| Mon 16 Aug 2004, 17:13 | | Results for the year ended 30 June 2004 |
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Clientele Life - Audited Group Results for the year ended 30 June 2004 and
withdrawal of cautionary announcement
Clientele Life Assurance Company Limited
(Registration number 1973/016606/06)
Share code: CLE
ISIN: ZAE000013397
Audited Group Results for the year ended 30 June 2004 and withdrawal of
cautionary announcement
- Headline earnings per share increased by 25%
- Cash generated by operations increased by 26%
- Embedded value per share increased by 24%
- Return on average shareholders` interests: 68%
- Dividend declared of 200 cents per share
AUDITED SUMMARISED GROUP INCOME STATEMENTS
Year ended 30 June
2004 2003 %
(R`000`s)
Premium income from insurance contacts 293 883 238 353 23
Service fees from investment contracts 5 020 1 484 238
Other income 19 209 7 927 142
Policyholders` net investment returns 21 290 5 731 271
Policyholders` benefits (34 066) (18 841) 81
Transfer to policyholders liabilities (63 981) (31 840) 101
Expenses (159 255) (136 423) 17
- Operating expenses (18 333) (15 989)
- New business acquisition expenses (140 922) (120 434)
PROFIT FROM LIFE OPERATIONS 82 100 66 391 24
Share of loss from associate (801) (1 576)
Net investment return on shareholders` 7 190 3 240 122
funds
profit before taxation 88 489 68 055 30
Taxation expense (26 970) (18 760) 44
NET PROFIT ATRIBUTABLE TO ORDINARY 61 519 49 295 25
SHAREHOLDERS
* Taxation of R27 million (2003: R18.8 million) is comprised of South African
normal taxation of R24.9 million (2003: R18.3 million), Secondary Tax on
Companies (STC) of R2.7 million (2003: R1.7 million) and an overprovision in
respect of the prior year of R0.6 million (2003: R1.2 million).
AUDITED SUMMARISED GROUP BALANCE SHEETS
As at As at
30 June 30 June
(R`000`s) 2004 2003
Shareholders` equity
Share capital 4 853 4 853
Share premium - 15 602
Retained earnings 101 684 64 563
Shareholders` interests 106 537 85 018
Policyholder liabilities under insurance
contracts 168 425 104 444
Policyholder liabilities under investment
contracts 142 082 62 672
417 044 252 134
Employment of funds
Investments 404 638 260 900
Investment in associate 728 1 304
Property, plant and equipment 8 506 7 865
Current assets 51 076 17 720
Total assets 464 948 287 789
Current liabilities (47 904) (35 655)
417 044 252 134
AUDITED SUMMARISED STATEMENTS OF CHANGES IN EQUITY
Share Share Retained
(R`000`s) capital premium earnings Total
Balance at 1 July 2002 4 770 9 642 105 268 119 680
Shares issued 162 12 739 12 901
Shares repurchased (79) (6 746) (6 825)
Share issue and (33) (33)
repurchase expenses
Net surplus attributable 49 295 49 295
to shareholders
Ordinary dividend (22 255) (22 255)
declared
Special dividend (67 745) (67 745)
declared
Balance at 30 June 2003 4 853 15 602 64 563 85 018
Balance at 1 July 2003 4 853 15 602 64 563 85 018
Net profit attributable 61 519 61 519
to shareholders
Dividend declared (24 398) (24 398)
Share premium (15 602) (15 602)
distribution
Balance at 30 June 2004 4 853 - 101 684 106 537
AUDITED SUMMARISED GROUP CASH FLOW STATEMENTS
Year ended 30 June
(R`000`s) 2004 2003 %
Cash generated by operations 131 584 104 677 26
Adjusted by:
Investment returns 28 480 8 971
Dividend paid (24 398) (89 980)
Taxation paid (20 001) (13 082)
Cash flow from operating activities 115 665 10 586
Cash flow from investing activities (153 978) (88 971)
Cash flow from financing activities 63 808 80 757
Increase in cash on hand 25 495 2 372
AUDITED EARNINGS PER SHARE
Year ended 30 June
2004 2003 %
(Cents per share)
Profit from life operations 253.79 205.26 24
Share of loss from associate (2.48) (4.87) (49)
Net investment return on shareholders` 22.23 10.02 122
funds
Profit before taxation 273.54 210.41 30
Taxation expense (83.39) (58.00) 44
Headline earnings* 190.15 152.41 25
Weighted ordinary shares in issue (`000`s) 32 350 32 345
It should be noted that there are no reconciling items between earnings per
share and headline earnings per share.
*Headline earnings is net profit attributable to ordinary shareholders.
AUDITED DISTRIBUTION TO SHAREHOLDERS AFTER THE YEAR ENDED 30 JUNE 2004
After year After year
ended ended
30 June 30 June
(R`000`s) 2004 % 2003
Ordinary dividend 64 700 165 24 398
Share premium returned - 15 602
Total distribution 64 700 62 40 000
Ordinary shares in issue at 30 June 32 350 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. These results have been audited by PricewaterhouseCoopers Inc and the
audit report is available for inspection at the registered office of the
company.
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) 2004 2003
Embedded value
Value of excess assets attributable to 106 536 85 018
shareholders
Cost of capital (3 944) (1 119)
Value of in force business 355 423 286 259
Embedded value 458 015 370 158
Value of new business 78 071 96 368
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 2004. The value of new business for last year includes a
once off amount in respect of annuity fee income introduced for the first time
in that year.
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 30 June 2004
Embedded value at beginning of year 370 158
Dividend (24 398)
Secondary tax on companies (2 725)
Return of Share premium (15 602)
Unwinding of discount rate 49 995
Incentive bonus scheme* (5 920)
Expected secondary tax payment 4 303
Value added by management 105 676
Value of new business 78 071
Investment experience 12 292
Loss from associate (801)
Experience and sundry adjustments 16 114
Change in basis (20 647)
Change in cost of capital (2 825)
Embedded value at end of year 458 015
Main assumptions: % p.a.
Long-term economic assumptions
Risk discount rate 16
Overall investment return 10
Expense inflation 6
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 R524 million in the individual policyholder fund.
* The incentive bonus scheme has replaced the Clientele Share Incentive Scheme.
COMMENTS
The Clientele Life Group is focused on delivering appropriate and affordable
life insurance and investment products to the under-served and growing lower to
middle income markets through effective and efficient direct distribution
methods.
Clientele Life`s approach to distributing its specific product offerings
directly to its customers has delivered consistently strong profitability and
cash flows since inception.
Net recurring premium income for the period of R294 million represents an
increase of 23% over last year. Service fees from investment contracts consist
mainly of fees earned on single premium business. The group earned R19 million
of other income which is comprised mainly of annuity fees from its Independent
Field Advertiser distribution channel. Policyholder benefits include claims paid
and encashment benefits paid to policyholders.
The profit from life operations attained an increase of 25% rising from R66.4
million to R82.1 million. Headline earnings per share rose by 25% from 152.41
cents per share to 190.15 cents per share. Operating expenses remain among the
lowest in the insurance industry.
This has translated into an after-tax return on average shareholders` interest
of 68%.
The embedded value of new business written during the period amounted to R78
million and includes annuity fees from the Independent Field Advertiser
distribution channel.
As previously reported, Clientele Life holds 33.3% of the equity of Clientele
USA LLC. Clientele USA LLC markets insurance products through direct marketing
channels. The option which Clientele Life holds to acquire the remaining 66.7%
of Clientele USA LLC has been extended to 31 December 2004. 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 appropriate life assurance products to its target market
through it`s direct distribution channels.
DIVIDEND DECLARATION
Notice is hereby given that the board has declared the following dividend per
ordinary share:
Ordinary dividend (cents per share) 200
Ordinary shares in issue at entitlement date (000`s) 32 350
The dividend will be paid on Monday, 13 September 2004.
To comply with the procedures of STRATE the last day to trade in the shares for
purposes of entitlement to the dividend is Friday, 3 September 2004. The shares
will commence trading ex dividend on Monday, 6 September 2004 and the record
date will be Friday, 10 September 2004.
Share certificates may not be dematerialised or rematerialised between Monday, 6
September 2004 and Friday, 10 September 2004 both days inclusive.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are advised that the cautionary announcement relating to the
trading update issued on 2 August 2004 has now been lifted.
By order of the board
G Q Routledge G J Soll Johannesburg
Chairman Managing Director 16 August 2004
Registered office:
Clientele House, Morning View Office Park, Cnr Rivonia and Alon Roads,
Morningside, PO Box 1316, Rivonia 2128
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limted, Ground Floor, 70 Marshall
Street, Johannesburg 2001,
PO Box 61051, Marshalltown 2107
Directors: G Q Routledge BA LLB (Chairman), G J Soll CA(SA) (Managing Director),
P J A Cunningham CA(SA), CA(Z), P R Enthoven BA, P W Felton B.Sc.Hdip.Tax (Law),
I B Hume CA(SA), ACMA.
Company secretary: B V Moore.
Website: www.clientelelife.com
E-mail: services@clientelelife.com
Investment Bank and sponsor
Nedbank Capital
Date: 16/08/2004 05:00:22 PM
Produced by the JSE SENS Department
