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Unaudited results and cash dividend declaration for the six months ended 31 December 2012
FirstRand Limited
Registration number: 1966/010753/06
Income tax reference number: 9150/201/71/4
JSE code: FSR ISIN: ZAE000066304 (FSR)
NSX share code: FST
UNAUDITED RESULTS AND CASH DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2012
INTRODUCTION
This report covers the unaudited financial results of FirstRand Limited (FirstRand or the Group) based on International Financial
Reporting Standards (IFRS) for the six months ended 31 December 2012.
The primary results and accompanying commentary are presented on a normalised basis as the Group believes this most accurately
reflects its economic performance. The normalised earnings have been derived from the unaudited IFRS financial results.
The normalised results include a consolidated income statement, statement of comprehensive income, statement of financial position,
statement of cash flows and a statement of changes in equity. A detailed description of the difference between normalised and IFRS
results is provided on www.firstrand.co.za. Commentary is based on normalised results, unless indicated otherwise.
Alan Hedding, CA(SA), supervised the preparation of the consolidated financial results.
FINANCIAL HIGHLIGHTS
Six months ended Year ended
31 December 30 June
2012 2011 % change 2012
Normalised earnings (R million) 7 218 5 771 +25 12 730
Earnings per share (cents) (IFRS)
- Basic 128.5 111.1 16 241.7
- Diluted 127.9 109.2 17 236.8
Headline earnings per share (cents) (IFRS)
- Basic 131.7 103.3 27 231.5
- Diluted 131.1 101.5 29 226.9
Diluted normalised earnings per share (cents) 128.0 102.4 +25 225.8
Normalised net asset value per share (cents) 1 200.6 1 053.0 +14 1 142.4
Dividend per ordinary share (cents) 55.0 44.0 +25 102.0
Normalised return on equity (%) 21.9 19.5 20.7
The Group consists of a portfolio of leading financial services franchises; these are First National Bank (FNB), the retail and
commercial bank, Rand Merchant Bank (RMB), the corporate and investment bank, and WesBank, the instalment finance business.
STATEMENT OF HEADLINE EARNINGS - IFRS
Six months ended Year ended
31 December 30 June
R million 2012 2011 % change 2012
Profit for the period 7 574 6 590 15 14 369
Non-controlling interests (405) (386) 5 (898)
NCNR preference shares (150) (137) 9 (275)
Earnings attributable to ordinary equityholders 7 019 6 067 16 13 196
Adjusted for: 176 (428) (>100) (554)
(Gain)/loss on disposal of investment securities and
other investments of a capital nature (1) 2 20
Gain on disposal of available-for-sale assets (1) (36) (154)
Gain on disposal of associates or joint ventures - (463) (473)
Gain on disposal of subsidiaries (10) (17) (266)
(Gain)/loss on the disposal of property and equipment (1) 24 49
Fair value of investment properties - - (12)
Impairment of goodwill 2 18 115
Impairment of assets in terms of IAS 36 254 15 7
Other - (1) 41
Tax effects of adjustments (69) 23 43
Non-controlling interest adjustments 2 7 76
Headline earnings 7 195 5 639 28 12 642
RECONCILIATION FROM HEADLINE EARNINGS TO NORMALISED EARNINGS
Six months ended Year ended
31 December 30 June
R million 2012 2011 % change 2012
Headline earnings 7 195 5 639 28 12 642
Adjusted for: 23 132 (83) 88
IFRS 2 Share-based payment expense 22 29 (24) 77
Treasury shares* 47 103 (54) 251
- Consolidation of share trust 47 94 242
- FirstRand shares held by policyholders - 9 9
Total return swap adjustment (53) - (240)
Private equity subsidiary realisations 7 - -
Normalised earnings 7 218 5 771 25 12 730
* Includes FirstRand shares held for client trading activities.
OVERVIEW OF RESULTS
INTRODUCTION
The South African macro and socio economic environment for the first six months of the financial year remained challenging. Initial
concerns related to global issues such as the potential breakup of the euro zone, a hard landing in China and the possibility of
significant fiscal contraction in the USA. As these global macroeconomic concerns subsided, local labour market action, sovereign
rating downgrades and growing domestic economic imbalances introduced a new set of uncertainties.
The South African economy started to show signs of slowing in the early part of the period under review. This slowdown, coupled with
the downside risks posed by the global environ-ment, prompted the SARB to lower the repo rate by another 50 bps in July. Strike
action in a number of industries also exacerbated the downward pressure on economic activity towards the end of 2012. The labour
unrest and reports indicating that South Africas current account deficit widened markedly during the course of last year resulted in a
weaker rand, and inflation started to trend upwards. The combination of these developments resulted in a number of rating agencies
downgrading South Africas sovereign rating.
Despite weaker growth, higher inflation and a weaker rand, credit extension registered double digit growth for the first time in more
than three years. Mortgage credit extension, however, continued to be weak and house prices remained under pressure.
The slowdown in South Africa did impact some parts of the Common Monetary Area (specifically Namibia) and Botswana. Elsewhere
in the region, those economies exposed to resources performed better as international commodities prices remained buoyant.
OVERVIEW OF RESULTS
FirstRand produced excellent results for the six months to 31 December 2012, achieving normalised earnings of R7 218 million, an
increase of 25% on the previous period, and producing a normalised return on equity (ROE) of 21.9% (2011: 19.5%).
All three franchises delivered strong operational performances, delivering good topline growth and profitability. In the case of FNB, this
was once again driven by customer acquisition, loan and deposit growth and the continued focus on driving transactional volumes
across all of its platforms, particularly electronic. WesBank grew new business volumes across all portfolios and the client franchises in
RMB delivered both good growth in profits and higher returns.
The table below shows a breakdown of sources of normalised earnings:
SOURCES OF NORMALISED EARNINGS
Six months ended Year ended
31 December 30 June
% % %
compo- compo- % compo-
R million 2012 sition 2011 sition change 2012 sition
FNB 4 023 56 3 360 58 20 6 666 53
RMB 1 969 27 1 455 25 35 3 654 29
WesBank 1 390 19 1 193 21 17 2 599 20
Corporate Centre and
consolidation adjustments (344) (5) (345) (6) - (703) (6)
FirstRand Limited (company)* 330 5 245 4 35 789 6
NCNR preference dividend (150) (2) (137) (2) 9 (275) (2)
Normalised earnings 7 218 100 5 771 100 25 12 730 100
* Included in this amount is the consolidation adjustment of R518 million (December 2011: R232 million, June
2012: R818 million) to bring the IFRS 2 costs from cash settled in the underlying subsidiaries to equity settled at
the Group level. This adjustment arises from the increase in the FirstRand share price between periods.
The Groups income statement benefited from an increase of 14% in net interest income (NII), driven by good growth in new business
at FNB, WesBank and RMB. Asset margins continued to benefit from mix of advances, pricing in FNB and funding strategies. Total
non-interest revenue (NIR) grew 24%, underpinned by increases in fee and commission income at FNB and WesBank. RMBs client
activities, particularly financing, advisory and structuring also contributed.
The Groups core operating costs grew 11% for the period. However, the combination of the ongoing impact of depreciation on small
value assets and software maintenance, investment in expansion initiatives, increases in IFRS 2 Share-based payments directly linked
to the Groups increased share price, as well as higher variable costs linked to the Groups performance, resulted in a 16% total cost
increase.
A reconciliation of operating expenses is provided in the table below.
RECONCILIATION OF OPERATING EXPENSES
Six months ended Year ended
31 December % 30 June
R million 2012 2011 change 2012
Operating expenses 15 120 12 995 16 27 212
Adjusted for:
Share-based payments (179) (45) >100 (469)
New subsidiaries - - - (82)
Expansion costs (442) (212) >100 (497)
RMB Corporate Banking software impairments (248) - -
Cooperation agreements and joint ventures (345) (253) 36 (564)
Accelerated depreciation and Full Maintenance Rental
(FMR) (166) (75) >100 (409)
Core costs 13 740 12 410 11 25 191
The increase in bad debts from 80 bps to 91 bps, is in line with expectations given the absolute book growth and the shift in asset
class mix. It also includes R575 million of credit impairment overlays at FNB and RMB, the creation of which reflects the Groups view
that the benign credit cycle has bottomed.
Non-performing loans (NPLs) decreased 3%, which is again in line with expectations and reflects the ongoing improvement in the large
retail books such as HomeLoans and Card. NPLs in the unsecured books picked up in line with expectations.
The Groups overall balance sheet continued to show good growth in advances compared to December 2011, driven by strong new
business volumes (indicated below), particularly in those portfolios where the Group was historically underweight, such as unsecured
and corporate (structured) lending.
- Unsecured lending in FNB (excluding Card) R4.6 billion
- Unsecured lending in WesBank R2.6 billion
- Vehicle and asset finance at WesBank R31.5 billion
- RMBs structured lending book R13.3 billion
On a rolling six months basis, growth in these portfolios has started to moderate.
OVERVIEW OF OPERATING FRANCHISES
FirstRands vision is to be the African financial services group of choice, creating long-term franchise value and delivering superior and
sustainable economic returns to shareholders within acceptable levels of volatility. The Group seeks to achieve this through two
parallel growth strategies:
- become a predominant player in all of the financial services profit pools in South Africa, growing in existing markets and those where
it is under-represented; and
- grow its franchise in the broader African continent, targeting those countries expected to show above average domestic growth and
which are well positioned to benefit from the trade and investment flows between Africa, China and India.
These strategies are executed through its portfolio of operating franchises, within a framework set by the Group and good progress
continues to be made. Below is a brief overview of progress on these strategic objectives and the financial and operational
performance of each franchise.
FNB
FNB represents FirstRands activities in the retail and commercial segments in both South Africa and the broader African continent. It is
growing its franchise strongly in both existing and new markets on the back of innovative products and delivery channels, particularly
focusing on electronic and digital platforms.
During the period under review, FNB completed an internal realignment of its successful segment focus. The original FNB segment
strategy, incorporating Mass, Consumer, Wealth, Commercial and Corporate, has been refined to focus on two larger segments -
Retail and Commercial. The African subsidiaries have been aligned under Retail and are now reported under total FNB. The Corporate
segment, previously FNB GTS, has been rebranded RMB Corporate Banking and aligned under RMB, the corporate and investment
bank, to provide an integrated and holistic offering to its large corporate customers.
FNB FINANCIAL HIGHLIGHTS
Six months ended Year ended
31 December % 30 June
R million 2012 2011 change 2012
Normalised earnings 4 023 3 360 20 6 666
Profit before tax 5 777 4 895 18 9 668
Total assets 283 860 267 999 6 268 533
Total liabilities 272 923 258 868 5 255 277
Credit loss ratio (%) 1.19 0.94 1.20
ROE (%) 36.2 34.7 35.0
FNB produced an excellent performance for the period, increasing pre-tax profits 18% and producing an ROE of 36.2%.
The business continued to benefit from its primary strategy to grow and retain core transactional accounts. This is underpinned by a
compelling value proposition (innovative products and channels at an acceptable cost to the customer) and supported by rewards
programmes, such as eBucks, SLOW lounges and fuel, data and airtime rewards. Innovations such as the Banking App, cellphone
banking and eWallet continue to attract new customers.
FNBs NII grew 22% driven by balance sheet growth and margin expansion due to the mix change to unsecured lending and the
repricing of newly-originated residential mortgages. Overall, lower growth in advances was partially offset by good deposit acquisition
(15% up). In addition, the R1.5 billion decrease in NPLs in HomeLoans positively impacted NII.
Advances increased 9%, in the main emanating from across the Retail segments in South Africa (up R10.6 billion) and Africa (up R3.7
billion). Card advances grew 14% on the back of proactive customer acquisition. Total residential mortgages increased 2% with
HomeLoans growing only 1%, reflecting FNBs strategy to write new business in the low-risk categories. Margins, however, remained
healthy. Affordable housing continued to show good growth at 17%.
FNBs focus on customer acquisition and retention underpinned the very good growth in deposits, driven by the core retail business,
the commercial segment and the African franchise.
FNBs strategy to grow core transactional banking accounts and drive activity across its electronic platforms resulted in strong
transactional volumes. NIR increased 13% mainly driven by activity in the Retail business (up 16%), with Commercial and Africa
contributing increases of 6% and 11%, respectively.
Bad debts increased 18%, which is below expectations given the growth in unsecured lending, with an exceptionally low R2 million at
Card. FNB has, however, taken the prudent decision to increase portfolio provisions, resulting in a total increase of 37%. Overall credit
quality across all portfolios is well within risk appetite and coverage ratios have increased.
FNB maintained core cost growth at 10%, reflecting its focus on ongoing efficiencies and streamlining platforms particularly in Retail.
When including investment costs, particularly in Africa (costs up 17%), total operating expenditure growth was 13%.
RMB
RMB represents the Groups activities in the corporate and investment banking segments in South Africa, the broader African continent
and India. Over the past three years, RMB has become a more client-centric business with a clear strategy anchored around a risk
appetite designed to effectively manage the trade-offs between earnings volatility, profit growth and returns.
The business continues to benefit from its focus on generating income from client-driven activities. This, coupled with steady
investment returns and a growing focus on asset management, has resulted in a higher quality and more sustainable earnings profile.
RMB made good progress with regard to its corporate banking franchise during the period under review. As mentioned in the FNB
section, FNB GTS has been rebranded RMB Corporate Banking and the alignment of this business fully under RMB better enables the
strategy to offer corporate and investment banking (CIB) solutions to the corporate and institutional client base.
RMB FINANCIAL HIGHLIGHTS
Six months ended Year ended
31 December % 30 June
R million 2012 2011 change 2012
Normalised earnings 1 969 1 455 35 3 654
Profit before tax 2 460 1 979 24 4 937
Total assets 356 390 307 762 16 331 977
Total liabilities 349 629 301 566 16 324 230
ROE (%) 22.2 18.1 23.2
RMB produced an excellent result in the six months to December 2012. Pre-tax profits increased 24% to R2 460 million, which is a
record first-half performance, and the ROE also increased to 22.2% (2011: 18.1%).
The Investment Banking Division (IBD) continued to show good growth, increasing pre-tax profits 18% to R1 506 million. Much of this
growth was balance sheet-led, with the core loan book increasing 19%, which is well above market and driven by a number of large
deals coupled with the arranging and structuring of renewable energy funding facilities.
The Global Markets division also delivered a strong performance for the period, growing profits 40% to R894 million, mainly
underpinned by client activities. Low volatility in local foreign exchange and interest rate markets softened profitability, however, African
activities continued to deliver, driven by strong performances from the subsidiaries.
Private Equity profits were up 8% to R229 million, driven mainly by equity-accounted earnings and income from investment
subsidiaries. The RMB Resources portfolio continued to experience pressure on profitability due to persistent weakness in the junior
mining sector, although losses were curtailed compared to the previous six months.
The Corporate Banking division produced a solid operational performance on the back of increased volumes.
WESBANK
WesBank represents the Groups activities in instalment finance in the retail, commercial and corporate segments. WesBanks
performance for the six months to December 2012 reflects its leading market position in instalment finance. In particular, long-standing
alliances with leading motor manufacturers and large dealer groups have generated increased market share within the required risk
profile.
WESBANK FINANCIAL HIGHLIGHTS
Six months ended Year ended
31 December % 30 June
R million 2012 2011 change 2012
Normalised earnings 1 390 1 193 17 2 599
Profit before tax 1 961 1 688 16 3 650
Total assets 132 972 112 396 18 121 610
Total liabilities 129 323 109 682 18 117 110
Credit loss ratio (%) 1.12 1.07 0.99
ROE (%) 31.8 29.8 33.9
On all key metrics WesBank delivered an excellent performance growing pre-tax profits 16% to R1 961 million, and producing an ROE
of 31.8%.
Total advances grew 17% to R129.9 billion on the back of new business growth of 19% to R39.2 billion. This was driven by the motor
and unsecured credit books, which delivered growth of 18% and 27%, respectively. Corporate new business volumes were also robust
(up 14%) and the positive turnaround at MotoNovo continued on the back of excellent volume growth.
Interest margins were maintained despite strong competition across all portfolios. The underlying retail vehicle finance advances are
also well balanced between fixed- and variable-rate. Origination is well within agreed risk thresholds and vintage performance is very
closely monitored. The credit quality in all portfolios continues to track within expectations.
Arrear levels have levelled off and further improvement is unlikely. NPLs decreased since June 2012, however, given that the credit
cycle has bottomed, this trend is likely to reverse going forward.
NIR reflected moderate growth with increased pricing pressures in the Auto card business.
Total cost growth of 5% reflects static headcount year-on-year, and includes increases in profit share payments to alliance partners and
increasing depreciation on FMR assets. Excluding these two items, year-on-year operating costs were slightly down.
STRATEGIC ISSUES
PROGRESS ON GROWTH STRATEGIES OUTSIDE SOUTH AFRICA
The Group seeks to generate incremental growth outside of its domestic market. It executes on the ground through its operating
franchises and enters each market depending on the specific growth opportunities presented. On the broader African continent the
priority countries for further investment remain Mozambique, Tanzania, Zambia, Nigeria, Ghana and kenya.
FNB continues to invest in growing its infrastructure in the new territories of Mozambique, Zambia and Tanzania and is leveraging its
South African developed products and solutions into these countries.
RMB is generating strong deal flow from its recently-established kenya representative office, and in February 2013 officially opened
RMB Nigeria. This followed the granting of an investment banking licence by the Central Bank of Nigeria, which required an initial
capital investment by FirstRand of $100 million.
RMB has been operating in Nigeria from a representative office since January 2010 and is already a meaningful player in the Nigerian
investment banking sector. The establishment of a fully-fledged investment banking operation will now allow RMB to rapidly build its
franchise, provide products and services to corporate and institutional clients, as well as attract in-country skills.
RMB Nigeria is providing the full spectrum of investment banking services to all industries, including corporate advisory, equity capital
markets, infrastructure and project finance, resource finance, structured trade and commodity finance, and fixed income, currency and
commodity services. These services are offered to large local, regional and international corporates already operating in, or entering
Nigeria and the broader west African economies.
The Group is awaiting final regulatory approvals relating to its offer for Merchant Bank Ghana (MBG) and expects to conclude this
transaction in the second half of the financial year. This will provide an excellent platform for FNB and RMB to roll out products and
services in Ghana. RMB is already generating a strong deal pipeline in-country, particularly in the property, and oil and gas sectors.
FirstRands Indian platform continues to gain traction. RMBs operations grew strongly albeit off a low base, mainly driven by the
in-country Global Markets and Investment Banking divisions. The FNB start up is also gaining momentum with the current focus on
building this platform into a profitable and scaleable operation.
PROGRESS ON INVESTMENT MANAGEMENT STRATEGY
Following the unbundling of its insurance subsidiary, Momentum, which included the asset management business, RMBAM, FirstRand
identified that investment management activities represented a significant gap in its portfolio. This gap, combined with opportunities
presented by regulatory changes and the Groups strategic objective to increase fee-generating activities, resulted in the creation of
Ashburton Investments.
The business will offer focused traditional and alternative investment solutions to individual and institutional investors and will combine
established active fund management expertise with alternative investment solutions from product providers Ashburton and RMB.
With an incremental and organic growth strategy, Ashburtons proposition is possible because it will be fully supported by the skills,
platforms and product origination capabilities of FirstRand. The Group believes it has a competitive advantage in this space given its
strong franchise in financial services, its balance sheet and a proven track record in incubating and growing greenfields businesses.
BALANCE SHEET STRENGTH
The Group believes a strong balance sheet is key to growth, particularly in periods of uncertainty.
CAPITAL
FirstRands capital management strategy is aligned to this view and to the Groups overall objective to deliver sustainable returns to
shareholders within appropriate levels of volatility. The Groups current philosophy, given the uncertain macro environment, is to
operate at the higher end of its targeted capital levels to ensure balance sheet resilience. Current targeted ranges and ratios are
summarised in the table below.
FirstRand Regulatory
% Actual Target minimum
Capital adequacy ratio 14.9 12.0 - 13.5 9.5*
Tier 1 ratio 13.4 11.0 7.0
Core Tier 1 ratio 12.5 9.5 - 11.0 5.25
* The regulatory minimum excludes the bank-specific (Pillar 2b) add-on and capital floor.
FirstRand Bank
(FRB)* Regulatory
% Actual Target minimum
Capital adequacy ratio 14.6 11.5 - 13.0 9.5**
Tier 1 ratio 12.7 10.5 7.0
Core Tier 1 ratio 11.9 9.0 - 10.5 5.25
* Reflects solo supervision, i.e. FirstRand Bank excluding foreign branches.
** The regulatory minimum excludes the bank-specific (Pillar 2b) add-on and capital floor.
With regard to the impact of Basel III, the final capital framework for banks operating in South Africa was released in October 2012 and
the impact on the Groups Core Tier 1 capital is expected to be minimal.
As part of the Groups strategy to utilise regulatory limits to optimise its capital structure, during the period under review FirstRand
replaced the FRB06 and FRB07 subordinated debt instruments with the FRB11 bond. This instrument meets the Basel III entry criteria
and will be included for grand-fathering from 1 January 2013 with full recognition envisaged once the resolution regime is implemented
in South Africa.
ASSET QUALITY
When assessing the underlying risk in the balance sheet, the Groups asset profile is dominated by a balanced advances portfolio,
which constitutes 73% of total assets. In terms of credit quality, 87% of advances are rated B upper or better. Cash and liquid assets
represent 17% of total assets, with only a small portion related to the investment and trading businesses.
PROSPECTS
The difficult macroeconomic environment is expected to continue for the rest of the financial year. Despite this, the Group expects to
continue to produce good organic growth. FNBs focus on customer acquisition and driving transactional revenues across its platforms
will drive NIR growth, as will RMBs client activities. With respect to advances growth, new business volumes in the retail lending books
are expected to moderate in the second half, a trend that is already manifesting on a rolling six-month basis. Corporate advances are
expected to remain robust at RMB.
Ongoing investment in stated growth opportunities will continue, which will result in cost pressure although strong revenue growth
should result in positive operating jaws.
DIVIDEND STRATEGY
The Group targets growth in dividend in line with sustainable earnings taking into account expansion plans. Therefore dividend cover
can vary from year to year.
BASIS OF PRESENTATION
FirstRand prepares its consolidated financial results in accordance with:
- IFRS, including IAS 34 Interim Financial Reporting;
- the Financial Reporting Guide as issued by the Accounting Practices Committee;
- JSE Listing Requirements; and
- the information as required by the Companies Act of South Africa.
The accounting policies applied are consistent with those applied in preparation of previous financial statements. A table reflecting the
restatement of prior year numbers and reasons therefore can be found below.
The Group believes normalised earnings more accurately reflect operational performance. Headline earnings are adjusted to take into
account non-operational and accounting anomalies. A detailed description of the difference between normalised and IFRS results is
provided on www.firstrand.co.za.
EVENTS AFTER THE REPORTING PERIOD
The directors are not aware of any material events, as defined in IAS 10, occurring between 31 December 2012 and the date of
authorisation of the interim results announcement.
BOARD CHANGES
Mr Jan Jonathan (Jannie) Durand was appointed to the Board as a non-executive director with effect from 23 October 2012.
Mr Durand joined the Board as a shareholder representative of Financial Securities Limited (Remgro).
Mr Grant Glenn Gelink was appointed to the Board as an independent non-executive director with effect from 1 January 2013.
CASH DIVIDEND DECLARATION
ORDINARY SHARES
The directors have declared a gross cash dividend totalling 55.0 cents per ordinary share out of income reserves for the six months
ended 31 December 2012.
Six months ended
31 December
Cents per share 2012 2011
Interim (declared 5 March 2013) 55.0 44.0
The salient dates for the interim dividend are as follows:
Last day to trade cum-dividend Wednesday 20 March 2013
Shares commence trading ex-dividend Friday 22 March 2013
Record date Thursday 28 March 2013
Payment date Tuesday 2 April 2013
Share certificates may not be dematerialised or rematerialised between Friday 22 March 2013 and Thursday 28 March 2013, both
days inclusive.
The interim dividend of 55.0 cents per share carries an STC credit of 4.27982 cents per share. Shareholders who are exempt from
Dividend Withholding Tax (DWT) will receive the full 55.0 cents per share. For shareholders who are subject to DWT, tax will be
calculated at 15% (or such lower rate if a double taxation agreement applies for foreign shareholders), after taking into account the
STC credit.
For South African shareholders who are subject to DWT the net final dividend after deducting 15% tax will be 47.39197 cents per
share.
The issued share capital on the declaration date was 5 637 941 689 ordinary shares and 45 000 000 variable rate, NCNR B
preference shares.
FirstRands income tax reference number is 9150/201/71/4.
B PREFERENCE SHARES
Dividends on the B preference shares were calculated at a rate of 75.56% of the prime lending rate of FNB, a division of FirstRand
Bank Limited.
The following dividends were declared and paid:
B preference
shares
Cents per share 2013 2012
Period
28 August 2012 - 25 February 2013 320.3
30 August 2011 - 27 February 2012 305.2
LL Dippenaar SE Nxasana BW Unser
Chairman CEO Company secretary
5 March 2013
CONSOLIDATED INCOME STATEMENT - IFRS
Six months ended Year ended
31 December 30 June
2012 2011* % change 2012
R million
Net interest income before impairment of advances 12 376 10 530 18 21 882
Impairment of advances (2 259) (1 824) 24 (5 065)
Net interest income after impairment of advances 10 117 8 706 16 16 817
Non-interest income 15 735 13 431 17 29 494
Income from operations 25 852 22 137 17 46 311
Operating expenses (15 652) (13 371) 17 (28 422)
Net income from operations 10 200 8 766 16 17 889
Share of profit of associates and joint ventures after
tax* 298 283 5 1 120
Income before tax 10 498 9 049 16 19 009
Indirect tax (462) (385) 20 (551)
Profit before direct tax 10 036 8 664 16 18 458
Direct tax* (2 462) (2 074) 19 (4 089)
Profit for the period 7 574 6 590 15 14 369
Attributable to:
Ordinary equityholders 7 019 6 067 16 13 196
NCNR preference shareholders 150 137 9 275
Equityholders of the Group 7 169 6 204 16 13 471
Non-controlling interests 405 386 5 898
Profit for the period 7 574 6 590 15 14 369
* Refer to reclassification of prior year numbers below.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - IFRS
Six months ended Year ended
31 December 30 June
R million 2012 2011 % change 2012
Profit for the period 7 574 6 590 15 14 369
OTHER COMPREHENSIVE INCOME
Items that may subsequently be classified to profit or
loss
Cash flow hedges (124) (275) (55) (420)
Available-for-sale financial assets 578 274 >100 560
Exchange differences on translating
foreign operations 323 634 (49) 599
Share of other comprehensive income of associates
after tax and non-controlling interests 24 (15) (>100) (167)
Other comprehensive income for the period before
tax 801 618 30 572
Income tax relating to components of other
comprehensive income (98) (10) >100 (41)
Other comprehensive income for the period 703 608 16 531
Total comprehensive income for the period 8 277 7 198 15 14 900
Total comprehensive income attributable to:
Ordinary equityholders 7 703 6 648 16 13 706
NCNR preference shareholders 150 137 9 275
Equityholders of the Group 7 853 6 785 16 13 981
Non-controlling interests 424 413 3 919
Total comprehensive income for the period 8 277 7 198 15 14 900
CONSOLIDATED STATEMENT OF FINANCIAL POSITION - IFRS
As at 31 December As at 30 June
R million 2012 2011* 2010* 2012
ASSETS
Cash and cash equivalents 52 695 38 545 31 511 38 363
Derivative financial instruments 56 502 57 721 51 052 52 913
Commodities 8 003 5 880 4 164 5 108
Accounts receivable 6 400 7 894 5 598 6 007
Policy loans - - 26 -
Tax asset 606 163 798 331
Advances 563 038 498 258 453 290 524 507
Investment securities and other investments 113 944 126 237 127 884 119 708
Investments in associates and joint ventures 7 040 6 663 5 819 6 869
Property and equipment 13 207 11 949 10 409 12 026
Intangible assets 1 557 1 647 1 510 1 743
Reinsurance assets 846 855 527 898
Post-employment benefit asset 8 3 - 7
Investment properties 452 203 161 215
Deferred income tax asset 524 470 451 471
Non-current assets and disposal groups
held for sale 505 5 173 2 609 599
Total assets 825 327 761 661 695 809 769 765
EQUITY AND LIABILITIES
Liabilities
Short trading positions 9 219 11 944 15 801 5 343
Derivative financial instruments 58 284 58 329 50 027 53 760
Creditors and accruals 8 788 9 764 6 077 9 086
Tax liability 289 409 319 386
Deposits 651 349 589 597 535 429 606 281
Provisions 584 523 861 592
Employee liabilities 6 671 5 936 4 993 6 933
Other liabilities 5 401 5 615 9 435 6 383
Policyholder liabilities under insurance contracts 1 543 1 373 2 007 1 517
Deferred income tax liability 1 498 2 226 2 474 1 679
Tier 2 liabilities 8 120 6 366 10 219 7 885
Liabilities directly associated with disposal groups held
for sale 83 4 480 419 113
Total liabilities 751 829 696 562 638 061 699 958
Equity
Ordinary shares 55 55 54 55
Share premium 5 387 5 167 5 194 5 216
Reserves 60 832 52 284 45 112 57 250
Capital and reserves attributable to ordinary
equityholders 66 274 57 506 50 360 62 521
NCNR preference shares 4 519 4 519 4 519 4 519
Capital and reserves attributable to equityholders of
the Group 70 793 62 025 54 879 67 040
Non-controlling interests 2 705 3 074 2 869 2 767
Total equity 73 498 65 099 57 748 69 807
Total equity and liabilities 825 327 761 661 695 809 769 765
* Refer to reclassifications of prior year numbers below.
CONSOLIDATED STATEMENT OF CASH FLOWS - IFRS
Six months ended Year ended
31 December 30 June
2012 2011# 2012
R million
Net cash flows from operating activities 11 140 6 124 16 635
Net cash generated/(utilised) from operations 9 439 1 298 (7 064)
Tax paid (3 412) (2 307) (5 331)
Net cash inflow from operating activities 17 167 5 115 4 240
Net cash outflow from investing activities (2 374) (2 364) (3 763)
Net cash (outflow)/inflow from financing activities (495) 1 335 3 464
Net increase in cash and cash equivalents from
operations 14 298 4 086 3 941
Cash and cash equivalents at the beginning of the
year 38 363 34 240 34 240
Cash and cash equivalents at the end of the year 52 661 38 326 38 181
Cash and cash equivalents acquired* - - 1
Cash and cash equivalents disposed of* (2) - (31)
Effect of exchange rate changes on cash and cash
equivalents 36 219 212
Cash and cash equivalents at the end of the year 52 695 38 545 38 363
Mandatory reserve balances included above** 14 991 13 443 13 677
* Cash and cash equivalents acquired and disposed of relate to cash balances held by subsidiaries acquired and disposed of during
the year.
** Banks are required to deposit a minimum average balance calculated monthly with the central bank, which is not available for use in
the Groups day-to-day operations. The deposit bears no or low interest. Money at short notice constitutes amounts withdrawable in 32
days or less.
# Prior year restatements due to reclassifications.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - IFRS
for the six months ended 31 December
Ordinary share capital and ordinary equityholders funds
Share
capital and General Cash flow Share-based
Share Share share risk hedge payment
R million capital premium premium reserve reserve reserve
Balance as at 1 July 2011 53 4 945 4 998 13 (451) 2 739
Movement in other reserves - - - - - 315
Ordinary dividends - - - - - -
Preference dividends - - - - - -
Transfer from/(to) reserves - - - 14 - -
Changes in ownership
interest
in subsidiaries - - - - - -
Consolidation of treasury
shares 2 222 224 - - -
Total comprehensive income
for the period - - - - (198) -
Balance as at 31 December
2011 55 5 167 5 222 27 (649) 3 054
Balance as at 1 July 2012 55 5 216 5 271 57 (753) 3 247
Issue of share capital - - - - - -
Movement in other reserves - - - - - (262)
Ordinary dividends - - - - - -
Preference dividends - - - - - -
Transfer from/(to) reserves - - - 15 - -
Changes in ownership
interest
in subsidiaries - - - - - -
Consolidation of treasury
shares - 171 171 - - -
Total comprehensive income
for the period - - - - (89) -
Vesting of share-based
payment reserve - - - - - (26)
Balance as at 31 December
2012 55 5 387 5 442 72 (842) 2 959
Ordinary share capital and ordinary equityholders funds Non-
Reserves cumulative
Foreign attributable non-
Available- currency to ordinary redeemable Non-
for-sale translation Other Retained equity- preference controlling Total
R million reserve reserve reserves earnings holders shares interests equity
Balance as at 1 July 2011 225 474 13 48 620 51 633 4 519 3 069 64 219
Movement in other reserves - - (142) 166 339 - (31) 308
Ordinary dividends - - - (6 341) (6 341) - (369) (6 710)
Preference dividends - - - - - (137) - (137)
Transfer from/(to) reserves - - - (14) - - - -
Changes in ownership
interest
in subsidiaries - - - (35) (35) - (8) (43)
Consolidation of treasury
shares - - - 40 40 - - 264
Total comprehensive income
for the period 187 606 (14) 6 067 6 648 137 413 7 198
Balance as at 31 December
2011 412 1 080 (143) 48 503 52 284 4 519 3 074 65 099
Balance as at 1 July 2012 626 1 052 (118) 53 139 57 250 4 519 2 767 69 807
Issue of share capital - - - - - - (4) (4)
Movement in other reserves - - (36) - (298) - (9) (307)
Ordinary dividends - - - (3 183) (3 183) - (412) (3 595)
Preference dividends - - - - - (150) - (150)
Transfer from/(to) reserves - - - (15) - - - -
Changes in ownership
interest
in subsidiaries - - - 13 13 - (61) (48)
Consolidation of treasury
shares - - - 49 49 - - 220
Total comprehensive income
for the period 442 311 20 7 019 7 703 150 424 8 277
Vesting of share-based
payment reserve - - - (676) (702) - - (702)
Balance as at 31 December
2012 1 068 1 363 (134) 56 346 60 832 4 519 2 705 73 498
RECLASSIFICATION OF PRIOR YEAR NUMBERS
During the reporting period the following reclassifications were made to the income statement and statement of financial position in line
with the reclassifications for the year ended 30 June 2012:
Amount
31 December 2011 as previously Amount as
R million reported restated Difference Explanation
Income statement The Groups share of profits from
Share of profit from 401 283 118 associates and joint ventures was
associates and joint stated net of the related tax expense.
ventures The comparative information was
restated in order to be comparable with
the updated presentation.
Direct tax (2 192) (2 074) (118) As per above.
Profit for the year 6 590 6 590 - No effect on profit for the year.
Statement of financial During the June 2012 financial year a
position comprehensive review of liabilities
Creditors and accruals 12 152 9 764 2 388 disclosure was undertaken by the
Deposits 595 200 589 597 5 603 Group to ensure that the presentation is
Provisions 2 965 523 2 442 consistent with industry practice and to
provide more detailed and useful
Post-retirement liabilities 2 346 - 2 346
information in the financial statements. A
Employee liabilities - 5 936 (5 936) reclassification was required to bring the
Other liabilities - 5 615 (5 615) comparative numbers in line with the
Tier 2 liabilities - 6 366 (6 366) updated presentation.
Long-term liabilities 5 048 - 5 048
Policyholder liabilities under
investment contracts 90 - 90
Note: Non-performing loans at 31 December 2011 have been restated from R18 366 million to R18 388 million.
Amount
31 December 2010 as previously Amount as
R million reported restated Difference Explanation
Statement of financial During the June 2012 financial year a
position comprehensive review of liabilities
Creditors and accruals 10 193 6 077 4 116 disclosure was undertaken by the
Deposits 543 713 535 429 8 284 Group to ensure that the presentation is
Provisions 3 254 861 2 393 consistent with industry practice and to
provide more detailed and useful
Post-retirement liabilities 2 202 - 2 202
information in the financial statements. A
Employee liabilities - 4 993 (4 993) reclassification was required to bring the
Other liabilities - 9 435 (9 435) comparative numbers in line with the
Tier 2 liabilities - 10 219 (10 219) updated presentation.
Long-term liabilities 7 489 - 7 489
Policyholder liabilities under
investment contracts 163 - 163
COMPANY INFORMATION
DIRECTORS
LL Dippenaar (Chairman), SE Nxasana (Chief executive officer), VW Bartlett, JJH Bester, MS Bomela, JP Burger (Financial director
and chief operating officer), L Crouse, JJ Durand, GG Gelink, PM Goss, NN Gwagwa, Pk Harris, WR Jardine, EG Matenge-Sebesho,
AT Nzimande, D Premnarayen (India), kB Schoeman, Rk Store, BJ van der Ross, JH van Greuning
SECRETARY AND REGISTERED OFFICE
BW Unser
4 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
PO Box 650149, Benmore 2010
Telephone: +27 11 282 1808
Telefax: +27 11 282 8088
Website: www.firstrand.co.za
JSE SPONSOR
Rand Merchant Bank (a division of FirstRand Bank Limited)
CORPORATE FINANCE
1 Merchant Place, Corner Fredman Drive and Rivonia Road
Sandton 2196
Telephone: +27 11 282 1847
Telefax: +27 11 282 4184
JSE INDEPENDENT SPONSOR
PricewaterhouseCoopers Corporate Finance (Pty) Ltd 2 Eglin Road Sunninghill Sandton 2196
NAMIBIAN SPONSOR
Simonis Storm Securities (Pty) Ltd 4 Koch Street Klein Windhoek Namibia
Transfer secretaries - South Africa
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg 2001
PO Box 61051, Marshalltown 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221
TRANSFER SECRETARIES - NAMIBIA
Transfer Secretaries (Pty) Ltd
4 Robert Mugabe Avenue, Windhoek
PO Box 2401, Windhoek, Namibia
Telephone: +264 612 27647
Telefax: +264 612 48531
5 March 2013
Date: 05/03/2013 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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