Sage reports sharp recovery

Posted On Thursday, 18 March 2004 02:00 Published by
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Recovery in earnings

By Ray Faure

Despite what it called a difficult year for the life insurance and unit trust industries and the specific challenges faced by the group relating to the closure and subsequent disposal of its international operations, life assurance group; Sage (SGG) reported a sharp recovery in earnings for the 12 months ended December compared with a loss in 2002.

The group reported headline earnings per share of 23.5 cents for the 12-month period compared with a 32-cent loss for the previous nine months.

Group attributable earnings for the year amounted to R74.6 million - a significant improvement on the loss of R239.5 million reported for the nine months to December 2002.

The attributable earnings contribution to the group by the operating subsidiaries, including Sage Life amounted to R131.1 million, compared to

R124.3 million in the nine months to December 2002. After providing for the cost of other activities of R16.7 million rand (R28.4 million previous nine months), financing costs, including all Equity Linked Notes (ELN) related items of R54.9 million, a reversal of R15.1 million in respect of discontinued international operations and capital items of R13.4 million, total group headline earnings recovered to R61.2 million from a loss of R48 million in the prior accounting period.

Total group attributable earnings per share for 2003 amounted to 28.7 cents compared to the loss of 159.8 cents per share in the nine months to December 2002.

Garth Griffin, Group Chief Executive, commented: "During 2003 we focused on stabilising the business and carried out restructuring and rationalisation to position the group for profitable growth. Earnings have recovered and there has been a notable pick up in business in the second half in our individual life and unit trust operations.

"We have a strengthened balance sheet following the successful capital raising last year, with a significant reduction in our debt and have an agreed plan to further improve the capital structure of the Group.

"At the operating level, significant progress was made on a number of initiatives, including a broad-based brand revitalisation project, in line with our newly agreed strategic direction."

No dividends were declared in respect of the financial year under review, as part of the process of strengthening the group's financial position.

A specific issue and rights offer in June 2003 raised a net R332.1 million in new capital which was deployed in the main in restructuring the funding of the group and debt at group level was reduced to R500.4 million from

R757.2 million at December 2002.

Looking ahead, the group said prospects for 2004 remained challenging.

"Specific areas of focus for the current year include the restoration of new business production levels, a continued strong focus on expense management and the reduction of unit cost levels, the further development of our distribution capability, the relaunch of the 'Sage' brand into our specific market segments and the ongoing development of leadership talent.

"Each of these areas is being actively pursued and should reflect in the group's activities during the course of 2004, establishing a base for profitable and sustainable development into the future.

"The outlook for 2004 remains challenging. We believe that we can improve on the results at operating company level, but are less able to manage the impact of investment returns on our overall results. However, given the prospects for local capital markets for the year, and a measure of stability, we believe that shareholders can look forward to further improvements in earnings as the business continues to build momentum," the group said.

I-Net Bridge 17 March 2004

Publisher: I-Net Bridge
Source: I-Net Bridge

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