Chairman’s report

Applying 55 years’ experience in 2018

SPAR has been entrenched in the South African retail landscape for 55 years. The typical local corner stores of the 1960s have since been replaced by world-class retail outlets, with shopping experiences that feature a range of products that would have been unimaginable at that time.

We are proud of what we have achieved as a group over 55 years in South Africa and beyond. Our international footprint, extensive and robust supply chains, and deep relationships, have all stood the test of time. We have learned to adapt and evolve through cycles of change.

The past year’s challenges confirm the relevance of our vision: to be the first-choice brand in the communities we serve. The following list contains a few examples of events that affected us on a retail and wholesale level:

  • The outbreak of listeriosis, highlighting vulnerabilities in food safety in South Africa, which directly impacted sales
  • Dramatic increases in the price of fuel, inter alia, due to higher oil prices and a weak Rand, resulting in increased transport costs
  • The first Value Added Tax (VAT) increase in 25 years, with the list of 19 basic foodstuffs that are zero-rated under review, affected consumers’ disposable income
  • The challenges experienced by many people who rely on grants from the South African Social Security Agency (SASSA) with changes in the payment system and pay points, which affected footfall at stores

Despite these and other operational challenges, SPAR delivered resilient results for 2018. Our diversified incomes streams supported revenue growth of 6.0% to R103.0 billion (2017: R97.2 billion) and a 1.9% increase in cases despatched to 291.3 million (2017: 285.9 million). Our investments into Ireland, Switzerland, Zambia and Sri Lanka have not been without their unique challenges. Despite this, their contributions over the long term add to the stability and sustainability of the group.

We continue supporting retailers in cross-border territories such as Botswana, Malawi, Mozambique, Namibia, the Seychelles and Swaziland. We do not have any short-term plans to venture beyond our immediate neighbours.

Our board provides guidance and support

We have a highly effective board with members who actively participate in leading the group. Our diversity in gender, race, age and experience means that we have balanced and robust conversations.

In the past year Andrew Waller joined the board, with his appointment ratified at the annual general meeting (AGM) in February 2018. At the AGM, all ordinary and special resolutions were approved by the requisite majority of shareholders.

The full results are available here.

The many faces of transformation

The board is committed to transformation beyond legislative compliance. Through its oversight role, the Social and Ethics Committee encourages efforts to create social and environmental transformation. We are particularly proud of the sustainable and multiplying impact of the rural farmer hubs and the way these initiatives contribute to employment, food security, nutrition and empowerment. This kind of progress is what South Africa desperately needs.

The development of black retailers continues, but at a slower pace than what we want to see. We will continue to do our best to attract and integrate black entrepreneurs.

SPAR committed R20 million to the Youth Employment Service (YES) network launched by President Cyril Ramaphosa. We are also increasing our intake of learners and apprentices throughout the group and continue to support the Jumpstart programme to create a pool of skills for retailers.

We know that our efforts to support sustainability and bring about transformation contribute to the positive spirit of our retailers. They believe in the businesses, in the future of the country and the potential of the SPAR brand.

Outlook for 2019

Conditions in South Africa will remain tough for food retailing and consumers in general. Election years tend to create turmoil and unrest: this is likely to be the case in 2019. In Ireland, we stand by as Britain prepares to leave the EU on 29 March 2019, with much uncertainty remaining. We expect trading conditions in Switzerland to remain stable.

SPAR has been contributing to a better South Africa for 55 years – and will continue to do so far into the future. We believe that our role in our communities is to serve. We are committed to realise the value inherent in our purpose. SPAR’s values of entrepreneurship, family values and passion, have created a strong culture for future success.

A word of appreciation

The board and executive acknowledge and appreciates the hard work and commitment of our employees – our most valuable asset. We recognise the invaluable role played by the divisional managing directors of our distribution centres in overseeing the group’s daily operations, while remaining committed to supporting social and environmental sustainability at a regional and national level. The same applies to the employees, management and leadership in Ireland and Switzerland, and our new store in Sri Lanka.

We encourage all our shareholders to attend the upcoming AGM of The SPAR Group Ltd, which is to be held in the company’s boardroom at 22 Chancery Lane, Pinetown on 12 February 2019 at 09:00.

Mike Hankinson