| Tue 24 Oct 2006, 17:00 | | Nu-World - Audited Financial Statements For The Ye |
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NWL
NWL
Nu-World - Audited Financial Statements For The Year Ended 31 August 2006
NU-WORLD HOLDINGS LIMITED
("Nu-World" or "the Group" or "the Company")Registration number
1968/002490/06
(Incorporated in the Republic of South Africa)
JSE share code: NWL
ISIN code: ZAE000005070
- EBITDA OPERATING INCOME UP 26,0% TO R129,061m- PROFIT BEFORE TAX UP
38,4% TO R120,423m- ATTRIBUTABLE INCOME UP 12,0% TO R82,030m- HEADLINE
EARNINGS PER SHARE UP 11,6% TO 378,3 cents- CASH BALANCES ON HAND UP 40,4%
TO R267,578m- CASH GENERATED FROM OPERATIONS R122,041 Million- CAPITAL
DISTRIBUTION PER SHARE 120,8 Cents
AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2006
ABRIDGED CONSOLIDATED INCOME STATEMENT
Audited Restated
year ended year ended
31 August 31 August
2006 2005 %
(R000) (R000) Change
Turnover 1 638 724 1 626 122 0,8
Net operating income 129 061 102 466 26,0
Depreciation 7 415 8 251
Interest paid 1 223 7 220
Income before taxation 120 423 86 995 38,4
Taxation 29 613 18 213
Income after taxation 90 810 68 782 32,0
Share of associate company loss (6 994)
Minority interests (1 786) 4 444
Attributable income 82 030 73 226 12,0
Dividend declared 20 971
Dividend per share (cents) 92,6
Capital distribution 27 357
Capital distribution from share 120,8
premium (cents)
Headline earnings 82 030 73 226 11,8
Earnings per share (cents) 378,3 339,1 11,6
Headline earnings per share (cents) 378,3 339,1 11,6
Dividend per share (cents) 92,6 30,5
Capital distribution per share 120,8
(cents)
Dividend declared/capital 3,0 3,5
distribution cover
Interest cover 99,5 13,0
Shares in issue 21 683 890 21 592 490
Shares in issue - weighted 21 683 890 21 592 490
Shares in issue - diluted 22 634 890 22 543 490
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited Restated
year ended year ended
31 August 31 August
2006 2005
(R000) (R000)
Cash generated by operating activities 54 659 65 467
Cash generated from operations 122 041 101 512
Interest paid (1 223) (7 220)
Dividend paid (27 820) (15 252)
Normal tax on companies (38 339) (13 573)
Cash flows from investing activities 9 996 (26 342)
Purchase of tangible fixed assets (4 222) (5 511)
Proceeds on disposal of fixed assets 220 145
Reclassification of associate to (8 471)
subsidiary
Increase in investment in subsidiary 22 469 (20 884)
Increase in investment in treasury shares (92)
Cash flows from financing activities 12 374 (10 196)
Repayment of long term borrowing (10 196)
Increase in shareholders loans 11 361
Proceeds from issue of treasury shares 1 013
Net increase in cash and cash equivalents 77 029 28 929
Effects of exchange rate changes (68)
Cash and cash equivalents at the 190 549 161 688
beginning of the year
Cash and cash equivalents at end of the 267 578 190 549
year
SEGMENTAL INFORMATION
Audited Restated
year ended year ended
31 August 31 August
2006 2005 %
(R000) (R000) Change
Geographical revenue
Republic of South Africa 1 124 014 971 479 15,7
Offshore subsidiaries 514 710 407 039 26,5
Deconsolidated subsidiary - 247 604
1 638 724 1 626 122 0,8
Geographical income
Republic of South Africa 83 275 76 963
Offshore subsidiaries (1 245) (3 737)
82 030 73 226 12,0
ABRIDGED CONSOLIDATED BALANCE SHEET
Audited Restated
year ended year ended
31 August 31 August
2006 2005
(R000) (R000)
Assets
Non-current assets
Fixed assets 41 673 44 867
Goodwill 25 729 18 089
Current assets
Inventory 179 030 171 341
Trade and other receivables 241 512 227 716
Cash equivalents 267 578 190 549
Total assets 755 522 652 562
EQUITY AND LIABILITIES
Ordinary shareholders" funds 485 282 422 478
Minority interests 47 949 28 156
Total shareholders" funds 533 231 450 634
Non-current liabilities 10 607 6 928
Current liabilities
Trade and other payables 200 323 195 000
Loans payable 11 361
Total equity and liabilities 755 522 652 562
SUPPLEMENTARY INFORMATION
Audited Restated
year ended year ended
31 August 31 August
2006 2005 %
(R000) (R000) Change
Analysis of Group turnover
Current consolidated subsidiaries 1 638 724 1 378 518 18,9
Deconsolidated subsidiaries 247 604 (100)
Total Group turnover 1 638 724 1 626 122 0,8
Operating income as percentage of 7,9 6,3 25,0
turnover (%)
Net negative debt to equity ratio (%) (55,1) (45,1)
Effective taxation rate (%) 24,6 20,9 17,5
Net asset value per share (cents) 2 238,0 1 956,6 14,4
Capital expenditure
Expansion 2 815 4 002
Replacement 1 407 1 509
4 222 5 511
Goodwill and amortisation
At beginning of year 18 089 5 926
Net acquisition of subsidiaries 15 978 9 751
Reclassification of subsidiary (8 338)
Derecognition of negative goodwill in - 2 412
terms of IFRS 3
25 729 18 089
Accounting policiesThe final report is prepared on the historical cost basis,
except financial instruments which have been fair valued.
This is in accordance with the recognition and measurement principles of
International Financial Reporting Standards (IFRS), the requirements of the
South African Companies Act and the JSE Listings Requirements.
The results are presented in terms of IFRS statements. The Group has adopted
and applied IFRS for the first time for the year ended 2006.
The transition date is 1 September 2004. The following new accounting
policies were adopted:
Shared-based paymentsThe Group has applied IFRS 2 - shared based payments.
IFRS 2 has been applied to all grants of equity, which were unvested as of 1
September 2004.
Reconciliation of Income Statement
Audited Restated
year year
ended ended
31 August 31 August
2006 2005
R"000 R"000
Profit attributable to shareholders
As previously reported under SA GAAP 82 030 73 385
IFRS adjustment - share based payments (159)
As reported under IFRS 82 030 73 226
Share based
Retained compensation
earnings reserve
R"000 R"000
1 September 2005
As previously reported 307 980
IFRS adjustment - share based payments (159) 159
As reported under IFRS 307 821 159
STATEMENT OF CHANGES IN EQUITY
Foreign
currency
Share Share Treasury translation
capital premium share reserve
R"000 R"000 R"000 R"000
Balance as at 1 September 217 115 632 (1 072) (813)
2004 (audited)
IFRS adjustments
Restated balance as at 1 217 115 632 (1 072) (813)
September 2004
Net profit for the year
Net profit as previously
reported
IFRS adjustments
Derecognition of negative
goodwill (IFRS 3)
Dividends
Dividend settled
IFRS adjustments - share
based payments
Fair value movement 627
Net treasury movement (20 872)
Treasury shares issued 9 20 770
Balance as at 31 August 226 136 402 (21 944) (186)
2005
Net profit for the year
IFRS adjustments - share
based payments
Dividends
Dividend settled
Fair value movement 352
Net treasury movement 1 013
Balance as at 31 August 226 136 402 (20 931) 166
2006
STATEMENT OF CHANGES IN EQUITY (Contd)
Share
based
Accumulated Shareholders compensation
profit for dividend reserve Total
R"000 R"000 R"000 R"000
Balance as at 1 247 434 361 398
September 2004
(audited)
IFRS adjustments
Restated balance as 247 434 - - 361 398
at 1 September 2004
Net profit for the 73 226 73 226
year
Net profit as 73 385 73 385
previously reported
IFRS adjustments (159) (159)
Derecognition of 2 412 2 412
negative goodwill
(IFRS 3)
Dividends (15 251) 15 251 -
Dividend settled (15 251) (15 251)
IFRS adjustments - 159 159
share based payments
Fair value movement 627
Net treasury (20 872)
movement
Treasury shares 20 779
issued
Balance as at 31 307 821 - 159 422 478
August 2005
Net profit for the 82 030 82 030
year
IFRS adjustments - 380 380
share based payments
Dividends (20 971) 20 971 -
Dividend settled (20 971) (20 971)
Fair value movement 352
Net treasury 1 013
movement
Balance as at 31 368 880 - 539 485 282
August 2006
COMMENTS
FINANCIAL OVERVIEW
The Directors of the Group are pleased to report strong growth for the period
ending 31 August 2006. For the sixteenth consecutive year, the Group has
produced growth in turnover, operating income, attributable income, headline
earnings per share and dividend/capital distribution.
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.
Notwithstanding a softening of consumer sentiment, the Nu-World Group has
continued to benefit from the current positive economic conditions being
experienced in the South African retail industry. In addition, positive
factors such as a rebound in confidence of retailers of durable goods due to
stronger than expected retail sales in the 3rd quarter, tax cuts and
sustained employment growth, continue to support household income and should
sustain a gradual easing in retail sales growth, avoiding a sharp
contraction.
Group turnover increased by 0,8% to R1,638m (August 2005: R1,626m). South
African revenues increased 16% and had the Prima subsidiary not been
deconsolidated, overall turnover increase would have been reported as 15,1%.
Price deflation was evident in South Africa for most of the financial year
and continues in Australia and the United Kingdom.
EBITDA increased 26,0% to R129,061m (August 2005: R102,466m)
Operating margins improved by 25,0% - increasing to 7,9% from the previous
year"s 6,3%.
Income before tax is up 38,4% to R120,423m (August 2005: R86,995m).
The tax rate increased from 20,9% to 24,6%, being more reflective of the
expected tax rate going forward.
Attributable income increased by 12,0% to R82,030m. (August 2005: R73,226m).
Headline earnings per share on a weighted basis - H.E.P.S. increased 11,6% to
378,3 cents (August 2005: 339,1 cents).
Cash generated from operations amounted to R122,041m.
Overall net working capital days of 80.2 is an improvement on the previous
year"s 86,3 days.
The balance sheet is strong and the Group remains ungeared with cash balances
on hand up 40,4% to R267,578m (August 2005: R190,549m).
The net asset value per share is up 14,4% to 2 238,0 cents (August 2005: 1
956,6 cents).
OPERATIONAL REVIEW
Nu-World is one of South Africa"s leading players in small electrical
appliances and consumer electronics.
Subsidiaries
Nu-World U.K. Ltd; Yale Prima Pty Ltd; On Corporation USA
Nu-World U.K. Ltd is a 60% held subsidiary. The U.K. retail market continues
to experience weak consumer sentiment, with lower disposable income due to
increasing energy costs and higher interest rates. We are pleased to report
that a new line-up of products and an increasing customer base, has seen the
company returning to profitability in the current year. The order book
leading up to the Christmas season is healthy.
Yale Prima Pty Ltd. In Australia, Nu-World has consolidated its two
operations into a 54,8% shareholding of Yale Prima Pty Ltd, as of 1 August
2006. The Yale Appliance Group performed well for the year under review, with
a business model better suited to Australia"s difficult trading conditions.
Prima Australasia experienced a difficult year in an increasingly competitive
and deflationary market.
However, following the merger and the change of the Prima business model in
line with Yale, directors are confident that the merged subsidiary will
generate profits in the coming year. Since the date of the merger, Yale Prima
has been profitable each month and the order book for the festive season is
particularly strong. Australia represents the largest of the Group"s foreign
operations with revenues of R452,369m. The Australian market for consumer
electronics, whilst extremely competitive, remains strong with consumers
trading up to flat-panel televisions and the latest innovative technologies.
On Corporation USA. With effect from 1 May 2006, the Group acquired a
controlling interest in On Corporation USA, with a Korean partner. Initial
revenue contribution for the year under review has been marginal but is
forecast to improve significantly in the years ahead.
Consumer ElectronicsJVC * Telefunken * Nu-Tec * Palsonic
The Nu-World brands, which in South Africa cover the spectrum of the consumer
electronics market, from price entry to top-end, performed well during the
period under review. Telefunken improved its rating in the latest Markinor
survey.
Flat panel televisions are taking a greater share of the TV market, which is
the largest single category of the consumer electronics market. Telefunken
and JVC have launched a range of flat panel televisions, both LCD and Plasma.
JVC offers the largest rear projection TV in the market. Other latest
technology offerings include second generation camcorders with 30GB hard disc
drives as well as software to support direct copying to DVD. Car audio is
moving into the portable visual entertainment arena, offering 61/2" LCD
screens and IPOD ready audio. Latest innovations in home theatre, component
systems, personal audio, portable multi-media and MP3"s, are driving
aspirational purchases.
New product range line-upConti Motorsport * Air-Conditioning * White Goods *
Power Tools * Cell phones * GPS Guidance Systems
The new ranges of products in terms of motorsport, air-conditioning and white
goods etc., represent a small percentage of our business at this time.
However, these segments have performed exceedingly well and offer substantial
potential for growth. In addition we are marketing a range of cell phones and
GPS Guidance systems.
Conti MotorsportThe off-take of Conti Motorsport has been excellent. The
range is ever growing and now includes: scooters, road bikes, super bikes,
quad bikes, bicycles, generators, go-carts and golf carts.
Conti Motorsport is driven by affordable ownership and fuel efficient
transport. With the increase in the cost of fuel, the nature of commuting in
South Africa will inevitably change in line with other emerging markets.
Conti Motorsport provides consumers with an ownership opportunity. Ownership
offers unlimited mobility, reduced commuting time, and cost-saving fuel
efficiency.
Service and support is key, with 76 appointed service agents nationwide
providing 24 hour service and spare parts.
AMID, the Association of Motorcycle Importers recently reported that sales of
2-wheelers year-to-date are up more than 50% on the previous year.
MANPOWER AND SOCIAL RESPONSIBILITY
The Group"s BEE initiatives are in line with the DTI"s BEE Codes of Good
Practice on Broad-Based Black Economic Empowerment - in terms of management,
employment equity, skills development, preferential procurement, enterprise
development and corporate social responsibility. The Group is committed to
comply with environmental regulations.
PROSPECTS
The Group has demonstrated its resilience by achieving growth for 16
consecutive years in turnover, operating income, attributable income and
headline earnings per share.
South Africa, with a "high street" retail market estimated at R385bn, has
been experiencing a period of the best retail environment in many years,
notwithstanding the recent dipping of consumer sentiment. Structural changes
and cyclical factors have contributed to this strong trading environment.
South Africa"s medium-term growth prospects are looking good. Urbanization
and an emerging middle class support growth in sales of consumer durables, Nu-
World"s product of trade.
The slight deterioration in consumer sentiment in the third quarter, reflects
a change in macroeconomic factors. The effects of higher petrol and food
prices, interest rate hikes, the depreciation of the Rand and a slowdown in
property increases has started to filter through to consumer sentiment.
However, retailer confidence remains relatively high after a third quarter of
superb sales growth. Third quarter statistics indicate that business
confidence in the wholesale trade is extremely high. It is evident that
notwithstanding recent pressures, consumer affordability levels have
increased with many consumers upgrading their durables with more expensive,
latest technology products.
Infrastructure spending and preparation for the 2010 Soccer World Cup will
sustain growth in the medium term. The government has committed to spend
R400bn in the medium-term to upgrade the country"s electricity, water and
transport infrastructure.
Nu-World has provided shareholders with growth generation with the C.A.G.R
over the last five years averaging 19,3%. The Group has demonstrated its
ongoing ability to generate cash and shareholders have been rewarded with a
steadily appreciating share price. The Group remains well positioned for long
term growth in terms of our broad diversification, level of innovation and
key customer relationships.
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.
DISTRIBUTION TO SHAREHOLDERS
The Board has resolved to declare a distribution to shareholders by way of a
capital distribution out of share premium of 120,8 cents per share.
Shareholders will be asked to consider, and if deemed fit, to approve the
capital distribution at the annual general meeting of Nu-World to be held on
24 January 2007. Salient dates and times pertaining to the capital
distribution will be announced following the annual general meeting.
ANNUAL REPORT
The annual report will be mailed to shareholders in due course. The annual
general meeting will take place on Wednesday, 24 January 2007, at the
registered office of the Company.
On behalf of the board of directors
M. S. Goldberg Executive Chairman
B.H. Haikney
Company Secretary
24 October 2006
Administration
Registration number 1968/002490/06
(Incorporated in the Republic of South Africa)
JSE share code: NWL
ISIN code: ZAE000005070
Registered office35 3rd Street, Wynberg, Sandton, 2199
Republic of South Africa
Tel +27 (11) 321 2111
Fax +27 (11) 440 9920
Transfer secretariesComputershare Investor Services 2004 (Pty) Ltd
70 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 (Executive 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
Date: 24/10/2006 05:00:51 PM Produced by the JSE SENS Department
