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Audited summary final financial results announcement and cash dividend declaration for the year ended 30 June 2018
RMB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1987/005115/06
JSE Ordinary share code: RMH
ISIN code: ZAE000024501
Audited summary final financial results announcement and cash dividend declaration for the year ended 30 June 2018
Basis of preparation
This report covers the audited summary final financial results of RMB Holdings Limited (RMH), based on International Financial Reporting Standards (IFRS), for
the year ended 30 June 2018.
The primary results and accompanying commentary are presented on a normalised basis as we believe this most accurately reflects the group's
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. Refer below.
Ellen Marais, CA(SA), prepared these financial results under the supervision of Herman Bosman, LLM CFA.
The directors take full responsibility and confirm that this information has been correctly extracted from the audited annual financial statements from which
the summary consolidated financial statements were derived.
A more comprehensive announcement is available on our website, www.rmh.co.za.
For the basis of presentation, refer below.
About RMH
RMH positions itself as a value-adding, stable and aspirational shareholder.
Who we are
RMH is an investment holding company with a proud track record of investing in disruptive and entrepreneurial financial services businesses. This
performance has been achieved by partnering with exceptional management teams for the long term.
Since its listing in 1992, RMH has provided shareholders with a vehicle to co-invest with the founders of FirstRand Limited (FirstRand). In 2011, RMH's insurance
interests were separately listed as Rand Merchant Investment Holdings Limited (RMI). RMH has since expanded its investment strategy to include a property
investment business, comprising scalable entrepreneur-led businesses with proven track records in managing and building out property portfolios.
What we do
RMH is the biggest shareholder in FirstRand, South Africa's largest banking group, with a 34% stake. RMH is the founding shareholder of FirstRand and views
this as its core asset. RMH is represented on all the relevant strategic and governance forums and provides FirstRand with a responsible and stable
shareholder of reference. FirstRand represents an exciting opportunity to build new businesses on the existing platform.
On a selective basis, RMH invests in other banking and property businesses.
Investment portfolio
FirstRand
FirstRand is generally regarded as one of Southern Africa's leading financial services groups. It is listed separately and has a market capitalisation of R358.4
billion as at 30 June 2018 (2017: R264.5 billion).
RMH Property
RMH's property investments are housed in a wholly-owned subsidiary, RMH Property Holdings Proprietary Limited (RMH Property), managed by a dedicated
investment team led by Brian Roberts. During the financial year, RMH Property expanded its core partnership by acquiring a direct interest in Atterbury
Europe, a logistical strategic alignment for the business, providing an opportunity for geographic diversification, and access to a promising European
market. During the financial year, the intrinsic value of RMH Property increased from R899 million to R2 067 million.
Investment policy
RMH invests in businesses that can deliver superior earnings, dividend growth and sustained long-term capital growth. We specifically target businesses and
industries complementary to our current portfolio.
Dividend policy
RMH has a stated policy of returning net dividends (after providing for funding and operational costs incurred at the centre) received in the ordinary
course of business to shareholders.
Our strategy
RMH is defined by its value-adding shareholding in FirstRand. This core asset provides RMH with exposure across the universal Southern African financial
services landscape and should deliver a sound balance between capital and dividend returns.
It is RMH's intention to retain its stake in FirstRand in its current structure as it holds structuring and financing value. It is recognised that RMH's market value
may trade at a discount to its underlying value. However, the value of the long-term optionality the structure provides, and has provided over the past
decades, outweighs this. RMH will continue to dynamically evaluate its position.
The investment in RMH Property will be evaluated in a similar way. Currently, the business is still in its formative phase and building critical mass as a
potentially independent property investment group.
Delivering enduring value
Our objective is to create a portfolio of businesses which are market-leaders and can deliver sustainable earnings, an attractive dividend yield and capital
growth.
We will deliver on our strategy by way of:
Diversification
We are constantly evaluating opportunities to expand the services and reach of our existing investees or add new investments, thereby creating more
enduring value.
During the year, we supported FirstRand in its geographic diversification into the UK market with the acquisition of Aldermore for £1.1 billion.
Optimisation
We focus on continuously improving the value our investees provide in order to create better enduring value for our shareholders.
This includes responding to market demands, such as FirstRand obtaining a licence to market short-term insurance to its large existing customer base.
Modernisation
We are well aware of renewal in our industries and will encourage our investees to be future-ready.
The true value RMH creates is measured in terms of capital growth, which reflects the growth in the underlying value of our investments. For a detailed
analysis of RMH's underlying intrinsic value, refer to the table below.
We measure short-term performance in terms of normalised earnings, which excludes non-operational items and accounting anomalies from headline
earnings. For the detailed calculation of normalised earnings in respect of the current and prior year, refer below.
It is RMH's objective to provide shareholders with a consistent annual dividend flow. In extraordinary circumstances, this can be complemented by other
distributions in the form of special dividends or the unbundling of investments to shareholders.
Our strategy is based on enduring values
The strong, enduring values instilled by our founders and board and embraced by management provide us with the tools to deliver on our strategy.
Performance and outlook
External environment
South Africa's new president, Cyril Ramaphosa, took office in February and promised to revive the economy, clamp down on corruption and attract $100
billion in new investments. The change in the political environment marked an initial positive turning point for business and consumer confidence. Rating
agencies, acknowledging the favourable political developments, have refrained from further downgrades since November 2017.
The South African economy is experiencing:
- a more stable political environment;
- stable inflation and interest rates;
- an unemployment rate which remains high; and
- a lack of growth.
Despite the improved political environment, policy uncertainties remain, such as the financial turnaround of state enterprises and the revival of the mining
sector. In addition, potential land reform policy, allowing land expropriation without compensation, raises uncertainty about property rights, which could
lead to a significant decline in investment into South Africa.
FNB SA economic forecasts
2012 2013 2014 2015 2016 2017 2018F 2019F 2020F
% Real GDP growth 2.2 2.5 1.7 1.3 0.6 1.3 1.6 1.5 1.4
% Unemployment 24.9 24.7 25.1 25.4 26.7 27.5 27.9* 28.3* 28.6*
% CPI average 5.6 5.8 6.1 4.6 6.3 5.3 4.9 5.1 5.2
Rand/Dollar average 8.21 9.65 10.85 12.78 14.70 13.30 12.20 12.60 13.20
* International Monetary Fund forecast
Enduring value created
RMH produced satisfactory results for the year ended 30 June 2018:
- Normalised earnings increased 8% to R8.8 billion (2017: R8.2 billion). Normalised earnings per share amounted to 624.4 cents per share
(2017: 578.5 cents per share);
- RMH's core investment, FirstRand, produced a good performance despite the challenging economic climate, increasing normalised earnings
by 8% (2017: 7%) and delivering a return on equity (ROE) of 23.0% (2017: 23.4%). FirstRand franchises, FNB, RMB and newly acquired Aldermore produced
resilient operating results, with WesBank feeling the macroeconomic pressure;
- RMH Property more than doubled its intrinsic value and delivered a normalised profit of R16 million;
- Market capitalisation increased by 29% to R107 billion; and
- Dividends for the year distributed to shareholders increased by 7% to 351 cents (2017: 327.0 cents).
Sources of income
FirstRand's well-diversified income stream is drawn from the full spectrum of banking services and is predominantly sourced from South Africa.
RMH's normalised earnings are made up as follows:
For the year ended
30 June
R million 2018 2017 % change
FNB 14 877 12 801 16
RMB 7 327 6 918 6
WesBank 3 626 3 996 (9)
Aldermore 276 - -
Other* 305 756 (60)
FIRSTRAND NORMALISED EARNINGS 26 411 24 471 8
Attributable to RMH 8 995 8 334 8
RMH Property 16 8 >100
RMH's funding and administrative costs (196) (176) 11
RMH NORMALISED EARNINGS 8 815 8 166 8
* Other is the total of FCC including group treasury, preference dividend paid on perpetual preference shares issued
by FirstRand and the dividend on the contingent convertible securities. It further includes capital endowment, the
impact of accounting mismatches, interest rate management and foreign currency liquidity management.
Normalised earnings has shown compound growth of 11% per annum over the past five years.
Underlying intrinsic value
During the year to 30 June 2018, RMH's market capitalisation increased by 29.1%. At year-end, it amounted to R107.0 billion (June 2017: R82.9 billion) or
7 579 cents per share (June 2017: 5 875 cents). This represents a 12.1% discount (June 2017: 7.3% discount) to RMH's underlying intrinsic value.
As at 30 June
R million 2018 2017 % change
Market value of listed interest (FirstRand) 122 058 90 077 36
Book value of RMH Property 2 067 899 >100
Net funding (2 267) (1 945) 17
TOTAL INTRINSIC VALUE 121 858 89 031 37
Intrinsic value per share (cents) 8 632.0 6 306.6 37
Final dividend payment
The board of RMH has declared a gross final dividend of 183 cents per share (2017: 174.0 cents), bringing the total dividend for the year ending 30 June
2018 to 351 cents per ordinary share (2017: 327.0 cents). The dividend is covered 1.8 times (2017: 1.8 times) by normalised earnings per share and
represents a year-on-year increase of 7%.
Board changes
Since announcing our interim results:
- James Teeger was appointed as a member of the audit and risk committee, which is now chaired by Sonja de Bruyn;
- Murphy Morobe is the new chairperson of the social, ethics and transformation committee, replacing Sonja de Bruyn, who remains a member; and
- Murphy Morobe is also the new lead independent director and chairperson of the directors' affairs and governance committee.
Outlook and future value creation
Management will focus on the following in the year ahead:
Diversify
Diversification of income stream and distribution of assets
On a selective basis, RMH may consider investments in businesses where partnerships with entrepreneurial and industry-disruptive management teams can
add value to RMH and its shareholders.
Investments with the following attributes will be of particular interest:
- banking, property and related industries;
- the ability to form a partnership between the investment, RMH and FirstRand;
- unlisted;
- digitally-oriented;
- the ability and possibility of RMH to add value; and
- relevance in terms of the size of the enterprise and its shareholding.
In addition, the dedicated RMH Property team will continue to identify opportunities for the both the core and specialist partnerships.
Optimise
Optimisation of our established investments
RMH will dynamically assess whether investments, other than FirstRand, are optimally housed in RMH. In the past this assessment has led to the listing of
Discovery, the merger of Momentum and Metropolitan, the listing of MMI and the unbundling of RMI.
Modernisation
RMH will continue to support its investee companies in being or becoming future-ready.
We remain confident that our clear strategy, in conjunction with a solid investment portfolio, underpinned by unwavering values, will allow RMH to continue
delivering on its primary objective of creating enduring value for shareholders.
For and on behalf of the board
JJ Durand HL Bosman
Chairman Chief executive officer
Sandton
7 September 2018
Final dividend declaration
Notice is hereby given that a gross final dividend of 183 cents per share, payable out of income reserves, was declared on 7 September 2018 in respect of
the year ended 30 June 2018.
The dividend will be subject to Dividend Withholding Tax at a rate of 20%, which will result in a net dividend of 146.40 cents per share for those shareholders
who are not exempt. The company's tax reference number is 9950/098/71/6. Its issued share capital at the declaration date comprises 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: Tuesday, 2 October 2018
- Shares commence trading ex-dividend on Wednesday, 3 October 2018
- Record date: Friday, 5 October 2018
- Dividend payment date: Monday, 8 October 2018
No dematerialisation or rematerialisation of share certificates may be done between Wednesday, 3 October 2018 and Friday, 5 October 2018 (both days
inclusive).
By order of the board
(Ms) EJ Marais
Company secretary
7 September 2018
Financial review
The dominant part of RMH's income is its share in the after-tax profits of FirstRand, amounting to R9 043 million (2017: R8 371 million).
Audited summary consolidated income statement
For the year ended
30 June
R million 2018 2017 % change
Revenue 26 16
Share of after-tax profit of associate companies 8 812 8 374 5
Fee income 18 3
Net fair value (loss)/gain on financial assets and liabilities (45) 6
Net income 8 811 8 399 5
Administration expenses (56) (40) 40
Income from operations 8 755 8 359 5
Finance costs (173) (152) 14
Profit before tax 8 582 8 207 5
Income tax expense (22) (5) >100
PROFIT FOR THE YEAR 8 560 8 202 4
Audited summary consolidated statement of comprehensive income
For the year ended
30 June
R million 2018 2017 % change
Profit for the year 8 560 8 202 4
Other comprehensive income, after tax:
Items that may be reclassified to profit or loss
Share of other comprehensive income/(loss) of associate after tax and
non-controlling interests* 250 (742)
Available-for-sale financial assets 21 (14)
Profits/(losses) arising during the year 27 (18)
Deferred income tax (6) 4
Exchange difference on translating foreign operations 94 -
Items that may not subsequently be reclassified to profit or loss
Share of other comprehensive income of associate after tax and
non-controlling interests 13 58
Other comprehensive income/(loss) 378 (698)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 8 938 7 504 19
* Large movement due to translation of FirstRand's foreign operations.
Audited computation of headline earnings
For the year ended
30 June
R million 2018 2017 % change
Earnings attributable to equity holders 8 560 8 202 4
Adjusted for:
RMH's share of adjustments made by FirstRand
Gain on disposal of investment securities and other investments of a
capital nature (10) (1)
Loss due to the fair value adjustment of a non-current asset held for sale - 32
Loss/(gain) on disposal of available-for-sale assets 31 (18)
Transfer to foreign currency translation reserve 37 -
Loss on disposal of investments in non-private equity associates - 2
Impairment of non-private equity associates - 1
Gain on disposal of investments in subsidiaries (33) (619)
(Gain)/loss on disposal of property and equipment (21) 5
Fair value movement on investment properties (10) -
Impairment of goodwill 4 41
Impairment of assets in terms of IAS 36 14 126
Gain from a bargain purchase (14) -
Other (10) -
Tax effects of adjustments - 9
Non-controlling interests adjustments - 146
RMH's own adjustments
(Profit)/loss on deemed sale of associate due to change in effective
shareholding (5) 1
Impairment of assets in terms of IAS 36 61 -
Impairment of associate 247 -
HEADLINE EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS 8 851 7 927 12
Computation of normalised earnings
RMH regards normalised earnings as the appropriate basis to evaluate business performance as it eliminates the impact of non-recurring items and
accounting anomalies.
For the year ended
30 June
R million 2018 2017 % change
Headline earnings attributable to equity holders 8 851 7 927
RMH's share of adjustments made by FirstRand
TRS and IFRS 2 liability remeasurement (18) (21)
Treasury shares 6 (4)
IAS 19 adjustment (37) (40)
Private equity subsidiary realisations 16 307
Adjusted for
Group treasury shares(1) (3) (3)
NORMALISED EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS 8 815 8 166 8
(1) Adjustment to reflect earnings impact based on actual RMH shareholding in FirstRand i.e. reflecting treasury
shares as if they are non-controlling interests.
Audited computation of per share information
For the year ended
30 June
R million 2018 2017 % change
Earnings attributable to equity holders 8 560 8 202 4
Headline earnings attributable to equity holders 8 851 7 927 12
Normalised earnings attributable to equity holders 8 815 8 166 8
Net asset value 46 323 41 381 12
Number of shares in issue (millions) 1 412 1 412 -
Weighted average number of shares in issue (millions) 1 411 1 411 -
Diluted weighted average number of shares in issue (millions) 1 411 1 411 -
Weighted average number of shares in issue (millions) for normalised
earnings 1 412 1 412 -
Earnings per share (cents) 606.5 581.2 4
Diluted earnings per share (cents) 606.5 581.2 4
Headline earnings per share (cents) 627.1 561.7 12
Diluted headline earnings per share (cents) 627.1 561.7 12
Normalised earnings per share (cents) 624.4 578.5 8
Diluted normalised earnings per share (cents) 624.4 578.5 8
Net asset value per share (cents) 3 281.4 2 931.3 12
Audited dividend per share
For the year ended
30 June
cents 2018 2017 % change
Dividend per share
Interim 168.0 153.0 10
Final 183.0 174.0 5
TOTAL DIVIDEND PER SHARE 351.0 327.0 7
Dividend cover (relative to headline earnings) 1.8 1.7
Dividend cover (relative to normalised earnings) 1.8 1.8
Audited summary consolidated statement of financial position
The investment in associates increased with RMH's share of after-tax profits of R8 812 million (2017: R8 374 million) and RMH's share of associates' other
reserves of R1 186 million (2017: R731 million). This was offset by dividends received of R5 082 million (2017: R4 528 million).
For the year ended
30 June
R million 2018 2017
ASSETS
Cash and cash equivalents 43 39
Loans and receivables 57 114
Investment securities 523 334
Taxation receivable 4 5
Derivative financial instruments 55 8
Deferred tax asset - 4
Investment in associates 48 590 43 130
TOTAL ASSETS 49 272 43 634
EQUITY
Share capital and premium 8 825 8 825
Reserves 37 498 32 556
TOTAL EQUITY 46 323 41 381
LIABILITIES
Trade and other payables 232 81
Financial liabilities 2 692 2 154
Derivative financial instruments - 6
Long-term liabilities - 1
Deferred tax liability 25 11
TOTAL LIABILITIES 2 949 2 253
TOTAL EQUITY AND LIABILITIES 49 272 43 634
Audited summary consolidated statement of cash flows
For the year ended
30 June
R million 2018 2017
Cash flow from operating activities
Cash generated from operations 5 201 4 404
Income tax paid (8) (7)
NET CASH GENERATED FROM OPERATING ACTIVITIES 5 193 4 397
Cash flow from investing activities
Investment in associates (397) (699)
Additions to investments securities (157) (141)
Additions to derivatives (11) -
NET CASH USED IN INVESTMENT ACTIVITIES (565) (840)
Cash flow from financing activities
Preference shares issued 372 -
Borrowings withdrawn 5 957
Borrowings repaid - (21)
Interest paid (5) (64)
Dividends paid on preference shares in issue (168) (88)
Dividends paid to equity holders (4 828) (4 320)
NET CASH OUTFLOW IN FINANCING ACTIVITIES (4 624) (3 536)
Net increase in cash and cash equivalents 4 21
Cash and cash equivalents at the beginning of the year 39 18
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 43 39
Audited summary statement of changes in equity
Foreign Total
Share Equity currency equity
capital and accounted Available-for- translation Other Retained holders'
R million premium reserves sale reserve reserve reserves earnings funds
Balance as at 1 July 2016 8 825 26 245 - - 333 2 841 38 244
Total comprehensive income for the year - (684) (14) - - 8 202 7 504
Dividends paid - - - - - (4 320) (4 320)
Income of associates retained - 3 722 - - - (3 722) -
Reserve movements relating to associates - 76 - - - (123) (47)
BALANCE AS AT 30 JUNE 2017 8 825 29 359 (14) - 333 2 878 41 381
Balance as at 1 July 2017 8 825 29 359 (14) - 333 2 878 41 381
Total comprehensive income for the year - 263 21 94 - 8 560 8 938
Dividends paid - - - - - (4 828) (4 828)
Income of associates retained - 3 971 - - - (3 971) -
Reserve movements relating to associates - 832 - - - - 832
BALANCE AS AT 30 JUNE 2018 8 825 34 425 7 94 333 2 639 46 323
Basis of presentation of results
This report is prepared in accordance with:
- The framework concepts and the recognition and measurement requirements of International Reporting Standards (IFRS), including interpretations issued
by the IFRS Interpretations Committee;
- Financial Reporting Pronouncements as issued by Financial Reporting Standards Council;
- SAICA Financial Reporting Guide as issued by the Accounting Practices Committee;
- As a minimum, the information required by IAS 34 Interim Financial Reporting; and
- The requirements of the South African Companies Act, Act 71 of 2008, applicable to summary financial statements.
The directors take full responsibility and confirm that this information has been correctly extracted from the audited annual financial statements from which
the summary consolidated financial statements were derived.
Accounting policies
These summary results incorporate accounting policies that are consistent with those used in preparing the financial results for the year ended 30 June
2017.
The audited consolidated financial statements, from which these summary consolidated financial statements are extracted, are prepared in accordance
with the going concern principle under the historical cost basis, as modified by the fair value accounting of certain assets and liabilities, where required or
permitted by IFRS.
Amendments to IAS 7 Statement of Cash Flows (IAS 7) and IAS 12 Income Taxes (IAS 12) became effective in the current year. These amendments have not
had an impact on the group's reported earnings, financial position or reserves, or a material impact on the accounting policies.
The amendments to IAS 7 introduce additional disclosures in the statement of cash flows that will enable the users of the financial statements to evaluate
changes in liabilities arising from financing activities. This amendment has been applied retrospectively and comparative information has been presented
in line with the amended disclosure requirements. The amendment to IAS 12 relates to the recognition of a deferred tax asset for unrealised losses on debt
instruments that are measured at fair value for accounting purposes but considered at cost for tax purposes. The group is accounting for deferred tax on
these assets in line with the amendments. The adoption of these amendments has no impact on the group.
No other new or amended IFRS became effective for the year ended 30 June 2018 that impacted the group's reported earnings, financial position or
reserves, or the accounting policies.
IFRS 15 and IFRS 9
RMH has reviewed its financial assets and liabilities and is expecting the following impact from the adoption of the new standard on 1 July 2018:
Equity securities currently classified as available-for-sale will going forward be classified as fair value through profit and loss.
Debt securities currently carried at amortised cost will be continued to be carried at amortised cost.
The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses
as is the case under IAS 39. It applies to financial assets classified at amortised cost. This will not have an impact on RMH's direct instruments but will have a
significant impact on RMH's associate, FirstRand. The current indication received from FirstRand is that the impact will be between 47 bps to 57 bps on the
CET I Capital of FirstRand.
The implementation of IFRS 9 will not have a significant impact on RMH Property associates.
The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent
of the group's disclosures about its financial instruments, particularly in the year of the adoption of the new standard.
The standard must be applied for financial years commencing on or after 1 January 2018. The group will apply the new rules retrospectively from 1 July
2018, with the practical expedients permitted under the standard. Comparatives for 2018 will not be restated and adjustment will be made as an opening
adjustment on 1 July 2018.
Normalised results
RMH believes normalised earnings more accurately reflect operational performance.
Headline earnings in terms of Circular 4/2018 Headline Earnings are adjusted to take into account the following non-operational and accounting
anomalies:
1. RMH's portion of normalised adjustment made by its associate, FirstRand Limited, which have a financial impact:
- the Total Return Swap, which is an economic hedge against the cash-settled share-based payment;
- IFRS 2 share-based payment expense in terms of the BEE transaction;
- FirstRand shares held for client trading activities;
- IAS 19 measurement of plan asset; and
- the consolidation of private equity subsidiaries which is excluded from the Rule 1 exemption of Circular 4/2018, Headline Earnings per Share.
2. RMH shares held for client trading activities by FirstRand's addition, in terms of IAS 28 Investments in Associates, upstream and downstream profits are
eliminated when equity accounting is applied, and, in terms of IAS 32, profits or losses cannot be recognised on an entity's own equity instruments. For
the income statement, the RMH's portion of the fair value change in RMH shares by FirstRand is, therefore, deducted from equity-accounted earnings
and the investment recognised using the equity-accounted method.
3. Adjustment to reflect earnings impact based on actual RMH shareholding in FirstRand based on actual number of shares issued by FirstRand.
Normalised earnings presented in these summary financial results constitutes pro forma financial information. The pro forma financial information is the
responsibility of the directors and is presented for illustrative purposes. Because of its nature, the pro forma financial information may not fairly present
RMH's financial position, changes in equity, results of operations or cash flows. An assurance report has been prepared and issued by our auditor,
PricewaterhouseCoopers Inc., on the pro forma financial information included in this report. It is available at the registered office of RMH.
Auditor's report
The summary consolidated financial statements for the year ended 30 June 2018 contained in this booklet have been audited by PricewaterhouseCoopers
Inc., who expressed an unmodified opinion thereon in terms of ISA 810 (revised).
The auditor also expressed an unmodified opinion on the annual financial statements from which the summary consolidated financial statements were
derived. Unless the financial information is specifically stated as audited, it should be assumed to be unaudited.
A copy of the auditor's report on the annual consolidated financial statements is available for inspection at RMH's registered office, 2 Merchant Place,
corner Fredman Drive and Rivonia Road, Sandton, together with the financial statements identified in the respective auditor's reports.
The auditor's report does not necessarily report on all of the information contained in these condensed consolidated financial statements. Shareholders
are therefore advised that, in order to obtain a full understanding of the nature of the auditor's engagement, they should review the auditor's report
together with the accompanying financial information from the issuer's registered office.
The forward-looking information has not been commented or reported on by the group's external auditor. RMH's board of directors take full responsibility
for the preparation of this booklet.
Audited contingencies and commitments
as at 30 June
R million 2018 2017
Contingencies and commitments
Guarantees 2 823 1 603
BALANCE AT THE END OF THE YEAR 2 823 1 603
Subsequent events
Subsequent to the year end, FirstRand concluded a transaction with Discovery, through the issuance of preference shares, for the ultimate transfer and
disposal of its remaining effective 25.01% interest in Discovery Card and Discovery Bank, respectively. The consideration of this transaction is R1.8 billion,
which together with the preference share issuance of R1.3 billion in 2016, results in a total value unlock for FirstRand shareholders of approximately R3 billion.
This transaction is expected to be concluded during the financial year ending 30 June 2019.
At 30 June 2018, FNB includes Discovery Card advances with a gross value of R4.3 billion which will also be transferred at carrying value.
SEGMENTAL REPORT
FCC and RMH
R million FNB RMB WesBank Aldermore other FirstRand Property Other RMH
Year ended 30 June 2018
Investment income - - - - - - 18 8 26
Share of after-tax profit of associates 5 068 2 496 1 235 94 150 9 043 (236) 5 8 812
Fee income - - - - - - - 18 18
Net fair value loss on financial assets - - - - - - (53) 8 (45)
Net income 5 068 2 496 1 235 94 150 9 043 (271) 39 8 811
Administration expenses - - - - - - (10) (46) (56)
Income from operations 5 068 2 496 1 235 94 150 9 043 (281) (7) 8 755
Finance costs - - - - - - (5) (168) (173)
Profit before tax 5 068 2 496 1 235 94 150 9 043 (286) (175) 8 582
Income tax expense - - - - - - (6) (16) (22)
PROFIT FOR THE YEAR 5 068 2 496 1 235 94 150 9 043 (292) (191) 8 560
Headline earnings 5 068 2 496 1 235 94 137 9 030 16 (195) 8 851
Normalised earnings 5 067 2 495 1 235 94 104 8 995 16 (196) 8 815
As at 30 June 2018
Investment in associates - - - - - 46 557 2 033 - 48 590
Other assets - - - - - - 397 285 682
TOTAL ASSETS - - - - - 46 557 2 430 285 49 272
TOTAL LIABILITIES - - - - - - 363 2 586 2 949
FCC and RMH
R million FNB RMB WesBank other FirstRand Property Other RMH
Year ended 30 June 2017
Investment income - - - - - 6 10 16
Share of after-tax profit of associates 4 361 2 356 1 361 293 8 371 4 (1) 8 374
Fee income - - - - - - 3 3
Net fair value loss on financial assets - - - - - - 6 6
Net income 4 361 2 356 1 361 293 8 371 10 18 8 399
Administration expenses - - - - - - (40) (40)
Income from operations 4 361 2 356 1 361 293 8 371 10 (22) 8 359
Finance costs - - - - - (2) (150) (152)
Profit before tax 4 361 2 356 1 361 293 8 371 8 (172) 8 207
Income tax expense - - - - - - (5) (5)
PROFIT FOR THE YEAR 4 361 2 356 1 361 293 8 371 8 (177) 8 202
Headline earnings 4 361 2 356 1 361 17 8 095 8 (176) 7 927
Normalised earnings 4 360 2 356 1 361 257 8 334 8 (176) 8 166
As at 30 June 2017
Investment in associates - - - - 42 427 703 - 43 130
Other assets - - - - - 244 260 504
TOTAL ASSETS - - - - 42 427 947 260 43 634
TOTAL LIABILITIES - - - - - 48 2 205 2 253
GEOGRAPHICAL SEGMENTS
United
R million South Africa Kingdom Europe RMH
Year ended 30 June 2018
Share of after-tax profit of associates 8 674 94 44 8 812
Profit for the year 8 422 94 44 8 560
As at 30 June 2018
Investment in associates 47 181 - 1 409 48 590
In the prior year, RMH did not have multiple geographic segments as both FirstRand and RMH Property were viewed as South African entities with the
majority of their underlying businesses also in South Africa.
Administration
Directors
JJ Durand (Chairman), HL Bosman (CEO), JP Burger, P Cooper, (Ms) SEN De Bruyn, LL Dippenaar, PK Harris, (Ms) A Kekana, P Lagerström, (Ms) MM Mahlare,
MM Morobe, R Mupita and JA Teeger
Alternate directors: DA Frankel, F Knoetze and O Phetwe
Secretary and registered office
(Ms) EJ Marais
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.rmh.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 Proprietary Limited
Physical address: Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Postal address: PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221
Friday, 7 September 2018
Date: 07/09/2018 11:17:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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