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Unaudited Interim Results for the 6 months ended 31 August 2018 & Interim Dividend Declaration (No 8)
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 2018 AND INTERIM DIVIDEND
DECLARATION (NUMBER 8)
HIGHLIGHTS:
- Group Revenue increased by 10,7% to R 148,1 million (compared with R 133,8 million as at 31
August 2017) which was driven primarily by growth in the Private Wealth Management
subsidiaries, despite tough market conditions.
- Group Net Profit After Tax increased by 11,1% to R 32,069,850 (R 28,887,973 as at 31 August 2017).
- Assets under Management and Administration increased by 5,2% to R30,6 billion compared with
R29,1 billion as at 31 August 2017.
- Headline Earnings Per Share increased by 16,1 % from 9,40 cents to 10,91 cents on the back of
good revenue growth and cost control.
- Declaration of an interim dividend (and eighth dividend as a listed company) of 5,5 cents per
share reflecting a 10,0 % increase on the 5,00 cents dividend for the same period last year.
Statement of Financial Position
Unaudited Audited Unaudited
31 August 28 February 31 August
Figures in Rands 2018 2018 2017
Assets
Non-Current Assets
Property, plant and equipment 43,321,844 41,099,087 38,997,153
Investment property 305,779,149 308,338,397 308,738,912
Goodwill 87,008,312 87,438,936 86,996,053
Investment in associates 562,421 150,100 100
Deferred tax 2,955,941 1,909,073 1,355,220
Operating lease asset 7,602,947 7,654,398 7,861,237
Other financial assets 484,957 484,957 617,126
447,715,571 447,074,948 444,565,801
Current Assets
Loans to shareholders 36,361 120,381 200,022
Other financial assets 25,000,000 31,008,508 14,750,825
Operating lease asset 1,215,805 1,153,480 1,084,725
Current tax receivable 707,737 1,088,576 308,822
Trade and other receivables 28,971,518 30,807,328 22,904,701
Cash and cash equivalents 146,097,981 125,818,709 137,771,899
202,029,402 189,996,982 177,020,994
Total Assets 649,744,973 637,071,930 621,586,795
Unaudited Audited Unaudited
31 August 28 February 31 August
Figures in Rands 2018 2018 2017
Equity and Liabilities
Equity
Share capital 324,779,200 324,779,200 324,779,200
Reserves 5,249,644 4,874,481 4,051,260
Retained income 104,963,431 91,437,240 76,563,574
Equity attributable to equity holders of parent 434,992,275 421,090,921 405,394,034
Non-controlling interest 1,460,925 2,053,817 2,314,534
436,453,200 423,144,738 407,708,568
Liabilities
Non-Current Liabilities
Deferred tax 15,955,235 15,724,829 15,360,234
Other financial liabilities 135,769,596 142,233,919 148,760,012
151,724,831 157,958,748 164,120,246
Current Liabilities
Current tax payable 2,076,211 158,166 1,463,901
Other financial liabilities 12,462,929 11,819,600 11,257,076
Provisions - 500,000 -
Trade and other payables 47,027,802 43,490,678 37,037,004
61,566,942 55,968,444 49,757,981
Total Liabilities 213,291,773 213,927,192 213,878,227
Total Equity and Liabilities 649,744,973 637,071,930 621,586,795
Statement of Comprehensive Income
Six months Six months
Unaudited Unaudited
Figures in Rands 31 August 2018 31 August 2017
Revenue 148,074,478 133,798,582
Cost of sales -55,127,706 -47,732,578
Gross profit 92,946,772 86,066,004
Other income 3,141,890 531,963
Operating expenses -49,512,904 -45,103,218
Operating profit 46,575,758 41,494,749
Investment revenue 6,938,115 6,219,615
Fair value adjustment -1,614,551 -
Finance costs -6,962,258 -7,967,571
Profit before taxation 44,937,064 39,746,793
Taxation -12,867,214 -10,858,820
Profit for the period ended 32,069,850 28,887,973
Other comprehensive income 375,163 -
Total comprehensive income 32,445,013 28,887,973
Total comprehensive income attributable to:
Owners of the parent 32,065,858 28,369,405
Non-controlling interest 379,155 518,568
32,445,013 28,887,973
Share information:
Weighted average number of shares 302,741,722 302,741,722
Earnings per share (cents) 10,59 9,37
Headline earnings per share (cents) 10,91 9,40
Net asset value per share (cents) 143,68 133,91
Net tangible asset value per share (cents) 114,94 105,17
Statement of Cash Flows
Six months Six months
Unaudited Unaudited
31 August 31 August
Figures in Rands 2018 2017
Cash flows from operating activities
Cash generated from operations 52,397,093 55,231,446
Interest received 6,319,568 5,537,428
Dividends received 618,547 682,187
Finance costs -6,962,258 -7,967,571
Tax paid -11,384,792 -10,422,506
Net cash from operating activities 40,988,158 43,060,984
Cash flows from investing activities
Purchase of property, plant and equipment -1,451,982 -863,068
Disposal of property, plant and equipment 20,433 -
Additional investments in current subsidiaries -259,846 -1 259 552
Purchase of investment property - -778,388
Net cash acquired in business combination - -3,976,989
Purchase of investment in associate -412,321
Purchase of other financial assets - -4,402,299
Disposal of investment property - 18,220,578
Proceeds on disposal of financial assets 6,008,508 -
Net cash from investing activities 3,904,792 6,940,282
Cash flows used in financing activities
Dividends paid to non-controlling interests -712,200 -285,000
Proceeds from shareholders’ loans repaid 84,020 389,317
Dividends paid -18,164,504 -15,137,086
Net movement in other financial liabilities -5,820,994 -12,647,776
Net cash used in financing activities -24,613,678 -27,680,545
Total cash movement for the 6 months 20,279,272 22,320,721
Cash at the beginning of the 6 months 125,818,709 115,451,178
Total cash at end of the 6 months 146,097,981 137,771,899
Statement of Changes in Equity
Share Total
based attributable to Non-
Total stated Revaluation payment Retained equity holders controlling
capital reserve reserve income of the Group interest Total equity
-
Balance at 1 March 2017 324,779,200 3,866,845 64,360,955 393,007,000 2,310,826 395,317,826
Share option expense - - 184,415 - 184,415 - 184,415
Acquisition from non-controlling interest - - - -1,029,692 -1,029,692 -229,860 -1,259,552
Total comprehensive income for the 6 months - - - 28,369,405 28,369,405 518,568 28,887,973
Dividends - - - -15,137,086 -15,137,086 -285,000 -15,422,086
Balance at 31 August 2017 324,779,200 3,866,845 184,415 76,563,582 405,394,042 2,314,534 407,708,576
Total comprehensive income for the 6 months - 597,291 225,930 30,677,491 31,500,712 385,442 31,886,154
Acquisition from non-controlling interest - - - -666,747 -666,747 -382,889 -1,049,636
Other - - - - - 180,000 180,000
Dividends - - - -15,137,086 -15,137,086 -443,270 -15,580,356
Balance at 28 February 2018
324,779,200 4,464,136 410,345 91,437,240 421,090,921 2,053,817 423,144,738
Total comprehensive income for the 6 months - 375,163 - 31,690,695 32,065,858 379,155 32,445,013
Acquisition from non-controlling interest - - - - - -259,846 -259,846
Dividends - - - -18,164,504 -18,164,504 -712,200 -18,876,704
Balance at 31 August 2018 324,779,200 4,839,299 410,345 104,963,431 434,992,275 1,460,926 436,453,201
SEGMENT ANALYSIS
The following information relates to segment financial information of the group:
31 August 2018
Profit
Figures in Rand Revenue Before tax Assets Liabilities
Insurance broking 10,787,501 1,571,912 8,450,955 1,961,597
Wealth management 134,966,367 34,442,449 115,493,089 56,819,202
Administration of estates
and trusts 2,502,570 975,754 3,151,637 1,531,454
Property services 27,515,613 2,285,450 373,750,277 287,992,018
Investments 38,108,309 29,691,981 336,155,896 348,927
Intercompany eliminations -65,805,882 -24,030,482 -187,256,881 -135,361,425
148,074,478 44,937,064 649,744,973 213,291,773
31 August 2017
Profit
Figures in Rand Revenue before tax Assets Liabilities
Insurance broking 9,564,564 1,404,677 10,005,219 1,964,850
Wealth management 113,496,965 29,015,847 93,543,208 43,450,351
Administration of estates
and trusts 1,161,841 67,031 2,814,728 1,232,206
Property services 27,875,537 3,760,513 387,274,361 306,163,539
Investments 28,255,633 24,491,170 317,475,732 1,530,112
Intercompany eliminations -46,555,958 -18,992,445 -189,526,453 -140,462,831
133,798,582 39,746,793 621,586,795 213,878,227
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 28 February 2018. 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.
The results were prepared by an independent compiler, Professor Sean Weldon CA(SA) M
Comm (Acc), in conjunction with the Financial Director, Mr Glenn Orsmond CA(SA).
Any reference to future financial performance included in this announcement has not been
reviewed nor reported on by the Group’s external auditors.
The directors of NVest (“the Board”) take full responsibility for the preparation of the interim
report.
RECONCILIATION OF HEADLINE EARNINGS PER SHARE
Group
Six months Six months
Unaudited Unaudited
Figures in Rands 31 August 2018 31 August 2017
Earnings attributable to equity holders of the parent 32,065,858 28,369,405
Fair value adjustments of investment property 1,614,551 -
Property revaluation gain -375,163 -
Loss on disposal of property, plant and equipment 5,550 107,694
Taxation effect -279,177 -30,154
Headline earnings attributable to equity holders of
the parent 33,031,619 28,446,945
Per share information:
Weighted average number of shares 302,741,722 302,741,722
Earnings per share 10,59 9,37
Headline earnings per share (cents) 10,91 9,40
FINANCIAL COMMENTARY
NVest has performed well during the period under review and has achieved a strong set of
results despite challenging operating conditions. This performance is underpinned by double
digit growth in Group Revenue (up by 10,7% compared with 31 August 2017) and Net Profit
After Tax (up by 11,1% compared with 31 August 2017). There was also continued growth in
Assets under Management and Administration which increased to R30,6 billion compared with
R29,1 billion as at 31 August 2017. This growth has been driven primarily by the underlying
performance of the core Private Wealth Management, Asset Management and Stockbroking
subsidiaries within the Group which continue to attract assets and perform strongly. The internal
integration of those assets across product and value propositions is also maturing and
contributing to the overall profit numbers. Complementary business subsidiaries such as Short-
Term Insurance and the Wills and Estates subsidiaries are performing to expectation and
continue to provide valuable service propositions to clients. Operating margins have improved
as a result of robust cost controls.
PROSPECTS
The Group continues to perform strongly and provides consistently attractive returns for
shareholders despite turbulent operating and market conditions which present significant
headwinds to the financial services and Private Wealth Management industry. This underlying
performance bears testimony to the Group’s business model, its diverse income streams and
market position in its core revenue generating businesses.
The Group has positive operating cash flows and substantial capital reserves to leverage from
and the Board and Management remain committed to investing in the organic and acquisitive
growth of the Group to create a sustainable, long-term business which generates meaningful
returns for all its stakeholders.
The acquisitive growth agenda of the Group remains a priority. Focus in this regard will be on
strengthening market share and distribution channels and footprint of existing business
operations as well as diversification opportunities within the broader financial services sector.
CHANGES TO THE BOARD
The following changes were made to the Board of Directors during the period under review
and to the date of this report:
- Christopher Grant Lemmon was appointed to the Board in the capacity of Executive
Director with effect from 1 March 2018.
- Brendan Joseph Connellan was appointed to the Board in the capacity of Executive
Director with effect from 20 August 2018
- Glenn Wayne Orsmond was appointed to the Board in the capacity of Financial Director
with effect from 1 September 2018 (after the reporting period).
DIVIDEND DECLARATION
The Board has declared an interim dividend (Number 8) of 5,50 cents per share, which amounts
to 55% of headline earnings. The dividend is declared out of income reserves of the Group. The
dividend will be subject to a dividend withholding tax rate of 20% or 1.10 cents per ordinary
share. Shareholders, unless exempt or qualifying for a reduced withholding tax rate, will receive
a net dividend of 4.40 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:
2018
Last date to trade “cum? dividend Tuesday, 11 December
Shares commence trading ”ex” dividend Wednesday, 12 December
Record date (date shareholders recorded in share register) Friday, 14 December
Payment date Tuesday, 18 December
Shareholders may not dematerialise or rematerialise their share certificates between
Wednesday, 12 December 2018 and Friday 14 December 2018, both dates inclusive.
For and on behalf of the Board
Anthony Godwin Glenn Orsmond CA(SA)
Chief Executive Officer Financial Director
East London
20 November 2018
Executive Directors: Non-executive Directors:
Anthony Godwin (Chief Executive Officer) Jonathan Goldberg# (Chairperson)
Glenn Orsmond (Financial Director) Siviwe Kwatsha#
Brendan Connellan (Executive Director) Lana Weldon#
Michael Estment (Executive Director) Dylan Schemel
Christopher Lemmon (Executive Director) # - 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: 20/11/2018 08:08:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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