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The Spar Group Ltd unaudited interim results for the six months ended 31 March 2013 and cash dividend declaration
The SPAR Group Limited ("SPAR" or "the company" or "the group")
Registration number: 1967/001572/06
ISIN: ZAE 000058517 JSE code: SPP
UNAUDITED INTERIM RESULTS
for the six months ended 31 March 2013 and cash dividend declaration
Turnover UP 9.6%
Headline earnings per share UP 12.0%
Interim dividend of 179 cents per share UP 15.5%
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
% March March September
Rmillion Change 2013 2012 2012
Revenue 23 991.3 21 902.0 43 560.2
Turnover 9.6 23 794.8 21 717.8 43 166.0
Cost of sales (21 904.1) (20 001.3) (39 721.3)
Gross profit 1 890.7 1 716.5 3 444.7
Other income 196.5 184.2 394.2
Operating expenses 13.2 (1 258.3) (1 111.5) (2 315.7)
Trading profit 828.9 789.2 1 523.2
BBBEE transactions (6.7) (6.4) (13.0)
Operating profit 822.2 782.8 1 510.2
Interest received 13.8 11.2 32.8
Interest paid (15.5) (14.1) (27.8)
Share of equity accounted associate 0.8 0.9 3.5
Profit before taxation 5.2 821.3 780.8 1 518.7
Taxation (232.1) (257.0) (459.8)
Profit for the period attributable to
ordinary shareholders 12.5 589.2 523.8 1 058.9
Other comprehensive income
Exchange differences from translation
of foreign operations 0.6 (0.1)
Total comprehensive income 12.6 589.8 523.7 1 058.9
EARNINGS PER SHARE
Earnings per share (cents) 12.2 341.8 304.7 615.7
Diluted earnings per share (cents) 319.2 283.0 570.6
SALIENT STATISTICS
Headline earnings per share (cents) 12.0 342.0 305.4 616.3
Diluted headline earnings per share (cents) 12.6 319.4 283.6 571.2
Dividend per share (cents) 15.5 179.0 155.0 430.0
Net asset value per share (cents) 12.4 1 672.9 1 488.9 1 649.8
Operating profit margin (%) 3.5 3.6 3.5
Return on equity (%) 21.7 20.8 39.8
HEADLINE EARNINGS RECONCILIATION
Profit for the period attributable to
ordinary shareholders 589.2 523.8 1 058.9
Adjusted for:
Loss on disposal of property, plant and equipment 0.3 1.5 1.5
Tax effects of adjustments (0.1) (0.4) (0.4)
Headline earnings 12.3 589.4 524.9 1 060.0
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
March March September
Rmillion 2013 2012 2012
CASH FLOWS FROM OPERATING ACTIVITIES (337.0) (365.7) 1 153.5
Operating profit before: 822.2 782.8 1 510.2
Non cash items 104.8 92.3 173.0
Loss on disposal of property, plant and equipment 0.3 1.5 1.5
Net working capital changes (545.2) (544.7) 622.4
Increase in inventories (34.7) (253.6) (280.6)
Increase in trade and other receivables (227.2) (168.2) (473.2)
(Decrease)/increase in trade payables and provisions (283.3) (122.9) 1 376.2
Cash generated from operations 382.1 331.9 2 307.1
Interest received 14.3 12.0 32.8
Interest paid (15.5) (14.1) (27.8)
Taxation paid (244.6) (291.6) (488.1)
Dividends paid (473.3) (403.9) (670.5)
CASH FLOWS FROM INVESTING ACTIVITIES (165.5) (104.0) (222.0)
Investment to expand operations (97.2) (51.3) (92.7)
Investment to maintain operations (48.8) (25.6) (71.8)
Replacement of property, plant and equipment (49.6) (26.2) (74.1)
Proceeds on disposal of property, plant and equipment 0.8 0.6 2.3
Acquisition of business (9.1)
Net movement on loans and investments (19.5) (27.1) (48.4)
CASH FLOWS FROM FINANCING ACTIVITIES (86.0) (66.0) (71.4)
Proceeds from issue of shares 7.1 4.9 4.9
Proceeds from exercise of share options 24.2 25.9 47.3
Share repurchases (117.3) (96.8) (123.6)
Net (decrease)/increase in cash and cash equivalents (588.5) (535.7) 860.1
Net balances/(overdrafts) at beginning of period 841.6 (18.5) (18.5)
Net balances/(overdrafts) at end of period 253.1 (554.2) 841.6
Condensed consolidated statement of changes in equity
Currency Share
trans- based Attributable
Stated Treasury lation payment Retained to ordinary
Rmillion capital shares reserve reserve earnings shareholders
Capital and reserves at 30 September 2011 49.6 (27.8) (0.1) 292.0 2 175.8 2 489.5
Total comprehensive income (0.1) 523.8 523.7
Share capital issued 4.9 (4.9)
Recognition of share based payments 9.3 9.3
Take-up of share options 70.7 (40.0) 30.7
Transfer arising from take-up of share options 40.0 (40.0)
Share repurchases (96.8) (96.8)
Dividends declared (403.9) (403.9)
Recognition of BBBEE transaction 6.2 6.2
Capital and reserves at 31 March 2012 54.5 (58.8) (0.2) 307.5 2 255.7 2 558.7
Total comprehensive income 0.1 535.1 535.2
Share capital issued
Recognition of share based payments 9.4 9.4
Take-up of share options 78.7 (57.2) 21.5
Transfer arising from take-up of share options 57.2 (57.2)
Share repurchases (26.8) (26.8)
Dividends declared (266.6) (266.6)
Recognition of BBBEE transaction 6.2 6.2
Capital and reserves at 30 September 2012 54.5 (6.9) (0.1) 323.1 2 467.0 2 837.6
Total comprehensive income 0.6 589.2 589.8
Share capital issued 7.1 (7.1)
Recognition of share based payments 9.1 9.1
Take-up of share options 74.6 (43.3) 31.3
Transfer arising from take-up of share options 43.3 (43.3)
Share repurchases (117.3) (117.3)
Dividends declared (473.3) (473.3)
Recognition of BBBEE transaction 6.2 6.2
Capital and reserves at 31 March 2013 61.6 (56.7) 0.5 338.4 2 539.6 2 883.4
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
March March September
Rmillion 2013 2012 2012
ASSETS
Non-current assets 2 309.5 2 149.6 2 222.5
Property, plant and equipment 1 665.2 1 565.3 1 588.0
Goodwill 391.0 381.9 391.0
Operating lease receivables 103.8 117.8 112.7
Investment in associates 40.8 22.9 40.0
Other investments 20.9 20.5 20.9
Loans 76.2 25.5 59.0
Deferred taxation asset 11.6 15.5 10.9
Other non-current assets 0.2
Current assets 7 350.0 6 611.2 7 672.8
Inventories 1 450.3 1 388.6 1 415.6
Trade and other receivables 5 576.3 5 044.9 5 341.1
Prepayments 19.1 15.1 35.8
Operating lease receivables 38.3 30.5 34.3
Loans 6.8 28.9 4.4
Taxation receivable 6.1
Bank balances SPAR 125.2 752.4
Bank balances Guilds 127.9 103.2 89.2
Total assets 9 659.5 8 760.8 9 895.3
EQUITY AND LIABILITIES
Capital and reserves 2 883.4 2 558.7 2 837.6
Stated capital 61.6 54.5 54.5
Treasury shares (56.7) (58.8) (6.9)
Currency translation reserve 0.5 (0.2) (0.1)
Share based payment reserve 338.4 307.5 323.1
Retained earnings 2 539.6 2 255.7 2 467.0
Non-current liabilities 239.7 223.3 236.3
Deferred taxation liability 4.9 0.6 3.9
Post retirement medical aid provision 112.7 94.4 103.4
Operating lease payables 122.1 128.3 129.0
Current liabilities 6 536.4 5 978.8 6 821.4
Trade and other payables 6 484.6 5 267.3 6 772.6
Operating lease payables 39.3 32.8 35.4
Provisions 12.5 12.9 6.7
Taxation payable 8.4 6.7
Bank overdrafts 657.4
Total equity and liabilities 9 659.5 8 760.8 9 895.3
Notes to the condensed consolidated interim results
1 BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
The condensed financial information has been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS), the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council and the information as required by the IAS
34: Interim Financial Reporting, the JSE requirements and the requirements of the Companies Act of South Africa.
The report has been prepared using accounting policies that comply with IFRS which are consistent with those
applied in the financial statements for the year ended 30 September 2012.
The information contained in the interim report has neither been audited nor reviewed by the group's external
auditors. These condensed consolidated financial statements have been prepared under the supervision of
Mr MW Godfrey CA(SA), on behalf of The SPAR Group Limited.
Unaudited Unaudited Restated*
Six months Six months Year
ended ended ended
March March September
Rmillion 2013 2012 2012
2 STATED CAPITAL
Authorised
250 000 000 (March 2012: 250 000 000) ordinary shares 0.2 0.2 0.2
30 000 000 (March 2012: 30 000 000) redeemable convertible
preference shares
Issued
172 782 188 (March 2012: 172 372 704) ordinary shares 61.6 54.5 54.5
18 911 349 (March 2012: 18 911 349) redeemable convertible
preference shares
Total stated capital 61.6 54.5 54.5
Issued share capital amounts to R61 645 597 consisting of 172 782 188
ordinary shares. 404 484 ordinary shares were issued during the six
months ended 31 March 2013.
Issued redeemable convertible preference share capital amounts to
R11 347, consisting of 18 911 349 (March 2012: 18 911 349) shares
issued during the financial year ended 30 September 2009.
The weighted average number of ordinary shares (net of treasury shares)
used in the calculation of earnings per share and headline earnings per
share was 172 363 059 (March 2012: 171 899 983).
Diluted earnings and headline earnings per share were based on a
weighted average number of ordinary shares (net of treasury shares) of
184 558 192 (March 2012: 185 103 869).
3 CONTINGENT LIABILITIES
The company has guaranteed the finance obligations of certain
SPAR retailer members to the amount of: 404.8 386.9 386.8
4 OPERATING LEASES
Operating lease costs charged against operating profit
Immovable property 29.3 21.7 52.0
Lease rentals 204.5 181.2 410.7
Sub-lease recoveries (175.2) (159.5) (358.7)
Plant, equipment and vehicles 6.4 10.7 15.7
Operating lease commitments
Future minimum lease payments under non-cancellable operating leases 3 609.2 3 093.9 3 337.6
Land and buildings 3 602.2 3 087.2 3 335.0
Other 7.0 6.7 2.6
Future minimum sub-lease receivables under non-cancellable property leases (3 219.0) (2 733.5) (2 976.3)*
* The September 2012 sub-lease receivables have been restated due to
a disclosure error.
5 CAPITAL COMMITMENTS
Contracted 52.9 34.2 161.4
Approved but not contracted 76.6 25.7 56.5
Total capital commitments 129.5 59.9 217.9
6 SEGMENTAL REPORTING
The group operates its business from distribution centres situated throughout South Africa. The distribution
centres individually supply goods and services of a similar nature to the group's voluntary trading members. The
directors are of the opinion that the operations of the individual distribution centres are substantially similar to
one another and that the risks and returns of these distribution centres are likewise similar. As a consequence
thereof, the business of the group is considered to be a single segment.
7 EVENTS AFTER THE REPORTING DATE
No material events have occurred subsequent to 31 March 2013 which may have an impact on the group's
reported financial position at this date.
Review of trading results
TRADING OVERVIEW
During a period in which SPAR celebrated a special milestone of 50 years of trading in South Africa, consumer spending
continued to be pressured by high levels of unemployment, increasing energy and transport costs and reduced access to credit.
Labour unrest in key sectors of our economy added to the challenge for retailers who operate in an increasingly competitive
environment.
Against this economic backdrop, group turnover increased by 9.6% to R23.8 billion, which included another strong performance
from liquor while building materials' growth slowed. Profit before taxation increased 5.2% to R821.3 million. Gross margins
remained in line with those of the prior year, however, total distribution centre expenses increased by 10.7%, and were adversely
impacted by a 19.2% increase in delivery costs. These were the result of significant fuel price increases, case volume growth of 4.8%,
and increased costs of distribution into neighbouring countries. The total group operating expense increase of 13.2% was further
influenced by the costs of effectively 2 additional retail division stores, a new (strong) Build It marketing campaign, increased
communication costs due to the centralisation of our system infrastructure, and the timing of guild marketing expenditure between the
two periods. Profit after taxation increased by 12.5% and was favourably impacted by the removal of the STC tax charge in the current year.
Headline earnings rose 12.3% to R589.4 million (March 2012: 524.9 million) and headline earnings per share increased by 12.0% to
342 cents (March 2012: 305.4 cents). An interim dividend of 179 cents (March 2012: 155 cents) per share was declared, representing
an increase of 15.5%, and was adjusted to recognise the effect of the STC change.
SPAR wholesale turnover of R19.5 billion increased by 9.2% and was supported by a net growth in retail trading space of 1.32%.
Total retail turnover increased by 9.5%, and 7.6% on a comparable store basis. During the review period 9 new stores were opened
and at the end of March the group serviced 869 SPAR stores.
TOPS continued to be the stand out performer with wholesale turnover increasing by an impressive 18.2% to R1.9 billion. Store numbers
were boosted to 561 with 25 new stores opening during the first half of the financial year. The liquor performance was supported by
product inflation of 7.9%.
Combined food and liquor retail sales, which allows for a better industry comparative, increased in total by 10.2% and 7.8% on a
like-for-like store basis.
Build it wholesale turnover growth at 6.7% slowed during the period to R2.4 billion. Turnover was impacted by the macro-economic
factors covered above, adverse weather conditions over large parts of the country during the latter part of 2012 and imported cement
being purchased outside of our system. Another 8 new stores were added during the period taking store numbers to 289. The Build it
imports warehouse continued to show improvement with sales growing by 32%, although a weakening rand has had some impact on this
initiative.
We have continued the growth of our other retail formats and have opened 10 new Pharmacy at SPAR stores and 11 Savemor stores.
The group's retail division opened a new store during the period taking the number of corporate stores to 11. This division reported
retail sales of R451 Million and despite posting a trading loss, the overall group position remains positive when combined with the
wholesale profit made on sales to these stores. Subsequent to the reporting period, the group finalised the sale of one of these
stores to an independent SPAR retailer.
The group continued to invest in appropriate assets and capital expenditure remained in line with projections. Expenditure for the
full year is expected to be within the R290 million budget. The KwaZulu-Natal dry facility extension is progressing on schedule and
will be completed this year within the R65 million budget.
PROSPECTS
The group does not expect market conditions to change significantly over the remainder of the financial year. We anticipate that further
new store openings, strong marketing supporting our 50th anniversary and a continued focus on costs will allow us to deliver a satisfactory
performance for the second half of the year.
Mike Hankinson Wayne Hook
Chairman Chief Executive
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim cash dividend of 179 cents per share (gross) has
been declared by the board in respect of the six months ended 31 March 2013.
The dividend has been declared out of income reserves.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum-dividend Friday, 31 May 2013
Shares to commence trading ex-dividend Monday, 3 June 2013
Record date Friday, 7 June 2013
Payment of dividend Monday, 10 June 2013
Shareholders will not be permitted to dematerialise or rematerialise their share
certificates between Monday, 3 June 2013 and Friday, 7 June 2013, both days inclusive.
In terms of the Dividends Tax effective 1 April 2012, the following additional information
is disclosed:
- The local dividends tax rate is 15%;
- There are no STC credits utilised;
- The net local dividend amount is 152.15 cents per share for shareholders liable to
pay the Dividends Tax, and 179 cents per share for shareholder exempt from the
Dividends Tax;
- The issued share capital of the SPAR Group Limited as at the date of declaration is
172 312 120 ordinary shares; and
- The SPAR Group Limited's tax reference number is 9285/168/20/0.
By order of the board
KJ O'Brien Pinetown
Company Secretary 14 May 2013
DIRECTORATE and administration
Directors: MJ Hankinson* (Chairman), WA Hook (Chief Executive), MW Godfrey,
PK Hughes*, RJ Hutchison*, MP Madi*, HK Mehta*, P Mnganga*, R Venter, CF Wells*
*Non-executive
Company Secretary: KJ O'Brien
The SPAR Group Limited ("SPAR" or "the company" or "the group")
Registration number: 1967/001572/06
ISIN: ZAE 000058517 JSE code: SPP
Registered office: 22 Chancery Lane, PO Box 1589, Pinetown, 3600
Transfer secretaries: Link Market Services South Africa (Pty) Limited
PO Box 4844, Johannesburg, 2000
Auditors: Deloitte & Touche, PO Box 243, Durban, 4000
Sponsor: One Capital, PO Box 784573, Sandton, 2146
Bankers: First National Bank, PO Box 4130, Umhlanga Rocks, 4320
Attorneys: Garlicke & Bousfield, PO Box 1219, Umhlanga Rocks, 4320
Website: www.spar.co.za
15 May 2013
Date: 15/05/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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