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NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six months

Release Date: 20/04/2010 17:00
Code(s): NWL
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NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six months ended 28 February 2010 Nu-World Holdings Limited Registration number 1968/002490/06 (Incorporated in the Republic of South Africa) JSE share code: NWL & ISIN code: ZAE000005070 ("Nu-World" or "the Group" or "the Company") Unaudited Interim Report for the six months ended 28 February 2010 - GROUP REVENUE INCREASED BY 17.8% to R926,8 million - TOTAL COMPREHENSIVE INCOME INCREASED BY 161.6% to R35,7 million - HEADLINE EARNINGS PER SHARE INCREASED BY 101.8% to 168.7 cents - CASH GENERATED BY OPERATING ACTIVITIES R42,4 million - NET CASH ON HAND R168,1 million - NET ASSET VALUE PER SHARE 2 771.3 cents CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME Restated*
Unaudited Unaudited Audited 6 Months 6 Months 12 Months 28 February 28 February 31 August 2010 2009 % 2009
R`000 R`000 change R`000 Revenue 926 805 786 632 17.8 1 443 104 Net operating income 60 499 27 615 119.1 51 769 Depreciation 3 155 3 221 6 904 Interest paid 2 899 3 408 6 676 Restructuring costs - 3 027 operations Fair value adjustment 1 720 on financial instruments Income before 54 445 20 986 159.4 33 442 taxation Taxation 14 969 5 783 8 465 Income after taxation 39 476 15 203 159.7 24 977 Minority interests (3 815) (1 571) (1 943) Total comprehensive 35 661 13 632 161.6 23 034 income for the period SUPPLEMENTARY INFORMATION Determination of comprehensive income and headline earnings Comprehensive income 35 661 13 632 161.6 23 034 attributable to ordinary shareholders IFRS 3 Net Loss on 4 050 7 251 disposal of investments Headline earnings 35 661 17 682 101.7 30 285 Capital distribution 7 678 Capital distribution 33.9 from share premium (cents) Comprehensive income 35 661 13 632 161.6 23 034 Headline earnings 35 661 17 682 101.7 30 285 Earnings per share 168.7 64.5 161.8 108.9 (cents) Headline earnings per 168.7 83.6 101.8 143.2 share (cents) Dividend per share 33.9 (cents) Interest cover 19.8 7.2 6.7 Shares in issue 21 134 329 21 149 414 21 148 614 Shares in issue - 21 143 650 21 177 842 21 162 931 weighted Shares in issue - 21 795 329 21 810 414 21 809 614 diluted Operating income as a 6.5 3.5 3.6 percentage of revenue (%) Net negative debt to (28.7) (15.8) (26.9) equity ratio (%) Effective taxation 27.5 27.6 25.3 rate (%) Net asset value per 2 771.3 2 595.8 6.8 2 621.7 share (cents) Capital expenditure Expansion 998 1 287 3 025 Replacement 877 1 057 2 582 1 875 2 344 5 607
Intangible Assets Goodwill and amortisation At beginning and end 37 991 37 991 37 991 of year Intellectual Property At beginning of 14 322 14 322 14 322 period/year Amortisation of (1 303) intellectual property At end of period/year 13 019 14 322 14 322 Total intangible 51 010 52 313 52 313 assets SEGMENTAL INFORMATION Geographical revenue Republic of South 538 969 505 242 6.7 1 007 026 Africa Australasia 387 836 281 390 37.8 436 078 926 805 786 632 17.8 1 443 104 Geographical income Republic of South 31 730 12 668 150.5 29 875 Africa Australasia 3 931 964 307.7 410 35 661 13 632 161.6 30 285 * Restatement - refer to restatement note CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited 6 Months 6 Months 12 Months 28 February 28 February 31 August
2010 2009 2009 R`000 R`000 R`000 Balance at 1 September 554 452 550 060 550 060 Total comprehensive 35 661 13 632 23 034 income for the period Dividend (paid)/reversed 600 (600) (239) IFRS adjustments: share 380 443 based payments Profit/(loss) on cash 3 934 (3 934) flow hedges Capital distribution (7 677) (13 429) (13 429) from share premium Fair value movement 926 46 (400) Net treasury share (2 196) (1 083) (1 083) movement Balance at end of 585 700 549 006 554 452 period/year CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited 6 Months 6 Months 12 Months
28 February 28 February 31 August 2010 2009 2009 R`000 R`000 R`000 ASSETS Non-current assets Fixed assets 31 284 33 835 32 563 Intangible assets 51 010 52 313 52 313 Financial assets and 51 735 51 706 51 706 other investments Deferred taxation 9 847 11 608 10 492 Current assets Inventory 268 868 307 216 264 690 Trade and other 206 712 175 906 198 153 receivables Cash equivalents 168 153 86 911 149 131 Total assets 787 609 719 495 759 048 Equity and liabilities Ordinary shareholders` 585 700 549 006 554 452 funds Minority interests 30 019 22 301 23 133 Total shareholders` 615 719 571 307 577 585 funds Non-current liabilities Long term liabilities 20 000 20 000 20 000 Current liabilities Trade and other payables 151 890 128 188 161 463 Total equity and 787 609 719 495 759 048 liabilities CONDENSED GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited 6 Months 6 Months 12 Months 28 February 28 February 31 August
2010 2009 2009 R`000 R`000 R`000 Cash generated/ 20 926 (52 832) 12 088 (utilised) by operating activities Cash generated/ 42 443 (32 892) 40 705 (utilised) by operations Interest paid (2 900) (3 408) (6 676) Capital distributions/ (9 273) (14 029) (13 669) dividends paid Normal tax on companies (9 344) (2 503) (8 272) Cash flows from (1 904) 55 (2 645) investing activities Purchase of tangible (1 875) (2 344) (5 607) fixed assets Proceeds on disposal of 563 fixed assets Other investments (29) Net proceeds on sale of 3 481 3 481 a subsidiary Increase in investment (1 082) (1 082) in treasury shares Cash flows from - - - financing activities Net increase/(decrease) 19 022 (52 777) 9 443 in cash and cash equivalents Cash and cash 149 131 139 688 139 688 equivalents at the beginning of the period/year Cash and cash 168 153 86 911 149 131 equivalents at end of the period/year Comments Financial overview Directors are pleased to report a solid set of results and positive growth, despite challenging trading environments in both South Africa and Australia. We are comfortable that the restructuring and rationalization initiatives undertaken during the previous financial year, are bearing fruit. Directors are confident that the Group is leaner and better positioned to support sustainable growth in the medium term. The improving economic outlook is supporting a definite uptick in consumer confidence and an increased willingness to spend on consumer durables, among consumers. Group revenue for continuing operations increased by 17,8% to R926,8m (February 2009: R786,6m). Net operating income - EBITDA, increased by 119,1% to R60,5m (February 2009: R27,6m). Operating margins improved substantially compared to the equivalent period to February 2009, commendable considering the intense competition in the South African and Australian marketplaces. Total comprehensive income for the period increased by 161,6% to R35,7m (February 2009: R13,6m). Headline earnings per share - H.E.P.S. increased by 101,8% to 168,7 cents (February 2009: 83,6 cents). The balance sheet remains strong, with negative gearing and cash equivalents of R168,1m. It is clear that the improved focus on working capital management is achieving results. Inventories of R268,9m reflect a decrease of 12,5% (February 2009: R307,2m) and an improved stock turn ratio as a result. The net asset value per share is up 6,8% to 2 771,3 cents (February 2009: 2 595,8 cents). Trade receivables and payables increased in line with the increased revenue. OFFSHORE SUBSIDIARY Yale Prima Pty Ltd is a 59,4% held subsidiary, based in Sydney Australia, which in turn holds 51% of subsidiary Overstockoutlet Pty Ltd. Yale Prima imports a range of consumer electronics and appliances for major Australian retailers on an indent basis. OO.COM.AU is one of the leading Australian online internet retailers. OO.COM. AU has successfully re-branded to the exclusive "Only Online". The Company trades primarily in leading international brands across a broad range of consumer products:- including leading world brands in consumer electronics, watches, perfumes, books, DVD`s, golf and other sporting goods, health and fitness equipment, luggage, manchester and fashion accessories etc. The Australian economy is firmly back on a growth path with solid GDP growth. The growth path confidence is borne out by the Australian Central Bank`s continued raising of the benchmark cash rate, currently at 4,0% after the last increase in March 2010. Our Australian directors and management have completed their consolidation and restructuring initiatives as set out in the previous financial year. These cost-benefit synergies together with the improving Australian retail economy, have positioned the companies onto a path for future sustainable growth. Product Range Consumer Electronics * Small Electrical Appliances * Conti Motorsport * White Goods * Liquor * Furniture Notwithstanding the contraction of the South African retail market over the past years, Nu-World is increasing its market share in key product categories. Our price-entry and middle-market brands, in both consumer electronics and appliances, have performed particularly well. Our top-line "Vegas" ranges of consumer electronics and appliances, continues to make inroads and win consumer support and market share. Our range of flat panel televisions, including full high definition Plasma`s, LCD`s and LED`s, offer excellent value. Our comprehensive line-up of televisions, including CRT`s and Flat Panels is expanding rapidly. New initiatives include the pending launch of our high-tech division. PROSPECTS Directors are confident that the consolidation and rationalisation initiatives completed in 2009 have ensured that all Group companies are leaner and more competitive and well positioned to take advantage of improving markets. The Group`s diversification across markets, a broad range of product categories, key brands and market segments, has always served us well and remains at the core of our growth strategy for the future. Ongoing management initiatives for the financial year to August 2010 include: - The extension of product categories. - The extension of product ranges within existing categories. - The introduction of mobile phones and netbooks. -The introduction of a liquor division supplying our existing retail customers. - The establishment of a strategic partnership to enter the Chinese appliance market. - The ongoing cost-containment and streamlining of the local manufacturing division. Key financial indicators are showing clear signs that the South African and Australian economies have emerged from recession, although the pace of the recovery in South Africa remains measured. The South African Reserve Bank`s decision to cut its key lending rate by a further 50 basis points to 6.5% in March 2010, the lowest in almost 3 decades, is welcomed. The rate cut will undoubtedly spur the revival in consumer spending which began in the fourth quarter of 2009. Whilst the hosting of the Soccer World Cup is clearly providing a huge boost to the economy and the hospitality sector during 2010, Government`s infrastructure program will stretch well into the future and underpin GDP growth well beyond this international event. The Board is confident of continued sustained growth in the medium and long term. CHANGES TO THE BOARD The following changes to the Board have taken place since the date of the Group`s last report: - Richard Kinross was appointed as an independent non-executive director, effective 1 November 2009. NOTES 1. Basis of preparation The condensed unaudited Group interim financial statements for the period have been prepared in compliance with International Accounting Standard IAS 34 - Interim Financial Reporting, the Listings Requirements of the JSE Limited and AC 500. Other than IAS 1, the accounting policies applied in preparing these condensed unaudited Group interim financial statements are consistent with those applied in the annual financial statements for the year ended 31 August 2009 and the six months to 28 February 2009 and comply with International Financial Reporting Standards (``IFRS``) and the South African Companies Act. Consequently, the comparative information has been restated for the new disclosures in terms of IAS 1. 2. Restatement The revenue in the statement of the comprehensive income has been restated in terms of circular 9/2006 (IFRIC). 3. Subsequent events No events material to the understanding of the report have occurred during the period between 28 February 2010 and the date of this report. 4. Corporate governance The Nu-World Holdings Ltd Group subscribes to the recommendations of the King III Report on Corporate Governance and recognises the requirements to conduct the enterprise with integrity, transparency and equal opportunity. The Group strives to provide reports to shareholders that are timely, accurate, consistent and informative. 5. BBBEE rating The major South African wholly owned subsidiary, Nu-World Industries (Pty) Ltd, has attained a Level 5 accreditation. On behalf of the board of directors M.S. Goldberg Executive Chairman B.H. Haikney Company Secretary 20 April 2010 Registered office 35 3rd Street, Wynberg, Sandton 2199 Republic of South Africa Tel +27 (11) 321 2111 Fax +27 (11) 440 9920 Transfer secretaries Computershare Investor Services (Pty) Ltd 70 Marshall Street, Johannesburg 2001 Company secretary B.H. Haikney Auditors Tuffias Sandberg KSi Sponsor Sasfin Capital, a division of Sasfin Bank Limited Directors M.S. Goldberg (Executive Chairman), J.A. Goldberg (Chief Executive), G.R. Hindle (Financial Director) Non-executive directors J.M. Judin D. Piaray R. Kinross www.nuworld.co.za Date: 20/04/2010 17:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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