| Wed 11 Mar 2009, 11:56 | | RMH - RMBH - Summarised Unaudited results announcement and cash dividend |
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RMH
RMH
RMH - RMBH - Summarised, Unaudited results announcement and cash dividend
declaration for the six months ended 31 December 2008
RMB Holdings Limited
Registration number 1987/005115/06
Share code: RMH & ISIN code: ZAE000024501
("RMBH")
SUMMARISED, UNAUDITED RESULTS ANNOUNCEMENT AND CASH DIVIDEND DECLARATION FOR THE
SIX MONTHS ENDED 31 DECEMBER 2008
Normalised earnings
R1,4 billion or 111,9 cents
-35%
Interim dividend
R0,7 billion or 54 cents
-22%
Intrinsic value
R33,5 billion or 2 771 cents
-16%
An extremely challenging business environment
In our trading update to shareholders at the beginning of December 2008 we
highlighted that a challenging macro environment was playing out more negatively
than expected. The operating environment has remained extremely difficult,
characterised by further declines in asset prices, continued market volatility
and a declining economic outlook, both locally and internationally.
Global economic growth deteriorated rapidly, with most of the world`s major
economic powers entering recession. The international credit and liquidity
crunch worsened significantly, culminating in governments rescuing and
subsequently partially nationalising many of the largest international financial
institutions.
Although the South African economy was to some extent sheltered from the
international economic turmoil, it wasn`t immune to it, particularly with regard
to a significant slowdown in exports and a decline in commodity prices. This,
together with the high domestic inflation and interest rate environment,
contributed to negative growth of -1,8% in GDP in the final quarter of 2008.
Domestic interest rates remained high during the reporting period, with the
first downward adjustment of 50 basis points occurring on 11 December 2008.
These factors negatively impacted asset growth, and combined with falling equity
and house prices and lower customer affordability levels, resulted in further
increases in bad debt levels, especially in our retail lending franchises.
The All Share Index declined 29% in the period under review, with commensurate
downward pressure on performance and asset management fees derived from
investment businesses.
Overview of results
Against this background, our portfolio of financial services businesses produced
a mixed outcome. RMBH`s results were driven by the following outcomes in
normalised earnings for the six months to 31 December 2008:
*FirstRand -25% to R4 576 million (2007: R6 138 million)
*Discovery +19% to R489 million (2007: R410 million)
*OUTsurance +17% to R331 million (2007: R282 million)
The outcomes for Discovery and OUTsurance are particularly pleasing, given that
they were produced on the back of significant investment in new initiatives.
As the relative contribution from FirstRand overshadows that of our other
investments, RMBH did not escape the headwinds encountered by FirstRand. This
trend was accentuated as a result of the R249 million decline in the value of
the emerging market portfolio in which RMBH invested directly.
As a result, RMBH reported the following decline in normalised earnings for the
six month period to 31 December 2008:
*Normalised earnings -35% to R1 353 million
(2007: R2 084 million)
- per ordinary share -36% to 111,9 cents
(2007: 174,4 cents)
Sources of income
RMBH`s income is largely drawn from the full spectrum of Southern African
financial services:
Intrinsic value
The Group`s intrinsic value reflects the volatility in equity values experienced
over the period:
As at 31 December %
R million 2008 2007 change
Market value of listed interests 31 127 37 533 (17)
(FirstRand, Discovery)
Director`s valuation of unlisted 3 240 2 821 15
interests(OUTsurance, RMBSI)
Net funding (860) (378)
Total Intrinsic Value 33 507 39 976 (16)
Per RMBH share (cents) 2 771c 3 306c (16)
At 31 December 2008 RMBH`s market capitalisation amounted to R31,07 billion or 2
570c per share, (2007: R35,79 billion) representing a 7% discount (2007: 11%) to
the Group`s underlying intrinsic value.
Interim dividend payment
FirstRand constitutes the main source of both our earnings and dividends. It
seeks not to expose its dividend to the volatility brought about by fair value
accounting or the absolute size of its investment banking operations. It
therefore focuses on a sustainable growth rate, in line with normalised
earnings. This means that the dividend cover may vary from year to year. It
follows a policy of trying to return dividends to shareholders based on the long
term trend of its earnings. In the period under review, it has declared a
dividend of 34 cents, representing a decline of 23% from the prior period.
In the past we have stated that RMBH`s dividend philosophy is guided by two main
factors:
* RMBH will strive to return any dividend receipts derived from FirstRand to its
body of shareholders;
*Dividends derived from other sources will firstly be used to service any
funding obligations that may arise at the centre, after which any balance
remaining will be returned to shareholders.
From a shareholder perspective this will, under normal circumstances, give rise
to the following consequences - firstly, shareholders are assured of a natural
floor to their dividend expectations (being the FirstRand dividend) and
secondly, there is a natural ceiling to the other activities that RMBH may seek
to embark upon, i.e. the extent that it has "other" dividend streams to fund
expansion.
Following this approach, the natural dividend flow to the body of RMBH
shareholders for the six months to 31 December 2008 is:
R millon
Dividend receivable from FirstRand 576
Dividends receivable from:
Discovery 38
OUTsurance 68
RMBSI 17
Other 2
125
Funding obligations (53) 72
Dividend available for distribution 648
Dividend per ordinary share (cents) 54
Consequently, the Board has resolved to declare an interim dividend of 54 cents
per share (2007: 69 cents). The interim dividend is covered 2,1 times by
normalised earnings per share.
Outlook for the Group
At present the world is a very bleak place.
The macro outlook globally is expected to deteriorate further. The world is
experiencing the worst recession since World War 2 and expectations for global
growth have reduced from 2% to 0.5%. The current consensus view for the macro
scenario in South Africa is that growth is expected to slow from 3% last year to
0,5% in 2009.
Whilst South Africa is experiencing a severe cyclical downturn in asset quality,
there are no structural asset quality issues. Asset quality deterioration and
bad debts are in line with expectations given the cycle. However, whilst
interest rates have probably peaked, the deterioration in the credit cycle will
continue into 2009. It is likely that the international credit crisis will
impact on our domestic economy resulting in further job losses and continued
declines in asset values.
The South African consumer will remain under pressure despite the recent easing
of interest rates, and therefore volumes in the retail segment will continue to
decline and bad debts rise. In the corporate segment there is increased risk of
default in certain counters, either those exposed to the consumer cycle or those
with leveraged balance sheets.
At the FirstRand Banking Group:
* Its balance sheet is not exposed to the structured credit asset classes
currently contaminating international markets and in general the local banks are
well capitalised with access to liquidity and funding, albeit at a higher cost.
* It believes it is very well provided across its entire retail and wholesale
books.
* Investment and corporate banking is expected to remain resilient in the second
six months which will mitigate, to some extent, the strain in the retail
businesses. However, the significant profit contributions that have recently
been generated by realisations in the private equity portfolio are unlikely to
be repeated in the medium term.
The decline in equity markets, both locally and globally, has continued beyond
31 December 2008, with no imminent prospects of a recovery in the remainder of
the current financial year. Momentum`s operating profit growth is consequently
expected to remain under pressure, whilst the income on shareholders` assets
could be negatively impacted by the expectation of lower short term interest
rates.
FirstRand believes that the earnings from its local retail franchises will
remain under pressure in the second half of the year. In addition, both local
and international markets have experienced unprecedented volatility and the
resultant uncertainty is likely to continue. As a result, FirstRand believes
that the perfomance trend for the 12 months to 30 June 2009 will be similar to
that of the first half.
Discovery has in the last six months focused on its capital base, increasing its
capabilities and flexibility, leaving it well positioned for future growth and
opportunities.
The OUTsurance group`s South African business is well positioned, profitable and
adequately capitalised. It is approaching its Australian initiative with
circumspection and care.
Against what can only be described as a very challenging backdrop, the greater
RMBH group continues to focus on protecting its origination franchises and
balance sheets to ensure it is optimally positioned to take advantage of growth
opportunities as they arise, particularly as the negative credit cycle reverses.
Given the relative size of FirstRand in the greater group, it is likely that the
outcome projected by FirstRand for the year ending 30 June 2009 will largely
flow through to that of the RMBH group. However, we must caution that a major
dislocation in international markets that spills over into the local economy,
could upset this outcome.
For and on behalf of the Board
GT Ferreira P Cooper
Chairman Chief Operating Officer
Sandton, 11 March 2009
FirstRand Group
Summary of FirstRand Financial Results
Six months ended Year
ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Unaudited
Normalised earnings for
ordinary
shareholders derived
from:
FirstRand Banking Group 4 149 5 283 (21) 8 814
Momentum Group 740 913 (19) 2 004
FirstRand Ltd (313) (243) (29) (420)
(including preference
dividend payments)
FirstRand Group 4 576 5 953 (23) 10 398
normalised earnings
Attributable to RMBH* 1 329 1 807 (26) 3 103
* FirstRand presents its unaudited normalised earnings calculation on a pro-
forma basis as if the unbundling of Discovery had taken place at the beginning
of the 2007 financial year (i.e. Discovery excluded from both periods). As RMBH
continues to hold an interest in Discovery, such adjustment is not appropriate
in its case. This difference, together with various consolidation adjustments,
gives rise to the differing rate of change in earnings between periods in the
two groups.
The FirstRand Banking Group`s corporate and commercial franchises provided solid
performances, while the retail franchises showed strain due to the current
negative consumer credit cycle. The absolute growth in retail bad debts,
particularly in the residential mortgages portfolio, combined with the losses
emanating from the principal investment and trading operations of the investment
bank, negatively impacted overall profitability. Consequently, the total banking
portfolio produced normalised earnings of R4,1 billion, down 21% on the prior
period, with a concomitant decline in its return on equity (ROE) to 18% (2007:
27%).
Despite good new business growth and improving profit margins, the earnings of
Momentum Group`s insurance businesses were negatively impacted by the
significant volatility and decline in equity markets. While its conservative
capital management strategy protected earnings from the full impact of falling
equity values, Momentum`s normalised earnings reduced by 19% to R740 million,
with its ROE remaining a robust 23%.
FirstRand Banking Group
At First National Bank (FNB) high inflation and interest rates together with
elevated levels of consumer indebtedness created a challenging operating
environment, particularly for the advances businesses in the consumer market.
Given this negative credit cycle FNB produced satisfactory results, with
normalised earnings decreasing 15% from R2,5 billion to R2,1 billion and ROE
reducing from 35% to 28%.
FNB`s strong franchises in the Commercial and Corporate segments, contributed
earnings growth of 15% and 30% respectively, driven by healthy growth in
advances and deposits and transactional volumes.
Its diversified retail portfolio continued to show good growth in transactional
volumes and deposits, with the Mass segment performing well. However, the retail
lending portfolios continued to show significant increases in arrears and non
performing loans and a marked slowdown in new business, particularly in the
consumer segment. This negative gearing had a substantial impact on revenue
growth and profitability. In particular, FNB HomeLoans reported a loss of R975
million (2007: profit of R256 million). This reversal in profitability was
driven by a significant increase in the bad debt charge, driven by an increase
in NPL balances, as well as a significant slow down in advances as a result of
the repositioning of the portfolio.
The FNB African subsidiaries performed well, with considerable focus given to
the quality of lending and the pro-active management of the credit books. Net
income before tax increased 25% for the period to R658 million due to the strong
results from FNB Botswana, FNB Swaziland and FNB Mozambique. FNB has received
regulatory approval for the establishment of a full service bank in Zambia. The
intention is for this bank to offer a comprehensive range of retail, business,
commercial and corporate transactional banking products.
Rand Merchant Bank (RMB) reported normalised earnings of
R1,4 billion, down 20% on the prior period. RMB`s portfolio of businesses showed
a mixed performance with the Investment Banking division delivering a strong
result (+21%) as did the Fixed Income, Currencies and Commodities (FICC)
division (+30%). The Private Equity division was down on the prior period (-7%).
RMB experienced healthy levels of corporate activity in its Investment Banking
businesses. Advisory income exceeded that of the prior period. Rising
infrastructure and acquisition financing volumes also increased financing
revenues, while strong annuity income was generated by the in-force lending
book. The FICC business enjoyed strong client flows, particularly in hedging and
structured products, as customers sought protection in the highly volatile
currency and interest rate markets. Private Equity recorded strong realisation
profits though earnings from associates declined.
RMB`s Equities client execution businesses showed good growth but these were
offset by impairment charges raised following the default of a stockbroker
(Dealstream). The local Equities proprietary trading activities remained
profitable but, as anticipated, further losses were incurred in the wind-down of
its remaining international exposures.
The combination of higher bad debts and slowing asset growth in its local
lending businesses resulted in WesBank`s normalised earnings declining 62% to
R159 million from the prior period. WesBank`s normalised earnings do not,
however, include the R206 million loss incurred on the sale of its Australian
retail finance book.
Momentum Group
Momentum`s normalised earnings declined 19% to R740 million for the six months
ended 31 December 2008, mainly due to the significant drop in equity markets
during the period. Despite the decline in earnings, a solid return on equity of
23% was achieved.
Approximately two-thirds of Momentum`s profits are exposed to equity market
performance through asset-based fees, and these declined significantly in line
with equity market weakness. New business growth remained strong despite the
economic environment with the new business margin increasing from 2,1% to 2,2%
in the period. Collaboration with FNB continued to show good growth, but overall
new business was relatively subdued in line with the underlying trend in retail
banking products.
Investment income on shareholders` assets benefited from higher average interest
rates and higher levels of cash. The embedded value declined by 6% since 30 June
2008 to R15,1 billion due to the impact of equity market weakness on future
profitability, and the reduction in the directors` valuations of asset
management subsidiaries in line with the decline in the assets managed by these
businesses.
Directly held insurance interests
Discovery Group
Discovery is active in the insurance and health care funding markets in South
Africa and the United Kingdom.
During the period under review, the Discovery Group performed exceptionally
well:
* Operating profit from established businesses (Discovery Health, Discovery
Life, Vitality and PruHealth) increased by 31% to
R1,1 billion;
* If the burden of the start up costs of the new initiatives that have not yet
gained full traction (Discovery Invest, PruProtect) and the wind-down/exit costs
of USA based Destiny Health are brought to account, operating profit from all
businesses increased by 21% to R746 million; and
* Headline earnings increased by 19% to R489 million.
Discovery Health`s performance exceeded expectation, with operating profit
increasing by 22% to R475 million, while members grew by 4% to 2,1million lives.
The underlying Discovery Health Medical Scheme reached an important milestone by
achieving the statutory 25% reserve level. The Scheme now holds more than
R5,2 billion in reserves.
Discovery Life grew operating profit by a pleasing 29% to
R618 million. The business transacted by it has been of exceptional quality
resulting in positive experience variances over the period. While Discovery Life
did experience an increase in lapse rates over the period, reflecting the tough
economic environment, such outcome was not significantly above expectations.
Vitality continues to play a strategic role in providing a platform for all the
group`s businesses. Its new "Healthy Food" initiative is expected to become a
key differentiator for the group.
PruHealth, the Group`s UK based health joint-venture is on track to achieve
profitability during the calendar year. PruProtect, the life assurance joint
venture has to date performed below expectation. Particular attention is being
paid to both its distribution channels and product design, with early
indications being that the interventions are positive.
The wind-down of USA based Destiny Health is progressing in line with budget.
RMBH included R124 million of Discovery Group`s earnings in its normalised
earnings for the six months to December 2008 (In 2007 RMBH included R29 million,
being its share for the last two months of the period, of Discovery`s 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. During the last quarter of 2008 it
launched "Youi", an Australian based direct insurer. It has also expanded the
scope of its Namibian offering and has launched its first direct (credit) life
product in South Africa.
The South African operations of OUTsurance posted excellent results for the six
months to 31 December 2008 with net earned premium income increasing by 19% and
surpassing R1,9 billion, while it`s operating profit increased by 29% to R412
million. After allowing for the Australian and other start up costs, OUTsurance
reported an increase in headline earnings of 17% to R331 million (2007: R282
million).
RMBH`s attributable share of OUTsurance`s normalised earnings for the six months
amounted to R194 million (2007: R163 million).
RMB Structured Insurance
RMBSI creates individual insurance and financial risk solutions for large
corporates by using innovative financial structures.
Gross premiums written declined by some 8% to R778 million on the back of
declining activity in the retail credit market. As a result of the unwinding of
certain insurance contracts, profit after tax increased by 20% to R33 million
(2007: R28 million).
One of RMBSI`s major clients has decided to conduct its credit insurance
business on an in house basis. The loss of this client is likely to cause a
decline in RMBSI`s income for the full year.
RMBH`s attributable share of RMBSI`s normalised earnings for the six months
amounted to R25 million (2008: R21 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. On 1 July 2008 (the
beginning of the current financial year), the portfolio was valued at some R650
million.
In our trading update published at the beginning of December 2008 we advised
that the portfolio had not escaped the upheaval in international markets during
October 2008. The after tax loss included in RMBH`s normalised earnings for the
six months to December 2008 amounted to R249 million (2007: Profit R83 million).
The existence of the portfolio and its composition is continuously evaluated and
refined.
Glenrand M.I.B
RMBH had during 2007/8 advised shareholders that it no longer regarded Glenrand
M.I.B as a "core" element of its investment holdings and, when appropriate, RMBH
would give consideration to disposing of such interest. This conclusion was
driven inter alia, by the relative size of its investment in Glenrand M.I.B and
its inability to extract synergistic benefits between Glenrand M.I.B and RMBH`s
other investments.
At the end of December 2008 RMBH sold its 12,3% interest in Glenrand M.I.B to
Trustee Board Investments (Proprietary) Limited. The purchase consideration
amounted to R43.1 million. Neither RMBH`s share of Glenrand M.I.B`s earnings for
the six months to December 2008, nor the gain arising on the sale has a material
effect on the results of RMBH and as such have been included in "Other net
income" in the summarised financial statements accompanying this announcement.
Summarised group income statement
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Audited
Share in after tax 1 541 1 955 (21) 3 787
results of associate
companies
Profit on sale of 7 - -
associate
Impairment of - - (1)
associate
Earned premiums net of 2 583 2 464 5 174
reinsurance
Commission and fee 50 46 97
income
Investment (666) 475 626
income/(loss)
Income 3 515 4 940 9 683
Net claims paid (739) (1 138) (2 937)
Investment contract (217) (184) 82
benefits and insurance
provisions
Acquisition, marketing (1 019) (904) (2 035)
and administration
expenses
Operating profit 1 540 2 714 (43) 4 793
Net finance costs (92) (118) (152)
Profit before tax 1 448 2 596 (44) 4 641
Taxation (109) (187) 42 (290)
Net profit for the 1 339 2 409 (44) 4 351
period
Attributable to:
Equityholders of RMBH 1 378 2 238 (38) 4 122
Minority interest (39) 171 (>100) 229
1 339 2 409 (44) 4 351
Computation of headline earnings
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Audited
Earnings attributable to 1 378 2 238 (38) 4 122
ordinary shareholders
Adjustment for:
Impairment of associate - - 1
Profit on sale of (7) - -
associate
Other (2) 9 10
Share of adjustment made
by associates:
Loss/(profit) on sale of 9 (95) (131)
shares in subsidiary and
associate
Profit on sale of (15) (47) (76)
avaliable-for-sale
financial assets
Impairment of available- 15 - -
for-sale financial assets
Profit on VISA listing - - (344)
Loss on sale of MotorOne 67 - -
Advances book
Other 4 2 44
Total tax effect of - 13 73
adjustments
Total minority interest - - 15
in adjustments
Headline earnings 1 449 2 120 (32) 3 714
attributable to ordinary
shareholders
Sources of headline earnings
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Audited
Headline earnings from:
FirstRand 1 406 1 830 (23) 3 205
Discovery 131 32 174
OUTsurance 205 173 18 354
RMB Structured 25 23 9 78
Insurance
1 767 2 058 (14) 3 811
Other net (318) 62 (>100) (97)
income/(funding costs)
Headline earnings 1 449 2 120 (32) 3 714
Computation of earnings per share
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Audited
Earnings attributable to 1 378 2 238 (38) 4 122
ordinary shareholders
Headline earnings 1 449 2 120 (32) 3 714
attributable to ordinary
shareholders
Number of shares in issue 1 209 1 209 1 209
(millions)
Weighted average number 1 199 1 183 1 192
of shares in issue
(millions)
Earnings per share 114,9 189,2 (39) 345,9
(cents)
Diluted earnings per 114,5 186,8 (39) 339,9
share (cents)*
Headline earnings per 120,8 179,2 (33) 311,7
share (cents)
Diluted headline earnings 120,4 175,4 (31) 306,3
per share (cents)*
Dividend per share
(cents)
Interim 54,0 69,0 (22) 69,0
Final - - - 72,5
Total 54,0 69,0 (22) 141,5
Dividend cover (relative 2,2 2,6 2,2
to headline earnings)
* The diluted calculations give cognisance to the impact of the similar
calculation within FirstRand. This has no impact on RMBH`s weighted average
number of shares.
Summarised group balance sheet
at
31 December 30 June
2008 2007 2008
R million Unaudited Unaudited Audited
ASSETS
Property and equipment 116 110 113
Goodwill and other intangible 26 22 20
assets
Investment in associate 20 202 17 850 19 579
companies
Financial assets 5 170 5 890 5 953
Receivables and prepayments 574 390 488
Reinsurers` share of insurance 105 66 82
provisions
Cash and cash equivalents 1 902 2 044 2 058
Total assets 28 095 26 372 28 293
EQUITY
Share capital and premium 5 190 5 165 5 197
Reserves 15 340 13 414 15 110
Capital and reserves 20 530 18 579 20 307
attributable to equity holders
of the company
Minority interest 885 1 015 1 044
Total equity 21 415 19 594 21 351
LIABILITIES
Financial liabilities 2 710 2 531 2 577
Insurance contract provisions 3 583 3 557 3 938
Payables and provisions 387 690 427
Total liabilities 6 680 6 778 6 942
Total equity and liabilities 28 095 26 372 28 293
Summarised group cash flow statement
Six months ended Year
ended
31 December 30 June
2008 2007 2008
R million Unaudited Unaudited Audited
Cash available from operating 1 018 1 371 2 399
activities
Dividends paid (875) (950) (1 782)
Investment activities (169) (930) (1 154)
Financing activities (109) 574 575
Net (decrease)/increase in cash (135) 65 38
and cash equivalents
Unrealised foreign currency (21) 1 42
translation adjustments
Cash and cash equivalents at the 2 058 1 978 1 978
beginning of the period
Cash and cash equivalents at the 1 902 2 044 2 058
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.
Summarised statement of changes in equity
Share Treasury Equity Non-
Capital & Shares Accounted Distributable-
R million Premium Reserve Reserves Reserves
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
value of associate
due to
elimination of - - (47) -
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)
Balance at 30 June
2008 (audited)
as previously 5 328 (131) 11 993 552
reported
Net profit for the - - - -
period
Dividend paid - - - -
Income of - - 859 -
associated
companies retained
Capital invested by - - - -
minorities
Share option - - - (1)
expense reserve
Reserve movements - - - (21)
relating to
subsidiaries
Change in carrying
value of associate
due to
elimination of - - (113) -
treasury shares
Movement in - (7) 2 -
treasury shares
Reserve movements - - (120) -
relating to
associates
Balance at 31 5 328 (138) 12 621 530
December 2008
(unaudited)
Total
Retained Shareholders` Minority Total
R million Earnings Funds Interest Equity
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
value of associate
due to
elimination of - (47) - (47)
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)
Balance at 30 June
2008 (audited)
as previously 2 565 20 307 1 044 21 351
reported
Net profit for the 1 378 1 378 (39) 1 339
period
Dividend paid (877) (877) (110) (987)
Income of (859) - - -
associated
companies retained
Capital invested by - - 4 4
minorities
Share option - (1) - (1)
expense reserve
Reserve movements (18) (39) (14) (53)
relating to
subsidiaries
Change in carrying
value of associate
due to
elimination of - (113) - (113)
treasury shares
Movement in - (5) - (5)
treasury shares
Reserve movements - (120) - (120)
relating to
associates
Balance at 31 2 189 20 530 885 21 415
December 2008
(unaudited)
Computation of normalised earnings
The group believes that normalised earnings more accurately reflect operational
performance. Headline earnings are adjusted to take into account non-operational
and accounting anomalies. These unaudited adjustments are consistent with those
reported at 31 December 2007 and at 30 June 2008.
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Note Unaudited Unaudited change Unaudited
Headline 1 449 2 120 (32) 3 714
earnings
attributable to
ordinary
shareholders
RMBH`s share of
adjustments made
by associates:
Treasury shares 1 42 74 157
IFRS 2 share 2 (32) 56 43
based expenses
1 459 2 250 (35) 3 914
Adjustment for:
RMBH shares held 3 29 (6) (48)
by policyholders
Group treasury 4 (134) (161) (290)
shares
IFRS 2 share 2 (1) 1 1
based expenses
Normalised 1 353 2 084 (35) 3 577
earnings
attributable to
ordinary
shareholders
Weighted average 1 209 1 195 1 202
number of shares
?in issue
(millions)
Normalised 111,9 174,4 (36) 297,5
earnings per
share (cents)
Diluted 111,9 174,4 (36) 297,5
normalised
earnings per
share (cents)
Dividend cover 2,1 2,5 2,1
(relative to
normalised
earnings)
Sources of normalised earnings
Six months ended Year ended
31 December 30 June
2008 2007 % 2008
R million Unaudited Unaudited change Unaudited
Normalised earnings
from:
FirstRand 1 329 1 807 (26) 3 103
Discovery 124 29 161
OUTsurance 194 163 19 334
RMB Structured 25 21 19 72
Insurance
1 672 2 020 (17) 3 670
Other net (319) 64 (>100) (93)
income/(funding
costs)
Normalised earnings 1 353 2 084 (35) 3 577
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 for IFRS 2 share based expenses.
3. Deconsolidation of "deemed" RMBH`s treasury shares held for policyholders by
group insurers.
4. Adjustment to reflect earnings impact based on actual RMBH shareholding in
group companies, i.e. reflecting treasury shares as if they are minority
shareholders.
Interim dividend declaration
Notice is hereby given that an interim cash dividend of 54 cents per share was
declared on 11 March 2009 in respect of the six months ended 31 December 2008.
Shareholders` attention is drawn to the following important dates:
* Last day to trade in order to Friday, 27 March 2009
participate in this dividend
* Shares commence trading "ex dividend" Monday, 30 March 2009
on
* The record date for the dividend Friday, 3 April 2009
payment will be
* Dividend payment date Monday, 6 April 2009
No de-materialisation or re-materialisation of share certificates may be done
between Monday, 30 March 2009 and Friday, 3 April 2009 (both days inclusive).
By order of the Board
AL Maher
Company Secretary
11 March 2009
Basis of preparation of results
The accompanying summarised results for the six months ended 31 December 2008
reflect:
* the consolidation of the operations of RMBH and its subsidiaries including
OUTsurance and RMBSI; 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
2008.
RMB Holdings Limited ("RMBH")
Registration number 1987/005115/06
Share code RMH ISIN code ZAE000024501
Directors GT Ferreira (Chairman), P Cooper (COO), L Crouse, LL Dippenaar, JW
Dreyer, PM Goss, PK Harris, KC Shubane and Ms SEN Sebotsa.
Secretary AL Maher
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
Sponsor (in terms of JSE Listings Requirements) RAND MERCHANT BANK (a division
of FirstRand Bank Limited)
Physical address 1 Merchant Place, corner of Fredman Drive and Rivonia Road,
Sandton, 2196
Transfer secretaries
Computershare Investor Services (Proprietary) 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
Date: 11/03/2009 11:56:02 Produced by the JSE SENS Department.
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