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Nu-World - Audited financial statements for the year ended 31 August 2005
NU-WORLD HOLDINGS LIMITED(Incorporated in the Republic of South Africa)
(Registration no. 1968/002490/06)
Share Code: NWL & ISIN code: ZAE000005070
("Nu-World" or "the Group" or "the Company")- Group Turnover up 13.7% to
R1,626m
- Attributable Income up 20.8% to R73,385m
- Headline earnings per share up 21.1% to 339.9 cents
- Dividend per share up 31.7% to 92.6 cents
- Cash generated by operations R65,467m
- Five Year Compound Average Annual Growth rate in Headline Earnings - of
20.3%
- Fifteen consecutive years of growth in Turnover, Operating Income,
Attributable Income, Headline Earnings per Share and Dividend
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2005
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
31 August 2005 31 August 2004
R"000 R"000 % Change
Turnover 1 626 122 1 430 804 13.7%
Net operating income 102 625 94 661
Depreciation 8 251 8 443
Interest paid 7 220 3 605
Income before taxation 87 154 82 613
Taxation 18 213 19 082
Income after taxation 68 941 63 531
Minority interests 4 444 (2 781)
Attributable earnings 73 385 60 750 20.8%
Dividend declared 20 967 15 252 37.5%
Headline earnings 73 385 60 610 21.1%
Earnings per share (cents) 339.9 281.3 20.8%
Headline earnings per share 339.9 280.6 21.1%
(cents)
Dividend per share (cents) 92.6 70.3 31.7%
Dividend declared cover 3.5 4.0
Interest cover 13.1 23.9
Shares in issue 21 592 490 21 597 265
Shares in issue - weighted 21 592 490 21 597 265
Shares in issue - diluted 22 543 490 21 597 265
CONSOLIDATED BALANCE SHEET
Year ended Year ended
31 August 2005 31 August 2004
R"000 R"000
ASSETS
Non-current assets
Fixed assets 44 867 46 997
Goodwill 18 089 5 926
Current assets
Inventory 171 341 167 447
Trade and other receivables 227 716 217 528
Cash equivalents 190 549 161 688
Total assets 652 562 599 586
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders" funds 422 478 361 398
Minority interest 28 156 23 785
Total shareholders" funds 450 634 385 183
Non-current liabilities
Deferred tax 6 928 4 443
Current liabilities
Trade and other payables 195 000 209 960
Total equity and liabilities 652 562 599 586
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 August 2005 31 August 2004
R"000 R"000
Cash generated by operating 65 467 72 119
activities
Cash generated by operations 101 512 98 240
Interest paid (7 220) (3 605)
Dividend paid (15 252) (8 675)
Normal tax on companies (13 573) (13 841)
Cash flows from investing (26 342) (13 859)
activities
Purchase of tangible fixed (5 511) (4 039)
assets
Proceeds on disposal of fixed 145 462
assets
Increase in investment in (20 884) (10 001)
subsidiaries
Increase in investment in (92) (281)
treasury
shares
Cash flows from financing (10 196) -
activities
Repayment of long term (10 196) -
borrowing
Net increase in cash and cash 28 929 58 260
equivalents
Effect of exchange rate changes (68) (9)
Cash and cash equivalents at 161 688 103 437
the
beginning of the year
Cash and cash equivalents at 190 549 161 688
the
end of the year
STATEMENT OF CHANGES IN EQUITY
Share Share Treasury Foreigncurr
capital premium share ency
translation
reserve
R"000 R"000 R"000 R"000
Balance as at 1 September 217 115 632 (791) (1 291)
2003
Net profit for the year
Dividends
Dividends settled
Fair value movement 479
Net treasury share (281)
movement
Balance as at 31 August 217 115 632 (1 072) (812)
2004
Net profit for the year
Derecognition of negative
goodwill (IFRS3)
Dividends
Dividends settled
Fair value movement 627
Net treasury share (20 872)
movement
Treasury shares issued 9 20 770
Balance as at 31 August 226 136 402 (21 944) (185)
2005
Accumulated Shareholders Total
profit for dividend
R"000 R"000 R"000
Balance as at 1 September 2003 195 304 309 071
Net profit for the year 60 750 60 750
Dividends (8 621) 8 621 -
Dividends settled (8 621) (8 621)
Fair value movement 479
Net treasury share movement (281)
Balance as at 31 August 2004 247 433 - 361 398
Net profit for the year 73 385 73 385
Derecognition of negative goodwill 2 412 2 412
(IFRS3)
Dividends (15 251) 15 251 -
Dividends settled (15 251) (15 251)
Fair value movement 627
Net treasury movement (20 872)
Treasury shares issued 20 779
Balance as at 31 August 2005 307 979 - 422 478
SUPPLEMENTARY INFORMATION
Year ended Year ended % Change
31 August 31 August
2005 2004
R"000 R"000
Determination of attributable earnings
and headline earnings
Net income attributable to ordinary 73 385 60 750 20.8%
shareholders
Adjustment for amortisation of (140)
goodwill
Headline earnings 73 385 60 610 21.1%
Operating income as percentage of 6.3 6.6
turnover (%)
Net negative debt to equity ratio (%) (45.1) (44.6)
Effective taxation rate 20.9 23.1
Net asset value per share (cents) 1 956.6 1 673.4 16.9%
Capital Expenditure
Expansion 4 002 3 363
Replacement 1 509 676
5 511 4 039
Goodwill and amortisation
At beginning of year 5 926 5 786
Net acquisition of subsidiaries 9 751 -
Derecognition of negative 2 412 140
goodwill/goodwill created
At end of year 18 089 5 926
SEGMENTAL INFORMATION
Year ended Year ended % Change
31 August 31 August
2005 2004
R"000 R"000
Geographical revenue
Republic of South Africa 971 479 1 065 419
Australasia 591 628 285 226
United Kingdom 63 015 80 159
1 626 122 1 430 804 13.7%
Geographical income
Republic of South Africa 77 122 57 426
Australasia (2 411) 1 921
United Kingdom (1 326) 1 403
73 385 60 750 20.8%
Accounting policiesThe consolidated abridged financial statements for the year
ended 31 August 2005 are prepared in accordance with the South African
Statements of Generally Accepted Accounting Practice ("SA GAAP") applicable to
financial reporting (AC127). The accounting policies used are consistent with
those used in the annual financial statements for the year ended 31 August 2004.
The Group adopted International Financial Reporting Standard IFRS 3, accounting
for business combinations, resulting in goodwill no longer being amortised and
negative goodwill of R2,4 million being taken to reserves.
From a dividend per share perspective, disclosure has been provided based on the
period to which the dividends relate. Basic earnings per share is calculated by
dividing net profit by the weighted average number of ordinary shares in issue
during the 2005 year. Headline earnings per share is calculated by dividing
headline earnings by the weighted average number of ordinary shares in issue
during the year. Diluted shares in issue takes into account the dilutive effect
of share options held by employees.
COMMENTSFINANCIAL OVERVIEW
The Directors of Nu-World Holdings Ltd are pleased to report strong growth for
the period ending 31 August 2005. For the fifteenth consecutive year, the Group
has produced growth in turnover, operating income, attributable income, headline
earnings per share and dividend.
The Nu-World Group has certainly benefited from the current positive economic
conditions being experienced in the South African retail industry.
Nu-World is a leading South African source for branded consumer durables. The
Group manufactures, imports, exports and distributes a one-stop supply of
branded consumer durables.
Group turnover increased by 13.7% to R1,626m (August 2004 : R1,430m). The
growth is commendable considering the impact of price deflation averaging 15% -
25% in South Africa, Australia and the United Kingdom.
Attributable income increased by 20.8% to R73,385m (August 2004 : R60,750m).
Headline earnings per share on a weighted basis - H.E.P.S. increased 21.1% to
339.9 cents (August 2004 : 280.6 cents).
Dividend per share is up 31.7% to 92.6 cents (August 2004 : 70.3 cents). The
dividend cover has reduced from 4.0 times to 3.5 times cover.
Cash generated by operating activities amounted to R65,467m.
Overall net working capital days of 86.3 compares favourably with the previous
year"s 91.3 days.
The balance sheet is strong and the group remains ungeared with cash balances on
hand of R190,549m (August 2004 : R161,688m).
The net asset value per share of 1,956.6 cents is up 16.9% (August 2004 :
1,673.4 cents).
OPERATIONAL REVIEW
Nu-World is one of South Africa"s leading players in small electrical appliances
and consumer electronics.
The electrical appliance division performed reasonably well, despite price
deflation averaging 12%. A number of new products were introduced during the
latter part of the second half of the financial year and these sales will
positively impact revenues in the period to February 2006.
Consumer Electronics
JVC * Telefunken * Thomson * Nu-Tec * Palsonic
The Nu-World brands performed well during the period under review,
notwithstanding price deflation averaging 18% - 20%. The Telefunken brand
improved its rating in the latest Markinor survey. JVC and Telefunken will
launch a number of new products for the festive season including large rear
projection televisions as well as the first ever video camera hard disc
camcorder. Other latest technology offerings will include MP3"s in portable and
micro hi-fi systems. New DVD and Micro systems will be available with card-
readers and USB ports. Piano black component home theatre systems will enhance
the line-up. An expanded TV range with LCD TV"s, will further assist in winning
market share.
Foreign Subsidaries
Nu-World U.K. Ltd
Prima Australasia Pty Ltd
Yale Appliance Group Pty Ltd
Akai * Telefunken * Prima Electronics * Nu-Tec * RCA * Thomson
Nu-World UK Ltd is a 60% held subsidiary. The UK retail market and specifically
consumer durables, has been under pressure from lower volumes, lower margins and
price deflation. It is anticipated that a new line-up of products and new
listings will see the company returning to profitability in the forthcoming
year.
In Australia, Nu-World holds a 51% share in Prima Australasia Pty Ltd and a 65%
share in Yale Appliance Group Pty Ltd. The companies experienced a difficult
year in an increasingly competitive and deflationary market. Logistics and
operations of Prima and Yale have now been combined in Melbourne and a reduction
in operating costs and overheads will assist a return to profitability.
New product range line-up
Conti Motorsport, bicycles, air-conditioning, power tools, small and large
appliances.
A substantial number of new products within existing and new product categories
are in the process of being launched and will be available for the Christmas
season.
MANPOWER and SOCIAL RESPONSIBILITY
The Nu-World group of companies employs close to 1 000 people on three
continents. Nu-World is committed to training and further education for all
staff members to enable all to develop to their fullest potential. The Nu-World
health clinic continues to provide occupational health and safety and to focus
on HIV/Aids awareness programmes, counselling, testing and supportive medical
assistance. The appointed BEE subcommittee continues its engagement with
potential partners. The Group actively supports an active employment equity
programme and continues to empower employees of colour. The Group is committed
to comply with environmental regulations.
PROSPECTS
The Group has achieved growth for 15 consecutive years - across the board, in
turnover, operating income, attributable income and headline earnings per share.
South Africa, with a "high street" retail market estimated at R300bn, is
currently experiencing a period of the best retail environment in many years.
Retail sales are 25% up in real terms compared to 2000.
Public Enterprise Minister Alec Erwin has advised that government will spend
R200bn over the next seven years to upgrade the country"s electricity, water and
transport infrastructure. This expenditure will support an extended up-cycle in
terms of fixed investment and consumer demand.
Housing and electrification continue apace with more than 1,6 million houses for
the underprivileged being built and more than 4 million electricity connections
being made. A further 3 million homes will be connected to the grid over the
next few years
The strong growth in private sector consumption continues to be sustained by low
interest rates, higher asset prices and increased real disposable income. The
Reserve Bank has reduced its key lending rate seven times since June 2003, to
the lowest nominal interest rate in two decades. These forces continue to
support levels of consumer confidence and underpin sustained growth in the
economy and for our Group, within a scenario of moderating growth in consumer
demand, during the forthcoming year.
Audit report
The consolidated financial statements for the year have been audited by Tuffias
Sandberg KSi and their accompanying unqualified audit report as well as their
unqualified audit report on this set of summarized financial information are
available for inspection at the company"s registered office.
Corporate governanceThe Group subscribes to and complies with the Code on
Corporate Governance Practices as contained in the second King Report on
Corporate Governance.
Dividend declaration
The board has resolved to declare a dividend of 92,6 cents per share in respect
of the year ended 31 August 2005 (2004: 70,3 cents per share), payable on 12
December 2005 to those shareholders recorded in the books of the company at the
close of business on Friday, 09 December 2005.
The salient dates of the dividend are as follows:
Last date to trade cum dividend Friday, 02 December 2005
Shares trade ex dividend Monday, 05 December 2005
Record date Friday, 09 December 2005
Payment date Monday, 12 December 2005
No dematerialisation or rematerialisation of shares may take place between
Monday, 5 December 2005 and Friday, 09 December 2005, both dates inclusive.
Annual report
The annual report will be mailed to shareholders in due course. The annual
general meeting is scheduled to take place on Wednesday, 22nd February 2006, at
the registered office of the company.
On behalf of the board of directors
M.S. Goldberg
Executive Chairman
B.H. Haikney
Company Secretary
21 October 2005
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 Corporate; 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: 20/10/2005 05:00:17 PM Supplied by www.sharenet.co.za
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