| GROUP
OVERVIEW
We are pleased to report that the Group
has achieved a 17.1% increase in Headline
Earnings per share for the year ended
28 February 2006. The result is against
a background of various challenges we
have had to overcome during the financial
year including a very competitive trading
environment with continued low inflation,
and the industrial action at Pick 'n Pay
in the middle of the year.
The Group has adopted International
Financial Reporting Standards
("IFRS") and we draw your attention to
the separate section of this result outlining
the changes we have made in this regard.
Group turnover
at R35.1 billion is an increase of 10.0%
and shows good real growth, above the
very low levels of inflation, with the
Southern Africa segment achieving a growth
of 11.3%.
The increase in trading profit
of 16.9% for the Group is a good performance.
Trading margin has increased from 2.8%
to 3.0%.
Headline earnings
at R705.6 million increased by 15.2% for
the year. As a result of the concentration
effect of share repurchases, mainly towards
the end of the prior year, our headline
earnings per share at 153.02 cents is
up 17.1%.
PICK 'n PAY
RETAIL
The Retail division had a commendable
increase in both turnover and profitability,
despite the negative impact that the industrial
action had on the business. The continued
low inflation rate, which averaged 3.5%
for the year, has been great for consumers
and continues to focus our attention on
cost control.
Supermarkets
- during the year 8 new corporate supermarkets
were opened with a further 10 stores planned
in the year ahead.
Family
and Mini Market franchise
stores continue to make a significant
contribution to the Group. Franchise stores
now total 179 with 11 new Family stores
being opened in the current year. In the
year ahead we will open a further 24 Family
stores.
Hypermarkets
were particularly affected by the industrial
action, but as a brand still continue
to be the cheapest food retail outlet
in the country. The next financial year
will be particularly exciting with 2 new
Hypermarkets in Zambezi Road, Pretoria
and Old Pretoria Road, Centurion being
opened. These will be the first new Hypermarkets
opened in many years and shows our commitment
to this large retail format. A further
2 stores are currently being constructed
for opening in the year ending February
2008.
The Retail division has also been expanding
our liquor outlets to
22 and clothing stores
to 18 during the year. Liquor outlets,
adjacent to Supermarkets and Hypermarkets,
have been particularly successful and
as a format show good potential for the
future. Our clothing stores expanded by
a further 10 stores this year.
GROUP ENTERPRISES
Score Supermarkets
had a very strong trading year showing
real growth in turnover and significantly
reduced expenses. Following this turnaround,
in the year ahead we will open 7 new stores
and convert a further 28 stores to the
successful "Nambawane" format as well
completing the scanning roll-out.
Boxer Superstores
had yet another excellent trading year
showing real increases in both turnover
and profit contribution. In the current
year 3 new stores were opened. Next year
will see Boxer open 8 new supermarkets
and the completion of its rollout of scanning
in all stores.
TM Supermarkets
continues to trade under very trying circumstances
with inflation reaching levels of over
900%. During the year there was a significant
weakening in the Zimbabwean dollar which
is currently over $16,500 to the Rand.
FRANKLINS AUSTRALIA
Following the change-over to
our own distribution channels at the beginning
of the year the business is far more efficient,
as is evident from the trading loss in
the second half of the year being reduced
to R29.2 million from the R63.5 million
incurred in the first half. The year ahead
will see further significant reductions
in the losses.
The transition to the SAP software system
has been very successful and has assisted
us in planning for the implementation
of this system in our South African operations.
An important milestone in the last few
months has been the development of our
franchise model which is currently being
piloted.
Our main focus at Franklins in the year
ahead will be the refinement and rollout
of our franchise format as well as the
opening of 3 new corporate stores.
GENERAL COMMENT AND
PROSPECTS
We have had an exceptionally
busy trading year and are pleased that
we have again produced a strong performance.
We are excited by the prospect of a significant
number of new stores being opened in the
2007 financial year. Each division within
the Group is highly focused on their respective
goals in the next year and we are confident
that we will be able to achieve an acceptable
increase in headline earnings.
We would like to express our appreciation
for the loyal support shown by all our
employees, customers and suppliers.
For and on behalf of the boards
Raymond Ackerman
Chairman
19 April 2006
Sean Summers
Chief Executive Officer
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