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Abridged report relating to the audited financial results for the year ended 31 March 2018 and details of the notice
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 2018 and details of the notice of the annual
general meeting
Abridged consolidated statement of financial position
at 31 March 2018
Figures in R’000 2018 2017
Assets
Property, plant and equipment 18 051 17 629
Intangible assets 118 101
Investments 11 340 22 062
Deferred tax assets 3 020 1 424
Loans and receivables 5 387 3 668
Non-current assets 37 916 44 884
Inventories 10 993 11 284
Loans and receivables 44 226 44 766
Trade and other receivables 358 645 335 484
Investments 98 809 100 766
Cash and cash equivalents 89 717 57 603
Current assets 602 390 549 903
Total assets 640 306 594 787
Equity and liabilities
Stated capital 48 668 48 668
Revaluation reserve 7 983 7 983
Retained earnings 46 076 42 652
Equity 102 727 99 303
Liabilities
Deferred tax liabilities 2 400 2 398
Non-current liabilities 2 400 2 398
Trade and other payables 10 974 10 837
Insurance contract liability 524 193 482 180
Current tax payable 12 69
Current liabilities 535 179 493 086
Total liabilities 537 579 495 484
Total equity and liabilities 640 306 594 787
Abridged consolidated statement of profit or loss and other
comprehensive income
for the year ended 31 March 2018
Figures in R’000 2018 2017
Revenue 47 361 44 651
Cost of sales (26 470) (21 628)
Gross profit 20 891 23 023
Other income 2 259 2 117
Investment income from operations 42 505 37 884
Operating expenses (48 258) (43 991)
Administrative expenses (17 128) (16 805)
Results from operating activities 269 2 228
Investment income 4 601 4 841
Profit before taxation 4 870 7 069
Taxation credit/(expense) 542 (178)
Profit for the year 5 412 6 891
Other comprehensive income – –
Total comprehensive income for the year 5 412 6 891
Profit attributable to:
Owners 5 412 6 891
Total comprehensive income attributable
to:
Owners 5 412 6 891
Basic earnings per share (cents) 8,17 10,40
Diluted basic earnings per share (cents) 8,17 10,40
Abridged consolidated statement of cash flows
for the year ended 31 March 2018
Figures in R’000 2018 2017
Cash flows from operating activities
Cash utilised by operations (23 070) (41 680)
Investment income received from
operations 40 709 36 728
Dividends received 1 796 1 156
Dividends paid (1 988) (1 988)
Tax paid (1 109) (592)
Net cash generated from/(utilised by)
operating activities 16 338 (6 376)
Cash flows from investing activities
Acquisition of property, plant
and equipment (875) (965)
Proceeds on sale of property, plant
and equipment – 115
Acquisition of intangible assets (145) –
(Acquisition)/disposal of investments (35 126) 17 949
Investment income received 4 601 4 841
Short-term funds disinvested/(invested) 46 781 (77 778)
Loans repaid by related party 540 1 702
Proceeds on disposal of subsidiary – 7
Net cash generated from/(utilised by)
investing activities 15 776 (54 129)
Total cash movement for the year 32 114 (60 505)
Total cash sold by subsidiary for the
year – (4)
Cash and cash equivalents at the
beginning of the year 57 603 118 112
Total cash and cash equivalents at the
end of the year 89 717 57 603
Abridged consolidated statement of changes in equity
for the year ended 31 March 2018
Revalua-
Stated tion Retained Total
Figures in R’000 capital reserve earnings equity
Balance at 1 April 2016 48 668 7 983 37 749 94 400
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
Profit for the year – – 5 412 5 412
Total comprehensive
income for the year – – 5 412 5 412
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 2018 48 668 7 983 46 076 102 727
Abridged segmental report
for the year ended 31 March 2018
Figures in R’000 2018 2017
Segment assets
Furniture retail 70 391 62 793
Insurance and finance 609 636 563 378
Sub-total 680 027 626 171
Head office and eliminations (39 721) (31 384)
Total segment assets 640 306 594 787
Segment revenue
Furniture retail 43 543 36 712
Insurance and finance 5 150 9 416
Sub-total 48 693 46 128
Head office and eliminations (1 332) (1 477)
Total segment revenue 47 361 44 651
Net profit/(loss) for the year
Furniture retail 1 168 (1 156)
Insurance and finance 1 896 2 127
Sub-total 3 064 971
Head office and eliminations 2 348 5 920
Total net profit for the year 5 412 6 891
Accounting policies
Basis of preparation
The abridged consolidated financial statements for the year ended
31 March 2018 (“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 2018. Refer to the
consolidated financial statements for the year ended 31 March 2018
(“Audited Financial Statements”) for further information.
Reconciliation between earnings and headline earnings
for the year ended 31 March 2018
Profit on
ordinary Net
Figures in R’000 activities Taxation profit
2018
Profit for the year 4 870 542 5 412
Adjustments for:
Loss on disposal of
property, plant and
equipment 6 (2) 4
Headline earnings 4 876 540 5 416
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
2018 2017
Headline earnings per share (cents) 8,17 10,45
Diluted headline earnings per share
(cents) 8,17 10,45
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 these Abridged Financial Statements that affected
the presentation of the Audited Financial Statements for the year
ended 31 March 2018, 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 20 July 2018, and the
resignation of Andries J Kruger as independent non-executive
director, effective 1 April 2018. A separate announcement will
follow containing details of the dividend.
Chairman’s report – Barend J Willemse (Johan)
The past year was a difficult year for business and corporate
governance in the South African economy, corporate scandals and
corruption in State-Owned Enterprises reached a level never seen
before, while trading conditions in the economy remained
difficult, despite a small positive economic growth rate. Consumer
spending and our customer base in furniture and insurance had a
difficult year.
Fortunately, indications are that the tide is slowly turning
positive under new political leadership, although instability
remains a feature of the business world in which we are operating.
Despite higher taxes and an increase in value added tax, we remain
optimistic that the economic outlook has improved for 2018/19 with
lower interest rates and lower inflation and a strong increase in
consumer confidence that will most probably translate into higher
spending, stronger economic growth and a more favourable trading
environment.
The corporate scandals during the past year and the lack of proper
oversight and accountability have prompted all of us to be more
vigilant and really focus with new concentration on the governance
process and to ask the important and sometimes not so popular
questions as the board, representing the stakeholders’ interests.
Given our corporate governance responsibility, we adhere to the
King principles and are implementing King IV as we proceed, while
also complying with the regulatory environment and sound
accounting principles. The regulatory environment in the insurance
industry remains onerous and adds costs, but we are diligent in
fulfilling our reporting obligations and operating within the
regulatory framework as we are not in the business to take
shortcuts for a quick profit.
Your board continues to develop strategies with management and we
believe that we will continue to build a strong and profitable
business.
Your company remained profitable during the year and we believe
that we are continuing to build a strong foundation with strong
leadership and employees and appropriate investments in new
management systems to facilitate future growth and to remain
profitable and grow future profitability with appropriate
strategy.
The fact that our share price remains substantially below net
asset value continues to be a challenge and we will continue to
build confidence in the business’s future and sustainable
profitability, which we believe will create value for shareholders
and lower the discount to net asset value.
The furniture segment had a good profitable year, with low levels
of bad debt, as credit selection is done according to strict
criteria. We expect profitability to remain good, with sound
management and a clear strategy. In the Insurance industry
premiums were below budget, due to the difficult economic
circumstances of our clients, but prospects are improving as the
economic outlook improves and we continue to develop more
flexibility in our product offering to suit clients’ specific
needs. The regulation in the insurance industry remains
burdensome, as regulation keeps changing and we wait for the new
Solvency Assessment and Management (SAM) regulations to be made
law. We are complying with regulations and our solvability remains
healthy and within regulatory prescriptions while we continue to
strive for profitability.
I wish to thank the managing director and staff for their
dedication and hard work, while the board members continue to
fulfill the governance role with enthusiasm and due diligence.
We will continue to strive to improve profitability within the
regulatory and governance frameworks for the benefit of all
stakeholders.
Group managing director’s report – Gerard R de V Tromp
The past year can possibly be marked as one of the most
challenging given the turmoil in economic and political
environments including corporate scandals and corruption at a
level that cannot be imagined. Profit margins are coming more and
more under pressure in the effort to service the end consumer and
creating value in the ever-competing economic environment.
Creative ideas, exceptional focus on innovation, as well as
keeping up with the high pace of change remains critical in
maintaining a competitive advantage and providing an above average
customer experience.
It remains a privilege to report on the operations and financial
results of the group achieved during the past year, which
illustrates the commitment of our employees as well as the loyalty
of our esteemed customers and clients.
Corporate governance
Nictus remains committed to the highest standards of corporate
governance, promoting a sound internal control environment. King
IV has been implemented during the year under review. We look
forward to the implementation of Solvency Assessment and
Management (SAM) in the insurance industry as this transitional
period has been cumbersome and costly. We remain a proud South
African citizen, committed to conforming to all rules and
regulations we are exposed to across the group in the hope of
building an enduring and better South Africa.
Insurance and finance segment
The insurance segment performed satisfactorily during the year
although a decline in insurance income has occurred. Volatility in
the economic environment played a major role and our insurance
product achieved its full potential in assisting our clients to
conquer tough economic times. Rates of return also came under
pressure, especially during the second part of the financial year,
although we remain conservative in our investment approach to
ensure the preservation of capital. The Steinhoff debacle had a
big impact on the returns achieved as the drop in their share
price resulted in a loss of R0,861 million incurred. Despite the
loss incurred, the investment income from operations increased by
12,2%. We continue to employ highly skilled personnel to ensure
the full benefit of the product is explained to our clients, where
a very sharp focus is maintained on excellent customer service and
convenience. Development in technology as well as innovative,
custom-made solutions remains a top priority in this segment.
Furniture segment
The furniture segment performed remarkably well compared to the
prior year. We managed to achieve a growth of 19% in revenue which
resulted in returning the segment to profitability for the year
under review. In the effort of fulfilling customer needs and
expectations, together with strong support from our suppliers, we
are building a sustainable basis from which synergies and growth
can be achieved. Although this industry remains very challenging
and competitive, we position ourselves with ongoing longer-term
strategies and continuously strive, to deliver the best priced and
value for money products to our customers.
Outlook
Nictus maintained profitability for the past three years and
wishes to grow this profitability on a sustainable basis. We are
excited about the future of Nictus and South Africa and believe
that focusing on the strategies we formulate and believe in, will
result in the desired outcomes and milestones set.
Our philosophy remains to keep working on and formulating longer-
term strategies and action plans, and putting these into action
over time. We will maintain and enhance the group’s 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.
Although the coming year will bring further challenges
economically as well as politically, I believe we are well
positioned to face these conditions and look forward to converting
these challenges into opportunities.
Appreciation
I would like to bring all glory to our loving and almighty God for
continuously blessing this group. He is amidst our decision making
and thought processes and we are humbled by His grace.
Furthermore, I would like to thank every customer, client and
stakeholder for their trust and support in our brands as well as
in our people. We will continue to strive for excellence,
maintaining integrity at all levels throughout our group.
Lastly, I would like to thank the chairman and the members of the
board for their vision, support and guidance, my family for
unqualified support, as well as management and staff for their
continued commitment in living the strategy of becoming a sought
after wealth creator.
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 2018 (“the AGM”). The AGM will be held in the boardroom
at the Nictus Building, corner of Pretoria and Dover Street,
Randburg, Gauteng on Wednesday, 22 August 2018 at 12h00.
The notice of AGM and the summarised version of the Audited
Financial Statements, are to be posted to Nictus shareholders on
Friday, 29 June 2018. The integrated report and the publication of
the BEE annual compliance certificate pursuant to the Broad-Based
Economic Empowerment Amendment Act No.46 of 2013 are available on
the website www.nictuslimited.co.za.
Barend J Willemse (Johan)
Chairman
29 June 2018
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: 29/06/2018 10:07:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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