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SNT - Santam Limited and its subsidiaries - Reviewed interim report for

Release Date: 31/08/2011 14:00
Code(s): SNT
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SNT - Santam Limited and its subsidiaries - Reviewed interim report for Santam Limited and its subsidiaries for the six months ended 30 June 2011 Santam Limited and its subsidiaries Registration number 1918/001680/06 ISIN ZAE000093779 JSE share code: SNT NSX share code: SNM Reviewed interim report for Santam Limited and its subsidiaries for the six months ended 30 June 2011 - 16% increase in headline earnings - Exceptional underwriting returns achieved - Strong cash flows generated - Group solvency ratio of 45% - Interim dividend of 200 cents per share Financial review The Santam group achieved excellent returns for the first half of 2011 with headline earnings of 593 cents per share showing an increase of 16% compared to the very solid results of the same period in 2010. An outstanding underwriting return was the main driver for the favourable results. Investment returns were under pressure as a result of weak equity markets. The 25.2% return on weighted average shareholders` funds compared favourably with the 24% achieved in 2010. Growth in gross written premiums of 7% (9% excluding cell business) improved from the 6% recorded in 2010 and was achieved despite Santam`s resolve to maintain appropriate underwriting discipline across all classes of business as well as increased competition in the market. Positive growth was achieved across the largest insurance classes, including motor and property, but the strain on growth in the portfolio management business reflected the continued focus on positive underwriting results for this business unit. The net underwriting result for the first six months of the year was very pleasing, building on the momentum from the excellent returns of the 2010 financial year. A net underwriting margin of 8.4% compared favourably to the 8% achieved for the corresponding period in 2010. Most business units and insurance classes performed well when compared to 2010, mainly due to the absence of large industrial accident and fire-related claims in the commercial and corporate business units. However, specialist business classes, although still favourable, did not perform at the exceptional levels experienced for the comparative June 2010 period. The largest underwriting classes, motor and property, did very well with increased underwriting results of more than 90% and 50% respectively when compared to 2010. Continued focus on the reduction of claims cost and the positive effects of the implementation of the Insurance Services Transformation Project during 2010 and 2011 contributed in driving down the average claims cost, positively impacting the net claims ratio and underwriting result. The net acquisition cost ratio of 27.7% was higher than the 26.9% for the same period in 2010, mainly due to timing differences on management expenses as well as pressure on fee structures of outsourced business. Spend on strategic projects driving improvements to technology and processes across various areas of the business contributed approximately 1% to acquisition cost. Investment return on insurance funds of R193 million was below the R203 million for the comparable period in 2010. Despite increased float balances, returns from interest-bearing instruments were lower due to lower interest rates. The group`s operating activities generated healthy cash flows of R924 million, considerably more than the R645 million generated for the same period in 2010. The combined effect of the insurance activities resulted in a net insurance margin of 11.2% for the past six months compared to 11.1% for the comparable period in 2010. Performance of the investment portfolio was under pressure due to the weak performance of the equity markets closing below the December 2010 levels as well as from low interest rates. The company`s equity portfolio outperformed the ALSI index as mandates are essentially linked to the SWIX index. Dividend income was somewhat higher than for the comparative period in 2010. Reported investment results benefited from the derivative fence structures entered into during September and October 2010, which generated a credit of R52 million for the six months ended June 2011. These structures were substantially unwound during July and August at no cost to the company. Net earnings from associated companies were almost double when compared to 2010, mainly due to higher earnings from two key associates, Credit Guarantee Insurance Corporation of Africa Ltd and NICO Holdings Ltd. At 30 June 2011 the group`s international solvency ratio of 45% was at the upper end of the long-term target range of between 35% and 45%, similar to the level reported at 31 December 2010. Santam`s capital management philosophy is to maximise the return on shareholders` capital within an appropriate risk framework. At this stage it is not considered appropriate to declare a special dividend given the volatility in global financial markets, but it will remain under constant consideration. On 1 March 2011, Santam acquired 55% of the voting equity in Mirabilis Engineering Underwriting Managers (Pty) Ltd (Mirabilis) by merging its construction and engineering business into Mirabilis. The new merged entity is the leading engineering underwriter in the South African market. The board would like to extend its gratitude to Santam`s management, staff, brokers and other business partners for their efforts and contributions during the past six months. Prospects Although the global economy slowed down during the second quarter of 2011, it is still expected that South African gross domestic product (GDP) growth will exceed 3% in 2011, while the inflation (CPI) is expected to average 4.9%. Historically GDP growth and CPI provided a good indication of gross written premium growth expectancies in the short-term insurance market. Competition in the market will, however, increase from both new entrants as well as from existing incumbents entering into new product lines, putting pressure on premium rates. Santam is positioned to manage increases selectively through our market and risk segmentation approach. The rand is considered to be strong. A weakening rand will impact claims cost, specifically the motor class where the import cost of parts is impacted by the strength of the currency. Santam will, however, continue its efforts to optimise profitability in all aspects of the business with a strong focus on risk management, improving efficiencies and lowering claims cost. Underwriting margins are expected to reduce somewhat in the second half of the year. Interest rates are expected to remain at current levels for the rest of 2011. A lower return on insurance funds is therefore expected in 2011 when compared to 2010. The equity market is not expected to deliver exceptional returns in 2011 and therefore investment returns are expected to be lower in 2011 than in 2010. Events after the reporting period There have been no material changes in the affairs or financial position of the company and its subsidiaries since the statement of financial position date. Declaration of dividend (Number 115) Notice is hereby given that the board has declared an interim dividend for the six months ended 30 June 2011 of 200 cents per share (2010: 185 cents). Shareholders are advised that the last day to trade "cum dividend" will be Friday, 16 September 2011. The shares will trade "ex dividend" from the commencement of business on Monday, 19 September 2011. The record date will be Friday, 23 September 2011, and the payment date will be Monday, 26 September 2011. Certificated shareholders may not dematerialise or rematerialise their shares between Monday, 19 September 2011, and Friday, 23 September 2011, both dates inclusive. Auditors` report The company`s external auditors, PricewaterhouseCoopers Inc, have reviewed the condensed interim financial report. A copy of their unqualified review opinion is available on request at the company`s registered office. On behalf of the board VP Khanyile Chairman IM Kirk Chief Executive Officer 31 August 2011 Consolidated statement of financial position Notes Reviewed Reviewed Audited At 30 June At 30 June At 31 Dec 2011 2010 2010
R million R million R million Assets Non-current assets Property and equipment 72 53 88 Intangible assets 1 018 139 988 Deferred income tax 237 106 251 Investments in associates 241 217 211 Financial assets at fair value through income Equity securities 6 3 884 3 116 3 832 Debt securities 6 5 286 3 570 4 246 Financial assets at amortised cost Cell owners` interest 17 - 12 Reinsurance assets 302 347 315 Current assets Financial assets - at fair value through income Short-term money market instruments 6 1 848 4 065 3 685 Reinsurance assets 1 013 1 196 952 Deferred acquisition costs 243 238 251 Loans and receivables including insurance receivables insurance receivables 6 2 010 1 966 1 735 Income tax assets 21 6 26 Cash and cash equivalents 2 160 1 717 1 143
Total assets 18 352 16 736 17 735 Equity Capital and reserves attributable to the company`s equity holders Share capital 107 107 107 Treasury shares (648) (652) (651) Other reserves 1 354 1 297 1 265 Distributable reserves 4 667 3 997 4 405 5 480 4 749 5 126
Non-controlling interest 88 73 93 Total equity 5 568 4 822 5 219 Liabilities Non-current liabilities Deferred income tax 249 131 269 Financial liabilities - at fair value through income Debt securities 7 919 885 925 Derivatives 6 3 5 1 Financial liabilities - at amortised cost Cell owners` interest 612 598 589 Insurance liabilities 1 377 1 302 1 323 Provisions for other liabilities and charges 2 4 3 Current liabilities Financial liabilities - at fair value through income Debt securities 7 24 24 24 Investment contracts 472 345 495 Derivatives 6 21 5 74 Financial liabilities - at amortised cost Collateral guarantee contracts 111 104 108 Insurance liabilities 6 591 6 323 6 440 Deferred reinsurance acquisition revenue 11 32 40 Provisions for other liabilities and charges 29 28 33 Trade and other payables 2 136 1 606 1 890 Current income tax liabilities 227 522 302 Total liabilities 12 784 11 914 12 516
Total shareholders` equity and liabilities 18 352 16 736 17 735 Consolidated statement of comprehensive income Notes Reviewed Reviewed Change Audited
Six months Six months % Year ended ended ended 30 June 30 June 31 Dec 2011 2010 2010
R million R million R million Gross written premium 8 228 7 717 7% 15 855 Less: Reinsurance premium 1 293 1 418 2 336 Net premium 6 935 6 299 10% 13 519 Change in unearned premium Gross amount (138) (308) (65) Reinsurers` share 45 (39) 34 Net insurance premium revenue 7 028 6 646 6% 13 550 Investment income 8 301 335 (10%) 633 Income from reinsurance contracts ceded 183 134 236 Net gains/(losses) on financial assets and liabilities at fair value through income 70 (15) 537 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 7 582 7 100 7% 15 177 Insurance claims and loss adjustment expenses 5 229 4 728 9 531 Insurance claims and loss adjustment expenses recovered from reinsurers (742) (397) (848) Net insurance benefits and claims 4 487 4 331 4% 8 683 Expenses for the acquisition of insurance contracts 1 220 1 148 2 311 Expenses for marketing and administration 910 768 1 648 Expenses for asset management services rendered 14 16 29 Amortisation of intangible assets 33 4 27 Expenses 6 664 6 267 6% 12 698 Results of operating activities 918 833 10% 2 479 Finance costs (48) (42) (120) Share of profit of associates 46 24 63 Impairment reversal on net investment of associates - - 6 Profit before tax 916 815 12% 2 428 Income tax expense 9 (234) (229) (639) Profit for the period 682 586 16% 1 789
Other comprehensive income Currency translation differences 25 (19) (72) Total comprehensive income for the period 707 567 1 717 Profit attributable to: - equity holders of the company 670 578 16% 1 762 - non-controlling interest 12 8 27 682 586 1 789 Total comprehensive income attributable to: - equity holders of the company 695 559 24% 1 690 - non-controlling interest 12 8 27 707 567 1 717 Earnings attributable to equity shareholders Earnings per share (cents) 12 Basic earnings per share 593 512 16% 1 560 Diluted earnings per share 584 503 16% 1 532
Weighted average number of shares - millions 113.07 112.91 112.96 Weighted average number of ordinary shares for diluted earnings per share - millions 114.70 114.94 114.99 Consolidated statement of changes in equity Attributable to equity holders of the Non- Total
company controlling interest Share Treasury Other Distribu- R million R capital shares reserves table million
R million R million R million reserves R million Restated balance as at 1 January 2010 107 (660) 1 268 3 813 144 4 672 Balance as at 1 January 2010 107 (660) 1 268 4 080 144 4 939 Restatement - - - (267) - (267) Profit for the period - - - 1 762 27 1 789 Other comprehen- sive income: Currency translation differences - - (72) - - (72) Total comprehen -sive income for the period ended 31 December - - (72) 1 762 27 1 717 2010 Purchase of treasury shares - (34) - - - (34) Sale of treasury shares - 43 - - - 43 Loss on sale of treasury shares - - - (34) - (34) Transfer to reserves - - 69 (69) - - Share-based payments - - - 58 - 58 Dividends paid - - - (1 113) - (1 113) Excess paid on acquisition of non- controlling interest - - - (12) - (12) Interest acquired from non- controlling interest - - - - (78) (78) Balance as at 31 December 2010 107 (651) 1 265 4 405 93 5 219 Profit for the period - - - 670 12 682 Other comprehen- sive income: Currency translation differences - - 25 - - 25 Total comprehen- sive income for the period ended 30 June 2011 - - 25 670 12 707 Purchase of treasury shares - (37) - - - (37) Sale of treasury shares - 40 - - - 40 Loss on sale of treasury shares - - - (39) - (39) Transfer to reserves - - 64 (64) - - Share-based payments - - - 24 - 24 Dividends paid - - - (367) (24) (391) Excess received on sale of non- controlling interest - - - 38 - 38 Interest acquired from non- controlling interest - - - - 7 7 Balance as at 30 June 2011 107 (648) 1 354 4 667 88 5 568 Restated balance as at 1 January 2010 107 (660) 1 268 3 813 144 4 672 Balance as at 1 January 2010 107 (660) 1 268 4 080 144 4 939 Restatement - - - (267) - (267) Profit for the period - - - 578 8 586 Other comprehen -sive income: Currency translation differences - - (19) - - (19) Total comprehen- sive income for the period ended 30 June 2010 - - (19) 578 8 567 Purchase of treasury shares - (13) - - - (13) Sale of treasury shares - 21 - - - 21 Loss on sale of treasury shares - - - (18) - (18) Transfer to reserves - - 48 (48) - - Share-based payments - - - 23 (1) 22 Dividends paid - - - (339) - (339) Excess paid on acquisition of non- controlling interest - - - (12) - (12) Interest acquired from non- controlling interest - - - - (78) (78) Balance as at 30 June 2010 107 (652) 1 297 3 997 73 4 822 Consolidated statement of cash flows Notes Reviewed Reviewed Audited Six months Six months Year ended ended ended 31 Dec
30 June 30 June 2010 2011 2010 R million R million R million Cash generated from operations 1 289 825 2 115 Interest paid (73) (42) (95) Income tax paid (292) (138) (755) Net cash from operating 924 645 1 265 activities Cash flows from investing activities Cash generated/(utilised) in investment activities 790 66 (270) Acquisition of subsidiary 10 (240) (94) (357) Cash acquired through acquisition of subsidiary 10 3 95 262 Purchases of equipment (12) (19) (26) Purchases of software (18) - (1) Proceeds from sale of equipment - 1 - Acquisition of associated - - (17) companies Net cash from investing 523 49 (409) activities
Cash flows from financing activities Purchase of treasury shares (37) (13) (34) Proceeds on sale of treasury 4 4 11 shares (Decrease)/increase in investment contract liabilities (35) 1 129 Dividends paid to company`s shareholders (367) (339) (1 113) Dividends paid to non-controlling interest (24) - - Increase in cell owners` interest 18 62 42 Purchase of subsidiary from non-controlling interest 11 - (90) (90) Net cash used in financing activities (441) (375) (1 055) Net increase/(decrease) in cash and cash equivalents 1 006 319 (199) Cash and cash equivalents at beginning of period 1 143 1 379 1 379 Exchange gains/(losses) on cash and cash equivalents 11 19 (37) Cash and cash equivalents at end of period 2 160 1 717 1 143 Notes to the interim financial information 1. Basis of presentation This abridged consolidated interim financial information for the six months ended 30 June 2011 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 interim financial information does not include all of the information required by IFRS for full annual financial statements and should be read in conjunction with the annual financial statements for the year ended 31 December 2010, which have been prepared in accordance with IFRSs. 2. Accounting policies The accounting policies adopted are consistent with those of the previous financial year. 3. Estimates The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these abridged consolidated interim financial statements, the significant judgements made by management in applying the group`s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2010. 4. Risk management The group`s activities expose it to a variety of financial risks: market risk (including price risk, interest rate risk, foreign currency risk and derivatives risk), credit risk and liquidity risk. Insurance activities expose the group to insurance risk (including pricing risk, reserving risk, accumulation risk and reinsurance risk). The group is also exposed to operational risk and legal risk. The capital risk management philosophy is to maximise the return on shareholders` capital within an appropriate risk framework. The interim abridged consolidated financial statements do not include all risk management information and disclosure required in the annual financial statements and should be read in conjunction with the group`s annual financial statements as at 31 December 2010. There have been no changes in the risk management policies since year- end. 5. 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 as well as underwriting result and net insurance result as a measure 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. 5.1 For the six months ended 30 June 2011 Business activity Insurance Investment Total activities activities R million R million R million Revenue 8 228 172 8 400 Gross written premium 8 228 8 228 Net written premium 6 935 6 935 Net earned premium 7 028 7 028 Claims incurred 4 487 4 487 Net commission 1 037 1 037 Management expenses 904 6 910 Underwriting result 600 (6) 594 Investment return on insurance funds 193 193 Net insurance result 793 (6) 787 Investment income net of management fee and finance costs 116 116 Income from associates net of impairment 46 46 Amortisation of intangible assets (33) (33) Income before taxation 760 156 916
Total assets 9 666 8 686 18 352 Total liabilities 11 816 968 12 784 Insurance class Gross Under- Total Total written writing assets liabilities
premium result R million R million R million R million Accident and health 136 21 10 127 Alternative risk 817 (6) 289 1 761 Crop 67 25 26 51 Engineering 330 64 119 280 Guarantee 7 3 10 24 Liability 538 113 415 1 914 Miscellaneous 7 1 1 11 Motor 3 749 212 51 1 754 Property 2 393 115 576 1 841 Transportation 184 52 62 218 Unallocated - (6) 16 793 4 803 Total 8 228 594 18 352 12 784 Comprising: Commercial insurance 4 010 503 1 151 4 846 Personal insurance 3 401 103 119 1 374 Alternative risk 817 (6) 289 1 761 Unallocated - (6) 16 793 4 803 Total 8 228 594 18 352 12 784 5.2 For the six months ended 30 June 2010 Business activity Insurance Investment Total activities activities R million
R million R million Revenue 7 717 93 7 810 Gross written premium 7 717 7 717 Net written premium 6 299 6 299 Net earned premium 6 646 6 646 Claims incurred 4 331 4 331 Net commission 1 014 1 014 Management expenses 762 6 768 Underwriting result 539 (6) 533 Investment return on insurance funds 203 203 Net insurance result 742 (6) 736 Investment income net of management fee and finance costs 59 59 Income from associates 24 24 Amortisation of intangible assets (4) (4) Income before taxation 738 77 815 Total assets 9 833 6 903 16 736 Total liabilities 10 995 919 11 914 Insurance class Gross Under- Total Total written writing assets liabilities premium result R million R million R million R million Accident and health 185 13 22 144 Alternative risk 1 240 11 332 1 683 Crop 57 5 9 23 Engineering 282 62 124 307 Guarantee 7 5 11 25 Liability 500 190 461 1 850 Miscellaneous 11 3 2 14 Motor 3 059 111 44 1 562 Property 2 189 81 699 1 803 Transportation 187 58 77 248 Unallocated - (6) 14 955 4 255 Total 7 717 533 16 736 11 914
Comprising: Commercial insurance 3 535 444 1 327 4 706 Personal insurance 2 942 84 122 1 270 Alternative risk 1 240 11 332 1 683 Unallocated - (6) 14 955 4 255 Total 7 717 533 16 736 11 914 5.3 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 396 396 funds 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 asset (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 Under- Total Total written writing assets liabilities premium result 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 Reviewed Reviewed Audited At 30 June At 30 June At 31 Dec
2011 2010 2010 R million R million R million 6. Financial assets The group`s financial assets are summarised below by measurement category. Financial assets at fair value through income 10 994 10 741 11 688 Loans and receivables 2 010 1 966 1 735 Total financial assets 13 004 12 707 13 423
Financial assets at fair value through income Equity securities - quoted 3 523 2 808 3 498 - unquoted 361 308 334 3 884 3 116 3 832 Derivatives (net) (24) (10) (75) Debt securities - quoted government and other bonds 1 748 1 793 1 839 long-term money market instruments 1 154 1 026 1 174 redeemable preference shares 383 - 375 - unquoted government and other bonds 256 - 195 long-term money market instruments 1 432 - 354 redeemable preference shares 313 751 309 5 286 3 570 4 246 Short-term money market instruments 1 848 4 065 3 685
Total financial assets at fair value through income 10 994 10 741 11 688 7. Debt securities - at fair value through income At the beginning of the year 925 839 839 Fair value adjustment (6) 46 86 919 885 925
Accrued interest 24 24 24 943 909 949 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 the 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 income statement volatility. Reviewed Reviewed Audited At 30 June At 30 June At 31 Dec 2011 2010 2010
R million R million R million 8. Investment income Dividend income 69 55 118 Interest income 228 258 535 Foreign exchange differences 4 22 (20) 301 335 633 9. Income tax South African normal taxation Current year 234 240 580 Charge for the year 200 206 472 STC 34 34 108 Prior year 1 (7) (10) Foreign taxation 13 13 33 Income taxation for the year 248 246 603 Deferred taxation (14) (17) 36 Current year (13) (12) 37 STC (1) (5) (1) 234 229 639
Reconciliation of taxation rate (%) Normal South African taxation rate 28.0 28.0 28.0 Adjust for - Exempt income (2.1) (1.9) (1.6) - Investment results (2.3) (1.2) (5.1) - STC 3.6 3.6 4.4 - Other (1.7) (0.4) 0.6 Net reduction (2.5) 0.1 (1.7) Effective rate 25.5 28.1 26.3 Reviewed Reviewed Audited Six months Six months Year ended ended ended 31 Dec 2010
30 June 30 June 2011 2010 10. Business combinations Acquisition/Increase in shareholding On 1 March 2011, Santam Ltd acquired 55% of the voting equity interest in Mirabilis Engineering Underwriting Managers (Pty) Ltd by merging its construction and engineering business into Mirabilis. The new merged entity will be the leading engineering underwriter in the South African market.
Details of the assets and liabilities acquired at fair value are as follows: Deferred taxation (5) 3 61 Property and equipment - 4 41 Intangible assets 18 - 196 Investments 5 - 9 Reinsurance assets - 13 3 Loans and receivables 1 67 211 Short-term money market instruments - - 18 Cash and cash equivalents 3 95 262 Insurance liabilities - (32) (9) Trade and other payables (4) (53) (478) Taxation - (2) 2 Net asset value acquired 18 95 316 Goodwill 28 - 675 Non-controlling interest recognised on acquisition (8) - - Excess received on sale of non-controlling interest (38) - - Excess of acquirer`s interest in the net fair value of the acquirer`s identifiable assets, liabilities and contingent liabilities over cost - (1) (6) Investment in associated share previously acquired - - (281) Deferred purchase consideration paid/(provided)* 240 - (347) Purchase consideration paid 240 94 357 Mirabilis Engineering Underwriting Managers (Pty) Ltd - - - MiWay Group Holdings (Pty) Ltd 240 - - Other - 94 357 * Amount is variable and will be impacted by returns achieved over the next three years. Comparative information on acquisitions relate to the transactions below reported on in detail in prior periods. Net asset Goodwill Purchase
value conside- acquired ration paid a) Emerald Risk Transfer (Pty) Ltd On 1 January 2010, Swanvest 120 (Pty) 100 - 94 Ltd acquired 100% of the voting equity interest in Emerald Risk Transfer (Pty) Ltd to obtain specialist underwriting skills in the corporate property environment. b) Indwe Broker Holdings (Pty) Ltd Effective 1 September 2010, the Santam 97 356 263 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. The company is being independently managed as an intermediary. c) MiWay Group Holdings Ltd On 31 December 2010, Swanvest 120 (Pty) 119 319 - Ltd increased its shareholding in MiWay Group Holdings Ltd from 31.25% to 100%. 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 continues to be managed independently, servicing the direct segment of the market. 316 675 357 Reviewed Reviewed Audited Six months Six months Year
ended ended ended 30 June 30 June 31 Dec 2011 2010 2010 11. Transactions with non-controlling parties On 1 March 2011, Santam Ltd sold the non-controlling interest of 45% in its construction and engineering business by merging it into Mirabilis Engineering Underwriting Managers (Pty) Ltd.
Non-controlling interest acquired/(sold) - 78 78 Excess (received)/paid on sale/acquisition of non-controlling interest (38) 12 12 Settled through acquisition of Mirabilis Engineering Underwriting Managers (Pty) Ltd 38 - - Purchase consideration paid - 90 90 Comparative information relates to the acquisition of the non- controlling interest in Centriq Holdings (Pty) Ltd on 1 January 2010. Reviewed Reviewed Audited
Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2011 2010 2010
12. Earnings per share Basic earnings per share Profit attributable to the company`s equity holders (R million) 670 578 1 762 Weighted average number of ordinary shares in issue (million) 113.07 112.91 112.96 Earnings per share (cents) 593 512 1 560 Diluted earnings per share Profit attributable to the company`s equity holders (R million) 670 578 1 762 Weighted average number of ordinary shares in issue (million) 113.07 112.91 112.96 Adjusted for share-options 1.63 2.03 2.03 Weighted average number of ordinary shares for diluted earnings per share (million) 114.70 114.94 114.99
Diluted basic earnings per share (cents) 584 503 1 532 Headline earnings per share Profit attributable to the company`s equity holders 670 578 1 762 Adjust for: Impairment reversal on net investment of associates - - (6) Impairment of goodwill - - 10 Gain on remeasuring existing interest in associates on transfer to subsidiaries - - (215) Excess of acquirer`s interest in the net fair value of the acquiree`s identifiable assets, liabilities and contingent liabilities over cost - (1) (6) Headline earnings (R million) 670 577 1 545 Weighted average number of ordinary shares in issue (million) 113.07 112.91 112.96 Headline earnings per share 593 511 1 367 (cents) Diluted headline earnings per share Headline earnings (R million) 670 577 1 545 Weighted average number of ordinary shares for diluted earnings per share (million) 114.70 114.94 114.99 Diluted headline earnings per share (cents) 584 502 1 343 13. Dividends per share Dividend per share (cents) 200 185 510 Special dividend per share (cents) - 500 500 Non-executive directors B Campbell, MD Dunn, BTPKM Gamedze, VP Khanyile (Chairman, NM Magau, JP Moller, YG Muthien, J van Zyl, BP Vundla Executive directors IM Kirk (Chief Executive Officer), MJ Reyneke (Chief Financial Officer) 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 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 Sponsor Investec Bank Limited Website www.santam.co.za Date: 31/08/2011 14:00:07 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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