Wrap Text
Results for the 12 months to June 2014
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 12 MONTHS TO JUNE 2014
Key information
- Trading profit was up 6% to R5.714 billion.
- Turnover increased 10.5% - from R92.457 billion to R102.204 billion.
- Headline earnings per share rose 3.3% to 697.6 cents (2013: 675.4 cents).
- EBITDA increased by 8.7% to R7.406 billion (2013: R6.811 billion).
Whitey Basson, chief executive, commented:
The year to June 2014 was one in which we invested heavily in the future of
the Group in anticipation of the next upswing in the economy and achieved
more than R100bn in turnover for the first time. Market share increased for
the 8th consecutive year. The Group invested in a net 125 new corporate
stores and also in the supply-line infrastructure to support them. A
turnover growth of more than 10% is no small achievement, given prevailing
trading conditions. This was achieved in an environment of constantly rising
costs, especially in the areas of electricity and energy over which we have
no control. Not only did the many new and refurbished stores add
substantially to depreciation costs but due to the country's present low
economic growth and consumers' lack of disposable income, it takes longer
than in the previous years for such stores to become profitable.
All these factors obviously had an impact on our results for the year.
Amidst the harsh consumer conditions, the Group restricted our food price
increases to 1.4% below South Africa's official food inflation figure. Our
trading profit margin in excess of 5% remained very competitive.
In the new financial year we are continuing our investment in the future,
particularly in respect of our operations elsewhere on the continent where
we plan to open 30 new supermarkets by June 2015. This we do in the firm
belief that the rest of Africa will assume greater significance in plotting
our way forward.
18 August 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
Food retailing was dominated in the year to June 2014 by consumers' lack of
disposable income given the low economic growth, persistently high
unemployment and disruptive labour unrest. What was experienced on the sales
floor was a reflection of the country's broader economy, which struggled to
maintain a growth rate of 2%. Business confidence dropped to levels last
seen in 2000, while consumer confidence has been on a consistent decline as
the pressure on households mounts because of constantly rising prices.
Turnover growth in the second half of the year improved on the back of a
stronger new store opening program than in the corresponding period a year
ago.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover increased by 10.5% for the 12 months - from R92.457 billion
to R102.204 billion. Turnover growth was boosted by an improved performance
by most of the Group's trading divisions during the second half of the year
when turnover grew 11.4%. It was further improved by the strong performance
of the Group's non-RSA operations partly due to the rand's continuing
weakness against the US$ as well as some African currencies. The
Supermarkets RSA operation reported sales growth of 8.7% while the
Supermarkets non-RSA operation reported an increase of 26.8% at current
exchange rates and 16.2% at constant rates.
Expenses
Depreciation and amortisation, operating leases and other expenses grew at a
faster rate than turnover. This was mainly due to the Group's continued
investment in new and refurbished stores, distribution centre expansions and
information technology. During the year a net 92 corporate supermarkets and
32 furniture stores were opened. The Group opened proportionately more
stores in the second half of the year than in the corresponding period in
the previous year which affected depreciation costs. However, the Group
continues its roll-out of new stores, albeit at a more cautious pace, to
enable it to derive the maximum long-term benefit from the eventual
improvement in the economy. Expense growth in existing supermarkets was
limited to 8.4%, reflecting the effect of new stores on expense growth.
Escalations in expenses such as electricity and other energy costs as well
as card commissions paid (with the introduction of many hybrid cards that
attract higher fees), were beyond the control of the Group. They were
nevertheless monitored as carefully as possible. As a result of SARB's
intervention, card commissions should reduce from January 2015.
Trading margin
The trading margin decreased slightly from 5.8% to 5.6% and reflects the
effects of real growth in turnover as well as of investment in new stores
and in the Group's supply chain infrastructure.
Exchange rate losses
The Group recorded an exchange rate loss of R9.4 million as against a loss
of R3.8 million in the corresponding period. This was mainly due to the
devaluation of the Malawian Kwacha and the Ghanaian Cedi with regard to
short term loan balances during the period under review.
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. IFRS requires that interest be
calculated at a rate that approximates a market related vanilla bond rate.
For the year under review this rate was 10.09% and amounted to a calculated
interest of R408.3 million compared to the actual bond rate paid of 6.5%
amounting to R292.5 million. The interest paid was offset to a certain
degree by interest received from the investment of the surplus cash.
Earnings per share
Basic and diluted headline earnings per share increased by 3.3% - from 675.4
cents to 697.6 cents.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 125 new corporate 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 reporting date resulted from certain creditors that were
paid after reporting date in June in the current year, whereas they had been
paid before reporting date the previous year. The Group also spent just over
R3.9 billion on capital investments during the preceding 12 months.
Inventory
The increase in inventory is due to the provisioning of the net 125 new
corporate stores as well as the increased capacity created in some of the
distribution centres. Management is also actively pursuing reductions of
inefficient stock holding at branch level.
Number of outlets June 2014
YEAR TO DATE (12 MONTHS) CONFIRMED
NEW STORES
JUNE 2013 OPENED CLOSED JUNE 2014 TO JUNE 2015
SUPERMARKETS 954 106 14 1 046 80
- SHOPRITE 456 52 5 503 54
- CHECKERS 171 15 1 185 15
- CHECKERS HYPER 29 3 1 31 2
- USAVE 298 36 7 327 9
HUNGRY LION 166 8 7 167 20
FURNITURE 336 39 7 368 30
- OK FURNITURE 287 37 4 320 27
- HOUSE & HOME 49 2 3 48 3
OK FRANCHISE 380 21 34 367 6
TOTAL STORES 1 836 174 62 1 948 136
COUNTRIES OUTSIDE RSA 16 2 14
OPERATIONAL REVIEW
The Group produced satisfactory results in the 12 months to June when seen
against the challenging conditions that existed in the South African food
retail market. Against the general trend the furniture division reported
excellent results in a fiercely contested sector. The subdued results of the
franchise division, on the other hand, reflected the difficult conditions
under which many of its members trade in South Africa's rural areas. The
Group's non-RSA operations continued to report strong growth with the number
of stores increasing at a solid pace.
Supermarkets RSA
The Group's supermarket division dominates the local market having
substantially more trading space, spread throughout the country's
established trading areas, than any of its competitors. The division, the
core business of the Group, increased sales by 8.7% from R70.707 billion to
R76.881 billion to produce a trading profit of R4.751 billion (2013: R4.513
billion). Our internal food inflation averaged 4.7% for the year (2013:
4.3%) against an official food inflation figure of 6.1% for South Africa.
The three chains together opened a net 76 new supermarkets during the
reporting period to bring the total to 877. The number of customers showed
acceptable growth.
Of the three brands, Shoprite remains the largest in terms of turnover and
the number of stores, which reached 400 during the year. However, its
turnover growth slowed to 7.5% due to the adverse market conditions
affecting its target market. There was a relentless focus during the year on
strengthening Shoprite's positioning as the food chain consistently offering
the lowest prices. Recent AMPS data shows Shoprite has by far the highest
number of loyal shoppers at 34% and the highest number of regular shoppers
at 21.7 million.
Checkers continued to reinforce its standing as a value retailer, expanding
its support base in the LSM 8-10 consumer categories. At the end of the
reporting period it operated 211 Checkers and Checkers Hyper outlets within
the country, reporting combined turnover growth of 8.2%.
During the year Usave, with its small-format stores, continued to thrive at
the lower end of the consumer spectrum and now generates more than 2% of
total sales generated by the South African food retail sector. It sticks
unwaveringly to its basic business model of offering a limited range of
basic foods at permanently discounted prices and continues to grow sales at
almost twice the industry's rate - for the year to June it reported sales
growth of 12.9% generated by 266 outlets, of which 30 are new.
Supermarkets Non-RSA
The Group has managed to amass a sizable property portfolio in non-RSA
countries of which the replacement value far exceeds its initial cost given
the weakening of the rand over time coupled with rising building and rental
costs in Africa.
The segment continued to gain momentum with a net 16 supermarkets opened
during the reporting period to bring the total number of supermarkets
outside the borders of South Africa to 169. Sales increased by 26.8% (16.2%
in constant currencies) compared to the previous year. Basket size was up by
16.8% while the number of customers increased by 7.8%. Zambia, Namibia and
Angola were again the top achievers.
Shortly before year-end the Group sold its three underperforming stores in
Tanzania to the Kenyan retailer Nakumatt which owns stores in several East-
African countries.
The Group intends accelerating its growth in the rest of Africa, focusing
mainly on resource rich countries, in the new financial year, with the
opening of 30 supermarkets confirmed.
Furniture
Despite the dwindling disposable income of consumers, the furniture division
managed to increase turnover by 12.2% and trading profit by 49.6% in a
struggling, highly competitive durables market. The best performance came
from its flagship chain, OK Furniture, which grew turnover by 19.5%, as well
as from the smaller-format OK Power Express. Both these formats cater to the
middle income sectors of the market. House & Home, aimed at the higher LSMs,
showed signs of turnaround after being restructured in the previous
financial year.
With consumer debt levels averaging at about 75% of disposable income, the
division followed a prudent policy in granting credit and at the same time
placed a strong focus on collections to keep total arrears at acceptable
levels of just under 9%.
The division now operates 368 outlets, having opened a net number of 32
stores during the reporting period. Of these 323 are in South Africa and 45
elsewhere on the continent. The division intends to continue growing
strongly in the new financial year through the addition of a further 30
stores.
Other Operating Segments
The subdued results of the Franchise Division echo the extremely challenging
conditions faced by many of its members of whom the majority trade in the
rural areas of South Africa and Namibia. Total turnover grew by 4.7% while
growth on existing business was higher at 9.5%. Despite gaining 21 members
during the year, membership dropped from 380 in 2013 to 367. In certain
instances OK Franchise had to terminate its relationship with certain
members because of their inability to meet their financial obligations.
The Group's pharmaceutical division consists of two components: a chain of
150 in-store MediRite pharmacies, of which 144 are in South Africa and six
in neighbouring countries, and a wholesale operation trading as Transpharm,
which supplies to MediRite and a number of external customers. Transpharm
has greatly improved the on-shelf availability of the extensive range of
medication in the pharmacies. In the new financial year, MediRite plans to
grow into Africa.
Computicket, South Africa's foremost ticketing business, which operates from
857 in-store kiosks and 40 freestanding outlets, had a subdued year as
promoters of live events found the fees of top international artists
prohibitively expensive due to the weakness of the rand. During the year
Computicket launched a new Deals website offering discounts and value-added
deals on entertainment and travel. Computicket's sale of airline tickets
rose to close to R500 million for the year, placing Computicket Travel on
par with the biggest travel agencies in South Africa.
EVENTS AFTER THE REPORTING DATE
At the end of July, a fire at the Shoprite store and distribution centre in
Palanca (Angola) led to the destruction of a substantial portion of the site.
Trading from the premises has ceased and a disaster recovery plan was
implemented. A temporary site has been secured for the distribution of dry
goods as well as perishables and the supply chain to service operations in
Angola is in place. It is too early to estimate the full value of the
financial impact, but the Group is insured and it is estimated that the
potential loss will not be material to the Group.
GROUP PROSPECTS AND OUTLOOK
With economic growth expected to remain below 3% in the new financial year
there is not much relief in sight for the beleaguered South African consumer.
The improved sales growth in the last quarter of the 2014 financial year has
continued into July and beyond, but with market conditions unchanged, it is
doubtful whether this can be sustained, especially in the light of the SA
Reserve Bank's recent interest rate increase. To retain present levels of
profitability would require strict discipline and cost control.
DIVIDEND NO 131
The board has declared a final dividend of 218 cents (2013: 215 cents) per
ordinary share, payable to shareholders on Monday, 15 September 2014. The
dividend has been declared out of income reserves. This brings the total
dividend for the year to 350 cents (2013: 338 cents) per ordinary share. The
last day to trade cum dividend will be Friday, 5 September 2014. As from
Monday, 8 September 2014, all trading of Shoprite Holdings Ltd shares will
take place ex dividend. The record date is Friday, 12 September 2014. Share
certificates may not be dematerialised or rematerialised between Monday, 8
September 2014, and Friday, 12 September 2014, both days inclusive.
1. The local dividend tax rate is 15%.
2. There are no STC credits available.
3. The net local dividend amount is 185.30 cents per share for shareholders
liable to pay Dividends Tax and 218.00 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 572 871 960 ordinary shares.
5. Shoprite Holdings Ltd's tax reference number is 9775/112/71/8.
ACCOUNTABILITY
These summary consolidated financial statements 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 and the
measurement and recognition requirements of International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council and to also, as a minimum,
contain the information required by IAS 34: Interim Financial Reporting. The
accounting policies applied in the preparation of the consolidated annual
financial statements from which the summary consolidated financial
statements were derived are in terms of International Financial Reporting
Standards and are consistent with those accounting policies applied in the
preparation of 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 7.
- 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 summary consolidated financial statements for the
year ended 30 June 2014 have been supervised by Mr M Bosman, CA(SA), and
have been audited by PricewaterhouseCoopers Inc., who expressed an
unmodified opinion thereon. The auditor also expressed an unmodified opinion
on the consolidated annual financial statements from which these summary
consolidated financial statements were derived. A copy of the auditor's
report on the summary consolidated financial statements and of the auditor's
report on the consolidated annual financial statements are available for
inspection at the Company's registered office, together with the financial
statements identified in the respective auditor's reports. 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
18 August 2014
Summary Consolidated Statement of Comprehensive Income
Restated
Audited Audited
year ended year ended
% June '14 June '13
Notes change Rm Rm
Sale of merchandise 10.5 102 204 92 457
Cost of sales 10.6 (80 936) (73 156)
GROSS PROFIT 10.2 21 268 19 301
Other operating income 8.9 2 840 2 607
Depreciation and amortisation 14.1 (1 525) (1 336)
Operating leases 17.3 (2 596) (2 213)
Employee benefits 8.1 (7 723) (7 145)
Other operating expenses 12.5 (6 550) (5 822)
TRADING PROFIT 6.0 5 714 5 392
Exchange rate losses 125.0 (9) (4)
Items of a capital nature (109.7) 3 (31)
OPERATING PROFIT 6.6 5 708 5 357
Interest received (13.1) 225 259
Finance costs 7.2 (461) (430)
Share of (loss)/profit of associates
and joint ventures (200.0) (5) 5
PROFIT BEFORE INCOME TAX 5.3 5 467 5 191
Income tax expense 9.6 (1 727) (1 576)
PROFIT FOR THE YEAR 3.5 3 740 3 615
OTHER COMPREHENSIVE INCOME, NET
OF INCOME TAX (76.0) 129 538
Items that will not be reclassified
to profit or loss
Re-measurements of post-employment
benefit obligations - 5 -
Items that may subsequently be
reclassified to profit or loss
Foreign currency translation differences (76.1) 123 514
Share of foreign currency translation
differences of
associates and joint ventures (95.8) 1 24
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (6.8) 3 869 4 153
PROFIT ATTRIBUTABLE TO:
Owners of the parent 3.7 3 730 3 597
Non-controlling interest (44.4) 10 18
3.5 3 740 3 615
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent (6.7) 3 859 4 135
Non-controlling interest (44.4) 10 18
(6.8) 3 869 4 153
Basic and diluted earnings
per share (cents) 3 3.7 697.0 672.3
Summary Consolidated Statement of Financial Position
Restated
Audited Audited
June '14 June '13
Notes Rm Rm
ASSETS
NON-CURRENT ASSETS 15 730 13 304
Property, plant and equipment 13 576 11 652
Investment in associates and joint ventures 155 169
Loans and receivables 316 10
Deferred income tax assets 440 420
Intangible assets 1 225 1 041
Fixed escalation operating lease accruals 18 12
CURRENT ASSETS 24 643 20 119
Inventories 12 344 10 310
Trade and other receivables 4 080 3 472
Derivative financial instruments 1 24
Current income tax assets 31 172
Loans and receivables 26 19
Cash and cash equivalents 8 161 6 122
Assets held for sale 160 57
TOTAL ASSETS 40 533 33 480
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO OWNERS OF THE PARENT
Share capital 1 650 647
Share premium 4 029 3 672
Treasury shares 1 (680) (320)
Reserves 13 218 11 185
17 217 15 184
NON-CONTROLLING INTEREST 66 68
TOTAL EQUITY 17 283 15 252
LIABILITIES
NON-CURRENT LIABILITIES 5 531 4 847
Borrowings 2 4 373 3 824
Deferred income tax liabilities 187 196
Provisions 277 251
Fixed escalation operating lease accruals 694 576
CURRENT LIABILITIES 17 719 13 381
Trade and other payables 16 332 12 725
Borrowings 2 311 328
Current income tax liabilities 870 181
Provisions 138 133
Bank overdrafts 61 8
Shareholders for dividends 7 6
TOTAL LIABILITIES 23 250 18 228
TOTAL EQUITY AND LIABILITIES 40 533 33 480
Summary Consolidated Statement of Changes in Equity
Non-
Total controlling
Rm equity interest
BALANCE AT JUNE 2012 12 807 62
Total comprehensive income 4 153 18
Profit for the year 3 615 18
Recognised in other comprehensive income
Foreign currency translation differences 538
Dividends distributed to shareholders (1 708) (12)
BALANCE AT JUNE 2013 15 252 68
Total comprehensive income 3 869 10
Profit for the year 3 740 10
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 6
Income tax effect of re-measurements of
post-employment benefit obligations (1)
Foreign currency translation differences 124
Share-based payments - value of employee services 4
Equity component of convertible bonds sold during
the year 27
Proceeds from ordinary shares issued -
Dividends distributed to shareholders (1 869) (12)
BALANCE AT JUNE 2014 17 283 66
Summary Consolidated Statement of Changes in Equity
Attributable to owners of the parent
Share Share
Rm Total capital premium
BALANCE AT JUNE 2012 12 745 647 3 672
Total comprehensive income 4 135 - -
Profit for the year 3 597
Recognised in other comprehensive income
Foreign currency translation differences 538
Dividends distributed to shareholders (1 696)
BALANCE AT JUNE 2013 15 184 647 3 672
Total comprehensive income 3 859 - -
Profit for the year 3 730
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 6
Income tax effect of re-measurements
of post-employment benefit obligations (1)
Foreign currency translation differences 124
Share-based payments - value of
employee services 4
Equity component of convertible bonds
sold during the year 27
Proceeds from ordinary shares issued - 3 357
Dividends distributed to shareholders (1 857)
BALANCE AT JUNE 2014 17 217 650 4 029
Summary Consolidated Statement of Changes in Equity
Attributable to owners of the parent
Treasury Other Retained
Rm shares reserves earnings
BALANCE AT JUNE 2012 (320) 543 8 203
Total comprehensive income - 538 3 597
Profit for the year 3 597
Recognised in other comprehensive income
Foreign currency translation differences 538
Dividends distributed to shareholders (1 696)
BALANCE AT JUNE 2013 (320) 1 081 10 104
Total comprehensive income - 124 3 735
Profit for the year 3 730
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 6
Income tax effect of re-measurements
of post-employment benefit obligations (1)
Foreign currency translation differences 124
Share-based payments - value of employee
services 4
Equity component of convertible bonds
sold during the year 27
Proceeds from ordinary shares issued (360)
Dividends distributed to shareholders (1 857)
BALANCE AT JUNE 2014 (680) 1 236 11 982
Summary Consolidated Statement of Cash Flows
Restated
Audited Audited
year ended year ended
June '14 June '13
Notes Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES 5 720 1 121
Operating profit 5 708 5 357
Less: investment income (36) (40)
Non-cash items 4.1 1 859 1 568
Payments for cash settlement of share
appreciation rights (21) (535)
Changes in working capital 4.2 1 078 (1 902)
Cash generated from operations 8 588 4 448
Interest received 252 285
Interest paid (345) (327)
Dividends received 30 14
Dividends paid (1 868) (1 707)
Income tax paid (937) (1 592)
CASH FLOWS UTILISED BY INVESTING ACTIVITIES 4.3 (4 165) (3 009)
CASH FLOWS FROM FINANCING ACTIVITIES 4.4 453 12
NET MOVEMENT IN CASH AND CASH EQUIVALENTS 2 008 (1 876)
Cash and cash equivalents at the beginning
of the year 6 114 7 901
Effect of exchange rate movements on cash
and cash equivalents (22) 89
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 8 100 6 114
Consisting of:
Cash and cash equivalents 8 161 6 122
Bank overdrafts (61) (8)
8 100 6 114
Summary Operating Segment Information
Analysis per reportable segment
Super- Super- Other
markets markets operating
RSA Non-RSA Furniture segments Consolidated
Audited June 2014 Rm Rm Rm Rm Rm
Sale of merchandise 79 651 14 787 3 996 6 610 105 044
External 76 881 14 779 3 996 6 548 102 204
Inter-segment 2 770 8 - 62 2 840
Trading profit 4 751 673 196 94 5 714
Depreciation and
amortisation* 1 388 266 53 23 1 730
Total assets 27 203 7 720 3 740 1 870 40 533
Super- Super- Other
markets markets operating
Restated Audited RSA Non-RSA Furniture segments Consolidated
June 2013 Rm Rm Rm Rm Rm
Sale of merchandise 72 828 11 663 3 562 6 570 94 623
External 70 707 11 657 3 562 6 531 92 457
Inter-segment 2 121 6 - 39 2 166
Trading profit 4 513 600 131 148 5 392
Depreciation and
amortisation* 1 204 201 49 21 1 475
Total assets 22 292 6 327 3 021 1 840 33 480
Geographical analysis
Outside
South South
Africa Africa Consolidated
Audited June 2014 Rm Rm Rm
Sale of merchandise - external 85 877 16 327 102 204
Non-current assets** 11 242 3 577 14 819
Outside
South South
Africa Africa Consolidated
Restated Audited June 2013 Rm Rm Rm
Sale of merchandise - external 79 575 12 882 92 457
Non-current assets** 9 916 2 789 12 705
*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 Results
Restated
Audited Audited
June '14 June '13
Rm Rm
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (2013: 650 000 000)
ordinary shares of 113.4 cents each
Issued:
572 871 960 (2013: 570 579 460)
ordinary shares of 113.4 cents each 650 647
Reconciliation of movement in number
of ordinary shares issued:
Number of shares
June '14 June '13
Balance at the beginning
of the year 570 579 460 570 579 460
Shares issued during
the year 2 292 500 -
Balance at the end of
the year 572 871 960 570 579 460
Details of the shareholder spread and major
shareholders are disclosed in the Shareholder
Analysis contained 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 '14 June '13
Issued ordinary
share capital 572 871 960 570 579 460
Treasury shares
(note 1.3) (37 729 072) (35 436 572)
535 142 888 535 142 888
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 (2013: 360 000 000)
non-convertible, non-participating no par
value deferred shares
Issued:
290 625 071 (2013: 290 625 071)
non-convertible, non-participating no par
value deferred shares - -
Reconciliation of movement in number of deferred
shares issued:
Number of shares
June '14 June '13
Balance at the beginning
of the year 290 625 071 276 821 666
Shares issued during
the year - 13 803 405
Balance at the end of
the year 290 625 071 290 625 071
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.
650 647
1.3 Treasury shares
37 729 072 (2013: 35 436 572)
ordinary shares 680 320
Reconciliation of movement in number
of treasury shares for the Group:
Number of shares
June '14 June '13
Balance at the beginning
of the year 35 436 572 35 436 572
Movement in shares
held by Shoprite Checkers
(Pty) Ltd
Shares purchased
during the year 2 292 500 -
Balance at the end
of the year 37 729 072 35 436 572
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference share capital 2 2
Convertible bonds (note 2.1) 4 381 4 078
Standard Bank de Angola, S.A. 218 -
First National Bank of Namibia Ltd 83 72
4 684 4 152
2.1 Convertible bonds
The Group has issued 6.5% convertible bonds
for a principal amount of R4.7 billion
(2013: R4.5 billion). The bonds mature on
3 April 2017 at their nominal value of
R4.7 billion (2013: 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 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 bonds recognised in the statement
of financial position is calculated as follows:
Face value of convertible bonds at the
beginning of the year* 4 548 4 445
Equity component* (470) (470)
Liability component at the beginning
of the year 4 078 3 975
Face value of convertible bonds sold
on 15 June 2014 224 -
Equity component (37) -
Liability component on initial recognition
of convertible bonds at 15 June 2014 187 -
Interest expense 408 396
Interest paid (292) (293)
Liability component at the end of the year 4 381 4 078
*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
R4.5 billion (2013: 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 8.9% (2013: 8.6%) and are within level 2
of the fair value hierarchy.
3 EARNINGS PER SHARE
Profit attributable to owners of the parent 3 730 3 597
Re-measurements (1) 32
Profit on disposal of property (13) (8)
Profit on disposal of assets held for sale - (42)
Loss on disposal and scrapping of
plant and equipment 26 34
(Reversal of impairment)/impairment
of property, plant and equipment (42) 31
Impairment of goodwill 12 14
Insurance claims paid 1 -
Loss on other investing activities 13 2
Re-measurements included in equity-
accounted profit of associates and
joint ventures 2 1
Income tax effect on re-measurements 4 (15)
Headline earnings 3 733 3 614
Number of ordinary shares Millions
- In issue 535 535
- Weighted average 535 535
Earnings per share Cents
- Basic and diluted earnings 697.0 672.3
- Basic and diluted headline earnings 697.6 675.4
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 2.1), which
were anti-dilutive in the current year,
could potentially have a dilutive impact in
the future. Full share grants outstanding
at the reporting date will have a dilutive
impact in the future.
4 CASH FLOW INFORMATION
4.1 Non-cash items
Depreciation of property, plant and equipment 1 568 1 333
Amortisation of intangible assets 162 142
Net fair value gains/(losses) on
financial instruments 23 (24)
Exchange rate losses 9 4
Profit on disposal of property (13) (8)
Profit on disposal of assets held for sale - (42)
Loss on disposal and scrapping of plant
and equipment 26 34
(Reversal of impairment)/impairment
of property, plant and equipment (42) 31
Impairment of goodwill 12 14
Movement in provisions 37 (93)
Movement in cash-settled share-based
payment accrual (37) 98
Movement in share-based payment reserve 4 -
Movement in fixed escalation operating
lease accruals 110 79
1 859 1 568
4.2 Changes in working capital
Inventories (1 994) (1 442)
Trade and other receivables (586) (506)
Trade and other payables 3 658 46
1 078 (1 902)
4.3 Cash flows utilised by investing activities
Investment in property, plant and equipment
and intangible assets to expand operations (2 917) (2 583)
Investment in property, plant and equipment
and intangible assets to maintain operations (992) (699)
Investment in assets held for sale (2) (4)
Proceeds on disposal of property, plant and
equipment and intangible assets 126 157
Proceeds on disposal of assets held for sale - 212
Other investing activities (313) (9)
Acquisition of operations (67) (83)
(4 165) (3 009)
4.4 Cash flows from financing activities
Proceeds from convertible bonds sold 224 -
Increase in borrowing from Standard
Bank de Angola, S.A. 218 -
Increase in borrowing from First National
Bank of Namibia Ltd 11 12
453 12
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 are
similar to those in the prior year and have been
eliminated in the annual financial statements on
consolidation. For further information, refer to
the audited annual financial statements.
6 SUPPLEMENTARY INFORMATION
Contracted capital commitments 2 477 1 737
Contingent liabilities 235 126
Net asset value per share (cents) 3 218 2 837
7 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
on the statement of financial position at the
beginning of the preceding period is not
considered material and in line with IAS 1:
Presentation of Financial Statements, no
statement of financial position as at 1 July
2012 has been presented. The effect of the
restatement is reflected below.
Effect of
Previously transition
reported to IFRS 11 Restated
June 2013 Rm Rm Rm
7.1 Impact on statement of
comprehensive income
Sale of merchandise 92 747 (290) 92 457
Operating profit 5 359 (2) 5 357
Profit before income tax 5 194 (3) 5 191
Income tax expense (1 579) 3 (1 576)
Profit for the year 3 615 - 3 615
7.2 Impact on statement of
financial position
Non-current assets 13 330 (26) 13 304
Current assets 20 102 17 20 119
Non-current liabilities 4 851 (4) 4 847
Current liabilities 13 386 (5) 13 381
7.3 Impact on statement of cash flows
Cash flows from operating activities 1 146 (25) 1 121
Cash flows utilised by
investing activities (3 039) 30 (3 009)
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 Fouche, 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, Farmers House, Central Park, 1st Floor, Main
Building (South Wing), Cairo Road, 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: 19/08/2014 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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