Trustco reviewed consolidated financial results

Dear Valued Business Partner

TRUSTCO GROUP HOLDINGS REVIEWED CONSOLIDATED FINANCIAL RESULTS

I am pleased to attach the Trustco Group Holdings Reviewed Consolidated Financial Results for the 12 months ended 31 March 2010, as published. As part of a high level overview, I would like to highlight the following:

Trustco Financial Services South Africa (TFS) is a wholly-owned subsidiary of Trustco Group Holdings Limited, which has a primary listing on both the Namibian Stock Exchange and the Johannesburg Stock Exchange Africa Board. The acquisition price earn out, related to the purchase of Trustco Financial Services – South Africa (TFS) was achieved 31 March 2009.The holding company subsequently appointed the new management team during April 2009.

Strategically TFS provides administration facilities for small to large brokers and systems and back office processing to corporate brokers, UMA’s and Insurers.

TFS as a group has four main business units:

· Trustco Intermediary Solutions : (Broker division) Providing administrator and UMA facilities for intermediaries;

· Trustco Corporate Solutions : Providing IT systems, services and back office processing to large corporate brokers, UMA’s and Insurers;

· Trustco Claims Solutions : Providing claims administration including salvage and recovery management; and

· Trustco Informatix : IT systems and hosting solutions.

During the past 12 months since effective control was established, it was the aim of the new management team to critically review operations, and the focus in the broker division has been on returning to a position of ensuring sustainable profitability for intermediaries, insurers and TFS alike. Emphasis has been placed on current portfolios, and application of strict pro-active underwriting has been implemented successfully to ensure profitable and sustainable business is maintained. Although this has resulted in a large premium drop, TFS has stuck to this strategy and it repositions TFS and its stakeholders correctly for growth and healthy business going forward.

TFS aims to operate at the highest ethical standards and ensure that we keep abreast of regulatory and other areas that will shape our landscape and that of our stakeholders. Thus ensuring that we are in a position to benefit from and capitalize on this and not be hampered in any way.

The Corporate division has shown significant growth year on year and this is expected to continue in the coming financial year. A major sales focus will be on marketing the TFS system and back-office solutions to corporate clients. TFS’s track record in this area is unmatched while flexibility, customer focus and high volume processing remain the corner stones of this success.

Trustco Claims Solutions has been one of the success stories over the past 3 years. This continues to be the case and services have been expanded to include an in-house legal team to manage the salvage and recovery processes. Prudent claims settlement methodology has ensured significantly lower leakage figures, favorable average claims costing, whilst ensuring quick claims settlement and exceptional policyholder and intermediary experience. Capacity exists and expansion of this business unit is expected in the coming year.

Trustco Informatix successfully launched the new i-Edge system in the past financial year providing a true e-commerce component to its offerings. This launch went seamlessly with limited hick-ups and complications. This success is attributed to the strict project management and change control procedures and disciplines in TFS. The TFS system was recently voted best system in an independent survey.

The system provides all functions from integrated comparative quoting (including renewal comparative quoting), policy issue, underwriting and premium calculation, premium administration including various collection facilities and claims modules. The system is both an intermediary and insurer system. Interfacing to industry initiatives will be the focus of this area with links to insurers and implementation of ACCORD and other standards already well underway. This is and will remain one of the key value drivers in the TFS business.

Various reporting structure changes have been made to align with the needs and direction of our business. The Executive team consists of Jans Wessels (MD), Ian Barnard (Finance), David Caine (Operations), Sharon Castro Carballo (Underwriting), Etienne du Toit (Claims) and Ernest Cockcroft (Sales). Executives that left the company during the past year are Johann Muller, Sollie Stols and Anneleen van Wyk.

Consolidated premium volumes at year end is just over R1 Billion per year with services provided to around 800 intermediaries directly or via corporates.

Trustco Group kept to its established track record, posting growth in revenue of 14% to R 550.4 million and growth in earnings of 49% to R 137.5 million, both being exceptional against the backdrop of the current economic climate. Group headline earnings amounted to R85 million, an improvement of 20% on 2009.

Trustco Financial Services – South Africa contributed 52.9% of Group revenue and posted a net profit after tax of R23.6 million (21% growth) off of revenue amounting to R291.7 million.

The share price has reacted positively, with initial increase of over 20% w=together with increase in trading volumes, after being very static for past few months.

Despite the current market conditions TFS has set targets for a 25% growth in the year to come. Many of the industry developments are ensuring that TFS’s core business values comes to the forefront and proposed regulation would result in bigger demand for our services.

There is no doubt that TFS faces many challenges due to historic situation and coupled to the developments in the industry in the past year, but we are confident that we are on the right track and will not waiver on the set strategies, to ensure we can add value to all our business partners.

I would like to thank the TFS team and all our loyal clients for the past year’s achievements, enabling these positive results.

Warm regards,

Jans Wessels
Group MD: Trustco Financial Services (South Africa)