| Thu 4 Dec 2003, 17:17 | | INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCT 03 |
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METRO CASH AND CARRY LIMITED - REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED
31 OCTOBER 2003 AND CAUTIONARY ANNOUNCEMENT
METRO CASH AND CARRY LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1946/021315/06 Share code: MTC ISIN: ZAE000012688
* Australian subsidiary grows profit before tax by 20% in Australian dollars
* Headline earnings increase by 15% to R214 million
* Cash generated by operating activities exceeds R600 million
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2003
AND CAUTIONARY ANNOUNCEMENT
INCOME STATEMENT
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Revenue 25 051 942 25 341 721 51 787 714
Cost of sales (23 922 376) (24 268 457) (49 637 845)
Administration, human
resource and
information costs (442 703) (360 062) (682 372)
686 863 713 202 1 467 497
Depreciation of tangible
assets (104 687) (127 553) (233 606)
Operating income 582 176 585 649 1 233 891
Interest paid (84 762) (108 776) (197 264)
Income before exceptional
items and taxation 497 414 476 873 1 036 627
Exceptional items refer
comments below (1 671) 43 061 18 046
Amortisation of goodwill (26 657) (24 562) (53 624)
Income before taxation 469 086 495 372 1 001 049
Taxation (159 950) (168 160) (328 991)
Income after taxation 309 136 327 212 672 058
Income attributable to
outside shareholders (118 569) (118 005) (232 378)
Income attributable to
ordinary shareholders 190 567 209 207 439 680
DETERMINATION OF HEADLINE
EARNINGS
Income attributable to
ordinary shareholders 190 567 209 207 439 680
Loss/(Surplus) arising from
allotment of shares
by the Australian subsidiary 1 671 (64 962) (63 569)
Costs relative to the
aborted investment in
the Philippines - - 12 457
Carrying value of Zambian
operations written off - 21 901 25 131
Amortisation of goodwill 21 519 19 986 43 001
Headline earnings 213 757 186 132 456 700
Ordinary shares in issue (000"s)
- total 1 824 610 1 741 855 1 771 466
- weighted average 1 814 790 1 736 225 1 744 530
Headline earnings per share
(cents) 11.8 10.7 26.2
Attributable earnings per
share (cents) 10.5 12.0 25.2
BALANCE SHEET
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Assets
Non-current assets 2 472 504 2 383 440 2 287 891
Tangible assets 1 175 682 1 207 423 1 102 677
Intangible assets 958 217 878 912 857 325
Investments and loans 217 774 159 874 214 876
Deferred taxation 120 831 137 231 113 013
Current assets 8 081 659 8 616 579 7 079 151
Inventories 3 238 599 3 347 518 2 923 435
Accounts receivable 4 198 282 4 309 062 3 524 060
Bank balances and cash 644 778 959 999 631 656
Total assets 10 554 163 11 000 019 9 367 042
Equity and liabilities
Capital and reserves 1 731 611 1 466 667 1 641 610
Outside shareholders" interest 768 026 757 590 665 880
Non-current liabilities 1 185 943 1 618 164 1 162 696
Interest bearing liabilities 1 077 345 1 523 786 1 069 281
Deferred taxation 14 324 5 121 14 340
Provisions 94 274 89 257 79 075
Current liabilities 6 868 583 7 157 598 5 896 856
Accounts payable 5 985 388 6 331 872 5 144 903
Provisions 326 759 347 498 303 782
Taxation 49 395 147 455 41 447
Interest bearing liabilities 507 041 330 773 406 724
Total equity and liabilities 10 554 163 11 000 019 9 367 042
Capital expenditure
Expended during the period 111 886 108 388 281 434
Committed or authorised 19 651 16 519 20 999
Contingent liabilities 23 701 26 285 20 620
Ordinary shares in issue (000"s) 1 824 610 1 741 855 1 771 466
Net asset value per share (cents) 94.9 84.2 92.7
ABRIDGED CASH FLOW STATEMENT
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Cash generated by operating
activities 606 272 607 568 1 004 139
Finance costs (84 762) (108 776) (197 264)
Taxation paid (159 444) (101 596) (319 170)
Cash inflow from operations 362 066 397 196 487 705
Cash utilised from investing
activities (250 251) (126 459) (332 691)
Net cash(outflow)/inflow from
financing activities* (220 777) 98 032 (226 455)
(Decrease)/Increase in net cash
resources (108 962) 368 769 (71 441)
Net cash resources
Cash and cash equivalents 644 778 959 999 631 656
Bank borrowings (285 210) (222 988) (163 126)
Net cash resources* 359 568 737 011 468 530
(Decrease)/Increase in net cash
resources (108 962) 368 769 (71 441)
*In 2002 net cash resources included R167.9 million in respect of the short term
portion of the securitised loan which has now been treated as a financing
activity
STATEMENT OF CHANGES IN ORDINARY
SHAREHOLDERS" EQUITY
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Balance at beginning of year
(as previously reported) 1 641 610 1 301 016 1 301 016
Prior year adjustment for financial
instruments (AC133) - - (33 604)
Restated balance at beginning
of year 1 641 610 1 301 016 1 267 412
Issue of ordinary shares
Odd-lot offer - (156) (156)
Share issue expenses (3 322) (354) (803)
Movements in distributable reserves
Income attributable to ordinary
shareholders 190 567 209 207 439 680
Movements in non-distributable
reserve
Foreign currency translation reserve (97 244) (43 046) (64 523)
Balance at end of period 1 731 611 1 466 667 1 641 610
SEGMENTAL INFORMATION
Australia
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Sales to customers 17 073 488 17 406 133 36 010 305
Dividends received
2003 2002 2003
R"000 R"000 R"000
Sales to customers 17 073 488 17 406 133 36 010 305
Dividends received
Interest received
Total revenue
Segmental result 415 887 387 277 837 800
Income from associated company 753 - 1 039
Amortisation of goodwill arising
on consolidation (13 889) (12 715) (28 305)
Interest received
Interest paid
Exceptional items
Income before taxation
Total depreciation and amortisation 79 088 94 466 178 279
Southern Africa
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Sales to customers 6 812 350 6 581 690 13 237 528
Dividends received
2003 2002 2003
R"000 R"000 R"000
Sales to customers 6 812 350 6 581 690 13 237 528
Dividends received
Interest received
Total revenue
Segmental result 133 620 147 733 299 230
Income from associated company
Amortisation of goodwill arising
on consolidation
Interest received
Interest paid
Exceptional items
Income before taxation
Total depreciation and amortisation 29 503 35 125 62 217
Africa
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Sales to customers 1 146 722 1 335 310 2 515 811
Dividends received
2003 2002 2003
R"000 R"000 R"000
Sales to customers 1 146 722 1 335 310 2 515 811
Dividends received
Interest received
Total revenue
Segmental result 33 205 47 362 87 470
Income from associated company
Amortisation of goodwill
arising on consolidation (921) - (1 625)
Interest received
Interest paid
Exceptional items
Income before taxation
Total depreciation and
amortisation 8 649 8 431 18 450
Corporate
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Sales to customers
Dividends received
2003 2002 2003
R"000 R"000 R"000
Sales to customers
Dividends received
Interest received
Total revenue
Segmental result (5 700) (10 629) (5 220)
Income from associated company
Amortisation of goodwill arising on
consolidation (11 847) (11 847) (23 694)
Interest received
Interest paid
Exceptional items
Income before taxation
Total depreciation and amortisation 14 104 14 093 28 284
Total
Six months Six months Year
ended ended ended
O 31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Sales to customers 25 032 560 25 323 133 51 763 644
Dividends received 14 971 4 682 10 498
2003 2002 2003
R"000 R"000 R"000
Sales to customers 25 032 560 25 323 133 51 763 644
Dividends received 14 971 4 682 10 498
Interest received 4 411 13 906 13 572
Total revenue 25 051 942 25 341 721 51 787 714
Segmental result 577 012 571 743 1 219 280
Income from associated company 753 - 1 039
Amortisation of goodwill arising
on consolidation (26 657) (24 562) (53 624)
Interest received 4 411 13 906 13 572
Interest paid (84 762) (108 776) (197 264)
Exceptional items (1 671) 43 061 18 046
Income before taxation 469 086 495 372 1 001 049
Total depreciation and
amortisation 131 344 152 115 287 230
COMMENTS
TRADING
The Group has produced an excellent result for the six months under review, in
what has been undoubtedly one of the toughest trading periods yet experienced.
The Australian subsidiary, which contributes approximately two-thirds of the
Group"s earnings, delivered an outstanding performance, increasing profit before
taxation by 20% in Australian Dollar terms. It is indeed unfortunate that, when
converted to Rands, these results do not reflect this exceptional performance.
The strengthening of the local currency also significantly affected Rand-
denominated earnings from the African and Hong Kong businesses and severely
impacted the domestic export operations. In addition, each of the three business
pillars experienced its unique competitive and market pressures. Offshore
operations contributed 74% of the Group"s turnover of R25 billion for the period
and 80% of operating income that totalled R578 million. Earnings before
exceptional items and taxation were R497.4 million, compared with R476.8 million
the previous year. Headline earnings per share increased by 10.3% to 11.8 cents.
Cash generated by operating activities exceeded R600 million and foreign
borrowings were reduced by a further A$30 million during the period.
METCASH TRADING LIMITED, AUSTRALASIA
The Australian operation produced excellent results for the period,
notwithstanding continued fierce competition from the major supermarket chains.
Turnover, in Australian Dollars, totalled A$3.44 billion, an increase of 7.3% on
the comparative period. When converted to Rands, this amounted to R17.1 billion.
Earnings after taxation at A$45.8 million increased by 20% and cash generated
from operations amounted to A$87 million. Trading results for the period have
been converted to Rands at an average rate of A$1 = R4.96 (2002 - A$1 = R5.40).
IGA Distribution delivered a particularly strong performance, on the back of a
sales increase of 6.3%, which yielded an increase in earnings of 12.3%. The
recent successful launches of the "Supa IGA" brand and the fuel promotions are
expected to add substantial value going forward.
The Campbells Cash & Carry division delivered a further exceptional increase in
earnings of 68.4% to A$8.1 million and Australian Liquor Marketers reflected
continued strong turnover growth of 11.9% for the period with earnings of A$14
million.
METCASH S.A. LIMITED
The Southern African businesses had an extremely difficult six months as the
softening in consumer demand that commenced in the second half of the last
inancial year hit home. This was exacerbated by the lowest domestic inflation
rate experienced for many years, with deflation in certain product categories.
Margins were under pressure as a result of the fierce competition to protect
market share and export opportunities became scarcer as the Rand continued to
strengthen against all major currencies.
Notwithstanding the problems experienced, turnover totalled R6.8 billion, an
increase of 3.5% over the comparative period, whilst net income before taxation
was level.
The acquisition of the Seven-Eleven convenience chain has now been successfully
concluded. The results for the six months do not include any benefit from this
transaction which, it is anticipated, will provide a boost to the conventional
distribution business, both in volume and earnings, in the forthcoming trading
period.
METCASH AFRICA (PROPRIETARY) LIMITED
With the exception of Botswana and Uganda, the businesses in the various
countries performed well in local currency terms, reflecting strong growth and
positive cash flows.
Botswana"s results continued to be negatively impacted, mainly as a result of
the strength of the Rand and mushrooming competition in a small market.
Nonetheless, management did well to retain market share in extremely difficult
circumstances. The results in Uganda were adversely affected by management
errors experienced in that operation and the necessary corrective action has
been taken.
Malawi turned in an excellent performance with earnings growth of 30% for the
period and both Angola and Kenya continue to reflect strong turnover growth.
However, the strength of the Rand, relative to the various African currencies,
played havoc with the results for the period. Turnover totalled R1.15 billion, a
decrease of 14% over that of the comparative period, whilst operating profit at
R33.2 million was approximately 30% lower.
Despite the continued deterioration of conditions in Zimbabwe, this operation
continues to trade exceptionally well. Results are only included to the extent
of dividends received.
BLACK ECONOMIC EMPOWERMENT INITIATIVE AND CAUTIONARY ANNOUNCEMENT
An arrangement has been entered into with African Renaissance Holdings Limited
in terms of which that company will lead the Group"s Black Economic Empowerment
("BEE") initiative with a view to procuring BEE participation in Metcash S.A.
Limited ("SA") and Metcash Africa (Proprietary) Limited ("Africa").
To facilitate the process, it is envisaged that this will result in the merger
of SA and Africa, followed by the separate listing of the merged entity on the
JSE Securities Exchange South Africa and other exchanges in Africa where the
business operates.
Shareholders will be kept advised as to progress with this initiative, which is
targeted for implementation by mid 2004. In the interim, shareholders are
advised to exercise caution in their dealings in the company"s shares.
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.
EXCEPTIONAL ITEMS
Six months Six months Year
ended ended ended
31 October 31 October 30 April
2003 2002 2003
R"000 R"000 R"000
Carrying value of Zambian operations
written off - (21 901) (25 131)
(Loss)/Surplus arising from
allotment of shares by the
Australian subsidiary (1 671) 64 962 63 569
Costs relative to the aborted
investment in the Philippines - - (20 392)
(1 671) 43 061 18 046
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$120 million (R588 million) syndicated loan for the balance of the purchase
price of the investment in Australia, bearing interest at approximately 7% per
annum, maturing on 30 April 2006.
A$65 million (R318 million) in terms of a formal accounts receivable
securitisation programme in the Australian subsidiary, bearing interest at
approximately 5% per annum.
R89 million in terms of a formal sale and lease-back property transaction,
payable over fifteen years and bearing interest at approximately 13% per annum.
R83 million in respect of leased assets, payable over five years and bearing
interest at approximately 5% per annum.
Current
R507 million, being the current portion of syndicated and securitised loans,
amounts owing in respect of leased assets and fluctuating bank borrowings in
various operations, bearing interest at prime overdraft rates or below.
HEADLINE EARNINGS
The calculation is based on 1 814 790 067 shares (2002 1 736 224 719 shares),
being the weighted average number of shares in issue during the period under
review. The increased number of shares relates to capitalisation issues.
DIRECTORATE
Mr Lekgau Mathabathe, an executive director of the company, who played an
important role both in the Group"s affairs and in the community, passed away on
31 August 2003. Mr Charles Turner was appointed as a non-executive director with
effect from 23 September 2003.
DIVIDENDS
It is the Board"s stated intention to resume payment of cash dividends and this
will commence upon completion of the year end results and the successful
conclusion of the BEE initiative.
PROSPECTS
Trading conditions are expected to remain generally tough during the forthcoming
six months. On the positive side, however, that period will include Xmas and
Easter trading, both of which should hopefully be boosted by the recent
significant interest rate reductions in South Africa. In addition, it is
anticipated that the Australian operations will yield earnings growth for the
next half similar to that of the first six months.
These factors, coupled with recent acquisitions and management initiatives to
contain and reduce costs whilst stimulating trading in all markets in which the
Group operates, should result in satisfactory earnings growth for the year.
This scenario must unfortunately be tempered by the unknown impact of currency
translations as a result of the continued strengthening of the Rand.
AUDIT REVIEW
The interim financial results have been reviewed by the Group"s auditors, Ernst
& Young. Their unqualified review opinion 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
4 December 2003
DIRECTORATE AND ADMINISTRATION
Directors: Dr F van Zyl Slabbert (Chairman)*,
C S dos Santos (Chief Executive), J L Grainger, D Kashuv (Israel)*,
B Joseph, J R McAlpine*, H Mer, G H Pieterse*, A Reitzer, G B Rubenstein*,
V D Rubin, S O Shonhiwa (Zimbabwe)*, R D Taurog, C F Turner*
*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: Computershare Limited
70 Marshall Street
Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
Sponsor: Sasfin Corporate Finance
a Division of Sasfin Bank Limited
Sasfin Place, North Block, 13 15 Scott Street
Waverley, Johannesburg 2090
(PO Box 95104, Grant Park 2051)
Date: 04/12/2003 11:57:13 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
