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NU-WORLD HOLDINGS LIMITED - Interim results for the period ended February 2015

Release Date: 14/04/2015 17:00
Code(s): NWL     PDF:  
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Interim results for the period ended February 2015

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’’) 

Condensed consolidated unaudited interim financial statements
for the six months ended 28 February 2015

•  Group revenue from continuing operations increased by 5,3% 
   to R1 090,5 million
•  Income after tax from continuing operations increased by 14,5% 
   to R41,2 million
•  Net profit attributable to ordinary shareholders for the period 
   increased by 19,3% to R40,9 million
•  Headline Earnings per Share (cents) increased by 16,5% to 186,6 cents 
•  Net asset value per share increased by 8,4% to 3 542,2 cents

CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME

                                 Unaudited      Unaudited               Audited
                                 6 Months       6 Months                12 Months
                                 28 February    28 February             31 August
                                 2015           2014           %        2014
                                 R’000          R’000          change   R’000
Continuing operations
Revenue                          1 090 504      1 035 292      5,3%     2 108 073
Net operating income             60 941         54 087                  115 617
Depreciation                     956            704                     1 915
Interest paid                    3 471          3 267                   4 356
Fair value adjustment on 
financial instruments            1 373          1 190                   4 465
Income before taxation           55 141         48 926                  104 881
Taxation                         13 989         12 994                  26 256
Income after taxation from 
continuing operations            41 152         35 932        14,5%     78 625
Discontinued operations
Net operating profit             -              294                     -
Profit after taxation from 
discontinuing operations         -              294                     -
Total net income after taxation  41 152         36 226                  78 625
Share of associate 
company profit                   37             -                       13
Net profit for the period/year   41 189         36 226        13,7%     78 638
Net profit attributable to:
Non-controlling interest         275            1 942                   3 475
Equity holders of the Company    40 914         34 284        19,3%     75 163
                                 41 189         36 226        13,7%     78 638

Headline earnings reconciliation:
Determination of comprehensive 
income and headline earnings
Net profit attributable to 
ordinary shareholders            40 914          34 284       19,3%     75 163
Less IAS16 gains on disposal 
of fixed assets                 (962)                                  (156)
Total tax effects of adjustments 179                                    44
Headline earnings                40 131          34 284       17,1%     75 051
SUPPLEMENTARY INFORMATION
Dividend paid                                                           25 047
Comprehensive income             40 914          34 284       19,3%     75 163
Headline earnings                40 131          34 284       17,1%     75 051
Basic earnings per share (cents) 190,2           160,2        18,7%     351,6
Headline earnings per 
share (cents)                    186,6           160,2        16,5%     351,1
Diluted earnings per 
share (cents)                    181,3           153,7        18,0%     337,3
Dividend per share (cents)                                              110,6
Dividend cover                                                          3,0
Shares in issue (total issued)   22 646 465      22 646 465             22 646 465
Shares in issue 
(less treasury shares)           21 630 612      21 369 543             21 354 720
Shares in issue – weighted       21 511 969      21 394 786             21 377 497
Shares in issue – diluted        22 562 112      22 301 043             22 286 220

Operating income as a
percentage of turnover (%)       5,6%            5,2%                   5,5%
Debt to equity ratio (%)         4,9%            (10,4%)               (9,0%)
Effective taxation
rate – continuing operations     25,4%            26,4%                 25,0%
Net asset value per 
share (cents)                    3 542,2          3 268,6      8,4%     3 548,2
Intangible assets
Goodwill and amortisation
Balance at beginning of 
period/year                      30 878           29 510                29 510
Translation difference          (1 545)           721                   1 368
Balance at end of period/year    29 333           30 231               30 878

Patent and trademark:
Balance at beginning of 
period/year                      31 706           31 706               31 706
Balance at end of period         31 706           31 706               31 706
Total intangible assets          61 039           61 937               62 584

SEGMENTAL INFORMATION
Geographical revenue
South Africa - 
continuing operations            714 310          669 157      6,7%    1 325 341
Offshore subsidiaries – 
continuing operation             376 194          366 135      2,7%    782 732
                                 1 090 504        1 035 292    5,3%    2 108 073
Geographical income
South Africa - 
continuing operations            30 209           25 370       19,1%   46 089
Offshore subsidiaries – 
continuing operation             10 705           8 620        24,2%   29 074
Offshore subsidiaries – 
discontinued operation                            294
                                 40 914           34 284       19,3%   75 163
Attributable income as 
percentage of turnover (%)
South Africa - 
continuing operations            4,2%             3,8%         11,5%   3,5%
Offshore subsidiaries – 
continuing operation             2,8%             2,4%         20,9%   3,7%
                                 3,8%             3,3%         13,3%   3,6%

CONDENSED GROUP STATEMENT OF FINANCIAL POSITION

                                 Unaudited        Unaudited     Audited
                                 6 Months         6 Months      12 Months
                                 28 February      28 February   31 August
                                 2015             2014          2014
                                 R’000            R’000         R’000
ASSETS
Non-current assets
Fixed assets                     30 113           33 181        30 482
Intangible assets                61 039           61 937        62 584
Investment in associate          144              94            107
Deferred taxation                8 479            6 699         9 731
Current assets
Assets classified as held 
for sale                                                        4 000
Inventory                       465 854           408 493       431 440
Trade and other receivables     417 061           313 452       402 572
Cash equivalents                47 519            72 433        105 596
Total assets                    1 030 209         896 289       1 046 512
Equity and liabilities
Ordinary shareholders’ funds    766 197           698 485       757 713
Minority interests              36 737            36 904        39 954
Total shareholders’ funds       802 934           735 389       797 667
Current liabilities
Bank borrowings                 84 733                          37 648
Trade and other payables        142 542           160 900       211 197
Total equity and liabilities    1 030 209         896 289       1 046 512

CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY

                                Unaudited         Unaudited      Audited
                                6 Months          6 Months       12 Months
                                28 February       28 February    31 August
                                2015              2014           2014
                                R’000             R’000          R’000
Balance as at 1 September       757 713           677 956        677 956
Total attributable income 
for the period/year             40 914            34 284         75 163
Dividend paid                  (27 897)          (13 452)       (13 452)
Movement in foreign currency 
translation reserve             589               648            3 918
Treasury share movement         2 562            (951)          (1 241)
Issue of share-based 
payment awards                 (7 684)                           15 369
Balance at end of period/year   766 197           698 485        757 713

CONDENSED GROUP STATEMENT OF CASH FLOWS

                                Unaudited         Unaudited      Audited
                                6 Months          6 Months       12 Months
                                28 February       28 February    31 August
                                2015              2014           2014
                                R’000             R’000          R’000
Cash utilised by 
operating activities           (112 105)         (35 755)       (43 480)
  Cash absorbed by operations  (60 425)          (7 985)        (10 700)
  Interest paid                (3 471)           (3 267)        (4 356)
  Dividends paid               (27 897)          (13 452)       (13 452)
  Normal tax on companies      (20 312)          (11 051)       (14 972)
Cash flows from investing 
activities                      6 943            (2 018)        (3 580)
  Purchase of tangible fixed 
  assets                       (561)             (1 250)        (3 783)
  Proceeds on disposal of 
  fixed assets                  4 942             183            203
  Investment in treasury
  Shares                        2 562            (951)
Net decrease in cash 
and cash equivalents           (105 162)         (37 773)       (47 060)
Effects of exchange rate 
changes on the balance of 
cash held in foreign currencies                                  4 802
Cash and cash equivalents at 
the beginning of the period/year 67 948            110 206       110 206
Cash and cash equivalents 
at the end of the period/year   (37 214)           72 433        67 948

COMMENTARY
Corporate information
Nu-World is a limited liability company incorporated and domiciled in South 
Africa with subsidiaries and associates in Australia, Brazil, 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 2015 have been prepared in accordance with the framework 
concepts and the measurement and recognition requirements of International 
Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides 
as issued by the Accounting Practices Committee and the financial pronouncements 
as issued by the Financial Reporting Standards Council, 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 2014.

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 2015 
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.

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

Discontinued operation
The comparative discontinued operation information relates to the disposal of 
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 2015 
despite trading within a subdued economic environment in most of the territories 
we trade in. Accordingly 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.

South Africa
The local economy and our customer base in general, has been affected by the 
decline in consumer unsecured lending. Currency volatility and further depreciation 
continued during the period under review. Despite these issues, 
the Group experienced reasonable sales and profit growth.
The small appliance division and seasonal product range showed strong growth 
due to the launch of new innovative products. The liquor division has 
consolidated sales of international brands and used this platform to increase 
its range and customer base for its own house brands.

Offshore operations
Africa / Middle East / CIS
This region has experienced tremendous changes from geo-political issues, the 
collapse of the oil price, and significant currency devaluations in oil
producing countries in Africa.

This has been a challenge for the Group, however our JVC brand has been well 
accepted and the Group is now capitalising on these gains.

Additional distributor network for territories currently not represented are 
being finalised for the JVC brand. 

The Group has signed an agreement with its Saudi Arabian distributor to introduce 
a second brand, Telefunken, for small appliances, white goods and consumer 
electronics. 

Australia
Huge currency depreciation has taken place making the trading environment 
difficult at retail level, however the Group's Australian subsidiary produced 
adequate results considering the difficult trading environment.

The JVC brand continues to gain market acceptance and show strong growth.

FINANCIAL OVERVIEW

STATEMENT OF COMPREHENSIVE INCOME

Group revenue from continuing operations increased by 5,3% to R 1 090,5 million 
(February 2014 – R 1 035,3 million). 

Net profit for the period increased by 13,7% to R 41,2 million 
(February 2014 – R 36,2 million).

Total attributable income for the period increased by 19,3% to R 40,9 million 
(February 2014 – R 34,3 million).

STATEMENT OF FINANCIAL POSITION

The balance sheet remains strong with a gearing ratio (debt:equity) of 4,9%.

Inventory levels of R 465,8 million increased by 8,0% from August 2014 
(R 431,4 million). 
Directors and management remain focused on improving working capital management. 
Stocking levels and ranges are being rationalised and stock 
turn rates should improve going forward.

The increase in trade and other receivables of 33,1% to R 417,1 million 
(February 2014 – R 313,4 million) arose due to the substantial increase in 
offshore  subsidiaries turnover at the end of the period together with the 
change in the customer sales mix weighted to customers with less favourable 
trading terms.

Net asset value per share has increased by 8,4% to 3 542,2 cents 
(February 2014 – 3 268,6 cents).  

SUBSEQUENT EVENTS

No events material to the understanding of the report have occurred during 
the period between 28 February 2015 and the date of this report.

On behalf of the board of directors

J.A. Goldberg                  G.R. Hindle
Chief Executive Officer        Financial Director
14 April 2015

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
RSM Betty & Dickson 

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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