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Shoprite Holdings Limited - Interim Results
SHOPRITE HOLDINGS LIMITED
(Reg. No 1936/007721/06)
(Incorporated in the Republic of South Africa)
JSE share code: SHP
ISIN no: ZAE 000012084
NSX no: SRH
("Shoprite")
Interim results
for the 6 months ended 31 December 2002
Group Income Statement
Unaudited Unaudited Audited
6 months to % 6 months to 12 months
to
R`000 31/12/02 Change 31/12/01 30/06/02
Revenue 12 694 044 15.6 10 981 520 22 109 797
Sale of merchandise 12 628 571 10 920 776 21 984 955
Gross profit 1 717 683 1 483 447 3 291 988
Operating profit before
exchange
(losses) / gains 269 369 35.6 198 630 497 843
Exchange
(losses) / gains (61 021) 51 705 24 314
Operating profit before exceptional
items 208 348 -16.8 250 335 522 157
Exceptional items 48 034 41 602 39 287
Operating profit after exceptional
items 256 382 -12.2 291 937 561 444
Investment income 17 053 13 952 34 061
Finance costs 17 600 16 455 47 465
Profit before tax 255 835 -11.6 289 434 548 040
Tax 68 804 -3.1 70 988 151 295
Profit after tax 187 031 -14.4 218 446 396 745
Minority interest 3 125 6 313 (8 148)
Net profit 183 906 -13.3 212 133 404 893
Headline earnings
per share (cents) 26,9 -17.5 32,6 72,1
Diluted headline earnings per
share (cents) 26,8 -17.8 32,6 71,8
Core earnings per
share (cents) 35,5 40.3 25,3
Diluted core earnings
per share (cents) 35,3 39.5 25,3
Earnings per share (cents) after
exceptional items 36,2 -10.4 40,4 78,4
Diluted earnings per share (cents)
after exceptional items 36,0 -10.9 40,4 78,0
Proposed distribution to shareholders
(cents per share) 14,0 27.3 11,0 25,5
Dividend cover (times) 1,9 3,0 2,8
Number of ordinary shares (`000)
used for calculation of:
earnings per share 507 761 525 620* 516 764*
diluted earnings
per share 511 112* 525 620* 519 042*
(*weighted average)
Group Balance Sheet
Unaudited Unaudited Audited
R`000 31/12/02 31/12/01 30/06/02
ASSETS
Non-current assets 1 854 496 1 614 665 1 746 673
Property, plant
and equipment 1 721 657 1 520 795 1 630 835
Investments 109 099 88 278 115 748
Deferred tax assets 250 415 335 187 303 128
Negative goodwill (251 400) (329 595) (303 038)
Goodwill 24 725 - -
Current assets 5 589 679 4 981 071 4 469 220
Inventories 2 733 605 2 466 856 2 250 278
Trade and other
receivables 1 784 532 1608 205 1 482 791
Cash and cash
equivalents 1 071 542 906 010 736 151
Total assets 7 444 175 6 595 736 6 215 893
EQUITY AND LIABILITIES
Capital and reserves 1 569 739 1 322 551 1 459 458
Minority interest 25 836 47 943 30 714
Non-current
liabilities 227 290 263 027 236 832
Interest bearing
borrowings 2 450 2 450 2 450
Deferred tax
liabilities 3 975 2 918 4 006
Provisions 220 865 257 659 230 376
Current liabilities 5 621 310 4 962 215 4 488 889
Other current
liabilities 5 621 310 4 962 215 4 457 659
Bank overdraft - - 31 230
Total equity and
liabilities 7 444 175 6 595 736 6 215 893
Reconciliation of Headline Earnings
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
R`000 31/12/02 31/12/01 30/06/02
Net profit
attributable to
shareholders 183 906 212 133 404 893
Exceptional items
after tax
Profit on disposal
of property - - (11 139)
Impairment of
buildings - - 15 469
Write down of
unlisted investment - - 23 781
Amortisation of
negative goodwill (51 638) (42 762) (69 319)
Write-off of
goodwill 3 604 - -
Payment for lease
cancellation - 1 160 2 032
Prescription of
amounts owing - - (111)
Other items after tax
Loss on disposal and scrapping of
plant and
equipment 856 1 023 6 850
Headline earnings 136 728 171 554 372 456
Exchange losses /
(gains) after tax 43 709 (38 453)
Core earnings 180 437 133 101
Group Cash Flow Statement
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
R`000 31/12/02 31/12/01 30/06/02
Cash generated by
operations 790 635 779 248 1 033 855
Net finance costs (547) (2 503) (14 681)
Dividends received - - 1 277
Dividends paid (74 078) (59 783) (128 705)
Tax paid (33 207) (18 772) (55 043)
Cash flows from
operating
activities 682 803 698 190 836 703
Cash flows from
investing activities (317 545) (283 253) (622 855)
Purchase of property, plant
and equipment (242 707) (283 149) (578 977)
Acquisition of further
interest in
Subsidiaries ( 11 091) - -
Acquisition of subsidiary /
operation (64 386) - -
Other investment
activities 639 (104) (43 878)
Net cash flow 365 258 414 937 213 848
Cash flows from financing
activities - (470 747) (470 747)
Acquisition of treasury
shares - (453 373) (453 373)
Interest bearing borrowings
repaid - (17 374) (17 374)
Movement in cash and
cash equivalents 365 258 (55 810) (256 899)
Acquired through acquisition
of subsidiary 1 363 - -
Net movement in cash and
cash equivalents 366 621 (55 810) (256 899)
Segment Information
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
R`000 31/12/02 31/12/01 30/06/02
REVENUE - by business segment
- Supermarkets 12 002 459 10 612 062 21 469 405
- Furniture* 691 585 369 458 640 392
Total revenue 12 694 044 10 981 520 22 109 797
OPERATING PROFIT -
by business segment
- Supermarkets 153 796 214 315 467 364
- Furniture* 54 552 36 020 54 793
Total operating profit 208 348 250 335 522 157
*House & Home, which up to that stage formed part of Hyperama, was placed under
the operational and administrative control of OK Furniture during the second
half of the previous financial year. As House & Home and Supermarkets operated
as a single business unit, it was not at that point possible to separate their
results in a meaningful way. A complete separation of the different business
units was, however, effected from 1 July 2002 and the following information
relating to House & Home are included in the results of the furniture segment
from this date:
Revenue: 281 841
Operating profit: 15 846
Supplementary Information
Unaudited Unaudited Audited
R`000 31/12/02 31/12/01 30/06/02
1. Depreciation for
the period 169 765 154 550 327 556
2. Capital commitments 109 017 148 139 160 603
3. Contingent liabilities 124 099 160 859 116 225
4. Net asset value per
share (cents) 309 260 287
5. Total number of
shares in issue (`000) 507 761 507 761 507 761
Statement of Changes in Equity
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
R`000 31/12/02 31/12/01 30/06/02
Balance at 1 July 1 459 458 1 444 966 1 444 966
Acquisition of
treasury shares - (274 765) (274 765)
Net profit for the period 183 906 212 133 404 893
Dividends distributed to
shareholders (73 625) (59 783) ( 115 636)
Balance at 31 December /
30 June 1 569 739 1 322 551 1 459 458
Comments on the results
1. In the period under review Shoprite increased turnover by 15.6% to
R12,694 billion and its operating profit margin before exchange rate differences
from 1.8% to 2.1%.
2. Shoprite`s operations elsewhere in Africa contributed 10.8% (2001: 9.7%) or
R1,2 billion to the turnover of the Supermarket Division. The group started
doing business in Madagascar and Mauritius in the period under review and now
has 62 stores in operation beyond the borders of South Africa.
3. Operating profit before exchange rate fluctuations increased by 35.6% from
R199 million to R269 million, mainly due to effective management. The
strengthening of the Rand, however, resulted in a largely unrealised exchange
loss of R61 million in the group`s operations (as against a largely unrealised
exchange profit of R51,7 million in the previous year). These exchange
fluctuations accordingly caused operating profit to drop by 16.8% to R208,3
million. If the unrealised exchange rate fluctuations are excluded in both
years, the growth in core earnings is 40.3%, with earnings of 35,5 cents per
share.
4. Progress has been made with stockholding, which decreased in real terms if
food inflation and the opening of new branches are taken into account. Other
balance sheet items show normal inflationary increases.
5. Exceptional items consist mainly of the amortisation of negative goodwill.
6. Goodwill in the balance sheet relates to the purchase of operations,
subsidiaries, and further interests in subsidiaries, and is amortised over the
useful life.
7. The dispute between the group and SAB arising from the acquisition of OK
Bazaars has still not been settled.
Prospects
The board is of the opinion that results will continue to be satisfactory over
the next six months. In addition to the prospect of a lower rate of inflation
there are many factors influencing a forecast. Food inflation is still higher
than the average salary increases, so that consumer spending is expected to
remain under pressure. The situation can change significantly, however, as the
increase in minimum wages begins to filter through into the economy and if the
Minister of Finance once again makes tax concessions benefiting the lower-income
groups in particular.
Dividend
The board has declared an interim dividend of 14 cents (2002: 11 cents) per
share, payable to shareholders on 17 March 2003. The last day to trade cum
dividend will be 7 March 2003. As from 10 March 2003 all trading of Shoprite
shares will take place ex dividend. The record date is 14 March 2003. Share
certificates may not be dematerialised or rematerialised between Monday, 10
March 2003 and Friday, 14 March 2003, both days inclusive.
Accountability
The main principles in the accounting policies adopted in preparing the interim
consolidated financial statements comply with the Statements of Generally
Accepted Accounting Practice in South Africa and are consistent with those
applied for the year ended 30 June 2002, with the following exceptions:
With the coming into operation of a new accounting statement AC 133,
Financial Instruments: Recognition and Measurement, all relevant transactions,
assets and liabilities are accounted for in terms of AC 133.
In terms of SAICA Circular 7/2002, which replaces AC 306, Headline
Earnings, the group`s headline earnings are now calculated after all capital
income statement items have been taken into account.
The application of the above-mentioned had no material effect on the group`s
results.
By order of the Board
C H Wiese J W Basson
Chairman Chief Executive
17 February 2003
Directorate and administration
Executive Directors: J W Basson (Chief Executive),
C G Goosen (Deputy Managing Director), S U M Martinengo,
B Rogut, B Weyers, A N van Zyl, B Harisunker
Non-executive Directors: C H Wiese (Chairman), J A Louw,
J J Fouch, T R P Hlongwane, J F Malherbe, J G Rademeyer
Company Secretary: A N van Zyl
Registered Office: Cnr William Dabs and Old Paarl Roads, Brackenfell, 7560,
South Africa;
P O Box 215, Brackenfell, 7561, South Africa;
Telephone: +27 (0) 21 980 4000; Facsimile: +27 (0) 21 980 4050
Auditors: PricewaterhouseCoopers Inc, 1 Waterhouse Place, Century City; P O Box
2799, Cape Town, 8001
Transfer Secretary: Computershare Investor Services Ltd,
70 Marshall Street, Johannesburg, 2001;
P O Box 1053, Johannesburg, 2000;
Telephone: +27 (0) 11 370 5000; Facsimile: +27 (0) 11 370 5272
Sponsor: Nedbank Corporate, 1 Newton Avenue, Killarney, 2193;
P O Box 582, Johannesburg, 2000, South Africa;
Telephone: +27 (0) 11 480 1780; Facsimile: +27 (0) 11 480 1630
Date: 17/02/2003 04:54:08 PM Supplied by www.sharenet.co.za
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