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NU-WORLD HOLDINGS LIMITED - Financial Results - Interims

Release Date: 16/04/2014 17:00
Code(s): NWL     PDF:  
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Financial Results - Interims

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 2014
 
Group revenue from continuing operations increased by 15.4%to R1 035,3 million
Net profit for the period increased by 22.9% to R36,2million
Basic EPS / HEPS (cents) increased by 15.6% to 160.2 cents
Net asset value per share 3 268,6 cents. Cash on hand R72,4 million
 
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
 
Unaudited Unaudited Audited 
                                      6 Months           6 Months               12 Months 
                                      28 February        28 February            31 August
                                      2014               2013             %     2013 
                                      R’000              R’000           change R’000 
Continuing operations
Revenue                               1 035 292          897 514         15,4%   1 684 064 
Net operating income                  54 087             52 362                  72 175 
Depreciation                          704                964                     1 875 
Interest paid                         3 267              5 856                   7 225 
Fair value adjustment on
financial instruments                 1 190              3 609 
Income before taxation                48 926             41 933                  63 075 
Taxation                              12 994             11 302                  14 513 
Income after taxation from continuing
operations                            35 932             30 631          17,3%   48 562 
Discontinued operations
Revenue                                                  235 555                 258 893 
Net operating income                  294                3 026                  (11 148)
Net operating
profit/(loss)                         294                3 026                  (11 148)
Depreciation                                             1 853                    2 141 
Interest paid                                            1 682                    1 196 
Loss before taxation                  294               (509)                   (14 485)
Taxation                                                 648                      5 407 
Non-controlling interest                                (12)                     (7 412)
Loss after taxation from
discontinued operations               294               (1 145)                 (12 480)
Total net income afte
taxation                              36 226             29 486                  36 082 
Share of associate company profit                                                   24 
Net profit for the period/year        36 226             29 486          22,9%   36 106 
Other comprehensive income: 
Exchange differences on
translating foreign
operations                            3 111              8 742                    5 481
Total comprehensive
income for the period/year            39 337             38 228                  41 587
Net profit attributable to:           1 942             (204)                     (351) 
Non-controlling interest
Equity holders of the company         34 284             29 690          15,5%   36 457
                                      36 226             29 486          22,9%   36 106  
Total comprehensiveincome 
attributable to: 
Non-controlling interest              3 206              3 500                    1 877 
Equity holders of the company         36 131             34 728                  39 710  
                                      39 337             38 228                  41 587  

Headline earningsreconciliation: 
Determination of comprehensive income 
and headline earnings
Net profit attributable
to ordinary shareholders              34 284             29 690          15,5%   36 457
Less IAS16 gains ondisposal of plant 
and equipment                                                                   (20 992) 
Add IAS38 impairment of
intangible assets                                                                29 128 
Total non-controlling  
interest effect of adjustments                                                   (3 307)
Headline earnings                    34 284              29 690          15,5%   41 286  

SUPPLEMENTARY INFORMATION 
Capital distribution                                                             13 452
Dividend paid                                                                      59,4
Dividend cover                                                                      2,7 
Basic earnings per share(cents)      160,2               138,6           15,6%    170,2 
Headline earnings per
share (cents)                        160,2               138,6           15,6%   192,80 
Diluted basic earnings
per share (cents)                    153,7               132,8           15,7%    163,1
Shares in issue 
(total issued)                       22 646 465          22 646 465           22 646 465
Shares in issue 
(less treasury shares)               21 369 543          21 418 695           21 417 695
Shares in issue - weighted           21 394 786          21 418 695           21 417 695
Shares in issue - diluted            22 301 043          22 350 195           22 349 195 
Operating income as a
percentage of turnover(%)            5,2%                5,8%                     4,3%
Debt to equity ratio (%)            (10,4%)              5,1%                   (16,3%)
Effective taxation rate 
- continuing operations              26,6%               27,0%
                  23,0%
Net asset value per share (cents)    3 268,6             3 129,5         
4,4%   3 165,4 
Intangible assets
Goodwill 
Balance at beginning of period/year  29 510              43 484                 47 773
Impairment during period                                                       
(22 381)
Translation difference               721                 6 323                  
4 118
Balance at end of 
period/year                          30 231              49 807                 29 510
Intellectual property
Balance at beginning of
period/year                                              14 155                 14 155
Impairment during period                                                       (14 155)
Translation difference                                   265
Balance at end of period/year                            14 420
Patent and trademark: 
Balance at beginning of period/year 31 706                                      31 706
Impairment during period
Balance at end of period/year       31 706                                      31 706
Total intangible assets             61 937               64 227                 61 216

SEGMENTAL INFORMATION 

Geographical revenue
South Africa -
continuing operations               669 157              689 207             1 242 044
Offshore subsidiaries – 
continuing operation                366 135              208 307               442 020
Offshore subsidiaries – 
discontinued operation                                   235 555               258 893 
                                    1 035 292            1 133 069           1 942 957
Geographical income
South Africa - 
continuing operations               25 370               27 221                 41 441
Offshore subsidiaries – 
continuing operation                8 620                3 614                   7 496
Offshore subsidiaries – 
discontinued operation              294                 (1 145)                (12 480)
                                    34 284               29 690                 36 457   

 


CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
 

                                    Unaudited          Unaudited          Audited 
                                    6 Months           6 Months           12 Months 
                                    28 February        28 February        31 August 
                                    2014               2013               2013 
                                    R’000              R’000              R’000 
ASSETS 
Fixed assets                        33 181             44 178             32 624 
Intangible assets                   61 937             64 227             61 216 
Financial assets and 
other investments                   94                 31 776             94 Deferred taxation                   6 699              5 200              9 563 
Current assets 
Inventory                           408 493            502 274            377 459 
Trade and other receivables         313 452            261 434            289 854 
Cash equivalents                    72 433                                122 372 
Total assets                        896 289            909 089            893 182 
Equity and liabilities
Ordinary shareholders’
funds                               698 485            670 295            677 956 
Minority interests                  36 904             44 939             33 155 
Total shareholders’ funds           735 389            715 234            711 111 
Current liabilities 
Bank borrowings                                        34 196             12 166 
Trade and other payables            160 900            159 659            169 905 Total equity and liabilities        896 289            909 089            893 182 

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY 

                                    Unaudited          Unaudited          Audited 
                                    6 Months           6 Months           12 Months 
                                    28 February        28 February        31 August 
                                    2014               2013               2013 
                                    R’000              R’000              R’000 
Balance as at 1 September           677 956            652 371            652 371 
Total comprehensiveincome 
for the period/year                 34 284             29 690             36 457 
Dividend paid                      (13 452)           (14 476)           (12 795)
Fair value movement                 648                2 710              7 003 
Treasury share movement            (951)                                 (83)
Reserves net of NCI movement                                             (4 997) 
Balance at end of period/year       698 485            670 295            677 956 

CONDENSED GROUP STATEMENT OF CASH FLOWS
 

                                    Unaudited          Unaudited         Audited  
                                    6 Months           6 Months          12 Months  
                                    28 February        28 February       31 August 
                                    2014               2013              2013  
                                    R’000              R’000             R’000  

Cash generated/(utilised) by 
operating activities                (35 755)           29 274            123 375
  Cash (absorbed) by/generated 
  from operations                   (7 985)            58 792            157 160
  Interest paid                     (3 267)           (7 538)           (7 226)
  Dividends paid                    (13 452)          (14 476)          (12 795)
  Normal tax on companies           (11 051)          (7 504)           (13 764)
Cash flows from     
investing activities                (2 018)           (8 830)            41 472
  Purchase of tangible 
  fixed assets                      (1 250)           (29 344)          (27 169)
  Purchase of intangible 
  fixed assets                                        (31 706)          (31 706)
  Proceeds on disposal of 
  fixed assets                       183                                 3 037  
  Proceeds on disposal of
  subsidiary assets                                    514               45 174
  Redemption of
  preference share issue                               51 706            51 706
  Investment in treasury
  shares                           (951)                                (84)
  Decrease in loan to    
  associate company                                                      514
Net (decrease)/increase
in cash and cash    
equivalents                        (37 773)            20 444            164 846
Cash and cash    
equivalents at the
beginning of the year               110 206           (54 640)          (54 640)
Cash and cash    
equivalents at the endof the 
period/year                         72 433            (34 196)           110 206  

COMMENTARY  

Corporate information 

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

Basis of preparation
These condensed consolidated interim financial statements for the six months ended 28 February 2014 have been prepared inaccordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides asissued by the Accounting Practices Committee, the Companies Act, No 71 of 2008 (as amended) and comply with the disclosure requirements of IAS 34: Interim Financial Reporting. 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 2013. 

The condensed consolidated interim financial statements are presented in Rand rounded to the nearest thousand (‘000). 

The condensed consolidated statement of financial position at 28 February 2014 and the related condensed statements of comprehensive income, statement of changes in equity and cashflows for the six months then ended, have not been reviewed orreported on by the Group’s auditors. 

The interim financial statements have been prepared under thesupervision of Graham Hindle CA (SA) in his capacity as Financial Director. 

Discontinued operation
The comparative discontinued operation information relates to the disposal of the Group’s Australian investment in Golf & Sport Pty Limited in addition to selling a substantial portion of the assets and liabilities of its Australian subsidiary Nu-World Australia Pty Ltd (formally known as OO Australasia Pty Limited). The comparative figures have been re-presented. 

Operating results
The Group produced satisfactory results for the period ended 28 February 2014 despite trading within a subdued economy with stagnant consumer spending. The South African consumer environment remains difficult and sales growth may be under some pressure for the remainder of the financial year.
 
In South Africa, the retail sales growth decelerated to 2,8% for the 2013 year, from 4,6% in 2012. Much of the moderation in the growth momentum occurred in the second half of 2013 when the extent of the increase in cost of living began to intensify and lenders tightened lending standards. The underlying trend, depicted by the 6 and 12 month rolling retail sales averages, does not indicate that there will be a meaningful recovery in retail sales growth in the coming months. Trade conditions surveyed for the first quarter of 2014 suggest that consumption of retail goods may moderated during 2014. 

These considerations are consistent with softer consumer 
spending. Presently, there is little to suggest that economic
activity in South Africa will ramp significantly higher
anytime soon. 


The directors are pleased to report on positive top-line 
growth in continuing operations and positive earnings growth 
attributable to equity holders of the company, despite the
trading period being challenging. 


The marketing and sales of the JVC visual category in our
export territories showed good improvement with Australia and 
certain Middle East countries performing above expectations.
The visual category is the largest single category in consumer 
electronics. 


Shipments of JVC visual products were delivered to numerous 
countries in Africa, Middle East, CIS and Australasia 
territories during the period under review. The finalisation 
of other countries to take place shortly.
 

The small appliance division continued to show strong growth 
under its full range of brands. The summer range of fans, air
coolers and air conditioners showed particularly strong growth
 in the period under review. The early acceptance of winter
stock lines into the stores was also noticeable. Sales of 
branded liquor lines continued to grow and showed strong
future growth potential. 


FINANCIAL OVERVIEW 


STATEMENT OF COMPREHENSIVE INCOME 


Group revenue from continuing operations increased by 15,4% to 
R 1 035,3 million (February 2013 – R 897,5 million).


Net profit for the period increased by 22,9% to R 36,2 million 
(February 2013 – R 29,5 million).

Total attributable income for the period increased by 15,5% to
R 34,3 million (February 2013 – R 29,7 million). 


STATEMENT OF FINANCIAL POSITION 


The balance sheet remains strong with a negative gearing ratio
(debt:equity) of 10,4%.


Inventory levels of R 408,5 million decreased by 18,7% from 
February 2013 (R 502,3 million). Directors and management
 remain focused on improving working capital management.
Stocking levels and ranges are being rationalised and stock
turn rates will improve further going forward.


The increase in trade and other receivable of 19,9% to R 313,4 
million (February 2013 – R 261,4 million) arose due to the 
substantial increase in offshore subsidiaries turnover 
together with the requirement for import trade deposits.
 Net asset value per share has increased by 4,4% to 3 268,6
cents (February 2013 – 3 129,5 cents). 


SUBSEQUENT EVENTS 

No events material to the understanding of the report have occurred during the period between 28 February 2014 and the date of this report. 
 
On behalf of the board of directors
  
J.A. Goldberg                   G.R. Hindle
Chief Executive Officer         Financial Director  

16 April 2014
Johannesburg

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 Officer)
G.R. Hindle (Financial Director) 

Non-executive directors 
J.M. Judin (Lead), D. Piaray, R. Kinross 
www.nuworld.co.za 



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