RAND MERCHANT INVESTMENT HOLDINGS LIMITED - Summarised unaudited results announcement and dividend declaration for the six months ended 31 December 2017

Release Date: 12/03/2018 08:00
Code(s): RMI
 
Wrap Text
Summarised unaudited results announcement and dividend declaration for the six months ended 31 December 2017

RAND MERCHANT INVESTMENT HOLDINGS LIMITED (RMI)
Registration number:     2010/005770/06
JSE ordinary share code: RMI
ISIN code:               ZAE000210688

SUMMARISED UNAUDITED RESULTS ANNOUNCEMENT AND DIVIDEND DECLARATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2017

Basis of preparation

These summarised, unaudited financial results for the six months ended 31 December 2017 have been prepared in accordance with:

- International Financial Reporting Standards (IFRS), including IAS34: Interim financial reporting;
- the requirements of the Companies Act, 71 of 2008, as amended;
- the SAICA Financial Reporting Guide as issued by the Accounting Practices Committee;
- the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council; and
- the Listings Requirements of the JSE Limited.

The accounting policies applied are consistent with those applied in the previous financial period, except for changes required by the mandatory
adoption of new and revised IFRS. None of the new accounting standards becoming effective in the current financial period had a significant impact on
the group's results.

Schalk Human MCom(Acc) CA(SA) prepared these consolidated financial results under the supervision of Herman Bosman LLM CFA. The board of
directors takes full responsibility for the preparation of this announcement and for correctly extracting the financial information for inclusion in the
announcement.

The summarised consolidated financial statements for the six months ended 31 December 2017 have not been audited.

Normalised earnings presented in these summarised financial results constitute pro forma financial information. The pro forma financial information is
the responsibility of RMI's board of directors and is presented for illustrative purposes.

The forward-looking information has not been commented or reported on by the group's external auditor.

VALUE CREATED

for the six months ended 31 December 2017

Compound shareholders' return since listing in 2011: 26.3% per annum

Normalised earnings: +26% to R2 271 million (2016: R1 805 million) (+24% to 150.2 cents per share) (2016: 121.5 cents per share)

Headline earnings: +28% to R2 087 million (2016: R1 625 million) (+26% to 138.3 cents per share) (2016: 109.6 cents per share)

ABOUT RMI

Rand Merchant Investment Holdings Limited (RMI) is a specialist financial services investment holding company listed on the JSE.
Its objective is to achieve superior returns for investors.

Value creation

RMI's primary objective is to create value for its shareholders by optimising, diversifying and modernising its investment portfolio.

Investment portfolio

RMI's investments include:
- Discovery Limited (Discovery);
- Hastings Group Holdings plc (Hastings);
- MMI Holdings Limited (MMI);
- OUTsurance Holdings Limited (OUTsurance);
- RMI Investment Managers Group Proprietary Limited (RMI Investment Managers); and
- AlphaCode Proprietary Limited (AlphaCode) with its next-generation investments:
  - Entersekt Proprietary Limited (Entersekt);
  - Luno Limited (Luno);
  - Merchant Capital Advisory Services Proprietary Limited (Merchant Capital); and
  - Prodigy Investments Limited (Prodigy).

The portfolio strikes a balance between growth and return and will evolve further in line with RMI's strategy.

Investment policy

RMI's aim is to be a value-adding, active enabler of leadership and innovation in financial services. It acquires meaningful interests with significant
influence in industry-changing businesses that can deliver superior earnings, dividends and capital growth over the long term.

Dividend policy

RMI's dividend policy is to pay out all dividends received from underlying investments after servicing any funding commitments at holding company
level and considering its debt capacity and investment pipeline. The policy seeks to achieve a sound balance between providing an attractive yield to
shareholders and achieving sustained growth. Given RMI's active investment strategy, this policy will be assessed dynamically.

END OF AN ERA

GT Ferreira has been involved in the financial services sector since graduating from the University of Stellenbosch. He was a co-founder of Rand
Consolidated Investments in 1977, which acquired control of Rand Merchant Bank in 1985. When RMB Holdings was founded in 1987, he was
appointed chairman, a position he still holds. He has been RMI's chairman since its inception in December 2010 and a driving force behind the group's
value creation and relentless pursuit of high values.

In a stellar career, he was instrumental in building leading businesses such as FirstRand, Discovery, MMI and OUTsurance. The combined value of
these businesses is in excess of R550 billion.

In April, he will turn 70 and reach the point of compulsory retirement. He will be replaced as chairman by Jannie Durand, the current deputy chairman,
effective 31 March 2018.

His legacy will remain as a set of unique values instilled in RMI. These values will ensure that the set strategy is implemented with integrity and
discipline to create further value for stakeholders.

Joining GT are Jan Dreyer, Pat Goss and Khehla Shubane. Together, these four directors have a combined service of more than 130 years at RMI and
its predecessor companies. RMI would like to thank these directors for their wisdom, innovation and commitment to the group.

RMI'S INVESTMENTS

The businesses in the RMI portfolio are all businesses that take established industries head on and disrupt the way things are done.

Listed investments

Discovery (25% held)

Discovery is a pioneering market leader with uniquely positioned businesses in the healthcare, long- and short-term insurance, wellness and financial
services industries. It operates in South Africa, the UK, China, Singapore, Australia, Japan, Europe and the USA through various business lines.
Its innovative shared value business model incentivises people to be healthier and enhances and protects their lives. This delivers superior actuarial
dynamics for the insurer and a healthier society.

Hastings (29.9% held)

Hastings is a UK-listed, fast-growing, agile, digitally-focused general short-term insurance provider to the UK car, van, bike and home insurance
market. It has strong relationships with all major price comparison websites, a cost-effective digital marketing model and a focus on client retention.
Hastings provides refreshingly straightforward products and services. It has 2.6 million live client policies and is a multi-award-winning business.

MMI (25.5% held)

MMI is an insurance-based financial services group listed on the JSE Limited.

The core businesses of MMI are long- and short-term insurance, asset management, savings, investment, healthcare administration and employee
benefits. These product and service solutions are provided to all market segments through the Metropolitan and Momentum operating brands.

Unlisted investments

OUTsurance (87.7% held)

OUTsurance provides short- and long-term insurance products in South Africa and short-term insurance products in Australia, New Zealand and
Namibia.

It has a client-centric approach, providing value-for-money insurance solutions backed by world-class service. Premiums are calculated according to a
client's unique risk profile and clients who remain claim free receive a cash OUTbonus, the first such reward system in South Africa.

RMI Investment Managers (100% held)

RMI Investment Managers' affiliate model enables the company to access a differentiated part of the investment management industry by investing in
and partnering with independent investment managers, as well as specialist investment teams. RMI Investment Managers has taken minority equity
stakes in boutique investment managers which span the asset class spectrum across active, passive, traditional and alternative. While the team is
more focused on the execution of the growth initiatives at each affiliate than on further acquisitions, they continue to look for opportunities that will
complement the existing suite of managers, as the company builds its share of the South African investment management market.

AlphaCode (100% held)

AlphaCode identifies, partners and grows extraordinary next-generation financial services entrepreneurs. It is actively seeking to fund new and
disruptive, sustainable, scalable business models.

- Merchant Capital (25.1% held) is a provider of alternative sources of working capital for small and medium enterprises in South Africa.
- Entersekt (25.1% held) is a leader in authentication, app security and payments-enablement technology, offering a highly scalable solution set with a
  track record of success across multiple continents.

During the six-month review period, two further investments were made:
- Prodigy (3.5% held) is an international fintech platform that offers loans to international postgraduate students attending top universities, and
- Luno (7.5% held) makes it safe and easy to buy, store and learn about digital currencies like Bitcoin and Ethereum in South Africa.

PERFORMANCE AND 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 of the Rand 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. Therefore, while 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 are not addressed appropriately. This is
further complicated by recent high profile corporate failures and critical water shortages in parts of the country.

Overview of results

Despite the challenges associated with the political uncertainty and other pressures during the last half of 2017, RMI managed to produce yet another
set of strong results, in keeping with its commitment to long-term value creation. Normalised earnings increased by 26% to R2.3 billion for the six
months ended 31 December 2017.

Discovery's performance over the six-month period exceeded expectations, with normalised earnings increasing by 30% to R2.8 billion. The
established businesses delivered combined growth in operating profit of 15%, which is well above the target of CPI + 5%, with VitalityHealth (150%
growth), Discovery Vitality (73% growth) and Discovery Invest (29% growth) being the main drivers of earnings growth. In addition, the emerging
businesses exceeded their targeted earnings growth of CPI + 30%. In total, 8% of earnings was invested in new initiatives, including Discovery Bank,
Umbrella Funds, Vitality Invest and Discovery Insure Commercial Insurance. The core new business annualised premium income (excluding the take-on
of new closed medical schemes and gross revenue of the Vitality Group) increased by 16% to R9.3 billion. The Discovery group also continued to meet
the requirements of its capital allocation model and maintained an above-guidance capital buffer of R2.5 billion.

RMI included normalised earnings of R382 million from Hastings for the six months to 31 December 2017. Hastings announced its 31 December 2017
year-end results on 1 March 2018, which indicated 26% growth in normalised earnings in Sterling terms. Gross written premiums increased by 21%,
due to a 13% increase in live client policies and premium rate increases. Claims increased by 15% due to the additional exposure to increased policy
volumes and claims inflation of 5%. Management expenses increased by 14%, primarily due to additional headcount to support the continued growth
of the business. Hastings declared a final dividend of 8.5 pence per share, an increase of 29% on the final dividend in the prior year of 6.6 pence per
share.

MMI recorded a 3% decrease in normalised earnings to R1.6 billion for the six-month period under review. Growth in normalised earnings was strained
by weaker persistency in Metropolitan Retail, weaker life insurance profitability at Momentum Retail and an increase in MMI's share of losses, in line
with business plans, on new initiatives such as the India joint venture. Momentum Corporate's profit has improved materially, with group underwriting
results showing significant improvement year-on-year. Earnings and headline earnings, which include the fair value gains on shareholder funds and the
positive investment variances experienced during the six months, increased by 23% and 27% respectively. MMI remained well capitalised at 31
December 2017 on both the existing and the proposed new Solvency Assessment and Management (SAM) bases.

Normalised earnings from OUTsurance, including its stake in Hastings, increased by 28% to R1.5 billion. Excluding its share in Hastings, OUTsurance's
normalised earnings increased by 11%, mainly driven by Youi's 60% growth in operating profit. The group's claims ratio was lower at 51.5% due to
lower natural peril claims in Australia and continued low claims frequencies and limited claims cost inflation in South Africa. The group cost-to-income
ratio increased from 25.0% to 25.2% owing to a higher cost ratio in the South African operations, with Youi Australia reducing its cost-to-income ratio
from 30.1% to 29.5%. Growth in gross written premium income was muted by reduced new business inceptions experienced in the Australasian
operations, coupled with low levels of premium inflation in South Africa.

RMI Investment Managers is in its third year of operations, with the financial performance being slightly behind expectations. The profitability of the
underlying affiliates was primarily impacted by the additional operational investments made to ensure scalability and by the impact of weak markets.
During the period under review, one new affiliate was added to the group, being Ethos Private Equity (Ethos), adding R11.2 billion of assets under
management in the alternative investment space. The total assets under management across the eleven affiliates of the group totalled R106 billion as
at 31 December 2017.

Royal Investment Managers is a joint venture between RMI Investment Managers and Royal Bafokeng Holdings (RBH). During the period under review,
two new affiliates were added, namely Ethos (in conjunction with RMI Investment Managers) and Balondolozi, an independent majority black-owned
quantitative manager with approximately R4.5 billion of assets under management.

The net funding and holding company costs amounted to R330 million, compared to R98 million in the comparative period. The increase is
predominantly due to the debt incurred to fund the acquisition of the group's 29.9% stake in Hastings. The net funding and holding company costs
were positively impacted by the return on higher cash balances compared to the prior period following the scrip dividend and cash proceeds on the
sale of 49% of the group's stake in Hastings to OUTsurance, and the fair value gain on the hedge which backs the share option liability following the
significant increase in the RMI share price during the six months.

The funding rates on the debt are as follows:
- R1 130 million preference shares (three years and one day) - 66% of prime overdraft rate (prime);
- R1 130 million preference shares (five years) - 68% of prime;
- R5 650 million preference shares (three years and one day) - 66% of prime;
- R1 800 million preference shares (five years) - 68% of prime; and
- R2 512 million GBP-denominated loan (£150 million) in Main Street 1353, the holding company of the group's investment in Hastings - 50% is a
  three-year loan at LIBOR (LIBOR fixed at 0.77%) plus 1.9% and the other 50% is a five-year loan at LIBOR (LIBOR fixed at 0.98%) plus 2.75%.

Sources of normalised earnings

RMI regards normalised earnings as the appropriate basis to evaluate business performance as it eliminates the impact of non-recurring items and
accounting anomalies.

The total normalised earnings of RMI's investee companies for the period under review are listed in the table below:

                                                                       
                                                                        For the six months ended                
                                                                               31 December                        Year ended
                                                                                                                     30 June
R million                                                                 2017            2016       % change           2017

Continuing operations
Discovery                                                                2 829           2 184             30          4 656
Hastings                                                                 1 374               -           >100            828(1)
MMI                                                                      1 556           1 598             (3)         3 208

OUTsurance excluding Hastings                                            1 268           1 139             11          2 463

- OUTsurance including Hastings                                          1 461           1 139             28          2 476
- Hastings included in OUTsurance                                         (193)              -          >(100)           (13)

Other(2)                                                                   (10)             (8)           (25)            (5)
Discontinued operation
RMBSI (excluding Truffle)                                                    -               3           (100)           (38)

1. Includes normalised earnings from Hastings for the four months from 1 March 2017, the effective date of the acquisition.
2. Other includes RMI Investment Managers and AlphaCode investments.

A reconciliation of the adjustments made to derive normalised earnings is presented below.

RMI's consolidated normalised earnings for the period under review is listed in the table below:

                                                                      
                                                                        For the six months ended                
                                                                             31 December                          Year ended
                                                                                                                     30 June
R million                                                                 2017            2016       % change           2017

Continuing operations                                                    2 271           1 803             26          3 927

Discovery                                                                  716             546             31          1 167
Hastings                                                                   382               -           >100            246(1)
MMI                                                                        396             404             (2)           816

OUTsurance excluding Hastings                                            1 117             959             16          2 092

- OUTsurance including Hastings                                          1 286             959             34          2 103
- Hastings included in OUTsurance                                         (169)              -          >(100)           (11)

Other(2)                                                                   (10)             (8)           (25)            (5)
Funding and holding company costs                                         (330)            (98)         >(100)          (389)

Discontinued operation
RMBSI (excluding Truffle)                                                    -               2           (100)           (30)

Normalised earnings                                                      2 271           1 805             26          3 897

Normalised earnings per share (cents) (continuing operations)            150.2           121.3             24          263.6
Normalised earnings per share (cents) (continuing and
discontinued operations)                                                 150.2           121.5             24          261.6

1. Includes normalised earnings from Hastings for the four months from 1 March 2017, the effective date of the acquisition.
2. Other includes RMI Investment Managers and AlphaCode investments.

The funding and holding company costs include the funding and operational expenses carried at the RMI corporate centre. The significant increase in
the funding and holding company costs relates to the funding costs on the preference shares issued and loan incurred primarily to fund the investment
in Hastings.


Market value of investments

During the 2017 calendar year, RMI's share price increased by 15% (2016: increased by 3%), compared to a 28% increase in the life insurance index
and an 18% increase in the non-life insurance index. RMI has delivered a total annually compounded return to shareholders of 26.3% since its listing in
March 2011.

The individual investment performances during the 2017 calendar year are outlined below:
- Discovery's share price increased by 62% (2016: decreased by 14%).
- MMI's share price decreased by 11% (2016: increased by 7%).
- On a "look-through" basis, based on share prices as at 31 December 2017, the value attributed to RMI's unlisted investments decreased by 8%
  (2016: increased by 16%) to R30.6 billion (2016: R33.3 billion). These unlisted investments include OUTsurance (excluding OUTsurance's 49% stake
  in the group's holding in Hastings) (87.7% held), RMI Investment Managers and the AlphaCode investments.

                                                                                                                               As at
                                                                                                                             30 June
                                                                                                                                2017
R million                                                                     2017             2016         % change         Audited

Market value of interest in:
- Discovery                                                                 30 122           18 543               62          20 716
- Hastings (RMI's effective holding)                                         9 896                -                -           9 857

  - 29.9% holding                                                           10 531                -                -          10 491
  - Attributable to non-controlling interest of OUTsurance                    (635)               -                -            (634)

- MMI                                                                        8 422            9 461              (11)          8 117

Market value of listed investments                                          48 440           28 004               73          38 690
RMI Investment Managers and AlphaCode at cost                                  823              417               97             619
Discontinued operation (RMBSI)                                                   -              370             (100)              -
Implied market value of OUTsurance (excluding Hastings)                     29 812           32 466               (8)         29 187

Gross market value of portfolio                                             79 075           61 257               29          68 496
Net liabilities of holding company                                          (9 406)          (2 127)           >(100)         (9 789)

RMI market capitalisation                                                   69 669           59 130               18          58 707

RMI closing share price (cents)                                              4 590            3 980               15           3 899

The movement in the net liabilities of the holding company was due to the acquisition of a 29.9% stake in Hastings in March 2017.

Interim dividend payment

MMI decided to update its dividend policy to be consistent with its planned capital deployment and projected capital coverage profile, with a more
proactive approach to capital management. A decision was made to distribute capital to shareholders by means of a share buy-back in lieu of paying
dividends. Given the current discount to embedded value, it is believed that a share buy-back is the most efficient use of capital and will enhance value
to shareholders. MMI plans to distribute R2 billion to shareholders through share buy-backs during the next 12 months. In future, it will target a
dividend cover range centred around 2.5 times core headline earnings compared to the 1.5 times to 1.7 times core headline earnings referenced
previously.

RMI's policy of paying out all dividends received from underlying investments after servicing any funding commitments at holding company level and
considering RMI's debt capacity and investment pipeline remains in place. As MMI used to be a significant contributor of dividends to RMI in the past,
this update to MMI's dividend policy has a direct knock-on impact on the dividend that RMI can declare to its shareholders.

The board believes RMI is adequately capitalised and that the company will be able to meet its obligations in the foreseeable future after payment of
the interim dividend declared below.

The board resolved to declare an interim dividend of 39.0 cents (2016: 53.0 cents) per ordinary share with an option to elect scrip in lieu of cash or to
reinvest all or part of the cash dividend (net of any applicable taxes) in RMI ordinary shares. The interim dividend per ordinary share is covered 3.9
times (2016: 2.3 times) by the normalised earnings of 150.2 cents (2016: 121.5 cents) per share.

Since 2014, RMI has actively pursued a strategy to optimise, diversify and modernise its portfolio of financial services assets. Its ambitions to diversify
geographically, add to its existing portfolio of significant stakes in financial services companies and to facilitate ongoing growth initiatives in its existing
portfolio companies imply additional investment and use of financial leverage. The RMI board has decided that, in addition to the cash dividend, it
would offer a scrip distribution alternative and a reinvestment option to prudently manage RMI's capital structure. The RMI board will continuously
assess RMI's dividend policy through its investment phase and may, if appropriate, continue to utilise the scrip distribution alternative and the
reinvestment option to support investment activity.

Shareholders are referred to the dividend declaration forming part of this announcement regarding the applicability of Dividend Withholding Tax to the
ordinary dividend and more detail on the options available to shareholders.


Changes to directorate

RMI welcomes the following new board members, effective from 31 March 2018, following the retirement of Messrs Ferreira, Dreyer, Goss (lead
independent) and Shubane:

- Mamongae Mahlare, MBA (Harvard), BSc (Chemical Engineering), is the managing director of Illovo Sugar SA. Previously she was head of alternate
  beverages at Coca Cola Beverages South Africa, held various positions at SABMiller's operations in Tanzania and Mozambique and was an
  associate consultant at Bain & Company.
- Ralph Mupita, MBA (UCT), BSc (Engineering)(Honours), is the chief financial officer and an executive director of MTN. He is the past chief executive
  officer of Old Mutual Emerging Markets covering life insurance, asset management, general insurance, lending and banking businesses in Africa,
  Latin America and Asia.
- 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 where he held the position of co-head of structured finance.
- David Frankel, an electrical engineer with an MBA from Harvard, is managing partner and co-founder of Founder Collective. He was co-founder and
  chief executive officer of Internet Solutions and served 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 RMI's board and was previously appointed deputy
chairman in anticipation of GT Ferreira's retirement. A new lead independent will be announced in due course.

Events after the reporting period

Acquisition of OUTsurance shares

RMI acquired 35 353 536 shares in OUTsurance from Mr Willem Roos on 6 March 2018 for an amount of R350 million. The price was determined by
an internal valuation as at 31 December 2017 which is used for all share transactions between OUTsurance employees and the staff share trust. As
reported previously, Willem will retain the majority of his shares in OUTsurance until at least the end of 2021 and therefore remains a significant
shareholder in OUTsurance.

Update on RMI's strategy

Vision

RMI's aim is to be a value-adding, active enabler of leadership and innovation in financial services. Its objective is to create a portfolio of businesses
which are market leaders and can deliver sustainable earnings, an attractive dividend yield and capital growth. RMI therefore pursues opportunities in
the changing financial services landscape which meet its stringent criteria and strong values.

Values

A values-driven culture is integral to RMI's success and long-term sustainability. It is therefore committed to ensuring that the principles of good
corporate governance and ethical business practice are applied consistently in interactions with all stakeholders and in a way that upholds its values,
which have been formed over decades and should stand the group in good stead for the future.

RMI has an "owner-manager" culture, which is shared at every business in which it is invested. It subscribes to a set of values which seek to foster
integrity, innovation, individual empowerment and personal accountability.

RMI's strategy is based on three initiatives designed to create sustainable value. They are:

- Optimisation

Growing the intrinsic value of investments

RMI focuses on continuously improving the value of its investee companies to create better value for its shareholders.

- Diversification

Expanding into new markets and segments

RMI is constantly evaluating opportunities to expand the services of its existing investee companies and to add new investments, thereby creating
more value.

- Modernisation

Pioneering the next frontier

RMI is conscious of renewal in financial services and will acquire proven businesses and invest in start-ups with special opportunities and drivers, which
can create new value.


  STRATEGIC INITIATIVE                              MAJOR MILESTONES

  OPTIMISATION OF OUR ESTABLISHED                   Extension of the MMI and OUTsurance incentive schemes.
  INVESTMENTS                                       Sale of RMB Structured Insurance to Santam.
  Management will continue its strategic            Sale of 49% of Main Street 1353 (holding company of the group's stake in Hastings) to
  dialogue and activity across the portfolio. It    OUTsurance.
  will assist with creating leadership stability    Increasing shareholding in OUTsurance.
  and succession planning.                          Exploration of new products and strategic projects to diversify revenue streams for OUTsurance.
                                                    Ongoing strategic dialogue with Discovery and MMI.

  DIVERSIFICATION OF INCOME STREAM                  Acquired a 29.9% stake in Hastings for R8.6 billion effective 1 March 2017.
  AND DISTRIBUTION OF ASSETS                        Acquired the following investments in RMI Investment Managers in the six months under review:
  RMI will evaluate expanding its geographic        30% in Ethos Private Equity
  footprint further, either independently and/or    30% in Balondolozi.
  through the existing portfolio.                   Continue to evaluate later-stage, capital-light business models with organic growth potential.

  MODERNISATION                                     AlphaCode has established itself as a centre of fintech excellence in South Africa and a source of
  RMI will continue to identify new                 innovation and next-generation thinking for the broader RMI portfolio.
  businesses, technologies and industry             Acquired the following investments in the six months under review:
  trends to complement RMI and its investee         3.5% in Prodigy Finance
  companies.                                        7.5% in Luno.
                                                    Pipeline of potential future investment opportunities created.


OUTLOOK AND FUTURE VALUE CREATION

Existing portfolio

Over the period, Discovery continued to make substantial progress against all three of its 2018 ambition criteria:

- Financial and social impact, targeting R10 billion in normalised profit from operations, with growth of CPI + 10%, return on capital of risk-free + 10%
  and making 10 million people around the world healthier.
- A unique foundation, comprising a sophisticated data and science capability, an aspirational global Vitality brand, exceptional talent, particularly in
  terms of critical skills and an entrenched values-based culture.
- Brilliant businesses that are insurgent in their markets, offer sustainable products that meet complex consumer needs, generate excellent member
  engagement, deliver superior actuarial dynamics and offer an exceptional service ecosystem.

Discovery's established businesses are all well positioned in their respective markets, its emerging businesses are insurgent and four substantial
businesses will be launched during 2018. This gives the group confidence of ongoing growth and performance into the future.

Hastings provides car, van, bike and home insurance to clients in the UK at competitive prices and with a focus on great service. Its business model
has been designed to be successful in the high growth, dynamic digital distribution segment of the UK insurance market and is underpinned by
sophisticated IT systems and pricing capabilities, which are driving its strong track record of sustainable growth. Hastings continues to grow its share
of the price comparison website (PCW) market in the UK, with PCWs growing their share of the total UK motor insurance market from 24% to 70%
over the past ten years.

The digital retail market is expected to continue to grow for the foreseeable future, partly due to increased use of mobile technology. The new
Guidewire platform and agile approach enable Hastings to identify opportunities, outperform and deliver value for shareholders. Guidewire is market-
leading software that supports claims, broking and billing in an integrated platform. Hastings has also invested in additional software components to
increase the ability of clients to self-serve through digital engagement.

In January 2018, Hastings announced the retirement of its chairman, Mike Fairy, at the company's annual general meeting in May 2018. Gary Hoffman
will take over the role of non-executive chairman when Mike steps down. Toby van der Meer, who joined Hastings in June 2011, was appointed to the
Hastings board and took over the role of CEO from Gary Hoffman on 1 March 2018. The Hastings board approved a long-term capital appreciation
plan which aligns the long-term interests of shareholders with retention incentives for key senior personnel.

MMI remains committed to its client-centric strategy that is purposefully focused on providing for its clients' needs to enhance their lifetime financial
wellness. At the same time, MMI continues to refine the actions and decisions to optimise delivery on its strategy:
- The business is increasingly focused on execution, with strategy now well ingrained in the various business areas;
- MMI is starting to see the benefit of the execution focus coming through in a number of areas such as its product offering, technology environment
  and footprint growth in Momentum Retail;
- MMI has commenced the exit of a number of African countries to improve its focus on remaining operations;
- The business continues to invest in the Multiply programme and sees it as a key component of its client engagement strategy; and
- MMI continues to invest in its distribution channels. The launch of insurance products in selected African Bank branches is one manifestation of this
  focus.

Nicolaas Kruger stepped down as CEO of MMI with effect from 15 February 2018, after nine years as CEO and 26 years of service in the group. Hillie
Meyer, previously CEO of Momentum from 1996 to 2005, will join MMI as CEO on a three-year contract. RMI extends its appreciation to Nicolaas for
his contribution and wishes Hillie all the best during his tenure as CEO.

OUTsurance has undergone a period of slow top-line growth whilst maintaining targeted profitability. The focus of the management team is to deliver
on the growth objectives of its various business units. Over recent months, OUTsurance has seen an improvement in the growth of the South African
personal lines operation and a satisfactory expansion in the business volumes written by its commercial agency force.

In the near-term, the improvement in new business volumes is likely to be dampened by very low premium inflation. Management is focused on
sustaining the improved new business performance of Youi Australia and reigniting growth in the New Zealand operation. The growth recovery is
expected to be incremental.

During the period under review, Youi Australia entered the Compulsory Third Party (bodily injury) insurance market in partnership with QBE. The CTP
offering enhances Youi's overall client proposition.

Digitising the way OUTsurance does business is a key strategy across all operating units and management is excited about the improved client
experience and efficiency associated with these initiatives.

OUTvest is a newly launched digital investment platform where clients receive high-quality advice and a value-for-money passive investment
proposition. Management is focused on the expansion of the product range and capabilities of this business.

In October 2017, Willem Roos, OUTsurance's long-serving CEO and founding member, resigned as CEO and took up a non-executive position on
OUTsurance's board. RMI wishes to express its gratitude to Willem for his visionary leadership, dedication and creation of a unique business culture
which has led to the success of OUTsurance since its founding in 1998. Willem leaves behind a highly experienced and dedicated management team
committed to the client-centric culture, service excellence and underwriting discipline which are the cornerstones of OUTsurance's success.

The assets under management across the affiliates of RMI Investment Managers continue to grow as clients look to independent asset managers for
alternative choices to managing their assets. Industry flows, however, slowed during the period under review, coupled with a challenging macro-
economic environment resulting in supressed profitability of the affiliate asset managers.

Affiliates across the portfolio substantially strengthened their businesses during the period by diversifying their client base and adding to their
investment and operational teams while growing their assets under management by R23 billion. RMI Investment Managers continued to add value to
its affiliates across strategy, distribution and operations and the team is pleased with the overall progress made, especially with its growing reputation
as a trusted, value-adding but non-interfering shareholder of choice for the independent asset management industry.

While the team is more focused on the execution of the growth initiatives at each affiliate than on further acquisitions, they continue to look for
opportunities to add affiliates, particularly in the areas where the business is underexposed, notably in the managing of global and unlisted assets. In
keeping with this, the team is pleased about Ethos becoming an affiliate, given the quality of the business as South Africa's oldest and one of the most
highly-regarded alternative asset managers. Furthermore, the constructive outlook for the alternatives landscape, increasing client demand and a
supportive regulatory environment bode well for future growth. The team and its joint venture partners in MMI and RBH look forward to working with
Ethos as they broaden their business into other parts of the alternatives market to create a more diversified and transformed business.

RMI is pleased to announce the appointment of Alida de Swardt as CEO of RMI Investment Managers effective from 1 March 2018. Alida replaces
Chris Meyer who emigrated to Australia in January 2018. Alida was the head of distribution and marketing of RMI Investment Managers.

New investments

In addition to optimising its existing portfolio, RMI plans to diversify and modernise its investment portfolio through opportunities across a wide
spectrum of scale and life-cycles of financial services businesses.

Traditional financial services

The investment team continues to investigate potential investment opportunities, both locally and globally, that conform to RMI's investment philosophy
and generate superior returns for shareholders.

Next-generation financial services

AlphaCode's vision is to pioneer the next frontier of financial services by identifying, partnering and growing extraordinary next-generation financial
services entrepreneurs. Over the last six months, AlphaCode has had success with both partnering these next-generation businesses with its
underlying portfolio companies to drive innovation and modernisation and building an investment portfolio of superior entrepreneur-led, early-stage
fintech-focused businesses that have achieved some market traction and are poised for rapid growth.

During the period under review, AlphaCode participated in a large capital raise in Prodigy Finance, an international fintech platform that offers loans to
postgraduate students accepted into business, engineering and law at the world's top universities, alongside one of Europe's leading venture capital
fintech investors, Balderton Capital. In August 2017, RMI invested in Luno, a crypto-currency platform that enables clients to buy, sell and store Bitcoin
and Ethereum. Luno is a global platform with operations in South Africa, Nigeria, Malaysia, Singapore and 35 countries across Europe. AlphaCode has
a strong pipeline of investment opportunities and will continue to invest in this space.

AlphaCode remains committed to building the broader entrepreneurial sector in South Africa by supporting high-impact black technology and
professional services entrepreneurs, providing mentorship, free office space, support facilities and access to enterprise development funding through its
broad-based black economic empowerment (BBBEE) centre of excellence.

RMI remains confident that its clear strategy, in conjunction with its solid investment portfolio and underpinned by unwavering values, will allow it to
continue delivering on its primary objective of creating sustainable, long-term value for shareholders.


GT Ferreira            Herman Bosman
Chairman               Chief executive
Sandton
12 March 2018


CASH DIVIDEND OR, AS AN ALTERNATIVE, AN ELECTION TO EITHER
(I)  RECEIVE A SCRIP DISTRIBUTION; OR
(II) REINVEST THE CASH DIVIDEND

1. Introduction

The board of directors (RMI board) of Rand Merchant Investment Holdings Limited (RMI) has declared an interim cash dividend of 39 cents per RMI
ordinary share for the six months ended 31 December 2017 (cash dividend). The RMI board has resolved to make a maximum of 13 928 492 fully paid
RMI ordinary shares of R0.0001 each (RMI shares) available to RMI shareholders as (a) capitalisation shares (having an aggregate notional issue
price of up to R591 960 914.61) (capitalisation shares) and/or (b) reinvestment shares (having an aggregate notional issue price of the cash dividend
reinvested (net of any applicable taxes)) (reinvestment shares).

The RMI board has resolved to:
i.  Make the capitalisation shares available to shareholders, in lieu of the cash dividend (scrip distribution alternative); and
ii. Offer RMI shareholders the ability to reinvest all or part of their cash dividend (net of any applicable taxes) (subscription value) in RMI ordinary shares
    by RMI (a) crediting such subscription value to RMI shareholders; and (b) applying such credit on behalf of RMI shareholders to subscribe for
    reinvestment shares (reinvestment option),
as may be elected by RMI shareholders in respect of all or a part of their shareholding recorded in RMI's securities register at 12:00 on the record date,
being Friday, 6 April 2018 (record date).

2. Rationale

Since 2014, RMI has actively pursued a strategy to optimise, diversify and modernise its portfolio of financial services assets. RMI's ambitions to
diversify geographically, add to its existing portfolio of significant stakes in financial services companies and to facilitate ongoing growth initiatives in its
existing portfolio companies imply additional investment and use of financial leverage. The RMI board has decided that, in addition to the cash
dividend, it would offer the scrip distribution alternative and the reinvestment option to prudently manage RMI's capital structure. The RMI board will
continuously assess RMI's dividend policy through its investment phase and may, if appropriate, continue to utilise the scrip distribution alternative and
the reinvestment option to support investment activity.

The scrip distribution alternative and reinvestment option are effective methods of managing the balance sheet post the March 2017 acquisition of a
29.9% interest in Hastings Group Holdings plc by RMI, which was debt-funded. Furthermore, the scrip distribution alternative and the reinvestment
option each provide a cost-effective opportunity for shareholders to increase their shareholding in RMI.

Remgro, RMI's largest shareholder at more than 30%, has undertaken to elect reinvestment shares in respect of all its shareholding, as contemplated
in the reinvestment option.

3. Terms of the scrip distribution alternative and reinvestment option

Each of the scrip distribution alternative and reinvestment option applies to the interim gross cash dividend of 39 cents per RMI share for the six
months ended 31 December 2017 declared on Monday, 12 March 2018. This will result in the payment of a net cash dividend of 31.2 cents per RMI
share to RMI shareholders liable for the full local 20% dividends tax and 39 cents per RMI share to RMI shareholders exempt from dividends tax.
Non-resident RMI shareholders may qualify for a reduced rate of dividends tax, depending on whether or not there is an applicable agreement for the
avoidance of double taxation between South Africa and the country in which a non-resident RMI shareholder is resident for tax purposes.

The issue price for the capitalisation and reinvestment shares is R42.50 per RMI share, being a 4.5% discount to the closing share price of RMI shares
on the JSE as at 8 March 2018. The number of capitalisation shares which RMI shareholders may elect to receive under the scrip distribution
alternative has been determined in the ratio of 0.91765 fully paid RMI shares for every 100 RMI shares held on the record date.

The reinvestment shares will be issued in consideration for the amount of the cash dividend (net of any applicable taxes) as elected to be reinvested by
RMI shareholders. The number of reinvestment shares, which RMI shareholders may elect to receive under the reinvestment option, assuming RMI
shareholders are liable for the full local 20% dividends tax, has been determined in the ratio of 0.73412 reinvestment shares for every 100 RMI shares
held on the record date. If no dividends tax is payable, the number of reinvestment shares, which RMI shareholders may elect to receive under the
reinvestment option has been determined in the ratio of 0.91765 reinvestment shares for every 100 RMI shares held on the record date.

The ratio of the scrip distribution alternative and reinvestment option has been determined with reference to such RMI shareholder's ordinary
shareholding in RMI (at 12:00 on the record date) in relation to the ratio that 39 cents or the cash dividend (net of any applicable taxes), in the scrip
distribution alternative or reinvestment option, respectively, bears to the issue price, being R42.50 per share, which is a 4.5% discount to the closing
price on Thursday, 8 March 2018 for RMI shareholders electing such option.

A circular setting out the terms of the cash dividend, scrip distribution alternative and the reinvestment option, including a form of election, will be
posted to RMI shareholders on Wednesday, 14 March 2018.

The election to receive either the scrip distribution alternative or the reinvestment option is optional. RMI shareholders may elect to participate in either
(i) the scrip distribution alternative; or (ii) the reinvestment option, in respect of all or part of their shareholding on the record date. RMI shareholders not
electing to participate in the scrip distribution alternative or the reinvestment option in respect of all or part of their shareholding will be deemed, by
default, to have elected to receive the cash dividend. RMI shareholders recorded in the securities register of RMI at 12:00 on the record date, who
have not elected to receive the capitalisation shares or the reinvestment shares, will be paid the cash dividend in respect of their entire shareholding on
the record date.

To the extent that the receipt and/or exercise of the election to participate in the scrip distribution alternative or the reinvestment option and/or the
receipt of capitalisation shares or the reinvestment shares pursuant to the scrip distribution alternative or the reinvestment option, respectively, in
jurisdictions other than South Africa might be prohibited or otherwise restricted by legal or regulatory requirements, require RMI to take any further
action, and/or the failure to comply with any of those legal or regulatory requirements might constitute a violation of the laws or regulatory requirements
of such jurisdictions, RMI shareholders will not be entitled to elect to participate in and/or receive RMI shares pursuant to the scrip distribution
alternative or the reinvestment option, directly or indirectly, in those jurisdictions, and shall be deemed to have elected the cash dividend,
notwithstanding an election to participate in the scrip distribution alternative or the reinvestment option by such RMI shareholder.

Where an RMI shareholder's entitlement to new RMI shares in respect of the scrip distribution alternative or the reinvestment option results in a fraction
of a new RMI share, such fraction will be rounded down to the nearest whole number resulting in allocations of whole RMI shares to RMI shareholders
and a cash payment for the fraction will be made to such RMI shareholders.

The weighted average traded price for RMI shares on Wednesday, 4 April 2018 less 10% of such weighted average traded price shall be used as the
cash value for fractional entitlements to be paid to RMI shareholders in accordance with the JSE Listings Requirements. RMI will release an
announcement on Thursday, 5 April 2018 in respect of the cash value determined on this basis.

4. Circular and salient dates

A circular providing RMI shareholders with the full information on the cash dividend, the scrip distribution alternative and the reinvestment option,
including a form of election to participate in either (i) the scrip distribution alternative or (ii) the reinvestment option, will be distributed to RMI
shareholders on Wednesday, 14 March 2018.

The salient dates of events thereafter are as follows:

 Event                                                                                    2018

 Circular and form of election posted to RMI shareholders on                              Wednesday, 14 March

 Last day to trade in order to be eligible to participate in the cash dividend/scrip
 distribution alternative/reinvestment option (cum cash dividend/scrip distribution
 alternative/reinvestment option)                                                         Tuesday, 3 April

 RMI shares trade ex the entitlement to the cash dividend/scrip distribution
 alternative/ reinvestment option                                                         Wednesday, 4 April

 Listing of maximum possible number of new RMI shares that could be issued
 in terms of the scrip distribution alternative and reinvestment option                   Wednesday, 4 April

 Cash value in respect of the RMI shares for determination of fractional
 entitlements to RMI shares, based on the volume weighted average price on
 Wednesday, 4 April 2018, discounted by 10%, released on SENS by 11:00 on                 Thursday, 5 April

 Last day to elect (i) the scrip distribution alternative in lieu of the cash dividend;
 or (ii) to reinvest the cash dividend in terms of the reinvestment option. Forms
 of election to reach the Transfer Secretaries by 12:00 on                                Friday, 6 April

 Record date in respect of the cash dividend/scrip distribution alternative/
 reinvestment option                                                                      Friday, 6 April

 Share certificates in respect of the scrip distribution alternative, posted and/or
 electronic funds transfers and CSDP/broker accounts credited/updated                     Monday, 9 April

 Announcement regarding the results of the cash dividend/scrip distribution
 alternative/reinvestment option released on SENS                                         Monday, 9 April

 Announcement regarding the results of the cash dividend/scrip distribution
 alternative/reinvestment option published in the press                                   Tuesday, 10 April

 Share certificates in respect of the reinvestment option posted and CSDP/
 broker accounts credited/updated                                                         Wednesday, 11 April

 Maximum number of new RMI shares listed adjusted to reflect the actual
 number of new RMI shares issued in respect of the scrip distribution alternative
 and the reinvestment option on or about                                                  Friday, 13 April

 Notes:
 1. All times provided are South African standard time quoted on a 24-hour basis, unless specified otherwise.
    The above dates and times are subject to change. If applicable, any changes will be released on SENS.
 2. Share certificates may not be dematerialised or rematerialised between Wednesday, 4 April 2018 and
    Friday, 6 April 2018, both days inclusive.


RMI's tax reference number is 9469/826/16/9. Its issued share capital at the declaration date comprise 1 517 848 499 ordinary shares.

By order of the RMI board.

JS Human
Company secretary

Sandton
12 March 2018


FINANCIAL REVIEW

Effective interest

RMI's effective interest in the group entities is different from the actual holdings as a result of the following consolidation adjustments:
- treasury shares held by group entities;
- shares held by consolidated share incentive trusts;
- "deemed" treasury shares arising from BBBEE transactions entered into; and
- "deemed" treasury shares held by policyholders and mutual funds managed by them.

As at 31 December 2017, the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the
companies as follows:

                                                                              31 December 2017                 31 December 2016

Unaudited                                                               Effective             Actual       Effective         Actual

Continuing operations
Discovery                                                                   25.1%              25.0%           25.1%          25.0%
Hastings                                                                    29.9%              29.9%               -              -
MMI                                                                         25.7%              25.5%           25.7%          25.5%
OUTsurance                                                                  88.5%              87.7%           84.9%          84.1%
RMI Investment Managers                                                    100.0%             100.0%          100.0%         100.0%
Merchant Capital                                                            25.1%              25.1%           25.1%          25.1%
Entersekt                                                                   25.1%              25.1%               -              -

Discontinued operation
RMB Structured Insurance                                                        -                  -           78.1%          75.5%


The group's interests in Prodigy Investments Limited and Luno Limited are treated as financial assets at fair value through profit or loss, as the size of
these shareholdings does not enable the group to exercise significant influence, which is the criterion for classifying an investment as an investment in
associate.

Summarised consolidated income statement

                                                                              
                                                                              Six months ended                         
                                                                                31 December                          Year ended
                                                                                                                        30 June
                                                                            2017              2016              %          2017
R million                                                              Unaudited         Unaudited         change       Audited

Continuing operations
Earned premiums net of reinsurance                                         7 208             7 048              2        14 064
Fee and other income                                                          61                65             (6)          135
Investment income                                                            377               331             14           688
Profit on sale of subsidiary                                                   -                 -              -             1
Net fair value gains/(losses) on financial assets                             42               (40)          >100           (43)

Income                                                                     7 688             7 404              4        14 845
Net claims paid                                                           (3 663)           (3 580)             2        (6 783)
Fair value adjustment to investment contracts and insurance
contract provisions                                                          (70)             (221)           (68)         (427)
Fair value adjustment to financial liabilities                              (100)              (88)            14          (199)
Acquisition, marketing and administration expenses                        (1 968)           (1 904)             3        (3 886)

Profit before finance costs, share of after tax results of associates
and taxation                                                               1 887             1 611             17         3 550
Net finance costs                                                           (387)              (84)          >100          (414)
Share of after tax results of associates                                   1 314               770             71         1 702

Profit before taxation                                                     2 814             2 297             23         4 838
Taxation                                                                    (570)             (496)            15        (1 084)

Profit for the period from continuing operations                           2 244             1 801             25         3 754
Profit/(loss) for the period from discontinued operation                       -                 1           (100)          (49)

Profit for the period                                                      2 244             1 802             25         3 705

Attributable to:
Equity holders of RMI                                                      2 059             1 619             27         3 327
Non-controlling interests                                                    185               183              1           378

Profit for the period                                                      2 244             1 802             25         3 705


Computation of headline earnings

                                                                       
                                                                         Six months ended                                   
                                                                           31 December                      Year ended
                                                                                                               30 June
                                                                        2017          2016            %           2017
R million                                                          Unaudited     Unaudited       change        Audited

Earnings attributable to equity holders                                2 059         1 619           27          3 327
Adjustment for:
  Intangible asset impairments                                            33            16                          91
  (Profit)/loss on dilution of shareholding                               (3)           10                          28
  Realised profit on sale of available-for-sale financial assets          (2)           (1)                         (2)
  Profit on sale of subsidiary                                             -           (18)                        (20)
  (Profit)/loss on sale of property and equipment                          -            (1)                          1
  Impairment of available-for-sale financial assets                        -             -                           9
  Impairment of owner-occupied building below cost                         -             -                           7

Headline earnings attributable to equity holders                       2 087         1 625           28          3 441


Computation of normalised earnings

                                                                        
                                                                         Six months ended                                  
                                                                          31 December                     Year ended
                                                                                                     %       30 June
R million                                                              2017          2016       change          2017

Headline earnings attributable to equity holders                      2 087         1 625           28         3 441
RMI's share of normalised adjustments made by investee
companies:                                                              167           188                        456

  Amortisation of intangible assets relating to business
  combinations                                                          170            97                        238
  Non-recurring and restructuring expenses                               35            20                         63
  Net realised and fair value (gains)/losses on shareholders'
  assets                                                                (28)            3                         13
  Basis and other changes and investment variances                      (10)           47                        117
  Rebranding and business acquisition expenses                            -            21                         25

Group treasury shares                                                    17            (8)                         -

Normalised earnings attributable to equity holders                    2 271         1 805           26         3 897


Computation of earnings per share

                                                                        
                                                                        Six months ended                                 
                                                                          31 December                     Year ended
                                                                                                             30 June
                                                                       2017          2016            %          2017
R million                                                         Unaudited     Unaudited       change       Audited

Earnings attributable to equity holders                               2 059         1 619           27         3 327

Headline earnings attributable to equity holders                      2 087         1 625           28         3 441

Normalised earnings attributable to equity holders                    2 271         1 805           26         3 897

Number of shares in issue (millions)                                  1 518         1 486            2         1 506
Weighted average number of shares in issue (millions)                 1 510         1 482            2         1 486

Continuing operations
Earnings per share (cents)                                            136.4         109.0           25         226.5
Diluted earnings per share (cents)                                    134.0         107.3           25         223.0
Headline earnings per share (cents)                                   138.3         109.4           26         234.2
Diluted headline earnings per share (cents)                           135.8         107.7           26         230.6
Normalised earnings per share (cents)                                 150.2         121.3           24         263.6
Diluted normalised earnings per share (cents)                         147.7         119.6           23         259.7

Continuing and discontinued operations
Earnings per share (cents)                                            136.4         109.2           25         223.9
Diluted earnings per share (cents)                                    134.0         107.5           25         220.4
Headline earnings per share (cents)                                   138.3         109.6           26         231.5
Diluted headline earnings per share (cents)                           135.8         107.9           26         227.9
Normalised earnings per share (cents)                                 150.2         121.5           24         261.6
Diluted normalised earnings per share (cents)                         147.7         119.8           23         257.7

Dividend per share
Interim dividend (cents)                                               39.0          53.0          (26)         53.0
Final dividend (cents)                                                    -             -            -          65.0

Total dividend                                                         39.0          53.0          (26)        118.0


Summarised consolidated statement of comprehensive income

                                                                         
                                                                          Six months ended                                     
                                                                            31 December                    Year ended
                                                                                                              30 June
                                                                         2017           2016           %         2017
R million                                                           Unaudited      Unaudited      change      Audited

Profit for the period                                                   2 244          1 802          25        3 705
Other comprehensive income for the period
Items that may subsequently be reclassified to income
  Currency translation differences                                       (149)          (464)         68         (248)
  Fair value movement on available-for-sale financial assets               73            (27)       >100          (22)
  Impairment of available-for-sale assets                                   -              -           -           13
  Deferred taxation relating to fair value movement on available-
  for-sale financial assets                                               (16)             6       >(100)           2
Share of other comprehensive income of associates                         (53)          (487)         89         (417)

  Items that may subsequently be reclassified to income, after
  taxation                                                                (63)          (491)         87         (448)
  Items that will not be reclassified to income, after taxation            10              4        >100           31

Other comprehensive income for the period                                (145)          (972)         85         (672)

Total comprehensive income for the period                               2 099            830        >100        3 033

Attributable to:
Equity holders of RMI                                                   1 932            706        >100        2 707
Non-controlling interests                                                 167            124          35          326

Total comprehensive income for the period                               2 099            830        >100        3 033


Summarised consolidated statement of financial position

                                                                              
                                                                                 As at                       
                                                                             31 December           As at
                                                                                                 30 June
                                                                         2017         2016          2017
R million                                                           Unaudited    Unaudited       Audited

Assets
Property and equipment                                                  1 118          730         1 000
Goodwill and other intangible assets                                       47           78            90
Investments in associates                                              25 150       14 971        24 455
Financial assets                                                       10 186       10 090         9 846
Loans and receivables including insurance receivables                   2 671        2 645         2 536
Deferred acquisition cost                                                 317          348           338
Reinsurance contracts                                                     584          237           672
Taxation                                                                    3           15             -
Deferred taxation                                                         125          109           176
Assets of discontinued operation                                            -        6 663             -
Cash and cash equivalents                                               2 494          877         2 302

Total assets                                                           42 695       36 763        41 415

Equity
Share capital and premium                                              14 825       13 556        14 328
Reserves                                                                5 880        4 646         4 947

Capital and reserves attributable to equity holders of the
company                                                                20 705       18 202        19 275
Non-controlling interests                                               1 325        1 186         1 215

Total equity                                                           22 030       19 388        20 490

Liabilities
Financial liabilities                                                  12 412        3 301        12 479
Insurance contracts                                                     6 826        6 589         6 841
Share-based payment liability                                             121          132           165
Payables and provisions                                                 1 163        1 120         1 263
Deferred taxation                                                          53            -            53
Taxation                                                                   90           63           124
Liabilities of discontinued operation                                       -        6 170             -

Total liabilities                                                      20 665       17 375        20 925

Total equity and liabilities                                           42 695       36 763        41 415


Statement of changes in equity

                                                                                                    Transactions
                                                                          Share        Equity          with non-                                  Non-
Unaudited                                                           capital and     accounted        controlling       Other    Retained   controlling       Total
R million                                                               premium      reserves          interests    reserves    earnings     interests      equity

Balance as at 1 July 2016                                                13 526         3 939             (2 097)        493       2 695         1 170      19 726
Income statement                                                              -             -                  -           -       1 619           183       1 802
Other comprehensive income                                                    -          (487)                 -        (426)          -           (59)       (972)
Dividends paid                                                                -             -                  -           -        (966)         (108)     (1 074)
Income of associates retained                                                 -           243                  -           -        (243)            -           -
BBBEE cost                                                                    -             1                  -           -           -             -           1
Movement in treasury shares                                                  30             2                  -           -           3             -          35
Transactions with non-controlling interests                                   -             -                (98)          -           2           (16)       (112)
Issue of share capital to non-controlling interests by subsidiaries           -             -                  -           -           -            23          23
Share-based payment reserve                                                   -             2                  -           5         (41)           (7)        (41)

Balance as at 31 December 2016                                           13 556         3 700             (2 195)         72       3 069         1 186      19 388

Balance as at 1 July 2017                                                14 328         4 300             (2 989)        295       3 341         1 215      20 490
Income statement                                                              -             -                  -           -       2 059           185       2 244
Other comprehensive income                                                    -           (53)                 -         (74)          -           (18)       (145)
Dividends paid                                                                -             -                  -           -        (979)         (101)     (1 080)
Issue of shares                                                             462             -                  -           -           -             -         462
Income of associates retained                                                 -           616                  -           -        (616)            -           -
BBBEE cost                                                                    -             1                  -           -           -             -           1
Movement in treasury shares                                                  35             3                  -           -           -             -          38
Transactions with non-controlling interests                                   -            (5)               (22)          -           1            (3)        (29)
Issue of share capital to non-controlling interests by subsidiaries           -             -                  -           -           -            49          49
Share-based payment reserve                                                   -            15                  -           3         (16)           (2)          -

Balance as at 31 December 2017                                           14 825         4 877             (3 011)        224       3 790         1 325      22 030


Consolidated statement of cash flows

                                                                     
                                                                        Six months ended                      
                                                                          31 December          Year ended
                                                                                                  30 June
                                                                       2017          2016            2017
R million                                                         Unaudited     Unaudited         Audited

Cash flows from operating activities
Cash generated from operations                                        1 672         1 003           2 638
Interest income                                                         302           242             503
Dividends received                                                      611           603           1 085
Income tax paid                                                        (494)         (480)         (1 130)
Cash flows from discontinued operation                                    -          (349)            190

Net cash generated from operating activities                          2 091         1 019           3 286

Cash flows from investing activities
Purchase of property and equipment                                     (213)         (140)           (484)
Disposal of property and equipment                                        2             -               2
Additions to financial assets                                        (4 369)       (2 176)         (9 215)
Disposals of financial assets                                         4 016         2 718           9 572
New investments acquired                                               (127)         (450)         (9 040)
Proceeds on sale of subsidiary                                            -             -             165
Cash flows from discontinued operation                                    -          (244)              -

Net cash outflow from investing activities                             (691)         (292)         (9 000)

Cash flows from financing activities
Proceeds from issue of shares                                           312             -             760
Issue of preference share debt                                            -             -           9 710
Redemption of preference share debt                                       -             -          (2 298)
Cash raised from borrowings incurred                                      -           594           2 367
Repayment of borrowings                                                 (40)            -               -
Cost of funding                                                         (45)          (12)            (59)
Dividends paid on preference shares in issue                           (342)          (82)           (271)
Dividends paid by subsidiaries to non-controlling interests            (101)         (108)           (253)
Additional shares acquired in subsidiary                                (10)            -            (912)
Dividends paid to shareholders                                         (829)         (966)         (1 753)
Proceeds on issue of shares to non-controlling interest                  49            41              71
Cash flows from discontinued operation                                    -           495               -

Net cash (outflow)/inflow from financing activities                  (1 006)          (38)          7 362

Net increase in cash and cash equivalents for the period                394           689           1 648
Unrealised foreign currency translation adjustment - Continuing
operations                                                             (202)         (521)             43
Cash and cash equivalents at the beginning of the period              2 302           611             611
Cash and cash equivalents transferred to assets of discontinued
operation                                                                 -            98               -

Cash and cash equivalents at the end of the period                    2 494           877           2 302


Segmental report

The segmental analysis is based on the management accounts prepared for the group.

Unaudited                                                                                                                                  RMI
R million                                                       Discovery             MMI     OUTsurance        Hastings     Other(1)    group

Six months ended 31 December 2017
Net income                                                              -               -          7 538               -       150       7 688
Policyholder benefits and transfer to policyholder liabilities          -               -         (3 733)              -         -      (3 733)
Depreciation                                                            -               -            (70)              -        (2)        (72)
Amortisation                                                            -               -            (45)              -         -         (45)
Other expenses                                                          -               -         (1 756)              -       (95)     (1 851)
Finance costs                                                           -               -              -               -      (387)       (387)
Fair value adjustment to financial liabilities                          -               -           (100)              -         -        (100)
Share of after tax results of associates                              666             315            165             176        (8)      1 314

Profit/(loss) before taxation                                         666             315          1 999             176      (342)      2 814
Taxation                                                                -               -           (551)              -       (19)       (570)

Profit/(loss) for the period                                          666             315          1 448             176      (361)      2 244
Hastings included in OUTsurance (net of GBP funding costs)              -               -           (154)            154         -           -

Profit/(loss) for the period                                          666             315          1 294             330      (361)      2 244

Normalised earnings                                                   716             396          1 461             189      (491)      2 271
Hastings included in OUTsurance (net of GBP funding costs)              -               -           (193)            193         -           -

Normalised earnings                                                   716             396          1 268             382      (491)      2 271

Assets                                                                  -               -         14 411               -     3 087      17 498
Investments in associates                                           9 420           5 926          3 999           5 094       711      25 150
Intangible assets                                                       -               -             47               -         -          47

                                                                    9 420           5 926         18 457           5 094     3 798      42 695
Hastings included in OUTsurance                                         -               -         (3 944)          3 944         -           -

Total assets                                                        9 420           5 926         14 513           9 038     3 798      42 695

Total liabilities                                                       -               -          8 166               -    12 499      20 665

1 Other includes RMI, RMI Investment Managers, AlphaCode investments and consolidation entries.


Unaudited                                                                                                  Discontinued                   RMI
R million                                                       Discovery             MMI    OUTsurance      operations     Other(1)    group

Six months ended 31 December 2016
Net income                                                              -               -         7 359               -        45       7 404
Policyholder benefits and transfer to policyholder liabilities          -               -        (3 801)              -         -      (3 801)
Depreciation                                                            -               -           (59)              -        (2)        (61)
Amortisation                                                            -               -           (43)              -         -         (43)
Other expenses                                                          -               -        (1 720)              -       (80)     (1 800)
Finance costs                                                           -               -             -               -       (84)        (84)
Fair value adjustment to financial liabilities                          -               -           (88)              -         -         (88)
Share of after tax results of associates                              500             263             8               -        (1)        770

Profit/(loss) before taxation                                         500             263         1 656               -      (122)      2 297
Taxation                                                                -               -          (502)              -         6        (496)

Result for the period from continuing operations                      500             263         1 154               -      (116)      1 801
Discontinued operation                                                  -               -             -               1         -           1

Profit/(loss) for the period                                          500             263         1 154               1      (116)      1 802

Normalised earnings                                                   546             404         1 139               3      (287)      1 805

Assets                                                                  -               -        13 817           6 663     1 234      21 714
Investments in associates                                           8 437           6 081            38               -       415      14 971
Intangible assets                                                       -               -            73               -         5          78

Total assets                                                        8 437           6 081        13 928           6 663     1 654      36 763

Total liabilities                                                       -               -         7 864           6 170     3 341      17 375

1 Other includes RMI, RMI Investment Managers, AlphaCode investments and consolidation entries.


Geographical segments

Unaudited                                   South                    New     United
R million                                  Africa   Australia    Zealand    Kingdom      Total

Six months ended 31 December 2017
Profit/(loss)                               1 016         538        (10)       (44)     1 500
Share of after tax results of associates      850           -          -        464      1 314

Profit/(loss) before taxation               1 866         538        (10)       420      2 814
Taxation                                     (402)       (168)         -          -       (570)

Profit/(loss) for the year                  1 464         370        (10)       420      2 244

Assets
Property and equipment                      1 064          41         13          -      1 118
Investments in associates                  16 112           -          -      9 038     25 150
Financial assets                            5 333       7 140        384          -     12 857
Cash and cash equivalents                   2 263         192         39          -      2 494
Other assets                                  216         769         91          -      1 076

Total assets                               24 988       8 142        527      9 038     42 695

Liabilities
Insurance contract liabilities              2 088       4 587        151          -      6 826
Other liabilities                          10 285         942        100      2 512     13 839

Total liabilities                          12 373       5 529        251      2 512     20 665

Six months ended 31 December 2016
Profit/(loss)                               1 163         399        (35)         -      1 527
Share of after tax results of associates      722           -          -         48        770

Profit before taxation                      1 885         399        (35)        48      2 297
Taxation                                     (367)       (129)         -          -       (496)

Result from continuing operations           1 518         270        (35)        48      1 801
Discontinued operation                          1           -          -          -          1

Profit/(loss) for the year                  1 519         270        (35)        48      1 802

Assets
Property and equipment                        675          31         24          -        730
Investments in associates                  14 971           -          -          -     14 971
Financial assets                            5 378       6 891        466          -     12 735
Cash and cash equivalents                     636         201         40          -        877
Other assets                                6 898         456         96          -      7 450

Total assets                               28 558       7 579        626          -     36 763

Liabilities
Insurance contract liabilities              1 886       4 490        213          -      6 589
Other liabilities                           9 691         981        114          -     10 786

Total liabilities                          11 577       5 471        327          -     17 375


Financial instruments measured at fair value

The group's activities expose it to a variety of financial risks. The table below analyses financial instruments carried at fair value by level in the fair value
hierarchy. The different levels are based on the extent that quoted prices are used in the calculation of the fair value of the financial instruments. These
levels are defined as follows:

Level 1 - fair value is based on quoted market prices (unadjusted) in active markets for identical instruments as measured on the reporting date.

Level 2 - fair value is determined through valuation techniques based on observable market inputs. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on entity-specific estimates.

Level 3 - fair value is determined through valuation techniques which use significant unobservable inputs.

                                                                                                                                 Total
Unaudited                                                                                                                     carrying
R million                                                                    Level 1         Level 2          Level 3           amount

31 December 2017
Financial assets
Equity securities
- Exchange traded funds                                                          724               -                -              724
- Listed preference shares                                                       346               -                -              346
- Collective investment schemes                                                    -             107                -              107
- Listed equity securities                                                       172               -                -              172
- Unlisted equity securities                                                       -               -              131              131

Debt securities
- Unlisted preference shares                                                       -             102                -              102
- Zero-coupon deposits                                                             -             292                -              292
- Term deposits                                                                    -           4 422                -            4 422
- Government, municipal and public utility securities                              -             416                -              416
- Money market securities                                                          -           2 569                -            2 569
- Collective investment schemes                                                    -              44                -               44
- Other debt securities at fair value through profit or loss                       -              18              818              836

Derivative asset                                                                   -              25                -               25

Total financial assets recognised at fair value                                1 242           7 995              949           10 186

Financial liabilities
Financial liabilities at fair value through profit or loss                         -               -              140              140
Derivative liability                                                               -              30                -               30

Total financial liabilities recognised at fair value                               -              30              140              170



                                                                                 Six months ended
                                                                                    31 December

Unaudited                                                                      2017             2016
R million                                                                 Unaudited        Unaudited

Reconciliation of movement in Level 3 assets
Balance at the beginning of the period                                          814              643
Additions in the current period                                                 130              281
Amount received in the current period                                             -             (106)
Investment income accrued                                                        43               28
Dividends received from the OUTsurance share trusts                             (38)             (39)

Balance at the end of the period                                                949              807

Reconciliation of movement in Level 3 liabilities
Balance at the beginning of the period                                          150              144
Preference dividends charged to the income statement                            100               88
Preference dividends paid                                                      (110)            (105)

Balance at the end of the period                                                140              127


The Level 3 financial liabilities at fair value through profit or loss represent profits arising out of profit sharing arrangements on ring-fenced insurance
business that accrue on a monthly basis.

                                                                                                                              Total
Unaudited                                                                                                                  carrying
R million                                                                   Level 1        Level 2          Level 3          amount

31 December 2016
Financial assets
Equity securities
- Exchange traded funds                                                         547              -                -             547
- Listed preference shares                                                      388              -                -             388
- Collective investment schemes                                                   -              -                -               -
- Listed equity securities                                                      141              -                -             141
- Unlisted equity securities                                                      -              -                -               -

Debt securities
- Unlisted preference shares                                                      -            505                -             505
- Zero-coupon deposits                                                            -            127                -             127
- Term deposits                                                                   -          4 577                -           4 577
- Government, municipal and public utility securities                             -            466                -             466
- Money market securities                                                         -          2 474                -           2 474
- Collective investment schemes                                                   -             43                -              43
- Other debt securities at fair value through profit or loss                      -              -              807             807

Derivative asset                                                                  -             15                -              15

Total financial assets recognised at fair value                               1 076          8 207              807          10 090

Financial liabilities
Financial liabilities at fair value through profit or loss                        -              -              127             127
Derivative liability                                                              -            209                -             209

Total financial liabilities recognised at fair value                              -            209              127             336


The fair values of the above instruments were determined as follows:

Level 1

The fair value of financial instruments traded in an active market is based on quoted market prices at the statement of financial position date. A market
is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory
agency and those prices represent actual and regularly occurring market transactions on an arm's length basis.

The listed preference share investments comprise instruments which are listed on a securities exchange. The fair values of these investments are
calculated based on the quoted closing prices of the individual investments on the reporting date. These instruments are included in Level 1 and
comprise mainly instruments classified as trading securities. The investment in the exchange traded funds track the performance of the top fifty
companies listed on the JSE.

Level 2

The fair values of financial instruments that are not traded in an active market are determined by using valuation techniques. These valuation techniques
maximise the use of observable market data where it is available and rely as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are market observable, the instrument is included in Level 2.

Level 2 instruments comprise derivative, debt and short-term money market instruments where the value is determined by using market observable
input, e.g. JIBAR, prime overdraft rate, foreign currency rates, listed bond rates of similar instruments, without significant adjustments.

The unlisted preference shares are redeemable with a notice period of one year. Dividend yields are 65% of the prime overdraft rate. The fair value of
the preference shares with a maturity date of longer than one year is calculated on a discounted cash flow basis with the discount rate adjusted for
changes in credit risk of the ultimate counterparty. Due to the redeemable nature, the preference shares are deemed to be debt securities.

Zero-coupon deposits are not traded actively during a financial reporting period and are classified as Level 2 financial instruments. Fair value is
determined based on a discounted cash flow valuation.

The group uses zero-coupon deposits to offset the interest rate risk inherent in some of the life insurance products underwritten by OUTsurance Life.
The counterparties to these deposits are the large South African banks. The zero-coupon deposits have been structured to allow for the payment of
the notional initial deposit to be spread over the specified term to enable cash flow matching. The maturity dates of the accreting zero-coupon deposits
are long-term, with maturity dates at the various trading dates not exceeding 15 years. The fair values of the accreting zero-coupon deposits are
determined monthly based on observable market inputs. To determine the fair values of the accreting zero-coupon deposits, a risk-free swap yield
curve produced every business day by the JSE is referenced. The instruments are designated at fair value through profit or loss, with both the interest
accrual and fair value accounted for in profit or loss.

The fair value of money market instruments and government, municipal and public utility securities is determined based on observable market inputs.
These instruments consist of fixed and floating rate notes held in segregated portfolios. These instruments are typically listed on the Bond Exchange of
South Africa (BESA). Instruments listed on BESA are not as actively traded as Level 1 instruments. Despite this, the fair values of these instruments can
be readily determined as the inputs utilised in the fair value calculation are available in the open market and on the coupon face at issue date.

Level 3

If one or more of the significant inputs are not based on observable market data, the instrument is included in Level 3. The financial instruments at fair
value through profit or loss represent profits arising out of the profit sharing arrangements that accrue on a monthly basis and which are distributed as
preference dividends bi-annually to the FirstRand Limited Group. The only significant unobservable input in the calculation of the preference dividend is
the historic profit of the profit sharing arrangements and there are no other inputs that determine the value of these instruments. Should the profit of the
profit sharing arrangement increase or decrease, the preference dividend will increase or decrease in direct proportion.
A specific valuation technique is used to value this Level 3 financial instrument which represents an accrued profit related to the FirstRand Limited
Homeowners profit sharing arrangement:

The fair value is determined based on valuation techniques where the input is determined by management, e.g. profits arising out of profit sharing
arrangements, and is not readily available in the market or where market observable input is significantly adjusted.

Inputs are determined by the profits arising and calculations are made in accordance with the profit share percentages, stipulated within the profit
sharing arrangement. No assumptions or adjustments or any other inputs are made to the profits before or after distribution. Distribution of the profits
arising are made in the form of preference dividends.

ADMINISTRATION

Directors

GT Ferreira (chairman), JJ Durand (deputy chairman), HL Bosman (chief executive and financial director), JP Burger, P Cooper, (Ms) SEN De Bruyn, LL
Dippenaar, JW Dreyer, PM Goss, PK Harris, (Ms) A Kekana, P Lagerström, MM Morobe, O Phetwe and KC Shubane.

Alternates

F Knoetze and DR Wilson

Messrs GT Ferreira, JW Dreyer and KC Shubane will retire and Mr Durand will take over as chairman on 31 March 2018. Mr Goss will retire on 10 April
2018.

Messrs R Mupita and J Teeger and Ms Mahlare will be appointed as independent, non-executive directors and Mr D Frankel as an alternate non-
executive director for Mr Teeger, effective on 31 March 2018.

Secretary and registered office

JS Human
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 8166
Telefax:                      +27 11 282 4210
Web address:                  www.rmih.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
Postal address:               PO Box 61051, Marshalltown, 2107
Telephone:                    +27 11 370 5000
Telefax:                      +27 11 688 5221

Date: 12/03/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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