| Wed 11 May 2005, 15:21 | | The Spar Group Limited - Unaudited Interim Results |
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The Spar Group Limited - Unaudited Interim Results For The Six Months Ended 31
March 2005
THE SPAR GROUP LIMITED
JSE code: SPP
ISIN number: ZAE000058517
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2005
Turnover +12.3% Operating Profit +28.3%
Headline Earnings per Share +21.2% Interim Dividend 30 Cents per
Share
INCOME STATEMENTS Unaudited Unaudited Audited
six months six months year
ended ended ended
March Change March September
R`000 2005 (%) 2004 2004
Revenue 6 647 507 9.4% 6 073 612 11 985 151
Continuing operations 6 647 507 12.3% 5 918 502 11 803 014
Discontinued operations - 155 110 182 137
Cost of sales (6 134 294) (5 576 686) (11 030 572)
Gross profit 513 213 496 926 954 579
Depreciation and
amortisation (Note 2) (21 498) (26581) (54 035)
Other operating expenditure (223 200) (259 631) ( 505 037)
Profit from operations 268 515 27.4% 210 714 395 507
Profit on disposal of
discontinued operations - - 20 502
Operating profit before
interest and taxation 268 515 27.4% 210 714 416 009
Continuing operations 268 515 28.3% 209 242 393 319
Discontinued operations - 1 472 22 690
Interest paid (4 651) (2 328) (3 315)
Interest received 2 177 6 020 12 205
Net profit before taxation 266 041 214 406 424899
Taxation (83 060) (68 994) (132 925)
Net profit for the period/year 182 981 25.8% 145 412 291 974
Headline Earnings Reconciliation
Net profit for the period/year 182 981 145412 291 974
Adjusted for:
Net profit on sale of fixed
assets and
retail stores, net of impairments (1 300) (1251) (20 177)
Amortisation of goodwill - 5 700 12 338
Headline earnings 181 681 21.2% 149 861 284 135
Earnings Per Share
Number of shares in issue (`000) 169 053 168 764 168 764
Weighted average shares for the
purposes of earnings per
share and headline earnings
per share
(`000) 168 856 168764 168 764
Headline earnings per share
(cents) 107.6 21.2% 88.8 168.4
Fully diluted headline earnings
per share (cents) 105.6 88.8 168.4
Earnings per share (cents) 108.4 25.8% 86.2 173.0
Fully diluted earnings per
share (cents) 106.4 86.2 173.0
Salient Statistics
Net asset value per share (cents) 368.5 399.2 259.1
Debt: equity ratio (%)
(debt includes bank overdraft)
(Note 1.1) 30.9 21.6 81.8
STATEMENTS OF CHANGES IN EQUITY Non-
Share Share distributable Accumulated
R`000 capital premium reserves profit Total
Balance at 30
September 2003 96 - 511 527 836 528443
Net profit for the
period - - - 145 412 145412
Foreign exchange
translation - - (140) - (140)
Balance at 31 March 2004 96 - 371 673 248 673715
Share capital issued
(Note 3) 5 - - - 5
Net profit for the
period - - - 146 562 146562
Dividends declared - - - (383 200) (383 200)
Release of revaluation
reserve - - (566) 566 -
Foreign exchange
translation - - 179 - 179
Balance at 30 September
2004 101 - (16) 437 176 437261
Share capital issued
(Note 3) - 2 805 - - 2 805
Net profit for the
period - - - 182 981 182981
Foreign exchange
translation - - (5) - (5)
Balance at 31 March
2005 101 2 805 (21) 620 157 623042
BALANCE SHEETS Unaudited Unaudited Audited
March March September
R`000 2005 2004 2004
Assets
Non-current assets 629 304 621 030 573 591
Property, plant and equipment 350 169 319 609 295 466
Goodwill 245 568 255 906 246 808
Loans and investments 23 730 38 672 24 625
Deferred taxation asset 9 837 6 843 6 692
Current assets 1 792 408 1 601 525 1 683 056
Inventories 348 930 391 985 335 253
Trade and other receivables 1 388 869 1 166 975 1 299 257
Cash held by Guilds (Note 1.1) 54 609 42 565 48 546
Total Assets 2 421 712 2 222 555 2 256 647
Equity and Liabilities
Capital and reserves 623 042 673 715 437 261
Share capital and premium 2 906 96 101
Non-distributable reserves (21) 371 (16)
Accumulated profit 620 157 673 248 437 176
Non-current liabilities 39 099 42 222 38 736
Deferred taxation liability - - 110
Long-term borrowings 277 3 191 1 754
Provision for post-retirement
medical obligations 38 822 34 244 36 872
Amount due to Tiger Brands Ltd - 4 787 -
Current liabilities 1 759 571 1 506 618 1 780 650
Trade payables, accruals and
provisions 1 544 783 1 339 961 1 419 344
Current portion of long-term
borrowings 41 600 - 832
Bank overdraft 150 866 137 345 355 308
Taxation 22 322 29 312 5 166
Total Equity and Liabilities 2 421 712 2 222 555 2 256 647
CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months year
ended ended ended
March March September
R`000 2005 2004 2004
Cash generated from operations 312 217 273 291 526211
Interest paid (4 651) (2 328) (3 315)
Interest received 2 177 6 020 12 205
Taxation paid (69 159) (93 848) (181 718)
Dividends paid - - (383 200)
Net cash generated from/(utilised by)
operating activities 240 584 183 135 (29 817)
Capital expenditure (78 682) (26 647) (51 674)
Acquisition of subsidiary - (291 863) (291 863)
Proceeds on disposal of
businesses and fixed assets 5 612 4 409 25189
Acquisition of minority shareholding - (1) (1)
Net movement on loans
and investments 895 (2) 10 602
Net cash utilised by
investing activities (72 175) (314 104) (307 747)
Proceeds from issue of share capital 2 805 - 5
Increase / (decrease) in borrowings 39 291 (405) (5 797)
Net cash generated/(utilised)
by financing activities 42 096 (405) (5 792)
Net increase/(decrease)
in cash and cash equivalents 210 505 (131 374) (343356)
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of Presentation
The interim consolidated financial statements were prepared in
acccordance with the South African Statements of Generally Accepted
Accounting Practice applicable to Interim Financial Reporting - AC127.
The accounting policies used in the preparation of the interim financial
statements were consistent with those employed in the annual financial
statements for the year ended 30 September 2004, except for the
accounting treatment of goodwill. In accordance with AC140, `Business
Combinations`, with effect from 1 October 2004, the Group is no longer
required to amortise goodwill. An impairment test on the balance of
goodwill will be performed annually. No impairment loss has occurred in
the six months ended 31 March 2005.
1.1 Reclassification of cash balances
During the current financial period, the Group reclassified cash
balances as between overdrafts and Guild cash holdings. The comparative
figures have been reclassified and the debt to
equity ratios revised in order to correspond with the current period
treatment.
2. Depreciation and Amortisation
During the current financial period, the Group reassessed its estimate
of the useful lives of certain assets, principally within the vehicle, plant
and machinery and computer equipment categories, in order to more accurately
reflect the specific employment of these assets by the Group. This change
resulted in a reduction in the depreciation charge for the period of
R1.5 million. The anticipated reduction in the depreciation charge for
the full year will be R10.2 million. 3. Share Capital During the six months
ended 31 March 2005, the Spar Group issued an additional 288 833 ordinary
shares of 0.06 cents each (September 2004: 8 692 003 ordinary shares of 0.06
cents each) pursuant to the exercise of share options under the 2004 Spar
share incentive scheme. Issued share capital has increased thereby to R101
431.50 (September 2004: R101 258.20), consisting of 169 052 503 shares of 0.06
cents each (September 2004: 168 763 670 ordinary shares of 0.06 cents each).
Unaudited Unaudited Audited
six months six months year
ended ended ended
March March September
2005 2004 2004
R`000 R`000 R`000
4. Contingent Liabilities
The Group has guaranteed the finance
obligations and rental commitments of
certain Spar members amounting to: 178 483 159 272 178297
5. Operating Leases Charges and recoveries
reported in operating profit Lease payments
charged against operating
profit in respect of headleases and other
operating leases 42 033 36 780 77 899
Recoveries from Spar members in terms of
sub-leases recognised in operating profit (40 755) (33 638) (69 815)
Net operating lease charges 1 278 3 142 8 084
Commitments Future lease payments under
non-cancellable leases: 967 734 827 714 918 941
The corresponding commitments of Spar
members to the Group in terms of
sub-leases were: (947 042) (709 587) (807 726)
Net commitment 20 692 118 127 111 215
6. Capital Commitments - Contracted 3 022 7 434 4 228
- Approved but not contracted 31 614 7 105 1 089
34 636 14 539 5 317
7. Post-Balance Sheet Events No material events have
occurred subsequent to 31 March 2005, which may have an impact on the
Group`s reported financial position at this date.
NATURE OF BUSINESS
The Group owns and operates six distribution centres that supply and
Service independently owned SPAR food stores, TOPS liquor outlets and BUILD it
building materials outlets, situated in South Africa and neighbouring
countries. The Group has core competencies in distribution and the
managing of voluntary trading organisations. It provides the control and
leadership for SPAR, TOPS and BUILD it in Southern Africa.
REVIEW OF TRADING RESULTS
Against a backdrop of strong competition and continuing low levels of
inflation (2-3%) the Group achieved a more than satisfactory turnover
increase of 12.3%. Market share for SPAR compared to the major food
chains remained at 26%. BUILD it and TOPS both achieved substantial
turnover growths as a result of the Group`s drive into these
businesses.
67 new stores were brought into the fold in the period under review and
good progress made with the ongoing upgrading and remodelling of
existing stores.
Operating profit before interest and taxation increased by 28.3% to
R268.5 million (2004: R209.2 million). This increase in profitability
was driven by improved operating efficiencies and cost control, the
cessation of the payment of the management fee to the Group`s former
holding company, the discontinuance of the amortisation of goodwill (in
terms of AC140) and a lower depreciation charge.
The Group moved from a net interest received position for the six months
to March 2004 to a net interest paid position following the significant
dividend distributed in 2004 and the acquisition of Nelspruit
Wholesalers. Net cash generated from operating activities amounted to
R240.6 million. As a result of this strong cash flow, the Group reduced
its overdraft to R150.9 million from the year end September 2004
overdrawn position of R355.3 million.
LOOKING FORWARD
It is anticipated that the competitive environment and the current low
levels of
inflation will remain features of the balance of the financial year.
However, with the Group`s aggressive marketing programme and focus on
new stores and the upgrading of existing stores, turnover growth
approximating current levels should be achievable.
Whilst the impact of improved operating efficiencies will be felt to a
lesser extent in the
second half, good growth in earnings is still expected.
Strong cash generation will continue and the level of borrowings will
further reduce.
DIVIDEND
Contrary to the prelisting statement comment, the directors are pleased
to announce the declaration of an interim dividend of 30 cents per share
payable on 6 June 2005. The dividend cover for the full year will
remain, as advised, at 2.25 times.
M J Hankinson P K Hughes
Chairman Chief Executive
11 May 2005
DECLARATION OF ORDINARY DIVIDEND
Notice is hereby given that an interim dividend of 30 cents per ordinary
share has been declared in respect of the half year ended 31 March 2005.
The salient dates for the payment of the dividend are detailed below:
Last day to trade cum-dividend Friday, 27 May 2005
Shares to commence trading ex-dividend Monday, 30 May 2005
Record date Friday, 3 June 2005
Payment of dividend Monday, 6 June 2005
Shareholders will not be permitted to dematerialise or rematerialise
their share certificates between Monday, 30 May 2005 and Friday,3 June 2005,
both days inclusive.
By order of the board
R C Fenner Pinetown
Secretary 11 May 2005
DIRECTORATE AND ADMINISTRATION
Directors: M J Hankinson* (Chairman), P K Hughes (Chief Executive), R W
Coe, D B Gibbon*,
R J Hutchison*, P M Madi*, H K Mehta*, G Moloi*. *Non executive
Company secretary: R C Fenner
ISIN number: ZAE000058517 JSE code: SPP
Registered office: 22 Chancery Lane, P O Box 1589, Pinetown, 3600
Transfer secretaries: Ultra Registrars (Pty) Limited, P O Box 4844,
Johannesburg, 2000
Auditors: Deloitte & Touche, P O Box 243, Durban, 4000
Sponsor: Rand Merchant Bank, P O Box 786273, Sandton, 2146
Bankers: First National Bank, P O Box 4130, Umhlanga Rocks, 4320
Website: www.spar.co.za
Date: 11/05/2005 03:00:28 PM
Produced by the JSE SENS Department
