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Summarised, audited results announcement and cash dividend declaration for the year ended 30 June 2013
RMB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1987/005115/06
JSE Ordinary share code: RMH
ISIN code: ZAE000024501
Summarised, audited results announcement and cash dividend declaration for the year ended 30 June 2013
KEY HIGHLIGHTS
Normalised earnings +21% to 359.4 cents per share
Dividend +36% to 170.5 cents per share
Instrinsic value +10% to 3 831 cents per share
Introduction
This report covers the audited financial results of RMB Holdings Limited ("RMBH" or the "group") based on International Financial Reporting Standards ("IFRS")
for the year ended 30 June 2013.
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 audited 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
RMBH's sole interest is its 33.9% investment in separately listed FirstRand Limited ("FirstRand"), generally regarded as Southern Africa's 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;
- WesBank, the instalment finance business; and
- Ashburton Investments, the group's newly-established investment management business.
Operating environment
For the year ended 30 June 2013 the macroeconomic environment remained challenging with global growth as a whole remaining below the long-term trend.
The local economy was negatively impacted by shifts in both global and domestic risk dynamics. The current account deficit widened to 6.7% by 30 June 2012.
The improvement in the US and the possibility of the unwinding of the current US monetary policy stimulus negatively impacted emerging markets flows which
benefited from low US rates and for South Africa led to the weakening of the rand. Domestic GDP slowed to 1.9% year-on-year in the first quarter of 2013. This
reflected the low levels of activity in both household and business sectors. Consumer spending decreased to 2.7% and investment spending to 4.4%. This
contributed to lower credit extension, slowing of vehicles sales and a muted housing market.
Activity in construction, agriculture and extractive industries in the rest of Sub-Saharan region of Africa led to continued robust growth in the region. The growth
trend in upper-middle countries such as Namibia and Botswana was lower due to their close connection with the euro zone.
Overview of results
RMBH continued to build on the strong base of the previous year and produced excellent results for the year ended 30 June 2013.
RMBH achieved normalised earnings of R5.1 billion, an increase of 21% on the comparative period. This outcome was driven by excellent results from FirstRand
which continued to benefit from good operational performances in all franchises.
The final dividend of 104.5 (2012: 73.5) cents per share resulted in dividends for the year increasing by 36%. The higher rate of growth in dividends for the year
arises from a decision by FirstRand to reduce its dividend cover ratio and increase its dividend payout ratio.
Underlying intrinsic value
RMBH's intrinsic value reflected the growth in financial sector equity values experienced over the year.
Intrinsic value
as at 30 June
%
R million 2013 2012 change
Market value of listed interest (FirstRand) 55 269 50 416 10
Net funding (1 172) (1 327) (12)
Total intrinsic value 54 097 49 089 10
Intrinsic value per share (cents) 3 831 3 477 10
Over the 12 months to 30 June 2013 RMBH's market capitalisation increased by 13% and at that date amounted to R55.6 billion or 3 940 cents per share
(June 2012: R49.2 billion). This represented a 2.7% premium (June 2012: 0.3% premium) to RMBH's underlying intrinsic value.
At 30 June 2013 net borrowings carried at the centre amounted to R1.17 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.
Final dividend payment
In the light of the current operating environment and the organic growth plans of its franchises, FirstRand performed a comprehensive analysis of:
- the desired range of its targeted return on equity ("REO") (18% to 22%);
- its anticipated growth in risk weighted assets; and
- its desire to protect the R10 billion of capital earmarked for its expansion strategy.
FirstRand concluded that it would be appropriate and prudent to reduce its dividend cover and increase its dividend payout ratio. The appropriateness of the level
of payout will be re-evaluated on an annual basis.
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. In line with the decrease in FirstRand's dividend cover, RMBH has decided to reduce its dividend cover to a similar extent.
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 final dividend.
Having due regard to the final dividend receivable from FirstRand and applying the dividend practice outlined above, the board of RMBH has resolved to declare a
gross final dividend of 104.5 cents per share (2012: 73.5 cents). Such final dividend, together with the interim dividend of 66.0 cents, brings the total dividend
for the year to 30 June 2013 to 170.5 cents per ordinary share (2012:125.5) and is covered 2.1 times by normalised earnings per share and represents a
year-on-year increase of 36%.
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 15.675000
cents per share. Due to the STC credit of 6.32971 cents per share being utilised to reduce the liability by the shareholder, the DWT tax payable is only 14.72554
cents per share. The net dividend receivable by non-exempt shareholder is therefore 89.77446 cents per share. An exempt shareholder will receive 104.5 cents per
share.
Outlook
The group expects to continue good organic growth despite the difficult macroeconomic environment. FNB's focus on customer acquisition and drive for
transactional volumes across all platforms should contribute positively to non-interest income growth, as will RMB's client activities locally and in the rest of Africa.
Further investment in growth opportunities will place pressure on cost containment but sustained revenue should result in positive operating jaws. A further
moderation in advances, new business volumes in the vehicles and asset finance and personal loans are expected. However, corporate advances will remain
healthy.
For and on behalf of the board
GT Ferreira P Cooper
Chairman Chief Executive Officer
Sandton
11 September 2013
SUMMARISED CONSOLIDATED INCOME STATEMENT
For the year ended 30 June
2013 2012 %
R million Audited Audited change
Share of after-tax profit of associate company 5 088 4 618 10
Investment income 23 24 (4)
Net income 5 111 4 642 10
Administration expenses (41) (37) 11
Income from operations 5 070 4 605 10
Finance costs (100) (102) (2)
Profit before tax 4 970 4 503 10
Income tax expense (1) (13) (92)
Profit for the year 4 969 4 490 11
Attributable to:
Equity holders of the company 4 969 4 490 11
Profit for the year 4 969 4 490 11
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 June
2013 2012 %
R million Audited Audited change
Profit for the year 4 969 4 490 11
Other comprehensive income, after tax:
Items that may subsequently be reclassified
to profit or loss:
Share of other comprehensive
income of associate after tax and
non-controlling interests 636 178
Other comprehensive income for the year 636 178
Total comprehensive income for the year 5 605 4 668
Total comprehensive income attributable to:
Equity holders of the company 5 605 4 668 20
Total comprehensive income for the year 5 605 4 668 20
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June
2013 2012
R million Audited Audited
ASSETS
Cash and cash equivalents 12 17
Loans and receivables 53 2
Investment securities 52 32
Derivative financial instruments 11 -
Property and equipment 1 1
Investment in associate 30 490 27 149
Total assets 30 619 27 201
EQUITY
Share capital and premium 8 822 8 771
Reserves 20 496 17 051
Total equity 29 318 25 822
LIABILITIES
Financial liabilities 1 234 1 305
Derivative financial instruments 9 -
Long-term liabilities 2 4
Provisions 2 7
Trade and other payables 54 63
Total liabilities 1 301 1 379
Total equity and liabilities 30 619 27 201
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended
30 June
2013 2012
R million Audited Audited
Net cash generated from operating activities 2 120 3 059
Dividends paid (1 967) (2 895)
Net cash outflow in investment activities (16) -
Net cash outflow in financing activities (142) (162)
Net (decrease)/increase in cash and cash equivalents (5) 2
Cash and cash equivalents at the beginning of the year 17 15
Cash and cash equivalents at the end of the year 12 17
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Share
capital
and Total Total
R million premium reserves equity
Balance at
30 June 2011 8 750 14 951 23 701
Total comprehensive income - 4 668 4 668
Dividends paid - (2 897) (2 897)
Share option expense
- IFRS 2 - (5) (5)
Change in
carrying value
of associate
due to elimination
of treasury shares - 117 117
Reserve movements relating to associate - 229 229
Movement in
treasury shares 21 (12) 9
Balance at
30 June 2012
As previously reported 8 771 17 051 25 822
Total comprehensive income - 5 605 5 605
Dividends paid - (1 967) (1 967)
Change in
carrying value
of associate
due to elimination
of treasury shares - 52 52
Reserve movements relating to associate - ( 245) ( 245)
Movement in
treasury shares 51 - 51
Balance at
30 June 2013 8 822 20 496 29 318
COMPUTATION OF HEADLINE AND NORMALISED EARNINGS
For the year ended 30 June
2013 2012 %
R million Note Audited Audited change
Earnings attributable to equity holders 4 969 4 490 11
Adjustment for:
RMBH's share of adjustment made by associate:
Loss on disposal of investment securities and other investments of a capital nature 5 7
Gain on disposal of available-for-sale assets (12) (54)
Gains on disposal of investment in associates or joint ventures - (165)
Gain on disposal of investment in subsidiaries (22) (93)
Loss on the disposal of property
and equipment 27 17
Fair value on investment properties (2) (4)
Impairment of goodwill 153 40
Impairment of assets in terms of IAS 36 107 2
Gain from a bargain purchase (5) -
Other (43) 14
Tax effects of adjustments (14) 15
Non-controlling interests adjustment 7 27
Headline earnings attributable
to equity holders 5 170 4 296 20
RMBH's share of adjustments made by associate:
Treasury shares 1 14 88
Reversal of private equity subsidiaries realisation 15 -
Total return swap adjustment 30 (84)
IFRS 2 share-based payment expenses 15 27
RMBH adjustment:
RMBH shares held by associate 2 (6) (1)
Group treasury shares 3 (163) (140)
Normalised earnings attributable
to equity holders 5 075 4 186 21
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 year ended 30 June
2013 2012 %
R million Audited Audited change
Earnings attributable to equity holders 4 969 4 490 11
Headline earnings attributable to equity holders 5 170 4 296 20
Normalised earnings for the year 5 075 4 186 21
Number of shares in issue (millions) 1 412 1 412
Weighted average number of shares
in issue (millions) 1 410 1 409
Diluted weighted average number
of shares in issue (millions) 1 410 1 409
Weighted average number of shares in
issue (millions) for normalised earnings 1 412 1 412
Earnings per share (cents) 352.4 318.7 11
Diluted earnings per share (cents)* 348.2 312.1 12
Headline earnings per share (cents) 366.7 304.9 20
Diluted headline earnings per share (cents)* 362.3 298.6 21
Normalised earnings per share (cents) 359.4 296.5 21
Diluted normalised earnings per
share (cents) 359.4 296.5 21
Dividend per share (cents)
Interim 66.0 52.0 27
Final 104.5 73.5 42
Total 170.5 125.5 36
Dividend cover (relative
to headline earnings) 2.2 2.4
Dividend cover (relative
to normalised earnings) 2.1 2.4
* The diluted calculations give cognisance to the impact of the similar calculation within FirstRand. This has no impact on RMBH's weighted average
number of shares.
SEGMENTAL INFORMATION
For the year ended 30 June
%
R million 2013 2012 change
FNB 8 162 6 666 22
RMB 4 426 3 654 21
WesBank 2 852 2 599 10
Other (117) (189) (38)
Normalised earnings 15 323 12 730 20
Attributable to RMBH 5 193 4 314 20
Basis of preparation of results
The accompanying summarised results for the year ended 30 June 2013 reflect:
- 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 announcement is extracted from the audited information. The independent auditor's report does not necessarily encompass all the information contained
in this announcement. Unless the financial information is specifically stated as audited, it should be assumed it is unaudited. The announcement is not an
earnings forecast and forward looking information has not been commented on or reported on by the group's auditors. The board of directors takes full
responsibility for the preparation of this announcement and that the financial information has been correctly extracted form the underlying annual financial
statements. The complete annual financial statements were audited by PricewaterhouseCoopers Inc. Their unmodified opinion is dated 11 September 2013.
Shareholders are advised that for a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's unmodified report
together with the complete annual financial statements from RMBH's registered office, 3rd Floor, 2 Merchant Place, Corner Fredman Drive and Rivonia Road,
Sandton.
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.
FINAL DIVIDEND DECLARATION
Notice is hereby given that a gross final dividend of 104.5 cents per share payable out of income reserves was declared on 11 September 2013 in respect of the
year ended 30 June 2013.
The company has utilised Secondary Tax on Companies credits amounting to 6.32971 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 89.77446 cents per share for those shareholders who are not exempt. The Company's tax
reference number is 99950/098/71/6. 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 Friday, 4 October 2013
- Shares commence trading "ex dividend" on Monday, 7 October 2013
- The record date for the dividend payment will be Friday, 11 October 2013
- Dividend payment date Monday, 14 October 2013
No de-materialisation or re-materialisation of share certificates may be done between Monday, 7 October 2013 and Friday, 11 October 2013 (both days inclusive).
By order of the board
(Ms) EJ Marais
Company secretary
11 September 2013
ADMINISTRATION
RMB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1987/005115/06
JSE Ordinary share code: RMH
ISIN code: ZAE000024501
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 director: 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: 11/09/2013 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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