| Mon 30 Jun 2008, 12:53 | | NCS - Nictus Limited - Abridged report relating to the audited financial results |
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NCS
NCS
NCS - Nictus Limited - Abridged report relating to the audited financial results
for the year ended 31 March 2008 and details of the notice of annual general
meeting
NICTUS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1981/001858/06)
JSE Share code: NCS
NSX Share code: NCT
ISIN Code NA0009123481
("Nictus" or "the company")
ABRIDGED REPORT RELATING TO THE AUDITED FINANCIAL RESULTS FOR THE YEAR
ENDED 31 MARCH 2008 AND DETAILS OF THE NOTICE OF ANNUAL GENERAL MEETING
ABRIDGED GROUP INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH 2008
Audited Audited
2008 2007
R`000 R`000
Revenue 265 229 233 110
Cost of sales (201 933) (182 613)
Gross profit 63 296 50 497
Other operating income 3 535 8 938
Administrative expenses (24 258) (20 096)
Other operating expenses (45 181) (39 015)
Investment income from operations 12 043 8 457
Operating profit 9 435 8 781
Investment income 3 284 1 868
Financing costs (5 536) (5 407)
Share of profits of associates - 688
Profit before taxation 7 183 5 930
Taxation (486) 87
Profit for the year 6 697 6 017
Attributable to:
Equity holders of the parent 6 697 6 501
Minority interest - (484)
Profit for the year 6 697 6 017
Basic earnings per share (cents) 12.96 12.63
Diluted earnings per share (cents) 12.53 12.16
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:
Profit for the year 6 697 6 501
Profit on disposal of interest in subsidiaries - (2 154)
Profit on disposal of interest in associates - (1 240)
Negative goodwill - (823)
Loss on disposal of property, plant and 28 219
equipment net of insurance proceeds
Headline earnings 6 725 2 503
Headline earnings per share (cents) 13.02 4.86
ABRIDGED GROUP BALANCE SHEET AS AT 31 MARCH 2008
Audited Audited
2008 2007
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 53 697 50 673
Goodwill 1 647 1 647
Intangible assets 582 247
Investments 16 771 17 817
Loans and receivables 122 319 119 078
Deferred tax asset 8 710 8 675
Current assets
Inventories 27 700 25 779
Trade and other receivables 111 957 73 366
Cash and cash equivalents 109 279 77 060
Current tax assets 146 678
Total assets 452 808 375 020
Equity
Share capital 25 729 25 729
Revaluation reserve 17 002 17 002
Contingency reserve 27 695 7 199
Retained income 16 800 15 601
Minority interest - -
Non-current liabilities
Interest bearing loans and borrowings 15 000 15 000
Deferred tax liability 6 135 5 666
Current liabilities
Bank overdraft 19 026 18 873
Interest bearing loans and borrowings 26 485 14 920
Insurance contract liabilities 289 668 231 095
Trade and other payables 25 998 23 751
Current tax liabilities 169 184
Total equity and liabilities 452 808 375 020
ABRIDGED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2008
Audited Audited
2008 2007
R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 7 183 5 930
Adjustment for:
Investment income (3 284) (1 868)
Finance expenses 5 536 5 407
Depreciation of property, plant and equipment 859 1 579
Amortisation of intangible asset 57 240
Loss on disposal of property, plant and 28
equipment 219
Profit on disposal of interest in associate - (1 240)
Profit on disposal of investments (230) (75)
Profit on disposal of subsidiary - (2 154)
Share of profit of associates - (688)
Fair value adjustment on investments (362) (2 281)
Negative goodwill recognized in profit and - (823)
loss
Working capital changes:
(Increase) / decrease in inventories (1 902) 7 409
(Increase)/ decrease in trade and other (38 591) (18 143)
receivables
Increase in insurance contract liabilities 58 573 47 135
Increase in trade and other payables 2 247 5 096
Cash generated by operations 18 052 37 286
Interest income from operations 5 413 3 671
Interest paid (5 536) (5 407)
Ordinary dividends received 6 630 4 786
Taxation paid 465 (48)
Net cash flow from operating activities 25 024 40 288
CASH FLOWS FROM INVESTING ACTIVITIES
Replacement of property, plant and equipment - (2 703)
Expansion of property, plant and equipment (5 517) (665)
Proceeds from disposal of property, plant and 1 606 686
equipment
Purchases of intangible assets (392) (14)
Acquisition of subsidiary - (2 059)
Disposal of subsidiary, net of cash disposal - 2 450
of
Proceeds from disposal of investments (1 805) 2 020
Investments made (167) (10 528)
Proceed on disposal of associate - 1 765
Loans and receivables advanced (3 241) (15 903)
Net cash flow from investing activities (2 622) (23 083)
CASH FLOWS FROM FINANCING ACTIVITIES
Interest bearing loans and borrowings raised 23 315 3 338
Interest bearing loans and borrowings repaid (11 750) (218)
Movement in reasury shares 103 (993)
Dividends paid (2 004) (802)
Net cash flow from financing activities 2 127 2 127
Net movement in cash and cash equivalents 9 664 1 325
Cash and cash equivalents at beginning of year 58 187
39 657
Cash and cash equivalents at end of year 90 253 58 187
ABRIDGED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2008
Audited Share Revalu- Con- Retained Minority Total
capital ation tingency Income Total interest equity
reserve reserve
R`000 R`000 R`000 R`000 R`000 R`000 R`000
Balance at 26 722 - 5 322 11 779 44 854
1 April 43 823 1 031
2006
Transfer to (993) (993)
treasury (993)
shares
Revaluation 17 002 17 002
of land and
buildings 17 002
Profit for 6 501 6 017
the year 6 501 (484)
Total 25 729 17 002 5 322 18 280 66 880
recognised
income and
expenses 66 333 547
for the
year
Transfer to 1 877 (1 877)
contingency
reserve
Minority (547)
portion of
shares
acquired in (547)
subsidiary
Ordinary (802) (802) (802)
dividend
Balance at 25 729 17 002 7 199 15 601 65 531
31 March 65 531 -
2007
Transfer to 103 103
treasury 103
shares
Profit for 6 697 6 697
the year 6 697 -
Transfer to 3 494 (3 494)
contingency
reserve
Ordinary (2 004) (2 004) (2 004)
dividend
Balance at 25 832 17 002 10 693 16 800
31 March 70 327 70 327
2008
ABRIDGED SEGMENTAL ANALYSIS FOR THE YEAR ENDED 31 MARCH 2008
2008 2007
R`000 R`000
SEGMENT REVENUE
Motor retail 169 933 137 417
Furniture retail 47 034 53 996
Insurance & Finance 53 996 45 425
Head Office 4 908 3 157
Eliminations (10 642) (12 192)
Total revenue 265 229 233 110
SEGMENT RESULTS
Motor retail 6 017 3 342
Furniture retail 2 557 (81)
Insurance & Finance 17 118 8 139
Head Office 13 377 (3 412)
Eliminations (26 350) 2 661
Total operating profit before financing
costs 12 719 10 649
ACCOUNTING POLICIES
The abridged consolidated annual financial statements have been prepared
in accordance with the recognition and measurement requirements of
International Financial Reporting Standards (IFRSs) and its interpretations
adopted by the International Accounting Standards Board, and the presentation
and disclosure requirements of IAS 34 Interim Financial Reporting. The
accounting policies are consistent with those applied in the consolidated
financial statements for the year ended 31 March 2007.
RELATED PARTIES
The company has a related party relationship with its subsidiaries, fellow
subsidiaries, associates and with its directors and executive officers.
2008 2007
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL R`000 R`000
Short-term employee benefits 3 556 2 549
TRANSACTIONS WITH RELATED PARTIES
PREMIUMS RECEIVED
Key management personnel and affiliates
E Tromp - 21
Gecko Consulting (Pty) Ltd - 80
Hitech Lasers (Pty) Ltd 400 600
Hitech Laser Systems (Pty) Ltd 76 -
Finhelp (Pty) Ltd - -
Management Outsource Services (Pty) Ltd 300 -
Medilase (Pty) Ltd 123 128
NC Tromp Boerdery 21 17
Premier Services (Pty) Ltd 47 24
PJ de W Tromp & Seuns (Pty) Ltd 18 12
WO Fourie 218 -
LOANS ADVANCED TO RELATED PARTIES
Key management personnel and affiliates
Aquaries Properties (Pty) Ltd 86 53
E Tromp - -
Gecko Consulting (Pty) Ltd - 20
H & Z Consulting (Pty) Ltd 82 178
Hartelus Farming (Pty) Ltd 0 199
Management Outsource Services (Pty) Ltd - -
N Prinsloo - 175
Swart Family Trust 125 18
Tromp Consulting International (Pty) Ltd - 168
ADVANCES INCLUDED IN LOANS AND RECEIVABLES
Key management personnel and affiliates
Aquaries Properties (Pty) Ltd 867 781
Empty Investments 30 CC - 303
Gecko Consulting (Pty) Ltd - 204
H & Z Consulting (Pty) Ltd 268 186
Hartelus Farming (Pty) Ltd 1 017 1 087
Management Outsource Services (Pty) Ltd 332 185
N Prinsloo - 213
Swart Family Trust 263 207
Tromp Consulting International (Pty) Ltd 263 326
PREFERENCE SHARES INCLUDED IN LOANS AND RECEIVABLES
Affiliates
Makalani Grapes (Pty) Ltd 5 000 5 000
Suidwesdrukkery Ltd 1 500 1 500
PJ de W Tromp & Seuns (Pty) Ltd 2 000 2 000
COMMITMENTS
Authorised capital expenditure, contracted for but 567 -
not provided
The committed expenditure relates to property and
will be financed by internal funds when incurred.
RESPONSIBILITY FOR CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
The abridged consolidated annual financial statements have been prepared
in accordance with the recognition and measurement requirements of
International Financial Reporting Standards (IFRSs) and its interpretations
adopted by the International Accounting Standards Board, and the presentation
and disclosure requirements of IAS 34 Interim Financial Reporting.
Appropriate accounting policies supported by reasonable and prudent
judgements have been applied consistently with those of prior year. The annual
consolidated financial statements for the year ended 31 March 2008 have been
audited by KPMG Inc., and their unqualified audit opinion is available for
inspection at the registered office of the company.
CHAIRMAN`S REPORT
On behalf of the Board of Directors I am pleased to present the annual
report of our Group for the financial year ending 31 March 2008.
As in the past, the Namibian operation is still a major contributor to
the Group`s revenue, and the economy of Namibia will continue to have a
major impact on the performance of the Group. The slightly larger contribution
in the current year from the Republic of South Africa ("RSA") operations was
mainly due to the better performance of Corporate Guarantee RSA.
The insurance and finance function once again delivered outstanding
performance. We are excited about the growth potential of Corporate
Guarantee RSA. This, together with the considerable turnaround in the
performance of the motor retail segment, against the negative trend in RSA,
is remarkable. The furniture retail segment performed in line with the general
performance of the industry. Once the upgrading program is completed in the
coming year, we expect slightly better performance.
Financial highlights
The past year was a good year for the Nictus Group, and the dedicated efforts
of the last four years are reflected in our results.
Good progress has been made in addressing the capital structure of the Group
and this remains an area of high focus and priority. The completion of the
process of divesting a number of investments that became unproductive also had
a positive impact on the results for the period under review.
The Group`s stronger position is reflected in the balance sheet as well as
the income statement. Overall, the increase in revenue is matched by
significant growth in the balance sheet, in spite of the divestment of
investments that became unproductive. The strength of the Group`s finances
gives a greater level of confidence in our ability to deepen our penetration
into the South African market.
- Revenue increased 15% to R265 million.
- Profit for the year increased with R0,7m to R6,7 million.
- Return on equity was 9,52%.
- Headline earnings increased by 168% to 13.02 cents per share.
- The Groups` asset base increased 21% and now stands at R453 million.
- The cash position of the group strengthened further with the increase
of R32 million to R90 million
- Capital and reserves grew by R5 million to R70 million.
Human capital, consolidation and efficiency
The year under review was characterised by a number of activities aimed
at improving our productivity and placing the Group on a sound footing for
further growth. Preparatory to our strategy, attention was given to the
Board`s mandate and committee functionality and efficiency. Clarity on strategy
and the ability to confidently make decisions are the hallmarks of dynamic
organisations.
Human resource management also came into focus as well as remuneration
policies. In the current environment of competition for skilled and
experienced people, the Group has a policy of preserving its human capital.
However this must be matched by prudence in allocation for remuneration. The
decision, to focus on human resource management as a matter of urgency has
paid off handsomely. The Board monitors the development of the human capital
in the Group on an ongoing basis.
As an adjunct to this, the Group also upgraded its IT systems. The ability to
use the IT system to retrieve information rapidly and make informed decisions
is not just a prerequisite for effective operations and sound governance, but
also for the envisaged expansion of the Group.
Additionally, the upgrade of Corporate House in Windhoek has allowed us to
centralise senior management in an environment that is conducive to interaction
and productivity.
The consolidation and restructuring phase, which began in 2004, is now in its
final phase and should be completed in the coming year.
Corporate Guarantee
Corporate Guarantee RSA, established in 2005, is developing in line with the
Group`s business plan. The Board still regards it as one of the key drivers
in its goal to grow the RSA operations to exceed the Namibian operations,
necessitated by the limited size of the Namibian market in total. Contingency
reserves in the insurance segment grew to R10,693 million and this gives the
Group a solid base for growth in the future.
Furniture outlets
The upgrading of our furniture outlets is an ongoing process. With the
completion of the outlet in the Nictus building in Randburg, we foresee, under
normal trading conditions, that it will contribute meaningfully to the income
of the total furniture segment in future.
The business environment
The good performance of the Group for the reporting period, and its prospects,
should be viewed against a number of Namibian macro-economic factors, current
and projected. Real growth during the period declined from 4,0 percent to 3,8
percent. The inflation rate for the period stood at 6,7 percent, though this
is expected to average 8,6 percent for the coming year. Exports increased by
12,5 percent but are not expected to increase substantially in 2008. During the
year under review, interest remained high and, at the time of reporting, stood
at 15,25 percent in Namibia. Namibian interest rates are traditionally 1,50 to
1,75 percent higher than in South Africa although at the end of the year under
review, the difference between the RSA and Namibian prime lending rate was only
0,25 per cent.
The coming year shows signs of major economic turbulence that will place
pressure on disposable income and spending of consumers, as well as the
Group`s operational costs and cost of sales. These factors include high food
costs, high fuel costs, rising interest rates, energy prices and load shedding.
Implementation of the SADC Free Trade Area is also expected to have an impact,
though it is still too early to accurately assess how it will change the
competitive landscape. Preliminarily, RSA growth is expected to shrink. However
a major emphasis on regional infrastructure and the Free Trade Area may bring
unexpected opportunities for Namibia from other directions.
The growing concern of major international investors with developing
countries, together with the inherent factors in our own region will most
probably not result in the weakening of the Rand. However if electricity
supply remains stable the weakening of the Rand will have a positive impact
on the largely export orientated Namibian economy. This in turn will have a
positive effect our Namibian operations.
The recessionary tendency in global markets is of some concern. The roots of
the tendency lie in excessive and lax approaches to credit, particularly in
major western markets. Combined with the governance failures recently seen in
major financial institutions, we expect to see a backlash in the form of more
conservative approaches to credit, gradually filtering across the globe.
This also raises the risk level attached to loans and debtors that have
traditionally been viewed as sound.
The combination of these factors is expected to have an impact on various
confidence measures in Namibia and the RSA, as well as affect the interest
rates and rates of currency exchange. Regionally, we expect to see RSA
interest rates vary by between a decrease of 100 and an increase of 300 basis
points. Although this is a wide range, it is fair and prudent to bear this in
mind in management of our twin operations. We hope that the Bank of Namibia
will be able to avoid following suite, and are aware of their concern
surrounding local interest rates. However the negative impact to the Group,
of a rise in interest rates may be offset by gains on the bottom line of the
insurance and finance segments.
The Group`s Board and executives recognise that conditions have been
difficult and expect them to become more so, particularly in the face of
pressured consumers in the retail segments. In spite of this, we seek to
maintain and possibly slightly improve the performance of the Group in the
coming year.
Governance
In the current climate, governance is particularly important. We are faced
with two markets, both of which have different characteristics, opportunities
and challenges. The consistency provided by uniform principles and ethical
dealings will stand the Group in good stead, informing decisions and
day-to-day operations.
The Group complies with the various IFRS`s and JSE listing requirements.
The Board also takes into account the practises and conduct as set out in the
King II report. The heart of the Board`s adherence to the standards is driven
by our desire to be an ethical company. A Board self-evaluation is done on a
regular basis.
Our commitment to transparency, integrity and accountability is also expected
to show us in sharp relief against the backdrop of governance failures and
questionable practices currently cropping up in various sectors of the RSA
financial industry.
Dividend
The Board of Directors has approved a final dividend of 4 cents per share
subsequent to year-end. This remains in line with our policy of 3 x cover.
Appreciation
I would like to conclude my report by expressing my gratitude to the Board
members for their dedication to Nictus and its goals, and for the support
I receive from them. I would also like to thank our customers for their
loyalty. I wish to thank all employees who made another substantial effort
in the past year to live the mission and vision of Nictus. Last but not
least I want to express my sincerest gratitude to the Executive Directors
for the excellent manner in which they have performed their duties.
What we have achieved and what we plan is eventually dependent on the Grace
of God Almighty.
JL Olivier
Chairman: Nictus Group
DECLARATION OF ORDINARY DIVIDEND
The board has declared a final dividend of 4.00 cents per share to ordinary
shareholders of the Company for the year ended 31 March 2008.
The salient dates of this dividend are:
Last day to trade "cum" the dividend Friday, 18 July 2008
Shares commence trading "ex" the dividend
from the commencement of business on Monday, 21 July 2008
Record date Friday, 25 July 2008
Payment date Monday, 28 July 2008
Share certificates may not be dematerialised or rematerialised between
Monday 21 July 2008 and Friday 25 July 2008 both days inclusive.
Shareholders are furthermore advised that a 10% non-resident shareholder`s
tax on the declared dividend will be applicable to all shareholders with
addresses outside of Namibia.
By order of the board
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
As the annual report for the year ended 31 March 2008 ("the annual report")
was posted to shareholders within 3 months of Nictus`s year end, this
announcement is not required to appear in the press and will not be sent to
shareholders.
The annual report contains a notice convening the annual general meeting of
Nictus shareholders for the year ended 31 March 2008 ("the AGM"). The AGM will
be held in the boardroom at the Nictus Building, corner of Pretoria and Dover
Street, Randburg, Gauteng on Tuesday 26th of August 2008 at 14h00.
J L Olivier
Chairman
30 June 2008
Date: 30/06/2008 12:53:14 Produced by the JSE SENS Department.
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