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)
Date: 27/02/2014 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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