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INDEQUITY GROUP LIMITED - Abridged report for the year ended 30 September 2014

Release Date: 09/12/2014 16:00
Code(s): IDQ     PDF:  
Wrap Text
Abridged report for the year ended 30 September 2014

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 2014

GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2014

                                                       30 Sep 2014   30 Sep 2013
                                                           Audited       Audited
                                                             R’000         R’000

ASSETS

Property and equipment                                         701           707
Intangible assets                                              535           530
Subrogation and salvage recoveries                           1 707         1 552
Reinsurance portion of insurance contract provisions            45            26
Deferred tax asset                                               -            40
Loans and receivables                                           54            43
Cash and cash equivalents                                   27 554        24 938
Total assets                                                30 596        27 836

EQUITY
Capital and reserves attributed to the Company’s
equity holders

Share capital                                                   23            23
Share premium                                               11 411        12 129
Retained income                                             11 436         8 160
Total equity                                                22 870        20 312

LIABILITIES

Insurance contract provisions                                4 629         4 869
Normal tax payable                                             201           199
Dividends payable                                               26             3
Trade and other payables                                     2 870         2 453
Total liabilities                                            7 726         7 524

Total shareholders’ equity and liabilities                  30 596        27 836



GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2014

                                                             30 Sep 2014   30 Sep 2013
                                                                 Audited       Audited
                                                                   R’000         R’000

Gross written premium                                            41 220         38 282
Less: reinsurance premium                                        (1 518)        (1 365)
Net written premium                                              39 702         36 917
Change in provision for gross unearned
premiums                                                            (26)           (54)
Net insurance premium earned                                     39 676         36 863

Other income                                                         76             74
Investment income                                                 1 200          1 049
Total income                                                     40 952         37 986


Claims incurred, net of reinsurance                             (18 696)       (17 478)
Administration Expenses                                         (11 259)       (10 900)
Acquisition costs                                                (2 985)        (2 767)

Profit before taxation                                            8 012          6 841
Taxation                                                         (2 273)        (1 901)
Profit for the year                                               5 739          4 940

Total comprehensive income for the year                           5 739          4 940

Profit attributable to:
    Equity holders of the parent                                  5 739          4 940

Earnings attributable to the equity holders
Basic earnings per share (cents)                                  49.76          41.70
Diluted earnings per share (cents)                                49.76          41.70
       


GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2014

                    Ordinary     Preference         Share       Retained       Total
                      shares         shares       Premium        Income/

                       R’000          R’000         R’000          R’000       R’000

Balance at
1 October 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


Changes in Equity 
for the year ended 30
September 2014

Total
comprehensive
income for the
year ended 30
September 2014
Divi
                                                                   5 739        5 739
Dividend paid
to shareholders
                                                                  (2 463)      (2 463)
146 643
treasury shares
purchased by
subsidiary
                                                      (718)                      (718)

Balance at 30
September 2014            11              12        11 411        11 436       22 870
 


GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED

                                               30 Sep 2014    30 Sep 2013
                                                   Audited        Audited
                                                     R’000          R’000

Net cash from operating activities                   5 957          6 738
Net cash movement in investing activities             (183)          (368)
Net cash used in financing activities               (3 158)        (1 574)



Net increase in cash and cash equivalents            2 616          4 796

Cash and cash equivalents at beginning of
year                                                24 938         20 142

Cash and cash equivalents at end of year            27 554         24 938



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 2014.

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 2014 annual financial
statements, which are consistent with those applied in the preparation of the 30
September 2013 annual financial statements. The accounting policies have been
applied consistently by all Group entities.

The abridged report has been prepared by R.Fourie (BCom Accounting 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
                                                               2014           2013
                                                            Audited        Audited

Basic earnings per share (cents)                              49.76          41.70
   - Profit attributable to shareholders of the
     parent R'000                                             5 739          4 940
   - Weighted average number of ordinary shares
     in issue                                            11 531 334     11 843 134

Diluted earnings per share (cents)                            49.76          41.70
   - Profit attributable to shareholders of the
     parent R'000                                             5 739          4 940
   - Weighted average number of ordinary shares
     in issue                                            11 531 334     11 843 134

Headline earnings per share (cents)                           49.94          41.84
   - Headline earnings R’000                                  5 760          4 956
   - Weighted average number of ordinary shares
     in issue                                            11 531 334     11 843 134

Diluted headline earnings per share (cents)                   49.94          41.84
   - Headline earnings R’000                                  5 760          4 956
   - Weighted average number of ordinary shares
     in issue                                            11 531 334     11 843 134

Reconciliation of net profit attributable to
shareholders of the parent to headline earnings

Net profit attributable to shareholders of the
parent R'000                                                  5 739          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                                       5 760          4 956




COMMENTS ON RESULTS

As another year has passed, we are pleased to announce an exceptionally pleasing set of
financial results once again. But before we expand on these, we again wish to remind
our stakeholders of some of our core principles. 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 43.5% (2013: 40.4%).


INSURANCE OPERATIONS

Conditions in the short-term insurance market remained difficult as the market became
increasingly competitive. This fact, together with the usual upward pressure on claims
expenses and unpredictable weather patterns, resulted in a particularly challenging
period for the insurance industry.

Severe floods in the Western Cape as well as two large hailstorms in Gauteng in October
and November 2013 in particular, had a material impact on the insurance industry and
their financial results. It is estimated that these events cost the industry close to
R2 billion.

Against this backdrop, we are therefore delighted to report that our insurance
operations managed to grow its profit before taxation by 17.6% from R6.8 million in
2013 to R8 million in 2014 and headline earnings per share by 19.4% from 41.84 cents to
49.94 cents. As always, Indequity has remained focused on attracting the “right”
business at sensible premiums. Consequently, gross written premium increased by 7.7%
(2013:8.2%) over the prior year. Indequity managed to achieve a net claims ratio of
47.1% (2013:47.4%), significantly outperforming its industry sector peers who reported
an average claims ratio of approximately 65%.

We constantly strive to improve efficiency in our business and we are therefore pleased
to announce a very gratifying profit before tax margin of 19.4% (2013:17.9%) of gross
written premium for the financial year. This again bears testimony to the exceptional
quality of Indequity’s insurance business.



                         2008     2009     2010     2011     2012     2013      2014


                          R’000    R’000    R’000    R’000    R’000    R’000    R’000
    Net Earned Premium
                         22 068   24 836   27 574   31 030   33 841   36 917   39 702
    Underwriting
    Profit                8 059    9 995   13 259   16 381   17 796   19 439   21 006

    Profit before tax       729    2 535    2 851    5 036    6 094    6 841    8 012



PROSPECTS

It is indeed a great honour to look back on how far Indequity has come since its early
days and to reflect on the value that has been created for all our stakeholders. Going
forward, Indequity will remain true to the principles that have contributed to its
success to date. We will continue to seek ways to enhance our value proposition and the
efficiencies in our business, in order to continue delivering exceptional value for our
stakeholders.

CONCLUSION

Once again, we 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 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 financial statements have been audited by KPMG Inc. Both the 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 dividend of 17.5 cents per Indequity ordinary share
(“Ordinary Share”)

(2013: 17.5 cents per Ordinary Share) and 3.33 cents per Indequity A class
preference share (“A Class Preference Share”) (2013: 3.33 cents per A Class
Preference Share) for the year ended 30 September 2014, to all ordinary
shareholders and A class preference shareholders recorded in the books of Indequity
at the close of business on Friday, 9 January 2015. The Group has a dividend cover
of 2.18 times.

The cash dividend timetable is structured as follows: the last day to trade cum
dividend in order to participate in the dividend is Friday, 2 January 2015. The
shares commence trading ex dividend from the commencement of business on Monday, 5
January 2015 and the record date is Friday, 9 January 2015. The dividend is to be
paid on Monday, 12 January 2015. Share certificates will not be able to be
rematerialised or dematerialised between Monday, 5 January 2015 and Friday, 9
January 2015, 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 11 669 850 Indequity B class preference shares in issue, including
       1 099 368 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
Wednesday 21 January 2015.

ON BEHALF OF THE BOARD

JF Zwarts                   L J van Rensburg
Chairman                    Chief Executive Officer

Johannesburg
9 December 2014

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 14 th 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


Sponsor: KPMG Services (Pty) Ltd

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