SOPRITE Holdings is issuing R8.9 billion worth of shares, or 40 million shares, in its subsidiary, Shoprite Checkers, to its staff through a new black economic empowerment (BEE) trust as it seeks to “retain, motivate and incentivise the employees” to its success going forward.
This will increase the retailer’s black ownership by 19.2 percent.
In a statement yesterday, the retailer said the shares were for recognising its employees’ valued contribution and ensuring their ongoing participation in the Shoprite Group’s continued growth and success.
Shoprite is currently valued at R129bn. In its 2021 annual report said it gained R4.5bn in market share across all its brands in South Africa, which include Shoprite, Checkers, Usave, Checkers Hyper and LiquorShop, among others.
The Shoprite Employee Trust was established on a non-vesting, evergreen basis, which would be primarily facilitated by Shoprite Checkers on a notional basis.
With this move, Shoprite joins banking group Capitec, which announced in January that it planned to issue shares worth R1bn to 10 000 of its employees to improve its broad-based black economic empowerment ownership status.
"Employees in South Africa, currently 126 000, will benefit directly through the Shoprite Employee Trust as unit holders in the trust, while non-RSA employees, currently 16 000, will receive equivalent benefits through their respective payroll,“ the group said.
Shoprite said the Shoprite Checkers dividend entitlements would be linked to a Shoprite Holdings dividend per share.
Shoprite Checkers would provide a R888 million contribution that would allow for the subscription of 10 percent of the shares to be held by the Shoprite Employee Trust, with the balance of shares funded on a notional basis by Shoprite Checkers.
“Furthermore, an initial distribution of R77m for the six months to 2 January, 2022, will be received by eligible RSA and non-RSA employees,” the group said.
The Shoprite group anticipates the impact of the transaction on the Shoprite group’s headline earnings to be a reduction in the region of 2.7 percent.
“This is based on the initial distribution to be paid relative to the Shoprite group’s headline earnings from continuing operations for the six months to January 2, 2022. This transaction will not have an impact on the shares in issue in Shoprite Holdings,” it said.
“This is to ensure that the benefits, which flow to employees are transparent and that employees recognise the tangible benefits of the Shoprite Group continuing to achieve strong operational and financial results,” the company said.
In March, Shoprite delivered strong growth in profit and sales in its half-year despite the impact of the July 2021 unrest on its bottom line as its “relentless” focus on affordability won over customers.
The supermarket giant released its results for the six months to January 2, 2022, reporting that it grew its headline earnings per share by 25 percent to 519.3 cents.
“The transaction represents a material step that has been taken in strengthening the relationship between the Shoprite Group and its employees for the benefit of the Shoprite Group,” it said.
By 4.45pm the share price was 2.93 percent lower at R211.37.
BUSINESS REPORT ONLINE