Results to 31 March 2003

1

• Results to 31 March 2003

2
Financial highlights

• Strong trading results in tough environment
• Trading profit R1,054 bn
• Trading profit increase 19
• Revenue 15
• Core EPS 14

3
Factors affecting results

• Difficult trading environment in many areas
• Indemnity insurance costs
• Dollar weakness
• Weak global markets
• Lower interest rates (UK)
• Lack of insurance capacity in some markets
• Disappointing performance of associates
• Rand strength
• Some positive offsets
• Hard insurance market
• Strong underlying business performance
• Lane Clark Peacock (LCP) acquisition

4
Alexander Forbes Group structure
Africa
Africa
Financial Services
Risk Services
Investment Solutions
International
UK
Risk Services
Financial Services
5
Revenue analysis

2003 Increase 2002 Rm Rm Africa 1
968 (40) 10 1 790 (42) International 2
912 (60) 19 2 449 (58) Total 4
880 (100) 15 4 239 (100)
6
Alexander Forbes Africa
Africa
Africa
Financial Services
Risk Services
Investment Solutions
International
UK
Risk Services
Financial Services
7
Operational review - Africa

• 2003 2002
• Trading profit Rm Increase Rm
• Risk Services 172 25 138
• Financial Services 208 15 181
• Investment Solutions 160 12 143
• Total 540 17 462

8
Africa

• Risk Services
• Modest revenue gain
• Strong growth in profit
• Strong turn around in Personal Services
• Disciplined management
• Benefit from harder insurance market
• Financial Services
• Healthy growth in revenue and margin
• Operating environment remains competitive
• Good new business gains
• Partially empowerment related

9
African associates

• Medscheme
• Disappointing performance
• New management implementing positive change
• Thebe Risk Benefits
• Sold for total consideration of R48m
• Effective date - 31 March 2003
• Subject to conditions precedent

10
Strategic developments - Africa

• Empowerment transaction implemented (30
  shareholding)
• Empowerment consortium headed by MCI
• Broad-based participation through AF Community
  Trust
• Benefits already being realised
• Effective date 31 March 2003
• Expected 7-year earn-out
• SA board restructured
• New non-execs
• Cyril Ramaphosa (Chairman)
• Ndoda Madalane
• Kojo Mills
• New execs
• Mpho Nkeli
• Geoffrey Nzau

11
Alexander Forbes Community Trust

• 5 equity stake in Alexander Forbes South Africa
• Beneficiaries
• Aged
• HIV/Aids
• Education
• Disabled
• Women
• Initial cash injection

12
Investment Solutions
Africa
Africa
Financial Services
Risk Services
Investment Solutions
International
UK
Risk Services
Financial Services
13
Investment Solutions - financial highlights

• Mar Mar 2003 Increase 2002
• Revenue (Rm) 450.3 12 400.4
• Operating profit (Rm) 159.8 12 143.3
• Pre-tax profit (Rm) 195.9 15 170.5
• Headline earnings (Rm) 144.9 21 120.0
• Closing assets (Rbn) 46.6 1 46.2
• Average assets (Rbn) 46.0 15 40.0

14
Embedded value

• Present value of projected future post-tax
  profits from existing business plus shareholder
  assets

Mar 2003 Mar 2002 Rm Rm Net value of inforce
business 1,499 1,528 Shareholder
assets 352 278 Embedded value 1,851 1,806 Embedded
value of 12 months new business 238 246 Embedd
ed value per share (cents) 641 625 Embedded value
of 1 years business per share (cents) 82 85
15
Highlights of the year

• Average asset growth
• Continued new business success
• Healthy ongoing cashflow
• Product enhancements continue
• Large fund successes
• Black empowerment
• IS delisted to form part of Alexander Forbes
  strategy
• No impact on operations and branding of IS
• Scrip lending now run in-house
• Stanlib multi-manager (ex Lodestone) assets of
  R1.4bn
• Namibian business assets exceed N450m
• Appropriate expense control

16
UK developments

• Purchase of Schroder Pensions Group with LCP
• Renamed as Investment Solutions Group
• Approval granted by FSA
• Providers of integrated services to UK pension
  fund market
• 90 million assets under management
• 48 institutional and over 8000 individual members
• 45 new staff members joined IS Group
• Unique product range to be launched shortly

17
Alexander Forbes International Operations
Africa
Africa
Financial Services
Risk Services
Investment Solutions
International
UK
Risk Services
Financial Services
18
Operational review - International

• 2003 2002
• Trading profit Rm Increase Rm
• Risk Services 301 25 241
• Financial Services 78 28 61
• Investment Solutions
• Direct Marketing 135 13 120
• Total 514 22 422

19
Operational review - International

• 2003 2002
• Trading profit Rm Increase Rm
• Risk Services 301 25 241
• - UK Europe 265 11 239
• - Latin America 15 183 (18)
• - Asia 21 5 20
• Financial Services 78 28 61
• - LCP 51
• - IFA 27 (56) 61

20
International

• Risk Services
• Benefit from harder insurance market (some
  capacity constraints)
• Negative impact of Dollar weakness and low
  interest rates
• Significant success in Professional Indemnity
  area
• Positive developments in UK Retail
• Turnaround in Argentina
• Financial Services
• LCP performed well and in line with expectation
• Difficulty in CTC and bureau business persisted
• Restructuring complete, lesser effect going
  forward
• IFA business success in sales recognised

21
International (cont.)

• Direct Marketing
• Exploring alternate providers for MIS
• Reduced marketing spend benefits current year
  results
• ADB doubles policy count
• Investment Solutions (Schroders acquisition)
• Imminent launch of Investment Solutions completes
  business model in UK

22
International acquisition issues

• LCP acquisition
• Leading actuarial consultancy firm
• Results on plan
• Investment Solutions (Schroders acquisition)
• DC admin capability
• Development of specialist products
• National Britannia
• Reasonable revenue, but profit behind plan
• Accelerated write-off of goodwill
• Rodobens (Joint venture in Brazil)
• Behind plan
• Further capital commitment not pursued
• Investment written off
• No other write downs required

23

• Analysis of financial results
• Mike Ilsley

24
Financial results

• 2003 2002
• Rm Increase Rm
• Revenue from operations 4,880 15 4,239
• Net operating expenses (3,930) (3,457)
• Operating profit 950 21 782
• Operational interest income 104 102
• Trading profit 1,054 19 884
• Trading profit ratio 22 21
• Operating profit ratio 19 18

25
Profitability ratios
26
Attributable core earnings

• 2003 2002
• Rm Increase Rm
• Trading profit 1,054 19 884
• Net finance costs (115) (64)
• Profit before associates 939 15 820
• Associates 29 61
• Profit 968 10 881
• Tax (291) (268)
• Minority interests (75) (83)
• Core earnings 602 14 530

(excludes taxation of non-trading items) (
excludes minority share of non-trading items)
27
Effective tax rate

• 2003 2002
• Rm Rm
• Effective tax rate on headline earnings 25.9 30.
  3
• Tax per income statement 221 315
• Tax on unrealised currency loss / (gain) 33 (47)
• Permanent tax saving 37 -
• Tax on core earnings 291 268
• Effective tax rate on core earnings 30.1 30.4

28
Earnings per share

• 2003 2002
• cents Increase cents
• Core EPS 174.0 14 153.2
• Unrealised currency loss / (gain) (33.2) 45.4
• - Tax thereon 9.5 (13.6)
• - Permanent tax saving 10.7 -
• Headline EPS 161.0 (13) 185.0
• Add Goodwill and other capital
  items (41.6) (24.6)
• EPS 119.4 (26) 160.4

29
Headline adjusting items per share

• 2003 2002
• cents cents
• Goodwill amortisation (30.1) (24.3)
• Rodobens write-off (5.5) -
• National Britannia accelerated amortisation (9.0)
  -
• Sale of Thebe Risk Benefits 4.9 -
• Medscheme write-down (1.7) -
• Other (0.2) (0.3)
• Total headline adjustments per share (41.6) (24.6
  )

30
Gearing and interest cover

• 2003 2002
• Rm Rm
• Long term liabilities (a) 2,503 2,153
• Equity before goodwill effects (b) 2,792 2,448
• Gearing (a) / (b) 90 88
• Trading profit (c) 1,054 884
• Net finance costs (d) 115 64
• Interest cover (c) / (d) 9 times 14 times

31
Return on equity

• Inter- Africa national Total
• Profit before non-trading items 563 405 968
• Tax thereon (161) (130) (291)
• Minority interests (47) (28) (75)
• Attributable core earnings 355 247 602
• Ordinary shareholders funds (before goodwill
  effects)
• - Closing 1,929 868 2,797
• - Average 1,845 777 2,622
• Return on average equity 19 32 23

32
Cash flow

• 2003 2002
• Rm Increase Rm
• Cash from operations 1 271 32 966
• Tax and dividends paid (602) (339)
• Cash from fiduciary activities
• Change in insurer balances (472) (37)
• Refund of vendor loan notes (554) -
• Cash invested
• - Subsidiaries and associates (1 352) (244)
• - Other (215) (416)
• Cash from financing 748 279
• Movement in cash balances (1 176) 209

33
Cash position

• Inter-
• Africa national Total
• Cash per balance sheet 463 1,902 2,365
• Utilisation
• Insurer balances (207) (830) (1,037)
• Loan note deposits (66) (66)
• Other net current liabilities andsolvency
  requirements (137) (831) (968)
• Cash available 119 175 294
• Refinancing of premium financereceivables in
  SA 164 164
• Capital reduction - Investment Solutions in
  UK 156 156
• Expected cash available 283 331 614

34

• Shareholders and strategy
• Rael Gordon

35
Shareholding at 31 March 2003
(total 16)
36
Prospects (Africa)

• Empowerment positioning creates additional
  opportunity across all business lines

• Financial Services
• Surplus legislation
• Client gains
• Risk Services
• Hard market
• New products and services
• Continued efficiency gains
• Investment Solutions
• Continued new business focus
• Includes larger funds

37
Prospects (International)

• Risk Services
• Focus on efficiency in each business
• More stable insurance market
• Continued opportunity in Professions
• New management in Retail
• Financial Services
• LCP performing well
• CTC and bureau rationalisation largely complete
• Significant sales successes in IFA business
  continue
• Continued cross selling
• Investment Solutions
• Significant scope in International operation
• Currency impact (particularly first 6 months)

38
The future

• Strategic positioning unchanged
• Independent, fast growing provider of financial
  and risk services with niche dominance in
  selected regions and business areas
• Organic growth
• New revenue
• Efficiency gains
• Selectively target acquisitions
• Simpler structure and presentation
• Without compromising disclosure
• Capital structure and domicile remain a key issue
• Will continue to explore alternative listing or
  structure

39

• Thank you