SPAR

A voluntary trading group. Stores owned and run by SPAR members, supplied and serviced by regional Distribution Centres, owned by SPAR SA

Operational Structure

Each DC managed autonomously as a profit centre by an Executive Mgt team

Decisions made by Group Services do not have to be implemented at DC level

Spar do not own any stores!

6 DC’s are owned and run by SPAR and provide leadership and expertise to retail members.

Channel / Formats

SPAR Stores

Trading Brand Positioning Size / Ranging

Every day convenience, speed and freshness Up to 600m2

Limited range of produce, bakery, fresh meat, prepared and take-out foods

Neighbourhood and rural supermarket shopping 700m2 -1300m2 - Range of groceries backed by fresh produce, in-store bakery, butchery, deli and home meal replacement departments

Aggressively priced one-stop bulk shopping 1300m2 + : Full range of groceries and general merchandise with service departments such as produce, bakery, butchery, deli and meal solutions

Standalone liquor stores for SPAR members 120m2 + : Full range of liquor products

A one-stop retailer of building materials primarily on a cash & carry basis supplying the building trade and DIY customers

Basic building and hardware products

Store Distribution – South Africa

Source : SPAR July 2009

Botswana incl with N.Rand, Namibia incl with W.Cape

Exceptional brand management and support capacity for members ensuring a consistent message over a wide range of store formats and consumer markets

A finely tuned logistics and distribution operation

Brand appeal and consistent brand message across LSMs 1-10

Exceptional reach into SAs full range of markets (LSM 1-10) through the flexibility built into the Retailer Member model E.g. : SPAR Thohoyandou sells 5 tons of chicken feet a day

Ongoing store refurbishment/ modernisation programme (20% stores per year)

Core competencies

Actual gross margin declined by 0,2% attributed by SPAR to a change in the sales mix (DC sales versus drop shipment), and the competitive trading environment

Group Financial Performance

*Note: CPIX was re-weighted at the end of 2008. 2009 figure is CPI

The Group (R’million) FY2004 FY2005 FY2006 FY2007 FY2008 HFY2009

Group Turnover 11,985 13,599 17,010 21,704 26,742 16,100

Group % Turnover Growth 18.0% 13.5% 25.1% 27.6% 23.2% 24.5%

Gross Profit % 9.2% 8.8% 8.4% 8.2% 8.1% 7.9%

Operating Profit 395 499 603 775 972 605.1

Operating Profit Margin 3.3% 3.6% 3.5% 3.5% 3.6% 3.8%

CPIX (Average for the period) 4.3% 3.9% 4.4% 5.8 10.4% 10.9%

Strong growth for the past three years with excellent performance at retail

1. The SPAR Brand : “Good For You”

Strategic Drivers

•Young, modern and energetic. •Focus on offering an unforgettable shopping experience •The principle : Life is full of great moments and shopping at SPAR is one of them

The Objective:

To make SPAR the first choice food store that appeals to all South Africans no matter where they live, what ethnic group they belong to, their gender, their age or their spending power

SUPERSPAR, Glenwood, KwaZulu Natal – Feb 09

Shopper Communication > Inside the Store

2. The Store Experience: The Re-Mix Programme

The store remodel programme > ‘Re-Mix’ and ‘Let’s Entertain’ strategyTarget extension and modernisation of 20% of stores p.a

129 stores in 2007 / 144 in 2008

Strategic Drivers

4. Private Label

SPAR driving Private Label very aggressively at the shop shelf and in consumer communication. A critical means of improving SPAR trading margin!

Strategic Drivers

5. Convenience

Focus on high margin specialist service departments, fresh and HMR’s

Be aware of pressure on grocery allocation > store level contact critical

Strategic Drivers

6. Emerging Market

Continued drive into emerging markets with 105 emerging market stores to date

Growing at a significant rate > Greenfields territory, and not an easy win – SPAR model ideal

Strategic Drivers

7. Improved Operational Efficiencies : Distribution

R1bn spent in upgrading facilities ever last 3 years