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NU-WORLD HOLDINGS LIMITED - Audited financial statements for the year ended 31 August 2013 and a dividend declaration

Release Date: 24/10/2013 17:00
Code(s): NWL     PDF:  
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Audited financial statements for the year ended 31 August 2013 and a dividend 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 2013 AND A
DIVIDEND DECLARATION

CASH GENERATED FROM OPERATIONS             R 157,2 MILLION      (+244.9%)
NET ASSET VALUE PER SHARE (CENTS)            3 165,4 CENTS      (+3.9%)
DIVIDEND PER SHARE (CENTS)                      59,4 CENTS      (+5.1%)
HEPS (CENTS)                                   192,8 CENTS      (+7.6%)
GROUP REVENUE FROM CONTINUING OPERATIONS R 1 684,1 MILLION      (-1,9%)

                                        Year ended     Year ended
                                            31-Aug         31-Aug
                                              2013           2012            %
                                              R000           R000       change
CONDENSED GROUP STATEMENT OF
COMPREHENSIVE INCOME
CONTINUING OPERATIONS
Revenue                                  1 684 064     1 716 071          -1,9%

Net operating income                        72   175       84   916
Depreciation                                 1   875        1   976
Interest paid                                7   225       11   582
Income before taxation                      63   075       71   358
Taxation                                    14   513       12   068
Income after taxation from continuing       48   562       59   290
operations

DISCONTINUED OPERATIONS
Loss after taxation from discontinued     (12 480)       (16 667)
operations

Total net income after taxation             36 082         42 623
Share of associate company income               24             28
Net profit for the year                     36 106         42 651

Other comprehensive income:
Exchange differences on translating          5 481         10 774
foreign operations
Total comprehensive income for the          41 587         53 425
year
Total profit attributable to:
Non-controlling interest                     (351)          4 256
Equity holders of the company               36 457         38 395           -5,0%
                                            36 106         42 651

Total comprehensive income
attributable to:
Non-controlling interest                     1 877         10 511
Equity holders of the company               39 710         42 914
                                            41 587         53 425
                                       Year ended   Year ended
                                           31-Aug       31-Aug
                                             2013         2012        %
                                             R000         R000   change
Headline earnings reconciliation:
Determination of attributable
earnings and headline earnings:
Net profit attributable to ordinary        36 457       38 395
shareholders
Less IAS 16 gains on disposal of         (20 992)            -
plant and equipment
Add IAS 38 impairment of intangible        29 128            -
assets
Total non-controlling interest            (3 307)            -
effects of adjustments
Headline earnings                          41 286       38 395    +7,5%
OTHER GROUP INFORMATION
Dividend – proposed / paid                 13 452       12 795    +5,1%
Earnings per share (cents)                  170,2        179,2    -5,0%
Headline earnings per share (cents)         192,8        179,2    +7,6%
Dividend per share (cents)                   59,4         56,5    +5,1%
Dividend cover                               2,71          3,0
Interest cover                                9,7          7,2   +34,7%
Shares in issue (total issued)         22 646 465   22 646 465
Shares in issue (less treasury         21 417 695   21 418 695
shares)
Shares in issue – weighted             21 417 695   21 420 083
Shares in issue – diluted              22 349 195   22 350 195
Operating income from continuing             4,3%         4,9%
operations as percentage of revenue
(Negative debt) / net debt to equity      (16,3)%         8,4%
ratio (%)
Effective taxation rate (%) –               23,0%        16,9%
continuing operations
Net asset value per share (cents)         3 165,4      3 045,8    3,9%
Intangible assets
Goodwill
Cost                                       47 773       43 484
Accumulated amortization and             (18 263)        4 289
impairment
Net carrying amount                        29 510       47 773
Intellectual property
Cost                                       14 155       13 182
Accumulated amortization and             (14 155)          973
impairment
Net carrying amount                             -       14 155
Patents and trademarks
Cost                                       31 706            -
Accumulated amortization and
impairment
Net carrying amount                        31 706            -

Total intangible assets                    61 216       61 928
SEGMENTAL INFORMATION

                                         Year ended   Year ended
                                             31-Aug       31-Aug
                                               2013         2012             %
                                               R000         R000        change
Geographical revenue
South Africa – continuing operations     1 242 044    1 362 569
South Africa – discontinued                      -        8 859
operations
Offshore subsidiaries                       442 020      353 502
Offshore subsidiaries – discontinued        258 893      398 429
operations
                                         1 942 957    2 123 359          -8,5%
Geographical income
South Africa – continuing operations         41 441      56 349
South Africa – discontinued                       -    (18 217)
operations
Offshore subsidiaries                         7 496      (1 287)
Offshore subsidiaries – discontinued       (12 480)        1 550
operations
                                             36 457         38 395       -5,0%

                                                  Year ended         Year ended
                                                      31-Aug             31-Aug
                                                        2013               2012
                                                        R000               R000
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
ASSETS
Non-current assets
Fixed assets                                           32 624           17 651
Intangible assets                                      61 216           61 928
Financial assets and other investments                     94              584
Deferred taxation                                       9 563            6 938
Current assets
Financial assets                                              -         51   706
Inventory                                             377   459        481   689
Trade and other receivables                           289   854        318   308
Cash equivalents                                      122   372         10   085
Total assets                                          893   182        948   889
EQUITY AND LIABILITIES
Ordinary shareholders’ funds                          677 956          652 371
Minority interests                                     33 155           43 812
Total shareholders’ funds                             711 111          696 183
Current liabilities
Bank overdraft                                         12 166           64 725
Trade and other payables                              169 905          187 981
Total equity and liabilities                          893 182          948 889
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

                                                 Year ended    Year ended
                                                     31-Aug        31-Aug
                                                       2013          2012
                                                       R000          R000
Balance as at 1 September                           652 371       616 138
Total attributable income for the year               36 457        38 395
Dividend paid                                      (12 795)             -
Capital distribution from share premium                   -       (6 681)
Fair value movement                                   7 003         4 519
Treasury share movement                                (83)             -
Reserves net of NCI movement                        (4 997)             -
Balance as at 31 August                             677 956       652 371

CONDENSED GROUP STATEMENT OF CASH FLOWS
 Cash generated from /(utilized by) operating        123 430    (139 362)
 activities
 Cash generated from /(absorbed by) operations       157 214    (108 511)
 Interest paid                                       (7 225)     (13 224)
 Dividend paid                                      (12 795)      (9 161)
 Normal tax on companies                            (13 764)      (8 466)
 Cash flows from investing activities                 40 985      (3 078)
 Purchase of tangible fixed assets                  (27 225)      (5 874)
 Purchase of intangible assets                      (31 706)            -
 Proceeds on disposal of fixed assets                  3 036          114
 Proceeds on disposal of assets held for sale              -        2 711
 Proceeds on disposal of discontinued                 45 174            -
 operations assets
 Decrease in loan to associate company                     -           (29)
 Proceeds on disposal of financial assets             51 706              -
 Cash flows from financing activities                    431              -
 Decrease in loan to associate company                   514
 Purchase of treasury shares                            (83)
 Net increase / (decrease) in cash and cash          164 846    (142 440)
 equivalents
 Cash and cash equivalents at the beginning of      (54 640)       87 800
 the year
 Cash and cash equivalents at end of the year        110 206     (54 640)

COMMENTARY
Corporate information
Nu-World is a limited liability company incorporated and domiciled in
South Africa with subsidiaries and associates in Lesotho, Australia and
Hong Kong. The main business of Nu-World, its subsidiaries, joint
ventures and associates is the importing, assembling, marketing and
distribution of branded consumer durables including consumer electronics,
hi-tech, small electrical appliances, white goods, liquor and furniture.

Basis of preparation
The audited condensed consolidated Group annual financial statements for
the year ended 31 August 2013 have been prepared in accordance with the
framework concept and measurement and recognition requirements of
International Financial Reporting Standards (IFRS), and information
required by IAS34: Interim Financial Reporting, the SAICA Reporting
Guides as issued by the Accounting Practices Committee and Financial
Reporting Pronouncements as issued by the Financial Reporting Standards
Council, the JSE Limited’s Listings Requirements and the requirements of
the Companies Act of South Africa. The accounting policies and their
application are consistent, in all material respects, with those detailed
in Nu-World’s 2012 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.
The annual financial statements were prepared under the supervision of
the Financial Director, G R Hindle CA(SA).

Auditor’s opinion
The independent auditors, Tuffias Sandberg KSi, have issued their
unqualified audit opinion on the Group’s annual financial statements and
this set of condensed financial statements for the year ended 31 August
2013. The audit was conducted in accordance with International Standards
on Auditing. The directors take full responsibility for the preparation
of this condensed report and the financial information has been correctly
derived from the Group financial statements and are consistent in all
material aspects with the Group financial statements. Their unqualified
audit report for this set of condensed financial information and the
annual financial statements are available for inspection at the Company’s
registered office.

Discontinued operations
During the year under review, the Group disposed of its Australian
investment in Golf & Sports Pty Limited in addition to selling a
substantial portion of the assets and liabilities of its Australian
subsidiary OO Australasia Pty Limited, incurring a gross loss of R 21,0
million arising from the Groups fair valuing of its goodwill and
intellectual property invested in this company. The comparative
information relates to the disposal of the local manufacturing division,
the discontinuation of the Chinese wholesale operation and the re-
presented comparatives for the sale of the above mentioned Australian
subsidiaries.
                                             Year ended    Year ended
                                                 31-Aug        31-Aug
                                                   2013          2012
 Revenue                                        258 893       407 288
 Loss from operations                          (11 148)       (9 688)
 Depreciation                                     2 141         3 727
 Interest paid                                    1 196         1 642
 Loss before taxation                          (14 485)      (15 057)
 Taxation                                         5 407         1 610
 Loss attributable to outside shareholders      (7 412)             -
 Groups share of loss from discontinued        (12 480)      (16 667)
 operations

OPERATING RESULTS
Retailers in South Africa, Africa’s biggest economy, are struggling to
achieve greater sales growth as consumers curtail spending due to high
personal debt levels, unemployment, rising fuel and transport prices, and
increased inflationary pressure. Retail sales are subdued indicating that
the financial health of consumers is not as robust as in previous years.
The number of consumers in SA with impaired credit records has risen
significantly. Consumer confidence reached a nine year low in Q1 2013,
recovering marginally in Q2 2013. Business confidence edged lower as
labour unrest, fragile economic growth, rising inflation and a weaker
Rand have weighed heavily on consumer and business sentiment.
At 31 August 2012 the Rand traded at R 8.40 against the USD and weakened
to R 10.24 at 31 August 2013. This represents a 21,9% devaluation against
the dollar this year. The Rand was the third weakest currency (after the
Turkish lira and the Indian rupee) amongst a basket of emerging market
currencies as traded against the dollar and tracked by Reuters.

Consumer electronics performance started to improve towards the end of
the financial year. JVCKENWOOD of Japan has granted the Nu-World Group of
companies the rights for JVC visual products in certain territories in
Africa, Middle East, CIS and Australasia. The population within these
territories is approximately 1.7 billion people, so the potential for
growth is substantial. Shipments were executed to the following countries
during the year under review - Angola, Algeria, Bahrain, Congo, Georgia,
Jordan, Kazakhstan, Libya, Morocco, Saudi Arabia, UAE and Uganda.
Distributors and/or orders received for the following countries –
Australia, Ethiopia, Ghana, Ivory Coast, Iraq, Kenya, Nigeria, New
Zealand, Qatar, Rwanda and Tanzania. The finalization of other countries
to take place shortly. Consumer electronics under the JVC brand performed
particularly well during the year under review. This tier one premium
brand has been well received in the African continent, the Middle East
and Australia.

Small domestic appliances continue to perform well under the Sunbeam
brand together with the recently launched premium range, Prima One &
Only. Our kettle, urn and mixer range performed particularly well. The
extended furniture range, inclusive of bedding, kitchenettes and outdoor
furniture showed good growth during the year under review.

STATEMENT OF COMPREHENSIVE INCOME
Group revenue from continuing operations decreased by 1.9% to R 1 684,1
million (August 2012 – R1 716,1 million) due to the struggling economy.
Interest paid improved by 37.6% to R 7,2 million (August 2012 - R 11,6
million) due to the lower stock levels and reduced borrowings.
Income before taxation from continuing operations decreased by 11.6% to
R 63,1 million (August 2012 - R 71,3 million) due to lower margins
arising from the weaker Rand.
Total attributable income for the year decreased by 5.0% to R 36,5
million (August 2012 – R 38,4 million).
Earnings per share – EPS decreased 5.0% to 170.2 cents (August 2012 –
179.2 cents). HEPS increased 7.6% to 192.8 cents (August 2012 – 179.2
cents).
Dividend per share increased 5.1% to 59.4 cents (August 2012 – 56.5
cents). Dividend cover increased to 2.75 times.

STATEMENT OF FINANCIAL POSITION
The balance sheet remains strong with a negative gearing ratio (debt :
equity) of 16.3%.
The increase in fixed assets arose primarily from the acquisition of
previously leased land and buildings.
Inventory levels of R 377,4 million have decreased due to the improved
stock turn and working capital management.
Stocking levels and ranges are being rationalized and stock turn rates
will improve even further going forward.
Net asset value per share has increased by 3.9% to 3,165.4 cents (August
2012 – 3,045.8 cents).
Trade and other receivables of R 289,9 million have decreased due to
improved debtor collection days and strong debt collection at financial
year end.

CASH FLOW
Cash generated from operating activities amounted to R 157,2 million
(2012 : absorbed by operations R 108,5 million) attributed to reduced
inventory levels, improved debtor collections and better working capital
management. Cash generated, from the drive to improve working capital
management further, will be used to reduce short-term borrowings and
increase financial investments.

CONTINUING OPERATIONS
The South African business operations contributed 74% of the group’s
continuing operations revenue and 85% of group continuing operations
income. Offshore operations account for 26% of turnover and 15% of
income. At the beginning of October 2012, the Reserve Bank of Australia
cut its benchmark interest rate to 3.25%, the lowest level since 2009, in
an effort to support the economy and revive consumer demand. The
Australian economic environment remains challenging and competitive.

TRANSFORMATION
Management has continued to meaningfully extend its initiatives in
employment equity, enterprise development and corporate social investment
during the period. The Group is committed to a process of further
transformation and economic empowerment of its stakeholders, such that an
acceptable balance between the operatives and commercial benefits of such
a process can be achieved, thereby ensuring the sustainability of the
Group in a competitive market sector.

BOARD OF DIRECTORS
No changes were made to the board of directors during the year under
review.

CORPORATE ACTIVITIES
On 21 January 2013, Nu-World acquired the remaining 49,9% of Palsonic
Hong Kong Limited for a nominal amount and changed the name of the
company to Nu-World Global Pty Limited.

On 24 April 2013, the Group disposed of its 51% investment in Golf &
Sports Pty Limited. In addition, it sold a substantial part of the assets
and liabilities of its subsidiary OO Australasia Pty Limited for a total
consideration of AUD 6,22 million. Subsequently OO Australasia Pty
Limited was renamed Nu-World Australia Pty Limited.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE ASPECTS
The Group subscribes to, and applies in, all material aspects with the
Code on Corporate Governance Practices and Conduct as contained in the
King III Report on Corporate Governance. Nu-World is committed to
transparent and integrated reporting in the spirit of King III and the
Global Reporting Initiative (GRI).
Initiatives include the reduction in energy consumption through ongoing
staff awareness programmes, the replacement of equipment with energy-
efficient units and by installing Power Management System (PMS) devices.
These installations will significantly reduce our overall electricity
footprint.
Nu-World   has  introduced   community  support  and   corporate  social
investment. The group focuses our efforts on children’s needs, in
particular the handicapped, supports charities and community facilities.

SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred
during the period between 31 August 2013 and the date of this report.

DECLARATION OF FINAL DIVIDEND
Notice is hereby given that a final gross dividend of 59,4 cents per
share (2012: 56,5 cents per share) was declared on 24 October 2013
payable to shareholders recorded in the register of Nu-World at the close
of business on the record date appearing below.
The salient dates pertaining to the final dividend are as follows:

Last date to trade ‘’cum’’ dividend     Friday, 29 November 2013
Date trading commences
‘’ex’’ dividend                         Monday, 2 December 2013
Record date                             Friday, 6 December 2013
Date of payment                         Monday, 9 December 2013

Ordinary share certificates may not be dematerialised or rematerialised
between Monday, 2 December 2013 and Friday, 6 December 2013, both days
inclusive.

In determining the dividend withholding tax (DWT) of 15% to withhold in
terms of the Income Tax Act for those shareholders who are not exempt
from the DWT, the total secondary tax on companies (STC) credits utilized
as part of this declaration amount to R 13,452,000.21 and consequently
the STC credits utilized per share amount to 59,4 cents per share.
Shareholders who are not exempt from the DWT will therefore receive a
dividend of 59,4 cents net of DWT. Nu-World has 22 646 465 ordinary
shares in issue and its income tax reference number is 9100/085/71/2.

Where applicable, dividends in respect of certificated shares will be
transferred electronically to shareholders’ bank accounts on the payment
date. In the absence of specific mandates, dividend cheques will be
posted to shareholders. Ordinary shareholders who hold dematerialised
shares will have their accounts at their CSDP or broker credited on
Monday, 9 December 2013.

ANNUAL REPORT
The 2013 Integrated Annual report will be mailed to shareholders prior to
the end of November 2013. The annual general meeting will take place at
10h00 on Wednesday, 12 February 2014, at the registered office of the
Company.

COMPANY OUTLOOK
The Company is focusing on increasing volumes as it remains a driver of
performance across its operations.

The directors are hopeful that the trend of rising impairments and
unemployment, slowing income and GDP growth, should begin reversing in
2014.

The Group is continuing to place increased focus on its successful
working capital management in an effort to reduce finance costs and
strengthen the balance sheet further.
The Group is negotiating additional distribution rights of the JVC visual
brand for other territories. Countries on other continents are being
investigated, analyzed and validated.


On behalf of the board of directors
J.A. Goldberg                                    B.H. Haikney
Chief Executive Officer                          Company Secretary
24 October 2013

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: 24/10/2013 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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