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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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Date: 19/04/2016 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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