| Tue 26 Oct 2004, 17:42 | | FINANCIAL STATEMENTS FOR THE YEAR |
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NU-WORLD HOLDINGS LIMITED - AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31
AUGUST 2004
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`)AUDITED FINANCIAL STATEMENTS FOR THE
YEAR ENDED 31 AUGUST 2004
Group Turnover up 21.3% to R1 430 804m
Attributable Income up 41.0% to R60 750m
Headline Earnings per share (cents) up 39.2% to 280,6 cents
Dividend declared per share (cents) up 76.6% to 70,3 cents
Cash generated by operations R72 119 million
5 Year Compound Average Annual Growth Rate in Headline Earnings - up 21,9%
Fourteen consecutive years of Growth in Turnover, Operating Income, Attributable
Income, Headline Earnings per Share and Dividend
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
31 August 2004 31 August 2003
R`000 R`000 % Change
Turnover 1 430 804 1 179 455 21.3%
Net operating income 94 661 72 835 30.0%
Depreciation 8 443 6 852
Interest paid 3 605 5 018
Income before taxation 82 613 60 965 35.5%
Taxation 19 082 12 127
Income after taxation 63 531 48 838 30.1%
Minority interests 2 781 5 739
Attributable earnings 60 750 43 099 41.0%
Dividend declared 15 254 8 626 76.8%
Dividend per share (cents) 70.3 39.8 76.6%
Headline earnings 60 610 43 562 39.1%
Earnings per share (cents) 281.3 199.4 41.0%
Headline earnings per share 280.6 201.6 39.2%
(cents)
Dividend declared cover 4.0 5.0
Interest cover 23.9 13.1
Shares in issue 21 597 265 21 611 675 (0.1%)
Shares in issue - weighted 21 597 265 21 611 675 (0.1%)
CONSOLIDATED BALANCE SHEET
Year ended Year ended
31 August 2004 31 August 2003
R`000 R`000
Assets
Non-current assets
Fixed assets 46 997 50 905
Goodwill 5 926 5 786
Current assets
Inventory 167 447 132 695
Trade and other receivables 217 528 182 923
Cash equivalents 161 688 103 437
Total assets 599 586 475 746
EQUITY AND LIABILITIES
Capital and reserves
Ordinary shareholders` funds 361 398 309 071
Minority interest 23 785 20 471
Total shareholders` funds 385 183 329 542
Non-current liabilities
Deferred tax 4 443 8 149
Current liabilities
Trade and other payables 209 960 138 055
Total equity and liabilities 599 586 475 746
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
31 August 2004 31 August 2003
R`000 R`000
Cash generated by operating 72 119 33 256
activities
Cash generated by operations 98 240 55 160
Interest paid (3 605) (5 018)
Dividend paid (8 675) (6 790)
Normal tax on companies (13 841) (10 096)
Cash flows from investing activities (13 859) (16 998)
Purchase of tangible fixed assets (4 039) (4 858)
Proceeds on disposal of fixed 462 336
assets
Increase in investment in (10 001) (11 685)
subsidiaries
Increase in investment in treasury (281) (791)
shares
Net increase in cash and cash 58 260 16 258
equivalents
Effect of exchange rate changes (9) 36
Cash and cash equivalents at the 103 437 87 143
beginning of the year
Cash and cash equivalents at the 161 688 103 437
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
2002 as previously stated
Consolidation of share (791)
incentive trust
Balance as at 1 September 217 115 632 (791)
2002 restated
Net profit for the year
Dividends
Dividends settled
Foreign currency (1 291)
translation
Balance as at 31 August 217 115 632 (791) (1 291)
2003
Net profit for the year
Dividends
Dividends settled
Net treasury movement (281)
Foreign currency 479
translation
Balance as at 31 August 217 115 632 (1 072) (812)
2004
Accumulated Shareholderfo Total
profit r dividend
R`000
R`000 R`000
Balance as at 1 September 158 996 274 845
2002 as previously stated
Consolidation of share (791)
incentive trust
Balance as at 1 September 158 996 274 054
2002 restated
Net profit for the year 43 099 43 099
Dividends (6 791) 6 791 0
Dividends settled (6 791) (6 791)
Foreign currency (1 291)
translation
Balance as at 31 August 195 304 0 309 071
2003
Net profit for the year 60 750 60 750
Dividends (8 621) 8 621 0
Dividends settled (8 621) (8 621)
Net treasury movement (281)
Foreign currency 479
translation
Balance as at 31 August 247 433 0 361 398
2004
SUPPLEMENTARY INFORMATION
Year ended Year ended % Change
31 August 2004 31 August
2003
R`000 R`000
Determination of
attributable earnings and
headline earnings
Net income attributable to 60 750 43 099 41.0%
ordinary shareholders
Adjustment for amortisation (140) 463
of goodwill
Headline earnings 60 610 43 562 39.1%
Operating income as 6.6 6.2
percentage of turnover (%)
Net negative debt to equity (44.6) (33.6)
ratio (%)
Effective taxation rate 23.1 19.9
Net asset value per share 1 673.4 1 424.6 17.5%
(cents)
Capital Expenditure
Expansion 3 363 4 270
Replacement 676 588
4 039 4 858
Goodwill and amortisation
At beginning of year 5 786 -
Net acquisition of - 6 249
subsidiaries
Goodwill created (written 140 (463)
off)
At end of year 5 926 5 786
SEGMENTAL INFORMATION
Year ended Year ended % Change
31 August 2004 31 August
2003
R`000 R`000
Geographical revenue
Republic of South Africa 1 065 419 929 253
Australasia 285 226 250 202
United Kingdom 80 159 -
1 430 804 1 179 455 21.3%
Geographical income
Republic of South Africa 57 426 37 126
Australasia 1 921 5 973
United Kingdom 1 403 -
60 750 43 099 41.0%
RESTATEMENT OF COMPARATIVESA recent ruling given by the GAAP Monitoring Panel
has provided more clarity regarding the consolidation of share incentive scheme
trusts. Consequently the Group has changed its accounting policy in respect of
its share incentive scheme trust (`share trust`). The share trust is now
consolidated to the extent that the Group`s issued share capital is under the
control of the Group. These shares are shown as treasury shares. The prior year
comparatives, have been restated.
R000 As previously Adjustment Restated
stated
Balance sheet
Other receivables 183 714 (791) 182 923
(Share incentive scheme
loan receivable)
Treasury shares - 791 791
Income statement
There was no effect on the
income statement in either
year.
Number of shares
Shares in issue 21 695 465 (83 790) 21 611 675
Shares in issue - weighted 21 695 465 (83 790) 21 611 675
Earnings per share
Earnings per share (cents) 198.7 0.7 199.4
Headline earnings per 200.8 0.8 201.6
share (cents)
Net asset value per share 1 428.2 (3.6) 1 424.6
(cents)
Accounting policiesThe consolidated abridged financial statements for the year
ended 31 August 2004 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 2003
except for the consolidation of the Nu-World Share Incentive Trust as required
by a directive issued by the JSE Securities Exchange South Africa during
February 2004. The effect on the net profit previously reported was immaterial.
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 2004 year. Headline earnings per share is calculated by dividing
headline earnings by the weighted average number of ordinary shares in issue
during the year.
COMMENTSFinancial reviewDirectors of Nu-World are pleased to report excellent
growth for the period ending 31st August 2004. For the fourteenth consecutive
year, the Group has produced growth in turnover, operating income, attributable
income, headline earnings per share and dividend.
The buoyant conditions being experienced in the South African retail industry
for consumer durables are supported from an economic cyclical perspective, by
lower interest rates, high real wages, individual tax relief and low debt
levels. The Group has certainly benefited from the current positive economic
conditions, but at the same time, organic growth and further market penetration
underpins the Group`s superb performance.
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 21.3% to R1,430,804m (August 2003 : R1,179,455m).
South African local revenue, excluding exports, increased by 27% which is
commendable considering the impact of price deflation averaging 15% - 25%.
Net operating income increased 30.0% to R94,661m (August 2003 : R72,835m).
Operating margins increased to 6.6% as compared to the previous year`s 6.2%.
The increase in the depreciation charge, up 23%, is due to the acquisition of
Conti S.A. plant and machinery.
The minority interest deduction decreased in the current year, due to the
previous year`s once off benefit arising from the sale of discounted liquidated
stock by Prima Australasia.
Attributable income increased by 41.0% to R60,750m (August 2003: R43,099m).
Headline earnings per share on a weighted basis - H.E.P.S. increased 39.2% to
280.6 cents (August 2003 : 201.6 cents).
Dividend per share is up 76.6% to 70.3 cents (August 2003: 39.8 cents). The
dividend cover has reduced from 5 times to a less conservative 4 times cover,
due to the improving cash on hand and cash generation position.
Cash generated by operating activities amounted to R72,119m.
The improved working capital position, has resulted in a 28.2% reduction in
interest paid of R3,605m (August 2003 : R5,018m). Overall net working capital
days of 91.3 compares favourably with the previous year`s 93.7 days.
The balance sheet is strong and the Group remains ungeared with cash balances on
hand of R161,688m (August 2003 : R103,437m).
The net asset value per share of 1,673.4 cents is up 17,5% (August 2003: 1,424.6
cents).
Operational reviewNu-World is South Africa`s leading low-cost, high-volume
manufacturer, importer and exporter, of small electrical appliances and one of
South Africa`s key players in consumer electronics.
Manufacturing small electrical appliancesManufacturing of small electrical
appliances performed well despite the strong Rand and increasingly competitive
imports. Manufacturing revenues increased 20% notwithstanding a substantial
decrease in exports. With the introduction of a number of new products and the
robust domestic consumer demand, manufacturing is expected to sustain strong
growth in the year ahead
Consumer electronics* JVC * Telefunken * Thomson * Nu-Tec * Palsonic In a recent
Markinor survey of the electrics/electronics markets, Nu-World was the only
company, within this sector, with two brands included in the top 10, being JVC
and Telefunken.
Nu-World`s consumer electronics division, with our range of complimentary
international brands, continues to generate growth.
Prima Australasia (Pty) Ltd - Subsidiary (`Prima`)* Akai * Telefunken * Prima
Electronics * Nu-Tec * RCA * ThomsonNu-World holds a 51% share in Prima. Prima
has performed relatively well in an increasingly competitive and deflationary
market, achieving an increase in comparable trading margins of 19.8% year on
year. The higher income contribution during the previous year arose from a once-
off benefit from the sale of discounted liquidated stock.
Apart from the RCA agency introduced in 2003, Prima has been appointed the sole
agent for the Thomson range of consumer electronics. Thomson is positioned at
the upper end of the market. Prima`s ever increasing stable of brands now cover
the entire spectrum of market segments, from price-entry to upper end.
Nu-World U.K. Ltd - Subsidiary (`Nu-World U.K.`)Nu-World U.K. is a 60% held
subsidiary, established on 1st September 2003.
Nu-World U.K. imports and distributes a range of branded consumer durables with
a primary focus on small electrical appliances.
The results from Nu-World U.K. are being consolidated for the first time. The
U.K. market is heavily weighted to the Christmas season. The first half of the
financial year to February, exceeds the second half in revenue and profit. Nu-
World U.K. contributed R80,159m to Group turnover and R1,403m to attributable
income.
G.E. White GoodsNu-World was appointed the South African agent for G.E. large
appliances in August 2004. The G.E. branded large appliances are positioned at
the upper end of the `White Goods` brand spectrum. G.E. will strengthen the
Group`s brand offerings and range of products in this important market sector.
Morphy RichardsNu-World was appointed the exclusive agent for the Morphy
Richards brand of appliances in South Africa, as of 1st September 2003. The
Morphy Richards range of small electric appliances has expanded significantly
over the year and will continue to be a key growth driver in the year ahead.
Manpower and social responsibilityThe Nu-World Group of companies employs just
less than 1,000 people on three continents. Nu-World remains committed to
creating an environment where all of our employees worldwide, can develop to
their fullest potential. The Nu-World health clinic serves to provide
occupational health and safety and to focus on HIV/Aids awareness programs,
counseling, testing and supportive medical assistance. The board has appointed a
B.E.E. sub-committee which is engaged in discussions with potential partners.
The Group is actively supportive of the responsibility of employment equity and
continues to empower employees of colour. The Group is actively committed to
comply with environmental regulations.
ProspectsThe Group has now achieved 14 consecutive years of growth across the
board, in turnover, operating income, attributable income, headline earnings per
share and dividend.
Lower real interest rates are affording higher disposable income and higher
consumer confidence. Statistics indicate that there has been a structural shift
in the SA consumer profile, with an increasing number of consumers migrating
from lower to middle income brackets over the past 10 years. It is expected that
structural forces will underpin sustained growth for the foreseeable future.
As a consequence of the government`s reconstruction and development program,
more than 1,6 million houses have been built and more than 4 million electricity
connections have been made. A further 3 million homes will be connected to the
grid over the next few years, at a rate exceeding 250,000 homes per annum.
The Group expects to increase market penetration in each of its areas of
operation in Southern Africa, Australasia and the United Kingdom, with new and
increased ranges of products lined up for the consumer electronics and
appliances divisions.
G.E. white goods and Morphy Richards small appliances, will generate additional
growth in the South African market.
The current positive economic structural forces in South Africa are expected to
be sustained for the foreseeable future and will serve to underpin the Group`s
above average growth rate for the forthcoming year and into the future.
Audit reportThe 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 declarationThe board has resolved to declare a dividend of 70,3 cents
per share in respect of the year ended 31 August 2004 (2003: 39,8 cents per
share), payable on 13 December 2004 to those shareholders recorded in the books
of the company at the close of business on Friday, 10 December 2004.
The salient dates of the dividend are as follows:
Last date to trade cum dividend Friday, 03 December 2004
Shares trade ex dividend Monday, 06 December 2004
Record date Friday, 10 December 2004
Payment date Monday, 13 December 2004
No dematerialisation or rematerialisation of shares may take place between
Monday, 6 December 2004 and Friday, 10 December 2004, both dates
inclusive.Annual reportThe annual report will be mailed to shareholders in due
course. The annual general meeting is scheduled to take place on Wednesday, 16
March 2005, at the registered office of the company.
On behalf of the board of directorsB.H. HaikneyCompany Secretary27 October 2004
AdministrationRegistration number 1968/002490/06(Incorporated in the Republic of
South Africa)JSE share code: NWLISIN code: ZAE000005070
Registered office35 3rd Street, Wynberg, Sandton, 2199Republic of South
AfricaTel +27 (11) 321 2111Fax +27 (11) 440 9920Transfer
secretariesComputershare Investor Services 2004 (Pty) Limited70 Marshall Street,
Johannesburg, 2001
Company secretaryB.H. Haikney
AuditorsTuffias Sandberg KSi
Joint sponsorsNedbank 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 DirectorJ.M. Judin
Independent Non-executive DirectorD. Piaray
www.nuworld.co.za
