SUR
SUR
SUR - Spur Corporation Limited - Unaudited condensed consolidated interim
results for the six months ended 31 December 2007
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2007
KEY PERFORMANCE Indicators
Profit after tax +7.1%
Distribution per share +7.7%
ABRIDGED INCOME STATEMENT
Unaudited Unaudited
six months ended six months ended
R`000 31/12/07 31/12/06
Revenue 144 850 110 125
Operating profit 49 581 46 381
Net interest received 2 212 2 188
(Loss)/ income from associate
companies (64) 297
Profit before taxation 51 729 48 866
Taxation (note 1) (15 097) (14 658)
Recognition of taxes relating to
foreign subsidiaries - -
Profit for the period 36 632 34 208
Attributable to:
Equity holders of parent 36 304 34 206
Minority interests 328 2
Earnings per share (cents) 41.18 38.80
Diluted earnings per share (cents) 39.56 38.17
Distribution per share (cents) 28.00 26.00
Audited
year ended
R`000 % Change 30/06/07
Revenue 31.5 215 411
Operating profit 6.9 89 585
Net interest received 3 754
(Loss)/ income from associate companies (344)
Profit before taxation 5.9 92 995
Taxation (note 1) (27 797)
Recognition of taxes relating to foreign
subsidiaries 16 554
Profit for the period 7.1 81 752
Attributable to:
Equity holders of parent 6.1 81 807
Minority interests (55)
Earnings per share (cents) 6.1 92.80
Diluted earnings per share (cents) 3.6 89.39
Distribution per share (cents) 7.7 55.00
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited
six months ended six months ended
R`000 31/12/07 31/12/06
Earnings attributable to ordinary
shareholders 36 304 34 206
Headline earnings adjustments:
Profit on sale of intangible asset - -
Loss on sale of property, plant and
equipment - 132
Loss on sale of associate company - 104
Headline earnings 36 304 34 442
Audited
year ended
R`000 % Change 30/06/07
Earnings attributable to ordinary
shareholders 6.1 81 807
Headline earnings adjustments:
Profit on sale of intangible asset (1 397)
Loss on sale of property, plant and equipment 171
Loss on sale of associate company 104
Headline earnings 5.4 80 685
ABRIDGED BALANCE SHEET
Unaudited at Unaudited at Audited at
R`000 31/12/07 31/12/06 30/06/07
ASSETS
NON-CURRENT ASSETS 411 886 358 601 405 298
Property, plant and equipment 88 234 53 576 82 982
Intangible assets 272 596 272 043 272 596
Investments and loans 27 129 22 677 25 072
Deferred taxation 23 927 10 305 24 648
CURRENT ASSETS 124 232 102 239 99 462
Inventory 5 500 2 515 4 943
Trade and other receivables 54 830 58 673 47 100
Taxation 1 910 - 2 285
Cash and cash equivalents 61 992 41 051 45 134
TOTAL ASSETS 536 118 460 840 504 760
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 418 006 376 281 403 636
Ordinary share capital 1 1 1
Share premium (net of treasury shares) 11 713 60 200 37 279
Foreign currency translation reserve 6 554 5 954 7 128
Share-based payments reserve 18 569 17 065 17 817
Accumulated profit 376 986 293 081 340 682
Total equity attributable to equity
holders of the parent 413 823 376 301 402 907
Minority shareholders` interests/(deficit) 4 183 (20) 729
NON-CURRENT LIABILITIES 64 717 40 679 43 288
Interest-bearing loan 17 077 - -
Operating lease liability 1 502 - -
Deferred taxation 46 138 40 679 43 288
CURRENT LIABILITIES 53 395 43 880 57 836
Trade and other payables 45 596 35 746 46 691
Shareholders for distribution 347 405 302
Taxation 5 394 6 364 9 927
Bank overdraft 2 058 1 365 916
TOTAL EQUITY AND LIABILITIES 536 118 460 840 504 760
ABRIDGED CASH FLOW STATEMENT
Unaudited six Unaudited six Audited
months ended months ended year ended
R`000 31/12/07 31/12/06 30/06/07
Cash generated from operations 55 495 51 210 96 924
Net interest received 2 212 2 188 3 754
Taxation paid (15 210) (8 560) (15 812)
Distributions paid (25 521) (22 006) (45 030)
Working capital changes (7 430) (8 611) 10 003
Cash flow from operating activities 9 546 14 221 49 839
Cash flow from investing activities (11 584) (15 364) (47 254)
Cash flow from financing activities 18 414 - -
Net movement in cash and cash
equivalents 16 376 (1 143) 2 585
Adjustment for foreign exchange
fluctuations (660) (59) 745
Net cash and cash equivalents at
beginning of period 44 218 40 888 40 888
Net cash and cash equivalents at
end of period 59 934 39 686 44 218
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Ordinary share Accumulated
capital & premium profit & minority
R`000 (net of treasury shares) shareholder interests
Balance at 1 July 2006 82 240 258 637
Profit for the year 81 807
Distributions (44 960)
Share-based payments
reserve
Foreign currency
translation reserve
Minority shareholders`
share of losses (55)
Acquisition of minority
shareholder`s interests
in subsidiary 43
Issue of shares in
subsidiaries to minority
shareholders 979
Balance at 1 July 2007 37 280 341 411
Profit for the period 36 304
Distributions (25 566)
Share-based payments
reserve
Foreign currency
translation reserve
Minority shareholders`
share of profits 328
Foreign currency
translation reserve
effect on
minorities (31)
Issue of shares in
subsidiary to minority
shareholder 3 157
Balance at 31 December
2007 11 714 381 169
Other
R`000 reserves Total
Balance at 1 July 2006 21 763 362 640
Profit for the year 81 807
Distributions (44 960)
Share-based payments reserve 1 504 1 504
Foreign currency translation reserve 1 678 1 678
Minority shareholders` share of losses (55)
Acquisition of minority shareholder`s interests
in subsidiary 43
Issue of shares in subsidiaries to minority
shareholders 979
Balance at 1 July 2007 24 945 403 636
Profit for the period 36 304
Distributions (25 566)
Share-based payments reserve 752 752
Foreign currency translation reserve (574) (574)
Minority shareholders` share of profits 328
Foreign currency translation reserve effect on
minorities (31)
Issue of shares in subsidiary to minority shareholder 3 157
Balance at 31 December 2007 25 123 418 006
ABRIDGED SEGMENT REPORT
Unaudited six Unaudited Audited
months ended six months ended year ended
R`000 31/12/07 31/12/06 30/06/07
REVENUE
Wholesale and distribution 42 558 42 710 76 192
Franchise - Spur (SA only) 53 706 50 407 99 911
Franchise - Other 13 826 12 197 23 773
Retail stores 33 058 3 553 13 846
Corporate services 1 702 1 258 1 689
Group revenue 144 850 110 125 215 411
OPERATING PROFIT
Wholesale and distribution 13 801 17 661 30 987
Franchise - Spur (SA only) 46 047 42 685 84 295
Franchise - Other 6 431 5 264 14 264
Retail stores 855 (903) (3 285)
Corporate services (17 553) (18 326) (36 676)
Group operating profit 49 581 46 381 89 585
SUPPLEMENTARY INFORMATION
Unaudited Unaudited
six months six months
ended ended
31/12/07 31/12/06
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) 41.18 39.07
Diluted headline earnings per share (cents) 39.56 38.44
Net asset value per share (cents) 474.17 426.84
Audited
year ended
% Change 30/06/07
Shares in issue (000`s) (note 2) 88 156
Weighted average number of shares in issue (000`s) 88 156
Headline earnings per share (cents) 5.4 91.53
Diluted headline earnings per share (cents) 2.9 88.17
Net asset value per share (cents) 11.1 457.87
NOTES
1. On 20 February 2008, subsequent to the balance sheet date, the Finance
Minister announced a reduction in the South African corporate tax rate from 29%
to 28%. This reduction will be accounted for in the full year results to 30 June
2008 but no related impact has been taken into account in these results in
accordance with AC502 - Substantively Enacted Tax Rates and Tax Laws.
2. Shares in issue less shares repurchased by a wholly owned subsidiary company
and share incentive trust.
BASIS OF ACCOUNTING
These unaudited financial results for the six months ended 31 December 2007
have been prepared in accordance with IAS 34 - Interim Financial Reporting. The
accounting policies and methods of computation applied in the preparation of
these results are consistent with those applied in the preparation of the
group`s annual financial statements for the year ended 30 June 2007.
FINANCIAL AND OPERATIONAL REVIEW
The period under review was characterised by a slow-down in consumer spending
due to multiple interest rate increases, higher fuel prices, high food
inflation and the introduction of new credit legislation in June 2007.
This impacted on revenue growth in our South African operations with restaurant
turnover increasing by 7%. Turnover of existing restaurants, which excludes new
outlets opened during the reporting period, grew by 6%. Overall group revenue
grew by 31.5% to R144.9 million, mainly as a result of the opening of
international company-owned outlets, particularly the two Spur restaurants in
London, which commenced trading in June 2007. The group`s international
operations contributed 27% of revenue (2007: 8%).
The trading environment during the period was adversely affected by on-going
high food price inflation. Input costs of raw materials, such as oil and tomato
products, resulted in pressure on margins in the group`s sauce manufacturing
division. Management took the strategic decision not to pass these cost
increases on to franchisees in order to ensure both good value for our
customers and the sustainability of franchisee profitability. We are confident
that this strategy will have a positive effect on the group`s revenue and
profitability in the medium to long term and our ability to deliver value for
money.
These factors contributed to the growth in operating profit being below revenue
growth, increasing 6.9% to R49.6 million (2007: R46.4 million).
Headline earnings increased by 5.4% to R36.3 million (2007: R34.4 million) with
the distribution per share up 7.7% to 28.0 cents (2007: 26.0 cents).
RESTAURANT GROWTH
The group has continued with the prudent expansion of its restaurant footprint
locally and internationally, opening eight new restaurants across the three
franchise brands during the period.
Five new restaurants were opened locally, including a Spur outlet in Maponya
Mall, the new mega shopping centre in Soweto, in October 2007.
Following the opening of outlets in Newry (Northern Ireland) and Kampala
(Uganda) the group has 37 restaurants outside South Africa.
A summary of the group`s restaurant base at 31 December 2007 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 232 28 260
Panarottis Pizza Pasta 52 9 61
John Dory`s Fish & Grill 20 - 20
Total 304 37 341
STRATEGY & PROSPECTS
The group`s experienced management team views the current tough trading
environment as a challenge and an opportunity and is confident that appropriate
measures are in place to ensure continued growth.
These strategies include:
an enhanced focus on increasing efficiencies in the procurement process;
further leveraging the group`s buying power to ensure customer benefit
through franchisee success;
minimising cost increases to customers and franchisees through product
innovation, menu engineering and broader local and international product
sourcing;
continuing with aggressive marketing campaigns to further build customer
loyalty and drive restaurant foot traffic;
further enhancement of the family experience in store; and
the ongoing process of installing generators in order to negate the impact of
irregular power supplies and electricity load shedding.
The group plans to open 12 restaurants in South Africa in the second half of
the year and three internationally in Belfast (Northern Ireland), Erina Fair
(Australia) and Lusaka (Zambia). The group is also investigating further
opportunities to open outlets in the United Kingdom and Ireland, as well as
Africa in Lagos (Nigeria) and Accra (Ghana), while continuing to explore
potential in the Middle East.
The brand loyalty built up over many years together with our positioning as an
affordable, accessible and enjoyable family sit-down restaurant experience
will ensure continued revenue and profit growth.
CAPITAL REDUCTION
In accordance with a general authority given to the directors at the annual
general meeting held on 5 December 2007, shareholders are advised that the
board of directors of the company has approved a capital reduction of
R24.7 million payable to the company`s shareholders, in lieu of dividends,
to be written off against the share premium account, which amount
equates to a distribution of 28.0 cents per ordinary share ("the distribution").
The distribution will be paid on Tuesday, 25 March 2008, to those shareholders
of the company who are recorded in the company`s register on Thursday, 20 March
2008 ("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 Thursday, 13 March 2008.
The shares will commence trading ex the distribution on Friday, 14 March 2008.
Share certificates may not be dematerialised or rematerialised between Friday,
14 March 2008 and Thursday, 20 March 2008 both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Managing Director) 27 February 2008
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 (Pty) Limited, 70 Marshall Street,
Johannesburg, 2001
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spur.co.za
Date: 28/02/2008 12:00:02 Produced by the JSE SENS Department.
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