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RMH
RMH
RMH - RMB Holdings - Summarised, Unaudited Results And Dividend Announcement
For The Six Months Ended 31 December 2007
RMB Holdings Limited
Registration number: 1987/005115/06
Share code: RMH & ISIN code: ZAE000024501
("RMBH")
SUMMARISED, UNAUDITED RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS
ENDED 31 DECEMBER 2007
- Normalised Earnings
- +12% to 174,4c or R2,08 billion
- Interim Dividend
- +12% to 69,0c or R0,83 billion
- Intrinsic Value
- -2% to 3 306c or R39,98 billion
BUSINESS ENVIRONMENT
In the executive review that accompanied RMBH`s annual financial statements
for the year ended 30 June 2007, we drew shareholders` attention to the
turmoil that had befallen global financial markets after the Group`s year end
and highlighted our concern that we would not be able to avoid the ensuing
contagion and its impact on South Africa.
Since then, the US "sub-prime" crisis has spilled over into world credit
markets to such an extent that some commentators view it as the catalyst that
could lead the first world economies into recession. Investor confidence has
evaporated and secondary credit and securitisation markets are functioning at
sharply reduced levels. As a result of bad debt write-offs, a significant
number of leading global banks have had their profitability decimated and have
needed to resort to emergency (and by definition, expensive) recapitalisations
in thin equity markets where the only investors of consequence have been
sovereign funds from the Middle and Far East. It was inevitable that South
Africa would be affected by this process.
As a result, the South African financial services environment was particularly
challenging during the six months ended 31 December 2007, with the following
forces impacting on our Group`s performance:
* Inflation and interest rates continued to rise, which resulted
in slower asset growth in the retail banking sector. This was
compounded by sharp increases in bad debts in the retail
portfolios due to higher levels of customer indebtedness.
* Corporate demand for credit continued to show resilience to the
rising interest rates, although some pressure is being
experienced in the small and medium enterprise segments.
* Continued capital expenditure, infrastructure development and
corporate action resulted in good growth in the corporate and
investment banking sectors.
* The local equity, currency and interest rate markets were
volatile on the back of the turmoil experienced in the
international capital markets. Whilst this was positive for
local trading activities, severe dislocations in the
international equity markets negatively impacted the Group`s
trading activities.
* The insurance operating environment was characterised by a
recovery in industry wide new business volumes.
The Group`s diverse portfolio of banking businesses allowed it to deliver
growth in earnings, despite the significantly tougher conditions in both the
retail segment and international markets. Our insurance activities also showed
good earnings growth, with OUTsurance producing exceptional results.
OVERVIEW OF RESULTS
RMBH reported the following key income statement outcomes for ordinary
shareholders:
* Attributable profit + 21% to R2 238 million (2006: R1
after tax 856 million)
* Headline earnings + 26% to R2 120 million (2006: R1
688 million)
While this outcome is, in the light of the bleak environment sketched above,
very pleasing, it does not in our opinion, provide the full picture of the
underlying operating outcome.
In previous reports to shareholders, RMBH highlighted that certain non-
operational factors and accounting anomalies impact on the calculation of
attributable and headline earnings. In the current period:
* When calculating Attributable Profit, changes in the inter
period profits on the sale of "available for sale assets" and
on the "sale of subsidiaries" distort the outcome.
* Similarly, changes in the inter period adjustment for the
elimination of deemed RMBH and FirstRand treasury shares held
by the Group`s share trusts and policyholders have a material
impact on both Attributable Profit and Headline Earnings.
When such non-operational factors and anomalies are isolated from these
results, the following trend in Normalised Earnings emerges for the six month
period to 31 December 2007:
* Normalised Earnings + 13% to R2 084 million (2006: R1
842 million)
* - per ordinary share + 12% to 174,4c (2006: 155,1c)
We believe Normalised Earnings to be a more appropriate basis against which to
measure the Group`s operational performance between periods.
While this outcome does not meet RMBH`s medium term target of 10% real growth
(which would have required an outcome of some 17%), it is, given the market
turmoil in the areas in which the Group operates, acceptable.
SOURCES OF INCOME
The acquisition of a direct 25% interest in Discovery should over time
introduce further diversity to the RMBH Group`s earnings. However, as such
increased interest was only held for two months, its earnings impact is not
yet fully reflected in the six months under review.
INTRINSIC VALUE
The intrinsic value of the Group`s investment portfolio is not directly
comparable between the two periods due to changes as a result of the
unbundling of Discovery and the consequential gearing that RMBH has assumed.
The values may be summarised as follows:
As At 31 December %
R million 2007 2006 change
Market value of listed
interests
(FirstRand, Discovery, 37 533 37 683 -
Glenrand M.I.B)
Director`s valuation of
unlisted interests
(OUTsurance, RMBSI) 2 821 2 292 23
Net (funding)/cash (378) 259 -
resources/investments
Total intrinsic value 39 976 40 234 (1)
Per RMBH share (cents) 3 306c 3 387c (2)
At 31 December 2007 RMBH`s market capitalisation amounted to R35,79 billion or
2 960c per share, (2006: R39,67 billion) representing a 10,5% discount (2006:
1,4%) to the Group`s underlying intrinsic value.
Interim Dividend Payment
The Board has resolved to declare an interim dividend of 69,0 cents per share
(2006: 61,5 cents), representing a 12% increase. The interim dividend is
covered 2,5 times by normalised earnings per share.
OUTLOOK FOR THE GROUP
We anticipate that, given the continuing volatility in global and local
capital markets, combined with rising inflation and high interest rates, the
second half of the financial year will continue to represent a challenging
operating environment.
Against this background, we are cautious regarding earnings prospects for the
year to June 2008.
In the context of our Banking interests:
* Consumer spending and credit extension are expected to slow
down further and bad debts are likely to increase.
* The corporate sector is expected to remain resilient due to
anticipated public sector investment and private fixed
investment. However, trading activities may continue to be
impacted by market turmoil and uncertainty.
Given the diversity of the Group`s banking portfolio, RMB and FNB will benefit
from their strong franchises within the corporate and commercial segments.
However, with the current levels of consumer indebtedness, the retail segments
will face significant headwinds.
The increased volatility in equity markets together with some economic
slowdown could impact on our insurance interests in the second half. However,
new business prospects combined with new growth initiatives should continue to
positively impact earnings.
RMBH believes that:
* given the pressures facing our businesses in the second half;
* combined with the significant earnings base created in the year
to 30 June 2007 (33% growth), it will be unlikely that we will
meet our targeted growth in earnings of 10% above inflation in
the current financial year.
We anticipate that, given the quality of our franchises and the diversified
nature of our portfolio, over the medium term earnings will trend back to the
stated target.
For and on behalf of the Board
GT Ferreira P Cooper
Chairman Chief Operating Officer
Sandton
5 March 2008
Interim Dividend Declaration
Notice is hereby given that an interim dividend of 69,0 cents per share was
declared on 5 March 2008 in respect of the six months ended 31 December 2007.
Shareholders` attention is drawn to the following important dates:
* Last day to trade in order to Wednesday, 19 March 2008
participate in this dividend
* Shares commence trading "ex Thursday, 20 March 2008
dividend" on
* The record date for the dividend Friday, 28 March 2008
payment will be
* Dividend payment date Monday, 31 March 2008
No de-materialisation or re-materialisation of share certificates may be done
between Thursday, 20 March 2008 and Friday, 28 March 2008 (both days
inclusive).
By order of the Board
AH Arnott
Company Secretary
5 March 2008
FIRSTRAND GROUP
Summary of FirstRand Financial Results
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Audited
Normalised earnings
derived from:
FirstRand Banking 5 283 4 783 10 10 089
Group
Momentum Group 913 768 19 1 668
Discovery Group* 185 220 - 536
FirstRand (incl. (243) (232) (4) (448)
preference dividends)
FirstRand normalised 6 138 5 539 11 11 845
earnings
Attributable to RMBH** 1 807 1 640 10 3 494
*Discovery Group unbundled in November 2007. Results for the 2007 half year
thus only include four months of earnings from Discovery Group.
**After consolidation eliminations.
For the half year to 31 December 2007 FirstRand grew pro forma normalised
earnings (i.e. excluding Discovery) by 12% and achieved a pro forma normalised
return on equity of 26%.
FirstRand Banking Group contributed 10% growth in earnings from R4,8 billion
to R5,3 billion with an ROE of 27% and the Momentum Group increased earnings
19% from R768 million to R913 million with an ROE of 31%.
FirstRand Banking Group
The performance of FirstRand`s banking operations was impacted by a number of
issues:
Firstly, significant increases in credit defaults at WesBank,
the vehicle finance business. Increased levels of consumer
indebtedness pushed bad debts to much higher levels than
previously experienced and at the same time asset growth slowed
meaningfully. Whilst this is to be expected at this point in
the cycle, WesBank`s overall earnings were negatively impacted.
* Secondly, net losses of R760 million in the investment bank`s
Equity Trading Division, combined with the very high base
achieved in the previous period resulted in RMB`s normalised
earnings growth slowing to 14%. Whilst this did impact the
Banking Group`s overall earnings profile, the diversified
nature of RMB`s portfolio enabled it to still give a creditable
performance despite these losses. The Private Equity,
Investment Banking and FICC divisions showed strong growth for
the period.
Despite difficult market conditions caused by increased interest rates and
inflation pressures, FNB delivered 25% growth in earnings, achieved on the
back of robust growth in advances (+23%) and deposits (+20%). This performance
can be attributed to FNB`s strong franchise in the corporate and commercial
segments, which now produce approximately half of FNB`s earnings. In addition,
its diversified portfolio of retail segments meant that whilst the consumer
segment experienced a slow down, the mass and wealth segments continued to
show good growth.
Momentum Group
Despite subdued investment markets the Momentum Group delivered 19% growth in
normalised earnings to R913 million and an excellent return on equity of 31%.
This performance exceeded all of FirstRand`s targets and can be attributed to
good new business flows with margins holding up and new initiatives that are
beginning to contribute to growth, in particular, the collaboration with FNB
in the mass and middle market segments and the continuing diversification of
Momentum`s distribution infrastructure.
Directly Held Insurance Interests
Discovery Group
Discovery is active in the insurance and health care funding markets in South
Africa, the United States and the United Kingdom.
FirstRand`s unbundling of its 57,1% interest in Discovery was completed during
November 2007. In this process, RMBH:
* received a direct stake in Discovery of approximately 16%;
* acquired the 4,5% interest in Discovery that Remgro Limited
received via its direct stake in FirstRand. The purchase
consideration due to Remgro was settled through a fresh
issue of RMBH shares; and
* purchased a further 4,5% interest in Discovery for a total
consideration of some R700 million. This acquisition was
cash settled.
As a result, RMBH now holds 25% of Discovery directly.
New business for the six months to December 2007 was flat. This muted outcome
reflects the decline in new business written by US based Destiny. If the
impact of Destiny is excluded, the group grew new business by 12%, with all
other businesses recording strong growth. The successful launch of Discovery
Invest, the Group`s investment product range in South Africa, as well as the
launch of PruProtect in the UK, has positioned the Group well for continued
growth in new business.
The Group is in the process of exiting the US health assurance market, after
Destiny failed to achieve traction. This process will take some eighteen
months to complete.
A highlight of the period`s results was Discovery Medical Scheme achieving its
targeted solvency ratio after generating a surplus of more than R1,0 billion
during the calendar year. Based on preliminary projections, the scheme`s
solvency should meet the required 25% at the end of the 2008 calendar year.
Discovery was able to report a 35% increase, to R726 million, in operating
profit before investment in new initiatives. Headline earnings per share
increased by 14% on a fully
Diluted Basis.
RMBH included R29 million (being its share of earnings for the last two months
of the period) of Discovery`s earnings in its normalised earnings. Prior to
that Discovery`s earnings were included in FirstRand`s earnings.
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 six months to 31 December 2007
with net earned premium income increasing by 25% to R1,6 billion, while its
underwriting profit increased by 12% to R253 million. On the back of a strong
performance of its investment portfolio, OUTsurance was able to increase
headline earnings by 31% to R282 million (2006: R216 million).
Notwithstanding the slow down in new vehicle sales and tougher economic
conditions, new business volumes have exceeded expectations.
The Group`s new initiative in Australia has been granted an insurance licence.
Its development expenditure is still within the agreed parameters and it
expects to launch its first product in the Australian market within the first
half of the 2008 calendar year.
RMBH`s attributable share of OUTsurance`s normalised earnings for the six
months amounted to R163 million (2006: R123 million).
RMB Structured Insurance
RMBSI creates individual insurance and financial risk solutions for large
corporates by using innovative financial structures.
The introduction of the National Credit Act and the tightening of monetary
policy have led to a significant decrease in RMBSI`s sale of consumer
protection insurance, one of the pillars of its business. Gross premiums
written declined by some 43% to R841 million, resulting in a 4% decline in
profit after tax to R28 million (2006: R29 million).
RMBH`s attributable share of RMBSI`s normalised earnings for the six months
amounted to R21 million (2006: R23 million).
Other Interests
Emerging Markets Equity Portfolio
In the final quarter of 2006 RMBH, with the help of independent investment
counsel, built a bespoke emerging market portfolio of selected listed
financial services equities, primarily in India, Brazil and Turkey.
RMBH has invested R500 million in the portfolio. The portfolio has been
designated as a "fair value through profit or loss" asset for accounting
purposes and gains and losses are being recorded against income.
The portfolio`s performance to date was gratifying and at 30 June 2007 it was
valued in excess of R656 million. In the six months to 31 December 2007 a
further gain of R100 million was recorded, resulting in a portfolio value of
R756 million. While the portfolio has not avoided the volatility and contagion
highlighted above, it is at the time of writing, still valued at levels above
that recorded at 31 December 2007.
The after tax gain included in RMBH`s normalised earnings amounted to R83
million (2006: R21 million).
Glenrand M.I.B
During the period under review, Glenrand M.I.B has made good progress towards
restructuring itself as a risk advisory business with core interests in
short-term insurance broking, risk advisory services, and claims and policy
administration capabilities. The disposal of its loss making benefit services
and pension fund administration business has been completed and it is in
negotiations to dispose of its healthcare division. With the imminent transfer
of assets from its life business, the disposal of non-core assets is
substantially complete.
For the six months to 31 December 2007, Glenrand M.I.B suffered a
disappointing loss of R46 million ( 2006: profit of R59 million), with the
benefit services business having suffered a trading loss of R43 million (2006:
R13 million).
The Risk Advisory Services business showed a marginal increase in revenues,
with good new business flows being offset by softer market conditions in the
corporate and commercial sectors. In its personal lines business it benefited
from hardening rates in the motor segment.
RMBH`s share of normalised loss from Glenrand M.I.B amounted to R4,0 million
(2006: profit R0,4 million).
Summarised group income statement
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Audited
Share of after tax 1 955 1 653 18 3 590
results in associate
companies
Impairment of associate - - (13)
Earned premiums net of 2 464 2 486 5 326
reinsurance
Commission and fee 46 44 72
income
Investment income 475 464 1 208
Income 4 940 4 647 10 183
Net claims paid (1 138) (1 289) (2 960)
Investment contract
benefits and
insurance provisions (184) (181) (294)
Acquisition, marketing (904) (1 003) (1 922)
and administration
expenses
Operating profit 2 714 2 174 25 5 007
Net finance costs (118) (83) (296)
Profit before tax 2 596 2 091 24 4 711
Taxation (187) (154) 21 (333)
Net profit for the 2 409 1 937 24 4 378
period
Attributable to:
Equityholders of RMBH 2 238 1 856 21 4 109
Minority interest 171 81 >100 269
2 409 1 937 24 4 378
Computation of headline earnings
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Audited
Earnings attributable to 2 238 1 856 21 4 109
ordinary shareholders
Adjustment for:
Impairment of associate - - 13
Other 9 5 5
Share of adjustment made
by associates:
Profit on sale of (47) (206) (283)
available-for-sale
financial assets
Profit on sale of shares (95) - (26)
in subsidiary and
associate
Other 2 (8) 24
Total tax effect of 13 33 35
adjustments
Total minority interest - 8 23
in adjustments
Headline earnings
attributable to ordinary
shareholders 2 120 1 688 26 3 900
Sources of headline earnings
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Audited
Headline earnings from:
FirstRand 1 830 1 480 24 3 395
Discovery 32 - -
Glenrand M.I.B (5) - 2
OUTsurance 173 131 32 299
RMB Structured 23 21 10 69
Insurance
2 053 1 632 26 3 765
RMBH and other 67 56 20 135
Headline earnings 2 120 1 688 26 3 900
Computation of earnings per share
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Audited
Earnings attributable 2 238 1 856 21 4 109
to ordinary
shareholders
Headline earnings
attributable to
ordinary
shareholders 2 120 1 688 26 3 900
Number of shares in 1 209 1 188 1 188
issue (millions)
Weighted average number
of shares
in issue (millions) 1 183 1 177 1 175
Earnings per share 189,2 157,7 20 349,7
(cents)
Diluted earnings per 186,8 153,5 22 340,6
share (cents)*
Headline earnings per 179,2 143,4 25 332,0
share (cents)
Diluted headline 175,4 139,6 26 323,4
earnings per share
(cents)*
Dividend per share
(cents)
Interim 69,0 61,5 12 61,5
Final - - - 80,0
Total 69,0 61,5 12 141,5
Dividend cover 2,6 2,3 2,3
(relative to headline
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
31 December 30 June
2007 2006 2007
R million Unaudited Unaudited Audited
ASSETS
Property and equipment 110 100 104
Goodwill and other intangible 22 10 7
assets
Investment in associate 17 850 13 703 15 193
companies
Financial assets 5 890 3 832 5 391
Receivables and prepayments 390 923 675
Reinsurers` share of insurance 66 28 56
provision
Cash and cash equivalents 2 044 2 002 1 978
Total assets 26 372 20 598 23 404
EQUITY
Share capital and premium 5 328 4 605 4 605
Reserves 13 251 10 075 12 018
Capital and reserves
attributable to
equity holders of the company 18 579 14 680 16 623
Minority interest 1 015 390 972
Total equity 19 594 15 070 17 595
LIABILITIES
Financial liabilities 2 531 1 484 1 594
Insurance contract provisions 3 557 3 706 3 734
Payables and provisions 690 338 481
Total liabilities 6 778 5 528 5 809
Total equity and liabilities 26 372 20 598 23 404
Summarised group cash flow statement
Six months ended Year
ended
31 December 30 June
2007 2006 2007
R million Unaudited Unaudited Audited
Cash available from 1 371 854 2 218
operating activities
Servicing of finance from (950) (748) (1 478)
shareholders
Investment activities (930) (536) (903)
Financing activities 574 196 (95)
Net increase/(decrease) in 65 (234) (258)
cash and cash equivalents
Unrealised foreign 1 - -
currency translation
adjustments
Cash and cash equivalents
at the beginning
of the period 1 978 2 236 2 236
Cash and cash equivalents 2 044 2 002 1 978
at the end of the period
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 normalised earnings:
The Group believes that normalised earnings more accurately reflects
operational performance. Headline earnings are adjusted to take into account
non-operational and accounting anomalies. These unaudited adjustments are
consistent with those reported at 30 June 2007, except for profit on private
equity realisations.
Six months ended Year
ended
31 December 30 June
2007 2006 % 2007
R million Note Unaudited Unaudited change Unaudited
Headline
earnings
attributable to
ordinary 2 120 1 688 26 3 900
shareholders
RMBH`s share of
FirstRand`s and
Discovery`s
adjustments:
Treasury shares 1 74 115 169
Adjustment of
listed property
associates
to net asset 2 - 42 8
value
IFRS 2 share 3 56 59 121
based expenses
2 250 1 904 18 4 198
Adjustment for:
RMBH shares 4 (6) 90 96
held by
policyholders
Group treasury 5 (161) (152) (312)
shares
IFRS 2 share 3 1 - 2
based expenses
Normalised
earnings
attributable to
ordinary 2 084 1 842 13 3 984
shareholders
Weighted average
number of shares
in issue 1 195 1 188 1 188
(millions)
Normalised 174,4 155,1 12% 335,4
earnings per
share (cents)
Diluted 174,4 155,0 13% 335,3
normalised
earnings per
share (cents)
Dividend cover 2,5 2,5 2,4
(relative to
normalised
earnings)
Sources of normalised earnings
Six months ended Year ended
31 December 30 June
2007 2006 % 2007
R million Unaudited Unaudited change Unaudited
Normalised earnings
from:
FirstRand 1 807 1 640 10 3 494
Discovery 29 - -
Glenrand M.I.B (4) - 2
OUTsurance 163 123 33 282
RMB Structured 21 23 (9) 69
Insurance
2 016 1 786 13 3 847
RMBH and other 68 56 21 137
Normalised earnings 2 084 1 842 13 3 984
Notes:
1. Deconsolidation of treasury shares and "deemed" treasury shares
by FirstRand and Discovery 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 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.
3. Adjustment for IFRS 2 share based expenses
4. Deconsolidation of "deemed" RMBH`s treasury shares held for
policyholders by group insurers.
5. 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 Shares Accounted Distributable-
&
R million Premium Reserves Reserves Reserve
Balance at 30 June
2006 (audited)
as previously 4 605 (140) 6 879 487
reported
Net profit for the - - - -
period
Dividend paid - - - -
Income of - - 1 164 -
associated
companies retained
Capital invested by - - - -
minorities
Share option - - - 1
expense reserve
Reserve movements - - - (11)
relating to
subsidiaries
Change in carrying - - 56 -
value of associate
due to elimination
of treasury shares
Movement in - (1) - -
treasury shares
Reserve movements - - (589) -
relating to
associates
Balance at 31 4 605 (141) 7 510 477
December 2006
(unaudited)
Balance at 30 June
2007 (audited)
as previously 4 605 (166) 9 133 512
reported
Issue of new shares 723 - - -
Net profit for the - - - -
period
Dividend paid - - - -
Income of - - 1 224 -
associated
companies retained
Capital invested by - - - -
minorities
Share option - - - 1
expense reserve
Reserve movements - - - 25
relating to
subsidiaries
Change in carrying - - (47) -
value of associate
due to elimination
of treasury shares
Movement in - 3 33 -
treasury shares
Reserve movements - - (34) -
relating to
associates
Balance at 31 5 328 (163) 10 309 538
December 2007
(unaudited)
Total
Retained Shareholders` Minority Total
R million Earnings Funds Interest Equity
Balance at 30 June
2006 (audited)
as previously 2 285 14 116 399 14 515
reported
Net profit for the 1 856 1 856 81 1 937
period
Dividend paid (748) (748) (103) (851)
Income of (1 164) - - -
associated
companies retained
Capital invested by - - 12 12
minorities
Share option - 1 - 1
expense reserve
Reserve movements - (11) 1 (10)
relating to
subsidiaries
Change in carrying - 56 - 56
value of associate
due to elimination
of treasury shares
Movement in - (1) - (1)
treasury shares
Reserve movements - (589) - (589)
relating to
associates
Balance at 31 2 229 14 680 390 15 070
December 2006
(unaudited)
Balance at 30 June
2007 (audited)
as previously 2 539 16 623 972 17 595
reported
Issue of new shares - 723 - 723
Net profit for the 2 238 2 238 171 2 409
period
Dividend paid (950) (950) (128) (1 078)
Income of (1 224) - - -
associated
companies retained
Capital invested by - - 11 11
minorities
Share option - 1 - 1
expense reserve
Reserve movements (36) (11) (11) (22)
relating to
subsidiaries
Change in carrying - (47) - (47)
value of associate
due to elimination
of treasury shares
Movement in - 36 - 36
treasury shares
Reserve movements - (34) - (34)
relating to
associates
Balance at 31 2 567 18 579 1 015 19 594
December 2007
(unaudited)
Basis of preparation of results
The accompanying summarised results for the six months ended 31 December 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,
Discovery and Glenrand M.I.B which have been equity accounted.
The interim report is prepared in accordance with:
* International Financial Reporting Standards ("IFRS"), including
IAS 34: Interim Financial Reporting;
* The requirements of the South African Companies Act, Act 61 of
1973, as amended; and
* The Listings Requirements of the JSE Limited (the "JSE").
These summarised results incorporate accounting policies that
are consistent with those used in preparing the financial
results for the year ended 30 June 2007. In July 2007 a new
headline earnings circular, Circular 8/2007, was issued by the
South African Institute of Chartered Accountants. Circular
8/2007 sets out specific industry exceptions that are applicable
to the FirstRand Group. One of these exceptions relates to the
inclusion of profit or losses made on the sale of private equity
associates and joint ventures in headline earnings. In previous
periods the profit or losses made on sale of private equity
associates and joint ventures were excluded from headline
earnings. The Group has included these profit or losses in
headline earnings and has restated the 31 December 2006 and 30
June 2007 headline earnings results accordingly.
The impact of the above mentioned restatements is shown below:
Restatement of prior period financial information
As
As originally
R million restated stated Difference Reason
31 December 2006 Profit on
private
equity
realisation
included in
headline
earnings
Headline earnings 1 688 1 587 101
Headline earnings
per share (cents)
- Basic 143,4 134,8 8,6
- Diluted 139,6 131,3 8,3
30 June 2007 Profit on
private
equity
realisation
included in
headline
earnings
Headline earnings 3 900 3 770 130
Headline earnings
per share (cents)
- Basic 332,0 320,9 11,1
- Diluted 323,4 312,6 10,8
Directors GT Ferreira (Chairman), P Cooper (COO), LL Dippenaar, JW Dreyer, DM
Falck, PM Goss, PK Harris, KC Shubane and Ms SEN Sebotsa (appointed 15
February 2008).
Secretary AH Arnott
Registered office and 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 Listings Requirements)
Rand Merchant Bank
(A division of FirstRand Bank Ltd)
Physical address 1 Merchant Place, corner of Fredman Drive and Rivonia Road,
Sandton 2196
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:
effective interest 32,7%*
First Rand
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 two subsidiary groups under FirstRand
Bank Holdings Limited and Momentum Group Limited.
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.
Assurance
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.
Effective Interest 27,3%*
Discovery Holdings Limited ("Discovery")
Discovery services the health care funding and insurance markets in South
Africa, the United States and the United Kingdom. It is a pre-eminent
developer of financial services products and operates under the Discovery
Health, Discovery Life, Vitality, Destiny and PruProtect brand names.
Effective Interest 61,8%*
FirstRand STI Holdings 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 80,6%*
RMBSI 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 risk advisory business with core interests in short-term
insurance broking, risk advisory services and the provision of claims and
policy administration capabilities.
* The effective interest held by RMBH in these businesses shows variations
between years as a result of the 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 effective interest held as at 31 December 2007 can be compared to the
actual interest held by RMBH in the statutory issued share capital of the
companies as follows:
Effective Actual
* FirstRand 32,7% 30,1%
* Discovery 27,3% 25,0%
* OUTsurance 61,8% 58,6%
* RMBSI 80,6% 76,9%
* Glenrand M.I.B 15,8% 12,3%
Date: 05/03/2008 10:26:01 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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