Structure
Corporate Team: Above (top l.t.r) Barney Rogut (General Manager: Buying and Merchandising), Steven Braude (General Manager: Non-Food
Buying), Jannie Holtzhausen (GeneralManager:Operations: North Africa), Brian Weyers (General Manager: Marketing),
(seated middle) Etienne Nel (General Manager: Portfolios), Callie Burger (General Manager: Human Resources),
(front l.t.r) Carel Goosen (Deputy Managing Director), André van Zyl (General Manager: Statutory and Legal Services),
Whitey Basson (Managing Director), Marius Bosman (General Manager: Financial Management), Photy Tzellios (General Manager: Logistics)
Group Structure
Managing Director
JW Basson
Deputy Managing
Director
Carel Goosen
Information Technology
Orlando da Silva
Financial Management
Marius Bosman
Logistics
Photy Tzellios
OK Franchise Division
Sergio Martinengo
Operations:
North Africa
Jannie Holtzhausen
Operations:
Sub-Sahara Africa
Mauritz Alberts
Marketing
Brian Weyers
Statutory and
Legal Services
André van Zyl
Properties
Philip van der Merwe
Human Resources
Callie Burger
Buying and
Merchandising
Barney Rogut
Portfolios
Etienne Nel
OK Furniture
Freshmark
Meat Markets
OK Foods
Sentra
8’ Till Late
Megasave
Southern African Distribution
including number of units
SHOPRITE CHECKERS
Shoprite Holdings Ltd
1
Annual Report 2000
349
OK
11
HYPERAMA
18
HOUSE & HOME
20
OK FURNITURE
118
SENTRA
148
OK FOODS
19
MEGASAVE
86
VALUE
65
BUYING PARTNERS
77
8 ’ TILL LATE
47
HUNGRY LION
30
Highlights
Financial Highlights
Shoprite Holdings Limited and its subsidiaries
Revenue
30 June 2000
30 June 1999
R’000
R’000
18 430 568
17 349 078
Operating profit
325 801
125 921
Profit before taxation
326 314
138 357
Headline earnings
313 112
115 655
Return on average capital employed
(%)
28.7
17.8
Headline earnings on average permanent capital
(%)
25.6
10.5
Interest-bearing debt: Total shareholders’ funds
(:1)
0.05
0.31
Headline earnings per shar e
(cents)
57.6
21.3
Dividend per share
(cents)
18.0
14.0
H e a d li n e E ar n i ng s p e r S h a r e
Revenue
2000
2000
1999
1999
1998
1998
1997
1997
*1996
*1996
0
5
10
15
20
25
30
35
40
45
50
60
0
3 000
cents
6 000
9 000
12 000
R’million
*1996 = 16 months
Shoprite Holdings Ltd
2
Annual Report 2000
15 000
18 000
21 000
Report
Joint Report of Chairman and Managing Dire c t o r
FINANCIAL RESULTS
THE PAST 20 YEARS
The Shoprite Group of Companies achieved earnings of
The year under review to June 2000 marks the culmination of a
57.6 cents per share for the year to 30 June 2000, compared
20-year period during which the Group developed from the small
to the 21.3 cents per share in the previous year.
8-store Shoprite chain with a turnover of R12million (purchased
A final
dividend of 9.5 cents was declared, bringing the total dividend
from the Rogut family in 1979).
to 18 cents (1999: 14 cents). This is in line with management’s
expectations and was achieved despite a challenging trading
The Group has steadily progressed
environment.
towards its objectives of becoming
the largest supermarket group
Shoprite’s operating profit was R326 million (1999: R126
on the continent and beyond,
million), which represents an operating margin of 1.8 percent.
a
process
which
has
been
accelerated with the acquisition
Group turnover grew by 6.2 percent to R18,4 billion (1999:
of various competitors. In a
R17,3 billion). The largest contribution was from the local
saturated market, with under-
supermarket division, which was able to maintain market share
performing
in a competitive market. Strong sales in furniture and home
strategy to buy out stores proved
competitors,
the
appliances ensured that OK Furniture increased its turnover by
to be the correct decision, despite
more than 35 percent to about R450 million, which was
the fact that grass-roots stores
pleasing and in line with expectations.
often offer a better return.
C.H. Wiese
The economic growth of many African countries has
coincided with Shoprite’s arrival in countries north of our border.
We currently operate 56 outlets outside of South Africa.
The dispute with SAB has still not been resolved and no
The acquisition in 1990 of Grand Bazaars, which comprised 27
provision has been made in the financial statements for interest
stores, was followed by an even bigger breakthrough, in 1991,
receivable of approximately R80 million.
when the Checkers Group was acquired.
At the time, the
Checkers Group boasted a turnover of almost double that of the
The results are convincing proof that the Group has successfully
consolidated Shoprite and Grand Bazaars Group.
addressed the problems that led to abnormal stock losses
experienced during the 1999 financial year. Shrinkage had been
During the next few years the Group focused on building the
at its lowest level in 10 years due to the stringent
company, which included expanding into Africa during 1995,
implementation of management disciplines that existed prior to
and the buy-out of OK Bazaars in 1997. The purchase of
the OK Bazaars acquisition. The Group’s shrinkage was now
OK Bazaars made Shoprite the largest supermarket group in
lower than internationally accepted norms.
the country.
Shoprite Holdings Ltd
3
Annual Report 2000
Report
Joint Report of Chairman and Managing Director (cont.)
Over a 20-year period turnover grew at an annualised compound
INFORMATION TECHNOLOGY
growth of 44.4 percent and earnings by 37.8 percent.
The acquisition of OK Bazaars during 1997, coupled with
The reduction in uneconomical retail space by 127 000m2 ,
accelerated expansion on the African continent, necessitated the
which included the scaling down of 15 and the closure of 26
upgrade of information systems within the Group, especially
outlets, resulted in sales growth only marginally ahead of
wireless networks to automate and refine our worldwide stocking
inflation.
procedures. During the past 24 months, a total of R264 million
was spent on new programmes and upgrades in these departments.
Shoprite Checkers remains the preferred shopping destination of
64.3 percent of housewives for household food and groceries.
The closest competitor caters for 28.3 percent of households.
Source: ACNielsen Customised Research.
The conversion of OK stores into Shoprite or Checkers stores has
All Checkers and Hyperama stores will have point of sale
been completed and any refurbishments currently underway
scanning installed by March 2001, bringing the total number of
are part of the standard programme. During the previous 24
scanning till points to more than 3 400. Over the next three
months, 159 outlets were refurbished while the Group opened
years, management will focus strongly on growing its investment
19 OK Foods franchises. The 8 ’Till Late format currently has
in wireless infrastructure to fully automate most in-store stock
47 outlets and this figure is increasing steadily. With a total of
procedures and functions.
911 outlets, including franchises, and an annual turnover of
more than R18 billion, the Shoprite Group is now the largest
The Group is capable of trading in any country in the world and
retail company on the African continent.
has already designated Internet buyers which will enable us to
source merchandise at the most competitive prices globally. With
The year under review saw the opening of 5 new stores in
its investment in information technology, the Group is ideally
Africa – 3 in Namibia, 1 in Mozambique and another 1 in
placed to take advantage of its position as Africa’s largest retailer.
Zambia. A new store will be opened in Cairo in November 2000,
which will be followed by the opening of more stores in Egypt
TOWARDS THE FUTURE
in 2001.
As part of its strategic positioning, the Group has made a decision
Hyperama is now a fully focussed operation within the Group.
about the future positioning of its powerful brands. It is envisaged
The refurbishment of 7 of the 18 stores was started and it is
that the Checkers format will be joined with that of the Hyperama,
expected that the remaining stores will be completed within the
providing for the LSM 6, 7 and 8 markets, while Shoprite stores
next 12 months.
provide for the broad middle to lower end of the market.
Shoprite Holdings Ltd
4
Annual Report 2000
Report
Trading conditions will continue to be challenging, and will be
SHOPRITE’S PEOPLE
influenced by broader socio-economic issues. The main concern
is the growing AIDS pandemic, which needs urgent attention
The past year is a milestone for the
from government, the private sector and all South Africans.
Group and we would like to thank
Recognising its responsibility in this regard, the Group is
the people who have over the past
currently deploying an HIV/AIDS awareness programme that
20 years helped to build the
is aimed at enhancing the wellbeing of its customers
Shoprite Group of Companies with
and workforce.
such enthusiasm and commitment.
Our thanks also go to the Group’s
The country has also made some strides in the upliftment of
younger generation of professional
previously disadvantaged sectors of our society, but the income
managers, whose skills have been
disparities that still exist – and are among the highest in the
developed over the past years,
world – are a cause for concern. These disparities will
increasingly have a material effect on the quality of life of all
enabling the Group to develop into
South Africans and can only be eradicated if economic growth
highest standards of financial
and job creation are dramatically accelerated.
disciplines and business principles.
a well-structured entity, with the
J.W. Basson
During the past 24 months, the Shoprite Group of Companies spent
R264 million on new software and upgrades of its information systems.
EXPANSION INTO AFRICA
During the year Mr Cornus Moore, executive director of Pepkor,
joined the board.
The Group’s expansion programme in Africa is well on track with
operations outside of South Africa currently contributing about
In the sections to follow, the Group’s strategic positioning
6 percent to Group turnover. This figure is expected to increase
through its people will become clear, as well as how some of
substantially in the next few years. Shoprite remains the only
the divisions will contribute to the achievement of its
South African food retail chain that is aggressively expanding
overall objectives.
into Africa, and plans to capture the majority market share
on the continent.
The economic growth of many African countries has coincided
with Shoprite’s arrival in the countries north of our border,
and the Group currently operates 56 outlets outside of
South Africa. During the past 24 months, Shoprite generated
exports of more than R380 million and to date has created
1 900 job opportunities in foreign countries.
The Group is clearly focused on the next decade, during which
it not only expects to remain the largest supermarket group in
Africa, but also to achieve broader objectives beyond the African
continent. Key management is currently being trained and
mentored throughout the Group and will be well-equipped to
guide the Group towards achieving these broader objectives.
Shoprite Holdings Ltd
5
Annual Report 2000
2 0 - Year Review - Financial Statistics
ANNUALISED
COMPOUND
GROWTH
INCOME STATEMENT
2000
R million
1999
1998
1997
OK Bazaars
1996
Sentra
1995
1994
1993
1992
Checkers
REVENUE
growth
44,4%
18,431
6.2%
17,349
19.1%
14,564
55.5%
9,365
19.4%
7,845
23.3%
6,364
15.8%
5,495
4.6%
5,255
365.4%
1,129
54.2%
OPERATING Profit
margin
34.3%
325.8
1.8%
125.9
0.7%
236.7
1.6%
200.0
2.1%
156.4
2.0%
99.5
1.6%
51.8
0.9%
44.1
0.8%
22.7
2.0%
Headline Earnings
growth
37.8%
313.1
170.7%
115.7
-52.6%
243.9
47.9%
164.9
26.1%
130.8
32.2%
99.0
125.9%
43.8
27.2%
34.4
183.4%
12.2
51.0%
DIVIDENDS (CENTS)
growth
26.8%
18.0
28.6%
14.0
0.0%
14.0
7.7%
13.0
226.3%
4.0
15.6%
3.4
28.6%
2.7
-
-
2.1
14.3%
-
3.2
1.5
3.3
2.5
4.9
4.4
2.7
-
2.6
36.0%
57.6
170.4%
21.3
-53.8%
46.1
42.7%
32.3
64.1%
19.7
28.5%
15.3
115.1%
7.1
24.0%
5.7
7.6%
5.3
51.9%
38.2%
1,293.0
1,092.1
1,055.4
554.5
439.4
373.8
274.2
197.5
27.0
66.5
349.6
173.8
210.8
243.7
94.5
104.9
108.6
-
1,391.3
1,466.8
1,250.8
772.8
688.1
470.1
379.3
306.8
27.0
26.3%
10.8%
30.3%
33.2%
32.2%
30.5%
18.6%
30.7%
49.6%
5.0%
31.3%
16.1%
37.5%
54.8%
25.2%
38.2%
54.8%
-
5,143.6
5,153.9
4,760.2
2,481.3
2,425.4
1,677.2
1,349.3
1,163.0
238.8
DIVIDEND COVER
EARNINGS PER
SHARE (CENTS)
growth
BALANCE SHEET
Ordinary shareholders funds
Interest-bearing debt
CAPITAL EMPLOYED
38.1%
Earnings on average
ordinary shareholders
funds
Interest-bearing debt:
Total shareholders funds
TOTAL ASSETS
44.6%
Note:
Earnings and Dividend per share for 1992 and the preceding years have been restated to allow for the change in the number of shares in issue as
a result of the acquisition of the Shoprite Group by Tradehold Ltd and the subsequent unbundling thereof.
Shoprite Holdings Ltd
6
Annual Report 2000
Statistics
1991
1990
Grand Bazaars
1989
1988
1987
1986
JSE Listing
1985
1984
1983
1982
1981
1980
732
55.3%
471
34.4%
351
42.4%
246
44.4%
171
35.1%
126
25.3%
101
53.8%
66
40.5%
47
45.4%
32
62.5%
20
67.5%
12
-
12.6
1.7%
13.0
2.8%
10.5
3.0%
7.9
3.2%
5.2
3.1%
3.9
3.1%
2.9
2.9%
2.2
3.4%
2.4
5.2%
1.9
6.0%
1.2
6.0%
0.9
7.6%
8.1
-1.1%
8.1
18.9%
6.8
33.4%
5.1
85.9%
2.8
54.8%
1.8
16.2%
1.5
5.3%
1.5
-30.9%
2.1
35.5%
1.6
129.5%
0.7
31.5%
0.5
-
1.8
16.7%
1.6
20.0%
1.3
25.0%
1.0
-
-
-
-
-
-
-
-
-
1.9
2.3
2.3
2.1
-
-
-
-
-
-
-
-
3.5
-3.6%
3.6
21.7%
3.0
35.3%
2.2
88.9%
1.2
50.0%
0.8
-
-
-
-
-
-
-
22.0
20.5
17.0
13.1
10.3
7.8
8.1
6.6
5.5
2.9
2.4
2.0
10.6
1.5
0.3
0.3
1.7
3.3
0.7
0.6
0.7
1.2
1.1
0.2
32.7
22.0
17.3
13.4
12.0
11.1
8.8
7.2
6.2
4.1
3.5
2.2
37.9%
43.5%
45.5%
43.8%
30.5%
22.5%
20.9%
24.1%
50.2%
58.7%
30.9%
-
48.3%
7.4%
1.7%
2.5%
16.4%
43.0%
8.2%
9.6%
13.1%
42.1%
45.1%
9.5%
181.4
113.2
83.7
59.1
40.9
31.0
25.2
15.8
12.2
7.7
5.8
3.2
Shoprite Holdings Ltd
7
Annual Report 2000
Divisional Report i n g
Our Future: top
To realise our objective of capturing the majority market share on the African continent we have appointed,and are currently
training,a large group to fulfil management needs of the future. Of these are: Mohamed Ssentongo from Uganda (Trainee Manager),
Gerdus Lewis (Accountant – Imports), Melody Feresu from Zimbabwe (Trainee Manager),Robert Katwere from Uganda (Trainee
Divisional Financial Manager),Hendrix Williams from Malawi (Trainee Manager), Maxwell Mavisa from Zimbabwe (Trainee
Manager), Ilze Koekemoer (Accountant – International Tax), Aubrey Gama from Malawi (Trainee Manager),and Kola Jolaolu from
Nigeria (Trainee Divisional Financial Manager).
SUPERMARKETS IN AFRICA
Challenges such as often-insufficient landline communication
have been solved by the installation of satellite link-ups.
Over the last 5 years, Shoprite – which today is the largest
Substantial investment in information technology over the past
retailer on the African continent – has expanded its thrust into
few years has resulted in streamlined procedures for ordering
Africa. Currently, 56 outlets serve more than 46 million
and stock control. A global tracking system, which provides up-
customers a year in the 6 countries where we operate outside of
to-date information of the whereabouts of all delivery trucks en-
South Africa. In each of these countries Shoprite created world-
route, has enabled the Group to manage its business in each
class supermarkets, which are welcomed by consumers as it
country efficiently.
gives access to lower prices on a wide range of basic food and
The encouragement of local manufacturers is key to the Group’s
household items. Added to this was the depth of experienced
operations beyond South African borders. Through the Group’s
and well-equipped management, which could lead the Africa
expansion programme in Africa, a retail market has been created
expansion without affecting the Group’s local business adversely.
for more than 270 local producers and manufacturers.
The long-term aim is to increase the operating income from other
In February this year the Group entered into a joint venture
African countries to more than 50 percent of Group revenue.
agreement with the Egypt-Kuwaiti Holding Company. The
agreement is expected to open up investment opportunities in
The absence of formal retail infrastructure in most African
markets initially hindered the Group’s ability to duplicate its
Egypt, as well as the Middle East. The first Shoprite store in
local strategy of growth through acquisition. However, with the
Egypt is due to open towards the end of 2000.
opening of the first few stores, benefits of comprehensive
Additional business opportunities are investigated in the
supermarkets were soon realised, which resulted in the
remaining Sub-Saharan countries and West Africa, especially
expansion programmes being easier with each new country.
those with economies similar to South Africa.
Our Future:
bottom right
Key management is currently being trained and mentored throughout the Group to guide us towards achieving our broader
objectives. Amongst those recently promoted are: Peter Franke-Matthecka,Special Project Manager in the Information
Technology Department (B Sc (Hons)), Jason Lenting,Programmer (B Com), Zukeka Jacob, Programmer (B Tech,Nat. Dip.
Computers),Zakele Sibiya, Trainee Regional Personnel Manager (Nat.Dip. Personnel Management),Andrew Tolmay,
Programmer (B Com),and Pieter Engelbrecht, Special Project Manager, assistant to the Managing Director (CA(SA)).
Shoprite Holdings Ltd
8
Annual Report 2000
Divisional
INFORMATION TECHNOLOGY
In view of the Group’s emphasis on perishables in future
Due to a substantially larger group and the non-South African
merchandise mix, the installation of point of sale scanning
operations expanding more rapidly, the Group’s investment of
systems will be completed in all these stores by March 2001.
Checkers and Hyperama stores, as well as their broader
R264 million in information technology played a key role in the
The Group’s expansion into foreign markets over the past 5 years
reported results.
can largely be attributed to its technological ability to support
The increased focus on utilising technology effectively ensured
decentralised businesses with local, independent services, while
that the Group, with more than R18 billion revenue, 18 million
maintaining strong central control. The expansion was
card transactions and EDI orders of more than R5 billion,
supported by the installation of 7 satellite sites throughout the
performed satisfactorily.
African continent.
The growing need for effective stock control and statistical data,
The Exceed 2000 logistical and E3-Trim forecasting and
especially at decentralised and foreign destinations, made it
replenishment software systems are considered to be world-
necessary for the Group to install a new Microsoft tools-based
leading applications and are deployed in all our distribution
data warehouse, upgrading the Group’s total data storage
centres.
capacity to 11 Terabytes.
The Group’s infrastructure is continuously evolving to enable
faster change and the free exchange of detailed operational
Ordering procedures were enhanced by the installation of more
than 650 wireless hand-held computer terminals, giving the
information between Shoprite and its suppliers. Business-to-
stores real-time information capability on all stock items with
business e-commerce applications will offer a substantial
regard to price, availability and ordering levels.
reduction in operating cost.
The Company will steadily become paperless in all internal
In its quest to become a technological leader, the Group
transactions between Head Office, stores and distribution
will continue its investment in technology and will spend
R271 million in 2000/2001, ensuring the automation of in-
centres, a scenario which will realise substantial cost savings.
store tasks and the open exchange with key supplier companies.
Shoprite Holdings Ltd
9
Annual Report 2000
Divisional Reporting (cont.)
Our Future:
top
Young professionals are appointed aimed at enhancing our human capital to face the challenges of the future. Recent appointments in the
Group include: Dirk Diemont,Project Manager: Meat Markets (MBA, M Sc Agriculture), Aldo Mangiagalli,Accountant:Fleet,Fuel &
Garage Division (CA (SA)), Tembi Maninjwa,Project Officer: Money Markets (National Diploma: Management),Dolf Diedericks,
Accountant: Finance (CA(SA)), Wynand Pretorius, Accountant:Africa (CA(SA)), Fanus Smit,Project Officer: Money Markets (MBA; B
Econ; Hons in Business Management & Administration),and Morné Fourie, Assistant to the General Manager:Marketing (B Com Hons).
HUMAN RESOURCES
The Branch Management Training Scheme, which is but one of
Shoprite currently employs some 29 000 permanent employees
currently boasts some 400 trainees, and has recently been
and more than 48 000 temporary and casual workers. The Group
adapted to accommodate future retailers throughout Africa.
the pillars of the company’s well-developed succession plan,
embraces an informal work style and has created an open-door
policy through its flat management structure. Only three levels
Shoprite
of management exist between store employees and the
Resources management information technologies to support
recently
implemented
sophisticated
Human
managing director. This aside, the company’s reporting and
line management in reaching business goals. This is in line
support structures underpin the high standard of professionalism
with the Group’s view that particular attention is paid to the
development and implementation of frameworks and systems
and efficiency.
to maximise labour productivity. One such support system is
The Group is divided into 9 divisions. 5 Of these are Shoprite
Electronic Time and Attendance, which enables the Group to
Checkers divisions which run decentralised operations, the
increase productivity levels and improve the control of staff
smallest being in excess of R1,1 billion in sales. Each division
costs as it assists managers to match staffing levels with the
operates autonomously and independently while supported by
need to provide quality customer service and at the same time
divisional human resources, financial, marketing and buying
remain within pre-set targets. It also allows real-time access to
functions. These disciplines are controlled centrally on a
store-level scheduling in order to monitor, and where necessary,
functional basis from where support and direction is given to the
adjust deficient situations.
divisions which then operate within set policies and parameters.
The Group is committed to driving transformation in the
workplace in line with a finalised comprehensive Employment
Divisional
Some 55 percent of employees have a service record of 10 years
and longer, testament to the company’s ability to provide long-
Equity Plan and will use this vehicle to enhance the strengths
term career opportunities. Furthermore, nearly 20 percent of the
of its human capital to face all the challenges of the future.
supervisory
and
managerial levels
have
a
post-matric
qualification ranging from diplomas to Doctorate degrees.
With a payroll exceeding R1,5 billion, Shoprite has systems to
In the past year more than 44 000 employees attended relevant
This capability extends to centrally administering the payroll of
administer, monitor and control all aspects of pay and benefits.
training courses, ranging from basic skills courses to
several African countries. The decision to implement the SAP
senior management development programmes. Management
Human Resource Application will allow integration with other
development is a key focus area and 1 572 managers have had the
applications and enable speedier access to information for
opportunity to attend training courses in the 1999/2000 year as
control purposes.
part of the growth and development plan. In addition, a number of
service training schools, which focus on the bakery, deli, fresh
produce and meat market operations, were enhanced.
Shoprite Holdings Ltd
10
Annual Report 2000
Divisional
OK FURNITURE
DISTRIBUTION CENTRES
Although the depressed economy continued its impact on the
In 1996, Shoprite embarked on an Efficient Consumer
furniture industry, the repositioning of the OK Furniture business
Response initiative aimed at improving product availability while
was successful with sales increasing by more than 35 percent
decreasing inventory levels and taking unnecessary costs out of
when compared with the previous period. 85 Stores were
the supply chain. This technological solution has born fruit and
refurbished during the year and an additional 15 to 20 stores are
today the supermarket group can claim its price leadership in
set to open in the coming period.
the marketplace.
While increased competition necessitated lower margins, it was
During the year under review, the 9 distribution centres, covering
balanced by building critical mass, which ensured higher sales
distribution space of more than 150 000m2, supplied more than
volumes. Continuous changes to the range also assisted the
750 points and distributed in excess of 55 million cases by
growth in sales volumes.
consolidating goods across 300 vendors. The Group’s largest and
New electronic Stock Management Systems were implemented
most modern distribution centre is located in Brackenfell, near
during the past year to identify slow moving stock. This resulted
Cape Town, and accommodates 15 000 line items. Distribution
in a reduction of stock levels by about 30 percent.
centre management and inventory management are enabled
OK Furniture recently launched a new brand, "OK Power
through the deployment of the Exceed 2000 logistical and E3-
Express", which will capitalise on its existing strengths in the
Trim forecasting and replenishment packages, respectively.
home entertainment, appliance and base-set market.
These initiatives resulted in increased customer satisfaction,
The division will improve profitability in the year ahead through
enhanced product availability and the lowest possible cost. This
the introduction of innovative financing packages. Sales will be
assisted Shoprite’s mission of remaining the country’s low cost
increased through the offer of pre-approved financing, exclusive
distributor of food products.
special offers to the existing customer base, modified sales
incentives, and additional training to support the vision of the
management team.
The finance and insurance operations are expected to continue
their increased revenue base, thereby further improving
overall profitability.
Our Future:
below
The Shoprite Group of Companies is the first Western Cape based company and the only retailer in South Africa to become an approved training
organisation with the South African Institute of Chartered Accountants. Employees benefiting from the Group’s status are: René Whon (Associate
Accounting Technician Articles, Nat.Dip. Internal Auditing), Tania Verwey (Chartered Accounting Articles, B Accounting Hons.), Jacques Steenkamp
(Associate General Accountant Articles, B Te c h ,N a t .D i p. Cost & Management Accounting), Jemine Jooste (Associate General Accountant Articles,
Nat.Dip. Financial Information Systems), and Rudi Kruger (Associate Accounting Technician Articles, Nat.Dip. Internal Auditing).
Shoprite Holdings Ltd
11
Annual Report 2000
Divisional
HYPERAMA/HOUSE & HOME
OK FRANCHISE DIVISION
The 18 Hyperama stores, which incorporate House & Home
The OK Franchise division franchises a number of niche
furniture departments, have a distinct vision and focus and are
brands in food retailing. These include OK Foods (large-
managed by a dedicated independent team of personnel. This
sized supermarkets); Sentra Supermarkets (medium-sized
operation currently trades with more than 94 000 lines
supermarkets); 8 ’Till Late (convenience superettes, serving as
including food, household items, clothing, large appliances and
neighbourhood stores); Megasave (wholesale and cash & carry
a wide range of indoor and outdoor furniture. House & Home,
outlets); Value (basic commodity superettes).
which also has two freestanding stores, reflected strong growth
in furniture and appliance sales despite a subdued trading
The intention is to convert 50 percent of the membership from
environment.
‘buying partnership’ to franchises by June 2002. The 8 ’Till Late
format, currently concentrated in the Western Cape and Northern
Inventory was reduced by R60 million in the past year after the
Province, will be expanded into other areas of the country during
successful implementation of front-end scanning and the UCS
the next year. Some 50 OK Foods outlets and 75 8 ’Till Late
furniture system. Less inventory as well as strong cost control
superettes will be operational by 31 December 2001.
supported the growth in net operating profit for the division,
which was up in excess of 120 percent.
Enterprise resource planning will be developed by June 2001
aimed at enhancing the information flow between this division,
The store refurbishment programme, which will be completed
its franchisees and suppliers.
during the next 12 months, will be aimed at incorporating the
latest supermarket retail trends, which will give consumers a
The establishment of new stores and the conversion of Sentra
world-class shopping experience.
stores to OK Foods will increase the brand awareness of OK Foods.
During the next financial period procurement and forecasting
Two training stores, aimed at providing practical training for
technology, which assist with automated ordering at store level,
prospective franchisees, will serve as a base for research and
will be implemented. This is aimed at ensuring a better in-stock
development and will be established by the first quarter of 2001.
situation that will lead to improved customer service levels,
further inventory reductions and an increase in sales.
The above will be complimented by the already strong OK
Franchise management team in reaching its longer-term
objective, which is to take the OK Franchise operation into Africa.
Our Future:
below
The Group provides exciting careers in buying and continuously trains young buyers. Forming part of the dynamic buying team at Head
Office are:Clive Marumo (Buyer:Non-Foods), Fowzia Higgins (Buyer:Non-Foods), Jaco Brand (Trainee Buyer: Foods), Jennifer Tyler (Buyer:
Foods),Barno de Lange (Internet Buyer), Rawena Wilscot (Trainee Buyer:Non-Foods),and Thabiso Gabanakgosi (Trainee Buyer: Foods).
Shoprite Holdings Ltd
12
Annual Report 2000
Directorate
D i rectorate and Administration
Shoprite Holdings Limited and its subsidiaries
SECRETARY
A N van Zyl
cnr William Dabs & Old Paarl Roads
PO Box 215 Brackenfell 7561
EXECUTIVE DIRECTORS
J W Basson (54) B.Com. CA (SA)
Managing Director
C G Goosen (47) B.Com. Hons. CA (SA)
Deputy Managing Director
BANKERS
ABSA Bank Limited
First National Bank Limited
Nedbank Limited
The Standard Bank of South Africa Limited
Boland PKS
Citibank, N.A.
S U M Martinengo (57) CA (SA)
General Manager: OK Franchise Division
B Rogut (74)
General Manager: Buying and Merchandising
B Weyers (48)
General Manager: Marketing
AUDITORS
PricewaterhouseCoopers Incorporated
Sanbel Building
Old Paarl Road
Bellville 7530
A N van Zyl (52) B.Com. LL.B.
General Manager: Statutory and Legal Services
D Kieviet (50) B.Com. Hons.
General Manager: Freshmark
REGISTRATION NUMBER
1936/007721/06
05/07721/06 (previous number)
Incorporated in the Republic of South Africa
NON-EXECUTIVE DIRECTORS
C H Wiese (58) B.A. LL.B. D.Com. (H.C.)
Group Chairman - Pepkor Ltd
J A Louw (56) B.Sc. Hons. B.(B.&A.) Hons.
Non-Executive Director
REGISTERED OFFICE
cnr William Dabs & Old Paarl Roads
PO Box 215
Brackenfell 7561
J J Fouché (52) B.Com. LL.B.
Executive Director - Pepkor Ltd
M G Loubser (75) B.Com. CA (SA)
Non-Executive Director
TRANSFER SECRETARY
Mercantile Registrars Limited
11 Diagonal Street
Johannesburg 2001
Telephone (011) 370 5000
Facsimile (011) 370 5271
J F Malherbe (71) B.Com. LL.B
Non-Executive Director
C Moore (50) B.Com. CA (SA)
Executive Director - Pepkor Ltd
STATEMENT OF SECRETARY
In accordance with section 268G(d) of the Companies Act, Act 61 of 1973, as amended ("the Act"), it is hereby certified that the
company has lodged with the Registrar of Companies all such returns that are required of a public company in terms of the Act and
that such returns are true, correct and up to date.
A N van Zyl
Secretary
28 August 2000
Shoprite Holdings Ltd
13
Annual Report 2000
Value Added Statement
Shoprite Holdings Limited and its subsidiaries
30 June 2000
R’000
REVENUE
30 June 1999
%
18 430 568
INVESTMENT INCOME
Cost of goods and services
R’000
17 349 078
84 891
116 422
16 269 827
15 438 242
VALUE ADDED
%
2 245 632
100.0
2 027 258
100.0
1 631 805
72.7
1 601 259
79.0
EMPLOYED AS FOLLOWS:
EMPLOYEES
Salaries, wages and service benefits
163 018
7.3
178 728
8.8
Finance charges to providers of funds
PROVIDERS OF CAPITAL
65 192
2.9
102 641
5.0
Dividends to providers of share capital
97 826
4.4
76 087
3.8
25 018
1.1
19 631
1.0
TAXATION
Payment of taxation on profits made
REINVESTED
Reinvested in the Group to finance future expansion and growth
425 791
18.9
227 640
11.2
Depreciation
229 691
10.2
189 417
9.3
Retained income
196 100
8.7
38 223
1.9
2 245 632
100.0
2 027 258
100.0
Value Added
EMPLOYMENT OF VALUE ADDED
Shoprite Holdings Ltd
14
Annual Report 2000
Five-Year
F i v e - Year Financial Review
Shoprite Holdings Limited and its subsidiaries
R’000
30 June
2000
12 months
30 June
1999
12 months
30 June
1998
12 months
30 June
1997
12 months
30 June
1996
16 months
18 430 568
17 349 078
14 564 217
9 365 493
10 183 256
INCOME STATEMENT
Revenue
Operating profit before exceptional items
Exceptional items
325 801
(19 186)
125 921
(1 345)
236 655
(2 028)
200 045
15 805
217 464
(111 697)
Operating profit after exceptional items
Investment income
Finance charges
306 615
84 891
65 192
124 576
116 422
102 641
234 627
93 126
46 611
215 850
101 461
45 837
105 767
78 996
33 488
Profit before taxation
Taxation
326 314
25 018
138 357
19 631
281 142
31 843
271 474
88 103
151 275
81 658
Profit before earnings of associated companies
Earnings of associated companies
301 296
-
118 726
-
249 299
-
183 371
-
69 617
(146)
Profit after taxation and earnings of associated companies
Outside shareholders’ interest
301 296
7 370
118 726
4 416
249 299
7 468
183 371
2 643
69 471
4 420
Net profit
293 926
114 310
241 831
180 728
65 051
Permanent capital
Outside shareholders’ interest
Interest-bearing debt
1 293 016
31 777
66 509
1 092 101
25 048
349 601
1 055 427
21 601
173 806
554 492
7 569
210 759
439 446
5 003
243 681
Capital employed
1 391 302
1 466 750
1 250 834
772 820
688 130
Fixed assets
Investments
Current assets
1 294 358
82 841
3 766 428
1 138 431
135 970
3 879 544
963 472
364 550
3 432 169
617 693
297 683
1 565 916
570 143
229 987
1 625 302
Total assets
Interest-free liabilities
5 143 627
3 752 325
5 153 945
3 687 195
4 760 191
3 509 357
2 481 292
1 708 472
2 425 432
1 737 302
Employment of capital
1 391 302
1 466 750
1 250 834
772 820
688 130
BALANCE SHEET
CASH FLOW STATEMENT
Cash generated/(utilised) by operations
Interest received
Interest paid
Dividends received
Dividends paid
Investment activities
689 401
81 096
(65 192)
3 795
(83 011)
(336 867)
530 615
104 374
(102 641)
12 048
(81 537)
(151 833)
91 021
71 342
(46 611)
21 784
(68 378)
(387 469)
(43 150)
76 769
(45 837)
24 692
(33 537)
(198 072)
401 978
71 947
(33 488)
7 049
(3 661)
(379 872)
Net cash flow
Ordinary shares issued
Financing activities
289 222
(283 092)
311 026
175 795
(318 311)
332 991
(466 562)
(219 135)
(32 923)
63 953
146 915
(451 882)
(252 058)
210 868
Movement in cash and cash equivalents
Acquired through acquisition of
subsidiaries and operations
6 130
486 821
-
-
Net movement in cash and cash equivalents
6 130
486 821
Shoprite Holdings Ltd
15
Annual Report 2000
139 961
(311 921)
(252 058)
210 868
Five-Year
F i v e - Ye a r F i n a n c i a l R e v i e w ( c o n t . )
Shoprite Holdings Limited and its subsidiaries
30 June
2000
12 months
30 June
1999
12 months
30 June
1998
12 months
30 June
1997
12 months
30 June
1996
16 months
(’000)
543 479
543 479
543 479
508 277
508 280
(’000)
(cents)
(cents)
(cents)
(cents)
(times)
543 479
237.9
57.6
54.1
18.0
3.2
543 479
200.9
21.3
21.0
14.0
1.5
529 275
194.2
46.1
45.7
14.0
3.3
508 277
109.1
32.3
35.6
13.0
2.5
501 650
86.5
34.8
13.0
5.2*
6.7
(:1)
(%)
(%)
12.9
1.77
28.7
12.7
0.73
17.8
14.3
1.63
32.6
12.8
2.14
41.3
13.2*
2.14
38.4*
(%)
(times)
25.6
8.8
10.5
8.3
29.8
9.7
32.6
11.0
32.0*
10.9*
(:1)
(:1)
(:1)
(times)
0.05
2.88
1.08
5.00
0.31
3.61
0.98
1.23
0.16
3.42
0.97
5.08
0.37
3.41
0.90
4.36
0.55
4.46
0.92
6.49
STATISTICS PER ORDINARY SHARE
Number of ordinary shares issued
Weighted average number of
ordinary shares issued
Net asset value per shar e
Headline earnings per shar e
Earnings per share
Dividend per share
Dividend cover
* capitalisation award - cash equivalent
PROFITABILITY AND ASSET MANAGEMENT
Asset turn
Operating margin
Return on average capital employed
Headline earnings on average
permanent capital
Stock turn
* adjusted for 12 months
LIQUIDITY AND GEARING
Interest-bearing debt:
Total shareholders’ funds
Total liabilities:Total shareholders’ funds
Current ratio
Finance charges cover
DEFINITIONS
Asset turn
Operating margin
Operating profit
Average capital employed
Capital employed
Return on average capital employed
Total shareholders’ funds
Total permanent capital
Stock turn
Headline earnings
Revenue divided by average capital employed.
Operating profit expressed as a percentage of revenue.
Profit before investment income, finance charges and taxation.
The average of capital employed at the beginning and the end of the financial year.
The sum of total shareholders’ funds and interest-bearing debt. Expressed another way, it is total
assets minus interest-free liabilities.
Operating profit before exceptional items plus investment income expressed as a percentage of
average capital employed.
The sum of total permanent capital and preference share capital.
The sum of permanent capital and outside shareholders’ interest.
Revenue divided by the average of trading stock at the beginning and the end of the financial year.
Profit before exceptional items.
Shoprite Holdings Ltd
16
Annual Report 2000
Corporate Management and Approval
of the Annual Financial Statements
The directors subscribe to the principles of transparent and
honest corporate management as set out in the Code of
Corporate Practice and Conduct in the King Report ("the code")
and conform to its requirements in all essential respects. The
company strives to maintain the highest standards of integrity
and ethics throughout its dealings with customers, staff,
shareholders and suppliers, thereby ensuring the highest level of
credibility, confidence and stability.
REMUNERATION COMMITTEE
The remuneration of the executive directors and the managing
director is subject to approval by the managing director and nonexecutive chairman respectively.
STAFF MEMBERS
The company maintains a policy of equal opportunities with no
unfair discrimination. Certain objectives have also been set for
management, aimed at making all levels more representative of
the South African society as a whole. The Group uses a variety
of participatory structures for issues affecting employees directly
and materially. These have been designed to maintain good
relations between employer and employee through the efficient
sharing of relevant information, consultation and the
identification and resolution of conflicts.
GROUP STRUCTURE
Shoprite Holdings Limited is an investment holding company
with investments in various trading subsidiary companies. All
subsidiaries of Shoprite Holdings are committed to the
principles of sound corporate management as contained in the
code and conform to it in all material respects, as far as
practically possible.
INTERNAL CONTROL
BOARD OF DIRECTORS
The directors accept final responsibility for the internal control
systems of the company. It is the task of management to ensure
that the relevant legislation and regulations are complied with,
and that adequate internal financial control systems are
developed and maintained in order to provide reasonable
certainty regarding:
The board of Shoprite Holdings consists of thirteen directors,
seven of whom hold executive positions in the Group. Details
regarding the members of the board appear on page 13 of the
financial report. The board meets at least four times a year.
AUDIT COMMITTEE
• the completeness and accuracy of the accounting records
• the integrity and soundness of the annual financial
statements and
• the safeguarding of the business’ assets.
The Shoprite Holdings audit committee consists of three nonexecutive directors and one executive director, who meet three
times per year in order to evaluate, among other things, accounting
practices, internal control systems, auditing and financial
reporting. It is also the audit committee’s task to evaluate critical
risk areas identified, together with management, for the Group, and
to report on those areas to the directors.
The efficiency of any internal financial control system is
dependent on the strict observance of prescribed measures.
There is always a risk of non-compliance of such measures by
staff. Consequently, even a strict and efficient internal control
system can provide no more than a reasonable measure of
assurance in respect of financial reporting and the safeguarding
of assets.
The audit committee works in accordance with a written
mandate from the board and external auditors have unrestricted
access to the committee. Appropriate members of management
are also invited to attend meetings in order to assist the
committee in performing its task. The audit committee receives
feedback on the activities of the company’s subsidiaries and
also has access to the minutes of those companies.
Shoprite Holdings Ltd
Internal auditors monitor the operation of the internal control
systems and report to management and the directors on
findings and recommendations. Certain high-level internal
audit functions were contracted out to the external auditors
during the course of the year. Corrective steps are taken to
17
Annual Report 2000
address shortcomings in control and other opportunities for
improving the system, whenever they are identified. The board,
working through its audit committee, supervises the financial
reporting process.
reporting. The directors are satisfied that the systems and
internal financial controls introduced by management are
effective and that there were no substantial discontinuities in
the functioning of the internal financial control systems during
the year under review. The external auditors are responsible for
reporting on the annual financial statements.
The Group assessed its internal financial control systems on
30 June 2000. It is the board’s opinion, based on this
assessment, that the internal control systems in respect of
financial reporting and the safeguarding of assets against
unauthorised use or disposal, met acceptable criteria.
The responsibility for drawing up and submitting the annual
financial statements was delegated to management. The annual
financial statements have been drawn up in accordance with
South African Statements of Generally Accepted Accounting
Practice and agree with the Groups’ accounting records and
policy. The directors are of the opinion that the Group has
sufficient resources at its disposal to operate the business for
the foreseeable future and the annual financial statements
have therefore been drawn up on a going concern basis.
CODE OF ETHICS
The Group’s Code of Ethics commits it to the highest standards
of integrity, conduct and ethics in its dealings with all parties
concerned, including its directors, managers, employees,
customers, suppliers, competitors, investors, shareholders and
the public in general. The directors and staff are expected to
fulfil their ethical obligations in such a way that the business is
run strictly according to fair commercial competitive practices.
The directors’ report, annual financial statements and Group
annual financial statements as set out on pages 19 to 42 have
been approved by the board of directors.
APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS
Signed on behalf of the board of directors.
The directors accept final responsibility for the integrity,
objectivity and soundness of the annual financial statements
and subscribe to the concept of transparency in financial
C H WIESE
Chairman
28 August 2000
J W BASSON
Managing Director
Strategy
Shoprite Employment Equity Strategy
Shoprite regards the diversity of its people as an asset, which
g roups and led to the establishment of Employment
contributes to the growth of the Group and adds value to the
Equity forums.
business. By linking the Employment Equity initiatives to the
overall business plan, we are able to give it a strategic focus and
The Employment Equity Plan includes certain corrective steps,
a meaningful role to play in building the hopes and aspirations
numerical targets and additional affirmative action measures
of the people of the Group.
that need to be implemented.
Regular monitoring and
evaluation to measure the progress of implementation of the
A Shoprite Employment Equity Plan has been finalised which
Plan have been put in place. The Plan clearly establishes certain
will bring into reality the key features of the Employment Equity
objectives that the Group has undertaken to work towards.
Act of 1998. This plan was preceded by an in-depth study and
These include:
analysis of the workforce, and all human resources policies and
practices in order to identify which, if any, barriers existed that
• To foster a corporate culture in which respect for all people
could hinder the advancement of designated groups, as
is valued;
identified in the Act. This study helped us to identify the profile
• The implementation of measures to eradicate discrimination;
of our workforce and its representivity not only in terms of race,
• To set in place a process by which equity will be achieved
gender and disabilities but also strengths and possible
that is representative of our society.
weaknesses that might have existed.
As the leading retailer in Africa, born and bred on this continent,
The process has been underpinned by wide ranging
we see these measures as a long-term investment in our people
consultation, which is representative of the different interest
and our country.
Shoprite Holdings Ltd
18
Annual Report 2000
Financial
,
Auditors
2000 Annual Financial Statements
Shoprite Holdings Limited and its subsidiaries
CONTENTS
Auditors’ report
Directors’ report
Accounting policies
Income statement
Balance sheet
19
20
21 - 22
23
24
Statement of changes in equity
Cash flow statement
25
26
Notes to the annual financial statements
Interest in Subsidiaries
27 - 41
42
Auditors’ Report
REPORT OF THE INDEPENDENT AUDITORS TO THE
MEMBERS OF SHOPRITE HOLDINGS LIMITED
estimates made by management, and
• evaluating the overall financial statement presentation.
We have audited the annual financial statements and Group
annual financial statements of Shoprite Holdings Limited set
out on pages 20 to 42 for the year ended 30 June 2000. These
financial statements are the responsibility of the directors of the
company. Our responsibility is to express an opinion on these
financial statements based on our audit.
We believe that our audit provides a reasonable basis for
our opinion.
AUDIT OPINION
In our opinion, the financial statements fairly present, in all
material respects, the financial position of the company and the
Group at 30 June 2000, and the results of their operations,
changes in equity and cash flows for the year then ended,
in accordance with South African Statements of Generally
Accepted Accounting Practice and in the manner required by
the Companies Act in South Africa.
SCOPE
We conducted our audit in accordance with statements of South
African Auditing Standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance that
the financial statements are free of material misstatement. An
audit includes:
• examining, on a test basis, evidence supporting the amounts
and disclosures included in the financial statements
• assessing the accounting principles used and significant
Shoprite Holdings Ltd
PRICEWATERHOUSECOOPERS INC.
Chartered Accountants (SA)
Registered Accountants and Auditors
28 August 2000
Bellville
19
Annual Report 2000
,
Directors
D i rectors’ Report
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
1 SHARE CAPITAL
3.2 Preference dividends
Details are stated in note 8 to the annual financial
statements.
3.3 Ordinary dividends
The directors declared a final dividend of 9.5 cents per
share payable on 29 September 2000, which together
with the interim dividend of 8.5 cents per share paid on
24 March 2000, amounts to 18.0 cents per ordinary
share for the year (1999: 14.0 cents).
No ordinary shares were issued during the year. Full details of
the company’s authorised and issued share capital are
detailed in note 17 to the annual financial statements.
2 BUSINESS OF THE GROUP
Shoprite Holdings Limited is an investment holding company
with investments in various subsidiaries. At the financial year
end the company controlled the following main investments:
Subsidiaries
Shoprite Checkers Ltd - Controls the following:
Supermarkets: The food and
butchery retailing activities in South
Africa and Namibia and also the
buying operation known as OK
Franchise.
4 DIRECTORATE
The names of the directors are listed on page 13 of the
annual report.
Mr C Moore was appointed as director on 23 November 1999.
In terms of the articles of association of the company Messrs
J J Fouche, J A Louw, C H Wiese and M G Loubser retire as
directors of the company at the annual general meeting, but
being eligible offer themselves for re-election.
Properties: Owns fixed property
strategically situated in South Africa.
At 30 June 2000 the directors of Shoprite Holdings Limited
confirmed a direct and indirect interest of 2.6% (1999:
4.4%) in the issued share capital of the company. Indirect
holdings through listed companies have not been included.
No changes in shareholdings occurred up to the date of
approval of the financial statements.
Fresh produce: Distributes fresh
produce to our supermarkets and, to a
lesser extent, also to other retailers.
Furniture:
activities.
The
retail
furniture
5 HOLDING COMPANY
Shoprite Guernsey Ltd - Controls the retailing activities in
other African countries.
The company’s holding company is Pepkor Limited and the
ultimate holding company is Pepgro Limited.
Shoprite Holdings Limited’s interest in its subsidiaries is set
out on page 42 of the annual report.
6 SECRETARY
3 GROUP RESULTS
Shoprite Checkers Ltd resigned on 23 November 1999 as
secretary and Mr A N van Zyl was appointed as secretary of
the company on the same date.
3.1 Earnings
The Group’s headline earnings per share amount to 57.6
cents (1999: 21.3 cents). Details of the net income of
Shoprite Holdings Limited and the Group are contained
in the income statement.
7 DISPUTE WITH SOUTH AFRICAN BREWERIES
As the outcome of the dispute between the Group and South
African Breweries is not yet known, for reasons of prudency,
no provision has been made for possible interest receivable on
the amount involved.
The attributable interest of Shoprite Holdings Limited in
the taxed profits and losses of its subsidiaries for the
period is as follows:
2000
1999
R’000
R’000
Total profits
360 292
183 463
Total losses
37 181
71 561
Shoprite Holdings Ltd
20
Annual Report 2000
Accounting
Accounting Policies
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
The principal accounting policies adopted in the preparation of
the consolidated financial statements are set out below and are
consistent with those applied in the previous year:
5 REVENUE
Revenue of the Group is the total of all sales and finance
income earned of the company’s subsidiaries excluding
inter group transactions. Some subsidiaries sell household
furniture on instalment sale agreement. Profit on installment
sale agreements is accounted for on the date of sale. Finance
income is recognised as income on the effective interest
rate method.
1 BASIS OF PREPARATION
The consolidated financial statements are prepared in
accordance with, and comply to, South African Statements
of Generally Accepted Accounting Practice. The consolidated
financial statements are prepared on the historical cost
basis, with the exception of certain assets which are adjusted
for revaluations.
6 DEFERRED TAXATION
2 CONSOLIDATION AND GOODWILL
Deferred taxation is provided on the comprehensive basis on
all temporary differences, after taking into account estimated
or assessed losses. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits
will be available against which the deferred tax assets can
be utilised.
The consolidated annual financial statements include the
accounts of the company and all its subsidiaries. The excess
of cost over net asset value at the date of acquisition
of interest in subsidiaries is written off against income. Intercompany transactions and balances are eliminated on
consolidation.
At the acquisition of interests in subsidiaries, a value is
placed on unused tax losses by the creation of deferred tax
assets, taking into account the probability that future taxable
income will be sufficient to recoupe the deferred tax assets.
3 FOREIGN CURRENCY
Amounts in foreign currency, resulting from trading, are
converted to Rand at spot rate and, where foreign exchange
contracts exist, at contracted exchange rates. Exchange rate
differences which occur at settlement or conversion are fully
accounted for in the income statement in the period in which
it occurred.
7 RETIREMENT BENEFIT COSTS
7.1 Pension fund
The cost of providing retirement benefits under the
defined benefit plan, is determined by using an
accrued benefit valuation method. Current service
costs are recognised as an expense in the current
period. Past service costs, experience adjustments, the
effects of changes in actuarial assumptions and the
effects of plan amendments in respect of existing
employees are recognised as an expense or an income
systematically over the expected remaining working
lives of those employees.
The effect of plan
4 FOREIGN ENTITIES
Assets and liabilities of foreign entities are translated to
Rand at closing rates, whereas income statements and cash
flow statements are translated at average rates for the year.
Differences arising from translation are taken directly to nondistributable reserves.
A total of 85 OK Furniture stores were refurbished in the year, while
an additional 15 to 20 stores are set to open in the coming period.
Shoprite Holdings Ltd
21
Annual Report 2000
Accounting
amendments in respect of retired employees is
measured as the present value of the effect of the
amended benefits and is recognised as an expense or
as income in the period in which the plan amendment
is made.
At the acquisition of operations, existing lease agreements are
reviewed and provisions created where future commitments
are considered to be uneconomical. These provisions are
charged to income over the remaining period of the lease.
11 LEASES
7.2 Provident fund
The company’s contributions to a defined contribution
plan in respect of services in a particular period are
recognised as an expense in that period. Additional
contributions are recognised as an expense in the
period during which the associated services are
rendered by employees.
Leases of assets under which all the risks and benefits of
ownership are effectively retained by the lessor, are
classified as operating leases. Certain premises and office
equipment are leased. Operating lease costs are charged
against operating profit as incurred.
12 CASH AND CASH EQUIVALENTS
8
FINANCIAL INSTRUMENTS
Actual bank balances are reflected. Outstanding cheques
are included in accounts payable and provisions, and
outstanding deposits in cash and cash equivalents.
Financial instruments carried on the balance sheet include
cash and cash equivalents, investments, accounts receivable,
accounts payable, leases and borrowings. These instruments
are generally carried at their estimated fair value. The
particular recognition methods adopted are disclosed in the
individual policy statements associated with each item.
9
13 INVENTORIES
Trading goods are valued at the lower of cost or net
realisable value. Estimated net realisable value is the
estimated selling price in the ordinary course of business
less any costs of disposals.
INVESTMENTS
Listed investments, unlisted investments and other
investments are carried at cost and are written down only
where there is a permanent impairment in value. The
impairment is charged to income in the period in which it
occurs.
Cost for the Group is determined as follows:
Merchandise for resale:
Average cost less an adjustment for obsolete, slow
moving and defective stock.
Goods in transit:
Invoice value of goods not yet received.
10 PROPERTY, PLANT AND EQUIPMENT
Land and buildings regarded as investment properties, are
carried at cost or valuation and are not depreciated. Land
and buildings’ book value is written down where there is a
permanent impairment in the value of a fixed property.
Machinery, equipment and vehicles are depreciated at rates
appropriate to the various classes of assets involved, taking
into account the estimated useful life of the individual
items. Improvements to leasehold property are carried at
cost and written off over the remaining period of the lease.
Assets obtained in terms of finance lease agreements are
capitalised.
Write-off periods :
Equipment
5 to 6 years
Machinery
5 to 6 years
Computer equipment 3 to 5 years
Vehicles
3 to 5 years
Trolleys
3 years
14 EXCEPTIONAL ITEMS
Items of an exceptional nature are disclosed separately and
are not included in headline earnings.
15 COMPARATIVE FIGURES
Where necessary, comparative figures have been restated to
accord with current year classification.
The Group’s long-term aim is to increase operating income from other
African countries to more than 50 percent of Group revenue.
Shoprite Holdings Ltd
22
Annual Report 2000
Income Statement
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
Group
30 June
30 June
30 June
1999
2000
2000
1999
R’000
R’000
R’000
R’000
-
-
120
15 809
10 535
-
10 655
15 809
85 571
109 997
148
126
96 078
125 680
8 126
11 770
87 952
113 910
-
-
87 952
113 910
Notes
30 June
REVENUE
2
18 430 568
17 349 078
OPERATING PROFIT BEFORE EXCEPTIONAL ITEMS
3
325 801
125 921
Exceptional items
6
(19 186)
OPERATING PROFIT AFTER EXCEPTIONAL ITEMS
(1 345)
306 615
124 576
Investment income
7
84 891
116 422
Finance charges
8
65 192
102 641
326 314
138 357
PROFIT BEFORE TAXATION
Taxation
9
25 018
19 631
301 296
118 726
Outside shareholders’ interest
7 370
4 416
NET PROFIT FOR THE YEAR
293 926
114 310
PROFIT AFTER TAXATION
Earnings per share (cents)
10
54.1
21.0
Headline earnings per share (cents)
10
57.6
21.3
18.0
14.0
Ordinary dividend per share (cents)
Income
Statement
Shoprite Holdings Ltd
23
Annual Report 2000
Balance
Balance Sheet
Shoprite Holdings Limited and its subsidiaries on 30 June 2000
Company
Group
30 June
30 June
30 June
1999
2000
2000
1999
R’000
R’000
R’000
R’000
1 377 578
1 274 401
1 138 431
Notes
30 June
ASSETS
964 878
999 781
-
-
891 604
926 773
73 274
73 008
972
NON-CURRENT ASSETS
Fixed assets
11
1 294 358
Interest in subsidiaries
12
-
-
Other investments
13
82 841
135 970
-
Deferred tax assets
14
379
-
836
CURRENT ASSETS
3 766 049
3 879 544
-
-
Inventories
15
2 108 873
2 083 302
19
-
Trade and other receivables
16
1 120 282
1 265 478
953
836
Cash and cash equivalents
536 894
530 764
965 850
1 000 617
5 143 627
5 153 945
1 293 016
1 092 101
TOTAL ASSETS
EQUITY AND LIABILITIES
924 028
940 112
CAPITAL AND RESERVES
616 306
616 306
Share capital
293 072
293 072
Share premium
17
14 650
30 734
-
-
2 450
2 450
2 450
2 450
Interest-bearing borrowings
-
-
Deferred tax liabilities
-
-
Other non-current liabilities
22
39 372
58 055
3 967
6 334
-
-
35 405
51 721
965 850
1 000 617
Reserves
616 306
616 306
293 072
293 072
383 638
182 723
31 777
25 048
333 391
437 039
19
18 858
66 509
21
3 937
2 764
310 596
367 766
3 485 443
3 599 757
18
OUTSIDE SHAREHOLDERS’ INTEREST
NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Trade and other payables
23
3 385 896
3 280 225
Current portion of bor rowings
19
47 651
283 092
51 896
36 440
5 143 627
5 153 945
Shareholders for dividends
TOTAL EQUITY AND LIABILITIES
Shoprite Holdings Ltd
24
Annual Report 2000
Statement of Changes in Equity
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
GROUP
R’000
BALANCE AT 1 JULY 1998
Foreign currency translation differences
Other
non-
Share
Share
translation
distributable
Retained
Total
capital
premium
reserve
reserves
income
1 055 427
616 306
293 072
3 192
7 412
135 445
(1 549)
Surplus on revaluation of land and buildings
Foreign
currency
(1 549)
(73)
Net profit for the year
(73)
114 310
Dividends distributed
114 310
(76 087)
Transfer from non-distributable reserves
(76 087)
73
BALANCE AT 30 JUNE 1999
1 092 101
Foreign currency translation differences
73
616 306
293 072
4 815
Surplus on revaluation of land and buildings
1 643
(1 967)
293 926
Dividends distributed
Transfer from non-distributable reserves
BALANCE AT 30 JUNE 2000
173 741
4 815
(1 967)
Net profit for the year
7 339
293 926
(97 826)
(97 826)
1 967
1 967
1 293 016
616 306
293 072
6 458
5 372
371 808
COMPANY
Foreign
R’000
BALANCE AT 1 JULY 1998
Other
currency
non-
Share
Share
translation
distributable
Retained
Total
capital
premium
reserve
reserves
income
912 163
616 306
293 072
-
2 152
633
Net profit for the year
87 952
87 952
Dividends distributed
(76 087)
(76 087)
BALANCE AT 30 JUNE 1999
924 028
Net profit for the year
113 910
616 306
293 072
-
2 152
12 498
Equity
Dividends distributed
(97 826)
BALANCE AT 30 JUNE 2000
940 112
Shoprite Holdings Ltd
113 910
(97 826)
616 306
25
293 072
Annual Report 2000
-
2 152
28 582
Cash Flow
Cash Flow Statement
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
Notes
30 June
2000
R’000
30 June
1999
R’000
(4 359)
19 021
CASH RETAINED / (UTILISED) FROM OPERATIONS
626 089
462 859
120
15 809
Operating profit before exceptional items
325 801
125 921
-
(15 765)
(437)
6
(8 698)
(9 390)
676
-
(8 339)
(9 340)
250
166
(148)
(126)
85 321
Non-cash items
24.1
236 583
197 239
Decrease / (increase) in working capital
24.2
165 675
233 549
Taxation paid
24.3
(21 773)
(30 512)
Exceptional items
24.4
(16 885)
CASH GENERATED / (UTILISED) BY OPERATIONS
Interest received
Interest paid
4 418
689 401
530 615
81 096
104 374
(65 192)
(102 641)
109 831
Dividends received
(81 443)
(81 510)
Dividends paid
24.5
(83 011)
3 795
(81 537)
4 650
(19 138)
INVESTMENT ACTIVITIES
24.6
(336 867)
(151 833)
291
(117)
289 222
311 026
-
-
FINANCING ACTIVITIES
(283 092)
175 795
-
-
Interest-bearing debt (repaid) / raised
(283 092)
175 795
291
(117)
662
953
291
(117)
953
836
NET CASH FLOW
12 048
NET MOVEMENT IN CASH AND CASH EQUIVALENTS
6 130
486 821
MOVEMENT IN CASH AND CASH EQUIVALENTS
Balance at beginning of the year
Net movement
BALANCE AT END OF THE YEAR
Shoprite Holdings Ltd
26
Annual Report 2000
530 764
43 943
6 130
486 821
536 894
530 764
Notes to the Annual Financial Statements
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
1
SEGMENT INFORMATION
Primary reporting format - business segments
The Group is organised into two main business segments:
- Supermarkets
- Furniture
Supermarkets consists of the following divisions:
- Supermarkets
- Fresh produce
- Properties
Unallocated costs represent corporate expenses. Segment assets consist of property, plant and equipment, inventories, receivables
and cash and cash equivalents, and exclude investments and defer red tax assets. Segment liabilities comprises of trade creditors
and other provisions and exclude items such as borrowings, tax liabilities and shareholders for dividends. Capital expenditure
comprises of additions to property, plant and equipment.
Supermarkets
R’000
REVENUE
External sales
OPERATING PROFIT
Segment results
Unallocated costs
Operating profit
OTHER INFORMATION
Segment assets
Unallocated corporate assets
Consolidated total assets
Segment liabilites
Segment capital expenditure
Unallocated corporate capital expenditur e
Consolidated capital expenditure
Segment depreciation
Unallocated corporate depreciation
Consolidated depreciation
Non-cash expenses
30 June 2000
Furniture
R’000
Consolidated
R’000
17 976 750
453 818
18 430 568
482 416
37 483
4 214 055
581 526
4 795 581
264 825
5 060 406
3 194 785
191 110
3 385 895
323 556
15 095
338 651
63 895
402 546
519 899
(194 098)
325 801
Notes
195 736
(6 892)
Shoprite Holdings Ltd
27
Annual Report 2000
5 355
-
201 091
28 600
229 691
(6 892)
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
1
SEGMENT INFORMATION (continued)
Supermarkets
R’000
REVENUE
External sales
30 June 1999
Furniture
R’000
Consolidated
R’000
17 012 573
336 505
322 267
13 464
4 286 825
510 108
4 796 933
221 042
5 017 975
3 198 353
191 886
3 390 239
Segment capital expenditure
Unallocated corporate capital expenditur e
Consolidated capital expenditure
324 131
12 501
336 632
47 062
383 694
Segment depreciation
Unallocated corporate depreciation
Consolidated depreciation
128 831
3 363
132 194
24 960
157 154
OPERATING PROFIT
Segment results
Unallocated costs
Operating profit
OTHER INFORMATION
Segment assets
Unallocated corporate assets
Consolidated total assets
Segment liabilities
Non-cash (expenses) / income
(7 734)
88
17 349 078
335 731
(209 810)
125 921
(7 646)
Notes
Shoprite Holdings Ltd
28
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
2
-
REVENUE
Sale of merchandise
Finance income earned
-
30 June
2000
R’000
30 June
1999
R’000
18 308 521
122 047
18 430 568
17 245 920
103 158
17 349 078
18 308 521
15 808 817
17 245 920
14 946 413
2 499 704
1 426 050
(29 842)
(225 472)
(3 344 639)
325 801
2 299 507
1 280 983
(28 635)
(238 132)
(3 187 802)
125 921
1 631 805
229 691
536 543
10 710
4 305
330
6 075
57 352
11 988
44 500
864
7 707
6 892
1 601 259
189 417
437 042
6 683
3 593
603
2 487
54 270
372
53 558
340
28 222
7 822
1 547 262
(2 819)
87 362
1 631 805
1 489 803
18 447
93 009
1 601 259
The definition of revenue has been revised in the current
year to include finance income earned on instalment sales.
Comparatives have been restated accordingly.
-
-
120
120
15 809
15 809
32
32
247
247
-
35
35
322
322
(15 765)
-
3 OPERATING PROFIT
3.1Arrived at as follows:
Sale of merchandise
Cost of sales
Gross profit
Other operating income
Distribution costs
Administrative costs
Other operating costs
Operating profit
3.2Determined after taking into account
the following expenditure:
Staff costs (refer note 4)
Depreciation of fixed assets
Operating lease - land and buildings
Auditors’ remuneration
Audit fees - for the year
- under-provided in the previous year
Fees for other services
Fees paid for outside services
Administrative
Technical
Secretarial
Exchange rate losses / (profits)
Loss on sale and scrapping of fixed assets
4
-
STAFF COSTS
Wages and salaries
Post retirement medical benefits (refer note 28.2)
Retirement benefit contributions (refer note 28.1)
Average number of persons employed by the Group
during the year
Full-time
Part-time (full-time equivalent)
-
-
Shoprite Holdings Ltd
29
Annual Report 2000
Number of employees
28 917
28 000
33 333
32 000
62 250
60 000
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
5
7 830
35
(7 830)
35
8 382
43
(8 382)
43
30 June
2000
R’000
30 June
1999
R’000
-
-
DIRECTORS’ REMUNERATION
For full-time management
For services as directors
Less: Paid by subsidiaries
Share options to directors (refer note 17.4)
6
9 859
676
10 535
-
-
-
85 321
250
85 571
109 831
166
109 997
22
126
126
21
21
32
32
23
23
EXCEPTIONAL ITEMS
Profit on sale of fixed property
Write down of fixed property to market value
Payment received for lease cancellation
Goodwill written off
Profit on disposal of investment
Restraint of trade
Property insurance claim received
Provision for losses in the employee share incentive trust
Other
The above had no effect on outside shareholders’ interest
Tax effect on exceptional items
7
8
INVESTMENT INCOME
Dividends
from subsidiaries
Interest on investments of surplus funds
Dividends
unlisted investment
listed investment
FINANCE CHARGES
Other interest paid
Foreign exchange transaction losses
Preference dividends
6% non-convertible cumulative preference
shares of R2 each
5% non-convertible cumulative preference
shares of R2 each
Second 5% non-convertible cumulative
preference shares of R2 each
Third 5% non-convertible cumulative
preference shares of R2 each
Notes
50
50
148
126
8 126
8 126
11 770
11 770
9 TAXATION
9.1 Classification South African normal taxation
Foreign taxation
Shoprite Holdings Ltd
30
Annual Report 2000
(600)
34 845
(1 701)
(500)
(51 230)
(19 186)
808
(3 262)
2 842
(3 309)
(1 500)
2 400
676
(1 345)
-
-
81 096
3 224
571
84 891
104 374
11 648
400
116 422
61 400
3 666
126
94 832
7 683
126
21
21
32
32
23
23
50
50
65 192
102 641
17 036
7 982
25 018
11 795
7 836
19 631
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
112
8 014
8 126
8 126
63
(1)
(11 708)
11 770
11 770
28 823
(20 697)
37 704
(25 934)
38
(25 596)
(3 153)
8 014
-
38
(32 949)
(4 730)
(1)
11 708
-
8 126
11 770
-
-
Group
9
TAXATION (continued)
9.2 Consisting of Current taxation
Prior year taxation
Withholding taxation
Secondary tax on companies
Deferred taxation
9.3 Reconciliation of taxation South African normal taxation
Net adjustments
Other allowances
Preference dividends
Dividend income
Other exempt income and non-deductible expenses
Creation of tax losses
Utilisation of tax losses
Other adjustments
Prior year taxation
Secondary tax on companies
Foreign taxation adjustments
Non-resident shareholders’ tax
Withholding taxation
Deferred tax assets not created
Taxation
9.4
Calculated tax losses at year-end Net calculated tax losses
30 June
2000
R’000
30 June
1999
R’000
10 682
306
1 470
11 766
24 224
794
25 018
8 898
(266)
2 443
8 036
19 111
520
19 631
97 894
(72 876)
41 507
(21 876)
38
(1 139)
(22 894)
4 076
(57 038)
309
306
11 766
(10 261)
67
1 470
424
436
65
(7 520)
(32 643)
8 386
(813)
(266)
8 036
2 443
-
25 018
19 631
1 093 780
1 319 581
293 926
19 186
313 112
114 310
1 345
115 655
543 479
543 479
54.1
57.6
21.0
21.3
The utilisation of the tax relief to the value of
R328 133 902 (1999: R395 874 300) calculated
at current tax rates on the net calculated tax losses,
is dependent on sufficient future taxable income
in the companies concerned.
The full amount of the net calculated tax losses was
excluded from the calculation of deferred taxation as
it flows from past takeovers whereby operations were
acquired below their net asset values.
10
-
-
EARNINGS PER SHARE
Net profit available for distribution to shareholders
Exceptional items (note 6)
Headline earnings
Number of ordinary shares in issue (’000)
Earnings per share (cents)
- Net profit
- Headline earnings
Shoprite Holdings Ltd
31
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
11
FIXED ASSETS
11.1
Own assets
11.1.1 Land and buildings
-
Group
- Cost
- Accumulated depreciation
At book value
At cost
At valuation
-
30 June
2000
R’000
30 June
1999
R’000
64 639
7 184
57 455
429 273
1 955
488 683
63 100
2 683
60 417
359 322
2 555
422 294
1 835 899
1 189 998
645 901
1 724 798
1 158 783
566 015
176 757
74 362
102 395
151 352
55 680
95 672
54 450
2 929
57 379
54 450
54 450
1 294 358
1 138 431
Details of land and buildings are available for
inspection at the registered office of the
company. The directors are of the opinion that
the market value of land and buildings, which
are not depreciated, exceeds its book value.
11.1.2 Machinery, equipment and vehicles
Cost
Accumulated depreciation
-
11.1.3 Improvements to leasehold property
Cost
Accumulated depreciation
-
11.2
Capitalised leased assets
11.2.1 Land and buildings - at cost
- at valuation
-
-
-
-
Total fixed assets
11.3
Reconciliation of carrying values
Book value at 1 July 1999
Acquisition of assets
Reclassification of assets
Proceeds on sale of assets
Depreciation
Write down to market value
Loss on sale and
scrapping of assets
Book value at 30 June 2000
Shoprite Holdings Ltd
32
Land and
buildings
422 294
77 590
(2 495)
(3 605)
(4 501)
(600)
488 683
Annual Report 2000
Capitalised
Own assets
leased assets
Machinery,
equipment
Leasehold
Land and
and vehicles improvements
buildings
566 015
95 672
54 450
299 147
25 809
(211)
(244)
2 950
(5 646)
(185)
(206 512)
(18 657)
(21)
(6 892)
645 901
102 395
57 379
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
12
447 542
445 026
(964)
891 604
266
73 008
73 274
-
490 609
437 128
(964)
926 773
73 008
73 008
-
-
-
-
-
73 008
73 008
-
30 June
1999
R’000
-
-
3 306
3 270
73 008
3 257
82 841
5 371
3 794
3 270
123 008
527
135 970
6 998
6 141
-
25 000*
-
25 000*
73 008
73 008
169
210
379
-
INTEREST IN SUBSIDIARIES
Consisting of:
Shares at cost
Amounts owing
Provision against interest in subsidiaries
13 OTHER INVESTMENTS
13.1 Consisting of:
Amounts owing by share incentive trusts
Other loans
Listed share investment (refer note 13.2)
Unlisted share investment (refer note 13.3)
Other
13.2 Listed share investment:
1 428 240 Ordinary shares of no par value in
Sentra Namibia Ltd
Market value of listed investment
13.3 Unlisted share investments:
25 000 Redeemable cumulative non-participation preference
shares of R0,01 each in KWL Investments (Pty) Ltd
Directors’ valuation of unlisted investment
25 000 Redeemable cumulative non-participation preference
shares of R0,01 each in AEL Investments Holdings (Pty) Ltd
Directors’ valuation of unlisted investment
13 250 000 Ordinary Shares of R0,01 in Century City Centre Ltd
Directors’ valuation of unlisted investment
*Investments underscribed by Investec Bank Ltd
14
30 June
2000
R’000
DEFERRED TAX ASSETS
Provisions
Other deductible temporary differences
-
Notes
The movement on the defer red tax account is as follows:
-
-
At beginning of the year
Income statement charge
At end of the year
Shoprite Holdings Ltd
379
379
33
Annual Report 2000
-
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
15
-
-
-
-
-
INVENTORIES
Trading goods
Consumable stores
Amount carried at net realisable value
16
19
19
Group
TRADE AND OTHER RECEIVABLES
Trade accounts, less unearned finance income
and provision for doubtful debts
Other receivables
Current tax asset
30 June
2000
R’000
30 June
1999
R’000
2 108 440
433
2 108 873
2 083 167
135
2 083 302
744 579
725 387
799 415
318 723
2 144
1 120 282
753 932
511 546
1 265 478
616 306
616 306
11 830
3 220
209
1 943
6 458
8 982
5 187
209
1 943
1 643
371 808
383 638
173 741
182 723
17 ORDINARY SHARE CAPITAL
17.1 Authorised:
650 000 000 (1999: 523 277 440)
ordinary shares of 113.4 cents each
616 306
616 306
17.2 Issued:
543 479 460 (1999: 543 479 460)
ordinary shares of 113.4 cents each
17.3 The unissued share capital is under the control of the
directors who may issue it in such terms and conditions
as they in their discretion deem fit.
17.4 Options on shares of Shoprite Holdings Limited:
The following options have been granted to directors and
managers and remain effective:
In respect of 10 000 000 ordinary shares exercisable at
any time prior to 8 September 2002 at a purchase price of
R8 per share.
In respect of 14 900 000 ordinary shares at R7.39 per share
exercisable between 31 August 2005 and 31 August 2010.
2 152
209
1 943
-
2 152
209
1 943
-
12 498
14 650
28 582
30 734
18 RESERVES
18.1 Non-distributable reserves
Reserve on acquisition of subsidiaries
Reserve on conversion from no par value to par value shares
Capital redemption reserve
Foreign currency translation reserve
18.2 Distributable reserves
Retained income
Shoprite Holdings Ltd
34
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
19
19.1
-
-
19.2
2 450
2 450
2 450
2 450
2 450
2 450
INTEREST BEARING BORROWINGS
Secured
Finance lease obligations:
Repayable quarterly and bi-annually over periods
terminating in June 2003 at fixed interest rates varying
from 15.66% p.a. to 16.3% p.a. The loans are secured
as detailed in note 19.3
Unsecured
Repayable in equal, bi-annual payments until
31 March 2001, at an interest rate of 16.32% p.a.
Preference share capital (refer note 20)
Loan from holding company
Less
-
-
350
350
650
650
450
450
2 000
3 450
2 000
3 450
19.3 Loans secured by:
Finance lease agreements over fixed assets
with a book value of
20
PREFERENCE SHARE CAPITAL
20.1 Authorised:
175 000 6% Non-convertible cumulative
preference shares of R2 each
325 000 5% Non-convertible cumulative
preference shares of R2 each
225 000 Second 5% non-convertible cumulative
preference shares of R2 each
1 000 000 Third 5% non-convertible cumulative
preference shares of R2 each
20.2
350
350
650
650
450
450
1 000
2 450
1 000
2 450
- Redemption within 12 months
transferred to short-term loans
Issued:
175 000 6% Non-convertible cumulative
preference shares of R2 each
325 000 5% Non-convertible cumulative
preference shares of R2 each
225 000 Second 5% non-convertible cumulative
preference shares of R2 each
500 000 Third 5% non-convertible cumulative
preference shares of R2 each
Shoprite Holdings Ltd
35
Annual Report 2000
30 June
2000
R’000
30 June
1999
R’000
22 831
32 201
41 228
2 450
66 509
88 950
2 450
226 000
349 601
47 651
18 858
283 092
66 509
57 363
57 363
350
350
650
650
450
450
2 000
3 450
2 000
3 450
350
350
650
650
450
450
1 000
2 450
1 000
2 450
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
21
-
-
The movement on the defer red tax account is as follows:
At beginning of the year
Income statement charge
Forex difference
At end of the year
22
-
-
72
420
3 475
3 967
163
316
5 855
6 334
23
24
24.1
-
(15 765)
( 15 765)
24.2
(4)
(433)
(437)
DEFERRED TAXATION
Allowances on fixed assets
Provisions
19
(13)
6
OTHER NON-CURRENT LIABILITIES
Provision for post-retirement medical benefits
Provision for uneconomical lease commitments
TRADE AND OTHER PAYABLES
Trade payables
Other payables
Current tax liability
CASH FLOW INFORMATION
Non-cash items:
Depreciation
Loss on sale and scrapping of fixed assets
Unrealised foreign exchange gain
Decrease / (increase) in working capital:
Inventory
Trade and other receivables
Current and non-current liabilities
Shoprite Holdings Ltd
30 June
2000
R’000
30 June
1999
R’000
4 032
(95)
3 937
2 880
(116)
2 764
2 764
1 173
3 937
2 385
520
(141)
2 764
140 645
169 951
310 596
143 464
224 302
367 766
2 461 451
907 497
16 948
3 385 896
2 414 833
853 039
12 353
3 280 225
229 691
6 892
236 583
189 417
7 822
197 239
(25 571)
147 340
43 906
165 675
(30 470)
70 712
193 307
233 549
Notes
36
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
24
24.3
(4 047)
(8 126)
3 475
(8 698)
(3 475)
(11 770)
5 855
(9 390)
24.4
10 535
(9 859)
676
24.5
(40 761)
(76 087)
35 405
(81 443)
(35 405)
(97 826)
51 721
(81 510)
24.6
(73 008)
266
152 533
9 859
(85 000)
4 650
266
7 898
(27 302)
(19 138)
24.7
-
-
Group
CASH FLOW INFORMATION (continued)
Taxation paid:
Payable at the beginning of the year
Per income statement
Payable at the end of the year
Exceptional items:
Exceptional items per income statement
Loss on sale of fixed property
Write down of fixed property to market value
Goodwill written off
Profit on disposal of investment
Dividends paid:
Shareholders for dividends at the beginning of the year
Dividends declared
Dividends declared to outside shareholders
Shareholders for dividends at the end of the year
Investment activities:
Acquisition of fixed assets
Proceeds on disposal of fixed assets
Acquisition of subsidiaries (refer note 24.7)
Acquisition of operations (refer note 24.8)
Investment in property development
Other investment activities
Decrease in amounts owing by:
Subsidiaries
Share incentive trusts
Preference share investments
Proceeds on disposal of unlisted investments
Acquisition of further interest in subsidiaries
Movement on foreign cur rency translation reserve
Analysis of acquisition of subsidiaries:
Outside shareholders’ interest
Goodwill on acquisition
Cost
Shoprite Holdings Ltd
37
Annual Report 2000
30 June
2000
R’000
30 June
1999
R’000
(12 353)
(24 224)
14 804
(21 773)
(23 754)
(19 111)
12 353
(30 512)
(19 186)
600
1 701
(16 885)
(1 345)
(808)
3 262
3 309
4 418
(36 440)
(97 826)
(641)
51 896
(83 011)
(40 887)
(76 087)
(1 003)
36 440
(81 537)
(402 546)
9 436
(2 242)
(373 023)
9 042
(2 751)
(11 991)
(73 008)
5
5 371
50 000
(1 701)
4 815
(336 867)
221 583
80 000
(1 690)
(151 833)
-
(34)
2 785
2 751
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
24
24.8
-
-
-
25
412 358
104 153
516 511
420 000
56 431
476 431
26
-
-
-
-
CASH FLOW INFORMATION (continued)
Analysis of acquisition of operations:
Fixed assets
Inventory
Total
Goodwill on acquisition
Cost
CONTINGENT LIABILITIES
Guarantees issued in respect of debt of:
Share incentive trust
Subsidiaries
Other guarantees
CAPITAL COMMITMENTS
Contracted for
Authorised by directors, but not contracted for
Total commitments
Commitments for the 12 months after accounting date
Funds to meet this expenditure will be provided from
the Group’s own resources and bor rowings
27
30 June
2000
R’000
30 June
1999
R’000
-
10 671
796
11 467
524
11 991
420 000
82 645
502 645
412 358
412 358
109 219
558 735
667 954
71 330
432 624
503 954
667 954
503 954
BORROWING POWERS
In terms of the articles of association of the company,
the borrowing powers of Shoprite Holdings Limited
are unlimited.
Notes
Shoprite Holdings Ltd
38
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
30 June
2000
R’000
30 June
1999
R’000
87 362
93 009
8 265
-
140 645
143 464
28
POST-RETIREMENT BENEFITS
28.1 Pension / Provident Funds
The Group provides retirement benefits to 90.1% of the
employees and 8.3% of the employees belong to national
retirement plans. The monthly contributions are charged
to income.
All company funds are defined contribution funds,
except for two which are defined benefit funds.
All South African funds are subject to the
Pension Fund Act of 1956.
Both these funds are in the process of being closed, one
by liquidation (689 active members) and the other by
termination (1 active member and 30 pensioners).
In terms of the valuation cycle, all funds were confirmed
as being financially sound as at their last valuation. The two
defined benefit funds are actuarially valued every three years.
-
-
-
-
-
-
During the year under review contributions to retirement
funding have been made to the value of
During the year under review, some employing companies
have for certain periods not been required to make
contributions to existing pension and provident funds.
These contribution holidays resulted in a financial benefit of
to the Group.
28.2 Medical aid
Full provisions for post-retirement medical benefits, where
they exist, were made with reference to actuarial valuations
in respect of past service liabilities. At year-end the
provision for post-retirement medical benefits amounted to
Shoprite Holdings Ltd
39
Annual Report 2000
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
30 June
2000
R’000
30 June
1999
R’000
29
SHARE INCENTIVE SCHEMES
29.1 The Shoprite Holdings Limited Share Incentive Trust
In terms of the rules of The Shoprite Holdings Limited
Share Incentive Trust the trustees are empowered to
acquire and allocate shares which in total may not exceed
15% of the issued ordinary share capital of the company.
The movement during the accounting period was
as follows:
-
-
Balance at the beginning of the year
Shares purchased
Shares released to participants
Balance at the end of the year
Number of shares in
Shoprite Holdings Limited
53 225 722
42 287 820
2 988 600
15 566 600
(3 330 873)
(4 628 698)
52 883 449
53 225 722
29.2 The Tradehold Limited Share Incentive Trust
Shoprite Holdings Limited assumed responsibility for the
obligations of The Tradehold Limited Share Incentive Trust.
The movement during the accounting period was as follows:
-
803 100
-
622 699
Balance at the beginning of the year
Shares released to participants
Balance at the end of the year
30
GUARANTEES
30.1 The company guarantees overdraft facilities of its
subsidiaries to the value of
Number of shares in
Shoprite Holdings Limited
92 335
3 218 363
(3 126 028)
92 335
92 335
-
-
Notes
30.2 The company guarantees the obligations of certain
of its subsidiaries for the rental of land and buildings.
Shoprite Holdings Ltd
40
Annual Report 2000
Notes
Notes to the Annual Financial Statements (cont.)
Shoprite Holdings Limited and its subsidiaries for the year ended 30 June 2000
Company
30 June
30 June
1999
2000
R’000
R’000
Group
30 June
2000
R’000
31
30 June
1999
R’000
FINANCIAL INSTRUMENTS
Forward foreign exchange contracts:
Derivative instruments, in the form of forward foreign
exchange contracts, are being applied, subject to the risk
assessment by management, to hedge against the foreign
currency risk in respect of foreign liabilities. Forward foreign
exchange contracts are not used for speculative purposes.
At 30 June 2000 and 30 June 1999 the settlement dates on open
forward contract ranged between 3 months and 1 year. The local
currency amounts to be received and contractual exchange rates
of the company’s outstanding contracts were:
US Dollars (at rates averaging R1=USD 0.1397)
Credit risk:
Potential concentration of credit risk consists principally of
bank balances and cash, accounts receivable and investments.
Except for the total exposure represented by the respective
balance sheet items, no other exceptional concentration of
risk has been included. Funds are invested at banks with
acceptable credit rating only and accounts receivable
comprise a wide spread of client base, which is subject to
stringent credit approval and control.
Interest rate risk:
The Group is exposed to interest rate price risk due to
debt to the value of R64 059 668 which bears interest
at fixed rates. In the normal course of business the Group
is also exposed to interest cash flow risk due to debtors
which bear interest at variable rates.
Liquidity risk:
The Group has no risk of illiquidity due to unutilised
banking facilities and unlimited bor rowing powers.
Fair value:
The book value of financial instruments approximate the
fair values thereof, with the exception of listed investments.
32
RELATED PARTY INFORMATION
Related party relationships exist between the company, its
holding company, subsidiaries, fellow subsidiaries and
the directors of the company. All intergroup transactions
have been eliminated in the annual financial statements.
Details of the remuneration of the directors, their loans
and shareholding, are disclosed elsewhere in the annual
financial statements.
Shoprite Holdings Ltd
41
Annual Report 2000
Rand equivalent
102 289
57 859
Analysis of Share h o l d e r s
Shoprite Holdings Limited
DISTRIBUTION OF SHAREHOLDING
Pepkor Limited
30 June 2000
30 June 1999
Percentage
Percentage
61.49
61.49
CMB Nominees (Pty) Ltd
9.70
7.74
Standard Bank Nominees Tvl (Pty) Ltd
5.83
5.12
Uhuru-Saccawu (Pty) Ltd
3.71
3.72
Directors (direct and indirect)
2.60
4.40
Nedcor Bank Nominees Ltd
1.64
2.16
Individuals and companies
6.27
7.54
Pension, provident funds and insurance companies
0.07
0.15
Employees’ share incentive trust
8.69
7.68
100.00
100.00
Number of shares (’000)
Percentage
,
Shareholders
CONCENTRATION
Number of holders
1
-
500
2 278
366
0.07
501
-
5 000
1 120
1 899
0.35
5 001
-
10 000
165
1 201
0.22
10 001
-
100 000
306
10 830
1.99
100 000
106
529 183
97.37
3 975
543 479
100.00
over
S h a reholders’ Diary
June
-
Financial year-end
August
-
Profit announcement
Payment of preference dividend
September
-
Publication of annual repor t
Payment of final ordinary dividend
October
-
Annual General Meeting
December
-
End of financial half-year
February
-
Interim profit announcement
Interim ordinary dividend declaration
Payment of preference dividend
March
-
Payment of interim ordinary dividend
Shoprite Holdings Ltd
43
Annual Report 2000