| Tue 20 Apr 2004, 9:50 | | Pick "n Pay - Reviewed group results for the year |
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Pick "n Pay - Reviewed group results for the year ended 29 February 2004
PICK `N PAY STORES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1968/008034/06)
Share Code: PIK ISIN: ZAE000005443
("Pick `n Pay")
PICK `N PAY HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1981/009610/06)
Share code: PWK ISIN code: ZAE000005724
("Pikwik")
Reviewed group results for the year ended 29 February 2004
REVIEW OF OPERATIONS
GROUP OVERVIEW
One of the major features of the year from a trading perspective was the effect
of the decrease in the rate of inflation in significant major categories, the
effect of food deflation which was obviously felt to a greater degree given the
basic nature of the goods sold in our Score and Boxer divisions. Notwithstanding
this, the Group has performed exceptionally well and posted an acceptable
result.
The management of the Retail division specifically is to be congratulated on the
energy and effort that has been put into the Group recovery. I would also like
to take this opportunity of once again thanking our very loyal customers,
employees, suppliers and all other stakeholders for their ongoing support and
encouragement during the course of this year.
Group turnover for the year of R29.3 billion is 11.8% up on last year and
includes a 15.9% increase in Southern African operations and a 7.7% decrease in
Australia. In Australian dollars, Franklins turnover increased by 4.0%, the
decrease shown being purely as a result of the strengthening rand.
Trading profit increased by 15.9% while profit before tax, after interest and
investment income, increased by 13.3%. Interest income for the year was affected
by the 5.0% decrease in prime rates during the year.
The headline earnings increase of 14.1% is very acceptable considering the
challenges that we have had to overcome during the year.
As the board of directors are confident of ongoing growth in the year ahead,
they have approved a final dividend of 63.5 cents giving a full year dividend of
80.0 cents, an increase of 15.9%.
PICK "N PAY RETAIL DIVISION
Notwithstanding the effect of the extortion incident, this division performed
strongly in the second half of the year and produced a really commendable
result. All major parts of the division being Hypermarkets, Supermarkets,
Franchise and Butcheries reported good real growth in both turnover and profit
contributions.
The division opened 8 new Corporate stores, the most for many years, and 15 new
Family stores. In the coming year the division will continue to increase its
footprint by opening a further 15 new Corporate stores and 20 Family stores.
GROUP ENTERPRISES
Score ccontinues to be restructured in terms of its geographic operations. While
significant progress has been made on the administrative front within Score, we
are not satisfied with the operational progress and further significant
management changes have been made.
The initial signs already indicate an improvement in its performance and will
see it return to profitability in the year ahead.
Score was also significantly impacted by the effect of deflation on most basic
food commodities which form the bulk of the sales within this Group.
Notwithstanding this, a fairly significant real growth was shown in turnover due
partly to the opening of new stores, as well as aggressive promotion and
marketing.
Boxer produced an outstanding result showing real growth in both turnover and
profit. Like Score, Boxer has been particularly hard hit by the above
deflationary factors. During the year Boxer opened 6 new stores and will open a
further 4 stores in the next year, and convert 9 Score stores in the Eastern
Cape.
Boardmans - the sale of Boardmans was implemented on 1 April 2004 following
Competition Tribunal approval of the transaction.
The Go Banking divisions have continued to grow their customer base, increasing the number of
accounts by 23.0% and total deposits by 25.0% during the year. In the year ahead
The Go Banking division will launch further new products and enhance their existing product
ranges.
TM Supermarkets, in Zimbabwe - Under continuing trying trading circumstances,
the management of TM, yet again, produced a very commendable result. They
continue to receive our support in any way we can. We continue to account only
for dividends received. However, no dividends were received this year.
Franklins Australia
In Australian dollars the turnover for the year increased by 4.0% which shows
real growth. During the year 2 new stores were opened and the store destroyed by
fire in September 2002 was relaunched successfully.
Before depreciation, Franklins made a trading loss of R5.5 million which is a
significant improvement over the loss incurred last year of R56.2 million. This
shows the significant strides management have made in building our Australian
business.
The board has taken a decision to end our distribution contract with Metcash and
have appointed two logistics providers to distribute to stores from January
2005. We are confident that by managing our own distribution network entirely,
we will be able to further enhance our efficiencies and bottom line
contributions in our Franklins operation.
GENERAL COMMENT
Although we have had our fair share of challenges during the year past, I would
really like to thank all of my Pick "n Pay colleagues, as well as our customers,
for the significant support that we have received.
Sean Summers
Chief Executive Officer
19 April 2004
Pick "n Pay Stores Limited
Share code: PIK ISIN code: ZAE000005443
INCOME STATEMENT
Reviewed Audited
2004 Growth 2003
Rm % Rm
Revenue (note 2) 30 448.3 27 182.0
Turnover 29 276.1 11.8 26 194.2
Cost of merchandise sold (24 420.4) (21 552.3)
Gross profit 4 855.7 4 641.9
Other income 1 076.1 875.9
Trading expenses (5 142.8) (4 837.1)
Trading profit 789.0 15.9 680.7
Interest received 81.9 91.8
Interest paid (46.6) (41.4)
Dividends received 14.2 20.1
Goodwill amortisation (36.8) (38.6)
Exceptional items - (5.3)
Profit before tax 801.7 13.3 707.3
Tax (286.0) (253.5)
Net profit for the year 515.7 13.6 453.8
Trading profit margin 2.7% 2.6%
Profit before tax margin 2.7% 2.7%
Per share - cents
Headline earnings (note 3) 117.38 14.1 102.87
Earnings 109.55 93.80
Fully diluted headline earnings 111.64 98.78
Fully diluted earnings 104.26 90.17
Dividends
Interim - No. 71 paid 16.50 17.9 14.00
Final - No. 72 payable 63.50 15.5 55.00
Total 80.00 15.9 69.00
Dividend cover 1.5 1.5
BALANCE SHEET
Reviewed Audited
2004 2003
Rm Rm
Assets
Non-current assets
Goodwill 745.1 742.1
Property 182.3 110.9
Equipment and vehicles 1 045.4 877.2
Investments (note 4b) 242.3 262.3
Loans 89.6 97.5
Deferred tax 99.2 68.6
Participation in export partnerships 127.6 143.3
2 531.5 2 301.9
Current assets
Stocks 1 578.7 1 507.3
Trade and other receivables 628.1 495.7
Cash resources 1 502.5 1 035.6
3 709.3 3 038.6
Total assets 6 240.8 5 340.5
Equity and liabilities
Capital and reserves 1 349.2 1014.1
Non-current liabilities
Interest bearing debt 188.2 243.3
Retirement scheme obligations 145.0 125.9
Deferred tax 151.7 163.8
484.9 533.0
Current liabilities
Interest bearing debt 159.9 186.7
Trade and other payables 3 972.0 3 395.0
Tax 274.8 211.7
4 406.7 3 793.4
Total equity and liabilities 6 240.8 5 340.5
Shares in issue - millions 483.4 483.4
Weighted average shares in issue -
millions (note 5) 470.7 483.8
Net asset value - cents per share
(property value based on directors"
valuation) 331.9 249.1
CASH FLOW STATEMENT
Reviewed Audited
2004 2003
Rm Rm
Trading profit 789.0 680.7
Depreciation 283.1 278.1
Trade and other payables 591.9 429.6
Stocks (71.4) (149.9)
Trade and other receivables (125.1) (132.3)
Exchange rate effect on working capital (19.8) (2.6)
Cash generated by operations 1 447.7 1 103.6
Interest received 81.9 91.8
Interest paid (46.6) (41.4)
Dividends received 14.2 20.1
Dividends paid (316.7) (258.5)
Tax paid (283.4) (323.9)
Net cash inflow from operating activities 897.1 591.7
Property (74.2) (4.2)
Equipment and vehicles (434.4) (276.9)
Investments 181.4 (10.8)
Loans 7.9 (8.2)
Net acquisitions - (232.7)
Net cash outflow from investing activities (319.3) (532.8)
Interest bearing debt (repaid)/raised (87.9) 171.5
Share repurchases (33.2) (181.3)
Take up of share options 10.2 -
Net cash outflow from financing activities (110.9) (9.8)
Net increase in cash resources 466.9 49.1
Cash resources at 1 March 1 035.6 986.5
Cash resources at 29 February 1 502.5 1 035.6
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
2004 2003
Rm Rm
Capital and reserves at 1 March 1 014.1 1 220.9
Change in accounting policies (note 4) (74.9) (103.9)
Capital and reserves - as restated 1 089.0 1 117.0
Net profit for the year 515.7 453.8
Dividends paid (316.7) (258.5)
Share repurchases (33.2) (181.3)
Take up of share options 10.2 -
Revaluation of investments 60.3 -
Foreign currency translation 23.9 (116.9)
Capital and reserves at 29 February 1 349.2 1 014.1
SEGMENTAL REPORT
Southern Africa Australia
Reviewed Audited Reviewed Audited
2004 2003 2004 2003
Rm Rm Rm Rm
Turnover 25 068.6 21 635.3 4 207.5 4 558.9
Turnover -
Australian dollars AUD858.3 AUD825.2
Trading profit/(loss) 829.5 764.8 (40.5) (84.1)
Exceptional items - (5.3) - -
Goodwill amortisation (9.5) (9.6) (27.3) (29.0)
Depreciation, included
in trading
profit/(loss) (248.1) (250.2) (35.0) (27.9)
Goodwill 171.2 180.9 573.9 561.2
Property, equipment
and vehicles 1 021.0 801.2 206.7 186.9
Total current assets
(excluding cash
resources) 1 995.2 1 813.3 211.6 189.7
Total current
liabilities
(excluding debt) 3 784.3 3 212.6 462.5 394.1
SEGMENTAL REPORT (continued)
Total
Reviewed Audited
2004 2003
Rm Rm
Turnover 29 276.1 26 194.2
Turnover -
Australian dollars
Trading profit/(loss) 789.0 680.7
Exceptional items - (5.3)
Goodwill amortisation (36.8) (38.6)
Depreciation, included
in trading profit/(loss) (283.1) (278.1)
Goodwill 745.1 742.1
Property, equipment
and vehicles 1 227.7 988.1
Total current assets
(excluding cash resources) 2 206.8 2 003.0
Total current liabilities
(excluding debt) 4 246.8 3 606.7
Pick "n Pay Holdings Limited ("PIKWIK")
Results for the year ended 29 February 2004
Share code: PWK ISIN code: ZAE000005724
Pikwik"s only asset is its 53.2% (2003: 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 R294.1 million (2003:
R264.9 million).
Headline earnings per share, calculated using the weighted average number of
shares in issue during the year of 496.2 million (2003: 494.9 million), is 59.28
cents
(2003: 53.53 cents). Pikwik"s final dividend per share is 31.00 cents (2003:
26.85 cents).
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick "n Pay Stores Ltd (No. 72) 63.50 cents per share
Pick "n Pay Holdings Ltd (No. 45) 31.00 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 4 June 2004.
The shares will trade EX dividend from the commencement of business on Monday, 7
June 2004 and the record date will be Friday, 11 June 2004.
The dividends will be paid on Monday, 14 June 2004.
Share certificates may not be dematerialised or rematerialised between Monday, 7
June 2004 and Friday, 11 June 2004, both dates inclusive.
On behalf of the boards of directors
GF Lea
Company secretary 19 April 2004
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 4, are
consistent with those applied in the previous year. The financial information
has been reviewed by KPMG Inc., whose unqualified review opinion is available
for inspection at the Company"s registered office. It is anticipated that an
unqualified audit opinion will be issued in due course once the annual financial
statements have been audited.
2. Revenue comprises turnover, other income, interest received and dividends
received.
3. Headline earnings of R552.5 million (2003; R497.7 million) is net profit for
the year adjusted for the add back of goodwill amortisation and exceptional
items.
4. During the year the Group changed the following accounting policies to comply
with SAGAAP:
a. To comply with AC132 the Pick "n Pay Share Purchase Trust, which holds both
Stores and Pikwik shares, is now consolidated.
This change has not had an effect on earnings in the current or prior year,
however it has had an effect on the earnings per share due to the treasury
shares held by the trust.
The prior year figures have been restated and now include the Pikwik shares as
an investment at cost and the Stores treasury shares in equity.
b. To comply with AC133 listed investments are now valued at market value and
the participation in export partnerships are reflected at amortised costs using
the effective interest rate method.
In accordance with the adoption provisions of AC133 an adjustment has been made
to the Group"s reserves at the beginning of the year and no adjustments have
been made to prior year figures.
5. The weighted average number of shares is lower than that in issue due to the
treasury shares held by the Group being treated as cancelled for this
calculation.
6. Effective 1 April 2004 the Boardmans division was sold for net asset value
plus goodwill of R26 million.
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) (**German)
(+Independent)
These results are also available on our website http://www.picknpay.co.za
