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NCS
NCS
Nictus - Unaudited Interim Results For The Six Months Ended 30 September 2006
Nictus Limited
Incorporated in the Republic of South Africa
Registration Number: 1981/001858/06
JSE share code: NCS
NSX Share code: NCT
ISIN: NA0009123481
("Nictus" or "the company")
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 06 30 Sept 05 31 Mar 06
R`000 R`000 R`000
Revenue 127 471 114 170 247 898
Cost of sales (76 873) (75 943) (149 436)
Change in gross provision (12 465) (5 421) (21 093)
for unearned premiums
Claims incurred (13 879) (7 475) (28 555)
Gross profit 24 254 25 871 48 814
Other operating income 3 706 1 879 1 152
Operating and (25 261) (26 160) (48 800)
administrative expenses
Operating profit before 2 699 1 590 1 166
investment income
Investment income 2 971 1 716 5 259
Operating profit before 5 670 3 306 6 425
financing costs
Financing cost (2 834) (2 617) (5 235)
Share of profit of 2 162 105
associates
Profit before taxation 2 838 851 1 295
Taxation (note 3) (565) 1 093 1 792
Profit for the period 2 273 1 944 3 087
Attributable to:
Equity holders of the 2 757 1 614 3 004
parent
Minority interest (484) 330 83
2 273 1 944 3 087
Earnings per share (cents) 5.16 3.02 5.62
Diluted earnings per share
(cents) 5.16 3.02 5.62
Number of shares in issue 53 444 53 444 53 444
(000`s)
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
at at at
30 Sept 06 30 Sept 05 31 Mar 06
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 30 977 38 231 37 811
equipment
Intangible assets and 1 976 3 212 3 774
goodwill
Interest in associates - - 1 030
Investments 11 422 15 000 6 467
Loans and receivables 112 978 98 718 101 529
Deferred taxation 7 836 8 186 10 120
165 189 163 347 160 731
Current assets 167 892 122 395 147 696
Total assets 333 081 285 742 308 427
EQUITY
Issued ordinary share 26 722 26 722 26 722
capital
Contingency reserve 5 322 5 400 5 322
Retained income (note 3) 13 732 10 274 11 777
Total equity attributable to 45 776 42 396 43 821
equity holders of the parent
Minority interest - 451 1 031
Total equity 45 776 42 847 44 852
LIABILITIES
Non-current liabilities
Interest bearing loans and
borrowings 16 308 19 887 17 844
Deferred taxation 3 218 4 182 4 709
19 526 24 069 22 553
Current liabilities 267 779 218 826 241 022
Total liabilities 287 305 242 895 263 575
Total equity and liabilities 333 081 285 742 308 427
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Contingency Retained Total Minority Total
capital reserve income interest equity
R`000 R`000 R`000 R`000 R`000 R`000
Balance at 1 26 722 5 400 8 660 40 782 121 40 903
April 2005
Profit for the - - 1 614 1 614 330 1 944
period
Balance at 30 26 722 5 400 10 274 42 396 451 42 847
September 2005
Profit/(loss) - - 1 425 1 425 580 2 005
for the period
Transfer from
contingency - (78) 78 - - -
reserve
Balance at 31 26 722 5 322 11 777 43 821 1 031 44 852
March 2006
Profit/(loss) - - 2 757 2 757 (484) 2 273
for the period
Disposal of
shares in - - - - (547) (547)
subsidiaries
Dividend paid - - (802) (802) - -
Balance at 30 26 722 5 322 13 732 45 776 - 45 776
September 2006
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 06 30 Sept 05 31 Mar 06
R`000 R`000 R`000
Cash flow from operating
activities
Cash generated by 22 983 5 485 25 699
operations
Investment income 2 971 1 716 5 259
Interest paid (2 469) (2 251) (4 522)
Preference dividends (365) (366) (713)
paid
Taxation paid - (2) (235)
Ordinary dividends paid (802) - -
Net cash flow from 22 318 4 582 25 488
operating activities
Net cash flow from (14 354) (18 967) (15 492)
investing activities
Net cash flow from 6 571 3 620 3 000
financing activities
Net increase/(decrease) 14 535 (10 765) 12 996
in cash and cash
equivalents
Cash and cash 39 657 26 661 26 661
equivalents at beginning
of the period
Cash and cash 54 192 15 896 39 657
equivalents at end of
the period
CONDENSED SEGMENTAL
REPORT
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 Sept 06 30 Sept 05 31 Mar 06
R`000 R`000 R`000
Segment revenue
Motor retail 60 056 58 471 110 713
Furniture retail 34 023 33 440 67 087
Insurance & Finance 33 392 22 799 70 098
127 471 114 710 247 898
Operating profit/(loss)
Motor retail 1 679 685 2 256
Furniture retail (89) 969 (440)
Insurance & Finance 3 259 2 292 1 946
Other 824 (640) 2 663
5 673 3 306 6 425
RECONCILIATION BETWEEN EARNINGS & HEADLINE EARNINGS
Profit for the period 2 757 1 614 3 004
Loss/(profit) on 49 (144) 102
disposal of property,
plant and equipment
Profit on disposal of (2 154) - -
interest in
subsidiaries(note 4)
Negative goodwill (1 132) - -
written off(note 5)
Impairment of goodwill - - 406
Reversal of impairment - - (300)
losses
Write-off of plant and - (332) (357)
equipment
Headline (loss)/earnings (480) 1 138 2 855
Headline (loss)/earnings (0.90) 2.13 5.34
per share (cents)
NOTES TO THE FINANCIAL INFORMATION
1. BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) and its interpretations
adopted by the International Accounting Standards Board (IASB). The accounting
policies are consistent with those applied for the year ended 31 March 2006.
Standards and interpretations effective subsequent to this date have not had a
material effect on the results. These condensed financial statements comply
with IAS 34.
2. FOREIGN CURRENCY
The group`s functional currency is Namibian dollars. As the entity`s primary
listing is on the Johannesburg Stock Exchange, the interim financial statements
have been presented in South African Rands being the group`s presentation
currency. The Namibian Dollar and the South African Rand are translated on a
one-to-one basis.
3. COMPARATIVE FIGURES
The September 2005 comparatives have been restated to be consistent with the
accounting policies and basis of presentation applied to both the current
period and the previous year ended 31 March 2006. The only change affecting
results as previously reported for the September 2005 interim period is in
respect of the IFRS requirements to account for the tax on technical insurance
provisions. This resulted in a credit of R 517 thousand in deferred income tax
in the income statement and a decrease in retained earnings in the balance
sheet of the same amount.
4. DISPOSAL OF SUBSIDIARIES
The holding company sold its entire interest in Capricorn Eiendomme (Pty) Ltd
and the Corporate Guarantee group sold its 51% interest in Parcel Force
Couriers (Pty) Ltd during the period. The profit on disposal of the interests
is included in operating income.
Capricorn Parcel Total
Force
R`000 R`000 R`000
Plant and equipment 4 125 2 988 7 113
Other non-current assets - 101 101
Trade and other 1 3 549 3 550
receivables
Cash and cash equivalents 124 (420) (296)
Non-current liabilities (2 880) (3 298) (6 178)
Short-term loans (1 299) (4 590) (5 889)
Trade and other payables (13) (4 777) (4 790)
Current tax liability (48) - (48)
Net asset value on date of 10 (6 447) (6 437)
sale
Outside shareholders` - 4 017 4 017
interest in share capital
Goodwill realised - 1 653 1 653
Proceeds (1 387) - (1 387)
Profit on sale of shares (1 377) (777) (2 154)
Cash and cash equivalents 124 (420) (296)
sold
Net cash inflow (1 253) (1 197) (2 450)
5. ACQUISITION OF SUBSIDIARY
On 1 September 2006 the remaining 35% ordinary shares in Futeni Collections
(Pty) Ltd were bought.
R`000
Non-current assets 2 688
Loans and receivables 36 486
Trade and other receivables 15 536
Cash and cash equivalents 146
Non-current liabilities (35 596)
Trade and other payables (11 027)
Net asset value on date of 8 233
purchase
Purchase of 35% shareholding 2 881
Negative goodwill recognised in 1 132
the income statement (incl in
Other operating income)
Purchase price (1 750)
Net cash outflow 2 263
REVIEW OF OPERATIONS
OVERVIEW
Group revenue increased by 11% to R127 million.
Operating profit before financing costs increased by 72% to R5,7 million.
Net profit for this period increased by 17% to R2,3 million.
SEGMENTAL ALLOCATIONS
A strategic decision was made to incorporate the carpet operations into the
furniture retail operations in order to streamline the business resulting in
the wholesale segment falling away. The comparative figures have consequently
been restated.
SEGMENTAL RESULTS
The group recorded 72% growth in operating profit before financing costs.
Motor retail: Although volumes increased by 20% in units, in Rand terms there
was only a 2% improvement in revenue, reason being that there is a definite
shift to the sale of entry-level vehicles at lower margins. The operating
result improved significantly due to a renewed focus by management on all areas
of the business.
Furniture retail revenue increased marginally. Revenue generated out of South
Africa increased by 7% whereas revenue in Namibia fell by 10% due to new
entrants in the furniture market that put our sales under pressure. The drop
in earnings is attributable to the cost of the consolidation of the wholesale
market sector.
Insurance and finance: Premium income doubled in both Namibia and RSA. We are
confident that Corporate Guarantee in South Africa is very well positioned to
ensure growth for this segment. The higher interest rate environment is very
positive for this sector.
HEADLINE EARNINGS
There were a number of non-trading items and related financial effects which
impacted the group`s headline earnings for the current and prior reporting
periods. The main items are:
* a profit on the disposal of 51% interest in the loss making entity, Parcel
Force Couriers (Pty) Ltd amounted to R777 thousand.
* a profit on the disposal of the holding company`s investment in Capricorn
(Pty) Ltd of R1,4 million.
* negative goodwill on the acquisition of the remaining portion of Futeni
Collections (Pty) Ltd of R1,1 million.
BASIC EARNINGS PER SHARE
Earnings per share for the six months ended 30 September 2006 were 5.16 cents
(30 September 2005 - 3.02 cents), compared to headline earnings loss per share
of 0.90 (30 September 2005 profit of 2.13 cents).
DIVIDEND
The Nictus board of directors proposes no interim dividend.
DIRECTORS
No changes have occurred in the directorate since 31 March 2006.
PROSPECTS
The board expects that the higher interest rate environment will have a
positive impact on our insurance business. Although this high interest rate
environment has the potential to put margins in our other operations under
pressure, the economic indicators are positive for the Namibian economy where
78% of our revenue is generated from. We believe that the consolidation of the
wholesale carpet sector and the sale of loss making subsidiaries should
position us well for the future.
On behalf of the board:
N.C. Tromp
F.R. Van Staden
Windhoek, 12 December 2006
COMPANY DETAILS
Company registration number: RSA: 1981/01858/06, NAM: F81/11858
JSE share code: NCS, NSX Share code: NCT, ISIN number: NA0009123481
Directors: J L Olivier (Chairman), N C Tromp (Managing Director), J N Campbell
(non-exec), Prof. S S Loubser (non-exec), F R van Staden (Financial Director) J
J Retief (Human Resources)
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd, P O Box
61051, Marshalltown 2107
RSA Registered Office: Nictus Building, corner of Pretoria and Dover Street,
Randburg (P O Box 2878, Randburg, 2125)
Namibia Registered Office: 3rd Floor, Corporate House, 17 Luderitz Street,
Windhoek (P O Box 755, Windhoek)
Sponsor on the JSE: KPMG Services (Pty) Ltd
Sponsor on the NSX: Namibia Equity Brokers (Pty) Ltd
Date: 11/12/2006 16:00:01 Produced by the JSE SENS Department.
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