| Tue 16 Oct 2007, 8:41 | | PWK/PIK - PIKWIK/Pick `n Pay - Unaudited Interim C |
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PWK PIK
PWK PIK
PWK/PIK - PIKWIK/Pick `n Pay - Unaudited Interim Condensed Consolidated
Results For The Six Months Ended 31 August 2007
PICK `n PAY HOLDINGS LIMITED
("PIKWIK")
Share code: PWK & ISIN code: ZAE000005724
PICK `n PAY STORES LIMITED
Share code: PIK & ISIN code: ZAE000005443
Pick `n Pay
Turnover up 16.9%
Trading profit up 26.8%
Headline earnings per share up 15.1%
Interim dividend per share up 15.2%
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31
AUGUST 2007
REVIEW OF OPERATIONS
Turnover
Group turnover at R21.8 billion shows strong real growth, being16.9% above
last year. This growth comprises 16.3% in the Southern African segment and
21.3% in Australia. The Franklins increase in Australian Dollars is 1.3%
(despite the sale of 2 stores) with the remaining SA Rand growth as a result
of a weakening Rand against the Australian Dollar.
Trading profit
The trading profit increased by 26.8% with trading profit margin increasing
from 2.4% last year to 2.6% in the current six months.
Headline earnings per share
The headline earnings for the period at R332.1 million is 13.9% above last
year. Headline earnings per share at 73.52 cents is 15.1% above last year,
which increase is higher than that of headline earnings due to the
concentration effect of the repurchase of shares. The increase in headline
earnings is less than that of trading profit mainly as a result of not
receiving a contribution from TM Supermarkets in the current period.
Dividends per share
We have increased the interim dividend to 31.10 cents for Pick `n Pay Stores
Limited and to 15.18 cents per share for Pick `n Pay Holdings Limited both a
15.2% increase over last year.
Pick `n Pay Retail
Our core Supermarket business performed well. However, the Hypermarkets profit
contribution was below expectation as a result of cost pressures on opening 5
new format stores within a 12 month period.
Supermarkets - We opened 3 new corporate stores during the six months and
converted 2 corporate stores to Family franchise stores. During the second six
months of the year we will open a further 4 new corporate supermarkets and
convert another 3 corporate supermarkets to Family stores.
Family Franchise - We continue to expand our successful Family franchise
format opening a further 6 new stores during the period including 2
conversions from corporate stores. During the second six months of the year we
will open a further 11 new Family stores, including 3 conversions.
Hypermarkets - During the period we opened the Greenstone Mall Hypermarket in
Edenvale and in September 2007 we opened our first Pick `n Pay store in
Soweto.
Also during the month of September we opened our new revamped Norwood
Hypermarket which is trading really well. These new generation Hypers are all
out performing at sales level and are proving popular with a broad spectrum of
customers.
Liquor stores - During the period, the division opened a further 9 liquor
stores, with another 11 to come in the second half of the year.
Group Enterprises
Score
The operating performance of Score was in line with last year. We are busy
finalising discussions with various stakeholders regarding the future
development of Score and will be communicating these plans in due course.
Boxer
Boxer had another excellent trading period and opened 2 additional stores, one
being in the Boxer Build Hardware format. During the second six month period,
Boxer intend opening a further 4 stores. The management of Boxer are very
aware of the inflationary pressure on basic foods and are doing everything
they can to minimise its impact on customers.
Franklins Australia
Turnover for the six month period at AUD410.2 million showed an increase of
1.3% over the same period last year. This is despite the fact that we sold 2
stores to a Franchisee during the period. Due to the weakening of the SA Rand
to the Australian Dollar, turnover for the period at R2.4 billion showed an
increase of 21.3%.
Franklins produced an operating profit before interest of AUD1.1 million for
the six months which included a profit on the sale of 2 corporate stores to a
Franchisee of AUD7.9 million as part of our planned strategic Franchise roll-
out. In this regard, these 2 corporate stores together with 2 further
independent stores were converted to the Franklins Franchise model, bringing
the total number of Franchise stores to 6 at the end of the period. We are
confident that these 6 stores will provide a good platform for the expansion
of further Franchise outlets.
In addition to 1 new corporate store planned to open in the second six months
of the year, Franklins have also started an extensive refurbishment programme
including the expansion of certain ranges and fresh foods in-store.
We are confident that this refurbishment programme and the continued roll-out
of franchise stores will lead to greater real sales growth and a significant
improvement in the overall operating profitability of the Franklins chain.
General comment and prospects
The conversion of our accounting systems to SAP throughout the Group is
ongoing. The Western Cape region and the corporate accounting office
installation is now complete and conversions are underway in the Kwa-Zulu
Natal and Eastern Cape regions. In the short time that SAP has been live in
the Western Cape region, users have already experienced significant benefit
from improved operating efficiencies.
During the six month period we started implementing our strategy, which we
shared with you in April 2007. Highlights in this area include the opening of
our new Longmeadow warehouse which over time will distribute more than 60% of
inland store purchases allowing us to enhance our customer offering through
improved quality and a better in-stock position. It will also enable the
company to more effectively manage its investment in stock.
During the second half of the financial year we will share with you more
exciting developments as we implement further aspects of our strategy.
We are confident that the Group will be able to achieve an acceptable growth
in headline earnings for the full 2008 financial year.
For and on behalf of the Board
Raymond Ackerman Nick Badminton
Chairman Chief Executive Officer
15 October 2007
PICK `n PAY STORES LIMITED -
Share code: PIK ISIN code: ZAE000005443
These results are also available on our website http://www.picknpay.co.za
INCOME STATEMENT
Unaudited Audited
Six months ended
Year to
Aug 2007 Growth Aug 2006 Feb 2007
Rm % Rm Rm
Revenue 22 736.6 19 487.0 41 128.1
(note 2)
Turnover 21 759.4 16.9 18 617.3 39 337.1
Cost of merchandise sold (18 020.7) (15 429.9) (32 443.2)
Gross profit 3 738.7 3 187.4 6 893.9
Other trading income 955.7 849.9 1 749.4
Trading expenses (4 126.0) (3 584.2) (7 354.9)
Loss on sale of property,
equipment
and vehicles - (4.7) (17.0)
Trading profit 568.4 26.8 448.4 1 271.4
Interest received 21.5 19.8 41.6
Profit on sale of - 7.8 8.2
investments
Profit on sale of stores 47.0 - 7.6
Operating profit 636.9 476.0 1 328.8
Interest paid (30.3) (27.1) (49.3)
Share of associate`s profit - 24.1 26.1
Impairment of investment in (9.1) - (64.0)
associate
(note 4)
Impairment of Score goodwill - - (36.3)
Profit before tax 597.5 473.0 1 205.3
Tax (note 5) (227.5) (178.3) (529.7)
Profit for the period 370.0 294.7 675.6
Trading profit margin 2.6% 2.4% 3.2%
Operating profit margin 2.9% 2.6% 3.4%
Earnings per share - cents
Basic 81.92 64.53 148.13
Diluted 77.25 60.96 139.86
Interim dividend - No. 79 31.10 15.2 27.00
payable
Headline earnings
reconciliation
Profit for the period 370.0 294.7 675.6
Loss on sale of property,
equipment
and vehicles - 4.7 17.0
Profit on sale of - (7.8) (8.2)
investments
Profit on sale of stores (47.0) - (7.6)
Impairment of investment in 9.1 - 64.0
associate
(note 4)
Impairment of Score goodwill - - 36.3
Headline earnings 332.1 13.9 291.6 777.1
Reversal of deferred tax - - 46.4
asset (note 5)
Headline earnings before
deferred tax
reversal 332.1 291.6 823.5
Headline earnings per share
- cents
Headline - before deferred 73.52 15.1 63.86 180.55
tax reversal
Headline 73.52 63.86 170.38
Diluted 69.35 60.32 160.79
BALANCE SHEET
Unaudited Audited
Aug 2007 Aug 2006 Feb 2007
Rm Rm Rm
Assets
Non-current assets
Goodwill 735.5 726.0 714.3
Intangible assets 250.2 140.6 190.3
Property, equipment and 2 750.2 2 123.2 2 525.2
vehicles
Investments 0.2 0.6 0.2
Investment in associate - 71.1 9.1
(note 4)
Loans 111.1 83.9 108.8
Operating lease asset 6.6 5.3 5.9
Participation in export 66.7 69.4 67.8
partnerships
Deferred tax 125.1 218.7 151.2
4 045.6 3 438.8 3 772.8
Current assets
Inventory 2 638.1 2 156.6 2 367.4
Trade and other receivables 1 084.8 875.3 943.7
Tax - 3.6 -
Cash and cash equivalents 656.1 540.9 709.1
4 379.0 3 576.4 4 020.2
Total assets 8 424.6 7 015.2 7 793.0
Equity and liabilities
Total equity 677.7 684.5 1 015.4
Non-current liabilities
Long-term debt (note 6) 680.4 189.1 181.8
Retirement scheme 102.0 182.8 129.0
obligations
Operating lease liability 603.9 575.4 584.3
1 386.3 947.3 895.1
Current liabilities
Short-term debt 45.0 48.6 51.6
Trade and other payables 6 171.3 5 334.8 5 605.4
Tax 144.3 - 225.5
6 360.6 5 383.4 5 882.5
Total equity and liabilities 8 424.6 7 015.2 7 793.0
Shares in issue - millions 486.1 486.1 486.1
Weighted average shares in
issue - millions (note 3) 451.8 456.7 456.1
Net asset value - cents per
share (property value based
on directors`
valuation) 212.9 223.7 283.4
CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year to
Aug 2007 Aug 2006 Feb 2007
Rm Rm Rm
Trading profit 568.4 448.4 1 271.4
Loss on sale of property, - 4.7 17.0
equipment and vehicles
Depreciation and 246.4 187.0 426.4
amortisation
Share options expense 20.3 14.3 29.2
Net operating lease 19.0 20.5 28.8
obligations
Increase in trade and other 534.4 655.1 868.1
payables
Increase in inventory (270.6) (172.4) (383.2)
Increase in trade and other (138.8) (122.3) (189.1)
receivables
Cash generated by trading 979.1 1 035.3 2 068.6
activities
Interest received 21.5 19.8 41.6
Cash generated by operations 1 000.6 1 055.1 2 110.2
Interest paid (30.3) (27.1) (49.3)
Dividends paid (477.4) (403.9) (523.8)
Tax paid (282.5) (398.6) (449.9)
Cash flows from operating 210.4 225.5 1 087.2
activities
Property, equipment and (453.8) (417.5) (1 047.0)
vehicle additions
Proceeds on sale of - 28.8 -
property, equipment and
vehicles
Intangible asset additions (69.3) (26.8) (79.8)
Acquisition of stores - (2.2) (2.2)
Proceeds on sale of stores 50.6 - 29.2
Proceeds on sale of - 8.7 9.1
investments
Loans (advanced)/repaid (2.3) 12.8 (12.1)
Cash flows from investing (474.8) (396.2) (1 102.8)
activities
Debt raised/(repaid) (note 491.9 (34.8) (38.9)
6)
Share repurchases (300.0) (221.1) (221.2)
Take-up of share options by 12.6 20.2 43.4
employees
Cash flows from financing 204.5 (235.7) (216.7)
activities
Net decrease in cash and (59.9) (406.4) (232.3)
cash equivalents
Cash and cash equivalents at 709.1 944.6 944.6
1 March
Exchange rate effect on cash 6.9 2.7 (3.2)
and cash equivalents
Cash and cash equivalents at 656.1 540.9 709.1
31 August/28 February
STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
Six months ended Year to
Aug 2007 Aug 2006 Feb 2007
Rm Rm Rm
Total equity at 1 March 1 015.4 854.9 854.9
Total recognised income and 406.8 420.1 832.9
expense for the period
Profit for the period 370.0 294.7 675.6
Gains and losses recognised
directly in equity:
Revaluation of investments - (7.8) (8.2)
Foreign currency translation 36.8 133.2 165.5
Dividends paid (477.4) (403.9) (523.8)
Share repurchases (300.0) (221.1) (221.2)
Take-up of share options by 12.6 20.2 43.4
employees
Share options expense 20.3 14.3 29.2
Total equity at 31 August/28 677.7 684.5 1 015.4
February
SEGMENTAL REPORT
Southern Africa Australia
Aug Aug Aug Aug
2007 2006 2007 2006
Rm Rm Rm Rm
Segment revenue 20 119.8 17 333.9 2 616.8 2 153.1
Turnover 19 333.3 16 617.8 2 426.1 1 999.5
- Australian dollars 410.2 405.1
Segment result
Operating profit/(loss) 608.7 485.2 6.7 (29.0)
before interest (note 7)
- Australian dollars (note 1.1 (5.8)
7)
Depreciation and
amortisation, included
in segment result (209.6) (161.0) (36.8) (26.0)
Goodwill, included in total 137.2 173.5 598.3 552.5
assets
Total assets, net of 6 775.0 5 467.5 1 524.5 1 325.4
deferred tax and tax
Total liabilities, net of 6 785.7 5 645.0 816.9 685.7
tax
Capital expenditure 488.8 430.7 34.3 15.8
SEGMENTAL REPORT (continued)
Total
Aug Aug
2007 2006
Rm Rm
Segment revenue 22 736.6 19 487.0
Turnover 21 759.4 18 617.3
- Australian dollars
Segment result
Operating profit/(loss) 615.4 456.2
before interest (note 7)
- Australian dollars (note
7)
Depreciation and (246.4) (187.0)
amortisation, included in
segment result
Goodwill, included in total 735.5 726.0
assets
Total assets, net of 8 299.5 6 792.9
deferred tax and tax
Total liabilities, net of 7 602.6 6 330.7
tax
Capital expenditure 523.1 446.5
NOTES TO THE FINANCIAL INFORMATION
1. The Group`s interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 - Interim Financial Reporting. The
accounting policies and methods of computation applied in the preparation of
these financial statements are consistent with those applied in the
preparation of the Group`s annual financial statements for the year ended 28
February 2007.
2. Revenue comprises turnover, other trading income and interest received.
3. The weighted average number of shares is lower than that in issue due to
the treasury shares held by the Group being treated as cancelled for this
calculation.
4. An impairment review has been performed on the value of the investment in
TM Supermarkets and due to the worsening economic conditions in Zimbabwe we
have written down the investment by R9.1 million to a carrying value of nil.
5. The February 2007 tax charge included a reversal of a deferred tax asset of
R46.4 million relating to Score Supermarkets. As disclosed last year, we
consider a headline earnings calculation excluding this charge to more fully
reflect the Group`s result for that year.
6. During the period the Group raised a fixed interest 5-year term bank loan
of R500 million to fund capital expenditure.
7. Trading profit in Australia includes a R47.0 million profit on the sale of
2 stores to a Franchisee, as part of our strategic Franchise roll-out.
PICK `n PAY HOLDINGS LIMITED ("PIKWIK")
Share code: PWK & ISIN code: ZAE000005724
Pikwik`s only asset is its 52.94% (2006: 52.94%) investment in Pick `n Pay
Stores Limited. The Pikwik Group earnings are directly related to those of
this investment. Headline earnings for the period amount to R175.8 million
(2006: R154.4 million).
Headline earnings per share, calculated using the weighted average number of
shares in issue during the period of 511.6 million (2006: 507.4 million), is
34.36 cents (2006: 30.43 cents). The total number of shares in issue is 527.2
million (2006: 527.2 million). Pikwik`s interim dividend per share is 15.18
cents (2006: 13.17 cents).
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick `n Pay Stores Limited
(No. 79) 31.10 cents per share
Pick `n Pay Holdings Limited
(No. 52) 15.18 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 7 December 2007. The shares will trade
EX dividend from the commencement of business on Monday,
10 December 2007 and the record date will be Friday,
14 December 2007.
The dividends will be paid on Tuesday, 18 December 2007.
Share certificates may not be dematerialised or rematerialised between Monday,
10 December 2007 and Friday, 14 December 2007, both dates inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary
15 October 2007
Directors of Pick `n Pay Stores Limited: Executive:
RD Ackerman* (Chairman), D Robins** (Deputy Chairman), NP Badminton (CEO), W
Ackerman*, DG Cope Non-executive: GM Ackerman*, RP de Wet*+, HS Herman*+, C
Nkosi+, DM Nurek+, BJ van der Ross+, J van Rooyen+
*Also directors of Pick `n Pay Holdings Limited **German +Independent
Sponsor: Investec Bank Limited
Date: 16/10/2007 08:00:01 Produced by the JSE SENS Department.
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