| Wed 14 May 2008, 7:30 | | SPP - The SPAR Group - Unaudited Interim Results F |
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SPP
SPP
SPP - The SPAR Group - Unaudited Interim Results For The Six Months Ended 31
March 2008 And Cash Dividend Declaration
The SPAR Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1967/001572/06
ISIN: ZAE000058517
JSE CODE: SPP
("SPAR" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2008 AND CASH
DIVIDEND DECLARATION
- OPERATING PROFIT +24.8%
- HEADLINE EARNINGS PER SHARE +28.7%
- INTERIM DIVIDEND 100 CENTS PER SHARE +37.9%
Condensed Income Statement
Unaudited Unaudited Audited
Six months Six months Year
% ended ended ended
Rmillion Change Mar 2008 Mar 2007 Sept 2007
REVENUE 21.1 13 061.1 10 783.6 21 903.1
Turnover 21.1 12 936.7 10 685.9 21 704.0
Cost of sales (11 884.3) (9 821.1) (19 926.9)
Gross profit 1 052.4 864.8 1 777.1
Other income 124.4 97.7 199.1
Operating expenses (680.6) (565.0) (1 201.5)
OPERATING PROFIT 24.8 496.2 397.5 774.7
Interest received 21.7 12.6 32.3
Interest paid (10.4) (6.6) (10.3)
Share of equity
accounted associate - - (2.0)
Profit before taxation 25.8 507.5 403.5 794.7
Taxation (170.0) (141.6) (271.7)
PROFIT FOR THE PERIOD
ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 28.9 337.5 261.9 523.0
EARNINGS PER SHARE
Earnings per share
(cents) 29.1 202.0 156.5 313.0
Diluted earnings per
share (cents) 193.0 149.7 299.0
SALIENT STATISTICS
Headline earnings per
share (cents) 28.7 201.2 156.3 312.3
Diluted headline
earnings per share
(cents) 192.2 149.6 298.4
Dividend per share
(cents) 37.9 100.0 72.5 185.0
Net asset value per
share (cents) 764.4 611.8 666.9
Operating profit margin (%) 3.8 3.7 3.6
Return on equity (%) 28.0 27.3 52.3
HEADLINE EARNINGS
RECONCILIATION
Profit for the year
attributable to
ordinary shareholders 337.5 261.9 523.0
Adjusted for:
Profit on sale of
property, plant and
equipment (1.8) (0.3) (2.1)
Impairment of property,
plant and equipment - - 0.5
Tax effects of
adjustments 0.5 0.1 0.5
HEADLINE EARNINGS 28.5 336.2 261.7 521.9
Condensed Balance Sheet
Unaudited Unaudited Audited
Rmillion Mar 2008 Mar 2007 Sept 2007
ASSETS
NON-CURRENT ASSETS 1 462.3 1 086.4 1 242.5
Property, plant and equipment 940.4 636.4 736.2
Goodwill 245.6 245.6 245.6
Investment in associate 3.5 5.5 3.5
Finance lease receivables 14.4 3.2 9.3
Operating lease receivables 118.5 108.4 115.3
Loans 122.2 87.3 114.0
Other non-current assets 3.6 4.1
Deferred taxation asset 14.1 14.5
CURRENT ASSETS 3 784.5 3 058.1 3 815.0
Inventories 689.7 574.1 594.5
Trade and other receivables 2 869.2 2 385.8 2 677.9
Prepayments 9.0 1.7 17.8
Finance lease receivables 3.6 0.6 2.2
Operating lease receivables 11.5 9.8 10.3
Loans 29.7 20.1 31.1
Bank balances and cash 66.6 389.2
Bank balances - Guilds 77.5 66.0 64.3
3 756.8 3 058.1 3 787.3
Non-current assets held for sale 27.7 27.7
TOTAL ASSETS 5 246.8 4 144.5 5 057.5
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 298.8 1 025.3 1 109.7
Share capital and premium 13.4 13.4 13.4
Treasury shares (105.9) (90.6) (154.4)
Share based payment reserve 20.5 24.2 30.2
Retained earnings 1 370.8 1 078.3 1 220.5
NON-CURRENT LIABILITIES 175.7 171.5 169.8
Deferred taxation liability 12.2
Post retirement medical aid provision 57.8 51.3 54.8
Borrowings 0.2
Operating lease payables 117.9 107.8 115.0
CURRENT LIABILITIES 3 772.3 2 947.7 3 778.0
Trade and other payables 3 677.5 2 550.8 3 691.9
Borrowings 37.4 0.4
Operating lease payables 12.3 10.4 10.9
Provisions 5.1 68.8 3.5
Taxation 77.4 35.5 71.3
Bank overdrafts 244.8
TOTAL EQUITY AND LIABILITIES 5 246.8 4 144.5 5 057.5
Condensed Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
Rmillion Mar 2008 Mar 2007 Sept 2007
CASH FLOWS FROM OPERATING ACTIVITIES (93.0) (27.2) 924.7
Operating cash flows before working
capital changes 553.5 433.0 865.3
Net working capital changes (306.7) (221.7) 521.9
Interest received 21.4 12.4 32.0
Interest paid (10.4) (6.6) (10.3)
Taxation paid (163.6) (116.8) (237.9)
Dividends paid (187.2) (127.5) (246.3)
CASH FLOWS FROM INVESTING ACTIVITIES (242.4) (182.0) (393.8)
Investment to maintain operations (10.9) (16.1) (20.7)
- replacement of property, plant
and equipment (14.5) (16.7) (38.7)
- proceeds on disposal of property,
plant and equipment 3.6 0.6 18.0
Investment to expand operations (224.5) (126.2) (275.9)
Net movement on loans and
investments (7.0) (39.7) (97.2)
CASH FLOWS FROM FINANCING ACTIVITIES 26.0 (11.1) (118.1)
Proceeds from the exercise of share
options 26.4 9.1 11.6
Share repurchases - (19.9) (92.1)
Repayment of long-term borrowings (0.4) (0.3) (37.6)
NET CHANGE IN CASH AND CASH
EQUIVALENTS (309.4) (220.3) 412.8
NET CASH AND CASH EQUIVALENTS AT
BEGINNING
OF PERIOD 453.5 41.5 41.5
Effects of exchange rate changes on
the balance of cash
held in foreign currencies (0.8)
NET CASH AND CASH EQUIVALENTS AT
END OF PERIOD 144.1 (178.8) 453.5
Condensed Statement of Changes in Equity
Share based
Share capital Treasury payment
Rmillion and premium shares reserve
Total capital and reserves at
30 September 2006 13.4 (99.8) 35.0
Net profit for the period - - -
Recognition of share based
payments - - 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
Net profit for the period - - -
Recognition of share based
payments - - 11.9
Take-up of share options - 8.4 (5.9)
Share repurchases - (72.2) -
Dividends declared - - -
Total capital and reserves at
30 September 2007 13.4 (154.4) 30.2
Net profit for the period - - -
Recognition of share based
payments - - 12.4
Take-up of share options - 48.5 (22.1)
Dividends declared - - -
Total capital and reserves at
31 March 2008 13.4 (105.9) 20.5
Attributable
Retained to ordinary
Rmillion earnings shareholders
Total capital and reserves at
30 September 2006 943.8 892.4
Net profit for the period 261.9 261.9
Recognition of share based payments - 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
Net profit for the period 261.1 261.1
Recognition of share based payments - 11.9
Take-up of share options - 2.5
Share repurchases - (72.2)
Dividends declared (118.9) (118.9)
Total capital and reserves at
30 September 2007 1 220.5 1 109.7
Net profit for the period 337.5 337.5
Recognition of share based payments - 12.4
Take-up of share options - 26.4
Dividends declared (187.2) (187.2)
Total capital and reserves at
31 March 2008 1 370.8 1 298.8
Notes to the Condensed Financial
Statements
1 BASIS OF PRESENTATION AND COMPLIANCE WITH INTERNATIONAL FINANCIAL REPORTING
STANDARDS
The group financial results, from which these condensed financial statements
were derived, are prepared in accordance with International Financial Reporting
Standards and have been prepared on the historical cost basis except for the
revaluation of financial instruments, the valuation of share based payments and
the post retirement medical obligation. The principal accounting policies
adopted are consistent with those of the previous year. These condensed
financial statements have been prepared in terms of IAS 34
- Interim financial reporting.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
Mar 2008 Mar 2007 Sept 2007
Rmillion
2 NON-CURRENT ASSETS CLASSIFIED AS
HELD FOR SALE
Property, plant and equipment held
for sale 27.7 27.7
3 SHARE CAPITAL AND PREMIUM
Authorised
250 000 000 (March 2007: 250 000
000) ordinary shares of 0.06 cents
(March 2007: 0.06 cents) each 0.2 0.2 0.2
Issued
169 940 035 (March 2007: 169 940
035) ordinary shares of 0.06 cents
(March 2007: 0.06 cents) each 0.1 0.1 0.1
Share premium account 13.3 13.3 13.3
Balance at beginning of year 13.3 13.3 13.3
Shares issued during the year
Total share capital and premium 13.4 13.4 13.4
The weighted average number of
ordinary shares (net of
treasury shares) used in the
calculation of earnings per
share and headline earnings per
share was 167 100 486
(March 2007: 167 399 890). Diluted
earnings and headline earnings
per share were based on a weighted
average number of ordinary shares
(net of treasury shares) of
174 890 154 (March 2007:
174 917 450).
4 CONTINGENT LIABILITIES
The company has guaranteed the
finance obligations of
certain SPAR retailer members to
the amount of 128.6 146.8 123.5
5 OPERATING LEASES
Operating lease costs charged
against operating profit
Immovable property 5.2 1.4 6.2
- lease rentals 81.0 65.0 138.0
- sub-lease recoveries (75.8) (63.6) (131.8)
Plant, equipment and vehicles 2.6 6.8 12.9
Operating lease commitments
Future minimum lease payments under
non-cancellable
operating leases 1 630.0 1 388.2 1 542.3
- land and buildings 1 627.9 1 386.6 1 540.0
- other 2.1 1.6 2.3
The future minimum sub-lease
recoveries under non-
cancellable property leases (1 597.9) (1 370.4) (1 524.3)
Net commitments 32.1 17.8 18.0
6 CAPITAL COMMITMENTS
Contracted 188.2 209.7 281.8
Approved but not contracted 163.3 29.2 192.5
351.5 238.9 474.3
7 SEGMENTAL REPORTING
The group operates its business from six distribution centres situated
throughout South Africa. The distribution centres individually supply goods and
services of a similar nature to the group`s voluntary trading members. The
directors are of the opinion that the operations of the individual distribution
centres are substantially similar to one another and that the risks and returns
of these distribution centres are likewise similar. As a consequence thereof,
the business of the group is considered to be a single geographic segment. TOPS
at SPAR and Build it, although constituting distinct businesses at retail, do
not satisfy the thresholds of significance for disclosure as separate
reportable segments of the group.
8 POST BALANCE SHEET EVENTS
No material events have occurred subsequent to 31 March 2008 which may have an
impact on the group`s reported financial position at this date.
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 100 cents per share has
been declared in respect of the 6 months ended 31 March 2008.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum-dividend Friday, 30 May 2008
Shares to commence trading ex-dividend Monday, 2 June 2008
Record date Friday, 6 June 2008
Payment of dividend Monday, 9 June 2008
Shareholders will not be permitted to dematerialise or rematerialise their
share certificates between Monday, 2 June 2008 and Friday, 6 June 2008, both
days inclusive.
By order of the board
KJ O`Brien Pinetown
Company Secretary 13 May 2008
Review of Trading Results
During the period under review the group again produced solid trading results
buoyed in particular by strong volume growth. At retail, good organic growth
(assisted by SPAR`s store remodel programme), new store openings and aggressive
marketing activity resulted in market share gains. Distribution centre
comparable turnover growth was 24.3%
Operating profit at R496.2 million increased 24.8%. The group maintained its
trading gross margin at 8.1%. Expenditures were satisfactorily controlled,
notwithstanding substantially higher fuel and transport costs (up 42.7%) and
depreciation costs of R33.0 million (2007 - R25.1 million).
SPAR retail outlets continued to trade well in a competitive market, with the
group`s 45th year anniversary providing an exciting promotional platform.
Fifteen new SPAR stores opened during the period, taking total store numbers,
to 817. At 31 March, the group serviced 197 SUPERSPAR, 463 SPAR and 157
KWIKSPAR stores. Trading space increased 2.4% to 798 797 m2. The remodelling of
stores continued, with 85 stores having embarked on major upgrades. An
ambitious new store opening schedule is in place for the remainder of the
financial year.
Excellent sales growth was achieved by TOPS stores. In less than six years TOPS
has not only become the biggest retail liquor chain in store numbers, but is
now measured as being the largest liquor chain in terms of turnover. Thirty six
new TOPS stores were opened during the period, bringing total store numbers to
321. Further store openings are planned for the balance of the year.
Build it continued to achieve impressive sales growth through to the end of
calendar 2007, but has since experienced a slowdown in building activity
Turnover for the six months topped R1.1 billion, a growth of 25.8%. The supply
of cement, which during 2007 was erratic, has improved. Build it opened 16 new
outlets and now services 254 members. It is anticipated that a further 15
stores will open before year end September 2008.
Operating cash flow remained strong but reflected the ongoing expenditure on
capex (R239 million) and the substantially higher 2007 final dividend payment.
DISTRIBUTION FACILITIES
During April 2008 the group commenced trading operations from its new Cape Town
distribution centre, which enabled the division to consolidate operations onto
a single site.
Whilst the new facility will bring an increased level of cost, operational
efficiencies from the move will be achieved. It is anticipated that once
trading operations have settled, radio frequency and voice picking technologies
will be introduced. These technologies have resulted in improved operating
efficiencies and stock picking accuracy in the group`s other distribution
centres. Spar`s present facility in Montague Gardens will be vacated at the end
of May 2008.
Expansion of the group`s South Rand distribution centre is on track. The
expansion will result in additional dry goods warehouse space becoming
available by November 2008, followed by further perishable space in October
2009. The cost of the project is estimated at R265 million.
Construction of a new perishable facility at Mount Edgecombe, KZN will commence
shortly. This facility, estimated to cost R185 million, is scheduled for
completion in September 2009.
The group`s forecast 2008 capital expenditure (net of the proceeds arising on
the expected sale of the Montague Gardens property) remains unchanged at R400
million.
The group has installed diesel generators at four of its six distribution
centres, with generators to be installed at the remaining two distribution
centres by financial year end.
The group is confident that it has adequate plans in place to cope with
loadshedding and is actively encouraging retailer members to review their
ability to trade in the event of power outages.
PROSPECTS
Although a slow down in economic activity is anticipated, increased marketing
spend together with planned retail store openings and remodels augur well for
real turnover growth.
Strong cash generation will continue, notwithstanding the capital expenditure
programme.
The group is confident that it will again achieve satisfactory revenue and
profit growth during the remainder of 2008.
MJ Hankinson WA Hook
Chairman Chief Executive
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
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: Deloitte & Touche, PO Box 243, Durban, 4000
SPONSOR: RAND MERCHANT BANK (A division of FirstRand Bank Limited), PO Box
786273, Sandton, 2146
BANKERS: First National Bank, PO Box 4130, Umhlanga Rocks, 4320
WEBSITE: www.spar.co.za
Date: 14/05/2008 07:30:01 Produced by the JSE SENS Department.
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