| Tue 8 May 2007, 17:00 | | NWL - Nu-World - Unaudited Interim Report: Half Ye |
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NWL
NWL
NWL - Nu-World - Unaudited Interim Report: Half Year Ended 28 February 2007
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 REPORT FOR THE HALF YEAR ENDED 28 FEBRUARY 2007
GROUP TURNOVER UP 24.5% TO R1 052.2m
OFFSHORE SUBSIDIARY ATTRIBUTABLE INCOME UP 83.8% TO R5.5m
ATTRIBUTABLE INCOME UP 6.9% TO R43.2m
HEADLINE EARNINGS PER SHARE UP 6.2% TO 197.8 cents
CASH GENERATED BY OPERATIONS R27.5m
CONSOLIDATED INCOME Unaudited Reviewed Audited
STATEMENT six months six months year
ended ended ended
28 February 28 February 31 August
2007 2006 % 2006
R`000 R`000 change R`000
Turnover 1 052 175 844 808 24.5 1 638 724
Net operating income 68 433 66 552 129 061
Depreciation 3 597 3 550 7 415
Interest paid 3 187 599 1 223
Income before taxation 61 649 62 403 120 423
Taxation 13 339 14 852 29 613
Income after taxation 48 310 47 551 90 810
Share of associate (3 555) (6 994)
company`s loss
Minority interests (5 115) (3 603) (1 786)
Attributable income 43 195 40 393 6.9 82 030
Dividend declared 27 357
Dividend per share (cents) 120.8
Headline earnings 43 195 40 393 6.9 82 030
Earnings per share (cents) 197.8 186.3 6.2 378.3
Headline Earnings per 197.8 186.3 6.2 378.3
share (cents)
Dividend per share (cents) 0.0 0.0 120.8
Interest Cover 20.3 105.2 99.5
Shares in issue 21 833 040 21 685 290 21 683 890
Shares in issue - weighted 21 833 040 21 685 290 21 683 890
Shares in issue - diluted 22 494 040 22 636 290 22 634 890
CONSOLIDATED CASH FLOW Unaudited Reviewed Audited
STATEMENT six months six months year
ended ended ended
28 February 28 February 31 August
2007 2006 2006
R`000 R`000 R`000
Cash generated/(utilised) by (12 395) 37 282 54 659
operating activities
Cash generated by operations 27 531 79 054 122 041
Interest paid (3 187) (599) (1 223)
Dividend paid (27 357) (20 971) (27 820)
Normal tax on companies (9 382) (20 202) (38 339)
Cash flows from investing (840) (12 548) 9 996
activities
Purchase of tangible fixed (840) (2 067) (4 222)
assets
Proceeds on disposal of fixed 220
assets
Increase in investment in 22 469
subsidiary
Reclassification of subsidiary (10 481) (8 471)
Cash flows from financing (10 214) 1 078 12 374
activities
Increase in translation reserve 15
(Decrease)/increase in (11 361) 11 361
shareholders loans
Proceeds on issue of treasury 1 147 1 063 1 013
shares
Net (decrease)/increase in cash (23 449) 25 812 77 029
and cash equivalents
Cash and cash equivalents at 267 578 190 549 190 549
the beginning of the
period/year
Cash and cash equivalents at 244 129 216 361 267 578
end of the period/year
SEGMENTAL INFORMATION Unaudited Reviewed Audited
six months six months year
ended ended ended
28 February 28 February 31 August
2007 2006 % 2006
R`000 R`000 change R`000
Geographical revenue
South Africa 605 652 577 200 1 124 014
Offshore subsidiaries 446 523 267 608 514 710
1 052 175 844 808 24.5 1 638 724
Geographical income
South Africa 37 689 37 397 83 275
Offshore subsidiaries 5 506 2 996 (1 245)
43 195 40 393 6.9 82 030
CONSOLIDATED BALANCE SHEET Unaudited Reviewed Audited
six months six months year
ended ended ended
28 February 28 February 31 August
2007 2006 2006
R`000 R`000 R`000
Assets
Non-current assets
Fixed assets 38 917 41 576 41 673
Goodwill 25 729 9 751 25 729
Investment in associate 23 816
companies
Deferred taxation 17 995 18 732
Current assets
Inventory 201 213 144 054 179 030
Trade and other receivables 225 534 138 742 241 512
Cash equivalents 244 129 216 361 267 578
Total assets 753 517 574 300 774 254
Equity and liabilities
Ordinary shareholders` funds 503 273 442 751 485 282
Minority interests 54 649 13 256 47 949
Total shareholders` funds 557 922 456 007 533 231
Non-current liabilities 7 304 6 810 10 607
Current liabilities
Trade and other payables 188 291 111 483 219 055
Loans payable 11 361
Total equity and liabilities 753 517 574 300 774 254
SUPPLEMENTARY INFORMATION Unaudited Reviewed Audited
six months six months year
ended ended ended
28 February 28 February 31 August
2007 2006 2006
R`000 R`000 R`000
Operating income as a 6.5 7.9 7.9
percentage of turnover (%)
Net negative debt to equity (48.5) (48.9) (55.1)
ratio (%)
Effective taxation rate (%) 21.6 23.8 24.6
Net asset value per share 2 305.1 2 041.7 2 238.0
(cents)
Capital expenditure
Expansion 557 1 084 2 815
Replacement 283 983 1 407
840 2 067 4 222
Goodwill and amortisation
At beginning of year 25 729 18 089 18 089
Net acquisition of subsidiaries 15 978
Reclassification of subsidiary (8 338) (8 338)
25 729 9 751 25 729
STATEMENT OF CHANGES IN Foreign
EQUITY currency
Share Share Treasury translation
capital premium share reserve
R`000 R`000 R`000 R`000
Balance as at 1 226 136 402 (21 944) (186)
September 2005
Net profit for the year
Dividends
Dividend settled
Ifrs adjustments: share
based payments
Fair value movement 352
Net treasury share 1 013
movement
Balance as at 31 August 226 136 402 (20 931) 166
2006
Net profit for the
period
IFRS adjustments: share
based payments
Dividends
Dividend settled
Fair value movement 815
Net treasury movement 1 148
Balance as at 28 226 136 402 (19 783) 981
February 2007
STATEMENT OF CHANGES IN Share
EQUITY (Contd) based
Accumulated Shareholders compensation
profit for dividend reserve Total
R`000 R`000 R`000 R`000
Balance as at 1 307 821 - 159 422 478
September 2005
Net profit for the year 82 030 82 030
Dividends (20 971) 20 971 -
Dividend settled (20 971) (20 971)
Ifrs adjustments: share 380 380
based payments
Fair value movement 352
Net treasury share 1 013
movement
Balance as at 31 August 368 880 - 539 485 282
2006
Net profit for the 43 195 43 195
period
Ifrs adjustments: share 190 190
based payments
Dividends (27 357) 27 357 -
Dividend settled (27 357) (27 357)
Fair value movement 815
Net treasury movement 1 148
Balance as at 28 384 718 - 729 503 273
February 2007
COMMENTS
FINANCIAL OVERVIEW
Directors of Nu-World Holdings Ltd, a leading supplier of a broad range of
branded consumer durables to the retail industry, are pleased to report moderate
growth for the period ending 28 February 2007. The Group has now achieved
seventeen consecutive interim periods of growth.
The South African retail industry slowed only moderately during the period under
review. South Africa`s medium-term growth prospects are looking good. With a
"high street" retail market estimated at R385bn, structural changes and cyclical
factors continue to contribute to strong retail sales for consumer durables, Nu-
World`s product of trade.
Group turnover increased by 24.5% to R1 052.2m (February 2006: R844.8m). The
South African operation achieved an increase in revenue of 4.9% for the period
under review, notwithstanding price deflation averaging 4% for appliances and
substantial deflation within key categories of consumer electronics, such as
flat panel televisions. Nonetheless, the run-up to the 2006 Christmas season
achieved all-time record revenues.
Net operating income, EBITDA increased 2.8% to R68.4m (February 2006: R66.5m).
Operating margins came under pressure in a more competitive South African
marketplace and margins were squeezed in Australia and the United Kingdom.
Operating margins for the Group decreased by 1.4% to 6.5% (February 2006: 7.9%).
Apart from intensified competition, margins have been affected by price
deflation in the South African market as well as the markets in which our
subsidiaries operate.
Net interest paid has increased to R3.2m (February 2006: R0.6m), as a
consequence of the cost of financing working capital requirements of stock and
debtors. The Group as a whole has taken a conscious decision to increase stock
levels, to offer better levels of service in an increasingly competitive
marketplace. Overall net working capital days is reflected as 80.5 days with
debtors days of 56.1. The effective tax rate decreased from 23.8% to 21.6%.
Attributable income increased by 6.9% to R43.2m (February 2006: R40.4m).
Headline earnings per share - H.E.P.S. increased by 6.2% to 197.8 cents
(February 2006: 186.3 cents).
Cash generated by operations amounted to R27.5m.
The balance sheet remains solid and the Group remains ungeared with cash
balances on hand of R244.1m (February 2006: R216.4m). The increase in
inventories and trade and other receivables are as a result of the consolidation
of Prima by way of the Yale Prima merger and the consolidation of On Corporation
U.S.A. Trade and other payables increased as a result of the planned run-up of
inventories.
The net asset value per share is up 12.9% to 2 305.1 cents (February 2006: 2
041.7 cents).
Accounting Policies
The interim report is prepared on the historical cost basis, except for
financial instruments which have been fair valued. This is in accordance with
the recognition and measurement of International Financial Reporting Standards
(IFRS), IAS 34 Interim Financial Reporting, the South African Companies Act and
the JSE Listing Requirements. The results are presented in terms of IFRS
statements.
Distribution to Shareholders
The board has resolved to continue the policy of a single distribution to
shareholders at the end of each financial year.
OFFSHORE SUBSIDIARIES
Yale Prima Pty Ltd (Australia), Nu-World U.K. Ltd, On Corporation USA Yale Prima
Pty Ltd. (Australia) represents the largest by turnover, of the Group`s offshore
operations. Nu-World has consolidated its two operations into a 54.8%
shareholding of Yale Prima Pty Ltd, as of 1st August 2006. The consolidation of
operations, including administration, finance, logistics and call centres, has
afforded savings in overall operating costs and overheads. Yale Prima has been
profitable each month since the date of the merger and the subsidiary is
expected to remain profitable for the remainder of the financial year.
Nu-World U.K. Ltd is a 60% held subsidiary. The U.K. retail market continues to
experience weak consumer sentiment, with lower disposable income due to
increasing energy costs and higher interest rates. The addition of seasonal
products and an increasing customer base has enabled the company to provide a
positive contribution for this interim period.
On Corporation USA. With effect from the 1st May 2006, the Group acquired a
controlling interest in On Corporation USA with a Korean partner. The
contribution from On Corporation USA for the year to date has been positive and
the subsidiary is expected to show strong growth for the balance of the
financial year.
PRODUCT RANGE - NEW PRODUCT LINE-UP
Consumer Electronics * Small Electrical Appliances * Conti Motorsport * Air-
Conditioning * White Goods * Power Tools * Cell phones * GPS Guidance Systems
The Nu-World brands now cover the spectrum of a widely increasing range of
consumer durables, including small appliances, consumer electronics, motorsport,
large appliances, air-conditioning and more.
The market for televisions, the single largest category of consumer electronics,
is increasingly competitive, with price deflation across all categories
including CRT and flat panel televisions. Consumers continue to trade up from
CRT to flat panel LCD and plasma televisions, as prices decrease and become more
affordable. Telefunken and JVC are offering an increasing range of flat panel
televisions, both LCD and Plasma. It is evident that consumer affordability
levels have increased with many consumers upgrading their durables with more
expensive products and technologies.
The new ranges of products in terms of motorsport, golf carts, go-carts, power
tools, air-conditioning and white goods etc, represents an increasing percentage
of our business, with enormous growth potential. Our inroads into the market for
our range of cell phones and GPS navigation systems, has opened up new
distribution channels with new opportunities.
The extensive Conti Motorsport range has continued to expand and now includes:
scooters, road bikes, super bikes, quad bikes, bicycles, generators, go-carts,
golf carts and car accessories. The growth drivers for Conti Motorsport, being
affordable ownership and fuel efficient transport, will inevitably change the
nature of commuting in South Africa in line with other emerging markets.
MANPOWER AND SOCIAL RESPONSIBILITY
The Group`s BEE initiatives are in line with the DTI`s BEE Codes of Good
Practice on broad-based Black Economic Empowerment - in terms of management,
employment equity, skills development, preferential procurement, enterprise
development and corporate social responsibility. The Group is committed to
comply with environmental regulations.
PROSPECTS
The Group has now achieved growth for 17 consecutive interim periods. The South
African market for consumer durables is moderating, but growth is still
relatively strong and our key retail customers continue to report double-digit
growth.
According to the BER, the short-term outlook for the SA economy has improved in
recent months. Real GDP growth is expected to slow only moderately from an
estimated 5% last year, but the composition of growth may differ. The first
quarter retail survey indicated a fairly mild slowdown in retail sales volume.
Retailers expect to see a recovery in sales during 2007/Q2. The 2007 Budget was
widely praised. Business will profit from the R9bn relief in personal income tax
as well as the phasing out of secondary tax on companies and the relaxation of
foreign exchange controls. The MPC`s decision to leave interest rates unchanged
in February was widely welcomed. Infrastructure spending as well as investment
in preparation for the 2010 soccer world cup, should sustain growth in the
medium term. The government has committed to spend R400bn in the medium-term to
upgrade the country`s electricity, water and transport infrastructure.
Nu-World`s diversification in South Africa and off-shore, into an increasingly
wider range of consumer durable market segments, provides for broader market
exposure and offers greater scope for sustainable growth. Nu-World`s
diversification has provided shareholders with a platform for sustainable growth
- with growth in attributable income over the last five financial years
averaging 19.3%. The group remains well positioned for medium term growth in
terms of our broad diversification, level of innovation and key customer
relationships.
On behalf of the board of directors
M. S. Goldberg B.H. Haikney
Executive Chairman Company Secretary
Wynburg
8 May 2007
Administration
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 2004 (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Company secretary
B.H. Haikney
Auditors
Tuffias Sandberg KSi
Joint sponsors
Sasfin Capital, a division of Sasfin Bank Limited (Lead); Nedbank Capital;
Directors
M.S. Goldberg (Executive Chairman), J.A. Goldberg (Chief Executive), G.R. Hindle
(Financial Director)
Non-executive Director
J.M. Judin
Independent Non-executive Director
D. Piaray
www.nuworld.co.za
Date: 08/05/2007 17:00:01 Produced by the JSE SENS Department.
