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Shoprite Holdings Ltd - Preliminary results for the 53 weeks ended June 2005
Shoprite Holdings Ltd
(Registration No 1936/007721/06)
ISIN: ZAE000012084
JSE share code: SHP
NSX share code: SRH
LuSE share code: SHOPRITE
("the Group")
PRELIMINARY RESULTS FOR THE 53 WEEKS ENDED JUNE 2005
Introductory note
The financial year to 3 July 2005 comprised 53 weeks compared to the
corresponding 12 months of 52 weeks in 2004. The figures provided below under
the heading "Key Information" are therefore for 53 weeks, as they are in the
rest of this document. To facilitate comparison between the 2005 and 2004
trading periods, figures for 52 weeks are also provided below, in brackets. In
addition, the figures for 2004 have been adjusted for changes in accounting
policy and reclassification of disclosure items on the basis set out under the
heading "Accountability" towards the end of this document.
Key information
* Total turnover increased 11,9% from R26,641 billion to R29,813 billion
(52 weeks: 9,7% to R29,232 billion).
* Non-RSA operations achieved 19,6 % sales growth in stable currency
terms.
* Operating profit before exchange differences up 27,8% to R912,2
million (52 weeks: 17,1% to R835,1 million).
* Headline earnings per share up 48,5% (52 weeks: 35,2%).
* Headline earnings per share, adjusted for exchange differences, up
25,4% (52 weeks: 14,1%).
* Dividend per share proposed increased 38,9% to 50,0 cents.
* Net asset value per share increased 20,6% to 416 cents.
* Basket size increased by 4,2% (52 weeks: 3,9%) and the number of
customer transactions, by 8,2% (52 weeks: 6,0%).
Whitey Basson, chief executive, commented:
"I am delighted with the excellent results produced on virtually all fronts. The
South African operation of our core business performed particularly well.
Turnover at 11,9% higher far outstripped CPIX of about 4%. Despite the pincer
effect created by food inflation of just 1,6% and rising operational costs, the
Group nevertheless increased operating profit by 27,8% over the 53-week period.
This was mainly due to better information being available for decision-making,
higher productivity, improved product ranging and a virtually fully automated
replenishment system that greatly advanced product flow from our distribution
centres to our stores, even those in isolated areas in Africa."
23 August 2005
Enquiries
Shoprite Holdings Limited
Tel: 021 980 4000
Whitey Basson, chief executive
Carel Goosen, deputy managing director
De Kock Communications
Tel: 021 422 2690
Cell: 076 390 7725
Ben de Kock
Operating environment
The trading environment in South Africa during the review period remained stable
and did not materially change in the sectors in which the Group operates
compared to the previous year. Inflation dropped even further as did interest
rates while the rand remained steady against the currencies of the country"s
major trading partners. The result was that due to cheaper imports and the
strong rand, sales of durable and semi-durable goods remained buoyant, although
tending to level out in the second half of the financial year. Food retailing
also benefited from this increased liquidity but had to contend with food
deflation in the case of some staples, and inflation of just 1,6% across the
food spectrum.
At the lower end of the market there was a noticeable increase in disposable
income, in our view the cumulative result of the material benefits derived by
lower-income earners from South Africa"s new political dispensation through tax
concessions, social grants and other forms of government support. In addition,
the benefits of the country"s consistent economic growth since the nineties are
increasingly spilling over into this sector of the community which is also
profiting from the recent increase in employment in both the formal and informal
sectors. As a result, many such consumers have become more upwardly mobile,
moving into LSM 4 to 7. This in turn has brought a change in the composition of
the consumer basket now containing more higher-margin food items as well as
related non-food products needed by first-time home owners.
Comments on the results
Income statement
Total revenue:
Total revenue increased 11,6% from R27,168 billion to R30,328 billion while
market share increased marginally by 0,13%.
Gross profit:
Gross profit increased 12,0% to R5,990 billion, due mainly to improved product
ranges, more efficient replenishment and the greater contribution to income by
the non-foods division which benefited from a stronger rand.
Operating margin:
If forex is excluded, the operating margin grew from 2,68% to 3,06%, the highest
ever, while it was 2,86% if the current year is reduced to 52 weeks. This
resulted mainly from improved decision-making, greater efficiencies as well as
improvements in distribution and a further reduction in the already very low
level of shrinkage.
Staff costs:
The increase in staff costs at 12,1% was marginally above turnover growth of
11,9% due to a non-recurring expense of R46 million relating to share
appreciation rights granted in previous years. If this expense is excluded,
staff costs grew by 9,8% and on that basis, the Supermarket Division again
increased productivity.
Exchange differences:
In the year to 30 June 2005 the rand weakened 6% against the US dollar compared
to strengthening against that currency by 16,7% in 2004. The weaker rand
resulted in a currency gain of R6,1 million as against a currency loss of R79,3
million in 2004.
Exceptional items:
The exceptional items include an impairment of R48,1 million in respect of
assets the Group holds in certain African countries.
Tax:
Tax shows an increase of 29,7% due to losses suffered in certain of the non-RSA
companies.
Earnings per share:
Diluted headline earnings per share increased 47,4% from 79,4 cents to 117,0
cents. Once adjusted for exchange differences, diluted headline earnings per
share was 24,4% higher at 115,6 cents. Earnings per share was only 0,2% above
that for 2004 due to an exceptional item in the 2005 financial year relating to
the impairment of certain of the Group"s assets in Africa and the fact that the
last tranche (R150 million) of the amortisation of negative goodwill was
reflected, also as an exceptional item, in the results for the 2004 financial
year.
Dividend proposed:
The increase of 38,9% in the dividend per share to 50,0 cents reduces dividend
cover to 2,1 times for a 52-week year. This trend is in line with a Board
decision to reduce, over time, the dividend cover to 2 times.
Balance sheet
Inventories:
Stock levels for the period increased by 2,9% and should be seen against a
turnover growth of 11,9%. Stock turn of inventory supplied by the Group"s own
distribution centres improved to 27 times per year and reflected a cumulative
reduction in stockholding of more than R400 million over two years.
Cash and cash equivalents and bank overdrafts:
Net cash and cash equivalents were R408,9 million at year-end compared to R1,128
billion in 2004. In 2004 the financial year ended on 27 June, before the month-
end creditor payments had been made, while the 2005 financial year ended on 3
July after such payments had been effected.
Operational review
Confirmed
Number of Number of new store
stores at Stores Stores stores at openings
30 June 2004 opened closed 30 June 2005 30 June 2006
Supermarkets 486 54 11 529 95
Shoprite 314 18 5 327 46
Checkers 90 6 1 95 20
Checkers Hyper 23 0 0 23 0
Usave 59 30 5 84 29
Hungry Lion 52 7 2 57 5
Furniture Group 167 10 0 177 19
OK Furniture 145 9 0 154 16
House & Home 22 1 0 23 3
Total own 705 71 13 763 119
stores
OK Franchise 297 25 74 248 19
Hungry Lion 3 1 1 3 3
Franchise
Total franchise 300 26 75 251 22
Total stores 1005 97 88 1014 141
Countries
outside South 15 1 0 16 17
Africa
Supermarkets
The combined revenue of the three supermarket brands - Shoprite, Checkers and
Usave and including the non-RSA operation - increased by 12,5% to R26,587
billion, up from R23,629 billion in 2004. The total number of customers served
increased by 8,2% while basket value for the 12 months was 4,2% higher as
against 2,0% the previous year. An aggressive new-store programme is envisaged
involving 66 new Shoprite and Checkers supermarkets and 29 Usave outlets.
Despite the fact that in South Africa the Group opened fewer large-format stores
than its major opposition it nevertheless managed to grow market share both in
terms of total turnover and on a like-for-like basis. A recent survey by AC
Nielsen showed that 85,8% of customers claimed to shop at the Shoprite Group
compared to 74,4% previously.
The current market realities in our core consumer base indicate good growth
prospects for the Shoprite brand. In 2004, a further 1,3 million people joined
the LSM 4 to 6 economic group which means Shoprite"s core target market is
growing substantially. The burgeoning South African middle class that was so
evident in the past financial year will continue to be a key driver of growth
for the Shoprite brand. Factors that contribute to the growth of the middle to
lower market are transformation, mass electrification, formal housing projects
and measures aimed at poverty alleviation. In our view no other food retailer is
better positioned than Shoprite to capitalise on this growth.
The repositioning of the Checkers brand to appeal to more affluent South African
consumers is in full swing. The ranging of specialty food products, a more
upmarket overall communication strategy and the sourcing of more convenient
store locations are the focus areas of the brand. Management is encouraged by
the fact that from September 2004 to April 2005 the chain grew its support by
LSM 9 and 10 customers from respectively 39,8% to 49,7% and 42,8% to 60,5%.
The Group also benefited increasingly from the new automated re-ordering system
which resulted in improved product flow through the distribution centres to the
stores, better product availability and higher stock turn.
Shoprite
Shoprite"s South African operation reported excellent results for the year
despite a trading environment again characterised by virtually non-existent food
inflation. It achieved turnover growth of 13,2% to R14,213 billion compared to
R12,555 billion in 2004.
The chain operates 327 of the Group"s 529 corporate stores in 17 countries,
South Africa included. Of these, 260 do business in South Africa and 67 beyond
its borders. It is expected to add a further 46 stores in the 2006 financial
year, 39 of these in South Africa. Should the Competitions Board approve the
acquisition of Foodworld, its 13 stores would be converted to the Shoprite brand
in the new financial year.
To counter the effects of price deflation still experienced in the case of most
staple foods and the marginal inflation in virtually all other food sectors, the
chain further expanded its higher-margin, non-food offering. At the same time
food ranges were extended by increasing the choice of aspirational products.
These new ranges also reflect the changing needs of the brand"s traditional
customers whose demand for white goods and electrical appliances has been
greatly increased by home ownership. Access to home appliances such as fridges
also had a knock-on effect on the sale of especially perishables and value-added
products.
With a healthy increase of 7,8% in the number of customers served the chain will
focus on trading up consumer spending in its stores and further growing the
average basket size which was 5,4% higher for the period under review.
Checkers
The Checkers brand held its own in a fiercely contested sector despite a large
number of opposition stores being opened in the higher LSM sector during the
reporting period. Turnover grew 9,5% to R9,432 billion. The brand increased
profitability by 32,9%. The number of store visits was 3,3% higher, and basket
size grew by 6,3%. The new customers are mainly from the higher LSMs, indicating
a positive response from the new target market. During the year six new stores
were opened and one closed. The chain operates 118 outlets of which four are
outside the borders of South Africa.
With its repositioning to cater to a more affluent consumer, Checkers is
benefiting from the worldwide shift in retail to convenience foods and value-
added products. To this end there is an increasing focus in its stores on
specialist departments such as the bakery, meat market, cheese and delicatessen
counter, and wine store. The focus on convenience has seen a strong increase in
prepared foods while the fruit and vegetable departments were expanded and
market share increased. Considerable progress was made during the year upgrading
the remaining Checkers outlets to new-generation stores, a process scheduled for
completion by the end of the 2006 calendar year.
Usave
This lower-end discounter increased the number of its stores by 25 to 84. Of
these, 62 are located in South Africa and 22 elsewhere on the continent. Its
success is based on high stock turn coupled with fast replenishment to maximise
sales floor space, and stores in operation for the full year continued to
produce a satisfactory return on capital employed.
After growing from an initial four stores in 2003 to 59 in 2004, management used
the 2005 financial year for consolidation. The initial rapid expansion of the
number of stores put pressure on in-store disciplines. Time was also needed to
refine the concept in the light of the experience gained. This process has now
been completed, allowing the store-opening programme to accelerate once again.
The objective is to have 113 Usave outlets by the end of the 2006 financial
year.
Operations outside South Africa
The operating results were below expectations and sales growth of 20,2% for the
53 weeks at constant conversion rates were well below the 26,2% for the 52 weeks
in 2004. This weaker performance resulted mainly from the continued strength of
the rand which reduced the affordability of South African exports, diluted
profit margins and compelled the Group to source product from elsewhere.
The non-RSA operations were extensively re-evaluated during the year and future
growth areas identified. The Group is achieving satisfactory results in, for
instance, Zambia and the BNLS countries, but profitability remains a problem in
Tanzania and in Egypt. The other countries all offer real potential for further
development. Shrinkage reached unacceptable levels in some countries but the
problem was rectified after strengthening management and tightening disciplines.
During the year the Group for the first time moved outside Africa when it opened
a 5 500 m2 franchised superstore in Mumbai in India. Although the store is
increasing its high-income customer base, it will take time to change shopping
patterns over a broad spectrum as for most consumers, the supermarket concept is
completely new.
During December 2005 the Group will start trading in Nigeria, after South Africa
the biggest market on the continent, when it opens a supermarket in a new
shopping centre in Lagos. The country"s retail potential is enormous and the
Group is researching additional sites in the capital.
During the 2006 financial year the Group plans to build two more shopping
centres in Angola and one in Namibia, as well as two supermarkets in Mozambique.
OK Franchise
During the period under review the division returned to profitability. The
number of franchisees reduced by 49, after adding 25 new members and closing 74
members" accounts. The majority of these were financially non-viable accounts. A
campaign was launched to canvass new members and after year-end 19 had signed up
to bring the number to 267. The remaining core consists of viable businesses
with substantial growth potential, and management is confident about their
future. Most of these businesses are located in the rural areas. Management is
keen to strengthen the division"s presence in those areas but is at the same
time targeting urban and semi-urban neighbourhoods for future growth.
Furniture
The Furniture division experienced another excellent year in terms of both
turnover growth and profitability. It increased revenue 16,5% to R1,999 billion
and operating profit 18,8% to R183,0 million. The factors that stimulated the
market in 2004 - lower taxes, reduced interest rates and a strong rand - also
determined sales patterns in the past financial year. The trading environment
remained highly competitive, especially in respect of white goods, bedding and
home entertainment products. The shift to cash continued with credit sales
dropping to 37% of total sales from 42% the previous year, despite the volume of
credit sales increasing.
By year-end the division operated 163 House & Home and OK Furniture stores as
well as 14 small-format OK Power Express outlets selling a reduced range of
white goods and home entertainment products. An aggressive store- opening
programme has been set in motion for 2006 with three House & Home and 16 OK
Furniture outlets, of which three are outside South Africa, on the drawing
board. During the period under review the division opened a store in Mozambique
and also intends expanding into Angola.
Group prospects and outlook
There are no forces at work in the economy that in our view would cause food
inflation to increase significantly in the short to medium term. The higher
disposable income in the Group"s target market should boost unit sales and
thereby offset, to a certain extent, the negative effect on turnover of low food
inflation. Management will continue to counter this effect by maintaining strict
disciplines, by increasing store efficiency and service levels, and continuously
improving product selection and availability. As part of this process a start
will be made in September with the phased introduction of a much more extensive
and sophisticated back-office programme that we believe will revolutionise store
operations.
We are therefore positive about the year ahead. The robust growth in turnover of
the past year is being continued in the new financial year, which will be
supported by an aggressive new-store programme, and we intend growing strongly
off the more structured base we created this year. We thus expect to maintain
the turnover growth and profitability pattern laid down in the 2005 financial
year bearing in mind that the new financial year will consist of the standard 52
weeks compared to the 53 weeks of 2005.
Corporate governance
Shoprite acts in accordance with the principles as embodied in the Code of
Corporate Practice and Conduct in the King Report 2002 ("the Code"). The Group
complies with the significant requirements incorporated in the Code and the JSE
Limited listing requirements.
Dividend No 113
The Board has declared a final dividend of 28,0 cents (2004: 19,5 cents) per
share, payable to shareholders on Monday, 19 September 2005. This brings the
total dividend for the year to 50,0 cents per ordinary share (2004: 36,0 cents).
The last day to trade cum dividend will be Friday, 9 September 2005. As from
Monday, 12 September 2005, all trading of Shoprite Holdings Ltd shares will take
place ex dividend. The record date is Friday, 16 September 2005.
Share certificates may not be dematerialised or re-materialised between Monday,
12 September 2005, and Friday, 16 September 2005, both days inclusive.
Accountability
These condensed consolidated preliminary results have been prepared in
accordance with South African Statements of Generally Accepted Accounting
Practice ("GAAP") and Schedule 4 of the South African Companies Act (Act No 61
of 1973), as amended. The accounting policies are consistent with those used in
the annual financial statements for the year ended 30 June 2004, except as
stated below.
Change in accounting policy
Accounting for goodwill
In accordance with the transitional provisions of AC 140: Business Combinations
and AC 128: Impairment of Assets, the Group has discontinued the amortisation of
goodwill and eliminated the carrying amount of the related accumulated
amortisation with a corresponding decrease in goodwill. All goodwill acquired in
business combinations will now be tested for impairment annually and any
resulting impairment losses will be recognised in the income statement. As per
the stated transitional provisions this adjustment will be done prospectively
and the effect on the current year income statement is reflected below.
Reviewed Audited
53 weeks 52 weeks
R"000 ended June 05 ended June 04
Operating profit 5 087
Exceptional items (26 151)
Profit before tax (21 064)
Tax -
Net profit (21 064)
Decrease in goodwill 21 064
Accounting for leases
In terms of SAICA Circular 7/2005 relating to AC 105: Leases, all
payments in respect of operating leases with a fixed escalation clause,
are recognised as an expense or income on a straight-line basis over the
lease term.
As per the requirements of AC 103: Net profit or loss for the period,
fundamental errors and changes in accounting policies, the relevant
comparative information has been restated. The effect of the restatement
is reflected below and in the statement of changes in equity.
R"000
Operating profit 7 378 10 909
Exceptional items - 3 667
Profit before tax 7 378 14 576
Tax (including tax rate adjustment) 7 437 5 199
Net profit (59) 9 377
Increase in non-current 154 529 163 589
assets
Increase in trade and other 1 623 4 465
receivables
Increase in non-current
liabilities 514 829 529 269
Increase in trade and other 16 962 14 365
payables
Reclassification of disclosure items
Certain reclassifications of income statement items in the current year
resulted in changes to the relevant comparative information to ensure
accurate comparability with the current year information. The effected
line items are detailed below.
All items forming part of the inventory valuation have now been
disclosed as part of cost of sales.
R"000
Cost of sales 1 302 399 1 284 665
Other operating income (1 605 605) (1 562 116)
Depreciation 24 218 23 762
Operating leases 16 470 30 196
Staff costs 72 310 77 868
Other operating costs 190 208 145 625
Operating profit - -
Reclassification of software as intangible assets
R"000
Intangible assets - 26 923 17 822
software
Property, plant and (26 923) (17 822)
equipment
Non-current assets - -
Depreciation (13 490) (12 047)
Other operating costs - 13 490 12 047
amortisation of software
Operating profit - -
Reclassification of reinstatement provision
R"000
Reinstatement provision - 20 822 565
current
Trade and other payables (20 822) (565)
Current liabilities - -
Auditors" review opinion
The condensed consolidated preliminary results for the 53 weeks ended June 2005
have been reviewed by PricewaterhouseCoopers Inc. The auditors" unqualified
review opinion is available for inspection at the company"s registered office.
Thanks to management and staff.
Retail has been transformed in the past decade into a most exciting world of new
challenges and limitless growth opportunities. That excitement has also been
growing within the Shoprite group as it develops into a global player. We thank
every member of staff that has taken up these challenges wanting to be part of a
bold future. Also every member of management who has helped shape this future,
and every member of the Board who has brought their wisdom to bear on the
decisions we need to take to make that future a reality.
By order of the Board
C H Wiese
Chairman
J W Basson
Chief executive
23 August 2005
Condensed group income statement
Reviewed Audited
53 weeks % 52 weeks
R"000 ended June 05 change ended June 04
Revenue 30 328 476 11,63 27 168 360
Sale of merchandise 29 812 886 11,91 26 641 233
Finance income earned 164 791 (3,81) 171 322
Franchise fees received 18 760 (5,15) 19 779
Operating lease income 184 887 (15,15) 217 903
Net premiums earned 147 152 24,58 118 123
Gross profit 5 990 491 12,00 5 348 544
Other operating income 675 384 (3,30) 698 446
Depreciation (441 806) 18,90 (371 573)
Operating leases (822 592) 1,24 (812 524)
Staff costs (2 462 545) 12,14 (2 195 969)
Other operating costs (2 026 757) 3,75 (1 953 418)
Operating profit before exchange
gains/(losses) 912 175 27,84 713 506
Exchange gains/(losses) 6 103 (79 276)
Operating profit before
exceptional items 918 278 44,79 634 230
Exceptional items (41 670) 165 261
Operating profit after exceptional
items 876 608 9,65 799 491
Investment income 69 400 57 739
Finance costs (47 772) (30 062)
Profit before tax 898 236 8,59 827 168
Tax (323 272) 29,67 (249 307)
Profit after tax 574 964 (0,50) 577 861
Minority interest (7 109) (11 674)
Net profit 567 855 0,29 566 187
Earnings per share (cents) 111,9 0,2 111,7
Diluted earnings per share (cents) 108,9 (0,5) 109,5
Headline earnings per share
(cents) 120,3 48,5 81,0
Diluted headline earnings per
share (cents) 117,0 47,4 79,4
Adjusted headline earnings per
share (cents) 118,8 25,4 94,7
Adjusted diluted headline earnings
per share (cents) 115,6 24,4 92,9
Ordinary dividend per share
(cents) 41,5 25,8 33,0
Ordinary dividend per share
proposed (cents) 50,0 38,9 36,0
Number of ordinary shares ("000) used for
calculation of:
earnings per share 507 373* 506 979*
diluted earnings per share 521 644* 517 007*
(*weighted average)
Condensed group balance sheet
Reviewed Audited
R"000 June 05 June 04
Assets
Non-current assets 2 775 164 2 615 874
Property, plant and equipment 2 311 641 2 160 987
Available-for-sale investments 33 100 6 980
Loans originated by the enterprise 61 530 66 537
Deferred tax assets 324 270 327 373
Intangible assets 40 410 48 161
Fixed escalation operating lease accrual 4 213 5 836
Current assets 5 778 466 5 483 546
Assets classified as held for sale 183 025 -
Inventories 2 696 558 2 620 150
Trade and other receivables 1 639 120 1 626 985
Current tax asset 62 474 29 181
Available-for-sale investments - 53 624
Loans originated by the enterprise 3 993 19 538
Cash and cash equivalents 1 193 296 1 134 068
Total assets 8 553 630 8 099 420
Equity and liabilities
Capital and reserves 2 112 660 1 752 635
Minority interest 40 841 38 007
Non-current liabilities 733 269 747 594
Interest-bearing borrowings 2 450 2 450
Deferred tax liabilities 4 131 1 939
Provisions 211 859 213 936
Fixed escalation operating lease accrual 514 829 529 269
Current liabilities 5 666 860 5 561 184
Trade and other payables 4 725 009 5 280 895
Current tax liability 66 983 223 281
Provisions 86 936 49 132
Bank overdraft 784 388 5 833
Shareholders for dividends 3 544 2 043
Total equity and liabilities 8 553 630 8 099 420
Condensed group statement of changes in equity
Reviewed Audited
53 weeks 52 weeks
R"000 ended June 05 ended June 04
Balance at 1 July as previously stated 1 752 635 1 732 939
Effect of fixed escalation operating
lease accruals - (384 956)
As restated 1 752 635 1 347 983
Acquisition of treasury shares (265) (3 080)
Net fair value profits on available-for-
sale investments, net of tax 2 997 8 969
Net profit for the year 567 855 566 187
Dividends distributed to shareholders (210 562) (167 424)
Balance at 30 June 2 112 660 1 752 635
Condensed group segment information
Reviewed Audited
53 weeks 52 weeks
R"000 ended June 05 ended June 04
Revenue - by business segment
- Supermarkets 28 329 967 25 452 544
- Furniture 1 998 509 1 715 816
Total revenue 30 328 476 27 168 360
Operating profit - by business segment
- Supermarkets 735 269 480 197
- Furniture 183 009 154 033
Total operating profit 918 278 634 230
Reconciliation of headline earnings
Reviewed Audited
53 weeks 52 weeks
R"000 ended June 05 ended June 04
Net profit attributable to shareholders 567 855 566 187
Exceptional items after tax 40 195 (163 807)
Profit on sale of operation - (68)
Profit on sale of buildings (6 716)
Profit on sale of unlisted investment (19 906) -
Profit on sale of listed investment (660) -
Insurance claim for building received (5 864) -
Impairment/(reversal of impairment) of 51 507 (3 067)
property, plant and equipment
Impairment of unlisted investment - 5 119
Amortisation of negative goodwill - (150 036)
Impairment of goodwill 26 151 -
Reversal of impairment of amounts owing
by share incentive trust participants - (7 946)
Payment for lease cancellation 3 484 3 000
Profit on lease cancellation (6 840) (10 642)
Prescription of amounts owing (961) (167)
Other items after tax
Loss on disposal and scrapping of software,
plant and equipment 2 410 3 195
Amortisation of goodwill - 5 087
Headline earnings 610 460 410 662
Exchange (gains)/losses after tax (7 487) 69 416
Adjusted headline earnings 602 973 480 078
Supplementary information
Reviewed Audited
R"000 June 05 June 04
1. Capital commitments 344 438 174 053
2. Contingent liabilities 53 190 14 707
There was an increase in the contingent
liabilities arising in the ordinary course
of business relating to property and other
transactions from which it is anticipated
that no material liabilities will arise.
3. Net asset value per share (cents) 416 345
4. Total number of shares in issue (adjusted
for treasury shares) 507 355 507 387
Condensed group cash flow statement
Reviewed Audited
53 weeks 52 weeks
R"000 Notes ended June 05 ended June
04
Cash generated by operations 777 418 1 341 611
Operating profit before exceptional
items 918 278 634 230
Non-cash items 1 501 554 471 820
Changes in working capital 2 (652 332) 226 327
Exceptional items 3 9 918 9 234
Net finance costs 14 948 22 971
Dividends received 6 680 4 706
Dividends paid (213 336) (171 105)
Tax paid (509 097) (75 012)
Cash flows from operating activities
76 613 1 123 171
Cash flows from investing activities
(810 961) (736 243)
Purchase of software, property, plant
and equipment (946 231) (792 693)
Proceeds on disposal of software,
property, plant and equipment
81 147 26 733
Acquisition of operations (17 127) (14 147)
Proceeds on disposal of unlisted
investment 50 000 -
Proceeds on disposal of listed
investment 21 069 -
Acquisitions of listed investment
(21 069) -
Disposal of operation - 5 200
Other investment activities 21 250 38 664
Net cash flow (734 348) 386 928
Cash flows from financing activities
428 (3 080)
Acquisition of treasury shares (265) (3 703)
Proceeds on sale of treasury shares
- 623
Proceeds on issue of preference shares
to joint venture 693 -
Movement in cash and cash equivalents
(733 920) 383 848
Effect of exchange rate movements on
cash and cash equivalents
14 593 (27 319)
Net movement in cash and cash
equivalents (719 327) 356 529
Cash flow information
1. Non-cash items
Depreciation on property, plant and
equipment 466 024 395 335
Amortisation of goodwill - 5 087
Amortisation of software 13 490 12 047
Loss on disposal and scrapping of 3 384 4 117
software, plant and equipment
Net fair value (gains)/losses on
financial instruments (3 629) 3 842
Exchange (gains)/losses (6 103) 79 276
Movement in provisions 35 727 (12 880)
Movement in fixed escalation operating
lease accrual (7 339) (15 004)
501 554 471 820
Reclassification of movement in provisions, from changes in working
capital to non-cash items, in the current year resulted in adjustments to
the relevant comparative figures to conform with the changes in
presentation made in the current year.
2. Changes in working capital
Inventories (92 552) (98 169)
Trade and other receivables (13 788) (227 341)
Trade and other payables (545 992) 551 837
(652 332) 226 327
3. Exceptional items
Exceptional items per income statement
(41 670) 165 261
Profit on disposal of property (7 401) -
Profit on disposal of operation - (97)
Impairment/(reversal of impairment) of
property, plant and equipment
51 507 (3 067)
Impairment of unlisted investment
- 5 119
Profit on disposal of unlisted
investment (18 000) -
Profit on disposal of listed investment
(669) -
Reversal of impairment of amounts owing
by Shoprite Holdings Ltd
Share Incentive Trust participants
- (7 946)
Impairment of goodwill 26 151 -
Amortisation of negative goodwill
- (150 036)
9 918 9 234
Directorate and administration
Executive directors:
JW Basson (chief executive), CG Goosen (deputy managing director),
B Weyers, AN van Zyl, B Harisunker
Non-executive directors:
CH Wiese (chairman), JA Louw, JJ Fouche, TRP Hlongwane, JF Malherbe,
JG Rademeyer
Company secretary: AN van Zyl
Registered office
Cnr William Dabs and Old Paarl Roads, Brackenfell, 7560, South Africa
PO Box 215, Brackenfell, 7561, South Africa
Telephone: +27 (0)21 980 4000; Facsimile: +27 (0)21 980 4050
Website: www.shoprite.co.za
Transfer secretaries
South Africa
Computershare Investor Services 2004 (Pty) Ltd
PO Box 61051, Marshalltown, 2107, South Africa
Telephone: +27 (0)11 370 5000; Facsmile: +27 (0)11 668 5520
Website: www.computershare.com
Namibia
Transfer Secretaries (Pty) Ltd
PO Box 2401, Windhoek, Namibia
Telephone: +264 (61) 227 647; Facsimile: +264 (61) 248 531
Zambia
Lewis Nathan Advocates
PO Box 372668, Lusaka, Zambia
Telephone: +260 (0) 1 223 174; Facsimile: +260 (0) 1 229 868
Sponsors
South Africa
Nedbank Capital
PO Box 1144, Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8603; Facsmile: +27 (0)11 294 8602
Website: www.nedbank.co.za
Namibia
Old Mutual Asset Managers
PO Box 25549, Windhoek, Namibia
Telephone: +264 (0) 61 299 3527; Facsmile: +264 (0) 61 299 3528
Zambia
Lewis Nathan Advocates
PO Box 37268, Lusaka, Zambia
Telephone: +260 (0) 1 223 174; Facsimile: +260 (0) 1 229 868
Auditors
PricewaterhouseCoopers Incorporated
PO Box 2799, Cape Town, 8001, South Africa
+27 (0)11 294 8602
Date: 24/08/2005 08:00:23 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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