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Condensed consolidated interim financial statements for the six months ended 30 September 2017
Nictus Limited
(Nictus or the company)
(Incorporated in the Republic of South Africa)
Registration number RSA: 81/011858/06
Registration number NAM: 781/11858
JSE Share code: NCS
ISIN number: NA0009123481
www.nictuslimited.co.za
Condensed consolidated interim financial statements
for the six months ended 30 September 2017
Condensed consolidated statement of financial position
at 30 September 2017
Unaudited Unaudited Audited
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Assets
Non-current assets
Property, plant and equipment 17 411 17 458 17 629
Intangible assets 153 228 101
Investments 35 734 25 210 22 062
Deferred tax assets 2 307 2 616 1 424
Loans and receivables 4 279 3 382 3 668
59 884 48 894 44 884
Current assets 570 009 500 923 549 903
Total assets 629 893 549 817 594 787
Equity and liabilities
Equity
Stated capital 48 668 48 668 48 668
Revaluation reserve 7 983 7 983 7 983
Retained earnings 44 192 37 949 42 652
100 843 94 600 99 303
Liabilities
Non-current liabilities
Deferred tax liabilities 2 371 2 475 2 398
2 371 2 475 2 398
Current liabilities 526 679 452 742 493 086
Total liabilities 529 050 455 217 495 484
Total equity and liabilities 629 893 549 817 594 787
Condensed consolidated statement of profit or loss and other
comprehensive income for the six months ended 30 September 2017
Unaudited Unaudited
Six Six Audited
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Revenue 22 395 21 364 44 651
Cost of sales (11 756) (9 067) (21 628)
Gross profit 10 639 12 297 23 023
Other income 1 156 1 012 2 117
Investment income from operations 23 007 17 637 37 884
Operating and administrative
expenses (32 952) (30 460) (60 796)
Results from operating activities 1 850 486 2 228
Investment income 2 239 2 613 4 841
Profit before taxation 4 089 3 099 7 069
Taxation expense (561) (911) (178)
Profit for the period 3 528 2 188 6 891
Other comprehensive income for the
period – – –
Total comprehensive income for the
period 3 528 2 188 6 891
Profit attributable to:
Owners of the parent 3 528 2 188 6 891
3 528 2 188 6 891
Total comprehensive income
attributable to:
Owners of the parent 3 528 2 188 6 891
3 528 2 188 6 891
Basic earnings per share (cents) 5,32 3,30 10,40
Diluted basic earnings per share
(cents) 5,32 3,30 10,40
Weighted average number of shares
in issue (000s) 66 270 66 270 66 270
Condensed consolidated statement of cash flows
for the six months ended 30 September 2017
Unaudited Unaudited
Six Six Audited
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Cash flows from operating
activities
Cash utilised by operations (note
7) (3 642) (27 920) (41 680)
Investment income received from
operations 21 332 16 975 36 728
Dividends received 756 662 1 156
Dividends paid (1 988) (1 988) (1 988)
Tax paid (250) – (592)
Net cash generated from/(utilised
by) operating activities 16 208 (12 271) (6 376)
Cash flows from investing
activities
Acquisition of property, plant and
equipment (13) (415) (965)
Proceeds on sale of property, plant
and equipment – 10 115
Acquisition of intangible assets (145) – –
Proceeds from disposal of
investments – 14 484 17 949
Acquisition of investments (12 753) – –
Investment income received 2 239 2 613 4 841
Short-term funds
disinvested/(invested) 2 142 (54 856) (77 778)
Loans repaid by related parties 1 374 8 555 1 702
Loans repaid by third parties – 1 386 –
Proceeds on disposal of subsidiary – – 7
Net cash utilised by investing
activities (7 156) (28 223) (54 129)
Total cash movement for the period 9 052 (40 494) (60 505)
Total cash sold by subsidiary for
the period – – (4)
Cash and cash equivalents at the
beginning of the period 57 603 118 112 118 112
Total cash and cash equivalents at
the end of the period 66 655 77 618 57 603
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2017
Share Revaluation Retained Total
Figures in R’000 capital reserve earnings equity
Balance at 31 March 2016 48 668 7 983 37 749 94 400
Total comprehensive
income for the period
Profit for the period – – 2 188 2 188
Total comprehensive
income for the period – – 2 188 2 188
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 30 September
2016 48 668 7 983 37 949 94 600
Total comprehensive
income for the period
Profit for the period – – 4 703 4 703
Total comprehensive
income for the period – – 4 703 4 703
Balance at 31 March 2017 48 668 7 983 42 652 99 303
Total comprehensive
income for the period
Profit for the period – – 3 528 3 528
Total comprehensive
income for the period – – 3 528 3 528
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 30 Septembe
2017 48 668 7 983 44 192 100 843
Condensed segmental report
for the six months ended 30 September 2017
Unaudited Unaudited
Six Six Audited
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Segment assets
Furniture retail 64 945 64 346 62 793
Insurance and finance 598 035 522 998 563 378
662 980 587 344 626 171
Head office and eliminations (33 087) (37 527) (31 384)
629 893 549 817 594 787
Segment revenue
Furniture retail 20 006 16 101 36 712
Insurance and finance 3 099 6 167 9 416
23 105 22 268 46 128
Head office and eliminations (710) (904) (1 477)
22 395 21 364 44 651
Segment profit/(loss) for the
period
Furniture retail 548 (1 204) (1 156)
Insurance and finance 2 004 2 783 2 127
2 552 1 579 971
Head office and eliminations 976 609 5 920
3 528 2 188 6 891
Reconciliation between earnings and headline earnings
for the six months ended 30 September 2017
Profit on
ordinary Net
Figures in R’000 activities Taxation profit
Unaudited – Six months ended 30
September 2017
Profit for the period 4 089 (561) 3 528
Adjustments for:
Loss on disposal of property,
plant and equipment 6 (2) 4
Headline earnings 4 095 (563) 3 532
Headline earnings per share
(cents) 5,33
Diluted headline earnings per
share (cents) 5,33
Unaudited – Six months ended 30
September 2016
Profit for the period 3 099 (911) 2 188
Adjustments for:
Profit on disposal of property,
plant and equipment (10) 3 (7)
Headline earnings 3 089 (908) 2 181
Headline earnings per share
(cents) 3,29
Diluted headline earnings per
share (cents) 3,29
Audited – Year ended 31 March
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
Headline earnings per share
(cents) 10,45
Diluted headline earnings per
share (cents) 10,45
Notes to the financial information
for the six months ended 30 September 2017
1. Basis of preparation
The condensed consolidated interim financial statements (interim
financial statements) are prepared in accordance with International
Financial Reporting Standards, IAS 34 Interim Financial Reporting, the
SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, the Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies Act of
South Africa. The accounting policies applied in the preparation of these
interim financial statements are in terms of International Financial
Reporting Standards and are consistent with those applied in the previous
annual financial statements.
The interim financial statements are presented in thousands of South
African Rand (R’000s) on the historical cost basis, except held-for-
trading investments which are measured at fair value and land and
buildings held for administrative purposes which are measured at revalued
amounts.
The interim financial statements for the period ended 30 September 2017,
together with the statements regarding the prospects of the group, have
not been audited by the group’s auditors.
The interim financial statements as reported herein have been prepared by
the group financial director of Nictus Limited, Eckhart H Prozesky
CA(SA).
2. Directors’ responsibility
The directors take full responsibility for the preparation of the interim
financial statements.
3. 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 parties are unchanged from that
reported at 31 March 2017. Refer to the 2017 audited financial statements
for further information, accessible on the Nictus website.
4. Events after reporting date
There were no events after the reporting date and up to the date of
approval of these interim financial statements that affected the
presentation of the interim financial statements for the period ended 30
September 2017.
5. Changes to the board
Gerard Swart, John D Mandy and Philippus J de W Tromp were re-elected as
directors of Nictus Limited at the annual general meeting on 17 August
2017.
Andries J Kruger was appointed as an independent non-executive director
effective 1 October 2017.
6. Dividend
No interim dividend has been declared.
The board declared a final dividend of 3 cents per ordinary share for the
year ended 31 March 2017 on 30 June 2017, to all ordinary shareholders
recorded in the books of Nictus Limited at the close of business on
Friday, 21 July 2017. The dividend was paid on Monday, 24 July 2017.
7. Cash utilised by operations
Unaudited Unaudited
Six Six Audited
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Profit before taxation 4 089 3 099 7 069
Adjustments for:
Depreciation of property, plant
and equipment 225 187 406
Loss/(profit) on disposal of
property, plant and equipment 6 (10) (24)
Loss on scrapping of property,
plant and equipment – – 69
Amortisation of intangible asset 93 127 254
Dividend income (756) (662) (1 156)
Investment income (2 239) (2 613) (4 841)
Investment income from operations (21 332) (16 975) (36 728)
Profit on disposal of investments (1 522) (4 745) (3 458)
Fair value adjustments on
investments 603 4 892 3 288
Profit on sale of subsidiary – – (3)
Changes in working capital:
Increase in inventories (871) (2 490) (99)
Increase in trade and other
receivables (14 310) (39 409) (79 920)
(Decrease)/increase in trade and
other payables (4 173) (842) 3 227
Increase in insurance contract
liability 36 545 31 521 70 236
(3 642) (27 920) (41 680)
8. Determination and disclosure of fair values
Fair values have been determined for measurement and/or disclosure
purposes based on the following methods:
Property, plant and equipment
The fair value of land and buildings is estimated by using a combination
of the income capitalisation method and the depreciated replacement value
method. This method requires the net annual income generated by the
property, based on market trends, to be capitalised at an appropriate
rate of return to reflect risk, specific investment demands and the
overall condition of the structures.
Investments in equity and debt securities
The fair value of financial assets at fair value through profit or loss
is determined by reference to their quoted closing market price at the
reporting date.
The fair values of the financial assets were determined as follows:
- The fair values of listed or quoted investments are based on the quoted
closing market price; and
- The fair values of debt securities are based on the quoted closing
market price as reflected on the recognised exchange.
Trade and other receivables
The fair value of trade and other receivables is estimated as the present
value of future cash flows, discounted at the market rate of interest at
the reporting date. The carrying amount of short-term trade and other
receivables at amortised cost is believed to approximate their fair
values.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated
based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the reporting date.
Interest-bearing loans and borrowings and loans to group companies
Fair value is calculated based on the present value of future principal
and interest cash flows, discounted at the market rate of interest at the
reporting date. The interest rate used for determining the fair value is
the prime interest rate.
Trade and other payables
All trade and other payables are of a short-term nature and the carrying
value of trade and other payables at amortised cost is believed to
approximate their fair value.
Cash and cash equivalents
The cash and cash equivalents held by the group are of a short-term
nature and the fair value of positive bank balances and bank overdrafts
is deemed to approximate the carrying amount.
8.1 Fair value of land and buildings
Land and buildings, which consist of a business premises situated on erf
2134, Ferndale, Johannesburg, are independently valued on an ad-hoc
basis. The property was valued by the company’s directors and an external
independent valuator at 31 March 2017. The external valuator was Johannes
SF Wessels, a Professional Associated Valuer registered with the South
African Council for the Property Valuers Profession (SACPVP Number
7316/3). He is not connected to the company and he has the appropriate
qualifications and experience in the location and category of the
property. The company’s directors value the group’s property portfolio on
an annual basis. An external, independent valuation company, having
appropriate recognised professional qualifications and recent experience
in the locations and category of property being valued, also provides
supporting information used in the annual directors’ valuation process.
The fair values are based on valuations and other market information that
take into consideration the estimated rental value and depreciated
replacement value of the property. A market yield is applied to the
estimated rental value to arrive at the gross property valuation. The
valuation was based on a combination of the income capitalisation method
and the depreciated replacement cost method for existing use. The
directors have assessed the residual value of the property at 31 March
2017 and calculated that the residual value approximates the current
carrying value. No depreciation has therefore been recognised in the
current or prior period in respect of the property.
Fair value hierarchy
Figures in R’000 Level 1 Level 2 Level 3 Total
Land and buildings – 2017 – – 16 146 16 146
Land and buildings - 2016 – – 16 100 16 100
The valuation techniques to fair value assets and liabilities in Level 3.
Assets Method Major assumptions
Land and Income capitalisation Capitalisation rate
buildings method Rental per square metre
per Rode report
Vacancy factor
Land and
Figures in R’000 buildings
Reconciliation of land and buildings at fair value in
Level 3
Balance at 1 April 2017 16 146
Fair value measurements –
Balance at 30 September 2017 16 146
Sensitivity analysis
Land and buildings
Presented below is an analysis of the impact on the fair value of the
land and buildings for changes in the key valuation assumptions.
Figures in R’000 Capitalisation rate
Income capitalisation method 8,81% 9,81% 10,81%
Rental (10% decrease) 13 400 12 100 11 000
Rental (Rate per Rhode report) 16 100 14 400 13 100
Rental (10% increase) 18 700 16 800 15 200
Figures in R’000 Depreciation rate
Depreciated replacement cost method 60,00% 65,00% 70,00%
Building costs (3% decrease) 18 900 17 400 15 800
Building costs (Rate per AECOM’s
African Property and Construction
Handbook of 2016) 19 300 17 700 16 100
Building costs (3% increase) 19 700 18 100 16 400
The valuation for the financial year ended 31 March 2017 was based on a
combination of the income capitalisation method and the depreciated
replacement cost method for existing use. A 50% contribution rate per
method was deemed appropriate by the directors.
8.2 Fair value hierarchy of financial assets at fair value through profit
or loss
For financial assets recognised at fair value, disclosure is required of
a fair value hierarchy which reflects the significance of the inputs used
to make the measurements. There were no transfers between the levels for
the reporting period.
Level 1: Quoted market price in an active market for an identical
instrument.
Level 2: Valuation techniques based on observable inputs either directly
(i.e. as prices) or indirectly (i.e. derived from prices). This category
includes instruments valued using quoted market prices in active markets
for similar instruments; quoted prices for identical or similar
instruments in markets that are considered less than active; or other
valuation techniques where all significant inputs are directly or
indirectly observable from market data.
Level 3: Valuation techniques using significant unobservable inputs. This
category includes all instruments where the valuation techniques include
inputs not based on observable data and the unobservable inputs have a
significant effect on the instrument’s valuation.
Unaudited Unaudited
Six Six Audited
months months Year
ended ended ended
30 Sept 30 Sept 31 March
Figures in R’000 2017 2016 2017
Level 1
Listed shares 14 650 16 389 12 967
Debt securities 2 001 1 974 1 988
Unit trusts 19 083 6 847 7 107
35 734 25 210 22 062
8.3 Financial assets by category
The accounting policies for financial assets have been applied to the
line items below:
Loans and Fair value
receivables through
at profit or loss
amortised – held for
Figures in R’000 cost trading Total
Unaudited - 30 September 2017
Loans and receivables 47 671 – 47 671
Investments – 35 734 35 734
Trade receivables 346 538 – 346 538
Short-term deposits 98 624 – 98 624
Cash and cash equivalents 66 655 – 66 655
559 488 35 734 595 222
Unaudited - 30 September 2016
Loans and receivables 41 295 – 41 295
Investments – 25 210 25 210
Trade receivables 289 699 – 289 699
Short-term deposits 77 844 – 77 844
Cash and cash equivalents 77 618 – 77 618
486 456 25 210 511 666
Audited - 31 March 2017
Loans and receivables 48 434 – 48 434
Investments – 22 062 22 062
Trade receivables 334 329 – 334 329
Short-term deposits 100 766 – 100 766
Cash and cash equivalents 57 603 – 57 603
541 132 22 062 563 194
8.4 Financial liabilities by category
The accounting policies for financial liabilities have been applied to
the line items below:
Financial
liabilities at
Figures in R’000 amortised Total
cost
Unaudited - 30 September 2017
Trade and other payables 6 283 6 283
Unaudited - 30 September 2016
Trade and other payables 6 429 6 429
Audited - 31 March 2017
Trade and other payables 10 467 10 467
The carrying amounts of the financial liabilities at amortised cost
approximate their fair values.
9. Results overview
9.1 Furniture segment
Despite the fact that unemployment in South Africa is at a record high
and that consumers remains under pressure due to the struggling economy,
the segment delivered positive results. Revenue levels increased and all
resources are being utilised and managed to reduce costs and enhance
efficiency throughout all aspects within the segment. This contributed to
the profitability achieved within the segment for the six-month period
ended 30 September 2017.
9.2 Insurance and finance segment
The segment continued to deliver positive results during the six-month
period ended 30 September 2017. Increased focus and effective management
of the investments contributed positive results with regards to
investment income generated by operations. The reduction in segment
revenue and profitability during the reporting period was caused by,
amongst other contributing factors, the local economic challenges faced
within South Africa.
9.3 Holding company level
The company continued to invest in expanding its talent pool and
organisational structures to support its current and future business
operations. A reduction in costs resulted in increased profitability for
the six-month period ended 30 September 2017.
10. Prospects
The monetary policy easing cycle is likely to be shallow and together
with the forecast for slow economic growth over the medium-term, the
current financial pressures experienced by consumers could be protracted.
The board is confident that despite the economic, political and
environmental challenges within the South African economy, the various
segments are well placed to build on the results achieved in the first
six months.
On behalf of the board
Gerard R de V Tromp Eckhart H Prozesky
Group managing director Group financial director
Randburg
1 December 2017
Contact information
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
Sponsor
KPMG Services Proprietary Limited
Registration No: 1999/012876/07
85 Empire Road, Parktown
Johannesburg, 2193
Private Bag X9, Parkview, 2122
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
Directors
Barend J Willemse (Independent non-executive chairman)
Gerard Swart (Independent non-executive)
John D Mandy (Independent non-executive)
Andries J Kruger (Independent non-executive)
Philippus J de W Tromp (Non-executive)
Nicolaas C Tromp (Non-executive)
Gerard R de V Tromp (Executive group managing director)
Eckhart H Prozesky (Executive group financial director)
Date: 01/12/2017 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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