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SHOPRITE HOLDINGS LIMITED (REGISTRATION NO 05/07721/06)
INTERIM PROFIT ANNOUNCEMENT FOR THE 6 MONTHS ENDED 31 DECEMBER 1999
HEADLINE EARNINGS GROWTH 16,2% - NUMBER OF OUTLETS: 512 CONSOLIDATED INCOME STATEMENT
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO % 12 MONTHS TO R'000 31/12/99 31/12/98 CHANGE 30/06/99 TURNOVER 9 342 234 8 789 375 6,3 17 245 920 OPERATING PROFIT BEFORE
EXCEPTIONAL ITEMS 154 056 124 621 23,6 125 921
EXCEPTIONAL ITEMS 138 804 (1 345) OPERATING PROFIT AFTER
EXCEPTIONAL ITEMS 154 194 125 425 22,9 124 576
INVESTMENT INCOME 42 682 37 010 15,3 116 422
FINANCE CHARGES 34 169 22 752 50,2 102 641
PROFIT BEFORE TAXATION 162 707 139 683 16,5 138 357
TAXATION 10 422 7 834 33,0 19 631
PROFIT AFTER TAXATION 152 285 131 849 15,5 118 726 OUTSIDE SHAREHOLDERS'
INTEREST 3 692 3 224 4 416
NET PROFIT 148 593 128 625 15,5 114 310 HEADLINE EARNINGS PER SHARE
(CENTS) 27,3 23,5 16,2 21,3 EARNINGS PER SHARE (CENTS) AFTER
EXCEPTIONAL ITEMS 27,3 23,7 15,2 21,0 DISTRIBUTION TO SHAREHOLDERS
(CENTS PER SHARE) 8,5 7,5 13,3 14,0
DIVIDEND COVER (TIMES) 3,2 3,1 1,5 NUMBER OF ORDINARY SHARES ('000) USED FOR CALCULATION OF EARNINGS
PER SHARE 543 479 543 479 543 479 CONSOLIDATED BALANCE SHEET
UNAUDITED UNAUDITED AUDITED
(R'000) 31/12/99 31/12/98 30/06/99 NON-CURRENT ASSETS 1 401 548 1 580 577 1 274 401 FIXED ASSETS 1 267 852 1 068 731 1 138 431 INVESTMENTS 133 696 511 846 135 970
CURRENT ASSETS 4 433 376 3 717 152 3 879 544 INVENTORIES 2 280 040 2 174 354 2 083 302 ACCOUNTS RECEIVABLE 1 261 513 1 201 057 1 265 478 BANK BALANCES AND CASH 891 823 341 741 530 764
TOTAL ASSETS 5 834 924 5 297 729 5 153 945 ORDINARY SHAREHOLDERS'
FUNDS 1 200 193 1 115 312 1 092 100 OUTSIDE SHAREHOLDERS'
INTEREST 28 740 24 825 25 048
NON-CURRENT LIABILITIES 467 740 582 817 441 678
INTEREST-BEARING DEBT 71 349 128 646 66 510 OTHER NON-CURRENT
LIABILITIES 393 626 451 787 372 403
DEFERRED TAXATION 2 765 2 384 2 765
CURRENT LIABILITIES 4 138 251 3 574 775 3 595 119 INTEREST-BEARING DEBT 27 312 577 112 283 092
OTHER CURRENT LIABILITIES 4 110 939 2 997 663 3 312 027 TOTAL EQUITY AND
LIABILITIES 5 834 924 5 297 729 5 153 945 CONSOLIDATED CASH FLOW STATEMENT
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO 12 MONTHS TO (R'000) 31/12/99 31/12/98 30/06/99 CASH GENERATED BY
OPERATIONS 866 487 127 755 530 613
NET INVESTMENT INCOME 5 975 6 753 1 733
DIVIDENDS RECEIVED 2 538 7 505 12 048
DIVIDENDS PAID (36 440) (40 887) (81 536) CASH FLOW FROM OPERATIONS 838 560 101 126 462 858
INVESTMENT ACTIVITIES (226 560) (335 280) (151 833) ACQUISITION OF FIXED ASSETS (234 530) (185 776) (373 024) OTHER INVESTMENT ACTIVITIES 7 970 (149 504) 221 191
NET CASH FLOW 612 000 (234 154) 311 025
FINANCING ACTIVITIES (250 941) 531 952 175 796
NET MOVEMENT IN DEBT (250 941) 531 952 175 796 MOVEMENT IN BANK BALANCES
AND CASH 361 059 297 798 486 821 SUPPLEMENTARY INFORMATION
UNAUDITED UNAUDITED AUDITED
6 MONTHS TO 6 MONTHS TO 12 MONTHS TO (R'000) 31/12/99 31/12/98 30/06/99 1. DEPRECIATION FOR THE
PERIOD 104 599 81 321 189 416 2. DIVIDENDS RECEIVED (INCLUDED IN INVESTMENT
INCOME) 2 538 7 12 048 3. CAPITAL EXPENDITURE FOR
THE PERIOD 234 530 185 776 373 024 IN 31/12/99 31/12/98 IN 30/06/99
4. CAPITAL COMMITMENTS 73 847 61 795 71 330 5. INVESTMENTS: UNLISTED - AT COST AND
DIRECTORS' VALUATION 130 425 508 575 132 699
LISTED - AT COST 3 271 3 271 3 271
- AT MARKET VALUE 6 284 12 713 6 141
6. CONTINGENT LIABILITIES 452 279 683 412 358 7. NET ASSET VALUE PER SHARE
(CENTS) 221 205 201 COMMENTS ON THE RESULTS
1. DESPITE TIGHT TRADING CONDITIONS ALL THE DIVISIONS IN THE GROUP PRODUCED SATISFACTORY RESULTS DURING THE PERIOD UNDER REVIEW. THE INCREASE OF 6% IN TURNOVER MUST BE VIEWED AGAINST THE BACKGROUND OF THE ONGOING RATIONALISATION SINCE THE OK TAKEOVER, WHICH LED TO THE CLOSING OF 27 SUPERMARKETS IN THE 1999 CALENDAR YEAR AND THE REDUCTION OF CERTAIN PRODUCT RANGES.
2. THE INCREASE OF 24% IN OPERATING PROFIT ON A 6% INCREASE IN TURNOVER SHOWS THAT THE BENEFITS OF THE RATIONALISATION OF OK'S OPERATIONS AND THE TIGHTENING OF INTERNAL DISCIPLINES ARE BEGINNING TO BE REFLECTED IN THE GROUP'S RESULTS. DURING THE PERIOD UNDER REVIEW STOCK SHRINKAGE THROUGHOUT THE GROUP WAS LOWER THAN IN THE CORRESPONDING PERIOD, WHEN SHRINKAGE WAS WITHIN ACCEPTABLE PARAMETERS.
3. THE DECREASE IN NET INVESTMENT INCOME AS COMPARED WITH THE CORRESPONDING PERIOD IS ATTRIBUTABLE TO THE AGGRESSIVE CONVERSION PROGRAMME AND THE ATTENDANT CAPITAL EXPENDITURE INCURRED IN THE CASE OF OK STORES. THIS PROGRAMME HAS VIRTUALLY BEEN COMPLETED AND WILL BE FOLLOWED BY A RENOVATION PROGRAMME FOR THE HYPERAMA STORES AS A MATTER OF HIGH PRIORITY.
4. THE LOW TAX ASSESSMENT IS DUE TO THE LARGE ASSESSED LOSSES STILL AVAILABLE TO THE GROUP. THE TAX PAYABLE IS MADE UP MAINLY OF STC AND TAX DUE BY PARTNERSHIP VENTURES IN THE GROUP.
5. THE SHARP DECREASE IN INVESTMENTS AS SHOWN IN THE BALANCE SHEET REFLECTS THE BOARD DECISION AT THE END OF THE 1999 FINANCIAL YEAR TO FINANCE THE LOAN TO THE SHARE INCENTIVE TRUST FROM EXTERNAL SOURCES. THE GROUP, HOWEVER, STILL GUARANTEES THE LOAN TO THE TRUST.
6. THE OUTCOME IN THE DISPUTE BETWEEN THE GROUP AND SAB IN RESPECT OF THE GUARANTEE GIVEN BY SAB IN REGARD TO THE NET ASSET VALUE OF OK BAZAARS IS NOT YET KNOWN. THEREFORE, FOR REASONS OF PRUDENCE, NO PROVISION HAS BEEN MADE IN THE STATEMENTS FOR INTEREST RECEIVABLE FROM SAB.
7. THE GROUP HAS NOT CREATED A DEFERRED TAX ASSET OUT OF THE TAX LOSS OBTAINED WITH THE TAKEOVER OF OK BAZAARS. SUCH AN ASSET WOULD RESULT IN NEGATIVE GOODWILL, AND PRESENT GENERALLY ACCEPTED ACCOUNTING PRACTICE DOES NOT ALLOW THE CREATION OF NEGATIVE GOODWILL IN LATER YEARS.
8. THE ABNORMAL STOCK LOSSES AT THE END OF THE 1999 FINANCIAL YEAR LED TO A SERIES OF WIDESPREAD ACTIONS WHICH RESULTED, INTER ALIA, IN MORE THAN 600 ARRESTS IN CONNECTION WITH THESE IRREGULARITIES. IN ADDITION, PERSONS WHO ALLEGEDLY TOOK DELIVERY OF SOME OF THE STOLEN GOODS, ARE BEING PROSECUTED. YEAR 2000 COMPLIANCE
NO MATERIAL PROBLEMS HAVE BEEN EXPERIENCED IN SWITCHING OVER TO THE YEAR 2000, SO THAT THE GROUP'S OPERATIONS HAVE NOT BEEN AFFECTED IN ANY WAY. PROSPECTS
THE BOARD EXPECTS THAT THE SATISFACTORY RESULTS OF THE FIRST SIX MONTHS WILL BE REPEATED IN THE SECOND HALF OF THE YEAR. ONE OF THE GROUNDS FOR THIS
EXPECTATION IS THE FACT THAT SPENDING SHOULD BE STIMULATED BY THE CURRENT INCREASE IN CONSUMER CONFIDENCE. DIVIDEND
IT IS ENVISAGED THAT AN INTERIM DIVIDEND OF 8,5 CENTS (1998 - 7,5 CENTS) PER SHARE WILL BE DECLARED BEFORE THE END OF MARCH 2000. BY ORDER OF THE BOARD CH WIESE JW BASSON CHAIRMAN MANAGING DIRECTOR 21 FEBRUARY 2000 C/O WILLIAM DABS AND OLD PAARL ROADS BRACKENFELL A MEMBER OF THE PEPKOR GROUP
THIS INFORMATION IS ALSO AVAILABLE ON THE INTERNET AT: HTTP://WWW.SHOPRITE.CO.ZA
