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Unaudited condensed consolidated interim results for the 26 weeks ended 1 September 2019
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")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE 26 WEEKS ENDED 1 SEPTEMBER 2019
This short-form announcement is the responsibility of the directors and is only a summary of the information contained in the Group's full
interim announcement.
Any investment decision should be based on the full interim 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/2019/jse/isse/PIK/FY20H1.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. To request a copy of the full announcement, contact our Company Secretary, Debra Muller at
demuller@pnp.co.za.
The information contained in this announcement has neither been audited nor reviewed by the Group's external auditors.
CONSISTENCY AT THE CORE DELIVERS ANOTHER STRONG RESULT
26 weeks to 26 weeks to
1 September 26 August %
Key financial indicators 2019 2018* change
Turnover - comparable# R43.1 billion R40.7 billion 6.0
Turnover - reported# R43.2 billion R41.2 billion 4.8
Revenue R44.2 billion R42.2 billion 4.8
Gross profit margin 19.8% 18.8%
Trading profit R1 187.6 million R1 056.0 million 12.5
Trading profit margin 2.7% 2.6%
Trading profit - South Africa R1 158.0 million R995.0 million 16.4
Trading profit margin - South Africa 2.8% 2.5%
Profit before tax (PBT) before net monetary gain and capital items R554.8 million R505.6 million 9.7
PBT margin before net monetary gain and capital items 1.3% 1.2%
Basic earnings per share 81.31 cents 80.57 cents 0.9
Reported headline earnings per share (HEPS)^ 91.28 cents 77.67 cents 17.5
Reported diluted headline earnings per share (DHEPS)^ 90.61 cents 76.27 cents 18.8
Comparable HEPS excluding hyperinflation net monetary gain^ 85.03 cents 77.67 cents 9.5
Comparable DHEPS excluding hyperinflation net monetary gain^ 84.41 cents 76.27 cents 10.7
Net asset value per share 636.66 cents 638.99 cents (0.4)
Interim dividend per share 42.80 cents 39.10 cents 9.5
*The financial information presented for the prior period is on a restated basis, with the full retrospective adoption of IFRS 16 Leases (IFRS 16).
Refer to note 12 of the Group's full interim announcement for further information.
#After a strategic change in our arrangements with airtime and data providers this year, the Group now only transacts on an agency basis.
Airtime and data sales and related purchases previously recognised on a gross basis within turnover and cost of sales, are now recognised on a
net basis within other income. Comparable turnover information is provided, with relevant airtime and sales excluded, to allow for a comparable
assessment of year-on-year performance. Refer to the Appendix of the Group's full interim announcement for further information.
^Reported headline earnings and diluted headline earnings per share include a non-cash hyperinflation gain recognised in the current year 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 headline earnings and diluted headline earnings per share exclude the impact of hyperinflation
accounting. Refer to note 8 of the Group's full interim announcement for further information.
RESULT HIGHLIGHTS
- By following a successful long-term strategy, the Group has delivered another period of turnover growth and improved profit margins despite a
difficult consumer environment
- A positive performance by our core South African operations resulted in overall earnings growth at Group level, despite challenges in Zambia
and Zimbabwe
- Comparable Group turnover growth of 6.0%, with like-for-like turnover growth of 2.9%
- South African operations delivered comparable turnover growth of 6.5%, against a strong base last year, with like-for-like turnover growth
of 3.5%
- Selling price inflation restricted to 2.2%, below general price and food inflation, with like-for-like volume growth in South Africa of 1.3%
- Stronger performances across all Pick n Pay and Boxer owned and franchise formats, with an increased relative contribution from company-owned
stores lifting gross profit margin to 19.8%
- Strong earnings contribution from core South African business, with trading profit up 16.4%, and trading profit margin up from 2.5% to 2.8% of
turnover
- On a comparable basis, excluding hyperinflation gains and losses, operations outside South Africa contributed R45.8 million to profit
before tax. Reported earnings from the Rest of Africa division are down 79.8% year-on-year, reflecting in particular difficult economic
conditions in Zimbabwe, with the Group's share of associate income now accounted for under the provisions of IAS 29 Financial Reporting in
Hyperinflationary Economies (IAS 29)
- Comparable headline earnings per share, excluding the impact of hyperinflation accounting in Zimbabwe, and reflecting underlying operating
performance, up 9.5%
- Interim dividend up 9.5% to 42.80 cents per share in line with comparable growth in headline earnings per share, with plans to maintain a
recalibrated dividend cover under IFRS 16 of 1.3 times earnings for the full year (equal to 1.5 times earnings cover pre-IFRS 16)
Despite a difficult trading environment inside and outside South Africa, the Group has delivered another positive performance, maintaining growth
in both sales and earnings. Over a number of years, the Group has succeeded in developing much greater relevance and flexibility in its customer
offer, format and operating model. An emphasis on cost discipline and greater efficiency has provided headroom for investment in price, quality
and value for all customers. Our Pick n Pay and Boxer stores now appeal across a very broad range of incomes, preferences and communities.
This has positioned the Group well to identify and pursue opportunities for growth in a dynamic and sustainable way within a persistently
low-growth economy.
Group turnover increased by 6.0% on a comparable basis, with like-for-like turnover growth of 2.9%. Net new stores added 3.1% to sales growth.
Trading conditions in Zambia remained constrained, with muted sales growth and the weaker Zambia kwacha weighing on Group turnover growth. On a
constant currency basis, comparable Group turnover grew 6.2%. The Group's core South Africa division delivered comparable turnover growth of 6.5%,
with like-for-like turnover growth of 3.5%. Efficiency gains from optimising our product range, improving availability and reducing waste enabled
the Group to invest in lower prices, with selling price inflation restricted to just 2.2% year-on-year. The Group maintained positive volume
growth despite operating in a difficult trading environment.
Consistent execution of the Group's long-term plan has delivered substantially improved performances across our company-owned and franchise estate.
A pleasing increase in the sales and earnings contribution from company-owned Pick n Pay and Boxer supermarkets, particularly those serving lower-
and middle-income customers, helped to lift the Group's gross profit margin to 19.8%.
The Groups' trading expenses grew 9.8% year-on-year, largely driven by the Group's expanding owned-store business, strengthened operational
management teams, and the impact of double-digit increases in the cost of security, rates, water and other utilities.
Effective delivery of the Group's plan is particularly evident in the Group's core South Africa division, where tighter margin management and
improved efficiency helped to deliver a 16.4% increase in underlying trading profit in South Africa.
Group earnings reflect the significant challenges experienced in operations outside South Africa, particularly in Zambia and Zimbabwe, with
Zimbabwe also experiencing significant currency devaluation and hyperinflation over the period. The Group has applied the provisions of IAS 29
in the recognition of its share of associate income in Zimbabwe. This has resulted in a hyperinflation net monetary gain over the period, and a
related capital impairment. The Group's comparable PBT, excluding the impact of hyperinflation was up 9.7% year-on-year to R554.8 million, with
comparable PBT margin improvement from 1.2% to 1.3%.
The stability of the Group's balance sheet reflects the consistent execution of its long-term strategy, which has delivered industry-leading
earnings growth for a number of years, alongside sustainable returns from a measured and targeted capital investment programme. The Group has no
long-term funding and is efficiently and effectively geared through short-term debt. The Group has maintained its position of low debt over the
past 12 months. The Group's net asset value was impacted by a reduction in the foreign currency translation reserve of R132.3 million as a result
of the translation of our investment in TM Supermarkets at a rate of 12.4 Zimbabwe dollars to 1.0 US dollar (FY2019: 3.3 Zimbabwe dollars to
1.0 US dollar). The fair value of the Group's investment in TM exceeds its carrying value of R50.4 million and no further impairment is required.
Earnings per share increased by 0.9% to 81.31 cents, reflecting the impact of the Group's capital losses this period, including its share of the
hyperinflation impairment loss in Zimbabwe, against capital profits in the prior year. Headline earnings per share grew 17.5% to 91.28 cents, with
diluted HEPS up 18.8%. On a comparable basis, excluding hyperinflation gains in Zimbabwe, headline earnings per share were up 9.5%, and diluted
headline earnings per share were up 10.7%, reflecting the progress made across our customer offer, an impactful new store and refurbishment
programme, and cost and working capital discipline.
The Group will pay an interim dividend of 42.80 cents per share to shareholders, up 9.5% on last year.
We extend our sincere appreciation to our Pick n Pay and Boxer teams, including our valuable franchise partners, for all their hard work, their
unwavering commitment to the customers they serve, and their determination to build an ever stronger and more sustainable business.
Gareth Ackerman Richard Brasher
Chairman Chief Executive Officer
21 October 2019
INTERIM DIVIDEND DECLARATION
Number of shares in issue: 493 450 321
Notice is hereby given that the directors have declared an interim gross dividend (number 103) of 42.80 cents per share out of income reserves.
The dividend declared is subject to dividend withholding tax at 20%.
The tax payable is 8.56 cents per share, resulting in shareholders who are not exempt from dividends tax with a net dividend of 34.24 cents
per share.
Dividend dates
The last day of trade in order to participate in the dividend (CUM dividend) will be Tuesday, 3 December 2019. The shares will trade EX dividend from
the commencement of business on Wednesday, 4 December 2019 and the record date will be Friday, 6 December 2019. The dividend will be paid on
Monday, 9 December 2019. Share certificates may not be dematerialised or rematerialised between Wednesday, 4 December 2019 and Friday, 6 December 2019,
both dates inclusive.
On behalf of the Board of directors
Debra Muller
Company Secretary
21 October 2019
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
over 80 000 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 (CIO), Suzanne Ackerman-Berman, Jonathan Ackerman
Non-executive
Gareth Ackerman (Chairman), Aboubakar Jakoet, David Robins
Independent non-executive
David Friedland, Hugh Herman, Alex Mathole, Audrey Mothupi, Jeff van Rooyen
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
100 Grayston Drive, Sandton, 2196
Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
Date: 22/10/2019 07:05:00
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