Geographical review


The turnover of SPAR Southern Africa increased by 4.5% despite double-digit liquor sales growth, mostly due to a highly competitive retail market.

Internally measured food inflation was reported at 6.0% significantly lower than at the half year due to declining commodity prices in the second half.

Operating expenses were up 8.7% (2016: 11.9%) underpinned by increased marketing and selling costs. Volumes processed through the seven distribution centres decreased 2.6% during the year to 224.5 million cases (2016: 226.4 million cases).

SPAR Southern Africa recorded a 3.4% decrease in profit before tax to R1.9 billion (2016: R2.0 billion), which was boosted by net interest income of R75.9 million (2016: R44.5 million).

Combined food and liquor retail sales, which allow for a better industry comparison, increased by 5.3%. The performance of SPAR stores was impacted by lower consumer spending with retail turnover growth of 4.5% to R76.5 billion (2016: R73.2 billion) and like-for-like growth of 4.2%. Wholesale turnover increased 4.2% to R51.7 billion while demand for SPAR-branded products grew 9.7% during the 2017 financial year, with total sales of R8.0 billion. SPAR’s total house brand sales have increased to R10.2 billion.

The group maintained a selective approach to new store development to ensure the viability of all proposed expansion projects. Total retail space growth increased 1.7% (2016: 1.5%). A number of new developments continue to be delayed by property developers. SPAR continued to drive store refurbishments to meet evolving consumer preferences, with 149 stores being refurbished (2016: 167 stores). A net 13 stores were opened during the 2017 financial year, bringing the total store numbers to 903 by 30 September 2017.

TOPS at SPAR has extended its double-digit growth trajectory, achieving a 12.4% increase in reported retail turnover to R10.0 billion (2016: R8.9 billion) while extensive store upgrades supported same-store turnover growth of 9.7%. Wholesale turnover was up 11.2% to R5.8 billion (2016: R5.2 billion). Despite ongoing delays in obtaining liquor licences, 51 new TOPS stores opened and the brand closed the year with 733 stores. The total retail liquor space increased 5.8% for the period. The majority of stores have converted to the new TOPS at SPAR logo and 50 stores were refurbished.

Build it delivered a 4.3% increase in retail sales to R12.2 billion (2016: R11.7 billion) while same-store growth amounted to 1.1%, reflecting the tough trading environment and low inflation that is impacting the whole industry. Wholesale turnover grew 2.1% to R7.1 billion. Cement inflation was measured at approximately 2.0% with strong price recovery in the second half of the year. Demand for the Build it house brand continues to grow with sales improving 18.7% to R338.6 million for the period. At year-end, Build it’s store network stood at 368 stores, including 27 new Build it outlets opened during the 2017 financial year.

Read more about SPAR Southern Africa’s operational performance here.


In euro-denominated currency, turnover increased by 1.5% to €1.4 billion.

However, the BWG Group reported a 11.1% decrease in reported turnover to R20.5 billion (2016: R23.1 billion), substantially due to exchange rate fluctuations. This was partially offset by Gilletts’ contribution (acquired July 2016 and included for the whole year compared to three months in the prior year) and strong performances from most of the other brands. The grocery market remained in a deflationary cycle with reported internal deflation of 2.0% for food and non-alcoholic beverages and deflation of 0.8% for alcohol and tobacco products in the year to 30 September 2017 (Source: Irish Central Statistics).

The turnover and profit contributions of the Londis business continue to exceed plan, with sales growth of 4.6%. The XL and SPAR brands gained market share with sales growth of 6.6% and 4.2% respectively. EUROSPAR delivered strong sales growth compared to its supermarket peers. The BWG Wines and Spirits and BWG Foodservice businesses once again delivered excellent results with sales increasing 17.8% and 13.2% respectively. The turnover contribution of Appleby Westward, operating in South West England, declined 12.6% in euro terms, or 4.9% in sterling currency terms. This was substantially due to the loss of two independent groups of stores.

BWG Group’s euro-denominated margin increased to 11.2% as it reacted rapidly to the deflationary market conditions. Operating profit grew 4.2% to R508.2 million (2016: R487.8 million) while profit before tax was up 7.9% to R465.8 million (2016: R431.7 million). In euro terms profit before tax increased 21.8%.

Total store numbers across BWG Group’s store formats at 30 September 2017 was 1 330 stores, with 73 new stores opened during the 2017 financial year.

Read more about SPAR Ireland’s operational performance here.


A majority stake in SPAR Switzerland, acquired effective 1 April 2016, was consolidated for the full year compared to six months in the prior year.

Sales for the second six months were down 3.1% in local currency terms, in line with the negative growth reported across the retail sector. Swiss food retail inflation increased 0.3% year-on-year to end September 2017 (Source: Federal Statistical Office). Driving sales at both the retail and wholesale level in Switzerland remains a key priority for SPAR to improve this acquisition’s business performance, including the roll out of category management practices to optimise retail performance.

The gross operating margin, which is higher than in other regions due to the nature of product distributed, increased to 18.0% (2016: 14.0%) and is considered sustainable as all product is supplied ex-warehouse. Furthermore, SPAR Switzerland is highly exposed to the convenience sector that commands higher margins.

SPAR Switzerland’s operating profit increased to R69.0 million (2016: R32.2 million). Cost saving plans were implemented in all areas of the business, however, SPAR Switzerland’s higher inherent cost structure reflects its greater exposure to retail due to its large proportion of corporate owned stores and TopCC cash-and-carry outlets. This business typically incurs selling and marketing expenditure amounting to some 70% of its overheads (at least double that of the rest of the group). An IAS 19 pension liability charge of R26.2 million (2016: R12.8 million) also impacted reported expenses.

Profit before tax amounted to R65.9 million (2016: R6.3 million). However, adjusting for the extraordinary IFRS pension charge and a financial liability relating to the future minority purchase obligation, the reported figure increases to R68.7 million (2016: R31.0 million). The actions taken during the last six months by the new management team at SPAR Switzerland are starting to deliver results and the focus on improving the retail offering will continue in the year ahead.

Read more about SPAR Switzerland’s operational performance here.

Currency movements over the course of the reporting period


At year-end the group had external banking facilities in South Africa totalling R3.6 billion of which Rnil (2016: Rnil) was drawn down. Committed facilities totalled R2.2 billion while the group had access to R1.4 billion of uncommitted facilities.

The BWG Group has access to €60 million of revolving credit and overdraft facilities.

Spar Switzerland has confirmed credit lines and facilities of CHF65.2 million.

The decrease in net borrowings from the prior year was largely the result of improved working capital management by the foreign operations.


A summary of the group’s capital expenditure and approved capital commitments as at 30 September 2017 is set out below:



The identification of sustainability and financial risks for the group forms part of the enterprise risk management process. During the course of the year this was once again updated by management and these risks were reviewed by the internal audit team. The group is typically exposed to inflation, interest rate, liquidity and credit risks, the latter specifically impacting trade receivables. No additional risks were identified and management are satisfied that these risks are being continuously and proactively managed.


The annual financial statements have been prepared in accordance with International Financial Reporting Standards and the requirements of the Companies Act, No. 71 of 2008, as amended (Companies Act). The group has considered and adopted all new standards, interpretations and amendments to existing standards that are effective as at the year-end.

There have been no material impacts of these amendments on the financial statements.

The JSE’s 2016 report on the proactive monitoring of Annual Financial Statements was also considered in preparing the 2017 integrated report.


The board has formally considered the going concern assertion of The SPAR Group and is of the opinion that it remains appropriate for the forthcoming financial year.

Mark Godfrey
Group Financial Director
14 November 2017