11th Sep 2007 07:30
Abbey National PLC11 September 2007 Abbey National plc - Unaudited Interim Announcement Six Months Ended 30 June 2007 On 26 July 2007, Abbey National plc ("Abbey") issued a Trading Statementsummarising the results for the six months ended 30 June 2007. That statementwas unaudited and did not comprise an interim results announcement. It containednarrative on business trends and new business. This statement is a follow-up tothe Trading Statement and comprises Abbey's unaudited interim resultsannouncement. It contains unaudited primary financial statements, including anincome statement, balance sheet, statement of recognised income and expense, andcash flow statement. For further details of business trends it should be read inconjunction with the Trading Statement issued on 26 July 2007. Whilst thefinancial information included in this interim announcement has been prepared inaccordance with International Financial Reporting Standards (IFRS), thisannouncement does not contain all the financial statement disclosures that wouldbe required under IFRS. The accounting policies adopted by Abbey in the periodcovered by this announcement are consistent with those described in the 2006Annual Report and Accounts. Summarised Consolidated Income Statement For the six months ended 30 June 2007 and 2006 30 June 30 JuneContinuing operations 2007 2006 £m £mNet interest income 735 584Non-interest income 633 611Total operating income 1,368 1,195Administrative expenses (685) (708)Depreciation and amortisation (97) (109)Impairment losses on loans and advances (109) (127)Share of loss of associates (1) (1)Profit on continuing operations before tax 476 250Tax on profit on continuing operations (117) (60)Profit on continuing operations after tax 359 190Discontinued operations:Profit for the period from discontinued operations - 53Impairment losses from discontinued operations - (232)Loss for the period from discontinued operations - (179)Profit for the period 359 11 2007 compared to 2006 Profit before tax from continuing operations of £476m compared to a profit of£250m in 2006 and marks a significant improvement on 2006. Material movements byline include: • net interest income of £735m (2006: £584m) increased by over 25%. The increase relates in part to earnings on the proceeds from the sale of the life businesses in 2006. The remaining movement was largely due to asset growth of over 7% and improved liability growth combined with margin management. In total, spreads were stronger than the same period last year benefiting from improvement in liability spreads; • non-interest income of £633m (2006: £611m) benefited from slightly higher Retail Banking income and strong growth in investment related income. This was driven by our success in the tax year campaign and a stronger range of investments and bundled saving products. The increase is also driven, to a large extent, by hedging losses in the first half of 2006 (not repeated in 2007), improved results in financial markets and gains on the sale of motor finance businesses in 2007. • administrative expenses of £685m (2006: £708m) reduced by a further 3%, with the majority of the savings relating to employment costs driven by headcount reductions predominantly in 2006; • depreciation and amortisation of £97m (2006: £109m) decreased by 11% due to the write off of assets that took place in 2006; • provision charge in relation to bad and doubtful debts of £109m (2006: £127m). Provisions have stabilised through the first half of 2007. This performance was due largely to the continued strong quality of secured assets, offset in part by a deterioration of quality in the unsecured portfolio as expected; • discontinued operations represent the Life insurance businesses. In 2006, Abbey sold its entire life insurance business to Resolution plc for cash consideration of approximately £3.6bn. The principal life companies sold were Scottish Mutual Assurance plc, Scottish Provident Limited and Abbey National Life plc, as well as the two offshore life companies, Scottish Mutual International plc and Scottish Provident International Life Assurance Limited. As at 30 June 2007, 31 December 2006 and 30 June 2006 As at As at As at 30 June 2007 31 December 2006 30 June 2006 £m £m £mAssetsCash and balances at central banks 818 888 3,114Trading assets 69,033 62,314 64,995Derivative financial instruments 9,564 8,336 7,761Financial assets designated at fair value 8,371 8,713 4,158Loans and advances to banks 2,835 2,242 33Loans and advances to customers 106,293 103,146 99,581Available for sale securities 24 23 7Investment in associated undertakings 21 22 30Intangible assets 90 90 98Property, plant and equipment 463 415 344Operating lease assets 2,070 2,082 2,133Current tax assets 241 223 472Deferred tax assets 712 804 771Other assets 2,419 2,507 1,763Assets classified as held for sale - - 28,920Total assets 202,954 191,805 214,180 Deposits by banks 4,497 6,656 1,132Deposits by customers 68,026 66,519 66,526Derivative financial instruments 11,727 10,218 8,435Trading liabilities 58,048 57,604 66,671Financial liabilities designated at fair value 7,483 8,151 8,905Debt securities in issue 37,376 28,998 21,773Other borrowed funds 1,573 1,655 1,920Subordinated liabilities 4,484 5,020 6,033Macro hedge of interest rate risk 345 174 52Other liabilities 4,037 1,616 2,021Other provisions 142 180 147Current tax liabilities 447 300 414Deferred tax liabilities 565 564 629Retirement benefit obligations 722 1,034 1,107Liabilities classified as held for sale - - 25,340Total liabilities 199,472 188,689 211,105 Share capital 148 148 148Share premium account 1,857 1,857 1,857Retained earnings 1,477 1,111 1,070Total shareholders equity 3,482 3,116 3,075Total liabilities and equity 202,954 191,805 214,180 For the six months ended 30 June 2007 2007 £m Exchange differences on translation of foreign operations (1)Actuarial gains and losses on defined benefit pension plans 297Tax on items taken directly to equity (89)Net gains recognised directly in equity 207Profit for the period 359Total recognised income and expense for the period 566 Attributable to:Equity holders of the parent 566 566 An interim dividend of £200m for 2007 was declared on 26 June 2007 on Abbey'sordinary shares in issue. The dividend will be paid during the second half of2007. Consolidated Cash Flow Statement For the six months ended 30 June 2007 and 2006 2007 2006 £m £m Net cash flow from / (used in) operating activities 4,938 (1,557) Cash flows from / (used in) investing activitiesDividends received from associates - 2Investment in associates - (7)Purchase of tangible and intangible fixed assets (135) (104)Proceeds from tangible and intangible fixed assets 4 -Purchase of non-dealing securities (1) (3)Net cash flow (used in) investing activities (132) (112) Cash flows from / (used in) financing activitiesIssue of loan capital 11,636 2,223Repayment of loan capital (3,088) (2,748)Net cash flows from financing activities 8,548 (525) Net increase / (decrease) in cash and cash equivalents 13,354 (2,194) Cash and cash equivalents at beginning of the period (3,847) 8,241Effects of exchange rate changes on cash and cash equivalents (252) (507)Cash and cash equivalents at the end of the period 9,255 5,540 Abbey is a registered trademark. Abbey & Santander Abbey National plc ("Abbey") is a wholly owned subsidiary of Banco SantanderS.A. ("Santander") (SAN.MC,STD.N). Founded in 1857, Santander has more than 60million customers, over 10,000 offices and a presence in over 40 countries. Itis the largest financial group in Spain and is a major player in Latin Americaand elsewhere in Europe, including in the United Kingdom (through Abbey) and inPortugal. Through Santander Consumer it also operates a leading consumer financefranchise in Germany, Italy, Spain and ten other European countries. Santanderhas a secondary listing of its ordinary shares on the London Stock Exchange andAbbey continues to have its preference shares listed on the London StockExchange. Nothing in this press release constitutes or should be construed asconstituting a profit forecast. Disclaimer Abbey and Santander both caution that this press release may containforward-looking statements. The US Private Securities Litigation Reform Act of1995 contains a safe harbour for forward-looking statements on which we rely inmaking such statements in documents filed with the US Securities and ExchangeCommission. Such forward-looking statements are found in various placesthroughout this press release. Words such as "believes", "anticipates","expects", "intends", "aims" and "plans" and similar expressions are intended toidentify forward looking statements, but they are not the exclusive means ofidentifying such statements. Forward-looking statements include, withoutlimitation, statements concerning our future business development and economicperformance. These forward looking statements are based on management's currentexpectations, estimates and projections and both Abbey and Santander cautionthat these statements are not guarantees of future performance. We also cautionreaders that a number of important factors could cause actual results to differmaterially from the plans, objectives, expectations, estimates and intentionsexpressed in such forward-looking statements. These factors include, but are notlimited to, (1) inflation, interest rate, exchange rate, market and monetaryfluctuations; (2) the effect of, and changes to, regulation and governmentpolicy; (3) the effects of competition in the geographic and business areas inwhich we conduct operations; (4) technological changes; and (5) our success atmanaging the risks of the foregoing. The foregoing list of important factors isnot exhaustive. When relying on forward-looking statements to make decisionswith respect to Abbey or Santander, investors and others should carefullyconsider the foregoing factors and other uncertainties and events. Suchforward-looking statements speak only as of the date on which they are made, andwe do not undertake any obligation to update or revise any of them, whether as aresult of new information, future events or otherwise. Statements as tohistorical performance, historical share price or financial accretion are notintended to mean that future performance, future share price or future earnings(including earnings per share) for any period will necessarily match or exceedthose of any prior year. This announcement is not a form of statutory accounts. The information for theyear ended 31 December 2006 does not constitute statutory accounts as defined insection 240 of the Companies Act 1985. A copy of the statutory accounts forthat year has been delivered to the Registrar of Companies. The auditors'report on those accounts was not qualified and did not contain statements undersection 237(2) or (3) of the Companies Act 1985. Contacts Matthew Young (Communications Director) 020 7756 4232 Anthony Frost (Head of Media Relations) 020 7756 5536 Bruce Rush (Investor Relations) 020 7756 4275 For more information contact: [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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