| Wed 27 Aug 2003, 10:33 | | Interim results for the six months ended 30 June |
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SAGE GROUP LIMITED -
Sage Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1970/010541/06)
Share code: SGG ISIN: ZAE 000006623
Interim results for the six months ended 30 June 2003
Total earnings of R45,1 million (R239,5 million loss - 9 months to 31/12/02)
Headline earnings per share of 28,5 cents (31,9 cents loss - 9 months to
31/12/02)
Total life new business premiums of R165,0 million annual premium equivalent
(R216,4 million to 30/6/02)
Sage Unit trust sales of R326,9 million
Total SA assets under management of R10,0 billion (R10,0 billion on 31/12/02)
Group embedded value of R816,0 million(R575,3 million 31/12/02)
Management team strengthened; Board restructured
Stronger balance sheet following capital raising of R350 million. Debt reduced
from R654,5 million to R382,8 million
27 August 2003
Garth Griffin, Group Chief Executive, commented:
"Our Group results have been impacted by the volatile and difficult trading
environment as well as by market uncertainty following the developments and
restructuring during the past 12 months. The benefits of the restructuring are
however now beginning to materialise and with the clear focus on South African
operations, should be reflected in an improving new business trend in the second
half. We expect that the outcome of our strategic review will provide further
impetus to the Group"s focus on delivering value to all stakeholders."
SAGE GROUP LIMITED
INTERIM REPORT
FOR THE SIX MONTHS ENDED 30 JUNE 2003
COMMENTARY
ACCOUNTING POLICIES AND PRESENTATION
The accounting policies adopted comply with South African Statements of
Generally Accepted Accounting Practice as well as with applicable legislation.
These accounting policies are consistent with those applied at 31 December 2002,
except for the adoption of the accounting standard AC133 (Financial Instruments:
Recognition and Measurement) which became effective for financial years on or
after 1 July 2002.
AC133 is a prospective statement, which means that historical figures are not
adjusted to the new basis of accounting. Instead adjustments to determine the
new equity as well as the asset and liability base are dealt with as an opening
transitional adjustment in retained earnings.
In accordance with AC133, in respect of financial assets, policyholder and
shareholder assets have been designated as "available for sale". Due to the fact
that policyholder assets back policyholder liabilities, the gains or losses are
subsequently transferred to or from the life fund liabilities. Shareholder
available-for-sale assets are valued at fair value and gains or losses are
included in income.
Insofar as liabilities are concerned and in accordance with this statement, read
together with the guidance on the application of AC133 to liabilities arising
from long-term insurance contracts as approved by the Accounting Practices
Committee, certain liabilities have been designated as "investment contracts".
Insurance contracts continue to be valued in terms of the Financial Soundness
Valuation basis with the actuarially determined liabilities now being disclosed
separately from "liabilities under investment contracts" on the balance sheet.
Investment contracts are valued at fair value in accordance with AC133. The net
result relating to these contracts are reflected in the income statement.
The Equity Linked Notes liability, which includes an embedded derivative, has
been designated as "held at fair value (through the income statement)". Both the
debt instrument and the embedded derivative have been fair valued in accordance
with AC133.
There is currently no International Financial Reporting Standard for insurance.
Although the International Accounting Standards Board has a project in progress
to address this issue, finalisation is not expected for a number of years to
come. The impact on the results of the Group for the six months to 30 June 2003
in respect of the adoption of AC133 is detailed in note 5 to the income
statement.
Operating Environment and Strategic Progress
The Group has operated in a particularly challenging environment during the
review period. Economic growth has remained muted, investment markets have been
weak, the rand has strengthened but been volatile and business growth has
remained under pressure in the life insurance and unit trust sectors in which
the Group operates. In addition, the Group has faced the uncertainty created in
the wake of the discontinuation of its international activities in the 2002
financial year. In recent months however, significant progress has been made in
restructuring the Group:
* The board of Sage Group has been restructured under the leadership of the new
Non-Executive Chairman, Dr Danie Cronje and, as previously announced, the
management team has been restructured and strengthened with the appointment of
Mr Garth Griffin to the new position of Group Chief Executive.
* The Group successfully completed a R350 million capital raising exercise
establishing a more diverse shareholder base. New capital of R235 million was
raised during the review period by way of a rights issue to shareholders and
R115 million was raised in a specific issue to a consortium of investors
represented by, and including, AVASA Holdings Limited (the AVASA consortium).
The proceeds of the capital raising are being utilised to strengthen the Group
balance sheet by reducing interest bearing borrowings. The foreign Equity Linked
Notes, which have been fully hedged, have been reduced through repurchases and
cancellation of $14,7 million at the date of this report at a discount of
approximately 12% to their nominal value. Net debt at Group level has
consequently been substantially reduced to R382,8 million at 30 June 2003 from
R654,6 million at 31 December 2002. Interest cover has improved to 2,5 times and
is expected to reflect the ongoing benefit of the capital raising.
* Agreement in principle has been reached for the disposal by the Group of its
US life operations, namely Sage Life Assurance of America Inc to Swiss Re Life
and Health US for $100, subject to final regulatory approval which is expected
shortly. The winding down of all ancillary activities in the US is virtually
complete and no further costs are anticipated to be incurred by the Group.
Strategic Review
The board and management have commenced an extensive process of re-energizing
and refocusing the Group"s South African life insurance and unit trust
operations and of developing a new vision to drive longer term strategy. The
objective is to position the Sage Group as a unique and competitive listed
financial services group. This exercise encompasses restructuring and expanding
the leadership team, enhancing financial management processes, addressing future
capital needs, reviewing market segmentation, product development strategy and
distribution structures and rejuvenating the well established Sage brand. The
strategic review is well advanced and it is anticipated that developments will
be announced in the next few months.
Operating Results
Trading Review
New Business
As indicated in the corporate update on 5 June 2003, the uncertainty surrounding
the Group prior to the announcement of the 2002 financial results and other
developments, including the disposal of the international operations, materially
affected new business results. New business was also impacted by the prevailing
economic and investment climate, in line with the general trend in the insurance
and investment industries.
Total South African life new business for the 6 months under review showed a
decline of 23,7% to R165,0 million compared to the same period in the previous
year in terms of Annual Premium Equivalent (annualised recurring premiums and
10% of single premiums). Total new business in the Individual division declined
by 32,7% while the Employee Benefits division showed an increase of 15,2%.
External sales by Sage Unit Trusts for the 6 months totalled R326,9 million,
compared with R861,2 million in the same period of the previous year.
Repurchases have continued at high levels in line with the industry trend,
resulting in a net outflow of R129,1 million for the period compared to net
inflows of R117,1 million in the first half of last year, good relative
investment performance notwithstanding.
The capital raising and other recent developments in the Group have been well
received internally and by intermediaries and clients and an improvement in the
new business trend is anticipated in the second half of the year.
Expense Management
Within the SA operations, expenses of management for the six months to June 2003
have been well contained, showing a reduction of 3,9% on a comparative basis
with the previous year. Steps taken to rationalise certain activities, notably
the full integration of unit trust and life operations, are expected to yield
additional cost savings but, in the shorter term, these will be partially offset
by additional development expenses to be incurred in the restructuring process.
Management will continue to seek further cost reductions, while concentrating on
the optimal allocation of resources.
Policy Discontinuances
Discontinuances of policies through lapsing and surrenders within Sage Life
increased during the first half of the year; the number of policies lapsed
increased only marginally (0,7%) while the number of policies surrendered
increased by 16,4% compared to the same period last year. However, the value of
in force annualised premiums has continued to increase, albeit marginally,
reaching R1 013 million at the end of June 2003 compared to R990 million a year
earlier.
Investments
During the review period, there has been an overall decline in equity values but
continuing positive performance in the fixed interest sectors. The investment
performance of client assets continues to improve on a relative basis, even
though absolute returns remain muted in line with market conditions. Sage Life"s
major employee benefit portfolios continue to feature in the top quartile of
independent rankings over the past one and three years while six of the Sage
unit trusts are ranked in the top quartile in their sectors for the 12 months to
June 2003. The shareholder fund in Sage Life has been partially protected from
the general market trend by the positive performance of the ABSA holding.
Financial Results
Group total earnings for the review period amounted to R45,1 million,
significantly up on the loss of R239,5 million for the nine months to December
2002. Total earnings per share amounted to 28,0 cents compared with a loss of
159,4 cents in the previous nine months. The implementation of accounting
standard AC133 had the effect of increasing total earnings by R5,2 million in
the review period.
No dividend has been declared at the interim stage or is anticipated for the
balance of the financial year, as part of the process of further strengthening
the Group"s financial position. The directors will be monitoring the position
carefully with a view to the
resumption of dividend payments when appropriate.
Group operating earnings were negatively impacted in particular by an expense
strain as a result of lower new business volumes, voluntary terminations by
clients and poor investment markets, which resulted in an operating deficit of
R44,5 million from Sage Life"s operating fund.
On the other hand, net earnings attributable to Sage Life"s shareholder"s fund
amounted to R65,4 million. In the current period, shareholder earnings from this
source benefited from the improvement in the ABSA share price.
Sage Life"s capital adequacy requirement at 30 June 2003 was R442,6 million and
the capital adequacy multiple has remained unchanged at 1,5. This satisfies
current regulatory guidelines. Management continues to examine ways of ensuring
that Sage Life"s capital adequacy requirements are minimised, inter alia through
ongoing improvement of portfolio structures.
Despite weak markets and a decline in total assets under management, Sage Unit
Trusts produced satisfactory results, with earnings of R8,1 million for the six
months under review compared with R10,5 million in the previous nine months. The
valuation of Sage Unit Trusts has been written down by R15 million to R145
million to reflect prevailing market conditions.
Other earnings attributable to Group activities amounted to R58,2 million for
the six months under review. The significant favourable influences on these
earnings were foreign exchange translation and fair value adjustments amounting
to R58,9 million, resulting from the continuing strengthening of the rand, and
the net gain on ELN repurchases of R14,6 million.
Earnings for the review period were not impacted by the capital raising which
occurred on 17 June in respect of the specific issue and on 30 June in respect
of the rights issue.
Embedded Value Statements
Sage Life
Sage Life"s embedded value at 30 June 2003 was R1 295,6 million, a 2,7%
reduction since 31 December 2002, reflecting investment market trends, the
declining interest rate pattern and the reduction in new business volumes.
Sage Group
The embedded value measures the current value of the Group"s net assets at fair
value together with the present value of future profits from business already
written by the life insurance operations (net of cost of capital). The Group
embedded value at 30 June 2003 amounted to R816,0 million equivalent to 221
cents per share. This includes an allowance for Group corporate expenses not
accounted for in the Sage Life embedded value.
Outlook
The Group results have been impacted by the volatile and difficult trading
environment as well as by market uncertainty following the developments and
restructuring during the past 12 months. The benefits of the restructuring are
however now beginning to materialise and with the clear focus on South African
operations, should be reflected in an improving new business trend in the second
half. We expect that the outcome of our strategic review will provide further
impetus to the Group"s focus on delivering value to all stakeholders.
Dr DC Cronje G Griffin
Chairman Group Chief Executive
26 August 2003
* Total earnings R45,1 million
* Headline earnings per share 28,5 cents
* Total SA assets under management R10,0 billion
* Group embedded value R816,0 million
* Board restructured and management team strengthened
* Stronger balance sheet following R350 million capital raising
SALIENT FEATURES
6 months 9 months 3 months
30 June 31 Dec 30 June
2003 2002 2002
Total earnings/(loss)(1) R million 45,1 (239,5) 44,5
Total earnings/(loss) per share cents 28,0 (159,4)
30,1
Headline earnings/(loss) per share cents 28,5 (31,9)
30,6
Group embedded value R million 816,0 575,2 2 461,2
Group embedded value per share cents 221
366 1 640
Finance costs at Sage Group level R million (38,5) (56,6)
(19,5)
Net debt at Sage Group level R million 382,8 654,6
678,2
SA activities
- Total assets undermanagement R million 10 005,4 9 976,8
9 750,0
- New businessvolumes(2) R million 614,5 1 823,5
685,0
- Life new businessAPE(3) R million 165,0 336,2
114,2
- Life new business embedded value R million 16,7 40,2
20,0
- Net fund flows R million 54,0 113,6 90,4
Financial ratios
Life new business embedded value margin(4) % 17,1 15,7
22,3
CAR - Life company times 1,5 1,5 3,9
Interest cover(5) times 2,5 (2,1) 3,8
(1) Total earnings for the six months ended 30 June 2003 include the impact of
AC133.
(2) New business volumes: total life new business plus external unit trust
sales.
(3) APE = Annual premium equivalent and is equal to new recurring premiums
(including automatic increase premiums) plus 10% of single premiums.
(4) Life new business embedded value margin: calculated using APE, excluding
automatic increase premiums.
(5) Interest cover: total earnings before tax and finance costs at Sage Group
level, divided by finance costs at Sage Group level.
GROUP BALANCE SHEET
30 June 31 Dec 30 June
2003 2002 2002
R million Note Unaudited Audited Unaudited
ASSETS
Non-current assets 7 063,2 10 024,5 9 832,1
- Tangible assets 21,2 22,6 42,9
- Intangible assets 69,0 69,9 122,4
- Financial assets 21,2 28,0 52,8
- Investments of the life
insurance subsidiaries 6 951,8 9 904,0 9 614,0
Current assets 801,0 663,5 728,2
Total assets 7 864,2 10 688,0 10 560,3
EQUITY AND LIABILITIES
Total shareholders" interest 1 85,3 (155,4) 142,2
- Ordinary shareholders" interest 85,3 (247,8) 49,8
- Outside shareholders" interest - 92,4 92,4
Non-current liabilities 7 249,7 10 065,3 9 748,3
- Life funds 6 810,3 9 506,9 9 080,9
- Liabilities under insurance contracts 3 508,0
9 506,9 9 080,9
- Liabilities under investmentcontracts 3 302,3
- -
- Equity linked notes 2 439,4 558,4 667,4
Current liabilities 529,2 778,1 669,8
- Interest bearing 3 131,4 198,9 195,8
- Other 397,8 579,2 474,0
Total equity and liabilities 5 7 864,2 10 688,0 10 560,3
NOTES TO THE GROUP BALANCE SHEET
30 June 31 Dec 30 June
2003 2002 2002
R million Note Unaudited Audited Unaudited
1 RECONCILIATION BETWEEN
SHAREHOLDERS" FUNDS
IN SAGE LIFE LIMITED AND
SAGE GROUP LIMITED
Shareholder"s fund - SAGE LIFE LIMITED 677,7 671,7
1,852,5
- Adjustment to fair values of
Sage Life subsidiaries (148,0) (163,0) (1 612,9)
Shareholder"s fund of Sage Life Limited
at Net Asset Value 529,7 508,7 239,6
- International operations - 27,2 382,0
- ELN"s (439,4) (558,4) (667,4)
- Domestic interest bearing debt (131,4) (188,9) (185,8)
Gross (197,4) (198,9) (195,8)
Preference shares issued by
Sage Life subsidiary - 10,0 10,0
Inter company 66,0 - -
- Goodwill 14,8 15,6 39,9
- Tangible and intangible assets 26,1 33,7 88,4
- Net working capital 85,5 (85,7) 153,1
Shareholders" funds
- SAGE GROUP LIMITED 85,3 (247,8) 49,8
2 NON-CURRENT LIABILITIES
$55,3 million (2002: $65 million) 8% unsecured Equity Linked Notes (ELN"s)
redeemable 31 July 2005, valued at fair value.
The foreign liability has been fully hedged by means of a forward exchange
contract at a spot rate of R7,48/$.
3 CURRENT LIABILITIES
Bank borrowings totalling R112,5 million at 30 June 2003 are secured by means of
a pledge of 22,7% of the ordinary shares in Sage Life Limited.
4 NET DEBT AT SAGE GROUP LEVEL
Equity Linked Notes 439,4 558,4 667,4
Domestic interest bearing
debt (gross) 197,4 198,9 195,8
Rights offer proceeds
(net, included in current assets) (219,6) - -
Shareholders" cash
(included in current assets) (34,4) (102,7) (185,0)
382,8 654,6 678,2
5 TOTAL ASSETS UNDER
MANAGEMENT
- SA total assets 7 864,2 7 577,1 7 785,0
- SA Unit Trusts assets - off balance sheet 2 141,2 2
399,7 1 965,0
10 005,4 9 976,8 9 750,0
- International (discontinued) - 3 110,9 2 775,3
10 005,4 13 087,7 12 525,3
6 COMPARATIVES
Certain comparative figures have been regrouped and restated where necessary in
order to provide more meaningful comparable disclosures.
Following the change in year-end from 31 March to 31 December, comparative
figures are for the three months to June 2002 and 9 months to December 2002
respectively.
7 SAGE LIFE FINANCIAL RATIOS
Sage Life shareholder"s fund 677,7 671,7 1 852,5
Capital adequacy requirements (CAR) 442,6 438,1 473,0
CAR covered by Sage Life shareholder"s
fund (times) 1,5 1,5 3,9
Shareholders" fund as a percentage of
- Policy liabilities (%) 10,0 10,1 27,2
- Non-market related liabilities (%) 23,1 23,7 66,7
SUMMARISED CASH FLOW STATEMENT
30 June 31 Dec 30 June
2003 2002 2002
R million Unaudited Audited Unaudited
Cash outflow from operating activities (6,2) (124,0)
(15,2)
Cash inflow/(outflow)
from investing activities 135,3 31,0 (90,1)
Cash inflow/(outflow)
from financing (17,9) 22,0 8,2
Net increase/(decrease)
in cash equivalents 111,2 (71,0) (97,1)
Cash and equivalents
at beginning of period 311,0 381,9 381,9
Adjustment for cash in discontinued
operations at beginning of period (91,2) - -
Cash and equivalents at end of period 331,0 310,9 284,8
Shareholders 34,4 102,7 185,0
- SA 34,4 11,5 21,7
- International (discontinued) - 91,2 163,3
Policyholders 296,6 208,2 99,8
331,0 310,9 284,8
SUMMARISED GROUP INCOME STATEMENT
6 months 9 months 3 months
30 June 31 Dec 30 June
2003 2002 2002
R million Note Unaudited Audited Unaudited
Sage Life operating fund
(deficit)/surplus (44,5) 128,3 16,8
Net earnings/(loss) attributable to Sage Life
Shareholder"s fund 1 65,5 (4,0) 170,3
Other earnings/(loss) attributable to Groupactivities 2
58,2 (115,7) (122,3)
Finance costs 3 (33,3) (56,6) (19,5)
Earnings/(loss) beforeexceptional items 45,9
(48,0) 45,3
Exceptional items 4 (0,8) (191,5) (0,8)
Total earnings/(loss) 5 45,1 (239,5) 44,5
Reconciliation to headline earnings
Total earnings/(loss) 45,1 (239,5) 44,5
Add exceptional items 0,8 191,5 0,8
Headline earnings/(loss) 45,9 (48,0) 45,3
Weighted average number
of ordinary shares ("m) 6 161,1 150,3 148,0
Total number of shares
in issue ("m) 6 367,1 155,0 148,1
Compulsory convertible
debentures in issue ("m) 2,0 2,0 2,0
Total earnings/(loss) per
ordinary share (cents) 28,0 (159,4) 30,1
Headline earnings/(loss)
per ordinary share (cents) 28,5 (31,9) 30,6
NOTES TO THE SUMMARISED GROUP INCOME STATEMENT
6 months 9 months 3 Months
30 June 31 Dec 30 June
2003 2002 2002
R million Unaudited Audited Unaudited
1 NET EARNINGS/(LOSS)
ATTRIBUTABLE TO SAGE
LIFE SHAREHOLDER"S FUND
Earnings of unlisted subsidiaries 10,1 11,9 10,2
Investment income 10,6 14,5 -
Realised and unrealised net
surpluses on financial assets 51,3 2,7 96,3
Foreign exchange translation adjustments -
- 72,5
Loss on disposal of internationaloperations -
(1 028,9) -
Adjustment to fair value offsubsidiaries (15,0)
(152,6) (118,6)
Taxation (4,1) (30,2) (8,0)
Other (2,4) (2,9) (0,7)
50,5 (1 185,5) 51,7
Reversal of adjustments to fair
value of subsidiaries 15,0 1 181,5 118,6
65,5 (4,0) 170,3
2 OTHER EARNINGS/(LOSS)
ATTRIBUTABLE TO GROUP ACTIVITIES
Loss from other Group activities (5,9) (141,5) (156,4)
Foreign exchange translation and fair
value adjustments 58,9 102,3 36,5
Net gain on ELN repurchases 14,6 - -
Provision against share scheme loans (0,9) (57,7) -
Taxation (8,5) (10,6) (2,4)
International minority interest - (8,2) -
58,2 (115,7) (122,3)
3 FINANCE COSTS
Finance costs at Sage Group level (38,5) (56,6) (19,5)
Inter company 5,2 - -
(33,3) (56,6) (19,5)
4 EXCEPTIONAL ITEMS
Amortisation of goodwill (0,8) (1,3) (0,8)
Impairment of assets relating to
discontinued operations - (110,1) -
Other discontinuation costs - (80,1) -
(0,8) (191,5) (0,8)
5 AC133
With the implementation of AC133, the fair value adjustment amounting to a net
credit of R5,2 million for the Equity Linked Notes (designated as "held at fair
value") has been reflected in the income statement for the six months ended 30
June 2003.
6 SHARES ISSUED
On 17 June 2003 a special issue of 69 696 970 shares took place at R1,65 per
share. This was followed by a rights issue on 30 June 2003 of 142 424 242 shares
at R1,65 per share, the proceeds of which were received on 7 July 2003.
STATEMENT OF CHANGES IN EQUITY
6 months 9 months 3 Months
30 June 31 Dec 30 June
2003 2002 2002
R million Unaudited Audited Unaudited
Balance at the beginning of the period (247,8)
5,3 5,3
AC133 transitional adjustment to
opening retained earnings 1 (44,8) - -
Restated opening retained earnings (292,6) 5,3 5,3
Income attributable to shareholders 45,1 (239,5) 44,5
Dividends paid - (24,3) -
Shares issued during the period 350,0 10,9 -
Other (share issue expenses) (17,2) (0,2) -
Balance at the end of the period 85,3 (247,8) 49,8
Note
1 The AC133 transitional adjustment
is made up as follows:
- ELN liability adjustment to fair value (41,8)
- Financial assets impairment (3,0)
(44,8)
NEW BUSINESS - SOUTH AFRICA
Sage Life Limited
6 months 9 months 3 Months
30 June 31 Dec 30 June
2003 2002 2002
R million Unaudited Audited Unaudited
Life insurance premiums (gross)
Individual 206,7 768,9 298,9
Annualised recurring 109,5 234,4 80,1
Single 97,2 534,5 218,8
Local 91,8 288,1 88,6
Bermuda branch 5,4 246,4 130,2
Employee benefits 80,9 138,3 47,3
Annualised recurring 42,6 65,7 22,9
Single 38,3 72,6 24,4
Total life new business 287,6 907,2 346,2
Unit trust sales
External 326,9 916,3 338,8
Internal 1 437,7 1 438,8 506,3
1 764,6 2 355,1 845,1
EMBEDDED VALUE Sage Life Limited
6 months 9 months 3 Months
30 June 31 Dec 30 June
R million 2003 2002 2002
Shareholder"s fund 677,7 671,7 1 852,5
Net value of life insurancebusiness in force 617,9
660,0 798,5
- Value of life insurance businessin force 633,3
684,2 838,8
- Cost of capital (15,4) (24,2) (40,3)
Embedded value 1 295,6 1 331,7 2 651,0
Embedded value earnings
Embedded value at end of period 1 295,6 1 331,7 2 651,0
Embedded value at beginningof period 1 331,7 2
528,0 2 528,0
(36,1) (1 196,2) 123,0
Dividends declared - 55,0 -
Increase in capital - - -
Embedded value earnings (36,1) (1 141,3) 123,0
Components of embedded value earnings
Embedded value from new business 16,7 40,2 20,0
Earnings from existing business 5,7 50,5 77,9
- Expected return 42,9 91,1 28,6
- Operating experience variations 17,3 94,9 34,3
- Operating assumption changes (54,5) (135,5) 15,0
Investment return on shareholder"s fund 50,5 (1
185,5) 51,7
Economic assumption changes (109,0) (46,5) (26,6)
Embedded value earnings (36,1) (1 141,3) 123,0
APE for embedded value purposes 97,7 257,4 89,6
% % %
Embedded value of new business as
a percentage of APE (new business/APE) 17,1 15,7 22,3
Principal actuarial assumptions
Risk discount rate 11,50 12,75 13,75
Pre-tax investment returns
- Equities and offshore investments 11,50 12,75 13,75
- Properties 10,50 11,75 12,75
- Fixed interest securities 9,50 10,75 11,75
- Cash 7,50 8,75 9,75
Expense inflation 5,50 6,75 6,75
EMBEDDED VALUE Sage Group Limited
6 months 9 months 3 Months
30 June 31 Dec 30 June
R million 2003 2002 2002
Group embedded value
Shareholders" funds 85,3 (247,8) 49,8
Adjustment for Group corporate expenses (35,2)
Adjustment for revaluation of
unlisted subsidiaries 148,0 163,0 1 612,9
Net value of life insurancebusiness in force 617,9
660,0 798,5
Group embedded value 816,0 575,2 2 461,2
Group embedded value per share
Shares in issue (m)
- Ordinary shares 367,1 155,0 148,1
- Compulsory convertible debentures 2,0 2,0 2,0
369,1 157,0 150,1
Group embedded value per share (cents) 221 366 1 640
SEGMENTAL ANALYSIS
6 months 9 months 3 Months
30 June 31 Dec 30 June
R million 2003 2002 2002
ASSETS
Life insurance SA 7 451,9 7 484,1 7 608,3
Unit trusts 29,2 30,9 57,6
Other operations 115,8 30,2 34,5
Group activities 267,3 31,9 84,7
International(discontinued - 31/12/02) - 3 110,9
2 775,2
Total 7 864,2 10 688,0 10 560,3
LIABILITIES
Life insurance SA 7 095,3 6 982,9 7 090,6
Unit trusts 10,8 12,3 13,2
Other operations 28,6 24,3 9,9
Group activities 644,2 805,4 902,8
International(discontinued - 31/12/02) - 3 018,5 2
401,6
Total 7 778,9 10 843,4 10 418,1
HEADLINE EARNINGS
Life insurance SA 10,9 111,3 180,6
Unit trusts 8,1 10,6 4,9
Other operations 2,0 2,4 1,6
Group activities 24,9 (49,1) (10,8)
International (discontinued - 31/12/02) - (123,2) (131,0)
45,9 (48,0) 45,3
TOTAL SA FUND INFLOWS
Life insurance 550,0 1 188,7 386,4
Unit trusts 326,9 916,3 338,8
Other operations 4,2 10,8 0,9
Total 881,1 2 115,8 726,1
TOTAL SA FUND OUTFLOWS
Life insurance (370,8) (963,7) (308,1)
Unit trusts (456,1) (1 032,0) (326,9)
Other operations (0,2) (6,5) (0,7)
Total (827,1) (2 002,2) (635,7)
NET SA FUND FLOWS
Life insurance 179,1 225,0 78,3
Unit trusts (129,1) (115,7) 11,9
Other operations 4,0 4,3 0,2
Total 54,0 113,6 90,4
SHAREHOLDER"S FUND ANALYSIS
(at fair value) Sage Life Limited
6 months 9 months 3 Months
30 June 31 Dec 30 June
R million 2003 2002 2002
Listed investments - ABSA 454,2 404,4 399,0
Other investments
- Unlisted subsidiaries 168,3 161,8 1 268,2
Net asset value 20,3 (1,2) (344,7)
Revaluation adjustments 148,0 163,0 1 612,9
- Properties 77,3 97,7 149,8
- Other interest bearing investments 74,4 7,8 35,5
Current and other assets 15,9 - -
790,1 671,7 1 852,5
Taxation and amount due
to policyholders (112,5) - -
677,6 671,7 1 852,5
Enquiries:
Sage Group Limited 011 377 5364
Garth Griffin, Group Chief Executive
Nombini Mehlomakulu, Investor Relations 011 377 5821
College Hill South Africa 011 447 3030
Nicholas Williams 083 607 0761
Alice Jordan 083 448 2650
Directors Dr DC Cronje (Chairman) G Griffin (Group Chief Executive) MP
Adonisi JP Davies Dr BM Ilsley L Kaplan BA Myerson* JA Treger* HL Shill
AF van Biljon CL van Wyk Adv T van Wyk Secretary: CS Cant* (*British)
Registered Office 11th Floor Sage Centre 10 Fraser Street Johannesburg 2001
PO Box 7755 Johannesburg 2000 Registration number 1970/010541/06 Share code
SGG ISIN ZAE000006623
Transfer secretaries Computershare Investor Services Limited 2nd Floor Edura
House 41 Fox Street Johannesburg 2001 PO Box 61051 Marshalltown 2107
Sponsor Grant Thornton Kessel Feinstein Corporate Sponsors (Proprietary)
Limited 137 Daisy Street corner Grayston Drive Sandown 2196 Private Bag X28
Benmore 2010
Date: 27/08/2003 10:13:27 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
