RAND MERCHANT INVESTMENT HOLDINGS LIMITED - Summarised audited results announcement and dividend declaration for the year ended 30 June 2018

Release Date: 11/09/2018 08:00
Code(s): RMI
 
Wrap Text
Summarised audited results announcement and dividend declaration for the year ended 30 June 2018

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

Summarised audited results announcement and dividend declaration for the year ended 30 June 2018

Basis of preparation
These summarised, audited financial results of Rand Merchant Investment Holdings Limited (RMI) for the year ended 30 June 2018 have been prepared in
accordance with:
- International Financial Reporting Standards (IFRS), including IAS 34: 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 year, 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 year 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 annual consolidated financial statements for the year ended 30 June 2018, contained in this announcement, have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon.

The auditor also expressed an unmodified opinion on the annual consolidated financial statements from which the summarised annual consolidated financial
statements were derived. Unless the financial information is specifically stated as audited, it should be assumed that it is unaudited.

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. Because of its nature, the pro forma financial information may not fairly present
RMI's financial position, changes in equity, results of operations or cash flows. An assurance report has been prepared and issued by RMI's auditor,
PricewaterhouseCoopers Inc., on the pro forma financial information included in this report and is available at the registered office of RMI.

Copies of the auditor's reports on the annual consolidated financial statements and the summarised annual consolidated financial statements are available for
inspection at RMI's registered office, 3rd floor, 2 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, together with the annual consolidated
financial statements identified in the report.

The auditor's report does not necessarily report on all the information contained in these summarised consolidated financial statements.
Shareholders are therefore advised that, to obtain a full understanding of the nature of the auditor's engagement, they should review the auditor's report together
with the accompanying financial information from the issuer's registered office.

The forward-looking information was not reviewed or reported on by the group's external auditor.

Enduring value created for the year ended 30 June 2018

Compound shareholders' return since listing in 2011 - 23.2% per annum
Normalised earnings (from continuing operations) - R4 473 million +14% (2017: R3 927 million) (+12% to 295.1 cents per share)
Headline earnings (from continuing operations) R4 081 million +17% (2017: R3 480 million) (+15% to 269.7 cents per share)

About RMI

Rand Merchant Investment Holdings Limited (RMI) is a JSE-listed investment holding company with a proud track record of investing in disruptive and
entrepreneurial financial services businesses. The group's long-term performance has been achieved by partnering with exceptional management teams. RMI
positions itself as a value-adding, stable and aspirational shareholder.

Creating enduring value

RMI's primary objective is to create enduring 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);
  - Merchant Capital Advisory Services Proprietary Limited (Merchant Capital);
  - Prodigy Investments Limited (Prodigy); and
  - Luno Limited (Luno).

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 add enduring value by being an 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 on a regular basis.

RMI's investments

RMI is a strategic, active manager of a R57 billion financial services portfolio:

RMI's effective interest in these group entities is different from the actual interest due to consolidation adjustments in respect of treasury shares.

25.0% - Discovery
26.2% - MMI Holdings
88.6% - OUTsurance
29.9% - Hastings
100% - RMI Investment Managers
100% - AlphaCode

Listed investments

Discovery

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

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 the 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 2.7 million live client policies and is a multi-award-winning business.

MMI

MMI is an insurance-based financial services group which is 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 Momentum and Metropolitan operating brands.

Unlisted investments

OUTsurance

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. Clients who remain claim-free receive a cash OUTbonus, the first such reward system in South Africa.

RMI Investment Managers

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 currently predominantly focused on
the execution of the growth initiatives at each affiliate, 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

AlphaCode identifies, partners and grows extraordinary next-generation financial services entrepreneurs.

Prior year investments:

- Merchant Capital is a provider of alternative sources of working capital for small and medium enterprises in South Africa; and
- Entersekt 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 year, two further investments were made:

- Prodigy is an international fintech platform that offers loans to postgraduate students attending top universities; and
- Luno makes it safe and easy to buy, store and learn about digital currencies like Bitcoin and Ethereum in South Africa.

It is actively seeking to fund new and disruptive, sustainable, scalable business models.

Performance and outlook

External environment

South Africa's new president, Mr Cyril Ramaphosa, took office in February and promised to revive the economy, clamp down on corruption and attract $100 billion
in new investments. The change in the political environment marked an initial positive turning point for business and consumer confidence. In addition, rating
agencies have refrained from further downgrades since November 2017.

The South African economy is experiencing:
- A more stable political environment;
- Stable inflation and interest rates;
- Continued high unemployment rates; and
- A lack of growth.

Despite the improved political environment, policy uncertainties remain, such as the financial turnaround of state enterprises and the revival of the mining sector. In
addition, potential land reform policy, allowing land expropriation without compensation, raises uncertainty about property rights, which could lead to a decline in
investment into South Africa.

Overview of results

Despite the low economic growth environment across most markets, the RMI group delivered a pleasing 14% increase in normalised earnings from continuing
operations for the year ended 30 June 2018.

Discovery delivered a strong performance, with normalised earnings increasing by 16% to R5.4 billion. The established businesses delivered combined growth in
operating profit of 14%, which is well above the target of CPI + 5%, with Discovery Vitality (132% growth), VitalityHealth (108% growth) and Discovery Invest (19%
growth) being the main drivers of earnings growth. In addition, the emerging businesses exceeded their targeted earnings growth of CPI + 30%, with both
Discovery Insure (excluding the newly launched commercial offering) and the Vitality Group turning a loss position in the prior year into profits. In total, 7% of
earnings was invested in new initiatives, including Discovery Bank, the recently launched UK investment business, Vitality Invest, the commercial offering in
Discovery Insure and the Umbrella Fund offering in Discovery Invest. 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 10% to R16.1 billion. The Discovery group maintained a within-guidance cash buffer of
R1.7 billion as at 30 June 2018 and the financial leverage ratio of 25.8% remained below the limit set at 28%.

RMI included normalised earnings of R778 million from Hastings for the year ended 30 June 2018. Hastings announced its interim results for the six months
ended 30 June 2018 on 8 August 2018. Gross written premiums increased by 5% and normalised earnings by 22% in Pound Sterling terms for the six-month
period. The claims ratio of 73.8% was better than the target range of 75% to 79%, despite the impact of adverse weather conditions experienced in the first
quarter of the calendar year. Hastings recorded a sustained increase in clients, with live client policies increasing by 6% to 2.7 million and market share growing to
7.5% of the UK private car insurance market. The Solvency II coverage ratio strengthened to 171% (31 December 2017: 167%) and the reduction in the net debt
leverage multiple continued to improve to 1.1 times adjusted operating profit (31 December 2017: 1.4 times). Hastings declared an interim dividend of 4.5 pence
per share, an increase of 10% on the interim dividend in the prior year of 4.1 pence per share.

Although the continued challenging macroeconomic environment negatively impacted MMI's financial results for the year ended 30 June 2018, operational
shortcomings also played a part in the disappointing set of results. MMI recorded a 12% decrease in normalised earnings to R2.8 billion, despite strong
improvements in Momentum Corporate's group underwriting results, solid mortality and disability results across the group and improved results from the
international operations. These positive factors were more than offset by increased investment in client engagement activities and specific technology investments
to improve intermediary and client experience, the impact of a reinsurance loss, including an allowance for higher future reinsurance premiums on Momentum
Retail risk products, lower profits from the Momentum Retail legacy life products and a weaker early duration lapse experience in Metropolitan Retail. MMI's share
of losses from its new initiative investments in India and aYo increased by R90 million, in line with business plans. MMI's capital position remains strong, with a
buffer of R2.4 billion on an internal basis and a capital adequacy requirement (CAR) cover ratio of 2.6 times as at 30 June 2018.

Normalised earnings from OUTsurance, including its shareholding in Hastings, increased by 22% to R3 billion, mainly due to favourable claims conditions
throughout all major operations and higher associate earnings from its indirect interest in Hastings. Excluding Hastings, normalised earnings increased by 7% to
R2.6 billion. The cost-to-income ratio improved from 25.8% to 25.6%, primarily attributable to cost-efficiency in Youi. OUTsurance achieved a normalised return on
equity of 31.4% and a claims ratio of 49.8%. The claims ratio benefitted from lower motor claims and favourable weather conditions. Youi Australia will be paying
its maiden dividend. The adoption of the new Solvency Assessment and Management (SAM) prudential regulations, effective from 1 July 2018, is beneficial to the
South African regulated entities. Youi is unaffected as the Australian prudential regulations enjoy Solvency II equivalence.

RMI Investment Managers is in its third year of operations, with overall financial performance in line with expectations. Revenue improved across the affiliate
portfolio, despite the challenging economic and political environment in South Africa. The affiliates continued to strengthen their investment and operational
capabilities and are close to reaching operating leverage. Assets under management across the portfolio remained consistent over the past six months at R105
billion. This is a positive outcome in the face of South Africa being impacted by the global "risk-off" sentiment.

Royal Investment Managers is a joint venture between RMI Investment Managers and Royal Bafokeng Holdings (RBH). The portfolio performed in line with
expectations during the year.

The net funding and holding company costs amounted to R684 million, compared to R389 million in the prior year 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 year following the scrip dividend and cash proceeds on the sale of 49% of the group's stake in Hastings to OUTsurance.

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 year under review are listed in the table below:

                                                                               For the year ended 30 June

R MILLION                                                                             2018        2017      % change

Continuing operations
Discovery                                                                            5 401       4 656            16
Hastings(1)                                                                          2 758       1 918            44
MMI                                                                                  2 809       3 208           (12)
OUTsurance (excluding Hastings)                                                      2 639       2 463             7

- OUTsurance (including Hastings)                                                    3 012       2 476            22
- Hastings included in OUTsurance                                                     (373)        (13)        >(100)

Other(2)                                                                               (25)         (5)        >(100)
Discontinued operation
RMB Structured Insurance (excluding Truffle)                                             -         (38)          100

(1) The comparative for Hastings presents its normalised earnings for the year ended 30 June 2017. Its normalised
    earnings for the period from 1 March 2017 (the acquisition date of RMI's 29.9% equity stake) to 30 June 2017 were
    R828 million
(2) Other includes RMI Investment Managers and AlphaCode investments.

A detailed reconciliation between reported headline earnings and normalised earnings has been provided in the annual financial statements of the respective
investee companies. The annual financial statements of these investee companies are available on their respective websites.

RMI's consolidated normalised earnings for the year under review are listed in the table below:

                                                                                For the year ended 30 June

R MILLION                                                                             2018          2017        % change

Continuing operations                                                                4 473         3 927              14

Discovery                                                                            1 356         1 167              16
Hastings                                                                               778           246            >100
MMI                                                                                    715           816             (12)
OUTsurance (excluding Hastings)                                                      2 333         2 092              12

- OUTsurance (including Hastings)                                                    2 661         2 103              27
- Hastings included in OUTsurance                                                     (328)          (11)          >(100)

Other(1)                                                                               (25)           (5)          >(100)
Funding and holding company costs                                                     (684)         (389)            (76)

Discontinued operation
RMB Structured Insurance (excluding Truffle)                                             -           (30)           >100

Normalised earnings                                                                  4 473         3 897              15

Normalised earnings per share (cents) (continuing operations)                        295.1         263.6              12
Normalised earnings per share (cents) (continuing and discontinued
operations)                                                                          295.1         261.6              13

(1) Other includes RMI Investment Managers and AlphaCode investments.

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

Market value of investments

During the 2018 financial year, RMI's share price decreased by 4% (2017: decreased by 5%), compared to a 14% increase in the life insurance index and a 23%
increase in the non-life insurance index. RMI has delivered a total annual compound return to shareholders of 23.2% since its listing in March 2011.

The individual investment performances during the 2018 financial year are outlined below:

- Discovery's share price increased by 15% (2017: increased by 4%);
- Hastings' share price decreased by 19% in Pound Sterling terms and by 14% in Rand terms; and
- MMI's share price decreased by 13% (2017: decreased by 11%).

On a "look-through" basis, based on share prices as at 30 June 2018, the value attributed to RMI's unlisted investments decreased by 9% (2017: decreased by
12%) to R27.2 billion (2017: R29.8 billion). These unlisted investments include OUTsurance (excluding OUTsurance's 49% stake in the group's holding in Hastings)
(88.6% held), RMI Investment Managers (100% held) and the AlphaCode investments.


R MILLION                                                                                2018            2017         % change

Market value of listed investments(1)                                                  39 540          38 690                2

Discovery                                                                              23 887          20 716               15
Hastings (RMI's effective holding)                                                      8 566           9 857              (13)

- 29.9% holding                                                                         9 072          10 491              (14)
- Attributable to non-controlling interest of OUTsurance                                 (506)           (634)              20

MMI                                                                                     7 087           8 117              (13)

Market value of unlisted investments                                                   27 195          29 806               (9)

RMI Investment Managers and AlphaCode at cost                                             834             619               35
Implied market value of RMI's stake in OUTsurance (excluding Hastings)                 26 361          29 187              (10)

Gross market value of portfolio                                                        66 735          68 496               (3)
Net liabilities of holding company                                                     (9 709)         (9 789)               1

RMI market capitalisation                                                              57 026          58 707               (3)

RMI closing share price (cents)                                                         3 745           3 899               (4)

(1) The market value of these listed investments increased to R45 384 million on 7 September 2018.

Final dividend for the 2018 financial year

As conveyed in our interim results announcement, MMI has reviewed its dividend policy to ensure that it remains consistent with its capital deployment plans and
the need to maintain steady capital ratios under the SAM regime. MMI opted to buy back shares of up to R2 billion in 2018 in lieu of paying out dividends, given
that its shares are valued at a discount to embedded value (EV). MMI has subsequently bought back 47 million shares, valued at R974 million, between March
2018 and June 2018. RMI has not sold any of its MMI shares, thereby increasing its holding in MMI from 25.5% to 26.2%.

MMI expects the current buyback programme to be finalised by December 2018. The decision to continue with the share buyback programme, rather than paying
a cash dividend, will be reviewed during MMI's next interim results cycle and will depend on the price-to-EV rating, the capital position and shareholder
requirements at the time.

OUTsurance increased its final dividend by 45% to 33 cents per share, mainly due to Youi paying its maiden dividend. RMI will also receive a further R236 million
special dividend from OUTsurance, being surplus capital arising from the implementation of the SAM regime.

The 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.

The RMI board resolved to declare a final dividend of 65.0 cents (2017: 65.0 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 total dividend for the year of 104.0 cents (2017: 118.0 cents) per ordinary
share is covered 2.8 times (2017: 2.2 times) by the normalised earnings of 295.1 cents (2017: 261.6 cents) per share.

Since 2014, RMI has actively pursued a strategy to optimise, diversify and modernise its portfolio of financial services assets. Its ambition 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 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 information on the options available to shareholders.

Events after the reporting period

The directors are not aware of any material adjusting or non-adjusting events relating to the 2018 financial year that have occurred between the date of the
statement of financial position and the date of this report.

Update on RMI's strategy

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.

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

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

Diversify - RMI is constantly evaluating opportunities to expand the services and reach of its existing investees companies or to add new investments, thereby
creating more enduring value.

Modernise - RMI is well aware of renewal in its industries and will acquire proven businesses or invest in start-ups with special opportunities and drivers, which
can create new enduring value.

On a selective basis, RMI may consider investments in businesses where partnerships with entrepreneurial and industry-disruptive management teams can add
value to its shareholders.

Investments with the following attributes will be of interest:
- Financial services and related industries;
- The ability to form a partnership between the investment, RMI and its current investees;
- Unlisted;
- Digitally-oriented;
- An ability and possibility for RMI to add value; and
- Relevance in terms of the size of the enterprise and its shareholding.

RMI will dynamically assess whether investments are optimally housed in RMI or one of its existing investee companies.

Optimise - Optimisation of our established investments

Management will continue its strategic dialogue and activity across the portfolio. It will assist in creating leadership, stability and succession planning.

Major milestones

- Increased shareholding in OUTsurance and MMI;
- Exploration of new products and strategic projects to diversify revenue streams for OUTsurance; and
- Ongoing strategic dialogue with Discovery, MMI and Hastings.

Diversify - Diversification of income stream and distribution of assets

RMI will evaluate expanding its geographic footprint further, either independently and/or through the existing portfolio.

Major milestones

- Supported Discovery in diversifying into banking and short-term insurance;
- Acquired the following affiliates in RMI Investment Managers in the year:
  - 30% in Ethos Private Equity
  - 30% in Balondolozi Investment Services; and
- Continuing to evaluate later-stage, capital-light business models with organic growth potential.

Modernise - Modernisation

RMI will continue to identify new businesses, technologies and industry trends to complement RMI and its investee companies.

Major milestones

- Ongoing substantial investment by Discovery, Hastings, MMI and OUTsurance in latest technology;
- AlphaCode has established itself as a centre of fintech excellence in South Africa and a source of innovation and
- next-generation thinking for the broader RMI portfolio;
- Acquired the following investments during the year:
  - 3.5% in Prodigy Finance
  - 7.5% in Luno; and
- Pipeline of potential future investment opportunities created.

Outlook and future value creation

Existing portfolio

Discovery has built a strong portfolio of businesses at different maturity levels, all meeting stringent actuarial, market competitiveness and client service metrics.
The established businesses are of significant scale and continue to grow, with Discovery Health leading in open scheme market share, Discovery Life leading in
new business market share, Discovery Invest in the top ten retail asset takers and VitalityHealth and VitalityLife in the top five market leaders. In addition, these
businesses entered adjacent industries over the year, manifesting in the launch of Discovery for Business in South Africa and the introduction of the long-term
savings business, VitalityInvest in the UK, further building the Vitality UK composite model.

The emerging businesses of Discovery Insure, Vitality Group and Ping An Health, while taking longer than expected to grow, all turned profitable over the year and
demonstrated their potential. Discovery Insure is the fastest-growing short-term insurer in South Africa, Vitality Group is building a leading global behavioural
insurance platform and Ping An Health is the leading private health insurer in China. All three businesses continued to scale and innovate while maintaining positive
actuarial dynamics, offering substantial value to the Global Vitality Platform.

Due to the scale and growth rate of the established businesses, the growth model is proving to be less linear as time progresses. This is driving the need to invest
in large strategic initiatives with significant growth potential, which is the rationale behind launching Discovery Bank and VitalityInvest. Excluding the effect of the
Bank, Discovery expects continued growth without recourse to additional capital. The Bank will flatten earnings for the 2019 year, as post-launch, the amortisation
of the build cost will emerge. Thereafter, organic growth is expected.

A fast-moving and increasingly digital landscape plays to Hastings' strengths. Its capabilities in agile pricing, analytics and anti-fraud combined with its disciplined
underwriting and strong capital position means it is well-placed to continue to identify and grow in profitable parts of the market. These core attributes have
transformed the business from a small disruptor in 2011 into a household name in the UK short-term insurance market, a market with over 50 million car and
home policies.

Looking forward, Hastings will continue to invest in technology. It is continuing with the phased roll-out of the next-generation Guidewire platform, with home
policies now live on selected price comparison websites and car renewals migration underway. Guidewire will enable continued delivery of operational efficiencies.
Hastings also developed new digital capabilities over the last few months and launched a new Hastings mobile app. Hastings is continuously developing its pricing
and anti-fraud platforms and announced its participation in a mobility and vehicle technology research programme, alongside a range of other partners from the
automotive and mobility sectors.

MMI's vision is to be the preferred lifetime financial wellness partner with a reputation for innovation and trustworthiness. The group strategy, which focuses on
client-centricity, growth and excellence, remains intact. However, the specific strategic objectives will be set in more practical and meaningful terms, with an
increased focus on execution and delivery. To this end, MMI has made good progress during the year. The reset in priorities was done to enable improved
performance and future growth. Key activities include encouraging a more entrepreneurial culture, increased focus on successfully growing core businesses in
South Africa and exiting marginal operations outside South Africa. MMI has simplified its operating model and empowered its businesses with end-to-end
accountability from sales to service. Centralised functions need to demonstrate clear efficiency or standardisation benefits. MMI will also be increasingly vigilant in
not attempting too many new initiatives at any given time.

The maturity of the South African insurance markets and modest short-term macroeconomic growth prospects continue to put pressure on MMI's revenue growth
expectations. MMI will therefore also focus on financial discipline, cost-efficiencies and streamlining infrastructure. Building the foundation for longer-term prosperity
will depend on a strong distribution and service culture and relevant digital enablement.

OUTsurance's strategic focus includes:

- Growing its market share and product range in Australia. Over the last two years, Youi's new business growth has slowed, resulting in a stagnating market
  share. The successful delivery of various operational improvements and product innovation can steer the business back to growth. Youi's entry into the bodily
  injury market has been successful and continues to grow its commercial insurance capability, which is an exciting long-term growth proposition;
- Enhancing digital capabilities and infrastructure. OUTsurance has materially increased its investment in the group's technological capability and digital skills as it
  aims to more rapidly digitise its client experience across all products;
- Establishing a leading tied-agent distribution capability. The commercial insurance strategy is the primary growth initiative of the South African operation and will
  continue to receive significant focus in 2019 and beyond. The agency-force is also expected to make a significant contribution to the distribution of personal
  lines products;
- Grow the product footprint of OUTsurance Life. OUTsurance has recently entered the South African funeral insurance market, which is large, competitive and
  profitable. The team is also working to refocus the underwritten life operation to ensure its competitiveness and strength of its client proposition;
- Earnings diversification. The disruptive threat of autonomous vehicles, ride-sharing and continuous improvements in vehicle safety is material to the size of the
  vehicle insurance profit pool. Although this threat is of a long-term nature, it is important that the group's future dependency on motor insurance is reduced.
  OUTsurance will continue to consider various opportunities to expand within the financial services sector; and
- Regulatory environment. Regulatory changes within the financial services landscape remain a constant. OUTsurance remains well-positioned to adopt new
  regulations and to contribute positively to the design thereof.

OUTsurance remains confident that Youi's growth will recover in the near term and that it will deliver on the exciting growth initiatives of the South African
operation. Expansion in the South African economy is expected to remain challenging, which, coupled with historically low premium inflation, will contain the
growth prospects of the OUTsurance personal lines operation in the near term. The group will continue to maintain strict adherence to its underwriting discipline
and invest in its operational capability to drive world-class client service.

RMI Investment Managers face a challenging South African market. However, the appetite to allocate assets to boutique managers remains in place, with a
positive upward trend over the past two quarters. Many affiliates have been able to raise long-only mandates, with hedge funds remaining under pressure.

Affiliates across the portfolio remained focused on delivering good investment performance for their clients while continuing to strengthen their businesses with a
well-diversified client base and adding to their investment and operational capabilities. RMI Investment Managers has implemented a new shareholder value map
which will enhance the team's focus on six functional areas including strategic support, asset raising, thought leadership, marketing, industry 4.0 and operations,
risk and finance. These aim to add targeted value to affiliates in an innovative, focused and transparent manner.

The RMI Investment Managers team is currently concentrating on the growth phase of the business, which includes the implementation of strategic growth
initiatives at each affiliate. The portfolio is largely complete but the team will remain opportunistic and add potential affiliates to either solve additional or
underexposure in certain asset classes or to further add value to the portfolio. RMI Investment Managers will ensure that its reputation as a trusted, value-adding
but non-interfering shareholder of choice for the independent asset management industry remains a core philosophy.

The team and its partners in MMI and RBH are excited and committed to work with all its affiliates and support their growth paths over time to create a more
diversified and transformed business. Alida de Swardt has settled in well as the new CEO and the shareholders remain committed over the long-term to see the
success of the affiliate business model.

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 lifecycles 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. During the year, 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 year 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 next-generation financial services
entrepreneurs, with a strong emphasis on transforming financial services and partnering with young, black entrepreneurs. As part of this commitment, AlphaCode
has launched three new programmes to identify, partner and grow entrepreneurs at all stages of their journey. AlphaCode Explore is a 12-month learnership
programme which will develop and upskill 20 data scientists and enable them to build and proto-type fintech businesses. AlphaCode Incubate seeks to identify
and reward early-stage, high-potential black-owned financial services businesses. Each year, eight businesses will be selected to complete a customised
12-month programme and benefit from an entrepreneurial package worth R2 million each. Lastly, AlphaCode Accelerate is a 24-month scale-up programme that
provides mentorship, expert guidance and support services to financial services businesses in the growth phase, on the path to scale and job creation.

After year-end, Andile Maseko was appointed as the new AlphaCode eco-system manager.

There are several factors that could strain RMI's earnings growth in the 2019 financial year:

- The group had an exceptionally low claims experience in the 2018 financial year, especially in the South African and Australasian operations of OUTsurance. This
  also contributes to lower premium inflation;
- Cyclical movements, regulatory reform and the impact of Brexit on the environment in which Hastings operates;
- MMI being in the process of repositioning its business, with a focus on getting the fundamentals in place for longer-term growth; and
- Investments into new initiatives like Discovery Bank are expected to result in significant additional expenses for Discovery in the following financial year.

Over the longer term, RMI remains confident that its clear strategy, in conjunction with its solid investment portfolio that is underpinned by unwavering values, will
allow it to continue delivering on its primary objective of creating enduring value for shareholders.

Jannie Durand                Herman Bosman
Chairman                     Chief executive

Sandton
11 September 2018


Dividend declaration

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 a final cash dividend of 65 cents per RMI ordinary share for
the year ended 30 June 2018 (cash dividend). The RMI board has resolved to make a maximum of 26 046 512 fully paid RMI ordinary shares of R0.0001 cents
each (RMI shares) available to RMI shareholders as (a) capitalisation shares (having an aggregate notional issue price of up to R989 767 483.90) (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, 19 October 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.

3. Terms of the scrip distribution alternative and reinvestment option

Each of the scrip distribution alternative and reinvestment option applies to the final gross cash dividend of 65 cents per RMI share for the year ended 30 June
2018 declared on Tuesday, 11 September 2018. This will result in the payment of a net cash dividend of 52 cents per RMI share to RMI shareholders liable for the
full local 20% dividends tax and 65 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 R38.00 per RMI share, being a 4.3% discount to the closing share price of RMI shares on the JSE
as at 7 September 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 1.71053 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 1.36842 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 1.71053 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 65 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 R38.00 per share, which is a 4.3% discount to the closing price on Friday, 7 September 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 by Friday, 5 October 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, 17 October 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,
18 October 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 by Friday, 5 October 2018.

The salient dates of events thereafter are as follows:
 Event                                                                                 2018

Circular and form of election posted to RMI shareholders                               No later than Friday, 5 October
Last day to trade in order to be eligible to participate in the cash dividend/         Tuesday, 16 October
scrip distribution alternative/reinvestment option (cum cash dividend/scrip
distribution alternative/reinvestment option)
RMI shares trade ex the entitlement to the cash dividend/scrip distribution            Wednesday, 17 October
alternative/reinvestment option
Listing of maximum possible number of new RMI shares that could be                     Wednesday, 17 October
issued in terms of the scrip distribution alternative and reinvestment option
Cash value in respect of the RMI shares for determination of fractional                Thursday, 18 October
entitlements to RMI shares, based on the volume weighted average price on
Wednesday, 17 October 2018, discounted by 10%, released on SENS by
11:00 on
Last day to elect (i) the scrip distribution alternative in lieu of the cash           Friday, 19 October
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
Record date in respect of the cash dividend/scrip distribution alternative/            Friday, 19 October
reinvestment option
Share certificates in respect of the scrip distribution alternative, posted and/       Monday, 22 October
or electronic funds transfers and CSDP/broker accounts credited/updated
Announcement regarding the results of the cash dividend/scrip distribution             Monday, 22 October
alternative/reinvestment option released on SENS
Announcement regarding the results of the cash dividend/scrip distribution             Tuesday, 23 October
alternative/reinvestment option published in the press
Share certificates in respect of the reinvestment option posted and CSDP/              Wednesday, 24 October
broker accounts credited/updated
Maximum number of new RMI shares listed adjusted to reflect the actual                 Friday, 26 October
number of new RMI shares issued in respect of the scrip distribution
alternative and the reinvestment option on or about

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, 17 October 2018 and Friday,
    19 October 2018, both days inclusive.


RMI's tax reference number is 9469/826/16/9. Its issued share capital at the declaration date comprises 1 522 719 206 ordinary shares.

By order of the RMI board.

Schalk Human
Company secretary

Sandton
11 September 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 broad-based black economic empowerment (BBBEE) transactions entered into; and
- "Deemed" treasury shares held by policyholders and mutual funds managed by them.

As at 30 June 2018, the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the companies as follows:

                                                                                                       30 June                         30 June
                                                                                                         2018                            2017

AUDITED                                                                                      Effective           Actual      Effective           Actual

Discovery                                                                                        25.1%            25.0%          25.1%            25.0%
Hastings                                                                                         29.9%            29.9%          29.9%            29.9%
MMI                                                                                              26.5%            26.2%          25.7%            25.5%
OUTsurance                                                                                       89.7%            88.6%          88.5%            87.7%
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%          25.1%            25.1%


Summarised consolidated income statement
for the year ended 30 June
 
                                                                                                    2018            2017               %
R MILLION                                                                                        Audited         Audited          change

Continuing operations
Earned premiums net of reinsurance                                                                14 173          14 064               1
Commission and other income                                                                          124             135              (8)
Investment income                                                                                    760             688              10
Profit on sale of subsidiary and other realised gains                                                  3               1            >100
Net fair value losses on financial assets                                                            (66)            (43)             53

Income                                                                                            14 994          14 845               1
Net claims paid                                                                                   (6 535)         (6 783)             (4)
Fair value adjustment to investment contracts and insurance contract provisions                     (521)           (427)             22
Fair value adjustment to financial liabilities                                                      (193)           (199)             (3)
Acquisition, marketing and administration expenses                                                (3 905)         (3 886)              -

Profit before finance costs, share of after-tax results of associates and taxation                 3 840           3 550               8
Net finance costs                                                                                   (765)           (414)             85
Share of after-tax results of associates                                                           2 328           1 702              37

Profit before taxation                                                                             5 403           4 838              12
Taxation                                                                                          (1 136)         (1 084)              5

Profit for the year from continuing operations                                                     4 267           3 754              14
Discontinued operation
Loss for the year from discontinued operation                                                          -             (49)            100

Profit for the year                                                                                4 267           3 705              15

Attributable to:
Equity holders of RMI                                                                              3 897           3 327              17
Non-controlling interests                                                                            370             378              (2)

Profit for the year                                                                                4 267           3 705              15


Summarised consolidated statement of comprehensive income
for the year ended 30 June

                                                                               2018       2017           %
R MILLION                                                                   Audited    Audited      change

Profit for the year                                                           4 267      3 705          15
Other comprehensive income for the year
Items that may subsequently be reclassified to income
  Exchange differences on translation of foreign operations                      44       (248)       >100
  Fair value gains and losses on available-for-sale financial assets             93         (9)       >100
  Deferred taxation relating to available-for-sale financial assets             (21)         2       >(100)
Share of other comprehensive income of associates                               314       (417)       >100

  Items that may subsequently be reclassified to income, after taxation         277       (448)       >100
  Items that will not be reclassified to income, after taxation                  37         31          19

Other comprehensive income for the year                                         430       (672)       >100

Total comprehensive income for the year                                       4 697      3 033          55

Total comprehensive income attributable to:
Equity holders of RMI                                                         4 310      2 707          59
Non-controlling interests                                                       387        326          18

Total comprehensive income for the year                                       4 697      3 033          55


Computation of headline earnings
for the year ended 30 June

                                                                               2018        2017           %
R MILLION                                                                   Audited     Audited      change

Earnings attributable to equity holders                                       3 897       3 327          17
Adjustment for:
  Intangible asset impairments                                                   86          91
  Loss on dilution of shareholding                                               80          28
  Loss/(profit) on sale of subsidiary                                             5         (20)
  Impairment of available-for-sale financial assets                              17           9
  Impairment of owner-occupied building to below cost                             -           7
  Realised profit on sale of available-for-sale financial assets                 (5)         (2)
  Loss on disposal of property and equipment                                      5           1
  Release of foreign currency translation reserve                                (4)          -

Headline earnings attributable to equity holders                              4 081       3 441          19


Computation of normalised earnings
for the year ended 30 June

                                                                                2018      2017           %
R MILLION                                                                    Audited   Audited      change

Headline earnings attributable to equity holders                               4 081     3 441          19
RMI's share of normalised adjustments made by associates:                        416       456

  Amortisation of intangible assets relating to business combinations            332       238
  Basis and other changes and investment variances                               167       117
  Non-recurring and restructuring expenses                                        38        63
  Deferred tax timing difference related to new adjusted IFRS tax basis          (30)        -
  Unrealised gains on foreign exchange contracts not designated as a hedge       (19)        -
  Rebranding and business acquisition expenses                                     -        25
  Net realised and fair value losses on shareholders' assets                      10        13
  Deferred tax on assessed losses                                                (88)        -
  B-BBEE cost                                                                      6         -

Group treasury shares                                                            (24)        -

Normalised earnings attributable to equity holders                             4 473     3 897          15


Computation of earnings and dividend per share
for the year ended 30 June

                                                                       2018      2017        %
R MILLION                                                           Audited   Audited   change

Earnings attributable to equity holders                               3 897     3 327       17

Headline earnings attributable to equity holders                      4 081     3 441       19

Normalised earnings attributable to equity holders                    4 473     3 897       15

Number of shares in issue (millions)                                  1 523     1 506        1
Weighted average number of shares in issue (millions)                 1 513     1 486        2

Continuing operations
Earnings per share (cents)                                            257.6     226.5       14
Diluted earnings per share (cents)                                    252.9     223.0       13
Headline earnings per share (cents)                                   269.7     234.2       15
Diluted headline earnings per share (cents)                           265.0     230.6       15
Normalised earnings per share (cents)                                 295.1     263.6       12
Diluted normalised earnings per share (cents)                         290.0     259.7       12

Continuing and discontinued operations
Earnings per share (cents)                                            257.6     223.9       15
Diluted earnings per share (cents)                                    252.9     220.4       15
Headline earnings per share (cents)                                   269.7     231.5       17
Diluted headline earnings per share (cents)                           265.0     227.9       16
Normalised earnings per share (cents)                                 295.1     261.6       13
Diluted normalised earnings per share (cents)                         290.0     257.7       13

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

Total dividend                                                        104.0     118.0      (12)


Summarised consolidated statement of financial position
as at 30 June

                                                                       2018       2017
R MILLION                                                           Audited    Audited

Assets
Property and equipment                                                1 109      1 000
Intangible assets                                                       124         90
Investments in associates                                            26 413     24 455
Financial assets                                                     11 262      9 846
Loans and receivables (including insurance receivables)               2 634      2 536
Deferred acquisition cost                                               307        338
Reinsurance contracts                                                   286        672
Deferred taxation                                                       220        176
Taxation                                                                  3          -
Cash and cash equivalents                                             2 417      2 302

Total assets                                                         44 775     41 415

Equity
Share capital and premium                                            14 986     14 328
Reserves                                                              7 386      4 947

Capital and reserves attributable to equity holders of the company   22 372     19 275
Non-controlling interests                                             1 332      1 215

Total equity                                                         23 704     20 490

Liabilities
Financial liabilities                                                12 608     12 479
Insurance contracts                                                   6 725      6 841
Share-based payment liability                                           134        165
Payables and provisions                                               1 347      1 263
Deferred taxation                                                        54         53
Taxation                                                                203        124

Total liabilities                                                    21 071     20 925

Total equity and liabilities                                         44 775     41 415


Statement of changes in equity
for the year ended 30 June

                                                                                                  Transactions
                                                                           Share        Equity       with non-                                  Non-
AUDITED                                                              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
Profit per income statement                                                    -             -               -          -        3 327           378        3 705
Other comprehensive income                                                     -          (417)              -       (203)           -           (52)        (672)
Dividend paid                                                                  -             -               -          -       (1 753)         (253)      (2 006)
Shares issued                                                                760             -               -          -            -             -          760
Income of associates retained                                                  -           770               -          -         (770)            -            -
BBBEE cost                                                                     -             1               -          -            -             -            1
Change in non-distributable reserves
Movement in treasury shares                                                   37             6               -          -            3             -           46
Transactions with non-controlling interests                                    -             1            (902)         -           11            44         (846)
Issue of share capital to non-controlling interests by subsidiaries            -             -               -          -            -            71           71
Share-based payment reserve                                                    -             3               -          5         (165)          (23)        (180)
Sale of subsidiary                                                             5            (3)             10                      (7)         (120)        (115)

Balance as at 30 June 2017                                                14 328         4 300          (2 989)       295        3 341         1 215       20 490
Profit per income statement                                                    -             -               -          -        3 897           370        4 267
Other comprehensive income                                                     -           311               -        102            -            17          430
Dividend paid                                                                  -             -               -          -       (1 571)         (189)      (1 760)
Shares issued                                                                669             -               -          -            -             -          669
Income of associates retained                                                  -         1 181               -          -       (1 181)            -            -
BBBEE cost                                                                     -             3               -          -            -             -            3
Movement in treasury shares                                                  (11)            5               -          -            -             -           (6)
Transactions with non-controlling interests                                    -            58            (356)         -            2          (132)        (428)
Issue of share capital to non-controlling interests by subsidiaries            -             -               -          -            -            54           54
Share-based payment reserve                                                    -            31               -          -          (35)           (4)          (8)
Reserve adjustment of associates                                               -            (8)              -          -            -             1           (7)

Balance as at 30 June 2018                                                14 986         5 881          (3 345)       397        4 453         1 332       23 704


Consolidated statement of cash flows
for the year ended 30 June

                                                                                     2018        2017
R MILLION                                                                         Audited     Audited

Cash flows from operating activities
Cash generated from operations                                                      3 287       2 638
Interest income                                                                       590         503
Dividends received                                                                  1 285       1 085
Income tax paid                                                                    (1 101)     (1 130)
Cash flows from discontinued operation                                                  -         190

Net cash generated from operating activities                                        4 061       3 286

Cash flows from investing activities
Additions to property and equipment                                                  (255)       (484)
Disposal of property and equipment                                                      5           2
Additions to investments                                                           (9 689)     (9 215)
Disposals of investments                                                            8 436       9 572
Investments in associates                                                            (216)     (9 040)
Proceeds on sale of subsidiary                                                          -         165

Net cash outflow in investing activities                                           (1 719)     (9 000)

Cash flows from financing activities
Proceeds from issue of shares                                                         493         760
Issue of preference share debt                                                          -       9 710
Redemption of preference share debt                                                     -      (2 298)
(Borrowings repaid)/cash raised from borrowings incurred                              (50)      2 367
Cost of funding                                                                       (91)        (59)
Dividends paid on preference shares in issue                                         (677)       (271)
Dividends paid by subsidiaries to non-controlling interests                          (189)       (253)
Additional shares acquired in subsidiary                                             (360)       (912)
Cash dividends paid to shareholders                                                (1 394)     (1 753)
Proceeds on issue of shares to non-controlling interest                                54          71

Net cash (outflow)/inflow from financing activities                                (2 214)      7 362

Net increase in cash and cash equivalents for the year                                128       1 648
Unrealised foreign currency translation adjustment on cash and cash equivalents       (13)         43
Cash and cash equivalents at the beginning of the year                              2 302         611

Cash and cash equivalents at the end of the year                                    2 417       2 302


Segmental report

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

AUDITED                                                                                                                                               RMI
R MILLION                                                                            Discovery       MMI    OUTsurance     Hastings     Other(1)    group

Year ended 30 June 2018
Net income                                                                                   -         -        14 757            -       237      14 994
Policyholder benefits and transfer to policyholder liabilities                               -         -        (7 056)           -         -      (7 056)
Depreciation                                                                                 -         -          (136)           -        (4)       (140)
Amortisation                                                                                 -         -           (99)           -        (2)       (101)
Other expenses                                                                               -         -        (3 506)           -      (158)     (3 664)
Finance costs                                                                                -         -             -            -      (765)       (765)
Fair value adjustment to financial liabilities                                               -         -          (193)           -         -        (193)
Share of after-tax results of associates                                                 1 418       280           305          370       (45)      2 328

Profit/(loss) before taxation                                                            1 418       280         4 072          370      (737)      5 403
Taxation                                                                                     -         -        (1 108)           -       (28)     (1 136)

Result for the year                                                                      1 418       280         2 964          370      (765)      4 267
Hastings included in OUTsurance                                                              -         -          (294)         294         -           -

Profit/(loss) for the year                                                               1 418       280         2 670          664      (765)      4 267

Normalised earnings                                                                      1 356       715         3 012          405    (1 015)      4 473
Hastings included in OUTsurance                                                              -         -          (373)         373         -           -

Normalised earnings                                                                      1 356       715         2 639          778    (1 015)      4 473

As at 30 June 2018
Assets                                                                                       -         -        15 254            -     2 984      18 238
Investments in associates                                                               10 268     5 964         4 125        5 367       689      26 413
Intangible assets                                                                            -         -           124            -         -         124

                                                                                        10 268     5 964        19 503        5 367     3 673      44 775
Hastings included in OUTsurance                                                              -         -        (3 996)       3 996         -           -

Total assets                                                                            10 268     5 964        15 507        9 363     3 673      44 775

Total liabilities                                                                            -         -         8 359            -    12 712      21 071

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


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

Year ended 30 June 2017
Net income                                                                                   -         -       14 703             -               -       142       14 845
Policyholder benefits and transfer to policyholder liabilities                               -         -       (7 210)            -               -         -      (7 210)
Depreciation                                                                                 -         -         (131)            -               -        (5)       (136)
Amortisation                                                                                 -         -          (86)            -               -        (2)        (88)
Other expenses                                                                               -         -       (3 523)            -               -      (139)     (3 662)
Finance costs                                                                                -         -           (1)            -               -      (413)       (414)
Fair value adjustment to financial liabilities                                               -         -         (199)            -               -         -        (199)
Gain on derivative relating to acquisition of associate                                      -         -          750             -               -      (750)          -
Share of after-tax results of associates                                                 1 097       378           29           189               -         9       1 702

Profit/(loss) before taxation                                                            1 097       378        4 332           189               -    (1 158)      4 838
Taxation                                                                                     -         -       (1 079)            -               -        (5)     (1 084)

Result for the year from continuing operations                                           1 097       378        3 253           189               -    (1 163)      3 754
Discontinued operation                                                                       -         -            -             -             (49)        -         (49)

Profit/(loss) for the year                                                               1 097       378        3 253           189             (49)   (1 163)      3 705
Gain on derivative related to inter-group transaction                                        -         -         (750)            -               -       750           -
Hastings included in OUTsurance                                                              -         -          (10)           10               -         -           -

Profit/(loss) for the year                                                               1 097       378        2 493           199             (49)     (413)      3 705

Normalised earnings                                                                      1 167       816        2 476           233             (38)     (757)      3 897
Hastings included in OUTsurance                                                              -         -          (13)           13               -         -           -

Normalised earnings                                                                      1 167       816        2 463           246             (38)     (757)      3 897

As at 30 June 2017
Assets                                                                                       -         -       14 234             -               -     2 636      16 870
Investments in associates                                                                8 938     5 956        3 842         5 108               -       611      24 455
Intangible assets                                                                            -         -           89             -               -         1          90

                                                                                         8 938     5 956       18 165         5 108               -     3 248      41 415
Hastings included in OUTsurance                                                              -         -       (3 793)        3 793               -         -           -

Total assets                                                                             8 938     5 956       14 372         8 901               -     3 248      41 415

Total liabilities                                                                            -         -        8 341             -               -    12 584      20 925

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


Geographical segments

AUDITED                                                           South                     New       United
R MILLION                                                        Africa    Australia    Zealand      Kingdom     Total

Year ended 30 June 2018
Net income                                                        8 694        6 152        148            -    14 994
Policyholder benefits and transfer to policyholder liabilities   (3 795)      (3 226)       (35)           -    (7 056)
Other expenses                                                   (2 927)      (1 830)      (106)           -    (4 863)
Share of after-tax results of associates                          1 413            -          -          915     2 328

Profit before taxation                                            3 385        1 096          7          915     5 403
Taxation                                                           (822)        (314)         -            -    (1 136)

Profit for the year                                               2 563          782          7          915     4 267

As at 30 June 2018
Assets
Property and equipment                                              392          714          3            -     1 109
Investments in associates                                        17 050            -          -        9 363    26 413
Financial assets                                                  6 680        6 925        291            -    13 896
Other assets                                                      2 170          816        371            -     3 357

Total assets                                                     26 292        8 455        665        9 363    44 775

Liabilities
Insurance contract liabilities                                    2 069        4 494        162            -     6 725
Other liabilities                                                10 603          924         99        2 720    14 346

Total liabilities                                                12 672        5 418        261        2 720    21 071

Year ended 30 June 2017
Net income                                                        8 220        6 432        193            -    14 845
Policyholder benefits and transfer to policyholder liabilities   (3 658)      (3 514)       (38)           -    (7 210)
Other expenses                                                   (2 355)      (1 927)      (217)           -    (4 499)
Share of after-tax results of associates                          1 367            -          -          335     1 702

Profit/(loss) before taxation                                     3 574          991        (62)         335     4 838
Taxation                                                           (779)        (305)         -            -    (1 084)

Profit/(loss) from continuing operations                          2 795          686        (62)         335     3 754
Discontinued operations                                             (49)           -          -            -       (49)

Profit/(loss) for the year                                        2 746          686        (62)         335     3 705

As at 30 June 2017
Assets
Property and equipment                                              941           41         18            -     1 000
Investments in associates                                        15 554            -          -        8 901    24 455
Financial assets                                                  5 346        6 722        314            -    12 382
Other assets                                                      2 181        1 157        240            -     3 578

Total assets                                                     24 022        7 920        572        8 901    41 415

Liabilities
Insurance contract liabilities                                    1 961        4 697        183            -     6 841
Other liabilities                                                10 588          828        117        2 551    14 084

Total liabilities                                                12 549        5 525        300        2 551    20 925


Administration

Directors

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

Alternates

DA Frankel, F Knoetze and DR Wilson.

Messrs GT Ferreira, JW Dreyer and KC Shubane retired on 31 March 2018 and Mr PM Goss retired on 10 April 2018.

Mr JJ Durand became chairman on 31 March 2018.

Messrs RT Mupita and JA Teeger and Ms Mahlare were appointed as independent non-executive directors and Mr DA Frankel as an alternate non-executive
director 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, 2196
Postal address:     PO Box 61051, Marshalltown, 2107
Telephone:          +27 11 370 5000
Telefax:            +27 11 688 5221


Tuesday, 11 September 2018

Date: 11/09/2018 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,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story