Wrap Text
Results for the 6 months ended December 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 6 MONTHS ENDED DECEMBER 2015
Key information
- Trading profit up 10.4% to R3.314 billion.
- Turnover up 8.8% to R62.519 billion.
- Diluted headline earnings per share up 8.9% to 403.0 cents
(2014: 370.2 cents).
- Dividend per share up 9.1% to 156 cents (2014: 143 cents).
Whitey Basson, chief executive:
For the six months to December 2015 the Shoprite Group lifted total turnover
by 8.8% to R62.519 billion despite South Africa's weak economic growth and
high unemployment. The improved sales growth in the second quarter is
particularly pleasing considering internal food inflation declined over the
period and was less than half that of the corresponding period (2.2% vs
5.2%).
Effective management of all aspects of the business, including cost control,
enabled the Group to achieve a trading profit which, at R3.314 billion
(2014: R3.003 billion) is 10.4% higher than in the comparative period. In a
highly competitive environment, the trading margin increased from 5.2% to
5.3% as the Group's established store and distribution infrastructure
continued to become more efficient.
The Group's results were boosted by strong growth in the major markets where
it trades outside South Africa. The economies of oil-rich Angola and
Nigeria showed surprising resilience despite the challenges brought about by
the steep drop in the oil price. Sustainable growth remains central to the
Group's strategy and during the twelve months to December a total of 176 net
new corporate stores were opened (74 of which were in the period under
review). Some 6 150 new jobs were created making us one of the largest
employers in South Africa, employing more than 136 000 people.
The fact that there is at least some consultation between Government and
business regarding economic solutions is something we welcome. We should
however be careful that we don't keep ourselves busy with fanciful Star Wars
projects and neglect basic initiatives such as job creation, crime and
education at a ground level. The question has to also be asked if we are
really capable of managing the current mix of parastatals. We also caution
that the slowdown in global commodity prices, although an influencing factor,
it is only part of the problem and we must not overlook the inefficiencies
in our own economy.
22 February 2016
Enquiries:
Shoprite Holdings Limited Tel: (021) 980 4000
Whitey Basson, chief executive
Carel Goosen, deputy managing director
Adele Gouws Tel: (021) 980 4000
OPERATING ENVIRONMENT
It has been a challenging six months for consumers, especially for those in
the middle and lower income groups. The effects of a weak currency as well
as a devastating drought have begun to be felt, with initial increases in
the price of staples such as maize, cooking oil and similar essentials. The
slowdown in the Chinese economy and the consequent drop in the demand for
commodities impacted South Africa's extensive mining industry with
widespread job losses. In African countries, as in most emerging economies,
growth has also slowed but as yet consumer spending has not been affected to
the same extent as in South Africa. It is unavoidable that under these
circumstances competition among retailers in South Africa would intensify.
This has put margins under pressure as everyone battles for their share of
the consumer's rand. Compounding the situation is the high cost of transport
that has seen many consumers shop closer to home at informal traders where
short-term credit is also available. Despite these demanding conditions
Shoprite retained its commanding position and the ability to trade
profitably.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
The Group increased total turnover for the six months to R62.52 billion, an
increase of 8.8%. Turnover growth in Non-RSA countries was negatively
affected by the drop in oil prices (Angola and Nigeria), currency
depreciation (particularly in Zambia and Mozambique) and droughts. This was
offset by certain Non-RSA currencies remaining stronger than the rand as
well as new stores opened. At the same time the general state of the economy
placed a damper on consumer spending. Against the backdrop of these
challenges, Supermarkets RSA reported a sales growth of 7.2%, an improvement
on the first quarter's 4.9%. Supermarkets Non-RSA reported an increase of
15.2% at current exchange rates and 23.5% at constant rates.
Expenses
Depreciation and amortisation, as well as 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 last 12 months a net 70 supermarkets and 92 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. Escalations in expenses such
as security, electricity and other energy costs are items over which the
Group has little control. They were nevertheless managed as stringently as
possible.
Trading margin
The trading margin edged up to 5.30% (2014: 5.23%) and reflects the effects
of improved real growth in turnover as well as the investment in new stores
and supply chain infrastructure becoming more efficient.
Exchange rate gains
The Group recorded an exchange rate gain of R11 million compared to a loss
of R68 million in the corresponding period. This was mainly due to the rand
depreciating against the US dollar and certain African currencies during the
period under review with the resultant effect on short-term loan balances
and cash balances.
Finance cost and interest received
Net interest paid, when compared to the corresponding period, increased
with capital and information technology expenditure higher than 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 six months under review this amounted to a calculated interest
expense of R222.9 million compared to the actual interest paid of
R152.6 million.
Earnings per share
Basic headline earnings increased by 8.9% - from 371.9 cents to 405.0 cents
while diluted headline earnings per share increased by a similar 8.9% - from
370.2 cents to 403.0 cents.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 176 new corporate stores,
vacant land purchased for strategic purposes, investment in information
technology and distribution centres 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 R4.816 billion during the past 12 months.
Inventory
The increase in inventory is due to the provisioning of the net 176 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 but, at the same time, has to embrace the
opportunity to purchase inventory ahead of anticipated price increases to
support margin.
OPERATIONAL REVIEW
Under challenging circumstances all the divisions in the Group produced
satisfactory results for the six months to December 2015. These divisions
are supported by an extensive and highly sophisticated supply-line
infrastructure. A network of distribution centres which serve as
collection points for an increasing number of suppliers, ensures the
delivery of merchandise to stores at the right time and the best price.
Work started in January this year on the construction of an 85 000 square
meter regional distribution node outside Cape Town that will further enhance
service to stores. A new system for demand management is being introduced
across the Group that will further strengthen its value chain. IT and other
systems are being upgraded on an ongoing basis to further improve ranging
and on-shelf availability in stores and extend electronic integration with
suppliers.
Number of outlets December 2015
CONFIRMED
NEW STORES
TO
DEC 2014 OPENED CLOSED DEC 2015 JUNE 2017
SUPERMARKETS 1 081 83 13 1 151 123
- SHOPRITE 532 37 3 566 91
- CHECKERS 193 10 2 201 12
- CHECKERS HYPER 32 4 0 36 1
- USAVE 324 32 8 348 19
HUNGRY LION 172 20 6 186 7
FURNITURE 396 97 5 488 15
- OK FURNITURE 346 94 5 435 15
- HOUSE & HOME 50 3 0 53 0
OK FRANCHISE 371 28 36 363 23
TOTAL STORES 2 020 228 60 2 188 168
COUNTRIES OUTSIDE RSA 14 0 0 14
TOTAL STORES OUTSIDE RSA 318 46 7 357 58
Supermarkets RSA
Buoyed by a stronger second quarter that benefited from a successful festive
season, Supermarkets RSA increased turnover by 7.2% (2014: 12.0%) to R45.960
billion. This generated a trading profit of R2.676 billion which was 9.0%
higher than in the corresponding period (2014: R2.456 billion). This growth
was achieved in an environment in which internal food inflation was
stringently controlled to bring it down to 2.2%, almost half of the 5.2% of
the corresponding period.
Ancillary services such as Money Market, MediRite and LiquorShops aimed at
extending the customer offering continued to attract shoppers and lift
in-store sales. LiquorShops, which locates its outlets just outside or near
Group supermarkets, has shown dynamic growth since its inception. Opening
the equivalent of almost a store a week during the period under review, it
now operates 307 outlets in South Africa. It grew sales by 31.6%, almost
double that of the rest of the market resulting in strong market share gain.
The growth in turnover reported by the Shoprite chain, the Group's flagship
brand, reflects the lack of disposable income of its traditional middle to
lower income categories. With these shoppers tending to visit stores less
frequently because of the transport costs involved, strategies have been
implemented to maximise basket size when consumers do visit. Marketing
campaigns have been intensified to strengthen the chain's price positioning.
The chain has continued to subsidise basic food stuffs such as bread, milk
and rice, putting money back in the pockets of consumers while also
driving volume growth in those product categories. Shoprite opened a net 10
new stores during the review period to trade from 435 outlets in South
Africa.
Targeting mainly middle to higher-income consumers, Checkers, which consists
of 195 supermarkets and 36 hyper stores, was again the best performing
supermarket brand, growing turnover by 8.1%. The Checkers Hypers, large-
format supermarkets which are centrally located to make them readily
accessible for its target market, were the star performers. Non-food sales
were particularly encouraging. We believe the brand still has growth
potential, since it remains underrepresented in many of the country's more
affluent communities.
Usave with its limited product range has felt the effect of the growing
tendency among consumers to buy from informal traders closer to home. It
added a net 22 stores during the last 12 months to its base of 264 small-
format outlets.
Supermarkets Non-RSA
The Group continues to extend its operations in sub-Saharan Africa and now
operates 199 supermarkets in 14 countries outside South Africa. A net 10 new
supermarkets were opened during the six months to December 2015. Non-RSA
sales increased 15.2% and 23.5% in constant currencies. Despite the sharp
drop in commodity prices, oil-dependent countries such as Nigeria and
especially Angola performed very well. Boosted by the opening of two new
stores, Angola replaced Zambia as the biggest contributor to Non-RSA
turnover. The large store in Palanca near Luanda, which burnt down more
than a year ago, will reopen its doors in April this year and is expected
to boost turnover even further. Despite import restrictions and forex
shortage, Nigeria opened four new stores during the period with four
more planned for the second half of the year.
Furniture
In line with the rest of the durables retail sector, the Furniture
Division felt the effects of the volatile exchange rate and the poor state
of the economy. The large number of new outlets opened in the previous
financial year enabled it to increase turnover by 13.7% while growth on
existing business remained almost flat. The best performers continued to be
the middle-income chains OK Furniture and OK Power Express. Whereas the
sector had to contend with price deflation for several years, the situation
changed in the six months to December, with price inflation rising to 5.7%.
Credit sales continued to decrease and now lag cash sales by a considerable
margin. One of the main contributing factors is the implementation in
September 2015 of the first set of amendments to the National Credit Act
which introduced a more onerous calculation of affordability. This has made
it harder for consumers to obtain credit. During the period under review,
the division added a net 17 new stores to bring the total number of outlets
to 488 of which 61 are outside South Africa.
Other Operating Segments
The OK Franchise Division grew turnover 11.2% while growth on existing
business was 10.3%. This produced a trading profit that was better than
turnover growth. The division expects to maintain the present level of
growth during the second six months of the year. About 90% of members are in
South Africa and 10% in Namibia. The division has been upgrading its brands
with the result that an increasing number of its 363 members is now trading
under the OK banner.
MediRite, the in-store pharmacy chain that forms part of the Group's
pharmacy division, traded from 147 outlets in South Africa and 12 beyond the
country's borders. The number of prescriptions in South Africa increased to
2.8 million. In South Africa, 22 of its pharmacies serve as distribution
points for the Department of Health where patients can collect their chronic
medication. MediRite was recently accredited with Discovery Vitality for its
member risk management programme. The service, that encompasses testing for
blood pressure, cholesterol and sugar levels, will be rolled out countrywide
in the second half of the year. Transpharm, the wholesale arm of the
division, not only provides MediRite outlets with a reliable source of
supply, but also serves external customers who represent 66% of its total
turnover. It grew total turnover by 3.5% in the period under review.
Although Computicket's income from the sale of tickets for live events
increased during the reporting period, with some international artists
secured before the recent major decline of the rand, operating margins in
this area of the business remained under pressure. Computicket Travel,
launched just over a year ago, showed good growth with ticket sales for
local and international flights increasing by 22.3%. During the six months
to December, it handled ticket sales for 27 international airlines.
GROUP PROSPECTS AND OUTLOOK
With the World Bank predicting economic growth of less than 1% for South
Africa in 2016, the second half of the financial year will see challenging
trading conditions persist in the local market. The run-up to the local
municipal elections could also prove disruptive. However, the greater
geographic diversification of its operations places the Group in a better
position than its main competitors. In addition, our continuing investment
in infrastructure enables the Group to remain highly competitive. The Group
expects to deliver similar results during the next 6 months, provided the
current economic climate does not deteriorate further.
DIVIDEND NO. 134
The board has declared an interim dividend of 156 cents (2015: 143 cents)
per ordinary share, payable to shareholders on Tuesday, 22 March 2016. The
dividend has been declared from income reserves. The last day to trade cum
dividend will be Friday, 11 March 2016. As from Monday, 14 March 2016, all
trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 18 March 2016. Share certificates may not be
dematerialised or rematerialised between Monday, 14 March 2016, and Friday,
18 March 2016, 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 132.60 cents per share for shareholders
liable to pay Dividends Tax and 156 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
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 2015 to the date of this
report. The information contained in the interim report has neither been
audited nor reviewed by the Group's external auditors.
By order of the board
CH Wiese JW Basson
Chairman Chief executive
Cape Town
22 February 2016
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
% Dec '15 Dec '14 Jun '15
Notes change Rm Rm Rm
Sale of merchandise 8.8 62 519 57 469 113 694
Cost of sales 8.4 (49 565) (45 736) (90 180)
GROSS PROFIT 10.4 12 954 11 733 23 514
Other operating income 11.2 1 573 1 415 3 428
Depreciation and amortisation 14.1 (969) (849) (1 733)
Operating leases 15.6 (1 722) (1 490) (2 990)
Employee benefits 8.1 (4 587) (4 244) (8 507)
Other operating expenses 10.5 (3 935) (3 562) (7 384)
TRADING PROFIT 10.4 3 314 3 003 6 328
Exchange rate gains/(losses) 11 (68) (132)
Items of a capital nature 56 (2) (13)
OPERATING PROFIT 15.3 3 381 2 933 6 183
Interest received (36.1) 78 122 216
Finance costs 9.3 (234) (214) (415)
Share of (loss)/profit of
associates and joint ventures (141.7) (5) 12 (2)
PROFIT BEFORE INCOME TAX 12.9 3 220 2 853 5 982
Income tax expense 14.9 (993) (864) (1 848)
PROFIT FOR THE PERIOD 12.0 2 227 1 989 4 134
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX 702 216 (387)
Items that will not be
reclassified to profit or loss
Re-measurements of
post-employment benefit obligations - - 1
Items that may subsequently
be reclassified to profit or loss
Foreign currency translation
differences 729 210 (413)
Share of foreign currency
translation differences
of associates and joint ventures (27) 6 25
For the period 19 6 25
Reclassified to profit
for the period (46) - -
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 2 929 2 205 3 747
PROFIT ATTRIBUTABLE TO: 2 227 1 989 4 134
Owners of the parent 2 224 1 986 4 124
Non-controlling interest 3 3 10
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 2 929 2 205 3 747
Owners of the parent 2 926 2 202 3 737
Non-controlling interest 3 3 10
Basic earnings
per share (cents) 4 12.1 416.3 371.4 771.2
Diluted earnings per
share (cents) 4 12.0 414.2 369.7 767.4
Basic headline earnings
per share (cents) 4 8.9 405.0 371.9 772.9
Diluted headline earnings
per share (cents) 4 8.9 403.0 370.2 769.1
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
Dec '15 Dec '14 Jun '15
Notes Rm Rm Rm
ASSETS
NON-CURRENT ASSETS 19 924 17 105 18 035
Property, plant and equipment 16 958 14 679 15 374
Investment in associates and
joint ventures 20 179 178
Loans and receivables 675 480 547
Deferred income tax assets 535 466 469
Intangible assets 1 727 1 292 1 458
Fixed escalation operating
lease accruals 9 9 9
CURRENT ASSETS 31 629 29 007 25 872
Inventories 17 295 14 515 13 689
Trade and other receivables 5 976 5 615 5 019
Derivative financial instruments 8 5 -
Current income tax assets 16 13 44
Loans and receivables 80 101 59
Cash and cash equivalents 8 254 8 758 7 061
Assets held for sale 17 108 13
TOTAL ASSETS 51 570 46 220 43 920
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO OWNERS OF THE PARENT
Share capital 1 650 650 650
Share premium 4 029 4 029 4 029
Treasury shares 1 (767) (758) (759)
Reserves 16 853 14 336 15 172
20 765 18 257 19 092
NON-CONTROLLING INTEREST 62 61 68
TOTAL EQUITY 20 827 18 318 19 160
LIABILITIES
NON-CURRENT LIABILITIES 5 756 5 455 5 660
Borrowings 2 4 375 4 229 4 305
Deferred income tax liabilities 176 192 188
Provisions 305 282 321
Fixed escalation operating lease
accruals 900 752 846
CURRENT LIABILITIES 24 987 22 447 19 100
Trade and other payables 22 989 20 627 17 424
Borrowings 2 636 545 567
Derivative financial instruments 2 - 2
Current income tax liabilities 1 070 932 960
Provisions 183 98 136
Bank overdrafts 100 236 3
Shareholders for dividends 7 9 8
TOTAL LIABILITIES 30 743 27 902 24 760
TOTAL EQUITY AND LIABILITIES 51 570 46 220 43 920
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Total controlling
equity interest
Rm Rm
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 17 283 66
Total comprehensive income 2 205 3
Profit for the period 1 989 3
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
Purchase of treasury shares (78)
Dividends distributed to shareholders (1 180) (8)
BALANCE AT DECEMBER 2014 18 318 61
AUDITED 12 MONTHS ENDED JUNE 2015
BALANCE AT JUNE 2014 17 283 66
Total comprehensive income 3 747 10
Profit for the period 4 134 10
Recognised in other comprehensive income
Re-measurements of post-employment benefit
obligations 1
Foreign currency translation differences (388)
Modification of cash bonus arrangement
transferred from provisions 26
Share-based payments - value of
employee services 131
Purchase of treasury shares (79)
Dividends distributed to shareholders (1 948) (8)
BALANCE AT JUNE 2015 19 160 68
UNAUDITED 6 MONTHS ENDED DECEMBER 2015
BALANCE AT JUNE 2015 19 160 68
Total comprehensive income 2 929 3
Profit for the period 2 227 3
Recognised in other comprehensive income
Foreign currency translation differences 702
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 72
Purchase of treasury shares (28)
Treasury shares disposed 2
Realisation of share-based payment reserve -
Dividends distributed to shareholders (1 315) (9)
BALANCE AT DECEMBER 2015 20 827 62
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Share Share
Total capital premium
Rm Rm Rm
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 17 217 650 4 029
Total comprehensive income 2 202 - -
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
Purchase of treasury shares (78)
Dividends distributed to shareholders (1 172)
BALANCE AT DECEMBER 2014 18 257 650 4 029
AUDITED 12 MONTHS ENDED JUNE 2015
BALANCE AT JUNE 2014 17 217 650 4 029
Total comprehensive income 3 737 - -
Profit for the period 4 124
Recognised in other comprehensive
income
Re-measurements of post-employment
benefit obligations 1
Foreign currency translation
differences (388)
Modification of cash bonus arrangement
transferred from provisions 26
Share-based payments - value of
employee services 131
Purchase of treasury shares (79)
Dividends distributed to shareholders (1 940)
BALANCE AT JUNE 2015 19 092 650 4 029
UNAUDITED 6 MONTHS ENDED DECEMBER 2015
BALANCE AT JUNE 2015 19 092 650 4 029
Total comprehensive income 2 926 - -
Profit for the period 2 224
Recognised in other comprehensive
income
Foreign currency translation
differences 702
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 72
Purchase of treasury shares (28)
Treasury shares disposed 2
Realisation of share-based payment
reserve -
Dividends distributed to shareholders (1 306)
BALANCE AT DECEMBER 2015 20 765 650 4 029
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Treasury Other Retained
shares reserves earnings
Rm Rm Rm
UNAUDITED 6 MONTHS ENDED DECEMBER 2014
BALANCE AT JUNE 2014 (680) 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
Purchase of treasury shares (78)
Dividends distributed to shareholders (1 172)
BALANCE AT DECEMBER 2014 (758) 1 540 12 796
AUDITED 12 MONTHS ENDED JUNE 2015
BALANCE AT JUNE 2014 (680) 1 236 11 982
Total comprehensive income - (388) 4 125
Profit for the period 4 124
Recognised in other comprehensive
income
Re-measurements of post-employment
benefit obligations 1
Foreign currency translation
differences (388)
Modification of cash bonus arrangement
transferred from provisions 26
Share-based payments - value of
employee services 131
Purchase of treasury shares (79)
Dividends distributed to shareholders (1 940)
BALANCE AT JUNE 2015 (759) 1 005 14 167
UNAUDITED 6 MONTHS ENDED DECEMBER 2015
BALANCE AT JUNE 2015 (759) 1 005 14 167
Total comprehensive income - 702 2 224
Profit for the period 2 224
Recognised in other comprehensive
income
Foreign currency translation
differences 702
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 72
Purchase of treasury shares (28)
Treasury shares disposed 2
Realisation of share-based payment
reserve 18 (18)
Dividends distributed to shareholders (1 306)
BALANCE AT DECEMBER 2015 (767) 1 768 15 085
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Dec '15 Dec '14 Jun '15
Notes Rm Rm Rm
CASH FLOWS FROM OPERATING
ACTIVITIES 3 336 2 992 3 756
Operating profit 3 381 2 933 6 183
Less: investment income (47) (38) (99)
Non-cash items 5.1 1 181 1 527 2 912
Payments for cash settlement of
share appreciation rights - (3) (3)
Changes in working capital 5.2 1 106 578 (1 408)
Cash generated from operations 5 621 4 997 7 585
Interest received 114 154 294
Interest paid (197) (183) (377)
Dividends received 11 6 21
Dividends paid (1 316) (1 178) (1 947)
Income tax paid (897) (804) (1 820)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES 5.3 (2 461) (2 508) (4 670)
CASH FLOWS UTILISED BY FINANCING
ACTIVITIES 5.4 (20) (51) (52)
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 855 433 (966)
Cash and cash equivalents at the
beginning of the period 7 058 8 100 8 100
Effect of exchange rate movements
on cash and cash equivalents 241 (11) (76)
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD 8 154 8 522 7 058
Consisting of:
Cash and cash equivalents 8 254 8 758 7 061
Bank overdrafts (100) (236) (3)
8 154 8 522 7 058
CONDENSED OPERATING SEGMENT INFORMATION
Analysis per reportable segment
Unaudited December 2015
Supermarkets Supermarkets
RSA Non-RSA
Rm Rm
Sale of merchandise 47 826 9 743
External 45 960 9 735
Inter-segment 1 866 8
Trading profit 2 676 464
Depreciation and amortisation* 849 187
Total assets 30 863 13 047
Unaudited December 2014
Supermarkets Supermarkets
RSA Non-RSA
Rm Rm
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
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
* Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
CONDENSED OPERATING SEGMENT INFORMATION (continued)
Analysis per reportable segment (continued)
Unaudited December 2015
Other
operating
Furniture segments Consolidated
Rm Rm Rm
Sale of merchandise 2 692 4 154 64 415
External 2 692 4 132 62 519
Inter-segment - 22 1 896
Trading profit 112 62 3 314
Depreciation and amortisation* 43 19 1 098
Total assets 4 798 2 862 51 570
Unaudited December 2014
Other
operating
Furniture segments Consolidated
Rm Rm Rm
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
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
* Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
Geographical analysis
Unaudited December 2015
Outside
South Africa South Africa Consolidated
Rm Rm Rm
Sale of merchandise - external 51 717 10 802 62 519
Non-current assets** 13 619 5 075 18 694
Unaudited December 2014
Outside
South Africa South Africa Consolidated
Rm Rm Rm
Sale of merchandise - external 48 058 9 411 57 469
Non-current assets** 12 134 3 846 15 980
Audited June 2015
Outside
South 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
** 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 2015
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Dec '15 Dec '14 Jun '15
Rm Rm Rm
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (Dec '14: 650 000 000;
Jun '15: 650 000 000) ordinary shares
of 113.4 cents each
Issued:
572 871 960 (Dec '14: 572 871 960;
Jun '15: 572 871 960) ordinary shares
of 113.4 cents each 650 650 650
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 '15 Dec '14 Jun '15
Issued ordinary share capital 572 871 960 572 871 960 572 871 960
Treasury shares (note 1.3) (38 289 473) (38 213 212) (38 221 703)
534 582 487 534 658 748 534 650 257
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
Dec '15 Dec '14 Jun '15
Rm Rm Rm
1.2 Deferred share capital
Authorised:
360 000 000 (Dec '14: 360 000 000;
Jun '15: 360 000 000) non-convertible,
non-participating no par value
deferred shares
Issued:
291 792 794 (Dec '14: 291 792 794;
Jun '15: 291 792 794) non-convertible,
non-participating no par value
deferred shares - - -
Reconciliation of movement in number
of deferred shares issued:
Number of shares
Dec '15 Dec '14 Jun '15
Balance at the beginning
of the period 291 792 794 290 625 071 290 625 071
Shares issued during the
period - 1 167 723 1 167 723
Balance at the end of
the period 291 792 794 291 792 794 291 792 794
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Dec '15 Dec '14 Jun '15
Rm 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.
650 650 650
1.3 Treasury shares
38 289 473 (Dec '14: 38 213 212;
Jun '15: 38 221 703) ordinary shares 767 758 759
Reconciliation of movement in number
of treasury shares for the Group:
Number of shares
Dec '15 Dec '14 Jun '15
Balance at the beginning
of the period 38 221 703 37 729 072 37 729 072
Shares purchased during
the period 194 330 484 140 492 631
Shares utilised for settlement
of equity-settled share-based
payment arrangements (111 065) - -
Shares disposed during the period (15 495) - -
Balance at the end of the
period 38 289 473 38 213 212 38 221 703
Consisting of:
Shares owned by Shoprite
Checkers (Pty) Ltd 35 456 572 35 436 572 35 450 975
Shares held by Shoprite
Checkers (Pty) Ltd for the
benefit of participants to
equity-settled share-based
payment arrangements 2 832 901 2 776 640 2 770 728
38 289 473 38 213 212 38 221 703
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Dec '15 Dec '14 Jun '15
Rm Rm Rm
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd
preference share capital 2 2 2
Convertible bonds (note 2.1) 4 582 4 444 4 511
Standard Bank de Angola, S.A. 312 239 249
First National Bank of Namibia Ltd 96 89 97
Other borrowings 19 - 13
5 011 4 774 4 872
2.1 Convertible bonds
The Group has issued 6.5%
convertible bonds for a principal
amount of R4.7 billion
(Dec '14: R4.7 billion;
Jun '15: R4.7 billion). The bonds
mature on 3 April 2017 at their
nominal value of R4.7 billion
(Dec '14: R4.7 billion;
Jun '15: 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 period 4 511 4 381 4 381
Interest expense 223 216 436
Interest paid (152) (153) (306)
Liability component at the end
of the period 4 582 4 444 4 511
3 FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of amounts owing
by employees included in loans and
receivables amounted to R217.2 million
(Dec '14: R213.3 million;
Jun '15: R216.0 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 9.8% (Dec '14: 9.3%;
Jun '15: 9.3%) and is within
level 2 of the fair value hierarchy.
The fair value of the liability
component of the convertible
bonds included in borrowings
amounted to R4.6 billion
(Dec '14: R4.6 billion;
Jun '15: R4.6 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 9.4% (Dec '14: 8.7%;
Jun '15: 8.5%) 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 2 224 1 986 4 124
Re-measurements (55) 4 15
Loss on disposal and scrapping
of property - 305 313
Profit on disposal of assets
held for sale - (6) (39)
Loss on disposal and scrapping
of plant and equipment 15 53 96
Reversal of impairment of property,
plant and equipment - - (1)
Impairment of goodwill - - 12
Insurance claims receivable - (350) (367)
Profit on disposal of investment
in associate (71) - -
Profit on other investing activities - - (1)
Re-measurements included in
equity-accounted profit of associates
and joint ventures 1 2 2
Income tax effect on re-measurements (5) (1) (6)
Headline earnings 2 164 1 989 4 133
Number of ordinary shares '000 '000 '000
- In issue 534 582 534 659 534 650
- Weighted average 534 664 534 982 534 816
- Weighted average adjusted
for dilution 537 428 537 435 537 432
Reconciliation of weighted
average number of ordinary shares
in issue during the period:
Weighted average number of
ordinary shares 534 664 534 982 534 816
Adjustments for dilutive
potential of full share grants 2 764 2 453 2 616
Weighted average number of
ordinary shares for diluted
earnings per share 537 428 537 435 537 432
Earnings per share Cents Cents Cents
- Basic earnings 416.3 371.4 771.2
- Diluted earnings 414.2 369.7 767.4
- Basic headline earnings 405.0 371.9 772.9
- Diluted headline earnings 403.0 370.2 769.1
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
Dec '15 Dec '14 Jun '15
Rm Rm Rm
5 CASH FLOW INFORMATION
5.1 Non-cash items
Depreciation of property,
plant and equipment 955 853 1 754
Amortisation of intangible assets 143 95 208
Net fair value (gains)/losses
on financial instruments (7) (3) 3
Exchange rate (gains)/losses (11) 68 132
Loss on disposal and scrapping
of property - 305 313
Profit on disposal of assets
held for sale - (6) (39)
Loss on disposal and scrapping
of plant and equipment 15 53 96
Reversal of impairment of property,
plant and equipment - - (1)
Impairment of goodwill - - 12
Profit on disposal of investment
in associate (71) - -
Movement in provisions 29 (9) 72
Movement in cash-settled share-based
payment accrual (23) 32 60
Movement in share-based payment
reserve 72 62 131
Movement in fixed escalation
operating lease accruals 79 77 171
1 181 1 527 2 912
5.2 Changes in working capital
Inventories (3 440) (2 106) (1 483)
Trade and other receivables (799) (1 486) (1 048)
Trade and other payables 5 345 4 170 1 123
1 106 578 (1 408)
5.3 Cash flows utilised by investing
activities
Investment in property, plant and
equipment and intangible assets to
expand operations (1 864) (1 784) (3 630)
Investment in property, plant
and equipment and intangible
assets to maintain operations (700) (595) (1 001)
Proceeds on disposal of property,
plant and equipment and intangible
assets 55 24 71
Proceeds on disposal of assets
held for sale - 94 163
Other investing activities (149) (239) (264)
Investment in associate - (6) (6)
Proceeds on disposal of investment
in associate 197 - -
Acquisition of operations - (2) (3)
(2 461) (2 508) (4 670)
5.4 Cash flows utilised by financing
activities
Purchase of treasury shares (28) (78) (79)
Proceeds from treasury shares disposed 3 - -
Increase in borrowing from Standard
Bank de Angola, S.A. - 21 -
(Decrease)/increase in borrowing
from First National Bank of Namibia Ltd (1) 6 14
Increase in other borrowings 6 - 13
(20) (51) (52)
6 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.
7 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 252 1 640 1 595
Contingent liabilities 35 14 13
Net asset value per share (cents) 3 884 3 415 3 571
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, 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,
email: 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, facsimile: +264 (0)61 248 531,
email: ts@nsx.com.na (prefer e-mail to fax)
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,
email: sharetrack@scs.co.zm
Website: www.sharetrackzambia.com
Sponsors
South Africa: Nedbank Corporate and Investment Banking, PO Box 1144,
Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8525, facsimile: +27 (0)11 294 8525,
email: 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,
email: MGeises2@oldmutual.com
Zambia: Pangaea Securities Ltd, 1st Floor, Pangaea Office Park,
Great East 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: 23/02/2016 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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