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Send  Print  Share  RSS  Twitter  17 Nov 2010

JSE Results: Spar


Johannesburg, Nov 17 (I-Net Bridge) - South African grocery chain Spar Group
(SPP) on Wednesday reported diluted headline earnings per share rose 29.1% to
506.3 cents for the year ended September 2010 from 392.1 cents a year ago.

A final dividend of 222 cents per share was declared, for an annual
dividend of 362 cents per share - up 12.4% on the previous year's 322 cents.

The group's turnover grew 9% to 35.16 billion rand, while operating
profit was 14.2% higher at 1.30 billion rand.

"In a year of slow economic recovery, low inflation and an extremely
competitive retail environment, the group has produced a satisfactory financial
performance," it said.

It said that comparable headline earnings per share of 543.7 cents, which
is exclusive of the Broad Based Black Economic Empowerment transaction cost,
increased by 12.1%.

Cash generation was strong, impacted by a lower level of capital
expenditure this year of 206 million rand and the buy back of company shares
amounting to 188 million, Spar said.

"Food inflation was negligible at 1% for most of the year, influenced
mainly by deflation on basic commodities. Consumer spending remained under
pressure despite reduced interest rates while the increased level of
unemployment also impacted on our retail performance, particularly in the rural
markets," the group said.

Spar added that its continued focus on competitive retail pricing and
retailer profitability resulted in the gross margin declining slightly to 7.9%
(2009: 8%). Warehouse expense ratios were negatively affected by a 6.3% increase
in volumes handled by its distribution centres in a low food inflation

"Increased municipal charges and an increased fuel price adversely
affected the second half of the year. Positive highlights were the low increase
in administration expenses together with an improved level of irrecoverable

"Overall, group operating costs at 6.7% up on last year were well
controlled," Spar said.

The group said that in order to secure key sites, the group purchased
five retail stores during the year, which it said, would be managed by a newly
established retail division.

Net interest earned of 3.7 million rand was lower than that earned in
2009 of 5.4 million rand, and reflected the effects of the continued capital
expenditure programme, the share buybacks and of lower interest rates, the group

Spar said it had continued to advance or secure loan facilities for
retailers in order to enable them to purchase or revamp stores. The group
discounts these retailer loans with its bankers.

Looking ahead, Spar said: "The group expects 2011 to be another
challenging year but are nevertheless positive about the opportunities for our
business. We anticipate that consumer spending will remain under some pressure,
however the impact of lower interest rates, improving economic activity and a
gradual increase in food inflation are positive signs for an improvement in

The group said it would again focus on aggressively driving new business
opportunities, organic growth, stringent cost control and securing operating

"Cash generation is expected to improve as capital expenditure continues
to reduce and the dividend cover is maintained. Where appropriate, surplus cash
will be utilised to buy back shares," it concluded.


I-Net Bridge, Tel: +27-11-280-0693,

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