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JSE NBKP
NBKP
NBKP - Nedbank - Reviewed Preliminary Financial Results for the year ended 31
December 2006 and dividend declaration.
Nedbank Limited
Reg No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN code: ZAE000043667
A Member of the Old Mutual Group
REVIEWED PRELIMINARY FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006
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 22
February 2007. Further information is provided on the website
www.nedbankgroup.co.za.
Board changes during the year
- Warren Clewlow retired as a non-executive director and Chairman after reaching
the mandatory retirement age (4 May 2006).
- 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.
- Thenjiwe Chikane was appointed as an independent non-executive director
(1 November 2006).
- Rick Cottrell retired as an independent non-executive director after reaching
the mandatory retirement age (30 November 2006).
Accounting policies
Nedbank Limited (the `company`) is a company domiciled in South Africa. The
reviewed financial results of the company at and for the year ended 31 December
2006 comprise the company and its subsidiaries (together referred to as the
`group`) and the group`s interests in associates and jointly controlled
entities.
The group`s principal accounting policies have been applied consistently with
those of the prior year, except where otherwise stated. These Nedbank reviewed
financial results have been prepared in accordance with the recognition and
measurement principles of International Financial Reporting Standards (IFRS). In
the preparation of these financial results the group has assumed certain key
sources of estimation in recording various assets and liabilities. These sources
of estimation were the same as those applied to the consolidated financial
statements as at the year ended 31 December 2005. These standards are subject to
ongoing review and possible amendments and the results may therefore be subject
to change at future reporting dates.
Restatement of 2005 results
1 Reclassification of transaction costs in non-interest revenue (NIR)
Expenses amounting to R51 million (2005: R70 million), directly related to NIR,
have been reclassified from operating expenses, consistent with industry
practice, and have been included in NIR.
These expenses represent transaction costs directly attributable to the
acquisition of trading instruments recorded at fair values, which do not include
transaction costs. The carrying amount of trading instruments, other than those
at fair value through profit or loss, generally includes transaction costs.
Consequently, transaction costs that would be included in the determination of
the effective interest rate of the instruments and the interest attributable to
the instrument have been disclosed within NIR. Comparative results have been
restated accordingly.
2 Goodwill on acquisition of BoE Bank Limited assets and liabilities by Nedbank
Limited
On the acquisition of the assets and liabilities of BoE Bank Limited, the excess
of the purchase prices over the identifiable assets, liabilities and contingent
liabilities was applied to reduce the loan amount owing to BoE Bank Limited. To
align the accounting with the purchase agreement the excess amounting to R807
million has been raised as goodwill. Comparative results have been restated
accordingly.
3 Segmental reporting comparative results
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 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.
Reviewed results - auditors` opinion
The group`s auditors, KPMG Inc. and Deloitte & Touche, have reviewed the
condensed consolidated preliminary financial statements which comprise the
balance sheet of Nedbank Limited and its subsidiaries at 31 December 2006, and
the related consolidated income statement, condensed statement of changes in
equity and condensed cash flow statement for the year then ended and their
unmodified review opinion is available for inspection at the company`s
registered office.
Nedbank non-redeemable non-cumulative preference shares - declaration of
dividend no 8
Notice is hereby given that preference dividend no 8 of 44,13699 cents per share
has been declared for the period from 1 July 2006 to 31 December 2006, payable
on Monday, 26 March 2007, to shareholders of the non-redeemable non-cumulative
preference shares recorded in the books of the company at the close of business
on Friday, 23 March 2007.
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 Thursday, 15 March 2007
Shares trade ex dividend Friday, 16 March 2007
Record date Friday, 23 March 2007
Payment date Monday, 26 March 2007
Share certificates may not be dematerialised or rematerialised between Friday,
16 March 2007, and Friday, 23 March 2007, 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, 26 March 2007.
For and on behalf of the board
RJ Khoza TA Boardman
Chairman Chief Executive
21 February 2007
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*, TCP Chikane, 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 year ended 31 December
Reviewed Audited
Rm 2006 2005
Interest and similar income 27 089 22 574
Interest expense and similar charges 16 600 13 878
Net interest income 10 489 8 696
Impairment charge on loans and advances 1 465 987
Income from lending activities 9 024 7 709
Non-interest revenue*# 8 566 7 454
Operating income 17 590 15 163
Total expenses 11 725 10 494
Operating expenses* 11 581 10 195
Merger and recovery programme expenses 121
BEE transaction expenses 144 178
Indirect taxation 334 213
Profit from operations before non-trading 5 531 4 456
and capital items
Non-trading and capital items 183 833
Impairment of goodwill (1) (1)
Profit on sale of subsidiaries, 242 934
investments and property and equipment
Net impairment of investments, property (58) (100)
and equipment and capitalised development
costs
Profit from operations 5 714 5 289
Share of profits of associates and joint 68 67
ventures
Profit before direct taxation 5 782 5 356
Direct taxation 1 645 898
Taxation on non-trading and capital items 24 37
Profit for the year 4 113 4 421
Attributable to:
Profit attributable to equity holders of 3 870 4 228
the parent
Profit attributable to minority interest 243 193
- ordinary shareholders
Profit for the year 4 113 4 421
* 2005 restated
# Foreign currency gains and losses are no longer separately disclosed, but
included in non-interest revenue.
Consolidated balance sheet
at 31 December
Reviewed Audited
Rm 2006 2005
Assets
Cash and cash equivalents 11 165 10 586
Other short-term securities 13 855 9 496
Derivative financial instruments 10 314 12 534
Government and other securities 22 031 22 505
Loans and advances* 319 180 249 162
Other assets 5 120 5 088
Clients` indebtedness for acceptances 2 544 1 248
Current taxation receivable 138 119
Investment securities 2 385 2 419
Non-current assets held for sale 41 66
Investments in associate companies and 690 397
joint ventures
Deferred taxation asset 48 626
Investment property 66 87
Property and equipment 3 323 3 039
Long-term employee benefit assets 1 357 1 225
Computer software and capitalised 1 236 1 281
development costs
Mandatory reserve deposits with central 7 026 5 732
bank
Goodwill* 1 369 1 370
Total assets 401 888 326 980
Total equity and liabilities
Ordinary share capital 27 27
Ordinary share premium 14 422 14 422
Reserves 9 583 6 263
Total equity attributable to equity 24 032 20 712
holders of the parent
Preference share capital and premium 2 770 2 770
Minority shareholders` equity
attributable to
- ordinary shareholders 955 872
- preference shareholders 300
Total equity 28 057 24 354
Derivative financial instruments 11 549 15 463
Amounts owed to depositors 339 164 271 244
Other liabilities 9 098 5 224
Liabilities under acceptances 2 544 1 248
Current taxation liabilities 338 333
Deferred taxation liabilities 1 410 774
Long-term employee benefit liabilities 1 210 1 067
Long-term debt instruments 8 518 7 273
Total liabilities 373 831 302 626
Total equity and liabilities 401 888 326 980
Guarantees on behalf of clients 15 235 11 064
* 2005 restated
Contingency note
Historically a number of group companies entered into structured finance
transactions with third parties using the tax base of these companies. Pursuant
to the terms of the majority of these transactions, the underlying third party
has contractually agreed to accept the risk of any tax being imposed by the
South African Revenue Service (`SARS`), although the obligation to pay in the
first instance rests with the group companies. It is only in limited cases
where, for example, the credit quality of a client becomes doubtful, or where
the client has specifically contracted out of the re-pricing of additional
taxes, that the recovery from a client could be less than the liability that
could arise on assessment, in which case provisions are made. SARS has examined
the tax aspects of some of these types of structures and SARS could assess these
structures in a manner contrary to that initially envisaged by the contracting
parties. As a result group companies could be obliged to pay additional amounts
to SARS and recover these from clients under the applicable contractual
arrangements.
Condensed consolidated statement of changes in equity
Total
equity Preference Minority
attributable share interest
to equity capital attributable
to
holders of and preference
Rm the parent premium shareholders
Balance at 31 December 2004 16 550 2 770 245
Net income recognised directly in 209 - -
equity
Foreign currency translation 64
reserve movement
Available-for-sale reserve (42)
movement
Revaluation of owner-occupied 153
property
Share-based payments reserve 28
movement
Capitalisation of minorities
Other 6
Profit for the year 4 228
Dividend paid to ordinary (524)
shareholders
Dividend paid to preference (228)
shareholders
Issues of shares net of expenses 477
Redemption of preference shares (245)
Balance at 31 December 2005 20 712 2 770 -
Net income recognised directly in 337 - -
equity
Foreign currency translation 88
reserve movement
Available-for-sale reserve 58
movement
Revaluation of owner-occupied 75
property
Share-based payments reserve 134
movement
Other (18)
Profit for the year 3 870
Dividend paid to ordinary (668)
shareholders
Dividend paid to preference (219)
shareholders
Shares issued/(repurchased) by 300
subsidiary
Balance at 31 December 2006 24 032 2 770 300
Condensed consolidated statement of changes in equity
Minority
interest
attributable to
ordinary Total
Rm shareholders equity
Balance at 31 December 2004 558 20 123
Net income recognised directly in 122 331
equity
Foreign currency translation reserve 64
movement
Available-for-sale reserve movement (42)
Revaluation of owner-occupied property 153
Share-based payments reserve movement 28
Capitalisation of minorities 107 107
Other 15 21
Profit for the year 193 4 421
Dividend paid to ordinary shareholders (1) (525)
Dividend paid to preference (228)
shareholders
Issues of shares net of expenses 477
Redemption of preference shares (245)
Balance at 31 December 2005 872 24 354
Net income recognised directly in - 337
equity
Foreign currency translation reserve 88
movement
Available-for-sale reserve movement 58
Revaluation of owner-occupied property 75
Share-based payments reserve movement 134
Other (18)
Profit for the year 243 4 113
Dividend paid to ordinary shareholders (10) (678)
Dividend paid to preference (219)
shareholders
Shares issued/(repurchased) by (150) 150
subsidiary
Balance at 31 December 2006 955 28 057
Condensed consolidated cash flow statement
for the year ended 31 December
Reviewed Audited
Rm 2006 2005
Cash generated by operations 8 114 6 673
Change in funds for operating (5 267) 1 291
activities
Net cash generated from operating 2 847 7 964
activities before taxation
Taxation paid (752) (725)
Cash flows from operating activities 2 095 7 239
Cash flows utilised by investing (730) (302)
activities
Cash flows from/(utilised by) 508 (201)
financing activities
Net increase in cash and cash 1 873 6 736
equivalents
Cash and cash equivalents at the 16 318 9 582
beginning of the year*
Cash and cash equivalents at the end 18 191 16 318
of the year*
* Including mandatory reserve deposits with central bank.
Condensed geographical segmental reporting
for the year ended 31 December
Reviewed Audited Reviewed Audited
December December December December
2006 2005 2006 2005
Operating Operating Headline Headline
Rm income income* earnings earnings
South Africa 17 616 14 694 4 176 2 884
Business operations 17 612 14 568 4 512 3 406
BEE transaction costs (121) (334)
Merger and recovery (86)
programme expenses
Foreign currency 4 126 4 126
translation gains
Profit attributable to (219) (228)
minority interest -
preference shareholders
Rest of Africa 657 512 76 135
Business operations 657 512 99 135
BEE transaction costs (23)
Rest of world 675 603 183 148
Business operations 675 603 183 182
Merger and recovery (34)
programme expenses
Total per Nedbank Group 18 948 15 809 4 435 3 167
Fellow-subsidiary (1 358) (646) (724) 265
adjustments
Total 17 590 15 163 3 711 3 432
* Restated
Condensed operational segmental reporting
for the year ended 31 December
Reviewed Audited Reviewed Audited
December December December December
2006 2005 2006 2005
Rbn Rbn Rm Rm
Total Total Operating Operating
assets assets* income income*
Nedbank Capital 138 117 2 605 2 302
Nedbank Corporate 175 138 7 654 6 223
Nedbank Retail 125 96 8 591 7 208
Imperial Bank 30 22 932 740
Shared Services 9 9 228 306
Central management 12 15 (859) (823)
Eliminations (64) (45) (203) (147)
Total per Nedbank Group 425 352 18 948 15 809
Fellow-subsidiary (23) (25) (1 358) (646)
adjustments
Total 402 327 17 590 15 163
* Restated
Reviewed Audited
December December
2006 2005
Rm Rm
Headline Headline
earnings earnings*
Nedbank Capital 1 145 971
Nedbank Corporate 2 553 1 894
Nedbank Retail 1 463 896
Imperial Bank 193 147
Shared Services (176) 104
Central management (743) (845)
Eliminations
Total per Nedbank Group 4 435 3 167
Fellow-subsidiary adjustments (724) 265
Total 3 711 3 432
* Restated
These results and additional information are available on www.nedbankgroup.co.za
Date: 22/02/2007 08:01:02 Produced by the JSE SENS Department.
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