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Shoprite Ir 2021 Full
Shoprite Ir 2021 Full
ARK THE
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ED ANNUAL R
2021
Index to navigational icons
STAKEHOLDERS
Customers
Communities
Trade unions
Employees
Suppliers
Regulators
CAPITALS
F Financial
I Intellectual
H Human
M Manufactured
N Natural
S Social
MATERIAL
MATTERS
# MATERIAL MATTER
STRATEGY
REFERENCE
Page
Website: www.shopriteholdings.co.za
GRI
King IV
CONTENTS
Leadership messages
messages 24 Chief Executive Officer’s message
30 Chief Financial Officer’s message
The Group is committed to creating long-term, ethical and collaborative Materiality determination
relationships and we aim to provide a balanced view of how the Group We have applied the principle of materiality in developing our report and
creates, preserves and erodes value. This includes disclosures related to determining what information is to be included. Our overarching objective
performance in the year under review as well as areas of future focus. with this report is to provide our stakeholders with a transparent and
Annual Financial Statements balanced view of the Group in respect of our strategy and business
model, and the inputs thereto. This includes the capitals, and how they
Our stakeholders, page 52
result in the outputs and ultimately the outcome for our Group. In our
Integrated business model, page 44 view, information is material both from a quantitative and qualitative
perspective, and is, in our estimation, decision-useful to the readers of
Frameworks and guidelines our integrated report. GRI 102-46
Shoprite Holdings Limited1 (Shoprite or the Group or the Company) is an Our material matters, page 56
investment holding company, with its Home Office in South Africa. It is
Performance and outlook, pages 60–89
listed in the food retailers and wholesalers’ sector on the JSE Limited,
as well as on the Namibian and Zambian Stock exchanges.
This IAR, the Company’s notice of the Annual General Meeting (AGM)
and the audited annual financial statements are published in compliance
with the relevant provisions of the JSE Listing Requirements and the
South African Companies Act No. 71 of 2008. GRI 102-1
Stakeholder relationships
The Group is committed to creating long-term, ethical
Our IAR has been prepared in accordance with the International Integrated and collaborative relationships, which is essential
Reporting Council’s <IR> Framework based on what we determined to be for the business’ growth and continued success.
our material matters. This report, along with our Corporate Governance We continually seek to improve channels for engaging
Report, is also aligned with King IV’s recommended principles. stakeholders and integrating their feedback into how
we identify material matters, risks and opportunities,
Shoprite enhances its communications on economic, social and and implement our strategy.
environmental performance, by reporting against the Global Reporting
Initiative (GRI) Standards: Core option, the UN Sustainable Development Our stakeholders, page 52
Goals (SDG) and the Task Force on Climate-Related Financial Disclosures
(TCFD). Disclosures are made in our IAR and our Sustainability Report and
the GRI Index can be found on page 75 of our Sustainability Report.
The financial reporting boundary includes the Group’s subsidiaries. During the second half of the financial year, the Group disposed of its interest
in the Nigerian Supermarket business, closed its operations in Kenya and has subsequently also received binding offers for the sale of assets
and leases for its operations in Madagascar and Uganda. GRI 102-10/102-49
3
Our theme for this year’s report is Affordability, which is our golden thread throughout. We explain this theme as follows:
Leadership messages
1 2021 Integrated Annual Report: internally approved contribute to uncertainty in the short to medium term. Within this
by the Board context, the Group cannot take responsibility for updating or
revising any forward-looking statements except as required by
2 2021 Annual financial statements: externally audited applicable legislation or regulation.
by PricewaterhouseCoopers (PwC)
3 2021 Sustainability Report: internally approved by the Board on
the basis of the recommendation of Shoprite’s Social and Ethics
Report approval
The Board of Directors of Shoprite Holdings has acknowledged its
Committee (SEC)
responsibility in ensuring the integrity of this Integrated Annual Report
4 Corporate Governance Report, aligned to the King IV and has delegated responsibility to the Audit and Risk Committee to
disclosures: internally approved by the Board review the report. The Audit and Risk Committee has recommended the
Integrated Annual Report for approval by the Board.
For a full understanding of the Group’s performance in 2021, Wendy Lucas-Bull Pieter Engelbrecht
the Integrated Annual Report should be read alongside the reports Chairman Chief Executive Officer
listed before. These reports are all available as published reports on our
website, www.shopriteholdings.co.za.
Shareholder information
Other
It was a significant year given that we sold our Nigeria business, closed our operations in Kenya, and classified our operations in Madagascar
and Uganda as discontinued. It is for this reason that the comparative statement of comprehensive figures has been restated.
Two additional Independent Non-executive Directors were appointed after year end on 11 August 2021. These members have been included as
part of the Board of Directors.
SHOPRITE
HOLDINGS
2 ABOUT
SHOPRITE
HOLDINGS
Who we are and what we do
2 093 trucks and trailers deliver products to more than 2 900 stores every day, providing more than 24 million customers with a wide range of products.
Doing the
right thing
1
excellence, integrity
Shoprite is Africa’s
largest fast-moving and care
consumer goods
retailer. Our purpose
is to be Africa’s most
affordable, accessible
and innovative retailer
and our customers are
at the heart of what
we do – the reason for
our business.
2
• recognising that managing
our capital, resources and efficiency and
relationships is important commitment
to our success
3
growth, opportunity and
transformation
GRI 102-16
7
Leadership messages
• Relentlessly focus on keeping costs low and aim to
become more efficient. We know where and how every
rand is spent. Our business and operational processes
are set up to manage the use of resources by reducing
waste and minimising harm to the natural environment.
• Help where we can. We have a specific focus on food
security. When we have surplus food or resources,
PERFORMANCE HIGHLIGHTS
R168.0 billion
Sale of merchandise
(restated FY 2020: R155.4 billion)
R12.6 billion
Rand value of sales growth on prior year
(restated FY 2020: R7.9 billion)
R746 million
Capital investment in information
and technology (IT)
(FY 2020: R634 million)
2 913
Store footprint
(FY 2020: 2 829)
18.3%
Private-label participation in
Supermarkets RSA
(FY 2020: 17.1%)
Checkers Constantia Emporium opened in November 2019. Among the store’s many sustainability measures are energy-efficient lighting,
100% recyclable and compostable paper bags and a solar PV installation to generate renewable energy for the store.
GRI 102-7
9
R273.5 million
Total invested in communities in RSA
Leadership messages
(FY 2020: R243.9 million)
10 993 MWh
Renewable energy
generated Performance and outlook
(FY 2020: 3 298 MWh)
OUR BUSINESS
As a Group, Shoprite is Africa’s largest fast-moving consumer goods retailer. Its core
business is in food retailing, complemented by furniture, pharmaceuticals, hospitality,
ticketing, digital commerce, and financial and cellular services.
Through its wide range of customer-facing brands, value-added services and operational support functions, the Group operates across
13 industries to deliver our comprehensive product and services offering. GRI 102-2
Customer-facing brands
Corporate stores
Digital commerce
Branded private labels
• Low-price leadership (supermarket private labels): Ritebrand (Shoprite), Ubrand (Usave) and
Cellular Checkers Housebrand (Checkers and Checkers Hyper)
• Best value (branded products): Pot O’ Gold (grocery products), Farmer’s Choice (poultry), Zip (cola),
Lovies (nappies), Cape Point (frozen seafood) and Foreign Ground (coffee)
• Premium cross-category range: premium product range within one private label: Simple Truth,
Pharmaceutical and Forage and Feast, Oh My Goodness
• General merchandise: Essentials (small appliances), Ottimo and Platinum (premium appliances),
Bushbaby (outdoor products, tents and gazebos), Jolly Tots (baby accessories), Super Power (batteries)
and Schultz (power tools)
OK Franchise division
• Fresh Foods: Bella Vita, Café Culture, Simply Great, Ready to Cook, Ready to Braai, Oh My Goodness
OK Foods, OK MiniMark, OK Express,
• Fruit and Vegetables: Freshmark, Padkos
Sentra, OK Liquor, Megasave (wholesale)
• Meat Market: Championship Boerewors, Steakhouse Classic, Farmstead (pork), Kalahari Biltong,
Old Smokehouse (smoked products), Cattleman (beef), Dorsland Wors, Rooikrantz Boerewors
• MediRite (health products)
Leadership messages
• New and growing digital infrastructure NAMIBIA 33
1 417 10
95 726
• Lean cost structure 4 555
ESWATINI
26
954
GHANA 7 – – – – – – – – 7
LESOTHO 7 – – 8 3 – 9 – – 27
MADAGASCAR 10 – – – – – – – – 10
MALAWI 4 – – 2 – – – – – 6
MOZAMBIQUE 15 – – 1 1 – 10 – – 27
NAMIBIA 22 8 – 26 18 – 18 3 – 95
SOUTH AFRICA 523 230 38 398 537 8 301 39 145 2 219
UGANDA 5 – – – – – – – – 5
ZAMBIA 40 – – – – – 11 – – 51
TOTAL 681 239 38 448 560 8 383 43 145 2 400
Shareholder information
BRAND OVERVIEW
Shoprite Group gained R4.5 billion in market share across all our brands in South Africa
and individually they each retain significant growth potential.
Sales
79.7% Supermarkets RSA
(FY 2020: 78.8%)
Supermarkets contribution
9.2% Supermarkets Non-RSA
(FY 2020: 10.8%)
Value add
Creating a one-stop-shop customer experience, providing
fresh food, groceries, service departments, wine, general
merchandise, personal care and many other categories. Supermarkets RSA – making up 79.7% of sales from continuing
Stores also offer the convenience of Money Market and operations achieved 9.3% sales growth (52 weeks: sales growth of 6.9%)
financial services products, Computicket products and and, on a like-for-like basis, grew sales by 7.3%.
services, MediRite pharmacies, and technology and
cellular products at TechX departments.
Shoprite is a full-service Small-format stores Checkers and Checkers Checkers Hyper typically Serving the same
supermarket for our mass serving customers in the Hyper are perfectly carries a larger complement Shoprite and Checkers
middle-income market lower-income market, positioned to grow their of general merchandise customer base, these
customers where they can mostly in non-urban areas. share in the mid-to-upper categories such as stores are located
do their shopping, pay their segment of the market that audiovisual, DIY or gardening, adjacent to or near the
bills, receive government prioritises convenience, as well as store-within-a- supermarket brands and
grant payouts and get quality, fresh and store specialist concepts. provide a range of local and
their monthly prescription prepared products. There international alcoholic and
medicine in a select is opportunity to grow in non-alcoholic beverages at
number of stores. this area as this market supermarket prices.
segment has traditionally
been a focus for the Group.
12.7 million customers Usave extends the Group’s Opened 13 new Rolling out store-within-a- Opened 38 new stores
signed up to the footprint into rural/outlying FreshX format stores, store specialist concepts during the year.
Xtra Savings rewards areas, giving more people bringing the total to 41. such as Party Shops
programme. access to food and basic and Pet sections to all
services in their communities. Hyper stores.
75 895 Employees
5 046
Employees
31 275Employees
9 244 Employees
3 168
Employees
RSA 523 | 158 Non-RSA RSA 398 | 50 Non-RSA RSA 230 | 9 Non-RSA RSA 38 RSA 537 | 23 Non-RSA
Sales
Furniture contribution 4.0% (FY 2020: 3.5%)
1 048 Employees
4 906
Employees
Our extensive store footprint provides economies of scale leveraged to serve each brand’s loyal customer base across specific market
segments. GRI 102-6
Leadership messages
Located inside supermarkets, MediRite is Servicing customers across all income levels Online and call centre ticketing agent,
well positioned to meet the growing needs for with recognised community-based formats situated in most supermarkets and furniture
easily accessible and affordable healthcare to including OK Foods, OK MiniMark, OK Express, stores, servicing all supermarket and corporate
customers across all income levels. Sentra, OK Liquor and Megasave (wholesale). customers’ event, travel, race ticketing and
related solutions.
MediRite will open stand-alone pharmacies, Launched an online shopping app with Updated online travel booking platform
called MediRite Plus, with new specialised 24 participating OK Franchise members. increasing access and improving the
ranges and a focus on mom and baby. customer experience for the purchase and
pricing of bus and flight tickets.
Our wholesale brand distributes Servicing customers in the catering and Providing cellular products and services
pharmaceutical products and surgical hospitality industries, and door-to-door to customers in the low- to middle-income
equipment across South Africa. consumer deliveries. markets.
Shareholder information
Transpharm expanded ranges catering for an An extended national online offering will be Launched K’nect mobile network.
e-commerce platform. introduced in FY 2022 and will begin with
wine and spirits.
793
Employees
41
Employees
38
Employees
DC 3 DC 2 | Fleet 49 RSA 7
OPERATING ENVIRONMENT
As a result of the markets in which we operate, our business has become accustomed to
contending with considerable economic and social challenges including unemployment,
customer affordability, consumer confidence and lack of infrastructure/service delivery.
Our multi-brand strategy is able, for the most part, to deliver both value and affordability to all of our customers in varied economic
circumstances. We are first and foremost focused on the defensive category of food retailing and continuously evolve our product and
service offering as well as our channels to market.
The Group’s operating The South African economy is a significant market for the Group as it derives 89% of its
environment remained sales from its South African operations, of which the majority is from food retail.
impacted by the relatively
South African retailers continue to struggle with service delivery, relatively low levels of food
challenged state of the
inflation (although currently higher than in the past few years), persistently high growth in
various economies it
administered costs and increasing levels of unemployment. COVID-19 continued to weigh
trades in, exacerbated by
on South Africa and its associated lockdown regulations required our liquor business to be
the COVID-19 pandemic. closed for 144 days this year. We expect COVID-19 will continue to have a negative impact
While economic growth on economic growth for some time.
in most instances was
ahead of last year, the
economic environment this Indicators1
year formed part of what • South Africa’s 2020 annual real GDP decreased by 7.0% following an increase of 0.2%
has become a prolonged in 2019. This result was significantly impacted by the 17.8% contraction in the 2020
and disruptive period of second quarter GDP growth as a result of COVID-19 level five lockdown.
economic growth as a • Year to date, RSA GDP unadjusted year-on-year growth for Q1 2021 measured -3.2%.
result of recurring waves
• The South African Reserve Bank (SARB) forecasts RSA GDP growth to measure 4.2% in
of infection. This has led to
2021, 2.3% in 2022 and 2.4% in 2023.
increased unemployment
and constraints on people’s • South Africa’s average annual consumer price inflation (CPI) rate for 2020 was 3.3%.
ability to afford food and This is the lowest annual average rate since 2004 (1.4%) and the second-lowest since
basic necessities. 1969 (3.0%). The most recent measure on inflation is for the June 2021 quarter at 4.9%.
• The South African repo rate (the rate at which the SARB lends to commercial banks)
Strategy and investment case, page 40 measured 3.5% (July 2021). This is the lowest rate since the rate was introduced
COVID-19 overview, page 62 in 1998. It reached this level in July 2020 after cuts were made amid the COVID-19
lockdown in response to the ensuing economic downturn. The level of the repo rate has
Performance and outlook, pages 60–89 subsequently remained unchanged to the most recent July 2021 meeting.
Sustainability Report • Total employment decreased by 8.5% year on year between December 2019 and
December 2020, resulting in gross earnings decreasing 4.6% over the same period.
GRI 203-MA South Africa’s most recent reported measure on unemployment is the Q1 2021 rate
of 32.6%.2
Addressing material
matters: • In response to the hardship caused by lockdown regulations, the South African
Social Security Agency (SASSA) introduced a R350 Special COVID-19 Social
Strategy, trade
#6 MATERIAL MATTER environment Relief of Distress Grant (SRD). South Africans previously excluded from receiving
and growth social grants were eligible to receive R350 a month (to those people unemployed).
Socio-economic This relief grant, introduced in May 2020, was extended to January 2021 and then
#9 MATERIAL MATTER
contribution again extended to April 2021. It is estimated that approximately seven million people
receiving Child Support Grants on behalf of children were paid a fixed Care Giver
Grant of R500 a month for the months of June 2020 to October 2020. These grants
formed part of the R500 billion economic and social relief measures announced by
President Cyril Ramaphosa in April 2020 in response to the COVID-19 pandemic.
Post year end SASSA extended its COVID-19 relief for the eight-month period
August 2021 until March 2022. The relief programme is application based.
Response:
• Further entrenched our low-price leadership strategy across all our brands
• More than 24 million customers shopped at one of our 1 734 RSA supermarkets
• Increased workforce with no retrenchments
• Enhanced the Group’s ability to manage own resources through an additional
7 695 MWh of electricity generated from solar PV installations
15
Leadership messages
resources at risk as the impact of climate change grows, which
markets’ ability to trade. Furthermore, all countries where the has a bearing on sourcing of products and the ability to develop
Group has a presence were adversely affected by COVID-19 as local suppliers.
lockdown restricted travel and put economies under pressure.
Indicators
Indicators • In the period September to December 2020, 9.34 million
• According to the IMF’s projection, in 2020, real GDP declined in people in South Africa (16% of the population analysed)
many of the countries where we trade. faced high levels of acute food insecurity. The introduction of
• Inflation remains a challenge in countries such as Angola, lockdown measures saw movement restrictions of people,
Zambia and Malawi. making them unable to access informal markets. Salary cuts
• These factors have a combined adverse effect on real income and loss of employment negatively affected the purchasing
1
Stats South Africa.
2
Stats South Africa QRLS: Quarterly Labour Force Survey.
3
https://www.imf.org/en/Publications/WEO/Issues/2021/07/27/world-economic-outlook-update-july-2021
4
https://www.worldbank.org/en/topic/agriculture/brief/food-security-and-covid-19
5
https://reliefweb.int/sites/reliefweb.int/files/resources/IPC_South_Africa_AcuteFoodInsec_2020Nov2021Mar_Report.pdf
OPERATING ENVIRONMENT | continued
Emerging technologies and shifts in Technology is changing retail, with integrated enterprise resource
consumer expectations are dramatically planning (ERP) systems applied through the value chain to
changing the retail landscape, improve efficiencies and digital platforms facilitating omni-channel
with systems applied to all parts of shopping. More retailers are using technology to seamlessly
the value chain driving efficiencies engage with customers across channels in an attempt to improve
and precision retailing. Economic, their retail experience.
social and environmental aspects are
also challenging continuity of supply
chains. Communication is more direct Indicators
• The COVID-19 pandemic has changed online shopping
and immediate, with customers wanting
behaviour, according to a UNCTAD survey of about
more convenience across a spectrum
3 700 consumers in nine emerging and developed economies.
of products and services. Retailers
Following the pandemic, more than half of the survey’s
must, therefore, innovate to enhance
respondents now shop online more frequently and rely on the
the customer experience across both
internet more for news, health-related information and digital
physical and digital interactions.
entertainment. Consumers in emerging economies have made
Strategy and investment case, page 40 the greatest shift to online shopping.6
Performance and outlook, pages 60–89 • Shopping behaviour has changed as a result of the COVID-19
pandemic. Online shopping grew exponentially as consumers
have become omni-channel shoppers, shopping both online
Addressing material matters: and in-store.
Strategy, trade environment
#6 MATERIAL MATTER
and growth
Response
Information and technology • Expanded Checkers Sixty60 on-demand grocery delivery to
#1 MATERIAL MATTER
management
233 sites
#7 MATERIAL MATTER Customer centricity • Offered customers convenient and seamless digital products to
support their daily needs through our Xtra Savings rewards and
Money Market app
Case studies: • Optimised marketing spend with a targeted online and more
Checkers Sixty60, page 67 personalised marketing approach using data analytics
Xtra Savings, page 71
6
https://unctad.org/news/covid-19-has-changed-online-shopping-
forever-survey-shows
7
https://www.businessinsider.co.za/half-of-sa-could-be-shopping-
online-by-2024-if-data-costs-and-deliveries-improve-2020-11
Checkers Sixty60 won three awards at the 2020/21 Marketing Achievement Awards for Excellence in new product or brand launch, Excellence in Marketing
innovation and Excellence in Digital brand marketing.
17
Leadership messages
• As of January 2021 there were 38.1 million active internet
consumer data projects that 31.6 million South Africans could
users in South Africa. Among them, an overwhelming majority
be converted to online shopping by 2024.
(over 36 million) also used mobile internet. During the same
period it was found that nearly 99% of those using social media
Response accessed their accounts through mobile phones.9
• Expand the scope of our customer offerings to include more
digital solutions, leveraged Checkers Sixty60 further and Response
continue to diversify revenue streams • Launched K’nect mobile, our own mobile virtual network
• Continuous improvement and integration of the integrated ERP operator, offering competitive rates and other rewards
system allows for data analytics to be applied in future product to customers
and service development • Launched Rainmaker Media, providing specialised and focused
GOVERNANCE IN ACTION
The Group is committed to high Board effectiveness and performance
The Board’s focus areas this year have included processes to
standards of corporate governance support governance quality and Board effectiveness. Board
and applies principles of fairness, composition has received specific attention and will remain on
the agenda.
transparency and integrity at all levels
across the business. We manage the Activities included:
Group through a governing structure • Ongoing overview of the COVID-19 impact on the business
• A Board remuneration review
where responsibility and reporting roll
• Identifying a potential successor for the Chairman of the Audit
up from operational management to and Risk Committee
the Board of Directors. Operational • Strategic overview session with Executive Management
• Board recompositioning of Non-executive Board
responsibility resides with the
Executive Management while the Board
holds oversight at a strategic and
compliance level. 90% 60% 30%
Independent Female Black
King IV Principle 6 King IV Principle 4
King IV
The Board is satisfied the recommended practices underpinning The Board is also satisfied the Group has appropriately
a proper application of King IV principles are entrenched within applied all the necessary King IV principles in the context of
the Group’s governance and management activities, including its business and governance functions.
the Board’s governance oversight of the Group’s:
The Group’s application of King IV listed in the Corporate
• ethics Governance Report and each principle is noted where it
• performance as a responsible business is covered.
• formulation of strategy and strategic planning Corporate Governance Report
• governance functions and structures for a detailed review on the Group’s corporate governance and
• relationships with the CEO and key Executive functions ethical management practices. The separate report includes
• risk, compliance, and information and technology (IT) the King IV Principles, Board committee reports and the
management; and Remuneration Report.
The Board has delegated particular roles and responsibilities to Board committees and each has Board-approved Terms of Reference that
set out the nature and extent of responsibilities and decision-making authority. King IV Principle 8
Leadership messages
Wendy Dr Anna Johan Joseph
through committee reports Lucas-Bull Mokgokong Basson Rock
provided by the Executive team at
regular intervals and as specified
by each committee’s Terms of
Reference.
Independent Non-executive Directors | Non-executive Directors | Alternate Non-executive Director | Executive Directors
* Appointed after year end on 11 August 2021.
Operational Executive Management team Corporate Governance Report for full CVs of the Board
Chief Operating Officers (COO) and divisional Management oversee the operations of Supermarkets RSA, Supermarkets Non-
RSA and Furniture, while General Managers head the operations of Other operating segments.
MESSAGES
3 LEADERSHIP
MESSAGES
How we respond to the world we
operate in
The instant savings offered via the Xtra Savings rewards programme are in addition to the low prices the Shoprite Group offers its customers every day.
CHAIRMAN’S MESSAGE
It was a devastating week for South Africa and one companies to support their families, friends and employees,
we expect will have a lasting impact on several and we opened more eKasi container stores in communities to
fronts. Very few retailers escaped unharmed and our serve them better. Our response throughout the pandemic was
operations in the affected areas were directly impacted. a two-way street. Shoprite led the market by demonstrating
Only due to the heroic efforts of our competent people its support and commitment towards our people by paying
were we reopening stores in desperate communities an appreciation bonus at the onset of the pandemic, keeping
during that same week. This extreme challenge has our employees in jobs despite certain stores being closed for
highlighted the strength, depth and commitment of the periods during lockdown restrictions and simultaneously creating
business, underpinned by its decisive leadership and new jobs. Our employees in turn went out of their way to remain
extraordinary culture. This was evidenced in many social at work and serve our customers, understanding that getting to
media examples of our solution-oriented employees work during lockdown was a great challenge for many.
coming together to protect our business and serve our
customers. I know Shoprite will forever be remembered COVID-19 overview, page 62
for how it managed this disaster and came out the other Sustainability Report
side. My sincere thanks to each and every employee
for their commitment to the Company during this
Leadership
exceptionally tough time.
Last year Dr Christo Wiese announced his retirement as
Shoprite’s Board Chairman after 40 years. He played a founding
Doing the right thing role between 1979 and 1981 when the Pep Group acquired the
When level five lockdown was announced in first few Shoprite stores and then took over as Chair in 1991
March 2020, the Group set the tone for resilience and to guide the Group through its development and exponential
relief. This has been reflected in the way management growth. It has been an incredible period over which he presided,
rewarded and looked after our employees; the relentless and I look forward to working with him as a Non-executive
perseverance of our frontline employees who served Director of the Group.
customers through the various waves, lockdown levels
and restrictions, and in reaching out to the people in our Last year the Board undertook a detailed review of its
communities who needed assistance the most. I believe composition and functioning by an independent external party.
it is thanks to our people and the Group’s belief in its The recommendations from this were in line with and support
purpose that we have been able to maintain the level of the principles of the King IV Code on Corporate Governance.
performance we have. Adherence to the code sets the tone for ethical behaviour
throughout the Group. The independence, skills and succession
The way in which our Group responded during the plan of Board members have been identified as areas of
pandemic required agility and out-of-the-box thinking. improvement. My appointment was part of this process as the
In many instances COVID-19 accelerated and amplified Board reviewed and agreed on recommendations made through
the Group’s response. the independent review process. I was able to pick up from there
and we have since appointed four additional Directors.
Keeping our stores open, and employees and
customers safe involved new protocols of work that Linda de Beer and Nonkululeko Gobodo are Independent
were seamlessly implemented. We increased the Non-executive Directors. Both these appointments include
number of Mobile Soup Kitchen meals served, scaled membership of the Group’s Audit and Risk Committee and both
our on-demand Checkers Sixty60 grocery delivery Directors are highly qualified and experienced to succeed the
app; launched digital vouchers to enable people and current Chair of that committee. Eileen Wilton and Peter Cooper
23
Leadership messages
Checkers’ positioning, and extending the reach of Shoprite and
Usave. Adjacent to these – further extending our reach and by building on our solar power-generation capacity.
service offering with Checkers Sixty60 grocery delivery solution
– are, among others, the Xtra Savings rewards programme, This year we have improved our reporting against the
Money Market accounts and the recent launch of the Group virtual GRI Standards, refined the relevance and link to the
network operator. United Nations Sustainable Development Goals, and have
developed a position statement to address our influence
Strategy and investment case, page 40 on biodiversity and responsible sourcing.
Shoprite and Usave experienced a 12.0% sales growth in the second half of the
year which can partly be contributed to the launch of the Shoprite Xtra Savings
rewards card with 12.7 million sign-ups since the launch.
25
All that, in a year in which the world, our advantage, operational strength and customer
country and its economy were challenged by base. The Group, we believe, has an
a pandemic. In this context especially, words “As a Group we’ve unmatched ability to execute at an exceptional
cannot express how thankful I am to my Shoprite achieved so standard, and we are able to do so despite the
colleagues who came together every day – often challenges we encounter on our way. I can only
in the face of considerable adversity – to meet
much more than a
Leadership messages
commend our people for standing together.
the needs of our customers and, in doing so, commendable 8.1%
Every person and department contributed
further strengthening this great Company. increase in sales
towards our collective purpose, were
(5.9% on a 52-week accountable for their contributions and delivered
I ended last year’s report in the hope that we had
the worst of the COVID-19 pandemic behind basis) and 24.9% without hesitation.
us but here we are, a year later, still living in increase in trading
the midst of various levels of lockdown owing profit (20.9% on a Understanding our operating
to a third wave of infections. We have felt the 52-week basis).” environment and making a
loss of colleagues to the pandemic this year difference
and there are no words to express my sorrow
We are in the business of sustaining lives
in this regard. It is my sincere hope, with the
through the products we sell. It is of utmost
The fact that we were able and committed to looking after our rather relate to ancillary elements. We implore government to
people by paying the appreciation bonus, giving our employees job simplify the regulatory environment to promote growth in new and
security and not retrenching anyone made a tremendous difference existing businesses and, in turn, create much-needed employment
in our people’s lives. We did this while living with the reality of
and encourage innovation. South Africa has so much to offer but
COVID-19: implementing protocols, serving customers and even
there exists an inability to unlock this, in no small measure as a
losing colleagues, friends and family.
result of adopting developed country regulations we cannot afford.
Operationally, we have implemented and executed well, and we We, first and foremost, need a thriving economy from which point
have also extended our ability to build on our competitive we can then aspire to achieve other ideologies.
Performance against our strategy but particularly this year given the muted
Our purpose is to be Africa’s most affordable, growth (below inflation) in the South African
accessible and innovative retailer. We strive “Checkers provides Government’s social grants programme. In this
to bring products at the lowest cost to unsurpassed value context, we doubled down on our low-price
our customers to ensure we deliver on and range and, each promise with our R5 bread, R5 deli meals and
this objective. our ‘Everyone has the right’ campaign whereby
year, we improve we introduced the R5 sanitary packs to help
The significant 2018 IT implementation we on our fresh and keep girls in school.
undertook in order to operate from a core prepared meals
system of record, our central ERP system, as part of our In arguably one of the worst years in decades
has transformed how we run our business. for our Shoprite and Usave customers,
It enables to us manage and improve our day-
strategy to improve these RSA businesses jointly added R5.8 billion
to-day operations while facilitating our strategic our premium in additional sales to their 2020 base of
objective to win the race for reach. product offering R66.8 billion to generate R72.6 billion in
and customer sales for 2021. I am a firm believer that our
In line with our strategy, our business is authenticity is a big part of our success.
becoming more balanced in terms of sales and experience.”
We aren’t operating in this segment because
profits generated from our Shoprite and Usave it is expected, sadly, to be a segment of the
businesses and our Checkers and Checkers
market that has the potential in the coming
Hypermarket business. All our brands are now
years to add more rand food retail spend than others. We are
managed with a singular focus on their specific consumer markets.
here because of a deep sense of purpose and pride underscored
Our operating model – where each brand knows its customer
by a lifetime of relationships and learnings. In my opinion, nobody
intimately – delivers on their needs and taps into an extensive
understands this market and its customers better than we do.
and capable supply chain, making the Group highly efficient.
We get up every day to improve lives and it is this passion and
Our approach has provided greater customer focus and, as a
determination that keeps us focused on growing our presence in
result, we are optimistic regarding the opportunities ahead.
our home market.
Based on 53-week sales, Shoprite and Usave RSA contributed
Our repositioning journey for Checkers and Checkers Hyper in
54.3% of RSA Supermarkets sales and 43.2% of Group sales.
RSA is exciting for us and our customers and continues to go
The focus is increasingly on opening smaller and more localised
from strength to strength as evidenced by sales growth of 10.9%
stores, especially with our limited assortment supermarket format
this year from a very high base last year. Checkers provides
Usave. In many instances, our presence might be our customers’
unsurpassed value and range and, each year, we improve on our
only formal retail option to basic staples, fresh produce and
financial services. fresh and prepared meals as part of our strategy to improve our
premium product offering and customer experience. We continue
This is important given the current economic situation is to develop our Checkers FreshX format, upgrade our stores and
undoubtedly challenging as unemployment levels remain open in new locations. The Checkers Sixty60 on-demand grocery
stubbornly high. We are fortunate to be positioned in the delivery app, operating from the Checkers store base, continues to
relatively defensive business of food retail but Shoprite and increase its customer reach. The exponential growth of Checkers
Usave customers, especially those relying on social grants, Sixty60 has been an incredible success for the Group and a life-
are increasingly pressured. This is as a result of several factors changing solution for our Checkers customers. All credit goes to
Usave extends the Group’s footprint into rural/outlying areas, giving more people access to food and basic services in their communities.
Picture: Usave Beatrice Street, Durban.
27
the Checkers, Checkers Hyper and Checkers Sixty60 teams for During our previous reporting period we made good progress
their unsurpassed efforts which resulted in another year of market- in refocusing our capital allocation approach. We divested
Leadership messages
are proof of this. Checkers Sixty60 has grown exponentially hands. In Angola, specifically, our customers’ purchasing power
and the Xtra Savings rewards programme has saved customers needs time to recover from the impact of years of rampant
R5.3 billion in the past year at a time when they needed it inflation that far outpaced wage growth. These are challenging
the most. markets in which to operate and it is disappointing to see the
growth achieved in local currency eroded on translation into our
Case study: reporting currency (the rand). I must commend our Non-RSA
Xtra Savings, page 71 team. Despite significant headwinds, the business holds its own
and I am very proud of our people and operations across the
The Group is also looking to monetise its assets in numerous African continent.
ways, exploring and unlocking opportunities in alternative Strategy and investment case, page 40
revenue streams. During the year we launched K’nect mobile,
CFO’s Message, page 30
our own virtual mobile operator network. Since the launch we
Checkers has partnered with Krispy Kreme to bring the globally recognised and much-
loved doughnuts to its stores, and direct to homes via its Checkers Sixty60 delivery app.
Our people youth development; and then train, develop and promote from
Having paid the appreciation bonus to all employees in FY 2020, within as individuals gain the knowledge and experience required
and looking after our people during COVID-19, we still see the in our environment.
impact it has on people’s lives. The bonus reaffirmed that we
are one team, we are here for one another, and that everyone We acknowledge that we need to build our talent and succession
matters. The bonus was not limited to certain levels and job pool with experts to stay ahead of the game. In recent years
categories; every single person received the same. Throughout we have employed several senior Executives who contribute to
all the economic challenges, we have been able to keep strengthening our position as the largest retailer on the continent.
everyone employed. They, too, are strengthening their own teams to be future fit and
demographically relevant.
People are acutely aware of the economic hardship within the
countries where we operate as unemployment continues to In closing and in appreciation
increase. Staff turnover decreased to 22.4% and throughout the Our daily mission is to keep our products and services affordable.
business there is a sense that the Group is a safe haven. This is not always easy. While, like the rest of the world,
Everything we do requires a team effort. We retained and grew we operate with the complexities of COVID-19, our reality also
our employee base and negotiated wage agreements to give includes challenges such as power outages (load shedding),
our employees the ability to plan financially for at least the next disruptive protest action and crime requiring day-to-day
two years. Our transformation strategy is not limited to race and management. It means we constantly make new plans and adjust
gender: it includes a skills and experience aspect that will support existing ones to keep up with external factors that impact our
our business transformation strategy in becoming a smarter business and our supply chain. We are adept, there is no doubt.
Shoprite in the long term.
We still have so much to do and offer.
Achieving employment equity (EE) numbers in The investments we have made in support of
terms of regulatory requirements or industry our strategy give us the opportunity to embrace
practice will remain on our radar. We have developing our digital presence on the back of
“Our transformation
been ahead of the industry (that includes food our still growing store-based business. We are
strategy is not extending product ranges; taking more stores
manufacturers and food retailers) across all
levels of employment for some time and have limited to race and and brands to where our customers are; making
again improved our numbers. Our 64% senior gender: it includes a our financial services and platforms easier for
management and 79% middle management skills and experience customers to transact; and we are partnering
representation are where we outperform the aspect that will with suppliers at varying levels to ensure we
retail and private sectors. Women make up deliver the quantity and quality of products
support our business needed by our stores every day.
64% of our total employee base and 50% of our
store management. transformation
strategy in becoming Long-term sustainability is becoming more
Our biggest challenge is finding enough skilled a smarter Shoprite in important as countries and companies across
people to employ across our diverse operations. the world are battling with increased pressure
the long term.” on resources given growing populations, global
Retail requires a specific level of experience
on all levels. We mostly recruit from outside at warming, natural disasters and pandemics ...
a junior level, addressing unemployment and the list goes on. We might not be able to change
Specialised TechX departments sell technology and electronic equipment in select Checkers and Checkers Hypers stores.
Picture: Checkers Canal Walk, Cape Town.
29
the world, but we are doing our best in our own business and As a Group, we were back serving customers that very same
communities to do what we can, to reduce our environmental week, thanks in no small measure to our dedicated people,
Leadership messages
experience of our Board to assist us as we navigate our path
towards our Shoprite of the future.
Pieter Engelbrecht
I would be remiss if I did not refer to the devastating impact Chief Executive Officer
of the events that took place in KwaZulu-Natal and parts of
Gauteng shortly after the end of our financial year. We have 30 September 2021
reported separately in detail on the impact on our business,
which certainly resulted in significant damage to our operations in
the affected areas. While we are adequately insured, the damage
to us and our country doesn’t compare to the recompense
from a claim. Much-needed infrastructure and access to basic
Checkers and Checkers Hyper are perfectly positioned to grow their market
share in the mid-to-upper segment of the market that prioritises convenience,
quality, fresh and prepared products.
31
The year in review Areas of focus for the Group during the 2021 financial year
From a reporting perspective 2021 requires some explanation. included the following.
Shoprite follows a Julian calendar that requires us to include an Key driver Measurement
extra week as part of our financial year every five years; this is
referred to as the 53rd week. For ease of comparison, where we Reducing capital Capital spend was in line with the 2020 financial
expenditure year and below the guidance of 3.2% of sales.
Leadership messages
can, we report the 52-week equivalent.
The underspending was as a result of the
The Group delivered an exceptional financial performance for the restrictions placed during the COVID-19 pandemic
53 weeks ending 4 July 2021 as evidenced by 8.1% growth in regarding store openings and information and
sales, a 55-basis point improvement in gross margin to 24.5% and technology expenditure.
expense growth of 6.7%. As a result the Group’s earnings before Disposing of selected Property, plant and equipment (PPE) to the value
interest, tax, depreciation and amortisation (EBITDA) measured assets to unlock of R1.4 billion was sold since the inception of the
R15.1 billion (52 weeks: R14.7 billion). balance sheet value initiative to unlock value on the balance sheet.
and increase ROIC
The balance sheet remains strong, with the capital allocation
improvement programmes implemented over the past 24 months Improving our The Group’s cash position ended on R6.7 billion for
yielding the required results. We completed the sale and leaseback cash flow the year through cash generated from operations and
after repayment of borrowings. This year’s cut-off
With this in mind, the Board has declared a final dividend of Sale of merchandise
353 cents per share, resulting in a full-year dividend of 544 cents The following table gives the sale of merchandise per segment
per share. This is in line with the Group’s 1.75 times dividend from continuing operations.
cover based on diluted HEPS (DHEPS) from continuing operations
and represents year-on-year dividend per share growth of Restated*
53 weeks 52 weeks
42.0%. Furthermore, the Board has authorised a share buy-back Change 2021 2020
programme that to date has resulted in the repurchase of 3.4 million % Rm Rm
shares at a value of R515 million including related costs.
Supermarkets RSA 9.3 133 852 122 412
It is noteworthy that the performance of our business in Nigeria, Supermarkets Non-RSA (7.5) 15 453 16 707
Kenya, Madagascar and Uganda have been classified as Furniture 24.6 6 818 5 470
discontinued operations and has been excluded from our
Shareholder information
Supermarkets RSA 6.8%. We estimate internal food inflation for the region averaged
The Group’s core business, Supermarkets RSA – making up 9.2% for the period.
79.7% of sales from continuing operations – is represented by
1 726 stores across our major trading banners Shoprite, Usave, Trading in the various regions was negatively impacted as
Checkers, Checkers Hyper and LiquorShop. As a segment, COVID-19 restrictions were highly variable. The Group reacted to
Supermarkets RSA achieved 9.3% sales growth (52 weeks: sales these challenges by making changes to its operating model and
growth of 6.9%) and, on a like-for-like basis, grew sales by 7.3%. implemented various initiatives that included range optimisation
As a result of changed behaviour during the lockdown, customer and source of supply adjustments.
visits for the year declined by 3.8%; however, average basket Our Angolan and Zambian businesses were both impacted by
spend increased by 13.6%. Internal price inflation measured 3.8%, currency devaluation, as demonstrated by our Zambian operations
a result of second-half inflation declining to 3.4% from the 4.3% 25.2% sales growth in constant currency, translating to a decline
reported for the first half. of 11.8% in rand terms. In Angola, our supermarkets business’
12.6% decline in constant currency sales translated to a 37.2%
The full-year performance should be viewed in the context of a
decline in rand terms. The trading environment in Angola has
strong performance in the second half of the year on the back
not improved and the combined impact of rampant inflation and
of a high base in the 2020 financial year, owing to pantry loading
currency devaluations in recent years has significantly eroded
experienced during the March 2020 period amid the South African
customer spending power. Access to US dollar availability to
COVID-19 lockdown regulations implemented from 27 March 2020.
secure in-stock levels of imported lines remained constrained,
The Checkers supermarket chain, inclusive of 38 larger-format necessitating an increased reliance on locally sourced products.
Checkers Hypers, increased sale of merchandise by 10.9%. This, in turn, resulted in an improved stock holding ratio at year
Its strategy in South Africa, of focusing on establishing a fresh food end, without sacrificing margin.
theatre for its customer base, continues to improve year on year. For the most part, the remainder of our Supermarkets Non-RSA
The success of the launch of the Xtra Savings rewards programme continuing operations traded well.
during the previous financial year in the Checkers (including
Checkers Hyper) chain, has gained traction and the 7.6 million Furniture
Xtra Savings rewards programme customers – as at 4 July 2021 The Group’s Furniture segment, representing 4.0% of sales from
– contributed to the achievement of the record market share for continuing operations, benefited from a combination of ongoing
the brands. Checkers, inclusive of Checkers Hyper, now operates work-from-home spending shifts and the lower base created in
from 268 stores in South Africa. Of this, the number of stores in the fourth quarter of the previous year as a result of COVID-19
the Checkers FreshX format has increased to 41 from 28 stores in lockdown store closures.
the prior year.
Sales for the 53-week period increased by 24.6% to R6.8 billion
Checkers Sixty60, the Group’s response to fulfil the need in the (52 weeks: sales growth of 22.1% to R6.7 billion). Like-for-
market for a fast and reliable on-demand grocery delivery service, like sales for the year increased by 13.5%. Credit participation
has outperformed all initial estimates and has been rolled out to decreased to 12.6% (2020: 13.3%). We continued with the
233 stores, an increase of 146 stores since the previous financial consolidation of our furniture business footprint throughout
year. The service has won numerous accolades, disrupting the the year, resulting in OK Furniture closing a net 13 stores in
online grocery sales market in South Africa. South Africa and one store in Non-RSA. House and Home closed
a net two stores in South Africa. The division ended June 2021
The Shoprite and Usave brands collectively increased sales by with 340 stores in RSA and 86 stores in Non-RSA.
8.8%. Notably, sales growth accelerated from 5.6% during the
first half to 12.0% during the second half. Individually, Shoprite Other operating segments
and Usave reported growth in sales for the year of 8.9% and The Group’s other operating segments, representing 7.1% of
7.4% respectively. The accelerated growth experienced during the sales from continuing operations and comprising OK Franchise,
second half of the year of 12.0% was achieved on the back of the Transpharm, MediRite Pharmacies, Checkers Food Services (CFS)
launch of the Shoprite Xtra Savings rewards card with 12.7 million and Computicket, achieved sales growth of 10.0% for the year.
sign-ups since the launch. Our price-fighting Shoprite supermarket
business ended the year with a base of 523 stores, up by a Growth
%
net 17 new stores. Our low-cost, no-frills limited assortment
discounter Usave opened a net 26 new stores and ended the year OK Franchise 8.2
with 398 outlets (including 37 Usave Ekasi box stores). MediRite Pharmacies 17.2
The segment’s LiquorShop sales growth of 4.4% for the year Checkers Food Services (8.1)
was a result of the impact of COVID-19 lockdown regulations Total other operating segments 10.0
that impacted trade both throughout the 2021 year and during
This was an excellent achievement, notwithstanding the impact of
the second-half base in 2020. It required the complete closure
lockdown limitations, specifically on both CFS and Computicket.
of the liquor business for 144 days (2020: closed for 66 days)
CFS’ primary customer, the restaurant and hospitality industry, was
during the reporting period. The liquor business represents 5.5%
severely impacted by the various phases of lockdown regulations
of Supermarkets RSA’s sales and opened a net 37 new stores.
implemented during the year. Computicket was impacted as
It ended the year with 537 stores in South Africa. lockdown disallowed events and travel and their related ticketing.
Supermarkets Non-RSA Notwithstanding these limitations, the businesses’ ability to adapt
Given the classification of Nigeria, Kenya, Madagascar and and innovate resulted in second-half sales increasing by 10.1%.
Nigeria, Supermarkets Non-RSA recorded a decline in sales in
rand terms of 7.5% to R15.5 billion (52 weeks: decline by 9.5% The OK Franchise business increased sales by 8.2%.
to R15.1 billion) from continuing operations. As a segment, Our franchisees are to be commended, given the operating
Supermarkets Non-RSA’s continuing operations contributed 9.2% environment as a result of COVID-19 was exceptionally
to sales from continuing operations. In constant currency, sale of challenging. Over the year we added a net of 36 new stores to end
merchandise from continuing operations for the year increased by the year with 513 franchises.
33
Leadership messages
Profit before income tax 23.1 6 957 5 651
Income tax expense 26.3 (2 241) (1 774)
Profit from continuing operations 21.6 4 716 3 877
Profit/(loss) from discontinued operations (attributable to owners of the parent) (>100) 143 (501)
Profit for the year 43.9 4 859 3 376
Earnings per share for profit from continuing operations attributable to owners of the parent:
Basic earnings per share (cents) 22.1 851.6 697.5
Diluted earnings per share (cents) 21.8 848.2 696.5
Basic headline earnings per share (cents) 20.3 956.3 794.7
* Restated for newly classified discontinued operations, in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations.
• Contribution mix: the increasing contribution from our higher- marketing income. Insurance cell income also increased with the
margin Checkers and Checkers Hyper RSA supermarket Group’s new investment in an insurance cell captive arrangement.
business to our core Supermarkets RSA segment. Checkers Commissions received from our Computicket business was lower as
and Checkers Hyper in RSA now represent 40.2% of a consequence of the pandemic restricting live events and travelling.
Supermarkets RSA’s sales.
Restated*
• Collective impact of collaboration across our various corporate Change 2021 2020
teams: resulting in improved buying and more effective % Rm Rm
promotions facilitated by the Xtra Savings rewards programme. Commissions received 2.6 867 845
• Improved operational execution: resulting in improvements in Operating lease income (12.6) 423 484
the areas of waste and shrinkage. Premiums and other insurance
income earned 11.9 263 235
Shareholder information
The following table gives the relevant trading profit, per segment, for continuing operations:
* Restated for newly classified discontinued operations, in accordance with IFRS 5: Non-current Assets Held for Sale and Discontinued Operations.
35
The rand currency has shown unprecedented strength since the COVID-19 outbreak in March 2020 and has recovered to levels before
the outbreak. We have, however, experienced substantial currency devaluation of the Angolan kwanza and the Zambian kwacha that
negatively affected the short-term loans. The hedging policy applied resulted in a foreign currency loss of R27 million compared to a gain of
R577 million in the previous financial year.
The Group designated its US dollar-denominated lease liabilities as a hedge of a proportion of the net investment in the Group’s US dollar
subsidiary and applied hedge accounting since 1 July 2019.
Change
% 2021 2020 2019 2018
2020–2021 R R R R
Leadership messages
Nigeria naira (20.5) 0.035 0.044 0.039 0.045
Net finance costs addition to the statutory tax rates being higher than 28% in most
Net finance costs increased by 16.1% to R2.8 billion (restated cases, all contributing to the higher effective tax rate.
2020: R2.4 billion).
PPE, right-of-use assets and intangible assets
Interest on the Group’s R27.7 billion lease liabilities was R2.5 billion The Group’s PPE decreased by R3.9 billion to R14.4 billion owing
(restated 2020: R1.9 billion). to a combined result of the sale and leaseback transaction relating
to our three DCs (R2.0 billion), the sale of mature, non-strategic
Included in finance costs on borrowings is a one-off R178 million
properties (R250 million) and impairments (R860 million from
breakage cost on early settlement of a US$250 million fixed
* Restated for newly classified discontinued operations, in accordance with Store maintenance and
IFRS 5: Non-current Assets Held for Sale and Discontinued Operations. refurbishments (8.0) 1 217 1 321
New stores 88.8 761 403
Equity accounted investments Information and technology 17.8 746 634
Our share of post-acquisition profits from equity accounted Land, buildings and leasehold
investments is R120 million. This includes profits from Retail improvements (50.5) 299 604
Logistics Fund (RF) (Pty) Ltd, in which the Group acquired a 49.9% Supply chain (27.2) 196 268
shareholding through a sale and leaseback transaction during the Total capital expenditure (0.4) 3 219 3 230
financial year.
Right-of-use assets increased by R3.4 billion to R20.5 billion on
the back of the impact of the sale and leaseback transaction for
Income tax expense the period and new leases signed together with lease renewals.
Shareholder information
Impairments form part of items of a capital nature and net of Change 2021 2020
income tax impact earnings per share (EPS) but not HEPS. % Rm Rm
Capital commitments of R4.8 billion have been made relating to Supermarkets RSA 3.5 14 382 13 902
improvements for the next financial year. This includes additional Supermarkets Non-RSA (35.3) 1 818 2 808
expenditure for our POS upgrade (R0.3 billion) as well as delayed Furniture 8.9 1 629 1 496
expenditure (R0.5 billion). Other operating segments (11.3) 567 639
Total inventory (2.4) 18 396 18 845
Intangible assets consist mainly of goodwill paid for acquisitions,
trademarks acquired and software. Goodwill represents the
premium paid for certain businesses and is tested for impairment Trade and other receivables
annually based on the higher of the fair value less cost to sell or Trade and other receivables mainly represent instalment sale
the value-in-use of these businesses, calculated by using cash debtors, franchise debtors, receivables from medical aid schemes,
flow projections. buy-aid societies and rental debtors. Adequate allowance is
made for potential bad debts and the outstanding debtor book is
Software represents the Group’s investment in certain computer reviewed regularly.
software that is used in its daily operations and costs capitalised
Collections from contracts with customers improved and,
for software in development. Software is amortised over its useful
based on the assessment of expected credit losses for the year
life of three to 10 years.
in terms of IFRS 9: Financial Instruments, the provision against
Trademarks largely represent the purchased Computicket and the debtor book normalised from 45.9% to approximately 50.5%
Transpharm and are amortised over 20 and 16 years respectively. compared to the previous year.
Government bonds and bills Cash and cash equivalents and bank overdrafts
Local currency cash and short-term deposits in Angola are Net cash and cash equivalents (after deducting overdrafts)
amounted to R6.7 billion (2020: R10.0 billion). The decrease was
subject to onerous local exchange control regulations and limit the
largely as a result of the payment of trade payables and income
repatriation of surplus cash. The Group is utilising said cash for
tax due to cut-off on 4 July 2021 to the value of R5.9 billion
its local trade and has invested surplus cash in AOA, USD Index
in the Supermarket RSA segment. It was further impacted by
Linked Angola Government Bonds and AOA, Angola Government
the net repayment of borrowings to the value of R5.9 billion,
Bonds as well as Treasury Bills. The AOA, USD Index Linked
the R1.2 billion generated from the sale and leaseback transaction
Angola Government Bonds form part of the hedging strategy of the DCs and the initiation of the share buy-back programme to
against future possible devaluation. the value of R515 million including related costs.
The investment in government bonds and treasury bills reduced
Change 2021 2020
by a net R1.0 billion as a result of investments maturing during % Rm Rm
the year exceeding the amount of new investments in these
instruments. Cash and cash equivalents (34.4) 7 950 12 114
Bank overdrafts (41.7) (1 221) (2 095)
Change 2021 2020 Net cash and cash equivalents (32.8) 6 729 10 019
% Rm Rm
Provisions The period following the unrest has been a busy one with
the Group focused on recoveries and reopenings and up to
Leadership messages
the confines of the pandemic has become our new normal. is founded on a considered and well-articulated strategy spanning
We have successfully navigated three waves of infection and all facets of operations. Given significant changes to our Non-RSA
the business has demonstrated resilience throughout. To date, operating model, the region has returned to profitability. Despite
for the 2022 financial year, our LiquorShop business has remained the difficult start to 2022, we foresee a plethora of opportunities
closed for 21 days because of lockdown regulations and, from for our businesses – both individually and collectively – as we build
27 July 2021, it was able to commence trade four days a week and leverage the vast retail ecosystem that our brands and their
(Monday to Thursday). combined physical and digital presence represent.
Outside of the (not insignificant) impact of lockdown liquor trade Given the Group’s strong balance sheet and increasing growth and
closures, we seem to have settled into a pattern of differing levels innovation focus, it is important that assessing the cost of capital
of lockdown that have not, for some time, significantly impacted and our required return is embedded in our process. The Group
TO VALUE
CREATION
4 APPROACH
TO VALUE
CREATION
Reasons why to invest in Shoprite
Shareholder information Performance and outlook Approach to value creation Leadership messages About Shoprite Holdings About this report
40
Although we continuously evolve and adapt, we remain resolute Accelerating digital transformation
in our commitment to customers to be Africa’s most accessible, In the past year we have unveiled ShopriteX, the Group’s new
affordable and innovative retailer. We have revised our strategic agile digital business capability aiming to reimagine grocery retail
drivers to be more aligned with how the world around us has in a future, customer-inspired era. Marrying the best of data
changed. The race for reach through digital technologies has science and technology, ShopriteX aims to save customers time
become more critical and moved the dial on how we enable and money through innovation and creating more personalised
precision retailing. We are beginning to realise a return on shopping experiences. Following global trends in omni-channel
investment as strategic initiatives underpinning this commitment retail, ShopriteX encompasses the development of digital
become meaningful in terms of their impact on the business. commerce capability, digital channels to extend our reach,
personalisation at scale, and data and insight monetisation
We want Shoprite to lead in South African retail and be counted
to unlock precision retailing. It also focuses on customer
among the world’s best retailers. To achieve this we will focus
innovation and introduced a new unmatched reach business,
on optimising and growing our core retail activities in our existing
Rainmaker Media, a precision retail media business that leverages
markets while we capitalise on opportunities to unlock incremental
our consumer data.
growth by becoming a smarter, more customer-driven business,
closing the gaps in key segments and investing in long-term ShopriteX is home to a digital team of 250 of South Africa’s leading
opportunities to unlock alternative revenue streams. We will data science, technology, e-commerce and personalisation
leverage Shoprite’s scale advantage to build the dominant experts, playing a leading role in the Group’s drive to attract
consumer omni-channel ecosystem in Africa, creating unrivalled and retain future-fit talent, and becoming a more customer-
reach and entrenching customer loyalty. centric business.
The food retail business is our foundation and provides broadscale After a period of incubation, ShopriteX already boasts industry-
customer reach and high transactional frequency. Our investment leading innovations, namely Xtra Savings, South Africa’s
in technology provides increased reach and engagement, digital fastest-growing rewards programme, and Checkers Sixty60,
commerce capability and operational efficiencies while opening Checkers’ pioneering 60-minute grocery delivery service,
up new revenue opportunities as customer expectations and which met with unrivalled customer response. The team has
behaviours change. been awarded 17 innovation and digital awards in the past year.
Some noteworthy trading milestones during the year include:
• The Xtra Savings rewards programme signing up more than
20 million members.
• Checkers Sixty60 became the number one grocery app in the
country, with over 1.5 million app downloads.
Case studies:
Xtra Savings, page 71
Winning in the long term
Checkers Sixty60, page 67
Future-fit talent
Unlock alternative revenue
Leverage platform advantage
41
A Smarter Shoprite
How? Focus on customer data to How? Through smaller stores in How? Investing in technology
drive experience our customers’ neighbourhoods Operational efficiency is critical for us
Our strategy to enable precision Growing the Shoprite Mini and to stay competitive on affordability.
retailing and unlock alternative Usave store base and rolling out the We are shifting our focus to invest
revenue streams relies on effective smaller Checkers neighbourhood into data systems and analytics
application of our digital infrastructure store format. technology to optimise trading
and data-driven customer profiling. activities, personalise every customer
Technology-based solutions will Initiatives: interaction, continuously driving
allow us to connect directly with our Usave eKasi container stores, innovation for our customers –
Leadership messages
customers by concentrating on their OK Express thereby optimising efficiency and
personal needs and preferences. improving long-term returns.
Initiatives:
Investment in data science
capabilities through establishing a
data science hub and employing
and growing technology talent
Shareholder information
How? Expanding our private- How? Checkers and Checkers How? Supporting the growth of
label offering as part of our Hyper OK Franchise stores providing
growth strategy Through improving product offerings group support services and
Our private-label brands provide value and customer experience at Checkers supply chain access
propositions across the scale from low and Checkers Hyper, we are providing The Group will continue to
prices to premium segments. It has an alternative shopping destination consolidate its franchise business
become an avenue for significant to South African shoppers for fresh by rebranding stores – mostly under
product development and innovation, and premium food. The Checkers the OK brand – and integrating
and provides customers with better FreshX stores are bespoke and have operations into the Group’s supply
choice and better value. Our scale elevated the brand to credibly cater chain. This consolidation allows
and efficient supply chain allow us to for the premium and fresh market our franchise partners and buying
develop, produce and distribute these segments. The continued focus on partners like Megasave (a wholesale
private labels more cost-effectively. value as well as an improved range of brand) to benefit from the Group’s
While our low-price and best value- fresh products and healthier options wide-reaching supply chain network
branded products are focused for provide significant upside growth and range of product and services.
quality and affordability, the pace potential.
of development is accelerating for Initiatives:
premium cross-category product Initiative: 22 OK Foods and OK Express
ranges that incorporate health, Increased Checkers FreshX store (Forecourt) formats rolled out during
wellness and environmental rollout the period
benefits, general merchandise and
convenience/ready-made meals.
Initiatives:
382 new private labels with a focus
on premium: Oh My Goodness,
Forage and Feast, Simple Truth
Participating OK Franchise members have launched the online shopping app with deliveries in certain areas being done by their locally made, electric mellow vans.
Picture: OK Foods Boulevard, Paarl.
43
Leadership messages
frictionless shopping experience.
across the Group’s diverse operations. high transaction fees. Shoprite is a
By investing in people and growing our one-stop-shop for our customers
capabilities, we will drive and develop to conveniently pay bills, buy cell How? By building an ecosystem
the digital transformation agenda. phones, make money transfers and Using our channels, supply chain,
buy airtime and data, Lotto tickets, products and services, we are able to
Initiatives: electricity and even funeral insurance. build an ecosystem extending digital
Establishing a digital business unit to reach and enabling customers to
accelerate the Group’s drive to attract Initiatives: engage and transact more seamlessly
new future-fit technology talent Launched K’nect mobile network, and more frequently.
Rainmaker Media, Money Market
account Initiatives:
F I M
Financial capital Intellectual capital Manufactured capital
To enable the other capitals to deliver on The value of our 19 customer-facing brands Our 2 913 stores (FY 2020: 2 829 stores) enable
our activities, we use the funds and equity is essential in the sustainability of our us to meet our customer needs in the most
at our disposal from: R21.2 billion in equity business. Shoprite was the 12th most valuable convenient way possible while ensuring health
(FY 2020: R20.0 billion), R33.0 billion in debt South African brand in 2021 (FY 2020: 15th) and safety regulations are met.
(FY 2020: R35.3 billion) and R23.6 billion in (Brand Finance) and the 52nd most admired 673 843 square metres of DCs and 2 093 vehicles
retained earnings (FY 2020: R21.0 billion) company in Africa in 2020/21 (FY 2019/20: 50th) in our fleets.
(Brand Africa 100).
Cost of capital inputs Our integrated enterprise-wide technology Cost of capital inputs
We manage the cost of financial capital by platform (ERP) and information and technology • R1.2 billion on store maintenance and
managing these financial drivers: infrastructure and associated intellectual property refurbishments (FY 2020: R1.3 billion)
• Capital expenditure: maintained at R3.2 billion are important foundations for our business to • R761 million on new stores
(FY 2020: R3.2 billion) deliver on our activities. (FY 2020: R403 million)
• Unlocked capital: disposal of DC and non-
Three-pillar strategy and nine strategic drivers. • R196 million spend on supply chain
strategic property sites unlocked balance
improvements (FY 2020: R268 million)
sheet value – PPE valued at R1.4 billion Effective governance and ethics structures
(FY 2020: R1.3 billion) ensure the sustainability of the business over the
• Cash flow: cash position decreased to long term.
R6.7 billion (FY 2020: R10.0 billion) impacted
by month end cut-off on trade payables and Cost of capital inputs
income tax • R746 million capital investment in information
• Borrowing reduced to R5.3 billion and technology (FY 2020: R634 million)
(FY 2020: R12.0 billion) • Investment into money markets/financial
• Inventory: improved stockholding levels as a services, mobile network, rewards
percentage of sales to 11.2% (FY 2020: 12.1%) programme, new revenue streams
calculated on a 52-week basis
• Cost: total expenses growth 6.7% ICS
ST
GI
(FY 2020: reported 6.9%)
LO
Business activities and outputs
We have 19 customer-facing brands across various store
formats and channels serving customers from all market
segments, either in one of our stores or online.
EN T
UREM
Outcomes
Our financial outcomes are distributed to
shareholders or retained as continued financial
inputs/investment back into our business. Outcomes
Key outcomes include: • Continued integration of our enterprise-wide
• 956.3 cents HEPS from continuing operations integrated ERP system into all channels
(restated FY 2020: 794.7 cents) and brands
• Enterprise value R85.3 billion market • 717 (FY 2020: 828) new private-label Outcomes
capitalisation (FY 2020: R63 billion) products provide customers with extra variety, • 84 net new stores (FY 2020: 59)
• R23.6 billion in retained earnings alternative solutions and affordability • R1.2 billion spent on store refurbishments
(FY 2020: R21.0 billion) • All binding shareholder resolutions were and maintenance
• Gearing ratio* of 155.6% (FY 2020: 176.5%) passed by the required majority of Shoprite • Delivering products from 29 national DCs
* definition: interest-bearing borrowings and Holdings shareholders at the AGM held on • Deploying 820 trucks and 1 273 trailers
lease liabilities divided by equity 16 November 2020 for deliveries
45
Leadership messages
• R29.9 million in total CEO remuneration programmes for unemployed youth) in RSA
(FY 2020: R26.8 million) (FY 2020: R243.9 million)
• R7.9 million in total CFO remuneration • R8.5 billion procurement from black
(FY 2020: R6.7 million) women-owned suppliers in South Africa
• R5.8 million in Non-executive Director (FY 2020: R4.8 billion)
remuneration (FY 2020: R6.4 million) • R94.0 million cumulative investment
in Thuthuka Nathi Investment fund
(FY 2020: R85.0 million)
• R105.1 million invested in training
unemployed young people in the Retail
OP E Readiness Programme and our participation in
RA
TI the YES initiative (FY 2020: R113.6 million)
functions
servicing third-
79.7% Supermarkets RSA (FY 2020: 78.8%) • Scope 2 GHG emissions:
party customers, 9.2% Supermarkets Non-RSA (FY 2020: 10.8%) 1 867 528 tCO2e
stores and online
customers. 4.0% Furniture (FY 2020: 3.5%) (FY 2020: 1 986 711 tCO2e)
NG &
S
Outcomes
• Upholding supplier relationships, working in
partnership to achieve consistency of quality
products to our customers
Outcomes • Assisting with job creation and economic Outcomes
Ensuring a stable and proficient employee transformation, with increased procurement from • 8 207 tons of plastic waste diverted from
base with opportunities to develop and grow, black women-owned suppliers by R8.5 billion landfills and the environment
Shareholder information
Combined assurance
The Group has adopted a combined assurance approach closely
Risk management
aligned with the recommended practices set out in King IV.
Corporate strategy and objectives are aligned with the
The Board has delegated responsibility for governance oversight
Group’s risk appetite and tolerances and are linked
of the Group’s combined assurance framework to the Audit and
vertically (in reporting structures) and horizontally
Risk Committee, which is required to ensure implementation of the
(across business units) throughout the Group. The Group’s
combined assurance model results in fully integrated internal and
risk appetite is generally low, except for certain strategic
external assurance activities across the business.
business development areas. Risks are managed
King IV Principle 15 across the business at all levels through policies,
frameworks setting out what actions should be taken,
The Audit and Risk Committee has oversight over the effectiveness and procedures providing instruction on how actions
of the Group’s combined assurance framework, in conjunction should be implemented.
with the Group Risk and Compliance Manager and the Group
Internal Audit Executive, to achieve the objectives of an effective Through various committees and functional appointments,
combined assurance framework for the Group. More information the Group maintains comprehensive risk registers in
on assurance is provided in the Audit and Risk Committee compliance with the ERM Policy and Framework.
Report in the annual financial statements and in the Corporate
An annual self-assessment, relative to Gartner’s best-
Governance Report.
practice research, is used to determine and track our level
During the year under review we enhanced our combined of risk management maturity. The assessment assisted
assurance capability and strengthened our governance oversight with gaining a maturity view from high to low priorities.
of risks. Three new Board members with extensive risk experience The Group rated itself at a level 3 out of 5, with 12 internal
were also appointed. business units having participated in the assessment.
Combined assurance model in the Corporate Governance Report, page 17 Overall functional maturity is the average level of maturity
Annual Financial Statements: Audit and Risk Committee Report across all activities assessed and included the rating
of operational risk-related activities such as strategy,
appetite, resilience, processes, governance and reporting
structures, and compliance.
Low
Mat
urity
3
urity
Mat
High Target
5
3
The Group’s Home Office in Brackenfell, Cape Town, was built in 1997 and since 2021 features the Checkers FreshX Hyper and ShopriteX campus on its doorstep.
47
The table provides a combined overview of the risk management and assurance structure. The detailed assurance structure forms part of the
Corporate Governance Report.
Leadership messages
Committee-approved annual Internal Audit Plan and reports
to the CFO. Area of development:
A governance, risk management and compliance (GRC) project will roll out a platform in which a module
Third line of assurance for internal auditing will be created. The platform will aim to provide automation in some areas of the audit
function, creating a more formal link to the risk universe. This should drive audit efficiency and provide
better risk control analytics.
Group Risk and Compliance Manager reports to the Company Areas of responsibility:
Secretary (who is also the head of Legal) on compliance • Operational risk policies and processes are aligned with strategic risk management objectives and risks
are prioritised within the Group’s risk universe.
governance, and to the CFO on risk governance, with material
matters or findings escalated by the CFO and Company • The adequacy and effectiveness of risk mitigations, at operational level, is monitored at Group-level
through an established ERM infrastructure.
Secretary to the Executive team and the Audit and Risk
• Business unit management teams are supported to develop appropriate risk management action plans
Committee for attention. Risks are reported to the Audit and
Group Health and Safety Manager: The Group Health and Areas of responsibility:
Safety Manager reports in to the Group Risk Manager. Group health and safety is responsible for developing the health and safety systems, objectives and targets
for the Group.
Second line of assurance.
Group Insurance Manager: The Group Insurance Manager Areas of responsibility:
reports in to the CFO. Second line of assurance. Assessing the Group’s insurance needs including the procurement, processing and maintenance of all
insurance activities within the Group. The Group Insurance Manager also has a team of specialists focused
Performance and outlook
on fire risk controls and fire risk reduction.
Head of Group Security and Loss Prevention: The Head of Areas of responsibility:
Group Security and Loss Prevention reports to, and receives The Head of Group Security and Loss Prevention is responsible for developing and monitoring policies and
procedures for security and loss prevention-related matters, investigating losses incurred due to criminal
mandate from, the Security and Loss Prevention Steering
events, and proactively utilising data to mitigate future losses.
Committee. The Steering Committee members comprise the
three COOs, CFO and Company Secretary.
Almost certain
Risks are rated on the basis of their likelihood and impact
(inherent risk) as well as the strength of the controls
implemented to address them in order to arrive at a residual
risk rating. 4
Likely
1
The Group identified 55 strategic, operational, financial 5 6
or compliance-related risks within its risk landscape.
Likelihood
A summary of the top 10 key strategic risks that directly
Possible
impact the Group’s ability to realise its strategy and manage 10 2 3
its material matters are listed and discussed here.
Case study:
Unlikely
7 8 9
Security and loss prevention, Corporate Governance Report, page 14
Impact
4 Information and technology, and cyber risk 9 Project and change management risk
Ongoing mitigation
Ongoing mitigation
Leadership messages
work to capitalise on the lessons learnt during the COVID-19 lockdown that forced
remote working resulted in improved online productivity and collaboration. Insuring
against losses from business disruption.
5 People risk
Stakeholders MATERIAL MATTER 2
Risk description Investing in our people, attracting the right talent and rewarding our
The Group’s employees are critical to the success of our business. Failure to employees fairly contributes to maintaining healthy employee relations
maintain a productive and satisfied workforce can lead to high levels of employee that support our business and contributes to good customer experiences.
turnover, training costs, absenteeism, health and safety incidents, and labour unrest. We support union participation and actively engage with unions.
These, in turn, could impact our reputation, customer satisfaction and profitability. We are proactive in benchmarking against market and industry trends
and developments.
Related opportunity
Shareholder information
Investing in our people by tapping into their various existing and new skill sets to
create a multiskilled workforce that is developed for now and the future. Our leadership
pipeline not only ensures adequate succession planning and transforming our
business, but a seamless transition by better integrating our people into the Group to
achieve a future-fit team. A focus on the continuous changing digital world in which we
operate guides the Group to expand its digital capable workforce.
COVID-19 fast-tracked the test case for certain employees to work from home.
This proved that a fully functional home office environment can be achieved and
enabled an improved work-life balance.
Ongoing mitigation
Case study:
Security and loss prevention, Corporate Governance Report, page 14
7 Fraud risk
Stakeholders MATERIAL MATTERS 1 2 3 4 5 8
Risk description Relevant policies that inform accepted behaviour are reviewed,
The vulnerability that the Group faces internally from individuals and externally updated and approved periodically by the Group’s Board committees
through collusion, misappropriation of assets such as cash and inventory (shrinkage), and communicated to employees. Regular risk-based internal audits
and third-party fraud, armed robberies and theft. This includes the risk of reporting and of selected financial systems are conducted and there are clear areas
financial misstatements. of responsibility and management between operational and financial
positions. External audits and stringent financial controls are in place,
Related opportunity particularly in our financial services operations. New suppliers undergo
Strengthen organisational ethics and build a culture where every employee a due-diligence verification process and all transactions, goods and
understands the role they play in upholding our reputation as an honest and services are tracked to reduce irregular transactions while improving
trustworthy business. An internal financial control (IFC) evaluation project was budget control. New employees are vetted and a well-publicised fraud
launched to ensure that employees understand their responsibility and take ownership; reporting hotline is managed by an independent third party. The central
and make sure controls are properly executed. The IFC was completed. command centre plays a pivotal role in identifying, preventing and
investigating unlawful acts.
Ongoing mitigation
Leadership messages
repatriation of money and influence profitability. Most of our exposure is in markets borrowing in soft currencies.
linked to direct US dollar exposure.
Related opportunity
With the adverse implications of exchange rate risks, Shoprite increased its focus
and awareness of financial and non-financial managers (both in the local and Non-
RSA markets) to these risks and the importance of reducing exposures by aiming to
increase trade in local currencies.
We continuously expand our centralised distribution network across the country and by enhanced collaboration with our suppliers and their logistical
infrastructure, we will ensure optimal agility and responsiveness to mitigate supply chain disruption.
OUR STAKEHOLDERS
We have a responsibility towards our
stakeholders to create shared value over
the long term but we cannot do so without
their support. We depend on continuous
engagement to understand their needs
and address their concerns while
remaining cognisant of what is right for the
business to achieve our strategic goals.
Customers
Digital
Indirect
Stats SA: Consumer price index (CPI) headline inflation was recorded at 3.2% in January 2021 and food inflation made up 28% of this, even
10
though food and non-alcoholic beverages make up only 17.24% of the total CPI basket.
53
Leadership messages
directly linked to their area of operational responsibilities. invest our resources.
During the year under review our communication with employees Our community work extends beyond corporate social investment
and with shopfloor teams – specifically through the SiyaRinga (CSI). We continuously investigate ways in which our operations,
platform – increased and we launched Health24/7, an employee supply chain and infrastructure can create economic opportunities,
wellness programme with a monthly newsletter that is published in provide access to retail training, support entrepreneurial activities
association with an external health and wellness services provider. and enable small and medium enterprises (SME) to grow.
Channels YES programmes
T eam meetings, training, surveys, incentive and recognition
programmes Channels
Meetings with community and CSI partners, project visits
#OurShoprite e-newspaper, CEO video messages, SiyaRinga, Intranet
S upport to ECD practitioners, improving the nutritional intake of
Trade union affiliations
children attending ECD centres
#3 MATERIAL MATTER Supply chain resilience and sustainability #6 MATERIAL MATTER Strategy, trade environment and growth
55
Leadership messages
proactively contribute to policy development. We collaborate with risk for labour disputes is a primary focus area for the Group,
regulators and actively participate in new and amended regulations. and communication and negotiation with unions are ongoing.
The Group maintains a defined and risk-rated regulatory universe
across legislation, regulations and international best practices. We are the only South African retailer that is a signatory with
Uni Global, promoting social dialogue in support of better
Matters of interest Response management and trade union relationships. The Company
or concern • 45% of private-label products regularly engages with the recognised trade unions on matters
• Compliance with on-pack recycling labels of mutual interest and ultimately culminates in collective
• Participation in public policy bargaining agreements.
• 795 974 Occupational health
• Risk management, governance and safety audit checklists
and ethical practices completed Matters of interest Response
Our response and performance against our material matters are discussed in detail in each of the Capital Reports, with reference to the
Sustainability Report and Corporate Governance Report. Each material matter and its sub-themes are linked to the Group’s risks and have
been listed as such in the risks and opportunities discussion.
Our stakeholders, page 52
Risks and opportunities, page 46
The rating that management applied in determining the material matters was based on financial investment and return to shareholders,
impact and level of regulatory compliance, and the level of investment in innovation required to achieve strategic growth. Stakeholder
feedback, depending on their level of influence or dependence on material matter, was also considered. The way in which the rating
questions were positioned took the Group’s strategic growth drivers and risks into consideration.
#1 #2 #3 #4
Information Employees Supply chain Governance
and technology resilience and and ethics Regulatory
management sustainability environment
Material matters #5
Supply chain Strategy, trade
resilience and Environmental environment
sustainability stewardship Customer centricity and growth
#9 #8 #7 #6
GRI 102-47
57
#1 #2 #3
Leadership messages
• Continuous business optimisation • Training and development across • Reliability on infrastructure, systems
through digitalisation that takes into all employee levels (internally) and and suppliers to consistently
account an increasingly digitalised youth development (externally) to deliver quality products and service
retail environment and changing promote continuous improvement and (manufactured)
customer expectations employment opportunities • Agility in centralised planning and
• Improving agility and speed to react • Health and safety at work but also distribution capabilities with the ability
more quickly and appropriately to personal wellness to manage scale (manufactured)
changes in legislation, business • Transformation, diversity and inclusion • Optimising efficiencies to continuously
innovation and customer demands manage costs to keep products as
• Talent attraction, development and
• Improving efficiencies through the retention affordable as possible and reduce
Related capitals: I M S
Relevant stakeholders:
Shareholder information
#4 #5 #6
Governance and ethics Regulatory environment Strategy, trade
Good governance and ethics Our operations across environment and growth
throughout an organisation 13 industries and 13 countries Although Shoprite’s success has
are driven by our Board and deliver quality and affordable been built on its traditional brick-
Executives. It is therefore products and services to our and-mortar business, its strategy
important for the Group to have customers through our store is focused on adapting to the
a robust and capable Board of network and digital platforms. ever-changing retail, consumer
Directors, attuned to Shoprite’s Our business exists within a and economic environments.
business strategy, material risks complex regulatory environment The Group’s nine strategic growth
and opportunities, and a fully and requires high levels of levers drive operational results
accountable and hands-on compliance. Compliance requires and incentive schemes are
leadership team. Governance focus, resources and continuous aligned with the strategy.
is closely linked to the Group’s engagement with regulators and
risk management approach external verification authorities.
and oversight. Although GRI 307-MA
governance and ethics is a Board
responsibility, management is
accountable to fully adhere to the
directives set at Board level.
Since the Group purchased eight family-owned stores with 400 employees
in 1979, Shoprite grew into Africa’s largest food retailer.
59
#7 #8 #9
Leadership messages
• Providing healthy and nutritious food • Climate change through decreasing • Contribution to hunger relief and food
choices in a healthy and safe store our carbon emissions by managing our security through donations, community
environment energy and fuel consumption development and collaboration
• Providing access to affordable • Waste management, including food, • Providing support to communities at
products and services operational, chemical and electronic times of disaster
• Responsible marketing practices and waste, and specifically reducing waste • Providing development and work
product labelling to landfill experience opportunities for youth and
• Understanding changes in shopping • The direct and indirect use of water unemployed people
behaviour and customer expectation • Responsible practices with respect to • Acknowledging the impact of the
the use and recycling of packaging salaries and taxes we pay
Related capital: N
Relevant stakeholders:
Performance and outlook
Shareholder information
Freshmark is one of the largest procurers and distributors of fresh fruit and vegetables in Africa. Up to 95 percent of the fresh produce requirements are sourced
directly from local producers.
AND OUTLOOK
5 PERFORMANCE
AND OUTLOOK
How we use our resources to get
results that add value
The data we receive from our Xtra Savings customers’ purchasing history provides a deep understanding of our customers. With this intelligence we can
personalise shopper experience and incentivise customer-centric decision-making across the organisation.
COVID-19 OVERVIEW
Ongoing support: Checkers Queenstown donated much-needed care packages containing essential toiletries, snacks and water to COVID-19 patients
at the Frontier Hospital in February 2021. Since the start of the pandemic the Shoprite Group has donated thousands of care packages to hospitals in the
Eastern Cape, Gauteng, Free State, KwaZulu-Natal and the Western Cape.
LO
BUSIN
we realise how far we have come and we are incredibly proud of
Y
E ES
what we were able to achieve in this time.
We turned adversity into an example of how our people came together as a team. We were able to
keep jobs in place, not losing one person through retrenchments but gaining employees. We rallied
CO
together to do the right things with integrity and care for our communities and fellow citizens while we MMUNITIES
swiftly moved towards a Smarter Shoprite in our business execution.
In our business
The success of our Loss Prevention team includes:
Winning the war on crime, keeping
our customers and employees safe • Crime suspects making 880 court appearances,
During lockdown we encountered some including postponements, bail, testifying and
challenges as increased unemployment sentencing, in FY 2021. More than 69% more
led to more opportunistic crimes and guilty findings and/or convictions were made,
mask-wearing made it more difficult to amounting to 313 years and three months of
identify suspects. However, there were prison sentences and 54 years and six months
benefits because suspects couldn’t of suspended sentences. The unit was
move around freely, resulting in more instrumental in 225 arrests during FY 2021.
What we will remember most
arrests, while curfew hours also assisted Corporate Governance Report, page 14
in detecting criminal activity quicker
and easier.
Despite lockdown restrictions, Staff turnover decreased Over 15 866 care packages
the Group increased by 3.1%. were donated to hospitals in
sales by 8.1% and gained the Eastern Cape, Gauteng,
market share. Free State, KwaZulu-Natal and
the Western Cape.
Leadership messages
We were fortunate our business was Although we had temporary non- • Shoprite continued its critical
able to weather most of the storm essential store closures, we did not bread subsidy programme and
and as COVID-19 and various levels of have to retrench any employees; sold 72.8 million loaves of R4.99
lockdown persisted, we continued to created opportunities as we redeployed in-house bakery bread during
provide products to customers. employees to new locations or other FY 2021. This R5 offering was
• In August 2020 Shoprite launched positions; and appointed 3 897 new expanded, with sanitary pads
our new Money Market Account. people, specifically in our recent areas added to the range.
of development. • By the end of FY 2021 the Group
• In mid-October 2020 Shoprite
launched its Xtra Savings rewards • All employees were covered by our had served 291 837 nutritious
programme, giving much-needed COVID-19 assistance programme. meals and delivered thousands
In our communities
Our response was heartfelt and selfless but
Caring for our communities we are still thankful for the recognition our
Our beneficiary organisations faced several challenges – including teams received for their hard work and effort.
resource limitations in a time when more people needed them –
2021 Africa SABRE Awards include:
and difficulty managing new regulations related to the pandemic.
• Winner: Corporate Image
• We provided 46 ECD centres with personal protective
Shareholder information
FINANCIAL CAPITAL
F
Checkers Hyper in Brackenfell, near Cape Town, is a FreshX store, offering customers the same artisanal experience – but on a large scale.
Highlights
How our financial capital connects and
R21.2 billion in equity integrates within the business
(FY 2020: R20.0 billion) Without access to funds we will not be
able to invest in our strategy to create
R23.6 billion in retained earnings sustainable value for the Group in the
(FY 2020: R21.0 billion) long term. Funds are used to maintain our
operations and to position us for growth.
R5.3 billion in borrowings (FY 2020: R12.0 billion)/ Financial capital therefore underpins
56.0% reduction in borrowings all business activities as its output is
used to support the input of the other
Capital expenditure contained to 2.0% of turnover calculated capitals, thereby releasing value back
on a 52-week basis (restated FY 2020: 2.0% of turnover) into the business and to our shareholders
and investors.
Improved inventory % of sales ratio from 12.1% in the
Funds are derived from debt and equity finance and earnings.
prior year to 11.2% (calculated on a 52-week basis) Our earnings come from our retail activities, mostly from our
Supermarket businesses and other operating income.
Outlook
• Accelerating the Group’s physical reach and brand presence with the proposed acquisition and integration of the Masscash
Cash & Carry, Cambridge Food and Massfresh businesses into our operations
• Build and leverage the vast retail ecosystem that our brands and their combined physical and digital presence represent
• Share buy-backs and dividends to shareholders
For a full understanding of the Group’s financial performance, this Capital Report must be read together with:
CFO’s Message, page 30
Annual Financial Statements
65
#6 MATERIAL MATTER
Strategy, trade environment and growth
During FY 2021, while our focus was on the impact that COVID-19 had on the business operationally, we remained focused on our pursuit
of organic growth. The aim of most of our investment activities will be to maintain our low-price leadership promise. Our strategy drives all
investment decisions and must cater for our customers’ needs by providing them with the most affordable options, but also expand our
business into markets where technology, convenience and premium are important.
F I M H S N
Financial Intellectual Manufactured Human Social Natural
capital capital capital capital capital capital
Improving our Leveraging Rolling out smaller, Invested in our SAP Focusing on growing Our focus on
return on capital the significant lower-capital and data science Checkers’ position renewable energy
and balance sheet opportunities that expenditure Shoprite academies to in the mid-to-upper reduces our
Leadership messages
by focusing on exist as a result of supermarkets in attract, develop and customer segment dependence from
improving our our Xtra Savings South Africa. retain skills that of the market, unreliable sources
required inventory rewards programme, A net 17 Shoprite, will support our supported by the and increasing
levels, the and continuing to 7 Checkers and long-term growth growth of the electricity costs.
restructuring of our optimise our data- 26 Usave stores strategy. Checkers Sixty60 10 993 MWh
property portfolio led business and opened. Eight data scientists delivery app. renewable electricity
and re-evaluating creating value for were trained and used directly in our
our Non-RSA both our customers graduated through operations.
operations. and the Group via our new data
Stockholding levels digital offerings, science academy.
as a percentage partnerships and
This year we operated 681 Shoprite supermarkets in South Africa and 10 countries on the rest of the African continent.
FINANCIAL CAPITAL | continued
We believe the future will be data-led and, as such, we are Innovation across the business, with specific focus
strengthening and future-proofing our business and strategy by on growth opportunities in developing e-commerce
investing in our IT ecosystem and our people. Much of this is
enabled by the use of the data from our integrated ERP system Our milestone achievement in terms of e-commerce development
which increasingly informs our decisions. and growth has been the launch of Checkers Sixty60. It has been
rolled out to 233 sites.
We also plan to further our reach in our core RSA markets through
continuing to expand our physical (store-based) presence. E-commerce opportunities will be enhanced by our investment in
Our desire to be increasingly accessible in the markets in which infrastructure and data-driven customer communication through
we operate underpins our strategy to open stores organically and the capabilities of Rainmaker Media.
through focused acquisitions where we believe our expertise can Strategy and investment case, page 40
be leveraged for the good of our customers and stakeholders.
We successfully launched our Xtra Savings rewards programme Case study:
across our Checkers and Shoprite brands. It is the fastest- Checkers Sixty60, page 67
growing supermarket rewards programme in South Africa and,
Packers in our DCs receive picking instructions via an advanced voice messaging system, using AI to determine where in the packing aisle they are and
what to pick as they pass products.
67
CAPITAL IN ACTION
Leadership messages
We are delivering more volumes per store in a day now than we originally
thought we would do in a month! The operational team has also been
incredible in taking ownership of Checkers Sixty60, the training, the
pickers and the level of service on the back of operational excellence.”
– Neil Schreuder, chief of Strategy and Innovation
Associated risks • ability to select a second option for every product they order
• Business disruption risk • best value – we don’t charge more than we do in-
• Information and technology (IT), and cyber risk store; and
• People risk • grocery delivery within 60 minutes to the customer’s door.
• Changing trading environment
• Foreign exchange risk New digital commerce propositions and digital channels form
Risks and opportunities, page 46 a strong foundation for an omni-channel shopping experience
as proven by the more than 1.5 million Checkers Sixty60 app
downloads from customers across South Africa.
Governance MATERIAL MATTERS
Shareholder information
INTELLECTUAL CAPITAL
I
More than R3.8 billion has been invested since 2018 in the Group’s IT and technology infrastructure, creating a direct and real-time link between the
customer in store and the supply chain, where employees ensure products are correctly and timely delivered to stores.
The Group’s intellectual capital primarily consists of our people, information and
technology capability and data assets, and the ethical way in which we manage
our business.
Highlights
The Group’s success is largely rooted in our ability to effectively
Checkers Sixty60 delivery expansion to 233 sites including run our operations and we rely heavily on technology to do this.
Over the past four years we have invested in an integrated ERP
130 supermarkets and 103 liquor stores system that forms the foundation of our business systems. We will
continue to build on this platform to focus on the implementation
and usage of information and technology systems to differentiate
our organisational capabilities to become a Smarter Shoprite.
Outlook
PCI DSS certification was maintained for RSA stores. PCI DSS
• Further development in machine learning and artificial
certification is now a focus area in Non-RSA countries
intelligence to refine the forecasting, addressing
waste and on-shelf availability, particularly in the
Fresh categories.
6 911 number of dismissals due to misconduct
69
#1 MATERIAL MATTER
Information and technology management
Leadership messages
virtual vouchers by offering Money Market top-ups and a secure, Risks associated with information and technology are managed by
technology-based solution that enables people to send grocery a dedicated team. In addition to this, our PMO also assisted in a
vouchers via SMS. This new service has been developed to Group-wide data privacy project. Business analysts completed an
include additional benefits to our customers. analysis for remediation controls that looked at compliance for each
Our financial services division improved its Money Market options business unit. On completion of the review, business engagement
with new products and partnerships. Shoprite’s financial services managers were instrumental in assuring awareness and prioritisation
is driven by customer affordability and is on par, if not better, than of data privacy initiatives rolled out together with operational
global competitors, offering customers various transaction choices business plans.
and the most affordable rates for banking services. Our Security Centre and dedicated cybersecurity team enforces
K’nect Mobile launched in March 2021, adding a new revenue a zero-trust model that aims to strengthen safe access to our
Using this data, our improved data analytics give us the ability to
personalise every customer interaction at scale; curate product Data scientists at the Group’s new technology campus uses data
ranges based on customer needs; correctly manage stock levels; analysis to build predictability models that inform our supply chain,
minimise waste and cost; and order and deliver the right products making us more efficient and enabling us to maintain our low-
price leadership.
in time. This has proven especially advantageous during the
COVID-19 lockdown periods when planning was critical.
INTELLECTUAL CAPITAL | continued
#4 MATERIAL MATTER
Impact of digitisation on skills and Governance and ethics
communications
There is a gap in the market for experienced digital and IT skills.
With the Group’s focus on being a future-fit organisation and
Areas of management and focus
These sub-themes have been covered in detail in the Corporate
having increased its access to data and digital channels – in line
Governance Report alongside the King IV principles.
with digital requirements across brands and operations – there is a
specific need for data scientists.
Oversight of policies, processes and practices
Most of the Group’s IT employees are trained internally and ensuring responsible and responsive business,
deployed to manage operational functions. The IT function works risk management and an ethical culture
closely with the Human Resources department to address the
The Group’s combined assurance framework supports
apparent skills shortage.
good corporate governance through integration of internal
IT-relevant communication, particularly regarding cybersecurity assurance and external assurance, underpinning the integrity of
and data privacy, is rolled out with the assistance of various information for internal decision-making and external reporting.
teams: internally to employees by the internal communications King IV Principle 15
department, and externally to customers through focused
This oversight function includes the risk management process that
channels and campaigns compliant with the POPI Act and other
is part of the Group’s combined assurance, led by the Audit and
consumer protection regulations.
Risk Committee, which considers and makes recommendations
on risks, strategies, policies, appetite-setting and governance.
CAPITAL IN ACTION
Ownership and control Xtra Savings’ instant cash savings makes a real
Risk management
Leadership messages
Our Xtra Savings rewards programme has signed up more
than 20 million members since its launch. It is the critical
link between the customer and with every swipe of a card
we better understand our customers’ needs – allowing us
to create deeper customer understanding that allows us to
Primary stakeholders curate more personalised shopping experiences.
• Shareholders, financiers, regulators, employees and customers
who rely on Shoprite to be a well-governed and ethical business The programme benefits customers by providing
personalised deals on products they love to buy,
Our stakeholders, page 52
and by only receiving communication that is relevant,
which leads to better engagement and customer
Governance
• The Board of Directors is responsible for the Group’s governance
Performance and outlook
MATERIAL MATTERS
specifically relevant to COVID-19, were also high on the Board’s
agenda. Information and technology Customer centricity
Corporate Governance Report management Buying behaviour, customer
Integrated ERP system, preference, deeper customer
Audit and Risk Committee Report (included in the AFS) digital infrastructure understanding
Supply chain resilience and sustainability
Insights, efficiencies, added value, money back
MANUFACTURED CAPITAL
M
The Group’s physical presence spans more than 3 117 sites over which we have
full operational control. This includes our supply chain, store and IT infrastructure.
Highlights
The sophisticated nature of our supply chain management is a
major contributing factor to our success and has enabled us to
673 843 m across 29 DCs
2
take a leadership position in this regard. We have invested heavily
in our systems and infrastructure, aligning with international
best practice.
4 327 621 m2 across 2 400 corporate stores
With our focus on affordability we have to operate a lean cost
structure. A centralised distribution system is important to maintain
820 trucks and 1 273 trailers in distribution fleet our trading margins. Our integrated ERP system is providing
the outcomes for what is needed from a business intelligence
perspective. This model saves costs, cuts waste out of the
The Group’s largest dry goods DC in Centurion receives on system for us and our suppliers, and generates financial and
environmental benefits through resource use efficiencies.
average 6 950 orders on average per month resulting in
162 million cases for the year at an average of 184 million Stores include a range of formats across numerous brands and
market segments; from large Checkers Hypers in urban centra to
units per month being delivered to stores. small Usave stores in rural areas, all of which are appropriate for its
context and customer base.
Outlook
• We are currently remodelling and optimising our centralised supply chain network to ensure we continue to advance our
centralised supply chain infrastructure so that it is future-fit to enable growth, deliver efficient service and mitigate risk.
73
#3 MATERIAL MATTER
Supply chain resilience and sustainability
Reliability on infrastructure, systems and suppliers Agility in centralised planning and distribution
to consistently deliver quality products and service capabilities with the ability to manage scale
The experience during the COVID-19 lockdown periods tested our Continuing to invest in our supply chain will have substantial
supply chain in many ways. advantages as we improve our business optimisation processes
Leadership messages
streams and focus our resources towards getting critical items to
their footprint, there has also been an increase in demand for
stores quicker, acknowledging our capacity to react fast.
OK Franchise stores.
Governance
• The Board of Directors is responsible for oversight of the Group’s
strategy and performance with implementation being delegated to
the Executive Directors and their operational management teams.
• Risks relevant to the supply chain are managed through the
Shareholder information
Group’s risk function and reported to the Board through the Audit
and Risk Committee.
Corporate Governance Report
MANUFACTURED CAPITAL | continued
CAPITAL IN ACTION
#1 MATERIAL MATTER
Information and technology management Using the Group’s supply chain increases
margin, customer experience and affordability
Also see I
MATERIAL MATTERS
Governance
• IT governance is managed through the Group’s IT structure and Supply chain resilience and Information and
is reported at Board level through the Audit and Risk Committee. sustainability technology
King IV Principle 12 Access to scale, merchandise Integrated ERP system, real-
variety and services, efficiency time stock visibility
Corporate Governance Report
Customer centricity
Product availability and variety, trusted quality, affordability,
value-added services
75
HUMAN CAPITAL
H
Leadership messages
92.6% customer-facing employees We aim to be an employer of choice and pride ourselves on
being a job-creating company with a strong hire-to-retire model.
13 145 employees engaged with Health 24/7 through To remain globally competitive we have to retain and grow our
the EWP talent. We approved a human resources (HR) strategy in FY 2019
and started implementation during FY 2020. This strategy provides
a holistic approach to HR. It addresses the need for an engaged
R7.3 million invested in support of employees and their and empowered workforce, providing ongoing learning opportunities
families via Health 24/7 and promoting diversity, where every position in our business will be
evaluated to make sure we have the right people in the right places
to deliver on our purpose. The HR strategy addresses four pillars
R25.3 million paid towards educational loans Our overarching goal is to maintain a strong team of employees
and bursaries that consistently delivers on our customer-first approach. We want
an energised, experienced, diversified and transformed employee
58 458 employees are connected on SiyaRinga base that is happy to come to work and be part of our business
for the long term.
Performance and outlook
• Critical skills and generic leadership development within the Group Group’s social performance,
this Capital Report must be read
• Implementing an integrated, cloud-based Learning Management System, namely Success
together with:
Factors Learning across all brands and countries within the Group over the next three years that
will enable self-directed and mandatory job-based competency development Remuneration Report
• Based on active feedback we received via SiyaRinga, we are planning to launch functional features Sustainability Report
such as payslips, store card balances and applications for educational grants and loans via the app.
The aim is to encourage subscription and active participation by the majority of employees
#2 MATERIAL MATTER
Employees
Our customer-centric culture puts our customers first. Customer Skills development includes activities to upskill unemployed youth
service principles have been integrated into all training and through our Retail Varsity accredited learning programmes and
onboarding modules. the YES initiative. Most of these successful learners are offered
permanent employment within the Group.
Digitisation of learning has increased exponentially during the year
when social distancing prevented employees from participating The health and safety of our employees receive the highest
in most group sessions. It also facilitates efficient employee attention from management and the Board of Directors. Our health
participation and more people can participate. and safety policy guides all actions. Aspects of health and safety
form an integral part of induction and ongoing training throughout
In-store training now includes training around specific products all operations instils a safety-orientated culture.
or ranges such as our fresh produce, our private labels including
Simple Truth and our partner products like Farmer Angus, making We have a zero-tolerance approach towards health and safety
sure we have relevant product specialists in store. risks. Strict internal and external audits are performed periodically
and as regulation requires. The Department of Employment and
Rapid learning bulletins have been designed to support Labour and third-party service providers conduct regular hygiene
quick business changes, marketing and financial campaigns. and fire safety audits across the Group.
This includes new services, Money Market product launches or
changes to regulations. Investment in the integrated ERP system, training and
infrastructure improvements have assisted greatly in quicker
emergency response times, more awareness and fewer injuries.
All related activities are monitored and reported immediately
through a central control room. This has specifically helped during
the year when some of our operations were subjected to public
protest action owing to the backlash effects of COVID-19.
Employees
Leadership messages
employment transformation is a top priority but remains a
To enhance retention, we need to curb attrition. The CEO has taken
work in progress. We not only look at transformation from an
a special interest in this and introduced an initiative to find the root
EE perspective, but we address transformation as a broader
cause of our staff turnover at store level. An in-depth analysis was
theme that includes the Group’s job architecture.
launched to understand why employees choose to leave and, at the
Although our employee numbers are dominated by PDIs, we same time, link our intellectual/skills loss to the financial/investment
are actively working on improving better representation at all impact. The aim is to address employee expectations and for the
levels. We still do not achieve acceptable B-BBEE and EE rating business to identify gaps in our training and development approach.
scores. Our previous five-year Group target was narrowly missed The goal is to invest in the right people in the right places to build an
and results of the new period (started in 2020) look satisfactory. engaged and long-term workforce.
Overall Shoprite exceeds the retail sector benchmarks as per the
Employment Equity Report which was unveiled by the Minister Building strength in a management team remains a continuous
and salaries, bonuses and incentives are what people look at Remuneration Committee. Stakeholder concerns regarding
first, but we also know non-financial aspects have become as remuneration are addressed at this committee level and forms part
important when people seek employment opportunities. of the committee’s annual work plan.
New recruits are increasingly aware of brand perception and how Remuneration is generally positioned around the market median
their personal ideals and values align with that of their employer. using the REMchannel national and retail surveys for employees
Personal development and career growth are high on the agenda. below Executive level and the peer comparator group for
This is especially true in areas of new technology-focused jobs Executives, but this may be adjusted in order to attract scarce or
as we expand our markets and offerings to become a future- critical skills given the Group’s competitive position in the market.
HUMAN CAPITAL | continued
SiyaRinga, the Group’s data-free mobile app for employees, The greatest concerns in FY 2021 have been job security and
continues to elevate the voice of our people. We increased our remuneration in light of the impact that COVID-19 had on
79
CAPITAL IN ACTION
the economy. In our RSA operations wage negotiations were
successfully concluded with SACCAWU during May 2021 and a
Leadership messages
full-time and part-time workers. motivational speaker to current trainees.
“Having a bursary helped in so many ways. My parents didn’t have
to worry about university fees and I was able to focus 100% on my
studies. It also put positive pressure on me. I was motivated to excel and
to show Shoprite I was a great ‘investment’. I wanted show my value
Primary stakeholders
and strived for excellence all the time; which was not only a benefit to
• All employees across all departments and other businesses in Shoprite, but to myself as well.”
the Group
• Trade unions that our employees belong to Training gives employees more opportunity for
• Indirectly customers and suppliers with whom our employees development and growth in the Group while our bursary
interact programme builds a qualified pipeline for transformation,
promotion and succession.
• Food safety risk and on-campus accommodation, and are also linked
• Environmental, social and governance risks to work-back agreements – ensuring job opportunities
Risks and opportunities, page 46 upon graduation.
Governance
• Management of employee matters falls within the scope of the
Human Resources Executive who reports directly to the CEO and The right people in the right positions contribute to a sustainable
the Remuneration Committee. and future-fit business, and attract and retain people as an
employer of choice.
• The Remuneration committee’s purpose is to ensure the
Shareholder information
With one in five households reporting weekly hunger and millions of unemployed people in South Africa, Shoprite has intensified its efforts to provide
customers with products that are affordable and accessible. Shoprite is now expanding its R5 offering to include sanitary pads for women and girls –
items that it believes is a basic human right.
The right products at the right time, at the right price, play an important role in customer
satisfaction and cost management. We have developed a deep understanding of our
customers, our suppliers and our communities. Their needs have provided the guidance
for our journey to become one of the largest and most successful retail groups.
Highlights
Our aim is to provide them with quality, choice and affordability
3.8% internal food inflation rate maintained that meet their needs. To do this we need to be smarter, optimise,
diversify, grow and win in the long term but we need to also build
R4.5 billion market share gain in our supermarket stores sustainable relationships.
Outlook
• The Group’s CSI programmes and partnerships are being
Shoprite: WINNER: Supermarket independently benchmarked with peers. The outcome
of the Decade in Sunday Times and recommendations from this report will be taken under
Top Brands Awards advisement for any changes or improvements in the
Group’s CSI strategy and implementation.
Checkers: MarkLives Most Admired Brand
Awards
For a full understanding of the Group’s social performance, this Capital Report must be read together with: Sustainability Report
81
#7 MATERIAL MATTER
Customer centricity
Leadership messages
Policies and procedures are in place to promote compliance with all as a consequence of lockdown restrictions; however, because
relevant food safety regulations. We are a member of the Consumer COVID-19 influenced or changed many people’s lifestyles,
Goods Council South Africa Food Safety Initiative and have Checkers Sixty60 is still growing.
implemented sector-specific quality assurance systems. External
service providers conduct annual food safety and hygiene audits at Although we serve customers from across all market segments
DCs, and quarterly food safety and hygiene audits at stores. with varying expectations, Checkers has become a one-stop-
shop for higher-income customers who want to save money and
still access organic produce. For our lower-income customers
Providing access to affordable products and who need quality at an affordable price point and access to basic
services financial services, it is important to save money on transport
and travel.
Our customers often have limited resources. In recognising this,
We were able to keep food prices under the inflation rate in our Responsible marketing practices and product
RSA supermarket operations in the year under review and we labelling
believe this was thanks to our focus on best-price leadership.
Shoprite and Usave consistently delivered value for money to our We are committed to consumer protection and responsible
lower-income group customers while Checkers afforded higher- advertising practices that include all paid and unpaid
Performance and outlook
brands and supermarket stores. Significant investment in our use that data responsibly. Our data enables us to communicate
private labels enables us to adapt to changing trends and give with our customers on a personal level – concentrating on their
customers the option of our choice-grade entry-level products and needs and preferences – by adjusting promotions and pricing on
our premium products in a single store. a granular level. While we connect with them directly via digital
channels using a variety of media platforms, customer data will not
Many of the Group’s business initiatives have been designed to be used without their permission and we have high levels of data
improve the lives of our customers on a socio-economic level. security in place.
#9 MATERIAL MATTER
Protecting Shoprite’s reputation and customers’ Socio-economic contribution
perception of our brands
Our brand perception is measured by how well we deliver on
The Group’s Sustainability Report contains detailed information on
our purpose to our stakeholders. We are judged by the products
all CSI programmes. This report provides highlights of that.
and services we provide, the way we treat our customers and
suppliers, as well as the difference we make in our communities. We partner with several community partners to help us deliver
on our programmes while making sure our financial investments
We believe our commitment to our customers has been
reach the right beneficiaries and have the most impact. Our key
particularly evident in:
partners include:
• the way we support them by maintaining margins and keeping
• Food and Trees for Africa
costs low
• Gift of the Givers
• how we innovate to address their needs with new products and
services at affordable prices; and • The Lunchbox Fund
• always giving back to them through rewards and their • The Early Care Foundation
communities through our CSI programmes.
Customers vote with their wallet and their participation with Areas of management and focus
brands and their loyalty and trust is showing through the sign-up
and growth in our Xtra Savings rewards programme, our market Contribution to hunger relief and food security
share gains, increased social media following and the number of through donations, community development and
consumer awards. collaboration
Our support of hunger relief and food security is largely focused on
providing ECD centres with food, donations and training, assisting
Primary stakeholders communities to become self-sufficient food growers and diverting
• Our customers who shop at any of the Group’s brands or make use surplus food to communities.
of any of our services We continued our support with CSI partners that required even
• Indirectly our suppliers who form part of our supply chain to more assistance as a result of the added pressures on charities
provide our customers with products and services and NGOs owing to COVID-19. Our food donations to people
Our stakeholders, page 52 in need as well as our Mobile Soup Kitchen services played a
significant role in helping the most vulnerable members of society.
Governance
• Communications with customers is managed by the Marketing
department, which focuses on advertising.
• Marketing and related communication are governed by:
– The Advertising Regulatory Board and its Code of Advertising
Practice which regulates the content of South African advertising.
– The International Chamber of Commerce Code for Responsible
Food and Beverage Marketing Communication to comply with
the South African Regulations relating to the Labelling and
Advertising of Foodstuffs (R146/2010).
• Oversight of human rights and ethical behaviour falls into the
scope of the SEC.
Paulina Ntontela from Goshen Village, near Cathcart in the Eastern Cape
• Compliance is managed by operational management and is in front of her home garden. Through the Group’s community food
reported to the Board via the Audit and Risk Committee. garden programme, enthusiastic members are identified and provided
with a “garden in a bucket” starter kit which contains seedlings,
Corporate Governance Report hand tools, organic fertiliser and a training manual. Individuals are
Sustainability Report also invited to attend monthly training workshops presented by the
retailer. More than 120 000 meals are served to households from these
household food gardens.
83
Support for our food gardens is to provide food relief and build
resilience and self-sufficiency. Initiatives include:
Leadership messages
vulnerable families and people in need, as well as our soup kitchen
services played a significant role in helping the most vulnerable
members of society.
• W
e provide business and trade opportunities to SMEs governments in their quest to address poverty and provide
and entrepreneurs, giving them access to the Shoprite social services.
marketplaces or supply chains. We contribute by:
• T
huthuka Nathi Investments is our formalised SME • Paying direct taxes and through indirect tax where we collect
development fund with a transformational and developmental VAT, employees tax, dividend tax and UIF levies
focus. This investment programme provides funding and
• Avoiding aggressive tax practices that increase our liability and
business mentorship. Currently, LBB Foods, Red Baron Agri
reputational risk
and Zulzi on Demand form part of this investment. Collectively
they employ 196 people. • Paying the correct amount of tax, compliant with relevant
taxation laws of each jurisdiction, on time
• R
8.5 billion is procured from women-owned suppliers.
• Ensuring profits cannot be artificially moved between different
Shareholder information
• W
e provide training opportunities to:
jurisdictions through an appropriate transfer pricing policy
–6 247 unemployed young people trained through our
Retail Readiness Programme and our participation in the • The Group contributed R8.6 billion in total in taxes to various
YES initiative tax authorities
– R484 million Retail Readiness: investment since inception; • We use the Employment Tax incentive scheme in South Africa
and for employees between the ages of 18 and 29 years (inclusive)
– SMME members on venison meat processing in partnership who earn less than R6 500 per month for tax relief. During
with the Department of Forestry, Fisheries and the Environment FY 2021 we claimed R284.3 million for a monthly average
and assistant chefs with training in our Checkers Hyper Division. 26 718 employees who qualified
• Our tax contribution stems from taxes paid by the Group #3 MATERIAL MATTER
(R4.6 billion) as well as taxes collected on behalf of Supply chain resilience and sustainability
other taxpayers (R4.0 billion). The type of taxes includes
the following:
Also see M
Profit taxes
(R2 179 million) Areas of management and focus
Property taxes
Taxes paid (R62 million) Reliability on infrastructure and product supply,
by the Group Product and services taxes product quality and safety, mutually beneficial
(R2 053 million) supplier relationships
People taxes
Our supply chain was put to the test as a result of the
(R293 million)
unpredictability of the COVID-19 pandemic, subsequent changes
in regulations and a volatile operating environment. Our long-
standing supplier relationships and clear communication, internally
Profit taxes and externally, allowed us to overcome these difficulties.
Taxes (R31 million)
collected
Product and services taxes Owing to some of the challenges we experienced during
on behalf of (R2 716 million COVID-19, we increased our procurement from local suppliers.
someone
Planet taxes Farmers of fresh produce benefited most from this escalated
else
(R1 263 million) demand for their products and it decreased lead times on many
items for us.
Governance
• Oversight of socio-economic contribution falls in the scope of the
SEC including:
– human rights and ethical behaviour
– responsible business and good citizenship
– social and economic development; and
– CSI programmes.
• The Group is committed to transparent and ethical tax practices
and we co-operate with tax authorities across our operating
countries. We have a strong tax governance framework to guide
timeous, accurate and effective taxation compliance.
Corporate Governance Report
87% of private-label grocery products are produced locally in
South Africa.
85
CAPITAL IN ACTION
In the absence of preferred B-BBEE suppliers that can supply at
the scale we require, these challenges persist. In the medium to Premium product addresses a shift in product
Leadership messages
“The next soil carbon audit takes place in 2023 and with more cattle we
Our approach to food safety is built on three pillars through:
expect to see bigger increases in the carbon absorption.”
• Onboarding new suppliers For many consumers who shop according to price, the current grass-fed
• Ensuring food safety in our stores through independent burger range is sold for less per kilogram than the grain-fed range,
audits and mitigation measures making a premium product more affordable to a wider customer base.
• Business disruption risk which his herdsman Kasango Murehwa Samkute earned
• IT and cyber risk R100 000.00, because his herd is the biggest on the farm.
• Environmental, social and governance risks
• Foreign exchange risk
Risks and opportunities, page 46 We are accountable to ourselves and our stakeholders to
reduce our impact on our immediate environment and to
our indirect environment by encouraging and supporting
Governance responsible sourcing.
• The Board of Directors is responsible for oversight of the Group’s
strategy and performance with implementation being delegated to MATERIAL MATTERS
Shareholder information
#5 MATERIAL MATTER
Regulatory environment
Even under strict lockdown, our supermarkets remained open. This meant our employees had higher COVID-19 exposure risks than we would have ever thought we
would ask of them. The Group therefore implemented strict compliance measures to keep employees and customers as safe as possible.
87
NATURAL CAPITAL
N
Leadership messages
waste (including food waste), responsible sourcing, carbon, water and packaging.
Highlights
We have made significant progress to understand our contribution
16 502 036 tCO e total carbon emissions including
2
and put actions in place to drive change and minimise our
Scopes 1, 2 and 3 environmental impacts as far as possible. We have developed
position statements on climate change, sustainable packaging,
food waste, water security and biodiversity that elaborate on our
28 226 tCO e saved through recycling
understanding of environmental sustainability track relevant metrics across the Group’s operations, allowing us
• Increasing our generation and use of renewable energy to have an informed overview of sustainability and decision-making
on aspects like procurement of packaging, energy and water.
#8 MATERIAL MATTER
Environmental stewardship
Areas of management and focus • Water: To better manage our water consumption we have installed
Our impact on natural resources and our response to how we use water meters. We do not withdraw any water from non-renewable
those resources are discussed in detail in the Group’s Sustainability fresh or groundwater sources and continue to discharge all
Report. This report provides a high-level summary. wastewater to municipal treatment facilities in South Africa.
Waste:
Climate change through decreasing our carbon • Food: The most important focus during the year under review
emissions by managing our energy and fuel was preventing food going to waste. The COVID-19 pandemic
consumption and waste to landfill, including food, emphasised food security as a critical factor in our communities.
operational and electronic waste A food waste minimisation strategy received special attention
Our environmental efforts align with our strategy to become a by reducing the amount of food waste we create. We do this
Smarter Shoprite and are focused on being effective and efficient by efficiently managing on-shelf availability; transforming food
throughout our supply chain. We will use our initiatives to innovate, to be sold in a different format; and donating food to beneficiary
build resilience and create a competitive advantage. organisations. Food not suitable for donation or transformation is
used as animal feed or composted.
Although we have released ownership of DCs and entered into lease
agreements in FY 2020, we retained the management of the supply • Operational waste: We have embraced the circular economy
chain functions including property and logistics efficiencies. approach with plastic waste from our stores being recycled back
into our 100% Recycled and recyclable carrier bags.
Resources:
• Energy: The consistent availability of electricity remains a • Chemicals: The chemicals we use, including cleaning supplies and
challenge. The Group is on a journey to safeguard our operations disinfectants, are of food-grade quality. Only reputable suppliers that
from power disruptions as far as possible. We have increased can provide certification in line with our regulatory compliance needs
the installed capacity of our renewable energy through rooftop are used. This includes certification from the National Regulator for
solar photovoltaic (PV) systems and committed to procuring Compulsory Specifications (NRCS).
renewable energy from a specialist energy trader. The trailers
in our logistics fleet are also equipped with PV solar panels to • E-waste: Appliances, e-waste or obsolete equipment is donated,
power the refrigeration systems and tailgate lifts while trucks are mostly to The Appliance Bank.
switched off.
• Fuel: Reverse logistics have become entrenched in managing Responsible practices with respect to the use and
our return trips from stores to DCs, thereby improving the recycling of packaging
efficiency of the fleet and reducing emissions. By increasing the Packaging is a major source of waste if it is not managed responsibly.
energy efficiency of our trucks and training drivers to conserve
Therefore, we support a circular economy approach to packaging
energy consumption, we are able to reduce the comparative
and have instituted a target to substantially reduce our own waste
impact of the distance our fleet travels every year.
generation. Most of the initiatives will have a design-for-sustainability
approach to packaging based on life-cycle thinking and innovation,
particularly for our own brands.
Initiatives include:
• Transitioning all packaging in our delis, bakeries and fish shops to
recyclable materials
• Increasing the recycled content and recyclability of private-label
products and standardising recycling labels on private-label
packaging
• Shopping bags in our South African Shoprite, Checkers and
Usave stores are 100% recyclable and made from 100% recycled
material from post-consumer waste
• Backhauling cardboard and plastic from our stores to our DCs
increases the amount of plastic and cardboard we are able to
reuse or recycle
CAPITAL IN ACTION
• Our
in-store fresh foods and private-label departments continue
to prioritise responsibly sourced products wherever possible. Recycling encourages environmental
Leadership messages
biodiversity loss through our own operations and throughout our materials, the innovative programme is also creating employment
supply chain. At present we estimate that our own operations do opportunities for the country’s youth: the Gqeberha unit’s five employees
not have a major impact but understand the impact that exists form part of the Shoprite Group’s participation in the YES initiative.
within the production of the goods we sell. Our first action was to
develop the Group’s position statement from which implementation Shoprite has a zero waste-to-landfill approach and is
and target commitments will be developed. committed to reducing waste, creating awareness and
changing consumer behaviour regarding recycling
and reuse.
INFORMATION
6 SHAREHOLDER
INFORMATION
Investing in our people, attracting the right talent and rewarding our employees fairly
contributes to maintaining healthy employee relations that support our business.
Photo taken pre-COVID-19.
SHAREHOLDERS ANALYSIS
Company: Shoprite Holdings Limited
Register date: 25 June 2021
Issued share capital: 591 338 502
Number of Number of
Shareholder spread shareholdings % shares %
Number of Number of
Distribution of shareholders shareholdings % shares %
Number of Number of
Public/non-public shareholders shareholdings % shares %
Number of
Beneficial shareholders holding 1% or more shares %
Leadership messages
Foreign fund 3.5% Namibia Sweden, Switzerland, Germany, Denmark,
France, Ireland, Italy, Belgium, Slovenia,
managers 3.1% Netherlands Norway, South Korea, Cayman Islands,
Channel Islands, Austria
2.7% Luxembourg
2.2% China
12.7% Other*
43.5% USA
9.0% Singapore
8.8% UK
6.3% Namibia * Other: Saudi Arabia, Australia, Canada,
Foreign Switzerland, UAE, Norway, Sweden, Denmark,
Shareholder information
Leadership messages
those Shareholders are verified (as required in terms of Shareholder as at the record date and:
section 63(1) of the Companies Act) and are registered at • wish to participate in the AGM, you must obtain the
the commencement of the AGM). necessary letter of representation from your CSDP or
All Shareholders are entitled to attend and participate via the broker to represent the registered Shareholder; or
use of the electronic platform. • do not wish to attend the AGM, but would like your vote to
be recorded at the AGM, you should contact your CSDP
3.3 The cost of electronic participation in the AGM is for the or broker and furnish them with your voting instructions,
expense of the Shareholder so participating and will be billed
and you must not complete the attached form of proxy.
separately by the Shareholder’s own service provider.
4.4 In terms of section 63(1) of the Companies Act, any person
3.4 Each Shareholder by their participation in the AGM
from the use of the electronic services or any defect in it Friday, 8 October 2021. The Notice will be distributed to
or from total or partial failure of the electronic services and Shareholders on Monday, 18 October 2021.
connections linking the Shareholder who participates or
wishes to participate via the electronic services to the AGM. 4.6 The date on which Shareholders must be recorded as such
in the register maintained by the Transfer Secretaries for
The Company does not and cannot guarantee there will not purposes of being entitled to attend and vote at the AGM is
be a break in electronic communication. determined in terms of section 59(1)(b) of the Companies Act
being Friday, 5 November 2021 (Voting Record Date). The last
4. WHO MAY ATTEND AND VOTE? day to trade for purposes of being entitled to attend and vote
4.1 If you hold Dematerialised Shares that are registered in your at this AGM is Tuesday, 2 November 2021.
own name or if you are the registered holder of Certificated
Shareholder information
Shares: 4.7 Votes at the AGM on all resolutions will be conducted by way
of a poll. Every Shareholder present or represented by proxy
• you may participate in and/or vote at the AGM by way
shall have one (1) vote for every Shoprite Holdings Share held
of electronic participation in the manner described in
in the Company.
this Notice;
• alternatively, you may appoint a proxy to represent 4.8 If you are in any doubt as to what action you should take
you and, on your behalf, participate in, speak and arising from the following resolutions, please consult
vote at the AGM by way of electronic participation in your stockbroker, banker, attorney, accountant or other
the manner described in this Notice by completing professional adviser immediately.
5. INTEGRATED REPORT by the Board after the 2020 AGM on the dates set out below
A copy of the Company’s Integrated Report for the year and who are required to retire as Directors of the Company
ended 4 July 2021 and the reports of the Directors and at this AGM and who are eligible and available for re-election,
independent auditors are delivered herewith. are hereby elected with immediate effect:
3.1 Linda de Beer appointed on 11 May 2021
6. PURPOSE OF THE AGM 3.2 Nonkululeko Gobodo appointed on 11 May 2021
The purpose of the AGM is to: 3.3 Eileen Wilton appointed on 11 August 2021
• present the audited financial statements for the year 3.4 Peter Cooper appointed on 11 August 2021.”
ended 4 July 2021, the report of the Directors and the
report of the independent registered auditors thereon; Brief profiles of these Directors standing for election are set
• present the reports of the Audit and Risk as well as the out in Annexure A to this Notice.
Social and Ethics Committees;
For ordinary resolutions number 3.1–3.4 to be approved by
• consider any matters raised by Shareholders; and Shareholders, they must be supported by more than 50% of
• consider and, if deemed fit, to pass, with or without the voting rights exercised on the resolution by Shareholders
modification, the resolutions set out below. present or represented by proxy at this meeting.
to their shareholding, allot, issue and otherwise dispose of maximum discount permitted will be 10% (ten percent) of
such Ordinary Shares or Ordinary Shares having no par value the weighted average traded price on the JSE of those
Leadership messages
present or represented by proxy at this meeting.
requirements of the Companies Act, the MOI of the Company,
the JSE Listing Requirements and any other exchange on ORDINARY RESOLUTION NUMBER 9: APPROVAL
which the Shares of the Company may be quoted from time OF THE RULES OF THE AMENDED SHOPRITE
to time, when applicable, subject to the following limitations, HOLDINGS EXECUTIVE SHARE PLAN
namely that: “Resolved that the amended rules of the Shoprite Holdings
• the equity securities, which are the subject of the issue for Executive Share Plan (the Plan), which rules have been initialled
cash must be of a class already in issue, or where this is by the Company Secretary for identification purposes and the
not the case, must be limited to such securities or rights implementation of the Plan be and are hereby approved.”
that are convertible into a class already in issue; The background and salient features of the Plan, together
• any such issue will only be made to “public Shareholders” with full details of the amendments, are attached to this
given;
of the Non-executive Directors and members of
• an announcement will be published giving full details, at Board committees for their services as Directors) as
the time of any issue representing on a cumulative basis set out in the remuneration report in the Corporate
within one (1) financial year, 5% (five percent) or more of Governance Report from pages 23 to 40 is
the number of Ordinary Shares in issue prior to the issue in approved”; and
terms of this authority; Vote 2 implementation report as set out in the remuneration
• in determining the price at which an issue of Ordinary report in the Corporate Governance Report from
Shares may be made in terms of this authority, the pages 41 to 45 is approved.”
If the remuneration policy or the implementation report of SPECIAL RESOLUTION NUMBER 2:
the Company is voted against by 25% or more of the voting REMUNERATION PAYABLE TO NON-EXECUTIVE
rights exercised on the resolutions by Shareholders present DIRECTORS
or represented by proxy at this meeting, the Company will in “Resolved by separate Special Resolutions in terms of
its voting results announcement pursuant to paragraph 3.91 section 66(9) of the Companies Act, that the annual
of the JSE Listing Requirements extend an invitation to remuneration of the Non-executive Directors for the
dissenting Shareholders to engage with the Company to 12 months from 1 November 2021 to 31 October 2022 be
discuss their reasons for their dissenting votes; and the approved as follows:
manner and timing of such engagement will be specified in
the SENS announcement following the AGM. SHOPRITE HOLDINGS BOARD AND COMMITTEE
FEES
SPECIAL RESOLUTION NUMBER 1:
2021/2022
REMUNERATION PAYABLE TO NON-EXECUTIVE
DIRECTORS BOARD
“Resolved by separate Special Resolutions in terms of Chairman of the Board R3 445 500
section 66(9) of the Companies Act, that the annual
remuneration of the Non-executive Directors for the Lead Independent Director R865 000
12 months from 1 November 2020 – 31 October 2021 be Non-executive Director R501 000
approved as follows: AUDIT AND RISK COMMITTEE
SHOPRITE HOLDINGS BOARD AND COMMITTEE Chairman R416 000
FEES Member R215 000
2020/2021 2019/2020 REMUNERATION COMMITTEE
BOARD Chairman R281 000
Chairman of the Board R3 313 000 R1 535 000 Member R135 000
Lead Independent Director (LID) R832 000 R1 065 000 NOMINATION COMMITTEE
Non-executive Director R482 000 R470 000 Chairman R220 000
AUDIT AND RISK COMMITTEE Member R115 000
Chairman R380 000 R334 000 SOCIAL AND ETHICS COMMITTEE
Member R190 000 R169 000 Chairman R245 000
REMUNERATION COMMITTEE Member R123 000
Chairman R242 000 R203 500 INVESTMENT AND FINANCE COMMITTEE
Member R115 000 R97 000 Chairman R281 000
NOMINATION COMMITTEE Member R135 000
Chairman R210 000 R203 500
NOTE:
Member R108 500 R97 000 1. Investment and Finance Committee fee aligned with
SOCIAL AND ETHICS Remuneration Committee fees.
COMMITTEE
Chairman R220 000 R203 500 For Special Resolution number 2 to be approved by
Shareholders, it must be supported by at least 75% of the
Member R108 500 R97 000 voting rights exercised on the resolution by Shareholders
NOTES: present or represented by proxy at this meeting.
1. Fees stated above are exclusive of VAT as it may be Reason for and effect of Special Resolution number 2
applicable.
The reason for and effect of Special Resolution number 2
2. 2019/20 Chairman fee was not on an all-inclusive basis. is to grant the Company the authority to normalise the
3. 2020/21 Chairman fee is on an all-inclusive basis and is payment period and frequency of the remuneration to its
aligned to the upper quartile. Non-executive Directors for their services as Directors for the
4. LID fee is exclusive of payment for committee chairman period starting on 1 November 2021 to 31 October 2022.
and membership and is aligned to the upper quartile. SPECIAL RESOLUTION NUMBER 3: FINANCIAL
5. Proposed 2020/21 LID fee reduced in line with ASSISTANCE TO SUBSIDIARIES, RELATED AND
realignment of the role. INTER-RELATED ENTITIES
Resolved as a Special Resolution in terms of section 45(3)(a)(ii) of
For Special Resolution number 1 to be approved by
the Companies Act, subject to compliance with the requirements
Shareholders, it must be supported by at least 75% of the
of the Company’s MOI and the JSE Listing Requirements as
voting rights exercised on the resolution by Shareholders
presently constituted and amended from time to time as a
present or represented by proxy at this meeting.
general approval, that the Board be authorised during a period
Reason for and effect of Special Resolution number 1 of two (2) years from the date of this Special Resolution to
The reason for and effect of Special Resolution number 1 is authorise the Company to provide direct or indirect financial
to grant the Company the authority to pay remuneration to its assistance to any related or inter-related company or corporation
Non-executive Directors for their services as Directors for the (“any related or inter-related company or corporation’’ has herein
period 1 November 2020 to 31 October 2021. the same meaning as in section 45 of the Companies Act and
99
which meaning includes all the subsidiaries of the Company) and in such amounts as the Directors of the Company may
to the Company, in any form, including one or more of the from time to time determine, but subject to the MOI of the
Leadership messages
the authority to authorise financial assistance in any form to a Shares by the Company;
related or inter-related company or corporation, (“any related • the number of Ordinary Shares acquired in the
or inter-related company or corporation’’ has herein the aggregate in any one (1) financial year do not exceed 5%
same meaning as in section 45 of the Companies Act and (five percent) of the number of the Company’s issued
which meaning includes all the subsidiaries of the Company) Ordinary Shares on the date that this Special Resolution is
to the Company as contemplated in section 45 of the adopted;
Companies Act.
• prior to entering the market to repurchase the Company’s
otice to the Shareholders of the Company in terms
N securities, a Board resolution to authorise the repurchase will
of section 45(5) of the Companies Act, of a resolution have been passed in accordance with the requirements of
adopted by the Board authorising the Company to section 46 of the Companies Act, and stating that the Board
and only effective to the extent that Special Resolution full details of the programme have been disclosed to the
number 2 is adopted by Shareholders and the provision JSE prior to the commencement of the prohibited period;
of any such direct or indirect financial assistance by the • when the Company has cumulatively repurchased 3%
Company, pursuant to such resolution, will always be (three percent) of the initial number of the relevant class of
subject to the Board being satisfied that immediately securities, and for each 3% (three percent) in aggregate
after providing such financial assistance, the Company of the initial number of that class acquired thereafter, an
will satisfy the solvency and liquidity test as referred to announcement will be published; and
in section 45(3)(b)(i) of the Companies Act and that the
• the Company appoints only one agent to effect any
terms under which the financial assistance will be given
repurchase(s) on its behalf.”
are fair and reasonable to the Company as required in
section 45(3)(b)(ii) of the Companies Act; and For Special Resolution number 4 to be approved by
Shareholder information
• The Company hereby provides notice of the Section 45 Shareholders, it must be supported by at least 75% of the
Board Resolution to Shareholders of the Company. voting rights exercised on the resolution by Shareholders
present or represented by proxy at this meeting.
SPECIAL RESOLUTION NUMBER 4: GENERAL
AUTHORITY TO REPURCHASE SHARES Statement by the Board
“Resolved as a Special Resolution that the Company and/or The Directors have no specific intention to effect the resolution
any subsidiary of the Company be and are hereby authorised but will continually review the Company’s position, having
by way of a general authority to acquire the issued Ordinary regard to prevailing circumstances and market conditions, in
Shares of the Company upon such terms and conditions considering whether to repurchase its own Shares.
After having considered the effect of the repurchase of DISCLOSURES IN TERMS OF PARAGRAPH 11.26
Ordinary Shares pursuant to this general authority, the OF THE JSE LISTING REQUIREMENTS
Directors in terms of the relevant provisions of the Companies The JSE Listing Requirements require the following
Act and the JSE Listing Requirements confirm they will not disclosures in respect of Special Resolution number 4, some
undertake such repurchase unless: of which are disclosed in the Integrated Report of which this
• the Company and the Group are in a position to repay Notice forms part:
their debt in the ordinary course of business for the • Major Shareholders of the Company page 92
12-(twelve) month period after the date of the Notice of • Share capital of Company page 92
the AGM;
• the assets of the Company and the Group, being fairly Material change
valued in accordance with the accounting policies used Other than the facts and developments as referred to on
in the latest annual financial statements are, after the page 3 of the Integrated Report, there have been no material
repurchase, in excess of the liabilities of the Company and changes in the affairs or financial position of the Company
the Group for the 12-(twelve) month period after the date and its subsidiaries since the date of signature of the audit
of the Notice of the AGM; report and the date of this notice.
• the ordinary capital and reserves of the Company and the Directors’ responsibility statement
Group are adequate for the 12-(twelve) month period after The Directors, whose names are given on page 19 of the
the date of the Notice of the AGM; and Integrated Report, collectively and individually accept full
• the available working capital is adequate to continue the responsibility for the accuracy of the information and certify
operations of the Company and the Group for a period that to the best of their knowledge and belief there are no
of 12 (twelve) months after the date of the Notice of facts that have been omitted that would make any statement
the AGM. false or misleading and all reasonable enquiries to ascertain
such facts have been made.
Reason for and effect of Special Resolution number 4
Paragraphs 5.72(c) and 5.76 of the JSE Listing Requirements
8. DOCUMENTS AVAILABLE FOR INSPECTION
require that the Company or any subsidiary of the Company
The rules of the amended Shoprite Holdings Executive
may repurchase or purchase securities issued by the
Share Plan will be available for inspection during normal
Company only if approved by its Shareholders by way of a
business hours at the registered address of Shoprite Holdings
Special Resolution. The existing general authority granted by
from the date of this Notice of AGM up to and including
the Shareholders of the Company at the 2020 AGM, is due to
15 November 2021.
expire, unless renewed.
The Directors are of the opinion that it would be in the best 9. TRANSACTION OF OTHER BUSINESS
interest of the Company to extend such general authority. FOR SHOPRITE HOLDINGS LIMITED
The proposed general authority would enable the Company
or any subsidiary of the Company to repurchase up to a
maximum of 29 566 925 (twenty-nine million, five hundred
and sixty-six thousand nine hundred and twenty-five) Ordinary
Shares of the Company, representing 5% (five percent) of the PG DU PREEZ
issued Ordinary Share capital of Company as at 4 July 2021. Company Secretary
18 October 2021
The reason for the passing of Special Resolution number 4 is
to authorise the Company and/or its subsidiaries by way of a THE COMPANY SECRETARY
general authority from Shareholders to repurchase Ordinary Cnr William Dabbs Street and Old Paarl Road
Shares issued by the Company. PO Box 215, Brackenfell, 7560 South Africa
E-mail address: [email protected]
Once adopted, this Special Resolution will permit the
Company or any of its subsidiaries to repurchase such SOUTH AFRICAN TRANSFER SECRETARIES
Ordinary Shares in terms of the Companies Act, its MOI and Computershare Investor Services (Pty) Ltd
the JSE Listing Requirements. 15 Biermann Avenue, Rosebank, 2196
Private Bag X9000, Saxonwold, 2132, South Africa
Facsimile: +27 (0)11 688 5238
E-mail: [email protected]
101
Leadership messages
Appointed: 11 August 2021 member of the InvestCo on 2 September 2021. He is currently the
Board committees: Remco, InvestCo Chairman of Tradehold Ltd and Invicta Holdings Ltd and serves
Peter joined the Board as an Independent Non-executive Director as a Non-executive Director on the boards of Brait SE Ltd and
and was appointed as a member of the Remco and member of Gemfield Group Ltd.
the InvestCo on 2 September 2021. He is a member of the boards
of RMI Holdings, Momentum Metropolitan Holdings and Imperial Eileen Wilton, Independent Non-executive (61)
Logistics and previously served on the boards of Discovery, Qualifications: BCom, PGDDB, CD(SA)
FirstRand and OUTsurance. He is the past CEO of RMB Holdings Appointed: 11 August 2021
and RMI Holdings. Board committees: ARC, SEC
Eileen joined the Board as an Independent Non-executive Director
Linda de Beer, Independent Non-executive (52) and was appointed as member of the ARC and the SEC on
Qualifications: CA(SA), MCom (Tax), CD(SA)
Total %
NomCo
RemCo
SEC
at the IRBA (Independent Regulatory Board of Auditors) until a Linda de Beer1 2/21 3/31 – – – – 5/5 100%
new board was appointed. She is a pioneer in her field, having Nonkululeko
established her own successful accounting and audit firm that Gobodo1 2/21 3/31 – – – – 5/5 100%
grew to become SizweNtsalubaGobodo (SNG), the largest black Peter Cooper 2
accounting firm in South Africa and fifth-largest overall. In 2018,
SNG acquired the Grant Thornton South Africa licence, testament Eileen Wilton2
to the business’ leading position in the accounting profession
in South Africa. She has also been acknowledged for her role 1 Date of appointment: 11 May 2021.
2 Date of appointment: 11 August 2021.
in accounting and business including the Lifetime Achievement
Leadership messages
the vesting of the unvested awards will be on the date of complete months served since the award date to the date of
termination of employment or on a date as soon as practical termination of employment over the total number of months
after the date of termination of employment. The portion of the in the vesting period and adjusted for the extent to which the
retention shares and co-investment shares which will vest on performance conditions have been met at the immediately
date of termination of employment will be determined based on preceding financial year end.
the number of complete months served since the award date to
the date of termination of employment, over the total number of Performance conditions
months in the vesting period. The vesting of the relevant portion of The vesting of an award of performance shares will in all instances
the co-investment shares will in addition be subject to the fulfilment be subject to the satisfaction of performance conditions over
of the additional vesting condition until the date of termination of the performance period. In the event where the performance
employment. condition has to be reviewed before the end of the performance
If you choose to participate online you will be able to view a live webcast of the meeting, ask the Board questions and submit your votes in
real time. To access the platform, you will need to:
Visit https://web.lumiagm.com
on your smartphone, tablet or computer. You will need the latest versions of Chrome, Safari, Edge or Firefox. Please ensure your browser
is compatible.
Access
Once you have entered
web.lumiagm.com
into your web browser, you’ll be
prompted to enter the Meeting ID
Please note, Guests are not able to ask questions at the meeting, and they will not be able to vote.
105
If you would like to watch the webcast on smaller devices To vote, simply select your voting direction from the options shown
select the broadcast icon at the bottom of the screen in the on screen. A confirmation message will appear to show your vote
broadcast band. has been received.
Leadership messages
If viewing on a computer, the webcast will appear at the side If you wish to change your mind, simply select an alternate choice
automatically once the meeting has started. while the voting is open or select cancel if you wish to cancel
your vote.
You will still be able to send messages and view the webcast
whilst voting is open.
Questions Documents
Shareholder information
Any Shareholder or appointed proxy attending the meeting is Documents will be available for you in the documents vault,
eligible to ask questions. just click on the Documents icon at the top of the screen.
Type your message within the chat box at the bottom of the
messaging screen and then press send.
King IV King IV Code on Corporate Governance 2016, YES Youth Employment Services
published as part of the King IV ReportTM
FORM OF PROXY 107
Shoprite Holdings Ltd
(Incorporated in the Republic of South Africa)
(Registration number 1936/007721/06)
For use only by: JSE share code: SHP NSX share code: SRH
LUSE share code: SHOPRITE ISIN: ZAE000012084
• certificated ordinary Shareholders; and (“Shoprite Holdings” or “the Company”)
at the Annual General Meeting of Shareholders of Shoprite Holdings to be held by way of electronic participation only at 9.15 am
(South African time) on Monday, 15 November 2021 and any adjournment thereof (the AGM).
Dematerialised Shareholders holding shares other than with “own-name” registration, must inform their CSDP or broker of their intention to
participate in the AGM by way of electronic participation in the manner described in the Notice to Shareholders and request their CSDP or
broker to issue them with the necessary letter of representation to participate in the AGM.
If you do not wish to participate in the AGM, provide your CSDP or broker with your voting instruction in terms of your custody agreement.
being a Shareholder/Shareholders of Shoprite Holdings and holding ____________________ ordinary shares in the Company, hereby appoint
3. the Chairman of the Annual General Meeting, as my/our proxy to attend, speak and vote on my/our behalf at the AGM of the
Shareholders of the Company to be held at 9.15 am on Monday, 15 November 2021, and at any adjournment thereof.
Number
of shares*
In favour of
Abstain
Against
Ordinary resolution number 1 – Approval of annual financial statements
Ordinary resolution number 2 – Re-appointment of auditors
Ordinary resolution number 3 – Election of Directors:
3.1 Linda de Beer
3.2 Nonkululeko Gobodo
3.3 Eileen Wilton
3.4 Peter Cooper
Ordinary resolution number 4 – Re-election of Dr CH Wiese
Ordinary resolution number 5 – Appointment of members of the Shoprite Holdings Audit and Risk Committee
5.1 Johan Basson
5.2 Joseph Rock
5.3 Linda de Beer (subject to election as Director)
5.4 Nonkululeko Gobodo (subject to election as Director)
5.5 Eileen Wilton (subject to election as Director)
Ordinary resolution number 6 – General authority over unissued ordinary shares
Ordinary resolution number 7 – General authority to issue ordinary shares for cash
Ordinary resolution number 8 – General authority to Directors and/or Company Secretary
Ordinary resolution number 9 – Approval of the rules of the amended Shoprite Holdings Executive Share Plan
Non-binding advisory votes:
Vote 1 – Remuneration policy of Shoprite Holdings
Vote 2 – Implementation of the remuneration policy
Special resolution number 1 – Remuneration payable to Non-executive Directors for the period 1 November 2020 to 31 October 2021
S1.1 Remuneration payable to Chairman of the Board
S1.2 Remuneration payable to Lead Independent Director
S1.3 Remuneration payable to Non-executive Directors
S1.4 Remuneration payable to Chairman of the Audit and Risk Committee
S1.5 Remuneration payable to members of the Audit and Risk Committee
S1.6 Remuneration Payable to Chairman of the Remuneration Committee
S1.7 Remuneration payable to members of the Remuneration Committee
S1.8 Remuneration payable to Chairman of the Nomination Committee
S1.9 Remuneration payable to members of the Nomination Committee
S1.10 Remuneration payable to Chairman of the Social and Ethics Committee
S1.11 Remuneration payable to members of the Social and Ethics Committee
Special resolution number 2 – Remuneration payable to Non-executive Directors for the period 1 November 2021 to 31 October 2022
S2.1 Remuneration payable to Chairman of the Board
S2.2 Remuneration payable to Lead Independent Director
S2.3 Remuneration payable to Non-executive Directors
S2.4 Remuneration payable to Chairman of the Audit and Risk Committee
S2.5 Remuneration payable to members of the Audit and Risk Committee
S2.6 Remuneration Payable to Chairman of the Remuneration Committee
S2.7 Remuneration payable to members of the Remuneration Committee
S2.8 Remuneration payable to Chairman of the Nomination Committee
S2.9 Remuneration payable to members of the Nomination Committee
S2.10 Remuneration payable to Chairman of the Social and Ethics Committee
S2.11 Remuneration payable to members of the Social and Ethics Committee
S2.12 Remuneration payable to Chairman of the Investment and Finance Committee
S2.13 Remuneration payable to members of the Investment and Finance Committee
Special resolution number 3 – Financial assistance to subsidiaries, related and inter-related entities
Special resolution number 4 – General authority to repurchase shares
* Please indicate with an X in the appropriate spaces above how you wish your votes to be cast
Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.
FORM OF PROXY | continued
Shoprite Holdings Ltd
Leadership messages
Website: www.pangaea.co.zm
Website: www.computershare.com
Auditors
Namibia PricewaterhouseCoopers Incorporated
Transfer Secretaries (Pty) Ltd PO Box 2799, Cape Town, 8000, South Africa
PO Box 2401, Windhoek, Namibia Telephone: +27 (0)21 529 2000
Telephone: +264 (0)61 227 647 Facsimile: +27 (0)21 529 3300
E-mail: [email protected] Website: www.pwc.com/za
Zambia Bankers
ShareTrack Zambia ABSA Bank Ltd
Spectrum House, Stand 10 Jesmondine, Citibank N.A.
SHAREHOLDERS’ DIARY
June August October November December March April
Financial Reviewed Payment of Annual General End of financial Interim results Payment
year-end results final ordinary Meeting half-year of interim
dividend ordinary
dividend
Shareholder information
Publishing
of Integrated
Annual Report
Please consult our website www.shopriteholdings.co.za for the latest published diary dates.
www.shopriteholdings.co.za