The SPAR Group Ltd

On a 52-week comparable basis, group turnover from continuing operations rose 1.6% to ZAR 132.4 billion, operating profit increased 2.3% to nearly ZAR 2.8 billion, and cash generation strengthened 13.4% to nearly ZAR 5.5 billion. Turnover from continuing operations was up 1.8% in constant currency, with second-half growth of 2.6%; South Africa sales grew 2.3% and Ireland revenue was essentially flat. Management said HEPS declined 8.9% because net finance costs rose 19.1% and the effective tax rate increased, while return on capital employed was 14% adjusted for impairments. Group EBITDA was about ZAR 3 billion; continuing-operations EBITDA was ZAR 1.78 billion in South Africa and EUR 62 million in Ireland. Net borrowings were reduced 40% over the year, total debt fell from ZAR 9.1 billion to ZAR 5.4 billion, and leverage ended at 1.74x. Management said South Africa operating margin was 1.7% and the company is targeting 3% in South Africa by 2028; CapEx is expected to settle at about 1% of turnover over time.

Angelo Swartz framed 2025 as a year of simplification and discipline: SPAR exited non-core businesses, focused back on distribution and independent retailers, and prioritized rebuilding the balance sheet. He stressed that the company is not a chain but a network of independent entrepreneurs, and said the model is strongest when it stays close to local consumer needs. His tone was cautiously upbeat, with repeated emphasis that the “direction of travel is unmistakably positive” and that execution in 2026 will focus on margin improvement, omnichannel, private label and loyalty.

Moegamat Isaacs focused on the clean-up of the financial base and the mechanics behind the weaker HEPS. He said the group took about ZAR 5.2 billion of impairments in the year, including around ZAR 585 million on South African corporate stores, and that net finance costs rose 19.1% due to offshore debt assumptions in South Africa. He highlighted that total debt fell from ZAR 9.1 billion to ZAR 5.4 billion, all covenants were met with headroom, free cash flow from continuing operations was about ZAR 2.2 billion, and the net use of cash after international outflows was ZAR 133 million. He also said CapEx was below plan and is expected to ramp back up, but should eventually settle at about 1% of turnover.

Analysts pressed management on the path to returns of capital, the impact of working-capital timing, the South Africa margin shortfall versus prior guidance, and the timing of a dividend reinstatement. Management said buybacks may come before dividends because the shares look undervalued, and that dividends are more likely once gearing and margins improve further. On working capital, Reeza said the earlier reporting cutoff likely boosted cash by about ZAR 800 million to ZAR 1 billion, but he also pointed to ZAR 2.3 billion of non-operating cash outflows tied to the international exits. On South Africa margin, Angelo said 1.7% was held back by seasonality, higher provisions and weaker KZN, and confirmed the 3% target is for 2028.