Wrap Text
FSR - FirstRand Limited - Unaudited interim results for the six months
ended 31 December 2006
FirstRand Limited
(Registration No: 1966/010753/06)
JSE code FSR & ISIN: ZAE000066304
("FSR") NSX share code: FST
Unaudited interim results for the six months ended 31 December 2006
Integrated financial services
Additional information is available at www.firstrand.co.za
Certain companies within the FirstRand Group are Authorised Financial
Services Providers
Highlights
* Headline earnings +26%
* Diluted headline earnings per share +25%
* Normalised earnings +26%
* Diluted normalised earnings per share +26%
* Ordinary dividend per share +23%
* Total assets under management or administration +20%
INTRODUCTION
This report covers the financial results of FirstRand Limited ("FirstRand"
or "the Group") and deals with the financial and operating performance of
its main brands. The Group consists of a portfolio of leading brands; these
are First National Bank ("FNB"), the retail and commercial bank, Rand
Merchant Bank ("RMB"), the investment bank, WesBank, the instalment finance
business, Momentum, the life insurance business and Discovery, the health
and life business. FirstRand owns these businesses through various legal
entities. The Discovery Group, which is a 57% subsidiary of FirstRand, is
separately listed on the JSE and produces an independent report to
shareholders.
Review of results
Unaudited six months
ended December %
R million 2006 2005 change
Normalised earnings 5 539 4 407 26
Attributable earnings to ordinary 5 381 4 080 32
shareholders
Normalised net asset value 41 545 33 064 26
Normalised return on equity (%) 27.9 26.9
Assets under management or 835 699 696 975 20
administration
Normalised earnings per share
(cents)
- Basic 98.3 78.5 25
- Diluted 98.2 78.2 26
FINANCIAL PERFORMANCE
The table below represents the normalised earnings of the major groups
within FirstRand:
Unaudited six months
ended December %
R million 2006 2005 change
Banking Group 4 752 3 680 29
Momentum Group 799 731 9
Discovery Group 220 183 20
FirstRand (69) (73) 5
Dividend payment on non-cumulative (163) (114) (43)
non-redeemable preference shares
Normalised earnings 5 539 4 407 26
FirstRand produced excellent results for the six months to 31 December
2006, growing normalised earnings 26%. The banking businesses continued to
benefit from a strong economic environment with RMB delivering an
outstanding 75% increase in normalised earnings. FNB benefited from
continued demand for retail and commercial lending and strong transaction
volumes, growing normalised earnings 26%. WesBank`s profitability was
impacted by its investment in its offshore operations, although the local
businesses still performed well.
The Momentum Group increased normalised earnings 9% to R799 million.
However, after adjusting for the impact of the R1.2 billion special
dividends paid to FirstRand, normalised earnings would have increased 13%.
Discovery Group`s financial performance reflects the consistent and strong
performance of Discovery`s underlying businesses. Operating profit
increased 40% before investment income, tax and the impact of its BEE
transaction to R530 million (2005: R379 million).
Operating Environment
The South African financial services environment remained very favourable
in the six months to 31 December 2006, reflecting a period of strong
economic activity, relative Rand stability, contained inflationary
pressures, higher domestic interest rates and very strong equity markets.
The Rand strengthened 2.4%, from a level of R7.15: US$1 at 30 June 2006, to
R6.98: US$1 at 31 December 2006, largely due to renewed appetite for
emerging market assets, with strong foreign flows into the local equity and
bond markets. CPIX remained within the South African Reserve Bank`s
targeted range of 3% to 6%, averaging 5% during the period under review.
Both consumer and business confidence remained strong and rapid rates of
consumption expenditure and fixed investment resulted in year on year
growth in private sector credit extension of 25%, driven by corporate and
households` credit demand.
During the period, the central bank continued to raise interest rates with
three increases of 50 basis points in August, October and December 2006.
Although at an early stage, the tightening of monetary policy has shown
signs of taking effect with the absolute rate of growth in retail credit
slowing, in contrast corporate credit demand increased significantly.
Strategic issues
Changes in legislation
The National Credit Act ("NCA") was enacted during March 2006. The NCA
outlaws certain penalty and other fees which impact revenues from 1 June
2007. The two businesses that are mainly impacted by the NCA are FNB and
WesBank, and the Group has determined the potential revenue impact, taking
into account both revenue losses and possible additional revenue streams as
a result of the NCA. The total annualised revenue loss is estimated to be
between R400 million and R500 million and total implementation costs of
between R160 million and R260 million.
One of the key challenges facing the banking industry is the enquiry into
competition announced by the Competition Commission on 4 August 2006. The
enquiry will focus on the following:
* the level and structure of charges made by banks, as well as other
providers of payment services;
* the feasibility of improving access by non-banks and "would be banks" to
the national payment system infrastructure to allow them to compete more
effectively; and
* any other aspects relating to the payment system which could be seen as
anti-competitive.
Public hearings were held during November 2006 at which FNB and FirstRand
Bank submitted that there is no failure or impediment to competition in the
South African Banking Industry, although certain practices could be
improved. FNB and FirstRand Bank made a number of recommendations, one of
which was the elimination of SASWITCH fees which would result in
approximately R500 million of savings to the consumer.
The next round of public hearings will commence during April 2007 and is
focused on:
* ATMs with specific focus on SASWITCH fees, carriage fees and the
possibility of shifting to a direct charge (surcharge) model;
* various aspects pertaining to the acquiring and issuing of cards,
including the four party interchange model;
* access to the National Payment System and inter-operability between banks
and other financial services providers; and
* costs of providing transactional banking to the low income market.
Capital management
Group capital strategy
Since the formation of FirstRand in 1998, the Group has always viewed
capital as a scarce resource and its strategy has been to maintain the
optimal level of capital in the most cost efficient way, given its risk
profile and targeted credit counterparty rating. The Group`s policy is to
be capitalised at the higher of economic or regulatory capital and at the
same time provide a capital buffer to give confidence to debt-holders,
depositors, regulators and rating agencies. The Group aims to fulfil the
requirements of shareholders and maintain an efficient capital structure
with limited excesses, but which supports its short term growth
requirements. It does not hold surplus capital for acquisitions and the
need for raising additional capital is assessed on a transaction by
transaction basis.
Current capital position
From 2000 to 2004, FirstRand generated very high Returns on Equity ("ROE")
whilst the demand for capital from the lending businesses was low,
resulting in the Group generating significant surplus capital. In the first
half of 2005, the Group considered various mechanisms to return this excess
to shareholders, which was consistent with its philosophy not to hold a
large excess position but rather approach shareholders for additional
capital when required. At the same time, the Group reduced its dividend
cover from 3 times to 2.5 times.
However, during calendar 2005 there was a structural shift in South Africa
to a lower interest rate, lower inflation environment and this translated
into extremely favourable consumer credit markets. In response to this
demand, the Group invested capital into the high-growth retail lending
operations of the bank which has grown retail advances 47% since June 2005.
Over time, as a result of this advances growth, core equity has reduced to
8.1%.
Whilst the core equity ratio remains within the target range of 8% to 8.5%,
the Group is actively seeking to increase this ratio to the higher levels
of the target range through actions such as securitisation and first loss
risk transfers.
Going forward
Given the increase in interest rates over the past six months, the Group
expects retail lending to slow to more sustainable levels and this will
reduce pressure on capital requirements. Whilst it is expected that
corporate lending will increase, the use of the Group`s balance sheet will
be limited to those asset classes that provide an appropriate return, and
will continue to focus on an "originate and distribute" strategy.
In addition, Momentum continues to generate surplus capital. One of the
benefits of being an integrated group is the flexibility to move capital
between the businesses. Since June 2006, R1.2 billion of excess capital in
Momentum has been paid to the Group by way of special dividends. These
dividends were paid in June 2006 (R500 million) and October 2006 (R700
million). The capital was used to fund growth in the bank. The Group
anticipates that further capital will be available from Momentum in the
future.
In order to support the business units` future growth opportunities, the
Group is assessing its capital strategy with regard to internal deployment.
The effective allocation of capital is a key component of the Group`s
overall performance management strategy, and the Group is constantly
focused on ensuring that, despite rapid rates of growth, its ROE continues
to exceed its stated target of 10% above the weighted average cost of
capital. For example, in 2005 it stated that it was not pursuing aggressive
large corporate lending growth given the low returns. The Group has also
indicated that it is focusing on achieving appropriate returns from home
loans originated through the intermediary channels, and is prepared to lose
market share, should the returns not meet internal hurdle rates.
The Group continues to assess which of its current businesses are producing
the best returns on capital deployed, given the significant organic growth
opportunities in its local markets. At the same time, consistent with the
Group`s stated international strategy the business units are looking
outside South Africa for growth. The strategy is organic in nature, focused
on joint ventures or "greenfield" operations and a number of the businesses
have already identified potential opportunities.
The Group will only consider allocating capital to these international
growth opportunities if they meet or exceed the current hurdle rates.
Funding strategy
The objective of the Group`s funding strategy is to secure funding at an
optimal cost from diversified and sustainable funding sources.
The low savings rate and the ongoing demand for credit in South Africa
continues to force the Group to rely on the professional markets for
funding, with the resultant impact on liquidity and margin. This is likely
to be further exacerbated by funding requirements for international
expansion.
The Group is already looking at the local and international capital markets
to fund growth and in the current period has raised funds in Australia for
WesBank through a US$150 million Medium Term Note Programme, and
securitised R3 billion of WesBank assets in the international markets.
Currently, the Group is also planning a $US1.5 billion Medium Term Note
Programme to fund growth for FirstRand`s existing UK based activities.
Overview of results by brand
The table below indicates the relative contribution to normalised earnings
by brand:
Unaudited six months
ended December %
R million 2006 2005 change
FNB 2 280 1 807 26
RMB 1 572 898 75
WesBank 538 538 -
FNB Africa 218 174 25
Momentum 693 563 23
Discovery 220 183 20
Group Support 250 431 (42)
FirstRand (69) (73) 5
Dividend payment on non-cumulative (163) (114) (43)
non-redeemable preference shares
Normalised earnings 5 539 4 407 26
First National Bank ("FNB")
FNB has produced another set of excellent results with profit before
indirect taxation increasing 24% from R2 521 million to R3 119 million.
Interest income grew 29% due to the continued strong balance sheet growth
in both advances (up 31%) and deposits (up 19%), the widening of margins as
a result of interest rate increases and the increased endowment benefit on
deposits.
Bad debts increased to 0.8% (Dec 2005: 0.4%) of advances as a result of the
rising interest rate cycle and increased indebtedness levels of consumers.
This increase was expected given the abnormally low arrears and non-
performing loans ("NPLs") in previous years.
Non interest income increased 20% as a result of a significant increase in
customer numbers and higher transactional volumes.
Operating expenses increased 17% driven mainly by significant variable
costs, largely related to growth in new business and increased volumes, and
continued investment in new products, infrastructure and processes as well
as co-operation agreements with third parties by FNB Card, FNB HomeLoans
and Personal Loans.
FNB continued to focus on its segment strategy and the relative
contributions to profit by segment are depicted in the table below:
Unaudited six months
ended December %
R million 2006 2005 change
Consumer segment 1 198 1 039 15
- Personal Banking 693 513 35
- HomeLoans 400 318 26
- Card Issuing 105 208 (50)
Wealth 83 51 65
Commercial 1 107 839 32
Corporate 388 302 28
FNB Other 343 290 18
Profit before indirect tax 3 119 2 521 24
Indirect tax (138) (159)
Direct tax (700) (555)
Profit on sale of fixed assets (1)
Normalised earnings 2 280 1 807 26
The Consumer segment performed well with profits before taxation increasing
15% from R1 039 million to R1 198 million. This was achieved in an
operating environment of rising interest rates, but continued good growth
in both client and transactional volumes.
Gross interest income increased 27% as a result of the widening of margins
and strong growth in both deposits (up 16%) and advances (up 31%). Non
interest revenue increased 18% driven by 5% growth in the active cheque
accounts base and increased transactions per customer.
Total advances increased 31% to R104 billion, reflecting a continued focus
on sales against a background of strong demand for consumer credit,
although demand has slowed and is lower than levels experienced six months
ago.
FNB HomeLoans increased profit before taxation 26%. This was driven by
solid volume growth in profitable new business, combined with increased
margins due to rising interest rates. In addition, non interest revenue
grew 47%, underpinned by good transactional volume growth, particularly
from the One Account. Gross advances increased 31%, partially driven by
increased property values coupled with continued strong growth in sales. As
a result of FNB`s stated strategy of focusing on ROE, its market share of
new business decreased from 20% to 16%.
Despite a slowdown in the rate of growth of cardholder spend, largely as a
result of the higher indebtedness levels of consumers in general, as well
as rising interest rates, FNB Card successfully grew advances 25%,
customers` spend 19% and customer numbers 17%. Profit before taxation
decreased 50% and was significantly impacted by the margin pressure on
advances, as Card was unable to re-price the interest rate increases during
the period under the existing Usury Act, in spite of the cost of funds
increasing in line with the rate increases. In addition, profit was
impacted by the anticipated increase in bad debts and the start up costs
associated with various co-operation agreements.
The Wealth segment`s profit before taxation increased 65% to R84 million,
driven in the main by a particularly strong performance by RMB Private
Bank, which grew profit before taxation 56% to R84 million and FNB Trust
Services which also grew profits 56% to R28 million. Against this, the
start up losses in FNB Private clients increased 19% to R25 million.
Assets under management increased 51% to R22 billion, largely due to growth
in the equity market, investment selection and net new business inflows.
Strong growth in advances of 31% to R18 billion and deposits of 45% to R4
billion also contributed to the segment`s performance. As a result,
interest income increased 31% and non interest income grew 27%.
The Commercial segment had an excellent first half with gross interest turn
increasing 25%, non interest income 21% and profit before taxation 32%.
Deposits grew 19% due to continued strong consumer demand and retail sales
resulting in increased cash balances. Increasing interest rates resulted in
growth in interest income on endowment deposits as margins widened.
Advances increased 28% largely driven by the growth in "value add" products
such as Debtor Finance, Agricultural Term Loans and, in particular,
Commercial Property Finance.
Credit quality remained good with NPLs as a % of gross advances improving
from 2.9% to 2.5%. The bad debt charge as a % of advances increased to 0.6%
but is still below the expected loss levels of 0.8%.
The segment experienced strong transactional volumes resulting in non
interest income increasing 21%. The electronic delivery channel revenue
grew 33%, Speedpoint (Card Acquiring) revenue 37% and the active account
base grew 14%. International Banking`s non interest income grew 28%, mainly
due to the increase in dealing revenue driven by increased volumes and
turnover, despite suppressed margins, and assisted by market volatility.
The Corporate segment performed exceptionally well growing profits 29% with
non interest income increasing 14%, driven primarily by increased
transactional volumes in Speedpoint and FNB Online. This growth was
underpinned by a combination of new client acquisitions and a favourable
environment for retailers.
International banking showed strong growth in profit before taxation of 29%
and remains a significant contributor to the segment`s profitability.
Market volatility during the period created some opportunities to extract
business from both importers and exporters and as a consequence volumes and
turnover increased.
Deposits and advances increased 21% and 26% respectively, however, the
deposit margin was lower due to re-pricing of clients and increased volumes
in the Financial Institutions environment where margins are thinner.
The Mass segment performed exceptionally well during the period under
review with profits increasing significantly during the period, driven by
strong growth in both interest (up 34%) and non interest income (up 29%).
Interest income growth resulted from the 16% increase in net interest
income on deposits and growth in excess of 100% in net interest income on
advances. The non interest income growth was primarily driven by growth in
number of accounts, insurance revenue and ATM transactions. Advances grew
65%, primarily because of the SmartSpend, Smart Housing Plan and SmartBond
products.
FNB continued with its strategy to re-position its network to reflect
demographic shifts and alignment to retail and commercial development. The
representation points stayed static at 680 for the period and, whilst
traditional branches form the majority of the representation points, FNB
continued to increase its roll out of Community Banks and Sales Centres.
Overall, some 11 new branches were opened, 14 branches closed and 3 were
relocated in the period.
FNB has determined the potential revenue impact of the NCA taking into
account revenue losses and possible additional revenue streams. The
annualised impact is estimated at a revenue loss in the range of R300
million to R400 million with the final impact being subject to market
forces. FNB further estimates that the total implementation costs of the
NCA will range between R140 million and R230 million.
FNB still believes that the NCA will provide significant opportunities for
the established players to enter new markets.
Rand Merchant Bank ("RMB")
RMB increased profit before tax 75% to R2 billion with all business units
delivering strong growth for the half year.
This excellent performance reflects how well positioned RMB is to benefit
from good economic conditions and can be attributed to the successful
execution of a number of strategic initiatives. These strategies have
focused on providing innovative products and maintaining a strong client
franchise in local markets whilst at the same time successfully applying
its trading models and intellectual capital in international markets on an
opportunistic basis, leveraging off its local infrastructure.
The relative performance of RMB`s division is indicated in the table below:
Unaudited six months
ended December %
R million 2006 2005 change
Private Equity 791 543 46
Equity Trading 328 97 >100
Corporate Finance 156 79 97
Structured Finance 348 239 46
Project, Trade & Commodity Finance 79 36 >100
Treasury Trading 151 92 64
SPJ International 67 27 >100
Offshore Division 184 89 >100
Other (50) (28) 79
Profit before tax 2 054 1 174 75
Tax (482) (276)
Normalised earnings 1 572 898 75
The Private Equity division made a significant contribution, growing
profits 46% to R791 million. This performance was underpinned by good local
equity markets which resulted in strong growth in operational earnings from
equity accounted associates and profitable realisations. Despite these
realisations RMB has continued to build the Private Equity investment
portfolio through attractive investment opportunities largely attributable
to BEE activity. The unrealised profit in the portfolio grew to more than
R1.27 billion (June 2006: R1.1 billion, December 2005: R910 million).
The Equity Trading business achieved an outstanding result, recording 238%
growth over the comparable period. The performance of the offshore
arbitrage team, which contributed over 50% of the net result, reflects the
success of its strategy to apply locally developed arbitrage trading
strategies to global markets. The joint venture between RMB Securities and
Morgan Stanley delivered a strong first half performance, while Securities
Lending and Futures Clearing grew fees by more than 50%, amid continued
strong JSE volumes.
The other trading businesses - interest rates, currency and commodities -
also performed beyond expectations, both locally and internationally. The
Treasury Trading division benefited from the return of volatility and
direction to local interest rate and foreign exchange markets and strong
growth in client flows. The soft commodity trading team continued to
deliver a good performance.
Strong gains were achieved in both the emerging markets as well as the
developed markets trading books, on the back of improved corporate and
sovereign credit spreads. This resulted in SPJ International reporting 148%
year on year growth.
The Offshore division, RMB Resources, which comprises an energy trading
joint venture business, an international mining and resources lending and
investment business, again performed well, driven primarily by very strong
prices, in particular the energy sectors and profitable realisations of
investments.
The debt businesses also continued to benefit from positive economic
conditions producing year on year growth in excess of 30%. The Project
Finance team delivered a strong performance on the back of continued BEE
activity in the resources sector. Structured Finance benefited from a
robust property sector as well as acquisition and leveraged finance
opportunities created from BEE activity, achieving exceptional year on year
growth, while maintaining very high returns on capital.
Corporate Finance almost doubled its 2005 first half performance, driven by
strong growth in advisory fees from the Merger and Acquisitions team. RMB
concluded a number of significant mandates in the period, including the
Kumba restructuring and the Sasol BEE transaction.
WesBank
WesBank`s overall profitability was impacted by losses in its international
operations. The local business showed good growth in a challenging
environment characterised by higher interest rates and pressure on customer
affordability levels. This performance reflects the strength of WesBank`s
market position. The table below illustrates that although overall pre-tax
profits grew only 3% to R766 million, WesBank`s core business in South
Africa increased profit before tax by 14%.
A breakdown of WesBank`s performance is outlined in the table below:
Unaudited six months
ended December %
R million 2006 2005 change
Local Operations 831 728 14
International Operations (65) 17 >(100)
Profit before tax 766 745 3
Indirect tax (55) (41)
Direct tax (167) (166)
Minorities (6) -
Normalised earnings 538 538 -
The Australian and UK operations, which are in start up and turnaround
phases respectively, showed a loss of R65 million. These losses were worse
than expected but WesBank believes these operations will achieve
profitability in the short to medium term.
Gross advances increased by R19.6 billion, 27% growth on the prior period,
and included an additional R3.5 billion from the acquisition of Carlyle
Finance in the UK. However, during the period WesBank securitised R5.8
billion (face-value R7 billion) of assets and the exclusion of these assets
results in gross advances growth reducing to 19%.
Overall new business production increased 11% to R27.7 billion. Retail new
business growth slowed slightly due to the general reduction in consumer
affordability levels, whilst the corporate market continued to show good
growth as capital expenditure and infrastructure development continues to
gather momentum.
Competitive forces on pricing combined with the increased cost of longer
term funding of the fixed rate advances book continued to impact margins
resulting in a 6 basis point decline in the South African operations during
the period.
The charge for bad debts, as a percentage of advances, was 1.0% compared to
0.6% in the comparative period. This increase reflects the impact of higher
levels of customer indebtedness and the 200 basis point increase in the
prime rate, and was expected given the historically low levels of bad debts
in recent years. NPLs` increased to 1.2% of advances, but arrear levels
continued to improve through intensified collections activities and as a
result of the tightening of the credit scorecard at various intervals over
the course of the last 16 months.
Non interest revenue grew 50% year on year. This strong growth was driven
by insurance revenues, WesBank`s Fleet business and the contributions of
the non-banking subsidiary operations, including newly acquired Carlyle
Finance and the local collections business, Norman Bissett.
The substantial increase in non interest expenditure of 50% reflects
investment in the international operations and several of its subsidiary
companies. Within WesBank`s local operations, operating expenditure was
contained at 12.7%.
In terms of the NCA, WesBank has calculated that on an annualised basis,
its revenue will be negatively impacted by R100 million with up front
implementation costs of between R20 million and R30 million.
African subsidiaries
As a result of continued sales initiatives, coupled with focused efforts on
cost containment and excellent collaboration with FNB South Africa, FNB`s
African subsidiaries grew profit before tax 27%. Cost to income reduced
further to 43.8% with the return on equity improving to 31%.
The profit before tax of each subsidiary is outlined in the table below:
Unaudited six months
ended December %
R million 2006 2005 change
FNB Botswana 211 165 28
FNB Namibia 196 161 22
FNB Swaziland 30 19 58
FNB Lesotho - -
Profit before tax 437 345 27
Tax (115) (85)
Minorities (104) (86)
Normalised earnings 218 174 25
Against a backdrop of high interest rates and subdued economic growth, FNB
Botswana performed well with an increase in profit before tax of 26% to
P177.7 million (28% in Rand terms). Focused sales initiatives and the
opening of two additional branches resulted in a substantial increase in
volumes.
The high interest rate environment resulted in impairment losses increasing
105%. Growth in costs was kept at acceptable levels with FNB Botswana`s
cost to income ratio further improving to 33%. Gross advances grew 18% with
a substantial effort in new sales initiatives driving the increase (in
particular property finance).
FNB Namibia`s profit before tax increased 22% to N$196 million. Despite the
increase in the prime interest rate, the environment remained positive and
all businesses performed well as a result of the organic growth and cross-
selling initiatives. The cost to income ratio improved to 47.6%.
Profit before tax for banking operations increased 20% from N$135 million
to N$162 million and life assurance grew 87% off a lower base from N$15
million to N$29 million. This was mainly as a result of synergies within
the FNB Namibia Group, together with exceptional returns on the investment
portfolio. Advances grew 10% to N$8.1 billion, total assets increased 18%
to N$10.9 billion and deposits grew 18%.
FNB Swaziland continued its strong recovery under new management and,
although the economy is growing at less than 1%, increased profit before
tax by 58% to E29.9 million. This performance was achieved through the 6%
decrease in total costs, increase of net interest income of 20% and 15%
increase in fee income. The resultant cost to income ratio reduced from 62%
to 50%. Total assets grew 13% to E1.1 billion and impairments were well
controlled.
FNB Lesotho achieved sustainable levels of profitability for the period
under review and is well ahead of the business plan.
OUTsurance
OUTsurance performed exceptionally well during the six months ended
December 2006. Gross premiums written increased 23.3% off an already high
base, mainly driven by strong new business flows from both Personal and
Business OUTsurance. Premium increases for existing clients were contained
at levels well below the industry average.
The claims ratio (including the cost of OUTbonuses) was virtually identical
to the figure achieved for the same period ending in 2005, although there
was some upward pressure on claims costs inflation.
A continuous focus on increasing productivity through the use of technology
is reflected in the 0.9 percentage point improvement in the ratio of costs
to net premium income (15.2% in 2006 compared to 16.1% in 2005).
The strong organic growth, together with improved efficiencies resulted in
operating profit increasing 30.3%. This is a particularly pleasing
performance if compared with the rest of the industry, where the downward
movement in the insurance cycle has cut underwriting profits dramatically.
Normalised earnings did, however, show slower growth (15.7% up compared to
the prior period) due to significantly lower investment income. The latter
was negatively impacted by fair value adjustments to investments in
preference shares following the recent interest rate hikes.
Momentum Group
The Momentum Group`s normalised earnings increased 9% to R799 million for
the six months. These results benefited from the continued growth in equity
markets and the positive impact of recent acquisitions. Earnings growth
was, however, reduced by the investment in new initiatives and the
disappointing performance from the local asset management operations. The
investment income on shareholders` assets reduced due to a lower capital
base (as a result of the special dividends paid to FirstRand) and
significant investments in new acquisitions.
A breakdown of Momentum Group`s earnings is shown in the table below:
Unaudited six months
ended December %
R million 2006 2005 change
Insurance operations 544 434 25
Momentum 495 418 18
FNB collaboration 49 16 >100
Asset Management operations 149 129 16
Local 85 101 (16)
Offshore 64 28 >100
Group operating profit after tax 693 563 23
Investment income on shareholders` 106 168 (37)
assets
Normalised earnings 799 731 9
The embedded value of Momentum increased from R14.4 billion at 30 June
2006, to R15.4 billion, with positive growth from equity markets being
offset by the special dividends paid. The annualised return on embedded
value was 30%, compared to 31% in the year to 30 June 2006, as equity
markets continued to impact positively on the value of shareholders`
investments.
New business inflows for the six months totalled R28.5 billion, an increase
of 8% compared to the prior period. Growth in new recurring premium
business benefited from the 75% increase in volumes from collaboration
initiatives with FNB, and improved sales of savings products. Buoyant
equity markets impacted positively on Momentum`s lump sum inflows. Gross
asset management inflows increased 3% to R20.1 billion, mainly due to
increased inflows into the on-balance sheet portfolios marketed by RMB
Asset Management.
New business margins, however, came under pressure as a result of the
stronger growth in lower margin savings and investment business, as well as
the impact of the investment in the agency force. The overall new business
margin declined from 2.2% at 30 June 2006, to 1.9% for the current period.
Collaboration with FNB continues to show significant growth, generating a
threefold increase in operating profit to R49 million. The mass market
initiative continues to produce solid results on the back of good new
business volume and margin growth, whilst the middle market initiative is
making good progress.
Insurance operations
Operating profit increased 18% to R495 million, resulting from continued
growth in new business, equity markets and new acquisitions which were
partly offset by significant investments in new growth initiatives.
New retail recurring premium business increased 22% despite increased
competitive pressure. This growth was driven by a number of factors,
including:
* an increase of 18% in recurring savings product sales;
* an increase of 75% in sales from the FNB collaboration initiatives;
* the agency force production increased from 11% of total production in
2005, to 21% during the current period; and
* an increase of 37% in the Momentum products sold by FNB Financial
Consultants.
The growth in the agency force production, together with improved new
business volumes from FNB collaboration initiatives, has resulted in a more
balanced distribution mix. In the two years since December 2004, the
contribution to the distribution mix from the FNB collaboration and the
agents has increased from 15% to 37%.
Sales of Momentum`s lump sum products benefited from the continued strong
performance in equity markets, increasing 24% to R7.6 billion, resulting in
market share gains in most product lines.
Asset management operations
The asset management operations generated an increase in operating profit
of 16% to R149 million.
The local asset management operations experienced a 16% reduction in
operating profit to R85 million. The positive impact of increased equity
markets on fee revenue was reduced by a decline in performance fees, the
disinvestment of certain portfolios, and certain non-recurring income
included in the comparative period.
Despite the decision by the Public Investment Commissioner ("PIC") to
disinvest a significant portion of their assets following the restructuring
of the way in which they manage their portfolio, total assets under
management or administration remained at R353 billion. The net outflow of
funds of R34.5 billion for the six months would have reflected a positive
inflow after adjusting for the PIC disinvestment.
Investment income on shareholders` assets
The investment income earned on shareholders` assets decreased 37% to R106
million. This reduction was due to the:
* R1.2 billion in special dividends paid to FirstRand;
* acquisition of Sage and ALH;
* repayment of loans relating to the original acquisition of Ashburton; and
* the disposal of African Life.
Investing for growth
Key to Momentum`s strategy is investing in new initiatives relating to the
diversification of distribution, products and new markets.
The investment in the agency force has already resulted in an increase in
the proportion of recurring new business sourced through this channel and
productivity levels are improving month by month.
New business growth in the middle market joint venture with FNB is
progressing well, albeit at lower than the targeted level. Management has
taken action to address this, with a number of product enhancements, and
changes in distribution, currently being implemented.
Momentum`s short term insurance initiative is achieving growth ahead of the
business plan, with the scientific rating process resulting in a lower net
claims ratio than expected, and approximately 1 000 new policies being
issued each month.
Discovery Group
Discovery Group`s financial performance reflects the consistent and strong
performance of Discovery`s underlying businesses.
Operating profit increased 40% before investment income, tax and the impact
of its BEE transaction to R530 million (2005: R379 million). Diluted
headline earnings per share before the impact of the BEE transaction rose
29% to 70.1 cents (2005: 54.3 cents). New business grew to a record-
breaking level of R2.5 billion.
Discovery Health
Through a combination of growth, efficiency and focus on operational and
service excellence, Discovery Health delivered a substantial increase in
operating profit of 29% to R342 million (2005: R265 million), with new
business improving to R1 233 million (2005: R1 211 million).
Improved efficiencies resulted in staff headcount reducing 5% to 2 902
(2005: 3 055), despite a 7% increase in the number of covered lives, which
rose to 1 981 867. Lapse rates also improved - down from 2.6% to 2.1%.
Discovery Life
Discovery Life`s strategy of maintaining and enhancing its leadership
position in the pure life assurance market (protection market) was well
demonstrated during the period, growing operating profit 29% and annualised
new business premium income 22% to R480 million (2005: R392 million). The
value of in-force business has also grown strongly, up 22% to R5 068
million (2005: R4 151 million). Gross inflows increased 35% from R820
million in the previous period to R1 107 million.
PruHealth
PruHealth`s growth exceeded expectations reflecting Discovery`s excellent
working relationship with Prudential plc and the ability to combine the
best of both organisations for the benefit of clients. PruHealth achieved
strong new business growth in the period, up 260% from R77 million to R277
million. The number of lives covered grew 277%, while operating losses
increased to GBP9 million (2005: GBP6 million). The number of lives covered
exceeded 89 000 by the end of the period under review and had grown to 100
000 by the end of January 2007.
The strategy going forward is not only to grow the business significantly,
but also to maximise the quality of the business transacted.
Destiny Health
Destiny Health`s performance over the period was in line with expectations,
cutting operating losses by 59% reflecting the consequence of a successful
period of stabilisation. New business grew 10% to US$65 million, while
membership reduced 7% to 59 181 from 63 704 in the previous period.
The previous 18 months have been a particularly difficult period for
Destiny Health and Discovery has stated that the business would be
stabilised and turned around with operating losses not exceeding 5% of the
group`s overall operating profit. During the period, a new management team
focused successfully on bringing down the elevated loss ratios, securing
competitive network discounts, restructuring the strategic partnership with
the Guardian Life Insurance Company of America and Tufts Health Plan and
cutting operating costs within Destiny. This has resulted in reduced
operating losses and creates a foundation for profitability going forward.
Vitality and Discovery Card
Vitality`s performance over the period exceeded expectations both
financially and in terms of its impact on Discovery`s clients and its other
businesses. Gross inflows increased 13% to R355 million (2005: R315
million), with operating profit up 63% to R26 million (2005: R16 million).
The number of primary DiscoveryCard-holders increased 49% in the period to
353 541 (2005: 237 430).
The DiscoveryCard performed well, reflecting the success of its strategy to
offer added value as a credit card relative to other traditional credit
cards in the market-place. The first substantial independent survey
comparing the different value propositions rated the DiscoveryCard
substantially ahead of its competitors, which bodes well for
DiscoveryCard`s ability to grow its membership base and profits going
forward.
Group support
Group support consists of the following:
* cost of the support functions of the Momentum and the Banking Groups;
* investment income on free reserves;
* cost of securitisation;
* financing costs on debt capital; and
* carrying cost of structured debt capital.
The table below shows a reduction in Group Support`s normalised earnings
during the period, mainly due to increased costs associated with debt
capital raisings and a reduction in Momentum`s investment income on
shareholders` funds:
Unaudited six months
ended December %
R million 2006 2005 change
Group Support
- Banking Group 144 263 (45)
- Momentum Group: Investment income 106 168 (37)
on shareholders` assets
Normalised earnings 250 431 (42)
FirstRand Limited - central cost
The loss after tax for the six months ended 31 December 2006 increased to
R108 million as reflected below:
Unaudited six months
ended December %
R million 2006 2005 change
Dividend income 105 >100
Operating expenses (40) (25) (60)
Taxation (70) (26) (100)
Cumulative redeemable preference (103) (51) >(100)
shares
Loss after tax (108) (102)
IFRS 2 costs adjustment 39 29 34
Normalised earnings (69) (73) 5
The dividend income from the BEE staff share trusts relates to the
FirstRand BEE transaction whereby the Group made capital contributions to
the various BEE trusts to yield an effective return. The dividend income
more than offsets the cost of funding. The yield for the comparative period
was included in the Banking Group results. The increase in operating
expenses relates to the IFRS 2 costs incurred on the share appreciation
rights scheme. Taxation increased due to higher Secondary Tax on Companies
("STC") paid during the year following the reduction in the dividend cover.
The increase in the cumulative redeemable preference shares compared to the
prior period is as a result of the funding required for the BEE staff share
component.
Dividend policy
Ordinary shareholder dividend
The Group aligns its dividend policy with sustainable earnings growth and
therefore cover is based on normalised earnings.
The Group will maintain its dividend cover within its target range of
between 2.3 and 2.5 times. The Group believes this is a sustainable
dividend cover given the internal earnings generation capacity and organic
growth potential of the businesses.
The proposed interim dividend amounts to 39.5 cents per share, an increase
of 23% over the prior period.
Basis of presentation
FirstRand prepares its consolidated financial statements in accordance with
IFRS and on a going concern basis using the historical cost basis, except
for certain financial assets and liabilities where it adopts the fair value
basis of accounting.
These financial assets and liabilities include:
* financial assets held for trading;
* financial assets classified as available-for-sale;
* derivative assets and liabilities; and
* financial assets and liabilities at elected fair value.
The preparation of consolidated financial statements in conformity with
IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying
the Group`s accounting policies.
FINANCIAL IMPACT OF THE BLACK ECONOMIC EMPOWERMENT ("BEE") TRANSACTION
Background
IFRS 2 - Share-based payments requires that all share-based payment
transactions for goods or services received must be expensed with effect
from financial periods commencing on or after 1 January 2005. The
International Financial Reporting Interpretations Committee issued an
interpretation IFRIC 8 - the Scope of IFRS 2 ("IFRIC 8") during January
2006. IFRIC 8 clarifies that IFRS 2 applies to all share-based payment
transactions where the consideration received or to be received, either
through identifiable or unidentifiable goods or services, is less than the
fair value of the equity instruments issued or granted. IFRIC 8 is
applicable for financial periods commencing on or after 1 May 2006, on a
fully retrospective basis, using the transitional provisions of IFRS 2 read
with IFRS 1.
Financial impact on the FirstRand Group
FirstRand has accounted for the non-staff component of the Group`s BEE
transaction with effect from the financial year commencing 1 July 2006, in
accordance with the requirements of IFRIC 8.
As a result, the full financial impact in terms of IFRS 2 of the non-staff
component of the BEE transaction, amounting to R1.655 billion, has been
accounted for as an opening reserve transfer on 1 July 2006, and will have
no income statement effect.
Corporate governance
FirstRand has embraced the recommendations of King II on Corporate
Governance and strives to provide reports to shareholders that are timely,
accurate, consistent and informative.
Prospects
The Group expects the current favourable economic climate to continue. The
impact of the interest rate increases since June 2006 has resulted in a
slow-down in consumer demand for credit and it is expected that this will
continue in the second half of the financial year. Bad debts are likely to
increase from current levels. On the back of increased infrastructure
spend, corporate capacity building and BEE activity, corporate credit
demand is likely to strengthen and RMB, FNB and WesBank are well positioned
to benefit from this.
Overall the banking businesses will continue to focus on maintaining strong
top line growth whilst managing increases in operating expenses and bad
debts.
Although Momentum`s investment in new initiatives has slowed earnings
growth during the current period, these initiatives are expected to
contribute positively to future growth. As can be seen from the success of
the FNB collaboration in the mass market, these initiatives can become
meaningful contributors to earnings, and provide growth in excess of that
targeted by Momentum.
Barring any unforeseen events, the Group remains confident of achieving its
growth target of a 10% real return to shareholders.
GT Ferreira PK Harris
Chairman Chief Executive
INTERIM DIVIDEND DECLARATION
Notice is hereby given that an interim dividend of 39.5 cents per ordinary
share has been declared on 27 February 2007 in respect of the six months
ended 31 December 2006. The last day to trade in these shares cum-dividend
will be Thursday 15 March 2007 and the first day to trade ex-dividend will
be Friday 16 March 2007. The record date will be Friday 23 March 2007 and
the payment date Monday 26 March 2007.
Please note that no FirstRand share certificates may be dematerialised or
rematerialised between Friday 16 March 2007 to Friday 23 March 2007, both
days inclusive.
AH Arnott
Company Secretary
27 February 2007
Company information
Directors
GT Ferreira (Chairman), PK Harris (CEO), VW Bartlett, DJA Craig (British),
LL Dippenaar, DM Falck, PM Goss, NN Gwagwa, MW King, YI Mahomed, G Moloi,
AP Nkuna, SE Nxasana, SEN Sebotsa, KC Shubane, BJ van der Ross, Dr F van
Zyl Slabbert, RA Williams.
Secretary and Registered Office
AH Arnott, BCom, CA(SA)
4th Floor, 4 Merchant Place, Corner of Fredman Drive and Rivonia Road,
Sandton 2196
Consolidated income statement
Unaudited Audited
Six months ended Year ended
December % June
R million 2006 2005 change 2006
Net interest income 9 896 7 792 27 15 012
Interest and similar income 21 773 15 642 39 30 395
Interest expense and similar (11 877) (7 850) 51 (15 383)
charges
Impairment losses on loans (1 151) (576) 100 (1 411)
and advances
Net fee and commission 6 786 5 036 35 12 009
income
Fee and commission income 7 946 7 452 7 14 088
Fee and commission expense (1 160) (2 416) (52) (2 079)
Net insurance premium income 3 791 4 346 (13) 6 822
Insurance premium revenue 4 189 4 575 (8) 7 758
Premium ceded to reinsurers (398) (229) 74 (936)
Net claims and benefits paid (3 112) (4 446) (30) (6 174)
Gross claims and benefits
paid on
insurance contracts (3 655) (4 648) (21) (6 875)
Reinsurance recoveries 543 202 >100 701
Gains from banking and 2 151 1 016 >100 4 349
trading activities
Gains from investment 15 508 4 193 >100 19 225
activities
Other operating income 1 164 742 57 2 268
Increase in value of (14 799) (3 202) >100 (17 430)
policyholder liabilities
Fair value adjustment to (102) - >(100) (530)
financial liabilities
Net operating income 20 132 14 901 35 34 140
Operating expenses (11 709) (8 592) 36 (20 402)
Share of profit of
associated and joint
venture companies 768 716 7 1 290
Operating profit before 9 191 7 025 31 15 028
income tax
Taxation expense (3 083) (2 486) 24 (5 040)
Profit for the period 6 108 4 539 35 9 988
Attributable to:
Non-cumulative non-
redeemable
preference shares 163 114 43 274
Equity holders of the parent 5 381 4 080 32 8 825
Total for equity holders of 5 544 4 194 32 9 099
the Group
Minority interest 564 345 63 889
6 108 4 539 35 9 988
Earnings per share (cents)
-Basic 103.8 79.8 30 171.6
-Diluted 100.8 77.1 31 166.0
Consolidated balance sheet
Unaudited Audited at
at 31 December 30 June
R million 2006 2005 2006
Assets
Cash and short-term funds 31 127 22 541 46 684
Advances 325 232 246 326 291 076
Derivative financial 45 358 40 652 37 934
instruments
Investment securities and other 227 893 161 123 175 614
investments
Commodities 873 1 135 676
Investment properties 2 458 5 068 6 141
Policy loans on insurance 2 38 118
contracts
Reinsurance assets 532 299 292
Loans and accounts receivables 7 958 14 467 6 046
Investments in associated and 9 936 3 582 5 069
joint venture companies
Taxation 24 6 7
Intangibles 4 261 3 018 4 076
Property and equipment 4 948 4 720 5 011
Deferred tax 1 059 1 000 1 043
Total assets 661 661 503 975 579 787
Shareholders` equity and
liabilities
Liabilities
Deposits 355 011 264 437 317 840
Short trading position 37 716 20 417 25 967
Derivative financial 34 574 27 307 22 370
instruments
Creditors and accruals 19 340 21 061 16 848
Reinsurance liabilities 22 - 24
Policyholders` liabilities 105 605 78 250 93 720
under investment contracts
Policyholders` liabilities 45 337 39 642 40 740
under insurance contracts
Liabilities arising to third 563 4 355 1 725
parties
Deferred revenue liability 398 384 248
Post retirement funding 1 986 1 660 1 635
liability
Debentures and long-term 10 290 6 505 10 576
liabilities
Provisions 2 634 2 038 2 407
Taxation liability 910 173 1 024
Deferred tax 5 540 4 338 5 159
Total liabilities 619 926 470 567 540 283
Ordinary share capital and 2 239 2 694 3 635
share premium
Non-cumulative non-redeemable 4 519 4 519 4 519
preference shares
Distributable reserves 27 096 21 849 23 199
Non distributable reserves 4 512 1 978 5 177
Shareholders` equity 38 366 31 040 36 530
Minority interest 3 369 2 368 2 974
Total shareholders` equity and 661 661 503 975 579 787
liabilities
Statement of changes in equity for the six months ended 31 December 2006
Ordinary share capital and ordinary
shareholders`equity
Share Distribu- Non- Minority
capital and table distribu-
share table
premium
R million reserves reserves interest
Balance at 1 July 3 635 24 854 3 522 2 974
2006 as previously
stated
BEE - share based - (1 655) 1 655 -
payment reserve
Balance at 1 July 3 635 23 199 5 177 2 974
2006 as restated
Issue of share - - - (1)
capital
Currency - - (64) 1
translation
differences
Movement in - - (153) 69
revaluation
reserves
Movement in other - - (1) (1)
reserves
Earnings - 5 381 - 564
attributable to
shareholders
Ordinary dividends - (1 753) - (284)
Preference - - - -
dividends
Transfer (to)/from (165) 169 (2) -
reserves
Effective change of - (1) - -
shareholding in
subsidiary
Share based payment - 116 10
reserve
Consolidation of (1 231) 101 (561) 37
share trusts
Balance at 31 2 239 27 096 4 512 3 369
December 2006
Balance at 1 July 4 100 19 427 2 064 2 306
2005
Issue of share - - - -
capital
Share issue expense - - - -
Currency - - (269) -
translation
differences
Movement in - - 75 -
revaluation
reserves
Movement in other - - 9 -
reserves
Earnings - 4 080 - 345
attributable to
shareholders
Ordinary dividends - (1 600) - (283)
Preference - - - -
dividends
Transfer (to)/from - (101) 101 -
reserves
Share based payment - 43 - -
reserve
Consolidation of (1 406) - (2) -
share trusts
Balance at 31 2 694 21 849 1 978 2 368
December 2005
Ordinary Non cumulative
share capital
and ordinary
shareholders`
equity
Total non redeemable Total
ordinary preference shareholders`
shareholders` share capital equity
equity and premium
R million
Balance at 1 July 34 985 4 519 39 504
2006 as previously
stated
BEE - share based - - -
payment reserve
Balance at 1 July 34 985 4 519 39 504
2006 as restated
Issue of share (1) - (1)
capital
Currency (63) - (63)
translation
differences
Movement in (84) - (84)
revaluation
reserves
Movement in other (2) - (2)
reserves
Earnings 5 945 163 6 108
attributable to
shareholders
Ordinary dividends (2 037) - (2 037)
Preference - (163) (163)
dividends
Transfer (to)/from 2 - 2
reserves
Effective change of (1) - (1)
shareholding in
subsidiary
Share based payment 126 - 126
reserve
Consolidation of (1 654) - (1 654)
share trusts
Balance at 31 37 216 4 519 41 735
December 2006
Balance at 1 July 27 897 2 993 30 890
2005
Issue of share - 1 530 1 530
capital
Share issue expense - (4) (4)
Currency (269) - (269)
translation
differences
Movement in 75 - 75
revaluation
reserves
Movement in other 9 - 9
reserves
Earnings 4 425 114 4 539
attributable to
shareholders
Ordinary dividends (1 883) - (1 883)
Preference - (114) (114)
dividends
Transfer (to)/from - - -
reserves
Share based payment 43 - 43
reserve
Consolidation of (1 408) - (1 408)
share trusts
Balance at 31 28 889 4 519 33 408
December 2005
Summarised cash flow statement
Unaudited Audited
Six months Year
ended ended
December June
R million 2006 2005 2006
Cash (outflow)/inflow from (5 167) (13 078) 10 693
operations
Working capital changes 581 675 (907)
Cash (outflow)/inflow from (4 586) (12 403) 9 786
operations
Taxation paid (3 497) (3 282) (3 257)
Dividends paid (2 200) (1 714) (3 651)
Net cash (outflow)/inflow from (10 283) (17 399) 2 878
operating activities
Net cash (outflow)/inflow from (4 989) (2 863) (282)
investment activities
Net cash (outflow)/inflow from (285) 4 253 6 995
financing activities
Net (decrease)/increase in cash (15 557) (16 009) 9 591
and cash equivalents
Cash and cash equivalents at 46 684 38 550 37 093
the beginning of the period
Cash and cash equivalents at 31 127 22 541 46 684
the end of the period
Assets under management or administration
Audited
Unaudited at
at 31 December % 30 June
R million 2006 2005 change 2006
FirstRand and (12 685) (18 271) (31) (31 010)
consolidation adjustments
Banking Group 487 788 374 823 30 442 388
Momentum Group 179 008 141 498 27 161 632
Discovery Group 7 550 5 925 27 6 777
Total on balance sheet 661 661 503 975 31 579 787
assets
Off-balance sheet assets
managed or
administered on behalf of 174 038 193 000 (10) 192 097
clients
Total assets under
management or
administration 835 699 696 975 20 771 884
Statement of headline earnings and dividends
Unaudited Audited
Six months ended Year
ended
December % June
R million 2006 2005 change 2006
Attributable earnings to 5 381 4 080 32 8 825
ordinary shareholders
Headline earnings adjustments (812) (444) (710)
Less: Profit on disposal of
equity
accounted private equity (308) (294) (219)
associates
Less: Profit on sale of
available-for-sale
financial assets (505) (169) (360)
Add:
Impairment of property
and equipment - - 1
Less: Profit on sale of shares - - (37)
in subsidiary
Less: Profit on sale of - (82) (92)
associate
Less:
Net asset value in excess of
purchase
price of subsidiaries - - (22)
Add: Loss on sale of assets 1 - 19
Add: Impairment of goodwill - 101 -
Headline earnings 4 569 3 636 26 8 115
Normalised earnings 970 771 843
adjustments
Private equity realisation 308 294 219
Settlement with national - 27 30
treasury
Discovery BEE transaction 11 96 102
IFRS 2 share based payments 180 37 168
Treasury shares 342 251 352
Adjustment for effective
shareholding
in Discovery (21) (14) (28)
-Consolidation of staff share 268 134 383
schemes
-FirstRand shares held by 95 131 (3)
policyholders
Adjustment of listed property
subsidiary and
associate to net asset value 129 66 (28)
Normalised earnings 5 539 4 407 26 8 958
(unaudited)
Earnings per share (cents)
-Basic 103.8 79.8 30 171.6
-Diluted 100.8 77.1 31 166.0
Headline earnings per share
(cents)
-Basic 88.1 71.1 24 157.8
-Diluted 85.6 68.7 25 152.6
Normalised earnings per share
(cents)
-Basic 98.3 78.5 25 156.4
-Diluted 98.2 78.2 26 156.2
Ordinary dividend per share
(cents)
-Interim 39.5 32.0 23 32.0
-Final - - 34.0
Total 39.5 32.0 23 66.0
Dividend information
Non-cumulative non-redeemable
preference
dividend per share (cents)
"B" preference share
-paid on 26 February 2007/27 409.676 356.000
February 2006
-paid on 28 August 2006/29 363.000 37.000 363.000
August 2005
Total 772.676 37.000 719.000
"B1" preference share
-paid on 26 February 2007/27 409.676 - 356.000
February 2006
-paid on 28 August 2006/29 363.000 37.000 363.000
August 2005
Total 772.676 37.000 719.000
Ordinary dividends declared 2 226 1 797 24 3 718
Non-cumulative non-redeemable
preference
share dividends declared 163 114 43 274
Date: 27/02/2007 08:00:10 Supplied by www.sharenet.co.za
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