Summary of financial information

Transcription

1 Summary of financial information Unaudited results for the 6 months ended 31 December 2013

2 MMI HOLDINGS GROUP DIRECTORS STATEMENT The directors take pleasure in presenting the unaudited condensed interim results of MMI Holdings financial services group for the period ended 31 December The preparation of the group s results was supervised by the group finance director, Preston Speckmann, BCompt (Hons), CA(SA). Corporate events On 4 November the group announced that it will acquire 100% of Guardrisk from Alexander Forbes. In terms of the proposed transaction MMI will acquire the investment in Guardrisk from Alexander Forbes for an amount of R1,6 billion. The acquisition is subject to, inter alia, regulatory approvals by the Financial Services Board and the competition authorities. Basis of preparation of financial information These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34 (IAS 34) Interim financial reporting; the SAICA Financial Reporting Guide as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council; JSE Listing Requirements and as well as the South African Companies Act of The accounting policies applied in the preparation of these interim financial statements are in terms of International Financial Reporting Standards (IFRS) and are consistent with those adopted in the previous periods except as described below. Critical judgements and accounting estimates are disclosed in detail in the group s integrated report for the year ended 30 June 2013, including changes in estimates that are an integral part of the insurance business. The group is exposed to financial and insurance risks, details of which are also provided in the group s integrated report. New and revised standards effective for the period ended 31 December 2013 and relevant to the group IFRS 10 Consolidated financial statements, IFRS 11 Joint arrangements, IAS 28 (revised) Investments in associates and joint ventures (consolidation project) IFRS 10 builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. Under IFRS 10, subsidiaries are all entities (including structured entities) over which the group has control. The group controls an entity when it has power over an entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. If no single party controls the investee IFRS 11 provides guidance on whether a joint arrangement exists. IAS 28 was revised to incorporate amendments from this consolidation project. o Collective investment schemes: Previously the group consolidated collective investment schemes where the group s holding in a fund was greater than 50% and investments in a fund of between 20% and 50% were considered to be interests in associates. As a result of the adoption of IFRS 10 the group no longer uses the percentage holdings referred to above as the defining parameter of control. This resulted in an increased number of collective investment schemes being reclassified to subsidiaries (from associates) and to associates (from unit linked investments). o Cell captives: Before the adoption of IFRS 10, cells were regarded as separate entities under SIC 12 and were not included in the consolidated group results as the risks and rewards of these cells were not transferred to the group. These cells were therefore included in the consolidated results of cell owners. Under IFRS 10 a cell can only be consolidated by the cell owner if it first meets the definition of a silo. Cell captives in South Africa are not legally ring-fenced and are not seen as protected cells and therefore do not meet the definition of a silo. Cells are therefore no longer considered to be separate entities. This resulted in the group recognising the assets, liabilities, income and expenses relating to its cell captive business in its consolidated results. Because the risks and rewards relating to cell activities are for the benefit of cell owners, the inclusion of cell income and expenses does not impact the group s net results, as the result of cell activities are transferred back to the cell owner. o Other financial instruments: There were no other material financial instruments that met the new consolidation criteria. The changes resulting from the above have been applied retrospectively as required by the transitional provisions of IFRS 10. 1

3 MMI HOLDINGS GROUP IFRS 12 was also issued as part of the consolidation project and includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose entities and other off balance sheet vehicles. The group will incorporate these disclosures in the 2014 integrated report. Refer to the appendix for details of the above required restatements to the previously reported statement of financial position and income statement. The statement of other comprehensive income, statement of changes in equity, statement of cash flows and segment report has also been restated. Total assets and liabilities increased by R17.2 billion for June 2013 (December 2012: R11.2 billion). The restatements had no material impact on the current or prior period earnings, diluted earnings or headline earnings per share, nor on the net asset value of the group. Amendments to IAS 19 - Employee benefits The revised employee benefit standard introduces changes to the recognition, measurement, presentation and disclosure of post-employment benefits. The standard requires the immediate recognition of all past services costs in the income statement and replaces interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). Remeasurements as defined in the standard are now recorded in other comprehensive income. The application of this amendment did not have a significant impact on group s financial position, group earnings and cash flows in the current or prior period. IFRS 13 Fair value measurements IFRS 13 aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. This standard is required to be applied prospectively with no restatements. The impact of this change of fair value measurement has not been material on the current period earnings, diluted earnings or headline earnings per share, nor on the net asset value of the group. IAS 34 Interim reporting was revised for the introduction of IFRS 13 and requires additional disclosure on financial instruments carried at fair value. The group has complied with these additional disclosure requirements in these interim results. Other o IFRS 7 (amendment) Financial instruments: disclosures: offsetting financial assets and financial liabilities became effective for the first time in the current period and had no impact on the group s earnings. o The International Accounting Standards Board (IASB) made amendments to various standards as part of their annual improvements project. These amendments had no impact on the group s earnings. Reclassifications The December 2012 and June 2013 results have been restated for the following reclassifications: The comparative segmental information has been restated, where appropriate, to ensure alignment with the way in which the chief operating decision-maker, being the MMI executive committee, monitors and evaluates the performance of the various segments of the business. o MMI Rewards (including Momentum Multiply) has been reallocated from Momentum Retail to Shareholder Capital as the Rewards programme is a group-wide initiative. As a result the income, expenses, employees and all related activities have moved from the Momentum Retail to the Shareholder Capital segment. o The Momentum Employee Benefit segment has taken over the management of the open health scheme administration business to better align this with the corporate business. As a result the income, expenses, employees and all related activities have moved from the Metropolitan Health to the Momentum Employee Benefit segment. 2

4 MMI HOLDINGS GROUP These restatements had no impact on the current or prior period reported earnings, diluted earnings or headline earnings per share, nor on the net asset value or the statement of cash flows. Refer to the analysis of restatements tables for more details. Embedded value FNB Life The contractual agreement between MMI and FirstRand Bank was changed with effect from 1 July 2013 reducing MMI s profitsharing arrangement from 10% to 4%. As a result of this change, the value of new business and value of in-force of this FNB Life business has been excluded from the published MMI embedded value with effect from 1 July The profits arising from this business will therefore now be recognised in the embedded value earnings only as they emerge. The prior period numbers have not been restated as the change occurred during the current reporting period. Corporate governance The board has satisfied itself that appropriate principles of corporate governance were applied throughout the period under review. Directorate changes and directors shareholding Blignault Gouws, a non-executive director, retired from the Board of MMI Holdings on 27 November On the same day Mary Vilakazi resigned from the Board as non-executive director in order to take up an executive position with the group as described below. Louis Leon von Zeuner was appointed as a non-executive director of MMI, with effect from 1 January Wilhelm van Zyl, the deputy group CEO, informed the Board that he will be leaving the group, and resigning as a director, with effect from 30 June MMI would like to thank him for his 24 years of invaluable service to the group. He played a pivotal role in the creation of MMI and the successful completion of the integration phase. We wish him well in his future endeavours. All transactions in listed shares of the company involving directors were disclosed on SENS. Changes to the group executive committee In November 2013 Jan Lubbe, chief risk officer, and Vuyo Lee, group executive brand - stakeholder management and sustainability, were appointed as members of the group executive committee. Nigel Dunkley, group executive - balance sheet management has been transferred to the group s asset management business in the UK and Mary Vilakazi has been appointed as group executive - balance sheet management from 1 May Contingent liabilities and capital commitments As part of running a business, the group is party to legal proceedings and appropriate provisions are made when losses are expected to materialise. The group had no material capital commitments at 31 December 2013 that were not in the ordinary course of business. 3

5 MMI HOLDINGS GROUP Events after the reporting period The Competition Tribunal and FSB approved the Guardrisk transaction on 12 February 2014 and 24 February 2014 respectively. The disclosure of the initial accounting for the business combination will be included in the June 2014 financial results as the approvals were only obtained in February. Metropolitan International acquired a significant majority stake in Kenyan insurer Cannon Assurance Ltd (Cannon) for around R300 million. The acquisition is subject to regulatory and other required approvals. The shareholders of Cannon will in turn acquire a minority stake in Metropolitan Life Kenya. This transaction will enable a merger of the two companies with the consolidation of the life licences into one and a standalone short-term insurance licence and business. MMI intends to issue R1.5 billion of unsubordinated debt during March 2014 for which FSB approval has already been received. No other material events occurred between the reporting date and the date of approval of the interim results. Dividend declaration Ordinary shares The dividend policy for ordinary listed shares, approved by the directors, is to provide shareholders with stable dividend growth, increasing to reflect the board s long-term view on the expected underlying basic core headline earnings growth. Exceptions will be made from time to time, in order to account for, inter alia, volatile investment markets, capital requirements and changes in legislation. On 5 March 2014 a gross interim dividend of 57 cents per ordinary share was declared, payable out of income reserves to all holders of ordinary shares recorded in the register of the company at the close of business on Friday, 28 March 2014 and will be paid on Monday, 31 March The dividend will be subject to local dividend withholding tax at a rate of 15% unless the shareholder is exempt from paying dividend tax or is entitled to a reduced rate. The STC credits utilised per share amount to cents per ordinary share. This will result in a net dividend, for those shareholders who are not exempt from paying dividend tax, of cents per ordinary share. The number of ordinary shares in issue at the declaration date was , whilst the last day to trade cum dividend will be Thursday, 20 March The shares will trade ex dividend from the start of business on Monday, 24 March Share certificates may not be dematerialised or rematerialised between Monday, 24 March 2014 and Friday, 28 March 2014, both days inclusive. MMI s income tax number is Where applicable, dividends in respect of certificated shareholders will be transferred electronically to shareholders bank accounts on payment date. In the absence of specific mandates, dividend cheques will be posted to certificated shareholders on or about payment date. Shareholders who hold dematerialised shares will have their accounts with their CSDP or broker credited on the payment date. Preference shares Dividends of R22.6 million (132 cents per share p.a.) were declared on the unlisted A3 MMI preference shares. The declaration rate was determined as set out in the company s articles and the total preference dividend utilised STC credits of R

6 MMI HOLDINGS GROUP Directors responsibility and external audit These results are the responsibility of the directors. The condensed interim results have not been reviewed or audited by the external auditors. A printed version of the SENS announcement may be requested from the group company secretary, Maliga Chetty tel: Signed on behalf of the board JJ Njeke Nicolaas Kruger Chairman Group chief executive officer Centurion 5 March 2014 DIRECTORS: MJN Njeke (chairman), JP Burger (deputy chairman), NAS Kruger (group chief executive officer), FW van Zyl (deputy group chief executive officer), PE Speckmann (group finance director), N Motsei (executive), L Crouse, F Jakoet, Prof JD Krige, PJ Moleketi, SA Muller, V Nkonyeni, SE Nxasana, KC Shubane, FJC Truter, BJ van der Ross, JC van Reenen, LL von Zeuner, SECRETARY: Maliga Chetty TRANSFER SECRETARIES: Link Market Services SA (Pty) Ltd (registration number 2000/007239/07) Rennie House, 13th Floor, 19 Ameshoff Street, Braamfontein PO Box 4844, Johannesburg 2000 Telephone: info@linkmarketservices.co.za SPONSOR: Merrill Lynch (registration number: 2000/031756/06) REGISTERED OFFICE: 268 West Avenue, Centurion JSE CODE: MMI NSX CODE: MIM ISIN NO. ZAE

7 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Restated Restated Intangible assets Owner-occupied properties Property and equipment Investment properties Investment in associates Employee benefit assets Financial instrument assets (1) Reinsurance contracts Deferred income tax Properties under development Insurance and other receivables Current income tax assets Cash and cash equivalents Non-current assets held for sale Total assets EQUITY Equity attributable to owners of the parent Preference shares Non-controlling interests Total equity LIABILITIES Insurance contract liabilities Long-term insurance contracts Financial instrument liabilities Investment contracts with discretionary participation features designated at fair value through income Other financial instrument liabilities (2) Deferred income tax Employee benefit obligations Other payables Provisions Current income tax liabilities Total liabilities Total equity and liabilities Financial instrument assets consist of the following: Securities designated at fair value through income: R million (: R million; : R million) Investments in associates designated at fair value through income: R7 243 million (: R million; : R million) Derivative financial instruments: R3 442 million (: R4 461 million; : R3 173 million) Held-to-maturity assets: R76 million (: R75 million; : R69 million) Available-for-sale assets: R437 million (: R1 345 million; : R953 million) Loans and receivables: R4 381 million (: R4 599 million; : R5 697 million) 2. Other financial instrument liabilities consist of the following: Liabilities designated at fair value through income: R million (: R million; : R million) Derivative financial instruments: R2 925 million (: R2 844 million; : R2 547 million) Liabilities at amortised cost: R1 886 million (: R1 327 million; : R1 577 million) 6

8 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION CONDENSED CONSOLIDATED INCOME STATEMENT Restated Restated 12 mths to Net insurance premiums received Fee income (1) Investment income Net realised and fair value gains Net income Net insurance benefits and claims Change in liabilities Change in insurance contract liabilities Change in investment contracts with DPF liabilities (523) Change in reinsurance provision 118 (12) (21) Change in cell owner liabilities (283) (184) (414) Fair value adjustments on investment contract liabilities Fair value adjustments on collective investment scheme liabilities Depreciation, amortisation and impairment expenses Employee benefit expenses Sales remuneration Other expenses Expenses Results of operations Share of profit of associates Finance costs (2) (722) (631) (1 685) Profit before tax Income tax expenses (1 416) (1 113) (1 804) Earnings Attributable to: Owners of the parent Non-controlling interests MMI Group Ltd preference shares Basic earnings per ordinary share (cents) Diluted earnings per ordinary share (cents) Fee income consists of the following: Investment contracts: R983 million (: R662 million; : R1 901 million) Trust and fiduciary services: R900 million (: R890 million; : R1 837 million) Health administration services: R953 million (: R901 million; : R1 866 million) Other fee income: R362 million (: R215 million; : R601 million) 2. Finance costs consist of the following: Preference shares issued by MMI Holdings Ltd: R23 million (: R23 million; : R46 million) Subordinated redeemable debt: R55 million (: R56 million; : R100 million) Cost of carry and derivative financial instruments: R580 million (: R477 million; : R1 273 million) Other: R64 million (: R75 million; : R266 million) 7

9 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 12 mths to Earnings Other comprehensive income for the period, net of tax Items that may subsequently be reclassified to income Exchange differences on translating foreign operations Available-for-sale financial assets Items that will not be reclassified to income Land and buildings revaluation Adjustments to defined benefit pension fund Change in non-distributable reserves - - (10) Income tax relating to items that will not be reclassified (10) (7) 3 Total comprehensive income for the period Total comprehensive income attributable to: Owners of the parent Non-controlling interests MMI Group Ltd preference shares

10 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION RECONCILIATION OF HEADLINE EARNINGS attributable to owners of the parent Basic earnings 12 mths to Diluted earnings 12 mths to Earnings Finance costs convertible preference shares Dilutory effect of subsidiaries (1) (10) - (19) Diluted earnings Realised gains on available-for-sale financial assets - - (2) - - (2) Intangible asset and other impairments Profit on change from associate to subsidiary - (54) (67) - (54) (67) Loss on sale of business Headline earnings (2) Net realised and fair value gains on excess (398) (232) (340) (398) (232) (340) Basis and other changes and investment variances (64) (10) 367 (64) (10) 367 Amortisation of intangible assets relating to business combinations Corporate restructuring expenses (3) Dilutory effect of subsidiaries (1) - (12) - Investment income on treasury shares contract holders Core headline earnings (4) Metropolitan Health is consolidated at 100% and the Metropolitan Namibian group and Metropolitan Kenya are consolidated at 96% in the results. For purposes of diluted earnings, diluted non-controlling interests and investment returns are reinstated. The dilutory impact of these subsidiaries has been included in diluted earnings in the current period and June Headline earnings consist of operating profit, investment income, net realised and fair value gains, investment variances and basis and other changes. 3. Corporate restructuring expenses include once-off costs relating to the restructuring of the group. 4. Core headline earnings disclosed comprise operating profit and investment income on shareholder assets. It excludes net realised and fair value gains on investment assets, investment variances and basis and other changes which can be volatile, certain non-recurring items, as well as the amortisation of intangible assets relating to business combinations as this is part of the cost of acquiring the business. 9

11 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION EARNINGS PER SHARE (cents) attributable to owners of the parent 12 mths to Basic Core headline earnings Headline earnings Earnings Weighted average number of shares (million) Diluted Core headline earnings Weighted average number of shares (million) (1) Headline earnings Earnings Weighted average number of shares (million) (2) For diluted core headline earnings per share, treasury shares held on behalf of contract holders are deemed to be issued. 2. For diluted earnings and headline earnings per share, treasury shares held on behalf of contract holders are deemed to be cancelled. DIVIDENDS Ordinary listed MMI Holdings Ltd shares (cents per share) Interim March Final September 76 Total 127 MMI Holdings convertible redeemable preference shares (issued to Kagiso Tiso Holdings (KTH)) The A3 MMI preference shares are redeemable in June 2017 at a redemption value of R9.18 per share unless converted into MMI ordinary shares on a one-for-one basis prior to that date. Dividends are payable at 132 cents per annum (payable March and September). Significant related party transactions MMI Holdings Ltd declared R298 million (2013: R271 million) in ordinary dividends to RMI Holdings Ltd in September 2013 (2013: September 2012) and R200 million in ordinary dividends to RMI Holdings Ltd in March In September 2012, MMI Holdings Ltd also declared R255 million in special dividends to RMI Holdings Ltd. 10

12 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 12 mths to Changes in share capital Balance at beginning and end Changes in share premium Balance at beginning Treasury shares held on behalf of contract holders (4) Share buy-back - (7) (7) Balance at end Changes in other reserves Balance at beginning Total comprehensive income Transfer from/(to) retained earnings 3 (3) (8) Balance at end (1) Changes in retained earnings Balance at beginning Total comprehensive income Dividend paid (1 197) (2 095) (2 886) Transactions with non-controlling interests Transfer (to)/from other reserves (3) 3 8 Profit on preference share buy-back Balance at end Equity attributable to owners of the parent MMI Group Ltd preference shares Balance at beginning Total comprehensive income Dividend paid - (15) (32) Share buy-back - - (500) Balance at end Changes in non-controlling interests Balance at beginning Total comprehensive income Dividends paid (11) (9) (97) Transactions with owners Business combinations Balance at end Total equity Other reserves consist of the following: Land and buildings revaluation reserve: R562 million (: R580 million; : R534 million) Foreign currency translation reserve: R185 million (: R85 million; : R139 million) Fair value adjustment for preference shares issued by MMI: R940 million (: R940 million; : R940 million) Fair value reserve: R12 million (: R12 million; : R11 million) Non-distributable reserve: R8 million (: R13 million; : R4 million) Equity-settled share-based payments reserve: R3 million (: R3 million; : R3 million) Employee benefit revaluation reserve: R27 million (: Rnil; : Rnil) 11

13 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS Restated Restated 12 mths to Net cash inflow from operating activities Net cash outflow from investing activities (307) (907) (753) Net cash outflow from financing activities (890) (2 138) (3 169) Net cash flow (410) Cash resources and funds on deposit at beginning Cash resources and funds on deposit at end PRINCIPAL ASSUMPTIONS (South Africa) (1) % % % Pre-tax investment return Equities Properties Government stock Other fixed interest stocks Cash Risk-free return Risk discount rate (RDR) Investment return (before tax) balanced portfolio Expense inflation base rate (2) The principal assumptions relate only to the South African life insurance business. Assumptions relating to international life insurance businesses are based on local requirements and can differ from the South African assumptions. 2. An additional 1% expense inflation is allowed for in some divisions to reflect the impact of closed books that are in run-off. NON-CONTROLLING INTERESTS % % % Eris Property Group Metropolitan Botswana Metropolitan Ghana Metropolitan Health Botswana (previously Momentum Health Botswana) Metropolitan Health Ghana (previously Momentum Health Ghana) Metropolitan Health Group Metropolitan Health Mauritius (previously Momentum Health Mauritius) Metropolitan Health Namibia Administrators Metropolitan Kenya Metropolitan Namibia Metropolitan Nigeria Metropolitan Swaziland Metropolitan Tanzania (previously Momentum Tanzania) Metropolitan Zambia (previously Momentum Zambia) Momentum Mozambique Momentum Swaziland

14 MMI HOLDINGS GROUP IFRS FINANCIAL INFORMATION ANALYSIS OF ASSETS UNDER MANAGEMENT Restated Restated On-balance sheet assets Managed and/or administered by Momentum Investments Investment assets Properties Momentum Wealth linked product assets under administration Managed internally or by other managers within MMI Managed by external managers Other assets Off-balance sheet assets Managed and/or administered by Momentum Investments Collective investment schemes Segregated assets and linked products Properties Managed internally or by other managers within MMI Momentum Employee Benefits segregated assets Metropolitan Health Momentum Wealth linked product assets under administration Total assets under management Total assets managed and/or administered by Momentum Investments Other assets under management Total assets under management ANALYSIS OF ASSETS BACKING SHAREHOLDER EXCESS % % % Equity securities Preference shares Collective investment schemes Debt securities Properties Owner-occupied properties Investment properties Cash and cash equivalents and funds on deposit Intangible assets Other net assets Redeemable preference shares (313) (1.3) (313) (1.3) (313) (1.3) Subordinated redeemable debt (1 558) (6.3) (1 585) (6.8) (1 562) (6.7) Shareholder excess per reporting basis

15 MMI HOLDINGS GROUP SEGMENTAL INFORMATION Momentum Metropolitan Momentum Metropolitan Employee International Investments Health Capital total items (1) IFRS total Momentum Metropolitan Shareholder Segmental Reconciling Retail Retail Benefits Revenue Net insurance premiums (17 476) Recurring premiums (3 333) Single premiums (14 143) Fee income (536) Fee income Inter-segmental fee income (599) (599) Expenses Net payments to contract holders External payments (15 448) Other expenses Sales remuneration Administration expenses Amortisation due to business combinations and impairments Direct property expenses Asset management and other fee expenses Holding company expenses Inter-segmental expenses (601) (601) Diluted core headline earnings Operating profit (2) Tax on operating profit (2) (256) (119) (63) (13) (37) (20) (34) (542) (209) (751) Investment income Tax on investment income (6) (2) (119) (127) - (127) Actuarial liabilities The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums (R million) and claims (R million); FNB Life excluded from Metropolitan Retail (premiums R108 million, fee income R10 million, claims R1 million, sales remuneration R33 million and expenses R84 million); corporate restructuring expenses of R36 million; direct property and asset management fees for all segments, except non-life segments, that are set off against investment income for management reporting purposes but shown as an expense for accounting purposes; the amortisation of intangibles relating to business combinations; cell captive expenses (R51 million) and sales remuneration (R35 million) attributable to cell owners; and other minor adjustments to expenses (R90 million), sales remuneration (R6 million) and fee income (R53 million). 2. Reconciling items represents tax payable by cell captive owners. 14

16 Restated MMI HOLDINGS SEGMENTAL INFORMATION Momentum Metropolitan Momentum Metropolitan Employee International Investments Health Capital total items (1) IFRS total Momentum Metropolitan Shareholder Segmental Reconciling Retail Retail Benefits Revenue Net insurance premiums (18 855) Recurring premiums (2 026) Single premiums (2) (16 829) Fee income (567) Fee income Inter-segmental fee income (579) (579) Expenses Net payments to contract holders External payments (16 903) Other expenses Sales remuneration Administration expenses Amortisation due to business combinations and impairments Direct property expenses Asset management and other fee expenses Holding company expenses Inter-segmental expenses (573) (573) Diluted core headline earnings Operating profit (3) (8) Tax on operating profit (3) (204) (95) (75) (15) (23) (21) 65 (368) (141) (509) Investment income Tax on investment income (6) (2) (98) (106) - (106) Actuarial liabilities The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums (R million) and claims (R million); FNB Life adjustments reconciling the 10% of FNB Life included in each of the relevant lines to the accounting treatment of the reinsurance arrangement (premiums R93 million, claims R1 million, sales remuneration R36 million and expenses R61 million); direct property and asset management fees that are set off against investment income and fee income, respectively for management reporting purposes but shown as an expense for accounting purposes; the amortisation of intangibles relating to business combinations; cell captive expenses (R18 million) and sales remuneration (R31 million) attributable to cell owners; and other minor adjustments to expenses (R135 million), sales remuneration (R3 million) and fee income (R12 million). 2. Momentum Investments includes two significant client single premium inflows. 3. Reconciling items represents tax payable by cell captive owners. 15

17 Restated 12 mths to MMI HOLDINGS GROUP SEGMENTAL INFORMATION Momentum Metropolitan Momentum Metropolitan Employee International Investments Health Capital total items (1) IFRS total Momentum Metropolitan Shareholder Segmental Reconciling Retail Retail Benefits Revenue Net insurance premiums (33 435) Recurring premiums (4 889) Single premiums (28 546) Fee income (734) Fee income Inter-segmental fee income (927) (927) Expenses Net payments to contract holders (29 063) External payments (29 031) Inter-segmental payments (32) (32) Other expenses Sales remuneration Administration expenses Amortisation due to business combinations and impairments Direct property expenses Asset management and other fee expenses Holding company expenses Inter-segmental expenses (950) (950) Diluted core headline earnings Operating profit (2) Tax on operating profit (2) (461) (198) (115) (37) (54) (33) (52) (950) (302) (1 252) Investment income Tax on investment income (12) (4) (209) (225) - (225) Actuarial liabilities The 'Reconciling items' column includes: an adjustment to reverse investment contract premiums (R million) and claims (R million); FNB Life adjustments reconciling the 10% of FNB Life included in each of the relevant lines to the accounting treatment of the reinsurance arrangement (premiums R174 million, fee income R11 million, claims R3 million, sales remuneration R65 million and expenses R130 million); grossing up of fee income and expenses relating to properties under development (R121 million); corporate restructuring expenses of R67 million; direct property and asset management fees for all segments, except non-life segments, that are set off against investment income for management reporting purposes but shown as an expense for accounting purposes; the amortisation of intangibles relating to business combinations; cell captive expenses (R47 million) and sales remuneration (R46 million) attributable to cell owners; and other minor adjustments to expenses (R268 million), sales remuneration (R17 million) and fee income (R61 million). 2. Reconciling items represents tax payable by cell captive owners. 16

18 Analysis of reclassifications MMI HOLDINGS GROUP SEGMENTAL INFORMATION Momentum Metropolitan Momentum Employee Metropolitan Momentum Metropolitan Shareholder Segmental Reconciling Retail Retail Benefits International Investments Health Capital total items IFRS total The comparative segmental information has been restated for the effect of IFRS 10 and, where appropriate, to ensure alignment with the way in which the chief operating decisionmaker, being the MMI executive committee, monitors and evaluates the performance of the various segments of the business. Refer to table below for detail. These restatements had no impact on total core headline earnings. December 2012 Fee income Published December (546) Reclassifications (129) (138) (21) (21) Restated December (567) Other expenses Published December Reclassifications (19) (131) Restated December Actuarial liabilities Published December (488) Reclassifications Restated December Diluted core headline earnings Published December Reclassifications (8) - (4) Restated December

19 MMI HOLDINGS GROUP SEGMENTAL INFORMATION Analysis of reclassifications Momentum Metropolitan Momentum Employee Metropolitan Momentum Metropolitan Shareholder Segmental Reconciling Retail Retail Benefits International Investments Health Capital total items IFRS total June 2013 Net insurance premiums Published June (33 435) Reclassifications (156) Restated June (33 435) Fee income Published June (705) Reclassifications (280) (320) (29) (29) Restated June (734) Net payments to contract holders Published June (29 063) Reclassifications (145) Restated June (29 063) Other expenses Published June Reclassifications (42) (325) Restated June Actuarial liabilities Published June (444) Reclassifications Restated June Diluted core headline earnings Published June Reclassifications (21) (11) Restated June

20 MMI HOLDINGS GROUP SEGMENTAL INFORMATION CHANGE IN DILUTED CORE HEADLINE EARNINGS Change Restated Restated 12 mths to Momentum Retail 27% Metropolitan Retail 30% Momentum Employee Benefits 13% Metropolitan International 26% Momentum Investments 28% Metropolitan Health 7% Operating divisions 24% Shareholder Capital (19%) Total diluted core headline earnings 13% RECONCILIATION OF MOMENTUM INVESTMENTS 12 mths to Revenue Fee income Expenses and finance costs (647) (639) (1 234) Other expenses (636) (633) (1 215) Finance costs (11) (6) (19) Share of profit of associates 10-5 Non-controlling interests (14) (27) (42) Core adjustments Operating profit before tax RECONCILIATION OF METROPOLITAN HEALTH Restated Restated 12 mths to Revenue Net insurance premiums Fee income Expenses and finance costs (672) (663) (1 331) Net payments to contract holders (21) (15) (37) Other expenses (651) (648) (1 294) Core adjustments 2-5 Impairments and amortisation of intangibles relating to business combinations Adjustments for dilution (6) (7) (10) Other - (1) - Operating profit before tax

21 MMI HOLDINGS GROUP SEGMENTAL INFORMATION RECONCILIATION OF SHAREHOLDER CAPITAL Restated 12 mths to Revenue Net insurance premiums (excluding investment business) Balance Sheet Management income including fee income Guaranteed portfolios earnings Returns in excess of benchmark Returns on working capital and other Other income Total income Expenses Net payments to contract holders (excluding investment business) (87) (80) (158) Other expenses (521) (457) (935) Balance Sheet Management (112) (97) (173) Strategic initiatives and other (1) (249) (213) (526) Holding company (160) (147) (236) Total expenses (608) (537) (1 093) Operating profit/(loss) before tax 56 (8) Includes Momentum Short-term Insurance, Solvency Assessment and Management (SAM) costs, redeployment centre costs (in prior periods), MMI Rewards and India project costs. 20

22 MMI HOLDINGS GROUP SEGMENTAL INFORMATION PAYMENTS TO CONTRACT HOLDERS Restated 12 mths to Momentum Retail Death and disability claims Maturity claims Annuities Withdrawal benefits Surrenders Re-insurance recoveries (398) (553) (779) Metropolitan Retail Death and disability claims Maturity claims Annuities Withdrawal benefits Surrenders Re-insurance recoveries (247) (216) (95) Momentum Employee Benefits Death and disability claims Maturity claims Annuities Withdrawals and surrenders Terminations and disinvestments Re-insurance recoveries (432) (297) (672) Metropolitan International Death and disability claims Maturity claims Annuities Withdrawal benefits Surrenders Terminations and disinvestments Re-insurance recoveries (24) (13) (30) Momentum Investments Withdrawals Metropolitan Health Claims Shareholder Capital Claims Total payments to contract holders Reconciling items (15 448) (16 903) (29 063) Net insurance benefits and claims per income statement

23 MMI HOLDINGS GROUP SEGMENTAL INFORMATION NET FUNDS RECEIVED FROM CLIENTS Gross single inflows Gross recurring inflows Gross inflow Gross outflow Net inflow/ (outflow) Restated Net inflow/ (outflow) Restated 12 mths to Net inflow/ (outflow) Momentum Retail (10 689) 668 (194) (34) Metropolitan Retail (2 896) Momentum Employee Benefits (5 532) Metropolitan International (770) Momentum Investments (6 653) (2 872) Metropolitan Health (21) Shareholder Capital (195) (36) (18) 30 Long-term insurance business fund flows (26 756) Off-balance sheet fund flows Momentum Retail (5 258) Momentum Employee Benefits (1 040) Metropolitan International (465) (120) Momentum Investments (43 089) 29 (8 087) (7 931) Momentum Investments Eris Property acquisition Metropolitan Health (11 192) Total net funds received from clients (87 800) NUMBER OF EMPLOYEES Restated Restated Indoor staff Momentum Retail Metropolitan Retail Momentum Employee Benefits Metropolitan International Momentum Investments Metropolitan Health Shareholder Capital Balance Sheet Management Group services Short-term insurance Redeployment centre Field staff Momentum Retail Metropolitan Retail Metropolitan International Total

24 MMI HOLDINGS GROUP FINANCIAL INSTRUMENTS FINANCIAL ASSETS SUMMARISED BY MEASUREMENT CATEGORY Financial assets designated at fair value through income Securities designated at fair value through income Investments in associates designated at fair value through income Derivative financial instruments Available-for-sale 437 Financial assets carried at amortised cost Held-to-maturity 76 Loans and receivables Cash and cash equivalents Total financial assets Fair value of financial assets carried at amortised cost: Held-to-maturity 76 Loans and receivables Cash and cash equivalents FINANCIAL LIABILITIES SUMMARISED BY MEASUREMENT CATEGORY Investment contracts with DPF Financial liabilities designated at fair value through income Investment contracts designated at fair value through income Liabilities designated at fair value through income Derivative financial instruments Financial liabilities carried at amortised cost Financial liabilities Other payables Total financial liabilities Fair value of financial liabilities carried at amortised cost: Financial liabilities at amortised cost Other payables

25 MMI HOLDINGS GROUP FINANCIAL INSTRUMENTS The different valuation method levels have been defined as follows: - Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities - Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, prices) or indirectly (that is, derived from prices) - Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) FINANCIAL ASSETS Level 1 Level 2 Level 3 Securities designated at fair value through income Equity securities Local listed Foreign listed Unlisted Debt securities Stock and loans to government and other public bodies Local listed Foreign listed Unlisted Other debt instruments Local listed Foreign listed Unlisted Funds on deposit and other money market instruments Unit-linked investments Collective investment schemes Local unlisted or listed quoted Foreign unlisted or listed quoted Foreign unlisted unquoted Other unit-linked investments Local unlisted or listed quoted Local unlisted unquoted Foreign unlisted unquoted Foreign unlisted or listed quoted Investments in associates designated at fair value through income Derivative financial instruments Held for trading Held for hedging purposes Available-for-sale Equity securities Local listed Unlisted Debt securities Funds on deposit and other money market instruments Local unlisted quoted collective investment schemes Total