Slide 1: The SPAR Group Limited Results Presentation
THE SPAR GROUP LIMITED RESULTS PRESENTATION FOR THE YEAR ENDED 30 SEPTEMBER 2014
Slide 2: Slide 2
Slide 3: Agenda
NOTES AGENDA INTRODUCTION: SPAR GROUP PERFORMANCE SUMMARY SALIENT FEATURES Graham O’Connor, CEO BUSINESS ENVIRONMENT SPAR VALUES AND CULTURE STRATEGIC FOCUS AREAS FINANCIAL OVERVIEW Mark Godfrey, CFO OPERATIONAL REVIEW LOOKING FORWARD Graham O’Connor, CEO PROSPECTS QUESTIONS 1 THE SPA R GROUP L IM I
Slide 4: Introduction
NOTES INTRODUCTION Graham O’Connor CEO THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 2
Slide 5: SPAR Group: Facts and Figures
NOTES SPAR GROUP: FACTS AND FIGURES SPAR International: By December 2014, with launch of 3 stores in Indonesia, SPAR will be in 40 countries • Over 12 200 stores >€32bn p.a. turnover • South Africa is the second biggest SPAR country by turnover • Ireland is fifth biggest SPAR country by turnover Sou
Slide 6: SPAR Group: Facts and Figures (continued)
NOTES SPAR GROUP: FACTS AND FIGURES (continued) Ireland/South West England: BWG services >1 100 stores across 4 brands, ~€1.2bn (ZAR16.8bn) retail turnover • Wholesale and distribution of groceries + fresh produce, liquor to retail/catering sectors • Well established in convenience market • 22 300m²
Slide 7: Performance Summary
NOTES PERFORMANCE SUMMARY Solid trading results, notwithstanding challenging trading environment • Excellent team performance SPAR stores delivered a strong performance through organic growth focus • Underpinned by strong demand for house brands and store upgrades TOPS at SPAR extended market leader
Slide 8: Salient Features
NOTES SALIENT FEATURES R million 2014 2013 Change (%) Turnover 54 483.0 47 387.3 +15.0 Gross profit 4 497.9 3 820.7 +17.7 Gross profit (%) 8.3 8.1 Profit before tax 1 844.2 1 658.1 +11.2 Profit after tax 1 345.0 1 187.3 +13.3 Headline earnings per share (cents) 781.8 694.8 +12.5 Dividend per share (
Slide 9: Business Environment: Market Remains Tight
NOTES BUSINESS ENVIRONMENT: MARKET REMAINS TIGHT Tough trading environment • Muted South African economy • Pressure on consumer spending › Unrelenting unemployment, distressed household debt and higher interest rates • Impact of widespread industrial action • Food inflation relatively low at 5.7% In
Slide 10: SPAR Values and Culture
NOTES SPAR VALUES AND CULTURE: ETHICAL AND MORAL COMPASS/DECISION-MAKING FOUNDATION • Commitment to consumers, retailers, suppliers, brand, etc. SPAR values reviewed in 2014 • Displaying positive energy and attitude • Inclusive process involving • Enthusiasm Passion • Wanting to do what you currentl
Slide 11: Strategic Focus Areas
NOTES STRATEGIC FOCUS AREAS 1 2 3 4 WORLD CLASS COMPETITIVE COMPREHENSIVE WORLD CLASS REPLENISHMENT PRICING RANGE BRAND Ongoing supply chain Positive perception Best Attracting optimisation to attract new customers in Fresh independent retailers • Ensuring we run a lean • Group buying reviews, Outpe
Slide 12: Strategic Focus Areas (continued)
NOTES STRATEGIC FOCUS AREAS (continued) 5 6 7 8 BEST STAKEHOLDER NEW BUSINESS SUSTAINABLE RETAILERS RETURNS GROWTH SYSTEMS SPAR is only as strong SPAR’s people are at the Emphasis Living as our retailers foundation of its success on diversification the SPAR values • Provide expert retail • Emphasis
Slide 13: Financial Overview
NOTES FINANCIAL OVERVIEW Mark Godfrey CFO THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 11
Slide 14: Financial Overview: Turnover
NOTES FINANCIAL OVERVIEW: TURNOVER R million 2014 2013 Change (%) SPAR/TOPS 46 225.5 42 324.1 +9.2 Build it 5 509.2 5 063.2 +8.8 Total South Africa 51 734.7 47 387.3 +9.2 Liquor sales (SPAR/TOPS) 4 043.9 3 575.8 +13.1 Ireland 2 748.3 - - Total Group 54 483.0 47 387.3 +15.0 • Strong performance from
Slide 15: Financial Overview: Gross Margins
NOTES FINANCIAL OVERVIEW: GROSS MARGINS Turnover (Rm) 2014 (GP%) 2013 (GP%) Normal business 50 723.0 7.9 7.7 Retail division 773.7 15.9 15.3 Imports – Build it 238.0 20.6 20.5 Total South Africa 51 734.7 8.2 8.1 Ireland 2 748.3 10.2 - Total Group 54 483.0 8.3 8.1 Stronger ex-warehouse sales: • Wareh
Slide 16: Financial Overview: Inflation per Segment
NOTES FINANCIAL OVERVIEW: INFLATION PER SEGMENT 6 months to 2014 March 2014 2013 SPAR business 5.7%¹ 4.7% 5.8% Liquor 5.8% 5.7% 6.1% Build it c. 3.0%² 4.5% c. 4.9% 1. SPAR’s budgeted expectations for 2015: › SA food 6.0% › Building materials 3.5% › Ireland 0.5% 2. Building material inflation trackin
Slide 17: Financial Overview: Expenses
NOTES FINANCIAL OVERVIEW: EXPENSES Expenses (Rm) Increase (%) SPAR business 2 611.3 +13.2 Retail division 131.7 (-17.1) Build it division 143.9 +37.3 Total South Africa 2 886.9 +12.3 Ireland 263.3 - Total Group 3 150.2 +22.6 • SPAR IT costs increase due to implementation of SAP • Increase in marketi
Slide 18: Financial Overview: Cashflow
NOTES FINANCIAL OVERVIEW: CASHFLOW 199.2 5.6 5.4 (235.2) 1 868.7 R million (22.3) (471.9) (867.0) (221.4) (696.4) 1.3 543.4 (6.6) 57.4 (164.0) 6.0 (0.9) Impairment Closign balance Opening balance of businesses Non-cash items property, equipment Taxation paid Capital expenditure Other investing Excha
Slide 19: Financial Overview: Cash Flow (continued)
NOTES FINANCIAL OVERVIEW: CASH FLOW (continued) Rm 2014 2013 Cash flow from trading 2 077.6 1 848.3 Working capital changes (235.2) (1 032.7) - Decrease/(increase) in inventory (179.9) 41.9 - (Increase) in trade receivables (768.0) (514.9) - (Decrease)/increase in trade payables 712.7 (559.4) Cash g
Slide 20: Comparative Trading: H1 vs H2 + BWG Group Impact
NOTES FINANCIAL OVERVIEW: COMPARATIVE TRADING: UNPACKING H1 VS H2 + BWG GROUP IMPACT Turnover (Rm) Profit before tax (Rm) Profit after tax (Rm) F2013 23 795 23 592 F2013 821 837 F2013 589 598 F2014 25 606 26 129 2 748 F2014 890 904 50 F2014 643 654 48 H1 H2 BWG Group H1 H2 BWG Group H1 H2 BWG Group
Slide 21: Impact of BWG Group: Key Metrics
NOTES FINANCIAL OVERVIEW: IMPACT OF BWG GROUP: KEY METRICS SPAR Ireland R million Southern Africa (2 months) Group Income statement Revenue 52 220.4 2 795.5 55 015.9 Gross profit 4 216.3 281.6 4 497.9 Gross margin 8.1% 10.1% 8.3% Operating expenses (2 886.9) (263.3) (3 150.2) Profit before tax 1 794
Slide 22: Impact of BWG Group: Key Metrics
NOTES FINANCIAL OVERVIEW: IMPACT OF BWG GROUP: KEY METRICS SPAR Ireland R million Southern Africa (2 months) Group Balance sheet Property, plant and equipment 1 790.6 1 087.6 2 878.2 Goodwill 392.2 2 153.0 2 545.2 Current assets 8 359.5 2 894.2 11 253.7 Current liabilities 7 824.7 3 143.4 10 968.1 L
Slide 23: Operational Review
NOTES OPERATIONAL REVIEW Graham O’Connor THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 21
Slide 24: Operational Review: Retail Performance: Turnover
NOTES OPERATIONAL REVIEW: RETAIL PERFORMANCE: TURNOVER Total growth Like for like SPAR +7.8% +7.8% TOPS +13.8% +12.6% Build it +9.5% +7.7% • Further uptake of SPAR private label brands by cash strapped consumers: Up 14% • TOPS continuing to do well: Up 13.8% • Build it operating in challenging marke
Slide 25: Operational Performance: SPAR
NOTES OPERATIONAL PERFORMANCE: SPAR Wholesale turnover growth exceeded retail Turnover analysis (Rm) turnover growth ▲7.8% ▲8.9% • Recognition of value added by SPAR 63.1 58.5 merchandising, distribution and logistics • 14% growth from SPAR house brands to R5.8bn 42.2 38.7 Same store turnover up 7.8
Slide 26: Operational Performance: TOPS
NOTES OPERATIONAL PERFORMANCE: TOPS TOPS extending market leadership through Turnover analysis (Rm) offering and convenient locations ▲13.8% ▲13.1% • 13.8% increase in retail turnover 6.6 5.8 Same store retail growth of 12.6% 4.0 3.5 Wholesale turnover up 13.1% 2014 2013 2014 2013 51 new stores open
Slide 27: Operational Performance: Build it
NOTES OPERATIONAL PERFORMANCE: BUILD IT Difficult year despite further restructuring Turnover analysis (Rm) • Labour unrest; reduction in unsecured ▲9.5% ▲8.8% lending and increased pressure on retailers 9.0 8.1 • 9.5% retail turnover growth 5.5 5.1 Solid same store growth of 7.7% Wholesale turnover
Slide 28: Operational Performance: BWG Group
NOTES OPERATIONAL PERFORMANCE: BWG GROUP Excellent contribution from first 2 months • Turnover of R2 748.3m and operating profit of R65.5m Positive timing of transaction • Irish economic recovery now confirmed • 2014 GDP growth: 5.0% expected, increasing to 5.3% in 2015 26 THE SPA R GROUP L IM IT ED
Slide 29: Operational Performance: BWG Group
NOTES OPERATIONAL PERFORMANCE: BWG GROUP Positive experience since concluding the deal: • Executive management: › Three promoters (20% shareholders) are top class individuals › Excellent working relationship developing with SPAR • Senior management: › Strong support for acquisition from senior BWG m
Slide 30: Operational Performance: Distribution (South Africa)
NOTES OPERATIONAL PERFORMANCE: DISTRIBUTION (SOUTH AFRICA) IMPORTS WAREHOUSE NORTH RAND LOWVELD WESTERN CAPE SOUTH RAND EASTERN CAPE KZN DRY KZN PERISHABLES 28 THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 28
Slide 31: Operational Performance: Distribution (South Africa)
NOTES OPERATIONAL PERFORMANCE: DISTRIBUTION (SOUTH AFRICA) Volumes handled up 3.6%: 210.8 million cases dispatched Plans to embark on major extensions put on hold in 2014 • Work has commenced on Kwa-Zulu Natal perishable facility (completion: September 2015) • Construction on South Rand slow moving
Slide 32: Looking Forward
NOTES LOOKING FORWARD Graham O’Connor THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 30
Slide 33: Looking Forward: Group Priorities
NOTES LOOKING FORWARD: GROUP PRIORITIES • Top priority is to drive SPAR’s organic growth › Continue SPAR store upgrades: 180 planned in 2015 › Drive Fresh food offering: Fresh produce, HMR, Butchery and Bakery › Support retailer profitability • Bed down BWG Group transaction • Finalise way forward w
Slide 34: Projected Store Openings in F2015
NOTES LOOKING FORWARD: NEW BUSINESS SOUTH AFRICA: PROJECTED STORE OPENINGS IN F2015 New stores 2014 Projected 2015 SPAR 875 35 TOPS 622 45 Build it 294 28 Other brands 75 24 Total South Africa 1 866 130 Ireland/South West England 1 138 30 Group total 3 004 160 32 THE SPA R GROUP L IM IT ED R E S ULT
Slide 35: Prospects
NOTES PROSPECTS • Highly competitive retail sector with continued pressure on consumer spending • Focus on aggressively driving new business opportunities, organic growth, stringent cost control and securing operating and supply chain efficiencies • Irish operations expected to trade more profitably
Slide 36: Questions
NOTES QUESTIONS 34 THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 34
Slide 37: Disclaimer
NOTES DISCLAIMER This presentation contains forward-looking statements about the company’s operations and financial conditions. They are based on SPAR Group Limited’s best estimates and information at the time of writing. They are nonetheless subject to significant uncertainties and contingencies ma
Slide 38: NOTES
NOTES THE SPA R GROUP L IM IT ED R E S ULTS P R E S E N TATI O N FO R TH E Y E A R E N D E D 30 S E P TE MB E R 2014 36
Slide 39: The SPAR Group Limited Annual Results
THE SPAR GROUP LIMITED ANNUAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2014
Slide 40: Table of Contents
TABLE OF CONTENTS 1 Summarised consolidated statement of profit or loss and other comprehensive income 2 Summarised consolidated statement of financial position 3 Summarised consolidated statement of changes in equity 4 Summarised consolidated statement of cash flow 5 Notes to the summarised consoli
Slide 41: Summarised Consolidated Statement of Profit or Loss
SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Restated* Audited Audited Year ended Year ended % September September Rmillion Change 2014 2013 REVENUE 15.1 55 015.9 47 795.8 Turnover 15.0 54 483.0 47 387.3 Cost of sales (49 985.1) (43 566.6) Gross profit 4 497.9 3
Slide 42: Summarised Consolidated Statement of Financial Position
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Restated* Restated* Audited Audited Audited Year ended Year ended Year ended September September September Rmillion Notes 2014 2013 2012 ASSETS Non-current assets 5 677.4 2 381.7 2 226.7 Property, plant and equipment 2 878.2 1 749.1 1 588.0 Goo
Slide 43: Summarised Consolidated Statement of Changes in Equity
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Attri- Currency Share butable to trans- based ordinary Stated Treasury lation payment Retained Equity share- Rmillion capital shares reserve reserve earnings reserve holders Capital and reserves at 30 September 2012 54.5 (6.9) (0.1) 323.1 2 467.
Slide 44: Summarised Consolidated Statement of Cash Flow
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOW Restated* Audited Audited Year ended Year ended September September Rmillion Notes 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES 481.2 (443.2) Operating profit before: 1 867.4 1 645.6 Non-cash items 199.2 195.4 Impairment of goodwill 5.6 7.5 Loss/(prof
Slide 45: Notes to the Summarised Consolidated Financial Results
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL RESULTS 1. BASIS OF PRESENTATION AND COMPLIANCE WITH IFRS The summarised financial information has been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (I
Slide 46: Notes to the Summarised Financial Results (continued)
NOTES TO THE SUMMARISED CONSOLIDATED FINANCIAL RESULTS (CONTINUED) 4. BUSINESS COMBINATIONS 4.1 The SPAR Group Limited acquired a controlling shareholding of 80% in the BWG Group effective from 1 August 2014. The investment was made in TIL JV Limited, the new holding company for the BWG Group, via t
Slide 47: Review of Trading Results
Had all the acquisitions been consolidated from 1 October 2013, they would have contributed additional revenue of R13 900.4 million, and an operating profit of R180.4 million. The group’s total revenue would have increased to R 68 916.3 million, and the group’s operating profit would have increased
Slide 48: Review of Trading Results (continued)
REVIEW OF TRADING RESULTS (CONTINUED) Profit before tax increased 11.2% to R1.8 billion (2013: R1.7 billion), or an increase of 8.2% on a like-for-like basis (excluding BWG). The group’s headline earnings grew 12.8% to R1.4 billion (2013: R1.2 billion) with headline earnings per share showing a 12.5
Slide 49: Review of Trading Results (continued)
REVIEW OF TRADING RESULTS (CONTINUED) retail turnover growth of 9.5% (2013: 12%) to R9.1 billion (2013: R8.3 billion) with solid growth of 7.8% from existing stores. The wholesale turnover increased 8.8%, to total R5.5 billion (2013: R5.1 billion). It was encouraging to note that Build it’s house br
Slide 50: Audit Opinion and Declaration of Ordinary Dividend
AUDIT OPINION The auditors, Deloitte & Touche, have issued their opinion on the group’s consolidated financial statements for the year ended 30 September 2014. The audit was conducted in accordance with International Standards on Auditing. They have issued an unmodified opinion. A copy of the audito
Slide 51: Directorate and Administration
DIRECTORATE AND ADMINISTRATION DIRECTORS: MJ Hankinson* (Chairman), GO O'Connor (Chief Executive), MW Godfrey, WA Hook, PK Hughes*, RJ Hutchison*, MP Madi*, HK Mehta*, P Mnganga*, R Venter, CF Wells* * Non-executive Company Secretary KJ O'Brien THE SPAR GROUP LIMITED ("SPAR" or "the company" or "the
Slide 52: GREYMATTER & FINCH # 8743
GREYMATTER & FINCH # 8743
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Slide 54: www.spar.co.za
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