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Reviewed Group Result for the year ended 28 February 2005
Reviewed Group Result for the year ended 28 February 2005   - REVIEW OF OPERATIONS
Review of Operations
Income Statement
Balance Sheet
Cashflow Statement
Changes in Equity
Capitalisation and Dividends
Segmental Report

We are very pleased to present these results, given the low inflation environment we are operating in. Lower selling prices have driven volumes which, with further enhancements in operational efficiencies, has resulted in an increase in operating profit margin from 2.8% to 3.2% over last year.

The result, being an increase in headline EPS of 20.6%, has enabled us to increase our final dividend by 20.8%, which equates to a 20.6% increase in total dividend for the year.

Group turnover increased by 8.9%. Before the effect of the sale of Boardmans and the continued strengthening of the Rand against the Australian Dollar, turnover increased by 10.5%. Against a backdrop of low inflation and deflation in Score and Boxer, we are pleased to have again achieved significant levels of real growth.

The increase in trading profit and operating profit (including interest received) of 24.1% and 21.7% respectively, is particularly pleasing and reflects the continued efficiencies being achieved throughout the Group.

This division continues to be the driving force behind the Pick 'n Pay Group and predominant contributor to Group profitability, with consistently good results across all divisions.

Supermarkets showed good growth in turnover and continued to make a significant profit contribution to the Group. During the year 14 new Corporate stores were opened, with a further 9 new Corporate stores planned for the year ahead.

Hypermarkets showed real growth in turnover and a substantial increase to Group profitability, mainly as a result of operating efficiencies. Our focus is on building top line sales growth in this format.


Score showed good growth in turnover with even greater increases in volumes fuelled by continued deflation. The restructure in the Western Cape and Eastern Cape regions completed in August 2004, allows Score management to concentrate on the predominantly strong areas of the Score brand, in the Northern and Central regions of the country.

12 new stores were opened during the year and refurbishments in a number of existing stores were also completed.

Management have made great strides with expense savings and extracting further operational efficiencies. There is a renewed focus on driving top line sales which, together with the cost savings that continue to be made, puts Score well on the way to returning to profitability in the year ahead.

Boxer Superstores had a very good trading year with commendable increases in both turnover and profitability. They achieved particularly good growth in service areas. In addition to the Score stores taken over in the Eastern Cape, Boxer opened 6 new stores with a further 6 planned for next year.

Pick 'n Pay Go Banking - this initiative, in partnership with Nedcor, has continued to grow its account base and funds on deposit. Enhancing the range and utility of our banking products will add to the growth of this service.

TM Supermarkets in Zimbabwe continues to trade well. Turnover increases are above the very high levels of inflation, although in the last six months management have had to deal with huge reductions in inflation.

Turnover for the year at A$841.1 million is 2.0% below last year, which is largely accounted for by the fact that New South Wales is still experiencing food deflation in many categories and that we did not open any new stores this year.

We have now completed the establishment of our own channels of distribution. This step is the most significant since purchasing Franklins almost 4 years ago.

As a result of these projects, transitional costs pushed the trading loss before goodwill to A$12.8 million for the year versus A$8.2 million last year. The bulk of these additional costs were anticipated at the beginning of the year and are in line with budget.

Now that we have a self-managed distribution platform from which to operate we will be launching our franchising business in the year ahead which, together with the opening of a further 3 stores, will ensure the business incurs significantly reduced losses in the year ahead.

We are really pleased with these results which show real growth in profitability in a low inflation environment. We do not foresee material changes to the current inflation levels. With the various initiatives we have in place in each business unit for the year ahead, we are confident that we will be able to produce another year of good growth.

For and on behalf of the Board

Raymond Ackerman

18 April 2005
Sean Summers
Chief Executive Officer


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