Wrap Text
Results for the 6 months ended December 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 6 MONTHS ENDED DECEMBER 2014
Key information
- Trading profit up 11.6% to R3.003 billion.
- Turnover up 12.5% to R57.469 billion.
- Diluted headline earnings per share up 8.6% to 370.2 cents
(2013: 341.0 cents).
- Dividend per share up 8.3% to 143 cents (2013: 132 cents).
Whitey Basson, chief executive:
In the six months to December 2014 the Shoprite Group grew total turnover by
12.5% to R57.469 billion despite the continuous slowdown in the economy, the
disruptions caused by erratic power supply and slow disposable income growth.
Although our African operation performed as well as a year ago, growing
turnover by 15.4% in constant currencies, the dramatic drop in the oil price
has slowed economic growth in countries such as Nigeria and Angola whose
economies are dependent on the oil price. Yet, the Group achieved a trading
margin of 5.23% in a competitive environment due to the adding of new
business, our rigorous cost control practices in existing stores and the
efficiency of our extensive distribution infrastructure. Primed for growth,
the latter has already enabled us to open an additional 53 new stores in
South Africa in the six months to December without adding materially to our
distribution costs.
23 February 2015
Enquiries:
Shoprite Holdings Limited Tel: (021) 980 4000
Whitey Basson, chief executive
Carel Goosen, deputy managing director
Adele Gouws, corporate public relations
OPERATING ENVIRONMENT
In South Africa labour unrest and ongoing protests about service delivery in
various parts of the country, impacted consumer and investor confidence in
an economy which in 2014 grew by only 1.4%. At the middle to lower end of
the market, consumers have remained highly indebted, with up to half in
arrears with their repayments, leaving them with very little disposable
income. On the positive side, consumers have benefitted from lower fuel
prices which, according to some sources, should release as much as
R20 billion into the market should fuel prices remain at the current level.
Overall trading conditions remained difficult, resulting in intensified
competition for the consumer's rand among the major retailers, as well as a
host of smaller players. The Shoprite Group has overcome these challenges by
delivering on its tried-and-tested value proposition and posted satisfactory
results.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover increased by 12.5% for the 6 months - from R51.090 billion to
R57.469 billion. Turnover growth in Supermarkets Non-RSA was affected by
weakening currencies against the US$, the sale of the Tanzanian operation
and by the fire in Palanca, Angola.
The Group showed its resilience with a strong turnover growth due to the new
stores opened amidst a weak trading environment. The Supermarkets RSA
operation reported sales growth of 12% while the Supermarkets Non-RSA
operation reported an increase of 15% at current exchange rates and 15.4% at
constant rates.
Expenses
The Group's continued investment in new and refurbished stores and
information technology resulted in depreciation and amortisation, operating
leases and other operating expenses growing at a faster rate than turnover.
During the six months a net 35 supermarkets and 28 furniture stores were
opened. The Group continues its roll-out of new stores, albeit at a more
cautious pace, to benefit over the longer term from the eventual improvement
in the economy. Expense growth in existing supermarkets was well controlled
and limited to 5.4%, reflecting the effect of new stores on expense growth.
Escalations in expenses such as electricity and other energy costs as well
as card commissions paid (especially on bank hybrid cards that attract
higher fees), were beyond the control of the Group. However, they were
managed as carefully as possible. As a result of the South African Reserve
Bank's intervention, card commissions is set to reduce from April 2015,
bringing about a saving to the Group.
Trading margin
The trading margin remained relatively unchanged at 5.23% and remains
world-class. It reflects the better real growth in turnover as well as the
investment in new stores and supply chain infrastructure.
Exchange rate losses
The Group recorded an exchange rate loss of R68 million compared to a profit
of R4 million in the corresponding period. This was mainly due to the
devaluation of the Angolan, Nigerian and Mozambican currencies against the
US$ during the period under review with the resultant effect on short
term loan balances.
Finance cost and interest received
Net interest paid, when compared to the corresponding period, remained
static. For the convertible bonds issued, IFRS requires that interest be
calculated and recorded at a rate that approximates a market-related vanilla
bond rate. For the six months under review this amounted to a calculated
interest expense of R216.3 million compared to the actual interest paid of
R152.6 million.
Earnings per share
Basic headline earnings per share increased by 9.1% (from 341.0 cents to
371.9 cents), while diluted headline earnings per share increased by 8.6% -
from 341.0 cents to 370.2 cents.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 124 new corporate stores
during the 12 months, vacant land purchased for strategic purposes,
investment in information technology to support inventory management,
distribution centre developments, as well as standard 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 who were
paid after the reporting date in December in the current year, whereas they
had been paid before the reporting date the previous year. The Group also
spent about R2.4 billion on capital investments during the preceding six
months.
Inventory
The increase in inventory is due to the provisioning of the net 124 new
corporate stores as well as the increased capacity created in some of the
distribution centres. Management is actively pursuing reductions of
inefficient stock holding at branch level and the increase of 9.4%, lower
than turnover growth, indicates that progress is being made.
OPERATIONAL REVIEW
All the divisions, whether operating within South Africa or beyond its
borders, produced acceptable results during the period under review
notwithstanding being affected to a greater or lesser degree by the mostly
negative factors that impact retailing in their respective markets. Group
operations were provided with an advantage over their competitors due to its
extensive infrastructure and ongoing investment in the most advanced IT
systems.
NUMBER OF OUTLETS DECEMBER 2014
CONFIRMED
NEW STORES
DEC 13 OPENED CLOSED DEC 14 TO JUNE 2016
SUPERMARKETS 1 011 83 13 1 081 137
- SHOPRITE 488 43 5 526 84
- CHECKERS 182 12 0 194 20
- CHECKERS HYPER 30 2 1 31 5
- USAVE 311 26 7 330 28
HUNGRY LION 164 15 7 172 9
FURNITURE 350 50 4 396 79
- OK FURNITURE 303 46 3 346 76
- HOUSE & HOME 47 4 1 50 3
OK FRANCHISE 377 24 30 371 5
TOTAL STORES 1 902 172 54 2 020 230
COUNTRIES OUTSIDE RSA 15 0 1 14
Supermarkets RSA
Despite increased competition in the food retail market and the disruptions
caused by load-shedding over the peak festive trading period, Supermarkets
RSA increased turnover by 12.0% (2013: 7.6%) to R42.867 billion, generating
a trading profit of R2.456 billion which was 12.4% higher than in the
corresponding period (2013: R2.185 billion). The savings from the lower fuel
price were used to lower or stabilise basic food prices. The Group has
recently made a public call for all suppliers in the value chain to pass on
fuel price savings to consumers where possible. Some 62% of the Group's
customers make use of public transport and this challenge extends to the
public transport industry. Shoppers also benefited from an internal food
inflation figure, which at 5.2% was substantially below the official food
inflation figure of 8.2%.
The Shoprite chain, the Group's flagship brand, showed satisfactory year-on-
year turnover growth of 9.7%, considering the economic pressures experienced
by its core shopper base. Management continued to drive the brand's position
as price leader through various campaigns, particularly those involving
subsidising the price of basic foodstuffs such as cooking oil and maize meal.
It opened a net 8 new stores during the review period and was trading from
411 outlets in South Africa at the end of December 2014.
Attracting mainly middle to higher-income consumers, the Checkers brand,
which at the end of the reporting period operated 188 supermarkets and
31 hyper stores, continues to outperform the market. Highly successful
promotional campaigns in especially the last quarter boosted turnover growth
for the period to 12.9%. Much work continues to be done on improving product
ranges and in-store experiences for customers. Although the local retail
market is approaching saturation point, Checkers still has considerable
growth potential, since it remains underrepresented in many more affluent
parts of the country.
Trading from 270 outlets, Usave increased turnover by 13.6% during the
review period. The small-format convenience chain with its limited product
range intends opening 17 new stores in the next six months. Usave continues
to grow market share despite increased competition as there is growing
acceptance of its promise of providing the lowest prices for the range it
sells. It is growing customer loyalty mainly in the semi-urban and rural
communities where it trades.
Supermarkets Non-RSA
Supermarkets Non-RSA increased turnover for the six months by 15.4% in
constant currencies and the number of customers, by 9.5%. Growth was
negatively impacted by the sale of the Group's outlets in Tanzania and the
fire which destroyed the large supermarket in Palanca, Angola, which is in
the process of being rebuilt. The value of stock and assets destroyed
amounts to R515 million, but the Group is insured and the potential loss
will not be material. Excluding the sales figures from these two operations,
total sales growth would have been 20.3%. The Group now trades from 181
supermarkets outside of South Africa, having opened a net 18 during the past
12 months. A further 14 store openings have been confirmed for the second
half of the current financial year. During the reporting period the
economies of Nigeria and Angola, both largely oil dependent, came under
pressure due to the drop in the oil price. In addition, Nigeria had to
contend with the Ebola epidemic (although the country has been Ebola-free
since October 2014), terror attacks in northern states by Boko Haram and an
outbreak of bird flu in 11 states. Consumers may begin feeling the squeeze
of forex shortages with planned austerity measures and cuts in social
spending on the cards in these countries.
Furniture
In a period marked by considerable turmoil in the local furniture retail
sector, the Group's furniture division achieved sales growth of 12.2%. The
strongest growth came from the middle- to lower-income chains OK Furniture
and OK Power Express, although a revitalised House & Home, targeting
higher-income consumers, was not far behind. The division's internal price
inflation during this period was a low 2.6%. These results were achieved in
a highly competitive environment in which the Ellerines Group, which last
year was placed under business rescue, was clearing stock at greatly reduced
prices. The division, which in recent years has accelerated its growth
beyond South Africa's borders, reported that its new outlets in both Angola
and Zambia were achieving satisfactory growth. In the six months to December
the division opened a net 28 new outlets to bring the store count to 396. In
the six months to the end of the 2015 financial year it intends opening a
further 68 outlets of which 53 will be located in space previously occupied
by Ellerines stores after successful negotiations with the landlords of
those premises.
Other Operating Segments
The OK Franchise Division reported turnover growth of 14.9% with growth on
existing business at 9.9%. This strong growth pattern is expected to
continue in the second half of the year. At the end of December, OK
Franchise had 371 members, slightly fewer than the 377 of a year ago,
despite gaining a net four new members in the period under review. Some 80%
of members are in South Africa and the balance in neighbouring Namibia.
The Group's MediRite chain was operating 155 pharmacies in selected Group
supermarkets at the end of December 2014. Transpharm, in addition to
supplying MediRite pharmacies, also services external customers who
represent 68.3% of turnover. MediRite, voted SA's second best pharmacy in
the recent Sunday Times Retail Awards, has reported sales growth of 20.1% in
South Africa for the period while the number of prescriptions, which
represents 74.1% of its turnover, grew on a year-on-year basis from 2.2
million to 2.6 million. Transpharm's total sales was 4.8% higher compared to
a year ago. Its new facility in Cape Town will cut delivery times to
customers in the Western Cape and is expected to come on stream in the
second half of the financial year.
Given the erosion in the value of the rand and the consequent escalation in
the cost of imported entertainment, there was a contraction in the number of
top-line overseas artists visiting South Africa. This put Computicket's
operating margins under pressure. The recently launched Computicket Travel
improved turnover by 21.2%, underpinned by a strong growth in flight ticket
sales.
GROUP PROSPECTS AND OUTLOOK
The second half of the 2015 financial year is expected to make considerable
demands on management. There is every indication that the present economic
climate will continue, while consumers' lack of disposable income, coupled
with sluggish economic growth and climbing unemployment, will continue to
inhibit trading. However, the biggest concern centres on Eskom's erratic
load-shedding. It is not only influencing shopping patterns, but is also
forcing businesses into substantial additional costs to provide their own
back-up power systems. We believe that we are better equipped than most to
deal with the crisis because of our forward planning and the extent and
depth of our infrastructure and management team.
DIVIDEND NO 132
The board has declared an interim dividend of 143 cents (2014: 132 cents)
per ordinary share, payable to shareholders on Monday, 23 March 2015. The
dividend has been declared from income reserves. The last day to trade cum
dividend will be Friday, 13 March 2015. As from Monday, 16 March 2015, all
trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 20 March 2015. Share certificates may not be
dematerialised or rematerialised between Monday, 16 March 2015, and Friday,
20 March 2015, both days inclusive.
In terms of the Dividends Tax, the following additional information is
disclosed:
1. The local dividend tax rate is 15%.
2. There are no STC credits available.
3. The net local dividend amount is 121.55 cents per share for shareholders
liable to pay Dividends Tax and 143 cents per share for shareholders
exempt from paying Dividends Tax.
4. The issued ordinary 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
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. 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 2014 to the date of this report. The
information contained in the interim report has been neither audited nor
reviewed by the Group's external auditors.
By order of the board
CH Wiese JW Basson
Chairman Chief Executive
Cape Town
23 February 2015
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
% ended ended ended
Rm Notes change Dec '14 Dec '13 Jun '14
Sale of merchandise 12.5 57 469 51 090 102 204
Cost of sales 12.4 (45 736) (40 675) (80 936)
GROSS PROFIT 12.7 11 733 10 415 21 268
Other operating income 20.3 1 415 1 176 2 840
Depreciation and amortisation 23.4 (849) (688) (1 525)
Operating leases 16.6 (1 490) (1 278) (2 596)
Employee benefits 10.7 (4 244) (3 833) (7 723)
Other operating expenses 14.8 (3 562) (3 102) (6 550)
TRADING PROFIT 11.6 3 003 2 690 5 714
Exchange rate (losses)/gains (68) 4 (9)
Items of a capital nature (2) (2) 3
OPERATING PROFIT 9.0 2 933 2 692 5 708
Interest received 2.5 122 119 225
Finance costs (0.9) (214) (216) (461)
Share of profit/(loss) of
associates and joint ventures 300.0 12 3 (5)
PROFIT BEFORE INCOME TAX 9.8 2 853 2 598 5 467
Income tax expense 12.1 (864) (771) (1 727)
PROFIT FOR THE PERIOD 8.9 1 989 1 827 3 740
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX 216 105 129
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 210 95 123
Share of foreign currency
translation differences of
associates and joint ventures 6 10 1
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 2 205 1 932 3 869
PROFIT ATTRIBUTABLE TO: 1 989 1 827 3 740
Owners of the parent 1 986 1 822 3 730
Non-controlling interest 3 5 10
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 2 205 1 932 3 869
Owners of the parent 2 202 1 927 3 859
Non-controlling interest 3 5 10
Basic earnings per
share (cents) 3 9.1 371.4 340.6 697.0
Diluted earnings per
share (cents) 3 8.6 369.7 340.6 697.0
Basic headline earnings
per share (cents) 3 9.1 371.9 341.0 697.6
Diluted headline earnings
per share (cents) 3 8.6 370.2 341.0 697.6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Rm Notes Dec '14 Dec '13 Jun '14
ASSETS
NON-CURRENT ASSETS 17 105 14 506 15 730
Property, plant and equipment 14 679 12 779 13 576
Investment in associates and
joint ventures 179 182 155
Loans and receivables 480 15 316
Deferred income tax assets 466 425 440
Intangible assets 1 292 1 093 1 225
Fixed escalation operating
lease accruals 9 12 18
CURRENT ASSETS 29 007 25 405 24 643
Inventories 14 515 13 271 12 344
Trade and other receivables 5 615 4 319 4 080
Derivative financial instruments 5 16 1
Current income tax assets 13 26 31
Loans and receivables 101 18 26
Cash and cash equivalents 8 758 7 755 8 161
Assets held for sale 108 57 160
TOTAL ASSETS 46 220 39 968 40 533
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO OWNERS OF THE PARENT
Share capital 1 650 647 650
Share premium 4 029 3 672 4 029
Treasury shares 1 (758) (320) (680)
Reserves 14 336 11 962 13 218
18 257 15 961 17 217
NON-CONTROLLING INTEREST 61 61 66
TOTAL EQUITY 18 318 16 022 17 283
LIABILITIES
NON-CURRENT LIABILITIES 5 455 5 022 5 531
Borrowings 2 4 229 3 879 4 373
Deferred income tax liabilities 192 239 187
Provisions 282 279 277
Fixed escalation operating
lease accruals 752 625 694
CURRENT LIABILITIES 22 447 18 924 17 719
Trade and other payables 20 627 17 650 16 332
Borrowings 2 545 328 311
Current income tax liabilities 932 653 870
Provisions 98 99 138
Bank overdrafts 236 186 61
Shareholders for dividends 9 8 7
TOTAL LIABILITIES 27 902 23 946 23 250
TOTAL EQUITY AND LIABILITIES 46 220 39 968 40 533
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable
to owners
Non- of the
Total controlling parent
Rm equity interest Total
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 15 252 68 15 184
Total comprehensive income 1 933 5 1 928
Profit for the period 1 828 5 1 823
Recognised in other comprehensive income
Foreign currency translation differences 105 105
Dividends distributed to shareholders (1 163) (12) (1 151)
BALANCE AT DECEMBER 2013 16 022 61 15 961
AUDITED 12 MONTHS ENDED JUNE 2014
BALANCE AT JUNE 2013 15 252 68 15 184
Total comprehensive income 3 869 10 3 859
Profit for the period 3 740 10 3 730
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 6 6
Income tax effect of re-measurements
of post-employment benefit obligations (1) (1)
Foreign currency translation differences 124 124
Share-based payments - value of
employee services 4 4
Equity component of convertible bonds
sold during the year 27 27
Proceeds from ordinary shares issued - -
Dividends distributed to shareholders (1 869) (12) (1 857)
BALANCE AT JUNE 2014 17 283 66 17 217
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 17 283 66 17 217
Total comprehensive income 2 205 3 2 202
Profit for the period 1 989 3 1 986
Recognised in other comprehensive income
Foreign currency translation differences 216 216
Modification of cash bonus arrangement
transferred from provisions 26 26
Share-based payments - value of
employee services 62 62
Shares repurchased (78) (78)
Dividends distributed to shareholders (1 180) (8) (1 172)
BALANCE AT DECEMBER 2014 18 318 61 18 257
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Share Share Treasury
Rm capital premium shares
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 647 3 672 (320)
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 3 672 (320)
AUDITED 12 MONTHS ENDED JUNE 2014
BALANCE AT JUNE 2013 647 3 672 (320)
Total comprehensive income - - -
Profit for the period
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations
Income tax effect of re-measurements
of post-employment benefit obligations
Foreign currency translation differences
Share-based payments - value of
employee services
Equity component of convertible bonds
sold during the year
Proceeds from ordinary shares issued 3 357 (360)
Dividends distributed to shareholders
BALANCE AT JUNE 2014 650 4 029 (680)
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 650 4 029 (680)
Total comprehensive income - - -
Profit for the period
Recognised in other comprehensive income
Foreign currency translation differences
Modification of cash bonus arrangement
transferred from provisions
Share-based payments - value of
employee services
Shares repurchased (78)
Dividends distributed to shareholders
BALANCE AT DECEMBER 2014 650 4 029 (758)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Other Retained
Rm reserves earnings
UNAUDITED 6 MONTHS ENDED DECEMBER 2013
BALANCE AT JUNE 2013 1 081 10 104
Total comprehensive income 105 1 823
Profit for the period 1 823
Recognised in other comprehensive income
Foreign currency translation differences 105
Dividends distributed to shareholders (1 151)
BALANCE AT DECEMBER 2013 1 186 10 776
AUDITED 12 MONTHS ENDED JUNE 2014
BALANCE AT JUNE 2013 1 081 10 104
Total comprehensive income 124 3 735
Profit for the period 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
Dividends distributed to shareholders (1 857)
BALANCE AT JUNE 2014 1 236 11 982
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 1 236 11 982
Total comprehensive income 216 1 986
Profit for the period 1 986
Recognised in other comprehensive income
Foreign currency translation differences 216
Modification of cash bonus arrangement
transferred from provisions 26
Share-based payments - value of
employee services 62
Shares repurchased
Dividends distributed to shareholders (1 172)
BALANCE AT DECEMBER 2014 1 540 12 796
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Notes Dec '14 Dec '13 Jun '14
CASH FLOWS FROM OPERATING ACTIVITIES 2 992 3 392 5 720
Operating profit 2 933 2 692 5 708
Less: investment income (38) (19) (36)
Non-cash items 4.1 1 527 845 1 859
Payments for cash settlement
of share appreciation rights (3) (21) (21)
Changes in working capital 4.2 578 1 190 1 078
Cash generated from operations 4 997 4 687 8 588
Interest received 154 130 252
Interest paid (183) (160) (345)
Dividends received 6 8 30
Dividends paid (1 178) (1 161) (1 868)
Income tax paid (804) (112) (937)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES 4.3 (2 508) (1 946) (4 165)
CASH FLOWS (UTILISED BY)/
FROM FINANCING ACTIVITIES 4.4 (51) - 453
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 433 1 446 2 008
Cash and cash equivalents at
the beginning of the period 8 100 6 114 6 114
Effect of exchange rate movements
on cash and cash equivalents (11) 9 (22)
CASH AND CASH EQUIVALENTS AT
THE END OF THE PERIOD 8 522 7 569 8 100
Consisting of:
Cash and cash equivalents 8 758 7 755 8 161
Bank overdrafts (236) (186) (61)
8 522 7 569 8 100
CONDENSED OPERATING SEGMENT INFORMATION
ANALYSIS PER REPORTABLE SEGMENT
Unaudited December 2014
Supermarkets Supermarkets
Rm RSA Non-RSA
Sale of merchandise 44 501 8 456
External 42 867 8 451
Inter-segment 1 634 5
Trading profit 2 456 372
Depreciation and amortisation* 748 157
Total assets 30 308 9 548
Unaudited December 2013
Supermarkets Supermarkets
Rm RSA Non-RSA
Sale of merchandise 39 604 7 351
External 38 275 7 347
Inter-segment 1 329 4
Trading profit 2 185 322
Depreciation and amortisation* 662 126
Total assets 27 122 7 102
Audited June 2014
Supermarkets Supermarkets
Rm RSA Non-RSA
Sale of merchandise 79 651 14 787
External 76 881 14 779
Inter-segment 2 770 8
Trading profit 4 751 673
Depreciation and amortisation* 1 388 266
Total assets 27 203 7 720
* Represent gross depreciation and
amortisation before appropriate
allocations of distribution cost.
CONDENSED OPERATING SEGMENT INFORMATION (continued)
ANALYSIS PER REPORTABLE SEGMENT (continued)
Unaudited December 2014
Other
operating
Rm Furniture segments Consolidated
Sale of merchandise 2 368 3 809 59 134
External 2 368 3 783 57 469
Inter-segment - 26 1 665
Trading profit 145 30 3 003
Depreciation and amortisation* 28 15 948
Total assets 3 884 2 480 46 220
Unaudited December 2013
Other
operating
Rm Furniture segments Consolidated
Sale of merchandise 2 111 3 386 52 452
External 2 111 3 357 51 090
Inter-segment - 29 1 362
Trading profit 134 49 2 690
Depreciation and amortisation* 26 11 825
Total assets 3 497 2 247 39 968
Audited June 2014
Other
operating
Rm Furniture segments Consolidated
Sale of merchandise 3 996 6 610 105 044
External 3 996 6 548 102 204
Inter-segment - 62 2 840
Trading profit 196 94 5 714
Depreciation and amortisation* 53 23 1 730
Total assets 3 740 1 870 40 533
* Represent gross depreciation and
amortisation before appropriate
allocations of distribution cost.
GEOGRAPHICAL ANALYSIS
Unaudited December 2014
Outside
Rm South Africa South Africa Consolidated
Sale of merchandise - external 48 058 9 411 57 469
Non-current assets** 12 134 3 846 15 980
Unaudited December 2013
Outside
Rm South Africa South Africa Consolidated
Sale of merchandise - external 42 938 8 152 51 090
Non-current assets** 10 741 3 143 13 884
Audited June 2014
Outside
Rm South Africa South Africa Consolidated
Sale of merchandise - external 85 877 16 327 102 204
Non-current assets** 11 242 3 577 14 819
** 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 2014
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Dec '14 Dec '13 Jun '14
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (Dec '13: 650 000 000;
Jun '14: 650 000 000) ordinary shares
of 113.4 cents each
Issued:
572 871 960 (Dec '13: 570 579 460;
Jun '14: 572 871 960) ordinary
shares of 113.4 cents each 650 647 650
Reconciliation of movement in number
of ordinary shares issued:
Number of shares
Dec '14 Dec '13 Jun '14
Balance at the beginning
of the period 572 871 960 570 579 460 570 579 460
Shares issued during
the period - - 2 292 500
Balance at the end of the
period 572 871 960 570 579 460 572 871 960
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
Dec '14 Dec '13 Jun '14
Issued ordinary share capital 572 871 960 570 579 460 572 871 960
Treasury shares (note 1.3) (38 213 212) (35 436 572) (37 729 072)
534 658 748 535 142 888 535 142 888
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.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Dec '14 Dec '13 Jun '14
1.2 Deferred share capital
Authorised:
360 000 000 (Dec '13: 360 000 000;
Jun '14: 360 000 000) non-convertible,
non-participating no par value
deferred shares
Issued:
291 792 794 (Dec '13: 290 625 071;
Jun '14: 290 625 071) non-convertible,
non-participating no par value
deferred shares - - -
Reconciliation of movement in
number of deferred shares issued:
Number of shares
Dec '14 Dec '13 Jun '14
Balance at the beginning of
the period 290 625 071 290 625 071 290 625 071
Shares issued during
the period 1 167 723 - -
Balance at the end of
the period 291 792 794 290 625 071 290 625 071
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.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Dec '14 Dec '13 Jun '14
1.3 Treasury shares
38 213 212 (Dec '13: 35 436 572;
Jun '14: 37 729 072) ordinary
shares 758 320 680
Reconciliation of movement in
number of treasury shares
for the Group:
Number of shares
Dec '14 Dec '13 Jun '14
Balance at the beginning of
the period 37 729 072 35 436 572 35 436 572
Movement in shares held by
Shoprite Checkers (Pty) Ltd
Shares purchased during
the period 484 140 - 2 292 500
Balance at the end of
the period 38 213 212 35 436 572 37 729 072
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Dec '14 Dec '13 Jun '14
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd
preference share capital 2 2 2
Convertible bonds (note 2.1) 4 444 4 134 4 381
Standard Bank de Angola, S.A. 239 - 218
First National Bank of Namibia Ltd 89 71 83
4 774 4 207 4 684
2.1 Convertible bonds
The Group has issued 6.5%
convertible bonds for a principal
amount of R4.7 billion
(Dec '13: R4.5 billion;
Jun '14: R4.7 billion).
The bonds mature on 3 April 2017
at their nominal value of
R4.7 billion (Dec '13: R4.5 billion;
Jun '14: R4.7 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 period* 4 888 4 548 4 548
Equity component* (507) (470) (470)
Liability component at the beginning
of the period 4 381 4 078 4 078
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 216 202 408
Interest paid (153) (146) (292)
Liability component at the end
of the period 4 444 4 134 4 381
*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 R4.6 billion
(Dec '13: R4.3 billion;
Jun '14: R4.5 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 8.7% (Dec '13: 8.6%;
Jun '14: 8.9%) and are within
level 2 of the fair value hierarchy.
The carrying values of all other
financial instruments approximate
their fair values.
3 EARNINGS PER SHARE
Profit attributable to owners
of the parent 1 986 1 822 3 730
Re-measurements 4 4 (1)
Loss/(profit) on disposal and
scrapping of property 305 (1) (13)
Profit on disposal of assets
held for sale (6) - -
Loss on disposal and scrapping of
plant and equipment 53 3 26
Reversal of impairment of property,
plant and equipment - - (42)
Impairment of goodwill - - 12
Insurance claims (receivable)/paid (350) 2 1
Loss on other investing activities - - 13
Re-measurements included in
equity-accounted profit of associates
and joint ventures 2 - 2
Income tax effect on re-measurements (1) (1) 4
Headline earnings 1 989 1 825 3 733
Number of ordinary shares '000 '000 '000
- In issue 534 659 535 143 535 143
- Weighted average 534 982 535 143 535 143
- Weighted average adjusted
for dilution 537 435 535 143 535 149
Earnings per share Cents Cents Cents
- Basic earnings 371.4 340.6 697.0
- Diluted earnings 369.7 340.6 697.0
- Basic headline earnings 371.9 341.0 697.6
- Diluted headline earnings 370.2 341.0 697.6
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Rm Dec '14 Dec '13 Jun '14
4 CASH FLOW INFORMATION
4.1 Non-cash items
Depreciation of property, plant
and equipment 853 753 1 568
Amortisation of intangible assets 95 72 162
Net fair value (gains)/losses on
financial instruments (3) 7 23
Exchange rate losses/(gains) 68 (4) 9
Loss/(profit) on disposal and
scrapping of property 305 (1) (13)
Profit on disposal of assets held
for sale (6) - -
Loss on disposal and scrapping of
plant and equipment 53 3 26
Reversal of impairment of property,
plant and equipment - - (42)
Impairment of goodwill - - 12
Movement in provisions (9) (7) 37
Movement in cash-settled share-based
payment accrual 32 (30) (37)
Movement in share-based payment reserve 62 - 4
Movement in fixed escalation operating
lease accruals 77 52 110
1 527 845 1 859
4.2 Changes in working capital
Inventories (2 106) (2 911) (1 994)
Trade and other receivables (1 486) (827) (586)
Trade and other payables 4 170 4 928 3 658
578 1 190 1 078
4.3 Cash flows utilised by investing
activities
Investment in property, plant
and equipment and intangible
assets to expand operations (1 784) (1 326) (2 917)
Investment in property, plant
and equipment and intangible
assets to maintain operations (595) (653) (992)
Investment in assets held for sale - - (2)
Proceeds on disposal of property,
plant and equipment and intangible
assets 24 38 126
Proceeds on disposal of assets
held for sale 94 - -
Other investing activities (239) (3) (313)
Investment in associate (6) - -
Acquisition of operations (2) (2) (67)
(2 508) (1 946) (4 165)
4.4 Cash flows (utilised by)/from
financing activities
Shares repurchased (78) - -
Proceeds from convertible bonds sold - - 224
Increase in borrowing from
Standard Bank de Angola, S.A. 21 - 218
Increase in borrowing from
First National Bank of Namibia Ltd 6 - 11
(51) - 453
5 RELATED-PARTY INFORMATION
During the period 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 condensed interim
financial statements on consolidation.
6 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 640 1 572 2 477
Contingent liabilities 14 216 235
Net asset value per share (cents) 3 415 2 983 3 218
DIRECTORATE AND ADMINISTRATION
Executive directors
JW Basson (chief executive), CG Goosen (deputy managing director), M Bosman,
B Harisunker, AE Karp, EL Nel, BR Weyers
Executive alternate directors
JAL Basson, PC Engelbrecht
Non-executive director
CH Wiese (chairman)
Independent non-executive directors
JF Basson, 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, Spectrum House, Stand 10 Jesmondine,
Great East Road, Lusaka, Zambia, PO Box 37283, Lusaka, Zambia
Telephone: +260 (0)211 374 791 - 374 794, Facsimile: +260 (0)211 374 781
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.nedbankcapital.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
Zambia: Pangaea Renaissance Securities Ltd, Farmers House at Central Park,
3rd Floor, Cairo Road, Lusaka, Zambia, PO Box 30163, Lusaka 10101, Zambia
Telephone: +260 (0)211 220 707 / 238 709/10, Facsimile: +260 (0)211 220 925
Auditors
PricewaterhouseCoopers Incorporated, PO Box 2799, Cape Town, 8000,
South Africa
Telephone: +27 (0)21 529 2000, Facsimile: +27 (0)21 529 3300
Date: 24/02/2015 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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