|
|
| |
| REVIEW OF OPERATIONS |
GROUP OVERVIEW
One of the major features of the year from
a trading perspective was the effect of the
decrease in the rate of inflation in significant
major categories, and the effect of food deflation
which was obviously felt to a greater degree
given the basic nature of the goods sold in
our Score and Boxer divisions. Notwithstanding
this, the Group has performed exceptionally
well and posted an acceptable result.
The management of the Retail Division specifically
is to be congratulated on the energy and effort
that has been put into the Group recovery.
I would also like to take this opportunity of
once again thanking our very loyal customers,
employees, suppliers and all other stakeholders
for their ongoing support and encouragement
during the course of this year.
Group turnover for the year
of R29.3 billion is 11.8% up on last year and
includes a 15.9% increase in Southern African
operations and a 7.7% decrease in Australia.
In Australian dollars Franklins turnover increased
by 4.0% the decrease shown being purely as a
result of the strengthening of the Rand .
Trading profit increased by
15.9% while profit before tax, after interest
and investment income, increased by 13.3%.
Interest income for the year was affected by
the 5.0% drop in prime rates during the year.
The Headline earnings per
share increase of 14.1% is very acceptable considering
the challenges that we have had to overcome
during the year.
As the Board of Directors are confident of
ongoing growth in the year ahead, they have
approved a final dividend of 63.5 cents giving
a full year dividend of 80.0 cents, an increase
of 15.9%.
PICK ‘n PAY RETAIL DIVISION
Notwithstanding the effect of the extortion
incident, this division performed strongly in
the second half of the year and produced a really
commendable result. All major parts of
the division being Hypermarkets, Supermarkets,
Franchise and Butcheries reported good real
growth in both turnover and profit contributions.
The division opened 8 new Corporate stores,
the most for many years, and 15 new Family stores.
In the coming year the division will continue
to increase its footprint by opening a further
15 new Corporate stores and 20 Family stores.
GROUP ENTERPRISES
Score continues to be restructured in terms
of its geographic operations. While significant
progress has been made on the administrative
front within Score, we are not satisfied with
the operational progress and further significant
management changes have been made. The
initial signs already indicate an improvement
in its performance and will see it return to
profitability in the year ahead.
Score was also significantly
impacted by the effect of deflation on most
basic food commodities which form the bulk of
the sales within this group. Notwithstanding
this, a fairly significant real growth was shown
in turnover due partly to the opening of new
stores, as well as aggressive promotion and
marketing.
Boxer produced an outstanding
result showing real growth in both turnover
and profit. Like Score, Boxer has
been particularly hard hit by the above deflationary
factors. During the year Boxer opened
6 new stores and will open a further 4 stores
in the next year and convert 9 Score stores
in the Eastern Cape.
Boardmans - the sale of Boardmans
was implemented on 1 April 2004 following Competition
Tribunal approval of the transaction.
Go Banking have continued
to grow their customer base, increasing the
number of accounts by 23% and total deposits
by 25% during the year. In the year ahead
Go Banking will launch further new products
and enhance their existing product ranges.
TM Supermarkets , in Zimbabwe
- Under continuing trying trading circumstances,
the management of TM, yet again, produced a
very commendable result. They continue to receive
our support in any way we can. We continue
to account only for dividends received.
However, no dividends were received this year.
FRANKLINS AUSTRALIA
In Australian Dollars the turnover for the
year increased by 4.0% which shows real growth.
During the year 2 new stores were opened and
the store destroyed by fire in September 2002
was relaunched successfully.
Before depreciation, Franklins made a trading
loss of R5.5 million which is a significant
improvement over the loss incurred last year
of R56.2 million. This shows the significant
strides management have made in building our
Australian business.
The Board has taken a decision to end our distribution
contract with Metcash and have appointed two
logistics providers to distribute to stores
from January 2005. We are confident that
by managing our own distribution network entirely,
we will be able to further enhance our efficiencies
and bottom line contributions in our Franklins
operation.
GENERAL COMMENT
Although we have had our fair share of challenges
during the year past, I would really like to
thank all of my Pick ‘n Pay colleagues, as well
as our customers, for the significant support
that we have received.
SEAN SUMMERS
CHIEF EXECUTIVE OFFICER 19 April 2004 |
|
