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Audited summary consolidated financial results for the year ended 31 December 2014
NEDBANK LIMITED
Reg No 1951/000009/06
Incorporated in the Republic of South Africa
JSE share code: NBKP
ISIN: ZAE000043667
Audited summary consolidated financial results for the year ended
31 December 2014
Overview
Nedbank Limited ('Nedbank') is a wholly owned subsidiary of Nedbank Group
Limited, which is listed on JSE Limited. These summary consolidated financial
results are published to provide information to holders of Nedbank's listed non-
redeemable non-cumulative preference shares.
Commentary relating to the Nedbank summary consolidated financial results is
included in the Nedbank Group Limited group results, as presented to shareholders
on 23 February 2015. Further information is provided on the website at
nedbankgroup.co.za.
Board appointments
During the period David Adomakoh, Mantsika Matooane and Brian Dames were
appointed as independent non-executive directors with effect from 21 February,
15 May and 30 June 2014 respectively.
Paul Hanratty, Chief Operating Officer (COO) of Old Mutual plc, was appointed non-
independent non-executive director with effect from 8 August 2014.
Mfundo Nkuhlu, previously Managing Executive of Nedbank Corporate, succeeded
Graham Dempster as COO and joined the board as executive director with effect
from 1 January 2015. In his new role Mfundo has overall responsibility for the Rest of
Africa Division, Balance Sheet Management, Information Technology, Human
Resources, Marketing, Communications and Corporate Affairs, and Strategic
Planning. Graham will continue to focus on strategic initiatives in the rest of Africa
until his retirement on 31 May 2015.
Dr Reuel Khoza, the current Chairman, reached his nine-year term in August 2014
and in line with Nedbank Group policy retires at the close of the annual general
meeting (AGM) on 11 May 2015. Vassi Naidoo will be appointed non-executive
director of the companies with effect from 1 May 2015. The boards of Nedbank
Group and Nedbank have resolved to elect Vassi as Chairman of the companies
immediately following the conclusion of the Nedbank Group AGM scheduled to be
held on 11 May 2015.
Group executive appointments
The group announced a number of executive appointments during the year. All the
appointments were internal and are evidence of our well-thought-out succession
planning processes and the depth of our talent pipelines.
Philip Wessels was appointed Managing Executive of Retail and Business Banking,
following the appointment of Ingrid Johnson as Financial Director of our parent Old
Mutual plc. Trevor Adams succeeded Philip as Chief Risk Officer with effect from
1 August 2014 and Mike Davis joined the Group Executive Committee as Group
Executive of Balance Sheet Management with effect from 1 January 2015 to fill
Trevor's previous role.
Following the announcement in November 2014 that Nedbank Capital and Nedbank
Corporate will be integrated into a single client-facing, wholesale business cluster,
Brian Kennedy, Managing Executive of Nedbank Capital, has been accountable for
the combined corporate and investment bank, including the implementation of the
business structure and operating model with effect from 1 January 2015. This newly
formed cluster will offer the full spectrum of wholesale products under one brand and
one leadership team. Our objective is to create a wholesale business that combines
the strengths of Nedbank Capital and Nedbank Corporate to build a market-leading
franchise with an even stronger client-centred focus.
Priya Naidoo joined the Group Executive Committee on 1 January 2015 and will
succeed John Bestbier, Group Executive for Strategic Planning and Economics, on
his scheduled retirement date of 30 June 2015.
Accounting policies
Nedbank Limited is a company domiciled in SA. The summary consolidated financial
results of the group at and for the year ended 31 December 2014 comprise the
company and its subsidiaries (the 'group') and the group's interests in associates
and joint arrangements.
The information in the SENS announcement has been extracted from the
consolidated financial statements, which have been prepared in accordance with the
requirements of the JSE Limited Listings Requirements for preliminary reports, and
the requirements of the Companies Act applicable to summary financial statements.
The Listings Requirements require preliminary reports to be prepared in accordance
with the framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncement as
issued by the Financial Reporting Standards Council, and also, as a minimum, to
contain the information required by IAS 34: Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial
results, from which the summary consolidated financial results were derived, are in
terms of IFRS and are consistent with accounting policies applied in the preparation
of the previous consolidated financial statements.
The summary consolidated financial results have been prepared under the
supervision of Raisibe Morathi, the Chief Financial Officer.
Events after the reporting period
On 15 January 2015 Nedbank Limited's unsecured subordinated NEDH1A and
NEDH1B notes were redeemed and R225m of new-style tier 2 debt instruments
issued. A further R5,4bn of senior unsecured debt was issued on 12 February 2015.
Audited summary consolidated financial results – independent auditors'
opinion
KPMG Inc and Deloitte & Touche, Nedbank Group's independent auditors, have
audited the consolidated financial statements of Nedbank Limited from which the
summary consolidated financial results have been derived, and have expressed an
unmodified audit opinion on the annual financial statements. These summary
consolidated financial results comprise the summary consolidated statement of
financial position at 31 December 2014, summary consolidated statement of
comprehensive income, summary consolidated statement of changes in equity and
summary consolidated statement of cashflows for the year then ended. Both the
audit reports are available for inspection at Nedbank Group's registered office.
The auditors' report does not necessarily report on all of the information contained in
these financial results. Shareholders are therefore advised that, in order to obtain a
full understanding of the nature of the auditors' engagement, they should obtain a
copy of the auditors' report together with the accompanying financial information
from Nedbank's registered office.
The directors take full responsibility for the preparation of the summarised
consolidated financial results and that the financial information has been correctly
extracted from the underlying audited consolidated financial results.
Forward-looking statements
This announcement contains certain forward-looking statements with respect to the
financial condition and results of operations of Nedbank and its group companies
that, by their nature, involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future. Factors that could
cause actual results to differ materially from those in the forward-looking statements
include global, national and regional economic conditions; levels of securities
markets; interest rates; credit or other risks of lending and investment activities; as
well as competitive and regulatory factors. By consequence, all forward-looking
statements have not been reviewed, audited or reported on by the bank's auditors.
Nedbank non-redeemable non-cumulative preference shares – declaration of
dividend no 24
Notice is hereby given that preference dividend no 24 of 38,76140 cents per share
has been declared for the period from 1 July 2014 to 31 December 2014, payable on
Monday, 23 March 2015, 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, 20 March 2015. The dividend has been declared
out of income reserves.
The dividend will be subject to a dividend withholding tax rate of 15% (applicable in
SA), which will result in a net dividend to those shareholders who are not exempt
from paying dividend tax of 32,94719 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, 13 March 2015
Shares trade ex dividend Monday, 16 March 2015
Record date Friday, 20 March 2015
Payment date Monday, 23 March 2015
Share certificates may not be dematerialised or rematerialised between Monday,
16 March 2015, and Friday, 20 March 2015, both days inclusive.
Where applicable, dividends in respect of certificated shares will be transferred
electronically to shareholders' bank accounts on the 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, 23 March 2015.
For and on behalf of the board
Reuel Khoza Mike Brown
Chairman Chief Executive
23 February 2015
Registered office: Nedbank 135 Rivonia Campus, 135 Rivonia Road, Sandown,
Sandton 2196; PO Box 1144, Johannesburg, 2000.
Transfer secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg, 2001; PO Box 61051, Marshalltown, 2107.
Directors:
Dr RJ Khoza (Chairman), MWT Brown* (Chief Executive), DKT Adomakoh
(Ghanaian), TA Boardman, BA Dames, GW Dempster*, MA Enus-Brey, ID Gladman
(British), PB Hanratty (Irish), PM Makwana, Dr MA Matooane, NP Mnxasana,
RK Morathi* (Chief Financial Officer), JK Netshitenzhe, MC Nkuhlu* (Chief Operating
Officer), JVF Roberts (British), GT Serobe, MI Wyman** (British).
* Executive ** Senior independent non-executive director
Company Secretary: TSB Jali
Sponsors: Investec Bank Limited, Nedbank Capital
AUDITED SUMMARY CONSOLIDATED FINANCIAL RESULTS
for the year ended 31 December 2014
Summarised consolidated statement of comprehensive income
for the year ended 31 December 31 December
Change 2014 2013
(Audited) (Audited) (Audited)
% Rm Rm
Interest and similar income 13.5 50 075 44 107
Interest expense and similar charges 18.6 28 322 23 873
Net interest income 7.5 21 753 20 234
Impairments charge on loans and advances (19.0) 4 478 5 529
Income from lending activities 17.5 17 275 14 705
Non-interest revenue 4.7 16 196 15 466
Operating income 10.9 33 471 30 171
Total operating expenses 9.1 22 031 20 199
Indirect taxation 8.8 522 480
Profit from operations before non-trading and capital items 15.0 10 918 9 492
Non-trading and capital items 62.7 (96) (59)
Net profit on sale of subsidiaries, investments, and property and equipment (100.0) 5
Net impairment of investments, property and equipment, and capitalised development costs 50.0 (96) (64)
Fair-value adjustments of investment properties (100.0) 4
Profit from operations 14.7 10 822 9 437
Share of profits of associate companies and joint arrangements (57.1) 12 28
Profit from operations before direct taxation 14.5 10 834 9 465
Total direct taxation 21.3 2 786 2 297
Direct taxation 21.1 2 803 2 315
Taxation on non-trading and capital items (10.5) (17) (19)
Taxation on revaluation of investment properties (100.0) 1
Profit for the year 12.3 8 048 7 168
Other comprehensive income net of taxation (86.5) 126 932
Items that may be reclassified subsequently to profit or loss
– Exchange differences on translating foreign operations(1) (85.4) 14 96
– Fair-value adjustments on available-for-sale assets(1) 4.6 (113) (108)
Items that may not be reclassified subsequently to profit or loss
– Gains on property revaluations(1) (25.2) 163 218
– Remeasurements on long-term employee benefit assets (91.5) 62 726
Total comprehensive income for the year 0.9 8 174 8 100
Profit attributable to:
- Ordinary and preference equity holders 11.8 7 998 7 152
- Non-controlling interest – ordinary shareholders >100 50 16
Profit for the year 12.3 8 048 7 168
Total comprehensive income attributable to:
- Ordinary and preference equity holders 0.5 8 123 8 084
- Non-controlling interest – ordinary shareholders >100 51 16
Total comprehensive income for the year 0.9 8 174 8 100
Headline earnings reconciliation
for the year ended 31 December 31 December 31 December 31 December
Change 2014 2014 2013 2013
(Audited) (Audited) (Audited) (Audited) (Audited)
% Rm Rm Rm Rm
Gross Net of taxation Gross Net of taxation
Profit attributable to ordinary and preference equity holders 11.8 7 998 7152
Less: Non-headline earnings items (96) (79) (55) (37)
Net profit on sale of subsidiaries, investments, and property and equipment 5 6
Net impairment of investments, property and equipment, and capitalised development costs (96) (79) (64) (46)
Fair-value adjustments of investment properties 4 3
Headline earnings attributable to ordinary and preference equity holders 12.4 8 077 7 189
Summarised consolidated statement of financial position
at 31 December 31 December
Change 2014 2013
(Audited) (Audited) (Audited)
% Rm Rm
ASSETS
Cash and cash equivalents (38.4) 10 757 17 467
Other short-term securities 60.9 56 322 35 004
Derivative financial instruments 13.3 15 644 13 811
Government and other securities (14.2) 26 828 31 279
Loans and advances 6.6 603 329 566 047
Other assets 28.3 5 393 4 204
Current taxation assets (30.6) 236 340
Investment securities (19.2) 2 369 2 932
Non-current assets held for sale 33.3 16 12
Investments in private-equity associates, associate companies and joint arrangements 5.5 1 158 1 098
Deferred taxation assets >100 165 69
Investment property (100.0) 87
Property and equipment 13.5 7 459 6 571
Long-term employee benefit assets 54.9 4 409 2 847
Mandatory reserve deposits with central banks 12.5 14 843 13 199
Intangible assets 7.8 4 516 4 188
Total assets 7.8 753 444 699 155
EQUITY AND LIABILITIES
Ordinary share capital 27 27
Ordinary share premium 17 422 17 422
Reserves 14.0 34 787 30 524
Total equity attributable to equity holders of the parent 8.9 52 236 47 973
Preference share capital and premium 3 561 3 561
Non-controlling interest attributable to ordinary shareholders 29.8 183 141
Total equity 8.3 55 980 51 675
Derivative financial instruments (6.7) 15 479 16 588
Amounts owed to depositors 8.4 634 623 585 497
Provisions and other liabilities (16.1) 8 404 10 016
Current taxation liabilities >100 35 13
Deferred taxation liabilities (3.4) 287 297
Long-term employee benefit liabilities 66.4 3 002 1 804
Long-term debt instruments 7.1 35 634 33 265
Total liabilities 7.7 697 464 647 480
Total equity and liabilities 7.8 753 444 699 155
Summarised 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
Audited balance at 31 December 2012 43 589 3 561 136 47 286
Preference share dividend (292) (292)
Dividend to ordinary shareholders (3 450) (8) (3 458)
Total comprehensive income for the year 8 084 16 8 100
Share-based payment reserve movement 49 49
Disposal of subsidiary (3) (3)
Other movements (3) (3)
Regulatory risk reserve provision (4) (4)
Audited balance at 31 December 2013 47 973 3 561 141 51 675
Preference share dividend (323) (323)
Dividend to ordinary shareholders (3 400) (9) (3 409)
Total comprehensive income for the year 8 123 51 8 174
Share-based payment reserve movement (145) (145)
Regulatory risk reserve provision 7 7
Other movements 1 1
Audited balance at 31 December 2014 52 236 3 561 183 55 980
Summarised consolidated statement of cashflows
for the year ended 31 December 31 December
2014 2013
(Audited) (Audited)
Rm Rm
Cash generated by operations 18 386 17 772
Change in funds for operating activities (16 624) (7 076)
Net cash from operating activities before taxation 1 762 10 696
Taxation paid (3 463) (3 059)
Cashflows (utilised by)/from operating activities (1 701) 7 637
Cashflows utilised by investing activities (2 011) (1 427)
Cashflows utilised by financing activities (1 354) (772)
Effects of exchange rate changes on opening cash and cash equivalents (excluding foreign borrowings) 1 1
Net (decrease)/increase in cash and cash equivalents (5 066) 5 438
Cash and cash equivalents at the beginning of the year(2) 30 666 25 228
Cash and cash equivalents at the end of the year(2) 25 600 30 666
(1) Represents amounts less than R1m.
(2) Including mandatory reserve deposits with central banks.
Summarised segmental reporting
for the year ended 31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2014 2013 2014 2013 2014 2013 2014 2013
(Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited)
Rm Rm Rm Rm Rm Rm Rm Rm
Total assets Total liabilities Operating income Headline earnings
Nedbank Capital 168 172 180 708 161 281 174 845 5 037 4 380 2 128 1 726
Nedbank Corporate 213 069 188 363 202 463 179 849 5 838 5 084 2 599 2 245
Total Nedbank Retail and Nedbank Business Banking 323 840 302 371 296 275 275 688 21 975 19 929 4 031 3 468
Nedbank Retail 211 904 203 155 189 795 181 252 17 040 15 502 2 937 2 539
Nedbank Business Banking 111 936 99 216 106 480 94 436 4 935 4 427 1 094 929
Nedbank Wealth 57 609 50 911 54 779 48 424 3 986 3 553 1 042 900
Rest of Africa Division 27 428 20 117 23 879 18 119 1 631 1 426 357 173
Centre 19 195 7 124 (275) (11 667) 300 644 (277) 158
Total for Nedbank Group 809 313 749 594 738 402 685 258 38 767 35 016 9 880 8 670
Fellow-subsidiary adjustments (55 869) (50 439) (40 938) (37 778) (5 296) (4 845) (1 803) (1 481)
Total 753 444 699 155 697 464 647 480 33 471 30 171 8 077 7 189
The 2013 comparative results for the segmental reporting have been restated. The Rest of Africa Division is now reported separately, and Central Management and Shared Services are collectively reported as the Centre. The restatement has had no effect on the group results and ratios, and only affects segment results and ratios.
Offsetting financial assets and financial liabilities
In accordance with the requirements of IFRS 7 Financial Instruments: Disclosures, the table below sets out the impact of:
- recognised financial instruments that are set off in the statement of financial position in accordance with the requirements of IAS 32 Financial Instruments: Presentation; and
- financial instruments that are subject to an enforceable master netting arrangement or similar agreement that covers similar financial instruments and transactions that did not qualify for presentation on a net basis.
The group reports financial assets and financial liabilities on a net basis in the statement of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net
basis, or to realise the asset and settle the liability simultaneously.
Certain master netting arrangements may not meet the criteria for offsetting in the statement of financial position because:
- these agreements create a right of setoff that is enforceable only following an event of default, insolvency or bankruptcy; and
- the group and its counterparties do not intend to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
Master netting arrangements and similar agreements include derivative clearing agreements, global master repurchase agreements and global master securities lending agreements.
Similar financial instruments include derivatives, sales and repurchase agreements, reverse sale and repurchase agreements, and securities borrowing and lending agreements. Financial instruments such as loans and deposits
are not disclosed in the table below unless they are offset in the statement of financial position.
Related amounts not set off in the statement of
31 December 2014 (Audited) Effects of netting on the statement of financial position financial position
Amounts set off
in the statement Net amounts Amounts that Net amounts Total amounts
of financial included in the may be netted reflecting the Amounts not recognised in
position in statement of off on the effect of master subject to IFRS 7 the statement of
accordance with financial occurrence of a Financial netting offsetting financial
Rm Gross amounts IAS 32 position(1) future event collateral arrangements disclosure(2) position
Derivative financial instruments (2 812) 2 787 (25) 25 190 165
- Assets 15 395 249 15 644
- Liabilities (15 420) (59) (15 479)
Assets excluding derivative financial instruments 5 386 (2 874) 2 512 - - 2 512 600 817 603 329
- Loans and advances 5 386 (2 874) 2 512 2 512 600 817 603 329
Liabilities excluding derivative financial instruments (88 695) 29 516 (59 179) - - (59 179) (575 444) (634 623)
- Amounts owed to depositors (88 695) 29 516 (59 179) (59 179) (575 444) (634 623)
Related amounts not set off in the statement of
31 December 2013 (Audited) Effects of netting on the statement of financial position financial position
Amounts set off
in the statement Net amounts Amounts that Net amounts Total amounts
of financial included in the may be netted reflecting the Amounts not recognised in
position in statement of off on the effect of master subject to IFRS 7 the statement of
accordance with financial occurrence of a Financial netting offsetting financial
Rm Gross amounts IAS 32 position(1) future event collateral arrangements disclosure(2) position
Derivative financial instruments(3) (3 320) (3 320) 509 (2 811) 543 (2 777)
- Assets 12 627 1 184 13 811
- Liabilities (15 947) (641) (16 588)
Assets excluding derivative financial instruments(3) 2 885 (831) 2 054 - - 2 054 563 993 566 047
- Loans and advances 2 885 (831) 2 054 2 054 563 993 566 047
Liabilities excluding derivative financial instruments(3) (71 322) 16 187 (55 135) - - (55 135) (530 362) (585 497)
- Amounts owed to depositors (71 322) 16 187 (55 135) (55 135) (530 362) (585 497)
(1) Includes the net amount of financial assets and financial liabilities where offsetting has been applied in terms of IAS 32 and financial instruments that are subject to master netting agreements but where no offsetting has been applied. Excludes financial instruments that are neither subject to setoff nor master netting agreements.
(2) Includes financial instruments that are neither subject to setoff nor master netting agreements.
(3) During 2014 the group enhanced its accounting processes and management information and expanded the disclosure relating to the offsetting of financial assets and liabilities in its consolidated financial statements. This expanded disclosure resulted in a restatement to 2013 comparative information.
Contingent liabilities and commitments
CONTINGENT LIABILITIES AND UNDRAWN FACILITIES
31 December 31 December
2014 2013
(Audited) (Audited)
Rm Rm
Guarantees on behalf of clients 22 807 35 013
Letters of credit and discounting transactions 3 248 3 178
Irrevocable unutilised facilities and other 102 968 93 670
129 023 131 861
The group, in the ordinary course of business, enters into transactions that expose the group to tax, legal and business risks. Provisions are made for known liabilities that are expected to
materialise. Possible obligations and known liabilities where no reliable estimate can be made or it is considered improbable that an outflow would result are reported as contingent liabilities.
This is in accordance with IAS 37: Provisions, Contingent Liabilities and Contingent Assets.
There are a number of legal or potential claims against Nedbank Ltd and its subsidiary companies, the outcome of which cannot at present be foreseen.
COMMITMENTS
Capital expenditure approved by directors
31 December 31 December
2014 2013
(Audited) (Audited)
Rm Rm
Contracted 1 292 247
Not yet contracted 1 278 856
2 570 1 103
Funds to meet capital expenditure commitments will be provided from group resources. In addition, capital expenditure is incurred in the normal course of business throughout the year.
Operating lease commitments
Companies in the group have entered into leases over fixed property, furniture and other equipment for varying periods. The group is a major lessor of properties, which are subject to
individual contracts that specify the group's option to renew leases, escalation clauses and purchase options, if applicable. Due to the large number of lease agreements entered into by the
group, this information has not been provided in the annual financial statements, but is available from the group on request. The following are the minimum lease payments under non-
cancellable leases:
31 December 2014 (Audited) 2015 2016 -2019 Beyond 2019
Rm Rm Rm
Land and buildings(1) 690 1705 940
Furniture and equipment 286 173
976 1 878 940
31 December 2013 (Audited) 2014 2015 -2018 Beyond 2018
Rm Rm Rm
Land and buildings(1) 664 1 663 1 020
Furniture and equipment 246 410 2
910 2 073 1 022
(1) The group may from time to time enter into subleases of properties where it is the lessee. These subleases are considered to be immaterial in the context of the group's overall leasing arrangements.
Commitments under derivative instruments
The group enters into option contracts, financial futures contracts, forward rate and interest rate swap agreements and other financial agreements in the normal course of business.
Sponsors: Investec Bank Limited, Nedbank Capital
Date: 23/02/2015 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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