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Indequity Interim Results for the Six Months ended 31 March 2017
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 2017
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
31-Mar 31-Mar 30-Sep
2017 2016 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Property and equipment 2 150 1 309 1 017
Intangible assets 859 618 585
Subrogation and salvage recoveries 2 449 1 434 2 263
Reinsurance portion of insurance contract provisions 84 44 53
Investments 24 506 - 8 879
Deferred tax asset 106 - 252
Loans and receivables 319 83 234
Normal tax receivable 11 7 -
Cash and cash equivalents 24 797 31 223 25 341
Total Assets 55 281 34 718 38 624
EQUITY
Capital and reserve attributed to the
company's equity holders
Share capital 25 23 23
Share premium 28 101 11 311 11 311
Retained income 21 047 16 902 20 051
Non-distributable reserve 37 - -336
Total Equity 49 210 28 236 31 049
LIABILITIES
Insurance contract provisions 4 184 4 389 4 158
Deferred tax liability 558 130 289
Normal tax payable - - 334
Dividends payable 234 193 211
Trade and other payables 1 095 1 770 2 583
Total Liabilities 6 071 6 482 7 575
Total Equity and Liabilities 55 281 34 718 38 624
1
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
Year
6 Months Ended 6 Months Ended
Ended
31-Mar 31-Mar 30-Sep
2017 2016 2016
Unaudited Unaudited Audited
R'000 R'000 R'000
Gross written premium 26 388 24 074 49 069
Less: reinsurance premium -888 -1 052 -2 236
Net premium written 25 500 23 022 46 833
Change in provision for gross unearned premiums 28 12 -27
Net insurance premium earned 25 528 23 034 46 806
Other income 28 19 103
Investment income 169 756 778
Total income 25 725 23 809 47 687
Claims incurred, net of reinsurance -12 626 -10 859 -19 884
Gross claims incurred -12 657 -10 862 -19 896
Reinsurance recoveries 31 3 12
Administration Expenses -7 270 -6 456 -12 942
Expenses for the acquisition of insurance
-1 964 -1 760 -3 586
contracts
Profit before taxation 3 865 4 734 11 275
Taxation -1 022 -1 201 -3 157
Profit for the period 2 843 3 533 8 118
Items that may subsequently be reclassified to income:
Available for sale assets 373 - -336
Total comprehensive income for the period 3 216 3 533 7 782
Profit attributable to:
- Equity holders of the parent 3 216 3 533 7 782
Earnings attributable to the equity holders
Basic earnings per share (cents) 22.66 30.98 71.18
Diluted earnings per share (cents) 22.66 30.98 71.18
Dividends per share (cents)
- Ordinary shares 13.50 21 31.5
- "A" class preference shares 2.34 3.64 5.46
2
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Share Non-
Retained Total
capital distributable
and premium income reserve
R'000 R'000 R'000 R'000
Balance as at 1 October 2015 11 334 16 244 27 578
Changes in Equity for the year
ended 30 September 2016
Profit for the year ended 30 September 2016 8 118 8 118
Movement in items that may subsequently be
reclassified to income:
Available for sale assets -336 -336
Dividend paid to shareholders -4 311 -4 311
Balance at 30 September 2016 11 334 20 051 -336 31 049
Changes in Equity for the 6 months ended 31
March 2017
Share issue (1 700 000 shares at R10.00
17 000 17 000
each)
Profit for the 6 months ended 31 March 2017 2 843 2 843
Movement in items that may subsequently be
reclassified to income:
Available for sale assets 373 373
Dividend paid to shareholders -1 847 -1 847
Treasury shares purchased by subsidiary -208
Balance at 31 March 2017 28 126 21 047 37 49 210
Balance as at 1 October 2015 11 334 16 244 27 578
Changes in Equity for the 6 months ended 31
March 2016
Profit for the 6 months ended 31 March 2016 3 533 3 533
Dividend paid to shareholders -2 875 -2 875
Balance as at 31 March 2016 11 334 16 902 28 236
3
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
6 Months ended 6 Months ended Year ended
31-Mar-17 31-Mar-16 30-Sep-16
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash generated/(utilised) by operations 2 180 4 254 10 070
Interest received 778 974 1 858
Dividend received 145 - 53
Taxation paid -1 060 -1 205 -2 815
Net cash from operating activities 2 043 4 023 9 166
Movement in Intangible assets -327 - -
Movement in Fixed assets -1 348 -770 -395
Movement in Equity investments -15 900 - -9 831
Movement in Loans receivable 20 12 -139
Net cash used in investing activities -17 555 -758 -10 365
Dividends paid to shareholders -1 824 -2 735 -4 153
Proceeds from issue of shares 17 000 - -
Purchase of Treasury shares -208 - -
Net cash used in financing activities 14 968 -2 735 -4 153
Net movement in cash and cash equivalents -544 530 -5 352
Cash and cash equivalents at the
beginning of the period 25 341 30 693 30 693
Cash and cash equivalents at the end of
the period 24 797 31 223 25 341
EARNINGS PER SHARE
6 Months 6 Months
Year ended
ended ended
31-Mar-17 31-Mar-16 30-Sep-16
Unaudited Unaudited Audited
Basic earnings per share (cents) 22.66 30.98 71.18
Diluted earnings per share (cents) 22.66 30.98 71.18
Headline earnings per share (cents) 24.05 30.98 71.18
Fully diluted headline earnings per share
24.05 30.98 71.18
(cents)
Number of shares
- in issue 13 105 632 11 405 632 11 405 632
- weighted average 12 546 251 11 405 632 11 405 632
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.
4
Reconciliation of net profit attributable to shareholders of the parent to headline
earnings
Net profit attributable to shareholders of the
3 216 3 533 8 118
parent (R'000)
Profit/Loss on sale of property and equipment
21 - -22
(R'000)
- Before tax 29 - -31
- tax -8 - 9
Profit/Loss on sale of shares held as
153 - 402
available for sale assets (R'000)
- Before tax 212 - 558
- tax -59 - -156
Headline earnings (R'000) 3 390 3 533 8 498
COMMENTS ON RESULTS
The past summer has been an exceptionally difficult period for the short term
insurance industry. Against this backdrop, Indequity’s headline earnings per share
for the six months ended 31 March 2017 decreased by 22% when compared to the
headline earnings per share for the six months ended 31 March 2016. The main reason
for this decline was the severe flooding experienced in Gauteng in November 2016,
resulting in R1.4 million in additional claims in November 2016 compared to November
2015. Indequity’s gross claims ratio therefore increased from 45% in 2016 to 48% in
2017, which still reflects an outperformance of its industry peers. Furthermore, as
mentioned in the Annual Report of the Group for the year ended 30 September 2016,
The Group took a strategic decision to hedge itself against the possible
depreciation in the value of the Rand by investing a large portion of its asset base
in US Dollar based investments. Foreign exchange losses of R542 thousand were
attributed to this investment position during the six months under review. The Group
still believes that this is a prudent strategy given the current uncertain economic
and political climate in the country and will continue to maintain a large exposure
to the US Dollar. If the aforementioned losses are disregarded, profit before
taxation for the six months ended 31 March 2017, would have increased by 23%.
Looking forward, barring any unforeseen events such as those mentioned above, the
Group is confident that it will again achieve the growth in earnings which
stakeholders have become accustomed to. The above forecast financial information has
not been reviewed or reported on by the Company's auditors.
ACCOUNTING POLICIES AND PREPARATIONS
The principal accounting policies applied in preparing the condensed interim
financial statements for the six months ended 31 March 2017 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 2016. 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
The board has declared an interim dividend payment number seven of 10.50 cents per
Indequity ordinary share ("Ordinary Share") (March 2016: 10.5 cents) and 1.85 cents
per Indequity A class preference share ("A Class Preference Share") (March 2016:
1.82 cents) for the six months ended 31 March 2017, to all ordinary shareholders and
A class preference shareholders recorded in the books of Indequity at close of
business on 19 May 2017. The group has a dividend cover of 1.87 times. The cash
dividend timetable is structured as follows: the declaration date is 28 April 2017.
The last day to trade cum-dividend in order to participate in the dividend is 16 May
2017. The shares commence trading ex-dividend from the commencement of business on
17 May 2017 and the record date is 19 May 2017. The dividend is to be paid on 22 May
2017. Share certificates will not be able to be rematerialised or dematerialised
between 17 May 2017 and 19 May 2017, both days inclusive.
- The dividend has been declared out of income reserves.
- The local dividend tax rate is (20%).
- Indequity's income tax reference number is 9887001718.
- The group has 13 105 632 Ordinary Shares, 14 870 000 unlisted A Class
Preference Shares and 11 668 150 unlisted B Class Preference Shares in issue at
declaration date.
A Class
Preference
Ordinary share
Share dividend
dividend (cents
(cents per A
per Ordinary
Class
Share)
Preference
Share)
Gross local dividend amount for ordinary
shareholders / A class preference shareholders 10.50 1.85
exempt from dividend tax
Local dividend withholding tax amount for
ordinary shareholders / A class preference 2.10 0.37
shareholders to pay the dividend tax
Net local dividend amount for ordinary
shareholders / A class preference shareholders 8.40 1.48
liable to pay the dividend tax
6
ON BEHALF OF BOARD
LJ van Rensburg JF Zwarts Johannesburg
Chief Executive Officer Chairman 28 April 2017
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: B Payne CA(SA) (Financial Manager) under the
supervision of TE Vorster CA(SA) (Financial Director).
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Date: 28/04/2017 10:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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