Directors’ report
for the year ended 30 June


Nature of business

RMI Holdings is a listed, insurance-focused investment entity comprising an investment portfolio of South Africa’s premier insurance brands. It was formed as a result of the separation of RMBH’s insurance and banking interests during the previous financial period. RMBH transferred its insurance interests to RMI Holdings (then a wholly-owned subsidiary) and unbundled its shareholding in RMI Holdings on a one-for-one basis. RMI Holdings was separately listed on the JSE on 7 March 2011.

Effective 1 April 2012, RMI Holdings sold 6.5% (229 million shares) of its shareholding in OUTsurance to the OUTsurance Investment Trust for a purchase consideration of R531 million.

During June 2012, MMI converted 66 million preference shares into ordinary shares, thereby diluting RMI Holdings’ holding to 25%.

The table below summarises RMI Holdings’ actual interest in its investee companies as at 30 June 2012 compared to 30 June 2011:

  30 June  
2012  
30 June  
2011  
Discovery 25%*   25%*  
MMI 25%*   26%*  
OUTsurance 83%*   90%*  
RMBSI 76%*   76%*  
* Actual interest differs from the effective interest used for financial reporting due to the consolidation of treasury shares and "deemed" treasury shares held by group companies (note 38).

RMI Holdings was incorporated on 24 March 2010. The effective date of the transfer of the investments from RMBH was 1 March 2011. Thus, while the comparative financial information of RMI Holdings covers a fifteen month period to 30 June 2011, it was effectively dormant for the first eleven months of the comparative period and its comparative financial results therefore include income from the underlying investments for the four months ended 30 June 2011.

Further details regarding the investments are provided in notes 39 and 40 of these annual financial statements.


Share capital

ORDINARY SHARES
The total authorised number of ordinary shares is 2 000 000 000, with a par value of 0.0001 cent per share. During the previous financial period, 1 485 688 346 shares were issued at a premium of R9.1926 cent per share. The unissued share capital is under the control of the board of directors until the forthcoming annual general meeting.

PREFERENCE SHARES
The total authorised number of cumulative redeemable preference shares is 100 000 000, with a par value of 0.0001 cent per share. During the previous financial period, the company issued 750 000 fixed rate, cumulative, redeemable preference shares, with a par value of 0.0001 cent, at a premium of R999.9999 per share. The preference shares are redeemable at the discretion of the company at any time and compulsorily redeemable on 15 June 2016. The preference shares pay dividends at a fixed rate of 9.14% (2011: 8.31%) six monthly. The company also issued 700 001 variable rate, cumulative, redeemable preference shares, with a par value of 0.0001 cent, at a premium of R999.9999 per share in the previous financial period. The preference shares are redeemable at the discretion of the company at any time and compulsorily redeemable on 15 June 2016. The preference shares pay dividends at a rate of 80.85% (2011: 73.5%) of the prime interest rate six monthly.


Shareholder analysis

Based on information disclosed by STRATE and investigations conducted on behalf of the company, the following shareholders have an interest of 5% or more in the issued ordinary share capital of the company:

  30 June  
2012  
30 June  
2011  
Financial Securities Limited (“Remgro”) 30%   35%  
Royal Bafokeng Holdings Proprietary Limited 15%   5%  
Public Investment Corporation 10%   12%  

Royal Bafokeng Holdings Proprietary Limited (“RBH”) increased its shareholding in RMI Holdings in December 2011 by acquiring shares from Remgro Limited and the three founding members of the group, GT Ferreira, Laurie Dippenaar and Paul Harris. The board of RMI Holdings believes that this transaction ensured the significant involvement of a highly regarded and reputable broad-based black economic empowerment partner in RMI Holdings.


Earnings

Headline earnings of the group for the year ended 30 June 2012 amounted to R2 410 million (period ended 30 June 2011: R542 million).


Dividends

The following ordinary dividends were declared by RMI Holdings during the year under review:

  • An interim dividend for the six months ended 31 December 2011 of 30.0 cents per ordinary share, declared on 7 March 2012 and paid on 2 April 2012 (2011: 22.8 cents per ordinary share, declared on 9 March 2011 and paid on 4 April 2011).
  • A normal final dividend for the year ended 30 June 2012 of 50.0 cents per ordinary share and a special dividend of 55.0 cents per ordinary share were declared on 12 September 2012, payable on 15 October 2012 (2011: 33.7 cents per ordinary share, declared on 14 September 2011 and paid on 17 October 2011).

The last day to trade in RMI Holdings shares on a cum-dividend basis in respect of the final dividend will be Friday, 5 October 2012, while the first day to trade ex-dividend will be Monday, 8 October 2012. The record date will be Friday, 12 October 2012 and the payment date Monday, 15 October 2012.

No dematerialisation or rematerialisation of shares may be done during the period Monday, 8 October 2012 to Friday, 12 October 2012, both days inclusive.


Directorate

The directorate comprises:

GT Ferreira (chairman) P Cooper (chief executive officer)
LL Dippenaar JW Dreyer
JJ Durand PM Goss
PK Harris TV Mokgatlha
SEN Sebotsa KC Shubane

All the directors were appointed on 8 December 2010 expect for Mr TV Mokgatlha who was appointed to the board effective 25 May 2011. Messrs NDJ Carroll and L Crouse were appointed as alternate directors on 18 October 2011. On 26 April 2012, Mr MH Visser tragically passed away in a car accident.


Directors’ interests in RMI Holdings

Details of individual directors’ interests in the company are disclosed here.


Interest of directors and officers

During the financial year, no contracts were entered into in which directors or officers of the company had an interest and which significantly affected the business of the group. The directors had no interest in any third party or company responsible for managing any of the business activities of the group except to the extent that they are shareholders in RMI Holdings as disclosed in this report. Arm’s length insurance transactions entered into by the company’s directors with the group’s associates are disclosed here.


Directors’ emoluments

Directors’ and prescribed officers’ emoluments are disclosed here and here.


Directors’ participation in group share incentive schemes

RMI Holdings operates a cash-settled share scheme as part of its remuneration philosophy, which tracks the company’s share price. Mr Cooper participates in this scheme, as well as the equity-settled deferred bonus scheme, details of which are set out here.


Insurance

RMI Holdings has appropriate insurance cover against crime risks as well as professional indemnity.


Company secretary and registered offices

Mr JS Human is the company secretary and was appointed on 19 October 2011. The address of the company secretary is that of the company’s registered office. The company’s registered office is 3rd floor, 2 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196.


Management contract

RMBH renders management services to RMI Holdings. Mr Cooper’s executive remuneration is paid by RMBH. RMBH recovers a portion of his remuneration and other infrastructure costs from RMI Holdings.


Special resolutions

The following special resolutions were passed at the annual general meeting of RMI Holdings held on 2 December 2011:

  • approval of non-executive directors’ remuneration with effect from 2 December 2011;
  • general authority to repurchase company shares;
  • general authority to provide financial assistance for the acquisition of securities in the company and/or related or interrelated company; and
  • general authority to provide financial assistance to related companies and inter-related parties.

OUTsurance passed the following special resolution at its annual general meeting held on 3 November 2011:

  • general authority to provide financial assistance to related companies and inter-related parties.


Events subsequent to reporting date

Other than for the final and special dividend declaration, there are no other material facts or circumstances that have occurred between the accounting date and the date of this report.


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