Equisure’s earnings slip on acquisition costs

Although listed broker network consolidator Equisure Financial Network (TSE:EFN) produced a significant rise in revenue for the first six months of the current financial year compared with the same period the year prior, the network’s net earnings for the period fell as a result of acquisitional costs incurred toward the end of 1999.

Revenue for the first six months of this year rose by 40% to $41.1 million (June 1999: $29.3 million) with net earnings amounting to $2.36 million (June 1999: $2.59 million) resulting in earnings a share clocking in at 11c compared with the 13c a share posted at the end of June last year. The drop in earnings a share relate to “additional goodwill and interest expenses” incurred as a result of major insurance brokerage acquisitions of late 1999, says CEO George Hutchison. The decline in earnings a share for the first six months was amplified by a modest dilution of the shareholder base which saw the average number of common shares outstanding rise from 20.6 million shares at the end of June 1999 to the current level of 22.1 million shares in issue.

The company’s assets grew by 23% year-on-year to $265.9 million (June 1999: $214.6 million) at the end of June this year, with shareholders’ equity climbing to $93.1 million compared with the $91.1 million recorded at end of June 1999. “During the first six months of 2000, the corporation experienced strong growth in all its core business segments and overall exceeded budgeted targets for the period,” comments Hutchison. The company also purchased three brokerages located in Manitoba and Ontario during the six month reporting period, resulting in annualized revenue rising to around $84 million. Hutchison says the company’s previously announced plan to find a “big brother” majority stakeholder is still in the works. “While it is too early to predict the outcome, interest in the acquisition of Equisure is high and at least one party has already publicly stated their intention to make a takeover bid for the corporation,” he adds.