Conduit Capital’s turnaround reduces loss

CONDUIT Capital said yesterday that it expected its half-year loss to improve by as much as 82.1 percent after a turnaround in the business, boosted by its insurance business, the Constantia Insurance Group (CIG).

As a result, the group expected to report a headline loss of between 7.6 cents a share and 9.2c for the six months to end December, an improvement of between 78.3 percent and 82.1 percent compared to a headline loss of 42.4c reported last year.

Its loss a share was expected to be between 6.8c and 8.2c, an improvement of 81.3 percent and 84.5 percent compared to a loss a share of 43.8c reported a year earlier.

Conduit, an investment holding company primarily focused on the insurance industry, said its turnaround was pleasing and it had continued into the new financial year.

During the period CIG achieved a combined ratio of 99.8 percent compared to 111.3 percent compared to last year.

In February last year a new leadership team was introduced to CIG.

“Since then, CIG has produced 10 consecutive months of underwriting profits and a combined ratio below 100 percent. For the current period, CIG delivered an insurance operating profit compared to a R126.3 million operating loss in the prior period. This is a remarkable and sustainable turnaround of the business of which we are very proud,” the group said.

Its underwriting profitability increased by an estimated R85.9m for the current period compared to last year and net cash generated from operations before once off costs and losses from discontinued business lines was R34.8m.

Conduit said since the leadership change in February 2020, cumulative underwriting profits had amounted to R188.2m.

“The insurance operating result includes R25.7m in once-off, non-repeating losses from discontinued business, and R8.8m in once-off transaction costs, as well as various Covid-19 related provisions,” the group said.

However, Conduit added that without these costs, the insurance operating result would be substantially positive, and the combined ratio closer to its long-term target of 95 percent, adding that the momentum in the business has continued through January 2021.

In Century 21, sales increased by 45 percent off a relatively fixed cost base, as low interest rates increased home sales. Conduit owns 51 percent of Century 21, the SA master franchise holder of one of the world’s leading brands in real estate brokerage. It expects to release its results on February 22.

Conduit shares closed 1.54 percent higher at 66c on the JSE yesterday.