| Wed 27 Feb 2002, 0:00 | | Santam Limited - Summary Of Operating Results |
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2001
Santam Limited
Registration number 1918/001680/06
ISIN: ZAE000006854
Share code: SNT
SANTAM LIMITED AND ITS SUBSIDIARIES
SUMMARY OF OPERATING RESULTS FOR THE YEAR ENDED 31 DECEMBER 2001
AND DECLARATION OF DIVIDEND
HIGHLIGHTS
- Headline earnings up by 9%
- Comparable gross written premiums up by 24%
- Cash generated surges to R225 million
- Underwriting surplus maintained
INCOME STATEMENT Audited Audited
Year Year
Ended ended
December 2001 December 2000
R millions R millions
Gross written premiums 6205 4603
Underwriting surplus 97 101
Investment income 315 238
Interest received 185 152
Dividends received 130 86
Income from associates 2 3
Income before taxation 414 342
Taxation 92 84
Income after taxation 322 258
Minority interest 12 6
Attributable income / Headline earnings 310 252
Earnings per share (cents)
- Attributable earnings per share (cents) 282 258
- Headline earnings per share (cents) 282 258
Dividends per share (cents) 154 140
Dividend cover (times) 1.8 1.8
BALANCE SHEET Audited Audited
December December
2001 2000
ASSETS R millions R millions
Non-current asset
Fixed Assets 36 53
Investments 3600 3237
Listed at market value 2939 2780
Unlisted at directors' valuation 620 401
Investment in associated companies 41 56
Deferred taxation - 24
Technical Assets
Reinsurers' share in technical provisions 1718 1273
Current assets 2023 1926
Debtors 936 805
Cash and cash equivalents 1087 1121
Total assets 7377 6513
EQUITY AND LIABILITIES
Capital and Reserves 3230 2794
Minority shareholders' interest 29 19
Technical Provisions 3376 3066
Non-current liabilities
Deferred tax 116 153
Current liabilities 626 481
Amounts due to reinsurers 224 88
Creditors 402 393
Total equity and liabilities 7377 6513
Number of shares in issue 110.8 109.8
Weighted average number of shares
in issue (millions) 110.2 97.4
Net asset value per share (cents) 2914 2546
Solvency margin % 71 74
Note:
The financial statements have been prepared in terms of the new accounting
guidelines on disclosure for short-term insurers. Technical provisions
consist of gross outstanding claims and gross provision for unearned
premiums. The technical assets include the reinsurance portion thereof.
STATEMENT OF CHANGES IN EQUITY
Audited Audited
December December
2001 2000
R millions R millions
Balance as at beginning of period 2794 1828
Share Capital issued 24 1000
Share issue expenses (16)
Revaluation surplus and realised gains of
investments not recognized in income
statement 312 (29)
Deferred taxation on revaluation surplus
and realised gains of investments (50) (35)
Income attributable to shareholders 310 252
Dividends paid (160) (59)
Prior year adjustment (147)
Balance as at end of period 3230 2794
CASH FLOW STATEMENT
Audited Audited
Year Year
ended ended
December 2001 December 2000
Cash utilised in operations (90) (263)
Income before taxation 414 342
Decrease in unearned premiums (128) (62)
Depreciation charged 25 22
Change in working capital (79) (316)
Investment income (315) (238)
Other non-cash adjustments (7) (11)
Dividends and interest received 315 238
Cash generated by operating activities 225 (25)
Taxation paid (69) (53)
Dividends paid (162) (116)
Cash retained from operating activities (6) (194)
Cash generated from disposal of fixed assets (2) 11
Acquisition of subsidiaries - (1590)
Proceeds from ordinary shares issued 24 983
Increase in investments and liquid assets 15 (790)
Accounting policy
The accounting policy and procedures used by the group are consistent with
those of the previous financial year and financial statements were prepared
in accordance with General Accepted Accounting Practice.
Prior year adjustment
In line with short-term insurance industry practice, no provision had been
made in prior years for deferred taxation on the contingency reserve.
Following the withdrawal of Practice Note 10, in terms of which the
transfers to the contingency reserve were deductible for income tax
purposes, the financial statement have been amended by raising deferred tax
on the balance of the contingency reserve at 31 December 2000. Prior year
figures have been adjusted and comparative figures have been restated to
recognise the change. The change to the 2000 results is not significant,
decreasing attributable income and earnings per share by R 3 million and 3
cents per share respectively.
Commentary
In the year under review, Santam achieved good premium growth, mainly in the
commercial portfolio. This is reflected in the 35% increase in gross written
premiums to R 6,2 billion or 24% on a comparable basis, assuming Guardian
National was consolidated for the full year in 2000.
During the past year various factors put pressure on profit levels.
Unsatisfactory results were experienced in the corporate and crop insurance
markets, as well as certain segments of personal lines' portfolios.
Corrective measures are, however, already in place and an increased profit
contribution is anticipated in the next financial year.
Although the industry largely escaped natural catastrophes in the first half
of the year, various disasters late in 2001 left their mark on underwriting
results. The floods in Mpumalanga and hailstorms in Bloemfontein led to high
claim levels at the end of the year under review.
Despite these factors, the company achieved an underwriting surplus of R 97
million in 2001.
The underwriting result, together with the increase in investment income,
enabled the company to increase headline earnings per share by 9%. Net asset
value per share increased by 14.5% to 2914 cents due to the net result from
operations as well as the significant increase in the value of the
investment portfolio.
The group generated R 225 million in cash from its operating activities,
reinforcing the group's healthy financial position, and supporting the 10%
increase in the dividends.
Prospects
A balanced portfolio and well-aligned operational structures give Santam a
solid platform for future profitable growth.
The company will continue to apply strict and suitable underwriting measures
to keep risk at acceptable levels. Various actions that have been
implemented are expected to bring about an improvement in the claims account
during the next fiscal year. Simultaneously, steps taken to combat fraud and
corruption, in certain segments of the motor industry, will be sustained.
Corrective measures aimed at raising the profitability of problematical
segments delivered the anticipated results during the year under review and
are expected to yield further benefits. The focus on reducing management
costs will be intensified in the coming year.
Against this background and given a reasonably favourable business
environment, we would expect an improvement in underwriting results for
2002.
Dividend (Number 95)
Notice is hereby given that the board has declared a dividend of 95 cents
per share (2000: 86.5 cents). Shareholders are advised that the last day to
trade "CUM" the dividend will be Thursday 14 March 2002. The shares will
trade "EX" the dividend from the commencement of business on Friday 15 March
2002. The record date will be Friday 22 March 2002 and the payment date will
be Monday 25 March 2002. Certificated shareholders may not dematerialise or
rematerialise between Friday 8 March 2002 and Friday 22 March 2002 both days
inclusive.
Board of Directors
Dr. Leon Vermaak, chief executive of Sanlam Limited, was appointed as
director and chairman of the board of Santam Limited. He succeeds Mr.
Marinus Daling who passed away on 1 February 2002.
On behalf of the board
L VERMAAK J VAN ZYL
Chairman Chief Executive
26 February 2002
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
Transfer Secretaries: Mercantile Registrars Limited
11 Diagonal Street, Johannesburg 2001 Telephone (011) 370 5000
Corporate information
Non-executive Directors: EM Groeneweg, JG le Roux, WS MacFarlane, AR Martin,
JE Newbury, GE Rudman, JD Sinclair, DK Smith, P de V Rademeyer, JJ
Geldenhuys, L Vermaak (Chairman)
Executive Directors: J van Zyl (Chief Executive), JA Van Tonder, JW Wilken
Group Secretary: CV du Plessis
