| Tue 18 Oct 2005, 9:37 | | Pikwik / Pick "n Pay - Unaudited results for the s |
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PIK PWK
PIK PWK
Pikwik / Pick "n Pay - Unaudited results for the six months ended 31 August 2005
Pick `n Pay Holdings Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1981/009610/06)
Share code: PWK & ISIN: ZAE000005724
("Pikwik")
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")
UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2005
- TURNOVER up 10.7%
- TRADING PROFIT up12.8%
- HEADLINE EARNINGS PER SHARE up 16.7%
- INTERIM DIVIDEND PER SHARE up 17.7%
- REVIEW OF OPERATIONS
- GROUP OVERVIEW
We are pleased with these interim results given the tough trading environment in
the last six months with continued low inflation, the industrial action in Pick
"n Pay and the challenges we faced in Australia in perfecting our own
distribution channels.
For the first time the Pick "n Pay Group is reporting under International
Financial Reporting Standards ("IFRS") and we draw your attention to the
separate section of this announcement outlining the changes we have made to our
accounting policies.
Group Turnover at R16.9 billion shows good growth of 10.7% which is well above
the low levels of inflation. The turnover increase in the Southern Africa
segment of 12.4% is particularly encouraging.
Headline Earnings per Share at 55.31 cents has increased by 16.7%, which is
above the 14.4% increase in headline earnings, as a result of the concentration
effect of share repurchases.
PICK "n PAY RETAIL
Management did a commendable job in minimising the effect of the industrial
action and were still able to show good real growth in turnover and
profitability.
Supermarkets - showed good growth in turnover and profit contribution. Two new
stores, Eden Meadow in Edenvale and Cape Gate City in Cape Town, were opened
during the period. In the remaining six months of the year a further six new
corporate stores are scheduled to open.
Hypermarkets - it is in this division that the labour issues had the most impact
on turnover. However, due to expense control, the division still managed to
produce a good increase in profit contribution.
Franchise - this division continues to make a significant profit contribution,
with five new stores opening during the period and 20 confirmed for the next 18
months.
Clothing Stores - during the period, three new stores were opened and we have
confirmed a further six new stores for the remaining six months of the year.
GROUP ENTERPRISES
Score Supermarkets - Score had an outstanding six months trading period, showing
good real growth in turnover and a substantial reduction in the losses incurred
over the same period last year. This improvement is the result of reducing gross
margins to become even more competitive (which has led to increased volumes) and
via cost reductions. Score is now operating far more efficiently and is well on
its way to profitability for the year ended February 2006.
Boxer Superstores - Boxer had an excellent trading period showing significant
increases in both turnover and profit contribution. Boxer opened one new store
during the period and three further stores will open in the remaining six months
of the year.
TM Supermarkets - continues to trade well increasing its turnover and
profitability above the very high levels of inflation experienced in Zimbabwe.
In accordance with our conversion to IFRS we now equity account our share of
after tax profits which amounts to R14.6 million for this period versus R4.1
million last year.
Franklins Australia
Turnover for the period at AUD404.8 million is 5.1% down on last year, mainly as
a consequence of fierce competition and the lost sales during the first few
months of the period when the business was switching to its own channels of
distribution.
The implementation of the SAP software system has gone very well.
The process of switching to our own distribution channels was more difficult
than originally anticipated and as a consequence we incurred exceptional once-
off expenditure in the current six-month period. We are pleased to report that
service levels from the distribution centres are now consistently in excess of
94%.
In the six months ahead: we expect significantly reduced losses; will be
converting one or two corporate stores to Franchise stores to perfect our
Franchise model; and will be opening one new corporate store. We also have four
new corporate stores confirmed for the 2007 financial year.
GENERAL COMMENT AND PROSPECTS
Given the significant issues we had to contend with in the current six-month
period, we are pleased with these interim results. For the remainder of the
financial year, we have some exciting new store openings in Pick "n Pay Retail,
our focus in Australia will be launching Franchising, and in Score on ensuring
we stay on course to profitability.
For and on behalf of the Board
Raymond Ackerman Sean Summers
Chairman Chief Executive Officer
17 October 2005
INCOME STATEMENT
Audited
Six months ended Year to
Aug 2005 Growth Aug 2004 Feb 2005
Rm % Rm Rm
Revenue (note 2) 17 450.0 15 738.3 32 915.7
Turnover 16 880.8 10.7 15 245.8 31 885.0
Cost of merchandise
sold (14 013.9) (12 652.8) (26 447.6)
Gross profit 2 866.9 2 593.0 5 437.4
Other income 534.7 447.8 949.3
Trading expenses (3 024.3) (2 706.2) (5 491.1)
Trading profit 377.3 12.8 334.6 895.6
Interest received 34.5 44.7 81.4
Operating profit 411.8 379.3 977.0
Interest paid (21.8) (20.8) (32.9)
Share of associate"s
profit 14.6 4.1 14.6
Exceptional items (6.8) 24.0 21.6
Profit before tax 397.8 386.6 980.3
Tax (149.1) (139.3) (346.2)
Net profit for the
period 248.7 247.3 634.1
Trading profit margin 2.2% 2.2% 2.8%
Operating profit margin 2.4% 2.5% 3.1%
Per share - cents
Headline earnings 55.31 16.7 47.41 130.70
Earnings 53.84 52.51 135.30
Diluted headline
earnings 52.36 45.32 124.29
Diluted earnings 50.98 50.15 128.63
Interim dividend -
No. 75 23.30 17.7 19.80
Headline earnings
reconciliation
Net profit for
the period 248.7 247.3 634.1
Exceptional items 6.8 (24.0) (21.6)
Loss on sale of fixed
assets 6.8 - 3.8
Profit on sale of
Boardmans - (24.0) (24.0)
Profit on sale of
property - - (1.4)
Headline earnings 255.5 14.4 223.3 612.5
BALANCE SHEET
Audited
Aug 2005 Aug 2004 Feb 2005
Rm Rm Rm
Assets
Non-current assets
Goodwill 723.3 702.0 691.7
Property 336.4 212.1 251.6
Equipment and vehicles 1 251.9 1 093.9 1 158.9
Investments 5.0 2.9 3.7
Investment in associate 38.2 16.6 23.6
Loans 94.7 88.2 95.8
Operating lease assets 4.3 3.0 3.7
Participation in export
partnerships 98.6 124.8 102.7
Deferred tax 295.6 124.6 205.5
2 848.0 2 368.1 2 537.2
Current assets
Inventory 1 960.7 1 550.8 1 858.6
Trade and other receivables 701.3 551.0 634.5
Cash and cash equivalents 1 100.2 1 431.9 1 329.0
3 762.2 3 533.7 3 822.1
Total assets 6 610.2 5 901.8 6 359.3
Equity and liabilities
Total shareholders" equity 641.1 688.6 772.4
Non-current liabilities
Interest-bearing debt 176.9 184.2 178.6
Retirement scheme obligations 207.8 170.0 189.8
Operating lease obligations 515.5 460.4 490.9
900.2 814.6 859.3
Current liabilities
Interest-bearing debt 109.5 35.8 56.6
Trade and other payables 4 649.6 4 037.0 4 282.3
Tax 309.8 325.8 388.7
5 068.9 4 398.6 4 727.6
Total equity and liabilities 6 610.2 5 901.8 6 359.3
Shares in issue - millions 486.1 486.1 486.1
Weighted average shares
in issue - millions 462.0 471.0 468.7
Net asset value - cents per
share (property value based on
directors" valuation) 197.1 191.8 223.6
CASH FLOW STATEMENT
Audited
Six months ended Year to
Aug 2005 Aug 2004 Feb 2005
Rm Rm Rm
Trading profit 377.3 334.6 895.6
Depreciation 175.9 148.0 304.7
Share based payments expense 8.1 4.7 10.0
Net operating lease obligations 24.0 28.9 58.9
Trade and other payables 380.5 100.8 365.9
Inventory (102.1) (33.2) (341.1)
Trade and other receivables (62.6) 79.2 15.7
Exchange rate effect on working
capital (3.9) (16.2) (22.2)
Cash generated by trading
activities 797.2 646.8 1 287.5
Interest received 34.5 44.7 81.4
Cash generated by operations 831.7 691.5 1 368.9
Interest paid (21.8) (20.8) (32.9)
Dividend received from associate - 2.5 6.1
Dividends paid (347.1) (292.3) (381.6)
Tax paid (318.1) (114.5) (341.2)
Net cash inflow from operating
activities 144.7 266.4 619.3
Property (87.6) (32.4) (73.7)
Equipment and vehicles (257.9) (218.7) (446.3)
Loans repaid/(advanced) 1.1 1.4 (6.7)
Proceeds from sale of Boardmans - 78.1 78.1
Net cash outflow from investing
activities (344.4) (171.6) (448.6)
Interest-bearing debt
raised/(repaid) 51.2 (128.2) (112.9)
Issue of new shares - 12.2 12.2
Share repurchases (90.6) (67.5) (267.3)
Take-up of share options from
share trust 10.3 18.1 23.8
Net cash outflow from financing
activities (29.1) (165.4) (344.2)
Net decrease in cash and cash
equivalents (228.8) (70.6) (173.5)
Cash and cash equivalents
at 1 March 1 329.0 1 502.5 1 502.5
Cash and cash equivalents at
31 August/28 February 1 100.2 1 431.9 1 329.0
STATEMENT OF CHANGES IN EQUITY
Audited
Year to
Aug 2005 Aug 2004 Feb 2005
Rm Rm Rm
Total shareholders" equity
at 1 March - as previously
reported 1 132.4 1 132.4
IFRS adjustments
(refer IFRS disclosure)
Operating leases (299.9) (299.9)
Inventory valuation (11.0) (11.0)
Investment in associate 10.0 10.0
Total shareholders" equity at
1 March - as re-stated 772.4 831.5 831.5
Net profit for the period -
as re-stated 248.7 247.3 634.1
Net profit for the period -
as previously reported 253.0 649.6
IFRS adjustments
(refer IFRS disclosure)
Operating leases (20.3) (46.2)
Inventory valuation (0.1) (3.2)
Investment in associate 1.6 8.6
Share based payments (4.7) (10.0)
Goodwill amortisation 17.8 35.3
Dividends paid (347.1) (292.3) (381.6)
Issue of new shares - 12.2 12.2
Share repurchases (90.6) (67.5) (267.3)
Take-up of share options from
share trust 10.3 18.1 23.8
Share based payments reserve 8.1 4.7 10.0
Revaluation of investments 1.3 0.2 0.9
Foreign currency translation 38.0 (65.6) (91.2)
Total shareholders" equity at
31 August/28 February 641.1 688.6 772.4
SEGMENTAL REPORT
Southern Africa Australia
Aug 2005 Aug 2004 Aug 2005 Aug 2004
Rm Rm Rm Rm
Turnover 14 887.6 13 248.0 1 993.2 1 997.8
- Australian dollars 404.8 426.5
Trading profit/(loss) 440.8 366.6 (63.5) (32.0)
- Australian dollars (13.0) (6.7)
Exceptional items (6.8) 24.0 - -
Depreciation,
included
in trading
profit/(loss) (149.5) (129.1) (26.4) (18.9)
Goodwill 171.3 171.3 552.0 530.7
Property, equipment
and vehicles 1 337.8 1 101.2 250.5 204.8
Total current assets
(excluding cash and cash equivalents) 2 247.9 1 908.5 414.1
193.3
Total current
liabilities
(excluding debt) 4 463.7 4 061.9 495.7 300.9
SEGMENTAL REPORT (continued)
Total
Aug 2005 Aug 2004
Rm Rm
Turnover 16 880.8 15 245.8
- Australian dollars
Trading profit/(loss) 377.3 334.6
- Australian dollars
Exceptional items (6.8) 24.0
Depreciation, included
in trading profit/(loss) (175.9) (148.0)
Goodwill 723.3 702.0
Property, equipment
and vehicles 1 588.3 1 306.0
Total current assets
(excluding cash and
cash equivalents) 2 662.0 2 101.8
Total current liabilities
(excluding debt) 4 959.4 4 362.8
NOTES TO THE FINANCIAL INFORMATION
1 The Group has changed its accounting policies to comply with International
Financial Reporting Standards ("IFRS") effective 1 March 2004. All
comparative information has been adjusted accordingly. Refer to the
separate IFRS disclosure for further information.
2 Revenue comprises turnover, other income and interest received.
3 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.
Compliance with International Financial Reporting Standards ("IFRS")
In order to comply with IFRS the Group has adopted the following accounting
policies. All comparative information has been adjusted to comply with these new
accounting policies.
1 Operating leases with fixed rental escalations are now charged to the
income statement on a straight line basis as opposed to a cash basis in
previous years. This has necessitated the raising of a provision for lease
expenses and an asset for lease income on the balance sheet. This provision
and asset will be reversed during the latter part of each lease term when
the actual cash flow exceeds the income statement charge.
2 The valuation of inventory now takes account of normal cash discounts which
has the effect of reducing the inventory valuation at the reporting date.
3 As the Group holds a 25% interest in TM Supermarkets in Zimbabwe we now
recognise our share of after tax profits per the equity accounting method.
Previously, we only accounted for dividends actually received.
4 Share options (share based payments) granted to employees after November
2002 are valued using a binomial valuation model and this value is charged
to the income statement over the expected life of the option.
5 Goodwill is no longer amortised and is now stated at its carrying value as
at 1 March 2004. This carrying value is reviewed annually for impairment.
6 We have changed various income statement classifications to allow for the
above changes and also to comply with IFRS classifications.
Pikwik"s only asset is its 52.94% (2004: 52.94%) investment in Pick "n Pay
Stores Limited. The Pikwik Group earnings are directly related to those of this
investment. Headline earnings for the period amount to R135.3 million (2004:
R118.2 million).
Headline earnings per share, calculated using the weighted average number of
shares in issue during the period of 504.5 million (2004: 500.5 million), is
26.81 cents (2004: 23.61 cents). Pikwik"s interim dividend per share is 11.37
cents (2004: 9.67 cents).
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick "n Pay Stores Limited (No. 75) 23.30 cents per share
Pick "n Pay Holdings Limited (No. 48) 11.37 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 2 December 2005.
The shares will trade EX dividend from the commencement of business on Monday, 5
December 2005 and the record date will be Friday, 9 December 2005.
The dividends will be paid on Monday, 12 December 2005.
Share certificates may not be dematerialised or rematerialised between Monday, 5
December 2005 and Friday, 9 December 2005, both dates inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary
17 October 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
Date: 18/10/2005 08:00:39 AM Produced by the JSE SENS Department
