Wrap Text
Unaudited results for the 26 weeks ended 30 December 2018
SHOPRITE HOLDINGS LIMITED
(Reg. No. 1936/007721/06)
(ISIN: ZAE 000012084)
(JSE Share code: SHP)
(NSX Share code: SRH)
(LuSE Share code: SHOPRITE)
("the Group")
Key information
- Sale of merchandise increased by 0.2% to R75.8 billion.
- Trading profit decreased by 19.0% to R3.3 billion.
- EBITDA decreased by 12.2% to R4.7 billion.
- Diluted headline earnings per share of 398.5 cents, down by 24.1%.
- Dividend per share of 156 cents declared (2017: 205 cents).
- Opened a net 86 corporate stores during the 12 months (2017: 121).
- Created 1 758 additional jobs during the six months.
Pieter Engelbrecht, chief executive officer:
2018 has been a transformational year for the Group, which remains Africa's
largest and most profitable retailer. Our first half performance is below
expectations, but not a reflection of the fundamental strength of the
business. The results for the six months were affected by an overlapping of
multiple factors disrupting the trading environment.
These include factors in our external operating environment, where economic
conditions have left our core customer under significant financial pressure
and in which significant currency devaluations severely impacted the
performance in the Non-RSA operations.
At the same time, we have dealt with many internal challenges, investment
expenses and operational issues relating to the implementation of strategic
decisions including the roll out of the new SAP ERP system. The IT
replatforming was an absolute imperative and represents the culmination of
four years of planning, and it will ultimately improve our global
competitiveness.
In addition to a weak economy, 2018 saw a convergence of four main
disruptive factors:
- The dramatic devaluation in the Angola kwanza by 85.1% against the
dollar since January 2018.
- The supply chain disruption caused by the Centurion Distribution Centre
(DC) industrial action in May and June which lasted longer than
anticipated.
- Supply issues coincided with more than half of the business going live
on the IT system in the six months and adversely impacted product
availability for customers.
- RSA internal inflation remains low at only 0.4% marking the longest
period of stagnant inflation in a decade. In December customers still
benefitted from 10 719 items in selling price deflation.
Other environmental issues also affected demand from price-sensitive
customers, namely: the listeriosis crisis affecting processed meat sales,
SA's first VAT hike in 25 years and the new Sugar Tax.
Product availability has improved but a lot of work still needs to be done
and remains our number one priority in the short term. We have continued to
invest in the business through the cycle in new store rollouts and the
digital transformation of the Group.
Despite the tougher set of results, we served a record number of customers
and sold record product volumes, up 1.7% and 0.2% respectively, whilst
supermarket space growth was 1.9%. Strategic decisions to invest in
convenience foods, our fresh offer, private label and our liquor footprint
also continue to bear fruit.
The positive sales trend emerging in the festive season has continued in
January and February alongside improving product availability.
25 February 2019
Enquiries:
Shoprite Holdings Limited Tel: +27 (0)21 980 4000
Pieter Engelbrecht, chief executive officer
Anton de Bruyn, chief financial officer
Adele Lambrechts Tel: +27 (0)21 980 4000
COMMENTS ON THE RESULTS
Diluted headline earnings per share
The decline in diluted headline earnings per share of 24.1% is mainly
attributable to:
Underperformance of the Non-RSA operations
The Supermarkets Non-RSA segment reported a trading loss of R61.8 million
versus a trading profit of R552.7 million in the corresponding period.
The decline is mainly attributed to the unprecedented 85.1% currency
devaluation (against the USD since January 2018) in Angola. As a result,
gross margin was under pressure with the inability to pass on cost inflation
to consumers in the selling prices of goods. The Angolan economy remains in
recession, adversely affecting consumption expenditure in the country, with
mostly our price sensitive customers being unable to maintain spending
levels.
Accounting for Angola hyperinflation
For the six months to December 2018, the economy of Angola was again
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. The comparative interim results were not restated.
A summary of the primary adjustments as a result are as follows:
- A decrease in gross profit: R10 million
- An increase in depreciation: R49 million
- A net monetary gain: R439 million
Impact of changing from retail method of accounting ("RMA") to moving
average cost ("MAC")
A R95.2 million adjustment as a result of the transition from RMA to MAC
reduced the gross margin. All stores and DC's are now operating on the basis
of MAC.
Centurion DC industrial action impact and supply chain disruptions
All stores are now live on the new SAP ERP system. The industrial action at
the Centurion DC in May and June 2018, together with the SAP cutover that
followed in August 2018 in the Gauteng region, meant that we were unable to
adequately meet store demand which affected product availability for
consumers in the largest portion of our RSA business. Estimated lost store
sales resulting from stock issues exceeded R1 billion in the period.
Temporarily switching many suppliers to direct store deliveries during large
promotions adversely affected distribution fee income. On-shelf product
availability is much improved since October 2018 but more work remains to be
done.
Statement of Comprehensive Income
Sale of merchandise
Total sales for the Group increased by 0.2% for the 26 weeks to 30 December
2018 from R75.7 billion to R75.8 billion. Like-for-like sales declined by
2.7%. Supermarkets RSA reported sales growth of 2.6% which, on a like-for-
like basis, declined by 0.5% while Supermarkets Non-RSA recorded a decline
in sales of 13.3% with a like-for-like decline of 16.5%. In constant
currencies Supermarkets Non-RSA grew 0.05%.
The Group's Furniture division increased sales by 4.3% for the period, while
other operating segments (OK Franchise, Computicket, MediRite Pharmacy and
Checkers Food Services) achieved turnover growth of 6.5%.
Expenses
Total expenses increased by 5.6%.
Depreciation and amortisation grew at a higher rate than the sale of
merchandise, mainly due to new store openings, our continued store
refurbishment programme as well as the depreciation impact of hyperinflation
(R49 million). During the six month reporting period a net 55 new corporate
stores were opened (excluding the Hungry Lion stores held for sale and sold
during the preceding 12 months).
The 7.4% increase in operating lease expenses is due to the increase in rent
paid and rates and taxes. The rent paid on existing stores in Supermarkets
RSA increased in line with CPI. Currency devaluations in various Non-RSA
countries had a negative impact on USD leases in Supermarkets Non-RSA.
Cost of employment rose by 6.2% and includes the agreed upon increase as
part of the new two-year wage negotiations settlement. Escalation in
expenses, such as water and electricity of 6.1%, were largely beyond the
control of the Group due to electricity tariff increases being set by NERSA.
Trading margin
The trading margin, at 4.4%, is lower than the corresponding period's 5.4%
on the back of a decrease in gross margin from 23.8% to 23.1% and expense
growth of 5.6%. The 4.4% trading margin achieved by the Group remains
competitive relative to its local and international peer group.
Exchange rate losses
The Group recorded an exchange rate loss of R3.4 million for the reporting
period mainly due to the currency devaluation in the Angola kwanza and
Zambia kwacha since June 2018. The hedging strategy followed by the Group to
minimise the exchange rate losses in Angola comprised of the purchase of USD
Index Linked Government Bonds and Treasury Bills. Interest earned on these
instruments amounted to R177.8 million and is reported as part of other
operating income.
Finance cost and interest received
Net finance costs increased as a result of an additional R2.5 billion in net
borrowings due to funding required for capital projects and expansion of
Supermarkets Non-RSA. The devaluation of the rand against the USD had a
negative impact on finance costs payable on offshore USD medium-term
borrowings.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in a net 86 new corporate outlets
during the past 12 months, which included more own stores built, vacant land
purchased for strategic purposes and distribution centres. The investment in
information technology remains high and the Group plans to continue
investing in the medium term given the demands of modern retailing. The
Group has also started a process of selling non-strategic properties that
will reflect in the results for the 12 months to June 2019.
Cash and cash equivalents and bank overdrafts
The main increase in cash at reporting date is due to month-end cut-off for
accounts payable as well as the increase in long-term borrowings. This was
offset by the investment in capital expenditure and investment in USD Index
Linked Angola Government Bonds to hedge against possible further devaluation
of the Angola kwanza. During the period under review the Angolan operations
managed to repatriate USD67 million which had a positive impact on the cash
flow of the Group.
Inventory
Inventory decreased by 0.3% to R21.7 billion. Supermarkets RSA, including
the distribution centres, increased inventory by R800 million to
R15.6 billion due to the provisioning of new corporate outlets as well
as the increased capacity created by the new Cilmor food distribution
centre in the Western Cape. The Supermarkets Non-RSA division reported
a decrease in inventory as a result of the translation from local
currency to rand due to the currency devaluation in Angola and Nigeria
and overall improved stock management.
Trade and other payables
Trade and other payables increased by 2.6% on the previous year due to
month-end cut-off of trade accounts payable as reflected in the increase in
net cash and cash equivalents.
Borrowings
Total borrowings increased by R4.4 billion to R10 billion as a result of an
increase in offshore funding together with R2 billion medium-term funding
secured in RSA. The Group is in the process of finalising medium-term local
funding in Kenya and Zambia that will replace and reduce the reliance on USD
funding.
GROUP PROSPECTS AND OUTLOOK
The new ERP system deployment is complete as of January 2019 after a
herculean effort by the Shoprite team. The next phase will focus on refining
and then mastering the new system that will ultimately provide us with
smarter pricing, inventory management and profitability management at item
level.
Since January 2019, an improved sales trend is evident. Various events in
the second half of the previous financial year such as listeriosis, labour
disruptions, a VAT hike and the Sugar Tax mean the next six months has a
less demanding growth base than the preceding half. The new national minimum
wage implemented in RSA from 2019 is expected to provide some additional
sales impetus. Economic tailwinds remain limited and the impact of load-
shedding and political uncertainty ahead of the May 8th election make sales
predictions difficult. On-shelf availability remains our highest priority
and with the improved results, barring unforeseen external events, we are
optimistic that the current sales momentum is sustainable.
We anticipate rising selling price inflation in the RSA business towards
June, with inflation in key commodity categories such as maize, sugar and
chicken expected. There are 36 new supermarket and liquor outlet openings
planned for the six months ending June 2019. Our main priority is retaining
customer trust.
The performance of Supermarkets Non-RSA is dependent on foreign currency
availability in Angola and Nigeria together with stable currencies. The
Angola kwanza has shown more stability since the start of January. There are
seven new supermarket and liquor outlet openings planned for Non-RSA for the
six months ending June 2019.
Despite recent improvements following the decline in the interim diluted
headline earnings per share, it is unlikely that the Group will be able to
report full year growth on the previous year.
The Group expects to issue an operational update for the year ending June
2019 before the end of July 2019. The full year results will be available on
or about 20 August 2019.
PRO FORMA FINANCIAL INFORMATION
Certain financial information presented in these condensed consolidated
interim results for the 26 weeks ended 30 December 2018 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. The pro forma financial
information has neither been reviewed nor been reported on by the Group's
external auditors.
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 26 weeks 26 weeks
following Change 26 weeks to 26 weeks to
subtotals in to 30 Dec 2018 to 31 Dec 2017
of sale of Like- 30 Dec 2018 Like- 31 Dec 2017 Like-
merchandise for-like Unaudited for-like Unaudited for-like
% Rm Rm Rm Rm
Total (2.7) 75 867 72 587 75 704 74 597
Supermarkets
RSA (0.5) 56 138 54 051 54 729 54 297
Supermarkets
Non-RSA (16.5) 11 122 10 511 12 824 12 586
Impact of Angola hyperinflation adjustment
For the period ended 30 December 2018, the economy of Angola was assessed to
remain 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.
It is therefore useful and good governance to report pro forma information
for the period 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 unaudited condensed consolidated
interim results 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
Restated*
26 Weeks 26 Weeks 26 Weeks
Including 26 Weeks Excluding Excluding
Hyper- Hyper- Hyper- Hyper-
inflation inflation inflation inflation
Unaudited Adjustment Pro Forma Unaudited
30 Dec 18 30 Dec 18 30 Dec 18 31 Dec 17
Rm Rm Rm Rm
Sale of merchandise 75 837 (30) 75 867 75 704
Cost of sales (58 307) 20 (58 327) (57 678)
GROSS PROFIT 17 530 (10) 17 540 18 026
Other operating income 1 565 (1) 1 566 1 431
Depreciation and
amortisation (1 310) (49) (1 261) (1 195)
Operating leases (2 275) (6) (2 269) (2 119)
Employee benefits (5 918) 1 (5 919) (5 574)
Other operating expenses (6 708) 2 (6 710) (6 465)
Net monetary gain 439 439 - -
TRADING PROFIT 3 323 376 2 947 4 104
Exchange rate (losses)/gains (3) (2) (1) 4
Items of a capital nature 65 (15) 80 (34)
OPERATING PROFIT 3 385 359 3 026 4 074
Interest received 139 - 139 121
Finance costs (384) - (384) (189)
Share of profit of
equity accounted investments - - - 8
PROFIT BEFORE INCOME TAX 3 140 359 2 781 4 014
Income tax expense (875) (72) (803) (1 094)
PROFIT FOR THE PERIOD 2 265 287 1 978 2 920
OTHER COMPREHENSIVE
INCOME, NET OF INCOME TAX (1 565) (300) (1 265) (554)
Items that may subsequently
be reclassified to profit
or loss
Foreign currency
translation differences
including hyperinflation
effect (1 565) (300) (1 265) (539)
Share of foreign
currency translation
differences of equity
accounted investments - - - (4)
Gains on effective
cash flow hedge - - - (11)
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 700 (13) 713 2 366
PROFIT ATTRIBUTABLE TO: 2 265 287 1 978 2 920
Owners of the parent 2 258 287 1 971 2 912
Non-controlling interest 7 - 7 8
TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO: 700 (13) 713 2 366
Owners of the parent 693 (13) 706 2 358
Non-controlling interest 7 - 7 8
Basic earnings
per share (cents) 407.3 51.7 355.6 521.3
Diluted earnings
per share (cents) 406.8 51.7 355.1 520.9
Basic headline earnings
per share (cents) 398.9 53.7 345.2 525.6
Diluted headline
earnings per share (cents) 398.5 53.7 344.8 525.2
* Restated for the change in accounting policy. Refer to note 2 of the
condensed consolidated interim financial statements for more detail.
PRO FORMA STATEMENT OF FINANCIAL POSITION
Restated*
Including Excluding Excluding
Hyper- Hyper- Hyper- Hyper-
inflation inflation inflation inflation
Unaudited Adjustment Pro Forma Unaudited
30 Dec 18 30 Dec 18 30 Dec 18 31 Dec 17
Rm Rm Rm Rm
ASSETS
NON-CURRENT ASSETS 30 868 2 288 28 580 25 936
Property, plant
and equipment 21 697 2 147 19 550 19 359
Equity accounted investments - - - 31
Financial assets at
amortised cost
Loans receivable 1 470 - 1 470 -
Government bonds and bills 2 857 - 2 857 -
Loans and receivables - - - 1 233
Held-to-maturity investments - - - 1 320
Deferred income tax assets 865 (308) 1 173 832
Intangible assets 3 171 - 3 171 2 599
Trade and other receivables 808 449 359 562
CURRENT ASSETS 36 809 41 36 768 37 354
Inventories 21 695 50 21 645 21 765
Trade and other receivables 5 300 (9) 5 309 5 548
Current income tax assets 90 - 90 148
Financial assets at
amortised cost
Loans receivable 299 - 299 -
Government bonds and bills 665 - 665 -
Loans and receivables - - - 146
Held-to-maturity investments - - - 1 281
Cash and cash equivalents 8 760 - 8 760 8 466
ASSETS HELD FOR SALE 114 - 114 34
TOTAL ASSETS 67 791 2 329 65 462 63 324
EQUITY
CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital - - - 671
Share premium - - - 6 845
Stated capital 7 516 - 7 516 -
Treasury shares (618) - (618) (562)
Reserves 19 163 1 680 17 483 19 365
26 061 1 680 24 381 26 319
NON-CONTROLLING INTEREST 87 - 87 87
TOTAL EQUITY 26 148 1 680 24 468 26 406
LIABILITIES
NON-CURRENT LIABILITIES 9 284 649 8 635 2 797
Borrowings 7 077 - 7 077 1 241
Deferred income tax
liabilities 726 649 77 106
Provisions 232 - 232 258
Fixed escalation operating
lease accruals 1 249 - 1 249 1 192
CURRENT LIABILITIES 32 359 - 32 359 34 121
Trade and other payables 24 382 - 24 382 23 753
Borrowings 2 968 - 2 968 4 451
Current income tax
liabilities 983 - 983 359
Provisions 141 - 141 152
Bank overdrafts 3 885 - 3 885 5 406
TOTAL LIABILITIES 41 643 649 40 994 36 918
TOTAL EQUITY AND
LIABILITIES 67 791 2 329 65 462 63 324
* Restated for the change in accounting policy. Refer to note 2 of the
condensed consolidated interim financial statements for more detail.
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 period
ended 30 December 2018, the economy of Angola was assessed to remain
hyperinflationary.
The table below sets out the percentage change in turnover, based on the
actual results for the period, 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 Reported Constant
on prior period 26 weeks Currency Currency
Angola kwanza (45.0) (9.9)
Nigeria naira (1.4) 8.4
Zambia kwacha 0.7 11.0
Mozambique metical 1.5 (4.0)
Total Supermarkets Non-RSA (13.3) 0.0
NUMBER OF OUTLETS 30 DECEMBER 2018
CONFIRMED
NEW
12 MONTHS 12 MONTHS 12 MONTHS 12 MONTHS STORES TO
DEC 2017 OPENED CLOSED DEC 2018 JUNE 2020
SUPERMARKETS 1 276 76 22 1 330 106
SHOPRITE 631 31 5 657 48
CHECKERS 218 11 2 227 14
CHECKERS HYPER 37 0 0 37 0
USAVE 390 34 15 409 44
LIQUORSHOP 424 52 4 472 21
HUNGRY LION 13 1 5 9 0
FURNITURE 491 10 22 479 8
OK FURNITURE 437 10 19 428 8
HOUSE & HOME 54 0 3 51 0
OK FRANCHISE 414 58 24 448 21
TOTAL STORES 2 618 197 77 2 738 156
COUNTRIES
OUTSIDE RSA 14 1 1 14
TOTAL STORES
OUTSIDE RSA 400 37 18 419 35
These numbers exclude Hungry Lion stores held for sale and sold during the
preceding 12 months (opening balance adjusted with 193 stores), as well as
the MediRite pharmacies which are located within supermarkets.
OPERATIONAL REVIEW
The Group has consistently delivered strong results over the past two
decades. The decline in headline earnings per share during the six months
ending December 2018 must be viewed in the context of various critical
expansion and technology projects the Group has embarked on in the past five
years to ensure future growth and modernise our technology landscape. The
timing unfortunately coincided with the deterioration of the RSA and Non-RSA
economies and consumer expenditure levels over this same period.
Supermarkets RSA
The core South African Supermarket operation, trading through 1 541 outlets
and representing 74.0% of total sales, increased sales by 2.6% with a
decline in trading profit of 15.1%.
Supermarkets RSA's performance was affected by zero inflation or deflation
in core categories, the distressed financial position of its customers and
product availability challenges stemming from the Group's largest DC in
Gauteng, which accounts for 53% of total centralised food distribution for
the RSA supermarkets business. Industrial action followed by the deployment
of our new ERP system shortly after the labour disruption hampered the
ability to adequately meet demand which resulted in lost sales
opportunities. The challenges have largely been arrested through multiple
interventions, although we are not yet at targeted levels of efficiency.
The South African supermarket operations continued to serve more customers,
growing transactions by 2%, while we also sold 0.7% more items. In December,
a total of 10 719 items were selling at lower prices than a year prior,
although lower than the 11 607 items in deflation at the end of September.
This eased the burden on customers as we remained committed to our low price
promise, but curtailed organic topline growth in the Shoprite and Usave
operations in particular.
The Group's strategy to capture a greater proportion of the top-end affluent
consumer segments' grocery expenditure has seen Checkers, excluding the
larger format Hyper stores, increase sales by 4.3%. The opening and
conversion of Checkers stores to our new FreshX concept currently stands at
20 and the focus remains to transform a third of our Checkers store
portfolio to this format. Coupled with continuous innovation and improvement
in fresh, health and convenience food ranges, we are optimistic about the
further value we can extract out of this segment in the medium term.
The Shoprite brand, with its focus on price-sensitive consumers, continued
to subsidise the essential foods through additional food subsidies, putting
more than R80 million back into the pockets of consumers. This includes our
instore bakery bread, which has been selling at a subsidised price of R4.99
for almost three years, a price in line with ten years ago. Shoprite's price
leadership remains uncontested despite increased competitor promotional
activity. Notwithstanding its shopper base being the hardest hit by
prevailing economic conditions, Shoprite grew sales by 1.2% with zero
internal food inflation for the period. The growth in the Shoprite and Usave
brands were particularly affected by the Centurion DC industrial action, as
deliveries to higher value stores were prioritised at the expense of far
outlying rural stores. The 1.0% turnover decline in the Group's hard
discounter format Usave also reflects the position that SA's most vulnerable
consumers find themselves in.
The liquor division continues to be a standout performer, increasing
turnover by 20.1% and gaining significant market share. The chain continues
to meet its store per week expansion target, opening a net 27 new outlets
since June 2018.
Supermarkets RSA continued its expansion, having added a net 61 new
supermarkets and liquor outlets over the six months, with 101 confirmed new
stores to open over the next 18 months, including our latest format Usave
container stores, which allows the Group to make inroads into previously
underpenetrated areas.
Supermarkets Non-RSA
Trading in 14 countries in the rest of Africa and Indian Ocean Islands,
Supermarkets Non-RSA recorded a decline of 13.3% in sales in rand terms and
contributed 14.7% to the Group's sales. Non-RSA sales growth remained
positive in constant currency terms, although currency devaluations and poor
trading conditions in many countries, contributed to a below par
performance. Supermarkets Non-RSA internal inflation remains low at just
2.8% for the current period.
The slower Supermarkets Non-RSA sales are mainly attributed to the
performance of the Angolan supermarket operation, following the 85.1%
devaluation of the Angola kwanza against the USD since January 2018. It
reported a 45.0% decline in sales in rand terms and 9.9% measured in
constant currency. Angola's economy remains in deep recession and the
currency devaluation weighed heavily on local consumer expenditure.
The Angolan currency shows signs of stabilising somewhat since the beginning
of 2019 and the longer term economic outlook looks more positive as
structural improvements bear fruit. The Group remains positive about the
return to profitability and viability of its Angolan investment.
Trading in Nigeria continues to be hampered by foreign exchange fluctuations
and the Group's adoption of the NIFEX exchange rate had a negative impact on
converting local sales to rand. The Nigerian supermarket operation increased
sales by 8.4% in local currency and the new store opened in the past year is
trading well. The Group has made progress in increasing stock availability,
including through its new fresh produce distribution facility.
Zambia is now almost self-sufficient in terms of local supply of fresh and
perishable lines. Zambia's sales in local currency are showing an
improvement in the second quarter of 14.7%.
The Group opened its first store in Kenya in the revamped Westgate Mall in
Nairobi. The store is trading in line with expectations, and another store
will be opened in Kenya by June 2019.
The Group is firmly committed to its Non-RSA operations and is positive
about its long term prospects on the continent. Growth in retail will be
driven by rapid population growth and formalisation of food retail and the
Group is uniquely positioned with an unrivalled retail footprint, experience
and consumer base on the continent.
Furniture
The Group's 479 furniture stores increased turnover by 4.3% and reported a
decline in trading profit of 5.5% to R104 million. Second quarter sales were
lower than expected as excessive demand on Black Friday resulted in
suppliers being unable to meet delivery before month-end cut-off. South
African stores continued to trade well whilst sales in Angola decreased in
rand terms, driven by the currency devaluation, which had a negative impact
on the profitability of the segment.
Other Operating Segments
Other operating segments, which include OK Franchise, Computicket, MediRite
Pharmacy and Checkers Food Services, achieved turnover growth of 6.5%.
The OK Franchise division recorded a net increase of 34 stores during the
last 12 months. The conversion of franchise stores to the OK brand is on
track for completion this year. Franchise stores are increasingly using the
Group's central DC's and better sales have been achieved on the back of a
wider range of fresh products and more frequent deliveries to franchise
stores. The strong uptake of the Group's extended number of private label
products and general merchandise ranges available to franchisees is also
performing well.
DIVIDEND NO 140
The board has declared an interim dividend of 156 cents (2017: 205 cents)
per ordinary share, payable to shareholders on Monday, 18 March 2019. The
dividend has been declared out of income reserves. The last day to trade cum
dividend will be Tuesday, 12 March 2019. As from Wednesday, 13 March 2019,
all trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 15 March 2019. Share certificates may not be
dematerialised or rematerialised between Wednesday, 13 March 2019, and
Friday, 15 March 2019, 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 124.8 cents per share for shareholders
liable to pay Dividends Tax and 156 cents per share for shareholders
exempt from paying Dividends Tax.
3. The issued ordinary share capital of Shoprite Holdings Ltd as at the
date of this declaration is 591 338 502 ordinary shares.
4. Shoprite Holdings Ltd's tax reference number is 9775/112/71/8.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated* Restated*
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
% 30 Dec '18 31 Dec '17 1 Jul '18
Notes change Rm Rm Rm
Revenue 4 77 541 77 256 148 245
Sale of merchandise 0.2 75 837 75 704 145 104
Cost of sales 1.1 (58 307) (57 678) (110 415)
GROSS PROFIT (2.8) 17 530 18 026 34 689
Other operating income 9.4 1 565 1 431 2 926
Depreciation and
amortisation 9.6 (1 310) (1 195) (2 530)
Operating leases 7.4 (2 275) (2 119) (4 272)
Employee benefits 6.2 (5 918) (5 574) (10 851)
Other operating expenses 3.8 (6 708) (6 465) (12 591)
Net monetary gain 439 - 653
TRADING PROFIT (19.0) 3 323 4 104 8 024
Exchange rate (losses)/gains (3) 4 (251)
Items of a capital nature 65 (34) (246)
OPERATING PROFIT (16.9) 3 385 4 074 7 527
Interest received 14.9 139 121 215
Finance costs (384) (189) (422)
Share of profit of equity
accounted investments - 8 27
PROFIT BEFORE INCOME TAX (21.8) 3 140 4 014 7 347
Income tax expense (20.0) (875) (1 094) (2 124)
PROFIT FOR THE PERIOD (22.4) 2 265 2 920 5 223
OTHER COMPREHENSIVE
INCOME, NET OF INCOME TAX (1 565) (554) (689)
Items that will not be
reclassified to profit
or loss
Re-measurements of
post-employment medical
benefit obligations - - 2
Items that may
subsequently be
reclassified to
profit or loss
Foreign currency
translation differences
including hyperinflation
effect (1 565) (539) (678)
Share of foreign
currency translation
differences of equity
accounted investments - (4) (2)
Gains on effective
cash flow hedge - (11) (11)
For the period - 3 3
Reclassified to
profit for the period - (14) (14)
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD 700 2 366 4 534
PROFIT ATTRIBUTABLE TO: 2 265 2 920 5 223
Owners of the parent 2 258 2 912 5 211
Non-controlling interest 7 8 12
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO: 700 2 366 4 534
Owners of the parent 693 2 358 4 522
Non-controlling interest 7 8 12
Basic earnings per
share (cents) 10 (21.9) 407.3 521.3 936.0
Diluted earnings
per share (cents) 10 (21.9) 406.8 520.9 935.2
Basic headline
earnings per
share (cents) 10 (24.1) 398.9 525.6 971.4
Diluted headline
earnings per
share (cents) 10 (24.1) 398.5 525.2 970.5
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated* Restated*
Unaudited Unaudited Audited
30 Dec '18 31 Dec '17 1 Jul '18
Notes Rm Rm Rm
ASSETS
NON-CURRENT ASSETS 30 868 25 936 29 353
Property, plant and equipment 21 697 19 359 21 218
Equity accounted investments - 31 -
Financial assets at
amortised cost
Loans receivable 5 1 470 - -
Government bonds and bills 6 2 857 - -
Loans and receivables 5 - 1 233 1 318
Held-to-maturity investments 6 - 1 320 2 090
Deferred income tax assets 865 832 877
Intangible assets 3 171 2 599 2 994
Trade and other receivables 808 562 856
CURRENT ASSETS 36 809 37 354 32 310
Inventories 21 695 21 765 17 959
Trade and other receivables 5 300 5 548 4 935
Current income tax assets 90 148 120
Financial assets at
amortised cost
Loans receivable 5 299 - -
Government bonds and bills 6 665 - -
Loans and receivables 5 - 146 231
Held-to-maturity investments 6 - 1 281 1 600
Cash and cash equivalents 8 760 8 466 7 465
ASSETS HELD FOR SALE 114 34 184
TOTAL ASSETS 67 791 63 324 61 847
EQUITY
CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital 7 - 671 -
Share premium - 6 845 -
Stated capital 7 7 516 - 7 516
Treasury shares 7 (618) (562) (554)
Reserves 19 163 19 365 20 424
26 061 26 319 27 386
NON-CONTROLLING INTEREST 87 87 91
TOTAL EQUITY 26 148 26 406 27 477
LIABILITIES
NON-CURRENT LIABILITIES 9 284 2 797 3 567
Borrowings 8 7 077 1 241 1 371
Deferred income tax liabilities 726 106 697
Provisions 232 258 264
Fixed escalation operating
lease accruals 1 249 1 192 1 235
CURRENT LIABILITIES 32 359 34 121 30 803
Trade and other payables 24 382 23 753 20 626
Borrowings 8 2 968 4 451 5 606
Current income tax liabilities 983 359 481
Provisions 141 152 95
Bank overdrafts 3 885 5 406 3 995
TOTAL LIABILITIES 41 643 36 918 34 370
TOTAL EQUITY AND LIABILITIES 67 791 63 324 61 847
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Total controlling
Rm equity interest
RESTATED UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED 27 749 91
Effect of adopting IFRS 15: Revenue from
Contracts with Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 27 739 91
Total comprehensive income 2 366 8
Profit for the period 2 920 8
Recognised in other comprehensive income
Foreign currency translation differences (543)
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 23
Modification of cash bonus arrangement transferred
from provisions 9
Buy-back and cancellation of ordinary shares (1 750)
Purchase of treasury shares (140)
Treasury shares disposed 2
Realisation of share-based payment reserve -
Transfer from capital redemption reserve -
Dividends distributed to shareholders (1 841) (12)
RESTATED BALANCE AT 31 DECEMBER 2017 26 406 87
RESTATED AUDITED 52 WEEKS ENDED 1 JULY 2018
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED 27 749 91
Effect of adopting IFRS 15: Revenue
from Contracts with Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 27 739 91
Total comprehensive income 4 534 12
Profit for the period* 5 223 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)
RESTATED BALANCE AT 1 JULY 2018 27 477 91
UNAUDITED 26 WEEKS ENDED 30 DECEMBER 2018
BALANCE AT 1 JULY 2018 27 477 91
Effect of adopting IFRS 9: Financial
Instruments (note 2) (412)
RESTATED BALANCE AT 2 JULY 2018 27 065 91
Total comprehensive income 700 7
Profit for the period 2 265 7
Recognised in other comprehensive income
Foreign currency translation differences
including hyperinflation effect (1 565)
Share-based payments - value of employee services 39
Modification of cash bonus arrangement transferred
from provisions 16
Purchase of treasury shares (115)
Treasury shares disposed 5
Realisation of share-based payment reserve -
Dividends distributed to shareholders (1 562) (11)
BALANCE AT 30 DECEMBER 2018 26 148 87
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Share Share
Rm Total capital premium
RESTATED UNAUDITED 26 WEEKS ENDED
31 DECEMBER 2017
BALANCE AT 2 JULY 2017 AS
PREVIOUSLY STATED 27 658 681 8 585
Effect of adopting IFRS 15:
Revenue from Contracts with
Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 27 648 681 8 585
Total comprehensive income 2 358 - -
Profit for the period 2 912
Recognised in other comprehensive
income
Foreign currency translation
differences (543)
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 23
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 (140)
Treasury shares disposed 2
Realisation of share-based payment reserve -
Transfer from capital redemption reserve -
Dividends distributed to shareholders (1 829)
RESTATED BALANCE AT 31 DECEMBER 2017 26 319 671 6 845
RESTATED AUDITED 52 WEEKS ENDED
1 JULY 2018
BALANCE AT 2 JULY 2017 AS PREVIOUSLY
STATED 27 658 681 8 585
Effect of adopting IFRS 15: Revenue
from Contracts with Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 27 648 681 8 585
Total comprehensive income 4 522 - -
Profit for the period* 5 211
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)
RESTATED BALANCE AT 1 JULY 2018 27 386 - -
UNAUDITED 26 WEEKS ENDED 30 DECEMBER 2018
BALANCE AT 1 JULY 2018 27 386 - -
Effect of adopting IFRS 9: Financial
Instruments (note 2) (412)
RESTATED BALANCE AT 2 JULY 2018 26 974 - -
Total comprehensive income 693 - -
Profit for the period 2 258
Recognised in other comprehensive income
Foreign currency translation
differences including hyperinflation
effect (1 565)
Share-based payments - value of employee
services 39
Modification of cash bonus arrangement
transferred from provisions 16
Purchase of treasury shares (115)
Treasury shares disposed 5
Realisation of share-based payment reserve -
Dividends distributed to shareholders (1 551)
BALANCE AT 30 DECEMBER 2018 26 061 - -
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Stated Treasury
Rm capital shares
RESTATED UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED - (446)
Effect of adopting IFRS 15: Revenue from
Contracts with Customers (note 2)
RESTATED BALANCE AT 2 JULY 2017 - (446)
Total comprehensive income - -
Profit for the period
Recognised in other comprehensive income
Foreign currency translation differences
Gains on effective cash flow hedge
Income tax effect of gains on effective
cash flow hedge
Cash flow hedging reserve transferred to receivables
Income tax effect of cash flow hedging reserve
transferred to receivables
Share-based payments - value of employee services
Modification of cash bonus arrangement transferred
from provisions
Buy-back and cancellation of ordinary shares
Purchase of treasury shares (140)
Treasury shares disposed 2
Realisation of share-based payment reserve 22
Transfer from capital redemption reserve
Dividends distributed to shareholders
RESTATED BALANCE AT 31 DECEMBER 2017 - (562)
RESTATED AUDITED 52 WEEKS ENDED 1 JULY 2018
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED - (446)
Effect of adopting IFRS 15: Revenue from Contracts
with Customers (note 2)
RESTATED BALANCE AT 2 JULY 2017 - (446)
Total comprehensive income - -
Profit for the period*
Recognised in other comprehensive income
Re-measurements of post-employment medical
benefit obligations
Income tax effect of re-measurements of
post-employment medical benefit obligations
Foreign currency translation differences
including hyperinflation effect
Income tax on foreign currency translation
differences including hyperinflation effect
Gains on effective cash flow hedge
Income tax effect of gains on effective
cash flow hedge
Cash flow hedging reserve transferred to receivables
Income tax effect of cash flow hedging reserve
transferred to receivables
Share-based payments - value of employee services
Modification of cash bonus arrangement transferred
from provisions
Buy-back and cancellation of ordinary shares
Purchase of treasury shares (142)
Treasury shares disposed 5
Realisation of share-based payment reserve 29
Conversion to stated capital 7 516
Transfer from capital redemption reserve
Dividends distributed to shareholders
RESTATED BALANCE AT 1 JULY 2018 7 516 (554)
UNAUDITED 26 WEEKS ENDED 30 DECEMBER 2018
BALANCE AT 1 JULY 2018 7 516 (554)
Effect of adopting IFRS 9: Financial
Instruments (note 2)
RESTATED BALANCE AT 2 JULY 2018 7 516 (554)
Total comprehensive income - -
Profit for the period
Recognised in other comprehensive income
Foreign currency translation differences
including hyperinflation effect
Share-based payments - value of employee services
Modification of cash bonus arrangement transferred
from provisions
Purchase of treasury shares (115)
Treasury shares disposed 5
Realisation of share-based payment reserve 46
Dividends distributed to shareholders
BALANCE AT 30 DECEMBER 2018 7 516 (618)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Other Retained
Rm reserves earnings
RESTATED UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED (969) 19 807
Effect of adopting IFRS 15: Revenue from
Contracts with Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 (969) 19 797
Total comprehensive income (554) 2 912
Profit for the period 2 912
Recognised in other comprehensive income
Foreign currency translation differences (543)
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 23
Modification of cash bonus arrangement transferred
from provisions 9
Buy-back and cancellation of ordinary shares
Purchase of treasury shares
Treasury shares disposed
Realisation of share-based payment reserve (22)
Transfer from capital redemption reserve (2) 2
Dividends distributed to shareholders (1 829)
RESTATED BALANCE AT 31 DECEMBER 2017 (1 517) 20 882
RESTATED AUDITED 52 WEEKS ENDED 1 JULY 2018
BALANCE AT 2 JULY 2017 AS PREVIOUSLY STATED (969) 19 807
Effect of adopting IFRS 15: Revenue from Contracts
with Customers (note 2) (10)
RESTATED BALANCE AT 2 JULY 2017 (969) 19 797
Total comprehensive income (691) 5 213
Profit for the period* 5 211
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
Treasury shares disposed 1
Realisation of share-based payment reserve (29)
Conversion to stated capital
Transfer from capital redemption reserve (2) 2
Dividends distributed to shareholders (2 969)
RESTATED BALANCE AT 1 JULY 2018 (1 620) 22 044
UNAUDITED 26 WEEKS ENDED 30 DECEMBER 2018
BALANCE AT 1 JULY 2018 (1 620) 22 044
Effect of adopting IFRS 9: Financial
Instruments (note 2) (412)
RESTATED BALANCE AT 2 JULY 2018 (1 620) 21 632
Total comprehensive income (1 565) 2 258
Profit for the period 2 258
Recognised in other comprehensive income
Foreign currency translation differences
including hyperinflation effect (1 565)
Share-based payments - value of employee services 39
Modification of cash bonus arrangement transferred
from provisions 16
Purchase of treasury shares
Treasury shares disposed
Realisation of share-based payment reserve (46)
Dividends distributed to shareholders (1 551)
BALANCE AT 30 DECEMBER 2018 (3 176) 22 339
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Restated*
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 Dec '18 31 Dec '17 1 Jul '18
Notes Rm Rm Rm
CASH FLOWS FROM OPERATING
ACTIVITIES 1 552 3 978 7 418
Operating profit 3 385 4 074 7 527
Less: investment income (244) (160) (344)
Non-cash items 11.1 1 177 1 556 2 919
Changes in working capital 11.2 (919) 1 591 2 673
Cash generated from operations 3 399 7 061 12 775
Interest received 307 256 493
Interest paid (403) (245) (555)
Dividends received 13 25 49
Dividends paid (1 562) (1 839) (2 980)
Income tax paid (202) (1 280) (2 364)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES (2 511) (4 327) (7 355)
Investment in property,
plant and equipment and
intangible assets to expand
operations (1 853) (2 093) (3 720)
Investment in property,
plant and equipment and
intangible assets to maintain
operations (942) (841) (1 616)
Proceeds on disposal of
property, plant and equipment
and intangible assets 178 56 132
Proceeds on disposal of
assets held for sale 105 120 121
Payments for government bonds
and bills (2018: held-to-maturity
investments) (740) (1 675) (2 401)
Proceeds from government
bonds and bills
(2018: held-to-maturity
investments) 915 207 490
Amounts paid to Resilient
Africa (Pty) Ltd (14) (1) (7)
Amounts received from Resilient
Africa (Pty) Ltd - 9 -
Amounts repaid by employees - 102 102
Other loans receivable
(2018: loans and receivables)
advanced (221) (211) (430)
Cash inflows from other
loans receivable
(2018: loans and receivables) 65 - 149
Investment in joint venture - - (150)
Acquisition of subsidiaries
and operations (4) - (25)
CASH FLOWS FROM FINANCING
ACTIVITIES 2 545 894 1 426
Purchase of treasury shares (115) (140) (142)
Proceeds from treasury shares
disposed 5 2 6
Buy-back and cancellation of
ordinary shares - (1 750) (1 750)
Repayment of borrowings 8 (2 657) (1 923) (7 895)
Increase in borrowings 8 5 312 4 705 11 207
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 1 586 545 1 489
Cash and cash equivalents
at the beginning of the period 3 470 2 709 2 709
Effect of exchange rate movements
and hyperinflation on cash
and cash equivalents (181) (194) (728)
CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD 4 875 3 060 3 470
Consisting of:
Cash and cash equivalents 8 760 8 466 7 465
Bank overdrafts (3 885) (5 406) (3 995)
4 875 3 060 3 470
* Restated for the change in accounting policy. Refer to note 2 for more
detail.
SELECTED EXPLANATORY NOTES TO THE CONDENSED CONSOLIDATED INTERIM RESULTS FOR
THE 26 WEEKS ENDED 30 DECEMBER 2018
1 BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared
in accordance with International Financial Reporting Standard,
IAS 34: Interim Financial Reporting, the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards
Council and the requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these interim
financial statements are in terms of International Financial
Reporting Standards and are consistent with those applied in the
previous consolidated annual financial statements, except for the
adoption of the following new standards and interpretations by the
Group on 2 July 2018:
- IFRS 9: Financial Instruments, and
- IFRS 15: Revenue from Contracts with Customers.
The impact of the adoption of these standards are disclosed in note 2.
The Group has not early adopted any other standard, interpretation
or amendment that has been issued but is not yet effective.
The preparation of these results has been supervised by Mr A de
Bruyn, CA(SA). There have been no material changes in the affairs or
financial position of the Group and its subsidiaries from 30 December
2018 to the date of this report. The information contained in the
interim report has neither been audited nor reviewed by the Group's
external auditors.
2 CHANGES IN ACCOUNTING POLICIES
2.1 Effect of adopting IFRS 9: Financial Instruments
IFRS 9 replaces IAS 39: Financial Instruments: Recognition and
Measurement. It addresses the classification, measurement and
derecognition of financial assets and financial liabilities,
introduces new rules for hedge accounting and a new impairment model
for financial assets.
The adoption of IFRS 9 with effect from 2 July 2018 resulted in
changes in accounting policies and adjustments to the amounts
recognised in the financial statements. The Group has elected not to
restate its comparative information as permitted by IFRS 9.
Accordingly, the impact of IFRS 9 has been applied retrospectively
with an adjustment to opening retained earnings on 2 July 2018.
Therefore comparative information in the prior period annual
financial statements has not been amended for the impact of IFRS 9.
The total impact on the Group's retained earnings as at 2 July 2018
is as follows:
Notes Rm
Closing retained earnings on 1 July 2018 as
previously reported 22 044
Adjustments to retained earnings on initial
application of IFRS 9 (412)
Increase in impairment allowance for trade
and other receivables 2.1.3 (352)
Increase in impairment allowance for government
bonds and bills 2.1.3 (133)
Increase in impairment allowance for loans
receivable 2.1.3 (1)
Increase in net deferred income tax assets
relating to impairment allowances 86
Increase in current income tax liabilities
relating to the above (12)
Opening retained earnings on 2 July 2018
(before restatement for IFRS 15) 21 632
The application of IFRS 9 had no material impact on the reported
earnings or financial position for the interim results period
under review.
2.1.1 Classification and measurement of financial instruments
IFRS 9 requires all financial assets to be classified and measured on
the basis of the entity's business model for managing the financial
assets and the contractual cash flow characteristics of the financial
assets.
Management has assessed which business models apply to the financial
assets held by the Group at the date of initial application of
IFRS 9 and has classified its financial instruments into the
appropriate IFRS 9 categories. It was determined that all of the
Group's financial assets which were measured at amortised cost and
classified as held-to-maturity and loans and receivables under
IAS 39, satisfy the conditions for classification at amortised cost
under IFRS 9. Hence there is no change to the measurement of these
assets.
There has been no change to the classification of the Group's
financial liabilities and they continue to be classified and measured
at amortised cost.
2.1.2 Derivatives and hedging activities
The Group does not currently apply hedge accounting and continues
to account for forward exchange contracts at fair value through
profit and loss.
2.1.3 Impairment of financial assets under the expected credit loss model
IFRS 9 has introduced new expected credit loss (ECL) impairment
requirements, as opposed to an incurred loss model applied in terms
of IAS 39. The ECL requirements apply to all financial assets
measured at amortised cost and will result in the earlier
recognition of credit provisions.
At a minimum, an impairment provision is required to be measured
at an amount equal to the 12-month ECL for financial assets measured
at amortised cost. A loss allowance for full lifetime ECL is
required for a financial asset if the credit risk of that financial
instrument has increased significantly since initial recognition.
The Group has the following types of financial assets measured at
amortised cost that are subject to IFRS 9's new ECL model:
- Instalment sale receivables
- Trade receivables for sales of inventory
- Loans receivable
- Government bonds and bills
- Other receivables
The Group was required to revise its impairment methodology under
IFRS 9 for each of these classes of assets. The impact of the change
in impairment methodology on the Group's retained earnings and
equity is disclosed in the table above.
The measurement of ECLs reflects a probability-weighted outcome, the
time value of money and the best forward-looking information
available to the Group. The calculated ECL is discounted using the
original effective interest rate applicable to the financial asset.
The Group measures ECL for instalment sale receivables, loans
receivable and government bonds and bills using probability of
write-off, exposure at write-off, timing of when write-off is
likely to occur and loss given write-off. These components are
multiplied together and adjusted for the likelihood of write-off.
For trade and other receivables without a significant financing
component, the Group has adopted the simplified approach which
recognises lifetime expected credit losses regardless of stage
classification. The Group has established a provision matrix that is
based on historical credit loss experience, adjusted for
forward-looking factors specific to such trade and other receivables
and the economic environment.
When a financial asset is classified as stage 3 impaired, interest
income is calculated on the impaired value (gross carrying amount
less impairment allowance) based on the original effective interest
rate. The contractual interest income on the gross carrying amount
of the financial asset is suspended and is only recognised as
interest income when the financial asset is reclassified out of
stage 3.
2.2 Effect of adopting IFRS 15: Revenue from Contracts with Customers
IFRS 15 replaces IAS 18: Revenue. It addresses the classification,
measurement and disclosure of revenue from contracts with customers.
It establishes a five-step model to account for revenue from contracts
with customers, based on the principle that revenue is recognised
either over time or at a point in time, as or when the Group satisfies
performance obligations and transfers control of goods or services
to its customers.
The adoption of IFRS 15 with effect from 2 July 2018 resulted in
changes in accounting policies and adjustments to the amounts
recognised in the financial statements. In accordance with the
transition provisions in IFRS 15, the Group has adopted the new
standard retrospectively and has restated comparatives for the 2018
financial year.
The total impact on the Group's retained earnings as at 2 July 2017
is as follows:
Notes Rm
Closing retained earnings on 2 July 2017 as
previously reported 19 807
Adjustments to retained earnings from
adoption of IFRS 15 (10)
Refund liability for customers' right
to return goods 2.2.1 (47)
Revenue recognised for customers'
unexercised rights 2.2.2 30
Timing of revenue recognition 3
Increase in net deferred income tax
assets relating to the above 4
Opening retained earnings on 3 July 2017 19 797
The impact of IFRS 15 on the consolidated financial statements is
disclosed under note 2.3.
2.2.1 Accounting for refunds
It is policy to sell goods with the right of return in terms of
current consumer legislation. Such sales are cancelled where the
right of return is exercised. Under IFRS 15, a refund liability for
the expected refunds to customers is recognised as an adjustment to
revenue in trade and other payables. The accumulated experience of
the Group's returns has been utilised to estimate such refund
liability at the time of sale. Based on past experience it is
estimated that goods returned in a saleable condition will be
insignificant and therefore, the Group does not recognise an asset
and a corresponding adjustment to cost of sales for its right to
recover the product from the customer where the customer exercises
his right of return.
2.2.2 Accounting for breakage
A customer's non-refundable prepayment to an entity gives the
customer a right to receive a good or service in the future.
However, customers occasionally do not exercise all of their
contractual rights. In terms of IFRS 15, the Group recognised the
expected breakage amount in such contract liabilities resulting from
customers' unexercised rights as revenue, in proportion to the
pattern of rights exercised by its customers. The accumulated
experience of the Group's breakage history has been utilised to
estimate when it expects to be entitled to a breakage amount.
2.2.3 Agent vs principal assessment
IFRS 15 provides new guidance that impacted the Group's assessment
of whether it acts as principal or agent when recognising revenue
from certain value-added services. In certain instances, revenue
previously recognised on a gross basis and included in sale of
merchandise and cost of sales, is now required to be recognised on
a net basis in other operating income. In other cases, revenue
previously recognised on a net basis in other operating income, is
now required to be recognised on a gross basis in other operating
income and other operating expenses.
2.3 Impact on the consolidated financial statements
The following tables set out the impact of the changes in accounting
policies and retrospective adjustments recognised for each individual
line item affected in the consolidated financial statements. IFRS 9
was adopted without restating comparative information and the impact
is therefore not reflected in the restated comparatives but recognised
in the opening statement of financial position on 2 July 2018. The
aggregate effect of the changes in accounting policies on the annual
financial statements and interim results presented are as follows:
2.3.1 Impact on statement of comprehensive income
Restated
Unaudited Unaudited Unaudited
As previously IFRS 15 26 weeks
reported restatement ended
31 Dec '17 31 Dec '17 31 Dec '17
Rm Rm Rm
Sale of merchandise 75 823 (119) 75 704
Cost of sales (57 772) 94 (57 678)
GROSS PROFIT 18 051 (25) 18 026
Other operating income 1 360 71 1 431
Other operating expenses (6 419) (46) (6 465)
TRADING PROFIT 4 104 - 4 104
Income tax expense (1 094) - (1 094)
PROFIT ATTRIBUTABLE TO: 2 920 - 2 920
Owners of the parent 2 912 - 2 912
Non-controlling interest 8 - 8
Basic earnings per share (cents) 521.3 - 521.3
Diluted earnings per share (cents) 520.9 - 520.9
Basic headline earnings per share
(cents) 525.6 - 525.6
Diluted headline earnings per
share (cents) 525.2 - 525.2
Restated
Audited Audited Audited
As previously IFRS 15 52 weeks
reported restatement ended
1 Jul '18 1 Jul '18 1 Jul '18
Rm Rm Rm
Sale of merchandise 145 306 (202) 145 104
Cost of sales (110 580) 165 (110 415)
GROSS PROFIT 34 726 (37) 34 689
Other operating income 2 779 147 2 926
Other operating expenses (12 494) (97) (12 591)
TRADING PROFIT 8 011 13 8 024
Income tax expense (2 121) (3) (2 124)
PROFIT ATTRIBUTABLE TO: 5 213 10 5 223
Owners of the parent 5 201 10 5 211
Non-controlling interest 12 - 12
Basic earnings per share (cents) 934.3 1.8 936.0
Diluted earnings per share (cents) 933.4 1.8 935.2
Basic headline earnings per share
(cents) 969.6 1.8 971.4
Diluted headline earnings per
share (cents) 968.7 1.8 970.5
2.3.2 Impact on statement of financial position
Audited Audited
As previously IFRS 15
reported restatement
1 Jul '18 1 Jul '18
Rm Rm
ASSETS
NON-CURRENT ASSETS
Financial assets at amortised cost
Loans receivable - -
Government bonds and bills - -
Loans and receivables 1 318 -
Held-to-maturity investments 2 090 -
Deferred income tax assets 876 1
CURRENT ASSETS
Trade and other receivables 4 931 4
Financial assets at amortised cost
Loans receivable - -
Government bonds and bills - -
Loans and receivables 231 -
Held-to-maturity investments 1 600 -
EQUITY
Reserves 20 424 -
LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities 697 -
CURRENT LIABILITIES
Trade and other payables 20 621 5
Current income tax liabilities 481 -
Restated Audited Restated
Audited IFRS 9 Audited
at restatement at
1 Jul '18 2 Jul '18 2 Jul '18
Rm Rm Rm
ASSETS
NON-CURRENT ASSETS
Financial assets at amortised cost
Loans receivable - 1 317 1 317
Government bonds and bills - 1 970 1 970
Loans and receivables 1 318 (1 318) -
Held-to-maturity investments 2 090 (2 090) -
Deferred income tax assets 877 78 955
CURRENT ASSETS
Trade and other receivables 4 935 (352) 4 583
Financial assets at amortised cost
Loans receivable - 231 231
Government bonds and bills - 1 587 1 587
Loans and receivables 231 (231) -
Held-to-maturity investments 1 600 (1 600) -
EQUITY
Reserves 20 424 (412) 20 012
LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities 697 (8) 689
CURRENT LIABILITIES
Trade and other payables 20 626 - 20 626
Current income tax liabilities 481 12 493
Unaudited Unaudited Restated
As previously IFRS 15 Unaudited
reported restatement at
31 Dec '17 31 Dec '17 31 Dec '17
Rm Rm Rm
ASSETS
NON-CURRENT ASSETS
Deferred income tax assets 831 1 832
CURRENT ASSETS
Trade and other receivables 5 545 3 5 548
EQUITY
Reserves 19 375 (10) 19 365
LIABILITIES
NON-CURRENT LIABILITIES
Deferred income tax liabilities 110 (4) 106
CURRENT LIABILITIES
Trade and other payables 23 735 18 23 753
2.3.3 Impact on statement of cash flows
Restated
Audited Audited Audited
As previously IFRS 15 52 weeks
reported restatement ended
1 Jul '18 1 Jul '18 1 Jul '18
Rm Rm Rm
CASH FLOWS FROM OPERATING
ACTIVITIES
Operating profit 7 514 13 7 527
Changes in working capital 2 686 (13) 2 673
3 CONDENSED OPERATING SEGMENT INFORMATION
3.1 Analysis per reportable segment
Super- Super- Other
markets markets operating
Unaudited RSA Non-RSA Furniture segments
30 December 2018 Rm Rm Rm Rm
Sale of merchandise 58 533 11 146 3 420 5 187
External 56 138 11 122 3 420 5 187
Inter-segment 2 395 24 - -
Trading profit 2 839 (62) 104 66
Interest income
included in trading
profit 26 188 140 19
Depreciation
and amortisation^ 1 154 230 50 21
Total assets 40 412 16 866 4 480 3 704
Total Hyper-
operating inflation Consoli-
Unaudited segments effect dated
30 December 2018 Rm Rm Rm
Sale of merchandise 78 286 (30) 78 256
External 75 867 (30) 75 837
Inter-segment 2 419 - 2 419
Trading profit 2 947 376 3 323
Interest income included
in trading profit 373 (2) 371
Depreciation and amortisation^ 1 455 49 1 504
Total assets 65 462 2 329 67 791
Super- Super- Other
Restated* markets markets operating
Unaudited RSA Non-RSA Furniture segments
31 December 2017 Rm Rm Rm Rm
Sale of merchandise 57 329 12 857 3 279 4 873
External 54 729 12 824 3 279 4 872
Inter-segment 2 600 33 - 1
Trading profit 3 342 553 110 99
Interest income
included in trading
profit 26 94 146 15
Depreciation and
amortisation^ 1 047 239 52 21
Total assets 37 214 18 593 4 394 3 123
Total Hyper-
Restated operating inflation Consoli-
Unaudited segments effect dated
31 December 2017 Rm Rm Rm
Sale of merchandise 78 338 - 78 338
External 75 704 - 75 704
Inter-segment 2 634 - 2 634
Trading profit 4 104 - 4 104
Interest income included
in trading profit 281 - 281
Depreciation and
amortisation^ 1 359 - 1 359
Total assets 63 324 - 63 324
Super- Super- Other
Restated* markets markets operating
Audited RSA Non-RSA Furniture segments
1 July 2018 Rm Rm Rm Rm
Sale of merchandise 112 180 23 163 5 967 9 465
External 107 344 23 106 5 967 9 464
Inter-segment 4 836 57 - 1
Trading profit 6 551 650 256 251
Interest income
included in
trading profit 59 245 355 34
Depreciation and
amortisation^ 2 201 455 105 41
Total assets 35 008 17 260 4 199 3 077
Total Hyper-
Restated* operating inflation Consoli-
Audited segments effect dated
1 July 2018 Rm Rm Rm
Sale of merchandise 150 775 (777) 149 998
External 145 881 (777) 145 104
Inter-segment 4 894 - 4 894
Trading profit 7 708 316 8 024
Interest income included
in trading profit 693 (29) 664
Depreciation and
amortisation^ 2 802 80 2 882
Total assets 59 544 2 303 61 847
^ Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
* Restated for the change in accounting policy. Refer to note 2 for
more detail.
3.2 Geographical analysis
Outside
South South
Africa Africa
Unaudited 30 December 2018 Rm Rm
Sale of merchandise - external 63 217 12 650
Non-current assets^^ 18 242 4 838
Total Hyper-
operating inflation Consoli-
segments effect dated
Unaudited 30 December 2018 Rm Rm Rm
Sale of merchandise - external 75 867 (30) 75 837
Non-current assets^^ 23 080 2 596 25 676
Outside
South South
Restated* Africa Africa
Unaudited 31 December 2017 Rm Rm
Sale of merchandise - external 61 375 14 329
Non-current assets^^ 17 245 5 275
Total Hyper-
operating inflation Consoli-
Restated* segments effect dated
Unaudited 31 December 2017 Rm Rm Rm
Sale of merchandise - external 75 704 - 75 704
Non-current assets^^ 22 520 - 22 520
Outside
South South
Restated* Africa Africa
Audited 1 July 2018 Rm Rm
Sale of merchandise - external 120 014 25 867
Non-current assets^^ 17 567 4 889
Total Hyper-
operating inflation Consoli-
Restated* segments effect dated
Audited 1 July 2018 Rm Rm Rm
Sale of merchandise - external 145 881 (777) 145 104
Non-current assets^^ 22 456 2 612 25 068
^^ Non-current assets consist of property, plant and equipment,
intangible assets and non-financial trade and other receivables.
* Restated for the change in accounting policy. Refer to note 2
for more detail.
Restated* Restated*
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 Dec '18 31 Dec '17 1 Jul '18
Rm Rm Rm
4 REVENUE
Revenue from contracts
with customers 76 630 76 420 146 549
Sale of merchandise (note 4.1) 75 837 75 704 145 104
Commissions received 447 431 856
Franchise fees received 45 41 84
Other income 301 244 505
Finance income 510 402 879
Finance income earned 140 146 355
Bank balances and investments 139 121 215
Government bonds and bills 178 80 191
Staff and other loans receivable 53 55 118
Operating lease income 251 232 455
Premiums earned 137 177 327
Dividends received 13 25 35
77 541 77 256 148 245
* Restated for the change in accounting policy. Refer to note 2
for more detail.
4.1 Sale of merchandise has been further disaggregated into geographical
regions. Refer to note 3.2 for further information.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 Dec '18 31 Dec '17 1 Jul '18
Rm Rm Rm
5 FINANCIAL ASSETS AT AMORTISED
COST - LOANS RECEIVABLE
(2018: LOANS AND RECEIVABLES)
Amounts owing by associate
(note 5.1) 1 040 917 990
Amounts owing by franchisees 346 286 334
Amounts owing by
RMB Westport Osapa (note 5.2) 206 176 195
Amounts owing by Kin-Oasis
Investments Ltd (note 5.3) 146 - -
Other 31 - 30
1 769 1 379 1 549
Analysis of total loans receivable: 1 769 1 379 1 549
Non-current 1 470 1 233 1 318
Current 299 146 231
5.1 Amounts owing by associate 1 040 917 990
ZAR denominated amounts owing
by Resilient Africa (Pty) Ltd
(note 5.1.1) 387 562 373
USD denominated amounts owing
by Resilient Africa (Pty) Ltd
(note 5.1.2) 653 355 617
5.1.1 The ZAR denominated shareholder
loan earns interest at an average
rate of 6.6% (31 Dec '17: 6.6%;
1 Jul '18: 6.6%) p.a. and is
repayable on demand, subject to
certain conditions.
5.1.2 The US dollar denominated amount
earns interest at an average rate
of 3.0% (31 Dec '17: 3.0%;
1 Jul '18: 3.0%) p.a. and is
repayable after seven years,
subject to certain conditions.
5.2 Amounts owing by RMB Westport Osapa
The amount owing by RMB Westport
Osapa is denominated in US dollar,
earns interest at an average rate of
3.0% (31 Dec '17: 3.0%; 1 Jul '18: 3.0%)
p.a. and is repayable after five years,
subject to certain conditions.
5.3 Amounts owing by Kin-Oasis
Investments Ltd
The amount owing by Kin-Oasis
Investments Ltd is denominated in US
dollar, earns interest at an average
rate of 3.0% (31 Dec '17: N/A;
1 Jul '18: N/A) p.a. and is repayable
after seven years, subject to
certain conditions.
6 FINANCIAL ASSETS AT AMORTISED
COST - GOVERNMENT BONDS AND
BILLS (2018: HELD-TO-MATURITY
INVESTMENTS)
AOA, USD Index Linked, Angola
Government Bonds (note 6.1) 2 569 2 178 3 008
AOA, Angola Government Bonds
(note 6.2) 288 - -
Angola Treasury Bills (note 6.3) 665 423 682
3 522 2 601 3 690
Analysis of total government
bonds and bills: 3 522 2 601 3 690
Non-current 2 857 1 320 2 090
Current 665 1 281 1 600
6.1 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%
(31 Dec '17: 7.0%; 1 Jul '18: 7.0%)
p.a. and mature after a period of
2 to 3 years. Accrued interest
is payable bi-annually.
6.2 AOA, Angola Government Bonds
The AOA, Angola Government Bonds
are denominated in Angola kwanza,
earn interest at an average rate
of 12.1% (31 Dec '17: N/A;
1 Jul '18: N/A) p.a. and mature
after a period of 2 to 3 years.
Accrued interest is payable
bi-annually.
6.3 Angola Treasury Bills
The Angola Treasury Bills are
denominated in Angola kwanza,
earn interest at an average
rate of 22.7% (31 Dec '17: 15.7%;
1 Jul '18: 22.8%) p.a. and mature
within 12 months. Accrued interest
is payable at maturity.
7 SHARE CAPITAL AND TREASURY SHARES
7.1 Stated capital
Conversion of share capital 671 - 671
Conversion of share premium 6 845 - 6 845
7 516 - 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 previous year.
7.2 Ordinary share capital
Authorised:
1 300 000 000 (1 Jul '18:
1 300 000 000) no par value
ordinary shares; (31 Dec '17:
650 000 000 ordinary shares of
113.4 cents each)
Issued:
591 338 502 (1 Jul '18: 591 338 502)
no par value ordinary shares;
(31 Dec '17: 591 338 502 ordinary
shares of 113.4 cents each) - 671 -
Reconciliation of movement in
number of ordinary shares issued:
Number of shares
30 Dec '18 31 Dec '17 1 Jul '18
Balance at the beginning
of the period 591 338 502 600 021 829 600 021 829
Buy-back and cancellation
of ordinary shares - (8 683 327) (8 683 327)
Balance at the end of
the period 591 338 502 591 338 502 591 338 502
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
30 Dec '18 31 Dec '17 1 Jul '18
Issued ordinary share capital 591 338 502 591 338 502 591 338 502
Treasury shares (note 7.4) (37 009 116) (36 706 184) (36 659 642)
554 329 386 554 632 318 554 678 860
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.
Rm Rm Rm
7.3 Deferred share capital
Authorised:
720 000 000 (31 Dec '17:
360 000 000; 1 Jul '18:
720 000 000) non-convertible,
non-participating, non-transferable
no par value deferred shares
Issued:
305 621 601 (31 Dec '17:
305 621 601; 1 Jul '18: 305 621 601)
non-convertible, non-participating,
non-transferable no par value
deferred shares - - -
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.
7.4 Treasury shares
37 009 116 (31 Dec '17: 36 706 184;
1 Jul '18: 36 659 642)
ordinary shares 618 562 554
Reconciliation of movement in
number of treasury shares for
the Group:
Number of shares
30 Dec '18 31 Dec '17 1 Jul '18
Balance at the beginning
of the period 36 659 642 36 166 544 36 166 544
Shares purchased during
the period 630 341 678 621 689 219
Shares disposed during
the period (23 427) (9 590) (25 342)
Shares utilised for settlement
of equity-settled share-based
payment arrangements (257 440) (129 391) (170 779)
Balance at the end of
the period 37 009 116 36 706 184 36 659 642
Consisting of: 37 009 116 36 706 184 36 659 642
Shares owned by Shoprite
Checkers (Pty) Ltd 35 436 572 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 1 572 544 1 269 612 1 223 070
Rm Rm Rm
8 BORROWINGS
Consisting of:
ABSA Bank Ltd (note 8.1) 2 000 - -
Barclays Bank Mauritius Ltd
(note 8.2) 1 379 582 1 359
Standard Chartered Bank
(Mauritius) Ltd (note 8.3) 1 451 1 241 1 371
Standard Finance (Isle of Man)
Ltd (note 8.4) 5 077 3 722 4 113
First National Bank of Namibia Ltd 138 136 134
The Standard Bank of South
Africa Ltd - 11 -
10 045 5 692 6 977
Analysis of total borrowings: 10 045 5 692 6 977
Non-current 7 077 1 241 1 371
Current 2 968 4 451 5 606
Reconciliation of movement in
liabilities arising from financing
activities:
Carrying value at the beginning
of the period 6 977 3 274 3 274
Cash inflows 5 312 4 705 11 207
Cash outflows (2 657) (1 923) (7 895)
Foreign currency translation
differences including
hyperinflation effect 413 (364) 391
Carrying value at the end of
the period 10 045 5 692 6 977
8.1 ABSA Bank Ltd
This loan is denominated in ZAR
and unsecured. R1.00 billion is
payable after 36 months and bears
interest at an average rate of
8.4% p.a. The remaining balance is
payable after 60 months and bears
interest at an average of 8.7% p.a.
8.2 Barclays Bank Mauritius Ltd
This loan is denominated in US
dollar, unsecured, payable within
12 months and bears interest at
an average of 3.7% (31 Dec '17:
2.2%; 1 Jul '18: 2.5%) p.a.
8.3 Standard Chartered Bank
(Mauritius) Ltd
This loan is denominated in US
dollar, unsecured, payable within
12 months and bears interest at
an average of 4.0% (31 Dec '17:
2.0%; Jul '18: 2.7%) p.a.
8.4 Standard Finance (Isle of Man) Ltd
This loan is denominated in US
dollar, unsecured and payable
after 36 months. R1.45 billion
(31 Dec '17: R1.24 billion;
1 Jul '18: R1.37 billion) bears
interest at a fixed rate of 3.5%
p.a. and the remaining balance
bears interest at a fixed rate
of 4.3% (31 Dec '17: an average
rate of 2.3%; 1 Jul '18: an average
rate of 2.8%) p.a.
9 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 reporting period:
30 Dec '18 31 Dec '17 1 Jul '18
Carrying amount Rm Rm Rm
Government bonds and bills 3 522 2 601 3 690
Loans receivable 1 769 1 379 1 549
Borrowings 10 045 5 692 6 977
30 Dec '18 31 Dec '17 1 Jul '18
Fair value Rm Rm Rm
Government bonds and bills 3 583 2 602 3 681
Loans receivable 1 557 1 582 1 418
Borrowings 9 871 5 692 6 892
Restated*
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
30 Dec '18 31 Dec '17 1 Jul '18
Rm Rm Rm
10 EARNINGS PER SHARE
Profit attributable to owners
of the parent 2 258 2 912 5 211
Re-measurements (65) 34 246
Profit on disposal and scrapping
of property (10) - -
Profit on disposal of assets
held for sale (32) (20) (20)
Loss on disposal and scrapping
of plant and equipment and
intangible assets 16 36 108
Impairment of property, plant
and equipment 62 - 49
Impairment of intangible assets - 40 51
Insurance claims receivable (103) - -
Loss on disposal of investment
in joint venture - - 80
Loss/(profit) on other investing
activities 2 (22) (22)
Income tax effect on re-measurements 19 (10) (49)
Headline earnings 2 212 2 936 5 408
* Restated for the change in accounting policy. Refer to note 2 for
more detail.
Number of ordinary shares
(net of treasury shares) '000 '000 '000
- In issue 554 329 554 632 554 679
- Weighted average 554 623 558 602 556 643
- Weighted average adjusted
for dilution 555 198 559 011 557 172
Reconciliation of weighted average
number of ordinary shares in issue
during the period:
Weighted average number of
ordinary shares 554 623 558 602 556 643
Adjustments for dilutive potential
of full share grants 575 409 529
Weighted average number of ordinary
shares for diluted earnings
per share 555 198 559 011 557 172
Earnings per share Cents Cents Cents
- Basic earnings 407.3 521.3 936.0
- Diluted earnings 406.8 520.9 935.2
- Basic headline earnings 398.9 525.6 971.4
- Diluted headline earnings 398.5 525.2 970.5
Rm Rm Rm
11 CASH FLOW INFORMATION
11.1 Non-cash items
Depreciation of property,
plant and equipment 1 313 1 192 2 518
Amortisation of intangible assets 191 167 364
Net fair value losses on financial
instruments - 3 2
Net monetary gain (439) - (653)
Exchange rate losses/(gains) 3 (4) 251
Profit on disposal and scrapping
of property (10) - -
Profit on disposal of assets
held for sale (32) (20) (20)
Loss on disposal and scrapping
of plant and equipment and
intangible assets 16 36 108
Impairment of property, plant
and equipment 62 - 49
Impairment of intangible assets - 40 51
Loss on disposal of investment in
joint venture - - 80
Movement in provisions 31 34 (15)
Movement in cash-settled
share-based payment accrual (31) 22 21
Movement in share-based payment
reserve 39 23 64
Movement in fixed escalation
operating lease accruals 34 63 99
1 177 1 556 2 919
11.2 Changes in working capital
Inventories (4 065) (4 244) (880)
Trade and other receivables* (775) (584) (15)
Trade and other payables* 3 921 6 419 3 568
(919) 1 591 2 673
* Restated for the change in accounting policy. Refer to note 2
for more detail.
12 RELATED-PARTY INFORMATION
During the period under review,
in the ordinary course of business,
certain companies within the Group
entered into transactions with
each other. All these intergroup
transactions are similar to those
in the prior year and have been
eliminated in the condensed
interim financial statements
on consolidation.
13 NEW STANDARDS AND INTERPRETATIONS
NOT YET EFFECTIVE
IFRS 16: Leases replaces IAS 17:
Leases with effect from the year
ending 28 June 2020. IFRS 16 will
result in most leases being recognised
in the statement of financial position,
as the distinction between operating
and finance leases has been removed.
Under the new standard, an asset
representing the right to use the
leased item and a financial liability,
to pay rentals, will be recognised.
The only exceptions are short-term
and low-value leases. The new standard
will primarily affect the accounting
for operating leases relating to retail
stores. As at the reporting date the
Group has non-cancellable operating
lease commitments of R21.2 billion.
The Group has not yet determined the
extent of the right of use asset nor
the liability for future payments and
how this will affect profit and
classification of cash flows.
14 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 720 1 291 1 621
Contingent liabilities 296 175 356
Net asset value per share (cents) 4 701 4 747 4 937
DIRECTORATE AND ADMINISTRATION
Executive directors
PC Engelbrecht (CEO), A de Bruyn (CFO), B Harisunker
Non-executive director
CH Wiese (chairman)
Independent non-executive directors
JF Basson, JJ Fouche, EC Kieswetter, AM le Roux, ATM Mokgokong,
JA Rock, SA Zinn
Alternate non-executive director
JD Wiese
Company secretary
PG du Preez
Registered office
Cnr William Dabbs Street and Old Paarl Road, Brackenfell, 7560,
South Africa, PO Box 215, Brackenfell, 7561, South Africa
Telephone: +27 (0)21 980 4000, facsimile: +27 (0)21 980 4050,
Website: http://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: http://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: http://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: http://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: http://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: http://www.pwc.com/za
26 February 2019
Date: 26/02/2019 09:00:00 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.
Sharenet Sites 
