| Wed 9 Mar 2011, 10:52 | | RMH - RMB Holdings Limited - Summarised unaudited results announcement and |
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RMH
RMH
RMH - RMB Holdings Limited - Summarised, unaudited results announcement and
cash dividend declaration for the six months ended 31 December 2010
RMB Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1987/005115/06
JSE Ordinary share code RMH
ISIN code ZAE000024501
("RMBH")
SUMMARISED, UNAUDITED RESULTS ANNOUNCEMENT AND CASH DIVIDEND DECLARATION FOR
THE SIX MONTHS ENDED 31 DECEMBER 2010
+20% to 164,2 cents or R1,99 billion Normalised earnings
+21% at 65,5 cents or R0,94 billion Total interim dividend
+21% to 3 870 cents or R46,8 billion Intrinsic value
A STRONG OUTCOME THAT CONTINUES TO BUILD ON THE SIGNIFICANT RECOVERY IN
PROFITABILITY RECORDED OVER THE LAST TWO YEARS
OPERATING ENVIRONMENT
The global economic environment continues to reflect an uneven recovery across
regions. While Asia, Latin America and Africa are growing at a faster rate,
the recovery in the USA remains uncertain and the Eurozone faces slow growth
and serious fiscal deficit challenges.
Against this backdrop, the South African economy reflected a stable
performance after emerging from the recession during the third quarter of
2009, achieving (annualised seasonally adjusted) GDP growth of 2,6% and 4,4%
respectively during the third and fourth quarters of 2010. As was the case for
the rest of the world, growth was supported by further policy stimulus and
growth in mining, manufacturing and retail trade volumes and improved external
trade. Further easing in the inflation rate to 3,5% at 31 December 2010
allowed the South African Reserve Bank to cut interest rates by a further 100
bps during the period under review, to 36 year lows. Real disposable income
reflected strong growth during the latter part of 2010 and job losses showed a
modest reversal with 17 000 non-agricultural jobs created during the third
quarter of 2010.
While the lower average interest rates weighed on FirstRand`s endowment
income, the cumulative benefit of the interest rate cuts, a modest recovery in
house prices, higher equity prices and real growth in disposable income eased
pressure on consumers. This impacted positively on retail bad debt levels
although there was an increase in commercial and corporate impairment levels
in certain areas of the economy. Across the South African banking sector,
balance sheets experienced low growth, due to the limited recovery in economic
activity and the ongoing process of consumers deleveraging their balance
sheets.
The markets in which our insurance interests operate remain complex, and were
impacted upon, not only by the spill over of the international financial
crisis, but also by considerable policy debates and increased legislation
expanding consumer protection.
OVERVIEW OF RESULTS
Against this background, our portfolio of financial services businesses
produced a strong outcome and continued to build on the significant recovery
in profitability recorded in the financial year to June 2010.
RMBH`s results were driven by the following outcomes in normalised earnings
for the six months to 31 December 2010:
FirstRand +20% to R4 752* million (2009: R3 946* million)
Discovery +25% to R941 million (2009: R755 million)
OUTsurance +27% to R360 million (2009: R284 million)
*The FirstRand results reflect normalised earnings from continuing
operations, after the unbundling of its interest in the merged MMI group.
The outcome reported by OUTsurance is particularly pleasing and reflects
satisfying growth in its Southern African operations notwithstanding having to
absorb the impact of start up costs in Australia.
As a result, RMBH was able to report the following growth in normalised
earnings for the six month period to 31 December 2010:
Normalised + 20% to R1 985 million (2009: R1 654 million)
earnings
-per ordinary + 20% to 164,2 cents (2009: 136,8 cents)
share
SOURCES OF INCOME
RMBH`s income is largely drawn from the full spectrum of Southern African
financial services, and reflects normalised earnings (excluding other net
income/funding costs) achieved over a broad diversified base (R million):
INTRINSIC VALUE
The Group`s intrinsic value reflected the recovery in financial sector equity
values experienced over the period:
As at 31 December
R million 2010 2009 %
change
Market value of listed 43 656 35 813 +22
interests(FirstRand, Discovery, MMI)
Directors` valuation of unlisted 3 946 3 562 +11
interests(OUTsurance, RMBSI)
Net funding (806) (752)
Total intrinsic value 46 796 38 623 +21
Per RMBH share (cents) 3 870c 3 194c +21
Over the year to 31 December 2010 RMBH`s market capitalisation increased by
30% and at that date amounted to R46,55 billion or 3 850 cents per share
(2009: R35,79 billion). This represented a 0,5% discount (2009: 7%) to the
group`s underlying intrinsic value.
INTERIM DIVIDEND PAYMENT
RMBH has traditionally followed the practice of returning dividends (after
providing for funding costs incurred at the centre) received by it in the
normal course of business to shareholders. It is envisaged that this practice
will continue after the group restructuring.
For the six months ended 31 December 2010, RMBH`s normalised earnings from
continuing operations (that is after recognising the impact of the unbundling
of RMI Holdings) amounted to 110,1 cents per share (2009: 91,2 cents). Having
due regard to the interim dividend receivable from FirstRand and applying the
dividend practice outlined above, the Board of RMBH has resolved to declare an
interim dividend of 42,7 cents per share. Such interim dividend is covered 2,6
times by normalised earnings per share from continuing operations.
Shareholders are referred to the RMI Holdings dividend declaration published
simultaneously with this profit announcement. In terms of that announcement,
RMI Holdings shareholders will receive an interim dividend of 22,8 cents per
share. In total, an RMBH shareholder who has retained his RMI Holdings shares
from the unbundling would thus have received ordinary dividends of 65,5 cents
per share for the six month period ending 31 December 2010. This represents a
year-on-year increase of 21% and a 2,5 times cover ratio on normalised
earnings from all operations for the period.
OUTLOOK
Given that the current South African economic environment is recovering at a
very subdued rate, achieving material revenue growth in the medium term will
remain challenging.
At FirstRand, now representing the only material investment held by RMBH:
- Growth in retail advances will remain low as levels of consumer indebtedness
are still at historic highs;
- Corporate balance sheets remain strong and have weathered the cycle well.
However, given current levels of corporate capacity, investment opportunities
will be limited and growth in corporate advances is expected to remain
subdued; and
- In line with its strategy FirstRand will continue to invest in its
infrastructure in South Africa and grow its footprint and client franchise in
other selected African markets. Given these investment strategies, and the
expected ongoing pressures on revenue growth, FirstRand`s operating franchises
continue to focus on efficiencies.
FirstRand believes its franchises are well positioned to benefit from the
improving cycle and deliver on the overall growth strategy. It continues to
make good progress on its strategy to be the African financial services group
of choice, creating long term franchise value and delivering superior and
sustainable economic returns to shareholders within acceptable levels of
volatility.
The restructuring of the RMBH group into focussed, separately listed banking
(via RMBH) and insurance (via RMI Holdings) groups give shareholders greater
flexibility and transparency in managing their investment in the group. While
the relative rerating of RMBH since announcing the restructuring has been
gratifying, we believe that in due course the more focused nature of the
investment entry points could allow shareholders to crystallise additional
value from their investment in the group.
For and on behalf of the Board
GT Ferreira P Cooper
Chairman Chief Executive Officer
Sandton
9 March 2011
GROUP RESTRUCTURING
Subsequent to the close of the six month period ended 31 December 2010,
RMBH shareholders authorised, and RMBH implemented, a far reaching
reorganisation that included, inter alia the following steps:
-the issue for R2,5 billion cash of new RMBH ordinary shares to Royal Bafokeng
Holdings (Proprietary) Limited;
-the acquisition by RMBH of additional FirstRand ordinary shares in exchange
for the issue of new RMBH ordinary shares, thereby increasing RMBH`s holding
in FirstRand to 33,9%;
-the separation of RMBH`s insurance and banking interests, through the
transfer of RMBH`s insurance interests to a wholly-owned subsidiary, Rand
Merchant Insurance Holdings Limited ("RMI Holdings");
-the unbundling of RMI Holdings to RMBH`s ordinary shareholders on a one-for-
one basis and the separate listing of RMI Holdings on the JSE as an insurance-
focused investment entity;
-the subsequent acquisition by RMI Holdings of additional MMI ordinary shares
in exchange for new RMI Holdings ordinary shares, increasing RMI Holdings`
effective interest in MMI to 24,4%; and
-the acquisition by RMI Holdings of FirstRand`s 45% interest in OUTsurance for
cash (the "OUTsurance acquisition").
Save for the OUTsurance acquisition (which is awaiting regulatory approval)
all of the other steps in the restructuring have become unconditional and have
been implemented.
The reorganisation took place after the close of the six month period ending
31 December 2010. Consequently it does not impact on the overall results
reported for this period. However, in accordance with International Financial
Reporting Standards, RMBH`s interest in the insurance group unbundled to RMBH
shareholders on 7 March 2011 has been treated as "discontinued operations" and
reflected separately as "being held for unbundling" in this results
announcement.
FIRSTRAND GROUP
FirstRand produced strong results for the period under review, building on the
significant recovery in profitability during the 2010 financial year.
The group achieved normalised earnings of R4 752 million from continuing
operations and produced a normalised Return on Equity (ROE) of 18,7%. The
group`s dividend, on continuing operations, increased by 25%.
Earnings continued to be driven by significant decreases in retail bad debts
(impairment charge 35% down on the previous comparative period and 15% down on
the six months to June 2010). This positively impacted both WesBank and FNB`s
performance.
All three of the group`s franchises showed strong operational performances.
Overall non interest revenue (NIR) grew 11%, reflecting good growth in
customers and transactional volumes at FNB and robust growth of 28% in fair
value income, driven by good performances from RMB`s local trading businesses.
The group also benefitted from a significant increase of 67% in profits from
investment activities.
Margins continued to benefit from the re-pricing strategies across all of the
large lending books, although the low levels of new business mean that the
full benefits are still to materialise. In addition, margins continued to be
impacted by the negative endowment effect on capital and deposits due to lower
average interest rates.
The cost to income ratio deteriorated slightly due to the sluggish topline
growth and the 10% increase in operating expenses primarily driven by variable
costs associated with higher income levels and ongoing investment in the
group`s growth strategy.
RMBH included R1 377 million of FirstRand`s earnings in its normalised
earnings for the six months to December 2010 (2009: R1 147 million).
DIRECTLY HELD INSURANCE INTERESTS
As reported, after 31 December 2010 all of RMBH`s insurance interests were re-
housed in RMI Holdings and on 7 March 2011, RMBH unbundled its entire interest
in RMI Holdings to its shareholders, with each RMBH shareholder receiving one
RMI Holdings share for every RMBH share held. RMI Holdings is separately
listed on the JSE.
DISCOVERY GROUP
Discovery posted strong results for the six month period to 31
December 2010. While the period under review was complex, impacted by both the
financial crisis and the considerable policy debates that affect the markets
in which Discovery operates, the performance across Discovery`s businesses was
pleasing.
Over the last 12 months, and particularly during the six month period under
review, Discovery focused on achieving growth in three key strategic areas:
- In Discovery`s South African businesses, quality, growth and innovation were
the important areas of focus. For Discovery Life, this manifested in a
significant reduction in lapse rates and superior mortality and morbidity
experience. Discovery Invest continued to strengthen its position in the
retail investment space, manifesting in new product designs and platforms;
- In Discovery`s international businesses, a step-change in strategy was
employed to achieve scale, profitability and relevance. In particular, the
acquisition of Standard Life Healthcare, the significant work done within
PruHealth and the continued successful roll-out of PruProtect, have created a
business of significant size and potential in the United Kingdom. Furthermore,
the important transaction concluded with Humana Inc. in the United States and
the acquisition of 20% of Ping An Health in China, provide considerable upside
potential without significant capital risk; and
- A continued focus on building new businesses based on the unique business
model of Discovery in the South African market.
The results of these strategies were pleasing. Total new business production
increased by 15% from R3 246 million to R3 747 million and the group`s
embedded value increased by 15% from R21 billion to R24 billion. Normalised
operating earnings, excluding the once-off effects of the Standard Life
Healthcare acquisition, increased by 28% from
R1 044 million to R1 332 million.
RMBH included R236 million of Discovery`s earnings in its normalised earnings
for the six months to December 2010 (2009: R189 million).
MMI HOLDINGS
MMI`s results for the period ended 31 December 2010 comprise six months of
Momentum`s results (to 31 December 2010) and Metropolitan`s results for the
month of December 2010. Consequently such results are not necessarily a
meaningful reflection of the underlying performance trends.
The MMI results for the period ended 31 December 2010 were characterised by
the following:
- An increase in core headline earnings for both Metropolitan and Momentum.
Pro-forma diluted core headline earnings for MMI for the six months amounted
to R1 228 million (assuming the transaction was in place for six months);
- New business volume increased in all Momentum`s main product lines, but
overall new business margins remained lower than the longer term target.
Margins in respect of Metropolitan`s new business increased. The group pro-
forma value of new business for MMI was R356 million for the six months; and
- The combined embedded value of the MMI group increased to
R31,1 billion.
MMI`s ability to sustain new business growth in the period before the merger
and during the ongoing integration process is encouraging. MMI`s main focus in
2011 will be on maximising the benefits of an effective integration process.
It aims to achieve significant efficiencies in this process, but not at the
cost of new business volumes or effective service delivery.
RMBH included R195 million of MMI`s earnings in its normalised earnings for
the six months to December 2010 (2009: R197 million - indirectly via
FirstRand).
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. OUTsurance has also
launched a direct life product in the South African market.
For the six months ended 31 December 2010, the Southern African operations
have grown operating profit by a strong 36%. The main driver behind the
performance was significantly lower claims ratios resulting from favourable
weather conditions and lower vehicle part prices attributed to the strong
Rand. Youi is performing in line with its business plan and generated an
operating loss of R123,1 million which is an improvement of 9% on the
comparative period reflecting that the business is beginning to achieve
traction.
OUTsurance`s normalised earnings, increased by 27% from
R284 million to R360 million.
RMBH`s attributable share of OUTsurance`s normalised earnings for the six
months amounted to R212 million (2009: R167 million).
RMB STRUCTURED INSURANCE
RMBSI provides a comprehensive range of tailored solutions to select clients
in the short-term and long-term insurance sector. In the period under review
RMBSI recovered by turning a loss of R3 million to a normalised earnings of
R15 million.
RMBH`s attributable share of RMBSI`s normalised earnings for the six months
amounted to R11 million (2009: loss of R2 million).
INTERIM CASH DIVIDEND DECLARATION
Notice is hereby given that an interim dividend of 42,7 cents per share was
declared on 9 March 2011 in respect of the six months ended 31 December 2010.
Shareholders` attention is drawn to the following important dates:
Last day to trade in order to participate in Friday, 25 March 2011
this dividend
Shares commence trading "ex dividend" on Monday, 28 March 2011
The record date for the dividend payment will Friday, 1 April 2011
be
Dividend payment date Monday, 4 April 2011
No de-materialisation or re-materialisation of share certificates may be done
between Monday, 28 March 2011 and Friday, 1 April 2011 (both days inclusive).
By order of the Board
AL Maher
Company Secretary
9 March 2011
SUMMARISED CONSOLIDATED INCOME STATEMENT
Six months ended 31 Year ended
December 30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Audited
Continuing operations
Share of after tax results in 1 473 1 191 24 2 543
associate company
Investment income 17 2 26
Income 1 490 1 193 2 569
Administration expenses (15) (9) (22)
Operating profit 1 475 1 184 25 2 547
Net finance costs (47) (47) (100)
Profit before tax 1 428 1 137 26 2 447
Taxation (1) 4 1
Profit from continuing 1 427 1 141 25 2 448
operations
Operations to be unbundled
(discontinued)
Profit attributable to 911 662 38 1 397
operations to be unbundled
Negative goodwill on 1 370 - -
acquisition of associate
Profit for the period 3 708 1 803 >100 3 845
Attributable to:
Equity holders of RMBH 3 551 1 690 >100 3 607
Non-controlling interests 157 113 39 238
3 708 1 803 >100 3 845
SUMMARISED STATEMENT OF COMPREHENSIVE INCOME
Six months ended 31 Year
December ended
30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Audited
Profit for the period 3 708 1 803 >100 3 845
Other comprehensive income,
net of tax
Currency translation (3) 1 18
differences
Available-for-sale financial 25 25 25
assets
Share of other comprehensive (152) 119 (105)
income of associates
Other comprehensive income for (130) 145 (>100) (62)
the period
Total comprehensive income for 3 578 1 948 84 3 783
the period
Total comprehensive income
attributable to:
Equity holders of RMBH 3 412 1 825 87 3 528
Non-controlling interests 166 123 35 255
3 578 1 948 84 3 783
COMPUTATION OF HEADLINE EARNINGS
Six months ended 31 Year
December ended
30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Audited
Earnings attributable to 3 551 1 690 >100 3 607
equity holders
Adjustment for:
Negative goodwill on (1 370) - -
acquisition of associate
Other 11 (1) (2)
Share of adjustment made by
associates:
Profit on sale of shares in (1) - (37)
subsidiary and associate
Profit on sale of joint (178) - -
venture
Profit on sale of available- (101) (26) (69)
for-sale financial assets
Gain from a bargain purchase - - (66)
Impairment of assets in 2 - 57
terms of IAS36
Loss on sale of advances - 6 -
books
Impairment of goodwill and 10 26 53
intangible assets
Other 15 (3) 33
Total tax effect of (4) - 17
adjustments
Total non-controlling - - 1
interest in adjustments
Headline earnings 1 935 1 692 14 3 594
attributable to equity
holders
SUMMARISED STATEMENT OF CHANGES IN EQUITY
R million Share Treasury Equity Non distri-
capital & shares accounted butable
premium reserve reserves reserves
Balance at 30 June 2009
(audited)
as previously 5 328 (137) 12 496 559
reported
Total comprehensive - - 119 16
income for the period
Dividend paid - - - -
Income of associated - - 1 142 -
companies retained
Capital invested by non- - - - -
controlling interest
Disinvestment from - - - -
consolidated fund
Reserve movements - - - 7
relating to
subsidiaries
Change in carrying - - (145) -
value of associates due
to elimination of
treasury shares
Movement in treasury - (46) 34 -
shares
Reserve movements - - 265 -
relating to associates
Balance at 31 December 5 328 (183) 13 911 582
2009 (unaudited)
Balance at 30 June 2010
(audited)
as previously 5 328 (202) 14 614 609
reported
Total comprehensive - - (152) 13
income for the period
Dividend paid - - - -
Income of associated - - 1 224 -
companies retained
Capital invested by non- - - - -
controlling interest
Reserve movements - - - 32
relating to
subsidiaries
Change in carrying - - (636) -
value of associates due
to elimination of
treasury shares
Movement in treasury - (22) 60 -
shares
Reserve movements - - 1 643 -
relating to associates
Balance at 31 December 5 328 (224) 16 753 654
2010 (unaudited)
SUMMARISED STATEMENT OF CHANGES IN EQUITY
R million Retained Total Non- Total
earnings equity con-trolling equity
holders` interests
funds
Balance at 30 June 2009
(audited)
as previously 2 396 20 642 1 099 21 741
reported
Total comprehensive 1 690 1 825 123 1 948
income for the period
Dividend paid (544) (544) (125) (669)
Income of associated (1 142) - - -
companies retained
Capital invested by non- - - 100 100
controlling interest
Disinvestment from - - (323) (323)
consolidated fund
Reserve movements (15) (8) 5 (3)
relating to subsidiaries
Change in carrying value - (145) - (145)
of associates due to
elimination of treasury
shares
Movement in treasury - (12) - (12)
shares
Reserve movements - 265 - 265
relating to associates
Balance at 31 December 2 385 22 023 879 22 902
2009 (unaudited)
Balance at 30 June 2010
(audited)
as previously 2 499 22 848 1 036 23 884
reported
Total comprehensive 3 551 3 412 166 3 578
income for the period
Dividend paid (846) (846) (98) (944)
Income of associated (1 224) - - -
companies retained
Capital invested by non- - - 130 130
controlling interest
Reserve movements (26) 6 19 25
relating to subsidiaries
Change in carrying value - (636) - (636)
of associates due to
elimination of treasury
shares
Movement in treasury - 38 - 38
shares
Reserve movements - 1 643 - 1 643
relating to associates
Balance at 31 December 3 954 26 465 1 253 27 718
2010 (unaudited)
SOURCES OF HEADLINE EARNINGS
Six months ended 31 Year ended
December 30 June
R million 2010 2009 % 2010
Unaudite Unaudited change Audited
d
Headline earnings from:
FirstRand 1 422 1 211 17 2 518
Other net income/(funding (46) (44) (5) (86)
costs)
Headline earnings from 1 376 1 167 18 2 432
continuing operations
Momentum 98 152 384
MMI 63 - -
161 152 6 384
Discovery 166 201 (17) 411
OUTsurance 222 176 26 359
RMBSI 10 (4) >100 8
Headline earnings from 559 525 6 1 162
operations to be unbundled
Headline earnings for the 1 935 1 692 14 3 594
period
COMPUTATION OF EARNINGS PER SHARE
Six months ended 31 Year
December ended
30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Audited
From continuing operations and
operations to be unbundled
Earnings attributable to 3 551 1 690 >100 3 607
equity holders
Headline earnings attributable 1 935 1 692 14 3 594
to equity holders
Number of shares in issue 1 209 1 209 1 209
(millions)
Weighted average number of 1 201 1 199 1 199
shares in issue (millions)
Earnings per share (cents) 295,5 140,9 >100 300,8
Diluted earnings per share 292,6 140,5 >100 298,0
(cents)*
Headline earnings per share 161,0 141,2 14 299,8
(cents)
Diluted headline earnings per 158,2 140,8 12 297,0
share (cents)*
Dividend per share (cents)
Interim 42,7 54,0 - 54,0
Final - - - 70,0
Total 42,7 54,0 - 124,0
From continuing operations
Earnings attributable to 1 427 1 146 25 2 453
equity holders
Headline earnings attributable 1 376 1 167 18 2 432
to equity holders
Number of shares in issue 1 209 1 209 1 209
(millions)
Weighted average number of 1 209 1 209 1 209
shares in issue (millions)
Earnings per share (cents) 118,0 94,8 24 202,9
Diluted earnings per share 115,9 94,5 23 200,7
(cents)*
Headline earnings per share 113,8 96,5 18 201,2
(cents)
Diluted headline earnings per 111,7 63,2 77 199,1
share (cents)*
* The diluted calculations give cognisance to the impact of the similar
calculation within FirstRand, Discovery and MMI Holdings. This has no
impact on RMBH`s weighted average number of shares.
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 30 June
R million 2010 2009 2010
Unaudited Unaudited Audited
ASSETS
Property and equipment 3 143 165
Goodwill and other intangible assets 3 13 46
Investment in associate companies 18 410 21 664 22 371
Financial assets 113 4 858 5 288
Receivables and prepayments 14 765 635
Reinsurers` share of insurance - 152 152
provision
Cash and cash equivalents 14 2 756 2 749
Non-current assets to be unbundled 17 545 - -
Total assets 36 102 30 351 31 406
EQUITY
Share capital and premium 5 104 5 145 5 126
Reserves 21 361 16 878 17 722
Capital and reserves attributable to 26 465 22 023 22 848
equity holders of the company
Non-controlling interests 1 253 879 1 036
Total equity 27 718 22 902 23 884
LIABILITIES
Financial liabilities 1 301 2 802 2 792
Insurance contract provisions - 4 090 4 184
Payables and provisions 48 557 546
Liabilities directly associated with 7 035 - -
non-current assets
Total liabilities 8 384 7 449 7 522
Total equity and liabilities 36 102 30 351 31 406
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 31 Year ended
December 30 June
R million 2010 2009 2010
Unaudited Unaudited Audited
Cash available from operating 683 445 1 033
activities from continuing operations
Cash available from operating
activities from discontinued
operations 1 054 1 162 1 722
Dividends paid (845) (543) (1 195)
Investment activities from continuing (130) 306 122
operations
Investment activities from (1 202) (320) (361)
discontinued operations
Financing activities from continuing 20 (154) (203)
operations
Financing activities from 74 (127) (368)
discontinued operations
Net (decrease)/increase in cash and (346) 769 750
cash equivalents from continuing and
discontinued operations
Unrealised foreign currency (4) 1 13
translation adjustments
Transferred to non-current assets to (2 385) - -
be unbundled
Cash and cash equivalents at the 2 749 1 986 1 986
beginning of the period
Cash and cash equivalents at the end 14 2 756 2 749
of the period
Cash available from operating activities from discontinued operations
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 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 2009 and 30 June 2010.
Six months ended 31 Year ended
December 30 June
R million Note 2010 2009 % 2010
Unaudited Unaudited change Unaudited
Headline earnings 1 935 1 692 14 3 594
attributable to
equity holders
RMBH`s share of
adjustments made by
associates:
Treasury shares 1 79 41 83
Other 28 (6) 73
2 042 1 727 18 3 750
Adjustment for:
RMBH shares held by 2 54 45 66
policyholders
Group treasury shares 3 (111) (118) (249)
Normalised earnings 1 985 1 654 20 3 567
attributable to
equity holders
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. Deconsolidation of "deemed" RMBH`s treasury shares held for
policyholders by group insurers.
3. Adjustment to reflect earnings impact based on actual RMBH shareholding
in group companies, i.e. reflecting treasury shares as if they are minority
shareholders.
SOURCES OF NORMALISED EARNINGS
Six months ended 31 Year ended
December 30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Unaudited
Normalised earnings
from:
FirstRand 1 377 1 147 20 2 494
Other net (46) (44) (5) (86)
income/(funding costs)
Normalised earnings from 1 331 1 103 21 2 408
continuing operations
Momentum 152 197 418
MMI 43 - -
195 197 (1) 418
Discovery 236 189 25 389
OUTsurance 212 167 27 341
RMBSI 11 (2) >100 11
Normalised earnings from 654 551 19 1 159
operations to be
unbundled
Normalised earnings for 1 985 1 654 20 3 567
the period
COMPUTATION OF NORMALISED EARNINGS PER SHARE
From continuing operations and operations to be unbundled
Six months ended 31 Year ended
December 30 June
R million 2010 2009 % 2010
Unaudited Unaudited change Unaudited
Normalised earnings for 1 985 1 654 20 3 567
the period
Weighted average number 1 209 1 209 1 209
of shares in issue
(millions)
Normalised earnings per 164,2 136,8 20 295,0
share (cents)
Diluted normalised 163,8 136,8 20 295,0
earnings per share
(cents)
From continuing
operations
Normalised earnings from 1 331 1 103 21 2 408
continuing operations
Weighted average number 1 209 1 209 1 209
of shares in issue
(millions)
Normalised earnings per 110,1 91,2 21 199,2
share (cents)
Diluted normalised 110,1 91,2 21 199,2
earnings per share
(cents)
BASIS OF PREPARATION OF RESULTS
The accompanying summarised results for the six months ended 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 MMI
Holdings 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
2010.
THE RMBH GROUP AT A GLANCE
At 31 December 2010, RMBH was the holding company of some of South Africa`s
pre-eminent financial services companies.
BANKING SECTOR
INTEREST HELD: 30,1%
FIRSTRAND
FIRSTRAND LIMITED (THE "FIRSTRAND GROUP") THE FIRSTRAND GROUP COMPRISES OF A
PORTFOLIO OF LEADING FINANCIAL SERVICES FRANCHISES. IT PROVIDES CUSTOMERS WITH
A COMPREHENSIVE RANGE OF PRODUCTS AND SERVICES ACCORDING TO SPECIFIC TARGET
MARKET SEGMENTS.
BANKING
FNB
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
Rand Merchant Bank ("RMB") is responsible for the large corporate segment, to
which it provides loans, value added advisory and structuring services.
WESBANK
WesBank is South Africa`s dominant moveable asset financier.
The balance of the group includes its African banking subsidiaries and Banking
Group Treasury.
INTEREST HELD: 100%
RMI HOLDINGS
RAND MERCHANT INSURANCE HOLDINGS LIMITED ("RMI HOLDINGS")
RMI Holdings is with effect from 7 March 2011, a separately listed investment
holding company that holds a diversified portfolio of some of South Africa`s
premier insurance brands. ITS purpose is to give shareholders greater
flexibility and transparency in managing their insurance investments
traditionally held by RMBH.
INTEREST HELD: 25,0%
DISCOVERY
Discovery Holdings Limited ("Discovery")
Discovery is an integrated financial services group that operates in health
insurance, life assurance, investment and health and wellness markets.
Discovery is active in South Africa, the United Kingdom, China and the United
States in the consumer-engaged health insurance, consumer-engaged life
assurance and the investment and long-term savings markets. It is a pre-
eminent developer of financial services products and operates under the
Discovery Health, Discovery Life, Discovery Invest, Vitality, Pru Health and
Pru Protection brand names.
INTEREST HELD: 58,6%
OUTsurance
FirstRand STI Holdings Limited ("OUTsurance")
Utilising a scientific approach to risk selection together with superior
claims management and innovative product design, the OUTsurance group conducts
short-term and long-term insurance activities. Direct insurance activities are
conducted using the OUTsurance and Youi (Australian) brands.
INTEREST HELD: 19,0%
MMI Holdings Limited ("MMI")
Flowing from the merger of the Momentum and Metropolitan groups, MMI is a
leading insurance-based financial services group conducting business in South
Africa and elsewhere in Africa. Utilising the Momentum and Metropolitan brand
names, the business of MMI consists of life insurance, healthcare
administration, asset management, short-term insurance and employee benefits.
INTEREST HELD: 76,4%
RMB STRUCTURED INSURANCE
RMB-SI Investments (Proprietary) Limited ("RMBSI")
RMBSI provides a comprehensive range of tailored solutions to select clients
in the short-term and long-term insurance sector. RMBSI`s business model is
based on structured business products, participating in underwriting
management agency business and conducting affinity business on behalf of
corporate clients.
Directors GT Ferreira (Chairman), P Cooper (CEO),
LL Dippenaar, JW Dreyer, JJ Durand, PM Goss, PK Harris,
Ms SEN Sebotsa, KC Shubane and MH Visser Secretary and registered office AL
Maher BCompt(Hons), CA(SA)
Physical address 3rd Floor, 2 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 4210 Web address www.rmbh.co.za
Sponsor (in terms of JSE Limited 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: 09/03/2011 10:52:01 Produced by the JSE SENS Department.
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