| Thu 3 Jun 2004, 15:27 | | REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED |
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METRO CASH & CARRY LTD - REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED
30 APRIL 2004 AND FURTHER CAUTIONARY
Metro Cash And Carry Limited
(Incorporated in the Republic of South Africa)
Registration number 1946/021315/06
JSE Share code: MTC
ISIN: ZAE000012688
* Turnover for the year totals R51.5 billion
* Australian subsidiary grows profit after tax by 25% in Australian Dollars
* Cash generated by operating activities exceeds R1.1 billion
REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 30 APRIL 2004 AND FURTHER
CAUTIONARY ANNOUNCEMENT
INCOME STATEMENT
Reviewed Audited
Year Year
ended ended
30 April 30 April
2004 2003
R`000 R`000
Revenue 51 517 132 51 787 714
Cost of sales (49 206 455) (49 637 845)
Administration, human resource
and information costs (864 948) (682 372)
1 445 729 1 467 497
Depreciation of tangible assets (213 302) (233 606)
Operating income 1 232 427 1 233 891
Interest paid (168 848) (197 264)
Income before exceptional items and taxation 1 063 579 1 036 627
Exceptional items - refer comments below (2 727) 18 046
Amortisation of goodwill (57 067) (53 624)
Income before taxation 1 003 785 1 001 049
Taxation (341 653) (328 991)
Income after taxation 662 132 672 058
Income attributable to outside shareholders (250 655) (232 378)
Income attributable to ordinary shareholders 411 477 439 680
DETERMINATION OF HEADLINE EARNINGS
Income attributable to ordinary shareholders 411 477 439 680
Loss/(Surplus) arising from allotment of
shares
by the Australian subsidiary 2 727 (63 569)
Costs relative to the aborted investment in
the Phillippines - 12 457
Carrying value of Zambian operations written off - 25 131
Amortisation of goodwill 46 660 43 001
Headline earnings 460 864 456 700
Ordinary shares in issue (000`s)
- total 1 798 154 1 738 951
- weighted average 1 788 861 1 712 015
Headline earnings per share (cents) 25.8 26.7
Attributable earnings per share (cents) 23.0 25.7
BALANCE SHEET
Reviewed Audited
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Assets
Non-current assets 2 492 211 2 133 810
Tangible assets 1 219 780 1 102 677
Intangible assets 1 058 638 857 325
Investments and loans 103 847 60 795
Deferred taxation 109 946 113 013
Current assets 8 375 563 7 203 692
Inventories 3 328 644 2 923 435
Accounts receivable 4 528 728 3 524 060
Short term loan 122 292 124 537
Bank balances and cash 395 899 631 660
Total assets 10 867 774 9 337 502
Equity and liabilities
Capital and reserves 2 090 920 1 612 067
Outside shareholders` interest 753 800 665 880
Non-current liabilities 717 725 1 162 696
Interest bearing liabilities 600 608 1 069 281
Deferred taxation 20 526 14 340
Provisions 96 591 79 075
Current liabilities 7 305 329 5 896 859
Accounts payable 6 102 708 5 144 906
Provisions 338 122 303 782
Taxation 110 487 41 447
Interest bearing liabilities 754 012 406 724
Total equity and liabilities 10 867 774 9 337 502
Capital expenditure
Expended during the period 239 412 281 434
Committed or authorised 19 118 20 999
Contingent liabilities 45 882 20 620
Net asset value per share (cents) 116.3 92.7
ABRIDGED CASH FLOW STATEMENT
Reviewed Audited
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Cash generated from operating activities 1 186 903 1 004 139
Finance costs (168 848) (197 264)
Taxation paid (265 381) (319 170)
Cash inflow from operations 752 674 487 705
Cash utilised in investing activities (503 878) (332 691)
Net cash outflow from financing activities (605 643) (226 455)
Net decrease in net cash resources (356 847) (71 441)
Net cash resources
Cash and cash equivalents 395 899 631 656
Bank borrowings (284 216) (163 126)
Net cash resources 111 683 468 530
Decrease in net cash resources (356 847) (71 441)
STATEMENT OF CHANGES IN ORDINARY
SHAREHOLDERS` EQUITY
Reviewed Audited
30 April 30 April
2004 2003
R`000 R`000
Balance at beginning of year
(as previously reported) 1 612 067 1 301 016
Prior year adjustment for unallocated shares
in share trust (AC132) - (30 178)
Prior year adjustment for accumulated surplus
in share trust (AC132) - 499
Prior year adjustment for financial instruments
(AC133) - (33 604)
Restated balance at beginning of year 1 612 067 1 237 733
Issue of ordinary shares
Odd-lot offer - (156)
Share issue expenses (3 374) (803)
Unallocated shares in share trust (83) 99
Accumulated surplus in share trust 23 37
Movements in distributable reserves
Income attributable to ordinary shareholders 411 477 439 680
Movements in non-distributable reserves
Foreign currency translation reserve 70 810 (64 523)
Balance at end of year 2 090 920 1 612 067
SEGMENTAL INFORMATION
Australia
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Sales to customers 35 783 400 36 010 305
Dividends received
Interest received
Total revenue
Segmental result 913 593 837 800
Income from associated company 3 317 1 039
Amortisation of goodwill arising on consolidation (29 492) (28 305)
Interest received
Interest paid
Exceptional items
Income before taxation
Total assets 6 544 027 5 320 035
Total liabilities 5 084 872 4 281 249
Capital expenditure 147 914 162 430
Total depreciation and amortisation 165 097 178 279
Africa
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Sales to customers 15 708 389 15 753 339
Dividends received
Interest received
Total revenue
Segmental result 315 601 386 700
Income from associated company
Amortisation of goodwill arising on consolidation (3 881) (1 625)
Interest received
Interest paid
Exceptional items
Income before taxation
Total assets 3 584 685 3 289 988
Total liabilities 2 309 867 2 140 788
Capital expenditure 91 462 117 373
Total depreciation and amortisation 77 048 80 667
Corporate
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Sales to customers
Dividends received
Interest received
Total revenue
Segmental result (10 597) (5 220)
Income from associated company
Amortisation of goodwill arising on consolidation (23 694) (23 694)
Interest received
Interest paid
Exceptional items
Income before taxation
Total assets 739 062 727 479
Total liabilities 628 315 637 515
Capital expenditure 36 1 631
Total depreciation and amortisation 28 224 28 284
Total
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
Sales to customers 51 491 789 51 763 644
Dividends received 14 830 10 498
Interest received 10 513 13 572
Total revenue 51 517 132 51 787 714
Segmental result 1 218 597 1 219 280
Income from associated company 3 317 1 039
Amortisation of goodwill arising on consolidation (57 067) (53 624)
Interest received 10 513 13 572
Interest paid (168 848) (197 264)
Exceptional items (2 727) 18 046
Income before taxation 1 003 785 1 001 049
Total assets 10 867 774 9 337 502
Total liabilities 8 023 054 7 059 552
Capital expenditure 239 412 281 434
Total depreciation and amortisation 270 369 287 230
COMMENTS
TRADING
The Group`s Australasian operations produced outstanding results for the year,
whilst those of the African and Hong Kong businesses were satisfactory in
extremely difficult circumstances.
At a trading level, the Group was confronted with various business and economic
factors and a number of significant initiatives were undertaken. The main issues
are -
* the strength of the Rand against the Australian Dollar, the U.S. Dollar and
all relevant African currencies severely affected reported turnovers and
earnings in Rands from Africa, Australia and Hong Kong, as well as the
domestic export businesses. The impact of this is illustrated by the fact
that had the rates of exchange remained the same as they were at 30 April
2003, Group turnover and profit before tax for the 2004 year would have
been approximately R3.2 billion and R72 million higher, respectively;
* the extremely low rate of inflation in South Africa with price deflation in
many major product categories;
* increased competition in mature markets in Southern Africa, resulting in
the sacrifice of margin to protect market share;
* the acquisition and `bedding down` of the 7-Eleven franchise chain in South
Africa;
* the Black Economic Empowerment initiative which commenced in October last
year; and
* the restructuring of the African operations into a single business unit and
the proposed listing thereof on the JSE Securities Exchange South Africa,
since superseded by the management buy-out of the Group`s non-Australian
assets as proposed by certain major shareholders.
Group turnover for the year totalled R51.5 billion and operating income exceeded
R1.2 billion. The Australian operations contributed 69.5% and 75.1%,
respectively, to these figures.
Earnings before exceptional items and taxation exceeded R1.06 billion and
headline earnings per share were 25.8 cents. Cash generated by operating
activities exceeded R1.1 billion and foreign borrowings were reduced by a
further A$86 million during the year.
METCASH TRADING LIMITED, AUSTRALASIA
The Australian business produced excellent results for the year, notwithstanding
continued fierce competition from the major supermarket chains. Turnover
totalled A$7.2 billion, an increase of 7.1% on the previous year. This
translates to R35.8 billion.
Earnings after taxation at A$101.7 million increased by 25.1% and cash generated
from operations increased to A$171 million. Trading results for the year have
been converted to Rands at an average rate of A$1 = R4.99 (2003 - A$1 = R5.36).
Each of the three trading divisions, IGA Distribution, Campbells Cash & Carry
and Australian Liquor Marketers, reflected strong turnover and earnings growth
for the year.
Management is confident that this business unit will continue to show
satisfactory sales and profit growth in the year ahead.
METCASH TRADING AFRICA LIMITED
This company conducts business in fourteen countries, namely, South Africa,
Lesotho, Namibia, Swaziland, Angola, Botswana, Hong Kong, Israel, Kenya,
Madagascar, Malawi, Mozambique, Uganda and Zimbabwe.
This trading unit had an extremely difficult year as consumer demand in the
Group`s business arena in Southern African markets continued to soften. The
effect of this was exacerbated by the lowest domestic inflation rate experienced
for many years, with deflation in certain major product categories. Margins were
generally under pressure as a result of the fierce competition for market share
and export opportunities became scarcer as the Rand continued to strengthen
against all major currencies.
Turnover was flat year on year and totalled R15.7 billion. Attributable income
at R160 million was 3.6% above that of the previous year. Cash generated by
operating activities exceeded R200 million for the year. Results from Zimbabwe
are only included to the extent of dividends received.
PROPOSED MANAGEMENT BUY-OUT OF METCASH TRADING AFRICA LIMITED AND FURTHER
CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the announcement made on 5 May 2004 wherein it was
advised that, at the initiative of the company`s two major shareholders, namely,
RMB Asset Management and Stanlib Asset Management, a consortium of Metro
management, the Black Empowerment Consortium and associates, led by Carlos dos
Santos and Hilton Mer (`the consortium`), had agreed to acquire from the company
the entire issued share capitals of, and all claims on loan account against, all
the subsidiaries conducting the business of the Group, save for the company`s
61% shareholding in Metcash Trading Limited Australia and the syndicated loan of
AU$119 million arising from the acquisition thereof (`the transaction`).
The cash consideration payable by the consortium to the company in respect of
the transaction is R1.3 billion which, after deduction of costs and taxes, will
be distributed to shareholders in the most efficient manner.
Further announcements as to progress will be made in due course and, in the
interim, shareholders are advised to continue 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, save for the
matter set out below, the accounting policies are consistent with those applied
in the last annual report.
In accordance with the Listings Requirements of the JSE Securities Exchange
South Africa, the company`s share incentive trusts have been consolidated and
the relative comparative figures restated as necessary. This process has had no
effect on the income statement, but has affected the number of shares in issue
and the weighted average thereof, for purposes of the computation of net asset
value and earnings per share respectively.
EXCEPTIONAL ITEMS
Audited Audited
Year ended Year ended
30 April 30 April
2004 2003
R`000 R`000
(Loss)/Surplus arising from allotment
of shares by the Australian subsidiary (2 727) 63 569
Costs relative to the aborted investment in the
Philippines - (20 392)
Carrying value of Zambian operations written off - (25 131)
(2 727) 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$86 million (R429 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. R89 million in terms of a formal sale and
leaseback 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
R754 million, being the current portion of syndicated and securitised loans
(A$33 million and A$45 million respectively), 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 1 788 861 658 shares (2003 - 1 712 014 947 shares),
being the weighted average number of shares in issue during the year under
review, after taking cognisance of the consolidation of the share incentive
trusts.
DIVIDENDS
Upon the successful conclusion of the proposed management buy-out of Metcash
Trading Africa Limited referred to above, a distribution in the most efficient
manner will be made to shareholders estimated at approximately 61 cents per
share after the deduction of expenses and taxation.
AUDIT REVIEW
The information set out above has been reviewed, but not audited, 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
3 June 2004
DIRECTORATE AND ADMINISTRATION
Directors:
Dr F van Zyl Slabbert (Chairman)*, C S dos Santos (Chief executive),
J L Grainger, D Kashuv (Israeli)*, B Joseph, J R McAlpine*, H Mer,
G H Pieterse*, A Reitzer, G B Rubenstein*, V D Rubin, S O Shonhiwa*,
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 Investor Services 2004 (Pty) 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)
03 June 2004
Date: 03/06/2004 11:34:14 AM Produced by the JSE SENS Department
