Wrap Text
Results for the 12 months to June 2015
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 2015
Key information
- Turnover increased 11.2% - from R102.204 billion to R113.694 billion.
- Trading profit was up 10.7% to R6.328 billion.
- Headline earnings per share rose 10.8% to 772.9 cents (2014: 697.6 cents).
- Nearly ten thousand new jobs created during the year.
- A net 170 new corporate stores opened.
Whitey Basson, chief executive, commented:
We believe we have produced a more than creditable performance in the 2015
financial year by increasing sales under trying market conditions by 11.2%.
Sales growth improved from the previous year despite opening fewer new
supermarkets. Our performance enabled us to grow our market share of food
retail in South Africa for the ninth consecutive year, while research also
shows that 72% of all South African adults now shop at the Group's stores.
According to Nielsen our competitors combined showed sales growth of 8.6%.
Trading profit was 10.7% higher at R6.328 billion. Despite many external
cost factors such as electricity and fuel, relentless cost control in all
areas of the business and greater efficiencies in our supply chain enabled
us to achieve a healthy trading margin of 5.57%, compared to 5.59% the
previous year. Internal food inflation decreased slightly from the year
before to 4.6% for the year, well below the official food inflation figure
of 6.8%.
Further higher expense growths that the Group experienced out of necessity
were security costs due to high levels of crime, which now amounts to more
than R1 billion - or close to 1% of turnover, because of the high number of
robberies and theft experienced at store level. It also costs us almost R2
billion - or close to 2% of turnover - for normal electricity costs and to
ensure a constant power supply to continue doing business during periods of
erratic load shedding.
Our growth sustained job creation, with the addition of 9 842 new jobs
during the year to bring our total staff complement to 132 942 of whom 114
984 are employed within South Africa and 17 958 outside its borders.
17 August 2015
Enquiries:
Shoprite Holdings Limited Tel: (021) 980 4000
Whitey Basson, Chief Executive
Carel Goosen, Deputy Managing Director
Adele Gouws, Group PR and Communications Manager
OPERATING ENVIRONMENT
The economy's lack of momentum was exacerbated during the year by the
worldwide weakening demand for commodities which forms the bulk of South
Africa's export income. Unemployment among the economically active
population continued to hover around 25% and above, with various industries
such as mining and telecoms cutting jobs. In this environment consumer
confidence dropped to its lowest level in more than 14 years as consumers
found themselves under increasing pressure, which was increasingly evident
in the second half of the year.
Against this background the Group continued to show its resilience and
generated a turnover of R113.69 billion, a growth of 11.2% on the previous
year.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
The Group added R11.49 billion to total turnover for the year, an increase
of 11.2% to R113.69 billion. Turnover growth in non-RSA countries was
negatively affected by the drop in oil prices (Angola and Nigeria) and their
currencies depreciating against the US Dollar. The loss of the sizeable
store in Palanca, Angola destroyed in a fire also impacted turnover. This
store will reopen in the beginning of 2016. At the same time the general
state of the economy in RSA placed a damper on consumer spending. Despite
these challenges, Supermarkets RSA reported improved sales growth of 10.5%
(2014: 8.7%) as cost conscious consumers flocked to the Group's stores.
Supermarkets Non-RSA reported an increase of 13.5% at current exchange rates
and 15.5% at constant rates (a slight improvement on the previous reporting
period).
Expenses
Depreciation and amortisation, as well as the increase in the cost of
operating leases grew at a faster rate than turnover. This was mainly due to
the Group's continued investment in new and refurbished stores and
information technology. During the 12 months a net 58 supermarkets and 103
furniture stores were opened. 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 expected eventual improvement in the economy. Expense
growth in existing supermarkets was limited to 4.2%, highlighting the effect
of new stores on total expense growth.
Escalations in expenses such as security, 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 started to reduce from April 2015, although
the Group is of the opinion that interchange fees remain too high.
Trading margin
The trading margin remained relatively in line with the prior year at 5.57%
(2014: 5.59%) and reflects the effects of improved 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 R132 million as against a loss
of R9 million in the corresponding period. This was mainly due to the
devaluation of the Angolan, Nigerian and Mozambican currencies against the
US Dollar 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, reduced
slightly with capital and information technology expenditure almost on par
with the previous year. For the convertible bonds issued, IFRS requires that
interest be calculated at a rate that approximates a market related vanilla
bond rate. For the 12 months under review this amounted to a calculated
interest expense of R436 million compared to the actual interest paid of
R306 million.
Earnings per share
Diluted headline earnings per share increased by 10.2% - from 697.6 cents to
769.1 cents.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 170 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
The decrease in cash at the reporting date resulted from the capital
expenditure of about R4.6 billion during the past 12 months.
Inventory
The increase in inventory is due to the provisioning of the net 170 new
corporate stores as well as the increased capacity created in distribution
centres. Management is also actively pursuing reductions of inefficient
stock holding at branch level and the increase of 10.9%, lower than turnover
growth, indicates progress is being made.
Number of outlets June 2015
YEAR TO DATE (12 MONTHS) CONFIRMED
NEW STORES
TO
JUNE 2014 OPENED CLOSED JUNE 2015 JUNE 2016
SUPERMARKETS 1 046 72 14 1 104 96
SHOPRITE 509 36 4 541 57
CHECKERS 185 13 1 197 7
CHECKERS HYPER 31 2 0 33 4
USAVE 321 21 9 333 28
HUNGRY LION 167 20 11 176 15
FURNITURE 368 105 2 471 23
OK FURNITURE 320 101 2 419 22
HOUSE & HOME 48 4 0 52 1
OK FRANCHISE 367 28 35 360 10
TOTAL STORES 1 948 225 62 2 111 144
COUNTRIES OUTSIDE RSA 14 14
TOTAL STORES OUTSIDE RSA 295 46 8 333 58
OPERATIONAL REVIEW
The Group produced strong results in the 12 months to June when seen in the
context of the demanding conditions that existed in the market place, both
in South Africa and in the countries in which the Group operates on the
continent. A consistent performer among the smaller business units was
LiquorShop, which now has 293 outlets and grew turnover 37.6% and like-for-
like sales by 15.3%. A rejuvenated franchise division is revitalising the OK
brand and is not only extending its geographic reach in South Africa but is
also strengthening its presence in urban areas. In the almost 25 years since
venturing north of South Africa's borders for the first time into Zambia,
the Group has established itself in 14 countries outside South Africa where
it is growing its presence on a daily basis.
During the period under review we continued to extend and further refine our
supply-line infrastructure using cutting-edge technology to drive
efficiencies, working closely with suppliers in doing so. Further extensions
were effected to our main distribution centre at Centurion, now bringing the
total built up area to 180 000m2, while construction is soon to start on a
new 85 000m2 facility in Cape Town. Our superior supply chain enables us to
keep price increases substantially below national food price inflation. It
not only assists us greatly in performing well during difficult times but is
expected to provide us with exponentially greater benefits when the economy
improves.
We have also completed a major phase in our IT upgrade which focuses
particularly on demand management by processing point-of-sale information
much more efficiently and enabling us to improve ranging and on-shelf
availability in our stores for further growth and profitability improvements.
Supermarkets RSA
The Group's core supermarket division continues to dominate South African
food retailing in terms of trading area, number of outlets and customer
support. Despite opening fewer stores than in the previous year (a net new
38 against 76 in 2014), the division increased sales by 10.5% from R76.881
billion to R84.945 billion to produce a trading profit of R5.268 billion
(2014: R4.751 billion). Growth was higher in the first half of the year
owing to a strong Christmas season and stores being closed in December 2013
for Mr Mandela's funeral. In-store complementary services attracted millions
of shoppers. During the year more than 18 million people used our stores
both in South Africa and elsewhere in Africa to transfer money to friends
and family.
The turnover of the Shoprite brand with 419 stores accounts for just over
half of the Group's total supermarket sales in South Africa. With 22.4
million regular shoppers it continues to focus on the needs of lower to
middle LSM consumers and for this reason invests substantially in
subsidising basic food items to strengthen its positioning as the country's
low price leader. It grew turnover by 8.5%, an improvement on the 7.5%
achieved in 2014, despite opening half the number of new stores than the
previous year.
The 191 Checkers supermarkets and 33 Checkers Hyper outlets recorded sales
growth of 10.9%. Further market share gains were achieved for the brand
which continues to win consumers in the more affluent consumer segment
whilst retaining its value for money philosophy.
Usave, with its small-format stores, increased market share despite of sales
growth slowing to 11.5%, having added only a net nine outlets during the
reported period. Its new-store programme is to be accelerated substantially
in the new financial year. It holds itself by the basic business model of
offering a limited range of basic foods at permanently discounted prices
which has proven to be a winning formula amongst consumers.
Supermarkets Non-RSA
The Group now owns 189 supermarkets beyond the borders of South Africa,
having opened a net 20 during the reporting period. Sales increased in rand
terms by 13.5% and, in constant currencies, by 15.5%. Growth in rand terms
was affected by the weakening of a number of African currencies against the
rand.
The drop in commodity prices affected the economies of several of the
countries in which the Group operates. The aftermath of the Ebola epidemic
in West Africa as well as lower oil revenues and resultant forex shortages
in certain countries were other destabilising factors.
During the year there was a strong focus on growing the Group's presence in
Angola where it now trades from 27 supermarkets, having added a net six new
supermarkets during the period under review and where good turnover growth
is justification for the Group's investment. Nigeria, another strategic
focus area, increased turnover by 19.7%, having added two supermarkets to
the existing ten. Growth in that country will be accelerated by a further
eight supermarkets opening for business in the new financial year, to bring
the total to 20.
The Group intends continuing its strong expansion drive in Africa with 35
new stores planned for countries across sub-Saharan Africa by June 2016.
Furniture
In a stressed environment for durable goods the Group's furniture division
increased turnover for the year to June by 13% and trading profit by 4.6%.
The strongest performance was again delivered by the dominant OK Furniture
chain. After restructuring, the more up-market House & Home has increased
turnover satisfactorily.
The division's growth in sales was assisted by an aggressive store opening
programme which saw 103 net new outlets added to the existing portfolio. It
now operates 471 stores of which 417 are in South Africa and 54 in seven
countries beyond its borders. The expansion was boosted by establishing new
stores in space previously occupied by 54 stores of the now defunct
Ellerines chain after successful negotiations with the landlords of those
premises. The division was able to acquire qualified personnel, also at
management level, from elsewhere in the industry to run the many new outlets.
After growing store numbers by almost 30% of which more than half only came
on stream in April of this year, management's focus is on bedding down all
the new outlets before embarking on a new round of store openings of which a
further 23 have been finalised.
The bulk of the division's sales remain cash based. In a market with high
consumer debt levels, the division continues to follow a prudent credit
policy, also in the light of the recent amendments to the National Credit
Act.
Other Operating Segments
OK Franchise: Much work was done during the year to revitalise the OK brand
and achieve a high level of standards throughout its 360 franchise stores to
provide customers with a consistent shopping experience. New branding and
distribution initiatives supported total turnover growth of 15.8%. Whereas
in the past the OK brand enjoyed the strongest exposure in the rural areas
of South Africa's northern provinces, it is now opening more and more
franchise stores in urban areas across the country including looking to open
OK franchise outlets in shopping malls in the future.
MediRite: The Group's pharmaceutical division consists of two components: a
chain of 156 MediRite pharmacies, of which 146 are in South Africa and 10 in
neighbouring countries, and a wholesale arm trading as Transpharm, which
supplies to MediRite pharmacies and a number of external customers. Sales
for the year in the MediRite Group increased by 9.7% and the number of
prescriptions executed, by 14.8% to 5.5 million.
Computicket: The live entertainment industry in South Africa continues to
struggle due to the weakness of the rand which makes the appearance of major
international artists prohibitively expensive. Airline ticket sales on the
other hand have shown substantial growth, especially for flights within
Africa. The brand has now expanded its presence to eight countries outside
South Africa.
GROUP PROSPECTS AND OUTLOOK
The new financial year will have its challenges in South Africa given the
lack of macro-economic stimulus. Management does therefore not foresee
improved trading conditions for the immediate future, but we are confident
that we have put the structures in place and have the relevant experience
and expertise to overcome this, as we have done for the last few years. Our
brands are well positioned to capitalise on increasingly cost-conscious
consumers and our investment in the economies north of South Africa's
borders will continue unabated.
DIVIDEND NO 133
The board has declared a final dividend of 243 cents (2014: 218 cents) per
ordinary share, payable to shareholders on Monday, 14 September 2015. The
dividend has been declared out of income reserves. This brings the total
dividend for the year to 386 cents (2014: 350 cents) per ordinary share. The
last day to trade cum dividend will be Friday, 4 September 2015. As from
Monday, 7 September 2015, all trading of Shoprite Holdings Ltd shares will
take place ex dividend. The record date is Friday, 11 September 2015. Share
certificates may not be dematerialised or rematerialised between Monday, 7
September 2015, and Friday, 11 September 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. The net local dividend amount is 206.55 cents per share for shareholders
liable to pay Dividends Tax and 243 cents per share for shareholders
exempt from paying Dividends Tax.
3. The issued ordinary share capital of Shoprite Holdings Ltd as at the date
of this declaration is 572 871 960 ordinary shares.
4. Shoprite Holdings Ltd's tax reference number is 9775/112/71/8.
BASIS OF PREPARATION
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.
The preparation of these summary consolidated financial statements for the
year ended 30 June 2015 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
17 August 2015
Summary Consolidated Statement of Comprehensive Income
Audited Audited
year ended year ended
% June '15 June '14
Notes change Rm Rm
Sale of merchandise 11.2 113 694 102 204
Cost of sales 11.4 (90 180) (80 936)
GROSS PROFIT 10.6 23 514 21 268
Other operating income 20.7 3 428 2 840
Depreciation and amortisation 13.6 (1 733) (1 525)
Operating leases 15.2 (2 990) (2 596)
Employee benefits 10.2 (8 507) (7 723)
Other operating expenses 12.7 (7 384) (6 550)
TRADING PROFIT 10.7 6 328 5 714
Exchange rate losses (132) (9)
Items of a capital nature (13) 3
OPERATING PROFIT 8.3 6 183 5 708
Interest received (4.0) 216 225
Finance costs (10.0) (415) (461)
Share of loss of associates
and joint ventures (60.0) (2) (5)
PROFIT BEFORE INCOME TAX 9.4 5 982 5 467
Income tax expense 7.0 (1 848) (1 727)
PROFIT FOR THE YEAR 10.5 4 134 3 740
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX (387) 129
Items that will not be reclassified
to profit or loss
Re-measurements of post-employment
benefit obligations 1 5
Items that may subsequently be
reclassified to profit or loss
Foreign currency translation
differences (413) 123
Share of foreign currency
translation differences
of associates and joint ventures 25 1
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 3 747 3 869
PROFIT ATTRIBUTABLE TO: 4 134 3 740
Owners of the parent 4 124 3 730
Non-controlling interest 10 10
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 3 747 3 869
Owners of the parent 3 737 3 859
Non-controlling interest 10 10
Basic earnings per share (cents) 4 10.6 771.2 697.0
Diluted earnings per share (cents) 4 10.1 767.4 697.0
Basic headline earnings
per share (cents) 4 10.8 772.9 697.6
Diluted headline earnings
per share (cents) 4 10.2 769.1 697.6
Summary Consolidated Statement of Financial Position
Audited Audited
June '15 June '14
Notes Rm Rm
ASSETS
NON-CURRENT ASSETS 18 035 15 730
Property, plant and equipment 15 374 13 576
Investment in associates and joint ventures 178 155
Loans and receivables 547 316
Deferred income tax assets 469 440
Intangible assets 1 458 1 225
Fixed escalation operating lease accruals 9 18
CURRENT ASSETS 25 872 24 643
Inventories 13 689 12 344
Trade and other receivables 5 019 4 080
Derivative financial instruments - 1
Current income tax assets 44 31
Loans and receivables 59 26
Cash and cash equivalents 7 061 8 161
Assets held for sale 13 160
TOTAL ASSETS 43 920 40 533
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO OWNERS OF THE PARENT
Share capital 1 650 650
Share premium 4 029 4 029
Treasury shares 1 (759) (680)
Reserves 15 172 13 218
19 092 17 217
NON-CONTROLLING INTEREST 68 66
TOTAL EQUITY 19 160 17 283
LIABILITIES
NON-CURRENT LIABILITIES 5 660 5 531
Borrowings 2 4 305 4 373
Deferred income tax liabilities 188 187
Provisions 321 277
Fixed escalation operating lease accruals 846 694
CURRENT LIABILITIES 19 100 17 719
Trade and other payables 17 424 16 332
Borrowings 2 567 311
Derivative financial instruments 2 -
Current income tax liabilities 960 870
Provisions 136 138
Bank overdrafts 3 61
Shareholders for dividends 8 7
TOTAL LIABILITIES 24 760 23 250
TOTAL EQUITY AND LIABILITIES 43 920 40 533
Summary Consolidated Statement of Changes in Equity
Attributable
to owners
of the
parent
Non-
Total controlling
Rm equity interest Total
BALANCE AT JUNE 2013 15 252 68 15 184
Total comprehensive income 3 869 10 3 859
Profit for the year 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
Total comprehensive income 3 747 10 3 737
Profit for the year 4 134 10 4 124
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 1 1
Foreign currency translation
differences (388) (388)
Share-based payments -
value of employee services 131 131
Modification of cash bonus
arrangement transferred from provisions 26 26
Shares repurchased (79) (79)
Dividends distributed to shareholders (1 948) (8) (1 940)
BALANCE AT JUNE 2015 19 160 68 19 092
Summary Consolidated Statement of Changes in Equity (continued)
Attributable to owners of the parent
Share Share Treasury
Rm capital premium shares
BALANCE AT JUNE 2013 647 3 672 (320)
Total comprehensive income - - -
Profit for the year
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)
Total comprehensive income - - -
Profit for the year
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations
Foreign currency translation
differences
Share-based payments -
value of employee services
Modification of cash bonus
arrangement transferred from provisions
Shares repurchased (79)
Dividends distributed to shareholders
BALANCE AT JUNE 2015 650 4 029 (759)
Summary Consolidated Statement of Changes in Equity (continued)
Attributable to owners of the parent
Other Retained
Rm reserves earnings
BALANCE AT JUNE 2013 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
Dividends distributed to shareholders (1 857)
BALANCE AT JUNE 2014 1 236 11 982
Total comprehensive income (388) 4 125
Profit for the year 4 124
Recognised in other comprehensive income
Re-measurements of post-employment
benefit obligations 1
Foreign currency translation
differences (388)
Share-based payments -
value of employee services 131
Modification of cash bonus
arrangement transferred from provisions 26
Shares repurchased
Dividends distributed to shareholders (1 940)
BALANCE AT JUNE 2015 1 005 14 167
Summary Consolidated Statement of Cash Flows
Audited Audited
year ended year ended
June '15 June '14
Notes Rm Rm
CASH FLOWS FROM OPERATING ACTIVITIES 3 756 5 720
Operating profit 6 183 5 708
Less: investment income (99) (36)
Non-cash items 5.1 2 912 1 859
Payments for cash settlement
of share appreciation rights (3) (21)
Changes in working capital 5.2 (1 408) 1 078
Cash generated from operations 7 585 8 588
Interest received 294 252
Interest paid (377) (345)
Dividends received 21 30
Dividends paid (1 947) (1 868)
Income tax paid (1 820) (937)
CASH FLOWS UTILISED BY INVESTING ACTIVITIES 5.3 (4 670) (4 165)
CASH FLOWS (UTILISED BY)/FROM
FINANCING ACTIVITIES 5.4 (52) 453
NET MOVEMENT IN CASH AND CASH EQUIVALENTS (966) 2 008
Cash and cash equivalents at the beginning
of the year 8 100 6 114
Effect of exchange rate movements on cash
and cash equivalents (76) (22)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 7 058 8 100
Consisting of:
Cash and cash equivalents 7 061 8 161
Bank overdrafts (3) (61)
7 058 8 100
Summary Operating Segment Information
ANALYSIS PER REPORTABLE SEGMENT
Audited June 2015
Supermarkets Supermarkets
RSA Non-RSA
Rm Rm
Sale of merchandise 88 195 16 792
External 84 945 16 781
Inter-segment 3 250 11
Trading profit 5 268 741
Depreciation and amortisation* 1 536 319
Total assets 28 056 9 726
Audited June 2014
Supermarkets Supermarkets
RSA Non-RSA
Rm Rm
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
Summary Operating Segment Information (continued)
ANALYSIS PER REPORTABLE SEGMENT (continued)
Audited June 2015
Other
operating
Furniture segments Consolidated
Rm Rm Rm
Sale of merchandise 4 516 7 539 117 042
External 4 516 7 452 113 694
Inter-segment - 87 3 348
Trading profit 205 114 6 328
Depreciation and amortisation* 77 30 1 962
Total assets 4 019 2 119 43 920
Audited June 2014
Other
operating
Furniture segments Consolidated
Rm Rm Rm
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
GEOGRAPHICAL ANALYSIS
Audited June 2015
South Outside
Africa South Africa Consolidated
Rm Rm Rm
Sale of merchandise - external 95 121 18 573 113 694
Non-current assets** 12 811 4 030 16 841
Audited June 2014
South Outside
Africa South Africa Consolidated
Rm Rm Rm
Sale of merchandise - external 85 877 16 327 102 204
Non-current assets** 11 242 3 577 14 819
* 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 Summary Consolidated Financial Statements
Audited Audited
June '15 June '14
Rm Rm
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (2014: 650 000 000)
ordinary shares of 113.4 cents each
Issued:
572 871 960 (2014: 572 871 960)
ordinary shares of 113.4 cents each 650 650
Reconciliation of movement in number
of ordinary shares issued:
Number of shares
June '15 June '14
Balance at the beginning of the year 572 871 960 570 579 460
Shares issued during the year - 2 292 500
Balance at the end of the year 572 871 960 572 871 960
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 '15 June '14
Issued ordinary share capital 572 871 960 572 871 960
Treasury shares (note 1.3) (38 221 703) (37 729 072)
534 650 257 535 142 888
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.
Audited Audited
June '15 June '14
Rm Rm
1.2 Deferred share capital
Authorised:
360 000 000 (2014: 360 000 000)
non-convertible, non-participating
no par value deferred shares
Issued:
291 792 794 (2014: 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 '15 June '14
Balance at the beginning of the year 290 625 071 290 625 071
Shares issued during the year 1 167 723 -
Balance at the end of the year 291 792 794 290 625 071
Audited Audited
June '15 June '14
Rm Rm
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.
650 650
1.3 Treasury shares
38 221 703 (2014: 37 729 072) ordinary shares 759 680
Reconciliation of movement in number of
treasury shares for the Group:
Number of shares
June '15 June '14
Balance at the beginning of the year 37 729 072 35 436 572
Shares purchased during the year 492 631 2 292 500
Balance at the end of the year 38 221 703 37 729 072
Consisting of:
Shares owned by Shoprite Checkers (Pty) Ltd 35 450 975 35 436 572
Shares held by Shoprite Checkers (Pty) Ltd
for the benefit of participants to
equity-settled share-based payment
arrangements 2 770 728 2 292 500
38 221 703 37 729 072
Audited Audited
June '15 June '14
Rm Rm
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference share capital 2 2
Convertible bonds (note 2.1) 4 511 4 381
Standard Bank de Angola, S.A. 249 218
First National Bank of Namibia Ltd 97 83
Other borrowings 13 -
4 872 4 684
2.1 Convertible bonds
The Group has issued 6.5% convertible
bonds for a principal amount of R4.7 billion
(2014: R4.7 billion). The bonds mature on
3 April 2017 at their nominal value of
R4.7 billion (2014: 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:
Liability component at the beginning of the year 4 381 4 078
Liability component on initial recognition
of convertible bonds at 15 June 2014 - 187
Face value of convertible bonds sold on
15 June 2014 - 224
Equity component - (37)
Interest expense 436 408
Interest paid (306) (292)
Liability component at the end of the year 4 511 4 381
The fair value of the liability component
of the convertible bonds amounted to
R4.6 billion (2014: 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 8.5%
(2014: 8.9%) and is within level 2
of the fair value hierarchy.
3 FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of amounts owing by
employees included in loans and receivables
amounted to R216.0 million (2014: R208.7 million)
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 9.3% (2014: 9.0%) and is
within level 2 of the fair value hierarchy.
The book value of all other financial
assets and liabilities approximate
the fair values thereof.
4 EARNINGS PER SHARE
Profit attributable to owners of the parent 4 124 3 730
Re-measurements 15 (1)
Loss/(profit) on disposal and scrapping of property 313 (13)
Profit on disposal of assets held for sale (39) -
Loss on disposal and scrapping of
plant and equipment 96 26
Reversal of impairment of property,
plant and equipment (1) (42)
Impairment of goodwill 12 12
Insurance claims (receivable)/paid (367) 1
(Profit)/loss on other investing activities (1) 13
Re-measurements included in equity-accounted
loss of associates and joint ventures 2 2
Income tax effect on re-measurements (6) 4
Headline earnings 4 133 3 733
Number of ordinary shares '000 '000
- In issue 534 650 535 143
- Weighted average 534 816 535 143
- Weighted average adjusted for dilution 537 432 535 149
Reconciliation of weighted average number
of ordinary shares in issue during the year:
Weighted average number of ordinary shares 534 816 535 143
Adjustments for dilutive potential
of full share grants 2 616 6
Weighted average number of ordinary
shares for diluted earnings per share 537 432 535 149
Earnings per share Cents Cents
- Basic earnings 771.2 697.0
- Diluted earnings 767.4 697.0
- Basic headline earnings 772.9 697.6
- Diluted headline earnings 769.1 697.6
Audited Audited
June '15 June '14
Rm Rm
5 CASH FLOW INFORMATION
5.1 Non-cash items
Depreciation of property, plant and equipment 1 754 1 568
Amortisation of intangible assets 208 162
Net fair value losses on financial instruments 3 23
Exchange rate losses 132 9
Loss/(profit) on disposal and scrapping of property 313 (13)
Profit on disposal of assets held for sale (39) -
Loss on disposal and scrapping of
plant and equipment 96 26
Reversal of impairment of property,
plant and equipment (1) (42)
Impairment of goodwill 12 12
Movement in provisions 72 37
Movement in cash-settled share-based payment accrual 60 (37)
Movement in share-based payment reserve 131 4
Movement in fixed escalation operating
lease accruals 171 110
2 912 1 859
5.2 Changes in working capital
Inventories (1 483) (1 994)
Trade and other receivables (1 048) (586)
Trade and other payables 1 123 3 658
(1 408) 1 078
5.3 Cash flows utilised by investing activities
Investment in property, plant and equipment
and intangible assets to expand operations (3 630) (2 917)
Investment in property, plant and equipment
and intangible assets to maintain operations (1 001) (992)
Investment in assets held for sale - (2)
Proceeds on disposal of property, plant
and equipment and intangible assets 71 126
Proceeds on disposal of assets held for sale 163 -
Other investing activities (264) (313)
Investment in associates (6) -
Acquisition of operations (3) (67)
(4 670) (4 165)
5.4 Cash flows (utilised by)/from financing activities
Shares repurchased (79) -
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 14 11
Increase in other borrowings 13 -
(52) 453
6 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.
7 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 595 2 477
Contingent liabilities 13 235
Net asset value per share (cents) 3 571 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, E-mail: Web.Queries@Computershare.co.za,
Website: www.computershare.com
Namibia: Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek, Namibia,
Telephone: +264 (0)61 227 647, E-mail: ts@nsx.com.na
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,
E-mail: sharetrack@scs.co.zm, Website: www.sharetrackzambia.com
Sponsors
South Africa: Nedbank CIB, PO Box 1144, Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8525, Facsimile: +27 (0)11 294 8525,
E-mail: doristh@nedbank.co.za, 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, E-mail: MGeises2@oldmutual.com
Zambia: Pangaea 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,
E-mail: info@pangaea.co.zm, Website: www.pangaea.co.zm
Auditors
PricewaterhouseCoopers Incorporated, PO Box 2799, Cape Town, 8000,
South Africa, Telephone: +27 (0)21 529 2000, Facsimile: +27 (0)21 529 3300,
Website: www.pwc.co.za
Date: 18/08/2015 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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