| Tue 16 Sep 2003, 10:07 | | Audited Results for the year ended 30 June 2003 |
|
FirstRand - Audited Results for the year ended 30 June 2003
FirstRand
Registration No: 1966/010753/06
Share code: FSR ISIN: ZAE000014973
("FSR")
NSX Share Code: FST
Audited Results for the year ended 30 June 2003
Additional information available at:
www.firstrand.co.za
5th consecutive year of superior growth
Since the creation of FirstRand in 1998 the diversified earnings base of the
group has delivered core headline earnings growth at a compound rate of 20% per
annum, to double from R2.5 billion in 1999 to R5.1 billion in 2003.
Post-AC133 Pre-AC133
Headline earnings (%) +3 -4
Core headline earnings (%) +30 +23
Dividend per share (%) +23 +23
Total assets under management or
administration (R billion) 490.3 489.2
Core headline earnings (R million)
"99 2 516
"00 2 954
"01 3 450
"02 4 186
"03 5 151
Dividends per share (cents)
"99 15.50
"00 19.00
"01 23.75
"02 28.50
"03 35.00
Net asset value (R million)
"99 11 133
"00 12 757
"01 15 366
"02 19 084
"03 22 286
Introduction
This abridged report relates to the consolidated financial results of FirstRand
Limited and its wholly owned subsidiaries, FirstRand Bank Holdings Limited ("the
Banking Group") and Momentum Group Limited ("the Insurance Group"). A detailed
report on the operations of the Group will be circulated to shareholders and is
available on the company website - www.firstrand.co.za.
Operating environment
These pleasing results were produced in a challenging operating environment
characterised by the following:
High South African interest rates resulted in an improvement in margins. This,
together with growth in retail deposits, had a favourable impact on the
endowment effect of the Banking Group. However, the high interest rates dampened
the demand for credit.
A strengthening Rand resulted in a lower Rand value for foreign-sourced fee
income and substantial translation losses.
Poor and uncertain equity markets continued their negative trend during the year
under review:
- In South Africa, the JSE ALSI 40 index declined by 25% over the year; and
- In global markets the MSCI World Index declined by 2.5% (in US Dollar
terms).
The declining investment markets impacted negatively on the demand for single
premium investment products offered by the Insurance Group. Consequently, growth
in total assets and fee income of the Group"s life insurance and asset
management subsidiaries was constrained.
The demand for credit by large corporations in South Africa remained subdued.
While still above the long-term historic averages, corporate defaults in the USA
improved towards the end of the year. This resulted in a lower loss from Rand
Merchant Bank"s investment in Collateralised Debt Obligation ("CDO") portfolios.
The regulatory environment remains demanding. The implementation of the
Financial Advisors and Intermediary Services Act, the Financial Intelligence
Centre Act and the imminent introduction of the Financial Services Charter
continues to occupy considerable executive time.
Financial overview
It is now five years since the formation of FirstRand in 1998. During this
period the merged group has undergone fundamental change as the FirstRand
Business Philosophy was implemented. The aim of creating an integrated financial
services group structured with critical mass to take advantage of the blurring
of boundaries in financial services and the convergence of products and services
between banking, insurance and asset management has been achieved.
The success of this philosophy is now manifest in a group recognised for the
excellence of its people and its distinctively branded products and services.
The diversified earnings base of the FirstRand Group has seen core headline and
headline earnings grow at a compound growth rate of 20% per annum, with core
headline earnings doubling from R2 516 million in 1999 to R5 151 million in
2003.
Earnings
The FirstRand Group produced excellent results for the year ended 30 June 2003.
Virtually all business units contributed to the growth in core headline earnings
per share of 23% (pre-AC133). Notwithstanding the fact that international
private banking and the asset management activities showed a significant decline
in profits as a result of low interest rates in international markets and the
poor performance of both local and international investment markets, the rest of
the Group, particularly retail banking, more than made up their decline in
profits.
Headline earnings (post-AC133), after translation losses of R532 million (2002:
R548 million gain) increased by 3% from R4 734 million (86.9 cents per share) to
R4 897 million (89.9 cents per share). On a pre-AC133 basis, headline earnings
decreased by 4%.
Core headline earnings per share (pre-AC133), which exclude translation gains
and losses, increased by 23% from 76.9 cents per share to 94.5 cents per share.
After incorporating AC133 the increase amounted to 30% (99.6 cents per share).
In April 2003 FirstRand authorised the listing of 15 017 941 ordinary shares as
the result of the conversion of "A" variable rate, redeemable convertible
preference shares in terms of the FirstRand OutPerformance Share Incentive
Scheme. This resulted in a dilution of 0.28% for the Group"s existing
shareholders. This dilution had a negligible effect on earnings per share in
respect of the year to June 2003.
Dividends
A final dividend of R1 010 million representing 18.5 cents per share has been
declared, bringing the total dividend for the year to R1 909 million, or 35
cents per share (2002: 28.5 cents per share). This represents an increase of 23%
in the total dividend per share over the prior year and is in line with core
headline earnings growth.
Capital management
Capital raising by FirstRand
In order to facilitate the reorganisation of the Insurance Group and the
underwriting of the Discovery Holdings Limited ("Discovery") claw-back offer,
the FirstRand Group issued R1 405 million of redeemable cumulative preference
shares ("the preference shares"), in two tranches on 15 and 30 July 2003. Of the
amount raised, approximately half was applied to the Discovery capitalisation.
This issue of the preference shares by FirstRand enabled it to raise the
requisite capital cost-effectively and to optimally allocate it between the
Insurance Group, Discovery and the Banking Group.
Insurance Group reorganisation
The Insurance Group initiated a detailed evaluation of its capital management
programme, and as a result, achieved the following objectives:
A more appropriate asset composition in the shareholders" portfolio in order to
meet the Financial Services Board"s (FSB) new valuation regulations relating to
subsidiary companies and to optimise return on capital.
The transfer of Momentum Life"s investment of 62% in Discovery to FirstRand
(effective 1 July 2003) in exchange for cash, which resulted in a reduction in
Momentum Life"s Capital Adequacy Requirement ("CAR"). This was the first step in
their capital management programme.
Limiting asset concentration risk in the Momentum Life shareholders" portfolio
and applying a more prudent investment policy; and
An appropriate investment mandate for shareholders" capital, backing CAR,
invested in cash or near cash instruments.
Following the above restructuring, Momentum Life"s CAR cover has remained at 2
times, which is within the targeted range set by its board.
The Insurance Group now has a more robust capital structure, with reduced
concentration risk and volatility in its shareholders" portfolio.
Strategic initiatives
During the year the Group implemented a number of strategic initiatives.
International activities
- During the first half of the financial year, FNB Namibia announced its
intention to take over the operations of Swabou Bank in a transaction involving
an exchange of shares. The acquisition has been formally approved by the
Namibian authorities and is effective from 1 July 2003. The transaction, which
is earnings-enhancing, reduces FirstRand"s shareholding in FNB Namibia from 78%
to 60%.
- Discovery announced in March 2003 that its US based health operation,
Destiny Health, had signed favourable distribution agreements with Guardian Life
Assurance Company of America and Tufts Health Plan of Boston, Massachusetts.
- In July 2003 FirstRand announced its intention to dispose of its interest
in its international banking operation, Ansbacher (UK). This disposal will allow
the Banking Group to re-deploy approximately GBP100 million of capital which is
currently delivering sub-optimal returns. The asset management operations which
form part of Ansbacher will be retained.
Black economic empowerment
- Momentum Employee Benefits has, subsequent to year-end, announced a
partnership with the Mine Workers Investment Company ("MIC"). In terms of the
agreement two business units, namely Momentum Life"s trade union retirement fund
administration business and Momentum Actuaries and Consultants will be
transferred into a new company, Lekana Employee Benefit Solutions, in which MIC
will acquire a 30% interest. The remaining business units comprising risk
management and small schemes administration will now form part of Momentum"s
Life operations.
- In response to the reporting demands likely to be placed on the Group
upon the advent of the Financial Services Charter, an empowerment unit has been
established to proactively promote and monitor progress across the Group with
regard to the Charter.
Brand rationalisation
- Ansbacher Private Bank and Origin merged their back office operations in
October 2002. In February 2003, the positioning of the Group"s private banking
operations was taken a step further when the combined operation was renamed RMB
Private Bank. The Group"s international multi-manager operations which were
formerly marketed under the Ansbacher brand, will in future be marketed under
the RMB brand with the Momentum brand being used for the local multi-manager
operations.
Review of operations
To facilitate comparison with the prior year, this review concentrates on core
headline earnings (all pre-AC133).
Banking Group
The Banking Group had an excellent year and increased core headline earnings by
26%. The Banking Group contributed 78% of FirstRand"s total core headline
earnings.
Highlights of the Banking Group"s results include:
Good domestic advances growth in the retail and medium corporate markets.
Excellent growth in net interest income of 36% as a result of improved overall
margins including the positive endowment effect of higher interest rates on
FirstRand Bank"s larger capital base.
Strengthening of margins from 4.33% to 4.81%.
The scale benefits resulting from the mortgage and deposit books acquired from
Saambou Bank and BOE towards the end of the previous financial year.
Rand-denominated advances growth of 12.5%.
Improvement of the non-performing loan book and a much lower charge in respect
of the Banking Group"s investment in its CDO portfolio.
Increases in transactional revenue as a result of stronger new business growth.
These were reduced to a limited extent by:
Lower trading profits after the exceptional profit earned in the 2002 financial
year.
A disappointing performance from international private banking.
An increase in the average tax rate from 19.5% to 21.6%.
Insurance Group
The Insurance Group results, which reflect growth in core headline earnings per
share of 10%, are particularly gratifying if viewed against the backdrop of the
poor performance of international and local equity markets. Features of these
results include:
Very strong growth in recurring life, investment and health insurance premiums.
Satisfactory levels of single premium growth in difficult investment markets.
Continued operating efficiency gains.
Strong growth in the embedded value of new business in respect of life,
investment and health insurance business.
A restoration of margins in the employee benefits risk business.
A decline in fee income from international and local asset management
activities.
Significantly improved returns on Momentum"s shareholder portfolio following a
move to cash.
Segmental analysis
Retail +27%
The Retail businesses had an excellent year and their earnings now account for
45% of the FirstRand Group"s total core headline earnings.
FNB Retail showed excellent results which were driven by pleasing domestic
advances and deposit growth and an improvement in the interest margin.
Transactional income grew by 13.9% following volume and limited price increases.
eBucks.com recorded a maiden profit.
FNB HomeLoans benefited from strong new business growth and the acquisitions
made in the prior year. Non-performing mortgage loans showed a slight increase
in the face of the high interest rate environment.
WesBank achieved record new business results with the new advances exceeding R24
billion in the year under review. Increased competition resulted in margin
squeeze. As a result of WesBank"s collaboration with FNB Corporate, excellent
progress was made in sourcing new corporate business.
The Group"s African subsidiaries in Namibia, Botswana and Swaziland again
produced satisfactory results. FNB Namibia paid a special dividend of N$190
million thereby returning surplus capital to shareholders.
OUTsurance enjoyed another outstanding year, benefiting from their relationship
with FNB HomeLoans. FirstLink also benefited from Group collaboration.
Corporate +12%
Rand Merchant Bank"s Equities Trading, Special Projects and Private Equity
divisions all enjoyed an excellent year contributing to pre-tax profit growth of
18%. Losses in respect of the CDO portfolio were substantially down on the
previous year. Unrealised profits in the private equity portfolio are R699
million.
FNB Corporate achieved excellent results despite poor demand for credit from
large corporates, increasing profit before tax by 27%. Deposit margins improved
significantly and there was an increase in the volume of transactions.
Satisfactory advances growth of 19% was achieved in the medium corporate market.
Non-performing loans decreased by 50%.
Momentum Employee Benefits managed to restore their underwriting margins in
respect of their group risk business.
FirstRand Asset Management"s results were disappointing after being negatively
impacted by the loss of funds under management, the poor performance of
international and local equity markets, and closure costs related to the
cessation of sales of certain retail investment products. Relative investment
performance has improved significantly in the period under review.
Momentum +15%
Momentum Life"s individual life business performed well in a difficult market.
The growth in single premium new business (+9%) was subdued, but recurring
premium new business growth of 27% reflected the success of new risk and
investment products launched during the year. Poor investment markets and high
interest rates are impacting on the performance of all life assurance companies,
but relative to its peers, Momentum Life had a good year.
Steady progress continues to be made with the multi-manager business both
locally and abroad.
RMB Private Bank +69%
The recently merged private banking operations of Origin and Ansbacher trading
as RMB Private Bank, achieved both good advances and deposit growth.
Ansbacher (UK) (>100%)
Ansbacher (UK)"s results disappointed and were in part due to poor international
credit markets and low interest rates. Substantial losses were incurred in
respect of international banking. A decision has been taken to find a new
strategic shareholder for this business.
Discovery Holdings +42%
Discovery Health continued to grow market share as a result of strong new
business growth (+26%) in its existing market. New business at Discovery Life
increased by 60% and operating profit, including the return on shareholder funds
increased from R11 million to R114 million.
Destiny in the US incurred further start-up losses of R169 million which were in
line with expectations.
A successful rights issue took place in July 2003. The proceeds will be used to
refinance the international operation and to fund local expansion.
The Discovery Group"s embedded value increased by 47% to R4 868 million.
Capital Centre +73%
The Banking Group"s income on capital benefited from high local interest rates.
These gains were partly dampened by low rates earned on international capital.
Increased provisioning for certain corporate debts which was made in the
previous year, was not repeated in the year under review.
Momentum"s shareholder portfolio increased earnings by 37% as a result of
restructuring activities.
Disclosure philosophy and accounting policies
Following the positive report on corporate governance practices of the South
African banking industry by Advocate Myburgh and an internal review of FirstRand
Bank"s practices, the bank"s governance structures and charters have, where
appropriate, been standardised across the Group. The Group is committed to the
highest standard of corporate governance, and in this regard strives to provide
reports which are transparent, timeous and accurate.
This profit statement has been prepared in compliance with the Listings
Requirements of the JSE Securities Exchange South Africa. The financial
statements to which this profit statement relates were audited by
PricewaterhouseCoopers Inc. A copy of their unqualified audit opinion is
available for inspection at the registered office of FirstRand Limited.
The pre-AC133 results included in this announcement have been reviewed by
PricewaterhouseCoopers Inc. A copy of their unqualified review opinion is
available for inspection at the registered office of FirstRand Limited.
The accounting policies of the Group comply in all material respects with
statements of South African GAAP and the Companies Act of 1973. These accounting
policies are consistent with those applied during the year to 30 June 2002 with
the exception of the introduction of AC133 and Discovery"s treatment of deferred
acquisition costs.
Annual general meeting
The sixth annual general meeting of shareholders of FirstRand Limited will be
held on 2 December 2003 in the Auditorium, 18th Floor, 1 Merchant Place, corner
Fredman Drive and Rivonia Road, Sandton at 09:30.
Prospects
We are cautiously optimistic about the prospects of an improved economic outlook
in the year ahead. A lower interest rate environment will benefit growth and
increase the likelihood of a favourable movement in the stock market. This will
be conducive to good new business growth across all business units in the year
ahead. The benefits of a lower interest rate environment which include an
anticipated increase in the demand for credit and a lower level of bad debt
provisioning will, to an extent be offset by lower margins. Fortunately the
Group implemented hedging strategies to protect the endowment margins over the
short to medium term.
Significantly improved results are expected from the Group"s local and
international asset management activities after a disappointing year. The
proposed disposal of Ansbacher (UK), in whole or in part, is expected to free
underperforming capital currently held offshore.
Companies such as Discovery, OUTsurance, eBucks.com and RMB Private Bank, which
are all entrepreneurial, new ventures started in the last ten years, are
expected to continue to grow strongly and provide a meaningful enhancement to
the Group"s overall earnings growth rate.
It is anticipated that the Financial Services Charter will be published towards
the end of 2003 and is to be welcomed. This follows months of discussions and
negotiations between interested parties. The publication will remove uncertainty
which has surrounded the financial services industry in recent times.
The Group"s strong brands, proven ability to attract talented people and the
deeply embedded FirstRand business philosophy, remain the pillars on which the
Group relies to maintain its minimum targeted 10% real growth rate.
For and on behalf of the board
GT Ferreira LL Dippenaar
Chairman Chief Executive
Sandton
16 September 2003
Final dividend declaration
Notice is hereby given that a final dividend of 18.5 cents per ordinary share
has been declared on 16 September 2003 in respect of the year ended 30 June
2003. The last day to trade in these shares on a cum dividend basis will be 17
October 2003 and the first day to trade ex dividend will be 20 October 2003. The
record date will be 24 October 2003 and the payment date is 27 October 2003.
Shareholders may not dematerialise or rematerialise their share certificates
between 20 October 2003 and 24 October both days inclusive.
By order of the Board
AH Arnott
Company Secretary
16 September 2003
Directors
GT Ferreira (Chairman), LL Dippenaar (CEO), BH Adams, VW Bartlett, DJA Craig
(British), DM Falck, PM Goss, PK Harris, MW King, MC Ramaphosa, KC Shubane, BJ
van der Ross, Dr F van Zyl Slabbert, RA Williams
Secretary and registered office
AH Arnott BCom, CA(SA)
17th Floor, 1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton,
2196.
Postal address
PO Box 786273, Sandton, 2146
Telephone: +27 11 282-1808, Telefax: +27 11 282-8065
Web address: www.firstrand.co.za
Sponsor
Rand Merchant Bank (A Division of FiratBank Bank Limited) Corporate Finance
1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196
Transfer secretaries:
Computershare Limited
70 Marshall Street, Johannesburg
Transfer Secretaries (Pty) Limited
P O Box 2401
Windhoek
Namibia
Basis of presentation
For a proper appreciation of the results presented in this report, two matters
are highlighted separately in the accompanying analysis of results.
AC133 - Fair value accounting
FirstRand is the first major South African financial services group to present a
full year"s financial results in accordance with the requirements of a new
statement of Generally Accepted Accounting Practice "AC133 - Financial
Instruments: Recognition and Measurement".
This standard introduces the concept of "fair value" accounting for financial
instruments, which form the core of the Group"s businesses. The concept and the
accounting standards, both locally (AC133) and internationally (IAS39), are
still the subject of considerable debate and likely to evolve further over time.
AC133 is prospective in nature, in that it does not provide for the re-statement
of prior year comparatives, but instead relies on complex transitional
provisions which affect the opening balances at the beginning of the reporting
period.
In the Banking Group, the implementation of AC133 has a material impact on
headline earnings and net asset value per share.
In the Insurance Group, the implementation of AC133 has necessitated the
classification of policyholder contracts between insurance contracts and
investment contracts. Insurance contracts continue to be valued and disclosed in
terms of the Financial Soundness Valuation (FSV) basis. Investment contracts are
accounted for at fair value. The net effect of the implementation of AC133 on
earnings is not material.
The impact of AC133 on opening balances is analysed in the statement of changes
in equity.
FirstRand believes that the impact of AC133 is best highlighted by presenting
supplementary pre-AC133 accounts for the current year reflecting the position
before the application of AC133. Accordingly, these financial results are shown
both before and after the implementation of AC133 to facilitate a meaningful
interpretation of the results for the year to 30 June 2003.
The impact of AC133 on core headline earnings may be highlighted as follows:
% change
Year ended 30 June R million from 2002
2002 (pre-AC 133) 4 186 -
2003 (pre-AC 133) 5 151 +23
2003 (post-AC 133) 5 429 +30
ED168, an AC133 interpretation, has been issued by the South African Institute
of Chartered Accountants and is currently open for comment. Changes in this
statement may effect the Banking Group"s results.
FirstRand is of the opinion that:
The results incorporating the impact of AC133 should be seen as the basis
against which future performance should be measured. The change in accounting
practice resulting from AC133 is likely to lead to increased volatility in
reported earnings in the future and will place a greater emphasis over the
longer term on growth in net asset values.
The results for the year, prior to adopting AC133, are a more appropriate basis
to evaluate the Group"s 2003 performance against the prior year. Consequently,
except where stated otherwise, the commentary that follows uses this basis as a
starting point.
Translation gains and losses
Announcements relating to FirstRand"s financial results during the last two
years have highlighted the impact of translation gains and losses. In this
report translation gains and losses have again been separately identified.
Gains and losses relating to independent businesses are reflected in the balance
sheet.
Those relating to integrated business are shown in the income statement.
Translation losses and gains reflected in the financial statements over the last
two years were as follows:
Pre-AC133
R milions 2003 2002
Total translation (loss)/gain (1 152) 1 153
Reflected on balance sheet (547) 605
Income statement
for the year ended 30 June
2003 2002
Audited Reviewed Audited
R million Post-AC133 Pre-AC133 Actual
Banking operations
Interest income 26 293 26 301 18 721
Interest expenditure (17 189) (17 567) (12 304)
Net interest income before
impairment of advances 9 104 8 734 6 417
Impairment of advances (1 478) (1 367) (1 705)
Net interest income after 7 626 7 367 4 712
impairment of advances
Non-interest income 7 123 6 913 8 319
Net income from operations 14 749 14 280 13 031
Operating expenditure (9 537) (9 538) (8 378)
Income from operations 5 212 4 742 4 653
Share of earnings of associated
companies 494 484 368
Income before indirect taxation 5 706 5 226 5 021
Indirect taxation (346) (346) (281)
Income before direct taxation 5 360 4 880 4 740
Direct taxation (1 308) (1 186) (818)
Income after taxation 4 052 3 694 3 922
Earnings attributable to outside (278) (277) (182)
shareholders
Earnings from banking operations 3 774 3 417 3 740
Insurance operations
Group operating profit after
taxation 604 610 635
Net premium income 10 527 18 557 19 245
Investment income 3 399 5 707 5 838
Policy fees on investment 178 - -
contracts
Policyholder benefits (7 312) (13 990) (17 393)
Marketing and administration
expenses (3 084) (3 084) (2 563)
Impairment of goodwill (242) (242) (210)
Commissions (1 043) (1 218) (938)
Direct taxation (468) (572) (594)
Indirect taxation (125) (138) (131)
Realised and unrealised (764) (1 608) 2 844
investment surpluses
Earnings attributable to (138) (136) (100)
outside shareholders
Transfer to policyholder
liabilities under
insurance contacts (324) (2 666) (5 363)
Investment income on the
shareholders" portfolio 250 250 176
Interest, dividends and net
rentals 288 288 195
Taxation on investment income (38) (38) (19)
Earnings from insurance operations 854 860 811
FirstRand Limited (39) (39) (61)
Management expenses (27) (27) (7)
Secondary tax on companies (12) (12) (54)
Goodwill amortised - intergroup 5 5 5
Earnings attributable to ordinary
shareholders 4 594 4 243 4 495
Earnings per share (cents) 84.3 77.9 82.5
Diluted earnings per share (cents) 83.2 76.8 82.5
Core headline earnings per share
(cents) 99.6 94.5 76.9
Headline earnings per share
(cents) 89.9 83.4 86.9
Return on average equity (based on
core headline earnings) (%) 27.8 27.2 26.1
Return on average equity
(based on headline earnings) (%) 23.7 22.7 27.5
Number of shares in issue
(million) 5 460.3 5 460.3 5 445.3
Weighted average number of shares
in issue (million) 5 448.2 5 448.2 5 445.3
Weighted average number of shares
for diluted earnings per share
(million) 5 524.1 5 524.1 5 445.3
Final 18.5 18.5 15.0
Total 35.0 35.0 28.5
Headline earnings reconciliation
for the year ended 30 June
2003 2002 % change
Audited Reviewed Audited Pre-AC133
R million Post-AC133 Pre-AC133 Actual on Actual
Attributable earnings
Banking Group 3 774 3 417 3 740 (9)
Insurance Group 854 860 811 6
Goodwill amortised -
intergroup 5 5 5 -
4 633 4 282 4 556 (6)
FirstRand Limited (39) (39) (61) (36)
Earnings attributable to
ordinary shareholders 4 594 4 243 4 495 (6)
Add: Amortisation of
goodwill 82 82 58
Add:Impairment of goodwill 242 242 210
Add:Loss on disposal of
assets 31 31 31
Less: Profit on sale of
subsidiaries - - (32)
Less: Abnormal profit on
release of reserves -
Discovery (52) (52) (28)
Headline earnings 4 897 4 546 4 734 (4)
Translation losses/(gains) 532 605 (548) >100
Core headline earnings 5 429 5 151 4 186 23
Summarised cash flow statement
for the year ended 30 June
2003 2002
Audited Audited
R million Post-AC133 Actual
Cash flows from operating activities
Cash generated by operations 13 469 15 367
Working capital changes 5 865 (3 098)
Cash inflow from operations 19 334 12 269
Taxation paid (1 332) (1 412)
Dividends paid (1 715) (1 416)
Net cash inflow from operating activities 16 287 9 441
Net cash (outflow)/inflow from investment
activities (9 140) 4 092
Net cash (outflow)/inflow from financing activities (298) 482
Net increase in cash and cash equivalents 6 849 14 015
Cash and cash equivalents at beginning of year 38 239 16 293
Cash and cash equivalents acquired - 7 931
Cash and cash equivalents at end of year 45 088 38 239
Assets under management
at 30 June
2003 2002
Audited Reviewed Audited
R million Post-AC133 Pre-AC133 Actual
Holding company 997 997 1 158
Banking Group 303 915 302 179 281 774
Insurance Group 90 781 91 421 91 834
Total on balance sheet assets 395 693 394 597 374 766
Off-balance sheet assets managed or
administered on behalf of clients 94 568 94 568 98 328
Total assets under management or
administration 490 261 489 165 473 094
Balance sheet
as at 30 June
2003 2002
Audited Reviewed Audited
R million Post-AC133 Pre-AC133 Actual
Assets
Banking operations 257 926 256 408 246 337
Cash and short-term funds 29 252 29 252 24 784
Advances 189 626 189 533 175 161
- Originated 135 062
- Held-to-maturity 9 753
- Available for sale 7 406
- Trading 40 707
- Less: Impairments (3 302)
Investment securities and other
investments 36 645 35 220 44 654
Financial instruments held for trading 11 379
Investment securities 25 266
- Held-to-maturity 1 220
- Available for sale 21 208
- At elected fair value 2 838
Non-recourse investments 2 403 2 403 1 738
Insurance operations 76 297 76 891 73 832
Funds on deposit 15 836 15 836 13 455
Government and public authority stocks 12 575 12 575 9 842
Debentures and other loans 10 759 10 887 7 541
Policy loans 581 581 580
Equity investments 33 793 34 259 39 510
Investment properties 2 753 2 753 2 904
Current assets 8 926 9 182 10 619
Loans 686 686 934
Investments in associated companies 2 458 2 318 1 736
Derivative financial instruments 43 879 43 833 35 057
Deferred taxation assets 981 739 1 264
Intangible assets 472 472 942
Property and equipment 4 068 4 068 4 045
Total assets 395 693 394 597 374 766
Shareholders" equity and liabilities
Deposits and current accounts 186 031 186 129 201 404
Non-recourse deposits 2 403 2 403 1 738
Current liabilities 17 335 17 209 13 954
Provisions 1 092 1 094 926
Taxation 1 430 1 418 508
Derivative financial instruments 46 657 46 983 37 215
Short trading positions 33 881 33 807 16 799
Deferred taxation liabilities 1 944 1 342 2 204
Retirement funding liabilities 1 293 1 293 1 211
Debentures and long-term liabilities 4 645 4 630 5 164
Life insurance funds 75 551 76 154 73 519
Policyholder liabilities under
insurance contracts 38 975 76 154 73 519
Policyholder liabilities under
investment contracts 36 576 - -
Total liabilities 372 262 372 462 354 642
Outside shareholders" interests 1 145 1 148 1 040
Share capital and share premium 8 487 8 487 8 487
Reserves 13 799 12 500 10 597
Total shareholders" equity and
liabilities 395 693 394 597 374 766
Statement of changes in equity
for the year ended 30 June
Total
Non- share-
Share Share Retained distributable holders"
R million capital premium earnings reserves funds
Balance at 1 July 2001
As previously stated 56 9 539 6 533 457 16 585
- Reclassification of
preference shares (1) (1 107) - - (1 108)
- Change in accounting
policy -
deferred acquisition
costs - - (111) - (111)
Restated balance as at 1
1 July 2001 55 8 432 6 422 457 5 366
Currency translation
differences - - - 604 604
Revaluation of
investments - - - 60 60
Non-distributable
reserves of
associated companies - - - 12 12
Movement in other
reserves - - - (37) (37)
Earnings attributable
to shareholders - - 4 495 - 4 495
Dividends - - (1 416) - (1 416)
Transfer (to)/from
reserves - - (36) 36 -
Balance at 30 June
2002 55 8 432 9 465 1 132 19 084
Balance at 1 July 2002 55 8 432 9 465 1 132 19 084
AC133 adjustments to
opening balance - - (482) 555 73
Adjusted opening
balance 55 8 432 8 983 1 687 19 157
AC133 adjustments to
current year - - - 823 823
Currency translation
differences - - - (575) (575)
Movement in other
reserves - - - 2 2
Earnings attributable
to shareholders - - 4 594 - 4 594
Dividends - - (1 715) - (1 715)
Transfer (to)/from
reserves - - (96) 96 -
Balance at 30 June
2003 55 8 432 11 766 2 033 22 286
Sources of profit
for the year ended 30 June
Pre-AC133
R million 2003 % 2002 %
Retail 2 301 44.7 1 809 43.2
FNB Retail 1 339 26.0 9623 23.0
WesBank 535 10.4 503 12.0
African subsidiaries 312 6.1 288 6.9
OUTsurance & FirstLink 115 2.2 564 1.3
Corporate 1 606 31.2 1 436 34.3
Rand Merchant Bank 803 15.6 677 16.2
FNB Corporate 549 10.7 424 10.1
FirstRand Asset Management 125 2.4 228 5.4
Momentum Employee Benefits 129 2.5 107 2.6
Wealth 398 7.7 430 10.3
Momentum 441 8.6 382 9.1
FNB Trust Services 20 0.4 24 0.6
RMB Private Bank 27 0.5 16 0.4
Ansbacher (UK) (90) (1.8) 8 0.2
Discovery Holdings 166 3.2 117 2.8
Capital 680 13.2 394 9.4
Capital centre - Banking Group 458 8.9 265 3,4 6.3
Investment income on shareholders"
portfolio - Momentum 261 5.1 190 4.6
FirstRand Limited (39) (0.8) (61) (1.5)
Core headline earnings1 5 151 100.0 4 186 100.0
Notes:
1. Core headline earnings exclude foreign currency translation losses or gains.
2. Taxation relating to the Banking Group has been allocated across the Bank"s
operating divisions on a pro rata basis.
3. These figures have been restated to reflect a transfer of R26 million profit
from Capital Centre in respect of acquisitions made in the previous financial
year.
4. Interest calculated on capital allocated to the Capital Centre has been re-
allocated to the appropriate short-term insurance centers
First National Bank
Momentum
Wesbank
eBucks.com
Discovery
Outsurance
Rand Merchant Bank
Date: 16/09/2003 07:10:55 AM Produced by the JSE SENS Department
