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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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