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Shoprite establishes a B-BBEE employee trust worth R8.9bn

The group says it will make an initial distribution of R77m to its employees to reward them for the retailer’s interim performance.
Image: Bloomberg

Africa’s largest grocery retailer, JSE-listed Shoprite Holdings will, through its subsidiary Shoprite Checkers Propriety Limited, issue 40 million shares valued at a total of R8.9 billion to its 126 000 South African employees, it announced on Wednesday.

The news of the Shoprite Employee Trust comes a day after one of Shoprite’s biggest competitors Pick n Pay released its full-year results and revealed its strategic plan to re-establish its competitive dominance in the retail market.

This move by Shoprite will see it grow its subsidiary – Shoprite Checkers’s – Black Economic Empowerment Ownership from 13.5% to 19.2%.

“The transaction is in line with the Shoprite Group’s core values of recognising the valued role its employees play in the growth and success of the Shoprite Group,” Shoprite says in a statement.

“Furthermore, the improvement of employees’ lives is an imperative, especially in the economic context of the countries in which the Shoprite Group operates.”

Of the South African employees who will benefit from this employee trust, Shoprite says 97% of them are black and about 66% are female.

Read: PnP: Aggressive Boxer expansion and new store format for ‘inbetweeners’

Non-South African employees

The trust’s 40 million shares will be split into 4 million class A shares and 36 million class B shares. South African employees will benefit directly from the trust while its 16 000 non-South African employees will benefit in the form of a cash bonus payment.

“Shoprite Holdings believes it is imperative to recognise the valued role all employees play in the group’s success.”

“As such, the Group’s non-RSA employees will receive an equivalent payment to that of the RSA employees, which will be paid as a cash bonus payment through payroll, subject to same eligibility criteria and terms as applicable to the Beneficiaries of the Employee Trust,” the group says.

First dividend payout

Subsidiary Shoprite Checkers will make an R888 million contribution towards the subscription of 10% of the shares to be held by the trust and it will fund the balance of the shares on a notional basis.

Further, the group revealed that beneficiaries of the trust will be duly rewarded for the company’s performance for the six months ended January 2, 2022.

“An initial distribution of R77 million for the six-month period to January 2, 2022 will be received by eligible RSA and non-RSA employees.”

This transaction the group says will result in a 2.7% reduction in its headline earnings.

“The transaction is intended to retain, motivate and incentivise the employees of the Shoprite Group to continue to contribute towards its success going forward.”

“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.”

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