Wrap Text
PRELIMINARY RESULTS FOR THE YEAR ENDED JUNE 2012
Shoprite Holdings Limited
(Reg. No. 1936/007721/06)
(ISIN: ZAE 000012084)
(JSE Share code: SHP)
(NSX Share code: SRH)
(LuSE Share code: SHOPRITE)
(“the Group”)
PRELIMINARY RESULTS FOR THE YEAR ENDED JUNE 2012
Key information
– Trading profit was up 17,02% to R4,665 billion.
– Turnover increased 14,4% – from R72,298 billion to R82,731 billion.
– Headline earnings per share rose 19,6% to 607,04 cents.
– Final dividend per share declared was 194 cents (2011: 165 cents) an increase of 17,6%.
Whitey Basson, chief executive, commented:
The Group’s ability to perform well despite adverse market conditions were again illustrated in the year to
June 2012. The turnover increase of 14,3% in its supermarkets in an environment in which internal food inflation
averaged 4,9% represents real growth in excess of 9%. That it managed to keep internal food inflation almost
4 percentage points below the official rate of 8,8% in our view reflects very positively on the Group’s commit-
ment to keep food prices as low as possible. This will stand consumers in good stead in the coming year if the
speculated price increases become a reality to the extent of economists’ current forecasts.
Turnover accelerated in the second half of the year – from 13,2% to 15,7% – while food inflation came down pro-
viding some reprieve for consumers. This slight buoyancy in the market has persisted after year-end but it is
doubtful whether it will last as food prices are bound to rise in line with international markets. The past
12 months was also a gratifying period that saw the Group appointing its 100 000th employee, having created
more than 7000 new jobs as a result of its successful store opening programme.
20 August 2012
Enquiries:
Shoprite Holdings Limited Tel: (021) 980 4000
Whitey Basson, chief executive
Carel Goosen, deputy managing director
De Kock Communications Tel: (021) 422 2690
Ben de Kock Cell: 076 390 7725
OPERATING ENVIRONMENT
The business environment remained largely unchanged from the previous reporting period. South African
consumers, beset on all sides by the challenges of rising debt and increased living expenses, continue to face
persistent high levels of unemployment, rising electricity, schooling and transport costs, and the impact of a
weaker rand which affected the prices of all imports. However, the government played its part in assisting
consumers and the economy by keeping interest levels at their lowest in 30 years while continuing the payment
of social grants from child maintenance to old age pensions, to an increasing number of low-income recipients.
Consumers elsewhere in Africa, whose predominantly cash-based societies are in the main further removed
from the fall-out of Europe’s escalating sovereign-debt crises, had an easier time of it. They benefited from
imports at reduced prices from South Africa due to a weaker rand and saw fewer pressures on their growing
middle class.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover grew 14,4% from R72,298 billion to R82,731 billion. Internal food inflation for RSA Supermarkets
was 4,9% compared to the official South African food inflation figure of 8,8%. This compares with growth of
7,3% (9,7% when compared to 52 weeks) in the previous year when internal food deflation averaged 0,1%.
The Group’s non-RSA supermarket operation reported an increase in turnover of 25,4% at current exchange
rates and by 19,7% at constant currencies.
Expenses
Depreciation and amortisation grew 16,8% to R1,090 billion due mainly to the Group’s investment in new and
refurbished stores, distribution centre expansions and information technology. Other expenses increased by
22,4% mainly due to the increased turnover, new stores opened, as well as the escalation in electricity and other
energy costs. The increase of 13,3% in staff costs to R6,53 billion is below the growth in turnover and includes
new staff appointed for the net 90 additional stores opened.
Trading margin
The trading margin increased to 5,64% from 5,51% and reflects the continuing efficiencies achieved by, inter
alia, the on-going investment in the Group’s supply chain infrastructure.
Exchange rate losses
The Group recorded an exchange rate loss of R8,3 million as against a loss of R446 000 in the corresponding
period. This was mainly due to a weaker rand against the US dollar during the period under review and helped
make prices of South African merchandise more competitive elsewhere in Africa.
Finance cost and interest received
The increase in net interest paid was due to the increase in capital expenditure on new stores and information
technology as well as interest provided on the convertible bonds issued towards the end of the year, although
the latter was offset to a large degree by the cash received from the share issue.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in the net 90 additional stores, vacant land purchased for strategic
purposes, investment in information technology to support inventory management, distribution centre
development, as well as normal asset replacements.
Cash and cash equivalents and bank overdrafts
This item should also be seen in conjunction with current liabilities. The increase in cash at balance sheet date
is due to a highly successful convertible bond issue that came on the back of an equally successful share issue.
The Group managed to attract just under R8 billion in less than 18 hours which attests to the trust that investors
place in the Group.
In addition certain creditors were paid after balance sheet date in the current year, whereas they had been paid
before balance sheet date in the previous year. This also accounts for the increase in Trade and other payables.
The Group also spent just over R3 billion on capital expenditure during the preceding 12 months.
OPERATIONAL REVIEW
All the divisions improved on their performance in the previous financial year and in almost all instances
exceeded the growth in their respective sectors. This they managed by offering hard-pressed consumers the
right product at the right price at the right time. In doing so they relied on a highly efficient replenishment
system created through the Group’s on-going investment in information technology and distribution
infrastructure. It continued aggressively enlarging its store footprint by adding a net 90 additional food and
furniture outlets to its portfolio. The accent on growth in terms of store numbers was particularly strong in the
Group’s operations outside South Africa.
Number of outlets June 2012
YEAR TO DATE CONFIRMED
NEW STORES
JUN 11 OPENED CLOSED JUN 12 TO JUNE 2013
SUPERMARKETS 814 68 7 875 103
– SHOPRITE 405 21 2 424 44
– CHECKERS 160 10 3 167 11
– CHECKERS HYPER 26 2 28 1
– USAVE 223 35 2 256 47
HUNGRY LION 130 18 3 145 15
FURNITURE 300 21 7 314 24
– OK FURNITURE 250 19 4 265 22
– HOUSE & HOME 50 2 3 49 2
TOTAL OWNED STORES 1244 107 17 1334 142
– OK FRANCHISE 269 171 42 398 6
– USAVE FRANCHISE 2 1 3 1
– H/L FRANCHISE 5 5 0
TOTAL FRANCHISE 276 172 42 406 7
TOTAL STORES 1520 279 59 1740 149
Supermarkets RSA
Supermarkets RSA, which contributes 78,1% to group turnover and consists of the three chains Shoprite,
Checkers and Usave, continued to trade successfully. While the formal food market as measured by Nielsen in
the 12 months to June grew by 8,9%, Supermarkets RSA increased turnover by 12,9% from R57,214 billion to
R64,584 billion. This growth was achieved in an environment in which internal food inflation escalated from
-0,1% to 4,9%, still substantially below the official food inflation rate of 8,8%. It was the sixth consecutive year in
which the Group’s supermarkets grew at a faster pace than the sector as a whole. In the 12 months to June
Supermarkets RSA increased the number of stores from which it trades by a net 55 to 864.
The flagship Shoprite chain with 339 supermarkets in South Africa, increased sales by 11,6% and in existing
stores by 8,5% off an already high base. It continued to focus on delivering the lowest prices and to expand its
presence in particularly previously marginalised residential areas providing a standard of neighbourhood food
shopping not hitherto available to residents. The strength of the Shoprite brand was confirmed when, according
to both the Sunday Times Top Brands awards and The Times/Sowetan Retail Awards in 2011, South Africans
rated Shoprite as the No 1 supermarket for the 5th consecutive time and No 1 in all five grocery categories
including overall customer experience, respectively. After year-end it was announced that Shoprite was again
the winner, for the third consecutive year, in the convenience and grocery store category of the 2012 Sunday
Times Top Brands Awards, of which the winners are voted in by consumers.
In the three months since April when the chain started paying social grants on behalf of the Department of
Social Development it made more than 3 million payments to grant recipients who as a group form an integral
part of the chain’s target audience.
Despite increasing competition, Checkers continued to expand its customer base in the higher LSM categories
and to maintain its position for the fourth year as the fastest-growing national food chain in its segment of the
market by growing turnover by 11,9% in the period under review. At the end of the review period it traded from
162 supermarkets and 28 hyper stores. It is constantly expanding product ranges in its chosen speciality areas
such as estate wines, exotic cheeses and branded meat products, and introducing new categories with products
linked to a modern lifestyle.
Usave has continued to grow its store footprint by opening a net 24 new outlets. It now operates 215 stores in
South Africa and is fast becoming a meaningful niche player in domestic food retailing. Its predominantly
small-format stores with their limited range of food and non-food products remain rigorously focused on value
and price. It grew turnover by 19,9% and by 9,7% in existing stores.
Supermarkets Non-RSA
The Group’s non-RSA supermarket operation experienced a successful year with turnover in its 156 stores in
16 countries, increasing it by 25,4% at current exchange rates and by 19,7% at constant currencies. Although the
lack of suitable sites remains a major impediment to growth, the Group was nevertheless able to open 21 new
stores, one of these in Kinshasa in the Democratic Republic of Congo (DRC). The Group now employs more than
11 000 people in the 16 countries in which it has a presence outside South Africa.
Furniture
The division reported a sales increase of 11,1% to R3,4 billion in an environment in which continuing price
deflation averaged 5,1%. Growth in existing stores was 8,8% while trading profit was 33,5% higher than a year
ago. The biggest profit contribution came from OK Furniture which focuses on the middle to lower end of the
market. The division’s solid performance resulted from its on-going investment in new stores, its rigid
adherence to a highly competitive pricing policy and improved levels of customer service.
Other Operating Segments
These include the results of the OK Franchise Division, the Pharmacy Division as well as Computicket.
During the year OK Franchise implemented the transaction in terms of which it acquired the Friendly, Seven
Eleven and Price Club franchise chains from Metcash. Although not all the Metcash members were retained, the
division’s number of franchise members nevertheless increased from 276 to 406. The additional sales generated
by these mainly small-format stores enabled the division to increase turnover by 19,1% to R3,7 billion. As no
additional infrastructure was required to service new members, the growth in trading profit was above turnover.
MediRite operated pharmacies in 136 Shoprite and Checkers stores, having opened a net 15 during the year.
It has strengthened its relationship as a preferred provider with a number of medical aid societies for whom the
size of its footprint is of material importance in the distribution of chronic medication. MediRite pharmacies are
provisioned for more than 95% by the Group’s wholesale division, Transpharm, which is extending its external
client base and has reported particularly strong growth in the Western Cape.
Computicket continued to operate successfully its network of outlets in Shoprite and Checkers supermarkets as
well as in OK Furniture and House & Home stores. It continued to upgrade its technology platforms to
accommodate spikes in demand for tickets for celebrity concerts and major sporting events and remains South
Africa’s leading ticketing business.
GROUP PROSPECTS AND OUTLOOK
The board expects trading conditions to remain largely the same for at least the first half of the new financial
year. Nothing on the horizon suggests the pressure on consumers’ disposable income will ease off; if anything,
it will increase further with a rise in global food prices at this stage seemingly unavoidable. However, the Group
is well positioned to trade profitably even under such conditions.
DIVIDEND NO 127
The board has declared a final dividend of 194,0 (2011: 165,0 cents) per ordinary share, payable to shareholders
on Monday, 17 September 2012. The dividend has been declared out of income reserves. This brings the total
dividend for the year to 303,0 cents per ordinary share (2011: 253,0 cents). The last day to trade cum dividend
will be Friday, 7 September 2012. As from Monday, 10 September 2012 all trading of Shoprite Holdings Ltd
shares will take place ex dividend. The record date is Friday, 14 September 2012. Share certificates may not be
dematerialised or rematerialized between Monday 10 September 2012, and Friday, 14 September 2012, both
days inclusive.
In terms of the new Dividends Tax effective 1 April 2012, the following additional information is disclosed:
1. Local dividend tax rate is 15%.
2. There are no STC credits available.
3. Net local dividend amount is 164,9 cents per share for shareholders liable to pay Dividends Tax and
194,0 cents per share for shareholders exempt from paying Dividends Tax.
4. The issued share capital of Shoprite Holdings as at the date of this declaration is 570 579 460 ordinary
shares; and
5. Shoprite Holdings’ tax reference number is 9775/112/71/8.
ACCOUNTABILITY
These condensed consolidated preliminary results have been prepared in accordance with International
Financial Reporting Standards (“IFRS”), IAS 34: Interim Reporting, the South African Companies Act (Act no 71
of 2008), as amended and the listing requirements of the JSE Limited. The accounting policies are consistent
with those used in the annual financial statements for the financial period ended June 2011, unless otherwise
stated. The preparation of these results have been supervised by Mr M. Bosman, CA(SA) and have been
reviewed by PricewaterhouseCoopers Inc., whose unqualified report is available for inspection at the registered
office of the Company.
The Group issued compound financial instruments for the first time during the year under review and acquired
an investment in an associate during the year. The accounting policies adopted for such compound financial
instruments and investment in associate are set out below.
1. Compound financial instruments
Compound financial instruments issued by the Group comprise convertible bonds that can be converted to
share capital at the option of the holder and the number of shares to be issued does not vary with changes in
their fair value.
The liability component of a compound financial instrument is recognised initially at the fair value of a similar
liability that does not have an equity conversion option. The equity component is recognised initially at the
difference between the fair value of the compound financial instrument as a whole and the fair value of the
liability component. Any directly attributable transaction costs are allocated to the liability and equity
components in proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial instrument
is not re-measured subsequent to initial recognition except on conversion or expiry.
2. Associates
Associates are those entities over which the Group exercises significant influence but not control. Significant
influence is presumed to exist when the Group holds between 20% and 50% of the voting rights of another
entity. The Group’s investments in associates are accounted for using the equity method and are initially
recognised at cost. Investments in associates include goodwill identified on acquisition, net of any accumulated
impairment losses.
The Group’s share of post-acquisition profit or loss and its share of post-acquisition movements in other
comprehensive income are recognised in the statement of comprehensive income and in other comprehensive
income respectively, with a corresponding adjustment to the carrying amount of the investment, from the date
that significant influence commences until the date that significant influence ceases. When the Group’s share of
losses in an associate equals or exceeds its investment in the associate, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
Where applicable, accounting policies applied by associates have been changed to ensure consistency with the
policies adopted by the Group.
EVENTS AFTER THE REPORTING DATE
On 28 June 2012, shareholders approved the issue of an additional 13,803,405 non-convertible, non-participating,
no par value deferred shares in the share capital of Shoprite Holdings to Thibault Square Financial Services
(Pty) Ltd pursuant to the issue of the additional ordinary shares during the reporting period. These deferred
shares were however only issued subsequent to the financial year end.
AUDITORS REVIEW OPINION
The condensed consolidated preliminary results for the year ended June 2012 have been reviewed by
PricewaterhouseCoopers Inc. The auditors’ unqualified review opinion is available for inspection at the
Company’s registered office.
By order of the board
CH Wiese JW Basson
Chairman Chief executive
Cape Town
20 August 2012
Condensed Group Statement of Comprehensive Income
Reviewed Audited
% year ended year ended
R’000 Notes change June ‘12 June ‘11
Sale of merchandise 14.4 82 730 587 72 297 777
Cost of sales 14.1 (65 752 642) (57 624 408)
GROSS PROFIT 15.7 16 977 945 14 673 369
Other operating income 25.3 2 325 312 1 855 841
Depreciation and amortisation 16.8 (1 090 295) (933 592)
Operating leases 14.1 (1 940 221) (1 700 468)
Employee benefits 13.3 (6 530 468) (5 762 045)
Other expenses 22.4 (5 077 139) (4 146 408)
TRADING PROFIT 17.0 4 665 134 3 986 697
Exchange rate losses 1 770.6 (8 343) (446)
Items of a capital nature 19.3 (93 687) (78 533)
OPERATING PROFIT 16.8 4 563 104 3 907 718
Interest received 50.3 142 166 94 614
Finance costs 77.5 (223 563) (125 964)
PROFIT BEFORE INCOME TAX 15.6 4 481 707 3 876 368
Income tax expense 6.8 (1 438 889) (1 346 826)
PROFIT FOR THE YEAR 20.3 3 042 818 2 529 542
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX
Fair value movements on available-for-sale
investments (2 726.6) (51 219) 1 950
Foreign currency translation differences (302.7) 288 699 (142 451)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 37.3 3 280 298 2 389 041
PROFIT ATTRIBUTABLE TO:
Owners of the parent 20.6 3 026 563 2 509 780
Non-controlling interest (17.7) 16 255 19 762
20.3 3 042 818 2 529 542
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO:
Owners of the parent 37.8 3 264 043 2 369 279
Non-controlling interest (17.7) 16 255 19 762
37.3 3 280 298 2 389 041
Basic and diluted earnings per share (cents) 4 19.0 590.0 495.9
6
Condensed Group Statement of Financial Position
Reviewed Audited
R’000 Notes June ‘12 June ‘11
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 9 668 559 8 168 749
Investment in associate 1 103 886 —
Available-for-sale investments — 59 656
Loans and receivables 3 706 4 308
Deferred income tax assets 413 645 326 457
Intangible assets 894 296 719 105
Fixed escalation operating lease accrual 10 573 9 246
11 094 665 9 287 521
CURRENT ASSETS
Inventories 8 680 109 7 055 867
Trade and other receivables 2 702 031 2 255 390
Current income tax assets 81 190 38 543
Loans and receivables 16 197 46 226
Cash and cash equivalents 7 939 333 1 961 551
19 418 860 11 357 577
Assets held for sale 391 993 58 659
TOTAL ASSETS 30 905 518 20 703 757
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS
Share capital 2 647 314 616 583
Share premium 3 672 069 293 072
Treasury shares 2 (320 146) (337 406)
Reserves 8 745 805 6 512 451
12 745 042 7 084 700
NON-CONTROLLING INTEREST 62 675 58 750
TOTAL EQUITY 12 807 717 7 143 450
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 3 4 006 698 26 177
Deferred income tax liabilities 152 085 25 377
Provisions 338 791 339 200
Fixed escalation operating lease accrual 520 206 455 787
Trade and other payables 21 878 263 455
5 039 658 1 109 996
CURRENT LIABILITIES
Trade and other payables 12 711 704 9 807 743
Borrowings 3 28 736 23 578
Derivative financial instruments 231 3 606
Current income tax liabilities 151 025 464 316
Provisions 138 634 104 117
Bank overdrafts 22 858 2 042 100
Shareholders for dividends 4 955 4 851
13 058 143 12 450 311
TOTAL LIABILITIES 18 097 801 13 560 307
TOTAL EQUITY AND LIABILITIES 30 905 518 20 703 757
Condensed Group Statement of Changes in Equity
Attributable to equity holders
Non-
Total controlling Share Share Treasury Other Retained
R’000 equity interest Total capital premium shares reserves earnings
BALANCE AT JUNE 2010 5 972 016 67 184 5 904 832 616 583 293 072 (337 406) 140 920 5 191 663
Total comprehensive income 2 389 041 19 762 2 369 279 — — — (140 501) 2 509 780
Profit for the year 2 529 542 19 762 2 509 780 2 509 780
Recognised in equity
Net fair value movement on available-for-sale
investments 2 267 2 267 2 267
Income tax effect of net fair value movement
on available-for-sale investments (317) (317) (317)
Foreign currency translation differences (142 451) (142 451) (142 451)
Transfer to contingency reserve — — 4 509 (4 509)
Dividends distributed to shareholders (1 217 607) (28 196) (1 189 411) (1 189 411)
BALANCE AT JUNE 2011 7 143 450 58 750 7 084 700 616 583 293 072 (337 406) 4 928 6 507 523
Total comprehensive income 3 280 298 16 255 3 264 043 — — — 237 480 3 026 563
Profit for the year 3 042 818 16 255 3 026 563 3 026 563
Recognised in equity
Net fair value movement on available-for-sale
investments (59 557) (59 557) (59 557)
Income tax effect of net fair value movement
on available-for-sale investments 8 338 8 338 8 338
Foreign currency translation differences 288 699 288 699 288 699
Equity component of convertible bonds issued
during the year 333 880 333 880 333 880
Proceeds from ordinary shares issued 3 409 728 3 409 728 30 731 3 378 997
Treasury shares’ loss 74 289 74 289 17 260 57 029
Transfer from contingency reserve — — (33 536) 33 536
Dividends distributed to shareholders (1 433 928) (12 330) (1 421 598) (1 421 598)
BALANCE AT JUNE 2012 12 807 717 62 675 12 745 042 647 314 3 672 069 (320 146) 542 752 8 203 053
Condensed Group Statement of Cash Flows
Reviewed Audited
year ended year ended
R’000 Notes June ‘12 June ‘11
CASH FLOWS FROM OPERATING ACTIVITIES 3 334 804 1 543 646
Operating profit 4 563 104 3 907 718
Less: investment income (82 259) (27 663)
Non-cash items 5.1 1 714 522 1 459 480
Payments for cash settlement of share appreciation rights (287 540) (218 037)
Payments for settlement of post-retirement medical
benefits liability (1 779) (2 630)
Changes in working capital 5.2 649 234 (1 324 359)
Cash generated from operations 6 555 282 3 794 509
Interest received 159 024 110 519
Interest paid (125 745) (125 964)
Dividends received 65 401 11 758
Dividends paid (1 433 824) (1 216 084)
Income tax paid (1 885 334) (1 031 092)
CASH FLOWS UTILISED BY INVESTING ACTIVITIES 5.3 (3 110 892) (2 937 011)
CASH FLOWS FROM FINANCING ACTIVITIES 5.4 7 767 685 9 329
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 7 991 597 (1 384 036)
Cash and cash equivalents at the beginning of the year (80 549) 1 344 587
Effect of exchange rate movements on cash and
cash equivalents 5 427 (41 100)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 7 916 475 (80 549)
Consisting of:
Cash and cash equivalents 7 939 333 1 961 551
Bank overdrafts (22 858) (2 042 100)
7 916 475 (80 549)
Condensed Operating Segment Information
Analysis per reportable segment
Reviewed June 2012
Other
Supermarkets Supermarkets operating
RSA Non-RSA Furniture segments Consolidated
R’000 R’000 R’000 R’000 R’000
Sale of merchandise
External 64 584 215 9 174 147 3 400 185 5 572 040 82 730 587
Inter-segment 1 749 501 4 949 — — 1 754 450
66 333 716 9 179 096 3 400 185 5 572 040 84 485 037
Trading profit 3 887 334 466 277 175 492 136 031 4 665 134
Depreciation and amortisation 992 998 144 550 44 152 18 406 1 200 106
Total assets 22 312 020 4 527 078 2 386 342 1 680 078 30 905 518
Audited June 2011
Other
Supermarkets Supermarkets operating
RSA Non-RSA Furniture segments Consolidated
R’000 R’000 R’000 R’000 R’000
Sale of merchandise
External 57 213 793 7 316 698 3 059 648 4 707 638 72 297 777
Inter-segment 1 512 692 — — — 1 512 692
58 726 485 7 316 698 3 059 648 4 707 638 73 810 469
Trading profit 3 302 262 415 524 131 484 137 427 3 986 697
Depreciation and amortisation 831 309 111 274 41 025 22 834 1 006 442
Total assets 14 600 472 2 996 263 2 035 346 1 071 676 20 703 757
Geographical analysis
Reviewed June 2012
Outside
South Africa South Africa Consolidated
R’000 R’000 R’000
Sale of merchandise – external 72 492 035 10 238 552 82 730 587
Non-current assets* 8 473 336 2 100 092 10 573 428
Audited June 2011
Outside
South Africa South Africa Consolidated
R’000 R’000 R’000
Sale of merchandise – external 64 068 311 8 229 466 72 297 777
Non-current assets* 7 569 684 1 327 416 8 897 100
*Non-current assets consist of property, plant and equipment, intangible assets and fixed escalation operating
lease accruals.
Selected Explanatory Notes to the Preliminary Results
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
1 INVESTMENT IN ASSOCIATE
Investment in Winhold Ltd
Investment in ordinary shares 103 886 —
The Group acquired a 49% interest in Winhold Ltd during
the year under review. Winhold Ltd is an unlisted retailing
supermarket group in Mauritius, denominated in Mauritian rupees.
2 SHARE CAPITAL AND TREASURY SHARES
2.1 Ordinary share capital
Authorised:
650 000 000 (2011: 650 000 000) ordinary shares of 113.4 cents each
Issued:
570 579 460 (2011: 543 479 460) ordinary shares of 113.4 cents each 647 037 616 306
Reconciliation of movement in number of ordinary shares issued:
Number of shares
June ‘12 June ‘11
Balance at the beginning of the year 543 479 460 543 479 460
Shares issued during the year 27 100 000 —
Balance at the end of the year 570 579 460 543 479 460
Treasury shares held by Shoprite Checkers (Pty) Ltd and The Shoprite
Holdings Ltd Share Incentive Trust are netted off against share capital on
consolidation. The net number of ordinary shares in issue for the Group are:
Issued ordinary share capital 570 579 460 543 479 460
Treasury shares (note 2.3) (35 436 472) (37 346 947)
535 142 988 506 132 513
The unissued ordinary shares are under the control of the directors who
may issue them on such terms and conditions as they deem fit until the
Company’s next annual general meeting.
All shares are fully paid up.
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
2.2 Deferred share capital
Authorised:
360 000 000 (2011: 360 000 000) non-convertible, non-participating no par
value deferred shares
Issued:
276 821 666 (2011: 276 821 666) non-convertible, non-participating
no par value deferred shares 277 277
The unissued deferred shares are not under the control of the directors,
and can only be issued under predetermined circumstances as set out in
the Memorandum of Incorporation of Shoprite Holdings Ltd.
All shares are fully paid up and carry the same voting rights as the
ordinary shares.
647 314 616 583
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
2 SHARE CAPITAL AND TREASURY SHARES (continued)
2.3 Treasury shares
35 436 472 (2011: 37 346 947) ordinary shares 320 146 337 406
Reconciliation of movement in number of treasury shares for the Group:
Number of shares
June ‘12 June ‘11
Balance at the beginning of the year 37 346 947 37 346 947
Movement in shares held by The Shoprite Holdings Ltd Share
Incentive Trust
Shares disposed during the year (506 036) —
Movement in shares held by Shoprite Checkers (Pty) Ltd
Shares purchased during the year 506 036 —
Shares’ loss during the year (1 910 475) —
Balance at the end of the year 35 436 472 37 346 947
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
3 BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference share capital 2 450 2 450
Shoprite International Ltd preference share capital 182 149
Convertible bonds (note 3.1) 3 975 330 —
First National Bank of Namibia Ltd 57 472 47 156
4 035 434 49 755
3.1 Convertible bonds
The Group issued 6.5% convertible bonds for a principal amount of
R4,5 billion on 2 April 2012. The bonds mature five years from the issue
date at their nominal value of R4,5 billion or can be converted into
shares at the holders’ option at the maturity date at the rate of 5 919.26
shares per R1 million. The Group holds, subject to conditions, rights on
early redemption. The values of the liability component and the equity
conversion component were determined at issuance of the bond.
The fair value of the liability component, included in non-current
borrowings, was calculated using a market interest rate for an equivalent
non-convertible bond. The residual amount, representing the value of
the equity conversion option, is included in shareholders’ equity in other
reserves, net of income taxes.
The convertible bond recognised in the statement of financial position is
calculated as follows:
Face value of convertible bonds issued on 2 April 2012* 4 347 641 —
Equity component* (470 129) —
Liability component on initial recognition at 2 April 2012 3 877 512 —
Interest expense 97 818 —
Liability component at the end of the year 3 975 330 —
*The transaction costs have been allocated to the equity and liability components based on their relative
day one values.
The fair value of the liability component of the convertible bonds amounted to R4,1 billion at the statement
of financial position date. The fair value is calculated using cash flows discounted at a rate based on the
borrowings rate of 8.5%.
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
4 EARNINGS PER SHARE
Profit attributable to equity holders 3 026 563 2 509 780
Re-measurements 93 687 78 533
(Profit)/loss on disposals of property (1 572) 6 214
Profit on disposals of assets held for sale — (12 868)
Loss on disposals and scrappings of plant,
equipment and intangible assets 15 166 32 256
Insurance claims paid 1 094 217
Impairment of property, plant and equipment
and assets held for sale 17 210 56 351
Impairment of goodwill 61 605 768
Loss/(profit) on other investing activities 184 (4 405)
Income tax effect on re-measurements (6 038) (19 307)
Headline earnings 3 114 212 2 569 006
Number of shares
June ‘12 June ‘11
R’000 R’000
Number of ordinary shares
– In issue 535 143 506 133
– Weighted average 513 019 506 133
Cents
– Earnings 590.0 495.9
– Headline earnings 607.0 507.6
Diluted earnings per share is unchanged from basic earnings per share, as the inclusion of the dilutive
potential ordinary shares would increase earnings per share and is therefore not dilutive. Convertible
debt outstanding at the reporting date (refer note 3.1), which were anti-dilutive in the current year, could
potentially have a dilutive impact in the future.
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
5 CASH FLOW INFORMATION
5.1 Non-cash items
Depreciation of property, plant and equipment 1 132 907 948 520
Amortisation of intangible assets 67 199 57 922
Net fair value (gains)/losses on financial instruments (3 375) 5 105
Exchange rate losses 8 343 446
(Profit)/loss on disposals of property (1 572) 6 214
Profit on disposals of assets held for sale — (12 868)
Loss on disposals and scrappings of plant, equipment
and intangible assets 15 166 32 256
Impairment of property, plant and equipment and
assets held for sale 17 210 56 351
Impairment of goodwill 61 605 769
Movement in provisions 34 577 70 876
Movement in cash-settled share-based payment accrual 330 738 272 808
Movement in fixed escalation operating lease accrual 51 724 21 081
1 714 522 1 459 480
5.2 Changes in working capital
Inventories (1 526 104) (1 000 474)
Trade and other receivables (239 945) (236 566)
Trade and other payables 2 415 283 (87 319)
649 234 (1 324 359)
Reviewed Audited
June ‘12 June ‘11
R’000 R’000
5 CASH FLOW INFORMATION (continued)
5.3 Cash flows utilised by investing activities
Investment in property, plant and equipment and intangible
assets to expand operations (2 359 020) (2 283 322)
Investment in property, plant and equipment and intangible
assets to maintain operations
(758 749) (721 897)
Proceeds on disposals of property, plant and equipment
and intangible assets 149 315 63 483
Proceeds on disposals of assets held for sale — 28 360
Other investing activities 34 409 3 493
Investment in associate (103 886) —
Acquisition of subsidiaries and operations (72 961) (27 128)
(3 110 892) (2 937 011)
5.4 Cash flows from financing activities
Proceeds from ordinary shares issued 3 409 728 —
Proceeds from convertible bonds issued 4 347 641 —
Increase in borrowings from First National Bank
of Namibia Ltd 10 316 9 329
7 767 685 9 329
6 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 707 467 1 343 534
Contingent liabilities 206 168 157 792
Net asset value per share (cents) 2 382 1 400
Directorate and Administration
Executive directors
JW Basson (chief executive), CG Goosen (deputy managing director), B Harisunker, AE Karp, EL Nel, BR Weyers
Non-executive director
CH Wiese (chairman)
Executive alternate directors
JAL Basson, M Bosman, PC Engelbrecht
Independent non-executive directors
JJ Fouché, EC Kieswetter, JA Louw, JF Malherbe, ATM Mokgokong, JG Rademeyer, JA Rock
Non-executive alternate director
JD Wiese
Company secretary
PG du Preez
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.shopriteholdings.co.za
Transfer secretaries
South Africa: Computershare Investor Services (Pty) Ltd, PO Box 61051, Marshalltown, 2107, South Africa
Telephone: +27 (0)11 370 5000, Facsimile: +27 (0)11 688 5248, Website: www.computershare.com
Namibia: Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek, Namibia
Telephone: +264 (0)61 227 647, Facsimile: +264 (0)61 248 531
Zambia: ShareTrack Zambia, 1st Floor, Main Building (South Wing), Cairo Road, Lusaka, Zambia,
PO Box 37283, Lusaka, Zambia, Telephone: +260 (0)211 236 783, Facsimile: +260 (0)211 236 785
Sponsors
South Africa: Nedbank Capital, PO Box 1144, Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8525, Facsimile: +27 (0)11 294 8525, Website: www.nedbank.co.za
Namibia: Old Mutual Investment Group (Namibia) (Pty) Ltd, PO Box 25549, Windhoek, Namibia
Telephone: +264 (0)61 299 3264, Facsimile: +264 (0)61 299 3528
Auditors
PricewaterhouseCoopers Incorporated, PO Box 2799, Cape Town, 8000, South Africa
Telephone: +27 (0)21 529 2000, Facsimile: +27 (0)21 529 3300
Date: 21/08/2012 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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