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Abridged report for the year ended 31 March 2017 and details of AGM
Nictus Limited
(Incorporated in the Republic of South Africa)
(Registration number 81/011858/06)
JSE Share code: NCS
ISIN Code NA0009123481
(“Nictus” or “the Company” or “the Group”)
Abridged report relating to the audited financial results for the
year ended 31 March 2017 and details of the notice of the annual
general meeting
Abridged consolidated statement of financial position
at 31 March 2017
Figures in R’000 2017 2016
Assets
Property, plant and equipment 17 629 17 230
Intangible assets 101 355
Investments 22 062 39 841
Deferred tax assets 1 424 1 145
Loans and receivables 3 668 4 768
Non-current assets 44 884 63 339
Inventories 11 284 11 185
Loans and receivables 44 766 46 468
Trade and other receivables 335 484 254 464
Investments 100 766 22 988
Cash and cash equivalents 57 603 118 112
Current assets 549 903 453 217
Total assets 594 787 516 556
Equity and liabilities
Stated capital 48 668 48 668
Revaluation reserve 7 983 7 983
Retained earnings 42 652 37 749
Equity 99 303 94 400
Liabilities
Deferred tax liabilities 2 398 2 602
Non-current liabilities 2 398 2 602
Trade and other payables 10 837 7 610
Insurance contract liability 482 180 411 944
Current tax payable 69 –
Current liabilities 493 086 419 554
Total liabilities 495 484 422 156
Total equity and liabilities 594 787 516 556
Abridged consolidated statement of profit or loss and other
comprehensive income
for the year ended 31 March 2017
Figures in R’000 2017 2016
Revenue 44 651 51 062
Cost of sales (21 628) (20 621)
Gross profit 23 023 30 441
Other income 2 117 4 062
Investment income from operations 37 884 30 699
Operating expenses (43 991) (40 626)
Administrative expenses (16 805) (19 146)
Results from operating activities 2 228 5 430
Investment income 4 841 3 869
Profit before taxation 7 069 9 299
Taxation expense (178) (1 312)
Profit for the year 6 891 7 987
Other comprehensive income:
Items that will never be reclassified to
profit or loss
Tax related to property valuation –
capital gains tax rate change – (187)
Total comprehensive income for the year 6 891 7 800
Profit attributable to:
Owners of the parent 6 891 7 987
Total comprehensive income attributable
to:
Owners of the parent 6 891 7 800
Basic earnings per share (cents) 10,40 12,05
Diluted basic earnings per share (cents) 10,40 12,05
Abridged consolidated statement of cash flows
for the year ended 31 March 2017
Figures in R’000 2017 2016
Cash flows from operating activities
Cash utilised by operations (41680) (75 909)
Investment income received from operations 36728 29 264
Dividends received 1156 1 435
Dividends paid (1988) (1 988)
Tax paid (592) –
Net cash utilised by operating activities (6 376) (47 198)
Cash flows from investing activities
Acquisition of property, plant and
equipment (965) (336)
Proceeds on sale of property, plant and
equipment 115 104
Acquisition of intangible assets – (22)
Proceeds from disposal of investments 17 949 1 873
Investment income received 4 841 3 869
Short-term funds (invested)/disinvested (77 778) 108 893
Loans repaid by/(advanced to) related
parties 1 702 (7 187)
Proceeds on disposal of subsidiary 7 –
Net cash (utilised by)/generated from
investing activities (54 129) 107 194
Total cash movement for the year (60 505) 59 996
Total cash sold by subsidiary for the year (4) –
Cash and cash equivalents at the beginning
of the year 118 112 58 116
Total cash and cash equivalents at the end
of the year 57 603 118 112
Abridged consolidated statement of changes in equity
for the year ended 31 March 2017
Re-
Stated valuation Retained Total
Figures in R’000 capital reserve earnings equity
Balance at 1 April 2015 48 668 8 170 31 577 88 415
Total comprehensive income
for the year
Profit for the year – – 7 987 7 987
Other comprehensive income
Deferred tax on property
revaluations
– capital gains tax rate
change – (187) – (187)
Total comprehensive income
for the year – (187) 7 987 7 800
Transactions with the owners
of the company
Distributions to the owners
of the company
Dividends paid – – (1 988) (1 988)
Prescribed dividends – – 173 173
Total transactions with the
owners of the company – – (1 815) (1 815)
Balance at 31 March 2016 48 668 7 983 37 749 94 400
Total comprehensive income
for the year
Profit for the year – – 6 891 6 891
Total comprehensive income
for the year – – 6 891 6 891
Transactions with the owners
of the company
Distributions to the owners
of the company
Dividends paid – – (1 988) (1 988)
Total transactions with the
owners of the company – – (1 988) (1 988)
Balance at 31 March 2017 48 668 7 983 42 652 99 303
Abridged segmental report
for the year ended 31 March 2017
Figures in R’000 2017 2016
Segment assets
Furniture retail 62 793 63 679
Insurance and finance 563 378 486 431
Sub-total 626 171 550 110
Head office and eliminations (31 384) (33 554)
Total segment assets 594 787 516 556
Segment revenue
Furniture retail 36 712 36 564
Insurance and finance 9 416 15 918
Sub-total 46 128 52 482
Head office and eliminations (1 477) (1 420)
Total segment revenue 44 651 51 062
Net (loss)/profit for the year
Furniture retail (1 156) 820
Insurance and finance 2 127 3 627
Sub-total 971 4 447
Head office and eliminations 5 920 3 540
Total net profit for the year 6 891 7 987
Accounting policies
Basis of preparation
The abridged consolidated financial statements for the year ended
31 March 2017 (“Abridged Financial Statements”) are prepared in
accordance with the requirements of the JSE Limited (“JSE”)
Listings Requirements (“Listings Requirements”) for abridged
reports, and the requirements of the Companies Act of South Africa
(“Companies Act”) applicable to Abridged Financial Statements.
The Abridged Financial Statements are prepared in accordance with
the framework concepts and the measurement and recognition
requirements of International Financial Reporting Standards (IFRS)
and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as
issued by the Financial Reporting Standards Council and to also,
as a minimum, contain the information required by IAS 34 Interim
Financial Reporting. This announcement does not include the
information required pursuant to paragraph 16A(j) of IAS 34. The
accounting policies applied in the preparation of the consolidated
financial statements, from which the Abridged Financial Statements
were derived, are in terms of International Financial Reporting
Standards and are consistent with the accounting policies applied
in the preparation of the previous consolidated financial
statements.
Mr Eckhart H Prozesky (financial director, CA (SA)) was
responsible for supervising the preparation of the Abridged
Financial Statements.
The full Abridged Consolidated Financial Statements are available
on our website, at our registered office and upon request.
The new standards and interpretation adopted during the period
under review had no material impact on the Group.
Related parties
During the period, certain companies within the Group entered into
transactions with each other. These intra-Group transactions have
been eliminated on consolidation. Related party information
is unchanged from that reported at 31 March 2017. Refer to the
consolidated financial statements for the year ended 31 March 2017
(“Audited Financial Statements”) for further information.
Reconciliation between earnings and headline earnings
for the year ended 31 March 2017
Profit on
ordinary Net
Figures in R’000 activities Taxation profit
2017
Profit for the year 7 069 (178) 6 891
Adjustments for:
Profit on disposal of property,
plant and equipment (24) 7 (17)
Profit on disposal of
subsidiary (3) 1 (2)
Loss on scrapping of property,
plant and equipment 69 (19) 50
Headline earnings 7 111 (189) 6 922
2016
Profit for the year 9 299 (1 312) 7 987
Adjustments for:
Profit on disposal of property,
plant and equipment (18) 5 (13)
Headline earnings 9 281 (1 307) 7 974
2017 2016
Headline earnings per share (cents) 10,45 12,03
Diluted headline earnings per share (cents) 10,45 12,03
Responsibility for Audited Financial Statements
The Audited Financial Statements have been audited by KPMG Inc.,
and their unqualified audit opinion is available for inspection at
the registered office of the Company. The auditor’s opinion does
not necessarily report on all of the information contained in this
Abridged Financial Statements announcement. Shareholders are
therefore advised that in order to obtain a full understanding of
the nature of the auditor’s engagement they should obtain a copy
of the auditor’s opinion together with the accompanying Audited
Financial Statements from the issuer’s registered office or
website.
This Abridged Financial Statements information has been extracted
from the Audited Financial Statements, but is not itself audited.
The directors of Nictus are solely responsible for the preparation
of the Abridged Financial Statements and for its correct
extraction from the underlying Audited Financial Statements.
Events after reporting date
There were no events after the reporting date and up to the date
of approval of the Audited Financial Statements that affected the
presentation of the Audited Financial Statements for the year
ended 31 March 2017, other than that a dividend of 3,00 cents per
share was declared by the directors subsequent to year end,
payable to shareholders registered on 21 July 2017. A separate
announcement will follow containing details of the dividend.
Chairman’s report – Prof BJ Willemse
Given a strong capital base and sufficient cash, we continue to
carefully evaluate new business opportunities to grow the business
further and to continue to deliver value to our stakeholders while
doing business on an ethical basis. I wish to thank the managing
director and all staff for their loyalty and ethical way of doing
business.
We are grateful that Nictus continued to be profitable, while the
macro economy is in a declining growth phase and with an outlook
of no growth for 2017/18.
The international credit ratings downgrade that followed Mr Zuma’s
cabinet reshuffle at the end of March was the first step in the
reversing of expectations. The outlook for interest rates has
changed from slowly declining into 2017 and 2018, towards a
potential increase by 0,5-1 percentage points during the next
year. This follows the new outlook of a slow increase in
inflation, as the Rand exchange rate started to reverse the
strengthening trend into a weakening trend. A number of economic
indicators from car sales to business confidence indexes turned
sharply into negative territory during April 2017 with little
improvement, if any, in sight.
The next business year will be tough for most businesses in South
Africa and maintaining profitability and the required return on
capital will remain a challenge.
As reported last year, the Group went through some changes, and
with the new managing director and new management team we are
confident that the Group will remain profitable for the following
reasons: Clear strategies have been developed to continue to grow
the business within the limits of available resources and risk
appetite; and new business opportunities have been identified and
are being pursued that will increase the basis of growth and
profits into the future for the investments in the furniture and
insurance segments. Further investments in technology are also in
progress, that will improve the operating environment of
the Group.
Continuous delays in implementing the new insurance bill results
in increases in cost. Regulatory requirements need to be met from
the current Act as well as the new proposed bill and regulations.
However, Corporate Guarantee (South Africa) Limited is well placed
to meet the requirements of the new bill. Developing a more
flexible product offering and expanding the areas of business
resulted in new growth opportunities, but also diversifying
concentration risks. A subcommittee of the board oversees the
investments of the funds, with renewed focus on margins and low
risk investments, within the prescriptions of the Act.
The furniture sector in South Africa remains under pressure, a
result of tightening in credit and as disposable incomes slow
down. Nictus Meubels Proprietary Limited has a very good record on
credit scorecard applications in selecting creditworthy clients.
Bad debts remain well below the industry average and we are
confident that the trade receivables impairment allowance is
adequate and we will remain cautious, given the expected economic
environment.
I want to thank my fellow board members for continuous support and
dedication in fulfilling our duties as directors. In this regard,
we have also decided to continue to strive to meet the guidelines
of good corporate governance, as proposed by King IV, in the
continuous building of the company for the benefit of all
stakeholders.
Group managing director’s report - GRdV Tromp
The past year was challenging given the volatile economic and
political environments. It gives me pleasure to report, however,
that thanks to our committed employees, valued stakeholders and
solid governance structures, the Group still achieved satisfactory
results. We are proud that, despite these difficult circumstances
and a result showing reduced turnover and profitability, we can
report an increase of 15% growth in Group assets.
During the past year, long-term strategies were formulated across
the Group and we are excited about putting these strategies into
practice. I believe that the conditions for conducting business in
the coming financial year will remain challenging, but I am
confident that we will maintain profitability whilst expanding our
asset base throughout South Africa.
Segmental performance
The segments performed satisfactorily during the year. Nictus has
increased its focus and drive towards establishing various
functions across the Group to enhance synergies and promote
efficiency and effectiveness. Our vision of being an independent
and diversified investment holding company whilst creating wealth
for all stakeholders remains the primary focus area.
Furniture segment
The furniture segment experienced a tough year and while major
competitors closed down, the industry still remained resilient to
the changes and consequences of these closures. We believe that
many opportunities have arisen as a result and we have developed
long-term strategies to increase the current offering and to
expand the range of our products. Technological development
remains a primary tool to ensure sustainability.
Insurance and finance segment
The insurance segment performed well during the year despite being
exposed to political changes and economic challenges that resulted
in changes in rates of return. Net written premiums increased
during the past year and we are confident in our ability to
maintain this trend for sustainable growth. Exceptional focus is
placed on customer service and continuing development of
structures that will convert risk to sustainable wealth.
Corporate governance
Nictus remains committed to the highest standards of corporate
governance. Our commitment extends to employing employees with
high levels of integrity and qualifications who assist in a
continuous enhancement of the internal control environment. The
implementation of King IV will be addressed during the year ahead
and we look forward to seeing the results of this process.
Although we are in a changing regulatory environment, especially
in the insurance industry, we remain committed to conforming to
all rules and regulations we are exposed to across the Group.
Outlook
Nictus remains a proud South African corporate citizen with long-
term strategies to continue on this path and to contribute to the
success of the country. These strategies will be implemented and
should start to reap benefits within the next three years. We
believe that the Group has an exceptional value offering for its
customers and clients and we look forward to capturing these
synergies for the benefit of all policyholders, stakeholders and
shareholders.
Appreciation
I would like to thank the chairman and the members of the board
for their vision and exceptional support, as well as management
and staff for their unconditional commitment and shared vision in
building this Group and assisting in taking it to the next level.
I thank my family for their endless support and ultimately, I
thank God for blessing the Group, guiding and protecting its
employees and their families, and embracing us with endless grace.
Integrated report and notice of annual general meeting
The Integrated Report contains a notice convening the annual
general meeting of Nictus shareholders for the year ended 31 March
2017 (“the AGM”). The AGM will be held in the boardroom at the
Nictus Building, corner of Pretoria and Dover Street, Randburg,
Gauteng on Thursday, 17 August 2017 at 12h00.
The notice of AGM and the summarised version of the Audited
Financial Statements, are to be posted to Nictus shareholders on
Friday, 30 June 2017. The integrated report is available on the
website www.nictuslimited.co.za.
BJ Willemse
Chairman
30 June 2017
Sponsor on the JSE:
KPMG Services Proprietary Limited
Registered office of the Company
Head office
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Windhoek office
Nictus Building, 1st Floor
140 Mandume Ndemufayo Avenue, Windhoek
Private Bag 13231, Windhoek
Company secretary
Veritas Board of Executors Proprietary Limited
Registration number 1984/007487/07
1st Floor, Nictus Building
Corner of Pretoria and Dover Street, Randburg
PO Box 2878, Randburg 2125
Auditors and reporting accountant
KPMG Inc.
Registration number 1999/021543/21
KPMG Crescent
85 Empire Road, Parktown 2193
Private Bag 9, Parktown 2122
Date: 30/06/2017 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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