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MUTUAL & FEDERAL INTERIM RESULTS
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
Unaudited financial results for the half-year ended 30 June 2002
INCOME STATEMENT 30/6/02 30/6/01 Change 31/12/01
R`m R`m % R`m
Technical account
Gross premiums 2,642 2,382 11 4,820
Net premiums 2,337 2,151 9 4,306
Earned premiums net 2,256 2,123 4,293
of reinsurance
Claims incurred net (1,650) (1,566) (3,153)
of reinsurance
Acquisition (359) (338) (663)
expenses
Management expenses (196) (191) (388)
Net underwriting 51 28 89
surplus
Investment return on 91 76 20 161
insurance funds
General insurance 142 104 37 250
result
Long-term investment 185 203 393
return on
shareholders` funds
Operating income 327 307 7 643
based on long-term
investment return
Non-technical
account
Short-term (210) 152 299
investment
fluctuations
Dividends, 112 163 341
interest and
property income
Realised (17) 385 553
(deficit)/surplus on
investments
Unrealised (29) (117) (41)
deficit on
investments
Allocated (276) (279) (554)
investment return
transferred to
technical account
Goodwill and (25) (5) (18)
retrenchment costs
Income before 92 454 924
taxation
Taxation (22) (28) (205)
Income after 70 426 719
taxation
Minority 3 7 26
shareholders/share
of associates
Net income 73 433 745
Headline earnings 279 296 (6) 520
Headline earnings 115 123 (7) 215
per share (cents)
(note 2)
Combined ratio (%) 97.7 98.7 97.9
(note 3)
Basic earnings per 30 182 308
share (cents)
(note 2)
Ordinary dividend 22 22 58
per share (cents)
Special dividend 350
per share (cents)
Net asset value per 1,308 1,630 1,318
share (cents)
Number of shares in
issue (million)
- at period end 242.9 241.5 242.2
- weighted average 242.5 241.3 241.6
Determination of
headline earnings
Net income 73 433 745
Goodwill and 25 5 18
retrenchment costs
Short-term 210 (152) (299)
investment
fluctuations
Taxation effect of (29) 10 56
short-term
investment
fluctuations
Headline earnings 279 296 520
BALANCE SHEET As at As at As at
30/6/02 30/6/01 31/12/01
R`m R`m R`m
Assets
Non-current assets 3,915 4,423 4,165
Fixed assets 154 142 157
Investments at 3,479 4,035 3,728
market value
Ordinary shares 3,055 3,024 3,100
Government stock 83 227 221
Other 341 784 407
Investment in 108 96 101
associated companies
Goodwill 174 138 179
Deferred taxation - 12 -
Reinsurers` share of 570 454 500
technical assets
Deferred acquisition 148 131 127
costs
Current assets 1,945 1,832 1,667
Debtors / other 762 727 755
Cash and cash 1,183 1,105 912
equivalents
Total assets 6,578 6,840 6,459
Equity and
liabilities
Capital and 3,177 3,852 3,192
reserves
Interest of outside 2 126 3
shareholders in
subsidiaries
Non-current 343 118 415
liablities
Technical 2,700 2,465 2,525
provisions
Deferred 45 29 32
reinsurance
commission revenue
Current liabilities 311 250 292
and provisions
Total equity and 6,578 6,840 6,459
liabilities
STATEMENT OF CHANGES IN EQUITY
Share Contingency Retained
R`m Capital Reserve Income Total
Balance at 1 115 331 2,746 3,192
January 2002
Net income for the 73 73
period
Transfer to 8 (8) -
contingency reserve
Dividends paid (87) (87)
Secondary tax on (7) (7)
companies
Issue of share 6 6
capital
Balance at 30 June 121 339 2,717 3,177
2002
CASH FLOW STATEMENT 30/6/02 30/6/01 31/12/01
R`m R`m R`m
Cash generated by / 76 ( 46) 208
(utilised in)
operations
Investment income 112 163 341
Cash generated by 188 117 549
operating activities
Taxation paid ( 4) ( 14) ( 108)
Cash available from 184 103 441
operating activities
Dividends paid ( 87) ( 87) ( 988)
Secondary tax on ( 7) ( 104) ( 179)
companies paid
Cash retained from / 90 ( 88) ( 726)
(utilised by)
operating activities
Cash generated by 175 458 884
investing activities
Decrease in funding 265 370 158
requirements
Cash effects of
financing activities
Proceeds from issue 6 4 12
of shares
Increase in cash and 271 374 170
cash equivalents
NOTES
1. Accounting policies and presentation
The interim consolidated financial statements are prepared in
accordance with AC 127 - Interim Financial Reporting.
The accounting policies applied in the preparation of these interim
consolidated financial statements are consistent with those used in
the annual financial statements for the year ended 31 December 2001.
Certain comparative figures at 31/12/01 have been regrouped.
Comparative figures at 30/06/01 have been restated to recognise the
change in accounting policy at the end of 2001.
2. Earnings per share
Headline earnings per share are calculated on net income adjusted
for abnormal items and short-term investment fluctuations net of
taxation.
Basic earnings per share are based on net income after short-term
investment fluctuations, goodwill and retrenchment costs.
Headline earnings for the half year ended 30 June 2001 have been
restated to recognise the taxation effect of short-term investment
fluctuations.
3. Combined ratio
This reflects the ratio of total insurance expenditure to net earned
premiums.
COMMENTS
There has been an encouraging increase in the General Insurance Result from
R104m to R142m following an improvement in the underwriting surplus and higher
levels of funds generated by the insurance activities.
A number of accounts continue to underperform, but the group has managed to
increase underwriting profitability through more decisive risk selection and
withdrawal from unprofitable business. As a result, premium growth has been
modest, but continued control over claims and management expenditure has
contributed to the improved result.
Dividends and interest income declined during the period, as a result of lower
levels of investments following the payment of a special dividend of 350 cents
per share in December 2001. As a result of this dividend the headline earnings
for the period declined from R296m to R279m.
The net asset value per share has declined marginally since 31 December 2001
following the underperformance of listed equities. The solvency margin (being
the ratio of net assets to net premiums) remains strong, and was in excess of
70% at 30 June 2002.
The Board remains cautiously optimistic regarding the balance of the year but it
must be noted that short-term insurance results fluctuate and the results for
the first six months are not necessarily indicative of the outturn for the
remainder of the year.
DECLARATION OF DIVIDEND (NUMBER 65)
An interim dividend of 22 cents per share has been declared payable to
shareholders in respect of the six months to 30 June 2002.
In accordance with the trading requirements under the STRATE environment, the
last day to trade to participate in the final dividend will be Friday, 30 August
2002. The shares will commence trading ex-dividend on Monday, 2 September 2002,
and the record date will be Friday, 6 September 2002. Payment will be made on
Monday, 9 September 2002.
Share certificates may not be dematerialised or rematerialised between Monday, 2
September and Friday, 6 September 2002, both days inclusive.
On behalf of the Board
K T M Saggers
B Campbell
(Managing Director)
Registered Office: 19th Floor, Mutual & Federal Centre, 75 President
Street, Johannesburg 2001
Transfer Secretaries: Computershare Investor Services Limited, 11 Diagonal
Street, Johannesburg 2001
26 July 2002
Website: www.mf.co.za
ISIN: ZAE000010823
E-mail: investor@mf.co.za
Share code: MAF
Date: 29/07/2002 07:30:00 AM Produced by the JSE SENS Department
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