Wrap Text
Abridged report for the year ended 30 September 2012
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
ABRIDGED REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2012
GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2012
30 Sep 2012 30 Sep 2011
Audited Audited
R’000 R’000
ASSETS
Property and equipment 500 465
Intangible assets 532 534
Subrogation and salvage recoveries 2 147 2 263
Reinsurance portion of insurance contract provisions 35 23
Deferred tax asset 21 66
Loans and receivables 91 306
Cash and cash equivalents 20 142 15 987
Total assets 23 468 19 644
EQUITY
Capital and reserves attributed to the company’s
equity holders
Share capital 24 24
Share premium 13 702 13 633
Contingency reserve - 3 104
Retained income/(Accumulated loss) 3 220 (4 178)
Equity attributed to equity holders of the parent 16 946 12 583
Non-controlling interest - 1 100
Total equity 16 946 13 683
LIABILITIES
Insurance contract provisions 4 168 3 292
Tax payable 82 142
Dividends payable 3 3
Trade and other payables 2 269 2 524
Total liabilities 6 522 5 961
Total shareholders’ equity and liabilities 23 468 19 644
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2012
30 Sep 2012 30 Sep 2011
Audited Audited
R’000 R’000
Gross written premium 35 384 32 196
Less: reinsurance premium (1 543) (1 166)
Net written premium 33 841 31 030
Change in provision for unearned premiums, net of
reinsurance (16) (4)
Net insurance premium revenue 33 825 31 026
Other income 150 504
Investment income 950 711
Total revenue 34 925 32 241
Claims incurred, net of reinsurance (16 045) (14 649)
Administration Expenses (9 966) (10 124)
Acquisition costs (2 820) (2 430)
Finance costs - (2)
Profit before taxation 6 094 5 036
Taxation (1 800) (1 354)
Profit for the year 4 294 3 682
Total comprehensive income for the year 4 294 3 682
Profit attributable to:
Equity holders of the parent 4 294 3 682
Non-controlling interest - -
4 294 3 682
Earnings attributable to the equity holders
Basic earnings per share (cents) 36.12 31.33
Diluted earnings per share (cents) 36.12 30.98
Headline earnings per share (cents) 35.61 31.33
Fully diluted headline earnings per share (cents) 35.61 30.98
Dividends per share (cents)
- Ordinary shares - -
- A-Class preference shares - -
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2012
Ordinary Preference Share Non- Retained Non- Total
shares shares Premium distributable Income/ Controlling
and (Accumulated interest
Contingency loss)
reserves
R’000 R’000 R’000 R’000 R’000 R’000 R’000
Balance at
1 October 2010 12 12 13 554 2 758 (7 514) 1 100 9 922
Changes in Equity for the year ended 30
September 2011
Total
comprehensive
income for the
year ended 30
September 2011 - - - - 3 682 - 3 682
Transfer to
contingency
reserve - - - 346 (346) - -
Ordinary shares
distributed by
Employee Share
Incentive
Purchase Scheme - - 79 - - - 79
Balance at
30 September
2011 12 12 13 633 3 104 (4 178) 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
Transfer from
contingency
reserve - - - (3 104) 3 104 - -
Ordinary shares
distributed by
Employee Share
Incentive
Purchase Scheme - - 69 - - - 69
Redemption of
preference
shares
- - - - - (1 100) (1 100)
Balance at 30
September 2012 12 12 13 702 - 3 220 - 16 946
GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
30 Sep 2012 30 Sep 2011
Audited Audited
R’000 R’000
Net cash from operating activities 5 231 2 616
Net cash from investing activities 24 (177)
Net cash used in financing activities (1 100) (219)
Net increase in cash and cash equivalents 4 155 2 220
Cash and cash equivalents at beginning of
year 15 987 13 767
Cash and cash equivalents at end of year 20 142 15 987
SEGMENT ANALYSIS – BUSINESS SEGMENTS
No segment analysis has been prepared as the group is only involved in insurance
activities, which are managed as a whole. There is no segmented information reported
to management.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 SEPTEMBER 2012
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The consolidated annual financial statements from which these abridged financial
statements have been derived have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (“IFRS”), the AC500 Standards issued by the
Accounting Practices Board, the JSE Listings requirements and the Companies Act No.
71 of 2008, as amended. These abridged financial statements contain the information
required by IAS 34: Interim Financial Reporting.
The annual financial statements have been prepared on the historical cost basis
except for financial instruments classified as at fair value through profit or loss
which are recognised at fair value.
The accounting policies are in terms of IFRS and have been applied consistently to
all periods presented in these financial statements and agree with those principal
policies used in the preparation of the 30 September 2011 annual financial
statements. The accounting policies have been applied consistently by all Group
entities.
The abridged report has been prepared by D. Deoraj (Bcom Accounting UJ) –
Financial Accountant, under the supervision of TE Vorster (Financial Director).
HEADLINE EARNINGS PER SHARE AND DILUTED HEADLINE EARNINGS PER SHARE
Year ended Year ended
30 September 30 September
2012 2011
Audited Audited
Basic earnings per share (cents) 36.12 31.33
- Net profit attributable to shareholders of
the parent R'000 4 294 3 682
- Weighted average number of ordinary shares
in issue 11 886 817 11 753 333
Diluted earnings per share (cents) 36.12 30.98
- Net profit attributable to shareholders of
the parent R'000 4 294 3 682
- Weighted average number of ordinary shares
in issue 11 886 817 11 886 817
Headline earnings per share (cents) 35.61 31.33
- Headline earnings R’000 4 233 3 682
- Weighted average number of ordinary shares
in issue 11 886 817 11 753 333
Diluted headline earnings per share (cents) 35.61 30.98
- Headline earnings R’000 4 233 3 682
- Weighted average number of ordinary shares
in issue 11 886 817 11 886 817
Reconciliation of Weighted Average Number of
Shares used in diluted earnings
Weighted average number of shares 11 886 817 11 753 333
Weighted effect of shares in Indequity Group
Limited Share Incentive Scheme - 133 484
Diluted weighted average number of shares 11 886 817 11 886 817
Reconciliation of net profit attributable to
shareholders of the parent to headline earnings
Net profit attributable to shareholders of the
parent R'000 4 294 3 682
Profit on sale of property and equipment less
taxation (R’000) (61) -
Headline earnings R'000 4 233 3 682
COMMENTS ON RESULTS
Indequity’s main objective is to create significant shareholder wealth, by utilising
the capital resources at our disposal more effectively than our competitors. We
therefore do not measure our progress and our success by the size of our operation or
only by the growth in our premiums (turnover). Consequently, the primary yardstick we
use in measuring our performance is the return on capital achieved. In the year under
review our pre-taxation return on capital was an outstanding 44.5% (2011: 50.8%). Also
noteworthy is the fact that operations generated cash of R6.1 million for the year
(2011: R3.1 million).
INSURANCE OPERATIONS
Conditions in the short term insurance market remained tough, with a focus by most
insurers on business retention rather than expansion. The industry has also seen a
substantial increase in claims over the last few months, notably an increase in
weather related claims. In light of these market factors, we are pleased to
announce that our insurance operations managed to grow its profit before tax by
21%, from R5 million in 2011 to R6.1 million in 2012.
Indequity has remained focused on attracting the “right” business at sensible
premiums, consequently gross written premium increased by 10% over the prior year.
Indequity managed to maintain its exceptional net claims ratio on 47%. This should
be compared with industry averages of approximately 58% for the same period-a truly
outstanding performance!
We constantly strive to improve efficiency in our business and we are therefore
pleased to announce a very pleasing profit before tax margin of 17% (2011:16%) for
the financial year. This can be compared to the negative profit margins reported by
some general insurers on their personal lines businesses over the last few years.
This bears testimony to the exceptional quality of Indequity’s insurance business.
2004 2005 2006 2007 2008 2009 2010 2011 2012
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Net Earned Premium 3 315 6 961 10 729 15 668 22 068 24 836 27 574 31 030 33 841
Underwriting Profit 1 149 2 252 5 523 6 507 8 059 9 995 13 259 16 381 17 796
Profit before tax -1 565 -2 284 298 1 056 729 2 535 2 851 5 036 6 094
PROSPECTS
As far as the general personal lines and business insurance operations are
concerned, we anticipate the business environment to be increasingly competitive
with various new entrants to the market. We anticipate growth to remain under
pressure as the same business considerations as outlined above will continue to be
pertinent. We again commit to place emphasis on building a quality long-term
sustainable business and as a result we will continue to follow the same
disciplined approach in these operations, that we had in the past. As always, we
are constantly considering and implementing innovative methods to increase the
efficiency of our business.
In order to continue to deliver superior growth, we remain hard at work to develop
novel, innovative products to compliment the Group’s existing product offering.
Indequity received no income from new products during the year under review, as
only test marketing of these products was done. Based on the outcome thereof,
enhancements were made to our new product offerings and we are confident that we
will soon be able to report a positive contribution to group results from these.
CONCLUSION
We again wish to express our gratitude to our stakeholders for their continued
support and faith in Indequity and its management over many years. We trust that
their patience will be well rewarded over time.
We also wish to thank our management and employees for their commitment, dedication
and perseverance, without which such outstanding results would not have
materialised.
AUDIT OPINION
The annual financial statements have been audited by Grant Thornton. Both the
financial statements and the unqualified audit opinion are available for inspection
at the registered office of Indequity.
The auditor’s report does not necessarily cover all of the information contained in
this abridged report. Shareholders are therefore advised that in order to obtain a
full understanding of the nature of the auditor’s work they should obtain a copy of
that report together with the accompanying financial information from the
registered office of the company.
DIVIDEND
No ordinary dividend has been declared for the year under review.
NOTICE TO MEMBERS OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of members of Indequity
Group Limited will be held at the registered office, First Floor, Cascade House,
corner 14th Avenue and Hendrik Potgieter Road, Constantia Kloof, at 10:00 on
22 January 2013.
ON BEHALF OF THE BOARD
JF Zwarts L J van Rensburg
Chairman Chief Executive Officer
Johannesburg
5 December 2012
Directors: AV van Jaarsveldt* (British), LJ van Rensburg, JF Zwarts*,
G Williamson*, TE Vorster (* non-executive) Company secretary: D Deoraj Registered
address: First Floor, Cascade House, Constantia Office Park, cnr 14th Avenue and
Hendrik Potgieter Road, Constantia Kloof, Johannesburg, 1709 Postal address: PO
Box 5433, Weltevredenpark, 1715 Telephone: (+2711) 475-0816 Fax: (+2711) 475-
0877 Website: www.indequity.com
Johannesburg
12 December 2012
Sponsor: KPMG Services (Pty) Ltd
Date: 12/12/2012 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.