Shoprite Holdings Limited Financial Results 30 June 2002 Introduction Whitey Basson Chief Executive Officer Shoprite Holdings Limited Table of Contents • Corporate Management • Financial Highlights • Management & Personnel • Store Expansion & Rationalisation • Market Analysis • Questions MANAGING Corporate DIRECTOR JW BASSON B COMM, CA (SA) AGE: 56 YRS Management SERV: 31 YRS DEPUTY MANAGING DIRECTOR C GOOSEN PERSONAL B COMM (HONS) CA (SA) ASSISTANT AGE: 49 YRS P ENGELBRECHT SERV: 19 YRS B COMPT (HONS) CA (SA) AGE : 33 YRS SERV: 5 YRS STATUTORY FINANCIAL INFORMATION HUMAN NON FOODS LOGISTICS PROPERTIES MARKETING AND LEGAL MANAGEMENT TECHNOLOGY RESOURCES BUYING SERVICES G MENTZ M BOSMAN P TZELLIOS C BURGER P V D MERWE B WEYERS S BRAUDE A VAN ZYL B COMPT (HONS) CA B ACC(HONS) B SC (ENG), MBA BA (HONS), MBA B COMM, MBA B COMM, LLB CA (SA) (SA) AGE : 45 YRS AGE : 31 YRS AGE : 43 YRS AGE : 45 YRS AGE : 40 YRS AGE : 50 YRS AGE : 46 YRS AGE : 54 YRS SERV: 9 YRS SERV: 2 YRS SERV: 11 YRS SERV: 13 YRS SERV: 14 YRS SERV: 25 YRS SERV: 16 YRS SERV: 21 YRS P SOLMS J MACLENNAN J VAN ZYL D MOLLER M FOURIE A VAN STADEN T WIESE B COMM (HONS) B COMM, CA (SA) B COMM, CA (SA) BA (HONS) MA B COMM (HONS) B COMM, LLD CA(SA) AGE : 42 YRS AGE : 47 YRS AGE : 40 YRS AGE : 43 YRS AGE : 28 YRS AGE : 45 YRS AGE : 39YRS SERV: 11 YRS SERV: 15 YRS SERV: 9 YRS SERV: 14 YRS SERV: 2 YR SERV: 16 YRS SERV: 10 YRS MANAGING DIRECTOR Corporate JW BASSON B COMM, CA (SA) AGE: 55 YRS Operations SERV: 31 YRS DEPUTY MANAGING DIRECTOR C GOOSEN B COMM (HONS) CA (SA) AGE: 49 YRS SERV: 19 YRS PORTFOLIOS OPERATIONS SUB-SAHARA FRESH PORTFOLIOS: PROJECT E NEL TECHNICAL OPERATIONS FOODS EAST COAST OF MANAGER AFRICA, INDIA B COMM, S LAUBSCHER G FRITZ B DE KLERK P ENGELBRECHT B COMPT (HONS) CA (SA) B SC (ENG) R HARISUNKER DIP COST ACC CA (SA) AGE : 53 YRS AGE :59 YRS AGE : 42 YRS AGE : 51 YRS AGE : 50 YRS AGE : 33 YRS SERV: 4 YRS SERV: 1.5 YRS SERV: 20 YRS SERV: 16 YRS SERV: 33 YRS SERV: 5 YRS OK FRANCHISE ZAMBIA FAST FOODS G KRIEL UGANDA SP LATEGAN ZIMBABWE AGE : 49 YRS TANZANIA AGE: 54 YRS SERV: 21 YRS MALAWI SERV: 16 YRS OK MEAT FRESHMARK NAMIBIA MARKETS FURNITURE J V DEVENTER MONEY A KARP P MALAN D DIEMONT MARKETS U-SAVE EGYPT M SC, MBA M COMM, PHD AGE : 43 YRS G HAYES F STEMMET M COPELAND AGE : 33 YRS AGE : 34 YRS AGE : 42 YRS B COMM (HONS) SERV: 13 YRS SERV: 2 YRS SERV: 8 YRS SERV: 12 YRS AGE: 27 YRS AGE: 39 YRS AGE: 35 YRS SERV: 4 YRS SERV: 5 YRS SERV: 11 YRS P COMBRINK C V D WALT B COMM B SC CA (SA) AGE: 51 YRS AGE: 48 YRS SERV: 20 YRS SERV: 8 YRS MANAGINGMANAGING DIRECTORDIRECTOR Operations: JWJW BASSON BASSON B COMM,B COMM, CA CA(SA)(SA) AGE:AGE: 56 56YRS YRS Supermarkets SERV:SERV: 31 31YRS YRS PORTFOLIOSPORTFOLIOS COASTALCOASTAL E NELE NEL OPERATIONSOPERATIONS B COMM,B COMM, CA ANDAND BUYING BUYING (SA)CA(SA) B ROGUTB ROGUT AGE:AGE: 53 53YRS YRS SERV:SERV: 4 YRS 4 YRS AGE:AGE: 76 76YRS YRS SERV:SERV: 34 34YRS YRS NATALNATAL CHECKERSCHECKERS INLANDINLAND MOZAMBIQUEMOZAMBIQUE HYPERSHYPERS OPERATIONSOPERATIONS MAURITIUSMAURITIUS MADAGASCARMADAGASCAR G SMOLLENG SMOLLEN K ZWENNISK ZWENNIS INDIAINDIA AGE:AGE: 48 48YRS YRS AGE:AGE: 50 50YRS YRS R HARISUNKERR HARISUNKER AGE:AGE: 50 50YRS YRS SERV:SERV: 18 18YRS YRS SERV:SERV: 18 18YRS YRS SERV:SERV: 33 33YRS YRS GAUTENGGAUTENG GAUTENGGAUTENG WESTERNWESTERN GAUTENGGAUTENG WESTERNWESTERN FREESTATEFREESTATE EASTERNEASTERN CENTRALCENTRAL GAUTENGGAUTENG NORTHNORTH SUPERSTORESSUPERSTORES CAPECAPE CAPECAPE P VANP VAN V SCHOELERV SCHOELER A GARDENERA GARDENER J BEHRJ BEHR S SCHIFFS SCHIFF H VANH VAN ROOYEN ROOYEN J FOURIEJ FOURIE RENSBURGRENSBURG AGEAGE : 40 : 40YRS YRS AGEAGE : 40 : 40YRS YRS AGEAGE : 54 : 54YRS YRS AGEAGE : 42 : 42YRS YRS AGEAGE : 61 : 61YRS YRS AGEAGE : 48 : 48YRS YRS AGEAGE : 47 : 47YRS YRS SERV:SERV: 13 13YRS YRS SERV:SERV: 13 13YRS YRS SERVSERV : 26 : 26YRS YRS SERVSERV : 16 : 16YRS YRS SERV:SERV: 25 25YRS YRS SERV:SERV: 29 29YRS YRS SERV:SERV: 18 18YRS YRS M JOUBERTM JOUBERT M ALBERTSM ALBERTS F STEMMETF STEMMET J DEJ DE SWART SWART S GOUWSS GOUWS D JACOBSD JACOBS W WHUNLUN HUNLUN B ACCB ACC B COMMB COMM B COMPTB COMPT(HONS) (HONS) B COMPTB COMPT(HONS) (HONS) AGE:AGE: 43 43YRS YRS AGE:AGE: 41 41YRS YRS AGE:AGE: 39 39YRS YRS AGE:AGE: 39 39YRS YRS AGE:AGE: 33 33YRS YRS AGE:AGE: 39 39YRS YRS AGE:AGE: 38 38YRS YRS SERV:SERV: 19 19YRS YRS SERV:SERV: 15 15YRS YRS SERV:SERV: 5 YRS 5 YRS SERV:SERV: 10 10YRS YRS SERV:SERV: 4 YRS 4 YRS SERV:SERV: 11 11YRS YRS SERV:SERV: 11 11YRS YRS Financial Results Highlights Presenter: Carel Goosen Deputy Managing Director Shoprite Holdings Limited Financial Results Highlights Year Ended June 00 June 01 June 02 Revenue (Rm) 18 430 19 597 22 110 Revenue growth (%) 6,2 6,3 12,8 Operating Profit (Rm) 319 407 522 Operating Profit growth (%) 168,1 27,6 28,4 Operating Margin (%) 1,7 2,1 2,4 Headline EPS 44,6 56,7 70,4* Dividend per share 18,0 20,5 25,5 Dividend Cover 2,5 2,8 2,8 * Diluted Key Points • Turnover – Food inflation up 10% – Grow customer base by 4.6% – Growth / rationalisation –Open 24, close 9 supermarkets –Open 12, close 9 furniture stores –35 supermarkets refurbished – Closure + Refurb = Net trading space reduction of 30 000m2 Key Points (Cont) • Operating profit – Operating margin improved to 2.4% – Stock losses improved further – Effective cost control – Currency profits reduced to R 24 m – Unproductive buildings – R 82 m – Africa • 10 % of Revenue • 20 % of Operating Profit Key Points (Cont) • Exceptional items – Impairment of assets R 39 m – Negative Goodwill R 69 m – Sale of Land & Buildings R 11 m • Investment income – Cash flush – R 736 m – Share buy back – R 453 m – Stock holding opportunity = R 500 m Key Points (Cont) • Taxation – Current tax rate 13,5% – Tax loss of R 600 m Information Technology Actual ‘01 Actual ’02 Budget ’03 R 108 m R 64 m R 177 m Past Year Coming Year • E-Procurement • Mainframe replacement • Scanning – 150 to 235 • E-Business Platform • SAP • Branch Systems • Wholesale • Business Intelligence • Mainframe requirement • Customer focus analysis • Supply Chain • Transport Layer • Vendor Managed Inventory Financial Statistics - 22 Years Comp 1980 Growth 2002 Revenue (Rm) 12 40,7% 22 110 Operating Profit (Rm) 0,9 33,5% 522 Share Statistics Since Listing Comp 1986 Growth 2002 Revenue (Rm) 126 38,1% 22 110 Operating Profit (Rm) 3,9 35,8% 522 NAV/share (cents) 3,4 31,9% 287 Headline EPS (cents) 0,6 34,7% 70,4 Dividend per share (cents) 0 35,7% 25,5 Market Capitalisation (Rm) 226 19,6% 3 935 P/E Ratio comparison P/E Ratio USA: 2001 2002 Wal-Mart 36,6 31,5 Kroger 20,2 12,5 Europe: Tesco 22,9 18,4 Sainsbury 21,4 16,4 Casino 28,8 20,5 South Africa: Pick & Pay 17,2 16,2 Woolworths 13,8 13,1 Shoprite Holdings 9,9 10,5 Management & Human Resources Presenter: Callie Burger Human Resources Director Shoprite Holdings Limited MANAGING Corporate DIRECTOR JW BASSON B COMM, CA (SA) AGE: 56 YRS Management SERV: 31 YRS DEPUTY MANAGING DIRECTOR C GOOSEN PERSONAL B COMM (HONS) CA (SA) ASSISTANT AGE: 49 YRS P ENGELBRECHT SERV: 19 YRS B COMPT (HONS) CA (SA) AGE : 33 YRS SERV: 5 YRS STATUTORY FINANCIAL INFORMATION HUMAN NON FOODS LOGISTICS PROPERTIES MARKETING AND LEGAL MANAGEMENT TECHNOLOGY RESOURCES BUYING SERVICES G MENTZ M BOSMAN P TZELLIOS C BURGER P V D MERWE B WEYERS S BRAUDE A VAN ZYL B COMPT (HONS) CA B ACC(HONS) B SC (ENG), MBA BA (HONS), MBA B COMM, MBA B COMM, LLB CA (SA) (SA) AGE : 45 YRS AGE : 31 YRS AGE : 43 YRS AGE : 45 YRS AGE : 40 YRS AGE : 50 YRS AGE : 46 YRS AGE : 54 YRS SERV: 9 YRS SERV: 2 YRS SERV: 11 YRS SERV: 13 YRS SERV: 14 YRS SERV: 25 YRS SERV: 16 YRS SERV: 21 YRS P SOLMS J MACLENNAN J VAN ZYL D MOLLER M FOURIE A VAN STADEN T WIESE B COMM (HONS) B COMM, CA (SA) B COMM, CA (SA) BA (HONS) MA B COMM (HONS) B COMM, LLD CA(SA) AGE : 42 YRS AGE : 47 YRS AGE : 40 YRS AGE : 43 YRS AGE : 28 YRS AGE : 45 YRS AGE : 39YRS SERV: 11 YRS SERV: 15 YRS SERV: 9 YRS SERV: 14 YRS SERV: 2 YR SERV: 16 YRS SERV: 10 YRS MANAGING DIRECTOR Corporate JW BASSON B COMM, CA (SA) AGE: 55 YRS Operations SERV: 31 YRS DEPUTY MANAGING DIRECTOR C GOOSEN B COMM (HONS) CA (SA) AGE: 49 YRS SERV: 19 YRS PORTFOLIOS OPERATIONS SUB-SAHARA FRESH PORTFOLIOS: PROJECT E NEL TECHNICAL OPERATIONS FOODS EAST COAST OF MANAGER AFRICA, INDIA B COMM, S LAUBSCHER G FRITZ B DE KLERK P ENGELBRECHT B COMPT (HONS) CA (SA) B SC (ENG) R HARISUNKER DIP COST ACC CA (SA) AGE : 53 YRS AGE :59 YRS AGE : 42 YRS AGE : 51 YRS AGE : 50 YRS AGE : 33 YRS SERV: 4 YRS SERV: 1.5 YRS SERV: 20 YRS SERV: 16 YRS SERV: 33 YRS SERV: 5 YRS OK FRANCHISE ZAMBIA FAST FOODS G KRIEL UGANDA SP LATEGAN ZIMBABWE AGE : 49 YRS TANZANIA AGE: 54 YRS SERV: 21 YRS MALAWI SERV: 16 YRS OK MEAT FRESHMARK NAMIBIA MARKETS FURNITURE J V DEVENTER MONEY A KARP P MALAN D DIEMONT MARKETS U-SAVE EGYPT M SC, MBA M COMM, PHD AGE : 43 YRS G HAYES F STEMMET M COPELAND AGE : 33 YRS AGE : 34 YRS AGE : 42 YRS B COMM (HONS) SERV: 13 YRS SERV: 2 YRS SERV: 8 YRS SERV: 12 YRS AGE: 27 YRS AGE: 39 YRS AGE: 35 YRS SERV: 4 YRS SERV: 5 YRS SERV: 11 YRS P COMBRINK C V D WALT B COMM B SC CA (SA) AGE: 51 YRS AGE: 48 YRS SERV: 20 YRS SERV: 8 YRS Employment Statistics 45.8 ‘000 45.3 45.5 44.7 44.6 29.4 29.1 28.7 29.1 26.6 23.5 16.0 1997 1998 1999 2000 2001 2002 FTE Permanent Employees • Process 2,316,000 pay slips per annum for 12 countries on African continent • 651 with post-matric qualifications •Average years of service 12 years Sales per R1 Cost of Employment R 13.00 OK Bazaars takeover R 12.00 R 11.00 R 10.00 ' 02 ' 99 ' 00 ' 01 ' 96 ' 97 ' 98 ' 93 ' 94 ' 95 More than pre-OK takeover Sales per FTE 45 OK Bazaars takeover 40 35 30 25 20 15 '98 '99 '00 '01 '02 '93 '94 '95 '96 '97 Surpassed R 41 000 Sales per FTE v Inflation R(000) SALES / FTE 41,3 INFLATION SALES/ FTE TREND 36,5 33,5 31,6 27,8 26,6 33,0 30,5 23,9 28,6 21,6 27,2 25,8 19,0 24,2 22,2 20,7 19,0 1994 1995 1996 1997 1998 1999 2000 2001 2002 Highlights • Productivity improved more than 13% (Sales per FTE) • Sales per cost of employment back to pre- OK takeover • 2 Year Wage agreement in RSA (8% and 7%)- Negotiating wages in 6 different countries • Never had a wage strike in Shoprite Highlights (cont) • First retailer and second company in RSA to implement SAP NQF training and development modules.