RMH Portfolio and strategy overview - RMB Holdings
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RMH
Portfolio and strategy overview
0
Context
RMH is an investment holding company with a proven track record of investing
in disruptive and entrepreneurial financial services businesses
This performance has been achieved by partnering with exceptional
management teams for the long term
RMH positions itself as a value-adding, stable and aspirational shareholder
RMH PORTFOLIO OVERVIEW
34% 100%
1
RMH has a strong track record of delivering value to investors
Total shareholder return CAGR of 25% per annum since listing in November 1992
Nov 92 May 94 Nov 95 May 97 Nov 98 May 00 Nov 01 May 03 Nov 04 May 06 Nov 07 May 09 Nov 10 May 12 Nov 13 May 15 Nov 16 May 18
1992 1995 1997 1998 2010 2011 2015 2016
1999
Listed Momentum merged First investment for
RMH listed on JSE Launched Bought RMH Property is
with Metropolitan to form
from Listed separately Property strategy partnership with
Anglo American to form on the JSE launched
Acquired
Started
Acquires significant
stake in RMH
• The RMH and RMI group of companies have been investing domestically and internationally for over 40 years
• Out of FirstRand and Momentum, we have created four significant South African financial services businesses
(Discovery, OUTsurance, FirstRand and MMI) that sustain jobs for over 80,000 people
Source: Datastream, Reuters, Company Reports 2
RMH strategy
RMH is the biggest shareholder in FirstRand, South Africa’s largest banking group, holding a 34% stake. RMH is the founding shareholder of FirstRand and
views this as its core asset. RMH is represented on all the relevant strategic and governance forums and provides FirstRand with a responsible and stable
major shareholder.
RMH is defined by its shareholding in FirstRand. This core asset provides RMH with exposure across the universal Southern African financial services sector
and should also deliver a sound balance between capital and dividend returns.
It is RMH’s intention to retain its stake in FirstRand, in its current structure as it holds structuring and financial value. It is recognised that RMH’s market value
may trade at a discount to its underlying value. However, the value of the long-term optionality the structure provides, and has provided over the past decades,
outweighs this. RMH will continue to dynamically evaluate this.
On a selective basis, RMH may consider investments in other business where partnerships with entrepreneurial and industry-disruptive management teams can
add value to RMH and its shareholders. Investments with inter alia the following attributes will be of particular interest:
- banking, property and related industries;
- the ability to form a partnership between the investment, RMH and FirstRand;
- unlisted;
- digitally-oriented;
- the ability of RMH to add value; and
- relevance in terms of size of enterprise and shareholding.
RMH will dynamically assess whether investments, other than FirstRand, are optimally housed in RMH. In the past this assessment has inter alia led to the
listing of Discovery, the merger of Momentum and Metropolitan, the listing of MMI and the unbundling of RMI Holdings. The investment in RMH Property
will be evaluated in a similar way. Currently the business is still in its formative phase and building critical mass as a potentially independent development-
focused property investment group.
3
FY18 Results summary
KEY PERFORMANCE INDICATORS NORMALISED EARNINGS HISTORY
30,000 9% 8%
R’ m Jun-17 Jun-18 % chg.
25,000 FY14
Value, earnings and dividends 20,000 FY15
8 815
8,166
R'm
7,659
7,158
15,000
6,237
Intrinsic value per share (R) 6 306.6 8 632.0 36.9% FY16
26 411
18,663
21,286
22,855
24,471
10,000
FY17
Total ordinary dividend per share (cps) 327 351 7.3% 5,000
FY18
0
Normalised earnings (R million) 8 166 8 815 7.9% FirstRand RMH
Diluted normalised earnings per share (cps) 578.5 624.4 7.9% DIVIDENDS HISTORY
Dividend cover based on normalised earnings (x) 1.77 1.78 0.6%
20,000 12% 12%
Normalised earnings FY14
15,000
FY15
R'm
4 955
12 801 14 877 16.2%
4,630
FNB
4,165
10,000
3,896
3,212
FY16
15 426
11,840
12,700
14,360
9,810
RMB 6 902 7 327 6.2% 5,000 FY17
3 996 3 626 (9.3%) FY18
WesBank 0
FirstRand RMH
Aldermore - 276 n/a
5 year CAGR
Other 756 305 (59.7%)
INTRINSIC VALUE
FirstRand 24 471 26 411 7.9%
R’ m Jun-17 Jun-18 % chg
Group normalised earnings
Intrinsic value (R’m)
RMH portion of FirstRand’s earnings 8 334 8 995 7.9%
FirstRand market value 90 077 122 058 35.5%
RMH Property 8 16 100.0% RMH Property 899 2 067 >100.0%
RMH’s funding and administrative costs (176) (196) 11.4% Net debt (1 945) (2 267) 16.6%
Group normalised earnings 8 166 8 815 7.9% RMH intrinsic value 89 031 121 858 36.9%
Source: Company reports
4
FY18 Results summary
KEY PERFORMANCE INDICATORS NORMALISED EARNINGS (R’m)
R’m Jun-17 Jun-18 % chg.
22% 14% 7% 7% 8%
9.9% 30,000
Net interest income 46,626 51,254
Non-interest income 39,268 41,926 6.8% 25,000
Fee and commission 25,598 28,250 10.4% 20,000
Insurance income 3,967 4,197 5.8% 15,000
24,471 26,411
(2.1%) 21,286 22,855
Fair value income 4,255 4,165 10,000 18,663
Investment income 2,178 1,959 (10.1%) 5,000
Associates & JVs (after tax) 1,041 914 (12.2%) 0
Other 2,229 2,441 9.5% FY14 FY15 FY16 FY17 FY18
Revenue 85,894 93,180 8.5%
FRANCHISE CONTRIBUTION TO EARNINGS (%)
Operating costs (43,773) (47,664) 8.9%
8.1% 100%
Pre-provision operating profits 42,121 45,516 14%
17% 16% 17% 17%
Credit impairments (8,054) (8,567) 6.4% 80%
30% 29% 28% 29% 28%
Indirect taxes (1,081) (1,077) (0.4%)
60% Wesbank
Profit before tax 32,986 35,872 8.7%
RMB
Income tax (6,951) (7,865) 13.1% 40%
58% FNB
7.6% 53% 55% 55% 54%
Profit after tax 26,035 28,007 20%
Attributable to minorities (1,208) (1,130) (9.5%)
0%
Contingent convertible securities - (115) >(100.0%) FY14 FY15 FY16 FY17 FY18
Attributable to prefs (356) (351) (1.4%)
Normalised earnings 24,471 26,411 7.9% LONG-TERM CREDIT IMPAIRMENT CHARGE (%)
Key ratios
1.42%
1.38%
1.87%
Normalised diluted EPS (cps) 436.2 470.1 8.0%
1.08%
Dividend (cps) 255.0 275 7.8%
0.99%
0.91%
0.90%
0.93%
0.86%
0.84%
Normalised tangible NAV (cps) 1,911.7 1,964.1 2.7%
0.77%
Net Advances 893,106 1,121,227 25.5%
Normalised ROA (%) 2.1% 1.9%
Normalised ROE (%) 23.4% 23.0%
Common equity tier 1 ratio 14.9% 12.1%
Cost-to-income ratio 51.0% 51.2%
NPLs as a % of performing book 2.4% 2.4% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
Source: Company reports
5
The property strategy
In late 2015, RMH announced its intention to launch a property strategy, that is now housed in its
subsidiary RMH Property (‘RMHP’):
• RMHP has an overall NAV target of R10bn, over the next 5-7 years; and
• RMHP has made six investments since the launch of strategy and will continue to grow the portfolio
The principal objectives of RMH’s property strategy are to:
• diversify RMH’s earnings base beyond banking, across the breadth of the property value chain;
• enhance RMH’s total return with a focus on net asset value growth, whilst balancing yield;
• partner with entrepreneurs in line with RMH’s investment ethos, track record and expertise;
• retain a dedicated specialist team that independently identifies and manages property assets;
• neither dilute RMH’s FirstRand focus nor reduce flexibility of RMH’s capital structure; and
• create portfolios that can be listed / monetised.
6
The property strategy
BALANCING RETURNS WITH BALANCE SHEET FLEXIBILITY
• In the decade leading up to RMH’s announcement of its property strategy in 2015, the South African property sector offered attractive
returns and strong diversification benefits for RMH
• Over that decade, the South Africa’s listed property sector:
‒ outperformed the JSE All Share Index by 3% p.a.; the JSE Financials index by 4% p.a. (on a total return basis)1; and
‒ had low correlation to listed financials (32% vs. 69% between JSE Financial 15 Index and the JSE All-Share Index1) indicating strong
return and diversification benefits for a banking focused portfolio such as RMH
• This outperformance was partly driven by return profiles of listed property counters that were increasingly enhanced by development profits
• RMH’s strategic rationale for launching the property strategy was to capitalise on this opportunity by focusing on development focused
partnerships, whilst generating sufficient yield over time to contain a potential drag on FirstRand dividends distributed to RMH shareholders
from additional financing costs
• Since 2015, despite some headwinds, the listed property sector continued to perform relative to the listed financials and the market until
early 2018
CUMULATIVE TOTAL RETURN 2
800% Before announcement After
of property strategy announcement
700%
600%
500%
400%
300%
200%
100%
0%
Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17
JSE Financials JSE Property JSE All Share
Note: 1. Total return and correlation based on period from 30 June 2005 – 1 July 2015; 2. Total return in the chart from 30 June 2005 – 1 June 2018
Source: Company reports; Reuters 7
Capacity and value-add framework
DEDICATED MANAGEMENT CAPACITY
• RMH has appointed a dedicated specialist team to execute the RMH property strategy
• RMHP team collectively has over 25 years of property experience as strategic executives, principal investors and lenders
• Brian Roberts (CEO of RMH Property) founded and led Genesis Properties, a mezzanine property finance fund backed by Kirsh Holdings,
Genesis Capital and RMH
• Genesis Properties’ first two funds delivered a pre-tax return to shareholders of 62% and 29%, respectively, at the time RMH invested in Genesis
Properties’ third fund
• Since RMH invested in Genesis Properties’ third fund in 2016, RMH has earned a pre-tax return in excess of 25%
RMH PROPERTY TEAM
Brian Roberts, CEO: RMH Property Ekerete Umoetok,
Investment Executive: RMH Property
• Founder & former CEO of Genesis Properties
• Property finance and principal investment experience
• Former Head of Nedbank Corporate Property
at Standard Bank and Phatisa
Finance
• Part of the team that invested R10bn for RMI & RMH
• Former Managing Director of Zenprop
• 7 years of property experience
• Over 20 years of property experience
• MComm.; BSc. (Hons.); BComm; CFA
• BComm. (Hons.)
VALUE-ADD FRAMEWORK
Strategic oversight Deal making insights Asset management oversight
• Drive strategic decision • Craft key transactions with • Strategically allocate
making at board level management resources to drive returns at
• Reinforce good governance • Provide funding support, asset level
and processes where necessary • Encourage industry best
practices
8
RMH Property strategy
CREATE A DIVERSIFIED PROPERTY PORTFOLIO OF ENTREPRENEURIAL, DEVELOPMENT FOCUSED PARTNERSHIPS
CORE PARTNERSHIP: Target NAV R5-10bn1 SATELLITE PARTNERSHIPS: Target NAV R1-5bn1
• Atterbury Property Holdings
is RMHP’s core domestic • RMHP has satellite partners with specific focus
partner areas which include:
• RMHP has and will continue
to invest in Atterbury-led
Domestic Domestic
initiatives such as Divercity
Urban Property Fund
• Atterbury Europe is RMHP’s
core partner in Europe
(initial investment via • RMHP continues to actively seek international
Brightbridge) partners to add further geographic diversification
• RMHP has and will support beyond the current Atterbury Europe footprint
International Atterbury-led initiatives in International
Europe
Rationale for Core Partnership Rationale for Satellite Partnerships
• Best-of-breed management team • Ability to partner with best-of-breed specialist developers on a portfolio
• Scalable development operation diversified across traditional property and/or asset specific basis in key niches of the property market
asset categories (office, retail, industrial) • Allows for diversification of RMHP’s portfolio
• Sizeable capital base in an unlisted vehicle providing scope and • Satellite partnerships may achieve higher yields / faster NAV growth
opportunity to increase development potential of the portfolio than the more traditional core partnership
• Liquid vehicle to potentially monetise property interest in the future • Flexibility to partner with developers on single assets or entire portfolio
Note: 1. Target collective value of RMHP’s stakes in domestic and international partnerships 9Progress to date
RMH HAS MADE PROGRESS ON ITS PROPERTY STRATEGY
CORE PARNERSHIP SATELLITE PARTNERSHIPS
Three
40.0% stake
27.5% stake 43.9%1 stake
49.9% stake
18.4%2 stake
• RMHP has deployed c. R1.3bn in equity capital (excl. committed pipeline)
• Further to the equity capital, c. R1.5bn of 3-5 year funding support/guarantees have been allocated to portfolio companies
‒ Funding support is intended to catalyse medium-term growth in RMHP investees by supporting development initiatives
‒ Guarantee capacity utilised for the benefit of investees typically earns RMHP a guarantee fee (fee income in excess of
RMH’s cost of funding)
Note: 1. Direct stake only 2. Direct stake only: subject to Competition Commission approval
Source: Company reports 10Core domestic partner | Atterbury Property Holdings
OVERVIEW KEY PEOPLE
Louis van der Watt (Co-founder and Group CEO)
• Atterbury Property Holdings (‘Atterbury’) has significant experience in • Louis co-founded Atterbury in 1994, after completing his articles at
property development, having developed more than two million m2 of Deloitte
commercial, retail, and residential property since its establishment in • He also co-founded Attfund, subsequently acquired by Hyprop and
Attacq Limited
1994
• Atterbury has property development, fund management, corporate James Ehlers (MD Atterbury Property Developments)
services and asset management divisions • James has successfully run the property development division of
Atterbury since 2002 and was previously Group COO
• One of Atterbury’s most notable projects began in 2005, where Attacq
• He established and operated a successful independent construction
was formed and acquired 1,75 million m2 of commercial development business prior to joining Atterbury
rights at Waterfall City, Midrand from the Islamic Institute. Attacq was
later listed on the main board of the JSE Lucille Louw (MD Atterbury Asset Management)
• Lucille is a seasoned property executive and has led Atterbury’s
• Atterbury developed the Waterfall precinct, that now includes the Asset Management division since 2005
flagship Mall of Africa and regional head office of PWC • Her team manages Atterbury-owned and 3rd party assets valued at
over R15bn
SELECT DEVELOPMENTS
• Mall of Africa • Die Klubhuis • Newtown Junction
• 131,000m2 retail centre in Waterfall • 5,200m2 offices in Pretoria • 52,089m2 retail centre in Newtown
Source: Company reports 11Core European partner | Atterbury Europe
OVERVIEW KEY PEOPLE
Henk Deist (Group CEO)
• Atterbury Europe B.V. (‘Atterbury Europe’) was founded in 2014,
when Atterbury Property Holdings co-invested with a consortium of • Since joining as CFO in 2014, Henk has been
instrumental in building the portfolio Atterbury Europe
private investors to form a European focused property company manages today
• Today, Atterbury Europe’s €500m+ property portfolio includes • Henk is a seasoned deal maker having spent 11 years at
significant stakes in retail and office developments in Cyprus, Rand Merchant Bank, including a tenure as Head of
Romania and Serbia. The retail portfolio that makes up the majority of Resource Finance
Atterbury Europe’s assets is primarily comprised of dominant retail • Henk holds a Master’s in Tax and is a qualified CA(SA)
centres in prime locations
• Atterbury Europe partners with leading developers in each market
and contributes world class development and asset management Louis van der Watt (Founder)
skills to their partnerships with support from Atterbury • Louis co-founded Atterbury Europe
• RMH initially gained indirect exposure to Atterbury Europe via an • He continues to provide strategic direction to this and
other key entities in the Atterbury Group
investment in Atterbury’s international SPV, Brightbridge Investments
SELECT DEVELOPMENTS
• Openville • Mall of Cyprus • Usce
• 115,000m2 mixed-use development in Timișoara • 24,779m2 retail centre in Nicosia • 41,172m2 retail centre in Belgrade
Source: Company reports 12Core partnership initiative | Divercity Urban Property Fund(1)
OVERVIEW KEY SEED PARTNERS
• Divercity is an urban property fund focused on investing in and
renewing dense urban precincts rather than individual buildings on, a • The renowned Atterbury Property group brings significant expertise and
collaborative basis with its seed partners assets to Divercity
• Divercity has a preferred offtake arrangement on the seed partners’ • Atterbury Property fund is also seeding Divercity with assets from its
partnership with Talis Property Fund
completed developments, and enhances its yields by participating in
the development profits of these large-scale, mixed-use and mixed
income urban renewal projects
• Atterbury, Ithemba Group, Genesis Properties and Propertuity as • Ithemba Property, established in 1998, has its roots in Berea and is a
Divercity’s seed partners have collectively seeded the portfolio with c. subsidiary of the Circlevest Property Group
R1.7bn of gross assets • They provide property and asset management services, including lettings,
collections, property management, marketing and redevelopments of
• Atterbury and Ithemba are the largest seed partners each with an buildings located in Berea, Hillbrow, Doornfontein, Marshallstown, Kempton
interest of at least 25% in Divercity and will collectively manage all of Park and Midrand
Divercity’s assets • In total, Ithemba’s portfolio consists of over 3,500 residential units and
18,000m2 of retail space
SELECT DEVELOPMENTS
• Turbine Hall • Dual City • Urban 8
• 20,761m2 commercial building in Newtown • 40,659m2 mixed-used development in Maboneng • 175 unit residential building in Maboneng
Note: (1) RMHP investment is subject to Competition Tribunal approval
Source: Company reports 13Satellite partner | Genesis Properties Three
OVERVIEW KEY PEOPLE
• Genesis Properties was formed in 2010 as a partnership between Brain Roberts (Director & Founder)
Genesis Capital Partners, Kirsh Group and Brian Roberts • Founder & former CEO of Genesis Properties
• RMH is invested in Genesis Properties’ 3rd fund (‘Genesis Properties • Former Head of Nedbank Corporate Property Finance
Three’) alongside Genesis Capital Partners • Former Managing Director of Zenprop
• There is a funding gap in the property market created by banks • Over 20 years of property experience
providing only 70-80% of funding for new property developments • Brian holds a BComm. (Hons.) from the University of
Westville
• Genesis Properties addresses this market gap by providing
mezzanine funding to developers in exchange for equity stakes in the Darren Shur (Director, MD Genesis Capital Partners)
underlying developments in a prudent and disciplined manner • Founded Genesis Capital Partners in partnership with
• This partnership model with seasoned developers is in line with Genesis Group in 2006
RMH’s investment ethos, and provides RMHP access to lucrative • Former director at Peregrine Investment Banking focused
property developments with market leading developers on their private equity portfolio
• Darren is a qualified CA(SA) having served articles at
• To date, Genesis Properties has invested in properties with a gross Fisher Hoffman Sithole
property cost of R2.6bn
SELECT DEVELOPMENTS
• SSD Head Office • Devil’s Peak Brewery • Valley View Retail Centre
• 3,000m2 office building in Randburg • 21,100m2 mixed-use building in Cape Town • 16,000m2 retail centre in Krugersdorp
Source: Company reports 14Satellite partner | Propertuity Development
OVERVIEW KEY PEOPLE
Reanne van der Merwe (CEO)
• 20 years' experience and 10+ years of in property
• Propertuity is a leader in urban renewal, having led the development
of the flagship mixed-use Maboneng precinct that has attracted • Former CFO of Pareto Limited, a R30bn property group
with flagship investments in regional retail centres such as
tourists, artists, residents and developers alike to join the Maboneng Sandton City, Menlyn Park & Cresta
project
• Former CFO of Mangwanani Group
• A decade after establishing the Maboneng precinct, Propertuity • Reanne is a qualified CA(SA)
embarked upon a consolidation phase, to strengthen the business
and adapt to challenging property sector headwinds David Beattie (Asset management partner)
• Propertuity has repositioned itself as a residential developer focused • Founder of Chorus Letting, a leading residential property
on bringing people to Maboneng, and continues to develop and rental agency managing 2,000 properties across Cape
manage its increasingly focused portfolio of residential units Town and Johannesburg
• Chorus Letting has been appointed to manage
• Propertuity is committed to Maboneng and will work with the Propertuity’s completed assets with their trademark
community, developers and residents to keep the precinct vibrant efficiency
• David is the renowned author of ‘The Expert Landlord’
SELECT DEVELOPMENTS
• Arts on Main • Hallmark House • Craftsmen’s Ship
• 1,545m2 mixed-use building in Maboneng • 109 unit residential building in Maboneng • 193 unit residential building in Maboneng
Source: Company reports 15FY18 results
INTRINSIC VALUE NORMALISED EARNINGS
R’m 2018 2017 % change R’m 2018 2017 % change
Core portfolio 2 192 610 >100% Core portfolio 152 (1) >100%
Satellite portfolio 23 289 (92%) Satellite portfolio (124) 9 (>100%)
Holding company net assets (148) - 100% Holding company costs (12) - (>100%)
RMH Property RMH Property
2 067 899 >100% 16 8 >100%
intrinsic value normalised earnings
A strong performance from the core portfolio, both in terms of earnings and intrinsic value growth, more
than offsets the satellite portfolio disappointing results
• The core partnership (Atterbury) performed well, particularly in terms of intrinsic value growth, RMH Property’s primary
performance metric. The increase in the core portfolio’s intrinsic value is primarily a result of Atterbury Europe’s balance sheet
restructure, in addition to a strong performance from the underlying businesses
• The satellite portfolio underperformed due to a full impairment of the equity investment in Propertuity, partly offset by strong
performance from Genesis Properties
• Propertuity has materially underperformed against expectations due to various factors including: overly optimistic asset selection
and unrealistic valuation expectations by Propertuity’s management team, limited management capacity, excessive gearing and
operational challenges
• Propertuity’s shareholders have taken significant measures to reduce losses herein including changes to strategy and
management, a rationalisation of the portfolio, and the introduction of seasoned property developers and managers
• This asset is not expected to materially impact RMH Property’s future earnings and has been impaired with adequate provisions
recognised for related contingencies
Source: Company reports 16Prospects to expand the RMH Property portfolio
RMHP PLANS TO DIVERSIFY THE PORTFOLIO DOMESTICALLY AND INTERNATIONALLY
• Although South Africa’s property sector has strong prospects over the long-term it continues to face significant headwinds at this stage of the
cycle. Further diversification beyond our existing international earnings stream is warranted
• There are significant opportunities for RMHP in Europe and other jurisdictions that offer access to dynamic markets and robust rand-hedged
returns particularly in Eastern European Retail, where Atterbury Europe operates
REAL GDP GROWTH OUTLOOK(1) RETAIL SALES GROWTH(1) (2)
5.8% 4.2%
3.8%
3.1%
4.3%
1.6%
3.7% 1.1%
3.3% 0.8% 0.7% 0.7%
3.2% 0.3% 0.3% 0.3%
2.7% 2.5%
2.1%
1.9%2.0% 1.8% 1.8% 1.8%
1.7%1.5%
1.5% 1.6% 1.6%
1.3% (1.0%) (0.9%)
0.6% (1.8%)
(2.8%)
(3.3%)
2016 2017 2018 2019 2020 2017 2018 2019 2020
South Africa UK EU Eastern Europe South Africa UK EU Eastern Europe
EXPECTED CAPITAL DEPLOYMENTS
R3bn-R5bn • In the medium-term, RMHP plans to make further investments of R3-5bn
Equity capital (inclusive of the committed pipeline)
• Further investments will be made domestically and internationally to support
our core partnership with Atterbury and broaden satellite partnerships, with a
bias towards European investments
New medium-term assets
Note: 1. Eastern Europe excl. Russia 2. Year-on-year real retail sales growth
Source: IMF; Trading Economics; Company reports 17Financial metrics for RMH Property
FOCUS ON CAPITAL GROWTH
• RMHP’s investment strategy primarily focuses on development focused businesses with returns driven by capital growth (measured by intrinsic value)
• This contrasts with most JSE-listed property companies that have portfolios primarily skewed towards more mature yielding assets with predictable cash
flows and consistent dividends
• In the medium-term, RMHP will target an 15-20% p.a. gross equity return on a portfolio wide basis driven by:
‒ Development profits and other capital growth (majority of return)
‒ Stable yields on completed assets (minority of return)
RMHP GROSS INTRINSIC VALUE RMHP NET INTRINSIC VALUE 1 RMHP NORMALISED EARNINGS 2
668 152
2,192 2,067
9 8 16
899 -
610
(1)
(12)
289
- 23
(148) (124)
FY17 FY18
FY17 FY18
(62)
Core Satellite Other RMH Property Core Satellite Other RMH Property
FY17 FY18
Note: Figures in millions of rands; 1. Net of RMH Property related debt; 2. Normalised earnings excl. revaluation gains
Source: Company reports; RMH analysis 18Financial impact of RMH Property on RMH
OPTIONALITY CREATED FOR RMH WITHOUT COMPROMISING DIVIDENDS DISTRIBUTIONS
• RMH funds RMHP’s investments by raising preference shares under RMH’s medium-term debt programme
• These investments should not have a material impact on RMH’s intrinsic value, earnings, dividends in the medium term
RMHP GROSS CONTRIBUTION TO INTRINSIC VALUE RMHP NET CONTRIBUTION TO INTRINSIC VALUE1 RMHP CONTRIBUTION TO EARNINGS
% of intrinsic value % of intrinsic value % of earnings
1.0% 1.7% (0.1%) 0.6% 0.1% 0.2%
FY17 FY18 FY17 FY18 FY17 FY18
RMH excl. RMH Property RMH Property RMH excl. RMH Property RMH Property RMH excl. RMH Property RMH Property
RMH DEBT-TO-MARKET CAP RMHP RELATED DEBT AS % OF TOTAL RMH DEBT % DIVIDENDS APPLIED TO DEBT SERVICE2
Debt-to-market cap RMHP related debt % % of RMH’s FSR dividends
2.3% 2.4% 49.4% 59.3% 1.4% 1.6%
FY17 FY18 FY17 FY18 FY17 FY18
Dividends applied to debt service
Market cap net of debt Total debt RMH excl. RMH Property RMH Property
Residual FirstRand dividend
Note: 1. RMHP intrinsic value net of RMHP related debt 2. Only RMH Property related debt service costs
Source: Company reports; Reuters consensus forecasts for FirstRand; RMH analysis 19Questions
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