| Mon 3 Mar 2003, 18:14 | | Clientele Life Assurance Company - Group Results |
|
ended 31 December 2002
Clientele Life Assurance Company Limited
(Registration number 1973/016606/06)
Share code: CLE
ISIN: ZAE000013397
Group Results for the six months ended 31 December 2002
- Net premium income increased by 30%
- Surplus from life operations increased by 35%
- Annualised after tax return on average shareholders` interests: 43%
- Cash generated by operations increased by 54%
- Embedded value - value added by management increased by 71% to R63 million
The following are the unaudited results for the company and its subsidiaries for
the six months ended 31 December 2002
Summarised Group Income Statements
Six months ended 31 December Year
ended
2002 2001 % 2001 30 June
(R`000`s) (Pro forma) 2002
Net recurring 112 875 86 861 30 86 861 181 899
premium income
Other income - 4 352 - - - -
fees earned
Policyholders` 708 4 436 4 436 6 619
investment income
Benefits - (8 219) (7 717) (7 717) (16 472)
policyholders
Transfer to life (17 565) (12 676) 39 (12 676) (19 152)
fund
Expenses (66 200) (51 624) 28 (51 624) (104 187)
- Operating (8 020) (6 102) 31 (6 102) (13 196)
expenses
- New business (58 180) (45 522) 28 (45 522) (90 991)
acquisition
expenses
Surplus from life 25 951 19 280 35 19 280 48 707
operations
Share of results (138) - - (381)
from associate
Shareholders` 19 2 882 6 643 10 748
investment income
Pre-tax headline 25 832 22 162 25 923 59 074
earnings
Taxation* (8 689) (7 904) (7 904) (14 564)
Headline earnings 17 143 14 258 20 18 019 44 510
Pro-forma results for the six months ended 31 December 2001 have been presented
to ensure the results are comparable as a special dividend of R67,75 million was
paid to shareholders on 9 September 2002.
It is pleasing to note that shareholders free assets were protected during this
period of poor investment returns where the all share index produced a negative
11,5% return and the Financial and Industrial index produced a negative 15,4%
return. The Group`s conservative investment approach has resulted in a slightly
positive investment return.
*Taxation of R8,7 million is comprised of South African normal taxation of R8,1
million, Secondary tax on companies (STC) of R1,8 million and an overprovision
in respect of the prior year of R1,2 million.
Summarised Group Balance Sheets
As at As at As at
31 Dec. 31 Dec. 30 June
(R`000`s) 2002 2001 2002
Funds employed
Share capital 4 853 4 770 4 770
Share premium 15 602 9 640 9 642
Retained surplus 32 411 78 777 105 268
Shareholders` interests 52 866 93 187 119 680
Life fund 90 169 66 129 72 604
143 035 159 316 192 284
Employment of funds
Investments 144 905 154 180 176 203
Investment in associate 2 742 - 2 880
Fixed assets 9 020 9 610 9 366
Current assets 7 154 8 675 23 526
Total assets 163 821 172 465 211 975
Liabilities (20 786) (13 149) (19 691)
143 035 159 316 192 284
Summarised statements of changes in equity
Share Share Retained
(R`000`s) capital premium earnings Total
30 June 2002
Balance at the beginning of 4 770 9 642 80 567 94 979
year
Net surplus attributable to 44 510 44 510
shareholders
Dividend declared (19 809) (19 809)
Balance at the end of year 4 770 9 642 105 268 119 680
31 December 2002
Balance at the beginning of 4 770 9 642 105 268 119 680
period
Shares issued 162 12 739 12 901
Shares repurchased (79) (6 746) (6 825)
Share issue and repurchase (33) (33)
expenses
Net surplus attributable to 17 143 17 143
shareholders
Ordinary dividend declared (22 255) (22 255)
Special dividend declared (67 745) (67 745)
Balance at the end of period 4 853 15 602 32 411 52 866
Summarised group cash flow statements
Six months ended 31 Year
December
2002 2001 % ended
(R`000`s) 30 June 2002
Cash generated by operations 46 985 30 448 54 64 754
Adjusted by:
Returns on investments 4 662 2 392 16 956
Dividends paid (90 000) (19 803) (19 801)
Taxation paid (12 962) (2 261) (2 258)
Cash flow from operating (51 315) 10 776 59 651
activities
Cash flow from investing 22 131 (17 323) (65 467)
activities
Cash flow from financing 20 739 (59) 383
activities
Decrease in cash on hand (8 445) (6 606) (5 433)
Earnings per share
Year
Six months ended 31 December ended
2002 2001 % 2001 30 June
(Cents) (Pro forma) 2002
Surplus from life 80.24 60.63 32 60.63 153.17
operations per share
Share of results from (0.42) - - (1.20)
associate per share
Shareholders` 0.06 9.06 20.89 33.80
investment income per
share
Pre-tax headline 79.88 69.69 81.52 185.77
earnings per share
Taxation per share (26.87) (24.85) (24.85) (45.80)
Headline earnings per 53.01 44.84 18 56.67 139.97
share
Weighted ordinary 32 341 31 800 31 800 31 800
shares in issue
(`000`s)
Dividends paid to shareholders during the six months ended 31 December 2002
Six months Six months
ended ended
31 December 31 December
(R`000`s) 2002 % 2001
Ordinary dividend 22 255 19 809
Special dividend 67 745 -
Total dividends 90 000 354 19 809
The dividends were paid to
shareholders on 9 September 2002.
Ordinary shares in issue
000`s
Ordinary shares in issue at 30 31 800
June 2002
Ordinary shares issued in terms of
share option scheme on
16 August 2002 1 075
Ordinary shares repurchased on 30 (525)
September 2002
Ordinary shares in issue at 31 32 350
December 2002
Notes:
The investment in associate represents a 33,3% investment in Client
le USA LLC.
The principal accounting policies and valuation bases adopted by the company
remain consistent with South African Statements of GAAP and those applied last
year except for the change in the treatment of dividends and STC with the
adoption of AC 107 (revised). In terms of new guidelines issued by the JSE
Securities Exchange South Africa, headline earnings are no longer determined on
a long-term rate of return. Comparative figures for December 2001 have been
restated appropriately.
The transfer to the life fund has been based on best estimates after providing
for first and second tier margins and has been actuarially certified by QED
Actuaries & Consultants (Pty) Limited.
The company has no major capital commitments for the foreseeable future.
The nature of the company`s business remains unchanged.
Group embedded value
The embedded value represents an estimate of the value of the company exclusive
of goodwill attributable to future new business. The embedded value comprises:
- the value of excess assets attributable to shareholders
- 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 the calculation date.
The embedded value calculations have been certified by the company`s independent
actuaries, QED Actuaries & Consultants (Pty) Limited.
December December
(R`000`s) 2002 2001
Embedded value
Value of excess assets attributable to 55 785 99 448
shareholders
Cost of capital (1 213) (1 237)
Value of in force business 298 023 232 471
Embedded value 352 595 333 156
Value of new business 65 894 43 687
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 six month period ended 31 December 2002.
The cost of capital is the opportunity cost of having to hold assets to cover
the capital adequacy requirement.
Embedded value at 30 June 2002 364 766
Revision of withdrawal assumption as at 30 June 2002 (7 005)
Restated embedded value at 30 June 2002 357 761
Unwinding of discount rate 18 251
Increase in share capital and share premium 6 043
Dividend (90 000)
Secondary tax on companies (1 774)
Value added by management 62 587
Value of new business 65 894
Investment experience - policyholders (1 222)
Investment return on shareholders` funds 19
Withdrawal, expense and commission experience 314
Tax experience (340)
Sundry adjustments (2 078)
Change in cost of capital (273)
Embedded value at 31 December 2002 352 595
Main assumptions: % p.a.
Long-term economic assumptions
Risk discount rate 16
Overall investment return 12
Expense inflation 8
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.
No future benefit has been anticipated in the embedded value calculation for the
estimated tax loss of R340 million in the individual policyholder fund.
Comments
The Group continues to be driven by simplicity of product and efficiency of
operation. Operating results for the six months ended 31 December 2002 reflect
strong new business growth, cash flows and profitability.
Net recurring premium income for the period of R113 million represents an
increase of 30% over last year. The group earned R4 million of other income
which is comprised of net single premium income and annuity fees from its
Independent Field Advertiser distribution channel. The surplus from life
operations attained an increase of 35% rising from R19 million to R26 million.
Pre-tax headline earnings rose by 17% from 69,69 cents per share to 79,88 cents
per share. Operating expenses per policy continue to drop and the average annual
cost per policy of less than R50 remains the lowest in the insurance industry.
This has translated into an after-tax return on average shareholders` interest
of 43%.
On 9 September 2002 total dividends of R90 million were paid to ordinary
shareholders. R67,7 million of this amount represents a special dividend, the
payment of which has reduced shareholders` funds and has impacted on the return
on free assets for the period. Comparative figures have been restated in order
to ensure that the results are comparable.
The embedded value of new business written during the period amounted to R66
million and includes, for the first time, annuity fees from the Independent
Field Advertiser distribution channel. The total increase in embedded value
before dividends and related STC amounts to R86 million.
As previously reported, Client
le Life holds 33,3% of the equity of Client
le
USA LLC. Client
le Life`s option to acquire the remaining 66,7% of the equity on
or before 31 December 2002 has been extended to 31 December 2003. Client
le USA
LLC markets insurance products through direct marketing channels. It is not
anticipated that this transaction will have any meaningful impact on Client
le
Life`s results in the short term.
Prospects
The Group intends to remain focused on its growth path and to grow its
operations by building on its distribution strengths.
The Group will continue to provide low cost life assurance products to its
target market through low cost distribution channels.
The Group has identified the opportunities available in diversifying its income
streams and leveraging off its distribution, cost and customer base and its
management, technology and administration expertise and is currently pursuing
these potential revenue growth areas.
By order of the board
G Q Routledge G J Soll Johannesburg
Chairman Managing Director 4 March 2003
Registered office: Client
le House, Morning View Office Park, Cnr Rivonia and
Alon Roads, Morningside, PO Box 1316, Rivonia 2128
Transfer secretaries: Computershare Investor Services Limited, 10th Floor, 70
Marshall Street, Johannesburg 2001, PO Box 1053, Johannesburg 2000
Directors: G Q Routledge (Chairman), G J Soll (Managing Director),
P J A Cunningham, P R Enthoven, P W Felton, I B Hume. Company secretary: B V
Moore.
Website: www.clientelelife.com
Date: 03/03/2003 05:00:03 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
