| Fri 15 Nov 2002, 17:51 | | Indequity - Audited Financial Results For The Year |
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Indequity - Audited Financial Results For The Year Ended 30 September 2002
Indequity Group Limited
Incorporated in the Republic of South Africa
Registration number: 1998/015883/06
"Indequity" or "the Group" or "the company"
Share code: IDQ
ISIN: ZAE000016606
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2002
SUMMARISED GROUP INCOME STATEMENT for the year ended
30 Sep 2002 30 Sep 2001
Audited Audited
R R
Investment income (1 829 250) 5 731 194
Investment banking income 786 980 1 319 503
Insurance income 7 498 785 10 385 597
Total revenue 6 456 515 17 436 294
Expenses attributable to 4 340 552 5 740 451
cellholders
Net underwriting expenses and 2 889 936 3 684 151
claims incurred
Finance charges 266 217 26 640
Depreciation 237 933 257 741
Operating expenses 5 762 704 4 904 762
Total expenses 13 497 342 14 613 745
(Loss)/Profit before taxation (7 040 827) 2 822 549
Taxation (73 872) (832 327)
Outside shareholders` interest in
private equity investments` 763 252 212 436
losses
Basic earnings (6 351 447) 2 202 658
Add: Write off of goodwill 291 620 344 879
Add: Write off of trademarks 421 414 -
Headline earnings (5 638 413) 2 547 537
Dividend per share (cents)
- interim - 4.25
- final - 3.75
Headline earnings per share (40.45) 19.75
(cents)
Basic earnings per share (cents) (45.56) 17.07
Fully diluted headline earnings (40.45) 17.69
per share (cents)
Number of shares
- in issue 11 670 000 13 400 000
- weighted average 13 940 833 12 900 000
- fully diluted 13 940 833 14 400 000
SUMMARISED GROUP BALANCE SHEET as
at
30 Sep 2002 30 Sep 2001
Audited Audited
R R
ASSETS
Non-current assets 725 133 11 455 944
Technical insurance assets 308 124 -
Current assets 16 114 400 19 131 790
Marketable securities 5 167 662 2 163 120
Receivables 698 307 1 004 752
Cash and cash equivalents 10 248 431 15 963 918
Total assets 17 147 657 30 587 734
EQUITY AND LIABILITIES
Share capital and premium 14 112 286 19 368 200
Contingency reserve 20 785 6 118
(Accumulated loss)/Retained (3 230 009) 3 667 390
income
Ordinary shareholders` funds 10 903 062 23 041 708
Preference shareholders` interest 4 375 778 3 559 063
Minority shareholders` interest (1 269 193) (547 586)
Non-current liabilities 1 138 339 1 206 308
Technical insurance provisions 608 674 1 485 684
Current liabilities 1 390 997 1 842 557
Trade payables 538 162 812 947
Accruals and provisions 60 420 520 000
Current tax liabilities 792 415 509 610
Total equity and liabilities 17 147 657 30 587 734
Net asset value per ordinary 93.43 171.95
share (cents)
SUMMARISED STATEMENT OF CHANGES IN EQUITY for the year ended
30 Sep 2002 30 Sep 2001
Audited Audited
R R
Balance at the beginning of 23 041 708 21 683 746
the year
Net (loss)/profit for the year (6 351 447) 2 202 658
Dividends paid (540 085) (848 366)
Purchase of treasury shares (12 089) -
Ordinary shares repurchased (5 243 825) -
and cancelled
Apportioned to preference 8 800 3 670
shareholders
Balance at end of year 10 903 062 23 041 708
SUMMARISED CASH FLOW STATEMENT for the year ended
30 Sep 2002 30 Sep 2001
Audited Audited
R R
Cash flows from operating (3 355 381) (1 307 458)
activities
Cash flows from investing 1 859 546 (7 164 025)
activities
Cash flows from financing (4 219 652) (4 931 803)
activities
Net decrease in cash and cash (5 715 487) (13 403 286)
equivalents
Cash and cash equivalents - 15 963 918 29 367 204
beginning of year
Cash and cash equivalents - end of 10 248 431 15 963 918
year
Accounting policies
The accounting policies followed in preparing these financial statements comply
in all material respects with South African Statements of Generally Accepted
Accounting Practice and are consistent with those of the previous financial
year.
Audit opinion
These results have been audited by KPMG Inc. Their unqualified audit opinion is
available for inspection at the registered office of Indequity.
Comments on results
Indequity Group recorded a net loss after taxation of R6 351 447 for the year
under review. It is important to note, however, that a significant portion of
this figure comprises accounting write offs that had no impact on the current
year`s cash outflow. The loss was accounted for as follows:
Write off of investment in Proper Group Limited 5 341 241
Write off of trademarks 181 368
Write off of goodwill 291 620
Indequity`s share in losses of Alexecovet (Pty) Ltd 299 603
Losses of Cyan Communications (Pty) Ltd 151 869
Other 85 746
6 351 447
Clearly, 92% (R5 814 229) of the loss comprised accounting write offs, while the
cash losses in the Group amounted to just 8% (R537 218).
In accordance with current accounting practice and accounting prudence,
management has written off all intangible assets as well as any items in respect
of which any doubt may exist as to their actual realisable value. In
consequence, the assets remaining on the balance sheet mainly comprise liquid
assets (i.e. cash and listed blue chip shares) and the company`s fixed assets.
Divisional results
Investments
The year under review was one of mixed fortunes for the Group. The most
disappointing of these was Indequity`s investment in Proper Group Limited
("Proper"), which failed to deliver on expectations. Following Proper`s profit
warning, management decided to write off Indequity`s investment in Proper in its
entirety. It is noteworthy that Indequity`s equity stake of 6 001 300 shares
in Proper was, to a large extent, received as consideration for investment
banking transactions performed, with a limited cash investment being made in
Proper at the time of that company`s listing on the JSE Securities Exchange. As
the final year-end results of Proper have not been published yet, it is
impossible to determine whether or not this conservative approach was indeed
appropriate. The management of Indequity nevertheless maintains that the
decision was prudent under the circumstances.
The cash losses incurred were the result of further investments in the Group`s
other private equity investments, namely Alexecovet (Pty) Ltd and Cyan
Communications (Pty) Ltd. Both entities are still in an early growth phase and
therefore require meaningful investment to increase their respective future
earnings potential. Management is pleased to report that these investments are
bearing fruit, with both entities contributing positively by year-end.
The Group`s blue chip listed equities portfolio contributed favourably to the
Group`s results. A pre-tax return of 14.71% per annum was achieved. This
performance is considered highly satisfactory, given the significant correction
in world equity markets that took place during the year.
Investment banking
As envisaged in our 2001 annual report, the general bear market that prevailed
for much of the year had a negative influence on the investment banking
division. Accordingly, this division`s contribution to earnings declined over
the prior year.
Insurance
The most noteworthy achievement for the year was the unrestricted short-term
insurance license obtained by Indequity Specialised Insurance Limited during the
latter part of the year. Management spent the remainder of the year developing
products and establishing a suitable infrastructure. Consequently, the
insurance division`s results for the year largely reflect the maintenance of its
older products. Management is confident that the introduction of new products in
the year ahead will enable this division to contribute significantly to the
Group`s results over time.
Movements in balance sheet
The material movement in shareholders` funds can be attributed largely to the
following items:
The write off of Proper Group Limited and the intangible assets of Indequity;
and
The share repurchase and cancellation of 2 730 000 (18,96%) of the issued
ordinary shares in Indequity Group Limited and the subsequent repayment of the
loan by the Indequity Group Limited Employee Share Incentive Trust.
Neither of these transactions had any current cash flow implications for the
Group. Therefore, with the exception of Indequity`s fixed assets and
receivables, shareholders` funds at year-end constitute liquid net assets.
Prospects
Management is optimistic about the future. In addition to being in a sound cash
position, the Group owns an unrestricted short-term insurance company, an array
of fine operating entities, two very promising private equity operations and a
fine team of dedicated and committed operating managers.
These factors, combined with the prevailing opportune investment climate, augur
well for the Group`s ongoing commitment to deliver exceptional results for its
stakeholders over the longer-term.
Dividend
No dividend has been declared for the year under review.
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,
corner 14th Avenue and Hendrik Potgieter Road, Constantia Kloof, at 15:00 on 10
January 2003.
On behalf of the board
A V van Jaarsveldt J van Rensburg Johannesburg
Chairman Chief Executive Officer 15 November 2002
Directors: A V van Jaarsveldt* (British), L J van Rensburg, T C Meyer, B J
Slabbert*, J F Zwarts* (* non-executive) Company secretary: S le Roux
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: (+2711) 475-0816 Fax: (+2711)
475-0877 Website: www.indequity.com
Date: 15/11/2002 05:15:00 PM Produced by the JSE SENS Department
