Slide 1: The SPAR Group Ltd Results Presentation 2022
THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 2: Presentation Outline
PRESENTATION OUTLINE OVERVIEW Brett Botten, CEO FINANCIAL REVIEW Mark Godfrey, CFO OPERATIONAL & STRATEGIC UPDATE Brett Botten, CEO THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 3: Overview
OVERVIEW Brett Botten, Chief Executive Officer THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 4: Review of the Period – FY22
REVIEW OF THE PERIOD – FY22 • GROUP o Robust turnover growth of 6%; resilient performance despite ongoing challenges • SOUTHERN AFRICA o Strong turnover growth of 8.4% • Combined core grocery & liquor turnover up 9.2% • Core grocery business: robust growth of 5.3% • TOPS liquor: +42.6% (pandemic-rel
Slide 5: Review of the Period – FY22
REVIEW OF THE PERIOD – FY22 • EUROPEAN REGIONS (In local currency) o BWG Group (Ireland & South West England) • Strong turnover growth of 7.6%; continued impressive performance o SPAR Switzerland • Turnover declined by 3.0% but still significantly ahead of pre-COVID-19 levels o SPAR Poland • Turnove
Slide 6: My SPAR, Our Tomorrow
MY SPAR, OUR TOMORROW ENIRONMENTAL FOCUS APPROACH TO PACKAGING • Committed to a ‘just transition’ to • Growing ‘circular economy’ net zero emissions by 2050 innovation and initiatives • Climate change report aligned with • Launched ‘Smartpak’, TCFD framework sustainable packaging solution • 34.7% re
Slide 7: My SPAR, Our Tomorrow
MY SPAR, OUR TOMORROW INSPIRING OUR COMMUNITIES AND PEOPLE TO DO AND BE MORE • Launched small supplier development programme • Recognised as a ‘top employer’ in South Africa • Progress against gender-based violence • Ongoing support of youth education programmes • Feeding the nation and serving our
Slide 8: Financial Review
FINANCIAL REVIEW Mark Godfrey, Chief Financial Officer THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 9: Financial Overview – Salient Features
FINANCIAL OVERVIEW SALIENT FEATURES Change R million 2022 2021 % Turnover¹ 135 609.1 127 940.5 6.0 Gross profit 16 299.0 15 359.0 6.1 - Gross profit (%) 12.0% 12.0% Net operating expenses 15 896.5 14 647.2 8.5 Operating profit 3 428.7 3 392.6 1.1 - Operating margin (%) 2.5% 2.7% Profit after tax 2 2
Slide 10: Key Regional Metrics
FINANCIAL OVERVIEW KEY REGIONAL METRICS Southern Switzer- R million Africa Ireland land Poland Group Income statement Revenue – sale of merchandise 88 090.9 31 295.6 13 834.7 2 387.9 135 609.1 Gross profit 8 829.4 4 485.1 2 547.9 436.6 16 299.0 Gross profit (%) 10.0% 14.3% 18.4% 18.3% 12.0% Operatin
Slide 11: Turnover by Region
FINANCIAL OVERVIEW Southern Africa TURNOVER • Robust overall growth in SA Change • SPAR and TOPS combined growth of 9.2% R million 2022 2021 % • Excellent liquor growth, against 2021 SPAR - core grocery business 65 946.9 62 608.1 5.3% liquor trade restrictions and civil unrest in base TOPS/Liquor sa
Slide 12: Inflation Becoming a Factor
FINANCIAL OVERVIEW INFLATION BECOMING A FACTOR Southern Africa SPAR South Africa • 2023 inflation estimate of 5.3% 2022 (%) 2021 (%) Internally measured • CPI for the period +7.0 +5.5 wholesale inflation FY22 FY21 • Food +9.4 +6.0 • Non- alcoholic beverages +5.9 +1.6 Food 6.9% 4.9% • Alcohol and tob
Slide 13: Gross Margins
FINANCIAL OVERVIEW GROSS MARGINS Southern Africa 2022 2022 Gross 2022 Change 2021 • Increased liquor sales mix; dilutionary R million Turnover margin (GP%) (bps) (GP%) impact on wholesale gross margin South Africa 86 289.1 7 968.2 9.23% -18 bps 9.41% Ireland S Buys 1290.9 108.2 8.38% -34 bps 8.72% •
Slide 14: Net Operating Expenses
FINANCIAL OVERVIEW NET OPERATING EXPENSES 2022 2021 Warehousing and distribution expenses % R million Expenses Expenses increase • Significant increase in fuel and outsourced transport costs of 25.4% Warehousing and distribution expenses • Increase in energy costs of 22.1% 5 184,5 4 552,5 13.9 Marke
Slide 15: Net Operating Expenses continued
FINANCIAL OVERVIEW NET OPERATING EXPENSES continued Southern Africa 2022 2021 • Employment costs well managed % • Significant increases in fuel, energy, IT % % costs and marketing costs R million Expenses of sales Expenses of sales increase Ireland South Africa 6 940.6 8.0 6 213.2 7.8 11.7 • Net exp
Slide 16: Finance Income & Costs
FINANCIAL OVERVIEW FINANCE INCOME & COSTS 2022 2021 R million Finance income Loans 45.0 47.1 Bank deposits 24.6 18.2 Trade and other 64.1 53.9 Lease receivables – IFRS16 465.3 453.8 599.0 573.0 Finance costs Loans 152.8 148.8 Bank overdraft 147.9 83.2 Deposits and other 11.3 35.5 Lease liabilities –
Slide 17: Effective Tax Rate
FINANCIAL OVERVIEW EFFECTIVE TAX RATE 2022 2021 R million South African current income tax rate 28.0 28.0 Temporary differences relating to share plans 0.2 (0.7) Fair value, forex & finance cost adjustments arising on - financial liabilities (0.1) Other exempt and non-deductible items 0.8 0.5 Unutil
Slide 18: Currency Impacts (vs ZAR)
FINANCIAL OVERVIEW CURRENCY IMPACTS (VS ZAR) Ireland (€) Switzerland (CHF) 2022 2021 2022 2021 Closing spot rate 17.80 17.47 18.41 16.20 Average rate 17.21 17.94 16.84 16.51 EURO & SWISS FRANC / ZAR EUR : ZAR 19 OCT 2021 - SEP 2022 CHF:ZAR 18,5 18 17,5 17 16,5 16 15,5 15 THE SPAR GROUP LTD RESULTS P
Slide 19: Currency Impacts (vs ZAR) Poland
FINANCIAL OVERVIEW CURRENCY IMPACTS (VS ZAR) Poland (PLN) 2022 2021 Closing spot rate 3.66 3.79 Average rate 3.69 3.95 PLN / ZAR 4,1 OCT 2021 - SEP 2022 4 3,9 3,8 3,7 3,6 3,5 3,4 3,3 3,2 3,1 3 THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 20: Comparative Trading (ZAR)
FINANCIAL OVERVIEW COMPARATIVE TRADING (ZAR) TURNOVER (Rm) OPERATING PROFIT/(LOSS) (Rm) ( 237,1) POL 1 122,1 POL 1 265,8 ( 165,9) SA 43 469,5 SA 1 031,7 44 621,4 1 420,0 IRE 16 442,3 580,5 14 853,3 IRE 390,0 6 970,0 H2 2022 221,6 SWZ SWZ 6 864,7 H1 2022 187,9 2022 Growth YoY 2022 Growth YoY Southern
Slide 21: Comparative Trading (Local Currency)
FINANCIAL OVERVIEW COMPARATIVE TRADING (FOREIGN REGIONS IN LOCAL CURRENCY) TURNOVER (‘m) OPERATING PROFIT/(LOSS) (‘m) POL ((65,5) 65,5) 312,3 POL POL 312,3 ( 43,9) (43,9) POL 335,7 335,7 34,4 34,4 969,7 969,7 IRE IRE IRE IRE 22,0 22,0 849,1 849,1 13,4 13,4 412,3 412,3 SWZ SWZ SWZ SWZ H2 10,9 10,9 40
Slide 22: Balance Sheet Regional Key Metrics
FINANCIAL OVERVIEW BALANCE SHEET REGIONAL KEY METRICS Southern R million Africa Ireland Switzerland Poland Group Balance sheet Property, plant and equipment 2 795.3 2 395.4 3 536.6 269.4 8 996.7 Right-of-use asset 708.2 2 537.1 4 788.1 287.1 8 320.5 Lease receivable – Non-current 4 515.6 120.3 - 370
Slide 23: Group Net Debt
FINANCIAL OVERVIEW GROUP NET DEBT R million 2022 2021 • Foreign-currency based debt: c.98% Bank overdrafts 3 013.0 2 415.5 • Percentage of debt Total borrowings 7 596.6 7 649.8 Financial liability 54.4 50.1 • Fixed 2.3% / floating 97.7% Bank balances (862.0) (1 370.7) Total net debt 9 802.0 8 744.7
Slide 24: Weighted Average Maturity
FINANCIAL OVERVIEW WEIGHTED AVERAGE MATURITY BORROWINGS BY REGION (PRIMARY BORROWINGS) Years SA 2.3 IRE 4.3 2022 local ZAR SWZ 2.5 R million currency ZAR 2022 2021 POL 2.2 Southern Africa (ZAR) 173.0 173.0 235.2 AVERAGE INTEREST RATES ON Ireland (EUR) 178.2 3 173.0 3 400.1 BORROWINGS (%) FY22 FY21 S
Slide 25: Cashflow
FINANCIAL OVERVIEW CASHFLOW R million 2022 2021 Cash flow from operating activities (adjusted for non-cash items) 5 816.6 5 568.7 Working capital changes : (789.7) (693.2) - Increase in inventory (1 049.0) (110.9) - Increase in trade and other receivables (2 196.4) (688.9) - Increase in trade payabl
Slide 26: Cashflow continued
FINANCIAL OVERVIEW CASHFLOW continued Rmillion • Cash generated from operations of R5.8 bn • Dividends of R1.4bn paid to shareholders • Increase in CAPEX across all geographies, with investment in SAP a significant portion • Business acquisitions of R349.2m (SA and UK retail stores, and 2 Irish cash
Slide 27: Capital Expenditure
FINANCIAL OVERVIEW CAPITAL EXPENDITURE R million 2022 2021 Investing to expand operations (1 190.8) (978.4) Investment to maintain operations (454.8) (394.7) Replacement of property, plant and equipment (592.6) (463.9) Proceeds on disposal of property, plant and equipment 137.8 69.2 Acquisition of b
Slide 28: Capital Expenditure continued
FINANCIAL OVERVIEW CAPITAL EXPENDITURE continued Southern Africa • Investment mainly in software, as well as plant Regional capital expenditure equipment and vehicles R million Expansion Replacement 2022 • SAP investment of R463m Southern Africa (547.5) (163.3) (710.8) Ireland (411.3) (123.6) (534.9
Slide 29: Reconciliation of Dividend
FINANCIAL OVERVIEW RECONCILIATION OF DIVIDEND R million 2022 Reported headline earnings 2 233.4 Number of shares (net of treasury shares) at declaration date (million) 192.45 Headline earnings per share (cents) 1 160.5 Dividend cover 2.90 Dividend per share (cents) 400.0 • Dividend policy adjusted •
Slide 30: Performance Summary
FINANCIAL OVERVIEW PERFORMANCE SUMMARY NET ASSET VALUE PER SHARE HEADLINE EARNINGS PER SHARE (CENTS) (CENTS) 2022 5 201,0 2022 1 165,3 1 160,5 2021 4 350,5 2021 1 187,3 1 196,2 2020 4 102,2 2020 1 266,9 1 135,3 2019 3 879,9 2019 1 166,3 1 129,1 2018 2018 1 063,2 3 692,2 965,7 2017 2017 976,0 3 407,0
Slide 31: Salient Features
FINANCIAL OVERVIEW SALIENT FEATURES Change R million 2022 2021 % Turnover¹ 135 609.1 127 940.5 6.0 Gross profit 16 299.0 15 359.0 6.1 - Gross profit (%) 12.0% 12.0% Net operating expenses 15 896.5 14 647.2 8.5 Operating profit 3 428.7 3 392.6 1.1 - Operating margin (%) 2.5% 2.7% Profit after tax 2 2
Slide 32: Operational and Strategic Update – Southern Africa
OPERATIONAL AND STRATEGIC UPDATE – SOUTHERN AFRICA Brett Botten, Chief Executive Officer THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 33: Southern Africa: SPAR Grocery and Liquor
SOUTHERN AFRICA SPAR SPARGROCERY AND LIQUOR CORE GROCERY AND LIQUOR GROCERY TURNOVER % • Combined turnover growth +9.2% Wholesale +5.3 • Opened 72 SPAR and TOPS stores Retail +4.1 • 233 SPAR & TOPS stores upgraded Retail LFL +4.9 • House brands: +6.5% to R16.2bn o SPAR private label:+3.7% to R10.9bn
Slide 34: Southern Africa: SPAR Encore
SOUTHERN AFRICA SPAR ENCORE • Acquire remaining stake in SPAR Encore, subject to Competition Commission approval • Launched ‘The Food Stall’ • Increased focus on fresh • Butchery, bakery, HMR and fresh produce • SPAR Encore - product • SPAR Engage - merchandising Securing the supply chain and suppor
Slide 35: SPAR2U On-Demand Shopping Platform
SOUTHERN AFRICA SPAR2U ON-DEMAND SHOPPING PLATFORM • Launched SPAR2U o Rapid progress made o ‘E-Commerce-as-a-Service’ solution for retailers o Retailer focuses purely on picking and packing orders 87 sites launched FY22 You enable Shopping You handle picking & dispatch We plan the next available dr
Slide 36: S Buys and Pharmacy at SPAR
SOUTHERN AFRICA S BUYS AND PHARMACY AT SPAR Pharmacy at spar • Reaffirmed SPAR’s commitment to pharmacy • Combined portfolio: S BUYS and Pharmacy at SPAR retail turnover fy22 • S BUYS - strength in structure +10.2% • Wholesaler • Courier pharmacy (Scriptwise) • Training academy • Focused on improved
Slide 37: Build it
SOUTHERN AFRICA BUILD BUILD IT IT • Performance underpinned by strength of supply chain • Focus on store upgrades and retail execution • 27 new stores; 65 store upgrades • 404 stores end FY22 TURNOVER % Wholesale +3.1 Retail +3.7 Retail LFL +2.6 Surpassed R10 billion turnover in fy22 THE SPAR GROUP
Slide 38: Strategic Focus Areas
STRATEGIC FOCUS AREAS STRATEGIC FOCUS AREAS Interdependent retailing Embed diversity and transformation Build our Supply brands in chain of the Greater collaboration with hearts and minds future retailers to ensure improved Put consumers at our heart consistency for consumers Drive Grow and inter- i
Slide 39: Southern Africa
SOUTHERN AFRICA Sustainable stakeholder value Loved & respected as a brand Affordable & nutritious food Family values Entrepreneurship Passion SPAR Group Housebrand diversity supplier diversity Black retailer Embed Rural Hub enablement diversity and integration transformation SPAR2U, optimisation, s
Slide 40: Key Areas of Focus for Next Months
SOUTHERN AFRICA KEY AREAS OF FOCUS FOR NEXT 12 – 18 MONTHS Marketing recalibration Customer & format segmentation Fresh Omnichannel Private label strategy Retail excellence THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 41: Operational and Strategic Update – European Regions
OPERATIONAL AND STRATEGIC UPDATE – EUROPEAN REGIONS Brett Botten, Chief Executive Officer THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 42: BWG Group (Ireland & SW England)
BWG GROUP (Ireland & SW England) • Strong turnover and operating profit growth in EUR • Total store network 1 439 (33 net new) • Continued market share gains in convenience & foodservices • Well placed to optimise hospitality sector recovery • Appleby Westward • 19 retail stores acquired in FY22 Emp
Slide 43: SPAR Switzerland
SPAR SWITZERLAND 900 3,5% CHF’m • Solid performance despite decline in turnover 850 3,0% 3,0% 846,9 3,0% 2,7% 821,6 2,5% • Convenience brand of choice 800 2,0% 801,9 1,5% • Quality fresh offering 750 0,8% 1,0% 700 • Private label relaunch – 3 tiered 718,4 0,5% 650 0,0% • No.1 fully integrated into v
Slide 44: SPAR Poland
SPAR POLAND • Decisive action taken in FY22 • Restructuring of distribution centres • Closure of Warsaw • Expansion of Czeladz • Retailer loyalty in the south • End FY22 40% (FY21: 27%) • Avia petro-convenience partnership • 19 new stores in Q4; 26 in total • Store network of 180 stores Czeladz KEY
Slide 45: SPAR Sri Lanka
SPAR SRI LANKA • Profitable in FY22 for the first time • Challenging political and economic conditions • Stores seeing positive trends as tourism returns BRINGING WORLD-CLASS RETAILING TO SRI LANKA THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 46: Outlook
OUTLOOK Brett Botten, Chief Executive Officer THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 47: Outlook
OUTLOOK • Renewed focus with leadership changes • 12 to 18 month accelerated growth plan • Optimise foodservices recovery • Integration of new acquisitions Group • Reaffirm position as leader in convenience sector implementation • Build relationships in petro-convenience plan for SAP • Development o
Slide 48: Better Together: Our Purpose and Vision
BETTER TOGETHER OUR PURPOSE “To inspire people to do and be more” OUR VISION “Be the 1st choice Brand in the communities we serve” THE SPAR GROUP LTD RESULTS PRESENTATION 2022
Slide 49: Disclaimer
DISCLAIMER This presentation contains forward-looking statements about the company’s operations and financial conditions. They are based on The SPAR Group Limited’s best estimates and information at the time of writing. They are nonetheless subject to significant uncertainties and contingencies, man
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