Firstrand Limited/Momentum - Minimum Standards On Early Termination Values
Firstrand Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/010753/06)
(Share code: FSR)
(ISIN: ZAE000066304)
Momentum Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1904/002186/06)
("Momentum")
MINIMUM STANDARDS ON EARLY TERMINATION VALUES
Momentum refers to the respective press announcements of the Minister of Finance
and the LOA issued on Monday 12 December 2005, regarding the intention to
implement minimum standards on early termination values on savings and
retirement annuity products.
The cost to Momentum of the improvement in values, both retrospectively and
prospectively, is estimated to be between R225 million and R250 million (before
tax), which includes an allowance for implementation costs. These amounts
include the estimated impact of Sage Life policies, but exclude any earnings
benefit arising from the Sage acquisition. An amount of R100 million has
already been provided towards an improvement in early termination values in
Momentum"s results for the year ended 30 June 2005. The incremental cost of
between R125 million and R150 million will be provided for in the six-month
period to 31 December 2005.
The incremental cost represents approximately 0.8% of Momentum"s embedded value,
comprising Momentum"s published embedded value at 30 June 2005, plus that of
Sage Group published at 31 December 2004.
On the assumption that the additional provision was provided for from earnings
at 30 June 2005, Momentum"s headline earnings would have decreased by between
7,3% and 8,8%. On the same basis the impact on FirstRand Limited would have been
a reduction in headline earnings of between 1,2% and 1,4%.
The information set out in this announcement is based on estimates and has not
been subject to review or audit by the auditors of FirstRand.
Momentum - CFO Asokan Naidu 012 671 8815
FirstRand - Investor Relations Sam Moss 011 282 1341
Corporate advisor to Momentum
Rand Merchant Bank (A division of FirstRand Bank Limited)
Merchant bank and sponsor to FirstRand Limited
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 13/12/2005 12:23:52 PM Produced by the JSE SENS Department
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