| Wed 17 Nov 2010, 7:05 | | SPP - The Spar Group Limited - Audited results for the year ended 30 September |
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SPP
SPP
SPP - The Spar Group Limited - Audited results for the year ended 30 September
2010 and cash dividend declaration
THE SPAR GROUP LIMITED
("SPAR" or "the company" or "the group")
REGISTRATION NUMBER: 1967/001572/06
ISIN: ZAE000058517 JSE share code: SPP
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2010 AND CASH DIVIDEND
DECLARATION
Turnover UP 9,0%
Trading profit UP 8,4%
Headline earnings per share before BBBEE transaction UP 12,1%
Annual dividend 362 cents per share UP 12,4%
Condensed consolidated statement of comprehensive income
Audited Audited
Year ended Year ended
% September September
Rmillion Change 2010 2009
REVENUE 35 159.6 32 256.2
Turnover 9.0 34 844.2 31 962.1
Cost of sales (32 083.7) (29 393.0)
Gross profit 2 760.5 2 569.1
Other income 315.4 294.1
Operating expenses 6.7 (1 759.6) (1 648.7)
TRADING PROFIT 8.4 1 316.3 1 214.5
BBBEE transactions (13.0) (136.2)
Profit on sale of West Cape distribution
centre 63.0
OPERATING PROFIT 14.2 1 303.3 1 141.3
Interest received 24.6 34.9
Interest paid (20.9) (29.5)
Share of equity accounted associate 0.4
Profit before taxation 1 307.4 1 146.7
Taxation (391.6) (401.5)
PROFIT FOR THE YEAR ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 915.8 745.2
Exchange differences from translation of
foreign operations 0.1 (0.3)
TOTAL COMPREHENSIVE INCOME 915.9 744.9
EARNINGS PER SHARE
Earnings per share (cents) 536.0 439.4
Diluted earnings per share (cents) 506.2 426.0
SALIENT STATISTICS
Headline earnings per share (cents) 32.5 536.1 404.5
Headline earnings per share adjusted for
BBBEE (cents) 12.1 543.7 484.8
Diluted headline earnings per share (cents) 29.1 506.3 392.1
Dividend per share (cents) 12.4 362.0 322.0
Net asset value per share (cents) 1 278.8 1 137.4
Trading profit margin (%) 3.8 3.8
Return on equity (%) 44.4 43.5
HEADLINE EARNINGS RECONCILIATION
Profit for the period attributable to
ordinary shareholders 915.8 745.2
Adjusted for:
Loss/(profit) on sale of property, plant and equipment 0.1 (63.7)
Tax effects of adjustments 4.4
HEADLINE EARNINGS 915.9 685.9
BBBEE transactions 13.0 136.2
HEADLINE EARNINGS BEFORE BBBEE
TRANSACTIONS 13.0 928.9 822.1
Condensed consolidated statement of financial position
Audited Audited
Year ended Year ended
September September
Rmillion 2010 2009
ASSETS
NON-CURRENT ASSETS 2 006.0 1 856.2
Property, plant and equipment 1 521.0 1 425.8
Goodwill 299.7 245.6
Operating lease receivables 139.1 143.3
Investment in associate 17.0 3.5
Other investments 1.5
Loans 23.0 13.8
Deferred taxation asset 3.2 22.0
Other non-current assets 1.5 2.2
CURRENT ASSETS 5 522.9 4 683.6
Inventories 959.2 853.1
Trade and other receivables 4 412.0 3 715.7
Prepayments 28.6 26.4
Operating lease receivables 25.7 15.4
Loans 2.2 4.5
Taxation receivable 10.0
Bank balances - Guilds 85.2 68.5
TOTAL ASSETS 7 528.9 6 539.8
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 2 187.2 1 940.3
Share capital and premium 33.4 23.3
Treasury shares (10.8)
Currency translation reserve (0.2) (0.3)
Share based payment reserve 261.8 231.1
Retained earnings 1 903.0 1 686.2
NON-CURRENT LIABILITIES 209.5 209.4
Post retirement medical aid provision 75.1 67.9
Operating lease payables 134.4 141.5
CURRENT LIABILITIES 5 132.2 4 390.1
Trade and other payables 4 565.0 4 015.2
Operating lease payables 29.9 15.5
Provisions 5.8 6.1
Taxation payable 0.4 2.3
Bank overdrafts 531.1 351.0
TOTAL EQUITY AND LIABILITIES 7 528.9 6 539.8
Condensed consolidated 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)
Total comprehensive income for the year (0.3)
Issue of shares 9.9 (9.9)
Recognition of share based payments
Take-up of share options 122.4
Transfer arising from take-up of share options
Share repurchases (34.9)
Dividends declared
Recognition of BBBEE transaction
CAPITAL AND RESERVES AT 30 SEPTEMBER 2009 23.3 - (0.3)
Total comprehensive income for the year 0.1
Issue of shares 10.1 (10.1)
Recognition of share based payments
Take-up of share options 187.4
Transfer arising from take-up of share options
Share repurchases (188.1)
Dividends declared
Recognition of BBBEE transaction
CAPITAL AND RESERVES AT 30 SEPTEMBER 2010 33.4 (10.8) (0.2)
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
Total comprehensive income for the year 745.2 744.9
Issue of shares -
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)
Dividends declared (467.7) (467.7)
Recognition of BBBEE transaction 131.6 131.6
CAPITAL AND RESERVES AT 30 SEPTEMBER 2009 231.1 1 686.2 1 940.3
Total comprehensive income for the year 915.8 915.9
Issue of shares -
Recognition of share based payments 18.3 18.3
Take-up of share options (120.5) 66.9
Transfer arising from take-up of
share options 120.5 (120.5) -
Share repurchases (188.1)
Dividends declared (578.5) (578.5)
Recognition of BBBEE transaction 12.4 12.4
CAPITAL AND RESERVES AT 30 SEPTEMBER 2010 261.8 1 903.0 2 187.2
Condensed consolidated statement of cash flows
Audited Audited
Year ended Year ended
September September
Rmillion 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES 238.9 215.4
Operating profit before: 1 303.3 1 141.3
Non cash items 153.6 291.1
Loss/(profit) on disposal of property, plant and
equipment 0.1 (63.7)
Net working capital changes (257.5) (163.6)
- Increase in inventories (106.1) (57.4)
- Increase in trade and other receivables (700.9) (409.3)
- Increase in trade payables and provisions 549.5 303.1
Cash generated from operations 1 199.5 1 205.1
Interest received 23.6 34.3
Interest paid (20.9) (29.5)
Taxation paid (384.8) (526.8)
Dividends paid (578.5) (467.7)
CASH FLOWS FROM INVESTING ACTIVITIES (281.0) (268.5)
Investment to expand operations (169.3) (390.4)
Investment to maintain operations (34.3) 49.5
- Replacement of property, plant and equipment (36.3) (51.1)
- Proceeds on disposal of property, plant and equipment 2.0 100.6
Acquisition of subsidiaries (54.1)
Net movement on loans and investments (23.3) 72.4
CASH FLOWS FROM FINANCING ACTIVITIES (121.3) 22.6
Proceeds from issue of share capital 10.1 9.9
Proceeds from exercise of share options 56.7 47.6
Share repurchases (188.1) (34.9)
NET DECREASE IN CASH AND CASH EQUIVALENTS (163.4) (30.5)
Net overdrafts at beginning of year (282.5) (252.1)
Effects of exchange rate changes on the balance of cash
held in foreign currencies 0.1
NET OVERDRAFTS AT END OF YEAR (445.9) (282.5)
Notes to the condensed consolidated financial results
1. BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the AC 500 standards as
issued by the Accounting Practices Board and the information as required by IAS
34: Interim Financial Reporting. The report has been prepared using accounting
policies that comply with IFRS which are consistent with those applied in the
financial statements for the year ended 30 September 2009.
Audited Audited
Year ended Year ended
September September
Rmillion 2010 2009
2. SHARE CAPITAL AND PREMIUM
Authorised
250 000 000 (2009: 250 000 000) ordinary shares of
0.06 cents (2009: 0.06 cents) each 0.2 0.2
30 000 000 (2009: 30 000 000) redeemable,
convertible preference
shares of 0.06 cents each - -
Issued
171 170 013(2009: 170 597 792) ordinary shares of
0.06 cents (2009: 0.06 cents) each 0.1 0.1
18 911 349 (2009: 18 911 349) redeemable,
convertible preference
shares of 0.06 cents each - -
Share premium account 33.3 23.2
Balance at beginning of year 23.2 13.3
Issue of shares 10.1 9.9
Total share capital and premium 33.4 23.3
Issued redeemable, convertible preference share capital amounts to R11 347,
consisting of 18 911 349 (2009:18 911 349) shares issued at par 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 170
862 375 (2009: 169 581 464).
Diluted earnings and headline earnings per share were based on a weighted
average number of ordinary shares (net of treasury shares) of 180 912 511 (2009:
174 928 715).
3. CONTINGENT LIABILITIES
The company has guaranteed the finance obligations
of certain SPAR retailer members to the amount of 366.0 330.5
4. OPERATING LEASES
Operating lease costs charged against operating
profit
Immovable property 10.0 9.2
- lease rentals 274.5 221.5
- sub-lease recoveries (264.5) (212.3)
Plant, equipment and vehicles 7.5 8.6
Operating lease commitments
Future minimum lease payments under non-cancellable
operating leases 2 324.2 1 932.9
- land and buildings 2 318.4 1 930.6
- other 5.8 2.3
Future minimum sub-lease receivables under
non-cancellable
property leases (2 119.1) (1 923.4)
Net commitments 205.1 9.5
5. CAPITAL COMMITMENTS
Contracted 168.0 48.7
Approved but not contracted 23.0 53.0
Total capital commitments 191.0 101.7
6. SEGMENTAL REPORTING
The group operates its business from seven main 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 2010 which may have
an impact on the group`s reported financial position at this date.
Review of trading results
FINANCIAL OVERVIEW
In a year of slow economic recovery, low inflation and an extremely competitive
retail environment, the group has produced a satisfactory financial performance.
Comparable headline earnings per share of 543.7 cents, which is exclusive of the
Broad Based Black Economic Empowerment transaction cost, increased by 12.1%. The
annual dividend declaration increased 12.4% as the dividend policy remained
unchanged.
Cash generation was strong, impacted by a lower level of capital expenditure
this year of R206 million and the buy back of company shares amounting to R188
million.
Food inflation was negligible at 1% for most of the year, influenced mainly by
deflation on basic commodities. Consumer spending remained under pressure
despite reduced interest rates while the increased level of unemployment also
impacted on our retail performance, particularly in the rural markets.
The group`s continued focus on competitive retail pricing and retailer
profitability resulted in the gross margin declining slightly to 7.9% (2009:
8.0%). Warehouse expense ratios were negatively affected by a 6.3% increase in
volumes handled by our distribution centres in a low food inflation environment.
Increased municipal charges and an increased fuel price adversely affected the
second half of the year. Positive highlights were the low increase in
administration expenses together with an improved level of irrecoverable debts.
Overall, group operating costs at 6.7% up on last year were well controlled.
In order to secure key sites, the group purchased five retail stores during the
year. These will be managed by a newly established retail division.
Net interest earned of R3.7 million was lower than that earned in 2009 (R5.4
million) and reflected the effects of the continued capital expenditure
programme, the share buybacks and of lower interest rates. The group has
continued to advance or secure loan facilities for retailers in order to enable
them to purchase or revamp stores. The group discounts these retailer loans with
its bankers.
The group has no long term borrowings and, when necessary, funds its operations
from overdraft facilities. These facilities are in excess of forecast
requirements and are subject to annual review.
Dividend cover was maintained at 1.5, and a final dividend of 222 cents per
share was declared. Dividends for the year amounted to 362 cents (2009: 322
cents) per share.
PROSPECTS
The group expects 2011 to be another challenging year but are nevertheless
positive about the opportunities for our business. We anticipate that consumer
spending will remain under some pressure, however the impact of lower interest
rates, improving economic activity and a gradual increase in food inflation are
positive signs for an improvement in trading.
The group will again focus on aggressively driving new business opportunities,
organic growth, stringent cost control and securing operating efficiencies.
Cash generation is expected to improve as capital expenditure continues to
reduce and the dividend cover is maintained. Where appropriate, surplus cash
will be utilised to buy back shares.
Mike Hankinson Wayne Hook
Chairman Chief Executive
AUDIT OPINION
The auditors, Deloitte & Touche, have issued their opinion on the group`s
financial statements for the year ended 30 September 2010. The audit was
conducted in accordance with International Standards on Auditing. They have
issued an unmodified audit opinion. These summarised provisional financial
statements have been derived from the group financial statements and are
consistent in all material respects, with the group financial statements. A copy
of their audit report is available for inspection at the company`s registered
office. Any reference to future financial performance included in this
announcement, has not been reviewed or reported on by the company`s auditors.
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that a final dividend of 222 cents per share has been
declared in respect of the year ended 30 September 2010.
The salient dates for the payment of the final dividend are detailed below:
Last day to trade cum-dividend Friday, 3 December 2010
Shares to commence trading ex-dividend Monday, 6 December 2010
Record date Friday, 10 December 2010
Payment of dividend Monday, 13 December 2010
Shareholders will not be permitted to dematerialise or rematerialise their share
certificates between Monday, 6 December 2010 and Friday, 10 December 2010, both
days inclusive.
By order of the board
KJ O`Brien
Company Secretary
Pinetown
16 November 2010
DIRECTORATE AND ADMINISTRATION
DIRECTORS: MJ Hankinson* (Chairman), WA Hook (Chief Executive),
MW Godfrey, 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: ZAE000058517 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: 17/11/2010 07:05:14 Produced by the JSE SENS Department.
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