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Condensed consolidated interim financial statements
for the six months ended 30 September 2016
Nictus Limited
(Nictus or the Company)
(Incorporated in the Republic of South Africa)
Registration number RSA: 81/011858/06
Registration number NAM: 781/11858
JSE share code: NCS
ISIN number: NA0009123481
http://www.nictuslimited.co.za
Condensed consolidated interim financial statements
for the six months ended 30 September 2016
Condensed consolidated statement of financial position
at 30 September 2016
Unaudited Audited
30 Sept 30 Sept 31 March
Figures in R’000 2016 2015 2016
Assets
Non-current assets
Property, plant and equipment 17 458 17 275 17 230
Intangible assets 228 480 355
Investments 25 210 39 658 39 841
Deferred tax assets 2 616 2 457 1 145
Loans and receivables 3 382 4 847 4 768
48 894 64 717 63 339
Current assets
Current assets 500 923 466 366 453 217
Total assets 549 817 531 083 516 556
Equity and liabilities
Equity
Stated capital 48 668 48 668 48 668
Revaluation reserve 7 983 8 170 7 983
Retained earnings 37 949 34 462 37 749
94 600 91 300 94 400
Liabilities
Non-current liabilities
Deferred tax liabilities 2 475 2 584 2 602
2 475 2 584 2 602
Current liabilities
Trade and other payables 9 277 9 819 7 610
Insurance contract liability 443 465 427 380 411 944
452 742 437 199 419 554
Total liabilities 455 217 439 783 422 156
Total equity and liabilities 549 817 531 083 516 556
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2016
Unaudited Audited
Six Six
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2016 2015 2016
Revenue 21 364 26 955 51 062
Cost of sales (9 067) (10 567) (20 621)
Gross profit 12 297 16 388 30 441
Other income 1 012 2 617 4 062
Investment income from
operations 17 637 13 152 30 699
Operating and administrative
expenses (30 460) (29 356) (59 772)
Results from operating
activities 486 2 801 5 430
Investment income 2 613 2 241 3 869
Profit before taxation 3 099 5 042 9 299
Taxation expense (911) (169) (1 312)
Profit for the period 2 188 4 873 7 987
Other comprehensive income:
Items that will never be
reclassified to profit or
loss
Taxation related to
components of other
comprehensive income – – (187)
Total comprehensive income
for the period 2 188 4 873 7 800
Profit attributable to:
Owners of the parent 2 188 4 873 7 987
2 188 4 873 7 987
Total comprehensive income
attributable to:
Owners of the parent 2 188 4 873 7 800
2 188 4 873 7 800
Basic earnings per share
(cents) 3,30 7,35 12,05
Diluted basic earnings per
share (cents) 3,30 7,35 12,05
Weighted average number of
shares in issue (000s) 66 270 66 270 66 270
Condensed consolidated statement of cash flows
for the six months ended 30 September 2016
Unaudited Audited
Six Six
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2016 2015 2016
Cash flows from operating
activities
Cash utilised by operations (27 920) (34 171) (75 909)
Investment income received
from operations 16 975 12 340 29 264
Dividends received 662 812 1 435
Dividends paid (1 988) (1 988) (1 988)
Net cash utilised by
operating activities (12 271) (23 007) (47 198)
Net cash (utilised
by)/generated from investing
activities (28 223) 20 827 107 194
Total cash movement for the
period (40 494) (2 180) 59 996
Cash and cash equivalents at
the beginning of the period 118 112 58 116 58 116
Total cash and cash
equivalents at end of the
period 77 618 55 936 118 112
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2016
Revalua-
Share tion Retained Total
Figures in R’000 capital reserve earnings equity
Balance at
31 March 2015 48 668 8 170 31 577 88 415
Total comprehensive
income for the period
Profit for the period – – 4 873 4 873
Total comprehensive
income for the period – – 4 873 4 873
Transactions with the
owners of the Company
Distributions to the
owners of the Company
Dividend – – (1 988) (1 988)
Total transactions
with the owners of the
Company – – (1 988) (1 988)
Balance at
30 September 2015 48 668 8 170 34 462 91 300
Total comprehensive
income for the period
Profit for the period – – 3 114 3 114
Other comprehensive
income
Deferred tax on
property revaluations
– capital gains tax
rate change – (187) – (187)
Total comprehensive
income for the period – (187) 3 114 2 927
Transactions with the
owners of the Company
Distributions to the
owners of the Company
Prescribed dividends – – 173 173
Total transactions
with the owners of the
Company – – 173 173
Balance at
31 March 2016 48 668 7 983 37 749 94 400
Total comprehensive
income for the period
Profit for the period – – 2 188 2 188
Total comprehensive
income for the period – – 2 188 2 188
Transactions with the
owners of the Company
Distributions to the
owners of the Company
Dividend (note 6) – – (1 988) (1 988)
Total transactions
with the owners of the
Company – – (1 988) (1 988)
Balance at
30 September 2016 48 668 7 983 37 949 94 600
Condensed segmental report
for the six months ended 30 September 2016
Unaudited Audited
Six Six
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2016 2015 2016
Segment assets
Furniture retail 64 346 64 452 63 679
Insurance and finance 522 998 510 061 486 431
587 344 574 513 550 110
Head office and eliminations (37 527) (43 430) (33 554)
549 817 531 083 516 556
Segment revenue
Furniture retail 16 101 18 849 36 564
Insurance and finance 6 167 8 829 15 918
22 268 27 678 52 482
Head office and eliminations (904) (723) (1 420)
21 364 26 955 51 062
Segment profit for the period
Furniture retail (1 204) 446 820
Insurance and finance 2 783 2 656 3 627
1 579 3 102 4 447
Head office and eliminations 609 1 771 3 540
2 188 4 873 7 987
Reconciliation between earnings and headline earnings
for the six months ended 30 September 2016
Non-
Profit on control-
ordinary ling Net
Figures in R’000 activities Taxation interest profit
Unaudited –
Six months ended
30 September 2016
Profit before taxation 3 099 (911) – 2 188
Adjustments for:
Profit on disposal of
property, plant and
equipment (10) 3 – (7)
Headline earnings 3 089 (908) – 2 181
Headline earnings per
share from operations
(cents) 3,29
Diluted headline
earnings per share
from operations
(cents) 3,29
Unaudited –
Six months ended
30 September 2015
Profit before taxation 5 042 (169) – 4 873
Adjustments for:
Profit on disposal of
property, plant and
equipment (35) 10 – (25)
Headline earnings 5 007 (159) – 4 848
Headline earnings per
share from operations
(cents) 7,32
Diluted headline
earnings per share
from operations
(cents) 7,32
Audited – Year ended
31 March 2016
Profit before taxation 9 299 (1 312) – 7 987
Adjustments for:
Profit on disposal of
property, plant and
equipment (18) 5 – (13)
Headline earnings 9 281 (1 307) – 7 974
Headline earnings per
share from operations
(cents) 12,03
Diluted headline
earnings per share 12,03
from operations
(cents)
Notes to the financial information
for the six months ended 30 September 2016
1. Basis of preparation
The condensed consolidated interim financial statements (interim
financial statements) are prepared in accordance with
International Financial Reporting Standards, IAS 34 Interim
Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee, the Financial
Pronouncements as issued by the Financial Reporting Standards
Council and the requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these
interim financial statements are in terms of International
Financial Reporting Standards and are consistent with those
applied in the previous annual financial statements.
The interim financial statements are presented in thousands of
South African Rand (R’000s) on the historical cost basis, except
held for trading investments which are measured at fair value and
land and buildings held for administrative purposes which are
measured at revalued amounts.
The interim financial statements for the period ended 30 September
2016, together with the statements regarding the prospects of the
group, have not been audited by the group’s auditors.
The interim financial statements as reported herein have been
prepared by the group financial director of Nictus Limited,
Eckhart H Prozesky CA(SA).
2. Directors’ responsibility
The directors take full responsibility for the preparation of the
interim financial statements.
3. Related parties
During the period, certain companies within the group entered into
transactions with each other. These intra-group transactions have
been eliminated on consolidation. Related party information is
unchanged from that reported at 31 March 2016. Refer to the 2016
audited financial statements for further information, accessible
on the Nictus website.
4. Events after reporting date
There were no events after the reporting date and up to the date
of approval of these interim financial statements that affected
the presentation of the interim financial statements for the
period ended 30 September 2016.
5. Changes to the board
Nicolaas C Tromp and Barend J Willemse were re-elected as
directors of Nictus Limited at the annual general meeting on
18 August 2016.
6. Dividend
The board declared a final dividend of 3 cents per ordinary share
for the year ended 31 March 2016 on 30 June 2016, to all ordinary
shareholders recorded in the books of Nictus Limited at the close
of business on Friday, 22 July 2016. The dividend was paid on
Monday, 25 July 2016.
No interim dividend has been declared.
7. Determination and disclosure of fair values
Fair values have been determined for measurement and/or disclosure
purposes based on the following methods:
Property, plant and equipment
The fair value of land and buildings is estimated by using a
combination of the income capitalisation method and the
depreciated replacement value method. This method requires the net
annual income generated by the property, based on market trends,
to be capitalised at an appropriate rate of return to reflect risk,
specific investment demands and the overall condition of the
structures.
Investments in equity and debt securities
The fair value of financial assets at fair value through profit or
loss is determined by reference to their quoted closing market
price at the reporting date. The fair value of held-to-maturity
investments is determined for disclosure purposes only.
The fair values of the financial assets were determined as
follows:
- The fair values of listed or quoted investments are based on the
quoted market price; and
- The fair values of debt securities are based on the quoted
closing market price as reflected on the recognised exchange.
Trade and other receivables
The fair value of trade and other receivables is estimated as the
present value of future cash flows, discounted at the market rate
of interest at the reporting date. The carrying amount of short-
term trade and other receivables at amortised cost is believed to
approximate their fair values.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is
calculated based on the present value of future principal and
interest cash flows, discounted at the market rate of interest at
the reporting date.
Interest-bearing loans and borrowings and loans to group companies
Fair value is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate
of interest at the reporting date. The interest rate used for
determining the fair value is the prime interest rate.
Trade and other payables
All trade and other payables are of a short-term nature and the
carrying value of trade and other payables at amortised cost is
believed to approximate their fair value.
Cash and cash equivalents
The cash and cash equivalents for the group is of a short-term
nature and the fair value of bank overdrafts approximates the
carrying amount.
7.1 Fair value of land and buildings
Land and buildings, which consist of business premises situated on
erf 2134, Ferndale, Johannesburg, are independently valued on an
ad-hoc basis. The last independent valuation was performed on
31 March 2014. The company’s directors value the group’s property
portfolio on an annual basis. An external, independent valuation
company, having appropriate recognised professional qualifications
and recent experience in the locations and category of property
being valued, also provides supporting information used in the
annual directors’ valuation process. The fair values are based on
valuations and other market information that take into
consideration the estimated rental value and depreciated
replacement value of the property. A market yield is applied to
the estimated rental value to arrive at the gross property
valuation. The directors have assessed the residual value of the
properties at 31 March 2016 and calculated that the residual value
approximates the current carrying value. No depreciation has
therefore been recognised in the current period in respect of the
properties.
Figures in R’000 Level 1 Level 2 Level 3 Total
Land and buildings – – 16 100 16 100
The valuation techniques to fair value assets and liabilities in
Level 3.
Assets Method Major assumptions
Land and buildings Income capitalisation Capitalisation rate
method
Rental per square metre
per Rode report
Land and
Figures in R’000 buildings
Reconciliation of land and buildings at fair value in
Level 3
Balance at 1 April 2016 16 100
Total gains or losses in other comprehensive income –
Fair value measurements –
Balance at 30 September 2016 16 100
Sensitivity analysis
Land and buildings
Presented below is an analysis of the impact on the fair value of
the land and buildings for changes in the key valuation
assumptions.
Figures in R’000 Capitalisation rate
Income method 13,25% 14,25% 15,25%
Rental (5% decrease) 16 550 15 400 14 400
Rental (rate per Rode report) 17 400 16 100 15 100
Rental (5% increase) 18 300 17 000 15 900
Figures in R’000 Depreciation rate
Depreciated replacement cost
method 64% 65% 66%
Building costs (5% decrease) 17 050 16 750 16 450
Building costs (rate per AECOM’s
African Property and Construction
Handbook of 2013) 17 600 16 100 17 000
Building costs (5% increase) 18 150 17 800 17 500
7.2 Fair value hierarchy of financial assets at fair value through
profit or loss
For financial assets recognised at fair value, disclosure is
required of a fair value hierarchy which reflects the significance
of the inputs used to make the measurements. There were no
transfers between the levels for the reporting period.
Level 1: Represents those assets which are measured using quoted
market prices in an active market for an identical instrument.
Level 2: Represents those assets which are measured using
valuation techniques based on observable inputs either directly
(i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: Represents those assets which are measured using
valuation techniques using significant unobservable inputs.
Unaudited Audited
Six Six
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2016 2015 2016
Level 1
Listed shares 16 389 25 044 23 708
Corporate bonds 1 974 1 966 1 936
Unit trusts 6 847 12 648 14 197
25 210 39 658 39 841
7.3 Financial assets by category
The accounting policies for financial assets have been applied to
the line items below:
Fair value
Loans and through Held to
receivables profit or maturity
at loss at
amortised – held for amortised
Figures in R’000 cost trading cost Total
30 September 2016
Loans and
receivables 41 295 – – 41 295
Investments – 25 210 – 25 210
Trade receivables 289 699 – – 289 699
Short-term
deposits 77 844 – – 77 844
Cash and cash
equivalents 77 618 – – 77 618
486 456 25 210 – 511 666
30 September 2015
Loans and
receivables 46 531 – – 46 531
Investments – 37 692 1 966 39 658
Trade receivables 257 656 – – 257 656
Short-term
deposits 111 090 – – 111 090
Cash and cash
equivalents 55 936 – – 55 936
471 213 37 692 1 966 510 871
31 March 2016
Loans and
receivables 51 236 – – 51 236
Investments – 39 841 – 39 841
Trade receivables 253 248 – – 253 248
Short-term
deposits 22 988 – – 22 988
Cash and cash
equivalents 118 112 – – 118 112
445 584 39 841 – 485 425
The carrying amounts of the financial assets approximate their
fair values.
7.4 Financial liabilities by category
The accounting policies for financial liabilities have been
applied to the line items below:
Financial
liabilities at
amortised
Figures in R’000 cost Total
30 September 2016
Trade and other payables 6 429 6 429
30 September 2015
Trade and other payables 9 701 9 701
31 March 2016
Trade and other payables 6 905 6 905
The carrying amounts of the financial liabilities approximate
their fair values.
8. Results overview
8.1 Furniture segment
The retail environment is currently subject to weaker consumer
demand and high interest rates. Due to lower sales levels achieved
and reduced profit margins the profitability of the furniture
segment was under pressure during the six-month period ended 30
September 2016.
8.2 Insurance and finance segment
The segment continued to deliver positive results during the six-
month period ended 30 September 2016. Corporate Guarantee reduced
its exposure to equity markets to restrict potential losses caused
by currency and share price fluctuations attributed to the
political, global and local economic instability. The active
management of the investments contributed to an increase in
investment income generated by operations.
8.3 Holding Company level
The company continued to invest in expanding its talent pool and
succession planning to support its current and future business
operations. This resulted in reduced profitability, however we
believe it to be prudent and necessary to achieve its strategies.
9. Prospects
The Group has historically generated higher earnings in the second
part of the financial year. The board is confident that despite
the economic, political and environmental challenges within the
South African economy, the various segments are well placed to
build on the results achieved in the first six months.
On behalf of the board
Gerard R de V Tromp Eckhart H Prozesky
Group managing director Group financial director
Randburg
9 December 2016
Contact information
Nictus Limited
(Nictus or the company)
(Incorporated in the Republic of South Africa)
Registration number RSA: 81/011858/06
Registration number NAM: 781/11858
JSE share code: NCS
ISIN number: NA0009123481
Company secretary
Veritas Board of Executors Proprietary Limited
Registration number 1984/007487/07
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Auditors and reporting accountant
KPMG Inc.
Registration number 1999/021543/21
KPMG Crescent
85 Empire Road, Parktown 2193
Private Bag 9, Parktown 2122
Sponsor
KPMG Services Proprietary Limited
Registration No: 1999/012876/07
85 Empire Road
Parktown
Johannesburg, 2193
Private Bag X9
Parkview, 2122
Registered office of the Company
Head office
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Windhoek office
Nictus Building, 1st floor
140 Mandume Ndemufayo Avenue
Windhoek
Private Bag 13231, Windhoek
Directors
Barend J Willemse (Independent non-executive chairman)
Gerard Swart (Independent non-executive)
John D Mandy (Independent non-executive)
Philippus J de W Tromp (Non-executive)
Nicolaas C Tromp (Non-executive)
Gerard R de V Tromp (Group managing director)
Eckhart H Prozesky (Group financial director)
Date: 09/12/2016 10:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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