Ann: Nick Scali Ltd FY16 Appendix 4E-NCK.AX, page-2

A beautiful set of numbers, clean, conservatively cast financial results that all reconcile perfectly with one another.

In my experience, the time that it takes for me to update my model for a company is inversely proportional to the financial pedigree of such a company.

In NCK's case, it takes no more than a few minutes.

And that included me undergoing a double take to make sure I hadn't made a mistake, because it all looked a bit to good to be true: the most striking thing, being the half-on-half split in EBIT growth: 43% in 1H and 74% in the second half.

Matched by a 75% increase in the final dividend.

What's more, the result contains some signs that they have thrown the kitchen sink at the cost line in the second half result order to prevent the reported result from looking even better.

A different set of executives - if they were so inclined - could easily have generated a second-half NPAT result closer to $13.5m, instead of the $12.0m figure actually reported.


If there is any point of contention going forward it is that care and attention will need to be given to the gross margin, which - at 61.5% in the second half - is above the long-term average of 60%, and is approaching the levels seen in the halcyon days of 2010/11 (when the government of the day, in response to the GFC, shoved wads of dollars of cash into the fists of Australian consumers with the instruction to blow it at the Mall).