| Fri 11 Feb 2005, 14:28 | | ANNUAL FINANCIAL STATEMENTS |
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RENTSURE HOLDINGS LIMITED - AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR
THE YEAR ENDED 30 JUNE 2004
RENTSURE HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/023539/06)
Share code: RNT ISIN: ZAE000012811
(`Rentsure` or `company` or `group`)
AUDITED CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2004
CONSOLIDATED BALANCE SHEET
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
Non-current assets 173 051 234 701
Investment properties 36 924 64 992
Property, plant and equipment 99 943 121 150
Premium receivable for an investment contract issued - 5 623
Intangible assets 498 432
Cost of control arising on consolidation 606 9 011
Investment in associates 763 813
Other investments 34 317 32 680
Current assets 146 799 147 012
Inventories 33 854 33 140
Net amounts receivable as per reinsurance accounts 6 527 7 947
Trade and other receivables 63 147 64 085
Taxation prepaid - 942
Cash and cash equivalents 43 271 40 898
Total assets 319 850 381 713
EQUITY AND LIABILITIES
Capital and reserves 6 313 59 960
Share capital 8 394 8 394
Non-distributable reserves 34 546 43 348
General reserve 359 359
Distributable reserve 5 681 4 200
Retained income (44 972) (24 857)
Shareholders` funds 4 008 31 444
Minority shareholders` interest 2 305 28 516
Technical liabilities
Policyholder liabilities, net of reinsurance 220 724 216 401
- insurance contracts 152 951 150 084
- investment contracts 67 773 66 317
Non-current liabilities 8 182 15 679
Employee benefits 1 550 6 461
Interest bearing borrowings 3 583 6 006
Deferred tax liabilities 3 049 3 212
Current liabilities 84 631 89 673
Trade and other creditors 71 712 75 807
Provisions 4 079 3 372
Short-term borrowings 5 602 7 966
Current portion of interest bearing borrowings 2 630 2 238
Taxation owing 608 290
Total equity and liabilities 319 850 381 713
Net asset value per share (cents) 9.9 77.8
Net tangible asset value per share (cents) 7.2 54.4
Calculated on number of shares issued of (`000) 40 438 40 438
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2004
Share Non- Accumu- Total
capital distribu- Distribu- lated
table table General (deficit)/
reserve reserve reserve profit
R`000 R`000 R`000 R`000 R`000 R`000
Balance as at
30 June 2002 8 394 19 272 - 359 18 317 46 342
Revaluations - 24 076 4 200 - - 28 276
Net loss for the year - - - - (43 174) (43 174)
Balance as at
30 June 2003 8 394 43 348 4 200 359 (24 857) 31 444
Revaluations - (7 725) 1 481 - - (6 244)
Transfer - (1 077) - - 1 077 -
Net loss for the year - - - - (21 192) (21 192)
Balance as at
30 June 2004 8 394 34 546 5 681 359 (44 972) 4 008
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
INCOME 166 794 134 112
Premium income, net of reinsurance 161 574 134 394
Other income 1 816 2 806
Administration fee income 986 874
Rental income 7 530 6 708
Income from other investments (5 112) (10 670)
EXPENSES 193 860 232 032
Acquisition costs 43 763 54 193
Policyholder benefits 103 063 99 414
Marketing, sales and administration expenses 47 034 78 425
NET LOSS BEFORE TAXATION (27 066) (97 920)
Taxation ` - 1 799
Deficit before transfer to policyholder
liabilities for insurance contracts (27 066) (96 121)
Transfer (to)/from policyholder liabilities
for insurance contracts (2 867) 36 392
LOSS FOR THE YEAR (29 933) (59 729)
Outside shareholders` interest 8 741 16 555
HEADLINE LOSS FOR THE YEAR (21 192) (43 174)
Loss per share (cents) (52,4) (106.8)
Headline loss per share (cents) (52,4) (106.8)
Calculated on number of shares
issued of (`000) 40 438 40 438
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
30 June 30 June
2004 2003
R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash utilised by operations (33 268) (86 677)
Interest received 5 430 4 298
Dividends received 530 1 497
Taxation refunded/(paid) 1 548 (843)
Net cash outflow from operating activities (25 760) (81 725)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (2 842) (10 266)
Disposals of property, plant and equipment 2 570 7 693
Disposals of investment property - 195
Decrease in loans to policyholders 2 809 16 864
Net proceeds from investments 5 828 56 355
Net receipts from investment contracts
issued to policyholders (876) 3 434
Maturity or withdrawal of deposits
and other securities 1 331 142
Disposal of investments in subsidiaries 13 711 -
Decrease in loans to subsidiaries
and other 141 8 281
Decrease/(increase) in premium receivablefor
investment contract issued to a policyholder 5 623 (5 623)
(Decrease)/increase in interest bearing
liabilities (162) 3 725
Net cash inflow from investing activities 28 133 80 800
Net increase/(decrease) in cash and cash equivalents 2 373 (925)
Cash and cash equivalents - beginning
of the year 40 898 41 823
Cash and cash equivalents - end of the year 43 271 40 898
COMMENTARY TO THE FINANCIAL RESULTS FOR THE YEAR ENDED JUNE 2004
LATE PUBLICATION OF RESULTS
The publication of the results was delayed due to the material dispute between
Rentsure`s subsidiary, Rentmeester Assurance Limited (`Rentmeester`) and Assupol
Life (`Assupol`), pertaining to the underwriting of pensioner funeral group
scheme policies. This dispute has spanned a period of approximately two years.
An Order given by the High Court on 30 November 2004, determined that the
policies in dispute be divided equally between Rentmeester and Assupol.
REASONS FOR LOSSES INCURRED
Despite various actions taken to curtail the losses sustained by Rentmeester,
material losses were nevertheless incurred for the following reasons:
1. the loss of 50% of the underwriting income to Assupol relating to pensioner
funeral group scheme policies underwritten by Rentmeester, which policies were
the subject of various disputes between Rentmeester and Assupol;
2. under-recovery of expenses due to costs budgets and sales volumes not being
met;
3. lower than expected returns on investment assets;
4. higher than expected lapses in policies, which resulted in unrecoverable
commission on individual business generated through the agent distribution
channel;
5. increases in policyholder and pension fund liabilities, due to the increase
in expected future investment return; and
6. amendments to the new business re-insurance treaty for Rentmeester.
PROSPECTS
Shareholders are referred to the announcement dated 25 November 2004 in terms of
which shareholders were advised that Rentsure had entered into an agreement with
Capital Alliance Life Limited to dispose of its 70% interest in Rentmeester.
This was considered the most appropriate course to
recapitalise Rentmeester and to address the losses sustained. In this regard,
shareholders are referred to the announcement published simultaneously with this
announcement.
In due course, and subject to shareholder approval, it is the directors`
intention to proceed with the orderly winding up of Rentsure by means of a
members` voluntary liquidation process. Simultaneously with the voluntary
liquidation, an application will be made to the JSE Securities Exchange South
Africa to terminate the company`s listing.
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
The financial statements for the year ended 30 June 2004 have been prepared in
accordance with Statements of Generally Accepted Accounting Practice and group
accounting policies, which policies are consistent in all material aspects with
those applied previously.
AUDITOR`S REPORT
The financial results have been audited by Jan Erasmus Auditors and their
qualified audit report is available for inspection at Rentsure`s registered
office.
For and on behalf of the Board
J Vermooten (Chairman) R de Kock (Company Secretary)
11 February 2005
Directors: J Vermooten (Chairman), J Vermooten, M Vermooten, N B Read
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Registered office: 74 Watermeyer Street, Val de Grace, Pretoria
Sponsor: Bridge Capital
