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SPP
SPP
SPP - The Spar Group Limited - Unaudited interim results for the six months
ended 31 March 2007 and dividend declaration
The Spar Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1967/001572/06)
Share code: SPP
ISIN Number: ZAE000058517
Operating profit +28.2%
Headline earnings 156.3 cents per share +28.5%
Interim dividend 72.5 cents per share +51.0%
Unaudited Interim Results for the Six months ended 31 March 2007
CONDENSED INCOME STATEMENT
Unaudited Unaudited
Six months Six months Audited
ended ended year ended
Rmillion March 2007 Change March 2006 Sept 2006
REVENUE 10 783.6 31.0% 8 231.2 17 176.6
Turnover 10 685.9 31.1% 8 153.6 17 009.6
Cost of Sales (9 821.1) (7 453.8) (15 581.3)
Gross Profit 864.8 699.8 1 428.3
Other Income 97.7 77.6 167.0
Operating Expenses (565.0) (467.3) (992.5)
OPERATING PROFIT 397.5 28.2% 310.1 602.8
Interest received 12.6 7.5 21.7
Interest paid (6.6) (2.7) (6.1)
Share of profit of
associate - 0.5 0.3
Profit before taxation 403.5 27.9% 315.4 618.7
Taxation (141.6) (109.0) (211.1)
PROFIT FOR THE PERIOD
ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 261.9 26.9% 206.4 407.6
EARNINGS PER SHARE
(CENTS)
Earnings per share 156.5 28.5% 121.8 240.5
Fully diluted earnings
per share 149.7 117.6 231.7
SALIENT STATISTICS
Headline earnings
per share (cents) 156.3 28.5% 121.7 240.0
Fully diluted headline
earnings per share
(cents) 149.6 117.4 231.2
Dividend per share
(cents) 72.5 51.0% 48.0 123.0
Net asset value
per share (cents) 611.8 507.8 533.5
Net margin (%) 3.7 3.8 3.5
Return on average
equity (%) 27.3 25.6 49.6
HEADLINE EARNINGS
RECONCILIATION
Profit for the period
attributable to
ordinary shareholders 261.9 206.4 407.6
Adjusted for:
Profit on sale of property,
plant and equipment,
net of impairments and
net of taxation effect (0.2) (0.3) (0.9)
HEADLINE EARNINGS 261.7 27.0% 206.1 406.7
CONDENSED STATEMENT OF CHANGES IN EQUITY
Share based
Share capital Treasury payment
Rmillion and premium shares reserve
Total capital and reserves at
30 September 2005 5.4 - 18.5
Net profit for the period - - -
Share based payment reserve - - 8.6
Shares issued 5.1 - -
Dividends declared - - -
Total capital and reserves at
31 March 2006 10.5 - 27.1
Net profit for the period - - -
Share based payment reserve - - 7.9
Shares issued 2.9 - -
Share repurchases - (99.8) -
Dividends declared - - -
Total capital and reserves at
30 September 2006 13.4 (99.8) 35.0
Net profit for the period - - -
Share based payment reserve - - 9.2
Take-up of share options - 29.1 (20.0)
Share repurchases - (19.9) -
Dividends declared - - -
Total capital and reserves at
31 March 2007 13.4 (90.6) 24.2
Attributable
Retained to ordinary
Rmillion earnings shareholders
Total capital and reserves at
30 September 2005 726.9 750.8
Net profit for the period 206.4 206.4
Share based payment reserve - 8.6
Shares issued - 5.1
Dividend s declared (109.2) (109.2)
Total capital and reserves at
31 March 2006 824.1 861.7
Net profit for the period 201.2 201.2
Share based payment reserve - 7.9
Shares issued - 2.9
Share repurchases - (99.8)
Dividends declared (81.5) (81.5)
Total capital and reserves at
30 September 2006 943.8 892.4
Net profit for the period 261.9 261.9
Share based payment reserve - 9.2
Take-up of share options - 9.1
Share repurchases - (19.9)
Dividends declared (127.4) (127.4)
Total capital and reserves at
31 March 2007 1 078.3 1 025.3
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 72.5 cents per share has been
declared in respect of the six months ended 31 March 2007.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum-dividend Friday, 1 June 2007
Shares to commence trading ex-dividend Monday, 4 June 2007
Record date Friday, 8 June 2007
Payment of dividend Monday, 11 June 2007
Shareholders will not be permitted to dematerialise or rematerialise their share
certificates between Monday, 4 June 2007 and Friday, 8 June 2007, both days
inclusive.
By order of the board
KJ O`Brien Pinetown
Secretary 16 May 2007
CONDENSED BALANCE SHEET
Unaudited Unaudited Restated
Rmillion March 2007 March 2006 Sept 2006
ASSETS
NON CURRENT ASSETS 1 083.2 799.8 925.9
Property, plant and equipment 636.4 430.2 519.1
Goodwill 245.6 245.6 245.6
Investment in associate 5.5 5.7 5.5
Loans 87.3 20.1 51.0
Operating lease receivables (Note 4) 108.4 91.1 104.7
Deferred taxation asset - 7.1 -
CURRENT ASSETS 3 061.3 2 362.1 2 702.6
Inventories 574.1 438.7 449.3
Trade receivables 2 389.6 1 842.8 2 146.3
Prepayments 1.7 4.0 12.5
Short-term loans 20.1 4.4 16.7
Current portion of operating
lease receivables (Note 4) 9.8 8.1 9.2
Bank balances - Guilds 66.0 64.1 68.6
TOTAL ASSETS 4 144.5 3 161.9 3 628.5
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 025.3 861.7 892.4
Share capital and premium (Note 2) 13.4 10.5 13.4
Treasury shares (90.6) - (99.8)
Share based payment reserve 24.2 27.1 35.0
Retained earnings 1 078.3 824.1 943.8
NON CURRENT LIABILITIES 171.5 140.6 160.5
Deferred taxation liability 12.2 - 6.1
Post retirement medical aid
provision 51.3 48.6 49.8
Long-term borrowings 0.2 1.3 0.4
Operating lease payables (Note 4) 107.8 90.7 104.2
CURRENT LIABILITIES 2 947.7 2 159.6 2 575.6
Trade payables and accruals 2 550.8 2 028.8 2 419.9
Current portion of long -term
borrowings 37.4 36.7 37.6
Current portion of operating
lease payables (Note 4) 10.4 8.5 9.7
Provisions 68.8 24.1 64.4
Taxation 35.5 18.7 16.9
Bank overdrafts 244.8 42.8 27.1
TOTAL EQUITY AND LIABILITIES 4 144.5 3 161.9 3 628.5
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES
The condensed financial statements have been prepared in accordance with IAS 34
- Interim Financial Reporting and have been prepared under the historical cost
convention, except for financial instruments which are fair valued. The
accounting policies adopted are consistent with those applied in the annual
financial statements for the year ended 30 September 2006.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
Rmillion March 2007 March 2006 Sept 2006
2. SHARE CAPITAL AND PREMIUM
AUTHORISED
250 000 000 (March 2006:
250 000 000)
ordinary shares of 0.06 cents
(March 2006: 0.06 cents) each 0.2 0.2 0.2
ISSUED
169 940 035 (March 2006:
169 713 436)
ordinary shares of 0.06 cents
(March 2006:
0.06 cents) each 0.1 0.1 0.1
SHARE PREMIUM ACCOUNT
Balance at beginning of period 13.3 5.3 5.3
Shares issued during the period - 5.1 8.0
Total share capital and premium 13.4 10.5 13.4
Pursuant to the exercising of options, 4 100 ordinary shares (March 2006: 453
401) were issued during the six months ended 31 March 2007, thereby increasing
the issued share capital to R101 964 (March 2006: R101 828) consisting of 169
940 035 shares (March 2006: 169 713 436) of 0.06 cents each.
The weighted average number of shares (net of treasury shares) used in the
calculation of earnings per share and headline earnings per share was 167 399
890 (March 2006: 169 429 967).
Fully diluted earnings and headline earnings per share were based on a weighted
average number (net of treasury shares) of 174 917 450 (March 2006: 175 559 088)
ordinary shares.
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
Rmillion March 2007 March 2006 Sept 2006
3. CONTINGENT LIABILITIES
The company has guaranteed
the finance obligations of certain
SPAR retailer members to
the amount of: 146.8 192.3 164.8
4. OPERATING LEASES
The operating lease receivables and
payables relating to sublet
properties
have been restated by R91,9 million
due to an error at the initial
measurement date. This has had no
effect on opening equity, or on
current or comparative earnings.
OPERATING LEASE COSTS CHARGED
AGAINST OPERATING PROFITS
Immovable property 1.4 0.8 1.5
- lease rentals 65.0 48.9 103.5
- sub-lease recoveries (63.6) (48.1) (102.0)
Plant, equipment and vehicles 6.8 1.0 13.4
OPERATING LEASE COMMITMENTS
Future minimum lease payments under
non-cancellable operating leases
are as follows: 1 388.2 1 153.3 1 297.6
- land and buildings 1 386.6 1 150.7 1 295.6
- other 1.6 2.6 2.0
The future minimum sub-lease
recoveries under non-cancellable
property leases are: (1 370.4) (1 132.2) (1 277.6)
Net commitments 17.8 21.1 20.0
5. CAPITAL COMMITMENTS
Contracted 209.7 29.3 95.0
Approved but not contracted 29.2 243.2 206.7
238.9 272.5 301.7
6. SEGMENTAL REPORTING
The group operates its business from six distribution centres situated
throughout Southern Africa. The distribution centres individually supply goods
and services of a similar nature to the group`s voluntary trading members. The
directors are of the opinion that the operations of the individual distribution
centres are substantially similar to one another and that the risks and returns
of these distribution centres are likewise similar. As a consequence thereof,
the business of the group is considered to be a single operating segment.
7. POST BALANCE SHEET EVENTS
No material events have occurred subsequent to 31 March 2007 which may have an
impact on the group`s reported financial position at this date.
CONDENSED CASH FLOW STATEMENT
Unaudited Unaudited
Six months Six months Audited
ended ended Year ended
Rmillion March 2007 March 2006 Sept 2006
CASH FLOWS FROM OPERATING
ACTIVITIES (27.2) 104.7 372.7
Operating cash flows before working
capital changes 433.0 339.0 665.1
Net working capital changes (221.7) (35.7) 69.4
Interest received 12.4 6.9 21.4
Interest paid (6.6) (0.5) (6.1)
Taxation paid (116.8) (95.8) (186.4)
Dividends paid (127.5) (109.2) (190.7)
CASH FLOWS FROM INVESTING
ACTIVITIES (182.0) (84.5) (237.5)
Investment to maintain operations (16.1) (24.1) (37.3)
- Replacement of property, plant
and equipment (16.7) (24.6) (39.7)
- Proceeds on disposal of
property, plant
and equipment 0.6 0.5 2.4
Investment to expand operations (126.2) (53.8) (150.1)
Net movement on loans and
investments (39.7) (6.6) (50.1)
CASH FLOWS FROM FINANCING
ACTIVITIES (11.1) 0.9 (93.9)
Proceeds from issue of share
capital and premium - 5.1 8.0
Share repurchases (19.9) - (99.8)
Proceeds from the exercise
of share options 9.1 - -
Repayment of long -term borrowings (0.3) (4.2) (2.1)
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (220.3) 21.1 41.3
NET CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 41.5 0.2 0.2
NET (OVERDRAFTS)/CASH AND
CASH EQUIVALENTS AT END OF PERIOD (178.8) 21.3 41.5
REVIEW OF TRADING RESULTS
On the back of excellent retail performance by SPAR, TOPS and BUILD IT stores,
the group achieved substantial sales growth. Performance was influenced by
continued strong consumer spending, higher inflation levels, aggressive
marketing and above market organic growth. The group again achieved further
market penetration.
With margins and expenditure well controlled, the strong sales performance
translated into an operating profit of R397 million, 28.2% up on interim 2006.
Operating cash flows remained strong, but net cash reflected the further capex
investment in distribution facilities and a temporary increase in working
capital requirements. The group continued to repurchase its shares and acquired
a further 417 866 shares as at the 31st March 2007.
STORE NUMBERS AND RETAIL SELLING AREAS
The six months under review saw the opening of 17 new stores. The store
regeneration programme continued with 50 stores undergoing major upgrades and 11
stores moving to a bigger store format. At the 31st March the group serviced 158
SUPERSPAR, 484 SPAR and 165 KWIKSPAR retail outlets. Total retail trading space
increased 3.6% to 753 479msq.
TOPS store numbers rose to 258 stores (42 new stores), whilst BUILD IT opened a
further 11 stores. BUILD IT now supplies 228 stores countrywide.
CAPITAL EXPENDITURE
The substantial growth being experienced by the group continues to put extreme
pressure on all distribution facilities and considerable attention has been
given to planning for the long-term resolution of the group`s current capacity
constraints. To this end the group is looking to acquire further property in
KwaZulu-Natal and in the Gauteng region.
Additional land was purchased adjoining the group`s South Rand distribution
centre and the planning of an extension to the existing distribution facility is
underway. Construction of the extension to the facility will commence as soon as
regulatory approvals have been secured.
Construction of the group`s new distribution facility in the Western Cape is
progressing well and trading from this facility will commence, as planned,
during the first quarter of calendar 2008. The group`s existing facility in
Montague Gardens will be disposed of once the move to the new facility is
complete.
LOOKING FORWARD
It is anticipated that buoyant trading conditions will continue for the
remainder of the financial year, notwithstanding a reported softening of
consumer spending. Planned store openings and further growth in retail selling
areas are also forecast.
DIVIDEND
In line with the group`s stated policy to decrease the dividend cover, a
dividend of 72.5 cents per share has been declared. This dividend represents a
51.0% increase on the 2006 interim declaration.
DIRECTORATE
During the period under review Roelf Venter was appointed as an executive
director of the group.
M J Hankinson W A Hook
Chairman Chief Executive
16 May 2007
DIRECTORATE AND ADMINISTRATION
DIRECTORS: MJ Hankinson* (Chairman), WA Hook (Chief Executive), RW Coe, DB
Gibbon*, PK Hughes*, RJ Hutchison*, MP Madi*, HK Mehta*, P Mnganga*, R Venter.
* Non executive
COMPANY SECRETARY: KJ O`Brien
ISIN: ZAE000058517
JSE CODE: SPP
REGISTERED OFFICE: 22 Chancery Lane, PO Box 1589, Pinetown, 3600
TRANSFER SECRETARIES: Link Market Services South Africa (Pty) Ltd, PO Box
4844, Johannesburg, 2000
AUDIRORS: Deloitte & Touche, PO Box 243, Durban, 4000
SPONSORS: Rand Merchant Bank, PO Box 786273, Sandton, 2146
BANKERS: First National Bank, PO Box 4130, Umhlanga Rocks, 4320
ATTORNEYS: Garlicke & Bousfield, PO Box 1219, Umhlanga Rocks, 4320
Website: www.spar.co.za
Date: 16/05/2007 17:30:01 Produced by the JSE SENS Department.
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