| Wed 11 Nov 2009, 7:05 | | SPP - Spar - Audited Results For The Year Ended 30 September 2009 And Cash |
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SPP
SPP
SPP - Spar - Audited Results For The Year Ended 30 September 2009 And Cash
Dividend Declaration
THE SPAR GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1967/001572/06)
JSE Code: SPP
ISIN: ZAE000058517
("SPAR" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2009 AND CASH DIVIDEND
DECLARATION
FINANCIAL HIGHLIGHTS
* Turnover up 19.5%
* Trading profit up 25.0%
* Headline earnings per share before BBBEE transaction up 19.5%
* Final dividend 200 cents per share up 29.0%
Condensed Income Statement
Audited Audited
Year ended Year ended
September September
Rmillion Change 2009 2008
REVENUE 32 256.2 26 992.5
Turnover 19.5% 31 962.1 26 742.2
Cost of sales (29 393.0) (24 582.5)
Gross profit 2 569.1 2 159.7
Other income 294.1 250.3
Operating expenses (1 648.7) (1 438.1)
TRADING PROFIT 25.0% 1 214.5 971.9
Profit on sale of property 63.0
BBBEE transactions (136.2)
OPERATING PROFIT 1 141.3 971.9
Interest received 34.9 45.9
Interest paid (29.5) (19.3)
Profit before taxation 1 146.7 998.5
Taxation (401.5) (316.9)
PROFIT FOR THE YEAR ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 745.2 681.6
EARNINGS PER SHARE (CENTS)
Earnings per share 439.4 406.5
Diluted earnings per share 426.0 390.5
SALIENT STATISTICS
Headline earnings per share (cents) 404.5 405.7
Headline earnings per share before
BBBEE transaction (cents) 19.5% 484.8 405.7
Diluted headline earnings per share
(cents) 392.1 389.8
Dividend per share (cents) 26.3% 322.0 255.0
Net asset value per share (cents) 1 137.4 883.5
Trading profit margin (%) 3.8 3.6
Return on equity (%) 43.5 52.5
HEADLINE EARNINGS RECONCILIATION
Profit for the year attributable to
ordinary
shareholders 745.2 681.6
Adjusted for:
Profit on sale of property, plant and
equipment (63.7) (1.8)
Tax effects of adjustments 4.4 0.5
HEADLINE EARNINGS 685.9 680.3
BBBEE transactions 136.2
HEADLINE EARNINGS BEFORE BBBEE
TRANSACTIONS 822.1 680.3
Condensed Cash Flow Statement
Audited Audited
Year ended Year ended
September September
Rmillion 2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES 215.4 (379.7)
Operating profit before: 1 141.3 971.9
Non cash items 291.1 117.7
Profit on disposal of property, plant and
equipment (63.7) (1.8)
Net working capital changes (163.6) (870.1)
- Increase in inventories (57.4) (201.2)
- Increase in trade and other receivables (409.3) (686.7)
- Increase in trade payables and provisions 303.1 17.8
Cash generated from operations 1 205.1 217.7
Interest received 34.3 45.4
Interest paid (29.5) (19.3)
Taxation paid (526.8) (268.1)
Dividends paid (467.7) (355.4)
CASH FLOWS FROM INVESTING ACTIVITIES (268.5) (356.3)
Investment to expand operations (390.4) (365.3)
Investment to maintain operations 49.5 (55.6)
- Replacement of property, plant and equipment (51.1) (60.8)
- Proceeds on disposal of property, plant and
equipment 100.6 5.2
Net movement on loans 72.4 64.6
CASH FLOWS FROM FINANCING ACTIVITIES 22.6 29.2
Proceeds from issue of share capital and premium 9.9
Proceeds from exercise of share options 47.6 37.7
Share repurchases (34.9) (8.1)
Repayment of long-term borrowings (0.4)
NET DECREASE IN CASH AND CASH EQUIVALENTS (30.5) (706.8)
NET (OVERDRAFTS)/CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR (252.1) 453.5
Effects of exchange rate changes on the balance
of cash held in foreign currencies 0.1 1.2
NET OVERDRAFTS AT END OF YEAR (282.5) (252.1)
Condensed Statement of Changes in Equity
Share Currency
capital and Treasury translation
premium shares reserve
Rmillion
Capital and reserves at
30 September 2007 13.4 (154.4)
Profit for 2008
Recognition of share based
payments
Take-up of share options 84.9
Transfer arising from
take-up of share options
Share repurchases (8.1)
Dividends declared
Capital and reserves at
30 September 2008 13.4 (77.6) -
Profit for 2009
Recognition of share based
payments
Take-up of share options 122.4
Transfer arising from
take-up of share options
Share repurchases (34.9)
Issue of shares 9.9 (9.9)
Recognition of BBBEE
transaction
Exchange differences on
translation of foreign
subsidiaries (0.3)
Dividends declared
Capital and reserves at
30 September 2009 23.3 - (0.3)
Share Attributable
based to ordinary
payment Retained share-
reserve earnings holders
Rmillion
Capital and reserves at
30 September 2007 30.2 1 220.5 1 109.7
Profit for 2008 681.6 681.6
Recognition of share based
payments 22.3 22.3
Take-up of share options (47.2) 37.7
Transfer arising from
take-up of share options 73.1 (73.1) -
Share repurchases (8.1)
Dividends declared (355.4) (355.4)
Capital and reserves at
30 September 2008 78.4 1 473.6 1 487.8
Profit for 2009 745.2 745.2
Recognition of share based
payments 21.1 21.1
Take-up of share options (64.9) 57.5
Transfer arising from
take-up of share options 64.9 (64.9) -
Share repurchases (34.9)
Issue of shares -
Recognition of BBBEE
transaction 131.6 131.6
Exchange differences on
translation of foreign
subsidiaries (0.3)
Dividends declared (467.7) (467.7)
Capital and reserves at
30 September 2009 231.1 1 686.2 1 940.3
Condensed Balance Sheet
Audited Audited
September September
Rmillion 2009 2008
ASSETS
NON-CURRENT ASSETS 1 856.2 1 549.6
Property, plant and equipment 1 425.8 1 083.3
Goodwill 245.6 245.6
Operating lease receivables 143.3 125.2
Investment in associate 3.5 3.5
Finance lease receivables 20.4
Loans 13.8 52.6
Other non-current assets 2.3 3.3
Deferred taxation asset 21.9 15.7
CURRENT ASSETS 4 683.6 4 284.3
Inventories 853.1 795.7
Trade and other receivables 3 715.7 3 341.4
Prepayments 26.4 24.2
Operating lease receivables 15.4 13.4
Finance lease receivables 5.5
Loans 4.5 15.9
Bank balances - Guilds 68.5 57.9
4 683.6 4 254.0
Non-current assets held for sale 30.3
TOTAL ASSETS 6 539.8 5 833.9
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 940.3 1 487.8
Share capital and premium 23.3 13.4
Treasury shares (77.6)
Currency translation reserve (0.3)
Share based payment reserve 231.1 78.4
Retained earnings 1 686.2 1 473.6
NON-CURRENT LIABILITIES 209.4 184.7
Post retirement medical aid provision 67.9 60.8
Operating lease payables 141.5 123.9
CURRENT LIABILITIES 4 390.1 4 161.4
Trade and other payables 4 015.2 3 707.0
Operating lease payables 15.5 14.4
Provisions 6.1 8.7
Taxation 2.3 121.3
Bank overdrafts 351.0 310.0
TOTAL EQUITY AND LIABILITIES 6 539.8 5 833.9
Notes to the Condensed Financial Statements
1 BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
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. The Group has
considered all new standards, interpretations, and amendments to existing
standards that are effective as at year end. There has been no material impact
of these amendments on the financial statements.
These condensed financial statements have been prepared in terms of IAS 34 -
Interim Financial Reporting.
Audited Audited
Year ended Year ended
September September
Rmillion 2009 2008
2 SHARE CAPITAL AND PREMIUM
Authorised
250 000 000 (2008: 250 000 000) ordinary shares
of 0.06 cents
(2008: 0.06 cents) each 0.2 0.2
Authorised
30 000 000 (2008: Nil) redeemable, convertible
preference shares of 0.06 cents each - -
Issued
170 597 792 (2008: 169 940 035) ordinary shares
of 0.06 cents (2008: 0.06 cents) each 0.1 0.1
Issued
18 911 349 (2008: Nil) redeemable, convertible
preference
shares of 0.06 cents each - -
Share premium 23.2 13.3
Balance at beginning of year 13.3 13.3
Issue of shares 9.9
Total share capital and premium 23.3 13.4
Issued ordinary share capital amounts to R102 359
consisting of 170 597 792 ordinary shares. 657 757
shares were issued during the financial year ended
30 September 2009.
Issued redeemable, convertible preference share capital
amounts to R11 347, consisting of 18 911 349 shares
issued during the financial year ended 30 September 2009.
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 169 581 464 (2008: 167 666 960).
Diluted earnings and headline earnings per share
were based on a weighted average number of ordinary shares
(net of treasury shares) of 174 928 715 (2008: 174 535 945).
3 CONTINGENT LIABILITIES
Guarantees issued in respect of the finance
obligations of SPAR retailer members 330.5 226.9
4 OPERATING LEASES
Operating lease costs charged against operating
profit
Immovable property 9.2 10.0
- lease rentals 221.5 167.8
- sub-lease recoveries (212.3) (157.8)
Plant, equipment and vehicles 8.6 8.7
Operating lease commitments
Future minimum lease payments under
non-cancellable operating leases 1 932.9 1 706.0
- land and buildings 1 930.6 1 703.9
- other 2.3 2.1
Future minimum sub-lease recoveries under
non-cancellable
property leases are: (1 923.4) (1 683.8)
Net commitments 9.5 22.2
5 CAPITAL COMMITMENTS
Contracted 48.7 248.7
Approved but not contracted 53.0 117.7
Total capital commitments 101.7 366.4
6 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.
7 POST BALANCE SHEET EVENTS
No material events have occurred subsequent to 30 September 2009 which may have
an impact on the Group`s reported financial position at this date.
Review of Trading Results
FINANCIAL OVERVIEW
In a difficult and competitive trading environment The SPAR Group Limited
produced strong growth in both sales and profitability for the year under
review. Turnover of R32 billion increased 19.5%, while trading profit rose 25%
on the prior year. Headline earnings per share of 484.8 cents, exclusive of the
Broad Based Black Economic Empowerment (BBBEE) transaction cost increased by
19.5%. The annual dividend declaration increased 26.3%, reflecting a further
reduction in the dividend cover. Cash generation remained satisfactory,
notwithstanding capital expenditure of R442 million.
The year was one of two halves. During the first six months food inflation ran
at an average of 16% and group turnover during this period increased 24.5%. The
second six months saw food inflation decline significantly to an average of 9%,
which, with increased pressure on consumer spending, resulted in a sharply
reduced turnover increase of 14.9% for the period.
SPAR`s focus on responsible competitive pricing resulted in the gross margin
declining to 8.0% (2008: 8.1%). The Group benefited from its ongoing
distribution facilities upgrade programme, improved warehouse efficiencies and
a substantially reduced fuel cost in the second half resulting from lower world
oil prices. The Group incurred, and has provided for, a higher level of
irrecoverable debts as a result of some retailers experiencing cash flow
difficulties or problems in accessing bank credit. The Group continues to
assist cash-strapped retailers wherever possible.
Net interest earned of R5.4 million was considerably lower than that earned in
2008 (R26.6 million), and reflected the effects of the capital expenditure
programme and of lower interest rates. The Group advanced or secured loan
facilities for retailers in order to enable them to purchase or revamp stores.
These loans are discounted with the Group`s bankers.
The Group continued expanding and upgrading its operating facilities.
Expenditure of R145 million was incurred in completing the KwaZulu-Natal
perishable facility and R104 million on the final phase of the expansion of the
South Rand facility.
A final dividend of 200 cents (2008:155 cents) per share was declared.
Dividends for the year amounted to 322 cents (2008: 255 cents) per share.
The Group has no long-term borrowings and, when necessary, funds its operations
from overdraft facilities. The Group has overdraft facilities with three major
banks to the extent of R1.2 billion and has in place access to overnight funds
of a further R350 million. These facilities are comfortably in excess of
forecast requirements and are subject to annual review.
BROAD BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION
In line with the Group`s commitment to transformation, shareholders approved
the Group`s proposed BBBEE transaction on 12 August 2009. The transaction,
which has resulted in 10% of SPAR`s equity being transferred to two trusts for
the benefit of the Group`s and retailers` employees, is an important
component of SPAR`s transformation objectives.
COMPETITION COMMISSION
During June 2009 the Competition Commission initiated an investigation into
major South African supermarket chains, including SPAR, for possible
contraventions of the Competition Act. Issues being investigated by the
Commission are the potential abuse of buying power, long term exclusive leases,
category management and the exchange of information. The Group has undertaken
to fully co-operate with the Commission in its investigation and is of the
opinion that no contraventions of the Competition Act have taken place.
PROSPECTS
Management expects 2010 to be another challenging year but are nevertheless
positive about the opportunities for the business. It is anticipated that the
current relatively low levels of trading activity will continue for at least
the first half of the 2010 financial year, whereafter it is likely that volumes
will increase. Food inflation is forecast to continue to run at lower levels.
The Group will aggressively focus on driving new business opportunities,
organic growth, stringent cost control and securing operating efficiencies.
Cash generation is forecast to improve as capital expenditure reduces and the
dividend cover is maintained. Where appropriate, surplus cash will be utilised
to buy back shares.
Mike Hankinson Wayne Hook
Chairman Chief Executive
10 November 2009
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the Group`s
financial statements for the year ended 30 September 2009. 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 Group`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 DIVIDEND
Notice is hereby given that a final dividend of 200 cents per share has been
declared in respect of the year ended 30 September 2009.
The salient dates for the payment of the final dividend are detailed below:
Last day to trade cum-dividend Friday, 27 November 2009
Shares to commence trading ex-dividend Monday, 30 November 2009
Record date Friday, 4 December 2009
Payment of dividend Monday, 7 December 2009
Shareholders will not be permitted to dematerialise or rematerialise their
share certificates between Monday, 30 November 2009 and Friday, 4 December
2009, both days inclusive.
By order of the board
KJ O`Brien Pinetown
Company Secretary 10 November 2009
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
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Date: 11/11/2009 07:05:09 Produced by the JSE SENS Department.
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