Wrap Text
Summarised, unaudited interim results announcement and cash dividend declaration
for the six months ended 31 Decembe
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
Summarised, unaudited interim results announcement and cash dividend declaration
for the six months ended 31 December 2012
A gratifying outcome - not only have we successfully weathered some storms but our investments are on a strong trajectory for future growth.
GT Ferreira
KEY HIGHLIGHTS
Normalised earnings
+5%
to 76.5 cents
Dividend
+33%
to 40.0 cents
Intrinsic value
+35%
to 1 955 cents
Introduction
This report covers the unaudited financial results for the six months ended 31 December 2012 of Rand Merchant Insurance Holdings Limited
(RMI or the group), which were prepared in accordance with:
- International Financial Reporting Standards (IFRS), including IAS 34: Interim financial reporting;
- the requirements of the South African Companies Act, 71 of 2008, as amended; and
- the Listings Requirements of the JSE Limited.
The primary results and accompanying commentary are presented on a normalised basis (which excludes non-operational items and accounting
anomalies), as we believe this most accurately reflects underlying economic performance. Of relevance:
- The normalised earnings have been derived from the unaudited IFRS financial results.
- The accounting policies applied in the preparation of the summarised financial results for the six months ended 31 December 2012 are consistent
with those applied in the financial year ended 30 June 2012. However, following a change in accounting policy by OUTsurance in the second half
of the financial year ended 30 June 2012, the prior period comparatives for the six months ended 31 December 2011 have been restated to
conform to the accounting policy now in force.
- A reconciliation of the adjustments made to restate the prior period comparatives and to derive normalised earnings is presented in the
accompanying schedules.
Schalk Human, CA(SA), prepared these consolidated financial results under the supervision of Peter Cooper, CA(SA).
The RMI group at a glance
After the March 2011 re-structuring and further subsequent acquisitions, the interests of RMI comprise an investment portfolio of South Africas
premier insurance brands:
Discovery Limited (Discovery) (effective interest: 26.7%)
Discovery services the healthcare funding and insurance markets in South Africa, the United Kingdom, United States and China. As a pre-eminent
developer of integrated financial services products, it operates under a number of brand names, the more important of which are Discovery Health,
Discovery Life, Discovery Invest, Discovery Insure, Discovery Card, Vitality, PruHealth, PruProtect and Ping An Health.
MMI Holdings Limited (MMI) (effective interest: 25.2%)
MMI was formed from the merger of Momentum and Metropolitan, both sizeable insurance-based financial services players in South Africa to
create South Africas third largest insurer. The core businesses of MMI are long-term insurance, asset management, investment, healthcare
administration and employee benefits. Product solutions are provided to all market segments. MMI operates in 12 countries outside of South
Africa. It provides for the insurance needs of individuals in the lower, middle and upper income markets, principally under the Momentum and
Metropolitan brand names.
OUTsurance Holdings Limited (OUTsurance) (effective interest: 85.3%)
OUTsurance is a direct personal lines and small business short-term insurer. Pioneers of the OUTbonus concept, it has grown rapidly by applying
a scientific approach to risk selection, product design and claims management. Youi, its direct personal lines initiative in Australia, and its South
African direct life insurance business have reached critical mass and are fast gaining traction.
RMB Structured Insurance Limited (RMBSI) (effective interest: 79.1%)
RMBSI holds both short-term and life insurance licenses. It creates bespoke insurance and financial risk solutions for South Africas large
corporations by using sophisticated risk techniques and innovative financial structures. In addition, it part owns a portfolio of underwriting
management agencies.
Operating environment
For the six months to 31 December 2012 the South African macro and socio economic environment remained challenging:
- Initially, potential global macro-economic concerns such as the breakup of the euro zone, a hard landing in China and the possibility of significant
fiscal contraction in the USA weighed heavily on sentiment.
- As these subsided, South African issues, including labour market action, growing domestic economic imbalances and sovereign rating
downgrades introduced a new set of uncertainties.
Our economy showed signs of slowing in the early part of the period, prompting the SARB to lower the repo rate by a further 50 bps. Industrial
action also exacerbated the downward pressure on economic activity. This, and reports indicating that South Africas current account deficit had
widened markedly, resulted in a weaker Rand and inflation started to trend upwards. The combination of these developments resulted in a number
of rating agencies downgrading South Africas sovereign rating.
Equity markets rose strongly during the reporting period while long bond interest rates closed slightly lower. Overall consumer confidence
remained fragile and employment levels continued to be under pressure. Despite some positive economic signals, local operating conditions
remained challenging.
At the 30 June 2012 year-end we cautioned that for our short-term insurance interests the exceptionally favourable claims experience of the
recent past can be expected to normalise without realising how prescient such view would prove to be. In the last six months our short-term
insurance operations experienced the most severe weather related catastrophes in their history.
Overview of results
Notwithstanding such uncertain backdrop, all of the businesses in which RMI is invested produced gratifying results for the half year, with strong
positive growth in normalised earnings being recorded by Discovery, MMI and RMBSI:
Normalised earnings
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Discovery 1 349 1 125 20 2 316
MMI 1 501 1 294 16 2 955
OUTsurance 493 548 (10) 1 157
RMBSI 55 5 >100 96
RMIs attributable share of this outcome for the six months ended 31 December 2012 was as follows:
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Normalised earnings from:
Discovery 337 281 20 579
MMI 368 323 14 746
OUTsurance 412 494 (17) 1 010
RMBSI 42 4 >100 74
1 159 1 102 5 2 409
Funding and holding company costs (22) (22) (39)
Normalised earnings 1 137 1 080 5 2 370
The relative under contribution from OUTsurance is due to the sale by RMI of a 7% interest to the OUTsurance management team between the
two periods. Thus, in the current period some 83% of OUTsurances normalised earnings are attributable to RMI while in the prior period 90% of its
normalised earnings accrued to RMI.
The gross interim dividend of 40.0 cents per ordinary share increased by 33% and is covered 1.9 times by the normalised earnings (2011: 2.4
times).
Sources of income
Predominantly sourced from Southern Africa, RMIs well-diversified income stream is drawn from the full spectrum of insurance business:
Life 47%
Short-term 37%
Health 13%
Asset Management 3%
Intrinsic value
The groups intrinsic value reflected the recovery in financial sector equity values experienced over the period.
As at 31 December 30 June
R million 2012 2011 % change 2012
Market value of interest in:
- Discovery 9 207 6 440 43 7 699
- MMI 8 701 6 697 30 7 050
Directors valuation of interests in unlisted subsidiaries 11 223 8 736 28 10 506
Total market and directors valuation 29 131 21 873 33 25 255
Net (liabilities)/assets of holding company (90) (353) 75 214
Total intrinsic value 29 041 21 520 35 25 469
Intrinsic value per RMI share (cents) 1 955 1 448 35 1 714
RMI share price (cents) 2 058 1 340 54 1 737
RMI market capitalisation 30 575 19 908 54 25 806
Premium/(discount) to intrinsic value 5.3% (7.5%) 1.3%
Interim dividend payment
RMI follows a stated intention of returning net dividends (after providing for funding and operational costs incurred at the centre) received by it in
the ordinary course of business to shareholders.
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.
Having due regard to the interim dividends receivable from our underlying investments and applying the dividend practice outlined above, the
board of RMI has resolved to declare a gross interim dividend of 40.0 cents per ordinary share (2011: 30.0 cents). Such dividend is covered 1.9
times by normalised earnings per share (2011: 2.4 times).
Dividend Withholding Tax (DWT) at a rate of 15% is levied on dividends paid to shareholders who are not exempt from DWT. RMI has
accumulated Secondary Tax on Companies (STC) credits amounting to 0.18278 cents per ordinary share that can be used to reduce the DWT
liability arising. The net dividend after DWT for shareholders who are not exempt from DWT is therefore 34.02742 cents per ordinary share.
Outlook for the coming year
The difficult macro-economic environment is expected to continue for the rest of the financial year ending 30 June 2013. Growth in new insurance
business volumes will remain dependent on the economic environment, including a recovery in employment and stronger disposable income
levels.
- Discovery believes that its efforts over the last six months strongly positions it for continued growth into the future.
- At MMI the merger integration process is largely complete and the shift of focus to growth initiatives bodes well for the future.
- OUTsurance has literally weathered the proverbial storm. It suffered further significant weather claims in Australia after the end of the current
reporting period resulting from tropical storm Oswald. While earnings growth in the second half of the year is likely to be subdued, it is well
positioned for the future.
The quality of RMIs investments and their respective strategies should underpin the groups ability to provide us, as shareholders, with sustainable
superior returns in future.
During the period Niall Carroll resigned from the board as an alternate director. We thank him for his input during the period that he served on the
RMI board and wish him well. Royal Bafokeng Holdings recently proposed Obakeng Phetwe as its representative on the board. We extend a warm
welcome to him as well as to Albertinah Kekana, his alternate, and look forward to working with them in future.
For and on behalf of the board
GT Ferreira P Cooper
Chairman Chief executive officer
Sandton
7 March 2013
Cash dividend declaration
Notice is hereby given that a gross interim dividend of 40.0 cents per ordinary share payable out of income reserves was declared on 7 March
2013 in respect of the six months ended 31 December 2012.
RMI has utilised STC credits amounting to 0.18278 cents per ordinary share. The balance of the dividend will be subject to DWT at a rate of 15%,
which will result in a net dividend of 34.02742 cents per ordinary share for those shareholders who are not exempt from DWT. RMIs tax reference
number is 9469/826/16/9. Its issued share capital at the declaration date is 1 485 688 346 ordinary shares and 1 049 001 redeemable preference
shares.
Shareholders attention is drawn to the following important dates:
Last day to trade in order to participate in this dividend Wednesday, 27 March 2013
Shares commence trading ex dividend on Thursday, 28 March 2013
The record date for the dividend payment will be Friday, 5 April 2013
Dividend payment date Monday, 8 April 2013
No de-materialisation or re-materialisation of share certificates may be done between Thursday, 28 March 2013 and Friday, 5 April 2013
(both days inclusive).
By order of the board
JS Human
Company secretary
7 March 2013
Review of investment performance
Discovery
Discoverys performance over the six months to 31 December 2012 was excellent and saw:
- growth in new business annualised premium income of 12% to R5.11 billion; and
- normalised headline earnings increasing by 20% to R1.35 billion.
The period was noteworthy for its greater diversification of new business and earnings underpinned by the outstanding performance from the
United Kingdom (UK) businesses which contributed 14% (R283 million) to Discoverys normalised profit before taxation. The groups embedded
value grew by 18% to R33.4 billion on the back of the strong new business growth in the UK and positive experience variances across all
businesses.
RMI included R337 million (2011: R 281 million) of Discoverys earnings in its normalised earnings for the six month period.
For an in-depth review of Discoverys performance, RMI shareholders are referred to www.discovery.co.za.
MMI
The operating environment for the period under review remained fragile for MMI. Notwithstanding this, it produced satisfying results, with:
- 4% growth in new business annualised premium income to R2.43 billion;
- core headline earnings increasing by 16% to R1.5 billion; and
- group embedded value of R33.5 billion, generating an annualised return of 20%.
The Momentum / Metropolitan merger integration is progressing well with the strategic focus of the group having shifted from integration to growth
initiatives. To date merger savings of R256 million have been recorded and the targeted savings of R500 million per annum remain on track.
RMI included R368 million (2011: R323 million) of MMIs earnings in its normalised earnings for the six month period.
For an in-depth review of MMIs performance, RMI shareholders are referred to www.mmiholdings.co.za.
OUTsurance
During the six months under review OUTsurance experienced the most severe weather related catastrophes in its history. However, a well
structured re-insurance strategy resulted in some 80% of the R180 million hail storm related claims being ceded to re-insurers. Considering the
impact of these catastrophes, OUTsurance produced a satisfactory financial performance with:
- gross written premium increasing 23% to R3.95 billion; while
- the decline in normalised earnings was limited to 10%;
- the interim dividend increased by 20%; and
- OUTsurance achieved a 36% return on equity.
Notwithstanding the weak economy and elevated levels of competition in South Africa, new business volumes showed improvement.
Youi, the start-up venture in Australia (launched in 2008), delivered an excellent operational performance and its strong premium growth
contributed significantly to the 23% increase in the groups premium income, while its claims ratios were maintained within long-term target ratios.
RMI included R412 million (restated 2011: R494 million) of OUTsurances earnings in its normalised earnings for the six month period.
For an in-depth review of OUTsurances performance, RMI shareholders are referred to www.outsurance.co.za.
RMBSI
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 is beginning to bear fruit and the business mix is trending in the right direction.
Normalised earnings for the period amounted to R55 million (2011: R5 million) as a result of a significant realisation on the unwinding of a
customer portfolio.
RMI included R42 million (2011: R4 million) of RMBSIs earnings in its normalised earnings for the six month period.
Summarised consolidated income statement
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Earned premiums net of reinsurance 3 670 3 286 12 6 661
Fee income 67 59 14 119
Investment income 234 201 16 569
Realised gains 42 - -
Net fair value gains on financial assets 479 128 >100 209
Income 4 492 3 674 22 7 558
Net claims paid (2 157) (1 508) 43 (2 581)
Investment contract benefits and insurance provisions (259) (189) 37 (677)
Fair value adjustment to financial liabilities (85) (106) (20) (220)
Acquisition, marketing and administration expenses (1 151) (955) 21 (1 971)
Operating profit 840 916 (8) 2 109
Finance costs (66) (66) (138)
Share of after tax results from associate companies 685 503 36 975
Profit before taxation 1 459 1 353 8 2 946
Taxation (224) (337) (34) (517)
Profit for the period 1 235 1 016 22 2 429
Attributable to:
Equity holders of RMI 1 146 969 18 2 248
Non-controlling interests 89 47 89 181
Profit for the period 1 235 1 016 22 2 429
Computation of headline earnings
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Earnings attributable to equity holders 1 146 969 18 2 248
RMIs share of headline earnings adjustments made by associates: (1) (17) (57)
Realised profit on sale of available-for-sale financial assets (1) (22) (19)
Goodwill and other impairments - 5 17
Profit on step-up of associate - - (54)
Profit on sale of business - - (1)
Profit on sale of subsidiary (26) - -
Loss on dilution of shareholding 4 - 208
Realised loss on sale of available-for-sale financial assets - - 4
Impairment of available-for-sale reserve - - 7
Headline earnings attributable to equity holders 1 123 952 18 2 410
Sources of headline earnings
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Headline earnings from:
Discovery 330 274 20 569
MMI 350 208 68 550
OUTsurance 421 488 (14) 1 261
RMBSI 44 4 >100 76
1 145 974 18 2 456
Funding and holding company costs (22) (22) (46)
Headline earnings 1 123 952 18 2 410
Computation of normalised earnings
The group believes that normalised earnings more accurately reflect operational performance. Headline earnings are adjusted to take into account
non-operational items and accounting anomalies.
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Headline earnings attributable to equity holders 1 123 952 18 2 410
RMIs share of normalised adjustments made by associates: 38 136 230
Amortisation of intangible assets relating to business combinations 87 79 152
Basis and other changes and investment variances (3) 40 76
Finance costs raised on puttable non-controlling interest financial
liability 20 19 38
Net realised and fair value gains on excess (58) (24) (65)
BEE costs and share based expenses - 6 -
STC - 23 37
Other (8) (7) (8)
Recognition of deferred tax asset on assessed losses - 24 (214)
Earnings of subsidiary held for sale - (6) (10)
STC - - 7
Group treasury shares (24) (26) (53)
Normalised earnings attributable to equity holders 1 137 1 080 5 2 370
Sources of normalised earnings
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Normalised earnings from:
Discovery 337 281 20 579
MMI 368 323 14 746
OUTsurance 412 494 (17) 1 010
RMBSI 42 4 >100 74
1 159 1 102 5 2 409
Funding and holding company costs (22) (22) (39)
Normalised earnings 1 137 1 080 5 2 370
Computation of earnings per share
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Earnings attributable to equity holders 1 146 969 18 2 248
Headline earnings attributable to equity holders 1 123 952 18 2 410
Number of shares in issue (millions) 1 486 1 486 1 486
Weighted average number of shares in issue (millions) 1 483 1 481 1 481
Earnings per share (cents) 77.3 65.4 18 151.8
Diluted earnings per share (cents)* 77.0 65.3 18 150.7
Headline earnings per share (cents) 75.7 64.3 18 162.8
Diluted headline earnings per share (cents)* 75.4 64.2 17 161.8
Dividend per share (cents)
Interim 40.0 30.0 33 30.0
Final - - 105.0
- Normal - - 50.0
- Special - - 55.0
Total 40.0 30.0 33 135.0
Dividend cover (normal dividend relative to headline earnings) 1.9 2.1 2.0
* The diluted earnings calculations give cognisance to the adjustments made by Discovery and MMI in similar calculations. These adjustments
have no impact on RMIs diluted weighted average number of shares.
Computation of normalised earnings per share
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
2012 2011 % change 2012
Weighted average number of shares in issue (millions) 1 486 1 486 1 486
Normalised earnings per share (cents) 76.5 72.7 5 159.5
Diluted normalised earnings per share (cents) 76.3 72.2 6 157.8
Dividend cover (normal dividend relative to normalised earnings) 1.9 2.4 2.0
Summarised consolidated statement of comprehensive income
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 % change 2012
Profit for the period 1 235 1 016 22 2 429
Other comprehensive income, net of taxation
Items that may be subsequently reclassified to income:
Currency translation differences 42 80 (48) 77
Fair value movement on available-for-sale financial assets 26 25 4 7
Share of other comprehensive income of associates:
Items that may be subsequently reclassified to income 64 86 (26) 121
Items that will not be reclassified to income 13 8 63 13
Other comprehensive income for the period 145 199 (27) 218
Total comprehensive income for the period 1 380 1 215 14 2 647
Total comprehensive income attributable to:
Equity holders of RMI 1 281 1 159 11 2 459
Non-controlling interests 99 56 77 188
Total comprehensive income for the period 1 380 1 215 14 2 647
Summarised consolidated statement of financial position
Restated
As at 31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 2012
Assets
Property and equipment 442 290 413
Goodwill and other intangible assets 55 20 50
Investments in associate companies 10 061 9 600 9 864
Financial assets 7 244 7 266 7 603
Loans and receivables including insurance receivables 1 208 386 998
Taxation 7 - -
Deferred acquisition cost 30 38 32
Reinsurance contracts 335 287 273
Deferred taxation 444 162 441
Disposal group held for sale - - 211
Cash and cash equivalents 2 457 2 463 2 462
Total assets 22 283 20 512 22 347
Equity
Share capital and premium 13 615 13 619 13 614
Reserves (693) (1 558) (430)
Capital and reserves attributable to equity holders of the company 12 922 12 061 13 184
Non-controlling interests 545 343 626
Total equity 13 467 12 404 13 810
Liabilities
Insurance contracts 4 532 3 812 3 710
Financial liabilities 3 246 3 523 3 730
Payables and provisions 710 529 700
Deferred taxation 311 190 324
Taxation 17 54 14
Disposal group held for sale - - 59
Total liabilities 8 816 8 108 8 537
Total equity and liabilities 22 283 20 512 22 347
Summarised statement of changes in equity
Trans- Other
actions non-
Unaudited Share Equity with non- distri- Non-
capital and accounted controlling butable Retained controlling Total
R million premium reserves interests reserves earnings interest equity
Balance as at 1 July 2011
- As originally stated 13 571 (117) (2 657) 23 202 281 11 303
- Change in accounting policy - - 305 - 17 29 351
Balance as at 1 July 2011 as restated 13 571 (117) (2 352) 23 219 310 11 654
Total comprehensive income for the period - 94 - 96 969 56 1 215
Dividends paid - - - - (501) (37) (538)
Sale of shares in subsidiary - - 10 - - 5 15
Reserve movements relating to subsidiaries - - - 22 (23) 9 8
Reserve movements relating to associates - (3) - - - - (3)
Income of associate companies retained - 183 - - (183) - -
Movement in treasury shares 48 5 - - - - 53
Balance at 31 December 2011 13 619 162 (2 342) 141 481 343 12 404
Balance at 1 July 2012 13 614 420 (2 071) 88 1 133 626 13 810
Total comprehensive income for the period - 77 - 57 1 146 99 1 379
Dividends paid - - - - (1 560) (123) (1 683)
Sale of subsidiary - - - (1) (1) (76) (78)
Reserve movements relating to subsidiaries - - - 6 (16) 19 9
Reserve movements relating to associates - 23 - - - - 23
Income of associate companies retained - 79 - - (79) - -
Movement in treasury shares 1 6 - - - - 7
Balance at 31 December 2012 13 615 605 (2 071) 150 623 545 13 467
Segment report
The segmental analysis is based on the management accounts prepared for the group.
RMI
Discovery MMI OUTsurance RMBSI Other (1) group
R million Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Six months ended 31 December 2012
Share of after tax results from associate
companies 331 369 6 - (21) 685
Operating profit - - 776 67 (3) 840
Finance costs - - - (11) (55) (66)
Profit before taxation 331 369 782 56 (79) 1 459
Taxation - - (220) (1) (3) (224)
Profit for the period 331 369 562 55 (82) 1 235
Normalised earnings 337 368 493 55 (116) 1 137
Assets - - 6 975 4 618 574 12 167
Investments in associates 4 235 5 798 18 10 - 10 061
Intangible assets - - 51 1 3 55
Total assets 4 235 5 798 7 044 4 629 577 22 283
Total liabilities - - 3 518 4 226 1 072 8 816
Six months ended 31 December 2011 - Restated
Share of after tax results from associate
companies 293 212 4 - (6) 503
Operating profit - - 898 41 (23) 916
Finance costs - - (1) (28) (37) (66)
Profit before taxation 293 212 901 13 (66) 1 353
Taxation - - (339) (8) 10 (337)
Profit for the period 293 212 562 5 (56) 1 016
Normalised earnings 281 323 548 5 (77) 1 080
Assets - - 6 252 4 272 368 10 892
Investments in associates 3 687 5 899 14 - - 9 600
Intangible assets - - 17 1 2 20
Total assets 3 687 5 899 6 283 4 273 370 20 512
Total liabilities - - 2 642 3 964 1 502 8 108
(1) Other includes RMI, consolidation of treasury shares and other consolidation entries.
Geographical segments
South
Africa Australia Total
R million Unaudited Unaudited Unaudited
Six months ended 31 December 2012
Profit before taxation 1 529 (70) 1 459
Taxation (245) 21 (224)
Profit for the period 1 284 (49) 1 235
Total assets 19 956 2 327 22 283
Total liabilities 7 282 1 534 8 816
Six months ended 31 December 2011 - Restated
Profit before taxation 1 439 (86) 1 353
Taxation (343) 6 (337)
Profit for the period 1 096 (80) 1 016
Total assets 19 106 1 406 20 512
Total liabilities 7 311 797 8 108
Summarised consolidated statement of cash flows
Restated
31 December 31 December 30 June
Unaudited Unaudited Audited
R million 2012 2011 2012
Cash available from operating activities 2 056 1 661 1 957
Dividends paid (1 560) (501) (946)
Investment activities 261 (1 050) (936)
Financing activities (789) (179) (205)
Net decrease in cash and cash equivalents (32) (69) (130)
Unrealised foreign currency translation adjustments 27 76 143
Cash and cash equivalents included under disposal group held for sale - - (7)
Cash and cash equivalents at the beginning of the period 2 462 2 456 2 456
Cash and cash equivalents at the end of the period 2 457 2 463 2 462
Change in accounting policy
The accounting policies applied in the preparation of the summarised financial results for the six months ended 31 December 2012 are consistent
with those applied in the financial year ended 30 June 2012. However, OUTsurance had changed its accounting policy in respect of the provision
for non-claims bonuses in the second half of the financial year ended 30 June 2012. As a result of the timing of this change in accounting policy,
the comparative numbers for the six months ended 31 December 2011 were restated in line with the new accounting policy.
The previous accounting policy for the provision of non-claims bonuses used the historic and expected claims frequencies in deriving the best
estimate for the provision. Due to the fact that OUTsurance had built up a long track record of client cancellation data, an analysis had been
performed in the second half of the financial year ended 30 June 2012 to determine the impact of client cancellations on the non-claims bonus
provision. A risk margin had also been incorporated into the estimate of the provision to allow for the inherent uncertainty of a provision of this
nature.
The effect of this change in accounting policy is as follows:
Statement of financial position
31 December
R million 2011
Assets
Decrease in deferred taxation (151)
Total restatement of assets (151)
Equity and liabilities
Increase in retained earnings 52
Increase in transactions with non-controlling interests reserve 305
Increase in non-controlling interest 33
Decrease in insurance contract liabilities (541)
Total restatement of equity and liabilities (151)
Income statement
Decrease in cash bonuses on insurance contracts expense 54
Increase in deferred taxation (15)
Increase in non-controlling interest (4)
Increase in profit attributable to equity holders for the period 35
Interest in group entities
RMIs effective interest in the group entities is different from the actual holdings as a result of the following consolidation adjustments:
- treasury shares held by the 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.
At 31 December 2012 the effective interest held by RMI can be compared to the actual interest in the statutory issued share capital of the
companies as follows:
Effective Actual Effective Actual
31 December 2012 31 December 2011
Discovery 26.7% 25.0% 26.7% 25.0%
MMI 25.2% 25.0% 26.3% 26.0%
OUTsurance 85.3% 83.4% 92.3% 89.9%
RMBSI 79.1% 76.4% 80.5% 76.4%
Directors
GT Ferreira (Chairman), P Cooper (CEO), L Crouse (appointed 17 September 2012), LL Dippenaar, JW Dreyer, JJ Durand, PM Goss, PK Harris,
TV Mokgatlha, O Phetwe (appointed 6 February 2013), (Ms) SEN Sebotsa and KC Shubane.
Alternates: NDJ Carroll (resigned 31 October 2012) and (Ms) A Kekana (appointed 6 February 2013).
Secretary and registered office
JS Human CA(SA)
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: 07/03/2013 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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