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. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. 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