Wrap Text
Abridged report for the year end 30 September 2018
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 2018
GROUP STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER 2018
30-Sep-18 30-Sep-17
Audited Audited
R’000 R’000
ASSETS
Property and equipment 1 336 2 058
Intangible assets 806 825
Investments 10 695 3 985
Deferred tax asset 248 250
Subrogation and salvage recoveries 2 080 2 095
Reinsurance portion of insurance contract provisions 31 42
Normal tax receivable 7 -
Loans and receivables 84 145
Cash and cash equivalents 38 997 45 781
Total assets 54 284 55 181
EQUITY
Capital and reserves attributed to the Company’s equity
holders
Share capital 25 25
Share premium 16 964 23 268
Retained income 29 125 24 086
Non-distributable reserve - -292
Foreign currency translation reserve -1 036 -
Total equity 45 078 47 087
LIABILITIES
Insurance contract provisions 5 354 5 187
Deferred tax liability 183 352
Normal tax payable 264 39
Dividends payable 258 215
Trade and other payables 3 147 2 301
Total liabilities 9 206 8 094
Total shareholders’ equity and liabilities 54 284 55 181
GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 SEPTEMBER 2018
30-Sep-18 30-Sep-17
Audited Audited
R’000 R’000
Gross written premium 59 148 53 956
Less: reinsurance premium -1 179 -1 847
Net written premium 57 969 52 109
Change in provision for gross unearned
premiums -33 12
Net insurance premium earned 57 936 52 121
Other income 388 59
Investment income 1 006 2 331
Total income 59 330 54 511
Gross claims incurred -25 424 -24 763
Reinsurance recoveries -11 -11
Administration Expenses -17 694 -15 467
Acquisition costs -4 163 -3 924
Profit before taxation 12 038 10 346
Taxation -3 442 -2 812
Profit for the year 8 596 7 534
Fair value adjustment through OCI on available for
405 61
sale assets
Related tax on fair value movement of available-for-
-113 -17
sale assets
Total comprehensive income for the year 8 888 7 578
Profit attributable to:
Equity holders of the parent 8 888 7 578
Earnings attributable to the equity holders
Basic earnings per share (cents) 71.41 58.92
Diluted earnings per share (cents) 71.41 58.92
GROUP STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 SEPTEMBER 2018
Share Foreign
Non-
capital Retained currency
distributable Total
and Income translation
reserve
premium reserve
R'000 R'000 R'000 R'000
Balance at 1 October 2016 11 334 20 051 -336 - 31 049
Changes in Equity for the
year ended
30 September 2017
Share issue (1 700 000
17 000 17 000
shares at R10.00 each)
Profit for the year 7 534 7 534
Fair value adjustment on
44 44
available for sale assets
Transactions with owner
of the company
Dividend paid to
-3 499 -3 499
shareholders
Group shares purchased by
-5 041 -5 041
subsidiary
Balance at 30 September
23 293 24 086 -292 - 47 087
2017
Changes in Equity for the
year ended
30 September 2018
Profit for the year 8 596 8 596
Fair value adjustment on
292 292
available for sale assets
Exchange differences on
-1 036 -1 036
foreign operations
Transactions with owner
of the company
Dividend paid to
-3 557 -3 557
shareholders
Group shares purchased by
-5 924 -5 924
subsidiary
Group Shares repurchased
-380 -380
and cancelled
Balance at 30 September
16 989 29 125 - -1 036 45 078
2018
Group Company
2018 2017 2018 2017
Dividend per ordinary share (cents) 24.00 22.25 24.00 22.25
Dividend per A-class share (cents) 4.22 3.92 4.22 3.92
GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 SEPTEMBER 2018
30-Sep-18 30-Sep-17
Audited Audited
R’000 R’000
Operating activities
Cash generated by operations 12 726 9 388
Interest received 1 987 1 771
Dividend received 125 295
Taxation paid -3 504 -3 027
Net cash movement in operating activities 11 334 8 427
Investing activities
Proceeds from the disposal of property and equipment 475 90
Acquisition of property and equipment -300 -1 567
Acquisition of intangible assets -28 -330
Acquisition of shares -16 692 -19 364
Proceeds from the disposal of shares 10 386 24 720
Net cash movement in investing activities -6 159 3 549
Financing activities
Purchase of treasury shares -5 924 -5 041
Shares repurchased and cancelled -380 -
Proceeds from issue of shares - 17 000
Dividends paid to shareholders -3 514 -3 495
Net cash movement in financing activities -9 818 8 464
Movement in cash and cash equivalents -4 643 20 440
Cash and cash equivalents
At beginning of the year 45 781 25 341
Movement per above -4 643 20 440
Effect of exchange rate changes -2 141 -
At end of the year 38 997 45 781
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
2018
ACCOUNTING POLICIES AND BASIS OF PREPERATION
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 underlying
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 2018 financial statements,
which are consistent with those, applied in the preparation of the 30 September
2017 financial statements. The accounting policies have been applied consistently
by all Group entities.
The abridged report has been prepared by B. Payne CA(SA) – Group Financial Manager,
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-Sep-18 30-Sep-17
Audited Audited
Basic earnings per share (cents) 71.41 58.92
- Profit attributable to shareholders of the parent
8 596 7 534
R'000
- Weighted average number of ordinary shares in issue 12 037 132 12 786 823
Diluted earnings per share (cents) 71.41 58.92
- Profit attributable to shareholders of the parent
8 596 7 534
R'000
- Weighted average number of ordinary shares in issue 12 037 132 12 786 823
Headline earnings per share (cents) 74.06 59.70
- Headline earnings R’000 8 915 7 633
- Weighted average number of ordinary shares in issue 12 037 132 12 786 823
Diluted headline earnings per share (cents) 74.06 59.70
- Headline earnings R’000 8 915 7 633
- Weighted average number of ordinary shares in issue 12 037 132 12 786 823
Reconciliation of net profit attributable to shareholders
of the parent to headline earnings
Net profit attributable to shareholders of the parent R'000 8 596 7 534
Loss on sale of shares held as available for sale assets
251 78
R'000
- Before tax 349 108
- Tax -98 -30
Profit on sale of property and equipment R'000 68 21
- Before tax 95 29
- Tax -27 -8
Headline earnings R'000 8 915 7 633
COMMENTS ON RESULTS
Indequity is once again pleased to report a very gratifying set of results for
the year ended 30 September 2018. As has become the custom, we wish to highlight
a few noteworthy figures. Our pre-taxation return on capital was 29,4% (2017:
24,9%), which comfortably exceeds our target of 20% per annum. Turnover grew by
9,6% (2017; 10%) whilst our gross claims ratio decreased from 45,9% in 2017 to
43% in 2018. This translated into growth in pre-taxation profit of 16,4% over the
prior year.
As a result of share repurchases made by the Group in terms of its share repurchase
program, the weighted average number of shares outstanding at year-end decreased
which, in addition to the increased profits, contributed to a 21.2% increase in
diluted earnings per share and a headline earnings per share increase of 24,1%
to 74,06 (2017: 59.70) cents per share.
OPERATIONS
The insurance industry in South Africa remains exceedingly competitive. With
this as a backdrop, achieving growth targets and delivering superior results is
always a challenge. On a positive note, no major natural disasters impacted the
Group during the year, which enabled the Group to deliver a very pleasing set of
financial results. A particularly noteworthy aspect in this year’s results, is
the cash generated by our insurance operations, which came to R12,7 million.
LONG TERM GROWTH OF THE BUSINESS
The progress Indequity has made over the years, can be illustrated through the
following graph and statistics:
2011 2012 2013 2014 2015 2016 2017 2018
R’000 R’000 R’000 R’000 R’000 R’000 R’001 R’001
Net Earned
31 030 33 841 36 917 39 702 43 158 46 833 52 109 57 970
Premium
Underwriting
16 381 17 795 19 439 21 006 24 167 26 949 27 335 32 535
Profit
Profit
5 036 6 094 6 841 8 012 10 045 11 275 10 346 12 038
before tax
PROSPECTS
The Group’s cash resources amounted to approximately R50 million at year end.
The challenge remains to utilize these as optimally as possible. To this end, R
19,5 million ($ 1,3 million) was invested in a US subsidiary with the objective
to serve as a hedge against a depreciation of the South African Rand, but also
to seek opportunities to deploy the cash more productively internationally.
The Group continues to look for attractive investment opportunities where returns
on the capital could be maximized. As with any long-term investment strategy,
we do not expect immediate results, but we are confident that our efforts will
be rewarded over time and that the contribution from this avenue will be material
over time.
As far as Indequity’s insurance operations are concerned, we are confident that
a solid foundation has been established. Consequently, we expect similar long-
term growth patterns to those from the past, to continue into the foreseeable
future.
CONCLUSION
Favourable results such as these published by Indequity, would not have been
possible without the loyalty, support and commitment of Indequity’s many
stakeholders. As always, we wish to express our sincere gratitude for the
contributions made by each and every stakeholder.
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.
CAPITAL REDUCTION
For the year ending 30 September 2018, a capital reduction of 14.00 cents per
ordinary share (2017: dividends of 13.50 cents per share) and 2.46 cents per A
class preference share (2017: dividends of 2.38 cents per share) has been declared
to all ordinary shareholders and A class preference shareholders recorded in the
books of Indequity at the close of business on Friday, 14 December 2018. Given
the abovementioned capital reduction declaration, the Group has a dividend cover
of 2.23 times (2017: 2.15 times). This payment is being paid out of contributed
tax capital. CTC is defined as stated capital before 01 January 2011 less any
deemed dividend before that date plus the consideration for new share issues
subsequent to 01 January 2011 less any distribution from contributed tax capital
after 1 January 2011.
The capital reduction timetable is structured as follows:
Declaration and finalisation date Wednesday, 21 November 2018
Last day to trade cum capital reduction Tuesday, 11 December 2018
First day to trade ex-capital reduction Wednesday, 12 December 2018
Record date Friday, 14 December 2018
Payment date Tuesday, 18 December 2018
Share certificates will not be able to be rematerialised Wednesday, 12 December 2018
or dematerialized between (Both days inclusive) and Friday, 14 December 2018
All ordinary shareholders and A class preference shareholders are hereby advised
that the capital reduction will not be subject to dividends tax. In accordance
with paragraphs 11.17(a)(i) to (ix) and 11.17(c) of the JSE Listings Requirements,
the following additional information is provided:
- The capital reduction has been declared out of stated capital
- The local dividend tax rate is 20%
A Class Preference
Ordinary share capital Share capital
reduction (cents per reduction (cents per
Ordinary Share) A Class Preference
Share)
Capital reduction amount for
ordinary shareholders/A class
14.00 2.46
preference shareholders exempt
from dividends tax
- Indequity’s income tax reference number is 9887001718.
- The Group has 13 050 632 Ordinary Shares, 14 870 000 A Class Preference
Shares and 11 669 680 Indequity B class preference shares in issue.
NOTICE TO MEMBERS OF ANNUAL GENERAL MEETING
Notice is hereby given that the tenth 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, 16 January 2019 at
11:00.
The AGM timetable is structured as follows:
Last day to trade Tuesday 08 January 2019
Record date Friday,11 January 2019
Proxy date Monday, 14 January 2019
AGM Tuesday, 16 January 2019
ON BEHALF OF THE BOARD
JF Zwarts L J van Rensburg
Chairman Chief Executive Officer
Johannesburg
15 November 2018
Directors: AV van Jaarsveldt* (British), LJ van Rensburg, JF Zwarts*,
G Williamson*, TE Vorster (* non-executive) Company secretary: WS de Vries
Registered address: First Floor, Cascade House, Constantia Office Park, cnr 14th
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
21 November 2018
Date: 21/11/2018 09:29:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.