Rand Merchant Investment Holdings (RMI), the investment holding company that owns OUTsurance, has advised shareholders to expect a drop in normalised earnings when it publishes its annual results later this week.
The holding company, which began unbundling its stakes in Discovery and Momentum Metropolitan in 2021, said in a trading statement on Tuesday that normalised earnings for the year to end-June 2022 were expected to fall by between 12% and 22% to a range of between 180.5c and 203.6c. RMI regards normalised earnings, which excludes nonoperational items and accounting anomalies, as the key indicator of the group’s operational performance.
Headline earnings per share (HEPS), a widely used accounting definition of profitability that excludes one-off items, are expected to decline by between 7% and 17% to a range of between 159c and 178.2c. Overall earnings per share are anticipated to jump by between 668% and 678% to between 1,453.1c and 1,472c.
RMI said in April that it had received regulatory approval to unbundle its 25% stake in Discovery as well as its 26.8% shareholding in Momentum Metropolitan. The process of hiving off its 167-million shares in Discovery and 401-million in Momentum was finalised on April 25.
RMI also announced in March that it intended to swap its JSE listing with OUTsurance, which will see the group rebranded in line with that of the short-term insurance firm. AlphaCode, RMI’s fintech business arm and asset management business, will exist alongside OUTsurance, the crown jewel in its investment portfolio.
RMI also announced in December 2021 that it had sold its 30% stake in UK insurer Hastings for R14.6bn to Nordic insurance group Sampo, which was a co-investor in the company via a 70% shareholding. The sale allowed RMI to book an R8.7bn profit after settling Hastings’s debt and the receipt of a dividend from OUTsurance, which is 89.1% owned by RMI but which also had a stake in Hastings via a separate entity called Main Street. It also negated the need for a planned rights issue.
RMI said in a trading statement on Tuesday that the earnings of Hastings, Discovery and Momentum Metropolitan were equity accounted until December 8 2021, and that the financial results of all three investee companies were treated as discontinued operations in the group’s financial results.
RMI will publish its annual results on September 22.
theunisseng@businesslive.co.za
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