| Thu 6 Dec 2001, 0:00 | | Metro Cash And Carry Limited - Interim Results |
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METRO CASH AND CARRY LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1946/021315/06)
Share code: MTC ISIN: ZAE000012688
INTERIM RESULTS
for the six months ended 31 October 2001
INCOME STATEMENT
Unaudited
Unaudited Pro forma Unaudited Audited
Six months Six months Six months Year
ended ended ended ended
31 October 31 October 31 October 30 April
2001 2000 2000 2001
R'000 R'000 R'000 R'000
Revenue 18 011 852 16 344 621 16 854 151 35 656 103
- continuing operations 18 011 852 15 480 501 15 990 031 33 960 127
- discontinued operations
and store closures 864 120 864 120 1 695 976
Cost of sales (17 488 897) (15 956 156) (16 439 020) (34 630
952)
Administration, human
resource and information
systems costs (179 814) (153 927) (158 788) (366 160)
Operating income 343 141 234 538 256 343 658 991
Interest paid (90 301) (94 616) (94 616) (213 340)
Income before
exceptional items
and taxation 252 840 139 922 161 727 445 651
Exceptional items
before taxation 225 487 (208 918) (208 918) (444 696)
Income before taxation 478 327 (68 996) (47 191) 955
Taxation (80 146) (15 756) (25 416) (115 615)
Income after taxation 398 181 (84 752) (72 607) (114 660)
Income attributable to
outside shareholders (70 650) (43 990) (43 990) (132 380)
Income/(Loss) attributable
to ordinary shareholders 327 531 (128 742) (116 597) (247 040)
ABRIDGED BALANCE SHEET
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Assets
Non-current assets 1 914 622 1 826 417 1 581 429
Fixed assets 990 068 914 402 876 747
Intangible assets 582 409 322 494 325 959
Investments and loans 160 525 338 901 159 651
Future income tax benefit
in foreign subsidiary 181 620 250 620 219 072
Current assets 7 009 392 6 194 051 6 272 484
Inventories 2 717 444 2 575 928 2 583 925
Accounts receivable 3 793 839 3 188 179 3 380 997
Bank balances and cash 498 109 429 944 307 562
Total assets 8 924 014 8 020 468 7 853 913
Equity and liabilities
Shareholders' equity
Capital and reserves 1 395 044 806 443 1 088 930
Outside shareholders' interest 307 064 213 031 304 816
Non-current liabilities 1 722 396 1 690 209 1 684 003
Deferred taxation 4 130 3 740 6 787
Interest bearing 1 718 266 1 686 469 1 677 216
Current liabilities 5 499 510 5 310 785 4 776 164
Non-interest bearing 4 961 559 4 864 643 4 564 745
Interest bearing 537 951 446 142 211 419
Total equity and liabilities 8 924 014 8 020 468 7 853 913
Capital expenditure
Expended during the period 48 959 96 008 224 082
Committed or authorised 20 644 42 718 11 998
Contingent liabilities 42 263 48 541 42 263
Ordinary shares in issue 1 685 846 1 278 223 1 685 846
Net asset value per share (cents) 82.8 63.1 64.6
ABRIDGED CASH FLOW INFORMATION
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Net cash flow from operations 401 145 352 466 759 826
Investment income 15 141 16 385 30 199
Reduction/(Increase) in working capital 104 722 (223 543) (457 694)
Value Added Tax settlement costs - - (141 982)
Finance costs (90 301) (94 616) (213 340)
Taxation paid (54 728) (49 859) (62 410)
Cash inflow/(outflow) from operations 375 979 833 (85 401)
Dividends paid - (43 306) (43 306)
Net cash retained/(utilised) 375 979 (42 473) (128 707)
Cash utilised in investing activities (90 024) (81 171) (122 053)
285 955 (123 644) (250 760)
Net cash (outflow)/inflow from
financing activities (354 098) (110 643) 179 739
Decrease in cash and cash equivalents (68 143) (234 287) (71 021)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
31 October 31 October 30 April
2001 2000 2001
R'000 R'000 R'000
Ordinary shareholders' equity
at beginning of year 1 088 930 855 320 855 320
Issue of ordinary shares
Cash - - 473 336
Non-cash - 122 967 175 791
Share issue expenses - - (15 942)
Movements in distributable reserves
Income/(Loss) attributable to
ordinary shareholders 327 531 (116 597) (247 040)
Movements in non-distributable reserves
Transfer from distributable reserves (25 769)
Foreign currency translation reserve (21 417) (55 247) (126 766)
Ordinary shareholders' equity
at end of period 1 395 044 806 443 1 088 930
DETERMINATION OF HEADLINE EARNINGS
Unaudited
Unaudited Pro forma Unaudited Audited
Six months Six months Six months Year
ended ended ended ended
31 October 31 October 31 October 30 April
2001 2000 2000 2001
R'000 R'000 R'000 R'000
Income/(Loss) attributable
to ordinary shareholders 327 531 (128 742) (116 597) (247 040)
Investment in Israeli
operations written-off - 66 936 66 936 66 936
Provision against
recoverability of loans
to Employee
Share Incentive Trusts - - - 235 778
Carrying value of Zimbabwe
operations written-off 19 407 - - -
Profit on sale of
investment in
Israeli operations (244 894) - - -
Net loss on disposal of
businesses and stores
in subsidiaries 21 725 36 182 36 182 29 115
Amortisation of goodwill 11 662 9 021 9 021 20 219
Headline earnings 135 431 (16 603) (4 458) 105 008
Ordinary shares in issue
(000's)
- total 1 685 846 1 278 223 1 278 223 1 685 846
- weighted average 1 685 846 1 263 798 1 263 798 1 347 756
Headline earnings
per share (cents) 8.0 (1.3) (0.4) 7.8
Attributable earnings/
(loss) per share (cents) 19.4 (10.2) (9.2) (18.3)
SEGMENTAL INFORMATION
Six months ended 31 October 2001
Southern Hong Kong
Africa Australia Africa and Corporate Total
R'000 R'000 R'000 R'000 R'000
Sales to
customers 5 190 268 11 451 167 1 172 731 182 545 17 996 711
Dividends received 5 311
Interest received 9 830
Total revenue 18 011 852
Segment result
- continuing
operations 81 438 227 177 47 532 7 859 364 006
Income from
associated
company and
jointly
controlled
entity 340 340
Loss
- discontinued operations (31 035)
Interest received 9 830
Interest paid (90 301)
Exceptional items 225 487
Income before taxation 478 327
Total
depreciation 34 361 49 772 8 024 1 944 94 101
Total assets 2 191 957 5 687 215 709 663 335 179 8 924 014
Total
liabilities 2 013 084 4 834 703 306 424 67 695 7 221 906
Pro forma six months ended 31 October 2000*
Sales to
customers 4 962 612 10 279 286 966 193 120 479 16 328 570
Dividends received 3 540
Interest received 12 511
Total revenue 16 344 621
Segment result
- continuing
operations 84 239 191 166 33 061 7 134 315 600
Income from
associated
company 291 291
Loss
- discontinued operations (93 864)
Interest received 12 511
Interest paid (94 616)
Exceptional items (208 918)
Income before taxation (68 996)
Total
depreciation 32 885 51 618 8 839 2 223 95 565
Total assets 2 108 166 4 807 534 440 595 480 255 7 836 550
Total
liabilities 1 244 143 5 294 654 243 242 78 989 6 861 028
Year ended 30 April 2001
Sales to
customers 10 095 768 22 279 541 3 013 850 236 713 35 625 872
Interest received 30 199
Dividends received 32
Total revenue 35 656 103
Segment result
- continuing
operations 159 656 353 609 102 344 11 726 688 899
Income from
associated
company 1 457 1 457
Loss - discontinued operations (61 564)
Interest received 30 199
Interest paid (213 340)
Exceptional items (444 696)
Income before taxation 955
Total
depreciation 65 174 101 579 17 312 5 102 189 167
Total assets 2 338 887 4 612 320 591 891 310 815 7 853 913
Total
liabilities 2 009 036 3 956 447 438 053 56 631 6 460 167
*Restated for exclusion of Zimbabwe
COMMENTS
TRADING
Group turnover totalled R18 billion for the period, an increase of 16.4%
over that of the continuing businesses for the same period of the previous
year. Offshore operations contributed 71.2% of the Group's turnover and
77.6% of income before interest, exceptional items and taxation. Income
before exceptional items and taxation totalled R253 million, an increase of
80.7% on the previous year. Income attributable to ordinary shareholders at
R328 million reflects a dramatic turnaround of R457 million over the
attributable loss of the previous year. Headline earnings per share at 8
cents also reflect this turnaround when compared with the loss of 1.3 cents
last year, particularly having regard to the increased number of shares in
issue.
METCASH S.A. LIMITED
Turnover of this business unit totalled R5.2 billion for the period, an
increase of 9.4% over that of the continuing businesses for the same period
of the previous year. Extremely difficult trading conditions persisted
during the six months and the focus on market share retention, coupled with
the costs of disposal of non-profitable operations, resulted in income from
continuing businesses of R81 million before interest, exceptional items and
taxation. Although this result is virtually the same as that for the
previous year, the foundation has now been laid for future profitability of
this business unit.
The period under review witnessed the highly successful opening of a
Trade Centre in Windhoek in July and the launch of the UMS Buying Group in
September.
METCASH TRADING LIMITED AUSTRALASIA
This subsidiary continues to reflect strong growth and produced outstanding
results for the period. Turnover for the six months totalled R11.45 billion.
Like-on-like turnover growth for the period in local currency terms was a
creditable 12%, while earnings from these operations before taxation, on a
similar comparison, increased by 35%. In Rand terms, income for the six
months, before interest, exceptional items and taxation, totalled R225
million. All trading divisions reported increased turnover, with IGA
Distribution coming through with a particularly strong performance. Both IGA
Distribution and Australian Liquor Marketers reported increased earnings
whilst Campbells Cash & Carry reported a slight decrease in earnings owing
to the cost of a major drive into the formalised convenience sector and
confectionery route trade.
Although the results for the period have absorbed the costs necessary to
accommodate the increased volumes anticipated to result from the recent
disposals by Franklins of stores to independent retailers, no benefits from
these transactions had materialised in the period under review.
METCASH AFRICA (PROPRIETARY) LIMITED
This business unit conducts operations in Botswana, Zimbabwe, Malawi,
Zambia, Mozambique, Madagascar, Kenya and Uganda. Operations in all
countries reflected impressive growth and improved performances in local
currency terms.
On a like-for-like comparison, turnover for the period totalled R1.17
billion, an increase of 21.3% over the previous year. Income before interest
and taxation increased by 42% to R47.5 million.
Expansion opportunities in various other African countries are currently
under investigation.
METCORP (HONG KONG) LIMITED
A most satisfactory improvement was achieved by this business unit. Turnover
increased by 51.5% to a total of R182.5 million, on the back of improved
product availability. Income before corporate costs, interest, exceptional
items and taxation increased by a similar percentage.
ACCOUNTING POLICIES
This report is prepared on the historical cost basis in accordance with
South African Statements of Generally Accepted Accounting Practice and the
accounting policies are consistent with those applied in the last annual
report.
INVESTMENT IN ISRAEL
As recently announced, the major portion of the Group's investment in
Israel, namely, Clubmarket Marketing Chains and the smaller NewPharm chain,
has been sold for a gross consideration of US$32 million (R301 million). The
proceeds from the sale (which were received after 31 October 2001), after
costs and expenses, will be utilised to reduce Group debt.
This leaves the Group with 100% of Mashbir Foods, a small grocery
wholesaling operation, which it intends keeping, and the April Cosmetics
chain, which it intends selling.
SARS - VALUE ADDED TAX MATTER
The company is aware of the criminal investigation that SARS and the
Scorpions have been conducting. This investigation related to the frauds
perpetrated on the company that gave rise to the high profile VAT case and
assessment. That dispute and the assessment were resolved by the company and
SARS in October last year. Aside from exchanges of information that took
place between the company and SARS prior to the settlement, the company, in
terms of the settlement agreement, also undertook to co-operate with any
continuing investigations. SARS has expressed its satisfaction with the
company's co-operation in this regard.
The arrests of the five persons recently reported in the media are the
result of these criminal investigations and relate to the VAT frauds
perpetrated against the company. The company welcomes these developments and
will follow the proceedings with interest.
COMPARATIVE FIGURES AND PRO FORMA COMPARATIVES
The comparative figures in the Income Statement for the six months ended 31
October 2000 have been restated to reflect the disposal of the John Lewis
Food Service division in Australia as well as the disposal of stores in
Metcash S.A. Limited. These restatements have not affected net profit or
earnings per share.
In view of the political and economic turmoil and uncertainties in
Zimbabwe, the decision was taken to adopt the most conservative view, to
deconsolidate that operation from the Group's results and to write off the
carrying value of the investment in Zimbabwe, which amounted to R19.4
million. Accordingly, net income after tax totalling R10 million was
excluded from Group earnings in this period and R16 million in the
comparative period.
In order to achieve a meaningful comparison, a pro forma comparative
income statement for the six months ended 31 October 2000 is presented and
all comparisons made in these comments accord with those figures.
EXCEPTIONAL ITEMS
Gross Taxation Net
R'000 R'000 R'000
31 October 2001
Carrying value of Zimbabwe operations
written off 19 407 19 407
Profit on sale of investment
in Israeli operations (244 894) (244 894)
(225 487) (225 487)
31 October 2000
Investment in Israeli operations
written off 66 936 66 936
Amount paid to South African Revenue
Service in respect of VAT settlement 141 982 (28 446) 113 536
208 918 (28 446) 180 472
Attributable to outside shareholders (26 707)
153 765
30 April 2001
Investment in Israeli operations
written off 66 936 66 936
Provision against recoverability of
loans to Employee Share
Incentive Trusts 235 778 235 778
Amount paid to South African Revenue
Service in respect of VAT settlement 141 982 (28 446) 113 536
444 696 (28 446) 416 250
Attributable to outside shareholders (15 391)
400 859
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
A$188 million (R893 million) syndicated loan for the balance of the purchase
price of the investment in Australia secured by a pledge of shares in that
company and bearing interest at approximately 6.8% per annum fluctuating in
accordance with the London Interbank Offered Rate.
A$174 million (R825 million) in terms of a formal accounts receivable
securitisation programme in the Australian subsidiary, bearing interest at
approximately 6% per annum.
Current
Fluctuating bank borrowings in various operations, bearing interest at rates
at or below prime overdraft rates.
A$25 million (R118 million) repaid on the securitisation programme after
31 October 2001.
HEADLINE EARNINGS
The calculation is based on 1 685 846 211 shares (2000 - 1 263 798 097
shares), being the weighted average number of shares in issue during the
period under review.
PROSPECTS
Whilst the economic impact of the tragic events of 11 September and their
aftermath cannot be assessed and should definitely not be underestimated,
the Group is certainly well positioned to produce solid results in the
future, having regard, inter alia, to the following -
* more than 70% of turnover and earnings are generated offshore, by far the
major portion from Australia;
* decisive action taken in regard to profitability of the Southern African
operations;
* positive impact on the Australian operations that will emanate from the
disposal by Franklins of stores to independent retailers;
* Israeli operations sold and Group debt to be reduced.
CAPITALISATION ISSUE
The Board has resolved to award capitalisation shares to ordinary
shareholders recorded in the books of the company on 4 January 2002 in the
ratio of 1.3 new fully paid ordinary shares for every 100 held.
The number of capitalisation shares which will be issued is 21 916 001.
The salient dates are -
Last day to trade cum capitalisation issue Thursday, 27 December
2001
New shares listed Friday, 28 December 2001
First date to trade entitlement
ex capitalisation issue Friday, 28 December 2001
Record date for capitalisation issue Friday, 4 January 2002
Issue of new share certificates or shareholder
account credited with CSDP or broker Monday, 7 January 2002
Shareholders may not dematerialise or rematerialise their holdings of
ordinary shares between Wednesday, 19 December 2001, and Friday, 4 January
2002.
COMPLIANCE
This interim report complies in all material respects with the requirements
of the new Statement of Generally Accepted Accounting Practice AC127
(Interim Financial Reporting).
AUDIT REVIEW
The information set out above has been reviewed, but not audited, by the
Group's auditors, Ernst & Young. The report is available for inspection at
the company's registered office.
On behalf of the Board
Dr F van Zyl Slabbert C S dos Santos
Chairman Chief Executive
6 December 2001
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)
