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NWL
NWL
NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six months
ended 28 February 2010
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 six months ended 28 February 2010
- GROUP REVENUE INCREASED BY 17.8% to R926,8 million
- TOTAL COMPREHENSIVE INCOME INCREASED BY 161.6% to R35,7 million
- HEADLINE EARNINGS PER SHARE INCREASED BY 101.8% to 168.7 cents
- CASH GENERATED BY OPERATING ACTIVITIES R42,4 million
- NET CASH ON HAND R168,1 million
- NET ASSET VALUE PER SHARE 2 771.3 cents
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Restated*
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2010 2009 % 2009
R`000 R`000 change R`000
Revenue 926 805 786 632 17.8 1 443 104
Net operating income 60 499 27 615 119.1 51 769
Depreciation 3 155 3 221 6 904
Interest paid 2 899 3 408 6 676
Restructuring costs - 3 027
operations
Fair value adjustment 1 720
on financial
instruments
Income before 54 445 20 986 159.4 33 442
taxation
Taxation 14 969 5 783 8 465
Income after taxation 39 476 15 203 159.7 24 977
Minority interests (3 815) (1 571) (1 943)
Total comprehensive 35 661 13 632 161.6 23 034
income for the period
SUPPLEMENTARY
INFORMATION
Determination of
comprehensive income
and headline earnings
Comprehensive income 35 661 13 632 161.6 23 034
attributable to
ordinary shareholders
IFRS 3 Net Loss on 4 050 7 251
disposal of
investments
Headline earnings 35 661 17 682 101.7 30 285
Capital distribution 7 678
Capital distribution 33.9
from share premium
(cents)
Comprehensive income 35 661 13 632 161.6 23 034
Headline earnings 35 661 17 682 101.7 30 285
Earnings per share 168.7 64.5 161.8 108.9
(cents)
Headline earnings per 168.7 83.6 101.8 143.2
share (cents)
Dividend per share 33.9
(cents)
Interest cover 19.8 7.2 6.7
Shares in issue 21 134 329 21 149 414 21 148 614
Shares in issue - 21 143 650 21 177 842 21 162 931
weighted
Shares in issue - 21 795 329 21 810 414 21 809 614
diluted
Operating income as a 6.5 3.5 3.6
percentage of revenue
(%)
Net negative debt to (28.7) (15.8) (26.9)
equity ratio (%)
Effective taxation 27.5 27.6 25.3
rate (%)
Net asset value per 2 771.3 2 595.8 6.8 2 621.7
share (cents)
Capital expenditure
Expansion 998 1 287 3 025
Replacement 877 1 057 2 582
1 875 2 344 5 607
Intangible Assets
Goodwill and amortisation
At beginning and end 37 991 37 991 37 991
of year
Intellectual Property
At beginning of 14 322 14 322 14 322
period/year
Amortisation of (1 303)
intellectual property
At end of period/year 13 019 14 322 14 322
Total intangible 51 010 52 313 52 313
assets
SEGMENTAL INFORMATION
Geographical revenue
Republic of South 538 969 505 242 6.7 1 007 026
Africa
Australasia 387 836 281 390 37.8 436 078
926 805 786 632 17.8 1 443 104
Geographical income
Republic of South 31 730 12 668 150.5 29 875
Africa
Australasia 3 931 964 307.7 410
35 661 13 632 161.6 30 285
* Restatement - refer to restatement note
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Balance at 1 September 554 452 550 060 550 060
Total comprehensive 35 661 13 632 23 034
income for the period
Dividend (paid)/reversed 600 (600) (239)
IFRS adjustments: share 380 443
based payments
Profit/(loss) on cash 3 934 (3 934)
flow hedges
Capital distribution (7 677) (13 429) (13 429)
from share premium
Fair value movement 926 46 (400)
Net treasury share (2 196) (1 083) (1 083)
movement
Balance at end of 585 700 549 006 554 452
period/year
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
ASSETS
Non-current assets
Fixed assets 31 284 33 835 32 563
Intangible assets 51 010 52 313 52 313
Financial assets and 51 735 51 706 51 706
other investments
Deferred taxation 9 847 11 608 10 492
Current assets
Inventory 268 868 307 216 264 690
Trade and other 206 712 175 906 198 153
receivables
Cash equivalents 168 153 86 911 149 131
Total assets 787 609 719 495 759 048
Equity and liabilities
Ordinary shareholders` 585 700 549 006 554 452
funds
Minority interests 30 019 22 301 23 133
Total shareholders` 615 719 571 307 577 585
funds
Non-current liabilities
Long term liabilities 20 000 20 000 20 000
Current liabilities
Trade and other payables 151 890 128 188 161 463
Total equity and 787 609 719 495 759 048
liabilities
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2010 2009 2009
R`000 R`000 R`000
Cash generated/ 20 926 (52 832) 12 088
(utilised) by operating
activities
Cash generated/ 42 443 (32 892) 40 705
(utilised) by operations
Interest paid (2 900) (3 408) (6 676)
Capital distributions/ (9 273) (14 029) (13 669)
dividends paid
Normal tax on companies (9 344) (2 503) (8 272)
Cash flows from (1 904) 55 (2 645)
investing activities
Purchase of tangible (1 875) (2 344) (5 607)
fixed assets
Proceeds on disposal of 563
fixed assets
Other investments (29)
Net proceeds on sale of 3 481 3 481
a subsidiary
Increase in investment (1 082) (1 082)
in treasury shares
Cash flows from - - -
financing activities
Net increase/(decrease) 19 022 (52 777) 9 443
in cash and cash
equivalents
Cash and cash 149 131 139 688 139 688
equivalents at the
beginning of the
period/year
Cash and cash 168 153 86 911 149 131
equivalents at end of
the period/year
Comments
Financial overview
Directors are pleased to report a solid set of results and positive growth,
despite challenging trading environments in both South Africa and Australia.
We are comfortable that the restructuring and rationalization initiatives
undertaken during the previous financial year, are bearing fruit. Directors
are confident that the Group is leaner and better positioned to support
sustainable growth in the medium term.
The improving economic outlook is supporting a definite uptick in consumer
confidence and an increased willingness to spend on consumer durables, among
consumers.
Group revenue for continuing operations increased by 17,8% to R926,8m
(February 2009: R786,6m).
Net operating income - EBITDA, increased by 119,1% to R60,5m (February 2009:
R27,6m). Operating margins improved substantially compared to the equivalent
period to February 2009, commendable considering the intense competition in
the South African and Australian marketplaces.
Total comprehensive income for the period increased by 161,6% to R35,7m
(February 2009: R13,6m).
Headline earnings per share - H.E.P.S. increased by 101,8% to 168,7 cents
(February 2009: 83,6 cents).
The balance sheet remains strong, with negative gearing and cash equivalents
of R168,1m. It is clear that the improved focus on working capital management
is achieving results. Inventories of R268,9m reflect a decrease of 12,5%
(February 2009: R307,2m) and an improved stock turn ratio as a result.
The net asset value per share is up 6,8% to 2 771,3 cents (February 2009: 2
595,8 cents).
Trade receivables and payables increased in line with the increased revenue.
OFFSHORE SUBSIDIARY
Yale Prima Pty Ltd is a 59,4% held subsidiary, based in Sydney Australia,
which in turn holds 51% of subsidiary Overstockoutlet Pty Ltd. Yale Prima
imports a range of consumer electronics and appliances for major Australian
retailers on an indent basis. OO.COM.AU is one of the leading Australian
online internet retailers. OO.COM. AU has successfully re-branded to the
exclusive "Only Online". The Company trades primarily in leading international
brands across a broad range of consumer products:- including leading world
brands in consumer electronics, watches, perfumes, books, DVD`s, golf and
other sporting goods, health and fitness equipment, luggage, manchester and
fashion accessories etc.
The Australian economy is firmly back on a growth path with solid GDP growth.
The growth path confidence is borne out by the Australian Central Bank`s
continued raising of the benchmark cash rate, currently at 4,0% after the last
increase in March 2010.
Our Australian directors and management have completed their consolidation and
restructuring initiatives as set out in the previous financial year. These
cost-benefit synergies together with the improving Australian retail economy,
have positioned the companies onto a path for future sustainable growth.
Product Range
Consumer Electronics * Small Electrical Appliances * Conti Motorsport * White
Goods * Liquor * Furniture
Notwithstanding the contraction of the South African retail market over the
past years, Nu-World is increasing its market share in key product categories.
Our price-entry and middle-market brands, in both consumer electronics and
appliances, have performed particularly well. Our top-line "Vegas" ranges of
consumer electronics and appliances, continues to make inroads and win
consumer support and market share. Our range of flat panel televisions,
including full high definition Plasma`s, LCD`s and LED`s, offer excellent
value. Our comprehensive line-up of televisions, including CRT`s and Flat
Panels is expanding rapidly. New initiatives include the pending launch of our
high-tech division.
PROSPECTS
Directors are confident that the consolidation and rationalisation initiatives
completed in 2009 have ensured that all Group companies are leaner and more
competitive and well positioned to take advantage of improving markets.
The Group`s diversification across markets, a broad range of product
categories, key brands and market segments, has always served us well and
remains at the core of our growth strategy for the future.
Ongoing management initiatives for the financial year to August 2010 include:
- The extension of product categories.
- The extension of product ranges within existing categories.
- The introduction of mobile phones and netbooks.
-The introduction of a liquor division supplying our existing retail
customers.
- The establishment of a strategic partnership to enter the Chinese appliance
market.
- The ongoing cost-containment and streamlining of the local manufacturing
division.
Key financial indicators are showing clear signs that the South African and
Australian economies have emerged from recession, although the pace of the
recovery in South Africa remains measured. The South African Reserve Bank`s
decision to cut its key lending rate by a further 50 basis points to 6.5% in
March 2010, the lowest in almost 3 decades, is welcomed. The rate cut will
undoubtedly spur the revival in consumer spending which began in the fourth
quarter of 2009.
Whilst the hosting of the Soccer World Cup is clearly providing a huge boost
to the economy and the hospitality sector during 2010, Government`s
infrastructure program will stretch well into the future and underpin GDP
growth well beyond this international event.
The Board is confident of continued sustained growth in the medium and long
term.
CHANGES TO THE BOARD
The following changes to the Board have taken place since the date of the
Group`s last report:
- Richard Kinross was appointed as an independent non-executive director,
effective 1 November 2009.
NOTES
1. Basis of preparation
The condensed unaudited Group interim financial statements for the period have
been prepared in compliance with International Accounting Standard IAS 34 -
Interim Financial Reporting, the Listings Requirements of the JSE Limited and
AC 500. Other than IAS 1, the accounting policies applied in preparing these
condensed unaudited Group interim financial statements are consistent with
those applied in the annual financial statements for the year ended 31 August
2009 and the six months to 28 February 2009 and comply with International
Financial Reporting Standards (``IFRS``) and the South African Companies Act.
Consequently, the comparative information has been restated for the new
disclosures in terms of IAS 1.
2. Restatement
The revenue in the statement of the comprehensive income has been restated in
terms of circular 9/2006 (IFRIC).
3. Subsequent events
No events material to the understanding of the report have occurred during the
period between 28 February 2010 and the date of this report.
4. Corporate governance
The Nu-World Holdings Ltd Group subscribes to the recommendations of the King
III Report on Corporate Governance and recognises the requirements to conduct
the enterprise with integrity, transparency and equal opportunity. The Group
strives to provide reports to shareholders that are timely, accurate,
consistent and informative.
5. BBBEE rating
The major South African wholly owned subsidiary, Nu-World Industries (Pty)
Ltd, has attained a Level 5 accreditation.
On behalf of the board of directors
M.S. Goldberg
Executive Chairman
B.H. Haikney
Company Secretary
20 April 2010
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
Tuffias Sandberg KSi
Sponsor
Sasfin Capital, a division of Sasfin Bank Limited
Directors
M.S. Goldberg (Executive Chairman),
J.A. Goldberg (Chief Executive),
G.R. Hindle (Financial Director)
Non-executive directors
J.M. Judin
D. Piaray
R. Kinross
www.nuworld.co.za
Date: 20/04/2010 17:00:01 Produced by the JSE SENS Department.
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