Page 56 - Niveus - Integrated report 2013

Basis of preparation and accounting policies
The results for the year ended 31 March 2013 have been prepared in accordance with International Financial Reporting Standards
IFRS”), the disclosure of IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guide as issued by the Accounting
Practices Committee, the requirements of the South African Companies Act, 71 of 2008 and the Listings Requirements of
the JSE Limited. The accounting policies of the group are consistent with those applied for the year ended 31 March 2012.
As required by the Listings Requirements of the JSE Limited, the group reports headline earnings in accordance with Circular
Headline Earnings as issued by the South African Institute of Chartered Accountants. These financial statements were
prepared under the supervision of the financial director, Ms Muriel Loftie-Eaton CA(SA).
Acquisitions and disposal
During the year under review, Niveus acquired a 100% interest in the Galaxy Bingo Group and a 90% interest in Formex
Industries Proprietary Limited (“Formex”) with effect from 1 July 2012. As the acquisitions were made from Niveus’s holding
company, Hosken Consolidated Investments Limited (“HCI”), they were accounted for as common control acquisitions due
to HCI retaining control of Niveus. The transactions were made at nominal values and therefore resulted in debit entries of
R84 million and R226 million to the common control reserve for Galaxy Bingo and Formex respectively due to their negative
equity positions at the date of acquisition. Furthermore, a R102,5 million shareholder’s loan to Formex was acquired from HCI at
a nominal value due to the loan being impaired to zero. This resulted in a credit to the common control reserve of R102,5 million.
The investment in Formex was sold to HCI for a cash consideration of R23,4 million in January 2013, resulting in a consolidated
loss of R9,6 million on the sale recorded in the income statement.
The interest in KWV Holdings Limited (“KWV”) was increased from 35,5% to 39,9% in July 2012 subsequent to the purchase
of an additional 3 million KWV shares for a cash consideration of R26 million. In December 2012, Niveus purchased a further
million KWV shares for R7 million cash and the issue of 5,5 million Niveus shares. Niveus is now the holder of 51,6% KWV
shares and the transaction resulted in the acquisition of control. The R260 million difference between the fair value of the
investment of R375 million and the net asset value attributable to Niveus of R635 million (based on provisional amounts) is
recorded as negative goodwill in the income statement which is added back for headline earnings per share (“HEPS”). In terms
of IFRS 3: Business Combinations, Niveus has a maximum of 12 months from the acquisition date to complete the acquisition
accounting. The allocation of the purchase consideration to the identifiable assets and subsequent amendment to the recorded
goodwill will therefore be reported in the following year, retrospectively for the year ending 31 March 2013.
The acquired entities contributed revenue of R323 million and loss before tax of R19 million since the date of acquisition. If these
acquisitions had occurred on 1 April 2012, the contribution to revenue would have been R967 million and to loss before tax
R26 million.
Shares issued
In July 2012, the company issued 8,98 million shares at R13,90 per share for the acquisition of a R124,8 million loan claim against
Galaxy Bingo at face value, issued 22,48 million shares at R13,90 per share for the acquisition of a R312,5 million loan claim
against HCI-KWV Holdings Proprietary Limited at face value and 17 million shares at R13,90 per share for R236,6 million cash.
On 10 September 2012, the company listed its 107 million issued shares on the main board of the Johannesburg Stock Exchange
under the Investment Entities sector. In December 2012, Niveus issued 5,5 million shares for the acquisition of a further
interest in KWV.
Niveus Investments Limited integrated Report 2013