| Wed 12 Sep 2007, 7:58 | | MET - Metropolitan Holdings Ltd - Unaudited group |
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MET
MET
MET - Metropolitan Holdings Ltd - Unaudited group results for the six months
ended 30 June 2007
METROPOLITAN HOLDINGS LTD
(Incorporated in the Republic of South Africa)
Registration number: 2000/031756/06
ISIN: ZAE000050456
JSE Share Code: MET
NSX Share Code: MTD
("Metropolitan")
METROPOLITAN HOLDINGS FINANCIAL SERVICES GROUP
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
ADDING SHAREHOLDER VALUE
* Net funds received from clients - R6.7 billion
* Value of new business - up 76%
* Diluted core headline earnings per share - up 35%
* Interim dividend per share - up 24%
* Total premium income - up 40%
* Total assets under management - R95 billion+
* Return on embedded value - 20%
REVIEW OF OPERATIONS AND PROSPECTS
Financial highlights
* Diluted core headline earnings per share increased by 35% (basic 32% up),
augmented by the reduction in the number of shares over the past few years.
* Headline earnings and earnings, boosted by the performance of the
investment markets, were 30% higher.
* All the businesses in the group increased their operating profit, with the
strongest growth coming from the newer businesses, highlighting once again
the benefits of our diversification strategy.
* The unbroken record of positive cashflow from clients continued, with an
unprecedented net inflow of R6.7 billion being recorded for the period
under review, more than 2.5 times up on the previous period.
* The total value of new business concluded during the six-month period
increased 76% from R84 million to R148 million.
* Investment income on shareholder assets was 16% higher, despite the special
dividend of 77 cents per share paid during April 2007.
* Over the six month period the embedded value per share rose 22%
(annualised) from 1 585 cents (after the special dividend) to 1 761 cents.
Operational overview
* Retail recurring premium income was 11% higher, corporate was 16% up and
international increased by 5%, highlighting the continued growth in all of
the life businesses.
* The value of retail new business grew by 29%, corporate 130%, international
29%, asset management 23% and health 190%.
* The retail new business margin increased from 1.5% to 1.6% (percentage of
present value of future premiums (PVP) basis).
* Corporate new business showed an impressive 267% increase.
* International recorded a strong new business margin of 3.5% (PVP).
* Asset management new business grew by 23%, mainly driven by collective
investments.
* New business from the health operations increased almost three times,
mostly as a result of the tremendous growth in membership of the Government
Employees Medical Scheme (GEMS).
* The agreement to establish a life insurance business in Nigeria was
finalised and the company has started operating, increasing our non South
African life companies to six.
* Once again positive operating experience variances emerged in the embedded
value, highlighting the continued successes achieved from ongoing
management actions.
* The economic capital model was further enhanced during the period and the
output proved to be consistent during the recent turbulent market.
Prospects
* Metropolitan continues to capitalise on its focused market positioning, in
line with its strategy to create prosperity for Africa`s people by
providing accessible, affordable and appropriate products.
* All businesses in the group are well prepared for the threats and
opportunities posed by ongoing changes in the highly regulated environments
in which they operate.
* Food and transport inflation remains the biggest challenge to our core
target market. Any increase in this factor will curtail new business
prospects.
* The retail business is currently reviewing its business model with a view
to curtailing future expense growth. This project is still in the planning
phase, and as a result no account has been taken in these results of any
future project costs or related expense savings.
* The board process of finding a successor for Peter Doyle has made good
progress, and an announcement will be made in due course.
* The group remains well capitalised and will continue to buy back shares up
to fair value.
* The board is satisfied that the business is sustainable, thanks to its
strong focus on client service, product innovation, business retention,
cost containment and capital management.
DIRECTORS` STATEMENT
The directors take pleasure in presenting the unaudited interim results of the
Metropolitan Holdings financial services group for the six months ended 30 June
2007.
These results have been prepared in accordance with International Accounting
Standard 34 (IAS34) - Interim financial reporting; guidelines issued by the
Actuarial Society of South Africa; and the disclosure requirements of the JSE
Limited (JSE).
The accounting policies of the group have been applied consistently to all the
periods presented. The preparation of financial statements in accordance with
IFRS requires the use of certain critical accounting estimates as well as the
exercise of managerial judgement in the application of the group`s accounting
policies. Such critical judgements and accounting estimates are disclosed in
detail in the annual financial statements for the year ended 31 December 2006
and, with the exception of the principal economic assumptions, have remained
unchanged since then.
Restatement of June 2006 results
The accounting treatment of certain items has been changed from that disclosed
in June 2006. In finalising the December 2006 annual financial statements, some
refinements were made to the application of IFRS, as disclosed in the 2006
annual report.
* The trustees of the group`s retirement and pension fund schemes have
submitted their surplus apportionment arrangements in terms of the Pension
Funds Second Amendment Act 39 of 2001. The Metropolitan Staff Pension Fund
submission was the only arrangement noted by the Financial Services Board.
Approval of the other arrangements is still outstanding. As a result of
this process, a net asset of R126 million in respect of pension funds and a
post-retirement medical benefit obligation of R59 million were recognised
in the 2006 group results.
* IFRIC 8 - Scope of IFRS 2 - Share-based payments - was early adopted by the
group on 1 January 2006 and retrospectively applied, decreasing total
assets by R130 million and equity by R96 million, increasing liabilities by
R18 million and decreasing earnings to equity holders of the group by R4
million.
* Management fees in Metropolitan Collective Investments Limited have been
accounted for against service fees charged. This reallocation has had no
impact on earnings.
* Deferred tax on owner-occupied properties was increased to the normal
income tax rate, increasing liabilities by R18 million and decreasing
equity by R18 million.
* Cash and cash equivalents have been reclassified between cash with a
maturity date of less than 90 days and greater than 90 days.
Standards and interpretations to published standards effective in 2007 and
relevant to the group
IFRS 7 - Financial instruments: Disclosure; and complementary amendment to IAS 1
- Presentation of financial statements - capital disclosure.
IFRS 7 introduces new disclosure relating to financial instruments while the
complementary amendment to IAS 1 introduces new disclosure relating to capital
management.
IFRIC 10 - Interim financial reporting and impairment
IFRIC 10 prohibits the reversal at a subsequent balance sheet date of the
impairment losses recognised in an interim period on goodwill and investments in
equity instruments and in financial assets carried at cost.
Standards not yet effective but early adopted by the group
IFRS 8 - Operating segments (effective from annual periods beginning on or after
1 January 2009)
IFRS 8 specifies how an entity should report information about its operating
segments in annual financial statements. The requirements of IFRS 8 are based
on the information about the components of the entity that management uses to
make operating decisions. The group has applied IFRS 8 from 1 January 2007.
Corporate activity during the year
Metropolitan Holdings Limited bought back a further 24 million ordinary shares,
cancelled 44 million listed ordinary shares and is holding 6 million as treasury
shares.
Related parties
There have been no significant changes to the nature of the related party
transactions as described in note 37 of the 2006 annual financial statements.
Corporate governance
The board has satisfied itself that appropriate principles of corporate
governance were applied throughout the period under review.
Directorate changes and directors` shareholding
Prof Wiseman Nkuhlu was appointed group chairman on 31 May 2007. No further
changes have been made to the directorate. All transactions in listed shares
involving directors were disclosed on SENS as required.
Capital commitments and contingent liabilities
The group had no material capital commitments or contingent liabilities at 30
June 2007. The group is party to legal proceedings in the normal course of
business, including one relating to the curatorship of Ovation as set out in the
2006 directors` report (page 84 of the annual report). Appropriate provisions
are made when losses are expected to materialise.
Post balance sheet events
No material post balance sheet events occurred between the balance sheet date
and the date of approval of the interim results.
DIVIDEND DECLARATION
Ordinary listed shares
The dividend policy for ordinary listed shares, approved by the directors and
consistent with prior years, is to provide shareholders with stable dividend
growth that reflects expected growth in underlying earnings in the medium term,
while allowing the dividend cover to fluctuate.
An interim dividend of 36.00 cents per ordinary share was declared on 11
September 2007. This dividend is payable to the holders of ordinary shares
recorded in the register of the company at the close of business on Friday, 5
October 2007 and will be paid on Monday, 8 October 2007. The last day to trade
"cum" dividend will be Friday, 28 September 2007. The shares will trade "ex"
dividend from the start of business on Monday, 1 October 2007. Share
certificates may not be dematerialised or rematerialised between Monday, 1
October 2007 and Friday, 5 October 2007, both days inclusive.
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 have
dematerialised their shares will have their accounts with their CSDP or broker
credited on Monday, 8 October 2007.
Preference shares (unlisted shares)
Dividends of R27.2 million (14.4%), R4.6 million (36.00 cents per share) and
R24.1 million (15.6%) were declared on 11 September 2007 on the A1, A2 and A3
Metropolitan preference shares respectively, payable on 30 September 2007. The
declaration rates were determined as set out in the company`s articles. These
amounts are included under finance costs in these results.
Signed on behalf of the board
Prof Wiseman Nkuhlu Group chairman
Peter Doyle Group chief executive
Cape Town
11 September 2007
Directors:
Prof Wiseman Nkuhlu (non-executive group chairman), Peter Doyle (group chief
executive), Phillip Matlakala (executive director), Abel Sithole (executive
director), Preston Speckmann (executive director), Fatima Jakoet, Peter
Lamprecht, Syd Muller, Bulelwa Ndamase, John Newbury, JJ Njeke, Andile Sangqu,
Marius Smith, Franklin Sonn, Johan van Reenen
Secretary: Bongiwe Gobodo-Mbomvu
Registration number: 2000/031756/06
Registered office: 7 Parc du Cap, Mispel Road, Bellville 7535
JSE code: MET
NSX code: MTD
ISIN NO: ZAE000050456
Date: 12/09/2007 07:58:01 Produced by the JSE SENS Department.
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