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INDEQUITY GROUP LIMITED - Indequity Interim Results For The Six Months Ended 31 March 2016

Release Date: 19/04/2016 09:00
Code(s): IDQ     PDF:  
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Indequity Interim Results For The Six Months Ended 31 March 2016

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 2016


CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

                                                    31 March    31 March    30 September
                                                        2016        2015            2015
                                                   Unaudited   Unaudited        Audited
                                                       R'000        R'000         R'000
ASSETS
Property and equipment                                1 309           995           822
Intangible assets                                       618           535           659
Subrogation and salvage recoveries                    1 434         1 536         1 525
Reinsurance portion of insurance
contract provisions                                      44            41            41
Normal tax receivable                                     7             -            10
Loans and receivables                                    83            45            95
Cash and cash equivalents                            31 223        28 455        30 693
Total Assets                                         34 718        31 607        33 845


EQUITY

Capital and reserve attributed to the
company's equity holders

Share capital                                           23             23            23
Share premium                                       11 311         11 411        11 311
Retained income                                     16 902         12 272        16 244
Total Equity                                        28 236         23 706        27 578

LIABILITIES
Deferred tax liability                                 130            174           137
Insurance contract provisions                        4 389          4 974         3 426
Tax payable                                              -            136             -
Dividends payable                                      193             89            53
Trade and other payables                             1 770          2 528         2 651
Total Liabilities                                    6 482          6 737         6 267

Total shareholders' equity and
liabilities                                         34 718         31 607        33 845




                                               
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

                                                  6 Months      6 Months
                                                     Ended         Ended       Year Ended
                                                  31 March      31 March     30 September
                                                      2016          2015             2015
                                                 Unaudited     Unaudited         Audited
                                                       R'000         R'000         R'000

 Gross written premium                             24 074           22 023        44 937
 Less: reinsurance premium                        (1 052)            (862)       (1 779)
 Net premium written                               23 022           21 161        43 158
 Change in provision for gross unearned
 premiums                                              12               15          (14)
 Net insurance premium earned                      23 034           21 176        43 144

 Other income                                          19               35            72
 Investment income                                    756              793         1 703
 Total income                                      23 809           22 004        44 919

 Claims incurred, net of reinsurance             (10 859)          (9 615)       (18 991)
 Gross claims incurred                           (10 862)          (9 798)       (19 235)
 Reinsurance recoveries                                 3             183            244

 Administration Expenses                          (6 456)          (6 199)       (10 045)
 Acquisition costs                                (1 760)          (1 645)        (3 312)
 Total Expenses                                  (19 075)         (17 459)       (34 874)

 Profit before taxation                             4 734           4 545         10 045
 Taxation                                         (1 201)          (1 272)        (2 802)
 Total comprehensive income for the period          3 533           3 273          7 243

 Profit attributable to:
 - Equity holders of the parent                    3    533          3 273         7 243

 Earnings attributable to the equity
 holders

 Basic earnings per share (cents)                      28.65         28.65         63.45
 Diluted earnings per share (cents)                    28.65         28.65         63.45


 Dividends per share (cents)
 - Ordinary shares                                     21.00         17.50         17.50
 - "A" class preference shares                          3.64          3.33          3.33




                                             
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 2014               11 434           11 436    22 870
Changes in Equity for the year
ended 30 September 2015

Total comprehensive income for
the year ended 30 September
2015                                                         7 243      7 243
Dividend paid to shareholders                              (2 435)    (2 435)
Repurchase of share from
subsidiary                                   (10)                        (10)
10 000 shares repurchased                    (90)                        (90)
Balance at 30 September 2015               11 334           16 244    27 578


Changes in Equity for the 6
months ended 31 March 2016


Total comprehensive income for
the 6 months ended 31 March
2016                                                         3 533      3 533
Dividends Paid                                              (2 875)   ( 2 875)
Balance at 31 March 2016                   11 334           16 902     28 236


Balance as at 1 October 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)
Balance as at 31 March 2015                11 434           12 272     23 706




                                            
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

                                                    6 Months       6 Months
                                                       ended          ended     Year ended
                                                    31 March       31 March   30 September
                                                        2016           2015           2015
                                                   Unaudited      Unaudited        Audited
                                                       R'000          R'000          R'000


 Net cash from operating activities                    4 023          3 627          6 088
 Net cash used in investing
 activities                                            (758)          (289)          (441)
 Net cash used in financing activities               (2 735)        (2 437)        (2 508)
 Net movement in cash and cash
 equivalents                                              530           901          3 139
 Cash and cash equivalents at
 beginning of the period                              30 693         27 554         27 554
 Cash and cash equivalents at
 end of the period                                    31 223         28 455         30 693


EARNINGS PER SHARE

                                                    6 Months      6 Months
                                                       ended         ended      Year ended
                                                    31 March      31 March    30 September
                                                        2016          2015            2015
                                                   Unaudited     Unaudited         Audited

 Basic earnings per share (cents)                      30.98         28.65          63.45
 Diluted earnings per share (cents)                    30.98         28.65          63.45
 Headline earnings per share (cents)                   30.98         28.65          63.45
 Fully diluted headline earnings per share
 (cents)                                               30.98         28.65          63.45

 Number of shares
 - in issue                                       11 405 632    12 515 000     11 405 632
 - weighted average                               11 405 632    11 415 632     11 415 440
 - diluted                                        11 405 632    11 415 632     11 415 440


 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.


 Net profit attributable to shareholders of
 the parent and headline earnings                      3 533         3 273          7 243

 Headline earnings                                     3 533         3 273          7 243




                                              
                                  REVIEW OF RESULTS

Indequity is pleased to announce that it has increased its basic earnings per share
by 8% compared to the basic earning per share reported in the previous six month
period. Basic earnings per share increased from 28.65 cents for the six months ended
31 March 2015 to 30.98 cents for the six months ended 31 March 2016.

Indequity achieved a net claims ratio of 47% (2015:45%) and therefore once again
significantly outperformed its industry sector peers. The increased net claims ratio
is largely due to weather related claims. We are committed to a 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 29% for the six months ended 31 March 2015 to 28% for the six months ended
31 March 2016, 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 44% (2015: 42%).

                                      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 2016 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 2015. 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

Due to the Group’s current strong cash position, the Board decided to declare an
interim dividend of 10.50 cents gross per Indequity ordinary share (“Ordinary Share”)
(March 2015: 0 cents) and 1.82 cents gross per Indequity A class preference share (“A
Class Preference Share”) (March 2015: 0 cents) for the six months ended 31 March
2016, to all ordinary shareholders and A preference shareholders recorded in the
books of Indequity at close of business on Friday 27 May 2016. The Group has a
dividend cover of 2.46 times.

The cash dividend timetable is structured as follows:       the declaration date is
Tuesday, 19 April 2016. The last day to trade cum dividend in order to participate in
the dividend is Friday, 20 May 2016. The shares commence trading ex -dividend from
the commencement of business on Monday, 23 May 2016 and the record date is Friday, 27
May 2016. The dividend is to be paid on Monday, 30 May 2016. Share certificates will
not be able to be rematerialised or dematerialised between Monday, 23 May 2016 and
Friday, 27 May 2016, both days inclusive.

 -   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                   10.5                       1.82
 amount for ordinary
 shareholders/A class
 preference shareholders
 exempt from dividends tax
 Local dividend                        1.575                      0.273
 withholding tax amount
 for ordinary shareholders
 /A class preference
 shareholders to pay the
 dividend tax
 Net local dividend amount             8.925                      1.547
 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.




                                          
                                ON BEHALF OF BOARD

LJ van Rensburg                        JF Zwarts                Johannesburg
Chief Executive Officer                Chairman                 19 April 2016


Directors:            LJ van Rensburg, TE Vorster, JF Zwarts*, G Williamson*,
                      AV van Jaarsveldt* (British), (*non-executive)
Company secretary:    WS de Vries
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:          TE Vorster (Financial Director) is responsible for the
                      preparation of the interim results announcement.




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