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Abridged report for the year ended 30 September 2013
Indequity Group Limited
Registration number: 1998/015883/06
Incorporated in the Republic of South Africa
Share code: IDQ
ISIN: ZAE000016606
“Indequity” or “the Group” or “the Company”
ABRIDGED REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2013
GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2013
30 Sep 2013 30 Sep 2012
Audited Audited
R’000 R’000
ASSETS
Property and equipment 707 500
Intangible assets 530 532
Subrogation and salvage recoveries 1 552 2 147
Reinsurance portion of insurance contract provisions 26 35
Deferred tax asset 40 21
Loans and receivables 43 91
Cash and cash equivalents 24 938 20 142
Total assets 27 836 23 468
EQUITY
Capital and reserves attributed to the Company’s
equity holders
Share capital 23 24
Share premium 12 129 13 702
Retained income 8 160 3 220
Total equity 20 312 16 946
LIABILITIES
Insurance contract provisions 4 869 4 168
Tax payable 199 82
Dividends payable 3 3
Trade and other payables 2 453 2 269
Total liabilities 7 524 6 522
Total shareholders’ equity and liabilities 27 836 23 468
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2013
30 Sep 2013 30 Sep 2012
Audited Audited
R’000 R’000
Gross written premium 38 282 35 384
Less: reinsurance premium (1 365) (1 543)
Net written premium 36 917 33 841
Change in provision for gross unearned
premiums (54) (16)
Net insurance premium earned 36 863 33 825
Other income 74 150
Investment income 1 049 950
Total income 37 986 34 925
Claims incurred, net of reinsurance (17 478) (16 045)
Administration Expenses (10 900) (9 966)
Acquisition costs (2 767) (2 820)
Profit before taxation 6 841 6 094
Taxation (1 901) (1 800)
Profit for the year 4 940 4 294
Total comprehensive income for the year 4 940 4 294
Profit attributable to:
Equity holders of the parent 4 940 4 294
Earnings attributable to the equity holders
Basic earnings per share (cents) 41.70 36.12
Diluted earnings per share (cents) 41.70 36.12
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2013
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 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 to
contingency
reserve
(3 104) 3 104 -
Ordinary shares
distributed by
Employee Share 69 69
Incentive
Purchase Scheme
Redemption of
preference
shares in
subsidiary
(1 100) (1 100)
Balance at
30 September
2012 12 12 13 702 - 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
324 542
treasury shares
purchased by
subsidiary (1) (1 573) (1 574)
Balance at 30
September 2013 11 12 12 129 - 8 160 - 20 312
GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
30 Sep 2013 30 Sep 2012
Audited Audited
R’000 R’000
Net cash from operating activities 6 738 5 231
Net cash movement in investing activities (368) 24
Net cash used in financing activities (1 574) (1 100)
Net increase in cash and cash equivalents 4 796 4 155
Cash and cash equivalents at beginning of
year 20 142 15 987
Cash and cash equivalents at end of year 24 938 20 142
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 2013.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
This abridged report has been prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial
Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting Pronouncements as issued by
Financial Reporting Standards Council, the JSE Listings Requirements and the
Companies Act (71 of 2008), as amended. This abridged report contains the
information required by IAS 34: Interim Financial Reporting. The financial
information included in this abridged report has been extracted from the audited
annual financial statements.
The annual financial statements have been prepared on the historical cost basis.
The accounting policies are in terms of IFRS and have been applied consistently to
all periods presented in this abridged report and agree with those principal
policies used in the preparation of the 30 September 2012 annual financial
statements. The accounting policies have been applied consistently by all Group
entities.
The abridged report has been prepared by N. Murray (BCom Accounting Honours (Tax) UJ) –
Financial Accountant, under the supervision of TE Vorster CA(SA)(Financial Director).
HEADLINE EARNINGS PER SHARE AND DILUTED HEADLINE EARNINGS PER SHARE
Year ended Year ended
30 September 30 September
2013 2012
Audited Audited
Basic earnings per share (cents) 41.70 36.12
- Profit attributable to shareholders of the
parent R'000 4 940 4 294
- Weighted average number of ordinary shares
in issue 11 843 134 11 886 817
Diluted earnings per share (cents) 41.70 36.12
- Profit attributable to shareholders of the
parent R'000 4 940 4 294
- Weighted average number of ordinary shares
in issue 11 843 134 11 886 817
Headline earnings per share (cents) 41.84 35.61
- Headline earnings R’000 4 956 4 233
- Weighted average number of ordinary shares
in issue 11 843 134 11 886 817
Diluted headline earnings per share (cents) 41.84 35.61
- Headline earnings R’000 4 956 4 233
- Weighted average number of ordinary shares
in issue 11 843 134 11 886 817
Reconciliation of Weighted Average Number of
Shares used in diluted earnings
Weighted average number of shares 11 843 134 11 886 817
Weighted effect of shares in Indequity Group
Limited Share Incentive Scheme - -
Diluted weighted average number of shares 11 843 134 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 4 940 4 294
Loss/(Profit) on sale of property and equipment
R’000 16 (61)
- Before tax 22 85
- Tax (6) 24
Headline earnings R'000 4 956 4 233
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 40.4% (2012: 44.5%). Also
noteworthy is the fact that operations generated cash of R7.5 million for the year
(2012: R6.1 million).
INSURANCE OPERATIONS
Conditions in the short term insurance market remained difficult, 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 12%, from R6.1
million in 2012 to R6.8 million in 2013 and headline earnings per share by 17% from
35.61 cents to 41.84 cents.
Indequity has remained focused on attracting the “right” business at sensible premiums,
consequently gross written premium increased by 8% 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, which is once again
very pleasing.
We constantly strive to improve efficiency in our business and we are therefore pleased
to announce a very gratifying profit before tax margin of 18% (2012:17%) for the
financial year. This again bears testimony to the exceptional quality of Indequity’s
insurance business.
2007 2008 2009 2010 2011 2012 2013
R’000 R’000 R’000 R’000 R’000 R’000 R’000
Net Earned Premium
15 668 22 068 24 836 27 574 31 030 33 841 36 917
Underwriting
Profit 6 507 8 059 9 995 13 259 16 381 17 796 19 439
Profit before tax 1 056 729 2 535 2 851 5 036 6 094 6 841
PROSPECTS
As far as the general personal lines and business insurance operations are concerned,
we anticipate the business environment to continue to be 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.
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 also wish to thank our
management and employees for their commitment, dedication and perseverance, without
which such pleasing results would not have materialised.
AUDIT OPINION
This abridged report is extracted from the audited information but is not itself
audited. The directors take full responsibility for the preparation of the abridged
report and the correct extraction of the financial information included therein
from the underlying annual financial statements.
The annual financial statements have been audited by KPMG Inc. Both the annual
financial statements and the unqualified audit opinion are available for inspection
at the registered office of Indequity.
FINAL DIVIDEND
The Board has declared a final gross dividend of 17.50000 cents per Indequity
ordinary share (“Ordinary Share”) (2012: 0 cents per Ordinary Share) and 3.32593
cents per Indequity A class preference share (“A Class Preference Share”) (2012: 0
cents per A Class Preference Share) for the year ended 30 September 2013, to all
ordinary shareholders and A class preference shareholders recorded in the books of
Indequity at the close of business on Friday, 3 January 2014. The Group has a
dividend cover of 1.88 times.
The cash dividend timetable is structured as follows: the last day to trade cum
dividend in order to participate in the dividend is Tuesday, 24 December 2013. The
shares commence trading ex dividend from the commencement of business on Friday, 27
December 2013 and the record date is Friday, 3 January 2014.The dividend is to be
paid on Monday, 6 January 2014. Share certificates will not able to be
rematerialised or dematerialised between Friday, 27 December 2013 and Friday, 3
January 2014, both days inclusive.
All ordinary shareholders and A class preference shareholders are hereby advised
that the dividends will be subject to the dividends tax, which was introduced with
effect from 1 April 2012. In accordance with paragraphs 11.17(a)(i) to (x) and
11.17(c) of the JSE Listings Requirements, the following additional information is
provided:
- The dividend has been declared out of income reserves.
- The local dividend tax rate is 15%.
- There are no secondary tax on companies (“STC”) credits to be utilised.
Ordinary share dividend A Class Preference Share
(cents per Ordinary dividend
Share) (cents per A Class
Preference Share)
Gross local dividend 17.50000 3.32593
amount for ordinary
shareholders/A class
preference shareholders
exempt from dividends tax
Local dividend 2.62500 0.49889
withholding tax amount
for ordinary shareholders
/A class preference
shareholders to pay the
dividend tax
Net local dividend amount 14.87500 2.82704
for ordinary shareholders
/A class preference
shareholders liable to
pay the dividend tax
- Indequity’s income tax reference number is 9887001718.
- The Group has 12 515 000 Ordinary Shares, 13 170 000 A Class Preference
Shares and 11 669 950 Indequity B class preference shares in issue, including
952 725 ordinary treasury shares held by Indequity Specialised Insurance
Limited.
NOTICE TO MEMBERS OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of shareholders 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
Tuesday 21 January 2014.
ON BEHALF OF THE BOARD
JF Zwarts L J van Rensburg
Chairman Chief Executive Officer
Johannesburg
5 December 2013
Directors: AV van Jaarsveldt* (British), LJ van Rensburg, JF Zwarts*,
G Williamson*, TE Vorster (* non-executive) Company secretary: R Fourie 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
9 December 2013
Sponsor: KPMG Services (Pty) Ltd
Date: 09/12/2013 04:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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