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RMBH delivers excellent growth

19 September 2007 RMB Holdings

"A truly outstanding set of results"
GT Ferreira Chairman

RMBH delivers excellent growth with -

* Normalised Earnings +33%to R 3,98 billion
* Dividends+25% toR 1,68 billion


Separately listed RMBH (market capitalisation at end June 2007 R39,0 billion) have interests in:

* Integrated banking and insurance group FirstRand (33%);
* personal lines insurer OUTsurance (62%);
* specialist insurer RMB Structured Insurance (80%)
and
* short-term insurance broker Glenrand M.I.B (16%).

FINANCIAL HIGHLIGHTS

RMBH's key financial highlights for the year to 30 June 2007 are:

* Headline earnings per share+ 30% to320.9c (2006 : 247.6c)
* Normalised earnings per share+ 33% to335.4c (2006 : 251.9c)
* Dividend per share+ 25% to141.5c (2006 : 113.5c)

For most of the year the SA financial services sector operated in a robust environment with consumer demand for credit showing resilience, while good growth was achieved in the corporate sector.

RMBH Chairman GT Ferreira commented that: "These market conditions allowed our businesses to flourish, with FirstRands banking operations recording an exceptional 35% increase in normalised earnings, which exceeded R10 billion for the first time. This was underpinned by a particularly strong performance from the investment bank, RMB, which grew earnings by 82% to R3.9 billion."

Other pleasing increases in normalised earnings were recorded by:

* Discovery+33% toR 920m
* OUTsurance+28% to R 480m
* RMBSI+26% toR 90m

The strong equity markets ruling during the year to June 2007 enabled RMBH to grow the intrinsic value of its portfolio of businesses by 34% to R41.4 billion (from 2 596 cents to 3 486 cents per RMBH share).

Particularly pleasing is the underlying long term trend, with the groups intrinsic value having grown at an annual compound growth rate of 23% per annum over the last five years.


FURTHER DIVERSIFCATION

RMBH believes that, given the relative stability and maturity of its core investments, the time is right for RMBH to give further consideration to investment opportunities that will allow it to further grow shareholder returns.

The most significant of these is RMBHs intention to acquire a significant stake of 25% in the Discovery Group, following its proposed unbundling by FirstRand.

Three steps are envisaged in a transaction that should be completed by middle November 2007:


*RMBH will receive a direct stake in Discovery of approximately 16% upon unbundling (market value R 2.6 billion);
*RMBH will acquire 4,5% of Discovery from the Remgro group (the R 0,7 billion purchase consideration will be settled a fresh issue of RMBH shares to Remgro); and
*In terms of further purchase agreements, RMBH will acquire a further 4,5% in Discovery. These will be cash settled (R 0,7 billion).

Upon completion of the transaction RMBH will have an investment of some R 4,0 billion in Discovery.

Comments Ferreira: "We will hold a significant, but not controlling, stake in an entity that we believe has excellent growth prospects and we will effectively be in partnership with a management team whose entrepreneurial skills we have long admired."

PROSPECTS

RMBH's strategy remains focused on building a diverse portfolio of leading financial services franchises in South Africa. The group will also, admittedly from a small base, increasingly focus on selected international opportunities, particularly in Africa, India and Brazil.

RMBH anticipates that, given the increased uncertainty in financial markets since the year-end, the next financial year will be in a more challenging operating environment.

Ferreira comments: "We would be amiss, while basking in the glow of this very satisfying outcome, not to draw attention to the turmoil that has been visited upon global financial markets since the group's year end. There has been a significant correction in global markets which has created increased uncertainty and investor nervousness, causing a broad re-pricing of risk in all financial markets.

We cannot avoid this kind of contagion and clearly this turmoil will also impact on South Africa. This changing landscape is meaningful for a group such as ours and clearly there are challenges ahead. Notwithstanding, we believe that the South African growth story remains intact and our portfolio consists of franchises that are well positioned to continue to benefit from the opportunities presented."

Click here to download the financial sumary (PDF File 120KB)



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