Wrap Text
Announcement of RMH condensed unaudited interim results, cash dividend and board changes
RMB HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1987/005115/06
JSE Ordinary share code: RMH
ISIN code: ZAE000024501
ANNOUNCEMENT OF RMH CONDENSED UNAUDITED INTERIM RESULTS, CASH DIVIDEND DECLARATION AND BOARD CHANGES
Basis of preparation
This report covers the unaudited interim financial results of RMB Holdings Limited (RMH), based on International Financial Reporting Standards (IFRS), for the
six months ended 31 December 2017.
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 unaudited, 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.
Value created for the six months ended 31 December 2017
(comparatives at 31 December 2016)
Net asset value up 8% to R42.7 billion (2016: R39.5 billion)
Intrinsic value of portfolio up 27% to R127.5 billion (2016: R100.5 billion)
Market capitalisation up 19% to R111.8 billion (2016: R93.7 billion)
Net income up 3% to R4.2 billion (2016: R4.0 billion)
Headline earnings up 6% to R4.2 billion (2016: R4.0 billion)
Normalised earnings up 7% to R4.2 billion (2016: R3.9 billion)
Dividend per share up 10% to 168 cents (2016: 153 cents)
ABOUT RMH
RMH is a top 40 JSE-listed investment holding company with a 34% share in FirstRand and 100% of RMH property.
Leading South African businessmen, GT Ferreira, Laurie Dippenaar and Paul Harris, founded RMH's forerunner 41 years ago.
Since its listing in 1992, RMH has provided shareholders with a vehicle to co-invest with the founders of FirstRand. In 2011, the insurance interests 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 managing and building out property portfolios.
Investment portfolio
RMH's main interest is its 34% investment in separately-listed FirstRand Limited (FirstRand), generally regarded as southern Africa's pre-eminent financial
services group, with a market capitalisation of R377.2 billion at 31 December 2017 (2016: R298.3 billion).
The extension of the investment strategy into property involved the acquisition of a 27.5% interest in Atterbury Property Holdings Proprietary Limited
(Atterbury), a 34.1 % interest in Propertuity Development Proprietary Limited (Propertuity), an urban renewal business and 40% of Genesis Properties Three
Proprietary Limited (Genesis Properties), a mezzanine debt and equity funding business, to form RMH Property. A management ownership participation
scheme with maximum participation of 10% in RMH Property has been put in place.
Investment policy
RMH invests in businesses that can deliver superior earnings, dividend growth and sustained long-term capital growth. We specifically target the wider
financial services industry 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. Funding costs are expected to increase during the build phase of RMH Property.
End of an era
GT Ferreira has been RMH's chairman since inception and a driving force behind the group's value creation and relentless pursuit of high values.
He has been involved in the financial services sector since graduating with commerce degrees from the University of Stellenbosch. In a stellar career, he
was a driving force in building significant businesses and wealth.
In April he will turn 70 and, with that, reach the point of compulsory retirement.
Joining him are Pat Goss, Jan Dreyer and Khehla Shubane. These directors have a combined service of more than 130 years. RMH would like to thank
these directors for their wisdom, innovation and commitment to RMH. Their leadership has created a legacy of leading financial services businesses such
as FirstRand, Discovery, MMI Holdings and OUTsurance. The combined value of these businesses is R566 billion. RMH achieved shareholder returns of more
than 25% per annum since 1992.
Whilst GT will be sorely missed by his peers, his legacy shall remain.
A set of unique values has been instilled in RMH with the most noticeable the ethos of an owner-manager culture. These values will ensure that the set
strategy will be implemented with integrity and discipline to create further value for stakeholders.
PERFORMANCE OUTLOOK
External environment
The South African economy has already experienced a positive impact as a result of the improved domestic political environment, most notably in the
strengthening in the local currency and improved business confidence. That, together with the broad-based upturn in the global economy, has improved
the prospects for GDP growth. However, a number of major hurdles still remain.
Whilst the economy is expected to recover moderately in 2018 and 2019 on the back of higher prices for commodities, growth will remain constrained if
structural imbalances in the economy are not addressed. This is further hampered by high profile corporate failures and critical water shortages in various
parts of the country.
FNB SA Economic Forecasts
2012 2013 2014 2015 2016 2017F 2018F 2019F
% Real GDP growth 2.2 2.5 1.7 1.3 0.3 0.9 1.6 1.7
% Unemployment 24.9 24.7 25.1 25.4 26.7 26.7
% CPI average 5.6 5.8 6.1 4.6 6.3 5.3 4.5 5.5
Rand/Dollar average 8.2 9.6 10.8 12.8 14.7 13.3 12.8 13.4
Despite the challenges associated with the political uncertainty and other pressures during the last half of 2017, RMH, on the back of a resilient
performance by FirstRand, produced satisfactory results, in keeping with its commitment to long-term value creation.
Value created
RMH produced satisfactory results for the six months ended 31 December 2017:
- Normalised earnings increased 7% to R4.2 billion (2016: R3.9 billion).
Normalised earnings per share amounted to 295.2 cents per share (2016: 275.4 cents per share).
RMH's core investment, FirstRand, produced a resilient performance despite the challenging economic climate, increasing normalised earnings by 7%
(2016:7%) and delivering a return on equity (ROE) of 22.5% (2016:22.9%). FirstRand franchises, FNB and RMB, produced strong operating results as
WesBank came under pressure. The results of RMH Property were negatively impacted as the property sector faced strong headwinds.
- Market capitalisation
increased by 19% to R111.8 billion (2016: R93.7 billion).
- Dividends for the period distributed to shareholders increased by 10% to 168.0 cents per share (2016: 153.0 cents per share).
Sources of income
FirstRand's well-diversified income stream provides a universal set of transactional, lending, investment and insurance products and services. RMH's
normalised earnings, predominantly sourced from South Africa, are made up as follows:
For the six months ended
31 December For the
% year ended
R million 2017 2016 change 30 June 2017
FNB 7 160 6 409 12 12 801
RMB 3 139 2 821 11 6 902
WesBank 1 915 1 944 (1) 3 996
Other* 247 472 (48) 772
FirstRand normalised earnings 12 461 11 646 7 24 471
Attributable to RMH 4 243 3 965 7 8 334
RMH Property (15) 7 >(100) 8
Centre costs (60) (84) (30) (176)
RMH normalised earnings 4 168 3 888 7 8 166
* Other is the total of FCC including group treasury and preference dividend paid on perpetual preference shares
issued by FirstRand. It further includes capital endowment, the impact of accounting mismatches, interest rate
management and foreign currency liquidity management.
Underlying intrinsic value
At 31 December 2017, RMH's market capitalisation had increased by 19% year-on-year. At that date, it amounted to R111.8 billion (2016: R93.7 billion) or
7 917 cents (2016: 6 640 cents) per share. This represented a 14.1% discount (2016: 7.2% discount) to RMH's underlying intrinsic value. Net asset value per
share increased 8% to 3 022.4 cents (2016: 2 796.4 cents) per share.
For the six months ended
31 December For the
% year ended
R million 2017 2016 change 30 June 2017
Market value of listed interest (FirstRand) 128 601 101 578 27 90 077
Book value of RMH Property* 743 922 (19) 899
Net funding* (1 876) (1 990) (6) (1 546)
Total intrinsic value 127 468 100 510 27 89 430
Intrinsic value per share (cents) 9 029.4 7 119.8 27 6 334.9
Net asset value per share (cents) 3 022.4 2 796.4 8 2 931.4
* Recalculated on a consistent basis. Stated after impairment of associates totalling R174 million.
Discount to underlying intrinsic value
Since the unbundling of RMI in 2011, RMH has traded at an average 1.1% discount compared to the underlying intrinsic value of its investments. Over the
last three and five years respectively, RMH has traded at an average discount of 3.6% and 5.9%. It is widely accepted and empirically observed that
holding companies typically trade at a discount due to frictional costs such as central head-office costs and tax.
Notwithstanding the 70% increase in RMH’s share price since 1 August 2017 (up to 5 March 2018), RMH has traded at an average 11.6% discount to
its intrinsic value since 1 August 2017, peaking at 17.4% on 15 February 2018. The board believes that the recent widening of the discount is not a structural
deviation from historical performance and can be attributed to changes in liquidity and volatility patterns on the JSE.
Shareholders are referred to the document entitled, "Reflections on RMH's recent trading in relation to underlying discount to intrinsic value" on
the RMH website, www.rmh.co.za for a more detailed assessment.
Interim dividend payment
The board of RMH has resolved to declare a gross interim dividend of 168.0 cents per share (2016: 153.0 cents). The dividend is covered 1.8 times (2016:
1.8 times) by normalised earnings per share and represents a year-on-year increase of 10% (2016: 8%).
Update on RMH'S strategy
RMH's aim is to be a value-adding active enabler of leadership and innovation in banking and property. 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 pursue opportunities in
the changing financial services landscape which meet our stringent criteria and strong values.
- Diversification
We are constantly evaluating opportunities to expand the services of our existing investees or add new investments, thereby creating more value.
- Optimisation
We focus on continuously improving the value our investees provide in order to create better value for our shareholders.
- Modernisation
We are well aware of renewal in our industries and will acquire proven businesses or invest in start-ups with special opportunities and drivers, which can
create new value.
RMH has consistently measured its performance in terms of normalised earnings, which adjusts headline earnings to take into account non-operational
items and accounting anomalies.
For the detailed calculation of normalised earnings in respect of the current and prior period, refer below.
The true value created 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 intrinsic and net asset value, refer to the underlying intrinsic value table above.
RMH measures the success of its active, value-adding portfolio management strategy to its stakeholders in the form of investments that can deliver
superior earnings, dividend growth and sustained long-term capital growth.
The above does not preclude RMH from considering opportunities to sell and achieve a premium for FirstRand or parts thereof or an unbundling, as the
case may be, at the appropriate time.
Outlook and future value creation
Management will focus on the following in the period ahead:
- Diversify
Diversification of income stream and distribution of assets
Management will focus on the newly-created property business in identifying opportunities for both the core portfolio and specialist portfolio.
It will evaluate expanding RMH's geographic footprint further, either independently and/or through the existing portfolio.
- Optimise
Optimisation of our established investments
Management will continue its strategic dialogue and activity across the portfolio. It will assist with creating leadership stability and succession planning.
- Modernise
Modernisation
RMH will continue to identify new businesses, technologies and industry trends to complement RMH and its investee companies.
RMH was instrumental in FirstRand's acquisition of Aldermore plc (see below). This demonstrates the value of RMH as a strategic shareholder and delivers
on the strategy of diversification, optimisation and modernisation.
We remain confident that both our clear strategy, in conjunction with the solid investment portfolio and underpinned by unwavering values, will allow RMH
to continue delivering on its primary objective of creating sustainable, long-term value for shareholders.
For and on behalf of the board
GT Ferreira JJ Durand HL Bosman
Chairman Deputy chairman Chief executive
Sandton
7 March 2018
INTERIM DIVIDEND DECLARATION
Notice is hereby given that a gross interim dividend of 168.0 cents per share, payable out of income reserves, was declared on 7 March 2018 in respect of
the six months ended 31 December 2017.
The dividend will be subject to Dividend Withholding Tax at a rate of 20%, which will result in a net dividend of 134.4 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 Monday, 26 March 2018
- Shares commence trading ex-dividend on Tuesday, 27 March 2018
- The record date for the dividend payment will be Thursday, 29 March 2018
- Dividend payment date Tuesday, 3 April 2018
No dematerialisation or rematerialisation of share certificates may be done between Tuesday, 27 March 2018 and Thursday, 29 March 2018 (both days
inclusive).
By order of the board
(Ms) EJ Marais
Company secretary
7 March 2018
BOARD CHANGES
In addition to GT Ferreira (chairman), Jan Dreyer and Khehla Shubane also retire effective 31 March 2018. Pat Goss (lead independent) will retire on 10
April 2018. A new lead independent will be announced in due course.
In their stead, RMH welcomes the following new independent non-executive directors and alternate on 31 March 2018:
- Mamongae Mahlare MBA (Harvard) BSc (Chemical Engineering), managing director of Illovo Sugar S.A, who was previously employed by Coca Cola
Beverages South Africa, SABMiller and Bain & Company;
- Ralph Mupita MBA BSc (Engineering), chief financial officer of MTN and past chief executive officer of Old Mutual Emerging Markets;
- James Teeger BCom CA(SA), leads the investment activities of the Oppenheimer family. He was previously a director of De Beers and spent 12 years at
RMB, first as the head of property finance and then as co-head of structured finance; and
- David Frankel BSc (Elecrtical Engineer) MBA (Harvard), alternate to James Teeger, managing partner and co-founder of Founder Collective. He was
co-founder and chief executive officer of Internet Solutions on the board of Dimension Data plc. He has served on the board of RMB since 2007.
Jannie Durand will become chairman of the board. He is a long-serving non-executive director on RMH's board and was previously appointed deputy
chairman in anticipation of GT Ferreira's retirement.
EVENTS SUBSEQUENT TO REPORTING PERIOD
During January 2018, RMH Property acquired a further 43.8% interest in Atterbury Europe, in addition to its indirect interest through Atterbury. This
transaction was concluded in a phased approach and completed by the middle of February 2018. The transaction was financed by the issue of a
combination of cumulative, redeemable preference shares and notes under RMH's recently established debt programme.
FINANCIAL REVIEW
The dominant part of RMH's income is its share in the after-tax profits of FirstRand, amounting to R4 342 million (2016: R4 049 million).
Condensed consolidated income statement
For the six months
ended For the
31 December year ended
% 30 June
R million 2017 2016 change 2017
Revenue 11 6 16
Share of after-tax profit of associates 4 183 4 073 8 374
Fee income 3 - 3
Net fair value gain on financial assets and liabilities 17 27 6
Net income 4 214 4 106 3 8 399
Administration expenses (25) (35) (29) (40)
Income from operations 4 189 4 071 3 8 359
Finance costs (80) (73) 10 (152)
Profit before tax 4 109 3 998 3 8 207
Income tax expense (12) (8) 50 (5)
PROFIT FOR THE PERIOD 4 097 3 990 3 8 202
Attributable to:
Equity holders of the company 4 097 3 990 3 8 202
PROFIT FOR THE PERIOD 4 097 3 990 3 8 202
Condensed consolidated statement of comprehensive income
For the six months
ended For the
31 December year ended
% 30 June
R million 2017 2016 change 2017
Profit for the period 4 097 3 990 3 8 202
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 (332) (543) (742)
Available-for-sale financial assets 23 (13) (14)
Profit/(loss) arising during the period 29 (16) (18)
Deferred income tax (6) 3 4
Items that may not subsequently be reclassified to profit
or loss
Share of other comprehensive income of associates after
tax and non-controlling interests (15) (28) 58
Other comprehensive income for the period (324) (584) (45) (698)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3 773 3 406 11 7 504
Total comprehensive income attributable to:
Equity holders of the company 3 773 3 406 11 7 504
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 3 773 3 406 11 7 504
Computation of headline earnings
For the six months
ended For the
31 December year ended
% 30 June
R million 2017 2016 change 2017
Earnings attributable to equity holders 4 097 3 990 3 8 202
Adjusted for:
RMH's share of adjustments made by FirstRand:
Gain on disposal of investment securities and
other investments of capital nature (11) - (1)
Loss due to the fair value adjustment of a
non-current asset held for sale - - 32
Gain on disposal of available-for-sale assets (7) (22) (18)
Loss on disposal of investments in non-private
equity associates - 1 2
Impairment of non-private equity associates - - 1
(Gain)/loss on disposal of investments in subsidiaries (33) 2 (619)
(Gain)/loss on disposal of property and equipment (9) 3 5
Fair value movement on investment properties (1) - -
Impairment of goodwill - - 41
Impairment of assets in terms of IAS 36 - - 126
Other (10) - -
Tax effects of adjustments 4 5 9
Non-controlling interests adjustments 7 - 146
RMH's own adjustments
(Profit)/loss on deemed sale of associate due
to change in effective shareholding (4) (18) 1
Impairment of assets in terms of IAS 36 24 - -
Impairment of associates 150 - -
HEADLINE EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS 4 207 3 961 6 7 927
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
For the six months
ended For the
31 December year ended
% 30 June
R million 2017 2016 change 2017
Headline earnings attributable to equity holders 4 207 3 961 6 7 927
RMH's share of adjustments made by FirstRand:
TRS and IFRS 2 liability remeasurement (47) (57) (21)
Treasury shares 3 2 (4)
IAS 19 adjustment (19) (18) (40)
Private equity subsidiary realisations 25 - 307
Adjusted for:
Group treasury shares1 (1) - (3)
NORMALISED EARNINGS FOR THE PERIOD 4 168 3 888 7 8 166
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.
Computation of per share information
For the six months
ended For the
31 December year ended
% 30 June
R million 2017 2016 change 2017
Earnings attributable to equity holders 4 097 3 990 3 8 202
Headline earnings attributable to equity holders 4 207 3 961 6 7 927
Normalised earnings attributable to equity holders 4 168 3 888 7 8 166
Net asset value 42 676 39 485 8 41 381
Number of shares in issue (millions) 1 412 1 412 1 412
Weighted average number of shares in issue (millions) 1 411 1 411 1 411
Diluted weighted average number of shares in issue
(millions) 1 411 1 411 1 411
Weighted average number of shares in issue (millions)
for normalised earnings 1 412 1 412 1 412
Earnings per share (cents) 290.4 282.8 3 581.2
Diluted earnings per share (cents) 290.4 282.8 3 581.2
Headline earnings per share (cents) 298.2 280.7 6 561.7
Diluted headline earnings per share (cents) 298.2 280.7 6 561.7
Normalised earnings per share (cents) 295.2 275.4 7 578.5
Diluted normalised earnings per share (cents) 295.2 275.4 7 578.5
Net asset value per share (cents) 3 022.4 2 796.4 8 2 931.3
Dividend per share
For the six months
ended For the
31 December year ended
% 30 June
cents 2017 2016 change 2017
Dividend per share
Interim 168.0 153.0 10 153.0
Final - - - 174.0
TOTAL 168.0 153.0 10 327.0
Dividend cover (relative to headline earnings) 1.8 1.8 1.7
Dividend cover (relative to normalised earnings) 1.8 1.8 1.8
Condensed consolidated statement of financial position
The investment in associates increased with RMH's share of after-tax profits of R4 183 million (2016: R 4 073 million) and RMH's share of associates' other
reserves of negative R22 million (2016: R5 million). This was offset by dividends received of R2 598 million (2016: R2 254 million).
As at
31 December As at
30 June
R million 2017 2016 2017
ASSETS
Cash and cash equivalents 81 21 39
Loans and receivables 94 3 114
Investment securities 401 413 334
Taxation receivable 1 7 5
Derivative financial instruments 42 25 8
Deferred tax asset - - 4
Investment in associates 44 346 41 281 43 130
TOTAL ASSETS 44 965 41 750 43 634
EQUITY
Share capital and premium 8 825 8 825 8 825
Reserves 33 851 30 660 32 556
TOTAL EQUITY 42 676 39 485 41 381
LIABILITIES
Trade and other payables 103 86 81
Provisions - 13 -
Financial liabilities 2 138 2 137 2 154
Derivative financial instruments 25 15 6
Long-term liabilities 1 1 1
Deferred tax liability 22 13 11
TOTAL LIABILITIES 2 289 2 265 2 253
TOTAL EQUITY AND LIABILITIES 44 965 41 750 43 634
Condensed consolidated statement of cash flows
For the six months
ended For the
31 December year ended
30 June
R million 2017 2016 2017
Net cash generated from operating activities 2 525 2 246 4 397
Dividends paid (2 456) (2 160) (4 320)
Net cash outflow in investment activities (11) (929) (840)
Net cash (out)/inflow in financing activities (16) 846 784
Net decrease in cash and cash equivalents 42 3 21
Cash and cash equivalents at the beginning of the period 39 18 18
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 81 21 39
Condensed consolidated statement of changes in equity
Total
Share equity Non-
capital and Total holders' controlling Total
R million premium reserves funds interest equity
Balance as at 1 July 2016 8 825 29 419 38 244 - 38 244
Total comprehensive income for the tear - 3 406 3 406 - 3 406
Dividends paid - (2 160) (2 160) - (2 160)
Reserve movements relating to associates - (5) (5) - (5)
BALANCE AS AT 31 DECEMBER 2016 8 825 30 660 39 485 - 39 485
Balance as at 1 July 2016 8 825 29 419 38 244 - 38 244
Total comprehensive income for the year - 7 504 7 504 - 7 504
Dividends paid - (4 320) (4 320) - (4 320)
Reserve movements relating to associates - (47) (47) - (47)
BALANCE AS AT 30 JUNE 2017 8 825 32 556 41 381 - 41 381
Balance as at 1 July 2017 8 825 32 556 41 381 - 41 381
Total comprehensive income for the period - 3 773 3 773 - 3 773
Dividends paid - (2 456) (2 456) - (2 456)
Reserve movements relating to associates - (22) (22) - (22)
BALANCE AS AT 31 DECEMBER 2017 8 825 33 851 42 676 - 42 676
BASIS OF PRESENTATION OF RESULTS
The 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, 71 of 2008, applicable to summary financial statements.
The condensed consolidated interim results for the six months ended 31 December 2017 have not been audited or independently reviewed by the
external auditor.
Accounting policies
These condensed results incorporate accounting policies that are consistent with those used in preparing the financial results for the year ended
30 June 2017.
These results 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 six months ended 31 December 2017 that impacted the group's reported earnings, financial
position or reserves, or the accounting policies.
Normalised results
RMH believes normalised earnings more accurately reflect operational performance. 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 broad-based black economic empowerment 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 2/2015, 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.
Contingencies and commitments
For the six months
ended For the
31 December year ended
30 June
R million 2017 2016 2017
Contingencies and commitments
Guarantees 1 603 645 1 603
BALANCE AT THE END OF THE PERIOD 1 603 645 1 603
SEGMENTAL REPORT
FCC and RMH
R million FNB RMB WesBank other FirstRand Property Other RMH
For the six months ended 31 December 2017
Revenue - - - - - 5 6 11
Share of after-tax profit of associates 2 439 1 069 652 182 4 342 (164) 5 4 183
Fee income - - - - - - 3 3
Net fair value gain on financial assets - - - - - (24) 41 17
Net income 2 439 1 069 652 182 4 342 (183) 55 4 214
Administration expenses - - - - - (3) (22) (25)
Income from operations 2 439 1 069 652 182 4 342 (186) 33 4 189
Finance costs - - - - - (3) (77) (80)
Profit before tax 2 439 1 069 652 182 4 342 (189) (44) 4 109
Income tax expense - - - - - - (12) (12)
PROFIT FOR THE PERIOD 2 439 1 069 652 182 4 342 (189) (56) 4 097
Headline earnings 2 439 1 069 652 122 4 282 (15) (60) 4 207
Normalised earnings 2 438 1 069 652 84 4 243 (15) (60) 4 168
Assets - - - - - 262 357 619
Investment in associates - - - - 43 809 537 - 44 346
TOTAL ASSETS - - - - 43 809 799 357 44 965
TOTAL LIABILITIES - - - - - 56 2 233 2 289
FCC and RMH
R million FNB RMB WesBank other FirstRand Property Other RMH
For the six months ended 31 December 2016
Revenue - - - - - 1 5 6
Share of after-tax profit of associates 2 183 961 676 230 4 050 6 17 4 073
Net fair value gain on financial assets/liabilities - - - - - 1 26 27
Net income 2 183 961 676 230 4 050 8 48 4 106
Administration expenses - - - - - - (35) (35)
Income from operations 2 183 961 676 230 4 050 8 13 4 071
Finance costs - - - - - (1) (72) (73)
Profit before tax 2 183 961 676 230 4 050 7 (59) 3 998
Income tax expense - - - - - - (8) (8)
PROFIT FOR THE PERIOD 2 183 961 676 230 4 050 7 (67) 3 990
Headline earnings 2 183 961 676 220 4 040 7 (86) 3 961
Normalised earnings 2 183 961 676 147 3 967 7 (86) 3 888
Assets - - - - - 194 275 469
Investment in associates - - - - 40 553 728 - 41 281
TOTAL ASSETS - - - - 40 553 922 275 41 750
TOTAL LIABILITIES - - - - - - 2 265 2 265
FCC and RMH
R million FNB RMB WesBank other FirstRand Property Other RMH
For the year ended 30 June 2017
Revenue - - - - - 6 10 16
Share of after-tax profit of associates 4 361 2 351 1 361 298 8 371 4 (1) 8 374
Fee income - - - - - - 3 3
Net fair value gain on financial assets - - - - - - 6 6
Net income 4 361 2 351 1 361 298 8 371 10 18 8 399
Administration expenses - - - - - - (40) (40)
Income from operations 4 361 2 351 1 361 298 8 371 10 (22) 8 359
Finance costs - - - - - (2) (150) (152)
Profit before tax 4 361 2 351 1 361 298 8 371 8 (172) 8 207
Income tax expense - - - - - - (5) (5)
PROFIT FOR THE YEAR 4 361 2 351 1 361 298 8 371 8 (177) 8 202
Headline earnings 4 361 2 351 1 361 22 8 095 8 (176) 7 927
Normalised earnings 4 360 2 351 1 361 262 8 334 8 (176) 8 166
Assets - - - - - 244 260 504
Investment in associates - - - - 42 427 703 - 43 130
TOTAL ASSETS - - - - 42 427 947 260 43 634
TOTAL LIABILITIES - - - - - 48 2 205 2 253
Geographical segments
RMH does not have any geographic segments as both FirstRand and RMH Property are viewed as South African entities. This is expected to change in the
forthcoming financial year.
Directors
GT Ferreira (chairman), JJ Durand (deputy chairman) HL Bosman (chief executive), JP Burger, P Cooper, (Ms) SEN De Bruyn, LL Dippenaar, JW Dreyer,
PM Goss, PK Harris, (Ms) A Kekana, O Phetwe, P Lagerstrom, MM Morobe and KC Shubane
Alternate directors: F Knoetze and DR Wilson
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 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: First floor, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Postal address: PO Box 61051, Marshalltown, 2107
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221
Date: 07/03/2018 11:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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