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MMI - MMI Holdings Limited - Detailed MMI unaudited pro forma financial

Release Date: 09/03/2011 07:08
Code(s): MMI
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MMI - MMI Holdings Limited - Detailed MMI unaudited pro forma financial information - Results for the 6 months ended 31 December 2010 MMI Holdings Limited Incorporated in the Republic of South Africa Registration Number: 2000/031756/06 JSE share code: MMI NSX share code: MIM ISIN: ZAE000149902 ("MMI" or the "group") Detailed MMI unaudited pro forma financial information Results for the 6 months ended 31 December 2010 UNAUDITED PRO FORMA FINANCIAL INFORMATION OF MMI HOLDINGS LIMITED GROUP ("MMI") The unaudited pro forma income statement, analysis of diluted core headline earnings, value of new business, new business premiums and return on embedded value of MMI for the 6 months ended 31 December 2010 ("unaudited pro forma financial information") are provided below and have been prepared for illustrative purposes only to reflect the pro forma results of MMI as though the merger of Metropolitan and Momentum as set out in the Revised Listing Particulars dated 6 September 2010 ("the Merger") was effective from 1 July 2010. Because of their nature, the unaudited pro forma financial information may not fairly present MMI`s financial position, changes in equity, results of operations or cash flows going forward. The unaudited pro forma financial information is the responsibility of the MMI Directors. The unaudited pro forma financial information is based on the accounting policies adopted by MMI, which are in accordance with IFRS except for value of new business and embedded value information, which is calculated in terms of the guidance of the Actuarial Society of South Africa. The independent reporting accountants` limited assurance report on the unaudited pro forma financial information of MMI for the six months ended 31 December 2010 is available for inspection. UNAUDITED PRO FORMA INCOME STATEMENT The unaudited pro forma income statement for the six months ended 31 December 2010 has been prepared on the assumption that the Merger was effective from 1 July 2010. All figures are in R million unless otherwise stated Metropoli-tan Metropoli-tan Metropoli- Momentum 12 months 6 months tan 6 months 6 months ended 31 ended 30 June ended 31 ended 31 December 2010 2010 December December
(A) 2010 2010 (B) (A-B) (1) Notes (2) Net insurance 10 304 4 964 5 340 4 267 premiums received Fee income 1 471 700 771 1 443 Investment income 3 667 1 672 1 995 4 372 Net realised and 4 849 (546) 5 395 11 599 fair value gains Net income 20 291 6 790 13 501 21 681
Net insurance 8 757 4 444 4 313 5 006 benefits and claims Change in 4 651 (85) 4 736 2 636 liabilities Change in insurance 4 039 320 3 719 2 501 contract liabilities Change in 665 (371) 1 036 389 investment contracts with DPF liabilities Change in (53) (34) (19) (254) reinsurance provision Fair value 1 042 171 871 8 601 adjustments on investment contract liabilities Fair value 5 6 (1) 1 022 adjustments on collective investment scheme liabilities Depreciation, 191 100 91 83 amortisation and impairment expenses Employee benefit 1 694 858 836 1 122 expenses Sales remuneration 982 476 506 960 Other expenses 1 291 528 763 674 Expenses 18 613 6 498 12 115 20 104
Metropoli-tan Metropoli- Metropoli- Momentum 12 months tan 6 months tan 6 months 6 months ended 31 ended 30 ended 31 ended 31 December 2010 June 2010 December December
(A) 2010 2010 (B) (A-B) (1) Notes (2) Results of 1 678 292 1 386 1 577 operations Share of profit of 14 11 3 22 associates Finance costs (134) (66) (68) (266) Profit/(loss) 1 558 237 1 321 1 333 before tax Income tax (385) (16) (369) (558) credits/(expenses) Earnings 1 173 221 952 775 Attributable to: Owners of the 1 153 218 935 760 parent Non-controlling 20 3 17 (3) interests Preference 18 shareholders 1 173 221 952 775 Metro- FNB Life Amorti- Other MMI
politan sation of pro re- merger- forma classi- related fica- intan-
tions gible assets (4) (5) Notes (3) (6) Net insurance premiums (300) 9 307 received Fee income (44) 2 170 Investment income (9) 6 358 Net realised and fair 16 994 value gains Net income (44) (309) 34 829
Net insurance benefits (83) 9 236 and claims Change in liabilities 15 7 387 Change in insurance 6 220 contract liabilities Change in investment 1 425 contracts with DPF liabilities Change in reinsurance 15 (258) provision Fair value adjustments 9 472 on investment contract liabilities Fair value adjustments 1 021 on collective investment scheme liabilities Depreciation, 3 299 476 amortisation and impairment expenses Employee benefit 1 958 expenses Sales remuneration (3) 1 463 Other expenses (44) (18) 1 375 Expenses (44) (68) 299 (18) 32 388 Metro- FNB Amorti- Other MMI politan Life sation pro forma
re-classi- of fica- merger- tions related intan-
gible (3) assets Notes (4) (5) (6)
Results of operations - (241) (299) 18 2 441 Share of profit of 25 associates Finance costs (334) Profit/(loss) before (241) (299) 18 2 132 tax Income tax 67 77 (783) credits/(expenses) Earnings - (174) (222) 18 1 349 Attributable to: Owners of the parent - (174) (214) 18 1325 Non-controlling (8) 6 interests Preference shareholders 18 - (174) (222) 18 1 349
RECONCILIATION OF PRO Metropoli- Metropoli-tan Metropoli- Momentum FORMA HEADLINE EARNINGS tan 12 6 months tan 6 6 months attributable to owners of months ended 30 June months ended 31 the parent ended 31 2010 ended 31 December December December 2010 2010 (B) 2010 (A) (A-B) Notes (1) (2) BASIC Earnings 1 153 218 935 760 Goodwill and other 29 17 12 7 impairments Sale of Union Life (3) (3) - Headline earnings 1 179 232 947 767 Net realised and fair (601) 9 (610) 23 value losses/ (gains) on excess Basis and other changes 357 173 184 (23) and investment variances FNB Life (174) Merger costs 42 - 42 27 Amortisation of intangible 27 assets relating to business combinations Core headline earnings(7) 977 414 563 647 DILUTED Earnings 1 153 218 935 760 Finance costs - preference 86 42 44 - shares Diluted earnings 1 239 260 979 760 Goodwill and other 29 17 12 7 impairments Sale of Union Life (3) (3) - Headline earnings 1 265 274 991 767 Net realised and fair (601) 9 (610) 23 value losses/ (gains) on excess Basis and other changes 357 173 184 (23) and investment variances Dilutory effect of (5) (2) (3) - subsidiaries (8) FNB Life (174) Investment income on 1 - 1 treasury shares - contract holders Merger costs 42 - 42 27 Amortisation of intangible 27 assets relating to business combinations Core headline earnings(7) 1 059 454 605 647
RECONCILIATION OF PRO Metropoli-tan Metropoli- Metropoli- Momentum FORMA HEADLINE EARNINGS 12 months tan 6 months tan 6 6 months attributable to owners of ended 31 ended 30 months ended 31 the parent December 2010 June 2010 ended 31 December (A) December 2010 (B) 2010 (A-B) Notes (1) (2) Earnings per share (cents) Basic Core headline earnings Headline earnings Earnings Weighted average number of 551 951 shares (million) (9) Diluted Core headline earnings Weighted average number of 654 951 shares (million) (10), (11) Headline earnings Earnings Weighted average number of 653 951 shares (million) (10), (11) RECONCILIATION OF PRO Metropoli FNB Amortisa- Other MMI FORMA HEADLINE EARNINGS tan Life tion of pro attributable to owners of reclassif merger- forma the parent ica-tions related intangible assets
Notes (3) (4) (5) (6) BASIC Earnings - (174) (214) 18 1 325 Goodwill and other 19 impairments Sale of Union Life - Headline earnings - (174) (214) 18 1 344 Net realised and fair (587) value losses/ (gains) on excess Basis and other changes 161 and investment variances FNB Life 174 - Merger costs (42) 27 Amortisation of 214 241 intangible assets relating to business combinations Core headline earnings(7) - - - (24) 1 186
RECONCILIATION OF PRO Metropoli- FNB Amortisa- Other MMI FORMA HEADLINE EARNINGS tan Life tion of pro attributable to owners of reclassi- merger- forma the parent fications related intangible assets Notes (3) (4) (5) (6) DILUTED Earnings - (174) (214) 18 1 325 Finance costs - 44 preference shares Diluted earnings - (174) (214) 18 1 369 Goodwill and other 19 impairments Sale of Union Life - Headline earnings - (174) (214) 18 1 388 Net realised and fair (587) value losses/ (gains) on excess Basis and other changes 161 and investment variances Dilutory effect of (3) subsidiaries (8) FNB Life 174 - Investment income on 1 treasury shares - contract holders Merger costs (42) 27 Amortisation of 214 241 intangible assets relating to business combinations Core headline earnings(7) - - - (24) 1 228 Earnings per share (cents) Basic Core headline earnings 80 Headline earnings 91 Earnings 89 Weighted average number (20) 1 482 of shares (million) (9) Diluted Core headline earnings 77 Weighted average number 1 605 of shares (million) (10), (11) Headline earnings 88 Earnings 86 Weighted average number 1 584 of shares (million) (10), (20) (11) Notes to the income statement and reconciliation of pro forma headline earnings: 1. The "Metropolitan 6 months ended 31 December 2010" column represents Metropolitan`s derived financial information for the six months ended 31 December 2010. The derived results of Metropolitan for the six months are based on the Metropolitan published reviewed financial information for the 12 months ended 31 December 2010 (column A) less the previously published unaudited financial information for the six months ended 30 June 2010 (column B). The independent reporting accountant`s review opinion on the Metropolitan financial information for the 12 months ended 31 December 2010 is available for inspection. The weighted average number of shares represents the actual weighted number of shares of Metropolitan for the six months ended 31 December 2010 prior to the Merger. 2. The "Momentum 6 months ended 31 December 2010" column represents Momentum`s published unaudited financial information for the six months ended 31 December 2010 and has been extracted, without adjustment, from the published results for the six months ended 31 December 2010. 3. The "Metropolitan reclassifications" column represents certain reclassifications made to the results for the six months ended 30 June 2010 to align the accounting policies with the accounting policies used by MMI for the six months ended 31 December 2010. The following reclassifications were made: a. Administration fee income was set off against other expenses in the income statement for the six months ended 30 June 2010. This income is now disclosed under fee income (R44 million). b. The amortisation and impairment of deferred acquisition costs and the change in provision of commission debtors (agents and brokers) were previously disclosed under depreciation, amortisation and impairment expenses in the income statement. These costs are now shown under sales remuneration as they all relate to commission. An amount of R3 million was reallocated. 4. The "FNB Life" column represents an adjustment relating to specific terms included in the agreement entered into between FirstRand Limited and Momentum governing their future relationship, dated 25 August 2010 (the FNB Strategic Relationship Agreement). In terms of this agreement FirstRand receives 90% of the earnings of FNB Life, a division of Momentum, through a reinsurance arrangement which became effective from 1 December 2010. The published Momentum results for the six months ended 31 December 2010 includes 100% of FNB Life earnings for five months and 10% for one month. The pro forma financial information assumes that the FNB Relationship Agreement was effective from 1July 2010 and therefore this column adjusts for 90% of the FNB Life earnings for five months, being R174 million (net of tax). 5. The "Amortisation of merger-related intangible assets" column represents an adjustment relating to intangible assets recognised in terms of the fair value adjustments to Metropolitan assets and liabilities in terms of the Merger and the reverse acquisition of Metropolitan by Momentum and the preliminary fair value exercise. Intangible assets were fair valued and additional intangible assets were identified as part of the preliminary fair value exercise performed. This adjustment represents the effect of amortisation for the 6 months ended 31 December 2010. The material amortisation periods and amounts are as follows: Intangible asset Additional fair Additional amortisation net recognised value recognised of tax and minorities Value of business 6 060 123 acquired Customer relations 1 925 66 Software 36 3 Brand 1 078 20 Broker network 135 10 Total 9 234 222 Deferred tax of R77 million has been released in line with the above. The R8 million impact of non-controlling interests relates to adjustments in entities where outside shareholders share in the adjustments above. 6. The "Other" column represents the following: a. An adjustment relating to non-recurring transaction costs directly associated with the Merger. Total non-recurring transaction costs of R27 million (net of tax) of the accounting acquirer, Momentum, have been expensed in terms of IFRS 3 (Revised) - Business combinations and are already included in the historical financial information of Momentum for the six months ended 31 December 2010. The merger costs incurred by Metropolitan in the six months ended 31 December 2010 (R18 million) and included in the historical financial information of Metropolitan for the six months ended 31 December 2010 have been adjusted for in this column, as Metropolitan`s merger costs are considered pre-acquisition and are therefore added back for the MMI pro forma financial information. For core headline earnings purposes, the R42 million merger costs for the 12 months ended 31 December 2010 were reversed in the reported results. This original core earnings adjustment is reversed for the pro forma MMI position as a transaction costs adjustment is made as discussed above. b. An adjustment to the weighted average number of shares for the 20 million treasury shares held within the MMI group. 7. Core headline earnings are a measure of the performance of MMI in addition to earnings and headline earnings as it is seen by the directors of MMI as an appropriate measure. Core headline earnings eliminate items of both a once-off and an inherently volatile nature, such as changes to the valuation basis, investment variances, capital appreciation/depreciation and the amortisation of any intangible assets recognised due to business combinations. 8. Metropolitan Health and Metropolitan Kenya are consolidated at 100% in the results. For the purposes of diluted core headline earnings, non- controlling interests and investment returns are reinstated. 9. The weighted average number of ordinary shares assumes that the 951 million shares issued to FirstRand in exchange for Momentum were issued on 1 July 2010. At 31 December 2010, there were 20 million internally held MMI shares. These shares all back policyholder assets and are now treated as treasury shares. These shares have also been adjusted for in the weighted average number of shares. 10. The diluted weighted average number of ordinary shares for core headline earnings per share purposes represents the diluted weighted average number of shares for the 6 months ended 31 December 2010 and assumes that the treasury shares held on behalf of contract holders are issued. For diluted earnings and headline earnings per share, these shares are deemed to be cancelled. 11. It was assumed that all the convertible preference shares issued to a subsidiary of Kagiso Trust Investments (Pty) Ltd would convert into ordinary shares on a one-for-one basis. This represents the fully diluted effect of these preference shares. 12. The effect of the reversal of dividend income, any realised and unrealised gains on the 20 million treasury shares discussed above was considered immaterial and therefore no adjustment has been made for the pro forma financial information. UNAUDITED PRO FORMA ANALYSIS OF DILUTED CORE HEADLINE EARNINGS The unaudited pro forma analysis of diluted core headline earnings for the six months ended 31 December 2010 has been prepared on the assumption that the Merger was effective from 1 July 2010. All figures are in R million unless otherwise stated ANALYSIS OF Metro- Metro- Met- Momen- Momen- Reallo- Mer- MMI PRO FORMA poli-tan poli-tan ropo- tum 6 tum re- cate ger pro DILUTED 12 months 6 months litan months allo- Metro- costs forma CORE ended 31 ended 30 6 ended ca- poli- HEADLINE Decem-ber June months 31 tions tan EARNINGS 2010 2010 ended Decem- Ody- (A) 31 ber ssey
(B) Decem- 2010 ber 2010 Notes (A-B) (3) (1) (2) (4) (5) Momentum 305 70 (18) 357 retail Metropoli- 432 211 221 (21) 18 218 tan retail New markets (21) 21 - Employee 158 62 96 28 124 benefits/ Corporate business Momentum (1) 1 - group Interna- 84 51 33 (13) 20 tional Invest- 55 10 45 150 (70) 125 ments/ Asset Manage-ment Health 92 47 45 (16) 29 FNB Life 23 23 Share- 238 73 165 191 (24) 332 holder capital/ Capital centre (6) 1 059 454 605 647 - - (24) 1 228
Notes to the pro forma analysis of diluted core headline earnings: 1. The "Metropolitan 6 months ended 31 December 2010" column represents Metropolitan`s derived financial information for the six months ended 31 December 2010. The derived results of Metropolitan for the six months are based on the Metropolitan published reviewed financial information for the 12 months ended 31 December 2010 (column A) less the previously published unaudited financial information for the six months ended 30 June 2010 (column B). The independent Reporting Accountant`s review opinion on the Metropolitan financial information for the 12 months ended 31 December 2010 is available for inspection. 2. The "Momentum 6 months ended 31 December 2010" column represents Momentum`s published unaudited financial information for the six months ended 31 December 2010 and has been extracted, without adjustment, from the published results for the six months ended 31 December 2010. 3. The "Momentum reallocations" column represents the following reallocations: a. reallocation of the core headline earnings of the historical Momentum `group` segment (negative R1 million) into the equivalent current MMI segments, being Employee benefits (R28 million), Health (negative R16 million) and International (negative R13 million). b. reallocation of Momentum`s middle market initiative (New markets) to Metropolitan retail as under MMI it will now report under Metropolitan retail (negative R21 million). c. reallocation of Momentum wealth as it was previously disclosed under the `investments segment` and is now included under Momentum retail (R70 million). 4. The "Reallocate Metropolitan Odyssey" column represents the reallocation of Metropolitan Odyssey from Metropolitan retail to Momentum retail as its target market is similar to that of Momentum (negative R18 million). 5. The "Merger costs" column represents non-recurring transaction costs directly associated with the merger. Total merger costs of R27 million (net of tax) of the accounting acquirer, Momentum, have been expensed in terms of IFRS 3 (Revised) - Business combinations and are already included in the historical financial information of Momentum for the six months ended 31 December 2010. The merger costs incurred by Metropolitan in the six months ended 31 December 2010 have been adjusted for in this column as Metropolitan`s merger costs are considered pre-acquisition and are therefore added back for the MMI pro forma financial information. The R24 million represents the R24 million merger costs incurred for the six months ended 30 June 2010 which were previously not added back for diluted core headline earnings. 6. Shareholder capital/Capital centre includes unallocated expenses of R312 million which will be allocated to business units after the strategic planning sessions and group budgeting processes have been finalised. UNAUDITED PRO FORMA VALUE OF NEW BUSINESS AND NEW BUSINESS PREMIUMS The unaudited pro forma value of new business and new business premiums for the six months ended 31 December 2010 has been prepared on the assumption that the Merger was effective from 1 July 2010. All figures are in R million unless otherwise stated PRO FORMA Metro- Metro- Metro- Momen- Mo- Re- Me- MMI VALUE OF NEW poli- poli- poli-tan tum 6 men- allo- tro- pro BUSINESS tan 12 tan 6 6 months months tum cate poli- forma months months ended 31 ended re- Metro- tan
ended ended Decem-ber 31 allo- poli- basis 31 30 2010 Decem- ca- tan chan- Decem- June (A-B) ber tions Ody- ges ber 2010 (1) 2010 ssey
2010 Notes (A) (B) (2) (3) (4) (5)
Momentum 188 188 retail Metropoli- 223 54 169 (10) (31) 128 tan retail New markets (10) 10 - Employee 23 7 16 9 1 26 benefits Interna- 21 6 15 (1) 14 tional 267 67 200 187 - - (31) 356 PRO FORMA Metro- Metro- Metro- Momen- Mo- Re- Me- MMI NEW poli-tan poli-tan poli- tum 6 men- allo- tro- pro BUSINESS 12 6 months tan 6 months tum cate poli- forma PREMIUMS months ended 30 months ended re- Metro- tan ended 31 June ended 31 allo- poli- basis
Decem- 2010 31 Decem- ca- tan chan- ber 2010 Decem- ber tions Ody- ges (A) (B) ber 2010 ssey 2010
(A-B) (4) Notes (1) (2) (3) (5)
Recurring 1 155 508 647 967 - - 1 614 premiums Momentum 614 84 698 retail Metropoli- 843 364 479 48 (84) 443 tan retail New markets 48 (48) - Employee 158 69 89 305 394 benefits Interna- 154 75 79 79 tional
Single 3 176 1 463 1 713 12 121 - 13 834 premiums Momentum 10 991 115 11 106 retail Metropoli- 2 115 960 1 155 (115) 1 040 tan retail New markets - - Employee 941 472 469 1 130 1 599 benefits Interna- 120 31 89 89 tional PRO FORMA Metro- Metro- Metro- Momen- Mo- Re- Me- MMI NEW poli-tan poli- poli- tum 6 men- allo- tro- pro BUSINESS 12 months tan 6 tan 6 months tum cate poli- forma PREMIUMS ended 31 months months ended re- Metro-tan Decem-ber ended ended 31 allo- poli- basis
2010 30 31 Decem- ca- tan chan- (A) June Decem- ber tions Ody- ges 2010 ber 2010 ssey 2010
(B) (A-B) (4) Notes (1) (2) (3) (5)
Annual 1 472 655 817 2 179 - - 2 996 premium equivalent (APE) Momentum 1 713 96 1 809 retail Metropoli- 1 054 460 594 48 (96) 546 tan retail New markets 48 (48) - Employee 252 117 135 418 553 benefits Interna- 166 78 88 88 tional Present 8 540 3 674 4 866 17 253 - - (147) 21 972 value of premiums (PVP) Momentum 14 167 294 14 461 retail Metropoli- 5 602 2 358 3 244 100 (294) (93) 2 957 tan retail New markets 100 (100) - Employee 2 154 964 1 190 2 986 (44) 4 132 benefits Interna- 784 352 432 (10) 422 tional
PRO FORMA Me-tro- Mo-men- Mo-men- Re-allo-Me- MMI PROFITABI- poli-tan tum for tum re- cate Me-tro- pro LITY OF NEW for the the 6 allo-ca- tro- poli- forma BUSINESS - 6 months months tions poli- tan COVERED ended 31 ended tan Ody-basis BUSINESS Decem- 31 ssey chan- ber 2010 Decem- ges (A-B) ber
(1) 2010 (3) (4) Notes (2) (5) Pro forma 11.9 value of new business as % of APE Momentum 10.4 retail Metropolitan 23.4 retail Employee 4.7 benefits Interna- 15.9 tional
Pro forma 1.6 value of new business as % of PVP Momentum 1.3 retail Metropolitan 4.3 retail Corporate 0.6 business Interna- 3.3 tional Notes to the pro forma value of new business and new business premiums: 1. The "Metropolitan 6 months ended 31 December 2010" column represents Metropolitan`s derived financial information for the six months ended 31 December 2010. The derived results of Metropolitan for the six months are based on the Metropolitan published financial information for the 12 months ended 31 December 2010 as reviewed by the consulting actuaries (column A) less the previously published unaudited financial information for the six months ended 30 June 2010 (column B). The consulting actuaries` review opinion on the Metropolitan financial information for the 12 months ended 31 December 2010 is available for inspection. 2. The "Momentum 6 months ended 31 December 2010" column represents Momentum`s published unaudited financial information for the six months ended 31 December 2010 and has been extracted, without adjustment, from the published results for the six months ended 31 December 2010. 3. The "Momentum reallocations" column represents the following reallocations: a. reallocation of Momentum`s middle market initiative (New markets) to Metropolitan retail as under MMI it will now report under Metropolitan retail; b. the Momentum `group` segment was already disclosed separately into Employee benefits, Health and International in the published Momentum results for the 6 months ended 31 December 2010 and therefore a reallocation was not necessary; and c. Momentum wealth was already disclosed with Momentum retail in the published Momentum results for the 6 months ended 31 December 2010 and therefore a reallocation was not necessary. 4. The "Reallocate Metropolitan Odyssey" column represents the reallocation of Metropolitan Odyssey from Metropolitan retail to Momentum retail as its target market is similar to that of Momentum. The value of new business amount was considered immaterial and therefore no reallocation was made for value of new business. 5. The "Metropolitan basis changes" column represents the effect of the change in assumptions to put the 30 June 2010 value of new business of Metropolitan on a consistent basis as the 31 December 2010 value of new business calculation. UNAUDITED PRO FORMA RETURN ON EMBEDDED VALUE The unaudited pro forma annualised return on embedded value for the six months ended 31 December 2010 has been prepared on the assumption that the Merger was effective on 1 July 2010. All figures are in R million unless otherwise stated Metro- Metro- Metro- Momen- FNB MMI pro poli-tan poli-tan poli-tan tum for Life forma for the for the for the 6 the 6 12 months 6 months months months
ended 31 ended 30 ended 31 ended Decem-ber June Decem-ber 31 2010 2010 2010 Decem- (A) (B) (A-B) ber
(1) 2010 Notes (2) (3) Opening embedded 12 118 12 007 11 811 17 683 (633) 28 861 value Metropolitan 111 111 restatements (4) Capital (696) (433) (263) (930) 735 (458) movements Embedded value 1 895 237 1 658 1 048 (102) 2 604 profit Closing embedded 13 317 11 811 13 317 17 801 - 31 118 value Annualised 18.9 return on embedded value (%)
Notes to the pro forma annualised return on embedded value: 1. The "Metropolitan 6 months ended 31 December 2010" column represents Metropolitan`s derived reconciliation of embedded value for the six months ended 31 December 2010. The derived results of Metropolitan for the six months are based on the Metropolitan published, reconciliation of embedded value for the 12 months ended 31 December 2010 as reviewed by the consulting actuaries (column A) less the published, unaudited financial information for the six months ended 30 June 2010 (column B). The consulting actuaries` review opinion on the Metropolitan financial information for the 12 months ended 31 December 2010 is available for inspection. 2. The "Momentum for the 6 months ended 31 December 2010" column represents Momentum`s reconciliation of embedded value as extracted, without adjustment, from the unaudited published results of Momentum for the 6 months ended 31 December 2010. 3. The "FNB Life" column represents an adjustment relating to specific terms included in the FNB Relationship Agreement. In terms of this agreement FirstRand receives 90% of the earnings of FNB Life, a division of Momentum. This adjustment represents 90% of the embedded value of FNB Life as at 1 July 2010 together with the movements in embedded value for the 6 months ended 31 December 2010. 4. The "Metropolitan restatements" line represents the early adoption of IAS 12 - Income taxes amendments. The amendment introduces a presumption that the carrying value of an investment property is recovered through sale. The Metropolitan group has elected to early adopt the amendment and this results in an increase in opening embedded value as at 1 July 2010 of R111 million. As the amendment was published in December 2010, it was not applied to the Metropolitan previously published results for the six months ended 30 June 2010. 9 March 2011 Sponsor: Merrill Lynch South Africa (Pty) Limited Date: 09/03/2011 07:08:12 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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