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Audited Condensed Consolidated Annual Financial Statements For The Year Ended 31 August 2016 And A Dividend Declarat
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 2016 AND A DIVIDEND DECLARATION
GROUP REVENUE R 2 590,4 MILLION + 20.0%
NET OPERATING INCOME BEFORE BAD DEBT
WRITE-OFF R 204,5 MILLION + 53.1%
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS
(AFTER BAD DEBT WRITE-OFF) R 102,1 MILLION + 10.4%
EPS (CENTS) 488.4 CENTS + 13.6%
DIVIDEND PER SHARE (CENTS) 180.4 CENTS + 10.3%
NET ASSET VALUE PER SHARE (CENTS) 4 286.6 CENTS + 6.4%
CASH GENERATED FROM OPERATIONS R 98,3 MILLION
Year ended Year ended
31-Aug 31-Aug
2016 2015 %
R000 R000 Change
CONDENSED GROUP STATEMENT OF PROFIT
AND LOSS AND OTHER COMPREHENSIVE
INCOME
Revenue 2 590 415 2 159 240 20,0%
Net operating income before bad debt 204 555 133 587 53,1%
write-off
Bad debt write-off (*) (88 466) 0
Net operating income 116 089 133 587
Depreciation 2 812 2 437
Interest paid 14 683 7 180
Income before taxation 98 594 123 970
Taxation 18 986 33 457
Income after taxation 79 608 90 513
Share of associate company income 36 41
Net profit for the year 79 644 90 554
Total profit attributable to:
Non-controlling interest (22 484) (1 990)
Equity holders of the Company 102 128 92 544 10,4%
79 644 90 554
Other comprehensive income:
Exchange differences on translating 15 899 689
foreign operations
Total comprehensive income for the 95 543 91 243
year
Total comprehensive income
attributable to:
Non-controlling interest (18 569) (8 621)
Equity holders of the Company 114 112 99 864
95 543 91 243
Year ended Year ended
31-Aug 31-Aug
2016 2015 %
R000 R000 change
Headline earnings reconciliation:
Determination of attributable
earnings and headline earnings:
Basic and diluted basic earnings 102 128 92 544 10,4%
Less IAS 16 gains on disposal of (9 899) (437)
property, plant and equipment
Total tax effects of adjustment 2 255 122
Total non-controlling interest
effects of adjustments
Headline earnings 94 484 92 229
OTHER GROUP INFORMATION
Dividend – proposed / paid 40 851 37 027 10,3%
Earnings per share (cents) 488,4 430,1 13,6%
Headline earnings per share (cents) 451,9 428,6 5,4%
Diluted earnings per share (cents) 455,3 408,7 11,4%
Dividend per share (cents) 180,4 163,5 10,3%
Dividend cover (times) 2,5 2,5
Shares in issue (total issued) 22 646 465 22 646 465 0,0%
Shares in issue (less treasury 21 268 900 20 905 690 1,7%
shares)
Shares in issue – weighted 20 910 415 21 518 864 -2,8%
Shares in issue – diluted 22 428 900 22 645 690 0,0%
Operating income before bad debt 7,9% 6,2% 28,2%
write-off as percentage of revenue
(Negative debt)/ Net Debt to equity (1,0%) 4,6%
ratio
Effective taxation rate 19,3% 27,0%
Net asset value per share (cents) 4 286,6 4 029,1 6,4%
Intangible assets
Goodwill and amortization
Balance at beginning of year 29 978 30 878
Translation difference 2 780 (900)
Balance at end of year 32 758 29 978
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 64 464 61 684
SEGMENTAL INFORMATION
Year ended Year ended
31-Aug 31-Aug
2016 2015 %
R000 R000 change
Geographical revenue
South Africa 1 753 783 1 443 802 21,5%
Offshore subsidiaries 836 632 715 438 16,9%
2 590 415 2 159 240 20,0%
Geographical income
South Africa 81 404 59 532
Offshore subsidiaries 20 724 33 012
102 128 92 544 10,4%
Attributable income as percentage of
turnover (%)
South Africa 4,6% 4,1% 12,6%
Offshore subsidiaries 2,5% 4,6%
3,9% 4,3%
Year ended Year ended
31-Aug 31-Aug
2016 2015
R000 R000
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
ASSETS
Non-current assets
Property, plant and equipment 25 119 23 148
Intangible assets 64 464 61 684
Investment in associates 185 149
Deferred taxation 22 195 3 301
Current assets
Assets classified as held for sale 0 9 940
Inventory 391 860 422 095
Stock in transit 178 422 212 883
Trade and other receivables 500 733 400 893
Cash and cash equivalents 80 401 90 077
Total assets 1 263 379 1 224 170
EQUITY AND LIABILITIES
Ordinary shareholders' funds 911 711 842 317
Non-controlling interest 12 764 31 333
Total shareholders' funds 924 475 873 650
Current liabilities
Bank overdraft 71 017 128 873
Trade and other payables 267 887 221 647
Total equity and liabilities 1 263 379 1 224 170
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
31-Aug 31-Aug
2016 2015
R000 R000
Balance as at 1 September 842 317 757 713
Total attributable income for the year 102 128 92 544
Dividend paid (37 027) (26 206)
Movement in foreign currency translation 11 985 7 320
reserve
Treasury share movement 6 228 (15 444)
(Redemption)/issue of share-based payment (13 920) 26 390
awards
Balance as at 31 August 911 711 842 317
CONDENSED GROUP STATEMENT OF CASH FLOWS
Year ended Year ended
31-Aug 31-Aug
2016 2015
R000 R000
Cash generated from/(absorbed by) operating 8 679 (94 257)
activities
Cash generated from/(absorbed by) operations 98 289 (28 932)
Investment income 216 197
Interest paid (14 683) (7 180)
Dividend paid (37 027) (26 205)
Taxation paid (38 116) (32 137)
Cash flows from investing activities 21 814 (16 207)
Purchase of tangible fixed assets (4 724) (5 719)
Proceeds on disposal of fixed assets 82 76
Increase /(decrease)in investment in treasury 6 228 (15 444)
shares
Proceeds on disposal of assets held for sale 20 230 4 880
Net increase/(decrease) in cash and cash 30 493 (110 464)
equivalents
Cash and cash equivalents at the beginning of (38 796) 67 948
the year
Effect on exchange rate changes on the 17 687 3 720
balance of cash held in foreign currencies
Cash and cash equivalents at end of the year 9 384 (38 796)
COMMENTARY
Corporate information
Nu-World is a 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 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 audited condensed consolidated annual financial statements for the
year ended 31 August 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), the JSE Limited Listings
Requirements 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 financial statements are presented in Rand
rounded to the nearest thousand („000).
The annual financial statements have been prepared under the supervision
of Graham Hindle CA (SA) in his capacity as Financial Director.
Auditor's opinion
The independent auditors, RSM South Africa, and designated auditor Ms.
Jackie Kitching, 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 2016. 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
is available for inspection at the Company's registered office.
Bad debt write-off (*)
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.
Subsequent to this date, all the DSE stores have either been closed or
sold. There is no further trading. The liquidators have advised that
there is no likelihood of any recovery of debt for any concurrent
creditor, and accordingly the entire DSE debt of 8.6 million Australian
Dollars (“AUD”) has been written off.
OPERATING RESULTS
The Group produced satisfactory results for the year ended 31 August 2016
despite the write off of Yale's DSE receivable. Accordingly the directors
are pleased to report strong positive top-line growth and positive
earnings growth attributable to equity holders of the Company.
South Africa
South Africa is the largest hub of the Group, currently into our 70th
year of operations.
The South African economy continues to show resilience, although the
growth in the Group's categories is slower. Consumers' disposable income
has fallen, placing many retailers and others under undue pressure.
Notwithstanding this issue, the company in South Africa managed to show
positive growth in both sales and profitability. We continue to try and
offer our customer base, the best quality products at affordable prices.
Operating profit as a percentage of turnover improved by 12,6% mainly due
to the completion of the consolidation of warehouses reducing overall
warehousing and distribution costs, as a percentage of turnover by in
excess of 10%, the reduction of administration costs as a percentage of
turnover costs and the sale of non-core assets previously held for sale.
The Company enjoyed strong exports into neighboring and other
territories.
Our exclusive brands of Ideal, Sunbeam, Goldair, JVC, Telefunken, Nutec
and Palsonic increased the opportunity for growth, with expanded ranges,
designs and specifications. Due to the climate change and the more
extreme weather, seasonal sales, both summer and winter ranges, showed
strong sales growth in the year under review.
Offshore operations
Africa / Middle East / CIS
Many of these markets are under pressure due to political and economic
conditions. In Africa the foreign exchange availability affects the
business cycle. Nevertheless, the Group broke through with additional
sales to CIS (Commonwealth of Independent States). New distributors for
various countries are being finalized, as are different product
categories.
Australia
Our penetration into the Australian market for JVC continues in both
Visual and Audio sectors. Yale also experienced additional sales growth
through their traditional business, ranging various items for major
retail customers.
With the exception of the bad debt write-off, the year under review was
reasonable, however Yale continues to review all costs and is committed
to reducing costs further wherever possible.
FINANCIAL OVERVIEW
STATEMENT OF COMPREHENSIVE INCOME
Group revenue increased by 20,0% to R 2 590,4 million
(August 2015 – R 2 159,2 million).
Net operating income before impairment of receivable increased by 53,1%
to R 204,6 million (August 2015 – R 133,6 million)
Total earnings per share for year under review increased by 13,6% to
488,4 cents (August 2015 – 430,1 cents).
STATEMENT OF FINANCIAL POSITION
The balance sheet remains strong with a negative gearing ratio
(debt:equity) of (1,0%) (August 2015 – 4,6%).
Inventory levels, inclusive of stock in transit, of R 570,3 million
decreased by 10,2% from August 2015 (R 635,0 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 24,9% to R 500,7 million
(August 2015 – R 400,9 million) arose due to the increase in Group
turnover (20,0%) for the year together with the change in the customer
sales mix.
Net asset value per share has increased by 6,3% to 4 286,6 cents
(August 2015 – 4 029,1 cents).
CASH FLOW
Cash generated from operations amounted to R 98,3 million (August 2015 :
R 28,9 million absorption) arose from higher debtor levels from increased
turnover, reduced inventory levels, reduced goods in transit levels and
reduced import prepayments.
SEGMENT REPORTING
The South African business operations contributed 67,7% of the Group's
revenue and 79,7% of the Group's attributable income. Offshore operations
account for 32,3% of turnover and 20,3% of income. Revenue growth across
certain business segments, coupled with improved margins from both local
and offshore operations, resulted in operating income before impairment
of receivables improving by 53,1%.
BOARD OF DIRECTORS
F.J. Davidson joined 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 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).
Nu-World continues its community support and corporate social investment.
The Group has introduced the Nu-World School of Excellence for both
employees and surrounding unemployed members of communities.
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred
during the period between 31 August 2016 and the date of this report.
DECLARATION OF FINAL DIVIDEND
Notice is hereby given that a final gross dividend of 180,4 cents per
share (2015: 163,5 cents per share) was declared on 27 October 2016
payable to shareholders recorded in the register of Nu-World at the close
of business on the record date appearing below. The dividend is payable
out of cash reserves.
The salient dates pertaining to the final dividend are as follows:
Declaration announcement: Thursday, 27 October 2016
Last date to trade "cum" dividend Tuesday, 29 November 2016
Date trading commences "ex" dividend Wednesday, 30 November 2016
Record date Friday, 2 December 2016
Date of payment Monday, 5 December 2016
Ordinary share certificates may not be dematerialised or rematerialised
between Wednesday, 30 November 2016 and Friday, 2 December 2016, both
days inclusive.
Dividend withholding tax (DWT) of 15% will be withheld in terms of the
Income Tax Act for those shareholders who are not exempt from the DWT.
Shareholders who are not exempt from the DWT will therefore receive a
dividend of 153,34 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, 5 December 2016.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The 2016 Integrated Annual report will be mailed to shareholders prior to
the end of December 2016. The annual general meeting will take place at
10h00 on Wednesday, 8 February 2017, at the registered office of the
Company.
PROSPECTS
Improvements in strategic and operational plans are the focus of
management 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 trades in, should
increase the contribution from these businesses in future years.
Corrective action has been taken in the Australian operations to ensure
the return to profitability.
The Group continues to focus its target market on recognised
International brands for consumer electronics and consumer durables, both
locally and offshore.
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
Chief Executive Officer
G.R. Hindle
Financial Director
27 October 2016
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
RSM South Africa
Directors
M.S. Goldberg (Executive Chairman),
J.A. Goldberg (Chief Executive),
G.R. Hindle (Financial Director)
Independent Non-executive directors
J.M. Judin (Lead)
D. Piaray
R. Kinross
F.J. Davidson
www.nuworld.co.za
27 October 2016
Sponsor
Sasfin Capital,
(a division of Sasfin Bank Limited)
Date: 27/10/2016 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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