Wrap Text
Audited results for the year ended 29 February 2016
NVEST FINANCIAL HOLDINGS LIMITED AND ITS SUBSIDIARIES
(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 29 FEBRUARY 2016 AND DIVIDEND
DECLARATION NUMBER 3
HIGHLIGHTS:
- Attributable net profit after taxation increased to R57.9 million compared to R33.6 million
in 2015.
- Revenue increased by 88% to R216.4 million for the year ended 29 February 2016 (2015:
R114.6 million).
- Earnings per share increased by 23% to 23.28 cents per share (18.93 cents in 2015).
- Headline earnings per share increased by 16.83% to 18.77 cents per share (16.07 cents in
2015).
- Share capital increased to R324.8 million (2015: R54 million) – through proceeds from the
initial listing and the issue of shares during the year under review.
- Assets under management and administration of R22.5 billion as at 29 February 2016.
- Declaration of a final dividend of 4.8 cents per share.
Statement of Financial Position as at 29 February 2016
Figures in Rand 2016 2015
Assets
Non-Current Assets
Property, plant and equipment 34 307 962 1 960 320
Investment property 297 200 000 -
Goodwill 82 604 170 25 874 090
Investments in joint ventures - 60
Investments in associates 100 22 624 206
Loans to group companies - 62 175
Deferred tax - 543 414
Other financial assets 295 000 200 000
414 407 232 51 264 265
Current Assets
Loans to related parties - 320 161
Other financial assets 9 511 790 -
Loans to shareholders 694 991 25 249 101
Trade and other receivables 12 319 220 7 603 105
Operating lease smoothing asset 7 439 232 -
Current tax receivable 845 349 -
Cash and cash equivalents 132 368 716 48 548 897
163 179 298 81 721 264
Total Assets 577 586 530 132 985 529
Equity and Liabilities
Equity
Equity Attributable to Equity Holders of Parent
Share capital 324 779 200 53 982 677
Reserves 1 452 097 -
Retained earnings 34 925 319 1 611 574
361 156 616 55 594 251
Non-controlling interest 5 055 211 1 383 763
366 211 827 56 978 014
Liabilities
Non-Current Liabilities
Deferred tax 10 976 015 -
Other financial liabilities 157 141 541 -
168 117 556 -
Current Liabilities
Loan from related party 116 667 -
Current tax payable - 404 897
Other financial liabilities 15 400 000 62 541 938
Trade and other payables 27 164 359 12 353 279
Operating lease smoothing liability - 527 091
Provisions 576 121 180 310
43 257 147 76 007 515
Total Liabilities 211 374 703 76 007 515
Total Equity and Liabilities 577 586 530 132 985 529
Net asset value per share information
Net asset value per share (c) 119.30 31.28
Net tangible asset value per share (c) 92.01 16.72
Shares in issue at 29 February 2016 302 741 722 178 879 362
Statement of Profit or Loss and Other Comprehensive Income
Figures in Rand 2016 2015
Revenue 216 443 442 114 642 325
Cost of sales (67 469 044) (30 812 790)
Gross profit 148 974 398 83 829 535
Other income 2 752 347 2 205 943
Operating expenses (81 537 263) (51 162 113)
Operating profit 70 189 482 34 873 365
Investment revenue 12 439 831 2 918 392
Fair value adjustments 12 665 171 -
Income from equity accounted investments 1 440 949 7 859 335
Finance costs (16 820 681) (5 214)
Profit before taxation 79 914 752 45 645 878
Taxation (20 427 253) (10 279 092)
Profit for the year 59 487 499 35 366 786
Other comprehensive income -
Items that will not be reclassified to profit or loss:
Gains and losses on property revaluation 1 859 329 -
Income tax relating to items that will not be reclassified (346 728) -
Total comprehensive income for the year 61 000 100 35 366 786
Profit attributable to:
Owners of the parent 57 949 279 33 637 889
Non-controlling interest 1 538 220 1 728 897
59 487 499 35 366 786
Total comprehensive income attributable to:
Owners of the parent 59 401 376 33 637 889
Non-controlling interest 1 598 724 1 728 897
61 000 100 35 366 786
Headline earnings reconciliation:
Earnings attributable to equity holders of the parent 57 949 279 33 637 889
Profit on sale of shares - -
- Re-measurements included in equity accounted (1 037 483) (5 073 376)
earnings of associates
- Fair value adjustment of investment property (10 201 486) -
- Fair value adjustment of property, plant and - -
equipment
- Fair value adjustment of other financial assets - -
- Profit/Loss on sale of fixed assets 23 977 (3 106)
46 734 287 28 561 407
Per share information
Earnings per share (cents) 23.28 18.93
Headline earnings per share (cents) 18.77 16.07
Weighted average number of shares 248 935 830 177 726 744
Statement of Cash Flows
Figures in Rand 2016 2015
Cash flows from operating activities
Cash generated from operations 63 172 023 23 282 449
Interest received 11 674 765 2 756 493
Dividends received 765 066 161 899
Finance costs (16 820 681) (5 214)
Tax paid (20 442 941) (10 828 711)
Net cash from operating activities 38 348 232 15 366 916
Cash flows used in investing activities
Purchase of property, plant and equipment (29 539 627) (1 250 659)
Disposal of property, plant and equipment 43 352 6 315
Purchase of investment property (74 799) -
Net cash acquired in business combinations 5 424 113 -
Advancements of loans to group companies - (65 309)
Repayment of loans to related parties 947 325 114 925
Proceeds from other financial assets 3 490 163 -
Additional investments in current subsidiaries (1 550 000) (7 413 468)
Net cash used in investing activities (21 259 473) (8 608 196)
Cash flows generated from/( used in) financing activities
Proceeds from share issues 112 525 478 39 305 041
Proceeds from other financial liabilities 27 391 386 -
Advances to / (Repayment of) loans to shareholders 24 554 111 (23 892 270)
Repayment of loans from shareholders (11 572 262) -
Dividends paid (86 167 653) (21 657 098)
Dividends paid to minority shareholders - (1 700 000)
Net cash generated from/(used in) financing activities 66 731 060 (7 944 327)
Total cash movement for the year 83 819 819 (1 185 607)
Cash at the beginning of the year 48 548 897 49 734 504
Total cash at end of the year 132 368 716 48 548 897
Statement of Changes in Equity
Figures in Rand Share Share Total share Revaluation Retained Total Non- Total Equity
capital premium capital Reserve earnings controlling
attributable shareholders
to equity
holders of
the group
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 - - - - 33 637 889 33 637 889 1 728 897 35 366 786
year
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 - - - - (13 140) (13 140) 13 140 -
not lost
Total contributions by and distributions 53 982 177 (18 120 038) 35 862 139 - (89 333 329) (53 471 190) (3 978 875) (57 450 065)
to owners of company recognised
directly in equity
Balance at 1 March 2015 53 982 677 - 53 982 677 - 1 611 574 55 594 251 1 383 763 56 978 014
Profit for the year - - - - 57 949 279 57 949 279 1 538 220 59 487 499
Other comprehensive income - - - 1 452 097 - 1 452 097 60 504 1 512 601
Total comprehensive income for the - - - 1 452 097 57 949 279 59 401 376 1 598 724 61 000 100
year
Issue of shares 180 122 300 - 180 122 300 - - 180 122 300 - 180 122 300
Acquisition from non-controlling interest - - - - (1 009 819) (1 009 819) (540 207) (1 550 026)
Dividends - - - - (23 625 715) (23 625 715) - (23 625 715)
Business combinations 90 674 223 - 90 674 223 - - 90 674 223 2 612 931 93 287 154
Total contributions by and distributions 270 796 523 - 270 796 523 - (24 635 534) 246 160 989 2 072 724 248 233 713
to owners of Company recognised
directly in equity
Balance at 29 February 2016 324 779 200 - 324 779 200 1 452 097 34 925 319 361 156 616 5 055 211 366 211 827
SEGMENT ANALYSIS
The following information relates to segment financial information of the group:
2016
Revenue Profit before Assets Liabilities
tax
Segments:
Insurance broking 13 375 030 2 311 125 8 451 418 2 044 678
Wealth management 165 001 045 50 163 307 64 738 078 27 899 998
Administration of estates 4 263 972 1 798 718 3 227 048 1 206 774
and trusts
Property services 35 390 248 20 178 076 344 099 773 275 713 439
Other 1 974 120 32 071 246 297 335 169 1 144 009
Inter -company eliminations (3 560 973) (26 607 720) (140 264 956) (96 634 195)
216 443 442 79 914 752 577 586 530 211 374 703
2015
Revenue Profit before Assets Liabilities
tax
Segments:
Insurance broking 11 764 360 1 626 041 6 589 453 1 846 685
Wealth management 113 972 706 35 169 385 42 593 865 24 281 391
Administration of estates 2 152 306 111 588 1 991 481 1 266 739
and trusts
Other 1 732 561 38 159 201 81 919 056 63 519 325
Inter-company eliminations (14 979 608) (29 420 337) (108 326) (14 906 625)
114 642 325 45 645 878 132 985 529 76 007 515
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 2015. 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 29 February 2016 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
Shareholders are referred to the interim results published on 26 November 2015 wherein
additional cash that was raised since the Company?s listing as a result of issues for shares in
cash forms part of the cash that NVest invests at money market rates in the short term. The
Company?s board of directors (“Board”) is 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 the Company?s profit after tax has increased as a result of the earnings from the
cash investments, this will cause a temporary drag on earnings per share given the increased
number of shares and the lower return on the cash. The Board advised 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 Board
believes that this short term dilution will enable the Company to make acquisitions that will
contribute to meaningful long term growth and is currently exploring various exciting
opportunities in that regard.
The year under review, the first for NVest as a listed company, has resulted in a very strong
financial performance with several positive movements and trends, including significant
growth in revenue.
Revenue has increased by 88% to R 216.4 million (2015: R 114.6 million) due to a combination
of strong revenue streams from existing business subsidiaries and additional contributions to
the bottom line pursuant to the acquisition of 100% shareholding in NFB Finance Brokers
Gauteng (Pty) Limited and an additional 51% shareholding in NVest Properties during the
year under review.
The growing revenue stream, coupled with the prudent containment of costs, has translated
into a profit before tax due to owners of R57.9 million (2015: R33.6 million).
The company has strong cash reserves. The intention is to apply these in acquisitions which
will yield a better return than what the funds currently earn on call.
Share capital has increased to R 324.8 million (2015: R 54 million) – this being proceeds from
the initial listing and the issue of shares during the year as set out in the section on
acquisitions/disposals/share issues/re-purchases
The net asset value per share has increased resoundingly to 119.30 cents (2015: 31.28 cents)
and the net tangible asset value per share to 92.01 cents (2015: 16.72 cents).
PROSPECTS
Despite volatile global markets, a turbulent Rand and uncertain political headwinds, the
Company is positive about the year ahead. The Board and management believe that the
Company is well positioned to capitalise on growth opportunities across several of its existing
subsidiaries as well as to give proper consideration to acquisitive growth to capitalise on
synergies and diversify the product and service offering further.
ACQUISITIONS, DISPOSALS, SHARE ISSUES AND REPURCHASES
During the year under review, the Company acquired an increased shareholding in NVest
Properties Limited (“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 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, taking the total shareholding of the
Company in NVest Properties to 96%.
On 1 August 2015 NVest entered into 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 shares were issued in early December 2015.
On 1 September 2015 NVest entered into 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 shares were listed on 2 September 2015.
On 4 September 2015, the Company announced an acquisition of NFB House, a property
situated at 42 Beach Road, Nahoon, East London, by NVest Properties for a total
consideration of R14 000 000. A further acquisition of properties and buildings situated at 49
& 51 Beach Road was concluded by NVest Properties for a total consideration R13 000 000
during November 2015.
There were no share repurchases during the year under review.
As at 29 February 2016, the Company had 302,741,722 shares in issue.
CHANGES TO THE BOARD OF DIRECTORS
The composition of the Board of Directors was significantly restructured prior to listing and
pursuant to the acquisition of NFB Finance Brokers Gauteng (Pty) Limited, as tabled below:
Directors Office Designation Changes
Q. Barnard Director Executive Resigned 01 April 2015
P.B. Bartlett* Director Executive Appointed 01 April 2015
Resigned 01 September 2015
B.J. Connellan* Director Executive Resigned 01 September 2015
N.N. Eppel Director Non-executive Resigned 24 March 2015
A.D. Godwin Chief Executive Executive Appointed on 03 July 2008
Officer
J. Goldberg Chairperson Non-executive Appointed 01 April 2015
Independent
A.V. Kent Director Executive Appointed on 03 July 2008
F.T. Knox Financial Director Executive Appointed on 14 May 2015
S.R. Kwatsha Audit Committee Non-executive Appointed 01 April 2015
Chairman Independent
R.M. McIntyre* Director Executive Appointed 01 April 2015
Resigned 01 September 2015
T.H. McClure* Director Executive Appointed 01 April 2015
Resigned 01 September 2015
G.R. Ramsay* Director Executive Resigned 01 September 2015
J.P. Ross-Smith Director Non-executive Appointed 01 April 2015
Independent
B.A. Russell Director Non-executive Resigned 01 April 2015
Independent
M.E.E. Sassoon Director Non-executive Resigned 24 March 2015
Independent
D.L. Schemel Director Non-executive Appointed 01 June 2015
Independent
M. Estment Director Executive Appointed 01 September 2015
The above individuals (*) remain as directors and employees at a subsidiary level. Brendan
Connellan also remains as Company Secretary of the NVest Group.
SUBSEQUENT EVENTS
The directors are not aware of any material event which occurred after the reporting date
and up to the date of this report.
DIVIDEND DECLARATION
As stated, the Company has an intention of paying out approximately half of its headline
earnings (as a guideline) as a dividend going forward as a listed Company.
The Board has declared a final gross dividend (Number 3) of 4.8 cents per share for the year
ended 29 February 2016. The dividend is declared out of income reserves. The dividend will
be subject to a dividend withholding tax rate of 15% or 0.72 cents per ordinary
share. Shareholders, unless exempt or qualifying for a reduced withholding tax rate, will
receive a net dividend of 4.08 cents per share.
NVest?s tax reference number is 905398119. The number of ordinary shares in issue at the
declaration date is 302,741,722.
The salient dates for the dividend will be as follows:
2016
Last date to trade “cum? dividend Friday, 17 June
Shares commence trading „ex? the dividend Monday, 20 June
Record date (date shareholders recorded in share register) Friday, 24 June
Payment date Monday, 27 June
Shareholders may not dematerialise or rematerialise their share certificates between
Monday, 20 June 2016 and Friday, 24 June 2016, both dates inclusive.
For and on behalf of the Board
Anthony Godwin Frank Knox
Chief Executive Officer Financial Director
31 May 2016
Executive Directors: Independent Non-executive directors:
Anthony Godwin (Chief Executive Officer) Jonathan Goldberg (Chairman)
Frank Knox (Financial Director) John Ross-Smith
Andrew Kent Siviwe Kwatsha
Michael Estment Non-executive directors:
Dylan Schemel
Company Secretary and Registered Office: Transfer Secretaries:
Brendan Connellan Computershare Investor Services Proprietary
42 Beach Road Limited
Nahoon 70 Marshall Street
East London – Eastern Cape Johannesburg, 2001
(PO Box 8132, Nahoon, 5210) (PO Box 61051 Marshalltown, 2107)
WEBSITE: http://www.nvestholdings.co.za/ Designated Advisor:
Arbor Capital Sponsors Proprietary Limited
Date: 31/05/2016 04:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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