Integrated

Annual Report

2018


NAVIGATING OUR REPORTING SUITE

NAVIGATING OUR REPORTING SUITE

Our six capitals

Our ability to create long-term sustainable value for stakeholders depends on the use of various capitals within our business. The International Integrated Reporting <IR> Framework supports integrated financial reporting, and, in particular, the reporting of the Group's business model across these six forms of capital. Refer to "Our business model" on pages 20 to 21 for more information.

Financial

Human

Manufactured

Social and relationship

Intellectual

Natural


Our key stakeholders

The Group is committed to open and constructive engagement with all our stakeholders. Our business model and strategy are designed to consider and address the issues and concerns most relevant to our key stakeholders. Refer to the "Engaging with our stakeholders" section on pages 38 to 41 for more information.

Customers

Community

Employees

Suppliers

Franchisees

Shareholders


Our business acceleration pillars

The second stage of our strategic long-term plan is organised around seven business acceleration pillars. These pillars represent the material growth opportunities that can materially affect our ability to create value over the short, medium and long term. Refer to our "Strategic focus" section on pages 44 to 51 for more information.

Better for customers

A flexible and winning estate

Efficient and effective operations

Every product, every day

A winning team

Boxer–
a national brand

Rest of Africa – a second engine of growth


Previous

Five-year review


 

        2018  2017  2016  2015  2014 
  PERFORMANCE MEASURES 
  Turnover growth  5.3  7.0  8.2  6.1  6.5 
  Gross profit margin   18.7  18.7  18.6  18.6  18.4 
  Other trading income margin  2.2  2.0  1.9  1.7  1.5 
  Trading expenses margin  18.6  18.4  18.5  18.5  18.3 
  Trading profit growth  4.9  19.1  20.1  18.1  20.6 
  Trading profit margin  2.2  2.2  2.0  1.8  1.6 
  Profit before tax growth  5.4  18.5  20.0  38.6  5.2 
  PBTAE growth  3.8  19.1  23.8  21.7  22.0 
  PBTAE margin  2.2  2.2  2.0  1.7  1.5 
  EBIT growth  8.2  (7.6) 54.6  30.3  5.9 
  EBITDA (before capital items) growth  8.1  14.4  16.5  4.5  13.4 
  Profit for the period margin  1.6  1.6  1.4  1.3  0.9 
  HEPS  cents  277.0  258.7  215.2  173.3  141.2 
  HEPS growth  7.1  20.2  24.2  22.8  26.8 
  ROCE  32.6  32.3  29.6  24.5  20.6 
  Net asset value per share  cents  966.2  922.0  869.4  741.8  651.7 
  WACC  12.0  13.1  12.2  10.6  10.7 
  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                   
  Turnover  Rm  81 560.1  77 486.1  72 445.1  66 940.8  63 117.0 
  Other trading income  Rm  1 760.6  1 522.4  1 379.5  1 159.9  965.5 
  Trading expenses  Rm  15 191.0  14 243.4  13 376.6  12 396.6  11 550.5 
  Trading profit  Rm  1 819.9  1 735.6  1 457.7  1 214.1  1 028.1 
  PBTAE  Rm  1 789.1  1 723.3  1 447.5  1 168.8  960.5 
  Profit before tax  Rm  1 768.1  1 677.0  1 414.9  1 179.2  850.9 
  Profit for the period  Rm  1 296.3  1 216.0  1 023.2  843.0  596.5 
  EBIT  Rm  1 915.2  1 769.5  1 915.2  1 238.8  950.5 
  EBITDA (before capital items) Rm  3 023.8  2 797.3  2 444.5  2 097.9  2 008.5 
  Headline earnings  Rm  1 312.1  1 247.3  1 030.7  829.1  675.4 
  CONSOLIDATED STATEMENT OF FINANCIAL POSITION    
  Assets  Rm  18 980.5  17 791.8  16 312.5  14 610.3  13 941.7 
  Ordinary shareholders' equity  Rm  4 023.6  3 855.7  3 701.7  3 107.9  2 688.4 
  Liabilities  Rm  14 956.9  13 936.1  12 610.8  11 502.4  11 253.3 
  STOCK EXCHANGE (JSE LIMITED) PERFORMANCE                   
  Number of shares in issue  millions  488.5  488.5  488.5  487.3  480.4 
  Weighted average number of shares in issue  millions  473.7  482.2  478.9  478.3  478.4 
  Market capitalisation  Rbn  36.3  34.0  27.4  25.7  21.7 
  Market capitalisation net of treasury shares  Rbn  35.3  32.9  26.9  25.3  21.6 
  Price earnings ratio  times  26.8  26.9  26.1  30.5  32.0 
  Annual dividend per share  cents  188.8  176.3  149.4  118.1  92.3 
  Dividend cover  times  1.5  1.5  1.5  1.5  1.5 
  Dividend yield  2.5  2.5  2.7  2.2  2.0 
  Volume of shares traded  millions  360.1  345.7  281.6  213.3  165.2 
  Percentage of shares traded  73.7  70.8  57.6  43.8  34.4 
  Market price per share (PIK)                  
  – close at period-end  cents  7 428  6 969  5 614  5 282  4 514 
  – high for the period  cents  7 606  8 424  7 000  6 082  5 440 
  – low for the period  cents  5 460  5 525  4 850  4 401  3 519 
  HUMAN MEASURES*
     Developed a skilled workforce            
        Number of employees 000 51.9 54.4 52.9 48.7 49.3
        Permanent employee turnover % 24.9 19.9 16.1 19.3 15.0
     Employment equity**            
        Top management % 40.9 35.0 36.0 35.7 39.0
        Senior management % 71.3 63.0 66.0 64.4 61.0
        Professionally qualified middle management % 92.8 87.0 88.0 87.1 85.0
        Skilled technical and junior management % 97.8 97.0 96.0 95.2 95.0
        Semi-skilled and discretionary decision-making % 99.8 99.8 99.7 99.7 99.8
        Unskilled and defined decision-making % 99.7 99.6 99.5 99.4 99.6
  SOCIAL AND ENVIRONMENTAL MEASURES*            
     Carbon footprint CO2e tonnes 657 387.2 671 052.6 656 765.1 613 934.7 588 509.2
     Energy usage per square metre reduction (2008 baseline) GWh 37.0 34.1 31.4 32.0 30.0
     CO2e emissions per square metre reduction (2013 baseline) % 2.5 3.5 0.6 2.4 4.0
     Waste diverted from landfill % 54.3 48.4 46.0 45.0 43.0
     Water consumed megalitres 1 161 1 332 1 249 1 316 1 133
     Total CSI spend Rm 30.5 38.7 41.5 44.6 36.0
     Schools in Pick n Pay School Club   3 300 3 025 3 025 3 025 2 750
     BBBEE level   Level 8 Level 8 Level 4 Level 4 Level 6
  OPERATIONAL STATISTICS            
     Number of stores            
        Group   1 628 1 504 1 353 1 189 1 076
        Pick n Pay – company owned   722 661 596 510 464
        Pick n Pay – franchise   660 614 549 490 433
        Boxer – company owned   246 229 208 189 179
        Associate            
        TM Supermarkets   57 56 57 53 52
     Total with associate   1 685 1 560 1 410 1 242 1 128
  Total square metres m2 – millions 2.5 2.4 2.3 2.2 2.1
     Company owned m2 – millions 1.8 1.7 1.6 1.5 1.5
     Franchise m2 – millions 0.7 0.7 0.7 0.7 0.6
* Information relates to Pick n Pay-owned stores only.
** These measures represent the participation of employment equity candidates, as governed by the Employment Equity Act, No 55 of 1998, in the presented categories.

Prior period amounts normalised for non-recurring items and/or restated to ensure comparability.

     DEFINITIONS

Profit before tax and exceptional items (PBTAE)

 

Profit for the period, before tax and exceptional items. Exceptional items are determined by the remuneration committee. These are non-recurring items of an exceptional size and nature.

EBIT

 

Profit for the period, before net interest, tax and capital items.

EBITDA

 

Profit for the period, before net interest, tax, depreciation, amortisation and capital items.

Headline earnings

 

Net profit for the period adjusted for the after-tax effect of capital items.

Headline earnings per share (HEPS)

 

Headline earnings divided by the weighted average number of shares in issue for the period.

Return on capital employed (ROCE)

 

Headline earnings divided by average shareholders’ equity plus non-current borrowings.

Net asset value per share

 

Total value of net assets at period-end, adjusted for directors’ valuations of property, divided by the number of shares in issue at period-end, held outside the Group.

Weighted average cost of capital (WACC)

 

WACC is the calculation of our after-tax cost of capital in which each category of capital is proportionally weighted. All sources of capital, including non-current borrowings, bank overdraft and short-term borrowings, are included in the calculation.

Market capitalisation

 

The price per share at period-end multiplied by the number of shares in issue at period-end.

Price earnings ratio

 

The price per share at period-end divided by headline earnings per share.

Annual dividend per share

 

The interim dividend declared during the current financial period and the final dividend declared after period-end, in respect of the current financial year

.

Dividend cover

 

Headline earnings per share divided by the dividends per share that relate to those earnings.

Dividend yield

 

Annual dividend per share expressed as a percentage of closing share price.

 
Turnover (Rbn) Trading profit margin (%) HEPS (cents) ROCE (%)

Number of stores Square metres (m2 – millions)