| Wed 21 Apr 2010, 9:07 | | PIK/PWK - Pick N Pay Stores Ltd/Pick N Pay Holding |
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PWK PIK
PWK PIK
PIK/PWK - Pick N Pay Stores Ltd/Pick N Pay Holdings - Reviewed condensed
consolidated results for the year ended 28 February 2010
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 28 February 2010
FINANCIAL HIGHLIGHTS - CONTINUING OPERATIONS
Turnover up 9.8%
Profit for the year up 10.5%
EBITDA excluding capital profit on sale of properties and stores
up 3.3%
Headline earnings per share up 1.1%
Total dividend per share up 2.6%
RESULT OVERVIEW - CONTINUING OPERATIONS
As reported in October 2009, this financial year has been an exceptionally
tough trading period with the recessionary climate biting especially hard
during the second six months. We expect the 5.5% reduction in interest rates
over the last 15 months and reduced food inflation to ease the strain on
consumers` disposable income. However, the beginning of the 2011 financial
year will continue to present a tough trading environment.
Despite these challenges, we continue to make significant strides in
transforming Pick n Pay with the following positive results during the year:
- A slight increase in market share for the year (from continuing operations);
- The completion of the closure of the Score retail trading operation with a
total of 70 stores now converted to Pick n Pay and Boxer. After accounting for
the closure costs and for the provision of doubtful debts, we have made a
material improvement to the profits from the old Score business;
- The consolidation of our 3 northern regions into one team will be completed
by August 2010;
- Strong double-digit growth in fresh and private label sales, both being
primary areas of focus;?We added a further 5 sites to our Express network in
conjunction with BP. These continue to exceed expectations. We are planning an
accelerated rollout of this format;
- The implementation of our supply chain strategy continues apace with the
expansion of the Longmeadow distribution facility nearly complete and
significantly improved operating efficiencies with cost per case down by 15%;
- Completion of our SAP implementation in all corporate stores with only
franchise stores in the Northern part of the country to be converted by August
2010; and
- Continued commitment to sustainable practices within the business. Our focus
is on energy saving, waste control, recycling and enterprise development.This
is only the start of our transformation as we embed all of our strategic
initiatives. Group turnover at R54.7 billion was 9.8% above last year; Pick n
Pay and Boxer growing by 11.5% and Franklins Australia by 1.4%, in Australian
Dollars. Trading profit for the year decreased by 2.5% as a direct result of
the reduction in gross profit margin from 19.0% last year to 18.6% this year.
This reduction in margin is due to our continued investment in prices on basic
foods. However, the overall decrease was counteracted by enhanced operating
efficiencies, especially in our supply chain. Headline earnings per share at
236.33 cents is 1.1% above last year. The total dividend per share for the
year of 174.50 cents for Pick n Pay Stores Limited and 84.93 cents for Pick n
Pay Holdings Limited is 2.6% and 2.4% above last year, respectively.
OPERATIONAL HIGHLIGHTS
Pick n Pay and Boxer increased turnover by 11.5% for the year. The second half
of the year saw growth rates drop substantially as food inflation abated and
customers remained cautious. During the year we opened 5 new Pick n Pay
corporate supermarkets, 20 new Boxer stores and 38 new Pick n Pay franchise
stores (including 5 Express stores and Score conversions). In the year ahead
we plan to open a further 27 supermarkets under the Pick n Pay and Boxer
brands and are working on opening substantially more new stores for the years
thereafter. As economic conditions continued to tighten during the second half
of the financial year, earnings growth was affected by the rapid decline in
food inflation (off the previous year high base), continued investment in
lower selling prices, escalating electricity costs, and further conservative
provisions against debt. Notwithstanding the above, we did see a significant
increase in the number of customer transactions during the year, demonstrating
the resilience of the PnP brand.
Franklins Australia turnover at AUD861.1 million increased by 1.4% and before
capital items produced a profit of R21.9 million which is on par with last
year. The impact of the 3 year, AUD50 million store refurbishment program
continues to be positive with completed stores achieving double-digit sales
growth and improved profitability. The program saw 18 refurbishments this year
and a further 8 are planned for the next financial year. Franklins` Loyalty
Club achieved substantial membership growth with cardholders now exceeding 780
000. Our expansion further into Africa is progressing well. We are due to open
our first corporate store in Zambia midyear; we have signed up franchise
partners in Mozambique; and we have identified sites for expansion into
Mauritius.
GENERAL COMMENTS
The Competition Commission investigation into food pricing is ongoing and we
continue to give the process our full co-operation. We expect trading for the
first six months of the 2011 financial year to remain difficult. However, we
are confident that we will start to reap the benefits of our strategic
initiatives by: expanding our store footprint, continuing to improve the
shopping experience of our customers, driving operating efficiencies through
supply chain, SAP and operating cost reductions. All of these initiatives
position us well to benefit from the anticipated upturn in the economy. As
announced in October 2009 our Chairman, Raymond Ackerman, and Mrs Wendy
Ackerman have now retired as members of the Board. Words alone cannot express
the gratitude that all associates, suppliers, management and employees of Pick
n Pay feel for their vision and unwavering commitment to grow and build the
Pick n Pay business over the past 43 years. We wish Raymond Ackerman all the
best in his new ambassadorial role at Pick n Pay.
For and on behalf of the board
Gareth Ackerman Nick Badminton
Chairman Chief Executive Officer
20 April 2010
PICK N PAY STORES LIMITED - Share Code: PIK ISIN Code: ZAE000005443
STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year to Year to
Feb 2010 Growth Feb 2009*
Rm % Rm
Continuing operations
Revenue (note 5) 54 996.9 50 135.8
Turnover 54 734.5 9.8 49 862.1
Cost of merchandise sold (44 576.4) (40 404.7)
Gross profit 10 158.1 9 457.4
Other trading income 186.5 201.8
Trading expenses (8 685.9) (7 949.9)
Loss on sale of equipment and vehicles (5.6) (13.7)
Trading profit 1 653.1 1 695.6
Interest received 75.9 71.9
Interest paid (91.6) (107.5)
Profit on sale of property 190.9 68.7
Profit on sale of stores - 15.1
Profit before tax 1 828.3 1 743.8
Tax (531.9) (570.5)
Profit for the period from continuing 1 296.4 10.5 1 173.3
operations
Loss from discontinued operation (note 9) (107.5) (118.5)
Profit for the year 1 188.9 1 054.8
Other comprehensive income
Exchange rate differences on translating 73.8 (98.8)
foreign operations
Actuarial gains and losses (34.3) (6.5)
Total comprehensive income for the year 1 228.4 949.5
EBITDA, excluding capital profit on sale
of properties and stores 2 388.4 3.3 2 311.4
Gross profit margin 18.6% 19.0%
Trading profit margin 3.0% 3.4%
Earnings per share - cents
Basic 251.25 12.4 223.60
Continuing operations 273.97 10.2 248.72
Discontinued operation (22.72) (25.12)
Diluted 247.40 11.5 221.81
Continuing operations 269.76 9.3 246.73
Discontinued operation (22.36) (24.92)
Headline earnings reconciliation
Profit for the year 1 188.9 1 054.8
Headline adjustments (net of tax):
Loss on sale of equipment and vehicles 5.6 13.7
Loss on sale of equipment and vehicles - 1.3 3.9
discontinued operation
Profit on sale of property (183.7) (68.7)
Profit on sale of stores - (15.1)
Headline earnings 1 012.1 2.4 988.6
Continuing operations 1 118.3 1.4 1 103.2
Discontinued operation (106.2) (114.6)
Headline earnings per share - cents
Headline 213.90 2.1 209.57
Continuing operations 236.33 1.1 233.86
Discontinued operation (22.43) (24.29)
Diluted 210.62 1.3 207.89
Continuing operations 232.71 0.3 231.98
Discontinued operation (22.09) (24.09)
Interim dividend - No. 83 paid 39.75 35.75
Final dividend - No. 84 payable 134.75 134.25
Total dividend 174.50 2.6 170.00
*Restated - refer notes 2 & 3
BALANCE SHEET
Reviewed Audited
Feb 2010 Feb 2009
Rm Rm
Assets
Non-current assets
Intangible assets 1 126.7 1 093.6
Property, equipment and vehicles 3 415.5 2 937.0
Operating lease asset 33.5 19.3
Participation in export partnerships 50.6 57.9
Deferred tax 98.1 99.8
Loans 124.7 128.6
Investments 0.2 0.2
4 849.3 4 336.4
Current assets
Assets held for sale - discontinued operation - 62.6
Inventory 3 326.2 3 334.5
Trade and other receivables 1 968.0 1 769.5
Cash and cash equivalents 1 055.3 1 072.8
6 349.5 6 239.4
Total assets 11 198.8 10 575.8
Equity and liabilities
Total shareholders` equity 2 144.6 1 695.5
Non-current liabilities
Long-term debt 670.7 678.1
Retirement scheme obligations 24.7 8.2
Operating lease liability 695.9 658.5
1 391.3 1 344.8
Current liabilities
Short-term debt 38.8 38.3
Tax 230.7 181.4
Trade and other payables 7 393.4 7 315.8
7 662.9 7 535.5
Total equity and liabilities 11 198.8 10 575.8
Shares in issue - millions (note 8) 480.4 506.1
Weighted average shares in issue - millions 473.2 471.7
(note 6)
Net asset value - cents per share (property value 512.5 441.7
based on directors` valuation)
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
Year to Year to
Feb 2010 Feb 2009
Rm Rm
At 1 March 1 695.5 1 340.9
Total comprehensive income for the period 1 228.4 949.5
Dividends paid (814.6) (717.8)
Share repurchases (80.1) (21.6)
Net effect of settlement of employee share 52.1 85.4
options
Net effect of cancellation of treasury shares (2.7) -
(note 8)
Share options expense 66.0 59.1
At 28 February 2 144.6 1 695.5
CASH FLOW STATEMENT
Reviewed Audited
Year to Year to
Feb 2010 Feb 2009*
Rm Rm
Cash flows from operating activities
Trading profit 1 653.1 1 695.6
Loss on sale of equipment and vehicles 5.6 13.7
Depreciation and amortisation 735.3 615.8
Share options expense 65.2 59.1
Actuarial loss in equity (47.7) (9.0)
Net operating lease obligations 36.5 33.4
Cash generated before movements in working 2 448.0 2 408.6
capital
Movements in working capital: 0.7 221.0
Increase in trade and other payables 316.2 1 157.8
Increase in inventory (148.9) (415.2)
Increase in trade and other receivables (166.6) (521.6)
Cash generated by trading activities 2 448.7 2 629.6
Interest received 75.9 71.9
Interest paid (91.6) (107.5)
Cash generated by operations 2 433.0 2 594.0
Dividends paid (814.6) (717.8)
Tax paid (456.6) (567.7)
Net cash from operating activities - continuing 1 161.8 1 308.5
operations
Net cash used in operating activities - (212.7) (56.1)
discontinued operation
Total net cash from operating activities 949.1 1 252.4
Cash flows from investing activities
Intangible asset additions (51.5) (66.1)
Property, equipment and vehicle additions (1 142.0) (936.4)
Proceeds on sale of property, equipment and 209.4 99.8
vehicles
Loans advanced 3.9 (7.9)
Net cash used in investing activities - (980.2) (910.6)
continuing operations
Net cash from investing activities - discontinued 56.8 68.9
operation
Total net cash used in investing activities (923.4) (841.7)
Cash flows from financing activities
Debt repaid (6.9) (1.3)
Share repurchases (80.1) (21.6)
Proceeds from employees on settlement of share 36.4 31.3
options
Net cash (used in)/from financing activities - (50.6) 8.4
continuing operations
Net (decrease)/increase in cash and cash (24.9) 419.1
equivalents
Cash and cash equivalents at 1 March 1 072.8 663.2
Effect of exchange rate fluctuations on cash and 7.4 (9.5)
cash equivalents
Cash and cash equivalents at 28 February 1 055.3 1 072.8
*Restated - refer note 3
REVIEWED OPERATING SEGMENT REPORT
Pick n Pay and Franklins Insurance
Boxer
Feb 2010 Feb 2009 Feb 2010 Feb 2009 Feb 2010 Feb 2009
Rm Rm Rm Rm Rm Rm
External 49 320.4 44 250.9 5 673.3 5 879.6 3.2 5.3
revenue
Inter-segment (14.4) (9.1) - - 14.4 9.1
revenue
External 49 068.5 43 991.1 5 666.0 5 871.0 - -
turnover
- Australian 861.1 849.5
dollars
(millions)
Profit/(loss) 1 603.2 1 637.6 16.3 23.3 17.9 14.5
before tax
(note 7)
- Australian 2.5 3.7
dollars
(millions)
Total assets 9 009.5 8 389.6 2 055.5 1 815.4 47.7 54.8
REVIEWED OPERATING SEGMENT REPORT
Unallocated Head Total continuing Discontinued
Office costs and operations operation Score
revenues
Feb 2010 Feb 2010 Feb 2009 Feb 2010 Feb 2009 Feb 2010
Rm Rm Rm Rm Rm Rm
External - - 54 996.9 50 135.8 580.9 2 073.0
revenue
Inter-segment - - - - - -
revenue
External - - 54 734.5 49 862.1 579.8 2 070.8
turnover
- Australian
dollars
(millions)
Profit/(loss) 190.9 68.4 1 828.3 1 743.8 (106.0) (123.0)
before tax
(note 7)
- Australian
dollars
(millions)
Total assets - - 11 112.7 10 259.8 86.1 316.0
REVIEWED OPERATING SEGMENT REPORT
Total operations
Feb 2010 Feb 2009
Rm Rm
External 55 577.8 52 208.8
revenue
Inter-segment - -
revenue
External 55 314.3 51 932.9
turnover
- Australian
dollars
(millions)
Profit/(loss) 1 722.3 1 620.8
before tax
(note 7)
- Australian
dollars
(millions)
Total assets 11 198.8 10 575.8
The basis for reporting segmental financial information has been changed to
accord with IFRS 8: Operating Segments. Previously, segmental information was
provided on a geographic basis, reflecting only the southern African
operations and the Australian operation. With the implementation of IFRS 8,
operating segments were identified based on financial information regularly
reviewed by the Pick n Pay Stores Limited Board (identified as the Chief
Operating Decision Maker of the Group for IFRS 8 reporting purposes) for
performance assessments and resource allocation. As the Pick n Pay and Boxer
operating segments have demonstrated similar economic characteristics they
have been aggregated in terms of IFRS 8.
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 are
prepared in accordance with the recognition and measurement requirements
of IFRS and the disclosure requirements of IAS 34. Except as presented
below in notes 2 and 3, accounting policies are consistent with those of
prior years.
2. The Group adopted the revised IAS 1, IFRS 8 and Circular 3/2009 (the
revised Headline Earnings per Share circular) during the year. The
presentation of the financial statements (IAS 1) and operating segment
disclosures (IFRS 8) are changed accordingly, with no adjustment
necessary on the adoption of Circular 3/2009.
3. The Group has revised its treatment of actuarial gains and losses in
terms of IAS 19. Previously, all actuarial gains and losses on defined
retirement benefit plans were recognised in operating profit. The Group
now recognises these gains and losses in other comprehensive income.
Comparative figures have been restated increasing profit before tax by
R9.0 million (R6.5 million after tax), with no effect on total equity or
retirement scheme obligations.
4. During the year, certain companies within the Group entered into
transactions with each other. These intra-group transactions are
eliminated on consolidation. Related party information is unchanged from
that reported at 28 February 2009. For further information, please refer
to note 28 of the 2009 annual report.
5. Revenue comprises turnover, other trading income and interest received.
6. 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.
7. Profit before tax in Australia includes a net R5.6 million loss on sale
of assets (2009: R1.4 million profit).
8. On 25 February 2010, the Company re-purchased and cancelled 25 736 561
ordinary shares, which were held as treasury shares by a subsidiary
company. The cancellation of these shares had no financial impact, other
than R2.7 million paid in Securities Transfer Tax.
9. The Group has now completed the closure of the store operations of its
subsidiary, Score Supermarkets Operating Limited, which results are
disclosed as a discontinued operation. Disclosed is salient information
on this operation.
Reviewed Audited
Feb 2010 Feb 2009
Rm Rm
Statement of comprehensive income
Revenue 580.9 2 073.0
Turnover 579.8 2 070.8
Trading expenses 238.1 512.4
Loss on sale of equipment and vehicles 1.3 3.9
Trading loss 107.1 123.0
Loss for the year (after tax) 107.5 118.5
Balance Sheet
Total assets 86.1 316.0
Total liabilities 174.4 328.9
Cash flow statement
Net cash used in operating activities (212.7) (56.1)
Net cash from investing activities 56.8 68.9
Net cash from financing activities - -
PICK N PAY HOLDINGS LIMITED ("PIKWIK")
Share Code: PWK ISIN code: ZAE000005724
Pikwik`s only asset is its 54.34% (2009: 54.43%)
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 R549.9 million (2009: R539.3
million).
Headline earnings per share from continuing operations is 117.93 cents (2009:
116.92 cents).
Diluted headline earnings per share from continuing operations is 114.92 cents
(2009: 114.59 cents).
Headline earnings per share is 106.72 cents (2009: 104.78 cents). Diluted
headline earnings per share is 103.84 cents (2009: 102.58 cents).
The total number of shares in issue is 527.2 million (2009: 527.2 million) and
the weighted average number of shares in issue during the year is 515.3
million (2009: 514.7 million). Pikwik`s total dividend for the year is 84.93
cents per share (2009: 82.97 cents per share), an increase of 2.4%.
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick n Pay Stores Ltd (No. 84) 134.75 cents per share
Pick n Pay Holdings Ltd (No. 57) 65.63 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 4 June 2010. The shares will trade EX
dividend from the commencement of business on Monday, 7 June 2010 and the
record date will be Friday, 11 June 2010.
The dividends will be paid on Monday, 14 June 2010.
Share certificates may not be dematerialised or rematerialised between Monday,
7 June 2010 and Friday, 11 June 2010, both dates inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary
20 April 2010
DIRECTORS OF PICK N PAY STORES LIMITED
Executive: NP Badminton (CEO), DG Cope (CFO), SD Ackerman-Berman,
JG Ackerman
Non-executive: GM Ackerman (Chairman), D Robins (German)
Independent non-executive: HS Herman, C Nkosi, BJ van der Ross,
RSJ van Rensburg, J van Rooyen
On 1 March 2010, RD Ackerman and W Ackerman retired as members of the Board
and SD Ackerman-Berman and JG Ackerman were appointed as full Board members.
DIRECTORS OF PICK N PAY HOLDINGS LIMITED
Non-executive: RD Ackerman (Chairman), GM Ackerman, W Ackerman
Independent non-executive: RP de Wet, HS Herman
Registered office: 101 Rosmead Avenue, Kenilworth, Cape Town, 7708
Sponsor: Investec Bank Limited, 100 Grayston Drive, Sandton, 2196
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
(www.pnp.co.za)
Date: 21/04/2010 08:00:01 Produced by the JSE SENS Department.
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