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. 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