| Tue 21 Oct 2003, 10:06 | | Pick `n Pay Stores Limited / Pick `n Pay Holdings |
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Pick `n Pay Stores Limited / Pick `n Pay Holdings Limited - Results For The Six
Release Date: 21/10/2003 08:00:01 Code(s): PIK PWK
Pick `n Pay STORES LIMITED / Pick `n Pay HOLDINGS LIMITED - RESULTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2003
Pick `n Pay STORES LIMITED
Share code: PIK
ISIN code: ZAE000005443
Pick `n Pay HOLDINGS LIMITED ("PIKWIK")
Share code: PWK
ISIN code: ZAE000005724
UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2003
REVIEW OF OPERATIONS
GROUP OVERVIEW
The current six-month period has been extremely challenging. Dealing with the
extortion incident demanded extensive management time. Although this cost the
Group severely in terms of lost turnover and related expenditure, the management
of the Retail division should be congratulated on keeping the business running
so efficiently during this trying time. I would also like to take this
opportunity of once again thanking our very loyal customers, employees and all
other stakeholders for their ongoing support and encouragement.
Notwithstanding the above, the Group has managed to increase its Southern Africa
turnover by 16.0% and increase Group headline earnings per share ("HEPS") by
18.0%. This increase in HEPS is greater than that of headline earnings due to
the concentration of shares in issue as a result of our share repurchase
programme. In line with our HEPS increase we have increased our interim dividend
to 16.50 cents per share.
PICK "n PAY RETAIL DIVISION
This division was a significant contributor to the increase in the Southern
Africa turnover and in the light of the difficulties in operating during the
extortion, management are to be congratulated in this regard.
All major parts of the Retail business, Hypermarkets, Supermarkets, Franchise
and Butcheries, reported good results showing real growth in both turnover and
net profit contribution.
During the period, we opened 5 new Corporate stores, and plan to open a further
4 new Corporate stores in the second half of the year. Of the new stores opened,
three were in Pretoria which has significantly improved our penetration in that
area.
6 Family stores and 1 Mini Market were also opened with a further 7 Family and
1 Mini Market scheduled for opening in the six months ahead.
GROUP ENTERPRISES
Score showed good growth in turnover over the period opening 15 stores during
the six months. Score"s significant growth in turnover has been offset by a
disappointing profit performance largely as a result of significant growth and
start-up costs and certain systems shortfalls. We are confident of Score"s
future growth and profitability.
Boxer have again produced very acceptable results for the six months, showing
real growth in turnover and increased Group profit contribution. The Boxer
market has been particularly affected by deflation of approximately 3,0% with
the major effect being on zero-rated goods which constitute as much as 26,0% of
Boxer"s turnover. Even under these circumstances, the management have done well
to maintain their fair share of their market. Boxer opened 3 new stores during
the period and plan to open a further 4 new stores in the six months ahead.
Boardmans had a challenging six months with the continued strength of the Rand
and effective deflation of imported merchandise. We opened 2 larger style
Boardmans stores in Cape Town, with more room for a greater offering in
furniture and outdoor equipment.
"Go Banking" during the period increased its number of accounts by 17,0% and also
further enhanced the functionality of the Go Banking card at Pick `n Pay till
points with the ability to deposit personal cheques and to obtain balances and
mini statements. Go Banking, as part of the Nedcor overall retail strategy, will
continue to evolve.
Franklins Australia As a result of the strengthening of the Rand, the Australian
turnover decreased by 10.8%. In Australian Dollars, turnover increased by 5.4%.
This turnover increase is commendable given that food inflation is currently
less than 1,0%. This real growth is supported by our increase in market share
over the period in the New South Wales area. During the period 3 new stores were
opened in Forest Way, Bateaux Bay and Singleton, the latter being the store
which was destroyed by fire in September 2002.
Before depreciation and goodwill amortisation, Franklins made a small trading
profit which shows the strides that management have made in consolidating and
building a meaningful business in the New South Wales area. In this regard we
are very pleased with the progress to date.
GENERAL COMMENT
Although we have had our significant challenges in the last six months, the
Group"s performance has been commendable.
I wish to thank all my colleagues in the Company for their support over the last
six months and we look forward to the remainder of the financial year with
confidence.
Sean Summers
Chief Executive Officer
20 October 2003
Pick `n Pay STORES LIMITED Share code: PIK ISIN code: ZAE000005443
INCOME STATEMENT
Audited
Year to
2003 Growth 2002 Feb 2003
Rm % Rm Rm
Revenue (note 1) 14 496.7 13 039.5 27 139.6
Turnover 13 953.7 10.9 12 577.5 26 194.2
Cost of merchandise sold (11 667.5) (10 337.4) (21 552.3)
Gross profit 2 286.2 2 240.1 4 641.9
Other income 488.4 406.3 833.5
Trading expenses (2 468.9) (2 385.3) (4 794.7)
Trading profit 305.7 17.1 261.1 680.7
Interest received 45.1 45.6 91.8
Interest paid (24.6) (20.5) (41.4)
Dividends received 9.5 10.1 20.1
Operating profit 335.7 13.3 296.3 751.2
Goodwill amortisation (18.3) (19.5) (38.6)
Exceptional items (14.1) (5.3)
Profit before tax 317.4 262.7 707.3
Tax (125.1) (110.3) (253.5)
Net profit for the period 192.3 152.4 453.8
Headline earnings calculation
Net profit for the period 192.3 152.4 453.8
Adjustment (note 2) 18.3 33.6 43.9
Headline earnings 210.6 13.2 186.0 497.7
Trading profit margin 2.2% 2.1% 2.6%
Operating profit margin 2.4% 2.4% 2.9%
Per share - cents
Headline earnings 44.57 18.0 37.76 102.24
Earnings 40.69 30.94 93.22
Fully diluted headline
earnings 42.70 36.33 98.20
Fully diluted earnings 39.03 29.77 89.64
Dividends
Interim -
No. 71 proposed 16.50 17.9 14.00
BALANCE SHEET
Audited
2003 2002 Feb 2003
Rm Rm Rm
Assets
Non-current assets
Goodwill 726.9 821.0 742.1
Property 164.6 85.5 110.9
Equipment and vehicles 942.4 885.3 877.2
Investments 181.4 181.4 181.4
Loans 158.2 138.2 163.8
Participation in export
partnerships 131.4 144.2 143.3
Deferred tax 87.2 58.4 68.6
2 392.1 2 314.0 2 287.3
Current assets
Stocks 1 552.6 1 438.9 1 507.3
Trade and other receivables 547.1 387.4 495.7
Cash resources 947.4 952.9 1 035.6
3 047.1 2 779.2 3 038.6
Total assets 5 439.2 5 093.2 5 325.9
Equity and liabilities
Capital and reserves 903.5 968.9 999.1
Non-current liabilities
Interest bearing debt 240.1 244.2 243.3
Provisions 292.9 262.7 255.7
Deferred tax 149.2 166.3 163.9
682.2 673.2 662.9
Current liabilities
Interest bearing debt 122.7 18.5 186.7
Trade and other payables 3 541.7 3 253.1 3 265.1
Tax 189.1 179.5 212.1
3 853.5 3 451.1 3 663.9
Total equity and liabilities 5 439.2 5 093.2 5 325.9
Shares in issue - millions 483.4 483.4 483.4
Treasury shares held - millions 12.0 - 9.5
Weighted average shares in
issue - millions 472.5 492.6 486.8
Net asset value - cents per
share (property value based
on directors" valuation) 220.8 231.8 239.9
CASH FLOW STATEMENT
Audited
Year to
2003 2002 Feb 2003
Rm Rm Rm
Trading profit 305.7 261.1 680.7
Depreciation 144.4 123.3 278.1
Trade and other payables 314.8 410.7 429.6
Stocks (45.3) (87.9) (149.9)
Trade and other receivables (47.9) (22.0) (132.3)
Cash generated by operations 671.7 685.2 1 106.2
Interest received 45.1 45.6 91.8
Interest paid (24.6) (20.5) (41.4)
Dividends received 9.5 10.1 20.1
Dividends paid (241.3) (205.1) (258.5)
Tax paid (181.4) (200.7) (323.9)
Net cash inflow from operating
activities 279.0 314.6 594.3
Property (55.3) 9.4 (4.2)
Equipment and vehicles (211.9) (106.6) (276.9)
Loans 5.6 125.5 99.9
Net acquisitions - (185.9) (232.7)
Net cash outflow from investing
activities (261.6) (157.6) (413.9)
Interest bearing debt (repaid)/raised (68.8) 4.2 171.5
Share repurchases (33.2) (172.9) (300.2)
Net cash outflow from financing
activities (102.0) (168.7) (128.7)
Net (decrease)/increase in cash
resources (84.6) (11.7) 51.7
Cash resources at 1 March 1 035.6 986.5 986.5
Effect of exchange rate movements
on working capital (3.6) (21.9) (2.6)
Cash resources at
31 August/28 February 947.4 952.9 1 035.6
STATEMENT OF CHANGES IN EQUITY
Audited
Year to
2003 2002 Feb 2003
Rm Rm Rm
Capital and reserves at 1 March 999.1 1 220.9 1 220.9
AC 133 adjustment (note 3) (8.4) - -
Capital and reserves - as restated 990.7 1 220.9 1 220.9
Net profit for the period 192.3 152.4 453.8
Share repurchases (33.2) (172.9) (300.2)
Dividends paid (241.3) (205.1) (258.5)
Foreign currency translation reserve (5.0) (26.4) (116.9)
Capital and reserves at
31 August/28 February 903.5 968.9 999.1
SEGMENTAL REPORT
Southern Africa Australia Total
2003 2002 2003 2002 2003 2002
Rm Rm Rm Rm Rm Rm
Turnover 11 842.8 10 210.5 2 110.9 2 367.0 13 953.7 12 577.5
Trading
profit/
(loss) 321.5 312.0 (15.8) (50.9) 305.7 261.1
Goodwill
amorti-
sation (4.8) (4.8) (13.5) (14.7) (18.3) (19.5)
Exceptional
items - (14.1) - - - (14.1)
Depreciation,
included in
trading
profit/
(loss) (128.1) (110.1) (16.3) (13.2) (144.4) (123.3)
Goodwill 175.4 185.6 551.5 635.4 726.9 821.0
Property,
equipment
and
vehicles 916.0 785.2 191.0 185.6 1 107.0 970.8
Total current
assets
(excluding
cash
resources) 1 918.1 1 627.8 181.6 198.5 2 099.7 1 826.3
Total current
liabilities
(excluding
debt) 3 337.4 2 790.1 393.4 642.5 3 730.8 3 432.6
NOTES TO THE FINANCIAL INFORMATION
1. Accounting policies comply with South African Statements of Generally
Accepted Accounting Practice ("SA GAAP") and, except as stated in note 3, are
consistent with those applied for the year ended 28 February 2003. Revenue
comprises turnover, other income, interest received and dividends received.
2. The headline earnings adjustment in the current period relates only to the
add back of goodwill amortisation.
3. SA GAAP AC 133 Financial Instruments adjustment. During the period the Group
changed its accounting policy in respect of its financial instruments to comply
with AC 133 Financial Instruments: Recognition and Measurement. In accordance
with the adoption provisions of AC 133 an adjustment has been made to the
Group"s reserves at the beginning of the period and no adjustment has been made
to prior year figures. In order to comply with AC 133 the Group has changed the
valuation of its participation in export partnerships from a cost basis to
amortised cost using the effective interest rate method.
Apart from the above, the adoption of AC 133 had no other material effect on the
valuation of other financial instruments.
Pick `n Pay HOLDINGS LIMITED ("PIKWIK")
Share code: PWK
ISIN code: ZAE000005724
RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2003
Pikwik"s only asset is its 53.2% (2002: 53.2%) investment in Pick "n Pay Stores
Limited. The Pikwik Group earnings are directly related to those of this
investment. Headline earnings for the year amount to R112.1 million (2002:
R99.0 million).
Headline earnings per share, calculated using the shares in issue at the balance
sheet date of 527.2 million (2002: 527.2 million), is 21.26 cents (2002: 18.78
cents). Pikwik"s interim dividend per share is 8.05 cents (2002: 6.83 cents).
DIVIDEND DECLARATION
The directors have declared the following cash dividends:
Pick "n Pay Stores Ltd (No. 71) 16.50 cents per share
Pick "n Pay Holdings Ltd (No. 44) 8.05 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 5 December 2003.
The shares will commence trading EX dividend from the commencement of business
on Monday, 8 December 2003 and the record date will be Friday, 12 December 2003.
The dividends will be paid on Monday, 15 December 2003.
Share certificates may not be dematerialised or rematerialised between Monday, 8
December 2003 and Friday, 12 December 2003, both dates inclusive.
On behalf of the boards of directors
GF Lea
Company Secretary
20 October 2003
These results are also available on our website http://www.picknpay.co.za
Directors of Pick `n Pay Stores Limited:
Executive: RD Ackerman* (Chairman), D Robins (Deputy Chairman),
SR Summers (CEO), W Ackerman*, DG Cope. Non-executive:
GM Ackerman*, RP de Wet*+, HS Herman*+, C Hultzer*+, C Nkosi+,
DM Nurek*+, BJ van der Ross+
(*Also directors of Pick `n Pay Holdings Limited) (+Independent)
