| Tue 18 May 2004, 13:22 | | group results for the year ended 29 February 2004. |
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Pick "N Pay Group - Audited group results for the year ended 29 February 2004.
Pick `n Pay Holdings Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1981/009610/06)
JSE Share code: PWK
ISIN: ZAE000005724
Pick `n Pay Stores Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1968/008034/06)
Share code: PIK
ISIN: ZAE000005443
Audited group results for the year ended 29 February 2004.
Further to the reviewed preliminary results published on 20 April 2004
shareholders are advised that the audited annual financial statements for the
year ended 29 February 2004 will be dispatched on 19 May 2004. Whereas in the
reviewed results, Pick `n Pay Holdings Limited(Pikwik) shares held by the Pick
`n Pay Employee Share Purchase Trust ("the Trust")(see note 4a to the results
below) were treated as listed investments, upon reflection it is considered more
appropriate to account for such shares as Treasury shares in the consolidated
financial statements of Pick `n Pay Stores Limited. Accordingly, the audited
results below reflect the cost of the Pikwik shares held by the Trust as a
reduction of equity. This change does not have any effect on the Headline
earnings, Headline earnings per share, or dividends declared by the Group, which
remain unchanged from the reviewed preliminary Group results.
The revised audited results of the Group are therefore presented below:
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 recovery from the extortion
attempt. 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 per share increase of 14.1% is very acceptable considering
the challenges that we 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 15 Family stores.
GROUP ENTERPRISES
Score continues to be restructured in terms of its geographic operations. While
substantial 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.
Go Banking 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
Go Banking will launch further new products and enhance their existing product
ranges.
TM Supermarkets, in Zimbabwe - Under difficult 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 only account for
dividends received. However, no dividends were received from TM this year due to
Zimbabwean foreign exchange shortages.
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 service our stores from January 2005.
We are confident that by managing our own distribution network entirely, we will
be able to further enhance 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
particularly 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
INCOME STATEMENT
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
Diluted headline earnings 111.64 98.78
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
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) 7.7 181.4
Loans 89.6 97.5
Deferred tax 99.2 68.6
Participation in export partnerships 127.6 143.3
Total non-current assets 2 296.9 2 221.0
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
Total current assets 3 709.3 3 038.6
Total assets 6 006.2 5 259.6
Equity and liabilities
Capital and reserves 1 132.4 933.2
Non-current liabilities
Interest bearing debt 188.2 243.3
Retirement scheme obligations 145.0 125.9
Deferred tax 133.9 163.9
Total non-current liabilities 467.1 533.1
Current liabilities
Interest bearing debt 159.9 186.7
Trade and other payables 3 972.0 3 394.9
Tax 274.8 211.7
Total current liabilities 4 406.7 3 793.3
Total equity and liabilities 6 006.2 5 259.6
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) 285.9 232.0
CASH FLOW STATEMENT
2004 2003
Rm Rm
Trading profit 789.0 680.7
Depreciation 283.1 278.1
Trade and other payables 592.0 429.6
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 1 447.8 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 (283.5) (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 realised 175.3 -
Loans repaid /(advanced) 7.9 (8.2)
Net acquisitions - (232.7)
Net cash outflow from investing activities (325.4) (522.0)
Interest bearing debt (repaid)/raised (87.9) 171.5
Share repurchases (38.0) (191.5)
Take up of share options 21.1 (0.6)
Net cash outflow from financing activities (104.8) (20.6)
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
2004 2003
Rm Rm
Capital and reserves at 1 March 933.2 1 220.9
Change in accounting policies (note 4) (8.4) (174.0)
Capital and reserves - as restated 924.8 1 046.9
Net profit for the year 515.7 453.8
Dividends paid (316.7) (258.5)
Share repurchases (38.0) (191.5)
Take up of share options 21.1 (0.6)
Revaluation of listed investments 1.6 -
Foreign currency translation 23.9 (116.9)
Capital and reserves at 29 February 1 132.4 933.2
SEGMENTAL REPORT
Southern Africa Australia
2004 2003 2004 2003
R 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
Stocks and receivables 1 995.2 1 813.3 211.6 189.7
Trade & other payables 3 509.5 3 000.8 462.5 394.1
SEGMENTAL REPORT (continued)
Total
2004 2003
Rm Rm
Turnover 29 276.1 26 194.2
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
Stocks and receivables 2 206.8 2 003.0
Trade & other payables 3 972.0 3 394.9
PICK "N PAY HOLDINGS LIMITED ("PIKWIK")
Share code: PWK
ISIN code: ZAE000005724
Audited results for the year ended 29 February 2004
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 R294.0 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 audited by KPMG Inc., whose unqualified audit opinion
is available for inspection at the Company"s registered office.
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 SA GAAP:
a. To comply with AC132 the Pick "n Pay Employee 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 being treated as cancelled for
the earnings per share calculations.
The prior year figures have been restated and now include the Pikwik
and Stores shares held by the Trust as treasury shares in Group
equity.
b. To comply with AC133 listed investments are now valued at market value
and the participation in export partnerships are reflected at
amortised cost 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
NOTICE OF ANNUAL GENERAL MEETINGS
The Annual General Meetings of shareholders of Pick `n Pay Stores Limited and
Pick `n Pay Holdings Limited will be held at 5th floor boardroom, Pick `n Pay
center, corner Main and Campground roads, Claremont, Cape Town on Friday, 11
June 2004 at 9h00 and 9h30, respectively. Registration for both meetings will
commence at 8h30. The full notice details of the meetings and proxy forms are
contained in the annual report which will be dispatched to all shareholders on
19 May 2004.
Cape Town
18 May 2004
Sponsor
Investec Bank
Date: 18/05/2004 01:08:18 PM Produced by the JSE SENS Department
