TIDMNBSR
RNS Number : 2678M
Newcastle Building Society
27 July 2017
Announcement of half-year results for the six months ended 30
June 2017
Key Highlights
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* Profit before tax increased from GBP3.5m to GBP7.2m
reflecting a lower provisions charge and a one-off
credit of GBP2.1m arising on the purchase of our
Cobalt office
* Operating profit before provisions, one-off items and
FSCS levy was up from GBP6.1m to GBP6.2m
* Increased savings balances by GBP120m with over
10,000 new savers in the first half of the year
* Gross lending increased to GBP303m from GBP255m and
net lending improved from GBP116m to GBP155m in the
first half of 2017 compared to the same period in
2016
* The percentage of mortgages in arrears by 3 months or
more continued at a very low level of 0.39% compared
to 0.47% at the same point last year; well below
industry averages
* Capital ratios are robust with Total Capital Ratio
(Solvency) at 18.3%, Tier 1 Ratio at 15.8%, Common
Equity Tier 1 Ratio at 14.5% and Leverage Ratio at 5%
* Liquidity as a percentage of shares, deposits and
liabilities (excluding encumbered assets) was 18.3%
compared to 17.4% at the end of 2016
* Achievement of Gold Investors in People status in
2017
* Major investment in staff through leadership
programmes, pay and grading review and new
apprenticeship programme which add to existing
programmes
* Increased contribution to Community Fund and
expansion of grant programme benefitting thousands of
people across the North East region
* Purchase of our flagship office building at Cobalt
Park following nine years of rental - securing our
interest for the longer term
------------------------------------------------------------------------
Chief Executive's Review
For over 150 years Newcastle Building Society has been bringing
communities in the North East together and connecting them with a
better financial future. This is our purpose as a building society
and our members can rely on us to help save and plan their
finances, buy their own home, make positive changes to our local
communities and of course be a great place for our staff to work
and develop.
In the first half of 2017 we have achieved both a strong
financial performance but also made great progress in delivering on
our purpose with higher lending, more new savers and increased
levels of ongoing financial advice business. In terms of financial
performance we are reporting increased profits, strong capital
ratios, a robust liquidity position and record low levels of
arrears, reflecting the excellent credit quality of our residential
mortgage book.
As a mutual, we need to make sufficient profits to grow and
invest for the future, while maintaining strong capital ratios. I
am pleased that we have been able to increase profitability at a
time when we are making investments into our branch network and
property infrastructure, strengthening our senior management team,
developing our people, upgrading and enhancing the resilience of
our systems and, not least, focusing on how we give great service
to our customers.
Profitability
Operating profit before provisions, the Financial Services
Compensation Scheme levy and a non-recurring credit relating to the
purchase of our Cobalt office was up slightly GBP6.2m. Whilst
overall income was up by 6% (GBP1.6m), the significant ongoing
investment into the business resulted in higher costs, so the
growth in overall operating profit was GBP0.1m.
Net interest receivable increased from GBP13.2m to GBP13.6m due
to increased mortgage lending however interest margin remained
unchanged at 75bp with lower funding costs being offset by narrower
spreads on mortgage lending. Other income and charges increased
from GBP13.1m to GBP14.3m due mainly to increased mortgage fee
income and growth in Newcastle Strategic Solutions income.
Management expenses (comprising administration expenses and
depreciation) increased by GBP1.5m from GBP20.2m to GBP21.7m. This
reflected growth in the headcount to support growing areas of the
business, particularly the Solutions business, customer services
and support functions such as risk, compliance and change
management. Our increased capital investment programme has resulted
in a higher charge for depreciation, however this will create
benefits to the business in the longer term. Another area of growth
has been within information technology where we are investing in
projects to enhance our infrastructure and resilience, whilst at
the same time expanding our IT development team as we develop our
in-house systems to keep pace with digital and regulatory changes.
As a result of this investment the cost to income ratio increased
from 76.9% to 78.0%, which was in line with expectations of an
increase in the short term.
Profit before tax was GBP7.2m for the six months ended 30 June
2017 compared to GBP3.5m for the first half of 2016, an increase of
GBP3.7m.
In February 2017 we purchased our office building at Cobalt
Park, a site that we have occupied for the last nine years,
securing our future occupancy of the building and providing
additional space to further grow and develop our business. During
the lease period the Society spread the effective cost of the lease
over what was a 15 year term and built up a significant creditor
for costs recognised but not billed during the rent free period. On
purchase of the building this credit has been released, as it is no
longer required, generating a GBP2.1m one-off profit in the
period.
Mortgage impairment charges have fallen, as we expected,
reducing from GBP1.8m to GBP0.2m and for the first time in 10 years
the Society had no charge in the period in relation to legacy
commercial lending exposures with the book now representing less
than 3% of the total mortgage portfolio.
Provisions for liabilities and charges increased by GBP0.1m from
GBP0.8m to GBP0.9m. The charge for the Financial Services
Compensation Scheme levy reduced from GBP0.8m to GBP0.3m reflecting
a lower expected interest levy for the 2017/18 Scheme year. This
follows HMT's announcement that a substantial proportion of the
loans to the FSCS are to be repaid following asset disposals by UK
Asset Resolution. However offsetting this reduction was an increase
in the provision for consumer redress of GBP0.6m reflecting
increased costs of dealing with claims.
Capital
The Total Capital Ratio (Solvency) increased to 18.3% from 18.2%
at the same time last year but was down compared to 31 December
2016 level of 18.7%; this reduction being due to the amortisation
of Tier 2 capital as it approaches maturity. Tier 1 ratio improved
from 15.1% to 15.8% over the same period. Common Equity Tier 1
ratio improved from 13.7% to 14.5%. The Society's Basel III
leverage ratio (transitional basis) was 5.0% compared to 4.9% at 30
June 2016. Capital ratios include half year retained profits.
Liquidity
Liquid assets as a percentage of Shares, Deposits and
Liabilities at 30 June 2017 was 25.4% compared to 25.0% at the end
of 2016. Excluding encumbered liquid assets the ratio increased
from 17.4% to 18.3% at 30 June 2017. The quality of liquidity
continues to be excellent, comprising assets held in cash or that
can easily be converted to cash through treasury markets (repo) or
via the various Bank of England liquidity schemes.
Credit Risk
The percentage of mortgages in arrears by 3 months or more
continued at a level lower than the UK average, at 0.39% compared
to 0.47% at the half year last year, and 0.42% at 31 December 2016.
Possession cases continued at very low levels.
The Society's prime residential mortgage book increased by
GBP155m during the first half of 2016 (GBP116m first half 2016)
which was due mainly to an increase in gross lending to individuals
from GBP255m to GBP303m with mortgage retention rates on maturity
slightly higher.
Supporting our Customers
We pride ourselves on having mortgage products to suit a wide
range of house buyers, from 2 to 10 year fixed periods, variable
and discounted rates, and fee free products. We also have a range
of retention products available on maturity for loyal customers.
Our aim is to provide a wide range of options, giving more choice
and flexibility to suit borrowers' individual needs.
As the largest building society in the North East it's important
that we connect with our region's communities and respond to their
very particular circumstances. We therefore launched an exclusive
range of mortgages to help local people buy their own home. Whether
it's first time buyers taking their first step on the property
ladder, supporting existing house buyers move home, or simply
helping people save money by remortgaging, we are focused on
meeting the needs of our borrowers. We were delighted that our
efforts were recognized in the recent "What Mortgage Awards 2017"
when we received the award for Best Regional Building Society.
We consider it vitally important, for individuals and for wider
society, that people are encouraged to save for their future and to
plan their finances. Against a backdrop of falling individual
savings levels, we give our savings accounts an added boost by
building a local community benefit into the act of saving. The
Newcastle Building Society Community Saver accounts, which were
launched last year and continue to prove very popular, see us
donate an equivalent 0.1% of total balances held in the account to
the Newcastle Building Society Community Fund. The fund is held by
the Community Foundation and makes grants to charities and
community groups across the region, nominated by our members.
The persistent low interest rate environment has been
challenging for savers across the UK. We were pleased therefore, to
launch market leading 12 month and two year fixed rate ISAs (at
1.2% and 1.3% respectively), together with a competitive 12 month
bond at 1.4%. The products offered flexibility, some with an
element of penalty free access, and all allowed transfers from
existing ISA savings. This helped our savings balances grow by
GBP120m or 4% in the first six months of 2017 with over 10,000 new
customers opening accounts with us.
Our financial advice subsidiary, Newcastle Financial Advisers
Ltd (NFAL), gives customers financial advice regardless of how much
they have to invest. NFAL has a significant and growing level of
funds under management for people in the region, and continues to
invest in growing local financial adviser talent to meet a customer
preference for face-to-face service. This subsidiary scores highly
in customer satisfaction (currently at 95%) and has been
particularly appreciated in areas of our region that have
experienced loss of ongoing service from other financial
providers.
Earlier this year we announced further strengthening of our
presence and investment in the North East, through a new branch
review and continuing investment programme. Following the
relocation and upgrade in Darlington to create a purpose-built
branch and financial advice centre, we announced plans to invest in
the relocation or refurbishment of three other branches - in Durham
later this year, and Carlisle and Berwick, to be completed over the
next 18 months. We also announced that our branches in Dumfries and
Gibraltar will close later this year. Branch closures are always
regrettable but the changes reflect our strategic focus on our
heartland, and we are ensuring that customers and staff in both
locations are fully supported through the closure process.
We are here to deliver a strong, sustainable building society
for our members. Our roots are in the North East, and we are
committed to focusing on, and supporting communities in our region
where we seek to have a long-term positive impact.
Supporting our Staff
Earlier this year, we were delighted to become one of just a
handful of companies in the region to be awarded Investors in
People - Gold status. This recognises our progress in investing in
our people across nine separate criteria, including leadership,
support and development of staff. It reflects our genuine
involvement with our local communities, our values and behaviours,
and our investment in staff development, all of which are driving
positive change across the organisation for everyone.
In 2015 our Financial Advice subsidiary teamed up with Openwork
to launch what was one of the first partnerships of its kind in the
building society sector, to provide a bespoke training programme
for talented colleagues within the Society to train to become
professional financial advisers. This forms part of the Society's
comprehensive training and development programme, designed to help
colleagues build meaningful careers within our organisation. The
first Ocademy candidates have now graduated and taken up positions
as financial advisers in two of our branches. Our second and third
intake of candidates are now also on their journey through the
programme that will culminate in them becoming an important part of
our next generation of financial advisers.
In June we finalised our new Apprenticeship Programme and the
recruitment process is already well underway with a fantastic
response from school leavers within the region who are searching
for that first opportunity to get on the career ladder.
Apprenticeships have vastly changed over the past few years; they
earn a competitive salary whilst we support them through a
structured learning programme with both a nationally recognised
qualification and a career at the end. This adds to the graduate
recruitment and placement programmes we have been running for many
years.
In the first half of 2017 we completed a major review of our pay
and grading structures so we could ensure we had fair remuneration,
competitive packages and all staff had a clear understanding of
their roles. This was aligned with an extensive job evaluation
exercise which will ensure we have the right pay and grading
structures in place to attract and retain talent.
Having created 118 new jobs during 2016 as part of an ongoing
GBP10m investment programme across our Group, which took our
overall headcount past the 1,000 mark, we are already well on the
way to creating a further 130 new roles this year.
Supporting our Communities
In just 12 months of operating our Community Fund accounts the
Newcastle Building Society Community Fund has made grant donations
to the value of GBP78,000 to local projects, and we estimate this
has had a positive impact on the lives of more than 70,000 people
across the North East region already. Our donations into the fund
linked to the Community Saver accounts are further supported by
generous fundraising by our colleagues. A talking newspaper for the
blind in Alnwick; a Durham lunch club that tackles social
isolation; and a North Shields community garden are just some of
the recent projects which will be making use of our grant
funding.
Alongside this we continue to support the North East based
cancer charity, the Sir Bobby Robson Foundation. We have just
passed the GBP2.5m milestone in cumulative donations to this worthy
cause, which funds leading cancer research, diagnosis and treatment
for people across our region.
Our colleague volunteering has grown significantly. In just the
first six months of this year we have already surpassed last year's
total activity levels. Some of our colleagues have even committed
beyond the two days per annum funded by our Society to dedicate
their own time. Whilst a range of causes have benefited from access
to this army of willing helpers, it is not a one way relationship.
Our colleagues enjoy and benefit from experiencing a different sort
of challenge, from connecting with the residents of our
communities, and by supporting the people and causes that are close
to their hearts in whatever small way they can.
Our commitment to financial education continues in all its
forms. Our regular financial 'Big Talks' are open to members and
non members alike, and take place across our heartland. These are
ideal for those who want to learn more about how to manage their
finances and plan for the future. In addition to the Big Talks
there have been a series of mortgage-focused events for first time
buyers which have also been popular with young house buyers in the
region keen to understand more about how to get onto the property
ladder.
Our primary school education programme, the Boardroom Charity
Challenge continues to amaze us with the quality of the submissions
from primary schools. Schools work on a programme with local branch
representatives before going on to present in our Boardroom in a
Dragon's Den style challenge. This year Throckley Primary School in
Newcastle upon Tyne took the honours and will create Throckley
Carnival to raise funds for The Batten Disease Family
Association.
I am pleased with the Society's performance for the first half
of the year from both a financial and non-financial perspective. We
will continue to invest in the business and focus on our purpose
and why we are here as a building society. Whilst there may be
uncertainty from the impact of European and more Global factors on
the UK economy, we'll continue to do what we do best; helping
people save and plan their finances and own their own home, being a
great place to work and supporting our communities in making
positive changes.
Andrew Haigh
Chief Executive
26(th) July 2017
Forward-looking statements
Certain statements in this half-yearly information are
forward-looking. These statements are made in good faith based on
the information available up to the time of approval of this report
and such statements should be treated with caution due to the
inherent uncertainties, including both economic and business risk
factors, underlying any such forward-looking information. Therefore
actual results may differ materially from those expressed or
implied by these forward-looking statements. The Directors
undertake no obligation to update any forward-looking statements
whether as a result of new information, future events or
otherwise.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Summary Consolidated Income Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
30 Jun 17 30 Jun 16 31 Dec 16
GBPm GBPm GBPm
Interest and similar income 31.9 36.1 69.8
Interest expense and similar charges (18.3) (22.9) (42.7)
---------- ---------- ----------
Net interest receivable 13.6 13.2 27.1
Other income and charges 14.3 13.1 27.5
Total operating income 27.9 26.3 54.6
Administrative expenses (20.5) (19.1) (40.3)
Depreciation (1.2) (1.1) (2.4)
---------- ---------- ----------
Operating profit before impairments and provisions 6.2 6.1 11.9
Impairment charges on loans and advances to customers (0.2) (1.8) (3.2)
Provisions for liabilities and charges (0.9) (0.8) (0.6)
Release of lease creditor 2.1 - -
Profit before taxation 7.2 3.5 8.1
Taxation expense (1.4) (0.7) (2.0)
---------- ---------- ----------
Profit after taxation for the financial period 5.8 2.8 6.1
---------- ---------- ----------
The Notes on pages 11 and 12 form an integral part of this
condensed consolidated half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Summary Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
30 Jun 17 30 Jun 16 31 Dec 16
GBPm GBPm GBPm
Profit for the period 5.8 2.8 6.1
Other comprehensive income/(expense)
Items that may be reclassified to income statement
Movement on available for sale reserve 1.8 (0.5) 1.0
Income tax on items that may be reclassified to income statement (0.4) 0.1 (0.2)
---------- ---------- ----------
Total items that may be reclassified to income statement 1.4 (0.4) 0.8
---------- ---------- ----------
Items that will not be reclassified to income statement
Actuarial re-measurements on retirement benefit obligations - - 2.6
Income tax on items that will not be reclassified to income statement - - (0.4)
---------- ---------- ----------
Total items that will not be reclassified to income statement - - 2.2
Total other comprehensive income/(expense) 1.4 (0.4) 3.0
---------- ---------- ----------
Total comprehensive income for the financial period 7.2 2.4 9.1
---------- ---------- ----------
The Notes on pages 11 and 12 form an integral part of this
condensed consolidated half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Summary Consolidated Balance Sheet
Unaudited Unaudited Audited
30 Jun 17 30 Jun 16 31 Dec 16
GBPm GBPm GBPm
ASSETS
Liquid assets 843.6 810.9 776.5
Derivative financial instruments 5.0 10.5 6.5
Loans and advances to customers 2,702.4 2,547.4 2,563.8
Fair value adjustments for hedged risk 207.7 274.5 233.8
Property, plant and equipment and other assets 57.0 42.3 40.9
TOTAL ASSETS 3,815.7 3,685.6 3,621.5
---------- ---------- ----------
Unaudited Unaudited Audited
30 Jun 17 30 Jun 16 31 Dec 16
GBPm GBPm GBPm
LIABILITIES
Shares 2,830.2 2,730.6 2,709.2
Fair value adjustments for hedged risk 2.8 8.4 5.2
Deposits and debt securities 490.0 405.0 398.4
Derivative financial instruments 209.3 274.3 234.3
Other liabilities 17.9 15.7 16.1
Subordinated liabilities 50.0 50.0 50.0
Subscribed capital 30.0 30.0 30.0
Reserves 185.5 171.6 178.3
---------- ---------- ----------
TOTAL LIABILITIES 3,815.7 3,685.6 3,621.5
---------- ---------- ----------
The Notes on pages 11 and 12 form an integral part of this
condensed consolidated half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Summary Consolidated Statement of Movement in Members'
Interests
For the 6 months ended 30 June 2017 (unaudited)
Available
General reserve for sale reserve Total
GBPm GBPm GBPm
At 1 January 2017 178.0 0.3 178.3
Movement in the period 5.8 1.4 7.2
At 30 June 2017 183.8 1.7 185.5
---------------- ------------------ -------
For the 6 months ended 30 June 2016 (unaudited)
Available
General reserve for sale reserve Total
GBPm GBPm GBPm
At 1 January 2016 169.7 (0.5) 169.2
Movement in the period 2.8 (0.4) 2.4
At 30 June 2016 172.5 (0.9) 171.6
---------------- ------------------ -------
For the year ended 31 December 2016 (audited)
Available
General reserve for sale reserve Total
GBPm GBPm GBPm
At 1 January 2016 169.7 (0.5) 169.2
Movement in the year 8.3 0.8 9.1
At 31 December 2016 178.0 0.3 178.3
---------------- ------------------ -------
The Notes on pages 11 and 12 form an integral part of this
condensed consolidated half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Summary Consolidated Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months
to to 12 months
30 Jun 17 30 Jun 16 31 Dec 16
GBPm GBPm GBPm
Net cash flows from operating activities 87.8 12.7 18.1
Payment into defined benefit pension
scheme (0.9) (0.9) (2.0)
Net cash flows from investing activities (47.9) 19.4 2.0
Net cash flows from financing activities (3.0) (3.1) (6.2)
---------- ---------- ----------
Net increase in cash and cash equivalents 36.0 28.1 11.9
---------- ---------- ----------
Cash and cash equivalents at the start
of period 198.4 186.5 186.5
---------- ---------- ----------
Cash and cash equivalents at the end
of the period 234.4 214.6 198.4
---------- ---------- ----------
Other percentages
6 months 6 months 12 months
30 Jun 17 30 Jun 16 31 Dec 16
% % %
Gross capital as a % of shares and borrowings 8.0 8.0 8.3
Liquid assets as a % of shares and borrowings 25.4 25.9 25.0
Wholesale deposits as a % of shares and borrowings 14.8 12.9 12.8
Liquid assets as a % of shares and borrowings excluding encumbered assets 18.3 17.2 17.4
Net interest receivable as a % of mean total assets 0.75 0.75 0.77
Cost to income ratio 78.0 76.9 78.0
Profit after tax as a % of mean total assets 0.31 0.16 0.17
Management expenses as a % of mean total assets* 1.18 1.14 1.21
Common Equity Tier 1 Ratio 14.5 13.7 14.4
Tier 1 Ratio 15.8 15.1 15.9
Total Capital Ratio (Solvency) 18.3 18.2 18.7
Leverage Ratio (Basel III - end point) 4.6 4.5 4.7
Leverage Ratio (Basel III - transitional) 5.0 4.9 5.2
* Expressed on an annualised basis
The above percentages are unaudited. The figures for the 12
months ended 31 December 2016 are extracted from the audited 2016
accounts. The Notes on pages 11 and 12 form an integral part of
this condensed consolidated half-yearly financial information.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Notes
1. General information
1.1. The half-yearly financial information set out above, which
was approved by the Board of Directors on 26(th) July 2017, 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
2016 has been extracted from the accounts for that year, and on
which the auditors gave an unqualified opinion, and which have been
filed with the Financial Conduct Authority and Prudential
Regulation Authority.
1.3. The half-yearly financial information for the 6 months to
30 June 2017 and the 6 months to 30 June 2016 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
The condensed consolidated half-yearly financial information for
the half-year ended 30 June 2017 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
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 2016, which have been prepared in accordance
with IFRSs as adopted by the European Union.
The Board has reviewed medium and long term plans over a 5 year
horizon with particular emphasis on examining forecast capital,
profitability and liquidity of the Group and the risks to those
forecasts through a variety of stress testing scenarios. In
reviewing the Group capital plans the Board has also considered the
impact of recent pronouncements from the Financial Policy Committee
which increase the capital requirements for Banks and Building
Society's through a higher countercyclical capital buffer. This
horizon is considered appropriate through alignment to the Group's
usual forecasting and management reporting allowing robust and
continuous assessment of the Group's expected position and
principal risks over the time-frame. Active risk management is
undertaken to mitigate the Group's principal risks as detailed in
note 4 of this half-yearly financial information.
The outcome of this review is that the Directors are satisfied
that the Society and the Group have adequate resources to continue
in business and meet its liabilities throughout the period of
assessment.
Accordingly the financial statements of the Group have been
prepared on a going concern basis with no material uncertainties
that the going concern basis of accounting is appropriate.
3. Accounting policies
The half-yearly financial information has been prepared on the
basis of the accounting policies adopted for the year ended 31
December 2016, as described in those financial statements.
4. Principal Risks and Uncertainties
The Group's activities expose it to a variety of risks: market
risk (predominantly interest rate risk), credit risk, liquidity
risk and operational risk. There have been no changes in the
principal risks and uncertainties facing the Group and no
significant changes to these risks are expected in the second half
of the year.
The interim condensed consolidated financial information does
not include all risk management information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's Annual Report and Accounts for
December 2016.
Since year end there has been a strengthening of risk management
departments involving a restructure and expansion of the team.
There have been no material changes in risk management policies or
procedures.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
5. Taxation
The effective tax rate is 19.25% (first half 2016 - 20%). The
tax charge has been calculated as far as possible to approximate to
the expected full year tax rate and includes an adjustment to
deferred tax assets, and to current tax for changes in the enacted
corporation tax rate.
6. Related Party Transactions
During the 6 months to 30 June 2017 the Society purchased
GBP7.7m (2016: GBP6.4m) of Business Support Services from Newcastle
Strategic Solutions Limited (NSSL) and GBP2.2m (2016: GBP2.0m)
Managed IT and Property Services from Newcastle Systems Management
Limited (NSML), both wholly owned subsidiary companies. The Society
received GBP6.3m (2016: GBP2.1m) from NSSL and GBP0.5m (2016:
GBP0.5m) from NSML for the provision of financial and
administrative services during the same period. For further detail
see Note 28 of the Newcastle Building Society Annual Report and
Accounts 2016.
7. Fair value measurement
The following table summarises the fair value measurement basis
used for assets and liabilities held on the Balance Sheet at fair
value.
Level Level Level Total
1 2 3 GBPm
GBPm GBPm GBPm
Financial assets
Debt securities - available for
sale 379.4 - - 379.4
Derivative financial instruments - 5.0 - 5.0
Fair value adjustments for hedged
risk on underlying instruments - 207.7 - 207.7
Financial liabilities
Derivative financial instruments - 209.3 - 209.3
Fair value adjustments for hedged
risk on underlying instruments - 2.8 - 2.8
Level 1: Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability either directly
(i.e. as price) or indirectly (i.e. derived from prices).
Level 3: Inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
These definitions have been taken from the March 2009 amendment
to IFRS 13 'Improving Disclosures: Financial Instruments'.
There were no transfers between levels in the period.
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
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 true and fair
review of the information required by the Disclosure and
Transparency Rules (DTR 4.2.4, DTR 4.2.7 and DTR 4.2.8).
The Society's Home Member State is the United Kingdom.
The Directors of Newcastle Building Society are listed in the
Annual Report for 2016. Ron McCormick, Non-Executive Director and
Deputy Chairman, retired at the conclusion of the Annual General
Meeting on 26 April 2017. David Buffham was appointed Deputy
Chairman on 26 April 2017. Damian Thompson, Customer Director,
resigned from the Board on 24 April 2017. There were no other
changes to the Board in the period.
On behalf of the Board
Andrew Haigh
Chief Executive
26(th) July 2017
NEWCASTLE BUILDING SOCIETY GROUP
HALF-YEARLY FINANCIAL INFORMATION
Independent review report to Newcastle Building Society
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the Announcement of half-year results
of Newcastle Building Society for the six months ended 30 June
2017. Based on our review, nothing has come to our attention that
causes us to believe that the condensed consolidated interim
financial statements are 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 Conduct Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by Newcastle Building Society, comprise:
-- the Summary Consolidated Balance Sheet as at 30 June 2017;
-- the Summary Consolidated Income Statement and Summary
Consolidated Statement of Comprehensive Income for the period then
ended;
-- the Summary Consolidated Cash Flow Statement for the period then ended;
-- the Summary Consolidated Statement of Movements in Members'
Interests for the period then ended; and
-- the explanatory Notes to the condensed consolidated interim financial statements.
As disclosed in Note 2, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union.
The condensed consolidated interim financial statements included
in the Announcement of half-year results have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
What a review of condensed consolidated financial statements
involves
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.
We have read the other information contained in the Announcement
of half-year results and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed consolidated interim financial
statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the Directors
The Announcement of half-year results, including the condensed
consolidated interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the Announcement of half-year results in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the
Announcement of half-year results based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, 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.
PricewaterhouseCoopers LLP
Chartered Accountants
26(th) July 2017
Newcastle upon Tyne
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GRGDRGBDBGRR
(END) Dow Jones Newswires
July 27, 2017 03:11 ET (07:11 GMT)
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