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The Spar Group Limited - Sparkling Maiden Results From Spar Group Limited
THE SPAR GROUP LIMITED
JSE code: SPP
ISIN number: ZAE000058517
Press Release
11th May 2005
For immediate release
Sparkling Maiden Results from Spar Group Limited
In its first reporting period as a listed company, the Spar Group
Limited has turned in a strong set of results for the six months ended
31st March 2005.
Buoyed by the robust retail consumer spending, turnover was up 12,3% -
ahead of turnover growth achieved for the year ended September 2004 and
the corresponding six months to March 2004.
Operating profit before interest and taxation increased by 28,3% to
R269 million (2004 R209 million). Headline earnings per share were up a
healthy 21,2% and the business remains strongly cash generative with
cash of some R312 million generated from operations over the period.
The group made considerable progress in reducing its level of
borrowings.
Contrary to the prelisting statement which indicated that an annual
dividend would be paid, the group has declared a 30 cents a share
interim dividend.
While the enduring strength of the economy, and consumer spending in
particular, assisted the group`s profitability, other drivers were
improved operating efficiencies and cost controls.
The short term under recovery of costs at the South Rand Distribution
Centre caused by the transfer of considerable perishable product
business to the Group`s new North Rand Distribution Centre last year,
is now a thing of the past and efficiencies, business volumes and
trading margins at both facilities have improved significantly.
The margins also benefited from a cessation in management fees paid to
former holding company, Tiger Brands Limited, the discontinuance of the
amortisation of goodwill arising from the recent purchase of Nelspruit
Wholesalers and a lower depreciation charge.
Spar Group CEO, Peter Hughes, says he is pleased with Group`s first set
of results as a listed entity - particularly the healthy increase in
turnover in the current low inflationary environment.
`With food inflation running at an estimated 2 - 3%, this equates to
around a 9% real turnover increase, which is more than satisfactory in
the current competitive food retailing environment,` he says.
Hughes says in the absence of any major inflationary forces building up
in the economy, he expects trading volumes to remain at current levels
for the foreseeable future.
The Spar retail stores serviced by the Spar Group saw retail sales
increase by 10,5% - ahead of the average for the food retail sector.
The Group`s market share in the food distribution business remained
unchanged at around 26%, but an aggressive new store opening and store
re-vamp programme could see some subsequent gains being made in this
area.
During the period under review the Group presided over the opening 67
new stores, which included 17 Spar`s, 30 Tops at Spar stores and 20
Build It outlets. The intention is to bring a further 79 new stores to
the market across all store formats during the remainder of the current
financial year.
On the distribution side, Hughes says the Group has just signed a R20m
contract for the development of a 6 800 square metre extension to its
distribution centre in KwaZulu Natal. Work on the facility has already
started and is expected to be completed before the Christmas season. It
has also acquired an adjoining property for R5,5m which will provide
sufficient space for future expansion of the facility.
In the Western Cape, where the Group is planning to build a brand new
R190 million distribution facility, the search is still on for a
suitable development site.According to Hughes,several options are
currently being considered and an announcement will be made in due
course.
Ends
ISSUED BY: MOTIV INVESTOR COMMUNICATIONS
Graham Fiford Tel: (011) 305 - 7312
ON BEHALF OF: SPAR GROUP LIMITED
Peter Hughes Tel: (031) 719 1900
Date: 11/05/2005 04:08:27 PM
Produced by the JSE SENS Department
