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