| Wed 9 May 2012, 7:05 | | SPP - The Spar Group Limited - Unaudited Interim Results for the six months |
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SPP
SPP
SPP - The Spar Group Limited - Unaudited Interim Results for the six months
ended 31 March 2012 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")
FINANCIAL HIGHLIGHTS
Turnover UP 13.6%
Profit before taxation UP 11.4%
Headline earnings per share UP 9.1%
Interim dividend of 155 cents per share(gross)
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
% March March September
Rmillion Change 2012 2011 2011
REVENUE 21 902.0 19 294.7 38 819.6
Turnover 13.6 21 717.8 19 115.0 38 458.7
Cost of sales (20 001.3) (17 584.8) (35 336.6)
Gross profit 1 716.5 1 530.2 3 122.1
Other income 184.2 179.7 360.9
Operating expenses 11.5 (1 111.5) (996.8) (2 065.7)
TRADING PROFIT 789.2 713.1 1 417.3
BBBEE transactions (6.4) (6.5) (12.9)
OPERATING PROFIT 10.8 782.8 706.6 1 404.4
Interest received 11.2 7.5 18.2
Interest paid (14.1) (14.2) (24.7)
Share of equity accounted
associate 0.9 0.8 6.7
Profit before taxation 11.4 780.8 700.7 1 404.6
Taxation (257.0) (221.5) (452.0)
PROFIT FOR THE PERIOD
ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 523.8 479.2 952.6
OTHER COMPREHENSIVE INCOME
Exchange differences from
translation of foreign operations (0.1) 0.1
TOTAL COMPREHENSIVE INCOME 523.7 479.2 952.7
EARNINGS PER SHARE
Earnings per share (cents) 9.0 304.7 279.6 555.6
Diluted earnings per
share (cents) 283.0 261.9 521.4
SALIENT STATISTICS
Headline earnings per
share (cents) 9.1 305.4 279.8 557.1
Diluted headline earnings
per share (cents) 283.6 262.1 522.8
Dividend per share (cents) 9.2 155.0 142.0 377.0
Net asset value per share (cents) 1 488.9 1 328.0 1 450.5
Operating profit margin (%) 3.6 3.7 3.7
Return on equity (%) 20.8 21.5 40.7
HEADLINE EARNINGS RECONCILIATION
Profit for the period
attributable to
ordinary shareholders 523.8 479.2 952.6
Adjusted for:
Loss on sale of property,
plant and equipment 1.5 0.5 3.4
Tax effects of adjustments (0.4) (0.2) (0.9)
HEADLINE EARNINGS 524.9 479.5 955.1
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
March March September
Rmillion 2012 2011 2011
CASH FLOWS FROM OPERATING ACTIVITIES (365.7) (446.1) 737.7
Operating profit before: 782.8 706.2 1 404.4
Non cash items 92.3 94.4 169.1
Loss on disposal of property, plant
and equipment 1.5 0.5 3.4
Net working capital changes (544.7) (637.2) 204.3
- Increase in inventories (253.6) (240.9) (175.9)
- Increase in trade and other
receivables (168.2) (184.0) (452.2)
- (Decrease)/ increase in trade and
other payables and provisions (122.9) (212.3) 832.4
Cash generated from operations 331.9 163.9 1 781.2
Interest received 12.0 6.6 17.1
Interest paid (14.1) (14.2) (24.7)
Taxation paid (291.6) (221.9) (411.3)
Dividends received 0.4
Dividends paid (403.9) (380.9) (624.6)
CASH FLOWS FROM INVESTING ACTIVITIES (104.0) (172.8) (254.2)
Investment to expand operations (51.3) (64.9) (118.0)
Investment to maintain operations (25.6) (30.1) (36.6)
- Replacement of property, plant and
equipment (26.2) (30.2) (41.5)
- Proceeds on disposal of property,
plant and equipment 0.6 0.1 4.9
Acquisition of subsidiaries (71.8) (82.2)
Net movement on loans and investments (27.1) (6.0) (17.4)
CASH FLOWS FROM FINANCING ACTIVITIES (66.0) (22.6) (56.1)
Proceeds from issue of shares 4.9 13.0 16.2
Proceeds from exercise of share options 25.9 12.5 25.5
Share repurchases (96.8) (48.1) (97.8)
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (535.7) (641.5) 427.4
NET OVERDRAFTS AT BEGINNING OF PERIOD (18.5) (445.9) (445.9)
NET OVERDRAFTS AT END OF PERIOD (554.2) (1 087.4) (18.5)
Condensed consolidated statement of changes in equity
Currency Share-
trans- based
Stated Treasury lation payment
Rmillion capital shares reserve reserve
Capital and reserves at 30
September 2010 33.4 (10.8) (0.2) 261.8
Total comprehensive income
Share capital issued 13.0 (13.0)
Recognition of share-based payments 8.5
Take-up of share options 53.7 (28.2)
Transfer arising from take-up of
share options 28.2
Share repurchases (48.1)
Dividends declared
Recognition of BBBEE transaction 6.2
Capital and reserves at 31 March
2011 46.4 (18.2) (0.2) 276.5
Total comprehensive income 0.1
Share capital issued 3.2 (3.2)
Recognition of share-based payments 9.3
Take-up of share options 43.3 (27.0)
Transfer arising from take-up of
share options 27.0
Share repurchases (49.7)
Dividends declared
Recognition of BBBEE transaction 6.2
Capital and reserves at 30
September 2011 49.6 (27.8) (0.1) 292.0
Total comprehensive income (0.1)
Share capital issued 4.9 (4.9)
Recognition of share-based payments 9.3
Take-up of share options 70.7 (40.0)
Transfer arising from take-up of
share options 40.0
Share repurchases (96.8)
Dividends declared
Recognition of BBBEE transaction 6.2
Capital and reserves at 31 March
2012 54.5 (58.8) (0.2) 307.5
Attributable
Retained to ordinary
Rmillion earnings shareholders
Capital and reserves at 30 September 2010 1 903.0 2 187.2
Total comprehensive income 479.2 479.2
Share capital issued -
Recognition of share-based payments 8.5
Take-up of share options 25.5
Transfer arising from take-up of share options (28.2) -
Share repurchases (48.1)
Dividends declared (380.9) (380.9)
Recognition of BBBEE transaction 6.2
Capital and reserves at 31 March 2011 1 973.1 2 277.6
Total comprehensive income 473.4 473.5
Share capital issued -
Recognition of share-based payments 9.3
Take-up of share options 16.3
Transfer arising from take-up of share options (27.0) -
Share repurchases (49.7)
Dividends declared (243.7) (243.7)
Recognition of BBBEE transaction 6.2
Capital and reserves at 30 September 2011 2 175.8 2 489.5
Total comprehensive income 523.8 523.7
Share capital issued -
Recognition of share-based payments 9.3
Take-up of share options 30.7
Transfer arising from take-up of share options (40.0) -
Share repurchases (96.8)
Dividends declared (403.9) (403.9)
Recognition of BBBEE transaction 6.2
Capital and reserves at 31 March 2012 2 255.7 2 558.7
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
March March September
Rmillion 2012 2011 2011
ASSETS
Non-current assets 2 149.6 2 114.2 2 123.8
Property, plant and equipment 1 565.3 1 551.1 1 550.4
Goodwill 381.9 371.5 381.9
Operating lease receivables 117.8 133.7 119.3
Investment in associate 22.9 16.6 22.1
Other investments 20.5 1.5 1.5
Loans 25.5 31.2 34.8
Deferred taxation asset 15.5 7.5 13.2
Other non-current assets 0.2 1.1 0.6
Current assets 6 611.2 5 927.9 6 177.8
Inventories 1 388.6 1 200.1 1 135.0
Trade and other receivables 5 044.9 4 593.7 4 867.8
Prepayments 15.1 17.6 26.6
Operating lease receivables 30.5 22.0 36.7
Loans 28.9 10.3 15.3
Taxation receivable 5.6
Bank balances - Guilds 103.2 78.6 96.4
TOTAL ASSETS 8 760.8 8 042.1 8 301.6
EQUITY AND LIABILITIES
Capital and reserves 2 558.7 2 277.6 2 489.5
Stated capital 54.5 46.4 49.6
Treasury shares (58.8) (18.2) (27.8)
Currency translation reserve (0.2) (0.2) (0.1)
Share-based payment reserve 307.5 276.5 292.0
Retained earnings 2 255.7 1 973.1 2 175.8
Non-current liabilities 223.3 216.9 216.5
Deferred taxation liability 0.6 0.6
Post retirement medical aid provision 94.4 76.8 85.5
Operating lease payables 128.3 140.1 130.4
Current liabilities 5 978.8 5 547.6 5 595.6
Trade and other payables 5 267.3 4 353.0 5 391.5
Operating lease payables 32.8 23.0 37.0
Provisions 12.9 5.6 11.6
Taxation payable 8.4 40.6
Bank overdrafts 657.4 1 166.0 114.9
TOTAL EQUITY AND LIABILITIES 8 760.8 8 042.1 8 301.6
Notes to the condensed consolidated interim results
1 BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS
The condensed consolidated interim results have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), IAS 34: Interim
Reporting and the AC 500 standards as issued by the Accounting Practices
Board, the South African Companies Act (No 71 of 2008, as amended) and the
listing requirements of the JSE Limited. The accounting policies are in terms
of IFRs and are consistent with those used in the annual financial statements
for the financial period ended September 2011.
The information contained in the interim report has neither been audited nor
reviewed by the group`s external auditors. These condensed consolidated
financial statements have been prepared under the supervision of MW Godfrey
CA(SA), the Financial Director of the group.
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
March March September
Rmillion 2012 2011 2011
2 STATED CAPITAL
Authorised
250 000 000 (March 2011: 250 000 000)
ordinary shares 0.2 0.2 0.2
30 000 000 (March 2011: 30 000 000)
redeemable, convertible
preference shares - - -
Issued
172 372 704 (March 2011:
171 729 604) ordinary shares 54.5 46.4 49.6
18 911 349 (March 2011: 18 911 349)
redeemable, convertible
preference shares - - -
Total stated capital 54.5 46.4 49.6
Per the resolution passed at the
annual general meeting, all shares of
par value were converted to no par value.
Issued share capital amounts to R103
424, consisting of 172 372 704
ordinary shares. 436 100 ordinary
shares were issued during the
six months ended 31 March 2012.
Issued redeemable, convertible
preference share capital amounts to
R11 347, consisting of 18 911 349
(March 2011: 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 171 899 983 (March 2011: 171
394 121).
Diluted earnings and headline earnings
per share were based on a
weighted average number of ordinary
shares (net of treasury shares) of
185 103 869 (March 2011: 182 991 411).
3 CONTINGENT LIABILITIES
The company has guaranteed the finance
obligations of certain SPAR
retailer members to the amount of: 386.9 386.9 415.6
4 OPERATING LEASES
Operating lease costs charged against
operating profit
Immovable property 21.7 16.7 35.2
- Lease rentals 181.2 161.7 337.6
- Sub-lease recoveries (159.5) (145.0) (302.4)
Plant, equipment and vehicles 10.7 5.8 13.9
Operating lease commitments
Future minimum lease payments under
non-cancellable operating leases 3 093.9 2 539.5 2 924.5
- Land and buildings 3 087.2 2 536.3 2 917.2
- Other 6.7 3.2 7.3
Future minimum sub-lease receivables
under non-cancellable property leases (2 733.5) (2 191.7) (2 569.4)
Net commitments 360.4 347.8 355.1
5 CAPITAL COMMITMENTS
Contracted 34.2 55.4 130.3
Approved but not contracted 25.7 11.0 16.1
Total capital commitments 59.9 66.4 146.4
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
business of the group is considered to be a single geographic segment.
7 EVENTS AFTER THE REPORTING DATE
No material events have occurred subsequent to 31 March 2012 which may have an
impact on the group`s reported financial position at this date.
Review of trading results
TRADING OVERVIEW
Trading profit for the period under review reflected a pleasing improvement
over the same period last year. The consumer remained under pressure, high
unemployment levels persisted and food retail competition intensified, which
all led to a challenging trading environment. This was partly countered by
higher internal inflation of 7.2% for the period.
Turnover growth of 13.6%, which included volume growth of 6.1%, was very
encouraging and reflected a solid contribution from food and strong
performances from liquor and building materials. Profit before taxation
increased 11.4% for the period and was impacted by tighter gross margins, down
from 8.0% to 7.9%, and lower marketing income. Total operating expenses
increased by 11.5%, with fuel costs up 38% being a major contributing factor,
and the once-off KwaZulu-Natal distribution centre strike costs adding a
further R12 million. Comparable business costs, excluding our retail stores
and imports warehouse operation, were up 9.9%. Headline earnings per share
increased by 9.1% to 305.4 cents and was impacted by an underprovision for tax
in the prior period.
SPAR wholesale turnover of R17.9 billion increased by 12.1% and was supported
by growth in retail trading space of 1.63%. During the period 12 new stores
were opened. At the end of March the group serviced 867 SPAR stores.
TOPS remains a real success story. Store numbers increased to 523 with 25 new
stores opening during the first half of the year. Liquor trading remained very
strong with wholesale turnover for the period increasing by an impressive
19.7% to R1.6 billion.
Build it wholesale turnover reported growth of 19.2% to R2.25 billion, and was
once again supported by an excellent retail performance. Eight new stores were
opened in the period. The new Build it imports warehouse operation has shown
an impressive sales growth of 72%, however, our current focus is on refining
the product range and addressing the cost of distribution. We remain confident
about the future success of this venture.
We have progressed other retail formats and now have 16 pharmacies and 13
Savemor stores. We expect these new opportunities to gain some further
momentum going forward.
During the period the group`s retail division took on two new stores
temporarily which, together with two other corporate stores, are in the
process of being sold.
Performance in this division will show an improvement for the year to
September 2012. This division is profitable after the relevant wholesale
profit is taken into account, which affirms our decision to protect these
retail sites.
PROSPECTS
The group does not expect market conditions to change significantly over the
remainder of the financial year and consequently expects to deliver a
satisfactory performance for the second half of the year.
Cash generation will remain strong, buoyed by the fact that operational
capital expenditure for the year will not exceed R180 million.
Mike Hankinson Wayne Hook
Chairman Chief Executive
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 155 cents per share (gross)
has been declared by the board in respect of the six months ended 31 March
2012.
The dividend has been declared out of income reserves.
The salient dates for the payment of the interim dividend are detailed below:
Last day to trade cum-dividend Friday, 1 June 2012
Shares to commence trading ex-dividend Monday, 4 June 2012
Record date Friday, 8 June 2012
Payment of dividend Monday, 11 June 2012
Shareholders will not be permitted to dematerialise or rematerialise their
share certificates between Monday, 4 June 2012 and Friday, 8 June 2012, both
days inclusive.
In terms of the new Dividend Tax effective 1 April 2012, the following
additional information is disclosed:
- The local dividend tax rate is 15%;
- There are no STC credits utilised;
- The net local dividend amount is 131.75 cents per share for shareholders
liable to pay the new Dividend Tax, and 155 cents per share for shareholders
exempt from the new Dividend Tax;
- The issued share capital of The SPAR Group Limited is 172 372 704 ordinary
shares; and
- The SPAR Group Limited`s tax reference number is 9285/168/20/0.
By order of the board
KJ O`Brien Pinetown
Company Secretary 8 May 2012
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, CF Wells* *Non-executive
Company secretary: KJ O`Brien
ISIN: ZAE000058517 JSE 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: One Capital, PO Box 784573, 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: 09/05/2012 07:05:20 Produced by the JSE SENS Department.
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