Wrap Text
Results for the 6 months ended December 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")
SHOPRITE HOLDINGS: RESULTS FOR THE 6 MONTHS ENDED DECEMBER 2013
Key information
- Turnover increased 9.7% - from R46.572 billion to R51.090 billion.
- Trading profit was up 7.5% to R2.690 billion.
- Headline earnings per share rose 7.9% to 341.0 cents (2012: 315.9 cents).
- Dividend per share declared was 132 cents (2012: 123 cents) an increase
of 7.3%.
Whitey Basson, chief executive, commented:
In the six months to December 2013 the Shoprite Group grew total turnover by
9.7% to R51.090 billion in an environment which, within South Africa, has
remained difficult. Our turnover was supported by the strong growth we
achieved elsewhere in Africa. Despite the present challenging trading
conditions locally we have continued our long term investment strategy in
new stores adding more trading space to our portfolio than any of our
competitors. Sales in December were negatively impacted by approximately
R260 million in our decision to close all RSA stores on the 15th of that
month, the day of the funeral of former President Nelson Mandela. We did so
as a mark of respect at his passing and also out of recognition for the huge
debt we owe him for creating a climate of dynamic growth which took Shoprite
way beyond the borders of this country.
24 February 2014
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 trading conditions prevalent in the corresponding period in 2012
persisted in the six months under review. Strikes in several sectors have
become an entrenched part of the South African business landscape while
violent protests over service delivery are on the increase countrywide.
Unemployment hovered above the 24% mark, a situation exacerbated by the
State's lower levels of investment in infrastructure following the
2010 Soccer World Cup. Middle- and lower-income consumers, many of them
overburdened with debt, are struggling to make ends meet due to spiralling
increases in their living expenses and transport costs. The consequent lack
of disposable income has a severe impact on the retail environment in which
competition for the consumer's rand has greatly intensified in the six
months under review.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover increased by 9.7% for the period - from R46.572 billion to
R51.090 billion, boosted by the strong performance of the Group's non-RSA
operations.
Expenses
Depreciation and amortisation grew 8% to R688 million mainly due to the
Group's continued investment in new and refurbished stores and in
information technology. Other expenses increased by 14.6% also due to the
increased turnover and new stores opened as well as the escalation in
electricity and other energy costs. The rise of 5.9% in employee benefits to
R3.833 billion includes new staff appointed for the net 104 stores opened
during the last 12 months.
Trading margin
The trading margin decreased slightly to 5.3% from 5.4% and reflects the
effects of the slower growth in turnover as well as the high upfront costs
associated with the new store openings.
Exchange rate profits
The Group recorded a small exchange rate profit of R4.3 million compared to
a loss of R41.4 million in the corresponding period. This positive swing was
mainly because the Group obtained approval from the Malawian authorities to
reclassify short-term borrowings in Malawi into long-term borrowings during
the second half of the previous financial year.
Finance costs and interest received
The increase in net interest paid resulted from the capital expenditure on
new stores and information technology. The interest paid was partially
offset by interest received from the investment of the surplus cash.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 104 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.
Inventory
The increase is due to the provisioning of a net 82 supermarkets and 23
furniture stores and purchases in anticipation of a weaker rand. Inventory
levels were further affected by more subdued festive season trading than
expected as well as store closures on the 15th of December.
OPERATIONAL REVIEW
NUMBER OF OUTLETS DECEMBER 2013
CONFIRMED
NEW STORES
YEAR TO DATE (12 MONTHS) TO
DEC 12 OPENED CLOSED DEC 13 JUNE 2015
SUPERMARKETS 929 88 6 1011 193
- SHOPRITE 443 38 2 479 81
- CHECKERS 170 14 2 182 25
- CHECKERS HYPER 29 1 0 30 4
- USAVE 287 35 2 320 83
HUNGRY LION 165 11 12 164 18
FURNITURE 327 29 6 350 40
- OK FURNITURE 276 29 2 303 33
- HOUSE & HOME 51 0 4 47 7
OK FRANCHISE 400 31 54 377 3
TOTAL STORES 1821 159 78 1902 254
All the divisions operating within South Africa were affected by the
prevailing economic conditions. Under the circumstances their results are
satisfactory and were assisted by the Group's well-managed infrastructure
that remained relentlessly focused on reducing supply line costs.
In December 2013 the Group operated in 16 countries compared to 17 in 2012
after ceasing operation in Zimbabwe. Despite the pressure on sales, the
Group did not slow the pace of its store development programme thereby
sacrificing like-for-like growth through cannibalisation in the short term.
In keeping with the Group's strategy to utilise opportunities within its
reach, it opened 69 corporate stores in the reporting period.
Supermarkets RSA
At a time when consumer confidence was at its lowest level in a decade,
Supermarkets RSA increased turnover by 7.6% from R35.583 billion to R38.275
billion. This produced a trading profit of R2.185 billion which was 5.4%
higher than in the corresponding period (2012: R2.073 billion). Internal
food inflation during the six months averaged 3.8% compared to an official
food inflation figure of 5.2%. On the day of the funeral of former President
Nelson Mandela all RSA supermarket stores were closed as a mark of respect.
An estimated R260 million was lost in sales which were not recovered,
impacting turnover growth for the reporting period by 0.7%.
Consumers' lack of disposable income was particularly noticeable in the
turnover growth in Shoprite, the Group's core brand, which operates 382
supermarkets in South Africa having gained a net 19 outlets during the
reporting period. Much of the chain's focus has been on alleviating the
plight of low-income consumers through support programmes such as a R20
million food subsidy campaign to confirm its positioning as the brand
offering the lowest prices. It continued to be the haven for social grant
recipients and the number of grants paid out in stores almost doubled.
Both Checkers' supermarkets and hyper stores saw slower growth off its high
base and in an environment of intensified competition. Much work was done on
improving product ranges and in-store experiences for customers. The focus
continued to be on what is known as its "famous for" departments such as its
Steakhouse Classic meats, local and international wines, speciality cheeses
and Coffee Collection as part of its long term repositioning strategy. The
brand has been increasing its presence in the country through the opening of
both supermarkets (now 177) and Hypers (now 30).
Usave gained a net 16 new stores in the reporting period to bring its
total number of outlets to 259. The brand continued to grow market share by
maintaining its promise of offering the lowest prices in respect of its
limited product range. Usave is increasingly establishing a loyal following
of price-conscious consumers, especially in rural and semi-urban areas.
Supermarkets Non-RSA
The Group's non-RSA supermarkets continued their strong growth across the 15
countries in which it trades in Africa and on the islands in the Indian
Ocean. Sales increased by 28.1% in rand terms, and by 14.9% in constant
currencies. Growth was supported by the rand weakening more against the US
dollar than did the currencies of some of the countries in which the Group
trades. During the reporting period a net 10 new stores were opened with a
further 13 confirmed to start trading by the end of the current financial
year. The Group now operates 163 supermarkets outside the borders of South
Africa.
Furniture
Against the general trend the Furniture Division achieved an overall sales
increase of 10.5%, due to strong growth in the dominant OK Furniture and
smaller OK Power Express brands, both aimed at lower-income consumers. The
growth was achieved notwithstanding deflation of 1.7% in major product
categories and margins. Credit exposure was carefully monitored and arrears
kept within acceptable levels. During the reporting period the total number
of outlets increased to 350 reflecting a net gain of 14 stores. A further 20
are expected to start trading before the end of the current financial year.
Other Operating Segments
The OK Franchise division showed healthy turnover growth of 8.9% on existing
business, but a lower total growth due to the withdrawal of two buying
groups. After a period of consolidation following the acquisition of the
Metcash franchise business of 148 stores two years ago, membership has
stabilised at 377, with 339 of these in South Africa and 38 in Namibia.
Since June 2013 the division has recruited 16 new members and is looking
forward to improved growth in the second half of the financial year.
The Group's pharmacy division consisting of MediRite, which at the end of
the reporting period operated 150 pharmacies in Shoprite and Checkers stores,
and Transpharm, a wholesale pharmaceutical company, continued to extend its
presence in the health-care sector. MediRite increased sales by 18.2% in
South Africa with the number of prescriptions filled growing to 2.4 million.
It will be opening eight pharmacies in Shoprite supermarkets in Angola in
the near future to bring its number of outlets there to 11. Transpharm lost
turnover due to a change in promotional strategy for independent pharmacies.
This, however, increased profitability.
Computicket was affected by general market conditions and the fact that the
cost of major overseas shows had become prohibitively expensive for local
promoters due to the weakening of the rand against the American dollar. To
maintain its position as the country's foremost ticketing business,
Computicket is undertaking an extensive systems upgrade to create a state-
of-the-art booking engine, which will greatly increase its agility in
handling extreme peaks in ticket demand.
GROUP PROSPECTS AND OUTLOOK
The board does not expect any improvement in the trading environment
within South Africa in 2014. At the same time our business outside the
borders of the country continues to flourish and a number of new stores are
to come on stream before year-end. Strict cost control measures are
rigorously applied throughout the business while we are constantly refining
our extensive distribution network which is a major strength of the Group.
Against this background the board is confident that the Shoprite Group will
be able to maintain its present level of profitability growth in the second
half of the financial year.
DIVIDEND NO 130
The board has declared an interim dividend of 132 cents (2013: 123 cents)
per ordinary share, payable to shareholders on Monday, 24 March 2014. The
dividend has been declared out of income reserves. The last day to trade cum
dividend will be Thursday, 13 March 2014. As from Friday, 14 March 2014, all
trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Thursday, 20 March 2014. Share certificates may not be
dematerialised or rematerialised between Friday, 14 March 2014, and Thursday,
20 March 2014, both days inclusive.
1. Local dividend tax rate is 15%.
2. There are no STC credits available.
3. Net local dividend amount is 112.20 cents per share for shareholders
liable to pay Dividends Tax and 132.00 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
The condensed consolidated interim financial statements are prepared in
accordance with International Financial Reporting Standard, IAS 34: Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council, and the requirements of the Companies
Act of South Africa. The accounting policies applied in the preparation of
these interim financial statements are in terms of International Financial
Reporting Standards and are consistent with those applied in the previous
consolidated annual financial statements, with the exception of adopting the
following new accounting standards:
- IFRS 10: Consolidated Financial Statements
The objective of IFRS 10 is to establish principles for the presentation and
preparation of consolidated financial statements when an entity controls one
or more other entities. The Group has revised its accounting policies on the
consolidation of subsidiaries and concluded that the adoption of IFRS 10 did
not result in any material change in the consolidation of the Group.
- IFRS 11: Joint Arrangements
IFRS 11 eliminates the previous policy choice of proportionate consolidation
for jointly controlled entities. Equity accounting becomes mandatory for
participants in joint ventures. Previously, the Group proportionately
consolidated all joint ventures which entailed that it included its share of
the assets, liabilities, income and expenses of jointly controlled entities
on a line-by-line basis in its financial statements. Under the equity method,
the investment in joint ventures is initially recognised at cost and the
carrying amount is increased or decreased to recognise the Group's share of
the profit or loss and movements in other comprehensive income of joint
ventures after the date of acquisition. The Group's share of the profit or
loss of joint ventures is recognised as a single line item in profit or loss
under the equity method. The change from proportionate consolidation to
equity accounting resulted in a change in individual asset, liability,
income, expense and cash flow line items with no impact on equity or profit
attributable to owners of the parent. The impact of the application of IFRS
11 on the Group's results is disclosed in note 5.
- IFRS 13: Fair Value Measurement
IFRS 13 aims to improve consistency and reduce complexity by providing a
precise definition of fair value and a single source of fair value
measurement and disclosure requirements for use across IFRS. IFRS 13 was
adopted and applied prospectively and it was assessed that the adoption did
not result in any material impact on the financial results of the Group.
The preparation of these results has 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 2013 to the date of this
report. The information contained in the interim report has neither been
audited nor reviewed by the Group's external auditors.
By order of the board
CH Wiese JW Basson
Chairman Chief Executive
Cape Town
24 February 2014
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Audited
and and
Unaudited restated restated
6 months 6 months for the year
% ended ended ended
R'000 change Dec '13 Dec '12 Jun '13*
Sale of merchandise 9.70% 51 089 765 46 572 295 92 457 126
Cost of sales 9.80% (40 675 090) (37 045 013) (73 156 023)
GROSS PROFIT 9.31% 10 414 675 9 527 282 19 301 103
Other operating income 15.39% 1 176 072 1 019 239 2 607 466
Depreciation and
amortisation 8.01% (688 067) (637 064) (1 335 722)
Operating leases 18.15% (1 278 207) (1 081 861) (2 213 048)
Employee benefits 5.94% (3 832 833) (3 618 041) (7 145 301)
Other expenses 14.61% (3 101 932) (2 706 491) (5 822 395)
TRADING PROFIT 7.46% 2 689 708 2 503 064 5 392 103
Exchange rate
gains/(losses) -110.28% 4 254 (41 376) (3 843)
Items of a capital nature -127.04% (2 437) 9 013 (30 882)
OPERATING PROFIT 8.94% 2 691 525 2 470 701 5 357 378
Interest received -10.92% 119 177 133 779 258 793
Finance costs 6.62% (216 125) (202 706) (429 967)
Share of profit of associates
and joint ventures -56.93% 3 779 8 774 5 414
PROFIT BEFORE INCOME TAX 7.79% 2 598 356 2 410 548 5 191 618
Income tax expense 9.42% (770 685) (704 309) (1 576 310)
PROFIT FOR THE PERIOD 7.12% 1 827 671 1 706 239 3 615 308
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX 514.81% 104 518 17 000 537 727
Items that may be
reclassified subsequently
to profit or loss
Foreign currency
translation differences 464.37% 94 667 16 774 513 354
Share of foreign currency
translation differences of
associates and joint
ventures 4258.85% 9 851 226 24 373
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 12.13% 1 932 189 1 723 239 4 153 035
PROFIT ATTRIBUTABLE TO: 7.12% 1 827 671 1 706 239 3 615 308
Owners of the parent 7.43% 1 822 748 1 696 671 3 597 711
Non-controlling interest -48.55% 4 923 9 568 17 597
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 12.13% 1 932 189 1 723 239 4 153 035
Owners of the parent 12.46% 1 927 266 1 713 671 4 135 438
Non-controlling interest -48.55% 4 923 9 568 17 597
Basic and diluted earnings
per share (cents) (note 2) 7.43% 340.6 317.1 672.3
* The audited June 2013 figures have been restated for the adoption of IFRS
11. These restatements have not been subject to an audit. Refer to note 5.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
and and
Unaudited restated restated
R'000 Dec '13 Dec '12 Jun '13*
ASSETS
NON-CURRENT ASSETS 14 506 870 12 345 720 13 303 320
Property, plant and equipment 12 778 952 10 748 795 11 653 008
Investment in associates and
joint ventures 182 166 152 186 168 535
Loans and receivables 15 357 11 676 10 325
Deferred income tax assets 425 028 421 803 420 093
Intangible assets 1 093 163 1 000 687 1 039 155
Fixed escalation operating
lease accruals 12 204 10 573 12 204
CURRENT ASSETS 25 402 805 22 057 714 20 119 543
Inventories 13 270 676 10 597 430 10 310 046
Trade and other receivables** 4 319 302 3 854 965 3 471 597
Derivative financial instruments 16 449 - 23 576
Current income tax assets 25 870 203 139 172 232
Loans and receivables 17 768 19 093 18 908
Cash and cash equivalents 7 752 740 7 383 087 6 123 184
Assets held for sale 57 033 331 918 57 071
TOTAL ASSETS 39 966 708 34 735 352 33 479 934
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS
Share capital 647 328 647 328 647 328
Share premium 3 672 069 3 672 069 3 672 069
Treasury shares (320 146) (320 146) (320 146)
Reserves 11 961 534 9 418 014 11 184 825
15 960 785 13 417 265 15 184 076
NON-CONTROLLING INTEREST 60 935 60 165 68 194
TOTAL EQUITY 16 021 720 13 477 430 15 252 270
LIABILITIES
NON-CURRENT LIABILITIES 5 022 385 4 838 176 4 846 522
Borrowings (note 1) 3 879 500 3 766 856 3 823 591
Deferred income tax liabilities 239 240 159 335 195 930
Provisions 278 953 367 351 251 354
Fixed escalation operating
lease accruals 624 692 538 679 575 368
Trade and other payables - 5 955 279
CURRENT LIABILITIES 18 922 603 16 419 746 13 381 142
Trade and other payables** 17 649 584 15 560 607 12 725 130
Borrowings (note 1) 327 778 324 272 327 755
Current income tax liabilities 652 944 174 317 180 799
Provisions 98 589 88 856 133 457
Bank overdrafts 185 561 264 997 7 567
Shareholders for dividends 8 147 6 697 6 434
TOTAL LIABILITIES 23 944 988 21 257 922 18 227 664
TOTAL EQUITY AND LIABILITIES 39 966 708 34 735 352 33 479 934
* The audited June 2013 figures have been restated for the adoption of
IFRS 11. These restatements have not been subject to an audit. Refer to
note 5.
** Reclassified December 2012. Refer to note 42 of the annual financial
statements for the financial period ended June 2013.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable
to
Non- equity
Total controlling holders
R'000 equity interest Total
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 other comprehensive
income
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
AUDITED 12 MONTHS ENDED JUNE 2013
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 period 3 615 308 17 597 3 597 711
Recognised in other comprehensive
income
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
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 15 252 270 68 194 15 184 076
Total comprehensive income 1 932 189 4 923 1 927 266
Profit for the period 1 827 671 4 923 1 822 748
Recognised in other comprehensive
income
Foreign currency translation
differences 104 518 - 104 518
Dividends distributed to
shareholders (1 162 739) (12 182) (1 150 557)
BALANCE AT DECEMBER 2013 16 021 720 60 935 15 960 785
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attributable to equity holders
Share Share Treasury
R'000 capital premium shares
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 other comprehensive income
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)
AUDITED 12 MONTHS ENDED JUNE 2013
BALANCE AT JUNE 2012 647 314 3 672 069 (320 146)
Total comprehensive income - - -
Profit for the period - - -
Recognised in other comprehensive income
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)
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 647 328 3 672 069 (320 146)
Total comprehensive income - - -
Profit for the period - - -
Recognised in other comprehensive income
Foreign currency translation differences - - -
Dividends distributed to shareholders - - -
BALANCE AT DECEMBER 2013 647 328 3 672 069 (320 146)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attributable to equity holders
Other Retained
R'000 reserves earnings
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 other comprehensive income
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
AUDITED 12 MONTHS ENDED JUNE 2013
BALANCE AT JUNE 2012 542 752 8 203 053
Total comprehensive income 537 727 3 597 711
Profit for the period - 3 597 711
Recognised in other comprehensive income
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
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 1 080 479 10 104 346
Total comprehensive income 104 518 1 822 748
Profit for the period - 1 822 748
Recognised in other comprehensive income
Foreign currency translation differences 104 518 -
Dividends distributed to shareholders - (1 150 557)
BALANCE AT DECEMBER 2013 1 184 997 10 776 537
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Audited
and and
Unaudited restated restated
6 months 6 months for the year
ended ended ended
R'000 Dec '13 Dec '12 Jun '13*
CASH FLOWS FROM OPERATING ACTIVITIES 3 390 675 1 187 521 1 121 394
Operating profit 2 691 525 2 470 701 5 357 378
Less: investment income (18 560) (16 838) (39 581)
Non-cash items (note 3.1) 843 702 844 293 1 568 468
Payments for cash settlement
of share appreciation rights (20 960) (534 727) (534 727)
Changes in working capital (note 3.2) 1 190 268 284 879 (1 901 690)
Cash generated from operations 4 685 975 3 048 308 4 449 848
Interest received 129 349 143 368 284 076
Interest paid (160 255) (153 276) (327 351)
Dividends received 8 388 7 249 14 298
Dividends paid (1 161 026) (1 051 798) (1 707 017)
Income tax paid (111 756) (806 330) (1 592 460)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES (note 3.3) (1 946 017) (1 984 195) (3 009 799)
CASH FLOWS FROM
FINANCING ACTIVITIES (note 3.4) 45 6 086 13 052
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 1 444 703 (790 588) (1 875 353)
Cash and cash equivalents at
the beginning of the period 6 115 617 7 900 677 7 900 677
Effect of exchange rate movements
on cash and cash equivalents 6 859 8 001 90 293
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD 7 567 179 7 118 090 6 115 617
Consisting of:
Cash and cash equivalents 7 752 740 7 383 087 6 123 184
Bank overdrafts (185 561) (264 997) (7 567)
7 567 179 7 118 090 6 115 617
* The audited June 2013 figures have been restated for the adoption of IFRS
11. These restatements have not been subject to an audit. Refer to note 5.
CONDENSED OPERATING SEGMENT INFORMATION
ANALYSIS PER REPORTABLE SEGMENT
Unaudited December 2013
Supermarkets Supermarkets
R'000 RSA Non-RSA
Sale of merchandise 39 603 244 7 351 115
External 38 274 568 7 347 355
Inter-segment 1 328 676 3 760
Trading profit 2 184 682 322 044
Depreciation and amortisation** 662 347 126 386
Total assets 27 121 702 7 101 063
Unaudited and restated December 2012
Supermarkets Supermarkets
R'000 RSA Non-RSA
Sale of merchandise 36 614 571 5 739 460
External 35 583 201 5 736 530
Inter-segment 1 031 370 2 930
Trading profit 2 072 980 254 524
Depreciation and amortisation** 573 325 91 671
Total assets 24 042 901 5 513 980
Audited and restated June 2013*
Supermarkets Supermarkets
R'000 RSA Non-RSA
Sale of merchandise 72 829 348 11 662 386
External 70 707 959 11 656 635
Inter-segment 2 121 389 5 751
Trading profit 4 514 085 599 856
Depreciation and amortisation** 1 203 559 201 014
Total assets 22 291 102 6 327 461
CONDENSED OPERATING SEGMENT INFORMATION (CONTINUED)
Unaudited December 2013
Other
operating
R'000 Furniture segments Consolidated
Sale of merchandise 2 111 194 3 385 435 52 450 988
External 2 111 194 3 356 648 51 089 765
Inter-segment - 28 787 1 361 223
Trading profit 134 022 48 960 2 689 708
Depreciation and amortisation** 25 562 10 966 825 261
Total assets 3 496 963 2 246 980 39 966 708
Unaudited and restated December 2012
Other
operating
R'000 Furniture segments Consolidated
Sale of merchandise 1 910 523 3 360 558 47 625 112
External 1 910 523 3 342 041 46 572 295
Inter-segment - 18 517 1 052 817
Trading profit 120 887 54 673 2 503 064
Depreciation and amortisation** 22 936 10 098 698 030
Total assets 2 994 141 2 184 330 34 735 352
Audited and restated June 2013*
Other
operating
R'000 Furniture segments Consolidated
Sale of merchandise 3 561 555 6 570 400 94 623 689
External 3 561 555 6 530 977 92 457 126
Inter-segment - 39 423 2 166 563
Trading profit 130 652 147 510 5 392 103
Depreciation and amortisation** 48 841 21 163 1 474 577
Total assets 3 021 476 1 839 895 33 479 934
GEOGRAPHICAL ANALYSIS
Unaudited December 2013
Outside
South South
R'000 Africa Africa Consolidated
Sale of merchandise - external 42 938 412 8 151 353 51 089 765
Non-current assets*** 10 741 238 3 143 081 13 884 319
Unaudited and restated December 2012
Outside
South South
R'000 Africa Africa Consolidated
Sale of merchandise - external 40 197 957 6 374 338 46 572 295
Non-current assets*** 9 461 215 2 298 840 11 760 055
Audited and restated June 2013*
Outside
South South
R'000 Africa Africa Consolidated
Sale of merchandise - external 79 574 757 12 882 369 92 457 126
Non-current assets*** 9 915 841 2 788 526 12 704 367
* The audited June 2013 figures have been restated for the adoption of
IFRS 11. These restatements have not been subject to an audit. Refer to
note 5.
** 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 CONDENSED CONSOLIDATED
INTERIM RESULTS FOR THE 6 MONTHS ENDED DECEMBER 2013
Unaudited Audited
and and
Unaudited restated restated
6 months 6 months for the year
ended ended ended
R'000 Dec '13 Dec '12 Jun '13
1. BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference
share capital 2 450 2 450 2 450
Shoprite International Ltd
preference share capital 456 374 440
Convertible bonds (note 1.1) 4 133 816 4 024 760 4 077 946
First National Bank of
Namibia Ltd 70 556 63 544 70 510
4 207 278 4 091 128 4 151 346
1.1 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 was calculated using a
market interest rate for an equivalent
non-convertible bond at initial
recognition. 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* 4 548 075 4 445 459 4 445 459
Equity component* (470 129) (470 129) (470 129)
Liability component at
the beginning of the period 4 077 946 3 975 330 3 975 330
Interest expense 202 120 196 882 396 318
Interest paid (146 250) (147 452) (293 702)
Liability component at the
end of the period 4 133 816 4 024 760 4 077 946
*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
(Dec '12: R4.4 billion;
Jun '13: R4.3 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% (Dec '12: 7.6%;
Jun '13: 8.6%).
The carrying values of all
other financial instruments
approximate their fair values.
2. EARNINGS PER SHARE
Profit attributable to owners of
the parent 1 822 748 1 696 671 3 597 711
Re-measurements 2 810 (9 016) 31 400
Profit on disposal of property (1 422) - (7 598)
Profit on disposal of assets held
for sale - (19 326) (41 946)
Loss on disposal and scrapping of
plant, equipment and intangible
assets 2 724 10 283 34 041
Impairment of property, plant
and equipment and assets held
for sale - - 30 607
Impairment of goodwill - - 13 585
Insurance claims paid 1 500 - -
(Profit)/loss on other
investing activities (365) 30 2 193
Re-measurements included in
equity-accounted profit of
associates and joint ventures 373 (3) 518
Income tax effect on re-measurements (808) 2 719 (14 841)
Headline earnings 1 824 750 1 690 374 3 614 270
Number of shares
'000 '000 '000
Number of ordinary shares
- In issue 535 143 535 143 535 143
- Weighted average 535 143 535 143 535 143
Earnings per share Cents
- Basic and diluted earnings 340.6 317.1 672.3
- Basic and diluted headline earnings 341.0 315.9 675.4
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 1.1),
which were anti-dilutive in the
current period, could potentially
have a dilutive impact in the future.
Unaudited Audited
and and
Unaudited restated restated
6 months 6 months for the year
ended ended ended
R'000 Dec '13 Dec '12 Jun '13
3. CASH FLOW INFORMATION
3.1 Non-cash items
Depreciation of property,
plant and equipment 753 281 628 971 1 332 567
Amortisation of intangible assets 71 980 69 059 142 010
Net fair value losses/(gains) on
financial instruments 7 129 (3 257) (23 807)
Exchange rate (gains)/losses (4 254) 41 376 3 843
Profit on disposal of property (1 422) - (7 598)
Profit on disposal of assets
held for sale - (19 326) (41 946)
Loss on disposal and scrapping
of plant, equipment and intangible
assets 2 724 10 283 34 041
Impairment of property, plant and
equipment and assets held for sale - - 30 607
Impairment of goodwill - - 13 585
Movement in provisions (7 486) (19 459) (92 389)
Movement in cash-settled share-based
payment accrual (30 387) 104 405 97 899
Movement in fixed escalation
operating lease accruals 52 137 32 241 79 656
843 702 844 293 1 568 468
3.2 Changes in working capital
Inventories (2 911 164) (1 933 879) (1 441 485)
Trade and other receivables (827 021) (841 573) (506 122)
Trade and other payables 4 928 453 3 060 331 45 917
1 190 268 284 879 (1 901 690)
3.3 Cash flows utilised by
investing activities
Investment in property, plant and
equipment and intangible assets
to expand operations (1 325 740) (1 729 401) (2 584 204)
Investment in property, plant and
equipment and intangible assets
to maintain operations (653 002) (326 320) (698 721)
Investment in assets held for sale - - (3 602)
Proceeds on disposal of property,
plant and equipment and intangible
assets 38 178 88 739 156 485
Proceeds on disposal of assets
held for sale - 53 102 212 045
Other investing activities (3 880) (10 860) (9 297)
Acquisition of operations (1 573) (59 455) (82 505)
(1 946 017) (1 984 195) (3 009 799)
3.4 Cash flows from financing activities
Proceeds from deferred shares issued - 14 14
Increase in borrowing from
First National Bank of Namibia Ltd 45 6 072 13 038
45 6 086 13 052
4. SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 572 104 1 283 651 1 736 798
Contingent liabilities 215 518 57 125 125 569
Net asset value per share (cents) 2 983 2 507 2 837
5. IMPACT OF THE APPLICATION OF IFRS 11
In terms of IFRS 11: Joint Arrangements,
the Group ceased proportionate
consolidation of its investment
in joint ventures and now accounts
for this investment using the equity
method in accordance with IAS 28:
Investments in Associates and Joint
Ventures.
The Group has applied the change
in accounting policy in accordance
with the transitional provisions of
IFRS 11 from the beginning of the earliest
period presented (1 July 2012). The Group
recognised its investment in joint
ventures as at 1 July 2012 as the
aggregate of the carrying amounts
of the assets and liabilities that
were previously proportionately
consolidated. This is the deemed
cost of the Group's investment in
its joint ventures at initial
recognition for purposes of
applying equity accounting.
As per the requirements of IAS 8:
Accounting Policies, Changes in
Accounting Estimates and Errors,
the relevant comparative information
has been restated. The effect of
the restatement is reflected below.
Unaudited Unaudited
6 months for the year
ended ended
Dec '12 Jun '13
(Decrease)/increase R'000 R'000
5.1 Impact on statement of comprehensive income
Sale of merchandise (150 863) (290 188)
Operating profit (6 827) (1 658)
Profit before income tax (2 187) (2 235)
Income tax expense (2 187) (2 235)
Profit for the period - -
5.2 Impact on statement of financial position
Non-current assets (19 117) (27 978)
Current assets 9 316 18 641
Non-current liabilities (4 205) (5 367)
Current liabilities (5 596) (3 970)
5.3 Impact on statement of cash flows
Cash flows from operating activities (18 679) (26 225)
Cash flows utilised by investing activities 16 738 29 094
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, 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, Website: www.sharetrackzambia.com
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: 25/02/2014 09:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
