Wrap Text
Results for the 12 months to June 2013
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")
RESULTS FOR THE 12 MONTHS TO JUNE 2013
Key information
Trading profit was up 15,6% to R5,394 billion.
Turnover increased 12,1% - from R82,731 billion to R92,747 billion.
Headline earnings per share rose 11,3% to 675,38 cents (2012: 607,04 cents).
Dividend per share declared was 215 cents (2012: 194 cents) an increase of
10,8%.
Whitey Basson, chief executive, commented:
The Group increased total turnover by 12,1% to R92,747 billion in a difficult
trading environment. Due to its unrelenting focus on containing costs and its
ability to generate greater efficiencies from its supply line, the Group was
able to grow profit at a faster rate than turnover. For the first time in the
Group's history, trading profit exceeded the R5 billion mark rising by 15,6% to
R5,394 billion. As a result its trading margin exceeded previous levels to
reach 5,8%. Its core business, the supermarket operation in South Africa,
increased sales by 9,8% against internal inflation which averaged 4,7% for the
period to record real growth of 5,1%. Its 153 supermarkets in 16 countries
outside South Africa grew turnover in rand terms by 27,9%. Management is
satisfied that all the divisions in the Group performed satisfactorily.
19 August 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
During the period under review growth in South Africa was hampered by labour
unrest, the disruption of production in a number of industries, falling
commodity prices and increases in the cost of living. The South African market
held up well until December whereafter it weakened quite substantially, a view
shared by all the major food retailers. Where the Group achieved growth of
13,8% in the first half, that figure dropped to 10,4% in the second. This was a
period characterised by a substantial pressure on consumers' disposable income
given the rising cost of transport and electricity - major expense items for
the middle market ? and the high level of indebtedness of customers. Shopping
patterns also changed, with consumers tending to visit stores less frequently
because of the high transport costs but tending to spend more when they do.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Despite growth levelling off in the second six months of the reporting period,
total turnover increased by 12,1% for the financial year - from R82,731 billion
to R92,747 billion. It was boosted by the strong performance of the Group's
Non-RSA operations partly due to the weakening of the rand against the US$ and
some African currencies. The RSA supermarket operation reported sales growth of
9,8% while the Non-RSA supermarket operation reported an increase of 27,9% at
current exchange rates and 21,2% at constant rates.
Expenses
Depreciation and amortisation grew 23,9% to R1,351 billion due mainly to the
Group's continued investment in new and refurbished stores, distribution centre
expansions and information technology. Other expenses increased by 15,5% also
due to the increase in turnover and the new stores opened as well as the
escalation in electricity and other energy costs, and an increase in card
commissions paid. The rise of 10,2% in staff costs to R7,195 billion is below
the growth in turnover and includes new staff appointed for the net 114 stores
opened.
Trading margin
The trading margin increased to 5,8% from 5,6% 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 Group's 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 R3,79 million as against a loss of
R8,34 million in the previous year. The loss for the year 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
calculated on the convertible bonds issued towards the end of the previous
financial year. IFRS requires the debt component of the convertible bonds to be
measured at amortised cost, using the effective interest method at the Internal
Rate of Return. The interest expense calculated at the Internal Rate of Return
of 10,09% amounted to R396,3 million for the year under review compared to the
actual interest paid amounting to R 293,7 million at the coupon rate of 6,5%.
The interest paid was offset to a certain degree by interest received from the
investment of the surplus cash.
Earnings per share
The growth of 11,3% in basic and diluted headline earnings per share, from
607,0 cents to 675,4 cents, was partially diluted due to the Group's successful
capital raising in March 2012 which brought 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 114 additional stores, vacant
land purchased for future store openings, 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. Certain
creditors were paid before balance sheet date in June in the current year,
whereas they had been paid after balance sheet date the previous year. The
Group also spent just over R3,3 billion on capital investments during the
preceding 12 months.
OPERATIONAL REVIEW
All the divisions reported acceptable growth in a most taxing trading
environment and management is satisfied that the furniture division performed
satisfactorily against its peers in the industry, despite its decline in
profitability. The focus remained on growing the store network in South Africa,
particularly in previously underrepresented areas, as well as elsewhere in
Africa. To support this growth, the Group continued to invest in increasing the
efficiency of its supply chain, particularly in distribution centres and the
technology that drives them.
Number of outlets June 2013
YEAR TO DATE (12 months) CONFIRMED
JUN 12 OPENED CLOSED JUN 13 NEW STORES
TO JUNE 2014
SUPERMARKETS 878 81 5 954 129
- SHOPRITE 423 31 1 453 59
- CHECKERS 168 7 2 173 21
- CHECKERS HYPER 28 1 0 29 3
- USAVE 259 42 2 299 46
Hungry Lion 150 23 7 166 10
FURNITURE 314 27 5 336 25
- OK FURNITURE 265 24 2 287 24
- HOUSE & HOME 49 3 3 49 1
OK FRANCHISE 398 42 60 380 7
TOTAL STORES 1 740 173 77 1 836 171
Supermarkets RSA
The division, the largest in the Group, increased sales by 9,8% from R64,584
billion to R70,926 billion to produce a trading profit of R4,503 billion (2012:
R3,887 billion). Internal food inflation averaged 4,3% for the year (2012:
4,9%) against an official food inflation figure of 6,1%. The three chains
together opened a net 57 new stores during the reporting period to bring the
total to 801. According to AMPS, about 24,6 million shoppers - some 70% of the
country's adult population - use Group supermarkets for their food and
household purchases. The number of customers in particularly Checkers and Usave
showed healthy growth. A further 109 new supermarkets are confirmed for the
2014 financial year.
Of the three brands, Shoprite remains the largest in terms of turnover and the
number of stores, which reached 361 during the year. Its growth in turnover,
which slowed to 7,3%, was impacted most severely by unemployment, labour
unrest, high transport costs and the repayment of unsecured loans. Its customer
base is nevertheless still expanding and despite intense competition in its
market segment Shoprite retained its high credibility rating with consumers by
sticking to its basic principles of value and price. It continues to dominate
its sector by a large margin.
Both Checkers supermarkets and hyper stores have defied the general trend and
reported good growth for the full year, increasing turnover by 10,7%. The chain
has found a desirable market niche and continued to grow its share of South
Africa's more affluent LSM 10 segment. Its focus has been on innovation and the
chain has identified certain specialist product areas showcasing its overall
excellence.
Usave with its typically small-format, no-frills stores, continued its
expansion programme in South Africa, bringing the national total to 243
outlets. An increasingly relevant niche player in the local food retailing
sector, it sells at discounted prices a limited range of basic products, an
increasing number of them under its own label. During the period under review
it increased turnover by 21,4%.
Supermarkets Non-RSA
The Group experienced another year of strong growth in its Non-RSA operations
with turnover accelerating by 27,9% and by 15,3% on a same store basis. Growth
was assisted by the continued weakening of the rand against the US dollar and
certain African currencies, making imports from South Africa more affordable.
Supermarkets Non-RSA opened 19 stores during the year with a further 20
confirmed to open by June 2014. As has been the case these past few years, the
focus remained on the West coast of Africa, particularly Nigeria and Angola
where it now operates 7 and 17 supermarkets respectively. During the reporting
period the Group focussed on its presence in those countries in which it is
already trading with a view to achieving economies of scale.
Furniture
After a promising start to the year, sales started petering out as trading
conditions deteriorated, particularly in the second half of the year, and the
division's turnover growth dropped to 4,7% from 11,1% the previous year. The OK
Furniture and the smaller OK Power Express chains which together account for
about 65% of sales, withstood these market pressures better than the more up-
market House & Home stores and achieved acceptable real growth in turnover of
9,3%. However, House & Home's sales declined 2,8%. Management nevertheless
continued its store-opening programme in new viable locations and the division
achieved a net gain of 22 stores during the year after closing a number of
unprofitable outlets. The Division now operates 39 outlets outside South Africa
and is intent on further extending its presence on the continent.
Other Operating Segments
At the end of the reporting period OK Franchise had 380 members in South
Africa, Botswana and Namibia. It gained 42 new members during the year but also
terminated its relationship with a number of financially weaker members.
Although most members found trading conditions in their areas extremely
challenging, the division nevertheless achieved above inflation sales growth
with 7.1% in total growth and 9.0% growth on existing business.
The pharmaceutical division consists of two divisions - a retail arm with 146
in-store pharmacies trading under the name MediRite and the wholesale division
Transpharm. MediRite increased turnover by 17% while the growth on existing
business was 12,3%. The number of prescriptions filled increased by 41% to 4,5
million. MediRite already operates pharmacies in several neighbouring countries
and is now exploring the opportunity of opening outlets in Nigeria. Transpharm
increased sales by 36,5% to R2,413 billion. Inter-company sales constituted
just more than 22% of turnover.
Computicket, which remains the country's foremost ticketing business with 775
in-store kiosks and 37 freestanding outlets, has been increasing its investment
in cutting edge technology to create a new and much more powerful digital
platform to accommodate spikes in the demand for tickets as well as growing
online ticket purchasing traffic.
GROUP PROSPECTS AND OUTLOOK
In the new financial year the impact of the weaker rand will be felt more by
consumers who are coming under increasing pressure. In this environment, price
competition is expected to become even tougher as the battle for market share
intensifies. To assist customers, the Group will be investing substantially in
ensuring its price leadership position and absorbing the inflationary impact on
the consumer, which may put margins under pressure. The board believes the
Group will nevertheless be able to achieve encouraging turnover and profit
growth in the new financial year.
DIVIDEND NO 129
The board has declared a final dividend of 215,0 cents (2012: 194,0 cents) per
ordinary share, payable to shareholders on Monday, 16 September 2013. The
dividend has been declared out of income reserves. This brings the total
dividend for the year to 338,0 cents per ordinary share (2012: 303,0 cents).
The last day to trade cum dividend will be Friday, 6 September 2013. As from
Monday, 9 September 2013, all trading of Shoprite Holdings Ltd shares will take
place ex dividend. The record date is Friday, 13 September 2013. Share
certificates may not be dematerialised or rematerialised between Monday,
9 September 2013, and Friday, 13 September 2013, both days inclusive.
1. Local dividend tax rate is 15%.
2. There are no STC credits available.
3. Net local dividends amount is 182,75 cents per share for shareholders
liable to pay Dividends Tax and 215,00 cents per share for shareholders
exempt from paying Dividends Tax.
4. The issued share capital of Shoprite Holdings Ltd as at the date of this
declaration is 570 579 460 ordinary shares; and
5. Shoprite Holdings Ltd's tax reference number is 9775/112/71/8.
ACCOUNTABILITY
These summary consolidated results are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for preliminary reports
and the requirements of the Companies Act applicable to summary financial
statements. The Listings Requirements require preliminary reports to be
prepared in accordance with the framework concepts, the measurement and
recognition requirements of International Financial Reporting Standards (IFRS),
the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and must also, as a minimum, contain the information required by IAS
34: Interim Financial Reporting. 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), and have been audited by PricewaterhouseCoopers Inc.,
whose unqualified report is available for inspection at the registered office
of the Company. The auditor's report does not necessarily report on all of the
information contained in this announcement. Shareholders are therefore advised
that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with the
accompanying financial information from the registered office of the Company. ?
By order of the board
CH Wiese JW Basson
Chairman Chief executive
Cape Town
19 August 2013
RESULTS PRESENTATIONS
Over and above the two presentations to analysts in South Africa on 20 and 21
August 2013, an opportunity will exist for investors abroad to discuss the
results with members of the Shoprite Holdings management team on Wednesday, 21
August 2013, at SA TIME 16:00. The toll-free number for people phoning from the
United States is 1 866 652 5200, from the United Kingdom it is 0808 162 4061.
From any other country the number is +27 11 535 3600.
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
% year ended year ended
R'000 Notes change June '13 June '12
Sale of merchandise 12,1 92 747 314 82 730 587
Cost of sales 11,5 (73 316 296) (65 752 642)
GROSS PROFIT 14,4 19 431 018 16 977 945
Other operating income 12,2 2 608 352 2 325 312
Depreciation and amortisation 23,9 (1 350 915) (1 090 295)
Operating leases 15,2 (2 234 306) (1 940 221)
Employee benefits 10,2 (7 195 133) (6 530 468)
Other expenses 15,5 (5 864 787) (5 077 139)
TRADING PROFIT 15,6 5 394 229 4 665 134
Exchange rate losses (54,5) (3 793) (8 343)
Items of a capital nature (66,5) (31 400) (93 687)
OPERATING PROFIT 17,4 5 359 036 4 563 104
Interest received 82,2 259 050 142 166
Finance costs 92,0 (429 185) (223 563)
Share of profit of associate 100,0 4 952 -
PROFIT BEFORE INCOME TAX 15,9 5 193 853 4 481 707
Income tax expense 9,7 (1 578 545) (1 438 889)
PROFIT FOR THE YEAR 18,8 3 615 308 3 042 818
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX 126,4 537 727 237 480
Items that may be reclassified
subsequently to profit or loss
Fair value movements on
available-for-sale investments (100,0) - (51 219)
Foreign currency translation differences 78,8 516 110 288 699
Share of foreign currency translation
differences of associate 100,0 21 617 -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 26,6 4 153 035 3 280 298
PROFIT ATTRIBUTABLE TO:
Owners of the parent 18,9 3 597 711 3 026 563
Non-controlling interest 8,3 17 597 16 255
18,8 3 615 308 3 042 818
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent 26,7 4 135 438 3 264 043
Non-controlling interest 8,3 17 597 16 255
26,6 4 153 035 3 280 298
Basic and diluted earnings
per share (cents) 3 13,9 672,3 590,0
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
R'000 Notes June '13 June '12
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 11 713 741 9 668 559
Investment in associate 130 455 103 886
Loans and receivables 10 325 3 706
Deferred income tax assets 425 381 413 645
Intangible assets 1 039 192 894 296
Fixed escalation operating lease accrual 12 204 10 573
13 331 298 11 094 665
CURRENT ASSETS
Inventories 10 317 417 8 680 109
Trade and other receivables 3 427 785 2 880 439
Derivative financial instruments 23 576 -
Current income tax assets 174 545 81 190
Loans and receivables 18 908 16 197
Cash and cash equivalents 6 138 671 7 939 333
20 100 902 19 597 268
Assets held for sale 57 071 391 993
TOTAL ASSETS 33 489 271 31 083 926
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE TO
EQUITY HOLDERS
Share capital 1 647 328 647 314
Share premium 3 672 069 3 672 069
Treasury shares 1 (320 146) (320 146)
Reserves 11 184 825 8 745 805
15 184 076 12 745 042
NON-CONTROLLING INTEREST 68 194 62 675
TOTAL EQUITY 15 252 270 12 807 717
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings 2 3 823 371 4 006 698
Deferred income tax liabilities 197 135 152 085
Provisions 253 833 338 791
Fixed escalation operating lease accrual 577 271 520 206
Trade and other payables 279 21 878
4 851 889 5 039 658
CURRENT LIABILITIES
Trade and other payables 12 723 129 12 890 112
Borrowings 2 327 755 28 736
Derivative financial instruments - 231
Current income tax liabilities 186 666 151 025
Provisions 133 561 138 634
Bank overdrafts 7 567 22 858
Shareholders for dividends 6 434 4 955
13 385 112 13 236 551
TOTAL LIABILITIES 18 237 001 18 276 209
TOTAL EQUITY AND LIABILITIES 33 489 271 31 083 926
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Total controlling
R'000 equity interest Total
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 year 3 042 818 16 255 3 026 563
Recognised in other
comprehensive income
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 year 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
Total comprehensive income 4 153 035 17 597 4 135 438
Profit for the year 3 615 308 17 597 3 597 711
Recognised in other comprehensive income
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 537 727 537 727
Proceeds from deferred shares issued 14 14
Dividends distributed to
shareholders (1 708 496) (12 078) (1 696 418)
BALANCE AT JUNE 2013 15 252 270 68 194 15 184 076
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
Share Share Treasury
R'000 capital premium shares
BALANCE AT JUNE 2011 616 583 293 072 (337 406)
Total comprehensive income - - -
Profit for the year
Recognised in other
comprehensive income
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 year
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)
Total comprehensive income - - -
Profit for the year
Recognised in other comprehensive income
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
Proceeds from deferred shares issued 14
Dividends distributed to
shareholders
BALANCE AT JUNE 2013 647 328 3 672 069 (320 146)
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders
Other Retained
R'000 reserves earnings
BALANCE AT JUNE 2011 4 928 6 507 523
Total comprehensive income 237 480 3 026 563
Profit for the year 3 026 563
Recognised in other
comprehensive income
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 year 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
Total comprehensive income 537 727 3 597 711
Profit for the year 3 597 711
Recognised in other comprehensive income
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 537 727
Proceeds from deferred shares issued
Dividends distributed to
shareholders (1 696 418)
BALANCE AT JUNE 2013 1 080 479 10 104 346
SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS
Audited Audited
year ended year ended
R'000 Notes June '13 June '12
CASH FLOWS FROM OPERATING ACTIVITIES 1 147 619 3 334 804
Operating profit 5 359 036 4 563 104
Less: investment income (38 742) (82 259)
Non-cash items 4.1 1 585 103 1 714 522
Payments for cash settlement of
share appreciation rights (534 727) (287 540)
Payments for settlement of post-retirement
medical benefits liability - (1 779)
Changes in working capital 4.2 (1 893 161) 649 234
Cash generated from operations 4 477 509 6 555 282
Interest received 283 494 159 024
Interest paid (326 569) (125 745)
Dividends received 14 298 65 401
Dividends paid (1 707 017) (1 433 824)
Income tax paid (1 594 096) (1 885 334)
CASH FLOWS UTILISED BY INVESTING ACTIVITIES 4.3 (3 038 893) (3 110 892)
CASH FLOWS FROM FINANCING ACTIVITIES 4.4 13 052 7 767 685
NET MOVEMENT IN CASH AND CASH EQUIVALENTS (1 878 222) 7 991 597
Cash and cash equivalents at the
beginning of the year 7 916 475 (80 549)
Effect of exchange rate movements on
cash and cash equivalents 92 851 5 427
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 6 131 104 7 916 475
Consisting of:
Cash and cash equivalents 6 138 671 7 939 333
Bank overdrafts (7 567) (22 858)
6 131 104 7 916 475
SUMMARY OPERATING SEGMENT INFORMATION
Analysis per reportable segment
Audited June 2013
Super- Super- Other
markets markets operating
RSA Non-RSA Furniture segments Consolidated
R'000 R'000 R'000 R'000 R'000
Sale of
merchandise
External 70 925 545 11 729 237 3 561 555 6 530 977 92 747 314
Inter-
segment 2 121 389 5 751 - - 2 127 140
73 046 934 11 734 988 3 561 555 6 530 977 94 874 454
Trading
profit 4 503 439 612 628 130 652 147 510 5 394 229
Depreciation
and
amortisation* 1 216 234 203 532 48 841 21 163 1 489 770
Total assets 22 305 523 6 322 377 3 021 476 1 839 895 33 489 271
Audited June 2012
Super- Super- Other
markets markets 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 2 564 750 1 680 078 31 083 926
Geographical analysis
Audited June 2013
Outside
South South
Africa Africa Consolidated
R'000 R'000 R'000
Sale of merchandise - external 79 792 343 12 954 971 92 747 314
Non-current assets** 9 964 499 2 800 638 12 765 137
Audited June 2012
Outside
South South
Africa 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
*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
Audited Audited
June '13 June '12
R'000 R'000
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (2012: 650 000 000)
ordinary shares of 113.4 cents each
Issued:
570 579 460 (2012: 570 579 460)
ordinary shares of 113.4 cents each 647 037 647 037
Reconciliation of movement in number
of ordinary shares issued:
Number of shares
June '13 June '12
Balance at the
beginning of
the year 570 579 460 543 479 460
Shares issued
during the year - 27 100 000
Balance at the
end of the year 570 579 460 570 579 460
Details of the shareholder spread and
major shareholders are disclosed in the
Shareholder Analysis in the integrated report.
Treasury shares held by Shoprite Checkers
(Pty) Ltd are netted off against share
capital on consolidation. The net number
of ordinary shares in issue for the Group are:
Number of shares
June '13 June '12
Issued ordinary
share capital 570 579 460 570 579 460
Treasury shares
(note 1.3) (35 436 472) (35 436 472)
535 142 988 535 142 988
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 Company's next annual general meeting.
All shares are fully paid up.
1.2 Deferred share capital
Authorised:
360 000 000 (2012: 360 000 000)
non-convertible, non-participating
no par value deferred shares
Issued:
290 625 071 (2012: 276 821 666)
non-convertible, non-participating
no par value deferred shares 291 277
Reconciliation of
movement in number of
deferred shares issued:
Number of shares
June '13 June '12
Balance at the
beginning of
the year 276 821 666 276 821 666
Shares issued
during the year 13 803 405 -
Balance at the
end of the year 290 625 071 276 821 666
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.
647 328 647 314
1.3 Treasury shares
35 436 472 (2012: 35 436 472)
ordinary shares 320 146 320 146
Reconciliation of movement
in number of treasury shares for the Group:
Number of shares
June '13 June '12
Balance at the
beginning of
the year 35 436 472 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 35 436 472
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference share capital 2 450 2 450
Shoprite International Ltd preference share capital 220 182
Convertible bonds (note 2.1) 4 077 946 3 975 330
First National Bank of Namibia Ltd 70 510 57 472
4 151 126 4 035 434
2.1 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 bonds.
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 bonds recognised in the
statement of financial position is
calculated as follows:
Face value of convertible bonds
at the beginning of the year* 4 445 459 -
Equity component* (470 129) -
Liability component at the
beginning of the year 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 396 318 97 818
Interest paid (293 702) -
Liability component at the end of the year 4 077 946 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
R4,3 billion (2012: 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 8.6% (2012: 8.5%).
3 EARNINGS PER SHARE
Profit attributable to owners of the parent 3 597 711 3 026 563
Re-measurements 31 400 93 687
Profit on disposals of property (7 598) (1 572)
Profit on disposals of assets held for sale (41 946) -
Loss on disposals and scrappings
of plant, equipment and intangible assets 34 584 15 166
Insurance claims paid - 1 094
Impairment of property, plant and equipment
and assets held for sale 30 582 17 210
Impairment of goodwill 13 585 61 605
Loss on other investing activities 2 193 184
Income tax effect on re-measurements (14 841) (6 038)
Headline earnings 3 614 270 3 114 212
Number of shares
'000 '000
Number of ordinary shares
- In issue 535 143 535 143
- Weighted average 535 143 513 019
Earnings per share Cents
- Basic and diluted earnings 672,3 590,0
- Basic and diluted headline earnings 675,4 607,0
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 2.1), which
were anti-dilutive in the current year,
could potentially have a dilutive impact
in the future.
Audited Audited
June '13 June '12
R'000 R'000
4 CASH FLOW INFORMATION
4.1 Non-cash items
Depreciation of property, plant and equipment 1 347 715 1 132 907
Amortisation of intangible assets 142 055 67 199
Net fair value gains on financial instruments (23 807) (3 375)
Exchange rate losses 3 793 8 343
Profit on disposals of property (7 598) (1 572)
Profit on disposals of assets held for sale (41 946) -
Loss on disposals and scrappings of
plant, equipment and intangible assets 34 584 15 166
Impairment of property, plant and equipment
and assets held for sale 30 582 17 210
Impairment of goodwill 13 585 61 605
Movement in provisions (91 578) 34 577
Movement in cash-settled share-based
payment accrual 97 899 330 738
Movement in fixed escalation
operating lease accrual 79 819 51 724
1 585 103 1 714 522
4.2 Changes in working capital
Inventories (1 443 661) (1 526 104)
Trade and other receivables (483 422) (261 833)
Trade and other payables 33 922 2 437 171
(1 893 161) 649 234
4.3 Cash flows utilised by investing activities
Investment in property, plant and equipment
and intangible assets to expand operations (2 609 517) (2 359 020)
Investment in property, plant and equipment
and intangible assets to maintain operations (702 850) (758 749)
Investment in assets held for sale (3 602) -
Proceeds on disposals of property,
plant and equipment and intangible assets 156 833 149 315
Proceeds on disposals of assets held for sale 212 045 -
Other investing activities (9 297) 34 409
Investment in associate - (103 886)
Acquisition of operations (82 505) (72 961)
(3 038 893) (3 110 892)
4.4 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 13 038 10 316
13 052 7 767 685
5 RELATED-PARTY INFORMATION
During the year under review, in the
ordinary course of business, certain
companies within the Group entered into
transactions with each other. All these
intergroup transactions have been eliminated
in the annual financial statements on
consolidation. For further information,
refer to note 40 of the audited annual
financial statements.
6 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 738 887 1 707 467
Contingent liabilities 125 569 206 168
Net asset value per share (cents) 2 837 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 Fouch, 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
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: 20/08/2013 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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