| Wed 6 Jun 2001, 0:00 | | Metro Cash And Carry Limited - Financial Report |
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METRO CASH AND CARRY LIMITED
(Registration number 1946/021315/06)
AUDITED CONSOLIDATED FINANCIAL RESULTS
for the twelve months ended 30 April 2001
INCOME STATEMENT
Restated
Audited Audited
Year ended Year ended
30 April 30 April
2001 2000
R'000 R'000
Turnover 35 625 872 33 084 911
Continuing operations 33 929 896 29 433 135
Discontinued operations 1 695 976 3 651 776
Operating income before depreciation
and interest
Continuing operations 867 830 938 619
Discontinued operations (51 328) (70 739)
816 502 867 880
Depreciation (189 167) (194 467)
Operating income before interest 627 335 673 413
Net interest paid (183 141) (94 278)
Paid (213 340) (124 880)
Received 30 199 30 602
Income before taxation 444 194 579 135
Taxation (144 061) (152 959)
Income after taxation 300 133 426 176
Share of income of associated companies 1 457 4 901
Attributable income
before exceptional items 301 590 431 077
Exceptional items (416 250) -
Attributable income/(loss) (114 660) 431 077
Income attributable to
outside shareholders (132 380) (92 183)
Income/(loss) attributable to
ordinary shareholders (247 040) 338 894
Dividend - (141 576)
Retained income/(loss) for the period (247 040) 197 318
Ordinary shares in issue (000's)
- Total 1 685 846 1 246 626
- Weighted average 1 347 756 1 188 119
Adjusted headline earnings
per ordinary share (cents) 16.2 31.5
Attributable earnings/(loss)
per ordinary share (cents) (18.3) 28.5
Dividend per ordinary share (cents) - 11.5
Dividend cover (times) - 2.4
RECONCILIATION OF ADJUSTED HEADLINE EARNINGS
Restated
Audited Audited
Year ended Year ended
30 April 30 April
2001 2000
R'000 R'000
Income/(loss) attributable to
ordinary shareholders (247 040) 338 894
Adjusted for -
Amortisation of goodwill 20 219 15 893
Net loss on disposal of businesses and
retail stores in subsidiaries 29 115 18 928
Exceptional items 416 250 -
Adjusted headline earnings 218 544 373 715
ABRIDGED BALANCE SHEET
Restated
Audited Audited
30 April 30 April
2001 2000
R'000 R'000
ASSETS
Non-current assets
Fixed assets 876 747 967 169
Intangibles 325 959 320 568
Unlisted investments and loans 159 651 332 525
Future income tax benefit in
foreign subsidiary 219 072 268 795
1 581 429 1 889 057
Current assets
Inventories 2 583 925 2 479 664
Accounts receivable 3 101 348 2 756 860
Amount owing for sale of
John Lewis Food Service 279 649 -
Bank balances and cash 307 562 405 103
6 272 484 5 641 627
Total assets 7 853 913 7 530 684
EQUITY AND LIABILITIES
Shareholders' funds
Capital and reserves 1 088 930 855 320
Outside shareholders' interest 304 816 218 087
1 393 746 1 073 407
Non-current liabilities
Deferred taxation 6 787 21 936
Interest bearing 1 677 216 1 721 889
1 684 003 1 743 825
Current liabilities
Non-interest bearing 4 564 745 4 526 438
Interest bearing 211 419 187 014
4 776 164 4 713 452
Total equity and liabilities 7 853 913 7 530 684
Capital expenditure for the period 224 082 152 058
Capital expenditure committed or
authorised 11 998 29 300
Contingent liabilities 42 263 321 556
Ordinary share in issue (000's) 1 685 846 1 246 626
Net asset value per share (cents) 64.6 68.6
ABRIDGED CASH FLOW INFORMATION
Restated
Audited Audited
Year ended Year ended
30 April 30 April
2001 2000
R'000 R'000
Net cash flow from operations 766 797 803 448
Investment income 30 199 30 602
Movement in working capital (457 694) (674 959)
Costs relative to
VAT settlement with SARS (135 573) -
Finance costs (213 340) (124 880)
Taxation paid (75 788) (128 484)
(85 399) (94 273)
Dividends (43 306) (45 509)
Net cash effects of
operating activities (128 705) (139 782)
Net cash effects of
investing activities (122 055) (13 728)
(250 760) (153 510)
Net cash effects of
financing activities 179 739 168 969
(Decrease)/increase in
net cash resources (71 021) 15 459
SEGMENTAL INFORMATION
Restated
Audited Audited
Year ended Year ended
30 April 30 April
2001 2000
R'000 R'000
Turnover
South Africa
Continuing operations 9 687 530 9 376 319
Discontinued operations 408 238 454 477
Australia
Continuing operations 20 991 803 17 238 883
Discontinued operations 1 287 738 3 197 299
Africa 3 013 850 2 532 779
Hong Kong 236 713 285 154
35 625 872 33 084 911
Operating income before interest
South Africa
Continuing operations 172 083 324 915
Discontinued operations (12 427) (12 065)
Australia
Continuing operations 402 746 326 672
Discontinued operations (49 137) (67 911)
Africa 102 344 82 129
Corporate and Hong Kong 11 726 19 673
627 335 673 413
STATEMENT OF CHANGES IN EQUITY
Restated
Audited Audited
Year ended Year ended
30 April 30 April
2001 2000
R'000 R'000
Balance at the beginning of the period 855 320 1 191 729
Increase in stated capital 633 185 1 035 736
Premium on acquisition of subsidiaries
written off against stated capital - (1 346 597)
Premium on acquisition of
subsidiaries written off against
distributable reserves - (128 855)
Foreign currency translation
adjustments (152 535) (94 011)
Retained income/(loss) for the period (247 040) 197 318
Capital and reserves 1 088 930 855 320
COMMENTS
Trading
Group turnover from continuing operations totalled R34 billion for the year.
The increase of 15.3% over the previous year emanated mainly from the
operations in Australia and Africa. Operating income before interest for the
year totalled R627 million. Earnings were adversely affected by the
extremely difficult trading conditions persistent in the retail market in
South Africa, but nevertheless the Group earned 16.2 cents per share for the
year.
Domestic operations
Turnover for Metcash S.A. Limited totalled R10.1 billion for the year, a
modest 2.7% increase over the previous year. The lack of turnover growth
reflects the poor trading conditions and diminished consumer spending
experienced generally by the retail sector in South Africa. These operations
yielded operating income before interest of R160 million and the decrease in
earnings is a direct result of the margin and income pressures created by
the fight to retain market share and the time required to effect a
commensurate reduction in overheads. The labour dispute in October/November
last year, resulting in strike action, had a further adverse impact on
earnings as did the conservative view adopted by the board in relation to
providing against the recoverability of franchise debtors.
Management has taken decisive action to improve the future profitability of
the various business units, including the flattening of operational
management structures, revising the approach to core staffing levels and the
closure/disposal of twelve cash and carry stores and six liquor outlets as
well as the rationalisation and consolidation of the conventional
distribution and franchise operations.
International Operations
Australia
Metcash Trading Limited Australasia (formerly Davids Limited) continues to
grow from strength to strength and produced outstanding results for the
year. Turnover from continuing operations increased to R21 billion, an
increase of 21.8% over the previous year, whilst operating income before
interest from these operations totalled R403 million, an increase of 23%.
All trading divisions reported improved earnings. The recently announced
disposal of John Lewis Food Service eliminates the only non-profitable area
of the business and enables management to focus on the core operations. The
proceeds from the sale of John Lewis Food Service totalling AU$69 million
(R280 million) will be utilised to reduce borrowings in the Australian
company and to fund the recently announced on-market buy-back of up to 40
million converting preference shares in that company.
Africa
Metcash Africa (Proprietary) Limited, which operates in Botswana, Zimbabwe,
Malawi, Zambia, Mozambique, Madagascar, Kenya and Uganda, produced excellent
results for the year under review. Turnover increased by 19% in Rand terms
and net income before taxation which totalled R118 million, reflected an
increase of 24%. Operations in all countries reflected impressive growth and
improved performances, particularly in Botswana and Zimbabwe,
notwithstanding the problems currently being experienced in the latter
country.
Hong Kong
The main focus of this business unit is the export and distribution of South
African fruit into various countries in the Far East. The floods experienced
last year resulted in poor fruit crops with a concomitant severe impact on
trading and profitability. Towards year-end trading in this division was
looking substantially brighter.
Accounting Policies
This report is prepared on the historical cost basis in accordance with
South African Statements of Generally Accepted Accounting Practice and, with
the exception of the change in the basis of accounting for the Group's
investment in Israel, the accounting policies are consistent with those
applied in the last annual report.
Investment In Israel
As reported in the interim announcement at 31 October 2000, the Group
altered the basis of accounting for the investment in Israel from the
proportionate consolidation method to the equity accounting method with
effect from 1 May 2000 and simultaneously wrote off the carrying value of
the investment entirely. Exceptional items reflected in the attached Income
Statement include R67 million in respect of this write off.
The board has taken the decision to actively pursue the sale of the
investment in Israel.
Restatement of comparative figures
As a result of the change in the basis of accounting for the investment in
Israel, the comparative figures for the year ended 30 April 2000, included
in the attached Income Statement, Abridged Balance Sheet and Cash Flow
Statements, have been restated. These restatements have not affected net
profit or earnings per share.
Exceptional items
Exceptional items comprise - R'000
Amount paid to South African Revenue Service in respect
of VAT settlement, net of taxation 113 536
Investment in Israeli operations written off 66 936
Provision against recoverability of loans to
Employee Share Incentive Trusts 235 778
416 250
It should be noted that the only item that has affected cash flow was the
amount paid in respect of the VAT settlement.
Share of income of associate companies
This represents the Group's share of income from the investment in Produce
Traders Trust, Australia. The comparative figure for the year ended 30 April
2000 substantially reflects the restatement of the Group's share of income
from the investment in the Israeli operations.
Borrowing capacity and interest bearing debt
In terms of the relevant articles of association, the Group has unlimited
borrowing powers.
Interest bearing debt comprises -
Non-current
AU$220 million (R894 million) in terms of a formal accounts receivable
securitisation programme in the Australian subsidiary, bearing interest at
approximately 6% per annum.
AU$193 million (R784 million) syndicated loan for the balance of the
purchase price of the investment in Australia secured by pledge of the
shares in that company and bearing interest at approximately 7% per annum
fluctuating in accordance with the London Interbank Offered Rate. During the
period under review, this loan was converted to Australian Dollars from U.S.
Dollars to reduce exposure to currency fluctuations.
Current
Fluctuating bank borrowings in various operations, bearing interest at rates
at or below prime overdraft rates.
Employee share incentive trusts
Continuing pressure on the company's share price has resulted in the need to
provide against the recoverability of the amounts owing by the Employee
Share Incentive Trusts. At 30 April 2001, an amount of R235.8 million was
set aside for this purpose and is included in exceptional items. The quantum
of this provision will be reviewed in accordance with future share price
fluctuations.
Adjusted headline earnings
The calculation is based on 1 347 755 581 shares (2000 - 1 188 118 871
shares), being the weighted average number of shares in issue during the
year under review and reflects the full dilution resulting from the
capitalisation share awards in July 2000 and January 2001 as well as the
rights issue concluded in February this year.
Rights issue
As previously announced, the company concluded a R500 million rights issue
late in February this year, resulting in the issue of a further 384 615 385
ordinary shares. This had the effect of improving the Group's overall
gearing position.
Directors
In accordance with the commitment to attain the highest standards of
corporate governance, three new non-executive directors have been appointed
to the board, namely, Roy McAlpine, Gavin Pieterse and Shepherd Shonhiwa.
Prospects
The Group now trades through more than 650 outlets in eighteen countries and
improved performance from all business units is anticipated in the
forthcoming year. The operations in Africa and Hong Kong are expected to
yield further improved earnings in the year ahead. The action programme
implemented in the domestic operations will undoubtedly result in improved
margins going forward and the recently announced transactions involving
Franklins in Australia will add significantly to the gathering earnings
momentum of the Australian Group.
Dividends
The board has decided to pass the final dividend for the year under review
and it is anticipated that payment of dividends will recommence in the
forthcoming financial year.
On behalf of the board
Dr F van Zyl Slabbert C S dos Santos
Chairman Chief Executive
DIRECTORATE AND ADMINISTRATION
Directors: Dr F van Zyl Slabbert (Chairman)*, C S dos Santos (Chief
Executive), J L Grainger, B J Hale, D Kashuv (Israeli), B Joseph, L M
Mathabathe, J R McAlpine*, H Mer, G H Pieterse*, A Reitzer, G B Rubenstein*,
V D Rubin, S O Shonhiwa*, R D Taurog *non-executive
Group Company Secretary: P M Gishen (Miss)
Registered office: First Floor, 33 Scott Street, Waverley, Johannesburg 2090
(PO Box 1970, Highlands North 2037)
Transfer secretaries: Mercantile Registrars Limited, 11 Diagonal Street,
Johannesburg 2001 (PO Box 1053, Johannesburg 2000)
