| Tue 19 Apr 2005, 9:38 | | Pick n Pay Stores Limited / Pick n Pay Holdings Li |
|
Pick n Pay Stores Limited / Pick n Pay Holdings Limited - Reviewed Group
Release Date: 19/04/2005 08:30:01 Code(s): PIK PWK
Pick `N Pay Stores Limited / Pick `N Pay Holdings Limited - Reviewed Group
Result For The Year Ended 28 February 2005
PICK `n PAY STORES LIMITED
Incorporated in the Republic of South Africa
(Registration number: 1968/008034/06)
Share code: PIK
ISIN code: ZAE000005443
PICK `n PAY HOLDINGS LIMITED (`PIKWIK`)
Incorporated in the Republic of South Africa
(Registration number: 1981/009610/06)
Share Code: PWK
ISIN code: ZAE000005724
REVIEWED GROUP RESULT FOR THE YEAR ENDED 28 FEBRUARY 2005
TRADING PROFIT 24.1%
OPERATINGPROFIT 21.7%
HEADLINE EARNINGS PER SHARE 20.6%
FINALDIVIDEND PER SHARE 20.8%
REVIEW OF OPERATIONS
GROUP OVERVIEW
We are very pleased to present these results, given the low inflation
environment we are operating in. Lower selling prices have driven volumes which,
with further enhancements in operational efficiencies, has resulted in an
increase in operating profit margin from 2.8% to 3.2% over last year.
The result, being an increase in headline EPS of 20.6%, has enabled us to
increase our final dividend by 20.8%, which equates to a 20.6% increase in total
dividend for the year.
Group turnover increased by 8.9%. Before the effect of the sale of Boardmans and
the continued strengthening of the Rand against the Australian Dollar, turnover
increased by 10.5%. Against a backdrop of low inflation and deflation in Score
and Boxer, we are pleased to have again achieved significant levels of real
growth.
The increase in trading profit and operating profit (including interest
received) of 24.1% and 21.7% respectively, is particularly pleasing and reflects
the continued efficiencies being achieved throughout the Group.
PICK `n PAY RETAIL DIVISION
This division continues to be the driving force behind the Pick `n Pay Group and
predominant contributor to Group profitability, with consistently good results
across all divisions.
Supermarkets showed good growth in turnover and continued to make a significant
profit contribution to the Group. During the year 14 new Corporate stores were
opened, with a further 9 new Corporate stores planned for the year ahead.
Hypermarkets showed real growth in turnover and a substantial increase to Group
profitability, mainly as a result of operating efficiencies. Our focus is on
building top line sales growth in this format.
The Family store brand showed strong growth in turnover and continues to make a
significant contribution to Group profitability. During the year we opened 10
stores and we plan to open a further 10 new stores next year.
GROUP ENTERPRISES
Score showed good growth in turnover with even greater increases in volumes
fuelled by continued deflation. The restructure in the Western Cape and Eastern
Cape regions completed in August 2004, allows Score management to concentrate on
the predominantly strong areas of the Score brand, in the Northern and Central
regions of the country.
12 new stores were opened during the year and refurbishments in a number of
existing stores were also completed.
Management have made great strides with expense savings and extracting further
operational efficiencies. There is a renewed focus on driving top line sales
which, together with the cost savings that continue to be made, puts Score well
on the way to returning to profitability in the year ahead.
Boxer Superstores had a very good trading year with commendable increases in
both turnover and profitability. They achieved particularly good growth in
service areas. In addition to the Score stores taken over in the Eastern Cape,
Boxer opened 6 new stores with a further 6 planned for next year.
Pick `n Pay Go Banking - this initiative, in partnership with Nedcor, has
continued to grow its account base and funds on deposit. Enhancing the range and
utility of our banking products will add to the growth of this service.
TM Supermarkets in Zimbabwe continues to trade well. Turnover increases are
above the very high levels of inflation, although in the last six months
management have had to deal with huge reductions in inflation.
FRANKLINS AUSTRALIA
Turnover for the year at A$841.1 million is 2.0% below last year, which is
largely accounted for by the fact that New South Wales is still experiencing
food deflation in many categories and that we did not open any new stores this
year.
We have now completed the establishment of our own channels of distribution.
This step is the most significant since purchasing Franklins almost 4 years ago.
As a result of these projects, transitional costs pushed the trading loss before
goodwill to A$12.8 million for the year versus A$8.2 million last year. The bulk
of these additional costs were anticipated at the beginning of the year and are
in line with budget.
Now that we have a self-managed distribution platform from which to operate we
will be launching our franchising business in the year ahead which, together
with the opening of a further 3 stores, will ensure the business incurs
significantly reduced losses in the year ahead.
GENERAL COMMENT AND PROSPECTS
We are really pleased with these results which show real growth in profitability
in a low inflation environment. We do not foresee material changes to the
current inflation levels. With the various initiatives we have in place in each
business unit for the year ahead, we are confident that we will be able to
produce another year of good growth.
For and on behalf of the Board
Raymond Ackerman Sean Summers
Chairman Chief Executive Officer
18 April 2005
PICK `n PAY STORES LIMITED - Share code: PIK ISIN code: ZAE000005443
INCOME STATEMENT
Reviewed Audited
2005 Growth 2004
Rm % Rm
Revenue (note 2) 33 175.5 30 448.3
Turnover 31 885.0 8.9 29 276.1
Cost of merchandise sold (26 597.5) (24 420.4)
Gross profit 5 287.5 4 855.7
Other income 1 203.0 1 076.1
Trading expenses (5 521.6) (5 142.8)
Goodwill amortisation (35.3) (36.8)
Trading profit 933.6 24.1 752.2
Interest received 81.4 81.9
Operating profit 1 015.0 21.7 834.1
Interest paid (32.9) (46.6)
Dividends received 6.1 14.2
Exceptional items 21.6 -
Profit before tax 1 009.8 801.7
Tax (360.2) (286.0)
Net profit for the year 649.6 515.7
Trading profit margin 2.9% 2.6%
Operating profit margin 3.2% 2.8%
Per share - cents
Headline earnings 141.54 20.6 117.38
Earnings 138.60 109.55
Fully diluted headline earnings 134.51 111.64
Fully diluted earnings 131.74 104.26
Interim dividend - No. 73 paid 19.80 16.50
Final dividend - No. 74 payable 76.70 20.8 63.50
Total 96.50 80.00
Dividend cover 1.47 1.47
Headline earnings reconciliation
Net profit for the year 649.6 515.7
Goodwill amortisation 35.3 36.8
Exceptional items (21.6) -
Profit on sale of Boardmans (24.0)
Profit on sale of property (1.4)
Loss on sale of fixed assets 3.8
Headline earnings 663.3 20.1 552.5
BALANCE SHEET
Reviewed Audited
2005 2004
Rm Rm
Assets
Non-current assets
Goodwill 656.4 745.1
Property 251.6 182.3
Equipment and vehicles 1 158.9 1 045.4
Investments 8.6 7.7
Loans 95.8 89.6
Participation in export partnerships 102.7 127.6
Deferred tax 129.9 99.2
2 403.9 2 296.9
Current assets
Inventory 1 878.8 1 578.7
Trade and other receivables 634.5 628.1
Cash and cash equivalents 1 329.0 1 502.5
3 842.3 3 709.3
Total assets 6 246.2 6 006.2
Equity and liabilities
Total shareholders` equity 1 078.8 1 132.4
Non-current liabilities
Interest-bearing debt 178.6 188.2
Retirement scheme obligations 189.8 145.0
Deferred tax 67.0 133.9
435.4 467.1
Current liabilities
Interest-bearing debt 56.6 159.9
Trade and other payables 4 282.3 3 972.0
Tax 393.1 274.8
4 732.0 4 406.7
Total equity and liabilities 6 246.2 6 006.2
Shares in issue - millions 486.1 483.4
Weighted average shares in issue
- millions 468.7 470.7
Net asset value - cents per share
(property value based on directors`
valuation) 289.7 285.9
CASH FLOW STATEMENT
Reviewed Audited
2005 2004
Rm Rm
Trading profit 933.6 752.2
Depreciation 304.7 283.1
Goodwill amortisation 35.3 36.8
Trade and other payables 365.9 592.0
Inventory (345.5) (71.4)
Trade and other receivables 15.7 (125.1)
Exchange rate effect on working capital (22.2) (19.8)
Cash generated by trading activities 1 287.5 1 447.8
Interest received 81.4 81.9
Cash generated by operations 1 368.9 1 529.7
Interest paid (32.9) (46.6)
Dividends received 6.1 14.2
Dividends paid (381.6) (316.7)
Tax paid (341.2) (283.5)
Net cash inflow from operating activities 619.3 897.1
Property (73.7) (74.2)
Equipment and vehicles (446.3) (434.4)
Investments realised - 175.3
Loans (6.7) 7.9
Proceeds from sale of Boardmans (note 5) 78.1 -
Net cash outflow from investing activities (448.6) (325.4)
Interest-bearing debt repaid (112.9) (87.9)
Issue of new shares (note 3) 12.2 -
Share repurchases (267.3) (38.0)
Take-up of share options from share trust 23.8 21.1
Net cash outflow from financing activities (344.2) (104.8)
Net (decrease)/increase in cash and cash
equivalents (173.5) 466.9
Cash and cash equivalents at 1 March 1 502.5 1 035.6
Cash and cash equivalents at 28 February 1 329.0 1 502.5
STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
2005 2004
Rm Rm
Capital and reserves at 1 March 1 132.4 924.8
Net profit for the year 649.6 515.7
Dividends paid (381.6) (316.7)
Issue of new shares (note 3) 12.2 -
Share repurchases (267.3) (38.0)
Take-up of share options from share trust 23.8 21.1
Revaluation of investments 0.9 1.6
Foreign currency translation (91.2) 23.9
Capital and reserves at 28 February 1 078.8 1 132.4
SEGMENTAL REPORT
Southern Africa Australia Total
Reviewed Audited Reviewed Audited Reviewed Audited
Feb 2005 Feb 2004 Feb 2005 Feb 2004 Feb 2005 Feb 2004
Rm Rm Rm Rm Rm Rm
Turnover 27 989.2 25 068.6 3 895.8 4 207.5 31 885.0 29 276.1
- Australian
dollars 841.1 858.3
Trading profit/
(loss) before
goodwill
amortisation 1 028.4 829.5 (59.5) (40.5) 968.9 789.0
- Australian
dollars (12.8) (8.2)
Goodwill
amortisation (9.5) (9.5) (25.8) (27.3) (35.3) (36.8)
Exceptional
items 21.6 - - - 21.6 -
Depreciation,
included in
trading
profit/(loss) (267.9) (248.1) (36.8) (35.0) (304.7) (283.1)
Goodwill 161.7 171.2 494.7 573.9 656.4 745.1
Property,
equipment
and vehicles 1 203.5 1 021.0 207.0 206.7 1 410.5 1 227.7
Inventory and
receivables 2 140.1 1 995.2 373.2 211.6 2 513.3 2 206.8
Trade and other
payables 3 759.6 3 509.5 522.7 462.5 4 282.3 3 972.0
NOTES TO THE FINANCIAL INFORMATION
1. Accounting policies comply with South African Statements of Generally
Accepted Accounting Practice and 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. During the year Pick `n Pay Stores Limited issued 2 690 000 shares pursuant
to the take-up of share options under the 1997 share option scheme.
4. Treasury shares held by the Group are treated as cancelled for the weighted
average number of shares calculation.
5. Effective 1 April 2004 the Boardmans Division was sold for net asset value
plus goodwill of R26 million. The profit on sale is the amount received for
goodwill after transaction costs.
6. The South African Revenue Service has concluded an agreement with the
managing partner and its export partners regarding the tax treatment of a group
company`s participation in export partnerships. This agreement has no material
effect on the current or future earnings.
PICK `n PAY HOLDINGS LIMITED (`PIKWIK`)
RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2005
Share Code: PWK ISIN code: ZAE000005724
Pikwik`s only asset is its 52.9% (2004: 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 R351.2 million (2004:
R294.1 million).
Headline earnings per share, calculated using the weighted average number of
shares in issue during the year of 501.1 million (2004: 496.2 million), is 70.08
cents (2004: 59.28 cents). Pikwik`s final dividend per share is 37.43 cents
(2004: 31.00 cents), bringing the total dividend per share for the year to 47.10
cents (2004: 39.05 cents).
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick `n Pay Stores Limited (No. 74) 76.70 cents per share
Pick `n Pay Holdings Limited (No. 47) 37.43 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 3 June 2005.
The shares will trade EX dividend from the commencement of business on Monday, 6
June 2005 and the record date will be Friday, 10 June 2005.
The dividends will be paid on Monday, 13 June 2005.
Share certificates may not be dematerialised or rematerialised between Monday, 6
June 2005 and Friday, 10 June 2005, both dates inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary 18 April 2005
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
