South Africa is going through a difficult financial growth period. Although we are encouraged by the commission of inquiry into state capture that is interrogating past practices, we are not yet seeing benefits, and recovery is slower than expected. However, at SPAR we remain excited about the future and are comfortable that the country is heading in the right direction. Our government has the appropriate plans and policies on the table – we urge these leaders towards action to ensure implementation.

That said, the global environment is not necessarily much better. We are operating in a phase that is not normal, and our wish is to return to a more settled environment. 

In this context our board is satisfied that SPAR has a solid strategy that is being executed well. We test our assumptions every year, and are comfortable that we have the appropriate focus areas.

A family culture of passionate entrepreneurship

The SPAR culture which is shaped by our values, and is a tangible differentiator for our group. We experience this every year at our retail convention: the space filled with SPAR retailers and employees is characterised by passion and energy. Talk is about something which they all love: our business.

This culture can have its challenges, especially when an entrepreneur makes unethical decisions that are not in the best interest of the bigger group. Over the years, there has been many examples of organisations which have been negatively impacted by one or two individuals. At SPAR we will always be decisive and protective of our brand.

A seamless and responsible leadership handover

The scope of leadership changes this year can easily have disrupted a company of our size. At SPAR we had a seamless transition: 10 out of 18 executives left their roles, with nine retirements and one managing director electing to become one of our independent retailers. Of the ten roles, we made two external appointments. The rest of the executives were replaced with competent people steeped in the SPAR tradition: people who know the business and ethos really well.

With the scale of leadership changes, and the challenging delays with our plans in Poland, Graham and I agreed to the nomination committee’s request to extend our tenure as chief executive officer and chairman respectively for another year. We are engaging with our bigger shareholders personally on this matter, and we are confident that this is a responsible decision in the interest of the business.

A system shaped to be sustainable

The board remains committed to a sustainable approach that is founded in our material relationships with stakeholders. Our flagship rural hub project shows early signs of being financially sustainable for a group of small emerging farmers, but it has not been an easy journey, reflecting many typical South African realities. As we reshape and expand this developing supplier model, we remain committed to the concept of rural farmers supplying fresh produce to SPAR stores. It has the potential to provide employment, grow rural economies, ensure food security and improve nutrition, while reducing transport costs for SPAR, shorten lead times, and increase freshness and shelf life.

Appreciation and outlook

The board and executive teams had a testing year that demanded strong leadership. I want to congratulate them for the way in which they reached the right decisions and delivered strong results, despite trying conditions.

In addition to the executive changes mentioned earlier, the board also saw a series of changes: Phinda Madi, Roelf Venter and Wayne Hook all retired as board members. We are deeply grateful for their contributions to SPAR, with Roelf and Wayne leaving after years of service to the business. Chris Wells will be retiring at the 2020 AGM, having served on our board, and chairman of the audit and risk committee’s since April 2011. I want to thank Chris for his solid, reliable and ethical leadership.We welcomed Lwazi Koyana as a non-executive director.

The board remains committed to act with independence of mind, and in the best interests of the group. We look forward to a year in which we can contribute to a South Africa that is positioned to recover, to generate new growth and create jobs.

Mike Hankinson
Chairman

“SPAR’s results for 2019 were stronger than expected, especially in South Africa. Ireland continued on a strong path of profitable delivery whereas Switzerland recovered well from a difficult first half. The group is financially sound, socially conscious and committed to its vision: to be the first choice brand in the communities we serve.”