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RAND MERCHANT INSURANCE HLDGS LTD - Summarised, unaudited interim results and cash dividend declaration for the six months ended 31 December 2014

Release Date: 05/03/2015 08:00
Code(s): RMI     PDF:  
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Summarised, unaudited interim results and cash dividend declaration for the six months ended 31 December 2014

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
(RMI)

Summarised, unaudited interim results announcement and cash dividend declaration for the six months ended 31 December 2014

KEY HIGHLIGHTS

Normalised earnings +14% to 105.4 cents per share
Ordinary dividend +13% to 52.0 cents per share
Market value +49% to 4 086 cents per share

Basis of preparation of results

The accompanying summarised financial results for the six months ended 31 December 2014 reflect:

- the consolidation of the operations of Rand Merchant Insurance Holdings Limited (RMI) and its subsidiaries, including OUTsurance Holdings Limited (OUTsurance)
and RMB-SI Investments Proprietary Limited (RMBSI); and
- RMI's interests in its associates, Discovery Limited (Discovery) and MMI Holdings Limited (MMI), which have been equity accounted.

These results have been prepared in accordance with:

- International Financial Reporting Standards (IFRS), including IAS 34: Interim financial reporting;
- the requirements of the South African Companies Act, Act 71 of 2008, as amended; and
- the Listings Requirements of the JSE Limited.

The accounting policies applied are consistent with those applied in the previous financial year, except for:

- the accounting policy governing the treatment of deferred acquisition costs for short-term and long-term insurance contracts which was changed in the second
half of the 2014 financial year as reported in the 2014 annual integrated report. The results for the six months ended 31 December 2013 were restated
accordingly as set out in the accompanying schedules; and
- changes required by the mandatory adoption of new and revised IFRS. None of the new accounting standards becoming effective in the current financial year
impacted on the group's accounting policies, earnings or financial position.

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.

Economic environment

The IMF reduced its 2015 and 2016 global growth forecasts to 3.5% and 3.7% respectively. Although the US economy continued to pick up momentum, other
major developed and emerging market economies struggled and this weakness was reflected in downward pressure on commodity prices and slowing growth in
the economies of South Africa's main export partners.

The local economy remained subdued due to the weak global growth, structural constraints and sluggish domestic demand which resulted in low levels of
economic activity. Local industries were unable to take full advantage of exchange rate weakness due to ongoing electricity shortages which have kept production
capacity constrained.

Domestic demand remains negatively impacted by low levels of business and consumer confidence, weak real disposable income growth, sluggish household
credit extension and interest rate tightening. Deficit economies like South Africa remain vulnerable to the uncertainties of global sentiment and risk appetite.

Strategy

RMI aims to be a value-adding, active enabler of leadership and innovation in financial services. It is an active investment holding company with a focus on
portfolio optimisation.

In addition to its involvement in the existing portfolio, RMI is considering new opportunities across the South African and broader African financial services
landscape. The scope of opportunities will, in all probability, initially be South African-focused and will include buy and build possibilities across a wide spectrum
of scale and life cycles of financial services businesses.

RMI's plans to create long-term optionality via investments in conceptual and early stage emerging opportunities are also progressing well. These plans include the
creation of an accelerator to provide physical space and associated services to financial services entrepreneurs.

Specifically, the plan to enter the asset management industry continues to take shape with the arrival in January of an appropriate senior resource to run the
initiative. This business will look to invest in and grow with South Africa's best investment talent along similar lines to the successful affiliate models used in the
US and UK markets.

Overview of results

Notwithstanding the challenging economic environment, all RMI's investments, with the exception of RMBSI, produced satisfying results. In particular, strong
growth in normalised earnings were recorded by Discovery and OUTsurance.

OUTsurance's normalised earnings for the comparative period have been restated to reflect the change in accounting policy in respect of the deferral of
acquisition costs.

The normalised earnings of RMI's investee companies for the six months under review are listed in the table below:

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                  Restated                           30 June
                                                                                                   2014               2013                 %            2014
R million                                                                                     Unaudited          Unaudited            change         Audited

Discovery                                                                                         1 981              1 650                20           3 457
MMI                                                                                               1 852              1 690                10           3 621
OUTsurance                                                                                          739                643                15           1 448
RMBSI                                                                                                18                 24               (25)            101


The consolidated group normalised earnings for the six months ended 31 December 2014 amounted to R1 566 million, an increase of 14% on the comparative
period in the prior year.

The breakdown of the group consolidated normalised earnings is provided in the table below:

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                  Restated                           30 June
                                                                                                   2014               2013                 %            2014
R million                                                                                     Unaudited          Unaudited            change         Audited

Normalised earnings from:
- Discovery                                                                                         496                413                20             866
- MMI                                                                                               461                419                10             899
- OUTsurance                                                                                        620                543                14           1 219
- RMBSI                                                                                              15                 20               (25)             78
                                                                                                  1 592              1 395                14           3 062
Funding and holding company costs                                                                   (26)               (16)              (63)            (40)

Normalised earnings                                                                               1 566              1 379                14           3 022

Normalised earnings per share (cents)                                                             105.4               92.8                14           203.4


The increase in the funding and holding company costs reflects the increased infrastructure at holding company level to execute the active investment strategy.

RMI regards normalised earnings as the appropriate basis to evaluate business performance as it eliminates the impact of non-recurring items and accounting
anomalies. A reconciliation of the adjustments made to derive normalised earnings is presented in the accompanying schedules.

Market value of investments

Discovery benefited from a significant market re-rating during the 2014 calendar year on the back of its continued strong financial performance, with its market
capitalisation increasing by 32%. Over the same year, MMI's market capitalisation increased by 19%.

On a "look-through" basis, the market value attributed to RMI's interests in OUTsurance (83.4% held) and RMBSI (76.4% held) increased by 76% to R32.3
billion, reflecting market recognition of the continued progress made in building out OUTsurance's Australian initiative and the strength of its South African
franchise.

RMI's share price increased by 49% in the 2014 calendar year. Together with the dividend paid, the total shareholders' return amounted to 53% for the year
ended 31 December 2014. Since inception in March 2011, RMI delivered a total annual compounded return to shareholders of 40%.

The market values of RMI's investments are summarised in the table below:

                                                                                                  As at 31 December
                                                                                                                                                       As at
                                                                                                                                                     30 June
                                                                                                   2014               2013                 %            2014
R million                                                                                     Unaudited          Unaudited            change       Unaudited
Market value of interest in:
- Discovery                                                                                      16 493             12 510                32          14 383
- MMI                                                                                            11 782              9 929                19          10 302
Market value of listed investments                                                               28 275             22 439                26          24 685
Implied market value of unlisted investments                                                     32 305             18 377                76          24 075
                                                                                                 60 580             40 816                48          48 760
Net assets/(liabilities) of the holding company                                                     125                (34)             >100             (59)
RMI market capitalisation                                                                        60 705             40 782                49          48 701
RMI closing share price (cents)                                                                   4 086              2 745                49           3 278

The movement in the net assets of the holding company is due to the retention of the R196 million special dividend received from MMI in October 2014.

Interim dividend payment

The policy of paying out all dividends received from underlying investments after servicing any funding commitments at holding company level and considering
RMI's debt capacity and investment pipeline, remains in place.

Discovery has announced a rights issue offer on 24 February 2015 amounting to between R4 billion and R5 billion. RMI has irrevocably committed to follow its
rights relating to its 25% shareholding in Discovery. Directors and senior management of Discovery, who collectively hold 12.1% of Discovery's shares, have also
irrevocably committed to follow their rights pursuant to the rights issue. RMI has underwritten the 62.9% balance of the rights issue. RMI has secured funding for
these commitments and is therefore in a position to continue with its stated dividend policy.

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 declared below.

The board resolved to declare an interim dividend of 52.0 cents (2013: 46.0 cents) per ordinary share. The dividend is covered 2.0 times (2013: 2.0 times) by the
normalised earnings of 105.4 cents per share.

Shareholders are referred to the dividend declaration forming part of this announcement regarding the applicability of Dividend Withholding Tax to the ordinary
dividend.

Outlook

Trading conditions in the second half of the current financial year are expected to be largely consistent with the experience in the first half.

GDP growth in South Africa for 2015 is expected to come in at about 2.0%. In the medium term it is estimated to be slightly higher but to remain below trend
due to both demand weakness and supply side constraints, particularly in respect of electricity.

If the recovery of the US economy continues as expected, interest rates may increase which will place further pressure on the South African consumer. High levels
of indebtedness remain in certain segments of the consumer market, which limits disposable income and the capacity to save. However, the significant fall in the
oil price in recent months could start a downward trend in consumer inflation.

Discovery will be able to pursue certain identified growth initiatives with the capital raised via the rights issue offer.

MMI believes that the group has identified and is implementing innovative strategies to unlock value and generate the required return on capital for shareholders
over time.

Youi Australia, one of the group's main growth drivers, is expected to deliver strong premium growth and achieve economies of scale. The abnormally low natural
perils claims in the second half of the previous financial year is however not expected to recur and profitability growth might therefore not mirror revenue growth.
The expected net pre-tax loss of AUS$7 million from cyclone Marcia which hit the east coast of Australia in February 2015 will negatively impact earnings in the
second half of the financial year.

Youi New Zealand is expected to break-even over the next five years and to start making a meaningful contribution to group earnings thereafter. The new
business strain caused by this initiative might impact negatively on OUTsurance's profit and dividend growth during the start-up phase.

RMI's plans to expand its investment portfolio through buy and build opportunities and to create an accelerator in support of financial services entrepreneurs are
progressing well.

For and on behalf of the board.

GT Ferreira        HL Bosman
Chairman           Chief executive officer

Sandton
5 March 2015

CASH DIVIDEND DECLARATION

Interim cash dividend

Notice is hereby given that a gross interim dividend of 52.0 cents per ordinary share payable out of income reserves was declared on 5 March 2015 in respect of
the six months ended 31 December 2014.

The company has utilised Secondary Tax on Companies credits amounting to 0.41583 cents per ordinary share. The balance of the dividend will be subject to
Dividend Withholding Tax at a rate of 15%, which will result in a net dividend of 44.26237 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 is 1 485 688 346 ordinary shares and 648 001 redeemable
preference shares.

Shareholders' attention is drawn to the following important dates:

-   Last day to trade in order to participate in the dividend will be Friday, 20 March 2015
-   Shares commence trading "ex dividend" on Monday, 23 March 2015
-   The record date for the dividend payment will be Friday, 27 March 2015
-   Dividend payment date will be Monday, 30 March 2015

No de-materialisation or re-materialisation of share certificates may be done between Monday, 23 March 2015 and Friday, 27 March 2015 (both days inclusive).

By order of the board.

JS Human
Company secretary
5 March 2015

REVIEW OF INVESTMENT PERFORMANCE

Discovery

Discovery services the healthcare funding and insurance markets in South Africa, the United Kingdom, China, Singapore, Australia and the United States. It is a
pre-eminent developer of integrated financial services products and operates under the Discovery Health, Discovery Life, Discovery Insure, Discovery Invest,
DiscoveryCard, Vitality, VitalityHealth, VitalityLife and Ping An Health brand names.

In November 2014, Discovery acquired the remaining 25% shareholding in Prudential Health Holdings Limited from Prudential Assurance Company (Prudential)
for GBP155 million (R2 790 million). Following this acquisition, PruHealth and PruProtect have been rebranded as VitalityHealth and VitalityLife respectively.
Discovery also paid USD5 million (R54 million) to acquire Humana's 25% shareholding in The Vitality Group LLC.

Both of these acquisitions were concluded based on put options granted to Prudential and Humana during the 2011 financial year which entitled them to sell
their remaining interests in these entities at fair value to Discovery at contracted dates. Since 2011, Discovery carried the present value of the estimated purchase
price as a financial liability in its statement of financial position. The difference between the carrying value of this financial liability and the purchase price paid by
Discovery resulted in a fair value profit of R1 661 million included in Discovery's earnings attributable to ordinary shareholders and headline earnings for the six
months ended 31 December 2014, but it was excluded from normalised headline earnings.

Discovery produced strong results for the six months to 31 December 2014 and some of the financial highlights included:

-   Normalised headline earnings increased by 20% to R2.0 billion with normalised headline earnings per share increasing by 16%;
-   New business grew by 17% to R6.7 billion;
-   Gross inflows under management, which is a good measure of the growth of Discovery, increased by 18% to R43 billion;
-   Discovery achieved growth in embedded value of 14% to R45.5 billion, with an annualised return on embedded value of 13.7%; and
-   The interim dividend increased by 17% to 85.5 cents per share.

Discovery Health's operating profit before tax increased by 11% to R954 million after continued efficiencies were passed onto the medical scheme through a
planned scale-related discount which assisted the medical scheme to reach a solvency ratio of 25.8% as at 31 December 2014. New business grew by 7% to
R2.8 billion.

Discovery Life achieved growth in operating profit before tax of 17% to R1.5 billion over the six months, driven by new business growth of 9% to R1.2 billion
and better than expected claims experience.

Operating profit before tax at Discovery Invest increased by 29% to R191 million, with 22% growth in new business volumes and an increase of 27% in assets
under management to R45.6 billion. This sustained growth was largely driven by increased take-up of integrated products, market momentum and increased
adviser support.

The combined VitalityHealth and VitalityProtect businesses grew earnings before tax by 20% to R432 million and new business by 7% to R915 million. The launch
of the new brands following the acquisition of the remaining 25% shareholding was well received in the UK with no significant impacts on lapses or
performance.

Discovery Insure's new business was exceptional, with 57% growth to R403 million.

RMI included R496 million of Discovery's earnings in its normalised earnings (2013: R413 million).

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

MMI Holdings

MMI is a South African financial services group that provides life insurance, employee benefits, investment and savings, healthcare solutions and short-term
insurance to individual clients, small and medium businesses, large companies, organisations and public enterprises in South Africa, the rest of Africa and selected
international countries. It covers the lower, middle and upper income markets, principally under the Momentum and Metropolitan brand names.

In the period under review, the net realised and fair value losses on shareholders' assets amounted to R73 million, compared to net realised and fair value gains of
R398 million in the comparative period in the prior year. This significant movement caused earnings attributable to ordinary shareholders and headline earnings to
decrease by 25%, but it had no impact on the growth in core headline earnings as these net realised and fair value losses and gains were excluded from core
headline earnings.

MMI delivered a solid financial performance for the six months under review:

- New business premiums increased by 15% to 23.7 billion;
- The value of new business grew by 11% to R420 million, with the new business margin remaining at 1.8%;
- The embedded value amounted to R39.8 billion, reflecting an annualised return on embedded value of 12%;
- Diluted core headline earnings increased by 10% to R1.9 billion;
- The operating divisions achieved growth in core headline earnings of 13% to R1.5 billion. All the existing businesses increased their profits with Momentum
Employee benefits (52% increase to R272 million), Metropolitan Health (31% increase to R98 million) and International (27% increase to R62 million) recording
the highest growth;
- Overall earnings growth was restricted by investments into new initiatives that are being pursued in line with the group's strategy of growth, client-centricity and
excellence; and
- The interim dividend increased by 11% to 63 cents per share.

MMI reported a strong capital buffer of R3.5 billion as at 31 December 2014 after allowing for capital requirements, strategic growth initiatives and the interim
dividend. The MMI board is satisfied that this capital level is appropriate in the current environment of changing regulations and focus on growth initiatives. MMI
also successfully raised R750 million of subordinated debt in November 2014 and redeemed R500 million of maturing subordinated debt in December 2014 as
scheduled.

RMI included R461 million of MMI's earnings in its normalised earnings (2013: R419 million).

For an in-depth review of MMI's performance, RMI's shareholders are referred to www.mmiholdings.com.

OUTsurance

OUTsurance provides short and long-term insurance products in South Africa, Australia, New Zealand and Namibia with a client centric ethos of providing value
for money insurance solutions backed by awesome client service.

Youi New Zealand was launched in August 2014 as an extension of Youi's Australian operation. It provides personal lines insurance cover directly to the New
Zealand public.

OUTsurance delivered a satisfactory financial and operational performance during the six months under review:

- Normalised earnings increased by 15% to R739 million;
- Gross premium revenue grew by 25% to R6.2 billion. Youi contributed 44% or R2.8 billion of the total gross premium revenue;
- OUTsurance achieved growth in annualised new business volumes of 18% to R2 billion;
- The net loss from natural catastrophes amounted to R92 million which was R82 million lower than the comparative period in the prior year;
- The claims ratio increased from 54.1% to 54.4%;
- The cost to income ratio increased from 26.5% to 28.1% largely attributable to the new business strain incurred with the launch of the New Zealand business
and the higher relative growth in Youi's cost base; and
- The interim dividend grew by 21% to 14.5 cents per share.

OUTsurance's South African short-term operations recorded a 17% increase in normalised earnings to R711 million, mostly driven by a recovery in premium
inflation, higher new business flows and an improvement in the claims ratio due to lower incurred losses from natural catastrophes. The incurred loss on the
Orkney earthquake amounted to R24 million, compared to total catastrophe losses of R84 million included in the earnings of the comparative period.

Youi Australia generated normalised earnings of R66 million for the six months under review, compared to R25 million in the comparative period. Youi continued
to gain market share on the back of successful marketing initiatives, excellent service and a value for money product offering. The claims ratio increased from
59.2% to 61% as a result of unfavourable weather conditions at the beginning of the financial year. The net impact of the Brisbane hailstorm in November 2014
was AUS$7 million or R68 million, compared to catastrophe losses of R90 million in the comparative period in the prior year.

During February 2015, Youi Australia incurred significant exposure from cyclone Marcia which hit the east coast of Australia and caused significant damage in the
state of Queensland. It is expected that Youi will incur a net pre-tax loss, after taking into account reinsurance recoveries, of AUS$7 million from this catastrophe
event which will negatively impact earnings in the second half of the financial year.

The performance of Youi New Zealand to date is satisfactory and in line with expectations. The start-up loss of R45 million together with R16 million funding
costs resulted in a total strain of R61 million on the earnings of the OUTsurance group for the six months under review.

The introduction of the new Solvency Assessment and Management regulatory regime with effect from 1 January 2016 is not expected to have a material impact
on the OUTsurance group's current capital position. The group's current capital adequacy ratio is 1.8 times the capital adequacy requirement (CAR). The targeted
level is 1.2 times CAR.

RMI included R620 million of OUTsurance's earnings in its normalised earnings (2013: R543 million).

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

RMB Structured Insurance

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

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
continues to bear fruit and the business mix is trending in the right direction.

Normalised earnings for the six months to 31 December 2014 amounted to R18 million (2013: R24 million). The decrease in earnings relates to lower investment
income on a large corporate policy.

RMI included R15 million of RMBSI's earnings in its normalised earnings (2013: R20 million).


Effective interest

RMI's effective interest in the group entities is different from the actual holdings as a result of the following consolidation adjustments:

-   treasury shares held by 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.

As at 31 December 2014 the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the companies as
follows:

                                                                                                                    31 December
                                                                                                          2014                              2013
                                                                                             Effective          Actual        Effective            Actual
                                                                                             Unaudited       Unaudited        Unaudited         Unaudited

Discovery                                                                                        25.8%           25.0%            25.8%             25.0%
MMI                                                                                              25.2%           25.0%            25.2%             25.0%
OUTsurance                                                                                       84.2%           83.4%            84.8%             83.4%
RMBSI                                                                                            78.3%           76.4%            79.1%             76.4%


Summarised consolidated income statement

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited

Earned premiums net of reinsurance                                                                5 721             4 741                 21          10 020
Fee income                                                                                          121                82                 48             138
Investment income                                                                                   272               218                 25             625
Net fair value gains on financial assets                                                             43               454                (91)            804

Income                                                                                            6 157             5 495                 12          11 587
Net claims paid                                                                                  (2 899)           (2 671)                 9          (4 938)
Fair value adjustment to investment contracts and insurance contract provisions                    (201)             (312)               (36)           (880)
Fair value adjustment to financial liabilities                                                      (89)              (85)                 5            (191)
Acquisition, marketing and administration expenses                                               (1 857)           (1 434)                29          (3 096)

Profit before finance costs, share of after tax results of associates and taxation                1 111               993                 12           2 482
Finance costs                                                                                       (39)              (46)               (15)            (79)
Share of after tax results of associates                                                          1 213             1 026                 18           1 776

Profit before taxation                                                                            2 285             1 973                 16           4 179
Taxation                                                                                           (346)             (275)                26            (870)

PROFIT FOR THE PERIOD                                                                             1 939             1 698                 14           3 309

Attributable to:
Equity holders of RMI                                                                             1 819             1 594                 14           3 053
Non-controlling interests                                                                           120               104                 15             256

PROFIT FOR THE PERIOD                                                                             1 939             1 698                 14           3 309


Computation of headline earnings

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited

Earnings attributable to equity holders                                                           1 819             1 594                 14           3 053
Adjustment for:
 Profit on sale of associate                                                                        (11)                -                                  -
 Loss/(profit) on dilution of shareholding                                                            3              (145)                              (135)
 Realised loss/(profit) on sale of available-for-sale financial assets                                2                (9)                               (49)
 Intangible asset impairments                                                                         1                 4                                  8
 Loss on disposal of property and equipment                                                           -                 3                                  2

HEADLINE EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS                                                  1 814             1 447                 25           2 879


Sources of headline earnings

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited

Headline earnings from:
- Discovery                                                                                         892               446                100             802
- MMI                                                                                               309               449                (31)            807
- OUTsurance                                                                                        624               546                 14           1 229
- RMBSI                                                                                              15                22                (32)             81
                                                                                                  1 840             1 463                 26           2 919
Funding and holding company costs                                                                   (26)              (16)               (63)            (40)

HEADLINE EARNINGS                                                                                 1 814             1 447                 25           2 879


Computation of normalised earnings

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited

Headline earnings attributable to equity holders                                                  1 814             1 447                 25           2 879
RMI's share of normalised adjustments made by associates:                                          (255)              (46)                               189

 Fair value adjustment to puttable non-controlling interest financial liability                    (416)              (26)                                50
 Amortisation of intangible assets relating to business combinations                                103                80                                173
 Non-recurring items                                                                                 29                 7                                 43
 Net realised and fair value losses/(gains) on shareholders' assets                                  18              (100)                              (136)
 Finance costs raised on puttable non-controlling interest financial liability                       16                19                                 39
 Non-controlling interest allocation if no put options                                              (11)              (10)                               (20)
 Basis and other changes and investment variances                                                     6               (16)                                40

Group treasury shares                                                                                 7               (22)                               (46)

NORMALISED EARNINGS ATTRIBUTABLE TO EQUITY HOLDERS                                                1 566             1 379                 14           3 022


Computation of earnings per share

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited

Earnings attributable to equity holders                                                           1 819             1 594                 14           3 053

Headline earnings attributable to equity holders                                                  1 814             1 447                 25           2 879

Normalised earnings attributable to equity holders                                                1 566             1 379                 14           3 022

Number of shares in issue (millions)                                                              1 486             1 486                  -           1 486
Weighted average number of shares in issue (millions)                                             1 482             1 483                  -           1 484

Earnings per share (cents)                                                                        122.7             107.5                 14           205.8
Diluted earnings per share (cents)                                                                121.5             106.4                 14           203.6
Headline earnings per share (cents)                                                               122.4              97.6                 25           194.0
Diluted headline earnings per share (cents)                                                       121.2              96.5                 26           191.9
Normalised earnings per share (cents)                                                             105.4              92.8                 14           203.4
Diluted normalised earnings per share (cents)                                                     104.8              91.9                 14           201.3

Dividend per share (cents)

Interim dividend                                                                                   52.0              46.0                 13            46.0
Final dividend                                                                                        -                 -                  -            62.0

TOTAL DIVIDEND                                                                                     52.0              46.0                 13           108.0


Summarised consolidated statement of comprehensive income

                                                                                                   Six months ended
                                                                                                      31 December
                                                                                                                                                  Year ended
                                                                                                                 Restated                            30 June
                                                                                                   2014              2013                  %            2014
R million                                                                                     Unaudited         Unaudited             change         Audited
Profit for the period                                                                             1 939             1 698                 14           3 309
Other comprehensive income for the period
Items that may subsequently be reclassified to income
  Currency translation differences                                                                  (97)               36              >(100)            125
  Fair value movement on available-for-sale financial assets                                        (54)               42              >(100)             41
  Deferred taxation relating to fair value movement on available-for-sale financial assets           10                 -                  -             (16)
Share of other comprehensive income of associates                                                    53                98                (46)            108
  Items that may subsequently be reclassified to income, after taxation                              39                84                (54)             74
  Items that will not be reclassified to income, after taxation                                      14                14                  -              34

OTHER COMPREHENSIVE INCOME FOR THE PERIOD                                                           (88)              176              >(100)            258
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD                                                         1 851             1 874                 (1)          3 567
Total comprehensive income attributable to:
Equity holders of RMI                                                                             1 753             1 759                  -           3 288
Non-controlling interests                                                                            98               115                (15)            279
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD                                                         1 851             1 874                 (1)          3 567


Summarised consolidated statement of financial position

                                                                                As at 31 December
                                                                                                                 As at
                                                                         Restated                              30 June
                                                                             2014                2013             2014
R million                                                               Unaudited           Unaudited          Audited

Assets
Property and equipment                                                        524                 525              520
Goodwill and other intangible assets                                           81                  28              110
Investments in associates                                                  12 155              11 145           11 582
Financial assets                                                            7 211               7 917            6 861
Loans and receivables including insurance receivables                       2 746               1 719            3 078
Taxation                                                                        3                  16                -
Deferred acquisition cost                                                     381                 289              357
Reinsurance contracts                                                         542                 425              301
Deferred taxation                                                             177                 328              232
Cash and cash equivalents                                                   5 112               3 256            4 725

TOTAL ASSETS                                                               28 932              25 648           27 766

Equity
Share capital and premium                                                  13 538              13 590           13 592
Reserves                                                                    2 776               1 034            1 886

Capital and reserves attributable to equity holders of the company         16 314              14 624           15 478
Non-controlling interests                                                     942                 786              899

TOTAL EQUITY                                                               17 256              15 410           16 377

Liabilities
Insurance contracts                                                         6 469               5 710            5 948
Share-based payment liability                                                 131                  44              145
Financial liabilities                                                       3 719               3 308            3 704
Payables and provisions                                                     1 114                 993            1 189
Deferred taxation                                                             203                 174              379
Taxation                                                                       40                   9               24

TOTAL LIABILITIES                                                          11 676              10 238           11 389

TOTAL EQUITY AND LIABILITIES                                               28 932              25 648           27 766


Statement of changes in equity
                                                                       Share                  Transactions
                                                                     capital      Equity         with non-                                  Non-
Unaudited                                                                and   accounted       controlling       Other    Retained   controlling      Total
R million                                                            premium    reserves         interests    reserves    earnings     interests     equity

Balance as at 1 July 2013
- As originally stated                                                13 632         935            (2 071)        162         907           586     14 151
- Change in accounting policy                                              -           -                 -          10         152            28        190

Restated balance as at 1 July 2013                                    13 632         935            (2 071)        172       1 059           614     14 341
Total comprehensive income for the period                                  -          98                 -          66       1 594           115      1 873
Dividends paid                                                             -           -                 -           -        (817)          (86)      (903)
Income of associates retained                                              -         625                 -           -        (625)            -          -
Movement in treasury shares                                              (42)          3                 -           -           -             -        (39)
Transactions with non-controlling interests                                -           -                (5)          -           -            (2)        (7)
Issue of share capital by a subsidiary                                     -           -                 -           -           -           112        112
Change in reserves due to a change in holding                              -           -                 -          43         (43)           33         33

BALANCE AS AT 31 DECEMBER 2013                                        13 590       1 661            (2 076)        281       1 168           786     15 410

Balance as at 1 July 2014                                             13 592       2 094            (2 076)        343       1 525           899     16 377
Total comprehensive income for the period                                  -          53                 -        (119)      1 819            98      1 851
Dividends paid                                                             -           -                 -           -        (921)          (96)    (1 017)
Income of associates retained                                              -         560                 -           -        (560)            -          -
Puttable non-controlling interests                                         -          (5)                -           -           -             -         (5)
Movement in treasury shares                                              (54)          6                 -           -           -             -        (48)
Transactions with non-controlling interests                                -           -                65         (55)         45            41         96
Share-based payment reserve                                                -           -                 -           2           -             -          2

BALANCE AS AT 31 DECEMBER 2014                                        13 538       2 708            (2 011)        171       1 908           942     17 256


Summarised consolidated statement of cash flows

                                                                                   Six months ended
                                                                                      31 December
                                                                                                                 Year ended
                                                                                                                    30 June
                                                                                 2014               2013               2014
R million                                                                   Unaudited          Unaudited            Audited

Cash available from operating activities                                        1 399              1 346              2 214
Dividends paid                                                                   (921)              (817)            (1 500)
Investment activities                                                             (13)               195              1 471
Financing activities                                                               63               (174)              (307)

Net increase in cash and cash equivalents                                         528                550              1 878
Unrealised foreign currency translation adjustments                              (141)                42                183
Cash and cash equivalents at the beginning of the period                        4 725              2 664              2 664

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD                              5 112              3 256              4 725


Segment report

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

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

Six months ended 31 December 2014
Operating profit                                                                  -              -            1 057                 40            14          1 111
Finance costs                                                                     -              -                -                 (7)          (32)           (39)
Share of after tax results of associates                                        901            341                9                 (1)          (37)         1 213

Profit/(loss) before taxation                                                   901            341            1 066                 32           (55)         2 285
Taxation                                                                          -              -             (327)               (14)           (5)          (346)

PROFIT/(LOSS) FOR THE PERIOD                                                    901            341              739                 18           (60)         1 939

NORMALISED EARNINGS                                                             496            461              739                 18          (148)         1 566

Assets                                                                            -              -           10 603              5 234           859         16 696
Associates                                                                    6 113          5 961               26                 55             -         12 155
Intangible assets                                                                 -              -               78                  1             2             81

TOTAL ASSETS                                                                  6 113          5 961           10 707              5 290           861         28 932

TOTAL LIABILITIES                                                                 -              -            6 098              4 837           741         11 676

Six months ended 31 December 2013 - Restated
Operating profit                                                                  -              -              912                 37            44            993
Finance costs                                                                     -              -                -                 (7)          (39)           (46)
Share of after tax results of associates                                        455            453                4                 (1)          115          1 026

Profit before taxation                                                          455            453              916                 29           120          1 973
Taxation                                                                          -              -             (268)                (5)           (2)          (275)

PROFIT FOR THE PERIOD                                                           455            453              648                 24           118          1 698

NORMALISED EARNINGS                                                             413            419              643                 24          (120)         1 379

Assets                                                                            -              -            8 539              5 286           650         14 475
Associates                                                                    5 013          6 066               19                 47             -         11 145
Intangible assets                                                                 -              -               25                  1             2             28

TOTAL ASSETS                                                                  5 013          6 066            8 583              5 334           652         25 648

TOTAL LIABILITIES                                                                 -              -            4 618              4 930           690         10 238

(1) "Other" includes RMI and consolidation entries.

Geographical segments

Unaudited                                                                                 South                                  New
R million                                                                                Africa       Australia              Zealand             UK            Total

Six months ended 31 December 2014
Profit/(loss) before taxation                                                             1 039              94                  (61)             -            1 072
Share of after tax results of associates                                                  1 132               -                    -             81            1 213

Profit/(loss) before taxation                                                             2 171              94                  (61)            81            2 285
Taxation                                                                                   (318)            (28)                   -              -             (346)

PROFIT/(LOSS) FOR THE PERIOD                                                              1 853              66                  (61)            81            1 939

TOTAL ASSETS                                                                             22 998           5 365                  569              -           28 932

TOTAL LIABILITIES                                                                         7 546           4 062                   68              -           11 676

Six months ended 31 December 2013 - Restated
Profit before taxation                                                                      912              35                    -              -              947
Share of after tax results of associates                                                    956               -                    -             70            1 026

Profit before taxation                                                                    1 868              35                    -             70            1 973
Taxation                                                                                   (265)            (10)                   -              -             (275)

PROFIT FOR THE PERIOD                                                                     1 603              25                    -             70            1 698

TOTAL ASSETS                                                                             22 016           3 622                   10              -           25 648

TOTAL LIABILITIES                                                                         7 644           2 585                    9              -           10 238


Financial instruments measured at fair value

The group's activities expose it to a variety of financial risks. The interim results announcement does not include all financial risk management information and
disclosures required in the annual financial statements and should be read in conjunction with the group's annual integrated report for the year ended 30 June
2014.

The table below analyses financial instruments carried at fair value by level in the fair value hierarchy. The different levels are based on the extent that quoted
prices are used in the calculation of the fair value of the financial instruments. These levels are defined as follows:

Level 1 - fair value is based on quoted market prices (unadjusted) in active markets for identical instruments as measured on the reporting date.
Level 2 - fair value is determined through valuation techniques based on observable market inputs. These valuation techniques maximise the use of observable
market data where it is available and rely as little as possible on entity specific estimates.
Level 3 - fair value is determined through valuation techniques which use significant unobservable inputs.

                                                                                                                                                   Total
Unaudited                                                                                                                                       carrying
R million                                                                                       Level 1          Level 2         Level 3          amount

31 December 2014
Financial assets
Equity securities
- available-for-sale                                                                                684                -               -             684
- at fair value through profit or loss                                                            2 069               24               -           2 093
Debt securities
- available-for-sale                                                                                  -              544               -             544
- at fair value through profit or loss                                                              276            3 090             400           3 766
Derivative asset                                                                                      -               45               -              45

TOTAL FINANCIAL ASSETS RECOGNISED AT FAIR VALUE                                                   3 029            3 703             400           7 132

Financial liabilities
Convertible debentures                                                                                -               15               -              15
Financial liabilities at fair value through profit or loss                                            -                -              89              89
Derivative liability                                                                                  -               34               -              34
Investment contracts                                                                                876              504               -           1 380

TOTAL FINANCIAL LIABILITIES RECOGNISED AT FAIR VALUE                                                876              553              89           1 518



                                                                                                      Six months ended
                                                                                                         31 December
Unaudited
R million                                                                                           2014              2013

Reconciliation of movement in level 3 assets
Balance at the beginning of the period                                                               415               441
Amount received in the current period                                                                  -                (5)
Investment income accrued                                                                             17                17
Dividends received from the OUTsurance Investment Trust                                              (32)              (30)

BALANCE AT THE END OF THE PERIOD                                                                     400               423

Reconciliation of movement in level 3 liabilities
Balance at the beginning of the period                                                               105               110
Preference dividends charged to the income statement in respect of profit sharing
arrangements on ring-fenced insurance business                                                        89                85
Preference dividends paid                                                                           (105)             (110)

BALANCE AT THE END OF THE PERIOD                                                                      89                85


                                                                                                                                                   Total
Unaudited                                                                                                                                       carrying
R million                                                                                       Level 1          Level 2         Level 3          amount

31 December 2013
Financial assets
Equity securities
- available-for-sale                                                                                719                -               -             719
- at fair value through profit or loss                                                            2 388               26               -           2 414
Debt securities
- available-for-sale                                                                                  -              538               -             538
- at fair value through profit or loss                                                              905            2 828             423           4 156
Derivative asset                                                                                      -               11               -              11

TOTAL FINANCIAL ASSETS RECOGNISED AT FAIR VALUE                                                   4 012            3 403             423           7 838

Financial liabilities
Convertible debentures                                                                                -               15               -              15
Financial liabilities at fair value through profit or loss                                            -                -              85              85
Derivative liability                                                                                  -               17               -              17
Investment contracts                                                                                863              419               -           1 282

TOTAL FINANCIAL LIABILITIES RECOGNISED AT FAIR VALUE                                                863              451              85           1 399


The fair values of the above instruments were determined as follows:

Level 1

The level 1 equity securities comprise listed preference share and ordinary share investments which are listed on a securities exchange. The fair values of these
investments are calculated based on the closing bid prices on the last business day of the reporting period. The ordinary share investments include an investment
in a listed exchange traded fund which tracks the performance of the top 40 companies listed on the Johannesburg Securities Exchange. Debt securities represent
South African Government issued interest securities and other listed interest securities on the Bond Exchange of South Africa. The carrying amount represents the
closing bid prices on the last business day of the reporting period. Investment contract liabilities are valued with reference to the fair value of the underlying
assets.

Level 2

The level 2 fair value instruments include unlisted preference shares that are redeemable with a notice period ranging from thirty days to three years. Dividend
yields range from 50.8% to 70% of the prime overdraft rate. The fair value of the preference shares which are redeemable within one year from the reporting
date is deemed to equal the redemption value. The fair value of the preference shares with a maturity date of longer than one year, is calculated on a discounted
cash flow basis with the discount rate adjusted for changes in credit risk of the ultimate counterparty, being one of the large South African banks. Due to the
redeemable nature, the preference shares are deemed to be debt securities. The fair values of collective investment scheme investments are determined by the
closing unit price as quoted by the collective investment schemes. The collective investment schemes are not listed. The fair value of money market instruments
and other interest securities are determined based on observable market inputs. The derivative asset and liability are valued with reference to the closing bid price
of the underlying listed equities they relate to. Investment contract liabilities are valued with reference to the fair value of the underlying assets.

Level 3

The level 3 financial asset at fair value through profit or loss represents an investment in the OUTsurance Investment Trust, the value of which is not significantly
sensitive to an increase or decrease in the counterparty credit rating due to the collateralised nature of the transaction. The financial liabilities at fair value through
profit or loss represent profits arising out of the profit sharing arrangements that accrue on a monthly basis and which are distributed as preference dividends on
a six monthly basis.

CHANGE IN ACCOUNTING POLICY

In the second half of the previous financial year, the group changed its accounting policy in respect of acquisition costs to allow for the deferral thereof on
short-term policies with a term greater than a month and long-term policies. The rationale behind the change in accounting policy is explained in the annual
integrated report for the year ended 30 June 2014.

This change in accounting policy has been accounted for retrospectively and the financial information for the six months ended 31 December 2013 have been
restated. The effect of the change is as follows:

Restatements for the six months ended 31 December 2013
                                                                                                 Original         Restated
Unaudited                                                                                          amount           amount       Difference
R million                                                                                            2013             2013             2013

Statement of financial position
Assets
Deferred acquisition costs                                                                             30              289              259
Deferred taxation                                                                                     431              328             (103)

Increase in assets                                                                                    461              617              156

Equity and liabilities
Reserves                                                                                              826            1 034              208
Non-controlling interests                                                                             750              786               36
Insurance contracts                                                                                 5 798            5 710              (88)

Increase in equity and liabilities                                                                  7 374            7 530              156

Income statement
Acquisition, marketing and administration expenses                                                 (1 473)          (1 434)              39
Fair value adjustment to investment contracts and insurance contract provisions                      (342)            (312)              30
Taxation                                                                                             (255)            (275)             (20)

Increase in profit for the six months ended 31 December 2013                                       (2 070)          (2 021)              49

Attributable to:
Equity holders of RMI                                                                               1 553            1 594               41
Non-controlling interests                                                                              96              104                8

Increase in profit for the six months ended 31 December 2013                                        1 649            1 698               49


ADMINISTRATION

Directors

GT Ferreira (Chairman), HL Bosman (CEO & FD), JP Burger, P Cooper (appointed as non-executive director on 11 September 2014), (Ms) SEN De Bruyn Sebotsa,
LL Dippenaar, JW Dreyer, JJ Durand, PM Goss, PK Harris, P Lagerström, MM Morobe (appointed 1 August 2014), O Phetwe and KC Shubane

Alternates: L Crouse and (Ms) A Kekana

Secretary and registered office

JS Human

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: 05/03/2015 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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