RMB faces profit slump

2008-12-02 17:28

Johannesburg - RMB Holdings (RMBH, RMH) said on Tuesday it expects headline earnings per share (HEPS) for the six months ended December to be 24% to 32% lower than the 179.2 cents per share earned for the previous comparable half-year.

Normalised earnings per share are expected to be 30% to 38% lower than last year's 174.4 cents per share.

RMBH said that as its investment in financial services group FirstRand (FSR) produces the bulk of its earnings, it was anticipated that the impact outlined in a trading statement issued by FirstRand earlier Tuesday would, to a large extent, flow through into RMBH's results for the half year to 31 December 2008 and for the year ending 30 June 2009.

FirstRand said that a combination of an acceleration of bad debts in the retail businesses combined with losses incurred in the investment bank will negatively impact the group's earnings for the full year to the end of June 2009.

"RMBH's other investments have in the main performed in line with the guidance given to shareholders at the time of publishing the company's 2008 annual report in middle September 2008," RMBH said.

"However, the bespoke portfolio of emerging market financial shares in which RMBH has invested and which is managed on our behalf by a leading independent manager, did not escape the upheaval in international markets during October 2008. In the process the portfolio, which was valued at R650m at the beginning of the financial year, lost some R250m of its value.

"Should current market conditions persist to the 31 December 2008 reporting date, this loss will need to be recorded in the portfolio for the six month period. The existence of the portfolio and its composition is continuously evaluated and refined.

"This loss and, to a lesser extent, the cost of the funding raised and shares issued by RMBH to fund the acquisition of our additional interest in Discovery during November 2007, as well as the random impact of treasury share eliminations, will have a further dampening effect on RMBH's results," RMBH added.

Details of RMBH's interim results for the six months ending on 31 December 2008 are expected to be released on SENS and published in the press on or about 11 March 2009.

- I-Net Bridge