Voluntary announcement: update on civil unrest in South Africa and its impact on the group
THE SPAR GROUP LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1967/001572/06
JSE Code: SPP
(“SPAR” or the “Group”)
VOLUNTARY ANNOUNCEMENT: UPDATE ON CIVIL UNREST IN SOUTH AFRICA
AND ITS IMPACT ON THE GROUP
Headquartered in Durban, SPAR has been shocked and deeply saddened by the recent
civil unrest in KwaZulu-Natal (KZN) and parts of Gauteng. The full extent of the financial
impact on the Group is still being determined, however this announcement serves as an
update to shareholders of our preliminary assessment as of 22 July 2021.
- The Group’s Central Office and all distribution facilities in the affected areas remain
secure and are undamaged
- KZN distribution centre will be fully operational by 25 July 2021
- 38 stores looted have been cleaned, restocked and reopened
- 112 stores remain closed as repair and cleanup operations continue
- Both wholesale and retail insurance claims assessed to be adequately covered
- Short-term bridging finance secured to extend support to the retailers impacted
Commenting on the situation, Brett Botten, CEO for SPAR said:
“Despite the loss of business caused by the recent civil unrest, the SPAR retailers have
expressed a firm commitment to start again. This speaks to the resilience and
entrepreneurial spirit of SPAR’s retailers, who are intensely aware of the role they play
within their communities. We are understandably concerned about the impact on our
communities and our country and for this reason SPAR has resolute desire to rebuild and
help lessen the extent of the damage and devastation caused within our communities. Our
thoughts are with those who have been severely impacted by the recent unrest. We thank
the SPAR retailers and customers for their understanding, co-operation and patience
during this stressful time for all concerned.”
SPAR Central Office and distribution centres
SPAR reacted quickly to the initial unrest by closing all distribution centres considered to
be at risk and increasing security protocols at these facilities, for the safety of our staff and
to secure the Group’s assets. We are pleased to report that no harm came to our people
and that SPAR’s Central Office and distribution centres remained secure and undamaged
during the unrest. Only one SPAR truck was lost in the violence.
While distribution operations in KZN were severely disrupted last week, limited deliveries
did commence again on Friday, 16 July 2021, once assessed safe to do so. As part of our
contingency plan, the distribution centres in neighboring provinces are distributing to
retailers in parts of KZN until our local facility is fully operational again. Supplier inbound
deliveries to the KZN distribution centre are returning to normal and this division is
expected to be fully operational by Sunday, 25 July 2021.
The South Rand distribution centre in Gauteng was closed for one day as a precaution
but has resumed normal operations. None of the other four regional distribution centres
have been impacted by the unrest.
Many of our SPAR retailers have been severely impacted by the looting, vandalism and
destruction of property that took place last week. At first count, a total of 184 stores
(including 62 TOPS liquor stores and 31 Build it stores) reported varying degrees of looting
and damage. As soon as it has been considered safe, retailers and their staff, often with
help from the local communities, have begun cleaning and restocking. So far, 38 of the
stores have reopened. In addition, 34 TOPS liquor stores are ready to trade but will remain
closed due to the Government’s Covid-19 restrictions.
There are currently 112 stores across various formats closed, representing less than 5%
of our store network across Southern Africa. Repair operations are under way. The Group
is confident that most of these stores will reopen in the short term, but a few will be delayed
for longer due to the extent of the damage caused.
A total of eight corporate stores are included in the total of stores looted that remain closed.
Four of these stores are TOPS liquor stores.
At the wholesale level, the Group is adequately covered for asset damage, stock and
business interruption. Work has already commenced with insurers and loss adjustors to
prepare the necessary insurance claims as soon as possible.
SPAR is engaging with all the retailers impacted by the looting and unrest to provide any
necessary assistance with their insurance claims. All affected retailers have the necessary
SASRIA cover in place to ensure full recovery.
SPAR will continue working with insurers to accelerate the timeframe required to reopen
The Group is committed to helping our retailers affected by the unrest and will offer
temporary financial support by suspending repayment of all trade accounts until they are
able to reopen their stores. This assistance is expected to be short-term in duration,
however, this will be dependent on the time in which stores can be trading again. SPAR
has the necessary facilities to provide this relief.
Potential supply constraints and suppliers
We are experiencing disruption in the availability of certain products due to the damage
and destruction caused to certain supplier facilities and warehouses. We are working
closely with all our affected suppliers to try and ensure these products are back on shelf
as soon as possible. The Group is also engaging with severely impacted smaller suppliers
and will offer them all necessary assistance.
The Group is deeply concerned about the knock-on consequences the unrest will inflict
upon the poor in this country. Certain areas affected by the unrest have been left without
food stores due to the level of damage caused. This has a direct and dire impact on the
ability to get food and interferes with the Government’s ability to pay social grants, which
are typically collected from SPAR and other food retail stores. We are working closely with
SPAR retailers and their local communities, as well as local authorities to help alleviate
the level of devastation caused in these areas. The Group has launched a number of aid
initiatives during this time and will continue to support local communities and existing
organisations that rely on our assistance.
By order of the Board
23 July 2021
Rand Merchant Bank, a division of FirstRand Bank Ltd
Date: 23-07-2021 02:35:00
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