| Wed 23 Aug 2006, 8:00 | | Shoprite - Year-end results for the 52 Weeks ended |
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SHP
SHP
Shoprite - Year-end results for the 52 Weeks ended June 2006
SHOPRITE HOLDINGS LIMITED
(Reg. No. 1936/007721/06)
(ISIN: ZAE000012084)
(JSE Share code: SHP)
(NSX Share code: SRH)
(LuSE Share code: SHOPRITE)
("Shoprite Holdings" or "the Group")
SHOPRITE HOLDINGS: YEAR-END RESULTS FOR THE 52 WEEKS ENDED JUNE 2006
When evaluating these results please note that this year-end report covers
52 weeks compared to 53 weeks in the corresponding reporting period ended
June 2005. To make comparisons meaningful, percentages provided in the
section "Key information" below are given for both a 53-week and a 52-week
period ended June 2005.
Key information
Trading profit was up 21,3% (52 weeks: 31,1%) to R1,253 billion.
Turnover increased 12,8% (52 weeks: 15,1%) - from R29,704 billion to
R33,511 billion.
Non-RSA operations achieved 18,6% (52 weeks: 20,9%) sales growth.
Gross profit percentage achieved: 20,3% (2005: 20,1%).
Diluted headline earnings per share, adjusted for exchange differences,
rose 10,4% to 145,0 cents (52 weeks: up 19,8%).
Dividend per share proposed increased 46% to 73,0 cents.
Whitey Basson, chief executive, commented:
Financial year 2006 has been a most gratifying one for the Group. After
several years of restructuring and consolidating all our activities into a
coherent whole, the business, underpinned by astute management and some of
the most advanced information systems available, is now well placed to reap
the rewards. We were fortunate in being able to refine this process of
consolidation during a time when strong economic growth and high consumer
confidence boosted our efforts. The South African operation of our main
supermarket brands fared exceptionally well in terms of both turnover and
trading profit growth. Our non- RSA operation showed an 18,6% turnover
growth while our financial service division, which has now also entered the
field of basic banking services, is making an increasingly meaningful
contribution to the bottom line. We are entering a new era of information-
based management, which we believe will have a far-reaching effect on our
business and that bodes well for the future.
22 August 2006
Enquiries:
Shoprite Holdings Limited Tel: (021) 980 4000
Whitey Basson, chief executive
Carel Goosen, deputy managing director
De Kock Communications Tel: (021) 422 2690
Ben de Kock 076 390 7725
Operating environment
Consumer confidence remained high throughout the reporting period and
spending continued unabated. This was particularly noticeable in the
durable and non-food sectors where spending was linked, inter alia, to the
government"s accelerated housing programme and continued support through
social grants and tax concessions for lower-income earners. In the second
half of the year the downward pressure on prices started to ease and food
inflation began to rise, although the latter still averaged only 4,1%
(source: Statistics South Africa) for the year. The dominant factor in the
market remained the strong growth in the numbers and the disposable income
of the emerging black middle class which is the main driver for retail
growth in South Africa. This new middle class challenges retailers to meet
aspirations with an improved product choice and an extended range of
consumer services. With government"s projected annual economic growth rate
of 4,5% for the next three years, underpinned by its plans for massive
investment in infrastructure, the numbers of this new middle class are
expected to continue growing in the years to 2010. The Group"s main brand
is seen as better positioned than any of its competitors to benefit from
this growth surge in its core target market.
Comments on the results
Income statement
Total turnover
Total turnover increased by 12,8% from R29,704 billion to R33,511 billion.
If the extra week in the corresponding reporting period is disregarded, the
growth in turnover was 15,1%.
Gross profit
Gross profit was 13,6% higher at R6,795 billion. The Group managed to
maintain its price competitiveness in a market characterised by aggressive
food discounting in a low-inflation environment. This it was able to do
thanks to strong sales growth and measures to contain operating costs. The
relatively strong rand continued to benefit the sale of imported higher-
margin products while its potential negative effect on exports was
mitigated by the strengthening of several key African currencies and the
stability of others.
Expenses
Expenses were well managed over the period. Staff costs increased above
inflation, but increased productivity compensated for the difference. Low
interest rates enabled the Group to negotiate lower escalations in the case
of new rental contracts while similar success is also being achieved with
the renegotiation of existing ones. The increase of 15,8% in depreciation
and amortisation costs reflects the aggressive store opening and
refurbishment programmes of Shoprite and Checkers in particular, as well as
the ongoing investment in improved technology.
Trading profit
The robust growth in trading profit was due primarily to an excellent
performance by the Group"s supermarkets in South Africa. With fixed cost
increases restricted to inflation levels, the substantially higher turnover
growth boosted trading profit to 21,3% (52 weeks: 31,1%).
Trading margin
The trading margin of 3,7%, up from 3,5% (52 weeks: 3,3%), is the highest
ever achieved by the Group. It is the result of a continuous upgrade of
replenishment programmes, improved efficiencies in supply chain management,
including the distribution centres, and rigorous control of shrinkage at
both pay points and receiving bays.
Interest received and finance costs
Low interest rates as well as the capital expenditure required for new and
refurbished stores continue to put pressure on net interest income.
Tax
In addition to secondary tax on companies of R35m the tax charge includes
an amount of R27m for capital gains tax that relates to the properties
sold. During the latter part of the year the Group also reached a
settlement with SARS regarding the tax residency of the Group"s offshore
structure. The related payment of R33m is reflected as arrears taxes paid.
Income of a capital nature
The income of a capital nature (in previous years referred to as
exceptional items) in the income statement of R166,9 million relates mainly
to profit achieved on the sale of 16 properties in transactions finalised
in the second half of the financial year.
Loss from discontinued operation
During the year the Group divested from Egypt due to ongoing restrictions
on retailing. Its seven stores were closed, resulting in a loss of R19,9
million. The buying department and distribution centre is being retained to
serve countries that benefit from a preferred duty structure on goods
imported from Egypt.
Dividend proposed
The Board proposed a final dividend of 46,0 cents per ordinary share (2005:
28,0 cents). This brings the total dividend for the year to 73,0 cents per
ordinary share, an increase of 46,0%, which represents a two time cover, a
decision taken by the board during the previous year.
Balance Sheet
Intangible assets
The increase in intangible assets from R40,8 million to R235,9 million was
duemainly to the acquisition of Foodworld Stores and Computicket,
transactions which were finalised during the first half of the review
period, as well as the replacement of the branch back-office system with a
vastly more sophisticated system known as Operation Better Store.
Inventories
The increase of 20,6% in inventory to R3,270 billion was mainly the result
of provisioning a net of 45 new supermarkets opened during the year and
substantial forward buying of non-foods for the 2006 Christmas season to
relieve the pressure on the distribution centre as well as improving
service levels from our suppliers. Stock turn remained at 8,9 times.
Operational review
The Group as a whole fared exceptionally well during the period under
review with total sales growing 12,8% to R33,511 billion and trading profit
up 21,3% to R1,253 billion compared to 53 weeks in 2005. These percentages
increase to 15,1% and 31,1% respectively when compared to a 52-week period
in 2005 and were achieved with food inflation at 4,1% for the period. The
Group"s core target market was not meaningfully affected by the rise in
interest rates announced towards the end of the review period. However,
cost inflation is expected to escalate in the new financial year given the
record fuel prices.
Number of outlets
JUN 2005 Open Closed JUN Confirmed
2006 new
stores
JUN 2007
SUPERMARKETS 529 77 32 574 41
- SHOPRITE 325 39 16 348 24
- CHECKERS 97 14 1 110 9
- CH HYPER 23 1 24 0
- USAVE 84 23 15 92 8
HUNGRY LION 57 18 1 74 17
FURNITURE 177 21 0 198 15
- OK FURNITURE 154 17 171 11
- HOUSE & HOME 23 4 27 4
TOTAL OWN STORES 763 116 33 846 73
- OK FRANCHISE 248 40 35 253 18
- H/LION FRANCHISE 3 1 2 2 0
TOTAL FRANCHISE 251 41 37 255 18
TOTAL STORES 1014 157 70 1101 91
COUNTRIES OUTSIDE 16 1 1 16
RSA
Nigeria Egypt
Supermarkets
The Group"s supermarket operation in South Africa, centred in the three
chains Shoprite, Checkers and Usave and representing 80,8% of total
turnover, fared particularly well, boosting turnover by 12,6% (52 weeks:
14,9%) and trading profit by 22,3% (52 weeks: 32,2%). In doing so it also
increased market share by 0,13%. The strong turnover growth was buoyed by a
10,1% increase in the number of customer transactions while the value per
transaction was on average 4,1% higher. Increased sales of higher-margin
non-food products such as smaller electric appliances sought after by
first-time home-owners, also added substantially to the bottom line. Money
Market kiosks with their expanded range of financial services are playing a
bigger role in bringing consumers into the Group"s supermarkets, with 50%
of customers making use of their services.
One of the most encouraging developments of the past year has been the
increasing and more clearly differentiated loyalty of customers to the
Shoprite and Checkers brands. This has markedly reduced the level of
cannibalization between the two brands previously noticeable, especially
during national promotions.
Shoprite
Shoprite operates 348 of the Group"s 574 corporate stores in 17 countries
in total, of which the 286 supermarkets in South Africa generate about 47%
of the Group"s total turnover. The Shoprite brand is the spearhead of its
operations in South Africa and beyond its borders. In South Africa it
increased turnover by 12,4% (52 weeks: 14,8%) and its number of customer
transactions by 10,6%. Basket growth was negatively affected by deflation
and low inflation in bulk categories and grew by 3.5%. During the year the
impact of the spending power of the new emerging middle class became more
marked, and mainly to accommodate the aspirations of these shoppers the
chain started an extensive upgrade programme of its stores, not only
improving the shopping environment, but also extending the range with more
aspirational products, especially in the area of convenience foods.
Checkers
In South Africa the chain achieved total turnover growth of 12,1% (52
weeks: 14,4%) while growing the number of customer transactions by 7,7% and
basket size by 6%. During the year Checkers stabilised in its more up-
market positioning with a customer base clearly differentiated from that of
Shoprite and grew its store base to 130 outlets. A successful campaign was
launched to promote this new positioning with a strong accent on lifestyle
and by focusing in newspaper advertising on the innovative product offering
of its specialist departments.Much attention was also paid to improving
customer relations and service delivery.
Usave
This new and highly versatile brand continued its growth. With its
"everyday low price" positioning and ability to operate successfully in
virtually every environment, it continued to gain market share from
wholesalers as well as retailers in the rural areas. Usave raised turnover
by 29,3% (52 weeks: 32,0%) albeit off a relatively low base while
increasing the number of transactions by 19,6% and basket size by 8,5%. The
opportunities for expansion of the Usave format in South Africa are vast
now that the Group trades in three distinct separate markets with its
supermarket brands. Outside South Africa Usave complements the larger
Shoprite supermarkets as satellite stores assisting in achieving critical
supply mass earlier.
Operations outside South Africa
Group results were well supported by the satisfactory growth in the
performance of the 109 non-RSA stores, which recorded turnover growth in
rand terms of 20,4% (52 weeks: 23,0%) to R2,925 billion. Trading profit
also exceeded last year"s contribution by a substantial margin. The Group
benefited from the greater economic stability on the continent. With a few
exceptions, currencies either strengthened against the rand or stayed on a
par compared to a year ago. The Group has started to broaden its focus to
include the oil-rich West African countries being well placed to benefit
from consumers" higher disposable income. It opened its first supermarket
in Nigeria in December 2005.
OK Franchise
The division has launched an intensive campaign to rebuild its membership
base after a period during which it closed a number of unprofitable
accounts. During the year it signed up 40 new members and closed a further
35 non-viable accounts. Although it increased turnover by only 1,82%, it
grew profitability by close on 20%. The 253 members remaining all operate
successful businesses and provide an excellent base for future growth in a
highly contested sector of the food retail market. The new recruitment
drive is aimed primarily at potential urban members to balance the
division"s strong rural base.
Furniture
The Furniture division increased turnover by 11,2% (52 weeks: 13,7%) to
R1,875 billion in a highly competitive market which resulted in immense
pressure on margins, especially in the second half of the year, with
trading profit growing 4,3% to R200,5 million and when compared to 52
weeks, this growth was 9,0%.
These results must be seen against this division"s strong performance
during the last few years when international sourcing was greatly improved,
a keen pricing policy introduced, strong disciplines were embedded and a
market-orientated culture entrenched. Although it is, with 198 stores,
still a relatively small player in its sector, the potential exists to add
a number of new stores without materially increasing the division"s present
fixed-cost structure.
Group prospects and outlook
We foresee acceptable growth for the Group in the 2007 reporting period.
The economic growth that will flow from the government"s vast investment in
infrastructure and mass housing over the next few years will, in the
Group"s main target markets, outweigh the braking impact of higher interest
rates on consumer spending. A rand at R7 to the US dollar also works to the
benefit of the Group as a weaker currency makes South African exports more
competitive and thus stimulates local job creation. We believe the Group"s
major brands are particularly well positioned to benefit from forces
currently at work in the economy while its new areas of business will
become increasingly important contributors to group income.
Corporate Governance
Shoprite is committed to the principles 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 in
the Listings Requirements of the JSE Ltd.
Dividend no 115
The Board has declared a final dividend of 46,0 cents (2005: 28,0 cents)
per share, payable to shareholders on Monday, 18 September 2006. This
brings the total dividend for the year to 73,0 cents per ordinary share
(2005: 50,0 cents). The last day to trade cum dividend will be Friday, 8
September 2006. As from Monday, 11 September 2006 all trading of Shoprite
Holdings Ltd shares will take place ex dividend. The record date is Friday,
15 September 2006.
Share certificates may not be dematerialised or re-materialised between
Monday, 11 September 2006, and Friday, 15 September 2006, both days
inclusive.
Auditors" review opinion
The condensed consolidated preliminary results for the 52 weeks ended June
2006 have been reviewed by PricewaterhouseCoopers Inc. The auditors"
unqualified review opinion is available for inspection at the Company"s
registered office.
Accountability
These condensed consolidated preliminary results have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and
Schedule 4 of the South African Companies Act (Act no 61 of 1973), as
amended.
The Group has reported under IFRS for the first time and applied IFRS 1:
First-time Adoption of International Financial Reporting Standards, to
these financial statements. All relevant comparative information has been
adjusted in accordance with IFRS 1.
The accounting policies that have been adopted in order to comply with
IFRS, and their effect on the Group"s results, are listed below.
Reconciliation of equity
Notes June 2005
R"000
Balance at beginning of July
As previously stated (SA GAAP) 1 752 635
Reclassification of minority interest to statement of
changes in equity 38 007
Effect of IFRS: Property, plant and equipment 1 180 413
Translation of foreign operations 2 (166 454)
Intangible assets 3 1 875
Share-based payments 4 (4 023)
As restated 1 802 453
Net movement in treasury shares (265)
Net fair value profits on available-for-sale
investments, net of tax 2 997
Net profit for the year 637 004
As previously stated (SA GAAP) 567 855
Reclassification of minority interest to statement of
changes in equity 7 109
Effect of IFRS: Property, plant and equipment 1 35 121
Translation of foreign operations 2 25 135
Intangible assets 3 (1 250)
Share-based payments 4 3 034
Foreign currency translation differences 2 33 260
Transfer to share-based payment reserve 4 5 265
Dividends distributed to shareholders (214 837)
Balance at end of June 2 265 877
1. Property, plant and equipment
As per the requirements of IAS 16: Property, Plant and Equipment the Group now
reviews the estimated useful life and residual value of all property, plant and
equipment annually and accounts for any resulting changes as a change in
accounting estimate in accordance with IAS 8: Accounting Policies, Changes in
Accounting Estimates and Errors. As these estimates were not reviewed after
initial recognition in the past, the accumulated depreciation was recalculated
in line with the policy of annual review as stated above.
June 2005
R"000
Depreciation and amortisation 50 022
Trading profit 50 022
Expenditure of a capital nature (1 780)
Profit before tax 48 242
Tax (including tax rate adjustment) 13 121
Profit for the year 35 121
ATTRIBUTABLE TO:
Equity holders of the Company 34 839
Minority interest 282
Increase in property, plant and equipment 302 263
Decrease in intangible assets 84
Decrease in deferred tax assets 80 703
Increase in deferred tax liabilities 5 942
Increase in minority interest 918
2. Translating foreign operations
As per the requirements of IAS 21: The Effects of Changes in Foreign Exchange
Rates, the Group now translates the results and financial positions of its
foreign operations, with a functional currency other than rand, to rand using
the following procedures:
- Assets and liabilities are translated at closing rate
- Income and expenses are translated at transaction date
- Resulting exchange rate differences are recognised in equity.
As the functional currency of the Group"s foreign operations were considered to
be rand in the past the inventories, property, plant and equipment and the
related depreciation were accounted for at historical rates and all translation
differences were accounted for in the income statement. The translation of all
foreign operations was recalculated and the necessary adjustments were made
retrospectively.
June 2005
R"000
Depreciation and amortisation 27 310
Trading profit 27 310
Exchange rate gains (3 830)
Expenditure of a capital nature 1 655
Profit before tax 25 135
Increase in foreign currency translation reserve 26 802
Decrease in property, plant and equipment 123 319
Increase in deferred tax assets 458
Decrease in intangible assets 172
Increase in inventories 14 974
3. Intangible assets
As per the requirements of IAS 38: Intangible Assets, the Group now reviews the
estimated useful life and residual value of all intangible assets annually and
accounts for any resulting changes as a change in accounting estimate in
accordance with IAS 8: Accounting Policies, Changes in Accounting Estimates and
Errors. As these estimates were not reviewed after initial recognition in the
past the accumulated amortisation were recalculated in line with the policy of
annual review as stated above.
June 2005
R"000
Depreciation and amortisation (1 250)
Profit for the year (1 250)
Increase in intangible assets 625
4. Share-based payments
In terms of IFRS 2: Share-Based Payment, the Group shall, for all future share-
based payment transactions, expense the related services received over the
vesting period with a corresponding increase in equity or creditors.
For all equity-settled share-based payment transactions granted after 7 November
2002 that have not yet vested by 1 January 2005 and all cash settled share-based
payment transactions the relevant comparative information has been restated. The
effect of the restatement is reflected below and in the statement of changes in
equity.
June 2005
R"000
Employee benefits 6 590
Profit before tax 6 590
Tax (3 556)
Profit for the year 3 034
Decrease in deferred tax asset 1 832
Decrease in cash settled share-based 6 108
payment accrual
Increase in share-based payment reserve 13 589
5. Reclassification of income statement and balance sheet classifications
Various classifications of income statement and balance sheet items were changed
to ensure a more relevant presentation of financial results as per the
requirements of IFRS. The main items adjusted are listed below:
1. Investment income and commissions received are now disclosed as other
operating income.
2. All outstanding deposits and outstanding cheques are now disclosed as part
of cash and cash equivalents.
3. All income/ (expense) items of a capital nature, as used in the calculation
of headline earnings per share, are grouped together.
4. Unearned insurance premiums are reclassified from trade and other payables
as instalment sales under trade and other receivables, and warranties from
provisions to unearned premiums.
5. Accretion of discount on provision for onerous lease contracts reclassified
from other expenses to finance costs.
6. Claims incurred but not reported are reclassified from trade and other
payables to provisions.
7. Certain obligations for post-employment benefits previously included under
other payables are now reclassified to provisions.
Preliminary results for the 52 weeks ended 30 June 2006
CONDENSED GROUP INCOME STATEMENT
Reviewed Reviewed
% 52 weeks 53 weeks
R"000 change ended June 06 ended June 05
Sale of merchandise 12,8 33 511 287 29 704 233
Cost of sales 12,6 (26 715 806) (23 724 000)
Gross profit 13,6 6 795 481 5 980 233
Other operating income 11,2 765 180 688 325
Depreciation and amortisation 15,8 (434 866) (375 622)
Operating leases 2,9 (841 446) (817 809)
Employee benefits 15,1 (2 815 830) (2 446 849)
Other expenses 11,0 (2 215 944) (1 995 662)
Trading profit 21,3 1 252 575 1 032 616
Exchange rate gains 8 445 1 921
Income/(expenditure) of a
capital nature 166 906 (35 392)
Operating profit 42,9 1 427 926 999 145
Interest received 71,1 96 385 56 329
Finance costs 70,8 (89 736) (52 543)
Profit before tax 43,0 1 434 575 1 002 931
Tax (518 240) (339 949)
Profit after tax 38,2 916 335 662 982
Loss for the year from
discontinued operation (19 853) (25 978)
Profit for the year 40,7 896 482 637 004
ATTRIBUTABLE TO:
Equity holders of the Company 890 132 629 613
Minority interest 6 350 7 391
896 482 637 004
Earnings per share from
continued operations (cents) 38,9 179,4 129,2
Earnings per share (cents) 41,3 175,4 124,1
Diluted earnings per share from
continued operations (cents) 37,4 172,7 125,7
Diluted earnings per share
(cents) 39,9 168,9 120,7
Ordinary dividend per share paid
(cents) 32,5 55,0 41,5
Ordinary dividend per share
declared (cents) 46,0 73,0 50,0
Number of ordinary shares ("000)
used for calculation of:
earnings per share 507 346* 507 373*
diluted earnings per share 526 998* 521 644*
(* weighted average)
CONDENSED GROUP BALANCE SHEET
Reviewed Reviewed
as at as at
R"000 June 06 June 05
ASSETS
Non-current assets 3 759 229 2 872 400
Property, plant and equipment 3 248 283 2 490 585
Available-for-sale investments 13 846 33 100
Loans and receivables 38 817 61 530
Deferred tax assets 219 626 242 193
Intangible assets 235 866 40 779
Fixed escalation operating lease accrual 2 791 4 213
Current assets 6 183 163 5 497 446
Inventories 3 269 500 2 711 532
Other current assets 1 492 466 1 522 087
Assets classified as held for sale 163 876 183 025
Available-for-sale investments 33 592 -
Loans and receivables 15 758 3 993
Cash and cash equivalents 1 207 971 1 076 809
Total assets 9 942 392 8 369 846
EQUITY AND LIABILITIES
Total equity 3 082 868 2 265 877
Capital and reserves attributable
to equity holders 3 035 863 2 224 118
Minority interest 47 005 41 759
Non-current liabilities 731 860 748 773
Borrowings 2 464 2 450
Deferred tax liabilities 7 400 10 073
Provisions 269 264 221 421
Fixed escalation operating lease accrual 452 732 514 829
Current liabilities 6 127 664 5 355 196
Other current liabilities 5 422 096 4 521 856
Provisions 34 301 48 952
Bank overdraft 671 267 784 388
Total equity and liabilities 9 942 392 8 369 846
CONDENSED GROUP CASH FLOW STATEMENT
Reviewed Reviewed
52 weeks 53 weeks
R"000 Notes ended June 06 ended June 05
Cash generated by continued
operations 2 065 366 783 285
Operating profit 1 427 926 999 145
Less: investment income (11 086) (13 056)
Non-cash items 1 281 090 453 106
Changes in working capital 2 367 436 (655 910)
Net interest received 12 656 10 162
Dividends received 5 079 6 680
Dividends paid (282 473) (213 336)
Tax paid (438 890) (509 097)
Cash utilised by discontinued
operation 3 (23 050) (5 415)
Cash flows from operating
activities 1 338 688 72 279
Cash flows from investing
activities (1 097 877) (810 961)
Purchase of property, plant and
equipment and software (1 318 364) (922 535)
Proceeds on disposal of property,
plant and equipment and software 343 601 57 451
Proceeds on disposal of
investments - 71 069
Acquisition of subsidiaries/
operations (136 565) (17 127)
Proceeds on disposal of operations 2 632 -
Acquisition of listed investment - (21 069)
Other investment activities 10 819 21 250
Cash flows from financing
activities 406 428
Acquisition of treasury shares (99) (265)
Proceeds on issue of preference
shares to joint venture 505 693
Movement in cash and cash
equivalents 241 217 (738 254)
Effect of exchange rate movements
on cash and cash equivalents 3 066 10 988
Net movement in cash and cash
equivalents 244 283 (727 266)
CASH FLOW INFORMATION
R"000
1. Non-cash items
Depreciation on property, plant and
equipment 447 808 385 098
Amortisation of intangible assets 14 380 14 742
Net fair value gains on financial
instruments (20 091) (3 629)
Exchange rate gains (8 445) (1 921)
Share options granted 764 5 265
Profit on disposal of property (171 651) (7 329)
Loss on disposal and scrapping of plant and
equipment and software 9 257 4 980
Profit on disposal of unlisted investment - (18 000)
Profit on disposal of listed investment - (669)
(Reversal of impairment)/impairment of
property, plant and equipment (1 559) 40 177
Profit on disposal of operation (728) -
Impairment of goodwill 1 286 26 151
Movement in provisions 28 204 15 580
Movement in fixed escalation operating
lease accrual (18 135) (7 339)
281 090 453 106
2. Changes in working capital
Inventories (500 151) (80 237)
Trade and other receivables 23 580 18 079
Trade and other payables 844 007 (593 752)
367 436 (655 910)
3. Cash utilised by discontinued operation
Loss for the year from discontinued
operation per income statement (19 853) (25 978)
Depreciation on property, plant and
equipment 2 368 3 592
Amortisation of intangible assets 8 -
Exchange rate losses/(gains) 6 350 (352)
Loss on disposal and scrapping of property,
plant and equipment and software 5 577 -
Proceeds on disposal and scrapping of
property, plant and equipment and software 9 091 -
(Reversal of impairment)/impairment of
property, plant and equipment (9 787) 9 787
Changes in working capital (16 804) 7 536
(23 050) (5 415)
CONDENSED SEGMENT INFORMATION
Reviewed Reviewed
% 52 weeks 53 weeks
R"000 change ended June 06 ended June 05
SEGMENT REVENUE - by business
segment
- Supermarkets 12,9 31 635 822 28 017 664
- Furniture 11,2 1 875 465 1 686 569
Total segment revenue 12,8 33 511 287 29 704 233
SEGMENT RESULT - by business
segment
- Supermarkets 26,6 1 051 301 830 084
- Furniture 3,8 198 633 191 397
Total segment result 22,4 1 249 934 1 021 481
Segment result comprises trading profit plus exchange rate losses/gains
less investment income.
SUPPLEMENTARY INFORMATION
Reviewed Reviewed
as at as at
R"000 June 06 June 05
1. Capital commitments 388 775 344 438
2. Contingent liabilities 88 362 53 190
There was an increase in the contingent liabilities
arising in the ordinary course of business relating to
property and other transactions from which it is
anticipated that no material liabilities will arise.
3. Net asset value per share (cents) 598 438
4. Total number of shares in issue (adjusted for
treasury shares) 507 345 507 355
CONDENSED STATEMENT OF CHANGES IN EQUITY
Reviewed Reviewed
52 weeks 53 weeks
R"000 ended June 06 ended June 05
Balance at beginning of July 2 265 877 1 802 453
Net movement in treasury shares (99) (265)
Net fair value profits on
available-for-sale investments, net of tax 12 452 2 997
Net profit for the year 896 482 637 004
Transfer to share-based payment reserve 764 5 265
Foreign currency translation differences 187 545 33 260
Dividends distributed to shareholders (280 153) (214 837)
Balance at end of June 3 082 868 2 265 877
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Reviewed
52 weeks 53 weeks
R"000 ended June 06 ended June 05
Net profit attributable to shareholders 890 132 629 613
Loss for the year from discontinued
operation 19 853 25 978
Earnings from continued operations 909 985 655 591
(Income)/expenditure of a capital nature
after tax (141 557) 32 448
Profit on disposal of unlisted investment - (19 906)
Profit on disposal of listed investment - (660)
Profit on disposal of operation (622) -
Profit on disposal of property (144 584) (6 644)
Loss on disposal and scrapping of plant,
equipment and software 6 613 3 511
Insurance claim for building received (2 006) (5 864)
(Reversal of impairment)/impairment of
property, plant and equipment (1 559) 40 177
Impairment of goodwill 1 286 26 151
Payment made for lease cancellation - 3 484
Profit on lease cancellation - (6 840)
Prescription of amounts owing (685) (961)
Headline earnings from continued operations 768 428 688 039
Exchange rate gains after tax (4 274) (3 305)
Adjusted headline earnings from continued
operations 764 154 684 734
Headline earnings from continued operations 768 428 688 039
Add: loss for the year from discontinued
operation (19 853) (25 978)
(Income)/expenditure of a capital nature
after tax from discontinued operation (4 210) 9 787
Headline earnings 744 365 671 848
Earnings per share from continued
operations (cents) 179,4 129,2
Earnings per share (cents) 175,4 124,1
Diluted earnings per share from continued
operations (cents) 172,7 125,7
Diluted earnings per share (cents) 168,9 120,7
Headline earnings per share from continued
operations (cents) 151,5 135,6
Headline earnings per share (cents) 146,7 132,4
Diluted headline earnings per share from
continued operations (cents) 145,8 131,9
Diluted headline earnings per share (cents) 141,2 128,8
Adjusted headline earnings per share from
continued operations (cents) 150,6 135,0
Adjusted diluted headline earnings per
share from continued operations (cents) 145,0 131,3
Ordinary dividend per share paid (cents) 55,0 41,5
Ordinary dividend per share declared (cents) 73,0 50,0
Acknowledgement
The innovation and daring that have been our guiding principles over the past
three decades and that will continue to inform our endeavours in the years ahead
are an expression of the culture that has been nurtured in our business by top
management with full backing of the Board. The results of that daring and
dedication are clearly reflected in our financial performance for the year, and
we want to express our deepest gratitude to every member of staff for his or her
contribution, to our fellow directors for their unstinting support and to all
our suppliers for helping us achieve our goals.
By order of the Board
C H Wiese
Chairman
J W Basson
Chief executive
22 August 2006
Directorate and administration
Executive directors: JW Basson (chief executive), CG Goosen (deputy managing
director), B Harisunker, AE Karp, EL Nel, AN van Zyl, BR Weyers
Non-executive directors: CH Wiese (chairman), JJ FouchA, TRP Hlongwane, JA
Louw, JF Malherbe, JG Rademeyer
Alternate directors: JAL Basson, M Bosman, PC Engelbrecht, JD Wiese
Company secretary: AN van Zyl
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
Transfer secretaries
South Africa: Computershare Investor Services 2004 (Pty) Ltd, PO Box 61051,
Marshalltown, 2107, South Africa
Telephone: +27 (0)11 370 5000 Facsimile: +27 (0)11 686 5238
Website: www.computershare.com
Namibia: Transfer Secretaries (Pty) Ltd, PO Box 2401, Windhoek, Namibia
Telephone: +264 (0)61 227 647 Facsimile: +264 (0)61 248 531
Zambia: Lewis Nathan Advocates, PO Box 37268, Lusaka, Zambia
Telephone: +260 (0)1 223 174 Facsimile: +260 (0)1 229 868
Sponsors
South Africa: Nedbank Capital, PO Box 1144, Johannesburg, 2000, South Africa
Telephone: +27 (0)11 295 8602 Facsimile: +27 (0)11 294 8602
Website: www.nedbank.co.za
Namibia: Old Mutual Investment Services (Pty) Ltd, PO Box 25549, Windhoek,
Namibia
Telephone: +264 (0)61 299 3527 Facsimile: +264 (0)61 299 3528
Zambia: Lewis Nathan Advocates, PO Box 37268, Lusaka, Zambia
Telephone: +260 (0)1 223 174 Facsimile: +260 (0)1 229 868
Auditors: PricewaterhouseCoopers Incorporated, PO Box 2799, Cape Town, 8000,
South Africa
Date: 23/08/2006 08:00:33 AM Produced by the JSE SENS Department
