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CONDUIT CAPITAL LIMITED - Condensed Consolidated Reviewed Results for the Six Months Ended 31 December 2019

Release Date: 31/03/2020 17:24
Code(s): CND     PDF:  
 
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Condensed Consolidated Reviewed Results for the Six Months Ended 31 December 2019

CONDUIT CAPITAL LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1998/017351/06)
Share code: CND      ISIN: ZAE000073128
(“Conduit” or “Conduit Capital” or “the Group”)


CONDENSED CONSOLIDATED REVIEWED RESULTS
for the six months ended 31 December 2019

This short-form announcement is the responsibility of the directors and is only a summary of the information in the full
announcement, which is available at:

https://senspdf.jse.co.za/documents/2020/jse/isse/cnd/interim20.pdf

and also published on the Group’s website at www.conduitcapital.co.za. A copy of the auditor’s review report is available
on request. Please email results@conduitcapital.co.za to request a copy. Any investment decisions should be based on
consideration of the full announcement.

FINANCIAL HIGHLIGHTS
                                                                             Reviewed
                                                                             Six months ended Dec 2019 vs
                                                                             Six months ended Dec 2018
Gross written premium                                                        up 24.1% to R1.115 billion
Net premium income as reported                                               up 3.6% to R168.7 million
Net premium income excluding
solvency reinsurance                                                         up 22.0% to R1.045 billion
(Loss) earnings per share                                                    down from 3.3 cents earnings to 43.8 cents loss
Headline (loss) earnings per share                                           down from 3.3 cents earnings to 42.4 cents loss
Net asset value per share                                                    down 201.4 cents to 61.7 cents
Weighted average number of shares
in issue (’000)                                                              down 0.2% to 701 948

Conduit shareholders are referred to the 2019 Integrated Annual Report wherein shareholders were advised to expect
volatility in the Group’s earnings due to the nature of its business, that being insurance underwriting and mark-to-market
movements in its listed investment portfolio. Conduit is committed to its goals of investing in its business and supporting
its investments for the long-term.

The value of Conduit’s equity portfolio decreased on a temporary mark-to-market basis during the six months under
review, as the South African equities market and business confidence in general remain under strain. These temporary
losses (or gains) are required to be expensed in the Group’s income statement in terms of IFRS.

Conduit’s wholly owned insurance companies delivered solid growth in premium and underlying capacity. The negative
underwriting result in the Life portfolio and a small number of motor books in the broader Property & Casualty business
affected the overall underwriting result adversely. This was offset by excellent performance in the remainder of the
Property & Casualty, Health and Medical Malpractice portfolios and an acceptable result in most other lines.

Earnings or Loss Per Share (“EPS”) and Headline Earnings or Loss Per Share (“HEPS”) include:
• up-front investment to increase the capacity of the Group by way of attracting appropriately skilled people and systems
   to materially scale the insurance business;
• underwriting losses incurred in certain insurance portfolios;
• the cost of solvency reinsurance; and
• the impact of the temporary reduction in the value of Conduit’s equity portfolio on a mark-to-market basis.

Conduit Capital is confident in its strategy to build a diversified insurance business of scale in South Africa, and believes
its listed investment portfolio remains significantly undervalued in the context of a challenging and low confidence
environment within the South African economy. Intense corrective action has been taken during the six months under
review, including a fundamental redesign of the business operating model, a major reduction in operating expenses
and new leadership under Constantia Insurance Company Limited CEO Peter Todd. We believe the insurance business
is positioned to deliver a combined ratio closer to the target of 95% by the early part of the next financial year.
Shareholders are, however, reminded that insurance outcomes are naturally uncertain.

Shareholders’ attention is drawn to the various announcements regarding:
1. the recapitalisation of Constantia Insurance Company Limited for approximately R1 billion, which transaction is moving
   forward and expected to be completed on or around the end of the current financial year; and
2. Conduit’s acquisition of Legal Shield Holdings Limited and its impact on the Group going forward.

The full announcements and the related presentation are available at:

• http://www.overend.co.za/download/sesns20200211s426530.pdf;
• http://www.overend.co.za/download/sens-20200327-s428839.pdf; and
• https://www.conduitcapital.co.za/downloads/presentations/2020/2020-03-26-annexure-b-presentation-lsh-and-
   herboths.pdf

Johannesburg
31 March 2020

DIRECTORS:
Executive directors:       Sean Riskowitz (Chief Executive Officer), Lourens Louw (Chief Financial Director)
Non-executive directors:   Ronald Napier (Chairman)*, Leo Chou, Adrian Maizey, Zukie Siyotula*, William Thorndike*, Rosetta Xaba*
                           * Independent
Company secretary:         CIS Company Secretaries Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
Registered address:        Unit 9, 4 Homestead Avenue, Bryanston, Sandton, 2191
Postal address:            PO Box 97, Melrose Arch, 2076
Transfer secretaries:      Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196
Sponsor:                   Merchantec Capital

Date: 31-03-2020 05:24:00
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