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Indequity Group Limited - Abridged Report On Annual Financial Statements And
Release Date: 09/12/2003 17:15:01 Code(s): IDQ
INDEQUITY GROUP LIMITED - ABRIDGED REPORT ON ANNUAL FINANCIAL STATEMENTS AND
NOTICE TO MEMBERS OF ANNUAL GENERAL MEETING
Indequity Group Limited
Registration number: 1998/015883/06
Incorporated in the Republic of South Africa
"Indequity" or "the Group" or "the company"
Share code: IDQ
ISIN: ZAE000016606
ABRIDGED REPORT ON THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 30
SEPTEMBER 2003
ABRIDGED GROUP INCOME STATEMENT for the year ended
30 Sep 2003 30 Sep 2002
Audited Audited
R R
Investment income 987 960 2 008 757
Investment banking and private equity
income 1 543 554 (3 051 027)
Insurance income 6 628 387 7 498 785
Total revenue 9 159 901 6 456 515
Expenses attributable to cellholders 2 688 295 4 340 552
Net underwriting expenses and claims 3 434 076 2 889 936
incurred
Finance charges 230 633 266 217
Depreciation 267 044 237 933
Operating expenses 6 968 800 5 762 704
Total expenses 13 588 848 13 497 342
(Loss)/profit before taxation (4 428 947) (7 040 827)
Taxation 1 035 304 (73 872)
Outside shareholders" interest in
private equity investments" losses 159 201 763 252
Basic earnings (3 234 442) (6 351 447)
Add: Write off of goodwill - 291 620
Add: Write off of trademarks - 421 414
Headline earnings (3 234 442) (5 638 413)
Dividend per share (cents)
- interim - -
- final - -
Headline earnings per share (cents) (26,76) (40,45)
Basic earnings per share (cents) (26,76) (45,56)
Fully diluted headline earnings per (26,76) (40,45)
share (cents)
Number of shares
- in issue 12 170 000 11 670 000
- weighted average 12 086 667 13 940 833
- fully diluted 12 086 667 13 940 833
ABRIDGED GROUP BALANCE SHEET as at
30 Sep 2003 30 Sep 2002
Audited Audited
R R
ASSETS
Non-current assets 1 612 713 725 133
Technical insurance assets - 308 124
Current assets 11 268 085 16 114 400
Marketable securities - 5 167 662
Receivables 739 039 698 307
Deferred tax 1 379 350 -
Current tax asset 3 024 -
Inventory 89 019 -
Cash and cash equivalents 9 057 653 10 248 431
Total assets 12 880 798 17 147 657
EQUITY AND LIABILITIES
Share capital and premium 14 109 766 14 112 286
Contingency reserve 116 859 20 785
(Accumulated loss)/Retained income (6 560 525) (3 230 009)
Ordinary shareholders" funds 7 666 100 10 903 062
Preference shareholders" interest 3 848 716 4 375 778
Minority shareholders" interest (1 428 395) (1 269 193)
Non-current liabilities 1 076 891 1 138 339
Technical insurance provisions 747 874 608 674
Current liabilities 969 612 1 390 997
Trade payables 558 430 538 162
Accruals and provisions 49 471 60 420
Current tax liabilities 792 415 792 415
Bank overdraft 361 711 -
Total equity and liabilities 12 880 798 17 147 657
Net asset value per ordinary share 62,99 93,43
(cents)
ABRIDGED STATEMENT OF CHANGES IN EQUITY for the year ended
30 Sep 2003 30 Sep 2002
Audited Audited
R R
Balance at the beginning of the year
10 903 062 23 041 708
Net loss for the year (3 234 442) (6 351 447)
Ordinary share issued 500 000 -
Dividends paid - (540 085)
Purchase of treasury shares (502 520) (12 089)
Ordinary shares repurchased and - (5 243 825)
cancelled
Apportioned to preference
shareholders - 8 800
Balance at end of year 7 666 100 10 903 062
ABRIDGED CASH FLOW STATEMENT for the year ended
30 Sep 2003 30 Sep 2002
Audited Audited
R R
Cash flows relating to operating
activities (4 341 860) (3 355 381)
Cash flows relating to investing
activities 2 841 425 (3 396 368)
Cash flows relating to financing
activities (52 054) 1 036 262
Net decrease in cash and cash
equivalents (1 552 489) (5 715 487)
Cash and cash equivalents - beginning
of year 10 248 431 15 963 918
Cash and cash equivalents - end of
year 8 695 942 10 248 431
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
The annual financial statements have been audited by Dannhauser Inc. Their
unqualified audit opinion is available for inspection at the registered office
of Indequity.
COMMENTS ON RESULTS
Management took a strategic decision during 2002 to incur significant but
essential expenses in order to broaden the Group"s income base but, more
importantly, to establish a company that is able to deliver solid, annuity
income year after year.
Short-term sacrifices had to be made, which could not provide immediate growth
in revenue or profit. As a result the Group has reported a loss of R3.2 million
for the year.
The return on the Group"s cash resources also declined during the year. This is
due to volatile equity markets, lower interest rates and reduced cash holdings.
The Group has taken remedial action and cash resources have been invested
defensively.
DIVISIONAL RESULTS
INSURANCE OPERATIONS
We are pleased to report that the significant start-up expenses in launching our
first short-term insurance product have borne fruit. Premium income has grown
by a monthly compounded rate of 15%, whilst claims have been restricted to
approximately 50% of premiums, on a cash basis.
These positive results were partly offset by a decline in premiums received from
a cell captive facility, resulting in a decline in total premiums compared with
last year. Nevertheless, total consolidated net underwriting income generated
by insurance operations grew by 88,6% over 2002.
The Group is delighted with the progress it has made and expects to reach break-
even on insurance operations during 2004.
INVESTMENT MANAGEMENT
Despite material negative results experienced initially from this business, the
Group was successful in integrating these operations with its own and in
refocusing the business. By year-end Indequity Capital Managers contributed
positively to the Group"s results and delivered a return on invested capital
around 16% per annum.
Subsequent to year-end, additional products have been developed and added to
Indequity Capital Managers" product range. The Group is confident that these
will contribute to enhance the current return on capital invested.
ALEXECOVET (PTY) LTD ("ECO-VET")
The Group"s holds an effective stake of approximately 45% in Eco-Vet. This
entity provides a range of natural veterinary medicines, which it distributes
through veterinarians, pharmacies and pet shops.
Since the Group"s initial investment in Eco-Vet in May 2000, the emphasis has
been on building the brand, streamlining relationships with stakeholders,
eliminating problem areas and, most importantly, obtaining registrations with
the Registrar of Agriculture for our products.
Despite the requirement for further investments in Eco-Vet during the year to
address these issues, we are now fortunate to report that we have made
significant strides to finalise these matters. Historical problem areas have
been addressed, relationships with stakeholders are sound and the brand is now
widely recognised. Most importantly all 40 products are now licensed. As a
result, this company is now cash flow positive and currently delivers an after
tax return on total invested funds of around 13% per annum.
PROSPECTS
The Group has made significant progress in meeting its strategic objectives and
expects the recent negative results to be short-term in nature.
The Group anticipates that it will incur a further small loss for the 2004 year,
where after it anticipates operating with increasing profitability.
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 23
January 2004.
ON BEHALF OF THE BOARD
A V van Jaarsveldt L J van Rensburg Johannesburg
Chairman Chief Executive Officer 5 December 2003
Directors: AV van Jaarsveldt* (British), LJ van Rensburg, TC Meyer, BJ
Slabbert*, JF 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: 09/12/2003 05:15:06 PM
Produced by the JSE SENS Department
