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Audited Results For The Year Ended 30 September 2013 And Cash Dividend Declaration
The SPAR Group Limited
RegistRation number: 1967/001572/06
ISIN: ZAE000058517 JSE share code: SPP
("SPAR" or "the company" or "the group")
AUDITED RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2013
AND CASH DIVIDEND DECLARATION
- Up 9.8%
Turnover
- Up 12.8%
Annual dividend
- Up 13.0%
Headline earnings per share
- Up 485 cents
Annual dividend per share declared
Summarised consolidated statement of comprehensive income
Audited Audited
Year ended Year ended
% September September
Rmillion Change 2013 2012
Revenue 47 795.8 43 560.2
Turnover 9.8 47 387.3 43 166.0
Cost of sales (43 566.6) (39 721.3)
Gross profit 3 820.7 3 444.7
Other income 408.5 394.2
Operating expenses 10.8 (2 565.9) (2 315.7)
Trading profit 1 663.3 1 523.2
BBBEE transactions (13.3) (13.0)
Operating profit 9.3 1 650.0 1 510.2
Interest received 34.0 32.8
Interest paid (24.8) (27.8)
Share of equity accounted associate income 3.3 3.5
Profit before taxation 9.5 1 662.5 1 518.7
Taxation (472.0) (459.8)
Profit for the year attributable to
ordinary shareholders 12.4 1 190.5 1 058.9
Other comprehensive income
Exchange differences from translation
of foreign operations 0.6
Total comprehensive income 12.5 1 191.1 1 058.9
EARNINGS PER SHARE
Earnings per share (cents) 12.2 690.6 615.7
Diluted earnings per share (cents) 13.0 644.7 570.6
SALIENT STATISTICS
Headline earnings per share (cents) 13.0 696.6 616.3
Diluted headline earnings per share (cents) 13.9 650.4 571.2
Dividend per share (cents) 12.8 485.0 430.0
Net asset value per share (cents) 11.7 1 843.4 1 649.8
Operating profit margin (%) 3.5 3.5
Return on equity (%) 39.6 39.8
HEADLINE EARNINGS RECONCILIATION
Profit for the year attributable to ordinary shareholders 1 190.5 1 058.9
Adjusted for:
(Profit)/loss on disposal of property, plant and equipment (0.1) 1.1
- Gross (0.2) 1.5
- Tax effect 0.1 (0.4)
Impairment of goodwill 7.5
Loss on disposal of investment 3.0
Headline earnings 13.3 1 200.9 1 060.0
Summarised consolidated statement of financial position
Audited Audited
September September
Rmillion 2013 2012
ASSETS
Non-current assets 2 380.9 2 222.5
Property, plant and equipment 1 749.1 1 588.0
Goodwill 387.6 391.0
Operating lease receivables 98.1 112.7
Investment in associates 52.6 40.0
Other investments 1.9 20.9
Loans 64.4 59.0
Deferred taxation asset 27.2 10.9
Current assets 7 404.8 7 672.8
Inventories 1 374.0 1 415.6
Trade and other receivables 5 841.3 5 341.1
Prepayments 32.7 35.8
Operating lease receivables 39.1 34.3
Loans 5.5 4.4
Bank balances - SPAR 752.4
Bank balances - Guilds 112.2 89.2
Total assets 9 785.7 9 895.3
EQUITY AND LIABILITIES
Capital and reserves 3 177.7 2 837.6
Stated capital 61.6 54.5
Treasury shares (42.8) (6.9)
Currency translation reserve 0.5 (0.1)
Share based payment reserve 355.1 323.1
Retained earnings 2 803.3 2 467.0
Non-current liabilities 224.6 236.3
Deferred taxation liability 1.5 3.9
Post retirement medical aid provision 108.0 103.4
Operating lease payables 115.1 129.0
Current liabilities 6 383.4 6 821.4
Trade and other payables 6 204.6 6 772.6
Operating lease payables 41.9 35.4
Provisions 14.7 6.7
Taxation payable 11.3 6.7
Bank overdrafts 110.9
Total equity and liabilities 9 785.7 9 895.3
Summarised consolidated statement of changes in equity
Share Attributable
Currency based to ordinary
Stated Treasury translation payment Retained share-
Rmillion capital shares reserve reserve earnings holders
Capital and reserves at 30 September 2011 49.6 (27.8) (0.1) 292.0 2 175.8 2 489.5
Total comprehensive income for the year 1 058.9 1 058.9
Issue of shares 4.9 (4.9) -
Recognition of share based payments 18.7 18.7
Take-up of share options 149.4 (97.2) 52.2
Transfer arising from take-up of share options 97.2 (97.2) -
Share repurchases (123.6) (123.6)
Dividends declared (670.5) (670.5)
Recognition of BBBEE transaction 12.4 12.4
Capital and reserves at 30 September 2012 54.5 (6.9) (0.1) 323.1 2 467.0 2 837.6
Total comprehensive income for the year 0.6 1 190.5 1 191.1
Issue of shares 7.1 (7.1) -
Recognition of share based payments 19.6 19.6
Take-up of share options 116.6 (72.2) 44.4
Transfer arising from take-up of share options 72.2 (72.2) -
Share repurchases (145.4) (145.4)
Dividends declared (782.0) (782.0)
Recognition of BBBEE transaction 12.4 12.4
Capital and reserves at 30 September 2013 61.6 (42.8) 0.5 355.1 2 803.3 3 177.7
Summarised consolidated statement of cash flows
Restated*
Audited Audited
Year ended Year ended
September September
Rmillion 2013 2012
Cash flows from operating activities (443.2) 1 153.5
Operating profit before: 1 650.0 1 510.2
Non cash items 191.0 173.0
Impairment of goodwill 7.5
(Profit)/loss on disposal of property, plant and equipment (0.2) 1.5
Net working capital changes (1 032.7) 622.4
- Decrease/(increase) in inventories 41.6 (280.6)
- Increase in trade and other receivables (514.9) (473.2)
- (Decrease)/increase in trade payables and provisions (559.4) 1 376.2
Cash generated from operations 815.6 2 307.1
Interest received 34.0 32.8
Interest paid (24.8) (27.8)
Taxation paid (486.0) (488.1)
Dividends paid (782.0) (670.5)
Cash flows from investing activities (296.1) (220.3)
Investment to expand operations (220.1) (89.1)
Investment to maintain operations (78.5) (71.8)
- Replacement of property, plant and equipment (83.3) (74.1)
- Proceeds on disposal of property, plant and equipment 4.8 2.3
Acquisition of businesses (24.3) (11.0)
Proceeds from disposal of business 17.0
Net movement in loans and investments 9.8 (48.4)
Cash flows from financing activities (101.0) (73.1)
Proceeds from issue of shares 7.1 4.9
Proceeds from exercise of share options 37.3 47.3
Share repurchases (145.4) (123.6)
Acquisition of partial interest in a subsidiary that does
not involve a change of control (1.7)
Net movement in cash and cash equivalents (840.3) 860.1
Net balances/(overdrafts) at beginning of year 841.6 (18.5)
Net balances at end of year 1.3 841.6
* The 2012 values have been restated to ensure correct classifications in terms of IAS 7. The reclassifications do
not change the net cash flow position for the year.
Notes to the summarised consolidated financial results
1. BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
The summarised 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 the Financial Reporting Standards Council and the
information as required by IAS 34: Interim Financial Reporting, the JSE Limited Listings 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 these applied in the financial
statements for the year ended 30 September 2012.
In compliance with the disclosure requirements of the Companies Act, No 71 of 2008, the annual
financial statements have been prepared under the supervision of Mr MW Godfrey CA(SA), on behalf
of The SPAR Group Limited.
Audited Audited
Year ended Year ended
September September
Rmillion 2013 2012
2. STATED CAPITAL
Authorised
250 000 000 (2012: 250 000 000) ordinary shares 0.2 0.2
30 000 000 (2012: 30 000 000) redeemable convertible
preference shares - -
Issued
172 800 310 (2012: 172 377 704) ordinary shares 61.6 54.5
18 859 949 (2012: 18 911 349) redeemable convertible
preference shares - -
Total stated capital 61.6 54.5
Issued share capital amounts to R61 645 499 consisting of 172 800 310 ordinary shares. 422 606
ordinary shares were issued during the year ended 30 September 2013.
Issued redeemable convertible preference share capital amounts to R11 347, consisting of
18 859 949 (2012: 18 911 349) shares issued during the financial year ended 30 September 2009.
During the current financial year 51 400 redeemable convertible preference shares were converted
into 18 122 ordinary shares. These relate to the vesting arising from the death of participants in both
BBBEE trusts.
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 172 380 610 (2012: 171 992 577).
Diluted earnings and headline earnings per share were based on a weighted average number of
ordinary shares (net of treasury shares) of 184 646 200 (2012: 185 565 578).
Restated*
Audited Audited
Year ended Year ended
September September
Rmillion 2013 2012
3. CONTINGENT LIABILITIES
The company has guaranteed the finance obligations
of certain SPAR retailer members to the amount of: 482.8 386.8
4. OPERATING LEASES
Operating lease costs charged against operating profit
Immovable property 55.0 52.0
- Lease rentals 474.3 410.7
- Sub-lease recoveries (419.3) (358.7)
Plant, equipment and vehicles 4.8 15.7
Operating lease commitments
Future minimum lease payments under
non-cancellable operating leases 3 694.0 3 337.6
- Land and buildings 3 686.6 3 335.0
- Other 7.4 2.6
Future minimum sub-lease receivables under
non-cancellable property leases (3 290.2) (2 973.3)*
Net commitments 403.8 364.3
* The September 2012 sub-lease receivables have been
restated due to a disclosure error.
5. CAPITAL COMMITMENTS
Contracted 93.0 161.4
Approved but not contracted 13.2 56.5
Total capital commitments 106.2 217.9
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 Chief Executive Officer (the Chief Operating Decision Maker) is 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 30 September 2013 which may have an impact on
the group's reported financial position at this date.
REVIEW OF TRADING RESULTS
SPAR in South Africa marked its 50th anniversary during 2013 and celebrated past achievements with
the people who made it happen - our retailers, employees, suppliers and most importantly, the
consumers who support our retailers' stores every day. SPAR has changed dramatically since 1963. Retail
membership has grown from 500 stores under one format into 1 817 stores under seven formats,
the group's basic warehouses into seven world class distribution centres and our footprint has spread further into
Africa.
The group performed solidly with a particularly encouraging second half, despite the challenging trading
environment. Consumers were constrained by unemployment, restricted access to credit and rising costs.
In emerging market segments increased strike action had a negative impact on disposable spend. The
retail environment was increasingly competitive across all segments of the group's business with an
aggressive pursuit for new retail sites.
FINANCIAL OVERVIEW
Group turnover increased 9.8% to R47.4 billion (2012: R43.2 billion) and profit after tax increased 12,4%
to R1.2 billion. SPAR's gross margin rose to 8.1% (2012: 8.0%). Operating expenses increased 10.8% to
R2.6 billion (2012: R2.3 billion) with high distribution costs impacted by rising fuel costs (up 12.7% from
2012). Profit before tax increased 9.5% to R1.7 billion (2012: R1.5 billion).
The lower effective tax rate of 28.4% (2012: 30.3%) is due to the change in STC legislation during the
prior year.
Headline earnings growth of 13.3% to R1.2 billion (2012: R1.1 billion) translated into headline earnings
per share of 696.6 cents (2012: 616.3 cents), up 13%. A final dividend of 306 cents per share (2012:
275 cents) was declared, bringing the total dividend to 485 cents per share (2012: 430 cents), up 12.8%.
The group's cash generation remained strong with the change in the year-end position attributed to the
timing of trade creditor payments. Group cash flow included capital expenditure of R303.4 million,
comprising the KwaZulu-Natal dry warehouse facility upgrade (R63.4 million) and the first phase of the
new group financial system implementation (R72.8 million). The projected capital expenditure in 2014 is
budgeted at R350 million.
The group's balance sheet remains strong, with no long-term borrowings and improved working capital.
SPAR's overdraft facilities are sufficient to fund operations for the group's forecast requirements.
OPERATIONAL OVERVIEW
Retail turnover for SPAR stores increased 9.1% to R58.5 billion (2012: R53.7 billion), with wholesale
turnover up 9.3% to R38.7 billion (2012: R35.5 billion). Existing stores outperformed the market, with
turnover growth of 7.5%, underpinned by strong promotional activity. Internal food inflation declined to
5.5% (2012: 6.1%). SPAR house brands are core to the growth and achieved wholesale turnover of
R5.1 billion. Retail trading space increased 2.2% (2012: 3.2%) with 20 new SPAR stores opened, taking
the total store number to 873. The revamp of 155 stores had a positive effect on turnover growth.
TOPS at SPAR extended its recent growth trajectory as retail sales increased 15.9% to R5.8 billion (2012:
R5.0 billion) with wholesale turnover growing 16.1% to R3.6 billion. 47 new stores were opened,
bringing the total TOPS stores to 582. Its number one ranking in the South African retail liquor trade was
confirmed, with awards including The Sunday Times' Best Liquor Store accolade and ten Veritas wine
awards for our exclusive brands.
Build it reported satisfactory results for the year, outperforming its main competition and
seeing an encouraging recovery in the second half. Retail turnover increased 12% (2012: 17%) to
R8.3 billion (2012: R7.5 billion) and existing store growth was 9%. Wholesale turnover was up 9.5%,
totalling R5.1 billion (2012: R4.6 billion). With 20 new stores opened, including stores in Mozambique
and Botswana, total stores grew to 298. Particularly pleasing was a 27.1% improvement in sales out of
the Build it imports facility to R195.9 million (2012: R154.1 million).
Savemor is a small store format catering to the needs of less populated rural towns or the CBDs of larger
towns that cannot justify the set-up cost of a SPAR store. A total of 14 new stores were opened during
the year, bringing the total format stores to 28.
The group continued to fine-tune the Pharmacy at SPAR model and rolled out 17 new stores during the
year, taking total store numbers to 36.
During the year, the group entered into an arrangement to pilot the SPAR Express concept with Shell.
Initial results from the first store in Wadeville have been positive and the pilot will be expanded during
the new financial year.
SPAR group despatched 203.5 million cases through seven distribution centres, an increase of 4.3% on
the volumes handled in the prior year. Distribution capacity is a key driver of growth and to this end, the
group extended the KwaZulu-Natal distribution centre in 2013 and is planning an extension of the
adjacent perishables facility in the new year. The group is making progress to finalise the acquisition of
land for the new distribution centre planned in the Lanseria area.
The corporate retail division, comprising 11 stores owned and managed by the group, reported turnover
of R836 million, up 7% on the prior year. The trading challenges of the locations in which our retail
division operates have remained unchanged, however, the group remains steadfast that its decision to
defend these sites was appropriate. The net profitability position of this business continues to be positive
for the group. During the year, one new store was opened in Philippi and the Sea Point SUPERSPAR was
sold to an independent retailer.
PROSPECTS
The group expects the trading environment to remain challenging with subdued economic growth and
continued rand weakness.
Nevertheless, the SPAR group remains confident that the resilience of our people, our retailers and our
business model will allow us to once again produce a satisfactory trading performance in 2014.
Directorate/Executive
The Board announced the resignation of Wayne Hook as Chief Executive Officer effective
31 January 2014 and the appointment of Graham OConnor as Chief Executive Officer as of 1 February 2014.
Mike Hankinson Wayne Hook
Chairman Chief Executive
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group's financial statements for the year
ended 30 September 2013. The audit was conducted in accordance with International Standards on
Auditing. They have issued an unmodified opinion. A copy of the auditor's report together with a copy
of the audited financial statements is available for inspection at the company's registered office.
These summarised financial statements have been derived from the group's financial statements and are
consistent in all material respects with the group's financial statements. These summarised financial
statements have been audited by the company's auditors who have issued an unmodified opinion. The auditor's
report does not necessarily report on all of the information contained in this announcement. Any reference
to future financial information included in this announcement has not been reviewed or reported on by the
auditors. Shareholders are advised that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of that report together with the accompanying financial information
from the company's registered office.
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that a gross final cash dividend of 306 cents per share has been declared by the
board in respect of the year ended 30 September 2013. The dividend has been declared out of income
reserves.
The salient dates for the payment of the final dividend are detailed below:
Last day to trade cum dividend Friday, 29 November 2013
Shares to commence trading ex dividend Monday, 2 December 2013
Record date Friday, 6 December 2013
Payment of dividend Monday, 9 December 2013
Shareholders will not be permitted to dematerialise or rematerialise their share certificates between
Monday, 2 December 2013 and Friday, 6 December 2013, both days inclusive.
In terms of South African taxation legislation effective from 1 April 2012, the following additional
information is disclosed:
- The South African local dividend tax rate is 15%;
- No STC credits will be utilised;
- The net local dividend amount is 260.1 cents per share for shareholders liable to pay tax on dividends
and 306 cents per share for shareholders exempt from such dividend tax;
- The issued share capital of The SPAR Group Limited is 172 800 310 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 12 November 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: ZAE000058517 JSE share 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
Date: 13/11/2013 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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