| Tue 20 Feb 2001, 0:00 | | Santam Limited - Summary Of Operating Results |
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SANTAM LIMITED AND ITS SUBSIDIARIES
SUMMARY OF OPERATING RESULTS FOR THE YEAR ENDED 31 DECEMBER 2000
AND DECLARATION OF DIVIDEND
INCOME STATEMENT
Audited Audited
Year Year
ended ended
December 2000 December 1999
R millions R millions
Gross written premium 4 603 2 784
Underwriting surplus 101 59
Investment income 238 215
Interest received 152 134
Dividends received 86 81
Income from associates 3 -
Income before taxation 342 274
Taxation 81 61
Income after taxation 261 213
Minority interests 6 -
Attributable income 255 213
Earnings per share (cents) 261 293
Dividends per share 140.0 126.5
Dividend cover 1.9 2.3
BALANCE SHEET
Audited Audited
December December
2000 1999
R millions R millions
ASSETS
Non-current assets
Fixed assets 53 42
Investments 3 237 3 492
Listed at market value 2 780 2 004
Unlisted at directors' valuation 401 378
Guardian at provisional directors' valuation - 1 108
Investment in associated companies 56 2
Deferred taxation 21
Current assets 1 926 795
Other debtors 805 242
Cash and cash equivalents 1 121 553
Total assets 5 237 4 329
EQUITY AND LIABILITIES
Capital and Reserves 2 943 1 828
Share capital 1 046 62
Non-distributable reserves 799 352
Distributable reserves 1 098 1 414
Minority shareholders interest 20 13
Current liabilities 2 274 2 488
Outstanding claims 1 067 536
Unearned premiums 726 74
Other creditors 481 1 878
Total equity and liabilities 5 237 4 329
Number of shares in issue 109.8 72.7
Weighted average number of shares 97.4 72.7
Net asset value per share (cents) 2 681 2 532
Solvency margin % 78 71
Solvency margin on a pro-forma combined group income for the full twelve months
will be 70.4%
STATEMENT OF CHANGES IN EQUITY
Audited
Year
ended
December 2000
R millions
Balance as at 1 January 2000 1 828
Shares issued 1 000
Share issue expenses (16)
Revaluation surplus (deficit) and realised gains not (30)
recognised in income statement
Deferred taxation on revaluation surplus of investments (35)
Retained income for the period 255
Dividends paid (59)
Capital and reserves at end of period 2 943
CASH FLOW STATEMENT
Audited Audited
Year Year
ended ended
December 2000 December 1999
Cash (utilised in) generated from operations (263) 139
Dividends and interest received 238 214
Cash (utilised in) generated by operating
activities (25) 353
Taxation paid (54) (126)
Dividends paid (116) (108)
Cash (utilised) retained from operating
activities (195) 119
Cash generated from disposal of fixed assets 11 (12)
Acquisition of subsidiaries (1 590) 11
Proceeds from ordinary shares issued 983 -
Increase (decrease) in investments and
liquid assets (791) 118
SALIENT FIGURES FOR THE PAST SEVEN YEARS
R'millions 2000 1999 1998 1997 1996 1995 1994
Gross premiums 4 603 2 784 2 847 2 511 2 187 1 824 1 551
Underwriting surplus 101 59 19 124 115 113 34
Investment income 238 215 220 191 155 126 108
Net income after taxation 255 213 200 237 201 183 114
Earnings per share (cents) 261 293 275 326 277 253 158
Dividends per share (cents) 140 126.5 115 100 82 70 58
Net asset value per share
(cents) 2 681 2 532 2 259 2 589 2 310 2 069 1 645
Solvency margin 78%* 71% 61% 80% 83% 90% 84%
*Solvency margin on a pro-forma combined group premium income for the full
twelve months will be 70.4%.
Accounting policy
The accounting policy and procedures used by the group are consistent with
those of the previous financial year.
Acquisition of Guardian National Insurance Company Ltd. ("Guardian")
The regulatory authorities approved that Santam acquire 100% of the
shareholding of Guardian in April 2000. Guardian therefore has been accounted
for as an investment up to 30 April 2000 and thereafter consolidated as a
subsidiary.
A new company structure is in place and operational. Integration of products
and systems is progressing according to a structured plan and costs are well
within budget.
Commentary
In an exceptionally challenging year, Santam performed strongly and succeeded
in turning an underwriting deficit of R13 million in the first six months into
a R101 million surplus, including non-recurring integration benefits of R37
million.
The turnaround in underwriting profitably has benefited from lower claims
experience, appropriate and stricter underwriting measures as well as high
service standards that enabled the company to convert the Guardian portfolio
into a profitable and growing business. The path for the turnaround was
cleared when the Guardian loss of R71 million in the first six months in 1999
was reduced to a R3 million loss for the comparable period in 2000.
The satisfying performance is in contrast with the nature-related catastrophes
that struck early in the period under review. Veld fires dogged the Western
Cape, while heavy rain and floods caused extensive damage in the northern parts
of the country and Namibia. This led to abnormally high claim levels and put
considerable pressure on earnings per share. Net weather related claims for
the group amounted to R55 million more than in 1999.
The group's gross written premium increased by a substantial 65% to R4.6
billion. Policyholders, national brokers and independent brokers endorsed the
Santam service offering and supported the combined group with their business.
Retention of business was significantly better than expected.
The launch of the new, integrated Santam and a redesigned corporate identity in
the second half of the year - along with an aggressive marketing campaign -
boosted awareness levels and strengthened the Santam brand.
Despite pressure of low interest rates, the company succeeded in notching up a
satisfactory investment income. At the same time, the solvency margin is sound
at 78%.
Earnings per share decreased by 11% from 293c in the preceding twelve-month
period to 261c. This was anticipated in the interim report issued to
shareholders in August 2000.
Prospects
The favourable result, supported by a balanced insurance portfolio, has created
a solid platform for growth. This is evidenced by the growing support for the
Santam brand and a strong inflow of new business.
Though some benefits of the Guardian acquisition started showing during the
year under review, management expects these benefits to be realised from 2001
onwards. This will enable Santam to maintain rates at affordable levels. The
company will continue applying appropriate and strict underwriting measures,
even tightening them where necessary, in order to keep the cost of insuring
risk at responsible levels. Management expects underwriting profit to improve
in a tight market. Santam plans to enhance service levels through improved
business processes, service standards and productivity. Various initiatives
and products are being developed to capitalise on technological progress in
adapting to rapidly evolving consumer patterns.
As a result of the foregoing, a satisfactory improvement in earnings per share
is expected in the forthcoming year.
Dividend
The board considers the current dividend policy of increasing the annual
dividend by at least 10% to remain appropriate. Accordingly, the board has
declared a final dividend of 86,5 cents per share. The dividend will be paid
to shareholders registered in the company's books at closing time on Friday, 6
April 2001. The dividend is payable on Friday, 20 April 2001 and will be
transferred electronically to shareholders' bank accounts on date. Cheques
dated 20 April 2001 will be posted on Friday, 13 April 2001 to shareholders who
choose to receive payment by cheque.
On behalf of the board
MH DALING Chairman
L VERMAAK Managing Director
20 February 2001
Head Office and Registered Address
Head Office:
1 Sportica Crescent,
Tyger Valley,
Bellville 7530
PO Box 3881,
Tyger Valley 7536
Telephone (021) 915 7000
Fax (021) 914 0700
http://www.santam.co.za
Registered number 1918/001680/06
Transfer Secretaries:
Mercantile Registrars Limited
11 Diagonal Street,
Johannesburg 2001
Telephone (011) 370 5000
Corporate information
Non-executive Directors: MH Daling (Chairman), EM Groeneweg, AW Jack, JG le
Roux, WS MacFarlane, AR Martin, JE Newbury, CJ Oosthuizen, GE Rudman, JD
Sinclair, DK Smith
Executive Directors: L Vermaak (Managing) JA Van Tonder
Group secretary: CV du Plessis
