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CLIENTELE LIMITED - Condensed Preliminary Group Result for the year ended 30 June 2015

Release Date: 17/08/2015 17:00
Code(s): CLI     PDF:  
Wrap Text
Condensed Preliminary Group Result for the year ended 30 June 2015

Clientèle Limited
(Registration number 2007/023806/06)
Share code: CLI ISIN: ZAE000117438
Condensed Preliminary Group results for the year ended 30 June 2015

Highlights
Diluted headline earnings per share increased by 15% to 108 cents

Return on average shareholders' interest of 56%

Dividend declared per share increased by 15% to 90 cents

Net insurance premiums increased by 17% to R1.5 billion

Recurring Return on Embedded Value of 30%

Recurring Embedded Value Earnings increased by 36% to R1.1 billion

Value of New Business increased by 12% to R717.6 million



Comments
Introduction

The Board is pleased to announce that the Clientèle Group ("the Group") has achieved another year of good operating results
despite the ongoing tough economic environment. The strong production achieved during the 2014 financial year has continued
this year whilst the quality of new business written has been maintained. This is the result of the Group's continued focus on
ingraining sustainability practices and principles and maintaining strict controls.

Profit before tax increased by 19% to R501.9 million (2014: R422.4 million) and headline earnings for the Group increased by 17%
to R360.6 million (2014: R307.6 million). The profit before tax and headline earnings for last year were positively impacted by the
once-off discretionary margin release of R49.9 million (R35.9 million after-tax) and negatively by the R32.5 million (R23.5 million
after-tax) fair value adjustment to the zero coupon fixed deposits in African Bank Limited ("ABL").

Recurring Embedded Value Earnings has increased by 36% to R1.1 billion (2014: R805.3 million) and the Value of New Business
("VNB") has increased by 12% to R717.6 million (2014: R638.2 million) despite the negative impact of the increase in the Risk
Discount rate ("RDR”) referred to below. Had the RDR remained at the 30 June 2014 level, VNB would have increased by 21%.
New Business profit margins have improved to 28.9% (2014: 27.5%) as a result of continued cost control, strong production of
good quality new business and an increase in average premiums.

This performance resulted in the Group achieving a return on average shareholders' interests of 56%.

The dividend declared per share increased by 15% to 90.00 cents (2014: 78.00 cents).



Operating Results
Group Statement of Comprehensive Income

Diluted headline earnings per share for the year increased by 15% to 107.67 cents (2014: 93.53 cents).

Net insurance premium revenue increased by 17% to R1.5 billion (2014: R1.3 billion), on the back of the ongoing increase in the
production of good quality business and good withdrawal experience.

Investment returns of R154.9 million, although being above the market's returns, are lower than last year's returns of R181.6
million.

Net insurance benefits and claims of R300.5 million (2014: R311.1 million) are 3.4% lower than last year due to lower
encashments of unitised endowment policies.

Despite the increase in marketing and other acquisition costs incurred to support the VNB growth, the increase in operating
expenses has been restricted to 7% in comparison to the 17% increase in net insurance premiums mentioned above.

The Group follows a conservative accounting practice of eliminating negative reserves. As acquisition costs are expensed upfront,
the recovery of these costs and the profits are deferred over the policy life. The present value of this discretionary margin amounts
to R2.5 billion (2014: R2.3 billion).



Group Embedded Value and Value of New Business

As mentioned above, the sustained momentum in the production of good quality business has driven the increase in the VNB to
R717.6 million (2014: R638.2 million). The Recurring Embedded Value Earnings of R1.1 billion translates into a Recurring Return
on Embedded Value ("ROEV") of 30% (2014: 24%). The Group Embedded Value ("EV") has increased by 17% to R4.6 billion
(2014: R3.9 billion). Withdrawal experience on new business as well as most tranches of existing business was better than
assumption and an improvement on the prior year resulting in a withdrawal profit of R19 million (2014: a loss of R17 million).

The RDR has been set at 11.8% (2014: 11.1%). The calculation is comprehensively explained in the Group EV results section of
the results and a sensitivity analysis is also provided.



Segment Results
Clientèle Life - Long-term insurance

Clientèle Life's Long-term insurance segment remains the major contributor to Group performance. It accounts for 84% (2014:
86%) or R602.3 million (2014: R550.6 million) of the Group's R717.6 million (2014: R638.2 million) of VNB and recorded Recurring
EV Earnings of R911.4 million (2014: R677.0 million) for the year. The segment generated R303.6 million (2014: R283.4 million)
net profit for the year, an increase of 7%, a pleasing result given the once-off positive after-tax impact of R35.9 million in the
comparative year resulting from the release of the discretionary margin.



Clientèle Life - Investment contracts

The Investment contracts operating segment reported a R4.6 million net profit for the year (2014: R13.9 million net loss). This
should be viewed in conjunction with the R19.9 million (2014: R21.7 million) of deferred profits included in the Statement of
Financial Position. The prior year net profit for the year was impacted by the fair value adjustment of R22.5 million (after-tax) to
zero coupon fixed deposits in ABL.



Clientèle General Insurance (Clientèle Legal) - Short-term insurance

Clientèle Legal accounts for R111.4 million (2014: R85.5 million) of the Group's VNB for the year, and recorded Recurring EV
Earnings of R184.4 million (2014: R135.5 million). The segment generated a 15% increase in net profit for the year to R47.0
million (2014: R40.8 million).



Prospects

The Board's focus for the future will remain on building on the positive momentum that has been achieved in the production of
good quality business and on customer service. In addition, the Board is committed to providing products that are relevant and
meet the individual policyholder's needs and delivering these to the market conveniently and efficiently as well as creating and
nurturing mutually beneficial partnerships with all its stakeholders that add value on a sustainable basis. The Board remains
convinced that there remain attractive opportunities for growth and value creation in Clientèle's target market.



Dividend Declared

Notice is hereby given that the directors have declared a final gross dividend of 90.00 cents (2014: 78.00 cents) per share on 13
August 2015 for the year ended 30 June 2015.

The Board of Clientèle Limited confirms that the Group will satisfy the solvency and liquidity tests immediately after completion of
the dividend distribution.

The dividend will be subject to dividends tax. In accordance with the JSE Listings Requirements, the following additional
information is disclosed:

-   The dividend has been declared out of income reserves;
-   The local dividends tax rate is 15% (fifteen percent);
    The gross local dividend amount is 90.00 cents (2014: 78.00 cents) per ordinary share for shareholders exempt from the
-   dividends tax;
    The net local dividend amount is 76.50 cents (2014: 66.30 cents) per ordinary share for shareholders liable to pay the
-   dividends tax;
    The local dividends tax amount is 13.50 cents (2014: 11.70 cents) per ordinary share for shareholders liable to pay the
-   dividend withholding tax;
-   No STC credits are utilised;
-   Clientèle Limited currently has 330,629,599 (2014: 329,218,449) ordinary shares in issue;


Clientèle Limited's income tax reference number is 9465071166.

In compliance with the requirements of STRATE Limited, the electronic settlement and custody system used by the JSE Limited,
the following salient dates for the payment of the dividend are applicable:

Last day to trade                           Friday, 11 September 2015
Shares commence trading "ex" dividend       Monday, 14 September 2015
Record date                                 Friday, 18 September 2015
Payment date                                Monday, 21 September 2015


Share certificates may not be dematerialized or rematerialized between Monday, 14 September 2015 and Friday, 18 September
2015, both days inclusive.

By order of the Board

G Q Routledge                           B W Reekie
Chairman                                Managing Director

Johannesburg

17 August 2015


REVIEWED

Condensed Group Statement of Comprehensive Income
                                                                                            Year ended 30 June         %
(R'000's)                                                                                    2015         2014    Change
Revenue
Insurance premium revenue                                                               1,641,189    1,406,175        17
Reinsurance premiums                                                                     (114,001)    (100,005)
Net insurance premiums                                                                  1,527,188    1,306,170        17
Other income                                                                              170,652      171,194
Interest income                                                                            22,759       53,169
Fair value adjustment to financial assets at fair value through profit or loss            154,889      181,556
Net income                                                                              1,875,488    1,712,089
Net insurance benefits and claims                                                        (300,499)    (311,102)
Decrease in policyholder liabilities under insurance contracts                              5,042       42,727
Decrease in reinsurance assets                                                               (227)         (95)
Fair value adjustment to financial liabilities at fair value through profit or loss -
investment contracts                                                                      (72,275)     (49,184)
Interest expense                                                                           (2,752)     (12,393)
Impairment of advances                                                                    (12,380)     (31,719)
Operating expenses                                                                       (990,505)    (927,937)        7
Profit before tax                                                                         501,892      422,386        19
Tax                                                                                      (137,501)    (115,870)       19
Net profit for the year                                                                   364,391      306,516        19
Attributable to:
- Non-controlling interest - ordinary shareholders                                          2,748       (1,295)
Equity holders of the Group - ordinary shareholders                                       361,643      307,811        17
Net profit for the year                                                                   364,391      306,516        19
Other comprehensive income:
Gains on property revaluation#                                                              6,711       20,296
Income tax relating to gains on property revaluation#                                      (1,742)      (5,014)
Other comprehensive income for the year - net of tax                                        4,969       15,282
Total comprehensive income for the year                                                   369,360      321,798        15
Attributable to:
- Non-controlling interest - ordinary shareholders                                          2,748       (1,295)
Equity holders of the Group - ordinary shareholders                                       366,612      323,093        13
# Items that cannot be recycled to profit or loss.


Condensed Group Statement of Financial Position
                                                                                            Year ended 30 June
(R'000's)                                                                                    2015         2014
Assets
Intangible assets                                                                          27,088       23,461
Property and equipment                                                                     26,487       23,389
Owner-occupied properties^                                                                308,715      224,009
Deferred tax                                                                               31,395       25,744
Inventories                                                                                 1,484        1,860
Reinsurance assets                                                                          3,015        3,242
Financial assets at fair value through profit or loss                                   2,051,487    2,043,394
Loans and receivables including insurance receivables                                      76,138      113,348
Current tax                                                                                 5,258        6,317
Cash and cash equivalents                                                                 223,939      183,246
Total assets                                                                            2,755,006    2,648,010
Total equity and reserves                                                                 740,195      618,846
Liabilities
Policyholder liabilities under insurance contracts                                        698,882      703,924
Financial liabilities - investment contracts                                              942,336    1,046,721
- at fair value through profit or loss                                                    942,336      998,337
- at amortised cost                                                                                     48,384
Financial liabilities - loans at amortised cost                                            35,177       10,000
Employee benefits                                                                         122,308       98,423
Deferred tax                                                                               30,071       33,727
Accruals and payables including insurance payables                                        181,620      134,909
Current tax                                                                                 4,417        1,460
Total liabilities                                                                       2,014,811    2,029,164
Total equity and liabilities                                                            2,755,006    2,648,010
^ Owner-occupied properties are disclosed at level 2 in the fair value measurement hierarchy.



Tax
                                                                                            Year ended 30 June
(R'000's)                                                                                    2015         2014
Current and deferred tax                                                                 (129,301)    (114,734)
Capital gains tax                                                                          (5,811)        (714)
Underprovision in prior years                                                              (2,389)        (422)
Tax                                                                                      (137,501)    (115,870)
The Individual Policyholder Fund has an estimated tax loss of R2.7 billion (2014: R2.4 billion)



Reconciliation of Net Profit to Headline Earnings
                                                                                            Year ended 30 June         %
(R'000's)                                                                                    2015         2014    Change
Net profit for the year attributable to equity holders of the Group                       361,643      307,811        17
Less: Profit on disposal of property and equipment                                           (282)        (202)
Add: Impairment of intangible assets                                                        1,234
Less: Taxation effects on loan write-off                                                   (2,037)
Headline earnings for the year                                                            360,558      307,609        17



Ratios per Share
                                                                                            Year ended 30 June         %
(Cents)                                                                                      2015         2014    Change
Headline earnings per share                                                                109.33        93.58        17
Diluted headline earnings per share                                                        107.67        93.53        15
Earnings per share                                                                         109.66        93.64        17
Diluted earnings per share                                                                 107.99        93.59        15
Net asset value per share                                                                  223.87       187.97        19
Diluted net asset value per share                                                          221.04       188.16        17
Dividends per share - paid                                                                  78.00        74.00         5
Dividends per share - declared                                                              90.00        78.00        15
Ordinary shares in issue ('000)                                                           330,630      329,218
Weighted average ordinary shares ('000)                                                   329,799      328,722
Diluted average ordinary shares ('000)                                                    334,877      328,901



Condensed Group Statement of Cash Flows
                                                                                            Year ended 30 June
(R'000's)                                                                                    2015         2014
Cash flows from operating activities                                                      128,721       49,245
Profit from operations adjusted for non-cash items                                        553,120      418,720
Working capital changes                                                                     9,350      (95,884)
Separately disclosable items(1)                                                           (61,082)     (49,005)
Decrease in financial liabilities(2)                                                     (178,930)    (334,158)
Net disposal of investments(3)                                                            146,796      426,142
Interest received                                                                          44,435       30,145
Dividends received                                                                         16,647       18,860
Dividends paid                                                                           (257,081)    (243,030)
Tax paid                                                                                 (144,534)    (122,545)
Cashflows from investing activities(4)                                                   (113,205)     (46,010)
Cashflows from financing activities(5)                                                     25,177
Net increase in cash and cash equivalents                                                  40,693        3,235
Cash and cash equivalents at beginning of the year                                        183,246      180,011
Cash and cash equivalents at end of the year                                              223,939      183,246
1. Interest and dividends received
2. Financial liabilities - investment contracts
3. Investments in respect of insurance operations and investment contracts
4. Mainly relates to the acquisition of intangible assets, property and equipment
5. External funding for new office building development



Segment Assets and Liabilities
                                                                                            Year ended 30 June
(R'000's)                                                                                    2015         2014
Long-term insurance                                                                     1,653,027    1,454,656
Investment contracts                                                                      942,702    1,047,977
Short-term insurance                                                                      173,805      150,153
Other*                                                                                     24,146       86,105
Inter segment                                                                             (38,674)     (90,881)
Total Group Assets                                                                      2,755,006    2,648,010
Long-term insurance                                                                     1,026,336      933,007
Investment contracts                                                                      942,336    1,046,721
Short-term insurance                                                                       50,328       36,085
Other*                                                                                     34,485      104,232
Inter segment                                                                             (38,674)     (90,881)
Total Group Liabilities                                                                 2,014,811    2,029,164
* The decrease in other segment assets and liabilities relates to the decrease in advances of Clientèle Loans Direct



Notes to the Results

The results have been reviewed by the Group's external auditors, PricewaterhouseCoopers Incorporated, in terms of International
Standards on Review Engagements 2410. The scope of the review was to enable the external auditors to report that nothing
came to their attention to cause them to believe that the accompanying condensed preliminary consolidated financial information
is not presented, in all material respects, in accordance with the South African Companies Act 71 of 2008, as amended and the
JSE Limited Listings Requirements. A copy of the unqualified review opinion is available on request at the Company's registered
offices.

The condensed consolidated preliminary Financial Statements were prepared under the supervision of Mr I B Hume (CA(SA),
ACMA), the Group Financial Director.



Accounting Policies
Statement of compliance

The condensed consolidated preliminary Financial Statements are prepared in accordance with the JSE Limited Listings
Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The Listings Requirements
require preliminary reports to be prepared in accordance with the framework concepts, the measurement and recognition
requirements of International Financial Reporting Standards ("IFRS"), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and
must also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied
in the preparation of the condensed consolidated preliminary Financial Statements are in terms of IFRS and are consistent with
those applied in the previous consolidated Annual Financial Statements.

The preparation of the condensed consolidated preliminary Financial Statements in accordance with IFRS requires the use of
certain critical accounting estimates and judgments. The reported amounts in respect of the Group's insurance contracts,
employee benefits and unquoted financial instruments are affected by accounting estimates and judgments.



Related Party Transactions

Transactions between Clientèle Limited and its subsidiaries have been eliminated on consolidation. There were no material related
party transactions during the year except for financial assistance provided to the Group's wholly-owned subsidiary, Clientèle
Properties East in respect of the new office building development.



Segment Information

The Group's results are analysed across South Africa ("SA") - geographical segment.

The Group's main operating segments are Long-term insurance, Investment contracts, Short-term insurance and Other (which is
predominantly Clientèle Loans). The vast majority of policies written are in respect of individuals.



Capital Commitments

The Group's wholly owned subsidiaries, Clientèle Properties East and Clientèle Properties North, are in the process of developing
a new office building and parking structure within the Clientèle Office Park. The capitalised costs of this are estimated to be
R213.0 million, of which R108.8 million has been capitalised since inception. It is the Group's intention that the building will be
occupied by the Group in November 2015.



Commitments and events after the reporting date

The Group intends to provide financial assistance by means of a net exposure through guarantees of R45 million for the purchase
of 3.92% of Clientèle's issued shares by Yellowwoods Trust Investments (Pty) Ltd ("YTI") a wholly owned subsidiary of the Hollard
Foundation Trust, a BBBEE Trust. This will be voted on by shareholders' at the AGM on 29 October 2015. Full details will be
provided in the Integrated Annual Report.

Financial Assets and Liabilities held at Fair Value through profit or loss - Fair Value Hierarchy Disclosure

The following table presents the Group's financial assets and liabilities that are measured at fair value through profit or loss at 30
June 2015.

(R'000's)                                                                  Level 1          Level 2            Level 3          Total
Assets
Listed equity securities                                                  573,385                                            573,385
Unlisted equity securities                                                                   3,850                             3,850
Promissory notes and fixed deposits                                                        488,926          410,386          899,312
Funds on deposit                                                                           484,464                           484,464
Fixed interest securities                                                                   85,528            4,948           90,476
Total assets                                                              573,385        1,062,768          415,334        2,051,487
Liabilities
Financial liabilities at fair value through profit or loss                                 802,653          139,683          942,336
Total liabilities                                                                          802,653          139,683          942,336

Shareholders' and policyholders' linked exposure to ABL through investments in zero coupon fixed deposits of R275.7 million and
R139.7 million respectively as at 30 June 2015 have been reclassified to level 3 (from level 2) on the fair value hierarchy as
values are estimated indirectly using valuation techniques or models. The most relevant inputs to the level 3 discounted cash flow
fair value model applied to the ABL fixed deposits are the risk premium (28.3% to the average zero coupon risk free yield curve)
and the extension of maturities as announced by the ABL curator in the SENS Announcement dated 28 May 2015. The model
yields a value of approximately 90% of the face value of these fixed deposits. If the key inputs are adjusted in the valuation
models, to illustrate sensitivities, between an upper and lower range this would illustrate an adjusted face value of between 95%
and 75% respectively. The net profit before taxation would, as a result of the sensitivity illustrations, then change in a range of R15
million higher to R45 million lower, depending on the inputs used.



Segment Statements of Comprehensive Income
                                                                                                                    Inter
                                                                                                                  segment
                                                          Long-term      Investment    Short-term              (revenue)/
(R'000's)                                                 insurance       contracts     insurance      Other      expense          Total
30 June 2015
Insurance premium revenue                                 1,397,393                       243,796                              1,641,189
Reinsurance premiums                                       (114,001)                                                            (114,001)
Net insurance premiums                                    1,283,392               -       243,796          -            -      1,527,188
Other income                                                145,170          12,750           363     17,647       (5,278)       170,652
Interest income                                              13,777                         1,018     14,088       (6,124)        22,759
Fair value adjustment to financial assets at fair value
through profit or loss                                       71,428          73,497         9,964                                154,889
Segment revenue                                           1,513,767          86,247       255,141     31,735      (11,402)     1,875,488
Segment expenses and claims                              (1,091,975)        (79,774)     (190,799)   (22,450)      11,402     (1,373,596)
Net insurance benefits and claims                          (275,677)                      (24,822)                              (300,499)
Decrease/(increase) in policyholder liabilities under
insurance contracts                                           5,877                          (835)                                 5,042
Decrease in reinsurance assets                                 (227)                                                                (227)
Fair value adjustment to financial liabilities at fair
value through profit or loss                                                (72,275)                                             (72,275)
Interest expense                                                             (2,270)                  (6,606)       6,124         (2,752)
Impairment of advances                                                                               (12,380)                    (12,380)
Operating expenses                                         (821,948)         (5,229)     (165,142)    (3,464)       5,278       (990,505)
Profit before tax                                           421,792           6,473        64,342      9,285            -        501,892
Tax                                                        (118,172)         (1,812)      (17,367)      (150)                   (137,501)
Net profit for the year                                     303,620           4,661        46,975      9,135            -        364,391
Attributable to:
Non-controlling interest - ordinary shareholders                                                       2,748                       2,748
Equity holders of the Group - ordinary shareholders         303,620           4,661        46,975      6,387            -        361,643
30 June 2014
Insurance premium revenue                                 1,211,029                       195,146                              1,406,175
Reinsurance premiums                                        (99,568)                         (437)                              (100,005)
Net insurance premiums                                    1,111,461               -       194,709          -            -      1,306,170
Other income                                                151,740          13,071           102     11,469       (5,188)       171,194
Interest income                                              14,478                           916     45,636       (7,861)        53,169
Fair value adjustment to financial assets at fair value
through profit or loss                                      140,741          26,726        14,089                                181,556
Segment revenue                                           1,418,420          39,797       209,816     57,105      (13,049)     1,712,089
Segment expenses and claims                              (1,033,869)        (59,132)     (154,897)   (54,854)      13,049     (1,289,703)
Net insurance benefits and claims                          (287,212)                      (23,890)                              (311,102)
Decrease in policyholder liabilities under insurance
contracts                                                    41,396                         1,331                                 42,727
Decrease in reinsurance assets                                  (95)                                                                 (95)
Fair value adjustment to financial liabilities at fair
value through profit or loss                                                (49,184)                                             (49,184)
Interest expense                                                             (5,280)                 (14,974)       7,861        (12,393)
Impairment of advances                                                                               (31,719)                    (31,719)
Operating expenses                                         (787,958)         (4,668)     (132,338)    (8,161)       5,188       (927,937)
Profit/(loss) before tax                                    384,551         (19,335)       54,919      2,251            -        422,386
Tax                                                        (101,130)          5,414       (14,155)    (5,999)                   (115,870)
Net profit/(loss) for the year                              283,421         (13,921)       40,764     (3,748)           -        306,516
Attributable to:
Non-controlling interest - ordinary shareholders                                                      (1,295)                     (1,295)
Equity holders of the Group - ordinary shareholders         283,421         (13,921)       40,764     (2,453)           -        307,811
Condensed Group Statement of Changes in Equity
                                                                                                                  SAR
                                                                                                            and Bonus
                                                                       Common                                  Rights      NDR:                     Non-
                                               Share       Share      control         Sub-     Retained       Schemes     Reva-        Sub-  controlling
(R'000's)                                    capital     premium      deficit        total     earnings       reserve~  luation       total     interest        Total
Balance as at 1 July 2013                      6,560     268,982     (220,273)      55,269      417,700        15,066    45,940     533,975       (4,555)     529,420
Ordinary dividends                                                                             (243,069)                           (243,069)                 (243,069)
Total comprehensive income                                                                      307,811                  15,282     323,093       (1,295)     321,798
- Net profit/(loss) for the year                                                                307,811                             307,811       (1,295)     306,516
- Other comprehensive income                                                                                             15,282      15,282                    15,282
Shares issued                                     24      16,636                    16,660                                           16,660                    16,660
SAR and Bonus Rights Schemes allocated                                                                         10,697                10,697                    10,697
Transfer from shares issued                                                                     (14,078)       (2,582)              (16,660)                  (16,660)
Balance as at 30 June 2014                     6,584     285,618     (220,273)      71,929      468,364        23,181    61,222     624,696       (5,850)     618,846
Balance as at 1 July 2014                      6,584     285,618     (220,273)      71,929      468,364        23,181    61,222     624,696       (5,850)     618,846
Ordinary dividends                                                                             (257,031)                           (257,031)                 (257,031)
Total comprehensive income                                                                      361,643                   4,969     366,612        2,748      369,360
- Net profit for the year                                                                       361,643                             361,643        2,748      364,391
- Other comprehensive income                                                                                              4,969       4,969                     4,969
Shares issued                                     29      24,567                    24,596                                           24,596                    24,596
SAR and Bonus Rights Schemes allocated                                                                          9,020                 9,020                     9,020
Transfer from shares issued                                                                     (20,094)       (4,502)              (24,596)                  (24,596)
Balance as at 30 June 2015                     6,613     310,185     (220,273)      96,525      552,882        27,699    66,191     743,297       (3,102)     740,195
~ SAR Scheme - the Clientèle Limited Share Appreciation Rights Scheme
~ Bonus Rights Scheme - the Clientèle Limited Bonus Rights Scheme
~ 1.4 million (2014: 1.2 million) shares were issued in terms of the SAR and Bonus Rights Schemes



UNAUDITED GROUP EMBEDDED VALUE RESULTS

Group Embedded Value

The Embedded Value ("EV") represents an estimate of the value of the Group, exclusive of goodwill attributable to future new
business. The EV comprises:

-   the Free Surplus; plus,
-   the Required Capital identified to support the in-force business; plus,
-   the Present Value of In-force ("PVIF") business; less,
-   the Cost of Required Capital ("CoC").

The PVIF business is the present value of future after tax profits arising from covered business in force as at 30 June 2015.
All material business written by the Group has been covered by EV Methodology as outlined in Advisory Practice Notice, APN 107
of the Actuarial Society of South Africa, including:

- all long-term insurance business regulated in terms of the Long-Term Insurance Act, 1998;
- Legal insurance business where EV Methodology has been used to determine future shareholder entitlements;
- annuity income arising from non-insurance contracts where EV Methodology has been used to determine future shareholder
  entitlements; and
- Loans business where EV Methodology has been used to determine future shareholder entitlements.

The EV calculations have been certified by the Group's independent actuaries, QED Actuaries & Consultants (Pty) Ltd. The EV
can be summarised as follows:

                                                                                                           Year ended 30 June
(R'000's)                                                                                                 2015           2014
Required capital                                                                                       335,208        312,387
Free surplus                                                                                           387,605        287,353
Adjusted Net Worth ("ANW") of covered business                                                         722,813        599,740
PVIF                                                                                                 3,952,657      3,397,262
CoC                                                                                                    (74,170)       (58,308)
EV of covered business                                                                               4,601,300      3,938,694

The ANW of covered business is defined as the excess value of all assets attributed to the covered business, but not required to
back the liabilities of covered business. Free Surplus is the ANW less the Required Capital attributed to covered business.



Reconciliation of Total Equity to ANW

                                                                                                           Year ended 30 June
(R'000's)                                                                                                 2015           2014
Total equity and reserves per the
 Statement of Financial Position                                                                       740,195        618,846
Adjusted for deferred profits and impact of compulsory margins on investment business                   11,327         12,793
Adjusted for minority interests                                                                          3,102          5,850
Adjusting subsidiaries to Net Asset Value                                                               21,884         20,148
SAR and Bonus Rights Schemes adjustment                                                                (53,695)       (57,897)
ANW                                                                                                    722,813        599,740

The CoC is the opportunity cost of having to hold the Required Capital of R335.2 million as at 30 June 2015 (30 June 2014:
R312.4 million). The Required Capital has been set at the greater of the Statutory Termination Capital Adequacy Requirement
(TCAR) and 1.25 times the Statutory Ordinary Capital Adequacy Requirement (OCAR) for the Life company plus the Statutory
Capital Requirement for the Short-term company.

The SAR and Bonus Rights Scheme adjustment recognises the future dilution in EV, on a mark to market basis, as a result of the
SAR and Bonus Rights Schemes.

Clientèle Life's Statutory Capital Adequacy Requirement (CAR) was calculated as the maximum of TCAR, OCAR and MCAR, with
TCAR being the highest of the three. The credit risk component of OCAR includes an amount of R90 million specifically pertaining
to the credit risk on ABL assets backing Policyholder liabilities.

Clientèle Life's Statutory CAR cover ratio at 30 June 2015 was 2.32 times (30 June 2014: 2.03 times) on the statutory valuation
basis.

Clientèle General Insurance's Statutory Capital Adequacy Requirement cover ratio at 30 June 2015 was 1.33 times (30 June
2014: 1.57 times) on the statutory valuation basis.



Value of New Business ("VNB")

                                                                                                           Year ended 30 June
(R'000's)                                                                                                 2015           2014
Total VNB                                                                                              717,574        638,154
Present Value of New Business premiums                                                               2,482,780      2,319,368
New Business profit margin                                                                               28.9%          27.5%

The VNB (excluding any allowance for the Management incentive schemes which is shown as a separate component of EV
Earnings) represents the present value of projected after tax profits at the point of sale on new covered business commencing
during the year ended 30 June 2015 less the CoC pertaining to this business.

The New Business profit margin is the VNB expressed as a percentage of the present value of future premiums (and other annuity
fee income) pertaining to the same business.



Long-term Economic Assumptions

                                                                                                           Year ended 30 June
(%)                                                                                                       2015           2014
Risk discount rate                                                                                        11.8           11.1
Non-unit investment return                                                                                 8.3            7.6
Unit investment return                                                                                     9.3            9.0
Expense inflation                                                                                          6.8            6.1
Corporate tax                                                                                             28.0           28.0

The risk discount rate ("RDR") has been determined using a top-down weighted average cost of capital approach, with the equity
return calculated using Capital Asset Pricing Model ("CAPM") theory. In terms of current actuarial guidance, the RDR has been set
as the risk free rate plus a beta multiplied by the assumed equity risk premium. It has been assumed that the equity risk premium
(i.e. the long-term expected difference between equity returns and the risk free rate) is 3.5%. The beta pertaining to the Clientèle
share price is relatively low, which is partially a consequence of the relatively small free-float of shares. After consideration, the
Board has decided to continue to use a more conservative beta of 1, as opposed to its actual beta of 0.013 in the calculation of
the RDR. The Board draws the reader's attention to the RDR sensitivity analysis in the table below which allows for sensitivity
comparisons using various alternative RDR's.

The resulting RDR utilised for the South African business as at 30 June 2015 was 11.8% (30 June 2014: 11.1%).



RDR Sensitivities

(R'000's)                                                                                                   EV            VNB
RDR 9.8%                                                                                             5,332,103        902,672
RDR 10.8%                                                                                            4,932,427        800,815
RDR 11.1% (as at June 2014)                                                                          4,826,710        774,042
RDR 11.8%                                                                                            4,601,300        717,574
RDR 12.8%                                                                                            4,322,874        647,370
RDR 13.8%                                                                                            4,085,615        588,226



EV per Share

                                                                                                           Year ended 30 June
(Cents)                                                                                                   2015           2014
EV per share                                                                                          1,391.68       1,196.38
Diluted EV per share                                                                                  1,370.63       1,195.73



Segment Information

The EV can be split between segments as follows:

(R'000's)                                               ANW         PVIF       CoC             EV
30 June 2015
SA - Long-term insurance                            609,521    3,306,547   (53,314)     3,862,754
SA - Short-term insurance                           120,532      639,592   (20,856)       739,268
SA - Investment contracts                                 -        2,629         -          2,629
Other                                                (7,240)       3,889         -         (3,351)
Total                                               722,813    3,952,657   (74,170)     4,601,300
30 June 2014
SA - Long-term insurance                            500,170    2,868,411   (41,066)     3,327,515
SA - Short-term insurance                           111,976      518,714   (17,242)       613,448
SA - Investment contracts                                 -        3,051         -          3,051
Other                                               (12,406)       7,086         -         (5,320)
Total                                               599,740    3,397,262   (58,308)     3,938,694



The VNB can be split between segments as follows:

                                                                                                           Year ended 30 June
(R'000's)                                                                                                 2015           2014
SA - Long-term insurance                                                                               602,313        550,551
SA - Short-term insurance                                                                              111,360         85,507
SA - Investment contracts                                                                                3,037            745
Other                                                                                                      864          1,351
Total                                                                                                  717,574        638,154
Embedded Value Earnings Analysis

EV earnings (per APN 107) comprises the change in EV for the year after adjusting for capital movements and dividends paid.


                                                                                                           Year ended 30 June 2015                      Year ended
                                                                                                                                                      30 June 2014
(R'000's)                                                                                           ANW             PVIF            CoC           EV            EV
A: EV at the end of the year                                                                    722,813        3,952,657        (74,170)   4,601,300     3,938,694
EV at the beginning of the year                                                                 599,740        3,397,262        (58,308)   3,938,694     3,546,640
Ordinary dividends                                                                             (257,031)               -              -     (257,031)     (243,069)
B: Adjusted EV at the beginning of the year                                                     342,709        3,397,262        (58,308)   3,681,663     3,303,572
EV earnings (A - B)                                                                             380,104          555,395        (15,862)     919,637       635,122
Impact of once-off economic assumption changes                                                   (1,628)         171,997          7,636      178,005       139,436
Impact of other once-off items                                                                        -                -              -            -        30,718
Recurring EV earnings                                                                           378,476          727,392         (8,226)   1,097,642       805,276
Recurring Return on EV                                                                                                                         29.8%         24.4%
Return on EV                                                                                                                                   25.0%         19.2%

Components of EV earnings
VNB                                                                                            (250,093)         976,333         (8,665)     717,574       638,154
Expected return on covered business                                                                   -          404,319          6,973      411,292       344,233
Expected profit transfer                                                                        617,648         (617,648)             -            -             -
Withdrawal and unpaid premium experience variance                                                (2,452)          23,312         (1,843)      19,017       (16,975)
Claims and reinsurance experience variance                                                       (3,416)               -              -       (3,416)       (2,259)
Sundry experience variance                                                                        4,233              (66)             -        4,167         5,212
Changes in modelling/basis and non-economic assumptions                                          11,012          (38,272)        (4,691)     (31,951)     (144,313)
Expected return on ANW                                                                           34,987                -              -       34,987        29,385
SAR and Bonus Rights Scheme                                                                      13,221                -              -       13,221       (25,078)
Goodwill and Medium-term incentive schemes                                                      (47,912)         (20,586)             -      (68,498)      (63,827)
EV operating return                                                                             377,228          727,392         (8,226)   1,096,394       764,532
Investment return variances on ANW                                                                1,248                -              -        1,248        40,744
Recurring EV earnings                                                                           378,476          727,392         (8,226)   1,097,642       805,276
Effect of economic assumption changes                                                             1,628         (171,997)        (7,636)    (178,005)     (139,436)
Impact of other once-off items                                                                        -                -              -            -       (30,718)
EV earnings                                                                                     380,104          555,395        (15,862)     919,637       635,122

website: www.clientele.co.za e-mail: results@clientele.co.za



Registered office: Clientèle Office Park, Cnr Rivonia and Alon Roads, Morningside 2196, South Africa
PO Box 1316, Rivonia 2128, South Africa

Transfer secretaries: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001, South Africa
PO Box 61051, Marshalltown 2107, South Africa

Directors: G Q Routledge BA LLB (Chairman); G J Soll CA(SA) (Vice Chairman); B W Reekie BSc(Hons), FASSA* (Managing Director); 
A D T Enthoven BA, PhD (Political Science); B Frodsham BCom*; P R Gwangwa BProc LLB, LLM; I B Hume CA(SA), ACMA*; 
B A Stott CA(SA); R D Williams, BSc(Hons), FASSA

Company secretary: W van Zyl CA(SA)        *Executive Director



Sponsor:

PricewaterhouseCoopers Corporate Finance Proprietary Limited

Date: 17/08/2015 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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