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NIVEUS INVESTMENTS LTD - Unaudited Group Interim Results for the six months ended 30 September 2013

Release Date: 21/11/2013 10:43
Code(s): NIV     PDF:  
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Unaudited Group Interim Results for the six months ended 30 September 2013

Niveus Investments Limited
Reg. no: 1996/005744/06
Incorporated in the Republic of South Africa
JSE share code: NIV
ISIN code: ZAE000169553
("the Company" or "the Group" or "Niveus")

UNAUDITED GROUP INTERIM RESULTS
for the six months ended 30 September 2013


ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION


                                                             Unaudited         Unaudited         Audited
                                                          30 September      30 September        31 March
                                                                  2013              2012            2013
                                                                 R'000             R'000           R'000
ASSETS

Non-current assets                                             606 309           660 420         569 750

Property, plant and equipment                                  487 352           289 738         452 170

Investment properties                                            3 700             3 700           3 700

Goodwill                                                        49 730            49 730          49 730

Interest in associates and joint ventures                       15 365           294 122          15 141

Other intangible assets                                         26 128             6 625          27 229

Deferred taxation                                               18 403             9 412          15 553

Non-current receivables                                          5 631             7 093           6 227

Current assets                                               1 433 409           265 777       1 533 308

Other                                                        1 200 295           127 265       1 273 343

Bank balances and deposits                                     233 114           138 512         259 965

Non-current assets held for sale                                     ­             1 982               ­

Total assets                                                 2 039 718           928 179       2 103 058

EQUITY AND LIABILITIES

Equity                                                       1 439 586           475 724       1 444 738

Equity attributable to equity holders of the parent            894 626           500 645         860 241

Non-controlling interests                                      544 960           (24 921)        584 497

Non-current liabilities                                        213 685           263 385         229 528

Deferred taxation                                               28 547                37          34 797

Borrowings                                                     182 691           262 676         192 693

Operating lease equalisation liability                           2 447               672           2 038

Current liabilities                                            386 447           185 301         428 792

Non-current liabilities held for sale                                ­             3 769               ­

Total equity and liabilities                                 2 039 718           928 179       2 103 058

Net asset value per share (cents)                                  784               467             764

Net tangible asset value per share (cents)                         717               416             696



ABRIDGED CONSOLIDATED INCOME STATEMENT


                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year 
                                                                 ended             ended           ended
                                                          30 September      30 September        31 March
                                                                  2013              2012            2013
                                                                 R'000             R'000           R'000

Revenue                                                        443 343            92 542         200 525

Net gaming win                                                 396 988           292 742         655 611

Group revenue                                                  840 331           385 284         856 136

Other income                                                     2 507                 ­           9 023

Other operating expenses                                      (764 080)         (303 833)       (693 632)

EBITDA                                                          78 758            81 451         171 527

Depreciation and amortisation                                  (52 058)          (31 376)        (71 898)

                                                                26 700            50 075          99 629

Investment income                                                6 514             1 132           5 514

Finance costs                                                   (8 634)          (10 447)        (16 273)

Share of profits of associates and joint ventures                  423           (16 305)        (14 722)

Gain on bargain purchase                                             ­                 ­         259 781

Other impairment reversals                                         689                 ­           5 539

Asset impairments                                               (1 614)                ­          (2 880)

Impairment of goodwill, investments and

  receivables                                                        ­              (757)           (343)

Profit before taxation                                          24 078            23 698         336 245

Taxation                                                       (13 159)          (14 070)        (30 868)

Profit for the year from continuing operations                  10 919             9 628         305 377

Discontinued operations                                              ­              (105)        (16 178)

Profit for the year                                             10 919             9 523         289 199

Attributable to:

Equity holders of the parent                                    15 396             8 791         290 414

Non-controlling interests                                       (4 477)              732          (1 215)

                                                                10 919             9 523         289 199


                                                              Unaudited                        Audited
                                                         Six months ended                     Year ended
                                                           30 September                       31 March
                                                     2013                  2012                  2013
                                                    R'000                 R'000                 R'000
Reconciliation of headline earnings           Gross        Net      Gross       Net      Gross          Net

Earnings attributable to equity holders

 of the parent                                          15 396                8 791                 290 414

IAS 16 (Gains)/losses on disposal of

 plant and equipment                           (807)      (532)     1 186     1 096        238          107

IAS 16 Impairment of plant and equipment      1 614      1 162          ­         ­      2 880        2 074

IFRS 3 Impairment of goodwill                     ­          ­        757       757        343          343

IFRS 3 Gain on bargain purchase                   ­          ­          ­         ­   (259 781)    (259 781)

IAS 27 Loss from disposal of subsidiary           ­          ­          ­         ­      9 555        9 555

Re-measurements included in equity-

 accounted earnings  of associates                ­          ­          ­      (136)      (147)        (147)

Headline profit                                         16 026               10 508                  42 565


                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year
                                                                 ended             ended           ended 
                                                          30 September      30 September        31 March
                                                                  2013              2012            2013

Earnings per share (cents)

Basic                                                             13,6              10,6           301,3

­ Continuing operations                                           13,6              10,7           318,1

­ Discontinued operations                                            ­              (0,1)          (16,8)

Headline                                                          14,2              12,7            44,2

­ Continuing operations                                           14,2              12,8            50,0 

­ Discontinued operations                                            ­              (0,1)           (5,8)

Diluted basic                                                     13,6              10,6           301,3

­ Continuing operations                                           13,6              10,7           318,1

­ Discontinued operations                                            ­              (0,1)          (16,8)

Diluted headline                                                  14,1              12,7            44,2

­ Continuing operations                                           14,1              12,8            50,0

­ Discontinued operations                                            ­              (0,1)           (5,8)

Weighted average number of shares in issue ('000)              112 908            82 876          96 373
 
Actual number of shares in issue at end of period ('000)       114 132           107 119         112 619

Weighted average number of shares in issue (diluted) ('000)    113 553            82 876          96 373



ABRIDGED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME


                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year 
                                                                 ended             ended           ended
                                                          30 September      30 September        31 March 
                                                                  2013              2012            2013
                                                                 R'000             R'000           R'000

Profit for the period                                           10 919             9 523         289 199

Other comprehensive income:

Foreign currency translation differences                           267                30              96

Total comprehensive income                                      11 186             9 553         289 295

Attributable to:

Equity holders of the parent                                    15 430             8 821         290 510

Non-controlling interests                                       (4 244)              732          (1 215)

                                                                11 186             9 553         289 295

ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year
                                                                 ended             ended           ended
                                                          30 September      30 September        31 March 
                                                                  2013              2012            2013
                                                                 R'000             R'000           R'000


Balance at beginning of year                                 1 444 738            24 879          24 879

Stated capital

Shares issued                                                   19 059           673 958         745 457

Current operations

Total comprehensive income                                      11 186             9 553         289 295

Equity-settled share-based payments                                874                 ­               ­

Common control reserve                                               ­          (207 543)       (208 304)

Effects of changes in holding                                  (16 000)                ­           7 169

Minority interest on acquisition of subsidiaries                     ­           (25 123)        588 762

Capital reductions and dividends                               (20 271)                ­          (2 520)

Balance at end of period                                     1 439 586           475 724       1 444 738


ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS



                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year
                                                                 ended             ended           ended
                                                          30 September      30 September        31 March
                                                                  2013              2012            2013
                                                                 R'000             R'000           R'000

Cash flows from operating activities                           (23 285)           96 074         216 908

Cash flows from investing activities                           (37 737)          (66 661)        (37 193)

Cash flows from financing activities                               286            97 942          69 146

(Decrease)/increase in cash and cash equivalents               (60 736)          127 355         248 861

Cash and cash equivalents

 At beginning of period                                        259 965            11 139          11 139

 Foreign exchange difference                                       267                18             (35)

 At end of period                                              199 496           138 512         259 965

Bank balances and deposits                                     233 114           138 512         259 965

Bank overdrafts included under current liabilities             (33 618)                -               -

Cash and cash equivalents                                      199 496           138 512         259 965



SEGMENTAL ANALYSIS
                                                             Unaudited         Unaudited         Audited
                                                            Six months        Six months            Year
                                                                 ended             ended           ended
                                                          30 September      30 September        31 March 
                                                                  2013              2012            2013
Revenue                                                          R'000             R'000           R'000

Gaming and entertainment                                        13 642             7 469          24 960

Beverages                                                      429 701                 ­         175 565

Vehicle component manufacturing                                      ­            85 073               ­

Total                                                          443 343            92 542         200 525

Net gaming win

Gaming and entertainment                                       396 988           292 742         655 611

Total                                                          396 988           292 742         655 611

EBITDA

Gaming and entertainment                                       107 599            86 134         186 070

Vehicle component manufacturing                                      ­            (2 920)              ­

Beverages                                                       (7 699)                ­          (4 496)

Head office                                                    (21 142)           (1 763)        (10 047)

Total                                                           78 758            81 451         171 527

Profit before taxation

Gaming and entertainment                                        60 878            48 849         106 541

Vehicle component manufacturing                                      ­            (7 177)             ­

Beverages                                                      (17 913)          (16 305)        (23 873)

Head office                                                    (18 887)           (1 669)        253 577*

Total                                                           24 078            23 698         336 245

* Profit before tax includes gain on bargain purchase

NOTES AND COMMENTARY TO THE ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS

Basis of preparation and accounting policies

The results for the six months ended 30 September 2013 have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), the disclosure of IAS 34: Interim Financial Reporting, the SAICA Financial Reporting 
Guides as issued by the Accounting Practices Board, the Financial Reporting Pronouncements as issued by the Financial 
Reporting Standards Council, the requirements of the South African Companies Act, 2008 (as amended) 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 2013. As required by the Listings Requirements of the JSE Limited, the group reports headline earnings 
in accordance with Circular 2/2013: Headline Earnings as issued by the South African Institute of Chartered Accountants. 
The interim financial statements have not been audited nor independently reviewed and were prepared under the supervision 
of the financial director, Ms Muriel Loftie-Eaton CA(SA).

Vukani

Vukani contributed R87 million to group gaming EBITDA. The EBITDA includes R15 million in share-based payment costs 
that are not expected to recur at the same rate in future. EBITDA is in line with budget, with the higher gross gaming 
revenue ("GGR") per limited payout machine (“LPM”) compensating for LPM roll-out which is slower than anticipated. While 
the number of LPMs has not increased significantly since year-end, the approvals pipeline is better than previous periods. 
Additional LPM roll-out remains contingent on gaming and liquor board meetings, with the KwaZulu-Natal (“KZN”) roll-out in 
particular being hampered by a significant backlog of applications at the liquor board. The delays previously experienced
in the Gauteng Province, appear to have subsided.

We remain concerned about the number of illegal gaming operations in the country and are engaging with the regulators 
to assist in addressing the problem which, if not addressed, will have a negative impact on our business. 

The gaming industry has taken notice of the potential of sports betting and our competitors have started to acquire sports
betting licences during the last 12 months. We have been involved in the industry for the last 24 months and have been 
operating our own sports betting site for the last 12 months. Plans to participate in the industry are in place and can be 
expanded if we are comfortable with our position in the market, the potential returns of the business and our risk management 
systems. We have been granted sports-betting licences in the Western Cape. 

The number of LPMs at 30 September 2013 were  4 459, with an average GGR per LPM of R16 831 for the six months 
ended 30 September 2013. Operational overheads increased by R23 million from R80 million in the comparative period, 
mainly due to the provision for share-based payment costs and foreign exchange losses on unhedged foreign payables 
for LPM purchases.

Bingo

Trading in the key Gauteng market has exceeded the budget and the prior year's trading, with Gauteng sites continuing to grow 
faster than the provincial gaming growth rate. Our integrated product offering, including our Galaxy Grill concept, appears 
to be well received by the market and our operational service is improving continuously. 

Bingo contributed R18 million to group EBITDA and R7 million to net profit after taxation.

The group was granted two licences in the Eastern Cape, one of which is in Port Elizabeth. It is expected that trading 
under these licences will commence in the first quarter of 2014.

We await the finalisation of the licences in KZN where the gaming board has indicated that it intends to reduce the 
number of potential Bingo licences by 30%. To date we are the only active operator in KZN, located in Amanzimtoti.  

Significant one-off costs are included in the current period that relate to bid costs and lease costs prior to 
opening sites. The group benefited from a revised equipment sourcing structure that reduced rental costs in the 
current period and will result in lower future costs.

The approval of electronic Bingo terminals (“EBTs”) in KZN and the Eastern Cape has not been finalised by the respective 
gaming boards. The industry is actively engaging with the gaming boards to obtain the necessary approvals in this regard.

KWV

The change in year-end for KWV makes comparisons to the prior reported nine-month period difficult. At year-end the 
group had returned to profitability, but the interim results show a loss of R12 million. Compared to the six-month 
comparable results, volume growth of 5% and revenue growth of 25% were achieved.

The loss includes significant inventory write-offs and foreign exchange losses of R37 million of which approximately 
R10 million relates to mark-to-market losses attributable to future periods for which the income has not been received. 
The net loss of R27 million represents additional income that the group could have earned had it not elected to hedge
its export sales book. The benefit of the weaker exchange rate is reflected in group turnover.

Costs remain well controlled with most cost centres containing costs below budget.

The group is expected to continue with its hedging policy which will result in mark-to-market losses if the currency 
continues to depreciate. A substantial portion of the sales is hedged when pricing with customers is concluded to 
ensure that planned margins are achieved. This policy is appropriate given the group’s low aggregate profitability 
which impedes the ability to absorb foreign exchange risk. The average hedge rate continues to follow the ZAR 
depreciation against key exchange rates, with the average hedge rate now considerably higher than at year-end. 
The group will be a net beneficiary if the currency continues to weaken.

During the period the group acquired an additional 2 million shares in KWV at a price of R8 per share, taking the 
interest in KWV from 52% to 54%.

Head office

The head office EBITDA comprises mainly costs relating to directors’ emoluments, management salaries and share-based 
payment provisions totalling R13 million as well as management fees of R4,3 million paid to the management company.

Dividend and shares issued

On 22 July a gross dividend of 18 cents per ordinary share, with a net dividend of 15,3 cents per share after 
dividends withholding tax of 15%, or the option to elect a capitalisation issue alternative of 1 share for every 
70 shares held, was declared. A gross cash dividend of R1,2 million was paid and 1,5 million capitalisation shares 
were issued on 12 August 2013.

Interim dividend

The directors approved an interim gross ordinary dividend for the six months ended 30 September 2013 of 7 cents 
per share on Thursday, 21 November 2013. The dividend will be payable on Tuesday, 17 December 2013. There are 
114 131 689 ordinary shares in issue. 

The interim dividend meets the definition of a dividend in terms of the Income Tax Act (Act 58 of 1962). The 
dividend amount net of South African dividends tax of 15% is 5.95 cents per share to those shareholders that 
are not exempt from dividends tax. The distribution is made from income reserves and no STC credits were applied 
against the dividend. The Company's tax reference number is 9564/137/84/3.

Last day to trade cum dividend			Friday, 6 December 2013
Trading ex dividend commences		        Monday, 9 December 2013
Record date					Friday, 13 December 2013
Payment date					Tuesday, 17 December 2013

Share certificates may not be dematerialised or rematerialised between Monday, 9 December 2013 and Friday, 
13 December 2013, both days inclusive.

Comparative figures

The comparative figures are not comparable to the results for this period due to the acquisition of interest in the 
Galaxy Bingo Group, the acquisition of a controlling interest in KWV and further shares in KWV as well as the 
acquisition and disposal of Formex Industries Proprietary Limited. 


André van der Veen

21 November 2013
Cape Town


Directors: JA Copelyn†, MM Loftie-Eaton*, KI Mampeule#, 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: PSG Capital Proprietary Limited

Website: www.niveus.co.za



Date: 21/11/2013 10:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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