| Thu 1 Nov 2001, 0:00 | | Indequity Group Limited - Financial Year Results |
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Indequity Group Limited
Share code : IDQ
ISIN : ZAE000016606
Summarised group income results for the year ended
30 Sep 2001 % 30 Sep 2000
Audited increase Audited (revised)*
R R
Investment income 4 614 384 2 827 696
- Interest received 659 681 1 126 514
- Dividends received 112 748 856 840
- Realised profit -
marketable securities 402 813 -
- Unrealised profit/
(loss) - marketable
securities 2 560 436 (122 427)
- Profit on sale
of shares in
subsidiary - 221 641
- Income of private
equity investment 878 706 745 128
Investment banking
income 1 319 503 967 835
- Fees received 1 306 518 954 140
- Other income 12 985 13 695
Insurance income 11 502 407 2 541 757
- Net premiums earned 9 402 698 1 729 503
- Commission received 218 514 336 718
- Fees received 764 385 277 990
- Interest received 1 116 810 196 351
- Other income - 1 194
Total revenue 17 436 294 175% 6 337 288
Expenses attributable
to cellholders 5 740 451 1 200 654
Net underwriting
expenses and claims
paid 3 684 151 333 400
Interest paid 26 640 46 115
Depreciation 257 741 215 979
Operating expenses 4 559 883 2 675 049
Total expenses 14 268 866 219% 4 471 198
Earnings from
ordinary activities
before taxation 3 167 428 70% 1 866 090
Outside shareholders'
interest in private equity
investment's losses/
profits 212 436 (117 808)
Taxation (832 327) (179 218)
Net attributable
income/ Headline
earnings 2 547 537 62% 1 569 064
Dividend per share (cents)
- interim 4,25 4,25
- final 3,75 2,25
Headline earnings
per share (cents) 19,75 46,6% 13,47
Earnings per share
(cents) 17,07 26,1% 13,54
Fully diluted headline
earnings per share
(cents) 17,69 62,7% 10,88
Number of shares
- in issue 13 400 000 11 900 000
- weighted average 12 900 000 11 650 000
- fully diluted 14 400 000 14 427 302
Summarised group balance sheets as at
30 Sep 2001 30 Sep 2000
Audited Audited (revised)*
R R
ASSETS
Non-current assets 6 687 944 1 962 219
- Fixed assets 937 583 1 147 089
- Loan to Indequity
Group Limited Employee Share
Incentive Trust 5 305 054 -
- Intangible assets
and positive goodwill 445 307 815 130
Current assets 23 899 790 32 530 068
- Investments in
marketable securities 6 931 120 2 132 194
- Accounts receivable 1 004 752 1 030 670
- Cash and cash equivalents 15 963 918 29 367 204
Total assets 30 587 734 34 492 287
EQUITY AND LIABILITIES
Share capital and premium 19 368 200 19 368 200
Contingency reserve 6 118 -
Retained income 3 667 390 2 315 546
Total ordinary shareholders'
funds 23 041 708 21 683 746
Preference shareholders'
interest 3 559 063 3 251 101
Minority shareholders'
interest (547 586) (335 150)
Non-current liabilities 1 206 308 943 500
- Deferred taxation 315 174 -
- Negative goodwill 673 405 943 500
- Interest-bearing borrowings 217 729 -
Technical insurance provisions 1 485 684 2 212 162
- Net outstanding claims 1 475 271 1 925 162
- Net unearned premiums 10 413 287 000
Current liabilities 1 842 557 6 736 928
- Trade payables 812 947 380 847
- Accruals and provisions 520 000 932 826
- Acquisition of subsidiary - 5 191 069
- South African Revenue
Services 509 610 232 186
Total equity and liabilities 30 587 734 34 492 287
Net asset value per ordinary
share (cents) 171,95 182,65
*The comparative figures have been adjusted to account for the investment in
Alexecovet (Pty) Ltd as a consolidated subsidiary and no longer as an
associate company.
Statement of changes in equity for the year ended 30 September 2001
Share capital Contingency Retained Total
& premium reserve income
Balance at 1 October 2000
As previously reported 19 368 200 (49 936) 2 365 482 21 683 746
Reclassification 49 936 (49 936) -
As restated 19 368 200 - 2 315 546 21 683 746
Net attributable income 2 547 537 2 547 537
Dividends paid (848 366) (848 366)
Net transfer to contingency reserve 6 118 (6 118) -
Apportioned to preference
shareholders 3 671 3 671
Permanent impairment
of positive goodwill (344 879) (344 879)
Balance at 30 September
2001 19 368 200 6 118 3 667 390 23 041 708
Summarised cash flow statements for the year ended
30 Sep 2001 30 Sep 2000
Audited Audited (revised)*
R R
Cash flows from operating activities (1 307 458) 1 684 827
Cash flows from investing activities (7 164 025) 2 332 814
Cash flows from financing activities (4 931 803) 5 506 492
Net (decrease)/ increase in cash
and cash equivalents (13 403 286) 9 524 132
Cash and cash equivalents -
beginning of year 29 367 204 19 843 072
Cash and cash equivalents -
end of year 15 963 918 29 367 204
Comments on results
The results for the year ended 30 September 2001 are particularly pleasing,
given the exceptionally difficult economic climate and turbulence that
characterised the period under review.
Total revenue increased by 175% to R17m whilst earnings before taxation
increased by 70% to R3,2m. Despite a substantial increase in the provision
for taxation, the Group managed to increase headline earnings by 62% to
R2,5m and headline earnings per share by 46,6% to 19,75 cents per share.
The contribution to revenue of both the investment and insurance divisions
are noteworthy. As anticipated in our interim report, the activities of the
investment banking division declined during the latter part of the year, in
line with challenging market conditions.
Divisional results
Investments
The investments division is satisfied with the good progress it made during
the year. Without deviating from its conservative investment policy, it
managed to generate superior returns on its investments.
The Group's focused investment vehicle, Indequity (SA) Capital Limited,
which houses the Group's listed equities portfolio, concluded the year with
a pre-tax return of 25,9%. This return is very gratifying given the
exceptionally volatile and uncertain market conditions which prevailed
during the year.
The Group's meaningful equity stake of 15,75% in Proper Group Limited, which
is not included in the Indequity (SA) Capital Limited portfolio, reflected a
pleasing positive return. As this company is currently in its early growth
phase, management believes that, over the medium to long term, this
investment has substantial potential for further growth.
Despite an increase in turnover by Alexecovet (Pty) Limited, the Group's
private equity investment, it did not contribute positively to this year's
net income. The Group's share of the losses of Alexecovet (Pty) Limited
amounted to R120 000. In accordance with current Statements of Generally
Accepted Accounting Practice the results of this company are now
consolidated and no longer equity accounted, as was the practice before.
The Group is still confident that, once the initial expenses incurred in
order to increase the future earnings potential of this company have had the
desired effect, this investment will deliver superior returns.
Investment Banking
The activities of this division largely took place during the first half of
the year, which included the listing of Proper Group Limited as well as a
number of smaller ad-hoc assignments which were undertaken. As this
division is reliant on market conditions that favour corporate finance
activity, it is anticipated that this division would again be able to
contribute materially to earnings, once market conditions improve.
Insurance
The insurance division once again contributed meaningfully to the Group's
revenue and profitability. The emphasis of this division has shifted
primarily towards the bedding down and growth of business in the Group's
cell-captive and alternative risk transfer insurer, Indequity Specialised
Insurance Limited ("ISI"). This division is satisfied with the quality and
quantity of business written by ISI to date. However it is also cognisant
of the challenges that lie ahead in identifying unique risks in which the
Group will be willing to participate and the delivery of innovative
solutions for complex problems, which are pre-requisites for the growth in
this business. The short-term insurance broking arm currently focuses
exclusively on personal lines insurance and continues to operate profitably.
Movements in balance sheet
A significant movement in the balance sheet since the previous 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 aquisition of Indequity Specialised Insurance Limited, which was
provided for at the September 2000 year-end and was paid subsequent to year-
end.
The decrease in cash and cash equivalants can also be attributed to this
payment as well as to the loan which was made to the Indequity Group Limited
Employee Share Incentive Trust and the redeployment of cash through
investments in listed equities.
Prospects
The Group envisages a challenging economic climate, volatile markets and
generally difficult market conditions for the foreseeable future. Against
this backdrop, it is impossible to accurately predict what the impact on the
Group or its earnings will be. Nevertheless, the Group is confident that it
will be able to meet the demanding challenges that lie ahead and continue to
deliver above-average growth in earnings.
Notice of final dividend declaration and salient features
Notice is hereby given that on 31 October 2001, the board of directors
resolved to declare a final cash dividend of 3,75 cents (2000 : 2,25 cents)
per ordinary share, being the final dividend for the financial year ended 30
September 2001 to shareholders, registered as such at the close of business
on 14 December 2001. The salient dates for the declaration and payment of
the final dividend are as follows:
Last date to trade ("LDT") ordinary shares
"CUM" dividend Friday, 7 December 2001
Ordinary shares trade "EX" dividend Monday, 10 December 2001
Record Date ("RD") Friday, 14 December 2001
Payment Date Tuesday, 18 December 2001
Share certificates may not be dematerialised/ rematerialised between 3
December 2001 and 14 December 2001, both days inclusive.
Notice to members of annual general meeting
Notice is hereby given that the annual general meeting of members of
Indequity Group Limited will be held at the registered office, First Floor,
Cascade House, Constantia Office Park, corner 14th Avenue and Hendrik
Potgieter Road, Constantia Kloof, at 10:00 on 13 December 2001.
On behalf of the board
A V van Jaarsveldt L J van Rensburg Johannesburg
Chairman Chief Executive Officer 31 October 2001
Directors: A V van Jaarsveldt* (British), L J van Rensburg, T C Meyer, B J
Slabbert*(*non-executive) Company secretary: J Pienaar 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
Website: www.indequity.com
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