SUR 201309120019A
Reviewed condensed consolidated results and cash dividend declaration for the year ended 30 June 2013
Spur Corporation Limited
Incorporated in the Republic of South Africa
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
Reviewed condensed consolidated results and cash dividend declaration for the year ended
30 June 2013
- Revenue up 29.7%
- Diluted HEPS up 22.4%
- Dividend per share up 27.6%
Prepared under the supervision of the Chief Financial Officer, Ronel van Dijk CA(SA)
TRADING PERFORMANCE
Spur Corporation produced an excellent set of results in difficult trading conditions. In the
face of mounting pressure on consumers, a strong performance across all brands saw Spur
Corporation increase revenue by 29.7% to R653.0 million in the year ended 30 June 2013.
Revenue growth was bolstered by the inclusion of the Captain DoRegos chain and distribution
centre from 1 March 2012 and the acquisition by the group of two previously franchised Spur
outlets in England and Ireland during the year.
Total restaurant sales across the group showed solid growth, increasing by 16.4% in total,
and by 15.4% in South Africa despite the weak consumer economy.
Spur Steak Ranches lifted sales by 15.2% through the continued success of the breakfast and
weekday promotions, and the upgrading of kids play facilities in restaurants. The Spur
Family Card continues to drive sales growth, with membership of the loyalty programme
increasing to 1.4 million by year end. Turnover from existing Spur restaurants increased by
13.0%. Fourteen new Spur restaurants were opened in South Africa during the year. Management
contained the menu price increase in Spur to 3.6% despite the high levels of food price
inflation over the past year.
Sales in Panarottis increased by 31.4%, with turnover from existing outlets growing by 22.4%.
The brands strong performance was driven by positive consumer response to its weekday and
breakfast specials, supported by targeted revamps of existing outlets and the introduction
and improvement of kids play facilities. Ten new restaurants were opened during the year,
including four Panarottis Pizza Express outlets, while a further seven were refurbished.
John Dorys grew sales by 11.4% as customers responded positively to the innovative marketing
campaigns, the new menu offering and weekday specials. Two new restaurants were opened and
nine revamped during the period.
Captain DoRegos has now been fully integrated into the group and generated restaurant sales
of R191.1 million and distribution centre sales of R72.6 million in its first full year of
inclusion. No comparative sales performance is reported as the business was only acquired in
March 2012. Eleven new outlets were opened and management has focused on enhancing the brand
image, menu offering and product quality.
Sales in the international operations increased by 24.7% in Rand terms, benefiting from the
depreciation of the Rand against major currencies over the past year. Total sales in local
currencies increased by 14.0% and by 7.7% in existing outlets as the performance of the UK
operation continued to improve.
Africa continues to deliver stable growth while trading conditions and revenues have remained
static in Australia.
The Spur outlets in Staines (England) and Dublin (Ireland) were converted to company-owned
restaurants during the past year. All eight restaurants in the UK and Ireland are now
company-owned. A new Spur restaurant was opened in Nairobi (Kenya) and a Panarottis Express
outlet was opened in Mauritius. The first international Captain DoRegos outlets were opened
in Namibia and Mauritius.
The group continues to expand as viable opportunities arise, opening a net 23 new restaurants
in the past year and relocating three to improved trading sites. Customer experience remains
a key focus and 55 Spur outlets were refurbished with a franchisee investment of
approximately R40 million, and this has resulted in positive revenue growth in these outlets.
The restaurant footprint at 30 June 2013 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 267 36 303
Panarottis Pizza Pasta 61 12 73
John Dorys Fish Grill Sushi 29 29
Captain DoRegos 72 2 74
Total 429 50 479
FINANCIAL PERFORMANCE
Franchise revenue showed impressive growth, with Spur growing 15.5% to R179.5 million,
Panarottis increasing 28.9% to R16.7 million and John Dorys rising 5.6% to R11.7 million.
Franchise revenue in Captain DoRegos amounted to R9.2 million.
Manufacturing and distribution revenue increased 49.6% to R213.7 million. This increase was
supported by the inclusion of the Captain DoRegos distribution centre for the full year,
which generated revenue of R72.6 million compared to the prior years R23.5 million for the
four months from acquisition. Product volumes in the groups sauce manufacturing facility
also grew well. The upgrading of the central kitchen facility has been completed and a new
sauce bottling plant was commissioned during the year.
International revenue, comprising franchise revenue and company-owned restaurant turnover,
increased 32.8% to R191.4 million. Revenue benefitted from the conversion of the two Spur
outlets in England and Ireland to company-owned restaurants during the year. The board has
taken a prudent decision to impair the assets of the Panarottis outlet in Tuggerah
(Australia) owing to the challenging trading performance.
Profit before income tax increased by 11.4% to R195.1 million. This includes a net gain of
R10.7 million (2012: R3.5 million) related to the groups share appreciation rights incentive
scheme and a foreign exchange currency loss of R6.5 million compared to a gain of R2.3
million in 2012.
Comparable profit before income tax, excluding the impact of the groups long-term incentive
scheme, the R2.2 million impairment of Panarottis Tuggerah, start-up costs in international
company-owned outlets, as well as foreign exchange gains/losses and other one-off items in
the current and comparable periods, but including the impact of the Captain DoRegos business,
increased by 15.8%.
Headline earnings increased 20.6% to R134.8 million, with diluted headline earnings per share
growing 22.4% to 156.6 cents. This performance is in line with the earnings guidance provided
in the groups trading statement issued on SENS on 4 September 2013.
The board has declared a final cash dividend of 56.0 cents per share, bringing the total
dividend for the year to 111.0 cents, an increase of 27.6% on the previous year.
PROSPECTS
Economic uncertainty and sustained pressure on disposable income in the groups target
markets are likely to remain for the foreseeable future. Spur, Panarottis, John Dorys and
Captain DoRegos will continue to deliver excellent quality meals at a reasonable price, great
service and an enjoyable family environment.
The successful weekday promotions strategy and ability to capitalise on the momentum created
in the breakfast market will be key in attracting and retaining customers and driving sales
growth.
At least 26 new restaurant openings are planned across the four brands in South Africa in the
2014 financial year. This includes six Spur, five Panarottis, four John Dorys and seven
Captain DoRegos outlets to be opened in the first half of the year. International expansion
will again focus on building our presence in Africa, with new restaurants planned for
Swaziland, Nigeria, Tanzania, Namibia and the Seychelles. Two new Spur franchised
restaurants will be opened in Australia in the year ahead.
CASH DIVIDEND
Shareholders are advised that the board of directors of the company has, on Wednesday,
11 September 2013, resolved to declare a gross cash dividend for the year ended 30 June 2013
of R54.7 million, which equates to 56.0 cents per share for each of the 97 632 833 shares in
issue, subject to the applicable tax levied in terms of the Income Tax Act (Act No. 58 of
1962 amended) (dividend tax) of 15%.
The dividend has been declared from income reserves. The net dividend is 47.6 cents per share
for shareholders liable to pay dividend tax. The companys income tax reference number is
9695015033.
In accordance with the provisions of Strate, the electronic settlement and custody system
used by the JSE Limited, the relevant dates for the dividend are as follows:
Event Date
Last day to trade cum dividend Friday, 27 September 2013
Shares commence trading ex dividend Monday, 30 September 2013
Record date Friday, 4 October 2013
Payment date Monday, 7 October 2013
Those shareholders of the company who are recorded in the companys register as at the record
date will be entitled to the dividend. Share certificates may not be dematerialised or
rematerialised between Monday, 30 September 2013 and Friday, 4 October 2013, both days
inclusive.
For and on behalf of the Board
A Ambor (Exexcutive Chairman)
P van Tonder (Chief Executive Officer)
Cape Town
11 September 2013
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended %
R000 30 June 2013 30 June 2012 change
Revenue 653 027 503 444 29.7
Operating profit before finance income 189 186 168 936 12.0
Net finance income 5 871 6 164
Profit before income tax 195 057 175 100 11.4
Income tax expense (63 237) (60 718)
Profit for the year 131 820 114 382 15.2
Other comprehensive income/(losses): 17 948 3 679
Foreign currency translation differences for foreign
operations 25 948 (3 603)
Foreign exchange (loss)/gain on net investments in
foreign operations (10 666) 9 774
Tax on foreign exchange loss/(gain) on net investments
in foreign operations 2 666 (2 492)
Total comprehensive income for the year 149 768 118 061 26.9
Profit/(losses) attributable to:
Owners of the company 132 284 113 884 16.2
Non-controlling interest (464) 498
Profit for the year 131 820 114 382 15.2
Total comprehensive income attributable to:
Owners of the company 150 951 118 208 27.7
Non-controlling interest (1 183) (147)
Total comprehensive income for the year 149 768 118 061 26.9
Per share (cents)
Basic earnings 153.66 130.71 17.6
Diluted earnings 153.66 130.34 17.9
Distribution per share 111.00 87.00 27.6
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to ordinary shareholders 132 284 113 884 16.2
Headline earnings adjustments:
Impairment of property, plant and equipment 1 750
Impairment of goodwill 1 564
Bargain purchase gain (refer note 4) (3 694)
(Profit)/loss on disposal of property, plant and
equipment (net of tax) (29) 41
Reclassification of foreign currency loss from other
comprehensive income to profit on deregistration
of foreign operation 842
Headline earnings 134 847 111 795 20.6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
R000 at 30 June 2013 at 30 June 2012
ASSETS
Non-current assets 449 180 417 552
Property, plant and equipment 76 878 73 492
Intangible assets and goodwill 321 698 320 986
Investments and loans 13 880 8 818
Deferred tax 9 347 7 776
Leasing rights 5 290 1 826
Derivative financial asset 22 087 4 654
Current assets 239 309 186 462
Inventories 17 020 10 304
Tax receivable 8 134 5 488
Trade and other receivables 86 356 71 866
Derivative financial asset 15 703
Cash and cash equivalents 112 096 98 804
TOTAL ASSETS 688 489 604 014
EQUITY
Total equity 470 858 425 606
Ordinary share capital 1 1
Share premium 6 6
Shares repurchased by subsidiaries (77 235) (60 510)
Foreign currency translation reserve 18 721 54
Retained earnings 535 248 490 815
Total equity attributable to equity holders of the parent 476 741 430 366
Non-controlling interest (5 883) (4 760)
LIABILITIES
Non-current liabilities 90 236 80 578
Long-term loans payable 423 446
Employee benefits 12 048 4 520
Operating lease liability 5 481 6 564
Deferred tax 72 284 69 048
Current liabilities 127 395 97 830
Bank overdrafts 1 605 1 854
Tax payable 4 132 6 052
Trade and other payables 105 214 89 004
Employee benefits 16 117
Shareholders for dividend 327 920
TOTAL EQUITY AND LIABILITIES 688 489 604 014
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
R000 at 30 June 2013 at 30 June 2012
Operating profit before working capital changes 200 302 171 060
Working capital changes 2 958 6 378
Cash generated from operations 203 260 177 438
Net interest received 5 871 6 164
Tax paid (60 675) (58 578)
Distributions paid (88 444) (65 108)
Net cash flow from operating activities 60 012 59 916
Cash flow from investing activities (44 113) (72 122)
Cash flow from financing activities (2 076) (4 652)
Net movement in cash and cash equivalents 13 823 (16 858)
Effect of foreign exchange fluctuations (282) 98
Net cash and cash equivalents at beginning of year 96 950 113 710
Net cash and cash equivalents at end of year 110 491 96 950
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share Retained
capital & share earnings and
premium (net of Other non-controlling
R000 treasury shares) reserves interest Total
Balance at 1 July 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 interest
in subsidiary (refer note 5) (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
Total comprehensive income for the year 18 667 131 101 149 768
Profit for the year 131 820 131 820
Other comprehensive income 18 667 (719) 17 948
Transactions with owners, recorded
directly in equity
Contributions by and distributions to
owners (16 725) (87 851) (104 576)
Distributions to equity holders (87 851) (87 851)
Own shares acquired (16 725) (16 725)
Changes in ownership interests in
subsidiaries that do not result
in a loss of control 60 60
Acquisition of subsidiary (refer note 2) 60 60
Total transactions with owners (16 725) (87 791) (104 516)
Balance at 30 June 2013 (77 228) 18 721 529 365 470 858
CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT
Reviewed Audited
year ended year ended %
R000 30 June 2013 30 June 2012 change
External revenues
Manufacturing and distribution (refer footnote a) 213 712 142 821 49.6
Franchise Spur 179 464 155 433 15.5
Franchise Panarottis 16 692 12 952 28.9
Franchise John Dorys 11 712 11 092 5.6
Franchise Captain DoRegos 9 174 2 498 267.3
Other South Africa 30 399 34 395 (11.6)
Total South Africa segments 461 153 359 191 28.4
Unallocated South Africa 515 205 151.2
Total South Africa 461 668 359 396 28.5
United Kingdom 118 353 81 631 45.0
Australia 60 632 53 140 14.1
Other International 12 374 9 277 33.4
Total International segments 191 359 144 048 32.8
TOTAL EXTERNAL REVENUES 653 027 503 444 29.7
Profit/(loss) before income tax
Manufacturing and distribution (refer footnote a) 59 525 55 662 6.9
Franchise Spur 158 818 136 447 16.4
Franchise Panarottis 9 874 7 866 25.5
Franchise John Dorys 6 629 5 818 13.9
Franchise Captain DoRegos 3 838 928 313.6
Other South Africa 92 1 427 (93.6)
Total South Africa segments 238 776 208 148 14.7
Unallocated South Africa (refer footnote b) (35 690) (36 445) 2.1
Total South Africa 203 086 171 703 18.3
United Kingdom (refer footnote c) (1 006) 694 (245.0)
Australia (refer footnote d) (2 194) (682) (221.7)
Other International 7 487 5 305 41.1
Total International segments 4 287 5 317 (19.4)
Unallocated International (refer footnote e) (12 316) (1 920) (541.5)
Total International (8 029) 3 397 (336.4)
TOTAL PROFIT BEFORE INCOME TAX 195 057 175 100 11.4
FOOTNOTES:
a) Includes revenue of R72.625 million (2012: R23.485 million) and profit before tax of R1.949
million (2012: R0.948 million) in respect of the Captain DoRegos distribution centre
(refer note 4).
b) Includes a charge in respect of cash-settled share-based payments of R23.645 million
(2012: R3.965 million) and a fair value gain in respect of a related hedge of R34.357 million
(2012: R7.479 million) relating to the groups long-term share-linked retention scheme; legal
costs and professional fees of R1.424 million (2012: R3.171 million) relating to the dispute
with the former minority shareholder of John Dorys Franchise (Pty) Ltd and the related
Financial Services Board investigation (which investigation was concluded during the year and
the company vindicated of any wrong doing). The prior year also includes a bargain purchase
gain on the acquisition of Captain DoRegos in the amount of R3.694 million (refer note 4) and
due diligence costs in respect of the Captain DoRegos acquisition and other potential
acquisitions which were not progressed, in the amount of R0.745 million.
c) Includes initial start-up and trading losses in the current year in respect of Two Rivers Spur
(Staines, England), Rapid River Spur (Dublin, Ireland) and Trinity Leasing in the amount of
R2.773 million in aggregate (refer notes 2 and 3). The prior year includes a fair value gain on
the realisation of collateral of R0.843 million (refer note 6).
d) Includes an impairment of property, plant and equipment relating to Panarottis Tuggerah of
R2.188 million. The prior year includes an impairment of goodwill in the amount of R1.564
million relating to the same cash-generating unit.
e) The current year includes losses amounting to R1.052 million in winding up certain of the
groups Australian equity-accounted associates which ceased trading in previous years. Also
includes a foreign exchange loss of R6.518 million (2012: gain of R2.288 million). The foreign
exchange loss for the current year includes the reclassification of net foreign currency losses
from other comprehensive income to profit on the deregistration of Larkspur Four Limited, a UK
foreign operation which previously traded the Yellowstone Spur in Derby, England (which ceased
trading in December 2010), amounting to R0.842 million.
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended %
30 June 2013 30 June 2012 change
Shares in issue (000s)* 85 633 86 256
Weighted average number of shares in issue (000s) 86 090 87 124
Diluted weighted average number of shares in issue (000s) 86 090 87 377
Headline earnings per share (cents) 156.64 128.32 22.1
Diluted headline earnings per share (cents) 156.64 127.95 22.4
Net asset value per share (cents) 549.86 493.42 11.4
Dividend per share (cents) 111.00 87.00 27.6
* Shares in issue less shares repurchased by a wholly owned subsidiary company and special purpose
entity.
NOTES
1. Review report The consolidated statement of financial position at 30 June 2013 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 companys registered office. Basis of
Preparation The financial statements for the year ended 30 June 2013 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 SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
the requirements of the South African Companies Act (No. 71 of 2008) 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 are consistent with
those applied in the preparation of the groups annual financial statements for the year ended
30 June 2012.
2. With effect from 1 October 2012, the group acquired a 90% interest in Trinity Leasing Limited
(Trinity Leasing) for £40 000 (the equivalent of R0.538 million) from Trinity Leisure Limited
(Trinity Leisure), the company that previously held the master franchise rights for the group
in the United Kingdom. Trinity Leasing owns the lease in respect of the former Arapaho Spur in
Staines, England, which restaurant ceased trading and was liquidated prior to the transaction
in question. Trinity Leasing also owned the tangible assets of the former Arapaho Spur at the
time of the transaction, which assets were, subsequent to the transaction, sold to a wholly-
owned group entity. The group concluded the transaction in order to secure the trading site of
the former Arapaho Spur. The group now trades a new restaurant, Two Rivers Spur, in the same
location, through a wholly-owned subsidiary. The purchase consideration was settled by way of a
reduction of the pre-existing loan receivable from Trinity Leisure. The fair value of the
identifiable assets and liabilities acquired was R0.598 million at the date of the acquisition
and comprised: R0.067 million for property, plant and equipment; R0.037 million for inventory;
R0.934 million for leasing rights; R0.666 million for trade and other receivables; R0.844
million for trade and other payables; and a deferred tax liability on fair value adjustments of
R0.262 million. The fair value of identifiable assets and liabilities attributable to non-
controlling interests was R0.060 million. Subsequent to the acquisition, Trinity Leasing
earned revenue of R1.754 million (all of which was intercompany and has been eliminated on
consolidation) and incurred a loss of R0.059 million which is included in profit. Trinity
Leasing is not expected to contribute significantly to group revenue or profits in future, as
all income is intercompany.
3. With effect from 1 April 2013, the group acquired the lease of the site at which the Iowa Spur
in Dublin, Ireland previously traded, for £177 000 (the equivalent of R2.453 million). Iowa
Spur was previously owned and operated by a subsidiary of Trinity Leisure but ceased trading in
December 2012. The lease was acquired from a subsidiary of Trinity Leisure and the
consideration for the lease was settled by way of a reduction in the pre-existing loan
receivable from Trinity Leisure. A new restaurant, Rapid River Spur, commenced trading (through
a wholly-owned subsidiary of the group) at the site in April 2013.
4. In the prior year and with effect from 1 March 2012, the group acquired the Captain DoRegos
fast food franchise and distribution centre businesses. The fair value of the identifiable net
assets acquired (net of deferred tax) was R37.918 million on the effective date, resulting in
a bargain purchase gain of R3.694 million included in profit in the prior year.
5. In the prior year and with effect from 25 January 2012, the group acquired the 35% interest in
John Dorys Franchise (Pty) Ltd held by the non-controlling shareholder of that company
resulting in the group owning 100% of the subsidiary.
6. In the prior year and with effect from 30 June 2012, the group acquired the 10% interest in
Larkspur One Ltd (which trades Cheyenne Spur, in the O2 Dome in London, England) held by the
non-controlling shareholder of that company resulting in the group owning 100% of the
subsidiary. Ownership of the shares was assumed after the non-controlling shareholder
absconded and defaulted on a loan advanced by the group for which the shares served as
collateral. The transaction resulted in a fair value gain on the realisation of collateral of
R0.843 million recognised in profit in the prior year.
7. With reference to the contingent liability referred to in note 41 on page 140 of the annual
integrated report for the year ended 30 June 2012, the South African Revenue Service has
issued the group with assessments in respect of income relating to controlled foreign companies
of the group in the amount of R2.842 million (comprising income tax of R2.273 million and
interest of R0.569 million) for the 2009, 2010 and 2011 years of assessment. Management has
objected to the assessments and is confident that it is able to defend the assessments.
Following the objection process, should any amount of tax be payable, it is expected that the
tax liability will be substantially less than that assessed. Consequently, a liability has not
been raised in respect of the assessments issued.
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)
Our Brand Family
Spur Steak Ranches
Panarottis Pizza Pasta
John Dorys Fish Grill Sushi
Captain DoRegos Chicken Fish Burgers
www.spurcorporation.co.za
Date: 12/09/2013 12:00:00 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
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