Tue Sep 08 05:00:00 UTC 2020
Key information
– Sale of merchandise increased by 6.4% to R156.9 billion
– Excluding the impact of hyperinflation trading profit increased by 10.4% to R8.3 billion
– Diluted headline earnings per share (DHEPS) increased by 2.5% to 765.8 cents (2019: 746.9 cents)
– Adjusted DHEPS* increased by 16.6% to 717.5 cents (2019: 615.2 cents)
– Full year dividend, in line with Group policy of 2x DHEPS cover, increased by 20.1% to 383 cents (2019: 319 cents)
– Net cash position improved by R6.4 billion to R10.0 billion (2019: R3.6 billion)
– Net borrowings declined by R6.1 billion to R2.0 billion (2019: R8.1 billion)
– Opened a total of 147 stores comprising 101 corporate and 46 franchise stores
* The adjusted diluted HEPS constitutes pro forma financial information in terms of JSE Listing Requirements.
Pieter Engelbrecht, chief executive officer:
In a challenging year we are proud to report the Group’s 6.4% increase in sales to a record R156.9 billion. Despite significant COVID-19 lockdown restrictions impacting the Group to varying degrees, our core Supermarkets RSA operating segment increased sales by 8.7%, representing a R9.8 billion increase to R122.4 billion. Our Supermarkets Non-RSA continuing operations’ sales declined by 1.4% in rand terms, however, it increased by 6.6% in constant currency terms.
As evidenced by our results, our core business, Supermarkets RSA, made up of Shoprite, Usave, Checkers and Checkers Hyper, remained focused on their respective customer segments and continued to execute on their value proposition. Pleasingly, our South African supermarket business reported 2.3% volume growth, coupled with 16 months of consecutive market share gains up to and including June 2020. It was without doubt a milestone year strategically, with the successful launch of our industry first digital shopping application Checkers Sixty60 and our Checkers Xtra Savings rewards Programme, which ended the year with 4.7 million customers registered.
As previously articulated, the Group has embarked on a process to consider the sale of either a majority stake or the entire shareholding in our Nigeria subsidiary and, as required by IFRS 5: Non-current Assets Held for Sale and Discontinued Operations, it is now reported as a discontinued operation. Overall, it has been a difficult six months for Supermarkets Non-RSA given lockdown regulations which impacted store openings, days and hours of trade, as well as severely restricting transport in some countries, impeding our employees and customers’ ability to get to our stores.
Notwithstanding lockdown regulations resulting in the closure of our furniture and liquor stores, the Group reported a 20 basis point increase in trading margin to 5.3% after adjusting for the impact of hyperinflation. This is a considerable achievement and is a result of excellent sales growth, improved gross margin and commendable expense management, despite significant COVID-19 related costs.
We approached COVID-19 lockdown conservatively given our view of the economic contraction and job losses that would follow in what can only be described as a devastating year for South Africa. In doing so we prioritised two things – the health and safety of our employees and customers and the preservation of jobs for our people.
2020 was a team effort across the business, executing day-to-day operational excellence whilst delivering on a number of strategic initiatives. I am, as such, very proud of Shoprite, our people and these results.