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RMH
RMH
RMBH - Summarised audited results announcement, year ended 30 June 2006
RMB HOLDINGS LIMITED
("RMBH")
Registration number: 1987/005115/06
Share code: RMH & ISIN code: ZAE000024501
- normalized earnings + 24% to 251,0c or R2,98 billion
- Dividend + 21% to 113,5c or R1,35 billion
Intrinsic value + 15% to 2 596c or R30,84 billion
Summarised audited results announcement, year ended 30 June 2006
OVERVIEW OF RESULTS
RMBH experienced a positive economic environment which provided strong
growth opportunities for Group companies in the financial year to 30 June
2006. In particular:
* High consumer confidence, stable inflation and interest rate patterns
resulted in continued strong growth in consumer expenditure, income and
output. This translated into substantial increases particularly in asset
backed consumer borrowings; and
* Corporate profitability and private sector fixed investment which also
showed strong growth and supported job creation.
These factors contributed to continued asset price growth and very buoyant
equity markets, with the FTSE-JSE Top 40 Index increasing by 52% during the
financial year.
Our Group benefited handsomely from such a positive environment and at the
operational level the following excellent increases in headline earnings
were reported:
* At FirstRand -
*FirstRand Banking Group + 25% to R7 049- million
* Momentum Group + 21% to R1 534 million
* OUTsurance + 24% to R369 million
RMBSI + 31% to R71 million
RMBH reported the following key income statement outcomes for ordinary
shareholders:
* Attributable earnings (3%) to R3 145- million (2005: R3 231- million)
* Headline earnings + 17% to- R2 908- million (2005: R2 492- million)
On a per share basis this translates to:
* Attributable earnings per share- (2%) to 267.8- cents (2005: 272.0-
cents)
* Headline earnings per share + 18% to 247.6- cents (2005: 209.7- cents)
The decline in attributable earnings between years can in the main be
ascribed to the inclusion, during 2005, of a gain of some R605- million
arising from the disposal of 7,6% of RMBH"s interest in FirstRand as part
of the FirstRand BEE transaction.
The 17% increase in RMBH"s headline earnings does not mirror the strong
operational trend highlighted above. Sadly, such strong underlying
operational trend is clouded at Group level through accounting anomalies,
including IFRS adjustments, some of which are counter-intuitive.
In its review of results, FirstRand sought to isolate those accounting
anomalies which, in its view, cloud the assessment of its operational
performance. After adjusting for the treatment of, inter alia, private
equity transactions, the Discovery BEE transaction and treasury shares, it
focuses on Normalised Earnings as a truer and more appropriate/enduring
method of reporting operational performance.
RMBH agrees with such approach. If a similar and consequential adjustment
is effected at RMBH the following unaudited operational trend is recorded
for the year ended 30 June 2006:
* Normalised earnings + 24%- to- R2 982- million (2005: R2 397- million)
* Normalised earnings per share + 24%- to 251.0- cents (2005: 201.8- cents)
RMBH believes this to be a more appropriate basis against which to measure
future performance.
The year-on-year increase in the market value of RMBH"s underlying
investments has been muted as a result of the R1,2- billion (100- cents per
share) of capital returned to shareholders in November 2005. The intrinsic
value of RMBH rose by 15% to some R30,8- billion (or 2 596 cents per share
(2005: 2 258 cents)).
RMBH has declared a final dividend of 63 cents per share which, together
with the interim divided of 50,5 cents per share, brings the total dividend
for the year to 113,5 cents per share (2005: 94,0 cents), representing a
year-on-year increase of 21% and a dividend cover ratio (on normalised
earnings) of 2,2 times.
Group capital position
The year-on-year increase in the market value of RMBH"s underlying
investments has been muted as a result of the R1,2- billion (100- cents per
share) of capital returned to shareholders in November 2005. The increase
in value over the last year may be summarised as follows:
As at 30 June
2006 2005 %
Rm Rm change
Market value of listed interests
(Firstrand, Glenrand M.I.B) 28 527 23 143 +23
Directors" valuation of unlisted
interests
(OUTsurance, RMBSI) 2 081 1 726 +21
Net cash resources/investments 232 1 950 (88)
Total intrinsic value 30 840 26 819 +15
Per RMBH share (cents) 2 596c 2 258c +15
At 30 June 2006 RMBH"s market capitalisation amounted to R29,34- billion or
2- 470- cents per share, (2005: R26,42- billion) representing a 5% discount
(2005: 1%) to the group"s underlying intrinsic value.
Dividend payment
The Board has resolved to declare a final dividend of 63,0 cents per share
(2005: 52,0 cents).
Such final dividend, together with the interim dividend of 50,5 cents
brings the total dividend for the year ended 30 June 2006 to 113,5 cents
(2005: 94,0 cents).
This represents a year-on-year increase of 21% and a dividend cover ratio
(on normalised earnings) of 2,2 times (2005: 2,2 times), in line with that
of RMBH"s major investments.
Corporate citizenship
RMBH and all of the companies in which it invests have embraced the
recommendations of the King II report on Corporate Governance. We remain
committed to the highest standard of Corporate Governance and in this
regard strive to provide reports to shareholders that are timely, accurate,
consistent and informative.
RMBH supports broad-based and genuine empowerment and transformation in all
of the sectors in which we operate. All companies within the greater Group
are proactively working towards achieving the targets envisaged in the
Financial Sector Charter.
Outlook for the Group
We believe that South Africa remains in a structurally lower interest rate
and inflation environment and that our economic prospects remain positive.
The higher levels of interest rates that we are experiencing in the short
term will have some dampening effect on consumer credit demand. However,
strong public and private sector fixed investment leading up to 2010,
together with increased BEE activity and consumption demand, should
underpin future growth.
At FirstRand:
* The cycle of interest rate increases experienced from June 2006 onwards,
is expected to result in the low levels of bad debts experienced by
FirstRand Banking Group over the last few years to trend back up to the
long-term target ranges.
* The Banking Group"s challenge going into the 2007 financial year will be
to maintain robust asset growth while managing the expected increases in
bad debt levels.
* The Banking Group is also focusing on increased efficiencies.
* The increased volatility in investment markets makes any projections
regarding Momentum"s overall future performance difficult. Increased
consumerism will continue to place pressure on the financial services
industry. However, Momentum is confident of the steps it has taken to
address the value for money issue through revised fee structures.
* Momentum"s focus is now on extracting efficiencies from existing
operations, improved service levels, and expansion into new markets, such
as the joint ventures with FNB, which now include leveraging off the FNB
infrastructure into Africa.
RMBH"s other interests (all engaged in short-term insurance) are each
unique in their own abilities and also stand poised to extract further
value from their identified niches.
Barring any unforeseen external shocks, we believe that the existing
strategies of the Group and diversified income streams generated from the
underlying business units will ensure that the Group is well positioned to
achieve its stated objective of 10% real growth.
For and on behalf of the Board
GT Ferreira P Cooper
Chairman Chief Operating Officer
Sandton
20 September 2006
FIRSTRAND GROUP
Summary of FirstRand Financial Results
Year ended 30 June
2006 2005 %
Rm Rm change
Headline earnings for ordinary
shareholders comprise:-
- FirstRand Banking Group 7 049 5 656 25
- Momentum Group 1 534 1 270 21
- Discovery Group 350 324 8
- FirstRand Ltd (inc. pref. div. (438) (372) 18
payments)
- Consolidation of treasury shares (380) (155) >100
Group headline earnings 8 115 6 723 21
Attributable to RMBH* 2 521 2 228 13
*After consolidation eliminations
Operating Environment
The FirstRand Group achieved these results in a positive economic
environment which provided strong organic growth opportunities for the
Group"s banking and assurance businesses.
Within the FirstRand Banking Group, RMB delivered a particularly
outstanding performance, with much of its growth being driven by the
excellent performance of its equity related businesses. The strong
performances by FNB and WesBank were driven in part by good economic
conditions which provided significant consumer credit demand, particularly
for asset backed finance, increased customer numbers and transaction
volumes. In addition, the implementation of a number of innovative growth
strategies across all the businesses created additional organic growth.
Momentum Group delivered strong results in what remained a challenging
operating environment. The combination of buoyant equity markets and the
continued success of Momentum"s distribution model, resulted in a
significant increase in lump sum investment inflows. Sales of recurring
premium risk policies also continued to show strong growth.
Discovery Group enjoyed another year of excellent growth, characterised by
a solid performance by Discovery Health and better than expected growth in
new business at Discovery Life and PruHealth. On the back of strong cash
flow generation, Discovery declared a maiden dividend.
Financial Results
FirstRand Banking Group
The FirstRand Banking Group produced excellent results for the year. In
particular:
* FNB produced excellent results for the year, with profit before tax
increasing by 22% to R5,1 billion. Advances grew by 31% with Home Loans and
Card Issuing being the major contributors. FNB"s segment strategy continues
to be successful as it facilitates product innovation and differentiation.
* RMB delivered an exceptional performance producing year on year pre tax
profit growth of 38% to R2,6- billion. This performance was driven by the
equity businesses, which benefited from the buoyant equity markets and low
interest rate environment. The healthy economic environment was also
positive for originated debt and advisory mandates. RMB"s strategy to focus
on managing client relationships has been extremely successful and provided
good growth opportunities during the year.
* WesBank had a very good year with pre tax profits increasing by 25% to
R1,8- billion. Advances increased by 24% driven by increased market share
and high new business volumes.
The combined impact of increased volumes, together with the Bank"s hedging
strategies, compensated for pressure on margins experienced by FNB and
WesBank. Margin pressure on certain asset generators, particularly
mortgages and vehicle finance, intensified during the financial year,
primarily due to competitive pricing pressure.
Net interest income and interest margins benefited from the improved mix in
the lending book as a result of an increase in retail lending and a
decrease in large corporate advances.
Non-interest income continued to grow very strongly, increasing by 33%,
reflecting significant increases in customer numbers and transaction
volumes at FNB and high new business growth and insurance product cross
sell at WesBank. The significant growth in investment income and income
from associates (up 28%) again reflects the outstanding performance from
RMB"s private equity business.
Operating expenses increased by 19%, reflecting high new business
acquisition costs and infrastructure investment. Despite these investments,
based on normalised earnings, the cost to income ratio reduced from 57% in
2005 to 54% in 2006.
FirstRand Banking Group reported a return on equity of 26,0% (2005: 24,2%),
significantly above its performance target of 20%. It has a capital
adequacy ratio of 12,8% (2005:13,8%) and is well positioned to meet the
requirements of Basel II (with a proposed implementation date of January
2008).
Momentum Group
The Momentum Group delivered very strong results in what remained a very
challenging environment:
* Earnings attributable to ordinary shareholders increased by 42% to R1,9-
billion.
* Total assets under management and administration increased by 31% to
R353,7- billion mainly due to the growth in equity markets and the
acquisition of the Sage Group.
* The embedded value for the Momentum Group increased by 22% to R14,4-
billion. The embedded profit for the period represents a return of 31% on
opening embedded value, reflecting strong growth in the value of new
business.
Good organic growth was achieved in individual recurring risk and lump sum
retail investment flows. However, sales of recurring premium investment
products were negatively impacted by a reduction in retirement annuity
sales.
Collaboration with the wider FirstRand Group progressed well with sales
from the two joint ventures with FNB increasing significantly, mainly as a
result of credit life policies embedded in the Bank"s products. Sales of
Momentum products through the FNB Financial Consultants distribution
channel increased significantly, and Momentum"s short-term insurance
initiative is generating new business ahead of the business plan.
Momentum Group"s capital adequacy requirement (CAR) of R2,0bn was covered
3,1- times (2005: 2,2 times), well in excess of the targeted range of 1,8
to 2,2 times. As a result, a special dividend of R500- million was declared
to FirstRand at the year end.
Insurance Operations
The insurance operations increased operating profit by 22% to R0,9-
billion. The strong growth in investment markets impacted positively on the
results although the increased new business levels and the investment in
the agency force resulted in new business strain, which dampened profit
growth.The integration of the Sage agency force into the Momentum
distribution environment was completed, with the combined agency operation
increasing its contribution to new recurring premium product sales during
the year. Although the new tied agency force is not yet operating at
optimum capacity it provides a solid platform for future new business
growth in an area of the market where Momentum has not traditionally been
well represented.
Asset Management Operations
The asset management operations grew earnings by 40% to R0,35- billion
with the local asset management operations, represented mainly by RMBAM,
generating an excellent 37% increase in earnings. Strong market growth in
the institutional business, offset marginally by a net outflow of funds,
contributed to increased asset values and consequently higher fees, whilst
positive retail collective investment scheme net inflows also benefited
income levels.
Discovery Group
Discovery Group had a successful year, with important developments in each
of its businesses, strong earnings growth and the declaration of a maiden
dividend of R160- million.
The strong earnings growth translated into a 36% increase in headline
earnings (before BEE expenses) to R692- million (2005: R509- million). In
particular:
* Discovery Health produced a solid performance with operating profit
increasing by 20% to R655m (2005: R548- million) with the number of lives
covered by the scheme increasing by 9% to 1,94- million.
* Discovery Life exceeded expectations, further consolidating its
leadership position within the protection market and increasing operating
profits (before BEE expenses) by 31% to R545- million (2005: R417-
million).
* US based Destiny Health had a disappointing financial year, with
operating losses increasing by 68% to R151- million (2005: R90- million).
This poor performance reflects a significant shift in the competitive
dynamics of the markets in which Destiny operates. Substantial remedial
steps, including a focus on premium increases where appropriate and the
termination of one of its joint ventures, have been put in place. It is
expected that as a result, emerging losses will be minimised and reduce
rapidly.
* The performance of 50% held UK based Prudential Health was particularly
pleasing with the company making a significant impact on the UK private
medical insurance market.
Short-Term INSURANCE INTERESTS
RMB Structured Insurance
RMBSI creates individual insurance and financial risk solutions for large
corporates by using innovative financial structures.
It reported an exceptional outcome with:
* A 31% increase in headline earnings, which amounted to R71- million.
(2005: R54- million); and has
* Proposed a two times covered dividend of R36- million for the year (2005:
R26- million).
At 30 June 2006 RMBSI had total assets of R3,7- billion (2005: R3,3-
billion) and was adequately capitalised in all the jurisdictions in which
it operates.
These results were derived from strong growth in premium income in RMBSI"s
consumer protection business, driven by booming retail sector activity, and
increased management fees earned on its investment portfolios which
benefited from strong equity markets.
RMBSI continues to invest considerable resources in the development of a
new suite of products that exploit the challenges and opportunities
presented by changes in accounting, statutory and fiscal environments in
which its client base operates. However, the complexity of such changes has
resulted in slower than expected implementation of the new products.
RMBH"s attributable share of RMBSI"s headline earnings for the year
amounted to R56- million (2005: R51- million), reflecting the reduction of
RMBH"s effective interest from 98% to 80% as a result of a BEE transaction
implemented with the New Seasons Investment group during April 2005.
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.
OUTsurance posted excellent results for the year with:
* Net earned premium income increasing by 24% to R2,1 billion (2005: R1,7-
billion); while
* Headline earnings increased by 24% to R369- million (2005: R297-
million).
* It has declared a 1,4 times covered dividend of R263- million for the
year (2005: R210- million).
At 30 June 2006 OUTsurance had total assets of R2,1- billion (2005: R1,8-
billion) with a solvency margin of 43%.
The strong and profitable growth in OUTsurance"s personal lines business
was slightly muted by:
* Higher loss ratios caused mainly by more rain induced damage during the
current year;
* While Business OUTsurance is steadily gaining traction it is still
incurring start up costs; and
* Investment in the risk assessment and administration backbone that
OUTsurance is providing for the Momentum group"s entry into the short-term
market through that group"s broker based distribution channel.
New business volumes from all sources continue to be encouraging. Given the
dramatic drop in the underwriting profits reported by most of OUTsurance"s
competitors, the expected hardening of premium rates is beginning to
materialise. As a result of OUTsurance"s disciplined approach to
underwriting, it is well placed to benefit as this process plays out.
RMBH"s attributable share of OUTsurance"s headline earnings for the year
amounted to R234- million (2005: R194- million).
Glenrand M.I.B
The challenging market circumstances in which Glenrand M.I.B found itself
have continued in the year under review. Revenues from continuing business
have remained static as a result of lost business and a soft market that
exerted downward pressure on commission based fees.
A turnaround in attributable earnings from a loss of R23- million in 2005
to a profit of R50- million in the current year flows to a large extent
from a R84- million gain arising on the disposal of the group"s re-
insurance consulting business. After adjusting for such non-recurring
revenue items, as well a IFRS based charge arising from its BEE
transaction, Glenrand M.I.B reported a headline earnings loss of R29-
million (2005: profit R10- million).
Management believes that significant headway has been made in dealing with
legacy issues such as the possibility of undisclosed profits arising from
bulking and that these are now appropriately accounted for.
RMBH"s share of headline loss from Glenrand M.I.B amounted to R8- million
(2005: profit R3- million).
DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 63,0 cents per share was
declared on 20 September 2006 in respect of the financial year ended 30
June 2006.
Shareholders attention is drawn to the following important dates:
* Last day to trade in order to Friday, 13 October 2006
participate in this dividend
* Shares commence trading ex
dividend on Monday, 16 October 2006
* The record date for the dividend Friday, 20 October 2006
payment will be
* Dividend payment date Monday, 23 October 2006
No dematerialisation or rematerialisation of share certificates may be done
between Monday, 16 October 2006 and Friday, 20 October 2006 (both days
inclusive).
By order of the Board
AH Arnott
Company Secretary
20 September 2006
SUMMARISED GROUP INCOME STATEMENT
For the year ended 30 June
2006 2005 %
Audited Audited change
Rm Rm
Share of after tax results in associate 2 757 2 365 17
companies
Profit on sale of interest in 6 633
associates
Earned premiums net of reinsurance 4 415 3 723
Fee income 52 44
Investment income 919 669
Income 8 149 7 434
Net claims paid (2 426) (1 908)
Investment contract benefits and (181) (299)
insurance provisions
Acquisition, marketing and (1 746) (1 497)
administration expenses
Operating profit 3 796 3 730 2
Finance costs (232) (136)
Profit before taxation 3 564 3 594 (1)
Taxation (270) (253) 7
Net profit for the year 3 294 3 341 (1)
Attributable to:
Equityholders of RMBH 3 145 3 231 (3)
Minority interest 149 110 35
3 294 3 341 (1)
Computation of earnings per share
For the year ended 30 June
2006 2005 %
Audited Audited change
Rm Rm
Earnings attributable to ordinary 3 145 3 231 (3)
shareholders
Headline earnings attributable to 2 908 2 492 17
ordinary shareholders
Number of shares in issue (millions) 1 188 1 188
Weighted average number of shares in 1 174 1 188
issue (millions)
Earnings per share (cents) 267.8 272.0 (2)
Diluted earnings per share (cents)* 260.6 269.3 (3)
Headline earnings per share (cents) 247.6 209.7 18
Diluted headline earnings per share 240.9 207.0 16
(cents)*
Dividend per share (cents)
Interim 50.5 42.0 20
Final 63.0 52.0 21
Total 113.5 94.0 21
* The diluted calculations give cognisance to the impact of the similar
calculation within FirstRand. This has no impact on RMBH"s weighted average
number of shares.
SUMMARISED GROUP BALANCE SHEET
as at 30 June
2006 2005
Audited Audited
Rm Rm
ASSETS
Property and equipment 105 106
Goodwill and other intangible assets 13 20
Investment in associate companies 13 121 11 235
Financial assets 3 044 2 117
Receivables and prepayments 634 642
Reinsurers" share of insurance provision 24 37
Cash and cash equivalents 2 236 4 298
Total assets 19 177 18 455
EQUITY
Share capital and premium 4 605 5 793
Reserves 9 511 8 068
Capital and reserves attributable to equity 14 116 13 861
holders of the company
Minority interest 399 313
Total equity 14 515 14 174
LIABILITIES
Financial liabilities 1 150 1 264
Insurance contract provisions 3 206 2 570
Payables and provisions 306 447
Total liabilities 4 662 4 281
Total equity and liabilities 19 177 18 455
COMPUTATION OF HEADLINE EARNINGS
For the year ended 30 June
2006 2005 %
Audited Audited change
Rm Rm
Earnings attributable to ordinary 3 145 3 231 (3)
shareholders
Adjustment for:
Profit on sale of partial interest in (6) (605)
associates
Other 13 -
Share of adjustment made by associates:
Reversal of private equity realisations (71) (137)
Profit on sale of subsidiary"s (30) 23
associate
Realised profit on sale of available- (117) (27)
for-sale assets
Other (26) 7
Headline earnings attributable to 2 908 2 492 17
ordinary shareholders
SOURCES OF HEADLINE EARNINGS
For the year ended 30 June
2006 2005 %
Audited Audited change
Rm Rm
Headline earnings from:
FirstRand 2 521 2 228 13
Glenrand M.I.B (8) 3 >(100)
OUTsurance 234 194 21
RMBSI 56 51 10
2 803 2 476 13
RMBH and other 105 16 >100
Headline earnings 2 908 2 492 17
SUMMARISED GROUP CASH FLOW STATEMENT
for the year ended 30 June
2006 2005
Audited Audited
Rm Rm
Cash available from operating activities 1 545 1 551
Return of capital to shareholders (1 188) -
Servicing of finance from shareholders (1 214) (1 117)
Investment activities (1 031) 1 750
Financing activities (165) (136)
Net (decrease)/increase in cash and cash (2 053) 2 048
equivalents
Unrealised foreign currency translation (9) (7)
adjustments
Cash and cash equivalents at the beginning of 4 298 2 257
the year
Cash and cash equivalents at the end of the 2 236 4 298
year
Cash available from operating activities includes net premium receipts by
short-term insurance operations. Given the fluctuations inherent in non-
recurring structured insurance transactions, such cashflows are not
necessarily directly comparable between years.
COMPUTATION OF NORMALISED EARNINGS
For the year ended 30 June
2006 2005 %
Unaudited Unaudited change
Note Rm Rm
Headline earnings
attributable
to ordinary shareholders 2 908 2 492 17
RMBH"s share of FirstRand"s
adjustments:
Treasury shares 1 115 49
Private equity realisations 2 114 137
and National Treasury
settlement
3 137 2 678 17
Adjustment for:
RMBH shares held by 3 69 -
policyholders
Group treasury shares 4 (224) (121)
2 982 2 557 17
Adjustment for impact of BEE 5 - (160)
transactions
Normalised earnings
attributable
to ordinary shareholders 2 982 2 397 24
Weighted average number of 1 188 1 188
shares in issue (millions)
Normalised earnings per 251.0 201.8 24
share (cents)
Diluted normalised earnings 243.7 199.0 22
(cents)
Dividend cover (relative to 2.2 2.2
normalised earnings)
SOURCES OF NORMALISED EARNINGS
For the year ended 30 June
2006 2005 %
Unaudited Unaudited change
Rm Rm
Normalised earnings from:
FirstRand 2 611 2 159 21
Glenrand M.I.B (8) 3 >(100)
OUTsurance 219 177 24
RMBSI 55 42 31
2 877 2 381 21
RMBH and other 105 16 >100
Normalised earnings 2 982 2 397 24
Notes:
1. Deconsolidation of treasury shares and "deemed" treasury shares
created by FirstRand to account for:
- the Discovery BEE transaction; FirstRand shares acquired to hedge
liabilities under staff share schemes; and FirstRand shares held
as policyholder assets by group insurers.
2. Adjustment to include recurring Private Equity realisations and
insurance settlement agreement with National Treasury in operational
performance.
3. Deconsolidation of "deemed" RMBH"s treasury shares held for
policyholders by group insurers.
4. Adjustment to reflect earnings impact based on actual RMBH
shareholding in group companies, i.e. reflecting treasury shares as if
they are minority shareholders.
5. Adjustment to restate prior year earnings at RMBH"s actual 2006
interest in group companies.
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Share Equity Non- Treasury
Capital & Accounted Distributable- Shares Retained
Premium Reserves Reserves Reserve
Rm Rm Rm Rm
Balance at 30 June
2004 (audited)
as previously 5 793 4 944 414 -
reported
Net profit for the - - - -
year
Dividend paid - - - -
Income of associated - 940 - -
companies retained
Capital invested by - - - -
minorities
Reserve movements - - 44 -
relating to
subsidiaries
Change in carrying - (773) - -
value of associate
due to elimination of
treasury shares
Reserve movements - 246 - -
relating to
associates
Balance at 30 June 5 793 5 357 458 -
2005 (audited)
Prospective - (425) - (202)
adjustment due to
implementation of
IFRS
Balance at 1 July 5 793 4 932 458 (202)
2005
Return of share (1 188) - - -
premium
Net profit for the - - - -
year
Dividend paid - - - -
Income of associated - 1 733 - -
companies retained
Capital invested by - - - -
minorities
Share option expense - - 1 -
reserve
Reserve movements - - 30 -
relating to
subsidiaries
Change in carrying - (19) - -
value of associate
due to elimination of
treasury shares
Movement in treasury - - - 62
shares
Reserve movements - 233 - -
relating to
associates
Balance at 30 June 4 605 6 879 489 (140)
2006 (audited)
SUMMARISED STATEMENT
OF CHANGES IN EQUITY
Total
Capital & Shareholders" Minority Total
Earnings Funds Interest Equity
Rm Rm Rm Rm
Balance at 30 June
2004 (audited)
as previously 1 126 12 277 209 12 486
reported
Net profit for the 3 231 3 231 110 3 341
year
Dividend paid (1 117) (1 117) (51) (1 168)
Income of associated (940) - - -
companies retained
Capital invested by - - 36 36
minorities
Reserve movements (47) (3) 9 6
relating to
subsidiaries
Change in carrying - (773) - (773)
value of associate
due to elimination of
treasury shares
Reserve movements - 246 - 246
relating to
associates
Balance at 30 June 2 253 13 861 313 14 174
2005 (audited)
Prospective (138) (765) - (765)
adjustment due to
implementation of
IFRS
Balance at 1 July 2 115 13 096 313 13 409
2005
Return of share - (1 188) - (1 188)
premium
Net profit for the 3 145 3 145 149 3 294
year
Dividend paid (1 217) (1 217) (77) (1 294)
Income of associated (1 733) - - -
companies retained
Capital invested by - - 11 11
minorities
Share option expense - 1 - 1
reserve
Reserve movements (27) 3 3 6
relating to
subsidiaries
Change in carrying - (19) - (19)
value of associate
due to elimination of
treasury shares
Movement in treasury - 62 - 62
shares
Reserve movements - 233 - 233
relating to
associates
Balance at 30 June 2 283 14 116 399 14 515
2006 (audited)
BASIS OF PREPARATION OF RESULTS
The accompanying summarised results for the year ended 30 June 2006 are:
* a consolidation of the operations of RMBH and its two subsidiaries,
OUTsurance and RMB Structured Insurance; while * RMBH"s proportionate
interest in its associates, FirstRand and Glenrand M.I.B has been equity
accounted.
The annual financial statements for the year ended 30 June 2006, to which
this profit announcement relates, were prepared on the historical cost
basis, unless otherwise indicated, in accordance with:
* International Financial Reporting Standards ("IFRS");
* The requirements of the South African Companies Act, Act 61 of 1973, as
amended; and
* The Listings Requirements of the JSE Limited (the "JSE").
Such annual financial statements were audited by PricewaterhouseCoopers
Inc. A copy of their unqualified audit opinion is available for inspection
at RMBH"s registered office.
Restatement of prior year financial information
Certain reclassifications between assets and liabilities as a result of the
changes brought about by IFRS were effected in the 2005 balance sheets.
This amounted to R20 million. In addition, certain reclassifications in the
2005 income statement for IFRS were also effected. There was no impact on
the previously reported net profit after taxation.
Transition to IFRS
With effect from 1 July 2005, RMBH prepared its consolidated financial
statements in accordance with IFRS. The 30 June 2006 annual financial
statements are thus the first complete set of financial statements that the
Group has prepared in accordance with IFRS. Consequently:
* As prior year comparative information is also reported, the effective
date of transition to IFRS is 1 July 2004 (with the exception of the
standards relating to financial instruments and insurance contracts which
were applied from 1 July 2005); and furthermore
* IFRS 1: "First-time adoption of IFRS" has been applied and the results
for the comparative period have been restated accordingly. Readers are
referred to RMBH"s "Transition to International Financial Reporting
Standards" report distributed to shareholders during March 2006, and
available on the Company"s website.
Prior to 1 July 2005 RMBH"s consolidated financial statements were prepared
in accordance with South African Statements of Generally Accepted
Accounting Practice.
Save for changes flowing from the adoption of IFRS, RMBH"s financial
statements incorporate accounting policies consistent with those employed
in the previous year.
FirstRand
FirstRand Limited (the "FirstRand Group")
The FirstRand Group is a uniquely structured financial services group with
critical mass in both banking and insurance. For regulatory oversight
purposes, its operations are housed in three subsidiary groups under
FirstRand Bank Holdings Limited, Momentum Group Limited and Discovery
Holdings Limited.
Effective interest 32,7%*
Banking
The FirstRand Banking Group provides customers with a comprehensive range
of products and services according to specific target market segments.
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 ("RMB") is responsible for the large corporate segment,
to which it provides loans and value added advisory and structuring
services
WesBank is South Africa"s dominant movable asset financier. It is active in
both the retail and corporate segments.
Insurance
Momentum Group targets individuals in the middle and upper income markets,
principally under the Momentum Life, Momentum Wealth, Momentum Health and
RMB Unit Trust brand names.
Discovery Group (held 57,1% by FirstRand) services the health insurance and
life assurance markets.
Short-term insurance
Effective interest 63.0%*
OUTsurance is a direct personal lines and small business 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.
RMBSI holds both short-term and life assurance licences. It creates bespoke
insurance and financial risk solutions for South Africa"s large
corporations by using sophisticated risk techniques and innovative
financial structures.
Effective interest 80.0%*
RMBSI holds both short-term and life assurance licences. It creates bespoke
insurance and financial risk solutions for South Africa"s large
corporations by using sophisticated risk techniques and innovative
financial structures.
Effective interest 15.8%*
Glenrand MIB is a financial services group focused on providing risk
advisory services and solutions, employee benefits and investment advisory
services.
* The effective interest held by RMBH in these businesses shows variations
between years as a result of the consolidation, by such entities of:
* Treasury shares held by them;
* Shares held in them by their staff share incentive trusts; and/or
* "Deemed" treasury shares held in them by policyholders and mutual funds
managed by them; as well as
* "Deemed" treasury shares arising from BEE transactions entered into.
RMB HOLDINGS LIMITED ("RMBH")
Registration number: 1987/005115/06
Share code: RMH ISIN code: ZAE000024501-
Directors- GT Ferreira (Chairman), P Cooper (COO), LL Dippenaar, JW Dreyer,
DM Falck, PM Goss, PK Harris and KC Shubane
Secretary and registered office - AH Arnott
Physical address - 4th Floor, 4 Merchant Place, corner of Fredman Drive and
Rivonia Road, Sandton, 2196
Postal address- PO Box 786273, Sandton, 2146-
Telephone- +27 11 282 8000 -
Telefax- +27 11 282 8088-
Web address- www.rmbh.co.za-
Sponsor (in terms of JSE Listing Requirements)- Rand Merchant Bank (A
division of FirstRand Bank Ltd)- Physical address- 1 Merchant Place, corner
of Fredman Drive and Rivonia Road, Sandton, 2196-
Auditors- PricewaterhouseCoopers Inc.
Physical address- 2 Eglin Road, Sunninghill, 2157-
Transfer secretaries- Computershare Investor Services 2004 (Pty) 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: 20/09/2006 03:33:30 PM Produced by the JSE SENS Department
