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NWL - Nu-World Holdings Limited - Audited financial statements for the year
ended 31 August 2010 and capital reduction distribution to shareholders
NU-WORLD HOLDINGS LIMITED
Registration No. 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")
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2010 AND CAPITAL
REDUCTION DISTRIBUTION TO SHAREHOLDERS
GROUP REVENUE INCREASED BY 26.3% TO R 1 821,9 MILLION.
INCOME BEFORE TAXATION INCREASED BY 201.0% TO R 100,7 MILLION.
TOTAL COMPREHENSIVE INCOME INCREASED BY 286.5% TO R 79,9 MILLION.
EARNINGS PER SHARE INCREASED BY 197.9% TO 324.4 CENTS.
HEADLINE EARNINGS PER SHARE INCREASED BY 126.5% TO 324.4 CENTS.
CAPITAL DISTRIBUTION PER SHARE INCREASED BY 197.8% TO 101.0 CENTS.
NET ASSET VALUE PER SHARE INCREASED BY 11.3% TO 2,916.7 CENTS.
Year ended Year ended
31-Aug 31-Aug
2010 2009 %
R`000 R`000 change
CONDENSED GROUP STATEMENT OF
COMPREHENSIVE INCOME
Revenue 1 821 931 1 443 104 26,3%
Net operating income (EBITDA) 113 297 51 769
Depreciation 6 629 6 904
Interest paid 4 811 6 676
Restructuring costs - operations 3 027
Fair value adjustment on financial 1 189 1 720
instruments
Income before taxation 100 668 33 442 201,0%
Taxation 26 596 8 465
Income after taxation 74 072 24 977
Share of loss of associate companies (183) 0
Net profit for the year 73 889 24 977 195,8%
Other comprehensive income :
Exchange differences on translating 2 152 (348)
foreign operations
Cash flow hedges 3 935 (3 935)
Total comprehensive income for the
year 79 976 20 694 286,5%
Net profit attributable to :
Non-controlling interest 5 289 1 943
Equity holders of the company 68 600 23 034
73 889 24 977
Total comprehensive income
attributable to :
Non-controlling interest 6 003 1 994
Equity holders of the company 73 973 18 700
79 976 20 694
Year ended Year ended
31-Aug 31-Aug
2010 2009 %
R`000 R`000 change
Determination of earnings and
headline earnings:
Net profit attributable to ordinary 68 600 23 034
shareholders
IFRS 3 Net loss on disposal of 7 251
investments
Headline earnings 68 600 30 285 126,5%
Capital distribution 22 873 7 678
Capital distribution from share 101,0 33,9 197,8%
premium (cents)
Capital distribution cover (times) 3,0 3,0
Earnings per share (cents) 324,4 108,9 197,9%
Headline earnings per share (cents) 324,4 143,2 126,5%
Interest cover (times) 22,2 6,7
Shares in issue (less treasury 21 260 618 21 148 614
shares)
Shares in issue - weighted 21 143 650 21 162 931
Shares in issue - diluted 21 591 118 21 809 614
Other group information:
Operating income as percentage of 6,2 3,6 73,3%
revenue (%)
Net negative debt to equity ratio (9,4) (26,9)
(%)
Effective taxation rate (%) 26,4 25,3
Net asset value per share (cents) 2 916,7 2 621,7 11,3%
Capital expenditure 5 280 5 607
Intangible assets
Goodwill and amortization
At beginning and end of year 37 991 37 991
Intellectual property
At beginning of year 14 322 14 322
Amortization of intellectual (1 695)
property
At end of year 12 627 14 322
Total intangible assets 50 618 52 313
SEGMENTAL INFORMATION
Geographical revenue
South Africa 1 126 051 1 007 026 11,8%
Offshore subsidiaries 695 880 436 078 59,6%
1 821 931 1 443 104 26,3%
Geographical headline earnings
South Africa 63 148 29 875 111,4%
Offshore subsidiaries 5 452 410 1 229,8%
68 600 30 285 126,5%
Year ended Year ended
31-Aug 31-Aug
2010 2009
R`000 R`000
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
ASSETS
Non-current assets
Plant and equipment 30 942 32 563
Intangible assets 50 618 52 313
Financial assets and other investments 54 611 51 706
Deferred taxation 11 582 10 492
Current assets
Inventory 391 569 264 690
Trade and other receivables 283 665 198 153
Cash equivalents 58 520 149 131
Total assets 881 507 759 048
EQUITY AND LIABILITIES
Ordinary shareholders` funds 620 102 554 452
Non-controlling interests 29 135 23 133
Total shareholders` funds 649 237 577 585
Long term liability 20 000 20 000
Current liabilities
Trade and other payables 212 270 161 463
Total equity and liabilities 881 507 759 048
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Balance as at 1 September 554 452 550 060
Total comprehensive income for the year 73 973 18 700
Dividend paid (361) (239)
IFRS adjustments - share based payments 277 443
Capital distribution from share premium (7 677) (13 429)
Net treasury share movement 1 634 (1 083)
Shares repurchased (2 196)
Balance as at 31 August 620 102 554 452
CONDENSED GROUP STATEMENT OF CASH FLOWS
Cash(utilised by)/generated from operating (82 127) 12 088
activities
Cash(utilised by)/generated from operations (44 939) 40 705
Interest paid (4 811) (6 676)
Capital distribution/dividend paid (8 038) (13 669)
Normal tax on companies (24 338) (8 272)
Cash flows from investing activities (8 484) (2 645)
Purchase of tangible plant and equipment (5 298) (5 607)
Proceeds on disposal of plant and equipment 463 563
Investment in associate companies (3 087)
Net proceeds on sale of a subsidiary 3 481
Shares repurchased (2 196)
Net treasury share movement 1 634 (1 082)
Net increase / (decrease) in cash and cash (90 611) 9 443
equivalents
Cash and cash equivalents at the beginning of 149 131 139 688
the year
Cash and cash equivalents at end of the year 58 520 149 131
COMMENTS
FINANCIAL OVERVIEW
Directors are pleased to report a convincing return to strong growth,
with these latest financial year-end results, in line with the Trading
Statement released on SENS on the 21st of September 2010. Notwithstanding the
difficult trading environment over the past number of years, the group has
demonstrated a relatively high degree of resilience. The previous years of
consolidation and rationalisation have better
positioned all companies in the group to re-establish a definitive and
sustainable growth path.
The improving economic outlook is supporting a growing sense of consumer
confidence, with a commensurate willingness by consumers to purchase
consumer durables. The strength of our currency and the latest interest
rate cuts to a thirty year low, will support consumer sentiment as we approach
the Christmas season.
Group Revenue increased by 26.3% to R1 821,9 million (August 2009 : R1 443,1
million).
Net operating income - EBITDA increased by 118.9% to R113,3 million
August 2009 : R51,8 million).
Operating margins improved substantially by 73.3% compared to the
equivalent period to August 2009.
Income before taxation - increased by 201.0% to R100,7 million.
(August 2009 : R33,4 million).
The effective tax rate has increased marginally to 26.4% (August 2009 :
25.3%)
Total comprehensive income for the year increased by 286.5% to R79,9 million
(August 2009 : R20,7 million).
Earnings per share - EPS increased by 197.9% to 324.4 cents
(August 2009 : 108.9 cents).
Headline earnings per share - HEPS increased by 126.5% to 324.4 cents
(August 2009 : 143.2 cents).
Capital distribution from share premium increased by 197.8% to 101.0
cents (August 2009 : 33.9 cents). The distribution cover at 3.0 times,
remains in line with previous years.
The statement of financial position remains ungeared with cash equivalents of
R58,5 million.
Net interest paid has decreased 27.9% to R4,8 million (August 2009 : R6.7
million)
and the interest cover has increased 229.9% to 22.2 times.
The net asset value per share is up 11.3% to 2 916.7 cents
(August 2009 : 2 621.7 cents).
OPERATIONAL REVIEW
In both South Africa and Australia, we have been successful in growing
sales and improving margins. Our diversification into new product
categories has opened up new opportunities for growth across a wider
spectrum of retail customers.
In South Africa we have successfully introduced new product categories
and offer a broader range of merchandise within each category.
Nu-World has just recently entered two new important and exciting market
categories, liquor and hi-tech. The liquor market is estimated to be
approximately R40 billion. Nu-World is now importing and distributing a
growing range of branded liquor products including amongst others, exclusive
French brands of VSOP and XO cognacs, as well as a range of spirits and beers.
The liquor products are sold to our existing licensed customer base as well as
a number of resellers of liquor products. The hi-tech product category is also
new to the company. The mobile phone market category is the single largest
market category in South Africa. Nu-World is bringing to market and rolling
out a leading-edge innovative range of models, including dual-sim, free to air
TV and a number of other impressive features. The roll-out of the mobile phone
range will step up as we approach the festive season. Other hi-tech product
categories will be brought to market in the forthcoming financial year.
Offshore subsidiaries accounted for 38% of revenue and 8% of income for the
year under review. Our Australian subsidiaries have reported improved
performance for the year. Despite a growing Australian economy, retail sales
for durables remain under pressure and this trading space has become even more
competitive. Our companies have achieved growth through diversifying into a
number of new product categories, winning market share from competitors and
bringing new customers on board.
The internet retailer OO.COM.AU "Only Online" has achieved a 40% revenue
growth and has successfully maintained margins, despite an increasingly
competitive online retail environment. The company has gained traffic and won
market share from other leading Australian players. The company currently
offers a hugely increased range of products within a number of diversified
branded durable categories.
PROSPECTS
Directors report that the consolidation and rationalisation of the past years
has achieved a lower overhead base and improved efficiency levels. All
companies in the group continue to secure new product and category offerings,
to sustain and enhance the scope for future growth. There are exciting revenue
and profit growth opportunities to be achieved in the forthcoming year.
It is rewarding to confirm that all companies in the group have reported
increased revenue and improved margins in these somewhat uncertain economic
times.
Recent economic data together with reports from many of South Africa`s
leading retailers support the underlying consensus that the worst of the
economic cycle is behind us. The South African economy grew relatively
robustly during the first half of 2010. The successful hosting of the
FIFA World Cup provided a boost to the economy as well as a proud
psychological boost to all South Africans.
As a group we are fortunately placed to take advantage of the emerging
growth in both South Africa and Australia, notwithstanding the limited
visibility and uncertainty regarding sustainable growth in the global
economy.
CORPORATE GOVERNANCE
The Nu-World Holdings Ltd Group subscribes to the recommendations of the
King report on Corporate Governance and conducts the enterprise with
integrity, transparency and equal opportunity. The Group strives to provide
reports to shareholders that are timely, accurate, consistent and informative.
BBBEE RATING
The major South African wholly owned subsidiary, Nu-World industries
(Pty) Ltd, has attained a level 5 accreditation.
ACCOUNTING POLICIES
The condensed financial statements have been prepared in accordance with:
- IAS 34: Interim Financial Reporting using accounting policies that are in
accordance with IFRS as well as AC 500 Standards as issued by the
Accounting Practices Board and consistent with those applied in the prior
year;
- The requirements of the South African Companies Act, 61 of 1973, as
amended; and
- The Listings Requirements of the JSE Limited.
AUDIT REPORT
The consolidated financial statements for the year have been audited by
Tuffias Sandberg KSi and their accompanying unqualified audit report as well
as their unqualified audit report on this set of condensed financial
information is available for inspection at the company`s registered office.
CHANGE TO THE BOARD OF DIRECTORS
Mr J M Judin, currently an independent non-executive director of Nu-world, was
appointed as lead independent director to the Board of Nu-World on 1 June
2010.
CAPITAL REDUCTION DISTRIBUTION TO SHAREHOLDERS
The Board has resolved to make a capital reduction distribution to ordinary
shareholders from the company`s share premium account amounting to 101,0 cents
per ordinary share ("the capital distribution").
Notice is hereby given that the board of directors ("the board") has resolved
to distribute to ordinary shareholders a portion of the share premium account
in lieu of a dividend to ordinary shareholders of the company. The capital
distribution will be paid in terms of a general authority to make such
payments granted to the board by shareholders at the company`s AGM held on
Wednesday, 10 February 2010. The capital distribution will amount to 101,0
cents per ordinary share, based on a reduction to share premium of R 22 872
930.
The following salient dates will be applicable:
Last date to trade "cum" the capital distribution Friday, 3 December 2010
Trading commences "ex" the capital distribution Monday, 6 December 2010
Record date Friday,10 December 2010
Date of payment Monday,13 December 2010
Share certificates may not be dematerialised or rematerialised between Monday,
6 December 2010 and Friday, 10 December 2010, both dates inclusive.
FINANCIAL EFFECTS
The table below illustrates the effect of the capital distribution on the
earnings and net asset value per Nu-World ordinary share and is based on the
audited results for the year ended 31 August 2010. These financial effects
which have been reviewed by the company`s auditors, Tuffias Sandberg KSi, are
prepared for illustrative purposes only, are the responsibility of the Board,
and because of their nature, may not give a true indication of the company`s
financial position and results of operations.
Before After %
cents Cents change
Earnings per share 324,4 319,3 (1,6)
Headline earnings per share 324,4 319,3 (1,6)
Net asset value per share 2 916,7 2 804,0 (3,9)
Net tangible asset value per share 2 738,0 2 625,3 (4,1)
Notes to the financial effects:
It is assumed that the capital distribution had been paid to shareholders on 1
September 2009, and based on a reduction of R 22 872 930 and an after tax
interest rate earned on cash resources of 4,74%.
ANNUAL REPORT
The annual report will be mailed to shareholders prior to end November 2010.
The annual general meeting will take place at 10h00 on Wednesday, 9 February
2011, at the registered office of the company.
On behalf of the board of directors
M.S. Goldberg B.H. Haikney
Executive Chairman Company Secretary
27 October 2010
Administration
Registration number 1968/002490/06
(Incorporated in the Republic of South Africa)
JSE share code: NWL
ISIN code: ZAE000005070
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 (Lead)
D. Piaray
R. Kinross
www.nuworld.co.za
Date: 27/10/2010 17:00:01 Supplied by www.sharenet.co.za
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