| GROUP
OVERVIEW
We are pleased to report that the Group
has achieved a 15.5% increase in headline
earnings per share for the 6 months ended
31 August 2006. This has been achieved
through a 10.3% increase in turnover and
a 23.1% increase in trading profit. Our
continual strive for operational efficiencies
has led to an increase in trading profit
margin from 2.2% to 2.5% for the period.
In light of the above result, we have
increased our interim dividend by 15.9%.
PICK 'n PAY RETAIL
The Retail division had a strong 6 month
period showing real growth in turnover
and increased its profit contribution
though improved operating efficiencies.
Supermarkets
- during the period 4 new corporate stores
were opened with a further 6 new stores
due to open in the second half of the
financial year. We already have 4 new
supermarkets being built for completion
in the 2008 financial year with extensive
redevelopments of the Benmore Gardens
and Claremont supermarkets also planned
for next year.
We continue to expand our successful Family
Franchise format opening 4 new
stores in the current period with a further
7 new stores due to open in the second
half of the year. This division continues
to play an important role in the expansion
of the Pick 'n Pay Brand.
Hypermarkets
- The opening of 2 brand new hypermarkets
in Zambezi Road, Montana and on Old Pretoria
Road Centurion, in the second half of
the financial year will provide momentum
for growth in this store format.
GROUP ENTERPRISES
At the lower levels of the LSM
market, both Score and Boxer had to contend
with difficult trading conditions during
the first 3 months of the period.
After persistent deflation experienced
in this market over the last 3 years the
trend has moved to positive inflation.
Boxer Superstores
- opened 2 new stores in the period and
intend opening a further 5 stores in the
remaining half of the financial year.
Score Supermarkets -
With the increasing number of conversions
to the Nambawane format we are now starting
to reap the benefit. A further 6 stores
were converted in the current 6 month
period with this process being accelerated
in the second half of the year with a
further 28 conversions. In addition, Score
opened 1 new store this period with a
further 5 new store openings planned for
the remainder of the financial year.
During the period we acquired 100% of
the business of Fruit & Veg City,
which purchase is still subject to certain
suspensive conditions, including Competition
Commission approval and completion of
our due diligence review.
FRANKLINS
AUSTRALIA
Turnover for the period at R2.0 billion
was on par with last year. As a result
of improved gross margins and the containment
of expenses, Franklins were able to decrease
their loss for the period from R63.5 million
to R29.0 million.
During the period we opened our first
two franchise stores, one a conversion
from a corporate store and the other a
conversion from another franchising brand.
To date we are very pleased with the sales
growth shown since conversion and feedback
from operators on the support given by
Franklins is very encouraging.
In the second half of the financial year,
we have various other franchise conversions
planned in addition to 2 new corporate
store openings. A further 4 corporate
stores have already been confirmed to
open during the 2008 financial year. These
new store openings, together with the
expansion of our franchise business, will
give the momentum needed to improve the
overall performance of this business.
GENERAL COMMENT
AND PROSPECTS
We remain confident of being
able to achieve real growth in headline
earnings per share for the year.
For and on behalf of the boards
Raymond Ackerman
Chairman
16 October 2006
Sean Summers
Chief Executive Officer |
