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31 August 2001
Nu-World Holdings Limited
Registration No. 1968/002490/06
Share Code: NWL
ISIN Code: ZAE000005070
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2001
Headline Earnings - 30% Annual average growth rate over 5 years
Eleven consecutive years of growth in turnover, operating income,
attributable income, headline earnings per share and dividend
Turnover up 35.3%
Attributable income up 16.7%
Headline earnings per share up 16.0%
Dividend per Share up 20.5%
Cash generated by operations R12,3m
INCOME STATEMENT
Year Ended Year Ended
31 Aug 2001 31 Aug 2000 %
R000 R000 Change
Turnover 884 252 653 772 35.3
Net operating income 55 721 54 213
Depreciation 4 234 4 052
Interest paid 8 988 6 414
Income before taxation 42 499 43 747
Taxation 8 335 12 013
Income after taxation 34 164 31 733
Share of Associate Companies
retained income / (loss) (135) 0
Outside shareholder's interest 87 2 648
Attributable income 33 942 29 085 16.7
Dividend 5 903 4 900 20.5
Retained earnings for the year 27 878 24 185 15.9
Headline Earnings 33 942 29 085 16.7
Earnings per share (cents) 156.4 134.1 16.6
Earnings per share (cents)
- weighted 156.4 134.8 16.0
Headline earnings per share (cents) 156.4 134.1
Headline earnings per share (cents)
- weighted 156.4 134.8
Dividend per share (cents) 27.2 22.6
Dividend cover 5.7 5.9
Interest cover 5.7 7.8
Shares in issue 21 695 21 695
Shares in issue - weighted 21 695 21 583
DECONSOLIDATED COMPARATIVE INFORMATION
Turnover 813 500 620 850 31.0
EBITDA 54 476 48 940 11.3
Operating margin as a
%age of turnover 6.7% 7.8%
Income before taxation 42 499 38 622 10.0
Income after taxation 34 164 28 388 20.3
Attributable income 33 942 29 085 16.7
BALANCE SHEET
ASSETS
Non-current assets
Fixed assets 28 089 28 245
Goodwill 7 567
Investment in associate company 12 864
Current assets
Inventory 103 137 137 947
Trade and other receivables 162 433 157 150
Cash equivalents 65 078 60 531
Total Assets 371 601 386 440
EQUITY AND LIABILITIES
Shareholder's interest 234 780 208 101
Non-current liabilities 12 973 17 433
Current liabilities
Trade and other payables 123 848 159 875
Current portion of interest
bearing liabilities 1 031
Total equity and liabilities 371 601 386 440
Debt: Equity ratio 0% 0%
STATEMENT OF CHANGES IN EQUITY
Equity at beginning of the year 208 101 184 157
Share capital issued / (redeemed) (1 272)
Dividend (5 903) (4 572)
Foreign currency translation reserve (87) 87
Retained earnings for the year 33 941 29 085
Equity at end of year 234 780 208 101
CASH FLOW STATEMENT
Cash generated/(utilised) by
operating activities 12 335 (5 358)
Cash generated from operations 41 052 7 256
Interest paid (8 723) (6 414)
Dividend paid (4 895) (328)
Normal tax on companies (15 099) (5 872)
Cash flows from investing
Activities (254) (18 414)
Purchase of tangible fixed assets (6 507) (7 417)
Proceeds on disposal of fixed assets 107 129
Investment in subsidiary (11 126)
Conversion of subsidiary to
Associate 6 146
Cash flows from financing
activities (7 333) 4 885
Repayment of long term borrowing (6 062) (7 167)
Increase in translation reserve 201
Proceeds from outside shareholder's 11 851
Share repurchase (1 271)
Net increase / (decrease) in cash
and cash equivalents 4 748 (18 887)
Effect of exchange rate changes (201)
Cash and cash equivalents at
the beginning of the year 60 531 79 418
Cash and cash equivalents at
the end of the year 65 078 60 531
FINANCIAL OVERVIEW
The Board of Directors of Nu-World Holdings Ltd is again pleased to report
satisfactory growth results for the period ending 31st August 2001. This set
of results represents the eleventh consecutive year of growth in Turnover,
Operating Income, Attributable Income, Headline Earnings per Share and
Dividend.
Trading conditions in both South Africa and Australia remained extremely
difficult during the year under review. Notwithstanding the current
economic conditions however, the Group achieved satisfactory growth.
Turnover increased by 35.3% to R884,252m (August 2000 : R653,772m).
The selling and marketing costs of introducing new brands into the South
African market, together with the cost of re-launching Akai in Australia,
placed downward pressure on margins overall. However, the drive to regain
market share for these international brands, has proved successful. It is
anticipated that margins will improve in the forthcoming year, to the levels
of previous years.
EBITDA Earnings before interest, tax and depreciation, increased by 11.3% to
R54,476m (August 2000 : R48,940m). (Refer to section 'Deconsolidated
Comparative Information'.)
Attributable income increased by 16.7% to R33,942m (August 2000 : R29,085m).
Headline earnings per share on a weighted basis increased 16% to 156.4 cents
(August 2000 : 134.8 cents).
Dividend per share is up 20.4% to 27.2 cents (August 2000 : 22.6 cents).
Cash generated by operating activities of R12,3m reflects a particularly
strong turnaround from the August 2000 year end position. The Group remained
in an ungeared position at the end August 2001 with cash balances on hand of
R65,078m. (August 2000 : R60,531m).
The net asset value per share at 1082.2 cents has increased by 12.8%
(August 2000 : 959.2 cents).
At the time of writing, Nu-World shares are trading at a 17% discount to
net asset value per share, at the current share price of R9.00.
Deconsolidation of Prima Australasia Pty Ltd. On the 1st March 2001,
Directors took the decision to reclassify the Group's 33,3% interest in
Prima Australasia Pty Limited, from a Subsidiary to an Associate Company.
For comparative purposes, a section of the Income Statement is restated
under 'Deconsolidated Comparative Information', providing information that
is more relevant to Prima Australasia Pty Ltd, as an Associate Company,
going forward.
The Current Assets section of the Balance Sheet, indicates an improvement in
Working Capital Management. Inventory is down by 22.4% year on year,
against an increase in Turnover of 35%. Stock turn ratios have improved. The
D.S.O. debtors collection measure, reflects a significant improvement, as
well.
OPERATIONAL REVIEW
IN-HOUSE MANUFACTURING -
SMALL ELECTRICAL APPLIANCES
Nu-World is South Africa's leading low-cost, high-volume manufacturer,
importer and exporter, of small electrical appliances.
The manufacturing division has achieved an increase in net margins, year on
year, resulting from improved productivity, cost cutting through ongoing
value engineering and the introduction of new low-cost products.
Manufacturing is expected to produce strong growth during the forthcoming
year, with the launch of new products and a substantial increase in exports.
In-house manufacturing and concurrent exports, provide a natural hedge
against the devaluation of the Rand.
EXPORTS
The export division was restructured during the 3rd quarter. Exports for
the last quarter grew 55% year on year.
The Group has achieved a huge breakthrough for exports into the U.S.A.
market. It is anticipated that products manufactured in our South African
plant will be on the shelves of leading American retailers during the first
half of the new financial year.
The Group's experience and success in exporting to developed countries in
Europe and Australasia has opened the door to U.S.A. buyers. The volume
requirements of our American customers are as much as ten times the current
volumes of our existing exports to the United Kingdom.
A substantial Capex programme is underway to boost production, improve
productivity and further improve quality.
CONSUMER ELECTRONICS -
JVC * TELEFUNKEN * THOMSON * NU-TEC
JVC continues to be the key growth driver within the Consumer Electronics
Division. JVC achieved increased market penetration and continued to gain
market share, with sales increasing 24% year on year.
The Group is now one of the leading players in Consumer Electronics in
Southern Africa.
Nu-World's Consumer Electronics Division, with our range of complimentary
international brands, differentiated within distinct market segments, from
price-entry to top-end, will continue to generate growth.
The Group's purchasing power, for the Southern African and Australasian
markets, provides a strategic advantage in obtaining world-best pricing and
trading terms.
'WHITE GOODS' -
'LAUNDRY', 'COOKING' AND 'REFRIGERATION'
Nu-World imports large appliances from a number of countries.Recent
consolidation and liquidations in the industry have opened up a number of
opportunities for the Group.
In addition to our Nu-Tec range, Nu-World has successfully launched a range
of large appliances under the Telefunken brand.
In-House assembly of Free-Standing Stoves - Subsequent to the financial
year end, an assembly line was established in our Wynberg manufacturing
plant, to assemble 3-Plate and 4-Plate free-standing stoves. Kits for these
stoves are imported from Europe and South America. After the successful
launch of these two products, it is anticipated that additional electric and
gas stoves will be added to the range.
PRIMA AUSTRALASIA PTY LTD
AKAI * TELEFUNKEN * PRIMA ELECTRONICS * NU-TEC
Nu-World relinquished control of the Prima board to the majority
shareholders, on 1st March 2001. Prima is reflected as an Associate Company
investment rather than a Subsidiary, from this date.
Prima and its subsidiary, operated at breakeven for most of the year, in a
difficult trading environment. Prima provided a small positive contribution
to the Group at year end.
The reintroduction of the Akai branded range of consumer electronics into a
depressed Australian market, proved to be more time-consuming than
anticipated.
Since year-end however, Prima has experienced a positive turnaround. After
more than a year in the market, the company is now making inroads into
leading Australian retailers, with listings, catalogues and promotions.
Margins are firmer as the company leverages its increased purchasing power
into lower pricing and improved terms.
During October of 2001, Prima signed the rights to distribute the Telefunken
brand of Consumer Electronics in the Australian market. It is anticipated
that Telefunken will bring critical mass to the Australian operation.
Prima is expected to make an improved positive contribution to the Group's
bottom line in the forthcoming six months.
PROSPECTS
The Group is establishing itself as a key international player, within the
ranges of Branded Consumer Durables, in which it operates.
The diversified nature and increasing size of the Group, together with its
international reach, has provided shareholders with eleven consecutive years
of growth across the board.
This growth has been achieved, notwithstanding the difficult trading climate
in Southern Africa and Australia, during the past number of years.
Growth within manufacturing and exports will impact positively on margins.
Hard currency denominated exports, will generate increasing profit margins
as the South African currency weakens.
It is anticipated that margins will improve for the Group as a whole,
notwithstanding the downward pressure on the Rand.
In South Africa, the Government's housing initiative and the ongoing
electrification programme, underpins superior levels of growth, in the
electrical appliance and consumer electronics sectors.
Directors are confident that the Group remains strategically well positioned
to sustain growth levels for the forthcoming year and in the medium term.
DIVIDEND
Notice is hereby given that the final dividend number fourteen of 27,2 cents
per share (2000: 22,6 cents) has been declared to Shareholders.
The dividend is payable to the shareholders of the company recorded in the
books of the company at the close of business on 14 December 2001 (record
date). The last date to trade cum dividend will be 7 December 2001 and
trading commences ex dividend from 10 December 2001. The dividend will be
paid on 18 December 2001.
Share certificates may not be dematerialised or rematerialised between 3
December 2001 and 14 December 2001, both dates inclusive.
BY ORDER OF THE BOARD
M.S. Goldberg G.R. Hindle
Executive Chairman Company Secretary
Johannesburg
15 November 2001
DIRECTORS
Nu-World Holdings Limited has announced changes to its Board of Directors.
Dr John Temple retired from his dual role as Chairman and Non-Executive
Director with effect from 31 August 2001. Michael Goldberg will assume the
dual position of Executive Chairman and Executive Director, while Jeffrey
Goldberg has been appointed Managing Director. The remainder of the Board
has remained unchanged.
The Board of Directors of Nu-World Holdings Ltd takes this opportunity to
thank Dr John Temple for his invaluable assistance, direction and drive over
his fourteen year tenure as Chairman of the Board. We wish him well in his
retirement.
The Board expects to appoint additional non-executive Directors in the
future.
M.S. Goldberg BCom MBA (Wits) (Chairman), J.A. Goldberg BSc (Eng) (Wits)
(Managing), G.R. Hindle CA (SA), P. Gross B.Com L.L.B. (Wits)*, J.M. Judin
Dip Law (Wits)* (* Non-executive Directors.)
Registered Office Transfer Secretaries
35-3rd Street Mercantile registrars Ltd
Wynberg, Sandton 11 Diagonal Street
2199 Johannesburg 2000
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