Shoprite : 2021 Integrated Annual Report

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Retail environment

Emerging technologies and shifts in consumer expectations are dramatically changing the retail landscape,

with systems applied to all parts of the value chain driving efficiencies and precision retailing. Economic, social and environmental aspects are also challenging continuity of supply chains. Communication is more direct and immediate, with customers wanting more convenience across a spectrum of products and services. Retailers must, therefore, innovate to enhance the customer experience across both physical and digital interactions.

Strategy and investment case, page 40

Performance and outlook, pages 60-89

Digitisation

Technology is changing retail, with integrated enterprise resource planning (ERP) systems applied through the value chain to improve efficiencies and digital platforms facilitating omni-channel shopping. More retailers are using technology to seamlessly engage with customers across channels in an attempt to improve their retail experience.

Indicators

• The COVID-19 pandemic has changed online shopping

behaviour, according to a UNCTAD survey of about

3 700 consumers in nine emerging and developed economies.

Following the pandemic, more than half of the survey's

respondents now shop online more frequently and rely on the

internet more for news, health-related information and digital

entertainment. Consumers in emerging economies have made

the greatest shift to online shopping.6

• 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

Innovation

Increased competition between retailers provides more product and shopping options to customers. This drives innovation in systems and support functions to deliver on high customer expectations. In a dynamic retail environment, innovation is critical to maintaining a competitive advantage both in physical stores and digital platforms.

Indicators7

150%, to R225 billion, within the next five years. The market's growth in 2020 has been spurred by consequences of the COVID-19 pandemic.

• South Africa's online spend accounts for only 2% of all

retail transactions, compared to the global average of 16%,

according to Euromonitor. The South African online market

therefore remains largely untapped. Statista market and

consumer data projects that 31.6 million South Africans could

Diversifying revenue streams

A data-driven retail environment enables a deeper understanding of our customers and the ability to tailor services to meet customer needs. This customer-centric model uncovers opportunities

to optimise decision-making, offer add-on services and adapt channels to market. New entrants are bypassing traditional channels, while those with established retail footprints are testing new channels and product offerings. Diversifying revenue streams enhances competitiveness within what remains a low-margin environment and provides added value services that support customer growth and long-term retention.

Indicators

• The mobile payments market was valued at USD 1 449.6 billion

in 2020 and expected to reach USD 5 399.6 billion by 2026

and grow at a CAGR of 24.5% over the forecast period

(2021 - 2026). Owing to changing lifestyle, daily commerce

and rapid growth in online retailing, this trend is expected to

continue for many years.8

• As of January 2021 there were 38.1 million active internet

users in South Africa. Among them, an overwhelming majority

messagesAbout Shoprite HoldingsAbout this report

Home/contents page

Addressing material matters:

Strategy, trade environment

#6

MATERIAL MATTER

and growth

CROSS REFERENCE

#1

MATERIAL MATTER

management

Click to read more about related content

Information and technology

#7

MATERIAL MATTER

Customer centricity

within the Integrated Annual Report

Case studies:

Page

Checkers Sixty60, page 67

Xtra Savings, page 71

WEB REFERENCE

Click to link to external information on the

Shoprite Holdings website

Website

and in-store.

Response

be converted to online shopping by 2024.

Response

(over 36 million) also used mobile internet. During the same

period it was found that nearly 99% of those using social media

accessed their accounts through mobile phones.9

Response

Performance and outlookApproach to value creationLeadership

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OTHER REFERENCES

GRI

King IV

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.

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K'nect launched with flat call and data rates while Shoprite, Checkers and Usave customers are rewarded with free data and airtime.

SHOPRITE HOLDINGS LTD Integrated Annual Report 2021

Shareholder information

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2021

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NAB LIITYR

2021

2021

Integrated Annual Report

Annual Financial Statements

Corporate Governance Report

Sustainability Report

Form of proxy

Index to navigational icons

STAKEHOLDERS

Customers

Shareholders and financiers

Communities

Trade unions

Employees

Suppliers

Regulators

CAPITALS

MATERIAL

MATTERS

STRATEGY

REFERENCE

Page

Website: www.shopriteholdings.co.za

GRI

King IV

For further information on this Integrated Annual Report, please contact Sarita van Wyk on [email protected].

CONTENTS

About this

02 About this report

report

About Shoprite

06

Purpose and values

Holdings

08

Performance highlights

10

Our business

12

Brand overview

14

Operating environment

18

Governance in action

Leadership

22

Chairman's message

messages

24

Chief Executive Officer's message

30

Chief Financial Officer's message

Approach to

40

Strategy and investment case

value creation

44

Integrated business model

46

Risks and opportunities

52

Our stakeholders

56

Our material matters

Performance

62

COVID-19 overview

and outlook

64

Financial Capital

68

Intellectual Capital

72

Manufactured Capital

75

Human Capital

80

Social and Relationship Capital

87

Natural Capital

Shareholder

92

Shareholders analysis

information

93

Shareholders' country classification

94

Notice to Shoprite Holdings shareholders: AGM

104

Online Annual General Meeting guide

106

Abbreviations and acronyms

107

Form of proxy

IBC

Administration

1

About this report

About Shoprite Holdings

Leadership messages

Performance and outlookApproach to value creation

Shareholder information

SHOPRITE HOLDINGS LTD Integrated Annual Report 2021

2

ABOUT THIS REPORT

Welcome to our Integrated Annual Report (IAR) for the year ended 4 July 2021. This IAR forms part of our Integrated Reporting suite, which includes our annual financial statements, Sustainability Report and Corporate Governance Report where we provide information required by our stakeholders.

3

Our theme for this year's report is Affordability, which is our golden thread throughout. We explain this theme as follows:

AFFORDABILITY

report

this

EFFICIENCY

REWARDS

VARIETY

About

Operational efficiency

Our Xtra Savings rewards

Our wide range of

is critical for us to

programme across our

products, services and

stay competitive on

Checkers and Shoprite

private labels provide

The Group is committed to creating long-term, ethical and collaborative relationships and we aim to provide a balanced view of how the Group creates, preserves and erodes value. This includes disclosures related to performance in the year under review as well as areas of future focus.

Annual Financial Statements

Our stakeholders, page 52

Integrated business model, page 44

Frameworks and guidelines

Shoprite Holdings Limited1 (Shoprite or the Group or the Company) is an investment holding company, with its Home Office in South Africa. It is 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

Shoprite enhances its communications on economic, social and environmental performance, by reporting against the Global Reporting Initiative (GRI) Standards: Core option, the UN Sustainable Development 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.

Corporate Governance Report

Sustainability Report

TCFD Index, page 81

Financial disclosures contained in this report are aligned to the Group's annual financial statements. These statements comply with the following reporting guidelines and standards:

Materiality determination

We have applied the principle of materiality in developing our report and determining what information is to be included. Our overarching objective with this report is to provide our stakeholders with a transparent and balanced view of the Group in respect of our strategy and business model, and the inputs thereto. This includes the capitals, and how they result in the outputs and ultimately the outcome for our Group. In our view, information is material both from a quantitative and qualitative perspective, and is, in our estimation, decision-useful to the readers of

our integrated report.

GRI 102-46

Our material matters, page 56

Performance and outlook, pages 60-89

Stakeholder relationships

The Group is committed to creating long-term, ethical and collaborative relationships, which is essential

for the business' growth and continued success.

We continually seek to improve channels for engaging stakeholders and integrating their feedback into how we identify material matters, risks and opportunities, and implement our strategy.

Our stakeholders, page 52

Value creation

The section on the Group's approach to value creation provides an overview of our operating environment, our strategy and investment case, stakeholders and material matters. The section details how value

Approach to value creation, pages 38-59

Performance and outlook, pages 60-89

1The Group's subsidiary structure is explained in detail in the Directors' report in the annual financial statements available on www.shopriteholdings.co.za.

affordability. If we can cut

brands has the largest

customers with variety,

costs out of our supply

membership base in

alternative solutions and

chain through being

South Africa, giving

affordability, that caters

efficient and mindful of

customers instant

to their personalised and

waste, it means we can

cash-back rewards on

relevant needs.

extend the consumer's

their purchases, making

Shoprite Holdings

spending ability.

shopping more affordable.

Assurance of the Group's external

Forward-looking information

reporting suite

About

The Board takes primary responsibility for the overall consistency,

This report contains forward-looking statements regarding

relevance and reasonableness of the information throughout the report.

the Group's operations and its performance prospects.

Furthermore, the Board reviews and approves this integrated report

These statements involve an inherent level of uncertainty. They do,

for issue.

however, reflect our best judgement and estimates informed by

Internal and external assurance across our reporting suite include:

the Group's Board-approved business plans as at the time of

publication of this report. The COVID-19 pandemic continues to

messages

1 2021 Integrated Annual Report: internally approved

contribute to uncertainty in the short to medium term. Within this

context, the Group cannot take responsibility for updating or

by the Board

revising any forward-looking statements except as required by

Leadership

2 2021 Annual financial statements: externally audited

applicable legislation or regulation.

by PricewaterhouseCoopers (PwC)

3 2021 Sustainability Report: internally approved by the Board on

Report approval

the basis of the recommendation of Shoprite's Social and Ethics

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.

creation

5 2021 Climate Change CDP Report: externally verified

The Board has reviewed the preparation and presentation of the report

6 The Group's B-BBEErating and that of all its subsidiaries:

externally verified by AQRate

and is of the opinion the report addresses all the issues that are material

value

to - or could materially affect - the Group's ability to create, preserve

to

GRI 102-56

or erode value on a sustainable basis over the short, medium and

Approach

The Audit and Risk Committee evaluates the performance of the external

long term, in a transparent and balanced manner. It has assessed the

assurance obtained from the Group's combined assurance process and

auditor, PwC, against specified criteria and

assesses the effectiveness

is satisfied the model enables an

effective internal control environment

of the external audit process. It is satisfied

with the effectiveness of the

for internal decision-making by management. The Board believes

external audit and the quality of the external auditor. A formal framework

the report complies with the recommendations of the International

governs the process through which PwC renders non-assurance

services to make sure audit independence is not compromised.

outlook

performance of the Group for the reporting period ended 4 July 2021.

The Audit and Risk Committee approved the terms of a master service

The Board has approved the report on 30 September 2021.

agreement for the provision of such services by PwC as well as a pre-

and

approval policy stating the nature and extent of non-assurance services

Signed on behalf of the Board

that may be provided.

Performance

The Board is comfortable that the information in this report is transparent

and reliable.

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.

information

Scope and boundary

The report covers the integrated performance of the Group's operations for the reporting period 29 June 2020 to 4 July 2021 (FY 2021). Information on the subsidiaries, operating segments and countries of operation included as part of the Group are reported on from pages 10 to 13.

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

Other

It was a significant year given that we sold our Nigeria business, closed our operations in Kenya, and classified our operations in Madagascar

Shareholder

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 LTD Integrated Annual Report 2021

4

2

ABOUT

SHOPRITE HOLDINGS

Who we are and what we do

"Shoprite is Africa's largest fast-moving consumer goods retailer."

5

About this report

About Shoprite Holdings

Leadership messages

Performance and outlookApproach to value creation

Shareholder information

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.

SHOPRITE HOLDINGS LTD Integrated Annual Report 2021

Disclaimer

Shoprite Holdings Ltd. published this content on 18 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 October 2021 12:21:03 UTC.