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FIRSTRAND LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2003
FIRSTRAND LIMITED
Registration No: 1966/010753/06
JSE code: FSR
ISIN: ZAE000014973
("FSR")
NSX share code: FST
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2003
Headline earnings +26%
Headline earnings per share +25%
Core headline earnings +17%
Core headline earnings per share +16%
Dividend per share +17%
Total assets under management
or administration R518.5 billion
Introduction
This report covers the consolidated results of FirstRand Limited (FirstRand),
its wholly owned subsidiaries FirstRand Bank Holdings Limited (the Banking
Group) and Momentum Group Limited (Momentum) and its 63% held subsidiary
Discovery Holdings Limited (Discovery).
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.
Preference share issue
As advised in the previous report to shareholders, the Group raised R1 405
million of funding through the issue of preference shares to facilitate the
restructuring of Momentum"s balance sheet and the transfer of the investment in
Discovery from Momentum to FirstRand.
Basis of presentation
AC133 was implemented with effect from 1 July 2002. The Group"s first set of
results under AC133 were produced in December 2002, and were supplemented by
results prepared on a pre-AC133 basis. These are the first set of results
presented which show the current and comparative results on a post-AC133 basis.
As previously discussed and extensively documented, AC133 creates a certain
amount of additional volatility into the reporting of companies" results. AC133
introduces a mixed model requiring some assets and liabilities to be valued at
fair value, while others are valued at historic cost. The resultant mismatch
creates income statement volatility. In the case of FirstRand, and specifically
the Banking Group, this mismatch arises in the case of hedges designed to
protect the margin on the advances book. The hedges are carried at fair value,
while the underlying advances are carried at historic cost.
The table below discloses the effect of these mismatches, and in the opinion of
management, presents results that more accurately reflect the operating
performance of FirstRand.
Unaudited
six months
ended
31 December
R million 2003 2002 % change
Headline earnings 2 787 2 215 26
Foreign currency 216 362 (40)
translation loss
Core headline earnings 3 003 2 577 17
AC133 mismatch 25 (106) >100
losses/(profits) reversed
Operational earnings 3 028 2 471 23
Operational earnings represent a sound basis for assessing the sustainable
future performance of the group. The AC133 mismatched profits and losses and
foreign currency translation losses could be volatile and cannot be forecast
with any certainty.
Operating environment
The Group"s operating results for the six months to 31 December 2003 were
achieved in a changing environment, characterised by the following:
- A reducing rate of inflation and declining interest rates resulted in a
buoyant retail banking market.
- An upturn in equity markets. The JSE ALSI 40 Index increased by 24% during
the period under review, of which 16% related to the last quarter of the
calendar year.
- A strengthening Rand, increasing 12.4% to a level of R6.62: US$1.
- Lower economic growth of 1.9%.
The net impact on the Group was an increase in the demand for retail credit,
improved bad debt ratios, a positive outlook for equity-related activities and
lower earnings in Rand terms from offshore activities.
Operating performance and earnings
The results for the period under review again demonstrate the advantages of
FirstRand"s diversified earnings base. Whilst Momentum delivered a satisfactory
performance in a difficult environment, the Group"s banking operations delivered
a particularly strong performance. FNB Corporate and Rand Merchant Bank produced
excellent results, with the retail banking operations continuing to show good
growth. Both OUTsurance and Discovery delivered outstanding results.
The Group"s earnings in summary are:
- Headline earnings per share increased by 25% from 40.7 cents to 51.0 cents
- Diluted headline earnings per share increased by 26% from 40.0 cents to
50.3 cents
- Core headline earnings per share increased by 16% from 47.3 cents to 55.0
cents
- Return on capital based on headline earnings is 23.9%
- Growth in net asset value of 19%
- Growth in dividend per share of 17%
In line with FirstRand"s stated policy of keeping dividends in line with
earnings growth before taking into account any translation gains or losses, an
interim dividend of R1 051 million, representing 19.25 cents per share (2002:
16.5 cents per share) has been declared.
Strategic initiatives
During the period a number of strategic initiatives were implemented:
- The operations of SWABOU, Namibia"s largest mortgage bank, were merged with
FNB Namibia with effect from 1 July 2003. The merger resulted in the
Group"s interest in the enlarged Namibian operations reducing from 77% at
30 June 2003 to 61% at 31 December 2003.
- Good progress has been made with respect to the sale of Ansbacher. Since
the process started the Group has received numerous expressions of interest
from prospective bidders, for the whole and parts of the business. We are
currently pursuing discussions with those parties interested in acquiring
the Group as a whole, and we are confident that a sale will be concluded by
financial year-end.
- Agreement was reached with the Irish Revenue to settle matters relating to
Ansbacher Cayman Limited"s alleged tax liabilities in Ireland. A payment of
E7.5 million (approximately R60 million) was agreed in full and final
settlement of the matter. Whilst FirstRand"s position throughout was, and
remains, that Ansbacher Cayman did not have any liability to Irish tax, it
took a pragmatic view to avoid further litigation costs and ongoing
reputational damage and thereby bring clarity to shareholders.
- The Group was a signatory to the Financial Services Charter, and in order
to monitor progress and manage the reporting process, the FirstRand
Transformation Unit was established. As previously indicated to
shareholders FirstRand is committed to a BEE share ownership transaction at
Group level and is continuing to explore appropriate ownership structures.
Review of operations
A summarised report on the operations of FirstRand"s subsidiaries is set out
below:
FirstRand Banking Group
Headline earnings increased by 34%
The Banking Group, which contributed 84% to the Group"s core headline earnings,
had an excellent first six months due to strong new business growth, lower bad
debts and non-performing loans, increased transactional and trading income and
increased merchant banking income. The lower interest rate environment
negatively affected interest rate margins, however this was partially offset by
the Banking Group hedging strategy.
Operating expenses increased by 23.3%. This was caused partly by a change in the
salary review date from January to August, which resulted in accelerated salary
increases taking place in the first half of the financial year. The historical
trend of a proportionately larger increase in expenses in the second half is not
expected to be repeated this year. The first half increase in expenses should
not be seen as a reflection of what is expected for the full year. This increase
resulted in the cost-to-income ratio increasing to 55.5% compared with 55.3% in
the year to June 2003.
At an operating level most divisions improved their performance over the
corresponding period in the prior year.
Retail Banking
FNB Retail (+20%)
An increase in the customer base, increased transactional revenue, growth in
card business and deposits and improving bad debts were the principal
contributors to this excellent result. Non-performing loans were down to 6.3%
from 8.2%. There was a turnaround in the micro-lending book. FNB HomeLoans"
earnings growth was impacted negatively by margin squeeze which, together with
the run-off in the book restricted overall profit growth to 1%. Non-performing
loans and bad debt charges are at an all-time low.
WesBank (+41%)
Advances growth of 23%, driven by record increases in new business production,
allowed WesBank to retain its dominant position in the asset finance market. The
division"s fixed loan book enabled it to protect its margins. Non-performing
loans are at the lowest levels on record and the division benefited from growth
in non-interest income.
Short-term insurance (+66%)
OUTsurance experienced continued new business growth and excellent claims
experience which enabled this short-term insurance operation to increase its
earnings substantially.
African Operations (-8%)
Earnings from the Namibian, Botswana and Swaziland operations were slightly down
on the prior period due to margin squeeze experienced in Namibia and Botswana,
and merger costs incurred following the SWABOU acquisition. The dilution of the
Group"s shareholding in FNB Namibia following the SWABOU acquisition exaggerated
this effect. New business growth was satisfactory. The devaluation of the Pula
had a negative impact on earnings growth in Rand terms.
Corporate Banking
Rand Merchant Bank (RMB) (+54%)
RMB benefited from excellent growth in treasury trading and improved local and
international credit environments. Merchant banking benefited from increased
corporate activity and BEE transactions. Corporate Finance profit growth was
bolstered by good profits from equity-related transactions. Private Equity also
delivered a strong performance.
FNB Corporate (+74%)
FNB Corporate had an excellent first six months benefiting from new customer
acquisition, which drove strong growth in transactional income across all
products. FNB Corporate experienced an excellent reduction in bad debts. The
growth in credit demand from the large corporates was modest. The continued
progress on the work-out of previous retail industry credit exposures, including
Profurn, removed this concentration in the lending book and eliminated the drag
on earnings caused by holding costs in respect of non-performing assets. The
final conditions relating to the sale of the investment in McCarthy were
concluded early in 2004.
International Banking (+7%)
Ansbacher"s operating losses have reduced from R92 million to R86 million mainly
due to lower bad debts and improved trading results. The results were negatively
impacted by the R60 million settlement with the Irish tax authorities. However,
the operating environment remained difficult and new business flows were
disappointing. We are satisfied with the progress on the disengagement process,
which will result in the release of under-performing capital.
Momentum Group
Headline earnings increased by 9%
Momentum delivered a satisfactory performance in tough market conditions, with
earnings growth impacted by start-up costs relating to new products and
distribution initiatives, which are only expected to make a contribution to
profits in future years.
Insurance Operations (+3%)
Total retail new business production increased by 10% mainly due to the success
of Momentum"s new generation risk product and the sales of linked products,
which offset the decline in single premium sales. The value of new business
increased by 12% and the new business profit margin increased significantly from
15% to 19%.
Start-up costs were incurred with the launch of Momentum"s health insurance
offering Pulz, and the company"s loyalty programme, Momentum Multiply.
Asset Management Operations (+5%)
As a result of the loss of a few large fixed interest mandates the level of
outflows at RMB Asset Management was disappointing. However, there was a good
turnaround in unit trust inflows, and total assets under management increased by
7% to R146.9 billion, driven by strong investment performance. RMB Asset
Management"s investment performance was rated jointly first over one year in an
independent survey.
Discovery Group
Diluted headline earnings per share increased by 22%
Discovery Group delivered excellent growth in earnings and embedded value for
the first six months, driven by strong new business growth. New business growth
in Discovery Life was particularly strong, showing an increase of 35%.
Destiny Health is expected to reach its stated objective of break-even in
February 2004, one month later than its targeted date, and it is expected that
the positive impact of the Tufts and Guardian joint ventures will only start to
be felt in the next few months.
Discovery Health"s members under administration now exceeds 1.5 million lives,
and operating profit increased by an excellent 20%. The Discovery Health Medical
Scheme has met its reserve requirements at 31 December 2003.
Capital
Following the introduction of the new FSB regulations and the subsequent re-
structure of Momentum"s shareholder portfolio, Momentum"s capital has been
maintained at twice the minimum capital adequacy requirement.
The Banking Group has, subsequent to the reporting period, successfully raised
R1 billion of Tier 2 capital to meet its future capital requirements and further
reduce its cost of capital.
FirstRand
The costs incurred by FirstRand increased from R18 million to R108 million. The
table below analyses those costs.
Six months
ended
31 December
R million 2003 2002
Capital funding costs 70 -
Secondary tax on companies 27 12
Operating expenses 11 6
Total 108 18
The capital funding costs resulted from the issue of R1.4 billion of preference
shares to facilitate the restructure of the Group already discussed above.
Operating expenses increased due to increased marketing spend.
Prospects
Looking forward, higher economic growth is expected in the 2004 calendar year
and the low interest rate environment will impact favourably on credit demand
and bad debts. For the Banking Group, a sustained low interest rate environment
will also continue to place pressure on margins, however growth in new business
should offset these pressures and the bank"s hedging strategy will continue to
provide some protection.
For the insurance businesses, the strong growth in investment markets should
have a positive impact on asset-based fees in the second half of the financial
year, and new business flows should increase as investor sentiment improves.
Momentum"s new growth initiatives and targeted improvements in productivity
should have a positive impact on future profitability.
We do not expect costs to increase significantly in the second half, and we
expect a positive outcome from our disposal of Ansbacher, which will release
under-performing capital.
We are confident that the Group"s diverse earnings base, our new initiatives and
the inherent organic growth opportunities that this Group offers will enable
FirstRand to continue to enjoy good earnings growth.
For and on behalf of the board
GT Ferreira LL Dippenaar
Chairman Chief Executive
Sandton
2 March 2004
Interim dividend declaration
Notice is hereby given that an interim dividend of 19.25 cents per ordinary
share has been declared on 2 March 2004 in respect of the six months ended 31
December 2003.
Salient dates:
Last day to trade cum the dividend Thursday, 18 March
Shares commence trading ex the dividend Friday, 19 March
from the commencement of business on
Record date Friday, 26 March
Payment date Monday, 29 March
Share certificates may not be dematerialised or rematerialised between Friday,
19 March 2004 and Friday 26 March 2004, both days inclusive.
AH Arnott
Company Secretary
2 March 2004
Contingencies and commitments
The new Basel II Accord on capital management ("Basel II") introduces onerous
capital requirements in respect of off balance sheet exposures. In anticipation
of its introduction and as a result of a conscious strategy followed by the
Banking Group, contingencies and commitments have been managed down by 42.7%
year-on-year, and by 41.4% from June 2003. The Banking Group is satisfied that
the current levels of exposures provide an acceptable return given the
associated capital costs.
Accounting policies
The accounting policies applied are in accordance with Statements of Generally
Accepted Accounting Practice. These accounting policies are consistent with
those of the prior year with the exception of the change in accounting policy
adopted by Discovery from deferring health insurance and group life acquisition
costs to expensing these costs as incurred, in line with industry practice. The
effect of the change in this accounting policy is detailed in the "Restatement
of comparative figures" section below.
Restatement of comparative figures
The table below summarises the restatement and reallocation of comparative
figures as at 31 December 2002:
As
As originally
Balance sheet item restated stated Difference Notes
Financial 25 278 25 715 (437) 1
instruments held for
trading
Advances
- Originated 134 753 147 048 (12 295) 2
- Trading 34 061 18 540 15 521 3
- Less: Impairments (3 226) - (3 226) 4
Commodities 437 - 437 5
Debentures and other 12 805 12 714 91 6
loans
Current assets 11 062 13 940 (2 878) 7
Deposits and current 193 004 202 903 (9 899) 8
accounts
Negotiable deposits 20 144 - 20 144 9
Current liabilities 19 979 23 384 (3 405) 10
Provisions 886 - 886 11
Short trading 7 443 17 688 (10 245) 12
positions
Long-term 5 391 4 487 904 13
liabilities
Policyholder 38 326 38 095 231 14
liabilities under
insurance contracts
Outside 1 200 1 272 (72) 15
shareholders"
interests
Share capital and 8 487 9 700 (1 213) 16
share premium
Reserves 12 105 12 223 (118) 17
Notes
1. Commodity instruments have been disclosed separately.
2. Restated by showing impairments of R3 226 million separately, and
reallocating R15 521 million to "Trading advances".
3. Reclassifying R15 521 million of advances from "Originated" to "Trading"
4. Reallocated from "Originated".
5. Reallocated from "Financial instruments held for trading".
6. R84 million reallocated from current assets. R7 million fair value
adjustments.
7. R84 million reallocated to debentures and other loans. R43 million deferred
costs written off. R2 751 million owing from policyholder portfolios in the
Momentum Group previously shown on a grossed up basis.
8. Separate disclosure of negotiable deposits previously included in this
category.
9. Separate disclosure of negotiable deposits.
10. (R2 751 million) owing from policyholder portfolios in the Momentum Group
previously shown on a grossed up basis.
(R886 million) reallocation to provisions.
(R93 million) restatement relating to deferred acquisition costs.
R325 million short-term portion of preference shares reallocated to liabilities.
11. Reallocation from current liabilities.
12. Separate disclosure of negotiable deposits previously included in this
category.
13. R888 million long-term portion of preference shares. R16 million AC133 fair
value adjustment.
14. (R16 million) AC133 fair value adjustment. R247 million deferred aqcuisition
cost adjustment.
15. Outside shareholders" portion on deferred acquisition costs adjustments.
16. Reallocation of preference share capital to long-term and short-term
liabilities.
17. R125 million opening balance adjustment in respect of deferred acquisition
costs. R7 million profit effect for the six months ended 31 December 2002,
relating to deferred acquisition costs, and AC133 adjustments.
Income statement
Unaudited Audited
six months ended
31 December
Year
ended
% 30 June
R million 2003 2002 change 2003
FirstRand Bank
Interest income 11 860 13 496 (12) 26 293
Interest expenditure (7 192) (9 109) 21 (17 189)
Net interest income 4 668 4 387 6 9 104
before impairment of
advances
Impairment of (455) (628) 28 (1 478)
advances
Net interest income 4 213 3 759 12 7 626
after impairment of
advances
Non-interest revenue 3 904 2 886 35 7 123
Transactional income 2 927 2 527 16 5 735
Trading income 878 559 57 1 583
Investment income 200 41 >100 118
Other non-interest 115 120 (4) 219
income
Translation losses (216) (362) 40 (532)
Net income from 8 117 6 645 22 14 749
operations
Operating (4 992) (4 089) (22) (9 537)
expenditure
Income from 3 125 2 556 22 5 212
operations
Share of income of 214 148 45 494
associated companies
Income before 3 339 2 704 23 5 706
taxation
Indirect taxation (129) (175) 26 (346)
Income before direct 3 210 2 529 27 5 360
taxation
Direct taxation (768) (702) (9) (1 308)
Income after 2 442 1 827 34 4 052
taxation
Earnings (139) (100) (39) (278)
attributable to
outside shareholders
Earnings 2 303 1 727 33 3 774
attributable to
ordinary
shareholders
Momentum Group
Income from 600 407 47 853
operations
Share of income of 30 23 30 62
associated companies
Income before direct 630 430 47 915
taxation
Direct taxation (1) (141) (146) 3 (279)
Income after 489 284 72 636
taxation
Earnings (5) (4) (25) (7)
attributable to
outside shareholders
Earnings 484 280 73 629
attributable to
ordinary
shareholders
Discovery Holdings
Income before direct 258 162 59 538
taxation
Direct taxation (1) (123) (76) (62) (182)
Income after 135 86 57 356
taxation
Earnings (49) (32) (53) (131)
attributable to
outside shareholders
Earnings 86 54 59 225
attributable to
ordinary
shareholders
FirstRand Limited (109) (18) >(100) (39)
Interest expenditure (13) - - (11)
Management expenses (12) (6) (100) (16)
Secondary tax on (27) (12) >(100) (12)
companies
Preference dividends (57) - - -
Goodwill amortised - 3 3 - 5
intergroup
Earnings 2 767 2 046 35 4 594
attributable to
ordinary
shareholders
(1) Taxation excludes all policyholder taxation and includes only direct
taxation on shareholders.
Headline earnings
reconciliation
Earnings attributable 2 767 2 046 35 4 594
to ordinary
shareholders
Add: Goodwill 20 15 33 82
amortised
Add: Goodwill - 166 (100) 242
impaired
Less: Profit on - (12) 100 31
disposal of assets
Less: Abnormal profit - - - (52)
on release of
reserves
Headline earnings 2 787 2 215 26 4 897
Dividends declared (R 1 051 898 17 1 909
million)
Return on average 26.2 27.8 27.8
equityn (based on
core headine
earnings) (%)
Return on average 23.9 22.3 23.7
equity (based on
headline earnings)
(%)
Number of shares in 5 460.3 5 445.3 - 5 460.3
issue (million)
Weighted average 5 460.3 5 445.3 - 5 448.2
number ofshares in
issue (million)
Weighted average 5 540.4 5 534.5 - 5 524.1
number ofshares for
diluted earnings per
share (million)
Headline earnings per 51.0 40.7 25 89.9
share (cents)
Core headline 55.0 47.3 16 99.6
earnings per share
(cents)
Earnings per share 50.7 37.6 35 84.3
(cents)
Diluted headline 50.3 40.0 26 88.6
earnings per share
(cents)
Dividend per share
(cents)
Interim 19.25 16.50 17 16.50
Final n/a n/a - 18.50
Total 19.25 16.50 17 35.00
Summarised cash flow statement
Unaudited Audited
six months ended
31 December
Year ended
30 June
R million 2003 2002 2003
Cash flows from operating
activities
Cash generated by 6 999 10 404 13 469
operations
Working capital changes (5 782) (1 594) 5 865
Cash inflow from 1 217 8 810 19 334
operations
Taxation paid (1 882) (906) (1 332)
Dividends paid (1 010) (817) (1 715)
Net cash (outflow)/inflow (1 675) 7 087 16 287
from operating activities
Net cash outflow from (8 248) (10 (9 140)
investment activities 126)
Net cash inflow/(outflow) 1 833 279 (298)
from financing activities
Net (decrease)/increase in (8 090) (2 760) 6 849
cash and cash equivalents
Cash and cash equivalents 45 088 38 239 38 239
at beginning of period
Cash and cash equivalents 36 998 35 479 45 088
at end of period
Assets under management or administration
Unaudited at Audited
31 December
30 June
R million 2003 2002 2003
Holding company 963 1 222 997
Banking Group 317 078 293 710 303 915
Insurance and Health 200 470 184 195 185 349
On-balance sheet 99 004 90 334 90 781
Off-balance sheet assets 101 466 93 861 94 568
managed and administered on
behalf of clients
Total 518 511 479 127 490 261
Balance sheet
Unaudited Audited
at 31 December
30 June
R million 2003 2002 2003
Assets
Banking operations 272 169 249 664 257 926
Cash and short-term funds 23 249 21 491 29 252
Investment securities and 42 375 43 034 36 136
other investments
Financial instruments held 16 260 25 278 10 870
for trading
Investment securities 26 115 17 756 25 266
- Originated 300 - -
- Held-to-maturity 2 004 5 469 1 220
- Available for sale 23 811 12 287 24 046
Advances 203 776 182 558 189 626
- Originated 144 207 134 753 135 062
- Held to maturity 7 760 9 859 9 753
- Available for sale 9 085 7 111 7 406
- Trading 46 038 34 061 40 707
- Less: Impairments (3 314) (3 226) (3 302)
Commodities 374 437 509
Non-recourse investments 2 395 2 144 2 403
Insurance and Health 83 353 77 134 76 297
operations
Funds on deposit 13 749 13 988 15 836
Government and public 12 170 11 650 12 575
authority stocks
Debentures and other loans 11 464 12 805 10 759
Policy loans 629 578 581
Equity investments 42 234 35 187 33 793
Property investments 3 107 2 926 2 753
Current assets 9 382 11 062 8 926
Loans 629 1 214 686
Investments in associated 2 492 2 251 2 458
companies
Derivative instruments 42 948 38 333 43 879
Deferred taxation assets 1 135 938 981
Intangible assets 561 672 472
Property and equipment 4 376 3 998 4 068
Total assets 417 045 385 266 395 693
Liabilities and
shareholders" equity
Deposits and current 196 506 193 004 186 031
accounts
Negotiable deposits 35 166 20 144 29 662
Non-recourse deposits 2 395 2 144 2 403
Current liabilities 17 305 19 979 17 335
Provisions 1 262 886 1 092
Taxation 986 568 1 430
Derivative instruments 41 275 36 910 46 657
Short trading positions 6 137 7 443 4 219
Deferred taxation 1 877 2 045 1 944
liabilities
Post-retirement medical 1 315 1 260 1 293
liability
Long-term liabilities 6 589 5 391 4 645
Policyholder liabilities 79 857 73 700 75 551
Policyholder liabilities 41 441 38 326 38 975
under insurance contracts
Policyholder liabilities 38 416 35 374 36 576
under investment contracts
Total liabilities 390 670 363 474 372 262
Outside shareholders" 1 959 1 200 1 145
interests
Shareholders" funds
Share capital and share 8 487 8 487 8 487
premium
Reserves 15 929 12 105 13 799
Total liabilities and 417 045 385 266 395 693
shareholders" equity
Contingencies and 15 180 26 484 25 888
commitments
Statement of changes in equity
Share Share
R million capital premium
Balance as at 1 July 2003 55 8 432
Currency translation differences - -
Revaluation of investments - -
Realisation of available for
sale assets - -
Cash flow hedging -
effective portion - -
Reserves arising on
acquisition of subsidiaries - -
Non distributable reserves
of associate companies - -
Movement in other reserves - -
Transfer to general risk reserve - -
Earnings attributable to shareholders - -
Dividends paid - -
Balance as at
31 December 2003 55 8 432
Balance as at
31 December 2002
As previously stated 56 9 644
- Reclassification of
preference shares (1) (1 212)
- Change in accounting policy -
deferred acquisition costs - -
Restated balance as
at 31 December 2002 55 8 432
Statement of changes in equity
Non- Total
share-
Retained distribu holders
table "
R million earnings reserves funds
Balance as at 1 July 2003 11 766 2 033 22 286
Currency translation differences - (117) (117)
Revaluation of investments - 554 554
Realisation of available for
sale assets - (25) (25)
Cash flow hedging -
effective portion - (67) (67)
Reserves arising on
acquisition of subsidiaries - 19 19
Non distributable reserves
of associate companies - 2 2
Movement in other reserves - 7 7
Transfer to general risk reserve (92) 92 -
Earnings attributable to 2 767 - 2 767
shareholders
Dividends paid (1 010) - (1 010)
Balance as at
31 December 2003 13 431 2 498 24 416
Balance as at
31 December 2002
As previously stated 10 359 1 864 21 923
- Reclassification of
preference shares - - (1 213)
- Change in accounting policy -
deferred acquisition costs (118) - (118)
Restated balance as
at 31 December 2002 10 241 1 864 20 592
Sources of profit
for the six months ended 31 December
2003 % 2002 %
R million R contri R contri
million bution million bution
FirstRand Banking Group 1 2 524 84.1 2 084 80.8
Retail banking - FNB 910 30.3 756 29.3
Instalment finance - 357 11.9 254 9.9
WesBank
African operations - FNB 166 5.5 181 7.0
Africa
Short-term insurance -
OUTsurance, FirstLink 73 2.4 44 1.7
Corporate banking - FNB 380 12.7 218 8.5
Corporate
Investment banking - RMB 433 14.4 281 10.9
International banking - (86) (2.9) (92) (3.6)
Ansbacher UK
Private banking - RMB 14 0.5 19 0.7
Private Bank
Fiduciary Services - FNB 8 0.3 9 0.3
Trust Services
Capital centre - Banking 269 9.0 414 16.1
Group
Momentum Group 502 16.7 460 17.9
Insurance operations - 261 8.7 253 9.9
Momentum
Asset management - RMBAM,
Ashburton 90 3.0 86 3.3
Investment income on 151 5.0 121 4.7
shareholders" assets
Discovery Group 85 2.8 51 2.0
FirstRand Limited (108) (3.6) (18) (0.7)
Core headline earnings 2 3 003 100.0 2 577 100.0
Notes:
1 Taxation relating to the Banking Group has been allocated across the bank"s
operating divisions on a pro rata basis, except in the case of the settlement
with the Irish tax authorities which is included in the tax charge for Ansbacher
UK.
2 Core headline earnings exclude foreign currency translation losses and gains.
Directors
GT Ferreira (Chairman), LL Dippenaar (CEO), VW Bartlett, DJA Craig (British),
DM Falck, PM Goss, NN Gwagwa, PK Harris, MW King, G Moloi, 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 8088
Web address: www.firstrand.co.za
Sponsor (in terms of JSE requirements) Rand Merchant Bank (A division of
FirstRand Bank)
Corporate Finance
1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196
Transfer secretaries
Computershare Limited Transfer secretaries (Pty) Limited
70 Marshall Street, Johannesburg PO Box 2401, Windhoek, Namibia
PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 7700
Telefax: +27 11 688 7721
Additional information available at:
www.firstrand.co.za
Date: 02/03/2004 07:01:44 AM Produced by the JSE SENS Department
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