| Tue 10 May 2011, 17:00 | | NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six months |
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NWL
NWL
NWL - Nu-World Holdings Limited - Unaudited Interim Report for the six months
ended 28 February 2011
Nu-World Holdings Limited
Registration number 1968/002490/06
(Incorporated in the Republic of South Africa)
JSE share code: NWL ISIN code: ZAE000005070
Unaudited Interim Report for the six months ended 28 February 2011
- Group revenue increased by 3.0% to R954,5 million
- Total comprehensive income increased by 2.1% to R44,4 million
- Headline earnings per share decreased by 9.7% to 152,4 cents
- Cash generated from operating activities R104,0 million
- Net cash on hand R118,7 million
- Net asset value per share increased by 5.7% to 2 929,0 cents
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2011 2010 % 2010
R`000 R`000 change R`000
Revenue 954 547 926 805 3.0 1 821 931
Net operating income 59 946 60 499 113 297
(EBITDA)
Depreciation 3 007 3 155 6 629
Interest paid 4 999 2 899 4 811
Fair value adjustment on 1 189
financial instruments
Income before taxation 51 940 54 445 100 668
Taxation 13 683 14 969 26 596
Income after taxation 38 257 39 476 74 072
Share of associate 30 (183)
company profit/(loss)
Net profit for the 38 287 39 476 (3.0) 73 889
period/year
Other comprehensive
income:
Exchange differences on 6 078 61 2 152
translating foreign
operations
Cash flow hedges 3 935 3 935
Total comprehensive 44 365 43 472 2.1 79 976
income for the
period/year
Net profit attributable
to:
Non-controlling interest 5 633 3 815 5 289
Equity holders of the 32 654 35 661 68 600
company
38 287 39 476 73 889
Total comprehensive
income attributable to:
Non-controlling interest 9 168 6 885 6 003
Equity holders of the 35 197 36 587 73 973
company
44 365 43 472 79 976
Headline Earnings
Reconciliation
Determination of
attributable earnings
and headline earnings:
Net profit attributable 32 654 35 661 (8.4) 68 600
to ordinary shareholders
Headline earnings 32 654 35 661 (8.4) 68 600
OTHER GROUP INFORMATION
Capital distribution 22 867
Earnings per share 152,4 168,7 (9.7) 322,7
(cents)
Headline earnings per 152,4 168,7 (9.7) 322,7
share (cents)
Capital distribution per 101,0
share (cents)
Capital distribution 3,0
cover
Interest cover 11,4 19,8 22,2
Shares in issue 21 421 371 21 134 329 21 260 618
Shares in issue - 21 421 465 21 143 650 21 143 650
weighted
Shares in issue - 21 421 371 21 795 329 21 591 118
diluted
Operating income as 6,3 6,5 6,2
percentage of turnover
(%)
Net negative debt to (18,9) (28,7) (9,4)
equity ratio (%)
Effective taxation rate 26,3 27,5 26,4
(%)
Net asset value per 2 929,0 2 771,3 5.7 2 916,7
share (cents)
Intangible assets
Goodwill
At beginning of 37 991 37 991 37 991
period/year
Net acquisition/ 4 572
translation of
subsidiaries
At end of period/year 42 563 37 991 37 991
Intellectual Property
Net acquisition of 12 627 14 322 14 322
subsidiaries
Amortisation/translation 328 (1 303) (1 695)
of intellectual property
At end of period/year 12 955 13 019 12 627
Total intangible assets 55 518 51 010 50 618
SEGMENTAL INFORMATION
Geographical revenue
South Africa 540 219 538 969 1 126 051
Offshore subsidiaries 414 328 387 836 695 880
954 547 926 805 3.0 1 821 931
Geographical income
South Africa 27 223 31 730 63 148
Offshore subsidiaries 5 431 3 931 5 452
32 654 35 661 (8.4) 68 600
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2011 2010 2010
R`000 R`000 R`000
Balance as at 1 620 102 554 452 554 452
September
Total attributable 32 654 35 661 68 600
income for the period
Dividend (paid)/reversed (1 771) 600 (361)
IFRS adjustments: share 277
based payments
Loss on cash flow hedges 3 934 3 934
Capital distribution (22 873) (7 677) (7 677)
from share premium
Fair value movement 2 543 926 1 439
Net treasury share (3 225) 1 634
movement
Shares repurchased (2 196) (2 196)
Balance at end of 627 430 585 700 620 102
period/year
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2011 2010 2010
R`000 R`000 R`000
ASSETS
Non-current assets
Fixed assets 30 488 31 284 30 942
Intangible assets 55 518 51 010 50 618
Financial assets and 54 670 51 735 54 640
other investments
Deferred taxation 6 830 9 847 11 582
Current assets
Inventory 403 409 268 868 391 569
Trade and other 147 086 206 712 283 636
receivables
Cash equivalents 118 739 168 153 58 520
Total assets 816 740 787 609 881 507
Equity and liabilities
Ordinary shareholders` 627 430 585 700 620 102
funds
Minority interests 38 303 30 019 29 135
Total shareholders` 665 733 615 719 649 237
funds
Non-current liabilities
Long term liabilities 20 000 20 000 20 000
Current liabilities
Trade and other payables 131 007 151 890 212 270
Total equity and 816 740 787 609 881 507
liabilities
CONDENSED GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2011 2010 2010
R`000 R`000 R`000
Cash 62 772 20 926 (82 280)
generated/(utilised) by
operating activities
Cash generated by/ 103 997 42 443 (45 093)
(absorbed by) operations
Interest paid (4 999) (2 900) (4 811)
Capital distributions/ (24 644) (9 273) (8 038)
dividends paid
Normal tax on companies (11 582) (9 344) (24 338)
Cash flows from (2 553) (1 904) (9 964)
investing activities
Purchase of tangible (2 553) (1 875) (5 298)
fixed assets
Proceeds on disposal of 464
fixed assets
Investment in associate (29) (2 934)
Increase in investment (2 196)
in treasury shares
Cash flows from - - 1 633
financing activities
Proceeds on issue of 1 633
treasury shares
Net increase/(decrease) 60 219 19 022 (90 611)
in cash and cash
equivalents
Cash and cash 58 520 149 131 149 131
equivalents at the
beginning of the
period/year
Cash and cash 118 739 168 153 58 520
equivalents at end of
the period/year
COMMENTS
Financial overview
Directors of Nu-World Holdings Limited ("Nu-World" or "the Group" or "the
Company") are pleased to report a reasonable set of interim results, for a
period which has proved to be particularly challenging. The beginning of
calendar 2011 has been the most demanding. Many of our retail customers are
still holding large stocks of consumer durables as a consequence of lower than
anticipated sales during the festive season. Consumer confidence has declined
during 2011 Q1 and consistent with this, retailers have reported lower business
confidence for the period. Consumers have come under increasing pressure with
rising food, fuel and electricity costs. It is evident that because of the
increasing cost of essentials, consumers have a lesser portion of their
discretionary expenditure to spend on consumer durables. This slowdown presents
a challenging trading environment for the remainder of the financial year.
Group Revenue for operations increased by 3.0% to R954,5 million (February 2010:
R926,8 million).
Net operating income - EBITDA, decreased by 0.9% to R59,9 million (February
2010: R60,5 million). This decrease is off a high base after an increase of
119.1% in February 2010.
Operating margins came under pressure in an increasingly competitive market.
Both South African and Australian group companies faced intensified competition
during the festive season and into the first months of calendar 2011.
Total comprehensive income for the period increased by 2.1% to R44,4 million
(February 2010: R43,4 million).
Headline earnings per share - H.E.P.S. decreased by 9.7% to 152.4 cents
(February 2010: 168.7 cents) following an increase of 161.6% for the same period
last year.
The balance sheet remains solid, with negative gearing and cash equivalents of
R118,7 million. All companies in the Group are focused on working capital
management, reducing stock levels and improving debtors` collection days. The
current high level of inventories at R403,4 million is due to the Company
stocking up of our new product categories as well as an increased winter
appliance range, for sale during the second half of the financial year. It is
anticipated that stock levels will decline substantially by the financial year
end.
Cash generated by operations of R104,0 million has improved substantially as
compared to the same period for the previous year.
The net asset value per share is up 5.7% to 2 929.0 cents (February 2010: 2
771.3 cents). The share is trading at an approximate discount to net asset value
of 18% with the share currently trading in the region of 2 400 cents.
OPERATIONAL REVIEW
The Group`s line-up of international and in-house value brands encompass an ever
increasing spread of consumer durables within six key market categories which
include:- consumer electronics, hi-tech, small electrical appliances, white
goods, liquor and furniture. Our recent diversification into two new product
categories, hi-tech and liquor, has opened up new opportunities for growth
across a wider spectrum of retail customers. The extensive liquor market,
estimated at approximately R40 billion, offers above average growth
opportunities. The hi-tech product category has proved to be competitive and
challenging. Within the hi-tech category, the mobile phone market segment which
is the single largest retail market category in South Africa, is anticipated to
become an important growth driver. Nu-World`s leading-edge range of mobile
phones offers exciting features including:- multiple sims, free-to-air TV, music
and a number of other impressive features, at affordable prices. Other hi-tech
products currently being introduced include, mobile internet devices and
netbooks. During the next few months we will be launching a comprehensive range
of JVC flat panel televisions, including LCD`s, LED`s, and Plasmas.
Offshore subsidiaries accounted for 43% of revenues, much in line with the same
period during 2010, but the percentage of income generated from offshore
subsidiaries increased from 11% for the interim period to February 2010 to 17%
for the period under review. Our Australian subsidiaries managed to improve
their income contribution, despite intensely competitive market conditions by
diversifying their product offering and winning market share.
In China, our associate company has launched a range of small appliances. It is
rewarding to see our trademarked "Palsonic" branded products on the shelves of
leading Chinese retailers.
PROSPECTS
South African retail sales growth slowed during the first quarter of calendar
2011. Consumer confidence has declined as a result of increasing inflationary
pressures, including higher costs for food, fuel and electricity. It is apparent
that the pace of growth in the South African economy remains volatile. This
slowdown presents a challenging trading environment for the remainder of the
financial year. Market conditions have become all the more competitive and
profit margins have come under further pressure.
The Group`s line-up of key international and local brands, across an
increasingly broad range of product categories and income groups, has produced
ongoing growth over many challenging years. Directors continue to focus on
diligent working capital management, lower inventory target levels, higher stock
turns and other cost-cutting initiatives.
REPORTING ENTITY
Nu-World Holdings Limited is a group of companies domiciled in both South Africa
and Australia. The condensed consolidated interim financial statements as at and
for the period ended 28 February 2011 comprise the Company, its subsidiaries and
interest in associates.
BASIS OF PREPARATION
These condensed consolidated interim financial statements for the six months
ended 28 February 2011 have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the AC 500 standards as issued by the
Accounting Practices Board of its successors, 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 2010.
The condensed consolidated interim financial statements are presented in Rand
rounded to the nearest thousand (`000).
The condensed consolidated statement of financial position at 28 February 2011
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.
SUBSEQUENT EVENTS
No events material to the understanding of the report have occurred during the
period between 28 February 2011 and the date of this report.
On behalf of the board of directors
J.A. Goldberg B.H. Haikney
Chief Executive Officer Company Secretary
10 May 2011
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: 10/05/2011 17:00:01 Produced by the JSE SENS Department.
