SUR
SUR
Spur - Reviewed Results for the year ended 30 June 2006 and capital distribution
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
REVIEWED RESULTS
For the year ended 30 June 2006
Key PERFORMANCE Indicators
* Operating profit +17%
* Headline earnings per share +19%
ABRIDGED INCOME STATEMENT
Reviewed Audited restated
year ended year ended %
30/06/2006 30/06/2005 Change
R"000
Revenue 182 692 200 632 (8.9)
Operating profit 77 441 66 100 17.2
Net interest received 4 007 4 823
Loss from associate companies (253) (80)
Profit before taxation 81 195 70 843 14.6
Taxation (23 528) (20 114)
Profit for the year 57 667 50 729 13.7
Attributable to:
Equity holders of the parent 57 989 50 645 14.5
Minority interests (322) 84
RECONCILIATION OF HEADLINE
EARNINGS
Earnings attributable to equity
holders of the parent 57 989 50 645
Headline earnings adjustment:
Profit on sale of property,
plant and equipment (18) (422)
Headline earnings 57 971 50 223 15.4
Statistics
Shares in issue (000"s) (Note 1) 88 156 88 156
Weighted average number of
shares in issue (000"s) 88 156 90 783
Earnings per share (cents) 65.78 55.79 17.9
Diluted earnings per share
(cents) 65.12 55.79 16.7
Headline earnings per share
(cents) 65.76 55.32 18.9
Diluted headline earnings per
share (cents) 65.10 55.32 17.7
Distribution per share (cents) 47.00 40.00 17.5
Net asset value per share (cents) 411.36 381.81 7.7
ABRIDGED BALANCE SHEET
Reviewed year ended Audited restated
30/06/2006 year ended
30/06/2005
R"000
ASSETS
Non-current assets 346 849 330 636
- Property, plant and equipment 37 612 27 100
- Intangibles 271 865 271 865
- Interest in associate companies 11 258 6 678
- Loans receivable 14 791 11 940
- Deferred taxation assets 11 323 13 053
Current assets 92 707 77 328
- Inventory 2 232 5 024
- Trade and other receivables 39 493 26 660
- Loans receivable 2 449 1 420
- Cash and cash equivalents 45 689 41 637
- Taxation 2 844 2 587
TOTAL ASSETS 439 556 407 964
EQUITY AND LIABILITIES
Capital and reserves 362 640 336 591
- Ordinary share capital 1 1
- Share premium (net of treasury
shares) 82 239 119 265
- Accumulated profit 258 875 200 886
- Share-based payments reserve 16 313 14 809
- Minority shareholders
(deficit)/interest (238) 84
- Foreign currency translation
reserve 5 450 1 546
Non-current liabilities
- Deferred taxation liabilities 37 939 32 570
Current liabilities 38 977 38 803
- Trade and other payables 18 220 19 565
- Loans payable 9 023 5 036
- Shareholders for distribution 372 213
- Bank overdraft 4 801 1 934
- Taxation 6 561 12 055
TOTAL EQUITY AND LIABILITIES 439 556 407 964
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share capital
& premium
(net of treasury
Notes shares) Reserves
R"000
Balance at 1 July 2004
- as previously stated 183 295 -
IFRS adjustments
Trademark adjustment 2
Property, plant and equipment 3
Deferred taxation 4
Restated balance at 1 July 2004 183 295 -
Attributable earnings
- as previously stated
IFRS adjustments 2 298
Foreign currency translation 5 1 546
Property, plant and equipment 3
Deferred taxation 4
Share-based payments 6 752
Attributable earnings - restated
Other adjustment
Deferred taxation 7 14 057
Minority interests
Taxation charged to equity
Distributions (32 654)
Shares repurchased (31 375)
Restated balance at 30 June 2005 119 266 16 355
Attributable earnings for the year
Distributions (37 026 )
Share-based payments 1 504
Foreign currency translation 3 904
Minority interests
Balance at 30 June 2006 82 240 21 763
Accumulated
(loss)/
profit & minority
interests Total
R"000
Balance at 1 July 2004
- as previously stated (44 688) 138 607
IFRS adjustments 196 614 196 614
Trademark adjustment 263 391 263 391
Property, plant and equipment 825 825
Deferred taxation (67 602) (67 602)
Restated balance at 1 July 2004 151 926 335 221
Attributable earnings
- as previously stated 51 922 51 922
IFRS adjustments (1 277) 1 021
Foreign currency translation (1 493) 53
Property, plant and equipment 40 40
Deferred taxation 928 928
Share-based payments (752) -
Attributable earnings - restated 50 645
Other adjustment
Deferred taxation 14 057
Minority interests 84 84
Taxation charged to equity (1 685) (1 685)
Distributions (32 654)
Shares repurchased (31 375)
Restated balance at 30 June 2005 200 970 336 591
Attributable earnings for the year 57 989 57 989
Distributions (37 026)
Share-based payments 1 504
Foreign currency translation 3 904
Minority interests (322) (322)
Balance at 30 June 2006 258 637 362 640
ABRIDGED CASH FLOW STATEMENT
Reviewed year ended Audited restated
30/06/2006 year ended
30/06/2005
R"000
Cash generated from operations 82 175 67 541
Net interest received 4 007 4 823
Taxation paid (22 795) (13 892)
Distributions paid (36 867) (32 685)
Working capital changes (8 485) (5 297)
Cash flow from operating activities 18 035 20 490
Cash flow from investing activities (16 666) (23 845)
Cash flow from financing activities - (31 375)
Net movement in cash and cash
equivalents 1 369 (34 730)
Adjustment for foreign exchange
fluctuations (184) 383
Net cash and cash equivalents at
beginning of the year 39 703 74 050
Net cash and cash equivalents at
end of the year 40 888 39 703
ABRIDGED SEGMENT REPORT
Reviewed year ended Audited restated
30/06/2006 year ended
30/06/2005
R"000
REVENUE
Wholesale and distribution 73 852 110 165
Franchise - Spur 86 548 73 494
Franchise - Other 19 435 14 278
Corporate services 2 857 2 695
Group revenue 182 692 200 632
OPERATING PROFIT
Wholesale and distribution 27 432 23 034
Franchise - Spur 72 326 61 470
Franchise - Other 6 507 6 304
Corporate services (28 824) (24 708)
Group operating profit 77 441 66 100
Notes
1. Shares in issue less shares repurchased by a wholly owned subsidiary company
and share incentive company.
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 net of related taxes.
7. Deferred taxation - An adjustment was required to account for the taxation
benefit derived from the Spur management share incentive scheme.
GROUP ACCOUNTING POLICIES AND CONVERSION TO IFRS
The Spur Corporation Board of Directors has adopted International Financial
Reporting Standards (IFRS) for the year ended 30 June 2006. The financial
statements for the year ended 30 June 2006 will be the company"s first
financial statements prepared in compliance with IFRS and hence IFRS 1 - First
Time Adoption of IFRS has been applied in preparing these financial statements.
The company has adopted all applicable IFRS issued or revised up to 30 June
2006. These results have been reviewed by KPMG Inc., and their unqualified
review opinion is available for inspection at the company"s registered office.
In terms of IFRS 1, the group has restated its opening reserves and the
consolidated balance sheet as at 1 July 2004 as well as the consolidated income
statement and cash flow statement for the year ending 30 June 2005. For further
details on this see notes 2 - 7.
FINANCIAL AND OPERATIONAL REVIEW
Spur Corporation has continued to capitalise on buoyant trading conditions to
further entrench its position in the family sit-down restaurant market
in South Africa. Financial performance was boosted by improved second half
results, with the group experiencing a record number of restaurant openings and
upgrades of existing restaurants.
Restaurant turnover, which reflects in the franchise fee income received from
franchisees, increased by 17.7% and passed the R2 billion mark for the first
time. The turnover of existing restaurants, excluding new outlets opened during
the year, was 10.7% higher than the previous year.
Group revenue declined by 8.9% to R182.7 million (2005: R200.6 million) as a
result of the lower wholesale and distribution sales following the outsourcing
of the national distribution of restaurant supplies from the group"s central
kitchens to an independent distributor. The outsourcing of this function is
already proving beneficial to the group and will have a positive effect on
profitability and operating margins in the long term.
Operating profit grew by 17.2% to R77.4 million (2005: R66.1 million),
benefiting from disciplined cost control and restaurant revenue growth.
Headline earnings increased by 15.4% to R58.0 million (2005: R50.2 million).
Headline earnings per share rose by 18.9% to 65.76 cents (2005: 55.32 cents)
while diluted headline earnings per share increased by 17.7% to 65.10 cents
(2005: 55.32 cents).
The group has grown its base to 321 outlets across its three brands locally and
internationally following the addition of 34 restaurants during the financial
year. These comprise 15 Spur Steak Ranches, 9 Panarottis Pizza Pasta and 10
John Dory"s Fish & Grill outlets. Sixteen restaurants were revamped and this
has resulted in strong revenue growth in all these businesses.
A summary of the restaurant base at 30 June 2006 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 215 24 239
Panarottis Pizza Pasta 57 8 65
John Dory"s Fish & Grill 17 - 17
Total 289 32 321
Black economic empowerment remains a priority and Spur Corporation has
facilitated funding of R30 million from the Industrial Development Corporation
to finance black franchisees.
PROSPECTS
While the low interest rate environment has contributed to strong turnover
growth in recent years, the interest rate increases in June and August,
together with further anticipated hikes in the year ahead, are likely to result
in a slowdown in discretionary consumer spending. This creates an opportunity
for the group to make further market share gains across the three franchise
brands as consumers become more price sensitive and value-for-money conscious.
The continued expansion of our restaurant footprint will bolster revenue
growth.
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 R22.0
million payable to the company"s shareholders, in lieu of dividends, to be
written off against the share premium account, which amount equates to 25 cents
per ordinary share ("the distribution").
The distribution will be paid on Monday, 9 October 2006, to those shareholders
of the company who are recorded in the company"s register on Friday, 6 October
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 Friday, 29 September 2006.
The shares will commence trading ex the distribution on Monday, 2 October 2006.
Share certificates may not be dematerialised or rematerialised between Monday,
2 October and Friday, 6 October 2006 both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) P van Tonder (Managing Director)
Cape Town
13 September 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)
Spur Corporation Limited (Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
Registered Office
1 Waterford Mews, Century Boulevard, Century City, 7441
Transfer Secretaries
Computershare Investor Services 2004 (Pty) Ltd, 70 Marshall Street,
Johannesburg, 2001
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
Spur Steak Ranches
Panarotti"s
John Dory"s Fish & Grill
Date: 14/09/2006 12:00:07 PM Produced by the JSE SENS Department
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