SUR - Spur Corporation - Reviewed Condensed Consolidated Results For
11 September 2008 12:00
SUR
SUR
SUR - Spur Corporation - Reviewed Condensed Consolidated Results For
The Year Ended 30 June 2008, Capital reduction and dividend declaration
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
REVIEWED CONDENSED CONSOLIDATED RESULTS for the year ended 30 June 2008
ABRIDGED INCOME STATEMENT
Reviewed Audited
year ended year ended
R`000 30/06/08 % Change 30/06/07
Revenue 295 838 37.3 215 411
Operating profit 85 534 -4.5 89 585
Net interest received 4 852 3 754
Loss from associate companies (292) (344)
Profit before taxation 90 094 -3.1 92 995
Taxation (29 016) (27 797)
Taxes relating to foreign subsidiaries
(note 1) (1 476) 16 554
Profit for the year 59 602 -27.1 81 752
Attributable to:
Equity holders of parent 59 266 -27.6 81 807
Minority interests 336 (55)
Earnings per share (cents) 67.23 -27.6 92.80
Diluted earnings per share (cents) 65.07 -27.2 89.39
Distribution per share (cents) 55.00 - 55.00
RECONCILIATION OF HEADLINE EARNINGS
Reviewed Audited
year ended year ended
R`000 30/06/08 % Change 30/06/07
Earnings attributable to
ordinary shareholders 59 266 -27.6 81 807
Headline earnings adjustments:
Profit on sale of intangible asset - (1 397)
Loss on sale of property, plant and equipment 1 171
Loss on sale of associate company - 104
Impairment loss on property, plant and
equipment 8 174 -
Profit on disposal of minority share in
subsidiary company (46) -
Headline earnings 67 395 -16.5 80 685
ABRIDGED BALANCE SHEET
Reviewed at Audited at
R`000 30/06/08 30/06/07
ASSETS
NON-CURRENT ASSETS 427 940 396 262
Property, plant and equipment 98 890 82 982
Intangible assets 281 867 272 596
Investments and loans 24 520 25 072
Deferred tax 18 966 15 612
Other non-current asset 3 697 -
CURRENT ASSETS 129 194 99 462
Inventory 6 624 4 943
Trade and other receivables 52 381 47 100
Tax receivable 3 324 2 285
Cash and cash equivalents 66 865 45 134
TOTAL ASSETS 557 134 495 724
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 437 102 403 636
Ordinary share capital 1 1
Share premium (net of treasury shares) (12 970) 37 279
Foreign currency translation reserve 26 778 7 128
Share-based payments reserve 19 030 17 817
Retained earnings 399 948 340 682
Total equity attributable to equity holders of the
parent 432 787 402 907
Minority shareholders` interests 4 315 729
NON-CURRENT LIABILITIES 57 636 34 252
Long term loans payable 15 579 -
Operating lease liability 1 321 -
Deferred tax 40 736 34 252
CURRENT LIABILITIES 62 396 57 836
Trade and other payables 51 053 46 691
Shareholders for distribution 352 302
Tax payable 8 729 9 927
Bank overdraft 2 262 916
TOTAL EQUITY AND LIABILITIES 557 134 495 724
ABRIDGED CASH FLOW STATEMENT
Reviewed Audited
year ended year ended
R`000 30/06/08 30/06/07
Cash generated from operations 110 013 95 527
Net interest received 4 852 3 754
Taxation paid (24 763) (15 812)
Distributions paid (50 199) (45 030)
Working capital changes (8 865) 10 003
Cash flow from operating activities 31 038 48 442
Cash flow from investing activities (32 414) (45 857)
Cash flow from financing activities 18 656 -
Net movement in cash and cash equivalents 17 280 2 585
Adjustment for foreign exchange fluctuations 3 105 745
Net cash and cash equivalents at beginning of year 44 218 40 888
Net cash and cash equivalents at end of year 64 603 44 218
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Retained
Ordinary share earnings
capital & premium & minority
(net of shareholder
R`000 treasury shares) 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 year 59 266
Distributions (50 249)
Share-based payments reserve
Effect of change in tax rate
Foreign currency translation reserve
Foreign exchange loss on net
investment in foreign subsidiaries
net of taxes
Minority shareholders` share of profits 336
Foreign currency translation
reserve effect on minorities 95
Issue of shares in subsidiary to
minority shareholder 3 155
Balance at 30 June 2008 (12 969) 404 263
Other
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 year 59 266
Distributions (50 249)
Share-based payments reserve 1 524 1 524
Effect of change in tax rate (311) (311)
Foreign currency translation reserve 23 260 23 260
Foreign exchange loss on net
investment in foreign subsidiaries
net of taxes (3 515) (3 515)
Minority shareholders` share of profits 336
Foreign currency translation
reserve effect on minorities (95) -
Issue of shares in subsidiary to
minority shareholder 3 155
Balance at 30 June 2008 45 808 437 102
ABRIDGED SEGMENT REPORT
Reviewed Audited
year ended year ended
R`000 30/06/08 30/06/07
REVENUE
Wholesale and distribution 80 603 76 192
Franchise - Spur (SA only) 107 982 99 911
Franchise - Other 28 165 23 791
Retail stores 75 197 13 828
Corporate services 3 891 1 689
Group revenue 295 838 215 411
OPERATING PROFIT
Wholesale and distribution 26 349 31 444
Franchise - Spur (SA only) 91 539 84 295
Franchise - Other 12 705 14 264
Retail stores (11 101) (3 285)
Corporate services (33 958) (37 133)
Group operating profit 85 534 89 585
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended
30/06/08 % Change 30/06/07
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) 76.45 -16.5 91.53
Diluted headline earnings
per share (cents) 73.99 -16.1 88.17
Net asset value per share (cents) 495.83 8.3 457.87
NOTES
1. The recognition of taxes relating to foreign subsidiaries of R16.6 million
in the prior year resulted 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 group`s international operations.
Agreement was reached with the relevant tax authorities in the prior year
which provided the necessary certainty to recognise the deferred tax asset.
During the current year, legislation was implemented with retrospective
effect in the tax jurisdiction in question which limits the period during
which tax losses can be recognised to nine years. Consequently, part of the
deferred tax asset recognised in the prior year was written off in the
current year.
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 2008 have
been prepared in accordance with accounting policies that comply with
International Financial Reporting Standards ("IFRS"), and have been
consistently applied with those adopted for the year ended 30 June 2007.
FINANCIAL AND OPERATIONAL REVIEW
Spur Corporation has continued to show solid restaurant turnover growth
despite the current economic climate in which high interest rates and
inflationary cost pressures have impacted disposable income levels in the
group`s target market.
The Spur brand in particular showed its resilience, with restaurant turnover
for the financial year increasing by 8.6%. Despite continued high food price
inflation of approximately 17.6% for the year, innovative menu engineering
ensured that the price impact on customers was minimised.
Group revenue increased by 37.3% to R295.8 million. Franchise fee income in
Spur Steak Ranches (local and international) rose by 10.3% to R111.4 million,
Panarottis Pizza Pasta by 3.9% to R11.8 million and John Dory`s Fish & Grill
by 35.9% to R5.6 million. The group`s international operations contributed
29.6% of revenue (2007: 10.8%).
The group has continued to invest in procurement, thereby limiting the impact
of high food inflation on franchisee profitability and facilitating sustained
quality supply. The manufacturing division turnover benefited from an
increase in the sales of retail sauces in supermarkets, but high food cost
inflation negatively impacted the cost of manufacture, resulting in a
tightening of margins in this area of the business.
As detailed in the group`s trading statement on 26 August 2008, income for
the
year was negatively impacted by an impairment of assets (R8.2 million) and
operational losses incurred in an unsuccessful fish and grill outlet in
Australia, together amounting to R9.2 million. As a result of these
impairment and operational losses, operating profit decreased by 4.5% to
R85.5 million (2007: R89.6 million). There is no intention to persist with
this fish and grill concept.
The earnings in the prior year benefited from a tax credit of R16.6 million,
which arose from the recognition of deferred tax assets relating to future
tax deductions in respect of intangible assets and cumulative tax losses up
to 30 June 2006 in the group`s international operations.
This prior year tax credit impacted headline earnings, which decreased by
16.5% to R67.4 million (2007: R80.7 million). Excluding the tax impact,
headline earnings increased by 5.1%.
RESTAURANT EXPANSION
Spur Corporation increased its restaurant base to 343 across its three
franchise brands locally and internationally following the opening of 17 new
restaurants during the year. These openings comprised 14 Spur Steak Ranches,
one Panarottis and two John Dory`s restaurants.
A further nine Spur, 13 Panarottis and seven John Dory`s restaurants were
upgraded and eight restaurants relocated to improved trading areas,
benefiting revenue growth.
Spur continues to broaden its footprint in the growing South African economy,
opening restaurants in Soweto and Braamfontein, and has identified new
opportunities in Hillbrow, Gugulethu and Atteridgeville.
Internationally the group has continued its measured expansion in Africa and
the United Kingdom. New Spur restaurants were opened in Kampala, Uganda, and
in Newry and Belfast, Northern Ireland.
With effect from 1 April 2008, Spur Corporation concluded a transaction in
the United Kingdom which enables the group to accelerate its expansion in the
region. In addition, a restructure in Australia was effected in which the
group acquired the outside shareholdings of two Spur restaurants.
A summary of the group`s restaurant base at 30 June 2008 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 236 28 264
Panarottis Pizza Pasta 51 7 58
John Dory`s Fish & Grill 21 - 21
Total 308 35 343
PROSPECTS
The group plans to open 16 restaurants in South Africa in the next financial
year. The group is also investigating further opportunities to open outlets
in Africa, in Ghana, Kenya, Nigeria, Tanzania and Zambia, while continuing to
explore potential in the Middle East. Further locations are being pursued in
the United Kingdom and Ireland.
Spur is launching an exciting new Secret Tribe children`s loyalty programme
to further enhance the Spur-experience for the whole family. The brand images
of both John Dory`s and Panarottis have undergone further design updates
which management believes provide additional growth opportunities to both
brands in the new financial year.
Slower consumer spending and high food prices will continue to be a challenge
in the year ahead. Strategies are in place to continuously enhance the
customer value proposition and to assist franchisees by sourcing quality
products at competitive prices through the group`s procurement division. The
directors and management anticipate that the group will continue to deliver
increased revenue and profitability in the year ahead.
CAPITAL REDUCTION AND CASH DIVIDEND
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
R11.3 million payable to the company`s shareholders, in lieu of dividends,
to be written off against the share premium account, which amount equates
to 11.6 cents per ordinary share ("the capital reduction") and a cash
dividend of R15.0 million, which equates to 15.4 cents per ordinary share
("the cash dividend").
The capital reduction and cash dividend ("collectively referred to as the
distribution") will be paid on Monday, 6 October 2008, to those shareholders
of the company who are recorded in the company`s register on Friday,
3 October 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 Friday, 26 September
2008.
The shares will commence trading ex the distribution on Monday,
29 September 2008. Share certificates may not be dematerialised or
rematerialised between Monday, 29 September 2008 and Friday, 3 October 2008,
both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Managing Director) 11 September 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: 11/09/2008 12:00:02 Produced by the JSE SENS Department.
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