| Tue 11 Sep 2001, 0:00 | | Rmb Holdings Ltd - Audited Results For The Year En |
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Share code: RMH
ISIN code: ZAE000024501
Headline earnings exceed R1 billion for the first time and increased by 46%
to R1,2 billion
Headline earnings per share up 27%
Dividend per share up 20%
The RMBH Group
RMBH is the holding company of some of South Africa's leading financial
services companies. It acts as a seedbed for the establishment of
entrepreneurial financial services businesses with high growth potential,
which are at the forefront of technological and product innovation in
financial services. RMBH's interests include:
FirstRand Limited ("FirstRand" or the "FirstRand group")
(effective interest from 1 January 2001: 32,8% - previously 25,0%)
The FirstRand group is a uniquely structured financial services group with
critical mass in both banking and insurance. Substantially all of its
operations are wholly-owned and are a consolidation of:
- FirstRand Bank Holdings Limited (the "FirstRand Banking group"), where
FirstRand is involved in retail, corporate and merchant banking, as well as
instalment sale and property finance (principally under the First National
Bank ("FNB"), Rand Merchant Bank, WesBank, Ansbacher, eBucks.com and Origin
brand names); and
- Momentum Group Limited (the "Momentum group"), which includes life
assurance, asset management and health insurance activities (principally
under the Momentum Life, Momentum Wealth, RMB Asset Management, Futuregrowth
and Discovery brand names).
FirstRand continues to capitalise on the blurring of boundaries and
convergence within the financial services sector.
RMB Structured Insurance Limited ("RMBSI")
(effective interest from 1 March 2001: 100% - previously 70%)
RMBSI is a short-term insurer creating individual financial risk solutions
to South Africa's top companies by using sophisticated risk techniques and
innovative financial structures.
OUTsurance Limited ("OUTsurance")
(direct interest: 46,1%, effective interest, including FirstRand: 61,2%)
OUTsurance is a direct personal lines 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.
Glenrand M.I.B Limited ("Glenrand M.I.B")
(effective interest 18,6%)
Glenrand M.I.B is a leading financial services group focused on providing
risk advisory services and solutions, employee benefits and investment
advisory services and solutions and selected risk products and healthcare
administration services.
Global Resorts (SA) (Pty) Limited ("Global Resorts")
(effective interest 48,0%)
Global Resorts is a leading player in the gaming industry in South Africa.
It designs, develops and operates multi-faceted casino, hotel and
entertainment facilities and has an interest in three casinos, the principal
of which is Caesars Gauteng.
overview of results for the
year to 30 june 2001
RMBH experienced an exciting and successful year. Highlights include:
- Headline earnings attributable to ordinary shareholders exceeded R1bn for
the first time;
- Headline earnings per share increased by 27% to 113,0 cents (2000: 88,7
cents); and
- Since listing in 1992, headline earnings per share has increased at an
annual compound growth rate of 37% per annum.
The FirstRand group - still contributing the largest component of our
earnings - exceeded expectations and increased headline earnings by 25% to
R3,7bn. This, coupled with the additional 7,8% interest acquired in
FirstRand on 1 January 2001, enabled RMBH to report a 46% increase in
headline earnings to R1,2bn (2000: R0,8bn).
Review of operations
Sources of income
FirstRand group
Summary of FirstRand financial results
Year ended 30 June 2001 % 2000
Rm Audited change Audited
Headline earnings from:
- FirstRand Banking group 2 795 28 2 190
- Momentum group 943 19 790
- Secondary tax on companies (41) 58 (26)
Attributable to FirstRand
shareholders 3 697 25 2 954
Attributable to RMBH* 1 078 46 738
*After consolidation eliminations
Operating environment
The operating environment faced by the group during the current financial
year has been most challenging, with key economic indicators often moving in
a contradictory and volatile manner. Notwithstanding an interest rate
environment that tended lower, the demand for credit remained subdued. In
addition, FirstRand had to deal with significant regulatory changes and
interventions.
FirstRand Banking group
The FirstRand Banking group achieved exceptional results, with headline
earnings attributable to shareholders increasing by 28% to R2,795bn (2000: R
2,190bn). This represents 75% of FirstRand's headline earnings. FNB Retail
Bank doubled earnings following a successful restructuring of its back
office operations. By increasing market share, FNB Home Loans also doubled
its earnings, while FNB Corporate Bank increased earnings by 25% through
advances growth and sound credit management. Good gains were also reflected
from the African subsidiaries as a result of market share growth and
improved credit management.
Momentum group
The Momentum group increased operating profit after tax by 25% from R620m to
R772m as a result of exceptional performance in the individual life and
health insurance operations and a good performance in the employee benefits
area. Investment income on shareholders' funds was static, resulting in
earnings attributable to FirstRand shareholders increasing by 19% to R943m
(2000: R790m).
Strategic initiatives
FirstRand continues with the implementation of its vision of an integrated
financial services group. To align its strategic thinking across the group
with the appropriate target market segments, three important clusters were
created:
- a Wealth cluster - targeting the upper end of the market;
- the Corporate cluster - aimed at the business sector; and
- a Retail cluster - focused on consumers.
The executive committee of each cluster comprises executives from both
Banking and Insurance, thereby ensuring that the full range of intellectual
skills existing within FirstRand is brought to bear in the execution of our
strategic thinking.
FirstRand's e-commerce initiative and customer appreciation program,
eBucks.com, has made good progress. As a result of its merger with certain
third party customer appreciation programs and the transfer of all of the
group's internet banking activities to it, eBucks.com should have 350 000
customers by December 2001.
Directly held short-term insurance interests
RMB Structured Insurance
As previously reported, RMBSI became a wholly owned subsidiary of the group
with effect from
1 March 2001.
RMBSI had an excellent year, largely as a result of new business gained, the
restructuring of a large transaction, and large annual premium inflows.
RMBH's attributable share of RMBSI's headline earnings for the year amounted
to R19m (ten months to June 2000: R5m).
OUTsurance
OUTsurance reported a 95% increase in net premium income for the year, which
amounted to R391m (2000: R201m). This outcome reflects both strong organic
growth as well as the successful integration of the First National Insurance
business acquired halfway through the previous financial year. All areas of
operation performed satisfactorily with underwriting profit increasing from
R4m to R44m in the current financial year.
RMBH's attributable share of OUTsurance's headline earnings for the year
increased by 73% and amounted to R19m (2000: R11m).
Other financial services interests
Glenrand M.I.B
Glenrand M.I.B reported a 14% increase in income attributable to ordinary
shareholders for the year, which amounted to R61m (2000: R54m). A 33%
increase in operating revenues was diluted by the cost of starting up new
initiatives in both the United Kingdom and South Africa. Such costs,
together with the attendant funding costs and the cost of discontinued
operations in Australia caused the increase in headline earnings being
limited to 2%.
RMBH's attributable share of headline earnings from this group amounted to
R11m (2000: R11m).
Gaming interests
Global Resorts
All elements of the permanent facility at Caesars Gauteng were successfully
commissioned, within budget, during the last quarter of 2000.
Notwithstanding the Gauteng gaming market showing only modest growth,
Caesars Gauteng increased gross gaming revenue by some 17% and maintained a
market share in excess of 28%. The other facilities performed in line with
expectation.
RMBH's attributable share of headline earnings amounted to R75m (2000:
R51m), a pleasing increase of 47%. This reflects in part, the favourable
impact of the opening of the permanent facility at Caesars Gauteng.
Net funding cost
Net funding cost substantially represents funding costs incurred in
financing RMBH's commitments at its gaming interests.
Global Resorts have, in line with the original project feasibility
projections, commenced repaying such funding, with the first payment having
been received during May 2001. Further repayments are scheduled to take
place on an annual basis, with the final repayment due at the end of 2003.
Initiatives are also currently under way at the group's short-term insurance
interests to assess the appropriateness of their capital structures. It is
anticipated that they will be able to distribute part of their capital
employed either as a return of capital or by way of maiden dividend.
STRATE
RMBH has been scheduled to dematerialise its issued ordinary shares from 26
November 2001, after which settlement of any trade on or outside the JSE
Securities Exchange South Africa may only be effected via the Share
Transactions Totally Electronic ("Strate") system. A separate letter, giving
guidance regarding the steps to be followed in this regard, will be posted
to shareholders simultaneously with this results announcement.
Change in directorate
The group has recently completed a review of the composition and function of
its board of directors. Such review gave due recognition to the composition
of and the strategic input required by the group's investments. Cognisance
was also taken of the personal preferences and continuing managerial roles
played by existing directors in the greater group (including FirstRand). The
review concluded that a compact board, focused on the strategic development
of the RMBH group would serve the interest of stakeholders best.
Effective 10 September 2001, the following directors have retired from the
board:
Ms W E Lucas-Bull, Messrs B A Adams, A Bottega, M P C Brogan, J W Gafney, A
Gore, R P Gouws, R J Hutchison, J J Kitshoff, J D Krige and H P Meyer.
The group's relationship with the retiring directors spans many years and in
some instances their relationship with the executive group predates the
formation of RMBH. On behalf of the greater body of shareholders, we thank
them for their wise counsel and input at board meetings and wish them well
in their future endeavours.
We look forward to continued interaction with those retiring members who are
still engaged in the greater group.
After the above changes the RMBH board comprises:
Messrs G T Ferreira (Chairman), P Cooper (Chief Operating Officer), L L
Dippenaar, J W Dreyer, D M Falck, P M Goss, P K Harris and K C Shubane.
The board's sub-committees are being reorganised to take cognisance of these
changes.
Dividend payment
Continuing our stated policy of mirroring the dividend payments received
from FirstRand, the board has resolved to declare a final dividend of 24,2
cents per share (2000: 20,7 cents). Such final dividend, together with the
interim dividend of 11,8 cents, brings the total dividend for the year ended
30 June 2001 to 36,0 cents (2000: 30,0 cents). This represents a year-on-
year increase of 20% and a dividend cover ratio of 3,1 times.
Outlook for the group
Prospects for the international economy (especially the United States) is
cause for concern. The potential impact thereof on the domestic markets in
which we operate introduces significant uncertainty and risk to our business
environment. Competition in the South African financial services industry is
also expected to increase. All of our businesses operate within regulatory
frameworks undergoing frequent change, some of which are having an impact on
the group's forward planning.
Consequently, maintaining profit growth at historically high levels will be
difficult and challenging. After a period of consolidation and
rationalisation, FirstRand is now a unique, fully integrated financial
services group, and is well positioned to maintain its performance relative
to its peers by adopting a greater outward focus. Our other investments are
now well established and should continue growing at a satisfactory pace.
By order of the board
G T Ferreira P Cooper
Chairman Chief Operating Officer
Sandton
10 September 2001
Final dividend declaration
Notice is hereby given that a final dividend of 24,2 cents per share has
been declared on 10 September 2001 in respect of the financial year ended 30
June 2001, payable to ordinary shareholders registered in the books of the
company at the close of business on 12 October 2001.
Where electronic transfer instructions are in place, dividends will be
credited to the shareholder's bank account on 31 October 2001. In the
absence of such mandates, dividend cheques will be posted to shareholders on
that date.
By order of the board
P F de Beer FCIS
Company Secretary
Sandton
10 September 2001
RMB Holdings Limited ("RMBH") Reg No 1987/005115/06
Secretary and registered office:
P F de Beer FCIS, 17th Floor, 1 Merchant Place, Corner of Fredman Drive and
Rivonia Road, Sandton, 2196
Postal address:
PO Box 786273, Sandton, 2146
Transfer secretaries:
Computershare Services Limited, 2nd Floor, Edura House, 41 Fox Street,
Johannesburg, 2001
Auditors:
PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill, 2157
summarised group income statement
for the year ended 30 June
2001 2000
Audited % Audited
Rm change Rm
Operating profit 52 2 51
Net finance costs (16) 7 (15)
Profit before tax 36 - 36
Taxation 5 >100 (5)
Operating profit after tax 41 32 31
Share of after tax results in
associate companies 1 128 30 865
Earnings attributable to shareholders
before goodwill amortisation 1 169 30 896
Net goodwill amortised (167) 35 (124)
Earnings attributable to
outside shareholders (18) 64 (11)
Earnings attributable to
ordinary shareholders 984 29 761
Computation of headline earnings:
Earnings attributable to ordinary
shareholders 984 29 761
Adjustment for:
Profit arising on the disposal
of investments - - (81)
Goodwill amortised (net) 167 35 124
Other, made by FirstRand 35 >100 6
Headline earnings attributable to
ordinary shareholders 1 186 46 810
Sources of headline earnings:
Headline earnings from:
FirstRand 1 078 46 738
Glenrand M.I.B 11 - 11
OUTsurance 19 73 11
RMB Structured Insurance 19 >100 5
Global Resorts 75 47 51
Headline earnings before funding 1 202 47 816
Net funding costs and other (16) >100 (6)
Headline earnings attributable
to ordinary shareholders 1 186 46 810
Computation of earnings per share:
Number of shares in issue (millions) 1 188 30 914
Weighted average number of shares
in issue (millions) 1 050 15 914
Earnings per share (cents) 93,7 12 83.3
Headline earnings per share (cents) 113,0 27 88,7
Dividend per share (cents)
- Interim 11,8 27 9,3
- Final 24,2 17 20,7
Total 36,0 20 30,0
Dividend cover (times) 3,1 3,0
summarised group balance sheet
as at 30 June
2001 2000
Audited Audited
Rm Rm
Assets
Cash and short-term funds 1 376 462
Investments and advances 710 614
Accounts receivable 291 281
2 377 1 357
Associated companies 5 555 3 659
Fixed assets 15 11
Goodwill 3 798 2 246
Total assets 11 745 7 273
Liabilities and shareholders' funds
Funding instruments 637 304
Accounts payable and accruals 212 302
Short-term insurance provisions
and policyholder provisions 1 362 692
Total liabilities 2 211 1 298
Outside shareholders' interest 97 89
Shareholders' funds
Reserves 3 544 2 849
Share capital and premium 5 793 2 937
Convertible debentures 100 100
9 437 5 886
Total liabilities and shareholders' funds 11 745 7 273
summarised statement of changes in equity
Non-
distrib-
Share Share utable Retained Total
capital premium reserve earnings equity
Rm Rm Rm Rm Rm
Balance at 30 June 2000 (audited)
- As previously reported 9 2 928 1 520 1 356 5 813
- Restatements by associates - - - 9 9
- Provision for dividends - - - 188 188
- Goodwill amortised - - - (300) (300)
- Share of associates' non-
distributable reserves - - 76 - 76
- Income of associates retained - - 145 (145) -
Restated balance at 30 June 2000 9 2 928 1 741 1 108 5 786
Issue of shares 3 2 853 - - 2 856
Earnings attributable to ordinary
shareholders - - - 984 984
Dividends paid - - - (329) (329)
Income of associates retained - - 783 (783) -
Transfer to contingency reserve - - 3 (3) -
Transfers relating to associates:
- Movement on foreign currency
translation reserves - - 35 - 35
Other - - 5 - 5
Balance at 30 June 2001 (audited) 12 5 781 2 567 977 9 337
summarised group cash flow statement
for the year ended 30 June
2001 2000
Audited Audited
Rm Rm
Cash available from operating activities 1 325 399
Cash flows for servicing of finance from shareholders (329) (248)
Cash flows from investment activities (73) (236)
Cash flows from financing activities (9) 5
Net increase/(decrease) in cash and cash equivalents 914 (80)
Cash and cash equivalents acquired with
acquisition of subsidiaries - 471
Cash and cash equivalents at the beginning of the year 462 71
Cash and cash equivalents at the end of the year 1 376 462
Preparation of accounts
RMBH's external auditors, PricewaterhouseCoopers Inc., has expressed their
unqualified audit opinion on these results.
This profit announcement has been prepared using accounting policies which
are in accordance with South African Generally Accepted Accounting Practice.
Such policies are consistent with those applied in the preparation of the
unqualified audited financial statements for the year ended 30 June 2000,
with the exception of:
- No provision has been made for dividends receivable or payable after the
last day of the reporting period. The comparative figures have been restated
accordingly.
- With effect from 1 July 2000, goodwill is being capitalised and amortised
over its estimated lifespan. The impact of such change in accounting policy
is reflected in the computation of attributable earnings. Comparative
figures have been restated.
Certain prior year comparatives have been restated and/or reclassified to
facilitate a more meaningful comparison.
