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Summarised & Audited Group Results for the year ended 30 June 2014
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 company")
MMI HOLDINGS
SUMMARISED AND AUDITED GROUP RESULTS
for the year ended 30 June 2014
New business PVP up 18% to R42 billion
Comparable VALUE OF NEW BUSINESS up 14% to R779 million
Annualised RETURN on EMBEDDED VALUE of 19% to R40 billion
Profit from OPERATING DIVISIONS up 22% to R3.0 billion
HEADLINE EARNINGS up 27% to R3.2 billion
CORE HEADLINE EARNINGS up 12% to R3.6 billion
Total DIVIDEND (including special) up 51% to R3.0 billion
OVERVIEW OF OPERATIONS
GROUP RESULTS
MMI delivered strong financial results for the year under review.
- Embedded value increased to R40 billion (2 474 cents per share), driven by an excellent 19% return on
embedded value.
- Growth in diluted headline earnings of 27%
- Diluted core headline earnings of R3.6 billion reflected a 12% increase on the prior year.
- The contribution from operating divisions rose 22% to R3.0 billion.
- Actual merger expense savings of R522 million achieved (target R500 million).
- A total dividend of 192 cents per share was paid for the year, including the special dividend,
an increase of 51%.
- MMI invested in excess of R2.5 billion in growth initiatives during the year.
OPERATING ENVIRONMENT
Local operating conditions were economically challenging and highly competitive. Equity markets increased
strongly throughout the year, while interest rate volatility continued. Consumer confidence remained fragile
with ongoing labour challenges, unemployment, indebtedness and inflation reducing disposable and investible
income. GDP growth in many African countries, however, is proving to be resilient. Despite the tough environment,
MMI has delivered very good financial results for the year, as the need for and provision of investment and
protection products within MMI’s client base remains an important part of financial wellness and planning.
CAPITAL STRENGTH
- MMI actively manages its capital resources within a defined risk appetite and balances the interests
of all stakeholders.
- The investment mandate for shareholder capital is restricted to lower-risk investments.
- MMI successfully issued R1.5 billion subordinated debt during March 2014 on the back of an improved credit rating.
- A strong capital buffer of R3.2 billion was reported at 30 June 2014, after allowing for capital requirements, growth
initiatives and dividends. This level is considered to be appropriate taking into account the expected impact of
Solvency Assessment and Management and other strategic initiatives.
OVERVIEW OF OPERATIONS
MOMENTUM RETAIL
- New insurance business, on a present value of premiums (PVP) basis, increased by 17% to R20.4 billion for the year.
- The value of new business increased strongly by 18% to R240 million, boosted by excellent single premium sales.
- Good risk experience continued, confirming the benefits of focusing on good quality new business.
- Operating expenses were well contained during the year.
- Asset-based fees boosted the profitability of the division.
- Operating profit for the year increased by 18% to R1 372 million.
METROPOLITAN RETAIL
- Single premium new business continued to perform very well, ending 22% higher, while recurring premiums
increased 9%.
- The profit-sharing arrangement with FNB Life reduced from 10% to 4% from 1 July 2013.
- The value of new business for the year increased 13% to R236 million, supported by well contained expenses.
- Good risk experience and higher asset levels during the year, together with disciplined expense management,
all contributed to the increase in profits while a slight deterioration in grouped individual persistency
reduced profit growth.
- Operating profit for the year increased by 15% to R587 million.
MOMENTUM EMPLOYEE BENEFITS
- New business, on a PVP basis, increased by 25% to R14.5 billion for the year.
- Good risk and investment recurring premium new business were secured, particularly in the small, medium and
micro enterprise (SMME) space, while increased retirement fund single premiums further boosted volumes.
- Value of new business exceeded expectations, increasing 19% to R254 million.
- Client retention interventions resulted in better persistency, while stable risk profit performance jointly
contributed to positive operating experience variances.
- The inclusion of Guardrisk, with effect from March 2014, further enhanced the results. As part of MMI’s
diversification strategy, Guardrisk is an important acquisition. This business is performing well and further
benefits are expected as the inherent synergies are unlocked.
- Operating profit for the year increased by 51% to R516 million.
METROPOLITAN INTERNATIONAL
- New business increased by 14% to R1.9 billion on a PVP basis, with improved contributions from most operations.
- The value of new business came under pressure, decreasing 13% to R49 million as the mix of business favoured
lower-margin products.
- Lives under administration in the health business increased by 5% to 415 000, while claims ratios remained
within acceptable limits.
- Expanding internationally remains strategically important to MMI. The acquisition of Cannon Assurance in Kenya,
which became unconditional during August 2014, is a key part of that strategy.
- Operating profit for the year increased by 13% to R122 million.
MOMENTUM INVESTMENTS
- Focus on investment excellence is starting to pay off, with equity and balanced fund performance showing
satisfactory improvement.
- The longer-term outlook for the investment management business remains positive as the alignment with the group
is strengthened.
- Operating profit, including investment income, for the year increased by 13% to R197 million.
METROPOLITAN HEALTH
- Total members under administration remain steady at 1.2 million principal members or three million lives.
- As part of a revenue and capability diversification strategy, the group acquired Providence Healthcare
Risk Managers.
- Operating profit, including investment income, for the year increased by 22% to R171 million.
SHAREHOLDER CAPITAL
- Shareholder Capital includes investment income on shareholder assets, operating profit from the balance
sheet management operation, the investment in MMI Wellness and Rewards Programme, the results of Momentum
Short-Term Insurance businesses, shareholder expenses and investments in other new ventures.
- The prior year results include a value added tax refund and the reversal of income tax provisions that
were no longer required.
TRANSFORMATION AND SUSTAINABILITY
- MMI is currently rated a level two broad-based black economic empowerment (B-BBEE) contributor.
- The group is a member of the JSE Sustainability Index, and remains committed to a strategy that promotes
sustainable businesses.
CLIENT-CENTRIC OPERATING MODEL
- MMI is implementing a new client-centric operating model under a restructured group executive committee.
PROSPECTS
- The strategic focus areas of the MMI group are firmly focused on growth, client-centricity and excellence.
- Each segment is implementing plans and processes to identify and optimise structures, operations, target
markets, distribution channels and product offerings through innovation and collaboration, in order to grow
the group through client-centricity.
- Growth in new business volumes will also be influenced by a tougher economic environment.
- The board of MMI Holdings believes that the group has identified and is implementing innovative strategies
to continue unlocking value and generating the required return on capital for shareholders over time.
MMI HOLDINGS
SUMMARY OF FINANCIAL INFORMATION
AUDITED RESULTS FOR THE 12 MONTHS ENDED 30 JUNE 2014
DIRECTORS' STATEMENT
The directors take pleasure in presenting the audited results of MMI Holdings financial services group for the
year ended 30 June 2014. The preparation of the group's results was supervised by the group finance director,
Preston Speckmann, BCompt (Hons), CA(SA).
CORPORATE EVENTS
Acquisitions
On 11 November 2013, the group acquired 100% of Providence Group (Providence), a healthcare administrator, for
R108 million.
On 3 March 2014, the group acquired 100% of Guardrisk Group (Pty) Ltd and its subsidiaries
(collectively "Guardrisk") from Alexander Forbes for R1.6 billion. The group's earnings therefore include
four months (March to June 2014) of Guardrisk's results. For embedded value purposes Guardrisk has been classified
as non-covered business.
Metropolitan International announced the acquisition of a significant majority stake in Kenyan insurer Cannon
Assurance Ltd (Cannon) for around R300 million. The acquisition was subject to regulatory and other required
approvals. The shareholders of Cannon will in turn acquire a minority stake in Metropolitan Life Kenya.
Metropolitan Health announced that it has acquired, subject to relevant regulatory approval, the CareCross Health
Group, including a majority share in Occupational Care South Africa (OCSA).
Listed debt
The JSE Limited has granted MMI Group Ltd the listing of new instruments to the total value of R1.5 billion. The
instruments are unsecured subordinated callable notes and were issued on 17 March 2014.
Licence amalgamation
On 6 June 2014, the High Court of Namibia approved the transfer of Momentum Life Assurance Namibia Ltd's long
term insurance business to MMI Holdings Namibia Ltd (previously Metropolitan Life Namibia Ltd) with effect from
30 June 2014. This had no impact on the group results.
BASIS OF PREPARATION OF FINANCIAL INFORMATION
These condensed consolidated financial statements have been prepared in accordance with International Accounting
Standard 34 (IAS 34) Interim financial reporting; the SAICA Financial Reporting Guide as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council; the JSE
Listings Requirements and the South African Companies Act, 71 of 2008. The accounting policies applied in the
preparation of these financial statements are in terms of International Financial Reporting Standards (IFRS)
and are consistent with those adopted in the previous years except as described below. Critical judgements and
accounting estimates are disclosed in detail in the group's integrated report for the year ended 30 June 2014,
including changes in estimates that are an integral part of the insurance business. The group is exposed to
financial and insurance risks, details of which are also provided in the group's integrated report.
New and revised standards effective for the year ended 30 June 2014 and relevant to the group
IFRS 10 Consolidated financial statements, IFRS 11 Joint arrangements, IFRS 12 - Disclosure of interests
in other entities, IAS 28 (revised) Investments in associates and joint ventures (consolidation project)
IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in
whether an entity should be included within the consolidated financial statements of the parent company. Under
IFRS 10, subsidiaries are all entities (including structured entities) over which the group has control. The
group controls an entity when it has power over an entity, is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect these returns through its power over the
entity. If no single party controls the investee, IFRS 11 provides guidance on whether a joint arrangement exists.
IAS 28 was revised to incorporate amendments from this consolidation project.
- Collective investment schemes: Previously the group consolidated collective investment schemes where the group's
holding in a fund was greater than 50% and investments in a fund of between 20% and 50% were considered to be
interests in associates. As a result of the adoption of IFRS 10 the group considers control over the fund manager
and no longer uses the percentage holdings referred to above as the defining parameter of control over the
schemes. This resulted in an increased number of collective investment schemes being reclassified to
subsidiaries (from associates) and to associates (from unit-linked investments).
- Cell captives: Before the adoption of IFRS 10, cells were regarded as special purpose entities under SIC 12 and
were not included in the consolidated group results as the risks and rewards of these cells were not transferred
to the group. As a result, these cells were included in the consolidated results of cell owners. Under IFRS 10,
a cell can only be consolidated by the cell owner if it first meets the definition of a deemed separate entity.
Cell captives in South Africa are not legally ring-fenced and are not seen as protected cells; therefore they do
not meet the definition of a deemed separate entity. Cells are therefore no longer considered to be special
purpose entities. This resulted in the group recognising the assets, liabilities, income and expenses relating
to its cell captive business in its consolidated results. Because the risks and rewards relating to cell
activities are for the benefit of cell owners, the inclusion of cell income and expenses does not impact the
group's net results, as the result of cell activities are transferred back to the cell owner.
- Other financial instruments: There were no other material financial instruments that met the new consolidation
criteria.
The changes resulting from the above have been applied retrospectively as required by the transitional provisions
of IFRS 10.
IFRS 12 was also issued as part of the consolidation project and includes the disclosure requirements for all forms
of interests in other entities, including joint arrangements, associates, special purpose entities and other
off-balance sheet vehicles. The group has incorporated these disclosures in the 2014 integrated report.
Refer to the appendix for details of the above required restatements to the previously reported statement of
financial position, income statement and statement of cash flows. Total assets and liabilities increased by
R17.2 billion for June 2013. Refer to the segment report for its restatements due to IFRS 10. There was no impact
on the statement of other comprehensive income or statement of changes in equity. The restatements had no
impact on the current or prior year earnings, diluted earnings or headline earnings per share, or on the net
asset value of the group.
Amendments to IAS 19 - Employee benefits
The revised employee benefit standard introduces changes to the recognition, measurement, presentation and
disclosure of post-employment benefits. The standard requires the immediate recognition of all past service
costs in the income statement and replaces interest cost and expected return on plan assets with a net interest
amount that is calculated by applying the discount rate to the net defined benefit liability (asset).
Remeasurements as defined in the standard are now recorded in other comprehensive income. The application of this
amendment did not have a significant impact on the group's financial position, group earnings and cash flows
in the prior year and the impact in the current year resulted in R98 million of asset remeasurements being
recorded in other comprehensive income and not the income statement.
IFRS 13 Fair value measurements
IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and
a single source of fair value measurement and disclosure requirements for use across IFRSs. This standard is
required to be applied prospectively with no restatements. The impact of this change of fair value measurement
has not been material on the current year earnings, diluted earnings or headline earnings per share, or on the
net asset value of the group. IAS 34 Interim reporting was revised for the introduction of IFRS 13 and
requires additional disclosure on financial instruments carried at fair value. The group has complied with
these additional disclosure requirements in these results.
Other
- IFRS 7 (amendment) Financial instruments: disclosures: offsetting financial assets and financial
liabilities became effective for the first time in the current year and had no impact on the group's
earnings or net asset value. The relevant information has been disclosed in the 2014 integrated report.
- The International Accounting Standards Board (IASB) made amendments to various standards as part of
their annual improvements project. These amendments had no impact on the group's earnings.
Reclassifications
The group's June 2013 results have been restated for the following reclassifications:
- The comparative segmental information has been restated, where appropriate, to ensure alignment with the way
in which the chief operating decision-maker, being the MMI executive committee, monitors and evaluates the
performance of the various segments of the business.
- MMI Rewards (including Momentum Multiply) has been reallocated from Momentum Retail to Shareholder
Capital as the Rewards programme is a group-wide initiative. As a result, the income, expenses, employees
and all related activities have moved from the Momentum Retail segment to the Shareholder Capital segment.
- The Momentum Employee Benefits segment has taken over the management of the Momentum Health open scheme
administration business to better align this with the corporate business. As a result, the income, expenses,
employees and all related activities have moved from the Metropolitan Health segment to the Momentum
Employee Benefits segment.
Refer to the analysis of segmental restatements tables for more details.
- Interest relating to interest rate swaps was previously grossed up and disclosed as interest income and finance
costs. As interest rate swaps are subject to fair value risk associated with the fixed and floating interest
legs, the net amount has now been disclosed as net realised and fair value gains. Refer to the appendix for
further details.
- The assets under management and related fund flows tables have been refined. Refer to these tables for details.
These restatements had no impact on the current or prior year reported earnings, diluted earnings or headline
earnings per share, or on the net asset value or net cash flow.
Embedded value FNB Life
The contractual agreement between MMI and FirstRand Bank was changed with effect from 1 July 2013, reducing MMI's
profit-sharing arrangement from 10% to 4%. As a result, the value of new business and value of in-force of the
FNB Life business has been excluded from the published MMI embedded value with effect from 1 July 2013. The
profits arising from this business will therefore only be recognised in the embedded value earnings as they
emerge. The prior year figures have not been restated as the change occurred during the current reporting year.
Corporate governance
The board has satisfied itself that appropriate principles of corporate governance were applied throughout the year
under review.
Changes to the directorate, secretary and directors' shareholding
On 27 November 2013, Blignault Gouws, a non-executive director, retired from the board and Wilhelm van Zyl, the
deputy group chief executive officer, resigned as a director with effect from 30 June 2014. We thank them for
their invaluable input over the years and wish them well in their future endeavours.
Mary Vilakazi resigned from the board as non-executive director to take up an executive position with the group as
described below, we thank her for her significant contribution over the years and look forward to working with her
as part of MMI's executive team.
The Nominations Committee of the MMI Holdings Board appointed Maliga Chetty as the group company secretary with
effect from 3 September 2013 and Louis von Zeuner was appointed as a non-executive director of MMI, with effect
from 1 January 2014.
All transactions in listed shares of the company involving directors were disclosed on SENS.
Changes to the group executive committee
In November 2013, Jan Lubbe, chief risk officer, and Vuyo Lee, group executive brand - stakeholder management and
sustainability, were appointed as members of the group executive committee. Nigel Dunkley, group executive -
balance sheet management has been transferred to the group's asset management business in the UK and Mary Vilakazi
has been appointed as group executive - balance sheet management from 1 May 2014. Herman Schoeman, managing director
of Guardrisk, was appointed to the group executive committee from 1 July 2014. On the same day, Khanyi Nzukuma was
appointed chief executive officer of Metropolitan Retail.
Contingent liabilities and capital commitments
As part of running a business, the group is party to legal proceedings and appropriate provisions are made when
losses are expected to materialise. The group had no material capital commitments at 30 June 2014 that were not
in the ordinary course of business other than those disclosed in the 2014 integrated report.
Events after year-end
Subsequent to year-end the market value of the African Bank equities and bonds decreased. Based on MMI's current
understanding, the direct impact on MMI's earnings (less than 2%), core headline earnings (less than 0.5%) and
embedded value (less than 0.5%) is not expected to be material.
The Kenyan competition authorities approved the Cannon transaction on 25 August 2014.
No other material events occurred between the reporting date and the date of approval of these results.
Dividend declaration
Ordinary shares
The dividend policy for ordinary listed shares, approved by the directors, is to provide shareholders with stable
dividend growth, reflecting the board's long-term view on the expected underlying basic core headline earnings
growth. Exceptions will be made from time to time, in order to account for, inter alia, volatile investment markets,
capital requirements and changes in legislation.
On 9 September 2014, a gross final dividend of 85 cents per ordinary share was declared, resulting in an annual
dividend of 142 cents per share. In addition, a special dividend of 50 cents per share was also declared. The final
and special dividends are payable out of income reserves to all holders of ordinary shares recorded in the register
of the company at the close of business on Friday, 3 October 2014, and will be paid on Monday, 6 October 2014.
Both dividends will be subject to local dividend withholding tax at a rate of 15% unless the shareholder is exempt
from paying dividend tax or is entitled to a reduced rate. The secondary tax on companies (STC) credits utilised
per share amount to 0.03487 cents per ordinary share on the final dividend and 0.02051 cents per ordinary share on
the special dividend. This will result in a net dividend, for those shareholders who are not exempt from paying
dividend tax, of 72.25523 cents per ordinary share for the final dividend and 42.50308 cents per ordinary share
for the special dividend.
The number of ordinary shares in issue at the declaration date was 1 569 803 700, while the last day to trade cum
dividend will be Friday, 26 September 2014. The shares will trade ex dividend from the start of business on Monday,
29 September 2014. Share certificates may not be dematerialised or rematerialised between Monday, 29 September 2014,
and Friday, 3 October 2014, both days inclusive. MMI's income tax number is 975 2050 147.
Where applicable, dividends in respect of certificated shareholders will be transferred electronically to
shareholders’ bank accounts on payment date. In the absence of specific mandates, dividend cheques will be posted
to certificated shareholders on or about payment date. Shareholders who hold dematerialised shares will have their
accounts with their CSDP or broker credited on the payment date.
Preference shares
Dividends of R22.8 million (132 cents per share p.a.) was declared on the unlisted A3 MMI Holdings Ltd preference
shares. The declaration rate was determined as set out in the company's Memorandum of Incorporation and the total
preference dividend utilised STC credits of R9 335.
Integrated information
The full integrated report for 2014 will be posted to shareholders by 30 September 2014, and can then be viewed
online at www.mmiholdings.com.
Directors' responsibility
These results are the responsibility of the directors. A printed version of the SENS announcement may be requested
from the group company secretary, Maliga Chetty tel: 012 684 4255.
External audit
The condensed results have been extracted from the group's 2014 annual financial statements, which have been
audited by PricewaterhouseCoopers Inc. and their unqualified audit report is available for inspection at the
company's registered office. In addition, the summarised group embedded value information has been extracted from
the 2014 group embedded value report, which has been reviewed by PricewaterhouseCoopers Inc. in accordance with the
embedded value basis of MMI, and the review report is available for inspection at the company's registered office.
Signed on behalf of the board
JJ Njeke Chairman
Nicolaas Kruger Group chief executive officer
Centurion
9 September 2014
DIRECTORS:
MJN Njeke (chairman), JP Burger (deputy chairman), NAS Kruger (group chief executive officer),
PE Speckmann (group finance director), N Motsei (executive), L Crouse, F Jakoet, Prof JD Krige,
PJ Moleketi, SA Muller, V Nkonyeni, SE Nxasana, KC Shubane, FJC Truter, BJ van der Ross,
JC van Reenen, LL von Zeuner
GROUP COMPANY SECRETARY:
Maliga Chetty www.mmiholdings.com
TRANSFER SECRETARIES:
Link Market Services SA (Pty) Ltd (registration number 2000/007239/07)
Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein 2001.
PO Box 4844, Johannesburg 2000
Telephone: +27 11 713 0800
E-mail:info@linkmarketservices.co.za
SPONSOR:
Merrill Lynch (registration number: 2000/031756/06)
REGISTERED OFFICE:
268 West Avenue, Centurion 0157
JSE CODE: MMI
NSX CODE: MIM
ISIN NO: ZAE000149902
MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Restated
30.06.2014 30.06.2013
Rm Rm
ASSETS
Intangible assets 12 819 11 769
Owner-occupied properties 1 714 1 488
Property and equipment 315 348
Investment properties 7 675 6 433
Investment in associates 179 121
Employee benefit assets 405 327
Financial instrument assets (1) 355 073 312 424
Reinsurance contracts 2 576 1 345
Deferred income tax 263 124
Properties under development 252 98
Insurance and other receivables 3 813 2 828
Current income tax assets 330 108
Cash and cash equivalents 28 875 22 275
Non-current assets held for sale 17 680
Total assets 414 306 360 368
EQUITY
Equity attributable to owners of the parent 24 734 23 473
Non-controlling interests 480 391
Total equity 25 214 23 864
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 106 047 96 973
Short-term insurance contracts 5 496 -
Financial instrument liabilities
Investment contracts 227 056 184 713
with discretionary participation features 25 405 24 937
designated at fair value through income 201 651 159 776
Other financial instrument liabilities (2) 34 117 37 964
Deferred income tax 4 281 3 917
Employee benefit obligations 1 246 1 328
Other payables 10 437 11 162
Provisions 157 180
Current income tax liabilities 255 267
Total liabilities 389 092 336 504
Total equity and liabilities 414 306 360 368
1. Financial instrument assets consist of the following:
- Securities designated at fair value through income: R334 996 million (30.06.2013: R289 501 million)
- Investments in associates designated at fair value through income: R11 900 million
(30.06.2013: R13 031 million)
- Derivative financial instruments: R2 362 million (30.06.2013: R3 173 million)
- Available-for-sale assets: R129 million (30.06.2013: R953 million)
- Held-to-maturity assets: R100 million (30.06.2013: R69 million)
- Loans and receivables: R5 586 million (30.06.2013: R5 697 million)
2. Other financial instrument liabilities consist of the following:
- Liabilities designated at fair value through income: R30 801 million (30.06.2013: R34 171 million)
- Derivative financial instruments: R1 853 million (30.06.2013: R2 547 million)
- Liabilities at amortised cost: R1 463 million (30.06.2013: R1 246 million)
CONDENSED CONSOLIDATED INCOME STATEMENT
Restated
12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Net insurance premiums received 23 138 23 304
Fee income (1) 6 567 6 205
Investment income 14 043 13 046
Net realised and fair value gains 43 906 30 859
Net income 87 654 73 414
Net insurance benefits and claims 22 321 20 327
Change in liabilities 7 850 9 305
Change in insurance contract liabilities 7 786 8 087
Change in short-term insurance contract liabilities (72) -
Change in investment contracts with DPF liabilities 468 1 239
Change in reinsurance provision (332) (21)
Fair value adjustments on investment contract liabilities 32 959 22 715
Fair value adjustments on collective investment scheme
liabilities 3 061 2 782
Depreciation, amortisation and impairment expenses 1 159 1 144
Employee benefit expenses 5 132 4 494
Sales remuneration 3 899 3 061
Other expenses 5 035 4 476
Expenses 81 416 68 304
Results of operations 6 238 5 110
Share of profit of associates 2 12
Finance costs (2) (482) (667)
Profit before tax 5 758 4 455
Income tax expenses (2 458) (1 804)
Earnings 3 300 2 651
Attributable to:
Owners of the parent 3 197 2 587
Non-controlling interests 103 32
MMI Group Ltd preference shares - 32
3 300 2 651
Basic earnings per ordinary share (cents) 205.5 166.0
Diluted earnings per ordinary share (cents) 202.4 164.2
1. Fee income consists of the following:
- Investment contracts: R1 772 million (30.06.2013: R1 901 million)
- Trust and fiduciary services: R2 014 million (30.06.2013: R1 837 million)
- Health administration services: R1 978 million (30.06.2013: R1 866 million)
- Other fee income: R803 million (30.06.2013: R601 million)
2. Finance costs consist of the following:
- Preference shares issued by MMI: R46 million (30.06.2013: R46 million)
- Subordinated redeemable debt: R149 million (30.06.2013: R100 million)
- Cost of carry positions: R156 million (30.06.2013: R255 million)
- Other: R131 million (30.06.2013: R266 million)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Earnings 3 300 2 651
Other comprehensive income for the year, net of tax 165 88
Items that may subsequently be reclassified to income 32 86
Exchange differences on translating foreign operations 40 86
Available-for-sale financial assets (8) -
Items that will not be reclassified to income 133 2
Land and buildings revaluation 41 9
Adjustments to employee benefit funds
Metropolitan Staff Pension Fund 107 -
Other (9) -
Change in non-distributable reserves 6 (10)
Income tax relating to items that will not be reclassified (12) 3
Total comprehensive income for the year 3 465 2 739
Total comprehensive income attributable to:
Owners of the parent 3 363 2 654
Non-controlling interests 102 53
MMI Group Ltd preference shares - 32
3 465 2 739
Basic earnings Diluted earnings
RECONCILIATION OF HEADLINE EARNINGS 12 mths to 12 mths to 12 mths to 12 mths to
attributable to owners of the parent 30.06.2014 30.06.2013 30.06.2014 30.06.2013
Rm Rm Rm Rm
Earnings 3 197 2 587 3 197 2 587
Finance costs convertible preference shares 45 46
Dilutory effect of subsidiaries (1) (22) (19)
Diluted earnings 3 220 2 614
Realised gains on available-for-sale financial assets - (2) - (2)
Intangible asset and other impairments 25 3 25 3
Profit on change from associate to subsidiary - (67) - (67)
Loss on sale of business - 3 - 3
Headline earnings (2) 3 222 2 524 3 245 2 551
Net realised and fair value gains on excess (544) (340) (544) (340)
Basis and other changes and investment variances 160 367 160 367
Amortisation of intangible assets relating to business
combinations 575 587 575 587
Non-recurring items (3) 171 58 171 58
Investment income on treasury shares contract holders 14 18
Core headline earnings (4) 3 584 3 196 3 621 3 241
1. Metropolitan Health is consolidated at 100% and the MMI Holdings Namibian group and Metropolitan Kenya are
consolidated at 96% in the results. For purposes of diluted earnings, diluted non-controlling interests and
investment returns are reinstated.
2. Headline earnings consist of operating profit, investment income, net realised and fair value gains, investment
variances and basis and other changes.
3. Non-recurring items include one-off costs relating to the restructuring of the group. It also includes a one-off
enhancement of benefits relating to the outsourcing of the Metropolitan Staff Pension Fund liabilities, amounting
to R107 million. The previously unrecognised net surplus asset exceeding the employer surplus account was used to
fund the enhancement and released in other comprehensive income, resulting in an accounting mismatch. The net asset
value of the group has therefore not been impacted.
4. Core headline earnings disclosed comprise operating profit and investment income on shareholder assets. It excludes
net realised and fair value gains on financial assets and liabilities, investment variances and basis and other
changes that can be volatile, certain non-recurring items, as well as the amortisation of intangible assets
relating to business combinations as this is part of the cost of acquiring the business.
EARNINGS PER SHARE (cents)
attributable to owners of the parent
12 mths to 12 mths to
30.06.2014 30.06.2013
Basic
Core headline earnings 230.3 205.1
Headline earnings 207.1 162.0
Earnings 205.5 166.0
Weighted average number of shares (million) 1 556 1 558
Diluted
Core headline earnings 225.7 202.1
Weighted average number of shares (million) (1) 1 604 1 604
Headline earnings 204.0 160.2
Earnings 202.4 164.2
Weighted average number of shares (million) (2) 1 591 1 592
1. For diluted core headline earnings per share, treasury shares held on behalf of contract holders are deemed
to be issued.
2. For diluted earnings and headline earnings per share, treasury shares held on behalf of contract holders
are deemed to be cancelled.
DIVIDENDS 2014 2013
Ordinary listed MMI Holdings Ltd shares (cents per share)
Interim March 57 51
Final September 85 76
Total 142 127
Special dividend 50 -
Total 192 127
MMI Holdings Ltd convertible redeemable preference shares (issued to Kagiso Tiso Holdings (Pty) Ltd (KTH))
The A3 MMI Holdings Ltd preference shares are redeemable in June 2017 at a redemption value of R9.18 per
share unless converted into MMI Holdings Ltd ordinary shares on a one-for-one basis prior to that date. Dividends
are payable at 132 cents per annum (payable March and September).
Significant related party transactions
R298 million (2013: R271 million) of the ordinary dividends declared by MMI Holdings Ltd in September 2013
(2013: September 2012) and R223 million (2013: R200 million) of the ordinary dividends declared in March 2014
(2013: March 2013) were attributable to RMI Holdings Ltd. In September 2012, R255 million of the special dividends
declared by MMI Holdings Ltd were attributable to RMI Holdings Ltd.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Changes in share capital
Balance at beginning and end 9 9
Changes in share premium
Balance at beginning 13 794 13 805
Treasury shares held on behalf of contract holders (12) (4)
Share buy-back - (7)
Balance at end 13 782 13 794
Changes in other reserves
Balance at beginning 1 631 1 572
Total comprehensive income 166 67
BEE cost 2 -
Transfer from/(to) retained earnings 3 (8)
Balance at end (1) 1 802 1 631
Changes in retained earnings
Balance at beginning 8 039 8 131
Total comprehensive income 3 197 2 587
Dividend paid (2 092) (2 886)
Transactions with non-controlling interests - 87
Transfer (to)/from other reserves (3) 8
Profit on preference share buy-back - 112
Balance at end 9 141 8 039
Equity attributable to owners of the parent 24 734 23 473
MMI Group Ltd preference shares
Balance at beginning - 500
Total comprehensive income - 32
Dividend paid - (32)
Share buy-back - (500)
Balance at end - -
Changes in non-controlling interests
Balance at beginning 391 281
Total comprehensive income 102 53
Dividends paid (18) (97)
Transactions with owners - 39
Business combinations 5 115
Balance at end 480 391
Total equity 25 214 23 864
1. Other reserves consist of the following:
- Land and buildings revaluation reserve: R561 million (30.06.2013: R534 million)
- Foreign currency translation reserve: R179 million (30.06.2013: R139 million)
- Fair value adjustment for preference shares issued by MMI: R940 million (30.06.2013: R940 million)
- Fair value reserve: R3 million (30.06.2013: R11 million)
- Non-distributable reserve: R16 million (30.06.2013: R4 million)
- Equity-settled share-based payments reserve: R5 million (30.06.2013: R3 million)
- Employee benefit revaluation reserve: R98 million (30.06.2013: Rnil)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Restated
12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Net cash inflow from operating activities 5 201 7 924
Net cash inflow from investing activities 793 (753)
Net cash inflow from financing activities 606 (3 169)
Net cash flow 6 600 4 002
Cash resources and funds on deposit at beginning 22 275 18 273
Cash resources and funds on deposit at end 28 875 22 275
PRINCIPAL ASSUMPTIONS (South Africa) (1) 30.06.2014 30.06.2013
% %
Pre-tax investment return
Equities 12.0 11.4
Properties 9.5 8.9
Government stock 8.5 7.9
Other fixed-interest stocks 9.0 8.4
Cash 7.5 6.9
Risk-free return (2) 8.5 7.9
Risk discount rate (RDR) 10.8 10.2
Investment return (before tax) balanced portfolio (2) 10.7 10.1
Expense inflation base rate (3) 6.7 6.1
1. The principal assumptions relate only to the South African life insurance business. Assumptions relating to
international life insurance businesses are based on local requirements and can differ from the South African
assumptions.
2. The risk-free return was determined with reference to the market interest rate on South African government bonds
at the valuation date. The investment return on balanced portfolio business was calculated by applying the above
returns to an expected long-term asset distribution.
3. An additional 1% expense inflation is allowed for in some divisions to reflect the impact of closed books that
are in run-off.
NON-CONTROLLING INTERESTS 30.06.2014 30.06.2013
% %
Eris Property Group 45.7 45.7
Metropolitan Botswana 24.2 24.2
Metropolitan Ghana 3.8 5.0
Metropolitan Health Botswana (previously
Momentum Health Botswana) 28.0 28.0
Metropolitan Health Ghana (previously
Momentum Health Ghana) 1.8 4.8
Metropolitan Health Group 17.6 17.6
Metropolitan Health Mauritius (previously
Momentum Health Mauritius) 5.0 5.0
Metropolitan Health Namibia Administrators 49.0 49.0
Metropolitan Kenya 33.7 33.7
Metropolitan Nigeria 50.0 50.0
Metropolitan Swaziland 33.0 33.0
Metropolitan Tanzania (previously Momentum Tanzania) 33.0 33.0
Metropolitan Zambia (previously Momentum Zambia) 35.0 35.0
MMI Holdings Namibia (previously Metropolitan Namibia) 10.3 10.3
Momentum Mozambique 33.0 33.0
Momentum Swaziland 33.0 33.0
ANALYSIS OF ASSETS UNDER MANAGEMENT (1)
Restated
30.06.2014 30.06.2013
Rm Rm
Managed and/or administered by Momentum Investments (net)
Financial assets 370 073 330 809
Momentum Manager of Managers 72 846 60 417
Momentum Collective Investments 51 215 48 025
Metropolitan Collective Investments (2) 55 538 42 834
Momentum Asset Management 141 874 140 005
Momentum Global Investments 36 076 26 960
Momentum Alternative Investments 12 524 12 568
Properties Eris Property Group 24 448 24 922
On-balance sheet 7 406 7 615
Off-balance sheet 17 042 17 307
394 521 355 731
Momentum Wealth linked product assets under administration 130 845 106 482
On-balance sheet 80 484 63 045
Off-balance sheet 50 361 43 437
Managed internally or by other managers within MMI 26 712 21 553
On-balance sheet 21 600 17 010
Off-balance sheet 5 112 4 543
Managed by external managers (on-balance sheet) 32 507 33 941
Properties managed internally or by other managers within
MMI or externally 2 252 1 084
Momentum Employee Benefits segregated assets 1 380 1 232
Momentum Employee Benefits cell captives on-balance sheet 12 058 1 582
Total assets under management 600 275 521 605
Managed and/or administered by Momentum Investments (net)
On-balance sheet 181 915 167 011
Off-balance sheet 212 606 188 720
394 521 355 731
1. Assets under management are reported net of double counted assets except where one entity manages assets on
behalf of another in the division, and both entities earn a fee on the same assets. Non-financial assets
(except properties) have been excluded.
2. Subsequent to year-end, approximately 60% of these assets have left the group. As this is low-margin business
the financial impact of this outflow is not expected to be material, after taking cost savings into account.
3. The June 2013 restatement relates to refinements in presentation, as explained in note 1 above.
NET FUNDS RECEIVED FROM CLIENTS (1)
Gross Gross
single recurring Gross Gross Net inflow/
inflows inflows inflow outflow (outflow)
12 mths to 30.06.2014 Rm Rm Rm Rm Rm
Momentum Retail 14 661 7 856 22 517 (21 215) 1 302
Metropolitan Retail 1 507 5 313 6 820 (5 523) 1 297
Momentum Employee Benefits 7 060 10 283 17 343 (12 907) 4 436
Metropolitan International 277 2 621 2 898 (1 602) 1 296
Momentum Investments 6 262 - 6 262 (10 823) (4 561)
Metropolitan Health - 47 47 (46) 1
Shareholder Capital 23 332 355 (313) 42
Long-term insurance business fund flows 29 790 26 452 56 242 (52 429) 3 813
Off-balance sheet fund flows
Managed and/or administered by Momentum
Investments (net)
Financial assets 70 048 (72 444) (2 396)
Properties Eris Property Group 2 114 (2 379) (265)
Momentum Wealth linked product assets
under administration 11 332 (11 163) 169
Managed internally or by other managers
within MMI 842 (775) 67
Momentum Employee Benefits segregated assets 2 571 (2 108) 463
Total net funds received from clients 143 149 (141 298) 1 851
NET FUNDS RECEIVED FROM CLIENTS (1)
Gross Gross
single recurring Gross Gross Net inflow/
Restated inflows inflows inflow outflow (outflow)
12 mths to 30.06.2013 Rm Rm Rm Rm Rm
Momentum Retail 10 964 7 611 18 575 (18 609) (34)
Metropolitan Retail 1 233 5 013 6 246 (4 509) 1 737
Momentum Employee Benefits 5 083 7 145 12 228 (9 385) 2 843
Metropolitan International 291 2 244 2 535 (1 340) 1 195
Momentum Investments 16 819 - 16 819 (15 241) 1 578
Metropolitan Health - 37 37 (37) -
Shareholder Capital 12 287 299 (269) 30
Long-term insurance business fund flows 34 402 22 337 56 739 (49 390) 7 349
Off-balance sheet fund flows
Managed and/or administered by Momentum
Investments (net)
Financial assets 69 371 (68 392) 979
Properties Eris Property Group 1 353 (2 724) (1 371)
Properties Eris Property Group acquisition 18 678 - 18 678
Momentum Wealth linked product assets under
administration 14 635 (11 213) 3 422
Managed internally or by other managers within MMI 936 (785) 151
Momentum Employee Benefits segregated assets 2 598 (1 931) 667
Total net funds received from clients 164 310 (134 435) 29 875
1. Assets under management and the related fund flows are reported net of double counted assets except where one
entity manages assets on behalf of another in the division, and both entities earn a fee on the same assets.
Non-financial assets (except properties) have been excluded.
2. The June 2013 restatement relates to refinements in presentation, as explained in note 1 above.
ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS
30.06.2014 30.06.2013
Rm % Rm %
Equity securities 1 228 5.0 973 4.1
Preference shares 1 354 5.5 538 2.3
Collective investment schemes 710 2.9 699 3.0
Debt securities 6 699 27.1 3 797 16.2
Properties 2 459 9.9 2 324 9.9
Owner-occupied properties 1 270 5.1 1 175 5.0
Investment properties 1 189 4.8 1 149 4.9
Cash and cash equivalents and funds on deposit 6 980 28.2 9 405 40.1
Intangible assets 8 129 32.9 7 109 30.3
Other net assets 563 2.3 503 2.1
28 122 113.7 25 348 108.0
Redeemable preference shares (313) (1.3) (313) (1.3)
Subordinated redeemable debt (3 075) (12.4) (1 562) (6.7)
Shareholder excess per reporting basis 24 734 100.0 23 473 100.0
BUSINESS COMBINATIONS JUNE 2014
Guardrisk
On 3 March 2014, MMI Holdings Ltd acquired 100% of Guardrisk for R1.6 billion in cash. The transaction resulted in
R567 million goodwill being recognised attributable to certain anticipated operating synergies.
Providence
On 11 November 2013, the group acquired 100% of Providence, a health administrator, for R51 million in cash with an
additional R57 million contingent consideration. The transaction resulted in R19 million goodwill being recognised
attributable to certain anticipated operating synergies.
Other
During the year the group also had a few smaller acquisitions, relating mostly to life books being acquired.
The purchase price consideration, the net assets acquired and any relevant goodwill relating to the above transactions
are as follows:
Total Guardrisk Providence Other
Rm Rm Rm Rm
Purchase consideration in total 1 760 1 607 108 45
Fair value of net assets
Intangible assets 1 095 940 112 43
Tangible assets 5 1 2 2
Financial instrument assets 10 837 10 630 11 196
Reinsurance contracts 762 762 - -
Insurance and other receivables 686 686 - -
Other assets 176 176 - -
Cash and cash equivalents 2 330 2 284 4 42
Insurance contract liabilities (6 061) (5 836) - (225)
Financial instrument liabilities (7 305) (7 298) - (7)
Other liabilities (1 346) (1 305) (40) (1)
Net identifiable assets acquired 1 179 1 040 89 50
Non-controlling interests (5) - - (5)
Goodwill recognised 586 567 19 -
Contingent liability payments (57) - (57) -
Purchase consideration in cash 1 703 1 607 51 45
The goodwill relating to the above transactions is not deductible for tax purposes. The above transactions contributed
net income of R2 255 million and earnings of R83 million to the group results for the current year.
BUSINESS COMBINATIONS JUNE 2013
Momentum Short-Term Insurance
As at 30 June 2012 MMI Group Ltd (MGL) and OUTsurance Holdings Ltd (OUTsurance) each owned 50% of the ordinary share
capital of Momentum Short-Term Insurance Company Ltd (MSTI). As OUTsurance controlled MSTI, MGL accounted for the
investment as an associate. On 13 July 2012, MGL acquired the remaining 50% shareholding for R125 million in cash,
which was based on the embedded value of MSTI. No goodwill was recognised on the transaction.
Eris Property Group
On 29 October 2012, MMI Holdings Ltd acquired 55% in Eris Property Group (Eris) for R329 million in cash. The
group's property portfolio is currently managed by Eris and Momentum Properties. The transaction resulted in
R191 million goodwill being recognised attributable to certain anticipated operating synergies. The goodwill
is not deductible for tax purposes. Eris management and Kagiso Tiso Holdings (Pty) Ltd (KTH), who were existing
shareholders in Eris, also acquired further shares from MMI Holdings Ltd, resulting in an effective controlling
interest for MMI Holdings Ltd of 54%.
The purchase price consideration, the net assets acquired and any relevant goodwill relating to the above
two transactions are as follows:
Total MSTI Eris
Rm Rm Rm
Purchase consideration in total 454 125 329
Fair value of net assets
Intangible assets 276 158 118
Tangible assets 332 - 332
Financial instrument assets 353 201 152
Cash and cash equivalents 43 7 36
Other assets 17 3 14
Financial instrument liabilities (85) - (85)
Other liabilities (418) (104) (314)
Net identifiable assets acquired 518 265 253
Fair value step-up of associate - MSTI
(recognised in net realised and fair value
gains) (67) (67) -
Derecognise investment in associate - MSTI
(carrying value at acquisition date) (73) (73) -
Non-controlling interests (115) - (115)
Goodwill recognised 191 - 191
Purchase consideration in cash 454 125 329
The above two transactions contributed net income of R603 million and earnings of R33 million to the group
results for the current year.
Common control transactions
After consultation with the Financial Services Board (FSB), the group applied to the High Court of South Africa
for the approval of the amalgamation of the two main long-term insurance licences. As a preparatory step for this
legal amalgamation of the life insurance licences, Momentum Group Ltd changed its name to MMI Group Ltd. The court
approval for the amalgamation was granted on 20 May 2013 and the assets and liabilities of Metropolitan Life Ltd
were sold to MMI Group Ltd on this date. The transaction was recorded in accordance with the group's accounting
policy for common control transactions. It had no impact on the group results or net asset value.
RECONCILIATION OF GOODWILL 30.06.2014 30.06.2013
Rm Rm
Carrying amount at beginning 502 311
Business combinations 586 191
Carrying amount at end 1 088 502
MMI GROUP SEGMENTAL INFORMATION
12 mths to 30.06.2014
Metro- Momentum
Momentum politan Employee
Retail Retail Benefits
Rm Rm Rm
Revenue
Net insurance premiums 22 517 6 820 17 343
Recurring premiums 7 856 5 313 10 283
Single premiums 14 661 1 507 7 060
Fee income 2 034 112 1 479
Fee income 2 034 112 1 479
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 21 215 5 523 12 907
Other expenses 3 474 2 100 2 316
Sales remuneration 1 892 937 519
Administration expenses 1 582 1 163 1 338
Amortisation due to business combinations
and impairments - - -
Cell captive business - - 459
Direct property expenses - - -
Asset management and other fee expenses - - -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 1 372 587 516
Operating profit 1 908 814 704
Tax on operating profit (536) (227) (188)
Investment income - - -
Tax on investment income - - -
Actuarial liabilities 175 869 32 296 82 902
12 mths to 30.06.2014
Metro- Metro-
politan Momentum politan
International Investments Health(2)
Rm Rm Rm
Revenue
Net insurance premiums 2 898 6 262 47
Recurring premiums 2 621 - 47
Single premiums 277 6 262 -
Fee income 184 1 442 1 513
Fee income 184 1 442 1 513
Inter-segmental fee income - - -
Expenses
Net payments to contract holders
External payments 1 602 10 823 46
Other expenses 1 168 1 195 1 311
Sales remuneration 424 - -
Administration expenses 729 954 1 288
Amortisation due to business combinations
and impairments 15 9 14
Cell captive business - - -
Direct property expenses - - -
Asset management and other fee expenses - 232 9
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 122 197 171
Operating profit 155 219 205
Tax on operating profit (33) (59) (44)
Investment income - 51 14
Tax on investment income - (14) (4)
Actuarial liabilities 9 152 34 942 8
12 mths to 30.06.2014
Shareholder Segmental Reconciling
Capital total items(1) IFRS total
Rm Rm Rm Rm
Revenue
Net insurance premiums 355 56 242 (33 104) 23 138
Recurring premiums 332 26 452 (6 713) 19 739
Single premiums 23 29 790 (26 391) 3 399
Fee income 502 7 266 (699) 6 567
Fee income 502 7 266 110 7 376
Inter-segmental fee income - - (809) (809)
Expenses
Net payments to contract holders
External payments 313 52 429 (30 108) 22 321
Other expenses 1 164 12 728 2 497 15 225
Sales remuneration 71 3 843 56 3 899
Administration expenses 531 7 585 518 8 103
Amortisation due to business
combinations and impairments 39 77 776 853
Cell captive business - 459 - 459
Direct property expenses - - 159 159
Asset management and other fee expenses 270 511 1 819 2 330
Holding company expenses 253 253 - 253
Inter-segmental expenses - - (831) (831)
Diluted core headline earnings 656 3 621 - 3 621
Operating profit (38) 3 967 - 3 967
Tax on operating profit 12 (1 075) - (1 075)
Investment income 864 929 - 929
Tax on investment income (182) (200) - (200)
Actuarial liabilities 3 528 338 697 (98) 338 599
1. The 'Reconciling items' column includes an adjustment to reverse investment contract premiums (R33 305 million)
and claims (R30 108 million); FNB Life excluded from Metropolitan Retail (premiums R201 million, fee income
R20 million, sales remuneration R64 million and expenses R159 million); non-recurring items of R192 million;
direct property and asset management fees for all segments, except non-life segments, that are set off against
investment income for management reporting purposes but shown as an expense for accounting purposes; the
amortisation of intangibles relating to business combinations; expenses relating to consolidated collective
investment schemes (R6 million); other minor adjustments to expenses (R161 million), sales remuneration (R8 million)
and fee income (R90 million); and adjustments to actuarial liabilities representing inter-segmental liabilities.
2. Metropolitan Health’s administration expenses for the current year include R33 million relating to the acquisition
of Providence.
3. Momentum Employee Benefits includes net insurance premiums (R1 699 million), fee income (R187 million), net payments
to contract holders (R1 509 million), sales remuneration (R376 million), cell captive business expenses
(R382 million) and actuarial liabilities (R13 944 million) relating to Guardrisk.
Metro- Momentum
Restated Momentum politan Employee
12 mths to 30.06.2013 Retail Retail Benefits
Rm Rm Rm
Revenue
Net insurance premiums 18 575 6 246 12 228
Recurring premiums 7 611 5 013 7 145
Single premiums (2) 10 964 1 233 5 083
Fee income 2 089 134 1 182
Fee income 2 089 134 1 182
Inter-segmental fee income - - -
Expenses
Net payments to contract holders 18 609 4 509 9 385
External payments 18 609 4 509 9 385
Inter-segmental payments - - -
Other expenses 3 173 2 029 1 380
Sales remuneration 1 645 871 128
Administration expenses 1 528 1 158 1 202
Amortisation due to business combinations
and impairments - - -
Cell captive business - - 50
Direct property expenses - - -
Asset management and other fee expenses - - -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 1 158 509 341
Operating profit 1 619 707 456
Tax on operating profit (461) (198) (115)
Investment income - - -
Tax on investment income - - -
Actuarial liabilities 153 463 29 070 55 977
Metropolitan Metro-
Restated Inter- Momentum politan
12 mths to 30.06.2013 national Investments Health
Rm Rm Rm
Revenue
Net insurance premiums 2 535 16 819 37
Recurring premiums 2 244 - 37
Single premiums (2) 291 16 819 -
Fee income 145 1 467 1 452
Fee income 145 1 467 1 452
Inter-segmental fee income - - -
Expenses
Net payments to contract holders 1 340 15 241 37
External payments 1 340 15 241 37
Inter-segmental payments - - -
Other expenses 1 052 1 215 1 294
Sales remuneration 335 - -
Administration expenses 715 948 1 279
Amortisation due to business combinations
and impairments 2 1 15
Cell captive business - - -
Direct property expenses - - -
Asset management and other fee expenses - 266 -
Holding company expenses - - -
Inter-segmental expenses - - -
Diluted core headline earnings 108 175 140
Operating profit 145 198 163
Tax on operating profit (37) (54) (33)
Investment income - 43 14
Tax on investment income - (12) (4)
Actuarial liabilities 7 656 32 703 11
Restated Shareholder Segmental Reconciling
12 mths to 30.06.2013 Capital total items (1) IFRS total
Rm Rm Rm Rm
Revenue
Net insurance premiums 299 56 739 (33 435) 23 304
Recurring premiums 287 22 337 (4 889) 17 448
Single premiums (2) 12 34 402 (28 546) 5 856
Fee income 470 6 939 (734) 6 205
Fee income 470 6 939 193 7 132
Inter-segmental fee income - - (927) (927)
Expenses
Net payments to contract holders 269 49 390 (29 063) 20 327
External payments 269 49 390 (29 031) 20 359
Inter-segmental payments - - (32) (32)
Other expenses 974 11 117 2 058 13 175
Sales remuneration 34 3 013 48 3 061
Administration expenses 364 7 194 424 7 618
Amortisation due to business combinations
and impairments 39 57 795 852
Cell captive business - 50 - 50
Direct property expenses - - 220 220
Asset management and other fee expenses 313 579 1 521 2 100
Holding company expenses 224 224 - 224
Inter-segmental expenses - - (950) (950)
Diluted core headline earnings 810 3 241 - 3 241
Operating profit 211 3 499 - 3 499
Tax on operating profit (52) (950) - (950)
Investment income 860 917 - 917
Tax on investment income (209) (225) - (225)
Actuarial liabilities 3 250 282 130 (444) 281 686
1. The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums (R33 609 million) and
claims (R29 034 million); FNB Life adjustments reconciling the 10% of FNB Life included in each of the relevant lines
to the accounting treatment of the reinsurance arrangement (premiums R174 million, fee income R11 million, claims
R3 million, sales remuneration R65 million and expenses R130 million); grossing up of fee income and expenses
relating to properties under development (R121 million); non-recurring items of R67 million; direct property and
asset management fees for all segments, except non-life segments, that are set off against investment income for
management reporting purposes but shown as an expense for accounting purposes; the amortisation of intangibles
relating to business combinations; expenses relating to consolidated collective investment schemes (R18 million);
other minor adjustments to expenses (R88 million), sales remuneration (R17 million) and fee income (R61 million);
and adjustments to actuarial liabilities representing inter-segmental liabilities.
2. Momentum Investments includes two significant client single premium inflows.
Momentum
Momentum Metropolitan Employee
Analysis of reclassifications Retail Retail Benefits
Rm Rm Rm
June 2013
Net insurance premiums
Published June 2013 18 575 6 246 12 072
Reclassifications - - 156
Restated June 2013 18 575 6 246 12 228
Fee income
Published June 2013 2 369 134 862
Reclassifications (280) - 320
Restated June 2013 2 089 134 1 182
Net payments to contract holders
Published June 2013 18 609 4 509 9 240
Reclassifications - - 145
Restated June 2013 18 609 4 509 9 385
Other expenses
Published June 2013 3 215 2 029 983
Reclassifications (42) - 397
Restated June 2013 3 173 2 029 1 380
Diluted core headline earnings
Published June 2013 1 179 509 330
Reclassifications (21) - 11
Restated June 2013 1 158 509 341
Actuarial liabilities
Published June 2013 153 463 29 070 54 614
Reclassifications - - 1 363
Restated June 2013 153 463 29 070 55 977
Metropolitan Momentum Metropolitan
Analysis of reclassifications International Investments Health
Rm Rm Rm
June 2013
Net insurance premiums
Published June 2013 2 535 16 819 193
Reclassifications - - (156)
Restated June 2013 2 535 16 819 37
Fee income
Published June 2013 145 1 467 1 772
Reclassifications - - (320)
Restated June 2013 145 1 467 1 452
Net payments to contract holders
Published June 2013 1 340 15 241 182
Reclassifications - - (145)
Restated June 2013 1 340 15 241 37
Other expenses
Published June 2013 1 052 1 215 1 619
Reclassifications - - (325)
Restated June 2013 1 052 1 215 1 294
Diluted core headline earnings
Published June 2013 108 175 151
Reclassifications - - (11)
Restated June 2013 108 175 140
Actuarial liabilities
Published June 2013 7 656 32 703 11
Reclassifications - - -
Restated June 2013 7 656 32 703 11
Shareholder Segmental Reconciling
Analysis of reclassifications Capital total items IFRS total
Rm Rm Rm Rm
The comparative segmental information has been restated for the effect of IFRS 10 and, where appropriate, to ensure
alignment with the way in which the chief operating decision-maker, being the MMI executive committee, monitors and
evaluates the performance of the various segments of the business. Refer to the directors’ statement for
explanations on restatements below. These restatements had no impact on total core headline earnings.
June 2013
Net insurance premiums
Published June 2013 299 56 739 (33 435) 23 304
Reclassifications - - - -
Restated June 2013 299 56 739 (33 435) 23 304
Fee income
Published June 2013 190 6 939 (705) 6 234
Reclassifications 280 - (29) (29)
Restated June 2013 470 6 939 (734) 6 205
Net payments to contract holders
Published June 2013 269 49 390 (29 063) 20 327
Reclassifications - - - -
Restated June 2013 269 49 390 (29 063) 20 327
Other expenses
Published June 2013 700 10 813 2 089 12 902
Reclassifications 274 304 (31) 273
Restated June 2013 974 11 117 2 058 13 175
Diluted core headline earnings
Published June 2013 789 3 241 - 3 241
Reclassifications 21 - - -
Restated June 2013 810 3 241 - 3 241
Actuarial liabilities
Published June 2013 3 250 280 767 (444) 280 323
Reclassifications - 1 363 - 1 363
Restated June 2013 3 250 282 130 (444) 281 686
Restated
CHANGE IN DILUTED CORE HEADLINE EARNINGS 12 mths to 12 mths to
30.06.2014 30.06.2013 Change
Rm Rm %
Momentum Retail 1 372 1 158 18
Metropolitan Retail 587 509 15
Momentum Employee Benefits 516 341 51
Metropolitan International 122 108 13
Momentum Investments 197 175 13
Metropolitan Health 171 140 22
Operating divisions 2 965 2 431 22
Shareholder Capital 656 810 (19)
Total diluted core headline earnings 3 621 3 241 12
RECONCILIATION OF MOMENTUM INVESTMENTS 12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Revenue 1 463 1 467
Fee income 1 442 1 467
Other income 21 -
Expenses and finance costs (1 239) (1 234)
Other expenses (1 195) (1 215)
Finance costs (44) (19)
Share of profit of associates 9 5
Non-controlling interests (23) (42)
210 196
Core adjustments 9 2
Impairments 9 1
Other - 1
Operating profit before tax 219 198
Tax on operating profit (59) (54)
Investment income 51 43
Tax on investment income (14) (12)
Diluted core headline earnings 197 175
Restated
RECONCILIATION OF METROPOLITAN HEALTH 12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Revenue 1 560 1 489
Net insurance premiums 47 37
Fee income 1 513 1 452
Expenses and finance costs (1 357) (1 331)
Net payments to contract holders (46) (37)
Other expenses (1 311) (1 294)
203 158
Core adjustments 2 5
Impairments and amortisation of intangibles relating
to business combinations 14 15
Adjustments for dilution (13) (10)
Other 1 -
Operating profit before tax 205 163
Tax on operating profit (44) (33)
Investment income 14 14
Tax on investment income (4) (4)
Diluted core headline earnings 171 140
Additional off-balance sheet information
Assets under administration at reporting date 10 686 9 540
Gross recurring inflow of funds 41 137 38 730
Gross outflow of funds (36 791) (33 806)
RECONCILIATION OF GUARDRISK (PROMOTER CELL (1)) 4 mths to
30.06.2014
Rm
Income
Net insurance premiums (excluding investment business) 913
Fee income 179
Other income 12
Total income 1 104
Expenses and finance costs
Net payments to contract holders
(excluding investment business) (812)
Change in liabilities 36
Other expenses (243)
Finance costs (1)
Total expenses and finance costs (1 020)
Operating profit before tax 84
Tax on operating profit (10)
Diluted core headline earnings 74
1. An insurer that enters into contractual arrangements with cell shareholders whereby the risk and rewards
associated with certain insurance activities accruing to the cell shareholder, in relation to the insurer,
are specified. The promoter cell will exclude all assets and liabilities and related income and expenses of
the cell arrangements.
Restated
RECONCILIATION OF SHAREHOLDER CAPITAL 12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Revenue
Net insurance premiums (excluding investment business) 332 287
Balance Sheet Management income including fee income 607 711
Guaranteed portfolios earnings 299 174
Returns in excess of benchmark 160 138
Returns on working capital and other 148 399
Other income 352 306
Total income 1 291 1 304
Expenses
Net payments to contract holders (excluding investment business) (204) (158)
Other expenses (1 125) (935)
Balance Sheet Management (196) (173)
Strategic initiatives and other (1) (676) (538)
Holding company (253) (224)
Total expenses (1 329) (1 093)
Operating (loss)/profit before tax (38) 211
Tax on operating profit 12 (52)
Investment income 864 860
Tax on investment income (182) (209)
Diluted core headline earnings 656 810
1. Includes Momentum Short-Term Insurance, Solvency Assessment and Management (SAM) costs, redeployment
centre costs (in prior year), MMI Rewards and India project costs.
Restated
PAYMENTS TO CONTRACT HOLDERS 12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Momentum Retail 21 215 18 609
Death and disability claims 3 412 3 018
Maturity claims 6 444 5 726
Annuities 4 505 3 849
Withdrawal benefits 46 140
Surrenders 7 569 6 655
Re-insurance recoveries (761) (779)
Metropolitan Retail 5 523 4 509
Death and disability claims 1 049 991
Maturity claims 2 373 1 688
Annuities 558 540
Withdrawal benefits 97 61
Surrenders 1 542 1 324
Re-insurance recoveries (96) (95)
Momentum Employee Benefits (1) 12 907 9 385
Death and disability claims 3 635 3 241
Maturity claims 667 491
Annuities 765 1 321
Withdrawals and surrenders 3 358 2 550
Terminations and disinvestments 3 802 2 454
Short-term insurance 1 880 -
Re-insurance recoveries (1 200) (672)
Metropolitan International 1 602 1 340
Death and disability claims 701 556
Maturity claims 284 234
Annuities 97 84
Withdrawal benefits 90 70
Surrenders 395 362
Terminations and disinvestments 80 64
Re-insurance recoveries (45) (30)
Momentum Investments
Withdrawals 10 823 15 241
Metropolitan Health
Claims 46 37
Shareholder Capital
Claims 313 269
Total payments to contract holders 52 429 49 390
Reconciling items (2) (30 108) (29 063)
Net insurance benefits and claims per income statement 22 321 20 327
1. Included in Momentum Employee Benefits above is R2 023 million claims and R514 million re-insurance
recoveries relating to Guardrisk.
2. Relates mainly to payments to investment contract holders.
NUMBER OF EMPLOYEES Restated
30.06.2014 30.06.2013
Indoor staff 9 877 9 597
Momentum Retail 1 711 1 573
Metropolitan Retail 1 174 1 452
Momentum Employee Benefits (1) 1 650 1 361
Metropolitan International 1 037 852
Momentum Investments 667 693
Metropolitan Health (2) 2 553 2 638
Shareholder Capital
Balance Sheet Management 68 66
Group services 781 806
Short-term insurance 236 156
Field staff 6 815 6 798
Momentum Retail 1 041 993
Metropolitan Retail 4 424 4 369
Metropolitan International 1 350 1 436
Total 16 692 16 395
1. Momentum Employee Benefits in the current year includes 218 employees relating to Guardrisk.
2. Metropolitan Health in the current year includes 116 employees relating to Providence.
3. Employee numbers were restated to align with segmental disclosures.
MMI HOLDINGS GROUP FINANCIAL INSTRUMENTS
FINANCIAL ASSETS SUMMARISED BY MEASUREMENT CATEGORY 30.06.2014
Rm
Financial assets designated at fair value through income 349 387
Securities designated at fair value through income 334 996
Investments in associates designated at fair value through income 11 900
Derivative financial instruments 2 362
Available-for-sale 129
Financial assets carried at amortised cost 34 561
Held-to-maturity 100
Loans and receivables 5 586
Cash and cash equivalents 28 875
Total financial assets 383 948
The fair value of loans and receivables is R5 636 million and the carrying value of held-to-maturity
financial assets and cash and cash equivalents approximates fair value.
FINANCIAL LIABILITIES SUMMARISED BY MEASUREMENT CATEGORY 30.06.2014
Rm
Investment contracts with DPF 25 405
Financial liabilities designated at fair value through income 234 305
Investment contracts designated at fair value through income 201 651
Liabilities designated at fair value through income 30 801
Derivative financial instruments 1 853
Financial liabilities carried at amortised cost 10 011
Financial liabilities 1 463
Other payables 8 548
Total financial liabilities 269 721
The fair value of financial liabilities at amortised cost is R2 053 million and the carrying value
of other payables approximates fair value due to their short-term nature.
MMI HOLDINGS GROUP FINANCIAL INSTRUMENTS
The different valuation method levels have been defined as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
- Level 2: Input other than quoted prices included within level 1 that is observable for the asset
or liability, either directly (that is, prices) or indirectly (that is, derived from prices)
- Level 3: Input for the asset or liability that is not based on observable market data (that is,
unobservable input)
FINANCIAL ASSETS
Level 1 Level 2 Level 3 Total
30.06.2014 Rm Rm Rm Rm
Securities designated at fair value
through income 221 835 106 619 6 542 334 996
Equity securities
Local listed 78 237 24 - 78 261
Foreign listed 20 878 792 2 21 672
Unlisted - 129 728 857
Debt securities
Stock and loans to government and
other public bodies
Local listed (1) 23 466 7 048 - 30 514
Foreign listed 424 1 258 24 1 706
Unlisted 6 3 156 70 3 232
Other debt instruments
Local listed 20 23 590 74 23 684
Foreign listed 47 440 4 491
Unlisted 5 21 420 2 799 24 224
Funds on deposit and other money
market instruments - 29 878 - 29 878
Unit-linked investments
Collective investment schemes
Local unlisted or listed quoted 70 588 136 - 70 724
Foreign unlisted or listed quoted 25 583 358 1 25 942
Foreign unlisted unquoted - 550 675 1 225
Other unit-linked investments
Local unlisted or listed quoted 2 565 6 374 2 8 941
Local unlisted unquoted - 10 174 2 159 12 333
Foreign unlisted unquoted - 1 292 4 1 296
Foreign unlisted or listed quoted 16 - - 16
Investments in associates designated
at fair value through income 11 900 - - 11 900
Derivative financial instruments 71 2 291 - 2 362
Held for trading 71 2 276 - 2 347
Held for hedging purposes - 15 - 15
Available-for-sale 121 4 4 129
Equity securities
Local listed 3 - - 3
Foreign listed 87 - - 87
Unlisted - - 4 4
Debt securities foreign listed 31 - - 31
Local unlisted/listed quoted
unit-linked investments - 4 - 4
233 927 108 914 6 546 349 387
1. R626 million of listed government stock was transferred from level 2 to level 1 assets during the year in line
with classification policy. The timing of the transfers are deemed to have occurred at the beginning of the year.
There were no significant transfers between level 1 and level 2 assets in the previous year.
FINANCIAL LIABILITIES
Level 1 Level 2 Level 3 Total
30.06.2014 Rm Rm Rm Rm
Investment contracts
Designated at fair value
through income 1 658 199 840 153 201 651
Financial liabilities designated at fair
value through income 21 747 8 956 98 30 801
Collective investment scheme liabilities 21 747 526 40 22 313
Subordinated call notes - 2 573 - 2 573
Carry positions - 4 851 - 4 851
Preference shares - 1 001 - 1 001
Other borrowings - 5 58 63
Derivative financial instruments
Held for trading 176 1 677 - 1 853
23 581 210 473 251 234 305
Financial assets
RECONCILIATION OF THE FAIR
VALUE OF LEVEL 3 FINANCIAL
ASSETS Designated at fair value through income
Equity Debt Unit-linked Other
securities securities investments investments(1) Total
30.06.2014 Rm Rm Rm Rm Rm
Opening balance 820 4 846 2 571 439 8 676
Transfer from/(to) other
asset classes - - 41 (41) -
Total realised gains/(losses)
in net realised and fair value
gains in the income statement 2 (5) (51) - (54)
Total unrealised gains in net
realised and fair value gains
in the income statement 177 552 259 - 988
Accrued interest in investment
income in the income statement - 62 14 - 76
Purchases 254 426 264 - 944
Sales (523) (377) (188) (394) (1 482)
Settlements - (1 667) (53) - (1 720)
Transfers into level 3 - 311 1 - 312
Transfers out of level 3 (2) - (1 177) (17) - (1 194)
Closing balance 730 2 971 2 841 4 6 546
1. Includes investments in associates' unit-linked investments as well as available-for-sale instruments.
2. The reason for the transfer out of level 3 in the current year is mainly as a result of obtaining access
to more observable data and refining the valuation technique. The timing of the transfers are deemed to have
occurred at the beginning of the year.
Sensitivity of level 3 financial instrument assets measured at fair value to changes in key assumptions:
Financial assets
Designated at fair value through income
Equity Debt Unit-linked Other
securities securities investments investments(1) Total
30.06.2014 Rm Rm Rm Rm Rm
Carrying value 730 2 971 2 841 4 6 546
10% increase/ 10% increase/ 10% increase/
Assumption change (decrease) in (decrease) in (decrease) in
markets interest rates unit price Not sensitive
Effect of increase
in assumption 73 (130) 284 N/A
Effect of decrease
in assumption (73) 123 (284) N/A
1. Includes investments in associates' unit-linked investments as well as available-for-sale instruments.
RECONCILIATION OF THE FAIR VALUE OF LEVEL 3 Investment Financial liabilities
FINANCIAL LIABILITIES contracts designated at fair value
designated through income
at fair Collective
value investment
through scheme Other
income liabilities borrowings Total
30.06.2014 Rm Rm Rm Rm
Opening balance 663 - - 663
Business combinations - - 4 4
Total realised losses in net
realised and fair value gains in the
income statement 5 - - 5
Total unrealised losses in net realised
and fair value gains in the income statement 1 7 (3) 5
Issues - 33 57 90
Settlements (498) - - (498)
Contract holder movements
Benefits paid (28) - - (28)
Investment return 10 - - 10
Closing balance 153 40 58 251
Sensitivity: Increasing/decreasing the investment return by 10% would decrease/increase the carrying value of level 3
financial instrument liabilities by R30 million and R30 million, respectively.
VALUATION TECHNIQUES USED IN DETERMINING THE FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Group's valuation processes
The group's in-house valuation experts perform the valuations of financial assets required for financial reporting
purposes. Discussions of valuation processes and results are held at least bi-annually, in line with the group's
bi-annual reporting dates.
Instrument Valuation basis Main assumptions
Equities and similar
securities
- Listed, local and foreign External valuations/quoted prices Management applies judgement if
(level 2) an adjustment of quoted prices
is required due to an inactive
market.
- Unlisted External valuations/price-earnings Management applies judgement if
ratios (level 3) an adjustment of the relevant
price-earnings ratio is required.
Stock and loans to other
public bodies
- Listed, local Yield of benchmark (listed government) Market input
bond (level 2)
- Listed, foreign Discounted cash flow (DCF), benchmarked Market input
against similar instrument with the same
issuer (level 2)
- Unlisted DCF, real interest rates or six-month Market input and appropriate spread
JIBAR plus fixedspread (level 2)
DCF, risk-free yield curve plus fixed
spread (level 3) Market input and appropriate spread
Other debt securities
- Listed, local DCF (BESA and ASSA bond perfect fit zero Market input, uplifted with inflation
curve and other published real or nominal
yields, uplifted with inflation), external
valuations (linked notes), or published price
quotations on JSE equity (preference shares)
and interest rate market (level 2)
- Listed, foreign External valuations that are based on Market input
published market input (level 2)
- Unlisted DCF (market-related nominal and real discount Market input, appropriate spread
rates, zero coupon bond curve plus issuer for level 3 assets, rates ranged
spread, non-observable nominal rates, bank between 5.8% and 14.0% (2013: 5.2%
and credit default swap curves, government and 11.0%)
bond yield curve plus a spread), external
valuations, or NAV of a hedge fund
(debenture) (level 2 and 3)
Funds on deposit and other
money market instruments
- Listed DCF (market-related yields), issue price Market input (based on quotes
issue price, or external valuations received from market participants
(level 2) and valuation agents)
- Unlisted Deposit rates, or DCF (market-related yields)
(level 2)
Unit-linked investments External valuations (level 2 and 3) Net asset value (assets and
liabilities are carried at fair
value)
Derivative assets and Black-Scholes model/net present value of Market input, credit spreads,
liabilities estimated floating costs less the performance contract inputs
of the underlying index over the contract
term/DCF (using fixed contract rates and
market-related variable rates adjusted for
credit risk, credit default swap premiums,
offset between strike price and market
projected forward value, yield curve of
similarmarket-traded instruments) (level 2)
Subordinated call notes Price quotations on JSE interest rate market Market input
(Liability) (based on yield of benchmark bond) (level 2)
Carry positions (Liability) DCF (in accordance with JSE interest rate Market input, contract input
market repo pricing methodology) (level 2)
Preference shares (Liability) Preference shares issued on 26 June 2014, Transaction price approximates
therefore valued at transaction price fair value
(level 2)
There were no significant changes in the valuation methods applied since 30 June 2013.
MMI HOLDINGS GROUP STATEMENT OF ASSETS AND LIABILITIES
Restated
STATEMENT OF ASSETS AND LIABILITIES ON REPORTING BASIS 30.06.2014 30.06.2013
Rm Rm
Total assets 414 306 360 368
Actuarial value of policy liabilities (338 599) (281 686)
Other liabilities (50 493) (54 818)
Non-controlling interests (480) (391)
Group excess per reporting basis 24 734 23 473
Net assets other businesses (2 999) (1 547)
Fair value adjustments on Metropolitan
business acquisition and other consolidation
adjustments (4 343) (5 001)
Excess long-term insurance business,
net of non-controlling interests(1) 17 392 16 925
RECONCILIATION OF CHANGE IN LONG-TERM INSURANCE EXCESS
TO THE INCOME STATEMENT
Change in excess of long-term insurance business (1) 467 143
Increase in share capital (27) (29)
Change in other reserves (2) (271) (62)
Dividend paid ordinary shares 3 282 3 140
Change in non-controlling interests 9 -
Other (21) (22)
Total surplus arising, net of non-controlling interests 3 439 3 170
Operating profit 2 677 2 530
Investment income on excess 748 683
Net realised and fair value gains on excess 301 221
Investment variances 170 117
Basis and other changes (457) (381)
Net consolidation adjustments 20 (43)
Earnings after non-controlling interests of
long-term insurance business 3 459 3 127
Earnings after non-controlling interests of
other group businesses and consolidation
adjustments 184 (94)
Amortisation of intangibles relating to the merger (446) (446)
Earnings attributable to owners of the parent
as per income statement 3 197 2 587
1. The long-term insurance business includes both insurance and investment contract business and is the simple
aggregate of all the life insurance companies in the group, including life insurance companies in Africa. It
is after non-controlling interests but excludes certain items that are eliminated on consolidation. It
also excludes non-insurance business.
2. Includes a one-off enhancement of benefits relating to the outsourcing of the Metropolitan Staff Pension
Fund liabilities (R107 million), that is not included in the surplus arising from long-term insurance business.
3. The June 2013 restatement was to align to the restated statement of financial position.
Restated
RECONCILIATION OF REPORTING EXCESS TO STATUTORY EXCESS 30.06.2014 30.06.2013
Rm Rm
Reporting excess long-term insurance business (1) 17 392 16 925
Disregarded assets (2) (966) (977)
Difference between statutory and published valuation methods (571) (551)
Write down of subsidiaries, associates for statutory purposes (1 387) (936)
Unsecured subordinated debt 3 075 1 553
Consolidation adjustments (23) (119)
Statutory excess long-term insurance business 17 520 15 895
Capital adequacy requirement (CAR) (Rm) (3) 6 221 6 167
Ratio of long-term insurance business excess to CAR (times) 2.8 2.6
Discretionary margins (4) 14 161 12 508
1. The long-term insurance business includes both insurance and investment contract business and
is the simple aggregate of all the life insurance companies in the group, including life insurance
companies in Africa. It is after non-controlling interests but excludes certain items which are
eliminated on consolidation. It also excludes non-insurance business.
2. Disregarded assets are those as defined in the South African Long-term Insurance Act, 52 of 1998, and are
only applicable to South African long-term insurance companies. Adjustments are also made for the
international insurance companies from reporting excess to statutory excess as required by their
regulators. It includes Sage intangible assets of R546 million (30.06.2013: R562 million).
3. Aggregation of separate company's capital adequacy requirements (CARs), with no assumption of
diversification benefits.
4. Discretionary margins are shown gross of tax. The prior year number has been restated.
MMI HOLDINGS GROUP EMBEDDED VALUE INFORMATION
EMBEDDED VALUE RESULTS AS AT 30.06.2014 30.06.2013
Rm Rm
Covered business
Reporting excess long-term insurance business 17 392 16 925
Reclassification to non-covered business (1 459) (1 482)
15 933 15 443
Disregarded assets (1) (682) (693)
Difference between statutory and published valuation methods (571) (551)
Dilutory effect of subsidiaries (2) (34) (26)
Consolidation adjustments (3) (77) (36)
Value of MMI Group Ltd preference shares issued (500) (500)
Diluted adjusted net worth covered business 14 069 13 637
Net value of in-force business (4) 20 324 17 870
Diluted embedded value covered business 34 393 31 507
Non-covered business
Net assets non-covered business within life insurance companies 1 459 1 482
Net assets non-covered business outside life insurance companies 2 999 1 547
Consolidation adjustments and transfers (to)/from covered business (3) (2 291) (1 011)
Adjustments for dilution (5) 720 698
Diluted adjusted net worth non-covered business 2 887 2 716
Write-up to directors' value 2 395 925
Non-covered business (6) 4 188 2 543
Holding company expenses (7) (1 383) (1 208)
International holding company expenses (7) (410) (410)
Diluted embedded value non-covered business 5 282 3 641
Diluted adjusted net worth 16 956 16 353
Net value of in-force business 20 324 17 870
Write-up to directors' value 2 395 925
Diluted embedded value 39 675 35 148
Required capital covered business (adjusted for qualifying
debt and preference shares) (8) 7 039 8 620
Surplus capital covered business 7 030 5 017
Diluted embedded value per share (cents) 2 474 2 191
Diluted adjusted net worth per share (cents) 1 057 1 020
Diluted number of shares in issue (million) (9) 1 604 1 604
1. Disregarded assets include Sage intangible assets of R546 million (30.06.2013: R562 million), goodwill
and various other items.
2. For accounting purposes, Metropolitan Health has been consolidated at 100%, while MMI Holdings Namibia
and Metropolitan Kenya have been consolidated at 96% in the statement of financial position, for the current
year. For embedded value purposes, disclosed on a diluted basis, the non-controlling interests and related
funding have been reinstated.
3. Consolidation adjustments include mainly goodwill and intangibles in subsidiaries that are eliminated.
4. The FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net
value of in-force amounted to R91 million at 30 June 2013.
5. Adjustments for dilution are made up as follows:
- Dilutory effect of subsidiaries (note 2): R102 million (30.06.2013: R119 million)
- Treasury shares held on behalf of contract holders: R305 million (30.06.2013: R266 million)
- Liability MMI Holdings Ltd convertible preference shares issued to KTH: R313 million
(30.06.2013: R313 million)
6. Guardrisk is included as part of non-covered business at 30 June 2014.
7. The holding company expenses reflect the present value of projected recurring head office expenses.
The international holding company expenses reflect the allowance for support services to the international
life assurance and health businesses.
8. The required capital for covered business amounts to R10 114 million (30.06.2013: R10 182 million) and is
adjusted for qualifying debt of R3 075 million (30.06.2013: R1 562 million).
9. The diluted number of shares in issue takes into account all issued shares, assuming conversion of the
convertible redeemable preference shares, and includes the treasury shares held on behalf of contract holders.
ANALYSIS OF NET VALUE OF IN-FORCE BUSINESS
PER DIVISION 30.06.2014 30.06.2013
Rm Rm
Momentum Retail 9 674 8 967
Gross value of in-force business 11 212 10 490
Less cost of required capital (1 538) (1 523)
Metropolitan Retail (1) 3 738 3 555
Gross value of in-force business 4 445 4 312
Less cost of required capital (707) (757)
Momentum Employee Benefits 4 242 3 106
Gross value of in-force business 4 892 3 776
Less cost of required capital (650) (670)
Metropolitan International 1 832 1 659
Gross value of in-force business 2 006 1 772
Less cost of required capital (174) (113)
Shareholder Capital 838 583
Gross value of in-force business (2) 838 583
Less cost of required capital - -
Net value of in-force business 20 324 17 870
Notes
1. The FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net value
of in-force amounted to R91 million at 30 June 2013.
2. The value of in-force in the Shareholder Capital represents discretionary margins managed centrally by
Balance Sheet Management.
Adjusted Net value of
EMBEDDED VALUE PER DIVISION net worth in-force 30.06.2014 30.06.2013
Rm Rm Rm Rm
Covered business
MMI Group Ltd (1) 12 503 18 491 30 994 28 652
Metropolitan Odyssey Ltd 59 - 59 49
Metropolitan International 1 507 1 833 3 340 2 806
MMI Holdings Namibia Ltd 551 1 242 1 793 1 523
Metropolitan Life of Botswana Ltd 202 139 341 266
Metropolitan Lesotho Ltd 349 434 783 655
Other international businesses 405 18 423 362
Total covered business 14 069 20 324 34 393 31 507
Write-up to
Adjusted directors'
net worth value 30.06.2014 30.06.2013
Rm Rm Rm Rm
Non-covered business
Momentum Investments (2) 839 1 089 1 928 1 746
Health businesses (3) 329 1 432 1 761 1 662
Momentum Retail (Wealth) (4) 355 300 655 379
Guardrisk business (5) 431 1 176 1 607 -
Momentum Short-term Insurance (MSTI) 150 169 319 300
Metropolitan International Holdings (6) 2 (388) (386) (285)
MMI Holdings (after consolidation
adjustments) (6) 781 (1 383) (602) (161)
Total non-covered business 2 887 2 395 5 282 3 641
Total embedded value 16 956 22 719 39 675 35 148
Diluted adjusted net worth non-covered
business (2 887)
Adjustments to covered business
adjusted net worth 3 323
Reporting excess long-term insurance
business 17 392
1. The FNB Life value of in-force is excluded from the embedded value from 1 July 2013. The FNB Life net value
of in-force amounted to R91 million at 30 June 2013.
2. Momentum Investments subsidiaries are valued using forward price-earnings multiples applied to the relevant
sustainable earnings bases.
3. All Health businesses have been valued using embedded value methodology.
4. Momentum Retail (Wealth) has been valued using embedded value methodology.
5. Guardrisk has been valued using embedded value methodology.
6. The holding company expenses reflect the present value of projected recurring head office expenses. The
international holding company expenses reflect the allowance for support services to the international life
assurance and health businesses.
ANALYSIS OF CHANGES IN GROUP EMBEDDED VALUE
12 mths to 12 mths to
Covered business 30.06.2014 30.06.2013
Notes Adjusted Gross
net worth value of in- Cost of
(ANW) force (VIF) CAR Total EV Total EV
Rm Rm Rm Rm Rm
Profit from new business (1 273) 2 316 (168) 875 799
Embedded value from new business A (1 273) 2 221 (169) 779 711
Expected return to end of period B - 95 1 96 88
Profit from existing business 3 690 (715) 253 3 228 3 336
Expected return unwinding of RDR B - 2 078 (292) 1 786 1 487
Release from the cost of required capital C - - 407 407 417
Expected (or actual) net of tax profit
transfer to net worth D 3 523 (3 523) - - -
Operating experience variances E 396 139 9 544 912
Operating assumption changes F (229) 591 129 491 520
Embedded value profit from operations 2 417 1 601 85 4 103 4 135
Investment return on adjusted net worth G 1 063 - - 1 063 919
Investment variances H 213 1 130 (65) 1 278 1 011
Economic assumption changes I (15) (279) (27) (321) (221)
Acquisition of covered business - - - - 89
Exchange rate movements (7) 4 1 (2) 39
Embedded value profit covered
business 3 671 2 456 (6) 6 121 5 972
Transfer of business (to)/from non-covered J
business (10) 4 - (6) 267
Changes in share capital 42 - - 42 37
Dividend paid (3 271) - - (3 271) (3 140)
Change in reserves - - - - (22)
Change in embedded value covered
business 432 2 460 (6) 2 886 3 114
Non-covered business
Change in directors' valuation and other
items 718 131
Holding company expenses (175) (455)
Embedded value profit non-covered
business 543 (324)
Changes in share capital (42) (37)
Dividend paid 1 179 236
Finance costs preference shares (45) (46)
Transfer of business from/(to) covered J
business 6 (267)
Change in embedded value non-
covered business 1 641 (438)
Total change in group embedded value 4 527 2 676
Total embedded value profit 6 664 5 648
Return on embedded value (%) - internal
rate of return 19.0% 17.4%
A. VALUE OF NEW BUSINESS
Metropoli- Metropoli- Compara-
tan tan tive
VALUE OF NEW BUSINESS Metropoli- Momentum Inter- Retail Segmental
Momentum tan Retail Employee natio- (excl. FNB total (excl.
Retail (1) Benefits nal Total Life)(1) FNB Life)
Rm Rm Rm Rm Rm Rm Rm
12 mths to 30.06.2014
Value of new business 240 236 254 49 779
Gross 312 276 299 61 948
Less cost of required
capital (72) (40) (45) (12) (169)
New business premiums 15 948 2 584 6 384 541 25 457
Recurring premiums 1 022 1 083 1 033 327 3 465
Single premiums 14 926 1 501 5 351 214 21 992
New business premiums (APE) 2 515 1 233 1 568 348 5 664
New business premiums (PVP) 20 434 5 372 14 491 1 866 42 163
Profitability of new
business as a percentage
of APE 9.5 19.1 16.2 14.1 13.8
Profitability of new
business as a percentage
of PVP 1.2 4.4 1.8 2.6 1.8
12 mths to 30.06.2013
Value of new business 203 239 213 56 711 209 681
Gross 268 268 275 63 874 238 844
Less cost of required
capital (65) (29) (62) (7) (163) (29) (163)
New business premiums 12 433 2 305 5 836 473 21 047 2 220 20 962
Recurring premiums 1 057 1 075 769 298 3 199 990 3 114
Single premiums 11 376 1 230 5 067 175 17 848 1 230 17 848
New business premiums (APE) 2 195 1 198 1 276 316 4 985 1 113 4 900
New business premiums (PVP) 17 421 5 126 11 627 1 635 35 809 5 042 35 725
Profitability of new business
as a percentage of APE 9.2 19.9 16.7 17.7 14.3 18.8 13.9
Profitability of new business
as a percentage of PVP 1.2 4.7 1.8 3.4 2.0 4.2 1.9
1. The FNB Life business was excluded in the Metropolitan Retail VNB at 30 June 2014 and included in the Metropolitan
Retail VNB at 30 June 2013. Comparative figures, excluding FNB Life, have been provided.
2. Value of new business and new business premiums are net of non-controlling interests.
3. The value of new business has been calculated on closing assumptions. Investment yields at the point of sale
have been used for fixed annuity and guaranteed endowment business, for other business the investment yields at
the end of the year have been used.
ANALYSIS OF NEW BUSINESS
PREMIUMS
Metropoli- Metropoli- Compara-
tan tan tive
Metropoli- Momentum Inter- Retail Segmental
Momentum tan Retail Employee natio- (excl. FNB total (excl.
Retail (1) Benefits nal Total Life)(1) FNB Life)
Rm Rm Rm Rm Rm Rm Rm
12 mths to 30.06.2014
New business premiums 15 948 2 584 6 384 541 25 457
Recurring premiums 1 022 1 083 1 033 327 3 465
Risk 501 713 408 - 1 622
Savings/Investments 521 370 625 - 1 516
International - - - 327 327
Single premiums 14 926 1 501 5 351 214 21 992
Savings/Investments 14 130 625 4 198 - 18 953
Annuities 796 876 1 153 - 2 825
International - - - 214 214
New business premiums (APE) 2 515 1 233 1 568 348 5 664
Risk 501 713 408 - 1 622
Savings/Investments 1 934 432 1 045 - 3 411
Annuities 80 88 115 - 283
International - - - 348 348
ANALYSIS OF NEW BUSINESS
PREMIUMS
Metropoli- Metropoli- Compara-
tan tan tive
Metropoli- Momentum Inter- Retail Segmental
Momentum tan Retail Employee natio- (excl. FNB total (excl.
Retail (1) Benefits nal Total Life)(1) FNB Life)
Rm Rm Rm Rm Rm Rm Rm
12 mths to 30.06.2013
New business premiums 12 433 2 305 5 836 473 21 047 2 220 20 962
Recurring premiums 1 057 1 075 769 298 3 199 990 3 114
Risk 508 748 369 - 1 625 663 1 540
Savings/Investments 549 327 400 - 1 276 327 1 276
International - - - 298 298 - 298
Single premiums 11 376 1 230 5 067 175 17 848 1 230 17 848
Savings/Investments 10 921 589 2 267 - 13 777 589 13 777
Annuities 455 641 2 800 - 3 896 641 3 896
International - - - 175 175 - 175
New business premiums (APE) 2 195 1 198 1 276 316 4 985 1 113 4 900
Risk 508 748 369 - 1 625 663 1 540
Savings/Investments 1 641 386 627 - 2 654 386 2 654
Annuities 46 64 280 - 390 64 390
International - - - 316 316 - 316
1. The FNB Life business was excluded in the Metropolitan Retail VNB at 30 June 2014 and included in the Metropolitan
Retail VNB at 30 June 2013. Comparative figures, excluding FNB Life, have been provided.
Restated
RECONCILIATION OF LUMP SUM INFLOWS 12 mths to 12 mths to
30.06.2014 30.06.2013
Rm Rm
Total lump sum inflows 29 790 34 402
Inflows not included in value of new business (8 246) (17 219)
Momentum Retail (200) (181)
Momentum Employee Benefits (1 715) (170)
Metropolitan International (46) (37)
Momentum Investments (6 262) (16 819)
Balance Sheet Management (23) (12)
Term extensions on maturing policies 465 610
Non-controlling interests and other adjustments (17) 55
Single premiums included in value of new business 21 992 17 848
1. June 2013 has been restated to reconcile from on-balance sheet single lump sum inflows instead of total lump
sum inflows.
B. EXPECTED RETURN
The expected return is determined by applying the risk discount rate applicable at the beginning of the
reporting year to the present value of in-force covered business at the beginning of the reporting year and
adding the expected return on new business, which is determined by applying the current risk discount rate to
the value of new business from the point of sale to the end of the year.
C. RELEASE FROM THE COST OF REQUIRED CAPITAL
The release from the cost of required capital represents the difference between the risk discount rate and the
expected after tax investment return on the assets backing the required capital over the year.
D. EXPECTED (OR ACTUAL) NET OF TAX PROFIT TRANSFER TO NET WORTH
The expected profit transfer for covered business from the present value of in-force to the adjusted net worth
is calculated on the statutory valuation method.
E. OPERATING EXPERIENCE VARIANCES
12 mths to
12 mths to 30.06.2014 30.06.2013
OPERATING EXPERIENCE VARIANCES Notes ANW Net VIF EV EV
Rm Rm Rm Rm
Momentum Retail 93 77 170 128
Mortality and morbidity 1 223 12 235 259
Terminations, premium cessations
and policy alterations 2 (86) 91 5 17
Expense variance 43 - 43 -
Other 3 (87) (26) (113) (148)
Metropolitan Retail 57 (18) 39 62
Mortality and morbidity 1 105 3 108 97
Terminations, premium cessations
and policy alterations 4 (37) (23) (60) (97)
Expense variance 45 - 45 59
FNB Life share of profits 30 - 30 -
Other 5 (86) 2 (84) 3
Momentum Employee Benefits 111 107 218 306
Mortality and morbidity 1 59 1 60 17
Terminations 6 23 115 138 233
Expense variance 21 - 21 9
Other 8 (9) (1) 47
Metropolitan International 73 29 102 152
Mortality and morbidity 1 78 8 86 81
Terminations, premium cessations
and policy alterations 12 5 17 65
Expense variance (8) 14 6 16
Other (9) 2 (7) (10)
Shareholder Capital 7 62 24 86 242
Opportunity cost of
required capital - (71) (71) 22
Total operating experience
variances 396 148 544 912
Notes
1. Overall, mortality and morbidity experience for the 12 months were better compared to what was allowed for
in the valuation basis.
2. Mainly due to good persistency on risk business and closed books where the impact of increased revenues in
the value of in-force offset lower termination profits.
3. Various items including fee reductions on Wealth business, costs related to strategic initiatives and under-
recovery of intergroup distribution costs.
4. Mainly due to negative experience on selected products with cashback features.
5. Mainly expenses relating to the Ukukhula business process enhancement project.
6. Favourable persistency impacted fee income positively.
7. The income recorded in respect of Shareholder Capital relates mostly to earnings from holding company
activities and the management of MMI's capital and shareholder balance sheet risks. Other sources of
earnings such as variations in actual tax payments and corporate expenses not allocated to underlying
business units are also included here.
F. OPERATING ASSUMPTION CHANGES
12 mths to
12 mths to 30.06.2014 30.06.2013
OPERATING ASSUMPTION CHANGES Notes ANW Net VIF EV EV
Rm Rm Rm Rm
Momentum Retail (212) 224 12 78
Mortality and morbidity
assumptions (2) 82 80 66
Renewal expense assumptions 1 (19) (11) (30) 104
Termination assumptions 2 (33) (18) (51) 104
Modelling, methodology and
other changes 3 (158) 171 13 (196)
Metropolitan Retail 125 (254) (129) 149
Mortality and morbidity
assumptions 4 100 1 101 205
Renewal expense assumptions 5 113 (26) 87 90
Termination assumptions 4 (54) (31) (85) (178)
FNB Life 6 - (91) (91) -
Modelling, methodology and
other changes 3 (34) (107) (141) 32
Momentum Employee Benefits (170) 631 461 387
Assumed mortality and
morbidity profit margin 7 (76) 53 (23) (29)
Termination assumptions 8 - 144 144 201
Renewal expense assumptions 9 (35) 401 366 81
Modelling, methodology and
other changes 10 (59) 33 (26) 134
Metropolitan International (3) 18 15 (18)
Mortality and morbidity
assumptions (12) 5 (7) 4
Renewal expense assumptions - 17 17 24
Termination assumptions (4) 14 10 (21)
Modelling, methodology and
other changes 13 (18) (5) (25)
Shareholder Capital 31 (38) (7) 20
Methodology change: cost of
required capital 11 - 139 139 (96)
Total operating assumption changes (229) 720 491 520
Notes
1. Mainly allowance for the costs of strategic initiatives.
2. Mainly allowance for the impact of better persistency on risk business claims experience.
3. Various changes were made to models and methodology, including refinements to the calculation of tax relief
on expenses. Provision was also made for policyholder benefit reviews.
4. Offsetting mortality and termination assumption changes were made to mainly Grouped Individual lines of
business, in line with recent experience investigations.
5. Allowances for better expense experience, in line with business budgets.
6. Future profits no longer recognised in the value of in-force for FNB Life business.
7. Strengthening of longevity assumptions on annuity business (ANW), offset by improvements on risk business.
8. Allowance made for improved persistency experience on FundsAtWork and Corporate Investment business.
9. Allowances for better expense experience, in line with business budgets, including allowance for clients
moving to lower fee options on certain investment business.
10. Various changes to models and methodology.
11. Refinements to the modelling of the cost of required capital, including better allowance for diversification
benefits.
G. INVESTMENT RETURN ON ADJUSTED NET WORTH
12 mths to 12 mths to
INVESTMENT RETURN ON ADJUSTED NET WORTH 30.06.2014 30.06.2013
Rm Rm
Investment income 722 681
Capital appreciation 368 267
Preference share dividends paid and change in
fair value of preference shares (27) (29)
Investment return on adjusted net worth 1 063 919
H. INVESTMENT VARIANCES
Investment variances represent the impact of higher/lower than assumed investment returns on current and
expected future after tax profits from in-force business.
I. ECONOMIC ASSUMPTION CHANGES
The economic assumption changes include the effect of the change in assumed rate of investment return,
expense inflation rate and risk discount rate in respect of local and offshore business.
J. TRANSFER OF BUSINESS (TO)/FROM NON-COVERED BUSINESS
This transfer represents the alignment of net assets and value of in-force of mainly international subsidiaries
between covered and non-covered business.
Adjusted In-force business New business written
COVERED BUSINESS: SENSITIVITIES net
30.06.2014 worth Net Gross Cost of Net Gross Cost of
value value CAR (3) value value CAR (3)
Rm Rm Rm Rm Rm Rm Rm
Base value 14 069 20 324 23 393 (3 069) 779 948 (169)
1% increase in risk discount rate 18 640 22 094 (3 454) 650 836 (186)
% change (8) (6) 13 (17) (12) 10
1% reduction in risk discount rate 22 220 24 857 (2 637) 925 1 074 (149)
% change 9 6 (14) 19 13 (12)
10% decrease in future expenses 21 456 24 516 (3 060) 875 1 044 (169)
% change (1) 6 5 - 12 10 -
10% decrease in lapse, paid-up and
surrender rates 21 105 24 189 (3 084) 937 1 115 (178)
% change 4 3 - 20 18 5
5% decrease in mortality and
morbidity for assurance 21 803 24 849 (3 046) 919 1 088 (169)
business
% change 7 6 (1) 18 15 -
5% decrease in mortality for
annuity business 20 007 23 101 (3 094) 771 941 (170)
% change (2) (1) 1 (1) (1) 1
1% reduction in gross investment
return, inflation rate and risk 14 039 20 885 23 930 (3 045) 863 1 032 (169)
discount rate
% change (2) - 3 2 (1) 11 9 -
1% reduction in inflation rate 21 034 24 103 (3 069) 849 1 018 (169)
% change 3 3 - 9 7 -
10% fall in market value of equities
and properties 13 858 18 854 21 975 (3 121)
% change (1) (7) (6) 2
10% reduction in premium indexation
take-up rate 20 069 23 099 (3 030) 748 918 (170)
% change (1) (1) (1) (4) (3) 1
10% decrease in non-commission
related acquisition expenses 880 1 049 (169)
% change 13 11 -
1% increase in equity/property risk
premium 20 876 23 905 (3 029) 806 976 (170)
% change 3 2 (1) 3 3 1
1. No corresponding changes in variable policy charges are assumed, although in practice it is likely that these will
be modified according to circumstances.
2. Bonus rates are assumed to change commensurately.
3. The change in the value of cost of required capital is disclosed as nil where the sensitivity test results in an
insignificant change in the value.
MMI HOLDINGS GROUP STOCK EXCHANGE PERFORMANCE
STOCK EXCHANGE PERFORMANCE 30.06.2014 30.06.2013
12 months
Value of listed shares traded (rand million) 15 362 16 060
Volume of listed shares traded (million) 637 733
Shares traded (% of average listed shares in issue) 41 47
Value of shares traded life insurance (J857 Rbn) 165 155
Value of shares traded top 40 index (J200 Rbn) 3 069 3 059
Trade prices
Highest (cents per share) 2 783 2 700
Lowest (cents per share) 2 039 1 792
Last sale of year (cents per share) 2 625 2 217
Annualised percentage (%) change during year 18 23
Annualised percentage (%) change life insurance sector (J857) 28 37
Annualised percentage (%) change top 40 index (J200) 31 18
30 June
Price/diluted core headline earnings (segmental) ratio 11.6 11.0
Dividend yield % (dividend on listed shares) 5.4 5.7
Dividend yield % top 40 index (J200) 2.6 2.9
Total shares issued (million)
Ordinary shares listed on JSE 1 570 1 570
Treasury shares held on behalf of contract holders (14) (14)
Basic number of shares in issue 1 556 1 556
Treasury shares held on behalf of contract holders 14 14
Convertible redeemable preference shares 34 34
Diluted number of shares in issue (1) 1 604 1 604
Market capitalisation at end (Rbn) (2) 42 36
Percentage (%) of life insurance sector 12 13
1. The diluted number of shares in issue takes into account all issued shares, assuming conversion of the convertible
redeemable preference shares, and includes the treasury shares held on behalf of contract holders.
2. The market capitalisation is calculated on the fully diluted number of shares in issue.
Appendix Restatement of prior year financial statements
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Reclassifi-
As Reclassifi- cation of
previously cation of cell Restated
reported CIS captives 30.06.2013
Rm Rm Rm Rm
ASSETS
Intangible assets 11 769 - - 11 769
Owner-occupied properties 1 488 - - 1 488
Property and equipment 348 - - 348
Investment properties 6 433 - - 6 433
Investment in associates 121 - - 121
Employee benefit assets 327 - - 327
Financial instrument assets 297 847 13 534 1 043 312 424
Reinsurance contracts 1 519 - (174) 1 345
Deferred income tax 124 - - 124
Properties under development 98 - - 98
Insurance and other receivables 2 857 - (29) 2 828
Current income tax assets 108 - - 108
Cash and cash equivalents 19 424 2 430 421 22 275
Non-current assets held for sale 680 - - 680
Total assets 343 143 15 964 1 261 360 368
EQUITY
Equity attributable to owners of the parent 23 473 - - 23 473
Non-controlling interests 391 - - 391
Total equity 23 864 - - 23 864
LIABILITIES
Insurance contract liabilities
Long-term insurance contracts 96 817 - 156 96 973
Financial instrument liabilities
Investment contracts 183 506 - 1 207 184 713
with discretionary participation features 24 937 - - 24 937
designated at fair value through income 158 569 - 1 207 159 776
Other financial instrument liabilities 22 152 15 812 - 37 964
Deferred income tax 3 917 - - 3 917
Employee benefit obligations 1 328 - - 1 328
Other payables 11 112 152 (102) 11 162
Provisions 180 - - 180
Current income tax liabilities 267 - - 267
Total liabilities 319 279 15 964 1 261 336 504
Total equity and liabilities 343 143 15 964 1 261 360 368
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited Reclassifi-
As Reclassifi- cation of Restated
previously cation of cell Interest 12 mths to
reported CIS captives rates swaps 30.06.2013
Rm Rm Rm Rm Rm
Net insurance premiums received 23 304 - - - 23 304
Fee income 6 234 (29) - - 6 205
Investment income 13 537 788 50 (1 329) 13 046
Net realised and fair value gains 29 152 1 322 74 311 30 859
Net income 72 227 2 081 124 (1 018) 73 414
Net insurance benefits and claims 20 327 - - - 20 327
Change in liabilities 9 677 - (372) - 9 305
Change in insurance contract liabilities 8 525 - (438) - 8 087
Change in investment contracts
with DPF liabilities 1 237 - 2 - 1 239
Change in reinsurance provision (85) - 64 - (21)
Fair value adjustments on investment contract
liabilities 22 614 - 101 - 22 715
Fair value adjustments on collective investment
scheme liabilities 882 1 900 - - 2 782
Depreciation, amortisation and impairment expenses 1 144 - - - 1 144
Employee benefit expenses 4 494 - - - 4 494
Sales remuneration 3 015 - 46 - 3 061
Other expenses 4 249 180 47 - 4 476
Expenses 66 402 2 080 (178) - 68 304
Results of operations 5 825 1 302 (1 018) 5 110
Share of profit of associates 12 - - - 12
Finance costs (1 684) (1) - 1 018 (667)
Profit before tax 4 153 - 302 - 4 455
Income tax expenses (1 502) - (302) - (1 804)
Earnings 2 651 - - - 2 651
Attributable to:
Owners of the parent 2 587 - - - 2 587
Non-controlling interests 32 - - - 32
MMI Group Ltd preference shares 32 - - - 32
2 651 - - - 2 651
Basic earnings per ordinary share (cents) 166.0 - - - 166.0
Diluted earnings per ordinary share (cents) 164.2 - - - 164.2
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Reclassifi-
As Reclassifi- cation of Restated
previously cation of cell 12 months to
reported CIS captives 30.06.2013
Rm Rm Rm Rm
Net cash inflow from operating activities 6 321 1 446 157 7 924
Net cash outflow from investing activities (753) - - (753)
Net cash outflow from financing activities (3 101) - (68) (3 169)
Net cash flow 2 467 1 446 89 4 002
Cash resources and funds on deposit at beginning 16 957 984 332 18 273
Cash resources and funds on deposit at end 19 424 2 430 421 22 275
Date: 10/09/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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