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Nedcor Limited - IFRS Financial Effects Of BEE Transaction
NEDCOR LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1966/010630/06
JSE share code: NED
ISIN code: ZAE000004875
(`Nedcor` or `the group`)
NEDCOR LIMITED - IFRS FINANCIAL EFFECTS OF BEE TRANSACTION
Further to the announcement on Nedcor`s adoption of International Financial
Reporting Standards (`IFRS`) issued on 3 May 2005 and the group`s broad-based
black economic empowerment (`BEE`) transaction announcement issued on 19 April
2005 , the pro forma IFRS financial effects of the BEE transaction for the
financial year ended 31 December 2004 are detailed below.
As advised on 19 April 2005 the anticipated economic cost of the BEE transaction
over ten years remains R968 million after tax. Assuming the deal is implemented
in late July or early August 2005, which is subject to regulatory and
shareholder approval, the IFRS 2 impact incurred in the second six months of the
2005 financial year is expected to be approximately R140 million after tax. The
long-term business benefits of the transaction are expected to outweigh the
costs.
The pro forma IFRS financial effects shown below have been prepared for
illustrative purposes only in order to provide information on how the
transaction might have affected the financial results and position of the Nedcor
consolidated results from 1 January 2004 for income statement effects and at 31
December 2004 for the balance sheet effects, and, because of their nature, these
financial effects may not give a true reflection of the actual financial effects
of the BEE transaction.
PREVIOUS ACCOUNTING POLICIES
As per the announcement of the BEE transaction on 19 April 2005:
31 December 2004 Before the After the
Nedcor BEE Nedcor BEE
Transaction Transaction
and issue and issue
of shares of shares Change
(cents) (cents) %
Attributable earnings
per share (`EPS`) 270 270 (0,05)
Fully diluted EPS 269 254 (5,65)
Headline earnings per
share (`HEPS`) 401 400 (0,14)
Fully diluted HEPS 400 377 (5,86)
Ordinary shareholders`
equity (Rm) 18 095 18 177 0,45
Net asset value (`NAV`)
per share 4 590 4 594 0,10
Tangible net asset value
(`TNAV`) per share 3 357 3 366 0,27
FINANCIAL EFFECTS APPLYING IFRS:
31 December 2004 Before the After the
Nedcor BEE Nedcor BEE
Transaction Transaction
and issue and issue
of shares of shares Change
(cents) (cents) %
Attributable earnings
per share (`EPS`) (1)(3)(4) 423 357 (15,54)
Fully diluted EPS (1)(3)(4) 422 336 (20,38)
Headline earnings per
share (`HEPS`) (1)(3)(4) 483 417 (13,67)
Fully diluted HEPS (1)(3)(4) 481 392 (18,62)
Ordinary shareholders`
equity (Rm) 18 497 18 580 0,45
Net asset value (`NAV`)
per share(2)(5) 4 692 4 696 0,09
Tangible net asset value
(`TNAV`) per share(2)(5) 3 400 3 408 0,26
The 2004 pro forma IFRS impact of the BEE deal is exaggerated as Nedcor`s 2004
earnings were low owing to the group being in the early stages of its three year
recovery programme and the impact of the 2004 recovery programme one-off costs.
The key differences in respect of the accounting for the BEE deal between
previous accounting policies and the new accounting policies which apply IFRS is
the introduction of IFRS2 - Share-based Payments, which results in an additional
charge to the income statement.
Notes:
(1) The `Before the Nedcor BEE transaction and issue of shares` column reflects
the earnings and headline earnings per Nedcor share for the year ended 31
December 2004 as announced on 3 May 2005 on an IFRS basis. The `After the Nedcor
BEE transaction and issue of shares` column reflects the earnings and headline
earnings adjusted for the financial effects of the various schemes based on the
assumption that the transaction was implemented from 1 January 2004.
(2) The `Before the Nedcor BEE transaction and issue of shares` column reflects
the net asset value per Nedcor share at 31 December 2004 as announced on 3 May
2005 on an IFRS basis. The `After the Nedcor BEE transaction and issue of
shares` column reflects the net asset value per Nedcor share after the
consideration received from the various schemes and an enlarged number of shares
based on the assumption that the transaction was implemented on 31 December
2004.
(3) The `Before the Nedcor BEE transaction and issue of shares` column weighted
average number of shares in issue used in calculating EPS was 360,88 million and
in calculating fully diluted EPS was 361,75 million.
(4) The `After the Nedcor BEE transaction and issue of shares` column weighted
average number of shares in issue used in calculating EPS was 362,30 million and
in calculating fully diluted EPS was 385,25 million (this includes Nedcor shares
expected to vest under the transaction).
(5) In calculating NAV and TNAV per share the number of shares in issue as at 31
December 2004 was 394,21 million and in determining the pro forma NAV and TNAV
per share, the number of shares in issue was 395,63 million (including 1,4
million shares that vest immediately as a result of the transaction).
Sandton
5 May 2005
For further information kindly contact
Tier 1 Investor Relations
+27 (0)21 702 3102
Sponsors
Merrill Lynch South Africa (Pty) Ltd
Nedbank Capital
Date: 05/05/2005 08:32:05 AM
Produced by the JSE SENS Department
