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NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six
months ended 29 February 2012
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 Company" or "the Group")
Unaudited Interim Report for the six months ended 29 February 2012
* Group revenue from continuing operations increased by 21.2% to R1 122,2
million
* Net operating income from continuing operations increased by 9.7% to
R70,7 million
* EPS and HEPS (cents) increased by 2.8% to 156.7 cents
* Net asset value per share 3,000.6 cents
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2012 2011 % 2011
R`000 R`000 change R`000
Continuing operations
Revenue 1 122 187 925 964 21,2% 1 609 922
Net operating income 70 735 64 505 9,7% 55 882
Depreciation 2 267 2 158 4 677
Interest paid 7 062 4 999 8 573
Fair value adjustment on 3 128
financial instruments
Income before taxation 58 278 57 348 42 632
Taxation 14 972 13 683 7 888
Income after taxation 43 306 43 665 34 744
from continuing
operations
Discontinued operations
Revenue 7 623 28 583 55 663
Net operating loss (5 505) (4 559) (11 427)
Depreciation 21 849 1 703
Loss before taxation (5 526) (5 408) (13 130)
Taxation
Loss after taxation from (5 526) (5 408) (13 130)
discontinued operations
Total net income after 37 780 38 257 21 614
taxation
Share of associate 30 (292)
company profit/(loss)
Net profit for the 37 780 38 287 21 322
period/year
Other comprehensive
income:
Exchange differences on 6 655 6 078 9 229
translating foreign
operations
Total comprehensive 44 435 44 365 30 551
income for the
period/year
Net profit attributable
to:
Non-controlling interest 4 222 5 633 1 278
Equity holders of the 33 558 32 654 2,8% 20 044
company
37 780 38 287 21 322
Total comprehensive
income attributable to:
Non-controlling interest 7 269 9 168 6 646
Equity holders of the 37 166 35 197 23 905
company
44 435 44 365 30 551
Determination of
attributable earnings
and headline earnings
Net income attributable 33 558 32 654 2,8% 20 044
to ordinary shareholders
Headline earnings 33 558 32 654 2,8% 20 044
SUPPLEMENTARY
INFORMATION
Capital distribution 6 681
Capital distribution 29,5
from share premium
(cents)
Capital distribution per 29,5
share (cents)
Capital distribution 3,0
cover
Earnings per share 156,7 152,4 2,8% 93,6
(cents)
Headline earnings per 156,7 152,4 2,8% 93,6
share (cents)
Shares in issue 21 420 195 21 421 371 21 420 795
Shares in issue - 21 420 195 21 421 371 21 400 205
weighted
Shares in issue - 22 351 695 21 421 371 22 352 295
diluted
Operating income as a 6,3% 7,0% 3,5%
percentage of turnover
(%)
Debt to equity ratio (%) 6,6% (18,9%) (14,3%)
Effective taxation rate 28,4% 26,3% 26,7%
Net asset value per 3 000,6 2 929,0 2,4% 2 876,4
share (cents)
Intangible assets
Goodwill
At beginning of 43 484 37 991 37 991
period/year
Revaluation of goodwill 1 866 4 572 5 493
At end of period/year 45 350 42 563 43 484
Intellectual property
At beginning of 13 182 12 627 12 627
period/year
Revaluation of 464 328 555
intellectual property
At end of period/year 13 646 12 955 13 182
Total intangible assets 58 996 55 518 56 666
SEGMENTAL INFORMATION
Geographical revenue
South Africa - 692 580 511 636 938 562
continuing operations
South Africa - 7 623 28 583 55 663
discontinued operations
Offshore subsidiaries 429 607 414 328 671 360
1 129 810 954 547 18,4% 1 665 585
Geographical income
South Africa - 36 542 32 631 31 422
continuing operations
South Africa - (5 526) (5 408) (13 130)
discontinued operations
Offshore subsidiaries 2 542 5 431 1 752
33 558 32 654 2,8% 20 044
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Balance as at 1 616 138 620 102 620 102
September
Total comprehensive 33 558 32 654 20 044
income for the
period/year
Dividend paid (2 479) (1 771) (1 771)
Capital distribution (6 681) (22 873) (22 873)
from share premium
Fair value movement 2 204 2 543 3 862
Net treasury share (3 225) (3 226)
movement
Balance at end of 642 740 627 430 616 138
period/year
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
ASSETS
Fixed assets 18 320 30 488 16 774
Intangible assets 58 996 55 518 56 666
Financial assets and 2 642 54 670 54 347
other investments
Deferred taxation 5 775 6 830 8 556
Current assets
Current assets 11 892 12 490
classified as held for
sale
Investment 51 706
Inventory 484 630 403 409 372 884
Trade and other 275 590 147 086 244 385
receivables
Cash equivalents 118 739 87 800
Total assets 909 551 816 740 853 902
Equity and liabilities
Ordinary shareholders` 642 740 627 430 616 138
funds
Minority interests 43 050 38 303 35 781
Total shareholders` 685 790 665 733 651 919
funds
Long term liabilities
Non-current liabilities 20 000 20 000
Current liabilities
Bank borrowings 42 737
Short term loan 20 000
Trade and other payables 161 024 131 007 181 983
Total equity and 909 551 816 740 853 902
liabilities
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Cash(utilised)/generated (127 316) 62 772 36 559
by operating activities
Cash (absorbed (107 473) 103 997 84 458
by)/generated by
operations
Interest paid (7 062) (4 999) (8 573)
Capital (9 161) (24 644) (24 644)
distributions/dividends
paid
Normal tax on companies (3 620) (11 582) (14 682)
Cash flows from (3 221) (2 553) (7 279)
investing activities
Purchase of tangible (3 833) (2 553) (4 420)
fixed assets
Proceeds on disposal of 612 367
assets held for sale
Increase in investment (3 226)
in treasury shares
Cash flows from 0 0 0
financing activities
Proceeds on issue of
treasury shares
Net (decrease)/increase (130 537) 60 219 29 280
in cash and cash
equivalents
Cash and cash 87 800 58 520 58 520
equivalents at the
beginning of the
period/year
Cash and cash (42 737) 118 739 87 800
equivalents at the end
of the period/year
COMMENTS
FINANCIAL OVERVIEW
Following on from an exceptionally difficult year, it is rewarding to report
the beginning of a positive turnaround of the Group`s trading and financial
position. Notwithstanding a continuing trading environment which remains
difficult and exceptionally competitive, directors are pleased to report a
return to growth.
Consumer confidence remains unchanged from Q4/2011 and is currently at a
fairly neutral level. The Bureau for Economic Research (BER) retail business
confidence index has ticked up marginally following on from the strong
volume growth and rising selling prices during Q4/2011. Whilst retailers may
expect a moderation of volume growth, there is an expectation that trading
conditions will improve. Traders in both the retail and wholesale sectors
believe that the consumer is not losing steam and have expectations that
spending will continue apace during the coming months. However, the exposure
of the South African economy to international developments and CPI
inflation, forecast to remain above target for the 2012 year, suggests that
consumers may be less willing and able to spend at the same rate, as 2012
progresses.
Group revenue from continuing operations increased by 21.2% to R1 122,2
million (February 2011:R926 million).
Net operating income from continuing operations - EBITDA, increased by 9.7%
to R70,7 million (February 2011: R64,5 million).
Net profit attributable to ordinary shareholders and headline earnings,
increased by 2.8% to R33.6 million (February 2011: R32,7 million).
Headline earnings per share - ("HEPS"). increased by 2.8% to 156.7 cents
(February 2011: 152.4 cents).
At this time it is essential that all companies in the Group are focused on
working capital management, reducing stock levels and improving debtors`
collection days. The current high level of inventories at R484,6 million is
due to the company stocking up of our new product categories as well as an
increased winter appliance range, for sale during the second half of the
financial year. It is anticipated that stock levels will decline by the
financial year end. There was a substantial increase in revenue in the last
quarter of the reporting period, which resulted in a corresponding increase
in trade receivables.
It is anticipated that cash utilised by operations will turn positive by the
end of the financial year or shortly thereafter.
The net asset value per share is up 2.4% to 3 000.6 cents (February 2011: 2
929.0 cents). The share is trading at an approximate discount to net asset
value of 42% with the share currently trading in the region of 1 750 cents.
OPERATIONAL REVIEW
The Group`s line-up of international and in-house value brands encompass an
ever increasing spread of consumer durables within six key market categories
which include: consumer electronics, hi-tech, small electrical appliances,
white goods, liquor and furniture. Hi-Tech products currently being
introduced include TPADS (Telefunken tablets), mobile internet devices and
netbooks. Our recent launch of JVC flat panel televisions, including LCD`s,
LED`s, and Plasmas, is making excellent inroads in the retail market.
Offshore subsidiaries accounted for 38.0% of revenues, down from 43.4% in
2011, but the percentage of income generated from offshore subsidiaries
decreased from 16.6% for the interim period to February 2011 to 7.6% for the
period under review. Our Australian subsidiaries continue to trade in an
intensely competitive environment.
PROSPECTS
Internationally we continue to invest in our brands. We operate in fast
changing markets in South Africa and Australia, which necessitates the
introduction of new updated ranges of products. We take into account that
consumers face new strains on their budgets and we believe that consumers
are looking for good value for money within the known brand arena. The
retail business in particular is not taking the market for granted and we
are seeing more special deals, every-day low prices as consumers respond to
competitive price points.
During the course of the six months preceding the period under review, the
Board took the decision to close the manufacturing division. A number of
reasons brought the Board to this conclusion: including the burdensome and
ongoing electricity price increases, increasing fuel costs as well as the
high cost of raw materials. During the period under review, the Company
started to sell off the asset held for sale, including plant and machinery,
moulds and dies and raw materials.
Exports into Africa are increasing, but we have taken cognisance that the
African market is discerning in terms of good quality value for money
products.
The Group`s line-up of key international and local brands, across an
increasingly broad range of product categories and income groups, has
produced ongoing growth over many challenging years. Directors continue to
prioritise working capital management, lower inventory target levels, higher
stock turns and a number of cost-cutting initiatives.
REPORTING ENTITY
Nu-World Holdings Limited is a holding company with operations in both South
Africa and Australia. The condensed consolidated interim financial
statements as at and for the period ended 29 February 2012 comprise the
Company, its subsidiaries and interest in associates.
BASIS OF PREPARATION
These condensed consolidated interim financial statements for the six months
ended 29 February 2012 have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the AC 500 standards as issued by the
Accounting Practices Board or its successors, the Companies Act, No 71 of
2008 (as amended), comply with the disclosure requirements of IAS 34:
Interim Financial Reporting and the JSE Limited Listings Requirements. The
condensed consolidated financial statements have been prepared under the
historical cost convention.
The accounting policies used in the preparation of these results are in
accordance with IFRS and consistent in all material respects with those used
in the audited annual financial statements for the year ended 31 August
2011.
The condensed consolidated interim financial statements are presented in
Rand rounded to the nearest thousand (`000).
The condensed consolidated statement of financial position at 29 February
2012 and the related condensed statements of comprehensive income, statement
of changes in equity and cash flows for the six months then ended, have not
been reviewed or reported on by the Group`s auditors. These condensed
consolidated interim financial statements have been prepared under the
supervision of Graham Hindle CA (SA), the Financial Director of the Group.
SUBSEQUENT EVENTS
No events material to the understanding of the report have occurred during
the period between 29 February 2012 and the date of this report.
On behalf of the board of directors
M.S. Goldberg B.H. Haikney
Executive Chairman Company Secretary
9 May 2012
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: 09/05/2012 17:00:01 Supplied by www.sharenet.co.za
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