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NWL
NWL
Nu-World - Reviewed interim report for the half year ended 28 February 2006
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")
INCOME BEFORE TAXATION UP 29,0% TO 62.4m
ATTRIBUTABLE INCOME UP 14,2% TO R40.4m
HEADLINE EARNINGS PER SHARE (CENTS) UP 13,7% TO 186,3 cents
CASH GENERATED BY OPERATIONS R37 282 million
5 Year Compounded Average Annual Growth Rate in Headline Earnings up 24,1%
REVIEWED INTERIM REPORT FOR THE HALF YEAR ENDED 28 FEBRUARY 2006
Reviewed Reviewed Restated
six months six months year
ended ended ended
28 Feb 2006 28 Feb 2005 31 Aug 2005
R"000 R"000 % Change R"000
Turnover 844 808 911 616 (7,3) 1 626 122
Net operating income 66 552 56 181 102 466
Depreciation 3 550 3 979 8 251
Interest paid 599 3 822 7 220
Income before taxation 62 403 48 380 29,0 86 995
Taxation 14 852 10 699 18 213
Income after taxation 47 551 37 681 68 782
Share of associate 3 555
company"s loss
Minority interests 3 603 2 312 4 444
Attributable income 40 393 35 369 14.2 73 226
Dividend declared 20 971
Dividend per share 92.6
(cents)
Headline earnings 40 393 35 369 14.2 73 226
Earnings per share 186.3 163.8 13.7 339.1
(cents)
Headline earnings per 186.3 163.8 13.7 339.1
share (cents)
Dividend per share 92.6
(cents)
Interest cover 105.2 13.7 13.0
Shares in issue 21 685 290 21 597 265 21 592 490
Shares in issue - 21 685 290 21 597 265 21 592 490
weighted
Shares in issue - 22 636 290 21 597 265 22 543 490
diluted
CONSOLIDATED CASH FLOW STATEMENT
Reviewed Restated Restated
six months six months year
ended ended ended
28 Feb 2006 28 Feb 2005 31 Aug 2005
R"000 R"000 R"000
Cash generated by operating 37 282 66 444 65 467
activities
Cash generated by operations 79 054 95 584 101 512
Interest paid (599) (3 822) (7 220)
Dividend paid (20 971) (15 252) (15 252)
Taxation paid (20 202) (10 066) (13 573)
Cash flows from investing (12 548) (23 357) (26 342)
activities
Purchase of tangible fixed (2 067) (2 929) (5 511)
assets
Proceeds on disposal of fixed 145
assets
Increase in investment in (20 428) (20 884)
subsidiary
Reclassification of subsidiary (10 481)
Increase in investment in (92)
treasury shares
Cash flows from financing 1 078 (2 669) (10 196)
activities
Repayment of long-term (2 669) (10 196)
borrowings
Increase in translation 15
reserve
Proceeds on issue of treasury 1 063
shares
Net increase in cash and cash 25 812 40 418 28 929
equivalents
Effect of exchange rate (68)
changes
Cash and cash equivalents at 190 549 161 688 161 688
the beginning of the period/year
Cash and cash equivalents at the 216 361 202 106 190 549
end of the period/year
CONSOLIDATED BALANCE SHEET
Reviewed Restated Restated
six months six months year
ended ended ended
28 Feb 2006 28 Feb 2005 31 Aug 2005
R"000 R"000 R"000
ASSETS
Non-current assets
Fixed assets 41 576 46 559 44 867
Goodwill 9 751 17 633 18 089
Investment in associate company 23 816
Current assets
Inventory 144 054 214 467 171 341
Trade and other receivables 138 742 215 622 227 716
Cash equivalents 216 361 202 106 190 549
Total assets 574 300 696 387 652 562
EQUITY AND LIABILITIES
Ordinary shareholders" funds 442 751 383 633 422 478
Minority interests 13 256 33 401 28 156
Total shareholders" funds 456 007 417 034 450 634
Non-current liabilities 6 810 9 692 6 928
Current liabilities
Trade and other payables 111 483 269 661 195 000
Total equity and liabilities 574 300 696 387 652 562
SUPPLEMENTARY INFORMATION
Reviewed Restated Restated
six months six months year
ended ended ended
28 Feb 2006 28 Feb 2005 % Change 31 Aug 2005
R"000 R"000 R"000
SUPPLEMENTARY
INFORMATION
Analysis of group
turnover
Current consolidated 844 808 761 021 11.0 1 378 518
subsidiaries
Deconsolidated 150 595 (100.0) 247 604
subsidiary
Total group turnover 844 808 911 616 (7.3) 1 626 122
Operating income as a 7.9 6.2 6.3
percentage of turnover
(%)
Net negative debt to (48.9) (52.7) (45.1)
equity ratio (%)
Effective taxation rate 23.8 22.1 20.9
(%)
Net asset value per 2 041.7 1 776.3 14.9 1 956.6
share (cents)
Capital Expenditure
Expansion 1 084 1 200 4 002
Replacement 983 1 729 1 509
2 067 2 929 5 511
Goodwill and
amortisation
At beginning of year 18 089 5 926 5 926
Net acquisition of 9 295 9 751
subsidiaries
Reclassification of (8 338)
subsidiary
Derecognition of 2 412 2 412
negative goodwill in
terms of IFRS 3
At end of period/year 9 751 17 633 18 089
SEGMENTAL INFORMATION
Geographical revenue
Republic of South Africa 577 200 499 606 971 479
Australasia 232 791 381 814 591 628
United Kingdom 34 817 30 196 63 015
844 808 911 616 (7.3) 1 626 122
Geographical income
Republic of South Africa 37 397 31 085 76 963
Australasia 1 407 4 273 (2 411)
United Kingdom 1 589 11 (1 326)
40 393 35 369 14.2 73 226
STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share Treasury translation
capital premium shares reserve
R"000 R"000 R"000 R"000
Balance as at 1 September 217 115 632 (1 072) (813)
2004 (Audited)
IFRS adjustments
Restated balance at 1 217 115 632 (1 072) (813)
September 2004
Net profit for the year
Net profit as previously
reported
IFRS adjustments
Derecognition of negative
goodwill (IFRS 3)
Dividends
Dividend settled
IFRS adjustments - share
based payments
Fair value movement 627
Net treasury share movement (20 872)
Treasury shares issued 9 20 770
Balance as at 31 August 226 136 402 (21 944) (186)
2005
Net profit for the period
IFRS adjustments - share
based payments
Dividends
Dividend settled
Fair value movement (402)
Net treasury movement 1 063
Balance as at 28 February 226 136 402 (20 881) (588)
2006
STATEMENT OF CHANGES IN EQUITY (Contd)
Share
Shareholders based
Accumulated for compensation
profits dividend reserve Total
R"000 R"000 R"000 R"000
Balance as at 1 247 434 - - 361 398
September 2004
(Audited)
IFRS adjustments
Restated balance at 1 247 434 - - 361 398
September 2004
Net profit for the year 73 226 73 226
Net profit as 73 385 73 385
previously reported
IFRS adjustments (159) (159)
Derecognition of 2 412 2 412
negative goodwill (IFRS
3)
Dividends (15 251) 15 251 -
Dividend settled (15 251) (15 251)
IFRS adjustments - 159 159
share based payments
Fair value movement 627
Net treasury share (20 872)
movement
Treasury shares issued 20 779
Balance as at 31 August 307 821 - 159 422 478
2005
Net profit for the 40 393 40 393
period
IFRS adjustments - 190 190
share based payments
Dividends (20 971) 20 971 -
Dividend settled (20 971) (20 971)
Fair value movement (402)
Net treasury movement 1 063
Balance as at 28 327 243 - 349 442 751
February 2006
COMMENTS
ACCOUNTING POLICIES
The interim report is prepared on the historical cost basis, except financial
instruments which have been fair valued.
This is in accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS), IAS 34 Interim Financial
Reporting, the South African Companies Act and the JSE Listings Requirements.
The results are presented in terms of IFRS statements. The Group has adopted and
applied IFRS for the first time for the year ended 2006.
The transition date is 1 September 2004. The following new accounting policies
were adopted:
Share-based paymentsThe Group has applied IFRS 2 - share based payments. IFRS 2
has been applied to all grants of equity, which were unvested as of 1 September
2004.
Reconciliation of Income Statement
Reviewed Restated
six months year
ended ended
28 Feb 2005 31 Aug 2005
R"000 R"000
Profit attributable to shareholders
As previously reported under SA GAAP 35 369 73 385
IFRS adjustment - share based (159)
payments
As reported under IFRS 35 369 73 226
Share based
Retained compensation
Earnings reserve
R"000 R"000
1 September 2005
As previously reported 307 980
IFRS adjustment - share based (159) 159
payments
As reported under IFRS 307 821 159
The auditors Tuffias Sandberg KSi have reviewed the financial statements for the
six months ended 28 February 2006 and their unqualified review report is
available for inspection at the company"s registered office.
FINANCIAL OVERVIEW
The 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 solid
growth for the period ending 28 February 2006. The Group is on track for sixteen
consecutive years of growth for the financial year to August 2006.
The South African retail industry remained buoyant during the period under
review. The run up to Christmas was particularly strong and South Africa
achieved record sales for the period.
Group turnover decreased by 7,3% to R844 808m (February 2005 :
R911 616m), as a result of the reclassification of the Prima Australasia Pty Ltd
subsidiary. The South African operation achieved an increase in revenue of
15,5% for the period under review, notwithstanding price deflation averaging 12%
for consumer electronics and 8% for appliances.
As of September 2005, due to an issue of new shares, the subsidiary Prima
Australasia Pty Ltd, which was previously 51% held, has been reclassified as an
associate. Nu-World now holds 46,3% of Prima. The remaining Australian
subsidiary, Yale Appliance Group Pty Ltd, performed well with profitability
reflecting double-digit growth. The ongoing consolidation of operations,
including logistics and call centres, of Prima and Yale continues, with savings
in overall operating costs and overheads.
Nu-World U.K. Ltd traded profitably in a difficult market. Turnover increased
15% to R34,8m and the company contributed R1,589m to attributable income.
Net operating income, EBITDA increased 18,5% to R66 552m (February 2005 : R56
181m). Operating margins increased to 7,9% as compared to the previous year"s
6,2%.
The improved working capital position has resulted in a substantial reduction in
net interest paid to R599 000 February 2005: R3 822m). Overall net working
capital days of 75,8 days, is an improvement of 3 days compared to the 78,8 days
for the corresponding period to February 2005. Interest cover improved
exponentially from 13,7 to 105,2 times. The effective tax rate increased from
22,1% to 23,8%.
Attributable income increased by 14,2% to R40 393m (February 2005 : R35 369m).
Headline earnings per share - H.E.P.S. increased 13,7% to 186,3 cents (February
2005 : 163,8 cents).
Cash generated by operating activities amounted to R37 282m.
The balance sheet remains solid and the group remains ungeared with cash
balances on hand of R216,361m (February 2005 : R202 106m). The decrease in
inventories and trade and other receivables are as a result of the
reclassification of Prima.
The net asset value per share is up 14,9% to 2,041.7 cents (February 2005 :
1,776.3 cents).
New product range line-up
Conti Motorsport * Air-Conditioning * White Goods * Power Tools * Cell phones *
GPS Sytems
The new ranges of products in the market including motorsport, air-conditioning
and white goods etc., represent a small percentage of our business at this time.
However, these segments have performed exceedingly well and offer substantial
potential for growth. New ranges of Plasma, LCD and CRT televisions are being
introduced as well as a range of cell phones and GPS tracking systems.
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 achieved growth for 16 consecutive interim periods. The South
African market for consumer durables remains buoyant and our key retail
customers continue to report double-digit growth.
According to the SA Reserve Bank, the growth rate in volume of consumer durables
peaked in the second quarter at 20,3%, with an average growth of 18% for 2005.
Consumer debt continues to increase, but the debt servicing level of 7% remains
relatively low and there is scope for consumers to take on more debt. The
forecast for growth of consumer durables for 2006 is 11%, which although down on
the 18% for 2005, is nevertheless extremely strong.
Nu-World"s diversification into a broad range of consumer durable market
segments provides comfort in terms our growth being less reliant on the level of
innovation and the introduction of new products within a particular segment of
consumer durables. The continuing strong growth in private sector consumption
continues to be sustained by low interest rates, higher asset prices and
increased real disposable income. It is evident that consumer affordability
levels have increased with many consumers upgrading their durables with more
expensive products and technologies. Directors remain optimistic in terms of the
Group"s prospects for the remainder of the financial year.
On behalf of the board of directors
M.S. Goldberg
Executive Chairman
B.H. Haikney
Company Secretary
Sandton
10 May 2006
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 2004 (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
Company secretary
B.H. Haikney
Auditors
Tuffias Sandberg KSi
Joint sponsors
Nedbank Capital; Sasfin Corporate Finance, a division of Sasfin Bank Limited
(Lead)
Directors
M.S. Goldberg (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: 09/05/2006 05:00:37 PM Produced by the JSE SENS Department
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