RESULT OVERVIEW

2009 was another year in which we made great strides in implementing the strategy we laid out in March 2007. Again we invested heavily in the business to ensure that we lay the right platform for many more years of sustainable growth.

Highlights of the year include:

• the successful refurbishment of some of our flagship stores;
• the re-launch of our private label brands;
• continued improvements in the range and quality of our fresh foods;
• 27 conversions of Score stores to Pick n Pay;
• completion of the first phase of our supply chain plan at Longmeadow;
• completion of 65% of our SAP implementation;
• the Boxer business continued to deliver outstanding results; and
• Franklins in Australia produced its first full year’s operating profit.
  
  

In the context of our continued investment in the business, as well as the current economic climate, we are very pleased with our financial results for the year.

As disclosed more fully in note 18 of the financial statements, the results of Score Supermarkets have been disclosed as a discontinued operation as we are winding down the business and sub-letting many of its sites to Black franchisees as Pick n Pay Family stores.

Financial highlights – continuing operations

Turnover

Group turnover at R49.9 billion is 17.4% above last year, with a growth of 17.3% in southern Africa and 18.2% in Australia. The Franklins’ increase in Australian dollars is 3.5%.

Trading profit

Trading profit margin is down from 3.6% to 3.4%. This is as a result of significant price investments we have made to help consumers during these tough economic times and is evident by a drop in the gross profit margin by 0.4% to 19.0% for the year. However, we have managed to cushion the financial effect of this investment in price by a reduction in expenses for the year of 0.2% of turnover.

Interest

Interest received increased over last year due to higher interest rates and better average cash balances. Interest paid was also up on last year due to the R500 million term loan drawn down in June 2007, owing for a full year.

Headline earnings per share (“HEPS”) and diluted HEPS

HEPS at 232.48 cents reflects an increase of 13.4%. Diluted HEPS shows an increase of 18.1% as last year’s base already allowed for the full dilution of the 20 million new ordinary shares issued on 31 December 2007.

Dividends per share

The final dividend per share of 134.25 cents for Pick n Pay Stores Limited and 65.52 cents for Pick n Pay Holdings Limited brings the total dividend for the year to 170.00 cents and 82.97 cents respectively, an increase of 14.0% and 13.9%, respectively.