SUR
SUR
SUR - Spur - Reviewed condensed consolidated results: year ended 30 June 2007
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
REVIEWED CONDENSED CONSOLIDATED RESULTS
for the year ended 30 June 2007
Key Performance Indicators
Revenue +17.9%
Distribution per share +17.0%
CONDENSED INCOME STATEMENT
Reviewed Audited
year ended year ended
R`000 30/06/07 30/06/06 % Change
Revenue 215 411 182 692 17.9
Operating profit 89 585 77 441 15.7
Net interest received 3 754 4 007
Share of loss from
associate companies (344) (253)
Profit before taxation 92 995 81 195 14.5
Taxation (27 797) (23 528)
Recognition of taxes relating
to foreign subsidiaries (Note 1) 16 554 -
Profit for the year 81 752 57 667 41.8
Attributable to:
Equity holders of parent 81 807 57 989 41.1
Minority interests (55) (322)
Earnings per share (cents) 92.80 65.78 41.1
Diluted earnings per share (cents) 89.39 65.12 37.3
Distribution per share (cents) 55.00 47.00 17.0
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
year ended year ended
R`000 30/06/07 30/06/06 % Change
Earnings attributable to
ordinary shareholders 81 807 57 989 41.1
Headline earnings adjustments:
Profit on sale of intangible asset (1 397) -
Loss/(profit) on sale of property,
plant and equipment 171 (18)
Loss on sale of associate company 104 -
Headline earnings 80 685 57 971 39.2
CONDENSED BALANCE SHEET
Reviewed Audited
R`000 at 30/06/07 at 30/06/06
ASSETS
NON-CURRENT ASSETS 405 298 346 849
Property, plant and equipment 82 982 37 612
Intangible assets 272 596 271 865
Investments and loans 25 072 26 049
Deferred taxation 24 648 11 323
CURRENT ASSETS 99 462 92 707
Inventory 4 943 2 232
Trade and other receivables 47 100 41 942
Taxation 2 285 2 844
Cash and cash equivalents 45 134 45 689
TOTAL ASSETS 504 760 439 556
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 403 636 362 640
Ordinary share capital 1 1
Share premium (net of treasury shares) 37 279 82 239
Foreign currency translation reserve 7 128 5 450
Share-based payments reserve 17 817 16 313
Accumulated profit 340 682 258 875
Total equity attributable to equity
holders of the parent 402 907 362 878
Minority shareholder interest/(deficit) 729 (238)
NON-CURRENT LIABILITY
Deferred taxation 43 288 37 939
CURRENT LIABILITIES 57 836 38 977
Trade and other payables 46 691 27 243
Shareholders for distribution 302 372
Taxation 9 927 6 561
Bank overdraft 916 4 801
TOTAL EQUITY AND LIABILITIES 504 760 439 556
CONDENSED CASH FLOW STATEMENT
Reviewed Audited
year ended year ended
R`000 30/06/07 30/06/06
Cash generated from operations 96 924 82 175
Net interest received 3 754 4 007
Taxation paid (15 812) (22 794)
Distributions paid (45 030) (36 867)
Working capital changes 10 003 (8 486)
Cash flow from operating activities 49 839 18 035
Cash flow from investing activities (47 254) (16 666)
Net movement in cash and cash equivalents 2 585 1 369
Adjustment for foreign exchange fluctuations 745 (184)
Net cash and cash equivalents at beginning
of year 40 888 39 703
Net cash and cash equivalents at end of year 44 218 40 888
CONDENSED STATEMENT OF CHANGES IN EQUITY
Ordinary
share
capital & Accumulated
premium profit &
(net of minority
treasury shareholder Other
R`000 shares) interests reserves Total
Balance at 1 July 2005 119 266 200 970 16 355 336 591
Profit for the year 57 989 57 989
Distributions (37 026) (37 026)
Share-based payments
reserve 1 504 1 504
Foreign currency
translation reserve 3 904 3 904
Minority interests`
share of losses (322) (322)
Balance at 1 July 2006 82 240 258 637 21 763 362 640
Profit for the year 81 807 81 807
Distributions (44 960) (44 960)
Share-based payments
reserve 1 504 1 504
Foreign currency
translation reserve 1 678 1 678
Minority interests`
share of losses (55) (55)
Acquisition of minority
interests in subsidiary 43 43
Issue of shares in
subsidiaries to
minorities 979 979
Balance at 30 June 2007 37 280 341 411 24 945 403 636
CONDENSED SEGMENT REPORT
Reviewed Audited
year ended year ended
R`000 30/06/07 30/06/06
REVENUE
Wholesale and distribution 76 192 73 852
Franchise - Spur (SA only) 99 911 86 548
Franchise - Other 23 773 19 435
Retail outlets 13 846 -
Corporate services 1 689 2 857
Group revenue 215 411 182 692
OPERATING PROFIT
Wholesale and distribution 30 987 26 303
Franchise - Spur (SA only) 84 295 72 326
Franchise - Other 14 264 8 879
Retail outlets (3 285) -
Corporate services (36 676) (30 067)
Group operating profit 89 585 77 441
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended
30/06/07 % Change 30/06/06
Shares in issue (000`s) (Note 2) 88 156 88 156
Weighted average number of shares
in issue (000`s) 88 156 88 156
Headline earnings per share (cents) 91.53 39.2 65.76
Diluted headline earnings
per share (cents) 88.17 35.4 65.10
Net asset value per share (cents) 457.87 11.3 411.36
NOTES
1. The recognition of taxes relating to foreign subsidiaries of R16.6 million
results from the recognition of a deferred tax asset in respect of cumulative
tax losses up to 30 June 2006 and future tax deductions in respect of
intangible assets in the company`s international operations. Agreement was
reached with the relevant tax authorities during the current year which has
provided the necessary certainty required to recognise this deferred
tax asset.
2. Shares in issue less shares repurchased by a wholly-owned subsidiary company
and share incentive trust.
BASIS OF ACCOUNTING
KPMG Inc., the group`s independent auditor, has reviewed the provisional
financial statements contained in this provisional report, and has expressed an
unmodified conclusion on the provisional financial statements. Their review
report is available for inspection at the company`s registered office. These
provisional financial statements for the year ended 30 June 2007 have been
prepared in accordance with the recognition and measurement requirements of
International Financial Reporting Standards ("IFRS"), and the disclosure
requirements of IAS 34, and have been consistently applied with those adopted
for the year ended 30 June 2006.
FINANCIAL AND OPERATIONAL REVIEW
Spur Corporation has continued its strong growth trend of recent years to
entrench its position in the competitive family sit-down restaurant market,
with restaurant turnover for the financial year increasing by 19.6%. Turnover
of existing restaurants, which excludes new outlets opened during the reporting
period, grew by 13.5%.
Group revenue increased by 17.9% to R215.4 million. Franchise fee income in
Spur Steak Ranches (local and international) rose by 17.9% to R101.1 million,
Panarottis Pizza Pasta by 19.9% to R11.3 million and John Dory`s Fish & Grill
by 32.2% to R4.1 million. The group`s international operations contributed
10.8% of revenue (2006: 3.7%).
The higher interest rate environment impacted on disposable income levels in
the group`s target market in the second half of the financial year. Despite
high food price inflation, prudent menu engineering and aggressive promotions
ensured that the price impact on customers was minimised.
The strategic decision taken two years ago to outsource the national
distribution of restaurant supplies from the group`s manufacturing facilities
has further enhanced franchisee operating standards and improved efficiencies
for both franchisee and franchisor.
The strong growth in restaurant revenue contributed to a 15.7% increase in
operating profit to R89.6 million (2006: R77.4 million).
As detailed in the group`s trading statement on 17 August 2007, income for the
year benefited from a tax credit of R16.6 million. The tax credit resulted from
the recognition of a deferred tax asset relating to cumulative tax losses and
future tax deductions in respect of intangible assets in the company`s
international operations.
This tax credit boosted headline earnings, which increased by 39.2% to R80.7
million (2006: R58.0 million). Diluted headline earnings per share rose 35.4%
to 88.17 cents (2006: 65.10 cents).
Following the finalisation of the Codes of Good Practice on Black Economic
Empowerment, the group commissioned an independent consultant to review the
operations in relation to the Codes and develop a holistic empowerment
strategy. The recent presentation of the findings highlighted various areas of
the business where progress can be made in a relatively short period of time.
This may not necessarily involve an equity transaction at this time. The board
will now consider the recommendations, after which the strategy will
be refined and implemented.
A number of new restaurants have been earmarked for funding from the facility
secured from the Industrial Development Corporation. These are John Dory`s and
Panarottis, Parow; Spur, Maponya Mall, Soweto; and Spur, Hout Bay.
RESTAURANT EXPANSION
Following the opening of 30 new outlets during the year, Spur Corporation
increased its restaurant base to 333 across its three franchise brands locally
and internationally. These openings comprised 22 Spur Steak Ranches, four
Panarottis and four John Dory`s outlets.
Spur continues to broaden its base in the growing South African economy and has
identified new opportunities in Maponya Mall, Soweto, and recently began
trading successfully in Jabulani Mall, Soweto; Carlton Centre, Johannesburg;
and The Trade Route Mall, Lenasia. Spur is committed to further expanding its
base as opportunities arise.
Internationally the group has continued its measured expansion in Africa,
Australia and the United Kingdom. New Spur restaurants were opened in Gaborone,
Windhoek and Swakopmund, further enhancing the African footprint. In Australia,
Spur opened a restaurant in Erina Fair on the central coast of New South Wales.
Two further company-owned restaurants were opened in London (The O2 Dome,
Greenwich and Lakeside Shopping Centre in West Thurrock) shortly before year
end, which have further augmented growth opportunities in the United Kingdom.
Subsequent to year end, the Arizona Spur was opened in Newry, Northern Ireland.
Panarottis opened new outlets in Blacktown, Australia; and Harare, Zimbabwe.
A further 21 Spur, 13 Panarottis and one John Dory`s restaurant were upgraded
and seven outlets relocated to improved trading areas, which has benefited
revenue growth.
A summary of the group`s restaurant base at 30 June 2007 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 226 27 253
Panarottis Pizza Pasta 53 7 60
John Dory`s Fish & Grill 20 - 20
Total 299 34 333
PROSPECTS
Slower consumer spending and rising food prices will be a challenge in the year
ahead. Strategies have been developed to enhance customer loyalty, drive foot
traffic and increase customer spend, while the group will source products
locally and internationally in an attempt to limit the impact of food
inflation. The directors and management are confident that the group will
continue to deliver increased revenue and profitability in the year ahead.
CAPITAL DISTRIBUTION
In accordance with a general authority given to the directors at the annual
general meeting held on 8 December 2006, shareholders are advised that the
board of directors of the company has approved a capital distribution of R25.6
million payable to the company`s shareholders, in lieu of dividends, to be
written off against the share premium account, which amount equates to 29 cents
per ordinary share ("the distribution").
The distribution will be paid on Monday, 8 October 2007, to those shareholders
of the company who are recorded in the company`s register on Friday, 5 October
2007 ("the record date").
The last day to trade (cum the distribution) in the company`s shares for
purposes of entitlement to the distribution will be Friday, 28 September 2007.
The shares will commence trading ex the distribution on Monday, 1 October 2007.
Share certificates may not be dematerialised or rematerialised between Monday,
1 October 2007 and Friday, 5 October 2007 both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Managing Director) 4 September 2007
Directors: A Ambor (Executive Chairman), P van Tonder (Managing Director),
M Farrelly, K Getz*, D Hyde*, P Joffe, K Madders MBE* (British), J Rabb*,
K Robertson, R van Dijk. Company secretary: R van Dijk (* non-executive)
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
Registered Office: 1 Waterford Mews, Century Blvd, Century City, 7441
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spur.co.za
Panarottis
Pizza Pasta
Big on Family
Big on Pizza
Spur Steak Ranches
A taste for life
John Dory`s
Fish & Grill
Date: 06/09/2007 12:00:01 Produced by the JSE SENS Department.
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