Spur Corporation Interim Results
07 March 2001 0:00
SPUR CORPORATION
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2000
KEY PERFORMANCE INDICATORS
* HEADLINE EARNINGS +20%
* SA FRANCHISE INCOME +15%
* INTERNATIONAL FRANCHISE INCOME +23%
INCOME STATEMENT
Unaudited Audited Audited
6 months 6 months 6 months
ended % ended ended
R000's Note 31/12/00 Increase 31/12/99 30/6/00
Turnover 1 64 939 1 64 107 126 014
Operating Profit 2 20 971 6 19 854 37 945
Interest Received 1 009 139 1 469
Interest Paid 3 (522) (2 169) (2 957)
Net interest received
(paid) 487 (2 030) (1 488)
Profit before taxation 21 458 20 17 824 36 457
Taxation (5 192) (4 240) (9 371)
Headline Earnings 16 266 20 13 584 27 086
Statistics
Shares in issue 90 875 84 604 90 875
Weighted average number
of shares in
issue (000's) 4 90 749 80 236 83 105
Headline Earnings
per share 17.92 6 16.93 32.6
Fully diluted Earnings
per share (cents) 16.68 7 15.61 30.4
Distributions per
share (cents) 9.0 8.5 16.5
NOTES:
Note 1: Turnover
S.A. franchise income 26 280 22 821 15%
International franchise
income 2 525 2 052 23%
Company owned stores 5 083 6 768 -25%
Sale of goods 30 565 32 156 -5%
Rental income 486 310 57%
64 939 64 107 1%
The turnover of company-owned stores declined due to the closure of one and the
conversion of two stores into franchised outlets.Turnover from the sale of
goods declined as a result of the outsourcing of a number of licensed products
previously sold through the Group's Central Kitchens. Advertising contributions
amounting to R16 494 851 (1999 - R13 822 000) have been excluded from group
turnover for purposes of meaningful comparison.
Note 2: Operating profit grew by only 6% owing to several factors, including
the write-off of all development costs incurred in expanding the brands into
international markets (in keeping with our accounting policies), a provision
made in anticipation of difficulties in recovering royalty income from our
Zimbabwe operations and the closure of one and conversion of two company owned
stores into franchised outlets.
Note 3: Interest paid includes interest on debentures at a rate of 10,85%. The
debentures, being compulsorily convertible on or before 30 June 2004, are
reflected as equity in the Balance Sheet.
Note 4: The increase in the weighted average number of shares in issue arose
primarily from Siphumelele Investments Limited exercising their option to
acquire a further 6 270 641 share during the previous financial year.
STATEMENT OF CHANGES IN EQUITY
Share Share Unissued Retained Total
R000's Capital Premium Shares Earnings
Opening balance
as at 01/07/2000 1 254 058 7 360 (168 960) 92 459
Purchase of
own shares (1 274) (1 274)
Retained income
for the period 16 266 16 266
Distributions
during the period (8 179) (8 179)
CLOSING 1 244 605 7 360 (152 694) 99 272
BALANCE AS
AT 31/12/2000
BALANCE SHEET
Unaudited Audited
R000's 31/12/00 31/12/99
ASSETS
NON-CURRENT ASSETS 74 802 93 681
- Tangible assets 8 574 7 424
- Intangible assets 217 8 826
- Loans 7 076 3 366
- Deferred Tax 58 935 74 065
CURRENT ASSETS 55 846 37 575
- Trade and other receivables 39 171 37 575
- Cash resources 13 607 -
- Taxation 3 068 -
TOTAL ASSETS 130 648 131 256
EQUITY AND LIABILITIES
EQUITY CAPITAL AND
RESERVES 99 272 88 887
- Ordinary share capital 1 1
- Share premium 244 605 255 884
- Compulsory convertible
debentures 7 360 7 360
- Retained income (152 694) (174 358)
NON-CURRENT
LIABILITIES 3 601 4 693
- Liability portion of convertible
debentures 3 382 3 693
- Loans 219 1 000
CURRENT LIABILITIES 27 775 37 676
- Trade and other payables 25 199 26 336
- Loans 2 576 2 509
- Bank overdraft 6 546
- Taxation - 2 285
TOTAL EQUITY AND LIABILITIES 130 648 131 256
CASH FLOW STATEMENT
Unaudited Audited
6 months 6 months
ended ended
R000's 31/12/00 31/12/99
Cash generated from
operations 21 510 18 229
Finance income - net 487 (2 030)
Working capital changes (9 576) 1 329
Taxation paid (5 181) -
Distribution (7 270) -
Cash flow from operating
Activities (30) 17 528
Cash flow from investing
Activities (4 705) (277 831)
Cash flow from financing
Activities (1 735) 271 342
Net decrease in cash and
Cash equivalents (6 470) 11 039
Net decrease in cash
and cash equivalents
at beginning of period 20 077 (17 585)
Net cash and cash
equivalents at end of
period 13 607 (6 546)
GENERALLY ACCEPTED ACCOUNTING PRACTICE
The above statements have been prepared in accordance with Generally Accepted
Accounting Practice.
FINANCIAL AND OPERATING REVIEW
During the first 6 months of the Financial Year, trading has been in line with
exceptions. Turnover of our core South African franchising division grew by
15%, which is more than satisfactory, particularly in the light of difficult
trading patterns in the Retail sector generally. Our international arm
achieved a 23% increase in turnover which augers well for future grown
prospects. Notwithstanding this growth in both local and international
franchise income, group turnover grew by only 1% primarily due to the
conversion of company-owned stores into franchised outlets as well as the
outsourcing of non-core licensed products, previously sold through the Group's
Central Kitchens, which has, however, resulted in Spur being able to improve
margins and quality. Headline earnings were 20% higher than the previous year.
The company is now in a strong positive cash position and is expected to
produce substantial earnings growth from this source.
SPUR: This is the core area of our business and has continued to grow solidly.
The period under review has seen the opening of 7 new outlets including the
525-seater Spur at the Century City complex, which increased our market share
in the Western Cape. The new Spur in the Montecasino development in
Johannesburg is also trading exceptionally well, thereby demonstrating the
power of the brand in a competitive casino environment. Our investment in
Information Technology has significantly improved manpower productivity,
enabling franchisor and franshisees to exchange and act swiftly on information
vital to enhanced operational efficiency.
Pon the international front, our outlet in the Liffey Valley Shopping Centre in
Dublin is trading exceptionally well, to the extent that we have been able to
accelerate our expansion programme, and our second store in Ireland is due to
open in the next 3 months. Our Africa division continues to grow from a sound
base, as does Australia.
PANAROTTIS: We have continued the process of re-engineering certain aspects of
our intellectual property in order to consolidate our position as the dominant
brand in the sitdown Pizza Pasta market in South Africa. To this end, we have
developed new pasta recipes, new menus and a simplified operation which will
improve margins and growth prospects. We have appointed a new Advertising
Agency, Jupiter Drawing room, and are confident that our new campaign will
produce significant rewards in the short to medium term. We have opened 6
outlets during the period and have completed a large number of upgrades of
existing stores to our current specifications.
BUSTA'S: The pace of the roll-out programme of this brand has gathered momentum
in recent months with a further 9 outlets having opened during the reporting
period. Busta's is rapidly becoming a known brand in the fast food market and
we anticipate that this brand will become an important component in our
strategy to penetrate new markets, in the near future.
PROSPECTS
The considerable efforts by management in all areas of our business, from
operational standards to information technology and marketing, especially in
times of tough trading conditions, have enabled us to strengthen our solid and
resilient base. We are confident that we can continue to increase foot traffic
through our stores by consistently delivering on our policy of providing our
customers with high quality food and a value for money experience, thereby
ensuring growth in earnings in the future.
CAPITAL REDUCTION / DISTRIBUTION
Notice is hereby given that, subject to JSE and shareholder approval, a capital
distribution in lieu of dividends of 9,0 cents per share, will be made to
shareholders on or about 18th April 2001 to those shareholders registered in
the books of the company at the close of business on Friday, 6th April 2001.
For and on behalf of the Board
A.J. Ambor (Executive Chairman)
P.G. van Tonder (Managing Director)
Cape Town
7 March 2001
Transfer Secretaries Registered Office
Mercantile Registrars Ltd 5th Floor, Matrix House
11 Diagonal Street 73 Strand Street
Johannesburg, 2001 Cape Town, 8001
