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JSE ABSP
ABSP
ABSP - Absa Bank - Profit and dividend announcement; unaudited interim financial
results for six months ended 30 June 2007
ABSA BANK LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/004794/06)
ISIN: ZAE000079810
JSE share code: ABSP
(Absa Bank)
ABSA BANK: PROFIT AND DIVIDEND ANNOUNCEMENT
UNAUDITED INTERIM FINANCIAL RESULTS FOR SIX MONTHS ENDED 30 JUNE 2007
BANK SALIENT FEATURES
Six months ended Twelve
months
ended
30 June 31 December
2007 2006* Change 2006**
(Unaudited) (Unaudited) % (Audited)
Income statement (Rm)
Headline earnings*** 3 371 2 648 27,3 5 861
Profit attributable to 3 360 2 634 27,6 6 051
ordinary equity holders of the
Bank
Balance sheet (Rm)
Total assets 508 563 431 122 18,0 453 726
Loans and advances to 407 359 340 658 19,6 368 320
customers
Deposits due to customers 286 422 254 052 12,7 275 407
Financial performance (%)
Return on average equity 25,3 22,7 25,1
Return on average assets 1,45 1,32 1,42
Loans-to-deposits ratio 142,2 134,1 133,7
Operating performance (%)
Net interest margin on 3,48 3,27 3,42
average assets
Net interest margin on 3,69 3,53 3,71
average interest-bearing
assets
Impairment losses on loans 0,49 0,37 0,44
and advances as % of average
loans and advances to
customers
Non-interest income as % of 44,1 44,2 45,4
total operating income
Cost-to-income ratio 56,6 60,7 58,1
Effective tax rate, excluding 29,3 29,1 28,4
indirect taxation
Share statistics (million)
(including "A" ordinary
shares)
Number of shares in issue 337,3 337,3 337,3
Weighted average number of 337,3 335,4 336,3
shares
Weighted average diluted 337,3 335,4 336,3
number of
shares
Share statistics (cents)
Earnings per share 996,1 785,5 26,8 1 799,0
Diluted earnings per share 996,1 785,5 26,8 1 799,0
Headline earnings per share 999,6 789,5 26,6 1 742,5
Diluted headline earnings per 999,6 789,5 26,6 1 742,5
share
Dividends per ordinary share 465,9 383,3 21,5 591,9
relating to income for the
period/year
Dividend cover (times) 2,1 2,1 2,9
Net asset value per share 8 315 6 846 21,5 7 630
Tangible net asset value per 8 241 6 812 21,0 7 586
share
Capital adequacy (%)
Absa Bank 12,9 12,7 12,3
*The comparatives for the six months ended 30 June 2006 have been
reclassified for certain assets and liabilities as well as interest and
dividends on fair value through profit and loss assets. See section on
"Reclassifications" below.
**The comparatives for the twelve months ended 31 December 2006 have been
reclassified for certain liabilities. See section on "Reclassifications" below.
***Excludes R114 million (December 2006: R73 million) profit attributable to
preference equity holders of the Bank.
BANK INCOME STATEMENT
Twelve
Six months ended months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Net interest income 8 101 6 592 22,9 14 184
Interest and similar income 23 458 16 836 39,3 36 551
Interest expense and similar (15 357) (10 244) (49,9) (22 367)
charges
Impairment losses on loans (943) (586) (60,9) (1 515)
and advances
7 158 6 006 19,2 12 669
Net fee and commission 5 110 4 298 18,9 9 434
income
Fee and commission income 5 161 4 308 19,8 9 468
1.1
Fee and commission expense (51) (10) >(100,0) (34)
Gains and losses from 860 520 65,4
banking and trading 1 274
activities 1.2
Gains and losses from 38 14 >100,0 169
investment activities 1.3
Other operating income 380 396 (4,0) 897
Net operating income 13 546 11 234 20,6 24 443
Operating expenditure (8 644) (7 555) (14,4) (15 943)
Operating expenses 2.1 (8 202) (7 172) (14,4) (15 070)
Non-credit related (28) - >(100,0) (71)
impairments 2.2
Indirect taxation (414) (383) (8,1) (802)
Share of retained earnings 15 35 (57,1)
of associated undertakings 48
and joint ventures
Operating profit before 4 917 3 714 32,4 8 548
income tax
Taxation expense (1 443) (1 080) (33,6) (2 424)
Profit for the period/year 3 474 2 634 31,9 6 124
Attributable to:
Ordinary equity holders of 3 360 2 634 27,6 6 051
the Bank
Preference equity holders 114 - >(100,0) 73
of the Bank
Minority interest 0 - >(100,0) 0
3 474 2 634 31,9 6 124
Headline earnings 3 3 371 2 648 27,3 5 861
NOTES TO THE INTERIM FINANCIAL RESULTS
1. NON INTEREST INCOME
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
1.1 Fee and commission
income
Asset management and related 11 6 83,3 22
fees
Credit related fees and 4 688 3 922 19,5 8 637
commission
Credit cards 788 629 25,3 1 383
Cheque accounts 1 212 1 155 4,9 2 384
Electronic banking 1 226 1 055 16,2 2 248
Other 1 462 1 083 34,9 2 622
Corporate finance fees 65 45 44,4 136
Insurance commission 234 215 8,8 453
received
Portfolio and other 5 4 25,0 16
management fees
External administration fees 158 116 36,2 204
5 161 4 308 19,8 9 468
1.2 Gains and losses from
banking and trading
activities
Net gains on investments 401 155 >100,0 570
Fair value through profit 401 155 >100,0 403
and loss
Profit on disposal of
associated undertakings and - - - 167
joint ventures
Dividend income 13 11 18,2 27
Net trading results 489 446 9,6 879
Derivatives (non-qualifying (43) (92) 53,3 (202)
hedges)
860 520 65,4 1 274
1.3 Gains and losses from
investment activities
Fair value through profit 14 - >100,0 80
and loss
Investment gains 14 - >100,0 80
Other dividend income 24 14 71,4 39
Profit on disposal of - - - 50
subsidiary
38 14 >100,0 169
2. OPERATING EXPENDITURE
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm % Rm
2.1 Operating expenses
Amortisation 10 - >(100,0) 18
Auditors` remuneration 44 43 (2,3) 55
Depreciation 369 353 (4,5) 706
Information technology cost 549 574 4,4 1 059
Marketing and advertising 415 345 (20,3) 710
costs
Operating lease rentals 421 382 (10,2) 690
Professional fees 330 398 17,1 986
Barclays synergy costs 300 262 (14,5) 640
Staff costs 4 427 3 527 (25,5) 7 492
Other operating expenses 1 337 1 288 (3,8) 2 714
8 202 7 172 (14,4) 15 070
2.2 Non-credit related
impairments
Associated undertakings and
joint ventures - - - 10
Available-for-sale assets
and strategic investments - - - (5)
Computer software 28 - >(100,0) 66
development costs
28 - >(100,0) 71
3. DETERMINATION OF HEADLINE EARNINGS
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Headline earnings is
determined as follows:
Profit attributable to
ordinary equity holders of
the Bank 3 360 2 634 27,6 6 051
Adjustments for:
Net profit on disposal of
property and equipment
(11) (0) >(100,0) (11)
Net loss/(profit) on
disposal of available-for-
sale assets and strategic
investments 22 14 57,1 (184)
Impairment costs - - - 5
Available-for-sale assets (5)
and strategic investments - - -
Investments in associated
undertakings and joint
venture companies - - - 10
Headline earnings 3 371 2 648 27,3 5 861
BANK BALANCE SHEET
30 June 31 December
2007 2006 2006
(Unaudited (Unaudited) Change (Audited)
Rm Rm % Rm
Assets
Cash, cash balances and 12 136 7 525 61,3 12 022
balances
with central banks
Statutory liquid asset 20 755 18 839 10,2 20 829
portfolio
Loans and advances to banks 17 681 24 296 (27,2) 20 833
Trading assets 17 577 26 531 (33,7) 17 711
Hedging assets 795 292 >100,0 672
Loans and advances to 407 359 340 658 19,6 368 320
customers
Loans to Group companies 7 349 1 318 >100,0 1 841
Loans to holding company 1 171 1 566 (25,2) 1 188
Other assets 15 989 4 867 >100,0 3 151
Investments 2 872 1 168 >100,0 2 839
Investments in associated
undertakings and joint 601
ventures 754 665 13,4
Intangible assets 250 112 >100,0 147
Property and equipment 3 791 3 256 16,4 3 509
Deferred tax assets 84 29 >100,0 63
Total assets 508 563 431 122 18,0 453 726
Liabilities
Deposits from banks 28 594 34 361 (16,8) 28 897
Trading liabilities 17 717 27 144 (34,7) 15 499
Hedging liabilities 2 993 1 257 >100,0 1 898
Deposits due to customers 286 422 254 052 12,7 275 407
Debt securities in issue 112 024 67 584 65,8 83 866
Current tax liabilities 345 405 (14,8) 941
Policyholder liabilities 70 (11,4)
under 79 76
insurance contracts
Borrowed funds 1 9 796 8 171 19,9 8 268
Other liabilities and 16 263 9 938 63,6
sundry provisions 8 015
Deferred tax liabilities 1 789 2 049 (12,7) 2 133
Total liabilities 476 013 405 040 17,5 425 000
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Share capital 303 303 - 303
Share premium 5 415 5 415 - 5 415
Preference share capital 1 1 - 1
Preference share premium 4 504 2 991 50,6 2 991
Other reserves 1 757 1 551 13,3 1 682
Distributable reserves 20 569 15 821 30,0 18 334
32 549 26 082 24,8 28 726
Minority interest 1 0 >100,0 0
Total equity 32 550 26 082 24,8 28 726
Total equity and liabilities 508 563 431 122 18,0 453 726
Contingent liabilities - 12 532 9 689 29,3
banking related 12 441
NOTES TO THE INTERIM FINANCIAL RESULTS
BORROWED FUNDS
Six months ended Twelve
months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Subordinated callable notes
14,25% (AB02) 3 100 3 100 - 3 100
10,75% (AB03) 1 100 1 100 - 1 100
3-month JIBAR + 0,75% (AB04) 400 400 - 400
8,75% (AB05) 1 500 1 500 - 1 500
8,10%(AB06) 2 000 2 000 - 2 000
8,80% (AB07) 1 725 - >100,0 -
Accrued interest 299 252 18,7 253
Fair value adjustment* (328) (181) (81,2) (85)
9 796 8 171 19,9 8 268
* Excludes impact of hedges.
BANK STATEMENT OF CHANGES IN EQUITY
30 June 31 December
2007 2006* 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Share capital 303 303 - 303
Opening balance 303 303 - 303
Shares issued - 0 (0,0) 0
Share premium 5 415 5 415 - 5 415
Opening balance 5 415 4 665 16,1 4 665
Shares issued - 750 >(100,0) 750
Preference share capital 1 1 - 1
Opening balance 1 - >100,0 -
Shares issued 0 1 (100,0) 1
Preference share premium 4 504 2 991 50,6 2 991
Opening balance 2 991 - >100,0 -
Shares issued 1 518 2 999 (49,4) 2 999
Costs incurred (5) (8) 37,5 (8)
Other reserves 1 757 1 551 13,3 1 682
Opening balance 1 682 1 817 (7,4) 1 817
Movement in foreign currency
translation reserve 45 63 (28,6) 178
Movement in regulatory
general credit risk reserve 400 250 60,0 50
Movement in available-for- 67
sale reserve 17 1 >100,0
Movement in cash flow 35,5 (485)
hedges reserve (437) (678)
Movement in associated
undertakings and joint 48
ventures` retained earnings
reserve 15 35 (57,1)
Disposal of associated
undertakings and joint (48)
ventures - release of
reserves - - -
Share-based payments for 78
the 55 63 (12,7)
period/year
Transfer from share-based (23)
payments reserve (20) - >(100,0)
Distributable reserves 20 569 15 821 30,0 18 334
Opening balance 18 334 14 224 28,9 14 224
Transfer to regulatory
general credit risk reserve (400) (250) (60,0) (50)
Transfer to associated
undertakings and joint (48)
ventures` retained earnings
reserve (15) (35) 57,1
Disposal of associated
undertakings and joint 48
ventures - release of
reserves - - -
Transfer from share-based 23
payments reserve 20 - >100,0
Profit attributable to
ordinary equity holders 3 360 2 634 27,6 6 051
Profit attributable to
preference equity holders 114 - >100,0 73
Dividends paid during the (1 987)
period/year (844) (752) (12,2)
32 549 26 082 24,8 28 726
Minority interest 1 0 >100,0 0
Opening balance 0 40 >(100,0) 40
Disposals - (40) 100,0 (40)
Other reserve movements 1 0 >100,0 (0)
Minority share of profit 0 - >100,0 0
Total equity 32 550 26 082 24,8 28 726
* In June 2006 the sale of Bankhaus Wolbern had not yet been concluded. Shortly
thereafter the sale was successfully concluded and to this end we have
reclassified the NAV of Wolbern to other assets in June 2006 to ensure
consistency with the treatment in December 2006.
GROUP CASH FLOW STATEMENT
Twelve
Six months ended Months
ended
30 June 31 December
2007 2006 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Net cash flow utilised in (2 822) (4 741) (6 054)
operating activities 40,5
Net cash flow (utilised
in)/from investing (500) (203) >(100,0) (1 660)
activities
Net cash flow from financing 2 394 4 989 (52,0) 3 755
activities
Net (decrease)/increase in (928) >(100,0)
cash and cash equivalents 45 (3 959)
Cash and cash equivalents at 3 498 (53,1)
the beginning of the 7 462 7 462
period/year 1
Effects of exchange rate 1 -
changes on cash on cash 1 (5)
equivalents
Cash and cash equivalents at 2 571 7 508 (65,8) 3 498
the end of the period/year 2
NOTES TO THE CASH FLOW
STATEMENT
1 Cash and cash equivalents
at the beginning of the
period/year
Coins and bank notes 3 498 3 210 9,0 3 210
Money on call - 4 252 >(100,0) 4 252
3 498 7 462 (53,1) 7 462
2 Cash and cash equivalents
at the end of the
period/year
Coins and bank notes 2 393 2 523 (5,2) 3 498
Money on call 178 4 985 (96,4) -
2 571 7 508 (65,8) 3 498
PROFIT CONTRIBUTION BY BUSINESS AREA
Twelve
Six months ended months
ended
30 June 31 December
2007 2006* 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 2 139 1 767 21,1 4 095
Absa Corporate and Business 740 506 46,2 1 282
Bank
Absa Capital 657 492 33,5 928
African operations (8) (14) 42,9 (44)
Corporate centre 1 68 25 >100,0 186
Capital and funding centre 90 44 >100,0 131
Total earnings from business 3 686 2 820 30,7 6 578
areas
Synergy costs (after tax) 2 (212) (186) (14,0) (454)
Profit attributable to
preference equity holders (114) - >(100,0) (73)
Profit attributable to
ordinary equity holders 3 360 2 634 27,6 6 051
Headline earnings 11 14 (21,4) (190)
adjustments
Total headline earnings 3 371 2 648 27,3 5 861
REVENUE CONTRIBUTION BY BUSINESS AREA**
Twelve
Six months ended months
ended
30 June 31 December
2007 2006* 2006
(Unaudited) (Unaudited) Change (Audited)
Rm Rm % Rm
Banking operations
Retail banking 10 043 8 296 21,1 18 033
Absa Corporate and Business 2 791 2 287 22,0 5 010
Bank
Absa Capital 1 451 1 124 29,1 2 369
African operations (2) (1) (100.0) (3)
Corporate centre 1 166 60 >100,0 365
Capital and funding centre 40 54 (25,9) 184
Total revenue from business 14 489 11 820 22,6 25 958
areas
NOTES
1 Corporate centre`s results include the Bank`s remaining international
operations as well as non-financial services businesses.
2 Synergies relate to the integration of Absa and Barclays following the
acquisition by Barclays of a majority share in Absa. Synergy costs are one-
off costs incurred in achieving synergy benefits.
- The comparative period has been restated for:
- Migration of clients from Private Bank to Retail Banking Services in the
current year.
- Virgin Money has been moved from Absa Home Loans to Retail Banking Services
to align with current year disclosure.
- The finalisation of the client split between Absa Capital and Absa
Corporate and Business Bank was concluded in November 2006, the June 2006
position has been restated to reflect this agreement.
Revenue consists of net interest income and non interest. Non-interest income
consists of the following income statement line items: net fee and commission
income, net insurance premium income, net claims and benefits paid, changes in
insurance and investment liabilities, gains and losses from banking and trading
activities, gains and losses from investment activities as well as other
operating income
RECLASSIFICATIONS
BANK BALANCE SHEET - 30 JUNE 2006
30 June 30 June
2006 2006
(Unaudited) (Unaudited)
(As Reclassi
previously
Rm Commentary reported) fications (Restated)
Assets
Cash, cash balances and 7 525 - 7 525
balances
with central banks
Statutory liquid asset 18 839 - 18 839
portfolio
Loans and advances to 1 12 148 12 148 24 296
banks
Trading assets and hedging 2 26 823 (292) 26 531
derivative assets
Hedging assets 2 - 292 292
Loans and advances to 1 & 3 352 645 (11 987) 340 658
customers
Loans to Group companies 1 151 167 1 318
Loans to holding company 1 566 - 1 566
Other assets 5 4 650 217 4 867
Investments 1 335 (167) 1 168
Investments in associated 665 - 665
undertakings and joint
ventures
Intangible assets 112 - 112
Property and equipment 3 256 - 3 256
Deferred tax assets 29 - 29
Clients` liabilities under 3 161 (161) -
acceptances
Total assets 430 905 217 431 122
Liabilities
Deposits from banks 1 & 4 - 34 361 34 361
Trading liabilities and 2 28 401 (1 257) 27 144
hedging derivative
liabilities
Hedging liabilities 2 - 1 257 1 257
Deposits due to customers 1 & 3 & 4 355 836 (101 784) 254 052
Debt securities in issue 4 - 67 584 67 584
Current tax liabilities 405 - 405
Policyholder liabilities 79 - 79
under insurance contracts
Borrowed funds 8 171 - 8 171
Other liabilities and 9 938 - 9 938
sundry provisions
Deferred tax liabilities 2 049 - 2 049
Liabilities to clients 3 161 (161) -
under acceptances
Total liabilities 405 040 - 405 040
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Share capital 303 - 303
Share premium 5 415 - 5 415
Preference share capital 1 - 1
Preference share premium 2 991 - 2 991
Other reserves 1 551 - 1 551
Distributable reserves 5 15 604 217 15 821
25 865 217 26 082
Minority interest 0 - 0
Total equity 25 865 217 26 082
Total equity and 430 905 217 431 122
liabilities
BANK INCOME STATEMENT - 30 JUNE 2006
Six months Six months
ended ended
30 June 30 June
2006 2006
(Unaudited) (Unaudited)
(As Reclassi
previously
Rm Commentary reported) fications (Restated)
Net interest income 6 6 636 (44) 6 592
Interest and similar 16 944 (108) 16 836
income
Interest expense and (10 308) 64 (10 244)
similar charges
Impairment losses on loans (586) - (586)
and advances
6 050 (44) 6 006
Net fee and commission 4 337 (39) 4 298
income
Fee and commission income 8 4 347 (39) 4 308
Fee and commission expense (10) - (10)
Gains and losses from 6 & 7 464 56 520
banking and trading
activities
Gains and losses from 6 & 7 - 14 14
investment activities
Other operating income 7 & 8 383 13 396
Net operating income 11 234 - 11 234
Operating expenditure (7 555) - (7 555)
Operating expenses (7 172) - (7 172)
Impairments - - -
Indirect taxation (383) - (383)
Share of retained earnings
of associated undertakings 35 - 35
and joint ventures
Operating profit before 3 714 - 3 714
income tax
Taxation expense (1 080) - (1 080)
Profit for the period 2 634 - 2 634
Attributable to:
Ordinary equity holders 2 634 - 2 634
of the Bank
Preference equity holders - - -
of the Bank
Minority interest - - -
2 634 - 2 634
Headline earnings 2 648 - 2 648
BANK BALANCE SHEET - 31 DECEMBER 2006
31 December 31 December
2006 2006
(Audited) (Audited)
(As Reclassi-
previously
Rm Commentary reported) fications (Restated)
Assets
Cash, cash balances and 12 022 - 12 022
balances
with central banks
Statutory liquid asset 20 829 - 20 829
portfolio
Loans and advances to 20 833 - 20 833
banks
Trading assets and hedging 17 711 - 17 711
derivative
assets
Hedging assets 672 - 672
Loans and advances to 368 320 - 368 320
customers
Loans to Group companies 1 841 - 1 841
Loans to holding company 1 188 - 1 188
Other assets 3 151 - 3 151
Investments 2 839 - 2 839
Investments in associated 601 - 601
undertakings and joint
ventures
Intangible assets 147 - 147
Property and equipment 3 509 - 3 509
Deferred tax assets 63 - 63
Total assets 453 726 - 453 726
Liabilities
Deposits from banks 4 39 236 (10,339) 28 897
Trading liabilities and 15 499 - 15 499
hedging derivative
liabilities
Hedging liabilities 1 898 - 1 898
Deposits due to customers 4 348 934 (73 527) 275 407
4 - 83 866 83 866
Debt securities in issue
Current tax liabilities 941 - 941
Policyholder liabilities 76 - 76
under
insurance contracts
Borrowed funds 8 268 - 8 268
Other liabilities and 8 015 - 8 015
sundry
provisions
Deferred tax liabilities 2 133 - 2 133
Total liabilities 425 000 - 425 000
Equity
Capital and reserves
Attributable to equity
holders of the Bank:
Share capital 303 - 303
Share premium 5 415 - 5 415
Preference share capital 1 - 1
Preference share premium 2 991 - 2 991
Other reserves 1 682 - 1 682
Distributable reserves 18 334 - 18 334
28 726 - 28 726
Minority interest 0 - 0
Total equity 28 726 - 28 726
Total equity and 453 726 - 453 726
liabilities
COMMENTARY ON THE RECLASSIFICATIONS
1. Change in banks/non-banks advances and deposits split
The financial statements for the period ended 30 June 2006 classified wholesale
funding with banks as part of balances with customers. The Group has
reclassified this funding as part of balances with banks.
2. Reclassification of non-qualifying hedges
The financial statements for the period ended 30 June 2006 classified non-
qualifying assets and liability hedges as hedging assets or liabilities. The
Group has reclassified these as trading assets or liabilities.
3. Clients` liabilities under acceptances
The financial statements for the period ended 30 June 2006 disclosed clients`
liabilities under acceptances separately on the face of the balance sheet. The
Group has now included them as part of loans and advances to/deposits from
customers as they are of a similar nature.
4. Debt securities in issue
Negotiable certificates of deposits and other funding paper issued were
previously reported as a sub-category of "Deposits due to customers" and
"Deposits from banks". Going forward, this will be disclosed on a separate line
on the face of the balance sheet, called "Debt securities in issue".
5. Sale of Bankhaus Wolbern
In June 2006 the sale of Bankhaus Wolbern had not yet been concluded. Shortly
thereafter the sale was successfully concluded and to this end we have
reclassified the NAV of Wolbern to other assets in June 2006 to ensure
consistency with the treatment at December 2006.
6. Reclassification of interest
The financial statements for the period ended 30 June 2006 classified interest
on investments held at fair value through profit and loss in net interest
income. The Group has reclassified this interest and now discloses it under
"Gains and losses from banking and trading/investment activities".
7. Reclassification of dividend income
The financial statements for the period ended 30 June 2006 classified dividends
on non-trading activities as part of other income. The Group has reclassified
these to gains and losses on banking and trading/investment activities.
8. Fee and commission income
Reallocation of forex gains and losses to other operating income.
PROFIT AND DIVIDEND ANNOUNCEMENT
Introduction
Absa Bank is a wholly owned subsidiary of Absa Group Limited (Absa Group), which
is listed on the JSE Limited.
Absa Bank and its subsidiaries` interim financial results for the six months
ended 30 June 2007 and its preference dividend declaration for the period from
1 March 2007 to 31 August 2007 are contained in this announcement.
Commentary pertaining to the operating environment and the results of Absa
Bank`s core subsidiaries can be found in the Absa Group`s interim financial
results announcement. The Absa Group announcement was published on the JSE
Limited Securities Exchange News Services (Sens) and the Absa Group`s website
(www.absa.co.za) on 2 August 2007, and in the press on 3 August 2007.
Basis of presentation and changes in accounting policies
Absa Bank`s interim results have been prepared in accordance with International
Financial Reporting Standards (IFRS) and disclosures comply with International
Accounting Standard (IAS) 34.
At 31 December 2006, Absa Bank changed its accounting policy to recognise
actuarial gains and losses in accordance with the "corridor method" allowed
under IAS 19 - Employee Benefits. This change was prompted by the fact that
previously the pension funds of the various African subsidiaries were
consolidated. Management is of the view that this change results in more
reliable and relevant information in relation to the underlying operations of
those entities. The result of this change is immaterial; hence, comparative
information for June 2006 has not been restated.
Certain income statement and balance sheet line items have been reclassified to
enhance the usefulness of Absa Bank`s reporting.
Declaration of dividend number 3: Absa Bank non-cumulative, non-redeemable
preference shares (Absa Bank preference shares)
The Absa Bank preference shares have a dividend rate of 63% of Absa Bank`s
prevailing prime overdraft lending rate (the prime rate). Absa Bank`s current
prime rate is 13,0%.
Notice is hereby given that preference dividend number 3 equal to 63% of the
prime rate as at 31 August 2007, per Absa Bank preference share, has been
declared for the period from 1 March 2007 to 31 August 2007. The dividend is
payable on Monday, 3 September 2007, to shareholders of the Absa Bank preference
shares recorded in the books of the Company at the close of business on Friday,
31 August 2007. Should the prime rate change prior to 31 August 2007, the actual
amount of the dividend will be adjusted accordingly.
A confirmation of this dividend declaration for the Absa Bank preference shares
will be made on the first business day following the public announcement of the
repo interest rate decision of the South African Reserve Bank`s Monetary Policy
Committee (MPC). The MPC meeting has been scheduled for 15 and 16 August 2007.
Based on the current prime rate, the preference dividend payable for the period
1 March 2007 to 31 August 2007, would indicatively be 4 043 cents per Absa Bank
preference share.
In accordance with the provisions of Strate, the electronic settlement and
custody system used by the JSE Limited, and the JSE Listings Requirements, the
following salient dates for the payment of the preference dividend are
applicable:
Last day to trade cum dividend Friday, 24 August 2007
Shares trade ex dividend Monday, 27 August 2007
Record date Friday, 31 August 2007
Payment date Monday, 3 September 2007
Share certificates may not be dematerialised or rematerialised between Monday,
27 August 2007, and Friday, 31 August 2007, both dates inclusive.
On Monday, 3 September 2007, the dividend will be transferred electronically to
the bank accounts of certificated shareholders who use this facility. In respect
of those who do not, cheques dated 3 September 2007 will be posted on or about
that date. The accounts of shareholders who have dematerialised their shares
(which are held at their central securities depository participant or broker)
will be credited on Monday, 3 September 2007.
On behalf of the board
WR Somerville
Group secretary
Johannesburg
2 August 2007
Please note that the preference dividend calculation dates are 28 (29) February
and 31 August of each year and that the payment date may not be later than 45
days after the preference dividend calculation date.
Enquiries
Jacques Schindehutte
Group executive director
Absa Group Limited
5th floor, Absa Towers East, 170 Main Street, Johannesburg, 2001
Tel: +2711 350 4850, Fax: +2711 350 8433
e-mail: jacquessc@absa.co.za
Eric Wasserman
Group executive: Group Finance
Absa Group Limited
4th floor, Absa Towers East, 170 Main Street, Johannesburg, 2001
Tel: +2711 350 5887, Fax: +2711 350 6487
e-mail: ericwas@absa.co.za
Sponsor:
Merrill Lynch South Africa (Proprietary) Limited
Date: 02/08/2007 07:38:57 Produced by the JSE SENS Department.
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