Spur - 2006 Interim Results For the six months end
02 March 2006 12:00
SUR
SUR
Spur - 2006 Interim Results For the six months ended 31 December 2005
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
2006 INTERIM RESULTS For the six months ended 31 December 2005
- Key PERFORMANCE Indicators
- Store turnover +19%
- Headline earnings per share +18%
ABRIDGED INCOME STATEMENT
Unaudited
Unaudited restated
six months six months
31/12/05 31/12/04
R"000
Revenue 96 912 105 619
Profit from operations 38 047 34 175
Net interest received 2 887 3 870
Profit before taxation 40 934 38 045
Taxation (12 088) (12 044)
Profit after taxation 28 846 26 001
Minority interests 211 (50)
Earnings attributable to ordinary shareholders 29 057 25 951
RECONCILIATION OF HEADLINE EARNINGS
Earnings attributable to ordinary shareholders 29 057 25 951
Headline earnings adjustment:
Profit on sale of property, plant and equipment - -
Headline earnings 29 057 25 951
Statistics
Shares in issue (000"s) (Note 1) 88 156 88 496
Weighted average number of shares in issue (000"s) 88 156 93 158
Earnings per share (cents) 32.96 27.86
Headline earnings per share (cents) 32.96 27.86
Diluted earnings per share (cents) 32.61 27.82
Diluted headline earnings per share (cents) 32.61 27.82
Distribution per share (cents) 22.00 20.00
Net asset value per share (cents) 380.89 359.81
Unaudited
restated
% year ended
Change 30/06/05
R"000
Revenue (8.2) 200 632
Profit from operations 11 .3 66 020
Net interest received (25.4) 4 823
Profit before taxation 7.6 70 843
Taxation (20 421)
Profit after taxation 10.9 50 422
Minority interests (84)
Earnings attributable to ordinary shareholders 12.0 50 338
RECONCILIATION OF HEADLINE EARNINGS
Earnings attributable to ordinary shareholders 50 338
Headline earnings adjustment:
Profit on sale of property, plant and equipment (449)
Headline earnings 12.0 49 889
Statistics
Shares in issue (000"s) (Note 1) 88 156
Weighted average number of shares in issue (000"s) 90 783
Earnings per share (cents) 18.3 55.45
Headline earnings per share (cents) 18.3 54.95
Diluted earnings per share (cents) 17.2 55.30
Diluted headline earnings per share (cents) 17.2 54.81
Distribution per share (cents) 10.0 40.00
Net asset value per share (cents) 5.9 367.37
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited
Unaudited restated restated
six months six months year ended
31/12/05 31/12/04 30/06/05
R"000
Cash generated from operations 40 961 37 056 67 541
Net interest received 2 887 3 870 4 823
Taxation paid (11 564) (11 204) (14 815)
Distributions paid (17 511) (15 621) (35 179)
Working capital changes (11 884) (6 556) (4 959)
Cash flow from operating activities 2 889 7 545 17 411
Cash flow from investing activities (6 314) (51 577) (52 141)
Net movement in cash and cash
equivalents (3 425) (44 032) (34 730)
Adjustment for foreign exchange
fluctuations (293) 12 383
Net cash and cash equivalents at
beginning of period 39 703 74 050 74 050
Net cash and cash equivalents at
end of period 35 985 30 030 39 703
ABRIDGED BALANCE SHEET
Unaudited Unaudited
Unaudited restated restated
six months six months year ended
31/12/05 31/12/04 30/06/05
R"000
NON-CURRENT ASSETS 322 137 312 467 317 579
- Property, plant and equipment 31 502 24 173 27 096
- Intangibles 271 865 270 865 271 865
- Investments and loans 18 770 17 429 18 618
CURRENT ASSETS 84 414 71 878 74 745
- Inventory 1 573 5 457 5 024
- Trade and other receivables 44 430 34 021 28 084
- Cash resources 38 411 32 400 41 637
TOTAL ASSETS 406 551 384 345 392 324
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 335 779 318 415 323 862
- Ordinary share capital 1 1 1
- Share premium (net of treasury
shares) 101 634 137 197 119 265
- Accumulated profit 232 309 179 196 201 907
- Share-based payment reserve 2 118 - 1 059
- Foreign currency translation
reserve (156) 1 971 1 546
- Minority interests (127) 50 84
Deferred taxation liabilities 34 526 27 482 32 247
CURRENT LIABILITIES 36 246 38 448 36 215
- Trade and other payables 27 119 29 025 24 600
- Shareholders for distribution 333 244 213
- Bank overdraft 2 426 2 370 1 934
- Taxation 6 368 6 809 9 468
TOTAL EQUITY AND LIABILITIES 406 551 384 345 392 324
ABRIDGED SEGMENT REPORT
Unaudited Unaudited
Unaudited restated restated
six months six months year ended
31/12/05 31/12/04 30/06/05
R"000
REVENUE
Wholesale and distribution 42 301 60 987 110 165
Franchise - Spur 43 032 37 049 73 494
Franchise - Other 9 710 6 641 14 278
Corporate services 1 869 942 2 695
Group revenue 96 912 105 619 200 632
PROFIT BEFORE TAXATION
Wholesale and distribution 14 276 11 786 23 034
Franchise - Spur 35 112 30 577 61 470
Franchise - Other 2 102 725 6 304
Corporate services (13 443) (8 913) (24 788)
Group profit from operations 38 047 34 175 66 020
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share capital
& premium
(net of
treasury
R"000 Notes shares) Reserves
Balance at 1 July 2003 210 050
Profit for the year
Distributions (25 873)
Shares repurchased (882)
Balance at 30 June 2004 - as
previously stated 183 295 -
IFRS adjustments
Trademarks 2
Property, plant and equipment 3
Deferred taxation 4
Restated balance at 30 June 2004 183 295 -
Profit for the year - as previously
stated
IFRS adjustments 2 605
Foreign currency translation 5 1 546
Property, plant and equipment 3
Deferred taxation 4
Share-based payment 6 1 059
Profit for the year - restated
Minority interests
Taxation charges to equity
Distributions (35 148)
Shares repurchased (28 881)
Restated balance at 30 June 2005 119 266 2 605
Profit for the period
Taxation charges to equity
Distributions (17 631)
Share-based payment 1 059
Foreign currency translation (1 702)
Minority interests
Balance at 31 December 2005 101 635 1 962
Accumulated
(loss)/profit &
minority
interests
R"000 Total
Balance at 1 July 2003 (81 866) 128 184
Profit for the year 37 178 37 178
Distributions (25 873)
Shares repurchased (882)
Balance at 30 June 2004 - as previously stated (44 688) 138 607
IFRS adjustments 196 614 196 614
Trademarks 263 391 263 391
Property, plant and equipment 825 825
Deferred taxation (67 602) (67 602)
Restated balance at 30 June 2004 151 926 335 221
Profit for the year - as previously stated 51 922 51 922
IFRS adjustments (1 584) 1 021
Foreign currency translation (1 493) 53
Property, plant and equipment 40 40
Deferred taxation 928 928
Share-based payment (1 059) -
Profit for the year - restated 50 338
Minority interests 84 84
Taxation charges to equity (357) (357)
Distributions (35 148)
Shares repurchased (28 881)
Restated balance at 30 June 2005 201 991 323 862
Profit for the period 29 057 29 057
Taxation charges to equity 1 345 1 345
Distributions (17 631)
Share-based payment 1 059
Foreign currency translation (1 702)
Minority interests (211) (211)
Balance at 31 December 2005 232 182 335 779
Notes
1. Shares in issue less shares repurchased by a wholly owned subsidiary company
and share incentive trust.
2. Trademarks - In accordance with IFRS 1 - First Time Adoption of
International Financial Reporting Standards, Appendix B2(b), trademarks
previously written off against reserves have been reinstated with a
resultant increase in equity. In accordance with IAS 38 - Intangible Assets,
trademarks have been assessed to have indefinite useful lives and
accordingly have not been amortised, but are subject to an annual impairment
review.
3. Property, plant and equipment - In terms of IFRS 1, the group has elected to
measure certain items of property, plant and equipment at the date of
transition to IFRS at its fair value and use that fair value as its deemed
cost at that date. This exemption was applied to land and buildings owned at
the transition date while residual values of 50% were assigned to all the
buildings. This has resulted in a lower depreciation charge on properties,
and a reversal of accumulated depreciation.
4. Deferred taxation - Deferred taxation has been adjusted to account for the
effect of the IFRS adjustments set out in notes 2 and 3.
5. Foreign currency translation - IAS 21 - The Effects of Changes in Foreign
Exchange Rates, requires the translation of foreign subsidiary companies
with a different functional currency (i.e. other than Rand) than its parent
to translate all their assets and liabilities at year end spot rates.
Foreign exchange differences arising on translation are no longer recognised
in the income statement, but are now recognised directly in a separate
component of equity (foreign currency translation reserve or "FCTR").
The group has elected the exemption available in IFRS 1, to set its FCTR to
zero at the transition date i.e. 1 July 2004.
6. Share-based payments - IFRS 2 - Share-based Payments, requires that the fair
value of equity settled share-based payments be determined at grant date and
that the expense be charged to the income statement over the vesting period.
BASIS OF ACCOUNTING
These unaudited financial results for the six months ended 31 December 2005
have been prepared in accordance with accounting policies that comply with
International Financial Reporting Standards ("IFRS"), with the date of
transition to IFRS for the group being 1 July 2004.
The audited results for the 12 months ended 30 June 2005 have been restated as
unaudited due to the IFRS adjustments not having been audited by the company"s
auditors.
FINANCIAL AND OPERATIONAL REVIEW
Positive trading conditions in the domestic market have continued into the 2006
financial year and the group has performed in line with the board and
management"s expectations for the period. The group increased its share of the
highly competitive family sit-down restaurant market, while the total store
base passed the 300 mark. Our international operations, which account for just
over 10% of the stores, continue to offer exciting growth prospects.
The R8.7 million decline in revenue to R96.9 million (2004: R105.6 million)
incorporates a decrease in wholesale and distribution sales that resulted from
the outsourcing of the national distribution of restaurant supplies from the
central kitchens to an independent distributor. The outsourcing of this
function was completed in September 2005 and has been and will continue to be
beneficial to the group. Sales of manufactured goods from the central kitchens
and decor, locally and internationally, increased by 25%.
Store turnover growth, which reflects in the core franchise royalty income and
is the yardstick of the group"s trading performance, increased by 19%. The
turnover of existing stores (excluding new stores opened during the year) was
13% higher, well ahead of the menu price inflation for the period.
The group"s operating profit rose 11.3% to R38.0 million (2004: R34.2 million).
When the effect of a share-based payment charge (as a result of the adoption of
IFRS 2 - Share-based payments) of R1.1 million as well as the prior year impact
of a taxation refund of R1.3 million is excluded, comparable operating profit
increased 19.0%. While expenses have been well-managed, the group incurred
increased staff and travelling costs for the investment in new stores (with
the group planning to open more than 40 new stores during the financial year),
higher depreciation charges and the IFRS 2 expense.
Headline earnings of R29.1 million were 12.0% higher than the previous
reporting period. Headline earnings per share increased by 18.3% to 32.96 cents
(2004: 27.86 cents), while diluted headline earnings per share rose by 17.2% to
32.61 cents (2004: 27.82 cents).
The group"s aggressive expansion has continued, with an additional 22 stores
opened since the beginning of the financial year, bringing the store base to
309. These comprise seven Spur Steak Ranches, five Panarottis Pizza Pasta and
ten John Dory"s Fish & Grill outlets.
A summary of the store base at 31 December 2005 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 208 23 231
Panarottis Pizza Pasta 54 7 61
John Dory"s Fish & Grill 17 - 17
Total 279 30 309
A further 22 stores are anticipated to be opened in the second six months of
the year. This includes new Spur outlets in China (Fuzhou), Australia
(Campbelltown) and Botswana (Gaborone), with two further Panarottis stores in
Australia (Campbelltown and Blacktown).
PROSPECTS
The new store openings and projected openings for the remainder of the
financial year highlight the opportunities for the group to increase its
national store footprint across the three franchise brands and grow market
share. Assuming a stable interest rate environment and favourable trading
conditions, the board and management are confident of a strong second half
performance which will translate into continued solid earnings growth for
shareholders.
CAPITAL DISTRIBUTION
In accordance with a general authority given to the directors at the annual
general meeting held on 2 December 2005, shareholders are advised that the
board of directors of the company has declared a capital distribution of R19.4
million payable to the company"s shareholders, in lieu of dividends, to be
written off against the share premium account, which amount equates to 22
cents per ordinary share ("the distribution").
The distribution will be paid on Monday, 27 March 2006, to those shareholders
of the company who are recorded in the company"s register on Friday, 24 March
2006 ("the record date").
The last day to trade (cum the distribution) in the company"s shares for
purposes of entitlement to the distribution will be Thursday, 16 March 2006.
The shares will commence trading ex the distribution on Friday, 17 March 2006.
Share certificates may not be dematerialised or rematerialised between Friday,
17 March 2006 and Friday, 24 March 2006 both days inclusive.
For and on behalf of the Board
A.J. Ambor (Executive Chairman) Cape Town
P.G. van Tonder (Managing Director) 2 March 2006
Directors: A Ambor (Executive Chairman), P van Tonder (Managing Director),
M Farrelly, K Getz*, D Hyde*, P Joffe, K Madders* (British), J Rabb*,
K Robertson
Company secretary : R van Dijk
(* non-executive)
www.spur.co.za
Spur Corporation Limited (Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
Registered Office
1 Waterford Mews, Century Blvd, Century City, 7441
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
Sponsor : Sasfin Capital (A division of Sasfin Bank Ltd)
Date: 02/03/2006 12:00:46 PM Produced by the JSE SENS Department
