Sagicor’s good profit poor presentation

Jamaica Sagicor Group reports increased 2018 profits.

Financial statements are meant to be understood by users. As most readers are not likely to be trained in accounting, the statements should be prepared in a manner for the average user to understand.
The latest audited financial statement put out by the Sagicor Group and audited by PriceWaterhhouseCoopers includes a profit statement that is a picture of confusion and extremely difficult to understand, that is just not good enough and it should be revamped, for greater clarity. It is just not clear how the statement moves from gross premium income through to investment income and then to total income. To determine what is being conveyed, one has to be fully conversant with computing of income statements and need to decipher what each line item really is and what set of figures relate to what item.
The group recorded total income of $70.7 billion up from $69.7 billion in 2017. The major operation areas generated less income that in 2017. Insurance generated $9.8 billion in 2018 compared to $41 billion in 2017 while investment income fell to $24.3 billion versus $26.7 billion in the previous year. Expenses moved from $55.9 billion in 2017 to just $54 billion in the latest period to December 2018. The reduction resulted from a big decline in movement in actuarial liabilities from $10.7 billion in 2017 to just $2.3 billion in 2018.

Reading the statement one has to guess whether the total cost is that of operating profit or expenses, as there is no caption to clarify. The report then ends up with profit before tax of $18 billion, up from $15 billion in 2017, but readers have to search to determine how the amount, was arrived at. After taxation charge of $4.2 billion versus $$2.9 billion in 2017, the group reported net profit of $13.9 billion against $12 billion in 2017. Earnings per share ended at $3.65 but was boosted by gains of $1.5 billion arising from consolidation of Sagicor Real Estate Fund.
At year-end, shareholders’ equity rose to $74.3 billion from $68.5 billion at the end of 2017 while total assets jumped to $394 billion from $352 billion.

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