A snapshot of the financial performance of BWG, the unlimited company that owns the Spar and Mace convenience store chains in Ireland, has emerged in the annual results of Spar South Africa, (SSA), the listed company that bought an 80 per cent stake in BWG over the summer.
SSA's annual results for the year to the end of September include a two-month window during which it owned BWG, in which it invested at the beginning of August in a deal brokered by Investec.
The figures show that BWG, which has more than 900 stores in Ireland and about 280 in Britain, had revenues of 2.74 billion rand (€196.5 million) in the period.
BWG, whose senior management including chief executive Leo Crawford, property director John Clohisey and finance director John O'Donnell retain a 20 per cent stake, recorded a gross profit of €20 million and operating profits of €4.7 million in the period, according to SSA.
Writedowns
The South African firm’s results show that BWG has long-term debts of €155 million. The company had boom-era property-related debts of up to €300 million 12 months ago, before a complex restructuring overseen by Mr Crawford. This culminated in writedowns from its banks last November followed by the sale of a majority stake to SSA for €55 million in cash, which was used to repay debts of €70 million.
SSA recorded sales growth of 15 per cent to 54.4 billion rand (€3.9 billion) and boosted its profits over the 12 months by 13 per cent to €84 million. SSA said that without BWG’s contribution, its turnover and profits would have grown by just 9.2 per cent.
In a full year, BWG would account for about a quarter of the revenues and profits of SSA. It has previously told the stock market that BWG had “underlying profits” of €11 million in 2013.
The South African company said BWG’s net profit margins were currently lower than the rest of the group. It also noted, however, that BWG’s gross margins were higher than the South African business, indicating that BWG’s cost base is out of step with the rest of SSA group on a proportional basis.
The group said BWG’s profits were “expected to increase through the implementation of various initiatives”.
The company said it had a "five-year plan" for BWG. This is thought to include a rollout of more large-format Eurospar stores in Ireland.
Last November’s restructuring, together with the investment by SSA, is understood to have freed up enough cashflow for a €100 million expansion of the business over the next five years.
It is understood that BWG, which in 2012 bought the €30 million-a-year Morris Brothers wholesaling group, retains an interest in buying other Irish wholesaling businesses.
BWG declined to comment on its financial performance yesterday.
