Wrap Text
Unaudited results for the 26 weeks ended 31 December 2017
SHOPRITE HOLDINGS LIMITED
(Reg. No. 1936/007721/06)
(ISIN: ZAE 000012084)
(JSE Share code: SHP)
(NSX Share code: SRH)
(LuSE Share code: SHOPRITE)
("the Group")
SHOPRITE HOLDINGS: UNAUDITED RESULTS FOR THE 26 WEEKS ENDED 31 DECEMBER 2017
Key information
- Diluted headline earnings per share of 525.2 cents, up 14.2%
- Trading profit increased by 5% to R4.104 billion
- Turnover increased by 6.3% to R75.823 billion
- Dividend per share of 205 cents declared, an increase of 13.9% over the
180 cents of the corresponding period.
Pieter Engelbrecht, chief executive:
Shoprite produced an industry-leading performance in the 26 weeks to 31
December 2017. Total turnover grew 6.3% from R71.297 billion to R75.823
billion on the back of 3.9% growth in volume of products sold and 3.6%
growth in number of customers. Trading profit was 5% higher at R4.104
billion. This was a satisfactory performance given that Shoprite RSA
internal inflation dropped seven percentage points to just 0.4% compared to
the previous year.
Group results were boosted by a strong performance in our core South African
supermarket operations, which grew turnover by 7.8%. Turnover of
Supermarkets Non-RSA operations, however, declined 0.4%, measured against an
exceptional prior year increase of 32.3%. At constant currencies,
Supermarkets Non-RSA turnover grew 1.9%.
The performance by the South African operations, boosted by the continued
success of Checkers' sharpened focus on high income group customers, helped
offset the effect of a challenging year for Non-RSA operations. The Group
advanced market share in RSA by 0.44 percentage points, which is testimony
to its resilience in less favourable periods.
This is an inversion of the trend in the previous year and validates the
strength of our strategy which not only includes geographical
diversification, but also the extraction of value across all operations and
brands.
Despite negligible price inflation, turnover and trading profit improved
and the Group achieved a healthy trading margin of 5.41%.
While the corresponding period saw internal inflation in RSA increase from
2.7% to 7.4%, the current interim period saw internal inflation drop sharply
to just 0.4%, with deflation recorded across a range of products and now
affecting more than 5 000 products.
To sustain long term growth both in South Africa and beyond its borders, the
Group opened a net 158 new stores during the past 12 months and at the end
of December was trading from 2 811 outlets, adding 4 254 additional jobs in
the reporting period, to bring the total staff complement to more than
148 000.
26 February 2018
Enquiries:
Shoprite Holdings Limited Tel: 021 980 4000
Pieter Engelbrecht, chief executive
Marius Bosman, chief financial officer
Adele Lambrechts Tel: 021 980 4000
OPERATING ENVIRONMENT
The Group was once again able to demonstrate its resilience to economic
headwinds and its ability to withstand challenges across its Non-RSA
operations.
South Africa has been in an almost no-growth situation for most of 2017,
unemployment stood at 26.7% in the fourth quarter of 2017, consumer
confidence was at low levels and our customers have been under unprecedented
financial pressure. The Group experienced deflation in most product ranges.
Non-RSA operations continued to be challenged by harsh trading environments,
forex shortages, low commodity prices and political instability.
COMMENTS ON THE RESULTS
Statement of Comprehensive Income
Total turnover
Total turnover for the Shoprite Group increased by 6.3% for the 26 weeks to
31 December 2017 - from R71.30 billion to R75.82 billion while growth on a
like-for-like basis was 2.0%. The growth this year must be seen in the
context of the very strong growth of 14% in the corresponding 26 weeks of
last year. Supermarkets RSA reported turnover growth of 7.8% and, on a like-
for-like basis, 3.5% while Supermarkets Non-RSA reported a decline in sales
of 0.4% with a like-for-like decline of 6.4%. At constant currency rates
Supermarkets Non-RSA sales increased by 1.9%.
Expenses
Total expenses increased by 9.3%. Depreciation and amortisation as well as
the increase in the cost of operating leases grew at a higher rate than
turnover, mainly because of new stores being opened. Depreciation and
amortisation is also affected by the new SAP ERP system having been
implemented. During the 12 months a net 74 supermarkets and 56 LiquorShop
outlets were opened, while a net 21 unprofitable furniture stores were
closed, improving the profitability of the Furniture division.
Escalations in expenses such as security, electricity and other energy costs
were beyond the control of the Group due to electricity tariff increases
being set by NERSA, while Private Security Industry Regulatory Authority
(PSiRA) agreed on wage increases in the security sector. These expenses were
nevertheless monitored as carefully as possible.
Trading margin
The trading margin decreased marginally from 5.48% to 5.41%. This margin
reflects the investment in new stores and in the supply-chain
infrastructure, with Cilmor in Cape Town coming on stream. The reduced
margin is mainly due to the slowdown in turnover in Non-RSA.
Exchange rate gains
The Group recorded an exchange rate gain of R4 million against a loss of
R188 million in the corresponding period. The loss in the previous year was
partly due to the devaluation of certain Non-RSA currencies against the US$
and the strengthening of the rand during the period under review with the
resultant effect on short-term loan balances. During the reporting 26 weeks
the Group obtained more offshore funding to support the Non-RSA operations
with the result that short-term intergroup loans were reduced and with it
the forex risk in South Africa.
Finance cost and interest received
Net interest expense, when compared to the corresponding period, decreased
due to the convertible bonds that were converted during the second half of
last year. This reduction was offset by additional funding required for the
expansion in Non-RSA.
Statement of Financial Position
Property, plant and equipment and intangible assets
The increase is due to the investment in 171 new corporate outlets which
included more own stores built, vacant land purchased for strategic
purposes, investment in information technology to support inventory
management, completion of the Cilmor distribution centre as well as normal
asset replacements.
Cash and cash equivalents and bank overdrafts
The decrease in cash at the reporting date resulted from (1) Buy-back and
cancellation of ordinary shares of R1.75 billion; (2) Purchase of additional
US$ Index Linked Angolan Government bonds to the value of R1 billion during
the 26 weeks. This was done as a hedge against a possible devaluation of the
Angolan kwanza; (3) Capital expenditure for the six months was about 13%
higher than that of the corresponding six months.
Inventory
The increase in inventory is due to the provisioning of the net 121 new
corporate outlets as well as the increased capacity created by the new
Cilmor food distribution centre in the Western Cape. Although fully stocked,
this centre did not operate at full capacity at the end of December, which
partly accounts for the increase in inventory.
The Group also made a strategic decision to allow Shoprite to participate
alongside Checkers in the highly successful Black Friday promotion in
November 2017 with the result that Checkers were slightly overstocked in
certain lines. However, those lines were all incorporated in the Heyday
promotion in February.
Trade and other payables
Trade and other payables show an increase of 5.9% on the previous year. This
increase goes hand in hand with the inventory increase.
Borrowings
The convertible bonds were converted in April 2017, but additional financing
was arranged to fund the expansion in Non-RSA. The Group is investigating
various medium to longer term funding options to support future
developments.
Pro forma information
Certain financial information presented in these 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. The pro forma information
has neither been reviewed nor been reported on by the Group's external
auditors.
Impact of the Group's pro forma constant currency disclosure
The Group discloses unaudited constant currency information in order to
indicate the Group's underlying Non-RSA businesses 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.
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 on prior period 26 weeks Reported Constant
Currency Currency
Angola kwanza (13.1) (9.5)
Nigeria naira 5.1 9.3
Zambia kwacha 4.4 4.5
Mozambique metical 32.3 13.2
Total Supermarkets Non-RSA (0.4) 1.9
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.
References were made to the following growth Like-
percentages in sale of merchandise for the Reported for-like
26 weeks to 31 December 2017 % %
Total 6.3 2.0
Supermarkets RSA 7.8 3.5
Supermarkets Non-RSA (0.4) (6.4)
NUMBER OF OUTLETS 31 DECEMBER 2017
12 MONTHS CONFIRMED
NEW
STORES TO
DEC 2016 OPENED CLOSED DEC 2017 JUNE 2019
SUPERMARKETS 1 202 84 10 1 276 99
SHOPRITE 602 31 4 629 65
CHECKERS 204 15 1 218 15
CHECKERS HYPER 37 0 0 37 0
USAVE 359 38 5 392 19
LIQUORSHOP 368 57 1 424 12
HUNGRY LION 194 14 2 206 8
FURNITURE 512 16 37 491 10
OK FURNITURE 459 14 36 437 10
HOUSE & HOME 53 2 1 54 0
OK FRANCHISE 377 61 24 414 8
TOTAL STORES 2 653 232 74 2 811 137
COUNTRIES OUTSIDE RSA 14 0 0 14
TOTAL STORES OUTSIDE RSA 417 52 9 460 45
These numbers exclude the MediRite pharmacies as they are located within
stores.
OPERATIONAL REVIEW
Supermarkets RSA
The Group's core business, the South African supermarket operation, produced
an exceptional performance, growing sales by 7.8%, and generating an
increased trading profit of R3.342 billion, R350 million higher than the
R2.992 billion in the corresponding period.
This growth was well ahead of competitors, reflecting continued gains in
market share.
Trading through 1 451 outlets and generating 81% of the Group's total
supermarket sales, the division continues to lead the industry with its
extensive and increasingly sophisticated supply-line infrastructure that
ensures on-shelf availability. Integrated planning and strict cost
disciplines continue to enhance the Group's ability to operate successfully
despite limited price increases and the strain on increasingly financially-
stretched customers.
The Group continues to provide value at affordable prices for these
customers through its extensive global sourcing capabilities. Private label
brands, which assist price sensitive consumers, increased their contribution
by 1.2 percentage points to make up 15.4% of sales.
During the review period the Group intensified its customer-centric focus in
every aspect of its business to serve the needs of customers better. This
was particularly evident at Checkers, which grew sales by 9.6% and gained
market share on the back of significant improvements in service,
enhancements to its fresh products and convenience food offerings and
upgraded store design.
The flagship Shoprite brand, with its focus on middle and lower-income
consumers, remained fully exposed to the effects of a strained economy, and
sales increased by a creditable 6.2% under the circumstances. Down-trading
in certain categories reflect the fact that customers are stretched to their
limit, and Shoprite has responded with the provision of affordable options
including R5 meals and a bigger choice of private label products.
The small-format Usave chain, which offers the lowest possible prices on a
restricted product range, performed exceptionally well with turnover growth
of 8.5% reflecting 38 new store openings and the success of its value
offering to its customers.
The Group has made its first significant investment into a digital
transformation programme and continues to explore technology-related
opportunities. Following a successful pilot partnership with Uber Eats in
Cape Town, the Group is planning to extend its offering to Johannesburg and
Durban.
Supermarkets Non-RSA
Supermarkets Non-RSA, which trades in 14 countries in the rest of Africa and
Indian Ocean islands, produced disappointing results for the period under
review.
Sales across the 30 supermarkets in Angola were down 9.5% in local currency,
against growth of 155.4% in the previous year. The decline primarily
reflects last year's exceptional performance and a drop in internal
inflation from 41.3% to -1.8%, panic buying that abated in a more
competitive landscape.
Nigeria's turnover growth in local currency was 9.3%, but customer volumes
were lower as inflation hit their disposable income while the Zambian
operations are starting to show positive growth, with sales up 4.5% in local
currency terms.
Expansion in Africa continues with a planned entry into Kenya before the end
of 2018, where weakened competitor positions have opened a window of
opportunity, to strengthen the Group's presence in East Africa.
Chronic shortage of foreign currency, particularly in the oil-producing
countries such as Angola and Nigeria remains an issue, but the Group has a
significant competitive advantage as it funds its stock requirements from
its external balance sheet, unlike many other traders in the region.
Results in Non-RSA operations should be viewed against the prior year's
exceptional sales performance and unprecedented increase in customers, as
well as against management's prior-year caution that such high growth levels
may not be sustainable.
Furniture
The ongoing refinement of the Furniture division continued to yield fruit,
with the furniture division growing total sales by 10.7%, despite credit
sales participation dropping by almost a third to only 15% of total sales.
Trading profit grew 15.8% off a low base and this growth was assisted by the
closure of 37 loss making stores.
The increase was assisted by the continued strong performance of its 81
stores outside South Africa which increased sales by 14.4% during the
reporting period, with Angola continuing to do well.
In South Africa, where the division operates 410 outlets under various
brands, sales grew 9.7%.
Other Operating Segments
The ongoing restructuring of the OK Franchise division, aimed at improving
service delivery to members and enhancing the image of the OK brand among
consumers, continues to yield positive results. Turnover increased by 8% and
it continues to gain market share. The division now has 414 members in South
Africa, Namibia and Swaziland as it gained a net 37 new members in the 12
months to 31 December 2017. As the Group continues to enhance support for
members, which includes increasing delivery frequency to members, their
purchases from Group distribution centres grew by 25.8% over the six-month
period.
GROUP PROSPECTS AND OUTLOOK
The Group continues to face extremely testing trading conditions, with
positive economic improvements across our operations still some way off and
food inflation expected to remain low. The Group has, however, proven that
notwithstanding such conditions, it continues to extract sales and profit
growth ahead of its competitors.
There are tentative signs of renewed confidence in South Africa and some
green shoots in several economies in which the Group operates which point to
positive change in the medium term.
Consumers remain under pressure but have felt some respite with fuel price
decreases, while the strong rand will have a positive effect on import
prices. These factors point to the potential for improvements in sales and
profitability.
Sales in the Non-RSA business will remain under pressure in the coming
months, as currency weakness, low commodity prices and forex shortages
continue to hamper economic growth in most territories. The Angolan currency
devaluation will restrain Angolan sales results in rands.
The Group has entrenched its position as the continent's leading retailer
and remains well positioned to capitalise on any change in conditions with
its continued investment into its enviable store footprint, superior brands
and its focus on its strategic growth drivers.
The Group expects to retain its market-leading growth and remains cautiously
optimistic for a further improvement in performance in 2018.
DIVIDEND NO 138
The board has declared an interim dividend of 205 cents (2016: 180 cents)
per ordinary share, payable to shareholders on Monday, 19 March 2018. The
dividend has been declared out of income reserves. The last day to trade cum
dividend will be Tuesday, 13 March 2018. As from Wednesday, 14 March 2018,
all trading of Shoprite Holdings Ltd shares will take place ex dividend. The
record date is Friday, 16 March 2018. Share certificates may not be
dematerialised or rematerialised between Wednesday, 14 March 2018, and
Friday, 16 March 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 164 cents per share for shareholders
liable to pay Dividends Tax and 205 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.
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. The preparation of these results
has been supervised by Mr M Bosman, CA(SA). There have been no material
changes in the affairs or financial position of the Group and its
subsidiaries from 31 December 2017 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.
DIRECTORATE AND ADMINISTRATION
Executive directors
PC Engelbrecht (CEO), M Bosman, B Harisunker, EL Nel
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 directors
JAL Basson, JD Wiese
Company secretary
PG du Preez
Registered office
Cnr William Dabs and Old Paarl Roads, Brackenfell, 7560, South Africa
PO Box 215, Brackenfell, 7561, South Africa
Telephone: +27 (0)21 980 4000, facsimile: +27 (0)21 980 4050
Website: www.shopriteholdings.co.za
Transfer secretaries
South Africa: Computershare Investor Services (Pty) Ltd, PO Box 61051,
Marshalltown, 2107, South Africa
Telephone: +27 (0)11 370 5000, facsimile: +27 (0)11 688 5238,
email: Web.Queries@Computershare.co.za
Website: www.computershare.com
Namibia: Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek, Namibia
Telephone: +264 (0)61 227 647, email: ts@nsx.com.na
Zambia: ShareTrack Zambia, Spectrum House, Stand 10 Jesmondine,
Great East Road, Lusaka, Zambia, PO Box 37283, Lusaka, Zambia
Telephone: +260 (0)211 374 791 - 374 794, facsimile: +260 (0)211 374 781,
email: sharetrack@scs.co.zm
Website: www.sharetrackzambia.com
Sponsors
South Africa: Nedbank Corporate and Investment Banking,
PO Box 1144, Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8525, facsimile: +27 (0)11 294 8525,
email: doristh@nedbank.co.za
Website: www.nedbank.co.za
Namibia: Old Mutual Investment Services (Namibia) (Pty) Ltd,
PO Box 25549, Windhoek, Namibia
Telephone: +264 (0)61 299 3347, facsimile: +264 (0)61 299 3500,
email: NAM-OMInvestmentServices@oldmutual.com
Zambia: Pangaea Securities Ltd, 1st Floor, Pangaea Office Park,
Great East Road, Lusaka, Zambia, PO Box 30163, Lusaka 10101, Zambia
Telephone: +260 (0)211 220 707 / 238 709/10, Facsimile: +260 (0)211 220 925,
email: info@pangaea.co.zm, Website: www.pangaea.co.zm
Auditors
PricewaterhouseCoopers Incorporated, PO Box 2799, Cape Town, 8000,
South Africa
Telephone: +27 (0)21 529 2000, facsimile: +27 (0)21 529 3300
Website: www.pwc.com/za
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
% 31 Dec '17 1 Jan '17 2 Jul '17
Notes change Rm Rm Rm
Sale of merchandise 6.3 75 823 71 297 141 000
Cost of sales 5.8 (57 772) (54 591) (107 174)
GROSS PROFIT 8.1 18 051 16 706 33 826
Other operating income 12.7 1 360 1 207 2 615
Depreciation and
amortisation 11.0 (1 195) (1 077) (2 176)
Operating leases 13.0 (2 119) (1 876) (3 819)
Employee benefits 5.9 (5 574) (5 262) (10 498)
Other operating expenses 10.8 (6 419) (5 791) (11 821)
TRADING PROFIT 5.0 4 104 3 907 8 127
Exchange rate gains/(losses) 4 (188) (236)
Items of a capital nature (34) (57) (166)
OPERATING PROFIT 11.3 4 074 3 662 7 725
Interest received 18.6 121 102 226
Finance costs (18.5) (189) (232) (340)
Share of profit/(loss) of
equity accounted investments 8 (23) 4
PROFIT BEFORE INCOME TAX 14.4 4 014 3 509 7 615
Income tax expense 2.4 (1 094) (1 068) (2 180)
PROFIT FOR THE PERIOD 19.6 2 920 2 441 5 435
OTHER COMPREHENSIVE INCOME,
NET OF INCOME TAX (554) (724) (933)
Items that will not be
reclassified to profit or loss
Re-measurements of
post-employment medical
benefit obligations - - 3
Items that may subsequently
be reclassified to profit
or loss
Foreign currency
translation differences (539) (657) (822)
Share of foreign
currency translation
differences of equity
accounted investments (4) (60) (103)
Gains/(losses) on
effective cash flow hedge (11) (7) (11)
For the period 3 (7) (11)
Reclassified to profit
for the period (14) - -
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD 2 366 1 717 4 502
PROFIT ATTRIBUTABLE TO: 2 920 2 441 5 435
Owners of the parent 2 912 2 438 5 428
Non-controlling interest 8 3 7
TOTAL COMPREHENSIVE
INCOME ATTRIBUTABLE TO: 2 366 1 717 4 502
Owners of the parent 2 358 1 714 4 495
Non-controlling interest 8 3 7
Basic earnings
per share (cents) 6 14.6 521.3 455.0 999.8
Diluted earnings
per share (cents) 6 15.1 520.9 452.6 984.8
Basic headline
earnings per
share (cents) 6 13.6 525.6 462.5 1 023.2
Diluted headline
earnings per
share (cents) 6 14.2 525.2 460.0 1 007.4
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
and
Unaudited restated Audited
31 Dec '17 1 Jan '17 2 Jul '17
Notes Rm Rm Rm
ASSETS
NON-CURRENT ASSETS 25 935 22 388 24 572
Property, plant and equipment 19 359 17 553 18 407
Equity accounted investments 31 30 27
Held-to-maturity investments 1 1 320 750 1 311
Loans and receivables 2 1 233 651 1 110
Deferred income tax assets 831 737 859
Intangible assets 2 599 2 152 2 355
Trade and other receivables* 562 515 503
CURRENT ASSETS 37 351 32 120 31 032
Inventories 21 765 18 481 17 794
Trade and other receivables* 5 545 5 581 5 105
Derivative financial instruments - 12 1
Current income tax assets 148 113 154
Held-to-maturity investments 1 1 281 - -
Loans and receivables 2 146 347 211
Cash and cash equivalents 8 466 7 586 7 767
Assets held for sale 34 15 119
TOTAL ASSETS 63 320 54 523 55 723
EQUITY
CAPITAL AND RESERVES
ATTRIBUTABLE TO OWNERS
OF THE PARENT
Share capital 3 671 652 681
Share premium 6 845 4 295 8 585
Treasury shares 3 (562) (799) (446)
Reserves 19 375 17 326 18 838
26 329 21 474 27 658
NON-CONTROLLING INTEREST 87 58 91
TOTAL EQUITY 26 416 21 532 27 749
LIABILITIES
NON-CURRENT LIABILITIES 2 801 1 485 1 492
Borrowings 4 1 241 - -
Deferred income tax liabilities 110 141 96
Provisions 258 283 232
Fixed escalation operating
lease accruals 1 192 1 061 1 164
CURRENT LIABILITIES 34 103 31 506 26 482
Trade and other payables 23 733 22 407 17 414
Borrowings 4 4 451 6 632 3 274
Derivative financial instruments 2 44 -
Current income tax liabilities 359 708 582
Provisions 152 163 154
Bank overdrafts 5 406 1 552 5 058
TOTAL LIABILITIES 36 904 32 991 27 974
TOTAL EQUITY AND LIABILITIES 63 320 54 523 55 723
* The unaudited 1 January 2017 figures have been restated for the
reclassification of prepaid land leases from current to non-current
assets. These restatements have not been subject to an audit.
Refer to note 10.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Non-
Total controlling
Rm equity interest
UNAUDITED 26 WEEKS ENDED 1 JANUARY 2017
BALANCE AT 3 JULY 2016 21 139 65
Total comprehensive income 1 717 3
Profit for the period 2 441 3
Recognised in other comprehensive
income
Foreign currency translation
differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Share-based payments - value of
employee services 69
Modification of cash bonus arrangement
transferred from provisions 6
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve -
Ordinary shares issued on conversion of
convertible bonds 268
Equity component of convertible bonds
converted during the period transferred
to retained earnings -
Dividends distributed to shareholders (1 609) (10)
BALANCE AT 1 JANUARY 2017 21 532 58
AUDITED 52 WEEKS ENDED 2 JULY 2017
BALANCE AT 3 JULY 2016 21 139 65
Total comprehensive income 4 502 7
Profit for the period 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
UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 27 749 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)
BALANCE AT 31 DECEMBER 2017 26 416 87
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Share Share
Rm Total capital premium
UNAUDITED 26 WEEKS ENDED 1 JANUARY 2017
BALANCE AT 3 JULY 2016 21 074 650 4 029
Total comprehensive income 1 714 - -
Profit for the period 2 438
Recognised in other comprehensive
income
Foreign currency translation
differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Share-based payments - value of
employee services 69
Modification of cash bonus arrangement
transferred from provisions 6
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve -
Ordinary shares issued on conversion of
convertible bonds 268 2 266
Equity component of convertible bonds
converted during the period transferred
to retained earnings -
Dividends distributed to shareholders (1 599)
BALANCE AT 1 JANUARY 2017 21 474 652 4 295
AUDITED 52 WEEKS ENDED 2 JULY 2017
BALANCE AT 3 JULY 2016 21 074 650 4 029
Total comprehensive income 4 495 - -
Profit for the period 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
UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 27 658 681 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)
BALANCE AT 31 DECEMBER 2017 26 329 671 6 845
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Attributable to owners of the parent
Treasury Other Retained
Rm shares reserves earnings
UNAUDITED 26 WEEKS ENDED 1 JANUARY 2017
BALANCE AT 3 JULY 2016 (760) 554 16 601
Total comprehensive income - (724) 2 438
Profit for the period 2 438
Recognised in other comprehensive
income
Foreign currency translation
differences (717)
Losses on effective cash flow hedge (10)
Income tax effect of losses on
effective cash flow hedge 3
Share-based payments - value of
employee services 69
Modification of cash bonus arrangement
transferred from provisions 6
Purchase of treasury shares (59)
Treasury shares disposed 1
Realisation of share-based payment reserve 19 (19)
Ordinary shares issued on conversion of
convertible bonds
Equity component of convertible bonds
converted during the period transferred
to retained earnings (20) 20
Dividends distributed to shareholders (1 599)
BALANCE AT 1 JANUARY 2017 (799) (134) 17 460
AUDITED 52 WEEKS ENDED 2 JULY 2017
BALANCE AT 3 JULY 2016 (760) 554 16 601
Total comprehensive income - (936) 5 431
Profit for the period 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
UNAUDITED 26 WEEKS ENDED 31 DECEMBER 2017
BALANCE AT 2 JULY 2017 (446) (969) 19 807
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 (140)
Treasury shares disposed 2
Realisation of share-based payment reserve 22 (22)
Transfer from capital redemption reserve (2) 2
Dividends distributed to shareholders (1 829)
BALANCE AT 31 DECEMBER 2017 (562) (1 517) 20 892
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 Dec '17 1 Jan '17 2 Jul '17
Notes Rm Rm Rm
CASH FLOWS FROM
OPERATING ACTIVITIES 3 978 4 221 3 339
Operating profit 4 074 3 662 7 725
Less: investment income (160) (83) (189)
Non-cash items 7.1 1 556 1 602 3 089
Changes in working capital 7.2 1 591 1 651 (2 278)
Cash generated from operations 7 061 6 832 8 347
Interest received 256 170 399
Interest paid (245) (228) (416)
Dividends received 25 15 16
Dividends paid (1 839) (1 607) (2 595)
Income tax paid (1 280) (961) (2 412)
CASH FLOWS UTILISED BY
INVESTING ACTIVITIES (4 327) (3 477) (6 985)
Investment in property, plant and
equipment and intangible assets
to expand operations (2 093) (2 011) (3 836)
Investment in property, plant and
equipment and intangible assets to
maintain operations (841) (572) (1 331)
Proceeds on disposal of property,
plant and equipment and intangible
assets 56 5 40
Proceeds on disposal of assets
held for sale 120 - -
Payments for AOA, USD Index Linked,
Angola Government Bonds (1 010) (770) (1 370)
Payments for Angola Treasury Bills (458) - -
Amounts paid to Resilient
Africa (Pty) Ltd (1) (59) (612)
Amounts received from Resilient
Africa (Pty) Ltd 9 - 136
Amounts paid to RMB Westport Osapa (191) - -
Amounts repaid by employees 102 - 123
Other investing activities (20) (70) (125)
Cash outflow on disposal of
investment in subsidiary - - (9)
Acquisition of subsidiary - - (1)
CASH FLOWS FROM FINANCING
ACTIVITIES 894 1 731 2 826
Purchase of treasury shares (140) (59) (59)
Proceeds from treasury shares
disposed 2 2 4
Buy-back and cancellation of
ordinary shares (1 750) - -
Convertible bonds settled at
maturity date 4 - - (108)
(Repayment of)/increase in
borrowing from ABSA Bank Ltd 4 (1 344) 1 399 1 361
(Repayment of)/increase in
borrowing from Barclays
Bank Mauritius Ltd 4 (579) - 1 224
Increase in borrowing from
Standard Chartered Bank
(Mauritius) Ltd 4 672 490 476
Repayment of borrowing from
Standard Bank de Angola, S.A. 4 - (115) (111)
Increase in borrowing from
Standard Finance
(Isle of Man) Ltd 4 4 031 - -
Increase in other borrowings 4 2 14 39
NET MOVEMENT IN CASH AND
CASH EQUIVALENTS 545 2 475 (820)
Cash and cash equivalents at the
beginning of the period 2 709 3 819 3 819
Effect of exchange rate movements
on cash and cash equivalents (194) (260) (290)
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD 3 060 6 034 2 709
Consisting of:
Cash and cash equivalents 8 466 7 586 7 767
Bank overdrafts (5 406) (1 552) (5 058)
3 060 6 034 2 709
CONDENSED OPERATING SEGMENT INFORMATION
ANALYSIS PER REPORTABLE SEGMENT
Super- Super- Other
markets markets operating
RSA Non-RSA Furniture segments Consolidated
Rm Rm Rm Rm Rm
Unaudited 31 December 2017
Sale of merchandise 57 448 12 857 3 279 4 873 78 457
External 54 848 12 824 3 279 4 872 75 823
Inter-segment 2 600 33 - 1 2 634
Trading profit 3 342 553 110 99 4 104
Interest income
included in
trading profit 26 94 146 15 281
Depreciation and
amortisation* 1 047 239 52 21 1 359
Total assets 37 214 18 592 4 394 3 120 63 320
Unaudited 1 January 2017
Sale of merchandise 53 648 12 889 2 961 4 570 74 068
External 50 894 12 877 2 961 4 565 71 297
Inter-segment 2 754 12 - 5 2 771
Trading profit 2 992 746 95 74 3 907
Interest income
included in trading
profit 37 21 157 14 229
Depreciation and
amortisation* 921 227 50 22 1 220
Total assets 33 145 14 129 4 505 2 744 54 523
Audited 2 July 2017
Sale of merchandise 107 001 24 867 5 432 9 000 146 300
External 101 734 24 840 5 432 8 994 141 000
Inter-segment 5 267 27 - 6 5 300
Trading profit 6 424 1 407 123 173 8 127
Interest income
included in trading
profit 70 78 314 36 498
Depreciation and
amortisation* 1 884 421 108 44 2 457
Total assets 32 535 16 407 4 180 2 601 55 723
* Represent gross depreciation and amortisation before appropriate
allocations of distribution cost.
GEOGRAPHICAL ANALYSIS
Outside
South South
Africa Africa Consolidated
Rm Rm Rm
Unaudited 31 December 2017
Sale of merchandise - external 61 494 14 329 75 823
Non-current assets** 17 245 5 275 22 520
Unaudited and restated 1 January 2017
Sale of merchandise - external 57 081 14 216 71 297
Non-current assets** 15 313 4 907 20 220
Audited 2 July 2017
Sale of merchandise - external 113 660 27 340 141 000
Non-current assets** 16 101 5 164 21 265
** Non-current assets consist of property, plant and equipment, intangible
assets and non-financial trade and other receivables. The unaudited
1 January 2017 figures have been restated for the reclassification of
prepaid land leases from current to non-current assets. These
restatements have not been subject to an audit. Refer to note 10.
SELECTED EXPLANATORY NOTES TO THE CONDENSED CONSOLIDATED INTERIM RESULTS FOR
THE 26 WEEKS ENDED 31 DECEMBER 2017
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 Dec '17 1 Jan '17 2 Jul '17
Rm Rm Rm
1 HELD-TO-MATURITY INVESTMENTS
AOA, USD Index Linked,
Angola Government Bonds
(note 1.1) 2 178 750 1 311
Angola Treasury Bills
(note 1.2) 423 - -
2 601 750 1 311
Analysis of total
held-to-maturity investments:
Non-current 1 320 750 1 311
Current 1 281 - -
2 601 750 1 311
1.1 AOA, USD Index Linked, Angola
Government Bonds
The AOA, USD Index Linked, Angola
Government Bonds earn interest
at an average rate of 7.0%
(1 Jan '17: 7.0%; 2 Jul '17: 7.0%) p.a.
and are repayable between 5 and
36 months. Accrued interest is payable
bi-annually. These bonds are
denominated in Angola kwanza and no
allowance for impairment has been
made. The maximum exposure to credit
risk at the reporting date is the
carrying value. The Group does not
hold any collateral as security.
1.2 Angola Treasury Bills
The Angola Treasury Bills earn
interest at an average rate of 15.7%
(1 Jan '17: N/A; 2 Jul '17: N/A)
p.a. and are repayable within
3 months. Accrued interest is payable
at maturity. These bonds are
denominated in Angola kwanza and no
allowance for impairment has been
made. The maximum exposure to credit
risk at the reporting date is
the carrying value. The Group does
not hold any collateral as security.
2 LOANS AND RECEIVABLES
Amounts owing by associate
(note 2.1) 917 562 953
Amounts owing by employees - 225 102
Amounts owing by franchisees 286 210 266
Amounts owing by RMB Westport
Osapa (note 2.2) 176 - -
Other - 1 -
1 379 998 1 321
Analysis of total loans and
receivables:
Non-current 1 233 651 1 110
Current 146 347 211
1 379 998 1 321
2.1 Amounts owing by associate
The ZAR denominated shareholder loan
of R359 million (1 Jan '17: R562 million;
2 Jul '17: R367 million) owing by
Resilient Africa (Pty) Ltd earns
interest at an average rate of 6.6%
(1 Jan '17: 6.6%; 2 Jul '17: 6.6%) p.a.
and is repayable on demand, subject to
certain conditions. An impairment
allowance of R60 million (1 Jan '17: Nil;
2 Jul '17: R26 million) was recognised
for the shareholder loan. The maximum
exposure to credit risk at the reporting
date is the carrying value, which
approximates fair value. The Group
does not hold any collateral as
security for this amount.
The US dollar denominated amount of
R558 million (1 Jan '17: N/A;
2 Jul '17: R586 million) owing by
Resilient Africa (Pty) Ltd earns interest
at an average rate of 3.0% (1 Jan '17: N/A;
2 Jul '17: 3.0%) p.a. and is repayable
after seven years, subject to certain
conditions. No allowance for impairment
has been made. The maximum exposure
to credit risk at the reporting date
is the carrying value. Share pledges
and cession agreements are held in the
underlying subsidiaries of Resilient
Africa (Pty) Ltd as collateral for this amount.
2.2 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% (1 Jan '17: N/A; 2 Jul '17: N/A)
p.a. and is repayable after five years,
subject to certain conditions. No
allowance for impairment has been
made. The maximum exposure to credit
risk at the reporting date is the
carrying value. RMB Westport Osapa's
holding company provided a guarantee
and indemnity for 50% of the loan
amount which is in turn secured by
a pledge of 100% of the shareholding
in RMB Westport Osapa to the Group.
3 SHARE CAPITAL AND TREASURY SHARES
3.1 Ordinary share capital
Authorised:
650 000 000 (1 Jan '17: 650 000 000;
2 Jul '17: 650 000 000) ordinary
shares of 113.4 cents each
Issued:
591 338 502 (1 Jan '17: 574 453 281;
2 Jul '17: 600 021 829) ordinary
shares of 113.4 cents each 671 652 681
Reconciliation of movement in
number of ordinary shares issued:
Number of shares
31 Dec '17 1 Jan '17 2 Jul '17
Balance at the beginning
of the period 600 021 829 572 871 960 572 871 960
Shares issued during the period - 1 581 321 27 149 869
Buy-back and cancellation
of ordinary shares (8 683 327) - -
Balance at the end of the
period 591 338 502 574 453 281 600 021 829
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
31 Dec '17 1 Jan '17 2 Jul '17
Issued ordinary share capital 591 338 502 574 453 281 600 021 829
Treasury shares (note 3.3) (36 706 184) (38 418 322) (36 166 544)
554 632 318 536 034 959 563 855 285
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.
3.2 Deferred share capital
Authorised:
360 000 000 (1 Jan '17: 360 000 000;
2 Jul '17: 360 000 000)
non-convertible, non-participating
no par value deferred shares
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 Dec '17 1 Jan '17 2 Jul '17
Rm Rm Rm
Issued:
305 621 601 (1 Jan '17: 292 598 241;
2 Jul '17: 305 621 601)
non-convertible, non-participating
no par value deferred shares - - -
Reconciliation of movement in number of deferred shares issued:
Number of shares
31 Dec '17 1 Jan '17 2 Jul '17
Balance at the beginning of
the period 305 621 601 291 792 794 291 792 794
Shares issued during the
period - 805 447 13 828 807
Balance at the end of
the period 305 621 601 292 598 241 305 621 601
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.
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 Dec '17 1 Jan '17 2 Jul '17
Rm Rm Rm
All shares are fully paid up
and carry the same voting rights
as the ordinary shares.
671 652 681
3.3 Treasury shares
36 706 184 (1 Jan '17:
38 418 322; 2 Jul '17:
36 166 544) ordinary shares 562 799 446
Reconciliation of movement in number of treasury shares for the Group:
Number of shares
31 Dec '17 1 Jan '17 2 Jul '17
Balance at the beginning
of the period 36 166 544 38 246 183 38 246 183
Shares purchased during
the period 678 621 300 439 300 439
Shares disposed during
the period (9 590) (13 015) (19 259)
Shares utilised for settlement
of equity-settled share-based
payment arrangements (129 391) (115 285) (2 360 819)
Balance at the end of the
period 36 706 184 38 418 322 36 166 544
Consisting of:
Shares owned by
Shoprite Checkers (Pty) Ltd 35 436 572 35 438 823 35 436 572
Shares held by Shoprite
Checkers (Pty) Ltd for the
benefit of participants to
equity-settled share-based
payment arrangements 1 269 612 2 979 499 729 972
36 706 184 38 418 322 36 166 544
Unaudited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
31 Dec '17 1 Jan '17 2 Jul '17
Rm Rm Rm
4 BORROWINGS
Consisting of:
Convertible bonds - 4 446 -
ABSA Bank Ltd (note 4.1) - 1 364 1 304
Barclays Bank Mauritius Ltd (note 4.2) 582 - 1 173
Standard Chartered Bank (Mauritius)
Ltd (note 4.3) 1 241 682 652
Standard Finance (Isle of Man)
Ltd (note 4.4) 3 722 - -
First National Bank of Namibia Ltd 136 112 134
The Standard Bank of South Africa Ltd 11 - 11
Other borrowings - 28 -
5 692 6 632 3 274
Analysis of total borrowings:
Non-current 1 241 - -
Current 4 451 6 632 3 274
5 692 6 632 3 274
Reconciliation of movement in
liabilities arising from financing
activities:
Carrying value at the beginning
of the period 3 274 5 124 5 124
Cash inflows 4 705 1 903 3 100
Cash outflows (1 923) (115) (219)
Acquisitions - - 11
Disposals - - (31)
Foreign exchange movements (364) (71) (164)
Ordinary shares issued on
conversion of convertible bonds - (268) (4 587)
Other non-cash movements - 59 40
Carrying value at the end of
the period 5 692 6 632 3 274
4.1 ABSA Bank Ltd
This loan was denominated in
US dollar, unsecured, repaid
during the period and carried
interest at an average of 1.6%
(1 Jan '17: 1.2%; 2 Jul '17: 1.8%)
p.a.
4.2 Barclays Bank Mauritius Ltd
This loan is denominated in US dollar,
unsecured, payable within 12 months and
bears interest at an average of 2.2%
(1 Jan '17: N/A; 2 Jul '17: 2.2%) p.a.
4.3 Standard Chartered Bank (Mauritius) Ltd
This loan is denominated in US dollar,
unsecured, payable within 12 months
and bears interest at an average of
2.0% (1 Jan '17: 2.4%; 2 Jul '17: 2.5%) p.a.
4.4 Standard Finance (Isle of Man) Ltd
This loan is denominated in
US dollar and unsecured.
R1.24 billion is payable after
36 months and bears interest at
an average of 3.5% (1 Jan '17:
N/A; 2 Jul '17: N/A) p.a. The
remaining balance is payable
within 12 months and bears interest
at an average of 2.3% (1 Jan '17:
N/A; 2 Jul '17: N/A) p.a.
5 FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of AOA, USD Index Linked,
Angola Government Bonds included in
held-to-maturity investments amounted
to R2.2 billion (1 Jan '17: R750.0 million;
2 Jul '17: R1.3 billion) at the statement
of financial position date. The fair
value is calculated using cash flows
discounted at a rate based on the
market related borrowings rate of
7.0% (1 Jan '17: 7.0%; 2 Jul '17: 7.0%)
and is within level 2 of the fair value hierarchy.
The fair value of US dollar denominated
amounts owing by Resilient Africa (Pty)
Ltd included in loans and receivables
amounted to R558 million (1 Jan '17: N/A;
2 Jul '17: R586 million) at the statement
of financial position date. The fair value
is calculated using cash flows discounted at
a rate based on the market related borrowings
rate of 3.0% (1 Jan '17: N/A; 2 Jul '17: 3.0%)
and is within level 2 of the fair value hierarchy.
The fair value of amounts owing by employees
included in loans and receivables at
1 January 2017 amounted to R221 million
(2 Jul '17: R102 million). The fair value
was calculated using cash flows discounted
at a rate based on the market related borrowings
rate of 10.5% (2 Jul '17: 10.5%) and was
within level 2 of the fair value hierarchy.
The fair value of amounts owing by RMB
Westport Osapa included in loans and
receivables amounted to R176 million
(1 Jan '17: N/A; 2 Jul '17: N/A) at the
statement of financial position date.
The fair value is calculated using cash
flows discounted at a rate based on the
market related borrowings rate of 3.0%
(1 Jan '17: N/A; 2 Jul '17: N/A) and is
within level 2 of the fair value hierarchy.
The fair value of the liability component
of the convertible bonds included in
borrowings at 1 January 2017 amounted
to R4.5 billion. The fair value was
calculated using cash flows discounted at
a rate based on the market related borrowings
rate of 7.8% and was within level 2 of the
fair value hierarchy.
The fair value of the non-current amount
owed to Standard Finance (Isle of Man) Ltd
included in borrowings amounted to
R1.24 billion (1 Jan '17: N/A; 2 Jul '17: N/A)
at the statement of financial position date.
The fair value is calculated using cash flows
discounted at a rate based on the market
related borrowings rate of 3.5%
(1 Jan '17: N/A; 2 Jul '17: N/A) and
is within level 2 of the fair value
hierarchy.
The book value of all other financial
assets and liabilities approximate
the fair values thereof.
6 EARNINGS PER SHARE
Profit attributable to owners
of the parent 2 912 2 438 5 428
Re-measurements 34 57 167
Profit on disposal of assets
held for sale (20) - -
Loss on disposal and scrapping
of plant and equipment and
intangible assets 36 26 79
Impairment of property, plant
and equipment - - 19
Impairment of intangible assets 40 32 70
Insurance claims receivable - - (5)
(Profit)/loss on other investing
activities (22) (1) 3
Re-measurements included in
share of profit/loss of
equity-accounted investments - - 1
Income tax effect on re-measurements (10) (17) (41)
Headline earnings 2 936 2 478 5 554
Profit attributable to owners
of the parent:
Used in calculating basic earnings
per share 2 912 2 438 5 428
Add: Interest savings on
convertible bonds - - 135
Used in calculating diluted
earnings per share 2 912 2 438 5 563
Headline earnings 2 936 2 478 5 554
Add: Interest savings on
convertible bonds - - 135
Used in calculating diluted
headline earnings per share 2 936 2 478 5 689
Number of ordinary shares
(net of treasury shares) '000 '000 '000
- In issue 554 632 536 035 563 855
- Weighted average 558 602 535 753 542 927
- Weighted average adjusted
for dilution 559 011 538 585 564 814
Reconciliation of weighted average
number of ordinary shares in
issue during the period:
Weighted average number of
ordinary shares 558 602 535 753 542 927
Adjustments for dilutive potential
of full share grants and
convertible bonds 409 2 832 21 887
Weighted average number of ordinary
shares for diluted earnings
per share 559 011 538 585 564 814
Earnings per share Cents Cents Cents
- Basic earnings 521.3 455.0 999.8
- Diluted earnings 520.9 452.6 984.8
- Basic headline earnings 525.6 462.5 1 023.2
- Diluted headline earnings 525.2 460.0 1 007.4
Rm Rm Rm
7 CASH FLOW INFORMATION
7.1 Non-cash items
Depreciation of property,
plant and equipment 1 192 1 065 2 146
Amortisation of intangible assets 167 155 311
Net fair value losses/(gains)
on financial instruments 3 - (33)
Exchange rate (gains)/losses (4) 188 236
Profit on disposal of assets
held for sale (20) - -
Loss on disposal and
scrapping of plant and
equipment and intangible assets 36 26 79
Impairment of property, plant
and equipment - - 19
Impairment of intangible assets 40 32 70
Movement in provisions 34 5 (52)
Movement in cash-settled share-based
payment accrual 22 (17) 11
Movement in share-based
payment reserve 23 69 139
Movement in fixed escalation
operating lease accruals 63 79 163
1 556 1 602 3 089
7.2 Changes in working capital
Inventories (4 244) (3 802) (3 237)
Trade and other receivables (584) (641) (164)
Trade and other payables 6 419 6 094 1 123
1 591 1 651 (2 278)
8 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.
In terms of an employment agreement,
Dr Basson was entitled to put all
Shoprite Holdings Ltd shares directly
or indirectly held by him against the
Company whilst still in the employment
of the Company. The specific repurchase
was subject to the provisions of the
Memorandum of Incorporation of the
Company, the Companies Act, No. 71 of
2008 (as amended) and the JSE Limited
Listings Requirements, where applicable.
Dr Basson formally notified the Company
of the exercising of the put option on
2 May 2017 whereby a specific repurchase
of 8 683 327 Shoprite Holdings Ltd shares
was proposed at R211.01 per share.
Subsequently the purchase price of each
Put Option share was reduced to R201.07,
being the 30-day VWAP of the ordinary shares
up to and including 2 May 2017.
This transaction 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.
9 SUPPLEMENTARY INFORMATION
Contracted capital commitments 1 291 1 933 1 807
Contingent liabilities 175 107 85
Net asset value per share (cents) 4 747 4 006 4 905
10 RECLASSIFICATION OF DISCLOSURE ITEMS
Certain reclassifications of
statement of financial position
items at the previous year-end
resulted in changes to the relevant
1 January 2017 comparative information
to ensure accurate comparability with
the current year information. The
affected line items are detailed below.
Reclassification of fixed escalation
operating lease accruals to trade and
other receivables and reclassification of
prepaid land leases from current trade
and other receivables to non-current.
These reclassifications ensured that
all operating lease receivables are
classified together and that current
and non-current trade and other
receivables are reflected appropriately.
Decrease in fixed escalation
operating lease accruals 26 -
Increase in trade and other receivables 515 -
Increase in non-current assets 489 -
Decrease in trade and other receivables 489 -
Decrease in current assets 489 -
TOTAL ASSETS - -
Date: 26/02/2018 05:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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