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Indequity interim results for the six months ended 31 March 2013
Indequity Group Limited
Registration number: 1998/015883/06
Incorporated in the Republic of South Africa
“Indequity” or “the Group” or “the Company”
Share code: IDQ
ISIN: ZAE000016606
INDEQUITY INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2013
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
31 March 31 March 30 September
2013 2012 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Property and equipment 656 417 500
Intangible assets 532 534 532
Subrogation and salvage recoveries 1 946 2 232 2 147
Reinsurance portion of insurance
contract provisions 32 33 35
Deferred tax asset 15 46 21
Loans and receivables 88 105 91
Cash and cash equivalents 23 246 19 043 20 142
Total Assets 26 515 22 410 23 468
EQUITY
Capital and reserve attributed to the
company's equity holders
Share capital 24 24 24
Share premium 13 702 13 645 13 702
Accumulated profit 5 481 775 3 220
Equity attributed to equity holders of
the parent 19 207 14 444 16 946
Minority interest - 1 100 -
Total Equity 19 207 15 544 16 946
LIABILITIES
Insurance contract provisions 4 953 4 914 4 168
Tax payable 47 181 82
Dividends payable 3 3 3
Trade and other payables 2 305 1 768 2 269
Total Liabilities 7 308 6 866 6 522
Total shareholders' equity and
liabilities 26 515 22 410 23 468
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
6 Months 6 Months
Ended Ended Year Ended
31 March 31 March 30 September
2013 2012 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Gross written premium 18 651 17 332 35 384
Less: reinsurance premium (683) (749) (1 543)
Net premium written 17 968 16 583 33 841
Change in provision for unearned premiums,
net of reinsurance (45) (7) (16)
Net insurance premium revenue 17 923 16 576 33 825
Other income 39 117 150
Investment income 499 459 950
Total revenue 18 461 17 152 34 925
Claims incurred, net of reinsurance (8 344) (8 241) (16 045)
Administration Expenses (5 627) (4 854) (9 966)
Acquisition costs (1 351) (1 350) (2 820)
Total Expenses (15 322) (14 445) (28 831)
Profit before taxation 3 139 2 707 6 094
Taxation (878) (858) (1 800)
Total comprehensive income for the period 2 261 1 849 4 294
Profit/(loss) attributable to:
- Equity holders of the parent 2 261 1 849 4 294
- Minority interest - - -
2 261 1 849 4 294
Earnings attributable to the equity holders
Basic earnings per share (cents) 19.02 15.64 36.12
Diluted earnings per share (cents) 19.02 15.55 36.12
Headline earnings per share (cents) 19.02 15.64 35.61
Fully diluted headline earnings per share
(cents) 19.02 15.55 35.61
Dividends per share (cents)
- Ordinary shares - - -
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Share capital Accumulated Contingency Minority Total
and premium Profit/(loss) reserve Interest
R'000 R'000 R'000 R'000 R'000
Balance as at 1 October 2011 13 657 (4 178) 3 104 1 100 13 683
Changes in Equity for the year
ended 30 September 2012
Total comprehensive income for
the year ended 30 September 2012 - 4 294 - - 4 294
Ordinary shares distributed by
Indequity Group Limited share
incentive purchase scheme 69 - - - 69
Transfer to contingency reserve - 3 104 (3 104) - -
Redemption of preference shares - - - (1 100) (1 100)
Balance at 30 September 2012 13 726 3 220 - - 16 946
Total comprehensive income for
the 6 months ended 31 March 2013 - 2 261 - - 2 261
Balance at 31 March 2013 13 726 5 481 - - 19 207
Balance as at 1 October 2011 13 657 (4 178) 3 104 1 100 13 683
Total comprehensive income for
the 6 months ended 31 March 2012 - 1 849 - - 1 849
Ordinary shares distributed by
Indequity Group Limited share
incentive purchase scheme 12 - - - 12
Transfer to contingency reserves - 3 104 (3 104) - -
Balance as at 31 March 2012 13 669 775 - 1 100 15 544
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
6 Months ended 6 Months ended Year ended
31 March 2013 31 March 2012 30 September 2012
Unaudited Unaudited Audited
R'000 R'000 R'000
Net cash from operating activities 3 329 2 834 5 231
Net cash from/(used in) investing
activities (225) 222 24
Net cash used in financing activities - - (1 100)
Net increase in cash and cash
equivalents 3 104 3 056 4 155
Cash and cash equivalents at
beginning of the period 20 142 15 987 15 987
Cash and cash equivalents at
end of the period 23 246 19 043 20 142
EARNINGS PER SHARE
6 Months ended 6 Months ended Year ended
31 March 2013 31 March 2012 30 September 2012
Unaudited Unaudited Audited
Basic earnings per share (cents) 19.02 15.64 36.12
Diluted earnings per share (cents) 19.02 15.55 36.12
Headline earnings per share (cents) 19.02 15.64 35.61
Fully diluted headline earnings per
share (cents) 19.02 15.55 35.61
Number of shares
- in issue 13 170 000 13 170 000 13 170 000
- weighted average 11 886 817 11 829 967 11 886 817
- diluted 11 886 817 11 886 817 11 886 817
The number of shares has been used in the calculations of earnings per share, diluted
earnings per share, headline earnings per share and fully diluted headline earning per
share.
Reconciliation of net profit
attributable to shareholders of the
parent to headline earnings
Net profit attributable to
shareholders of the parent (R'000) 2 261 1 849 4 294
Profit on sale of property and
equipment less taxation (R'000) - - (61)
Headline earnings (R'000) 2 261 1 849 4 233
FINANCIAL REVIEW
Indequity’s main objective has always been to create shareholder wealth through the
generation of superior returns on capital compared to its peers. We are pleased to
announce that we have once again managed to generate an excellent annualised pre-tax
return on capital of 37%! Moreover, profit after tax increased by 22% from R1.85
million to R2.26 million for the six month period under review.
During the last quarter of 2012 the insurance industry suffered various catastrophic
losses, particularly hail damage in the East and West Rand and significant fire
damage in St. Francis Bay. With this as a backdrop, we are therefore particularly
pleased to announce a 15% increase in underwriting profit year on year.
Indequity’s claims costs as a percentage of net written premiums remained stable on
47% compared to the industry average of 60% and more. This bears testament to
Indequity’s disciplined underwriting approach and underlines the importance of
maintaining a quality insurance book rather than merely chasing top line growth.
Indequity’s results for the 6 months ended 31 March 2013 reflect a continuance of the
earnings growth experienced over the last 5 years with profit before tax increasing
by 16% compared to the results reported for the same period of the prior financial
year.
The continued growth of Indequity over this period resulted in an increase in cash
and cash equivalents from R20,1 million as at 30 September 2012 to R23,2 million as
at 31 March 2013, an increase of R3,1 million.
PROSPECTS
Management remains optimistic about the prospects for the second half of the year,
but is cautious given increasing competition in the industry as well as the inherent
uncertainty of any insurance business. The Company will continue its efforts to
optimise profitability with a focus on building a superior quality business, building
on successes of the past and improving efficiencies. Indequity is well positioned to
face current challenges with its unique product and a quality existing business.
ACCOUNTING POLICIES AND PREPARATIONS
The principal accounting policies applied in preparing the condensed interim
financial statements for the six months ended 31 March 2013 are in terms of
International Financial Reporting Standards (“IFRS”) and are consistent with those of
the annual financial statements for the year ended 30 September 2012. The interim
financial statements were prepared in accordance with and containing information
required by the recognition, measurement, presentation and disclosure requirements of
IFRS, IAS 34 – Interim Financial Reporting as well as the AC 500 standards as issued
by the Accounting Practices Board or its successor and in compliance with the Listing
Requirements of the JSE Limited and the Companies Act (No.71 of 2008), as amended.
The financial information has been prepared in accordance with standards of IFRS that
are currently effective. This may differ from interpretive guidance from the
International Financial Reporting Interpretation Committee of International
Accounting Standards Board.
The financial statements have not been audited, or reviewed by the Company’s
auditors.
SEGMENT INFORMATION
No segment analysis has been prepared for the six months as the Group’s operations
are focused only on short-term insurance activities.
DIVIDENDS
In accordance with the Group’s insurance operations’ current cash requirements, no
interim dividends have been declared to ordinary shareholders.
ON BEHALF OF BOARD
LJ van Rensburg JF Zwarts Johannesburg
Chief Executive Officer Chairman 22 April 2013
Directors: LJ van Rensburg, TE Vorster, JF Zwarts*, G Williamson*,
AV van Jaarsveldt* (British), (*non-executive)
Company secretary: DJ Deoraj
Transfer secretary: Link Market Services South Africa (Pty) Ltd
Sponsor: KPMG Services (Pty) Ltd
Registered address: First Floor, Cascade House, Constantia Office Park
CNR 14th Avenue and Hendrik Potgieter Road
Constantia Kloof
1709
Postal address: PO Box 5433
Weltevredenpark
1715
Telephone: (+27 11) 475 0816
Fax: (+27 11) 475 0877
Prepared by: DJ Deoraj (Financial Accountant) under the supervision of
TE Vorster (Financial Director)
Date: 22/04/2013 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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