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NCS - Nictus Limited - Abridged report relating to the audited financial

Release Date: 28/06/2012 15:30
Code(s): NCS
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NCS - Nictus Limited - Abridged report relating to the audited financial results for the year ended 31 March 2012 and details of the notice of Annual General Meeting NICTUS LIMITED (Incorporated in the Republic of South Africa) (Registration number 1981/001858/06) JSE Share code: NCS NSX Share code: NCT ISIN Code NA0009123481 ("Nictus" or "the company") ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2012 AND DETAILS OF THE NOTICE OF ANNUAL GENERAL MEETING ABRIDGED SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 2012 Audited Audited 2012 2011
R`000 R`000 Revenue 568 823 494 109 Cost of sales (448 502) (401 407) Gross profit 120 321 92 702 Other income 11 056 10 793 Administrative expenses (58 102) (46 502) Operating expenses (88 902) (66 979) Investment income from operations 34 380 27 828 Results from operating activities 18 753 17 842 Investment income 7 737 6 722 Finance expenses (4 406) (5 090) Profit before taxation 22 048 19 474 Taxation 944 (3 991) Profit for the year 23 028 15 483 Other comprehensive income: Net gains on property revaluation 44 932 - Taxation related to components of other (5 750) - comprehensive income Other comprehensive income for the year net of 39 182 - taxation Total comprehensive income 62 210 15 483 Profit attributable to: Owners of the parent 23 028 15 483 Non-controlling interest - - Total comprehensive income attributable to: Owners of the parent 62 210 15 483 Non-controlling interest - - Profit for the year 23 028 15 483 Basic earnings per share (cents) 43.09 28.97 Diluted earnings per share (cents) 43.09 28.97
ABRIDGED SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2012 Audited Audited 2012 2011
R`000 R`000 Assets Non-current assets Investment property - 17 840 Property, plant and equipment 138 474 89 378 Goodwill - 1 647 Intangible assets 380 544 Investments 29 629 38 296 Loans and receivables 300 614 252 184 Deferred tax asset 7 924 13 391 Current assets Inventories 79 548 64 088 Trade and other receivables 235 527 178 164 Cash and cash equivalents 303 324 280 522 Current tax receivable 84 4 Total assets 1 095 504 936 058 Equity Share capital 26 722 26 722 Reserve 63 114 47 514 Retained earnings 78 731 37 198 Non-current liabilities Interest bearing loans and borrowings 4 819 11 748 Deferred tax liability 11 570 14 131 Current liabilities Bank overdraft 5 490 7 189 Interest bearing loans and borrowings 54 646 42 835 Insurance contract liabilities 788 052 690 216 Trade and other payables 58 842 58 189 Provisions 3 062 - Current tax liabilities 456 316 Total equity and liabilities 1 095 504 936 058
ABRIDGED SUMMARISED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2012 Audited Audited 2012 2011
R`000 R`000 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation 22 084 19 474 Adjustment for: Investment income from operations (16 530) (10 516) Dividend income (17 850) (17 312) Investment income (7 737) (6 722) Finance costs 4 406 5 090 Depreciation of property, plant and equipment 2 325 1 949 Amortisation of computer software 262 354 Loss on disposal of property, plant and - equipment 81 Fair value adjustment on property, plant and - equipment (138) Revaluation of investment property (7 025) (1 623) Profit on transfer of property, plant and - equipment - Movement in provisions 3 062 - Profit on disposal of subsidiary (3 802) - Impairment loss on goodwill 1 647 - Working capital changes: Increase in inventories (15 460) (18 201)
Decrease /(Increase) in trade and other (57 363) (49 965) receivables Increase in insurance contract liabilities 97 836 116 068 Increase in trade and other payables 864 9 171 Cash generated by operations 6 719 47 710 Investment income from operations received 16 530 10 516 Finance expenses (4 406) (5 090) Dividends received 17 850 17 312 Taxation paid 1 785 (86) Net cash flow from operating activities 38 478 70 362 CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment (13 259) (18 767) Proceeds from disposal of property, plant and 4 401 606 equipment Acquisition of investment property - - Acquisition of intangible assets (98) (463) Borrowings repaid on disposal of subsidiary 5 000 - Cash inflow on disposal of subsidiaries 22 200 - Investment income received 7 737 6 722 Proceeds from disposal of investments 8 667 - Acquisition of investments - (7 260) Loans and receivables advanced (48 430) (10 147) Net cash flow from investing activities (13 782) (29 309) CASH FLOWS FROM FINANCING ACTIVITIES Decrease in interest bearing loans and 4 882 borrowings (2 495) Movement in treasury shares - 133 Dividends paid (5 077) (3 340) Net cash flow utilised by financing activities (195) (5 702)
Net movement in cash and cash equivalents 24 501 35 351 Cash and cash equivalents at beginning of year 273 333 237 982 Cash and cash equivalents at end of year 297 834 273 333 ABRIDGED SUMMARISED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2012 Audited Share Revalu- Con- Retaine Total capita ation tingenc d equity
l reserve y earning reserve s R`000 R`000 R`000 R`000 R`000
Balance at 1 26 589 30 431 21 282 20 856 99 158 April 2010 Total comprehensive income for the year Profit for the 15 483 15 483 year Total comprehensive income 15 483 15 483 Transactions with owners of the Group recognised directly in equity Contributions by and distributions to the owners of the Group Transfer from 133 133 treasury shares Dividends to (3 340) (3 340) equity holders Total contributions by and distributions to the owners of the Group 133 (3 340) (3 207)
Transfers to retained earnings Transfer to (4 199) 4 199 contingency reserve Balance at 1 26 722 30 431 17 083 37 198 111 434 April 2011 Total comprehensive income for the year Profit for the 23 028 23 028 year Total 23 028 23 028 comprehensive income Other comprehensive income Revaluation of 44 932 44 932 land and buildings Deferred tax on (5 750) (5 750) the revaluation of land and buildings Total 39 182 23 028 62 210 comprehensive income for the year
Transactions with owners of the Group recognised directly in equity Contributions by and distributions to the owners of the Group Dividend to (5 077) (5 077) equity holders Total contributions by and distributions to the owners of the Group (5 077) (5 077) Transfers to retained earnings Transfer to (7 887) 7 887 contingency reserve Revaluation of (19 land and 320) buildings sold (19 320) during the year Deferred tax on 3 265 3 265 the revaluation of lands and building`s sold Total transfers (15 695) (7 887) 23 582 to retained earnings Balance at 31 26 722 53 918 9 196 78 731 March 2012 168 576 ABRIDGED SUMMARISED SEGMENTAL ANALYSIS FOR THE YEAR ENDED 31 MARCH 2012 Business segment Motor Furniture Insurance & Head retail retail Finance Office
2011 2011 2011 2011 Segment revenue Sales of goods 357 623 72 684 - - Rental income 56 793 1 063 - Finance income 969 6 626 28 837 - Management fees - - - 4 357 Insurance premium income - - 30 399 - Total revenue from 358 648 80 103 60 299 4 357 external customers Inter-segment revenue 2 834 1 639 905 -
Total segment revenue 361 482 81 742 61 204 4 357 Segment result
Operating profit before 6 342 8 215 19 533 18 811 financing costs Financing costs (2 489) (4 415) (485) (8 270) Profit before taxation 3 853 3 800 19 048 10 541 Taxation (1 361) (2 020) (2 854) - Net profit/(loss) for the 2 492 1 780 16 194 10 541 year Segment assets 161 575 111 225 819 544 110 511 Segment liabilities 122 876 66 505 750 396 65 004 Cash flows from operating (30 579) (11 360) 177 993 21 016 activities
Cash flows from investing 30 971 22 881 (201 597) (9 807) activities Cash flows from financing 5 234 (4 900) 46 839 (12 840) activities Capital expenditure (1 727) (1 083) (1 219) (41) Business segment Eliminations Consolidated 2011 2011 Segment revenue Sales of goods 969 431 276 Rental income - 1 912 Finance income (5 910) 30 522 Management fees (4 357) - Insurance premium income - 30 399 Total revenue from (9 298) 494 109 external customers Inter-segment revenue (5 378) -
Total segment revenue (14 676) 494 109 Segment result
Operating profit before (28 337) 24 564 financing costs Financing costs 10 569 (5 090) Profit before taxation (17 768) 19 474 Taxation 2 244 (3 991) Net profit/(loss) for the (15 524) 15 483 year Segment assets (266 797) 936 058 Segment liabilities (180 157) 824 624 Cash flows from operating (86 708) 70 362 activities
Cash flows from investing 128 243 (29 309) activities Cash flows from financing (40 035) (5 702) activities Capital expenditure (15 160) (19 230) Business segment Motor Furniture Insurance Head Office retail retail & Finance 2012 2012 2012 2012 Segment revenue
Sales of goods 410 671 88 936 - - Rental income 10 242 608 - Finance income 239 8 682 34 556 - Management fees - - - 5 034 Insurance premium income - - 32 929 - Total revenue from 410 920 97 860 68 093 5 034 external customers Inter-segment revenue 3 897 3 227 1 794 - Total segment revenue 414 817 100 187 69 887 5 034 Segment result Operating profit before 7 912 7 988 23 034 58 063 financing costs Financing costs (4 702) (5 436) 313 (6 296) Profit before taxation 3 210 2 552 23 347 51 767 Taxation (549) (1 532) (717) 1 900 Net profit/(loss) for the 2 661 1 020 22 630 53 667 year Segment assets 245 546 186 636 869 749 162 044
Segment liabilities 186 067 141 043 837 834 63 811 Cash flows from operating (19 (15 552) 159 773 49 165 activities 862) Cash flows from investing 22 957 19 435 (176 684) (35 742) activities
Cash flows from financing (6 517) (2 876) 44 184 (11 646) activities Capital expenditure (1 246) (1 045) (813) (43) Business segment Eliminations Consolidated 2012 2012 Segment revenue
Sales of goods 650 500 259 Rental income - 860 Finance income (8 702) 34 775 Management fees (5 034) - Insurance premium income - 32 929 Total revenue from (13 086) 568 823 external customers Inter-segment revenue (8 018) - Total segment revenue (21 104) 568 823 Segment result Operating profit before (70 507) 26 490 financing costs Financing costs 11 715 (4 406) Profit before taxation (58 792) 22 084 Taxation 1 842 944 Net profit/(loss) for the (56 950) 23 028 year Segment assets (368 470) 1 095 504
Segment liabilities (301 818) 926 937 Cash flows from operating (135 046) 38 478 activities Cash flows from investing 156 252 (13 782) activities
Cash flows from financing (23 340) (195) activities Capital expenditure (10 210) (13 357) ACCOUNTING POLICIES Basis of preparation The abridged summarised consolidated annual financial statements have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the AC 500 standards issued by the Accounting Policies Board and in compliance with IAS34: Interim Financial Reporting and the manner as required by the Companies Act of South Africa, 2008 and the Listing Requirements of the JSE Limited. The accounting policies are consistent with those applied in the consolidated financial statements for the year ended 31 March 2012, other than the new standards and interpretations adopted, being IFRIC19 (AC 452) Extinguishing Financial Liabilities with Equity Instruments, and IFRIC 14 (AC447) - IFRS 19 (AC116) The Limit on a Defined Benefit Asset, Minimum Funding Requirements and Their Interaction. The impact of these adopted standards and interpretations are not material on the Group. RELATED PARTIES The company has related party relationships with its subsidiaries, fellow subsidiaries, associates and with its directors and executive officers. RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS: 2012 2011
Profit for the year 22 084 19 474 Loss on disposal of property, plant and equipment - 81 net of insurance proceeds Taxation 944 (3 991) Headline earnings 17 650 15 564 Headline earnings per share (cents) 33.02 29.12 2012 2011 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL R`000 R`000 Short-term employee benefits 13 175 10 800 TRANSACTIONS WITH RELATED PARTIES PREMIUMS RECEIVED 2 744 2 245 RESPONSIBILITY FOR CONSOLIDATED ANNUAL FINANCIAL STATEMENTS Accounting policies have been applied consistently with those of prior year. The annual consolidated financial statements for the year ended 31 March 2012 have been audited by KPMG Inc., and their unqualified audit opinion is available for inspection at the registered office of the company. SUBSEQUENT EVENTS Nictus would like to draw the attention of Shareholders to the cautionary announcement released on 12 June 2012 where the board of directors advised that they have resolved to investigate a proposal in terms of which all the shares that Nictus holds in Nictus Holdings Limited ("Nictus Nambia") be distributed to Shareholders in the entitlement ratio of 1:1, in terms of section 46 and section 112 read together with section 115 of the South African Companies Act, 2008, as amended ("SA Act") and in accordance with the relevant Namibian and South African taxation requirements("Unbundling"). CHAIRMAN`S REPORT OVERVIEW Overview Nictus had the most successful year to date and it is with great thankfulness that we report the results for the financial year 2011 / 2012. The achievement of increasing profits before tax by approximately 14%on previous year and increasing assets to more than R 1 billion, is the result of careful management in the South African and Namibian business environments, over a long period of time. The increase in turnover and profits is the result of expansion in the motor and furniture industries, as well as continuing good performance in financial services. The company operates with integrity and with careful execution of a long run vision, to continue to build value for all stakeholders in the company. In addition to its regular functions, the Board has occupied itself with its capacity and is taking steps to ensure the verity of its decisions and directions in the coming years. Divergent legislative regimes and differing conditions in business environments stretch the management of the businesses` capacity. In both Namibia and South Africa, the amount of legislation and prescriptions pertaining to business are growing. Diverging legislation between the countries further complicates matters and requires a lot of Board deliberation. Several material steps have been taken, or are being implemented, to ensure that the Board will be able to maintain clarity and give direction with confidence under these circumstances. Subsidiaries of the company have been empowered to elect their own boards and take responsibility for management and performance, within agreed strategic plans and performance guidelines, subject to approval and oversight of the Nictus Board. This is enhanced by the drive towards establishing a progressive board approach and the implementation and refinement of a system of integrated reporting. Implementation of SAM (Solvency Assessment and Management model) in the South African insurance industry will have an impact on Corporate Guarantee South Africa, which will differ from the Namibian subsidiary. Divergent tax regimes and regulatory environments also have an impact on management and administration resources. The prospect of a Free Trade Area in the SADC remains elusive and will require careful consideration by the Board. A blueprint for an appropriate company structure, which will decrease costs and time required to fulfill regulatory requirements, is in development. The dedication and exceptional performance of the Group Chief Executive, executive directors, management and staff are summarized by the following: * Revenue increased by 15% to R 569 million; * Profit before taxation for the year increased by 13% to R 22.1 million; * Return on equity of 13.7% was achieved; * The Group`s asset base increased by 17%; * The cash position of the Group improved by 9% to R 298 million; * The equity of the Group grew by 51% to R169 million; and * The net asset value per share increased by 51% to 315.41 cents. The Future View The company is diversified within three market segments and continues to strive for excellence and sustainability in every aspect of the business. Emphasis on prudent long-term strategies will remain the focus in a market environment which continues to deliver opportunities for growth. However risks will have to be mitigated, while focusing on an appropriate return on equity. This requires dynamic leadership and personnel who will conduct business with integrity. Building a capable and dynamic workforce is a cornerstone for future growth, which will require training and investment in human capital. The coming year will be challenging as economic uncertainty and turmoil in European markets will affect Southern African markets. However, the Group continues to generate cash, which requires careful investment and which can be channelled into expansion. Directorate We announced on SENS that the Board will be strengthened on 1st April 2012 with the appointment of a further executive director. We welcome Philippus Tromp, who is the current managing director of Corporate Guarantee, Namibia. Corporate Governance This report complies with the Johannesburg Securities Exchange and Namibian Stock Exchange requirements and reflects the various International Financial Reporting Standards. The Board remains committed to all aspects of Corporate Governance, and to managing the Group in a transparent and accountable manner. Appreciation The journey during the past years was exciting, and rich in challenges and successes. Our success would not have been achieved without the perseverance, vision and dedication of my fellow Board members and management team. What we achieved during this year and in the past was only through the Grace of God Almighty. BJ Willemse Chairman: Nictus Group GROUP CHIEF EXECUTIVE`S REPORT OVERVIEW The Eurozone is still in turmoil, and a clear recovery strategy has yet to emerge and materialise. Africa, South Africa and Namibia will be affected. In South Africa the authorities succeeded in creating a stable environment, characterised by a stable interest rate and well-managed inflation. This environment enabled the Nictus Group to post moderate growth results. The Namibian economy performed well, mainly due to the stable political environment and major developments in the mining sector, especially uranium. Unemployment is still a concern, however Government and the private sector are working together in implementing the TIPEEG (Targeted Intervention Program for Employment and Economic Growth) to address unemployment in the medium term and make inroads into the infrastructural requirements of the long-term plan for Namibia`s economy. Both economies are contracting after a five year period of strong growth. This resulted in moderate growth in the Group results. However, as a result of this growth, the Group attained a watershed mark when its asset base exceeded the R1 billion mark. Internally, the Group continues to improve its efficiency through ongoing consolidation. The Group has performed exceptionally well in all areas during the preceding years, taking into account the difficult economic circumstances. Segmental Performance The Group strategy is closely linked to the vision of the Group. Strategically it is important to grow the segments so that each segment contributes equally to profitability. Where a segment is represented in both South Africa and Namibia, the target is for both operations to contribute equally to profitability in the segment. I am satisfied with the performance of all the segments under the circumstances during the year under review. Organisational Profile The extent of our operations is set out on the geographical spread. Furniture Retail Segment The segment operates in South Africa and Namibia with four outlets in each country. Revenue in the furniture segment increased satisfactorily by 23%. Operating profit decreased by 3% due to the higher cost of establishing a head office in South Africa. We envisage sustainable growth in revenue and operating profit for the coming year in this segment. Motor Retail Segment The vehicle segment operates in Namibia only, and distributes General Motors brands Chevrolet, Opel and Isuzu. Nictus is negotiating with General Motors South Africa ("GMSA") to optimize distribution of products in Namibia. Revenue in the motor segment increased by 15%, mainly due to the operations of the newly acquired dealerships. Operating profit increased by 25%, due to higher throughput during the year, as well as additional profits from the acquired dealerships. I expect a more moderate performance in this segment during the coming financial year. Insurance and Finance Segment The insurance and finance segment operates in South Africa and Namibia. The Group`s insurance product is unique as it provides innovative risk management solutions as an alternative to conventional insurance. The segment focuses on building sound relationships with clients. Products and services are developed and structured to meet clients` specific needs. The optimisation process in the insurance segment developed as expected, which created a good foundation for growth. Lower interest rates impacted negatively, but the segment showed an increase of 14% in premium income and 18% in operating profit nonetheless. As the customer base in South Africa and Namibia is expanding, more staff were appointed. The South African subsidiary is still building momentum. Training of staff is a priority in order to maintain sustainability. We expect to maintain moderate growth in this segment during the coming year. Growth Strategy Strategically the Group`s objectives remain unchanged, and we will strive to increase sales and profits from segments. The Group is driving customer acquisition and retention, and will maintain the quality of all debtors` books. Product sourcing will be expanded as we aim to optimise diversity of our product offering as a competitive advantage. Gains in growth will however be matched to our ability to develop capacity. Human Capital Focus on human resource management is paying off. Management monitors the development of human capital in the Group on an ongoing basis. Competition for skilled and experienced people is fierce in the market place, but the Group was able to source the services of further highly skilled people within its various segments. The Group has a policy of preserving its human capital and growth of human resources must be matched by prudence in allocation for remuneration. Corporate Governance Nictus Limited is committed to the highest standard of corporate governance. In our opinion, good corporate governance cannot be dictated only by set rules and regulation. Information, provided to management, that is relevant, transparent, timely and accurate will serve in the best interest of the Group. This will ultimately benefit all relevant stakeholders. Good corporate governance is entrusted to the management in charge of each segment. Outlook Trading conditions are expected to remain moderate, while external factors such as oil prices and food inflation affect our target markets. However, we have an experienced and focused management team that is committed to maintaining sustainability of our whole Group. Brand loyalty plays an important role in tough times, and the Group places emphasis on maintaining the strength of its portfolio of well established brands and loyal customer base in addition to deploying brand recognition as a tool for growth. Appreciation I would like to express my gratitude for the dedication and contribution of our Board, our management and staff, in achieving the excellent results. I would like to thank our suppliers and manufacturers, our business partners, the investment and financial community and the media for their support. We are committed to serving our customers and thank them for the loyalty they continue to show towards our brands. NC Tromp Group Chief Executive: Nictus Group DECLARATION OF ORDINARY DIVIDEND The board has declared a final dividend of 14.25 cents per share to ordinary shareholders of the Company for the year ended 31 March 2012. The salient dates of this dividend are: Last day to trade "cum" the dividend Friday, 13 July 2012 Shares commence trading "ex" the dividend from the commencement of business on Monday, 16 July 2012 Record date Friday, 20 July 2012 Payment date Monday, 23 July 2012 Share certificates may not be dematerialised or rematerialised between Monday 16 July 2012 and Friday 20 July 2012 both days inclusive. Shareholders are furthermore advised that a 15% non-resident shareholder`s tax ("NRST") on the declared dividend amounting to 2.1375 cents per share will be applicable to all shareholders with addresses outside of Namibia resulting in a net dividend of 12.1125 cents per share. The NRST will be credited against the Dividends Tax payable in terms of the South African Income Tax Act No. 58 of 1962 and, therefore, no Dividends Tax will be payable by Shareholders resident in South Africa and no Dividends Tax has been withheld in this regard by the Company. In compliance with the Listings Requirements, the following further information is required in with regards to the dividend declaration: The number of shares in issue as at 28 June 2012 is 53 443 500 shares. The SA income tax reference number for Nictus Limited is 9400084712. By order of the board ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING As the annual report for the year ended 31 March 2012 ("the annual report") was posted to shareholders within 3 months of Nictus`s year end, this announcement is not required to appear in the press and will not be sent to shareholders. The annual report contains a notice convening the annual general meeting of Nictus shareholders for the year ended 31 March 2012 ("the AGM"). The AGM will be held in the boardroom at the Nictus Building, corner of Pretoria and Dover Street, Randburg, Gauteng on Friday 31st of August 2012 at 10h00. The board of directors of the Company has determined that the record date in terms of section 59(1) of the Companies Act, 2008 ("the Companies Act") for the purpose of determining which shareholders of the Company are entitled to receive notice of the annual general meeting is 22 June 2012 and the record date for purposes of determining which shareholders of the Company are entitled to participate in and vote at the annual general meeting is Friday,24 August 2012. Accordingly, only shareholders who are registered in the register of members of the Company on Friday,24 August 2012 will be entitled to participate in and vote at the meeting. The Notice of Annual General Meeting and Annual Financial Statements are to be posted to shareholders on 29 June 2012. Accordingly, the last day to trade in order to be eligible to participate and vote will be Friday, 17 August 2012. B J Willemse Chairman 28 June 2012 Sponsor on the JSE: KPMG Services Proprietary Limited Sponsor on the NSX: Simonis Storm Securities (Member of the NSX) Date: 28/06/2012 15:30:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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