SUR SUR SUR - Spur - Unaudited condensed consolidated interim results and cash dividend declaration for the six months ended 31 December 2009 Spur Corporation Limited (Registration number 1998/000828/06) Share code: SUR ISIN: ZAE000022653 ("Spur" or "the Company" or "the Group") UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS AND CASH DIVIDEND DECLARATION for the six months ended 31 December 2009 * Operating profit +19.4% * Headline earnings +16.0% * Dividend per share +18.5% FINANCIAL AND OPERATIONAL PERFORMANCE Spur Corporation has delivered a solid performance in the current economic environment. The group posted a 6.0% growth in revenue to R179.5 million (2008: R169.4 million), sustained by support from its growing loyal customer base. Recessionary pressures continued to impact the restaurant industry locally and internationally as lower discretionary spending has reduced the frequency of visits to restaurants. Food inflation again necessitated a menu price increase but this was limited to 4% during the period. Spur Steak Ranches increased restaurant turnover by 7.3%, Panarottis Pizza Pasta turnover grew by 5.3% and John Dory`s Fish & Grill was up by 17.4%. Franchise fee income in Spur increased by 8.8% to R65.5 million, Panarottis by 7.7% to R5.6 million and John Dory`s by 29.5% to R4.5 million. International franchise fee income declined by 8.7% to R5.8 million, impacted by the strengthening of the Rand against the other currencies in which Spur trades. Profit before tax increased 17.4% to R68.5 million. Excluding one-off items such as foreign exchange losses and start-up costs on international restaurants in the current and prior periods, comparable profit before tax would have increased by 13.0%. Headline earnings increased 16.0% to R45.4 million (2008: R39.1 million), with diluted headline earnings per share growing 14.0% to 50.46 cents (2008: 44.25 cents). An interim cash dividend of 32.0 cents per share has been declared, an increase of 18.5% over the previous year. RESTAURANT EXPANSION Six new Spur, three Panarottis and four John Dory`s restaurants were opened in South Africa during the reporting period. Internationally, a new Spur franchised restaurant was opened in Mandurah (Western Australia), a company-controlled outlet was opened in Aberdeen (Scotland), and a new franchised restaurant in Maseru (Lesotho) brought the total number of restaurants in the African region (outside South Africa) to 17. A summary of the group`s restaurant profile at 31 December 2009 is as follows: Franchise brand South Africa International Total Spur Steak Ranches 244 31 275 Panarottis Pizza Pasta 53 6 59 John Dory`s Fish & Grill 25 - 25 Total 322 37 359 PROSPECTS The past few months have seen improving consumer sentiment owing to lower interest rates, stabilising inflation and higher real wage increases. Many economists do not expect a meaningful upturn in consumer spending for the balance of the year in anticipation of consumers exercising prudence due to economic pressures, such as rising energy costs. In this environment, value and affordability remain our primary focus. We are determined to remain competitive through adhering to brand fundamentals and our strategic focus of delivering great food, service and a fun environment. Management is committed to working with franchisees to enhance operational, procurement and distribution efficiencies to mitigate cost pressures and sustain profitability. The FIFA 2010 World Cup heralds an exciting time for the country and support from our loyal customers, combined with the extended mid-year school holiday, should impact favourably on trading during this period. Spur Corporation will continue to pursue its strategy of restaurant expansion locally and abroad, and plans to open several restaurants in South Africa in the remainder of the financial year. The group opened its first franchised Spur Steak Ranch in Dubai in January 2010. Further opportunities are being investigated in the international territories in which we trade. INTERIM CASH DIVIDEND In accordance with a general authority given to the directors at the annual general meeting held on 11 December 2009, shareholders are advised that the board of directors of the company has approved a cash dividend of R31.2 million, which equates to 32.0 cents per share. The cash dividend will be paid on Tuesday, 23 March 2010, to those shareholders of the company who are recorded in the company`s register on Friday, 19 March 2010 ("the record date"). The last day to trade (cum dividend) in the company`s shares for purposes of entitlement to the dividend will be Friday, 12 March 2010. The shares will commence trading ex dividend on Monday, 15 March 2010. Share certificates may not be dematerialised or rematerialised between Monday, 15 March 2010 and Friday, 19 March 2010, both days inclusive. For and on behalf of the Board A Ambor (Executive Chairman) Cape Town P van Tonder (Managing Director) 23 February 2010 ABRIDGED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited six Unaudited six months ended months ended R`000 31/12/09 31/12/08 Revenue 179 450 169 371 Operating profit before finance income 65 854 55 135 Net finance income 2 658 3 411 Share of loss of equity accounted investees (net of income tax) - (178) Profit before tax 68 512 58 368 Total income tax expense (22 693) (18 971) Profit for the period 45 819 39 397 Other comprehensive income/(losses): (6 130) (5 168) Exchange differences on translating foreign operations (5 923) (8 831) Income tax relating to components of other comprehensive income (207) 3 663 Total comprehensive income for the period 39 689 34 229 Profit attributable to: Owners of the company 45 381 39 125 Non-controlling interest 438 272 Profit for the period 45 819 39 397 Total comprehensive income attributable to: Owners of the company 39 344 34 069 Non-controlling interest 345 160 Total comprehensive income for the period 39 689 34 229 Per share (cents) Basic earnings 51.65 44.49 Diluted earnings 50.46 44.25 Distribution 32.00 27.00 Audited % year ended R`000 change 30/06/09 Revenue 6.0 326 774 Operating profit before finance income 19.4 97 661 Net finance income 6 219 Share of loss of equity accounted investees (net of income tax) (1 465) Profit before tax 17.4 102 415 Total income tax expense (38 574) Profit for the period 16.3 63 841 Other comprehensive income/(losses): (18 033) Exchange differences on translating foreign operations (19 129) Income tax relating to components of other comprehensive income 1 096 Total comprehensive income for the period 45 808 Profit attributable to: Owners of the company 63 264 Non-controlling interest 577 Profit for the period 63 841 Total comprehensive income attributable to: Owners of the company 45 374 Non-controlling interest 434 Total comprehensive income for the period 45 808 Per share (cents) Basic earnings 16.1 71.94 Diluted earnings 14.0 70.61 Distribution 18.5 55.00 ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Unaudited at Unaudited at Audited at R`000 31/12/09 31/12/08 30/06/09 ASSETS Non-current assets 402 119 413 406 398 399 Property, plant and equipment 87 689 88 370 84 429 Intangible assets and goodwill 279 714 281 419 279 970 Investments and loans 15 075 16 941 14 651 Deferred tax 17 299 23 959 16 618 Other non-current asset 2 342 2 717 2 731 Current assets 150 943 151 408 147 840 Inventory 5 262 7 225 6 066 Trade and other receivables 65 577 64 734 54 320 Current tax asset 4 120 3 831 3 567 Cash and cash equivalents 75 984 75 618 83 887 TOTAL ASSETS 553 062 564 814 546 239 EQUITY Total equity 407 177 445 898 434 320 Ordinary share capital 1 1 1 Share premium 6 7 6 Shares repurchased by subsidiaries (29 910) (25 349) (25 349) Foreign currency translation reserve 2 851 21 722 8 888 Share-based payments reserve - 19 792 20 554 Retained earnings 429 956 425 504 425 919 Total equity attributable to equity holders of the company 402 904 441 677 430 019 Non-controlling interest 4 273 4 221 4 301 LIABILITIES Non-current liabilities 63 583 58 810 60 237 Long-term loans payable 9 289 13 741 11 413 Operating lease liability 3 271 996 1 352 Deferred tax 51 023 44 073 47 472 CURRENT LIABILITIES 82 302 60 106 51 682 Trade and other payables 55 302 48 436 42 080 Shareholders for distribution 1 748 463 398 Tax payable 20 185 7 892 6 351 Bank overdraft 5 067 3 315 2 853 TOTAL EQUITY AND LIABILITIES 553 062 564 814 546 239 ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS Unaudited six Unaudited six Audited months ended months ended year ended R`000 31/12/09 31/12/08 30/06/09 Operating profit before working capital changes 71 780 64 475 118 205 Working capital changes (2 229) (15 548) (6 321) Cash generated from operations 69 551 48 927 111 884 Net interest received 2 658 3 411 5 803 Tax paid (18 094) (17 166) (34 292) Distributions paid (47 970) (23 932) (47 722) Net cash flow from operating activities 6 145 11 240 35 673 Cash flow from investing activities (16 193) 1 817 (15 546) Cash flow from financing activities (60) (3 824) (3 550) Net movement in cash and cash equivalents (10 108) 9 233 16 577 Effect of foreign exchange fluctuations (9) (1 533) (146) Net cash and cash equivalents at beginning of period 81 034 64 603 64 603 Net cash and cash equivalents at end of period 70 917 72 303 81 034 ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Ordinary share capital & share premium (net Other R`000 of treasury shares) reserves Balance at 1 July 2008 (12 969) 45 808 Total comprehensive income for the year - (17 890) Profit for the year - - Other comprehensive income - (17 890) Transactions with owners, recorded directly in equity Contributions by and distributions to owners (12 373) 1 524 Own shares acquired (2 013) - Distributions to equity holders (net of taxes) (10 360) - Share-based payments transactions (net of tax) - 1 524 Changes in ownership interests in subsidiaries that do not result in a loss of control - - Acquisition of minority interest in subsidiary - - Total transactions with owners, recorded directly in equity (12 373) 1 524 Balance at 30 June 2009 (25 342) 29 442 Total comprehensive income for the period - (6 037) Profit for the period - - Other comprehensive income - (6 037) Transactions with owners, recorded directly in equity Contributions by and distributions to owners (4 561) (20 554) Distributions to equity holders - - Impact of incentive scheme (including tax) (note 2) (4 561) - Share-based payments transactions (net of tax) - 1 211 Transfer of share-based payment reserve to retained earnings - (21 765) Balance at 31 December 2009 (29 903) 2 851 Retained earnings and non-controlling R`000 interest/(deficit) Total Balance at 1 July 2008 404 263 437 102 Total comprehensive income for the year 63 698 45 808 Profit for the year 63 841 63 841 Other comprehensive income (143) (18 033) Transactions with owners, recorded directly in equity Contributions by and distributions to owners (37 547) (48 396) Own shares acquired - (2 013) Distributions to equity holders (net of taxes) (37 547) (47 907) Share-based payments transactions (net of tax) - 1 524 Changes in ownership interests in subsidiaries that do not result in a loss of control (194) (194) Acquisition of minority interest in subsidiary (194) (194) Total transactions with owners, recorded directly in equity (37 741) (48 590) Balance at 30 June 2009 430 220 434 320 Total comprehensive income for the period 45 726 39 689 Profit for the period 45 819 45 819 Other comprehensive income (93) (6 130) Transactions with owners, recorded directly in equity Contributions by and distributions to owners (41 717) (66 832) Distributions to equity holders (24 975) (24 975) Impact of incentive scheme (including tax) (note 2) (38 507) (43 068) Share-based payments transactions (net of tax) - 1 211 Transfer of share-based payment reserve to retained earnings 21 765 - Balance at 31 December 2009 434 229 407 177 ABRIDGED CONSOLIDATED OPERATING SEGMENT REPORT Unaudited six Unaudited six Unaudited months ended months ended year ended R`000 31/12/09 31/12/08 30/06/09 External revenues Manufacturing 46 126 41 988 79 490 Franchise - South Africa 75 042 68 383 132 761 Other South Africa 8 806 8 601 17 793 Total South Africa segments 129 974 118 972 230 044 United Kingdom 30 086 28 702 55 840 Australia 16 291 18 175 34 048 Other International 3 099 3 522 6 842 Total International segments 49 476 50 399 96 730 TOTAL EXTERNAL REVENUES 179 450 169 371 326 774 Profit/(loss) before tax Manufacturing 20 351 17 459 33 534 Franchise - South Africa 59 760 55 235 105 922 Other South Africa (77) (715) (1 531) Total South Africa segments 80 034 71 979 137 925 Unallocated - South Africa (12 466) (10 861) (21 978) Total South Africa 67 568 61 118 115 947 United Kingdom (257) 245 (1 540) Australia 522 (1 674) (11 824) Other International 2 653 3 152 5 966 Total International segments 2 918 1 723 (7 398) Unallocated - International (1 974) (4 473) (6 134) Total International 944 (2 750) (13 532) TOTAL PROFIT/(LOSS) BEFORE TAX 68 512 58 368 102 415 The basis for reporting segmental financial information has been changed to accord with IFRS 8: Operating Segments. Previously, segmental information was provided by organising the group into three major operating divisions. With the implementation of IFRS 8, operating segments were identified based on financial information regularly reviewed by the Spur Corporation Limited Board (identified as the Chief Operating Decision Maker ("CODM") of the Group for IFRS 8 reporting purposes) for performance assessments and resource allocations. The Group early adopted the amendment to IFRS 8, which becomes effective for annual periods beginning on or after 1 January 2010, which does not require segment assets to be disclosed if such information is not regularly provided to the CODM. Accordingly, segment assets have not been disclosed. RECONCILIATION OF HEADLINE EARNINGS Unaudited six Unaudited six months ended months ended R`000 31/12/09 31/12/08 Profit attributable to ordinary shareholders 45 381 39 125 Headline earnings adjustments: Impairment of goodwill - - Impairment of property, plant and equipment - - (Profit)/loss on disposal of property, plant and equipment (12) - Headline earnings 45 369 39 125 Audited % year ended R`000 change 30/06/09 Profit attributable to ordinary shareholders 16.0 63 264 Headline earnings adjustments: Impairment of goodwill 1 583 Impairment of property, plant and equipment 8 461 (Profit)/loss on disposal of property, plant and equipment 1 168 Headline earnings 16.0 74 476 SUPPLEMENTARY INFORMATION Unaudited six Unaudited six months ended months ended 31/12/09 31/12/08 Shares in issue (000`s) (note 3) 87 865 87 865 Weighted average number of shares in issue (000`s) 87 865 87 942 Headline earnings per share (cents) 51.65 44.49 Diluted headline earnings per share (cents) 50.46 44.25 Net asset value per share (cents) 463.41 507.48 Audited % year ended Change 30/06/09 Shares in issue (000`s) (note 3) 87 865 Weighted average number of shares in issue (000`s) 87 942 Headline earnings per share (cents) 16.1 84.69 Diluted headline earnings per share (cents) 14.0 83.12 Net asset value per share (cents) (8.7) 494.30 NOTES 1. The Group`s interim condensed consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting. The accounting policies and methods of computation applied in the preparation of these financial statements are in accordance with IFRS and, except as presented below, are consistent with those applied in the preparation of the Group`s annual financial statements for the year ended 30 June 2009. The Group adopted the revised IAS 1, IFRS 8 and Circular 3/2009 (the revised Headline Earnings per Share circular) during the period under review. The presentation of the financial statements (IAS 1) and operating segment disclosures (IFRS 8) have been changed accordingly, with no adjustment necessary on the adoption of Circular 3/2009. 2. The first tranche of options/shares granted in terms of the Spur Management Incentive Scheme ("the Scheme") approved by shareholders in General Meeting on 15 December 2004 (as more fully described in note 19 on page 72 of the Annual Report for the year ended 30 June 2009) vested with directors and employees on 18 December 2009. The directors, in accordance with the rules of the Scheme, anticipated the vesting date of the second tranche of options originally intended to vest in December 2010, to 18 December 2009 and furthermore elected to settle all the options/shares in cash. Consequently, no shares were issued external to the group. The price at which all transactions were concluded was the ten-day volume-weighted average price of the company`s share from 3 December 2009 to 17 December 2009 (both dates inclusive). Details of directors` dealings were published on SENS on 21 December 2009. 3. Shares in issue less shares repurchased by a wholly owned subsidiary company and share incentive special purpose entity. Directors: A Ambor (Executive Chairman), P van Tonder (Managing Director), M Farrelly, K Getz*, D Hyde*, P Joffe, M Kuzwayo*, K Madders MBE* (British), K Robertson, R van Dijk (* non-executive) Company secretary: R van Dijk Registered Office: 1 Waterford Mews, Century Blvd, Century City, 7441 Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg, 2001 25 February 2010 Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd) www.spur.co.za Date: 25/02/2010 12:00:02 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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