SPAR INTERIM RESULTS PRESENTATION FOR THE SIX MONTHS ENDED 31 MARCH 2018
AGENDA INTRODUCTION: SPAR GROUP PERFORMANCE SUMMARY Graham O’Connor, CEO SALIENT FEATURES BUSINESS ENVIRONMENT FINANCIAL OVERVIEW Mark Godfrey, CFO OPERATIONAL OVERVIEW Graham O’Connor, CEO PROSPECTS QUESTIONS 2 SPAR INTERIM RESULTS PRESENTATION 2018
INTRODUCTION GRAHAM O’CONNOR CEO
SPAR GROUP: FACTS AND FIGURES SPAR International: Present in 48 countries with 242 distribution centres and serving 13.5 million customers every day • 12 777 stores €34.5bn p.a. global turnover • South Africa is the second biggest SPAR country by turnover Ireland is 10 th biggest SPAR country by turnover • Switzerland is 15 th biggest SPAR country by turnover • Source: SPAR International: Annual Review 2017 Southern Africa: Balanced portfolio of 2 184 stores across eight brands with H1 F2018 R53.7bn retail turnover • Groceries + fresh produce, liquor, pharmaceuticals and building materials • Offering spans consumer sectors from high to low LSMs • Seven distribution centres: 287 000m³ warehousing space • Handle 70% of SPAR’s turnover + 30% directly from third party suppliers • 115.4m cases dispatched in H1 F2018 • Distance travelled 16.1m km in H1 2018 (vs 16.0m kms travelled in H1 F2017) 4
SPAR GROUP: FACTS AND FIGURES (continued) Ireland/South West England: BWG services >1 330 stores across six brands, €681.5m (ZAR10.5bn) wholesale turnover in H1 F2018 • Wholesale and distribution of groceries + fresh produce, liquor to retail/catering/hospitality sectors • Dominant brands in the convenience market • 22 300m² stocking 4 600 ambient SKUs, 884 alcohol SKUs and 2 200 in chilled SKUs Ireland* Support to independent retailers • Relationships, marketing and branding, product development, systems support, property management, retail operations and training • Financial: Trade credit and access to funding * Kilcarbery facility only, excludes Appleby Westward 5 SPAR INTERIM RESULTS PRESENTATION 2018
SPAR GROUP: FACTS AND FIGURES (continued) Switzerland: SPAR Switzerland services 289 stores across three brands + 11 Cash & Carry outlets, CHF365.0m (ZAR4.8bn) wholesale turnover in H1 F2018 • Responsible for operation of 40 corporate stores + 249 independent retailer stores • Modern logistics centre supplying 6 500 ambient and chilled SKUs and total area of 33 000m 2 • Top CC: 11 Cash & Carry outlets with total selling area of 44 000m 2 6 SPAR INTERIM RESULTS PRESENTATION 2018
SPAR GROUP: FACTS AND FIGURES (continued) • National pharmaceutical wholesaler Wholesale • Pharmaceutical, frontshop, surgical & consumables and medical devices • Key customer channels: Pharmacies, hospitals and doctors. • National delivery of highly specialised medication to high-risk patients and doctors Specialised Courier • Renal, Ophthalmology, Rheumatology, Oncology, Transplant, ARVs, Pharmacy Neurology Training programmes for pharmacy sector across SA Training Academy Monthly facts and figures: • Pharmacy, hospital and doctor supplies: >1000 wholesale customers • Chronic medication: >20 000 patients • Training: >2 000 people in pharmacy sector (pharmacy assistants) 7 SPAR INTERIM RESULTS PRESENTATION 2018
PERFORMANCE SUMMARY • The SPAR Group reported strong performance and turnover increased to R50.0bn • SPAR Southern Africa grew wholesale turnover by 6.8%, impacted by early timing of Easter • S Buys pharmaceutical wholesale business acquired October 2017 and trading results included for 6 months • SPAR SA turnover was further influenced by dramatic reduction in measured food inflation – c.6.3% • Local perishable business impacted severely by Listeriosis outbreak – remains affected • Impressive sales growth in wholesale liquor business of +12.6% • Building material sales recovered strongly through loyalty gains and marketing interventions • Solid €-based organic turnover growth from SPAR Ireland despite flat economy • SPAR Switzerland reported improved profits, partly by closure of 5 unprofitable corporate stores • Continued capital investments in wholesale capacity and retail offering across three geographies • Total retail footprint rose to 3 803 stores: Southern Africa, Ireland, South West England and Switzerland 8 SPAR INTERIM RESULTS PRESENTATION 2018
PERFORMANCE SUMMARY NET ASSET VALUE PER SHARE HEADLINE EARNINGS PER SHARE (CENTS) (CENTS) 509,1 H1 2018 3334,7 H1 2018 541,2 445,1 H1 2017 3005,6 H1 2017 475,5 504,3 H1 2016 H1 2016 2 002,0 480,0 430,3 H1 2015 455,5 H1 2015 1 821,2 H1 2014 372,0 H1 2014 1 876,9 Normalised H1 H1 9 SPAR INTERIM RESULTS PRESENTATION 2018
SALIENT FEATURES Rmillion H1 2018 H1 2017 Change (%) Turnover 50 026.6 47 353.4 +5.6 Operating profit 1 316.2 1 206.8 +9.1 Profit before tax 1 345.9 1 229.7 +9.4 Earnings per share (cents) 533.7 471.6 +13.2 Headline earnings per share (cents) 541.2 475.5 +13.8 Dividend per ordinary share (cents) 270.0 240.0 +12.5 Net asset value per share (cents) 3 334.7 3 005.6 +10.9 10 SPAR INTERIM RESULTS PRESENTATION 2018
BUSINESS ENVIRONMENT SOUTH AFRICA IRELAND SWITZERLAND • Positive changes in • Irish grocery market remains • Improving economic economic and political deflationary indicators landscape • 5.7% GDP growth projected • Private local consumption • Muted 1.7% GDP expected for 2018 remains negative – cross for 2018 border economic migration • CPI measured at 0.2% • Constrained consumer (Mar 2018) • Country retail turnover down spending continues 1.8% y-y (March 2018) • Unemployment continues • Tough trading landscape trending down: 5.9% (April • GDP on track to grow 2.0% 2018) in 2018 • Internally measured food inflation: 1.9% • Continued impact of £ • CPI 0.8% (March 2018) devaluation on UK sales • Steady unemployment rate: • Economic uncertainties due 3.0% (March 2018) to Brexit remain 11 SPAR INTERIM RESULTS PRESENTATION 2018
FINANCIAL OVERVIEW MARK GODFREY CFO
FINANCIAL OVERVIEW: KEY REGIONAL METRICS Southern SPAR Rmillion Africa Ireland Switzerland Group Income statement Turnover 34 706.8 10 487.9 4 831.9 50 026.6 Gross profit 2 846.9 1 266.7 854.6 4 968.2 Gross profit % 8.2% 12.1% 17.7% 9.9% Operating expenses 2 119.1 1 236.5 1 209.9 4 565.5 Profit before tax 1 095.7 202.5 47.7 1 345.9 Profit after tax 802.0 184.2 41.5 1 027.7 Earnings per share (cents) – by segment 416.5 95.7 21.5 533.7 contribution Headline earnings per share (cents) – by 420.6 95.3 25.3 541.2 segment contribution * - adjusted for inter-group charges 13 SPAR INTERIM RESULTS PRESENTATION 2018
FINANCIAL OVERVIEW: TURNOVER Rmillion H1 2018 H1 2017 Change (%) SPAR/TOPS 30 606.7 29 125.0 +5.1 Liquor sales ( SPAR/TOPS ) 3 366.7 2 989.2 +12.6 Build it 3 661.7 3 373.2 +8.6 Southern Africa (comparable base) 34 268.4 32 498.2 +5.4 S Buys – Pharmaceutical business 438.4 - - Total Southern Africa 34 706.8 32 498.2 +6.8 Ireland 10 487.9 9 636.7 +8.8 Switzerland 4 831.9 5 218.5 -7.4 Total Group 50 026.6 47 353.4 +5.6 • Foreign turnover contribution: 30.6% of total Group turnover (2017: 31.4%) • Southern Africa continued to be impacted by constrained consumer spending • BWG Group delivered +2.9% euro-denominated growth in a flat economic environment • SPAR Switzerland continued to be impacted by disappointing decline in retail sales -5.3% in CHF - partly by strategic decision to close/sell corporate stores 14 SPAR INTERIM RESULTS PRESENTATION 2018
FINANCIAL OVERVIEW: TURNOVER | continued Ireland: Sales analysis of growth H1 2018 % H1 2017 Ireland (BWG Group) ZAR9.25bn +9.5 ZAR8.45bn S-W UK (Appleby ZAR1.23bn +3.4 ZAR1.19bn Westward Group) Total Sales ZAR10.48bn +8.8 ZAR9.64bn Effect of exchange rate Ireland (BWG Group) 9.5% Performance of core business 3.6% 5.9% Currency (EURO strengthens: ZAR) S-W UK (Appleby Westward Group) 3.4% Performance of core business (0.2%) Currency (Sterling weakens to EURO) (2.3%) Currency (EURO strengthens: ZAR) 5.9% 15 SPAR INTERIM RESULTS PRESENTATION 2018
FINANCIAL OVERVIEW: TURNOVER | continued Switzerland: Sales analysis of growth H1 2018 % H1 2017 Ex-warehouse ZAR2.02bn (2.2) ZAR2.07bn TopCC ZAR1.94bn (4.0) ZAR2.02bn Corporate retail ZAR0.87bn (23.0) ZAR1.13bn Total Sales ZAR4.83bn (7.4%) ZAR5.22bn Effect of exchange rate Total Ex- Top CC Corporate Warehouse retail Total sales decline (7.4%) (2.2%) (4.0%) (23.0%) Performance of core business (5.3%) (0.1%) (1.9%) (20.9%) Currency (2.1%) (2.1%) (2.1%) (2.1%) Currency (CHF weakens to EURO) (8.0%) (8.0%) (8.0%) (8.0%) Currency (EURO strengthens) 5.9% 5.9% 5.9% 5.9% 16 SPAR INTERIM RESULTS PRESENTATION 2018
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