To view the PDF file, sign up for a MySharenet subscription.

NICTUS LIMITED - Condensed consolidated interim financial statements for the six months ended 30 September 2018

Release Date: 30/11/2018 09:00
Code(s): NCS     PDF:  
 
Wrap Text
Condensed consolidated interim financial statements
for the six months ended 30 September 2018

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 2018


Condensed consolidated statement of financial position 
at 30 September 2018

                                        Unaudited    Unaudited      Audited
                                          30 Sept      30 Sept     31 March
Figures in R'000                             2018         2017         2018
Assets
Non-current assets                         51 934       59 884       37 916
Property, plant and equipment              18 096       17 411       18 051
Intangible assets                             647          153          118
Investments                                26 271       35 734       11 340
Deferred tax assets                         3 212        2 307        3 020
Loans and receivables                       3 708        4 279        5 387
Current assets                            565 376      570 009      602 390
Total assets                              617 310      629 893      640 306
Equity and liabilities
Equity                                    102 929      100 843      102 727
Stated capital                             48 668       48 668       48 668
Revaluation reserve                         7 983        7 983        7 983
Retained earnings                          46 278       44 192       46 076
Liabilities
Non-current liabilities                     2 583        2 371        2 400
Deferred tax liabilities                    2 583        2 371        2 400
Current liabilities                       511 798      526 679      535 179
Total liabilities                         514 381      529 050      537 579
Total equity and liabilities              617 310      629 893      640 306


Condensed consolidated statement of profit or loss and other 
comprehensive income 
for the six months ended 30 September 2018

                                        Unaudited    Unaudited      Audited
                                       Six months   Six months         year
                                            ended        ended        ended
                                          30 Sept      30 Sept     31 March
                                             2018         2017         2018
Figures in R'000
Revenue                                    22 454       22 395       47 361
Cost of sales                             (11 154)     (11 756)     (26 470) 
Gross profit                               11 300       10 639       20 891
Other income                                  752        1 156        2 259
Investment income from operations          22 219       23 007       42 505
Operating and administrative expenses     (33 984)     (32 952)     (65 386) 
Results from operating activities             287        1 850          269
Investment income                           2 167        2 239        4 601
Profit before taxation                      2 454        4 089        4 870
Taxation (expense)/credit                    (305)        (561)         542
Profit for the period                       2 149        3 528        5 412
Other comprehensive income for
the period                                      -            -            - 
Total comprehensive income for
the period                                  2 149        3 528        5 412
Profit attributable to:
Owners                                      2 149        3 528        5 412
Total comprehensive income attributable 
to:
Owners                                      2 149        3 528        5 412
Basic earnings per share (cents)             3,24         5,32         8,17
Diluted basic earnings per share (cents)     3,24         5,32         8,17
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 2018

                                        Unaudited    Unaudited      Audited
                                       Six months   Six months         year
                                            ended        ended        ended
                                          30 Sept      30 Sept     31 March
Figures in R'000                             2018         2017         2018
Cash flows from operating activities
Cash utilised by operations
(note 7)                                  (48 135)      (3 642)     (23 070)
Investment income received from
operations                                 20 186       21 332       40 709
Dividends received                            793          756        1 796
Dividends paid                             (1 988)      (1 988)      (1 988) 
Tax paid                                        -         (250)      (1 109) 
Net cash (utilised by)/generated
from operating activities                 (29 144)      16 208       16 338
Cash flows from investing activities
Acquisition of property, plant
and equipment                                (309)         (13)        (875) 
Acquisition of intangible assets             (663)        (145)        (145) 
Acquisition of investments                (13 691)     (12 753)     (35 126) 
Investment income received                  2 167        2 239        4 601
Short-term funds disinvested                9 539        2 142       46 781
Loans repaid by related party               6 949        1 374          540
Net cash generated from/(utilised by) 
investing activities                        3 992       (7 156)      15 776
Total cash movement for the period        (25 152)       9 052       32 114
Cash and cash equivalents at the
beginning of the period                    89 717       57 603       57 603
Total cash and cash equivalents
at the end of the period                   64 565       66 655       89 717


Condensed consolidated statement of changes in equity for the six months 
ended 30 September 2018

                                  Stated  Revaluation   Retailed      Total
Figures in R'000                 capital      reserve   earnings     equity
Balance at 1 April 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 September
2017                              48 668        7 983     44 192    100 843
Total comprehensive income 
for the period
Profit for the period                  -            -      1 884      1 884
Total comprehensive income
for the period                         -            -      1 884      1 884
Balance at 31 March 2018          48 668        7 983     46 076    102 727
Total comprehensive income for 
the period
Profit for the period                  -            -      2 149      2 149
Total comprehensive income
for the period                         -            -      2 149      2 149
Transactions with the owners 
of the company
Distributions to the owners 
of the company
Dividends paid                         -            -     (1 988)    (1 988) 
Prescribed dividends                   -            -         41         41
Total transactions with
the owners of the company              -            -     (1 947)    (1 947) 
Balance at
30 September 2018                 48 668        7 983     46 278    102 929


Condensed segmental report 
for the six months ended 30 September 2018

                                        Unaudited    Unaudited      Audited
                                       Six months   Six months         year
                                            ended        ended        ended
                                          30 Sept      30 Sept     31 March
Figures in R'000                             2018         2017         2018
Segment assets
Furniture retail                           51 074       64 945       70 391
Insurance and finance                     567 803      598 035      609 636
                                          618 877      662 980      680 027
Head office and eliminations               (1 567)     (33 087)     (39 721)
                                          617 310      629 893      640 306
Segment revenue
Furniture retail                           18 221       20 006       43 543
Insurance and finance                       4 968        3 099        5 150
                                           23 189       23 105       48 693
Head office and eliminations                 (735)        (710)      (1 332)
                                           22 454       22 395       47 361
Net (loss)/profit for the period
Furniture retail                             (417)         548        1 168
Insurance and finance                       2 152        2 004        1 896
                                            1 735        2 552        3 064
Head office and eliminations                  414          976        2 348
                                            2 149        3 528        5 412


Reconciliation between earnings and headline earnings 
for the six months ended 30 September 2018

                                        Profit on                   
                                         ordinary                       Net
Figures in R'000                       activities     Taxation       profit                                                                   
Unaudited - Six months ended
30 September 2018
Profit for the period                       2 454         (305)       2 149
Headline earnings                           2 454         (305)       2 149
Headline earnings per share (cents)          3,24
Diluted headline earnings per share
(cents)                                      3,24
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
Audited - Year ended 31 March 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
Headline earnings per share (cents)          8,17
Diluted headline earnings per share
(cents)                                      8,17


Notes to the financial information for the six months 
ended 30 September 2018

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. 
Significant standards and interpretations that were effective as of 
1 April 2018 included IFRS 9 Financial Instruments (IFRS 9) and IFRS 
15 Revenue from Contracts with Customers (IFRS 15). The group and insurance 
subsidiary are eligible and have elected the temporary exemption from IFRS 9. 
The adoption of IFRS 15 did not have a significant impact on the timing and 
value of revenue recognised as anticipated and disclosed in the previous 
annual financial statements.

The interim financial statements are presented in thousands of South African 
Rand (R'000) 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 2018, 
together with the statements regarding the prospects of the group, have not 
been audited by the group's auditor.

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 those reported at 
31 March 2018. Refer to the 2018 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 2018, apart 
from the approval and subsequent implementation of the specific repurchase 
on 12 November 2018, in terms of sections 4, 48(8)(b) and 114 of the Companies 
Act, read together with sections 115 and 164, the JSE Listings Requirements and 
Nictus' Memorandum of Incorporation, by Nictus Limited of 12 826 440 
(constituting 19,35% of the total ordinary shares in issue) from Nictus 
Holdings Limited (a related party) for a consideration of R7 471 401,30.

5. Changes to the board
Gerard R de V Tromp, Eckhart H Prozesky and Barend J Willemse (Johan) were 
re-elected as directors of Nictus Limited at the annual general meeting 
held on 22 August 2018.

Cornelius Johannes de Vrye was appointed as an independent non-executive 
director effective 1 November 2018.

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 2018 on 29 June 2018, to all ordinary shareholders 
recorded in the books of Nictus Limited at the close of business on Friday, 
20 July 2018. The dividend was paid on Monday, 23 July 2018.

7. Cash utilised by operations

                                        Unaudited    Unaudited      Audited
                                       Six months   Six months         year
                                            ended        ended        ended
                                          30 Sept      30 Sept     31 March
Figures in R'000                             2018         2017         2018
Profit before taxation                      2 454        4 089        4 870
Adjustments for:
Depreciation of property, plant
and equipment                                 264          225          447
Loss on disposal of property,
plant and equipment                             -            6            6
Amortisation of intangible asset              134           93          128
Dividend income                              (793)        (756)      (1 796) 
Investment income                          (2 167)      (2 239)      (4 601) 
Investment income from operations         (20 186)     (21 332)     (40 709) 
Profit on disposal of investments            (895)      (1 522)      (3 841) 
Fair value adjustments on
investments                                  (345)         603        4 865
Changes in working capital:
(Increase)/decrease in inventories         (1 000)        (871)         291
Increase in trade and other
receivables                                (1 947)     (14 310)     (24 880) 
(Decrease)/increase in trade and
other payables                             (3 874)      (4 173)         137
(Decrease)/increase in insurance
contract liability                        (19 780)      36 545       42 013
                                          (48 135)      (3 642)     (23 070)

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, debt securities and unit trusts
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;
- The fair values of debt securities are based on the quoted closing market 
price as reflected on the Bond Exchange of South Africa. The securities are 
regularly traded on the active market; and
- The fair values of the unit trust investments are based on the quoted put 
(exit) price provided by the fund manager.

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
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 previous independent valuation was completed on 31 March 2017. 
The property was valued by the company's directors at 31 March 2018. 
The company’s directors value the group's property 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 value for 
existing use. The directors assessed the residual value of the properties 
at 31 March 2018 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 - 2018              -           -     16 146      16 146
Land and buildings - 2017              -           -     16 146      16 146

The valuation techniques to fair value assets and liabilities in Level 3:

Assets                    Method                       Major assumptions
Land and buildings        Income capitalisation        Capitalisation rate
                          method                       Rental per square
                                                       metre per Rhode 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 2018                                              16 146
Fair value measurements                                                   - 
Balance at 30 September 2018                                         16 146

Sensitivity analysis
Land and buildings
Presented in the tables below is an analysis of the impact on the fair 
value of the property, per valuation method, for changes in the key 
valuation assumptions:

Figures in R'000                                   Capitalisation rate
Income capitalisation method (%)                 8,29       9,29      10,29
Rental (10% decrease)                          14 900     13 300     12 000
Rental (rate per Rhode report)                 17 800     15 900     14 400
Rental (10% increase)                          20 700     18 500     16 700


                                                     Depreciation rate
Depreciated replacement cost method (%)         65,00      70,00      75,00
Building costs (3% decrease)                   18 000     16 300     14 700
Building costs (rate per AECOM's
African Property and Construction
Handbook of 2017)                              18 300     16 600     15 000
Building costs (3% increase)                   18 700     16 900     15 200

The valuation for the financial year ended 31 March 2018 was based on a 
combination of the income capitalisation method and the depreciated 
replacement value for existing use. A 50% contribution rate per method was 
deemed appropriate by the directors.

The difference between the directors' valuation, R16,250 million, and the 
value attributed to the property in these interim financial statements, 
R16,146 million, was considered but not deemed to be material to warrant 
an adjustment in fair value.

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      Audited
                                       Six months   Six months         year
                                            ended        ended        ended
                                          30 Sept      30 Sept     31 March
Figures in R'000                             2018         2017         2018
Level 1
Listed shares                              16 193       14 650       11 340
Debt securities                            10 078        2 001        1 998
Level 2
Unit trusts                                77 833       19 083       42 826
                                          104 104       35 734       56 164


8.3 Financial assets by category
The accounting policies for financial assets have been applied to the 
line items below: 

                                                    Fair value
                                      Loans and        through   
                                     receivable      profit or       
                                   at amortised    loss - held        
                                           cost    for trading        Total
Figures in R'000                             
30 September 2018 
Loans and receivables                    40 985              -       40 985
Investments                                   -        104 104      104 104
Trade receivables                       358 782              -      358 782
Short-term deposits                      11 437              -       11 437
Cash and cash equivalents                64 565              -       64 565
                                        475 769        104 104      579 873
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


                                                    Fair value
                                      Loans and        through   
                                     receivable      profit or       
                                   at amortised    loss - held        
                                           cost    for trading        Total
31 March 2018
Loans and receivables                    49 613              -       49 613
Investments                                   -         56 164       56 164
Trade receivables                       357 497              -      357 497
Short-term deposits                      53 985              -       53 985
Cash and cash equivalents                89 717              -       89 717
                                        550 812         56 164      606 976

The carrying amounts of the financial assets at amortised cost 
approximate their fair values.

8.4 Financial liability by category
The accounting policies for financial liabilities have been applied to 
the line items below:
                                                   
                                                     Financial      
                                                   liabilities      
                                                  at amortised               
Figures in R'000                                          cost        Total
30 September 2018
Trade and other payables                                 6 509        6 509
30 September 2017
Trade and other payables                                 6 283        6 283
31 March 2018
Trade and other payables                                10 368       10 368

The carrying amounts of the financial liabilities at amortised cost 
approximate their fair values.

9. Results overview
9.1 Furniture segment
The retail segment is negatively affected by the fact that unemployment in 
South Africa is currently at a record high and that consumers remain under
pressure due to the struggling local economy. The negative impact
of the afore mentioned was exacerbated by the increase in Value Added Tax
and the significant increase in fuel prices since April 2018, that 
furthermore eroded consumer spending power. Revenue decreased by 9% which 
in turn affected the profitability of the segment when compared to the 
prior period. All resources are being utilised and managed to reduce
costs and enhance efficiency throughout all aspects within the segment.

9.2 Insurance and finance segment
The segment continued to deliver positive results during the six-month 
period ended 30 September 2018. The increase in profitability during the
reporting period was caused by, amongst other contributing factors, the 
continued focus on excellent customer service as well as innovative, 
custom-made solutions being put forward to new and existing clients.

9.3 Holding company level
The company continued to invest in enhancing organisational structures 
and action plans to support its current and future business operations. 
An increase in costs resulted in decreased profitability for the 
six-month period ended 30 September 2018.

10. Prospects
Within a South African context, the risk of inflation is likely to 
increase due to the weaker Rand and higher fuel prices. Monetary policy 
tightening could become a reality and together with the forecast for 
slower 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
30 November 2018

Contact information
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
1st Floor, Nictus Building
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

Auditor 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
KPMG Crescent
85 Empire Road, Parktown 2193
Private Bag 9, Parktown 2122

Directors
Barend J Willemse
Independent non-executive chairman

Gerard Swart
Independent non-executive director

John D Mandy
Independent non-executive director

Cornelius Johannes de Vrye
Independent non-executive director

Philippus J de W Tromp
Non-executive director

Nicolaas C Tromp
Non-executive director

Gerard R de V Tromp
Executive group managing director

Eckhart H Prozesky
Executive group financial director

Date: 30/11/2018 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story