| Wed 30 Jun 2010, 10:36 | | 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 2010 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 2010 AND DETAILS OF THE NOTICE OF ANNUAL GENERAL MEETING
ABRIDGED SUMMARISED GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 31 MARCH 2010
Audited Audited
2010 2009
R`000 R`000
Revenue 384 587 369 529
Cost of sales (301 497) (289 512)
Gross profit 83 090 80 017
Other operating income 3 758 3 682
Administrative expenses (41 547) (33 349)
Other operating expenses (60 008) (57 460)
Investment income from operations 26 606 17 083
Operating profit 11 899 9 973
Investment income 5 071 3 238
Finance expenses (5 229) (5 265)
Profit before taxation 11 741 7 946
Taxation (1 661) 2 097
Profit for the year 10 080 10 043
Other comprehensive income:
Gains on property revaluation 16 358 -
Taxation related to components of other comprehensive (2 929) -
income
Other comprehensive income for the year net of 13 249 -
taxation
Total comprehensive income 23 509 10 043
Profit attributable to:
Equity holders of the parent 10 080 10 043
Non-controlling interest - -
Total comprehensive income attributable to:
Equity holders of the parent 23 509 10 043
Non-controlling interest - -
Profit for the year 23 509 10 043
Basic earnings per share (cents) 18.96 18.98
Diluted earnings per share (cents) 18.86 18.79
ABRIDGED SUMMARISED GROUP STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2010
Audited Audited
2010 2009
R`000 R`000
Assets
Non-current assets
Investment property 16 217 -
Property, plant and equipment 73 109 55 284
Goodwill 1 647 1 647
Intangible assets 435 478
Investments 31 036 20 670
Loans and receivables 242 037 186 543
Deferred tax asset 14 535 13 992
Current assets
Inventories 45 887 40 695
Trade and other receivables 128 199 128 436
Cash and cash equivalents 255 434 177 896
Current tax assets 84 73
Assets classified as held for sale - 2 066
Total assets 808 620 627 780
Equity
Share capital 26 589 26 456
Revaluation reserve 30 431 17 002
Contingency reserve 21 282 16 989
Retained earnings 20 856 18 409
Non-current liabilities
Interest bearing loans and borrowings 11 936 21 659
Deferred tax liability 11 309 8 413
Current liabilities
Bank overdraft 17 452 14 389
Interest bearing loans and borrowings 45 142 50 558
Insurance contract liabilities 574 148 413 131
Trade and other payables 49 018 39 876
Current tax liabilities 457 898
Total equity and liabilities 808 620 627 780
ABRIDGED SUMMARISED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2010
Audited Audited
2010 2009
R`000 R`000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation 11 741 7 946
Adjustment for:
Investment income from operations received (9 850) (6 739)
Dividend income (16 756) (10 344)
Investment income (5 071) (3 238)
Finance expenses 5 229 5 265
Depreciation of property, plant and equipment 1 924 1 326
Amortisation of intangible asset 267 273
Loss on disposal of property, plant and equipment 50 31
Profit on disposal of investments - (1)
Fair value adjustment on investments - (66)
Revaluation of investment property (2 120) -
Profit on transfer of property, plant and equipment (38) -
Working capital changes:
Increase in inventories (5 192) (12 995)
Decrease /(Increase) in trade and other receivables 2 303 (18 545)
Increase in insurance contract liabilities 161 017 123 463
Increase in trade and other payables 9 142 13 878
Cash generated by operations 152 646 100 254
Investment income from operations received 9 850 6 739
Finance expenses (5 229) (5 265)
Dividend income 16 756 10 344
Taxation paid (2 689) (105)
Net cash flow from operating activities 171 334 111 967
CASH FLOWS FROM INVESTING ACTIVITIES
Expansion of property, plant and equipment (3 709) (3 041)
Proceeds from disposal of property, plant and 268 97
equipment
Acquisition of investment property (14 097) -
Purchases of intangible assets (186) (169)
Investment income received 5 071 3 238
Proceeds from disposal of investments - 3 288
Acquisition of investments (10 366) (7 120)
Loans and receivables advanced (55 494) (64 224)
Net cash flow from investing activities (78 513) (67 931)
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) / increase in interest bearing loans and (15 139) 30 732
borrowings
Movement in treasury shares 133 624
Dividends paid (3 340) (2 138)
Net cash flow from financing activities (18 346) 29 218
Net movement in cash and cash equivalents 74 475 73 254
Cash and cash equivalents at beginning of year 163 507 90 253
Cash and cash equivalents at end of year 237 982 163 507
ABRIDGED SUMMARISED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH
2010
Audited Share Revalu- Con- Retained Total
capital ation tingency earnings equity
reserve reserve
R`000 R`000 R`000 R`000 R`000
Balance at 1 April 2008 25 832 17 002 10 693 16 800 70 327
Changes in equity
Total comprehensive income for
the year
Profit for the year 10 043 10 043
Transfer from treasury shares 624 624
Transfer to contingency reserve 6 296 (6 296)
Dividend to equity holders (2 138) (2 138)
Balance at 1 April 2009 26 456 17 002 16 989 18 409
78 856
Changes in equity
Total comprehensive income for
the year
Profit for the year 10 080 10 080
Revaluation of property 13 429
Transfer from treasury shares 133 133
Transfer to contingency reserve 4 293 (4 293)
Dividend to equity holders (3 340) (3 340)
Balance at 31 March 2010 26 589 30 431 21 282 20 856
99 158
ABRIDGED SUMMARISED SEGMENTAL ANALYSIS FOR THE YEAR ENDED 31 MARCH 2010
Business segment Motor Furniture Insurance Head
retail retail & Finance Office
2010 2010 2010 2010
Segment revenue
Sales of goods 244 085 54 310 - -
Rental income 52 1 282 534 -
Finance income 3 939 5 949 26 276 -
Management fees - - - 3 351
Insurance premium income - - 51 655 -
Total revenue from external 248 075 61 541 78 465 3 351
customers
Inter-segment revenue 2 111 1 184 1 219 -
Total segement revenue 250 186 62 725 79 684 3 351
Segment result
Operating profit before 3 034 1 053 26 949 9 881
financing costs
Financing costs (828) (4 416) (2 898) (8 462)
Profit before taxation 2 206 (3 363) 24 051 1 419
Taxation (296) 340 (1 391) (1 900)
Net profit/(loss) for the year 1 910 (3 023) 22 660 (481)
Segment assets 119 119 92 294 728 081 112 111
Segment liabilities 84 802 61 829 667 359 79 451
Cash flows from operating 683 (7 984) 208 793 (4 852)
activities
Cash flows from investing 13 717 8 883 (236 484) 43 567
activities
Cash flows from financing (16 293) 186 102 875 (39 534)
activities
Capital expenditure 3 144 344 219 188
Business segment continued Eliminations Consolidated
2010 2010
Segment revenue
Sales of goods - 298 395
Rental income - 1 868
Finance income (3 495) 32 669
Management fees (3 351) -
Insurance premium income - 51 655
Total revenue from external customers (6 846) 384 587
Inter-segment revenue (4 514) -
Total segement revenue (11 360) 384 587
Segment result
Operating profit before financing costs (23 946) 16 970
Financing costs 11 374 (5 229)
Profit before taxation (12 571) 11 741
Taxation 1 586 (1 661)
Net profit/(loss) for the year (10 985) 10 080
Segment assets (257 604) 794 001
Segment liabilities (195 745) 697 696
Cash flows from operating activities (25 306) 171 334
Cash flows from investing activities 91 804 (78 513)
Cash flows from financing activities (65 580) (18 346)
Capital expenditure - 3 895
Business segment Motor Furniture Insurance Head
retail office
2009 2009 2009 2009
Segment revenue
Sales of goods 254 691 43 471 - -
Rental income 52 721 530 -
Finance income 776 5 614 27 554 -
Management fees - - - 11 339
Insurance premium income - - 39 572 -
Total revenue from external 255 519 49 806 67 656 11 339
customers
Inter-segment revenue 2 858 1 474 824 -
Total segement revenue 258 377 51 280 68 479 11 339
Segment result
Operating profit before 4 453 2 733 16 517 10 495
financing costs
Financing costs (883) (3 566) (3 709) (9 308)
Profit before taxation 3 570 (833) 12 808 1 188
Taxation (976) (315) 3 466 (315)
Net profit/(loss) for the 2 594 (1 147) 16 274 873
year
Segment assets 92 377 75 320 552 531 99 424
Segment liabilities 63 305 50 825 510 431 75 250
Cash flows from operating (4 791) 63 123 807 (4 880)
activities
Cash flows from investing (16 857) (2 928) (107 031) (20 499)
activities
Cash flows from financing 26 111 (3 997) 50 324 31 187
activities
Capital expenditure 525 1 878 779 28
Business segment continued Eliminations Consolidated
2009 2009
Segment revenue
Sales of goods - 298 162
Rental income - 1 303
Finance income (3 673) 30 272
Management fees (11 339) -
Insurance premium income 220 39 792
Total revenue from external customers (14 792) 369 529
Inter-segment revenue (5 156) -
Total segement revenue (19 948) 369 529
Segment result
Operating profit before financing (20 988) 13 211
costs
Financing costs 12 201 (5 265)
Profit before taxation (8 787) 7 946
Taxation 236 2 097
Net profit/(loss) for the year (8 550) 10 043
Segment assets (205 937) 613 715
Segment liabilities (160 198) 539 613
Cash flows from operating activities (2 232) 111 967
Cash flows from investing activities 79 384 (67 931)
Cash flows from financing activities (74 407) 29 218
Capital expenditure - 3 210
ACCOUNTING POLICIES
Basis of preparation
The abridged summarised 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. The accounting policies
are consistent with those applied in the consolidated financial statements for
the year ended 31 March 2009.
RELATED PARTIES
The company has related party relationships with its subsidiaries, fellow
subsidiaries, associates and with its directors and executive officers.
INVESTMENT PROPERTY
Opening Additions Fair value Total
Balance adjustments
2010
Investment property - 14 097 2 120 16 217
A register containing information required by paragraph 22(3) of Schedule 4 of
the Companies Act is available for inspection at the registered office of the
company.
Details of valuation
The effective date of the revaluations was 08 March 2010. Revaluations were
performed by an independent valuer, Mr Pierewiet Wilders, of Pierewiet Wilders
Valuations. Pierewiet Wilders Valuations is not connected to the Group and have
recent experience in location and category of the investment property being
valued.
The valuation was based on open market value for exiting use.
These assumptions are based on current market conditions.
The fair value adjustment was recognised in profit of loss for the year.
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS:
Profit for the year 10 080 10 043
Loss on disposal of property, plant and equipment 50 31
net of insurance proceeds
Headline earnings 10 130 10 074
Headline earnings per share (cents) 19.05 19.04
2010 2009
TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL R`000 R`000
Short-term employee benefits 5 512 4 854
TRANSACTIONS WITH RELATED PARTIES
PREMIUMS RECEIVED
Key management personnel and affiliates
Hitech Lasers (Pty) Ltd 1 053 988
Hitech Laser Systems (Pty) Ltd 388 375
Veritas Board of Executors (Pty) Ltd 13 11
Medilase (Pty) Ltd 444 422
NC Tromp Farming (Pty) Ltd 11 -
Premier Services (Pty) Ltd 142 24
PJ de W Tromp & Seuns (Pty) Ltd 12 13
Nembwe Consulting CC 200 160
P J de W Tromp 30 57
Outsource Management Solutions CC 60 -
Capricorn Properties (Pty) Ltd 480 -
LOANS ADVANCED TO RELATED PARTIES
Key management personnel and affiliates
Nembwe Consulting CC - 291
Swart Family Trust - 127
ADVANCES INCLUDED IN LOANS AND RECEIVABLES
Key management personnel and affiliates
Aquarius Properties (Pty) Ltd - 586
H & Z Consulting (Pty) Ltd - 49
Hartelus Farming (Pty) Ltd - 902
Outsource Management Solutions CC - 193
Tromp Consulting International (Pty) Ltd - 44
PREFERENCE SHARES INCLUDED IN LOANS AND RECEIVABLES
Affiliates
Makalani Grapes (Pty) Ltd 5 000 5 000
Suidwes Drukkery Ltd 1 500 1 500
Seasonaire (Pty) Ltd 4 000 4 000
PJ de W Tromp & Seuns (Pty) Ltd 2 000 2 000
RESPONSIBILITY FOR CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
Accounting policies have been applied consistently with those of prior year. The
annual consolidated financial statements for the year ended 31 March 2010 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
OVERVIEW
It is again a privilege to report on a very successful financial year. The
results have surpassed the previous year`s record performance in most segments.
Although our motor segment did not repeat its overall performance of last year,
it did remarkably well in comparison to the motor industry in the RSA, and
maintained its position in Namibia despite economic conditions and stock
shortages.
Despite the turmoil and volatility which persists in all economies and financial
markets, the Nictus Group was again fortunate to be able to maintain a
sustainable growth and build shareholders value with a solid capital growth and
profit performance.
We are particularly satisfied with the performance of the RSA Insurance and
Finance segment which helped to underpin our strategy to grow the Nictus RSA
operations. Our Namibian division of the Insurance and Finance segment performed
exceptionally well.
The following summary confirms the above stated:
- Revenue increased by 4.1% to R385 million;
- Profit before taxation for the year increased by R3.8 million to R11.7
million;
- Return on equity of 10.2% was achieved;
- The Group`s asset base increased by 28.8%;
- The cash position of the Group improved by 45.5% to R238 million;
- The equity of the Group grew by R20.3 million to R99.2 million;
- The net asset value per share increased by 25.1% to 186.47 cents.
The process whereby the Managing Directors and Boards have each "taken
ownership" of their respective segments, with the Holding Company Board acting
as an investment holding company, contributed to the success of the Group, and
confirms the Board`s previous decisions in this regard.
THE FUTURE VIEW
The past two years` remarkable performance has placed significant pressure on
the structure, personnel and management of the Group. This pressure, and the
additional challenge of availability of appropriately skilled labour, mainly in
Namibia, will require the Board to consolidate its position in the coming year,
once more strengthening the pillars which brought us success. It will also
require further attention to risk mitigation on our financial position. The
Board will however, endeavour to explore those opportunities which exist for
growth, but this will be done, for now, within the capabilities of the Group`s
structure.
Taking cognizance of the state of the two different economies in which we
operate, reduced growth of disposable income, and potential stock shortages in
the motor segment, we believe that the retail segments will be hard pressed to
maintain their past performance.
We are however more confident as our Insurance and Finance segment is reaching
its targets and maintaining steady growth. Any current planning is however
subject to unpredictable influences, from which the respective economic
environments in which Nictus operates, cannot be excluded. For this reason this
Group will have to remain dynamic in its decision making.
The prospects for economic growth of Namibia are promising and the Group expects
to benefit from this factor.
DIRECTORATE
To proceed with our succession planning within the Board, the following steps
were taken:
- Mr. Wilmar Fourie was appointed on 1 April 2010 as an Executive Financial
Director to the Holding Company`s Board. Wilmar is a Chartered Accountant
and has been part of the executive management of the Group for the past 3
years. He will make a valuable contribution in fulfilling this responsible
position.
- The Board has finalised the discussions with a candidate for the
appointment of a further independent non executive director, which was
effective from the 15th of June 2010.
This is being done to further strengthen and enlarge the experience of the Board
and to comply with the King 3 requirements and the proposed new company law.
Both individuals are welcomed to the Board, and we look forward to their
valuable contributions.
CORPORATE GOVERNANCE
This report complies with the Johannesburg Stock Exchange and Namibian Stock
Exchange requirements and reflects the various International Financial Reporting
Standards. The Board also remains committed to all aspects of Corporate
Governance and to manage the Group in a transparent and accountable manner.
DIVIDEND
The sustained performance of the Group as well as the strengthening of its
statement of financial position has enabled the board to maintain its dividend
policy of three times cover.
APPRECIATION
I am privileged to serve on the Board of such a committed team, which remains
focused on our Vision and Mission, and has a culture of delivering. I wish to
thank, with deep appreciation, my fellow board members for their continued
support as well as all our loyal employees, managers and all stakeholders for
their co-operation and efforts in building a growing Nictus.
What we again achieved this year and what we plan for the coming year is
eventually dependent on the Grace of God Almighty.
JL Olivier
Chairman: Nictus Group
GROUP CHIEF EXECUTIVE`S REPORT
Overview
It is with gratitude that I can report that the Group is successfully weathering
global economic uncertainty.
Based on forecasts from various markets, I am of the opinion that the recovery
of the global economy will however take longer than initially envisaged and that
a period of austerity is unavoidable. As a major role player in the Namibian
motor vehicle market, we are acutely aware of the difficulties that were caused
by the global meltdown.
However, we expect a faster recovery in the Namibian economy, as it was not as
severely affected as elsewhere. We believe that uranium exports will speedily
replace diamond exports, sustaining economic activity. We also foresee a similar
improvement in the South African economy, and are of the opinion that there will
be a period of sustainable growth ahead. The Euro remains a significant concern,
and we need to be cautious in expectation of gains against the currency going
forward. We are of the opinion that after the FIFA World Cup there will be a
sustainable growth in the economy.
Financial overview
The details of the exceptional results are reflected in the Chairman`s Report
and Annual Financial Statements.
Segmental performance
We are satisfied with the performance of all the segments under the existing
circumstances.
Furniture segment
Turnover in the furniture segment increased satisfactorily by 22%.
Operating profit has not been maintained due to unforeseen costs in relocating
the Windhoek furniture branch. We expect sustainable growth in turnover and
operating profit for the coming year in this segment.
Motor segment
Turnover in the motor segment dropped by 3%. Although the General Motors issue
appears to be resolved, we are experiencing inventory shortages on all newly
launched products, which will directly affect the bottom line profit.
Operating profit decreased by 32% due to lower throughput during the year.
We expect marginally better performance in this segment for the coming year.
Insurance and finance segment
Our insurance segment once again performed well, with an increase of 31% in
premium income. The South African subsidiary is building momentum. We were able
to broaden our customer base in South Africa and Namibia. Lower interest rates
impacted negatively in this segment and the financing division.
We expect to maintain growth in this segment during the coming year.
Growth strategy
Strategically our objectives remain unchanged, and the Group will strive to
increase sales from its profit centres. The Group is driving customer
acquisition and retention, and will maintain the quality of all debtors` books.
Product sourcing will be expanded as we aim to maximise this competitive
advantage. Organic growth has always been our preferred strategy.
We expect considerable consolidation in our industries within the Group due to
the contraction of the global economy.
Human capital
Focus on human resource management is paying off for the Group. Management
monitors the development of human capital in the Group on an ongoing basis.
Competition for skilled and experienced people is fierce in the current
environment. The Group has a policy of preserving its human capital and
therefore this must be matched by prudence in allocation for remuneration.
Outlook
Trading conditions are expected to remain tough, while external factors such as
oil prices and food inflation affect our target markets. We however have an
experienced management team that has successfully weathered the global crisis.
Brand loyalty plays an increasing role in tough times, and the Group has a
portfolio of well established brands with a loyal customer base.
Appreciation
I would like to express my gratitude to the dedication and contribution of our
management and staff in achieving the excellent results. I would like to thank
our suppliers and manufacturers, our business partners, the investment and
financial community and the media for their support. We are committed to serving
our customers and thank them for the loyalty they continue to show towards our
brands.
N.C. Tromp
Group Chief Executive
DECLARATION OF ORDINARY DIVIDEND
The board has declared a final dividend of 6.25 cents per share to ordinary
shareholders of the Company for the year ended 31 March 2010.
The salient dates of this dividend are:
Last day to trade "cum" the dividend Friday, 16 July 2010
Shares commence trading "ex" the dividend from the
commencement of business on Monday, 19 July 2010
Record date Friday, 23 July 2010
Payment date Monday, 26 July 2010
Share certificates may not be dematerialised or rematerialised between Monday 19
July 2010 and Friday 23 July 2010 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 2010 ("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 2010 ("the AGM"). The AGM will
be held in the boardroom at the Nictus Building, corner of Pretoria and Dover
Street, Randburg, Gauteng on Monday 23rd of August 2010 at 15h00.
J L Olivier
Chairman
Johannesburg
30 June 2010
Sponsor
KPMG Services (Proprietary) Limited
Date: 30/06/2010 10:36:01 Produced by the JSE SENS Department.
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