Wrap Text
Unaudited summary results announcement and cash dividend declaration for the six months ended 31 December 2020
RAND MERCHANT INVESTMENT HOLDINGS LIMITED (RMI)
Registration number: 2010/005770/06
JSE ordinary share code: RMI
ISIN code: ZAE000210688
UNAUDITED SUMMARY RESULTS ANNOUNCEMENT AND CASH DIVIDEND DECLARATION
for the six months ended 31 December 2020
BASIS OF PREPARATION
These unaudited summary financial results for the six months ended 31 December 2020 have been prepared in accordance with:
- International Financial Reporting Standards (IFRS), including IAS 34: Interim Financial Reporting;
- The requirements of the Companies Act, 71 of 2008, as amended;
- The SAICA Financial Reporting Guide as issued by the Accounting Practices Committee;
- The Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council; and
- The Listings Requirements of the JSE Limited.
The accounting policies applied are consistent with those applied in the previous financial period. Schalk Human MCom (Acc) CA (SA) prepared these
consolidated financial results under the supervision of Herman Bosman LLM CFA. The board of directors takes full responsibility for the preparation of this
announcement and for correctly extracting the financial information for inclusion in the announcement.
The summary consolidated financial statements for the six months ended 31 December 2020 contained in this announcement have not been audited.
Normalised earnings presented in these summary financial results constitute pro forma financial information. The pro forma financial information is the responsibility
of RMI's board of directors and is presented for illustrative purposes. As a result of its nature, pro forma financial information may not fairly present RMI's financial
position, changes in equity, results of operations or cash flows.
The forward-looking information has not been commented or reported on by the group's external auditor.
ENDURING VALUE CREATED FOR THE SIX MONTHS ENDED 31 DECEMBER 2020
Compound shareholders' return since listing in 2011: 15.8% per annum
Growth in total shareholders' equity since listing in 2011: 10.3% per annum
Normalised earnings for the six months ended 31 December 2020: +11% to R2 048 million (2019: R1 853 million)
RMI is a strategic, active and long-term investor in a multi-billion Rand financial services portfolio:
Interest held:
Discovery 24.8%
Momentum Metropolitan 27.4%
OUTsurance 89.1%
Hastings 30.0%
RMI Investment Managers 100%
AlphaCode 100%
OVERVIEW OF RESULTS
The operating environment for the six months ended 31 December 2020 continued to be dominated by the COVID-19 pandemic, with corresponding economic
uncertainty and market volatility. The RMI group, however, showed resilience under these challenging circumstances and delivered a satisfactory financial and
operating performance. The 11% growth in the consolidated normalised earnings to R2.0 billion for the period under review was driven mainly by a pleasing 23%
increase in normalised earnings by OUTsurance.
Discovery
Discovery's normalised earnings decreased by 1% to R2.3 billion for the six months ended 31 December 2020. Normalised profit from operations, which excludes
substantial foreign exchange losses and tax, increased by 19% to R4.5 billion, with 81% growth delivered by emerging businesses, which include Discovery Insure,
Vitality Group and Ping An Health. VitalityLife, an established business, tripled its normalised profit during the period under review and displayed a robust
recovery with positive lapse experience and resilience to interest rate volatility due to an effective hedge against movements in long-term interest rates in
the UK. Investment in new initiatives comprised 22% of earnings, compared to 26% in the comparative period. Discovery Bank continued to make pleasing progress,
growing to over 287 000 clients, with R5.7 billion in deposits and R3.8 billion in advances, reflecting the conservative lending strategy.
The challenging sales environment curtailed core new business levels in the established businesses. Emerging and new businesses did, however, provide further
evidence of the efficacy of Discovery's organic growth model, resulting in new business growing by 8% to R10.9 billion. New business margins also recovered
strongly compared to the second half of the previous financial year through diligent cost management and improvements in product mix. Strong retention levels
mitigated the slower new business growth rate.
In South Africa it became clear that the second wave of COVID-19 infections was having a more significant impact on Discovery's target market compared to
the first wave. Overall COVID-19 provisions were sustained at R3.4 billion. Discovery's capital metrics remained above target for all businesses and the financial
leverage ratio stabilised at 25.7%.
Momentum Metropolitan
Momentum Metropolitan delivered good operating results and new business growth during the six months under review, but earnings were dampened by the
second wave of the COVID-19 pandemic. Normalised earnings decreased by 43% compared to the prior period. The COVID-19 provision was increased by
an additional R655 million (net of tax) for possible adverse experience. Mortality data from the South African Medical Research Council indicated that recorded
COVID-19 deaths are understating the mortality impact of the pandemic. The COVID-19 provision relates to potential increased mortality claims, increases
in terminations, reduced return-to-work experience on disability income claims and business interruption claims. In addition to the increase in the COVID-19
provision, investment return declined by 75% resulting from lower yields on short-dated instruments, lower investable shareholder assets following the acquisition
of Alexander Forbes Insurance in February 2020 and a weaker hedging performance on the share scheme. Excluding the additional COVID-19 provision, operating
profit would have increased by 20%, supported by the diversified financial services business model with strong contributions from Momentum Investments,
Metropolitan Life, Momentum Insurance and Momentum Metropolitan Africa.
New business volumes increased by 14% to R30 billion and the value of new business more than doubled to R334 million. Momentum Metropolitan's capital
position remained strong despite the additional COVID-19 provision, with the solvency cover of the main life insurance entity increasing to 1.95 times the Solvency
Capital Requirement compared to the 1.85 times as at 30 June 2020. This enables Momentum Metropolitan to pay an interim ordinary dividend of 25 cents per
share. The annualised return on embedded value increased to 13.6% for the period under review, assisted by an improvement in investment markets and positive
operating variances.
OUTsurance
Normalised earnings, including OUTsurance's stake in Hastings, increased by 23% to R1.4 billion. Excluding its share in Hastings, OUTsurance's normalised
earnings increased by 22%, mainly attributable to lower claims frequencies, coupled with reduced natural peril losses in Australia and South Africa. Despite the
lower interest rate environment, investment income increased significantly as equity markets recovered during the reporting period. Youi only experienced one
large catastrophe hailstorm during the period under review resulting in a retained loss of AUS$10 million, compared to the retained loss of AUS$31 million in the
comparative period impacted by the Australian bushfires.
OUTsurance's gross written premiums increased by 18% despite the low premium inflation experienced across the motor insurance portfolio. Premium inflation on
property insurance continues to show positive momentum, in particular in Australia, where the higher cost of reinsurance and large natural catastrophes of 2020
are priced in. The overall new business premium growth for the OUTsurance group increased by a strong 40%. The overall cost-to-income ratio increased from
28.1% to 28.7%, mainly due to the large investment to expand OUTsurance Brokers, the introduction of the Blue Zebra Insurance channel and the launch of the
Compulsory Third Party insurance product in Australia.
OUTsurance Business has largely settled its business interruption claims obligation to clients operating in the tourist and hospitality sectors. OUTsurance Life
remains prudently reserved for the mortality impact of the pandemic and its earnings were materially impacted by higher claims and the impact of volatile long-term
interest rates on the measurement of the policyholder liability.
Hastings
RMI included normalised earnings of R183 million from Hastings for the six months ended 31 December 2020, representing an increase of 8%. Hastings delivered
a satisfactory operational and financial result for its financial year ended 31 December 2020. Policy count increased by 8% due to improved retention and solid
new business performance. Premium growth was negatively impacted by lower new business premiums as the market reduced pricing on the back of lower
pandemic-related motor claims. The claims ratio benefitted from the lower frequencies, with management applying prudent reserving assumptions to allow for
increased uncertainty and more severe bodily injury claims during the lockdown periods.
Hastings continues to make significant investments in the digitalisation of its client experience and the expansion of its home insurance offering.
During November 2020, the joint offer to privatise Hastings was successfully completed in partnership with Sampo. Hastings will benefit from operating in a private
capacity, which is more conducive to long-term decision-making and investment directed to growth and diversification. RMI has an option to acquire an additional
10% interest in Hastings at a price equal to the joint offer price. This option expires in May 2022.
RMI Investment Managers
RMI Investment Managers is now in its fifth year of partnering a select group of independent South African boutique asset management firms. Despite the
extremely difficult operating environment, the affiliates managed to remain resilient during these turbulent times. Pleasingly, the diversified nature of the affiliate
portfolio and asset classes represented demonstrated its value and resulted in better-than-expected financial performance on the back of good assets under
management growth of 11% to R154 billion and performance fee earnings.
Royal Investment Managers
Royal Investment Managers is a joint venture between RMI Investment Managers and Royal Bafokeng Holdings. The portfolio performed marginally below expectations, largely due
to the difficult year where the impact of COVID-19 affected some businesses more than others. Royal Investment Managers finalised terms with Balondolozi
Investment Services to convert its 30% equity stake acquired in December 2017 into a quasi-debt instrument on favourable terms.
The net funding and holding company costs decreased by 26% to R269 million. This decrease is mainly due to the decrease in the prime lending rate from 10%
in the comparative period to 7% in the period under review, with a significant portion of the funding still being at a variable rate. RMI has also reduced its spending
on the AlphaCode initiative compared to the prior period and benefitted from the timing difference between the movement in the IFRS 2 cash-settled share-based
payment liability and the hedge against this liability.
SOURCES OF NORMALISED EARNINGS
RMI regards normalised earnings as the appropriate basis to evaluate business performance as it eliminates the impact of non-recurring items and accounting
anomalies. The total reported normalised earnings of RMI's investee companies for the six months under review are listed in the table below:
Six months ended Year
31 December ended
30 June
R MILLION 2020 2019 % change 2020
Discovery 2 284 2 312(1) (1) 3 747
Momentum Metropolitan 1 012 1 772 (43) 1 521
OUTsurance (excluding Hastings) 1 351 1 103 22 2 218
- OUTsurance (including Hastings) 1 437 1 169 23 2 411
- Hastings included in OUTsurance(2) (86) (66) 30 (193)
Hastings 652 596 9 1 720
RMI Investment Managers and AlphaCode investments 62 (5) 100+ (10)
(1) Restated to align with calculation for the year ended 30 June 2020.
(2) Includes costs associated with the holding structure.
A reconciliation of the adjustments made to derive normalised earnings is presented below.
RMI's consolidated normalised earnings for the period under review is listed in the table below:
Six months ended Year
31 December ended
30 June
R MILLION 2020 2019 % change 2020
Discovery 578 576(1) - 933
Momentum Metropolitan 272 479 (43) 407
OUTsurance (excluding Hastings) 1 222 998 22 2 008
- OUTsurance (including Hastings) 1 299 1 058 23 2 180
- Hastings included in OUTsurance (2) (77) (60) 28 (172)
Hastings 183 170 8 486
RMI Investment Managers and AlphaCode investments 62 (5) 100+ (10)
Funding and holding company costs (269) (365) (26) (738)
Normalised earnings 2 048 1 853 11 3 086
Normalised earnings per share (cents) 133.7 120.9 11 201.5
(1) Restated to align with calculation for the year ended 30 June 2020.
(2) Includes costs associated with the holding structure.
CASH DIVIDEND DECLARATION
Notice is hereby given that a gross interim cash dividend of 22.5 cents per ordinary share, payable out of income reserves, was declared on 17 March 2021 in
respect of the six months ended 31 December 2020.
The dividend will be subject to Dividend Withholding Tax at a rate of 20%, which will result in a net dividend of 18.0 cents per ordinary share for those shareholders
who are not exempt.
The company's tax reference number is 9469/826/16/9. Its issued share capital at the declaration date comprises 1 531 807 770 ordinary shares.
Shareholders' attention is drawn to the following important dates:
- Last day to trade in order to participate in this dividend Tuesday, 13 April 2021
- Shares commence trading ex-dividend on Wednesday,14 April 2021
- The record date for the dividend payment will be Friday, 16 April 2021
- Dividend payment date Monday, 19 April 2021
No dematerialisation or rematerialisation of share certificates may be done between Wednesday, 14 April 2021 and Friday, 16 April 2021 (both days inclusive).
VALUE OF INVESTMENTS
As at 31 December As at
% 30 June
R MILLION 2020 2019 change 2020
Discovery (listed market value)(1) 25 305 19 881 27 17 231
Momentum Metropolitan (listed market value)(1) 6 320 8 759 (28) 7 062
OUTsurance excluding Hastings (internal valuation)(2) 34 127 33 649 1 32 024
Hastings (internal valuation for December 2020, listed market value for
December 2019 and June 2020)(3) 8 849 6 192 43 7 684
RMI Investment Managers and AlphaCode investments (at cost)(4) 1 432 1 512 (5) 1 515
Gross value of portfolio 76 033 69 993 9 65 516
Net liabilities of holding company(5) (8 941) (9 708) 8 (9 808)
Net value of portfolio(6) 67 092 60 285 11 55 708
Net value of portfolio per share (cents) 4 380 3 936 11 3 637
The valuations are based on:
1. Market price on 31 December 2020.
2. A detailed and independently verified discounted cash flow valuation which reflects a realistic, yet conservative view.
3. A combination of market price when Hastings was still listed (Hastings was delisted on 16 November 2020) and a discounted cash flow valuation.
The ZAR:GBP exchange rate as at 31 December 2020 was used to translate the GBP valuation into ZAR.
4. The investments in RMI Investment Managers and AlphaCode are shown at cost, which does not differ materially from the internal valuation. RMI sold
its stake in Luno in September 2020, the proceeds of which are included in the net liabilities of the holding company.
5. The net liabilities of the holding company include all the liabilities and assets at holding company level other than the investments shown separately in
the table above.
6. The information in the table above does not include a provision for CGT. The size of RMI's stakes in its underlying investee companies qualifies for
certain tax exemptions when certain corporate actions are performed. The CGT impact on the stakes held by disqualified shareholders under section 46
of the Income Tax Act is considered immaterial compared to the overall portfolio value, and these stakes can vary over time.
OUTLOOK AND ENDURING VALUE CREATION
Discovery
Discovery's business model has proven to be highly relevant during the COVID-19 pandemic and the trends that are emerging are likely to accentuate this
relevance in a post-COVID world. It is confident in its ability to capitalise on emerging opportunities.
Financial prudence remains a key focus, ensuring resilience in the current environment. The capital metrics remained above target for all businesses, with excess
liquidity held at the centre of R1.7 billion in South Africa, sufficient to withstand additional waves and economic risks from the pandemic, and the financial leverage
ratio stabilised at 25.7%.
Discovery's Ambition 2023 remains the strategic focus for the medium term, with the goal of being a leading financial services organisation globally, positively
influencing 100 million lives - with 10 million directly insured - and being a powerful force for social good. Key to achieving this is execution of market-specific
strategies:
- South Africa: a disruptive composite model, with market-leading businesses and pivoting Discovery Bank to growth;
- United Kingdom: a differentiated offering through a composite Vitality Shared-value model;
- Ping An Health: the leading health insurer in China with over 50 million clients; and
- Vitality Group: a sophisticated global behaviour-change platform linked to financial services.
Momentum Metropolitan
Momentum Metropolitan showed encouraging growth in new business in the past six months, testament to clients and intermediaries seeing value in the actions
it took to revitalise the business as part of its Reset and Grow strategy. It continues to improve its competitive position in most retail market segments. The
continued strong new business performance confirms that the growth initiatives are having the desired impact of delivering sustainable growth over the long term,
while maintaining robust levels of capital and liquidity.
Management remains cautious about the pace of economic recovery across its operations, as disposable income will remain under pressure because of
depressed economic activity. The near-term trajectory of the economy's recovery will continue to be impacted by the presence of COVID-19 and continued
uncertainty. It is navigating through this challenging period with a strong solvency position and with sufficient liquidity to withstand impacts from the continuously
evolving environment. It will continue to invest in its core operations to take advantage of the opportunities for growth brought about by the pandemic.
Ongoing execution of the Reset and Grow strategy helps it to retain focus and set the group up for success, such as:
- Strengthening its distribution capability by increasing the number of supporting independent financial advisers;
- Maintaining robust levels of capital and liquidity, enabling it to declare an interim ordinary dividend of 25 cents per ordinary share;
- Sharing ownership with its people by establishing its first broad-based employee share ownership programme, iSabelo, after receiving the requisite shareholder
approval in November 2020;
- Retaining a competitive Level 1 B-BBEE rating; and
- Rationalising the Africa portfolio. In December 2020, the sale of the business in Zambia was successfully completed and it was followed in January 2021 by the
completion of the sale of the business in Tanzania.
OUTsurance
OUTsurance's values-driven culture and single-minded focus on delivering exceptional client experience as cornerstones of its business contributed to its
operational and financial resilience during this unprecedented time. Its strategy of expanding its insurance product range and distribution channels continued to
gain traction with the expansion of the OUTsurance tied agency force (OUTsurance Brokers), the growth of Youi's partnership with Blue Zebra Insurance (BZI) and
the launch of Youi's Compulsory Third Party (CTP) insurance product in Australia.
OUTsurance is inwardly focused to deliver against its strategic plan to grow its product and channel capabilities to supplement the growth of its core operations.
During the next six months, OUTsurance Life and OUTvest will deploy a face-to-face distribution model to enable a wider client reach beyond the direct market.
Youi will focus on the roll-out of business insurance through the BZI channel and scale the newly-established CTP product.
OUTsurance Life remains prudently reserved for the mortality impact of the pandemic. The earnings of OUTsurance Life were materially impacted by higher claims
and the impact of volatile long-term interest rates on the measurement of the policyholder liability.
OUTsurance and Youi continue to invest in the digitalisation of client service initiatives as well as the modernisation of the core insurance and finance systems.
These investments will deliver long-term cost-efficiency as client contact interactions are optimised and modern system architecture is embedded.
Maintaining underwriting discipline and leading client service remains OUTsurance's core focus to grow sustainably and achieve profitable growth.
Hastings
Hastings' new consortium of owners are framing the details of a collaboration and knowledge transfer platform:
- Average premium: This has declined in recent years. Work is being done to better understand the drivers, including declining premium inflation, pricing
improvements and how disinflationary these are over time, market dynamics, business mix and demographics, renewal versus new business, pricing comparisons
to future ability to write higher premium business;
- Operational expenses: Interrogation of the operating cost build-up, including fixed versus variable components and how they compare to market peers in order
to ensure operating costs are appropriately managed;
- Reinsurance pricing: Hastings has entered into new reinsurance contracts within board-approved parameters and slightly adverse to budget assumptions. Three
new reinsurers were brought into the programme from 2020. With Sampo on board, further work is to be done on the optimisation analysis in light of any changes
in risk appetite, along with a potential shift in prioritisation between profit and dividends and performance of the underwriting book; and
- Distribution: The focus remains on capturing bigger market share with existing products. Marketing will be rebooted with delivery of a new pay per click strategy
and launch of a new brand and TV advert. Creditworthiness is to be enhanced by offering monthly payment options to more clients. Lastly, Hastings will launch a
new digital sales journey on a new technology platform to increase conversion and profit per client.
Hastings management has committed to external targets that have been communicated at a Sampo investor day. The two key ratios will be:
- Calendar year loss ratio: below 76%, consistent with prior market guidance of 75% to 79%; and
- Group operating ratio (total costs/total revenue, excluding investment income): below 88%.
RMI Investment Managers
RMI Investment Managers is largely in the consolidation phase of its business model evolution and has, therefore, focused its efforts on optimising the existing
portfolio by truly partnering its boutique investment managers in a supportive but non-interfering manner. The team continues to actively engage in strategic
dialogue with its affiliates with a focus on implementing its shareholder value map, which offers affiliates access to comprehensive strategic support including
operational, governance and financial support, succession planning, talent management and board representation. In addition, the team continues to play a
strategic advisory role in helping its affiliates raise retail assets and foster meaningful and trusted client relationships. Many of the affiliates have also benefitted from
marketing support provided by the RMI Investment Managers team. This has enabled the affiliates to expand their branding, marketing and public relations efforts
to enhance their brand presence and credibility in the market.
RMI Investment Managers has in the last financial year focused on expanding its asset class reach by supporting the expansion of new products by its affiliates,
which enables the overall breadth of the affiliate stable to mature in a healthy and organic manner.
Management's view is that the portfolio is largely complete, however, RMI Investment Managers will remain opportunistic and continue to explore the addition of
affiliates to either solve for additional exposure or under-exposure in certain asset classes or to further add value to the portfolio.
RMI Investment Managers will ensure that its reputation as a trusted, value-adding but non-interfering shareholder of choice for the independent asset
management industry remains a core philosophy. The team and its partners in Momentum Metropolitan and RBH remain excited and committed to working with
its affiliates to support their growth to scale while playing a meaningful part in transforming the investment management industry.
AlphaCode
AlphaCode identifies, partners and grows the next-generation of financial services entrepreneurs through incubation, acceleration, collaboration and investment.
The AlphaCode programmes have developed another strong cohort of early-stage financial services entrepreneurs over the last few months. At an entry level,
the AlphaCode Explore programme (which is a pre-incubator and data science training initiative) up-skilled 16 candidates during the year-long programme. One
of the candidates successfully pitched his early-stage business to progress into the flagship AlphaCode Incubate programme cohort for 2021. In October 2020,
AlphaCode Incubate saw the end of the 2020 cohort's programme, with seven businesses having being supported with mentorship, grant funding and start-up
masterclasses. The strongest performing business on the programme, Oyi Medical, was awarded an additional R450 000 in grant funding to support continued
growth of their healthcare savings and finance platform. Ten new businesses have been selected from over 200 applicants for the 2021 Incubate programme. The
diversity of solutions being worked on by this new cohort is exciting and promises to showcase even more creative thinking from South Africa's entrepreneurial
talent.
As part of the mandate of investing in disruptive, innovative financial services businesses, AlphaCode grew its investment portfolio by deploying additional equity
funding into one of its existing investee companies, Prodigy Finance. Prodigy is a lending platform that provides education loans to international postgraduate
students at the world's leading universities. The business has funded more than 20 000 students and facilitated more than $800 million in loans. AlphaCode
realised its first exit with the sale of Luno to a leading US cryptocurrency firm, Digital Currency Group. The exit was above the targeted internal rate of return of
25% to 35% for AlphaCode's fintech investments.
AlphaCode is developing an exciting pipeline of new investments, with a focus on Insurtech.
For and on behalf of the board.
Jannie Durand Herman Bosman
Chairman Chief executive officer
Rosebank
17 March 2021
SUMMARY CONSOLIDATED INCOME STATEMENT
Six months ended
31 December Year ended
30 June
2020 2019 % 2020
R MILLION Unaudited Unaudited change Audited
Gross insurance premiums 10 144 8 488 20 17 349
Less: Reinsurance premiums (700) (353) 98 (774)
Net insurance premiums 9 444 8 135 16 16 575
Gross change in provision for unearned premiums (572) (196) 100+ (422)
Net insurance premiums earned 8 872 7 939 12 16 153
Fee and other income 17 26 (35) 64
Investment income 79 141 (44) 252
Interest income on financial assets using the effective interest rate method 169 241 (30) 458
Realised losses (8) - (100+) -
Net fair value gains/(losses) on financial assets 275 (90) 100+ (421)
Expected credit losses on financial assets (9) (7) 29 (20)
Net income 9 395 8 250 14 16 486
Gross claims paid (5 429) (4 604) 18 (9 310)
Reinsurance recoveries received 1 174 593 98 1 664
Provision for non-claims bonuses (252) (243) 4 (500)
Transfer to policyholder liabilities under insurance contracts (157) 12 (100+) (34)
Acquisition expenses (46) (24) 92 (41)
Fair value adjustment to financial liabilities (54) (74) (27) (139)
Marketing and administration expenses (2 602) (2 310) 13 (4 859)
Profit before finance costs, results of associates and taxation 2 029 1 600 27 3 267
Finance costs (312) (346) (10) (689)
Share of after taxation results of associates 660 984 (33) 259
Profit before taxation 2 377 2 238 6 2 837
Taxation (594) (495) 20 (1 031)
Profit for the period from continuing operations 1 783 1 743 2 1 806
Profit for the period from discontinued operation - 104 (100) 104
Profit for the period 1 783 1 847 (3) 1 910
Attributable to:
Equity holders of the company 1 609 1 679 (4) 1 592
Non-controlling interests 174 168 4 318
Profit for the period 1 783 1 847 (3) 1 910
COMPUTATION OF HEADLINE EARNINGS
Six months ended
31 December Year ended
30 June
2020 2019 % 2020
R MILLION Unaudited Unaudited change Audited
Earnings attributable to equity holders 1 609 1 679 (4) 1 592
Adjustment for:
- Profit on sale of subsidiary (46) (111) (111)
- Impairment of intangible assets 19 192
- Loss on dilution and disposal of equity accounted investments 9 57 62
- Impairment of owner-occupied building to below cost 1 3 152
- FCTR reversal on sale of foreign subsidiary (1) 12 12
- Impairment of goodwill - 2 2
- Impairment relating to held for sale entities - 1 14
- Derecognition of assets - - 38
- Loss on step-up of joint venture - - 2
- Loss on disposal of property and equipment - - 1
Headline earnings attributable to equity holders 1 591 1 643 (3) 1 956
COMPUTATION OF NORMALISED EARNINGS
RMI regards normalised earnings as the appropriate basis to evaluate business performance as it eliminates the impact of non-recurring items.
Six months ended
31 December Year ended
UNAUDITED % 30 June
R MILLION 2020 2019(1) change 2020
Headline earnings attributable to equity holders 1 591 1 643 (3) 1 956
RMI's share of normalised adjustments made by associates 472 207 1 153
- Restructuring costs 222 - 20
- Amortisation of intangible assets relating to business combinations 151 147 305
- Economic assumption adjustments net of discretionary margin and interest rate
derivative 89 47 897
- Unrealised losses/(gains) on foreign exchange contracts not designated as a
hedge 37 2 (47)
- Deferred tax asset raised on assessed losses (37) - (69)
- Time value of money movement of swap contract in VitalityLife 10 2 24
- Transaction costs related to VitalityLife interest rate derivatives - 5 9
- Initial expenses related to Prudential Book transfer - 4 14
Group treasury shares (15) 3 (23)
Normalised earnings attributable to equity holders 2 048 1 853 11 3 086
(1) Restated to align with Discovery's calculation of normalised earnings for the year ended 30 June 2020.
COMPUTATION OF EARNINGS PER SHARE
Six months ended
31 December Year ended
30 June
2020 2019 2020
R MILLION Unaudited Unaudited % change Audited
Number of shares in issue (millions) 1 532 1 532 - 1 532
Weighted average number of shares in issue (millions) 1 529 1 529 - 1 529
Continuing and discontinued operations
Earnings attributable to equity holders 1 609 1 679 (4) 1 592
Headline earnings attributable to equity holders 1 591 1 643 (3) 1 956
Earnings per share (cents) 105.3 109.8 (4) 104.1
Diluted earnings per share (cents) 104.7 109.2 (4) 102.7
Headline earnings per share (cents) 104.1 107.5 (3) 127.9
Diluted headline earnings per share (cents) 103.5 106.8 (3) 126.2
Continuing operations
Earnings attributable to equity holders 1 609 1 599 1 1 512
Headline earnings attributable to equity holders 1 591 1 642 (3) 1 954
Earnings per share (cents) 105.3 104.6 1 98.9
Diluted earnings per share (cents) 104.7 104.0 1 97.5
Headline earnings per share (cents) 104.1 107.4 (3) 127.8
Diluted headline earnings per share (cents) 103.5 106.8 (3) 126.1
COMPUTATION OF NORMALISED EARNINGS PER SHARE
Six months ended
31 December Year ended
UNAUDITED 30 June
R MILLION 2020 2019(1) % change 2020
Number of shares in issue (millions) 1 532 1 532 - 1 532
Weighted average number of shares in issue (millions) 1 532 1 532 - 1 532
Continuing and discontinued operations
Normalised earnings attributable to equity holders 2 048 1 853 11 3 086
Normalised earnings per share (cents) 133.7 120.9 11 201.5
Diluted normalised earnings per share (cents) 133.4 120.2 11 199.9
Continuing operations
Normalised earnings attributable to equity holders 2 048 1 852 11 3 085
Normalised earnings per share (cents) 133.7 120.9 11 201.4
Diluted normalised earnings per share (cents) 133.4 120.2 11 199.8
(1) Restated to align with Discovery's calculation of normalised earnings for the year ended 30 June 2020.
DIVIDEND PER SHARE
Six months ended
31 December Year ended
30 June
2020 2019 2020
R MILLION Unaudited Unaudited % change Audited
Dividend per share
Interim 22.5 45.0 (50) 45.0
Final -
Total dividend per share 22.5 45.0 (50) 45.0
Dividend cover (relative to headline earnings) 4.6 2.4 2.8
Dividend cover (relative to normalised earnings) 5.9 2.7(1) 4.5
(1) Restated to align with Discovery's calculation of normalised earnings for the year ended 30 June 2020.
DIRECTORS
JJ Durand (chairman), HL Bosman (chief executive officer and financial director), JP Burger, P Cooper, (Ms) SEN De Bruyn, LL Dippenaar, PK Harris, (Ms) A
Kekana, P Lagerstrom, (Ms) MM Mahlare, MM Morobe, RT Mupita, O Phetwe and JA Teeger
ALTERNATES
DA Frankel, F Knoetze and UH Lucht
SECRETARY AND REGISTERED OFFICE
JS Human
Physical address: 12th Floor, The Bank, Corner of Cradock and Tyrwhitt Avenues, Rosebank, Johannesburg, 2196
Postal address: Private Bag X1000, Saxonwold, 2132
Telephone: +27 10 753 2430
Web address: www.rmih.co.za
SPONSOR
(in terms of JSE Listings Requirements)
Rand Merchant Bank (a division of FirstRand Bank Limited)
Physical address: 1 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton, 2196
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Physical address: Rosebank Towers, 15 Biermann Avenue, Rosebank
Postal address: Private Bag X9000, Saxonwold, 2132
Telephone: +27 11 370 5000
Telefax: +27 11 688 5221
This short-form announcement is the responsibility of the directors and is only a summary of the information in the full announcement and does not contain
full or complete details. The full announcement was released on the JSE's Stock Exchange News Service (SENS) on 17 March 2021 and can be found on the
company's website at www.rmih.co.za or at https://senspdf.jse.co.za/documents/2021/jse/isse/RMIE/RMI21Int.pdf The full announcement is available for
inspection at the company's registered office and the offices of the sponsor during office hours at no charge. Any investment decision should be based on the full
announcement published on the company's website. The results have not been audited.
www.rmih.co.za
Date: 17-03-2021 08:35:00
Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.