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SNT - Santam Limited - Audited abridged financial report for the year ended 31

Release Date: 01/03/2011 14:00
Code(s): SNT
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SNT - Santam Limited - Audited abridged financial report for the year ended 31 December 2010 SANTAM LIMITED (Incorporated in the Republic of South Africa) (Registration number 1918 / 001680 / 06 Share code: SNT Registration number 1918/001680/06 ISIN ZAE000093779 JSE share code: SNT NSX share code: SNM Santam Limited and its subsidiaries Audited abridged financial report for the year ended 31 December 2010 * 51% increase in headline earnings per share * Significant improvement in underwriting margin from 3.5% to 8.5% * Return on weighted average shareholders` funds of 37% * Strong cash flows generated * Healthy solvency ratio of 45% * Total dividend of 510 cents per share Financial review The Santam group achieved excellent underwriting and investment results in 2010. Overall earnings showed a significant improvement with headline earnings of R1 545 million, 51% higher than 2009. This equates to a headline earnings per share of 1 367 cents compared to 906 cents in 2009. The 37.1% return on weighted average shareholders` funds is particularly pleasing. The overall net underwriting margin increased substantially from 3.5% in 2009 to 8.5% in 2010. This culminated in a net underwriting result of R1 146 million, 153% higher than the R453 million in the comparative period. Investment income delivered similar results to those of 2009. Santam decided to maintain appropriate underwriting discipline in tight market conditions and with increased levels of competition in the industry. This resulted in growth of 6% in gross written premium which is considered acceptable given the exceptional turnaround in results of previously underperforming business classes. Underwriting performance of the crop business came under pressure due to weather-related claims. Margins in all other classes were satisfactory with excellent turnaround in the personal lines motor and property from the negative returns in 2009. Ongoing management intervention paid off for business sourced through the portfolio management business unit. Results from this area showed significant turnaround from a loss-making position in 2009 to an acceptable profit margin. The turnaround in the property portfolio was mainly due to the lower level of large industrial accident and fire-related claims and the Emerald transaction in late 2009. Of the specialist classes, the liability, engineering and transportation businesses performed particularly well. In general, lower average claim costs and our continuous focus on risk management to improve the quality and diversity of the risk pool impacted underwriting margins positively. The net acquisition cost ratio of 27.4% increased from 26% in 2009 mainly as a result of an increase in the net commission costs and performance bonuses. Santam also increased its spend on strategic initiatives by 19% from 2009. Investment returns on insurance funds of R396 million reduced from R420 million earned in 2009. These lower returns resulted from lower interest rates despite substantially increased float balances. The group`s operating activities generated healthy cash flows of R2.1 billion during the year - 17% higher than the R1.8 billion in 2009. The combined effect of the insurance activities resulted in a net insurance margin of 11.4% for the year compared to 6.8% in 2009. The reduction in interest rates adversely affected the yield on cash and money market instruments, but assisted bond returns. Dividend income was still somewhat suppressed. However, equity markets had a strong run towards the end of the year. This followed on a lacklustre performance during the first half of the year and impacted the investment results positively. We continued to employ our strategy of proactively and tactically hedging equity investments. As an alternative to rebalancing asset classes following the reduction of capital by means of the R5 per share special dividend in September, Santam entered into two derivative fence structures on 3 September 2010 and 5 October 2010 covering R1 billion and R750 million of equities respectively. The first fence has an attachment point of 5311 (SWIX40 index) with downside protection of 9% and an average upside participation of 18%. The second fence has an attachment point of 5589 with downside protection of 9% and average upside participation of 16%. At 31 December 2010, the SWIX40 index closed at 6069. This was 14% above the first attachment point and 9% above the second attachment point. On 31 December 2010, the structures had a negative mark-to-market fair value of R74 million which was fully accounted for. This will effectively be released to income over the remaining duration of the structures if they are maintained to maturity. Both structures expire in three equal tranches over the period from August to November 2011. Net earnings from associated companies of R69 million increased from R43 million in 2009. Based on interaction between SARS and the group, it was deemed prudent to make a provision for an additional tax liability amounting to R267 million. The restatement is in respect of the tax treatment at the time of the disposal of significant investments during 2007 and 2008. As the provision relates to the period up to and including 2008, it was made in the form of a prior year restatement to the opening consolidated statement of financial position of 2009, as set out in note 6. The group solvency ratio of 45% at 31 December 2010 was at the higher end of the long-term target range of 35% to 45%, and higher than the 42% reported at the end of 2009. Santam`s capital management philosophy is to maximise the return on shareholders` capital within an appropriate risk framework. Special dividends are considered taking account of capital levels as informed by the solvency margin targets of 35% to 45% and investment opportunities. At this point in time it is not considered appropriate to declare a further special dividend but it will remain under constant consideration. The group concluded the acquisition of the remaining 33.33% holding in Centriq Insurance Company (Pty) Ltd on 1 January 2010 following Kagiso Risk Solution`s decision to disinvest from the specialist insurer. On 1 January 2010 100% of the voting equity interest in Emerald Risk Transfer (Pty) Ltd was acquired to obtain specialist underwriting skills in the corporate property environment. On 1 September 2010 the group increased its effective shareholding in Indwe Broker Holdings (Pty) Ltd from 37.8% to 100%. The company is being independently managed as an intermediary. On 31 December 2010 the group increased its shareholding in MiWay Group Holdings (Pty) Ltd from 31.3% to 100% when Sanlam Limited opted to restructure its shareholdings in the general insurance cluster in South Africa. MiWay will continue to be managed independently, servicing the direct segment of the market. Further unit allocations were made to black staff in terms of Santam`s broad-based black economic empowerment (BBBEE) scheme. The board would like to extend its gratitude to Santam`s management, staff, brokers and other business partners for their efforts and contributions in the past year, which underpinned a pleasing set of results. Prospects We expect the economic recovery to continue during 2011 - albeit at a slow pace with a low interest and inflation environment during the first half of the year. We expect to see an increase in interest rates and inflation in the second half of the year. Average GDP for 2011 is expected to be somewhat higher than for 2010. However, we expect premium increases in 2011 will remain subdued and growth will be a challenge - especially during the first half of the year. Upwards pressure on premiums can be expected should underwriting margins normalise towards lower levels during the course of 2011. Santam is positioned to manage increases selectively through our market and risk segmentation approach. Claim costs are expected to come under pressure from the flooding throughout the country early in 2011, but Santam`s diversity of risk and reinsurance protection should ensure that losses are contained. The expected weakening of the rand from current high levels in excess of its purchasing price parity is likely to increase the cost of claims. This is particularly the case with motor claims where the import cost of parts is impacted by the strength of the currency. Therefore underwriting margins are expected to decrease in 2011 reverting back to the normalised range of 4% to 6%. Our diversified business lines position us well to face these challenges. We will also continue our efforts to optimise profitability across the business with a strong focus on risk management and operating efficiencies. Interest rates are expected to remain at current levels during the first half of 2011, but could increase during the second half of the year. The net effect is likely to be a lower return on insurance funds than in 2010. The fundamentals of the market are in place for another year of investment performance. However, it is unlikely that we will experience a repeat of the stellar returns experienced in the second half of the 2010 financial year in the bond and equity markets. Investment performance is anticipated to show returns in the mid teens. Declaration of dividend (Number 114) Notice is hereby given that the board has declared a final dividend of 325 cents per share (2009: 300 cents). Shareholders are advised that the last day to trade "cum dividend" will be Thursday, 17 March 2011. The shares will trade "ex dividend" from the commencement of business on Friday, 18 March 2011. The record date will be Friday, 25 March 2011, and the payment date will be Monday, 28 March 2011. Certificated shareholders may not dematerialise or rematerialise their shares between 18 March 2011, and 25 March 2011, both dates inclusive. Auditors` report The company`s external auditors, PricewaterhouseCoopers Inc, have audited the abridged financial report and the consolidated annual financial statements for the year ended 31 December 2010. Copies of their unqualified audit reports are available on request at the company`s registered office. On behalf of the board VP Khanyile IM Kirk Chairman Chief Executive 1 March 2011 Consolidated statement of financial position Notes Audited Restated At Audited
31 Dec 2010 At R million 31 Dec 2009 R million Assets Non-current assets Property and equipment 88 47 Intangible assets 988 143 Deferred income tax 251 88 Investments in associates 211 198 Financial assets - at fair value through income Equity securities 4 3 832 3 191 Debt securities 4 4 246 3 146 Financial assets - at amortised cost Cell owners` interest 12 - Reinsurance assets 315 382 Current assets Financial assets - at fair value through income Short-term money market instruments 4 3 685 4 554 Reinsurance assets 952 1 429 Deferred acquisition costs 251 259 Loans and receivables including insurance receivables 4 1 735 2 262 Income tax assets 26 4 Cash and cash equivalents 1 143 1 379
Total assets 17 735 17 082 Equity Capital and reserves attributable to the company`s equity holders Share capital 107 107 Treasury shares (651) (660) Other reserves 1 265 1 268 Distributable reserves 6 4 405 3 813 5 126 4 528 Non-controlling interest 93 144 Total equity 5 219 4 672 Liabilities Non-current liabilities Deferred income tax 269 129 Financial liabilities - at fair value through income Debt securities 5 925 839 Derivatives 4 1 9 Financial liabilities - at amortised cost Cell owners` interest 589 535 Insurance liabilities 1 323 1 332 Provisions for other liabilities and charges 3 5 Current liabilities Financial liabilities - at fair value through income Debt securities 5 24 24 Investment contracts 495 333 Derivatives 4 74 108 Financial liabilities - at amortised cost Collateral guarantee contracts 108 101 Insurance liabilities 6 440 6 931 Deferred reinsurance acquisition 40 53 revenue Provisions for other liabilities and charges 33 27 Trade and other payables 1 890 1 570 Current income tax liabilities 6 302 414 Total liabilities 12 516 12 410 Total shareholders` equity and 17 735 17 082 liabilities Consolidated statement of comprehensive income Notes Audited Audited Change Year ended Year ended % 31 Dec 31 Dec 2010 2009
R million R million Gross written premium 15 855 15 026 6% Less: Reinsurance premium 2 336 2 132 Net premium 13 519 12 894 5% Change in unearned premium Gross amount (65) (108) Reinsurers` share 34 106 Net insurance premium revenue 13 550 12 896 5% Investment income 7 633 707 (10%) Income from reinsurance contracts Ceded 236 209 Net gains on financial assets and liabilities at fair value through income 537 479 Gain on remeasuring existing interest in associates on transfer to subsidiaries 215 - Excess of interest in the net fair value of acquiree`s identifiable assets, liabilities and contingent liabilities over cost 6 - Net income 15 177 14 291 6%
Insurance claims and loss adjustment expenses 9 531 10 241 Insurance claims and loss adjustment expenses recovered from reinsurers (848) (1 141) Net insurance benefits and claims 8 683 9 100 (5%) Expenses for the acquisition of insurance contracts 2 311 2 127 Expenses for marketing and administration 1 648 1 425 Expenses for asset management services rendered 29 25 Amortisation and impairment of 27 25 intangible assets Expenses 12 698 12 702
Results of operating activities 2 479 1 589 56% Finance costs (120) (114) Share of profit of associates 63 49 Impairment reversal/(charge) on net investment in associate 6 (6) Profit before tax 2 428 1 518 60% Income tax expense 8 (639) (402) Profit for the year 1 789 1 116 60% Other comprehensive income Currency translation differences (72) (80) Total comprehensive income for the year 1 717 1 036 Profit attributable to: - equity holders of the company 1 762 1 082 - non-controlling interest 27 34 1 789 1 116 Total comprehensive income attributable to: - equity holders of the company 1 690 1 002 - non-controlling interest 27 34 1 717 1 036
Earnings attributable to equity shareholders Earnings per share (cents) 12 Basic earnings per share 1 560 959 63% Diluted earnings per share 1 532 942 63% Weighted average number of shares - 112.96 112.80 millions Weighted average number of ordinary shares for diluted earnings per share - millions 114.99 114.87 Consolidated statement of changes in equity Attributable to equity holders of the Non- Total company controlling interest
Share Treasury Other Distributable R million R capital shares reserves reserves million R million R million R R million million
Restated 107 (680) 1 251 3 319 138 4 135 balance as at 1 January 2009 Balance as 107 (680) 1 251 3 586 138 4 402 at 1 January 2009 Restatement - - - (267) - (267)
Profit for - - - 1 082 34 1 116 the year Other comprehensi ve income: Currency - - (80) - - (80) translation differences Total - - (80) 1 082 34 1 036 comprehensi ve income for the year ended 31 December 2009 Purchase of - (53) - - - (53) treasury shares Sale of - 73 - - - 73 treasury shares Loss on - - - (53) - (53) sale of treasury shares Transfer to - - 97 (97) - - reserves Share-based - - - 47 - 47 payments Dividends - - - (485) (28) (513) paid Restated 107 (660) 1 268 3 813 144 4 672 balance as at 31 December 2009 Profit for - - - 1 762 27 1 789 the year Other comprehensi ve income: Currency - - (72) - - (72) translation differences Total - - (72) 1 762 27 1 717 comprehensi ve income for the year ended 31 December 2010 Purchase of - (34) - - - (34) treasury shares Sale of - 43 - - - 43 treasury shares Loss on - - - (34) - (34) sale of treasury shares Transfer to - - 69 (69) - - reserves Share-based - - - 58 - 58 payments Dividends - - - (1 113) - (1 113) paid Excess paid - - - (12) - (12) on acquisition of non- controlling interest Interest - - - - (78) (78) acquired from non- controlling interest Balance as 107 (651) 1 265 4 405 93 5 219 at 31 December 2010 Consolidated statement of cash flows Notes Audited Audited
Year ended Year ended 31 Dec 2010 31 Dec 2009 R million R million Cash generated from operations 2 115 1 839 Interest paid (95) (114) Income tax paid (755) (115) Net cash from operating activities 1 265 1 610
Cash flows from investing activities Cash utilised in investment activities (270) (1 477) Acquisition of subsidiary 9 (357) (11) Cash acquired/(sold) through acquisition/sale of subsidiary 9 262 (23) Purchases of equipment (26) (37) Purchases of software (1) - Proceeds from sale of equipment - 1 Acquisition of associated companies (17) (7) Proceeds from sale of associated companies - 33 Acquisition of book of business - (2) Proceeds from sale of business operations - 56 Net cash from investing activities (409) (1 467) Cash flows from financing activities Purchase of treasury shares (34) (53) Proceeds on sale of treasury shares 11 20 Increase/(decrease) in investment contract liabilities 129 (101) Dividends paid to company`s shareholders (1 113) (485) Dividends paid to non-controlling interest - (28) Increase in cell owners` interest 42 87 Purchase of subsidiary from non-controlling interest 10 (90) - Net cash used in financing activities (1 055) (560) Net decrease in cash and cash equivalents (199) (417) Cash and cash equivalents at beginning of 1 379 1 938 year Exchange losses on cash and cash equivalents (37) (142) Cash and cash equivalents at end of year 1 143 1 379 Notes to the abridged financial report 1. Basis of presentation This abridged consolidated financial information for the year ended 31 December 2010 has been prepared in accordance with IAS 34 - Interim Financial Reporting and in compliance with the Listing Requirements of the JSE Limited. The abridged consolidated financial information does not include all of the information required by IFRS for full annual financial statements. 2. Accounting policies The principal accounting policies used in preparing the audited results for the year ended 31 December 2010 are consistent with those applied in the annual financial statements for the year ended 31 December 2009 in terms of IFRS, as described in those annual financial statements. The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010. * IFRS 3 (revised) - Business Combinations The new standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently re-measured at fair value through income. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree at fair value or at the non-controlling interest`s proportionate share of the acquiree`s net assets. All acquisition- related costs will be expensed. 3. Segment information The Executive committee (Exco) reviews the group`s internal reporting in order to assess performance and allocate resources. The operating segments identified are representative of the internal structure of the group. Exco reviews the two core activities of the group, i.e. insurance activities and investment activities on a monthly basis. Insurance activities are all insurance underwriting activities undertaken by the group and comprise commercial insurance, personal insurance and alternative risks. Insurance activities are also further analysed by insurance class. Investment activities are all investment-related activities undertaken by the group. Exco considers the performance of insurance activities based on gross written premium as a measure of growth while underwriting result and net insurance result are measures of profitability. Investment activities are measured based on net investment income and income from associated companies. Other information provided to Exco is measured in a manner consistent with that in the financial statements. 3.1 For the year ended 31 December 2010 Business activity Insurance Investment Total activities activities R million R million R million
Revenue 15 855 937 16 792 Gross written premium 15 855 15 855 Net written premium 13 519 13 519 Net earned premium 13 550 13 550 Claims incurred 8 683 8 683 Net commission 2 075 2 075 Management expenses 1 631 15 1 646 Underwriting result 1 161 (15) 1 146 Investment return on insurance funds 396 396 Net insurance result 1 557 (15) 1 542 Investment income net of management Fee and finance costs 840 840 Income from associates net of impairment 69 69 Amortisation of intangible assets (23) (23) Income before taxation 1 534 894 2 428 Total assets 9 446 8 289 17 735 Total liabilities 11 492 1 024 12 516 Insurance class Gross Underwriting Total Total written result assets liabilities
premium R million R million R million R million Accident and health 264 7 14 131 Alternative risk 1 751 13 266 1 769 Crop 429 (85) 204 379 Engineering 595 156 95 256 Guarantee 21 6 6 29 Liability 1 103 315 422 1 900 Miscellaneous 22 6 1 12 Motor 6 684 371 2 1 538 Property 4 615 269 498 1 608 Transportation 371 103 53 225 Unallocated - (15) 16 174 4 669 Total 15 855 1 146 17 735 12 516 Comprising: Commercial insurance 8 054 886 1 158 4 817 Personal insurance 6 050 262 137 1 261 Alternative risk 1 751 13 266 1 769 Unallocated - (15) 16 174 4 669 Total 15 855 1 146 17 735 12 516 3.2 For the year ended 31 December 2009 (restated) Business activity Insurance Investment Total activities activities R million R million R million Revenue 15 026 695 15 721 Gross written premium 15 026 15 026 Net written premium 12 894 12 894 Net earned premium 12 896 12 896 Claims incurred 9 100 9 100 Net commission 1 918 1 918 Management expenses 1 412 13 1 425 Underwriting result 466 (13) 453 Investment return on 420 420 insurance funds Net insurance result 886 (13) 873 Investment income net of management fee and finance 627 627 costs Income from associates net of impairment 43 43 Amortisation of intangible assets (25) (25) Income before taxation 861 657 1 518 Total assets 10 547 6 535 17 082 Total liabilities 11 538 872 12 410
Insurance class Gross Underwriting Total Total written result assets liabilities premium R million R million R million R million
Accident and health 382 3 25 147 Alternative risk 1 638 16 306 1 740 Crop 472 83 140 302 Engineering 562 127 107 308 Guarantee 16 6 12 27 Liability 1 126 517 488 1 941 Miscellaneous 19 (4) 5 17 Motor 6 147 (29) 33 1 487 Property 4 266 (321) 890 2 082 Transportation 398 68 64 265 Unallocated - (13) 15 012 4 094 Total 15 026 453 17 082 12 410 Comprising: Commercial insurance 7 489 657 1 692 5 341 Personal insurance 5 899 (207) 72 1 235 Alternative risk 1 638 16 306 1 740 Unallocated - (13) 15 012 4 094 Total 15 026 453 17 082 12 410
Audited Audited At At 31 Dec 2010 31 Dec 2009 R million R million
4. Financial assets The group`s financial assets net of derivatives are summarised below by measurement category
Financial assets at fair value through income 11 688 10 774 Loans and receivables 1 735 2 262 Total financial assets 13 423 13 036
Financial assets at fair value through income Equity securities - quoted 3 498 2 872 - unquoted 334 319 3 832 3 191 Derivatives (net) (75) (117)
Debt securities - quoted government and other bonds 1 839 1 639 long-term money market instruments 1 174 756 redeemable preference shares 375 - - unquoted government and other bonds 195 - long-term money market instruments 354 - redeemable preference shares 309 751 4 246 3 146 Short-term money market instruments 3 685 4 554 Total financial assets at fair value through income 11 688 10 774
5. Debt securities - at fair value through income At the beginning of the year 839 972 Fair value adjustment 86 (133) 925 839 Accrued interest 24 24 949 863 During 2007 the company issued unsecured subordinated callable notes to the value of R1 billion in two tranches. The fixed effective rate for the R600 million issue was 8.6% and 9.6% for the second tranche of R400 million, representing the R203 companion bond plus an appropriate credit spread at the time of the issues. The fixed coupon rate, based on the nominal value of the issues, amounts to 8.25% and for both tranches the optional redemption date is 15 September 2017. Between the optional redemption date and final maturity date of 15 September 2022, a variable interest rate (JIBAR-based) plus additional margin will apply. Per conditions set by the Regulator, Santam is required to maintain liquid assets equal to the value of the callable notes until maturity. The callable notes are therefore measured at fair value to minimise undue volatility in net profit. 6. Prior year restatement Following queries from SARS and pursuant to the complete restructuring of the investment portfolio in 2007 and 2008, an additional provision of R267 million has been raised for income tax relating to the underprovisioning for taxation on the net realised gains on traded investments during said period. As a consequence the net current income tax liability of R143 million and net current income tax asset of R35 million that were previously recognized in the statements of financial position of 2009 and 2008 respectively were adjusted with the additional provision. The distributable reserves of R3586 million and R4080 million recognized in the statements of financial provision of 2009 and 2008 respectively were also adjusted with the additional provision. Audited Restated Restated 2010 Audited Audited R million 2009 2008 R million R million
Assets Non-current assets 9 943 7 195 6 973 Current assets 7 792 9 887 9 411 Total assets 17 735 17 082 16 384 Equity Capital and reserves attributable to the company`s equity holders Share capital 107 107 107 Treasury shares (651) (660) (680) Other reserves 1 265 1 268 1 251 Distributable reserves 4 405 3 813 3 319 5 126 4 528 3 997 Non-controlling interest 93 144 138 Total equity 5 219 4 672 4 135
Liabilities Non-current liabilities 3 110 2 849 3 734 Current liabilities Financial liabilities - at fair value through income 593 465 275 Financial liabilities - at amortised cost 108 101 - Insurance liabilities 6 440 6 931 6 088 Deferred reinsurance acquisition Revenue 40 53 82 Provisions for other liabilities and charges 33 27 25 Trade and other payables 1 890 1 570 1 804 Current income tax liabilities 302 414 241 Total liabilities 12 516 12 410 12 249 Total shareholders` equity and Liabilities 17 735 17 082 16 384
Audited Audited At At 31 Dec 2010 31 Dec 2009
R million R million 7. Investment income Dividend income 118 198 Interest income 535 612 Foreign exchange differences (20) (103) 633 707 8. Income tax South African normal taxation Current year 580 240 Charge for the year 472 213 STC 108 27 Prior year (10) 25 Foreign taxation 33 27 Income taxation for the year 603 292 Deferred taxation 36 110 Current year 37 96 STC (1) 14 639 402
Reconciliation of taxation rate (%) Normal South African taxation rate 28.0 28.0 Adjusted for - Exempt income (1.6) (4.1) - Investment results (5.1) (2.6) - STC 4.4 2.7 - Other 0.6 2.5 Net reduction (1.7) (1.5) Effective rate (%) 26.3 26.5
9. Business combinations 9.1 Acquisition/Increases in shareholding a) Emerald Risk Transfer (Pty) Ltd On 1 January 2010, Swanvest 120 (Pty) Ltd acquired 100% of the voting equity interest in Emerald Risk Transfer (Pty) Ltd to obtain specialist underwriting skills in the corporate property environment. The company was sold by its main shareholder, Supergroup, as part of their strategy to dispose of non-core businesses. b) Indwe Broker Holdings (Pty) Ltd Effective 1 September 2010, the Santam Group increased its shareholding in Indwe Broker Holdings (Pty) Ltd from 37.8% to 100% by exercising its right to purchase shares on offer from other shareholders. While Santam is not actively pursuing the opportunity to buy brokerages, we responded to a business opportunity to protect our interest. Pamodzi Investment Holdings (Pty) Ltd and Thebe Investment Corporation (Pty) Ltd decided to dispose of their shares in order to pursue other investment opportunities. The company is being independently managed as an intermediary. c) MiWay Group Holdings (Pty) Ltd On 31 December 2010, Swanvest 120 (Pty) Ltd increased it shareholding in MiWay Group Holdings (Pty) Ltd from 31.25% to 100%. Santam acquired Sanlam`s controlling interest in the company, while, at the same time, Sanlam consolidated its short-term insurance interests into one single investment in Santam Ltd. It is strategically important that Santam makes proper inroads into the emerging direct short-term insurance market to retain its leadership position in the industry. MiWay will continue to be managed independently, servicing the direct segment of the market. Details of the assets and (a) (b) (c) Total liabilities acquired at fair Emerald Indwe MiWay value are as follows: Risk Broker Group Transfer Holdings Holdings (Pty) Ltd (Pty) (Pty)
Ltd Ltd Deferred taxation 3 (27) 85 61 Property and equipment 4 25 12 41 Intangible assets 5 119 72 196 Investments - - 9 9 Reinsurance assets 3 - - 3 Loans and receivables 68 15 128 211 Short-term money market instruments - - 18 18 Cash and cash equivalents 95 141 26 262 Insurance liabilities (7) - (2) (9) Trade and other payables (69) (180) (229) (478) Taxation (2) 4 - 2 Net asset value acquired 100 97 119 316 Goodwill - 356 319 675 Excess of acquirer`s interest in the net fair value of the acquirer`s identifiable assets, liabilities and contingent liabilities over cost (6) - - (6) Investment in associated share previously acquired - (190) (91) (281) Deferred purchase Consideration* - - (347) (347) Purchase consideration paid 94 263 - 357 * Amount is variable and will be impacted by returns achieved over the next 3 years. Audited Audited At At 31 Dec 31 Dec 2010 2009
R R million million 9.2 Disposals Net asset value sold - (3) Onerous contract as result of disposal - (5) Proceeds on sale - 56 Profit on sale of subsidiary - 54
Comparative information on acquisitions and disposals relate to several smaller transactions reported on in detail in prior periods. 10. Transactions with non-controlling parties On 1 January 2010, Santam Ltd acquired the non- controlling interest of 33.3% in Centriq Holdings (Pty) Ltd. Non-controlling interest acquired 78 - Excess paid on acquisition of non-controlling 12 - interest Purchase consideration paid 90 - Audited Audited
Year Year ended ended 31 Dec 31 Dec 2010 2009
11. Earnings per share Basic earnings per share Profit attributable to the company`s equity holders (R million) 1 762 1 082 Weighted average number of ordinary shares in issue (million) 112.96 112.80 Earnings per share (cents) 1 560 959
Diluted earnings per share Profit attributable to the company`s Equity holders (R million) 1 762 1 082 Weighted average number of ordinary Shares in issue (million) 112.96 112.80 Adjusted for share options 2.03 2.07 Weighted average number of ordinary shares for diluted earnings per share (million) 114.99 114.87 Diluted basic earnings per share (cents) 1 532 942 Headline earnings per share Profit attributable to the company`s equity holders (R million) 1 762 1 082 Adjusted for: Impairment (reversal)/charge on net investment of associates (6) 6 Impairment of goodwill 10 - Gain on remeasuring existing interest in associates on transfer to subsidiaries (215) - Profit on sale of subsidiaries and associates - (76) Excess of acquirer`s interest in the net fair value of the acquiree`s identifiable assets, liabilities and contingent liabilities Over cost (6) - Tax charge - 10 Headline earnings (R million) 1 545 1 022 Weighted average number of ordinary shares in issue (million) 112.96 112.80 Headline earnings per share (cents) 1 367 906 Diluted headline earnings per share Headline earnings (R million) 1 545 1 022 Weighted average number of ordinary shares for diluted earnings per share (million) 114.99 114.87
Diluted headline earnings per share (cents) 1 343 889 12. Dividends per share Ordinary dividend per share (cents) 510 466 Special dividend per share (cents) 500 - Non-executive directors B Campbell, MD Dunn, BTPKM Gamedze, DCM Gihwala, VP Khanyile (Chairman), JG le Roux, NM Magau, JP Moller, YG Muthien, P de V Rademeyer, GE Rudman, J van Zyl, BP Vundla Executive directors IM Kirk (Chief Executive Officer), MJ Reyneke (Chief Financial Officer) Sponsor Investec Bank Limited Transfer secretaries Computershare Investor Services (Pty) Ltd 70 Marshall Street, Johannesburg 2001 PO Box 61051, Marshalltown 2107 Tel: 011 370 5000 Fax: 011 688 7721 www.computershare.com Company secretary Masood Allie Santam head office and registered address 1 Sportica Crescent Tyger Valley, Bellville 7530 PO Box 3881, Tyger Valley 7536 Tel: 021 915 7000 Fax: 021 914 0700 www.santam.co.za Registration number 1918/001680/06 ISIN ZAE000093779 JSE share code: SNT NSX share code: SNM Date: 01/03/2011 14:00:04 Supplied by www.sharenet.co.za 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 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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