Wrap Text
Unaudited condensed consolidated interim results for the 26 weeks ended 30 August 2015
Pick n Pay Holdings Limited RF
Registration number: 1981/009610/06
JSE Share code: PWK
ISIN: ZAE000005724
Unaudited condensed consolidated interim results for the 26 weeks ended 30 August 2015
Review of operations
Turnaround strategy gains momentum
KEY FINANCIAL INDICATORS
26 weeks to 26 weeks to
30 August 31 August %
2015 2014 change
Turnover R34.9 billion R32.1 billion 8.5%
Gross profit margin 17.7% 17.7%
Trading expenses margin 17.3% 17.5%
Trading profit R461.6 million R385.7 million 19.7%
Trading profit margin 1.3% 1.2%
Profit before tax R449.9 million R365.9 million 23.0%
Profit before tax margin 1.3% 1.1%
Profit after tax R321.4 million R261.0 million 23.1%
Basic earnings per share 32.83 cents 26.72 cents 22.9%
Headline earnings per share 32.94 cents 26.51 cents 24.2%
Interim dividend per share 11.60 cents 9.40 cents 23.4%
RESULT SUMMARY
Pick n Pay demonstrated encouraging momentum in the first half of the financial year as it embarked on Stage 2 of
its long-term plan - to change the trajectory of the business. A stronger sales performance, combined with sound
gross margin management and tightly controlled capital and operating costs, drove headline earnings per share
up 24.2%.
Turnover growth accelerated to 8.5% from 6.1% in the previous financial year, despite an increasingly challenging
market environment. Turnover growth came from a good balance between sales from new stores and improved
like-for-like growth of 4.4% - evidence that Pick n Pay is winning back customers with tangible improvements in
the customer offer. The Group supported customers with competitive pricing and meaningful promotions over the
period, containing internal selling price inflation at 3.0%, well below CPI-food inflation of 4.8%.
Gross margin management was a key focus over the reporting period. The Group continued to achieve greater
operating efficiency, with benefits invested in the shopping trip, to strengthen the offer and provide support to
customers at an increasingly challenging time. The Group maintained its gross profit margin at 17.7%,
notwithstanding price investment through an expanded Brand Match, a more personalised Smart Shopper programme and
other initiatives.
Sound management of both capital and operating costs has helped deliver a stronger and more stable business.
The Group continues to find opportunity to remove cost and operate in a more efficient manner. This work enabled
the Group to reduce trading expenses expressed as a percentage of turnover from 17.5% to 17.3%. The improved
management of net working capital strengthened cash balances over the period and supported a further reduction
in long-term debt, with net interest paid down 23.6% on last year.
Segmental pre-tax profit in the core South Africa division grew by 44.8% on last year, underpinned by stronger
sales and greater operating efficiency. Total segment revenue in the Rest of Africa division grew 13.0% to
R2.0 billion. However the 14.4% decrease in segmental pre-tax profit of this division reflects the challenging
trading conditions in Zambia and the effect of currency fluctuations.
OPERATIONAL REVIEW
We measure our progress over the first half of the financial year against the Group’s seven strategic business
acceleration pillars:
Better for customers
The Group accelerated its improvement of the shopping trip, with customers noticing the benefits at store level.
Closer collaboration with producers, combined with better cold chain management is improving the quality and
shelf life of fresh produce. The Group completed its first full round of product-category reviews and has
streamlined and strengthened its product range. Detailed planograms in key categories are resulting in more
effective product display, better on-shelf replenishment and improved product availability. The Group also
made good progress on its plan to enhance its private label range, launching 37 new products over the period,
and redesigning the packaging of more than 300 lines.
Smart Shopper was once again voted as South Africa’s favourite loyalty programme in the recent 2015 Sunday Times
Top Brands Awards. The Group expanded its Smart Shopper “Partner Programme” over the last six months,
personalised vouchers through a “Just for You” mailing campaign, and boosted its “Instant Savings” programme,
enabling customers to earn an instant 10% off over 800 items in store simply by swiping their cards.
The Group doubled the number of products covered by its successful Brand Match campaign, which is continuing to
improve the customer perception of Pick n Pay prices relative to those of its peers. Successful promotional
campaigns included a vibrant 48th Birthday month and a Stikeez campaign towards the end of the financial period.
Designed as a fun thank you to Pick n Pay customers for their custom and loyalty, the Stikeez campaign captured
the imaginations of South Africans young and old.
A flexible and winning estate
The Group opened 83 Pick n Pay and Boxer stores in the 26 weeks to August, including 14 new supermarkets in
communities in which it had not previously traded. This compares with 46 stores in the same period last year.
This accelerated rate of growth reflects a stronger new space plan which benefits from greater format flexibility
and operational efficiencies developed over the past two years.
The Group added 21 new smaller convenience stores over the period, including under our Local, Express and Punch
formats. These stores have been well received by customers and are an exciting growth opportunity. The
performance of our larger Hypermarket format is improving as we become more innovative in the use of space, more
focused on a differentiated product offer and more relevant in our promotional activity.
In Stage 1 of its plan, the Group closed a number of under-performing stores, substantially improving the quality
of its estate. Having completed this stage, the number of under-performing stores has reduced considerably, with
just four closures over the period.
The Group continued with the refurbishment programme which began in the second half of last year, with the
commencement of a further 27 refurbishments in the 26 weeks to August.
The franchise business performed well over the period, with an encouraging increase in sales to franchisees and
a decrease in franchise debt. Pick n Pay added 27 net new franchise stores over the period. The franchise model
strengthens the Group by including within its ranks a team of passionate, experienced and highly-skilled
retailers with a strong commitment to the Pick n Pay brand. It also provides an excellent opportunity for
emerging entrepreneurs to develop and fulfil their ambitions.
Pick n Pay Online continued to deliver strong growth, particularly in the Western Cape where a new dedicated
picking warehouse at the Brackenfell Hypermarket has substantially broadened the product range for online
shoppers and has improved availability.
Efficient and effective operations
The Group has consistently recognised that improvements to the efficiency of its operations are key to unlocking
cost savings, improving service to customers, creating headroom to invest in the shopping trip and enhancing the
profitability of the business. Further progress has been made over the period in reducing trading expenses as a
percentage of turnover, both in head office costs and at store level.
Over the past six months, Pick n Pay’s “next generation” store programme has brought together the progress
achieved across various areas of the business to deliver new and refurbished stores which offer customers a
substantially improved shopping environment, better product ranges and lower operating costs. These stores are
characterised by wider aisles, enhanced lighting and signage and dedicated product-category alcoves for easy
store navigation. Operational improvements include faster checkouts, Wi-Fi connectivity and automatic ordering
and replenishment. Product offer has improved as a result of category reviews, product innovation and an
expanded private label range. Three “next generation” stores were opened in the first half of the year (1 new
store and 2 refurbishments) and the Group is very encouraged by the positive response from customers.
Every product, every day
A central supply chain increases efficiency, lowers cost and improves availaibility for customers. It enables
the Group to reduce back-up storage areas in stores, creating more space for trade and enabling colleagues to
spend more time on customers and less on back-end administration.
The Group made good progress in the period under review, bringing within its centralised supply chain more
than 200 new suppliers, more than was achieved over the full 2015 financial year. Volumes issued from
Pick n Pay distribution centres were up substantially on last year, contributing to a good improvement in
on-shelf availability. The Group is steadily progressing towards its aim of a fully centralised supply chain
with every product delivered every day to our stores on a short lead time.
The Western Cape region, serviced by the Philippi distribution centre, is at 62% centralisation (80% on
groceries). The level of centralisation in our Inland region, serviced by the Longmeadow distribution centre,
has reached 55% (65% on groceries). Across all regions, the Group has reached 55% centralisation. The Group
is exploring central supply chain opportunities in KwaZulu-Natal and the Eastern Cape. Improvements in the
operational efficiencies at our distribution centres, particularly at Longmeadow, have enabled the Group to
reduce its cost per case.
A winning team
The Group employs close to 50 000 people in its corporate business, and a roughly equivalent number through
its franchisees. Pick n Pay launched its “war on waste” campaign in July 2015, which - alongside commitments
on reducing food waste and energy usage - pledged the Group to creating 5 000 new jobs per year between 2015
and 2020, representing 20 new jobs per day. We are already demonstrating meaningful progress, with 1 800 new
jobs created over the reporting period.
The Group’s new performance management system, introduced for senior managers last year, has now been launched
to junior managers. The Group is also making progress on more efficient and streamlined processes in HR
management and on core skills training.
Boxer - a national brand
Boxer opened 12 new stores over the period across its range of formats. The business continues to grow
despite increasingly challenging economic conditions. Over the period under review, the business focused on
further strengthening its price positioning, and improving the quality of its fresh produce and grocery
ranges. Tight cost control is imperative in this low-margin environment and the Group is encouraged by Boxer’s
progress in managing overhead costs as a percentage of sales.
Boxer, in line with Group strategy, will move towards a central distribution model. It has built a new
distribution centre in KwaZulu-Natal, with the commencement of outbound deliveries in October 2015.
The Group remains confident of the opportunity to grow Boxer into a national brand in South Africa, and will
open its first Boxer store in the Western Cape this year.
Rest of Africa - second engine of growth
Growing our business outside of South Africa remains a strategic priority for Pick n Pay, notwithstanding
the challenging trading conditions facing some regions. Pick n Pay opened 6 stores outside South Africa
during the period, with three in Namibia, one in Zambia and two in Zimbabwe. The Rest of Africa division
recorded growth in segmental revenue (including direct supplier deliveries) of 13.0%. Segmental revenue
was up 14.3% in local currency terms, with like-for-like segmental revenue growth of 2.2%.
The Group’s franchise operation outside South Africa, in Botswana, Lesotho, Namibia and Swaziland,
delivered strong turnover growth over the period. In addition, the Group’s share of the profits of its
associate in Zimbabwe, TM Supermarkets (TM), grew 42.0% over the period to R15.7 million. The business
demonstrated improved profitability and operational efficiency in what remains a tough and competitive
market.
TM is seeing stronger trading results out of its newly refurbished stores, particularly those bearing
the Pick n Pay brand, and is working closely with Pick n Pay management to strengthen its procurement
capability and the quality of its fresh produce and grocery range.
Notwithstanding these strong performances from operations outside South Africa, the segmental pre-tax
profit of the Rest of Africa division was down 14.4% on last year. This reflects the difficult trading
conditions in Zambia and the weakening of the kwacha, as economic conditions deteriorated in a region
dependent on the strength of the copper price and the availability of hydro-electricity. However, the
long-term opportunities in the region remain good, and the Group plans to open three more stores in
Zambia in the next year.
The Group is in the early stages of developing a business in Ghana and will open its first store in
that country in the 2016 calendar year.
FINANCIAL REVIEW
Turnover
Group turnover at R34.9 billion was up 8.5% on last year, an improvement on the 6.1% growth recorded in
the 2015 financial year. Like-for-like turnover grew 4.4% on last year, an improved performance on the
3.6% recorded in 2015, with new stores adding 4.1% to turnover growth. This performance was achieved
in a tough market in which consumer confidence deteriorated in the face of escalating energy, fuel and
utility costs, higher taxes, increased costs of borrowing and a weakening rand.
Greater business efficiency assisted the Group to bear down on inflation. Internal food inflation fell
to 3.0% over the period, down from 6.3% in the second half of last year, and compares to CPI food
inflation of 4.8% for the period.
Gross profit
Gross profit increased by 8.4% to R6.2 billion. The gross profit margin was unchanged on last year at
17.7%, notwithstanding our investment in price through our expanded Brand Match campaign, our stronger
Smart Shopper programme and a successful 48th birthday promotion. The centralisation of supply is a key
strategic priority for the Group, and as the Group increases the volume of inventory going through its
distribution centres it will continue to unlock cost savings and operational efficiencies to reinvest
in the shopping trip.
Other trading income
Other trading income increased by 1.3% to R320.0 million.
Commissions and other income - once-off commissions earned in the prior period on the sale of iTunes
vouchers were not repeated this year. As a result, commissions and other income was down 14.9%.
Other value-added services including financial services, prepaid electricity, third party account
payments and gift cards all showed encouraging growth, underlining the good opportunity for
Pick n Pay and Boxer to grow services allied to the shopping trip.
Franchise fee income - was up 10.8% on last year, reflecting the 27 net new franchise stores added over
the period and the encouraging growth in franchise turnover.
Operating lease income - was up 25.6% on last year, which includes substantial new head leases in
Pick n Pay. The related operating lease expenses are included within occupancy costs.
Trading expenses
The Group reduced trading expenses as a percentage of turnover, from 17.5% to 17.3%. The increase in
like-for-like expenses was restricted to 4.6%.
Employee costs - steady improvement in the efficiency of in-store processes and labour scheduling
restricted the increase in employee costs to 6.9% (like-for-like 5.5%), notwithstanding the 52 net
new corporate stores added over the period. Employee costs include a charge of R58.6 million in
respect of the Group’s employee forfeitable share plan, against a corresponding R2.7 million charge
in the same period last year.
Occupancy costs - are up on last year reflecting the new store openings since August last year.
Group like-for-like occupancy costs were contained at 6.6%, notwithstanding rising rental pressures
across the sector, the impact of dollar-based rentals outside South Africa, and the growing cost of
providing adequate security in our stores.
Operations - the biggest driver of the 9.2% increase in operations costs was regulatory increases in
electricity and utility charges, which increased well ahead of inflation. Depreciation and
amortisation charges were up 6.7% as a result of our store opening and refurbishment programme.
Merchandising and administration costs - were down 6.6%, as a result of lower bank charges associated
with the cost of interchange, and the Group’s reduced use of external consultancy support.
Trading profit
Trading profit increased by 19.7% to R461.6 million. The trading margin improved from 1.2% to 1.3%
of turnover.
Net interest
The net interest charge was down 23.6% to R25.9 million due to stronger net working capital management
and the repayment of long-term debt.
Profit before tax
Profit before tax is up 23.0% to R449.9 million, representing a margin improvement from 1.1% to 1.3%
of turnover.
Tax
The tax rate remains unchanged.
Earnings per share
Basic earnings per share (EPS) - increased 22.9% from 26.72 to 32.83 cents per share.
Headline earnings per share (HEPS) - increased 24.2% from 26.51 to 32.94 cents per share.
The add-back of capital losses on the sale of assets of R0.6 million, net of tax, has been taken into
account in the calculation of headline earnings, against the deduction of capital profits of
R1.1 million, net of tax, in the prior year.
Financial position
Sunday Sunday
30 August 2015 31 August 2014
Rm Rm
Inventory 5 218.0 4 153.6
Trade and other receivables 3 146.7 2 709.4
Cash and cash equivalents 1 440.9 965.4
Other current liabilities* (11 110.5) (9 125.8)
Net working capital (1 304.9) (1 297.4)
*excludes the short-term portion of long-term borrowings
Net working capital was down only 0.6% on last year, notwithstanding the substantial capital investment over
the period as a result of the Group’s accelerated store opening and refurbishment programme. This reflects
sound control over all capital and operating expenditure and improved management of working capital, which
has removed the need for additional funding and enabled the further repayment of long-term debt.
Inventory - the increased inventory levels at August 2015 were due to the new stores opened over the period,
planned stock provisioning ahead of a potential transport strike, and the increase in the centralisation of
suppliers, which elevated stock levels in the short-term.
Trade and other receivables - increased by R437.3 million or 16.1% to R3 146.7 million as a result of the
27 net new franchise stores and an encouraging increase in issues to franchisees. The quality of the
debtors’ book has improved over the last year, with the impairment allowance down 1.9 percentage points,
expressed as a percentage of trade and other receivables.
Cash and cash equivalents
Sunday Sunday
30 August 2015 31 August 2014
Rm Rm
Cash balances 1 440.9 1 285.4
Bank overdrafts and overnight borrowings - (320.0)
Cash and cash equivalents 1 440.9 965.4
Total borrowings (536.1) (781.3)
Net funding position 904.8 184.1
The net funding position was R720.7 million stronger than last year, reflecting the reduced debt levels in
the Group and some positive benefit at period-end from the financial calendar cut-off.
Stronger working capital management offset the effect of the increased capital spend over the period, with
net finance charges down 23.6% on last year. Group capital expenditure was R611.5 million in the first half
of the year, compared with R397.8 million over the same period last year, with 84.0% of the investment
focused on expansion and improving the customer experience.
Shareholder distribution
The Board declared an interim dividend of 11.60 cents per share, up 23.4% on last year.
MAINTAINING MOMENTUM IN A CHALLENGING ENVIRONMENT
Trading conditions remain tough in South Africa and other markets, with strong retail competition for customers
who are coming under increasing financial pressure at all levels of society. Against this background the Group
has remained focused on improving its operational efficiency and delivering greater value and a better shopping
trip for customers. This has delivered positive results in the first half of the year and the Group is focused
on maintaining this momentum throughout the year.
We wish to thank every member of the Pick n Pay team for their hard work and commitment in delivering this
result. They recognise, as we do, that as Pick n Pay grows, so does our contribution to the communities we serve
in South Africa and beyond.
Raymond Ackerman
Chairman
12 October 2015
Dividend declaration
Pick n Pay Holdings Limited RF - Tax reference number: 9050/141/71/3
Number of shares in issue: 527 249 082
Notice is hereby given that the directors have declared an interim gross dividend (number 68) of 11.60 cents
per share out of income reserves.
The dividend declared is subject to dividend withholding tax at 15%.
The tax payable is 1.74000 cents per share, leaving shareholders who are not exempt from dividends tax with
a net dividend of 9.86000 cents per share.
Dividend dates
The last day of trade in order to participate in the dividend (CUM dividend) will be Friday, 4 December 2015.
The shares will trade EX dividend from the commencement of business on Monday, 7 December 2015 and the record
date will be Friday, 11 December 2015. The dividends will be paid on Monday, 14 December 2015.
Share certificates may not be dematerialised or rematerialised between Monday, 7 December 2015 and Friday,
11 December 2015, both dates inclusive.
On behalf of the board of directors
Debra Muller
Company Secretary
12 October 2015
Consolidated statement of comprehensive income
for the period ended
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
to to to
30 August 31 August 1 March
2015 % of Change 2014 % of 2015 % of
Rm turnover % Rm turnover Rm turnover
Revenue 35 205.6 8.5 32 452.6 67 603.1
Turnover 34 855.8 8.5 32 110.6 66 940.8
Cost of merchandise sold (28 689.5) 8.6 (26 424.7) (54 994.3)
Gross profit 6 166.3 17.7 8.4 5 685.9 17.7 11 946.5 17.8
Other trading income 320.0 0.9 1.3 316.0 1.0 602.9 0.9
Trading expenses (6 024.7) 17.3 7.3 (5 616.2) 17.5 (11 310.8) 16.9
Employee costs (3 014.3) 8.6 6.9 (2 818.6) 8.8 (5 653.9) 8.4
Occupancy (1 032.4) 3.0 15.1 (897.0) 2.8 (1 867.6) 2.8
Operations (1 399.5) 4.0 9.2 (1 281.2) 4.0 (2 618.8) 3.9
Merchandising and administration (578.5) 1.7 (6.6) (619.4) 1.9 (1 170.5) 1.7
Trading profit 461.6 1.3 19.7 385.7 1.2 1 238.6 1.9
(Loss)/profit on sale of property, plant
and equipment (1.5) 3.0 10.4
Finance income 29.8 14.6 26.0 59.4
Finance costs (55.7) (7.0) (59.9) (119.0)
Share of associate’s income 15.7 42.0 11.1 14.3
Profit before tax 449.9 1.3 23.0 365.9 1.1 1 203.7 1.8
Tax (128.5) 22.5 (104.9) (343.5)
Profit for the period 321.4 0.9 23.1 261.0 0.8 860.2 1.3
Other comprehensive income,
net of tax
Items that will not be reclassified to
profit or loss 4.9 1.7 33.0
Remeasurement in retirement scheme assets 6.8 2.4 45.9
Tax on remeasurement in retirement scheme assets (1.9) (0.7) (12.9)
Items that may be reclassified to profit or loss
Exchange rate differences on translating
foreign operations 2.9 (6.5) (11.4)
Total comprehensive income for the period 329.2 0.9 28.5 256.2 0.8 881.8 1.3
Profit for the period attributable to: 321.4 23.1 261.0 860.2
Owners of the Company 172.3 24.9 137.9 461.8
Non-controlling interest 149.1 21.1 123.1 398.4
Total comprehensive income for the period
attributable to: 329.2 28.5 256.2 881.8
Owners of the Company 176.4 30.3 135.4 473.4
Non-controlling interest 152.8 26.5 120.8 408.4
Cents Cents Cents
Basic earnings per share 32.83 22.9 26.72 88.78
Diluted earnings per share 31.62 22.6 25.79 86.54
Headline earnings per share 32.94 24.2 26.51 88.01
Diluted headline earnings per share 31.73 24.0 25.59 85.80
Consolidated statement of financial position
Unaudited Unaudited Audited
As at As at As at
30 August 31 August 1 March
2015 2014 2015
Rm Rm Rm
ASSETS
Non-current assets
Property, plant and equipment 4 336.8 3 947.8 4 187.0
Intangible assets 991.1 1 016.3 1 010.2
Operating lease assets 159.6 145.8 149.8
Investment in associate 195.9 177.0 180.2
Participation in export partnerships 16.0 26.9 23.4
Loans 95.8 108.7 100.6
Retirement scheme assets 71.9 94.3 70.1
Deferred tax assets 191.4 206.9 198.8
6 058.5 5 723.7 5 920.1
Current assets
Inventory 5 218.0 4 153.6 4 654.5
Trade and other receivables 3 146.7 2 709.4 2 956.7
Cash and cash equivalents 1 440.9 1 285.4 1 174.6
Derivative financial instruments 9.6 - 1.4
9 815.2 8 148.4 8 787.2
Total assets 15 873.7 13 872.1 14 707.3
EQUITY AND LIABILITIES
Capital and reserves
Share capital 6.6 6.6 6.6
Share premium 120.8 120.8 120.8
Treasury shares (112.3) (102.9) (109.0)
Retained earnings 1 566.5 1 297.3 1 619.3
Foreign currency translation reserve (8.2) (7.2) (9.8)
Attributable to owners of the Company 1 573.4 1 314.6 1 627.9
Non-controlling interest 1 452.6 1 221.8 1 499.2
Total equity 3 026.0 2 536.4 3 127.1
Non-current liabilities
Borrowings 92.2 741.1 492.8
Operating lease liabilities 1 201.1 1 108.6 1 138.5
1 293.3 1 849.7 1 631.3
Current liabilities
Trade and other payables 11 027.8 9 072.3 9 029.6
Bank overdraft and overnight borrowings - 320.0 500.0
Borrowings 443.9 40.2 291.5
Current tax liabilities 82.1 45.9 126.8
Provisions 0.6 4.5 1.0
Derivative financial instruments - 3.1 -
11 554.4 9 486.0 9 948.9
Total equity and liabilities 15 873.7 13 872.1 14 707.3
Net asset value - cents per share (property
valued based on directors’ valuation) 679.92 576.62 691.75
Consolidated statement of changes in equity
for the period ended 30 August 2015
Attributable to owners of the Company
Unaudited Foreign
currency Non-
Share Share Treasury Retained translation controlling Total
capital premium shares earnings reserve Total interest equity
Rm Rm Rm Rm Rm Rm Rm Rm
At 2 March 2014 6.6 120.8 (95.3) 1 377.3 (3.6) 1 405.8 1 290.6 2 696.4
Total comprehensive income
for the period - - - 138.8 (3.4) 135.4 120.8 256.2
Profit for the period - - - 137.9 - 137.9 123.1 261.0
Exchange rate differences
on translating foreign operations - - - - (3.4) (3.4) (3.1) (6.5)
Remeasurement in retirement
scheme assets - - - 0.9 - 0.9 0.8 1.7
Transactions with owners - - (7.6) (218.8) (0.2) (226.6) (189.6) (416.2)
Dividends paid - - - (194.9) - (194.9) (168.1) (363.0)
Share repurchases - - (12.1) (58.6) - (70.7) (52.0) (122.7)
Net effect of settlement of
employee share options - - 4.5 13.5 - 18.0 12.2 30.2
Share-based payment expense - - - 20.8 - 20.8 18.5 39.3
Movement in non-controlling interest - - - 0.4 (0.2) 0.2 (0.2) -
At 31 August 2014 6.6 120.8 (102.9) 1 297.3 (7.2) 1 314.6 1 221.8 2 536.4
Total comprehensive income
for the period - - - 340.7 (2.7) 338.0 287.6 625.6
Profit for the period - - - 323.9 - 323.9 275.3 599.2
Exchange rate differences on
translating foreign operations - - - - (2.7) (2.7) (2.2) (4.9)
Remeasurement in retirement
scheme assets - - - 16.8 - 16.8 14.5 31.3
Transactions with owners - - (6.1) (18.7) 0.1 (24.7) (10.2) (34.9)
Dividends paid - - - (50.3) - (50.3) (43.8) (94.1)
Share repurchases - - (10.1) (25.1) - (35.2) (20.0) (55.2)
Net effect of settlement of
employee share options - - 4.0 5.6 - 9.6 4.2 13.8
Share-based payment expense - - - 54.4 - 54.4 46.2 100.6
Movement in non-controlling interest - - - (3.3) 0.1 (3.2) 3.2 -
At 1 March 2015 6.6 120.8 (109.0) 1 619.3 (9.8) 1 627.9 1 499.2 3 127.1
Total comprehensive income
for the period - - - 174.9 1.5 176.4 152.8 329.2
Profit for the period - - - 172.3 - 172.3 149.1 321.4
Exchange rate differences on
translating foreign operations - - - - 1.5 1.5 1.4 2.9
Remeasurement in retirement scheme assets - - - 2.6 - 2.6 2.3 4.9
Transactions with owners - - (3.3) (227.7) 0.1 (230.9) (199.4) (430.3)
Dividends paid - - - (251.4) - (251.4) (220.4) (471.8)
Share repurchases - - (7.7) (29.1) - (36.8) (25.0) (61.8)
Net effect of settlement of
employee share options - - 4.4 6.8 - 11.2 5.8 17.0
Share-based payment expense - - - 46.4 - 46.4 39.9 86.3
Movement in non-controlling interest - - - (0.4) 0.1 (0.3) 0.3 -
At 30 August 2015 6.6 120.8 (112.3) 1 566.5 (8.2) 1 573.4 1 452.6 3 026.0
Consolidated statement of cash flows
for the year ended
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 August 31 August 1 March
2015 2014 2015
Rm Rm Rm
Cash flows from operating activities
Trading profit 461.6 385.7 1 238.6
Depreciation and amortisation 455.8 427.3 869.5
Share-based payments expense 86.3 39.3 139.9
Movement in net operating lease liabilities 52.8 52.9 78.8
Movement in provisions (0.4) (3.6) (7.1)
Fair value adjustments (8.2) 6.6 2.1
Cash generated before movements in working capital 1 047.9 908.2 2 321.8
Movements in working capital 1 254.5 941.0 150.1
Movements in trade and other payables 1 998.2 981.0 938.3
Movements in inventory (553.7) (171.7) (672.6)
Movements in trade and other receivables (190.0) 131.7 (115.6)
Cash generated by trading activities 2 302.4 1 849.2 2 471.9
Interest received 29.8 26.0 59.4
Interest paid (55.7) (59.9) (119.0)
Cash generated by operations 2 276.5 1 815.3 2 412.3
Dividends paid (471.8) (363.0) (457.1)
Tax paid (151.0) (136.3) (284.5)
Cash generated by operating activities 1 653.7 1 316.0 1 670.7
Cash flows from investing activities
Investment in intangible assets (8.6) (67.6) (159.2)
Investment in property, plant and equipment (546.8) (281.4) (897.3)
Purchase of operations (65.8) (50.9) (50.9)
Proceeds on disposal of intangible assets - 1.6 4.7
Proceeds on disposal of property, plant and equipment 14.7 27.8 57.3
Loans repaid/(advanced) 4.8 (16.7) (8.6)
Participation in export partnerships 7.4 (1.8) 1.7
Retirement obligation 5.0 (6.8) 60.9
Cash utilised in investing activities (589.3) (395.8) (991.4)
Cash flows from financing activities
Proceeds from borrowings* 1.8 400.0 400.0
Repayment of borrowings* (250.0) (1 103.6) (1 100.6)
Share repurchases (61.8) (122.7) (177.9)
Proceeds from employees on settlement of share options 1.2 0.8 1.0
Cash utilised in financing activities (308.8) (825.5) (877.5)
Net increase in cash and cash equivalents 755.6 94.7 (198.2)
Cash and cash equivalents at beginning of period 674.6 870.3 870.3
Effect of exchange rate fluctuations on cash
and cash equivalents 10.7 0.4 2.5
Net cash and cash equivalents at end of period 1 440.9 965.4 674.6
Consisting of:
Cash and cash equivalents 1 440.9 1 285.4 1 174.6
Bank overdraft and overnight borrowings - (320.0) (500.0)
* Borrowings raised/repaid for the 26-week period ended 31 August 2014 has been restated to be shown
separately, in line with full year disclosures.
Notes to the financial information
for the period ended 30 August 2015
1. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed consolidated interim financial statements are prepared in accordance with International
Financial Reporting Standards, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial
Reporting Standards Council and the requirements of the Companies Act of South Africa. The accounting
policies applied in the preparation of these interim financial statements are in terms of International
Financial Reporting Standards and are consistent with those applied in the financial statements for the
52 weeks ended 1 March 2015. These interim financial statements have been prepared by the Finance Division
under the supervision of the Chief Financial Officer, Mr Bakar Jakoet CA(SA), and have not been audited or
reviewed by the Group’s external auditors, Ernst & Young Inc.
2. RELATED PARTY TRANSACTIONS
During the period, certain companies within the Group entered into transactions with each other. These
intra-group transactions are eliminated on consolidation. Related parties are unchanged from those reported
at 1 March 2015. For further information please refer to note 27 of the 2015 Group financial statements and
note 9 of the 2015 Company financial statements.
3. SHARE CAPITAL
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 August 31 August 1 March
2015 2014 2015
Rm Rm Rm
Authorised
800 000 000 (2014: 800 000 000) ordinary shares of 1.25 cents each 10.0 10.0 10.0
Issued
527 249 082 (2014: 527 249 082) ordinary shares of 1.25 cents each 6.6 6.6 6.6
5% of the unissued shares of the Company may be utilised, and is available, to settle the Company’s
obligations under the employee share schemes.
The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote
per share at meetings of the Company.
4. REVENUE
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks
30 August 31 August to 1 March
2015 2014 2015
Rm Rm Rm
Turnover 34 855.8 32 110.6 66 940.8
Finance income 29.8 26.0 59.4
Other trading income 320.0 316.0 602.9
Franchise fee income 161.5 145.8 294.4
Operating lease income 42.2 33.6 67.3
Commissions and other income 116.3 136.6 241.2
35 205.6 32 452.6 67 603.1
5. OPERATING SEGMENTS
Unaudited South Rest of Total
Africa Africa operations
Rm Rm Rm
2015
Total segment revenue 33 650.1 1 958.3 35 608.4
External revenue 33 650.1 1 555.5 35 205.6
Direct deliveries* - 402.8 402.8
Segment external turnover 33 307.6 1 548.2 34 855.8
Segmental profit** 334.2 115.7 449.9
Other information
Statement of comprehensive income
Finance income 27.6 2.2 29.8
Finance costs (55.7) - (55.7)
Depreciation and amortisation 441.4 14.4 455.8
Share of associate’s income - 15.7 15.7
Statement of financial position
Total assets 14 728.3 1 145.4 15 873.7
Total liabilities 12 531.8 315.9 12 847.7
Additions to non-current assets 596.4 15.1 611.5
2014
Total segment revenue 31 030.1 1 732.4 32 762.5
External revenue 31 030.1 1 422.5 32 452.6
Direct deliveries* - 309.9 309.9
Segment external turnover 30 688.1 1 422.5 32 110.6
Segmental profit** 230.8 135.1 365.9
Other information
Statement of comprehensive income
Finance income 23.5 2.5 26.0
Finance costs (59.9) - (59.9)
Depreciation and amortisation 416.3 11.0 427.3
Share of associate’s income - 11.1 11.1
Statement of financial position
Total assets 12 853.1 1 019.0 13 872.1
Total liabilities 11 014.5 321.2 11 335.7
Additions to non-current assets 391.2 6.6 397.8
* Direct deliveries are issues to franchisees directly by Group suppliers
facilitated through the Group’s supply chains, that are not included in
revenue on the statement of comprehensive income.
** Segmental profit is the reported measure used for evaluating the Group’s
operating segments performance. On an overall basis the segmental profit
is equal to the Group’s reported profit before tax. The Rest of Africa
segment’s segmental profit comprises the segment’s trading result and
directly attributable costs only. No allocations are made for indirect
incremental cost incurred by the South Africa segment relating to the
Rest of Africa segment.
6. BASIC, HEADLINE AND DILUTED EARNINGS PER SHARE
Unaudited Unaudited Audited
26 weeks to 26 weeks to 52 weeks to
30 August 31 August 1 March
2015 2014 2015
Cents Cents Cents
per share per share per share
Basic earnings per share 32.83 26.72 88.78
Diluted earnings per share 31.62 25.79 86.54
Headline earnings per share 32.94 26.51 88.01
Diluted headline earnings per share 31.73 25.59 85.80
Rm Rm Rm
6.1 Basic and headline earnings
Reconciliation between basic and headline earnings:
Profit for the period 172.3 137.9 461.8
Profit attributable to forfeitable share plan shares (2.9) - (3.5)
Basic earnings for the period 169.4 137.9 458.3
Adjustments: 0.6 (1.1) (4.0)
Loss/(profit) on sale of property, plant and equipment 0.8 (1.6) (5.6)
Tax effect of (loss)/profit on sale of property,
plant and equipment (0.2) 0.5 1.6
Adjustments attributable to forfeitable share
plan shares - - -
Headline earnings 170.0 136.8 454.3
Basic earnings (profit for the period) 169.4 137.9 458.3
Dilutive effect of share options (4.1) (3.2) (6.8)
Diluted basic earnings 165.3 134.7 451.5
Headline earnings 170.0 136.8 454.3
Dilutive effect of share options (4.1) (3.2) (6.7)
Diluted headline earnings 165.9 133.6 447.6
000’s 000’s 000’s
6.2 Number of shares
Weighted average number of ordinary shares in issue 516 143.3 516 170.7 516 238.6
Diluted weighted average number of ordinary shares in issue 522 916.2 522 231.5 521 711.4
Number of shares in issue 527 249.1 527 249.1 527 249.1
7. FINANCIAL INSTRUMENTS
All financial instruments held by the Group are measured at amortised cost, with the exception of
derivative financial instruments and certain items included in trade and other payables. The latter
are measured at fair value through profit or loss, are categorised into level 2 of the fair value
hierarchy and are considered to be immaterial. Level 2 is defined as using inputs other than quoted
prices that are observable for the asset or liability either directly (prices) or indirectly
(derived from prices). The carrying value of all financial instruments approximate their fair value.
Number of stores
2 March Converted Converted 30 August
2015 Opened Closed - openings - closings 2015
Company owned
Pick n Pay 510 37 - 5 - 552
Hypermarkets 20 - - - - 20
Supermarkets 215 13 - 3 - 231
Clothing 102 16 - - - 118
Liquor 170 8 - 2 - 180
Pharmacy 3 - - - - 3
Boxer 189 12 (2) - - 199
Superstores 125 5 - - - 130
Hardware 21 1 - - - 22
Liquor 22 2 - - - 24
Punch 21 4 (2) - - 23
Total company owned 699 49 (2) 5 - 751
Franchise
Pick n Pay
Supermarkets 288 6 (2) - (3) 289
Family 266 6 (1) - (3) 268
Mini Market 21 - (1) - - 20
Daily 1 - - - - 1
Express 46 15 - - - 61
Clothing 16 1 - - - 17
Liquor 140 12 - - (2) 150
Total franchise 490 34 (2) - (5) 517
Total Group stores 1 189 83 (4) 5 (5) 1 268
TM Supermarkets 53 2 - - - 55
Total with TM Supermarkets 1 242 85 (4) 5 (5) 1 323
African footprint 116 6 - - - 122
- included in total stores above
Pick n Pay company owned 10 1 - - - 11
Boxer company owned 5 - - - - 5
Pick n Pay franchise 48 3 - - - 51
TM Supermarkets - associate 53 2 - - - 55
African footprint 116 6 - - - 122
- by country
Botswana 9 - - - - 9
Lesotho 3 - - - - 3
Namibia 27 3 - - - 30
Swaziland 14 - - - - 14
Zambia 10 1 - - - 11
Zimbabwe 53 2 - - - 55
Corporate information
Board of directors
Executive
Raymond Ackerman (chairman)
Wendy Ackerman
Gareth Ackerman
Independent non-executive
René de Wet
Hugh Herman
Jeff van Rooyen
Alternate directors
Suzanne Ackerman-Berman
Jonathan Ackerman
David Robins
Registered office
Pick n Pay Office Park
101 Rosmead Avenue
Kenilworth
Cape Town 7708
Tel +27 21 658 1000
Fax +27 21 797 0314
Postal address
PO Box 23087
Claremont 7735
Registrar
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg 2001
Tel +27 11 370 5000
Fax +27 11 688 5248
Postal address
PO Box 61051
Marshalltown 2107
Jse limited sponsor
Investec Bank Limited
100 Grayston Drive
Sandton 2196
Auditors
Ernst & Young Inc.
Attorneys
Edward Nathan Sonnenberg
Principal transactional bankers
Absa Limited
First National Bank
Company secretary
Debra Muller
email address: dmuller@pnp.co.za
Promotion of Access to Information Act
Information officer - Penny Gerber
email address: pgerber@pnp.co.za
Investor relations
David North
email address: dnorth@pnp.co.za
Penny Gerber
email address: pgerber@pnp.co.za
Website
Pick n Pay: www.picknpay.co.za
Investor relations: www.picknpayinvestor.co.za
Customer careline
Tel +27 800 11 22 88
email address: customercare@pnp.co.za
Online shopping
Tel +27 860 30 30 30
www.picknpay.co.za
Date: 13/10/2015 07:06:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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