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').
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