Wrap Text
Interim results for the six months ended 31 August 2015
NVEST FINANCIAL HOLDINGS LIMITED AND ITS SUBSIDIARIES
(Incorporated in the Republic of South Africa)
(Registration number 2008/015990/06)
(“NVest” or “the Company” or “the Group”))
ISIN Code: ZAE000199865 JSE Code: NVE
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2015 AND INTERIM
DIVIDEND DECLARATION (NUMBER 2)
HIGHLIGHTS:
- HEPS increased by 33.5% to 9.31 cents per share (6.97 cents for the same prior period in
2014).
- Assets under management and administration had grown to approximately R14.5 billion
as at 31 August 2015 (from R13.4 billion as at end February 2015).
- Listed 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. The number of Shareholders in the Company materially increased to
approximately 1400 as at end August 2015.
- Declaration of an interim dividend (and second dividend as a listed company) of 4.5
cents per share.
- Substantial strengthening of the balance sheet of the Group and strategic acquisitions.
Statement of Financial Position
Group
Unaudited Reviewed
Figures in
31 August 2015 31 August 2014
Rand
ASSETS
Non-Current Assets
Property, plant and equipment 2 721 039 2 072 010
Investment property 287 793 684 -
Goodwill 28 567 857 25 841 279
Investment in joint ventures 60 60
Investments in associates - 17 369 652
Loans to related parties 606 449 275 081
Other financial assets 200 000 200 000
Deferred tax - 1 212 313
Operating lease asset 7 176 948 -
327 066 037 46 970 395
Current Assets
Loans to related parties - 1 586 018
Current tax receivable - 88 866
Trade and other receivables 7 772 752 5 421 140
Cash and cash equivalents 133 592 935 46 684 972
141 365 687 53 780 996
Total Assets 468 431 724 100 751 391
EQUITY AND LIABILITIES
EQUITY
Equity Attributable to Equity Holders of Parent
Share capital 186 709 565 18 120 538
Retained income 14 080 956 60 231 323
200 790 521 78 351 861
Non-controlling interest 4 208 810 3 793 303
204 999 331 82 145 164
LIABILITIES
Non-Current Liabilities
Deferred tax 8 818 428 -
Operating lease liability 525 046 74 078
Other financial liabilities 161 464 291 -
170 807 765 74 078
Current Liabilities
Current tax payable 1 079 758 3 074 942
Loans from related parties 67 596 822 243 100
Operating lease liability - 64 569
Trade and other payables 23 948 049 15 149 538
92 624 628 18 532 149
Total Liabilities 263 432 393 18 606 227
Total Equity and Liabilities 468 431 724 100 751 391
Statement of Comprehensive Income
Group
Six months Six months
Unaudited Reviewed
31 August
Figures in Rand Notes 31 August 2015 2014
Revenue 78 929 301 54 230 108
Cost of sales -17 653 267 -14 187 585
Gross profit 61 276 033 40 042 523
Other income 717 050 1 175 442
Operating expenses -32 453 209 -25 078 127
Operating profit (loss) 29 539 875 16 139 838
Investment revenue 3 833 694 1 315 361
Fair value adjustment 3 125 000 -
Income from equity accounted investments 1 440 949 2 556 986
Finance costs -5 906 818 -11 578
Profit before taxation 32 032 700 20 000 607
Taxation -8 100 981 -4 916 736
Profit for the period ended 23 931 718 15 083 871
Other comprehensive income - -
Total comprehensive income 23 931 718 15 083 871
Total comprehensive income attributable to:
Owners of the parent 23 200 112 14 324 309
Non-controlling interest 731 606 759 562
23 931 718 15 083 871
Profit attributable to :
Owners of the parent 23 200 112 14 324 309
Non-controlling interest 731 606 759 562
23 931 718 15 083 871
Per share information:
Shares in issue:
Weighted average number of shares 210 689 681 177 500 000
Shares in issue at period end 1 242 500 000 177 500 000
Earnings per share
Earnings per share (c) 11,01 8,07
Headline earnings per share (c) 9,31 6,97
Net asset value per share
Net asset value per share (c) 82,80 44,00
Net tangible asset value per share (c) 71,02 29,58
Notes:
1. Extracted from Prospectus (fully diluted)
Reconciliation of Headline Earnings
Group
Six months Six months
Unaudited Reviewed
31 August
Figures in Rand 31 August 2015 2014
Earnings attributable to equity holders of
the parent 23 200 112 14 324 309
Re-measurements included in equity
accounted earning of associates -1 052 238 -1 944 539
Re-measurement of Investment Property -2 541 637 -
Headline earnings attributable to equity
holders of the parent 19 606 237 12 379 770
Statement of Cash Flows
Group
Six months Six months
Unaudited Reviewed
Figures in Rand 31 August 2015 31 August 2014
Cash flows from operating activities
Cash generated from operations 33 988 164 12 116 508
Interest income 3 744 674 1 315 361
Dividends received 89 020 -
Finance costs -5 906 818 -11 578
Tax paid -7 254 710 -3 568 286
Net cash from operating activities 24 660 331 9 852 005
Cash flows from/(used in) investing activities
Purchase of property, plant and equipment -1 133 360 -1 072 323
Sale of property, plant and equipment 499 -
Purchase of investment property -83 415 -
Sale of goodwill - -
Net cash acquired in business combination paid through
share issue 2 727 677 -
Investment in subsidiary -1 550 000 -
Net movements in loans with related parties 27 911 579 156 872
Net cash from/(used in) investing activities 27 872 980 -915 451
Cash flows generated from/(used in) financing activities
Proceeds from share issues 104 752 665 -
Share buy-back paid -62 541 938 -
Net movement on shareholders loans 13 914
Dividends paid -9 700 000 -11 400 000
Dividends paid to minority shareholders - -600 000
Net cash generated by/(used in) financing activities 32 510 727 -11 986 086
Total cash movement for the 6 months 85 044 038 -3 049 532
Cash at the beginning of the 6 months 48 548 897 49 734 504
Total cash at end of the 6 months 133 592 935 46 684 972
Statement of Changes in Equity
Total
Non-
Share Share Total share Retained attributable to
controlling Total equity
capital premium capital income equity holders
interest
of the Group
Figures in Rand
Balance at 01 March 2014 500 18 120 038 18 120 538 57 307 014 75 427 552 3 633 741 79 061 293
Changes in equity - - -
Total comprehensive income for the 6 months - - - 14 324 309 14 324 309 759 562 15 083 871
Dividends - - - -11 400 000 -11 400 000 -600 000 -12 000 000
Total changes - - - 2 924 309 2 924 309 159 562 3 083 871
Balance at 31 August 2014 500 18 120 038 18 120 538 60 231 323 78 351 861 3 793 303 82 145 164
Changes in equity
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
Changes in ownership interest - control not lost - - - -13 140 -13 140 13 140 -
Total comprehensive income for the 6 months - - - 19 313 580 19 313 580 969 335 20 282 915
Dividends - - - -72 799 036 -72 799 036 -1 100 000 -73 899 036
Total changes 53 982 177 -18 120 038 35 862 139 -58 619 749 -22 757 610 -2 409 540 -25 167 150
Balance at 28 February 2015 53 982 677 - 53 982 677 1 611 574 55 594 251 1 383 763 56 978 014
Changes in equity
Issue of shares 132 726 888 - 132 726 888 - 132 726 888 - 132 726 888
Business combinations - - - - - 2 612 711 2 612 711
Changes in ownership interest - control not lost - - - -1 030 731 -1 030 731 -519 269 -1 550 000
Total comprehensive income for the 6 months - - - 23 200 112 23 200 112 731 606 23 931 718
Dividends - - - -9 700 000 -9 700 000 - -9 700 000
Total changes 132 726 888 - 132 726 888 12 469 381 145 196 270 2 825 047 148 021 317
Balance at 31 August 2015 186 709 565 - 186 709 565 14 080 955 200 790 521 4 208 810 204 999 331
SEGMENT ANALYSIS
The following information relates to segment financial information of the group:
Group
Figures in Rand
Revenue Profit Assets Liabilities
before tax
Unaudited
6 months
31 August 2015
Insurance broking 5 893 305 911 156 6 236 283 837 484
Wealth management 66 164 692 21 754 354 41 189 451 15 930 700
Administration of estates
2 556 255 1 245 906 3 318 391 1 347 743
and trusts
Property services 11 716 726 5 906 243 220 416 276 163 382 370
Other 3 688 676 298 408 230 177 012 76 453 731
Intercompany eliminations -11 090 353 1 916 633 -32 905 689 5 480 365
78 929 301 32 032 700 468 431 724 263 432 393
Reviewed
6 months
31 August 2014
Insurance broking 5 233 604 472 722 5 693 771 1 781 392
Wealth management 49 929 931 16 800 234 53 530 189 22 425 529
Administration of estates
1 064 696 63 392 2 877 741 1 219 111
and trusts
Property services - - - -
Other 14 230 2 640 250 47 099 459 1 246 482
Intercompany eliminations -2 012 353 24 009 -8 449 769 -8 066 288
54 230 108 20 000 607 100 751 391 18 606 226
COMMENTARY
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies and method of measurement and recognition applied in the
preparation of these condensed unaudited consolidated interim 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 2015. The
unaudited consolidated interim results are prepared in accordance with the requirements of
the JSE Limited Listings Requirements for interim reports and the requirements of the
Companies Act, 71 of 2008. The unaudited consolidated interim 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 NVest Group Accountant, Charl Herselman CA(SA), was responsible for the preparation
of the unaudited consolidated interim results, under the supervision of Frank Knox, the
Financial Director of NVest. Any reference to future financial performance included in this
announcement has not been reviewed nor reported on by the Group’s external auditor.
The directors of NVest (“the Board”) take full responsibility for the preparation of the interim
report. The financial information has been correctly extracted from the underlying period
financial statements. This summarised report is extracted from unaudited information, and has
not itself been audited.
FINANCIAL COMMENTARY
NVest listed on the Alternative Exchange of the JSE on 29 May 2015 and these results are for
the first six month period during which the listing occurred.
The Board is pleased to report another period of good growth and progress on its key
strategic objectives, with revenue increasing 45.5% to R79 million from R54 million in the prior
period. The increase was from both the existing business as well as the acquisition of an
increased shareholding in NVest Properties Limited (“NVest Properties”) during the period
under review.
Cost of sales and operating expenses have been well controlled in light of the higher
turnover, increasing by approximately 27.61% over the prior period.
Income from equity accounted investments comprises income from the Company’s
associate investment in NVest Properties and in which NVest increased its shareholding to
96% during the period under review.
The fair value adjustment relates to an increase in the value of the properties held by NVest
Properties.
The increase in property, plant and equipment, increase in operating lease asset increase in
other financial liabilities, increase in loans from related parties of and the decrease in
investment in associate are all due to the acquisition of the additional shareholding in NVest
Properties, which holds a property portfolio of R288 million, and which was previously held as
an investment in an associate. The loan from related party will be capitalised as detailed in
Subsequent Events below.
ACQUISITIONS, DISPOSALS, SHARE ISSUES AND REPURCHASES
During the period under review, the Company acquired an increased shareholding in NVest
Properties which took its shareholding in that company from 45% to 95% and which was
settled through the issue of 13 514 069 new shares in NVest. At such date (1 June 2015), the
Company no longer accounted for NVest Properties as an Associate (equity accounting)
and began treating it as a subsidiary. A further 1% share in NVest Properties was then
acquired for a cash consideration of R 1 550 000.
On 1 August 2015 NVest entered in to an agreement to issue a further 26 241 722 shares to the
Rayner Sparg Trust (“Trust”) for a subscription price of R 2.80 per share and which was settled
by capitalisation of a loan account of R 67 596 821.60 which was owing to the Trust and the
balance in cash of R 5 880 000. The process to issue the shares is well advanced and we
expect that these will be issued early in December 2015.
SUBSEQUENT EVENTS
On 1 September 2015 NVest entered in to an agreement to acquire 100% of the shares in NFB
Gauteng Proprietary Limited (“NFB Gauteng”) in exchange for 33 000 000 shares in NVest.
NVest also issued a further 1 000 000 shares for cash of R 1 900 000.00. NFB Gauteng has been
in business for 30 years and shares a common asset management platform with the advisory
business of NVest as well as having a long working history with NVest and several of its
subsidiaries.
The specific issue of shares to the Rayner Sparg Trust at an issue price of R 2.80 as highlighted
above was subject to NVest shareholder approval, which was received after the period end.
Subsequent to the above two transactions, the Company will have 302 741 722 shares in
issue.
PROSPECTS
The Group’s results depend on the markets and assets under management to a large
degree. With acquisition of NFB Gauteng subsequent to the period ended 31 August 2015,
Group assets under management and administration have increased by approximately R9
billion and further to this, other predominantly investment related business units continue to
acquire new assets under management and administration at rates exceeding our
expectations. Coupled with this, our investment approach, erring on the side of caution,
leads the Group into the future on a confident basis.
The additional cash raised since listing as a result of issues for shares in cash (which includes
the specific issue of shares for cash expected to be issued early in December 2015 and which
will result in Company shares in issue increasing to 302 741 722) forms part of the cash that we
invest at money market rates. The directors are cognisant of the fact that the return on equity
of such investment is materially lower than return on equity from our operating companies.
Thus, while our Company profit after tax will increase as a result of the earnings from the cash
investments, this will cause a drag on our earnings per share given the increased number of
shares earning a lower return on the cash. The directors would like it noted that the Company
has deliberately done this to strengthen its balance sheet and to provide the ability to
execute on the acquisition strategy highlighted in the Company prospectus. The directors
believe that this short term dilution will enable the Company to make acquisitions that will
contribute to meaningful long term growth and are currently exploring various exciting
opportunities in that regard.
CHANGES TO THE BOARD
During the period under review, save as disclosed in the prospectus of the Company dated
25 May 2015, Dylan Schemel was appointed as a non-executive director and Mike Estment
appointed as an Executive Director with effect from 29 May 2015 and 1 September 2015
respectively.
At the date of appointment of Mike Estment and in line with recommended corporate
governance principles in terms of board composition, the Board also elected to restructure
and the following executive board members resigned with effect from 1 September 2015:
- Philip Barry Bartlett
- Robert More Mc Intyre
- Travis Henry McClure
- Brendan Joseph Connellan
- Gavin Robin Ramsay
The above individuals remain as directors and employees at a subsidiary level. Brendan
Joseph Connellan also remains as Company Secretary of the Group.
DIVIDEND DECLARATION
As stated, the Company has an intention of, where appropriate, paying out at least half of its
annual headline earnings as a dividend going forward as a listed company. The Board has
declared an interim dividend (Number 2) of 4.5 cents per share, which amounts to 48.34% of
headline earnings and is thus slightly below the intended minimum dividend pay-out policy;
however the Board is satisfied that the dividend being declared is a reasonable one and
appropriately in line with the Company’s intention to build up optimal reserves in order to
take advantage of potential future acquisitions that may present themselves and that the
annual pay-out is expected to exceed 50%. The dividend is declared out of income reserves
of the Group. The dividend will be subject to a dividend withholding tax rate of 15% or 0.675
cents per ordinary share. Shareholders, unless exempt or qualifying for a reduced withholding
tax rate, will receive a net dividend of 3.825 cents per share. NVest’s tax reference number is
905398119.
The number of ordinary shares which will be eligible for the dividend at the declaration date
is 302 741 722.
The salient dates for the dividend will be as follows:
2015
Last date to trade “cum? dividend Thursday 10 December
Shares commence trading ”ex” dividend Friday 11 December
Record date (date shareholders recorded in share Friday 18 December
register)
Payment date Monday 21 December
Shareholders may not dematerialise or rematerialise their share certificates between Friday,
11 December 2015 and Friday, 18 December 2015, both dates inclusive.
For and on behalf of the Board
Anthony Godwin Frank Knox
Chief Executive Officer Financial Director
East London
26 November 2015
Executive Directors:
Anthony Godwin (Chief Executive Officer)
Frank Knox (Financial Director)
Andrew Kent (Executive Director)
Michael Estment (Executive Director)
Non-executive Directors:
Jonathan Goldberg (Independent non-executive Chairperson)
John Ross-Smith (Independent non-executive director)
Siviwe Kwatsha (Independent non-executive director)
Dylan Schemel
Company Secretary:
Brendan Connellan
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:
42 Beach Road
Nahoon
East London, 5241
(PO Box 8132, Nahoon, 5210)
Website:
http://www.nvestholdings.co.za/
Date: 26/11/2015 02:21:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
