RMBH: "A satisfying outcome in a complex and volatile business environment”
“A satisfying outcome in a complex and volatile business environment”
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%); and
* personal lines insurer OUTsurance (59%).
FINANCIAL HIGHLIGHTS
In line with the market guidance previously provided to shareholders, RMBH reported the following outcomes the six months to 31 December 2009:
* Normalised earnings +22% to 136,8 cents (R1,65bn)
* Headline earnings +17% to 141,2 cents (R1,69bn)
* Attributable earnings +23% to 140,9 cents (R1,69bn)
The intrinsic value of RMBH’s underlying investments increased by 15% to R31,94 per share (R38,62bn) and it declared an unchanged interim dividend of 54 cents per share (R653m).
Chairman GT Ferreira commented, “Had previously described the year to June 2009 as the most difficult in RMBH’s thirty year history. Given that background, this is a satisfying outcome for the six months to December 2009.”
In a complex and volatile business environment, where the South African economy has barely shown signs of coming out of the recession, RMBH’s results were driven by the following outcomes in normalised earnings:
* FirstRand + 1% to R 4 605m
* Discovery +54% to R 755m
* OUTsurance - 14% to R 284m
While the FirstRand results reflect a muted outcome between the two comparative six months periods to December, it does not reflect the major improvement that was won in the six months to December 2009 over the immediately preceding half year to June 2009.
The outcome at Discovery is particularly pleasing, with the major part of the growth attributed to new business gained as well as the reduction of start up losses where new business ventures are beginning to gain traction.
OUTsurance achieved satisfying growth in its Southern African businesses (operating profits +15%) before the impact of Youi’s start up costs in Australia, where operations are ahead of its business plan.
In addition, RMBH was able to exit the emerging market portfolio in which it was invested directly, without further cost (2008: loss of R 249 million).
PROSPECTSRMBH anticipates a modest return to growth in the South African economy, driven mainly by further investment by government and some improvement in consumption levels
FirstRand expects that earnings from its banking franchises and assurance operations will benefit as the economy gradually recovers. Both Discovery and OUTsurance’s new initiatives should continue to gain traction during the current year.
Ferreira comments, “The drive now is to ensure our businesses are optimally positioned to take advantage of growth opportunities as they arise, particularly as the negative credit cycle reverses…”
