| Wed 23 May 2001, 0:00 | | Nandos - Audited Results For The Year Ended 28 Feb |
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Audited Results for the year ended 28 February 2001
Nando's Group Holdings Limited
Increase in revenue 46,8%
Increase in operating income 37,7%
Increase in headline earnings 27,9%
Net asset value 108,7%
Decrease in debt/equity ratio_ 73,9%
% contribution from off shore operations 27%
The Nando's Mission - The Nando's mission is to be recognised as a global
brand that consistently delivers quality, value and commitment to its
customer base. These objectives underpin the economic value of the Nando's
brand ensuring future sustainable growth in headline earnings.
Financial results - Fully diluted headline earnings per share of 2.86 cents
exceeded the group forecast of 2.83 cents per share.
Group attributable earnings of R18.5 million (2000: R14.4 million) include
the results of the Nando's offshore operations acquired with effect from 29
February 2000. Operating income before depreciation increased by R14.5
million over the corresponding previous period. Finance charges in the
period under review increased by R7 million as a result of the interest
bearing debt acquired by the group pursuant to the acquisition of the
Nando's international operations.
The group's borrowings reduced from R110 million at 29 February 2000 to R60
million at year end, a reduction of 45,5% reflecting the strong cash flow
generation of the group. The group's debt/equity ratio at year end was
102.6% compared to 392.9% at the end of February 2000. Further significant
reductions are anticipated in the financial year ended 28 February 2002.
Review of operations - The Nando's store base now comprises 304 stores, with
144 stores in international markets (2000:258 stores, with 111 stores in
international markets).
The Nando's brand has been firmly established in Australia and New Zealand
with 48 stores. The franchise model is ideally suited to these territories,
with Nando's experiencing above average conversion rates between franchisee
applications and final qualification. The franchise units opened during the
year under review have exceeded initial expectations.
The United Kingdom operation continues to capitalise on a strong brand
presence in London with stores opened in Manchester and Birmingham. The
store base now comprises 30 stores. Further expansion outside of London
continues.
A franchise development program for Canada has been implemented in Ottawa
and Vancouver. The franchise rollout will be supported by existing
infrastructure.
The Middle East hub has been bolstered with the signing of a master
franchise for Qatar. The first store opened in May 2001.
This will add to the royalty flow enjoyed from Saudi Arabia. Political
turmoil in Israel curtailed planned store expansion with the result that the
financial performance was disappointing.
The Malaysian operation delivered a strong royalty flow from the store base
in Kuala Lumpur. Expansion is underway in Penang.
The group has established a presence in the Indian sub continent with the
signing of a master franchise for Pakistan.
The first store opened in May 2001 and the second store build will shortly
commence.
Innscor Regional Foods Limited, the African joint venture did not perform
according to expectations for the second half of the financial year. Our
partner, Innscor Africa Limited responsible for the joint venture operations
has restructured the management team to give greater focus and attention to
regional operations.
The South African operation continues to expand its franchising operation
through the rollout of new franchise stores and the conversion of existing
corporate stores.
Capital expenditure and operating lease commitments - Capital expenditure
for the year amounted to R12.5 million (2000: R22.2 million). The group's
capital expenditure is reduced as a consequence of expansion through the
rollout of franchise stores.
Operating lease commitments
Year 2002 2003 2004 2005 2006 Total
and thereafter
R'000 35 162 31 701 25 843 19 879 21 102 133 687
Guarantees - Nando's Group Holdings Limited has provided a guarantee to the
Industrial Development Corporation ("IDC") in the amount of R22 million in
respect of franchises transacted through the IDC facility.
Accounting policies - During the year under review, the group changed its
accounting policy in respect of deferred taxation to comply with the revised
AC 102. Accordingly, the prior year taxation charge and attributable income
have been restated to incorporate the changed accounting policy. The 29
February 2000 headline earnings per share decreased by 0.59 cents per share
from 8.10 cents per share to 7.51 cents per share with this exception, the
accounting policies are consistent with those applied in the previous year.
Share Transactions Totally Electronic ("Strate") - The company's transition
took place on 6 April 2001 and trading for electronic settlement commenced
on 9 April 2001.
Appointments to the board of directors - Mustaq Brey, deputy chairman of
Brimstone Investment Corporation Limited, and Kevin Utian were appointed to
the board on 12 January 2001 in a non executive and executive capacity
respectively.
Dividend - The board has resolved not to declare a dividend. Cashflows from
operations will be utilised to further reduce interest bearing debt.
Our Nandocas - This financial performance was achieved with the unstinting
effort and commitment from all our Nandocas who make up the Nando's family.
We thank them for their contribution.
Prospects - The board is confident that continued improvement in the group's
attributable earnings will be made following further momentum in store
rollouts in international markets in line with our strategic objectives.
SEGMENTAL REPORT
South Middle
Africa UK Australia East
Revenues 329 397 Note 1 78 473 46 920
Canada Malaysia Africa Total
Revenues 14 901 1 609 Note 1 471 907
South Middle
Africa UK Australia East
Operating
income
before
tax 18 754 5 506 4 112 (3 459)
Canada Malaysia Africa Total
Operating
income
before
tax (1 143) 983 848 25 601
Note 1: Revenues exclude revenues from associated companies.
South
Africa Australia Middle East
Assets: Non current 136 988 16 914 12 607
179 340 25 196 20 187
Canada Total
Assets: Non current 3 149 169 658
5 586 230 309
South
Africa Australia Middle East
Liabilities:
Non current 57 748 4 568 2 473
Current 58 550 32 715 12 721
Canada Total
Liabilities:
Non current - 64 789
Current 2 942 106 928
South
Africa Australia Middle East
116 298 37 283 15 194
Canada Total
2 942 171 717
YEAR ENDED
GROUP INCOME STATEMENT 28 Feb 29 Feb
2001 2000
Audited Audited
R' 000 R' 000
Revenue 471 907 321 464
Operating income before depreciation 55 923 41 380
Depreciation (19 736) (15 097)
Operating income 36 187 26 283
Exceptional item: Restructuring costs 3 172 146
Net finance costs (15 027) (7 999)
Income before taxation 17 988 18 138
Taxation (7 093) (3 817)
Net income 10 895 14 321
Associated companies attributable
share of net income 4 441
Attributable income 15 336 14 321
Exceptional item: Restructuring costs 3 172 146
Headline earnings 18 508 14 467
Headline earnings per share (cents)
- fully diluted 2,86 2,24 Earnings per
share (cents)
- fully diluted 2,37 2,24
Weighted average number of
shares in issue ('000) 646 585 646 585
Headline earnings per share (cents)
- undiluted 2,86 7,51
Earnings per share (cents)
- undiluted 2,37 7,43
Weighted average number of
shares in issue ('000) 646 585 192 739
*Note: 453 846 154 NGH ordinary shares were issued with effect from 29
February 2000 persuant to the aquisition of the Nando's offshore operations.
In calculating diluted earnings per share for the year ended 29 february
2000, the maximum potential dilutive effect of the shares issued persuant to
the aquisition have been taken into account.
GROUP BALANCE SHEET R' 000 R' 000 Assets
Non-current assets 169 660 191 558
Property, plant and equipment 86 267 128 976
Development costs and trademarks 24 935 12 953
Investments in associate companies
and other investments 53 658 37 918
Employee share incentive scheme 4 800 11 711
Current assets 60 651 23 814
Inventories 7 423 7 831
Accounts and other receivables 37 812 15 983
Bank balances and cash 15 416 -
Total assets 230 311 215 372
Equity and Liabilities
Share capital and premium 6 465 6 465
Retained income 39 666 21 610
Ordinary shareholders' funds 46 131 28 075
Shareholders' loans 12 461 -
Shareholders' funds 58 592 28 075
Long term liabilities 55 961 80 147
Convertible debentures
- employee share incentive scheme 4 800 11 711
Deferred taxation 4 028 3 295
Current liabilities 106 930 92 144
Accounts payable, other accounts
payable and provisions 79 898 58 803
Current portion of long term
Liabilities 11 938 14 673
Taxation 7 479 3 194
Bank overdrafts 7 615 15 474
Total equity and liabilities 230 311 215 372
CASH FLOW STATEMENT R' 000 R' 000
Cash generated by operations 47 256 28 351
Net finance costs (15 027) (7 999)
Taxation paid (2 074) (689)
Cashflows from operating activities 30 155 19 663
Cashflows from investing activities 7 580 (32 018)
Cashflows from financing activities (14 460) 7 482
Net Increase (decrease) in cash
and cash equivalents 23 275 (4 873)
Cash and cash equivalents at the
beginning of the year (15 474) (10 601)
Cash and cash equivalents at the
end of the year 7 801 (15 474)
GROUP STATEMENT Share Share Retained Total
OF CHANGES IN EQUITY Capital Premium Income
R' 000 R' 000 R' 000 R' 000
Balance at
28 February 1999 as
previously reported 1 927 81 811 16 756 100 494
Effects of changing
accounting policy
relating to deferred
taxation - - 3 087 3 087
Balance at
28 February 1999 1 927 81 811 19 843 103 581
Net income for the year - - 14 321 14 321
Share issue 4 538 199 692 - 204 230
Goodwill written off (73 058) - (73 058)
Goodwill written off - (208 445) (12 554) (220 999)
Balance at
29 February 2000 6 465 - 21 610 28 075
Net income for the year - - 15 336 15 336
Translation differences - - 2 720 2 720
Balance at
28 February 2001 6 465 - 39 666 46 131
Robert C Brozin Les Perlman Sandton
Chief Executive Officer Chief Financial Officer 22 May 2001
Nando's Group Holdings Limited: (Incorporated in the Republic of South
Africa)(Registration number 1994/07318/06)
Registered Office: 64 3rd Avenue, Inanda, Sandton, 2196.
Directors: RC Brozin (Chief Executive Officer), M Brey*, LZ Brozin*, FOS
Duarte, RAG Enthoven*, FMS Guimaraes,
LG Katz, L Perlman, MD Radomsky, FJ Robertson*, BG Sacks, K Utian (*non
executive).
Transfer Secretaries: Mercantile Registrars Ltd, 11 Diagonal Street,
Johannesburg, 2001.
