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Summarised Group Financial Results for the 52 weeks ended 28 February 2021 and declaration of final dividend
Pick n Pay Stores Limited
Incorporated in the Republic of South Africa
Registration number: 1968/008034/06
ISIN: ZAE000005443
JSE share code: PIK
("Pick n Pay" or "the Group")
SUMMARISED GROUP FINANCIAL RESULTS FOR THE 52 WEEKS ENDED 28 FEBRUARY 2021 AND DECLARATION OF FINAL DIVIDEND
OUTSTANDING PERFORMANCE IN EXTRAORDINARY TIMES
KEY FINANCIAL INDICATORS 52 weeks to 52 weeks to
28 February 2021 1 March 2020^ %
FY21 FY20 change
Group turnover R93.1 billion R89.3 billion 4.3%
Group turnover - South Africa R89.9 billion R85.6 billion 5.0%
Gross profit margin 19.8% 19.7%
Trading profit R2 707.8 million R3 174.5 million (14.7%)
Profit before tax and capital items R1 554.2 million R1 940.4 million (19.9%)
Comparable profit before tax and capital items (PBT)# R1 583.4 million R1 897.2 million (16.5%)
Comparable PBT - excluding once-off compensation costs* R1 783.4 million R1 897.2 million (6.0%)
Profit for the period, after tax R967.1 million R1 194.7 million (19.1%)
Basic earnings per share 202.52 cents 250.90 cents (19.3%)
Headline earnings per share (HEPS) 229.31 cents 291.90 cents (21.4%)
Comparable HEPS# 235.42 cents 282.82 cents (16.8%)
Comparable HEPS - excluding once-off compensation costs* 265.58 cents 282.82 cents (6.1%)
FY21 - total dividend per share 179.74 cents 215.86 cents (16.7%)
^ Reported prior year headline earnings and headline earnings per share have been restated to accord with the guidance contained within SAICA Circular
1/2019: Headline Earnings, related to IFRS16: Leases. Please refer to note 4 of the summarised annual financial statements for further information.
* The Group incurred R200 million (R144 million net of South African income tax at 28%) of once-off compensation costs in respect of voluntary and
structured staff severance programmes undertaken during the course of the year. The measures were an important step in delivering on the Group's
productivity and efficiency goals under Project Future, the Group's modernisation programme. Please refer to the summarised annual financial statements
for further information.
# Profit before tax and capital items and headline earnings per share (HEPS) include non-cash hyperinflation net monetary adjustments recognised in respect
of the Group's investment in its associate, TM Supermarkets in Zimbabwe, under the requirements of IAS 29: Financial Reporting in Hyperinflationary
Economies (IAS 29). Comparable profit before tax and capital items, and Comparable HEPS, exclude these non-cash hyperinflation net monetary adjustments.
Please refer to Appendix 2 to the summarised annual financial statements for further information.
RESULT SUMMARY
The Group delivered an outstanding performance in a year which fell almost entirely within the National State of Disaster caused by Covid-19. Sales growth
of 10.0% in core food and groceries in South Africa led the market in a year of unprecedented disruption. Taking into account additional costs associated
with Covid-19 and the once-off compensation costs arising from severance programmes, the Group demonstrated considerable strength and momentum in its
underlying quality of earnings.
The Group's primary role throughout the Covid-19 pandemic has been to feed the nation by keeping our stores open, safe and fully stocked of essential food
and groceries. Our Pick n Pay and Boxer teams have achieved this with distinction, and the Board expresses its profound thanks to them for their dedication
and service.
FY21 Group earnings reflect the full impact of measures taken to contain the spread of the virus, including trading restrictions over non-essential goods
and services for parts of the year. These resulted in an estimated R4 billion in lost sales, and R200 million in additional costs arising from the Group's
operational response.
Throughout the crisis, the Group has remained resolute in its execution of its clear and customer-led strategy. Project Future was launched over a year
ago to drive modernisation and efficiency, enabling the Group to invest in lower prices, better value and improved service for customers. The Group
delivered R600 million of cost savings in the first year of Project Future, and is on-track to deliver the target of R1 billion over two years. In doing
so, the Group simplified its store, supply chain and support office infrastructure, drove productivity and efficiency gains across its operations and
improved the overall quality and relevance of its store estate. The benefit of this work is evidenced in the FY21 result through the Group's exceptional
gross profit margin management, strong cost discipline and tight working capital management.
R200 million once-off costs were incurred in compensation payments arising from a voluntary severance programme and some further retrenchments to improve
support office efficiency.
The Group worked closely with strategic funders to optimise cost-effective, short-term funding lines, maintaining high levels of liquidity throughout the
year. The Group's positive net funding position, after maintaining an uninterrupted dividend cycle with the payment of the FY20 final and FY21 interim
dividends in December 2020, reflects the Group's careful and considered cash management, with a keen focus on capital and working capital returns, and
exceptional discipline in respect of all non-critical spend.
FY21 Highlights:
- Resilient and responsive store and supply chain infrastructure, ensuring continuous business operations over the year and high levels of product
availability
- Market-leading core food and grocery** performance in South Africa, up 10.0% year-on-year (8.4% like-for-like) with 5.1% like-for-like volume growth in
the second half of the year
- Solid market share gains over the second half of the year, led by an outstanding Boxer performance
- Sustained improvement in the Group's underlying core retail offer, delivering improved trading densities with tighter and more tailored ranges
- Pick n Pay clothing achieved market share gains through increased customer demand for its high-quality, affordable offer
- Rapid expansion of South Africa's largest online grocery platform - with the on-demand grocery service Bottles augmenting Pick n Pay's scheduled delivery
and Click n Collect services
- Gross profit margin expansion to 19.8% of turnover, with cost savings and efficiency gains across the supply chain countering the impact of trading
restrictions on the Group's higher-margin categories
- Competitive prices and value, with internal selling price inflation kept to 3.8% over the year against CPI Food of 4.8%, driven by strong promotions and
a highly-integrated Smart Shopper loyalty programme
- Smart Shopper was recognised by the Sunday Times as South Africa's favourite retail loyalty programme of the past decade and, with 8.5 million active
members, has grown loyalty participation to 75% of sales
- Project Future is driving a culture of cost discipline, with growth in trading expenses contained at 5.6% (3.1% like-for-like), excluding additional
Covid-19 and once-off compensation costs
- Positive net cash funding position of R132.5 million, R500 million stronger than last year on a like-for-like basis, underpinned by strong working
capital management
- Improved store estate, with 112 new stores across all Pick n Pay and Boxer formats, reflecting targeted investment in smaller community-based stores
providing greater convenience and value
- The Group's Feed the Nation campaign raised R136 million in hunger relief efforts over the year, providing more than 28 million meals to vulnerable
families
** Core food and grocery sales include all food, grocery and general merchandise categories (including value-added categories impacted by trading
restrictions such as hot foods, deli and bakery products), but exclude liquor, clothing and tobacco.
A SOLID PLATFORM FOR FUTURE GROWTH
An extraordinary year
The Group has made considerable progress in its turnaround and modernisation programme over the past eight years. We believe that our FY21 performance
will stand out from all these years for the quality and resilience of the Group's performance in the most challenging of circumstances. The Group grew its
market share over the year, improved the productivity of its operations, and provided customers with ever greater value, including through a growing own
brand offer and a highly personalised loyalty programme.
The Board owes a significant debt of gratitude to Richard Brasher for his tremendous leadership over an eight-year tenure, and in particular for his
extraordinary commitment this year, when he delayed his retirement to steer the business effectively through the Covid-19 crisis. The Board expresses its
sincere thanks to Richard for his invaluable contribution and wishes him well for his retirement.
Looking forward
The business is well-placed for the next chapter of its growth, under the leadership of new CEO Pieter Boone. Pieter joins the Group with a successful
and diverse career in retail, most recently with the Metro AG group. Pieter has significant expertise and global experience in the retail, food service
and wholesale sectors and has a strong record of delivering retail growth in challenging and emerging market economies. The Group has a solid platform
from which to deliver long-term sustainable growth, and everyone in the Group looks forward to working with Pieter to deliver on our high expectations
and those of our stakeholders.
Gareth Ackerman Richard Brasher
Chairman Chief Executive Officer
20 April 2021
ABOUT THIS ANNOUNCEMENT
This short-form announcement is the responsibility of the directors and is only an abridged summary of the information contained in the Group's full 2021
annual result announcement. Any investment decision should be based on the full announcement published on the Group's website at www.picknpayinvestor.co.za
and on the JSE website using the link https://senspdf.jse.co.za/documents/2021/jse/isse/PIK/FY21.pdf.
Copies of the full announcement are available for inspection at, or may also be requested from, the Group's registered office or the office of our sponsor,
at no charge, during office hours.
The summarised audited Group annual financial statements are an extract from the audited Group annual financial statements, which have been audited by the
Group's independent external auditors, Ernst & Young Inc. who expressed an unmodified opinion thereon. The full annual financial statements and the
auditor's report thereon are available for inspection at the Company's registered office.
To request a copy of the full announcement, or to inspect the full annual financial statements or unmodified audit report at the Company's registered
office, please contact our Company Secretary, Debra Muller at demuller@pnp.co.za.
The Group will hold an online results presentation at 9:30am this morning. All interested stakeholders are invited to watch the live webcast which can be
accessed using the following link: https://www.corpcam.com/PicknPay21042021. The slides accompanying the live result presentation will be available on the
Pick n Pay Investor Relations website at www.picknpayinvestor.co.za shortly before the commencement of the presentation. A playback of the webcast will be
made available on our website approximately 2 hours after the presentation.
DIVIDEND DECLARATION
Tax reference number: 9275/141/71/2
Number of ordinary shares in issue: 493 450 321
2021 final dividend - number 106
Notice is hereby given that the directors have declared a final gross dividend (number 106) relating to its 2021 annual financial period (ended
28 February 2021) of 161.00 cents per share out of income reserves.
The dividend declared is subject to dividend withholding tax at 20%. The tax payable is 32.20 cents per share, resulting in shareholders who are not
exempt from dividends tax with a net dividend of 128.80 cents per share.
Dividend dates
Last day to trade cum-dividend Tuesday, 1 June 2021
Shares to commence trading ex-dividend Wednesday, 2 June 2021
Record date Friday, 4 June 2021
Dividend payment date Monday, 7 June 2021
Share certificates may not be dematerialised or rematerialised between Wednesday, 2 June 2021 and Friday, 4 June 2021, both dates inclusive.
On behalf of the Board of directors
Debra Muller
Company Secretary
20 April 2021
ABOUT PICK N PAY STORES LIMITED
The Pick n Pay Stores Limited Group is a leading South African grocery, clothing, pharmaceuticals, liquor and general merchandise retailer, employing
90 000 people through its owned and franchise operations, across its Pick n Pay and Boxer brands. The Group is managed through its South Africa and
Rest of Africa divisions and owns a 49% share of a Zimbabwean supermarket business, TM Supermarkets. For further information on Pick n Pay and its
underlying businesses, please visit www.picknpayinvestor.co.za.
DIRECTORS OF PICK N PAY STORES LIMITED
Executive
Richard Brasher (CEO)*
Lerena Olivier (CFO)
Richard van Rensburg (CISO)**
Suzanne Ackerman-Berman
Jonathan Ackerman
Non-executive
Gareth Ackerman (Chairman), Aboubakar Jakoet, David Robins
Independent non-executive
Haroon Bhorat, Mariam Cassim, David Friedland, Hugh Herman, Audrey Mothupi, Annamarie van der Merwe, Jeff van Rooyen
* Richard Brasher will retire as CEO of the Group at the end of April 2021, and CEO-designate Pieter Boone will be appointed in his stead.
** Richard van Rensburg retired from the Group at the end of March 2021.
CORPORATE INFORMATION
Registered office
101 Rosmead Avenue, Kenilworth, Cape Town 7708
Investor relations
Penny Gerber
Email address: pennygerber@pnp.co.za
Sponsor
Investec Bank Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited
Date: 21-04-2021 08:00:00
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