Johannesburg - Retail franchise Spar would be unbundled from its parent and listed on the JSE Securities Exchange this year, the food and drug heavyweight, Tiger Brands, said yesterday.
Tiger finalised the purchase for the outstanding part of Spar it did not own from Nelspruit Wholesalers in the past couple of months. It now controls the Spar brand in South Africa, Swaziland, Namibia and Botswana.
Spar was a star performer in the results accounting for 20 percent of the group's revenue and 21 percent of its operating income. There are 764 Spar stores across the country. They operate independently but belong to a voluntary association called the Spar Guild, to which they pay membership fees.
The funding from membership is used for co-ordinated activities like advertising and marketing. In addition, there are five Spar distribution centres, owned by Tiger Brands.
Julian Veron, an analyst with Andisa Securities, said the move had been rumoured for a while.
"Philosophically, I think shareholders will support this," he said. "It is the right time for them to engage in activities to make them more efficient." He added that the level of vertical integration at Tiger was outmoded.
The group yesterday reported interim results for the period to March which showed the maker of All Gold and Lucky Star had boosted headline earnings a share by 28 percent to R4.197.
Strong performances from the group's grain business, albeit off a low base following the group's lost R73 million on grain hedges, were also recorded. Fast-moving consumer goods, the generic drugs and homecare products divisions also performed well.
However, exports, fishing and sugar confectionery were a "blemish" on the accounts, according to managing director Nick Dennis. The stronger rand and smaller fish dented Tiger's fishing contribution on both the top and bottom lines.
Tiger declared an interim dividend of R1 a share for the half-year, an increase of 27 percent on the same period last year.
Tiger's chief executive, Nick Dennis, said: "Overall it was a good result, spurred by some great performances in food and healthcare but made to appear better by a rather depressed base. There were blemishes in associate earnings, exports, fishing and sugar confectionery."
Generic drugs lifted revenue by 35 percent and operating income by 50 percent.
During the period under review, Tiger got rid of its margarine and edible oils businesses. The company generated a net profit of R557.9 million, a rise of 11 percent for the period.
The firm expected to deliver headline earnings lower than the first half, but to still deliver real growth in the second half of the year.
The share closed up 82c at R88, in line with the sector's 0.29 percent gain.