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NU-WORLD HOLDINGS LIMITED - Unaudited Condensed Consolidated Interim Results Of Nu-World For The Six Months Ended 28 February 2019

16 April 2019 - 12:00 PM
NWL
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
                                  R000         R000 change         R000
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
                                 R000         R000 change       R000
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
                                R000         R000 change         R000
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
                                R000          R000       R000
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
                                 R000         R000       R000
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
                                 R000         R000       R000
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
                                 R000         R000       R000
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
                                 R000         R000       R000
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 entitys 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 JSEs 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 JSEs 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
                                  R000     R000

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 Groups 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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