| Wed 19 Sep 2007, 12:00 | | RMH - RMB Holdings Limited - Summarised audited re |
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RMH
RMH
RMH - RMB Holdings Limited - Summarised audited results announcement for the
year ended 30 June 2007
RMB Holdings Limited ("RMBH")
Registration number: 1987/005115/06
Share code: RMH ISIN code: ZAE000024501
* Normalised Earnings + 33% to 335,4c or R3,98 billion
* Dividend + 25% to 141,5c or R1,68 billion
* Intrinsic value + 34% to 3 486c or R41,41 billion
SUMMARISED AUDITED RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 30 JUNE 2007
Overview of Results
For the major part of the year to 30 June 2007 the South African financial
services sector operated in a robust environment, and largely shrugged off the
impact of:
* A 250 basis point increase in interest rates over the period;
* A higher current account deficit; as well as
* Steadily increasing inflation rates (driven by higher oil and food prices).
In the face of this, consumer demand for credit showed a level of resilience
that increasingly has become cause for concern from the Central Bank`s
perspective.
At the same time, increasing capital expenditure (on the back of the
government`s extensive infrastructure development program) and increased
corporate action gave rise to good growth in the corporate sector.
Local equity markets remained strong (+31% for the year) while South African
interest and currency markets remained volatile. In global markets, credit was
cheap and there was strong demand for commodities. These contributed to good
gains in most developed and emerging markets.
Notwithstanding a challenging assurance market, our portfolio of financial
services businesses flourished in these market conditions, with the following
outstanding increases in normalised earnings being recorded:
* FirstRand Banking Group +35% to R10,0 billion
* Discovery +33% to R920 million
* OUTsurance +28% to R480 million
* RMBSI +26% to R90 million
These excellent results allowed RMBH to report the following income statement
outcomes for our ordinary shareholders:
* Earnings +31% to R4,11 billion (2006: R3,15 billion)
* Normalised earnings +33% to R3,98 billion (2006: R2,99 billion)
On a per share basis this translates to:
* Attributable earnings per share +31% to 349,7c (2006: 267,8c)
* Normalised earnings per share +33% to 335,4c (2006: 251,9c)
The intrinsic value of the group`s investment portfolio reflects the strong
equity markets experienced during the period under review. The intrinsic value
of RMBH rose by 34% to R41,4 billion (or 3 486 cents per share (2006: 2 596
cents)).
We would be amiss, while basking in the glow of this very satisfying outcome,
not to draw the attention of shareholders to the turmoil that has been visited
upon global financial markets since the group`s year end.
We have witnessed a significant correction in global markets which has created
increased uncertainty and investor nervousness, causing a broad re-pricing of
risk in all financial markets. We cannot avoid this kind of contagion and
clearly this turmoil will also impact on South Africa.
This changing landscape is meaningful for a group such as ours and whilst our
diverse portfolio of businesses produced an impressive performance for the year
under review, there clearly are challenges ahead and we will need to proceed
with circumspection.
Sources of income
Predominantly sourced from Southern Africa, our well-diversified income stream
is drawn from the full spectrum of financial services:
Further diversification
Given the relative stability and maturity of RMBH`s core investments, we have
reached a point in the group`s development where it is appropriate to give
further consideration to investment opportunities that will allow RMBH to grow
shareholder returns.
To date we have identified three opportunities that meet our internal criteria:
1. Consolidation of our investment in the Discovery Group
In the last fortnight FirstRand announced its intention to seek approval to
unbundle its 57.1% interest in Discovery. As a consequence, RMBH will receive a
direct stake in Discovery of approximately 16%.
Given our fundamental belief in the investment case presented by Discovery, we
believe that RMBH should build a stake of not less than 25% in that group. To
this end we have announced that:
* RMBH has reached agreement with Remgro Limited that RMBH will acquire the 4,5%
interest in Discovery that Remgro will receive as a result of its direct stake
in FirstRand. We intend to settle the purchase consideration due to Remgro
through a fresh issue of RMBH shares; and
* RMBH has entered into further purchase agreements in terms of which it will
acquire an additional 4,5% interest in Discovery. These acquisitions will be
cash settled.
Upon completion of the transaction RMBH will have invested an additional R1,4
billion in Discovery (over and above the R2,6 billion interest received out of
the unbundling). In return we will hold a significant stake in an entity that we
believe has excellent growth prospects and we will effectively be in partnership
with a management team whose entrepreneurial skills we have long admired.
2. Creation of a diversified emerging market equity portfolio
Through FirstRand and our other investments we already have significant stakes
in arguably South Africa`s pre-eminent financial services groups. FirstRand has
stated its objective to build over time a portfolio of businesses in emerging
markets. When this comes to pass, FirstRand will naturally be RMBH`s entry point
and we stand ready to support them in meeting any realistic capital calls that
may be required.
In the interim, we believe that there are attractive investment opportunities
presenting themselves in the markets that the greater group will in due course
enter. To this end, we have over the last nine months, with the help of
independent investment counsel built a bespoke emerging market portfolio of
selected listed financial services equities, primarily in India and Brazil. RMBH
has invested R500 million in the portfolio. At the outset, the portfolio was
geared 50% with the underlying capital drawn from our surplus resources at the
centre. The portfolio performance has been gratifying and at year end was valued
in excess of R650 million. The portfolio has been designated as a "fair value
through profit or loss" asset for accounting purposes and the gain has been
recorded in income. While the portfolio has not avoided the contagion previously
highlighted, it is at the time of writing still valued at levels above that
recorded at year end.
3. Underwriting OUTsurance`s international expansion
We make reference elsewhere in this report to OUTsurance`s proposed
international expansion plans. RMBH and FirstRand (as co-shareholders) agreed to
underwrite the capital requirements arising (of the order of R400 million over
three years). This will allow the South African business to continue to drive
its growth plans unfettered by the burden of the start up costs that will need
to be incurred.
It is our intention to explore these initiatives and the philosophy underlying
them in greater detail when presenting the 2007 RMBH annual financial statements
to shareholders.
Group capital position
At the centre, RMBH is substantially without borrowings. At the end of June 2007
our borrowings amounted to some R373 million, directed largely at the emerging
markets portfolio described above and at meeting our working capital
requirements.
In the current year we will need to escalate our borrowing levels to implement
the transactions envisaged in consolidating our interest in Discovery and in
supporting OUTsurance`s international expansion. We have sufficient banking
facilities available to meet these calls. At present, we do not foresee any
further capital requirements from the other companies in which RMBH is invested.
The intrinsic value of the group`s investment portfolio reflects the strong
equity markets experienced during the period under review. The increase in value
over the last year may be summarised as follows:
As at 30 June 2007 2006 %
Rm Rm change
Market value of listed interests
(FirstRand, Glenrand M.I.B.) 38 353 28 527 +34
Director`s valuation of unlisted
interests
(OUTsurance, RMBSI) 2 769 2 081 +33
Net cash resources/investments 283 232 +22
Total Intrinsic Value (un-audited) 41 405 30 840 +34
Per RMBH share (cents) 3 486c 2 596c +34
At 30 June 2007 RMBH`s market capitalisation amounted to R39,03 billion or 3
286c per share, (2006: R29,34 billion) representing a 6% discount (2006: 5%) to
the group`s underlying intrinsic value.
Dividend Payment
The Board has resolved to declare a final dividend of 80,0 cents per share
(2006: 63,0 cents).
Such final dividend, together with the interim dividend of 61,5 cents brings the
total dividend for the year ended 30 June 2007 to 141,5 cents (2006: 113,5
cents). This represents a year-on-year increase of 25% and a dividend cover
ratio (on normalised earnings) of 2,4 times (2006: 2,2 times), in line with that
of RMBH`s major investments.
Outlook for the coming year
We anticipate that, given the increased uncertainty in financial markets since
the year-end, the next financial year will be a more challenging operating
environment.
With interest rates and inflation increasing, consumer spending is expected to
slow down, with growth in retail credit moderating. As levels of consumer
indebtedness rise, bad debts could also increase further. The corporate sector
however, is expected to continue to show robust growth due to public sector
investment combined with private fixed investment.
Against this background, FirstRand expects its banking businesses to show
continued growth in assets and earnings, although the mix will change:
* WesBank and FNB are likely to experience stronger demand for credit from their
corporate and commercial businesses.
* RMB will continue to benefit from increased infrastructure spend, corporate
capacity building and BEE activity, but the exceptional performance in the
current year from certain of the trading businesses will be a challenge to
exceed.
Momentum should continue to grow new business volumes, particularly as
collaboration with FNB gains further traction and new distribution channels come
on line.
Our strategy remains focused on building a diverse portfolio of leading
financial services franchises in South Africa. We will also, admittedly from a
small base, increasingly focus on selected international opportunities,
particularly in Africa, India and Brazil.
We believe that the anticipated organic growth in the local franchises combined
with growing returns from the international initiatives will, barring unforseen
events, over the medium term underpin our ability to continue to achieve a 10%
real return to shareholders.
For and on behalf of the Board
GT Ferreira P Cooper
Chairman Chief Operating Officer
Sandton
19 September 2007
Firstrand Group
FirstRand`s diversified portfolio of businesses benefited handsomely from the
market conditions experienced during the year to 30 June 2007. The retail,
corporate and investment banking segments performed particularly well, although
the life assurance markets remained challenging. All entities within the
FirstRand Group exceeded its two main performance targets, these being real
earnings growth of 10% per annum and ROE of 10% per annum above the weighted
average cost of capital.
The FirstRand Group of companies achieved a normalised return on equity of 28%
per annum and grew normalised earnings by 32% from the following main sources:
Year ended 30 June 2007 2006 %
Rm Rm change
Normalised earnings for ordinary
shareholders derived from:
- FirstRand Banking Group 10 041 7 463 35%
- Momentum Group 1 716 1 514 13%
- Discovery Group 536 424 26%
- FirstRand Ltd (inc. pref. div. payments) (448) (443) -
Group normalised earnings (un-audited) 11 845 8 958 32%
Attributable to RMBH * 3 494 2 619 33%
*After consolidation eliminations
FirstRand Banking Group
FNB, the commercial and retail bank, achieved a significant increase in customer
numbers, robust growth in deposits and advances, and strong volume growth, which
all contributed to normalised earnings growth of 27% to R 4.1 bn, despite a 63%
deterioration in the bad debts to advances ratio (predominantly in the retail
portfolio).
The performance of the Banking Group`s operations was underpinned by a
particularly strong performance from the investment bank, RMB, which grew
normalised earnings 82% to R3,9 billion. This was driven by good performances
across the entire portfolio with particularly significant earnings growth from
the Investment Banking, Equity Trading and Private Equity divisions.
WesBank, the vehicle finance business, continued to experience "negative
gearing" in its local franchise with retail asset growth slowing and a
significant increase in bad debts. However, corporate sales increased and
represented 28% of total new business compared to 25% in the previous year. Such
negative gearing, which is to be expected at this point in the cycle, together
with increased start up costs and operating losses in Wesbank`s international
operations, resulted in normalised earnings decreasing by 13% to R0,92 billion.
Introduction of the National Credit Act
The National Credit Act (NCA), which seeks to protect consumers from over-
indebtedness, became operational 1st June 2007. Whilst the cost of
implementation was mainly incurred by the Banking Group`s retail operations (FNB
and Wesbank) in the current year, the NCA is expected to impact certain retail
banking revenues going forward. Since implementation of the NCA there has been a
slight slow down in new business sales from mortgage, credit card and vehicle
finance. It is however, too early to establish a trend, particularly as its
implementation coincided with an interest rate increase.
FirstRand Banking Group Capital Position
From 2000 to 2004 FirstRand generated very high ROEs whilst the demand for
capital from the Banking Group`s lending businesses was low, resulting in the
Group generating significant surplus capital. In the first half of 2005 the
Group considered various mechanisms to return this excess to shareholders and
reduced its dividend cover from 3 times to 2.5 times. However, from 2005 to date
the lower interest rate, lower inflation environment translated into extremely
favourable consumer credit markets, resulting in the high-growth retail lending
operations of the Bank growing advances at a compound rate of 43%. This resulted
in FirstRand Bank`s core equity reducing to 8.1%, still above the minimum target
of 8%. The Banking Group is actively seeking to increase this ratio through
actions such as securitisation, first loss risk transfers and is further
evaluating moving from an "originate and hold" to an "originate and distribute"
strategy. The Banking Group does not believe that it will in the forseeable
future need to resort to shareholders to raise additional equity for existing
operations.
Momentum
The group`s wholly-owned insurance operations performed well. Momentum`s
insurance operations showed continued strong new business growth with margins
improving compared to the first half of the year due to increased sales of
higher margin products. Collaboration with FNB in the mass and middle market
segments also continued to produce good growth.
Momentum continued with its strategy to diversify its business with further
investments in new distribution channels, products and markets. This assisted in
it achieving a 17% increase in recurring retail premium income (driven by solid
growth in both risk and savings products) while lump sum insurance inflows
increased by 18% as a result of continued focus on specialist investment brokers
and positive investor sentiment. FNB Insurance made a large contribution to
growth in all areas with new annualised recurring premium growing by 65% to R364
million.
Momentum increased its normalised earnings by 13% to R1,7 billion. This outcome
does not take cognisance of the impact of the payment during the year of special
dividends of R2.4 billion from Momentum to FirstRand. Without such dividend
payments, Momentum would have increased normalised earnings by 19%.
Discovery
Discovery achieved a solid operational performance in substantially all of its
businesses and increased normalised earnings by 33% to R920 million (FirstRand`s
share amounts to R536 million).
Given its dominant size and resultant high base, Discovery Health performed
particularly well through a strong focus on efficiencies. It grew operating
profit by 12%. Discovery Life delivered a strong 29% increase in operating
profit, reflecting its strong market position in pure risk insurance.
Of Discovery`s international initiatives, UK based PruHealth performed as
expected with new business growing strongly. Notwithstanding some operational
successes, financial returns at USA based Destiny Health were disappointing.
Discovery`s board continues to monitor and evaluate its strategy regarding the
USA initiative.
FirstRand has announced it will seek shareholder approval to unbundle its 57.1%
interest in Discovery. Separate commentary regarding RMBH`s intention in this
regard is offered elsewhere in this report.
Directly held insurance interests
OUTsurance
The OUTsurance group is active in the short-term insurance market and continues
to grow and perform extremely well. It has become an established and trusted
brand in a relatively short space of time.
OUTsurance posted excellent results for the year with net earned premium income
increasing by 28% to R2,7 billion (2006: R2,1 billion). Headline earnings also
increased by 28% to R480 million (2006 : R376 million). These increases were
largely driven by premium growth (on the back of growth in client numbers) and a
successful reduction in the management expense ratio. At 30 June 2007 OUTsurance
had total assets of R2,6 billion (2006: R2,1 billion) with a solvency margin of
42%.
The OUTsurance group has now entered its tenth year of operation. During this
period it has succeeded in establishing itself as a respected player in the
personal lines market and successfully launched several new profitable
initiatives, including Business Outsurance, directed at smaller commercial
enterprises. It also provides pricing and administration infrastructure for
other entities in the FirstRand group.
Over the last two years it has conducted intensive research to determine the
transportability of its business model into international markets. This work is
fast coming to fruition and OUTsurance is due to launch its first international
program by entering the Australian short term market during the first half of
calendar 2008. The start up cost attaching to this program is likely to cause
OUTsurance`s growth in earnings for the 2008 financial year to be somewhat muted
when compared to its historical growth trajectory.
RMBH`s attributable share of OUTsurance`s normalised earnings for the year
amounted to R282 million (2006: R221 million).
RMB Structured Insurance
RMBSI creates individual insurance and financial risk solutions for large
corporates by using innovative financial structures.
RMBSI grew net insurance premiums by 14% to R2,6 billion and reported a pleasing
outcome with headline earnings increasing by 26% to R90 million (2006: R71
million). At 30 June 2007 RMBSI had total assets of R4,2 billion (2006: R3,6
billion) and was adequately capitalised in all the jurisdictions in which it
operates.
A core element of RMBSI`s business is the provision of specialist insurance
services to the retail furniture sector. While its current suite of products is
compliant with the requirements of the NCA, it is too early to determine whether
the general slowdown experienced by the sector upon implementation of the Act
will persist over time.
RMBH`s attributable share of RMBSI`s normalised earnings for the year amounted
to R69 million (2006: R55 million).
Other financial
Services interests
Glenrand M.I.B
In the year ended 30 June 2007 Glenrand M.I.B returned to profitability and made
significant progress towards the implementation of various strategic initiatives
aimed at growing the business.
These results were achieved against a backdrop of returning the group to its
core Risk Advisory Services business, with the loss making Benefit Services
Business having been sold (subject to certain resolutive conditions) at the year
end.
Glenrand M.I.B reported headline earnings of R15 million (2006: loss R29
million). This outcome reflects that, as a result of its disposal, the loss
making Benefit Services business was treated as a "discontinuing operation" and
accordingly excluded from the calculation of headline earnings.
Despite highly competitive market conditions, Risk Services achieved new
business flows that were ahead of expectation. Its margins were impacted by
investments in inter alia information technology, selected acquisitions and the
retention of specialist skills. Management is confident that these initiatives
will bear fruit in the near future.
RMBH`s share of Glenrand M.I.B`s headline earnings amounted to R2 million (2006:
loss R8 million).
Dividend Declaration
Notice is hereby given that a final dividend of 80,0 cents per share was
declared on 19 September 2007 in respect of the financial year ended 30 June
2007.
Shareholders` attention is drawn to the following important dates:
* Last day to trade in order to Friday, 12 October 2007
participate in this dividend
* Shares commence trading "ex dividend" on Monday, 15 October 2007
* The record date for the dividend payment Friday, 19 October 2007
will be
* Dividend payment date Monday, 22 October 2007
No dematerialisation or rematerialisation of share certificates may be done
between Monday, 15 October 2007 and Friday, 19 October 2007 (both days
inclusive).
By order of the Board
AH Arnott
Company Secretary
19 September 2007
Summarised group income statement
for the year ended 30 June
2007 2006 %
Audited Audited change
Rm Rm
Share of after tax results in 3 590 2 757 30
associate companies
Impairment of associate (13) -
Profit on sale of interest in - 6
associates
Earned premiums net of reinsurance 5 326 4 415
Commisson income 5 -
Fee income 67 52
Investment income 1 208 919
Income 10 183 8 149
Net claims paid (2 960) (2 426)
Investment contract benefits and (294) (181)
insurance provisions
Acquisition, marketing and (1 922) (1 746)
administration expenses
Operating profit 5 007 3 796 32
Net finance costs (296) (232)
Profit before tax 4 711 3 564 32
Taxation (333) (270) 23
Net profit for the year 4 378 3 294 33
Attributable to:
Equityholders of RMBH 4 109 3 145 31
Minority interest 269 149 81
4 378 3 294 33
Computation of headline earnings
for the year ended 30 June
2007 2006 %
Audited Audited change
Rm Rm
Earnings attributable to ordinary 4 109 3 145 31
shareholders
Adjustment for:
Profit on partial sale of interest - (6)
in associates
Impairment of associate 13 -
Other 5 13
Share of adjustment made by
associates:
Reversal of private equity (130) (71)
realisations
Profit on sale of shares in (22) (30)
subsidiary and associate
Profit on sale of available-for- (225) (117)
sale financial assets
Other 20 (26)
Headline earnings attributable to 3 770 2 908 30
ordinary shareholders
Sources of headline earnings
for the year ended 30 June
2007 2006 %
Audited Audited change
Rm Rm
Headline earnings from:
FirstRand 3 265 2 521 30
Glenrand M.I.B. 2 (8) >100
OUTsurance 299 234 28
RMB Structured Insurance 69 56 23
3 635 2 803 30
RMBH and other 135 105 29
Headline earnings 3 770 2 908 30
Computation of earnings per share
for the year ended 30 June
2007 2006 %
Audited Audited change
Rm Rm
Earnings attributable to ordinary 4 109 3 145 31
shareholders
Headline earnings attributable to 3 770 2 908 30
ordinary shareholders
Number of shares in issue (millions) 1 188 1 188
Weighted average number of shares in 1 175 1 174
issue (millions)
Earnings per share (cents) 349.7 267.8 31
Diluted earnings per share (cents)* 340.6 260.5 31
Headline earnings per share (cents) 320.9 247.6 30
Diluted headline earnings per share 312.6 240.3 30
(cents)*
Dividend per share (cents)
Interim 61.5 50.5 22
Final 80.0 63.0 27
Total 141.5 113.5 25
Dividend cover (relative to headline 2.3 2.2
earnings)
* The diluted calculations give cognisance to the impact of a similar
calculation within FirstRand. This has no impact on RMBH`s weighted average
number of shares.
Summarised group balance sheet
as at 30 June
2007 2006
Audited Audited
Rm Rm
Assets
Property and equipment 104 105
Goodwill and other intangible assets 7 13
Investment in associate companies 15 193 13 121
Financial assets 5 391 3 044
Receivables and prepayments 675 634
Reinsurers` share of insurance provision 56 24
Cash and cash equivalents 1 978 2 236
Total assets 23 404 19 177
Equity
Share capital and premium 4 605 4 605
Reserves 12 018 9 511
Capital and reserves attributable to 16 623 14 116
equityholders of the company
Minority interest 972 399
Total equity 17 595 14 515
Liabilities
Financial liabilities 1 594 1 150
Insurance contract provisions 3 734 3 206
Payables and provisions 481 306
Total liabilities 5 809 4 662
Total equity and liabilities 23 404 19 177
Summarised group cash flow statement
for the year ended 30 June
2007 2006
Audited Audited
Rm Rm
Cash available from operating activities 2 218 1 708
Return of capital to shareholders - (1 188)
Servicing of finance from shareholders (1 478) (1 214)
Investment activities (903) (1 051)
Financing activities (95) (308)
Net decrease in cash and cash equivalents (258) (2 053)
Unrealised foreign currency translation - (9)
adjustments
Cash and cash equivalents at the 2 236 4 298
beginning of the year
Cash and cash equivalents at the end of 1 978 2 236
the year
Cash available from operating activities includes net premium receipts by short-
term insurance operations.
Given the fluctuations inherent in non-recurring structured insurance
transactions, such cashflows are not necessarily directly comparable between
years.
Computation of unaudited Normalised earnings
The group believes normalised earnings more accurately reflect operational
performance. Headline earnings are adjusted to take into account non-operational
and accounting anomalies. These un-audited adjustments are consistent with those
reported at 30 June 2006, except for share-based payments and listed property
associates.
for the year ended 30 June
2007 2006 %
Un-audited Un-audited change
Note Rm Rm
Headline earnings
attributable to
ordinary shareholders 3 770 2 908 30
RMBH`s share of
FirstRand`s adjustments:
Treasury shares 1 169 135
Private equity
realisations and
National Treasury 2 130 80
settlement
Adjustment of listed
property
associates to net asset 3 8 (8)
value
IFRS 2 share based 4 121 50
expenses
4 198 3 165 33
Adjustment for:
RMBH shares held by 5 96 69
policyholders
Group treasury shares 6 (312) (242)
IFRS 2 share based 4 2 -
expenses
Normalised earnings
attributable to
ordinary shareholders 3 984 2 992 33
Weighted average number of 1 188 1 188
shares in issue (millions)
Normalised earnings per 335.4 251.9 33
share (cents)
Diluted normalised 335.3 251.6 33
earnings per share (cents)
Dividend cover (relative 2.4 2.2
to normalised earnings)
Sources of normalised earnings
for the year ended 30 June
2007 2006 %
Un-audited Un-audited change
Rm Rm
Normalised earnings from:
FirstRand 3 494 2 619 33
Glenrand M.I.B 2 (8) >100
OUTsurance 282 221 28
RMB Structured Insurance 69 55 25
3 847 2 887 33
RMBH and other 137 105 30
Normalised earnings 3 984 2 992 33
Notes:
1. Deconsolidation of treasury shares and "deemed" treasury shares created by
FirstRand to account for:
- the Discovery BEE transaction;
- FirstRand shares acquired to hedge liabilities under staff share schemes; and
- FirstRand shares held as policyholders assets by group insurers.
2. Adjustment to include recurring Private Equity realisations and Insurance
Settlement Agreement with National Treasury in operational performance.
3. Adjustment of listed property associates from net asset value to fair value
in order to match the policyholders liability which is based on the fair value
of the units held.
4. Adjustment for IFRS 2 share based expenses.
5. Deconsolidation of "deemed" RMBH treasury shares held for policyholders by
group insurers.
6. Adjustment to reflect earnings impact based on actual RMBH shareholding in
group companies, i.e. reflecting treasury shares as if they are minority
shareholders.
Summarised statement of changes in equity
Share Treasury Equity Non-
Capital and Shares Accounted Distributable
Premium Reserve Reserves Reserves
Rm Rm Rm Rm
Balance at 30 June 5 793 - 5 357 458
2005 (audited) - as
previously reported
Prospective adjustment - (202) (425) -
due to implementation
of IFRS
Balance at 1 July 2005 5 793 (202) 4 932 458
Restatement due to de- - - - (2)
designation of asset
Return of share (1 188) - - -
premium
Net profit for the - - - -
year
Dividend paid - - - -
Income of associated - - 1 733 -
companies retained
Capital invested by - - - -
minorities
Share option expense - - - 1
reserve
Reserve movements - - - 30
relating to
subsidiaries
Change in carrying - - (19) -
value of associate due
to elimination of
treasury shares
Movement in treasury - 62 - -
shares
Reserve movements - - 233 -
relating to associates
Balance at 30 June 4 605 (140) 6 879 487
2006 (audited)
Net profit for the - - - -
year
Dividend paid - - - -
Income of associated - - 2 344 -
companies retained
Capital invested by - - - -
minorities
Share option expense - - - 2
reserve
Reserve movements - - - 23
relating to
subsidiaries
Change in carrying - - 26 -
value of associate due
to elimination of
treasury shares
Movement in treasury - (26) 113 -
shares
Reserve movements - - (229) -
relating to associates
Balance at 30 June 4 605 (166) 9 133 512
2007 (audited)
Total
Retained Shareholders` Minority Total
Earnings Funds interest Equity
Rm Rm Rm Rm
Balance at 30 June 2005 2 253 13 861 313 14 174
(audited) - as previously
reported
Prospective adjustment (138) (765) - (765)
due to implementation of
IFRS
Balance at 1 July 2005 2 115 13 096 313 13 409
Restatement due to de- 2 - - -
designation of asset
Return of share premium - (1 188) - (1 188)
Net profit for the year 3 145 3 145 149 3 294
Dividend paid (1 217) (1 217) (77) (1 294)
Income of associated (1 733) - - -
companies retained
Capital invested by - - 11 11
minorities
Share option expense - 1 - 1
reserve
Reserve movements (27) 3 3 6
relating to subsidiaries
Change in carrying value - (19) - (19)
of associate due to
elimination of treasury
shares
Movement in treasury - 62 - 62
shares
Reserve movements - 233 - 233
relating to associates
Balance at 30 June 2006 2 285 14 116 399 14 515
(audited)
Net profit for the year 4 109 4 109 269 4 378
Dividend paid (1 479) (1 479) (103) (1 582)
Income of associated (2 344) - - -
companies retained
Capital invested by - - 407 407
minorities
Share option expense - 2 - 2
reserve
Reserve movements (35) (12) - (12)
relating to subsidiaries
Change in carrying value - 26 - 26
of associate due to
elimination of treasury
shares
Movement in treasury 3 90 - 90
shares
Reserve movements - (229) - (229)
relating to associates
Balance at 30 June 2007 2 539 16 623 972 17 595
(audited)
Basis of preparation of results
The accompanying summarised results for the year ended 30 June 2007 reflect:
* the consolidation of the operations of RMBH and its subsidiaries including
OUTsurance and RMB Structured Insurance; and
* RMBH`s proportionate interest in its associates, FirstRand and Glenrand M.I.B
which have been equity accounted.
The annual financial statements for the year ended 30 June 2007, to which the
profit announcement relates, were prepared in accordance with:
* International Financial Reporting Standards ("IFRS"), including IAS 34;
* The requirements of the South African Companies Act, Act 61 of 1973, as
amended; and
* The Listings Requirements of the JSE Limited (the "JSE").
Such annual financial statements were audited by PricewaterhouseCoopers Inc. A
copy of their unqualified audit opinion is available for inspection at RMBH`s
registered office.
These financial statements incorporate accounting policies that are consistent
with those used in preparing the financial results for the year ended 30 June
2006, with the exception of de-designating certain financial assets previously
designated as at fair value through profit or loss in accordance with IAS 39:
Financial Instruments: Recognition and Measurement (Revised January 2006). These
financial assets are now held as available-for-sale financial assets.
The impact of the above mentioned restatements on net profit for the year ended
30 June 2006 was R0.5 million. Financial assets previously designated as at fair
value through profit or loss of R599.1 million were reclassified as available-
for-sale financial assets. These restatements are not evident in this results
announcement as it is prepared on a summarised basis.
RMB Holdings Limited ("RMBH")
Registration number: 1987/005115/06
Share code: RMH ISIN code: ZAE000024501
Directors GT Ferreira (Chairman), P Cooper (COO), LL Dippenaar, JW Dreyer, DM
Falck, PM Goss, PK Harris and KC Shubane
Secretary and registered office AH Arnott
Physical address 4th Floor, 4 Merchant Place, corner of Fredman Drive and
Rivonia Road, Sandton 2196
Postal address PO Box 786273, Sandton 2146
Telephone +27 11 282 8000
Telefax +27 11 282 8088
Web address www.rmbh.co.za
Sponsor (in terms of JSE Listing Requirements)
Rand Merchant Bank
(A division of FirstRand Bank Ltd)
Physical address 1 Merchant Place, corner of Fredman Drive and Rivonia Road,
Sandton 2196
Auditors PricewaterhouseCoopers Inc.
Physical address 2 Eglin Road, Sunninghill 2157
Transfer secretaries Computershare Investor Services 2004 (Pty) Limited
Physical address Ground Floor, 70 Marshall Street, Johannesburg 2001
Postal address PO Box 61051, Marshalltown 2107
Telephone +27 11 370 5000
Telefax +27 11 688 5221
The RMBH group at a glance
RMBH is the holding company of some of South Africa`s leading financial services
companies. Our interests include:
FirstRand
FirstRand Limited (the "FirstRand Group")
The FirstRand Group is a uniquely structured financial services group with
critical mass in both banking and insurance. For regulatory oversight purposes,
its operations are housed in three subsidiary groups under FirstRand Bank
Holdings Limited, Momentum Group Limited and Discovery Holdings
Limited.FirstRand
Effective interest 32,8%*
Banking
The FirstRand Banking Group provides customers with a comprehensive range of
products and services according to specific target market segments.
First National Bank ("FNB") services the retail, business and medium corporate
segments. In addition it provides transactional services to the group`s large
corporate clients.
Rand Merchant Bank ("RMB") is responsible for the large corporate segment, to
which it provides loans, value added advisory and structuring services.
WesBank is South Africa`s dominant movable asset financier. It is active in both
the retail and corporate sectors.
Insurance
Momentum Group targets individuals in the middle and upper income markets,
principally under the Momentum Life, Momentum Wealth, Momentum Health and RMB
Unit Trust brand names.
Discovery Group (57.1%* held) services the health insurance and life assurance
markets.
Directly held insurance interests
Effective interest 62.2%*
FirstRand Short-term Insurance Limited
("OUTsurance")
OUTsurance is a direct personal lines and small business short-term insurer.
Pioneers of the OUTbonus concept, it has grown rapidly by applying a scientific
approach to risk selection, product design and claims management.
Effective interest 80.0%*
RMB Structured Insurance Limited
("RMBSI")
RMBSI holds both short-term and life assurance licences. It creates bespoke
insurance and financial risk solutions for South Africa`s large corporations by
using sophisticated risk techniques and innovative financial structures.
Effective interest 15.8%*
Glenrand M.I.B Limited
("Glenrand M.I.B")
Glenrand M.I.B is a financial services group focused on providing innovative and
cost effective risk advisory services and short term broking services in the
corporate, mid market and personal lines sectors.
* The effective interest held by RMBH in these businesses shows variations
between years as a result of consolidation, by such entities of:
- Treasury shares held by them;
- Shares held in them by their staff share incentive trusts; and/or
- "Deemed" treasury shares held in them by policyholders and mutual funds
managed by them; as well as
- "Deemed" treasury shares arising from BEE transactions entered into.
The resultant interest of RMBH in group entities after such consolidation
adjustments may be tabulated as follows:
Interest in Issued Effective
Share Capital Interest
FirstRand 30,1% 32,8%
OUTsurance 58,6% 62,2%
RMBSI 76,9% 80,0%
Glenrand M.I.B 12,3% 15,8%
The "Effective Interest" is the basis upon which earnings from a particular
entity is brought to account by RMBH.
Date: 19/09/2007 12:00:07 Produced by the JSE SENS Department.
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