SPUR CORPORATION LIMITED - REVIEWED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION for the year ended 30 June 2012
06 September 2012 12:00
SUR 201209060040A
REVIEWED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION
for the year ended 30 June 2012
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR ISIN: ZAE000022653
REVIEWED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION
for the year ended 30 June 2012
Revenue up 24.8%
Diluted HEPS up 31.4%
Dividend per share up 31.8%
PREPARED UNDER THE SUPERVISION OF THE CHIEF FINANCIAL OFFICER, RONEL VAN DIJK CA(SA)
TRADING PERFORMANCE
Spur Corporation increased revenue by 24.8% to R503.4 million in the financial year ended June 2012. An aggressive
promotions strategy to drive foot traffic and attract cash strapped consumers across its local and international
operations proved successful. Revenue also benefited from the inclusion of the DoRego's brand which was acquired
by the group with effect from 1 March 2012.
Turnover in Spur Steak Ranch outlets increased by 14.2%. The Spur Family Card membership has grown to over
1.1 million and accounts for 27% of the brand's local restaurant turnover. The loyalty programme has been successful
in increasing average spend per head and creating a greater affinity with the Spur brand, with card holders spending
on average 20% more than non-members.
Panarottis Pizza Pasta lifted restaurant turnover by 14.7% as the brand benefited from ongoing weekday specials and
the refurbishment of existing outlets. The brand has increased its focus on the family offering while the menu has been
refocused on the brand's core products of pizza and pasta.
John Dory's Fish Grill Sushi, under the stewardship of new management, grew restaurant turnover by 14.2% through
refocused marketing and targeting quieter trading periods.
DoRego's is a quick service value brand offering chicken, seafood and burgers through 74 franchised outlets. Retention
of key management facilitated a seamless integration into the group and strong expansion of the brand is anticipated
in the year ahead.
The group expanded its restaurant base to 456, including the 74 DoRego's outlets. In South Africa the group opened
12 new franchised Spur Steak Ranches as well as three Panarottis Pizza Pasta, one John Dory's Fish Grill Sushi and
two DoRego's franchised outlets. A further eight restaurants were relocated to improved trading nodes and 65 outlets
were refurbished.
Turnover and profitability in the group's international operations has shown an improvement. International expansion
has focused on Africa with the opening of five Spur and two Panarottis franchised outlets across the continent (outside
of South Africa). Spur openings included Zambia, Malawi, Botswana, Namibia and Nigeria and Panarottis openings
included Botswana and Zimbabwe. The group has a growing brand presence in Mauritius where two Spur and four
Panarottis restaurants were opened during the year.
The restaurant footprint at 30 June 2012 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 254 37 291
Panarottis Pizza Pasta 52 11 63
John Dory's Fish Grill Sushi 28 - 28
DoRego's 74 - 74
Total 408 48 456
FINANCIAL PERFORMACE
Franchise revenue in Spur increased by 13.5% to R155.4 million, Panarottis by 12.4% to R13.0 million and John Dory's by 13.4% to
R11.1 million. Franchise revenue in DoRego's amounted to R2.5 million for the four months to June 2012.
Manufacturing and distribution revenue rose by 31.0% to R142.8 million, which includes the addition of the revenue from the
DoRego's distribution centre for the four months to June 2012 of R23.5 million. The group continues to focus on creating efficiencies
following the consolidation of its manufacturing operations into one facility in Cape Town in the previous year.
International revenue, comprising franchise revenue and company-owned restaurant turnover, reflects the improving trading
performance in Africa, Mauritius and the United Kingdom and increased by 23.9% to R144.0 million.
Profit before income tax for the financial year increased by 49.9% to R175.1 million. Comparable profit before income tax, excluding
exceptional and one-off items and the contribution of DoRego's from March 2012, grew by 21.0%. These exceptional and one-off
items relate mainly to the restaurant impairments and start-up costs in new international company-owned restaurants in the prior year,
a bargain purchase gain on the acquisition of DoRego's in the current year and the movement in foreign exchange gains/losses and
share-based payment and related hedge fair value adjustments relative to the prior year.
The group increased headline earnings by 30.4% to R111.8 million, with diluted headline earnings per share growing by 31.4% to
127.95 cents per share. This performance is in line with the earnings guidance provided in the group's trading statement issued on
SENS on 24 August 2012.
A final cash dividend of 47.0 cents per share has been declared, bringing the total dividend for the year to 87.0 cents per share, an
increase of 31.8% on the previous year.
PROSPECTS
The retail trading environment is expected to remain challenging in the year ahead. The group is confident that by focusing
on its core strengths of quality, good value and innovative marketing across all brands, it will remain competitive in the
"eat-out" market.
The integration of the DoRego's brand will give the group exposure to a broader segment of the market. Management plans to
capitalise on the regional brand awareness of DoRego's and expand the current footprint.
The group plans to open eleven new Spur Steak Ranches as well as seven Panarottis Pizza Pasta, eight John Dory's Fish Grill
Sushi and ten DoRego's outlets in South Africa in the 2013 financial year.
A platform for sustainable growth has been built in Africa and expansion includes the opening of second outlets in Nigeria,
Kenya, Tanzania, Swaziland and Zambia. Two further outlets are planned for Namibia, two in Mauritius and one in the Seychelles.
CASH DIVIDEND
Shareholders are advised that the board of directors of the company has, on Wednesday, 5 September 2012, resolved to
declare a final gross cash dividend of R45.9 million for the year ended 30 June 2012, which equates to 47.0 cents per share,
subject to the applicable tax levied in terms of the Income Tax Act (Act No. 58 of 1962 amended) ("dividend tax"), for each
of the 97 632 833 shares in issue.
The dividend has been declared from income reserves. The company has available Secondary Tax on Companies ("STC")
credits in the amount of R2 645 850 which equates to 2.71 cents per share. Consequently, of the dividend declared,
2.71 cents per share will not be subject to dividend tax and 44.29 cents per share may be subject to local dividend tax at
a rate of 15%. The net dividend, after applying the STC credits, is 40.3565 cents per share for shareholders liable to pay
dividend tax. The company's income tax reference number is 9695015033.
The cash dividend will be paid on Monday, 8 October 2012, to those shareholders of the company who are recorded in
the company's register on Friday, 5 October 2012 ("the record date").
The last date to trade "cum dividend" in the company's shares for purposes of entitlement to the dividend will be Friday,
28 September 2012. The shares will commence trading "ex dividend" on Monday, 1 October 2012.
Share certificates may not be dematerialised or rematerialised between Monday, 1 October 2012 and Friday, 5 October 2012,
both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Chief Executive Officer) 5 September 2012
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended %
R'000 30/06/12 30/06/11 change
Revenue 503 444 403 396 24.8
Operating profit before finance income 168 936 111 969 50.9
Net finance income 6 164 4 861
Profit before income tax 175 100 116 830 49.9
Income tax expense (60 718) (48 742)
Profit for the year 114 382 68 088 68.0
Other comprehensive income/(losses): 3 679 860
Foreign currency translation differences for foreign operations (3 603) 2 406
Foreign exchange gain/(loss) on net investments in foreign operations 9 774 (2 075)
Tax on foreign exchange (gain)/loss on net investments in foreign operations (2 492) 529
Total comprehensive income for the year 118 061 68 948 71.2
Profit/(losses) attributable to:
Owners of the company 113 884 70 789 60.9
Non-controlling interest 498 (2 701)
Profit for the year 114 382 68 088 68.0
Total comprehensive income/(losses) attributable to:
Owners of the company 118 208 71 648
Non-controlling interest (147) (2 700)
Total comprehensive income for the year 118 061 68 948 71.2
Per share (cents)
Basic earnings 130.71 80.65 62.1
Diluted earnings 130.34 80.37 62.2
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to ordinary shareholders 113 884 70 789 60.9
Headline earnings adjustments:
Bargain purchase gain (3 694) -
Impairment of goodwill 1 564 4 948
Impairment of property, plant and equipment - 11 169
Loss/(profit) on disposal of property, plant and equipment (net of tax) 41 (1 147)
Headline earnings 111 795 85 759 30.4
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
R'000 at 30/06/12 at 30/06/11
ASSETS
Non-current assets 417 552 371 486
Property, plant and equipment 73 492 70 387
Intangible assets and goodwill 320 986 281 477
Investments and loans 8 818 5 857
Deferred tax 7 776 11 967
Leasing rights 1 826 1 798
Derivative financial assets 4 654 -
Current assets 186 462 184 477
Inventories 10 304 5 621
Tax receivable 5 488 4 410
Trade and other receivables 71 866 58 480
Cash and cash equivalents 98 804 115 966
TOTAL ASSETS 604 014 555 963
EQUITY
Total equity 425 606 408 236
Ordinary share capital 1 1
Share premium 6 6
Shares repurchased by subsidiaries (60 510) (38 941)
Foreign currency translation reserve 54 (4 270)
Retained earnings 490 815 450 507
Total equity attributable to equity holders of the parent 430 366 407 303
Non-controlling interest (4 760) 933
LIABILITIES
Non-current liabilities 80 578 73 090
Long-term loans payable 446 2 923
Employee benefits 4 520 555
Derivative financial liability - 2 627
Operating lease liability 6 564 6 531
Deferred tax 69 048 60 454
Current liabilities 97 830 74 637
Bank overdrafts 1 854 2 256
Tax payable 6 052 6 622
Trade and other payables 89 004 65 147
Shareholders for dividend 920 612
TOTAL EQUITY AND LIABILITIES 604 014 555 963
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
R'000 30/06/12 30/06/11
Operating profit before working capital changes 171 060 144 655
Working capital changes 6 378 2 631
Cash generated from operations 177 438 147 286
Net interest received 6 164 4 861
Tax paid (58 578) (41 149)
Distributions paid (65 108) (54 785)
Net cash flow from operating activities 59 916 56 213
Cash flow from investing activities (72 122) (23 567)
Cash flow from financing activities (4 652) 48
Net movement in cash and cash equivalents (16 858) 32 694
Effect of foreign exchange fluctuations 98 (16)
Net cash and cash equivalents at beginning of year 113 710 81 032
Net cash and cash equivalents at end of year 96 950 113 710
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share capital Retained earnings
& share premium (net Other and non-controlling
R'000 of treasury shares) reserves interest Total
Balance at 1 July 2010 (29 903) (5 129) 438 327 403 295
Total comprehensive income for the year - 859 68 089 68 948
Profit for the year - - 68 088 68 088
Other comprehensive income - 859 1 860
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (9 031) - (54 997) (64 028)
Distributions to equity holders - - (54 298) (54 298)
Impact of incentive scheme (including tax) - - (699) (699)
Own shares acquired (9 031) - - (9 031)
Changes in ownership interests in subsidiaries that
do not result in a loss of control - - 21 21
Acquisition of non-controlling interest in subsidiary - - 21 21
Total transactions with owners (9 031) - (54 976) (64 007)
Balance at 30 June 2011 (38 934) (4 270) 451 440 408 236
Total comprehensive income for the year - 4 324 113 737 118 061
Profit for the year - - 114 382 114 382
Other comprehensive income - 4 324 (645) 3 679
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (21 569) - (65 416) (86 985)
Distributions to equity holders - - (65 416) (65 416)
Impact of incentive scheme (including tax) (5 799) - - (5 799)
Own shares acquired (15 770) - - (15 770)
Changes in ownership interests in subsidiaries that
do not result in a loss of control - - (13 706) (13 706)
Acquisition of non-controlling interests in subsidiaries - - (13 706) (13 706)
Total transactions with owners (21 569) - (79 122) (100 691)
Balance at 30 June 2012 (60 503) 54 486 055 425 606
CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT
Reviewed Audited
year ended year ended %
R'000 30/06/12 30/06/11 change
External revenues
Manufacturing and distribution (refer footnote a) 142 821 109 043 31.0
Franchise - Spur 155 433 137 004 13.5
Franchise - Panarottis 12 952 11 526 12.4
Franchise - John Dory's 11 092 9 782 13.4
Franchise - DoRego's 2 498 -
Other South Africa 34 395 19 710 74.5
Total South Africa segments 359 191 287 065 25.1
Unallocated - South Africa 205 39
Total South Africa 359 396 287 104 25.2
United Kingdom 81 631 65 936 23.8
Australia 53 140 43 464 22.3
Other International 9 277 6 892 34.6
Total International segments 144 048 116 292 23.9
TOTAL EXTERNAL REVENUES 503 444 403 396 24.8
Profit/(loss) before income tax
Manufacturing and distribution (refer footnote a) 55 662 49 633 12.1
Franchise - Spur 136 447 118 712 14.9
Franchise - Panarottis 7 866 6 837 15.1
Franchise - John Dory's 5 818 4 543 28.1
Franchise - DoRego's 928 -
Other South Africa 1 427 (896)
Total South Africa segments 208 148 178 829 16.4
Unallocated - South Africa (refer footnote b) (36 445) (34 022) (7.1)
Total South Africa 171 703 144 807 18.6
United Kingdom (refer footnote c) 694 (27 688)
Australia (refer footnote d) (682) (1 279) 46.7
Other International 5 305 5 226 1.5
Total International segments 5 317 (23 741)
Unallocated - International (refer footnote e) (1 920) (4 236) 54.7
Total International 3 397 (27 977)
TOTAL PROFIT BEFORE INCOME TAX 175 100 116 830 49.9
FOOTNOTES:
a) Includes revenue of R23.485 million and profit before tax of R0.948 million in respect of the DoRego's distribution centre for the current year (refer note 2).
b) Includes a charge in respect of cash-settled share-based payments of R3.965 million (2011: R0.555 million) and a fair value gain in respect of a related
hedge of R7.479 million (2011: fair value loss of R2.627 million). Also includes a bargain purchase gain on the acquisition of DoRego's in the amount of
R3.694 million (refer note 2) and legal costs of R3.171 million relating to the dispute with the former minority shareholder of John Dory's Franchise (Pty) Ltd
in the current year (refer note 3) and a capital profit on disposal of an owner-occupied building of R1.205 million in the prior year.
c) The prior year includes impairment losses of R13.534 million in respect of property, plant and equipment and R4.948 million in respect of goodwill.
d) Includes an impairment of goodwill in the amount of R1.564 million in the current year.
e) Includes a foreign exchange gain of R2.288 million (2011: loss of R0.794 million).
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended %
30/06/12 30/06/11 change
Shares in issue (000's)* 86 256 87 214
Weighted average number of shares in issue (000's) 87 124 87 777
Diluted weighted average number of shares in
issue (000's) 87 377 88 084
Headline earnings per share (cents) 128.32 97.70 31.3
Diluted headline earnings per share (cents) 127.95 97.36 31.4
Net asset value per share (cents) 493.42 468.09 5.4
Dividend per share (cents) 87.00 66.00 31.8
* Shares in issue less shares repurchased by a wholly owned subsidiary company and share incentive special purpose entity.
NOTES
1. Review report The consolidated statement of financial position at 30 June 2012 and the consolidated statement of comprehensive income, statement of changes in equity, segmental analysis
and statement of cash flows for the year then ended, have been reviewed by KPMG Inc. Their unmodified report is available for inspection at the company's registered office.
Basis of Preparation The financial statements for the year ended 30 June 2012 have been prepared in accordance with the recognition and measurement principles of International Financial
Reporting Standards ("IFRS"), the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the AC 500 Standards as issued by the Accounting Practices Board, the
requirements of the South African Companies Act of 2008 and the JSE Listings Requirements. The accounting policies and methods of computation applied in the preparation of these financial
statements are in accordance with IFRS and are consistent with those applied in the preparation of the group's annual financial statements for the year ended 30 June 2011.
2. With effect from 1 March 2012, the group acquired the DoRego's franchise and distribution centre businesses. The consideration for the businesses was R30.0 million (which includes a contingent
consideration of R5 million based on profit targets) and a further R4.4 million for distribution centre inventories on the effective date. The consideration, excluding the contingent consideration,
was settled in cash. The fair value of the identifiable net assets acquired (net of deferred tax) was R37.9 million on the effective date, resulting in a bargain purchase gain of R3.7 million. From
the effective date of the acquisition to 30 June 2012, the businesses contributed a profit before tax of R1.9 million.
3. Pursuant to a settlement agreement concluded between the group and the Kapsimalis Family Trust (which owned a 35% interest in subsidiary John Dory's Franchise (Pty) Ltd ("John Dory's")),
the group acquired the remaining 35% interest in John Dory's with effect from 25 January 2012 for the sum of R12.25 million. The transaction is considered a small related party transaction
in terms of the JSE Listing Requirements. The terms of the acquisition were considered fair, as far as the company's shareholders are concerned, by an independent professional expert. Refer
SENS announcements of 7 March 2012 and 26 January 2012 for further details.
Directors
Executive Chairman: A Ambor
Chief Executive Officer: P van Tonder
Executive: M Farrelly, R van Dijk
Non-executive: K Getz, D Hyde, M Kuzwayo,
K Madders MBE (British), M Morojele
Company secretary: R van Dijk
Spur Corporation Limited (Registration number 1998/000828/06)
Share code: SUR ISIN: ZAE000022653
Registered Office: 14 Edison Way, Century Gate Business Park, Century City, 7441
Transfer Secretaries: Computershare Investor Services (Pty) Ltd,
70 Marshall Street, Johannesburg, 2001
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spurcorporation.co.za
Date: 06/09/2012 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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