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Abridged report relating to the audited financial results for the year ended 31 March 2014 and notice of AGM
Nictus Limited
(Incorporated in the Republic of South Africa)
(Registration number 81/011858/06)
JSE Share code: NCS NSX Share code: NCT
ISIN Code NA0009123481
(“Nictus” or “the Company” or the “Group”)
Abridged report relating to the audited financial results for the
year ended 31 March 2014 and details of the notice of the annual
general meeting
Condensed consolidated statement of comprehensive income for
the year ended 31 March 2014
Figures in R’000 2014 2013
Continuing operations
Revenue 48 757 40 156
Cost of sales (20 685) (22 228)
Gross profit 28 072 17 928
Other income 2 285 4 300
Investment income from operations 18 557 14 064
Operating and administrative
expenses (48 651) (51 458)
Results from operating activities 263 (15 166)
Investment income 3 405 2 005
Operating profit/(loss) before
financing costs 3 668 (13 161)
Finance expenses (1) (524)
Profit/(loss) before taxation 3 667 (13 685)
Taxation expense (653) (33)
Profit/(loss) from continuing
operations 3 014 (13 718)
Discontinued operations
Loss from discontinued operations,
net of tax – (1 411)
Profit/(loss) for the year 3 014 (15 129)
Other comprehensive income for the
year 263 –
Items that will never be reclassified
to profit or loss
Deferred taxation related to other
comprehensive income 263 –
Total comprehensive income for the
year 3 277 (15 129)
Profit/(loss)attributable to:
Owners of the Company 3 014 (15 129)
Total comprehensive income
attributable to:
Owners of the company 3 277 (15 129)
Earnings per share
Earnings/(loss) per share (cents) 4,55 (22,92)
Diluted earnings/(loss) per share
(cents) 4,55 (22,92)
Weighted average number of shares in
issue (000's) 66 270 59 839
Condensed consolidated statement of financial position
as at 31 March 2014
Figures in R’000 2014 2013
Assets
Non-current assets
Property, plant and equipment 16 997 17 681
Intangible assets 573 –
Investments 32 883 26 058
Loans and receivables 5 723 10 944
Deferred tax assets 2 460 3 124
Current assets 375 073 276 202
Total assets 433 709 334 009
Equity and liabilities
Equity
Stated capital 48 668 48 668
Revaluation reserve 8 170 5 905
Retained earnings 24 753 21 476
Liabilities
Non-current liabilities
Deferred tax liabilities 2 506 5 045
Current liabilities*
Insurance contract liability 338 920 244 698
Other current liabilities 10 692 8 217
Total equity and liabilities 433 709 334 009
Included in current liabilities is the insurance contract liability.
Premiums received under this liability are invested in terms of the
Insurance Act with the result that certain investments are of a
long-term nature.
Condensed consolidated statement of cash flows for the year
ended 31 March 2014
Figures in R’000 2014 2013
Cash flow from operating activities
Cash generated from/(utilised by)
operations 70 647 (227 387)
Investment income from operations
received 17 233 12 902
Finance expenses paid (1) (524)
Dividends received 1 324 1 162
Taxation paid – (401)
Net cash flow from operating activities 89 203 (214 248)
Net cash flow utilised by investing
activities (17 375) (160)
Net cash generated by financing activities – 37 032
Net increase/(decrease) in cash and cash
equivalents 71 828 (177 376)
Cash and cash equivalents at beginning
of year 120 458 297 834
Cash and cash equivalents at end of year 192 286 120 458
Condensed consolidated statement of changes in equity for the year
ended 31 March 2014
Total
non-
Reval- Contin- distri- Re-
Figures Share Stated uation gency butable tained Total
in R’000 capital capital reserve reserve reserves earnings equity
Balance at
1 April 2012 26 722 – 53 918 9 196 63 114 78 731 168 567
Total compre-
hensive income
for the year
Loss for the year
– continuing
operations – – – – – (13 718) (13 718)
– discontinued
operations – – – – – (1 411) (1 411)
Total comprehensive
income for the year – – – – – (15 129) (15 129)
Transactions
with owners of
the Group,
recognised
directly in equity
Contributions by
and distributions
to the owners of
the Group
Issue of new
ordinary shares – 21 946 – – – – 21 946
Conversion of
shares (26 722) 26 722 – – – – –
Dividends to
shareholders – – – – – (7 616) (7 616)
Distribution to
shareholders – – – – – (91 719) (91 719)
Total contri-
butions by and
distributions
to the owners
of the Group (26 722) 48 668 – – – (99 335) (77 389)
Transfers to
retained earnings
Transfer from
reserves on
distribution to
shareholders – – (46 243) (7 090) (53 333) 53 333 –
Transfer from
revaluation
reserve on
distributions to
shareholders – – (1 770) – (1 770) 1 770 –
Transfer from
contingency
reserve on
distribution to
shareholders – – - (2 106) (2 106) 2 106 –
Total transfers to
retained earnings – – (48 013) (9 196) (57 209) 57 209 –
Balance at
31 March 2013 – 48 668 5 905 – 5 905 21 476 76 049
Total compre-
hensive income
for the year
Profit for the year – – – – – 3 014 3 014
Taxation adjust-
ments to revalu-
ation of properties – – – – – 263 263
Total comprehensive
income for the year – – – – – 3 277 3 277
Transfers to reserves
Adjustments to
revaluation reserve – – 2 265 – 2 265 – 2 265
Balance at
31 March 2014 – 48 668 8 170 – 8 170 24 753 81 591
Condensed segmental report for the year ended
31 March 2014
Figures in R’000 2014 2013
Segment assets
Furniture retail 50 429 53 627
Insurance and finance 413 126 304 684
Head office and eliminations (29 846) (24 302)
Total assets 433 709 334 009
Segment revenue
Furniture retail 36 367 37 887
Furniture inter-segmental revenue 1 206 964
Total furniture revenue 36 573 38 851
Insurance and finance 13 442 2 980
Insurance and finance inter-segmental revenue 18 20
Total Insurance and finance revenue 13 460 3 000
Head office and eliminations (1 276) (1 695)
Total revenue 48 757 40 156
Profit/(loss) after taxation from
continuing operations
Furniture retail (806) (12 265)
Insurance and finance 5 040 2 833
Head office and eliminations (1 220) (4 286)
Total profit/(loss)after taxation 3 014 (13 718)
Accounting policies
Basis of preparation
The summary consolidated annual financial statements are prepared in
accordance with the requirements of the JSE Limited Listings
Requirements for provisional reports, and the requirements of the
Companies Act applicable to summary financial statements. The
Listings Requirements require provisional reports to be prepared in
accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and financial pronouncements
as issued by the Financial Reporting Standards Council and to also,
as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. The accounting policies applied in the
preparation of the consolidated financial statements from which the
summary financial statements were derived are in terms of
International Financial Reporting Standards and are consistent with
those accounting policies applied in the preparation of the previous
consolidated annual financial statements.
The new standards and interpretations adopted during the period under
review had no material impact 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 for the year
ended 31 March 2014
Figures in R’000 2014 2013
Continued operations
Profit/(loss) for the year, net of taxation 3 014 (13 718)
Profit on disposal of property, plant and
equipment (12) (2)
Headline earnings/(loss) 3 002 (13 720)
Headline earnings/(loss) per share (cents) 4,53 (22,93)
Diluted headline earnings/(loss) per share (cents) 4,53 (22,93)
Discontinued operations
Loss for the year, net of taxation – (1 411)
Profit on disposal of property, plant and
equipment – (84)
Headline loss – (1 495)
Headline loss per share (cents) – (2,50)
Diluted headline loss per share (cents) – (2,50)
Responsibility for consolidated annual financial statements
The consolidated financial statements for the year ended 31 March
2014 (“Audited Financial Statements”) have been audited by KPMG Inc.,
and their unqualified audit opinion is available for inspection at
the registered office of the Company.
This Abridged Financial Information has been extracted from the
Audited Financial Statements, but is not itself audited. The
directors of Nictus are solely responsible for the preparation of the
Abridged Financial Information and for its correct extraction from
the underlying Audited Financial Statements.
Subsequent events
No events subsequent to year end occurred that had a material effect
on the 31 March 2014 results.
Chairman’s report - BJ Willemse - Nictus Group
The unbundling of the Nictus Group into two separate listed entities
has resulted in the benefits as envisaged, albeit with concerted
efforts of board of directors (“Board”)and management.
The major structural effect thereof is the separation of geographical
listed holding companies, being the unbundled Nictus Holdings Limited
in Namibia, listed on the Namibian Stock Exchange (NSX) and the
remaining South African Nictus Limited, doing business in South
Africa and listed on the JSE with a secondary listing on the NSX.
Nictus Limited can report a huge turnaround in financial results for
2014, compared to 2013, whilst shareholders who retained their shares
in Nictus Holdings in Namibia have also experienced a strong profit
growth and an increase in asset value.
The Board is of the opinion that Nictus Limited business has
stabilised and the new management team is now focused on the
sustainable profitability of the Group into the future.
At operational level new strategic business plans have been developed
for the next five years and the Board and management have a clear
vision of the goals and the growth path ahead. Returning to
profitability, the objective is to keep profits sustainable and also
to focus on creating and capitalising on new growth opportunities.
Using the JSE listing to grow the business remains a strategic
objective.
The furniture business has shown a turnaround after the closing of
the loss-making store in Soweto, which was the target of a criminal
syndicate during 2012. Business growth, expansion into new markets
and increased client base will be the main areas enjoying attention
in the action plans. The core business remains the selling of high
quality furniture to the mid- to high-income groups, with a profit
drive from trading and not in providing credit. Credit criteria
remain conservative and impairments are well below the industry
average.
Corporate Guarantee (South Africa) Limited (“Corporate Guarantee”),
the insurance segment, consolidated its management and administration
and has shown strong growth during the year, achieving its best
results ever. Assets under management have grown by more than 34% to
R404 million. Given the nature of the Alternative Risk Transfer
product and the selection of risk educated clients, the business
remains profitable and is managed well within the regulatory
framework. The regulator is evaluating a new legislative framework
for the insurance industry, a process in which Corporate Guarantee is
intimately involved, and we are monitoring the new regulations and
their possible impacts when it will be implemented by 2016 (current
target date). The business is well capitalised and current
indications are that the business model will continue to operate well
within the new envisaged regulatory framework. Growth was exceptional
and the business continues to expand into new geographical areas.
Risks are evaluated and monitored by a dedicated risk committee,
while the Group audit committee oversees the capital management of
the insurance segment.
Investment management has been a prominent focus point over the past
year and the results are evident in increased profitability, well
within the risk appetite of the business. Risk appetite remains
conservative and assets are managed with due diligence and according
to asset classes defined and prescribed by statute.
We envisage a continuing growth for the 2015 year and improved
profitability, despite evidence of an economic downturn in South
Africa. This is a result of an increase in management focus and a new
talent pool that has been recruited, while control and oversight
functions have also been improved.
During the past year Wicus Olivier has stepped down as a
non-executive director after more than thirty years of service to
shareholders. We thank him for the valuable contribution that he has
made during difficult times in the long history of the Group. With
the aid of his input strong foundations have been laid for future
growth to build on.
Gerard Swart joined the board as an independent non-executive
director and we look forward to his contribution to the growth and
oversight of the Company as well as his wealth of financial
management expertise.
Wilmar Fourie stepped down as financial director in April 2014 and is
currently focusing on the growth opportunities of Nictus Holdings
Limited in Namibia.
In April 2014 Frank Theart was appointed financial director of the
Company and we have full confidence in his abilities, since he has
been with the Group for a number of years. His role will also
encompass the assurance of sound financial reporting, therein working
closely with our auditors, and will play a valuable part in the
financial oversight of the Company.
A special word of appreciation to the managing director, Nico Tromp,
for his patience in building a sustainable business and in
accumulating the necessary expertise within the Group and his vision
of the future growth of the business.
I want to thank all personnel for their dedication and loyalty to the
Group in delivering exceptional and sustainable results to all
stakeholders.
Group managing director's report - NC Tromp - Nictus Group
The unbundling of the Namibian operations from the South African
operations has been successfully concluded. The effective management
of the Group has been established in South Africa, and is based in
the Randburg head office. The result from a more focused approach by
the board and management is that costs were eliminated and activities
consolidated, which resulted in efficiencies that are evident in the
financial results for the year.
Overview
Management strive to yield a sustainable above average return for all
stakeholders of the Group over the medium to longer term.
The main focus of activities is presently in Gauteng and the Cape
provinces where the management expertise footprints are situated.
The business model is based on efficiently raising the income and
assets of the Group to optimise the return on assets.
Segmental performance
Nictus continues to implement its vision of being an independent and
diversified investment holding company.
Investments in the short-term insurance and furniture retail sectors
remain the key focus areas for the implementation of this vision.
Furniture retail
I am satisfied with the turnaround strategy that was implemented in
the furniture segment that showed a decrease in the reported loss of
R11,4 million in the prior year. However it has to be noted that this
is a long-term strategy in line with the Group strategy of creating
sustainable returns. This strategy has as foundation, the increase in
throughput in the current branches. The owned Randburg premises was
upgraded to optimise the retail and office space.
Insurance and Finance
The segment has experienced a positive acceptance of our alternative
risk transfer model in the market. The customer base has expanded to
satisfactory levels and the indication is that further expansion can
be expected. The unique innovative risk management solutions that the
product provides are supported by the sound relationships that our
marketing team has with our clients.
The segment is establishing itself firmly as a profit centre; with
sustainable growth being the key focus point of management.
I am satisfied with the asset growth in the segment (36%) as well as
the consistent increase in profit (78%).
Corporate governance
Nictus is committed to the highest standard of corporate governance.
In our opinion, good corporate governance cannot be dictated only by
set rules and regulations, but must be driven by the moral convictions
of the persons implementing them.
The Group endorses the King III Code of Governance Principles, the
International Financial Reporting Standards (IFRS) and integrated
reporting, whilst it complies with the Companies Act, 2008 and the
JSE Listings Requirements.
We further acknowledge our responsibility to ensure that business
within the Group is conducted with transparency, prudence, justice,
accountability and integrity.
Outlook
The restructuring of the Group, together with the further development
of effective management based in South Africa, will take at least
another year to fully reap the expected benefits aimed to be
achieved.
I firmly believe that this restructuring has paved the way for the
Group to build on and to flourish in the years to come.
Concerning the insurance segment, the implementation date of the
proposed changes in the Solvency Assessment and Management framework
(SAM) has been postponed for another year until
January 2016. The interim measures for the insurance industry which
have been set in place, already put the profitability of this segment
under pressure due to the additional capital adequacy requirements,
and will continue to do so. Despite this, the expectation is that
the segment will continue to grow profitably.
Our expectation is that the furniture segment should show good signs
of recovery following the further development of effective management
and further implementation of the turnaround plan. With basically no
growth in the South African economy the furniture industry is also
under pressure because of the upwards trend experienced in the interest
rate.
Appreciation
I would like to express my gratitude for the dedication and
contribution of our Board, managers and staff, for their support and
commitment towards and the belief in the chosen strategic direction of
the Group.
A special word of appreciation goes out to Wicus Olivier, long
serving independent non- executive director of Nictus Limited and
Corporate Guarantee, who retired during the past financial year, for
his services to the Group over the years.
On behalf of the Group, I would like to reaffirm our commitment to
serving our customers and would like to thank them, together with all
our stakeholders, for their continued loyalty and support.
Integrated report and notice of annual general meeting
As the summary annual financial statements for the year ended
31 March 2014 ("the Summary Financial Statements") is to be posted to
Nictus shareholders within 3 months of Nictus’ financial year end,
this announcement is not required to appear in the press and will not
be sent to Nictus shareholders.
The Integrated Report contains a notice convening the annual general
meeting of Nictus shareholders for the year ended 31 March 2014 ("the
AGM"). The AGM will be held in the boardroom at the Nictus Building,
corner of Pretoria and Dover Street, Randburg, Gauteng on Thursday
21st of August 2014 at 12h00.
The Board has determined that the record date in terms of section
59(1) of the Companies Act, of South Africa for the purpose of
determining which shareholders of the Company are entitled to receive
notice of the AGM is Friday, 20 June 2014 and the record date for
purposes of determining which shareholders of the Company are
entitled to participate in and vote at the AGM is Friday,
8 August 2014. Accordingly, only Nictus shareholders who are
registered in the register of members of the Company on Friday,
8 August 2014 will be entitled to participate in and vote at the AGM.
Accordingly, the last day to trade in order to be eligible to
participate in and vote at the AGM will be Friday, 1 August 2014.
The notice of AGM and the summary annual financial statements, are to
be posted to Nictus shareholders on Monday, 30 June 2014. The
integrated report is available on the website www.nictuslimited.co.za.
B J Willemse
Chairman
30 June 2014
Sponsor on the JSE: KPMG Services Proprietary Limited
Sponsor on the NSX: Simonis Storm Securities (Pty) Ltd
(Member of the NSX)
Registered office of the Company
Head office
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Windhoek office
Veritas Board of Executors Proprietary Limited
3rd floor, Corporate House
17 Lüderitz Street, Windhoek
Private Bag 13231, Windhoek
Company secretary
Veritas Board of Executors Proprietary Limited
(Registration number 1984/007487/07)
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Auditors
KPMG Inc.
(Registration number 1999/021543/21)
KPMG Crescent
85 Empire Road, Parktown 2193
Private Bag 9, Parktown 2122
Date: 30/06/2014 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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