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JSE NBKP
NBKP
Nedbank Limited - Reviewed financial results, six months ended 30 June 2006
Nedbank Limited
Reg No 1951/000009/06
Incorporated in the Republic of South Africa
Share code: NBKP
ISIN code: ZAE000043667
Reviewed financial results
for the six months ended 30 June 2006
These results and additional information are available on our website:
www.nedbankgroup.co.za
Overview
Nedbank is a wholly owned subsidiary of Nedbank Group Limited, which is listed
on the JSE Limited. These consolidated financial results are published to
provide information to holders of Nedbank"s listed non-redeemable non-cumulative
preference shares.
Commentary relating to the consolidated Nedbank financial results is included in
the Nedbank Group Limited group results, as presented to shareholders on 7
August 2006. Further information is provided on the website:
www.nedbankgroup.co.za.
Board changes during the period
Warren Clewlow retired as a non-executive director and Chairman after reaching
the mandatory retirement age (4 May 2006). The Chairman designate, Dr Reuel
Khoza, succeeded Warren Clewlow as Chairman (4 May 2006). Julian Roberts
resigned as a non-executive director (5 May 2006) following his appointment as
Chief Executive Officer and a director of Old Mutual plc"s subsidiary, Skandia.
Accounting policies
The group"s principal accounting policies have been applied consistently and
these Nedbank financial results have been prepared in accordance with IAS 34:
Interim Financial Reporting.
Restatements of 2005 results
The group"s balance sheet for the June 2005 reporting period was restated, in
line with the final 2005 year-end adjustments, to reflect the requirements of
reporting under IFRS. These restatements, after the 3 May 2005 SENS announcement
on the transition to IFRS, are reflected in the accompanying table as follows:
1. The group changed its treatment of operating leases with fixed escalations
from previously being expensed on a cash basis to being expensed on a straight-
line basis in terms of circular 7/2005 issued by the South African Institute of
Chartered Accountants on 2 August 2005 and in accordance with IAS 17: Leases.
2. The International Accounting Standards Board issued the fair value option
(FVO) amendment to IAS 39: Financial Instruments: Recognition and Measurement.
The FVO amendment defines the criteria under which an entity is permitted to
designate a financial instrument at initial recognition as being at fair value
through profit or loss (FVTPL).
Previously the group fair-valued certain assets and liabilities, with the
intention of eliminating any accounting mismatch. These instruments were
designated as held-for-trading on transition or inception. The FVO amendment
changed this and the FVTPL designation was applied. Any one of the following
conditions need to be met to designate a financial instrument as at FVTPL:
- accounting mismatch - this eliminates or significantly reduces a measurement
or recognition inconsistency that would arise from measuring assets or
liabilities or recognising gains or losses on such assets using a different
basis; or
- documented risk management or investment strategy - where a group of financial
assets and liabilities is managed and performance is evaluated on a fair-value
basis and this is documented and reported internally on this basis; or
- embedded derivatives - where the financial instrument contains an embedded
derivative, which significantly modifies the cash flows of the host contract or
where the embedded derivative would clearly require separation.
Nedbank Group, in line with Old Mutual plc, early-adopted the FVO amendment to
IAS 39 as from 1 September 2005 and restated its results as of 1 January 2004.
The group reviewed all previously designated assets and liabilities which were
classified as held-for-trading, and all assets and liabilities that did not meet
the required criteria were de-designated.
3. Previously the group did not consolidate its disability fund in the results.
In terms of IAS 27: Consolidated and Separate Financial Statements, the
disability fund was incorporated as at 31 December 2005 and comparative figures
were restated from 1 January 2004.
4. In terms of IAS 1: Presentation of Financial Statements, the group chose, as
at 31 December 2005, to present assets and liabilities on the face of the
balance sheet in order of their liquidity. Therefore mandatory deposits in terms
of the SARB regulations were reclassified from cash and cash equivalents to a
separate line on the face of the balance sheet.
5. Foreign exchange spot trades were reclassified, as at 31 December 2005, from
derivative financial instruments to either other assets or other liabilities on
the balance sheet.
6. In previous periods loans to associates and joint ventures were included in
the carrying value of associate investments and from 31 December 2005 these
loans were reclassified on the balance sheet to be included in loans and
advances.
7. Deferred revenue was previously disclosed separately on the balance sheet and
from 31 December 2005 was reclassified against the individual loans and advances
to which it relates.
8. The first-time consolidation of a subsidiary on 1 January 2004 resulted in
realised reserves of R132 million being incorrectly classified as available-for-
sale reserves. These reserves were reclassified in the December 2005 balance
sheet as distributable reserves from 1 January 2004, with no effect on overall
equity attributable to ordinary shareholders.
9. Segmental reporting comparative results were restated for 2005 to take
account of the ongoing changes for improved profitability measurement. The
restatements relate to the introduction, during 2006, of the allocation of the
group"s STC costs in respect of dividends payable to each cluster, based on
profitability, and the alignment of Imperial Bank"s contribution, net of
minorities, to exclude all group profitability measurement adjustments.
The above restatements have no effect on the June 2005 income statement or the
earnings per share calculation.
*At 30 June 2005 interest and similar income has been restated from R12 208
million to R11 374 million interest expense and similar charge has been restated
from R7 853 million to R7 019 million for the reallocation of intergroup
interest, with no effect to net interest income of R4 355 million.
Reviewed results - auditors" opinion
The company"s auditors, KPMG Inc and Deloitte & Touche, have reviewed these
results and their review opinion is available for inspection at the company"s
registered office.
Nedbank non-redeemable non-cumulative preference shares - declaration of
dividend no 7
Notice is hereby given that preference dividend no 7 of 39,27740 cents per share
has been declared for the period from 1 January 2006 to 30 June 2006, payable on
Monday, 4 September 2006, to shareholders of the non-redeemable non-cumulative
preference shares recorded in the books of the company at the close of business
on Friday, 1 September 2006.
In accordance with the provisions of STRATE, the electronic settlement and
custody system used by the JSE Limited, the relevant dates for the payment of
the dividend are as follows:
Last day to trade cum dividend Friday, 25 August 2006
Shares trade ex dividend Monday, 28 August 2006
Record date Friday, 1 September 2006
Payment date Monday, 4 September 2006
Share certificates may not be dematerialised or rematerialised between Monday,
28 August 2006, and Friday, 1 September 2006, both days inclusive.
Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders" bank accounts on payment date. In
the absence of specific mandates, dividend cheques will be posted to
shareholders. Shareholders who have dematerialised their share certificates will
have their accounts, at their CSDP or broker, credited on Monday, 4 September
2006.
For and on behalf of the board
RJ Khoza TA Boardman
Chairman Chief Executive
7 August 2006
Registered office:
Nedbank Sandton, 135 Rivonia Road, Sandown, 2196;
PO Box 1144, Johannesburg, 2000
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg, 2001;
PO Box 61051,
Marshalltown, 2107
Directors: Dr RJ Khoza (Chairman), Prof MM Katz (Vice-chairman),
ML Ndlovu (Vice-chairman), TA Boardman* (Chief Executive),
CJW Ball, MWT Brown*, RG Cottrell, BE Davison, N Dennis (British),
MA Enus-Brey, Prof B de L Figaji, RM Head (British), JB Magwaza,
ME Mkwanazi, CML Savage, GT Serobe, JH Sutcliffe (British)
* Executive
Company Secretary:
GS Nienaber
Sponsors:
Investec Bank Limited, Nedbank Capital
Consolidated income statement
for the period ended Reviewed Reviewed Audited
June June December
Rm 2006 2005* 2005
Interest and similar income 12 118 11 374 22 574
Interest expense and similar 7 253 7 019 13 878
charge
Net interest income 4 865 4 355 8 696
Impairment charge on loans and 804 597 987
advances
Income from lending activities 4 061 3 758 7 709
Non-interest revenue 4 073 3 288 7 524
Operating income 8 134 7 046 15 233
Total expenses 5 369 4 921 10 564
Operating expenses 5 304 4 869 10 265
Merger and recovery programme 52 121
expenses
BEE transaction expenses 65 178
Indirect taxation 151 161 213
Profit from operations before non- 2 614 1 964 4 456
trading and capital items
Non-trading and capital items 250 2 833
Impairment of goodwill (1)
Profit/(loss) on sale of 260 (14) 934
subsidiaries, investments and
property and equipment
Net impairment of investments, (10) 16 (100)
property and equipment and
capitalised development costs
Profit from operations 2 864 1 966 5 289
Share of profits of associates and 17 30 67
joint ventures
Profit before direct taxation 2 881 1 996 5 356
Direct taxation 785 387 898
Taxation on non-trading and 33 37
capital items
Profit for the period 2 063 1 609 4 421
Attributable to:
Profit attributable to equity 1 951 1 533 4 228
holders of the parent
Profit attributable to minority 112 76 193
interest - ordinary shareholders
Profit for the period 2 063 1 609 4 421
* Restated
Consolidated balance sheet
as at Reviewed Reviewed Audited
June June December
2006 2005 2005
Rm Restated
Assets
Cash and cash equivalents 8 587 7 911 10 586
Other short-term securities 13 347 14 054 9 496
Derivative financial instruments 11 154 12 373 12 534
Government and other securities 20 646 24 122 22 505
Loans and advances 278 447 245 751 249 969
Other assets 6 110 5 694 5 088
Clients" indebtedness for 1 617 1 396 1 248
acceptances
Current taxation receivable 119 173 119
Investment securities 2 595 2 501 2 419
Non-current assets held for sale 7 48 66
Investments in associate companies 390 482 397
and joint ventures
Deferred taxation asset 125 1 306 626
Investment property 71 119 87
Property and equipment 3 127 2 682 3 039
Post-employment assets 1 279 1 166 1 225
Computer software and capitalised 1 226 1 281 1 281
development costs
Mandatory reserve deposits with 6 026 5 755 5 732
central bank
Goodwill 563 540 563
Total assets 355 436 327 354 326 980
Total equity and liabilities
Ordinary share capital 27 27 27
Ordinary share premium 14 422 13 945 14 422
Reserves 7 631 4 074 6 263
Total equity attributable to 22 080 18 046 20 712
equity holders of the parent
Preference share capital and 2 770 2 770 2 770
premium
Minority shareholders" equity
attributable to
- ordinary shareholders 828 706 872
- preference shareholders 300
Total equity 25 978 21 522 24 354
Derivative financial instruments 14 260 14 579 15 463
Amounts owed to depositors 290 152 274 677 271 244
Other liabilities 11 976 5 667 5 224
Liabilities under acceptances 1 617 1 396 1 248
Current taxation liabilities 371 209 333
Deferred taxation liabilities 742 888 774
Post-employment liabilities 1 124 1 085 1 067
Long-term debt instruments 9 216 7 331 7 273
Total liabilities 329 458 305 832 302 626
Total equity and liabilities 355 436 327 354 326 980
Guarantees on behalf of clients 12 798 9 352 11 064
excluded from assets
Cash flow statement
for the period ended Reviewed Reviewed Audited
June June December
2006 2005 2005
Rm Restated
Cash generated by operations 3 821 2 855 6 673
Change in funds for operating (6 524) 1 823 1 291
activities
Net cash (used in)/generated from (2 703) 4 678 7 964
operating activities before
taxation
Taxation paid (198) (306) (725)
Net cash (used in)/generated from (2 901) 4 372 7 239
operating activities
Net cash (used in)/generated from (387) 184 (302)
investment activities
Net cash generated from/(used in) 1 583 (472) (201)
financing activities
Net (decrease)/increase in cash (1 705) 4 084 6 736
and cash equivalents
Cash and cash equivalents at 16 318 9 582 9 582
beginning of the period*
Cash and cash equivalents at end 14 613 13 666 16 318
of the period*
* Including mandatory deposits with central bank
Statement of changes in equity
Minority
Ordinary Preference attributable
to
shareholders" shareholders" preference
Rm equity equity shareholders
Balance at 31 December 2004 16 670 2 770 245
Additional effect of adopting (120)
IFRS
Restated balance at 31 16 550 2 770 245
December 2004
Net income recognised directly 283
in equity
Foreign currency translation 60
reserve movement
Available-for-sale reserve 234
movement
Capitalisation of minority
Other movements (11)
Profit for the period 1 533
Dividends paid to ordinary (204)
shareholders
Dividends paid to preference (116)
shareholders
Redemption of preference (245)
shares
Balance at 30 June 2005 18 046 2 770
Net income recognised directly (74)
in equity
Foreign currency translation 4
reserve movement
Available-for-sale reserve (276)
movement
Revaluation of owner-occupied 153
property
Share based payments reserve 28
movement
Capitalisation of minority
Other movements 17
Profit for the period 2 695
Dividends paid to ordinary (320)
shareholders
Dividends paid to preference (112)
shareholders
Issues of shares net of 477
expenses
Balance at 31 December 2005 20 712 2 770
Net income recognised directly (73)
in equity
Foreign currency translation 26
reserve movement
Available-for-sale reserve (124)
movement
Share based payments reserve 55
movement
Other movements (30)
Profit for the year 1 951
Dividends paid to ordinary (400)
shareholders
Dividends paid to preference (110)
shareholders
Shares issued/(repurchased) by 300
subsidiary
Balance at 30 June 2006 22 080 2 770 300
Statement of changes in equity
Minority
attributable Total
to
ordinary shareholders"
Rm shareholders equity
Balance at 31 December 2004 559 20 244
Additional effect of adopting (1) (121)
IFRS
Restated balance at 31 558 20 123
December 2004
Net income recognised directly 72 355
in equity
Foreign currency translation 60
reserve movement
Available-for-sale reserve 234
movement
Capitalisation of minority 70 70
Other movements 2 (9)
Profit for the period 76 1 609
Dividends paid to ordinary (204)
shareholders
Dividends paid to preference (116)
shareholders
Redemption of preference (245)
shares
Balance at 30 June 2005 706 21 522
Net income recognised directly 50 (24)
in equity
Foreign currency translation 4
reserve movement
Available-for-sale reserve (276)
movement
Revaluation of owner-occupied 153
property
Share based payments reserve 28
movement
Capitalisation of minority 37 37
Other movements 13 30
Profit for the period 117 2 812
Dividends paid to ordinary (1) (321)
shareholders
Dividends paid to preference (112)
shareholders
Issues of shares net of 477
expenses
Balance at 31 December 2005 872 24 354
Net income recognised directly 1 (72)
in equity
Foreign currency translation 26
reserve movement
Available-for-sale reserve (124)
movement
Share based payments reserve 55
movement
Other movements 1 (29)
Profit for the year 112 2 063
Dividends paid to ordinary (7) (407)
shareholders
Dividends paid to preference (110)
shareholders
Shares issued/(repurchased) by (150) 150
subsidiary
Balance at 30 June 2006 828 25 978
Segmental analysis by operation
for the period ended Reviewed Reviewed Audited
June 2006 June 2005 December 2005
Restated Restated
Rbn Rbn Rbn
Total Total Total
assets assets assets
Nedbank Corporate 149 129 138
Nedbank Capital 132 116 117
Nedbank Retail 108 86 96
Imperial Bank 26 18 22
Shared Services 7 9 9
Central Costs 13 18 15
Eliminations (50) (40) (45)
Total per Nedbank Group 385 336 352
Fellow-subsidiary adjustment (30) (9) (25)
Total 355 327 327
for the period ended Reviewed Reviewed Audited
June 2006 June 2005 December 2005
Restated Restated
Rm Rm Rm
Operating Operating Operating
income income income
Nedbank Corporate 3 529 2 872 6 223
Nedbank Capital 1 387 1 135 2 442
Nedbank Retail 3 975 3 346 7 208
Imperial Bank 427 315 740
Shared Services 23 162 306
Central Costs (437) (475) (823)
Eliminations (80) (70) (147)
Total per Nedbank Group 8 824 7 285 15 949
Fellow-subsidiary adjustment (690) (239) (716)
Total 8 134 7 046 15 233
for the period ended Reviewed Reviewed Audited
June 2006 June 2005 December 2005
Restated Restated
Rm Rm Rm
Headline Headline Headline
earnings earnings earnings
Nedbank Corporate 1 214 885 1 894
Nedbank Capital 576 427 971
Nedbank Retail 711 419 896
Imperial Bank 89 57 147
Shared Services (98) (29) 104
Central Costs (388) (361) (845)
Eliminations
Total per Nedbank Group 2 104 1 398 3 167
Fellow-subsidiary adjustment (370) 133 265
Total 1 734 1 531 3 432
Geographical segmental reporting
for the period ended Reviewed Reviewed Audited
June 2006 June 2005 December 2005
Operating Operating Operating
Rm income income income
South Africa 8 240 6 704 14 834
Business operations 8 237 6 539 14 708
BEE transaction costs
Merger and recovery
programme expenses
Foreign currency translation 3 165 126
profit/(loss)
Minority profit income
attributable to minority
preference shareholders
Rest of Africa 281 237 512
Rest of World 303 344 603
Business operations 303 344 603
Merger and recovery
programme expenses
Total per Nedbank Group 8 824 7 285 15 949
Fellow-subsidiary adjustments (690) (239) (716)
Total 8 134 7 046 15 233
for the period ended Reviewed Reviewed Audited
June 2006 June 2005 December 2005
Headline Headline Headline
Rm earnings earnings earnings
South Africa 1 984 1 210 2 884
Business operations 2 154 1 214 3 406
BEE transaction costs (63) (334)
Merger and recovery (53) (86)
programme expenses
Foreign currency translation 3 165 126
profit/(loss)
Minority profit income (110) (116) (228)
attributable to minority
preference shareholders
Rest of Africa 41 79 135
Rest of World 79 109 148
Business operations 79 109 182
Merger and recovery (34)
programme expenses
Total per Nedbank Group 2 104 1 398 3 167
Fellow-subsidiary adjustments (370) 133 265
Total 1 734 1 531 3 432
Balance sheet restatements
IAS 17 IAS 39 IAS 19
June Operating Fair value
2005 leases through Disability
Rm Reported expensed profit and fund
IFRS* loss
Cash and cash equivalents 13 666
Derivative financial 12 624
instruments
Loans and advances 245 991 (115)
Other assets 5 430 1
Deferred acquisition costs 12
Investments in associate 569
companies and joint
ventures
Deferred taxation asset 1 235 35 36
Post-employment assets 974 192
Mandatory reserve deposits
with central bank
Reserves as previously 4 194 (81) (82) 43
reported
Total equity attributable 18 166 (81) (82) 43
to ordinary share holders
Profit attributable to
minority ordinary
shareholders"
- Ordinary shareholders 707 (1)
Total equity 21 643 (82) (82) 43
Derivative financial 14 827
instruments
Amounts owed to depositors 274 674 3
Other liabilities 5 267 118
Deferred taxation 870 18
liabilities
Post-employment 954 131
liabilities
Deferred revenue 246
* Refer SENS announcement 4 August 2005
Reclassifications
Mandatory Derivative June
deposits spot trades Loans and Deferred 2005
with
Rm regulators Reclassi- Investments revenue Restated
fication
Cash and cash (5 755) 7 911
equivalents
Derivative (251) 12 373
financial
instruments
Loans and 87 (212) 245 751
advances
Other assets 251 12 5 694
Deferred (12)
acquisition
costs
Investments in (87) 482
associate
companies and
joint ventures
Deferred 1 306
taxation asset
Post- 1 166
employment
assets
Mandatory 5 755 5 755
reserve
deposits with
central bank
Reserves as 4 074
previously
reported
Total equity 18 046
attributable
to ordinary
share holders
Profit
attributable
to minority
ordinary
shareholders"
- Ordinary 706
shareholders
Total equity 21 522
Derivative (248) 14 579
financial
instruments
Amounts owed 274 677
to depositors
Other 248 34 5 667
liabilities
Deferred 888
taxation
liabilities
Post- 1 085
employment
liabilities
Deferred (246)
revenue
* Refer SENS announcement 4 August 2005
Date: 07/08/2006 08:56:24 AM Produced by the JSE SENS Department
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