Wrap Text
Unaudited Group Interim Results for the Six Months ended 30 September 2014
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 2014
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited 30 September Audited
30 September 2013 31 March
2014 Restated 2014
R'000 R'000 R'000
ASSETS
Non-current assets 1 260 170 1 093 435 1 200 750
Property, plant and equipment 1 079 072 926 503 1 023 845
Investment properties 6 813 3 700 3 900
Goodwill 49 730 49 730 49 730
Intangible assets 76 248 74 103 78 450
Interest in associates and joint arrangements 17 037 15 365 15 272
Deferred taxation 18 022 18 403 17 996
Loans receivable 13 248 5 631 11 557
Current assets 1 468 485 1 433 409 1 533 880
Other 1 345 963 1 200 295 1 310 440
Bank balances and deposits 122 522 233 114 223 440
Total assets 2 728 655 2 526 844 2 734 630
EQUITY AND LIABILITIES
Equity 1 931 745 1 849 884 1 902 357
Equity attributable to equity holders of the parent 1 248 853 1 118 378 1 173 574
Non-controlling interests 682 892 731 506 728 783
Non-current liabilities 343 504 290 513 277 034
Deferred taxation 111 303 105 375 107 629
Borrowings 223 373 177 786 163 225
Finance lease liabilities 66 4 905 2 404
Accruals 4 210 420
Operating lease equalisation liability 4 552 2 447 3 356
Current liabilities 453 406 386 447 555 239
Total equity and liabilities 2 728 655 2 526 844 2 734 630
Net asset value per share (cents) 1 068 980 1 016
Net tangible asset value per share (cents) 973 885 918
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Unaudited
Unaudited Six months
Six months ended Audited
ended 30 September Year ended
30 September 2013 31 March
2014 Restated 2014
R'000 R'000 R'000
Revenue 548 488 536 861 1 154 982
Net gaming win 482 811 396 988 818 421
Group revenue 1 031 299 933 849 1 973 403
Other income 193 (10 855) 12 540
Other operating expenses (884 705) (844 236) (1 773 760)
EBITDA 146 787 78 758 212 183
Depreciation and amortisation (61 996) (53 514) (107 588)
EBIT 84 791 25 244 104 595
Investment income 2 919 6 514 11 136
Share of profits of associates and joint arrangements 992 423 331
Impairment reversals 689
Asset impairments (763) (1 614) (6 412)
Finance costs (10 180) (8 634) (16 496)
Profit before taxation 77 759 22 622 93 154
Taxation (28 547) (12 692) (34 044)
Profit for the period 49 212 9 930 59 110
Attributable to:
Equity holders of the parent 40 640 14 885 61 471
Non-controlling interest 8 572 (4 955) (2 361)
49 212 9 930 59 110
Reconciliation of headline earnings Gross Net Gross Net Gross Net
Earnings attributable to
equity holders of the parent 40 640 14 885 61 471
IAS 16 gains on disposal of
plant and equipment (170) (98) (807) (532) (679) (475)
IAS 16 impairment of plant and equipment 763 549 1 614 1 162 6 412 4 230
IAS 40 fair value adjustment
to investment property (200) (163)
Headline earnings 41 091 15 515 65 063
Earnings per share (cents) 35,1 13,2 54,1
Headline earnings per share (cents) 35,5 13,7 57,2
Diluted earnings per share (cents) 34,2 13,1 52,8
Diluted headline earnings per share (cents) 34,6 13,7 55,9
Weighted average number of shares in issue ('000) 115 851 112 908 113 677
Actual number of shares in issue at
end of period ('000) 116 957 114 132 115 512
Weighted average number of shares
in issue (diluted) ('000) 118 910 113 553 116 330
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited
Unaudited Six months
Six months ended Audited
ended 30 September Year ended
30 September 2013 31 March
2014 Restated 2014
R'000 R'000 R'000
Profit for the period 49 212 9 930 59 110
Other comprehensive income:
Foreign currency translation differences (2 467) 267 2 773
Total comprehensive income 46 745 10 197 61 883
Attributable to:
Equity holders of the parent 38 161 14 919 63 927
Non-controlling interests 8 584 (4 722) (2 044)
46 745 10 197 61 883
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited
Unaudited Six months
Six months ended Audited
ended 30 September Year ended
30 September 2013 31 March
2014 Restated 2014
R'000 R'000 R'000
Balance at beginning of period 1 902 357 1 856 025 1 856 025
Stated capital
Shares issued 30 754 19 059 46 657
Current operations
Total comprehensive income 46 745 10 197 61 883
Equity-settled share-based payments 2 432 874 5 647
Effects of changes in holding (12 550) (16 000) (19 450)
Capital reductions and dividends (37 993) (20 271) (48 405)
Balance at end of the period 1 931 745 1 849 884 1 902 357
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2014 2013 2014
R'000 R'000 R'000
Cash flows from operating activities (78 609) (23 285) 219 772
Cash flows from investing activities (136 997) (37 737) (235 051)
Cash flows from financing activities 29 050 286 (21 246)
Decrease in cash and cash equivalents (186 556) (60 736) (36 525)
Cash and cash equivalents
At beginning of period 223 440 259 965 259 965
Foreign exchange difference 267
At end of period 36 884 199 496 223 440
Bank balances and deposits 122 522 233 114 223 440
Bank overdrafts included under current
liabilities (85 638) (33 618)
Cash and cash equivalents 36 884 199 496 223 440
SEGMENTAL ANALYSIS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2014 2013 2014
R'000 R'000 R'000
Revenue
Gaming and entertainment 27 928 13 642 44 770
Beverages* 520 560 523 219 1 110 212
Total 548 488 536 861 1 154 982
Net gaming win
Gaming and entertainment 482 811 396 988 818 421
EBITDA
Gaming and entertainment 132 640 107 599 216 035
Beverages 35 874 (7 699) 26 075
Head office (21 727) (21 142) (29 927)
Total 146 787 78 758 212 183
Profit before tax
Gaming and entertainment 75 853 60 878 117 946
Beverages* 21 439 (19 369) (448)
Head office (19 533) (18 887) (24 344)
Total 77 759 22 622 93 154
* The beverages revenue and profit
before tax for the six months ended
30 September 2013 are restated.
Headline earnings
Gaming and entertainment 51 547 41 638 83 395
Beverages 8 893 (7 236) 1 050
Head office (19 349) (18 887) (19 382)
Total 41 091 15 515 65 063
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The results for the six months ended 30 September 2014 have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), 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 2014. 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.
These interim financial statements have not been audited nor independently reviewed and were prepared under the
supervision of the financial director, Ms MM Loftie-Eaton CA(SA).
Restatement of 30 September 2013 figures
The acquisition of a controlling interest in KWV Holdings Limited (“KWV”) on 1 January 2013 qualified as a business
combination in terms of IFRS 3: Business Combinations. Comparative figures as at 30 September 2013 were determined
based on all information available at the acquisition date (“provisional accounting”). The provisional accounting was
updated for the reporting period ending 31 March 2014 for new information obtained within the 12-month timeframe after
the acquisition date. Changes to the updated results consist of adjustments to the fair values determined in the
had the following retrospective impact on the 2013 interim results:
As at 30 September 2013:
- Property, plant and equipment increased by R439 million
- Trademarks (included in intangible assets) increased by R48 million
- Deferred tax liability increased by R77 million
- Equity attributable to equity holders of the parent increased by R224 million
- Non-controlling interest increased by R186 million
- Net asset value (“NAV”) per share increased by 196 cents per share
- Net tangible asset value (“NTAV”) per share increased by 168 cents per share
For the six months ended 30 September 2013:
- Depreciation and amortisation increased by R1,5 million
- Deferred taxation decreased by R0,5 million
- Profit attributable to equity holders of the parent decreased by R0,5 million
- Profit attributable to non-controlling interest decreased by R0,5 million
- Basic earnings per share (“EPS”) decreased by 0,4 cents per share
- Headline earnings per share (“HEPS”) decreased by 0,5 cents per share
Niveus voluntarily changed its accounting policy relating to the valuation of inventory to be in line with the change in
accounting policy made by a major subsidiary of Niveus in terms of which excise duty is now included in the valuation of
inventory, which was previously included in trade and other receivables. The voluntary change in accounting policy, which
was effective for the results published for the year ended 31 March 2014, had the following retrospective impact on the
2013 interim results due to its application:
As at 30 September 2013:
- Inventory increased by R118 million
- Trade and other receivables decreased by R118 million
- No impact on NAV per share and NTAV per share
For the six months ended 30 September 2013:
- Revenue increased by R93 million
- Other income decreased by R13 million
- Other operating expenses increased by R80 million
- No impact on EPS and HEPS
Commentary
The Group’s results are largely dominated by the performance of the gaming business where the majority of the Group’s
investment is focused.
Our Group’s gaming offerings, in particular Bingo, has received significantly more attention from regulators and some
casino groups during the last six months. This includes statements that Electronic Bingo Terminals (“EBTs”) should not
be permitted in the current format. We see anti-EBT sentiment as the most significant risk to the bingo business, but
remain hopeful that our numerous facts-based submissions to the National Gambling Board ("NGB"), DTI and provincial
regulators will ultimately succeed in provinces where we have not been able to roll out EBTs. Our view remains that our
product does not compete with casinos and that margin and gross gaming revenue (“GGR”) problems highlighted by certain
industry groups are largely of their own making.
The economic conditions and consumer sentiment remained difficult if a basket of economic indicators is reviewed. We remain
fortunate that our GGR has grown by more than 20% compared to the same period last year.
Vukani
Vukani contributed R125 million to Group gaming EBITDA compared to R87 million in the comparative period. The prior period
included share-based payments of R15 million and forex losses of R3 million that did not recur at the same rate.
The number of active Limited Payout Machines (“LPMs”) at 30 September 2014 was 4 932 (March 2014: 4 643). The average GGR
per LPM increased to R17 794 (March 2014: 16 848). Operational overheads amounted to R89 million.
It is not expected that the number of LPMs rolled out will increase significantly when we report our full-year results due
to the limited number of gambling board meetings scheduled prior to 31 March 2015.
The Group was awarded one of the route operator licences in the Northern Cape and we have already submitted our first batch
of site applications. However, the Northern Cape Gambling Board’s decision has been taken on review by another applicant; this
may delay the roll-out of site licences.
The ongoing operation of illegal gambling outlets, mainly posing as internet entertainment lounges, is prevalent on a large
scale across our country. Various gambling boards and the SAPS have been unable to close them and the operations will affect
our LPM and Bingo businesses significantly if this continues unabated.
Bingo
Trading in Gauteng remains good with year-on-year gaming growth of more than 10%. Our operations in the Eastern Cape have
performed in line with expectations, while our North West operations traded below expectations.
The KwaZulu-Natal Gaming and Betting Board (“KZNGB”) has not approved EBTs and we remain unsure when or if this will happen.
We have one operational site in the province where we operate paper bingo and 33 LPMs. We have completed the construction of
two additional sites during the period and are hopeful that the KZNGB will approve the operation of bingo and LPMs in these
locations while we wait for the EBT approval process to be concluded. We aim to commence with the construction of a further
three sites in KwaZulu-Natal by March 2015.
The Group was awarded three additional bingo licences in the Eastern Cape. Two of these licences were challenged by another
applicant and we are currently assessing the potential impact on our construction timetable. The Group’s interest in these
licences varies between 29% and 49%.
Kuruman Casino licence
Our development programme is substantially on track and the expected opening date of the casino is mid-December 2014. We have
committed R90 million to the development of the casino and related infrastructure.
Sports betting
The Group continues to evaluate its offering in the sports betting sector. During the period the Group acquired a 25% interest
in the online sports betting company bet.co.za, which remains subject to gambling board approval.
KWV
The headline earnings for the period under review amounted to a profit of R16,6 million (24,3 cents per share) compared to a
loss of R13,0 million (18,9 cents per share) during the comparative period. The significant improvement is mainly due to the
rand depreciating against major currencies.
Total revenue for the six months to September 2014 decreased by 0,5% from that of the six months to September 2013. KWV’s
export portfolio benefited from a 10% weakening in the rand compared to the comparative period. If the exchange rate impact
is adjusted, revenue is about 4,5% lower than in the comparative six months. The current period includes exchange rate profits
of R7,4 million compared to a R37,6 million loss in the prior period, resulting in a R45 million swing between the two
periods. The main contributor to the decline in revenue is a 6% decrease in sales volumes.
The brandy market in South Africa remains under pressure and continued losing market share to whisky and white spirits. This
resulted in a volume decline despite increased market share for the KWV portfolio. KWV’s market share over the 12 months to
September 2014 increased from 10% to 12%. This market share growth was achieved in a tough trading environment, often at the
expense of gross profit margins.
Administrative and operational expenses increased by 2% from the comparative six-month period. The Group’s overhead expenses are
being contained below inflationary increases.
It is expected that challenging trading conditions will persist in Europe and that the brandy category will remain under pressure.
Dividend
No interim dividend is proposed and the board will consider the Group’s cash position and forecast requirements at year-end when
proposing the final dividend.
André van der Veen
Chief executive officer
20 November 2014
Paarl
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
Transfer secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg 2001
Sponsor:
PSG Capital Proprietary Limited
Website:
www.niveus.co.za
Date: 20/11/2014 01:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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