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Reviewed Abridged Consolidated Results for the year ended 31 March 2013
Niveus Investments Limited
Reg. no: 1996/005744/06
Incorporated in the Republic of South Africa
JSE share code: NIV
ISIN code: ZAE000169553
REVIEWED ABRIDGED CONSOLIDATED RESULTS
for the year ended 31 March 2013
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2013 2012
R'000 R'000
ASSETS
Non-current assets 569 750 507 614
Property, plant and equipment 453 215 150 019
Investment properties 3 700 3 700
Goodwill 49 730 48 230
Interest in associates and joint ventures 15 141 284 670
Other intangible assets 26 184 5 596
Deferred taxation 15 553 9 649
Non-current receivables 6 227 5 750
Current assets 1 533 308 49 643
Inventory 816 753 865
Trade and other receivables 456 590 37 639
Restricted cash 15 000 -
Bank balances and deposits 244 965 11 139
Total assets 2 103 058 557 257
EQUITY AND LIABILITIES
Equity 1 444 738 24 879
Equity attributable to equity holders of the parent 860 241 25 409
Non-controlling interests 584 497 (530)
Non-current liabilities 229 528 185 856
Deferred taxation 34 797 37
Borrowings 192 693 185 166
Operating lease equalisation liability 2 038 653
Current liabilities 428 792 346 522
Total equity and liabilities 2 103 058 557 257
Net asset value per share (cents) 764 43
Net tangible asset value per share (cents) 696 (48)
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
31 March 31 March
2013 2012
R'000 R'000
Cash flows from operating activities 216 962 84 371
Cash flows from investing activities (37 193) (57 614)
Cash flows from financing activities 69 092 (20 877)
Increase in cash and cash equivalents 248 861 5 880
Cash and cash equivalents
At beginning of year 11 139 5 259
Foreign exchange difference (35) -
At end of year 259 965 11 139
Restricted cash 15 000 -
Bank balances and deposits 244 965 11 139
Cash and cash equivalents 259 965 11 139
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
31 March 31 March
2013 2012
R'000 R'000
Revenue 200 525 6 982
Net gaming win 655 611 417 982
Group revenue 856 136 424 964
Other income 9 023 977
Other operating expenses (691 357) (292 984)
EBITDA 173 802 132 957
Depreciation and amortisation (71 857) (47 597)
EBIT 101 945 85 360
Investment income 5 514 559
Finance costs (16 273) (21 529)
Share of losses of associates and joint ventures (14 722) (2 252)
Negative goodwill 259 781 -
Profit before taxation 336 245 62 138
Taxation (30 868) (20 743)
Profit for the year from continuing operations 305 377 41 395
Discontinued operations (16 178) -
Profit for the year 289 199 41 395
Attributable to:
Equity holders of the parent 290 414 40 323
Non-controlling interests (1 215) 1 072
289 199 41 395
Reconciliation of headline earnings Reviewed Audited
31 March 2013 31 March 2012
R'000 R'000
Gross Net Gross Net
Earnings attributable to equity holders
of the parent 290 414 40 323
IAS 16 (Gains)/losses on disposal of plant and equipment 301 107 (331) (238)
IAS 16 Impairment of plant and equipment 2 880 2 074 361 260
IFRS 3 Impairment of goodwill 343 343 - -
IFRS 3 Negative goodwill (259 781) (259 781) - -
IAS 27 Loss from disposal of subsidiary 9 555 9 555 - -
Remeasurements included in equity-accounted
earnings of associates (147) (147) - -
Headline profit 42 565 40 345
Earnings per share (cents)
Basic and diluted 301,3 68,8
- Continuing operations 318,1 68,8
- Discontinued operations (16,8) -
Headline 44,2 68,8
- Continuing operations 50,7 68,8
- Discontinued operations (6,5) -
-Basic 301,3 68,8
-Headline 44,2 68,8
Weighted average number of shares in issue ('000) 96 373 58 633
Actual number of share in issue at end of year
(net of treasury shares) ('000) 112 619 58 633
SEGMENTAL ANALYSIS
a) Information on reportable segments
Reviewed Audited
31 March 31 March
2013 2012
Revenue R'000 R'000
Beverages 175 565 -
Gaming and Entertainment 24 960 6 982
Total 200 525 6 982
Net gaming win
Gaming and Entertainment 655 611 417 982
Total 655 611 417 982
EBITDA
Gaming and Entertainment 188 345 132 987
Beverages (4 496) -
Head office (10 047) (30)
Total 173 802 132 957
Profit before tax
Gaming and Entertainment 106 541 81 625
Beverages (23 873) (2 252)
Head office 253 577 (17 235)
Total 336 245 62 138
Headline profit - continuing operations
Gaming and Entertainment 73 630 60 183
Beverages (18 105) (2 252)
Head office (7 357) (17 586)
48 168 40 345
Headline profit - discontinued operations
Vehicle component manufacturing (5 603) -
Total 42 565 40 345
b) Information on geographical areas
Reviewed Audited
31 March 31 March
2013 2012
Revenue R'000 R'000
Republic of South Africa 118 916 6 982
International 81 609 -
Total 200 525 6 982
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
31 March 31 March
2013 2012
R'000 R'000
Balance at beginning of year 24 879 (14 729)
Share capital and premium
Shares issued 745 457 -
Current operations
Total comprehensive income 289 295 41 565
Common control reserve (207 643) -
Effects of changes in holding - (10)
Minority interest on acquisition of subsidiaries 595 270 -
Capital reductions and dividends (2 520) (1 947)
Balance at end of year 1 444 738 24 879
ABRIDGED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Reviewed Audited
31 March 31 March
2013 2012
R'000 R'000
Profit for the year 289 199 41 395
Other comprehensive income:
Foreign currency translation differences 96 170
Total comprehensive income 289 295 41 565
Attributable to:
Equity holders of the parent 290 510 40 493
Non-controlling interests (1 215) 1 072
289 295 41 565
NOTES TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The results for the year ended 31 March 2013 have been prepared in accordance with International Financial Reporting
Standards (IFRS), the disclosure of 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.
These financial statements were prepared under the supervision of the financial director, Ms Muriel Loftie-Eaton CA(SA).
Acquisitions and disposal
During the year under review, Niveus acquired a 100% interest in the Galaxy Bingo Group and a 90% interest in Formex
Industries Proprietary Limited (Formex) with effect from 1 July 2012. As the acquisitions were made from Niveus
holding company, Hosken Consolidated Investments Limited (HCI), they were accounted for as common control acquisitions
due to HCI retaining control of Niveus. The transactions were made at nominal values and therefore resulted in debit
entries of R84 million and R226 million to the common control reserve for Galaxy Bingo and Formex respectively due to
their negative equity positions at the date of acquisition. Furthermore, a R102,5 million 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 R102,5 million. The investment in Formex was sold to HCI for a cash consideration of R23,4 million
in January 2013 resulting in a consolidated loss of R9,6 million on the sale recorded in the income statement.
The interest in KWV Holdings Limited (KWV) was increased from 35,5% to 39,9% in July 2012 subsequent to the purchase
of an additional 3 million KWV shares for a cash consideration of R26 million. In December 2012, Niveus purchased a further
8 million KWV shares for R7 million cash and the issue of 5,5 million Niveus shares. Niveus is now the holder of 51,6%
KWV shares and the transaction resulted in the acquisition of control. The R260 million difference between the fair value
of the investment of R375 million and the net asset value attributable to Niveus of R635 million (based on provisional amounts)
is recorded as negative goodwill in the income statement which is added back for headline earnings per share (HEPS).
In terms of IFRS 3: Business Combinations, Niveus has a maximum of 12 months from the acquisition date to complete the
acquisition accounting. The allocation of the purchase consideration to the identifiable assets and subsequent amendment
to the recorded goodwill will therefore be reported in the following year, retrospectively for the year ending 31 March 2013.
The acquired entities contributed revenue of R323 million and loss before tax of R19 million since the date of acquisition.
If these acquisitions had occurred on 1 April 2012, the contribution to revenue would have been R967 million and to loss
before tax R26 million.
Shares issued
In July 2012, the company issued 8,98 million shares at R13,90 per share for the acquisition of a R124,8 million loan claim
against Galaxy Bingo at face value, issued 22,48 million shares at R13,90 per share for the acquisition of a R312,5 million
loan claim against HCI-KWV Holdings limited at face value and 17 million shares at R13,90 per share for R236,6 million cash.
On 10 September 2012, the company listed its 107 million issued shares on the main board of the Johannesburg Stock Exchange
under the Investment Entities sector. In December 2012, Niveus issued 5,5 million shares for the acquisition of a further
interest in KWV.
Discontinued operations
The R9,6 million loss on the sale of Formex is, together with the after tax loss of R6,6 million for the six-month period
from July to December 2012, reported as a loss from discontinued operations in the current year results. As the interest in
Formex was only obtained during the current financial year, comparative figures were not restated. The loss on the sale was
added back for HEPS from discontinued operations.
Comparative figures
The comparative figures are not comparable to the results for this year due to the acquisition of interest in Galaxy Bingo,
the acquisition of a controlling interest in KWV and the acquisition and disposal of Formex.
COMMENTARY
Vukani
Vukani is the largest contributor to EBITDA in the gaming segment. Of the gaming EBITDA of R188 million, Vukani contributed
R177 million (March 2012: R133 million). The EBITDA growth year-on-year is in line with our forecast even though the machine
roll-out is behind expectations due to continued difficulties in obtaining new machine approvals from the respective gaming
boards. The frustrating delays in Gauteng approvals should be behind us with the appointment of the new chief executive officer
of the Gauteng Gaming Board. During the period management increased the gross gaming revenue (GGR) per machine by 10%.
We continue to engage the other provincial gaming boards to approve new site applications but the process remains slow.
The closing number of machines amounted to 4 404 (September 2012: 4 293, and March 2012: 3 963). The average GGR per machine
per month for the year amounted to R15 632 (R15 679 for the six months ended September 2012 and R14 159 for the year ended
March 2012).
Operational costs increased by R26 million to R157 million, a 20% year-on-year increase. Of this increase, R12,5 million
relates to once-off items which we do not expect to occur in the following year.
Bingo
The business growth remains impressive with all the Gauteng sites growing significantly faster than the provincial gaming
growth rate. This growth enabled the Bingo business to become profitable with a profit before tax of R5 million. The Gauteng
sites are now refurbished and the impact on GGR has been positive.
The group has submitted applications for bingo sites in the Eastern Cape following the release of a request for proposal
(RFP) by the Eastern Cape Gaming Board. We expect the results to be announced by the end of July.
We also opened a bingo site in KwaZulu-Natal where we are limited to paper bingo. The KwaZulu-Natal Gaming Board has not
made an announcement on Electronic Bingo Terminals (EBTs) as they await the finalisation of the National Gaming Boards
review of gaming in South Africa. This appears to be the approach adopted by all the gaming boards, other than Gauteng.
KWV
The acquisition by Niveus of a controlling interest in KWV provides KWV with a stable controlling shareholder with a longer-
term investment horizon. While the acquisition was made at a substantial discount to net asset value (NAV) the upside in
the business remains leveraging its brands and international presence. For the nine months ended 31 March 2013, KWVs profit
after tax amounted to R7,4 million, which is a substantial turn-around from the R49,6 million loss for the 12-month period
ended 30 June 2012.
The return to profitability is pleasing as it resulted from operating profits but remains tenuous if the group does not
continue to execute its strategic plans. The year-on-year improvement is also impacted by the change in year-end which is
seasonally skewed for nine months and by substantial once-off costs in the prior period. The current nine-month results
included exchange rate losses on the currency hedge book of R16 million of which R11 million relates to future periods.
The group is expected to continue with its hedging policy which will result in mark-to-market losses if the rand continues
to depreciate. However, the long-term expectation is that the group will be a net beneficiary if the currency
continues to weaken.
As indicated, the future profitability of the group is predicated on volume growth rather than cost reduction, which is
particularly difficult given the world economic conditions.
Auditors review
These results have been reviewed by the companys auditors, PKF (Jhb) Inc. Their unqualified review opinion is available
for inspection at the registered office of the company.
Dividend
While the company remains committed to its dividend policy, the board recommends providing shareholders with a scrip
alternative in light of the group pursuing various growth opportunities. A detailed announcement will follow in due course.
Changes in directorate
During the year under review, the following amendments to the board was effected:
A van der Veen appointed 14/12/2011
MM Loftie-Eaton appointed 25/1/2012
Y Shaik appointed 25/1/2012
LM Molefi appointed 25/1/2012
NC Ngcobo appointed 25/1/2012
K Moloko appointed 25/1/2012 resigned 19/6/2012
André van der Veen
22 May 2013
Cape Town
Directors: JA Copelyn**, MJA Golding**, MM Loftie-Eaton*, KI Mampeule#, LM 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 Bank Limited
Website: www.niveus.co.za
Date: 23/05/2013 08:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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