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Abridged report for the year ended 30 September 2015
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 2015
GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2015
30 Sep 2015 30 Sep 2014
Audited Audited
R’000 R’000
ASSETS
Property and equipment 822 701
Intangible assets 659 535
Subrogation and salvage recoveries 1 525 1 707
Reinsurance portion of insurance contract provisions 41 45
Normal tax receivable 10 -
Loans and receivables 95 54
Cash and cash equivalents 30 693 27 554
Total assets 33 845 30 596
EQUITY
Capital and reserves attributed to the Company’s
equity holders
Share capital 23 23
Share premium 11 311 11 411
Retained income 16 244 11 436
Total equity 27 578 22 870
LIABILITIES
Insurance contract provisions 3 426 4 629
Deferred tax liability 137 -
Normal tax payable - 201
Dividends payable 53 26
Trade and other payables 2 651 2 870
Total liabilities 6 267 7 726
Total shareholders’ equity and liabilities 33 845 30 596
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2015
30 Sep 2015 30 Sep 2014
Audited Audited
R’000 R’000
Gross written premium 44 397 41 220
Less: reinsurance premium (1 779) (1 518)
Net written premium 43 158 39 702
Change in provision for gross unearned
premiums (14) (26)
Net insurance premium earned 43 144 39 676
Other income 72 76
Investment income 1 703 1 200
Total income 44 919 40 952
Claims incurred, net of reinsurance (18 991) (18 696)
Administration Expenses (12 571) (11 259)
Acquisition costs (3 312) (2 985)
Profit before taxation 10 045 8 012
Taxation (2 802) (2 273)
Profit for the year 7 243 5 739
Total comprehensive income for the year 7 243 5 739
Profit attributable to:
Equity holders of the parent 7 243 5 739
Earnings attributable to the equity holders
Basic earnings per share (cents) 63.45 49.76
Diluted earnings per share (cents) 63.45 49.76
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2015
Ordinary Preference Share Retained Total
shares shares Premium Income
R’000 R’000 R’000 R’000 R’000
Balance at
1 October 2013
11 12 12 129 8 160 20 312
Changes in Equity for the year ended 30 September 2014
Total
comprehensive
income for the 5 739 5 739
year ended 30
September 2014
Dividend paid
to shareholders (2 463) ( 2 463)
146 643
Treasury shares
purchased by (718) (718)
subsidiary
Balance at 30
September 2013
11 12 11 411 11 436 22 870
Changes in Equity for the year ended 30 30 September 2015
Total
comprehensive
income for the
year ended 30
September 2015
Divi
7 243 7 243
Dividend paid
to shareholders
(2 435) (2 435)
Repurchase of
shares from
subsidiary (10) (10)
10 000 shares
repurchased (90) (90)
Balance at 30
September 2015 11 12 11 311 16 244 27 578
Dividends paid during the financial year Group Company
2015 2014 2015 2014
Dividend per ordinary share (cents) 17.50 17.50 17.50 17.50
Dividend per A-class share (cents) 3.33 3.33 3.33 3.33
GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
30 Sep 2015 30 Sep 2014
Audited Audited
R’000 R’000
Net cash from operating activities 6 088 5 957
Net cash movement in investing activities (441) (183)
Net cash used in financing activities (2 508) (3 158)
Net increase in cash and cash equivalents 3 139 2 616
Cash and cash equivalents at beginning of
year 27 554 24 938
Cash and cash equivalents at end of year 30 693 27 554
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 2015
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
financial statements.
The 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 2015 financial statements,
which are consistent with those, applied in the preparation of the 30 September
2014 financial statements. The accounting policies have been applied consistently
by all Group entities.
The abridged report has been prepared by Z. Olivier (BCom - US) – 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
2015 2014
Audited Audited
Basic earnings per share (cents) 63.45 49.76
- Profit attributable to shareholders of the
parent R'000 7 243 5 739
- Weighted average number of ordinary shares
in issue 11 415 440 11 531 334
Diluted earnings per share (cents) 63.45 49.76
- Profit attributable to shareholders of the
parent R'000 7 243 5 739
- Weighted average number of ordinary shares
in issue 11 415 440 11 531 334
Headline earnings per share (cents) 63.45 49.94
- Headline earnings R’000 7 243 5 760
- Weighted average number of ordinary shares
in issue 11 415 440 11 531 334
Diluted headline earnings per share (cents) 63.45 49.94
- Headline earnings R’000 7 243 5 760
- Weighted average number of ordinary shares
in issue 11 415 440 11 531 334
Reconciliation of net profit attributable to
shareholders of the parent to headline earnings
Net profit attributable to shareholders of the
parent R'000 7 243 5 739
Loss/(Profit) on sale of property and equipment
R’000 - 21
Before tax - 29
Tax - (8)
Headline earnings R'000 7 243 5 760
COMMENTS ON RESULTS
As another year has passed, we are pleased to announce an exceptionally pleasing set of
financial results once again. 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 by the growth or extent of 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 47.6% (2014: 43.5%).
INSURANCE OPERATIONS
The domestic short-term insurance market has become increasingly competitive and is
therefore currently characterized by high claim ratios and very low profit margins.
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.
Against this backdrop, we are therefore delighted to report that we managed to grow
profit before taxation by 25% from R8 million in 2014 to R10 million in 2015 and
headline earnings per share by 27.1% from 49.94 cents to 63.45 cents. As always,
Indequity has remained focused on attracting quality business at sensible premiums.
Consequently, gross written premium increased by 9% (2014:7.7%) from the prior year.
Indequity managed to achieve a net claims ratio of 44% (2014:47.1%), significantly
outperforming its industry sector peers who reported an average claims ratio of
approximately 65%.
We constantly strive to improve efficiencies in our business and we are therefore
pleased to announce a very gratifying profit before tax margin of 22.4% (2014:19.4%) of
gross written premium for the financial year. This again bears testimony to the
exceptional quality of Indequity’s insurance business.
Indequity’s results over the past seven years can be summarised as follows:
2009 2010 2011 2012 2013 2014 2015
R’000 R’000 R’000 R’000 R’000 R’000 R’000
Net Earned Premium
24 836 27 574 31 030 33 841 36 917 39 702 43 158
Underwriting
Profit 9 995 13 259 16 381 17 796 19 439 21 006 24 167
Profit before tax 2 535 2 851 5 036 6 094 6 841 8 012 10 045
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. In
particular, it is noteworthy that the Indequity share price has increased from 145
cents per share in October 2010 to 1000 cents per share recently, which reflects an
annual compound growth of 47.14% over the past five years. 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 unwavering 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 21 cents per Indequity ordinary share
(“Ordinary Share”)
(2014: 17.5 cents per Ordinary Share) and 3.64 cents per Indequity A class
preference share (“A Class Preference Share”) (2014: 3.33 cents per A Class
Preference Share) for the year ended 30 September 2015, to all ordinary
shareholders and A class preference shareholders recorded in the books of Indequity
at the close of business on Friday, 15 January 2016. The Group has a dividend cover
of 2.52 times.
The cash dividend timetable is structured as follows: the declaration date is
Tuesday, 8 December 2015. The last day to trade cum dividend in order to
participate in the dividend is Friday, 8 January 2016. The shares commence trading
ex -dividend from the commencement of business on Monday, 11 January 2016 and the
record date is Friday, 15 January 2016. The dividend is to be paid on Monday, 18
January 2016. Share certificates will not be able to be rematerialised or
dematerialised between Monday, 11 January 2016 and Friday, 15 January 2016, 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%;
Ordinary share dividend A Class Preference Share
(cents per Ordinary dividend
Share) (cents per A Class
Preference Share)
Gross local dividend 21.00000 3.63733
amount for ordinary
shareholders/A class
preference shareholders
exempt from dividends tax
Local dividend 3.15000 0.54560
withholding tax amount
for ordinary shareholders
/A class preference
shareholders to pay the
dividend tax
Net local dividend amount 17.85000 3.09173
for ordinary shareholders
/A class preference
shareholders liable to
pay the dividend tax
- Indequity’s income tax reference number is 9887001718.
- The Group has 11 405 632 Ordinary Shares, 13 170 000 A Class Preference
Shares and 11 669 850 Indequity B class preference shares in issue.
NOTICE TO MEMBERS OF ANNUAL GENERAL MEETING
Notice is hereby given that the ninth annual general meeting of the shareholders of
Indequity Group Limited will be held at the registered office of the company, First
Floor, Cascade House, Constantia Office Park, corner 14th Avenue and Hendrik Potgieter
Road, Constantia Kloof, Johannesburg on Wednesday 20 January 2016, at 11:00.
ON BEHALF OF THE BOARD
JF Zwarts L J van Rensburg
Chairman Chief Executive Officer
Johannesburg
8 December 2015
Directors: AV van Jaarsveldt* (British), LJ van Rensburg, JF Zwarts*,
G Williamson*, TE Vorster (* non-executive) Company secretary: Z Olivier
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
Date: 08/12/2015 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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