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Unaudited Group Interim Results For The Six Months Ended 30 September 2015
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")
UNAUDITED GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2015
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
ASSETS
Non-current assets 1 406 640 1 260 170 1 338 005
Property, plant and equipment 1 212 986 1 079 072 1 150 507
Investment properties 6 813 6 813 6 813
Goodwill 60 360 49 730 60 360
Intangible assets 75 034 76 248 77 279
Interest in associates and joint ventures 30 775 17 037 21 693
Deferred taxation 13 175 18 022 16 991
Loans receivable 7 497 13 248 4 362
Current assets 1 590 115 1 468 485 1 514 756
Other 1 444 757 1 345 963 1 382 470
Cash and cash equivalents 145 358 122 522 132 286
Total assets 2 996 755 2 728 655 2 852 761
EQUITY AND LIABILITIES
Equity 1 984 530 1 931 745 1 985 645
Equity attributable to equity holders of the parent 1 305 028 1 248 853 1 295 018
Non-controlling interest 679 502 682 892 690 627
Non-current liabilities 417 680 343 504 391 526
Deferred taxation 117 208 111 303 120 591
Borrowings 286 254 223 373 261 033
Finance lease liabilities 66
Other payables 8 761 4 210 5 823
Operating lease equalisation liability 5 457 4 552 4 079
Current liabilities 594 545 453 406 475 590
Total equity and liabilities 2 996 755 2 728 655 2 852 761
Net asset value per share (cents) 1 095 1 068 1 107
Net tangible asset value per share (cents) 993 973 1 002
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Revenue 574 059 548 488 1 205 348
Net gaming win 555 435 482 811 999 695
Group revenue 1 129 494 1 031 299 2 205 043
Other income 18 528 193 32 603
Other operating expenses (1 054 408) (884 705) (1 917 810)
93 614 146 787 319 836
Depreciation and amortisation (76 704) (61 996) (129 820)
Investment income 1 634 2 919 5 801
Share of profits of associates and joint ventures (990) 992 1 474
Gain on disposal of subsidiaries 529
Asset impairments (504) (763) (4 837)
Impairment of investments (903)
Finance costs (15 647) (10 180) (24 217)
Profit before taxation 1 932 77 759 167 334
Taxation (35 776) (28 547) (73 326)
(Loss)/profit for the period (33 844) 49 212 94 008
Attributable to:
Equity holders of the parent (27 942) 40 640 80 286
Non-controlling interest (5 902) 8 572 13 722
(33 844) 49 212 94 008
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Reconciliation of headline earnings Gross Net Gross Net Gross Net
Earnings attributable to equity holders of the
parent (27 942) 40 640 80 286
IAS 16 losses/(gains) on disposal of plant and
equipment 1 372 330 (170) (98) 76 (37)
IAS 16 impairment of plant and equipment 504 363 763 549 4 837 3 585
IAS 27 gain from disposal of subsidiaries (529) (529)
IAS 28 impairment of investment in joint venture 903 419
Headline earnings (27 778) 41 091 84 253
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Earnings per share (cents) (23,9) 35,1 69,0
Headline earnings per share (cents) (23,7) 35,5 72,4
Diluted earnings per share (cents) (23,8) 34,2 67,8
Diluted headline earnings per share (cents) (23,7) 34,6 71,2
Weighted average number of shares in issue ('000) 117 103 115 851 116 402
Actual number of shares in issue at end of period ('000) 119 163 116 957 116 957
Weighted average number of shares in issue (diluted) ('000) 117 351 118 910 118 367
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
(Loss)/profit for the period (33 844) 49 212 94 008
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Foreign currency translation differences 15 661 (2 467) 2 875
Total comprehensive (loss)/income (18 183) 46 745 96 883
Attributable to:
Equity holders of the parent (12 708) 38 161 83 030
Non-controlling interest (5 475) 8 584 13 853
(18 183) 46 745 96 883
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Balance at beginning of period 1 985 645 1 902 357 1 902 357
Stated capital
Shares issued 57 643 30 754 30 754
Current operations
Total comprehensive (loss)/income (18 183) 46 745 96 883
Equity-settled share-based payments (8 439) 2 432 6 194
Effects of changes in holding (12 550) (12 550)
Capital reductions and dividends (32 136) (37 993) (37 993)
Balance at end of period 1 984 530 1 931 745 1 985 645
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Cash flows from operating activities (50 778) (78 609) 130 264
Cash flows from investing activities (92 643) (136 997) (292 620)
Cash flows from financing activities 73 472 29 050 71 202
Decrease in cash and cash equivalents (69 949) (186 556) (91 154)
Cash and cash equivalents
At beginning of period 132 286 223 440 223 440
At end of period 62 337 36 884 132 286
Bank balances and deposits 145 358 122 522 132 286
Bank overdrafts included under current liabilities (83 021) (85 638)
Cash and cash equivalents 62 337 36 884 132 286
SEGMENTAL ANALYSIS
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
30 September 30 September 31 March
2015 2014 2015
R'000 R'000 R'000
Revenue
Gaming and entertainment 25 390 27 928 49 963
Beverages 548 669 520 560 1 155 385
574 059 548 488 1 205 348
Net gaming win
Gaming and entertainment 555 435 482 811 999 695
EBITDA
Gaming and entertainment 153 640 132 640 266 064
Beverages 7 110 35 874 92 152
Head office (67 136) (21 727) (38 380)
93 614 146 787 319 836
Profit before tax
Gaming and entertainment 77 476 75 853 127 276
Beverages (9 142) 21 439 61 678
Head office (66 402) (19 533) (21 620)
1 932 77 759 167 334
Headline earnings
Gaming and entertainment 40 976 51 547 93 304
Beverages (2 728) 8 893 26 958
Head office (66 026) (19 349) (36 009)
(27 778) 41 091 84 253
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of preparation and accounting policies
The interim results for the six months ended 30 September 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, 71 of 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 2015.
As required by the Listings Requirements, 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).
Shares issued
On 15 September 2015, 1 750 000 shares were issued to Johnnic Holdings Management Services Limited for R45 million in
cash as approved by shareholders at the general meeting held on 9 September 2015. On 29 September 2015, 455 964 shares
were issued to Group employees in terms of the Niveus Employee Share Scheme.
COMMENTARY
The resilience of the Group’s gaming businesses was evident during the period under review. Gross gaming revenue (“GGR”)
increased by 15% mainly due to more gaming devices, while cost containment efforts continued to limit cost growth to
below the Consumer Price Index (“CPI”). The performance was below our expectation and we hope that the efforts to improve
business processes, together with litigation and interaction with the various gaming boards will be fruitful.
Illegal gambling is growing and we have seen no real effort from the respective gaming boards, SAPS, SARS or the DTI to curb
its proliferation. In conjunction with Hosken Consolidated Investments Limited (“HCI”), we have embarked on a process of
litigation against illegal establishments who pose as internet cafés and attempt to convince the courts and SAPS that they
operate legally. We have contributed R2,5 million to the Group’s efforts, but ultimately the only long-term solution will be
decisive action by the various government departments that are tasked with upholding the law. We are disappointed that the
DTI is focusing on curbing legal gambling, while illegal gambling is allowed to grow unabated.
Bingo and casino operations
The EBITDA contribution from the segment increased to R19 million from R8 million in the prior period. EBITDA for fully
developed sites (including the Kuruman Casino) is R62 million for the six months ended September 2015 (R86 million for the
12 months ended March 2015). This is reduced to R19 million by head office costs, development costs and losses from sites
that are not operationally complete (R10 million for the 12 months ended March 2015).
The Group’s problems in KwaZulu-Natal (“KZN”) have not been resolved and numerous court cases are underway to set aside the
potential revocation of the licences. The Group is currently operating three sites in the province, but no electronic bingo
terminals (“EBTs”) are operational at these sites. The South Coast Mall site is complete, but the KwaZulu-Natal Gaming and
Betting Board (“KZNGBB”) has failed to issue a certificate to commence trading since construction was completed in January.
The Uitenhage and King William’s Town licences remain contested by another bidder.
During the period under review, the Group commenced operations in Butterworth and was awarded the licence for Ngcobo. The
Group submitted bids for bingo licences in Limpopo and awaits the announcement of successful bidders. The North West Gambling
Board has also released a request for proposal (“RFP”) for bingo.
The DTI is still campaigning against EBTs, despite the absence of evidence to indicate that EBTs affect the industry or
consumers negatively.
Vukani
Vukani increased EBITDA to R138 million (September 2014: R125 million). The KZNGBB was not operational for most of the period,
which impacted new licences in the province. In the Eastern Cape, the 1 000 limited payout machine (“LPM”) limit has
nearly been reached and the introduction of a second operator has limited the Group’s growth in the province. During November,
the Northern Cape Gambling Board licensed the first LPMs. The Group will actively roll out sites during the next month.
The installed machine base increased to 5 224 from 5 052 in March 2015. The average GGR per machine increased from R17 832
in March 2015 to R18 092 for the six months ended September 2015.
Operating expenses of R98 million reflect a 10% increase on the prior period. Included in the R98 million is R8 million
relating to sports betting expenses. Excluding these, operational expenses remained substantially flat. It is expected
that the Group will incur additional legal costs in the next six months and that a further contribution will be made to
HCI to continue the action against illegal gambling.
The Group continues to develop its sports betting offering and is in the process of increasing its effective shareholding
in Bet.co.za to 42,6%. In addition, the Group is refining its retail offering and is working to optimise the balance between
owned operations and sports betting operations in partnership with Vukani site owners. The sports betting business will not
break even by the financial year-end and is expected to lose R8 million in the retail segment for the financial year ending
March 2016, as the fixed costs infrastructure required to manage the business is not covered by revenue. The Group currently
operates in 21 sites, either on its own or in partnership with Vukani site owners.
KWV
KWV reported an attributable loss of R2,7 million. This includes mark-to-market losses on its foreign exchange hedges but,
as reported previously, the Group remains a net beneficiary of currency depreciation.
The volume of brandy sales continued to decline as KWV has elected not to follow excessive discounting of brandy by Distell,
the category volume leader with more than 70% market share. As a result, the Group lost market share during the period and
will continue to do so, while lower-end brandy prices are substantially below economic levels. Importantly, the net
contribution from brandy, however, remains stable despite the volume losses.
The strategy to premiumise KWV brandy and potentially the brandy category, remains the only long-term solution to
arrest the decline of brandy. KWV was awarded the title of the world’s best brandy and cognac producer at the 2015
International Spirit Challenge in London.
The Group’s wine brands continue to grow and KWV’s wine credentials were again affirmed when it was named best producer at
the 2015 Veritas Awards for an unprecedented 5th consecutive time.
Head office costs
Head office costs amounted to R67 million. This includes R45 million, which was paid to JHMS as settlement of a variable-
rate management contract and R8 million, which is a variable-rate portion payable on the settlement date. Future head office
costs will comprise: remuneration costs of the Group executive directors, listing fees, internal and external audit fees,
fixed management fee payable to JHMS and consulting costs that are not allocated to subsidiaries.
Dividend to shareholders
The directors declared and approved an interim gross ordinary dividend for the six months ended 30 September 2015 of 7 cents
per share on Monday, 16 November 2015, out of income reserves. The dividend will be payable on Monday, 14 December 2015.
There are 119 162 734 ordinary shares in issue, as at 19 November 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 5,95 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, 4 December 2015
Trading ex dividend commences Monday, 7 December 2015
Record date Friday, 11 December 2015
Payment date Monday, 14 December 2015
Share certificates may not be dematerialised or rematerialised between Monday, 7 December 2015 and Friday, 11 December 2015,
both days inclusive.
André van der Veen
Chief executive officer
19 November 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: 19/11/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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