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NVest Financial Holdings Limited - Audited consolidated results for the year ended 28 February 2015 and dividend declaration

Release Date: 27/05/2015 11:18
Code(s): NVE     PDF:  
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Audited consolidated results for the year ended 28 February 2015 and dividend declaration

NVEST FINANCIAL HOLDINGS LIMITED
AND ITS SUBSIDIARIES
(formerly NVest Financial Holdings (RF) Proprietary Limited and in the process of being
changed from NVest Financial Holdings (RF) Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2008/015990/06)
(“NVest” or “the Company”)
ISIN Code: ZAE000199865 JSE Code: NVE


AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2015 AND DIVIDEND
DECLARATION


HIGHLIGHTS:
     HEPS increased by 34.5% to 16.07 cents per share (11.95 cents in 2014).
     Assets under management and administration of R13.4 billion at 28 February 2015.
     Listing on the Alternative Exchange of the JSE on 29 May 2015, raising R26.25 million before
     listing costs, at R1.00 per share in a significantly oversubscribed private placement.
     Declaration of a final dividend (and maiden dividend as a listed company) of 4 cents per
     share.

Statement of Financial Position as at 28 February 2015
Figures in Rand                                                           2015             2014
Assets
Non-Current Assets
Property, plant and equipment                                         1 960 320       1 230 170
Goodwill                                                             25 874 090      25 841 279
Investments in joint ventures                                                60              60
Investments in associates                                            22 624 206      14 812 666
Loans to group companies                                                382 337         431 953
Deferred tax                                                            543 414         425 033
Other financial assets                                                  200 000         200 000
                                                                     51 584 427      42 941 161
Current Assets
Loans to shareholders                                                25 249 101       1 843 031
Trade and other receivables                                           7 603 108       7 073 266
Cash and cash equivalents                                            48 548 897      49 734 504
                                                                     81 401 106      58 650 801

Total Assets                                                        132 985 533     101 591 962

Equity and Liabilities
Equity
Equity Attributable to Equity Holders of Parent
Share capital                                                        53 982 677      18 120 538
Retained earnings                                                     1 611 574      57 307 014
                                                                     55 594 251      75 427 552
Non-controlling interest                                              1 383 763       3 633 741
                                                                     56 978 014      79 061 293
Liabilities
Non-Current Liabilities
Operating lease liability                                               527 091          93 852

Current Liabilities
Current tax payable                                                     404 897         850 346
Loans from shareholders                                                       -         486 200
Other financial liabilities                                          62 541 938               -
Trade and other payables                                             12 533 593      21 100 271
                                                                     75 480 428      22 436 817
Total Liabilities                                                    76 007 519      22 530 669
Total Equity and Liabilities                                 132 985 533     101 591 962

Net asset value per share information
Net asset value per share (c)                                      31.28           42.49
Net tangible asset value per share (c)                             16.72           27.94
Shares in issue at 28 February 2015                          178 879 362     177 500 000

Statement of Profit or Loss and Other Comprehensive Income
Figures in Rand                                                     2015            2014

Revenue                                                       114 642 325      97 211 558
Cost of sales                                                (30 812 790)    (22 361 492)
Gross profit                                                   83 829 535      74 850 066
Other income                                                    2 205 943       2 492 179
Operating expenses                                           (51 162 113)    (45 841 922)
Operating profit                                               34 873 365      31 500 323
Investment revenue                                              2 918 392       1 653 808
Income from equity accounted investments                        7 859 335       9 250 588
Finance costs                                                      (5 214)          (163)
Profit before taxation                                         45 645 878      42 404 556
Taxation                                                     (10 279 092)     (9 735 870)
Profit for the year                                            35 366 786      32 668 686
Other comprehensive income                                               -              -
Total comprehensive income for the year                        35 366 786      32 668 686

Profit attributable to:
Owners of the parent                                          33 637 889      30 926 529
Non-controlling interest                                       1 728 897       1 742 157
                                                              35 366 786      32 668 686

Total comprehensive income attributable to:
Owners of the parent                                          33 637 889      30 926 529
Non-controlling interest                                       1 728 897       1 742 157
                                                              35 366 786      32 668 686

Headline earnings reconciliation:
Earnings attributable to equity holders of the parent         33 637 889      30 926 529
Profit on sale of shares                                                -     (2 098 514)
 -   Re-measurements included in equity accounted earnings    (5 073 376)     (4 826 856)
     of associates
 -   Profit/Loss on sale of fixed assets                          (3 106)     (2 781 234)
                                                              28 561 407      21 220 024

Per share information
Earnings per share (c)                                             18.93           17.42
Headline earnings per share (c)                                    16.07           11.95
Weighted average number of shares                            177 726 740     177 500 000

Statement of Cash Flows
Figures in Rand                                                     2015            2014
Cash flows from operating activities
Cash generated from (used in) operations                       23 282 448      42 569 844
Interest received                                               2 756 493       1 653 808
Dividends received                                                161 899               -
Finance costs                                                      (5 214)          (163)
Tax paid                                                     (10 828 711)     (9 970 185)
Net cash from operating activities                             15 366 915     34 253 304

Cash flows (used in) from investing activities
Purchase of property, plant and equipment                     (1 250 659)      (418 905)
Disposal of property, plant and equipment                     6 315              -
Disposal of goodwill                                              -        363 206
Proceeds from disposal of investments in subsidiaries             -      2 579 451
Advancements of loans to group companies                   (65 309)      (155 080)
Repayment of loans to group companies                       114 925        219 959
Additional investments in current subsidiaries          (7 413 468)              -
Net cash (used in) from investing activities            (8 608 196)      2 588 631

Cash flows used in financing activities
Proceeds from share issues                                39 305 042              -
Share buy-back not yet paid for                           62 541 938              -
Proceeds from shareholders loans                                   -        864 771
Advances to loans with shareholders                     (23 892 270)    (1 434 128)
Dividends paid                                          (84 199 036)   (23 750 000)
Dividends paid to minority shareholders                  (1 700 000)      (903 846)
Net cash used in financing activities                    (7 944 326)   (25 223 203)

Total cash movement for the year                         (1 185 607)    11 618 732
Cash at the beginning of the year                         49 734 504    38 115 772
Total cash at end of the year                            48 548 897     49 734 504
Statement of Changes in Equity
Figures in Rand                                             Share        Share    Total share       Retained          Total         Non-    Total Equity
                                                           capital    premium         capital       earnings                  controlling
                                                                                                attributable                   sharehold
                                                                                                    to equity                         ers
                                                                                                   holders of
                                                                                                   the group
Balance at 01 March 2013                                      500    18 120 038   18 120 538      48 579 344      66 699 882 1 767 120     68 467 002
Profit for the year                                             -             -            -      30 926 529      30 926 529 1 742 157     32 668 686
Other comprehensive income                                      -             -            -                -              -           -            -
Total comprehensive income for the year                         -             -            -      30 926 529      30 926 529 1 742 157     32 668 686
Transfer of ownership                                           -             -            -        1 551 141      1 551 141 (1 551 141)            -
Dividends                                                       -             -            -    (23 750 000)    (23 750 000)   (903 846) (24 653 846)
Changes in ownership interest - control not lost                -             -            -                -              - 2 579 451      2 579 451
Total contributions by and distributions to owners of           -             -            -    (22 198 859)    (22 198 859)     124 464 (22 074 395)
company recognised directly in equity
Balance at 01 March 2014                                       500   18 120 038   18 120 538      57 307 014      75 427 552 3 633 741     79 061 293
Profit for the year                                              -            -             -     33 637 889      33 637 889 1 728 897     35 366 786
Other comprehensive income                                       -            -             -               -               -          -            -
Total comprehensive income for the year                          -            -             -     33 637 889      33 637 889 1 728 897     35 366 786
Transfer share premium to share capital                 14 677 231 (14 677 231)             -               -               -          -            -
Share repurchase                                              (95) (3 442 807)    (3 442 902)               -    (3 442 902)           - (3 442 902)
Issue of shares                                         39 305 041            -    39 305 041               -     39 305 041         140   39 305 181
Transfer of ownership                                            -            -             -    (5 121 153)     (5 121 153) (2 292 155) (7 413 308)
Dividends                                                        -            -             -   (84 199 036)    (84 199 036) (1 700 000) (85 899 036)
Changes in ownership interest - control not lost                 -            -             -        (13 140)        (13 140)     13 140            -
Total contributions by and distributions to owners of   53 982 177 (18 120 038)    35 862 139   (89 333 329)    (53 471 190) (3 978 875) (57 450 065)
company recognised directly in equity
Balance at 28 February 2015                             53 982 677            -   53 982 677      1 611 574      55 594 251    1 383 763    56 978 014
SEGMENT ANALYSIS

The following information relates to segment financial information of the group:

2015


                                        Revenue      Profit before tax         Assets       Liabilities
Segments:
Insurance broking                      11 764 360           1 626 041       6 589 453       1 846 684
Wealth management                     113 358 486          35 169 381      42 593 864      24 281 397
Administration of estates and           2 152 305             154 983       1 991 481       1 266 740
trusts
Other                                      14 230           10 105 216     96 991 232      63 516 162
Inter company eliminations           (12 647 056)          (1 409 743)   (15 180 497)         (14 903
                                                                                                 465)
                                      114 642 325          45 645 878     132 985 533      76 007 518



2014

                                       Revenue      Profit before tax         Assets        Liabilities
Segments:
Insurance broking                    10 811 614           1 576 306        6 569 284        2 995 445
Wealth management                    93 232 397          30 133 927       56 260 353       25 308 127
Administration of estates and         2 958 025           1 012 029        2 851 451        1 238 298
trusts
Other                                     16 202          9 680 820        44 172 011          935 734
Inter -company eliminations          (9 806 680)              1 474       (8 261 137)      (7 946 935)
                                      97 211 558         42 404 556      101 591 962        22 530 669

BASIS OF PREPARATION AND ACCOUNTING POLICIES

The accounting policies and method of measurement and recognition applied in the preparation
of these condensed audited consolidated provisional results are in terms of International Financial
Reporting Standards (“IFRS”) and are consistent with those applied in the audited annual financial
statements for the previous year ended 28 February 2014. The audited consolidated provisional
results are prepared in accordance with the requirements of the JSE Limited Listings Requirements
for provisional reports and the requirements of the Companies Act, 71 of 2008. The audited
consolidated provisional results are presented in terms of the minimum disclosure requirements set
out in International Accounting Standards (“IAS”) 34 – Interim Financial Reporting, as well the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

The Financial Director, Frank Knox, was responsible for the preparation of the audited
consolidated provisional results. Any reference to future financial performance included in this
announcement has not been reviewed or reported on by the group?s external auditors.

The directors of NVest (“the Board”) take full responsibility for the preparation of the provisional
report. The financial information has been correctly extracted from the underlying annual
financial statements.

This summarised report is extracted from audited information, but is not itself audited.

The annual financial statements for the year ended 28 February 2015 have been audited by
Grant Thornton (Cape) Inc. A copy of the auditor?s unmodified opinion is available for inspection
at the company?s registered office.
COMMENTARY
NVest is scheduled to list on the Alternative Exchange of the JSE on 29 May 2015 and these results
are for the period prior to listing. For a full appreciation of the nature of the group and its
operations, shareholders are referred to the abridged Prospectus, which contains full details of the
private placement, comprising a private placing of 4 000 000 shares and a preferential offer of
22 250 000 shares, totalling 26 250 000 shares at R1.00 each.

The private placement has been fully subscribed.

The Board is pleased to report another year of good growth and progress on its key strategic
objectives, with revenue increasing 17.9% to R114 million from R97 million in the prior year.

Cost of sales and operating expenses have been well controlled in light of the higher turnover,
increasing by approximately 12% over the prior year.

Income from equity accounted investments comprises income from the Company?s associate
investment in NVest Properties Limited, which company holds a property portfolio of R282 million.
A portion of such income is attributed to a fair value adjustment in the property values.

PROSPECTS
The group?s results depend on the markets and assets under management to a large degree.
Notwithstanding this, the group faces the future on a confident basis.

ACQUISITIONS, DISPOSALS, SHARE ISSUES AND REPURCHASES
During the year under review the company acquired an increased shareholding in the following
subsidiaries ahead of the intended listing of NVest:

-     the acquisition of an additional 5% in the shareholding in NVest Securities Proprietary Limited
      from Robert More McIntyre for R2 608 341 settled through the issue of 3 032 954 new shares;
-     the acquisition of an additional 2.5% in the shareholding in NFB Finance Brokers Eastern
      Cape Proprietary Limited from McClure Family Trust for R1 730 445 settled through the issue
      of 2 012 146 new shares;
-     the acquisition of an additional 2.5% in the shareholding in NFB Finance Brokers Eastern
      Cape Proprietary Limited from Elldan Trust for R1 730 445 settled through the issue of
      2 012 146 new shares; and
-     the acquisition of an additional 15% in the shareholding in NFB Insurance Brokers (Border)
      Proprietary Limited from Gray Family Trust for R1 344 077 settled through the issue of new
      shares.

In addition to the above, the Company entered into a Repurchase Agreement with Sasfin for the
repurchase of 95 shares of the share capital (before the sub-division of the Company?s share
capital), equating to 19% of the issued share capital. The Repurchase Consideration amounted
to R60 999 183 plus any additional amounts that accrue until the date of the payment. The
Repurchase was approved by shareholders on 31 December 2014 and the final agreement was
signed on 19 February 2015. The majority of this obligation has already been settled and the
remaining balance will be settled by no later than 1 June 2015.

Further issues of shares for cash to key executives of the group were issued in terms of pre-existing
arrangements as well as to secure key management and succession planning for the group. In
addition, shares were issued to Rayner Sparg Trust for cash in order to secure a placing of a
portion of the cash required to fund the repurchase consideration due to Sasfin ahead of the
Listing. The Company is of the opinion that this issue of shares was a strategic one and that both
parties will gain strong potential benefits from this strategic alignment.

Details of the these share issues on 31 December 2014 are as follows:
-     Issue of 1 775 005 shares at 50 cents to BA Russell for cash in terms of a pre-existing
      arrangement ahead of listing
-     Issue of 10 000 000 shares at 86 cents to executives in terms of pre-existing arrangements
      ahead of listing
-     Issue of 4 439 231 shares for R1.00 to executives in terms of pre-existing arrangements ahead
      of listing
-     Issue of 770 000 shares for R1.00 per share to Rayner Sparg Trust
-     Issue of 9 500 000 shares at R1.81 per share to Rayner Sparg Trust

SUBSEQUENT EVENTS AND LISTING
Subsequent to the year end, the company will issue an additional 26 250 000 ordinary shares in
conjunction with its intended listing on the JSE raising an additional R26 250 000 (before expenses),
which will be primarily used to progress the key objectives of the group, one of which is expansion
by way of acquisition. Subsequent to the listing, the company will have 205 million shares in issue.


DIVIDEND DECLARATION
As stated, the company has an intention of paying out at least half of its headline earnings as a
dividend going forward as a listed company.

The board has declared a dividend (Number 1) of 4 cents per share. The dividend is declared out
of income reserves. The dividend will be subject to a dividend withholding tax rate of 15% or 0.6
cents per ordinary share. Shareholders, unless exempt or qualifying for a reduced withholding tax
rate, will receive a net dividend of 3.4 cents per share.

NVest?s tax reference number is 905398119. The number of ordinary shares in issue at the
declaration date is 205 million.

The salient dates for the dividend will be as follows:

Last date to trade “cum? dividend                                               Friday, 26 June 2015
Shares commence trading „ex? the dividend                                       Monday 29 June 2015
Record date (date shareholders recorded in share register)                      Friday, 3 July 2015
Payment date                                                                    Monday, 6 July 2015

Shareholders may not dematerialise or rematerialise their share certificates between Monday,
29 June 2015 and Friday, 3 July 2015, both dates inclusive.

For and on behalf of the Board

Anthony Godwin                                                              Frank Knox
Chief Executive Officer                                                     Financial Director

27 May 2015

Executive Directors:
Anthony Denis Godwin (Chief Executive Officer)
Frank Terrence Knox (Financial Director)
Robert More McIntyre (Corporate Finance Director)
Andrew Kent (Executive Director)
Brendan Connellan (Executive Director and Company Secretary)
Gavin Robin Ramsay (Executive Director)
Travis Henry McClure (Executive Director)
Philip Barry Bartlett (Executive Director)

Non-executive directors:
Jonathan Goldberg (Independent non-executive chairperson)
John Ross-Smith (Independent non-executive director)
Siviwe Kelebohile Kwatsha (Independent non-executive director)

Designated Advisor:
Arbor Capital Sponsors Proprietary Limited
Transfer Secretaries:
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61051 Marshalltown, 2107)

Registered Office:
127 Cape Road
Mount Croix
Port Elizabeth, 6057
(PO Box 8132, Nahoon, 5210)

WEBSITE: http://www.nvestholdings.co.za/

Date: 27/05/2015 11:18:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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