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Report to stakeholders

Chief Finance Officer's report

Pick n Pay HOLDINGS LIMITED GROUP

Pick n Pay Holdings Limited (Pikwik) Group’s only asset is its 53.8% (2012: 53.8%) effective holding in Pick n Pay Stores Limited (excluding treasury shares). The Pikwik Group earnings are directly related to those of this investment. The table below highlights the key financial indicators.

	2013	2012	% change



Turnover (Rbn)	59.3	55.3	7.1
Headline earnings per share (cents)	55.11	79.81	(30.9)
EBITDA (Rm)	1 791.1	2 072.1	(13.6)

Pick n Pay HOLDINGS LIMITED GROUP AND Pick n Pay STORES LIMITED GROUP

Shareholder distribution

The Groups maintain a dividend cover at 1.33 times headline earnings per share. The final dividend of 69.25 cents per share for Pick n Pay Stores Limited (Stores) and 33.61 cents per share for Pick n Pay Holdings Limited (Holdings) brings the total dividend for the annual period to 84.0 cents per share for Pick n Pay Stores Limited (35.8% down on the comparable period) and 40.78 cents per share for Pick n Pay Holdings Limited (35.8% down on the comparable period).

During the previous financial period, an additional dividend of 9.85 cents for Stores and 4.78 cents for Holdings was declared in respect of STC no longer payable by the Group, thus passing on the cash benefit to shareholders. If this is excluded, the decline in the year-on-year dividend was 30.6% and 30.5% for Stores and Holdings respectively, in line with the decrease in headline earnings per share.

Prospects

We expect the economic outlook to remain challenging for the foreseeable future. The current weak rand will result in increased costs of imported goods and high commodity prices will impact the cost of manufactured goods. Interest rates and inflation will stay at current low levels and our customers’ disposable income will remain under pressure.

In this trading environment the Group will be focusing on the basics of retailing, and ensuring our customers are central to all that we do. We will concentrate on cost containment, increasing administrative efficiencies and realising the related cost reductions.

Under the leadership of newly appointed CEO Richard Brasher, our immediate priority is improving the shopping trip for our customers. Pick n Pay is a great business, but as a team we know that a lot of hard work lies ahead. It will be a challenging and exciting period for the Group and we look forward to the future with optimism.

Bakar Jakoet
Chief Finance Officer

22 April 2013