| Thu 23 Apr 2009, 8:22 | | PIK / PWK - Pick N Pay - Reviewed condensed consol |
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PWK PIK
PWK PIK
PIK / PWK - Pick N Pay - Reviewed condensed consolidated results for the year
ended 28 February 2009
PICK n PAY STORES LIMITED
Share code: PIK & ISIN code: ZAE000005443
PICK N PAY HOLDINGS LIMITED ("PIKWIK")
Share code: PWK & ISIN code: ZAE000005724
Reviewed condensed consolidated results for the year ended 28 February 2009
TURNOVER UP 17.4%
TRADING PROFIT UP 11.2%
DILUTED HEADLINE EARNINGS PER SHARE UP 18.1%
HEADLINE EARNINGS PER SHARE UP 13.4%
TOTAL DIVIDEND PER SHARE UP 14.0%
RESULT OVERVIEW - CONTINUING OPERATIONS
We are pleased with this result considering the current economic climate and
the tightening of consumer spending. Consumers have been particularly hard
hit by high food inflation, erratic fuel prices and high interest rates.
As disclosed more fully in note 8 below, the results of Score Supermarkets
have been disclosed as a discontinued operation as we are winding down the
business and sub-letting many of its sites to black franchisees as Pick n Pay
Family stores.
TURNOVER
Group turnover at R49.9 billion is 17.4% above last year, with a growth of
17.3% in Southern Africa and 18.2% in Australia. The Franklins increase in
Australian dollars is 3.5%.
TRADING PROFIT
Trading profit margin is down from 3.6% to 3.4%. This is as a result of
significant price investment to help consumers (gross profit margin down 0.4%
to 19.0%). The effect is cushioned by a reduction in expenses of 0.2% of
turnover.
INTEREST
Interest received increased over last year due to higher interest rates and
better average cash balances. Interest paid was also up on last year due to
the R500 million term loan drawn down in June 2007 owing for a full year.
HEADLINE EARNINGS PER SHARE ("HEPS")AND DILUTED HEPS
HEPS at 232.48 cents reflects an increase of 13.4%. Diluted HEPS shows an
increase of 18.1% as last year`s base already allowed for the full dilution of
the 20 million new ordinary shares issued on 31 December 2007.
DIVIDENDS PER SHARE
The final dividend per share of 134.25 cents for Pick n Pay Stores Limited and
65.52 cents for Pick n Pay Holdings Limited brings the total dividend for the
year to 170.00 cents and 82.97 cents respectively, an increase of 14.0%.
OPERATIONAL HIGHLIGHTS
- Franklins Australia saw a substantial turnaround with a swing of R52.0
million to a R23.5 million trading profit before capital profits in the
current year. The key drivers to this significant improvement are further
increased operating efficiencies and double digit turnover growth from
refurbished stores.
The success of the 11 fully refurbished stores in the current year is not only
producing good turnover growth and increased profitability but is also
starting to open doors with landlords for prospective new stores. During the
2010 financial year we will complete another 14 store refurbishments.
We are delighted by the outstanding turnaround achieved by Franklins which has
now established a solid foundation for long term growth in Australia.
- Hypermarkets traded strongly, especially in the new format and
refurbished stores.
- Supermarkets continue to show robust turnover growth, particularly from
our new look refurbished stores such as Claremont, Benmore and
Bedfordview. Based on this positive uplift in turnover from the
23 supermarkets (11 corporate, 12 franchise) refurbished in the current
year, we will be expanding our `new look` refurbishment programme in the
year ahead to another 54 stores (21 corporate, 33 franchise).
- Pick n Pay Retail Strategy implementation continues to deliver according
to plan
- We have seen great customer acceptance of:
- New Hypermarket (Woodmead) and Supermarket (Claremont, Benmore and
Bedfordview) branding and "look and feel".
- Re-launched private label products.
- New store fresh foods initiatives.
- Pick n Pay Express forecourt stores.
- Converted Score stores.
- Score conversions are on track with 38 complete, achieving substantially
higher turnovers. Next year we plan to convert a further 29 stores. The
only stores remaining to be converted in the 2011 financial year are a
few in Botswana.
- SAP implementation is 65% complete, with the remaining Pick n Pay regions
to be completed in the next 18 months.
- Phase 1 of the Longmeadow Distribution Centre is now complete with all
set-up costs fully absorbed. The distribution centre now supplies all 263
inland stores. Phase II will expand the facility to accommodate central
distribution, automatic replenishment and strategic buy-ins. This will
commence during the 2010 financial year.
- Sustainability - We have implemented many new initiatives within the
Group around energy saving, reducing our carbon footprint, and recycling.
Sustainable practices are becoming a new way of life at Pick n Pay and we
are confident that not only will it cultivate a more sustainable
environment but will also lead to increased operating efficiencies. We
continue to facilitate ways that customers can help the environment. As
an example, we have recently launched an initiative to encourage
customers to significantly reduce the use of plastic bags.
- Boxer produced another very solid result with a significant increase in
turnover and profit.
- New stores - We continue to expand our store footprint. Including Score
store conversions we opened 67 new stores in the current year and plan to
open a further 58 next year.
GENERAL COMMENTS AND PROSPECTS
Given the tough trading conditions and the investment phase we are in, we are
pleased with this result. We remain optimistic for the year ahead due to our
strategic investments now starting to bear fruit, the relief brought to our
customers by lower interest rates and reducing inflation. We forecast improved
growth in 2010 headline earnings per share over that achieved this year.(This
forecast financial information has not been reviewed and reported on by the
Group independent auditors.)
For and on behalf of the board
Raymond Ackerman Nick Badminton
Chairman Chief Executive Officer
21 April 2009
PICK n PAY STORES LIMITED - Share code: PIK ISIN code: ZAE000005443
INCOME STATEMENT
Reviewed Audited
Year to Growth Year to
Feb 2009 Feb 2008*
Rm % Rm
Continuing operations
Revenue (note 2) 50 135.8 42 677.2
Turnover 49 862.1 17.4 42 474.3
Cost of merchandise sold (40 404.7) (34 216.2)
Gross profit 9 457.4 8 258.1
Other trading income 201.8 157.9
Trading expenses (7 958.9) (6 894.3)
Loss on sale of equipment and vehicles (13.7) (4.4)
Trading profit 1 686.6 11.2 1 517.3
Interest received 71.9 45.0
Interest paid (107.5) (79.2)
Profit on sale of property 68.7 -
Profit on sale of stores 15.1 47.0
Operating profit 1 734.8 1 530.1
Impairment of investment in associate - (9.1)
Profit before tax 1 734.8 1 521.0
Tax (568.0) (556.3)
Profit for the year from continuing 1 166.8 964.7
operations
Loss from discontinued operation (118.5) (31.3)
(note 8)
Profit for the year 1 048.3 933.4
Trading profit margin 3.4% 3.6%
Earnings per share - cents
Basic 222.23 205.43
Continuing operations 247.35 16.5 212.31
Discontinued operation (25.12) (6.88)
Diluted 220.45 195.75
Continuing operations 245.37 21.3 202.30
Discontinued operation (24.92) (6.55)
Interim dividend - No. 81 paid 35.75 31.10
Final dividend - No. 82 payable 134.25 118.00
Total dividend 170.00 14.0 149.10
Headline earnings reconciliation
Profit for the year 1 048.3 933.4
Loss on sale of equipment and vehicles 13.7 4.4
Loss on sale of equipment and vehicles 3.9 -
- discontinued operation
Profit on sale of property (68.7) -
Profit on sale of stores (15.1) (47.0)
Impairment of investment in associate - 9.1
Headline earnings 982.1 899.9
Continuing operations 1 096.7 17.8 931.2
Discontinued operation (114.6) (31.3)
Headline earnings per share - cents
Headline 208.19 198.06
Continuing operations 232.48 13.4 204.94
Discontinued operation (24.29) (6.88)
Diluted 206.53 188.73
Continuing operations 230.62 18.1 195.28
Discontinued operation (24.09) (6.55)
*Restated - refer note 4.
BALANCE SHEET
Reviewed Feb 2008*
Feb 2009
Rm Rm
Assets
Non-current assets
Intangible assets 1 093.6 1 155.9
Property, equipment and vehicles 2 937.0 2 802.5
Investments 0.2 0.2
Loans 128.6 120.7
Operating lease asset 19.3 10.9
Participation in export partnerships 57.9 61.5
Deferred tax 99.8 105.8
4 336.4 4 257.5
Current assets
Inventory 3 334.5 3 028.5
Trade and other receivables 1 769.5 1 243.9
Cash and cash equivalents 1 072.8 663.2
Assets held for sale - discontinued operation 62.6 -
6 239.4 4 935.6
Total assets 10 575.8 9 193.1
Equity and liabilities
Total equity 1 695.5 1 340.9
Non-current liabilities
Long-term debt 678.1 681.3
Retirement scheme obligations 8.2 49.0
Operating lease liability 658.5 626.9
1 344.8 1 357.2
Current liabilities
Short-term debt 38.3 36.4
Trade and other payables 7 315.8 6 209.2
Tax 181.4 249.4
7 535.5 6 495.0
Total equity and liabilities 10 575.8 9 193.1
*Restated - refer notes 4, 5 and 6.
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
Year to Year to
Feb 2009 Feb 2008
Rm Rm
Total equity at 1 March - as previously stated 1 340.9 1 015.4
Prior year adjustments (notes 4 and 5) - (70.4)
Total equity at 1 March - as restated 1 340.9 945.0
Total recognised income and expense for the year 949.5 1 139.5
Profit for the year - as previously stated 1 048.3 936.8
Prior year adjustment (note 4) - (3.4)
Gains and losses recognised directly in equity:
Foreign currency translation - as previously (98.8) 225.1
stated
Prior year adjustment (note 5) - (19.0)
Dividends paid (717.8) (614.9)
Issue of share capital - 79.9
Share repurchases (21.6) (299.6)
Net effect of settlement of employee share 85.4 45.8
options
Share options expense 59.1 45.2
Total equity at 28 February 1 695.5 1 340.9
CASH FLOW STATEMENT
Reviewed Audited
Year to Year to
Feb 2009 Feb 2008*
Rm Rm
Cash flows from operating activities
Trading profit 1 686.6 1 517.3
Loss on sale of equipment and vehicles 13.7 4.4
Depreciation and amortisation 615.8 481.9
Share options expense 59.1 45.2
Net operating lease obligations 33.4 31.5
Cash generated before movements in working 2 408.6 2 080.3
capital
Movements in working capital 221.0 (489.9)
Increase in trade and other payables 1 157.8 487.2
Increase in inventory (415.2) (704.9)
Increase in trade and other receivables (521.6) (272.2)
Cash generated by trading activities 2 629.6 1 590.4
Interest received 71.9 45.0
Interest paid (107.5) (79.2)
Cash generated by operations 2 594.0 1 556.2
Dividends paid (717.8) (614.9)
Tax paid (567.7) (504.0)
Net cash from operating activities - continuing 1 308.5 437.3
operations
Net cash (used in)/from operating activities - (56.1) 8.5
discontinued operation
Total net cash from operating activities 1 252.4 445.8
Cash flows from investing activities
Intangible asset additions (66.1) (157.4)
Property additions (52.3) (107.5)
Proceeds on disposal of property 78.0 50.6
Equipment and vehicle additions (884.1) (587.0)
Proceeds on disposal of equipment and vehicles 21.8 -
Loans advanced (7.9) (11.9)
Net cash used in investing activities - (910.6) (813.2)
continuing operations
Net cash from/(used in) investing activities - 68.9 (9.3)
discontinued operation
Total net cash used in investing activities (841.7) (822.5)
Cash flows from financing activities
Debt (repaid)/raised (1.3) 484.2
Issue of shares - 79.9
Share repurchases (21.6) (299.6)
Proceeds from employees on settlement of share 31.3 45.8
options
Net cash from financing activities - continuing 8.4 310.3
operations
Net increase/(decrease) in cash and cash 419.1 (66.4)
equivalents
Cash and cash equivalents at 1 March 663.2 709.1
Effect of exchange rate fluctuations on cash and (9.5) 20.5
cash equivalents
Cash and cash equivalents at 28 February 1 072.8 663.2
*Restated - refer notes 4, 5 and 6.
SEGMENTAL REPORT
Continuing operations
Southern Africa Australia Total
Reviewed Audited Reviewed Audited Reviewed Audited
Feb 2009 Feb 2008 Feb 2009 Feb 2008 Feb 2009 Feb 2008
Rm Rm Rm Rm Rm Rm
Segment 44 256.2 37 703.7 5 879.6 4 973.5 50 135.8 42 677.2
revenue
Turnover 43 991.1 37 506.9 5 871.0 4 967.4 49 862.1 42 474.3
- Australian 849.5 820.8
dollars
millions
Segment
result
Operating 1 745.5 1 550.2 24.9 14.1 1 770.4 1 564.3
profit before
interest
(note 7)
- Australian 3.6 2.3
dollars
millions
(note 7)
Included in
segment
result
Depreciation (518.4) (404.8) (97.4) (77.1) (615.8) (481.9)
and
amortisation
Share options (59.1) (45.2) - - (59.1) (45.2)
expense
Net operating (33.4) (31.5) - - (33.4) (31.5)
lease
obligations
Goodwill, 137.1 137.1 654.7 720.4 791.8 857.5
included in
total assets
Total assets, 8 373.7 6 720.5 1 786.3 1 874.4 10 160.0 8 594.9
net of
deferred tax
Total 7 700.5 6 463.9 670.7 735.1 8 371.2 7 199.0
liabilities,
net of tax
Capital 816.1 769.5 186.4 82.4 1 002.5 851.9
expenditure
The above segmental information does not include Score Supermarkets Operating
Limited, which has been classified as a discontinued operation (refer note 8).
PICK N PAY HOLDINGS LIMITED ("PIKWIK")
Share code: PWK ISIN code: ZAE000005724
Pikwik`s only asset is its 54.43% (2008: 54.68%) effective holding in Pick n
Pay Stores Limited (excluding treasury shares). The Pikwik Group earnings are
directly related to those of this investment. Headline earnings for the year
amount to R535.8 million (2008: R499.9 million).
Headline earnings per share is 104.09 cents (2008: 97.51 cents). Diluted
headline earnings per share is 101.91 cents (2008: 93.08 cents).
Headline earnings per share from continuing operations is 126.35 cents (2008:
103.61 cents). Diluted headline earnings per share from continuing operations
is 123.93 cents (2008: 99.10 cents).
The total number of shares in issue is 527.2 million (2008: 527.2 million) and
the weighted average number of shares in issue during the year is 514.7
million (2008: 512.6 million). Pikwik`s total dividend per share is 82.97
cents (2008: 72.83 cents), an increase of 13.9%.
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick n Pay Stores Limited (No. 82) 134.25 cents per share
Pick n Pay Holdings Limited (No. 55) 65.52 cents per share
For both companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 5 June 2009. The shares will trade EX
dividend from the commencement of business on Monday, 8 June 2009 and the
record date will be Friday, 12 June 2009.
The dividends will be paid on Monday, 15 June 2009.
Share certificates may not be dematerialised or rematerialised between Monday,
8 June 2009 and Friday, 12 June 2009, both dates inclusive.
On behalf of the Boards of directors
G F Lea - Company Secretary 21 April 2009
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. Except as
presented below in notes 4, 5 and 6, 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. The Group has reviewed its interpretation of IAS 2 in respect of the
accounting for incentive income and distribution costs. The effect of
the changes in interpretation are detailed below. Comparative figures
have been restated accordingly.
a. All distribution expenditure applicable to the transport of
inventory to retail outlets (including overhead expenditure in
respect of distribution centres) has been reclassified from trading
expenses to cost of sales. This reclassification has no impact on
the valuation of inventory, as inventory costings have always
included transport and distribution costs.
b. Advertising recoveries, net of related advertising expenditure, and
sales-based volume and other rebates received from suppliers,
previously disclosed in "other income" and trading expenses
respectively are now included within cost of sales. This
reclassification has had an impact on the balance sheet, with
rebates received and advertising recoveries, in excess of spend, now
being taken into account in the valuation of inventory.
The effect of the above adjustments and reclassifications on the comparative
figures are as follows:
Feb 2008 Feb 2008
Income statement Rm Balance sheet Rm
Gross profit 870.0
Other trading income (1 838.9) Inventory (72.9)
Trading expenses 964.6 Tax 17.9
Tax 1.3 Total equity (55.0)
Loss from discontinued (0.4) Profit for the year - (3.4)
operation 2008
Profit for the year (3.4) Profit for the year - (51.6)
prior years
5. In the prior year, an amount of R37.8 million, being the tax effect of
foreign currency translations, has been reclassified from the foreign
currency translation reserve to deferred tax. Comparative figures have
been restated - with an adjustment of R19.0 million in respect of the
2008 year and R18.8 million for years prior to 2008.
6. At February 2008 computer hardware assets with a cost of R31.4 million
were incorrectly included as part of intangible assets. This amount has
been reallocated to property, equipment and vehicles and the February
2008 comparative numbers have been restated accordingly. Also note that
in the current year Score assets with a net book value of R62.6 million
have been reclassified as held for sale (refer note 8).
7. Operating profit in Australia includes a net R1.4 million (2008: R42.6
million) profit on sale of assets.
8. The Group has committed to the closure of its subsidiary, Score
Supermarkets Operating Limited. The Score stores will be closed and the
property, equipment and vehicles sold. Many of the stores will be sub-let
to black franchisees and will be converted into Pick n Pay Family
Franchise stores. Although this means a discontinuation of the Score
brand, it is an exciting opportunity for the Group to expand the Pick n
Pay brand into new markets, as well as being able to create franchise
opportunities for black entrepreneurs. The closure of the Score operation
will be predominantly complete by 28 February 2010.
Score has been presented as a discontinued operation in the financial
information to 28 February 2009, and the comparative information has been
restated accordingly. The salient financial information of Score is as
follows:
Reviewed Audited
Feb 2009 Feb 2008
Income statement Rm Rm
Revenue 2 073.0 2 910.8
Turnover 2 070.8 2 906.4
Trading expenses 512.4 606.4
Loss on sale of equipment and vehicles 3.9 -
Trading loss for the year 123.0 35.2
Loss for the year 118.5 31.3
Balance sheet
Total assets 316.0 492.4
Total liabilities 328.9 403.8
Cash flow statement
Net cash (used in)/from operating activities (56.1) 8.5
Net cash from/(used in) investing activities 68.9 (9.3)
Net cash from financing activities - -
DIRECTORS OF PICK N PAY STORES LIMITED
Executive: R D Ackerman (Chairman), N P Badminton (CEO), W Ackerman,
D G Cope Non-executive: D Robins* (Deputy Chairman),
G M Ackerman, H S Herman#, C Nkosi#, B J van der Ross#, J van Rooyen#
*German #Independent
DIRECTORS OF PICK N PAY HOLDINGS LIMITED
Non-executive: G M Ackerman (Chairman), R D Ackerman, W Ackerman,
R P de Wet#, H S Herman# #Independent
www.pnp.co.za
23 April 2009
Sponsor: Investec Bank Limited
Date: 23/04/2009 08:00:01 Produced by the JSE SENS Department.
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