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Summarised audited consolidated results for the year ended 28 February 2017 and dividend declaration number 5
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
SUMMARISED AUDITED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2017 AND
DIVIDEND DECLARATION NUMBER 5
HIGHLIGHTS:
- Attributable net profit after taxation increased by 5.23% to R60.98 million (2016: R57.95
million).
- Revenue increased by 32.9% to R287.6 million (2016: R216.4 million).
- Net asset value increased by 8.82% to 129.82 cents per share (2016: 119.30 cents per
share)
- Headline earnings per share remained in line with the prior year at 18.45 cents per share
(2016: 18.77 cents per share) based on a higher number of weighted average shares in
issue compared to 2016 (weighted average shares in issue increased by 21.6%
compared with 2016).
- Assets under management and administration increased by 15.6% to R26 billion as at 28
February 2017 (2016: R22.5 billion).
- Declaration of a final dividend of 5.00 cents per share.
Statement of Financial Position as at 28 February 2017
Audited Audited
28 February 28 February
Figures in Rand 2017 2016
ASSETS
Non-Current Assets
Property, plant and equipment 39 087 622 34 307 962
Investment property 326 181 102 297 200 000
Goodwill 82 604 170 82 604 170
Investment 9 686 370 -
Investments in associates 100 100
Other financial assets 617 126 295 000
458 176 490 414 407 232
Current Assets
Other financial assets 10 348 526 9 511 790
Loans to shareholders 589 339 694 991
Straight line lease assets 8 542 011 7 439 232
Current tax receivable 676 888 845 349
Trade and other receivables 17 035 363 12 319 220
Cash and cash equivalents 115 451 178 132 368 716
152 643 305 163 179 298
Total assets 610 819 795 577 586 530
Audited Audited
28 February 28 February
Figures in Rand 2017 2016
EQUITY AND LIABILITIES
EQUITY
Equity Attributable to Equity Holders of Parent
Share capital 324 779 200 324 779 200
Reserves 3 866 845 1 452 097
Retained earnings 64 360 947 34 925 319
393 006 992 361 156 616
Non-controlling interest 2 310 826 5 055 211
395 317 818 366 211 827
LIABILITIES
Non-Current Liabilities
Deferred tax 15 293 970 10 976 015
Other financial liability 155 296 862 157 141 541
170 590 832 168 117 556
Current Liabilities
Loans from related parties - 116 667
Other financial liabilities 17 368 002 15 400 000
Provisions 651 984 576 121
Trade and other payables 26 891 159 27 164 359
44 911 145 43 257 147
Total Liabilities 215 501 977 211 374 703
Total Equity and Liabilities 610 819 795 577 586 530
Net asset value per share:
Net asset value per share (cents) 129.82 119,30
Net tangible asset value per share (cents) 102.53 92,01
Shares in issue at 28 February 2017 302 741 722 302 741 722
Statement of Profit or Loss and Other Comprehensive Income
Year Year
Audited Audited
28 February 28 February
Figures in Rand 2017 2016
Revenue 287 630 210 216 443 442
Cost of sales (91 004 044) (67 469 044)
Gross profit 196 626 166 148 974 398
Other income 4 001 877 2 752 347
Fair value adjustments 7 497 278 12 665 171
Operating expenses (113 904 054) (81 537 263)
Operating profit 94 221 267 82 854 653
Investment revenue 16 169 835 12 439 831
Finance costs (22 635 395) (16 820 681)
Income from equity accounted investments - 1 440 949
Profit before taxation 87 755 707 79 914 752
Taxation (25 687 600) (20 427 253)
Profit for the year ended 62 068 107 59 487 499
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Gains and losses on property valuation 3 111 788 1 859 329
Income tax relating to items that will not be
reclassified (697 040) (346 728)
Total items that will not be reclassified to profit or
loss 2 414 748 1 512 601
Other comprehensive income for the year net of
taxation 2 414 748 1 512 601
Total comprehensive income for the year 64 482 855 61 000 100
Profit attributable to:
Equity holders of the parent 60 978 205 57 949 279
Non-controlling interest 1 089 902 1 538 220
62 068 107 59 487 499
Total comprehensive income attributable to:
Equity holders of the parent 63 392 953 59 401 376
Non-controlling interest 1 089 902 1 598 724
64 482 855 61 000 100
Earnings per share information:
Earnings per share (cents) 20,14 23,28
Headline earnings per share (cents) 18,45 18,77
Weighted average number of shares 302 741 722 248 935 830
Statement of Cash Flows
Audited Audited
Figures in Rand 28 February 2017 28 February 2016
Cash flows from operating activities
Cash generated from operations 82 438 178 63 172 025
Interest received 14 941 892 11 674 765
Dividends received 1 227 943 765 066
Finance costs (22 635 395) (16 820 681)
Tax paid (21 898 225) (20 442 941)
Net cash from operating activities 54 074 393 38 348 234
Cash flows used in investing activities
Purchase of property, plant and equipment (3 617 844) (29 539 629)
Disposal of property, plant and equipment 398 706 43 352
Purchase of investment property (21 663 005) (74 799)
Investment in associate (9 686 370) -
Net cash acquired in business combinations - 5 424 113
Loans to group companies repaid (116 667) -
Loans from group companies - 947 325
(Repayment)/Proceeds of financial assets (1 158 862) 3 490 163
Net cash used in investing activities (35 844 042) (19 709 475)
Cash flows (used in) / generated from financing
activities
Proceeds on share issues - 112 525 478
Proceeds from other financial liabilities 2 241 138 27 391 386
Repayment of other financial liabilities (2 117 815) -
Proceeds from shareholders loan 117 851 24 554 111
Repayment of shareholders loan (12 199) (11 572 262)
Dividends paid (30 576 914) (86 167 653)
Dividends paid to minorities (719 950) -
Acquisition of additional shares in subsidiaries
from non-controlling interest (4 080 000) (1 550 000)
Net cash (used in)/from financing activities (35 147 889) 65 181 060
Total cash movement for the year (16 917 538) 83 819 819
Cash at the beginning of the year 132 368 716 48 548 897
Total cash at end of the year 115 451 178 132 368 716
Statement of Changes in Equity
Total
attributable Non-
Revaluation Retained
Share capital to equity controlling Total equity
reserve income
holders of interest
Figures in Rand the Group
Balance at 1 March 2015 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 year - 1 452 097 57 949 279 59 401 376 1 598 724 61 000 100
Issue of shares 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 2 612 931 93 287 154
Total contributions by and distributions to
owners of company recognised directly in
equity 270 796 523 - (24 635 534) 246 160 989 2 072 724 248 233 713
Balance at 1 March 2016 324 779 200 1 452 097 34 925 319 361 156 616 5 055 211 366 211 827
Profit for the year - - 60 978 205 60 978 205 1 089 902 62 068 107
Other comprehensive income - 2 414 748 - 2 414 748 - 2 414 748
Total comprehensive income for the year - 2 414 748 60 978 205 63 392 953 1 089 902 64 482 855
Acquisition from non-controlling interest - - (965 663) (965 663) (3 114 337) (4 080 000)
Dividends - - (30 576 914) (30 576 914) (719 950) (31 296 864)
Total contributions by and distributions to
owners of company recognised directly in
equity - - (31 542 577) (31 542 577) (3 834 287) (35 376 864)
Balance at 28 February 2017 324 779 200 3 866 845 64 360 947 393 006 992 2 310 826 395 317 818
SEGMENT ANALYSIS
The following information relates to segment financial information of the group:
2017
Profit
Revenue before tax Assets Liabilities
Segments:
Insurance broking 16 481 791 2 938 385 8 930 913 1 908 533
Wealth management 210 770 800 59 242 687 74 473 276 27 438 369
Administration of estates
and trusts 2 876 360 710 926 2 780 163 1 248 021
Property services 57 084 225 17 020 856 392 836 384 313 546 233
Other 2 231 659 45 582 448 309 052 404 923 021
Intercompany eliminations (1 814 625) (37 739 595) (177 253 345) (129 562 201)
287 630 210 87 755 707 610 819 795 215 501 977
2016
Profit
Revenue before tax Assets Liabilities
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
and trusts 4 263 972 1 798 718 3 227 048 1 206 774
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
HEADLINE EARNINGS RECONCILIATION
Year Year
Audited Audited
28 February 28 February
2017 2016
Reconciliation of basic to Gross Net Gross Net
headline earnings:
Earnings attributable to - 60 978 205 - 57 949 279
equity holders of the parent
Re-measurements included - - (1 440 949) (1 037 483)
in equity accounted
earnings of associates
Fair value adjustment of (7 318 097) (5 678 843) (12 539 932) (10 201 486)
investment property
Profit/Loss on sale of fixed 56 010 71 946 33 301 23 977
assets
Restatement of CGT - 470 498 - -
inclusion rate
55 841 806 46 734 287
Earnings per share as presented on the Statement of Profit or Loss and Other Comprehensive
Income is based on the weighted average number of 302 741 722 ordinary shares in issue
(2016: 248 935 830). There are no dilutive instruments.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The accounting policies and method of measurement and recognition applied in the
preparation of these summarised audited consolidated provisional results (“the 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 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 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 Group Financial Director, Frank Knox (B.Compt, Hons), was responsible for overseeing the
preparation of the 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 itself not audited.
The annual financial statements for the year ended 28 February 2017, from which these
results have been summarised, have been audited by Grant Thornton Cape Inc and a copy
thereof can be obtained from the registered head office of the Company. A copy of the
auditor?s unmodified opinion is available for inspection at the Company?s registered office.
COMMENTARY
The Company has been in operation, through its NFB Financial Advisory business, since 1985
and continues to grow as a broad-range Financial Services Provider. The Group consists of 10
(ten) wholly or majority owned subsidiaries. The core business operations are Private Wealth
Management, Stockbroking and Asset Management. The Group also includes a short-term
insurance brokerage, 2 (two) property businesses and a wills and administration of deceased
estates business. The long-term strategy is to become a pre-eminent independent, national
financial advisory business providing a holistic and integrated client product and service
proposition. This will be achieved through both organic and acquisitive growth. NVest is well
positioned in terms of capital reserves to execute against this strategy.
RESULTS
The Board is pleased to report another year of growth in challenging operating conditions as
well as continued progress in terms of executing its key strategic objectives. This growth is
highlighted by the significant increase in revenue, by 32.9%, to R287.6 million from R216.4
million in the prior year. The increase in revenue was achieved almost exclusively from
organic growth derived from existing business subsidiaries across the Group as well as
consolidating new revenue flows from the prior acquisitions of NFB Finance Brokers Gauteng
Proprietary Limited and the increased shareholding in NVest Properties Limited in the previous
financial year. Total assets under management and administration, a key driver for growth
across the core business subsidiaries of the Group, grew by 15.6% during the year.
Cost of Sales have increased by R23.5 million, which is broadly in line with and proportionate
to the overall growth of the business, particularly the inclusion of NFB Finance Brokers
Gauteng Proprietary Limited for the full financial year, as well as investment into resourcing
and infrastructure to ensure that the Group is optimally positioned for further organic and
acquisitive growth going forward. The growth in costs is also a result of:
- Variable costs growing in line with revenue;
- Legal and compliance costs following the listing in 2015; and
- Operations and infrastructure costs.
Prudent 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 of R87.8
million.
Headline earnings per share remained in line with the prior year at 18.45 cents per share
(2016: 18.77 cents per share) based on a higher number of weighted average shares in issue
(302 741 722 compared to 248 935 830 in 2016).
The Company is highly cash generative and 86.57% of profits before tax were generated in
cash during the year. NVest also continues to hold substantial cash reserves (R115.5 million)
which will be applied predominantly in acquisitions going forward to ensure a more
attractive yield than what these funds currently earn on call.
PROSPECTS
Despite the likelihood of challenging operating conditions continuing in the short to medium
term, underpinned by volatility in global markets and local political uncertainties, the Board
and Management remain positive about future prospects for growth across the Group. The
Company has invested in key personnel in senior positions, is consolidating the mainstream IT
platform for the Private Wealth Management subsidiaries and is in the final stages of opening
a branch of NVest Securities Proprietary Limited in Johannesburg. In addition, NVest is in the
process of finalising an acquisition of an established financial advisory business in Port
Elizabeth which will considerably bolster the Group?s presence in that target geography. The
Company remains optimally positioned to capitalise on growth opportunities and has the
capital reserves to give due consideration to further acquisitive growth that will either
leverage scale from existing operations or diversify income streams.
ACQUISITIONS, DISPOSALS, SHARE ISSUES AND REPURCHASES
During the year under review, the Company increased its shareholding in NVest Properties
Limited from 96% to 100% and in NVest Property Services Proprietary Limited from 76% to 80%.
Various acquisitive opportunities were scrutinised during the year and this remains a key
focus within the Group?s long term strategy and ambition.
There were no share issues and repurchases during the year under review.
As at 28 February 2017, the Company had 302 741 722 shares in issue.
RELATED PARTY INFORMATION
NVest Properties Limited (“NVP”), a wholly owned subsidiary, has acquired an 8.08%
shareholding in FWJK Properties Cape Town Proprietary Limited, which owns a tract of land in
Johannesburg (Erf no. 3 Illovo) which is being developed into an office park (“Illovo Point”)
by Johannesburg 2 Properties Proprietary Limited (in which NVP also has an 8.08%
shareholding).
NFB Finance Brokers Gauteng Proprietary Limited intends to take up one of the office units
upon completion, which is expected in 2018. NVest Financial Holdings Limited has ceded
R27.1 million of its cash held with Investec as a guarantee of the purchase by NVP of the two
office units within the development and which will only be called upon when transfer is
registered, which is expected in March 2018. NVP has issued a guarantee limited to R14.2
million for the construction of the development.
The balance of the related party information is of a historic and repetitive nature and is fully
disclosed in the audited financial statements.
CHANGES TO THE BOARD OF DIRECTORS
During the year under review, Mr John Ross-Smith retired as an Independent Non-Executive
Director of NVest with effect from 15 August 2016. Professor Lana Joy Weldon was appointed
as an Independent Non-Executive Director of the Company with effect from 6 October 2016.
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.
DIVIDENDS
During the year under review the Company declared an interim dividend (dividend
declaration Number 4) of 5.3 cents per share.
The Board has declared a final gross dividend (Number 5) of 5 cents per share for the year
ended 28 February 2017. In line with our target to grow the dividend on a year on year basis
we are pleased to confirm that the dividends declared for the 2017 financial year reflect an
increase of 10.75% compared against the 2016 financial year. The dividend is declared out
of income reserves. The dividend will be subject to a dividend withholding tax rate of 20% or
1.00 cents per ordinary share. Shareholders, unless exempt or qualifying for a reduced
withholding tax rate, will receive a net dividend of 4 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:
2017
Last date to trade “cum? dividend Monday, 12 June
Shares commence trading „ex? the dividend Tuesday, 13 June
Record date (date shareholders recorded in share register) Thursday, 15 June
Payment date Monday, 19 June
Shareholders may not dematerialise or rematerialise their share certificates between
Tuesday, 13 June 2017 and Thursday, 19 June 2017, both dates inclusive.
For and on behalf of the Board
Anthony Godwin Frank Knox
Chief Executive Officer Financial Director
29 May 2017
Executive Directors: Independent Non-executive directors:
Anthony Godwin (Chief Executive Officer) Jonathan Goldberg (Chairman)
Frank Knox (Financial Director) Siviwe Kwatsha
Andrew Kent Professor Lana Weldon
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: Designated Advisor:
http://www.nvestholdings.co.za/ Arbor Capital Sponsors Proprietary Limited
Date: 29/05/2017 03:59:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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