SPUR CORPORATION LIMITED - Reviewed Condensed Consolidated Results and Cash Dividend Declaration
11 September 2014 8:00
SUR 201409110005A
Reviewed Condensed Consolidated Results and Cash Dividend Declaration

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 2014

 - Restaurant sales: up 13.5%

 - Revenue: up 9.1%

 - Dividend per share: 9.0% up to 121 cents

 - Comparable profit: up 9.9%


Prepared under the supervision of the Chief Financial Officer, Ronel van Dijk CA(SA).

TRADING PERFORMANCE

Spur Corporation delivered solid results as trading conditions became increasingly challenging in the 
second half of the year. The fundamentals of the group's flagship brands remain strong and continue to 
deliver competitive growth.

Revenue increased by 9.1% to R732.6 million. Total restaurant sales across the group increased by 13.5% to 
R5.5 billion, with sales from existing restaurants increasing by 9.8% and sales in South Africa growing by 
12.8%, driven by robust performers Spur and Panarottis.

Constrained spending is evident among lower and middle income families, with marked spikes in mid-month 
and month-end pay day spending patterns becoming the norm.

Spur Steak Ranches showed a very encouraging 11.3% growth in local restaurant sales, supported by continued 
investments in upgrades and refurbishments by franchisees to create and maintain an environment that appeals 
to families. Existing restaurants increased sales by 9.8%. The brand currently has 1.7 million Spur Family 
Card members who now account for 44% of total restaurant sales, up from 38% last year. The Spur Family Card 
loyalty programme has been a profound success and a key differentiating factor for the brand.

Panarottis Pizza Pasta delivered excellent results, increasing restaurant sales by 28.2% in South Africa, 
with turnover from existing restaurants increasing 15.2%. Higher visibility and marketing of the brand on 
radio and television contributed to the strong growth, supported by the breakfast and Sunday lunch 
promotions. Customers have responded well to the use of imported Italian ingredients and improved quality 
of the product offering.

John Dory's grew local restaurant sales by 21.0%, driven by the opening of five new restaurants. Sales from 
existing outlets increased by 12.0%. The brand was promoted on national television for the first time this 
year, and has the support of highly committed franchisees. The menu offering continues to take into account 
the sustainability of fish stocks while improving the quality perception of the brand.

Captain DoRegos' performance reflects the financial realities of its lower LSM target market. Local 
restaurant sales declined by 13.8%, partially impacted by the closure of 15 redundant outlets.

The Hussar Grill has shown encouraging growth since being acquired in January 2014. Increasing customer 
support, interest from potential franchisees and the opportunity to expand nationally create exciting growth 
prospects for the brand.

Restaurant sales in the international operations were 20.2% higher in Rand terms, favourably impacted by 
the depreciation of the Rand during the year. Based on a constant exchange rate, international sales 
increased by 6.6%. Africa performed well, growing at 22.3% in Rand terms mainly due to the opening of seven 
new franchised outlets comprising additional restaurants in Swaziland, Tanzania, Namibia, Nigeria and Zambia.

Restaurant sales revenue in the UK increased by 18.5% in Rand terms, but was flat on the prior year when 
applying a constant exchange rate. It is positive that the region has maintained total turnover, despite 
pressure from increased competition and a decline in footfall caused by a protracted economic recovery in 
the region. Australia delivered a reasonable performance in a difficult and competitive environment, with 
restaurant sales increasing in Rand terms by 12.1% and by 6.7% on a constant exchange rate basis. One new 
franchised restaurant was opened in Perth (Australia) during the year.

The group opened 18 Spur, eight Panarottis, five John Dory's and four Captain DeRegos outlets worldwide, 
while 63 Spur outlets were refurbished locally with a franchisee investment of approximately R54 million.

The restaurant footprint at 30 June 2014 was as follows:

Franchise brand                                South Africa               International               Total
Spur Steak Ranches                                      270                          39                 309
Panarottis Pizza Pasta                                   68                          11                  79
John Dory’s Fish Grill Sushi                             33                           –                  33
Captain DoRegos                                          61                           2                  63
The Hussar Grill                                          6                           –                   6
Total                                                   438                          52                 490


FINANCIAL PERFORMANCE

Local franchise revenue increased by 11.8% for the year. Spur increased franchise revenue by 10.6%, 
Panarottis by 25.4% and John Dory's by 21.8%. Franchise revenue from Captain DoRegos decreased by 10.8%. 
Operating margins in the Spur and Panarottis divisions improved for the year due to the benefits of economies 
of scale, while the margin in John Dory's contracted slightly as a result of the investment in resources to 
ensure future expansion of the brand.

Following the closure of the Captain DoRegos distribution centre in November 2013 and the conclusion of a 
business restructure early in the new financial year aimed at rationalising the brand's cost structure, 
management is confident that the brand is well positioned for future growth.

The Hussar Grill retail division, comprising three company-owned restaurants, contributed revenue of 
R15.0 million for the six months since January 2014 while the franchise division contributed R0.7 million 
to group revenue for the same period.

While the manufacturing and distribution division reported a decline in revenue of 17.4% for the year, 
excluding the impact of the closure of the Captain DoRegos distribution centre, comparable revenue of this
business unit increased by 9.0%. Excluding the Captain DoRegos distribution centre, the business unit 
reflected a decline in operating margin from 40.8% in the prior year to 38.9% in the current year. This is 
as a result of relatively high food inflation impacting on the cost of manufactured sauces, the full impact 
of which has not been passed on to franchisees in an effort by management to protect franchisee 
profitability and maintain competitive pricing.

The group's distribution and logistics service provider, Vector Logistics, experienced a 13.5% volume 
increase in respect of the group's business. Vector Logistics remains critical to the success of the 
franchising system from a sustainability, food safety, quality and consistency point of view.

International revenue, comprising franchise revenue and company-owned restaurant turnover, increased 20.0% 
to R251.9 million.

The current year loss from the UK includes impairment and related losses of R3.5 million in respect of the 
Mohawk Spur in Wandsworth (England) following a recent trend of unsustainable trading losses. The region is 
otherwise holding its own in a competitive environment.

The current year loss in Australia includes an impairment loss of R2.5 million relating to the Panarottis 
outlet in Blacktown as well as a profit of R2.2 million realised on the sale of the group's 80% interest 
in the Panarottis outlet in Tuggerah (which had previously been impaired). Trading losses for these two 
outlets had a negative impact on the division's performance for the year.

The group's non-controlling interest in Braviz Fine Foods, a start-up rib processing plant, is due to 
commence trading in December 2014. Management remains excited at the prospects of this first new venture 
into vertical integration and is optimistic of the earnings potential of the investment.

Profit before tax increased by 2.7% to R201.9 million. This includes a net charge of R10.2 million (2013: 
gain of R10.7 million) related to the group's long-term share-linked retention scheme, R6.0 million (2013: 
R2.2 million) relating to restaurant impairment and related losses, R1.3 million one-off costs associated 
with the closure of the Captain DoRegos distribution centre, R1.6 million in legal and due diligence costs 
associated with the acquisition of The Hussar Grill, and a net foreign exchange gain of R2.6 million 
(2013: loss of R6.5 million).

Comparable profit before income tax, excluding exceptional and one-off items (including those listed above), 
increased by 9.9%.

Headline earnings remained flat at R135.2 million, with diluted headline earnings per share growing 0.5% 
to 157.9 cents.

The board has declared a final cash dividend of 64 cents per share, bringing the total dividend for the 
year to 121 cents per share, an increase of 9.0% on last year.


PROSPECTS

The group plans to open eight restaurants internationally while locally ten Spur, ten Panarottis, seven 
John Dory's, eight Captain DoRegos and six The Hussar Grill outlets will be opened in the 2015 financial 
year. The planned international openings include additional franchised restaurants in Namibia, Tanzania, 
Nigeria, Zambia and Australia.

Economic pressures are likely to continue to dampen consumer demand in the restaurant sector in the short 
to medium term. Management is confident that the group will continue to deliver on its growth strategy by 
targeting organic growth within existing brands and markets, and pursuing opportunities to expand vertical 
integration in relation to core products. Critical to sustained organic growth will be ensuring the group's
brands remain relevant to consumers in their respective markets, an uncompromising approach to operating 
standards and quality, product innovation and value-for-money. A focus for the year ahead will also be 
ensuring efficient and optimal resource utilisation to contain costs in an uncertain consumer environment.


CASH DIVIDEND

Shareholders are advised that the board of directors of the company has, on 9 September 2014, resolved to 
declare a final gross cash dividend for the year ended 30 June 2014 of R62.5 million, which equates to 
64.0 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, as amended) ("dividend withholding tax") of 15%.

The dividend has been declared from income reserves. The net dividend is 54.4 cents per share for share-
holders liable to pay dividend withholding tax. The company's income tax reference number is 9695015033. 
No STC credits have been utilised.

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, 26 September 2014
Shares commence trading "ex dividend"                     Monday, 29 September 2014
Record date                                               Friday, 3 October 2014
Payment date                                              Monday, 6 October 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, 
29 September 2014 and Friday, 3 October 2014, both days inclusive.

For and on behalf of the Board

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

Cape Town
9 September 2014


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                                                                     Reviewed 
                                                                      Reviewed       restated 
                                                                    year ended     year ended           % 
R 000                                                             30 June 2014   30 June 2013      change

Revenue                                                                732 636        671 552         9.1
Gross profit                                                           521 996        464 191        12.5
Operating profit before finance income                                 194 999        190 630         2.3
Net finance income                                                       7 251          5 909        22.7
Share of loss of equity-accounted investee
(net of income tax)                                                       (379)             ­
Profit before income tax                                               201 871        196 539         2.7
Income tax expense                                                     (64 638)       (63 237)
Profit for the year                                                    137 233        133 302         2.9

Other comprehensive income*:                                             5 621         17 913
Foreign currency translation differences for foreign 
 operations                                                              8 348         25 071
Reclassification of foreign currency (gain)/loss from other 
 comprehensive income to profit or loss on abandonment/deregistration 
 of foreign operations                                                  (3 386)           842
Foreign exchange gain/(loss) on net investments in foreign operations      879        (10 666)
Tax on foreign exchange (gain)/loss on net investments in foreign
 operations                                                               (220)         2 666
Total comprehensive income for the year                                142 854        151 215        (5.5)

Profit attributable to:
 Owners of the company                                                 136 331        132 624         2.8
 Non-controlling interest                                                  902            678
Profit for the year                                                    137 233        133 302         2.9

Total comprehensive income attributable to:
 Owners of the company                                                 142 932        151 317        (5.5)
 Non-controlling interest                                                  (78)          (102)
Total comprehensive income for the year                                142 854        151 215        (5.5)

* All items included in other comprehensive income are items that are or may be reclassified to profit or 
  loss.

Earnings per share (cents)
 Basic earnings                                                         159.20         154.05         3.3
 Diluted earnings                                                       159.20         154.05         3.3


RECONCILIATION OF HEADLINE EARNINGS
                                                                                     Reviewed 
                                                                      Reviewed       restated 
                                                                    year ended     year ended           % 
R 000                                                             30 June 2014   30 June 2013      change

Profit attributable to ordinary shareholders                           136 331        132 624         2.8
Headline earnings adjustments:
 Impairment of property, plant and equipment (refer notes 11 and 4)      2 313          1 750
 Impairment of intangible assets (refer note 10)                         1 866              ­
 Loss/(profit) on disposal of property, plant and equipment (net 
 of tax)                                                                   233            (29)
 Profit on sale of subsidiary (refer note 4)                            (2 154)             ­
 Reclassification of foreign currency (gain)/loss from other 
 comprehensive income to profit or loss on abandonment/deregistration
 of foreign operation (refer note 6)                                    (3 386)           842
Headline earnings                                                      135 203        135 187         0.0


None of the above items has any tax or non-controlling interest consequences with the exception of:
­ Gross impairment of property, plant and equipment comprises R2.496 million (2013: R2.188 million) with 
 an amount of R0.183 million (2013: R0.438 million) attributable to non-controlling interest.
­ Gross loss/(profit) on disposal of property, plant and equipment comprises a loss of R0.444 million 
(2013: profit of R0.040 million) adjusted for tax of R0.211 million (2013: R0.011 million).


CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                             
                                                                                     Reviewed
                                                                   Reviewed at    restated at
R 000                                                             30 June 2014   30 June 2013

ASSETS
Non-current assets                                                     512 900        451 447
Property, plant and equipment                                           77 289         79 775
Intangible assets and goodwill                                         359 742        323 633
Investments and loans                                                   53 471         11 315
Deferred tax                                                             6 536          9 347
Leasing rights                                                           3 352          5 290
Derivative financial asset                                              12 510         22 087

Current assets                                                         225 071        244 766
Inventories                                                             12 132         17 156
Tax receivable                                                          10 719          8 134
Trade and other receivables                                             88 097         88 949
Derivative financial asset                                              22 157         15 703
Cash and cash equivalents                                               91 966        114 824

TOTAL ASSETS                                                           737 971        696 213

EQUITY
Total equity                                                           519 620        472 526
Ordinary share capital                                                       1              1
Share premium                                                                6              6
Shares repurchased by subsidiaries                                     (77 235)       (77 235)
Foreign currency translation reserve                                    25 235         18 634
Retained earnings                                                      575 670        536 060
Total equity attributable to equity holders of the parent              523 677        477 466
Non-controlling interest                                                (4 057)        (4 940)

LIABILITIES
Non-current liabilities                                                 82 526         90 236
Long-term loans payable                                                      ­             423
Employee benefits                                                       10 909         12 048
Derivative financial liability                                             319              ­
Operating lease liability                                                1 776          5 481
Deferred tax                                                            69 522         72 284

Current liabilities                                                    135 825        133 451
Bank overdrafts                                                            539          1 605
Tax payable                                                              4 559          4 132
Trade and other payables                                               108 299        111 270
Employee benefits                                                       22 017         16 117
Shareholders for dividend                                                  411            327

TOTAL EQUITY AND LIABILITIES                                           737 971        696 213



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                                                                     Reviewed 
                                                                      Reviewed       restated 
                                                                    year ended     year ended
R 000                                                             30 June 2014   30 June 2013 

Cash flow from operating activities
Operating profit before working capital changes (refer note a)         198 644        202 914
Working capital changes                                                  3 971          1 320
Cash generated from operations                                         202 615        204 234
Net interest received                                                    6 313          5 909
Tax paid                                                               (66 891)       (60 675)
Dividends paid                                                         (96 682)       (88 444)
Net cash flow from operating activities                                 45 355         61 024
Net cash flow from investing activities (refer note b)                 (63 484)       (44 804)
Net cash flow from financing activities                                 (3 670)        (2 076)
Net movement in cash and cash equivalents                              (21 799)        14 144
Effect of foreign exchange fluctuations                                      7           (282)
Net cash and cash equivalents at beginning of year                     113 219         99 357
Net cash and cash equivalents at end of year                            91 427        113 219

Notes

a)  Includes a gross cash outflow of R23.357 million (2013: Rnil) in respect of the settlement of the 
    share appreciation rights granted in terms of the group's long-term share-linked retention scheme 
    (refer note 8).
b)  Includes a gross cash inflow of R21.364 million (2013: R1.221 million) arising from the economic 
    hedging instrument utilised by the group for its long-term share-linked retention scheme (refer 
    note 8). The current year includes a gross outflow of R36.650 million arising from the acquisition 
    of Braviz Fine Foods (Pty) Ltd (refer note 5) and a gross outflow of R35.380 million arising from 
    the acquisition of The Hussar Grill (refer note 3). The prior year includes a gross cash outflow 
    of R5.092 million relating to the acquisition of Trinity Leasing (refer note 2) and the acquisition 
    of treasury shares amounting to R16.725 million.


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
                                                                                      
                                                 Ordinary share                      Retained
                                                capital & share                  earnings and
                                                premium (net of        Other  non-controlling
R 000                                           treasury shares)    reserves         interest      Total  

Balance at 1 July 2012 ­ restated (refer note 1)        (60 503)         (59)         486 389     425 827
Total comprehensive income for the year ­ restated            ­        18 693          132 522     151 215
Profit or loss ­ restated (refer note 1)                      ­            ­            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 controlling interest in 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 year                       ­        6 601          136 253     142 854
Profit for the year                                           ­            ­           137 233     137 233
Other comprehensive income                                    ­        6 601             (980)      5 621

Transactions with owners, recorded directly in equity
Contributions by and distributions to owners                  ­            ­           (96 766)    (96 766)
Distributions to equity holders                               ­            ­           (96 766)    (96 766)

Changes in ownership interests in subsidiaries that 
result in a loss of control                                  ­            ­              1 006       1 006
Disposal of controlling interest in subsidiary 
(refer note 4)                                               ­            ­              1 006       1 006

Total transactions with owners                                ­            ­           (95 760)    (95 760)

Balance at 30 June 2014                               (77 228)      25 235           571 613     519 620


CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT
                                                                                     Reviewed 
                                                                      Reviewed       restated 
                                                                    year ended     year ended           %
R 000                                                             30 June 2014   30 June 2013      change

External revenues 
Manufacturing and distribution (refer note a)                          176 576        213 712       (17.4)
Franchise ­ Spur                                                        198 498        179 464        10.6
Franchise ­ Panarottis                                                   20 932         16 692        25.4
Franchise ­ John Dory's                                                  14 271         11 712        21.8
Franchise ­ Captain DoRegos                                               8 185          9 174       (10.8)
Franchise ­ The Hussar Grill (refer note b)                                 700              ­
Retail ­ The Hussar Grill (refer note b)                                 14 988              ­
Other South Africa                                                      44 958         30 399        47.9
Total South African segments                                           479 108        461 153         3.9
Unallocated                                                              1 595            515       209.7
Total South Africa                                                     480 703        461 668         4.1

United Kingdom                                                         157 565        118 353        33.1
Australia                                                               79 366         79 157         0.3
Other International                                                     15 002         12 374        21.2
Total International                                                    251 933        209 884        20.0

TOTAL EXTERNAL REVENUE                                                 732 636        671 552         9.1

Profit/(loss) before income tax
Manufacturing and distribution (refer note a)                           58 520         59 525        (1.7)
Franchise ­ Spur                                                        176 552        158 818        11.2
Franchise ­ Panarottis                                                   13 117          9 874        32.8
Franchise ­ John Dory's                                                   7 736          6 629        16.7
Franchise ­ Captain DoRegos                                               2 158          3 838       (43.8)
Franchise ­ The Hussar Grill (refer note b)                                 471              ­
Retail ­ The Hussar Grill (refer note b)                                  2 354              ­
Other South Africa                                                        (160)            92      (273.9)
Total South African segments                                           260 748        238 776         9.2
Unallocated ­ South Africa (refer note c)                               (60 020)       (34 889)      (72.0)
Total South Africa                                                     200 728        203 887        (1.5)

United Kingdom (refer note d)                                           (2 232)        (1 006)     (121.9)
Australia (refer note e)                                                  (157)        (1 513)       89.6
Other International                                                      8 829          7 487        17.9
Total International segments                                             6 440          4 968        29.6
Unallocated ­ International (refer note f)                               (4 918)       (12 316)       60.1
Total International                                                      1 522         (7 348)      120.7

PROFIT BEFORE INCOME TAX AND SHARE OF LOSS OF EQUITY-ACCOUNTED
 INVESTEE                                                              202 250        196 539         2.9

Share of loss of equity-accounted investee (net of income tax)            (379)             ­

PROFIT BEFORE INCOME TAX                                               201 871        196 539         2.7

Notes

a)  Includes revenue of R22.724 million (2013: R72.625 million) and loss before tax of R1.361 million 
    (2013: profit of R1.949 million) relating to the Captain DoRegos warehouse and distribution centre 
    (refer note 7). Included in the current year are costs associated with the closure of the distribution 
    centre amounting to R1.326 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)  The Hussar Grill franchise division and three company-owned retail restaurants were acquired with effect 
    from 1 January 2014. Refer note 3 for more details.
c)  Includes net interest income of R7.118 million (2013: R5.854 million). Includes a charge in respect of 
    the cash-settled share-based payments of R28.117 million (2013: R23.645 million) and a fair value gain 
    in respect of a related economic hedge of R17.922 million (2013: R34.357 million) (refer also note 8). 
    The current year includes transaction costs for the acquisition of The Hussar Grill of R1.620 million 
    (refer also note 3) and costs of R0.495 million relating to the international group restructure under-
    taken during the year (refer note 6). The prior year includes legal costs and professional fees of 
    R1.424 million relating to the dispute with the former non-controlling shareholder of John Dory's 
    Franchise (Pty) Ltd and the related Financial Services Board investigation (which investigation resulted 
    in the company being vindicated of any wrong doing). 
d)  The current year includes an impairment of franchise rights (intangible asset) amounting to R1.866 
    million and the accelerated amortisation of leasing rights amounting to R1.612 million relating to Mohawk 
    Spur Limited (refer note 10). The prior year includes 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.
e)  The current year includes an impairment loss of R2.496 million relating to the impairment of assets of 
    the Panarottis in Blacktown, Australia (refer note 11) as well as a profit of R2.154 million on the 
    disposal of the Panarottis in Tuggerah, Australia (refer note 4). The prior year includes an impairment 
    loss in respect of the property, plant and equipment of the Panarottis in Tuggerah amounting to 
    R2.188 million.
f)  Includes a foreign exchange loss of R0.687 million (2013: R5.676 million) and a gain of R3.386 million 
    (2013: loss of R0.842 million) relating to the reclassification of foreign exchange differences from 
    other comprehensive income to profit on abandonment/deregistration of foreign operations (refer note 6). 
    The current year includes costs of R1.674 million relating to the group restructure undertaken during  
    the year (refer note 6). The prior year includes losses amounting to R1.052 million in winding up certain 
    of the group's Australian equity-accounted associates which ceased trading in previous years.


SUPPLEMENTARY INFORMATION
                                                                                     Reviewed 
                                                                      Reviewed       restated 
                                                                    year ended     year ended           %
                                                                  30 June 2014   30 June 2013      change

Shares in issue (000's)*                                                85 633         85 633
Weighted average number of shares in issue (000's)                      85 633         86 090
Diluted weighted average number of shares in issue (000's)              85 633         86 090
Headline earnings per share (cents)                                     157.89         157.03         0.5
Diluted headline earnings per share (cents)                             157.89         157.03         0.5
Net asset value per share (cents)                                       606.80         551.80        10.0
Dividend per share (cents)                                              121.00         111.00         9.0

* 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 2014 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 review report 
    signed by registered auditor, BR Heuvel CA(SA), is available for inspection at the company's registered 
    office. The auditor's report does not necessarily report on all of the information contained in this 
    announcement/financial results. Shareholders are therefore advised that in order to obtain a full 
    understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's 
    report together with the accompanying financial information from the issuer's registered office.

    Basis of Preparation ­ The condensed consolidated financial statements for the year ended 30 June 2014 
    have been prepared in accordance with the JSE Limited Listings Requirements for provisional reports 
    and the requirements of the Companies Act of South Africa (No. 71 of 2008). The Listings Requirements 
    require provisional reports to be prepared in accordance with the framework concepts and the measure-
    ment and recognition requirements of International Financial Reporting Standards ("IFRS") and the SAICA 
    Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements 
    as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information 
    required by IAS 34 ­ Interim Financial Reporting. 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 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 (2013: R0.472 million). The impact on profit for the period is an increase of R1.098 million 
    (2013: R1.482 million). The impact on profit attributable to ordinary shareholders is an increase of 
    R0.362 million (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 group had acquired the initial 90% interest in Trinity with effect from 
    1 October 2012. The carrying amount of the net assets of Trinity in the consolidated financial state- 
    ments of the group at the date of acquisition of the additional 10% interest was R0.448 million. The 
    acquisition of the additional 10% interest has consequently resulted in a reduction in non-controlling 
    interests of R0.045 million and a corresponding increase in retained earnings.
  
3.  With effect from 1 January 2014, a wholly-owned subsidiary of the group acquired the franchise business 
    of The Hussar Grill as well as three restaurants trading as The Hussar Grill in Rondebosch, Green Point 
    and Camps Bay (all in the Western Cape). The acquisition is intended to give the group exposure to an 
    upmarket specialist steakhouse chain. The aggregate purchase consideration of R35.380 million was 
    settled in cash on the effective date. The net fair value of the identifiable assets and liabilities 
    was R8.462 million and comprised: trademarks and intellectual property of R9.904 million, inventory of 
    R0.475 million, employee obligations of R0.095 million and a deferred tax liability arising from the 
    initial recognition of these assets and liabilities of R1.822 million. The resulting goodwill of 
    R26.918 million is attributable to the reputation of the brand and the standing of the restaurants in 
    the respective areas in which they trade and will not be deductible for tax purposes. Subsequent to 
    acquisition, the combined business contributed R15.688 million to revenue, R2.825 million to profit 
    before tax and R2.034 million to profit. Transaction costs in the amount of R1.620 million relating to 
    financial and legal due diligence, legal and consulting services are included in profit before tax for    
    the year.

4.  With effect from 1 January 2014, a wholly-owned subsidiary of the group which was the 80% partner of 
    the Panarottis Tuggerah partnership agreed with the remaining 20% partner to dissolve the partnership 
    in question. The partnership previously operated the Panarottis restaurant in Tuggerah, Australia. As 
    part of the agreement, the group disposed of the partnership's net liabilities of R5.029 million (of 
    which the group's share amounted to R4.023 million) to the remaining 20% partner in exchange for: 
    forgiving previously intra group loans to the partnership in the amount of R3.428 million; retaining 
    the cash and certain debtors balances of the partnership of R0.406 million and R0.395 million 
    respectively; assuming certain of the partnership's liabilities in the amount of R0.986 million; and a 
    cash payment R1.744 million which is to be paid in instalments until October 2017. This resulted in a 
    profit on disposal of the partnership interest in the amount of R2.154 million. For the period in 
    question, the partnership contributed revenue of R6.050 million (2013: R11.095 million) and earned a 
    profit of R0.064 million (2013: loss of R2.990 million which included an impairment loss on property, 
    plant and equipment of R2.188 million).

5.  With effect from 18 March 2014, a wholly-owned subsidiary of the group acquired a 30% interest in Braviz 
    Fine Foods (Pty) Ltd, a start-up entity in the process of establishing a rib processing plant in 
    Johannesburg. As the group is able to exercise significant influence over the entity, but not control, 
    it equity accounts the investment. The initial purchase consideration amounted to R0.4 million 
    (comprising ordinary shares of R300 and initial transaction costs of R0.4 million). The group 
    simultaneously advanced a loan in the amount of R36.250 million to the entity. The loan bears interest 
    at the prevailing prime overdraft rate of interest and has no formal repayment terms (although any 
    repayment of shareholder loans is to be made on a pro rata basis between the respective shareholders) 
    and is consequently considered part of the net investment in the equity-accounted investee. Immediately 
    prior to the effective date, the fair value of the acquiree's net liabilities amounted to R0.684 million. 
    Goodwill of R0.606 million is therefore implicit in the carrying value of the investment. The group's 
    share of equity-accounted losses after tax for the period from acquisition to the reporting date 
    amounted to R0.379 million and arose primarily from finance costs incurred by the entity on shareholder 
    funding for the period.

6.  In June 2004, a wholly-owned foreign subsidiary of the group, Vantini Spur Limited ("Vantini"), the 
    owner of the group's international trademarks and intellectual property, granted a ten year usufruct 
    of the trademarks and intellectual property to another foreign wholly-owned subsidiary of the group, 
    Steak Ranches International BV ("SRIBV"). SRIBV is the primary franchisor of the group's brands outside 
    of South Africa. During the period of 31 March 2014 to 30 June 2014, in anticipation of the expiration 
    of the usufructury rights referred to above, the group restructured certain of its international 
    subsidiaries in order to ensure the continued validity of franchise agreements concluded between SRIBV 
    and its franchisees. The restructure resulted in certain foreign subsidiaries commencing deregistration 
    procedures or becoming dormant which resulted in foreign exchange gains on translation of these foreign 
    operations previously recognised in equity (FCTR) through other comprehensive income being recycled 
    through other comprehensive income back to profit in the amount of R3.386 million. Legal, consulting and 
    other advisory costs relating to the restructure amounted to R2.169 million for the year and are included 
    in profit before income tax for the year.
  
7.  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. 
    One-off costs associated with the closure of the warehouse amounted to R1.326 million and are included 
    in profit before income tax for the year.

8.  In December 2013, the first tranche of the share appreciation rights granted in terms of the group's 
    long-term share-linked retention 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 R19.920 million. During the year, the share-based payment expense 
    in respect of the scheme included in profit before tax amounted to R28.117 million (2013: 23.645 million), 
    while the gain on the related economic hedging financial instrument recognised in profit before tax 
    amounted to a credit of R17.922 million (2013: R34.357 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.

9.  Subsequent to the reporting date and with effect from 1 August 2014, the group acquired the remaining 
    50% interest in Panpen Pty Ltd ("Panpen"), a company in which the group had an existing 50% interest 
    and which operates the Panarottis outlet in Penrith, Australia. Despite not owning a majority interest 
    in Panpen prior to this transaction, the group effectively controlled Panpen and the entity was 
    consequently consolidated. The purchase consideration is an amount of AU$200 000 which was settled in cash 
    on the effective date. As part of the transaction, Panpen was required to settle the outstanding 
    shareholder's loan with the non-controlling shareholder in the amount of AU$158 342 (or R1.584 million 
    as at 30 June 2014) which amount was settled in cash on the effective date. The net liabilities of Panpen 
    at 30 June 2014 included in the consolidated financial statements of the group amount to R0.408 million 
    and the group has already recognised goodwill attributable to its existing investment in Panpen in the 
    amount of R3.215 million at 30 June 2014.

10. As a result of historic trading losses, the group had impaired the property, plant and equipment of 
    the Mohawk Spur in Wandsworth, England in prior years. As a consequence of continuing trading losses, 
    the carrying value of the cash-generating unit was re-assessed for impairment at the reporting date. 
    In this regard, the group concluded that the franchise rights intangible asset of R1.866 million 
    attributable to the cash-generating unit was impaired at the reporting date and the full carrying 
    value of the intangible asset has been charged to profit or loss. Furthermore, in considering the 
    ability of the entity in question to continue trading, the group has accelerated the amortisation of 
    the lease previously acquired by the group relating to the entity, resulting in a further charge of 
    R1.612 million to profit before income tax.

11. As a consequence of sustained historic trading losses, the property, plant and equipment of the 
    Panarottis outlet in Blacktown, Australia, amounting to R2.496 million at the reporting date were 
    impaired.

12. Subsequent to the reporting date, on 31 July 2014, shareholders were advised by way of an announcement 
    published on SENS that the company had entered into various agreements to issue 10 848 093 new ordinary 
    shares indirectly to Grand Parade Investments Limited ("GPI", registration number 1997/003548/06), a 
    strategic black empowerment partner. The company is separately intending to donate 500 000 of the 
    company's shares (100 000 share per annum over five years), currently held as treasury shares, to the 
    Spur Foundation, a benevolent foundation that is consolidated for the purposes of IFRS. Both  
    transactions are subject to shareholder and regulatory approval and the intended transaction date will
    be no later than 31 October 2014. The issue of shares to GPI will result in that company indirectly 
    holding 10% of the company's total shares in issue after the transaction. The shares will be issued  
    at a price of R27.16 per share, representing a 10% discount to the volume weighted average trading 
    price of Spur shares on the JSE for the 90 trading days prior to 30 July 2014. GPI will be restricted 
    from trading the shares in question without the express permission of Spur for a period of five years 
    from the effective date of the transaction and is furthermore required to maintain its Broad-based 
    Black Economic Empowerment credentials for the same period. Spur will partially fund the transaction 
    through a subscription of cumulative compulsorily redeemable five year preference shares in a special 
    purpose entity with a combined subscription value of R72.33 million (representing 24.5% of the total 
    funding requirement for the transaction). The preference shares will accrue dividends at a rate of 90%      
    of the prevailing prime overdraft rate of interest and will be subordinated in favour of the external 
    funding provider. GPI will fund 24.5% of the total funding requirement and an external funding provider 
    will fund the balance of 51% of the total funding requirement. The preference shares will be secured 
    by a cession of the reversionary interest in the Spur shares held indirectly by GPI which also serve 
    as security for the external funding. The transaction will result in a net cash inflow of 
    R222.33 million to Spur. If the transaction is approved by shareholders and regulators and the 
    remaining conditions precedent are fulfilled, it is estimated that a share-based payment expense of 
    R48.686 million will be recognised in profit in the 2015 financial year. Of the total estimated 
    transaction costs of R1.604 million, it is estimated that: R0.285 million relate directly to the 
    subscription of the preference shares referred to above and will be included in the carrying value of 
    the preference shares; R1.034 million relate directly to the issue of the company's ordinary shares and 
    will be charged directly against equity (retained earnings) and the balance of R0.285 million will be 
    charged to profit. The pro forma financial impact of the transactions was disclosed to shareholders in 
    an announcement published on SENS on 4 September 2014 and the circular incorporating full details of 
    the transactions was mailed to all shareholders on 4 September 2014.

13. As reported in note 41.1 on page 148 of the annual integrated report for the year ended 30 June 2013, 
    the South African Revenue Services ("SARS") had previously issued assessments to wholly-owned 
    subsidiary Spur Group (Pty) Ltd for additional income from controlled foreign companies of the group for 
    the 2009, 2010 and 2011 years of assessment. These assessments had previously been objected to by the 
    company. During the year, the objections were partially disallowed by SARS, resulting in reduced 
    assessments being issued amounting in aggregate to R1.993 million (comprising R1.561 million in tax 
    and R0.432 million in interest). The assessments have been settled. The board of the company in 
    question has appealed SARS' decision to partially disallow the objection and SARS has agreed to refer 
    the matter to alternate dispute resolution proceedings. No date has yet been set for these proceedings. 
    The board continues to be of the view that it is able to defend its position. Consequently, a liability 
    has not been raised in respect of the assessments issued, or the possible liability arising from the 
    same disputed issue for the 2012 to 2014 years of assessment. There have been no further changes to 
    the status of other contingent liabilities referred to in note 41 on page 148 of the annual integrated 
    report for the year ended 30 June 2013.

14. Fair value of financial instruments:
     ­ The hedge forward derivative financial assets/(liabilities) utilised by the group to economically 
      hedge the impact of the share appreciation rights granted in terms of its long-term share-linked 
      retention scheme are fair valued at each reporting date (refer note 8). The fair values of the 
      contracts are determined by an independent external professional financial instruments specialist 
      using a Black-Scholes (risk neutral pricing) option pricing model in a manner that is consistent 
      with prior reporting periods. The financial instruments in question are designated as level 2 
      financial instruments in terms of the fair value hierarchy specified in IFRS13 ­ Fair Value 
      Measurement, as the inputs into the valuation model are derived from observable inputs for the 
      assets/liabilities in question, but are not quoted prices in active markets for identical 
      assets/liabilities.

     ­ The loan advanced to the equity-accounted investee of R36.250 million as detailed in note 5 was 
      initially recognised at fair value at 18 March 2014 and is subsequently recognised at amortised 
      cost. In determining the fair value of the loan in question at initial recognition, the directors 
      considered the interest rates implicit in similar loans granted on similar terms and conditions 
      between unrelated market participants. The directors determined that the interest rate applicable 
      to the loan in question is commensurate with similar external loans between unrelated market 
      participants and the nominal value of the loan therefore approximated its fair value at initial 
      recognition. The financial asset is designated as a level 2 financial instrument in terms of the 
      fair value hierarchy as the inputs into the valuation model are derived from observable inputs for 
      the asset in question, but are not quoted prices in active markets for identical assets.


Directors

Executive Chairman: A Ambor
Chief Executive Officer: P van Tonder
Chief Financial Officer: R van Dijk
Chief Operating Officer: M Farrelly
Non-executive: K Getz, D Hyde, M Kuzwayo, K Madders MBE (British), D Molefe, 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
The Hussar Grill

www.spurcorporation.co.za


11 September 2014
Date: 11/09/2014 08:00:00 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
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.
 

 Powered by ProfileData