Dec |
| | | 09 | 09 |
+----------------------------------+----------------------------------+-----------+---------+
| | GBPm | GBPm | GBPm |
+----------------------------------+----------------------------------+-----------+---------+
| LIABILITIES | | | |
+----------------------------------+----------------------------------+-----------+---------+
| Shares | 3,767.8 | 3,361.1 | 3,787.2 |
+----------------------------------+----------------------------------+-----------+---------+
| Fair value adjustments for | 25.6 | 10.3 | 8.1 |
| hedged risk | | | |
+----------------------------------+----------------------------------+-----------+---------+
| Deposits and debt securities | 423.3 | 818.6 | 472.7 |
+----------------------------------+----------------------------------+-----------+---------+
| Derivative financial instruments | 82.1 | 40.7 | 44.4 |
+----------------------------------+----------------------------------+-----------+---------+
| Other liabilities | 37.2 | 46.4 | 37.6 |
+----------------------------------+----------------------------------+-----------+---------+
| Subordinated liabilities | 59.9 | 60.7 | 60.8 |
+----------------------------------+----------------------------------+-----------+---------+
| Subscribed capital | 29.6 | 29.9 | 29.9 |
+----------------------------------+----------------------------------+-----------+---------+
| Reserves | 178.0 | 183.2 | 179.4 |
+----------------------------------+----------------------------------+-----------+---------+
| TOTAL LIABILITIES | 4,603.5 | 4,550.9 | 4,620.1 |
+----------------------------------+----------------------------------+-----------+---------+
The notes on pages 9 to 11 form an integral part of this condensed consolidated
half-yearly financial information.
+------------------------------+---------+-----------+----------+--------+
| For the half year ended 30 June 2010 | | |
| (unaudited) | | |
+----------------------------------------------------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| | General | Available | Cash | Total |
| | reserve | for sale | flow | |
| | | reserve | hedge | |
| | | | reserve | |
+------------------------------+---------+-----------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 1 January 2010 | 178.6 | 0.8 | | 179.4 |
| | | | - | |
+------------------------------+---------+-----------+----------+--------+
| Movement in the period | (3.6) | 2.2 | | (1.4) |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 30 June 2010 | 175.0 | 3.0 | | 178.0 |
| | | | - | |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| For the half year ended 30 June 2009 | | |
| (unaudited) | | |
+----------------------------------------------------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| | General | Available | Cash | Total |
| | reserve | for sale | flow | |
| | | reserve | hedge | |
| | | | reserve | |
+------------------------------+---------+-----------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 1 January 2009 | 183.3 | 6.6 | (1.2) | 188.7 |
+------------------------------+---------+-----------+----------+--------+
| Movement in the period | 0.5 | (7.2) | 1.2 | (5.5) |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 30 June 2009 | 183.8 | (0.6) | | 183.2 |
| | | | - | |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| For the year ended 31 December 2009 | | |
| (audited) | | |
+----------------------------------------------------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| | General | Available | Cash | Total |
| | reserve | for sale | flow | |
| | | reserve | hedge | |
| | | | reserve | |
+------------------------------+---------+-----------+----------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 1 January 2009 | 183.3 | 6.6 | (1.2) | 188.7 |
+------------------------------+---------+-----------+----------+--------+
| Movement in the year | (4.7) | (5.8) | 1.2 | (9.3) |
+------------------------------+---------+-----------+----------+--------+
| | | | | |
+------------------------------+---------+-----------+----------+--------+
| At 31 December 2009 | 178.6 | 0.8 | | 179.4 |
| | | | - | |
+------------------------------+---------+-----------+----------+--------+
The notes on pages 9 to 11 form an integral part of this condensed consolidated
half-yearly financial information.
+------------------------------------+------------------------------------+------------------------+----------------------+
| | Unaudited | Unaudited | Audited |
+ +------------------------------------+------------------------+----------------------+
| | 6 months to | 6 months | 12 |
| | | to | months |
| | | | to |
+ +------------------------------------+------------------------+----------------------+
| | 30 Jun 10 | 30 Jun | 31 Dec |
| | | 09 | 09 |
+------------------------------------+------------------------------------+------------------------+----------------------+
| | GBPm | GBPm | |
| | | | GBPm |
+------------------------------------+------------------------------------+------------------------+----------------------+
| | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Net cash flows from operating | (65.0) | (362.8) | (44.9) |
| activities | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Taxation repaid | | 5.7 | 5.7 |
| | - | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Payment into defined benefit | (0.4) | (0.4) | (9.2) |
| pension scheme | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Net cash flows from investing | (237.4) | 109.1 | 126.0 |
| activities | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Net cash flows from financing | (2.6) | (3.0) | (5.7) |
| activities | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Net (decrease) / increase in cash | (305.4) | (251.4) | 71.9 |
| and cash equivalents | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Cash and cash equivalents at the | 678.0 | 606.1 | 606.1 |
| start of period | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
| Cash and cash equivalents at the | 372.6 | 354.7 | 678.0 |
| end of the period | | | |
+------------------------------------+------------------------------------+------------------------+----------------------+
Other percentages
+--------------------------------------+-----------+-----------+---------+
| | Unaudited | Unaudited | Audited |
+--------------------------------------+-----------+-----------+---------+
| | 6 | 6 | 12 |
| | months | months | months |
| | to | to | to |
+--------------------------------------+-----------+-----------+---------+
| | 30 Jun | 30 Jun | 31 Dec |
| | 10 | 09 | 09 |
+--------------------------------------+-----------+-----------+---------+
| | | | |
| | % | % | % |
+--------------------------------------+-----------+-----------+---------+
| | | | |
+--------------------------------------+-----------+-----------+---------+
| Gross capital as a percentage of | 6.6 | 6.7 | 6.5 |
| shares and borrowings | | | |
+--------------------------------------+-----------+-----------+---------+
| Liquid assets as a percentage of | 27.0 | 22.2 | 28.2 |
| shares and borrowings | | | |
+--------------------------------------+-----------+-----------+---------+
| Wholesale deposits as a % of shares | 8.3 | 17.4 | 8.8 |
| and borrowings | | | |
+--------------------------------------+-----------+-----------+---------+
| (Loss)/profit after tax as a % of | (0.2) | 0.0 | 0.0 |
| mean total assets | | | |
+--------------------------------------+-----------+-----------+---------+
| (including repositioning programme | | | |
| costs) | | | |
+--------------------------------------+-----------+-----------+---------+
| (Loss)/profit after tax as a % of | 0.0 | 0.0 | 0.0 |
| mean total assets | | | |
+--------------------------------------+-----------+-----------+---------+
| (excluding repositioning programme | | | |
| costs) | | | |
+--------------------------------------+-----------+-----------+---------+
| Management expenses as a % of mean | 1.1 | 1.0 | 0.9 |
| total assets* | | | |
+--------------------------------------+-----------+-----------+---------+
| (including repositioning programme | | | |
| costs) | | | |
+--------------------------------------+-----------+-----------+---------+
| Management expenses as a % of mean | 0.9 | 1.0 | 0.9 |
| total assets* | | | |
+--------------------------------------+-----------+-----------+---------+
| (excluding repositioning programme | | | |
| costs) | | | |
+--------------------------------------+-----------+-----------+---------+
* Expressed on an annualised basis
The notes on pages 9 to 11 form an integral part of this condensed consolidated
half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
Notes
1. General information
1.1. The half-yearly financial information set out above, which was approved by
the Board of Directors on, 29th July 2010, does not constitute accounts within
the meaning of the Building Societies Act 1986.
1.2. The financial information for the 12 months to 31 December 2009 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.
1.3. The half-yearly financial information for the 6 months to 30 June 2010 and
the 6 months to 30 June 2009 is unaudited.
1.4. 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.
2. Basis of preparation
This condensed consolidated half-yearly financial information for the half-year
ended 30 June 2010 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim
financial reporting' as adopted by the European Union. The half-yearly financial
information should be read in conjunction with the annual financial statements
for the year ended 31 December 2009, which have been prepared in accordance with
IFRSs as adopted by the European Union.
3. Accounting policies
Except as described below, the half-yearly financial information has been
prepared on the basis of the accounting policies adopted for the year ended 31
December 2009, as described in those financial statements.
The following new standards and amendments to standards have been adopted for
the first time for the financial year beginning on 1 January 2010:-
· IFRS 3 (Revised): Business Combinations;
· Amendment to IAS 39, Financial Instruments: Recognition and measurement
on eligible hedged items; and
· Improvements to IFRSs (2009).
Adoption has had no impact on the results for the period. The Group currently
expects to adopt these accounting policies in its annual accounts for the year
ended 31 December 2010.
NEWCASTLE BUILDING SOCIETY GROUP
4. Taxation
The effective tax charge is 27% (first half 2009 - 28.6%). The tax charge has
been calculated as far as possible to approximate to the expected full year tax
rate.
5. Related Party Transactions
The Group had no material or unusual related party transactions during the
half-year to 30 June 2010.
Key management compensation amounted to GBP0.8m for the period (first half 2009:
GBP0.4m).
6. Segment information
The chief operating decision maker has been identified as the Board of
Directors. The Board reviews the Group's internal reporting in order to assess
performance and allocate resources. Management has determined the operating
segments based on these reports. Following the management approach of IFRS 8,
operating segments are reported in accordance with the internal reporting
provided to the Board of Directors. The operating segments used by the Group
meet the definition of a reportable segment under IFRS 8.
The 'Member business' provides mortgage, savings, investment and insurance
products to members and customers. The 'Solutions business' provides business to
business services through people, processes and technology. The Board assesses
performance based on profit before tax after the allocation of all central
costs. Income and directly attributable costs are allocated to each segment and
support costs are apportioned, based on direct salary costs.
No segment information is presented on geographical lines, because substantially
all of the Group's activities are in the United Kingdom.
+-------------------------------+----------+-----------+--------+
| Period to 30 June 2010 | Member | Solutions | |
| | | | |
+-------------------------------+----------+-----------+--------+
| | Business | Business | Total |
+-------------------------------+----------+-----------+--------+
| | GBPm | GBPm | GBPm |
+-------------------------------+----------+-----------+--------+
| Net interest receivable | 9.0 | - | 9.0 |
+-------------------------------+----------+-----------+--------+
| Other income and charges | 5.2 | 4.2 | 9.4 |
+-------------------------------+----------+-----------+--------+
| Gains less losses from | 0.3 | - | 0.3 |
| financial instruments | | | |
+-------------------------------+----------+-----------+--------+
| Hedge ineffectiveness | (0.3) | 0.0 | (0.3) |
+-------------------------------+----------+-----------+--------+
| Administrative expenses | (15.0) | (3.9) | (18.9) |
+-------------------------------+----------+-----------+--------+
| Depreciation | (1.2) | (0.4) | (1.6) |
+-------------------------------+----------+-----------+--------+
| Impairment losses and | 1.4 | (0.2) | 1.2 |
| provisions for liabilities | | | |
| and charges | | | |
+-------------------------------+----------+-----------+--------+
| FSCS levy | - | - | - |
+-------------------------------+----------+-----------+--------+
| Repositioning programme | (4.0) | | (4.0) |
+-------------------------------+----------+-----------+--------+
| (Loss) before taxation | (4.6) | (0.3) | (4.9) |
+-------------------------------+----------+-----------+--------+
| Taxation credit | | | 1.3 |
+-------------------------------+----------+-----------+--------+
| (Loss) for the financial | | | (3.6) |
| period | | | |
+-------------------------------+----------+-----------+--------+
+-------------------------------+----------------------+--------------------------+----------------------+
| Period to 30 June 2009 | Member | Solutions | |
| | | | |
+-------------------------------+----------------------+--------------------------+----------------------+
| | Business | Business | Total |
+-------------------------------+----------------------+--------------------------+----------------------+
| | GBPm | GBPm | GBPm |
+-------------------------------+----------------------+--------------------------+----------------------+
| Net interest receivable | 15.2 | | 15.2 |
| | | - | |
+-------------------------------+----------------------+--------------------------+----------------------+
| Other income and charges | 4.8 | 5.2 | 10.0 |
+-------------------------------+----------------------+--------------------------+----------------------+
| Gains less losses from | (0.2) | - | (0.2) |
| financial instruments | | | |
+-------------------------------+----------------------+--------------------------+----------------------+
| Hedge ineffectiveness | (0.5) | - | (0.5) |
+-------------------------------+----------------------+--------------------------+----------------------+
| Administrative expenses | (16.6) | (5.3) | (21.9) |
+-------------------------------+----------------------+--------------------------+----------------------+
| Depreciation | (1.3) | (0.4) | (1.7) |
+-------------------------------+----------------------+--------------------------+----------------------+
| Impairment losses and | (0.2) | | (0.2) |
| provisions for liabilities | | - | |
| and charges | | | |
+-------------------------------+----------------------+--------------------------+----------------------+
| FSCS levy | - | - | - |
+-------------------------------+----------------------+--------------------------+----------------------+
| Profit / (loss) before | 1.2 | (0.5) | 0.7 |
| taxation | | | |
+-------------------------------+----------------------+--------------------------+----------------------+
| Taxation expense | | | (0.2) |
+-------------------------------+----------------------+--------------------------+----------------------+
| Profit for the financial | | | 0.5 |
| period | | | |
+-------------------------------+----------------------+--------------------------+----------------------+
+-------------------------------+----------------------+------------------------+-----------------------+
| | Member | Solutions | |
| | | | |
+-------------------------------+----------------------+------------------------+-----------------------+
| Period to 31 December 2009 | Business | Business | Total |
+-------------------------------+----------------------+------------------------+-----------------------+
| | GBPm | GBPm | GBPm |
+-------------------------------+----------------------+------------------------+-----------------------+
| Net interest receivable | 20.4 | | 20.4 |
| | | - | |
+-------------------------------+----------------------+------------------------+-----------------------+
| Other income and charges | 9.7 | 9.8 | 19.5 |
+-------------------------------+----------------------+------------------------+-----------------------+
| Gains less losses from | 0.2 | | 0.2 |
| financial instruments | | - | |
+-------------------------------+----------------------+------------------------+-----------------------+
| Hedge ineffectiveness | (0.3) | - | (0.3) |
+-------------------------------+----------------------+------------------------+-----------------------+
| Administrative expenses | (29.3) | (9.0) | (38.3) |
+-------------------------------+----------------------+------------------------+-----------------------+
| Depreciation | (2.5) | (0.8) | (3.3) |
+-------------------------------+----------------------+------------------------+-----------------------+
| Impairment losses and | 1.0 | (0.4) | 0.6 |
| provisions for liabilities | | | |
| and charges | | | |
+-------------------------------+----------------------+------------------------+-----------------------+
| FSCS levy | 1.3 | | 1.3 |
| | | - | |
+-------------------------------+----------------------+------------------------+-----------------------+
| Profit / (loss) before | 0.5 | (0.4) | 0.1 |
| taxation | | | |
+-------------------------------+----------------------+------------------------+-----------------------+
| Taxation expense | | | (0.1) |
+-------------------------------+----------------------+------------------------+-----------------------+
| Profit for the financial | | | 0.0 |
| period | | | |
+-------------------------------+----------------------+------------------------+-----------------------+
NEWCASTLE BUILDING SOCIETY GROUP
Statement of directors' responsibilities
The directors confirm that this condensed consolidated half-yearly financial
information has been prepared in accordance with IAS 34 as adopted by the
European Union, and that the half-yearly management report herein includes a
fair review of the information required by the Disclosure and Transparency Rules
(DTR 4.2.7 and DTR 4.2.8).
The directors of Newcastle Building Society are listed in the Annual Report for
2009. The following changes have occurred in the period:
David Buffham (appointed 24 May 2010)
Colin Seccombe (resigned 12 March 2010)
Catherine R.R. Vine-Lott (appointed 1 Jan 2010)
Gary Wilkinson (resigned 9 April 2010)
Jim Willens (appointed 4 Jan 2010)
Subsequent to the period end Angela Russell was appointed Finance Director on 1
July 2010.
On behalf of the Board
CJ Hilton
Chairman
29th July 2010
NEWCASTLE BUILDING SOCIETY GROUP
Independent review report to Newcastle Building Society
Introduction
We have been engaged by the Society to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010, which comprises the summarised consolidated income statement, summarised
consolidated statement of comprehensive income, summarised consolidated balance
sheet information as at 30 June 2010, summarised consolidated statement of
movements in members' interests, summarised consolidated cash flow statement and
associated notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Society a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the Society for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the United
Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
Newcastle upon Tyne
29th July 2010
Notes:
(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
Media Contact:
Natalie Falkous
Group Corporate Communications Manager
Tel: 0191 244 2024
Mobile: 07917388329
Email: natalie.falkous@newcastle.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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