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INDEQUITY GROUP LIMITED - Indequity Interim Results for the six months ended 31 March 2014

Release Date: 22/05/2014 15:00
Code(s): IDQ     PDF:  
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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)




                                         
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