UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2010 Motor Insurance Manufacturing Insurance Farming Insurance Mining Insurance Household Insurance CHAIRPERSON’S STATEMENT PERFORMANCE HIGHLIGHTS (Key Ratios) OVERVIEW It is my pleasure to present my report for the NICOZDIAMOND group of companies for the half year ended 30 June 2010. The initial momentum of economic recovery experienced in the year 2009 has not been sustained during the first half of 2010. All sectors of the economy continued to be adversely affected by liquidity constraints and low capitalisation levels amongst other factors. The insurance sector has not been spared from this trend. BUSINESS ENVIRONMENT Due to liquidity and affordability challenges most clients have continued to selectively insure. Clients have also continued to opt for short period policies as they are unable to afford annual premiums. Serious competition among the many insurance companies on the market has also continued to result in soft market rates, particularly for the motor class. Whilst incurred claims have remained controlled, a significant increase has been noted. The company however continues to adhere to prudent underwriting practices and effective claims management in order to ensure that the company achieves positive underwriting performance in the future. Operating costs are being closely monitored and aligned with revenue streams. Customer focus and intimacy is and remains pivotal in ensuring business acquisition and retention. FINANCIAL PERFORMANCE OVERVIEW Gross Premium Written for the six month period was US$8.3 million. Significant improvement has been noted on the retention ratios which went up from 57% as at December 2009 to 68% as at June 2010. The recapitalisation carried out at the end of 2009 contributed to the attainment of the improved ratios. Claims ratio for the group at 37.5% was good and within the internationally acceptable range. The company continues to practice stringent cash management to ensure that claims are paid within standard turnarounds despite the harsh liquidity conditions prevailing in the market. Underwriting profit was a loss of ($585,000) as a result of the low top line due to soft rates and subdued business environment, high cost structure not fully supported by the constrained top line and claims which grew above the growth rate of the top line. SUPPLEMENTARY INFORMATION 1. Corporate Information The consolidated financial statements of NICOZ DIAMOND Insurance Limited for the six months ended 30 June 2010 were authorised for issue in accordance with a resolution passed by the directors on 25 August 2010. The principal activity of the group is short term insurance and the shares are publicly traded. The abridged financial statements are expressed in United Stated Dollars which is the functional and reporting currency. 2. Basis of Preparation The consolidated abridged financial statements have been prepared on a historical cost basis except for financial instruments and financial liabilities that have been measured at fair value. 3. Statement of compliance The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), the Zimbabwe Stock Exchange Act (Chapter 24:18) and the Companies Act (Chapter 24:03). 4. Accounting Policies The principal accounting policies adopted in the presentation of these financial statements are consistent with those of the previous financial year. 5. Investments Included in the current assets are short-term investments made up of: 2010 2009 Quoted equities 1,653,213 2,601,622 Money Market investments 2,189,770 2,591,025 Total 3,842,983 5,192,647 Share Share Retained Other Non- Total capital premium earnings Reserves Total controlling equity interests US$ US$ US$ US$ US$ US$ US$ Balance at 31 December 20009 2,797,251 3,224,234 1,798,756 2,571,454 10,391,695 301,506 10,693,201 Changes in equity for 2010 (Loss)/Profit after tax for the period - - (482,427) - (482,427) (47,823) (530,250) Transfer to other reserves (specify) - - 13,316 (13,316) - - - FCTR - - - (87,382) (87,382) (46,474) (133,856) Balance at 30 June 2010 2,797,251 3,224,234 1,329,645 2,470,756 9,821,885 207,209 10,029,095 Share Share Retained Other Non- Total capital premium earnings Reserves Total controlling equity interests US$ US$ US$ US$ US$ US$ US$ Balance at 1 January 2009 - - (438,957) 4,807,422 4,368,465 394,196 4,762,661 Issue of share capital 799,214 3,196,856 - 3,996,070 - 3,996,070 Total comprehensive income for the year - - 1,903,017 - 1,903,017 (92,690) 1,810,327 Profit/(Loss) after tax for the period - - 2,220,592 - 2,220,592 (49,588) 2,171,004 Other comprehensive income net of taxes - - (317,575) - (317,575) (43,102) (360,677) Transfer to reserves 1,998,037 263,912 98,162 (2,235,968) 124,143 - 124,143 Rights Issue Expenses - (236,534) 236,534 - - - - Balance at 31 December 2009 2,797,251 3,224,235 1,798,757 2,571,454 10,391,696 301,506 10,693,201 STATEMENT OF CHANGES IN EQUITY For the period ended 30 June 2010 Dr Mavis Chidzonga (Chairperson), Mrs Grace Muradzikwa* (Managing Director), Mr Harold Andrew Richard Bijoux, Mr James Karidza, Mrs Thembiwe Chikosi Mazingi, Mr Munyaradzi Murape, Mr Albert Joel Nduna, Mr Gladman Sabarauta * Executive Director STATEMENT OF CHANGES IN EQUITY For the period ended 31 December 2009
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UNAUDITED FINANCIAL RESULTS FOR THE HALF YEAR
ENDED 30 JUNE 2010
Motor Insurance Manufacturing Insurance Farming Insurance Mining Insurance Household Insurance
CHAIRPERSON’S STATEMENT
PERFORMANCE HIGHLIGHTS (Key Ratios)
OVERVIEWIt is my pleasure to present my report for the NICOZDIAMOND group of companies for the half year ended 30 June 2010.
The initial momentum of economic recovery experienced in the year 2009 has not been sustained during the first half of 2010. All sectors of the economy continued to be adversely affected by liquidity constraints and low capitalisation levels amongst other factors. The insurance sector has not been spared from this trend.
BUSINESS ENVIRONMENTDue to liquidity and affordability challenges most clients have continued to selectively insure. Clients have also continued to opt for short period policies as they are unable to afford annual premiums. Serious competition among the many insurance companies on the market has also continued to result in soft market rates, particularly for the motor class.
Whilst incurred claims have remained controlled, a significant increase has been noted. The company however continues to adhere to prudent underwriting practices and effective claims management in order to ensure that the company achieves positive underwriting performance in the future. Operating costs are being closely monitored and aligned with revenue streams.
Customer focus and intimacy is and remains pivotal in ensuring business acquisition and retention.
FINANCIAL PERFORMANCE OVERVIEWGross Premium Written for the six month period was US$8.3 million. Significant improvement has been noted on the retention ratios which went up from 57% as at December 2009 to 68% as at June 2010. The recapitalisation carried out at the end of 2009 contributed to the attainment of the improved ratios.
Claims ratio for the group at 37.5% was good and within the internationally acceptable range. The company continues to practice stringent cash management to ensure that claims are paid within standard turnarounds despite the harsh liquidity conditions prevailing in the market.
Underwriting profit was a loss of ($585,000) as a result of the low top line due to soft rates and subdued business environment, high cost structure not fully supported by the constrained top line and claims which grew above the growth rate of the top line.
SUPPLEMENTARY INFORMATION
1. Corporate InformationThe consolidated financial statements of NICOZ DIAMOND Insurance Limited for the six months ended 30 June 2010 were authorised for issue in accordance with a resolution passed by the directors on 25 August 2010. The principal activity of the group is short term insurance and the shares are publicly traded.
The abridged financial statements are expressed in United Stated Dollars which is the functional and reporting currency.
2. Basis of PreparationThe consolidated abridged financial statements have been prepared on a historical cost basis except for financial instruments and financial liabilities that have been measured at fair value.
3. Statement of complianceThe consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS), the Zimbabwe Stock Exchange Act (Chapter 24:18) and the Companies Act (Chapter 24:03).
4. Accounting PoliciesThe principal accounting policies adopted in the presentation of these financial statements are consistent with those of the previous financial year.
5. Investments Included in the current assets are short-term investments made up of: 2010 2009 Quoted equities 1,653,213 2,601,622 Money Market investments 2,189,770 2,591,025 Total 3,842,983 5,192,647
Share Share Retained Other Non- Total capital premium earnings Reserves Total controlling equity
interestsUS$ US$ US$ US$ US$ US$ US$
Balance at 31 December 20009 2,797,251 3,224,234 1,798,756 2,571,454 10,391,695 301,506 10,693,201
Changes in equity for 2010
(Loss)/Profit after tax for the period - - (482,427) - (482,427) (47,823) (530,250)
Transfer to other reserves (specify) - - 13,316 (13,316) - - -
FCTR - - - (87,382) (87,382) (46,474) (133,856)
Balance at 30 June 2010 2,797,251 3,224,234 1,329,645 2,470,756 9,821,885 207,209 10,029,095
Share Share Retained Other Non- Totalcapital premium earnings Reserves Total controlling equity
interestsUS$ US$ US$ US$ US$ US$ US$
Balance at 1 January 2009 - - (438,957) 4,807,422 4,368,465 394,196 4,762,661
Issue of share capital 799,214 3,196,856 - 3,996,070 - 3,996,070
Total comprehensive income for the year - - 1,903,017 - 1,903,017 (92,690) 1,810,327
Profit/(Loss) after tax for the period - - 2,220,592 - 2,220,592 (49,588) 2,171,004
Other comprehensive income net of taxes - - (317,575) - (317,575) (43,102) (360,677)
Transfer to reserves 1,998,037 263,912 98,162 (2,235,968) 124,143 - 124,143
Rights Issue Expenses - (236,534) 236,534 - - - -
Balance at 31 December 2009 2,797,251 3,224,235 1,798,757 2,571,454 10,391,696 301,506 10,693,201
STATEMENT OF CHANGES IN EQUITYFor the period ended 30 June 2010
Dr Mavis Chidzonga (Chairperson), Mrs Grace Muradzikwa* (Managing Director), Mr Harold Andrew Richard Bijoux, Mr James Karidza, Mrs Thembiwe Chikosi Mazingi, Mr Munyaradzi Murape, Mr Albert Joel Nduna, Mr Gladman Sabarauta
* Executive Director
STATEMENT OF CHANGES IN EQUITYFor the period ended 31 December 2009
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFor the period ended 30 June 2010
Group Group2010 2009Us$ Us$
Gross Premiums Written 8,322,214 5,904,281Reinsurance cessions (2,634,005) (3,353,024)Net Premiums written 5,688,209 2,551,257Changes in up (833,986) (701,721)Earned Premiums 4,854,223 1,849,536Net Claims And Acquisition Costs (2,568,148) (404,289)Other Operating Expenses (2,870,977) (1,137,756)Underwriting (Loss)/Profit (584,902) 307,491Investment (Loss)/Income (585,696) 923,137Combined (Loss)/Profit (1,170,598) 1,230,628Share Of Associate Profits 61,229 31,103(Loss)/Profit Before Tax (1,109,369) 1,261,731Taxation 579,119 (317,793)(Loss)/Profit After Tax (530,250) 943,938
(Loss)/Profit Attributable To:Owners Of The Parent (482,427) 933,577Non-controlling Interests (47,823) 10,361
(530,250) 943,938Basic Earnings Per Share (Cents) (0.13) 0.24Diluted Earning Per Share (Cents) (0.13) 0.23
CONSOLIDATED STATEMENT OF CASH FLOWSFor the year ended 30 June 2010
June2010 2009
Cash flows from operating activities US$ US$
Cashflow from Operating Activities (460,649) 459,397
Cash flows from investing activities (909,310) (115,847)
Purchase of property plant and equipment (74,674) (34,155)
Investment in Property (276,729) -
Purchase of investments (2,490,588) (482,222)
Proceeds from disposal of investments 1,645,080 353,232
Other investing activities 287,601 47,298
Cash flows from financing activities - 100,000
Proceeds from short-term borrowings - 100,000
Net (decrease)/increase in cash and cash equivalents (1,369,959) 443,550
Cash and cash equivalents at beginning of year 1,878,910 99,767
Cash and cash equivalents at the end of the period 508,951 543,317
Management expenses remain a key focus area for the group and the company going forward. The group continues on its efforts to ensure expenses are aligned with the revenues and various cost control measures are being put in place to reduce the expense ratio to acceptable and sustainable levels.
The Group is invested in Property, unquoted equities, money market and in counters quoted on the Zimbabwe Stock Exchange(ZSE). All investment classes with the exception of the ZSE listed investments performed well during the period under review and posted positive returns. The values of ZSE listed counters have been depressed since the beginning of the year due to various factors, key among them the prolonged liquidity crunch prevailing in the economy. The Group made unrealised losses on the ZSE listed investments during the period under review and with the offset of income from the other asset classes, closed the period to June with an investment loss of $586,000.
Overall, the Group made a loss before tax of $1.2 million for the half year period to June 2010.
REGIONAL OPERATIONSThe group maintained its presence in Angola, Malawi , Uganda and Zambia through its management and technical services agreements. The group continues to actively scout for more opportunities in the African continent.
ISO CERTIFICATIONThe company was successfully recertified on the new ISO Standard, ISO 9001:2008 during the period under review. This assures that service standards are always met and quality products and efficient services are delivered to our clients and business partners. The desire to deliver beyond clients expectations remains the cornerstone of the company.
SOCIAL RESPONSIBILITY Despite the challenging operating environment, the company still values its contribution to the communities that it serves. A charity dinner was held in August 2010 to raise funds which were channelled to various charitable organisations across the country.
CLAIMS PAYING ABILITY RATINGThe company subjects itself to a claims paying ability assessment by Global Credit Rating Company of South Africa (GCR) on an annual basis. . From the assessment done in May 2010, an A- rating was maintained from the previous assessments. Despite the instability and liquidity constraints that prevailed in the economy, NicozDiamond was found to still have a strong claims paying ability.
DIVIDENDThe Board has seen it fit not to declare an interim dividend due to the depressed financial performance in the first half of the year.
OUTLOOKDespite the slowdown in economic activity, the company remains optimistic about the continued recovery of the economy, and the resultant opportunities in the insurance industry which the company is prepared and well equipped to exploit.
Significant progress has been made at industry level to address the issue of the market rates and it is anticipated that the expected hardening of the rates in the second half of the year will contribute to a better performance of the company and of the industry.
The company shall closely work with players in the various sectors in order to design appropriate products for them. Liquidity is expected to improve as funds trickle into the economy from the anticipated diamond sales. Capacity utilization in industries is also expected to marginally increase thereby creating opportunities for an upward review of insurance programmes by clients.
It is therefore the expectation of the Board and management that the second half of the year will show an improved financial position to that of the first half.
APPRECIATIONFirst and foremost, my appreciation and tribute goes to the shareholders of the company for the support continuously rendered to the company in the challenging half year period.
Appreciation is also extended to fellow Board members, management and staff for their continued dedication and commitment to the company.
We continued to receive support from our clients, brokers, reinsurers, business partners, regulatory authorities and above all the Commissioner of Insurances' Office and this is greatly appreciated.
We look forward to continued support and cooperation for the remainder of the year.
Total assets 16,216,144 17,703,401 11,486,132 12,639,404
EQUITY AND LIABILITIES
Total Equity 10,029,095 10,693,201 7,376,525 7,929,621 Equity Attributable to owners of the parent 9,821,886 10,391,695 7,376,525 7,929,621 Non-controlling interest 207,209 301,506 - -
Total Liabilities 6,187,049 7,010,200 4,109,607 4,709,783 Non current liabilities 1,459,321 1,823,331 594,120 958,131 Current Liabilities 4,727,728 5,186,869 3,515,487 3,751,652
TOTAL EQUITY AND LIABILITIES 16,216,144 17,703,401 11,486,132 12,639,404
CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAs at 30 June 2010
