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NWL - Nu-World - Audited Financial Statements for the year ended 31 August 2011
and a Cash Distribution Declaration
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 2011
AND A CASH DISTRIBUTION DECLARATION
GROUP REVENUE FROM CONTINUING OPERATIONS DECREASED BY 5,4% TO
R 1 609,9 MILLION
INCOME AFTER TAXATION FROM CONTINUING OPERATIONS DECREASED BY 52,2% TO
R 34,7 MILLION
EPS AND HEPS (CENTS) DECREASED BY 71,1% TO 93,7 CENTS.
CASH GENERATED FROM OPERATING ACTIVITIES R 84,4 MILLION
NET CASH ON HAND INCREASED BY 50.0% TO R 87,8 MILLION
CAPITAL DISTRIBUTION PER SHARE - 29,5 CENTS.
NET ASSET VALUE PER SHARE - 2,876.4 CENTS.
Year ended Year ended
31-Aug 31-Aug
2011 2010 %
R000 R000 change
CONDENSED GROUP STATEMENT OF
COMPREHENSIVE INCOME
CONTINUING OPERATIONS
Revenue 1 609 922 1 702 024 -5,4%
Net operating income 55 882 108 512 -48,5%
Depreciation 4 677 3 864
Interest paid 8 573 4 811
Fair value adjustment on financial 0 1 189
instruments
Income before taxation 42 632 98 648
Taxation 7 888 26 025
Income after taxation from continuing 34 744 72 623 -52,2%
operations
DISCONTINUED OPERATIONS
Revenue 55 663 119 907 -53,6%
Net operating (loss)/income (11 427) 4 785
Depreciation 1 703 2 765
(Loss) / Income before taxation (13 130) 2 020
Taxation 0 571
(Loss) / Income after taxation from (13 130) 1 449
discontinued operations
Total net income after taxation 21 614 74 072
Share of associate company (loss) (292) (183)
Net profit for the year 21 322 73 889
Year ended Year ended
31-Aug 31-Aug
2011 2010 %
R000 R000 change
Other comprehensive income:
Exchange differences on translating 9 229 2 152
foreign operations
Cashflow hedges 0 3 935
Total comprehensive income for the year 30 551 79 976
Total profit attributable to:
Non-controlling interest 1 278 5 289
Equity holders of the company 20 044 68 600
21 322 73 889
Total comprehensive income attributable
to:
Non-controlling interest 6 646 6 003
Equity holders of the company 23 905 73 973
30 551 79 976
Headline earnings reconciliation:
Determination of attributable earnings
and headline earnings:
Net profit attributable to ordinary 20 044 68 600
shareholders
Headline earnings 20 044 68 600
OTHER GROUP INFORMATION
Capital distribution 6 681 22 873
Earnings per share (cents) 93,7 324,4 -71,1%
Headline earnings per share (cents) 93,7 324,4 -71,1%
Capital distribution per share (cents) 29,5 101,0
Capital distribution cover 3,0 3,0
Shares in issue (less treasury shares) 21 420 795 21 260 618
Shares in issue - weighted 21 400 205 21 143 650
Shares in issue - diluted 22 352 295 21 591 118
OTHER GROUP INFORMATION
Determination of attributable earnings
and headline earnings:
Net income attributable to ordinary 20 044 68 600
shareholders
Headline earnings 20 044 68 600
Operating income from continuing 3,5% 6,4%
operations as percentage of revenue
Net negative debt to equity ratio (%) -14,3% -9,4%
Effective taxation rate (%) 26,7 26,4
Net asset value per share (cents) 2 876,4 2 916,7
Capital expenditure
Expansion 3 295 3 148
Replacement 1 125 2 150
4 420 5 298
Year ended Year ended
31-Aug 31-Aug
2011 2010 %
R000 R000 change
Intangible assets
Goodwill
At beginning and end of year 37 991 37 991
Translation difference 5 493 0
43 484 37 991
Intellectual property
At beginning of year 12 627 14 322
Translation / (Amortization) of 555 -1 695
intellectual property
At end of year 13 182 12 627
Total intangible assets 56 666 50 618
SEGMENTAL INFORMATION
Geographical revenue
South Africa - continuing operations 938 562 1 006 144
South Africa - discontinued operations 55 663 119 907
Offshore subsidiaries 671 360 695 880
1 665 585 1 821 931 -8,6%
Geographical income
South Africa - continuing operations 31 422 61 699
South Africa - discontinued operations (13 130) 1 449
Offshore subsidiaries 1 752 5 452
20 044 68 600 -70,8%
Year ended Year ended
31-Aug 31-Aug
2011 2010
R000 R000
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
ASSETS
Non-current assets
Fixed assets 16 774 30 942
Intangible assets 56 666 50 618
Financial assets and other investments 54 347 54 640
Deferred taxation 10 769 11 582
Current assets
Current assets classified as held for sale 12 490
Inventory 372 884 407 284
Trade and other receivables 244 385 267 921
Cash equivalents 87 800 58 520
Total assets 856 115 881 507
EQUITY AND LIABILITIES
Ordinary shareholders` funds 616 138 620 102
Minority interests 35 781 29 135
Total shareholders` funds 651 919 649 237
Year ended Year ended
31-Aug 31-Aug
2011 2010
R000 R000
Non-current liabilities
Long term liability 20 000 20 000
Current liabilities
Trade and other payables 181 983 212 270
Liabilities associated with Assets held for
Sale 2 213
Total equity and liabilities 856 115 881 507
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Balance as at 1 September 620 102 554 452
Total comprehensive income for the year 23 905 73 973
Dividend paid (1 771) (361)
IFRS adjustments - share based payments 278
Capital distribution from share premium (22 873) (9 873)
Net treasury share movement (3 226) 1 633
Balance as at 31 August 616 138 620 102
CONDENSED GROUP STATEMENT OF CASH FLOWS
Cash generated /(utilized) by operating 36 559 (82 127)
activities
Cash generated from / (absorbed by) operations 84 459 (44 940)
Interest paid (8 573) (4 811)
Capital distribution/dividend paid (24 645) (8 038)
Normal tax on companies (14 682) (24 338)
Cash flows from investing activities (7 279) (8 484)
Purchase of tangible fixed assets (4 420) (5 298)
Proceeds on disposal of fixed assets 367 464
Investment in associate companies (3 088)
Increase in investment in treasury shares (3 226) (562)
Net increase / (decrease) in cash and cash 29 280 (90 611)
equivalents
Cash and cash equivalents at the beginning of 58 520 149 131
the year
Cash and cash equivalents at end of the year 87 800 58 520
NOTES
1. Basis of preparation
The audited condensed consolidated Group annual financial statements for the
year ended 31 August 2011 have been prepared in accordance with accounting
policies compliant with International Financial Reporting Standards (IFRS),
information as required by IAS 34 Interim Financial Reporting, the AC 500
Standards as issued by the Accounting Practices Board, the South African
Companies Act and the JSE Limited`s Listings Requirements. The accounting
policies and their application are consistent, in all material respects,
with those detailed in Nu-World`s 2010 annual report. All new and revised
standards that became effective during the current period were adopted and
did not lead to any significant changes in accounting policies.
2. Assets classified as held for sale
During the period under review the assets of the Group`s manufacturing
operation was transferred to "assets held for sale" in line with the
reporting requirements of IFRS 5, non-current assets held for sale and
discontinued operations.
3. Discontinued operations
The results have been adjusted for the effect of the assets held for sale in
note 2 above.
4. Audit Report
The auditors, Tuffias Sandberg KSi, issued an unqualified audit opinion on
the Group`s annual financial statements for the year ended 31 August 2011. A
copy of their audit report is available for inspection at the company`s
registered office. These condensed Group annual financial statements have
been derived from the Group annual financial statements and are consistent,
in all material respects, with the Group annual financial statements.
COMMENTARY
Trading conditions in both our local and offshore operations were extremely
difficult during the second half of the financial year. Consumer confidence
plunged in the second and third quarters of this year, suggesting that the
spending that drove the post-recession recovery has lost most of its
momentum.
The FNB-BER consumer confidence index dropped by seven index points, from
the second quarter of this year to the third quarter, resulting in a two
year low.
Consumers have been spending more conservatively during the second half of
the financial year. This uncertainty, taken in context with the struggling
global and domestic economies, has resulted in consumers holding back on
their purchases of consumer durables.
The Economic Performance subindex dropped 15 index points, from
seventeen to two, its largest decline since the middle of the global
financial crisis during the second quarter of 2008. The GDP expenditure in
the Reserve Bank`s quarterly bulletin points to a moderation in household
consumer expenditure. The post-recession recovery has been very slow and
2011 has been a year of substantial uncertainty and extremely difficult
trading conditions for the Group.
The Group`s local manufacturing division`s performance weakened during the
year due to internal and external forces, including amongst other factors,
the NUMSA wage strike which crippled the entire industry including our own
operation. Compounding the industry strike, the rand remained consistently
strong during the financial year under review, resulting in our local
manufacturing division struggling to compete against cheaper imports. These
factors coupled with the burdensome and ongoing electricity price increases
and increasing fuel costs, have led to the increasingly uncompetitive
position of our manufacturing division, necessitating its closure. This
process will be completed by the end of this calendar year.
Despite revenue from local continuing operations and offshore operations
being down 6.7% and 3.5% respectively, the Group`s diversification into new
product categories has opened up new opportunities for future growth across
a wider spectrum of retail customers. The Group`s entry into both the liquor
market and the hi-tech cellular market continues to grow. The launch of a
comprehensive range of JVC flat panel televisions has been positively
received and is proving successful. The expansion of our white goods
refrigeration range has been well received by our retail customers and
promises substantive growth in the near future.
Consumer electronic sales, post the 2010 Soccer World Cup, continue to be
sluggish. However, the new JVC flat panel televisions together with the
introduction of new ranges of LCD, LED and plasma televisions, are expected
to increase demand for this key product category in the forthcoming
financial year.
Revenue from offshore subsidiaries accounted for 40.3% of the Group`s total
turnover. The consumer durables retail industry within the Australian
economy remains under pressure and has become increasingly competitive. The
online retail environment continues to be challenging and margins in this
industry have come under further pressure. The Group`s internet retailer
OO.COM.AU continues to offer a wide range of products within a number of
diversified branded durable categories.
FINANCIAL OVERVIEW
STATEMENT OF COMPREHENSIVE INCOME
Revenue from continuing operations decreased by 5.4% to R 1 609,9 million
(August 2010 : R 1 702,0 million).
Net operating income from continuing operations decreased by 48.5% to
R 55,9 million (August 2010 : R 108,5 million).
Total comprehensive income for the year amounted to R 30,6 million (August
2010 : R 80,0 million).
Basic earnings per share and Headline earnings per share decreased by 71.1%
to 93.7 cents (August 2010 : 324.4 cents).
STATEMENT OF FINANCIAL POSITION
Current assets exceed current liabilities by circa four times, while the
Group remains ungeared.
Cash on hand amounts to R 87,8 million (August 2010 : R 58,5 million).
Inventory decreased to R 372,8 million (August 2010 : R 407,3 million) in
line with the reduced revenues.
Trade and other receivables at year end were R 244,4 million, compared with
R 267,9 million in August 2010.
Net asset value per share amounts to 2 876.4 cents (August 2010 : 2 916.7
cents).
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred during
the period between 31 August 2011 and the date of this report.
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 29,5
cents per ordinary share ("the capital distribution") for the year ended 31
August 2011.
Notice is hereby given that the board of directors ("the board") has
declared a capital distribution to ordinary shareholders from the share
premium account in lieu of a dividend.
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, 9 February 2011. The capital distribution will amount to
29,5 cents per ordinary share, based on a reduction to share premium of R 6
680 707.
The following salient dates will be applicable:
Last date to trade "cum" the capital distribution Friday, 2 December 2011
Trading commences "ex" the capital distribution Monday, 5 December 2011
Record date Friday, 9 December 2011
Date of payment Monday,12 December 2011
Share certificates may not be dematerialised or rematerialised between
Monday, 5 December 2011 and Friday, 9 December 2011, both dates inclusive.
ANNUAL REPORT
The annual report will be mailed to shareholders prior to the 31st November
2011. The annual general meeting will take place at 10h00 on Wednesday, 8
February 2012, at the registered office of the company.
PROSPECTS
The Group is currently in the process of closing and disposing of its local
manufacturing division, together with restructuring certain unprofitable
business units. On completion of the restructuring and rationalization, the
Group will have a lower overhead base and improved efficiency levels and
will be better positioned to deliver growth. The Group`s new products and
category offerings will enhance the scope for future growth.
On behalf of the board of directors
M.S. Goldberg B.H. Haikney
Executive Chairman Company Secretary
27 October 2011
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 2004 (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: 27/10/2011 17:00:02 Supplied by www.sharenet.co.za
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