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Reviewed Group Consolidated Results for the year ended 31 March 2015
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")
REVIEWED GROUP CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 March 31 March
2015 2014
R'000 R'000
ASSETS
Non-current assets 1 338 005 1 200 750
Property, plant and equipment 1 150 507 1 023 845
Investment properties 6 813 3 900
Goodwill 60 360 49 730
Intangible assets 77 279 78 450
Interest in associates and joint arrangements 21 693 15 272
Deferred taxation 16 991 17 996
Loans receivable 4 362 11 557
Current assets 1 514 756 1 533 880
Other 1 382 470 1 310 440
Cash and cash equivalents 132 286 223 440
Total assets 2 852 761 2 734 630
EQUITY AND LIABILITIES
Equity 1 985 645 1 902 357
Equity attributable to equity holders of the parent 1 295 018 1 173 574
Non-controlling interests 690 627 728 783
Non-current liabilities 391 526 277 034
Deferred taxation 120 591 107 629
Borrowings 261 033 163 225
Finance lease liabilities 2 404
Accruals 5 823 420
Operating lease equalisation liability 4 079 3 356
Current liabilities 475 590 555 239
Total equity and liabilities 2 852 761 2 734 630
Net asset value per share (cents) 1 107 1 016
Net tangible asset value per share (cents) 1 002 918
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Year ended Year ended
31 March 31 March
2015 2014
R'000 R'000
Revenue 1 205 348 1 154 982
Net gaming win 999 695 818 421
Group revenue 2 205 043 1 973 403
Other income 32 603 12 540
Other operating expenses (1 917 810) (1 773 760)
EBITDA 319 836 212 183
Depreciation and amortisation (129 820) (107 588)
EBIT 190 016 104 595
Investment income 5 801 11 136
Share of profits of associates and joint arrangements 1 474 331
Asset impairments (4 837) (6 412)
Impairment of investments (903)
Finance costs (24 217) (16 496)
Profit before taxation 167 334 93 154
Taxation (73 326) (34 044)
Profit for the year 94 008 59 110
Attributable to:
Equity holders of the parent 80 286 61 471
Non-controlling interests 13 722 (2 361)
94 008 59 110
Reviewed Audited
Year ended Year ended
31 March 2015 31 March 2014
R'000 R'000
Reconciliation of headline earnings Gross Net Gross Net
Earnings attributable to equity holders of the parent 80 286 61 471
IAS 16 losses/(gains) on disposal of plant and equipment 76 (37) (679) (475)
IAS 16 impairment of plant and equipment 4 837 3 585 6 412 4 230
IAS 40 fair value adjustment to investment property (200) (163)
IAS 28 impairment of investment in joint arrangement 903 419
Headline earnings 84 253 65 063
Reviewed Audited
Year ended Year ended
31 March 31 March
2015 2014
Earnings per share (cents) 69,0 54,1
Headline earnings per share (cents) 72,4 57,2
Diluted earnings per share (cents) 67,8 52,8
Diluted headline earnings per share (cents) 71,2 55,9
Weighted average number of shares in issue ('000) 116 402 113 677
Actual number of shares in issue at end of year ('000) 116 957 115 512
Weighted average number of shares in issue (diluted) ('000) 118 367 116 330
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
31 March 31 March
2015 2014
R'000 R'000
Profit for the year 94 008 59 110
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences 2 875 2 773
Total comprehensive income 96 883 61 883
Attributable to:
Equity holders of the parent 83 030 63 927
Non-controlling interests 13 853 (2 044)
96 883 61 883
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
Year ended Year ended
31 March 31 March
2015 2014
R'000 R'000
Balance at beginning of year 1 902 357 1 856 025
Stated capital
Shares issued 30 754 46 657
Current operations
Total comprehensive income 96 883 61 883
Equity-settled share-based payments 6 194 5 647
Effects of changes in holding (12 550) (19 450)
Capital reductions and dividends (37 993) (48 405)
Balance at end of year 1 985 645 1 902 357
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
Year ended Year ended
31 March 31 March
2015 2014
R'000 R'000
Cash flows from operating activities 130 264 219 772
Cash flows from investing activities (292 620) (235 051)
Cash flows from financing activities 71 202 (21 246)
Decrease in cash and cash equivalents (91 154) (36 525)
Cash and cash equivalents
At beginning of year 223 440 259 965
At end of year 132 286 223 440
Bank balances and deposits 132 286 223 440
Cash and cash equivalents 132 286 223 440
SEGMENTAL ANALYSIS
Reviewed Audited
Year ended Year ended
31 March 31 March
2015 2014
R'000 R'000
Revenue
Gaming and entertainment 49 963 44 770
Beverages 1 155 385 1 110 212
Total 1 205 348 1 154 982
Net gaming win
Gaming and entertainment 999 695 818 421
EBITDA
Gaming and entertainment 266 064 216 035
Beverages 92 152 26 075
Head office (38 380) (29 927)
Total 319 836 212 183
Profit before tax
Gaming and entertainment 127 276 117 946
Beverages 61 678 (448)
Head office (21 620) (24 344)
Total 167 334 93 154
Headline earnings
Gaming and entertainment 93 304 83 395
Beverages 26 958 1 050
Head office (36 009) (19 382)
Total 84 253 65 063
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The results for the year ended 31 March 2015 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. 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 2/2013: 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).
Shares issued
On 29 July 2014, a gross dividend of 28 cents per ordinary share, with a net dividend of 23,8 cents
per share after Dividend Withholding Tax of 15%, or the option to elect a capitalisation issue
alternative of 1 share for every 76 shares held, was approved at the general meeting. A gross cash
dividend of R1,6 million was paid and 1 445 185 capitalisation shares were issued on 18 August 2014.
COMMENTARY
In the face of reduced consumer spending and cost pressure in the general business environment we are
pleased that our gaming businesses continued to show growth in earnings and margins. During the year
we invested R309 million in capital expenditure, including losses from new operations and support
structures, in the gaming businesses, with a significant portion thereof invested in KwaZulu-Natal (“KZN”)
where the Group is facing material regulatory hurdles.
As indicated last year, the potential returns in the gaming sector remain good but the risk of regulatory
interference and uncertainty has increased. The recent statements from the Department of Trade and
Industry (“DTI”) are not investment friendly for the bingo industry and also reflect a fixation with
legalised gambling when illegal gambling is growing at an unprecedented rate. The DTI also incorrectly
believes that gaming outside formal casinos is more harmful to society and that the investment by casino
operators needs to be protected. Illegal gaming is now one of the largest risks to the Group, and the
communities they operate in. The inability of the DTI, SAPS and SARS to stop these operations is concerning.
Numerous complaints have been lodged in multiple jurisdictions, by the gaming boards as well as the Group,
but action remains very limited and slow.
KWV Holdings Limited (“KWV”) increased its profits substantially from the previous year but it is expected
that profits in 2016 will be lower following a relative strengthening in the rand and sustained pressure in
the South African brandy category.
Bingo and casino operations
The EBITDA contribution of these businesses declined from R33 million in the comparative year to R10 million
in the current financial year. EBITDA for sites that are operationally fully developed (including the
Kuruman casino that opened in December) was R86 million. This was reduced to R10 million by head office
costs, development costs and losses from sites that are not yet operationally complete. It is estimated
that the head office costs associated with fully developed sites is less than R15 million.
A significant portion of the cost and losses were incurred in KZN, where the provincial finance authorities
have revoked licences issued to the Group in 2010. If the Group is unsuccessful in appeal and ultimately
loses its bingo licences the Group will be required to impair assets to the value of R35 million and may be
liable for rent and the retrenchment costs of 300 staff members.
Other costs include development costs for the new licences in the Eastern Cape and the costs of various
bids in other provinces. Bingo licences in Uitenhage and King Williams Town, awarded to the Group, have
been challenged by another bidder.
Vukani
Vukani continued to grow earnings despite slower than expected machine roll-out in the second half of the
financial year. The suspension of the KZN Gaming Board members, the delay in appointment of the
Northern Cape Gambling Board as well as reaching licence capacity in the Eastern Cape contributed to the slow
machine roll-out. The installed machine base increased from 4 643 in the prior year to 5 052 at March 2015
(4 932 September 2014). The average Gross Gaming Revenue (“GGR”) per machine per month increased from R16 848
in March 2014 to R17 832 with total GGR growing 16% year on year.
The current year operating expenses of R184 million include an additional R8 million in marketing expenses
compared to the R199 million expenses incurred in the prior year, which included a one-off R31 million share-
based payment expense. Operating expenses on a normalised basis therefore increased by 5%, which is largely
inflation based.
Vukani contributed EBITDA of R260 million to the R266 million EBITDA reported for the gaming segment. This is up
from R183 million in the prior year. Year-on-year EBITDA growth of 25% was achieved on a normalised operating
expense basis.
At year-end the Group had nine operating sports betting licences, which did not make a significant contribution
to GGR performance for the year and resulted in operating losses from this segment. The Group anticipates to
operate close to breakeven levels towards the end of the 2016 financial year.
KWV
KWV reported attributable headline earnings of R48 million (R2 million March 2014). While the business has
improved and its cost base is well controlled, the majority of the earnings were as a result of the depreciation
of the rand and the resultant profits on foreign exchange hedges.
KWV is recognised as the foremost brandy producer in South Africa and this was reflected in numerous awards,
including the recognition of KWV 12 year as the best brandy in the world.The volume of packed spirits sold
remained flat, but the Group increased its market share in the brandy category to 13,8%. The brandy category is
dominated by Distell, with nearly 70% market share, and until Distell increases prices in real terms, the category
will remain marginally profitable at the lower end.
Wine sales in South Africa improved in the core Roodeberg, KWV and Laborie brands. The South African wine category
is, however, under pressure internationally and the increase in bulk wine exports is further entrenching South
African wine as a low-cost offering, at the expense of our premium offerings. In 2015, KWV was the only South African
wine brand recognised as one of the World’s Top 50 Most Admired Wine Brands by Drinks International (33rd).
KWV will continue to hedge its foreign exchange exports and, following the appreciation of the exchange rate against
its trading currencies, in particular the euro, expects the profits in 2016 to be lower than 2015. It is unlikely
that it will be able to increase prices in foreign markets with local cost pressure expected to reduce overall margins.
KWV’s investment in sales and marketing will be maintained even if it reduces profitability in the short term.
Head office costs
Head office costs amounted to R38 million, with the cost of senior management and the 50 basis points management
fee payable to Johnnic Holdings Management Services (“JHMS”) included in this amount along with administration
costs, i.e. listing, legal and consulting fees and internal and external audit fees. Niveus conducted an
administration restructuring agreement with JHMS, subject to shareholder approval, whereby 50 basis points
management fee portion of the contract is cancelled, in exchange for the issue of 1,75 million Niveus shares and
an annual payment of R3 million, increasing by the Consumer Price Index. If approved by shareholders, head office
costs would be reduced by R13 million using the current year management fee payment as reference. Please refer to
the detailed announcement released on SENS on 21 May 2015.
Auditors’ 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.
Dividend to Shareholders
The directors declared and approved a gross ordinary dividend for the year ended 31 March 2015 of 12 cents per
share on Thursday, 21 May 2015. The dividend will be payable on Monday, 15 June 2015. There are 116 956 770
ordinary shares in issue, as at 21 May 2015.
The 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 10,2 cents per share to those shareholders that are not
exempt from dividends tax. The Company's tax reference number is 9564/137/84/3.
Last day to trade cum dividend Friday, 5 June 2015
Trading ex dividend commences Monday, 8 June 2015
Record date Friday, 12 June 2015
Payment date Monday, 15 June 2015
Share certificates may not be dematerialised or rematerialised between Monday, 8 June 2015 and Friday, 12 June
2015, both days inclusive.
In the Company's prelisting statement it indicated its intention to pay dividends equating to 50% of headline
earnings. In the light of the Group's growth and investment requirements, coupled with the uncertainty of the
KZN Bingo licences, the directors resolved to amend the principle and will in future determine the dividends on
an annual basis after considering capital requirements.
André van der Veen
Chief executive officer
21 May 2015
Paarl
CORPORATE INFORMATION
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
Transfer secretaries: Computershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg 2001
Sponsor: PSG Capital Proprietary Limited
Website: www.niveus.co.za
Date: 21/05/2015 03:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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