Shoprite Group (JSE:SHP) treasury shares in Zambia have disappeared at a cost to the SA company of R70m.
Chief executive Whitey Basson told analysts in Sandton on Tuesday that it was uncertain that the shares would be recovered, so a provision was made. If they are rediscovered, the provision will be written back in the current year.
“They are shares in Shoprite Group in SA but they are blocked in Zambia. They were issued at the time we listed in Zambia with a view to gradual release over time. We thought they were with the transfer secretaries but they weren’t. We might well find them. If there were foul play, we would hope to get them back but in the meantime we decided to provide for the loss in full.”
Because the shares are blocked, Shoprite shares in Zambia trade at half their value in SA, so there is a very large arbitrage opportunity for anyone who can sell Zambian registered shares into the SA market.
The R70m was only 2.8% of Shoprite Group’s R2.52bn taxed profit for the year. If the shares are recovered, the write-back of R70m could give a handy effective R140m start to the in the current year.
The Zambian setback was a rare blaps in Africa’s biggest retail group. Diluted headline earnings growth of 12% was a bit short of market expectations but it shaded most Shoprite’s rivals and was achieved in spite of numerous difficulties.
First, this year was 52 weeks, not 53 as in 2010. Second, because of higher profits at higher tax rates in certain African countries, the tax rate rose to 34.7% (32.7%). Third in the current year 14.6m workdays were lost to strike action. Fourth, a million jobs have been lost in SA in the past two years and the unemployment rate rose to 25%.
Electricity and water costs rose R266m to more than R1bn. That was serious for a company with a pre-tax profit margin of only 5.4%. Electricity tariffs also reduced disposable incomes across the economy. Municipal rates rose 45%.
Inflation, normally a retailer’s best friend, was hardly measurable. The strong rand made imports cheaper but reduced the translation of non-SA earnings. There were 78 new stores and more than 7 000 new jobs were generated in the group.
CEO Whitey Basson was satisfied that some 64% of SA shoppers buy at his stores – up from 47% in 2005. He was happy that Shoprite won many awards including No 1 supermarket in the Sunday Times Top brands survey.
Basson is happy with African expansion. It is in six of the fastest growing economies in the world. The population of SA’s largest cities was 15.2m, while those in Nigeria house 25.9m. SA GDP per capita is higher at $10 700, compared to Nigeria’s $25 00 and Angola’s $8 200.
The group was successful at home as well. Shoprite sold 900m eggs and 9 352km of boerewors, enough to reach from Cape Town to Delhi.
While the supermarkets and furniture showed growth around about inflation, the smaller businesses, such as liquor, Hungry Lion and Computicket outperformed. The distribution centres and the IT systems improved efficiency.
Shoprite is number 135 retailer in the world and has set its sights on being in the top 100. It would love to get back into India and has heard encouraging sounds from the Indian government.
[moneyweb.co.za]
How can shares disappear? This is a sign of crony capitalism and shoddy oversight by the market regulators of zambia.
..write back…arbitrage…gradual release over time…diluted headline earnings growth of 12% …English please!!!, this is not a post colonial Portuguese country.
Even a chartered certified accountant can’t understand this article
Please simplify this news for us! Shares disappearing!!! Donchi Kubeba at play. 9352 Km of boerewors, am sure RB and Sons can account for more than half!
Obviously its William Banda and his croonies at play. Iyi ni zii !
your ariticle is full of either technical terms or it’s the so called english at LT. make it simple please!!! for a layman like me.
I’ve heard of cooking the books but that is the most ridiculous thing I’ve every heard of hahahahaha
Check with RB and sons they may have them
Malabishi……………………..:((
Just a crooked Boer
They are just manufacturing a “loss” to avoid paying tax
Ask President Sata to explain what happened. HAhaha! Sorry, this is too modern for your old men who don’t even understand how our copper is being sold. This is more like HH’s turf. When will our people ever learn & know the right thing to do?
henry and adrew banda have something to do with this
I am a chartered accountant and i can tell all that there is no way shares can disappear. If what is reported is what basson actually said, then the chap shoudl be fired immediately. More likely though is the fact tha LT is confusing itself with this story.
damn if i don’t understand can an account please explain to me how one losses shares ?
Company Shares are represented by a share certificate. So if the share cetificate for Shoprite shares held in Zambia has disappeared then, the only option for Shoprite is to issue another certificate as replacement! As simple as that!
its only in Zambia where such things can happen. Ask RB
Maybe UPG printed the share certificate and it became blank or multiplied itself
Pa Zed
i cant understand any of this crap
#20 I thought i was the one iyeeee chizungu chanipita weee i didnt get it at all.
Shares disappearing!? Surely somebody ought to explain how this can happen – Mr. Basson please speak English when explaining some of these issues.
they jst dnt want to pay tax how do shares go missin shoprite makes money every second!its a pity zambia is givin away money the windfall tax nw its shoprite makin more n payin less amgin kantemba payin 3% n shoprite payin da same![-(
How can issued shares disappear!!! am so confused :-(
mmmmm! shares disappear? The president can explain what this means. Should we withdraw our shares in these other companies for fear of losing our shares? Some explanation is needed here before we go to the polls.
Either the CEO or Journalist is confusing themselves. If it is coming out as reported, then Mr. CEO must go back and do interpretation of financial ratios here. The article is meanigless period!
I think all this is not making sense coz R70m is a lot of money. Even though it is only 2.8% of shoprite shares.Pliz give as a proper explanation. Another tax evasion scador like mopani scandal.
I personally think what he means by sharing disappearing is that they are of less value in Zambia than in SA. That is why he talked about arbitrage opportunity. That is to say if the shares in Zambia are trading at less value than in SA, there is an opportunity to sell the Zambian shares to SA investors until the market stabilizes, i.e the shares in Zambia have the same value as the shares in SA.
Such things also happen in the currency market.
at first I thought the story was written by times of zambia, daily mail or znbc.
I know the three public media institutions are incapable of articulating business issues well.
the article is all over the place
Can someone explain this nonsense???????????????????
ha ha sounds like tax evasion to me !!!
How can shares disappear just 3 weeks before the elections? That’s unrealistic. I am an accountant myself but i do not get this at all. There is foul play here and i can bet that those shares will reappear after the elections. Some bullshit!!!
Can Lewis Mosho, Mr. Dick explain where the shares worth USD 1,000,000 have dissapeared to
Shopr?te Zamb?a w?ll ga?n back ?ts shares!!!!!!
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