Wrap Text
Year end results and dividend decleration
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 2018 AND A DIVIDEND DECLARATION
NET OPERATING INCOME BEFORE TAXATION R 272,5 MILLION + 12.4%
HEADLINE EARNINGS PER SHARE (CENTS) 869,5 CENTS + 11.5%
DIVIDEND PER SHARE (CENTS) 327.5 CENTS + 11.9%
NET ASSET VALUE PER SHARE (CENTS) 5 235,2 CENTS + 12.0%
CASH GENERATED FROM OPERATIONS R 55,2 MILLION
Year ended Year ended
31-Aug 31-Aug
2018 2017 %
R000 R000 Change
CONDENSED GROUP STATEMENT OF PROFIT
AND LOSS AND OTHER COMPREHENSIVE
INCOME
Revenue 3 004 227 2 948025
Net operating income 272 486 242318 12,4%
Depreciation 2 740 4884
Interest paid 28 667 18235
Income before taxation 241 079 219199
Taxation 54 915 48702
Income after taxation 186 164 170497
Share of associate company income 107 82
Net profit for the year 186 271 170 579 9,2%
Total profit attributable to:
Non-controlling interest 858 4 887
Equity holders of the Company 185 413 165 692 11,9%
186 271 170 579
Other comprehensive income:
Exchange differences on translating 26 635 (19 659)
foreign operations
Total comprehensive income for the 212 906 150 920 41,1%
year
Total comprehensive income
attributable to:
Non-controlling interest 1 389 3 876
Equity holders of the Company 211 517 147 044 43,9%
212 906 150 920
Headline earnings reconciliation:
Determination of attributable
earnings and headline earnings:
Basic earnings 185 413 165 692
Loss on disposal of property, plant 147 227
and equipment
Year ended Year ended
31-Aug 31-Aug
2018 2017 %
R000 R000 Change
Total tax effects of adjustment (41) (63)
Headline earnings 185 519 165 856 11,9%
OTHER GROUP INFORMATION
Dividend – proposed / paid 74 165 66 277 11,9%
Earnings per share (cents) 869,0 779,2 11,5%
Headline earnings per share (cents) 869,5 780,0 11,5%
Diluted earnings per share (cents) 857,8 739,1 16,1%
Dividend per share (cents) 327,5 292,7 11,9%
Dividend cover (times) 2,5 2,5
Shares in issue (total issued) 22 646 465 22 646 465
Shares in issue (less treasury 21 615 016 21 340 947
shares)
Shares in issue – weighted 21 335 944 21 263 167
Shares in issue – diluted 21 615 016 21 920 947
Operating income as percentage of 9,1% 8,2% 10,3%
revenue
Net asset value per share (cents) 5 235,2 4 674,6 12,0%
Intangible assets
Goodwill and amortization
Balance at beginning of year 31 522 32 758
Translation difference during year 538 (1 236)
Balance at end of year 32 060 31 522
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 63 766 63 228
SEGMENTAL INFORMATION
Year ended Year ended
31-Aug 31-Aug
2018 2017 %
R000 R000 Change
Geographical revenue
South Africa 2 255 369 2 024 484
Offshore subsidiaries 748 858 923 541
3 004 227 2 948 025 1,9%
Geographical income
South Africa 115 971 90 101
Offshore subsidiaries 69 442 75 591
185 413 165 692 11,9%
Attributable income as percentage of
revenue (%)
South Africa 5,1% 4,4% 15,6%
Offshore subsidiaries 9,3% 8,2% 13,2%
6,2% 5,6% 9,8%
Year ended Year ended
31-Aug 31-Aug
2018 2017
R000 R000
CONDENSED GROUP STATEMENT OF FINANCIAL
POSITION
ASSETS
Non-current assets
Property, plant and equipment 22 455 23 188
Intangible assets 63 766 63 228
Investment in associates 375 267
Deferred taxation 20 700 18 369
Current assets
Inventory 696 793 427 841
Stock in transit 250 143 238 337
Trade and other receivables 394 722 471 423
Cash and cash equivalents 125 659 114 279
Total assets 1 574 613 1 356 932
EQUITY AND LIABILITIES
Ordinary shareholders' funds 1 131 599 997 606
Non-controlling interest 14 436 16 640
Total shareholders' funds 1 146 035 1 014 246
Current liabilities
Bank overdraft 133 119 59 263
Trade and other payables 295 459 283 423
Total equity and liabilities 1 574 613 1 356 932
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
31-Aug 31-Aug
2018 2017
R000 R000
Balance as at 1 September 997 606 911 711
Total attributable income for the year 185 413 165 692
Dividend paid (66 286) (40 854)
Movement in foreign currency translation 26 104 (18 648)
reserve
Treasury share movement 2 682 (6 375)
Redemption of share-based payment awards (13 920) (13 920)
Balance as at 31 August 1 131 599 997 606
CONDENSED GROUP STATEMENT OF CASH FLOWS
Year ended Year ended
31-Aug 31-Aug
2018 2017
R000 R000
Cash (utilized)/generated from operating (88 480) 74 264
activities
Cash generated from operations 55 177 176 527
Investment income 367 317
Interest paid (28 667) (18 235)
Dividend paid (66 286) (40 854)
Normal tax on companies (49 071) (43 491)
Cash flows from investing activities (3 047) (9 537)
Purchase of tangible fixed assets (2 230) (3 651)
Investment in subsidiary (3 593) 80
Proceeds on disposal of fixed assets 93 409
Issue/(Purchase) of treasury shares 2 683 (6 375)
Net (decrease)/increase in cash and cash (91 527) 64 727
equivalents
Cash and cash equivalents at the beginning of 55 016 9 384
the year
Effect on exchange rate changes on the 29 051 (19 095)
balance of cash held in foreign currencies
Cash and cash equivalents at end of the year (7 460) 55 016
COMMENTARY
Corporate information
Nu-World is a company incorporated and domiciled in South Africa with
subsidiaries in Australia, Brazil, Dubai, Hong Kong and Lesotho. The main
business of Nu-World and its subsidiaries includes 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 audited condensed consolidated annual financial statements for the
year ended 31 August 2018 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 2017.
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
This condensed consolidated report is extracted from audited information.
The independent auditors, RSM South Africa Inc., and designated auditor
Ms. Jacqueline 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 2018.The
audit was conducted in accordance with International Standards on
Auditing. The directors take full responsibility for the preparation of
this condensed consolidated report and confirm that 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.
OPERATING RESULTS
The directors are pleased to report satisfactory results for the year
ended 31 August 2018 despite the tough economic climate. The Group
produced revenue in excess of R3Bn, positive earnings growth attributable
to equity holders of the Company of 11.9%
South Africa
The South African business operation performed well despite the economic
environment, increasing revenue by 11,4%, attributable income by 28,7%
and income as a percentage of revenue by 15,6%.
Various improvements in efficiencies including consolidated warehousing
and distribution has contributed to the improved margins. The Group is
fortunate to have dedicated and self-motivated staff to drive the Company
forward.
Sales
Consumer electronics
The Company continues to develop latest solutions and product for their
customers, by offering devices that are smarter and easier to use,
bringing benefits to all. Exciting new range and brands are being offered
for the coming sales season.
Seasonal products
Winter sales were in line with forecast.
Summer seasonal sales started well and real growth is anticipated.
Appliances – Small domestic appliances (SDA) and white goods
SDA – the company launched new top end brand – Ultimum – bringing high
end product to the consumer at affordable prices. These ranges are to be
extended.
Competitive price point models continue to be released with new
improvements in quality and design.
White goods – more comprehensive ranges being offered including one of
the largest ranges of cooker hoods. Refrigeration sales continue to
increase.
Fast Moving Consumer (FMC) Division – Liquor and other
This division has been expanded by the incorporation of locally
manufactured exclusively designed cigarettes with option of flavourings,
under the brand “Ultimum”.
Liquor – additional single malts and Japanese whisky's have been added.
Keeping with the latest trends of “a move to Gin”, the company has
introduced two additional gin brands.
Offshore operations
Australia
The market in Australia experienced tough economic times. One of our
operations larger customers exited from direct import programme, as
anticipated, and the company is working toward obtaining new
opportunities. This has partially been achieved by securing an additional
consumer electronic brand and new customer.
Nu-World Middle East / Nu-World Global HK
The companies and the market they service performed adequately.
Middle East experienced some economic turmoil with the previous rapid
decrease in the oil price, subsequently now reversing.
India
India, the Group's most recently added territory, showed slow growth
initially, however this recovered well in the last quarter of the
financial year.
South America – Brazil/Uruguay/Paraguay
This region continues with strong support and the forward book looks
promising. These markets are expanding with new ranges and product
categories, which benefits should start in the new financial year.
FINANCIAL OVERVIEW
STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
Group revenue increased by 1,9% to R 3 004,2 million
(August 2017 – R 2 948,0 million).
Net operating income (EBITDA) increased by 12,4% to R 272,5 million
(August 2017 – R 242,3 million)
Total headline earnings per share for year under review increased by
11,5% to 869,5 cents (August 2017 – 780,0 cents).
STATEMENT OF FINANCIAL POSITION
The balance sheet remains strong with gearing of less than 1%. (August
2017 – negative 5,5%).
Inventory levels, inclusive of stock in transit, of R 946,9 million
increased by 42,1% from August 2017 (R 666,2 million). The increase arose
mainly from the devaluation of the local currency, the early receipt of
peak season stock holding, and the addition of new consumer electronic
brands. Directors and management remain focused on improving working
capital management, stock turn and rationalising product ranges. Efforts
are under way to liquidate the slower moving stock lines.
Trade and other receivables decreased by 16,3% to R 394,7 million
(August 2017 – R 471,4 million) mainly due to the collection of
outstanding offshore debt and the early receipt of local debtor payments.
Net asset value per share has increased by 12,0% to 5 235,2 cents
(August 2017 – 4 674,6 cents).
CASH FLOW
Cash generated from operations amounting to R 55,2 million (August 2017:
R 176,5 million) arose from the increased profitability of the Group and
stringent credit control.
SEGMENT REPORTING
The South African business operations contributed 75,0% of the Group's
revenue and 62,5% of the Group's attributable income. Offshore operations
account for 25,0% of turnover and 37,5% of income. Revenue growth across
most business segments, coupled with improved margins from both local and
offshore operations, resulted in operating income as a percentage of
turnover improving by 9,8% to 6,2%.
BOARD OF DIRECTORS
There were no changes 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 IV Report on Corporate Governance. Nu-
World is committed to transparent and integrated reporting in the spirit
of King IV and the Global Reporting Initiative (GRI).
Nu-World continues its community support and corporate social investment.
DECLARATION OF FINAL DIVIDEND
Notice is hereby given that a final gross dividend of 327,5 cents per
share (2017: 292,7 cents per share) was declared on 23 October 2018,
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: Tuesday, 23 October 2018
Last date to trade "cum" dividend Tuesday, 5 February 2019
Date trading commences "ex" dividend Wednesday, 6 February 2019
Record date Friday, 8 February 2019
Date of payment Monday, 11 February 2019
Ordinary share certificates may not be dematerialised or rematerialised
between Wednesday, 6 February 2019 and Friday, 8 February 2019, both days
inclusive.
Dividend withholding tax (DWT) of 20% 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 262,0 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, 11 February 2019.
ANNUAL REPORT AND NOTICE OF ANNUAL GENERAL MEETING
The 2018 Integrated Annual report will be mailed to shareholders prior to
31 December 2018. The annual general meeting will take place at 10h00 on
Wednesday, 13 February 2019, at the registered office of the Company.
PROSPECTS
Improvements in strategic and operational plans are the focus of
management to grow both local and offshore market share in the consumer
electronics and branded consumer durables sectors. This, coupled with the
expanded offshore territories that the Group trades in, should increase
the contribution from these businesses in future years. The Groups local
projects division continues to explore business opportunities that could
increase contributions.
The Group continues to focus its target market on recognized
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.
CONTINGENT LIABILITY – PENDING TAX LITIGATION
As previously reported in the interim results, on 27th March 2018, the
South African Revenue Service (SARS) issued revised assessments for Nu-
World Global Investments (Pty) Ltd, a wholly owned subsidiary of Nu-World
Holdings Limited, relating to a dispute on a Royalty Financing
transaction for the 2008 to 2012 tax years, resulting in a potential tax
liability of R7,6M and interest, omissions and penalties until 31st
August 2018 of R21,4M.
In addition, on 24th May 2018, SARS issued a revised VAT assessment for
Nu-World Industries (Pty) Ltd, a wholly owned subsidiary of Nu-World
Holdings Limited, relating to a dispute on the zero-rating of a
transaction for the 2007/8 tax year, resulting in a potential VAT
liability of R4,1M and interest and penalties until 31st August 2018 of
R5,3M.
Nu-World have opposed these revised assessments and submitted Notice of
Objections and Notice of Appeals to SARS on the advice of their tax
advisors and senior legal council, and has requested suspension of
payment of these disputed taxes.
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred
during the period between 31 August 2018 and the date of this report.
On behalf of the board of directors
J.A. Goldberg G.R. Hindle
Chief Executive Officer Financial Director
23 October 2018
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
Rosebank Towers, 15 Bierman Avenue,
Rosebank, 2196
Company secretary
B.H. Haikney
Auditors
RSM South Africa Inc.
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
23 October 2018
Sponsor
Sasfin Capital (a member of the Sasfin Group)
Date: 23/10/2018 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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