| Tue 2 Oct 2001, 0:00 | | Pick 'n Pay Stores/ Pick 'n Pay Holdings - 2001 In |
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Group results for the six months ended 31 August 2001
Turnover up 14.2%
Trading Profit up 23.1%
Operating profit up 18.3%
Headline earnings up 21.1%
Headline earnings per share up 19.7%
Interim dividend per share up 18.6%
Review of operations
GROUP OVERVIEW
Group turnover for the six months ended August 2001, at R8.1 billion, is an
increase of 14.2%. This really is an outstanding performance given the
current continued adverse trading environment and once again, reflects a
strong real increase in turnover.
The increase in trading profit of 23.1% has been brought about partially by
continued improvement in margin mix and by a reduction in expenditure as a
percentage of turnover.
Cash on hand at R1.2 billion is an increase of 33.1%. The cash balance is
still prior to the funds being utilised for the purchase of the Franklins
stores in Australia (approximately R500 million) and we forecast a year end
cash balance of approximately R850 million.
The six months under review saw the implementation of our restructure
announced at year end, with Nick Badminton assuming the role as Managing
Director for the Pick 'n Pay Retail Group of Hypermarkets, Supermarkets and
Family Stores and Martin Rosen, as Managing Director of Group Enterprises,
including Score Supermarkets, Boardmans, Financial Services, TM Supermarkets
and all new business activities. Aubrey Zelinsky has taken up his
appointment as Managing Director of Franklins Australia and has now moved to
Sydney.
In line with our founding philosophy of decentralisation, the appointment of
these three M.D.s will lead to specific focus within these business units
and a concomitant flow of energy, expertise and growth going forward.
RETAIL DIVISION
The division has once again posted an excellent performance and what is
particularly pleasing, has been the growth in both top line sales, as well
as a strong improvement in profitability in Hypermarkets. The fundamental
decision taken some three years ago to consolidate the buying and
administrative functions of the Hypermarkets is now starting to bear fruit
and we are confident that this trend of an increasing profit contribution
will continue.
A major focus for the remainder of the financial year will be a continued
campaign to reduce overall expenditure as a percentage of turnover as we
continue to move to becoming truly competitive on an international basis.
Home Shopping continues to grow steadily and the feedback from consumers has
been very positive. This important development is seen as a strategic
initiative in providing service to the consumers who wish to use this
service as part of their overall relationship with us.
We have started converting RiteValu Franchise stores, which were previously
part of the Score Supermarket division, over to Pick 'n Pay Mini Markets.
These stores will now be run as part of the Pick 'n Pay Family Franchise
Division, falling within the geographic supermarket regions. There are two
primary reasons for this; firstly to allow these stores to draw on the
infrastructure, market knowledge and expertise of the core Pick 'n Pay
Supermarkets; and secondly, it will allow Score to focus on its target
market. It is envisaged that these conversions will be completed by the end
of this financial year, at which stage, RiteValu as a brand will cease to
trade. The advent of Pick 'n Pay Mini Markets gives the Retail Division
another store format that we believe will meet the needs of the emerging
convenience market.
GROUP ENTERPRISES
The decision to reduce gross margins in Score Supermarkets has led to a
dramatic improvement in turnover growth and market share. We believe that
Score is now well positioned to enter an active growth phase, both within
South Africa and outside of our borders, i.e. Botswana, Swaziland and
Tanzania.
The six months ahead will see the opening of our fourth store in Dar-es-
Salaam and we are pleased to report that the indications to date are
positive with very strong consumer acceptance for the Score Supermarket
brand and we are confident that this fledgling business will generate a
profit in the six months ahead.
Once again, TM Supermarkets in Zimbabwe has achieved a remarkable
performance. Unfortunately, the repatriation of profits is proving to be
increasingly problematic, however, this will not have a material effect on
Group earnings. We still remain positive in the medium to long term
prognosis for Zimbabwe and would like to thank all of our colleagues for all
that they have achieved under the circumstances.
We have recently launched Pick 'n Pay Go Banking and have started the
migration of accounts from BOE to our new partners, Nedcor. We are confident
that once the migration process is completed, we will be in a position to
start growing and expanding this service to our consumers and the six months
ahead will see some exciting announcements taking place.
FRANKLINS AUSTRALIA
We have commenced the process of taking over the 40 Franklins stores where
leases have been assigned to us. In parallel, we are also taking over the 20
Fresco stores that we purchased simultaneously with the Franklins deal. It
is our intention to have taken over all of the stores by the end of this
financial year.
GENERAL COMMENT
The recent turbulent events that have taken place in many areas of the
world, culminating in the disastrous sequence of events in America on 11
September, has left us in an environment where there is a lot of uncertainty
as to what the future holds. As South Africans, we undoubtedly feel our fair
share of the impact of all of these events, but there is no doubt in my mind
that the resilience and spirit that has always been displayed by our people
will once again rise to the occasion and I am confident that we can achieve
satisfactory growth in the six months to February 2002. Now, more than ever,
we need to be mindful of the task that we have always set ourselves and that
is to build a sustainable just society, not only within our Company, but
within our country. I want to thank all of my colleagues at Pick 'n Pay for
the role that they have played in helping make this Company, not only the
great place that it is, but the example that it sets.
Sean Summers
Chief Executive Officer
2 October 2001
Pick 'n Pay Stores Limited
Income statement
2001 2000 Year
(not (not Feb 2001
audited) Growth audited) (audited)
Rm % Rm Rm
Turnover 8 143.3 14.2 7 130.5 15 126.1
Cost of merchandise sold (6 700.4) (5 835.9) (12 410.8)
Gross profit 1 442.9 1 294.6 2 715.3
Other income 246.4 194.5 473.6
Trading expenses (1 514.9) (1 347.4) (2 792.8)
Trading profit 174.4 23.1 141.7 396.1
Interest received 41.1 43.2 80.9
Interest paid (14.7) (14.4) (28.7)
Dividends received 17.7 14.2 26.6
Operating profit 218.5 18.3 184.7 474.9
Exceptional item
(note 2) 15.0 - -
Profit before tax 233.5 184.7 474.9
Tax (81.9) (64.6) (147.0)
Profit after tax 151.6 120.1 327.9
Minority interest (0.6) (3.7) (5.4)
Net profit for the
period 151.0 116.4 322.5
Adjustment (note 2) (10.0) - -
Headline earnings 141.0 21.1 116.4 322.5
Per share - cents
Headline earnings 28.02 19.7 23.40 64.58
Earnings 30.00 23.40 64.58
Distribution declared 10.50 18.6 8.85
Balance sheet
2001 2000 Year
(not (not Feb 2001
audited) audited) (audited)
Rm Rm Rm
ASSETS
Non-current assets
Goodwill 41.6 - -
Property 135.3 151.3 127.1
Equipment and vehicles 694.9 752.6 761.9
Investments 195.5 196.5 195.5
Loans 296.5 253.8 295.9
Participation in export
partnerships 160.1 173.4 166.2
1 523.9 1 527.6 1 546.6
Current assets
Stocks 871.3 768.3 866.0
Trade and other receivables 301.2 318.0 287.1
Cash resources 1 238.5 930.3 1 085.3
2 411.0 2 016.6 2 238.4
Total assets 3 934.9 3 544.2 3 785.0
EQUITY AND LIABILITIES
Capital and reserves 1 106.7 871.6 1 039.2
Minority interest - 19.8 19.6
Non-current liabilities
Interest bearing debt 198.6 202.3 200.5
Deferred tax 181.3 180.8 185.9
379.9 383.1 386.4
Current liabilities
Trade and other payables 2 298.4 2 018.4 2 124.5
Tax 149.9 251.3 215.3
2 448.3 2 269.7 2 339.8
Total equity and liabilities 3 934.9 3 544.2 3 785.0
Shares in issue - millions 506.0 501.3 501.3
Weighted average shares in issue
- millions 503.4 497.7 499.4
Net asset value - cents per share
(property value based on
directors' valuation) 241.1 194.4 231.9
Cash flow statement
2001 2000 Year
(not (not Feb 2001
audited) audited) (audited)
Rm Rm Rm
Trading profit 174.4 141.7 396.1
Depreciation and amortisation 114.7 106.0 218.5
Trade and other payables 174.1 28.7 134.5
Stocks (4.5) (38.3) (133.1)
Trade and other receivables (8.0) 3.9 31.8
Cash generated by operations 450.7 242.0 647.8
Interest received 41.1 43.2 80.9
Interest paid (14.7) (14.4) (28.7)
Dividends received 17.7 14.2 26.6
Dividends paid (122.4) (77.3) (121.2)
Tax paid (151.6) (64.1) (177.5)
Cash retained from operating
activities 220.8 143.6 427.9
Equipment and vehicles 47.0 86.7 207.6
Property 8.2 (37.1) (61.3)
Interest bearing debt 1.9 (148.4) (146.6)
Investments - 15.0 14.0
Loans 0.6 70.4 102.2
Net acquisitions (note 3) 47.3 - -
Cash utilised for investing
activities 105.0 (13.4) 115.9
Net increase in cash resources 115.8 157.0 312.0
Cash resources at 1 March 1 085.3 773.3 773.3
Effect on cash resources of
exchange rate movements 37.4 - -
Cash resources at 31 August/
28 February 1 238.5 930.3 1 085.3
Statement of changes in equity
2001 2000 Year
(not (not Feb 2001
audited) audited) (audited)
Rm Rm Rm
Capital and reserves at 1 March 1 039.2 760.9 760.9
Prior year adjustment (note 4) - 69.3 69.3
Capital and reserves -
as restated 1 039.2 830.2 830.2
Net profit for the year -
as adjusted 151.0 116.4 322.5
As previously reported 120.7 319.0
Prior year adjustment (note 4) (4.3) 3.5
Distributions declared and paid (170.4) (137.3) (179.3)
Capitalisation award 48.0 62.3 62.3
Foreign currency translation
reserve 38.9 - 3.5
Capital and reserves at
31 August/28 February 1 106.7 871.6 1 039.2
NOTES TO THE FINANCIAL INFORMATION
1 Except for note 4, accounting policies and methods of computation are
consistent with those applied in the annual financial statements for the
year ended 28 February 2001.
2 The exceptional item relates to the disposal of the Financial Division to
Nedcor. The headline adjustment represents the exceptional item after tax
and the amortisation of goodwill.
3 This amount comprises the purchase of the remaining issued share capital
of Score Supermarkets Operating Limited, which is now a wholly-owned
subsidiary, for R62.3 million less the proceeds of R15.0 for the sale of
Financial Services.
4 The Group has changed its accounting policy for dividends and the related
STC charge to accord with Generally Accepted Accounting Practice. The Group
now accounts for dividends and STC in the period when declared. The effect
of this change is disclosed in the statement of changes in equity and
comparative figures have been restated accordingly.
Pick 'n Pay Holdings Limited (`Pikwik')
Result for the six months ended 31 August 2001
Pikwik's only asset is its 50.9% (2000: 51.0%) 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 R71.8 million
(2000: R59.4 million). Headline earnings per share, calculated using the
shares in issue at the balance sheet date of 527.2 million (2000: 522.6
million), is 13.61 cents (2000: 11.36 cents). Pikwik's interim dividend is
5.13 cents per share (2000: 4.32 cents per share).
Dividend declarations
The directors have declared the following interim dividends:
Pick 'n Pay Stores Limited - An interim cash dividend (No. 67) of 10.50
cents per share.
Share code: PIK. ISIN code: ZAE000005443.
Pick 'n Pay Holdings Limited - An interim cash dividend (No. 40) of 5.13
cents per share.
Share code: PWK. ISIN code: ZAE000005724.
For both companies, the last day of trade in order to participate in the
dividend ("CUM" dividend) will be Friday, 30 November 2001. The shares will
commence trading "EX" dividend from the commencement of business on Monday,
3 December 2001 and the record date will be Friday, 7 December 2001. The
dividends will be paid on Monday, 10 December 2001.
Share certificates may not be dematerialised between Monday, 26 November
2001 and Friday, 7 December 2001, both days inclusive.
M MARSDEN CA (SA) Secretary
2 October 2001
These results are also available on our website http//www.picknpay.co.za
