| Tue 17 Oct 2006, 8:17 | | Pick "n Pay - Unaudited Interim Group Results For |
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Pick "n Pay - Unaudited Interim Group Results For The Six Months Ended 31
August 2006
Pick `N Pay Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1981/009610/06)
Share code: PWK
ISIN code: ZAE000005724
("the Company")
UNAUDITED INTERIM GROUP RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006
Turnover up 10.3%
Trading profit up 23.1%
Headline earnings per share up 15.5%
Interim dividend per share up 15.9%
Review of operations
Group overview
We are pleased to report that the Group has achieved a 15.5% increase in
headline earnings per share for the 6 months ended 31 August 2006. This
has been achieved through a 10.3% increase in turnover and a 23.1%
increase in trading profit. Our continual strive for operational
efficiencies has led to an increase in trading profit margin from 2.2% to
2.5% for the period.
In light of the above result, we have increased our interim dividend by
15.9%.
Pick "n Pay Retail
The Retail division had a strong 6 month period showing real growth in
turnover and increased its profit contribution through improved operating
efficiencies during the half year.
Supermarkets - during the period 4 new corporate stores were opened with
a further 6 new stores due to open in the second half of the financial
year. We already have 4 new supermarkets being built for completion in
the 2008 financial year with extensive redevelopments of the Benmore
Gardens and Claremont supermarkets also planned for next year.
We continue to expand our successful Family Franchise format opening 4
new stores in the current period with a further 7 new stores due to open
in the second half of the year. This division continues to play an
important role in the expansion of the Pick "n Pay Brand.
Hypermarkets - the opening of 2 brand new hypermarkets in Zambezi Road,
Montana and on Old Pretoria Road Centurion, in the second half of the
financial year will provide momentum for growth in this store format.
Group Enterprises
At the lower levels of the LSM market, both Score and Boxer had to
contend with difficult trading conditions during the first three months
of this period.
After persistent deflation experienced in this market over the last 3
years the trend has moved to positive inflation.
Boxer Superstores - opened 2 new stores in the period and intend opening
a further 5 stores in the remaining half of the financial year.
Score Supermarkets - with the increasing number of conversions to the
Nambawane format we are now starting to reap the benefit. A further 6
stores were converted in the current 6 month period with this process
being accelerated in the second half of the year with a further 28
conversions. In addition, Score opened 1 new store this period with a
further 5 new store openings planned for the remainder of the financial
year.
During the period we acquired 100% of the business of Fruit & Veg City,
which purchase is still subject to certain suspensive conditions,
including Competition Commission approval and completion of our due
diligence review.
Franklins Australia
Turnover for the period at R2.0 billion was on par with last year. As a
result of improved gross margins and the containment of expenses,
Franklins were able to decrease their loss for the period from R63.5
million to R29.0 million.
During the period we opened our first two franchise stores, one a
conversion from a corporate store, and the other conversion from another
franchising brand. To date we are very pleased with the sales growth
shown since conversion and feedback from operators on the support given
by Franklins is very encouraging.
In the second half of the financial year, we have various other franchise
conversions planned in addition to 2 new corporate store openings. A
further 4 corporate stores have already been confirmed to open during the
2008 financial year. These new store openings, together with the
expansion of our franchise business, will give the momentum needed to
improve the overall performance of this business.
General comment and prospects
We remain confident of being able to achieve real growth in headline
earnings per share for the year.
For and on behalf of the Board
Raymond Ackerman Sean Summers
Chairman Chief Executive Officer
16 October 2006
PICK "n PAY STORES LIMITED
Share code: PIK
ISIN code: ZAE000005443
INCOME STATEMENT
Audited
Six months ended Year to
Aug 2006 Growth Aug 2005 Feb 2006
Rm % Rm Rm
Revenue (note 3) 19 487.0 17 700.1 36 784.6
Turnover 18 617.3 10.3 16 880.8 35 078.4
Cost of merchandise sold (15 429.9) (14 055.1) (29 060.1)
Gross profit 3 187.4 2 825.7 6 018.3
Other trading income 849.9 784.8 1 649.3
Trading expenses (3 584.2) (3 233.2) (6 620.2)
Profit on sale of
investment 7.8 - -
Loss on sale of property,
equipment and vehicles (4.7) (6.8) (2.5)
Trading profit 456.2 23.1 370.5 1 044.9
Interest received 19.8 34.5 56.7
Operating profit 476.0 17.5 405.0 1 101.6
Interest paid (27.1) (21.8) (37.6)
Dividends received - - 0.2
Share of associate"s
profit 24.1 14.6 23.4
Profit before tax 473.0 397.8 1 087.6
Tax (178.3) (149.1) (384.5)
Profit for the period 294.7 18.5 248.7 703.1
Trading profit margin 2.5% 2.2% 3.0%
Operating profit margin 2.6% 2.4% 3.1%
Per share - cents
Basic earnings 64.53 53.84 152.49
Diluted basic earnings 60.96 50.98 144.42
Interim dividend - No. 77 27.00 15.9 23.30
Headline earnings
reconciliation
Profit for the period 294.7 248.7 703.1
Profit on sale of
investment (7.8) - -
Loss on sale of property,
equipment and vehicles 4.7 6.8 2.5
Headline earnings 291.6 14.1 255.5 705.6
Per share - cents
Headline earnings 63.86 15.5 55.31 153.02
Diluted headline
earnings 60.32 52.36 144.92
BALANCE SHEET
Audited
Aug 2006 Aug 2005 Feb 2006
Rm Rm Rm
Assets
Non-current assets
Goodwill 726.0 665.8 634.9
Intangible assets 140.6 78.8 110.9
Property, equipment and vehicles 2 123.2 1 540.9 1 873.7
Investments 0.6 5.0 9.3
Investment in associate 71.1 38.2 47.0
Loans 83.9 94.7 96.7
Operating lease asset 5.3 4.3 4.8
Participation in export
partnerships 69.4 98.6 71.8
Deferred tax 218.7 299.7 238.3
3 438.8 2 826.0 3 087.4
Current assets
Inventory 2 156.6 1 960.7 1 984.2
Trade and other receivables 875.3 701.3 750.7
Tax 3.6 - -
Cash and cash equivalents 540.9 1 100.2 944.6
3 576.4 3 762.2 3 679.5
Total assets 7 015.2 6 588.2 6 766.9
Equity and liabilities
Total equity 684.5 573.1 854.9
Non-current liabilities
Long-term debt 189.1 202.0 192.9
Retirement scheme obligations 182.8 207.8 194.8
Operating lease liability 575.4 530.1 554.4
947.3 939.9 942.1
Current liabilities
Short-term debt 48.6 115.8 79.5
Trade and other payables 5 334.8 4 649.6 4 654.1
Tax - 309.8 236.3
5 383.4 5 075.2 4 969.9
Total equity and liabilities 7 015.2 6 588.2 6 766.9
Shares in issue - millions 486.1 486.1 486.1
Weighted average shares
in issue - millions 456.7 462.0 461.1
Net asset value - cents per
share (property value based
on directors" valuation) 223.7 182.4 257.9
CASH FLOW STATEMENT
Audited
Six months ended Year to
Aug 2006 Aug 2005 Feb 2006
Rm Rm Rm
Trading profit 456.2 370.5 1 044.9
Profit on sale of investment (7.8) - -
Loss on sale of property, equipment
and vehicles 4.7 6.8 2.5
Depreciation and amortisation 187.0 175.9 325.4
Share options expense 14.3 8.1 22.4
Net operating lease obligations 20.5 24.0 47.8
Increase in trade and other
payables 655.1 380.5 377.9
Increase in inventory (172.4) (102.1) (125.6)
Increase in trade and other
receivables (122.3) (62.6) (85.2)
Cash generated by trading
activities 1 035.3 801.1 1 610.1
Interest received 19.8 34.5 56.7
Cash generated by operations 1 055.1 835.6 1 666.8
Interest paid (27.1) (21.8) (37.6)
Dividends received - - 0.2
Dividends paid (403.9) (347.1) (452.0)
Tax paid (398.6) (318.1) (565.5)
Cash flows from operating
activities 225.5 148.6 611.9
Property, equipment and vehicle
additions (417.5) (386.0) (829.3)
Proceeds on sale of property,
equipment and vehicles 28.8 41.8 49.6
Intangible asset additions (26.8) - (90.0)
Acquisition of stores (2.2) - (5.2)
Proceeds on sale of investment 8.7 - -
Loans repaid/(advanced) 12.8 1.1 (0.9)
Cash flows from investing
activities (396.2) (343.1) (875.8)
Debt (repaid)/raised (34.8) 49.9 4.3
Share repurchases (221.1) (90.6) (132.0)
Take-up of share options from
share trust 20.2 10.3 25.2
Cash flows from financing
activities (235.7) (30.4) (102.5)
Net decrease in cash and cash
equivalents (406.4) (224.9) (366.4)
Cash and cash equivalents
at 1 March 944.6 1 329.0 1 329.0
Exchange rate effect on cash
and cash equivalents 2.7 (3.9) (18.0)
Cash and cash equivalents at
31 August / 28 February 540.9 1 100.2 944.6
STATEMENT OF CHANGES IN EQUITY
Audited
Six months ended Year to
Aug 2006 Aug 2005 Feb 2006
Rm Rm Rm
Total equity at 1 March - as
previously reported 714.8 714.8
Prior year adjustment -
Operating leases (Note 4) (10.4) (10.4)
Total equity at 1 March -
as re-stated 854.9 704.4 704.4
Total income and expense
for the period 420.1 288.0 686.9
Profit for the period 294.7 248.7 703.1
Revaluation of investments (7.8) 1.3 5.7
Foreign currency translation 133.2 38.0 (21.9)
Dividends paid (403.9) (347.1) (452.0)
Share repurchases (221.1) (90.6) (132.0)
Take-up of share options from
share trust 20.2 10.3 25.2
Share options expense 14.3 8.1 22.4
Total equity at
31 August/28 February 684.5 573.1 854.9
SEGMENTAL REPORT
Southern Africa Australia
Aug 2006 Aug 2005 Aug 2006 Aug 2005
Rm Rm Rm Rm
Segment revenue 17 333.9 15 609.6 2 153.1 2 090.5
Turnover 16 617.8 14 887.6 1 999.5 1 993.2
- Australian dollars 405.1 404.8
Segment result
Trading profit/(loss) 485.2 434.0 (29.0) (63.5)
- Australian dollars (5.8) (13.0)
Depreciation and
amortisation, included
in trading
profit/(loss) (161.0) (149.5) (26.0) (26.4)
Goodwill, included in
total assets 173.5 171.3 552.5 494.5
Total assets, net of
deferred tax and tax 5 467.5 5 060.7 1 325.4 1 227.8
Total liabilities,
net of tax 5 645.0 5 039.7 685.7 665.6
Capital expenditure 430.7 330.9 15.8 55.1
SEGMENTAL REPORT (continued)
Total
Aug 2006 Aug 2005
Rm Rm
Segment revenue 19 487.0 17 700.1
Turnover 18 617.3 16 880.8
- Australian dollars
Segment result
Trading profit/(loss) 456.2 370.5
- Australian dollars
Depreciation and amortisation, included
in trading profit/(loss) (187.0) (175.9)
Goodwill, included in total assets 726.0 665.8
Total assets, net of deferred tax and tax 6 792.9 6 288.5
Total liabilities, net of tax 6 330.7 5 705.3
Capital expenditure 446.5 386.0
PICK "n PAY HOLDINGS LIMITED ("PIKWIK")
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2006
Share Code: PWK ISIN code: ZAE000005724
Pikwik"s only asset is its 52.94% (2005: 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
R154.4 million (2005: R135.3 million).
Headline earnings per share, calculated using the weighted average number
of shares in issue during the period of 507.4 million (2005: 504.5
million), is 30.43 cents (2005: 26.81 cents). Pikwik"s interim dividend
per share is 13.17 cents (2005: 11.37 cents).
DIVIDEND DECLARATIONS
The directors have declared the following cash dividends:
Pick "n Pay Stores Ltd (No. 77) 27.00 cents per share
Pick "n Pay Holdings Ltd (No. 50) 13.17 cents per share
For both Companies, the last day of trade in order to participate in the
dividend (CUM dividend) will be Friday, 1 December 2006.
The shares will trade EX dividend from the commencement of business on
Monday, 4 December 2006 and the record date will be Friday, 8 December
2006.
The dividends will be paid on Monday, 11 December 2006.
Share certificates may not be dematerialised or rematerialised between
Monday, 4 December 2006 and Friday, 8 December 2006, both dates
inclusive.
On behalf of the boards of directors
GF Lea - Company Secretary
17 October 2006
NOTES TO THE FINANCIAL INFORMATION
1 Accounting policies comply with International Financial Reporting
Standards and, except for the adoption of IFRIC 4 explained in note 2,
have been consistently applied with those adopted for the year ended 28
February 2006.
2 International Financial Reporting Interpretations Committee (IFRIC) 4
requires lease contracts embedded in service contracts to be accounted
for in accordance with IAS 17 Leases. The Group has identified equipment
used by third party distribution centre operators as finance leases and
the trucks used by contracted operators to distribute merchandise to our
stores as operating leases. The effect of the finance leases was to raise
the value of the assets and the concomitant liabilities on the balance
sheet with no effect on the Group"s equity. The operating leases (which
have no income statement or balance sheet effect) will require disclosure
in the annual report. Comparative balance sheets have been adjusted
accordingly.
3 Revenue comprises turnover, other income, interest received and
dividends received.
4 An error was made in the calculation of operating lease liabilities
adjusted for in the financial statements for the year ended 28 February
2006. This has been corrected as a prior year adjustment to opening
equity with no effect on comparative earnings.
5 Certain comparative income statement classifications have been changed
to accord with those presented for the year ended 28 February 2006. These
reclassifications had no effect on earnings.
6 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.
7 The Group has acquired the entire Fruit & Veg City business, which is
subject to certain suspensive conditions including Competition Commission
approval and the completion of a due diligence review.
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: 17/10/2006 08:00:10 AM Produced by the JSE SENS Department
