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Indequity Interim Results for the six months ended 31 March 2014
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 2014
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Property and equipment 745 656 707
Intangible assets 530 532 530
Subrogation and salvage recoveries 1 310 1 946 1 552
Reinsurance portion of insurance
contract provisions 36 32 26
Deferred tax asset 34 15 40
Loans and receivables 35 88 43
Cash and cash equivalents 23 810 23 246 24 938
Total Assets 26 500 26 515 27 836
EQUITY
Capital and reserve attributed to the
company's equity holders
Share capital 23 24 23
Share premium 11 835 13 702 12 129
Accumulated profit 7 905 5 481 8 160
Equity attributed to equity holders of
the parent 19 763 19 207 20 312
Non - controlling interest - - -
Total Equity 19 763 19 207 20 312
LIABILITIES
Insurance contract provisions 5 055 4 953 4 869
Tax payable 8 47 199
Dividends payable 86 3 3
Trade and other payables 1 588 2 305 2 453
Total Liabilities 6 737 7 308 7 524
Total shareholders' equity and
liabilities 26 500 26 515 27 836
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
6 Months 6 Months
Ended Ended Year Ended
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Gross written premium 20 236 18 651 38 282
Less: reinsurance premium (717) (683) (1 365)
Net premium written 19 519 17 968 36 917
Change in provision for gross unearned
premiums 122 (45) (54)
Net insurance premium earned 19 641 17 923 36 863
Other income 39 39 74
Investment income 548 499 1 049
Total income 20 228 18 461 37 986
Claims incurred, net of reinsurance (9 768) (8 344) (17 478)
Administration Expenses (5 922) (5 627) (10 900)
Acquisition costs (1 469) (1 351) (2 767)
Total Expenses (17 159) (15 322) (31 145)
Profit before taxation 3 069 3 139 6 841
Taxation (861) (878) (1 901)
Total comprehensive income for the period 2 208 2 261 4 940
Profit attributable to:
- Equity holders of the parent 2 208 2 261 4 940
- Minority interest - - -
2 208 2 261 4 940
Earnings attributable to the equity
holders
Basic earnings per share (cents) 19.11 19.02 41.70
Diluted earnings per share (cents) 19.11 19.02 41.70
Dividends per share (cents)
- Ordinary shares 17.50 - -
- "A" class preference shares 3.33 - -
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Non-
Share capital Accumulated controlling Total
and premium Profit interest
R'000 R'000 R'000 R'000
Balance as at 1 October 2012 13 726 3 220 - 16 946
Changes in Equity for the year
ended 30 September 2013
Total comprehensive income for
the year ended 30 September
2013 4 940 4 940
Treasury shares purchased by
subsidiary (1 574) (1 574)
Balance at 30 September 2013 12 152 8 160 - 20 312
Changes in Equity for the 6
months ended 31 March 2014
Total comprehensive income for
the 6 months ended 31 March
2014 2 208 2 208
Dividends Paid (2 463) (2 463)
Treasury shares purchased by
subsidiary (294) (294)
Balance at 31 March 2014 11 858 7 905 - 19 763
Balance as at 1 October 2012 13 726 3 220 - 16 946
Changes in Equity for the 6
months ended 31 March 2013
Total comprehensive income for
the 6 months ended 31 March
2013 2 261 2 261
Balance as at 31 March 2013 13 726 5 481 - 19 207
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
6 Months 6 Months
ended ended Year ended
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
R'000 R'000 R'000
Net cash from operating activities 1 684 3 329 6 738
Net cash used in investing
activities (137) (225) (368)
Net cash used in financing activities (2 675) - (1 574)
Net movement in cash and cash
equivalents (1 128) 3 104 4 796
Cash and cash equivalents at
beginning of the period 24 938 20 142 20 142
Cash and cash equivalents at
end of the period 23 810 23 246 24 938
EARNINGS PER SHARE
6 Months 6 Months
ended ended Year ended
31 March 31 March 30 September
2014 2013 2013
Unaudited Unaudited Audited
Basic earnings per share (cents) 19.11 19.02 41.70
Diluted earnings per share (cents) 19.11 19.02 41.70
Headline earnings per share (cents) 19.29 19.02 41.84
Fully diluted headline earnings per share
(cents) 19.29 19.02 41.84
Number of shares
- in issue 12 515 000 13 170 000 12 515 000
- weighted average 11 552 989 11 886 817 11 843 134
- diluted 11 552 989 11 886 817 11 843 134
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
earnings 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) 2 208 2 261 4 940
Loss/Profit on sale of property and
equipment (R'000) 21 - 16
- Before tax 29 - 22
- tax (8) - (6)
Headline earnings (R'000) 2 229 2 261 4 956
REVIEW OF RESULTS
Indequity is pleased to announce that it managed to sustain its excellent basic
earnings per share reported in the previous six month period during one of the most
difficult periods ever experienced by the short-term insurance industry in South
Africa, with a number of our competitors reporting significant losses. Basic
earnings per share increased from 19.02 cents for the six months ended 31 March 2013
to 19.11 cents for the six months ended 31 March 2014.
Indequity managed to achieve a net claims ratio of 50%, significantly outperforming
its industry peers. Indequity achieved this result despite severe weather
catastrophes during the period. The most notable catastrophic events include floods
in the Western Cape and two significant hailstorms in Gauteng in October and
November 2013. The industry has already described the 28 November hailstorms in
Gauteng as one of the most severe catastrophic events experienced in South Africa to
date. It is estimated that local insurers and their reinsurers will suffer more than
two billion Rand in damages.
In order to trade profitably in the short term insurance market one needs to strike
a sensible balance between premium collections on the one hand and claims pay-outs
on the other. We attribute our underwriting success to our disciplined underwriting
practices and effective control over claims expenses.
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 again managed to generate an excellent annualised pre-tax
return on capital of 31%.
PROSPECTS
Management remains optimistic about the prospects for the second half of the year,
but is cautious given 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.
ACCOUNTING POLICIES AND PREPARATIONS
The principal accounting policies applied in preparing the condensed interim
financial statements for the six months ended 31 March 2014 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 2013. 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 SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council 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 condensed interim 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 May 2014
Directors: LJ van Rensburg, TE Vorster, JF Zwarts*, G Williamson*,
AV van Jaarsveldt* (British), (*non-executive)
Company secretary: R Fourie
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: R Fourie (Financial Accountant) under the supervision of
TE Vorster (Financial Director)
7
Date: 22/05/2014 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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