Pepkor’s Fintech division surges almost 27%

A R2.7bn impairment will not be a consideration in determining the dividend, says board.

Retail giant Pepkor Holdings has reported a solid performance for the fiscal year ending 30 September 2024, with group revenue rising by 7.8% to R85.1 billion.

Pepkor published a trading update and statement for the period on Sens on Wednesday morning.

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Its final results announcement will be on Tuesday, 26 November 2024.

In the period under review, the group’s Fintech segment emerged as the top performer with a 26.8% revenue surge in line with Pepkor’s expansion into financial services and mobile connectivity.

Pepkor’s board has decided that a R2.7 billion impairment in the period under review will not be considered in determining the FY24 dividend.

It notes that the group’s strong operational performance and cash flow will be “fully reflected” in the dividend outcome, providing “robust returns” to shareholders.

Pepkor's Share Price

Pepkor’s Clothing & General Merchandise (CGM) division, the group’s largest segment, achieved a 5.2% revenue increase to R61.4 billion, while its furniture, appliances, and electronics segment saw revenue increase by 4.5% to reach R11 billion.

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Despite a tough retail environment, Pepkor’s retail brands gained market share in the clothing, cellular, and home sectors. Its reach into the informal market through the fintech business Flash bolstered growth further.

Pepkor confirmed on 3 September 2024 the sale of The Building Company (TBCo), marking its exit from the building materials market. This divestment aligns with Pepkor’s strategy to streamline operations, enhance return on capital, and maximise shareholder returns. Consequently, TBCo will be classified as a discontinued operation in the group’s financial results.

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Read: Pepkor to offload building retail chain for R1.2bn

As per the JSE’s listings requirements, Pepkor earlier indicated expected differences in financial results for FY24 compared to FY23. The annual impairment assessment led to a R2.7 billion impairment on goodwill and intangible assets.

This was attributed to persistent challenges in Ackermans and subdued performance in the footwear market, which impacted brands like Tekkie Town and Shoe City. While this impairment will affect earnings, it will not impact its headline earnings per share (Heps).

Pepkor anticipates that Heps will range between 132.5 and 146.5 cents for continuing operations, reflecting a shift of between -6% and 4% from the prior period.

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