Picture: ISTOCK
Picture: ISTOCK

On Tuesday, Rand Merchant Investment (RMI) reported a 14% increase in its normalised earnings from continuing operations to R4.47bn in the year to June, boosted by its underlying investments.

RMI holds 25% of Discovery’s shares, along with 26% of MMI Holdings, both finanicial services companies. It also owns 88.6% of unlisted short-term insurer OUTsurance.

Normalised earnings from Discovery were up 16% to R5.4bn, while those from OUTsurance — including its shareholding in UK-based Hastings — increased 22% to R3bn.

Excluding Hastings, normalised earnings from OUTsurance rose a modest 7% to R2.6bn. But MMI recorded a 12% decrease in normalised earnings to R2.8bn.

RMI’s market value of listed investments rose 2% to R39.54bn, while its market value of unlisted investments fell 9% to R27.2bn. The company kept its final dividend steady at 65c per share, leaving the total at R1.04, down 12% on the matching period a year ago.

In its outlook statement, the company said there were several factors that could strain its earnings growth in the 2019 financial year:

• Exceptionally low claims experience in the 2018 financial year, especially in the South African and Australasian operations of OUTsurance, which also contributes to lower premium inflation

• Cyclical movements, regulatory reform and the effect of Brexit on the environment in which Hastings operates

• Investments into new initiatives such as Discovery Bank, which are expected to result in significant additional expenses for Discovery in the following financial year.

Please sign in or register to comment.