Pick n Pay at Rosebank in Johannesburg. Picture: FREDDY MAVUNDA
Pick n Pay at Rosebank in Johannesburg. Picture: FREDDY MAVUNDA

Retailer Pick n Pay said on Wednesday its total debt had increased to R17bn from R1.6bn for the 53 weeks ended March 3, as a result of accounting changes.

The company now had R15.4bn in theoretical lease liabilities, following the adoption of the International Financial Reporting Standards (IFRS) 16 standards.

One of the changes in that accounting standard is that companies must bring all their leases on to their balance sheets.

Group CEO Richard Brasher said in a web presentation on Wednesday that the company had to go over about 1,600 leases, and had pursued a slightly harder version of the standards than other retailers were likely to adopt.

This was more difficult, but hopefully more transparent, he said, with Pick n Pay restating results going back for two years.

“It has no impact on our underlying economic model, which is reassuring,” he said.

Pick n Pay CFO Lerena Olivier said the group had a stable lease portfolio, and the accounting changes would have no effect on the group’s net asset value. “IFRS has not changed the fundamental value of our business, or our value creation,” she said.

Earnings before interest, taxation, depreciation and amortisation would rise 6.6% to R5.67bn.

“This is purely the accounting consequence of IFRS 16, and it is important to note that the position does not reflect, or alter, the group’s careful and considered approach to long-term debt and its disciplined management of cash,” Pick n Pay said in a statement.