INDEQUITY INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015 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 2015 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION 31 March 31 March 30 September 2015 2014 2014 Unaudited Unaudited Audited R'000 R'000 R'000 ASSETS Property and equipment 995 745 701 Intangible assets 535 530 535 Subrogation and salvage recoveries 1 536 1 310 1 707 Reinsurance portion of insurance contract provisions 41 36 45 Deferred tax asset - 34 - Loans and receivables 45 35 54 Cash and cash equivalents 28 455 23 810 27 554 Total Assets 31 607 26 500 30 596 EQUITY Capital and reserve attributed to the company's equity holders Share capital 23 23 23 Share premium 11 411 11 835 11 411 Retained income 12 272 7 905 11 436 Total Equity 23 706 19 763 22 870 LIABILITIES Deferred tax liability 174 - - Insurance contract provisions 4 974 5 055 4 629 Tax payable 136 8 201 Dividends payable 89 86 26 Trade and other payables 2 528 1 588 2 870 Total Liabilities 7 901 6 737 7 726 Total shareholders' equity and liabilities 31 607 26 500 30 596 1 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME 6 Months 6 Months Ended Ended Year Ended 31 March 31 March 30 September 2015 2014 2014 Unaudited Unaudited Audited R'000 R'000 R'000 Gross written premium 22 023 20 236 41 220 Less: reinsurance premium (862) (717) (1 518) Net premium written 21 161 19 519 39 702 Change in provision for gross unearned premiums 15 122 (26) Net insurance premium earned 21 176 19 641 39 676 Other income 35 39 76 Investment income 793 548 1 200 Total income 22 004 20 228 40 952 Claims incurred, net of reinsurance (9 615) (9 768) (18 696) Gross claims incurred (9 798) - - Reinsurance recoveries 183 - - Administration Expenses (6 199) (5 922) (11 259) Acquisition costs (1 645) (1 469) (2 985) Total Expenses (17 459) (17 159) (32 940) Profit before taxation 4 545 3 069 8 012 Taxation (1 272) (861) (2 273) Total comprehensive income for the period 3 273 2 208 5 739 Profit attributable to: - Equity holders of the parent 3 273 2 208 5 739 Earnings attributable to the equity holders Basic earnings per share (cents) 28.65 19.11 49.76 Diluted earnings per share (cents) 28.65 19.11 49.76 Dividends per share (cents) - Ordinary shares 17.50 17.50 17.50 - "A" class preference shares 3.33 3.33 3.33 2 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY Share capital Retained Total and premium income R'000 R'000 R'000 Balance as at 1 October 2013 12 152 8 160 20 312 Changes in Equity for the year ended 30 September 2014 Total comprehensive income for the year ended 30 September 2014 5 739 5 739 Dividend paid to shareholders (2 463) (2 463) Treasury shares purchased by subsidiary (718) (718) Balance at 30 September 2014 11 434 11 436 22 870 Changes in Equity for the 6 months ended 31 March 2015 Total comprehensive income for the 6 months ended 31 March 2015 3 273 3 273 Dividends Paid (2 437) (2 437) Treasury shares purchased by subsidiary Balance at 31 March 2015 11 434 12 272 23 706 Balance as at 1 October 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 as at 31 March 2014 11 858 7 905 19 763 3 CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS 6 Months 6 Months ended ended Year ended 31 March 31 March 30 September 2015 2014 2014 Unaudited Unaudited Audited R'000 R'000 R'000 Net cash from operating activities 3 627 1 684 5 957 Net cash used in investing activities (289) (137) (183) Net cash used in financing activities (2 437) (2 675) (3 158) Net movement in cash and cash equivalents 901 (1 128) 2 616 Cash and cash equivalents at beginning of the period 27 554 24 938 24 938 Cash and cash equivalents at end of the period 28 455 23 810 27 554 EARNINGS PER SHARE 6 Months 6 Months ended ended Year ended 31 March 31 March 30 September 2015 2014 2014 Unaudited Unaudited Audited Basic earnings per share (cents) 28.65 19.11 49.76 Diluted earnings per share (cents) 28.65 19.11 49.76 Headline earnings per share (cents) 28.65 19.11 49.94 Fully diluted headline earnings per share (cents) 28.65 19.11 49.94 Number of shares - in issue 12 515 000 12 515 000 12 515 000 - weighted average 11 415 632 11 552 989 11 531 334 - diluted 11 415 632 11 552 989 11 531 334 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) 3 273 2 208 5 739 Loss/Profit on sale of property and equipment (R'000) - 21 21 - Before tax - 29 29 - tax - (8) (8) Headline earnings (R'000) 3 273 2 229 5 760 4 REVIEW OF RESULTS Indequity is pleased to announce that it has increased its basic earnings per share by 50% compared to the basic earning per share reported in the previous six month period. Basic earnings per share increased from 19.11 cents for the six months ended 31 March 2014 to 28.65 cents for the six months ended 31 March 2015. Indequity achieved a net claims ratio of 45% (2014:50%) and therefore once again significantly outperformed its industry sector peers. The decreased net claims ratio is largely due to the fact that there were no catastrophic events during the last summer, combined with Indequity’s continued focus to effectively manage costs. 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 on the other. We attribute our underwriting success to our disciplined underwriting practices and effective control over claims expenses. Administration expenses as a percentage of net insurance premium earned decreased from 30% for the six months ended 31 March 2014 to 29% for the six months ended 31 March 2015, bearing testimony to the success of the efficiency improvements which have been implemented in the business. 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 42% (2014: 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 2015 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 2014. 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. 5 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 21 April 2015 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) is responsible for the preparation of the interim results announcement. 6 7 Date: 22/04/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 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