Release Date: 18/07/2018 14:03
Code(s): SHP
Wrap Text
Operational update

(Incorporated in the Republic of South Africa)
Registration no. 1936/007721/06
ISIN: ZAE000012084
JSE share code: SHP
NSX share code: SRH
LuSE share code: SHOPRITE
(“The Group”)


In spite of difficult trading conditions, the Shoprite Group increased total turnover by 3.3% to
approximately R145.6 billion in the 12 months to June 2018. Excluding the impact of the
Angolan hyperinflation accounting adjustment, the Group’s turnover increased 3.6%.

The Group turnover growth in this operational update has been prepared taking into account
the effect of hyperinflation in Angola for the first time in accordance with IAS 29: Financial
Reporting in Hyperinflationary Economies, effective from 3 July 2017. The remaining
segmental financial information has been prepared excluding the impact of hyperinflation and
constitutes pro forma financial information to the extent that it is not extracted from the
segment disclosure which will be included in the audited consolidated financial statements for
the 12 months to June 2018.

Excluding the Angolan operation, the Shoprite Group managed to increase turnover by 5.5%
for the period. The Group’s internal inflation decreased from 7.3% in the previous year to only
0.5% for the current year.

The Group’s core business, Supermarkets RSA performed well, achieving 5.7% sales growth
for the year with internal inflation dropping to only 0.3% from 5.9% last year. Taking into
account internal inflation, the improved real turnover growth combined with positive volume
and customer growth reflects a strong underlying performance.

Supermarkets Non-RSA recorded negative turnover growth of 7.0% in Rand terms which
impacted overall Group sales performance. The slower Non-RSA sales is mainly attributed to
the normalised performance of the Angolan operation following the 65.9% compound growth
in turnover over the prior two years and the 50.2% devaluation of the Angolan Kwanza since
January 2018. Excluding Angola, Supermarkets Non-RSA managed to achieve a positive
sales growth of 3.0%. A significant drop off in Supermarkets Non-RSA internal inflation from
14.4% in the previous year to only 1.1% for the current year was also experienced.

The Group’s Furniture division increased sales by 9.9% for the period, while other operating
segments (OK Franchise, Medirite Pharmacy and Checkers Food Services) achieved growth
of 5.2%.

Despite the demanding trading environment, exasperated by the sharp decline in internal
inflation, the Group remains positive about its operational strength, customer support for its
brands and is making progress on its strategic priorities.

The above financial information is the responsibility of the directors of Shoprite Holdings Ltd
and has not been reviewed or reported on by the Shoprite Holdings’ auditors. The
hyperinflationary adjustment has been prepared for illustrative purposes only. The
consolidated financial results for the review period will be published on or about 20 August


Impact of Angola hyperinflation adjustment
The Group discloses the unaudited hyperinflation adjustment information in order to indicate
the effect of the restatement due to the change in the general price index of the
hyperinflationary economy. It will also facilitate comparisons against the prior period’s results
which were prepared before the Angolan economy was assessed to be hyperinflationary.
To present this information, the functional currency of Angola is adjusted to take into account
the value of money at the end of the reporting period.
The financial impact of hyperinflation on the current period’s turnover is shown below:

           Pro Forma               Reported                          Pro Forma                 Reported

           Change on      Change on        52 weeks to     Hyperinflation      52 weeks to   52 weeks to
        prior period   prior period        1 July 2018         adjustment      1 July 2018   2 July 2017
                   %              %                 Rm                 Rm               Rm            Rm

Total            3.6            3.3            145 648                435          146 083       141 000

Pieter Engelbrecht                       Anton de Bruyn
Chief executive officer                  Chief financial officer

Tel 021 980 4000

Date issued:                             18 July 2018

Sponsor:                                 Nedbank Corporate and Investment Banking

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