Underlying investments help RMI to 14% earnings growth
But the company says there are several factors that could strain its earnings growth in the 2019 financial year
11 September 2018 - 11:47
byStaff Writer
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
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.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Underlying investments help RMI to 14% earnings growth
But the company says there are several factors that could strain its earnings growth in the 2019 financial year
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.
FirstRand investors get bigger dividends
RMB Corvest assists clients internationally
How entrepreneurs can unlock the value of private equity for their businesses
Companies in this Story
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.