JOHANNESBURG - Rand Merchant Investment Holdings (RMH) said on Friday that it aimed to diversify its income stream and the distribution of its assets as normalised earnings jumped 7 percent in the year to June on its investment in FirstRand.
RMH chief executive Herman Bosman reiterated the company’s commitment to value creation, saying it was confident that it would continue to create enduring value for its shareholders over the medium to long term, given the strength of its underlying investments
“On a selective basis, RMH may consider investments in businesses where partnerships with entrepreneurial and industry-disruptive management teams can add value to RMH and its shareholders,” Bosman said..
Bosman said business investments would include banking and related industries, adding the investments would have to demonstrate the ability to form a partnership between the investment, RMH and FirstRand.
The RMH group recorded R9.4 billion in normalised earnings in the year to June from R8.8bn a year earlier, despite South Africa’s sluggish economic growth.
RMH said its normalised earnings a share amounted to 665.4cents a share from 624.4c a share a year earlier. It rewarded shareholders with a total dividend of 376c a share from 351c a share in 2018.
The group said its 34 percent stake in FirstRand, one of Southern Africa’s leading financial services groups, had boosted earnings.
RMH is the founding and the biggest shareholder in FirstRand, whose normalised earnings increased 6 percent.
“RMH’s core investment, FirstRand, produced a good performance despite the challenging economic climate, increasing normalised earnings by 6percent and delivering a return on equity of 22.8 percent,” Bosman said.
FirstRand is listed separately and has a market capitalisation of R384.5bn as at June 30, from R358.4bn a year earlier. It consists of FNB, WesBank, Ashburton Investments, the group’s investment management business Rand Merchant Bank (RMB), the corporate and investment bank Aldermore.
FirstRand franchises - FNB, RMB and Aldermore - also produced resilient operating results, with WesBank impacted by the macroeconomic environment, the company said.
Other highlights were the 4 percent increase in RMH Property’s intrinsic value to R748 million in 2019 from R722m. Going forward RMH Property would focus on the implementation of Atterbury Bucharest and the maximisation of the existing partnerships.
Asief Mohamed, the chief investment officer at Aeon Investment Management, said RMH had produced credible earnings growth of 6percent in line with market expectations.
“The earnings growth was produced in a difficult economic environment both in South Africa and the UK. Increasing competition in the unsecured lending environment will put net interest margins in this segment under pressure going forward,” Mohamed said.
RMH closed 1.04percent higher at R30 on Friday.