| Tue 22 Apr 2008, 9:14 | | PIK/PWK - PICKNPAY/PIKWIK - Reviewed condensed con |
|
PWK PIK
PWK PIK
PIK/PWK - PICKNPAY/PIKWIK - Reviewed condensed consolidated results for the year
ended 29 February 2008
PICK N PAY STORES LIMITED
Share code: PIK ISIN code: ZAE000005443
Pick n Pay Holdings Limited ("PIKWIK")
Share code: PWK ISIN code: ZAE000005724
PICK N PAY
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2008
Up 15.4% Turnover
Up 16.9% Trading profit
Up 10.1% Headline earnings per share
Up 11.1% Total dividend per share
Group overview
This result must be viewed in the context of the significant investment we are
making in the implementation of our strategy. The Pick n Pay brand relaunch, the
development of the new convenience food range, the continued implementation of
SAP and the opening of our new distribution facility at Longmeadow in Gauteng
have had a material cost impact on this result. We remain very confident that
this investment will reap substantial financial benefits in the future.
Turnover
Group turnover at R45.4 billion shows strong growth of 15.4% above last year.
This growth comprises 15.2% in the Southern African business segment and 16.4%
in Australia. The Franklins increase in Australian dollars is 1.7%, despite the
sale of two stores.
Trading profit
The trading profit increased by 16.9% with trading profit margin increasing from
3.2% last year to 3.3% in the year.
Headline earnings per share
Headline earnings per share at 198.82 cents is 10.1% above last year, before
last year`s write-off of Score`s deferred tax asset. Inclusive of this write-
off in the prior year, headline earnings per share shows an increase of 16.7%.
Dividends per share
We have increased the final dividend to 118.00 cents per share for Pick n Pay
Stores Limited and to 57.65 cents per share for Pick n Pay Holdings Limited,
both a 10.0% increase over last year. The total dividend payable by both
companies is up 11.1% on last year.
Food price increases
We are very aware of the inflationary pressure on basic foods and are doing
everything we can to minimise its impact on customers.
Pick n Pay Retail Division
Overall the core retail business performed well, in a year that was
exceptionally busy with the relaunch of our brand and the introduction of a
brand new convenience food range, both of which received good customer response.
Another highlight of the division was the opening of our Longmeadow Distribution
Centre in Gauteng, which will give us greater operating efficiencies and
flexibility.
Supermarkets - We opened 7 new corporate stores during the year and converted 6
corporate stores to Family Franchise stores. In the year ahead we plan to open a
further 6 new corporate supermarkets and look forward to the reopening of new
flagship stores in Claremont - Cape Town and Benmore, Johannesburg.
Family Franchise - We continue to expand this successful format opening a
further 20 new stores during the year including 6 conversions from corporate
stores and 7 Score conversions. Next year is exceptionally exciting as we plan
to open a further 50 new Family stores, including 3 corporate conversions and 29
Score conversions.
Hypermarkets - During the year we opened the Greenstone Mall Hypermarket in
Edenvale and our first Pick n Pay store (a Hyper) in Soweto, as well as opening
the new revamped Norwood Hypermarket, all of which are trading well. These new
generation Hypers are all outperforming at sales level and are proving popular
with a broad spectrum of customers. However, the cost pressures of opening these
stores, along with other refurbished new format stores, did lead to a profit
contribution for the year below expectations. We expect a much better
performance next year.
Liquor and Clothing stores - During the year, the division opened 18 new Liquor
stores and 7 new Clothing stores. In the year ahead we will further expand
these formats with 20 more Liquor and 2 Clothing stores.
Group Enterprises
Score
The operating performance of Score was in line with last year. The conversion of
Score stores to the Pick n Pay Family model is an extremely exciting development
for the Group, as we are able to expand the Pick n Pay brand into this market as
well as create a franchise opportunity for historically disadvantaged
entrepreneurs. To date we have converted 7 stores, all of which are trading
well, and by the end of the 2009 financial year we expect to have 36 converted
stores.
Boxer
Boxer had another excellent trading year including opening 5 additional stores.
Next year a further 14 are to be opened, including 9 Score conversions.
TM
TM continues to trade under exceptionally difficult economic conditions with the
procurement of stock being their biggest challenge. We continue to support our
colleagues and hope for economical and social stability in the near future. In
the current year we have impaired our remaining investment in TM of R9.1
million.
Franklins Australia
Turnover for the year at AUD820.8 million showed an increase of 1.7% over last
year. This is despite the fact that we sold 2 stores to a franchisee early in
the year. Due to the weakening of the SA rand relative to the Australian dollar,
turnover for the period at nearly R5.0 billion showed an increase of 16.4%.
Franklins produced an operating profit before interest of AUD2.3 million for the
year 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. We are
exceptionally pleased with this result as it is underpinned by an operating
profit before interest of AUD1.2 million in the second half of the financial
year. We are confident that this is the turning point for the operation.
The decision to invest a further AUD50.0 million (AUD20.0 million already
remitted) to fund the refurbishment of 30 Franklins stores will have a
significant impact on sales growth over the next few years.
The significant changes made in the Franklins business in the last three years,
together with the continued roll out of our franchise business, the
refurbishment of key stores and the opening of 3 new stores next year provide a
strong platform for earnings growth.
General comments and prospects
The conversion of our accounting systems to SAP throughout the Group is ongoing
with the conversion of the Western Cape, Eastern Cape and KwaZulu-Natal regions,
together with the corporate accounting office, now complete. The remainder of
the Pick n Pay Retail divisions are due for conversion over the next 18 months.
As we continue to implement our strategy, as set out in various financial
reports presented during the year, our main focus areas for the coming year
include the continued conversions of Score stores to Pick n Pay Family stores,
enhancements to the efficiency and throughput of our new distribution centre at
Longmeadow, improvements to our organisation, and further enhancements to our
Fresh food offer.
We are confident that the Group will achieve an acceptable growth in headline
earnings for the 2009 financial year, and with the significant investment taking
place, strong growth for the years thereafter.
Effective 30 April 2008 and after many years of dedicated service Rene de Wet
and David Nurek have decided to retire as directors of the Pick n Pay Stores
Limited Board. We thank both Rene and David for their valuable contribution and
service over the years. Rene will continue to serve on the Board of Pick n Pay
Holdings Limited.
For and on behalf of the Board
Raymond Ackerman Nick Badminton
Chairman Chief Executive Officer
21 April 2008
PICK N PAY STORES LIMITED
Share code: PIK ISIN code: ZAE000005443
Income statement
Reviewed Audited
Year to Year to
Feb 2008 Growth Feb 2007
Rm % Rm
Revenue (note 2) 47 466.5 41 128.1
Turnover 45 380.7 15.4 39 337.1
Cost of merchandise sold (37 411.0) (32 443.2)
Gross profit 7 969.7 6 893.9
Other trading income 2 036.9 1 749.4
Trading expenses (8 515.4) (7 354.9)
Loss on sale of property, (4.4) (17.0)
equipment and vehicles
Trading profit 1 486.8 16.9 1 271.4
Interest received 48.9 41.6
Interest paid (79.2) (49.3)
Profit on sale of stores 47.0 7.6
Operating profit 1 503.5 1 271.3
Share of associate`s profit - 26.1
Impairment of investment in (9.1) (64.0)
associate (note 4)
Impairment of Score goodwill - (36.3)
Profit on sale of investments - 8.2
Profit before tax 1 494.4 1 205.3
Tax (note 5) (557.6) (529.7)
Profit for the year 936.8 675.6
Trading profit margin 3.3% 3.2%
Earnings per share - cents
Basic 206.19 148.13
Diluted 196.47 139.86
Interim dividend - No. 79 31.10 27.00
paid
Final dividend - No. 80 118.00 10.0 107.25
payable
Total dividend 149.10 11.1 134.25
Headline earnings
reconciliation
Profit for the year 936.8 675.6
Loss on sale of property, 4.4 17.0
equipment and vehicles
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
Profit on sale of investments - (8.2)
Headline earnings 903.3 16.2 777.1
Reversal of deferred tax - 46.4
asset (note 5)
Headline earnings before 903.3 9.7 823.5
deferred tax reversal
Headline earnings per share -
cents
Headline 198.82 16.7 170.38
Headline - before deferred 198.82 10.1 180.55
tax reversal
Diluted 189.45 160.79
Balance sheet
Reviewed Audited
Feb 2008 Feb 2007
Rm Rm
Assets
Non-current assets
Goodwill 857.5 714.3
Intangible assets 329.8 190.3
Property, equipment and vehicles 2 771.1 2 525.2
Investments 0.2 0.2
Investment in associate (note 4) - 9.1
Loans 120.7 108.8
Operating lease asset 10.9 5.9
Participation in export partnerships 61.5 67.8
Deferred tax 143.6 151.2
4 295.3 3 772.8
Current assets
Inventory 3 101.4 2 367.4
Trade and other receivables 1 243.9 943.7
Cash and cash equivalents 663.2 709.1
5 008.5 4 020.2
Total assets 9 303.8 7 793.0
Equity and liabilities
Total equity 1 433.7 1 015.4
Non-current liabilities
Long-term debt (note 6) 681.3 181.8
Retirement scheme obligations 49.0 129.0
Operating lease liability 626.9 584.3
1 357.2 895.1
Current liabilities
Short-term debt 36.4 51.6
Trade and other payables 6 209.2 5 605.4
Tax 267.3 225.5
6 512.9 5 882.5
Total equity and liabilities 9 303.8 7 793.0
Shares in issue - millions 506.1 486.1
Weighted average shares in issue - millions 454.4 456.1
(note 3)
Net asset value - cents per share (property 373.6 283.4
value based on directors` valuation)
Statement of changes in equity
Reviewed Audited
Year to Year to
Feb 2008 Feb 2007
Rm Rm
Total equity at 1 March 1 015.4 854.9
Total recognised income and expense for the 1 161.9 832.9
year
Profit for the year 936.8 675.6
Gains and losses recognised directly in
equity:
Revaluation of investments - (8.2)
Foreign currency translation 225.1 165.5
Dividends paid (614.9) (523.8)
Issue of share capital 79.9 -
Share repurchases (299.6) (221.2)
Proceeds from employees on settlement of 45.8 43.4
share options
Share options expense 45.2 29.2
Total equity at 29 February 1 433.7 1 015.4
Cash flow statement
Reviewed Audited
Year to Year to
Feb 2008 Feb 2007
Rm Rm
Cash flows from operating activities
Trading profit 1 486.8 1 271.4
Loss on sale of property, equipment and 4.4 17.0
vehicles
Depreciation and amortisation 548.2 426.4
Share options expense 45.2 29.2
Net operating lease obligations 37.6 28.8
Increase in trade and other payables 501.3 868.1
Increase in inventory (733.9) (383.2)
Increase in trade and other receivables (293.9) (189.1)
Cash generated by trading activities 1 595.7 2 068.6
Interest received 48.9 41.6
Interest paid (79.2) (49.3)
Cash generated by operations 1 565.4 2 060.9
Dividends paid (614.9) (523.8)
Tax paid (504.7) (449.9)
Net cash from operating activities 445.8 1 087.2
Cash flows from investing activities
Property, equipment and vehicle additions (698.2) (1 047.0)
Intangible asset additions (163.0) (79.8)
Acquisition of stores - (2.2)
Proceeds on sale of stores 50.6 29.2
Proceeds on sale of investments - 9.1
Loans advanced (11.9) (12.1)
Net cash used in investing activities (822.5) (1 102.8)
Cash flows from financing activities
Debt raised/(repaid) (note 6) 484.2 (38.9)
Issue of shares (note 8) 79.9 -
Share repurchases (299.6) (221.2)
Proceeds from employees on settlement of 45.8 43.4
share options
Net cash used in financing activities 310.3 (216.7)
Net decrease in cash and cash equivalents (66.4) (232.3)
Cash and cash equivalents at 1 March 709.1 944.6
Exchange rate effect on cash and cash 20.5 (3.2)
equivalents
Cash and cash equivalents at 29 February 663.2 709.1
Segmental report
Southern Africa Australia
Reviewed Audited Reviewed Audited
Feb 2008 Feb 2007 Feb 2008 Feb 2007
Rm Rm Rm Rm
Segment revenue 42 110.8 36 527.2 5 355.7 4 600.9
Turnover 40 413.3 35 067.9 4 967.4 4 269.2
- Australian 820.8 807.2
dollars
Segment result
Operating 1 519.7 1 325.4 14.1 (46.4)
profit/(loss)
before interest
(note 7)
- Australian 2.3 (8.8)
dollars (note 7)
Included in
segment result:
Depreciation and (471.1) (365.5) (77.1) (60.9)
amortisation
Share options (45.2) (29.2) - -
expense
Net accrual for (37.6) (28.8) - -
future lease
expenditure
Goodwill, included 137.1 137.1 720.4 577.2
in total assets
Total assets, net 7 285.8 6 310.8 1 874.4 1 331.0
of deferred tax
Total liabilities, 6 867.7 6 010.4 735.1 541.7
net of tax
Capital 778.8 1 073.4 82.4 55.6
expenditure
Segmental report (continued)
Total
Reviewed Audited
Feb 2008 Feb 2007
Rm Rm
Segment revenue 47 466.5 41 128.1
Turnover 45 380.7 39 337.1
- Australian dollars
Segment result
Operating profit/(loss) before interest 1 533.8 1 279.0
(note 7)
- Australian dollars (note 7)
Included in segment result:
Depreciation and amortisation (548.2) (426.4)
Share options expense (45.2) (29.2)
Net accrual for future lease expenditure (37.6) (28.8)
Goodwill, included in total assets 857.5 714.3
Total assets, net of deferred tax 9 160.2 7 641.8
Total liabilities, net of tax 7 602.8 6 552.1
Capital expenditure 861.2 1 129.0
Notes to the financial information
1. KPMG Inc, the Group`s independent auditor has reviewed the condensed
consolidated results contained in this preliminary report, and has expressed an
unmodified conclusion on the preliminary financial statements. Their review
report is available for inspection at the Company`s registered office. These
preliminary financial statements have been prepared in accordance with the
recognition and measurement requirements of IFRS and the disclosure requirements
of IAS 34. Accounting policies are consistent with those of prior years.
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 fairly
reflect the Group`s result for that year.
6. During the year the Group raised a fixed interest five-year term bank loan of
R500 million to fund property developments.
7. Operating profit in Australia includes a R47.0 million (AUD 7.9 million)
profit on the sale of two stores to a franchisee, as part of our strategic
franchise roll-out.
8. Effective 31 December 2007 the Company issued 20 million new ordinary shares
pursuant to the redemption of unsecured compulsory convertible debentures.
Pick n Pay Holdings Limited ("PIKWIK")
Share code: PWK ISIN code: ZAE000005724
Pikwik`s only asset is its 50.85% (2007: 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 year amount to R459.3 million (2007:
R436.0 million before the deferred tax reversal).
Headline earnings per share, calculated using the weighted average number of
shares in issue during the year of 512.6 million
(2007: 508.7 million), is 89.60 cents (2007: 85.70 cents before the deferred tax
reversal). The total number of shares in issue is 527.2 million (2007: 527.2
million). Pikwik`s final dividend per share is 57.65 cents (2007: 52.35 cents).
Pikwik`s total dividend for the year is 72.83 cents, an increase of 11.1%.
Dividend declarations
The directors have declared the following cash dividends:
Pick n Pay Stores Limited (No. 80) 118.00 cents per share
Pick n Pay Holdings Limited (No. 53) 57.65 cents per share
For both companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 6 June 2008. The shares will trade EX
dividend from the commencement of business on Monday, 9 June 2008 and the record
date will be Friday, 13 June 2008.
The dividends will be paid on Tuesday, 17 June 2008.
Share certificates may not be dematerialised or rematerialised between Monday,9
June 2008 and Friday, 13 June 2008, both dates inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary
21 April 2008
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* (I),
HS Herman* (I), C Nkosi (I), DM Nurek (I),
BJ van der Ross (I), J van Rooyen (I)
*Also directors of Pick n Pay Holdings Limited
**German (I) Independent
These results are also available on our website www.picknpay.co.za
Date: 22/04/2008 08:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
