| Wed 28 Jan 2004, 14:08 | | TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT |
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SAGE GROUP LIMITED - TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
Sage Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1970/010541/06)
Share code: SGG
ISIN: ZAE 000006623
("SAGE GROUP")
TRADING UPDATE AND CAUTIONARY ANNOUNCEMENT
Sage Group"s results for the year ended 31 December 2003 are scheduled to be
announced on 17 March 2004. In line with the JSE Securities Exchange South
Africa Listings Requirements ("Listings Requirements"), shareholders are
informed that the Group"s financial results are expected to show a substantial*
improvement in total earnings attributable to shareholders and headline earnings
for the 12 months ended 31 December 2003 compared to those for the 9 months to
31 December 2002. The following trading update provides an early indication of
the year"s performance:
New Business
Total South African life new business for the 12 months under review showed a
decline of 24,5% to R329,5 million compared to 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 25,6% for
the year to R259,2 million, with the second half of the year showing an
improvement of 18,7% over the first half. In the Employee Benefits division,
new business decreased by 20% year-on-year to R70,3 million. External sales by
Sage Unit Trusts for the 12 months totalled R755,4 million, compared with R 1
438,7 million in the previous year, with the second half of the year showing an
improvement of 31% over the first half.
Expense Management
Expenses of management increased by 4,9% year on year, in line with forecast and
well below budget. Sales remuneration expenses declined by 24,2% in line with
lower new business volumes.
Policy Discontinuances
There has been an improvement in the trend of policy discontinuances through
lapsing and surrenders within Sage Life during the second half of the year. The
number of policies lapsed during the 12 months decreased by 1,3% while the
number of policies surrendered increased by 4,4% year on year. The number of
policies surrendered in the second half declined by 11% compared to the first
half and were 6% below those of the second half of 2002. The value of in force
annualised premiums has declined marginally to R 1 017 million at 31 December
2003 compared to R 1 027 million at 31 December 2002.
Investments
Sage Life"s money weighted average fund investment returns for 2003 were as
follows:
Individual domestic portfolios 19,8% (3% in 2002)
Individual foreign portfolios -1,2% (-25,6% in 2002)
Employee Benefits linked portfolios 19,3% (-3% in 2002)
In addition shareholder funds benefited directly from the positive performance
of the ABSA holding.
Financial Results
The second half of the year saw an improvement in business unit operational
performance as a result of the new business, expense management, policy
discontinuance and investment trends outlined above. At Group level, the Equity
Linked Notes (ELN"s) remain fully hedged against the movement in the rand/dollar
exchange rate but their value will be impacted by the embedded derivative to be
fair valued in terms of AC133. The Group"s financial results for the year are
therefore expected to show a substantial* improvement relative to the losses
reported for the 9 months ended 31 December 2002
CAUTIONARY ANNOUNCEMENT
The year-end actuarial valuation of Sage Life has not been completed and
finalisation of this valuation could impact on the early indications of the
financial results. In addition, the above information has not been reviewed and
reported on by the Group"s auditors. Shareholders are therefore advised to
exercise caution when dealing in Sage Group shares until the publication of the
Group"s annual results.
Note:
* Substantial being equal to or greater than 30%, as defined in the Listing
Requirements.
28 January 2004
Sponsor
Grant Thornton Corporate Finance (Proprietary) Limited
For further information, please contact:
Sage Group Limited 011 377 5555
Garth Griffin, Chief Executive 011 377 5364
Nombini Mehlomakulu, Investor Relations 011 377 5821
College Hill South Africa 011 447 3030
Nicholas Williams 083 607 0761
Alice Jordan 083 448 2650
Date: 28/01/2004 02:02:08 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
