| Wed 20 Aug 2003, 17:07 | | REVISED GROUP RESULTS FOR THE YEAR |
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CLIENTELE LIFE ASSURANCE COMPANY LIMITED -
Clientele Life Assurance Company Limited
(Registration number 1973/016606/06)
Share code: CLE
ISIN: ZAE000013397
* Return on average shareholders" interests: 65%
* Cash generated by operations increased by 62%
* Headline earnings per share increased by 29%
* Net premium income increased by 31%
* Surplus from life operations increased by 36%
* Embedded value - value of new business increased by 31% to R96 million
* Additional cash distribution to shareholders
Revised Group Results for the year ended 30 June 2003
AUDITED Summarised Group Income Statements
Year ended
30 June
2003 2002 % 2002
(R"000"s) (Pro forma)
Net recurring premium 238 353 181 899 31 181 899
income
Other income 9 411 - -
Policyholders" investment 5 731 6 619 6 619
income
Benefits - policyholders (18 841) (16 472) (16 472)
Transfer to life fund (31 840) (19 152) (19 152)
Expenses (136 423) (104 187) 31 (104 187)
- Operating expenses (15 989) (13 196) 21 (13 196)
- New business acquisition (120 434) (90 991) 32 (90 991)
expenses
SURPLUS FROM LIFE 66 391 48 707 36 48 707
OPERATIONS
Share of results from (1 576) (381) (381)
associate
Shareholders"investment 3 240 3 900 10 748
income
PRE-TAX EARNINGS 68 055 52 226 30 59 074
Taxation* (18 760) (14 564) (14 564)
Net income attributable to 49 295 37 662 31 44 510
ordinary shareholders
Pro-forma results for the year ended 30 June 2002 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 produced a return of 6,52%
during this period of poor investment returns where the all share index produced
a negative (18,60%) return and the Financial and Industrial index produced a
negative (18,21%) return. The Group"s conservative investment approach has also
resulted in a 7,05% investment return for policyholders.
*Taxation of R18,76 million is comprised of South African normal taxation of
R18,11 million, Secondary tax on companies (STC) of R1,74 million, capital gains
tax of R0,13 million and an overprovision in respect of the prior year of R1,22
million.
AUDITED Summarised Group Balance Sheets
As at As at
30 June 30 June
(R"000"s) 2003 2002
Funds employed
Share capital 4 853 4 770
Share premium 15 602 9 642
Retained surplus 64 563 105 268
Shareholders" interests 85 018 119 680
Life fund 104 444 72 604
Policyholder liabilities 62 672 -
252 134 192 284
Employment of funds
Investments 260 900 176 203
Investment in associate 1 304 2 880
Fixed assets 7 865 9 366
Current assets 17 720 23 526
Total assets 287 789 211 975
Liabilities (35 655) (19 691)
252 134 192 284
AUDITED SUMMARISED STATEMENTS OF CHANGES IN EQUITY
Share Share Retained
(R"000"s) capital premium earnings Total
Balance at 1 July 4 770 9 642 80 567 94 979
2001
Net surplus 44 510 44 510
attributable to
shareholders
Dividend declared (19 809) (19 809)
Balance at 30 June 4 770 9 642 105 268 119 680
2002
Balance at 1 July 4 770 9 642 105 268 119 680
2002
Shares issued 162 12 739 12 901
Shares repurchased (79) (6 746) (6 825)
Share issue and (33) (33)
repurchase
expenses
Net surplus 49 295 49 295
attributable to
shareholders
Ordinary dividend (22 255) (22 255)
declared
Special dividend (67 745) (67 745)
declared
Balance at 30 June 4 853 15 602 64 563 85 018
2003
AUDITED SUMMARISED GROUP CASH FLOW STATEMENTS
Year ended 30 June
(R"000"s) 2003 % 2002
Cash generated by 104 677 62 64 754
operations
Adjusted by:
Returns on 8 971 16 956
investments
Dividends paid (89 980) (19 801)
Taxation paid (13 082) (2 258)
Cash flow from 10 586 59 651
operating
activities
Cash flow from (88 971) (65 467)
investing
activities
Cash flow from 80 757 383
financing
activities
Increase/(decrease) 2 372 (5 433)
in cash on hand
AUDITED Earnings per share
Year ended 30 June
2003 2002 % 2002
(Cents per share) (Pro forma)
Surplus from life operations 205.26 153.17 34 153.17
Share of results from associate (4.87) (1.20) (1.20)
Shareholders" investment income 10.02 12.26 33.80
Pre-tax headline earnings 210.41 164.23 28 185.77
Taxation (58.00) (45.80) 27 (45.80)
Headline earnings* 152.41 118.43 29 139.97
Weighted ordinary shares in 32 345 31 800 31 800
issue ("000"s)
*Headline earnings is net income
attributable to ordinary
shareholders
AUDITED DISTRIBUTIONS TO SHAREHOLDERS AFTER THE YEAR ENDED 30 JUNE 2003
After year After year
ended ended
30 June 30 June
(R"000"s) 2003 2002
Ordinary dividend 24 398 22 255
Special dividend - 67 745
Share premium returned 15 602 -
Total distribution 40 000 90 000
ORDINARY SHARES IN ISSUE
000"s
Ordinary shares in issue at 30 June 2002 31 800
Ordinary shares issued in terms of share 1 075
option scheme on 16 August 2002
Ordinary shares repurchased on 30 (525)
September 2002
Ordinary shares in issue at 30 June 2003 32 350
Notes:
The investment in associate represents a 33,3% investment in Clientele 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. 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 June 2002 have been restated accordingly.
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 group 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 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 the calculation date.
The embedded value calculations have been certified by the company"s independent
actuaries, QED Actuaries & Consultants (Pty) Limited.
June June
(R"000"s) 2003 2002
Embedded value
Value of excess assets attributable to 85 018 121 797
shareholders
Cost of capital (1 119) (941)
Value of in force business 286 259 243 910
Embedded value 370 158 364 766
Value of new business 96 369 73 493
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 2003.
The cost of capital is the opportunity cost of having to hold assets to cover
the capital adequacy requirement.
Analysis of change in embedded value
Embedded value at 30 June 2002 364 766
Revision of withdrawal assumption as at 30 June (7 004)
2002
Revision of STC assumption as at 30 June 2002 (15 122)
Restated embedded value at 30 June 2002 342 640
Dividend (90 000)
Secondary tax on companies (1 743)
Increase in share capital and share premium 6 043
256 940
Unwinding of discount rate 35 485
Value added by management 84 551
Value of new business 96 369
Investment experience - policyholders (674)
Investment return on shareholders" funds 3 240
Withdrawal, expense, tax and commission experience (12 808)
Loss from associate (1 576)
Change in basis at 30 June 2003 (6 640)
Change in cost of capital (178)
Embedded value at 30 June 2003 370 158
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. The
embedded value STC assumptions have been revised as Clientele Life"s Holding
Company has changed it"s election for STC in terms of S64 B of the Income Tax
Act.
No future benefit has been anticipated in the embedded value calculation for the
estimated tax loss of R412 million in the individual policyholder fund.
Comments
The Group continues to be driven by appropriate and effective distribution
channels and efficiency of operation. Operating results for the year ended 30
June 2003 reflect strong new business growth, cash flows and profitability,
despite the difficult operating environment.
Net recurring premium income for the period of R238 million represents an
increase of 31% over last year. The group earned R9 million of other income
which comprises mainly of net single premium income and annuity fees from its
Independent Field Advertiser distribution channel. The surplus from life
operations attained an increase of 36% rising from R49 million to R66 million.
Headline earnings per share rose by 29% from 118.43 cents per share to 152.41
cents per share. Operating expenses per policy of less than R50 remain the
lowest in the insurance industry and it is pleasing to note that the operating
margin has increased to 27,85% (2002: 26,78%).
This has translated into an after-tax return on average shareholders" interest
of 65%.
On 9 September 2002 total dividends of R90 million were paid to ordinary
shareholders. Included in this amount is a special dividend of R67.75 million,
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 R96
million and includes, for the first time, annuity fees from the Independent
Field Advertiser distribution channel. The negative adjustment with regard to
withdrawal experience and change in basis are mainly related to higher than
expected production in the second quarter of the financial year where payment
experience is traditionally worse than the annual average.
As previously reported, Clientele Life holds 33,3% of the equity of Clientele
USA LLC. Clientele USA LLC markets insurance products through direct making
channels, this company is making slow and controlled progress. The option which
Clientele Life holds to acquire the remaining 66,7% of Clientele USA LLC expires
on 31 December 2003. Clientele Life has not yet made a final decision in this
regard and is negotiating to extend the option period. It is not anticipated
that this investment will have any meaningful impact on Clientele Life"s results
in the short-term.
Prospects
Clientele Life expects that the life assurance environment will remain difficult
for some time, however it believes that the Group will continue to grow and
prosper by providing low cost life assurance products to its target market
through appropriate distribution channels.
DISTRIBUTIONS TO SHAREHOLDERS
Notice is hereby given that the board has declared the following distribution
per ordinary share:
Ordinary dividend (cents per share) 75.42
Cash distribution from share premium (cents per share) 48.23
Total distributions (cents per share) 123.65
Ordinary shares in issue at entitlement date (000"s) 32 350
The distributions will be paid on 15 September 2003.
To comply with the procedures of STRATE the last day to trade in the shares for
purposes of entitlement to the distributions is Friday, 5 September 2003. The
shares will commence trading ex distribution on Monday, 8 September 2003 and the
record date will be Friday, 12 September 2003.
Share certificates may not be dematerialised or rematerialised between Monday, 8
September 2003 and Friday, 12 September 2003 both days inclusive.
By order of the board
GQ Routledge G J Soll Johannesburg
Chairman Managing Director 18 August 2003
Registered office: Clientele House, Morning View Office Park, Cnr Rivonia and
Alon Roads, Morningside, PO Box 1316, Rivonia 2128
Transfer secretaries: Computershare Limited, Ground Floor, 70 Marshall Street,
Johannesburg 2001, PO Box 1053, Johannesburg 2000
Directors: GQ Routledge BA LLB (Chairman), G J Soll CA(SA) (Managing Director),
P JACunningham CA(SA), CA(Z), PR Enthoven BA, PWFelton B.Sc.Hdip.Tax (Law), I B
Hume CA(SA), ACMA. Company secretary: BVMoore.
Website: www.clientelelife.com
E-mail: services@clientelelife.com
Sponsor Nedbank Corporate Finance
Date: 20/08/2003 05:02:12 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
