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NIVEUS INVESTMENTS LTD - Unaudited Group Interim Results for the six months ended 30 September 2012

Release Date: 19/11/2012 07:42
Code(s): NIV     PDF:  
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Unaudited Group Interim Results for the six months ended 30 September 2012

Niveus Investments Limited

Reg. no: 1996/005744/06

Incorporated in the Republic of South Africa

JSE share code: NIV

ISIN code: ZAE000169553

UNAUDITED GROUP INTERIM RESULTS

for the six months ended 30 September 2012

ABRIDGED CONSOLIDATED INCOME STATEMENT

                                                          Six months ended        Year ended
                                                           30 September             31 March

                                                        2012            2011            2012
                                                       R'000           R'000           R'000
                                                  (Unaudited)     (Unaudited)       (Audited)


Revenue                                               92 542           3 300           6 982

Net gaming win                                       292 742         196 065         417 982

Group revenue                                        385 284         199 365         424 964

Other income                                               ­              ­              977

Other operating expenses                            (303 833)       (136 085)       (292 984)

EBITDA                                                81 451          63 280         132 957

Depreciation and amortisation                        (31 376)        (23 129)        (47 597)

EBIT                                                  50 075          40 151          85 360

Investment income                                      1 132             166             559

Finance costs                                        (10 447)        (11 839)        (21 529)

Share of losses of associates                        (16 305)              ­          (2 252)

Impairment of goodwill                                  (757)              ­               ­
 
Profit before taxation                                23 698          28 478          62 138

Taxation                                             (14 070)         (8 361)        (20 743)

Profit for the year from continuing operations         9 628          20 117          41 395

Discontinued operations                                 (105)              ­               ­

Profit for the year                                    9 523          20 117          41 395


Attributable to:

Equity holders of the parent                           8 791          20 741          40 323

Non-controlling interests                                732            (624)          1 072

                                                       9 523          20 117          41 395



                                                           Six months ended                         Year ended
                                                             30 September                            31 March

                                                       2012                   2011                     2012
                                                      R'000                  R'000                    R'000
                                                   (Unaudited)             (Unaudited)              (Audited)

  
Reconciliation of headline earnings             Gross        Net         Gross        Net        Gross        Net

Earnings attributable
to equity holders of the parent                            8 791                   20 741                  40 323

IAS 16 (gains)/losses
on disposal of plant
and equipment                                   1 186      1 096           (84)       (60)       (331)      (238)

IAS 16 impairment of plant and
equipment                                           ­          ­             ­          ­         361        260

IFRS 3 Impairment of goodwill                     757        757             ­          ­           ­          ­

Re-measurements included in equity-
accounted earnings of associates                    ­       (136)            ­          ­           ­          ­

Headline profit                                           10 508                   20 681                 40 345



                                                           Six months ended       Year ended
                                                             30 September           31 March

                                                        2012            2011            2012
                                                  (Unaudited)     (Unaudited)       (Audited)


Earnings per share (cents)

Basic and diluted                                      10.60           35.37           68.77

­ Continuing operations                                10.73           35.37           68.77

­ Discontinued operations                              (0.13)             ­               ­


Headline and diluted headline                          12.68           35.27           68.81

­ Continuing operations                                12.81           35.27           68.81

­ Discontinued operations                              (0.13)             ­                ­


­ Basic and diluted                                    10.60           35.37           68.77

­ Headline and diluted headline                        12.68           35.27           68.81

Weighted average number of shares in 
issue ('000)                                          82 876          58 633          58 633


Actual number of share in issue at end of 
period ('000)                                        107 119          58 633          58 633



ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION


                                                          30 September             31 March

                                                        2012            2011            2012
                                                       R'000           R'000           R'000
                                                  (Unaudited)     (Unaudited)       (Audited)

ASSETS

Non-current assets                                   660 420         200 577         507 614

Property, plant and equipment                        290 940         132 399         150 019

Investment properties                                  3 700           3 700           3 700

Goodwill                                              49 730          48 240          48 230

Interest in associates                               294 122               ­         284 670

Other intangible assets                                5 423           2 587           5 596

Deferred taxation                                      9 412          11 401           9 649

Non-current receivables                                7 093           2 250           5 750

Current assets                                       265 777          41 172          49 643

Other                                                127 265          33 420          38 504

Cash and cash equivalents                            138 512           7 752          11 139

Non-current assets held for sale                       1 982               ­              ­

Total assets                                         928 179         241 749         557 257


EQUITY AND LIABILITIES

Equity                                               475 724           5 388          24 879
 
Equity attributable to equity holders of the
parent                                               500 645           5 752          25 409

Non-controlling interests                            (24 921)           (364)           (530)


Non-current liabilities                              263 385             619         185 856

Deferred taxation                                         37              28              37

Borrowings                                           262 676               ­         185 166

Operating lease equalisation liability                   672             591             653


Current liabilities                                  185 301         235 742         346 522


Non-current liabilities held for sale                  3 769               ­               ­


Total equity and liabilities                         928 179         241 749         557 257

 
Net asset value per share (cents)                        467              10              43
  
Net tangible asset value per share (cents)               416             (77)            (48)



ABRIDGED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME


                                                       Six months ended           Year ended
                                                          30 September              31 March

                                                        2012            2011            2012
                                                       R'000           R'000           R'000
                                                  (Unaudited)     (Unaudited)       (Audited)

Profit for the period                                  9 523          20 117          41 395

Other comprehensive income:
 
Foreign currency translation differences                  30               ­             170

Total comprehensive income                             9 553          20 117          41 565


Attributable to:

Equity holders of the parent                           8 821          20 741          40 493

Non-controlling interest                                 732            (624)          1 072

                                                       9 553          20 117          41 565


ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                           Six months ended       Year ended
                                                           30 September             31 March

                                                        2012            2011            2012
                                                       R'000           R'000           R'000
                                                  (Unaudited)     (Unaudited)       (Audited)

Balance at beginning of year                          24 879         (14 729)        (14 729)

Share capital and premium

Shares issued                                        673 958               ­               ­

Current operations

Total comprehensive income                             9 553          20 117          41 565

Common control reserve                              (207 543)              ­              ­

Effects of changes in holding                                                            (10)

Minority interest on acquisition of subsidiaries     (25 123)              ­

Capital reductions and dividends                           ­               ­          (1 947)

Balance at end of period                             475 724           5 388          24 879




ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                        30 September                31 March

                                                        2012            2011            2012
                                                       R'000           R'000           R'000
                                                  (Unaudited)     (Unaudited)       (Audited)

Cash flows from operating activities                  96 074          50 380          84 371

Cash flows from investing activities                 (66 661)        (47 887)        (57 614)

Cash flows from financing activities                  97 942              ­          (20 877)

Increase in cash and cash equivalents                127 355           2 493           5 880

Cash and cash equivalents

At beginning of period                                11 139           5 259           5 259

Foreign exchange difference                               18              ­                ­

At end of period                                     138 512           7 752          11 139



SEGMENTAL ANALYSIS

                                                       Six months ended           Year ended
                                                         30 September               31 March

                                                        2012            2011            2012

                                                       R'000           R'000           R'000
Revenue                                           (Unaudited)     (Unaudited)       (Audited)

Vehicle component manufacturing                       85 073               ­               ­

Other                                                  7 469           3 300           6 982
 
Total                                                 92 542           3 300           6 982


Net gaming win

Gaming and Entertainment                             292 742         196 065         417 982

Total                                                292 742         196 065         417 982


EBITDA

Gaming and Entertainment                              86 134          63 309         132 987

Vehicle component manufacturing                       (2 920)              ­               ­

Other                                                 (1 763)            (29)            (30)

Total                                                 81 451          63 280         132 957


Profit before taxation

Gaming and Entertainment                              48 849          40 344          81 625

Vehicle component manufacturing                       (7 177)              ­               ­

Beverages                                            (16 305)              ­          (2 252)

Other                                                 (1 669)        (11 866)        (17 235)

Total                                                 23 698          28 478          62 138


NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS


Basis of preparation and accounting policies
The results for the six months ended 30 September 2012 have been prepared in accordance with
International Financial Reporting Standards ("IFRS"), specifically IAS 34: Interim Financial
Reporting, the AC 500 series of interpretation as issued by the Accounting Practices Board,
the requirements of the South African Companies Act, 2008 and the Listings Requirements of the
JSE Limited. The accounting policies of the group are consistent with those applied for the
year ended 31 March 2012. As required by the Listings Requirements of the JSE Limited, the
group reports headline earnings in accordance with Circular 3/2012: Headline Earnings as
issued by the South African Institute of Chartered Accountants. The interim financial
statements have not been audited or independently reviewed and were prepared under the
supervision of the Chief Financial Officer, Ms Muriel Loftie-Eaton CA(SA).

Acquisitions

During the period under review, Niveus acquired a 100% interest in the Galaxy Bingo Group and
a 90% interest in Formex Industries with effect from 1 July 2012. As the acquisitions were
made from Niveus' holding company, Hosken Consolidated Investments ("HCI") Limited,
acquisitions were accounted for as common control acquisitions. The transactions were made at
nominal values and therefore resulted in debit entries of R84m and R226m to the common
control reserve for Galaxy Bingo and Formex respectively due to their negative equity
positions at the date of acquisition. Furthermore, a R102,5m shareholders' loan to Formex was
acquired from HCI at a nominal value due to the loan being impaired to zero. This resulted in
a credit to the common control reserve of R102,5m.

The acquired entities contributed revenue of R128,3m and loss before tax of R6,7m since the
date of acquisition. If these acquisitions occurred on 1 April 2012 the contribution to
revenue would have been R253,8m and to loss before tax R4,3m.

Shares issued

The company issued 8,98m shares at R13,90 per share for the acquisition of a R124,8m loan
claim against Galaxy Bingo at face value, issued 22,48m shares at R13,90 per share for the
acquisition of a R312,5m loan claim against HCI-KWV Holdings at face value and 17,02m shares
at R13,90 per share for R236,6m cash. All of the aforementioned share issues were done in
terms of the group restructuring as preparation for the listing. On 10 September 2012 the
company listed its 107m issued shares on the main board of the JSE Limited under the
Investment Entities sector.

Comparative figures

The comparative figures are not comparable to the results for this period due to the
acquisition of interest in Galaxy Bingo and Formex. Furthermore, KWV Holdings Limited was
equity accounted from December 2011 and there was a further increase in shareholding from
35,5% to 39,9% effective July 2012.


COMMENTARY ON RESULTS

The shares commenced trading on 10 September 2012 and the interim results contain six months
trading for Vukani, six months for KWV and the trading results for Galaxy Bingo and Formex for
three months from July 2012. The KWV results, accounted for as an associate, are for the
period 1 January 2012 to 30 June 2012.

Vukani

EBITDA for the six months was R82,5m (12 months ended March 2012 R133m). This is a pleasing
performance with gross gambling revenue ("GGR") for the six months increasing to R252,6m from
R196m for the six months ending September 2011. The year-to-date average GGR per machine per
month amounted to R15 679 (R13 606 in 2011) with a closing number of machines of 4 293.
Machines rolled out remains disappointing, especially in Gauteng where the gaming board was
dismissed in March and still has not been replaced. In Limpopo progress is also frustratingly
slow despite numerous discussions with the board and the executive. The group is considering
other options to resolve the slow progress in this province.

Galaxy Bingo

The business continues to improve on a month-to-month basis with the group producing a
positive EBITDA of R3,6m for the three months ending September 2012. Had the business been
acquired on 1 March, the EBITDA would have amounted to R6,7m. The improvement is driven by
better management practices and by an increased number of electronic bingo terminals ("EBTs").
The group opened its first site in KwaZulu-Natal where it will only offer paper bingo and
limited payout machines ("LPMs"). The roll-out of EBTs in provinces other than Gauteng has not
been approved and the respective gaming boards appear to be waiting for the National Gaming
Board to make a policy decision on the regulation of EBTs.

KWV

The results reflect the group's last published results for the year ended June 2012, of which
the last six months were reflected in Niveus as losses from associates, amounting to R16,3m.

Formex

The business remains under pressure producing a negative EBITDA of R2,9m for the three months
its results were included. The negative EBITDA mainly resulted from inventory provisions and
provisions for bad debts. Had the business been consolidated from 1 March, the EBITDA would
have amounted to R3,9m. The automotive industry, especially in the component supply sector,
remains under pressure as cost-cutting initiatives from the brand owners are forced down the
supply chain with limited ability to recover margin erosion by the component manufacturers.

Financing costs

Financing costs mainly reflects borrowing costs of subsidiaries. Formex incurred interest
costs of R2,1m for the three months and Vukani R7,8m for the six months.

Cash resources

The group ended the period with R138,5m in cash.



André van der Veen

Monday 19 November 2012
Cape Town

Niveus Investments Limited 
Incorporated in the Republic of South Africa

JSE share code: NIV

ISIN code: ZAE000169553

Directors: JA Copelyn**, MJA Golding**, MM Loftie-Eaton*, ML Molefi#, JG Ngcobo#,
Y Shaik#, A van der Veen*
(* executive  ** non-executive # independent non-executive)

Company Secretary: HCI Managerial Services Proprietary Limited
Block B, Longkloof Studios, Darters Road, Gardens 8001
PO Box 5251 Cape Town 8000

Transfer secretaries: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
PO Box 61051, Marshalltown 2107

Sponsor: Investec Securities Limited

Website: www.niveus.co.za

Date: 19/11/2012 07:42:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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