Notes to the financial information
for the period ended 28 February 2016

1.	BASIS OF PREPARATION AND ACCOUNTING POLICIES
	The summarised audited Group financial statements for the period ended 28 February 2016 are prepared in accordance with the requirements of the JSE Listings Requirements for abridged reports, and the requirements of the Companies Act applicable to summarised financial statements. The Listings Requirements require abridged reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting.
	The summarised Group financial statements do not include all the information required by IFRS for full financial statements and should be read in conjunction with the 2016 audited Group annual financial statements. The accounting policies applied in the preparation of the audited Group annual financial statements, from which the summarised Group financial statements were derived, are in terms of IFRS and are consistent with the accounting policies applied in the preparation of the previous audited Group annual financial statements. During the year, various new and revised accounting standards became effective, but their implementation had no impact on the results of either the current or prior year.
	These summarised Group financial statements are not audited but are extracted from audited information. The audited Group annual financial statements were audited by Ernst & Young Inc., who expressed an unmodified opinion thereon. The audited Group annual financial statements and the auditor’s report thereon are available for inspection at the company’s registered office. The directors take full responsibility for the preparation of these summarised Group financial statements and the financial information has been correctly extracted from the underlying audited Group annual financial statements. These summarised Group financial statements have been prepared by the Finance Division under the supervision of the Chief Finance Officer, Mr Bakar Jakoet CA(SA).

2. RELATED PARTIES

During the year, in the ordinary course of business, certain companies within the Group entered into transactions with each other. These inter-group transactions are eliminated on consolidation. Related party transactions are consistent with those reported in the prior year, and no significant new related party transactions arose during the year. Refer to note 27 of the 2016 audited Group annual financial statements for further information.

3.	REVENUE


		52 weeks 28 February 2016 Rm	Restated* 25 weeks 1 March 2015 Rm
	Turnover	72 445.1	66 940.8
	Finance income	60.9	59.4
	Bank balances and investments	30.0	40.9
	Trade and other receivables	27.3	13.9
	Staff loans and other	3.6	4.6
	Other trading income	971.3	782.9
	Franchise fee income	316.7	294.4
	Operating lease income	329.1	247.3
	Commissions and other income	325.5	241.2

		73 477.3	67 783.1


	*	Prior year amounts restated and/or reclassified, refer to note 10.

4.	SHARE CAPITAL

		52 weeks 28 February 2016 Rm	52 weeks 1 March 2015 Rm
	Authorised
	800 000 000 (2015: 800 000 000) ordinary shares of 1.25 cents each	10.0	10.0
	Issued
	488 450 321 (2015: 487 322 321) ordinary shares of 1.25 cents each	6.0	6.0
		000’s	000’s
	The number of shares in issue at end of period is made up as follows:
	Treasury shares held by the Group	1 752.4	1 746.9
	Shares issued under the forfeitable share plan	7 923.0	6 925.0
	Shares held outside the Group	478 774.9	478 650.4
		488 450.3	487 322.3

	The Company can issue new shares to settle the Group’s obligations under its employee share schemes, but issues in this regard are limited, in aggregate, to 5% of total issued share capital (currently 24 422 516 shares). To date, 10 743 000 shares have been issued, resulting in 13 679 516 shares remaining for this purpose. The holders of ordinary shares are entitled to receive dividends as declared and are entitled to one vote per share at meetings of the Company. The movement in the number of shares in issue in the current period was as a result of an issue of 1 128 000 shares (2015: 6 925 000 shares) in respect of the Group’s employee forfeitable share plan (FSP).

	Directors’ interest in shares

	52 weeks 28 February 2016 %	52 weeks 1 March 2015 %
Beneficial	1.9	0.9
Non-beneficial	26.3	27.5
	28.2	28.4
The directors’ interest in shares is their effective shareholding in the Company including shares held under the Group’s forfeitable share plan (excluding treasury shares) and their effective indirect shareholding through Pick n Pay Holdings Limited RF (excluding treasury shares).

5.	OPERATING SEGMENTS


		South Africa* Rm	Rest of Africa Rm	Total operations* Rm
	2016
	Total segment revenue	70 312.7	4 005.6	74 318.3
	External revenue	70 312.7	3 164.6	73 477.3
	Direct deliveries**	—	841.0	841.0
	Segment external turnover	69 300.6	3 144.5	72 445.1
	Profit before tax***	1 247.4	226.1	1 473.5
	Other information
	Statement of comprehensive income
	Finance income	52.8	8.1	60.9
	Finance costs	116.7	0.3	117.0
	Depreciation and amortisation	911.6	29.3	940.9
	Impairment loss on intangible assets	8.6	—	8.6
	Share of associate’s income	—	45.9	45.9
	Statement of financial position
	Total assets	15 261.3	1 323.6	16 584.9
	Total liabilities	12 402.8	284.2
	Investment in associate	—	285.5	285.5
	Additions to non-current assets	1 773.6	17.7	1 791.3
	2015
	Total segment revenue	64 754.2	3 681.9	68 436.1
	External revenue	64 754.2	3 028.9	67 783.1
	Direct deliveries**	—	653.0	653.0
	Segment external turnover	63 911.9	3 028.9	66 940.8
	Profit before tax***	1 016.2	189.0	1 205.2
	Other information
	Statement of comprehensive income
	Finance income	54.3	5.1	59.4
	Finance costs	119.0	—	119.0
	Depreciation and amortisation	845.2	24.3	869.5
	Share of associate’s income	—	14.3	14.3
	Statement of financial position
	Total assets	13 754.3	1 069.8	14 824.1
	Total liabilities	11 290.8	271.5	11 562.3
	Investment in associate	—	180.2	180.2
	Additions to non-current assets	1 061.8	43.5	1 105.3


	*	Prior year amounts restated and/or reclassified, refer to note 10.
	**	Direct deliveries are issues to franchisees directly by Group suppliers, these are not included in revenue on the statement of comprehensive income.
	***	Segmental profit before tax is the reported measure used for evaluating the Group’s operating segments performance. On an overall basis the segmental profit before tax is equal to the Group’s reported profit before tax. The Rest of Africa segment’s segmental profit before tax comprises the segment’s trading result and directly attributable costs only. No allocations are made for indirect or incremental cost incurred by the South African segment relating to the Rest of Africa segment.

6.	HEADLINE EARNINGS RECONCILIATION


		52 weeks 28 February 2016 Rm	52 weeks 1 March 2015 Rm
	Profit for the period	1 065.4	861.7
	Profit attributable to forfeitable share plan shares	(16.2)	(6.5)
	Basic earnings for the period	1 049.2	458.3
	Adjustments:	23.3	855.2
	Loss/(profit) on sale of property, plant and equipment	24.0	(7.4)
	Tax effect of (loss)/profit on sale of property, plant and equipment	(6.8)	(10.4)
	Impairment loss on intangible assets	8.6	3.0
	Tax effect of impairment loss on intangible assets	(2.5)	—
	Adjustments attributable to forfeitable share plan shares	0.4	—
	Headline earnings	1 072.9	847.8

7.	FINANCIAL INSTRUMENTS
	All financial instruments held by the Group are measured at amortised cost, with the exception of derivative financial instruments, financial instruments at fair value through profit or loss and available-for-sale financial instruments, as set out below:

	52 weeks 28 February 2016 Rm	52 weeks 1 March 2015 Rm
Derivative financial instruments
Forward exchange contracts – Level 2	6.0	1.3
Commodity hedge – Level 2	—	0.1
Financial instruments at fair value through profit or loss
Investment in Pick n Pay Holdings Limited RF – Level 1	218.5	211.5
Investment in Guardrisk Insurance Company Limited – Level 2	13.6	33.5
Available-for-sale financial instruments
Investment in Pick n Pay Holdings Limited RF – Level 1	46.4	42.2

	The fair value of the investment in Pick n Pay Holdings Limited RF shares are determined based on the price in an active securities market and is included in level 1 of the fair value hierarchy.
	The fair value of financial instruments that are not traded in active markets is determined by using valuation techniques. If all significant inputs required to fair value an instrument are observable, the instruments are included in level 2.
	The carrying value of all other financial instruments approximate their fair value.
	There have been no transfers between level 1, level 2 and level 3 of the fair value hierarchy during the year.
	Refer to note 28 of the 2016 audited Group annual financial statements for more information.

8.	ISSUE OF SHARES IN RESPECT OF FORFEITABLE SHARE PLAN
	Pick n Pay Stores Limited issued 1 128 000 shares (2015: 6 925 000 shares), in order to meet the share obligations under the Group’s employee forfeitable share plan (FSP).

9.	CAPITAL COMMITMENTS
	All capital expenditure will be funded from internal cash flow and through unlimited borrowing powers.


		52 weeks 28 February 2016 Rm	52 weeks 1 March 2015 Rm
	Authorised capital expenditure
	Contracted for	395.9	213.1
	Property	78.8	—
	Furniture, fittings, equipment and vehicles	211.5	123.1
	Intangible assets	105.6	90.0
	Not contracted for	1 783.1	1 839.3
	Property	27.5	180.0
	Furniture, fittings, equipment and vehicles	1 694.9	1 518.8
	Intangible assets	60.7	140.5

	Total commitments	2 179.0	2 052.4

10.	PRIOR PERIOD RESTATEMENTS AND RECLASSIFICATIONs
	The following prior period restatements were made in the Group’s South Africa operating segment:
	Recognition and measurement The Group’s investment in an insurance cell captive was historically treated as a wholly owned subsidiary and consolidated. On re-evaluating the definition of control in terms of IFRS 10 Consolidated Financial Statements, it is appropriate to account for this investment as a financial instrument at fair value through profit or loss in accordance with IAS 39 Financial Instruments.
	The Group owns Pick n Pay Holdings Ltd RF shares (PWK shares) to settle obligations under the Group’s share incentive scheme. Previously these shares were accounted for as treasury shares and the related share-based payment as equity settled. On review, the investment in PWK shares should be accounted for as a financial instrument in accordance with IAS 39 Financial Instruments and the related share-based payment as cash settled in terms of IFRS 2 Share-Based Payments.
	These errors were corrected in the current financial year and comparative figures restated. The errors did not require any adjustment to the previously reported profit for the period of the Group, including reported basic, diluted and headline earnings per share.
	Reclassifications
	In the comparative period certain rent received from franchisees, in terms of sublease agreements, was erroneously accounted for under occupancy costs in the statements of comprehensive income. An instance was found where an amount was incorrectly classified as trade and other payables rather than cash and cash equivalents in the statements of financial position.
	These reclassification errors were corrected in the current financial year and comparative figures restated. These reclassifications had no impact on the previously reported profit for the period, including reported basic, diluted and headline earnings per share.
	The corrections are set out below:
10.1	Prior period restatements and reclassifications’ impact on the 2015 statement of comprehensive income of Pick n Pay Stores Limited Group

	Restated 52 weeks 1 March 2015 Rm	Reclassi- fications Rm	Restatement Parent company share investment Rm	As previously published 52 weeks 1 March 2015 Rm
Revenue	67 783.1	180.0	—	67 603.1
Other trading income	782.9	180.0	—	602.9
Employee costs	(5 672.9)	—	(19.1)	(5 653.8)
Occupancy	(2 047.6)	(180.0)	—	(1 867.6)
Merchandising and administration	(1 150.0)	—	19.1	(1 169.1)
Other comprehensive income, net of tax
Fair value gain on available-for-sale financial instruments	4.2	—	4.2	—

10.2	Prior period restatements and reclassifications’ impact on the 2015 statement of financial position of Pick n Pay Stores Limited Group

		Restated As at 1 March 2015 Rm	Restatement Investment in insurance cell captive Rm	Reclassi- fications Rm	Restatement Parent company share investment Rm	As previously published 52 weeks 1 March 2015 Rm
	Financial instruments at fair value through profit or loss	245.0	33.5	—	211.5	—
	Available-for-sale financial instruments	42.2	—	—	42.2	—
	Trade and other receivables	2 936.4	(20.3)	—	—	2 956.7
	Cash and cash equivalents	1 024.5	(72.3)	(77.0)	—	1 173.8
	Treasury shares	(60.1)	—	—	109.0	(169.1)
	Fair value reserve	31.2	—	—	31.2	—
	Retained earnings	3 302.9	—	—	(8.5)	3 311.4
	Trade and other payables	8 889.7	(59.1)	(77.0)	—	9 025.8
	Share-based payment liability	122.0	—	—	122.0	—
	Net asset value (cents)	774.1	—	—	27.5	746.6

10.3	Prior period restatements and reclassifications’ impact on the 2014 statement of financial position of Pick n Pay Stores Limited Group

		Restated As at 2 March 2015 Rm	Restatement Investment in insurance cell captive Rm	Reclassi- fications Rm	Restatement Parent company share investment Rm	As previously published 52 weeks 2 March 2015 Rm
	Financial instruments at fair value through profit or loss	212.2	23.3	—	188.9	—
	Available-for-sale financial instruments	38.0	—	—	38.0	—
	Trade and other receivables	2 821.9	(19.2)	—	—	2 841.1
	Cash and cash equivalents	1 334.2	(61.1)	(145.0)	—	1 540.3
	Treasury shares	(50.4)	—	—	95.3	(145.7)
	Fair value reserve	27.0	—	—	27.0	—
	Retained earnings	2 847.9	—	—	(1.2)	2 849.1
	Trade and other payables	7 883.1	(57.0)	(145.0)	—	8 085.1
	Share-based payment liability	105.8	—	—	105.8	—
	Net asset value (cents)	679.9	—	—	34.3	645.6

10.4	Prior period restatements and reclassifications’ impact on the 2015 statement of cash flows of Pick n Pay Stores Limited Group

		Restated As at 1 March 2015 Rm	Restatement Investment in insurance cell captive Rm	Reclassi- fications Rm	Restatement Parent company share investment Rm	As previously published 52 weeks 1 March 2015 Rm
	Equity settled share-based payment expense	124.1	—	—	(15.8)	139.9
	Cash settled share-based payment expense	34.9	—	—	34.9	—
	Fair value loss/(gain) on financial instruments at fair value through profit or loss	(27.2)	(10.2)	—	(19.1)	2.1
	Movements in trade and other payables	1 006.6	(2.1)	68.0	—	940.7
	Movements in trade and other receivables	(114.5)	1.1	—	—	(115.6)
	Investment in financial instruments at fair value	(22.2)	—	—	(22.2)	—
	Share repurchases	(155.7)	—	—	22.2	(177.9)
	Cash and cash equivalents at beginning of period	664.2	(61.1)	(145.0)	—	870.3
	Cash and cash equivalents at end of period	524.5	(72.3)	(77.0)	—	673.8

Notes to the financial information for the period ended 28 February 2016

1.

BASIS OF PREPARATION AND ACCOUNTING POLICIES

2.

RELATED PARTIES

3.

REVENUE

4.

SHARE CAPITAL

5.

OPERATING SEGMENTS

6.

HEADLINE EARNINGS RECONCILIATION

7.

FINANCIAL INSTRUMENTS

8.

ISSUE OF SHARES IN RESPECT OF FORFEITABLE SHARE PLAN

9.

CAPITAL COMMITMENTS

10.

PRIOR PERIOD RESTATEMENTS AND RECLASSIFICATIONs

Notes to the financial information
for the period ended 28 February 2016