|
CLE
CLE
CLE - Clientele Life Assurance Company - Reviewed Group Results for the
Year ended 30 June 2007 and dividend declaration
Clientele Life Assurance Company Limited
(Registration number 1973/016606/06)
Share code: CLE ISIN: ZAE000013397
FSP number: 15268
Reviewed Group Results for the Year ended 30 June 2007
Highlights
* New business up by 63% to 727 000 policies
* Embedded value of new business up by 67% to R302 million
* Increase in total embedded value of 70% to R982 million
* Return on opening embedded value of 61%
* Net premium income up by 38%
* Headline earnings per share up by 14%
* Return on average shareholders` interests of 83%
* Payments made to historically under serviced South Africans up by 47% to
over R250 million
Comments
The year to 30 June 2007 has been Clientele Life`s most impressive year to
date.
727 000 policies were sold compared to 446 000 policies last year, an
increase of 63%. This has confirmed Clientele Life`s position as the market
leader in its chosen market in both direct marketing through television and
print advertising and direct selling through referral marketing and has
resulted in strong growth in Embedded Value.
Embedded Value of new business for the year of R302 million represents an
increase of 67% over last year.
Total Embedded Value, after adjusting for the payment of dividends and STC
has increased from R576 million at 30 June 2006 to R982 million at 30 June
2007, an increase of 70%. This translates into a Return on Opening Embedded
Value of 61% for the year which is amongst the highest in the Life
Insurance Industry.
Net recurring premium income for the year of R624 million (2006: R453
million) increased by 38%. The group earned R85 million (2006: R49 million)
of other income which represents an increase of 73% and is comprised mainly
of recurring income, prior to the allocation of related expenses, from its
Independent Field Advertiser ("IFA") distribution channel.
Policyholders benefits of R125 million (2006: R76 million) have increased
by 66%.
Operating expenses continue to be well controlled and the average annual
renewal cost per policy remains amongst the lowest in the Life Insurance
Industry.
This performance is in line with Clientele Life`s strategy of focusing on
new business growth and the creation of value over the long term. We are
proud of the fact that whilst there has been a significant increase in the
total acquisition costs of new business, from R249 million to R387 million,
an increase of 55%, acquisition costs per policy have remained fairly
static. In terms of Clientele Life`s conservative accounting policy these
acquisition costs are all expensed up front, and are not deferred over the
life of the policies, as is the alternative treatment allowed.
The effect of the conservative accounting treatment and the new business
strain arising out of the tremendous growth in new business has impacted
current earnings. Despite this we are pleased that headline earnings per
share has increased by 14% from 283,64 cents to 324,06 cents for the year
under review.
The above results have translated into an after-tax return on average
shareholders interests of 83%.
On 1 December 2006, the Long-term Insurance Act was amended to include the
changes in minimum surrender values agreed in the Statement of Intent.
Regulation 5 of Government Gazette No. 29446 introduced "more onerous"
surrender values than the Statement of Intent. Clientele Life has complied
with Regulation 5 and these results incorporate the increased surrender
values.
The number of IFAs has continued to increase substantially, adding to the
thousands of successful entrepreneurs and business owners from historically
under serviced sectors of the South African population. Clientele Life made
payments of over R250 million to these individuals during the year.
The Share Appreciation Rights ("SAR") Scheme implemented in January 2007
has required that, in accordance with IFRS, Clientele Life recognises a
cost of R2,1 million in the income statement for this year.
Clientele Life`s unique distribution and reward formula has resulted in it
providing appropriate and affordable Life Insurance Products to the under
serviced citizens of our country who can at the same time become owners of
their own businesses. We are proud of the difference Clientele Life has
made to the lives of these individuals and their communities.
Clientele Life remains committed to servicing, empowering and educating
under serviced segments of the financial services market and will continue
to consider other opportunities in this arena of the lower and middle
income markets.
By order of the Board
G Q Routledge G J Soll Johannesburg
Chairman Managing Director 20 August 2007
REVIEWED
condensed group balance sheets
As at As at
30 June 30 June
(R`000`s) 2007 2006
Assets
Property and equipment 82 512 12 651
Investment in associates 141 -
Loan to associates 450 -
Deferred taxation 3 384 5 150
Current taxation receivables 3 295 -
Inventories 1 459 1 355
Reinsurance assets 34 359 28 820
Financial assets held at fair
value through profit or loss 1 042 059 930 307
Receivables including insurance receivables 16 333 10 410
Cash and cash equivalents 89 695 52 544
Total assets 1 273 687 1 041 237
Equity
Share capital 4 853 4 853
Retained earnings 146 494 120 344
Non-Distributable Reserve: Revaluation 16 101 -
SAR Scheme Reserve 2 099 -
Treasury Share Reserve - (1 589)
Total equity 169 547 123 608
Liabilities
Policyholder liabilities under
insurance contracts 498 020 379 996
Financial liabilities held at fair
value through profit or loss 480 969 458 245
Employee benefits 32 760 17 760
Amounts due to reinsurers 1 191 430
Accruals and payables including
insurance payables 79 781 58 781
Deferred taxation 11 419 2 035
Current taxation - 382
Total liabilities 1 104 140 917 629
Total equity and liabilities 1 273 687 1 041 237
condensed group income statements
Year ended 30 June
(R`000`s) 2007 2006 % Increase
Revenue
Insurance premium revenue - 651 267 475 125 37
individual recurrring
Reinsurance premiums (27 749) (21 712) 28
Net insurance premiums 623 518 453 413 38
Other income 84 765 48 612 74
Fair value gains on financial 152 675 121 309 26
assets held at fair value
through profit and loss
Total revenue 860 958 623 334 38
Net insurance benefits and (125 450) (76 002) 65
claims
Policyholder benefits under (145 662) (92 453) 58
insurance contracts
Insurance claims recovered from 20 212 16 450 23
reinsurers
Increase in policyholder (118 024) (113 945) 4
liabilities under insurance
contracts
- Increase for the year (113 968) (86 191) 32
- Impact of Statement of Intent (4 056) (27 753)
and Regulation 5
Increase in reinsurance assets 5 539 5 217 6
Fair value adjustment to
financial liabilities held at
fair value through
profit and loss (34 332) (18 951) 81
Expenses (434 673) (281 103) 55
Acquisition costs associated (387 125) (249 150) 55
with insurance contracts
Administration expenses (47 548) (31 953) 49
Impairment of USA associate - (4 000)
Equity accounted earnings from 141 52 171
associates
Profit before taxation 154 159 134 602 15
Taxation (49 322) (43 823) 13
Net profit attributable to 104 837 90 779 15
ordinary shareholders
taxation
Year ended 30 June
(R`000`s) 2007 2006
Current and deferred taxation (33 524) (33 954)
Secondary tax on companies ("STC") (10 228) (9 730)
Capital gains tax (5 570) (973)
Over provision for prior years - 834
(49 322) (43 823)
The Individual Policyholder Fund has an estimated tax loss of
R720 million.
reconciliation of net profit attributable to ordinary shareholders to
headline earnings
Year ended 30 June
(R`000`s) 2007 2006
Net profit attributable to ordinary 104 837 90 779
shareholders
Add: Impairment of investment in associate - 958
Less/add: (Profit)/Loss on disposal of fixed (5) 21
assets
Headline earnings (R`000`s) 104 832 91 758
Headline earnings per share (cents) 324,06 283,64
Embedded value per share (cents) 3 037,00 2 072,49
Earnings per share (cents) 324,07 280,62
Diluted earnings per share (cents) 323,84 -
Net asset value per share (cents) 524,10 382,10
Diluted headline earnings per share (cents) 323,83 -
Weighted ordinary shares in issue (`000) 32 350 32 350
Diluted ordinary shares in issue (`000) 32 373 -
condensed statement of changes in equity
Non-
Treasury SAR distribu-
Share Retained shares scheme table
(R`000`s) capital earnings reserve reserve reserves Total
Balance as 4 853 110 132 (1 589) - - 113 396
at 1 July
2005
Net profit 90 779 90 779
attributable
to
shareholders
Ordinary (80 567) (80 567)
dividend
paid
Balance as 4 853 120 344 (1 589) - - 123 608
at 30 June
2006
Balance as 4 853 120 344 (1 589) - - 123 608
at 1 July
2006
Sale of 5 423 1 589 7 012
treasury
shares
Net profit 104 837 104 837
attributable
to
shareholders
Ordinary (84 110) (84 110)
dividend
paid
SAR scheme 2 099 2 099
allocated
Revaluation 16 101 16 101
of owner-
occupied
property
Balance as 4 853 146 494 - 2 099 16 101 169 547
at 30 June
2007
condensed group cash flow statements
Year ended 30 June
(R`000`s) 2007 2006
Cash generated by operations 228 551 239 057
Net acquisition of investments (72 746) (118 869)
Investment returns 25 321 59 075
Dividend paid (84 089) (80 489)
Taxation paid (43 614) (60 902)
Cash flow from operating activities 53 423 37 892
Cash flow from investing activities (16 272) (9 226)
Increase in cash on hand 37 151 28 646
segment information
Clientele Life`s main business segments include Insurance and Investment
contract segments.
The financial effects of the Investment contract segment on revenue and
profit for the year are insignificant.
2007 2006
Segment assets & liabilities R`000 R`000
Insurance segment assets 792 894 586 256
Investment contract segment assets 480 793 454 981
Total Group assets 1 273 687 1 041 237
Insurance segment liabilities 623 171 459 384
Investment contract segment liabilities 480 969 458 245
Total Group Liabilities 1 104 140 917 629
Clientele Life operates in South Africa. Policies written are in respect of
individuals.
proposed dividend to shareholders after the year ended 30 June 2007
After year After year
ended ended
30 June 30 June
2007 2006
Ordinary dividend (R`000`s) 97 050 84 110
Ordinary shares in issue at 30 June 32 350 32 350
(`000`s)
notes to the results:
The investment in associates represents a 33.3% investment in Clientele USA
LLC and a 49% share in Legal Sense (Pty) Ltd.
The increase in policyholder liabilities has been based on best estimates
after providing for compulsory and discretionary margins and has been
actuarially certified by QED Actuaries & Consultants (Pty) Limited.
The purchase of the two buildings in Morningview Office Park, referred to
in prior periods, has been concluded for R40,6 million.
These buildings have been revalued by an independent valuer at R62 million
which revaluation is reflected in the Balance Sheet.
The group has entered into negotiations to purchase the remaining four
buildings in Morningview Office Park in Rivonia Road, Sandton for R56
million.
The nature of the group`s business remains unchanged.
The results have been reviewed by the Group`s auditors,
PricewaterhouseCoopers Inc., in terms of International Standards on Review
Engagements 2410. The scope of the review was to enable the auditors to
report that nothing came to their attention that caused them to believe
that the accompanying condensed preliminary consolidated financial
information is not presented, in all material respects, in accordance with
the South African Companies Act and section 8.57 of the JSE Listings
Requirements. A copy of the review opinion is available on request at the
company`s registered offices.
accounting policies
Statement of compliance
The accounting policies adopted for the purpose of the group financial
statements comply with International Financial Reporting Standards
("IFRS"), and with the listing requirements of the JSE Limited and the
Companies Act of South Africa and are consistent with prior years save for
the introduction of the revaluation of investment property and the
valuation of subsidiary companies at fair value.
The preparation of financial statements in accordance with IFRS requires
the use of certain critical accounting estimates and judgement. The
reported amounts in respect of the Group`s insurance contracts, employee
benefits and unquoted financial instruments are affected by accounting
estimates and judgement.
There was no significant impact due to changes in previous assumptions used
in deriving at the amounts referred to above.
group Embedded value
The embedded value represents an estimate of the value of the group
exclusive of goodwill attributable to future new business. The embedded
value comprises:
- the value of excess assets attributable to shareholders plus
- the value of in force business less
- the cost of capital.
The value of in force business is the present value of future after tax
profits arising from business in force at 30 June 2007.
The embedded value calculations have been certified by the company`s
independent actuaries, QED Actuaries & Consultants (Pty) Limited.
Year ended 30 June
(R`000s) 2007 2006
Embedded value
Value of excess assets attributable to 167 446 123 608
shareholders
Cost of capital (13 683) (6 651)
Value of in force business 828 707 553 492
Embedded value 982 470 670 449
Value of new business 302 436 181 136
The value of new business represents the present value of projected after
tax profits at the point of sale on new policies sold and annuity fee
income during the year ended 30 June 2007.
The cost of capital is the opportunity cost of having to hold assets to
cover the capital adequacy requirement (CAR) of R47 million.
Clientele Life`s CAR cover ratio at year end was 3,6 times (2006: 4,5
times).
Analysis of change in embedded value 30 June 2007
Embedded value at beginning of year 670 449
Dividend paid (84 110)
Secondary tax paid (10 228)
Embedded value after adjusting for 576 111
dividends and STC
Unwinding of discount rate 97 966
SAR Scheme (2 099)
Proceeds on sale of treasury shares 7 012
Embedded value - Goodwill and medium-term (54 457)
incentive schemes
624 533
Value added by Management 377 590
Value of new business 302 436
Profit from associates 103
Investment experience 35 448
Withdrawal experience 24 485
Sundry adjustments 15 118
Change in basis
Value of in-force and excess assets (17 092)
Change in cost of capital (2 561)
Embedded value at end of period 982 470
Embedded value earnings
Embedded value at the end of the year 982 470
Embedded value at the beginning of the year 670 449
Change in embedded value for the year 312 021
Add: Dividends paid 84 110
Add: STC on dividends paid 10 228
Embedded value earnings for the year 406 359
As a percentage of embedded value at the 61%
beginning of the year
Main assumptions: % p.a. % p.a.
Long-term economic assumptions 2007 2006
Risk discount rate 14,0 14,0
Overall investment return 9,0 8,5
Expense inflation 6,5 6,0
Other assumptions
The assumptions for future mortality, persistency and premium escalations
were based on recent experience adjusted for anticipated future trends.
Allowance has been made for future taxation and STC in the embedded value
calculations.
dividend proposal
Notice is hereby given that the Board is proposing the following dividend
per ordinary share which declaration will take place on
2 October 2007.
Ordinary dividend (cents per share) 300
Ordinary shares in issue at record date (000`s) 32 350
The dividend will be paid on Monday, 29 October 2007.
To comply with the procedures of STRATE the last day to trade in the shares
for purposes of entitlement to the dividend is Friday, 19 October 2007. The
shares will commence trading ex dividend on Monday, 22 October 2007 and the
record date will be Friday, 26 October 2007.
Share certificates may not be dematerialised or rematerialised between
Monday, 22 October 2007 and Friday, 26 October 2007 both days inclusive.
By order of the board
G Q Routledge G J Soll Johannesburg
Chairman Managing Director 20 August 2007
Investment Bank and sponsor
Nedbank Capital
Registered office:
Clientele House, Morningview Office Park,
Cnr Rivonia and Alon Roads, Morningside,
PO Box 1316, Rivonia 2128
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg 2001, South Africa.
PO Box 61051, Marshalltown 2107, South Africa
Directors:
G Q Routledge BA LLB (Chairman),
G J Soll CA(SA) (Managing Director)*,
P J A Cunningham CA(SA), CA(Z), P?R Enthoven BA,
I B Hume CA(SA), ACMA*, B Frodsham BCom*,
Dr S D Molapo JSTC (SA), BSC (USA), M.Ed (USA), D.Ed (USA)
Company secretary: W Landman CA(SA). *Executive director
Website: www.clientelelife.com
E-mail: services@clientelelife.com
Date: 20/08/2007 17:00:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
| Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information. | |||||||||||||
| Other Profile Group sites: FundsData Online (unit trust data) | Profile Group corporate site | |||||||||||||
| [ Terms of Use | Privacy Policy | PAIA manual | FAQs/Help | Site Map | © Copyright Reserved 2026 ] | |||||||||||||
|
|||||||||||||
