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Results for the 6 months ended December 2012 and declatation of dividend
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)
SHOPRITE HOLDINGS: RESULTS FOR THE 6 MONTHS ENDED DECEMBER 2012
Key information
Trading profit was up 16,0% to R2,510 billion.
Turnover increased 13,8% - from R41,054 billion to R46,723 billion.
Headline earnings per share rose 12,5% to 315,9 cents (2011: 280,8 cents).
Dividend per share declared was 123 cents (2011: 109 cents) an increase of 12,8%.
Whitey Basson, chief executive, commented:
The Group succeeded in increasing total turnover by 13,8% to R46,723 billion
in a highly competitive market. The pace of growth in the first three months
of the reporting period was not maintained in the second, when the retail
sector as a whole experienced a slow-down in consumer demand, particularly
in the month of December. The trading margin edged slightly higher to 5,4%
compared to a year ago. The supermarket operation in South Africa grew
sales by 11,5% and with internal inflation at 4,6%, this represents real
growth of 6,9%. Seen against Nielsens reporting that sales for the food
retailing industry in South Africa grew by 8,2% in the six months to
December, it is clear that the Group has gained additional market share. At
the same time it continued its strong growth on the rest of the continent,
increasing turnover in constant currency terms by 23,5%. Overall, management
is satisfied with the results achieved in the present climate.
18 February 2013
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
In June 2012 the Minister of Finance, Pravin Gordhan, warned of tougher times
ahead for the South African economy due to the European crisis. He could not
at that time foresee the general sense of uncertainty that events such as
the labour action in the mining and agricultural sectors would create across
the consumer spectrum. In January the Bureau for Economic Research
reported a further drop in consumer confidence in the fourth quarter of
2012. During the six months reporting period, especially towards the end of
it, the disposable income of lower LSM groups in particular came under
increasing pressure due to earlier overspending on credit and the ever
rising cost of living, from electricity, transport to food and education.
The lack of disposable income was felt in all areas of the retail sector and
engendered intensified competition across the board. The Group has, however,
been able to withstand most of the challenges as reflected in its results.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Despite growth levelling off in the second three months of the reporting
period, total turnover increased by 13,8% for the period as a whole - from
R41,054 billion to R46,723 billion. It was boosted by the strong performance
of the Groups non-RSA operations in addition to the weakening of the rand
against the US$ and some African currencies.
Expenses
Depreciation and amortisation grew 25,8% to R644 million due mainly to the
Groups investment in new and refurbished stores, distribution centre
expansions and information technology. Other expenses increased by 24,6%
also due to the increased turnover and new stores opened as well as the
escalation in electricity and other energy costs, and an increase in card
commissions paid. The rise of 11,6% in staff costs to R3,643 billion is
below the growth in turnover and includes new staff appointed for the net 79
stores opened.
Trading margin
The trading margin increased to 5,4% from 5,3% and reflects the effects of
real growth in turnover as well as the continuing efficiencies achieved by,
inter alia, the on-going investment in the Groups supply chain
infrastructure. These efficiencies enabled management to keep cost increases
below turnover growth.
Exchange rate losses
The Group recorded an exchange rate loss of R41,4 million as against a
profit of R27,7 million in the corresponding period. This was mainly due to
the devaluation of the Malawian Kwacha during the period under review when
short-term borrowings could not be repaid owing to the unavailability of
foreign currency in that country.
Finance cost and interest received
The increase in net interest paid resulted from the increase in capital
expenditure on new stores and information technology as well as interest
accrued on the convertible bonds issued towards the end of the previous
financial year. The interest paid was substantially offset by interest
received from the investment of the surplus cash.
Earnings per share
The growth of 13,1% in earnings per share, from 280,3 cents to 317,1 cents,
was partially diluted due to the Groups successful capital raising in
March 2012 which resulted in an additional 27,1 million shares in issue.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 79 additional stores, vacant
land purchased for strategic purposes, investment in information technology
to support inventory management, distribution centre developments as well as
normal asset replacements.
Cash and cash equivalents and bank overdrafts
This item should be seen in conjunction with current liabilities. The
increase in cash at balance sheet date resulted from the successful
convertible bond and share issue during the previous financial year when the
Group attracted just under R8 billion from investors. In addition certain
creditors were only paid after balance sheet date in December in the current
year, whereas they had been paid before balance sheet date the previous
year. The Group also spent just over R2 billion on capital investments
during the preceding six months.
OPERATIONAL REVIEW
All the divisions reported acceptable growth in both turnover and operating
profit despite the tough trading conditions. The accent continued to be on
growing the store network both in and outside South Africa as well as their
supporting infrastructure. The latter included expanding existing
distribution facilities while making substantial further investments in
systems and software.
NUMBER OF OUTLETS DECEMBER 2012
DEC 11 OPENED CLOSED DEC 12 CONFIRMED
NEW
STORES TO
JUNE 2014
SUPERMARKETS 855 81 7 929 174 18.7%
- SHOPRITE 420 24 2 442 72 16.3%
- CHECKERS 164 10 3 171 22 12.9%
- CHECKERS HYPER 27 2 29 4 13.8%
- USAVE 244 45 2 287 76 26.5%
HUNGRY LION 148 20 3 165 8 4.8%
FURNITURE 308 26 7 327 32 9.8%
- OK FURNITURE 259 21 4 276 30 10.9%
- HOUSE & HOME 49 5 3 51 2 3.9%
OK FRANCHISE 419 38 57 400 9 2.3%
TOTAL STORES 1730 165 74 1821 223 12.2%
In December 2012 the Group operated in 17 countries compared to 16 in 2011.
Supermarkets RSA
Supermarkets RSA grew sales 11,5% from R32,031 billion to R35,699 billion in
a sluggish trading environment. On this turnover, a trading profit of R2,072
billion (2011: R1,788 billion) was generated. Internal food inflation was
restricted to 4,3% through meticulous cost control and increased
efficiencies throughout the business. This compares with the official food
inflation figure of 6,0% for the six months, a figure which is expected to
rise further in the months ahead.
Sales growth of 8,9% in Shoprite, the biggest chain in the Group with 353
supermarkets in South Africa, was impacted by a 25% unemployment rate, high
levels of unsecured debt and labour unrest. The chain retained its high
credibility rating among consumers for offering the lowest prices. It has
become a preferred destination for millions of recipients for the pay-out
of social grants, part of which then gets spent in the store. Services such
as money transfers remain a powerful draw card for consumers.
Both Checkers supermarkets and hyper stores reported better growth with a
sales increase of 13,0% for the period. It continued to drive its famous
for product categories which include its Wine Route, Cheese World, Coffee
Collection and butchery offerings.
Usave continued its expansion drive and opened a net 22 stores during the
six months to December of which six are the larger Super Usaves that offer
a product range double that of a standard Usave. At the same time the chain
continued to extend its range of consumer services by introducing Money
Market counters in a further 50 outlets. Turnover grew 19%.
Supermarkets Non-RSA
The Groups non-RSA supermarkets achieved good growth in a number of fast-
developing African economies. Sales increased by 28,2% in rand terms, and by
13,4% on a like-for-like basis. Growth was assisted by the weakening of the
rand against the US$ and a number of African currencies. At constant
currencies turnover grew by 23,5%. The Group opened 10 new supermarket
stores during the reporting period bringing the total number of stores it
operates outside the borders of South Africa to 144 supermarket stores. A
further 13 are scheduled to open in the second half of the financial year.
Furniture
After a strong start to the reporting period, trading conditions
deteriorated in the second quarter against the background of a wave of
national strike actions. Sales growth slowed to 4,8% for the six months.
Margins were maintained in a fiercely contested market in which efforts to
increase turnover was further hampered by continuing deflation which
averaged 1,2% for the period. During the six months the total number of
stores increased by a net 13 to 327, with a further 12 to be added in the
second half of the year.
Other Operating Segments
The acquisition a year ago of the Metcash franchise business, which added
148 stores to its franchise base spread throughout the rural areas of South
Africa and Namibia, was followed by a period of consolidation. During the
review period turnover increased 8,7% off the higher base, with
profitability increasing substantially above that. The number of franchise
members now stands at 400.
The pharmacy division consisting of MediRite, which at the end of 2012
operated 141 outlets in Shoprite and Checkers stores, and Transpharm, a
wholesale supplier of pharmaceutical products, further consolidated its
position as a leading player in the health-care sector. MediRite increased
sales by 15,04% despite the restrictive pricing policies of the government.
Transpharm, on the other hand, reduced margins and lifted turnover 65,0%
excluding inter-company sales. MediRite is presently accelerating its
expansion programme across the countrys borders.
During the period under review Computicket, which remains the countrys
foremost ticketing business, continued to increase its investment in the
latest technology to more effectively manage spikes in demand to the extent
where it now issues up to 156 tickets per second at peak times. There are at
present 702 in-store Computicket kiosks and 37 freestanding ones. At the
same time there is a strong move to online transactions.
GROUP PROSPECTS AND OUTLOOK
The economic conditions which defined the trading environment in South
Africa in the first six months are expected to persist for at least the rest
of the financial year as there are no indications that the cost pressures on
consumers will ease in the short term. However, the board is confident that
with the Groups aggressive expansion programme, supported by the increasing
benefits flowing from its sophisticated supply line, it will be able to
maintain its present growth and profitability. Outside South Africa the
Groups operations are expected to maintain its upward curve as new stores
come on stream and consumers flock in increasing numbers to its stores.
DIVIDEND NO 128
The board has declared an interim dividend of 123 cents (2012: 109 cents)
per ordinary share, payable to shareholders on Monday, 18 March 2013. The
dividend has been declared out of income reserves. The last day to trade cum
dividend will be Friday, 8 March 2013. As from Monday, 11 March 2013 all
trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 15 March 2013. Share certificates may not be
dematerialised or rematerialized between Monday 11 March 2013, and Friday,
15 March 2013, both days inclusive.
1. Local dividend tax rate is 15%.
2. There are no STC credits available.
3. Net local dividend amount is 104.55 cents per share for shareholders
liable to pay Dividends Tax and 123 cents per share for shareholders
exempt from paying Dividends Tax.
4. The issued share capital of Shoprite Holdings as at the date of the
declaration is 570 579 460 ordinary shares; and
5. Shoprite Holdings tax reference number is 9775/112/71/8.
ACCOUNTABILITY
The condensed consolidated interim 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 2012, with the exception of adopting the revised
IAS 1: Presentation of Financial Statements. The preparation of these
results have been supervised by Mr M Bosman, CA(SA). There have been no
material changes in the affairs or financial position of the Group and its
subsidiaries from 31 December 2012 to the date of this report.
By order of the board
CH Wiese JW Basson
Chairman Chief Executive
Cape Town
18 February 2013
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited
Unaudited Unaudited for the
6 months 6 months year
% ended ended ended
R000 Notes change Dec 12 Dec 11 Jun 12
Sale of merchandise 13,81 46 723 158 41 053 561 82 730 587
Cost of sales 13,00 (37 128 539) (32 857 420) (65 752 642)
GROSS PROFIT 17,06 9 594 619 8 196 141 16 977 945
Other operating income 15,29 1 019 588 884 384 2 325 312
Depreciation and amortisation 25,82 (643 970) (511 806) (1 090 295)
Operating leases 14,64 (1 091 519) (952 091) (1 940 221)
Employee benefits 11,55 (3 642 575) (3 265 348) (6 530 468)
Other expenses 24,63 (2 726 268) (2 187 510) (5 077 139)
TRADING PROFIT 16,00 2 509 875 2 163 770 4 665 134
Exchange rate (losses)/gains (249,27) (41 363) 27 710 (8 343)
Items of a capital nature 405,52 9 016 (2 951) (93 687)
OPERATING PROFIT 13,21 2 477 528 2 188 529 4 563 104
Interest received 248,21 133 918 38 459 142 166
Finance costs 208,52 (202 451) (65 619) (223 563)
Share of profit of associate 100,00 3 740 - -
PROFIT BEFORE INCOME TAX 11,63 2 412 735 2 161 369 4 481 707
Income tax expense (3,12) (706 496) (729 277) (1 438 889)
PROFIT FOR THE PERIOD 19,14 1 706 239 1 432 092 3 042 818
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX
Items that may be
reclassified subsequently
to profit or loss
Fair value movements on
available-for-sale
investments (100,00) - 8 747 (51 219)
Foreign currency translation
differences (94,20) 17 000 293 209 288 699
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD (0,62) 1 723 239 1 734 048 3 280 298
PROFIT ATTRIBUTABLE TO:
Owners of the parent 19,58 1 696 671 1 418 890 3 026 563
Non-controlling interest (27,53) 9 568 13 202 16 255
19,14 1 706 239 1 432 092 3 042 818
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO:
Owners of the parent (0,42) 1 713 671 1 720 846 3 264 043
Non-controlling interest (27,53) 9 568 13 202 16 255
(0,62) 1 723 239 1 734 048 3 280 298
Basic and diluted earnings
per share (cents) 4 13,11 317,1 280,3 590,0
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
R000 Notes Dec 12 Dec 11 Jun 12
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 10 805 381 9 436 394 9 668 559
Investment in associate 1 112 064 - 103 886
Available-for-sale investments - 69 827 -
Loans and receivables 11 676 4 483 3 706
Deferred income tax assets 424 411 295 878 413 645
Intangible assets 1 000 732 860 186 894 296
Fixed escalation operating
lease accrual 10 573 9 246 10 573
12 364 837 10 676 014 11 094 665
CURRENT ASSETS
Inventories 10 607 163 9 353 042 8 680 109
Trade and other receivables 3 620 974 2 567 410 2 702 031
Current income tax assets 203 846 104 015 81 190
Loans and receivables 19 093 137 495 16 197
Cash and cash equivalents 7 401 018 1 871 000 7 939 333
21 852 094 14 032 962 19 418 860
Assets held for sale 331 918 58 659 391 993
TOTAL ASSETS 34 548 849 24 767 635 30 905 518
EQUITY
CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY HOLDERS
Share capital 2 647 328 616 583 647 314
Share premium 3 672 069 293 072 3 672 069
Treasury shares 2 (320 146) (337 406) (320 146)
Reserves 9 418 014 7 392 185 8 745 805
13 417 265 7 964 434 12 745 042
NON-CONTROLLING INTEREST 60 165 59 622 62 675
TOTAL EQUITY 13 477 430 8 024 056 12 807 717
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 3 3 766 669 30 831 4 006 698
Deferred income tax liabilities 160 086 12 379 152 085
Provisions 369 130 370 129 338 791
Fixed escalation operating
lease accrual 540 541 470 118 520 206
Other non-current liabilities 5 955 157 968 21 878
4 842 381 1 041 425 5 039 658
CURRENT LIABILITIES
Trade and other payables 15 366 727 13 157 163 12 711 704
Borrowings 324 272 23 578 28 736
Derivative financial instruments - - 231
Current income tax liabilities 177 489 159 902 151 025
Provisions 88 856 88 624 138 634
Bank overdrafts 264 997 2 267 279 22 858
Shareholders for dividends 6 697 5 608 4 955
16 229 038 15 702 154 13 058 143
TOTAL LIABILITIES 21 071 419 16 743 579 18 097 801
TOTAL EQUITY AND LIABILITIES 34 548 849 24 767 635 30 905 518
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Attributable
to
Non- equity
Total controlling holders
R000 equity interest Total
UNAUDITED 6 MONTHS ENDED DECEMBER 2011
BALANCE AT JUNE 2011 7 143 450 58 750 7 084 700
Total comprehensive income 1 734 048 13 202 1 720 846
Profit for the period 1 432 092 13 202 1 418 890
Recognised in equity
Net fair value movement on
available-for-sale investments 10 171 10 171
Income tax effect of net fair
value movement on available-for-sale
investments (1 424) (1 424)
Foreign currency translation
differences 293 209 293 209
Dividends distributed to shareholders (853 442) (12 330) (841 112)
BALANCE AT DECEMBER 2011 8 024 056 59 622 7 964 434
AUDITED 12 MONTHS ENDED JUNE 2012
BALANCE AT JUNE 2011 7 143 450 58 750 7 084 700
Total comprehensive income 3 280 298 16 255 3 264 043
Profit for the period 3 042 818 16 255 3 026 563
Recognised in equity
Net fair value movement on
available-for-sale investments (59 557) (59 557)
Income tax effect of net fair
value movement on available-for-sale
investments 8 338 8 338
Foreign currency translation
differences 288 699 288 699
Equity component of convertible bonds
issued during the period 333 880 333 880
Proceeds from ordinary shares issued 3 409 728 3 409 728
Treasury shares loss 74 289 74 289
Transfer from contingency reserve - -
Dividends distributed to shareholders (1 433 928) (12 330) (1 421 598)
BALANCE AT JUNE 2012 12 807 717 62 675 12 745 042
UNAUDITED 6 MONTHS ENDED DECEMBER 2012
BALANCE AT JUNE 2012 12 807 717 62 675 12 745 042
Total comprehensive income 1 723 239 9 568 1 713 671
Profit for the period 1 706 239 9 568 1 696 671
Recognised in equity
Foreign currency translation
differences 17 000 17 000
Proceeds from deferred shares issued 14 14
Dividends distributed to shareholders (1 053 540) (12 078) (1 041 462)
BALANCE AT DECEMBER 2012 13 477 430 60 165 13 417 265
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
Share Share Treasury
R000 capital premium shares
UNAUDITED 6 MONTHS ENDED DECEMBER 2011
BALANCE AT JUNE 2011 616 583 293 072 (337 406)
Total comprehensive income - - -
Profit for the period
Recognised in equity
Net fair value movement on
available-for-sale investments
Income tax effect of net fair
value movement on available-for-sale
investments
Foreign currency translation
differences
Dividends distributed to shareholders
BALANCE AT DECEMBER 2011 616 583 293 072 (337 406)
AUDITED 12 MONTHS ENDED JUNE 2012
BALANCE AT JUNE 2011 616 583 293 072 (337 406)
Total comprehensive income - - -
Profit for the period
Recognised in equity
Net fair value movement on
available-for-sale investments
Income tax effect of net fair
value movement on available-for-sale
investments
Foreign currency translation
differences
Equity component of convertible bonds
issued during the period
Proceeds from ordinary shares issued 30 731 3 378 997
Treasury shares loss 17 260
Transfer from contingency reserve
Dividends distributed to shareholders
BALANCE AT JUNE 2012 647 314 3 672 069 (320 146)
UNAUDITED 6 MONTHS ENDED DECEMBER 2012
BALANCE AT JUNE 2012 647 314 3 672 069 (320 146)
Total comprehensive income - - -
Profit for the period
Recognised in equity
Foreign currency translation
differences
Proceeds from deferred shares issued 14
Dividends distributed to shareholders
BALANCE AT DECEMBER 2012 647 328 3 672 069 (320 146)
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
Other Retained
R000 reserves earnings
UNAUDITED 6 MONTHS ENDED DECEMBER 2011
BALANCE AT JUNE 2011 4 928 6 507 523
Total comprehensive income 301 956 1 418 890
Profit for the period 1 418 890
Recognised in equity
Net fair value movement on
available-for-sale investments 10 171
Income tax effect of net fair
value movement on available-for-sale
investments (1 424)
Foreign currency translation
differences 293 209
Transfer to contingency reserve
Dividends distributed to shareholders (841 112)
BALANCE AT DECEMBER 2011 306 884 7 085 301
AUDITED 12 MONTHS ENDED JUNE 2012
BALANCE AT JUNE 2011 4 928 6 507 523
Total comprehensive income 237 480 3 026 563
Profit for the period 3 026 563
Recognised in equity
Net fair value movement on
available-for-sale investments (59 557)
Income tax effect of net fair
value movement on available-for-sale
investments 8 338
Foreign currency translation
differences 288 699
Equity component of convertible bonds
issued during the period 333 880
Proceeds from ordinary shares issued
Treasury shares loss 57 029
Transfer from contingency reserve (33 536) 33 536
Dividends distributed to shareholders (1 421 598)
BALANCE AT JUNE 2012 542 752 8 203 053
UNAUDITED 6 MONTHS ENDED DECEMBER 2012
BALANCE AT JUNE 2012 542 752 8 203 053
Total comprehensive income 17 000 1 696 671
Profit for the period 1 696 671
Recognised in equity
Foreign currency translation
differences 17 000
Proceeds from deferred shares issued
Dividends distributed to shareholders (1 041 462)
BALANCE AT DECEMBER 2012 559 752 8 858 262
CONDENSED GROUP STATEMENT OF CASH FLOWS
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
R000 Notes Dec 12 Dec 11 Jun 12
CASH FLOWS FROM OPERATING
ACTIVITIES 1 206 200 1 441 695 3 334 804
Operating profit 2 477 528 2 188 529 4 563 104
Less: investment income (16 695) (38 438) (82 259)
Non-cash items 5.1 851 239 678 779 1 714 522
Payments for cash settlement
of share appreciation rights (534 727) (287 540) (287 540)
Payments for settlement of
post-retirement medical benefits
liability - - (1 779)
Changes in working capital 5.2 289 777 825 547 649 234
Cash generated from operations 3 067 122 3 366 877 6 555 282
Interest received 143 364 44 287 159 024
Interest paid (153 021) (65 619) (125 745)
Dividends received 7 249 32 610 65 401
Dividends paid (1 051 798) (852 685) (1 433 824)
Income tax paid (806 716) (1 083 775) (1 885 334)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES 5.3 (2 000 933) (1 825 173) (3 110 892)
CASH FLOWS FROM FINANCING
ACTIVITIES 5.4 6 086 4 622 7 767 685
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS (788 647) (378 856) 7 991 597
Cash and cash equivalents at
the beginning of the period 7 916 475 (80 549) (80 549)
Effect of exchange rate movements
on cash and cash equivalents 8 193 63 126 5 427
CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD 7 136 021 (396 279) 7 916 475
Consisting of:
Cash and cash equivalents 7 401 018 1 871 000 7 939 333
Bank overdrafts (264 997) (2 267 279) (22 858)
7 136 021 (396 279) 7 916 475
CONDENSED OPERATING SEGMENT INFORMATION
Analysis per reportable segment
Unaudited December 2012
Other
Supermarkets Supermarkets operating
R000 RSA Non-RSA Furniture segments Consolidated
Sale of merchandise
External 35 698 628 5 771 966 1 910 523 3 342 041 46 723 158
Inter-segment 1 031 370 2 930 - - 1 034 300
36 729 998 5 774 896 1 910 523 3 342 041 47 757 458
Trading profit 2 072 280 262 035 120 887 54 673 2 509 875
Depreciation and
amortisation* 579 462 92 440 22 936 10 098 704 936
Total assets 24 057 746 5 508 936 2 797 837 2 184 330 34 548 849
Unaudited December 2011
Other
Supermarkets Supermarkets operating
R000 RSA Non-RSA Furniture segments Consolidated
Sale of merchandise
External 32 030 963 4 502 804 1 822 699 2 697 095 41 053 561
Inter-segment 897 938 2 632 - - 900 570
32 928 901 4 505 436 1 822 699 2 697 095 41 954 131
Trading profit 1 787 559 214 428 108 974 52 809 2 163 770
Depreciation and
amortisation* 462 155 63 477 23 169 13 869 562 670
Total assets 16 131 196 5 107 975 2 174 364 1 354 100 24 767 635
Audited June 2012
Other
Supermarkets Supermarkets operating
R000 RSA Non-RSA Furniture segments Consolidated
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
Geographical analysis
Unaudited December 2012
Outside
South South
R000 Africa Africa Consolidated
Sale of merchandise - external 40 313 384 6 409 774 46 723 158
Non-current assets** 9 512 632 2 304 054 11 816 686
Unaudited December 2011
Outside
South South
R000 Africa Africa Consolidated
Sale of merchandise - external 35 994 985 5 058 576 41 053 561
Non-current assets** 8 473 579 1 832 247 10 305 826
Audited June 2012
Outside
South South
R000 Africa Africa Consolidated
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
*Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
**Non-current assets consist of property, plant and equipment, intangible
assets and fixed escalation operating lease accruals.
SELECTED EXPLANATORY NOTES TO THE PRELIMINARY RESULTS
FOR THE 6 MONTHS ENDED DECEMBER 2012
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec 12 Dec 11 Jun 12
R000 R000 R000
1 INVESTMENT IN ASSOCIATE
Investment in Winhold Ltd
Investment in ordinary shares 108 279 - 103 886
Share of post-acquisition profits 3 785 - -
112 064 - 103 886
During the previous year the Group
acquired a 49% interest in Winhold Ltd.
Winhold Ltd is an unlisted retailing
supermarket group in Mauritius,
denominated in Mauritian rupees.
Reconciliation of carrying value:
Carrying value at the beginning
of the period 103 886 - -
Investment in ordinary shares
acquired - - 103 886
Share of post-acquisition profits 3 740 - -
Exchange rate differences 4 438 - -
Carrying value at the end
of the period 112 064 - 103 886
2 SHARE CAPITAL AND TREASURY SHARES
2.1 Ordinary share capital
Authorised:
650 000 000 (Dec 11: 650 000 000;
Jun 12: 650 000 000) ordinary
shares of 113,4 cents each
Issued:
570 579 460 (Dec 11: 543 479 460;
Jun 12: 570 579 460) ordinary shares
of 113,4 cents each 647 037 616 306 647 037
Reconciliation of movement in
number of ordinary shares issued:
Number of shares
Dec 12 Dec 11 Jun 12
Balance at the beginning
of the period 570 579 460 543 479 460 543 479 460
Shares issued during the period - - 27 100 000
Balance at the end of the period 570 579 460 543 479 460 570 579 460
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:
Number of shares
Dec 12 Dec 11 Jun 12
Issued ordinary share capital 570 579 460 543 479 460 570 579 460
Treasury shares (note 2.3) (35 436 472) (37 346 947) (35 436 472)
535 142 988 506 132 513 535 142 988
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 Companys next annual
general meeting.
All shares are fully paid up.
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec 12 Dec 11 Jun 12
R000 R000 R000
2.2 Deferred share capital
Authorised:
360 000 000 (Dec 11: 360 000 000;
Jun 12: 360 000 000) non-convertible,
non-participating no par value
deferred shares
Issued:
290 625 071 (Dec 11: 276 821 666;
Jun 12: 276 821 666) non-convertible,
non-participating no par value
deferred shares 291 277 277
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.
647 328 616 583 647 314
2.3 Treasury shares
35 436 472 (Dec 11: 37 346 947;
Jun 12: 35 436 472) ordinary
shares 320 146 337 406 320 146
Reconciliation of movement in number
of treasury shares for the Group:
Number of shares
Dec 12 Dec 11 Jun 12
Balance at the beginning
of the period 35 436 472 37 346 947 37 346 947
Movement in shares held by The
Shoprite Holdings Ltd Share
Incentive Trust
Shares disposed during the period - - (506 036)
Movement in shares held by
Shoprite Checkers (Pty) Ltd
Shares purchased during the period - - 506 036
Shares loss during the period - - (1 910 475)
Balance at the end of the period 35 436 472 37 346 947 35 436 472
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec 12 Dec 11 Jun 12
R000 R000 R000
3 BORROWINGS
Consisting of:
Shoprite Holdings Ltd
preference share capital 2 450 2 450 2 450
Shoprite International Ltd
preference share capital 187 182 182
Convertible bonds (note 3.1) 4 024 760 - 3 975 330
First National Bank of Namibia Ltd 63 544 51 777 57 472
4 090 941 54 409 4 035 434
3.1 Convertible bonds
During the previous year the Group
issued 6.5% convertible bonds for a
principal amount of R4,5 billion.
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 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 at
the beginning of the period* 4 445 459 - -
Equity component* (470 129) - -
Liability component at the
beginning of the period 3 975 330 - -
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 196 882 - 97 818
Interest paid (147 452) - -
Liability component at
the end of the period 4 024 760 - 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 R4,4 billion
(Jun '12: 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 7.6%
(Jun '12: 8.5%).
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec 12 Dec 11 Jun 12
R000 R000 R000
4 EARNINGS PER SHARE
Profit attributable to
equity holders 1 696 671 1 418 890 3 026 563
Re-measurements (9 016) 2 951 93 687
Profit on disposals of property - - (1 572)
Profit on disposals of assets
held for sale (19 326) - -
Loss on disposals and scrappings
of plant, equipment and intangible
assets 10 280 2 558 15 166
Insurance claims paid - - 1 094
Impairment of property, plant and
equipment and assets held for sale - - 17 210
Impairment of goodwill - - 61 605
Loss on other investing activities 30 393 184
Income tax effect on re-measurements 2 719 (449) (6 038)
Headline earnings 1 690 374 1 421 392 3 114 212
Number of shares
Dec 12 Dec 11 Jun 12
000 000 000
Number of ordinary shares
- In issue 535 143 506 133 535 143
- Weighted average 535 143 506 133 513 019
Earnings per share Cents
- Earnings 317.1 280.3 590.0
- Headline earnings 315.9 280.8 607.0
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 period,
could potentially have a dilutive impact
in the future.
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec 12 Dec 11 Jun 12
R000 R000 R000
5 CASH FLOW INFORMATION
5.1 Non-cash items
Depreciation of property,
plant and equipment 635 852 531 582 1 132 907
Amortisation of intangible assets 69 084 31 087 67 199
Net fair value gains on
financial instruments (3 257) (21 897) (3 375)
Exchange rate losses/(gains) 41 363 (27 710) 8 343
Profit on disposals of property - - (1 572)
Profit on disposals of assets
held for sale (19 326) - -
Loss on disposals and
scrappings of plant, equipment and
intangible assets 10 280 2 558 15 166
Impairment of property, plant and
equipment and assets held for sale - - 17 210
Impairment of goodwill - - 61 605
Movement in provisions (19 449) 13 782 34 577
Movement in cash-settled
share-based payment accrual 104 405 128 031 330 738
Movement in fixed escalation
operating lease accrual 32 287 21 346 51 724
851 239 678 779 1 714 522
5.2 Changes in working capital
Inventories (1 938 531) (2 163 939) (1 526 104)
Trade and other receivables (825 092) (157 060) (239 945)
Trade and other payables 3 053 400 3 146 546 2 415 283
289 777 825 547 649 234
5.3 Cash flows utilised by
investing activities
Investment in property, plant
and equipment and intangible
assets to expand operations (1 742 929) (1 209 087) (2 359 020)
Investment in property, plant and
equipment and intangible assets
to maintain operations (329 763) (465 001) (758 749)
Proceeds on disposals of
property, plant and equipment
and intangible assets 88 972 7 338 149 315
Proceeds on disposals of
assets held for sale 53 102 - -
Other investing activities (10 860) (86 013) 34 409
Investment in associate - - (103 886)
Acquisition of subsidiaries
and operations (59 455) (72 410) (72 961)
(2 000 933) (1 825 173) (3 110 892)
5.4 Cash flows from financing activities
Proceeds from ordinary shares issued - - 3 409 728
Proceeds from deferred shares issued 14 - -
Proceeds from convertible bonds issued - - 4 347 641
Increase in borrowings from
First National Bank of Namibia Ltd 6 072 4 622 10 316
6 086 4 622 7 767 685
6 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 283 651 1 072 592 1 707 467
Contingent liabilities 57 125 157 792 206 168
Net asset value per share (cents) 2 507 1 574 2 382
DIRECTORATE AND ADMINISTRATION
Executive directors
JW Basson (chief executive), CG Goosen (deputy managing director),
B Harisunker, AE Karp, EL Nel, BR Weyers
Executive alternate directors
JAL Basson, M Bosman, PC Engelbrecht
Non-executive director
CH Wiese (chairman)
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 5238, 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, Plot 5 Katemo Road, Rhodes Park, Lusaka, Zambia
P O 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: 19/02/2013 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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