Most challenging year in RMBH history

“The most challenging year in RMBH’s history, with normalised earnings declining by 30% to R2.5 billion”

GT Ferreira – Chairman

RMBH holds strategic investments in a portfolio of leading financial services franchises in South Africa, including:

· banking and insurance group FirstRand (30%);

· health and life assurer Discovery (25%);

· personal lines insurer OUTsurance (59%); and

· specialist insurer RMB Structured Insurance (77%).

FINANCIAL HIGHLIGHTS

Towards the end of June 2009 RMBH provided shareholders with market guidance that it expected normalised earnings to decline by between 30% and 35%.

Chairman GT Ferreira commented that “…While the performance of our major investment, FirstRand , with pro forma normalised earnings down 31%, has broadly been in line with its “big four” banking peers, the outcome achieved is disappointing. This is particularly so, given that the broad trends experienced by all participants, was in our case exacerbated by losses from international strategies that both FirstRand and RMBH embarked upon. These have since been terminated.”

RMBH’s normalised earnings were drawn from the following main sources:

· FirstRand, which reported a 31% decline in pro forma normalised earnings of some R7,2 billion reflecting the negative impact of non-performing consumer loans and trading and mark to market losses arising from the de-risking and closure of certain international portfolios run by its investment bank.

· Discovery, which exceeded expectations with a 33% increase in headline earnings of R1,2 billion, as a result of sound performances across all business units and record levels of new business production.

· OUTsurance, which produced excellent results in South Africa where it grew operating profits to R0.9 billion. Its final outcome was muted by the start up costs of its Australian initiative, culminating in a 14% increase in headline earnings of R654 million.

· RMBH itself incurred mark to market losses during the year of some R178 million on a portfolio of financial stocks that it held in other emerging markets, thereby erasing all of the gains that it had recorded on the portfolio in previous years. The portfolio has since been wound up.

RMBH believes that the South African operating environment will remain tough for the rest of 2009 with a slow improvement from 2010 as lower interest rates and fiscal stimulus begin to have a positive impact.

FirstRand has increased its focus on the African continent and drawn back from such international activities where it cannot demonstrate as sustainable competitive advantage. Both Discovery and OUTsurance’s new initiatives should begin to gain traction during the current year.

Ferreira comments:

“…Given our size in local markets, and the incremental nature of our international strategies, it will be difficult for the RMBH group to track back to previous levels of earnings growth in the short term. However, we anticipate that RMBH will over time continue to deliver real returns to shareholders.”