Wrap Text
Reviewed Condensed Consolidated Results
Niveus Investments Limited
Incorporated in the Republic of South Africa
Registration number: 1996/005744/06
JSE share code: NIV
ISIN code: ZAE000169553
("the Company" or "the Group" or "Niveus")
REVIEWED CONDENSED CONSOLIDATED RESULTS
for the year ended 31 March 2014
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited
Reviewed Reviewed 31 March
Reviewed 31 March 31 March 2013
31 March 2013 2013 Reported
2014 Restated Restatement previously
R'000 R'000 R'000 R'000
ASSETS
Non-current assets 1 201 312 1 058 332 488 582 569 750
Property, plant and equipment 1 024 408 891 530 439 360 452 170
Investment properties 3 900 3 700 3 700
Goodwill 49 730 49 730 49 730
Interest in associates and joint ventures 15 272 15 141 15 141
Other intangible assets 78 449 76 451 49 222 27 229
Deferred taxation 17 996 15 553 15 553
Non-current receivables 11 557 6 227 6 227
Current assets 1 532 988 1 533 308 1 533 308
Other 1 309 548 1 273 343 1 273 343
Bank balances and deposits 223 440 259 965 259 965
Total assets 2 734 300 2 591 640 488 582 2 103 058
EQUITY AND LIABILITIES
Equity 1 902 027 1 856 025 411 287 1 444 738
Equity attributable to equity
holders of the parent 1 173 244 1 072 465 212 224 860 241
Non-controlling interests 728 783 783 560 199 063 584 497
Non-current liabilities 277 034 306 823 77 295 229 528
Deferred taxation 107 629 112 092 77 295 34 797
Borrowings 165 629 192 693 192 693
Accruals 420
Operating lease equalisation liability 3 356 2 038 2 038
Current liabilities 555 239 428 792 428 792
Total equity and liabilities 2 734 300 2 591 640 488 582 2 103 058
Net asset value per share (cents) 1 016 952 764
Net tangible asset value per share (cents) 918 855 696
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited
Reviewed Reviewed Year ended
Reviewed Year ended Year ended 31 March
Year ended 31 March 31 March 2013
31 March 2013 2013 Reported
2014 Restated Restatement previously %
R'000 R'000 R'000 R'000 Change
Revenue 1 154 982 258 724 58 199 200 525 346,4%
Net gaming win 818 421 655 611 655 611
Group revenue 1 973 403 914 335 58 199 856 136 115,8%
Other income 12 540 3 575 (5 448) 9 023
Other operating expenses (1 773 760) (740 844) (52 751) (688 093)
EBITDA 212 183 177 066 177 066 19,8%
Depreciation and amortisation (107 588) (72 626) (728) (71 898)
EBIT 104 595 104 440 (728) 105 168 0,1%
Investment income 11 136 5 514 5 514
Finance costs (16 496) (16 273) (16 273)
Share of profits of associates and joint
ventures 331 (14 722) (14 722)
Gain on bargain purchase 472 260 212 479 259 781
Asset impairments (6 413) (2 880) (2 880)
Impairment of goodwill, investments and
receivables (329) (343) (343)
Profit before taxation 92 824 547 996 211 751 336 245 (83,1%)
Taxation (34 044) (30 635) 233 (30 868)
Profit for the year from continuing operations 58 780 517 361 211 984 305 377 (88,6%)
Discontinued operations (16 178) (16 178)
Profit for the year 58 780 501 183 211 984 289 199 (88,3%)
Attributable to:
Equity holders of the parent 61 141 502 637 212 223 290 414 (87,8%)
Non-controlling interests (2 361) (1 454) (239) (1 215) 62,4%
58 780 501 183 211 984 289 199
Reviewed
Reviewed Year ended
Year ended 31 March 2013
31 March 2014 Restated
R'000 R'000
Reconciliation of headline earnings Gross Net Gross Net
Earnings attributable to equity holders
of the parent 61 141 502 637
IAS 16 (gains)/losses on disposal of plant and equipment (679) (475) 238 107
IAS 16 Impairment of plant and equipment 6 413 4 231 2 880 2 074
IFRS 3 Impairment of goodwill 329 329 343 343
IFRS 3 Gain on bargain purchase (472 260) (472 260)
IAS 27 Loss from disposal of subsidiary 9 555 9 555
IAS 40 Fair value adjustment to investment property (200) (163)
Re-measurements included in equity-accounted earnings
of associates (147) (147)
Headline earnings 65 063 42 309
Audited
Reviewed 31 March
Reviewed 31 March 2013
31 March 2013 Reported
2014 Restated previously
R'000 R'000 R'000
Earnings per share (cents)
Basic 53,8 521,6 301,3
Continuing operations 53,8 538,4 318,1
Discontinued operations (16,8) (16,8)
Headline 57,2 43,9 44,2
Continuing operations 57,2 49,7 50,0
Discontinued operations (5,8) (5,8)
Diluted basic 52,6 521,6 301,3
Continuing operations 52,6 538,4 318,1
Discontinued operations (16,8) (16,8)
Diluted headline 55,9 43,9 44,2
Continuing operations 55,9 49,7 50,0
Discontinued operations (5,8) (5,8)
Weighted average number of shares in issue ('000) 113 677 96 373 96 373
Actual number of shares in issue at end of period ('000) 115 512 112 619 112 619
Weighted average number of shares in issue (diluted) ('000) 116 330 96 373 96 373
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Audited
Reviewed Reviewed Year ended
Reviewed Year ended Year ended 31 March
Year ended 31 March 31 March 2013
31 March 2013 2013 Reported
2014 Restated Restatement previously
R'000 R'000 R'000 R'000
Profit for the period 58 780 501 183 211 984 289 199
Other comprehensive income:
Foreign currency translation differences 2 773 96 96
Total comprehensive income 61 553 501 279 211 984 289 295
Attributable to:
Equity holders of the parent 63 597 502 733 212 223 290 510
Non-controlling interests (2 044) (1 454) (239) (1 215)
61 553 501 279 211 984 289 295
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Audited
Reviewed Reviewed Year ended
Reviewed Year ended Year ended 31 March
Year ended 31 March 31 March 2013
31 March 2013 2013 Reported
2014 Restated Restatement previously
R'000 R'000 R'000 R'000
Balance at beginning of year 1 856 025 24 879 24 879
Stated capital
Shares issued 46 657 745 457 745 457
Current operations
Total comprehensive income 61 553 501 279 211 984 289 295
Equity-settled share-based payments 5 647
Common control reserve (208 304) (208 304)
Effects of changes in holding (19 450) 7 169 7 169
Minority interest on acquisition of subsidiaries 788 065 199 303 588 762
Capital reductions and dividends (48 405) (2 520) (2 520)
Balance at end of period 1 902 027 1 856 025 411 287 1 444 738
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
31 March 31 March
2014 2013
R'000 R'000
Cash flows from operating activities 221 161 216 908
Cash flows from investing activities (236 440) (37 193)
Cash flows from financing activities (21 246) 69 146
(Decrease)/increase in cash and cash equivalents (36 525) 248 861
Cash and cash equivalents
At beginning of period 259 965 11 139
Foreign exchange difference (35)
At end of period 223 440 259 965
Bank balances and deposits 223 440 259 965
Cash and cash equivalents 223 440 259 965
SEGMENTAL ANALYSIS
Reviewed
Reviewed Year ended
Year ended 31 March
31 March 2013
2014 Restated
Revenue R'000 R'000
Gaming and entertainment 44 770 24 960
Beverages 1 110 212 233 764
Total 1 154 982 258 724
Reviewed Audited
Year ended Year ended
31 March 31 March
2014 2013
Net gaming win R'000 R'000
Gaming and entertainment 818 421 655 611
Total 818 421 655 611
Reviewed Audited
Year ended Year ended
31 March 31 March
2014 2013
EBITDA R'000 R'000
Gaming and entertainment 216 035 191 609
Beverages 26 075 (4 496)
Head office (29 927) (10 047)
Total 212 183 177 066
Reviewed
Reviewed Year ended
Year ended 31 March
31 March 2013
2014 Restated
Profit before tax R'000 R'000
Gaming and entertainment 117 616 106 308
Beverages (448) (24 368)
Head office (24 344) 466 056*
Total 92 824 547 996
* Profit before tax includes gain on bargain purchase
Reviewed
Reviewed 31 March
31 March 2013
2014 Restated
R'000 R'000
Headline earnings continuing operations
Gaming and entertainment 83 395 70 446
Beverages 1 050 (18 361)
Head office (19 382) (4 173)
Headline earnings discontinued operations
Vehicle component manufacturing (5 603)
Group headline earnings 65 063 42 309
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The results for the financial year ended 31 March 2014 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 Committee, 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,
except as noted below. The adoption of new standards that are applicable for this financial year had no impact on the figures
presented. Details of the standards adopted will be provided in the annual financial statements. 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 MM Loftie-Eaton CA(SA).
Comparative figures
The comparative figures are not comparable to the results of the current financial year due to the acquisition of Galaxy
Bingo (“Bingo”) and the acquisition of a controlling interest in KWV Holdings Limited (“KWV”) on 1 July 2012 and 1 January
2013 respectively. The prior year figures also include the acquisition and disposal of Formex Industries Proprietary Limited.
Restatement of prior year figures
The acquisition of a controlling interest in KWV on 1 January 2013 qualified as a business combination in terms of IFRS 3:
Business Combinations. Comparative figures as at 31 March 2013 were determined based on all information available at the
acquisition date (“provisional accounting”). This provisional accounting was adjusted for new information obtained within
the timeframe of 12 months after the acquisition date. These adjustments to the fair values determined in the provisional
purchase price allocation are not treated as movements in the current financial year, but as an adjustment to the comparative
figures as at 31 March 2013. The revised acquisition accounting results in an additional gain on bargain purchase of
R212 million due to adjustments to the valuation of KWV’s trademarks and property, plant and equipment. The effects of
the revised acquisition accounting are as follows:
Property, plant and equipment increased with R439 million
Trademarks (included in intangible assets) increased with R49 million
Deferred tax liability increased with R77 million
Non-controlling interest increased with R199 million
KWV changed their accounting policy to include excise duty in the valuation of inventory. The change had the following
effects on the comparative figures:
On 31 March 2013
Group Inventory increased with R163 million
Group Trade and other receivables decreased with R163 million
For the year ended 31 March 2013
Group Revenue increased with R58 million
Group Other income decreased with R5 million
Group Other operating expenses increased with R53 million
Shares issued
On 22 July 2013, a gross dividend of 18 cents per ordinary share, with a net dividend of 15,3 cents per share after
Dividend 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 1 512 602 capitalisation shares were issued on
12 August 2013.
On 17 February 2014, the Company issued 1 379 896 shares at R20 per share to Johnnic Holdings Management Services ("JHMS")
in lieu of the settlement of management fees payable to JHMS in the amount of R27 597 920 in terms of the management agreement
between JHMS and Niveus. The shares were issued in terms of a specific approval for the issue of up to 2 000 000 shares to
JHMS for this purpose. The approval was granted by passing of a resolution at the general meeting of shareholders on 26 April
2013 in terms of the circular dated 28 March 2013. The management fee included R14,6 million which related to an equity-settled
share-based payment in terms of IFRS 2: Share-based payments and was recorded directly in equity.
Commentary
Consumer spending and disposable income is under significant pressure in South Africa and it has impacted many sectors of the
economy negatively. We are however fortunate that our gaming businesses have not been affected as much as other sectors that
are dependent on consumer spending. We have continued to invest in gaming and committed R186 million to capital expenditure
during the 2014 financial year. The potential returns remain attractive in this sector and our plans for 2015 are to continue
to invest in growth of these businesses.
KWV has over the last few years gone through a major turnaround. We are satisfied that KWV has now been returned to
satisfactory levels of efficiency and that the underlying profitability of its operations has been stabilised.
Vukani
Vukani remained the largest contributor to EBITDA in the gaming segment, contributing R183 million (R178 million March 2013)
of the total R216 million gaming EBITDA for the year. The EBITDA includes a non-recurring R31 million share-based payment
cost and grew by 20% compared to the prior year when disregarding this charge. The machine roll-out was slower than anticipated,
and while some of this can be attributed to red tape and the slow processing of applications by certain gaming boards, the Group
needs to improve its site selection and submission processes. The average GGR per machine benefited from the closure of under-
performing sites.
The installed machine base increased from 4 404 in the prior year to 4 643 at March 2014 (4 459 September 2013). The average
GGR per machine per month amounted to R16 848 (R16 831 September 2013 and R15 632 March 2013). In order to improve return on
assets, the Group will increasingly focus on the return per Limited Payout Machine ("LPM") rather than only on the number of
operational LPMs.
Operational costs increased by R42 million to R199 million, a 26% year-on-year increase largely due to the once-off share-based
payment charge of R31 million. Also included in this increase is R5 million foreign exchange loss on unhedged foreign payables
for LPM purchases.
During the current financial year, the Group was awarded sports betting licenses in the Western Cape and Eastern Cape Provinces.
The North West license was awarded in May. It is not expected that the Sports Betting Business will make a meaningful contribution
to profits in the 2015 financial year.
Bingo
Bingo contributed R33 million to Group EBITDA whilst operational expenditure has increased significantly from the prior year
due to the expansion of the existing site base. Most of the new sites opened towards the latter part of the financial year and
reduced the overall EBITDA due to pre-opening expenses. In addition, lease and site improvement expenses were incurred in
anticipation of future licenses.
The Group has been successful in obtaining two Bingo licenses in the Eastern Cape: one in Port Elizabeth and the other in Gonubie.
Trading under these licenses commenced in March 2014. The Eastern Cape Gambling and Betting Board have issued another request for
proposal (“RFP”) for additional licenses for which the bidding processes are currently open.
Bingo is in the process of developing 6 additional sites in KwaZulu-Natal within the 2015 financial year and some of the expenses
for these sites were incurred in the 2014 financial year. An interest in a temporary license in Brits in the North West province
was acquired during the year and trading in this province commenced during the first quarter of 2014. The new permanent site is
under construction and will open in the second quarter of the 2015 financial year.
The operation of Electronic Bingo Terminals (“EBTs”) has however not yet been approved by the KwaZulu-Natal Gaming and Betting
Board and uncertainty exists when this will happen. EBTs have been approved by the Gauteng, Eastern Cape, Mpumalanga and North
West gaming and betting boards.
Casino license
The Group acquired a 60% interest in the Kuruman casino license. Construction has commenced and it is anticipated that the casino
will be operational in December 2014.
KWV
KWV managed to deliver an attributable headline earnings of R1 million for the 12 months. While this is lower than the previous
reporting period of 9 months, the results include trading for the previously excluded 3 month period from April to June 2013,
which are historically not very robust. The profit was however below budget due to lower than expected volume growth and a
substantial write-down of inventory due to the slower sales.
Packed spirits revenue was flat compared to the prior year but volumes declined. The decline in volume was due to fierce competition
in the South African market, especially as whiskey continues to grow at the expense of the brandy category.
Wine sales volumes continued to improve with the core brands of KWV and Roodeberg growing impressively in Europe and South Africa.
The Group benefitted from a higher gross margin as the sales mix shifts to premium wine sales.
KWV’s business model, and prospects, improved substantially as a result of the more than 20% depreciation of the rand due during
the year. However, the Group did not receive the benefit of this depreciation as forward sales were hedged going into the financial
year and exchange rate losses amounted to R48 million. In effect KWV’s profit would have been R48 million higher had it not elected
to hedge its foreign sales.
Going forward KWV will continue to hedge a portion of its future sales, albeit now at higher rate. The business operates close
to breakeven and the priority is to stay in business rather than to bet on the currency.
The Group remains committed to improving profitability through volume growth in its key KWV, Laborie and Roodeberg brands. Achieving
growth of premium branded products requires an investment in distribution, marketing and advertising and the Group remains committed
to this strategy even if it reduces profitability in the short term.
Auditor’s Review
The Condensed Consolidated Results have been reviewed by the Company’s auditors, Grant Thornton (Jhb) Inc. Their unqualified review
opinion is available for inspection at the registered office of the Company.
Changes in Directorate
During the year under review, the following amendments to the board were effected:
MJA Golding – resigned 24/05/2013
KI Mampeule – appointed 10/04/2013
Dividend to Shareholders
The board declared a dividend of 28 cents per gross ordinary share, with a net dividend of 23,8 cents per share after Dividend
Withholding Tax of 15%, and offer shareholders the option to elect to receive either cash or one ordinary share for every 76
shares held. A detailed announcement will follow in due course.
On 22 July 2013, a gross dividend of 18 cents per ordinary share, with a net dividend of 15,3 cents per share after Dividend
Withholding Tax of 15%, or the option to elect a capitalisation issue alternative of 1 share for every 70 shares held, was declared.
On 17 December 2013 an interim cash dividend of 7 cents per ordinary share were declared and paid.
André van der Veen
Chief executive officer
22 May 2014
Cape Town
Directors:
JA Copelyn^, MM Loftie-Eaton*, KI Mampeule#, ML Molefi#, JG Ngcobo#, Y Shaik#, A van der Veen*
(^ non-executive * 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: 22/05/2014 11:35:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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