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NIVEUS CHANGES ITS DIVIDEND POLICY AMID LICENCE WORRIES

ALTERNATIVE gaming specialist Niveus Investments cited uncertainty around its KwaZulu-Natal electronic bingo terminal licences, which risk significant impairment, as a key consideration in revising its stated dividend policy.

Niveus, which is controlled by empowerment giant Hosken Consolidated Investments, originally indicated a willingness to pay half its headline earnings out in dividends.

But in comments accompanying its year to end-March results released on Thursday, the company advised shareholders that in the light of growth and investment requirements, coupled with the uncertainty of the KwaZulu-Natal bingo licences, the directors resolved to amend the dividend policy.

In future, payouts will be determined yearly after considering capital requirements.

For the year to end-March, Niveus proposed a 12c per share dividend, which is covered more than five times by earnings of 71c per share.

Earnings were driven by a strong showing by Vukani, Niveus’s limited-payout machine operator, and by liquor subsidiary KWV.

Niveus CEO Andre van der Veen said the profit contribution from the bingo and casino operations dropped to R10m (from R33m in the previous year).

But he emphasised that profits for sites that were “operationally fully developed”, including the Kuruman casino that opened in December, totalled R86m.

Mr van der Veen said a significant portion of the cost and losses in the bingo operations were incurred in KwaZulu-Natal, where the provincial finance authorities revoked licences that were issued in 2010.

He noted ominously that an unsuccessful appeal and loss of the bingo licences in KwaZulu-Natal would mean an impairment of assets to the tune of R35m. Niveus could then also be liable for rent and the retrenchment cost of 300 staff members.

He said that in the Eastern Cape, bingo licences granted to Niveus in Uitenhage and King William’s Town had been challenged by another bidder.

Mr van der Veen said the potential returns in the gaming sector remained good, but the risk of regulatory interference and uncertainty had risen.

“The recent statements from the Department of Trade and Industry … reflect a fixation with legalised gambling when illegal gambling is growing at an unprecedented rate.”

Source: BDLive – Marc Hassenfus