Slide 1: Annual Results Presentation
Annual Results Presentation For the year ended 30 September 2024
Slide 2: Agenda
Agenda FY 2024 Annual Results Presentation Operational Progress on Overview update key priorities Angelo Angelo Swartz Swartz Angelo Swartz Megan Pydigadu Financial Strategy & review Outlook Mark Godfrey Angelo Swartz Annual Results Presentation 2024 2
Slide 3: Overview
Overview Angelo Swartz, Group CEO
Slide 4: The SPAR model
The SPAR model Strong collaborative model between wholesaler and retailer and other stakeholders, making SPAR relevant within the communities it serves Wholesale distribution centres and Farms and suppliers Retail network of stores Consumers and communities central offices SPAR’s voluntary trading m
Slide 5: SPAR at a glance
SPAR at a glance Ireland and South West England Switzerland • R41 billion turnover o Ireland R35 billion | UK R6 billion • R16 billion turnover • 3 distribution centres • 1 distribution centre o Ireland 1 | UK 2 • 300 stores • 1 472 stores • 11 Cash & Carry SPAR Poland Discontinued Discontinued oper
Slide 6: Trading context
Trading context • Challenging trading conditions persist with green shoots • Inflation eased to 3.8% in September 2024 - lowest print since March 2021 • Annual food & non-alcoholic beverages (NAB) inflation stood at 4.7% in September 2024 Southern • Consumer confidence index improved marginally from
Slide 7: FY 2024 Highlights
FY 2024 Highlights Continuing operations R5.4bn cash R152.3bn R2.9bn generated from SPAR2U Turnover Operating profit operations Sites^ +4.0% +15.1% (1.9% margin) +7.8% 525 Gross new stores +179 R9.1bn 917.9 cents 12.8% Net Debt HEPS ROIC Retail loyalty^ -8.9% 78.7% +11.1% +0.2pp -1.2pp 2.41x Leverag
Slide 8: Recognition
Recognition Gold Pack Awards Bronze award for SPAR’s private label Tiering Project (Signature Select, SPAR brand, and SaveMor) 2024 Assegai Awards: Valentine’s 2024 ‘Fresh Love’ Campaign won two Bronze awards in the categories of Campaigns with a Budget Under R500,000 and Data-Inspired Insight 2. FT
Slide 9: Operational Update
Operational Update Angelo Swartz, Group CEO Megan Pydigadu Group COO
Slide 10: SA wholesale grocery and liquor businesses
SA wholesale grocery and liquor businesses Turnover growth Turnover growth FY 24 FY 23 FY 24 FY 23 (%) (%) Wholesale 2.9 7.1 Wholesale 9.4 (0.1) Retail 5.1 8.5 Retail 9.2 6.1 Retail LFL 4.5 8.2 Retail LFL 7.7 4.8 • Combined retail grocery and liquor turnover growth +5.7% (LFL 4.9%) - Core business t
Slide 11: Retail KPIs – Southern Africa
Retail KPIs – Southern Africa Footfall / Number of Average basket spend transactions at till SPAR SPAR Supermarkets +4.5% +0.6% Supermarkets TOPS at SPAR TOPS at SPAR liquor +1.4% +7.7% liquor Combined +1.5% Combined +4.2% Annual Results Presentation 2024 11
Slide 12: Build it
Build it Turnover growth (%) FY24 FY23 Wholesale 2.2 (4.3) Retail 2.5 1.1 Retail LFL 2.6 (0.2) • Solid performance given economic conditions • GP margin remained resilient despite impact of shift in product mix • Enhanced procurement strategy and engagement with retailers to address loyalty • 400 Bu
Slide 13: Pharmacy at SPAR
Pharmacy at SPAR Wholesale Scriptwise Total +10.1% +18.4% +14.5% • Turnover growth of 14.5% o Growth largely driven by wholesale business and growth in Scriptwise • Wholesaler + 10.1% o Retail loyalty continues to improve y-o-y o 55% compared to 41% in 2023 • Training academy expanding with new cour
Slide 14: BWG Group (Ireland and SW England)
BWG Group (Ireland and SW England) Ireland • Difficult second half due to cumulative effect of inflation on consumers and increased operating costs on operators. • Consumers seeking greater value for their money and switching to own brand and private labels. • Acquisitions made in the prior period d
Slide 15: SPAR Switzerland
SPAR Switzerland • Consumer purchasing preferences continue to impact volumes • Swiss consumer under pressure from cost-of-living increases • Strategic focus on convenience and fresh food segments mitigating impacts of cross border shopping • Improved profitability through cost-saving initiatives •
Slide 16: SPAR Sri Lanka
SPAR Sri Lanka • Joint Venture with Ceylon Biscuits Limited • SPAR has 27 stores across all formats (25 are corporate retail stores) • Encouraging business and consumer sentiment despite the challenges o Strong double digit growth year-on-year • Significant milestones: o Successful transition to new
Slide 17: Financial Review
Financial Review Mark Godfrey, Group CFO
Slide 18: Salient features
Salient features Continuing operations 2023 Change Rmillion 2024 % Re-presented* % Turnover¹ 152 337.5 146 461.0 4.0 EBITDA2 3 776.3 3 316.6 13.9 Operating profit 2 895.5 2 516.7 15.1 - Operating margin (%) 1.9% 1.7% Profit after tax 1 648.3 1 363.2 20.9 Earnings per share (cents) 855.9 687.2 24.5 H
Slide 19: Profit / (loss)
Profit / (loss) Regional metrics Discontinued Southern Continuing Total Rmillion Ireland Switzerland operation Africa operations Group Poland Income statement Revenue – sale of merchandise 95 997.1 40 674.3 15 666.1 152 337.5 2 948.6 155 286.1 Gross profit 9 128.5 6 187.5 2 863.1 18 179.1 648.8 18 8
Slide 20: Turnover
Turnover Continuing operations Change • SPAR & TOPS combined growth of 3.6% Rmillion 2024 2023 % % • Liquor sales recovery 9.4% across all divisions SPAR – core grocery business 73 149.3 71 168.7 2.8 Southern • Build it sales increased 2.3% on prior year Africa with recovery in H2 TOPS/Liquor sales
Slide 21: Indicative inflation
Indicative inflation 2024 2023 • CPI +3.8% +5.4% • Food and non-alcoholic beverages +4.7% +8.1% • Alcohol and tobacco +4.7% +5.2% Southern Africa Southern Africa Internally measured wholesale 2024 2023 price inflation • CPI +0.7% +6.4% 2024 2023 • Food and non-alcoholic beverages +1.9% +7.8% • Alcoh
Slide 22: Gross profit margin
Gross profit margin Continuing operations • Gross profit in Southern Africa has been flat year-on-year. • The SPAR SA GP% has declined due to 2024 2024 2024 Change 2023 Southern aggressive promotional activity and Rmillion Turnover Gross margin (GP%) (bps) (GP%) the slow recovery of KZN Africa • Enc
Slide 23: Net Operating expenses
Net Operating expenses Continuing operations % Warehouse and distribution expenses Rmillion 2024 2023 increase • Energy costs +5.6% • Repairs and maintenance +1% • Fuel and outsourced transport (-1.7%) Warehouse and distribution 5 876.1 5 520.1 6.4 Marketing and selling 8 425.5 7 697.9 9.5 Marketing
Slide 24: Net Operating expenses
Net Operating expenses Continuing operations • Increase in employee costs of 8.9% • Increase in IT costs of 2.9% • Marketing/Advertising costs 2024 2023 Southern decreased by 6.3% Africa • Balance of costs managed well % % % • Increase of 2.2% (EUR terms) Rmillion Expenses of sales Expenses of sales
Slide 25: Finance income and costs
Finance income and costs Continuing operations Rmillion 2024 2023 Finance income Loans 26.0 35.9 Bank deposits 66.9 46.6 Trade and other 71.1 66.2 Lease receivables – IFRS16 436.5 428.5 600.5 577.2 Finance costs Loans 259.3 236.2 Prolonged higher rates of interest Bank overdraft 382.0 301.6 across a
Slide 26: Effective tax rate reconciliation
Effective tax rate reconciliation Effective tax rate reconciliation 2024 2023 South African Current income tax rate 27.0 27.0 Temporary differences relating to share plans 0.5 Other exempt and non-deductible items 0.9 3.1 Impairments 0.9 12.0 Write-off of SAP asset under construction 0.2 1.2 Unutili
Slide 27: Currency impacts
Currency impacts Vs ZAR EURO/SWISS FRANC VS RAND EURO/SWISS FRANC VS RAND Oct 2023 - Sept 2024 Oct 2022 - Sept 2023 22,50 22,50 22,00 22,00 21,50 21,50 21,00 21,00 20,50 20,50 20,00 20,00 19,50 19,50 19,00 19,00 18,50 18,50 18,00 18,00 17,50 17,50 17,00 17,00 EURO: ZAR CHF: ZAR EURO: ZAR CHF: ZAR Li
Slide 28: Comparative trading
Comparative trading ZAR TURNOVER (Rm) OPERATING PROFIT (Rm) 1 217,6 92 611,9 SA SA 1 461,0 95 997,1 1 062,3 38 137,5 Ireland Ireland 1 216,8 40 674,3 236,8 15 711,6 Switzerland Switzerland 217,7 FY2023 FY2024 15 666,1 FY2023 FY2024 2024 Growth 2024 Growth Southern Africa 3.7% Southern Africa 20.0% I
Slide 29: Comparative trading
Comparative trading Foreign regions in local currency TURNOVER (‘m) OPERATING PROFIT (‘m) 1 965,4 54,8 Ireland Ireland 2 019,7 60,4 794,2 12,0 Switzerland Switzerland 745,2 10,4 FY2023 FY2024 FY2023 FY2024 2024 Growth 2024 Growth Ireland 2.8% Ireland 10.2% Switzerland (6.2%) Switzerland (13.3%) Annu
Slide 30: Discontinued operation – SPAR Poland
Discontinued operation – SPAR Poland Financial performance Rmillion % Change % 2024 2023 Revenue - sale of merchandise 3.0 2 948.6 2 863.3 Cost of sales (2 299.8) (2 295.5) Gross profit 14.3 648.8 567.8 Revenue - other 4.5 6.6 Other income 28.1 36.9 Net operating expenses (excl. impairments) 3.7 (83
Slide 31: Discontinued operation – SPAR Poland
Discontinued operation – SPAR Poland Cashflow information Rmillion 2024 2023 Statement of cash flows Net cash outflows from operating activities (359.2) (384.8) - Operating loss (1 100.7) (699.7) - Impairments of assets held for sale 945.1 - Other non cash items 60.3 474.4 - Net working capital chan
Slide 32: Discontinued operation – SPAR Poland
Discontinued operation – SPAR Poland Details of disposal group (NPI) held for sale 2024 Assets 1 032.6 Property, plant and equipment* 0.0 Right-of-use assets* 0.0 Lease receivable 398.1 Goodwill and intangible assets* 0.0 Loans and other receivables 83.6 Inventories 219.9 Trade and other receivables
Slide 33: Balance Sheet
Balance Sheet Regional metrics Southern Africa Ireland Switzerland Poland* Continuing Rmillion operations Balance sheet Property, plant and equipment 2 709.0 2 763.6 4 130.2 9 602.8 Right-of-use asset 843.0 2 749.6 4 411.8 8 004.4 Lease receivable – Non-current 4 104.4 110.7 4 215.1 Goodwill and int
Slide 34: Group net borrowings
Group net borrowings By region Sept March Sept Weighted average maturity Rmillion 2024 2024 2023 (Total borrowings) Years Southern Africa 2.79 Bank overdrafts 3 696.9 4 426.3 3 157.9 Ireland 2.25 Total borrowings 6 694.6 7 760.1 8 265.2 Switzerland 2.97 Bank balances - SPAR (1 276.2) (1 106.1) (1 42
Slide 35: Leverage ratio by region
Leverage ratio by region 12 months ending 30 September 2024 Southern Rmillion Group Ireland Switzerland Poland Africa Pre-IFRS16 EBITDA 3 782.6 1 798.7 1 513.7 470.2 Net Debt Bank overdrafts 3 696.9 2 740.7 237.1 719.1 Long term borrowings 6 694.6 1 303.2* 2 295.8 3 037.3 58.3 Total debt 10 391.5 4
Slide 36: Cashflow
Cashflow Rmillion 2024 2023 Cash flow from operating activities (adjusted for non-cash items) 5 383.7 4 996.1 Working capital changes : (578.1) 1 156.2 - Decrease in inventories 135.7 262.0 - Increase in trade and other receivables (57.1) (951.0) - (Decrease)/increase in trade payables and provision
Slide 37: Cashflow
Cashflow R million 5 384 578 1 445 31 5 192 980 358 1 254 1 133 33 625 Operating Net working Net Share Loans and Acquistions Net interest Taxation paid Net lease Capital Exchange Net decrease profit before capital movement - repurchases investments of businesses paid payments expenditure rate during
Slide 38: Capital expenditure
Capital expenditure Business acquisition net cash Rmillion 2024 2023 outflows arising on: Investment to expand operations (659.1) (1 269.3) • Five South Africa retail stores (R55.9m) Investment to maintain operations (473.6) (666.8) • Four Irish and UK retail stores (R134.8m) • One wholesale busines
Slide 39: Salient features
Salient features Continuing operations 2023 Change Rmillion 2024 % Re-presented* % Turnover¹ 152 337.5 146 461.0 4.0 EBITDA2 3 776.3 3 316.6 13.9 Operating profit 2 895.5 2 516.7 15.1 - Operating margin (%) 1.9% 1.7% Profit after tax 1 648.3 1 363.2 20.9 Earnings per share (cents) 855.9 687.2 24.5 H
Slide 40: Progress on key priorities
Progress on key priorities Angelo Swartz, Group CEO
Slide 41: Key priorities timeline
Key priorities timeline 2024 2024 2025 2025 2026 September December June September September SPAR Poland Debt Europe strategic SAP system roll South African Exit restructuring decisions out next DC profitability 3% EBIT margin Net debt / EBITDA 1.5 - 2.0x Annual Results Presentation 2024 41
Slide 42: Poland Exit update
Poland Exit update 42 Regulatory Approval Final confirmatory due diligence underway Expected Completion 19 November 2024: Expected to be complete in 30 Within 2-3 months Approved by the Polish anti-monopoly authorities business days from approval Annual Results Presentation 2024 42
Slide 43: SAP implementation update
SAP implementation update Significant progress made in resolving issues in SAP system design and user application o New WMS selection complete (CSnx) o New dashboards for better pricing visibility o Improvements in service levels and trading margins o Continued operational enhancements and improved
Slide 44: European Portfolio Review
European Portfolio Review Ireland 4,0% 1 000,0 Rationale 3,0% 100,0 Focused on capital allocation and 2,0% maximizing Group’s capital efficiency 10,0 1,0% 1,0 0,0% 2018 2019 2020 2021 2022 2023 2024 Operating profit Profit margin Strategic options under consideration Identifying market challenges an
Slide 45: Degearing our balance sheet
Degearing our balance sheet A key focus area of the group over the short to medium term is the strengthening of our balance sheet Key achievements over the past 6 months: Reduced gearing from 3.07 to 2.41 Removal of the Ireland parental guarantee We are cash generative with a strong focus on working
Slide 46: ROIC by region
ROIC by region SPAR Southern Africa BWG Group SPAR Switzerland ROIC 13.6% 13.0% 2.6% WACC 11.2% 8.8% 3.9% Calculation of ROIC: Net operating profit after tax ÷ invested capital ROIC has been calculated on a pre-IFRS 16 basis and has been adjusted for both the impact of SPAR Poland and SAP system imp
Slide 47: Capital allocation principles
Capital allocation principles Our principles support our growth ambitions, whilst also seeking to satisfy our targeted gearing structure and shareholder growth aspirations CAPITAL ALLOCATION IS DRIVEN TOP-DOWN AND TIGHTLY ALIGNED TO GROUP STRATEGIC PRIORITIES Real mid- Positive RoCE > Gearing single
Slide 48: Southern Africa Operating Margin Recovery Plan
Southern Africa Operating Margin Recovery Plan Enabled by efficiency enhancements from implementation of Target Operating Model SAP Operational resolution efficiencies 3% EBIT Target Sustainability initiatives Disposal of loss-making corporate stores Annual Results Presentation 2024 48
Slide 49: Southern Africa – margin excluding KZN
Southern Africa – margin excluding KZN Quarterly performance – SPAR (including ENCORE) Margin % - excl KZN 2,67% 2,71% 2,46% 2,47% 2,26% 2,26% 2,00% 1,41% Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 Q4 FY24 FY 2024 Annual Results Presentation 2024 49
Slide 50: Southern Africa - Normalised OP
Southern Africa - Normalised OP 1 769 R millions 188 19 18 50 13 1 461 20 Reported OP Impairment SAP write-off Impairment Loss on disposal Loss on Other* Normalised OP of Goodwill of Assets of businesses disposal of PPE Held for Sale * Comprises once-off items mainly relating to the KZN SAP clean up
Slide 51: Outlook
Outlook Angelo Swartz, Group CEO 51
Slide 52: Strategic framework
Strategic framework Harden Grow Clarify Execute Core To support SPAR's strategic initiatives, we will build a financial resilience by disposing of non-core assets, enabler optimising the capital structure, and implementing disciplined capital allocation practices. Annual Results Presentation 2024 5
Slide 53: Refocusing on the core
Refocusing on the core Hyperpersonalisation • SPAR2U • Flex Integrated Supply Chain • SPAR Mobile Clarifying market Strategy positioning • Retail media • Review TOM* and Group • Format architecture structure • Brand architecture • Streamlining supply chain • Strategic partnerships operations • Store
Slide 54: Thank you! Q&A
THANK YOU! Q&A Annual Results Presentation 2024