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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').
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