SUR - Spur Corporation Limited - Reviewed condensed consolidated results and
16 September 2010 12:00
SUR
SUR
SUR - Spur Corporation Limited - Reviewed condensed consolidated results and
cash dividend declaration for the year ended 30 June 2010
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
("Spur" or "the Company" or "the Group")
REVIEWED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION for the
year ended 30 June 2010
Operating profit +21.4%
Headline earnings +14.2%
FINANCIAL AND OPERATIONAL PERFORMANCE
Despite continued suppressed trading conditions in the retail market, Spur
Corporation enjoyed a successful year and produced a positive set of trading
results.
Restaurant turnover in our South African Spur Steak Ranch outlets increased by
9.5%, bringing total restaurant turnover to a new high of R2.5 billion. The
Panarottis brand grew restaurant turnover by 7.8% and John Dory`s delivered an
excellent growth of 23.4% over the prior year.
These results were achieved because of the stringent monitoring of standards,
innovative marketing and re-positioning of our menus to factor in an average
menu increase of 7.0% across all local brands. This considered increase was
based on sales mix calculations, food prices, an assessment of competition and
market tolerance. Food prices remained relatively constant during the period,
despite fears that the FIFA 2010 World Cup would prove to be an inflationary
force. Increases in electricity tariffs, rentals and rates remain areas of
operational focus.
Revenue grew by 6.5% from R326.8 million to R348.0 million. Franchise income in
Spur grew by 9.9% to R124.4 million; Panarottis by 6.1% to R10.8 million and
John Dory`s by 30.3% to R8.8 million. International revenue (franchise fee
income and restaurant turnover) declined by 4.4% to R92.5 million, impacted by a
tough international retail market and a strong rand.
Profit before tax increased by 20.0% to R122.9 million. The continuing
recessionary trading environment in the United Kingdom necessitated an
impairment of the assets of Yellowstone Spur in Derby in the East Midlands of
the United Kingdom, a region that was particularly hard hit. The impact of this
impairment on profit is R8.0 million. Excluding one-off or abnormal items such
as foreign exchange fluctuations, foreign restaurant impairments and the share-
based payment expense (relating to the group`s management incentive scheme) in
the current and prior years, comparable operating profit before finance income
grew by 15.5%.
Headline earnings increased by 14.2% to R85.1 million (2009: R74.5 million),
with diluted headline earnings per share up 13.8% to 94.6 cents (2009: 83.1
cents).
A final dividend of 28.0 cents per share has been declared bringing the total
dividend for the year to 60.0 cents per share, an increase of 9.1% on the
previous year.
RESTAURANT EXPANSION
A highlight of the year was the launch of a smaller-format Spur model for rural
areas. A smaller retail area and a simplified menu allows for a substantial
reduction in set-up costs compared to the standard format Spur outlet. The
initial two outlets have delivered rewarding turnovers and profits. The group
intends to roll out this format in the new year.
Locally, the group opened nine new Spurs, three Panarottis and five John Dory`s.
18 Spurs, seven Panarottis and two John Dory`s were refurbished and six Spur
outlets and one John Dory`s relocated to better trading locations.
Internationally, new Spur restaurants were opened in Aberdeen (United Kingdom),
Maseru (Lesotho), Mandurah (Western Australia) and in Dubai (United Arab
Emirates). The first Spur Express outlet was opened in Gaborone (Botswana) and
turnovers are encouraging.
The group`s current restaurant profile consists of:
Franchise brand South Africa International Total
Spur Steak Ranches 245 32 277
Panarottis Pizza Pasta 50 6 56
John Dory`s Fish & Grill 26 - 26
Total 321 38 359
PROSPECTS
Although the economic environment is expected to continue to recover at a slow
pace, management does not anticipate a significant improvement in consumer
spending in the year ahead. We will ensure that our brands continue to offer an
attractive and affordable proposition to our customers, and that franchisee
profitability is managed carefully. We are confident that we will remain
competitive through tailoring our menus, to keep them topical and competitive.
We will strive to maintain our marketing advantage through our creative and
focused regional initiatives and we will continue to reinforce our high
standards through constant training and our experienced operational teams.
We expect to open 14 new Spur Steak Ranches, four Panarottis and three John
Dory`s restaurants in the new financial year. Internationally restaurants are
scheduled to open in Gateshead (United Kingdom), Lusaka (Zambia) and Lilongwe
(Malawi).
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 R27.3
million, which equates to 28.0 cents per share.
The cash dividend will be paid on Monday, 11 October 2010, to those shareholders
of the company who are recorded in the company`s register on Friday, 8 October
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, 1 October 2010. The shares will
commence trading ex dividend on Monday, 4 October 2010.
Share certificates may not be dematerialised or rematerialised between Monday, 4
October 2010 and Friday, 8 October 2010, both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Managing Director) 15 September 2010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended %
R`000 30/06/10 30/06/09 change
Revenue 348 024 326 744 6.5
Operating profit before finance income 118 549 97 661 21.4
Net finance income 4 380 6 219
Share of loss of equity accounted
investees (net of income tax) - (1 465)
Profit before income tax 122 929 102 415 20.0
Income tax expense (44 562) (38 574)
Profit for the year 78 367 63 841 22.8
Other comprehensive losses: (14 093) (18 033)
Exchange differences on translating
foreign operations (11 483) (19 129)
Income tax relating to components of
other comprehensive losses (2 610) 1 096
Total comprehensive income for the year 64 274 45 808
Profit attributable to:
Owners of the company 77 557 63 264
Non-controlling interest 810 577
Profit for the year 78 367 63 841
Total comprehensive income
attributable to:
Owners of the company 63 540 45 374
Non-controlling interest 734 434
Total comprehensive income for the year 64 274 45 808
Per share (cents)
Basic earnings 88.27 71.94 22.7
Diluted earnings 86.25 70.61 22.2
Dividends 60.00 55.00 9.1
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
R`000 at 30/06/10 at 30/06/09
ASSETS
Non-current assets 382 609 398 399
Property, plant and equipment 75 184 84 429
Intangible assets and goodwill 279 609 279 970
Investments and loans 14 533 14 651
Deferred tax 11 128 16 618
Leasing rights 2 155 2 731
Current assets 148 116 147 840
Inventories 6 389 6 066
Tax receivable 3 600 3 567
Trade and other receivables 53 499 54 320
Cash and cash equivalents 84 628 83 887
TOTAL ASSETS 530 725 546 239
EQUITY
Total equity 403 295 434 320
Ordinary share capital 1 1
Share premium 6 6
Shares repurchased by subsidiaries (29 910) (25 349)
Foreign currency translation reserve (5 129) 8 888
Share-based payments reserve - 20 554
Retained earnings 434 015 425 919
Total equity attributable to equity holders of the
company 398 983 430 019
Non-controlling interest 4 312 4 301
LIABILITIES
Non-current liabilities 64 569 60 237
Loans payable 7 181 11 413
Operating lease liability 3 328 1 352
Deferred tax 54 060 47 472
CURRENT LIABILITIES 62 861 51 682
Bank overdrafts 3 596 2 853
Tax payable 4 832 6 351
Trade and other payables 53 969 42 080
Shareholders for dividend 464 398
TOTAL EQUITY AND LIABILITIES 530 725 546 239
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
R`000 30/06/10 30/06/09
Operating profit before working capital changes 134 474 118 205
Working capital changes 3 394 (6 321)
Cash generated from operations 137 868 111 884
Net interest received 4 948 5 803
Tax paid (49 528) (34 292)
Distributions paid (including management incentive
scheme - refer note 2) (80 708) (47 722)
Net cash flow from operating activities 12 580 35 673
Cash flow from investing activities (13 574) (15 546)
Cash flow from financing activities 771 (3 550)
Net movement in cash and cash equivalents (223) 16 577
Effect of foreign exchange fluctuations 221 (146)
Net cash and cash equivalents at beginning of year 81 034 64 603
Net cash and cash equivalents at end of year 81 032 81 034
CONDENSED 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 or loss - -
Other comprehensive losses - (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 tax) (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 non-controlling 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 year - (14 017)
Profit or loss - -
Other comprehensive losses - (14 017)
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 30 June 2010 (29 903) (5 129)
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 or loss 63 841 63 841
Other comprehensive losses (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 tax) (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 non-controlling 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 year 78 291 64 274
Profit or loss 78 367 78 367
Other comprehensive losses (76) (14 093)
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners (70 184) (95 299)
Distributions to equity holders (53 442) (53 442)
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 30 June 2010 438 327 403 295
CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT
Reviewed Audited
year ended year ended
R`000 30/06/10 30/06/09
External revenues
Manufacturing and Distribution 94 008 82 097
Franchise - Spur 124 411 113 229
Franchise - Panarottis 10 751 10 137
Franchise - John Dory`s 8 847 6 788
Other South Africa 17 554 17 793
Total South Africa segments 255 571 230 044
United Kingdom 56 080 55 840
Australia 30 013 34 048
Other International 6 360 6 842
Total International segments 92 453 96 730
TOTAL EXTERNAL REVENUES 348 024 326 774
Profit/(loss) before income tax
Manufacturing and Distribution 44 714 36 141
Franchise - Spur 107 339 97 525
Franchise - Panarottis 6 560 6 592
Franchise - John Dory`s 4 567 3 058
Other South Africa (691) (1 530)
Total South Africa segments 162 489 141 786
Unallocated - South Africa (28 220) (25 838)
Total South Africa 134 269 115 948
United Kingdom * (12 396) (1 540)
Australia ** (1 807) (13 587)
Other International 5 287 5 966
Total International segments (8 916) (9 161)
Unallocated - International *** (2 424) (4 372)
Total International (11 340) (13 533)
TOTAL PROFIT BEFORE TAX 122 929 102 415
* Includes impairment losses of R9.069 million (2009: Rnil) and foreign exchange
losses of R0.230 million (2009: R0.142 million).
** Includes impairment losses of Rnil (2009: R10.044 million) and profit on
disposal of property, plant and equipment of R0.475 million (2009: loss of
R1.180 million).
*** Includes foreign exchange gain of R1.793 million (2009: loss of
R1.129 million).
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
Reviewed Audited
year ended year ended %
R`000 30/06/10 30/06/09 change
Profit attributable to ordinary
shareholders 77 557 63 264 22.6
Headline earnings adjustments:
Impairment of goodwill - 1 583
Impairment of property, plant and
equipment 7 994 8 461
(Profit)/loss on disposal of property,
plant and equipment (net of tax) (484) 1 168
Headline earnings 85 067 74 476 14.2
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended %
30/06/10 30/06/09
change
Shares in issue (000`s) (note 3) 87 865 87 865
Weighted average number of shares in
issue (000`s) 87 865 87 942
Diluted weighted average number of
shares in issue (000`s) 89 929 89 601
Headline earnings per share (cents) 96.82 84.69 14.3
Diluted headline earnings per
share (cents) 94.60 83.12 13.8
Net asset value per share (cents) 458.99 494.30 (7.1)
NOTES
1. 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. The review report
is available for inspection at the company`s registered office. These financial
statements for the year ended 30 June 2010 have been prepared in accordance
with, and containing the information required by, IFRS (including IAS 34:
Interim Financial Reporting) and the AC 500 Standards as issued by the
Accounting Practices Board or its successor, the requirements of the South
African Companies Act of 1973 and the JSE Limited Listings Requirements. 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, Circular 3/2009 (the revised Headline Earnings per
Share circular) and revised IAS 27: Consolidated and Separate Financial
Statements. 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. IAS 27 requires that losses from
subsidiary companies be allocated to non-controlling interest, even if doing so
causes the non-controlling interest to be in a deficit position. IAS 27 was
applied prospectively from 1 July 2009 and resulted in R0.137 million losses
being allocated to non-controlling interest in the current year that would not
have been allocated to non-controlling interest prior to amendment.
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
outside of 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. A total of R27.3 million
was paid to participants and is included in distributions paid in the condensed
consolidated statement of cash flows.
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),
M Morojele*, 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
16 September 2010
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spurcorporation.co.za
Date: 16/09/2010 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. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS. 