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New Africa Capital Financial Services Group - Unaudited Group Results For The
Six Months Ended 30 June 2003
NEW AFRICA CAPITAL FINANCIAL SERVICES GROUP
(Incorporated in Republic of South Africa)
Registration number: 2000/031756/06
ISIN: ZAE000033361
Share Code: NAC
NSX Share Code: NWC
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
- Positive cash flow from clients sustained, exceeding R1 billion
- New recurring premium income up 16%
- Embedded value of new life insurance business up 44%
- Embedded value per share maintained in difficult markets
- Interim dividend up 3%
DIRECTORS" STATEMENT
The directors take pleasure in presenting the unaudited interim results of the
New Africa Capital Financial Services Group for the six months ended 30 June
2003.
These results comply in all material respects with the requirements of AC127 of
South African Statements of Generally Accepted Accounting Practice as well as
the South African Companies Act of 1973.
Presentation of financial statements
The consolidated financial statements are prepared on the fair value and going
concern bases. The group"s accounting policies comply with South African
Statements of Generally Accepted Accounting Practice and are consistent with
those applied at 31 December 2002. The comparative figures for June 2002 have
been adjusted for:
- the change in the accounting policy for earnings, and
- the transfer of the entire long-term insurance business of Commercial Union
Life to Metropolitan Life Limited with effect from 1 January 2002.
The accounting policy for earnings was changed at the end of 2002 and now
includes policy liability basis changes, excluding those in the 90:10 fund, as
part of earnings. This change increased the loss for June 2002 by R37 million.
AC133 Financial instruments: recognition and measurement (IAS39)
The group implemented and complied with AC133 as from the 2001 financial year.
Investment assets, except for originated loans, are classified as available-for-
sale. Gains and losses on assets backing policyholder liabilities are recognised
in the policyholders" fund. In the case of assets backing the shareholders"
excess, gains and losses are recognised in the income statement.
In accordance with the draft guidance on the application of AC133 to liabilities
arising under long-term insurance contracts, issued in April 2003 after approval
by the Accounting Practice Committee:
- Certain policyholder liabilities have been designated as "insurance
contracts" and others as "investment contracts".
- Insurance contracts are valued on the financial soundness valuation basis,
as set out in the addendum to Professional Guidance Note (PGN) 104, issued by
the Actuarial Society of South Africa.
- Investment contracts are valued at fair value, as described in AC133 and
the addendum to PGN 104.
Actuarially determined liabilities for insurance and investment contracts are
disclosed separately in the policyholders" fund note for June 2003.
A draft International Financial Reporting Standard (IFRS) on Insurance Contracts
(Phase I) (ED5) was issued for comment on 31 July 2003. This standard is due to
come into force for listed insurers in Europe and Australia in 2005. The prior
implementation of AC133 in South Africa has, however, raised many uncertainties
about aspects of the statement relating to the insurance sector. An ongoing
process to develop guidance for this sector, from both an accounting and an
actuarial perspective, could result in changes to the treatment followed in
these results.
REVIEW OF OPERATIONS
Operational improvements steadily gained ground, with this solid set of results
being underpinned by growth in recurring premium new business, ongoing cost
containment, sustained positive cash flows and improving investment performance.
Although the local equity bear market and a strengthening rand dampened
performance, Metropolitan Asset Managers achieved noticeably better relative
investment returns.
The 13% increase in new Retail recurring premium income proves that the group is
able to grow its business despite increased competition in the lower and middle
income markets.
Business growth is supported by the well-known and trusted Metropolitan brand,
with its strong people and performance focus.
The higher volume of Retail life new business, together with ongoing cost
cutting, resulted in higher profit margins.
Given that the comparable figure declined across the sector, growth in the
group"s annual premium equivalent (net new recurring premiums plus 10% of single
premiums) was particularly pleasing.
While the enhanced profitability is encouraging, the group remains strongly
focused on achieving further improvements.
The increase in shareholders" tax was driven primarily by capital gains tax on
market value movements.
Employee Benefits single premium business was disappointing due largely to
current market conditions.
Metropolitan Health Group"s results failed to meet expectations in a healthcare
market that is not growing.
Despite the continued decline in equity markets, the group maintained its
financially sound position thanks to robust capital management strategies.
The group"s embedded value and the capital adequacy requirement multiple
remained intact at R9.11 per share and 2.9 times respectively, further
confirmation of financial soundness.
FUTURE PROSPECTS
The Retail restructuring finalised in 2001 started to deliver results in the
second half of 2002, and the current results show that this turnaround is being
sustained and should continue into the second half of the year.
Innovative distribution strategies are being developed to capitalise on the
extra personal disposable income available in the group"s primary target markets
thanks to interest rate cuts and further tax reductions as well as recent salary
increases.
These strategies will be refined constantly to ensure that products and services
remain need specific.
Competitive pricing will assume ever greater significance while interest and
inflation rates remain at current levels or if they drop further as anticipated;
the continued strong emphasis on unit cost reduction for new and in-force
business remains vital.
Metropolitan Health Group is well positioned to secure new business; a
favourable SAS 70 systems audit report has greatly enhanced prospects,
especially franchising opportunities.
Taking these factors into account, the board is optimistic about the group"s
ability to continue improving the quantity and quality of new business and to
manage costs.
EMPOWERMENT
Empowerment credentials are playing an increasingly important role in the South
African business context and the group"s highly rated BEE status - first in the
insurance sector and eighth overall among JSE listed companies in the 2003
Empowerdex rankings - is standing it in good stead in this regard.
DIRECTORATE CHANGES AND DIRECTORS" SHAREHOLDING
Mr MM Ngoasheng (conflict of interests arose) and Dr IA Goldin (increased full-
time responsibilities), both non-executive directors, resigned from the board on
25 June and 18 August 2003 respectively. No further changes have been made to
the directorate since 31 December 2002. All transactions in listed shares
involving directors were disclosed on SENS as required.
CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
The group had no material capital commitments at 30 June 2003. The group is
party to legal proceedings in the normal course of business, and appropriate
provisions are made when losses are expected to materialise.
POST BALANCE SHEET EVENTS
No material post balance sheet events occurred between the balance sheet date
and the date of approval of the interim results.
DIVIDEND DECLARATION
The full year dividend policy approved by the directors, and consistent with
prior years, is to provide shareholders with stable dividend growth that
reflects expected growth in underlying earnings in the medium term, while
allowing the dividend cover to fluctuate.
In the prior year the group indicated that it would discontinue the practice of
declaring, as an interim dividend, half of the prior year"s full dividend. The
current interim declaration is therefore an advance payment of the 2003 full
year dividend. The directors have declared an interim dividend of 18 cents per
share.
The important dates pertaining to this dividend are:
Declaration date Tuesday, 16 September 2003
Last day to trade "cum" dividend Friday, 3 October 2003
First trading day "ex" dividend Monday, 6 October 2003
Record date Friday, 10 October 2003
Payment date Monday, 13 October 2003
Share certificates may not be dematerialised or rematerialised between Monday, 6
October and Friday, 10 October 2003, both days inclusive.
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
shareholders on or about payment date. Shareholders who have dematerialised
their shares will have their accounts with their CSDP or broker credited on
Monday, 13 October 2003.
Signed on behalf of the board
Gloria Tomatoe Serobe Non-executive group chairman
Peter Doyle Group chief executive
Cape Town
16 September 2003
Directors:
Gloria Tomatoe Serobe (non-executive group chairman), Peter Doyle (group chief
executive), Abel Sithole (executive director), Preston Speckmann (executive
director), Ntuthukoyezwe Buthelezi, Irene Charnley, Prof Willie Esterhuyse,
Peter Lamprecht, Syd Muller, John Newbury, Marius Smith, Dr Franklin Sonn, Johan
van Reenen and Sandile Zungu.
Company Secretary: Bongiwe Gobodo-Mbomvu.
Registration number: 2000/031756/06
Registered office: 7 Parc du Cap, Mispel Road, Bellville 7535
JSE code: NAC - NSX CODE: NWC - ISIN NO. ZAE000033361
Transfer secretaries: Sponsor:
Computershare Limited Merrill Lynch
(Registration number 1958/003546/06)
70 Marshall Street, Johannesburg, 2001
P O Box 1053, Johannesburg, 2000
Telephone +27 11 370 5000
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 1: CONSOLIDATED INCOME 6 mths to 6 mths to 12 mths to
STATEMENT 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Income from insurance and investment
business (table 6; note 6) 218 (161) (236)
Income from administration business
(note 1) 26 43 66
Income from holding company (note 2) (20) (44) (135)
Income before goodwill and tax 224 (162) (305)
Goodwill amortised (26) (25) (52)
Income before tax 198 (187) (357)
Shareholders" tax paid (63) (23) (25)
Income after tax 135 (210) (382)
Outside shareholders" share of
earnings (3) (1) (3)
Earnings 132 (211) (385)
TABLE 2: RECONCILIATION OF HEADLINE 6 mths to 6 mths to 12 mths to
EARNINGS 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Earnings 132 (211) (385)
Goodwill amortised 26 25 52
Headline earnings (1) 158 (186) (333)
Capital depreciation on excess 101 383 874
Deferred tax - CGT (40) (59) (145)
Basis changes and investment
variances (44) 37 (18)
Core headline earnings (2) (note 3) 175 175 378
Core headline earnings per share
(cents) 25.22 25.66 55.26
Headline earnings per share 22.77 (27.27) (48.68)
Earnings per share (cents) 19.02 (30.94) (56.29)
Weighted average number of shares in
issue (million) 694 682 684
Dividend per ordinary listed shares
(cents)
Interim 18.0 17.50 17.50
Final 20.50
Total 38.00
Headline earnings consist of operating profit, investment income and changes in
market value of investments.
Changes in market value of investments can be volatile, therefore core headline
earnings have been disclosed which comprise operating profit and investment
income only.
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 3: CONSOLIDATED BALANCE SHEET 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
ASSETS
Non-current assets
Investment assets 30 868 30 709 30 279
Equipment 112 139 126
Intangibles 104 84 97
Goodwill 361 410 389
Deferred tax 71 4 40
Current assets 1 415 1 393 1 468
Total assets (note 5) 32 931 32 739 32 399
EQUITY AND LIABILITIES
Capital and reserves (table 4) 4 308 4 482 4 329
Outside shareholders" interest 48 30 52
Non-current liabilities 27 068 26 549 26 610
Policyholders" fund (note 6) 27 059 26 485 26 600
Deferred tax 9 64 10
Current liabilities 1 507 1 678 1 408
Total equity and liabilities 32 931 32 739 32 399
TABLE 4: CONSOLIDATED STATEMENT OF 6 mths to 6 mths to 12 mths to
CHANGES IN EQUITY 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Shareholders" equity at beginning of
period 4 329 5 101 5 101
Changes in share capital - (245) (86)
Issue of share capital - - -
Share premium on new issue - 14 174
Treasury shares acquired - (110) (110)
Shares acquired and cancelled - (149) (150)
Changes in distributable reserve (21) (456) (705)
Revaluation of owner-occupied
properties - (85) (33)
Transfer from outside shareholders - 1 -
Earnings 132 (211) (385)
Dividend (153) (161) (287)
Changes in foreign currency
translation reserve - (3) (14)
Currency translation difference 7 4 (4)
Transfer to policyholders" fund (7) (7) (10)
Change in non-distributable reserve - 85 33
Revaluation of owner-occupied
properties - 85 33
Shareholders" equity at end of period
(table 3; note 9) 4 308 4 482 4 329
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 5: CONSOLIDATED CASH FLOW 6 mths to 6 mths to 12 mths to
STATEMENT 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Net cash inflow from operating
activities 648 884 2 061
Net cash in/(out)flow from investing
activities 214 (775) (1 737)
Net cash outflow from financing
activities - (246) (86)
Net cash flow 862 (137) 238
Cash resources and funds on deposit
at beginning of period 3 363 3 125 3 125
Cash resources and funds on deposit
at end of period 4 225 2 988 3 363
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 6: STATEMENT OF ACTUARIAL
VALUES OF ASSETS AND LIABILITIES 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Total assets per balance sheet (table
3) 32 931 32 739 32 399
Current liabilities and deferred tax
per balance sheet (1 516) (1 742) (1 418)
Outside shareholders" interest per
balance sheet (48) (30) (52)
Net assets - group 31 367 30 967 30 929
Actuarial liabilities under unmatured
policies (26 343) (25 718) (25 857)
Excess - group (table 7 & 8; note 9) 5 024 5 249 5 072
Net assets - non-insurance (971) (913) (984)
Excess - insurance and investment
business 4 053 4 336 4 088
Change in excess of assets over
liabilities (35) (403) (651)
Increase in share capital (10) - (7)
Foreign currency translation reserve 3 11 5
Dividend declared 163 179 313
Total surplus arising during period 121 (213) (340)
Operating profit 85 87 246
Investment income on group excess 90 77 137
Basis and other changes 45 (88) 61
Investment variance (6) - (85)
Capital depreciation on group
excess (93) (289) (699)
Surplus arising (90:10 fund) 30 80 117
Shareholder earnings (90:10 fund) (4) 2 (12)
Consolidation adjustments - (48) (21)
Net profit from insurance and
investment business 147 (179) (256)
Shareholders" tax paid 63 10 5
Goodwill amortised 8 8 15
Income from insurance and investment 218 (161) (236)
business
(before goodwill and tax) (table 1)
Capital adequacy requirement 1 732 1 672 1 726
Capital adequacy multiple (group
excess) 2.9 3.1 2.9
Second-tier margins 1 009 1 182 1 078
NEW AFRICA CAPITAL GROUP RESULTS
NOTE 1 - INCOME FROM 6 mths to 30 June 2003 6 mths to 12 mths to
ADMINISTRATION BUSINESS 30.06.2002 31.12.2002
(before tax, goodwill
and outside
shareholders)
Revenue Expenses Total Total Total
Rm Rm Rm Rm Rm
Health administration 143 (135) 8 22 31
Asset management 36 (23) 13 11 20
Asset administration 17 (12) 5 10 15
Total income from
administration business
(table 1) 196 (170) 26 43 66
NOTE 2 - INCOME FROM HOLDING COMPANY 6 mths to 6 mths to 12 mths to
(before tax) 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Investment income 21 18 35
Realised and unrealised changes in
market value of investments (24) (48) (146)
Administration expenses (17) (14) (24)
Net income from holding company
(table 1) (20) (44) (135)
NOTE 3 - ANALYSIS OF CORE HEADLINE 6 mths to 6 mths to 12 mths to
EARNINGS 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Corporate business 47 40 94
Operating profit 64 59 132
Tax (17) (19) (38)
Retail business 65 67 170
Operating profit 96 93 206
Tax (31) (26) (36)
International business 4 6 13
Operating profit 7 9 16
Tax (3) (3) (3)
Metropolitan Health Group 4 11 22
Operating profit 5 19 28
Tax (1) (8) (6)
Shareholders" equity 55 51 79
Holding company expenses (17) (14) (24)
Investment income on total
shareholder assets 109 89 145
Income tax on investment income (37) (24) (42)
Core headline earnings (table 2) 175 175 378
NEW AFRICA CAPITAL GROUP RESULTS
NOTE 4 - FUNDS 6 mths 6 mths 12 mths
RECEIVED FROM Gross Gross Net inflow Net inflow Net inflow
CLIENTS inflow outflow 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm Rm Rm
On-balance sheet
Retail business 1 790 (1 166) 624 561 1 288
Corporate
business 674 (931) (257) (287) 347
International
business 320 (163) 157 130 268
Total
premiums/claims
(note 7, 8) 2 784 (2 260) 524 404 1 903
Off-balance sheet
Health group 1 894 (1 756) 138 1 239
Corporate
business 1 271 (889) 382 653 682
Total 5 949 (4 905) 1 044 1 058 2 824
NOTE 5 - ASSETS UNDER MANAGEMENT 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Investment assets 30 865 30 655 30 279
Strategic investments 3 54 -
Goodwill 361 410 389
Equipment and intangibles 216 223 223
Current assets and deferred tax 1 486 1 397 1 508
Total on-balance sheet assets
(table 3) 32 931 32 739 32 399
Unit trusts 1 384 833 1 393
Health administration 1 355 1 300 1 281
Ovation - 1 091 -
Metropolitan Asset Managers 3 783 5 241 3 649
EB segregated assets 805 - 805
Total assets under management 40 258 41 204 39 527
NEW AFRICA CAPITAL GROUP RESULTS
NOTE 6: POLICYHOLDERS" FUND 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Balance at beginning 26 600 27 048 27 048
Inflow 3 720 2 481 5 593
Premiums received (note 7) 2 784 2 894 6 824
Investment return 936 (413) (1 231)
Investment income 867 969 1 898
Realised and unrealised 69 (1 382) (3 129)
changes in market value
of investments
Outgo (3 036) (3 212) (6 287)
Payments to policyholders
(note 8) (2 260) (2 490) (4 921)
Sales and distribution
costs (347) (310) (642)
Administration expenses (406) (363) (707)
Policyholders" tax paid (23) (49) (17)
Income from insurance and (218) 161 236
investment business (table 1 &
6)
Foreign currency translation (7) 7 10
changes
Balance at end 27 059 26 485 26 600
Liabilities under insurance 21 426 20 963
contracts
Liabilities under investment 4 917 4 894
contracts
90:10 fund surplus 716 743
Total (table 3) 27 059 26 600
NEW AFRICA CAPITAL GROUP RESULTS
NOTE 7 - PREMIUMS RECEIVED 6 mths to 6 mths to 12 mths to
30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Recurring premiums 2 113 1 987 4 332
Individual life 1 669 1 533 3 270
Employee benefits 574 552 1 278
Re-insurance (130) (98) (216)
Single premiums 671 907 2 492
Individual life 451 430 930
Employee benefits 220 477 1 562
Total (note 6) 2 784 2 894 6 824
Metropolitan Life Ltd 2 361 2 495 5 997
Metropolitan Odyssey Ltd 182 162 333
Metropolitan Life (Namibia) Ltd 149 154 313
Metropolitan Life of Botswana Ltd 90 83 181
Metropolitan Lesotho Ltd 2 - -
2 784 2 894 6 824
NEW AFRICA CAPITAL GROUP RESULTS
NOTE 8 - PAYMENTS TO POLICYHOLDERS 6 mths to 6 mths to 12 mths to
30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Individual life 1 290 1 220 2 537
Death and disability claims 345 312 661
Maturity claims 293 272 603
Annuities 203 182 378
Surrenders 480 469 935
Re-insurance recoveries (31) (15) (40)
Employee benefits 970 1 270 2 384
Death and disability claims 215 170 342
Maturity claims 234 74 141
Annuities 126 65 199
Withdrawal benefits 117 211 339
Terminations 335 773 1 423
Re-insurance recoveries (57) (23) (60)
Total (note 6) 2 260 2 490 4 921
Metropolitan Life Ltd 2 048 2 269 4 468
Metropolitan Odyssey Ltd 101 114 228
Metropolitan Life (Namibia) Ltd 85 81 180
Metropolitan Life of Botswana Ltd 26 26 45
2 260 2 490 4 921
NOTE 9 - ANALYSIS OF ASSETS 30.06.2003 31.12.2002
BACKING GROUP EXCESS
Rm % Rm %
Listed equities 2 088 48.5 2 253 52.0
Foreign investments 430 10.0 599 13.8
Properties 273 6.3 432 10.0
Fixed interest 450 10.4 384 8.9
Money market 540 12.5 166 3.8
Intangibles 361 8.4 389 9.0
Other assets 166 3.9 106 2.5
Group net asset value 4 308 100.0 4 329 100.0
(table 4)
Surplus in 90:10 fund 716 743
Excess - group (table 6) 5 024 5 072
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 7: EMBEDDED VALUE 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Excess - group (table 6) 5 024 5 249 5 072
Adjustments for:
Asset management (table 15) 144 147 139
Metropolitan Health Group 47 51 43
(table 15)
New Africa Capital expenses (227) (149) (163)
Surplus in 90:10 fund and (882) (909) (927)
goodwill (table 8)
Adjusted net asset value 4 106 4 389 4 164
Net value of in-force business 2 215 2 378 2 159
Individual life 1 831 2 001 1 745
Gross value of in-force 1 936 2 116 1 860
business
Less: Cost of capital (105) (115) (115)
Employee benefits 384 377 414
Gross value of in-force 498 525 538
business
Less: Cost of capital (114) (148) (124)
Embedded value (table 8) 6 321 6 767 6 323
Embedded value per share (cents) 911 1 012 911
Adjusted net asset value per 592 656 600
share (cents)
Number of shares in issue 694 669 694
(million)
(net of 41 million treasury
shares; 30.06.2002: 28 million)
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 8: EMBEDDED VALUE Net Value of 30.06.2003 31.12.2002
ATTRIBUTABLE TO GROUP asset in-force Total Total
value
Rm Rm Rm Rm
Metropolitan Life Ltd 2 988 2 006 4 994 4 812
Metropolitan Odyssey Ltd 119 100 219 210
Metropolitan International 140 - 140 290
Ltd (ex Commercial Union
Life)
Metropolitan Life (Namibia) 96 82 178 177
Ltd
Metropolitan Life of 53 27 80 73
Botswana Ltd
Metropolitan Lesotho Ltd 8 - 8 -
Metropolitan Health Group 281 44 325 333
Methealth Namibia 2 3 5 3
Administrators
Asset management 62 144 206 198
New Africa Capital (after 559 (227) 332 411
consolidation adjustments)
Goodwill (166) (166) (184)
Total embedded value 4 142 2 179 6 321 6 323
(table 7)
Adjustment for surplus in 882
90:10 fund and goodwill
(table 7)
Excess - group (table 6) 5 024
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 9: ANALYSIS OF Non- Insurance 30.06.2003 31.12.2002
CHANGES IN GROUP EMBEDDED insurance operations Total Total
VALUE Rm Rm Rm Rm
Profit from new business 11 24 35 141
Point of sale 11 23 34 132
Expected return to end - 1 1 9
of period
Profit from existing 21 71 92 (126)
business
Expected return 26 150 176 425
Investment variances - (55) (55) (347)
Operating experience (5) (24) (29) (204)
variances
Embedded value profit 32 95 127 15
from operations
Investment return on net 3 8 11 (566)
worth
Economic assumption (6) 91 85 (29)
changes
Experience assumption (77) 8 (69) (272)
changes
Exchange rate movements - (3) (3) (5)
Total embedded value (48) 199 151 (857)
profit
Capital raised (10) 10 - 174
Dividend 8 (161) (153) (287)
Share buy-back and share - - - (260)
issue costs
Decrease in embedded (50) 48 (2) (1 230)
value
Return on embedded value 4.8 (11.3)
(%) (2003 annualised)
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 10: VALUE OF LIFE INSURANCE 6 mths to 6 mths to 12 mths to
NEW BUSINESS 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Retail business 8 (4) -
Gross value of new business 13 - 8
Less: Cost of capital (5) (4) (8)
Corporate business 10 15 60
Gross value of new business 13 18 67
Less: Cost of capital (3) (3) (7)
International business * 5 5 8
Gross value of new business 6 6 10
Less: Cost of capital (1) (1) (2)
23 16 68
* Net of outside shareholders
TABLE 11: SOURCE OF NEW 30.06.2003 31.12.2002
BUSINESS
APE % Total % APE % Total %
General intermediary 15 13 16 17
channel
Direct writers 44 42 43 40
Direct mail and 28 16 27 13
telemarketing
Broker distribution 13 29 14 30
TABLE 12: VALUE OF NON-LIFE NEW 6 mths to 6 mths to 12 mths to
BUSINESS 30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Health administration 4 3 14
Asset management 7 27 50
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 13: NEW BUSINESS PREMIUMS 6 mths to 6 mths to 12 mths to
30.06.2003 30.06.2002 31.12.2002
Rm Rm Rm
Recurring premiums
Retail business 263 238 505
Corporate business 94 57 213
International business * 47 53 111
Individual life 45 42 92
Employee benefits 2 11 19
404 348 829
Single premiums
Retail business 443 395 882
Corporate business 215 472 1 556
International business * 11 40 54
669 907 2 492
Annual premium equivalent (APE) 471 439 1 078
* Net of outside shareholders
TABLE 14: VALUE OF NEW BUSINESS AS A Margin
% OF ANNUAL PREMIUM EQUIVALENT (APE)
30.06.2003 30.06.2002 31.12.2002
% % %
Retail business 2.6 (1.4) 0.0
Corporate business 8.7 14.4 16.3
International business 10.4 8.8 6.9
Total 4.9 3.6 6.3
APE represents new recurring premiums (net of lapses at inception) plus
10% of single premiums.
TABLE 15: VALUATION OF NON-LIFE Value as Write-up Embedded
SUBSIDIARIES per to fair value
balance value
sheet
Rm Rm Rm
Asset management 62 144 206
(table 7 & 8)
Health administration 283 47 330
(table 7 & 8)
NEW AFRICA CAPITAL GROUP RESULTS
Table 16: PRINCIPAL ASSUMPTIONS 30.06.2003 30.06.2002 31.12.2002
% % %
Pre-tax investment return
Equities 11.8 14.3 12.8
Properties 11.8 14.3 12.8
Government stock 9.8 12.3 10.8
Cash 7.8 10.5 8.8
Risk discount rate 13.3 15.8 14.3
Investment return (before tax) - 11.2 13.7 12.2
smoothed bonus
Expense inflation rate 7.0 8.5 8.0
TABLE 17: LIFE BUSINESS: SENSITIVITIES - Change in base value
30 JUNE 2003 of:
In-force New Notes
business business
% %
1% Increase in risk discount rate (6.0) (16.9) (i)
1% Reduction in risk discount rate 5.2 14.4 (i)
10% Reduction in per policy expenses 6.6 31.1 (ii)
1% Reduction in expense and salary 2.5 1.9 (ii)
inflation
10% Reduction in policy discontinuance 1.7 27.8
rates
10% Reduction in mortality, morbidity 18.6 147.0 (ii)
and medical rates
1% Increase in the assumed investment 9.1 3.3 (iii)
return
10% Increase in the premium indexation 1.9 6.6
take-up rate (from 65% to 75%)
1% Increase in risk discount rate (2.8) - (iv)
impact on cost of car
1% Reduction in risk discount rate 3.1 - (iv)
impact on cost of car
10% Increase in the number of new - 35.5
business
Base value before cost of CAR 2 434 32
(rand million)
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 17: LIFE BUSINESS: SENSITIVITIES -
30 JUNE 2003 (continued)
(i) The risk discount rate appropriate to an investor depends on the
investor"s own requirements, tax position and perception of the
risk associated with the realisation of the future profits of
New Africa Capital and its subsidiaries.
(ii) No corresponding changes in variable policy charges are assumed,
although in practice it is likely that variable charges will be
modified according to circumstances.
(iii) Bonus rates are assumed to change commensurately.
(iv) A change in the risk discount rate also has a noticeable effect
on the cost of holding the required CAR levels. Other
sensitivities above are shown before cost of CAR.
NEW AFRICA CAPITAL GROUP RESULTS
TABLE 18: STOCK EXCHANGE PERFORMANCE 6 mths to 6 mths to 6 mths to
30.06.2003 30.06.2002 31.12.2002
Value of shares traded 399 1 193 459
(rand million) *
Volume of shares traded (million) * 71 167 79
Shares traded (% of total shares in 20.5 49.9 22.8
issue - annualised)
Average trade for life insurance 53.8 N/A 51.4
sector (J084 - annualised)
Trade prices (cents per share)
Highest 640 902 669
Lowest 470 520 485
Last sale of period (closing) 595 630 610
Percentage change during period (5.02) (48.13) (6.32)
(annualised)
Percentage change for life (15.99) (12.48) (26.82)
insurance sector (J084 -
annualised)
Percentage change for top 40 index (24.62) 2.50 (31.92)
(J200 - annualised)
Price / core headline earnings ratio 11.80 12.28 11.04
(annualised)
Dividend yield % (dividend on listed 6.05 5.56 6.72
shares)
Average dividend yield for the life 6.15 4.63 5.76
insurance sector (J084)
Total shares issued (million)
Listed 635 634 635
Ordinary shares # 628 628 628
Share incentive scheme 7 6 7
Unlisted 59 35 59
Share purchase scheme 59 35 59
Total 694 669 694
Market capitalisation at period-end 4.13 4.21 4.23
(rand billion)#
Percentage of life insurance sector 5.58 4.57 5.27
* 30.06.2002: net of 33 million shares acquired for R260 million as part of a
share buy-back.
# Net of 41 million treasury shares held by a subsidiary company at each date.
Date: 17/09/2003 07:00:35 AM Produced by the JSE SENS Department
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