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Summarised, unaudited interim results and cash dividend declaration
for the six months ended 31 December 2012
RMB Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1987/005115/06)
JSE ordinary share code: RMH ISIN code: ZAE000024501
Summarised, unaudited interim results announcement and cash dividend declaration
for the six months ended 31 December 2012
KEY HIGHLIGHTS
An excellent outcome achieved in a challenging environment.
GT Ferreira
Normalised earnings
+26%
to 168.7 cents
Dividend
+27%
to 66.0 cents
Intrinsic value
+51%
to 4 101 cents
INTRODUCTION
This report covers the unaudited interim financial results of RMB Holdings Limited (RMBH 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 we believe this most
accurately reflects underlying economic performance. The normalised earnings have been derived from the unaudited
IFRS financial results. A reconciliation of the adjustments made to derive normalised earnings is presented in the
accompanying schedules.
Ellen Marais, CA(SA), prepared these financial results under the supervision of Peter Cooper, CA(SA).
RMBH AT A GLANCE
After the re-structuring in March 2011, RMBHs sole interest is its 33.9% investment in separately listed FirstRand
Limited (FirstRand), generally regarded as Southern Africas pre-eminent financial services group.
The FirstRand group comprises a portfolio of leading financial services franchises, including:
- First National Bank (FNB), the retail and commercial bank;
- Rand Merchant Bank (RMB), the corporate and investment bank; and
- WesBank, the instalment finance business.
OPERATING ENVIRONMENT
For the six months to December 2012 the South African macro and socio economic environment remained
challenging:
- Initially, potential global macroeconomic concerns such as the breakup of the euro zone, a hard landing in China
and the possibility of significant fiscal contraction in the USA weighed heavily on sentiment.
- As these subsided, South African issues, including labour market action, growing domestic economic
imbalances and sovereign rating downgrades introduced a new set of uncertainties.
Our economy showed signs of slowing in the early part of the period, prompting the SARB to lower the repo rate by a
further 50 bps. Industrial action also exacerbated the downward pressure on economic activity. This, and reports
indicating that South Africas current account deficit had widened markedly, 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.
Notwithstanding such factors, 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, economies exposed to resources performed better as international commodities
prices remained buoyant.
OVERVIEW OF RESULTS
RMBH continued to build on the strong base of the previous year and produced excellent results for the six months
to 31 December 2012.
RMBH achieved normalised earnings per share of 168.7 cents (R2.4 billion), an increase of 26% on the previous
period. This outcome was driven by excellent results from FirstRand which continued to benefit from strong
performances in all franchises.
The interim dividend of 66.0 cents per share increased 27% compared to the comparative period.
SOURCES OF INCOME
FirstRands well-diversified income stream is drawn from the full spectrum of banking services and is predominantly
sourced from Southern Africa.
UNDERLYING INTRINSIC VALUE
RMBHs intrinsic value reflected the strong growth in financial sector equity values experienced over the period:
As at 31 December 30 June
R million 2012 2011 % change 2012
Market value of interest in FirstRand 59 223 39 622 49 50 416
Net borrowings (1 320) (1 372) (4) (1 327)
Total intrinsic value 57 903 38 250 51 49 089
Intrinsic value per share (cents) 4 101 2 709 51 3 477
Over the 12 months to 31 December 2012 RMBHs market capitalisation increased by 49% and at that date
amounted to R57.5 billion or 4 070 cents per share (December 2011: R38.5 billion). This represented a 0.7% discount
(December 2011: 0.8% premium) to RMBHs underlying intrinsic value.
At 31 December 2012 net borrowings carried at the centre amounted to R1.32 billion of which the core term funding
comprised R1.18 billion fixed rate preference shares due for redemption on 6 December 2017, paying dividends at 7.08%
per annum, six monthly in arrears.
INTERIM DIVIDEND PAYMENT
RMBH follows a stated practice of returning net dividends (after providing for funding and operational costs incurred
at the centre) received by it in the ordinary course of business to shareholders.
The board is of the opinion that RMBH is adequately capitalised at this stage and that the company will be able to
meet its obligations in the foreseeable future after payment of the interim dividend.
Having due regard to the interim dividend receivable from FirstRand and applying the dividend practice outlined
above, the board of RMBH has resolved to declare a gross interim dividend of 66.0 cents per share (2011: 52.0 cents).
Such dividend is covered 2.6 times by normalised earnings per share and represents a year on year increase of
27%.
Dividend Withholding Tax (DWT) at a rate of 15% is levied on dividends paid to shareholders who are not exempt
from DWT. RMBH has accumulated Secondary Tax Credits (STC) that have been used to reduce the DWT liability
arising. A non-exempt shareholder would have needed to pay DWT of 9.90000 cents per share. Due to the STC
credit of 5.79905 cents per share being utilised to reduce the liability by the shareholder, the DWT tax payable is
only 9.03014 cents per share, a saving of 0.86969 cents per share. The net dividend receivable by a non-exempt
shareholder is therefore 56.96986 cents per share. An exempt shareholder would receive 66.0 cents per share.
OUTLOOK
The difficult macroeconomic environment is expected to continue for the rest of the financial year ending 30 June 2013.
Despite this, the FirstRand group expects to continue to produce good organic growth.
- FNBs focus on customer acquisition and driving transactional revenues across its platforms will drive non-interest
revenue (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.
FirstRands ongoing investment in stated growth opportunities will continue, which will result in cost pressure, although
strong revenue growth should result in positive operating efficiencies.
From a shareholder perspective we believe that all the strategic imperatives required to enable the group to continue to
deliver real growth in earnings are in place.
The information provided above is not an earnings forecast and has not been reviewed and reported on by the
companys external auditors.
BOARD CHANGES
During the period Niall Carroll resigned from the board. As a consequence, his alternate, Thabo Mokgatlha also retired
from the board. We thank both of them for their valued input during the period that they served on the RMBH board and
wish them well. Royal Bafokeng Holdings recently proposed Albertinah Kekana as its representative on the board. We
extend a warm welcome to her as well as to her alternate, Obakeng Phetwe and look forward to working with them in
future.
For and on behalf of the board
GT Ferreira P Cooper
Chairman Chief Executive Officer
Sandton
6 March 2013
INTERIM CASH DIVIDEND DECLARATION
Notice is hereby given that a gross interim dividend of 66.0 cents per share payable out of income reserves was declared
on 6 March 2013 in respect of the six months ended 31 December 2012.
The company has utilised Secondary Tax on Companies credits amounting to 5.79905 cents per share. The balance of
the dividend will be subject to Dividend Withholding Tax at a rate of 15%, which will result in a net dividend of 56.96986
cents per share for those shareholders who are not exempt. The companys tax reference number is 9950/098/71/6. Its
issued share capital at the declaration date is 1 411 703 218 ordinary shares and 11 800 redeemable preference shares.
Shareholders attention is drawn to the following important dates:
- Last day to trade in order to participate in this dividend Wednesday, 20 March 2013
- Shares commence trading ex dividend on Friday, 22 March 2013
- The record date for the dividend payment will be Thursday, 28 March 2013
- Dividend payment date Tuesday, 2 April 2013
No de-materialisation or re-materialisation of share certificates may be done between Friday, 22 March 2013 and
Thursday, 28 March 2013 (both days inclusive).
By order of the board
EJ Marais (Ms)
Company secretary
6 March 2013
SUMMARISED CONSOLIDATED INCOME STATEMENT
For the
For the six months ended year ended
31 December 30 June
Unaudited Audited
R million 2012 2011 % change 2012
Share of after tax results from associate company 2 456 2 124 16 4 618
Investment income 17 12 42 24
Net income 2 473 2 136 16 4 642
Administration expenses (27) (16) 69 (37)
Results of operating activities 2 446 2 120 15 4 605
Net finance costs (56) (51) 10 (102)
Profit before tax 2 390 2 069 16 4 503
Tax (10) (100) (13)
Profit for the period 2 390 2 059 16 4 490
Attributable to:
Equity holders of RMBH 2 390 2 059 16 4 490
Profit for the period 2 390 2 059 16 4 490
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the
For the six months ended year ended
31 December 30 June
Unaudited Audited
R million 2012 2011 % change 2012
Profit for the period 2 390 2 059 16 4 490
Other comprehensive income, after tax:
Items that may be reclassified to profit or loss
Share of other comprehensive income of associates after
tax and non-controlling interests 239 203 18 178
Other comprehensive income for the period 239 203 18 178
Total comprehensive income for the period 2 629 2 262 16 4 668
Total comprehensive income attributable to:
Equity holders of RMBH 2 629 2 262 16 4 668
Total comprehensive income for the period 2 629 2 262 16 4 668
COMPUTATION OF HEADLINE AND NORMALISED EARNINGS
For the
For the six months ended year ended
31 December 30 June
Unaudited Audited
R million Note 2012 2011 % change 2012
Earnings attributable to equity holders 2 390 2 059 16 4 490
Adjustment for:
Share of adjustment made by associates:
Profit on sale of shares in subsidiary and
associate (3) (168) (258)
Profit on sale of available-for-sale financial
assets (13) (54)
Impairment of assets in terms of IAS 36 89 5 2
Loss on disposal of investment securities 1 7
Impairment of goodwill 1 6 40
Other 8 27
Total tax effect of adjustments (24) 8 15
Total of non-controlling interests in adjustments 1 2 27
Headline earnings attributable to equity holders 2 454 1 908 29 4 296
RMBHs share of adjustments made by
associates:
Treasury shares 1 16 36 88
Reversal of private equity realisation 2
Other (19) (84)
IFRS 2 share based expenses 8 10 27
Adjustment for:
RMBH shares held for client trading activities 2 (2) (1)
Group treasury shares 3 (77) (63) (140)
Normalised earnings attributable to equity holders 2 382 1 891 26 4 186
Notes:
1. Deconsolidation of treasury shares and deemed treasury shares by FirstRand:
- FirstRand shares acquired to hedge liabilities under staff share schemes; and
- FirstRand shares held for client trading.
2. RMBH shares held for client trading activities by FirstRand.
3. Adjustment to reflect earnings impact based on actual RMBH shareholding in FirstRand
i.e. reflecting treasury shares as if they are non-controlling interests.
COMPUTATION OF EARNINGS PER SHARE
For the six months For the
ended year ended
31 December 30 June
Unaudited Audited
R million 2012 2011 % change 2012
Earnings attributable to equity holders 2 390 2 059 16 4 490
Headline earnings attributable to equity holders 2 454 1 908 29 4 296
Normalised earnings 2 382 1 891 26 4 186
Net asset value 27 148 24 038 13 25 822
Number of shares in issue (millions) 1 412 1 412 1 412
Weighted average number of shares in issue (millions) 1 410 1 407 1 409
Weighted average number of shares in issue (millions) for
normalised earnings 1 412 1 411 1 412
Earnings per share (cents) 169.5 146.3 16 318.7
Diluted earnings per share (cents)* 168.8 143.7 17 312.1
Headline earnings per share (cents) 174.0 135.6 28 304.9
Diluted headline earnings per share (cents)* 173.3 133.3 30 298.6
Normalised earnings per share (cents) 168.7 134.0 26 296.5
Diluted normalised earnings per share (cents) 168.7 134.0 26 296.5
Net asset value per share (cents) 1 922.7 1 702.4 13 1 828.7
Dividend per share (cents)
Interim 66.0 52.0 27 52.0
Final 73.5
Total 66.0 52.0 27 125.5
Dividend cover (relative to headline earnings) 2.6 2.6 2.4
Dividend cover (relative to normalised earnings) 2.6 2.6 2.4
* The diluted calculations give cognisance to the impact of the similar calculation within FirstRand. This has no
impact on RMBHs weighted average number of shares.
SEGMENTAL INFORMATION
For the six months For the
ended year ended
31 December 30 June
Unaudited Audited
R million 2012 2011 % change 2012
FNB 1 363 1 139 20 2 259
RMB 667 494 35 1 238
WesBank 471 404 17 881
Other (55) (81) (32) (64)
FirstRand contribution to RMBH 2 446 1 956 25 4 314
Funding and central costs (64) (65) (2) (128)
Normalised earnings 2 382 1 891 26 4 186
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 30 June
Unaudited Audited
R million 2012 2011 2012
Assets
Cash and cash equivalents 11 15 17
Investment securities 37 18 32
Loans and receivables 6 27 2
Property and equipment 1 2 1
Investment in associates 28 468 25 410 27 149
Receiver of revenue 2 4
Total assets 28 525 25 476 27 201
Equity
Share capital and premium 8 790 8 775 8 771
Reserves 18 358 15 263 17 051
Total equity 27 148 24 038 25 822
Liabilities
Financial liabilities 1 330 1 369 1 305
Long-term liabilities 4 10 4
Provisions 2 13 7
Trade and other payables 41 46 63
Total liabilities 1 377 1 438 1 379
Total equity and liabilities 28 525 25 476 27 201
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
For the
For the six months ended year ended
31 December 30 June
Unaudited Audited
R million 2012 2011 2012
Cash available from operating activities 1 005 2 204 3 059
Dividends paid (1 037) (2 162) (2 895)
Net increase/(decrease) in financing activities 26 (42) (162)
Net (decrease)/increase in cash and cash equivalents (6) 2
Cash and cash equivalents at the beginning of the period 17 15 15
Cash and cash equivalents at the end of the period 11 15 17
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Total
Share equity Non-
capital and Total holders controlling Total
R million premium reserves funds interests equity
Balance at 30 June 2011 (audited)
As previously reported 8 750 14 951 23 701 23 701
Total comprehensive income for the period 2 262 2 262 2 262
Dividend paid (2 164) (2 164) (2 164)
Share based payment 1 1 1
Change in carrying value of associate due
to elimination of treasury shares 15 15 15
Movement in treasury shares 25 25 25
Reserve movements relating to associates 198 198 198
Balance at 31 December 2011 (unaudited) 8 775 15 263 24 038 24 038
Balance at 30 June 2012 (audited) 8 771 17 051 25 822 25 822
Total comprehensive income for the period 2 629 2 629 2 629
Dividend paid (1 037) (1 037) (1 037)
Change in carrying value of associate due
to elimination of treasury shares 43 43 43
Movement in treasury shares 19 19 19
Reserve movements relating to associates (328) (328) (328)
Balance at 31 December 2012 (unaudited) 8 790 18 358 27 148 27 148
BASIS OF PREPARATION OF RESULTS
The accompanying summarised results for the six months ended 31 December 2012 reflects:
- the operations of RMBH and its proportionate interest in its associate, FirstRand, which has been equity accounted.
The report is prepared in accordance with:
- International Financial Reporting Standards (IFRS), including IAS 34: Interim Financial Reporting;
- The requirements of the South African Companies Act, Act 71 of 2008; and
- The Listings Requirements of the JSE Limited.
These summarised results incorporate accounting policies that are consistent with those used in preparing the
financial results for the year ended 30 June 2012.
The results are unaudited and have been prepared under the supervision of P Cooper, CA(SA).
RMBH believes normalised earnings more accurately reflect operational performance. Headline earnings are
adjusted to take into account the following non-operational and accounting anomalies for segmental reporting
purposes:
1. Deconsolidation of treasury shares and deemed treasury shares by FirstRand to account for:
- FirstRand shares acquired to hedge liabilities under staff share schemes; and
- FirstRand shares held for client trading activities.
2. RMBH shares held for client trading activities by FirstRand.
3. Adjustment to reflect earnings impact based on actual RMBH shareholding in FirstRand i.e. reflecting treasury
shares as if they are non-controlling interests.
ADMINISTRATION
Directors
GT Ferreira (Chairman), P Cooper (CEO), L Crouse, NDJ Carroll (resigned 31 October 2012), LL Dippenaar,
JW Dreyer, JJ Durand (appointed 18 September 2012), PM Goss, PK Harris, (Ms) A Kekana (appointed 6 February 2013),
KC Shubane and (Ms) SEN Sebotsa.
Alternate directors: TV Mokgatlha (resigned 31 October 2012), O Phetwe (appointed 6 February 2013).
Secretary and registered office
(Ms) EJ Marais BCom(Hons), CA(SA)
Physical address:
3rd Floor, 2 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton 2196
Postal address:
PO Box 786273, Sandton, 2146 Telephone: +27 11 282 8000 Telefax: +27 11 282 4210
Web address:
www.rmbh.co.za
Sponsor
(in terms of JSE Limited Listings Requirements)
Rand Merchant Bank (a division of FirstRand Bank Limited)
Physical address:
1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196
Transfer secretaries
Computershare Investor Services (Pty) Limited
Physical address:
Ground Floor, 70 Marshall Street, Johannesburg, 2001
Postal address:
PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221
Date: 06/03/2013 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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