SPUR CORPORATION LIMITED - Unaudited condensed consolidated results and cash dividend declaration for the six months ended 31 December 2013
27 February 2014 12:00
SUR 201402270022A
Unaudited condensed consolidated results and cash dividend declaration for the six months ended 31 December 2013

Spur Corporation Limited
Incorporated in the Republic of South Africa
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653

UNAUDITED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
RESULTS COMMENTARY
TRADING PERFORMANCE
Spur Corporation increased revenue by 10.4% to R376.0 million in the six months ended
31 December 2013, driven by a 16.1% increase in restaurant sales from international operations
(in rand terms), strong performances locally by Panarottis Pizza Pasta and John Dory’s Fish
Grill Sushi and another solid performance by Spur Steak Ranches.
Total restaurant sales increased by 11.5% to R2.8 billion.

Sales at Spur Steak Ranches (+10.0%), Panarottis Pizza Pasta (+26.2%) and John Dory’s
Fish Grill Sushi (+19.3%) were pleasing in the current consumer environment. Franchisees
across the portfolio continued to invest in refurbishments, upgrades and children’s
entertainment facilities. Innovative marketing campaigns, promotions, dynamic branding
and menu improvements have contributed to the group’s ability to appeal consistently to
a range of consumers.

Captain DoRegos’ restaurant sales performance (-9.2%) reflects the economic pressure
experienced by its lower LSM target market. Six redundant outlets were closed and four
opened during the period, bringing the total number of outlets in South Africa to 70
(contributing 3.3% of the group’s total restaurant sales). With continuous investment in
marketing the brand, the group is confident of growing its appeal to a broad customer base
and that it will perform optimally once fully integrated.
International restaurant sales sustained positive growth. Two Spur franchised outlets were
opened in Tanzania and Swaziland during the period. The group continues to expand in
countries where it has an existing presence, with Namibia being the strongest performer
over the reporting period. Restaurant sales in the United Kingdom and Australia remained
steady in local currencies.

A total of 13 (net) new restaurants opened across the four brands during the period,
increasing the number of restaurants to 492, of which 49 operate outside of South Africa.


The restaurant footprint at 31 December 2013 is as follows:

Franchise brand                          South Africa         International            Total
Spur Steak Ranches                                272                    36              308
Panarottis Pizza Pasta                             69                    11               80
John Dory’s Fish Grill Sushi                       32                     –               32
Captain DoRegos                                    70                     2               72
Total                                             443                    49              492

FINANCIAL PERFORMANCE

Local franchise revenue increased by 11.0% following increases in revenue at Spur (+9.4%),
Panarottis (+29.2%) and John Dory’s (+23.0%) and a decline of 4.5% in revenue at Captain
DoRegos.
Margins came under pressure in Spur, Panarottis and John Dory’s. This was in part due to the
increased investment in staff retention and development to facilitate longer-term growth. The
group also increased its contributions to the franchisee marketing funds to sustain market
exposure in a period of increased competition.
As part of the integration of Captain DoRegos into the group, the distribution centre in
Bloemfontein was closed in November 2013 and distribution operations absorbed into the group’s
existing outsourced logistics operation. Manufacturing and distribution revenue consequently
declined by 9.6% to R102.3 million. Profitability of the division was impacted by the resulting
retrenchment of employees, the sale of redundant assets at a loss and the increased cost of
working during the transitional period at an aggregate cost of R1.2 million. In addition,
profitability in the group’s sauce factory was impacted by increases in raw material costs which
were not passed on to franchisees to limit the impact on franchisee profitability.
International revenue, comprising franchise revenue and restaurant turnover from company-owned
restaurants in the UK and Australia, showed good growth, and benefited from the weakening rand
over the period. The international operations posted a modest return to profitability, although
at a lower margin than the local businesses.
Comparable profit before income tax, excluding exceptional and one-off items, increased by 5.5%.
These items include an increase in foreign exchange losses of R2.2 million, costs of R1.2 million
in respect of the closure of the Captain DoRegos distribution centre (referred to above) and an
unfavourable swing of R11.3 million in the cost of the group’s long-term share incentive scheme
(including the related hedge). Although the current and prior reporting periods are impacted by
the accounting treatment of the employee liability and related hedge, the cash flow cost of the
long-term incentive scheme for the period amounts to R2.6 million.
Group headline earnings decreased by 6.1% to R72.9 million, with diluted headline earnings per
share decreasing by 5.5% to 85.1 cents. The interim dividend was increased by 3.6% to 57.0 cents
per share.
PROSPECTS
The group will open a further seven restaurants internationally while locally six Spur, four
Panarottis, two John Dory’s and four Captain DoRegos outlets will be opened by the end of the
financial year. The planned international openings include additional franchised Spur restaurants
in Nigeria, Zambia and Tanzania and two further Spur and two Captain DoRegos outlets in Namibia.
Financial pressures on consumers are expected to continue in the months ahead, compounded by
the recent increase in interest rates. The group will continue to focus on rewarding its
customers with great value and an excellent dining experience to maintain and grow its market
share.
The purchase of the Western Cape-based Hussar Grill chain, effective from 1 January 2014, has
been welcomed by the Spur Corporation franchisees. Hussar Grill, operating since 1964, provides
a strong growth opportunity for the group with the potential for the chain to be expanded
nationally.
CASH DIVIDEND

Shareholders are advised that the board of directors of the company has, on Wednesday, 26
February 2014, resolved to declare an interim gross cash dividend for the six-month period to
31 December 2013 of R55.7 million, which equates to 57 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 48.45 cents per share
for shareholders liable to pay dividend tax. The company’s 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’                                     Thursday,   20   March   2014
Shares commence trading ‘ex dividend’                                  Monday,   24   March   2014
Record date                                                            Friday,   28   March   2014
Payment date                                                           Monday,   31   March   2014
Those shareholders of the company who are recorded in the company’s register as at the record date
will be entitled to the dividend.

Share certificates may not be dematerialised or rematerialised between Monday, 24 March 2014, and
Friday, 28 March 2014, both days inclusive.

For and on behalf of the Board

A AMBOR (Executive Chairman)
P VAN TONDER (Chief Executive Officer)

26 February 2014
Cape Town


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

                                                      Restated
                                    Unaudited        unaudited
                                   six months       six months                       Restated
                                        ended            ended                      unaudited
                                  31 December      31 December            %        year ended
R’000                                    2013             2012       change      30 June 2013
Revenue                               375 988          340 621         10.4             671 552
Operating profit before finance
  income                              101   176        108   840       (7.0)            190   630
Net finance income                      3   590          2   782                          5   909
Profit before income tax              104   766        111   622       (6.1)            196   539
Income tax expense                    (31   183)       (33   770)                       (63   237)
Profit for the period                  73   583         77   852       (5.5)            133   302
Other comprehensive
  income/(losses)*:                     10 602             4 607                         17 913
Foreign currency translation
  differences for foreign
  operations                            13 059             6 338                         25 913
Foreign exchange loss on net
  investments in foreign operations     (3 276)            (2 308)                      (10 666)
Tax on foreign exchange loss on
  net investments in foreign
  operations                                819              577                          2 666
Total comprehensive income for
  the period                            84 185             82 459       2.1             151 215

Profit attributable to:
  Owners of the company                 72 777             77 633      (6.3)            132 624
  Non-controlling interest                 806                219                           678
Profit for the period                   73 583             77 852      (5.5)            133 302
Total comprehensive income/
  (losses) attributable to:
  Owners of the company               83 446             82 541          1.1          151 317
  Non-controlling interest               739                (82)                         (102)
Total comprehensive income for
  the period                          84 185             82 459          2.1          151 215
* All items included in other comprehensive income are items that are or may be reclassified
to profit or loss.
Per share (cents)
  Basic earnings                       84.99              90.15         (5.7)          154.05
  Diluted earnings                     84.99              90.15         (5.7)          154.05


RECONCILIATION OF HEADLINE EARNINGS
                                                      Restated
                                   Unaudited         unaudited
                                  six months        six months                        Restated
                                       ended             ended                       unaudited
                                 31 December       31 December             %        year ended
R’000                                   2013              2012        change      30 June 2013
Profit attributable to ordinary
  shareholders                        72 777             77 633        (6.3)          132 624
Headline earnings adjustments:
  Impairment of property, plant
    and equipment                          –                    –                       1 750
  Bargain purchase gain                  (45)                   –                           –
  Loss/(profit) on disposal of
    property, plant and equipment
    (net of tax)                         172                   (17)                       (29)
  Reclassification of foreign
    currency loss from other
    comprehensive income to profit
    on deregistration of foreign
    operation                              –                  –                           842
Headline earnings                     72 904             77 616        (6.1)          135 187


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

                                                      Restated            Restated
                                 Unaudited at     unaudited at        unaudited at
                                  31 December      31 December             30 June
R’000                                    2013             2012                2013

ASSETS
Non-current assets                    447   299          435   246        451   447
Property, plant and equipment          80   495           77   070         79   775
Intangible assets and goodwill        324   166          323   225        323   633
Investments and loans                  16   142            6   311         11   315
Deferred tax                           11   603            7   580          9   347
Leasing rights                          5   483            1   774          5   290
Derivative financial asset              9   410           19   286         22   087
Current assets                        286   045          238 099          244   766
Inventories                            13   512           10 387           17   156
Tax receivable                          9   682            6 479            8   134
Trade and other receivables           103   612           92 753           88   949
Derivative financial asset             19   315                –           15   703
Cash and cash equivalents             139   924          128 480          114   824
TOTAL ASSETS                          733 344            673 345          696 213
EQUITY
Total equity                          508 712            462 327          472 526
Ordinary share capital                      1                  1                1
Share premium                               6                  6                6
Shares repurchased by
  subsidiaries                        (77 235)           (65 929)         (77 235)
Foreign currency translation
  reserve                              29 303              4 849           18 634
Retained earnings                     560 883            528 380          536 060
Total equity attributable to
  equity holders of the parent        512 958            467 307          477 466
Non-controlling interest              (4 246)             (4 980)          (4 940)


LIABILITIES
Non-current liabilities                81 579            90 355            90 236
Long-term loans payable                   459               429               423
Employee benefits                       6 021            13 110            12 048
Operating lease liability               3 564             6 051             5 481
Deferred tax                           71 535            70 765            72 284


Current liabilities                   143 053            120 663          133 451
Bank overdrafts                         2 147              1 839            1 605
Tax payable                              2 390               7 716          4 132
Trade and other payables               122 810             110 704        111 270
Employee benefits                       15 334                   –         16 117
Shareholders for dividend                  372                 404            327
TOTAL EQUITY AND LIABILITIES           733 344             673 345        696 213


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                           Restated       Restated
                                     Unaudited            unaudited      unaudited
                                    six months           six months     six months
                                         ended                ended          ended
                                   31 December          31 December        30 June
R’000                                     2013                 2012           2013

Operating profit before working
 capital changes (a)                    92   721           111   507      202   914
Working capital changes                  3   182            (1   893)       1   320
Cash generated from operations          95   903           109   614      204   234
Net interest received                    3   590             2   782        5   909
Tax paid                               (34   740)          (29   730)     (60   675)
Distributions paid                     (47   909)          (41   056)     (88   444)

Net cash flow from operating
  activities                             16 844             41 610         61 024
Net cash flow from investing
  activities (b)                         11 438            (11 737)       (44 804)
Net cash flow from financing
  activities                             (3 654)            (2 438)        (2 076)
Net movement in cash and cash
  equivalents                            24 628             27 435         14 144
Effect of foreign exchange
  fluctuations                               (70)             (151)          (282)
Net cash and cash equivalents at
  beginning of period                  113 219              99 357         99 357
Net cash and cash equivalents at
  end of period                        137 777             126 641        113 219

FOOTNOTES:

a) Includes a gross cash outflow of R23.357 million (2012: Rnil; year ended 30 June 2013: Rnil)
in respect of the settlement of the share appreciation rights granted in terms of the group’s
long-term share incentive scheme (refer note 4).
b) Includes a gross cash inflow of R20.794 million (2012: R0.395 million; year ended 30 June
2013: R1.221 million) arising from the economic hedging instrument utilised by the group for its
long-term share incentive scheme (refer note 4).


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


                                    Ordinary share                         Retained
                                       capital and                         earnings
                                     share premium                         and non-
                                  (net of treasury            Other     controlling
R’000                                      shares)         reserves        interest      Total


Balance at 1 July 2012 – restated         (60 503)               (59)      486 389     425 827
Total comprehensive income for the
  year – restated                                   –        18 693        132 522     151 215
Profit for the year – restated                      –             –        133 302     133 302
Other comprehensive income                          –        18 693           (780)     17 913
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                           –              –             60         60
Total transactions with owners            (16 725)                 –       (87 791)    (104 516)
Balance at 30 June 2013 – restated        (77 228)           18 634        531 120     472 526
Total comprehensive income for the
  period                                            –        10 669         73 516      84 185
  Profit for the period                             –             –         73 583      73 583
  Other comprehensive income                        –        10 669            (67)     10 602
Transactions with owners, recorded
  directly in equity
Contributions by and distributions
  to owners                                      –              –         (47 954)     (47 954)
Distributions to equity holders                  –              –         (47 954)     (47 954)

Changes in ownership interests in
  subsidiaries that do not result in a
  loss of control                                –              –             (45)           (45)
Acquisition of non-controlling interest
  in subsidiary (refer note 2)                   –              –             (45)           (45)
Total transactions with owners                   –              –         (47 999)     (47 999)

Balance at 31 December 2013               (77 228)       29 303           556 637      508 712

CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT

                                                         Restated                      Restated
                                       Unaudited        unaudited                     unaudited
                                      six months       six months                    six months
                                           ended            ended                         ended
                                     31 December      31 December             %         30 June
R’000                                       2013             2012        change            2013

External revenues
Manufacturing and distribution (a)        102 270         113 088          (9.6)       213 712
Franchise – Spur                          100 737          92 114           9.4        179 464
Franchise – Panarottis                     10 826           8 382          29.2         16 692
Franchise – John Dory’s                     7 192           5 847          23.0         11 712
Franchise – Captain DoRegos                 4 690           4 912          (4.5)         9 174
Other South Africa                         22 592          16 070          40.6         30 399
Total South Africa segments               248 307         240 413           3.3        461 153
Unallocated                                    38              98         (61.2)           515
Total South Africa                        248 345         240 511           3.3        461 668

United Kingdom                             77   795        55   521        40.1        118   353
Australia                                  42   754        38   464        11.2         79   157
Other International                         7   094         6   125        15.8         12   374
Total International                       127   643       100   110        27.5        209   884

TOTAL EXTERNAL REVENUES                   375 988         340 621          10.4        671 552

Profit/(loss) before income tax
Manufacturing and distribution (a)        30  708          33 043          (7.1)        59 525
Franchise – Spur                          89  919          82 492           9.0        158 818
Franchise – Panarottis                     6  754           5 291          27.7          9 874
Franchise – John Dory’s                    4  225           3 474          21.6          6 629
Franchise – Captain DoRegos                1  903           2 353         (19.1)         3 838
Other South Africa                            167             274         (39.1)            92
Total South Africa segments               133 676         126 927           5.3        238 776
Unallocated – South Africa (b)            (29 597)        (15 117)        (95.8)       (34 889)
Total South Africa                        104 079         111 810          (6.9)       203 887

United Kingdom (c)                         2 206              993         122.2         (1   006)
Australia (d)                                825              470          75.5         (1   513)
Other International                        4 151            3 652          13.7          7   487
Total International segments               7 182            5 115          40.4          4   968
Unallocated – International (e)           (6 495)          (5 303)        (22.5)       (12   316)
Total International                          687             (188)        465.4         (7   348)

TOTAL PROFIT BEFORE INCOME TAX            104 766         111 622          (6.1)       196 539
FOOTNOTES:
a) Includes revenue of R22.696 million (2012: R39.200 million; year ended 30 June 2013: R72.625
million) and loss before tax of R0.967 million (2012: profit of R1.435 million; year ended 30 June
2013: R1.949 million) relating to the Captain DoRegos warehouse and distribution centre (refer
note 3). Included in the current year are costs associated with the closure of the distribution
centre amounting to R1.224 million in respect of retrenchment costs, losses on sales of property,
plant and equipment and the impact of the increased cost of working during the process of closing
down the facility.
b) Includes net interest income of R3.461 million (2012: R2.719 million; year ended 30 June 2013:
R5.854 million). Includes a charge in respect of cashsettled share-based payments of R16.547
million (2012: R8.590 million; year ended 30 June 2013: R23.645 million) and a fair value gain in
respect of a related hedge of R11.729 million (2012: R15.027 million; year ended 30 June 2013:
R34.357 million) (refer also note 4).
c) The current period includes a bargain purchase gain of R0.045 million arising from the
acquisition of the remaining 10% interest in Trinity Leasing Limited (refer note 2). The results
for the year ended 30 June 2013 include initial start-up and trading losses 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.

d) The results for the year ended 30 June 2013 include an impairment of property, plant and equipment
relating to Panarottis Tuggerah of R2.188 million.
e) Includes a foreign exchange loss of R3.075 million (2012: R1.148 million; year ended 30 June
2013: R6.518 million).
SUPPLEMENTARY INFORMATION
                                                         Restated
                                        Unaudited       unaudited
                                       six months      six months                      Restated
                                            ended           ended                     unaudited
                                      31 December     31 December             %      year ended
R’000                                        2013            2012        change    30 June 2013

Shares in issue (000’s)*                  85 633           86 019                       85 633
Weighted average number of shares
  in issue (000’s)                        85 633           86 112                       86 090
Diluted weighted average number of
  shares in issue (000's)                 85 633           86 112                       86 090
Headline earnings per share (cents)        85.14            90.13          (5.5)        157.03
Diluted headline earnings per share
  (cents)                                  85.14            90.13          (5.5)        157.03
Net asset value per share (cents)         594.06           537.47          10.5         551.80
Dividend per share (cents)                  57.0             55.0           3.6          111.0
*Shares in issue less shares repurchased by a wholly-owned subsidiary company and share incentive
special purpose entity.


NOTES

1. The unaudited interim condensed consolidated results for the six months ended 31 December 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 and 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
these results have been consistently applied to prior periods and are consistent with those applied
in the preparation of the group’s annual financial statements for the year ended 30 June 2013,
except for the application of IFRS 10 – Consolidated Financial Statements, which resulted in
certain companies now being consolidated into the group’s results which previously did not meet the
definition of a subsidiary under the previous consolidation standard. The applicable comparative
amounts have also been restated. The impact on opening retained earnings for the current period is
an increase of R0.812 million (2012: R0.472 million). The impact on profit for the period is an
increase of R0.766 million (2012: R0.319 million; year ended 30 June 2013: R1.482 million). The
impact on profit attributable to ordinary shareholders is an increase of R0.267 million (2012:
0.195 million; year ended 30 June 2013: R0.340 million).

2. On 7 November 2013, a wholly-owned subsidiary of the group acquired the remaining 10% interest
in Trinity Leasing Limited (“Trinity”) for no consideration, resulting in the group now owning all
the shares in Trinity. Trinity owns the lease of the premises from which the group operates the Two
Rivers Spur in Staines, England. The acquisition resulted in a bargain purchase gain of R0.045
million which is included in profit.

3. In November 2013, the group closed its Captain DoRegos warehouse and distribution centre in
Bloemfontein. The distribution operations were absorbed into the group’s existing outsourced
logistics network.

4. In December 2013, the first tranche of share appreciation rights granted in terms of the group’s
long-term share incentive scheme was settled in cash. This resulted in a gross cash outflow of
R23.357 million. Simultaneously, the economic hedging instrument utilised by the group matured which
resulted in a gross cash inflow of R20.794 million. Further details of the share appreciation rights
and related hedges are detailed in notes 21 and 15 respectively on pages 127 and 124 respectively of
the annual integrated report for the year ended 30 June 2013.
5. Subsequent to the reporting date and with effect from 1 January 2014, the group acquired The Hussar
Grill franchise group which includes three company-owned restaurants and three franchised restaurants.
The purchase consideration amounts to R35 million in total.
6. There have been no changes to the status of contingent liabilities referred to in note 41 on page
148 of the annual integrated report for the year ended 30 June 2013.
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,
D Molefe
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 Limited)

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