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Shoprite Holdings Limited - Reviewed Preliminary Results For The
Release Date: 19/08/2003 07:43:46 Code(s): SHP
Shoprite Holdings Limited - Reviewed preliminary results for the
year ended 30 June 2003
SHOPRITE HOLDINGS LIMITED
(Reg. No. 1936/007721/06)
(ISIN: ZAE000012084)
(JSE Share code: SHP)
(NSX Share Code: SRH)
(LuSE Share Code: SHOPRITE)
("Shoprite" or "the Group")
Reviewed preliminary results for the year ended 30 June 2003
- Total sale of merchandise rose 13% to R 24.8 billion ( 2002:
R22.0 bn)
- Revenue from Africa in stable currency terms up 32 %
- Operating profit before exchange differences up by 21% to R603
million (2002: R498 m)
- Checkers operating profit up 39% over last year
- Headline earnings per share excluding effects of exchange
differences up by 23% to 80.1c (2002: 65.0c)
- Exchange loss of R133 million from strengthening Rand (2002: R24
million exchange profit)
- Dividend per share increased by 20% to 30.5c (2002: 25.5c)
Whitey Basson, Chief Executive, commented:
"We continue to benefit from our strategy to grow profitable
market share. The closing of unprofitable locations, repositioning
of Checkers and sales growth from Africa have all contributed to
our earnings growth. Our footprint has grown across Africa and
eastwards to India. We are well placed to apply our proven
business models in these higher growth markets."
19 August 2003
Enquiries:
Shoprite Holdings Limited
Tel: (021) 980 4000
Whitey Basson, Chief Executive
Carel Goosen, Deputy Managing director
College Hill South Africa
Tel: (011) 447 3030
Nicholas Williams 083 607 0761
Johannes van Niekerk 082 921 9110
Introduction
Shoprite is pleased to announce 13% growth in revenue to R25
billion from operations that now comprise 641 stores in 14
countries, employing 66 000 employees; affirming the Group"s
status as leading food retailer on the continent.
Supermarkets grew revenue by 10% to R23.7 billion. The furniture
division delivered revenue of R1.3 billion.
Operations outside South Africa contributed R2.6 billion or 10% of
revenue, compared to R2.3 billion a year ago. When measured in
stable currency terms, revenue from outside South Africa grew by
32%.
Operating environment
Consumer demand remained better than expected seen against the
backdrop of high food inflation for most of the year and increased
housing, transport and electricity costs, compared to lower
average wage increases.
These pressures have impacted on the Group"s average basket size,
which grew by 7.5% over last year. The number of customer visits
increased by 5.3% to achieve the stated growth in revenue.
Prices of basic commodities including wheat, maize and oil
experienced deflationary pressure on the back of the strengthening
Rand in the latter half of the financial year. Shoprite adjusted
prices downward as a result, with a commensurate effect on sales.
The advance of HIV/Aids has not had a noticeable effect on the
Group"s sales patterns or employment statistics for the year under
review.
The impact of the recently introduced plastic bag legislation has
not had a measurable impact on spending patterns or basket sizes.
Financial Review
Sale of merchandise increased by 13% to R24.8 billion over last
year, compared to food inflation that averaged 11% for the year.
Sales from comparable stores rose by 10%.
The gross margin remained stable around 15% despite the volatility
in food inflation proving the Group"s commitment to lowest prices.
Continued cost containment contributed to the increase in
operating margin from 2.26% to 2.43%. Operating leases include the
cost of uneconomical leases amounting to R83 million. Over the
next three years the Group will be able to exit some leases with
the following charges to the income statement, at current values;
2004 2005 2006
Rand (million) +6 -10 -10
The Rand strengthened by 27% against the US dollar and by a
similar margin to African currencies in the year under review.
When translating the results of foreign operations to Rand this
contributed to an exchange loss of R133 million. An exchange gain
of R24 million was recorded in the previous year.
Exceptional items mainly comprise amortisation of negative
goodwill amounting to R153 million (2002: R69 million). The
balance of negative goodwill will be amortised in the following
year.
Net finance costs were influenced by funding premises for our
African expansion and increased stock purchases before the high
food inflation period, to take advantage of attractive prices for
the customer"s benefit.
The effective tax rate, excluding the after tax effect of
exceptional items and exchange differences, amounted to 31% (2002:
32%). Tax payable amounted to 7.11% of taxable income, after
utilising available tax losses. The Group expects to have fully
utilised the tax losses stemming from the takeover of OK Bazaars
during the next year.
Headline earnings decreased by R80 million to R292 million mainly
as a result of exchange losses sustained from converting foreign
operations to Rand. When adjusted for exchange differences,
headline earnings increased by 21% to R407 million.
Total dividends proposed increased by 20% to 30.5 cents per share,
in line with the growth in adjusted headline earnings.
Properties, plant and equipment increased by a net R192 million,
after depreciation. Capital expenditure amounting to R562 million
was spent on the continuing refurbishment and opening of stores
and distribution centres.
Inventories increased by 15% to R2.6 billion. As a result stock
turn amounted to 10.3 compared to 10 last year. Shoprite"s stated
objective is to achieve a stock turn of 12 times per annum. During
the year the Group introduced electronic point-of-sale scanning
and fully integrated the replenishment system directly with
suppliers. These measures, through more disciplined ordering, will
contribute to a reduction of stockholding.
Operational Review
Store 30 Jun 02 Opened Closed 30 Jun 03 Prospects
Supermarkets 392 37 2 427 104
Shoprite 284 21 2 303 35
Checkers 85 3 0 88 7
Checkers Hyper 19 0 0 19 0
Usave 4 13 0 17 62
Hungry Lion 48 5 4 49 10
OK Furniture 158 7 0 165 13
OK Furniture 137 7 0 144 12
House & Home 21 0 0 21 1
Total Own 598 49 6 641 127
Stores
OK Franchise 383 46 71 358 44
Total Stores 981 95 77 999 171
Countries 11 2 0 13 3
outside
South Africa
Supermarkets
The Group"s local market share, measured in terms of sales, and
taking into account all stores, declined to 28.0% from 29.5% a
year ago.
Continuing low employment and low or negative food inflation in
the lower end of the market led to lower increases in the value of
sales in the lower end of the market than that experienced by
Checkers in the middle to upper end of the market.
To date, 71 supermarkets have been closed in unfavourable
locations. This has lead to a temporary decline in turnover, but
an immediate rise in earnings, as a result of economies of scale.
The ongoing refurbishment programme of Shoprite, Checkers and
Checkers Hyper stores continued, with 32 stores completed during
the year. The resultant increase in number of customers and
revenue per customer is encouraging. There are 73 refurbishments
approved for next year.
Total trading space increased by some 31 000 square metres from
new store openings and refurbishments.
The majority of consumers, across all cross-sections, polled by
independent market researchers, AC Nielsen, in the latest Trade
Search Omnibus study voted Shoprite, Checkers and Checkers Hypers
as their preferred shopping destination by a margin of more than
70%.
Shoprite
Sales grew by a pleasing 12% over last year, considering the
difficult trading environment.
The Shoprite brand remained the largest contributor to Group
sales.
The "Subsidised Prices" campaign was well received, and affirmed
the Group"s commitment to provide its customers with the lowest
prices. The cost of price-reductions amounted to R25.8 million.
The continuing refurbishment programme, together with on-going
improvement of customer service and store hygiene, is contributing
to growing customer numbers.
Checkers/Checkers Hyper
The repositioning of Checkers stores was well received by
customers with customer numbers increasing by 6% over last year,
delivering same-store sales growth of 15% for the year.
Operating profit has increased by 39% over last year.
Profitability has improved due to increased sales from the
repositioning of the brand, an improved merchandise range and
maintaining effective cost controls.
Eight stores have been relocated or refurbished, and 19 are
scheduled for relocation or refurbishment in the following year.
Continuous improvements are made to store layout and product
lines. Particular effort has been made in developing fresh
convenience ranges in line with international trends. These lines
have been well received.
The Checkers Hyper non-food offer was widened, with special
emphasis on destination departments. The aim is to add value to
the consumer"s shopping experience resulting in stronger brand
loyalty.
A number of the Checkers stores lend themselves to a more
convenient format where the emphasis is placed on a wider range of
value-added perishable merchandise. Potential sites have been
identified for opening during the next year.
Usave
A total of 17 stores have been opened to date in South Africa,
Namibia and Malawi.
All stores are trading profitably.
These no-frills stores offer a limited product range of core
consumables in a low-overhead environment. Usave provides an
improved shopping destination for customers in the lower LSM bands
and is a successful low-price alternative to the independents.
Customers, especially in rural areas, have responded favourably to
its proposition. The uniform format of the store lends itself to
rapid replication.
A total of 62 stores have been approved for opening next year,
including two in Angola and five in Ghana.
OK Franchise
Market growth is fairly static. New store opportunities are
directly related to population shifts and developments in new
growth areas.
The OK brand remains a trusted and respected brand, proven by its
ranking as fourth most respected retail brand, in the Sunday Times
- Markinor Top Brands Survey 2002.
To date 103 supermarkets have been branded under the OK banner and
have enjoyed an encouraging roll-out.
The OK branded stores are expected to grow by 19 stores next year
through new store openings, acquisitions and conversions. The
opportunity for growth through new business will depend on the
ability to secure appropriate new sites.
Operations outside South Africa
Growth outside South Africa continued with the opening of 24
stores, including 5 stores in Madagascar and one hyper-store in
Mauritius, for a total of 66 supermarkets, 12 furniture stores and
18 Hungry Lions in 13 countries.
Capital expended outside South Africa during the year amounted to
R134 million, for a total investment of R544 million to date, on
which a return of 19% has been earned. Acquiring or developing
prime retail space is the principal investment.
Operations outside South Africa delivered 14% growth in revenue or
32% growth in stable currency terms. Operating profit grew by 18%
over last year.
Margins for stores outside South Africa as a whole compared to
South Africa are sufficiently higher to compensate the Group for
the commensurate increase in operational risk, experienced as
pioneer food retail investors in many of the territories.
Inventory exported from South Africa to operations outside South
Africa amounted to R377 million, up from R342 million a year ago.
All established operations outside South Africa are trading
profitably with the exception of Egypt and Tanzania which have
incurred a loss of R30 million in total. Both operations are
expected to break-even in the next year.
Operations were established in Mauritius and Madagascar. These
operations have incurred establishment costs and are expected to
turn to profitability during the next year.
Shoprite opened its first hyper-store outside of South Africa in
Mauritius in November 2002. The store carries the widest range of
food products in the Group to cater for the cosmopolitan nature of
the population.
Trading conditions in Madagascar remained subdued since the
Group"s acquisition of five stores in October 2002. Positive
economic growth measures introduced by the new government should
benefit the general trading environment.
Namibia delivered 24% growth in sales over last year. Wine and
beer departments were introduced with the recent granting of
retail liquor licences to supermarkets, and proved to be very
successful in the initial take-up.
The market in Namibia is becoming more competitive, but hasn"t as
yet impacted the operating margin. Continuing focus on
stockholding, increasing the sales contribution from non-foods,
improving the bakery offering and presentation of the fresh foods
offering by limiting wastage are priorities for the year ahead.
Sales in Egypt from comparable stores increased by 33% in local
currency terms, despite restrictive customs practices which limit
imports. Negotiations are continuing to allow less restricted
imports which will improve both the product mix and gross margin.
The Group is committed to growing operating profit in Egypt
through the opening of more stores. Prospecting for sites is
continuing. Four stores have been approved for opening in Cairo
during the next year, which should contribute to a break-even
position.
In Uganda, although competitors entered the retail market in
Kampala, customer numbers grew on a year-to-year basis.
Sales in Malawi were favourably impacted by the lowering of the
surtax rate to 17.5% from 20%. Improved crops are expected and the
food shortages experienced towards the end of last year have
largely subsided.
Product ranges are constantly adjusted to cater for the customer
mix of the various local communities. Stores outside of South
Africa benefit from their competitively priced product line,
strong distribution support and product scanning infrastructure to
provide excellent customer service and grow market share.
Furniture
Competitive pricing, aggressive advertising and a high standard of
in-store presentation contributed to trading improvements across
the division.
OK Furniture stores increased revenue by 18% and House & Home
stores by some 20%.
Discounted selling prices applied to products in the home
entertainment and appliance departments improved cash sales to now
represent 58% of the division"s total sales. Credit sales at OK
Furniture represent 55% of total sales compared to 26% at House &
Home.
Net instalment sale receivables amounted to R576 million.
Provisions for impairments and unearned finance income amount to
R176 million or 23% of gross instalment sale receivables.
The refurbishment programme in House & Homes continued, with eight
stores already completed refurbished and another seven stores
targeted for completion in the new year.
Improvements in customer service remain a priority. Specialised
training of staff to deliver excellent service and demonstrate a
keen understanding of products has already been completed and is
delivering favourable results.
The current competitive trading environment is expected to
continue, necessitating maintaining aggressive product pricing
policies. Recent pressures on margins are expected to continue.
However, increased revenue from sales volume growth and
improvements in the overall sales mix are expected to provide
sufficient compensation to facilitate further growth.
Supply Chain Management
Shoprite differentiates itself from traditional retailers that
focus on vendors undertaking direct-to-store deliveries, by
controlling its supply chain for the customers benefit.
This Efficient Consumer Response (ECR) initiative follows
international best practice amongst retailers. Shoprite"s
investment in infrastructure and technology makes the company a
leader in both the retail and distribution industries on the
African continent.
Shoprite"s Distribution Centres were able to achieve service
levels exceeding that of vendors by some 10%. Stock turn at these
centres exceeded that achieved by retail outlets by more than 50%.
During the year, Shoprite took occupation of 81 000 square meters
of distribution space in Centurion. The refrigeration and ambient
distribution facilities are the largest on the African continent.
The Group"s twelve distribution centres operate regionally and
provide the support for the Group"s export initiatives.
The optimal use of this distribution infrastructure will assist in
realising the Group"s objective of increasing its stock turn.
The resultant savings in the supply chain allow Shoprite to
consistently maintain its product quality and "low price"
leadership position. It also makes it easier to open store
formats, at locations closer to the consumers" homes.
Information Technology
During the year under review Shoprite"s investment in a leading IT
infrastructure brought into implementation a central e-business
technology platform which replaced the Group"s mainframe
structure.
To accomplish this more than 7.5 million lines of code were
replaced in under 11 months. The Group"s objective to develop a
common integration architecture has been realised, providing the
flexibility to communicate with any software platform in a common
language (XML).
The operational benefit is the seamless integration of back-end
processes that will enable better collaboration with business
partners to achieve operational efficiencies and more prudent cost
management.
Continuing research and development is conducted with the
operational support of strategic partners Microsoft, IBM and
Telkom.
The Group"s Business-to-Business exchange now connects with all
suppliers, branches and buyers on a range of 206 000 stock keeping
units (SKU"s), processing 8.7 million item orders per month. An
order reaches the supplier in 3.7 minutes on average.
During the year the Data Warehouse has been refined, and with pre-
processing techniques summarises 50 million transactions per day.
Buyers now have the added benefit of more detailed merchandising
information analysing consumer trends and behaviour through
advanced predictive analysis and data mining.
Comparative pricing benefits between electronic point-of-sale
compared to manual cash registers, leveraged by the Group"s
software architecture, created the opportunity to invest in
electronic point-of-sale hardware. The objective is to equip all
stores with full scanning capability by April 2004. Up to seven
stores a week are being converted.
These IT advances allow the Group to trade in any country, in any
currency and in any language, as a retail and wholesale operation
from one location. The Group"s continuing African expansion will
be supported by the ability to trade with or without any
telecommunications network.
Strategic review and objectives
The Group aims for revenue growth in South Africa in line with GDP
growth in real terms, currently at some 11% in South Africa.
For stores outside South Africa Shoprite"s objective is to grow
revenue by utilising all opportunities that meet the Group"s
required rate of return on capital employed, in order to realise
the Group"s ambition of earning 50% of Group earnings from outside
South Africa in the medium-term.
Shoprite requires a rate of return on capital employed of 30%
after two years of operation. A pleasing return of 33% on capital
employed across the Group has been achieved this year.
The food retail market in South Africa is competitively serviced.
The Group is cautious to expand its business in this market and
won"t buy market share at the cost of earnings. Shoprite"s
objective is to maintain its market share in South Africa, and
constantly adapt to changing consumer preferences.
The increase in demand for convenience stores provides an
opportunity for growth in South Africa. The continuing
consolidation of the Group"s franchise operations under the OK
banner will improve the Group"s share of this market.
Opportunities not covered by any of the Group"s current store
formats in the bottom-end of the market are being pursued through
Usave, which has proven to be a robust and disciplined format for
replication in Africa.
The Group believes Africa is a viable growth opportunity, because:
- Consumer preferences are similar to the South African market
- Shoprite"s proven South African business models can be easily
replicated
- Operations are within easy reach
- There are no formal opposition
- There is substantial GDP creation in Africa outside South Africa
- Consumers respect and value the Group"s first-world offering
The Group"s objective for growth outside South Africa is to gain a
foothold in the most lucrative markets as soon a possible. To date
operations have been established in Zambia, Uganda, Tanzania,
Mozambique, Malawi, Namibia, Botswana, Lesotho, Swaziland, Egypt,
Madagascar, Mauritius and Zimbabwe.
During the next year a further 32 stores will be opened. In
addition to opening new stores in existing territories, four
stores are due to open in Angola, five stores in Ghana and a hyper-
store in India.
The Angolan economy is rebounding. Consumer spending is growing
measurably in the urban centres. The Group"s stores will be
located in Luanda.
Ghana"s GDP growth of 5.8% exceeds population growth. Retail in
the lower end of the market is under-serviced with no formal
supermarkets.
Expansion to India presents a valuable opportunity to export the
Group"s proven success in meeting the needs of Indian customers.
The market is particularly under-serviced in the formal low-cost
first-world offering segment. Shoprite is entering the market with
a small initial investment as suitable premises can be leased, and
all international suppliers are already operating in the country.
The Group is committed to the continued growth of the furniture
business. Initiatives to unlock fair value from the business,
which could include a separate listing, may be considered in
future.
Group prospects and outlook
Shoprite is well placed in all market segments to benefit from
anticipated increases in consumer spending following the easing of
interest rates and income tax relief, all contributing to improved
consumer confidence.
We value the confidence millions of our customers have placed in
our competitively priced quality merchandise. We are committed to
continue providing this experience to all our customers, wherever
we may serve them.
Corporate Governance
Shoprite acts in accordance with the principles as embodied in the
Code of Corporate Practice and Conduct in the King Report 2002
("the Code"). The Group complies with the significant requirements
incorporated in the Code and the JSE Securities Exchange SA
listing requirements.
Corporate Social Investment
Shoprite"s social investment programme has committed R 6.5million
for the year under review to a variety of worthy causes.
Highlights for the year include:
- Continuing sponsorship of the . Apart from showcasing role
models in a diverse range of categories, the award also provides a
tangible opportunity for women to launch their own development
projects.
- Continuing sponsorship of The Shoprite Checkers Primary Schools"
Netball Challenge. The challenge is designed to enable talented
players to go on to play netball at high school, provincial and
national level.
- Hosting the elderly for free cups of soup at all Shoprite and
Checkers stores, every Wednesday morning.
Thanks to management and staff
We would like to extend sincere thanks to our management and staff
for their unwavering support and contribution to our efforts in
the past year, full in the knowledge that this will continue in
the years ahead, for the benefit of all our stakeholders.
By order of the Board
CH Wiese J W Basson
Chairman Chief Executive
19 August 2003
CONDENSED GROUP INCOME STATEMENT
Reviewed Audited
12 months to % 12 months to
R"000 30 June 2003 change 30 June 2002
Revenue 24 971 333 12.94 22 109 797
Sale of merchandise 24 824 516 21 984 955
Gross profit 3 736 360 3 291 988
Other operating income 1 966 343 1 947 645
Depreciation (363 772) (327 556)
Operating leases (793 347) (681 688)
Staff costs (2 017 815) (1 821 281)
Other operating costs (1 924 464) (1 911 265)
Operating profit before exchange 603 305 21.18 497 843
(losses)/gains
Exchange (losses)/gains (132 945) 24 314
Operating profit before 470 360 -9.92 522 157
exceptional items
Exceptional items 132 868 39 287
Operating profit after exceptional 603 228 7.44 561 444
items
Investment income 63 076 34 061
Finance costs 63 340 47 465
Profit before tax 602 964 10.02 548 040
Tax 180 585 19.36 151 295
Profit after tax 422 379 6.46 396 745
Minority interest 2 317 (8 148)
Net profit 420 062 3.75 404 893
Earnings per share (cents) 82.7 5.5 78.4
Diluted earnings per share (cents) 82.6 5.9 78.0
Headline earnings per share 57.6 -20.1 72.1
(cents)
Diluted headline earnings per 57.5 -19.9 71.8
share (cents)
Adjusted headline earnings per 80.1 23.2 65.0
share (cents)
Adjusted diluted headline earnings 79.9 23.5 64.7
per share (cents)
Ordinary dividend per share 30.5 19.6 25.5
(cents)
Number of ordinary shares (`000)
used for
calculation of : earnings per 507 913 * 516 764 *
share
: diluted earnings per share 508 752 * 519 042 *
(* weighted average)
CONDENSED GROUP BALANCE SHEET
Reviewed Audited
R"000 30 June 2003 30 June 2002
ASSETS
Non-current assets 1 962 795 1 745 520
Property, plant and equipment 1 822 380 1 630 835
Investments 91 013 114 595
Deferred tax assets 165 853 303 128
Intangible assets (116 451) (303 038)
Current assets 4 882 721 4 470 373
Inventories 2 585 363 2 250 278
Trade and other receivables 1 487 124 1 482 791
Investments 8 798 1 153
Cash and cash equivalents 801 436 736 151
Total assets 6 845 516 6 215 893
EQUITY AND LIABILITIES
Capital and reserves 1 736 352 1 459 458
Minority interest 31 205 30 714
Non-current liabilities 227 728 236 832
Interest bearing borrowings 2 450 2 450
Deferred tax liabilities 4 224 4 006
Provisions 221 054 230 376
Current liabilities 4 850 231 4 488 889
Other current liabilities 4 795 337 4 402 278
Provisions 54 894 55 381
Bank overdraft - 31 230
Total equity and liabilities 6 845 516 6 215 893
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
12 months to 12 months to
R"000 30 June 2003 30 June 2002
Net profit attributable to 420 062 404 893
shareholders
Exceptional items after tax (132 868) (39 287)
Profit on disposal of property - (11 139)
Impairment of buildings 1 742 15 469
Impairment of unlisted investment 6 308 23 781
Amortisation of negative goodwill (153 002) (69 319)
Write-off of goodwill 3 978 -
Impairment of loan - Share incentive 8 161 -
trust
Payment for lease cancellation - 2 032
Prescription of amounts owing (55) (111)
Other items after tax
Loss on disposal and scrapping of 2 481 6 850
plant and equipment
Amortisation of goodwill 2 855 -
Headline earnings 292 530 372 456
Exchange losses/(gains) after tax 114 111 (36 634)
Adjusted headline earnings 406 641 335 822
In terms of SAICA Circular 7/2002, which replaces AC 306, Headline
Earnings, the Group"s headline earnings are now calculated after
all capital income statement items have been eliminated. Headline
earnings per share has been restated as reflected above.
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed Audited
12 months to 12 months to
R"000 Notes 30 June 2003 30 June 2002
Cash generated by operations 1 012 777 991 026
Operating profit before 470 360 522 157
exceptional items
Non-cash items 1 489 829 268 294
Changes in working capital 2 52 533 202 495
Exceptional items 3 55 (1 920)
Net finance costs (5 813) (14 681)
Dividends received 5 549 1 277
Dividends paid (146 264) (128 705)
Tax paid (72 238) (55 043)
Cash flows from operating 794 011 793 874
activities
Cash flows from investing (631 951) (630 332)
activities
Purchase of property, plant (561 804) (618 549)
and equipment
Proceeds on disposal of 27 583 39 572
property, plant and equipment
Acquisition of interest in (74 605) -
subsidiaries/operations
Acquisition of further (11 081) -
interest in subsidiaries
Other investment activities (12 044) (51 355)
Net cash flow 162 060 163 542
Cash flows from financing 10 596 (463 270)
activities
Disposal/(acquisition) of 3 553 (453 373)
treasury shares
Proceeds on issue of 7 043 7 477
additional share capital to
minorities
Interest bearing borrowings - (17 374)
repaid
Movement in cash and cash 172 656 (299 728)
equivalents
cquired through acquisition 1 316 -
of subsidiaries
Effect of exchange rate (77 457) 42 829
movements on cash and cash
equivalents
Net movement in cash and cash 96 515 (256 899)
equivalents
CASH FLOW INFORMATION
1. Non-cash items
Depreciation on property, plant and 363 772 327 556
equipment
Amortisation of goodwill 2 855 -
Loss on disposal and scrapping of plant 2 919 8 453
and equipment
Net fair value gains on financial (213) -
instruments
Unrealised foreign exchange 120 496 ( 67 715)
losses/(gain)
489 829 268 294
2. Changes in working capital
Inventories (429 392) (77 394)
Trade and other receivables 2 814 (8 783)
Trade and other payables 488 920 316 280
Movement in provisions (9 809) (27 608)
52 533 202 495
3. Exceptional items
Exceptional items per income statement 132 868 39 288
Profit on disposal of property - (11 139)
Impairment of buildings 1 742 15 469
Impairment of unlisted investment 6 308 23 781
Impairment of loan - Share incentive 8 161 -
trust
Write-off of goodwill 3 978 -
Amortisation of negative goodwill (153 002) (69 319)
55 (1 920)
CONDENSED SEGMENT INFORMATION
Reviewed Audited
12 months to 12 months to
R"000 30 June 2003 30 June 2002
REVENUE - by business segment
- Supermarkets 23 679 226 21 469 405
- Furniture 1 292 107 640 392 *
Total revenue 24 971 333 22 109 797
OPERATING PROFIT - by business segment
- Supermarkets 396 404 467 364
- Furniture 73 956 54 793 *
Total operating profit 470 360 522 157
*House & Home, which up to that stage formed part of Hyperama, was
placed under the operational and administrative control of OK
Furniture during the second half of the previous financial year.
As House & Home and Supermarkets operated as a single business
unit, it was not at that point possible to separate their results
in a meaningful way. A complete separation of the different
business units was, however, effected from 1 July 2002 and the
following information relating to House & Home are included in the
results of the furniture segment from this date:
536 360
Revenue
Operating profit 17 873
SUPPLEMENTARY INFORMATION
Reviewed Audited
12 months to 12 months to
R"000 30 June 2003 30 June 2002
1. Capital commitments 188 805 160 603
2. Contingent liabilities 64 106 116 225
3. Net asset value per share (cents) 342 287
4. Total number of shares in issue 508 212 507 761
(adjusted for treasury shares)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
12 months to 12 months to
R"000 30 June 2003 30 June 2002
Balance at 1 July 1 459 458 1 444 966
Disposal/(acquisition) of treasury 3 553 (274 765)
shares
Net fair value losses on available-for- (1 958) -
sale investments, net of tax
Net profit for the year 420 062 404 893
Dividends distributed to shareholders (144 763) (115 636)
Balance at 30 June 1 736 352 1 459 458
Dividend
The board has declared a final dividend of 16.5 cents (2002: 14.5
cents) per share, payable to shareholders on 15 September 2003.
The last day to trade cum dividend will be 5 September 2003. As
from 8 September 2003 all trading of Shoprite Holdings Ltd shares
will take place ex dividend. The record date is 12 September
2003.
Share certificates may not be dematerialised or rematerialised
between Monday, 8 September 2003 and Friday, 12 September 2003
both days inclusive.
Accountability
These condensed consolidated preliminary results have been
prepared in accordance with South African Statements of Generally
Accepted Accounting Practice ("GAAP") and Schedule 4 of the South
African Companies Act (Act No 61 of 1973), as amended. The
accounting policies are consistent with those used in the annual
financial statements for the year ended 30 June 2002, except for:
* With the coming into operation of a new accounting statement AC
133, Financial Instruments: Recognition and Measurement, all
relevant transactions, assets and liabilities are accounted for in
terms of AC 133. This application had no material effect on the
Group"s results.
Auditor"s Review Opinion
The condensed consolidated preliminary results for the year ended
30 June 2003 have been reviewed by PricewaterhouseCoopers Inc.
The auditors unqualified review opinion is available for
inspection at the Company"s registered office.
Directorate and Administration
Executive Directors: J W Basson (Chief Executive), C G Goosen
(Deputy Managing Director), B Rogut, B Weyers, A N van Zyl, B
Harisunker
Non-executive Directors: C H Wiese (Chairman), J A Louw, J J
Fouche, T R P Hlongwane, J F Malherbe, J G Rademeyer
Company Secretary: A N van Zyl
Registered Office: Cnr William Dabs and Old Paarl Roads,
Brackenfell, 7560, South Africa; P O Box 215, Brackenfell, 7561,
South Africa; Telephone: +27 (0) 21 980 4000; Facsimile: +27 (0)
21 980 4050
Auditors: PricewaterhouseCoopers Inc, 1 Waterhouse Place, Century
City; P O Box 2799, Cape Town, 8001
Transfer Secretaries: Computershare Ltd, 70 Marshall Street,
Johannesburg, 2001; P O Box 1053, Johannesburg, 2000; Telephone
+27 (0) 11 370 5000; Facsimile +27 (0) 11 370 5272
Sponsor: Nedbank Corporate, 1 Newton Avenue, Killarney, 2193; P O
Box 582, Johannesburg, 2000; Telephone +27 (0) 11 480 1780;
Facsimile +27 (0) 11 480 1630
