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RMB HOLDINGS LIMITED - Condensed unaudited interim financial results announcement for the six months ended 31 December 2019

Release Date: 11/03/2020 08:00
Code(s): RMH     PDF:  
 
Wrap Text
Condensed unaudited interim financial results announcement for the six months ended 31 December 2019

RMB HOLDINGS LIMITED 
(RMH)
(Incorporated in the Republic of South Africa)
Registration number:
1987/005115/06
JSE ordinary share code: RMH
ISIN code: ZAE000024501

CONDENSED UNAUDITED INTERIM FINANCIAL RESULTS ANNOUNCEMENT
for the six months ended 31 December 2019

About RMH

RMH was listed on the JSE in 1992 as a vehicle for shareholders to co-invest with the founders of Rand Merchant Bank (RMB). The group has established
numerous successful businesses, including FirstRand, Discovery and OUTsurance. RMH is proud of its role in growing these businesses. It also provided
independence to these companies, whilst retaining significant shareholdings as the group's continued strategic input is valued by the respective
underlying management teams.

In 2011, RMH's insurance interests (Discovery, Momentum Metropolitan and OUTsurance) were separately listed as Rand Merchant Investment Holdings
Limited (RMI). In 2016, RMH expanded its investment strategy to include a property investment business, comprising scalable, entrepreneur-led businesses
with proven track records in property.



Investment portfolio

FirstRand
RMH is the founding and largest shareholder in FirstRand, one of Southern Africa's leading financial services groups, with a 34% stake.
FirstRand's portfolio of integrated financial services businesses comprises FNB, RMB, WesBank, Aldermore and Ashburton Investments. FirstRand operates in
South Africa, certain markets in sub-Saharan Africa and the UK and offers a universal set of transactional, lending, investment and insurance products and
services.

FirstRand is listed separately and had a market capitalisation of R352.2 billion as at 31 December 2019 (2018: R367.8 billion).



RMH Property

RMH's property investments are housed in a majority-owned subsidiary, RMH Property Holdings Proprietary Limited (RMH Property), managed by a
dedicated investment team.

The intrinsic value created in RMH Property amounted to R672 million (2018: R971 million) (down 31%).



Restructuring

On 19 November 2019, RMH advised shareholders that, following a review of the RMH investment portfolio, the board resolved to restructure the
company's portfolio of assets and liabilities.

In terms of the restructuring, it is the board's intention to distribute the FirstRand shareholding to RMH shareholders and to monetise RMH Property in an
orderly manner over time. The distribution will be after full settlement of funding obligations and, on appropriate capitalisation of RMH post unbundling.
This will be done subject to the customary conditions precedent, including obtaining the required shareholder and regulatory approvals.

On the same date, Remgro also announced its intention to distribute, in full or in part, its exposure to both RMH and FirstRand to Remgro shareholders.
Remgro and RMH are currently busy finalising the detailed mechanics and transaction steps to give effect to the respective restructurings.

RMH shareholders are referred to a paper entitled "Additional Tax Policy and Administrative Adjustments" published by National Treasury on 26 February
2020 which proposes changes to section 46 of the Income Tax Act in relation to unbundling transactions. We have considered these proposed
amendments, and, having taken advice, do not expect these to impact the implementation of the proposed restructurings.

As previously communicated, a detailed announcement setting out the terms and conditions of the restructuring will be published before the end of the
first quarter 2020.



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.

In its efforts to implement the restructuring in the most efficient manner, RMH will not pay an interim cash dividend for the period ended 31 December
2019. The value of the cash dividend received from FirstRand will instead be incorporated into the economic value to be distributed to shareholders
pursuant to the proposed restructuring.

We expect to complete the restructuring before the end of our current financial year. The restructuring announcement will detail the treatment of the
interim cash dividend.



Enduring value created

Despite the macroeconomic challenges and other pressures during the second half of 2019, RMH, on the back of a resilient performance by FirstRand,
produced satisfactory results.

- Normalised earnings increased 3% to R4.6 billion (2018: R4.4 billion).
- Normalised earnings per share amounted to 325.1 cents per share (2018: 314.9 cents per share).
- RMH's core investment, FirstRand, produced a solid performance despite the challenging economic climate, increasing normalised earnings by 5% (2018:
7%) and delivering a return on equity of 21.2% (2018: 22.3%). FirstRand franchises, FNB, RMB and Aldermore produced good operating results, with WesBank
adversely affected by the macroeconomic climate.
- RMH Property's net intrinsic value created amounted to R672 million (2018: R971 million). This was mainly driven by the increase in net asset value of
Atterbury Europe, which was as a result of a Euro 100 million subscription by Pareto Limited for 25% of Atterbury Europe on
17 July 2019. The increase in the value of Atterbury Europe was off-set by the goodwill written down on Atterbury SA as a result of a general rerating of
property shares. The goodwill paid on the acquisition of Atterbury SA has now been fully impaired. RMH Property delivered normalised profit of R10 million
(2018: R15 million).
- RMH's market capitalisation increased slightly from R111.4 billion to R113.6 billion period-on-period.



Underlying intrinsic value

At 31 December 2019, RMH's market capitalisation was R113.6 billion (2018: R111.4 billion) at 8 044 cents (2018: 7 890 cents) per share. This equates to a
5.1% (2018: 11.2%) discount to RMH's underlying intrinsic value. Net asset value per share increased 7% to 3 604.7
(2018: 3 363.7) cents per share.

                                                                                               As at
                                                                                            31 December
                                                                                                                                            As at
R million                                                                                   2019            2018      % change       30 June 2019

Market value of listed interest (FirstRand)                                              120 038         125 314            (4)           130 960
Net intrinsic value of RMH Property                                                          672             971           (31)               748

 Gross value                                                                               3 425           3 641                            3 350
 Property funding                                                                         (2 753)         (2 670)                          (2 602)

Other net funding                                                                           (996)           (897)           11               (914)

TOTAL INTRINSIC VALUE                                                                    119 713         125 388            (5)           130 794

Intrinsic value per share (cents)                                                        8 480.0         8 882.0            (5)           9 265.0

Net asset value per share (cents)                                                        3 604.7         3 363.7             7            3 492.4




Computation of per share information
                                                                                      
                                                                                      For the six months ended 31                    For the year
                                                                                                December                                    ended
                                                                                                                                                
R million                                                                                    2019          2018       % change       30 June 2019

Revenue                                                                                     5 028         5 582            (10)            10 417
Earnings attributable to equity holders                                                     4 566         5 355            (15)             9 978
Headline earnings attributable to equity holders                                            4 583         4 448              3              9 390
Normalised earnings attributable to equity holders                                          4 591         4 447              3              9 394
Net asset value                                                                            50 899        47 495              7             49 303

Number of shares in issue (millions)                                                        1 412         1 412              -              1 412

Earnings per share (cents)                                                                  323.4         379.5            (15)             706.9
Diluted earnings per share (cents)                                                          323.4         379.5            (15)             706.9
Headline earnings per share (cents)                                                         324.6         315.2              3              665.2
Diluted headline earnings per share (cents)                                                 324.6         315.2              3              665.2
Normalised earnings per share (cents)                                                       325.1         314.9              3              665.4
Diluted normalised earnings per share (cents)                                               325.1         314.9              3              665.4
Net asset value per share (cents)                                                         3 604.7       3 363.7              7            3 492.4


Short-form announcement

This short-form announcement is the responsibility of the directors and is only a summary of the information in the full announcement and does not
contain full or complete details. The full announcement was released on the JSE's Stock Exchange News Service (SENS) on 11 March 2020 and can be
found on the company's website at www.rmh.co.za or at https://senspdf.jse.co.za/documents/2020/jse/isse/RMH/interims20.pdf. The full announcement
is available for inspection at the company's registered office and copies may also be requested at the company's registered office and at the offices of
the sponsor, at no charge, during office hours. Any investment decision should be based on the full announcement published on SENS and on the
company's website.


Directors

JJ Durand (Chairman), HL Bosman (CEO and FD), JP Burger, P Cooper, (Ms) SEN de Bruyn, LL Dippenaar, PK Harris, (Ms) A Kekana, P Lagerstrom, (Ms) MM
Mahlare, MM Morobe, RT Mupita, O Phetwe and JA Teeger



Alternate directors: F Knoetze, DA Frankel and UH Lucht



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

11 March 2020

Date: 11-03-2020 08:00:00
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