Wrap Text
Unaudited results for the six months ended 31 December 2016
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: UNAUDITED RESULTS FOR THE SIX MONTHS
ENDED 31 DECEMBER 2016
Key information
- Trading profit up 19.2% to R3.907 billion.
- Turnover up 14.0% - from R62.519 billion to R71.297 billion.
- Diluted headline earnings per share up 15.5% to 460.0 cents
(2015: 398.2 cents).
- Dividend per share declared 180 cents, an increase of 15.4% over the
156 cents of the corresponding period.
Pieter Engelbrecht, chief executive:
Shoprite produced an excellent set of results for the six months to
December 2016, which included a successful festive trading period. Total
turnover grew 14% from R62.519 billion to R71.297 billion while trading
profit was 19.2% higher at R3.907 billion. Group results were boosted by
a very strong performance by our Non-RSA operations which grew turnover
by 32.3% to R12.877 billion. At constant currencies this represents growth
of 51.7%.
The rise in trading profit above turnover growth was the result of increased
marketing activity, strict cost control across the spectrum, improved
planning involving all the various disciplines in the business, and the
Group's ability to achieve ongoing supply line efficiencies. These factors
combined enabled the Group to increase the trading margin from 5.2% to 5.5%
while continuing to provide the best value at highly competitive prices.
The widespread drought and its impact on agricultural production, coupled
with the high replacement cost of basic food imports, caused internal
inflation to increase from 2.7% a year ago to 7.4%, the highest level in
several years. To assist price sensitive consumers and support low prices
with value we continued to subsidise those basic foods most affected by
price escalations.
To sustain growth both within South Africa and beyond its borders, the Group
opened a net 147 new stores during the past 12 months and at the end of the
reporting period was trading from 2 653 outlets. This enabled it to create,
to our immense satisfaction, 7 144 additional jobs bringing its total staff
complement to more than 143 000.
20 February 2017
Enquiries:
Shoprite Holdings Limited Tel: 021 980 4000
Pieter Engelbrecht, chief executive
Marius Bosman, chief financial officer
Adele Lambrechts Tel: 021 980 4000
OPERATING ENVIRONMENT
The Group proved highly resilient in the weakened economic environment which
impacted especially lower-income South Africans throughout the review
period. The drought caused material price escalations especially in the case
of basic commodities while fuel price increases and other cost-of-living
expenses put further pressure on disposable income. The drought also
affected several of the Group's markets in Africa such as Zambia, where it
effectively countered increased competition from other, mainly South African
retailers. A positive is that the summer rainfall areas have experienced
some good early rains and it does appear to have eased the severe conditions
somewhat. Other African markets such as Angola and Nigeria on which the
Group has a particular focus, proved buoyant despite the oil-price collapse
and a consequent lack of foreign currency.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover for the Shoprite Group increased by 14.0% for the six months
to December 2016 - from R62.52 billion to R71.30 billion. Growth on a like-
for-like basis was 8.6%. Supermarkets RSA reported turnover growth of 10.7%
and, on a like-for-like basis, of 7.4% while Supermarkets Non-RSA recorded
sales growth of 32.3% and a like-for-like growth of 14.2%. At constant
currency rates Supermarkets Non-RSA sales increased by 51.7%.
Expenses
Total expenses increased by 12.6% which was lower than the sales growth of
14.0%. Depreciation and amortisation as well as the increase in the cost of
operating leases grew at a slower rate than turnover, mainly because of
fewer new stores being opened. However, the spend on the refurbishment of
existing stores and on information technology is continuing. During the 12
months a net 51 supermarkets, 24 furniture stores and 50 LiquorShop outlets
were opened.
Escalations in expenses such as security, electricity and other energy costs
were beyond the control of the Group. They were nevertheless monitored as
carefully as possible.
Trading margin
The trading margin increased from 5.24% to 5.48%. This margin reflects the
effects of real growth in turnover as well as of investment in new stores
and in the supply-chain infrastructure. During this six months the Group
changed its accounting policy with respect to the treatment of advertising
rebates with certain rebates relating to advertising now being deducted from
the purchase price of goods. See note 9 in this announcement for more
detail.
Exchange rate losses
The Group recorded an exchange rate loss of R188 million against a profit of
R11 million in the corresponding period. This was partly due to the
devaluation of certain non-RSA currencies against the US$ and the rand
during the period under review with the resultant effect on short-term loan
balances. In addition, the rand also strengthened against the US$ with the
result that a loss was also recorded on US$ balances held in South Africa as
well as certain forward foreign exchange contracts.
Finance cost and interest received
Net interest expense, when compared to the corresponding period, decreased
due to an improvement in cash flow from an improvement in net working
capital. 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 R202 million compared to the actual interest paid of
R143 million.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 133 new corporate outlets,
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 purchase of US$
Index Linked Angolan Government bonds to the value of R770 million during
this six months. This was done as a hedge against a possible devaluation of
the Angolan kwanza. In addition, the calendar month closed before the
accounting month-end date, with the result that some creditors were paid
before cut-off. Capital expenditure for the six months was on par with that
of the corresponding six months.
Inventory
The increase in inventory is due to the provisioning of the net 133 new
corporate outlets as well as the increased capacity created in some of the
distribution centres. Management is also actively pursuing reducing
inefficient stock holding at branch level and the increase of 9.4%, much
lower than turnover growth, shows some progress is being made.
Trade and other payables
Trade and other payables show a decrease of 2.6% on the previous year when
the calendar month also closed before the accounting month-end date, with
the result that creditors were paid before cut-off. This small reduction
goes hand in hand with inventory that increased less than the growth in
turnover.
Borrowings
The convertible bonds that are redeemable on 3 April 2017 are now reflected
under current liabilities.
NUMBER OF OUTLETS DECEMBER 2016
CONFIRMED
NEW
12 MONTHS STORES
TO
DEC 2015 OPENED CLOSED DEC 2016 JUNE 2018
SUPERMARKETS 1 151 72 21 1 202 123
SHOPRITE 566 39 4 601 81
CHECKERS 201 6 2 205 23
CHECKERS HYPER 36 1 0 37 0
USAVE 348 26 15 359 19
LIQUORSHOP 318 50 0 368 18
HUNGRY LION 186 14 6 194 20
FURNITURE 488 32 8 512 17
OK FURNITURE 435 32 8 459 15
HOUSE & HOME 53 0 0 53 2
OK FRANCHISE 363 40 26 377 16
TOTAL STORES 2 506 208 61 2 653 194
COUNTRIES OUTSIDE RSA 14 14
TOTAL STORES OUTSIDE RSA 368 56 7 417 66
These numbers exclude the MediRite pharmacies as they are located within
stores.
OPERATIONAL REVIEW
Supermarkets RSA
The Group's core business, the South African supermarket operation,
produced a more than creditable performance, growing sales by 10.7% from
R45.960 billion to R50.894 billion. This generated a trading profit of
R2.992 billion compared to R2.665 billion in the corresponding period, an
increase of 12.3%.
Trading through 1 336 outlets and generating almost 80% of the Group's total
supermarket sales, the division is supported by an extensive and
increasingly sophisticated supply-line infrastructure that ensures on-shelf
availability. In fact, the in-stock levels in stores are the highest ever,
the result of extensive, integrated planning by the different disciplines in
the business.
As a result of the slowdown in the economy and the pressure on disposable
income, customers across the spectrum increasingly searched for better
value. To satisfy their needs, the Group sourced products across the globe
that offer such value at affordable prices. It also extended its range of
private label brands extensively to assist price sensitive consumers.
During the review period the Group greatly intensified its customer-centric
focus in every aspect of its business to serve the needs of customers
better. In response, the Group's market share increased to 31.7% from 31.2%.
Its supermarkets offer customers an extensive range of ancillary services
such as LiquorShop, Money Market, MediRite and Computicket, entrenching them
as one-stop destination stores. LiquorShop, the country's fastest-growing
retail liquor chain at a store opening rate of one per week, increased
turnover 26.3% through 355 outlets of which 29 were opened in the six months
to December.
The flagship Shoprite brand with its focus on middle and lower-income
consumers was fully exposed to the effects of a strained economy. An
extensive range of highly successful promotional activities, especially
during a buoyant festive season, effectively countered this negative
environment. It also continued to subsidise basic food prices to assist the
most economically vulnerable. Shoprite, which opened a net 17 new stores
during the last 12 months, grew turnover by 8.8% to R25.899 billion,
notwithstanding an environment in which internal inflation for the Group
averaged 7.4%, the highest rate in years.
Checkers continued its uninterrupted growth of the past few years further
entrenching its appeal to higher-income consumers. It increased sales by
11.1% to R19.346 billion across its 235 stores. Growth on existing business
was a satisfactory 7.4%. The chain continued its drive to grow sales of
fresh and convenience foods with an expanded and enhanced offering four-fold
over the festive season.
The small-format Usave chain with its limited offering produced total
turnover growth of 13.1% - the highest of the various formats. It did so
through its 294 stores in South Africa, while also recording excellent
growth on existing business. Management continues to enforce strict
disciplines to ensure the chain does not stray from its primary positioning
of offering the lowest possible prices on a restricted product range.
Supermarkets Non-RSA
Supermarkets Non-RSA, which trades in 14 countries in the rest of Africa and
Indian Ocean islands, produced excellent results for the six months with
Angola and Nigeria the top performers. The 221 supermarkets and 13
LiquorShops generated turnover that grew 32.3% from R9.735 billion to
R12.877 billion. During the twelve months a net 22 new supermarkets opened
with another 11 to follow in the second half of the year.
Despite the chronic shortage of foreign currency in especially the oil-
producing countries such as Angola and Nigeria, the Group enjoyed a
significant competitive advantage in that it could fund its stock
requirements from its external balance sheet, unlike many other traders in
the region. Product availability saw consumers flock to its stores,
resulting in a constant currency sales increase of 155.4% in Angola and
60.1% in Nigeria. During the reporting period the customer base of the
Group's 29 supermarkets in Angola grew by 70% and that of Nigeria's 23
outlets by 56.3%.
Management is aware that such high growth levels may not be sustainable in
the longer term. However, it is confident that the majority of the new
customers, having become acquainted with the stores' price positioning and
product quality and availability, should be retained when market conditions
improve.
Furniture
The furniture division grew total sales by 10%. This was mainly due to the
strong performance of its 75 stores outside South Africa which increased
sales by 38.6% during the reporting period. Once again, the star performer
was Angola. In South Africa, where the division operates 437 outlets under
various brands, the difficult trading conditions saw sales grow 3.4%, well
below budget. Of the division's several chains, the dominant OK Furniture
continued to do well, increasing turnover by 17.0% while the more upmarket
House & Home delivered negative growth.
Other Operating Segments
OK Franchise: The ongoing restructuring of this division, aimed at improving
service delivery to members and enhancing the image of the OK brand among
consumers, has produced excellent results, with turnover increasing by 13.7%
and growth on existing business by 13.0%. The division now has 377 members
in South Africa and Namibia, having gained 27 in the six months to December.
The decision to enable members to open standalone liquor stores saw the
number of outlets rise from ten a year ago to 47. Its management
infrastructure is being extended to enhance support for members, whose
purchases from Group distribution centres grew by 36% over the six-month
period. While increasing the frequency of deliveries to members, the
division will also be extending its offering in the second half of the year
to include perishables and frozen products.
MediRite: The division comprises two business units - the retail pharmacy
chain MediRite and Transpharm, a wholesaler of medical products. Hampered
by, amongst others, government imposed exit price restrictions, the division
as a whole still operates at a loss. MediRite trades from 161 pharmacies of
which 12 are in Angola and three in Swaziland, with plans afoot to expand to
Mozambique. Transpharm, which supplies to MediRite as well as a number of
external customers, returned a profit for the six months.
Computicket: The operations of Computicket continue to be constrained by
lack of disposable consumer income as well as the relative weakness of the
rand which places visits by major international artists beyond the reach of
local impresarios. The entertainment calendar for the balance of the year
looks much healthier, though. However, its travel division continues to do
well despite the adverse trading environment.
GROUP PROSPECTS AND OUTLOOK
Although a slightly higher growth rate is predicted for 2017, it will in our
view have at most a minimal effect on the financial wellbeing of the members
of our primary target market. The high levels of unemployment are bound to
persist with continued consumer indebtedness and shrinking disposable
income. However, we have repeatedly shown we are able to function profitably
in such an environment. We continued to enjoy excellent consumer support at
the start of the second half of the year and we are confident this will
continue for the rest of this reporting period.
RETIREMENT OF DR WHITEY BASSON AS CEO
Dr Whitey Basson, who headed Shoprite from 1979, retired as CEO at the end
of the reporting period. During those 37 years he, with the support of an
experienced management team, transformed a small eight-store chain into the
biggest food retailer on the African continent, in so doing, deservedly,
becoming a legendary business name. Dr Basson, who is continuing his
association with the Group in the role of vice chairman, has been succeeded
by Mr Pieter Engelbrecht who, for most of his 20 years with the Group, has
worked in close association with Dr Basson. He and his management team will
continue to build on and expand the business philosophy and principles that
have enabled Shoprite to perform well even under the most trying conditions.
DIVIDEND NO 136
The board has declared an interim dividend of 180 cents (2015: 156 cents)
per ordinary share, payable to shareholders on Monday, 20 March 2017. The
dividend has been declared out of income reserves. The last day to trade cum
dividend will be Tuesday, 14 March 2017. As from Wednesday, 15 March 2017,
all trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 17 March 2017. Share certificates may not be
dematerialised or rematerialised between Wednesday, 15 March 2017, and
Friday, 17 March 2017, both days inclusive.
In terms of the Dividends Tax, the following additional information is
disclosed:
1. The local Dividends Tax rate is 15%.
2. The net local dividend amount is 153 cents per share for shareholders
liable to pay Dividends Tax and 180 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 574 453 281 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, except as set out below. 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 2016 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.
Held-to-maturity investments
During the reporting period, the Group acquired AOA, USD Index Linked,
Angola Government Bonds which are classified as held-to-maturity
investments. The Group classifies investments as held-to-maturity if they
are non-derivative financial assets with fixed or determinable payments and
fixed maturities and the Group intends to, and is able to, hold them to
maturity.
Held-to-maturity financial assets are recognised initially at fair value
plus directly attributable transaction costs. Subsequent to initial
recognition, held-to-maturity financial assets are measured at amortised
cost, using the effective interest rate method. These financial assets are
included under non-current assets unless it matures within 12 months after
statement of financial position date. Interest on held-to-maturity financial
assets is recognised in the statement of comprehensive income as part of
other operating income.
If there is objective evidence that an impairment loss has been incurred,
the amount of the loss is measured as the difference between the held-to-
maturity investments' carrying amount and the present value of the estimated
future cash flows discounted at the original effective interest rate
applicable to the relevant held-to-maturity investments. The carrying amount
will be reduced and the loss recognised in the statement of comprehensive
income.
Change in accounting policy
During the reporting period, the Group changed its accounting policy with
respect to the treatment of advertising rebates in line with the guidance
provided by the newly issued IFRS 15: Revenue From Contracts With Customers.
The change in accounting policy allows for symmetry in the accounting
treatment of rebates by suppliers and customers, i.e. if the supplier is
treating the rebate as a reduction of revenue, the Group as the customer
should account for rebates as a reduction in the purchase price of
inventory, which will result in a reduction of cost of sales when inventory
is sold. The Group previously reflected these rebates net of advertising
expenses as part of other operating income. Further, in accordance with
IAS 8: Accounting Policies, Changes in Accounting Estimates and Errors, this
results in information that is more relevant to the financial position and
performance of the Group. The change in accounting policy will be effective
for the year ending June 2017 and will be applied retrospectively. This has
therefore resulted in a restatement of the comparative June 2016 and
December 2015 figures on the statement of financial position and statement
of comprehensive income. Refer to note 9 for further information and a
summary of the effect of this change in accounting policy.
DIRECTORATE AND ADMINISTRATION
Executive directors
PC Engelbrecht (CEO), CG Goosen (deputy managing director),
M Bosman, B Harisunker, EL Nel, BR Weyers
Non-executive directors
CH Wiese (chairman), JW Basson (vice chairman)
Independent non-executive directors
JF Basson, JJ Fouche, EC Kieswetter, JA Louw, ATM Mokgokong, JA Rock
Alternate non-executive directors
JD Wiese, JAL Basson
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, email: 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,
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 Services (Namibia) (Pty) Ltd, PO Box 25549,
Windhoek, Namibia
Telephone: +264 (0)61 299 3347, facsimile: +264 (0)61 299 3500,
email: NAM-OMInvestmentServices@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,
email: 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.com/za
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited
Unaudited and
and restated
Unaudited restated for the
6 months 6 months year
ended ended ended
% Dec '16 Dec '15 Jun '16
Notes change Rm Rm+ Rm+
Sale of merchandise 14.0 71 297 62 519 130 028
Cost of sales 13.8 (54 591) (47 987) (99 372)
GROSS PROFIT 15.0 16 706 14 532 30 656
Other operating income 1.6 1 207 1 188 2 444
Depreciation and amortisation 11.1 (1 077) (969) (2 025)
Operating leases 8.9 (1 876) (1 722) (3 486)
Employee benefits 14.7 (5 262) (4 587) (9 499)
Other operating expenses 12.2 (5 791) (5 163) (10 809)
TRADING PROFIT 19.2 3 907 3 279 7 281
Exchange rate (losses)/gains (188) 11 (46)
Items of a capital nature (57) 56 (11)
OPERATING PROFIT 9.4 3 662 3 346 7 224
Interest received 30.8 102 78 174
Finance costs (0.9) (232) (234) (498)
Share of loss of associates
and joint ventures (23) (5) (52)
PROFIT BEFORE INCOME TAX 10.2 3 509 3 185 6 848
Income tax expense 8.5 (1 068) (984) (1 998)
PROFIT FOR THE PERIOD 10.9 2 441 2 201 4 850
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX (724) 702 (579)
Items that will not be reclassified
to profit or loss
Re-measurements of post-employment
medical benefit obligations - - 1
Items that may subsequently be
reclassified to profit or loss
Foreign currency translation
differences (657) 729 (680)
Share of foreign currency translation
differences of associates and
joint ventures (60) (27) 76
For the period (60) 19 122
Reclassified to profit for the period - (46) (46)
(Losses)/gains on effective
cash flow hedge (7) - 24
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 1 717 2 903 4 271
PROFIT ATTRIBUTABLE TO: 2 441 2 201 4 850
Owners of the parent 2 438 2 198 4 844
Non-controlling interest 3 3 6
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 1 717 2 903 4 271
Owners of the parent 1 714 2 900 4 265
Non-controlling interest 3 3 6
Basic earnings per
share (cents) 5 10.6 455.0 411.5 906.0
Diluted earnings
per share (cents) 5 10.6 452.6 409.4 901.3
Basic headline earnings
per share (cents) 5 15.6 462.5 400.2 905.0
Diluted headline
earnings per share (cents) 5 15.5 460.0 398.2 900.3
+ The audited June 2016 and unaudited December 2015 figures have been
restated for the change in accounting policy.
These restatements have not been subject to an audit. Refer to note 9.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Audited
and and
Unaudited restated restated
Dec '16 Dec '15 Jun '16
Notes Rm Rm+ Rm+
ASSETS
NON-CURRENT ASSETS 21 899 20 032 20 185
Property, plant and equipment 17 553 16 958 16 908
Investment in associates and
joint ventures 30 20 95
Held-to-maturity investments 3 750 - -
Loans and receivables 651 675 599
Deferred income tax assets 737 643 698
Intangible assets 2 152 1 727 1 857
Fixed escalation operating
lease accruals 26 9 28
CURRENT ASSETS 32 609 31 226 27 799
Inventories 18 481 16 892 15 055
Trade and other receivables 6 070 5 976 5 544
Derivative financial instruments 12 8 -
Current income tax assets 113 16 146
Loans and receivables 347 80 270
Cash and cash equivalents 7 586 8 254 6 784
Assets held for sale 15 17 17
TOTAL ASSETS 54 523 51 275 48 001
EQUITY
CAPITAL AND RESERVES ATTRIBUTABLE
TO OWNERS OF THE PARENT
Share capital 1 652 650 650
Share premium 4 295 4 029 4 029
Treasury shares 1 (799) (767) (760)
Reserves 17 326 16 560 17 155
21 474 20 472 21 074
NON-CONTROLLING INTEREST 58 62 65
TOTAL EQUITY 21 532 20 534 21 139
LIABILITIES
NON-CURRENT LIABILITIES 1 485 5 754 1 492
Borrowings 2 - 4 375 102
Deferred income tax liabilities 141 174 128
Provisions 283 305 267
Fixed escalation operating
lease accruals 1 061 900 995
CURRENT LIABILITIES 31 506 24 987 25 370
Trade and other payables 22 407 22 996 16 590
Borrowings 2 6 632 636 5 022
Derivative financial instruments 44 2 32
Current income tax liabilities 708 1 070 574
Provisions 163 183 187
Bank overdrafts 1 552 100 2 965
TOTAL LIABILITIES 32 991 30 741 26 862
TOTAL EQUITY AND LIABILITIES 54 523 51 275 48 001
+ The audited June 2016 and unaudited December 2015 figures have been
restated for the change in accounting policy. These restatements have
not been subject to an audit. Refer to note 9.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Total controlling
Rm equity interest
UNAUDITED AND RESTATED 6 MONTHS
ENDED DECEMBER 2015
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED 19 160 68
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED 18 893 68
Total comprehensive income 2 903 3
Profit for the period - AS RESTATED 2 201 3
AS PREVIOUSLY STATED 2 227 3
Effect of adjusted treatment of
advertising rebates (note 9) (26)
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 20 534 62
AUDITED AND RESTATED
12 MONTHS ENDED JUNE 2016
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED 19 160 68
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED 18 893 68
Total comprehensive income 4 271 6
Profit for the period - AS RESTATED 4 850 6
AS PREVIOUSLY STATED 4 847 6
Effect of adjusted treatment of
advertising rebates (note 9) 3
Recognised in other comprehensive income
Re-measurements of post-employment
medical benefit obligations 1
Foreign currency translation differences (604)
Gains on effective cash flow hedge 33
Income tax effect of gains on effective
cash flow hedge (9)
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 140
Purchase of treasury shares (28)
Treasury shares disposed 9
Realisation of share-based
payment reserve -
Dividends distributed to shareholders (2 153) (9)
BALANCE AT JUNE 2016 21 139 65
UNAUDITED 6 MONTHS ENDED DECEMBER 2016
BALANCE AT JUNE 2016 21 139 65
Total comprehensive income 1 717 3
Profit for the period 2 441 3
Recognised in other comprehensive income
Foreign currency translation differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Modification of cash bonus arrangement
transferred from provisions 6
Share-based payments - value of
employee services 69
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve -
Ordinary shares issued on conversion of
convertible bonds 268
Equity component of convertible bonds
converted during the period transferred
to retained earnings -
Dividends distributed to shareholders (1 609) (10)
BALANCE AT DECEMBER 2016 21 532 58
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Share Share
Rm Total capital premium
UNAUDITED AND RESTATED 6 MONTHS
ENDED DECEMBER 2015
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED 19 092 650 4 029
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED 18 825 650 4 029
Total comprehensive income 2 900 - -
Profit for the period - AS RESTATED 2 198
AS PREVIOUSLY STATED 2 224
Effect of adjusted treatment of
advertising rebates (note 9) (26)
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 20 472 650 4 029
AUDITED AND RESTATED
12 MONTHS ENDED JUNE 2016
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED 19 092 650 4 029
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED 18 825 650 4 029
Total comprehensive income 4 265 - -
Profit for the period - AS RESTATED 4 844
AS PREVIOUSLY STATED 4 841
Effect of adjusted treatment of
advertising rebates (note 9) 3
Recognised in other comprehensive income
Re-measurements of post-employment
medical benefit obligations 1
Foreign currency translation differences (604)
Gains on effective cash flow hedge 33
Income tax effect of gains on effective
cash flow hedge (9)
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 140
Purchase of treasury shares (28)
Treasury shares disposed 9
Realisation of share-based
payment reserve -
Dividends distributed to shareholders (2 144)
BALANCE AT JUNE 2016 21 074 650 4 029
UNAUDITED 6 MONTHS ENDED DECEMBER 2016
BALANCE AT JUNE 2016 21 074 650 4 029
Total comprehensive income 1 714 - -
Profit for the period 2 438
Recognised in other comprehensive income
Foreign currency translation differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Modification of cash bonus arrangement
transferred from provisions 6
Share-based payments - value of
employee services 69
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve -
Ordinary shares issued on conversion of
convertible bonds 268 2 266
Equity component of convertible bonds
converted during the period transferred
to retained earnings -
Dividends distributed to shareholders (1 599)
BALANCE AT DECEMBER 2016 21 474 652 4 295
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Treasury Other Retained
Rm shares reserves earnings
UNAUDITED AND RESTATED 6 MONTHS
ENDED DECEMBER 2015
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED (759) 1 005 14 167
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED (759) 1 005 13 900
Total comprehensive income - 702 2 198
Profit for the period - AS RESTATED 2 198
AS PREVIOUSLY STATED 2 224
Effect of adjusted treatment of
advertising rebates (note 9) (26)
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 14 792
AUDITED AND RESTATED
12 MONTHS ENDED JUNE 2016
BALANCE AT JUNE 2015
AS PREVIOUSLY STATED (759) 1 005 14 167
Effect of adjusted treatment of
advertising rebates (note 9) (267)
AS RESTATED (759) 1 005 13 900
Total comprehensive income - (580) 4 845
Profit for the period - AS RESTATED 4 844
AS PREVIOUSLY STATED 4 841
Effect of adjusted treatment of
advertising rebates (note 9) 3
Recognised in other comprehensive income
Re-measurements of post-employment
medical benefit obligations 1
Foreign currency translation differences (604)
Gains on effective cash flow hedge 33
Income tax effect of gains on effective
cash flow hedge (9)
Modification of cash bonus arrangement
transferred from provisions 7
Share-based payments - value of
employee services 140
Purchase of treasury shares (28)
Treasury shares disposed 9
Realisation of share-based
payment reserve 18 (18)
Dividends distributed to shareholders (2 144)
BALANCE AT JUNE 2016 (760) 554 16 601
UNAUDITED 6 MONTHS ENDED DECEMBER 2016
BALANCE AT JUNE 2016 (760) 554 16 601
Total comprehensive income - (724) 2 438
Profit for the period 2 438
Recognised in other comprehensive income
Foreign currency translation differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Modification of cash bonus arrangement
transferred from provisions 6
Share-based payments - value of
employee services 69
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve 19 (19)
Ordinary shares issued on conversion of
convertible bonds
Equity component of convertible bonds
converted during the period transferred
to retained earnings (20) 20
Dividends distributed to shareholders (1 599)
BALANCE AT DECEMBER 2016 (799) (134) 17 460
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited
Unaudited and
and restated
Unaudited restated for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Notes Rm Rm+ Rm+
CASH FLOWS FROM OPERATING
ACTIVITIES 4 221 3 336 1 443
Operating profit 3 662 3 346 7 224
Less: investment income (83) (47) (111)
Non-cash items 6.1 1 602 1 181 2 681
Changes in working capital 6.2 1 651 1 141 (3 334)
Cash generated from operations 6 832 5 621 6 460
Interest received 170 114 258
Interest paid (228) (197) (426)
Dividends received 15 11 27
Dividends paid (1 607) (1 316) (2 152)
Income tax paid (961) (897) (2 724)
CASH FLOWS UTILISED BY INVESTING
ACTIVITIES (3 477) (2 461) (4 733)
Investment in property, plant and
equipment and intangible assets to
expand operations (2 011) (1 864) (3 304)
Investment in property, plant and
equipment and intangible assets
to maintain operations (572) (700) (1 448)
Proceeds on disposal of property,
plant and equipment and
intangible assets 5 55 85
Payments for held-to-maturity
investments (770) - -
Other investing activities (129) (149) (263)
Proceeds on disposal of investment
in associate - 197 197
CASH FLOWS FROM/(UTILISED BY)
FINANCING ACTIVITIES 1 731 (20) 10
Purchase of treasury shares (59) (28) (28)
Proceeds from treasury shares disposed 2 3 9
Redemption of Shoprite Holdings Ltd
preference share capital - - (2)
Increase in borrowing from ABSA Bank Ltd 1 399 - -
Increase in borrowing from Standard
Chartered Bank (Mauritius) Ltd 490 - 216
Decrease in borrowing from Standard
Bank de Angola, S.A. (115) - (201)
Increase in other borrowings 14 5 16
NET MOVEMENT IN CASH AND CASH
EQUIVALENTS 2 475 855 (3 280)
Cash and cash equivalents at
the beginning of the period 3 819 7 058 7 058
Effect of exchange rate movements
on cash and cash equivalents (260) 241 41
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD 6 034 8 154 3 819
Consisting of:
Cash and cash equivalents 7 586 8 254 6 784
Bank overdrafts (1 552) (100) (2 965)
6 034 8 154 3 819
+ The audited June 2016 and unaudited December 2015 figures have
been restated for the change in accounting policy. These restatements
have not been subject to an audit. Refer to note 9.
CONDENSED OPERATING SEGMENT INFORMATION
Analysis per reportable segment
Super- Super- Other
markets markets operating
RSA Non-RSA Furniture segments Consolidated
Rm Rm Rm Rm Rm
Unaudited December 2016
Sale of merchandise 53 648 12 889 2 961 4 570 74 068
External 50 894 12 877 2 961 4 565 71 297
Inter-segment 2 754 12 - 5 2 771
Trading profit 2 992 746 95 74 3 907
Depreciation
and amortisation* 921 227 50 22 1 220
Total assets 33 145 14 129 4 505 2 744 54 523
Unaudited and restated December 2015+
Sale of merchandise 47 826 9 743 2 692 4 154 64 415
External 45 960 9 735 2 692 4 132 62 519
Inter-segment 1 866 8 - 22 1 896
Trading profit 2 665 459 98 57 3 279
Depreciation
and amortisation* 849 187 43 19 1 098
Total assets 30 634 13 034 4 756 2 851 51 275
Audited and restated June 2016+
Sale of merchandise 98 103 22 263 5 207 8 436 134 009
External 94 167 22 246 5 207 8 408 130 028
Inter-segment 3 936 17 - 28 3 981
Trading profit 5 828 1 227 91 135 7 281
Depreciation
and amortisation* 1 737 413 96 42 2 288
Total assets 29 985 11 489 3 965 2 562 48 001
+ The audited June 2016 and unaudited December 2015 figures have been
restated for the change in accounting policy.
These restatements have not been subject to an audit. Refer to note 9.
* Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
Geographical analysis
Outside
South Africa South Africa Consolidated
Rm Rm Rm
Unaudited December 2016
Sale of merchandise - external 57 081 14 216 71 297
Non-current assets** 15 233 4 498 19 731
Unaudited December 2015
Sale of merchandise - external 51 717 10 802 62 519
Non-current assets** 13 619 5 075 18 694
Audited June 2016
Sale of merchandise - external 105 603 24 425 130 028
Non-current assets** 14 193 4 600 18 793
** 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 2016
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm Rm
1 SHARE CAPITAL AND TREASURY SHARES
1.1 Ordinary share capital
Authorised:
650 000 000 (Dec '15: 650 000 000;
Jun '16: 650 000 000) ordinary
shares of 113.4 cents each
Issued:
574 453 281 (Dec '15: 572 871 960;
Jun '16: 572 871 960) ordinary
shares of 113.4 cents each 651 650 650
Reconciliation of movement in number of ordinary shares issued:
Number of shares
Dec '16 Dec '15 Jun '16
Balance at the beginning
of the period 572 871 960 572 871 960 572 871 960
Shares issued during
the period 1 581 321 - -
Balance at the end of
the period 574 453 281 572 871 960 572 871 960
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 '16 Dec '15 Jun '16
Issued ordinary share capital 574 453 281 572 871 960 572 871 960
Treasury shares (note 1.3) (38 418 322) (38 289 473) (38 246 183)
536 034 959 534 582 487 534 625 777
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
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm Rm
1.2 Deferred share capital
Authorised:
360 000 000 (Dec '15: 360 000 000;
Jun '16: 360 000 000) non-convertible,
non-participating no par value
deferred shares
Issued:
292 598 241 (Dec '15: 291 792 794;
Jun '16: 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 '16 Dec '15 Jun '16
Balance at the beginning
of the period 291 792 794 291 792 794 291 792 794
Shares issued during the period 805 447 - -
Balance at the end of
the period 292 598 241 291 792 794 291 792 794
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
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.
651 650 650
1.3 Treasury shares
38 418 322 (Dec '15: 38 289 473;
Jun '16: 38 246 183) ordinary shares 799 767 760
Reconciliation of movement in number of treasury shares for the Group:
Number of shares
Dec '16 Dec '15 Jun '16
Balance at the beginning
of the period 38 246 183 38 221 703 38 221 703
Shares purchased during
the period 300 439 194 330 194 916
Shares utilised for settlement
of equity-settled share-based
payment arrangements (115 285) (111 065) (112 933)
Shares disposed during the period (13 015) (15 495) (57 503)
Balance at the end of
the period 38 418 322 38 289 473 38 246 183
Consisting of:
Shares owned by Shoprite
Checkers (Pty) Ltd 35 438 823 35 456 572 35 436 572
Shares held by Shoprite
Checkers (Pty) Ltd for the
benefit of participants to
equity-settled share-based
payment arrangements 2 979 499 2 832 901 2 809 611
38 418 322 38 289 473 38 246 183
Audited
Unaudited Unaudited for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm Rm
2 BORROWINGS
Consisting of:
Shoprite Holdings Ltd preference
share capital - 2 -
Convertible bonds (note 2.1) 4 446 4 582 4 655
ABSA Bank Ltd (note 2.2) 1 364 - -
Standard Chartered Bank
(Mauritius) Ltd (note 2.3) 682 - 222
Standard Bank de Angola, S.A. - 312 121
First National Bank of Namibia Ltd 112 96 105
Other borrowings 28 19 21
6 632 5 011 5 124
2.1 Convertible bonds
The Group has issued 6.5%
convertible bonds for a principal
amount of R4.7 billion
(Dec '15: R4.7 billion;
Jun '16: R4.7 billion). The
bonds mature on 3 April 2017
at their nominal value of
R4.7 billion (Dec '15:
R4.7 billion; Jun '16:
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 4 655 4 511 4 511
Ordinary shares issued on
conversion of convertible bonds (268) - -
Interest expense 202 223 449
Interest paid (143) (152) (305)
Liability component at the end
of the period 4 446 4 582 4 655
2.2 ABSA Bank Ltd
This loan is denominated in
US dollar, unsecured, payable
within 12 months and bears interest
at an average of 1.2% p.a.
2.3 Standard Chartered Bank
(Mauritius) Ltd
This loan is denominated in
US dollar, unsecured, payable
within 12 months and bears
interest at an average of 2.39%
(Dec '15: N/A; Jun '16: 2.65%) p.a.
3 HELD-TO-MATURITY INVESTMENTS
AOA, USD Index Linked,
Angola Government Bonds 750 - -
The AOA, USD Index Linked,
Angola Government Bonds earn
interest at an average rate of
7.0% p.a. and are repayable within
24 months. Accrued interest is
payable bi-annually. These bonds
are denominated in Angola kwanza
and no allowance for impairment
has been made. The maximum exposure
to credit risk at the reporting date
is the carrying value. The Group does
not hold any collateral as security.
4 FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of Angola Government Bonds included in held-to-maturity
investments amounted to R750.0 million (Dec '15: N/A; Jun '16: N/A) 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
7.0% (Dec '15: N/A; Jun '16: N/A) and is within level 2 of the fair
value hierarchy.
The fair value of amounts owing by employees included in loans and
receivables amounted to R220.8 million (Dec '15: R217.2 million;
Jun '16: R217.0 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 10.5% (Dec '15: 9.8%; Jun '16: 10.5%)
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 R4.5 billion (Dec '15:
R4.6 billion; Jun '16: R4.7 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 7.8% (Dec '15: 9.4%;
Jun '16: 9.5%) 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.
Audited
Unaudited and
and restated
Unaudited restated for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm+ Rm+
5 EARNINGS PER SHARE
Profit attributable to owners
of the parent 2 438 2 198 4 844
Re-measurements 57 (55) 13
Profit on disposal and
scrapping of property - - (1)
Loss on disposal and scrapping
of plant and equipment and
intangible assets 26 15 59
Reversal of impairment of
property, plant and equipment - - (16)
Impairment of intangible assets 32 - 66
Insurance claims receivable - - (25)
Profit on disposal of investment
in associate - (71) (71)
Profit on other investing activities (1) - (1)
Re-measurements included in
equity-accounted loss of associates
and joint ventures - 1 2
Income tax effect on re-measurements (17) (5) (19)
Headline earnings 2 478 2 138 4 838
Number of ordinary shares '000
- In issue 536 035 534 582 534 626
- Weighted average 535 753 534 664 534 636
- Weighted average adjusted
for dilution 538 585 537 428 537 423
Reconciliation of weighted
average number of ordinary
shares in issue during the period:
Weighted average number of
ordinary shares 535 753 534 664 534 636
Adjustments for dilutive
potential of full share grants 2 832 2 764 2 787
Weighted average number of
ordinary shares for diluted
earnings per share 538 585 537 428 537 423
Earnings per share Cents
- Basic earnings 455.0 411.5 906.0
- Diluted earnings 452.6 409.4 901.3
- Basic headline earnings 462.5 400.2 905.0
- Diluted headline earnings 460.0 398.2 900.3
+ The audited June 2016 and unaudited December 2015 figures have
been restated for the change in accounting policy. These
restatements have not been subject to an audit. Refer to note 9.
Audited
Unaudited and
and restated
Unaudited restated for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm+ Rm+
6 CASH FLOW INFORMATION
6.1 Non-cash items
Depreciation of property, plant
and equipment 1 065 955 1 993
Amortisation of intangible assets 155 143 295
Net fair value (gains)/losses on
financial instruments - (7) 30
Exchange rate losses/(gains) 188 (11) 46
Profit on disposal and scrapping
of property - - (1)
Loss on disposal and scrapping of
plant and equipment and intangible
assets 26 15 59
Reversal of impairment of property,
plant and equipment - - (16)
Impairment of intangible assets 32 - 66
Profit on disposal of investment
in associate - (71) (71)
Movement in provisions 5 29 5
Movement in cash-settled
share-based payment accrual (17) (23) (10)
Movement in share-based payment
reserve 69 72 140
Movement in fixed escalation
operating lease accruals 79 79 145
1 602 1 181 2 681
6.2 Changes in working capital
Inventories (3 802) (3 405) (1 998)
Trade and other receivables (641) (799) (588)
Trade and other payables 6 094 5 345 (748)
1 651 1 141 (3 334)
+ The audited June 2016 and unaudited December 2015 figures
have been restated for the change in accounting policy.
These restatements have not been subject to an audit.
Refer to note 9.
Audited
Unaudited and
and restated
Unaudited restated for the
6 months 6 months year
ended ended ended
Dec '16 Dec '15 Jun '16
Rm Rm+ Rm+
7 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.
8 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 933 1 252 1 682
Contingent liabilities 107 35 146
Net asset value per share (cents) 4 006 3 830 3 942
+ The audited June 2016 and unaudited December 2015 figures
have been restated for the change in accounting policy.
These restatements have not been subject to an audit.
Refer to note 9.
9 CHANGE IN ACCOUNTING POLICY
During the reporting period, the Group changed its accounting
policy with respect to the treatment of advertising rebates.
"IFRS 15: Revenue from contracts with customers" provides more
clarity on how the supplier should treat the payment of rebates
to its customers: "An entity shall account for consideration payable
to a customer as a reduction of the transaction price and, therefore,
of revenue unless the payment to the customer is in exchange for a
distinct good or service (as described in paragraphs 26 to 30) that
the customer transfers to the entity." (IFRS 15 par 70).
The Group's advertising rebates result from the process of negotiating
the best product price with the supplier and therefore the Group
does not provide distinct goods or services to its suppliers in
exchange for the rebates. It is our view that the rebates paid by
our suppliers would therefore be treated as a reduction of the
suppliers' revenue in terms of IFRS 15. We believe that there should
be symmetry in the accounting treatment of rebates by suppliers
and customers. Therefore if the supplier is treating the rebate as
a reduction of revenue, the Group, as the customer, should account
for rebates as a reduction in the purchase price of inventory,
which will result in a reduction of cost of sales when inventory is
sold.
The Group previously classified these rebates net of advertising
expenses with its other operating income in the statement of
comprehensive income. It was concluded that the Group's inventory
accounting policy should be changed as a result of the additional
guidance provided by IFRS 15 with regards to the accounting
treatment of our rebates. Further, in accordance with "IAS 8:
Accounting policies, changes in accounting estimates and errors",
it results in information that is more relevant to the financial
position and performance.
The change in accounting policy will be effective for the year
ending June 2017 and will be applied retrospectively. This has
therefore resulted in a restatement of the comparative 2016 and
2015 figures on the statement of financial position. The aggregate
effect of the changes in accounting policy on the annual financial
statements and interim results for these periods are as follows:
Unaudited
Unaudited for the
6 months year
ended ended
Dec '15 Jun '16
Increase/(decrease) Rm Rm
9.1 Impact on statement of comprehensive income
Sale of merchandise - -
Cost of sales (1 578) (3 420)
GROSS PROFIT 1 578 3 420
Other operating income (385) (1 267)
Other operating expenses 1 228 2 150
TRADING PROFIT (35) 3
Income tax expense (9) -
PROFIT FOR THE PERIOD (26) 3
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (26) 3
Basic earnings per share (cents) (4.8) 0.6
Diluted earnings per share (cents) (4.8) 0.6
Basic headline earnings per share (cents) (4.8) 0.6
Diluted headline earnings per share (cents) (4.8) 0.6
9.2 Impact on statement of financial position
Deferred income tax assets 108 99
Inventories (403) (365)
TOTAL ASSETS (295) (266)
Reserves (293) (264)
Deferred income tax liabilities (2) (2)
TOTAL EQUITY AND LIABILITIES (295) (266)
9.3 Impact on statement of cash flows
CASH FLOWS FROM OPERATING ACTIVITIES - -
Operating profit (35) 3
Changes in working capital 35 (3)
NET MOVEMENT IN CASH AND CASH EQUIVALENTS - -
Date: 21/02/2017 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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