FANews
FANews
RELATED CATEGORIES

RMBH grows Normalised Earnings and Interim Dividend by 12% in a particularly challenging business environment

05 March 2008 RMB

Separately listed RMB Holdings (RMBH) (R35,8bn market capitalisation at end December 2007) has interests in:-

* banking and insurance FirstRand (33%);

* health insurer Discovery (27%);

* personal lines insurer OUTsurance (62%);

* specialist insurer RMB Structured Insurance (81%); and

·*short-term insurance broker Glenrand M.I.B (16%).

FINANCIAL HIGHLIGHTS

RMBH’s key income statement outcomes for the six months ended 31 December 2007 are:-

* Headline earnings + 26% to R2,12bn (2006 : R1,69bn)

* Headline earnings per share + 25% to 179,2c (2006 : 143,4c)

Accounting anomalies and non-operational factors have a distorting impact on the calculation of Headline Earnings. RMBH prefers to focus on “Normalised earnings” – where such anomalies have been eliminated - as the basis against which to measure operational performance.

* Normalised earnings + 13% to R2,08bn (2006 : R1,84bn)

* Normalised earnings per share + 12% to 174,4c (2006 : 155,1c)

* Interim dividend per share + 12% to 69,0c (2006 : 61,5c)

RMBH Chairman GT Ferreira commented that: “Both the international and the South African financial services environment were particularly challenging in the six months to December 2007. This is underscored by the fact that, in the period under review, we were not able to achieve our medium term target of 10% real growth in earnings per share. In this context, the outcome achieved is acceptable.”

The make-up of RMBH’s normalised earnings for the six months was as follows:

(Click on image to enlarge)

FirstRand grew pro forma normalised earnings (ie. excluding Discovery) by 12%, after robust performances by FNB (+ 25% ) and Momentum (+19%) were diluted by significant increases in credit defaults at WesBank’s vehicle finance business and trading losses at RMB’s equity trading division.

OUTsurance produced an excellent 33% increase in normalised earnings with new business volumes exceeding expectation.

RMBH itself benefited from continued growth in its international emerging markets investment portfolio.

RMBH increased its interim dividend by 12%, in line with the increase in normalised earnings per share.

OUTLOOK

Ferreira anticipates that, given the continuing volatility in global and local capital markets, combined with rising inflation and high interest rates, the second half of the financial year will continue to represent a challenging operating environment.

Against this background, he is cautious regarding earnings prospects for the year to June 2008 and believes it is unlikely that RMBH will meet its targeted growth in earnings of 10% above inflation, in the current financial year. He anticipates that, given the quality of RMBH’s franchises and the diversified nature of its portfolio, over the medium term earnings will trend back to this stated target.

Quick Polls

QUESTION

South Africa went to Davos to pitch itself as an investor-friendly destination, then signed an Expropriation Act. What message does this send to global investors?

ANSWER

Invest at your peril
SA is open for business
Two steps forward, one land grab back
Welcome to Hotel California
fanews magazine
FAnews February 2025 Get the latest issue of FAnews

This month's headlines

Unseen risks: insuring against the impact of AI gone wrong
Machine vs human: finding the balance
Is embedded insurance the end of traditional broker channels?
Client aspirations take centre stage as advisers rethink retirement planning
Maximise TFSA contributions before year-end
Subscribe now