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Unaudited interim results for the six months ended 29 February 2016
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 RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY
2016
GROUP REVENUE R 1 359,5 MILLION + 24.7%
NET OPERATING INCOME BEFORE
IMPAIRMENT (EBITDA) R 100,2 MILLION + 68.1%
PROFIT ATTRIBUTABLE TO
EQUITY HOLDERS (AFTER IMPAIRMENT) R 44,3 MILLION + 8.2%
HEPS (CENTS) 211,4 CENTS + 13.3%
NET ASSET VALUE PER SHARE (CENTS) 4 153,8 CENTS + 17.3%
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2016 2015 % 2015
R'000 R'000 change R'000
Revenue 1 359 483 1 090 504 24,7% 2 159 240
Net operating income
before impairment of
receivable 100 162 59 568 68,1% 133 587
Impairment of receivable (46 715)
Net operating income 53 447 59 568 133 587
Depreciation 1 203 956 2 437
Interest paid 9 631 3 471 7 180
Income before taxation 42 613 55 141 123 970
Taxation 8 699 13 989 33 457
Income after taxation 33 914 41 152 90 513
Share of associate
company profit 95 37 41
Net profit for the
period/year 34 009 41 189 90 554
Net profit attributable
to:
Non-controlling interest (10 266) 275 (1 990)
Equity holders of the
company 44 275 40 914 8,2% 92 544
34 009 41 189 90 554
Other comprehensive
income:
Exchange differences on
translating foreign
operations 24 304 (2 904) 688
Total comprehensive
income for the
period/year 58 313 38 285 52,3% 91 242
Total comprehensive
income attributable to:
Non-controlling interest (4 773) (2 170) (8 621)
Equity holders of the
company 63 086 40 455 99 863
58 313 38 285 91 242
Headline earnings
reconciliation:
Determination of
comprehensive income and
headline earnings
Net profit attributable
to ordinary shareholders 44 275 40 914 8,2% 92 544
Less IAS16 gains on
disposal of fixed assets (104) (962) (437)
Total tax effects of
adjustments 19 179 122
Headline earnings 44 190 40 131 10,1% 92 229
SUPPLEMENTARY
INFORMATION
Dividend paid 37 027
Comprehensive income 44 275 40 914 92 544
Headline earnings 44 190 40 131 10,1% 92 229
Basic earnings per share
(cents) 211,8 190,2 430,1
Headline earnings per
share (cents) 211,4 186,6 13,3% 428,6
Diluted earnings per
share (cents) 195,5 181,3 408,7
Dividend per share
(cents) 163,5
Dividend cover 2,5
Shares in issue (total
issued) 22 646 465 22 646 465 22 646 465
Shares in issue (less
treasury shares) 20 905 690 21 630 612 20 905 690
Shares in issue –
weighted 20 905 690 21 511 969 21 518 864
Shares in issue –
diluted 22 645 690 22 562 112 22 645 690
Operating income (before
impairment) as a
percentage of turnover 7,4% 5,5% 6,2%
Debt to equity ratio (%) 12,0% 4,9% 4,6%
Effective taxation rate 20,4% 25,4% 27,0%
Net asset value per
share (cents) 4 153,8 3 542,2 17,3% 4 029,1
Intangible assets
Goodwill and
amortisation
Balance at beginning of
period/year 29 978 30 878 30 878
Translation difference 3 324 (1 545) (900)
Balance at end of
period/year 33 302 29 333 29 978
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 65 008 61 039 61 684
SEGMENTAL INFORMATION
Geographical revenue
South Africa 888 577 714 310 1 443 802
Offshore subsidiaries 470 906 376 194 715 438
1 359 483 1 090 504 24,7% 2 159 240
Geographical income
(after impairment)
South Africa 40 974 30 209 59 532
Offshore subsidiaries 3 301 10 705 33 012
44 275 40 914 8,2% 92 544
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2016 2015 2015
R'000 R'000 R'000
ASSETS
Non-current assets
Fixed assets 32 234 30 113 23 148
Intangible assets 65 008 61 039 61 684
Investment in associate 244 144 149
Deferred taxation 8 819 8 479 3 301
Current assets
Assets classified as
held for sale 9 940
Inventory 510 764 465 854 422 095
Stock in transit 71 796 86 493 212 883
Trade and other
receivables 506 828 417 061 400 893
Cash equivalents 137 844 47 519 90 077
Total assets 1 333 537 1 116 702 1 224 170
Equity and liabilities
Ordinary shareholders
funds 868 376 766 197 842 317
Minority interests 26 560 36 737 31 333
Total shareholders
funds 894 936 802 934 873 650
Current liabilities
liabilities 1 333 537 1 116 702 1 224 170
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
Bank borrowings 242 301 84 733 128 873
Trade and other payables 196 300 229 035 221 647
Total equity and 29 February 28 February 31 August
2016 2015 2015
R'000 R'000 R'000
Balance as at 1
September 842 317 757 713 757 713
Total attributable
income for the
period/year 44 275 40 914 92 544
Dividend paid (37 027) (27 897) (26 205)
Movement in foreign
currency translation
reserve 18 811 589 7 319
Treasury share movement 2 562 (15 444)
Issue of share-based
payment awards (7 684) 26 390
Balance at end of
period/year 868 376 766 197 842 317
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
29 February 28 February 31 August
2016 2015 2015
R'000 R'000 R'000
Cash utilised by
operating activities (85 628) (112 105) (94 257)
Cash absorbed by
operations (21 542) (60 425) (28 735)
Interest paid (9 631) (3 471) (7 180)
Dividends paid (37 026) (27 897) (26 205)
Normal tax on companies (17 428) (20 312) (32 137)
Cash flows from
investing activities 1 286 6 943 (16 207)
Purchase of tangible
fixed assets (3 714) (561) (5 720)
Proceeds on disposal of
fixed assets 5 000 4 942 4 957
Investment in treasury
Shares 2 562 (15 444)
Net decrease in cash and
cash equivalents (84 342) (105 162) (110 464)
Effects of exchange rate
changes on the balance
of cash held in foreign
currencies 18 681 3 720
Cash and cash
equivalents at the
beginning of the
period/year (38 796) 67 948 67 948
Cash and cash
equivalents at the end
of the period/year (104 457) (37 214) (38 796)
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 includes the importing, manufacturing, 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 unaudited condensed consolidated interim results for the
six months ended 29 February 2016 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, 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 2015.
The condensed consolidated interim financial statements are
presented in Rand rounded to the nearest thousand („000).
The condensed consolidated statement of financial position at
29 February 2016 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.
Impairment of Receivables
Shareholders were advised in the SENS announcement released on
26 February 2016, that one of Nu-World's 59,35% held
subsidiaries, Yale Prima Proprietary Limited's (“Yale”),
customers, Dick Smith Holdings Limited (“DSH”), a Top 200
Australian Securities Exchange company and its subsidiaries
(collectively “DSE”), were placed into liquidation on 25
February 2016.
On 4 January 2016, DSE was placed into Voluntary
Administration (with McGrathNicol acting as Voluntary
Administrators to DSH (“Administrators”)) and shortly
thereafter into Receivership (with Ferrier Hodgson acting as
Receivers and Managers to DSH (“Receivers”)).
The first creditors' meeting was held on 14 January 2016,
where the Administrators outlined the following:
a. The intention of the Receivers was to continue trading as
usual and simultaneously run a sale campaign for all or
parts of the DSE business.
b. To allow the Administrators and Receivers to properly
assess the state of the business and to run the sale
campaign without creditor interference. It was their
intention to postpone the second critical creditors'
meeting by at least 6 months.
The request for extension of the second creditors' meeting was
granted by both the federal courts of Australia and New
Zealand until, at the earliest, the first week in August 2016.
As a result of the extension and as per the orders of the
court, no formal communication regarding either the sales
process or DSE's financial position was supplied to the
creditors' by either the Administrators or Receivers.
On 25 February 2016, the Receivers and Administrators
announced the liquidation of DSE and that the remaining Dick
Smith and Move Stores in Australia and New Zealand would
close.
At this stage due to the lack of official information being
provided to creditors the Company is unable to reliably
estimate what DSE debt will ultimately be required to be
written off by Yale. For the interim results, Yale has
provided 4.5 million Australian Dollars (“AUD”) before
taxation, representing 52.7% of the total exposure after GST
refund. There have been no further major developments in this
regard since the release of the initial SENS announcement on
26 February 2016.
Operating results
The Group produced satisfactory results for the period ended
29 February 2016 despite the impairment of Yale's DSE
receivable. Accordingly the directors are pleased to report
positive top-line growth and positive earnings growth
attributable to equity holders of the Company.
South Africa
The local economy and our customer base in general, has been
negatively affected by the slow retail sales growth and
weakening consumer demand. The slowdown in economic growth has
seen an impact on consumers, as real gross national income per
capita has fallen since 2014. Both household debt and debt
servicing costs have risen. Currency volatility and further
depreciation continued during the period under review. Despite
these issues, the Group experienced strong sales and profit
growth.
The consumer electronics division reported strong growth due
to the re-launch of JVC Audio and the continued growth of
house brands. The full range of summer seasonal products
showed strong growth during the period under review, as a
consequence of the extremely hot seasonal temperatures.
Offshore operations
Africa / Middle East / CIS
Sales have been adversely affected in oil dominated economies
(i.e. Nigeria / Saudi Arabia / Algeria / Libya). However the
operating companies are expanding into other territories in
the regions while continuing to retain and grow market share
in the territories mentioned above. It is anticipated that
there will be growth in the short term in the combined region
as new distributors, new technologies and new products are
introduced.
Nu-World Global (HK) Ltd and Nu-World Industries Middle East
DMCC continue to show strong top line growth and profitability
margins have increased significantly. Our brands continue to
make inroads into the visual consumer electronics market. The
Group continues to use its centralised buying power to expand
into existing regions and new territories.
Australia
Yale made an operating profit in excess of AUD1.1M prior to
impairment of receivables as detailed extensively in the
disclosure note above. The impairment of the DSE receivable
significantly affected the Yale results. The remainder of the
Yale business was robust with other customers showing top line
growth in a subdued market. The lost DSE business is expected
to be taken up by other existing Yale customers.
FINANCIAL OVERVIEW
STATEMENT OF COMPREHENSIVE INCOME
Group revenue increased by 24,7% to R 1 359,5 million
(February 2015 – R 1 090,5 million).
Net operating income before impairment of receivable increased
by 68,1% to R 100,2 million (February 2015 – R 59,6 million)
Total headline earnings per share for the period increased by
13,3% to 211,4 cents (February 2015 – 186,6 cents).
STATEMENT OF FINANCIAL POSITION
The balance sheet remains strong with a gearing ratio
(debt:equity) of 12,0% (February 2015 – 4,9%).
Inventory levels of R 510,8 million increased by 9,6% from
February 2015 (R 465,8 million). Directors and management
remain focused on improving working capital management. Stock
levels and ranges are being rationalised and stock turn rates
should improve in future.
The increase in trade and other receivable of 21,5% to R 506,8
million (February 2015 – R 417,1 million) arose due to the
increase in offshore subsidiaries turnover (25,2%) for the
period together with the change in the customer sales mix.
Net asset value per share has increased by 17,3% to 4 153,8
cents (February 2015 – 3 542,2 cents).
SUBSEQUENT EVENTS
No events material to the understanding of the report have
occurred during the period between 29 February 2016 and the
date of this report.
On behalf of the board of directors
J.A. Goldberg G.R. Hindle
Chief Executive Officer Financial Director
25 April 2016
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 South Africa
Sponsor
Sasfin Capital, (a division of Sasfin Bank Limited)
Directors
M.S. Goldberg (Executive Chairman)
J.A. Goldberg (Chief Executive Officer)
G.R. Hindle (Chief Financial Officer)
Non-executive directors
J.M. Judin (Lead), D. Piaray, R. Kinross, F.J. Davidson
www.nuworld.co.za
26 April 2016
Date: 26/04/2016 05:05:00 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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