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THE SPAR GROUP LIMITED - Preliminary summarised results for the year ended 30 September 2018 and cash dividend declaration

Release Date: 14/11/2018 07:05
Code(s): SPP     PDF:  
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Preliminary summarised results for the year ended 30 September 2018 and cash dividend declaration

THE SPAR GROUP LTD
REGISTRATION NUMBER: 1967/001572/06
ISIN: ZAE000058517
JSE SHARE CODE: SPP
THE SPAR GROUP LIMITED (SPAR or the company or the group)
www.spar.co.za

PRELIMINARY SUMMARISED RESULTS
FOR THE YEAR ENDED 30 SEPTEMBER 2018 AND CASH DIVIDEND DECLARATION


SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

                                                                                                YEAR ENDED SEPTEMBER
                                                                                           %        2018        2017
Rmillion                                                                              Change                Restated*

Revenue                                                                                  6.0   103 007.5    97 209.3
Turnover                                                                                 5.9   101 018.0    95 373.1
Cost of sales                                                                                  (90 225.0)  (85 163.3)
Gross profit                                                                                    10 793.0    10 209.8
Other income                                                                                     1 989.5     1 836.2
Net operating expenses                                                                   5.6   (10 001.8)   (9 469.0)
Trading profit                                                                                   2 780.7     2 577.0
BBBEE transactions                                                                                  (1.4)       (0.9)
Operating profit                                                                         7.9     2 779.3     2 576.1
Other non-operating items                                                                         (144.2)      (54.6)
Interest income                                                                                    169.3       193.7
Interest expense                                                                                  (192.9)     (176.6)
Finance costs including foreign exchange gains and losses                                         (136.5)      (64.4)
Share of equity-accounted associate (losses)/income                                                (10.9)       (8.8)
Profit before taxation                                                                  (0.1)    2 464.1     2 465.4
Income tax expense                                                                                (636.9)     (644.8)
Profit for the year attributable to ordinary shareholders                                0.4     1 827.2     1 820.6
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss:
  Remeasurement of post-retirement medical aid                                                      (0.3)       11.4
    Deferred tax relating to remeasurement of post-retirement medical aid                            0.1        (3.2)
  Remeasurement of retirement funds                                                                157.9       432.1
    Deferred tax relating to remeasurement of retirement funds                                     (26.8)      (67.9)
Items that may be reclassified subsequently to profit or loss:
  Gain/(loss) on cash flow hedge                                                                     1.6        (4.6)
    Tax relating to gain/(loss) on cash flow hedge                                                  (0.2)        0.6
  Exchange differences from translation of foreign operations                                      131.9        42.0
Total comprehensive income                                                              (6.3)    2 091.4     2 231.0

EARNINGS PER SHARE
Basic earnings per share                                                 (cents)         0.4       948.9       945.5
Diluted earnings per share                                               (cents)         0.3       942.2       939.4

* Refer to restatement note 9.

SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                                               YEAR ENDED SEPTEMBER
Rmillion                                              Notes                  2018       2017       2016
                                                                                    Restated*  Restated*
ASSETS
Non-current assets                                                       13 079.6   11 956.3   11 137.8
Property, plant and equipment                                             6 966.9    6 553.9    6 160.3
Goodwill and intangible assets                                            4 436.6    4 162.2    4 008.3
Investment in associates and joint ventures                                 156.7      117.3       38.4
Other investments                                                            57.9       57.7       54.2
Operating lease receivables                                                 208.3      125.4      100.5
Loans                                                                       696.4      406.2      217.8
Block discounting loan receivable                        10                 542.4      512.2      521.5
Deferred taxation asset                                                      14.4       21.4       36.8

Current assets                                                           18 166.3   16 879.5   16 806.9
Inventories                                                               3 933.1    3 816.4    3 810.9
Trade and other receivables                                              12 134.4   10 814.3   10 544.0
Prepayments                                                                 109.8       78.1       75.4
Operating lease receivables                                                  50.4       60.7       63.4
Loans                                                                        97.9      116.9       46.8
Current portion of block discounting loan receivable     10                 225.8      248.3      222.2
Income tax recoverable                                                        7.7        4.1        4.2
Other current financial assets                                                0.3        0.2
Cash and cash equivalents - SPAR                                          1 377.6    1 565.6    1 611.8
Cash and cash equivalents - Guilds and trusts                               229.3      174.9      428.2
Assets held for sale                                                          9.6      141.0      160.7
Total assets                                                             31 255.5   28 976.8   28 105.4
EQUITY AND LIABILITIES
Capital and reserves                                                      7 109.8    6 560.4    5 627.8
Stated capital                                                            2 231.5    2 231.5    2 231.5
Treasury shares                                                             (10.0)     (16.1)     (18.7)
Currency translation reserve                                                181.8       49.9        7.9
Share-based payment reserve                                                 274.8      293.0      261.1
Equity reserve                                                             (749.1)    (717.0)    (713.0)
Hedging reserve                                                             (30.8)     (32.2)     (28.2)
Retained earnings                                                         5 211.6    4 751.3    3 887.2

Non-current liabilities                                                   8 037.3    7 875.2    8 126.5
Deferred taxation liability                                                 413.1      361.2      290.7
Post-employment benefit obligations                                         787.6      940.2    1 392.2
Financial liabilities                                     5               2 042.9    1 700.1    1 568.0
Long-term borrowings                                                      3 976.5    4 160.4    4 164.3
Block discounting loan payable                           10                 553.6      525.1      536.4
Operating lease payables                                                    231.0      141.4      116.0
Other non-current financial liabilities                                       3.3        4.9
Long-term provisions                                                         29.3       41.9       58.9

Current liabilities                                                      16 108.4   14 541.2   14 351.1
Trade and other payables                                                 15 236.0   13 452.7   13 162.5
Current portion of long-term borrowings                                     433.6      364.4      265.9
Current portion of block discounting loan payable        10                 232.3      255.7      228.3
Operating lease payables                                                     51.5       62.8       65.6
Provisions                                                                   43.2       45.3       38.0
Income tax liability                                                        103.1       91.8       83.7
Bank overdrafts                                                               8.7      268.5      507.1

Total equity and liabilities                                             31 255.5   28 976.8   28 105.4

* Refer to restatement note 9. 

SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


                                                                                                 Share-
                                                                                    Currency      based                                      Non-  Attributable
                                                              Stated   Treasury  translation    payment   Retained   Equity  Hedging  controlling   to ordinary
Rmillion                                                     capital     shares      reserve    reserve   earnings  reserve  reserve     interest  shareholders

Capital and reserves at 30 September 2016                    2 231.5      (18.7)         7.9      261.1    3 902.3   (713.0)   (28.2)           -       5 642.9
Effect of restatement                                                                                        (15.1)                                       (15.1)
Restated capital and reserves at 30 September 2016*          2 231.5      (18.7)         7.9      261.1    3 887.2   (713.0)   (28.2)           -       5 627.8
Profit for the year attributable to ordinary shareholders                                                  1 820.6                                      1 820.6
Loss on cash flow hedge                                                                                                         (4.0)                      (4.0)
Remeasurement of post-retirement medical aid                                                                   8.2                                          8.2
Remeasurement of retirement funds                                                                            364.2                                        364.2
Recognition of share-based payments                                                                33.3                                                    33.3
Take-up of share options                                                  131.0                  (77.2)                                                    53.8
Transfer arising from take-up of share options                                                    77.2       (77.2)                                           -
Settlement of share-based payments                                          1.4                   (1.4)                                                       -
Share repurchases                                                        (129.8)                                                                         (129.8)
Dividends paid                                                                                            (1 251.7)                                    (1 251.7)
Exchange rate translation                                                               42.0                           (4.0)                               38.0
Restated capital and reserves at 30 September 2017*          2 231.5      (16.1)        49.9     293.0     4 751.3   (717.0)   (32.2)           -       6 560.4
Profit for the year attributable to ordinary shareholders                                                  1 827.2                                      1 827.2
Gain on cash flow hedge                                                                                                          1.4                        1.4
Remeasurement of post-retirement medical aid                                                                  (0.2)                                        (0.2)
Remeasurement of retirement funds                                                                            131.1                                        131.1
Recognition of share-based payments                                                                23.9                                                    23.9
Take-up of share options                                                  227.5                  (122.4)                                                  105.1
Transfer arising from take-up of share options                                                    122.4     (122.4)                                           -
Settlement of share-based payments                                         59.7                   (42.1)     (17.6)                                           -
Share repurchases                                                        (281.1)                                                                         (281.1)
Dividends paid                                                                                            (1 357.8)                                    (1 357.8)
Non-controlling interest arising on business acquisition                                                                                     27.6          27.6
Purchase obligation of non-controlling interest                                                                       (26.8)                (27.6)        (54.4)
Exchange rate translation                                                              131.9                           (5.3)                              126.6
Capital and reserves at 30 September 2018                    2 231.5      (10.0)       181.8      274.8    5 211.6   (749.1)   (30.8)           -       7 109.8

* Refer to restatement note 9.

SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS

                                                                               YEAR ENDED SEPTEMBER
                                                                                    2018       2017
Rmillion                                                    Notes                          Restated*

CASH FLOWS FROM OPERATING ACTIVITIES                                             1 975.8    1 411.2
Operating profit before:                                                         2 779.3    2 576.1
Non-cash items                                                                     738.9      680.9
Net loss on disposal of property, plant and equipment                               37.2       15.7
Net working capital changes                                                        416.3       13.0
- Decrease/(increase) in inventories                                                94.7      (23.7)
- Increase in trade and other receivables                                       (1 094.0)    (221.7)
- Increase in trade payables and provisions                                      1 415.6      258.4
Cash generated from operations                                                   3 971.7    3 285.7
Interest received                                                                   94.0      109.9
Interest paid                                                                     (123.3)    (106.1)
Taxation paid                                                                     (608.8)    (626.6)
Dividends paid                                                                  (1 357.8)  (1 251.7)

CASH FLOWS FROM INVESTING ACTIVITIES                                            (1 453.3)  (1 496.0)
Acquisition of businesses/subsidiaries                         4.4                (453.2)    (142.7)
Proceeds from disposal of businesses                           4.2                  47.7       48.0
Proceeds on disposal of assets held for sale                                        27.5       25.9
Investment to expand operations                                                   (456.1)    (842.1)
Investment to maintain operations                                                 (316.2)    (248.8)
- Replacement of property, plant and equipment                                    (352.9)    (330.0)
- Proceeds on disposal of property, plant and equipment                             36.7       81.2
Proceeds on loans and investments#                                                 398.8      450.9
Repayments of loans and investments#                                              (701.8)    (787.2)

CASH FLOWS FROM FINANCING ACTIVITIES                                              (428.0)       3.4
Proceeds from exercise of share options                                            105.1       53.8
Proceeds from borrowings#                                                                     156.2
Repayments of borrowings#                                                         (252.0)     (76.8)
Share repurchases                                                                 (281.1)    (129.8)

Net movement in cash and cash equivalents                                           94.5      (81.4)
Net cash balances at beginning of year                                           1 472.0    1 532.9
Exchange rate translation                                                           31.7       20.5
Net cash balances at end of year                                                 1 598.2    1 472.0

* Refer to restatement note 9.  
# Restatement of presentation of investing and financing activities.  

The presentation of cash flows relating to loans and investments and borrowings have been re-presented to reflect the gross movements in line with IAS 7 
(para 21). The restatement of the presentation did not result in a change to the net cash flows from investing and financing activities respectively. 


NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL RESULTS

1. BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS

The summarised consolidated financial statements contained in this preliminary report are prepared in accordance with the requirements of the JSE Limited Listings 
Requirements (Listings Requirements) for preliminary reports, and the requirements of the Companies Act, 71 of 2008 (Companies Act) applicable to summary financial
statements. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition 
requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and 
Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim 
Financial Reporting. The accounting policies applied in the preparation of the consolidated financial statements from which the summarised consolidated financial 
statements were derived are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual 
financial statements.

Neither this announcement nor the preliminary report has been audited but are extracted from the underlying audited information. The annual financial statements 
were audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The audited annual financial statements and the auditor's report thereon 
are available for inspection at the company's registered office. The directors take full responsibility for the preparation of the preliminary report and that the 
financial information has been correctly extracted from the underlying annual financial statements.

2. SALIENT STATISTICS AND HEADLINE EARNINGS

                                                                                                                YEAR ENDED SEPTEMBER
                                                                                                         %         2018         2017
Rmillion                                                                                            Change                  Restated*

SALIENT STATISTICS
Headline earnings per share                                                 (cents)                    1.4        965.7        952.8
Diluted headline earnings per share                                         (cents)                    1.3        958.9        946.6
Dividend per share                                                          (cents)                    8.0          729        675.0
Net asset value per share                                                   (cents)                    8.4      3 692.2      3 407.0
Operating profit margin                                                         (%)                                 2.8          2.7
Return on equity                                                                (%)                                26.7         29.9

HEADLINE EARNINGS RECONCILIATION
Profit for the year attributable to ordinary shareholders                                                       1 827.2      1 820.6
Adjusted for:
Loss on disposal of property, plant and equipment                                                                  34.2         13.9
- Gross                                                                                                            37.2         15.7
- Tax effect                                                                                                       (3.0)        (1.8)
Profit on disposal of assets held for sale                                                                         (4.4)        (7.5)
Fair value adjustment to assets held for sale                                                                                    1.2
Impairment of goodwill                                                                                             12.3          9.3
Profit on disposal of businesses                                                                                   (9.7)        (2.8)
Headline earnings                                                                                               1 859.6      1 834.7

* Refer to restatement note 9.  

3.  SEGMENTAL REPORTING

Segment accounting policies applied in the summarised consolidated financial statements are consistent with those adopted for the preparation of the consolidated 
financial statements.

The principal segments of the group have been identified on a primary basis by geographical segment, which is representative of the internal reporting used for 
management purposes as well as the source and nature of business risks and returns. These geographical segments also represent operating segments as they meet the 
quantitative thresholds.

The Chief Executive Officer (the Chief Operating Decision Maker) (CODM) is of the opinion that the operations of the individual distribution centres within 
Southern Africa are substantially similar to one another and that the risks and returns of these distribution centres are likewise similar. The risks and returns 
of the Ireland and Switzerland operations are not considered to be similar to those within Southern Africa or each other.

As a result, the geographical segments of the group have been identified as Southern Africa, Ireland and Switzerland. All segment revenue and expenses are directly
attributable to the segments. Segment assets and liabilities include all operating assets and liabilities used by a segment, with the exception of inter-segment 
assets and liabilities, and IFRS adjustments made by segments to their management report for the purposes of IFRS compliance. These assets and liabilities are all 
directly attributable to the segments.

The principal activity of the operating segments is the wholesale and distribution of goods and services to SPAR grocery stores and multiple other branded group 
retail outlets.

The group deals with a broad spread of customers, with no single customer exceeding 10% of the group's revenue.

Analysis per reportable segment:
                                                                                                   Switzerland     
                                                               Southern                                 IAS 19  Consolidated
Rmillion                                                         Africa      Ireland  Switzerland   adjustment         total

2018
Statement of profit or loss
Total revenue                                                  69 453.2     22 951.6     10 602.7                  103 007.5
Operating profit                                                2 080.3        574.4        122.5          2.1       2 779.3
Profit before tax                                               1 841.6        537.9         82.5          2.1       2 464.1
Interest income                                                   155.1         11.0          3.2                      169.3
Interest expense                                                  124.0         42.9         26.0                      192.9
Depreciation                                                      216.8        236.3        245.0                      698.1

Statement of financial position
Total assets                                                   16 436.1      9 777.5      5 041.9                   31 255.5
Total liabilities                                              12 718.1      7 263.5      3 857.3        306.8      24 145.7

2017 Restated*
Statement of profit or loss
Total revenue                                                  65 068.1     20 939.8     11 201.4                   97 209.3
Operating profit                                                1 998.9        508.2         95.2        (26.2)      2 576.1
Profit before tax                                               1 933.7        465.8         92.1        (26.2)      2 465.4
Interest income                                                   180.2         11.1          2.4                      193.7
Interest expense                                                   97.2         50.5         28.9                      176.6
Depreciation                                                      194.2        203.2        260.3                      657.7

Statement of financial position
Total assets                                                   14 843.0      9 272.3      4 861.5                   28 976.8
Total liabilities                                              10 851.6      7 364.7      3 791.7        408.4      22 416.4

Material non-cash items, relating to the movement in the group's financial liabilities, are presented in note 6.

* Refer to restatement note 9. The comparative segment information has been restated, as the CODM considers these operations based on IFRS financial information.

4. BUSINESS COMBINATIONS   
    
4.1 Acquisition of S Buys pharmaceutical wholesaler 

    The group purchased a 60% shareholding in Fifth Season Investments 126 (Pty) Ltd which trades as S Buys, a pharmaceutical wholesaler, effective 1 October 2017. 
    The final consideration paid for these shares was R74.9 million. This purchase was made in order to grow the Pharmacy at SPAR business. The group will purchase 
    the remaining 40% shareholding in S Buys between 30 September 2022 and 31 December 2022 for an amount based on a multiple of the profit after tax for the 2022 
    financial year. This obligation to purchase the remaining shareholding is recognised as a financial liability at the present value of the obligation, discounted
    from the expected settlement date to the reporting date. At acquisition, the non-controlling interest was recognised at the proportionate share of the net assets
    of the business. The non-controlling interest's share of profits or losses are not recognised in equity, but as the movement in the fair value of the discounted
    financial liability to purchase the remaining shareholding. None of the goodwill recognised on acquisition is expected to be deductible for tax purposes. The 
    initial accounting for the acquisition of S Buys was provisional for the value of intangible assets acquired, as the valuation of these assets had not yet been 
    completed. This process has now been finalised with no resulting changes to the values disclosed for the business combination. 

    Purchase of commercial property 
    The group purchased a commercial property for R165.0 million, which is a shopping centre in Pinetown, KwaZulu-Natal, adjacent to the SPAR head office. This 
    shopping centre houses a range of tenants, including certain group functions, from which the company derives rental income. The property was purchased by a 
    wholly owned subsidiary of The SPAR Group Ltd, Knowles Shopping Centre Investments (Pty) Ltd. This acquisition was funded from available cash resources. The 
    initial accounting for the acquisition of the commercial property was provisional for the value of deferred tax. This is now finalised with no resulting change
    to the values disclosed for the business combination. 

    Retail stores acquired 
    During the course of the financial year the group acquired the assets of seven (2017: seven) retail stores  in South Africa. GCL 2016 Ltd (Gilletts), a subsidiary 
    of The BWG Group, acquired the assets of two (2017: four) retail stores in the United Kingdom (UK) as well as one store in Ireland (2017: nil). The principal 
    activity of these acquisitions is that of retail trade and all its aspects. These stores were purchased in order to protect strategic sites, and the goodwill 
    arising on the business combinations is an indication of future turnover expected to be made by the group as a result of these acquisitions. These acquisitions
    were funded from available cash resources. 

    Acquisition of 4 Aces Wholesale Limited (4 Aces) 
    The BWG Group acquired the entire issued share capital of 4 Aces Wholesale Limited, a leading independent wholesaler supplying the grocery retail, licensed and 
    foodservice trades in Ireland. Formal approval and clearance was received from the regulating authority in early May, and the acquisition completed on the 
    11th of May 2018. 


Assets acquired and liabilities assumed at date of acquisition

                                                     2018                                                          2017
                                                             Knowles 
                                                    Fifth   Shopping 
                                                   Season     Centre 
                                                  Invest-    Invest-      UK   4 Aces      SA                UK      SA 
                                                ments 126      ments  retail   Whole-  retail            retail  retail
Rmillion                                        (Pty) Ltd  (Pty) Ltd  stores     sale  stores    Total   stores  stores   Total

Assets                                              196.8      165.0    58.5    234.7    32.7    687.7      2.1    15.1    17.2
Property, plant and equipment                         2.8      165.0    32.7             31.1    231.6             15.1    15.1
Goodwill                                             30.0                                         30.0                        -
Deferred tax asset                                    4.9                                          4.9                        -
Inventories                                          73.2                6.7     63.7     1.5    145.1      1.7             1.7
Other financial assets                                0.4                                          0.4                        -
Current tax receivable                                0.1                         0.5              0.6                        -
Trade and other receivables (net of provision)       84.1                2.0    110.1            196.2      0.4             0.4
Cash and cash equivalents                             1.3               17.1     60.4     0.1     78.9                        -
Liabilities                                        (127.8)         -   (14.0)  (134.8)   (1.6)  (278.2)       -       -       -
Finance lease liability                              (0.4)                                        (0.4)                       -
Trade and other payables                           (126.5)             (13.9)  (134.8)   (1.6)  (276.8)                       -
Income tax liability                                 (0.1)              (0.1)                     (0.2)                       -
Bank overdraft                                       (0.8)                                        (0.8)                       -

Total identifiable net assets  at fair value         69.0      165.0    44.5     99.9    31.1    409.5      2.1    15.1    17.2
Goodwill arising from acquisition                    33.5                7.1     81.5    52.4    174.5     15.2   107.3   122.5
Non-controlling interest                            (27.6)                                       (27.6)                       -
Purchase consideration transferred                   74.9      165.0    51.6    181.4    83.5    556.4     17.3   122.4   139.7
  Paid in cash                                       74.9      165.0    41.4    150.2    83.5    515.0     17.3   122.4   139.7
  Contingent consideration                                              10.2     31.2             41.4                        -
Cash and cash equivalents acquired                   (0.5)             (17.1)   (60.4)   (0.1)   (78.1)                       -
Business acquisition costs                                       0.7              1.1              1.8      3.0             3.0
Contingent consideration                                               (10.2)   (31.2)           (41.4)                       -
Net cash outflow on acquisition                      74.4      165.7    24.3     90.9    83.4    438.7     20.3   122.4   142.7


4.2 Assets and liabilities at date of disposal 

The assets and liabilities disposed of relate to previously disclosed as non-current assets held-for-sale relating to ADM Londis 
in the United Kingdom and four South African retail stores (2017: three retail stores). 

                                                                2018                2017
                                                      ADM  SA retail           SA retail
Rmillion                                           Londis     stores    Total     stores

Non-current assets                                  101.7       45.2    146.9       45.2
Property, plant and equipment                                   11.5     11.5        6.4
Non-current assets held for sale                    101.7               101.7
Goodwill                                                        33.7     33.7       38.8
Current liabilities                                (108.9)         -   (108.9)         -
Trade and other payables                             (7.4)               (7.4)
Deferred consideration payable for ADM Londis      (101.5)             (101.5)
Profit on disposal of businesses                      7.2        2.5      9.7        2.8
Proceeds                                                -       47.7     47.7       48.0

4.3 Impact of subsidiaries on the results of the group 

Contribution to results for the year
                                                                        2018                                              2017
                                                      Fifth    Knowles
                                                     Season   Shopping
                                                    Invest-     Centre
                                                      ments    Invest-       SA   4 Aces        UK                UK       SA       
                                                        126      ments   retail   Whole-    retail            retail   retail
Rmillion                                          (Pty) Ltd  (Pty) Ltd   stores     sale    stores     Total  stores   stores    Total

Revenue                                               952.7       17.5    328.6    319.0      17.2   1 635.0     4.6    468.3    472.9
Trading profit/(losses) before acquisition costs       17.9        8.3    (22.9)     5.5       0.2       9.0    (0.5)   (42.0)   (42.5)


4.4 Cash flow on acquisition of business/subsidiaries  

The cash flow on acquisition of business/subsidiaries is noted as being the amount disclosed in note 4.1 and other similar business acquisition costs incurred relating 
to prospective business acquisitions.  

Rmillion                                           2018    2017

Net cash outflow (Note 4.1)                       438.7   142.7
Other business acquisition costs                   14.5       -
Total net cash outflow relating to acquisitions   453.2   142.7


5. FINANCIAL LIABILITIES 

5.1 The SPAR Group Ltd acquired a controlling shareholding of 80% in the BWG Group, which is held by  TIL JV Ltd, a wholly owned subsidiary of The SPAR Group Ltd, 
    effective from 1 August 2014. The SPAR Group Ltd has agreed to acquire the remaining 20% shareholding from the non-controlling shareholders at specified future
    dates and in accordance with a determined valuation model. An election was made not to recognise a non-controlling interest, but to fair value the financial 
    liability. The financial liability is calculated as the present value of the non-controlling interests share of the expected purchase value and discounted from
    the expected exercise dates to the reporting date. As at 30 September 2018, the financial liability was valued at R1 216.2 million (2017: R963.8 million) based
    on management's expectation of future profit performance. The group has recognised 100% of the attributable profit.

    Repayments will commence in December 2019 and continue in 2020 and 2022.

    Interest is recorded in respect of this liability within finance costs using the effective interest rate method. The net exchange differences on the financial 
    liability have been presented in finance costs. The estimated future purchase price is fair valued at each reporting date and any changes in the value of the 
    liability as a result of changes in the assumptions used to estimate the future purchase price are recorded in profit or loss.

    In both 2018 and 2017 a fair value adjustment was made to the TIL JV Limited financial liability relating to changes in forecast profits.

5.2 The SPAR Group Ltd acquired a controlling shareholding of 60% in SPAR Holding AG, which is held by SAH Ltd, a wholly owned subsidiary of The SPAR Group Ltd,
    effective from 1 April 2016. Part of the purchase price of this 60% shareholding is a deferred consideration of CHF 16.0 million, which will be paid between 
    December 2020 and February 2021 with the purchase of the remaining 40% of SPAR Holding AG. The purchase of the remaining 40% shareholding is at a set price of 
    CHF 40.3 million. The total obligation of CHF 56.3 million was accounted for as a financial liability at the present value of the obligation, discounted from 
    the expected settlement date to the reporting date. An election was made not to recognise the non-controlling interest's share of profits or losses in equity, 
    but rather as the movement in the fair value of the discounted financial liability to purchase the remaining 40% shareholding.

    Interest is recorded in respect of this liability within finance costs using the effective interest rate method. The net exchange differences on the financial 
    liability have been presented in finance costs.

5.3 The SPAR Group Ltd acquired a 60% shareholding in Fifth Season Investments 126 (Pty) Ltd which trades as S Buys, effective 1 October 2017. The SPAR Group Ltd 
    agreed to purchase the remaining 40% shareholding in S Buys between 30 September 2022 and 31 December 2022 for an amount based on a multiple of profit after tax 
    for the 2022 financial year. This obligation to purchase the remaining shareholding will be recognised as a financial liability at the present value of the 
    obligation, discounted from the expected settlement date to the reporting date. An election was made not to recognise the non-controlling interest's share of 
    profits or losses in equity, but rather as the movement in the fair value of the discounted financial liability to purchase the remaining 40% shareholding. As 
    at 30 September 2018, the financial liability was valued at R49.2 million based on management's expectation of future profit performance.

    Interest is recorded in respect of this liability within finance costs using the effective interest rate method. The estimated future purchase price is fair 
    valued at each reporting date and any changes in the value of the liability as a result of changes in the assumptions used to estimate the future purchase price 
    are recorded in profit or loss.

6. FINANCIAL RISK MANAGEMENT 

                                                                                                                   2018        2017
Rmillion                                                                                                                   Restated*

Financial instruments classification
Net bank balances                                                                                               1 598.2     1 472.0
Loans (1)                                                                                                         794.3       523.1
Block discounting loan receivable (1)                                                                             768.2       760.5
Block discounting loan payable (2)                                                                               (785.9)     (780.8)
Other equity investments (3)                                                                                       57.9        57.7
Trade and other receivables (1)                                                                                12 134.4    10 814.3
Trade and other payables (2)                                                                                  (15 236.0)  (13 452.7)
FEC liability (4)                                                                                                  (3.3)       (4.9)
FEC asset (3)                                                                                                       0.3         0.2
Borrowings (2)                                                                                                 (4 410.1)   (4 524.8)
Financial liabilities (3)                                                                                      (2 042.9)   (1 700.1)

(1) Classified under IAS 39 as loans and receivables.
(2) Classified under IAS 39 as financial liabilities measured at amortised cost.
(3) Classified under IAS 39 as financial assets or liabilities at fair value through profit or loss.
(4) Designated as a hedging instrument.

* Refer to restatement note 9. 

Fair value hierarchy
The group's financial instruments carried at fair value are classified into three categories, defined as follows:
Level 1 financial instruments are those that are valued using unadjusted quoted prices in active markets for identical financial instruments.

Level 2 financial instruments are those valued using techniques based primarily on observable market data. Instruments in this category are valued using quoted prices
for similar instruments or identical instruments in markets which are not considered to be active; or valuation techniques where all the inputs that have a significant 
effect on the valuation are directly or indirectly based on observable market data. Financial instruments classified as level 2 are mainly comprised of other equity 
investments.

Level 3 financial instruments are those valued using techniques that incorporate information other than observable market data. Instruments in this category have been 
valued using a valuation technique where at least one input, which could have a significant effect on the instrument's valuation, is not based on observable market data.

The following financial instruments are carried at fair value and are further categorised into the appropriate fair value hierarchy:

Financial instruments    

                                                                        Fair value
                                                   Carrying 
Rmillion                                              value    Level 1   Level 2    Level 3

2018
Other equity investments                               56.9                 56.9
FEC liability designated as a hedging instrument       (3.3)                (3.3)
FEC asset at fair value through profit or loss          0.3                  0.3
Financial liabilities                              (2 042.9)                       (2 042.9)
Total                                              (1 989.0)         -      53.9   (2 042.9)

2017
Other equity investments                               55.3                 55.3
FEC liability designated as a hedging instrument       (4.9)                (4.9)
FEC asset at fair value through profit or loss          0.2                  0.2
Financial liabilities                              (1 700.1)                       (1 700.1)
Total                                              (1 649.5)         -      50.6   (1 700.1)

Level 2 valuation methods and inputs
The level 2 financial instruments consist of the investment in Group Risk Holdings (Pty) Ltd (GRH) and the Hypo Vorarlberg bank security deposit. The value of the 
investment in GRH is based on the group's premium contributions relative to other shareholders in GRH. The Hypo Vorarlberg bank security deposit is a portfolio of 
listed shares and bonds, the value of which are observable in the market.

Level 3 sensitivity information
The fair value of the level 3 financial liabilities of R2 042.9 million (2017: R1 700.1 million) was estimated by applying an income approach valuation method 
including a present value discount technique. The fair value measurement is based on significant inputs that are not observable in the market. Key inputs used in
the valuation include the estimated future profit targets for TIL JV Ltd and Fifth Season Investments (Pty) Ltd, and the discount rates applied. The estimated 
profitability was based on historical performances but adjusted for expected growth.

The following factors were applied in calculating the financial liabilities at 30 September 2018:

TIL JV Ltd
- Discount rate of 6.7% (2017: 7.2%)
- Closing rand/euro exchange rate of 16.46 (2017: 15.96)

SPAR Holding AG
- Discount rate of 2.0% (2017: 2.0%)
- Closing rand/Swiss franc exchange rate of 14.44 (2017: 13.95)

Fifth Season Investments (Pty) Ltd
- Discount rate of 13.3%

The following tables show how the fair value of the level 3 financial liabilities would change in relation to the discount rate if the discount rate increased or 
decreased by 0.5%.

                                      Discount  Sensitivity  Liability
                                        rate %     % change   Rmillion
TIL JV Ltd
2018
Financial liability                        6.7          0.5      (11.7)
Financial liability                        6.7         (0.5)      11.9

2017
Financial liability                        7.2          0.5      (14.0)
Financial liability                        7.2         (0.5)      14.3
SPAR Holding AG

2018
Financial liability                        2.0          0.5       (8.8)
Financial liability                        2.0         (0.5)       8.7

2017
Financial liability                        2.0          0.5      (11.9)
Financial liability                        2.0         (0.5)      12.1
Fifth Season Investments (Pty) Ltd

2018
Financial liability                       13.3          0.5       (1.0)
Financial liability                       13.3         (0.5)       1.0

The following tables show how the fair value of the level 3 financial liabilities would change in relation to change in the estimated future profit targets by 5.0%. 

                                      Sensitivity   Liability
                                         % change    Rmillion
TIL JV Ltd
2018
Financial liability                           5.0        59.2
Financial liability                          (5.0)      (59.1)

2017
Financial liability                           5.0        46.8
Financial liability                          (5.0)      (46.7)
Fifth Season Investments (Pty) Ltd

2018
Financial liability                           5.0         2.3
Financial liability                          (5.0)       (2.3)

Movements in level 3 financial instruments carried at fair value
The following tables show a reconciliation of the opening and closing balances of level 3 financial instruments carried at fair value:


Rmillion                                                          2018     2017

TIL JV Ltd
Balance at beginning of year                                     963.8    824.4
Finance costs recognised in profit or loss                        72.3     60.1
Net exchange differences arising during the period                40.6     27.7
Fair value adjustment                                            139.5     51.6
Balance at end of year                                         1 216.2    963.8
SPAR Holding AG
Balance at beginning of year                                     736.3    743.6
Finance costs recognised in profit or loss                        14.3     14.2
Net exchange differences arising during the period                 2.9    (37.6)
Foreign exchange translation                                      24.0     16.1
Balance at end of year                                           777.5    736.3
Fifth Season Investments (Pty) Ltd
Balance at beginning of year                                         -
Initial recognition                                               54.4
  Initial recognition reducing non-controlling interest balance   27.6
  Initial recognition in equity reserve                           26.8
Finance costs recognised in profit or loss                         6.4
Fair value adjustment                                            (11.6)
Balance at end of year                                            49.2        -

Total financial liabilities                                    2 042.9  1 700.1


7. COMMITMENTS  
                                                                                                 Land and
     Rmillion                                                                                   buildings    Other

7.1  Operating lease commitments
     Future minimum lease payments

     2018
     Payable within one year                                                                      1 623.6     78.2
     Payable later than one year but not later than five years                                    5 434.0    124.8
     Payable later than five years                                                                4 023.9     13.9
     Total                                                                                       11 081.5    216.9
     
     2017
     Payable within one year                                                                      1 804.0     69.9
     Payable later than one year but not later than five years                                    5 495.4    144.0
     Payable later than five years                                                                4 357.3     16.0
     Total                                                                                       11 656.7    229.9

     Future minimum lease payments relate to obligations under non-cancellable lease contracts.


     Rmillion                                                                                        2018     2017

 7.2 Operating lease receivables
     Future minimum sub-lease receivables
     Receivable within one year                                                                     952.7  1 124.7
     Receivable later than one year but not later than five years                                 3 132.3  3 185.9
     Receivable later than five years                                                             1 938.4  2 093.9
     Total operating lease receivables                                                            6 023.4  6 404.5

     Rmillion                                                                                        2018     2017

 7.3 Capital commitments
     Contracted                                                                                     200.5    549.8
     Approved but not contracted                                                                    143.5     94.8
     Total capital commitments                                                                      344.0    644.6

     Capital commitments will be financed from group resources.


8. FINANCIAL GUARANTEES  

The financial guarantees may be provided by the group to subsidiaries and affiliates. These financial guarantees are accounted for under IFRS 4 and initially measured
at cost and subsequently in terms of IAS 37 which requires the best estimate of the expenditure to settle the present obligation. Management have assessed that the 
amount that it would rationally pay to settle the obligation is nil.

Management's assessment is based on the ability of subsidiaries and affiliates having sufficient cash resources, in country, to service the underlying debt 
instrument's obligations as and when these become due.

The risk relating to financial guarantees is managed per geographical region through review of cash flow forecasts, budgets and monitoring of covenants.

The board has limited the guarantee facility to R190.0 million (2017: R190.0 million) relating to Numlite (Pty) Limited. In 2009, the company sold its investment
in retail computer equipment and ceded its right to receive payment of the existing and future rental streams to Numlite (Pty) Ltd, who in turn raises finance via a 
loan facility with an independent financial institution. The group has provided a limited guarantee relating to this loan facility.

The table below represents the full exposure of the group in relation to this financial guarantee as at 30 September 2018.

Rmillion                                             2018   2017

Financial Guarantees                                169.7  168.5
Guarantee of Numlite (Pty) Ltd finance obligations  169.7  168.5

9. PRIOR PERIOD RESTATEMENT AND CORRECTION OF PRESENTATION 

9.1 Correction of presentation 

During the year, the Group assessed all income streams from suppliers.

This evaluation revealed that the group had erroneously accounted for certain rebates and income within other income and in some instances recognised these net in
operating expenses.

In performing this assessment the following principles were considered:
-  Agreements with suppliers whereby volume-related rebates, promotional and marketing allowances and various other fees and discounts, received in connection with the
   purchase of goods are accounted for as a reduction to cost of sales.
-  Income which is earned for a distinct service is recognised as other income.
-  Income which is a genuine and specific recovery of a selling cost is recognised as a recovery of operating expenses.

9.2 Prior period restatement

SPAR gives out loans at the prime interest rate to retailers which are immediately sold at prime less one percent to an approved financial institution under a block
discounting agreement with recourse. These loans were previously disclosed as contingent liabilities due to SPAR providing financial guarantees against these 
discounting agreements, which have effectively transferred the loan receivable to the financial institution.

As these loans have been discounted to the financial institution with full recourse resulting in SPAR still being exposed to the credit risk on this transaction, it 
has been concluded that these loans which represent financial assets do not meet the derecognition criteria in terms of IAS 39. This has resulted in the recognition 
of a financial asset held at amortised cost which represents the amount owing by the retailer, and a financial liability held at amortised cost which represents the 
amount owing to the financial institution.

The restatement is effective for the year ended 30 September 2018 and has been applied retrospectively. This has resulted in a restatement of the comparative 2017 and
2016 figures on the statement of financial position. The aggregate effect of the restatement for these periods is as follows:

9.3 Prior period restatement and correction of presentation impact 

Prior period restatement and correction of presentation impact on statement of profit or loss and other comprehensive income

                                                                                                        2017    Effect of                  
                                                                                                  Originally    Reclassi-     Effect of        2017
                                                                                                   Presented     fication   Restatement    Restated

Revenue                                                                                             97 174.2         41.5          (6.4)   97 209.3
Turnover                                                                                            95 461.1        (88.0)                 95 373.1
Cost of sales                                                                                      (85 830.2)       666.9                 (85 163.3)
Gross profit                                                                                         9 630.9        578.9             -    10 209.8
Other income                                                                                         1 713.1        129.5          (6.4)    1 836.2
Net operating expenses                                                                              (8 760.6)      (708.4)            -    (9 469.0)
Warehousing and distribution expenses                                                               (2 871.7)       (83.3)                 (2 955.0)
Marketing and selling expenses                                                                      (4 000.4)      (578.0)                 (4 578.4)
Administration and information technology expenses                                                  (1 888.5)       (47.1)                 (1 935.6)

Trading profit                                                                                       2 583.4            -          (6.4)    2 577.0
BBBEE transactions                                                                                      (0.9)                                  (0.9)
Operating profit                                                                                     2 582.5            -          (6.4)    2 576.1
Other non-operating items                                                                              (54.6)                                 (54.6)
Interest income                                                                                        123.2                       70.5       193.7
Interest expense                                                                                      (113.2)                     (63.4)     (176.6)
Finance costs including foreign exchange gains and losses                                              (64.4)                                 (64.4)
Share of equity accounted associate (losses)/income                                                     (8.8)                                  (8.8)
Profit before taxation                                                                               2 464.7            -           0.7     2 465.4
Income tax expense                                                                                    (644.6)                      (0.2)     (644.8)
Profit for the year attributable to ordinary shareholders                                            1 820.1            -           0.5     1 820.6

                                                                                                       cents        cents         cents       cents

Basic earnings per share                                                                               945.2            -           0.3       945.5
Diluted earnings per share                                                                             939.1            -           0.3       939.4
Headline earnings per share                                                                            952.5            -           0.3       952.8
Diluted headline earnings per share                                                                    946.4            -           0.2       946.6


Prior period restatement impact on statement of financial position

                                                                                                        2017                     
                                                                                                  Originally       Effect of         2017
                                                                                                   Presented     Restatement     Restated

Block discounting loan receivable                                                                                      512.2        512.2
Deferred taxation asset                                                                                 15.7             5.7         21.4
Current portion of block discounting loan receivable                                                                   248.3        248.3
Retained earnings                                                                                    4 765.9           (14.6)     4 751.3
Block discounting loan payable                                                                                         525.1        525.1
Current portion of block discounting loan payable                                                                      255.7        255.7

                                                                                                        2016                     
                                                                                                  Originally       Effect of         2016
                                                                                                   Presented     Restatement     Restated
     
Block discounting loan receivable                                                                                      521.5        521.5
Deferred taxation asset                                                                                 30.9             5.9         36.8
Current portion of block discounting loan receivable                                                                   222.2        222.2
Retained earnings                                                                                    3 902.3           (15.1)     3 887.2
Block discounting loan payable                                                                                         536.4        536.4
Current portion of block discounting loan payable                                                                      228.3        228.3

Prior period restatement impact on statement of cash flows

                                                                                                        2017                     
                                                                                                  Originally       Effect of         2017
                                                                                                   Presented     Restatement     Restated

Cash flow from operating activities                                                                  1 141.2                      1 141.2
Cash generated from operations                                                                       3 292.1            (6.4)     3 285.7
Interest paid                                                                                         (112.5)            6.4       (106.1)

10. BLOCK DISCOUNTING LOANS 

Rmillion                                                   2018       2017
                                                                  Restated*

Block discounting loan receivable                         542.4      512.2
Current portion of block discounting loan receivable      225.8      248.3
Total block discounting loan receivable                   768.2      760.5

Block discounting loan payable                            553.6      525.1
Current portion of block discounting loan payable         232.3      255.7
Total block discounting loan payable                      785.9      780.8

SPAR gives out loans at the prime interest rate to retailers which are immediately sold at prime less one percent to an approved financial institution under a block
discounting agreement with recourse. The financial institution fulfils all administrative activities relating to the repayment of these loans, and will only revert 
to SPAR in the unusual instance of default on the part of the retailer.

As these loans have been discounted to the financial institution with full recourse resulting in SPAR still being exposed to the credit risk on this transaction, it 
has been concluded that these loans receivables do not meet the derecognition criteria for financial assets in terms of IAS 39. This has resulted in the recognition 
of a financial asset held at amortised cost which represents the amount owing by the retailer, and a financial liability held at amortised cost which represents the
amount owing to the financial institution.

Retailer loans are secured by notarial bonds over assets, deeds of suretyship, cession and pledge of shares and in some instances, lease options. The recoverability 
of amounts owed by retailers is regularly reviewed and assessed on an individual basis. A provision will be raised to the extent a loan is no longer considered 
recoverable. No provision has been raised at year-end as no material amounts are past due at year end. This is estimated considering past experience and additional 
risk factors such as significant actual or expected changes in the operating results or business conditions of the retailer. To the extent a loan is considered
irrecoverable, the debt is written off.

Schedule of repayment of borrowings

                                        2018        2017
Rmillion                                        Restated*

Year to September 2018                             302.7
Year to September 2019                 285.8       215.2
Year to September 2020                 236.7       164.7
Year to September 2021                 177.5       104.4
Year to September 2022                 114.7        39.9
Year to September 2023 onwards          37.5
                                       852.2       826.9

The schedule of borrowings represents the repayments that the retailer will make directly to the financial institution with whom the loans have been discounted.

* Refer to restatement note 9.

11. EVENTS AFTER THE REPORTING DATE

11.1 Acquisition of Roadfield Holdings Ltd

The BWG Group has purchased the entire shareholding of Roadfield Holdings Ltd (trading as Corrib Food Products) subject to the approval of the Competition and Consumer
Protection Commission (CCPC). Corrib Food Products is a wholesaler of predominantly chilled and frozen sectors in Ireland. The business operates from a major 
distribution centre based near Athenry, Co. Galway, and other distribution depots in Dublin. Approval for the transaction was received from the CCPC on 
31 October 2018.

11.2 The directors are not aware of any matters or circumstances, other than the above, arising since the end of the financial year which have or may significantly
     affect the financial position of the group or the results of its operations.

COMMENTARY 

SALIENT FEATURES
                                                                               Change 
Rmillion                                                      2018       2017      (%)

Turnover                                                 101 018.0   95 373.1*    5.9
Operating profit                                           2 779.3    2 576.1*    7.9
Earnings per share                             (cents)       948.9      945.5*    0.4
Headling earnings per share                    (cents)       965.7      952.8*    1.4
Normalised headline earnings per share (#)     (cents)     1 063.2      976.0*    8.9
Diluted headline earnings per share            (cents)       958.9      946.6*    1.3
Dividend per share                             (cents)       729.0      675.0     8.0
Net asset value per share                      (cents)     3 692.2    3 407.0*    8.4

* The prior year figures have been restated. Please refer to Note 9 of the notes to the summarised consolidated financial statements for further details.
# Headline earnings adjusted for fair value adjustments to, and foreign exchange losses on financial liabilities, and business acquisitions costs.

OVERVIEW OF TRADING RESULTS

The SPAR Group (the group) reported a pleasing performance for the year under review, with turnover increasing by 5.9% to R101.0 billion, despite continued challenging
trading conditions. The result has again been positively impacted by improving contributions from the European businesses and the group increased operating profit by 
7.9% to R2.8 billion. Profit before taxation of R2.5 billion was adversely impacted by fair value adjustments to, and foreign exchange losses on financial liabilities, 
together with increased interest expenditure resulting from cash outflows for acquisitions.

- SPAR Southern Africa contributed growth in wholesale turnover of 6.7%. This includes turnover reported by the pharmaceutical business, S Buys, acquired during the
  year. Excluding S Buys, SPAR Southern Africa produced wholesale turnover growth of 5.3% and stable gross margins, in a tough market environment. The TOPS liquor 
  brand delivered an impressive result with wholesale sales growth of 13.0%. Despite a generally weak building materials sector, Build It increased sales by 7.5% 
  enabled by strategic marketing efforts and grew market share. The SPAR Southern Africa store network increased to 2 236 stores, with  145 new stores opened across 
  all brands. The group completed 276 store upgrades across all brands, compared to 259 upgrades in the prior year.

- The BWG Group (SPAR Ireland) has continued to deliver strong euro-denominated results. The BWG Foodservice business reported impressive double-digit turnover growth, 
  while all of the retail brands enjoyed positive sales growth. The Kilcarbery distribution centre saw warehouse turnover increase by 6.9% as more product was directed
  through the facility. During May 2018, BWG completed the acquisition of 4 Aces Wholesale Limited which operates three cash-and-carry businesses in central Ireland.
  This business has been successfully integrated into the BWG Group's wholesale operations. SPAR Ireland's store network increased by a net 41 stores to finish the 
  year at 1 371 stores.

- SPAR Switzerland has made significant progress in addressing the overall business performance, despite  the difficult Swiss retail environment. While the reported
  turnover growth has remained negative, this was largely due to the strategic closure and sale of corporate retail stores during the year. However, this had a marked 
  positive impact on the profitability of the overall business. The core wholesale business continued to record improvements in profitability. SPAR Switzerland's 
  store network grew by the addition of 46 new stores to a total of 315 stores.

GROUP FINANCIAL REVIEW

                                                                 The SPAR
Rmillion                Southern Africa  Ireland   Switzerland  Group Ltd

Income statement
Turnover                       68 753.4  22 495.5      9 769.1  101 018.0
Gross profit                    6 190.7   2 823.6      1 778.7   10 793.0
Operating profit                2 080.3     574.4        124.6    2 779.3
Profit before taxation          1 841.6     537.9         84.6    2 464.1
Financial position
Total assets                   16 436.1   9 777.5      5 041.9   31 255.5
Total liabilities              12 718.1   7 263.5      4 164.1   24 145.7


Turnover of the SPAR Group increased by 5.9% to R101.0 billion (2017: R95.4 billion), with 31.9% (2017: 32.5%) of total turnover generated in foreign currency. The 
comparable Southern African business, with reported turnover growth of 5.3%, continued to be impacted by tough trading conditions. The turnover of the BWG Group 
increased by 4.2% in euro-currency terms. The continued depreciation of the rand against the euro over this period contributed to the 9.6% overall increase in 
reported turnover to R22.5 billion (2017: 20.5 billion). SPAR Switzerland contributed turnover of R9.8 billion (2017: R10.4 billion) with sales continuing to decline 
in an extremely difficult retail environment.

Gross margin on a restated basis increased to 10.7% but remained stable year-on-year at 10.1% on a pre-restated basis. SPAR Southern Africa increased its comparable 
gross margin slightly to 8.3%, despite the competitive market, as it continued to drive more product through its facilities - in particular, fresh and perishable 
categories. The BWG Group and SPAR Switzerland, which both operate in the higher margin convenience sector, reported comparable gross margins of 12.2% (2017: 12.1%) 
and 17.9% (2017: 18.0%) respectively.

Group operating expenses were well managed during the year, increasing by 5.6%, or 6.3% on a pre-restated basis, a noticeable improvement on the prior year. Excluding
the S Buys business (acquired effective  1 October 2017), the group expenses increased by 4.7%. The expense movement was positively impacted by the reduction in 
costs in the Swiss business of 4.7% through management initiatives and the disposal, or closure, of corporate stores. In Southern Africa, comparable operating 
expenses were up 7.8%. This was again attributable to increased marketing and promotional expenditures, higher transport and distribution costs (impacted by fuel 
cost increases of 17.9%) and further investment in IT infrastructure. The BWG Group's expenses grew by a well-controlled 4.4% in euro terms and continued to be 
impacted by increased depreciation charges and higher staff costs.

Profit before tax has remained flat year-on-year at R2.5 billion (2017: R2.5 billion), but was impacted by a net interest expense of R23.6 million, compared with net
interest income of R17.1 million in the prior year. The negative interest effect was further compounded by a significant foreign exchange loss of R43.5 million 
recognised on the translation of the South African euro-denominated financial liability to purchase the Irish and Swiss minority interests. Based on an improved 
Irish profit projection, this liability was also increased by a fair value revaluation of R139.5 million which also impacted profits.

Profit after tax improved 0.4% to R1 827.2 million (2017: R1 820.6 million), due to a slightly lower effective tax rate in Ireland.

Headline earnings per share increased by 1.4% to 965.7 cents (2017: 952.8 cents). The board approved a final dividend of 729 cents per share (2017: 675 cents per 
share), an increase of 8.0% year-on-year.

Cash generated from operations totalled R4.0 billion (2017: R3.3 billion) and reflected a strong improvement over the prior year due to reduced working capital 
levels. This was largely attributed to increased levels of trade payables due to payment cut-offs. The SPAR Group's cash flow from investing activities showed an 
outflow of R1 453.3 million, including total net capital expenditure of R772.3 million (2017: R1 090.9 million).  During this period the group concluded two major 
acquisitions in South Africa: a controlling interest in the  S Buys pharmaceutical wholesaler for R74.4 million and the Knowles Shopping Centre for R165.7 million.  
The BWG Group finalised the acquisition of the 4 Aces Wholesale business for R90.9 million. Taking into account the impact of a net R252.0 million outflow to reduced 
borrowings and a further R281.1 million for share repurchases, the group still closed the year in a net cash position of R1 598.2 million (2017: 1 472.0 million).

In Southern Africa, the group's capital expenditure during the period included operational investments of R256.1 million. This comprised primarily transport and 
logistics requirements as well as additional investment in IT infrastructure upgrades and software development. The BWG Group's capital expenditure amounted to 
R365.9 million, the majority of which was warehouse equipment, but did also include additional investments in retail property and IT technology. Capital expenditure 
in the Swiss operations of R149.1 million was incurred, including further store refurbishments and ongoing technology upgrades to enhance the retail offering. The 
group made further investments of R107.7 million to acquire ten corporate stores, defending strategically located retail locations in South Africa, the United
Kingdom and Ireland.

The budgeted capital expenditure for the year ahead in Southern Africa, amounting to R383.4 million (2017: R666.0 million) is expected to reduce to more normal 
operating levels, as no further property acquisitions are planned and construction plans for the previously announced distribution facilities have been placed on 
hold. In Ireland, budgeted capital spends of EUR32.0 million will continue to address a wide range of retail development commitments, while Spar Switzerland has 
CHF 25.0 million budgeted for further retail investments and additional improvements to own facilities and infrastructure. It is again anticipated that the foreign 
subsidiaries will fund all capital expenditure from their own cash flows.

GEOGRAPHICAL REVIEW

SPAR Southern Africa
The turnover of SPAR Southern Africa increased 6.7% to R68.8 billion (2017: R64.4 billion restated), but was positively influenced by the inclusion of the S Buys 
pharmaceutical business acquired on 1 October 2017. Excluding S Buys, the comparable business increased turnover by 5.3% (2017: 4.5%), reflecting the continued tough
retail market which remains underpinned by weak consumer spend. This result was positively boosted by strong liquor turnover growth of 13.0% and a very pleasing 
increase in the building materials business of 7.5%. The latter remains contrary to a weak building sector performance and reflected increased retailer loyalty and 
the results of strong marketing investments. Combined food and liquor wholesale turnover growth was recorded at 5.0% and needs to be viewed against internally 
calculated food inflation of 1.4% This inflation measure has continued to decline from the 1.9% measured at half year and the 6.0% reported in 2017.

Case volumes handled through the seven distribution centres continued to reflect the constrained market and increased 3.2% to 231.7 million cases 
(2017: 224.5 million cases). This positive volume growth reversed the decline in cases delivered recorded in the comparative year.

The retail turnover of SPAR stores increased 4.2% to R79.7 billion (2017: R76.5 billion) and recorded like-for-like retail growth of 2.3%. The combined food and 
liquor retail sales, which allow for a better industry comparison, increased by 5.1% and should be viewed against the significant decrease in food price inflation 
over the year. Wholesale turnover grew 4.1% to R53.7 billion, continuing to reflect the independent retailers' support of the group's voluntary trading model. 
Impacted by the material deflation recorded in certain commodity categories, total house brand turnover increased by 4.3% to R10.7 billion. Demand for SPAR-branded 
products was stronger at 5.8% for the year, with sales reaching R8.5 billion. The SPAR-branded private-label products continued to offer real consumer value and 
quality and remain a shopping differentiator for our retailers.

The group maintained the strong organic growth focus of existing retailers to drive profitability. Total retail space recorded strong growth of 3.8% (2017: 1.7%) and
was attributed to a number of large new stores. In addition, 170 SPAR stores were refurbished during the period to ensure they continued to provide retail offerings
to exceed consumer demands. A net 34 stores were opened, bringing the total SPAR store numbers to 937  by 30 September 2018.

The retail turnover of TOPS at SPAR increased by an impressive 11.3% to R11.2 billion (2017: R10.0 billion), as strong marketing initiatives and a refresh of the 
brand image attracted consumer spend. Like-for-like turnover growth amounted to 7.5% for the period. Wholesale turnover closely tracked the retail performance and 
grew by 13.0% to R6.5 billion (2017: R5.8billion). During the period, the TOPS at SPAR store network increased by 41 stores on a net basis to 774 stores while 53 
stores were revamped. The total retail liquor space increased 6.7% during the year.

Build it's retail turnover growth increased by 9.7% for the year, significantly higher than the building sector's calculated inflation of 3.8%, and against the 
backdrop of a challenging trading environment. This performance was underpinned by strong product and brand marketing and an added focus on retail execution to 
differentiate the brand. Like-for-like store growth was 7.4%. The group's buying teams drove increased retailer loyalty through improved product pricing. The 
influence of cement, which is a significant component of Build it's overall sales, continued to impact the turnover, as the continued oversupply has resulted in low 
category inflation of 0.5% over the year. Retail activity in the neighbouring countries continued to report strong growth totalling 11.9% for the year, which was 
positively influenced by improvements in both the Namibian and Mozambican stores. At wholesale level, turnover increased 7.5% to R7.6 billion (2017: R7.1 billion),
reflecting still further opportunities to grow retailer loyalty. Build it's house brand and imports showed solid growth of 11.0% for the year. At the year-end, 
Build it's store network totalled 376 stores, having opened a net eight stores during the year.

The S Buys pharmaceutical wholesale business was acquired with effect from 1 October 2017 and the revenue and profit were consolidated for the first time in this 
year. This strategic investment provides a full pharmaceutical wholesale service for the Pharmacy at SPAR retailers and management are actively working to convert 
their purchases to this wholesaler. The S Buys Group reported turnover of R929.0 million for the period, which amounted to a pleasing growth of 13.4%. This 
performance was driven by impressive increases of 17.1% in the Scriptwise business - catering for high-value speciality scripts - and 11.7% in wholesale sales, which
were largely attributed to increased procurement by SPAR pharmacies. The profitability of the business was, however, impacted by a lower than expected government 
regulated price increase of 1.3% compared to the 7.0%  in 2017.

The Pharmacy at SPAR business continued its growth trajectory adding 26 new stores and reporting an increase in retail turnover of 44.3% to R961 million. The 
retail organic growth was a healthy 17.2% and reflects the marketing and innovation benefits being enjoyed by these retailers. At the end of the period there were
 101 Pharmacy at SPAR stores.

SPAR Ireland
The BWG Group continued to deliver strong results for the year and reported euro-denominated turnover growth of 4.2% to EUR1.5 billion. This number was boosted by 
the inclusion of the 4 Aces business from May - if adjusted, the comparable group grew by 2.8%. Exchange rate weakness over the latter half of the year saw reported
turnover grow 9.6% to R22.5 billion (2017: R20.5 billion). Price measures over the financial year indicate that the grocery food and non-alcoholic drinks category
declined 2.2%, while alcohol and tobacco increased by 3.2%. (Source: Irish Central Statistics). Both the extreme weather conditions experienced in March and the 
above average warm summer brought significant sales benefits to the convenience sector as consumers bought larger quantities of food and beverages.

The hospitality sector remained strong and again boosted the sales of the BWG Foodservice and BWG Wines & Spirits divisions, which reported turnover growths of 
14.7% and 5.5% respectively. Compared with last year, all retail brands recorded positive growth, with the Londis brand increasing turnover to 4.9%, MACE growing 
by 4.4% and XL reporting growth of 4.5%. It was just as pleasing to report that all retail brands reported positive like-for-like growth.

The group's distribution volumes continued to show strong increases and record case movements continued to be handled in the Kilcarbery distribution centre which 
reported a sales increase of 6.9%. A real highlight for this business during the year was the recognition received through a number of prestigious logistics and 
transport awards, including the Irish Logistics Company of the Year award.

In South West England, BWG Group's Appleby Westward business reported an increase of 2.7% in sterling-denominated turnover. The slight improvement of the sterling 
decreased in the turnover result in reported euro  terms to 1.2%. This business represents approximately 12.2% of the consolidated BWG Group.

BWG Group's euro-denominated margin remained stable at 12.2% in highly competitive market conditions. Operating profit grew 13.0% to R574.4 million 
(2017: R508.2 million) while profit before tax increased 15.5% to R537.9 million (2017: R465.8 million).

The total number of stores across BWG Group's store formats at 30 September 2018 was 1 371 with 105 new stores added during the year.

Subsequent to the reporting period, the BWG Group announced the completion of the acquisition of  Corrib Food Products, a leading independent wholesaler with a 
significant presence in the chilled and frozen food sector in Ireland, along with being one of Ireland's leading suppliers of poultry products. The acquisition 
complements BWG's market-leading position in food distribution. It is also consistent with the group's strategy for growth and follows the successful acquisition 
of 4 Aces Wholesale earlier in the year.

SPAR Switzerland
The region reported turnover of R9.8 billion for the year (2017: R10.4 billion). Operating profit increased 80.6% to R124.6 million (2017: R69.0 million), while 
profit after tax increased by 17.5% to R67.1 million from a previous year profit of R57.1 million. This result was adversely impacted by finance costs, including 
foreign exchange impacts, relating to the valuation of the financial liability for the minority purchase obligation of R17.2 million  (2017: a net gain of 
R23.4 million).

The turnover performance of SPAR Switzerland continued to be negatively impacted by low economic growth in the retail market. While minor inflationary trends have 
been noted, with prices of food and non-alcoholic beverage prices increasing by 1.5%, alcoholic beverages being 0.7% higher, and a slight appreciation of the Swiss
franc against the euro, these have been insufficient to slow the attraction of cross border shopping that exists in Switzerland. SPAR Switzerland reported a 
decline in local currency measured turnover of -5.1%. However, this result continued to be negatively influenced by the strategic decision to exit from unprofitable
corporate retail stores. If the effect of these corporate stores was adjusted for, the local currency turnover decline would have been -0.8%. SPAR Switzerland 
launched 46 new stores during the year, including a large group of 41 stores in the west of the country that are now being serviced. At the end of the year there 
were 315 corporate and independent retailers serviced.

The cash-and-carry business, trading as TopCC, reported a disappointing decline in turnover for the year which was largely attributed to business closures in the 
Swiss restaurant and hospitality sectors. The group is investigating upgrade opportunities in the fresh offerings of these stores as this area is offering growth 
and this can be further maximised.

Warehouse turnover increased by a pleasing 1.5% for the year, reversing the declines previously reported, as SPAR retail activity was positively influenced by
innovative marketing campaigns, including the launch of a consumer loyalty card. Store delivery frequency, fleet optimisation as well as store ordering initiatives 
were implemented during the year which have resulted in significant improvements in logistics efficiencies, productivity and overall costs.

Despite the decline in overall turnover, the business succeeded in improving margins and reducing costs.

PROSPECTS
Against the backdrop of subdued consumer and business confidence in Southern Africa, the trading environment is expected to remain largely unchanged in the medium 
term. While food price inflation has recently dropped to extremely low levels, there are discernible signs that the cycle will start to turn. Recent record 
movements in fuel prices and continued foreign currency weakness also indicate that consumers will remain under pressure, with a constrained spending outlook. In 
response, SPAR's extensive distribution capability and market-leading brands are well positioned to deliver exceptional value to consumers and to also ensure that 
its independent retailers remain suitably positioned to meet these economic challenges.

The Irish business outlook, still influenced by Brexit uncertainties, remains positively cautious in both territories where they operate. Management's proactive 
response to market changes should ensure that SPAR Ireland will deliver a result in line with expectations. The acquisition of the Corrib Food Products wholesale 
business subsequent to the reporting date will further strengthen the Irish group's growth objectives.

The Swiss business will maintain its focus on driving the identified strategic initiatives to improve the turnover performance. The group continues to recognise 
that these objectives will take time to realise, but positive changes are being recorded.

The group remains well positioned to continue to create value for shareholders through its growing, diversified business and well-established retail brands.

Mike Hankinson        Graham O'Connor
Chairman              Chief Executive Officer

13 November 2018

DECLARATION OF ORDINARY DIVIDEND 
Notice is hereby given that a gross final cash dividend of 459 cents per share has been declared by the board in respect of the year ended 30 September 2018. The 
dividend has been declared out of income reserves. This brings the total gross dividend for the year to 729 cents (2017: 675 cents) per ordinary share. 

The salient dates for the payment of the final dividend are detailed below: 

Last day to trade cum-dividend                          Tuesday, 4 December 2018
Shares to commence trading ex-dividend                Wednesday, 5 December 2018
Record date                                              Friday, 7 December 2018
Payment of dividend                                     Monday, 10 December 2018

Shareholders will not be permitted to dematerialise or rematerialise their shares between Wednesday, 5 December 2018 and Friday, 7 December 2018, both days inclusive. 

In terms of South African taxation legislation effective from 1 April 2012 and the JSE Listing Requirements, the following additional information is disclosed: 
- The South African local dividend tax rate is 20% (2017: 20%); 
- The net local dividend amount is 367.2 cents per share for shareholders liable to pay tax on dividends and 459 cents per share for shareholders exempt from such
  dividend tax; 
- The issued share capital of The SPAR Group Ltd is 192 602 355 ordinary shares; and 
- The SPAR Group Ltd's tax reference number is 9285/168/20/0. 

By order of the board 

MJ Hogan 
Company Secretary 

Pinetown 
13 November 2018 

DIRECTORATE AND ADMINISTRATION

DIRECTORS: MJ Hankinson* (Chairman), GO O'Connor (Chief Executive Officer), MW Godfrey, WA Hook, MP Madi*, M Mashologu*, HK Mehta*, P Mnganga*, R Venter, AG Waller*, 
CF Wells*

* Non-executive

Company Secretary: MJ Hogan

Registered office
22 Chancery Lane
PO Box 1589
Pinetown
3600

Transfer secretaries
Link Market Services South Africa (Pty) Ltd
PO Box 4844
Johannesburg
2000

Auditors
PricewaterhouseCoopers Inc.
PO Box 1274
Umhlanga Rocks
4320

Sponsor
One Capital
PO Box 784573
Sandton
2146

Bankers
Rand Merchant Bank, a division of FirstRand Bank Ltd
PO Box 4130
The Square
Umhlanga Rocks
4021

Attorneys
Garlicke & Bousfield
PO Box 1219
Umhlanga Rocks
4320

Website
www.spar.co.za


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