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CND - Conduit - Trading Update CONDUIT CAPITAL LIMITED Incorporated in the Republic of South Africa (Registration number 1998/017351/06) Share code: CND ISIN: ZAE000073128 ("Conduit" or "the company" or "the group") TRADING UPDATE In terms of the Listings Requirements of JSE Limited, companies are required to publish a trading statement as soon as they become reasonably certain that the financial results for the period to be reported on will differ by more than twenty percent from that of the previous corresponding period. Accordingly, a review of the financial results for the year ended 31 August 2008 by management has indicated that operating profit, profit before tax, attributable earnings, headline earnings, earnings per share ("EPS"), headline earnings per share ("HEPS"), net asset value per share ("NAV") and tangible net asset value per share ("TNAV") are expected to be as follows: Table 1 Unaudite Unaudite d d 12 12
months months Change to to 31 Aug 31 Aug `08 `07 1
Operating profit (R`000) 2 19 727 12 587 7 140 Net profit before tax (R`000) 26 477 45 089 (18 2 612) Attributable earnings (R`000) 14 266 20 881 (6 615) Headline earnings (R`000) 14 828 20 365 (5 537) EPS (cents) 6.14 11.22 (5.08) HEPS (cents) 6.39 10.94 (4.55) NAV (cents) 85.86 85.81 0.05 TNAV (cents) 67.23 50.40 16.83
Number of shares in issue, net 250 277 221 777 - of treasury shares (`000) Weighted number of shares 232 166 186 104 - (`000) Note: The financial information on which the above trading statement is based has not been reviewed or reported on by the company`s auditors. 1. Given that the period to be reported on is a 12-month period and that the most recent audited financial statements are for the 18 months ended 31 August 2007, the financial information for the 12 months to 31 August 2007 is reflected as unaudited. 2. The difference between operating profit and net profit before tax is largely attributable to investment returns. HEPS for the six months to 31 August 2008 was 5.08 cents, which compares to 1.20 cents for the six month period ended 29 February 2008 (see Table 2). Whilst this represents a marked improvement in profitability, the impact of significantly lower investment returns in the six months to February 2008 (see trading statement of 29 April 2008) resulted in an overall reduction in earnings for the 12-month period ended 31 August 2008 as compared to the 12 months ended 31 August 2007. GENERAL COMMENTARY The corrective action taken in the insurance book in the six months to February 2008 provided the foundation for improved underwriting profitability in the second six months of the year. This coupled with reduced exposure to equity markets and the expected improved profitability in the group`s credit recovery operations (Conduit Direct) resulted in a significant improvement in group profitability in the second half of the financial year as is evident from the comparison set out below: Table 2 Unaudite Unaudite d d six six months months Change
to to 31 Aug 29 Feb `08 `08 Operating profit (R`000) 1 11 722 8 005 3 717 Net profit before tax (R`000) 17 848 8 629 9 219 1 Attributable earnings (R`000) 11 556 2 710 8 846 Headline earnings (R`000) 12 111 2 717 9 394 EPS (cents) 4.85 1.20 3.65 HEPS (cents) 5.08 1.20 3.88 NAV (cents) 85.86 89.85 (3.99) TNAV (cents) 67.23 54.72 12.51 Number of shares in issue, net 250 277 226 277 - of treasury shares (`000) Weighted number of shares 238 407 225 856 - (`000) Note: The financial information on which the above trading statement is based has not been reviewed or reported on by the company`s auditors. 1. The difference between operating profit and net profit before tax is largely attributable to investment returns. In the six months to 31 August 2008 the group further reduced its exposure to equity markets thereby minimising the impact of recent market turmoil. The statutory funding ratio of Constantia Insurance Company Limited ("CICL"), the insurance division`s main asset, improved from 24,7% in August 2007 to 38% as at 31 August 2008 (Statutory requirement: 15%). CICL`s credit rating remains unchanged at A-. As at 31 August 2008 group cash and near cash resources available for investment increased to approximately R130 million (29 February 2008: R110 million); which resources are in addition to existing working capital utilised within the group. Whilst the improved results for the six month period ended 31 August are pleasing, general market conditions remain challenging and will likely follow into the new financial year. The group will therefore continue to focus on existing operations and will maintain a conservative investment strategy. Conduit`s final results, with further commentary on all operating units, are expected to be published on SENS in November 2008. Johannesburg 31 October 2008 Sponsor: Merchantec (Proprietary) Limited Date: 31/10/2008 10:30:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
