Wrap Text
Reviewed Condensed Consolidated Interim Financial Results for the six months ended 30 June 2013
NEDBANK LIMITED: Registration No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN: ZAE000043667
NEDBANK LIMITED
REVIEWED CONDENSED FINANCIAL RESULTS
for the period ended 30 June 2013
Reviewed condensed consolidated interim financial results for the six
months ended 30 June 2013
Overview
Nedbank Limited ('Nedbank') is a wholly owned subsidiary of Nedbank Group
Limited, which is listed on JSE Limited. These condensed consolidated interim
financial results are published to provide information to holders of Nedbank's
listed non-redeemable non-cumulative preference shares.
Commentary relating to the Nedbank condensed consolidated interim financial
results is included in the Nedbank Group Limited group results, as presented
to shareholders on 6 August 2013. Further information is provided on the
website at www.nedbankgroup.co.za.
Board and executive changes during the period
Mr Don Hope resigned as a non-executive director of Nedbank Group and
Nedbank Limited with effect from 30 June 2013 following his retirement from
Old Mutual plc at the end of June 2013.
Accounting policies¹
Nedbank is a company domiciled in South Africa. The condensed
consolidated interim financial results at and for the six months ended 30 June
2013 comprise the company and its subsidiaries (the 'group') and the group's
interests in associates and jointly controlled entities.
Nedbank's condensed consolidated interim financial results have been
prepared in accordance with the measurement and recognition criteria of
International Financial Reporting Standards (IFRS) and are presented in
accordance with the disclosures prescribed by International Accounting
Standards (IAS) 34: Interim Financial Reporting, South African Institute of
Chartered Accountants (SAICA) Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncement as issued by
Financial Reporting Standards Council and the provisions of the Companies
Act of SA.
Nedbank's principal accounting policies have been prepared in terms of the
International Financial Reporting Standards (IFRS) of the International
Accounting Standards Board and have been applied consistently over the
current and prior financial years, with the exception of changes mentioned
below.
The following standards in particular have been newly adopted or amended
with effect from 1 January 2013:
- IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements
and IFRS 12 Disclosure of Interests in Other Entities, as well as the
consequential amendments to IAS 27 Separate Financial Statements
(2011) and IAS 28 Investments in Associates and Joint Ventures (2011).
As a result of adopting IFRS 10 the group has changed its accounting policy
with respect to determining whether it has control over and consequently
whether it is required to consolidate an investee. IFRS 10 introduces a new
set of criteria for assessing control by referring to the investor's exposure or
rights to variable returns from its involvement with the investee and the ability
to affect those returns through its power over the investee.
IFRS 11 requires that the group classifies its interests in joint arrangements as
either joint operations or joint ventures depending on the group's rights to
assets and obligations for the liabilities of the arrangements. There has been
no change to the method of accounting for joint arrangements.
These standards have been applied retrospectively and have not required any
material restatement in the groups' financial report.
- IFRS 13 Fair-value Measurement
IFRS 13 provides a revised definition of fair value and establishes a single
source of guidance for the measurement of fair value, which had
previously been contained in various standards. The adoption of this
standard did not have a material impact on the measurement of the
group's assets and liabilities. The group has an established control
framework with respect to the measurement of fair value, which includes
an ongoing review of the valuation methodologies applied.
- Disclosures Offsetting Financial Assets and Financial Liabilities
(amendments to IFRS 7)
The group has adopted the amendments to IFRS 7, which requires
extensive disclosures in respect of offsetting. The adoption had no impact
on the measurement of the group's assets and liabilities.
- IAS 19 Employee Benefits (2011)
The group has adopted IAS 19 Employee Benefits (2011). The
amendments include revised requirements for pensions and other
postemployment benefits, termination benefits and certain other changes.
The key amendments include:
- requiring the recognition of changes in net defined-benefit
liabilities/assets due to changes in determined expense/income in
'other comprehensive income' (eliminating the 'corridor approach'
previously permitted in IAS 19);
- modifying the accounting for termination benefits; and
- clarifying various miscellaneous issues.
The amendments have been applied retrospectively and required certain
restatements that are not material.
- IAS 1 Presentation of Financial Statements
Amendments to IAS 1 require identification of items that may be
reclassified from 'other comprehensive income' to 'profit or loss', and those
that may not be so reclassified. As a consequence of adopting the
amendments to IAS 1, items that may be reclassified from 'other
comprehensive income to 'profit or loss' have been denoted as such in the
statement of comprehensive income.
Events after the reporting period¹
A total of R1,8bn of new-style, fully loss-absorbent, Basel III-compliant, Tier 2
subordinated-debt capital was successfully issued during July 2013 to replace
the R1,8bn Basel II Tier 2 capital that matures in September 2013.
Furthermore, R3,2bn of three-year senior unsecured debt was also
successfully issued.
Reviewed results auditors' opinion
KPMG Inc and Deloitte & Touche, Nedbank Limited's independent auditors,
have reviewed the condensed consolidated interim financial results of
Nedbank Limited. The review was conducted in accordance with International
Standards on Review Engagements 2410: Review of Interim Financial
Information by the Independent Auditor. They have expressed an unmodified
review conclusion on the results. The condensed consolidated interim
financial results comprise the consolidated statement of financial position at
30 June 2013, consolidated statement of comprehensive income, condensed
consolidated statement of changes in equity and condensed consolidated
statement of cashflows for the six months then ended and selected
explanatory notes. The related notes are marked with(1). The review report is
available for inspection at Nedbank's registered office.
Nedbank non-redeemable non-cumulative preference shares - declaration of dividend no 21
Notice is hereby given that preference dividend no 21 of 35,12556 cents per
share has been declared for the period from 1 July 2013 to 31 December
2013, payable on Monday, 2 September 2013, to shareholders of the
Nedbank non-redeemable non-cumulative preference shares recognised in
the accounting records of the company at the close of business on Friday,
30 August 2013. The dividend has been declared out of income reserves.
The dividend will be subject to a dividend withholding tax rate of 15%
(applicable in South Africa), which will result in a net dividend to those
shareholders who are not exempt from paying dividend tax of 29,85673 cents
per share. Nedbank Limited's tax reference number is 9250/083/71/5 and the
number of preference shares in issue at the date of declaration is
358 277 491.
In accordance with the provisions of Strate, the electronic settlement and
custody system used by JSE Limited, the relevant dates for the payment of
the dividend are as follows:
Last day to trade cum dividend Friday, 23 August 2013
Shares trade ex dividend Monday, 26 August 2013
Record date Friday, 30 August 2013
Payment date Monday, 2 September 2013
Share certificates may not be dematerialised or rematerialised between
Monday, 26 August 2013, and Friday, 30 August 2013, 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 participant or broker, credited on Monday,
2 September 2013.
For and on behalf of the board
RJ Khoza MWT Brown
Chairman Chief Executive
6 August 2013
Consolidated statement of comprehensive income
for the period ended 30 June 30 June 31 December
2013 2012 2012
(Reviewed) (Reviewed) (Audited) Rm Rm Rm
Interest and similar income 21 358 21 520 42 900
Interest expense and similar charges 11 506 12 298 24 102
Net interest income 9 852 9 222 18 798
Impairments charge on loans and advances 3 299 2 741 5 239
Income from lending activities 6 553 6 481 13 559
Non-interest revenue 7 583 6 764 14 151
Operating income 14 136 13 245 27 710
Total operating expenses 9 703 8 980 18 601
Operating expenses** 9 683 8 948 18 539
Black economic empowerment (BEE) transaction expenses 20 32 62
Indirect taxation 244 197 460
Profit from operations before non-trading and capital items 4 189 4 068 8 649
Non-trading and capital items (8) 4 (48)
Net (loss)/profit on sale of subsidiaries, investments, and property and equipment 5 (1) 3
Net impairment of investments, property and equipment, and capitalised development costs (13) 5 (51)
Fair-value adjustments of investment properties 4 (1)
Profit from operations before direct taxation 4 185 4 072 8 600
Total direct taxation 1 031 1 085 2 159
Direct taxation** 1 031 1 084 2 158
Taxation on non-trading and capital items (1) 1 1
Taxation on revaluation of investment properties 1 *
Profit for the period 3 154 2 987 6 441
Other comprehensive income net of taxation (31) 24 42
Exchange differences on translating foreign operations*** 37 11 35
Fair-value adjustments on available-for-sale assets*** (57) 60 39
Remeasurements on long-term employee benefit assets** (36) (71)
(Losses)/Gains on property revaluations*** (11) (11) 39
Total comprehensive income for the period 3 123 3 011 6 483
Profit attributable to:
Ordinary and preference equity holders** 3 155 2 976 6 410
Non-controlling interest ordinary shareholders** (1) 11 31
Profit for the period 3 154 2 987 6 441
Total comprehensive income attributable to:
Ordinary and preference equity holders** 3 124 3 003 6 456
Non-controlling interest ordinary shareholders** (1) 8 27
Total comprehensive income for the period 3 123 3 011 6 483
* Represents amounts less than R1m.
** 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
***These items are or may be reclassified to profit or loss.
Headline earnings reconciliation
for the period ended 30 June 30 June 30 June 30 June 31 December 31 December
2013 2013 2012 2012 2012 2012
(Reviewed) (Reviewed) (Reviewed) (Reviewed) (Audited) (Audited)
Rm Rm Rm Rm Rm Rm
Gross Net of taxation Gross Net of taxation Gross Net of taxation
Profit attributable to ordinary and preference equity holders* 3 155 2 976 6 410
Less: Non-headline earnings items (4) (4) 4 3 (49) (50)
Net profit/(loss) on sale of subsidiaries, investments, and property and equipment 5 6 (1) (2) 3 2
Net impairment of investments, property and equipment, and capitalised development costs (13) (13) 5 5 (51) (51)
Fair-value adjustments of investment properties 4 3 (1) (1)
Headline earnings attributable to ordinary and preference equity holders 3 159 2 973 6 460
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
Consolidated statement of financial position at
30 June 30 June 31 December
2013 2012 2012
Reviewed) (Reviewed) (Audited)
Rm Rm Rm
ASSETS
Cash and cash equivalents 14 618 10 038 12 587
Other short-term securities 38 567 35 974 37 575
Derivative financial instruments 13 616 15 792 14 660
Government and other securities 24 508 26 473 26 194
Loans and advances** 541 298 509 217 520 116
Other assets 5 290 5 290 4 528
Current taxation receivable 404 940 241
Investment securities 3 144 3 722 3 196
Non-current assets held for sale 13 22 508
Investments in associate companies and joint ventures 523 596 665
Deferred taxation assets* 176 154 362
Investment property 87 488 84
Property and equipment 6 175 6 037 6 171
Long-term employee benefit assets* 2 022 2 007 1 992
Mandatory reserve deposits with central banks 11 439 12 365 12 641
Intangible assets 3 915 3 678 3 830
Total assets 665 795 632 793 645 350
EQUITY AND LIABILITIES
Ordinary share capital 27 27 27
Ordinary share premium 17 422 17 422 17 422
Reserves 26 801 23 813 26 140
Total equity attributable to equity holders of the parent 44 250 41 262 43 589
Preference share capital and premium 3 471 3 561 3 561
Non-controlling interest attributable to ordinary shareholders 124 118 136
Total equity 47 845 44 941 47 286
Derivative financial instruments 16 770 15 250 13 475
Amounts owed to depositors** 563 175 530 245 542 671
Provisions and other liabilities 9 263 9 734 9 273
Current taxation liabilities 20 28 67
Other liabilities held fior sale 36
Deferred taxation liabilities* 256 699 367
Long-term employee benefit liabilities* 1 990 1 842 1 880
Long-term debt instruments 26 476 30 054 30 295
Total liabilities 617 950 587 852 598 064
Total equity and liabilities 665 795 632 793 645 350
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
** As communicated in the group's 2012 integrated report, clients indebtedness for acceptances and liabilities for acceptances have been reclassified to loans and advances and amounts owed to depositors respectively for the purpose of achieving improved comparability with the majority of
the groups SA banking peers. These items were previously separately disclosed in the groups statement of financial position. June 2012 comparatives have been reclassified accordingly.
Condensed consolidated statement of changes in equity
Non-controlling
Total equity interest
attributable to Preference attributable to
equity holders share capital ordinary
of the parent and premium shareholders Total equity
Rm Rm Rm Rm
Balance at 31 December 2011 39 305 3 561 121 42 987
Adoption of IAS 19 amendments (228) (4) (232)
Restated balance at 31 December 2011 39 077 3 561 117 42 755
Shares issued 3 000 3 000
Preference share dividend (142) (142)
Dividend to ordinary shareholders (3 900) (7) (3 907)
Total comprehensive income for the period* 3 003 8 3 011
Share-based payment reserve movement 221 221
Regulatory risk reserve provision 2 2
Other movements 1 1
Balance at 30 June 2012 41 262 3 561 118 44 941
Preference share dividend (151) (151)
Dividend to ordinary shareholders (1 200) (1) (1 201)
Dividend in respect of BEE transaction (6) (6)
Total comprehensive income for the period* 3 453 19 3 472
Share-based payment reserve movement 230 230
Other movements 1 1
Balance at 31 December 2012 43 589 3 561 136 47 286
Preference share dividend (132) (132)
Dividend to ordinary shareholders (2 100) (8) (2 108)
Total comprehensive income for the period 3 124 (1) 3 123
Share-based payment reserve movement (229) (229)
Preference shares held by group entities (90) (90)
Disposal of subsidiary (3) (3)
Other movements (2) (2)
Balance at 30 June 2013 44 250 3 471 124 47 845
* Restated to reflect the adoption of IAS 19 Employee Benefits (2011).
Condensed consolidated statement of cashflows
for the period ended 30 June 30 June 31 December
2013 2012 2012
(Reviewed) (Reviewed) (Audited)
Rm Rm Rm
Cash generated by operations 8 834 8 057 16 521
Change in funds for operating activities (339) (5 996) (7 984)
Net cash from operating activities before taxation 8 495 2 061 8 537
Taxation paid (1 449) (1 865) (3 108)
Cashflows from operating activities 7 046 196 5 429
Cashflows utilised by investing activities (166) (742) (2 034)
Cashflows utilised by financing activities (6 051) (427) (1 543)
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings) * * *
Net increase/(decrease) in cash and cash equivalents 829 (973) 1 852
Cash and cash equivalents at the beginning of the period** 25 228 23 376 23 376
Cash and cash equivalents at the end of the period** 26 057 22 403 25 228
* Represents amounts less than R1m.
** Including mandatory reserve deposits with central banks.
Condensed segmental reporting
for the period ended 30 June 30 June 31 December 30 June 30 June 31 December 30 June 30 June 31 December
2013 2012 2012 2013 2012 2012 2013 2012 2012
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Total assets Operating income Headline earnings
Nedbank Capital 159 339 157 069 142 290 2 102 1 844 4 044 801 685 1 431
Nedbank Corporate 185 804 168 732 175 073 2 486 2 143 4 410 1 069 864 1 817
Total Nedbank Retail and Nedbank Business Banking 292 113 283 495 290 198 9 201 9 129 18 989 1 403 1 627 3 496
Nedbank Retail 200 339 193 889 198 072 7 196 7 062 14 693 1 054 1 194 2 552
Nedbank Business Banking 91 774 89 606 92 126 2 005 2 067 4 296 349 433 944
Nedbank Wealth 47 212 40 953 42 270 1 695 1 468 2 993 421 357 718
Shared Services 6 758 6 564 6 048 76 (11) 4 156 10 40
Central Management, including Rest of Africa 23 104 13 239 27 079 959 632 1 365 64 (89) (19)
Total for Nedbank Group 714 330 670 052 682 958 16 519 15 205 31 805 3 914 3 454 7 483
Fellow-subsidiary adjustments (48 535) (37 259) (37 608) (2 383) (1 960) (4 095) (755) (481) (1 023)
Total 665 795 632 793 645 350 14 136 13 245 27 710 3 159 2 973 6 460
.
The segmental results for 2012 have been restated to reflect the adoption of IAS 19 Employee Benefits (2011). The amendments to the standard include revised requirements for pensions and other postretirement benefits, termination benefits and certain other changes.
Condensed geographical segmental reporting
for the period ended 30 June 30 June 31 December 30 June 30 June 31 December
2013 2012 2012 2013 2012 2012
(Reviewed) (Reviewed) (Audited) (Reviewed) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm
Operating income Headline earnings
SA 15 515 14 217 29 748 3 742 3 164 6 869
Business operations* 15 515 14 217 29 748 3 893 3 347 7 230
BEE transaction expenses (19) (41) (68)
Profit attributable to non-controlling interest preference shareholders (132) (142) (293)
Rest of Africa* 655 584 1 259 124 126 297
Rest of world business operations* 349 404 798 48 164 317
Total per Nedbank Group 16 519 15 205 31 805 3 914 3 454 7 483
Fellow-subsidiary adjustments (2 383) (1 960) (4 095) (755) (481) (1 023)
Total 14 136 13 245 27 710 3 159 2 973 6 460
* 2012 restated to reflect the adoption of IAS 19 Employee Benefits (2011).
Fair-value hierarchy
FINANCIAL INSTRUMENTS CARRIED AT FAIR VALUE
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is a presumption that an entity is a
going concern without any intention or need to liquidate, to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed
sale.
The existence of published price quotations in an active market is the best evidence of fair value and, where they exist, they are used to measure the financial asset or financial liability. A market is considered to be active if transactions occur with sufficient volume and frequency to provide
pricing information on an ongoing basis. These quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.
Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group establishes fair value by using a valuation technique. These valuation techniques include reference to the current fair value of another
instrument that is substantially the same in nature (eg other short-term securities and government and other securities), reference to the value of the assets of underlying business (eg investment contract liabilities), earnings multiples (eg unlisted investments), discounted cashflow
analysis (eg unlisted investments, loans and advances, other short-term securities, government and other securities and amounts owed to depositors) and various option pricing models (eg other short-term securities and government and other securities and derivatives). Valuation
techniques applied by the group would generally be classified as level 2 or level 3 in terms of the fair-value hierarchy. The determination of whether an instrument is classified as level 2 or level 3 is dependent on the significance of observable inputs versus unobservable inputs in relation to
the fair value of the instrument. Inputs typically used in valuation techniques include discount rates, appropriate swap rates, volatility, servicing costs, equity prices, commodity prices, counterparty credit risk, and the group's own credit on financial liabilities.
The group has an established control framework for the measurement of fair value, which includes formalised review protocols for the independent review and validation of fair values separate from the business unit entering into the transaction. The valuation methodologies, techniques
and inputs applied to the fair-value measurement of the financial instruments have been applied in a manner consistent with that of the previous financial year (www.nedbankgroup.co.za).
FAIR-VALUE HIERARCHY
The financial instruments recognised at fair value have been categorised into the three input levels of the IFRS fair-value hierarchy as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.
Level 2: Valuation techniques based on (directly or indirectly) market-observable inputs. Various factors influence the availability of observable inputs. These factors may vary from product to product and change over time. Factors include the depth of activity in the relevant market, the
type of product, whether the product is new and not widely traded in the market, the maturity of market modelling and the nature of the transaction (bespoke or generic).
Level 3: Valuation techniques based on significant inputs that are not observable. To the extent that a valuation is based on inputs that are not market-observable, the determination of the fair value can be more subjective, depending on the significance of the unobservable inputs to the
overall valuation. Unobservable inputs are determined on the basis of the best information available and may include reference to similar instruments, similar maturities, appropriate proxies or other analytical techniques.
There were no significant transfers between level 1 and 2 during the period under review.
FINANCIAL ASSETS
Total financial assets recognised at
Total financial assets Total financial assets classified at level 1 Total financial assets classified at level 2 Total financial assets classified at level 3
amortised cost
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
(Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Cash and cash equivalents 26 057 25 228 26 057 25 228
Other short-term securities 38 567 37 575 15 102 16 425 500 479 22 965 20 671
Derivative financial instruments 13 616 14 660 1 6 13 615 14 654
Government and other securities 24 508 26 194 10 091 10 381 9 678 9 670 4 739 6 143
Loans and advances 541 298 520 116 453 666 438 255 1 1 87 576 81 743 55 117
Other assets 5 290 4 528 5 084 4 227 206 301
Investments in associate companies and joint ventures 485 636 485 636
Investment securities 3 144 3 196 795 884 972 967 1 377 1 345
652 965 632 133 510 000 494 516 11 181 11 040 129 867 124 479 1 917 2 098
FINANCIAL LIABILITIES
Total financial liabilities recognised at
Total financial liabilities Total financial liabilities classified at level 1 Total financial liabilities classified at level 2 Total financial liabilities classified at level 3
amortised cost
30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December 30 June 31 December
2013 2012 2013 2012 2013 2012 2013 2012 2013 2012
(Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited) (Reviewed) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Derivative financial instruments 16 770 13 475 1 16 769 13 473 1 1
Amounts owed to depositors 563 175 542 671 432 650 408 490 130 525 134 181
Provisions and other liabilities 9 263 9 273 6 592 6 970 2 547 2 248 124 55
Long-term debt instruments 26 476 30 295 20 964 24 665 5 289 5 447 223 183
615 684 595 714 460 206 440 125 7 836 7 696 147 641 147 892 1 1
LEVEL 3 RECONCILIATION
Gains/(Losses) in
Opening balance at Gains/(Losses) in comprehensive Purchases and Sales and Closing balance at
1 January profit for the year income for the year issues settlements Transfers in/(out) 30 June
2013 (Reviewed) Rm Rm Rm Rm Rm Rm Rm
FINANCIAL ASSETS
Loans and advances 117 (66) 4 55
Investment securities 1 345 19 4 (8) 17 1 377
Investments in associate companies and joint ventures 636 (289) 269 (131) 485
2 098 (336) 8 269 (139) 17 1 917
FINANCIAL LIABILITIES
Derivative financial instruments 1 1
1 - - - - - 1
Gains/(Losses) in
Opening balance at 1 Gains/(Losses) in comprehensive Sales and Closing balance at
January profit for the year income for the year Purchases and issues settlements Transfers in/(out) 31 December
2012 (Audited) Rm Rm Rm Rm Rm Rm Rm
FINANCIAL ASSETS
Derivative financial instruments 29 (29) -
Loans and advances 91 29 (3) 117
Investment securities 1 352 74 1 49 (131) 1 345
Investments in associate companies and joint ventures 545 (106) 275 (78) 636
2 017 (3) 1 324 (241) - 2 098
FINANCIAL LIABILITIES
Derivative financial instruments 5 (8) 4 1
5 (8) - - 4 - 1
Gains and losses include fair value gains or losses, translation gains or losses and, where applicable, dividends and interest income or expense.
EFFECT OF CHANGES IN SIGNIFICANT UNOBSERVABLE ASSUMPTIONS TO REASONABLE POSSIBLE ALTERNATIVES
As discussed above, the fair value of financial instruments is, under certain circumstances, measured by means of valuation techniques based on assumptions that are not market-observable. Where these scenarios apply, the group performs stress testing on the fair value of the relevant
instruments. In stress testing, appropriate levels are chosen for the unobservable input parameters so that they are consistent with prevailing market evidence and in line with the group's approach to valuation control.
The following information is intended to illustrate the potential impact of the relative uncertainty in the fair value of financial instruments, the valuation of which depends on unobservable input parameters. However, it is unlikely in practice that all unobservable parameters would
simultaneously be at the extremes of their ranges of reasonably possible alternatives. Furthermore, the disclosure is neither predictive nor indicative of future movements in fair value.
Favourable change Unfavourable
Value per statement in fair value due to change in fair value
Stress parameters of financial position stress test due to stress test
June 2013 (Reviewed) Principal assumption stressed % Rm Rm Rm
FINANCIAL ASSETS
Loans and advances Confidence levels, income volatility and spot rates between (14) and 14
55 5 (6)
Investment securities Valuation multiples, correlations, volatilities and credit spreads between (25) and 25
1 377 130 (141)
Investments in associate companies and joint ventures Valuation multiples between (12) and 12
485 57 (57)
Total financial assets classified at level 3 1 917 192 (204)
FINANCIAL LIABILITIES
Derivative financial instruments Correlations, volatilities and credit spreads between (25) and 25
1 * *
Favourable change Unfavourable
Value per statement in fair value due to change in fair value
Stress parameters of financial position stress test due to stress test
December 2012 (Audited) Principal assumption stressed % Rm Rm Rm
FINANCIAL ASSETS
Loans and advances Confidence levels, income volatility and spot rates between (14) and 14
117 13 (16)
Investment securities Valuation multiples, correlations, volatilities and credit spreads between (25) and 25
1 345 127 (156)
Investments in associate companies and joint ventures Valuation multiples between (11) and 11
636 70 (70)
Total financial assets classified at level 3 2 098 210 (242)
FINANCIAL LIABILITIES
Derivative financial instruments Correlations, volatilities and credit spreads between (25) and 25
1 * *
* Represents amounts less than R1m.
Restatements
The group has adopted IAS 19 Employee Benefits (2011). The amendments include revised requirements for pensions and other postemployment benefits, termination benefits and certain other
changes. The amendments have been applied retrospectively and required the following restatements in the consolidated statement of comprehensive income, headline earnings reconciliation and
consolidated statement of financial position:
Reviewed Reviewed Audited Reviewed
30 June 30 June 30 December 30 December
2012 IAS 19 2012 2012 IAS 19 2012
(As reported) restatement (Restated) (As reported) restatement (Restated)
Consolidated statement of comprehensive income
Total operating expenses 8 962 18 8 980 18 565 36 18 601
Direct taxation 1 089 (5) 1 084 2 168 (10) 2 158
Other comprehensive income net of taxation:
Remeasurements on long-term employee benefit assets (36) (36) (71) (71)
Profit attributable to:
Ordinary and preference equity holders 2 990 (14) 2 976 6 438 (28) 6 410
Non-controlling interest -ordinary shareholders 10 1 11 29 2 31
Total comprehensive income attributable to:
Equity holders of the parent 3 051 (48) 3 003 6 551 (95) 6 456
Non-controlling interest ordinary shareholders 9 (1) 8 29 (2) 27
Headline earnings reconciliation
Headline earnings 2 987 (14) 2 973 6 488 (28) 6 460
Consolidated statement of financial position
Deferred taxation assets 39 115 154 222 140 362
Long-term employee benefit assets 2 092 (85) 2 007 2 153 (161) 1 992
Total equity attributable to equity holders of the parent 24 089 (276) 23 813 26 463 (323) 26 140
Non-controlling interest attributable to ordinary shareholders 123 (5) 118 142 (6) 136
Deferred taxation liabilities 693 6 699 355 12 367
Long-term employee benefit liabilities 1 538 304 1 842 1 584 296 1 880
Registered office: Nedbank 135 Rivonia Campus, 135 Rivonia Road,
Sandown, Sandton 2196; PO Box 1144, Johannesburg, 2000.
Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107.
Directors:
Dr RJ Khoza (Chairman), MWT Brown* (Chief Executive), TA Boardman, TCP
Chikane, GW Dempster* (Chief Operating Officer), MA Enus-Brey, ID
Gladman (British), PM Makwana, NP Mnxasana, RK Morathi* (Chief Financial
Officer), JK Netshitenzhe, JVF Roberts (British), GT Serobe, MI Wyman**
(British).
* Executive ** Senior independent non-executive director
Company Secretary: TSB Jali
Sponsors: Investec Bank Limited, Nedbank Capital
Date: 06/08/2013 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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