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NCL
NCL
NCL - New Clicks Holdings Limited - Interim group results for the six months
ended 29 February 2008
NEW CLICKS HOLDINGS LIMITED
Registration Number: 1996/000645/06
Share code: NCL
ISIN: ZAE000014585
INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2008
- Turnover - continuing operations up 13.1%
- Diluted headline earnings per share up 25.8%
- Distribution per share up 25.3%
- ROE increases from 22.4% to 32.7%
Commentary
Overview
New Clicks showed the resilient nature of its business by posting a pleasing
level of real sales growth in the first six months of the 2008 financial year,
despite an overall slowdown in consumer spending in the country. The group has
benefited from this good trading and its ongoing focus on efficient cash and
capital management to exceed its medium-term ROE target of 30% in the period.
At the same time the group continued to invest in people, processes and stores
for the long-term growth of the business.
Financial performance
Group turnover from continuing operations increased by 13.1% to R5.64 billion
(2007: R4.98 billion), with selling price inflation measured at 3.4% for the
six month period. Retail turnover increased by 10.7% and 8.5% on a comparable
store basis, against inflation of 3.7%. UPD increased turnover by 13.6% and
experienced inflation of 3.1% for the period.
Retail total income (comprising gross profit and other income) grew by 16.7% to
R1.16 billion, with UPD`s total income up 5.3% to R185 million.
The retail operating margin improved from 5.9% to 6.3%, while UPD`s margin
declined from 3.2% to 2.8%.
The 15.2% increase in group operating expenditure from continuing operations
includes a provision for the employee incentive schemes which reflect the
current performance of the group, set-up costs for the Blueprint retail
programme and Musica store opening costs. Management expects cost growth to be
contained below the level of turnover growth for the full year.
Operating profit increased 15.2% as a result of higher turnover and the
improved retail margin.
The group`s headline earnings increased 12.0% from R188 million to R210
million, with the results of the Discom business included in the comparative
period.
Diluted headline earnings per share benefited from the share buy-back
programme and grew 25.8% to 67.8 cents per share. Diluted earnings per share
increased 54.0% to 82.4 cents per share, lifted by profit from the disposal of
Discom, Style Studio and land adjacent to the group`s head office during the
period.
Inventory continued to be well managed, with stock levels increasing by only
4.9% against turnover growth of 13.1%.
During the period the group repurchased 8.8% of its issued share capital,
partly funded by the proceeds of the Discom sale.
Cash flow for the period was impacted by timing differences in working capital
and the group moving into a net tax cash paying position.
Trading performance
Clicks increased turnover by 11.1%, showing real sales growth of 7.4%. The
performance was attributable to the growth of 16.8% in the health category and
13.5% in beauty, highlighting the defensive nature of Clicks in a tightening
economy. These categories now account for 73% of total turnover in Clicks.
Operating profit increased 22.6% owing to lower shrinkage and wastage,
increased private label sales and further efficiencies in the supply chain.
UPD grew turnover by 13.6%, boosted by increased sales to independent
pharmacies owing to the success of the Link initiative as well as benefiting
from new distribution contracts. Operating profit increased 1.7%. Management
anticipates that the business will show a recovery in the second half through
improved operating efficiencies and increases in logistics fees.
Strong growth in DVD and gaming sales in Musica contributed to an 8.5% increase
in turnover. CD sales declined owing to a lack of popular new local releases,
although Musica continued to gain market share. While operating profit for the
period was flat, Musica performed in line with budget and was impacted by the
opening of 11 new stores. The business is expected to show double digit profit
growth for the full year.
The Body Shop grew turnover by 19.8%, supported by the success of the Love Your
Body loyalty programme and new store openings. Operating profit increased by
30.4%.
Prospects
The group has clearly defined operational plans to deliver on its strategy and
achieve its medium-term targets.
While the trading environment is expected to become more challenging with
increasing pressures on consumer expenditure, New Clicks is a largely
defensive business which is proving fairly resilient in the current economic
climate. Sales for March and April have continued in line with the performance
for the first half.
Full-year earnings forecast
In the absence of any unforeseen factors in the macro-economy and any marked
deterioration in the trading environment, the board and management expect
diluted headline earnings per share to increase by between 20% and 30% for the
year to 31 August 2008. Diluted earnings per share are forecast to grow by
between 30% and 40%. These forecasts have not been audited or reviewed by the
company`s auditors.
Distribution
The board of directors has approved an interim distribution of 18.8 cents per
share (2007: 15.0 cents), comprising a cash dividend of 3.7 cents per share
and a distribution out of share premium of 15.1 cents per share in lieu of a
dividend (collectively "the distribution").
Shareholders are advised of the following salient dates relating to the
distribution:
Last day to trade cum
the distribution Thursday, 12 June 2008
Shares trade ex the distribution Friday, 13 June 2008
Record date Friday, 20 June 2008
Payment to shareholders Monday, 23 June 2008
Share certificates may not be dematerialised or rematerialised between Friday,
13 June 2008 and Friday, 20 June 2008, both days inclusive.
By order of the Board
ALLAN SCOTT
Company Secretary
24 April 2008
Consolidated Balance Sheet
As at As at As at
29 February 2008 28 February 2007 31 August 2007
R`000 (unaudited) (unaudited) (audited)
Assets
Non-current assets 1 168 726 1 301 579 1 188 408
Property, plant
and equipment 711 322 731 901 698 964
Investment property - 6 900 -
Intangible assets 289 174 394 395 291 339
Goodwill 83 950 83 950 83 950
Deferred tax assets 26 468 23 489 45 404
Loans receivable 57 812 60 944 68 751
Current assets 2 322 157 2 435 202 2 821 971
Inventories 1 316 347 1 460 912 1 191 847
Trade and other
receivables 774 861 713 909 792 126
Income tax
receivable 1 576 20 634 2 446
Loans receivable 6 722 3 184 4 616
Cash and cash
equivalents 147 159 195 446 413 275
Derivative
financial assets 75 492 41 117 59 391
Assets held for sale - - 358 270
Total assets 3 490 883 3 736 781 4 010 379
Equity and liabilities
Capital and reserves
Ordinary
shareholders` interest 1 103 513 1 528 003 1 296 188
Non-current
liabilities 326 424 353 138 331 676
Interest-bearing
borrowings 72 901 113 256 77 681
Employee benefits 103 460 53 398 64 943
Deferred tax
liabilities 50 181 86 281 91 692
Operating lease
liability 99 882 100 203 97 360
Current liabilities 2 060 946 1 855 640 2 382 515
Bank overdraft - 20 442 -
Trade and other payables 1 740 778 1 612 301 1 902 313
Employee benefits 92 516 71 481 127 383
Provisions 41 776 42 550 47 610
Interest-bearing
borrowings 71 280 75 480 203 450
Income tax payable 114 596 33 386 86 755
Liabilities held for sale - - 15 004
Total equity and
liabilities 3 490 883 3 736 781 4 010 379
Consolidated Income Statement
6 months to 6 months to
29 February 2008 28 February 2007
R`000 Note (unaudited) (unaudited)
Continuing operations
Revenue 5 878 718 5 214 863
Turnover 5 640 981 4 989 120
Cost of merchandise sold (4 518 413) (4 038 332)
Gross profit 1 122 568 9 50 788
Other income 226 634 220 657
Expenses (1 049 267) (911 029)
Depreciation and amortisation (46 410) (38 620)
Occupancy costs (152 091) (138 978)
Employment costs (490 060) (421 789)
Other costs (360 706) (311 642)
Profit/(loss) on disposal of
property, plant and equipment 18 806 (812)
Profit on disposal of
business 1 244 -
Goodwill impairment - -
Operating profit before
financing costs 319 985 259 604
Net financing costs (16 406) (22 216)
Financial income 11 103 5 086
Financial expense (27 509) (27 302)
Profit before taxation 303 579 237 388
Income tax expense (82 300) (64 825)
Profit for the period from
continuing operations 221 279 172 563
Discontinued operations
Profit for the period from
discontinued operations 1 33 681 13 601
Total profit for the period 254 960 186 164
Headline earnings
Total profit for the period 254 960 186 164
Adjustments for
Profit/(loss) on disposal of
property, plant and equipment (16 237) 1 383
Profit on disposal of businesses (28 742) -
Goodwill impairment - -
Headline earnings 209 981 187 547
Headline earnings per share (cents) 68.6 54.7
Diluted headline earnings per share (cents) 67.8 53.9
Earnings per share (cents) 83.3 54.3
Diluted earnings per share (cents) 82.4 53.5
Distributions per share (cents)
Proposed/paid - June 18.8 15.0
Paid - December
Year to
% 31 August 2007
R`000 change (audited)
Continuing operations
Revenue 12.7 10 529 632
Turnover 13.1 10 051 373
Cost of merchandise sold 11.9 (8 153 049)
Gross profit 18.1 1 898 324
Other income 2.7 462 393
Expenses 15.2 (1 866 889)
Depreciation and amortisation 20.2 (81 587)
Occupancy costs 9.4 (284 605)
Employment costs 16.2 (891 262)
Other costs 15.7 (609 435)
Profit/(loss) on disposal of property,
plant and equipment 29 402
Profit on disposal of business -
Goodwill impairment (250)
Operating profit before financing costs 23.3 522 980
Net financing costs (26.2) (38 827)
Financial income 15 866
Financial expense (54 693)
Profit before taxation 27.9 484 153
Income tax expense 27.0 (129 965)
Profit for the period from continuing
operations 28.2 354 188
Discontinued operations
Profit for the period from
discontinued operations 26 320
Total profit for the period 380 508
Headline earnings
Total profit for the period 37.0 380 508
Adjustments for
Profit/(loss) on disposal of property,
plant and equipment (23 836)
Profit on disposal of businesses -
Goodwill impairment 250
Headline earnings 12.0 356 922
Headline earnings per share (cents) 25.4 106.1
Diluted headline earnings per share (cents) 25.8 103.0
Earnings per share (cents) 53.4 113.2
Diluted earnings per share (cents) 54.0 109.9
Distributions per share (cents)
Proposed/paid - June 25.3 15.0
Paid - December 33.2
Condensed Consolidated Cash Flow Statement
6 months to 6 months to Year to
29 February 2008 28 February 2007 31 August 2007
R`000 (unaudited) (unaudited) (audited)
Cash generated by
operations 367 040 326 140 622 366
Working capital changes (242 056) 175 254 520 810
Net interest paid (13 778) (22 216) (36 383)
Taxation
(paid)/received (74 236) 52 553 37 504
Cash inflow from
operating
activities before
distributions 36 970 531 731 1 144 297
Distributions
paid to ordinary
shareholders (111 538) (77 692) (121 286)
Net cash effects
of operating
activities (74 568) 454 039 1 023 011
Net cash effects
of investing
activities 282 484 (70 447) (103 982)
Proceeds on
disposal of business 316 356 - -
Other investing activities (33 872) (70 447) (103 982)
Net cash effects
of financing
activities (474 032) (201 699) (498 865)
Purchase of
treasury shares (492 074) (256 091) (557 576)
Other financing
activities 18 042 54 392 58 711
Net (decrease)/
increase in cash
and cash equivalents (266 116) 181 893 420 164
Supplementary Information
29 February 2008 28 February 2007 31 August 2007
Number of ordinary
shares in issue (`000) 325 957 355 957 335 957
Weighted average
number of shares
in issue (net of treasury
shares) (`000) 306 053 342 642 336 266
Weighted average
diluted number of
shares in issue (net of
treasury shares)(`000) 309 581 347 803 346 372
Net asset value
per share (cents) 373 453 410
Net tangible asset
value per share (cents) 247 311 260
Depreciation and
amortisation (R`000) 49 687 49 630 104 401
Capital expenditure
(R`000) 64 791 88 229 154 622
Capital commitments
(R`000) 95 300 72 371 176 000
Segmental Analysis
The split per brand of turnover and profit
is as follows:
6 months to 6 months to
29 February 2008 28 February 2007 %
R`000 (unaudited) (unaudited) change
Turnover
Clicks 3 123 305 2 810 631 11.1
New United Pharmaceutical
Distributors 2 323 219 2 045 730 13.6
Musica 521 157 480 175 8.5
The Body Shop 52 786 44 057 19.8
Style Studio - 4 299
Intragroup elimination (379 486) (395 772) (4.1)
Continuing operations 5 640 981 4 989 120 13.1
Discom 50 140 612 243
Total 5 691 121 5 601 363 1.6
Profit before interest and
taxation
Clicks 186 551 152 174 22.6
New United Pharmaceutical
Distributors 66 007 64 902 1.7
Musica 36 915 36 661 0.7
The Body Shop 9 683 7 425 30.4
Style Studio 357 498
Intragroup elimination 422 (1 244)
Continuing operations 299 935 260 416 15.2
Discom 8 108 19 961
Total 308 043 280 377 9.9
Condensed Consolidated Statement of Changes in Equity
6 months to 6 months to Year to
29 February 2008 28 February 2007 31 August 2007
R`000 (unaudited) (unaudited) (audited)
Opening
shareholders`
interest 1 296 188 1 593 949 1 593 949
Increase in share
capital and premium - 3 119 2 402
Increase/(decrease)
in non-distributable
reserve 100 20 (629)
Net cost of own
shares purchased (338 238) (179 848) (562 505)
Net cost of own
shares cancelled (325) - -
Net profit for
the period 254 960 186 164 380 508
Share option
reserve 2 366 2 291 3 749
Distributions to
shareholders (111 538) (77 692) ( 121 286)
Closing
shareholders` interest 1 103 513 1 528 003 1 296 188
Notes
Accounting policies
These interim financial results have been prepared in accordance with IAS 34,
Interim Financial Reporting and the accounting policies used are consistent
with those applicable for the 2007 annual financial statements.
1. Discontinued operations
6 months to 6 months to Year to
29 February 2008 28 February 2007 31 August 2007
R`000 (unaudited) (unaudited) (audited)
Revenue from
discontinued
operations 51 903 629 910 1 192 255
Turnover 50 140 612 243 1 153 507
Cost of
merchandise sold (36 172) (449 233) (828 873)
Gross profit 13 968 163 010 324 634
Other income 1 763 17 667 38 748
Expenses (7 623) (160 716) (323 421)
Depreciation and
amortisation (44) (8 518) (16 758)
Occupancy costs 4 118 (26 994) (51 322)
Employment costs (7 360) (66 143) (148 939)
Other costs (4 337) (59 061) (106 402)
Loss on disposal
of property, plant
and equipment (4) (571) (2 890)
Profit from
operations 8 104 19 390 37 071
Profit on
disposal of
business 23 649 - -
Profit before
taxation 31 753 19 390 37 071
Income tax 1 928 (5 789) (10 751)
Profit for the
period from
discontinued
operations 33 681 13 601 26 320
During September 2007 the Discom business unit was sold to Edgars Consolidated
Stores Limited ("Edcon").
Set out above are the results of the Discom business unit which, as a result of
meeting the definition of a discontinued operation, are required to be
separately disclosed from the results of the continuing operations.
Registered address Cnr Searle and Pontac Streets, Cape Town 8001
PO Box 5142, Cape Town 8000
Directors D.M. Nurek* (Chairman), F. Abrahams*, P.F.K. Eagles*,
B.D. Engelbrecht, M.J. Harvey, F. Jakoet*,
D.A. Kneale** (Chief Executive Officer), R.L. Lumb*, M. Rosen*,
K.D.M. Warburton (Chief Financial Officer)
* non-executive **British
Transfer secretaries Computershare Investor Services (Proprietary) Limited,
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107
Sponsor Investec Bank Limited
This information, together with additional detail, is available on the
New Clicks Holdings website: http://www.newclicks.co.za
Registration Number: 1996/000645/06 Share code: NCL ISIN: ZAE000014585
Date: 24/04/2008 08:30:01 Produced by the JSE SENS Department.
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