Wrap Text
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2016 AND INTERIM DIVIDEND DECLARATION (NUMBER 4)
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 2016 AND INTERIM DIVIDEND
DECLARATION (NUMBER 4)
HIGHLIGHTS:
- Attributable net profit after taxation increased to R31.1 million (compared to R23.2 million for the same
period in 2015).
- Revenue increased by 76.6% to R139 million (R78.9 million for the same period in 2015).
- Headline earnings per share increased by 10.4% to 10.28 cents per share (9.31 cents for the same period in
2015).
- Declaration of an interim dividend (and fourth dividend as a listed company) of 5.30 cents per share.
- Assets under management and administration have grown to approximately R24 billion as at 31 August
(R22.5 billion as at 29 February 2016 year end and R14 billion as at 31 August 2015).
- Significant strengthening of the balance sheet with net tangible assets increasing by 70.94% to R294.4 million
(R172.2 million as at 31 August 2015).
Statement of Financial Position
Unaudited Unaudited
Figures in Rands 31 August 2016 31 August 2015
ASSETS
Non-Current Assets
Property, plant and equipment 35,072,915 2,721,039
Investment property 322,138,005 287,793,684
Goodwill 82,604,170 28,567,857
Investment in joint ventures - 60
Investments in associates 100 -
Loans to related parties 590,966 606,449
Other financial assets 296,000 200,000
Operating lease asset 8,158,061 7,176,948
448,860,217 327,066,037
Current Assets
Other financial assets 14,263,867 -
Trade and other receivables 13,386,529 7,772,753
Cash and cash equivalents 132,242,289 133,592,935
159,892,685 141,365,688
Total assets 608,752,902 468,431,725
EQUITY AND LIABILITIES
EQUITY
Equity Attributable to Equity Holders of Parent
Share capital 324,779,200 186,709,565
Reserves 1,452,097 -
Retained income 50,782,185 14,080,956
377,013,482 200,790,521
Non-controlling interest 5,758,665 4,208,810
382,772,147 204,999,331
LIABILITIES
Non-Current Liabilities
Deferred tax 13,542,704 8,818,428
Operating lease liability - 525,046
Other financial liability 177,761,662 161,464,291
191,304,366 170,807,765
Current Liabilities
Current tax payable 1,404,384 1,079,758
Loans from related parties 16,667 67,596,822
Provisions 307,638 -
Bank overdraft 28,320 -
Trade and other payables 32,919,380 23,948,049
34,676,389 92,624,629
Total Liabilities 225,980,755 263,432,394
Total Equity and Liabilities 608,752,902 468,431,725
Statement of Comprehensive Income
Six months Six months
Unaudited Unaudited
Figures in Rands 31 August 2016 31 August 2015
Revenue 139,294,745 78,929,301
Cost of sales -31,546,838 -17,653,267
Gross profit 107,747,907 61,276,034
Other income 1,805,210 717,050
Operating expenses -63,456,796 -32,453,209
Operating profit 46,096,321 29,539,875
Investment revenue 5,400,725 3,833,694
Fair value adjustment 3,532,450 3,125,000
Income from equity accounted investments - 1,440,949
Finance costs -8,517,313 -5,906,818
Profit before taxation 46,512,183 32,032,700
Taxation -14,700,270 -8,100,981
Profit for the period ended 31,811,913 23,931,719
Other comprehensive income - -
Total comprehensive income 31,811,913 23,931,719
Total comprehensive income attributable to:
Owners of the parent 31,108,459 23,200,112
Non-controlling interest 703,454 731,607
31,811,913 23,931,719
Profit attributable to:
Owners of the parent 31,108,459 23,200,112
Non-controlling interest 703,454 731,607
31,811,913 23,931,719
Unaudited Unaudited
Per share information: 31 August 2016 31 August 2015
Shares in issue:
Weighted average number of shares 302,741,722 210,689,681
Shares in issue at period end 302,741,722 242,500,000
Earnings per share:
Earnings per share (cents) 10.28 11.01
Headline earnings per share (cents) 10.04 9.31
Net asset value per share:
Net asset value per share (cents) 124.55 82.80
Net tangible asset value per share (cents) 97.25 71.02
Reconciliation of Headline Earnings
Group
Six months Six months
Unaudited Unaudited
Figures in Rands 31 August 2016 31 August 2015
Earnings attributable to equity holders of the parent 31,108,459 23,200,112
Re-measurements included in equity accounted earning of associates -1,052,238
Fair value adjustments of investment property -2,469,314 -2,541,637
Fair value adjustment of other financial assets -185,364
Increase in CGT inclusion rate 1,930,766
Headline earnings attributable to equity holders of the parent 30,384,547 19,606,237
Statement of Cash Flows
Group
Six months Six months
Unaudited Unaudited
Figures in Rands 31 August 2016 31 August 2015
Cash flows from operating activities
Cash generated from operations 50,478,228 33,988,165
Interest income 5,042,388 3,744,674
Dividends received 358,337 89,020
Finance costs -8,517,313 -5,906,818
Tax paid -9,883,849 -7,254,710
Net cash from operating activities 37,477,791 24,660,331
Cash flows (used in)/from investing activities
Purchase of property, plant and equipment -1,476,377 -1,133,360
Sale of property, plant and equipment 6,704 499
Purchase of investment property -21,663,005 -83,415
Net cash acquired in business combination paid through share issue - 2,727,677
Purchase of other financial assets -4,472,403 -
Investment in subsidiary -1,550,000
Net movements in loans with related parties -100,000 27,911,579
Net cash (used in)/from investing activities -27,705,081 27,872,980
Cash flows generated (used in)/from financing activities
Proceeds from share issues - 104,752,665
Share buy-back paid - -62,541,938
Net movement on shareholders loans 104,025 -
Dividends paid -15,251,603 -9,700,000
Net movement in other financial liabilities 5,220,121 -
Net cash (used in) / from financing activities -9,927,457 32,510,727
Total cash movement for the 6 months -154,747 85,044,038
Cash at the beginning of the 6 months 132,368,716 48,548,897
Total cash at end of the 6 months 132,213,969 133,592,935
Statement of Changes in Equity
Total
attributable to Non-
Total stated Revaluation Retained equity holders controlling
capital reserve income of the Group interest Total equity
Balance at 1 March 2015 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
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 - 12,469,381 145,196,269 2,825,048 148,021,317
Balance at 31 August 2015 186,709,565 - 14,080,955 200,790,520 4,208,811 204,999,331
Changes in equity 47,395,412 - - 47,395,412 - 47,395,412
Business combinations 90,674,223 - - 90,674,223 220 90,674,443
Changes in ownership interest - control not lost - - 20,912 20,912 -20,938 -26
Total comprehensive income for the 6 months - 1,452,097 34,749,177 36,201,274 867,118 37,068,392
Dividends - - -13,925,715 -13,925,715 - -13,925,715
Total changes 138,069,635 1,452,097 20,844,374 160,366,106 846,400 161,212,506
Balance at 29 February 2016 324,779,200 1,452,097 34,925,329 361,156,626 5,055,211 366,211,837
Changes in equity
Business combinations - - - - - -
Changes in ownership interest - control not lost - - - - - -
Total comprehensive income for the 6 months - - 31,108,459 31,108,459 703,454 31,811,913
Dividends - - -15,251,603 -15,251,603 - -15,251,603
Total changes - - 15,856,856 15,856,856 703,454 16,560,310
Balance at 31 August 2016 324,779,200 1,452,097 50,782,185 377,013,482 5,758,665 382,772,147
SEGMENT ANALYSIS
The following information relates to segment financial information of the group:
31 August 2016 Group
Profit before
Figures in Rand Revenue tax Assets Liabilities
Insurance broking 13,556,682 2,311,126 8,451,418 2,044,678
Wealth management 116,473,543 31,942,539 78,179,921 34,197,470
Administration of estates
and trusts 1,571,358 473,312 2,710,561 1,349,502
Property services 28,156,315 7,046,260 372,563,896 300,118,020
Other 1,974,120 14,368,506 297,335,169 1,144,009
Intercompany eliminations -22,437,273 -9,629,560 -150,488,063 -112,872,924
139,294,745 46,512,183 608,752,902 225,980,755
31 August 2015 Group
Profit before
Figures in Rand Revenue tax Assets Liabilities
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 76,453,732
Intercompany eliminations -11,090,353 1,916,633 -32,905,688 5,480,365
78,929,301 32,032,700 468,431,725 263,432,394
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 29 February 2016. 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.
Included in goodwill is the preliminary purchase price allocation (PPA) realised on the NVest Properties
Limited (“NVest Properties”) and NFB Gauteng Pty Limited (“NFB Gauteng”) acquisitions in the prior
year.
An independent identification of the intangible assets of both NVest Properties and NFB Gauteng was
conducted to determine the PPA in terms of IFRS 3. This confirmed that both the valuation and
description of the intangible assets relating to both business combinations were correct as
provisionally reflected. The independent identification and intangible asset allocation and valuation of
NVest Properties and NFB Gauteng was also reviewed by the Group’s auditors, Grant Thornton Cape
Inc.
The results were prepared by the NVest Group Accountant, Charl Herselman CA(SA), 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.
FINANCIAL COMMENTARY
The Board is pleased to report another period of growth as well as progress in terms of executing its
key strategic objectives. This growth is highlighted by the significant increase in revenue, by 76.5%, to
R139.3 million from R78.9 million in the prior reporting period. The increase in revenue was achieved
from both the existing business subsidiaries across the Group as well as the new revenue flows from
the acquisitions of NFB Gauteng and the increased shareholding in NVest Properties, which
acquisitions were made during the prior year.
Whilst Cost of Sales have increased materially, this is broadly in line with the overall growth of the
business, as well as the investment into resourcing and infrastructure to ensure that the Group is
positioned for further organic and acquisitive growth going forward. Judicious cost management
remains a key focus for the business. The overall position in terms of revenue growth and the
increased cost of sales translated into a profit before tax due to owners of R46.5 million.
Income from equity accounted investments declined due to the company’s acquisition of the
additional 51% in NVest Properties during the prior year, which is now a majority owned and
management controlled subsidiary. NVest Properties acquired additional properties within the
reporting period and now holds a property portfolio valued at R352.3 million as at end August 2016.
The liabilities, which have increased as part of the property purchases, are bank funded.
The fair value adjustment relates to an increase in the value of the properties held by NVest Properties
within the commercial property portfolio.
ACQUISITIONS, DISPOSALS, SHARE ISSUES AND REPURCHASES
There were no disposals, share issues or share repurchases during the period under review.
A subsidiary, NFB Finance Brokers Eastern Cape (Pty) Ltd (“NFB EC”) acquired the business of De Beer
Wealth Management effective 1 March 2016 for an undisclosed sum and which business was merged
with NFB EC which also employed that acquired business’ financial adviser.
SUBSEQUENT EVENTS
Subsequent to 31 August 2016, NVest has acquired the remaining 4% interest in NVest Properties for
an undisclosed sum, which transaction is not categorised in accordance with the JSE Listings
Requirements.
NVest Securities is in the process of opening a branch office in Johannesburg which will be located
within the current NFB Gauteng business premises. The Group is working on duplicating the very
successful model that operates in East London where the stock broking business (NVest Securities)
and the East London office of NFB Private Wealth Management operate from the same building and
which two businesses are very complementary to one another.
PROSPECTS
Despite significant local and global uncertainty on political, economic and market fronts, the Group
continues to show its resilience in terms of revenue and profit growth. The Board and Management
remain committed to investing in the infrastructure and capabilities across the underlying subsidiaries
to ensure that the Group is able to capitalise on opportunities to grow the geographical footprint of
the business as well as diversify the product and service offering to clients.
Chris Lemmon has taken up the position of joint Managing director of NVest Securities and will be
based in Johannesburg and tasked with the responsibility to drive this geographic expansion. Chris
was previously Head: Private Clients at Sasfin Asset Managers, a member of the Sasfin Holdings Group
Executive Committee, a director of Sasfin Securities and Chairperson of Sasfin’s Wealth Investment
Committee (and prior to that was a portfolio manager and director of NVest Securities).
CHANGES TO THE BOARD
During the period under review, Mr John Ross-Smith retired as an independent non-executive director
of NVest. Subsequent to the interim period end, Professor Lana Joy Weldon was appointed as an
Independent Non-Executive Director of the Company with effect from 6 October 2016.
DIVIDEND DECLARATION
The Board has declared an interim dividend (Number 4) of 5.3000 cents per share for the six months
ended 31 August 2016, which amounts to 52.81% of headline earnings and a year-on-year growth in
interim dividend of 17.78% (and a 10.42% growth in dividend over the 6 month period). 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 0.7950 cents per ordinary share. Shareholders, unless exempt or
qualifying for a reduced withholding tax rate, will receive a net dividend of 4.5050 cents per share.
NVest’s tax reference number is 9053981180.
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:
Last date to trade “cum" dividend Monday, 12 December 2016
Shares commence trading "ex" dividend Tuesday, 13 December 2016
Record date (date shareholders recorded in share register) Thursday, 15 December 2016
Payment date Monday, 19 December 2016
Shareholders may not dematerialise or rematerialise their share certificates between Tuesday 13
December 2016 and Thursday 15 December 2016, both dates inclusive.
For and on behalf of the Board
Anthony Godwin Frank Knox
Chief Executive Officer Financial Director
East London
23 November 2016
Executive Directors: Non-executive Directors:
Anthony Godwin (Chief Executive Officer) Jonathan Goldberg# (Chairperson)
Frank Knox (Financial Director) Siviwe Kwatsha#
Andrew Kent Lana Weldon#
Michael Estment Dylan Schemel
# - independent
Company Secretary: Designated Advisor:
Brendan Connellan Arbor Capital Sponsors Proprietary Limited
Transfer Secretaries: Registered Office:
Computershare Investor Services Proprietary 42 Beach Road
Limited Nahoon
70 Marshall Street East London, 5241
Johannesburg, 2001 (PO Box 8132, Nahoon, 5210)
(PO Box 61051 Marshalltown, 2107)
Website:
http://www.nvestholdings.co.za/
Date: 23/11/2016 10:44:00 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 
