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PICK N PAY STORES LIMITED - Trading statement

Release Date: 04/04/2014 16:35
Code(s): PIK     PDF:  
Wrap Text
Trading statement

Pick n Pay Stores Limited
(Incorporated in the Republic of South Africa)                                  
(Registration number:  1968/008034/06)
Share Code:  PIK   
ISIN code: ZAE000005443
                                  
Trading statement
Shareholders are advised that Pick n Pay Stores Limited (“the Group”) is in the process of
finalising their financial results for the financial year ended 2 March 2014, which are expected 
to be published on 15 April 2014.  

Despite a more challenging trading environment, the Group will deliver an improved financial
performance for the 2014 financial year.  Annual turnover growth was 7.7% on a comparable 
364-day basis*. Turnover growth on last year’s published 368 days was 6.5%.  The Group’s improved 
financial performance reflects in large measure the encouraging progress over the past year in 
reducing cost through greater organisational and operational efficiency, and stronger financial 
control across the business.   
During the 2014 financial year the Group completed the centralisation of its buying, operational
and finance support functions.  Some systems and reporting tools previously developed to support 
the decentralised business operation became obsolete.  This has necessitated an impairment of 
certain intangible assets, which will be reflected in the financial results.

We expect the results for the financial year ended 2 March 2014, expressed as growth on the
previous year, to fall within the following ranges: 
                                                                             Growth on prior
                                                      Growth on prior       year as adjusted   
                                                    year as published           (pro-forma)*   
                                                             368 days               364 days    
  HEPS and diluted HEPS will increase between             20% and 30%            35% and 45%   
  EPS and diluted EPS will increase between                1% and 10%            15% and 25%   
                                                                                                                         
 HEPS excludes the impairment of intangible assets, which accounts for the difference in the
year-on-year increase between HEPS and EPS. 
The Group is encouraged by this improved financial performance.  However, much work remains to be
done in what is a difficult trading environment.  Our strategic focus remains that of
customer-driven and sales-led growth, with progress on efficiency and expense control enabling us 
to invest in the shopping trip and deliver a consistently excellent customer experience. 

*Pro-forma financial information
The Group implemented a 52-week financial reporting calendar in February 2013.  The 52-week
financial reporting calendar reflects that revenue and gross profit is managed on a daily basis and 
is aggregated into 52 trading weeks of 364 days.  All other items included in profit before tax 
(other than those included in gross profit) are managed on a calendar month basis and are not 
pro-rated to days or weeks. 

The profit for the year consists of 52 weeks of gross profit and 12 calendar months of other
income and trading expenses. As a result of this change, the 2014 annual financial period began on 
4 March 2013 and ended on 2 March 2014 (364 trading days).  This compares to the 2013 annual 
financial period which ran from 1 March 2012 to 3 March 2013 (368 trading days). The 2013 financial 
period therefore included four extra days of turnover and related gross profit.  Other income and 
expenditure between the two years is comparable, with both the 2014 and 2013 financial years 
reporting a full 12 calendar months of other income and trading expenses.  

The results reported in this trading statement are presented on both a pro-forma comparable
52-week basis (with adjusted prior year numbers) and on an actual (unadjusted) basis.  The 
pro-forma 2013 result presented excludes 4 days of turnover and gross profit relating to items sold 
during 1 to 4 March 2012. The accounting policies applied in calculating the impact of the additional 
trading days are consistent with those applied in the Group’s consolidated annual financial statements.
 
The tax rate applied is the effective tax rate relating to the relevant entities within the Group.  The
pro-forma information has been prepared for illustrative purposes only and is the responsibility of the
directors and because of its nature, may not fairly present the financial position, changes in
equity, results of operations or cash flows.

The 2013 prior year numbers which form the base of this announcement are: 
                                                                              Prior year
                                      Prior year                             as adjusted   
                                    as published        Effect of new         (pro-forma)  
                                        368 days     trading calendar           364 days   
                                      R’ million           R’ million         R’ million  
  Turnover                              59 271.3               (663.8)          58 607.5   
  Gross profit (note 1)                 10 335.4               (100.7)          10 234.7   
  Other trading income (note 1)            518.9                    -              518.9   
  Trading expenses                     (10 001.9)                   -          (10 001.9)  
  Tax                                     (258.3)                30.7             (227.6)  
  Profit                                   550.6                (70.0)             480.6   
                                                                                           
                                           cents                cents              cents   
  HEPS                                    111.30               (14.64)             96.66   
  Diluted HEPS                            109.61               (14.42)             95.19   
  EPS                                     115.14               (14.64)            100.50   
  Diluted EPS                             113.39               (14.42)             98.97   
 Note 1 - during the year under review, trading income of R174.5 million previously included in
gross profit has been reclassified and disclosed separately as other trading income. This has 
been done to improve visibility of all other trading income, specifically commissions received. 

The prior year has been restated to align with the current year disclosures.  

This trading statement has not been reviewed by or reported on by the Group’s auditors.  

By order of the board
Cape Town                                                                     
4 April 2014                                                                                  
Sponsor: Investec Bank Limited

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