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Audited condensed consolidated Annual Financial Statements for the year ended 31 August 2014 & 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 CONDENSED CONSOLIDATED ANNUAL FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2014
AND A DIVIDEND DECLARATION
GROUP REVENUE FROM CONTINUING OPERATIONS R2 108,1 MILLION + 25.2%
PROFIT AFTER TAXATION R 78,6 MILLION +117.9%
EPS (CENTS) 351,6 CENTS +106.6%
DIVIDEND PER SHARE (CENTS) 110,6 CENTS + 86.2%
NET ASSET VALUE PER SHARE (CENTS) 3 476,3 CENTS + 9.8%
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
31-Aug 31-Aug
2014 2013 %
R000 R000 change
CONTINUING OPERATIONS
Revenue 2 108 073 1 684 064 25,2%
Net operating income 115 617 72 175
Depreciation 1 915 1 875
Interest paid 4 356 7 225
Fair value adjustment of
financial instruments 4 465
Income before taxation 104 881 63 075
Taxation 26 256 14 513
Income after taxation from
continuing operations 78 625 48 562
DISCONTINUED OPERATIONS
Loss after taxation from
discontinued operations (12 480)
Total net income after
taxation 78 625 36 082 117,9%
Share of associate
company income 13 24
Net profit for the year 78 638 36 106
Other comprehensive income:
Exchange differences on
translating foreign operations 7 241 5 481
Total comprehensive income
for the year 85 879 41 587
Total profit attributable to:
Non-controlling interest 3 475 (351)
Equity holders of the company 75 163 36 457 106,2%
78 638 36 106
Total comprehensive income
attributable to:
Non-controlling interest 6 798 1 877
Equity holders of the company 79 081 39 710
85 879 41 587
Headline earnings
reconciliation:
Determination of attributable
earnings and headline earnings:
Basic and diluted basic
earnings 75 163 36 457 106,2%
Less IAS 16 gains on
disposal of plant and
equipment (156) (20 707)
Add IAS 38 impairment of
intangible assets 36 536
Less IFRS 10 gain on
disposal of subsidiary (4 448)
Total tax effects of adjustment 44 7 552
Total non-controlling interest
effects of adjustments (7 613)
Headline earnings 75 051 47 777 57,1%
OTHER GROUP INFORMATION
Dividend – proposed / paid 25 047 13 452 86,2%
Earnings per share (cents) 351,6 170,2 106,6%
Headline earnings per
share (cents) 351,1 223,1 57,4%
Diluted earnings per
share (cents) 337,3 163,1
Dividend per share (cents) 110,6 59,4 86,2%
Dividend cover (times) 3,0 2,71
Interest cover (times) 26,1 9,7
Shares in issue (total issued)22 646 465 22 646 465
Shares in issue
(less treasury shares) 21 354 720 21 417 695
Shares in issue – weighted 21 377 497 21 417 695
Shares in issue – diluted 22 286 220 22 349 195
Operating income from
continuing operations as
percentage of revenue 5,5% 4,3% 28,0%
(Negative debt) to
equity ratio (9,2)% (16,3)%
Effective taxation rate –
continuing operations 25,0% 23,0%
Net asset value per
share (cents) 3 476,3 3 165,4 9,8%
Intangible assets
Goodwill and amortization
Balance at beginning of year 29 510 47 773
Amount impaired during year (22 380)
Translation difference 1 368 4 117
Balance at end of year 30 878 29 510
Intellectual property
Balance at beginning of year - 14 155
Amount impaired during year - (14 155)
Balance at end of year - -
Patents and trademarks
Balance at beginning of year 31 706 31 706
Amount impaired during year - -
Balance at end of year 31 706 31 706
Total intangible assets 62 584 61 216
SEGMENTAL INFORMATION
Year ended Year ended
31-Aug 31-Aug
2014 2013 %
R000 R000 change
Geographical revenue
South Africa –
continuing operations 1 325 341 1 242 044
Offshore subsidiaries 782 732 442 020
Offshore subsidiaries
– discontinued operations - 258 893
2 108 073 1 942 957 8,5%
Geographical income
South Africa –
continuing operations 46 089 41 441
Offshore subsidiaries 29 074 7 496
Offshore subsidiaries –
discontinued operations - (12 480)
75 163 36 457 106,2%
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
Year ended Year ended
31-Aug 31-Aug
2014 2013
R000 R000
ASSETS
Non-current assets
Fixed assets 30 482 32 624
Intangible assets 62 584 61 216
Investment in associate 107 94
Deferred taxation 9 731 9 563
Current assets
Assets classified as
held for sale 4 000
Inventory 431 440 377 459
Trade and other receivables 387 203 289 854
Cash and cash equivalents 105 596 122 372
Total assets 1 031 143 893 182
EQUITY AND LIABILITIES
Ordinary shareholders’ funds 742 344 677 956
Non-controlling interest 39 954 33 155
Total shareholders’ funds 782 298 711 111
Current liabilities
Bank overdraft 37 648 12 166
Trade and other payables 211 197 169 905
Total equity and liabilities 1 031 143 893 182
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
31-Aug 31-Aug
2014 2013
R000 R000
Balance as at 1 September 677 956 652 371
Total attributable income
for the year 75 163 36 457
Dividend paid (13 452) (12 795)
Movement in foreign
currency translation reserve 3 918 7 003
Treasury share movement (1 241) (83)
Reserves net of NCI movement (4 997)
Balance as at 31 August 742 344 677 956
CONDENSED GROUP STATEMENT OF CASH FLOWS
Year ended Restated Year Reported Year
ended ended
31-Aug 31-Aug 31-Aug
2014 2013 2013
R000 R000 R000
Cash (absorbed by) /
generated from operating
activities (43 480) 155 187 123 375
Cash (absorbed by) /
generated from operations (10 700) 193 553 157 160
Interest paid (4 356) (7 226) (7 226)
Dividend paid (13 452) (12 795) (12 795)
Taxation paid (14 972) (18 345) (13 764)
Cash flows from
investing activities (3 580) 26 891 41 472
Purchase of tangible
fixed assets (3 783) (27 169) (27 169)
Purchase of intangible assets (31 706) (31 706)
Proceeds on disposal of
fixed assets 203 29 306 3 036
Proceeds on disposal
of subsidiary 4 346 0
Proceeds on disposal of
assets in discontinued
operations 45 174
Decrease in loan to
associate company 491 514
Purchase of treasury shares (83) (83)
Redemption of preference
share issue 51 706 51 706
Cash flows from
financing activities 0 (20 000)
Secured borrowings repaid (20 000)
Net (decrease) / increase in
cash and cash equivalents (47 060) 162 078 164 847
Cash and cash equivalents at
the beginning of the year 110 206 (54 641) (54 641)
Effect on exchange rate
changes on the balance of
cash held in foreign currencies 4 802 2 769
Cash and cash equivalents at
end of the year 67 948 110 206 110 206
COMMENTARY
Corporate information
Nu-World is a limited liability company incorporated and domiciled in
South Africa with branches, subsidiaries and associates in Australia,
Brazil, Dubai, Hong Kong and Lesotho. The main business of Nu-World 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 annual financial statements for
the year ended 31 August 2014 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 2013 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).
Restatement of 2013 comparatives
The directors wish to inform shareholders that headline earnings,
headline earnings per share and diluted headline earnings as disclosed
in the Company’s annual financial statements for the year ended
31 August 2013 were understated, and this restatement arose from
the JSE Limited’s pro-active monitoring of financial statements.
The misstatement arose following the omission of the taxation effects
of these adjustments and the resulting effect on non-controlling interest.
The exact details of the restatement were announced on SENS
on 29 September 2014.
In addition, the above review resulted in the cash flow being
restated as follows:-
- Cash flows from operating activities has been adjusted
by the re-classification of repayment of borrowings and
the tax and non-controlling shareholders effects of the disposal
of disposal groups.
- Cash flows from investing activities has been adjusted for the
effects of the tax and non-controlling shareholders effects of
disposal groups.
- Cash flows from financing activities has been adjusted by the
repayment of borrowings.
Auditor’s opinion
The independent auditors, Tuffias Sandberg KSi, and designated auditor
Ashley Muller, have issued their unqualified audit opinion on the Group’s
annual financial statements and this set of condensed consolidated financial
statements for the year ended 31 August 2014. 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
consolidated financial information and the annual financial statements are
available for inspection at the Company’s registered office.
Discontinued operations
The comparative information relates to the disposal of the Group’s 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.
Year ended Year ended
31-Aug 31-Aug
2014 2013
R000 R000
Revenue 0 258 893
Loss from operations 0 (11 148)
Depreciation 0 2 141
Interest paid 0 1 196
Loss before taxation 0 (14 485)
Taxation 0 5 407
Loss attributable to
outside shareholders 0 (7 412)
Groups share of loss
from discontinued operations 0 (12 480)
OPERATING RESULTS
Over the past year the Group has made significant progress with its strategic
objectives of improving revenue growth and implementing cost cutting initiatives,
the benefit of which can be seen in the second half of the financial year.
The Group is focused on becoming a more effective and productive business.
Sustained improvement in financial control and operating efficiencies are driving
the profit growth. The offshore operations performed particularly well in
the second half of the financial year.
The Southern African consumer market is under pressure to achieve greater sales
growth, reflecting the increasing financial pressure faced by consumers due to
high personal debt levels, unemployment, ever increasing living costs and increased
inflationary pressures. Notwithstanding the above, the Group managed to achieve
increases in the local market in both sales and profitability.
The consumer electronics division locally continued to perform well during the
financial year, gaining market share from its competitors. The launch of new ranges
of flat screen televisions and audio products have started to be introduced for
the upcoming festive season. Initial sales response has been positive.
The small domestic appliance division performed well under the Sunbeam, Ideal and
Ideas brands together with the premium Prima One & Only brand. The full range of
seasonal products, both summer and winter, showed strong growth during the year
under review.
The expanded liquor range also contributed to the growth in local revenue, with a
number of exclusive brands having been launched for the retail trade.
The offshore divisions performed particularly well during the year under review.
The Group is in the process of managing all the sales to third party countries
through the Hong Kong and Dubai operational companies and branches. The Group is
now managing all sales and marketing for the JVC visual brand in the entire
African continent, the Middle East, CIS, Australasia, Brazil, Uruguay and Paraguay.
Additional product categories are being rolled out to the various distributors.
The benefit of the increased offshore volumes has assisted in reducing the
costs to the local markets as well.
Effective expense management and improved operational efficiencies is
strengthening the capacity of the Group to achieve its strategic focus
and objectives.
The Group’s focus remains that of customer-driven and sales-led expansion
both locally and offshore.
STATEMENT OF COMPREHENSIVE INCOME
Group revenue from continuing operations increased by 25.2% to R 2 108,1 million
(August 2013 – R 1 684,1 million) mainly due to the growth in offshore operations.
Interest paid improved by 39.7% to R 4,4 million (August 2013 - R 7,2 million)
due to the improved working capital and stock turn.
Income after taxation from continuing operations increased by 117.9% to
R 78,6 million (August 2013 - R 36,1 million) due to improved operating
margins and effective expense management.
Total attributable income for the year increased by 106.2% to R 75,2 million
(August 2013 – R 36,5 million).
Earnings per share – increased 106.6% to 351.6 cents (August 2013 – 170.2 cents).
Headline earnings per share increased 57.4% to 351.1 cents (August 2013 – 223.1 cents).
Dividend per share increased 86.2% to 110.6 cents (August 2013 – 59.4 cents).
Dividend cover remains at 3.0 times.
STATEMENT OF FINANCIAL POSITION
The balance sheet remains strong with a negative gearing ratio
(debt : equity) of 9.2%.
The decrease in fixed assets arose primarily from the sale of a portion of the
Company’s land and buildings shown currently as assets held for sale.
Inventory levels of R 431,4 million have increased due to increased turnover levels.
Stocking levels and ranges are being rationalised and stock turn rates should
improve going forward.
Net asset value per share has increased by 9.8% to 3,476.3 cents
(August 2013 – 3,165.4 cents).
Trade and other receivables of R 387,2 million have increased due to increased
turnover levels especially in Q4 2014. The offshore operations performed particularly
well in this quarter.
Trade and other payables of R 211,2 million (August 2013 – R 169,9 million) increased
in line with improved turnover levels of 25.2%.
CASH FLOW
Cash absorbed by operations amounted to R 10,7 million (August 2013 : generated from
operations R 193,5 million) arose from higher debtor levels from increased turnover,
increased inventory levels especially at financial year end as the Group gears up for
the peak season, increased goods in transit levels and higher import prepayments.
CONTINUING OPERATIONS
The South African business operations contributed 62.9% of the Group’s continuing
operations revenue and 61.3% of the Group’s continuing operations income. Offshore
operations account for 37.1% of turnover and 38.7% of income. Strong revenue growth
across all business segments, coupled with improved margins especially from the
offshore operations, resulted in earnings attributable towards ordinary shareholders
improving by 106.2%
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
There were no corporate activities during the year under review.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE ASPECTS
The Group subscribes to, and applies 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 2014 and the date of this report.
DECLARATION OF FINAL DIVIDEND
Notice is hereby given that a final gross dividend of 110,6 cents per share
(2013: 59,4 cents per share) was declared on 22 October 2014 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, 28 November 2014
Date trading commences
‘’ex’’ dividend Monday, 1 December 2014
Record date Friday, 5 December 2014
Date of payment Monday, 8 December 2014
Ordinary share certificates may not be dematerialised or rematerialised between
Monday, 1 December 2014 and Friday, 5 December 2014, 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 utilised as part of this declaration amount
to R 1,126,869.01 and consequently the STC credits utilised per share amount to
5,0 cents per share. Shareholders who are not exempt from the DWT will therefore
receive a dividend of 94.76 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, 8 December 2014.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The 2014 Integrated Annual report will be mailed to shareholders prior to the
end of December 2014. The annual general meeting will take place at 10h00 on
Wednesday, 11 February 2015, at the registered office of the Company.
PROSPECTS
Management believe that the correct strategic and operational plans are being put
in place to grow market share in the consumer electronics and branded consumer
durables sectors, both locally and offshore. This, coupled with the expanded offshore
territories that the Group trade in, should increase the contribution from these
businesses in future years.
The Group continues to focus its target market on recognised International brands
for consumer electronics and consumer durables, both locally and offshore.
Despite the prevailing levels of uncertainty and constrained growth levels in the
economy, the Group remains cautiously optimistic about the improved levels of
business activity across all segments.
The Group is well poised for sustainable growth and further expansion in its
local markets and chosen offshore territories. This growth will be aided by additional
appointed brands in offshore territories, strengthened by a strong capital base
and liquidity position and supported by the Group’s interactive service and backup models.
Any reference to the Group’s future financial performance contained in this announcement
has not been reviewed or reported on by the Company’s auditors.
On behalf of the board of directors
J.A. Goldberg G.R. Hindle
Chief Executive Officer Financial Director
22 October 2014
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
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
22 October 2014
Sponsor
Sasfin Capital,
(a division of Sasfin Bank Limited)
Date: 22/10/2014 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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