| Mon 19 May 2003, 17:09 | | INTERIM RESULTS |
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INDEQUITY GROUP LIMITED -
Indequity Group Limited
("Indequity" or "the Group")
(Incorporated in the Republic of South Africa)
Registration number: 1998/015883/06
Share Code: IDQ
ISIN: ZAE000016606
Summarised group income statement for the
6 months Year ended 6 months
ended 31 30 September ended 31
March 2003 2002 March 2002
Unaudited Audited Unaudited
R
R R
Investment income 1 334 529 (1 829 250) 2 897 687
Investment banking income 0 786 980 808 069
Insurance income 2 912 352 7 498 785 4 145 229
Total revenue 4 246 881 6 456 515 7 850 985
Expenses attributable to cell 910 615 4 340 552 1 733 681
holders
Net underwriting expenses and 1 718 338 2 889 936 2 030 102
claims incurred
Finance charges 86 568 266 217 109 302
Operating expenses 4 165 411 6 000 637 2 486 115
Total expenses 6 880 932 13 497 342 6 359 200
(Loss)/Profit before taxation (2 634 051) (7 040 827) 1 491 785
Taxation 786 818 (73 872) (371 579)
(Loss)/Profit from ordinary (1 847 233) (7 114 699) 1 120 206
activities
Minority shareholders" interest
in private equity investments" 115 519 763 252 297 514
losses
Basic earnings (1 731 714) (6 351 447) 1 417 720
Add: Write off of goodwill - 291 620 -
Add: Write off of trademarks - 421 414 -
Headline earnings (1 731 714) (5 638 413) 1 417 720
Dividends per share (cents)
- paid - - 3,75
- declared - - -
Headline earnings per share (14,73) (40,45) 9,85
(cents)
Basic earnings per share (cents) (14,73) (45,56) 9,85
Fully diluted headline earnings (14,73) (40,45) 9,85
per share (cents)
Number of shares
- in issue 12 170 000 11 670 000 14 390 000
- weighted average (up to 31 11 753 333 13 940 833 14 398 333
March 2003)
- fully diluted 11 753 333 13 940 833 14 390 000
Summarised group balance sheet as at
31 March 30 September 31 March
2003 2002 2002
Unaudited Audited Unaudited
R R R
ASSETS
Non-current assets 2 404 988 725 133 13 084 221
Property and equipment 797 123 725 133 842 561
Intangible assets - - 434 576
Goodwill 1 481 398 - -
Other investments - - 6 602 530
Loan to Indequity Group Limited
Employee Share Incentive Trust - - 5 204 554
Deferred tax 126 467 - -
Technical insurance assets 76 950 308 124 -
Current assets 11 818 353 16 114 400 18 670 503
Marketable securities 2 622 701 5 167 662 6 182 100
Receivables 1 336 441 698 307 933 094
Cash and cash equivalents 6 697 031 10 248 431 11 555 309
Current tax asset 1 162 180 - -
Total assets 14 300 291 17 147 657 31 754 724
EQUITY AND LIABILITIES
Share capital and premium 14 609 768 14 112 286 19 357 122
Contingency reserve 20 785 20 785 15 514
(Accumulated loss)/Retained (4 961 723) (3 230 009) 4 541 267
income
Ordinary shareholders" funds 9 668 830 10 903 062 23 913 903
Preference shareholders" interest 3 246 798 4 375 778 3 607 080
Total shareholders" funds 12 915 628 15 278 840 27 520 983
Minority shareholders" interest (1 384 712) (1 269 193) (845 077)
Non-current liabilities 1 034 098 1 138 339 1 503 531
Technical insurance provisions 824 789 608 674 1 566 521
Current liabilities 910 488 1 390 997 2 008 766
Trade payables 405 733 538 162 1 314 155
Accruals and provisions - 60 420 118 498
Bank overdraft 504 755 - -
Current tax liabilities - 792 415 576 113
Total equity and liabilities 14 300 291 17 147 657 31 754 724
Net asset value per ordinary 79,45 93,43 166,18
share (cents)
Statement of changes in equity
Share capital Accumulated Non Total
and premium loss distributable
reserves
Balance as at 1 14 112 286 (3 230 009) 20 785 10 903 062
October 2002
Ordinary shares 500 000 - - 500 000
issued
Purchase of (2 518) - - (2 518)
treasury shares
Net loss after
taxation for the 6 - (1 731 714) - (1 731 714)
months ended 31
March 2003
Balance as at 31 14 609 768 (4 961 723) 20 785 9 668 830
March 2003
Summarised cash flow statement as at
31 March 30 September 31 March
2003 2002 2002
Unaudited Audited Unaudited
R R R
Cash flow to operating activities (3 533 213) (3 355 381) (462 499)
Cash flow from/(to) investment 176 341 1 859 546 (4 013 518)
activities
Cash flow (to)/from financing (699 283) (4 219 652) 67 408
activities
Net decrease in cash and cash (4 056 155) (5 715 487) (4 408 609)
equivalents*
Cash and cash equivalents* - 10 248 431 15 963 918 15 963 918
beginning of period/year
Cash and cash equivalents* - end 6 192 276 10 248 431 11 555 309
of period/year
* Consist of cash and cash equivalents as well as bank overdraft
The interim financial report has been compiled in accordance with AC 127,
Interim financial reporting.
Significant events
The most significant positive events that took place during the six-month period
were:
1. The launch by Indequity Specialised Insurance Ltd of its first personal
lines retail product in October 2002, which is aimed at the affluent and
professional markets
2. The acquisition on December 2002 of Global Investment Planning Services
(Pty) Ltd, a comprehensively licensed asset manager which focuses primarily on
retail asset management for the high net-worth market.
Both these were significant milestones for the Group in its endeavours to put
the necessary cornerstones in place on which solid, synergistic and annuity
income generating operations can be built.
Although both operations have not yet contributed positively to the Group"s
results, management is confident that the short-term sacrifices made will be
more than justified through meaningful long-term benefits and gains for the
Group.
Comments on results
The results for the period under review should be evaluated largely against the
backdrop of two factors:
1. The worst bear market for half a century, which continued to wreak havoc
with most financial markets.
2. Start-up expenses pertaining to the launch of new products and expenses
relating to the incorporation of the recently acquired asset management
operation.
Equity Markets
The secular equity bear market that began early in 2000 prevailed for the
largest part of the six months to March 2003, fuelled by poor international
economic fundamentals, the Iraqi war and volatile currency markets. The net
result was a further decline in the All Share Index during the first quarter of
2003 of 16.3%.
Indequity was unfortunately not immune to these pressures and as a result was
forced to write down the value of its listed stock investments.
Realised and unrealised losses on the listed equities portfolio accounted for R
809 825 (March 2002: realised and unrealised profits on listed equities of R1
870 145) of the total loss before taxation of R 2 634 051 (March 2002: profit of
R 1 491 785).
Furthermore, in view of the existing difficult market conditions, management has
decided to focus exclusively on its investments and insurance divisions.
Consequently no investment banking income was generated during the period under
review.
Start-up and incorporation expenses
The remainder of the loss before taxation totalling R 1 824 226, occurred mainly
as a result of expenses incurred in the establishment of the required
infrastructure for Indequity Specialised Insurance Ltd as well as expenses
relating to the incorporation of Global Investment Planning Services (Pty) Ltd
into the Group.
It is noteworthy that the personal lines product has shown exceptional growth
over the period and is expected to reach critical mass within the next six-month
period.
Prospects
As indicated in the Group"s prior interim report, it is continually striving to
increase its recurring income base. Indequity is pleased to report that it made
significant progress to this end during this period of review. Although
management is expecting that these efforts as well as the prevailing uncertain
and volatile investment climate will have a negative effect on the current years
earnings, the Group continues to be optimistic about the long-term prospects and
remains committed to the objective to deliver above-average earnings growth over
the longer term.
Acquisition of subsidiary
Indequity Group Limited acquired the entire issued share capital of Global
Investment Planning Services (Pty) Ltd with effect 1 December 2002. The
acquisition consideration of R1.5 million was settled by paying R1 million cash
and issuing 500 000 Indequity Group Limited ordinary shares at R1.00 each.
Accounting policies
The accounting policies followed in preparing these interim results comply in
all material respects with South African Statements of Generally Accepted
Accounting Practice and are consistent with those of the previous financial
year.
Dividends
In accordance with the Group"s current cash requirements, no dividend is
declared for the current period.
On behalf of the board
L J van Rensburg T C Meyer Johannesburg
Chief Executive Director 15 May 2003
Officer
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: (+27 11) 475-0816 Fax: (+27 11) 475-0877
Website: www.indequity.com
Date: 19/05/2003 05:05:09 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
