| Tue 8 May 2001, 0:00 | | Indequity - Results |
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INDEQUITY GROUP LIMITED
(Registration number: 1998/015883/06)
(Incorporated in the Republic of South Africa
"Indequity" or "the Group" or "the Company"
RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2001
Revenue increased by 325%
Attributable income increased by 103%
Headline earnings per share increased by 42%
Summarised group income statements
6 months 6 months
ended ended % Year ended
31 March 2001 31 March 2000 increase 30 Sept 2000
Unaudited Unaudited Audited
R R R
Investment income 1 452 394 1 005 195 2 447 296
- Income/(loss) from
associated company (114 984) - 364 832
- Interest received 436 824 148 355 1 126 410
- Dividends received 66 392 856 840 856 840
- Realised income - listed
investments 295 065 - -
- Unrealised income - listed
investments 702 645 - (122 427)
- Other income 66 452 - 221 641
Investment banking income 1 300 400 778 868 933 945
- Fees received 1 300 400 771 750 920 250
- Other income - 7 118 13 695
Insurance income 5 887 316 248 705 2 541 756
- Net premiums earned 5 012 731 - 1 729 503
- Commission received 123 804 248 705 336 718
- Fees received 166 091 - 277 990
- Interest received 584 690 - 196 351
- Other income - - 1 194
Total revenue 8 640 110 2 032 768 325% 5 922 997
Net benefits paid/payable
to policy- and cellholders 2 809 100 - 1 200 654
Net underwriting expenses 2 206 430 - 333 400
Group operating expenses 1 832 296 1 085 649 2 640 692
Total expenses 6 847 826 1 085 649 531% 4 174 746
Earnings from ordinary
activities before taxation 1 792 284 947 119 89% 1 748 251
Taxation (398 642) (26 854) (179 187)
Net income after taxation/
Headline earnings 1 393 642 920 265 51% 1 569 064
Recognition of negative
goodwill as income 471 750 - 7 932
Net income attributable to
ordinary shareholders 1 865 392 920 265 103% 1 576 996
Dividends per share (cents)
- paid - 4,25 6,25
- declared 4,25 - -
Headline earnings per
share (cents) 11,47 8,07 42% 13,47
Earnings per share (cents) 15,35 8,07 90% 13,97
Fully diluted headline
earnings per share (cents) 9,68 6,39 51% 10,89
Number of shares
- in issue 12 400 000 11 400 000 11 900 000
- weighted average (up
to 31 March 2001) 12 150 000 11 400 000 11 650 000
- fully diluted 14 400 000 14 414 824 14 414 824
Summarised group balance sheets
31 March 2001 31 March 2000 30 Sept 2000
Unaudited Unaudited Audited
R R R
Assets
Fixed assets 987 939 1 056 283 1 080 695
Long-term loan - share
incentive trust 5 010 454 - -
Investment
- Investment in associate 1 174 578 - 1 275 443
- Listed investments 5 625 935 - 2 132 194
Accounts receivable 344 700 20 398 1 025 069
Cash and cash equivalents 15 836 585 20 888 547 29 298 558
Total assets 28 980 191 21 965 228 34 811 959
EQUITY AND LIABILITIES
Share capital 14 400 14 400 14 400
Share premium 19 353 800 19 353 800 19 353 800
Negative goodwill and
insurance reserves 471 748 - 893 564
Retained income 3 901 940 2 164 500 2 365 482
Total ordinary
shareholders' funds 23 741 888 21 532 700 22 627 246
Preferred shareholders'
equity in subsidiary
company 2 427 320 - 3 251 101
Technical insurance
provisions 1 529 991 - 2 212 162
- Net outstanding claims 1 529 991 - 1 925 162
- Net unearned premiums - - 287 000
Current liabilities 1 280 992 432 528 6 721 450
- Accounts payable 710 695 405 594 1 296 688
- Acquisition of subsidiary - - 5 191 069
- South African Revenue
Services 570 297 26 934 233 693
Total equity and
liabilities 28 980 191 21 965 228 34 811 959
Net asset value per
ordinary share (cents) 1,91 1,89 1,90
Statement of changes in equity
Share capital Retained Negative Total
and premium income goodwill
and insurance
reserves
Balance as at 1 October
2000 19 368 200 2 365 482 893 564 22 627 246
Net income after taxation
for the 6 months ended 31
March 2001 1 393 642 1 393 642
Dividends paid (final for
the year ended 30 September
2000) (279 000) (279 000)
Recognition of negative
goodwill as income and
adjustment in respect of
prior year 421 816 (421 816) -
Balance as at 31 March
2001 19 368 200 3 901 940 471 748 23 741 888
Comments on results
The Group is again pleased to report very satisfying results for the six month
period to 31 March 2001.
Total revenue increased sharply by 325% to R8,6m over the comparable six month
period. This increase was however partially offset by a significant increase in
expenses to R6,8m. The net result, being earnings from ordinary activities
before taxation, reflects an increase of 89% to R1,8m.
Despite a drastic increase in the Group's provision for taxation, as well as an
increase in the number of shares in issue, the Group managed to increase
headline earnings by 51% to R1,4m and headline earnings per share 42% to 11,47
cents per share.
Divisional results
Investments
The investment division continued to make good progress towards its objective
to generate superior returns on its investments over the longer term, without
deviating from its conservative investment policy.
As indicated in the Group's previous report, management identified several
attractive opportunities to invest in listed equities during the latter part of
the 2000 year. Consequently, Indequity (SA) Capital Ltd was formed early in
October 2000, as a focused investment vehicle through which the Group's listed
equities are held. At 31 March 2001, this portfolio reflected a return of
17,15% (35,16% annualised).
The second noteworthy achievement of this division during the period under
review, was the obtaining of a meaningful equity stake of 15,75% in Proper
Group Ltd, which was listed on the JSE Securities Exchange of South Africa in
November 2000. The Group views this investment as a strategic investment and
was not included in the Indequity (SA) Capital Ltd portfolio on 31 March 2001.
The Group's private equity investment in Alexecovet (Pty) Ltd delivered
negative results. The Group's share of these results, which are equity
accounted, amounted to R114 984. This can largely be attributed to
establishment and marketing expenses in the early phases of the company's
development cycle. Management are confident that over the longer term, the
desired returns will be achieved.
Investment Banking
Notwithstanding particularly difficult market conditions and a sharp decline in
corporate finance activity during the period, this division was successful in
the undertaking of a number of smaller ad-hoc projects, in addition to acting
as corporate advisors in respect of the Proper Group Ltd listing in November
2000. Although the Group is very pleased with the performance of this division
to March 2001, it is anticipated that the activities of the division will
decline until market conditions improve.
Insurance
The insurance division continues to contribute materially to Group profit. Of
particular note, is the stable performance of the recently acquired Indequity
Specialised Insurance Ltd, a short-term insurer which focuses on cell-captive
and alternative risk transfer business. Although management emphasis was placed
on the smooth transition of the insurance business during this period, the
Group is confident that significant growth can be achieved in this line of
business.
Movement in balance sheet
A significant movement in the balance sheet since the September 2000 year-end
that warrants further explanation, is the decrease in total assets. This can
largely be ascribed to the final purchase consideration of R5,2m in respect of
the acquisition of Indequity Specialised Insurance Ltd, which was provided for
at year-end and was paid subsequent to year-end.
Prospects
Notwithstanding challenging market conditions, which could have a negative
impact on the results of both the investments and investments banking
divisions, the Group is confident that it will continue to deliver
above-average earnings growth.
Declaration of ordinary dividend no. 3
The Group's board of directors has declared an interim dividend of 4,25 cents
per ordinary share which dividend is payable to shareholders registered in the
books of the Company at the close of business on 25 May 2001 (last day for
registration). This dividend will be paid electronically on 8 June 2001 and
cheques or bank drafts (where applicable) will be posted on or about this date.
On behalf of the board
A V van Jaarsveldt L J van Rensburg
Chairman Chief Executive Officer
Constantia Kloof 7 May 2001
Directors: A V van Jaarsveldt* (British),
L J van Rensburg, T C Meyer, B J Slabbert*
(*non-executive) Company secretary: A J Rossouw
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
Tel: +27 (11) 475-0816 Fax: +27 (11) 475-0877
Website: www.indequity.com
