| Wed 12 Nov 2008, 10:31 | | SPP - Spar - Audited Results For The Year Ended 30 September 2008 And Cash |
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SPP
SPP
SPP - Spar - Audited Results For The Year Ended 30 September 2008 And Cash
Dividend Declaration
THE SPAR GROUP LIMITED
(Incorporated in the Republic of South Africa)
REGISTRATION NUMBER: 1967/001572/06
ISIN: ZAE000058517 & JSE share code: SPP
("Spar" or "the company" or "the group")
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2008
AND CASH DIVIDEND DECLARATION
FINANCIAL HIGHLIGHTS
* TURNOVER up 23.2%
* ATTRIBUTABLE PROFIT up 30.3%
* HEADLINE EARNINGS per share up 29.9%
* FINAL DIVIDEND per share up 37.8%
RETAIL HIGHLIGHTS
* SPAR 37 stores opened
* SPAR RETAIL TRADING SPACE up 6.9%
* TOPS AT SPAR 69 stores opened
* BUILD IT 31 stores opened
Condensed Income Statement
Audited Restated
Year Year
% ended ended
Rmillion Change Sep 2008 Sep 2007
REVENUE (note 2) 23.1 26 992.5 21 919.8
Turnover 23.2 26 742.2 21 704.0
Cost of sales (24 582.5) (19 926.9)
Gross profit 2 159.7 1 777.1
Other income (note 2) 250.3 215.8
Operating expenses (note 2) (1 438.1) (1 218.2)
OPERATING PROFIT 25.5 971.9 774.7
Interest received 45.9 32.3
Interest paid (19.3) (10.3)
Share of equity accounted associate - (2.0)
Profit before taxation 25.6 998.5 794.7
Taxation (316.9) (271.7)
PROFIT FOR THE YEAR ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 30.3 681.6 523.0
EARNINGS PER SHARE (CENTS)
Earnings per share 29.9 406.5 313.0
Diluted earnings per share 390.5 299.0
SALIENT STATISTICS
Headline earnings per share (cents) 29.9 405.7 312.3
Diluted headline earnings per share
(cents) 389.8 298.4
Dividends per share (cents) 37.8 255.0 185.0
Net asset value per share (cents) 32.5 883.5 666.9
Operating profit margin (%) 3.6 3.6
Return on equity (%) 52.5 52.3
HEADLINE EARNINGS RECONCILIATION
Profit for the year attributable to
ordinary shareholders 681.6 523.0
Adjusted for:
Profit on sale of property, plant and
equipment (1.8) (2.1)
Impairment of property, plant and
equipment - 0.5
Tax effects of adjustments 0.5 0.5
HEADLINE EARNINGS 30.4 680.3 521.9
Condensed Balance Sheet
Audited Audited
Rmillion Sep 2008 Sep 2007
ASSETS
NON-CURRENT ASSETS 1 549.6 1 242.5
Property, plant and equipment 1 083.3 736.2
Goodwill 245.6 245.6
Investment in associate 3.5 3.5
Finance lease receivables 20.4 9.3
Operating lease receivables 125.2 115.3
Loans 52.6 114.0
Other non-current assets 3.3 4.1
Deferred taxation asset 15.7 14.5
CURRENT ASSETS 4 284.3 3 815.0
Inventories 795.7 594.5
Trade and other receivables 3 341.4 2 677.9
Prepayments 24.2 17.8
Finance lease receivables 5.5 2.2
Operating lease receivables 13.4 10.3
Loans 15.9 31.1
Bank balances and cash 389.2
Bank balances - Guilds 57.9 64.3
4 254.0 3 787.3
Non-current assets held for sale 30.3 27.7
TOTAL ASSETS 5 833.9 5 057.5
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 487.8 1 109.7
Share capital and premium 13.4 13.4
Treasury shares (77.6) (154.4)
Share based payment reserve 78.4 30.2
Retained earnings 1 473.6 1 220.5
NON-CURRENT LIABILITIES 184.7 169.8
Post retirement medical aid provision 60.8 54.8
Operating lease payables 123.9 115.0
CURRENT LIABILITIES 4 161.4 3 778.0
Trade and other payables 3 707.0 3 691.9
Borrowings 0.4
Operating lease payables 14.4 10.9
Provisions 8.7 3.5
Taxation 121.3 71.3
Bank overdrafts 310.0
TOTAL EQUITY AND LIABILITIES 5 833.9 5 057.5
Condensed Cash Flow Statement
Audited Restated
Year Year
ended ended
Rmillion Sep 2008 Sep 2007
CASH FLOWS FROM OPERATING ACTIVITIES (379.7) 924.7
Cash generated from operations before: 1 087.8 865.3
Net working capital changes (870.1) 521.9
- Increase in inventories (201.2) (145.2)
- Increase in trade and other receivables (686.7) (545.5)
- Increase in trade payables and provisions 17.8 1 212.6
Cash generated from operations 217.7 1 387.2
Interest received 45.4 32.0
Interest paid (19.3) (10.3)
Taxation paid (268.1) (237.9)
Dividends paid (355.4) (246.3)
CASH FLOWS FROM INVESTING ACTIVITIES (356.3) (393.8)
Investment to maintain operations (55.6) (20.7)
- Replacement of property, plant and equipment (60.8) (38.7)
- Proceeds on disposal of property, plant and
equipment 5.2 18.0
Investment to expand operations (365.3) (275.9)
Net movement on loans and investments 64.6 (97.2)
CASH FLOWS FROM FINANCING ACTIVITIES 29.2 (118.1)
Proceeds from exercise of share options 37.7 11.6
Share repurchases (8.1) (92.1)
Repayment of long-term borrowings (0.4) (37.6)
NET (DECREASE) / INCREASE IN CASH AND CASH
EQUIVALENTS (706.8) 412.8
NET CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 453.5 41.5
Effects of exchange rate changes on the balance of
cash
held in foreign currencies 1.2 (0.8)
NET (OVERDRAFTS) / CASH AND CASH EQUIVALENTS
AT END OF YEAR (252.1) 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
Profit for 2007
Recognition of share based
payments 21.1
Take-up of share options 37.5 (25.9)
Share repurchases (92.1)
Dividends declared
Total capital and reserves at
30 September 2007 13.4 (154.4) 30.2
Profit for 2008
Recognition of share based
payments 22.3
Take-up of share options 84.9 (47.2)
Transfer arising from take-up of
share options 73.1
Share repurchases (8.1)
Dividends declared
Total capital and reserves at
30 September 2008 13.4 (77.6) 78.4
Attributable
Retained to ordinary
Rmillion earnings shareholders
Total capital and reserves at
30 September 2006 943.8 892.4
Profit for 2007 523.0 523.0
Recognition of share based payments 21.1
Take-up of share options 11.6
Share repurchases (92.1)
Dividends declared (246.3) (246.3)
Total capital and reserves at
30 September 2007 1 220.5 1 109.7
Profit for 2008 681.6 681.6
Recognition of share based payments 22.3
Take-up of share options 37.7
Transfer arising from take-up of
share options (73.1) -
Share repurchases (8.1)
Dividends declared (355.4) (355.4)
Total capital and reserves at
30 September 2008 1 473.6 1 487.8
Notes Financial to the Statements
1 BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
The group financial results, from which these condensed financial statements
are derived, are prepared in accordance with International Financial Reporting
Standards and are 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 and
methods of computation adopted are consistent with those of the previous year
except for the adoption of IAS 1, IAS 32, IFRS 7 and IFRIC 10 in the current
year, none of which has had a material impact on the financial statements.
These condensed financial statements are prepared in terms of IAS 34 - Interim
financial reporting.
2 COMPARATIVE FIGURES
During the current financial year various other income receipts and expense
items were reclassified. Accordingly the 2007 comparative revenue, other income
and operating expenses figures were each increased by R16.7 million.
Audited Audited
Year Year
ended ended
Sep 2008 Sep 2007
Rmillion Rmillion
3 NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE
Property, plant and equipment held for sale 30.3 27.7
Non-current assets held for sale comprise of the
group`s Montague Gardens, Cape Town distribution
centre. At 30 September 2008, all suspensive
conditions of the sale had not been fulfilled.
As a result, the transfer of the property had
not been concluded.
No impairment was recognised on the
reclassification of the
property.
4 SHARE CAPITAL AND PREMIUM
Authorised
250 000 000 (2007: 250 000 000) ordinary
shares of 0.06 cents (2007: 0.06 cents) each 0.2 0.2
Issued
169 940 035 (2007: 169 940 035) ordinary
shares of 0.06 cents (2007: 0.06 cents) each 0.1 0.1
Share premium account 13.3 13.3
Total share capital and premium 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 167 666 960 (2007: 167 075 611). Diluted
earnings and headline earnings per share were
based on a weighted average number of ordinary
shares (net of treasury shares) of 174 535 945
(2007: 174 862 368).
5 CONTINGENT LIABILITIES
The company has guaranteed the finance obligations
of certain
SPAR retailer members to an amount of: 226.9 123.5
6 OPERATING LEASES
Operating lease costs charged against operating
profit
Immovable property 10.0 6.2
- lease rentals payable 167.8 138.0
- sub-lease recoveries (157.8) (131.8)
Plant, equipment and vehicles 8.7 12.9
Operating lease commitments
Future minimum lease payments under non-cancellable
operating leases are as follows: 1 706.0 1 542.3
- land and buildings 1 703.9 1 540.0
- other 2.1 2.3
The future minimum sub-lease recoveries under
non-cancellable
property leases are: (1 683.8) (1 524.3)
Net commitments 22.2 18.0
7 CAPITAL COMMITMENTS
Contracted 248.7 281.8
Approved but not contracted 117.7 192.5
366.4 474.3
8 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.
9 POST BALANCE SHEET EVENTS
The transfer of the Montague Gardens, Cape Town distribution centre, was
effected on 28 October 2008 for R93 million. The directors are not aware of any
other matters or circumstances 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 operation.
Review of Trading Results
The group produced a strong set of trading results for its 45th year of SPAR
operation in South Africa. This performance was driven by new store openings,
retail space growth and market share gains. Earnings for 2008 of R681.6 million
increased 30.3% on prior year, while headline earnings per share of 405.7
cents, rose 29.9%.The dividend cover was again reduced which resulted in a
37.8% increase in the annual dividend declaration. Cash generation remained
strong, notwithstanding the group`s substantial capital expenditure programme.
Turnover of R26.7 billion was up 23.2%, with this being a year of two differing
halves. During the first six months inflation ran at moderate levels and the
group experienced good volume growths. In the second six months volumes slowed,
as inflation increased sharply. SPAR stores achieved good turnover increases
(+21%) and national market share increased to 27.6% of the measured market. The
group`s liquor division had an exceptional year on the back of substantial
store openings and good organic growth. Build it achieved satisfactory growth
despite a slowdown in the building industry.
The competitive environment resulted in the gross margin declining slightly
from 8.2% in 2007 to 8.1% in 2008. Gross profit of R2.2 billion increased
21.5%.
Warehouse expenditure continued to reflect the efficiencies obtained from the
implementation of new technologies. Distribution costs however, increased
markedly as a result of the dramatic rise in the cost of fuel. The group
continues to focus on load and route optimisation and driver training in an
effort to minimise delivery costs.
Net interest earned of R26.6 million (2007 - R22.0 million) reflected higher
interest received on positive cash balances and outstanding loans. The group
reviewed its policy of funding retailer loans and during the latter half of the
year discounted a number of existing loans with its bankers. The group will
continue to assist retailers to secure loan facilities for store purchase and
revamp purposes.
The group maintained its investment in Zimbabwe. Trading conditions in that
country remained extremely difficult although, in general, SPAR outperformed
the market.
The effective rate of taxation, inclusive of STC, was 31.4% (2007 - 34.2%), in
the main the change being attributable to a reduction in the rate of company
taxation and a decrease in the rate of STC levied on dividends.
The group invested R365.3 million in expansionary and R60.8 million in
replacement capital expenditure. In addition to the expenditure on the Western
Cape facility (R106 million), some R126 million was spent on expanding the
South Rand warehouse and R49 million on the purchase of property in
KwaZulu-Natal. The South Rand facility expansion is scheduled for completion in
early 2010, whilst the construction of a perishable facility in KwaZulu-Natal
will be completed in November 2009. The group continued to invest in the
upgrading and modernisation of its transport fleet.
The group proceeded with a limited share buy back programme. Prior to the
September year-end close, 163 200 shares had been purchased. A further 719 800
shares have been purchased since year-end. The average cost of all shares
purchased was R48.67 per share. Proceeds from the exercising of share options
amounted to R37.7 million.
Notwithstanding an overdraft position at year-end of R310.0 million (2007 -
cash balance R389.2 million) the group`s cash flow remained strong. The group
remains in the enviable position of being able to self-fund its capital
expenditure programme, whilst at the same time lowering its dividend cover and
buying back shares.
The group reduced the dividend cover to a multiple of 1.6, and declared a final
dividend of 155 cents per share.
PROSPECTS
The group expects 2009 to be a challenging year. High interest rates, a weaker
rand, ongoing high levels of inflation and a slowing economy will put pressure
on consumers` disposable income. Management are however confident that they
will be able to produce a satisfactory level of earnings growth for the year.
Focus areas will be driving sales, cost control and improvements in operational
efficiencies.
Cash generation during 2009 will remain positive and will accommodate the
group`s capital expansion requirements as well as providing for dividends and
share buy backs. Capital expenditure for 2009 is forecast at R480 million.
Mike Hankinson Wayne Hook
Chairman Chief Executive
11 November 2008
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 September 2008. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. A copy of their audit report is available
for inspection at the company`s registered office. These condensed financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements.
DECLARATION OF ORDINARY CASH DIVIDEND
Notice is hereby given that a final dividend of 155 cents per share has been
declared in respect of the year ended 30 September 2008.
The salient dates for the payment of the final dividend are detailed below:
Last day to trade cum-dividend Friday, 28 November 2008
Shares to commence trading ex-dividend Monday, 1 December 2008
Record date Friday, 5 December 2008
Payment of dividend Monday, 8 December 2008
Shareholders will not be permitted to dematerialise or rematerialise their
share certificates between Monday, 1 December 2008 and Friday, 5 December 2008,
both days inclusive.
By order of the board
KJ O`Brien Pinetown
Company Secretary 11 November 2008
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
THE SPAR GROUP LIMITED ("Spar" or "the company" or "the group")
REGISTRATION NUMBER: 1967/001572/06
ISIN: ZAE 000058517 JSE share code: SPP
REGISTERED OFFICE: 22 Chancery Lane, PO Box 1589, Pinetown, 3600
TRANSFER SECRETARIES: Link Market Services South Africa (Pty) Limited,
PO Box 4844, Johannesburg, 2000
AUDITORS: Deloitte & Touche, PO Box 243, Durban, 4000
SPONSOR: 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: 12/11/2008 10:31:17 Produced by the JSE SENS Department.
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