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INSURE - REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2004 AND
DIVIDEND DECLARATION
INSURANCE OUTSOURCING MANAGERS HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013121/06)
JSE Code: INS ISIN Code: ZAE000033221
(`INSURE` or `the Group`)
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2004 AND DIVIDEND
DECLARATION
The interim results for the six months ended 31 August 2004, with comparative
period ended 2003 and the audited results for the year ended 29 February 2004
are presented below.
Consolidated Income Statements
Reviewed Reviewed interim Audited results
interim results for the For the
results for six months ended year ended
the 31 August 2003 29 February 2004
six months R`000 R`000
ended
31 August
2004
R`000
Gross collections 1 218 415 914 966 2 042 595
Revenue 17 033 16 682 31 130
Net income before 1 545 1 971 4 336
taxation
Taxation (431) (734) (1 477)
Net income after 1 114 1 237 2 859
taxation
Dividends (1 666) (555) (555)
Attributable income (552) 682 2 304
retained for the period
Determination of
headline earnings
Attributable income 1 114 1 237 2 859
Add: 35 - 39
Amortisation of
Goodwill
Deduct: Profit on (27) (28) (43)
disposal of assets
Headline earnings 1 122 1 209 2 855
Earnings per share
Shares in issue (000`s) 111 092 111 092 111 092
Earnings per share 1.0 1.1 2.6
(cents)
Headline earnings per 1.0 1.1 2.6
share (cents)
Dividends per share 1.5 0.5 0.5
(cents)
Consolidated Balance Sheets
Reviewed Reviewed Audited
as at as at as at
31 August 2004 31 August 2003 29 February
R`000 R`000 2004
R`000
ASSETS
Non-current assets 22 804 19 483 21 354
Property, plant and 19 034 17 557 17 802
equipment
Other intangible assets 634 - 667
Deferred taxation 2 493 1 926 2 272
Loans receivable 643 - 613
Current assets 123 033 62 704 110 472
Accounts receivable 124 850 75 994 102 048
Less: unearned finance (5 663) (5 189) (5 177)
charges
Taxation 30 - 105
Cash resources 3 816 21 899 13 496
Total assets 145 837 112 187 131 826
EQUITY AND LIABILITIES
Capital and reserves 18 110 16 682 18 662
Issued capital 53 654 53 654 53 654
Non-distributable reserves 2 661 2 735 2 698
Distributable reserves (38 205) (39 707) (37 690)
Current liabilities 127 727 95 505 113 164
Accounts payable 122 164 94 342 112 266
Taxation 467 71 358
Shareholders for dividend 21 561 9
Bank overdrafts 5 075 531 531
Total equity and 145 837 112 187 131 826
liabilities
Shares in issue (000) 111 092 111 092 111 092
Net asset value per share 16.3 15.0 16.8
(cents)
Tangible net asset value 15.7 15.0 16.2
per share
Consolidated Statement of Changes in Equity
Non
Share Share Accumulated distribut
Capital Premium Loss able Total
R`000 R`000 R`000 Reserve R`000
R`000
Balance at 29 February 2004 11 53 643 (37 690) 2 698 18 662
Earnings attributable to
ordinary shareholders
Ongoing operations - - 1 114 1 114
Revaluation depreciation - - 37 (37) -
Dividends paid - - (1 666) - (1 666)
Balance at 31 August 2004 11 53 643 (38 205) 2 661 18 110
Consolidated Cash Flow Statement
Reviewed Reviewed Audited
Six Months Six Months Twelve
31 August 31 August Months
2004 2003 29
R`000 R`000 February
2004
R`000
Cash flow (used in) / (11 509) 14 835 9 350
generated by operating
activities
Cash flow used in investing (2 685) (2 160) (4 470)
activities
Cash flow (used in) / (30) 1 418 810
generated by financing
activities
Cash and cash equivalents - 12 965 7 275 7 275
beginning of year
Cash and cash equivalents - (1 259) 21 368 12 965
at 31 August 2004
Segmental Analysis
Reviewed Reviewed Audited
Six Months Six Months Twelve Months
31 August 31 August 29 February
2004 2003 2004
% R`00 % R`00 % R`000
0 0
Revenue
Interest earned 65% 11 55% 9 63% 19 714
032 219
Fees charged 32% 5 30% 4 31% 9 611
486 915
Other 3% 515 15% 2 6% 1 805
548
Revenue as reported 100% 17 100% 16 100% 31 130
033 682
Accounting policies
This report has been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies and methods of
measurement are in all material respects consistent with those applied in
previously reported financial statements and have been consistently applied
throughout the period under review. The Group`s auditors, Compendium (Pretoria)
Inc., have reviewed the financial information in terms of Rule 3.23 of the
listing requirements of the JSE. Their unqualified review opinion is available
for inspection at INSURE`s offices.
Overview
The interim results reflect growth in the client base and products, specifically
premium collections and premium financing, presenting a 33% increase in gross
collections and premiums managed. INSURE continued to benefit from the
consolidation in the industry and consistently attracted key business through
the delivery of industry benchmarked services and products. However, in
accordance with the published trading update, the reduction in and low
prevailing Prime interest rate continued to affect the Group negatively.
Review of operations
Results
The benefits of growth in new business was neutralised by lower interest rates,
increasing revenue by only 2%, As cautioned in the audited results announcement
for the year ended 29 February 2004, and subsequent trading update in July 2004,
the decline in Prime interest rates had a substantial impact on the gross
margins of the business. In addition, substantial growth of 33% experienced,
combined with prospective demand for core products and services required
additional investment in human resources and training ahead of the expected
revenues.
Client loyalty remains high and new business is secured on an ongoing basis,
albeit at low and competitive margins. Net income after taxation reduced by 10%
and was shielded by a reduction in the effective tax rate from 37% to 28%.
Headline earnings declined by 7%. Apart from the acquisition of the Anvil
Premium Financing portfolio, no exceptional events occurred during the interim
period. Management remains committed to ongoing cost administration and
containment.
Acquisition - Anvil Premium Finance
The acquisition of Anvil in June 2004 from Regent Insurance Company Limited
marks another achievement for the strategic growth of premium finance. The
timing of the acquisition, being at the lowest point of its sales cycle, did
however result in additional operational costs being absorbed in the interim
period, with returns expected over a 12-month period.
Empowerment
INSURE, is subjected to the Financial Services Charter, and is evaluating its
compliance requirements in terms of the scorecard. INSURE has identified
potential investors and discussions are already in progress.
Prospects
INSURE will continue to focus on its strategic objectives of organic growth in
all areas and will pursue core product opportunities when they are identified.
Prevailing low interest rates will continue to suppress the gross margins of the
business. The Group is investigating new markets that would diversify INSURE`s
exposure to interest rate linked income, utilising existing systems and
expertise. Management remains confident that the Group`s focus, product
strengths and business model will deliver good organic growth in the future.
Change in year end
The Group has changed its year end from 28 February to 30 November and the next
reporting period will be for the nine month period to 30 November 2004.
Dividend
The board of directors are pleased to announce that an interim dividend of 0.50
cent per share (one half cent), has been declared, and is payable to
shareholders on Monday, 25 October 2004. The last date to trade `Cum` dividend
will be Friday, 15 October 2004. `Ex` dividend trade will commence on Monday, 18
October 2004 and the record date will be Friday, 22 October 2004. Shareholders
are advised that share certificates may not be dematerialised or rematerialised
between Monday, 18 October 2004 and Friday, 22 October 2004 both days inclusive.
A final dividend of 1.50 cents (one and one half cent) was paid in relation to
the prior year on Monday, 10 May 2004.
For and on behalf of the Board
D.G Eriksson D. M. Burns
Chairman Chief Executive
30 September 2004
Directors
D.G. Eriksson* (Chairman), M Ferreira*, B.B Dunn* (Alternate A.J. Dunn), D.M.
Burns (Chief Executive) (British), C.J.P. Cilliers (Managing)
(* Non-Executive)
Secretary and registered office
Mr. C.J.P. Cilliers, 6 St Giles Street, Randburg, 2125.
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited, 70 Marshall Street,
Johannesburg.
Postal address and E-mail
P.O. Box 2867, Randburg, 2125
and
`results2005@ioh.co.za`
Designated advisor
Arcay Corporate Services
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