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RAND MERCHANT INSURANCE HLDGS LTD - Summarised, unaudited interim results announcement and cash dividend declaration for the six months ended 31 Decembe

Release Date: 07/03/2013 08:00
Code(s): RMI     PDF:  
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Summarised, unaudited interim results announcement and cash dividend declaration
for the six months ended 31 Decembe

Rand Merchant Insurance Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2010/005770/06
JSE ordinary share code: RMI
ISIN code: ZAE000153102


Summarised, unaudited interim results announcement and cash dividend declaration


for the six months ended 31 December 2012


A gratifying outcome - not only have we successfully weathered some storms but our investments are on a strong trajectory for future growth.
GT Ferreira


KEY HIGHLIGHTS


Normalised earnings
+5%
to 76.5 cents


Dividend
+33%
to 40.0 cents


Intrinsic value
+35%
to 1 955 cents


Introduction
This report covers the unaudited financial results for the six months ended 31 December 2012 of Rand Merchant Insurance Holdings Limited
(RMI or the group), which were prepared in accordance with:


- International Financial Reporting Standards (IFRS), including IAS 34: Interim financial reporting;


- the requirements of the South African Companies Act, 71 of 2008, as amended; and


- the Listings Requirements of the JSE Limited.


The primary results and accompanying commentary are presented on a normalised basis (which excludes non-operational items and accounting
anomalies), as we believe this most accurately reflects underlying economic performance. Of relevance:


- The normalised earnings have been derived from the unaudited IFRS financial results.


- The accounting policies applied in the preparation of the summarised financial results for the six months ended 31 December 2012 are consistent
with those applied in the financial year ended 30 June 2012. However, following a change in accounting policy by OUTsurance in the second half
of the financial year ended 30 June 2012, the prior period comparatives for the six months ended 31 December 2011 have been restated to
conform to the accounting policy now in force.


- A reconciliation of the adjustments made to restate the prior period comparatives and to derive normalised earnings is presented in the
accompanying schedules.


Schalk Human, CA(SA), prepared these consolidated financial results under the supervision of Peter Cooper, CA(SA).


The RMI group at a glance
After the March 2011 re-structuring and further subsequent acquisitions, the interests of RMI comprise an investment portfolio of South Africas
premier insurance brands:


Discovery Limited (Discovery) (effective interest: 26.7%)


Discovery services the healthcare funding and insurance markets in South Africa, the United Kingdom, United States and China. As a pre-eminent
developer of integrated financial services products, it operates under a number of brand names, the more important of which are Discovery Health,
Discovery Life, Discovery Invest, Discovery Insure, Discovery Card, Vitality, PruHealth, PruProtect and Ping An Health.


MMI Holdings Limited (MMI) (effective interest: 25.2%)
MMI was formed from the merger of Momentum and Metropolitan, both sizeable insurance-based financial services players in South Africa to
create South Africas third largest insurer. The core businesses of MMI are long-term insurance, asset management, investment, healthcare
administration and employee benefits. Product solutions are provided to all market segments. MMI operates in 12 countries outside of South
Africa. It provides for the insurance needs of individuals in the lower, middle and upper income markets, principally under the Momentum and
Metropolitan brand names.


OUTsurance Holdings Limited (OUTsurance) (effective interest: 85.3%)


OUTsurance is a direct personal lines and small business short-term insurer. Pioneers of the OUTbonus concept, it has grown rapidly by applying
a scientific approach to risk selection, product design and claims management. Youi, its direct personal lines initiative in Australia, and its South
African direct life insurance business have reached critical mass and are fast gaining traction.


RMB Structured Insurance Limited (RMBSI) (effective interest: 79.1%)


RMBSI holds both short-term and life insurance licenses. It creates bespoke insurance and financial risk solutions for South Africas large
corporations by using sophisticated risk techniques and innovative financial structures. In addition, it part owns a portfolio of underwriting
management agencies.


Operating environment
For the six months to 31 December 2012 the South African macro and socio economic environment remained challenging:


- Initially, potential global macro-economic concerns such as the breakup of the euro zone, a hard landing in China and the possibility of significant
fiscal contraction in the USA weighed heavily on sentiment.


- As these subsided, South African issues, including labour market action, growing domestic economic imbalances and sovereign rating
downgrades introduced a new set of uncertainties.


Our economy showed signs of slowing in the early part of the period, prompting the SARB to lower the repo rate by a further 50 bps. Industrial
action also exacerbated the downward pressure on economic activity. This, and reports indicating that South Africas current account deficit had
widened markedly, resulted in a weaker Rand and inflation started to trend upwards. The combination of these developments resulted in a number
of rating agencies downgrading South Africas sovereign rating.


Equity markets rose strongly during the reporting period while long bond interest rates closed slightly lower. Overall consumer confidence
remained fragile and employment levels continued to be under pressure. Despite some positive economic signals, local operating conditions
remained challenging.


At the 30 June 2012 year-end we cautioned that for our short-term insurance interests the exceptionally favourable claims experience of the
recent past can be expected to normalise without realising how prescient such view would prove to be. In the last six months our short-term
insurance operations experienced the most severe weather related catastrophes in their history.


Overview of results
Notwithstanding such uncertain backdrop, all of the businesses in which RMI is invested produced gratifying results for the half year, with strong
positive growth in normalised earnings being recorded by Discovery, MMI and RMBSI:


Normalised earnings

                                                                                                 Restated
                                                                            31 December       31 December                             30 June
                                                                              Unaudited         Unaudited                             Audited

R million                                                                          2012              2011          % change              2012

Discovery                                                                         1 349             1 125                20             2 316
MMI                                                                               1 501             1 294                16             2 955
OUTsurance                                                                          493               548              (10)             1 157
RMBSI                                                                                55                 5              >100                96

RMIs attributable share of this outcome for the six months ended 31 December 2012 was as follows:

                                                                                                 Restated
                                                                            31 December       31 December                             30 June
                                                                              Unaudited         Unaudited                             Audited

R million                                                                          2012              2011           % change             2012

Normalised earnings from:

Discovery                                                                           337               281                20               579
MMI                                                                                 368               323                14               746
OUTsurance                                                                          412               494              (17)             1 010
RMBSI                                                                                42                 4              >100                74

                                                                                  1 159             1 102                 5             2 409
Funding and holding company costs                                                  (22)              (22)                                 (39)

Normalised earnings                                                               1 137             1 080                 5             2 370


The relative under contribution from OUTsurance is due to the sale by RMI of a 7% interest to the OUTsurance management team between the
two periods. Thus, in the current period some 83% of OUTsurances normalised earnings are attributable to RMI while in the prior period 90% of its
normalised earnings accrued to RMI.


The gross interim dividend of 40.0 cents per ordinary share increased by 33% and is covered 1.9 times by the normalised earnings (2011: 2.4
times).


Sources of income
Predominantly sourced from Southern Africa, RMIs well-diversified income stream is drawn from the full spectrum of insurance business:


Life 47%


Short-term 37%


Health 13%


Asset Management 3%



Intrinsic value
The groups intrinsic value reflected the recovery in financial sector equity values experienced over the period.

As at                                                                                31 December                                       30 June

R million                                                                          2012              2011           % change              2012

Market value of interest in:
- Discovery                                                                       9 207             6 440                 43             7 699
- MMI                                                                             8 701             6 697                 30             7 050

Directors valuation of interests in unlisted subsidiaries                       11 223             8 736                 28            10 506

Total market and directors valuation                                            29 131            21 873                 33            25 255
Net (liabilities)/assets of holding company                                        (90)             (353)                 75               214

Total intrinsic value                                                            29 041            21 520                 35            25 469

Intrinsic value per RMI share (cents)                                             1 955             1 448                 35             1 714

RMI share price (cents)                                                           2 058             1 340                 54             1 737
RMI market capitalisation                                                        30 575            19 908                 54            25 806
Premium/(discount) to intrinsic value                                              5.3%            (7.5%)                                 1.3%


Interim dividend payment
RMI follows a stated intention of returning net dividends (after providing for funding and operational costs incurred at the centre) received by it in
the ordinary course of business to shareholders.


The board is of the opinion that RMI is adequately capitalised at this stage and that the company will be able to meet its obligations in the
foreseeable future after payment of the interim dividend.
Having due regard to the interim dividends receivable from our underlying investments and applying the dividend practice outlined above, the
board of RMI has resolved to declare a gross interim dividend of 40.0 cents per ordinary share (2011: 30.0 cents). Such dividend is covered 1.9
times by normalised earnings per share (2011: 2.4 times).


Dividend Withholding Tax (DWT) at a rate of 15% is levied on dividends paid to shareholders who are not exempt from DWT. RMI has
accumulated Secondary Tax on Companies (STC) credits amounting to 0.18278 cents per ordinary share that can be used to reduce the DWT
liability arising. The net dividend after DWT for shareholders who are not exempt from DWT is therefore 34.02742 cents per ordinary share.


Outlook for the coming year
The difficult macro-economic environment is expected to continue for the rest of the financial year ending 30 June 2013. Growth in new insurance
business volumes will remain dependent on the economic environment, including a recovery in employment and stronger disposable income
levels.


- Discovery believes that its efforts over the last six months strongly positions it for continued growth into the future.


- At MMI the merger integration process is largely complete and the shift of focus to growth initiatives bodes well for the future.


- OUTsurance has literally weathered the proverbial storm. It suffered further significant weather claims in Australia after the end of the current
reporting period resulting from tropical storm Oswald. While earnings growth in the second half of the year is likely to be subdued, it is well
positioned for the future.


The quality of RMIs investments and their respective strategies should underpin the groups ability to provide us, as shareholders, with sustainable
superior returns in future.


During the period Niall Carroll resigned from the board as an alternate director. We thank him for his input during the period that he served on the
RMI board and wish him well. Royal Bafokeng Holdings recently proposed Obakeng Phetwe as its representative on the board. We extend a warm
welcome to him as well as to Albertinah Kekana, his alternate, and look forward to working with them in future.


For and on behalf of the board


GT Ferreira        P Cooper
Chairman           Chief executive officer
Sandton


7 March 2013


Cash dividend declaration
Notice is hereby given that a gross interim dividend of 40.0 cents per ordinary share payable out of income reserves was declared on 7 March
2013 in respect of the six months ended 31 December 2012.


RMI has utilised STC credits amounting to 0.18278 cents per ordinary share. The balance of the dividend will be subject to DWT at a rate of 15%,
which will result in a net dividend of 34.02742 cents per ordinary share for those shareholders who are not exempt from DWT. RMIs tax reference
number is 9469/826/16/9. Its issued share capital at the declaration date is 1 485 688 346 ordinary shares and 1 049 001 redeemable preference
shares.


Shareholders attention is drawn to the following important dates:

Last day to trade in order to participate in this dividend                                 Wednesday, 27 March 2013
Shares commence trading ex dividend on                                                    Thursday, 28 March 2013
The record date for the dividend payment will be                                               Friday, 5 April 2013
Dividend payment date                                                                          Monday, 8 April 2013


No de-materialisation or re-materialisation of share certificates may be done between Thursday, 28 March 2013 and Friday, 5 April 2013 
(both days inclusive).


By order of the board
JS Human
Company secretary
7 March 2013
Review of investment performance


Discovery
Discoverys performance over the six months to 31 December 2012 was excellent and saw:


- growth in new business annualised premium income of 12% to R5.11 billion; and


- normalised headline earnings increasing by 20% to R1.35 billion.


The period was noteworthy for its greater diversification of new business and earnings underpinned by the outstanding performance from the
United Kingdom (UK) businesses which contributed 14% (R283 million) to Discoverys normalised profit before taxation. The groups embedded
value grew by 18% to R33.4 billion on the back of the strong new business growth in the UK and positive experience variances across all
businesses.


RMI included R337 million (2011: R 281 million) of Discoverys earnings in its normalised earnings for the six month period.


For an in-depth review of Discoverys performance, RMI shareholders are referred to www.discovery.co.za.


MMI
The operating environment for the period under review remained fragile for MMI. Notwithstanding this, it produced satisfying results, with:
- 4% growth in new business annualised premium income to R2.43 billion;


- core headline earnings increasing by 16% to R1.5 billion; and


- group embedded value of R33.5 billion, generating an annualised return of 20%.


The Momentum / Metropolitan merger integration is progressing well with the strategic focus of the group having shifted from integration to growth
initiatives. To date merger savings of R256 million have been recorded and the targeted savings of R500 million per annum remain on track.


RMI included R368 million (2011: R323 million) of MMIs earnings in its normalised earnings for the six month period.


For an in-depth review of MMIs performance, RMI shareholders are referred to www.mmiholdings.co.za.


OUTsurance
During the six months under review OUTsurance experienced the most severe weather related catastrophes in its history. However, a well
structured re-insurance strategy resulted in some 80% of the R180 million hail storm related claims being ceded to re-insurers. Considering the
impact of these catastrophes, OUTsurance produced a satisfactory financial performance with:


-   gross written premium increasing 23% to R3.95 billion; while
-   the decline in normalised earnings was limited to 10%;
-   the interim dividend increased by 20%; and
-   OUTsurance achieved a 36% return on equity.


Notwithstanding the weak economy and elevated levels of competition in South Africa, new business volumes showed improvement.


Youi, the start-up venture in Australia (launched in 2008), delivered an excellent operational performance and its strong premium growth
contributed significantly to the 23% increase in the groups premium income, while its claims ratios were maintained within long-term target ratios.


RMI included R412 million (restated 2011: R494 million) of OUTsurances earnings in its normalised earnings for the six month period.


For an in-depth review of OUTsurances performance, RMI shareholders are referred to www.outsurance.co.za.


RMBSI
RMBSI continues to focus on a diversified business strategy to bolster its retainer base income on the back of the more traditional insurance
business. This is beginning to bear fruit and the business mix is trending in the right direction.


Normalised earnings for the period amounted to R55 million (2011: R5 million) as a result of a significant realisation on the unwinding of a
customer portfolio.


RMI included R42 million (2011: R4 million) of RMBSIs earnings in its normalised earnings for the six month period.
Summarised consolidated income statement

                                                                                       Restated
                                                                   31 December      31 December                   30 June
                                                                     Unaudited        Unaudited                   Audited

R million                                                                 2012             2011        % change      2012

Earned premiums net of reinsurance                                       3 670            3 286              12     6 661
Fee income                                                                  67               59              14       119
Investment income                                                          234              201              16       569
Realised gains                                                              42                -                         -
Net fair value gains on financial assets                                   479              128            >100       209

Income                                                                   4 492            3 674              22     7 558
Net claims paid                                                        (2 157)          (1 508)              43   (2 581)
Investment contract benefits and insurance provisions                    (259)            (189)              37     (677)
Fair value adjustment to financial liabilities                            (85)            (106)            (20)     (220)
Acquisition, marketing and administration expenses                     (1 151)            (955)              21   (1 971)

Operating profit                                                           840              916             (8)     2 109
Finance costs                                                             (66)             (66)                     (138)
Share of after tax results from associate companies                        685              503              36       975

Profit before taxation                                                   1 459            1 353               8     2 946
Taxation                                                                 (224)            (337)            (34)     (517)

Profit for the period                                                    1 235            1 016              22     2 429

Attributable to:
Equity holders of RMI                                                    1 146              969              18     2 248
Non-controlling interests                                                   89               47              89       181

Profit for the period                                                    1 235            1 016              22     2 429


Computation of headline earnings

                                                                                        Restated
                                                                    31 December      31 December                   30 June
                                                                      Unaudited        Unaudited                   Audited

R million                                                                  2012             2011       % change       2012

Earnings attributable to equity holders                                   1 146              969             18      2 248

RMIs share of headline earnings adjustments made by associates:            (1)             (17)                      (57)

Realised profit on sale of available-for-sale financial assets              (1)             (22)                      (19)
Goodwill and other impairments                                                -                5                        17
Profit on step-up of associate                                                -                -                      (54)
Profit on sale of business                                                    -                -                       (1)

Profit on sale of subsidiary                                               (26)                -                         -
Loss on dilution of shareholding                                              4                -                       208
Realised loss on sale of available-for-sale financial assets                  -                -                         4
Impairment of available-for-sale reserve                                      -                -                         7

Headline earnings attributable to equity holders                          1 123              952             18      2 410


Sources of headline earnings

                                                                                         Restated
                                                                    31 December       31 December                           30 June
                                                                      Unaudited         Unaudited                           Audited

R million                                                                  2012              2011        % change              2012

Headline earnings from:

Discovery                                                                   330              274               20               569
MMI                                                                         350              208               68               550
OUTsurance                                                                  421              488             (14)             1 261
RMBSI                                                                        44                4             >100                76

                                                                          1 145              974               18             2 456
Funding and holding company costs                                          (22)             (22)                               (46)

Headline earnings                                                         1 123              952               18             2 410

Computation of normalised earnings


The group believes that normalised earnings more accurately reflect operational performance. Headline earnings are adjusted to take into account
non-operational items and accounting anomalies.

                                                                                            Restated
                                                                        31 December      31 December                         30 June
                                                                          Unaudited        Unaudited                         Audited

R million                                                                      2012             2011      % change              2012

Headline earnings attributable to equity holders                              1 123              952            18             2 410

RMIs share of normalised adjustments made by associates:                        38              136                             230

Amortisation of intangible assets relating to business combinations              87               79                             152
Basis and other changes and investment variances                                (3)               40                              76
Finance costs raised on puttable non-controlling interest financial
liability                                                                        20               19                              38
Net realised and fair value gains on excess                                    (58)             (24)                            (65)
BEE costs and share based expenses                                                -                6                               -
STC                                                                               -               23                              37
Other                                                                           (8)              (7)                             (8)

Recognition of deferred tax asset on assessed losses                              -               24                           (214)
Earnings of subsidiary held for sale                                              -              (6)                            (10)
STC                                                                               -                -                               7
Group treasury shares                                                          (24)             (26)                            (53)

Normalised earnings attributable to equity holders                            1 137            1 080             5             2 370


Sources of normalised earnings

                                                                                            Restated
                                                                       31 December       31 December                        30 June
                                                                         Unaudited         Unaudited                        Audited

R million                                                                     2012              2011      % change             2012

Normalised earnings from:

Discovery                                                                      337               281            20              579
MMI                                                                            368               323            14              746
OUTsurance                                                                     412               494          (17)            1 010
RMBSI                                                                           42                 4          >100               74

                                                                             1 159             1 102             5            2 409
Funding and holding company costs                                             (22)              (22)                           (39)

Normalised earnings                                                          1 137             1 080             5            2 370


Computation of earnings per share

                                                                                              Restated
                                                                       31 December         31 December                       30 June
                                                                         Unaudited           Unaudited                       Audited

R million                                                                     2012                2011       % change           2012

Earnings attributable to equity holders                                      1 146                 969             18          2 248

Headline earnings attributable to equity holders                             1 123                 952             18          2 410

Number of shares in issue (millions)                                         1 486               1 486                         1 486
Weighted average number of shares in issue (millions)                        1 483               1 481                         1 481

Earnings per share (cents)                                                    77.3                65.4             18          151.8
Diluted earnings per share (cents)*                                           77.0                65.3             18          150.7
Headline earnings per share (cents)                                           75.7                64.3             18          162.8
Diluted headline earnings per share (cents)*                                  75.4                64.2             17          161.8

Dividend per share (cents)

Interim                                                                       40.0                30.0             33           30.0
Final                                                                            -                   -                         105.0

- Normal                                                                         -                   -                          50.0
- Special                                                                        -                   -                          55.0

Total                                                                         40.0                30.0             33          135.0

Dividend cover (normal dividend relative to headline earnings)                 1.9                 2.1                           2.0

* The diluted earnings calculations give cognisance to the adjustments made by Discovery and MMI in similar calculations. These adjustments
have no impact on RMIs diluted weighted average number of shares.


Computation of normalised earnings per share

                                                                                              Restated
                                                                       31 December         31 December                       30 June
                                                                         Unaudited           Unaudited                       Audited

                                                                              2012                2011        % change          2012

Weighted average number of shares in issue (millions)                        1 486               1 486                         1 486
Normalised earnings per share (cents)                                         76.5                72.7               5         159.5
Diluted normalised earnings per share (cents)                                 76.3                72.2               6         157.8
Dividend cover (normal dividend relative to normalised earnings)               1.9                 2.4                           2.0




Summarised consolidated statement of comprehensive income

                                                                                              Restated
                                                                       31 December         31 December                       30 June
                                                                         Unaudited           Unaudited                       Audited

R million                                                                     2012                2011          % change        2012

Profit for the period                                                        1 235               1 016                22       2 429

Other comprehensive income, net of taxation

Items that may be subsequently reclassified to income:
  Currency translation differences                                              42                  80              (48)          77
  Fair value movement on available-for-sale financial assets                    26                  25                 4           7

Share of other comprehensive income of associates:
 Items that may be subsequently reclassified to income                          64                  86              (26)         121
 Items that will not be reclassified to income                                  13                   8                63          13

Other comprehensive income for the period                                      145                 199              (27)         218

Total comprehensive income for the period                                    1 380               1 215                14       2 647

Total comprehensive income attributable to:

Equity holders of RMI                                                        1 281               1 159                11       2 459
Non-controlling interests                                                       99                  56                77         188

Total comprehensive income for the period                                    1 380               1 215                14       2 647


Summarised consolidated statement of financial position

                                                                                                   Restated
As at                                                                        31 December        31 December                 30 June
                                                                               Unaudited          Unaudited                 Audited

R million                                                                           2012               2011                    2012

Assets
Property and equipment                                                               442                290                     413
Goodwill and other intangible assets                                                  55                 20                      50
Investments in associate companies                                              10   061              9 600                   9 864
Financial assets                                                                 7   244              7 266                   7 603
Loans and receivables including insurance receivables                            1   208                386                     998
Taxation                                                                               7                  -                       -
Deferred acquisition cost                                                             30                 38                      32
Reinsurance contracts                                                                335                287                     273
Deferred taxation                                                                    444                162                     441
Disposal group held for sale                                                           -                  -                     211
Cash and cash equivalents                                                        2   457              2 463                   2 462

Total assets                                                                      22 283             20 512                  22 347

Equity
Share capital and premium                                                         13 615             13 619                  13 614
Reserves                                                                           (693)            (1 558)                   (430)

Capital and reserves attributable to equity holders of the company                12 922             12 061                  13 184
Non-controlling interests                                                            545                343                     626

Total equity                                                                      13 467             12 404                  13 810

Liabilities
Insurance contracts                                                                4 532              3 812                   3 710
Financial liabilities                                                              3 246              3 523                   3 730
Payables and provisions                                                              710                529                     700
Deferred taxation                                                                    311                190                     324
Taxation                                                                              17                 54                      14
Disposal group held for sale                                                           -                  -                      59

Total liabilities                                                                  8 816              8 108                   8 537

Total equity and liabilities                                                      22 283             20 512                  22 347




Summarised statement of changes in equity

                                                                                                Trans-            Other
                                                                                               actions             non-
Unaudited                                                        Share          Equity       with non-          distri-                           Non-
                                                           capital and       accounted     controlling          butable         Retained   controlling      Total
R million                                                      premium        reserves       interests         reserves         earnings      interest     equity

Balance as at 1 July 2011
- As originally stated                                          13 571           (117)         (2 657)               23              202           281     11 303
- Change in accounting policy                                        -               -             305                -               17            29        351

Balance as at 1 July 2011 as restated                           13 571           (117)         (2 352)               23              219           310     11 654
Total comprehensive income for the period                            -              94               -               96              969            56      1 215
Dividends paid                                                       -               -               -                -            (501)          (37)      (538)
Sale of shares in subsidiary                                         -               -              10                -                -             5         15
Reserve movements relating to subsidiaries                           -               -               -               22             (23)             9          8
Reserve movements relating to associates                             -             (3)               -                -                -             -        (3)
Income of associate companies retained                               -             183               -                -            (183)             -          -
Movement in treasury shares                                         48               5               -                -                -             -         53

Balance at 31 December 2011                                     13 619             162         (2 342)              141              481           343     12 404

Balance at 1 July 2012                                          13 614             420         (2 071)               88            1 133           626     13 810
Total comprehensive income for the period                            -              77               -               57            1 146            99      1 379
Dividends paid                                                       -               -               -                -          (1 560)         (123)    (1 683)
Sale of subsidiary                                                   -               -               -              (1)              (1)          (76)       (78)
Reserve movements relating to subsidiaries                           -               -               -                6             (16)            19          9
Reserve movements relating to associates                             -              23               -                -                -             -         23
Income of associate companies retained                               -              79               -                -             (79)             -          -
Movement in treasury shares                                          1               6               -                -                -             -          7

Balance at 31 December 2012                                     13 615             605         (2 071)              150              623           545     13 467




Segment report


The segmental analysis is based on the management accounts prepared for the group.

                                                                                                                                             RMI
                                                      Discovery              MMI       OUTsurance         RMBSI           Other (1)        group
R million                                             Unaudited        Unaudited        Unaudited     Unaudited           Unaudited    Unaudited

Six months ended 31 December 2012
Share of after tax results from associate
companies                                                   331              369                6             -                (21)          685
Operating profit                                              -                -              776            67                 (3)          840
Finance costs                                                 -                -                -          (11)                (55)         (66)

Profit before taxation                                      331              369              782            56                (79)        1 459
Taxation                                                      -                -            (220)           (1)                 (3)        (224)

Profit for the period                                       331              369              562            55                (82)        1 235

Normalised earnings                                         337              368              493            55               (116)        1 137

Assets                                                        -                -            6 975         4 618                574        12 167
Investments in associates                                 4 235            5 798               18            10                  -        10 061
Intangible assets                                             -                -               51             1                  3            55

Total assets                                              4 235            5 798            7 044         4 629                577        22 283

Total liabilities                                             -                -            3 518         4 226              1 072         8 816


Six months ended 31 December 2011 - Restated
Share of after tax results from associate
companies                                                   293              212                4             -                (6)           503
Operating profit                                              -                -              898            41               (23)           916
Finance costs                                                 -                -              (1)          (28)               (37)          (66)

Profit before taxation                                      293              212              901            13               (66)         1 353
Taxation                                                      -                -            (339)           (8)                 10         (337)

Profit for the period                                       293              212              562             5               (56)         1 016

Normalised earnings                                         281              323              548             5               (77)         1 080

Assets                                                        -                -            6 252         4 272                368        10 892
Investments in associates                                 3 687            5 899               14             -                  -         9 600
Intangible assets                                             -                -               17             1                  2            20

Total assets                                              3 687            5 899            6 283         4 273                370        20 512

Total liabilities                                             -                -            2 642         3 964              1 502         8 108

(1) Other includes RMI, consolidation of treasury shares and other consolidation entries.


Geographical segments



                                                                                  South
                                                                                 Africa             Australia                Total
R million                                                                     Unaudited             Unaudited            Unaudited

Six months ended 31 December 2012
Profit before taxation                                                            1 529                  (70)                1 459
Taxation                                                                          (245)                    21                (224)

Profit for the period                                                             1 284                  (49)                1 235

Total assets                                                                     19 956                 2 327               22 283

Total liabilities                                                                 7 282                 1 534                8 816

Six months ended 31 December 2011 - Restated
Profit before taxation                                                            1 439                  (86)                1 353
Taxation                                                                          (343)                     6                (337)

Profit for the period                                                             1 096                  (80)                1 016

Total assets                                                                     19 106                 1 406               20 512

Total liabilities                                                                 7 311                   797                8 108


Summarised consolidated statement of cash flows

                                                                                                             Restated
                                                                                    31 December           31 December             30 June
                                                                                      Unaudited             Unaudited             Audited

R million                                                                                  2012                  2011                2012

Cash available from operating activities                                                  2 056                 1 661               1 957
Dividends paid                                                                          (1 560)                 (501)               (946)
Investment activities                                                                       261               (1 050)               (936)
Financing activities                                                                      (789)                 (179)               (205)

Net decrease in cash and cash equivalents                                                  (32)                 (69)                (130)
Unrealised foreign currency translation adjustments                                          27                   76                  143
Cash and cash equivalents included under disposal group held for sale                         -                    -                  (7)
Cash and cash equivalents at the beginning of the period                                  2 462                2 456                2 456

Cash and cash equivalents at the end of the period                                        2 457                2 463                2 462


Change in accounting policy


The accounting policies applied in the preparation of the summarised financial results for the six months ended 31 December 2012 are consistent
with those applied in the financial year ended 30 June 2012. However, OUTsurance had changed its accounting policy in respect of the provision
for non-claims bonuses in the second half of the financial year ended 30 June 2012. As a result of the timing of this change in accounting policy,
the comparative numbers for the six months ended 31 December 2011 were restated in line with the new accounting policy.


The previous accounting policy for the provision of non-claims bonuses used the historic and expected claims frequencies in deriving the best
estimate for the provision. Due to the fact that OUTsurance had built up a long track record of client cancellation data, an analysis had been
performed in the second half of the financial year ended 30 June 2012 to determine the impact of client cancellations on the non-claims bonus
provision. A risk margin had also been incorporated into the estimate of the provision to allow for the inherent uncertainty of a provision of this
nature.
The effect of this change in accounting policy is as follows:


Statement of financial position

                                                                              31 December
R million                                                                            2011

Assets
Decrease in deferred taxation                                                       (151)

Total restatement of assets                                                         (151)

Equity and liabilities
Increase in retained earnings                                                          52
Increase in transactions with non-controlling interests reserve                       305
Increase in non-controlling interest                                                   33
Decrease in insurance contract liabilities                                          (541)

Total restatement of equity and liabilities                                         (151)

Income statement
Decrease in cash bonuses on insurance contracts expense                                54
Increase in deferred taxation                                                        (15)
Increase in non-controlling interest                                                  (4)

Increase in profit attributable to equity holders for the period                       35


Interest in group entities


RMIs effective interest in the group entities is different from the actual holdings as a result of the following consolidation adjustments:
- treasury shares held by the group entities;


- shares held by consolidated share incentive trusts;


- deemed treasury shares arising from BEE transactions entered into; and


- deemed treasury shares held by policyholders and mutual funds managed by them.


At 31 December 2012 the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the
companies as follows:

                                                         Effective              Actual                  Effective               Actual
                                                         31 December 2012                               31 December 2011

Discovery                                                26.7%                  25.0%                   26.7%                   25.0%
MMI                                                      25.2%                  25.0%                   26.3%                   26.0%
OUTsurance                                               85.3%                  83.4%                   92.3%                   89.9%
RMBSI                                                    79.1%                  76.4%                   80.5%                   76.4%


Directors
GT Ferreira (Chairman), P Cooper (CEO), L Crouse (appointed 17 September 2012), LL Dippenaar, JW Dreyer, JJ Durand, PM Goss, PK Harris,
TV Mokgatlha, O Phetwe (appointed 6 February 2013), (Ms) SEN Sebotsa and KC Shubane.


Alternates: NDJ Carroll (resigned 31 October 2012) and (Ms) A Kekana (appointed 6 February 2013).


Secretary and registered office
JS Human CA(SA)


Physical address:
3rd Floor, 2 Merchant Place, corner of Fredman Drive and Rivonia Road, Sandton 2196


Postal address:
PO Box 786273, Sandton, 2146 Telephone: +27 11 282 8166 Telefax: +27 11 282 4210


Web address:
www.rminsurance.co.za
Sponsor
(in terms of JSE Limited 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:
Ground Floor, 70 Marshall Street, Johannesburg, 2001


Postal address:
PO Box 61051, Marshalltown, 2107


Telephone:
+27 11 370 5000


Telefax:
+27 11 688 5221

Date: 07/03/2013 08:00:00 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
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