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Unaudited Condensed Consolidated Interim Results Of Nu-World For The Six Months Ended 28 February 2019
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 CONDENSED CONSOLIDATED INTERIM RESULTS OF NU-WORLD FOR
THE SIX MONTHS ENDED 28 FEBRUARY 2019 (“INTERIM RESULTS”)
CASH GENERATED FROM OPERATIONS R 305,1 MILLION
INCOME AFTER TAXATION R 95,7 MILLION + 11.1%
NET PROFIT ATTRIBUTABLE TO ORDINARY R 94,1 MILLION + 10.5%
SHAREHOLDERS
HEADLINE EARNINGS PER SHARE 435,2 CENTS + 9.1%
NET ASSET VALUE PER SHARE 5 278,9 CENTS + 11.7%
GROUP CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 % 2018
R’000 R’000 change R’000
Revenue 1 721 356 1 683 002 2,3% 3 004 227
Net operating income 136 123 129 837 272 486
Depreciation 1 325 1 362 2 740
Interest paid 9 135 14 591 28 667
Income before taxation 125 663 113 884 241 079
Taxation 29 968 27 784 54 915
Income after taxation 95 695 86 100 11,1% 186 164
Share of associate
company profit 33 91 107
Net profit for the
period/year 95 728 86 191 186 271
Net profit attributable
to:
Non-controlling interest 1 656 1 030 858
Equity holders of the
company 94 072 85 161 10,5% 185 413
95 728 86 191 186 271
Other comprehensive
income:
Exchange differences on
translating foreign
operations (12 552) (10 242) 26 635
Total comprehensive
income for the
period/year 83 176 75 949 212 906
Total comprehensive
income attributable to:
Non-controlling interest 471 (879) 1 389
Equity holders of the
company 82 705 76 828 211 517
83 176 75 949 212 906
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 % 2018
R’000 R’000 change R’000
Headline earnings
reconciliation:
Determination of
comprehensive income and
headline earnings
Basic earnings 94 072 85 161 185 413
Loss on disposal of
property, plant and
equipment 147
Total tax effects of
adjustments (41)
Headline earnings 94 072 85 161 10,5% 185 519
CAPITAL DISTRIBUTION 74 167
Dividend per share
(cents) 327,5
Dividend cover (times) 2,5
Headline earnings 94 072 85 161 10,5% 185 519
Basic earnings per share
(cents) 435,2 399,1 9,1% 869,0
Headline earnings per
share (cents) 435,2 399,1 9,1% 869,5
Shares in issue (total
issued) 22 646 465 22 646 465 22 646 465
Shares in issue (less
treasury shares) 21 613 366 21 340 947 21 615 016
Shares in issue –
weighted 21 614 295 21 340 947 21 335 944
SUPPLEMENTARY
INFORMATION
Operating income as a
percentage of turnover 7,9% 7,7% 9,1%
(Negative)/Debt to
equity ratio percentage (13,9%) 12,7% 0,7%
Effective taxation rate 23,8% 24,4% 22,8%
Net asset value per
share (cents) 5 278,9 4 724,0 11,7% 5 235,2
Intangible assets
Goodwill and
amortisation
Balance at beginning of
period/year 32 060 31 522 31 522
Translation difference (1 101) (1 920) 538
Balance at end of
period/year 30 959 29 602 32 060
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 % 2018
R’000 R’000 change R’000
Patent and trademark:
Balance at beginning of
period/year 31 706 31 706 31 706
Balance at end of
period/year 31 706 31 706 31 706
Total intangible assets 62 665 61 308 63 766
SEGMENTAL INFORMATION
Geographical revenue
South Africa 1 289 070 1 288 208 2 255 369
Offshore subsidiaries 432 286 394 794 748 858
1 721 356 1 683 002 2,3% 3 004 227
Geographical income
South Africa 59 253 54 867 115 971
Offshore subsidiaries 34 819 30 294 69 442
94 072 85 161 10,5% 185 413
GROUP CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 2018
R’000 R’000 R’000
ASSETS
Non-current assets
Fixed assets 22 796 23 489 22 455
Intangible assets 62 665 61 308 63 766
Investment in associate 408 358 375
Deferred taxation 18 551 17 660 20 700
Current assets
Inventory 451 907 553 991 696 793
Stock in transit 97 542 182 228 250 143
Trade and other
receivables 484 293 544 229 394 722
Cash equivalents 238 908 236 951 125 659
Total assets 1 377 070 1 620 214 1 574 613
Equity and liabilities
Ordinary shareholders’
funds 1 140 944 1 008 148 1 131 599
Minority interest 14 907 12 168 14 436
Total shareholders’
funds 1 155 851 1 020 316 1 146 035
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 2018
R’000 R’000 R’000
Current liabilities
Bank borrowings 80 701 364 811 133 119
Trade and other payables 140 518 235 087 295 459
Total equity and
liabilities 1 377 070 1 620 214 1 574 613
GROUP CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 2018
R’000 R’000 R’000
Balance as at 1
September 1 131 599 997 606 997 606
Total attributable
income for the
period/year 94 072 85 161 185 413
Dividend paid (74 167) (66 286) (66 286)
Movement in foreign
currency translation
reserve (11 368) (8 333) 26 104
Treasury share movement (74) 0 2 682
Issue of share-based
payment awards 882 0 (13 920)
Balance at end of
period/year 1 140 944 1 008 148 1 131 599
GROUP CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 2018
R’000 R’000 R’000
Cash generated/
(utilized) from
operating activities 179 642 (168 952) (88 480)
Cash generated/
(utilized) from
operations 305 096 (61 947) 55 177
Investment income 311 171 367
Interest paid (9 135) (14 591) (28 667)
Dividends paid (74 167) (66 286) (66 286)
Taxation paid (42 463) (26 299) (49 071)
Cash flows from
investing activities (1 666) (5 256) (5 730)
Purchase of tangible
fixed assets (1 666) (1 663) (2 230)
Investment in subsidiary (3 593) (3 593)
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
28 February 28 February 31 August
2019 2018 2018
R’000 R’000 R’000
Proceeds on disposal of
fixed assets 93
Cash flows from
financing activities (75) 2 683
(Purchase)/issue of
treasury shares (*) (75) 2 683
Net increase/
(decrease)in cash and
cash equivalents 177 901 (174 208) (91 527)
Effects of exchange rate
changes on the balance
of cash held in foreign
currencies (12 234) (8 668) 29 051
Cash and cash
equivalents at the
beginning of the
period/year (7 460) 55 016 55 016
Cash and cash
equivalents at the end
of the period/year 158 207 (127 860) (7 460)
*Restated in terms of IAS 7.17(b) which states that the payments to
owners to acquire or redeem the entity’s shares should be
classified as financing activities and not investing activities.
The restatement of the 2017 comparative figures amounting to R
6 375 million in our 2018 Integrated Annual Report was as a result
of a prior period error, detected by the JSE’s proactive monitoring
review of our Annual Financial statements for the year ended 31
August 2017 and interim results for the six months ended 28
February 2018.
In addition, the JSE’s proactive monitoring review process referred
to above, revealed that the accounting for the Employee Share
Purchase Plan “ESPP” in terms of IAS 39 (where the arrangement was
accounted for as a sale of shares with the recognition of a
corresponding financial asset) was incorrect and should have been
accounted for as a share- based payment transaction in terms of
IFRS 2. As a result of this error, the fair value of the options at
the grant date was not determined and accordingly no share based
payment expense has been charged to profit or loss over the vesting
period of the options as required by IFRS 2. As the ESPP referred
to above was finalised during the 2018 financial year, the
statement of financial position as at 31 August 2018 would remain
unchanged. Had the loan to the employees not been raised the 2017
statement of financial position would be restated as follows:
2017
2017 Restated
R’000 R’000
Trade and other receivables 421 714 407 794
Share-based payment reserve 13 920 nil
COMMENTARY
Corporate information
Nu-World is a limited liability 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, manufacturing, 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 Interim Results 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) and comply
with the disclosure requirements of IAS 34: Interim Financial
Reporting.
The Interim Results have been prepared under the historical cost
convention.
The accounting policies used in the preparation of these Interim
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 2018.
The Interim Results are presented in Rand rounded to the nearest
thousand (‘000).
The condensed consolidated statement of financial position at 28
February 2019 and the related condensed consolidated 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.
The Interim Results have been prepared under the supervision of
Graham Hindle CA (SA) in his capacity as Chief Financial Officer.
Operating results
The Group continued to produce strong results for the period ended
28 February 2019, despite exceedingly difficult trading conditions
and subdued consumer spending and confidence. Accordingly,
directors are pleased to report a 10,5% positive growth in earnings
attributable to equity holders of the Company. The balance sheet is
also substantially stronger as a result of R 305,1 million cash
generated from operations.
South Africa
The South African operations showed marginal top line growth, but
improved operating margins and a reduced interest bill, resulted in
stronger bottom line growth.
Consumer electronics –
The market within this division is under pressure due to weak
consumer demand and a slowdown in sales for higher ticket items,
due to constrained discretionary spending and subdued consumer
confidence. The Group has maintained its market share with the
introduction of additional brands and models with new state-of-the-
art features.
Liquor division –
Liquor sales remained constant as sales of additional brands and
product categories gained traction.
Small domestic appliances / white goods –
These divisions, inclusive of the seasonal summer range, showed
continued sales growth driven by the introduction of new product
ranges. White Goods, inclusive of microwaves, reported gains in
market share.
General –
The Group continues to invest in the development of new generation
models and designs, to ensure that our customers are afforded the
best cost-effective products.
Offshore operations
Australia
During the period under review, the Australian operation performed
well, showing both strong growth in sales and profitability. Our
expanded distribution network, inclusive of e-commerce options and
other traditional customers, underscored the operations for the
period.
Africa / Middle East / CIS / Brazil
The Company managed to show growth in a number of markets. The
consolidated results have been boosted by the ZAR weakening against
the United States Dollar and most other currencies. Sales to
Uruguay and the Middle East are stronger due to our enhanced
presence in these regions.
Sub-continent (India/Pakistan/Sri Lanka)
Our distribution network is being broadened. Consistant ongoing
sales to these regions have been slower than initially expected,
however we are confident that we are gaining traction and orders
are growing accordingly.
FINANCIAL OVERVIEW
STATEMENT OF COMPREHENSIVE INCOME
Group revenue increased by 2,3% to R 1 721,4 million
(February 2018 – R 1 683,0 million).
Income after taxation increased by 11,1% to R 95,7 million
(February 2018 – R 86,1 million).
Total headline earnings per share for the period increased by 9,1%
to 435,2 cents (February 2018 – 399,1 cents).
STATEMENT OF FINANCIAL POSITION
The balance sheet strengthened considerably during the period under
review, mainly due to the significant reduction in stock holding
and the resultant generation of cash which in turn reduced the
Group borrowings by R 284,1 million.
Inventory (including stock in transit) levels of R 549,5 million
decreased by 25,3% from February 2018 (R 736,2 million) and 42,0%
from August 2018 (R 946,9 million). Directors and management remain
focused on maintaining and improving working capital management and
stock turn rates even further.
The reduction in trade and other receivable of 11,0% to R 484,3
million (February 2018 – R 544,2 million) arose due to stringent
credit management policies.
Trade and other payables decreased by 40,2% to R 140,5 million
(February 2018 – R 235,1 million) due to the lower levels of stock
in transit at the end of the period under review.
Net asset value per share has increased by 11,7% to 5 278,9 cents
(February 2018 – 4 724,0 cents).
SUBSEQUENT EVENTS
Further as previously disclosed, on 7 March 2019, the South African
Revenue Service (SARS) declined the request for suspension of
payment for a subsidiary of Nu-World Holdings Limited, relating to
the 2008 to 2012 tax years for a taxation amount of R 7,6 million
and interest and penalties of R 18,8 million. Nu-World and their
tax advisors have opposed this SARS decision and will continue to
dispute and oppose this claimed tax liability. No other events
material to the understanding of the report have occurred during
the period between 28 February 2019 and the date of this report.
On behalf of the board of directors
J.A. Goldberg
Chief Executive Officer
G.R. Hindle
Chief Financial Officer
16 April 2019
Registered office
682 Pretoria Main Road, Wynberg, Sandton 2199
Tel +27 (11) 321 2111
Fax +27 (11) 440 9920
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Company secretary
B.H. Haikney
Auditors
RSM South Africa
Sponsor
Sasfin Capital, (a member of the Sasfin group)
Directors
M.S. Goldberg (Executive Chairman)
J.A. Goldberg (Chief Executive Officer)
G.R. Hindle (Chief Financial Officer)
Non-executive directors
J.M. Judin (Lead), D. Piaray, R. Kinross, F.J. Davidson
www.nuworld.co.za
Johannesburg
16 April 2019
Date: 16/04/2019 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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