Status quo for RHG

An effort by a group of activist shareholders to win a spot on the board of RHG failed yesterday. Only 30 per cent of shareholders voting at the annual meeting voted in favour of a motion to elect Steven Johnson (from the newsletter The Intelligent Investor) to the board. A slightly lower number supported the election of his colleague, Greg Hoffman.

Fewer than half of the shares voted in favour of new faces on the RHG board were also voted against the re-election of David Coe (formerly of Allco) to the board. An aborted effort by the dissidents to call a special meeting of the company two months ago had proposed a resolution to drop Coe from the board.

One theme of the platform of Johnson and Hoffman was a preference to return capital in the company to shareholders fairly quickly. RHG is turning into a cashbox as profits from managing its $7 billion back book of mortgages builds. (RHG sold the Rams Home Loans brand to Westpac in 2007).

RHG's board does not, for now, plan to follow the dissidents' advice. In prepared remarks for the meeting, and published through the ASX, the company's chair, John Kinghorn, repeated past advice that the company planned to preserve cash and "might take advantage of a superior investment opportunity should such an opportunity arise".

If none does so then in 2011 - when the earnings on the back book will be minimal - RHG may then return capital.