SUR - Spur Corporation Limited - Unaudited Interim
01 March 2007 12:00
SUR
SUR
SUR - Spur Corporation Limited - Unaudited Interim Results For the six months
ended 31 December 2006
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
2007 Unaudited Interim Results For the six months ended 31 December 2006
KEY PERFORMANCE
- Indicators
- Operating profit +22.5%
- Distribution per share +18.2%
ABRIDGED INCOME STATEMENT
Unaudited Unaudited restated
six months ended six months ended
31/12/06 31/12/05
R`000
Revenue 110 125 96 912
Operating Profit 46 381 37 850
Net interest received 2 188 2 887
Income/(loss) from
associate companies 297 197
Profit before taxation 48 866 40 934
Taxation (14 658) (11 764)
Profit for the period 34 208 29 170
Attributable to:
Equity holders of parent 34 206 29 381
Minority interests 2 (211)
Earnings per share
(cents) 38.80 33.33
Diluted earnings per
share (cents) 38.17 32.79
Distribution per share
(cents) 26.00 22.00
Audited
% year ended
change 30/06/06
R`000
Revenue 13.6 182 692
Operating Profit 22.5 77 441
Net interest received 4 007
Income/(loss) from
associate companies (253)
Profit before taxation 19.4 81 195
Taxation (23 528)
Profit for the period 17.3 57 667
Attributable to:
Equity holders of parent 16.4 57 989
Minority interests (322)
Earnings per share
(cents) 16.4 65.78
Diluted earnings per
share (cents) 16.4 65.12
Distribution per share
(cents) 18.2 47.00
RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited restated
six months ended six months ended
31/12/06 31/12/05
R`000
Earnings attributable to
ordinary shareholders 34 206 29 381
Headline earnings
adjustments:
Loss/(profit) on sale of
property, plant
and equipment 132 -
Loss on sale of associate company 104 -
Headline earnings 34 442 29 381
Audited
% year ended
change 30/06/06
R`000
Earnings attributable to
ordinary shareholders 57 989
Headline earnings
adjustments:
Loss/(profit) on sale of
property, plant
and equipment (18)
Loss on sale of associate company -
Headline earnings 17.2 57 971
ABRIDGED BALANCE SHEET
Unaudited at Unaudited restated at Audited at
31/12/06 31/12/05 30/06/06
R`000
ASSETS
NON-CURRENT ASSETS 358 601 334 186 346 849
- Property, plant and
equipment 53 576 31 502 37 612
- Intangibles 272 043 271 865 271 865
- Investments and loans 22 677 18 770 26 049
- Deferred taxation 10 305 12 049 11 323
CURRENT ASSETS 102 239 84 414 89 863
- Inventory 2 515 1 573 2 232
- Trade and other
receivables 58 673 44 430 41 942
- Cash and cash
equivalents 41 051 38 411 45 689
TOTAL ASSETS 460 840 418 600 436 712
EQUITY AND LIABILITIES
CAPITAL AND RESERVES 376 281 347 181 362 640
- Ordinary share capital 1 1 1
- Share premium (net of
treasury shares) 60 200 101 634 82 239
- Accumulated profit 293 081 230 268 258 875
- Share-based payment
reserve 17 065 15 561 16 313
- Minority shareholder
interests (20) (127) (238)
- Foreign currency
translation reserve 5 954 (156) 5 450
NON-CURRENT LIABILITY
- Deferred taxation 40 679 35 173 37 939
CURRENT LIABILITIES 43 880 36 246 36 133
- Trade and other
payables 35 746 27 119 27 243
- Shareholders for
distribution 405 333 372
- Bank overdraft 1 365 2 426 4 801
- Taxation 6 364 6 368 3 717
TOTAL EQUITY
AND LIABILITIES 460 840 418 600 436 712
ABRIDGED CASH FLOW STATEMENT
Unaudited six Unaudited restated Audited
months ended six months ended year ended
31/12/06 31/12/05 30/06/06
R`000
Cash generated from
operations 51 210 40 961 82 175
Net interest received 2 188 2 887 4 007
Taxation paid (8 560) (11 564) (22 794)
Distributions paid (22 006) (17 511) (36 867)
Working capital changes (8 611) (11 884) (8 486)
Cash flow from operating
activities 14 221 2 889 18 035
Cash flow from investing
activities (15 364) (6 314) (16 666)
Net movement in cash and
cash equivalents (1 143) (3 425) 1 369
Adjustment for foreign
exchange fluctuations (59) (293) (184)
Net cash and cash
equivalents at
beginning of period 40 888 39 703 39 703
Net cash and cash
equivalents at
end of period 39 686 35 985 40 888
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Ordinary Shares Accumulated
capital & premium profit & minority
(net of treasury shares) shareholder interests
R`000
Balance at 1 July 2005 119 266 200 970
Profit for the year 57 989
Distributions (37 026)
Share-based payment
reserve
Foreign currency
translation reserve
Minority interests (322)
Balance at 1 July 2006 82 240 258 637
Profit for the period 34 206
Distributions (22 039)
Share-based payment
reserve
Foreign currency
translation reserve
Minority interests 218
Balance at 31 December
2006 60 201 293 061
Other
reserves Total
R`000
Balance at 1 July 2005 16 355 336 591
Profit for the year 57 989
Distributions (37 026)
Share-based payment
reserve 1 504 1 504
Foreign currency
translation reserve 3 904 3 904
Minority interests (322)
Balance at 1 July 2006 21 763 362 640
Profit for the period 34 206
Distributions (22 039)
Share-based payment
reserve 752 752
Foreign currency
translation reserve 504 504
Minority interests 218
Balance at 31 December
2006 23 019 376 281
ABRIDGED SEGMENT REPORT
Unaudited six Unaudited restated Audited
months ended six months ended year ended
31/12/06 31/12/05 30/06/06
R`000
REVENUE
Wholesale and
distribution 42 710 42 301 73 852
Franchise - Spur 50 407 42 943 86 548
Franchise - Other 12 197 9 799 19 435
Retail stores 3 553 - -
Corporate services 1 258 1 869 2 857
Group revenue 110 125 96 912 182 692
PROFIT BEFORE TAXATION
Wholesale and
distribution 17 661 13 659 26 303
Franchise - Spur 42 685 35 112 72 326
Franchise - Other 3 784 2 102 6 508
Retail stores (903) - -
Corporate services (16 846) (13 023) (27 696)
Group operating profit 46 381 37 850 77 441
SUPPLEMENTARY INFORMATION
Unaudited Unaudited restated
six months ended six months ended
31/12/06 31/12/05
R`000
Shares in issue (000`s)
(Note 1) 88 156 88 156
Weighted average number of
shares in issue (000`s) 88 156 88 156
Headline earnings per
share (cents) 39.07 33.33
Diluted headline earnings
per share (cents) 38.44 32.79
Net asset value per share
(cents) 426.84 393.83
Audited
% year ended
Change 30/06/06
R`000
Shares in issue (000`s)
(Note 1) 88 156
Weighted average number of
shares in issue (000`s) 88 156
Headline earnings per
share (cents) 17.2 65.76
Diluted headline earnings
per share (cents) 17.2 65.10
Net asset value per share
(cents) 8.4 411.36
NOTES
1. Shares in issue less shares repurchased by a wholly owned subsidiary company
and share incentive trust.
2. The 31/12/05 results have been restated as a result of a change in the
interpretation of deferred taxation consequences relating to IFRS2 - Share-
based payments.
BASIS OF ACCOUNTING
These unaudited financial results for the six months ended 31 December 2006
have been prepared in accordance with accounting policies that comply with
International Financial Reporting Standards ("IFRS"), and have been
consistently applied with those adopted for the year ended 30 June 2006.
FINANCIAL AND OPERATIONAL REVIEW
Spur Corporation has produced a strong financial performance for the first half
of the year, with revenue growth being boosted by buoyant trading over the
Christmas period.
Restaurant turnover, which reflects in the royalty income received by the group
from franchisees, increased by 21.7%. The turnover of existing restaurants,
which excludes new outlets opened during the reporting period, grew by 17.1%.
This indicates that the group has continued to grow its share of the
increasingly competitive family sit-down restaurant market during this period.
Group revenue increased by 13.6% to R110.1 million (2005: R96.9 million).
The group lifted operating profit by 22.5% to R46.4 million (2005: R37.9
million) on the back of strong restaurant revenue growth and disciplined
management of expenses.
The outsourcing of the national distribution of restaurant supplies from the
group`s central kitchens has impacted positively on operating margins. This
outsourcing process is aimed at ensuring the consistency of all products in
restaurants and the maintenance of the `cold chain` from manufacturer to
delivery at the franchise outlet.
Headline earnings increased by 17.2% to R34.4 million (2005: R29.4 million)
with diluted headline earnings per share up 17.2% to 38.44 cents per share
(2005: 32.79 cents per share).
Spur Corporation has grown its restaurant base to 334 across the three brands
locally and internationally following the opening of a net 13 outlets during
the first six months of the financial year.
Internationally new Spur restaurants were opened in Gaborone, Windhoek and
Swakopmund and a further Panarottis outlet opened in Blacktown, Australia.
A further 16 restaurants were refurbished as part of the group`s ongoing
upgrading programme and five outlets were relocated to improved trading
environments to increase customer volumes.
A summary of the restaurant base at 31 December 2006 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 224 26 250
Panarottis Pizza Pasta 55 9 64
John Dory`s Fish & Grill 20 - 20
Total 299 35 334
PROSPECTS
The group is planning to open six restaurants in South Africa in the remainder
of the financial year. Internationally the group continues to focus on measured
expansion in Africa, Australia and the United Kingdom and is negotiating with
strategic alliance partners to capitalise on new opportunities in these
markets. Two new Spur restaurants will be opened in London, with new outlets
also planned for Kampala (Uganda) and Erina Fair (Australia). Panarottis opened
a new restaurant in Harare in February.
Spur Corporation is committed to a black economic empowerment strategy that
encompasses all elements of transformation. The recent finalisation of the
Codes of Good Practice on Black Economic Empowerment has provided the clarity
required for the group to continue with its development of a coherent
empowerment strategy. As previously advised, a R30 million funding facility has
been secured from the Industrial Development Corporation to finance black
franchisees and the group is actively seeking applications for funding from
potential black franchisees.
The trading momentum in the first half of the financial year has continued into
the first two months of 2007. Management does not expect that the 200 basis
points increase in interest rates in 2006 will have a major impact on the
group`s revenue owing to the high levels of customer loyalty across the group`s
three restaurant brands. Spur`s positioning as a family restaurant for the
growing middle market should result in a continued growth in market share as
consumers become more value-for-money conscious.
CAPITAL DISTRIBUTION
In accordance with a general authority given to the directors at the annual
general meeting held on 8 December 2006, shareholders are advised that the
board of directors of the company has approved a capital distribution of
R22.9 million payable to the company`s shareholders, in lieu of dividends, to
be written off against the share premium account, which amount equates to 26
cents per ordinary share ("the distribution").
The distribution will be paid on Monday, 26 March 2007, to those shareholders
of the company who are recorded in the company`s register on Friday, 23 March
2007 ("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, 15 March 2007.
The shares will commence trading ex the distribution on Friday, 16 March 2007.
Share certificates may not be dematerialised or rematerialised between Friday,
16 March 2007 and Friday, 23 March 2007 both days inclusive.
For and on behalf of the Board
A. Ambor (Executive Chairman)
P. van Tonder (Managing Director)
Cape Town
1 March 2007
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, R van Dijk. Company secretary: R van Dijk (* non-executive)
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spur.co.za
Date: 01/03/2007 12:00:00 Produced by the JSE SENS Department.