SHOPRITE HOLDINGS LIMITED - Results for the year ended 1 July 2018

Release Date: 21/08/2018 08:00
Code(s): SHP
 
Wrap Text
Results for the year ended 1 July 2018

SHOPRITE HOLDINGS LIMITED
(Reg. No. 1936/007721/06)
(ISIN: ZAE000012084)
(JSE Share code: SHP)
(NSX Share code: SRH)
(LuSE Share code: SHOPRITE)
("the Group")



SHOPRITE HOLDINGS: RESULTS FOR THE YEAR ENDED 1 JULY 2018



Key information

- Turnover increased by 3.1% to R145.3 billion.

- Diluted headline earnings per share of 968.7 cents, down by 3.8%.

- Trading profit decreased by 1.4% to R8.0 billion.

- EBITDA increased by 1.0% to R10.1 billion.

- Opened a net 124 corporate stores (2017: 109).

- Created 3 676 additional jobs.



Pieter Engelbrecht, chief executive officer:

In testing trading conditions, the Group managed to increase total turnover 

by 3.1% to R145.3 billion in the 12 months to 1 July 2018. Positive volume 

growth of 2.7% combined with a 3.3% increase in customer numbers as well as 

local market share gains continue to reflect a strong underlying 

performance.



Group turnover growth includes the effect of hyperinflation accounting in 

Angola for the first time in accordance with International Financial 

Reporting Standards. Excluding this adjustment, the Group's turnover 

increased by 3.6%. Group internal inflation dropped off significantly to 

only 0.5% from 7.3% in the previous year which dampened top line growth.



Trading profit was 1.4% lower at R8.0 billion, representing a still 

healthy trading margin of 5.5%.



Our core South African supermarket operations increased turnover by 5.7% 

despite experiencing overall deflation in selling prices for six out of 

twelve months during the year. Internal selling price inflation declined 

sharply from an average of 5.9% in the corresponding period to just 0.3% 

during the year under review, with 13 241 products in deflation at the end 

of June 2018. This is testimony to Shoprite's commitment for almost 40 years 

to put customers first by keeping prices low. The strong RSA performance 

amidst low inflation still resulted in a market share gain to 31.7% for

the period, propelled by Checkers' progress in its more sharpened focus 

on higher income customers.



Turnover of Supermarkets Non-RSA operations declined 7.0% after exceptional 

growth in the prior year and reflects slow economic recoveries and currency 

fluctuations in the major countries of operation.



We continue to invest in our people and products and secure growth 

opportunities in South Africa and beyond for the long-term growth of the 

business and in order to serve our customers, communities, suppliers and 

shareholders. Our ability to extract growth in trying circumstances 

validates the strength of our strategy which not only includes geographical 

diversification, but also the extraction of value across all operations and 

brands.



The Group continues to advance its primary purpose: to be Africa's most 

accessible and affordable food retailer. The Group opened a net 124 new 

corporate stores during the past 12 months and at year-end was trading from 

2 843 outlets, adding 3 676 additional jobs in the reporting period, to 

bring the total staff complement to 147 478.



20 August 2018





Enquiries:

Shoprite Holdings Limited Tel: 021 980 4000

Pieter Engelbrecht, chief executive officer

Anton de Bruyn, chief financial officer



Adele Lambrechts Tel: 021 980 4000



OPERATING ENVIRONMENT

The Group was resilient in the face of strong headwinds which gathered some 

momentum across South African and Non-RSA operations.



South Africa's gross domestic product grew 1.3% over 2017 and fell 2.2% in 

the first quarter of 2018, while unemployment remains high at 27.2%. These 

factors, coupled with an unprecedented VAT increase, record fuel prices, 

sugar tax to name a few, provided a challenging environment for the Group 

and put our customers under undue financial pressure.



Group internal inflation decreased from 7.3% in the previous year to only 

0.5% for the current year, ensuring we continue to provide the most 

affordable products to our customers, but putting pressure on revenue and 

operating profit as external cost inputs continued to increase at a quicker 

pace.



There were signs of increased political stability in a number of Non-RSA 

operations, which continued to experience lacklustre trading conditions and 

foreign exchange fluctuations.



COMMENTS ON THE RESULTS



Statement of Comprehensive Income



Total turnover

Total turnover for the Group increased by 3.1% for the 52 weeks to 1 July 

2018 from R141.0 billion to R145.3 billion. Excluding the impact of the 

Angolan hyperinflation accounting adjustment, the Group's turnover increased 

by 3.6% and like-for-like growth was -0.1%. Supermarkets RSA reported 

turnover growth of 5.7% and, on a like-for-like basis 1.9%, while 

Supermarkets Non-RSA recorded a decline in sales of 7.0% with a like-for-

like decline of 12.0%. The decline in Supermarkets Non-RSA sales are mainly 

due to the normalised performance of the Angolan Supermarkets operation 

following the 65.0% compound growth in turnover over the prior two years, 

the rapid decline in internal selling price inflation and the 50.2% 

devaluation of the Angola kwanza against the US dollar since December 2017. 

In constant currencies, Supermarkets Non-RSA sales increased by 1.2%.



The Group's Furniture division displayed an improved operating performance, 

growing sales by 9.8% for the period, while other operating segments (OK 

Franchise, Computicket, MediRite Pharmacy and Checkers Food Services) 

achieved turnover growth of 5.2%.



Expenses

Total expenses increased by 6.5%. Depreciation and amortisation as well as 

the increase in the cost of operating leases grew at a higher rate than 

turnover, mainly due to increased property taxes, new store openings and our 

continued refurbishment program of existing stores. During the 12-month 

reporting period a net 71 supermarkets and a net 50 LiquorShop outlets were 

opened.



Escalation in expenses such as electricity and other energy costs were 

mostly beyond the control of the Group due to electricity tariff increases 

being set by NERSA. The Group has however invested in power saving 

initiatives that will materialise benefits in the forthcoming financial 

year. The Private Security Industry Regulatory Authority (PSiRA) agreed on 

wage increases in the security industry with the resultant impact on the 

Group's security costs in South Africa. There was a marked increase in store 

robberies during the year which necessitated an increase in capital spend to 

implement additional measures to safeguard customers and staff.



Trading margin

The trading margin decreased from 5.8% to 5.5%. Despite the healthy margin 

levels, the reduction reflects investment in projects to future proof the 

Group as part of its store expansion program, enlargement of supply-chain 

infrastructure and the replacement of the information technology landscape. 

Near zero levels of internal inflation and the general slowdown in turnover 

in Supermarkets Non-RSA contributed to the lower margin.



Exchange rate losses

The Group recorded an exchange rate loss of R251 million for the financial 

year mainly due to the 50.2% currency devaluation in the Angola kwanza 

against the US dollar since December 2017. The hedging strategy followed by 

the Group to minimise the exchange rate losses in Angola were two fold with 

the purchase of US$ Index Linked Angola Government Bonds and Angola Treasury 

Bills. Investment income on the US$ Index Linked Angola Government Bonds and 

the Angola Treasury Bills amounted to R191 million and is reported as part 

of Other Operating Income.



Finance cost and interest received

Net interest expense, when compared to the corresponding period, increased 

due to additional funding required for capital projects and due to the 

forfeiture of the last interest payment of the convertible bonds in the 

prior year. Additional capital was required to fund expansion in 

Supermarkets Non-RSA.



Statement of Financial Position



Property, plant and equipment and intangible assets

The increase is due to the investment in a net 124 new corporate outlets 

which included more own stores built, vacant land purchased for strategic 

purposes and the investment in information technology to support inventory 

management. The Cilmor distribution centre is now fully operational.



Cash and cash equivalents and bank overdrafts

The increase in cash at the reporting date is mainly due to month end cut-

off for accounts payable. This was offset by the specific buy-back and 

cancellation of ordinary shares in the amount of R1.8 billion and a further 

increase in US$ Index Linked Angola Government Bonds and Angola Treasury 

Bills to the value of R2.4 billion to hedge against a possible further 

devaluation of the Angola kwanza.



Inventory

The 1% increase in inventory is a result of the Supermarkets Non-RSA 

operating segment reporting a marked decrease in inventory due to improved 

stock management. Provisioning of the net 124 new corporate outlets as well 

as the increased capacity created by the new Cilmor distribution centre in 

the Western Cape led to the overall increase in inventory levels.



Trade and other payables

Trade and other payables increased by 18.4% on the previous year due to 

month end cut-off reflected in cash and cash equivalent balances.



Borrowings

Total borrowings increased as offshore funding was secured to fund the 

Group's continued expansion drive outside South Africa. The Group is 

investigating various medium to longer term funding options to support 

future developments.



Pro Forma Information

Certain financial information presented in these annual financial results 

constitutes pro forma financial information. The pro forma financial 

information is the responsibility of the board of directors of the Company 

and is presented for illustrative purposes only. Because of its nature, the 

pro forma financial information may not fairly present the Group's financial 

position, changes in equity, results of operations or cash flows.



An assurance report (in terms of ISAE 3420: Assurance Engagements to Report 

on the Compilation of Pro Forma Financial Information) has been issued by 

the Group's auditors in respect of the pro forma financial information 

included in this announcement. The assurance report is available for 

inspection at the registered office of the Company.



Impact of the Group's pro forma constant currency disclosure

The Group discloses unaudited constant currency information to indicate the 

Group's Supermarkets Non-RSA operating segment performance in terms of sales 

growth, excluding the effect of foreign currency fluctuations. To present 

this information, current period turnover for entities reporting in 

currencies other than ZAR are converted from local currency actuals into ZAR 

at the prior year's actual average exchange rates on a country-by-country 

basis. In addition, in respect of Angola, the constant currency information 

has been prepared excluding the impact of hyperinflation. For the year ended 

1 July 2018, the economy of Angola was assessed to be hyperinflationary. 

Hyperinflation accounting was applied with effect from 3 July 2017.



The table below sets out the percentage change in turnover, based on the 

actual results for the financial year, in reported currency and constant 

currency for the following major currencies. The total impact on 

Supermarkets Non-RSA is also reflected after consolidating all currencies in 

this segment.



% Change in turnover on prior period 52 weeks        Reported      Constant

                                                     Currency      Currency

Angola kwanza                                           (26.1)         (9.3)

Nigeria naira                                            (1.9)          4.0

Zambia kwacha                                             3.1           8.8

Mozambique metical                                       21.9          12.3

Total Supermarkets Non-RSA                               (7.0)          1.2



Impact of Angola hyperinflation adjustment

For the year ended 1 July 2018, the economy of Angola was assessed to be 

hyperinflationary. As a result, the Group accounted for the results of its 

Angolan operations on a hyperinflationary basis in accordance with IAS 29: 

Financial Reporting in Hyperinflationary Economies (IAS 29) with effect from 

3 July 2017.



It is therefore useful and good governance to report pro forma information 

for the current year under review which excludes the impact of 

hyperinflation. It will also facilitate comparisons against the prior 

period's results which were prepared before the application of 

hyperinflation accounting.



The pro forma information was calculated through applying all the accounting 

policies adopted by the Group in the latest audited annual financial 

statements except for the hyperinflationary standard IAS 29.



The financial impact of hyperinflation on the current period's results is 

shown in the format of a pro forma statement of comprehensive income and a 

pro forma statement of financial position.



PRO FORMA STATEMENT OF COMPREHENSIVE INCOME



                         52 Weeks                    52 Weeks      52 Weeks

                        Including      52 Weeks     Excluding     Excluding

                           Hyper-        Hyper-        Hyper-        Hyper- 

                        inflation     inflation     inflation     inflation

                          Audited    Adjustment     Pro Forma       Audited

                             2018          2018          2018          2017

                               Rm            Rm            Rm            Rm



Sale of merchandise       145 306          (777)      146 083       141 000

Cost of sales            (110 580)          430      (111 010)     (107 174)

GROSS PROFIT               34 726          (347)       35 073        33 826

Other operating income      2 779           (39)        2 818         2 615

Depreciation and 

amortisation               (2 530)          (82)       (2 448)       (2 176)

Operating leases           (4 272)           (3)       (4 269)       (3 819)

Employee benefits         (10 851)           50       (10 901)      (10 498)

Other operating expenses  (12 494)           84       (12 578)      (11 821)

Net monetary gain             653           653             -             -

TRADING PROFIT              8 011           316         7 695         8 127

Exchange rate losses         (251)           39          (290)         (236)

Items of a capital nature    (246)            -          (246)         (166)

OPERATING PROFIT            7 514           355         7 159         7 725

Interest received             215             -           215           226

Finance costs                (422)           (1)         (421)         (340)

Share of profit of 

equity accounted investments   27             -            27             4

PROFIT BEFORE INCOME TAX    7 334           354         6 980         7 615

Income tax expense         (2 121)         (176)       (1 945)       (2 180)

PROFIT FOR THE YEAR         5 213           178         5 035         5 435



OTHER COMPREHENSIVE 

INCOME, NET OF INCOME TAX    (689)            -          (689)         (933)

Items that will not be 

reclassified to profit 

or loss

  Re-measurements of 

  post-employment medical 

  benefit obligations           2             -             2             3

Items that may subsequently 

be reclassified to profit 

or loss

  Foreign currency translation 

  differences including 

  hyperinflation effect      (678)            -          (678)         (822)

  Share of foreign currency 

  translation differences 

  of equity accounted 

  investments                  (2)            -            (2)         (103)



  Gains/(losses) on effective 

  cash flow hedge             (11)            -           (11)          (11)

    For the year                3             -             3           (11)

    Reclassified to profit 

    for the year              (14)            -           (14)            -



TOTAL COMPREHENSIVE 

INCOME FOR THE YEAR         4 524           178         4 346         4 502



PROFIT ATTRIBUTABLE TO:     5 213           178         5 035         5 435

  Owners of the parent      5 201           178         5 023         5 428

  Non-controlling interest     12             -            12             7



TOTAL COMPREHENSIVE INCOME 

ATTRIBUTABLE TO:            4 524           178         4 346         4 502

  Owners of the parent      4 512           178         4 334         4 495

  Non-controlling interest     12             -            12             7



Basic earnings per 

share (cents)               934.3          32.0         902.3         999.8

Diluted earnings per 

share (cents)               933.4          31.9         901.5         984.8

Basic headline earnings 

per share (cents)           969.6          32.2         937.4       1 023.2

Diluted headline earnings 

per share (cents)           968.7          32.1         936.6       1 007.4



PRO FORMA STATEMENT OF FINANCIAL POSITION



                        Including                   Excluding     Excluding

                           Hyper-        Hyper-        Hyper-        Hyper-

                        inflation     inflation     inflation     inflation

                          Audited    Adjustment     Pro Forma       Audited

                             2018          2018          2018          2017

                               Rm            Rm            Rm            Rm



ASSETS

NON-CURRENT ASSETS         29 352         2 253        27 099        24 572

Property, plant 

and equipment              21 218         2 140        19 078        18 407

Equity accounted 

investments                     -             -             -            27

Held-to-maturity 

investments                 2 090             -         2 090         1 311

Loans and receivables       1 318             -         1 318         1 110

Deferred income tax assets    876          (359)        1 235           859

Intangible assets           2 994             1         2 993         2 355

Trade and other receivables   856           471           385           503



CURRENT ASSETS             32 306            50        32 256        31 032

Inventories                17 959            60        17 899        17 794

Trade and other 

receivables                 4 931           (10)        4 941         5 105

Derivative financial 

instruments                     -             -             -             1

Current income tax assets     120             -           120           154

Held-to-maturity 

investments                 1 600             -         1 600             -

Loans and receivables         231             -           231           211

Cash and cash equivalents   7 465             -         7 465         7 767



ASSETS HELD FOR SALE          184             -           184           119



TOTAL ASSETS               61 842         2 303        59 539        55 723



EQUITY

CAPITAL AND RESERVES 

ATTRIBUTABLE TO OWNERS 

OF THE PARENT

Share capital                   -             -             -           681

Share premium                   -             -             -         8 585

Stated capital              7 516             -         7 516             -

Treasury shares              (554)            -          (554)         (446)

Reserves                   20 424         1 692        18 732        18 838

                           27 386         1 692        25 694        27 658

NON-CONTROLLING INTEREST       91             -            91            91

TOTAL EQUITY               27 477         1 692        25 785        27 749



LIABILITIES

NON-CURRENT LIABILITIES     3 567           611         2 956         1 492

Borrowings                  1 371             -         1 371             -

Deferred income tax 

liabilities                   697           611            86            96

Provisions                    264             -           264           232

Fixed escalation operating 

lease accruals              1 235             -         1 235         1 164



CURRENT LIABILITIES        30 798             -        30 798        26 482

Trade and other payables   20 621             -        20 621        17 414

Borrowings                  5 606             -         5 606         3 274

Current income tax 

liabilities                   481             -           481           582

Provisions                     95             -            95           154

Bank overdrafts             3 995             -         3 995         5 058



TOTAL LIABILITIES          34 365           611        33 754        27 974



TOTAL EQUITY AND 

LIABILITIES                61 842         2 303        59 539        55 723



Like-for-like comparisons

Like-for-like sales is a measure of the growth in the Group's year-on-year 

sales, removing the impact of new store openings and closures in the current 

or previous reporting periods. In addition, in respect of Angola, the like-

for-like sales have been prepared excluding the impact of hyperinflation.



References were made to the following subtotals of sale of merchandise



                                       52 weeks                    52 weeks

                         52 weeks            to      52 weeks            to

           Change in           to   1 July 2018            to   2 July 2017

            Like-for  1 July 2018     Like-for-   2 July 2017     Like-for-

               -like      Audited          like       Audited          like

                   %           Rm            Rm            Rm            Rm

Total           (0.1)     146 083       137 159       141 000       137 259

Supermarkets RSA 1.9      107 547       102 619       101 734       100 699

Supermarkets 

Non-RSA        (12.0)      23 106        21 496        24 840        24 439



NUMBER OF OUTLETS 1 JULY 2018



                                      12 MONTHS                   CONFIRMED

                                                                 NEW STORES

                2017       OPENED        CLOSED          2018          2019

SUPERMARKETS   1 226           82            11         1 297            88

SHOPRITE         614           29             4           639            46

CHECKERS         209           13             1           221            11

CHECKERS HYPER    37            0             0            37             0

USAVE            366           40             6           400            31



LIQUORSHOP       390           52             2           440            17



HUNGRY LION*     197           12             5           204             3



FURNITURE        488           20            24           484             7

OK FURNITURE     436           18            24           430             6

HOUSE & HOME      52            2             0            54             1



OK FRANCHISE     388           57            27           418            17



TOTAL STORES   2 689          223            69         2 843           132



COUNTRIES 

OUTSIDE RSA       14            0             0            14             1

TOTAL STORES 

OUTSIDE RSA      437           45             7           475            30



These numbers exclude the MediRite pharmacies as they are located within 

stores.



* The 204 Hungry Lion outlets include 151 which were sold on 1 July 2018

  when the Group disposed of its interest in Hungry Lion Fast Foods 

  (Pty) Ltd.



OPERATIONAL REVIEW



Supermarkets RSA

The core South African Supermarket operation, trading through 1 610 outlets 

and representing 74.0% of total sales, did well in an extremely tough 

environment, increasing sales by 5.7% and trading profit by 1.8%.



Taking into account the low levels of internal inflation, which dropped to 

only 0.3% from 5.9% last year, the improved pace on real turnover growth 

combined with positive volume and customer growth reflects a strong 

performance.



The South African operations continue to experience positive customer growth 

in terms of number of customers and number of customer trips to stores. We 

are also selling more products, with a 3% increase in units sold, a positive 

increase somewhat masked by the effect of deflation and cost pressures.



A total of 13 241 of our products were selling at lower prices than last 

year, easing the burden on our customers but putting some pressure on the 

Shoprite operation in particular. Integrated planning, strict cost 

disciplines and an extensive and sophisticated supply-line infrastructure 

have helped the Group to successfully manage the effect of deflation and the 

poor economy, although the sales increase at Shoprite was limited to 4.3% - 

a creditable performance given the circumstances.



The Group's strategy to capture a greater proportion of the higher LSM 

consumer segments' grocery expenditure has seen Checkers, excluding the 

larger format Hyper stores, increase sales by 8.2%.



Checkers' revamped stores and fresh and convenience offerings have been well 

received by customers, and our higher LSM shoppers are spending more and 

shopping with increased frequency.



Checkers has converted 13 stores to the new look FreshX concept, 

accelerating market share gains in the affluent market segment. The Group 

aims to revamp at least a third of its Checkers stores to the new look in 

the medium term.



Innovation, improved customer service and increases in convenience and fresh 

ranges have been significant draw-cards for Checkers, which continues to 

lead the Group's gain in market share.



The Shoprite brand, with its focus on middle and lower-income consumers, 

continued to subsidise basic food prices to assist the most vulnerable. 

Notwithstanding its shopper base being the hardest hit by prevailing 

economic conditions, Shoprite grew sales by 4.3% (2017: 6.0%) to 

R54.2 billion.



The Group's small format, hard discounter Usaves offering the lowest 

possible prices on a limited assortment, continued to perform well with a 

7.5% increase in turnover, despite deflation in most of its major product 

categories. A net 33 new Usave stores were opened in the year as reach was 

extended to consumers in traditionally underserved areas.



The Group's LiquorShop stores in South Africa recorded a strong performance, 

with a 20.6% increase in sales and new store expansion which met our 

aspirations with a new store opening almost every week of the year.



The implementation of our new SAP ERP system, the biggest IT project ever 

embarked upon by the Group, has almost been completed which will see all 

stores and distribution centres in all countries on one common technology 

platform. The herculean effort to deploy such a significant change to our 

technology platform was not without growing pains, however it will enable 

better inventory accuracy and improved efficiencies whilst addressing 

scalability.



Supermarkets Non-RSA

Trading in 14 countries in the rest of Africa and Indian Ocean Islands, the 

Group's Supermarkets Non-RSA operating segment produced disappointing 

results in line with those reported at the interim stage, mainly driven by 

the Angolan operation that faced many headwinds.



Supermarkets Non-RSA recorded a 7.0% decrease in turnover in rand terms 

which impacted overall Group sales performance. The slower Supermarkets Non-

RSA sales are mainly attributed to the normalised performance of the Angolan 

Supermarkets operation, the Group's biggest operation outside South Africa, 

following the 65.0% compound growth in turnover over the prior two years and 

the 50.2% devaluation of the Angola kwanza against the US dollar since 

December 2017.



Trading in Nigeria continues to be hampered by foreign exchange 

fluctuations, although Nigerian stores are showing growth in local currency, 

albeit at reduced margins.



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 imminent expansion into Kenya provides an exciting opportunity 

and reflects its ongoing commitment to the African continent, where it 

has a significant competitive advantage.



Furniture

The Group's Furniture division's ongoing refinement continued to bear fruit 

and it achieved a pleasing 9.8% increase in sales and profit growth in 

excess of 100% for the period.



This was achieved despite credit sales participation dropping by almost a 

third to 14.7% (2017: 20.8%) of total sales and only a marginal increase in 

product inflation.



Sales growth in its 396 South African stores was 9.5% up, while its 88 

stores outside South Africa increased sales by 11.0% on the back of improved 

distribution and merchandising decisions. Angola recorded a particularly 

strong performance where the OK Furniture brand is establishing strong 

customer loyalty.



The division's enhanced integration into the wider Shoprite Group has been 

particularly beneficial outside South Africa, with it benefitting from 

opening stores in Shoprite shopping centres.



The division opened 20 new stores, but it is a net four stores lighter than 

the previous year as unprofitable stores were closed.



Other Operating Segments

Other operating segments, which include OK Franchise, Computicket, MediRite 

Pharmacy and Checkers Food Services achieved turnover growth of 5.2%.



The OK Franchise division recorded a net gain of 30 new members as its

restructuring continued to enhance the OK brand among customers as well as

potential and existing franchisees.



The Group has seen a strong uptake of its extended number of private label 

products and general merchandise ranges available to franchisees.



GROUP PROSPECTS AND OUTLOOK

Our key indicators remain strong. We remain robust and profitable and 

continue to attract more customers and win market share.



We made a deliberate decision in the face of many headwinds to maintain 

investment in our people and in new stores for the sustainable long-term 

health of the business, the benefits of which will be realised in the 

future.



Sales in the Non-RSA business will remain under pressure as we expect 

continued currency weakness and foreign exchange shortages. Operations in 

the rest of Africa remain a substantial contributor to the Group and on its 

own stands tall relative to various local peers.



The Group has entrenched its position as the continent's leading retailer 

and is well positioned to capitalise on any economic improvements following 

its continued investment into a more accessible store footprint, superior 

brands and its focus on six strategic drivers of growth. Significant 

progress has been made on all of these drivers, which include a customer 

first culture, increasing share of the more affluent LSM 8 - 10 market, 

developing private label, building a stronger franchise offering, strategic 

footprint expansion and ultimately leveraging our African first mover 

advantage.



DIVIDEND NO 139

The board has declared a final dividend of 279 cents (2017: 324 cents) per 

ordinary share, payable to shareholders on Monday, 10 September 2018. The 

dividend has been declared out of income reserves. This brings the total 

dividend for the year to 484 cents (2017: 504 cents) per ordinary share. The 

last day to trade cum dividend will be Tuesday, 4 September 2018. As from 

Wednesday, 5 September 2018, all trading of Shoprite Holdings Ltd shares 

will take place ex dividend. The record date is Friday, 7 September 2018. 

Share certificates may not be dematerialised or rematerialised between 

Wednesday, 5 September 2018, and Friday, 7 September 2018, both days 

inclusive.



In terms of the Dividends Tax, the following additional information is 

disclosed:

1. The local dividend tax rate is 20%.

2. The net local dividend amount is 223.20 cents per share for shareholders

   liable to pay Dividends Tax and 279 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 591 338 502 ordinary shares.

4. Shoprite Holdings Ltd's tax reference number is 9775/112/71/8.



DIRECTORATE AND ADMINISTRATION



Executive directors

PC Engelbrecht (CEO), A de Bruyn (CFO), B Harisunker



Non-executive directors

CH Wiese (chairman), CG Goosen



Independent non-executive directors

JF Basson, JJ Fouche, EC Kieswetter, JA Louw, ATM Mokgokong, JA Rock



Alternate non-executive director

JD Wiese



Company secretary

PG du Preez



Registered office

Cnr William Dabbs 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



SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME



                                                      Audited       Audited

                                                     52 weeks      52 weeks

                                              %          2018          2017

                                 Notes   change            Rm            Rm

Sale of merchandise                         3.1       145 306       141 000

Cost of sales                               3.2      (110 580)     (107 174)

GROSS PROFIT                                2.7        34 726        33 826

Other operating income                      6.3         2 779         2 615

Depreciation and amortisation              16.3        (2 530)       (2 176)

Operating leases                           11.9        (4 272)       (3 819)

Employee benefits                           3.4       (10 851)      (10 498)

Other operating expenses                    5.7       (12 494)      (11 821)

Net monetary gain                                         653             -

TRADING PROFIT                             (1.4)        8 011         8 127

Exchange rate losses                                     (251)         (236)

Items of a capital nature                                (246)         (166)

OPERATING PROFIT                           (2.7)        7 514         7 725

Interest received                          (4.9)          215           226

Finance costs                              24.1          (422)         (340)

Share of profit of equity 

accounted investments                                      27             4

PROFIT BEFORE INCOME TAX                   (3.7)        7 334         7 615

Income tax expense                         (2.7)       (2 121)       (2 180)

PROFIT FOR THE YEAR                        (4.1)        5 213         5 435



OTHER COMPREHENSIVE INCOME, 

NET OF INCOME TAX                                        (689)         (933)

Items that will not be 

reclassified to profit or loss

  Re-measurements of 

  post-employment medical 

  benefit obligations                                       2             3

Items that may subsequently be 

reclassified to profit or loss

  Foreign currency translation 

  differences including 

  hyperinflation effect                                  (678)         (822)

  Share of foreign currency 

  translation differences of 

  equity accounted investments                             (2)         (103)

  Gains/(losses) on effective 

  cash flow hedge                                         (11)          (11)

    For the year                                            3           (11)

    Reclassified to profit for the year                   (14)            -



TOTAL COMPREHENSIVE INCOME FOR THE YEAR                 4 524         4 502



PROFIT ATTRIBUTABLE TO:                                 5 213         5 435

  Owners of the parent                                  5 201         5 428

  Non-controlling interest                                 12             7



TOTAL COMPREHENSIVE INCOME 

ATTRIBUTABLE TO:                                        4 524         4 502

  Owners of the parent                                  4 512         4 495

  Non-controlling interest                                 12             7



Basic earnings per share (cents)     9     (6.6)        934.3         999.8

Diluted earnings per share (cents)   9     (5.2)        933.4         984.8

Basic headline earnings per 

share (cents)                        9     (5.2)        969.6       1 023.2

Diluted headline earnings 

per share (cents)                    9     (3.8)        968.7       1 007.4



SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION



                                                      Audited       Audited

                                                         2018          2017

                                          Notes            Rm            Rm

ASSETS

NON-CURRENT ASSETS                                     29 352        24 572

Property, plant and equipment                 3        21 218        18 407

Equity accounted investments                                -            27

Held-to-maturity investments                  4         2 090         1 311

Loans and receivables                         5         1 318         1 110

Deferred income tax assets                                876           859

Intangible assets                                       2 994         2 355

Trade and other receivables                               856           503



CURRENT ASSETS                                         32 306        31 032

Inventories                                            17 959        17 794

Trade and other receivables                             4 931         5 105

Derivative financial instruments                            -             1

Current income tax assets                                 120           154

Held-to-maturity investments                  4         1 600             -

Loans and receivables                         5           231           211

Cash and cash equivalents                               7 465         7 767



ASSETS HELD FOR SALE                                      184           119



TOTAL ASSETS                                           61 842        55 723



EQUITY

CAPITAL AND RESERVES ATTRIBUTABLE TO 

OWNERS OF THE PARENT

Share capital                                 6             -           681

Share premium                                               -         8 585

Stated capital                                6         7 516             -

Treasury shares                               6          (554)         (446)

Reserves                                               20 424        18 838

                                                       27 386        27 658

NON-CONTROLLING INTEREST                                   91            91

TOTAL EQUITY                                           27 477        27 749



LIABILITIES

NON-CURRENT LIABILITIES                                 3 567         1 492

Borrowings                                    7         1 371             -

Deferred income tax liabilities                           697            96

Provisions                                                264           232

Fixed escalation operating lease accruals               1 235         1 164



CURRENT LIABILITIES                                    30 798        26 482

Trade and other payables                               20 621        17 414

Borrowings                                    7         5 606         3 274

Current income tax liabilities                            481           582

Provisions                                                 95           154

Bank overdrafts                                         3 995         5 058



TOTAL LIABILITIES                                      34 365        27 974



TOTAL EQUITY AND LIABILITIES                           61 842        55 723





SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



                                                                       Non-

                                                        Total   controlling

Rm                                                     equity      interest



BALANCE AT 3 JULY 2016                                 21 139            65



Total comprehensive income                              4 502             7

Profit for the year                                     5 435             7

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                                         4 

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                                        (1)

Foreign currency 

translation differences                                  (925)

Losses on effective 

cash flow hedge                                           (15)

Income tax effect of 

losses on effective 

cash flow hedge                                             4 



Share-based payments - 

value of employee services                                139 

Modification of cash 

bonus arrangement 

transferred from 

provisions                                                  6 

Purchase of treasury shares                               (59)

Treasury shares disposed                                    2 

Realisation of share-based 

payment reserve                                             - 

Ordinary shares issued on 

conversion of convertible 

bonds                                                   4 587 

Equity component of 

convertible bonds 

converted during the 

period transferred to 

retained earnings                                           - 

Non-controlling interest 

on acquisition of subsidiary                                2             2

Non-controlling interest 

on disposal of subsidiary                                  27            27

Dividends distributed to 

shareholders                                           (2 596)          (10)

BALANCE AT 2 JULY 2017                                 27 749            91



Total comprehensive income                              4 524            12

Profit for the year                                     5 213            12

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                                         3 

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                                        (1)

Foreign currency translation 

differences including 

hyperinflation effect                                     177 

Income tax on foreign 

currency translation 

differences including 

hyperinflation effect                                    (857)

Gains on effective cash 

flow hedge                                                (15)

Income tax effect of gains 

on effective cash flow hedge                                4 



Cash flow hedging reserve 

transferred to receivables                                 (3)

Income tax effect of cash 

flow hedging reserve 

transferred to receivables                                  1 

Share-based payments - value 

of employee services                                       64 

Modification of cash bonus 

arrangement transferred 

from provisions                                             9 

Buy-back and cancellation 

of ordinary shares                                     (1 750)

Purchase of treasury shares                              (142)

Treasury shares disposed                                    6 

Realisation of share-based 

payment reserve                                             - 

Conversion to stated 

capital                                                     - 

Transfer from capital 

redemption reserve                                          - 

Dividends distributed 

to shareholders                                        (2 981)          (12)

BALANCE AT 1 JULY 2018                                 27 477            91



SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)



                                   Attributable to owners of the parent

                                                        Share         Share

Rm                                        Total       capital       premium

BALANCE AT 3 JULY 2016                   21 074           650         4 029



Total comprehensive income                4 495             -             -

Profit for the year                       5 428 

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                           4 

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                          (1)

Foreign currency 

translation differences                    (925)

Losses on effective 

cash flow hedge                             (15)

Income tax effect of 

losses on effective 

cash flow hedge                               4 



Share-based payments - 

value of employee services                  139 

Modification of cash 

bonus arrangement 

transferred from 

provisions                                    6 

Purchase of treasury shares                 (59)

Treasury shares disposed                      2 

Realisation of share-based 

payment reserve                               - 

Ordinary shares issued on 

conversion of convertible 

bonds                                     4 587            31         4 556

Equity component of 

convertible bonds 

converted during the 

period transferred to 

retained earnings                             - 

Non-controlling interest  

on acquisition of subsidiary                  - 

Non-controlling interest 

on disposal of subsidiary                     - 

Dividends distributed to 

shareholders                             (2 586)

BALANCE AT 2 JULY 2017                   27 658           681         8 585



Total comprehensive income                4 512             -             -

Profit for the year                       5 201 

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                           3 

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                          (1)

Foreign currency translation 

differences including 

hyperinflation effect                       177 

Income tax on foreign 

currency translation 

differences including 

hyperinflation effect                      (857)

Gains on effective cash 

flow hedge                                  (15)

Income tax effect of gains 

on effective cash flow hedge                  4 



Cash flow hedging reserve 

transferred to receivables                   (3)

Income tax effect of cash 

flow hedging reserve 

transferred to receivables                    1 

Share-based payments - value 

of employee services                         64 

Modification of cash bonus 

arrangement transferred 

from provisions                               9 

Buy-back and cancellation 

of ordinary shares                       (1 750)          (10)       (1 740)

Purchase of treasury shares                (142)

Treasury shares disposed                      6 

Realisation of share-based 

payment reserve                               - 

Conversion to stated 

capital                                       -          (671)       (6 845)

Transfer from capital 

redemption reserve                            - 

Dividends distributed 

to shareholders                          (2 969)

BALANCE AT 1 JULY 2018                   27 386             -             -



SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)



                                   Attributable to owners of the parent

                            Stated     Treasury         Other      Retained

Rm                         capital       shares      reserves      earnings



BALANCE AT 3 JULY 2016           -         (760)          554        16 601



Total comprehensive income       -            -          (936)        5 431

Profit for the year                                                   5 428

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                                                       4

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                                                      (1)

Foreign currency 

translation differences                                  (925)

Losses on effective 

cash flow hedge                                           (15)

Income tax effect of 

losses on effective 

cash flow hedge                                             4 



Share-based payments - 

value of employee services                                139 

Modification of cash 

bonus arrangement 

transferred from 

provisions                                                  6 

Purchase of treasury shares                 (59)

Treasury shares disposed                      2 

Realisation of share-based 

payment reserve                             371          (371)

Ordinary shares issued on 

conversion of convertible 

bonds                                          

Equity component of 

convertible bonds 

converted during the 

period transferred to 

retained earnings                                        (361)          361

Non-controlling interest on 

acquisition of subsidiary

Non-controlling interest 

on disposal of subsidiary

Dividends distributed to 

shareholders                                                         (2 586)

BALANCE AT 2 JULY 2017           -         (446)         (969)       19 807



Total comprehensive income       -            -          (691)        5 203

Profit for the year                                                   5 201

Recognised in other 

comprehensive income

Re-measurements of 

post-employment medical 

benefit obligations                                                       3

Income tax effect of 

re-measurements of 

post-employment medical 

benefit obligations                                                      (1)

Foreign currency translation 

differences including 

hyperinflation effect                                     177 

Income tax on foreign 

currency translation 

differences including 

hyperinflation effect                                    (857)

Gains on effective cash 

flow hedge                                                (15)

Income tax effect of gains 

on effective cash flow hedge                                4 



Cash flow hedging reserve 

transferred to receivables                                 (3)

Income tax effect of cash 

flow hedging reserve 

transferred to receivables                                  1 

Share-based payments - value 

of employee services                                       64 

Modification of cash bonus 

arrangement transferred 

from provisions                                             9 

Buy-back and cancellation 

of ordinary shares

Purchase of treasury shares                (142)

Treasury shares disposed                      5                           1

Realisation of share-based 

payment reserve                              29           (29)

Conversion to stated 

capital                      7 516 

Transfer from capital 

redemption reserve                                         (2)            2

Dividends distributed 

to shareholders                                                      (2 969)

BALANCE AT 1 JULY 2018       7 516         (554)       (1 620)       22 044



SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS



                                                      Audited       Audited

                                                   year ended    year ended

                                                         2018          2017

                                          Notes            Rm            Rm

CASH FLOWS FROM OPERATING ACTIVITIES                    7 418         3 339

Operating profit                                        7 514         7 725

Less: investment income                                  (344)         (189)

Non-cash items                             10.1         2 919         3 089

Changes in working capital                 10.2         2 686        (2 278)

Cash generated from operations                         12 775         8 347

Interest received                                         493           399

Interest paid                                            (555)         (416)

Dividends received                                         49            16

Dividends paid                                         (2 980)       (2 595)

Income tax paid                                        (2 364)       (2 412)



CASH FLOWS UTILISED BY INVESTING ACTIVITIES            (7 355)       (6 985)

Investment in property, plant and equipment 

and intangible assets to expand operations             (3 720)       (3 836)

Investment in property, plant and equipment 

and intangible assets to maintain operations           (1 616)       (1 331)

Proceeds on disposal of property, plant and 

equipment and intangible assets                           132            40

Proceeds on disposal of assets held for sale              121             -

Payments for held-to-maturity investments              (2 401)       (1 370)

Proceeds from held-to-maturity investments                490             -

Amounts paid to Resilient Africa (Pty) Ltd                 (7)         (612)

Amounts received from Resilient Africa (Pty) Ltd            -           136

Amounts paid to RMB Westport Osapa                       (182)            -

Amounts repaid by employees                               102           123

Other investing activities                                (99)         (125)

Investment in joint venture                              (150)            -

Cash outflow on disposal of investment 

in subsidiary                                               -            (9)

Acquisition of subsidiaries and operations                (25)           (1)



CASH FLOWS FROM FINANCING ACTIVITIES                    1 426         2 826

Purchase of treasury shares                              (142)          (59)

Proceeds from treasury shares disposed                      6             4

Buy-back and cancellation of ordinary shares           (1 750)            -

Convertible bonds settled at maturity date                  -          (108)

Repayment of borrowings                                (7 895)         (111)

Increase in borrowings                                 11 207         3 100



NET MOVEMENT IN CASH AND CASH EQUIVALENTS               1 489          (820)

Cash and cash equivalents at the beginning 

of the year                                             2 709         3 819

Effect of exchange rate movements and 

hyperinflation on cash and cash equivalents              (728)         (290)

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR        3 470         2 709



Consisting of:

Cash and cash equivalents                               7 465         7 767

Bank overdrafts                                        (3 995)       (5 058)

                                                        3 470         2 709



SELECTED EXPLANATORY NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL RESULTS



1     BASIS OF PREPARATION

      The Group reports on the retail calendar of trading weeks which treats

      each financial year as an exact 52-week period, incorporating trade

      from Monday to Sunday each week. This treatment effectively results 

      in the loss of a day (or two in a leap year) per calendar year. These

      days are brought to account approximately every six years by including

      a 53rd week. Accordingly the results for the financial year under

      review are for a 52-week period, ended 1 July 2018, compared to 52

      weeks in the previous financial year.



      These summarised consolidated financial results are prepared in

      accordance with the requirements of the JSE Limited Listings

      Requirements for preliminary reports and the requirements of the

      Companies Act applicable to summary financial statements. The Listings

      Requirements require preliminary reports to be prepared in accordance

      with the framework concepts and the measurement and recognition

      requirements of International Financial Reporting Standards (IFRS),

      the SAICA Financial Reporting Guides as issued by the Accounting

      Practices Committee and Financial Pronouncements as issued by the

      Financial Reporting Standards Council and to also, as a minimum,

      contain the information required by IAS 34: Interim Financial

      Reporting.



      The accounting policies applied in the preparation of the consolidated

      annual financial statements from which the summarised consolidated

      financial results were derived are in terms of International Financial

      Reporting Standards and are consistent with those accounting policies

      applied in the preparation of the previous consolidated annual

      financial statements, except as set out below. Various new and revised

      accounting standards became effective during the year, but their

      implementation had no significant impact on the results of either the

      current or the previous year.



      The preparation of these summarised consolidated financial results for

      the year ended 1 July 2018 have been supervised by Mr A de Bruyn,

      CA(SA), and have been audited by PricewaterhouseCoopers Inc., who

      expressed an unmodified opinion thereon. The auditor also expressed

      an unmodified opinion on the consolidated annual financial statements

      from which these summarised consolidated financial results were

      derived. Copies of the auditor's reports on both the consolidated

      annual financial statements and the summarised consolidated financial

      results are available for inspection at the Company's registered

      office. The auditor's report does not necessarily report on all of

      the information contained in this announcement. Shareholders are

      therefore advised that in order to obtain a full understanding of the

      nature of the auditor's engagement they should obtain a copy of the

      auditor's report together with the accompanying financial information

      from the registered office of the Company. The consolidated annual

      financial statements, together with the integrated annual report, will

      be available on www.shopriteholdings.co.za by 30 September 2018.



      IAS 29: Financial reporting in hyperinflationary economies

      During the reporting period, the Group classified the economy of 

      Angola as hyperinflationary, effective from 3 July 2017. Accordingly,

      the results and the financial position, including comparative amounts,

      of the Group's Angolan subsidiaries have been expressed in terms of

      the measuring unit current at the reporting date, as required by IAS

      29. The carrying amounts of non-monetary assets and liabilities are

      adjusted to reflect the change in the general price index from the

      date of acquisition to the end of the reporting period. Gains or

      losses on the net monetary position are recognised in profit or loss.

      All items recognised in the statement of comprehensive income are

      restated by applying the change in the general price index from the

      dates when the items of income and expenses were initially earned or

      incurred while all items in the statement of cash flows are expressed

      in terms of the general price index at the end of the reporting

      period. At the beginning of the first period of application, the

      components of owners' equity, except retained earnings, are restated

      by applying a general price index from the dates the components were

      contributed or otherwise arose. These restatements are recognised in

      other comprehensive income. Restated retained earnings at the

      beginning of the first period of application are derived from all

      other amounts in the restated statement of financial position. As the

      presentation currency of the Group is that of a non-hyperinflationary

      economy, comparative amounts of the Group are not adjusted for changes

      in the price level or exchange rates in the current year.



2     SUMMARISED OPERATING SEGMENT INFORMATION

2.1   Analysis per reportable segment



                                             Audited 2018

                                   Supermarkets  Supermarkets

                                            RSA       Non-RSA     Furniture

                                             Rm            Rm            Rm

      Sale of merchandise               112 383        23 163         5 967 

        External                        107 547        23 106         5 967 

        Inter-segment                     4 836            57             - 

      Trading profit                      6 539           650           256 

      Interest income included in 

      trading profit                         59           245           355 

      Depreciation and amortisation*      2 201           455           105 

      Total assets                       35 008        17 259         4 199



                                             Audited 2018

                               Other      Total        Hyper-

                           operating  operating     inflation

                            segments   segments        effect  Consolidated

                                  Rm         Rm            Rm            Rm

      Sale of merchandise      9 464    150 977          (777)      150 200 

        External               9 463    146 083          (777)      145 306 

        Inter-segment              1      4 894             -         4 894 

      Trading profit             250      7 695           316         8 011 

      Interest income 

      included in trading 

      profit                      34        693           (29)          664 

      Depreciation and 

      amortisation*               41      2 802            80         2 882 

      Total assets             3 073     59 539         2 303        61 842



                                             Audited 2017

                                   Supermarkets  Supermarkets

                                            RSA       Non-RSA     Furniture

                                             Rm            Rm            Rm

      Sale of merchandise               107 001        24 867         5 432 

        External                        101 734        24 840         5 432 

        Inter-segment                     5 267            27             - 

      Trading profit                      6 424         1 407           123 

      Interest income included in 

      trading profit                         70            78           314 

      Depreciation and amortisation*      1 884           421           108 

      Total assets                       32 535        16 407         4 180 

 

                                             Audited 2017

                               Other      Total        Hyper-

                           operating  operating     inflation

                            segments   segments        effect  Consolidated

                                  Rm         Rm            Rm            Rm

      Sale of merchandise      9 000    146 300             -       146 300 

        External               8 994    141 000             -       141 000 

        Inter-segment              6      5 300             -         5 300 

      Trading profit             173      8 127             -         8 127 

      Interest income 

      included in trading 

      profit                      36        498             -           498 

      Depreciation and 

      amortisation*               44      2 457             -         2 457 

      Total assets             2 601     55 723             -        55 723 



2.2  Geographical analysis

                                             Audited 2018 

                             Outside      Total        Hyper-

                     South     South  operating     inflation

                    Africa    Africa   segments        effect  Consolidated

                        Rm        Rm         Rm            Rm            Rm

      Sale of 

      merchandise - 

      external     120 216    25 867    146 083          (777)      145 306 

      Non-current 

      assets**      17 567     4 889     22 456         2 612        25 068 



                                             Audited 2017 

                             Outside      Total        Hyper-

                     South     South  operating     inflation

                    Africa    Africa   segments        effect  Consolidated

                        Rm        Rm         Rm            Rm            Rm

      Sale of 

      merchandise - 

      external     113 660    27 340    141 000             -       141 000 

      Non-current 

      assets**      16 101     5 164     21 265             -        21 265



      *  Represent gross depreciation and amortisation before appropriate

         allocations of distribution cost.

      ** Non-current assets consist of property, plant and equipment,

         intangible assets and non-financial trade and other receivables.



                                                      Audited       Audited

                                                         2018          2017

                                                           Rm            Rm

3     PROPERTY, PLANT AND EQUIPMENT

      Carrying value at the beginning of the year      18 407        16 908

      Additions                                         4 411         4 347

      Borrowing costs capitalised                           -            44

      Transfer to assets held for sale                   (140)         (119)

      Acquisition of subsidiary                             -            33

      Disposal                                           (212)         (106)

      Depreciation                                     (2 518)       (2 146)

      Impairment                                          (55)          (19)

      Reversal of impairment                                6             -

      Foreign currency translation differences 

      including hyperinflation effect                   1 319          (535)

      Carrying value at the end of the year            21 218        18 407



4     HELD-TO-MATURITY INVESTMENTS

      AOA, USD Index Linked, Angola Government 

      Bonds (note 4.1)                                  3 008         1 311

      Angola Treasury Bills (note 4.2)                    682            -

                                                        3 690         1 311



      Analysis of total held-to-maturity investments:

      Non-current                                       2 090         1 311

      Current                                           1 600             -

                                                        3 690         1 311



4.1   AOA, USD Index Linked, Angola Government Bonds

      The AOA, USD Index Linked, Angola Government

      Bonds are denominated in Angola kwanza, earn

      interest at an average rate of 7.0% (2017: 7.0%)

      p.a. and mature after a period of 2 to 3 years.

      Accrued interest is payable bi-annually.



      The maximum exposure to credit risk at

      the reporting date is the carrying value.

      None of the AOA, USD Index Linked, 

      Angola Government Bonds are either past

      due or impaired. The Group does not hold any

      collateral as security.



4.2   Angola Treasury Bills

      The Angola Treasury Bills are denominated

      in Angola kwanza, earn interest at an

      average rate of 22.8% (2017: N/A) p.a.

      and mature within 12 months. Accrued

      interest is payable at maturity.



      The maximum exposure to credit risk

      at the reporting date is the

      carrying value. None of the Angola

      Treasury Bills are either past

      due or impaired. The Group does not hold

      any collateral as security.



5     LOANS AND RECEIVABLES

      Amounts owing by associate (note 5.1)               990           953

      Amounts owing by employees                            -           102

      Amounts owing by franchisees                        334           266

      Amounts owing by RMB Westport Osapa                 195             -

      Other                                                30             -

                                                        1 549         1 321



      Analysis of total loans and receivables:

      Non-current                                       1 318         1 110

      Current                                             231           211

                                                        1 549         1 321



5.1   Amounts owing by associate                          990           953

      ZAR denominated amounts owing by Resilient 

      Africa (Pty) Ltd (note 5.1.1)                       373           367

      USD denominated amounts owing by Resilient 

      Africa (Pty) Ltd (note 5.1.2)                       617           586



5.1.1 The ZAR denominated shareholder loan

      earns interest at an average rate of

      6.6% (2017: 6.6%) p.a. and is repayable

      on demand, subject to certain conditions.



      The maximum exposure to credit risk at

      the reporting date is the carrying value.

      An impairment allowance of R60 million

      (2017: R26 million) was recognised for

      the shareholder loan. The Group does

      not hold any collateral as security for

      this amount.



5.1.2 The US dollar denominated amount earns

      interest at an average rate of 3.0%

      (2017: 3.0%) p.a. and is repayable after

      seven years, subject to certain conditions.



      The maximum exposure to credit risk at

      the reporting date is the carrying value.

      No allowance for impairment has been made.

      The Group manages its credit risk by

      holding share pledges and cession agreements

      in the underlying subsidiaries of

      Resilient Africa (Pty) Ltd as collateral

      for this amount.



6     SHARE CAPITAL AND TREASURY SHARES

6.1   Stated capital

      Conversion of share capital                         671             -

      Conversion of share premium                       6 845             -

                                                        7 516             -



      The Company converted its par value

      ordinary shares of 113.4 cents each

      to no par value ordinary shares and

      increased the number of authorised no

      par value ordinary shares from 650 000 000

      to 1 300 000 000 during the year under review.



6.2   Ordinary share capital

      Authorised:

      1 300 000 000 no par value ordinary shares

      (2017: 650 000 000 ordinary shares of

      113.4 cents each)



      Issued:

      591 338 502 no par value ordinary

      shares (2017: 600 021 829 ordinary

      shares of 113.4 cents each)                           -           681



      Reconciliation of movement in number

      of ordinary shares issued:

                             Number of shares

                            2018           2017

      Balance at the 

      beginning of 

      the year       600 021 829    572 871 960 

      Shares issued 

      during the year          -     27 149 869 

      Buy-back and 

      cancellation 

      of ordinary 

      shares          (8 683 327)             - 

      Balance at 

      the end 

      of the year    591 338 502    600 021 829 



      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

                            2018           2017

      Issued ordinary 

      share capital  591 338 502    600 021 829 

      Treasury shares 

      (note 6.4)     (36 659 642)   (36 166 544)

                     554 678 860    563 855 285 



      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.



6.3   Deferred share capital

      Authorised:

      720 000 000 (2017: 360 000 000) 

      non-convertible, non-participating,

      non-transferable no par value deferred shares



      Issued:

      305 621 601 (2017: 305 621 601)

      non-convertible, non-participating,

      non-transferable no par value

      deferred shares                                       -             -



      Reconciliation of movement in number

      of deferred shares issued:

                             Number of shares

                            2018           2017

      Balance at the

      beginning of the

      year           305 621 601    291 792 794 

      Shares issued

      during the year          -     13 828 807 

      Balance at the

      end of the 

      year           305 621 601    305 621 601 



      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.



6.4   Treasury shares

      36 659 642 (2017: 36 166 544)

      ordinary shares                                     554           446



      Reconciliation of movement in number of

      treasury shares for the Group:

                             Number of shares

                            2018           2017

      Balance at

      the beginning

      of the year     36 166 544     38 246 183 

      Shares purchased

      during the year    689 219        300 439 

      Shares disposed

      during the year    (25 342)       (19 259)

      Shares utilised

      for settlement of

      equity-settled

      share-based payment

      arrangements      (170 779)    (2 360 819)

      Balance at the end

      of the year     36 659 642     36 166 544 





      Consisting of:

      Shares owned by

      Shoprite Checkers

      (Pty) Ltd       35 436 572     35 436 572 

      Shares held by

      Shoprite Checkers

      (Pty) Ltd for the

      benefit of

      participants to

      equity-settled

      share-based payment

      arrangements     1 223 070        729 972 

                      36 659 642     36 166 544 



7     BORROWINGS

      Consisting of:

      ABSA Bank Ltd (note 7.1)                              -         1 304

      Barclays Bank Mauritius Ltd (note 7.2)            1 359         1 173

      Standard Chartered Bank (Mauritius)

      Ltd (note 7.3)                                    1 371           652

      Standard Finance (Isle of Man) Ltd (note 7.4)     4 113             -

      First National Bank of Namibia Ltd                  134           134

      The Standard Bank of South Africa Ltd                 -            11

                                                        6 977         3 274



      Analysis of total borrowings:

      Non-current                                       1 371             -

      Current                                           5 606         3 274

                                                        6 977         3 274



7.1   ABSA Bank Ltd

      This loan was denominated in US dollar,

      unsecured, repaid during the period and

      carried interest at an average of 2.46% 

      (2017: 1.82%) p.a.



7.2   Barclays Bank Mauritius Ltd

      This loan is denominated in US dollar,

      unsecured, payable within 12 months and

      bears interest at an average of 2.51% 

      (2017: 2.16%) p.a.



7.3   Standard Chartered Bank (Mauritius) Ltd

      This loan is denominated in US dollar,

      unsecured, payable within 12 months and

      bears interest at an average of 2.69%

      (2017: 2.47%) p.a.



7.4   Standard Finance (Isle of Man) Ltd

      This loan is denominated in US dollar

      and unsecured. R1.37 billion is payable

      after 36 months and bears interest at

      a fixed rate of 3.49% p.a. The remaining

      balance is payable within 12 months and

      bears interest at an average of 2.76% p.a.



8     FAIR VALUE DISCLOSURES

      The Group has a number of financial

      instruments which are not measured at

      fair value in the statement of financial

      position. For the majority of these

      instruments, the fair values are not

      materially different to their carrying

      amounts, since the interest receivable/payable

      is either close to current market rates

      or the instruments are short-term in

      nature. Significant differences were

      identified for the following instruments

      at the end of the reporting period:



                                 Carrying amount             Fair value

                                  2018     2017          2018          2017

                                    Rm       Rm            Rm            Rm

      Held-to-maturity 

      investments                3 690    1 311         3 681         1 311

      Loans and receivables      1 549    1 321         1 418         1 321

      Borrowings                 6 977    3 274         6 892         3 274



                                                      Audited       Audited

                                                         2018          2017

                                                           Rm            Rm

9     EARNINGS PER SHARE

      Profit attributable to owners of the parent       5 201         5 428

      Re-measurements                                     246           167

      Profit on disposal of assets held for sale          (20)            -

      Loss on disposal and scrapping of plant 

      and equipment and intangible assets                 108            79

      Impairment of property, plant and equipment          49            19

      Impairment of intangible assets                      51            70

      Insurance claims receivable                           -            (5)

      Loss on disposal of investment in joint venture      80             -

      (Profit)/loss on other investing activities         (22)            3

      Re-measurements included in share of loss of 

      equity-accounted investments                          -             1

      Income tax effect on re-measurements                (49)          (41)

      Headline earnings                                 5 398         5 554



      Profit attributable to owners of the parent:

      Used in calculating basic earnings per share      5 201         5 428

      Add: Interest savings on convertible bonds            -           135

      Used in calculating diluted earnings per share    5 201         5 563



      Headline earnings                                 5 398         5 554

      Add: Interest savings on convertible bonds            -           135

      Used in calculating diluted headline earnings 

      per share                                         5 398         5 689



      Number of ordinary shares                          '000          '000

      - In issue                                      554 679       563 855

      - Weighted average                              556 643       542 927

      - Weighted average adjusted for dilution        557 172       564 814



      Reconciliation of weighted average number

      of ordinary shares in issue during the year:

      Weighted average number of ordinary shares      556 643       542 927

      Adjustments for dilutive potential of

      full share grants and convertible bonds             529        21 887

      Weighted average number of ordinary shares

      for diluted earnings per share                  557 172       564 814



      Earnings per share                                Cents         Cents

      - Basic earnings                                  934.3         999.8

      - Diluted earnings                                933.4         984.8

      - Basic headline earnings                         969.6       1 023.2

      - Diluted headline earnings                       968.7       1 007.4



                                                      Audited       Audited

                                                         2018          2017

                                                           Rm            Rm

10    CASH FLOW INFORMATION

10.1  Non-cash items

      Depreciation of property, plant and equipment     2 518         2 146

      Amortisation of intangible assets                   364           311

      Net fair value gains on financial instruments         2           (33)

      Net monetary gain                                  (653)            -

      Exchange rate losses                                251           236

      Profit on disposal of assets held for sale          (20)            -

      Loss on disposal and scrapping of plant and

      equipment and intangible assets                     108            79

      Impairment of property, plant and equipment          49            19

      Impairment of intangible assets                      51            70

      Loss on disposal of investment in joint venture      80             -

      Movement in provisions                              (15)          (52)

      Movement in cash-settled share-based payment 

      accrual                                              21            11

      Movement in share-based payment reserve              64           139

      Movement in fixed escalation operating 

      lease accruals                                       99           163

                                                        2 919         3 089



10.2  Changes in working capital

      Inventories                                        (880)       (3 237)

      Trade and other receivables                         (14)         (164)

      Trade and other payables                          3 580         1 123

                                                        2 686        (2 278)



11    RELATED PARTY INFORMATION

      During the year under review, in the

      ordinary course of business, certain companies

      within the Group entered into transactions

      with each other. All these intergroup

      transactions are similar to those in the

      prior year and have been eliminated in the

      annual financial statements on consolidation.

      Related party transactions also include

      key management personnel compensation and

      loans to associates and joint ventures.

      For further information, refer to the

      audited annual financial statements.



      In the prior year, Dr Basson notified the

      Company of the excercise of his put option.

      This specific repurchase of 8 683 327

      Shoprite Holdings Ltd shares at R201.07

      per share was approved by shareholders at

      an extraordinary general meeting held on

      5 September 2017, where after the shares

      were repurchased by the Company and

      cancelled with effect from 15 September 2017.



12    SUPPLEMENTARY INFORMATION

      Net asset value per share (cents)                 4 937         4 905

      Contracted capital commitments                    1 621         1 807

      Contingent liabilities                              356            85



      Contingent liabilities consist mainly

      of outstanding legal matters including

      a judgment in Nigeria that has gone on

      appeal as well as possible tax exposures

      that the Group has submitted objections to.


Date: 21/08/2018 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story