| 1. |
KPMG Inc., the Group’s independent auditor, has reviewed the condensed consolidated results for the year to 29 February 2012 contained in this preliminary report, and has expressed an unmodified conclusion on the preliminary financial statements. Their review report is available for inspection at the Company’s registered office. These preliminary financial statements are prepared in accordance with the recognition and measurement requirements of IFRS and the disclosure requirements of IAS 34. Other than disclosed in note 3, accounting policies are consistent with those of prior years. |
| 2. |
During the year, certain companies within the Group entered into transactions with each other. These intra-group transactions are eliminated on consolidation. Related parties are unchanged from that reported at 28 February 2011. For further information, please refer to note 28 of the 2011 annual report. |
| 3. |
Revenue comprises turnover, other trading income and interest received. The Group has reviewed the terms of its franchise agreements in Botswana, Lesotho and Swaziland, and the interpretation of its role in the supply of inventory to those franchisees. In the past, Pick n Pay purchased inventory on behalf of its franchisees and sold the inventory to the franchisees at no margin. As such, the accounting treatment of the transaction was to recognise the purchases as part of Group cost of merchandise sold and the sales as part of Group turnover, with no impact on gross profit. The substance of the relationship has changed over time, with the franchisees ordering and receiving directly from the suppliers, albeit facilitated through the Pick n Pay supply chain. We believe it more appropriate therefore to reflect Pick n Pay’s role in the transaction as that of agent, earning a franchise fee only. Therefore we will no longer be recognising the turnover and the corresponding cost of merchandise sold in the Group statement of comprehensive income. Prior year disclosures have been adjusted accordingly as follows: |
| |
| |
As
previously
stated
2011
Rm |
Prior
year
adjustment
2011
Rm |
As
restated
2011
Rm |
| Revenue |
52 216.7 |
(760.8) |
51 455.9 |
| Turnover |
51 945.8 |
(760.8) |
51 185.0 |
| Cost of merchandise sold |
(42 859.6) |
760.8 |
(42 098.8) |
| Gross profit |
9 086.2 |
— |
9 086.2 |
|
| |
No restatement of the prior year statement of financial position is required as the prior year adjustment has had no impact on earnings. |
| 4. |
The weighted average number of shares is lower than that in issue due to the treasury shares held by the Group being treated as cancelled for this calculation. |
| 5. |
In February 2012 the Group purchased a further 24% stake in TM Supermarkets in Zimbabwe for R102.5 million bringing its total investment to 49%. The business is currently incurring losses, our share being R1.9 million for the year. However, we are confident of its future prospects and are looking forward to playing a role in growing this business in Zimbabwe. |
6. |
In September 2011, after a lengthy dispute with the Australian Competition and Consumer Commission, we sold our Australian business, Franklins, to Metcash Limited for R1.2 billion net of fees. The sale of Franklins has enabled us to focus entirely on our southern African operations with the cash proceeds being utilised directly in our core retail operations. Franklins is disclosed as a discontinued operation, with its results to 30 September 2011 and the profit on sale of the business being disclosed separately from continuing operations. |
Results from the discontinued operation are as follows:
| |
|
Reviewed
year to
Feb 2012
Rm |
|
Audited
year to
Feb 2011
Rm |
| Results of discontinued operation |
|
|
|
|
| Revenue |
|
3 389.3 |
|
5 617.4 |
| Expenses |
|
(3 476.5) |
|
(5 740.8) |
| Results from operating activities |
|
(87.2) |
|
(123.4) |
| Tax |
|
— |
|
— |
| Results from operating activities, net of tax |
|
(87.2) |
|
(123.4) |
| Profit on sale of discontinued operation |
|
493.4 |
|
— |
| Tax on sale transaction |
|
(55.0) |
|
— |
| Profit/(loss) for the year |
|
351.2 |
|
(123.4) |
| Cash flows from/(utilised in) discontinued operation |
|
|
|
|
| Net cash (utilised in)/from operating activities |
|
(330.4) |
|
13.9 |
| Net cash from/(utilised in) investing activities |
|
1 459.6 |
|
(151.4) |
| Net cash sale proceeds |
|
1 244.9 |
|
|
| Cash and cash equivalents |
|
214.7 |
|
|
| Net cash from financing activities |
|
— |
|
10.0 |
| Net cash flows for the year |
|
1 129.2 |
|
(127.5) |
| |
|
|
|
|
| Effect of the disposal on the financial position of the Group |
|
|
|
|
| Net cash proceeds received |
|
1 244.9 |
|
|
| Foreign currency translation reserve – realised on sale |
|
539.8 |
|
|
| Less: net assets sold |
|
(1 291.3) |
|
|
| Intangible assets |
|
(837.2) |
|
|
| Property, plant and equipment |
|
(697.2) |
|
|
| Deferred tax |
|
(22.9) |
|
|
| Inventory |
|
(570.1) |
|
|
| Trade and other receivables |
|
(67.4) |
|
|
| Cash and cash equivalents |
|
214.7 |
|
|
| Short-term debt |
|
10.2 |
|
|
| Trade and other payables |
|
678.6 |
|
|
 |
|
|
|
|
| Profit on sale of Franklins |
|
493.4 |
|
|
| Tax on sale transaction |
|
(55.0) |
|
|
| |
|
438.4 |
|
|
|
