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SPP
SPP
SPP - Spar - Unaudited interim results for the six months ended 31 march 2010
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")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2010 AND CASH
DIVIDEND DECLARATION
FINANCIAL HIGHLIGHTS
OPERATING PROFIT UP 13.2%
HEADLINE EARNINGS PER SHARE UP 14.7%
INTERIM DIVIDEND 140 CENTS PER SHARE UP 14.8%
Condensed statement of comprehensive income
Unaudited
Six months
ended
% March
Rmillion Change 2010
REVENUE 17 669.6
Turnover 8.8 17 513.4
Cost of sales (16 131.2)
Gross profit 8.5 1 382.2
Other income 156.2
Operating expenses 4.6 (853.3)
OPERATING PROFIT 13.2 685.1
Interest received 11.7
Interest paid (11.5)
Profit on sale of Western Cape distribution centre
BBBEE transaction (6.2)
Profit before taxation 679.1
Taxation (204.2)
PROFIT FOR THE PERIOD ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 474.9
Other comprehensive income
Exchange differences from translation
of foreign operations
TOTAL COMPREHENSIVE INCOME 474.9
EARNINGS PER SHARE
Earnings per share (cents) 278.2
Diluted earnings per share (cents) 264.8
SALIENT STATISTICS
Headline earnings per share (cents) 14.7 278.1
Diluted headline earnings per share (cents) 264.6
Dividend per share (cents) 14.8 140.0
Net asset value per share (cents) 1 169.6
Operating profit margin (%) 3.9
Return on equity (%) 24.1
HEADLINE EARNINGS RECONCILIATION
Profit for the period attributable to
ordinary shareholders 474.9
Adjusted for:
Profit on sale of property, plant and equipment (0.4)
Tax effects of adjustments 0.1
HEADLINE EARNINGS 15.8 474.6
Unaudited Audited
Six months Year
ended ended
March September
Rmillion 2009 2009
REVENUE 16 247.5 32 256.2
Turnover 16 100.8 31 962.1
Cost of sales (14 827.0) (29 393.0)
Gross profit 1 273.8 2 569.1
Other income 146.7 294.1
Operating expenses (815.4) (1 648.7)
OPERATING PROFIT 605.1 1 214.5
Interest received 17.8 34.9
Interest paid (17.7) (29.5)
Profit on sale of Western Cape distribution centre 63.0 63.0
BBBEE transaction (136.2)
Profit before taxation 668.2 1 146.7
Taxation (198.2) (401.5)
PROFIT FOR THE PERIOD ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 470.0 745.2
Other comprehensive income
Exchange differences from translation
of foreign operations (0.3)
TOTAL COMPREHENSIVE INCOME 470.0 744.9
EARNINGS PER SHARE
Earnings per share (cents) 278.2 439.4
Diluted earnings per share (cents) 269.3 426.0
SALIENT STATISTICS
Headline earnings per share (cents) 242.5 404.5
Diluted headline earnings per share (cents) 234.7 392.1
Dividend per share (cents) 122.0 322.0
Net asset value per share (cents) 1 011.8 1 137.4
Operating profit margin (%) 3.8 3.8
Return on equity (%) 29.3 43.5
HEADLINE EARNINGS RECONCILIATION
Profit for the period attributable to
ordinary shareholders 470.0 745.2
Adjusted for:
Profit on sale of property, plant and equipment (65.0) (63.7)
Tax effects of adjustments 4.7 4.4
HEADLINE EARNINGS 409.7 685.9
Condensed statement of financial position
Unaudited Unaudited Audited
March March September
Rmillion 2010 2009 2009
ASSETS
NON-CURRENT ASSETS 1 886.9 1 746.9 1 856.2
Property, plant and equipment 1 464.6 1 300.9 1 425.8
Goodwill 245.6 245.6 245.6
Operating lease receivables 141.7 127.0 143.3
Investment in associate 3.5 3.5 3.5
Finance lease receivables 27.4
Loans 2.8 14.5 13.8
Deferred taxation asset 25.3 25.2 22.0
Other non-current assets 3.4 2.8 2.2
CURRENT ASSETS 5 174.7 4 654.0 4 683.6
Inventories 974.8 872.0 853.1
Trade and other receivables 4 091.1 3 686.9 3 715.7
Prepayments 12.9 11.3 26.4
Finance lease receivables 7.6
Operating lease receivables 17.9 14.7 15.4
Loans 0.5 8.9 4.5
Bank balances - Guilds 77.5 52.6 68.5
TOTAL ASSETS 7 061.6 6 400.9 6 539.8
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 1 998.8 1 719.1 1 940.3
Share capital and premium 33.4 14.3 23.3
Treasury shares (17.7) (6.5)
Currency translation reserve (0.3) (0.3)
Share based payment reserve 246.4 88.8 231.1
Retained earnings 1 737.0 1 622.5 1 686.2
NON-CURRENT LIABILITIES 210.8 190.2 209.4
Post-retirement medical aid provision 70.3 65.0 67.9
Operating lease payables 140.5 125.2 141.5
CURRENT LIABILITIES 4 852.0 4 491.6 4 390.1
Trade and other payables 4 194.6 3 688.5 4 015.2
Operating lease payables 18.2 15.6 15.5
Provisions 5.6 9.1 6.1
Taxation 33.7 14.0 2.3
Bank overdrafts 599.9 764.4 351.0
TOTAL EQUITY AND LIABILITIES 7 061.6 6 400.9 6 539.8
Condensed statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
March March September
Rmillion 2010 2009 2009
CASH FLOWS FROM OPERATING ACTIVITIES (71.2) (338.8) 215.4
Operating profit before: 679.0 668.1 1 141.3
Non-cash items 67.2 28.3 291.1
Profit on disposal of property,
plant and equipment (0.4) (63.7)
Net working capital changes (301.1) (459.6) (163.6)
- Increase in inventories (121.6) (76.0) (57.4)
- Increase in trade and other
receivables (358.0) (365.6) (409.3)
- Increase/(decrease) in trade
payables and provisions 178.5 (18.0) 303.1
Cash generated from operations 444.7 236.8 1 205.1
Interest received 11.0 17.2 34.3
Interest paid (11.5) (17.7) (29.5)
Taxation paid (176.2) (314.9) (526.8)
Dividends paid (339.2) (260.2) (467.7)
CASH FLOWS FROM INVESTING ACTIVITIES (76.2) (132.8) (268.5)
Investment to expand operations (65.1) (226.7) (390.4)
Investment to maintain operations (24.7) 57.3 49.5
- Replacement of property, plant
and equipment (26.0) (38.1) (51.1)
- Proceeds on disposal of property,
plant and equipment 1.3 95.4 100.6
Net movement on loans and
investments 13.6 36.6 72.4
CASH FLOWS FROM FINANCING ACTIVITIES (92.5) 11.9 22.6
Proceeds from issue of share
capital and premium 10.1 0.8 9.9
Proceeds from exercise of share options 41.2 45.9 47.6
Share repurchases (143.8) (34.8) (34.9)
NET DECREASE IN CASH AND CASH
EQUIVALENTS (239.9) (459.7) (30.5)
Net overdrafts at beginning of period (282.5) (252.1) (252.1)
Effects of exchange rate changes on
the balance of cash
held in foreign currencies 0.1
NET OVERDRAFTS AT END OF PERIOD (522.4) (711.8) (282.5)
Condensed statement of changes in equity
Share Currency
capital and Treasury translation
Rmillion premium shares reserve
CAPITAL AND RESERVES
AT 30 SEPTEMBER 2008 13.4 (77.6)
Comprehensive income for the period
Share capital issued 0.9 (0.9)
Recognition of share based payments
Take-up of share options 106.8
Transfer arising from take-up of
share options
Share repurchases (34.8)
Dividends declared
CAPITAL AND RESERVES
AT 31 MARCH 2009 14.3 (6.5) -
Comprehensive income for the period (0.3)
Share capital issued 9.0 (9.0)
Recognition of share based payments
Take-up of share options 15.6
Transfer arising from take-up of
share options
Share repurchases (0.1)
Dividends declared
Recognition of BBBEE transaction
CAPITAL AND RESERVES
AT 30 SEPTEMBER 2009 23.3 - (0.3)
Comprehensive income for the period
Share capital issued 10.1 (10.1)
Recognition of share based payments
Take-up of share options 136.2
Transfer arising from take-up of
share options
Share repurchases (143.8)
Dividends declared
Recognition of BBBEE transaction
CAPITAL AND RESERVES AT 31 MARCH 2010 33.4 (17.7) (0.3)
Share based Attributable
payment Retained to ordinary
Rmillion reserve earnings shareholders
CAPITAL AND RESERVES
AT 30 SEPTEMBER 2008 78.4 1 473.6 1 487.8
Comprehensive income for the perio 470.0 470.0
Share capital issued -
Recognition of share based payments 10.4 10.4
Take-up of share options (60.9) 45.9
Transfer arising from take-up of
share options 60.9 (60.9) -
Share repurchases (34.8)
Dividends declared (260.2) (260.2)
CAPITAL AND RESERVES
AT 31 MARCH 2009 88.8 1 622.5 1 719.1
Comprehensive income for the period 275.2 274.9
Share capital issued -
Recognition of share based payments 10.7 10.7
Take-up of share options (4.0) 11.6
Transfer arising from take-up of
share options 4.0 (4.0) -
Share repurchases (0.1)
Dividends declared (207.5) (207.5)
Recognition of BBBEE transaction 131.6 131.6
CAPITAL AND RESERVES
AT 30 SEPTEMBER 2009 231.1 1 686.2 1 940.3
Comprehensive income for the period 474.9 474.9
Share capital issued -
Recognition of share based payments 9.1 9.1
Take-up of share options (84.9) 51.3
Transfer arising from take-up of
share options 84.9 (84.9) -
Share repurchases (143.8)
Dividends declared (339.2) (339.2)
Recognition of BBBEE transaction 6.2 6.2
CAPITAL AND RESERVES AT 31 MARCH 2010 246.4 1 737.0 1 998.8
Notes to the condensed interim results
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. These condensed
financial statements have been prepared in terms of IAS 34: Interim Financial
Reporting.
These unaudited interim results have not been reviewed or reported on by the
group`s external auditors.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
March March September
Rmillion 2010 2009 2009
2. SHARE CAPITAL AND PREMIUM
Authorised
250 000 000
(March 2009: 250 000 000) ordinary
shares of 0.06 cents (March 2009:
0.06 cents) each 0.2 0.2 0.2
30 000 000 (March 2009: nil)
redeemable, convertible
preference shares of 0.06 cents each - - -
Issued
171 170 013 (March 2009:
170 010 935) ordinary
shares of 0.06 cents (March 2009:
0.06 cents) each 0.1 0.1 0.1
18 911 349 (March 2009: nil)
redeemable, convertible
preference shares of 0.06 cents each - - -
Share premium account 33.3 14.2 23.2
Balance at beginning of year 23.2 13.3 13.3
Shares issued during the year 10.1 0.9 9.9
Total share capital and premium 33.4 14.3 23.3
Issued share capital amounts to
R102 702 consisting
of 171 170 013 ordinary shares.
572 221 ordinary shares were issued
during the six months ended
31 March 2010.
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 170 672 879
(March 2009: 168 949 525). Diluted
earnings and headline earnings per
share were based on a weighted
average number of ordinary shares
(net of treasury shares) of 179 364 480
(March 2009: 174 518 888).
3. CONTINGENT LIABILITIES
The company has guaranteed the
finance obligations of certain
SPAR retailer members to
the amount of: 361.8 310.2 330.5
4. OPERATING LEASES
Operating lease costs charged
against operating profit
Immovable property - 5.8 9.2
- lease rentals 129.5 108.3 221.5
- sub-lease recoveries (129.5) (102.5) (212.3)
Plant, equipment and vehicles 4.7 5.6 8.6
Operating lease commitments
Future minimum lease payments under
non-cancellable operating leases 2 134.7 1 817.3 1 932.9
- land and buildings 2 132.6 1 815.5 1 930.6
- other 2.1 1.8 2.3
Future minimum sub-lease
receivables under non-
cancellable property leases (2 102.0) (1 808.2) (1 923.4)
Net commitments 32.7 9.1 9.5
5. CAPITAL COMMITMENTS
Contracted 52.2 149.3 48.7
Approved but not contracted 30.5 0.9 53.0
82.7 150.2 101.7
6. SEGMENTAL REPORTING
The group operates its business from 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
results of the distribution centres have been aggregated in terms of IFRS 8.
Build it, although constituting a distinct business, does not satisfy the
thresholds of significance for disclosure as a separate reportable segment.
7. POST BALANCE SHEET EVENTS
No material events have occurred subsequent to 31 March 2010 which may have an
impact on the group`s reported financial position at this date.
Review of trading results
Despite an extremely tough trading period and considerably lower levels of
inflation, turnover grew 8.8%, operating profit increased by 13.2% and headline
earnings per share rose by 14.7%. Operating expenditure was well controlled
being only 4.6% up on prior year. This performance was influenced by the effect
of lower fuel prices on delivery costs and a considerably reduced bad debt
write off. Case volumes handled through the group`s distribution centres
increased 4.7% on the comparable prior period.
Consumer spending remained under pressure and the food retail environment was
extremely competitive with aggressive pricing and promotions. Notwithstanding
the aforementioned, SPAR retail store turnover continued to grow ahead of the
market. Retail trading space increased to 894 306 m2 with 19 new stores
opened. At period end the group serviced 848 SPAR stores (249 SUPERSPAR, 459
SPAR and 140 KWIKSPAR stores). SPAR continued to focus on its responsible
competitive pricing philosophy and on providing value through its house brand
range. Driving retail growth remains the group`s number one priority.
TOPS store numbers increased to 439 with 28 stores opening during the six month
period. Trading remained strong with ex distribution centre turnover increasing
27.5% to R1.1 billion (2009: R873 million). TOPS continues to gain market share.
Build it turnover at R1.55 billion (2009: R1.36 billion) grew 13.9% on the
comparable prior period. This was a very pleasing performance given the state
of the industry and the current economic climate. Eleven new stores were opened
taking store numbers to 253. Build it has leased a distribution warehouse in
Durban and will shortly commence sourcing product for direct supply ex
distribution centre to retailers. It is estimated that over the next few years
Build it will be able to supply some 15% of retailers` product requirements.
This new venture will improve pricing to the consumer and will provide margin
opportunities for retailers and the group`s distribution centres.
CAPITAL EXPENDITURE
The extension to the group`s South Rand distribution centre was completed
during the period under review, with the final cost of the project being R265
million.
Construction of a new perishable facility at the Lowveld distribution centre is
progressing according to timetable and budget, with anticipated handover of the
facility scheduled for July 2010.
The group estimates that 2010 capital expenditure will not exceed R200 million.
PROSPECTS
The group anticipates that the tough trading environment will continue for the
balance of the financial year. However, slightly higher levels of inflation and
the positive sentiment generated by the World Cup should lead to improved
prospects for growth.
Mike Hankinson Wayne Hook
Chairman Chief Executive
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 140 cents per share has been
declared in respect of the six months ended 31 March 2010.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum-dividend Friday, 4 June 2010
Shares to commence trading ex-dividend Monday, 7 June 2010
Record date Friday, 11 June 2010
Payment of dividend Monday, 14 June 2010
Shareholders will not be permitted to dematerialise or rematerialise their
share certificates between Monday, 7 June 2010 and Friday, 11 June 2010, both
days inclusive.
By order of the board
KJ O`Brien
Company Secretary
Pinetown
11 May 2010
DIRECTORATE AND ADMINISTRATION
DIRECTORS: MJ Hankinson* (Chairman), WA Hook (Chief Executive), R W 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: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
PO Box 62200, Marshalltown, 2107
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: 12/05/2010 07:05:04 Produced by the JSE SENS Department.
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