Interim Results - Part 3

Woolwich PLC 2 August 2000 Part 3 STATUTORY INFORMATION BASIS OF PREPARATION During 2000, the accounting policy for commissions payable to introducers of certain lending business has changed. Where introducers are the primary form of distribution, commissions payable are now charged to the profit and loss account over the anticipated life of the loans using the Rule of 78. Previously, commissions payable were charged as incurred. In the opinion of the directors, the change of policy more fairly matches the direct costs of obtaining the business against the income earned on the loans. The effect of this change of accounting policy on the profit and loss account is as follows: Half year Year to to 30 31 June December 2000 1999 1999 £m £m £m Pre-tax profit increase: Fees and commissions payable 4.6 3.4 8.4 Corporation tax increase (1.4) (1.0) (2.6) -------- -------- -------- Increase in retained profit for 3.2 2.4 5.8 the period -------- -------- -------- In addition, during 2000 the Group has adopted FRS15: Tangible fixed assets and will not in future be revaluing land and buildings. The Group has followed the transitional provisions of FRS15 and will retain the book values of land and buildings as at 31 December 1999 as adjusted by additions and disposals. This change of policy has no material effect on the profit and loss account. Subject to the above, the interim financial information included in this report has been prepared on a basis consistent with the accounting policies set out on pages 42 and 43 of the Annual Report and Accounts for the year ended 31 December 1999 and was approved by the Board of Directors on 1 August 2000. The interim financial information for the six months ended 30 June 2000 and ended 30 June 1999 has not been audited but has been reviewed by the auditors. Their review report in respect of the six months ended 30 June 2000 is given on page 30. The comparative figures for the financial year ended 31 December 1999 are not the company's full statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Half year to Audited 30 June Year to 31 December 2000 1999 1999 Restated Restated £m £m £m Interest receivable and similar income arising from debt securities 59.9 58.7 114.6 Other interest 1,082.3 1,009.1 1,979.9 receivable and similar income ----------- --------- ----------- Interest receivable 1,142.2 1,067.8 2,094.5 Interest payable (802.9) (738.5) (1,431.0) ----------- --------- ----------- Net interest income 339.3 329.3 663.5 Fees and commissions 139.3 128.4 296.0 receivable Fees and commissions (14.3) (10.6) (24.6) payable Other operating income 30.4 18.9 49.4 Total non-interest 155.4 136.7 320.8 income ----------- --------- ----------- Operating income 494.7 466.0 984.3 Administrative expenses (212.4) (174.1) (371.6) Depreciation and (25.0) (24.5) (49.2) amortisation Total operating (237.4) (198.6) (420.8) expenses Provisions for bad and (23.5) (13.7) (32.9) doubtful debts ----------- --------- ----------- Operating profit 233.8 253.7 530.6 Share of operating loss (1.5) - (1.8) in joint ventures ----------- --------- ----------- Profit on ordinary 232.3 253.7 528.8 activities before tax Tax on profit on (72.0) (80.5) (168.3) ordinary activities Tax relief on 22.0 - - conversion costs ----------- --------- ----------- Profit on ordinary 182.3 173.2 360.5 activities after tax Minority interests - (1.9) (1.3) (4.1) equity ----------- --------- ----------- Profit attributable to 180.4 171.9 356.4 the shareholders of Woolwich plc Dividends (66.4) (60.7) (185.2) ------------ --------- ----------- Retained profit for the 114.0 111.2 171.2 period ============ ========= =========== Headline profit before 232.3 253.7 538.7 tax* ============ ========= =========== * Headline profit before tax is defined as pre-tax profit before costs of restructuring in 1999 EARNINGS PER SHARE Restated Restated Headline earnings per 10.4p 11.0p 23.5p ordinary share Basic earnings per 11.8p 11.0p 22.9p ordinary share Diluted earnings per 11.8p 10.9p 22.9p ordinary share The weighted average number of shares used in calculating earnings per share was as follows: Basic and headline 1,528m 1,568m 1,557m ordinary shares in issue Diluted ordinary shares 1,529m 1,571m 1,559m CONSOLIDATED BALANCE SHEET AS AT Unaudited Unaudited Audited 30/06/00 30/06/99 31/12/99 Restated Restated £m £m £m Assets Cash and balances at 165.1 40.2 257.9 central banks Loans and advances to 1,300.7 2,061.4 910.1 banks Loans and advances to 31,115.9 28,148.4 29,300.7 customers Debt securities 2,047.4 1,587.1 1,758.3 Interests in associates 37.7 9.4 31.5 and joint ventures Intangible fixed assets 4.7 4.2 3.8 Tangible fixed assets 317.2 284.2 303.1 Other assets, 609.8 526.5 542.1 prepayments and accrued income Long term assurance 685.7 564.3 658.9 policyholders' assets ---------- -------- -------- Total assets 36,284.2 33,225.7 33,766.4 ========== ======== ======== Liabilities Deposits by banks 2,345.2 1,830.1 1,763.5 Customer accounts 21,521.0 21,102.8 20,061.3 Debt securities in 7,930.3 6,171.2 7,385.8 issue Other liabilities, 1,096.2 1,070.8 1,252.9 accruals and deferred income and provisions for liabilities and charges Long term assurance 685.7 564.3 658.9 policyholders' liabilities Subordinated 847.1 690.9 844.7 liabilities ---------- -------- -------- 34,425.5 31,430.1 31,967.1 ---------- -------- -------- Called up share capital 152.1 155.8 154.0 Share premium account 10.4 10.2 10.4 Capital redemption 8.3 4.6 6.4 reserve Revaluation reserve 25.4 18.4 25.4 Profit and loss account 1,644.9 1,592.3 1,587.4 Shareholders' funds - 1,841.1 1,781.3 1,783.6 equity Minority interests - 17.6 14.3 15.7 equity ---------- -------- -------- Minority interests and 1,858.7 1,795.6 1,799.3 shareholders' funds ---------- -------- -------- Total liabilities and 36,284.2 33,225.7 33,766.4 shareholders' funds ========== ======== ======== STATEMENT OF CONSOLIDATED TOTAL RECOGNISED GAINS AND LOSSES Unaudited Half year Audited Year to to 30 June 31 December 2000 1999 1999 Restated Restated £m £m £m Profit attributable to 180.4 171.9 356.4 the shareholders of Woolwich plc Unrealised movement on - - 7.2 revaluation of properties Foreign currency 1.8 (6.4) (12.4) translation differences on net investments in subsidiary undertakings -------- --------- -------- Total recognised gains 182.2 165.5 351.2 for the year ------ -------- -------- RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Profit attributable to 180.4 171.9 356.4 the shareholders of Woolwich plc Dividends (66.4) (60.7) (185.2) -------- -------- -------- 114.0 111.2 171.2 Other recognised net 1.8 (6.4) (5.2) gains and losses for the year Ordinary shares issued - - 0.3 Shares repurchased (58.3) (61.4) (120.6) -------- -------- -------- Net movement in 57.5 43.4 45.7 shareholders' funds Opening shareholders' 1,783.6 1,737.9 1,737.9 funds -------- -------- -------- Closing shareholders' 1,841.1 1,781.3 1,783.6 funds -------- -------- -------- DIVIDENDS PER SHARE Half year Year to 31 to 30 June December 2000 1999 1999 Dividends per ordinary share: Interim 4.4p 3.9p 3.9p Final - - 8.1p -------- -------- -------- Total dividends 4.4p 3.9p 12.0p -------- -------- -------- SUMMARISED CONSOLIDATED CASH FLOW STATEMENT Unaudited Half year to Audited 30 June Year to 31 December 2000 1999 1999 Restated Restated £m £m £m Net cash inflow from 438.3 627.6 1,271.3 operating activities Net cash (outflow) from (6.2) (6.2) (64.5) returns on investments and servicing of finance Tax paid (37.4) (1.6) (159.1) Net cash (outflow) from (327.4) (199.5) (408.4) capital expenditure and financial investment Net cash (outflow) from (8.3) (5.9) (29.1) acquisitions Equity dividends paid (124.5) (347.0) (407.7) -------- -------- -------- Net cash (outflow) inflow (65.5) 67.4 202.5 before financing Net cash (outflow) inflow (58.3) (61.4) 42.5 from financing -------- -------- -------- (Decrease) increase in cash (123.8) 6.0 245.0 -------- -------- -------- Reconciliation of operating profit to net cash inflow from operating activities Operating profit 233.8 253.7 530.6 Change in other assets, (67.7) 64.4 48.8 prepayments and accrued income Change in other liabilities, (141.8) (404.0) (180.5) accruals and deferred income and provisions for liabilities and charges Interest on subordinated 35.8 31.1 66.4 liabilities Provisions for bad and 8.1 4.4 6.1 doubtful debts and advances written off Depreciation, amortisation 24.8 24.4 49.3 and profit or loss on disposal of fixed assets Change in loans and advances (2,120.7) 360.2 247.9 to banks and customers Change in deposits by banks 1,916.8 (412.4) (1,388.5) and customer accounts Change in debt securities in 544.5 713.7 1,928.3 issue Other non-cash movements 4.7 (7.9) (37.1) -------- -------- -------- Net cash inflow from 438.3 627.6 1,271.3 operating activities -------- -------- -------- SEGMENTAL BALANCE SHEET As at 30 June 2000 UK CONTINENTAL TREASURY RETAIL EUROPE £m £m £m Assets Due from banks 373.4 18.6 1,073.8 Loans and advances to 28,401.8 2,714.1 - customers Debt securities - - 2,047.4 Other assets 1,607.8 47.3 - Inter-business balances - - 9,733.2 -------- -------- -------- Total assets 30,383.0 2,780.0 12,854.4 -------- -------- -------- Liabilities Deposits by banks 221.6 503.3 1,620.3 Customer accounts 18,778.0 5.8 2,737.2 Debt securities in issue - 723.6 7,206.7 Other liabilities 1,562.0 47.8 - Inter-business balances 8,359.4 1,373.8 1,233.4 -------- -------- -------- 28,921.0 2,654.3 12,797.6 Shareholders' funds and 1,462.0 125.7 56.8 minority interests -------- -------- -------- Total liabilities and 30,383.0 2,780.0 12,854.4 shareholders' funds -------- -------- -------- CAPITAL ELIMINATIONS TOTAL £m £m £m Assets Due from banks - - 1,465.8 Loans and advances to - - 31,115.9 customers Debt securities - - 2,047.4 Other assets - - 1,655.1 Inter-business balances 1,233.4 (10,966.6) - ---------------------------- -------- ------------ -------- Total assets 1,233.4 (10,966.6) 36,284.2 ---------------------------- -------- ------------ -------- Liabilities Deposits by banks - - 2,345.2 Customer accounts - - 21,521.0 Debt securities in issue - - 7,930.3 Other liabilities 1,019.2 - 2,629.0 Inter-business balances - (10,966.6) - ---------------------------- -------- ------------ -------- 1,019.2 (10,966.6) 34,425.5 Shareholders' funds and 214.2 - 1,858.7 minority interests ---------------------------- -------- ------------ -------- Total liabilities and 1,233.4 (10,966.6) 36,284.2 shareholders' funds ---------------------------- -------- ------------ -------- As at 30 June 1999 Restated UK CONTINENTAL TREASURY RETAIL EUROPE £m £m £m Assets Due from banks 306.0 3.7 1,791.9 Loans and advances to 26,002.0 2,146.4 - customers Debt securities - - 1,587.1 Other assets 1,347.1 41.5 - Inter-business balances - - 6,497.4 -------- ------------ -------- Total assets 27,655.1 2,191.6 9,876.4 -------- ------------ -------- Liabilities Deposits by banks 237.2 582.6 1,010.3 Customer accounts 19,106.2 4.7 1,991.9 Debt securities in issue - 622.7 5,548.5 Other liabilities 1,370.7 47.3 - Inter-business balances 5,656.9 840.5 1,265.7 -------- ------------ -------- 26,371.0 2,097.8 9,816.4 Shareholders' funds and 1,284.1 93.8 60.0 minority interests -------- ------------ -------- Total liabilities and 27,655.1 2,191.6 9,876.4 shareholders' funds -------- ------------ -------- CAPITAL ELIMINATIONS TOTAL £m £m £m Assets Due from banks - - 2,101.6 Loans and advances to - - 28,148.4 customers Debt securities - - 1,587.1 Other assets - - 1,388.6 Inter-business balances 1,265.7 (7,763.1) - -------- ------------ -------- Total assets 1,265.7 (7,763.1) 33,225.7 -------- ------------ -------- Liabilities Deposits by banks - - 1,830.1 Customer accounts - - 21,102.8 Debt securities in issue - - 6,171.2 Other liabilities 908.0 - 2,326.0 Inter-business balances - (7,763.1) - -------- ------------ -------- 908.0 (7,763.1) 31,430.1 Shareholders' funds and 357.7 - 1,795.6 minority interests -------- ------------ -------- Total liabilities and 1,265.7 (7,763.1) 33,225.7 shareholders' funds -------- ------------ -------- SEGMENTAL BALANCE SHEET As at 31 December 1999 Restated UK CONTINENTAL TREASURY RETAIL EUROPE £m £m £m Assets Due from banks 461.1 18.9 688.0 Loans and advances to 26,990.7 2,310.0 - customers Debt securities - - 1,758.3 Other assets 1,499.9 39.5 - Inter-business balances - - 8,736.8 -------- ------------ -------- Total assets 28,951.7 2,368.4 11,183.1 -------- ------------ -------- Liabilities Deposits by banks 97.0 479.5 1,187.0 Customer accounts 18,271.3 5.4 1,784.6 Debt securities in issue - 599.5 6,786.3 Other liabilities 1,631.5 56.8 - Inter-business balances 7,602.6 1,134.2 1,373.3 -------- ------------ -------- 27,602.4 2,275.4 11,131.2 Shareholders' funds and 1,349.3 93.0 51.9 minority interests -------- ------------ -------- Total liabilities and 28,951.7 2,368.4 11,183.1 shareholders' funds -------- ------------ -------- CAPITAL ELIMINATIONS TOTAL £m £m £m Assets Due from banks - - 1,168.0 Loans and advances to - - 29,300.7 customers Debt securities - - 1,758.3 Other assets - - 1,539.4 Inter-business balances 1,373.3 (10,110.1) - -------- ------------ -------- Total assets 1,373.3 (10,110.1) 33,766.4 -------- ------------ -------- Liabilities Deposits by banks - - 1,763.5 Customer accounts - - 20,061.3 Debt securities in issue - - 7,385.8 Other liabilities 1,068.2 - 2,756.5 Inter-business balances - (10,110.1) - -------- ------------ -------- 1,068.2 (10,110.1) 31,967.1 Shareholders' funds and 305.1 - 1,799.3 minority interests -------- ------------ -------- Total liabilities and 1,373.3 (10,110.1) 33,766.4 shareholders' funds -------- ------------ -------- SHAREHOLDER INFORMATION Distribution of shares by size of holding 30 June 2000 31 December 1999 Size of Number of % of total Number of % of total Holding holdings number of holdings number of shares shares 1 - 10,000* 1,153,839 57.0 1,177,511 57.1 10,001 - 452 0.6 405 0.5 40,000 40,001 - 185 0.8 163 0.7 100,000 100,001 - 155 1.7 170 1.8 250,000 250,001 - 191 6.3 185 6.0 1,000,000 1,000,001 and 114 33.6 115 33.9 above Total 1,154,936 100.0 1,178,549 100.0 * Includes identifiable holdings within Sharestore and The Woolwich Single Company PEP and late validations INDEPENDENT REVIEW REPORT BY KPMG AUDIT PLC TO WOOLWICH PLC Introduction We have been instructed by the company to review the financial information set out on pages 22 to 26 and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The Listing Rules of the Financial Services Authority require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2000. KPMG Audit Plc Chartered Accountants London 1 August 2000 FINANCIAL CALENDAR Ex-dividend date for interim dividend 21 August 2000 Record date for interim dividend 25 August 2000 Payment date for interim dividend 9 October 2000 Announcement of 2000 annual results 15 February 2001 Ex-dividend date for final dividend 28 March 2001 Record date for final dividend 30 March 2001 Annual General Meeting 26 April 2001 Payment date for final dividend 14 May 2001 CONTACTS For further information please contact:- Raghnall Craighead Group Investor Relations Manager Woolwich plc 020-8298-5037 David Blake Head of Corporate Communications Woolwich plc 020-8298-5500 Rob McIvor Corporate Public Relations Manager Woolwich plc 020-8298-5020 Angus Maitland The Maitland Consultancy 020-7379-5151 Registered Office Woolwich plc Watling Street Bexleyheath Kent DA6 7RR Registered in England No. 3295699

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