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Interim Results for the Six Months Ended 31 March 2019
INDEQUITY GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number 1998/015883/06
Share code: IDQ ISIN: ZAE000016606
(“Indequity” or “the Group”)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2019
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION
31 March 2019 31 March 2018 30 September
2018
Unaudited Unaudited Audited
R'000 R'000 R'000
ASSETS
Property and equipment 2 037 2 126 1 336
Intangible assets 588 809 806
Investments 15 570 6 443 10 695
Deferred tax asset 148 303 248
Subrogation and salvage recoveries 2 366 2 061 2 080
Reinsurance portion of insurance contract provisions 29 38 31
Normal tax receivable - - 7
Loans and receivables 67 413 84
Cash and cash equivalents 35 338 33 145 38 997
Total assets 56 143 45 338 54 284
EQUITY
Capital and reserves attributed to the company's
equity holders
Share capital 24 21 25
Share premium 13 008 17 036 16 964
Retained income 33 821 25 500 29 125
Foreign currency translation reserve (441) (3 994) (1 036)
Total equity 46 412 38 563 45 078
LIABILITIES
Insurance contract provisions 6 342 4 131 5 354
Deferred tax liability 271 391 183
Dividends payable 316 349 258
Normal tax payable 67 - -
Trade and other payables 2 735 1 904 3 411
Total liabilities 9 731 6 775 9 206
Total shareholders' equity and liabilities 56 143 45 338 54 284
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
6 Months ended 6 Months ended Year ended
31 March 2019 31 March 2018 30 September
2018
Unaudited Unaudited Audited
R'000 R'000 R'000
Gross written premium 31 383 28 987 59 148
Less: reinsurance premium (679) (611) (1 179)
Net premium written 30 704 28 376 57 969
Change in provision for gross unearned premiums (26) (70) (33)
Net insurance premium earned 30 678 28 306 57 936
Other income 125 240 388
Investment income 1 744 ( 2) 1 006
Total income 32 547 28 544 59 330
Gross claims incurred (14 772) (12 851) (25 424)
Reinsurance recoveries (2) (46) (11)
Administration expenses (9 275) (8 716) (17 694)
Acquisition costs (2 149) (2 048) (4 163)
Profit before taxation 6 349 4 883 12 038
Taxation (1 653) (1 345) (3 442)
Profit for the period 4 696 3 538 8 596
Other comprehensive income, net of tax
Items that may subsequently be reclassified to
income:
Fair value adjustment on available for sale assets - - 405
Related tax on fair value adjustment on available for
- - (113)
sale assets
Exchange differences on translation of foreign
595 (3 994) (1 036)
operations
Total comprehensive income for the period 5 291 (456) 7 852
Profit attributable to:
- Equity holders of the parent 5 291 (456) 7 852
Earnings attributable to the equity holders
- Basic earnings per share (cents) 40.94 28.72 71.41
- Diluted earnings per share (cents) 40.94 28.72 71.41
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
6 Months ended 6 Months ended Year ended
31 March 2019 31 March 2018 30 September
2018
Unaudited Unaudited Audited
R'000 R'000 R'000
Cash generated by operations 5 050 3 205 12 726
Interest received 1 131 1 007 1 987
Dividend received 87 111 125
Taxation paid (1 653) (1 380) (3 504)
Net cash from operating activities 4 615 2 943 11 334
Movement in intangible assets - (7) (28)
Movement in fixed assets (884) (294) 175
Movement in equity investments (3 885) (3 645) (6 306)
Movement in loans receivable - 22 -
Net cash used in investing activities (4 769) (3 924) (6 159)
Dividends paid to shareholders (1 919) (1 990) (3 514)
Purchase of treasury shares - (5 921) (5 924)
Shares repurchased and cancelled (1 981) (317) (380)
Net cash used in financing activities (3 900) (8 228) (9 818)
Net movement in cash and cash equivalents (4 054) (9 209) (4 643)
Effects of currency translation on cash and cash
395 (3 427) (2 141)
equivalents
Cash and cash equivalents at beginning of the
38 997 45 781 45 781
period
Cash and cash equivalents at end of the period 35 338 33 145 38 997
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY
Share Retained Non - Foreign
capital and income distributable currency Total
premium reserve translation
R'000 R'000 R'000 R'000 R'000
Balance at 30 September 2017 23 293 24 086 (292) 47 087
Changes in Equity for the year ended 30
September 2018
Profit for the year 8 596 8 596
Fair value adjustment on available for sale
292 292
assets
Exchange differences on translation of (1 036) (1 036)
foreign operations
Transactions with owners of the company
Dividend declared to shareholders (3 557) (3 557)
Group shares purchased by subsidiary (5 924) (5 924)
Group shares repurchased and cancelled (380) (380)
Balance at 30 September 2018 16 989 29 125 (1 036) 45 078
Changes in Equity for the 6 months ended
-
31 March 2019
Profit for the period 4 696 4 696
Exchange differences on translation of
595 595
foreign operations
Transactions with owners of the company
Capital distribution out of share premium (1 976) (1 976)
Group shares repurchased and cancelled (1 981) (1 981)
Balance at 31 March 2019 13 032 33 821 (441) 46 412
Balance at 1 October 2017 23 293 24 086 (292) 47 087
Changes in Equity for the 6 months ended
31 March 2018
Profit for the period 3 538 3 538
Fair value adjustment on available for sale
292 292
assets
Exchange differences on translation of
(3 994) (3 994)
foreign operations
Transactions with owners of the company
Dividend declared to shareholders (2 124) (2 124)
Group shares purchased by subsidiary (5 921) (5 921)
Cancellation of shares (315) (315)
Balance as at 31 March 2018 17 057 25 500 (3 994) 38 563
31 March 2019 31 March 2018 30 September
Unaudited Unaudited 2018 Audited
R'000 R'000 R'000
Dividends per share (cents)
- Ordinary shares 13.50 13.50 24.00
- A class preference shares 2.38 2.34 4.22
EARNINGS PER SHARE
6 Months ended 6 Months ended Year ended 30
31 March 2019 31 March 2018 September 2018
Unaudited Unaudited Audited
Basic earnings per share (cents) 40.94 28.72 71.41
Diluted earnings per share (cents) 40.94 28.72 71.41
Headline earnings per share (cents) 40.94 30.76 74.06
Fully diluted headline earnings per share (cents) 40.94 30.76 74.06
Number of shares
- in issue 12 451 404 13 060 632 13 050 632
- weighted average 11 471 273 12 321 050 12 037 132
The weighted average 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 earnings per share.
Reconciliation of net profit attributable to shareholders of the parent to headline earnings
Net profit attributable to shareholders of the
parent and headline earnings 4 696 3 538 8 596
Adjusted for:
Loss on sale of property and equipment - - 95
Tax on the above - - (27)
Loss on sale of shares held as available for sale
- 349 349
assets
Tax on the above - (97) (98)
Headline earnings 4 696 3 790 8 915
COMMENTS ON RESULTS
Indequity is pleased to announce that its basic earnings per share (“EPS”) has increased by 42.5% compared
to the basic EPS reported in the previous six month period, from 28.72 cents for the six months ended 31 March
2018, to 40.94 cents per share for the six months ended 31 March 2019. The pre-taxation return on capital for
the period was an excellent 29.7% (2018: 22.3%), exceeding our target of 20% per annum. The growth in EPS
is largely due to an increase in investment income as well as a reduction in the weighted average number of
shares in issue due to share repurchases after the previous corresponding period. The Group continues to
maintain a strategic hedge against possible depreciation of the value of the Rand by investing a large portion
of liquid company assets in US Dollar based investments and will thus maintain a large exposure to the US
Dollar. Indequity will continue to utilise its disciplined underwriting strategy to optimise the returns of the Group.
Indequity has always believed in having rational and unbending standards for measuring progress and its main
objective therefore remains the creation of superior stakeholder wealth. We are thankful that the Group has
again achieved the exceptional results to which stakeholders have become accustomed.
ACCOUNTING POLICIES AND PREPARATION
The principal accounting policies applied in preparing the condensed interim financial statements for the six
months ended 31 March 2019 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 2018. 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.
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.
CAPITAL DISTRIBUTION
The board has declared a capital distribution out of share premium of 15.72 cents per Indequity ordinary share
("Ordinary Share") (March 2018: 10.5 cents) and 2.63 cents per Indequity A class preference share ("A Class
Preference Share") (March 2018: 1.85 cents) for the six months ended 31 March 2019, to all ordinary
shareholders and A class preference shareholders recorded in the books of Indequity at close of business on
Friday, 17 May 2019. This payment is being paid out of contributed tax capital ("CTC"). CTC is defined as stated
capital before 1 January 2011 less any deemed dividend before that date plus the consideration for new share
issues subsequent to 1 January 2011 less any distribution from contributed tax capital after 1 January 2011.
The capital distribution timetable is structured as follows: the declaration date is Tuesday, 23 April 2019. The
last day to trade cum-capital distribution in order to participate in the distribution is Tuesday, 14 May 2019. The
shares commence trading ex-capital distribution from the commencement of business on Wednesday, 15 May
2019 and the record date is Friday, 17 May 2019. The capital distribution is to be paid on Monday, 20 May 2019.
Share certificates will not be able to be rematerialised or dematerialised between Wednesday, 15 May 2019
and Friday, 17 May 2019, both days inclusive.
Relative to this distribution, the directors have confirmed that the Company will satisfy the solvency and liquidity
test immediately after completing the distribution.
For income tax purposes, shareholders are advised that the distribution will be paid out of qualifying contributed
tax capital as contemplated in the definition of “contributed tax capital” in section 1 of the Income Tax Act, 1962,
and as it will be regarded as a return of capital with no dividend tax being payable, consideration should be
given to the potential capital gains tax consequences. Indequity shareholders are, therefore, advised to consult
their tax advisors with regard to how they may be impacted by the distribution.
- Indequity's income tax reference number is 9887001718
- The group has 12 451 404 Ordinary Shares, 14 870 000 A Class Preference Shares and 11 669 680
B Class Preference Shares in issue on declaration date.
- Both A Class Preference Shares and B Class Preference Shares are unlisted.
This interim report has not been audited or reviewed by the Group auditor.
This report has been published on 23 April 2019.
ON BEHALF OF THE BOARD
LJ van Rensburg Chief Executive Officer
JF Zwarts Chairman
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: Merchantec Capital
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: W du Preez CA(SA) (Financial Manager) under the supervision of TE Vorster
CA(SA) (Financial Director).
Date: 23/04/2019 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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