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MUTUAL & FEDERAL INSURANCE COMPANY LIMITED -
MUTUAL & FEDERAL INSURANCE COMPANY LIMITED
Unaudited financial results for the half year ended 30 June 2003
INCOME STATEMENT 30/6/03 30/6/02 Change 31/12/02
R"m R"m % R"m
Gross premiums 3,010 2,642 14 5,603
Net underwriting surplus 111 51 116
Net investment (deficit)/
income (24) 66 (118)
Goodwill and retrenchment
costs (11) (25) (37)
Income/(loss) before taxation 76 92 (39)
Taxation (68) (29) (65)
Income/(loss) after taxation 8 63 (104)
Minority shareholders/share
of associates (5) 3 (6)
Net income/(loss) 3 66 (110)
Earnings per share
(a) Headline earnings per share are calculated on net income
adjusted for goodwill.
Determination of headline earnings
Net income/(loss) 3 66 (110)
Goodwill 11 10 21
Headline earnings/(loss) 14 76 (89)
Headline earnings/
(loss) per share (cents) 6 31 (37)
(b) Basic earnings per share are based on net income after
goodwill
and retrenchment costs
Basic earnings per share
Basic earnings/(loss)
per share (cents) 1 27 (45)
Ordinary dividend per
share (cents) 25 22 64
Combined ratio (%) (note 2) 95.9 97.7 97.6
Net asset value per share
(cents) 1,157 1,312 1,209
Number of shares in issue
(million)
- at period end 244.1 242.2 242.9
- weighted average 243.6 242.5 242.8
BALANCE SHEET As at As at As at
30/6/03 30/6/02 31/12/02
R"m R"m R"m
Assets
Non-current assets 2,829 3,915 3,016
Fixed assets 170 154 157
Investments at market value 2,370 3,479 2,595
Ordinary shares 1,985 3,055 2,199
Government stock 84 83 130
Other 301 341 266
Investment in associated
companies 118 108 96
Goodwill 152 174 163
Deferred taxation 19 - 5
Reinsurers" share of
technical provisions 860 570 733
Deferred acquisition costs 153 148 151
Current assets 2,759 1,945 2,491
Debtors / other 596 762 706
Cash and cash equivalents 2,163 1,183 1,785
Total assets 6,601 6,578 6,391
Equity and liabilities
Capital and reserves 2,824 3,177 2,937
Interest of outside
shareholders in subsidiaries 2 2 2
Non-current liabilities 171 343 244
Technical provisions 3,114 2,700 2,844
Deferred reinsurance
commission revenue 42 45 54
Current liabilities
and provisions 448 311 310
Total equity and liabilities 6,601 6,578 6,391
STATEMENT OF CHANGES IN EQUITY
Share Contingency Retained
capital Reserve income Total
R"m
Balance at 124 423 2,390 2,937
1 January 2003
Change in accounting
policy (19) (19)
(note 3)
Net income for the period 3 3
Transfer to contingency reserve 12 (12) -
reserve
Dividends paid (102) (102)
Issue of share capital 5 5
Balance at 30 June 2003 129 435 2,260 2,824
CASH FLOW STATEMENT 30/6/03 30/6/02 31/12/02
R"m R"m R"m
Cash generated by operations 420 76 157
Investment income 184 112 304
Cash generated by operating
activities 604 188 461
Taxation paid ( 84) ( 11) ( 105)
Cash available from operating 520 177 356
activities
Dividends paid ( 102) ( 87) ( 140)
Cash retained from operating 418 90 216
activities
Cash (utilised in)/generated by ( 45) 175 648
investing activities
Decrease in funding requirements 373 265 864
Cash effects of financing activities
Proceeds from issue of shares 5 6 9
Increase in cash and cash
equivalents 378 271 873
NOTES
1. Accounting policies
These financial results for the year have been prepared in
accordance with South African Statements of Generally
Accepted Accounting Practice. The accounting policies applied
in the preparation of these financial statements are
consistent with used in the annual financial statements for
the year ended 31 December 2003 with the exception of item 3
below. Certain Comparative figures have been regrouped.
2. Combined ratio
This reflects the ratio of total insurance expenditure to net
earned premiums.
3. Change in accounting policy
During the period the company changed its accounting policy
with regard to the recognition and measurement of certain
financial instruments in terms of AC 133. The cumulative
effect of this change in policy amounted to a charge of R19
million which has been adjusted against the opening balance
of retained income in 2003.
COMMENTS
Increased emphasis on appropriate product pricing has resulted in
a 14% growth in premiums. This has been accompanied by corrective
action taken on risk selection which has resulted in a further
improvement in the underwriting surplus. The General
Insurance
Result has accordingly increased from R142 million to R213
million.
Trading results during the period have been favourable with claim
numbers remaining stable and in particular, an absense of
severe
weather-related losses. In addition, improved levels of crime
awareness and a number of motor claim handling initiatives have
assisted in controlling claims costs.
All of the portfolios have performed satisfactorily except for the
fire account which continues to be adversely affected by
an ongoing high incidence of commercial and industrial
claims.
Interest income grew strongly during the period due to increased
levels of funds on deposit and continued high interest
rates. Dividend income declined as a result of lower
levels of equity holdings during the period.
The net asset value per share reduced during the period following
a decline in the value of listed equities whilst the solvency
margin (being the ratio of net assets to net premiums)
remains satisfactory and was in excess of 50% at 30 June
2003.
The Board is optimistic regarding prospects for 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 67)
An interim dividend of 25 cents per share has been declared
payable to shareholders in respect of the six months to 30 June
2003.
In accordance with the trading requirements under the
STRATE environment, the last day to trade to participate in the
interim dividend will be Friday, 29 August 2003.
The shares will commence trading ex-dividend on Monday,
1 September 2003, and the record date will be Friday,
5 September 2003. Payment will be made on Monday, 8 September
2003.
Share certificates may not be dematerialised or rematerialised
between Monday 1 September and Friday 5 September 2003, both days
inclusive.
On behalf of the Board
K T M Saggers (Chairman) B Campbell (Managing Director)
Registered Office:19th Floor, Mutual & Federal Centre,
75 President Street, Johannesburg 2001
Transfer Secretaries: Computershare Limited,
70 Marshall Street, Johannesburg 2001
25 July 2003.
Website: www.mf.co.za ISIN:
ZAE000010823
E-mail: investor@mf.co.za JSE share code: MAF NSX share code:
MTF
SUPPLEMENTARY INCOME STATEMENT
30/6/03 30/6/02 Change 31/12/02
(Reflecting long-term rate of
return adjustment) R"m R"m % R"m
Technical account (note A)
Gross premiums 3,010 2,642 14
5,603
Net premiums 2,666 2,337 14 4,886
Earned premiums net of
reinsurance 2,678 2,256
4,806
Claims incurred net of
reinsurance (1,932) (1,650) (3,515)
Acquisition expenses (416) (359) (767)
Management expenses (219) (196)
(408)
Net underwriting surplus 111 51 116
Investment return on insurance
funds 102 91 12 195
(note B)
General insurance result 213 142 50 311
Long-term investment return on 190 185 387
shareholders" funds (note B)
Operating income based on
long-term 403 327 23 698
investment return
Non-technical account (note A)
Short-term investment
fluctuations (316) (210) (700)
Dividends, interest and 184 112 306
property income
Realised surplus/(deficit) 1 (17) 313
on investments 2 (16) 314
Unrealised deficit on
investments (209) (29) (737)
Allocated investment return
transferred to Technical
account (292) (276)
(582)
(note B)
Retrenchment costs 0 (15) (16)
Goodwill (11) (10) (21)
Income/(loss) before taxation 76 92 (39)
Taxation (including secondary
secondary tax on companies) (68) (29) (65)
Income/(loss) after taxation 8 63 (104)
Minority shareholders/share
of associates (5) 3 (6)
Net income/(loss) 3 66 (110)
Operating earnings per share
Operating earnings per share are calculated on net income adjusted
for goodwill, retrenchment costs and short-term
investment fluctuations net of
taxation.
Determination of operating
earnings
Net income/(loss) 3 66 (110)
Goodwill 11 10 21
Retrenchment costs 0 15 16
Short-term investment
fluctuations 316 210 700
Taxation effect of short-term
investment fluctuations (16) (49) (96)
Secondary tax on companies 7 7 10
Operating earnings 321 259 24 541
Operating earnings per share
(cents) 132 107 23 223
NOTES TO THE SUPPLEMENTARY INCOME STATEMENT
A. Presentation
The results for the year are shown in the income statement.
To present
these in a meaningful way, a supplementary income statement
is provided
and separated into :
(a) A technical account
The technical account includes a long-term investment
return on both:
(1) funds generated by the insurance activities;
(2) shareholders" funds
This return was calculated at 14% in 2002 and has been
reduced
to 13,4% in 2003 as a result of an increased proportion
of interest bearing investments within the portfolio.
(b) A non-technical account
The non-technical account includes all non-insurance
related activities including investments, and above
mentioned allocated investment returns transferred to the
technical account.
B. Allocation
The investment return on investments supporting insurance
activities is allocated to the technical account in
determining the General Insurance Result. In addition the
long-term investment return on investments supporting
shareholders" funds is allocated from the non-technical
account to the technical account in determining an
operating income based on the long-term investment return.
The allocations accordingly negate one another in the
determination of income before tax.
The long-term investment return on shareholders" funds is an
estimate of the long-term trend investment return for the
relevant category of investments having regard to past
performance, current trends and future expectations.
Date: 28/07/2003 08:00:22 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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