Spur final results June 2018
Revenue for the year from continuing operations went up 3% to R667.2 million (R648 million) whilst gross profit rose 0.8% to R473.2 million (R469.3 million). Operating profit before finance income increased by 15.9% to R201.9 million (R174.1 million), Furthermore, headline earnings per share from continuing operations grew by 14% to 160.76 cents per share (140.96 cents per share).
Shareholders are advised that the board of directors of the company has, on Wednesday, 5 September 2018, resolved to declare a final gross cash dividend for the year to 30 June 2018 of R65.089 million, which equates to 60 cents per share for each of the 108 480 926 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 20%.
In an environment of increasing financial pressure on the group's middle-income customer base, with little relief expected in the short to medium term, the group's focus will remain on product quality, value, customer experience and innovation to retain and grow the customer base and ensure that the franchise model is sustainable. The group plans to increase market share by capitalising on the growing delivery opportunity through services including Uber Eats and Mr Delivery as well as "call and collect". These services are becoming increasingly popular across all brands.
Management recognises the increasing role of digital technology in customers' social and purchasing behaviour and will, as a result, be launching new e-commerce apps in the year ahead which will cater for payment facilities linked to loyalty, earning and redeeming of loyalty benefits, e-gifting, links to delivery services and product promotions. The restaurant footprint in South Africa will be expanded with the opening of at least 29 restaurants across Spur Steak Ranches (five), Panarottis (four), John Dory's (six), RocoMamas (eight), The Hussar Grill (three), Casa Bella (two), and Spur Grill & Go (one).
The group aims to open at least 14 international restaurants in the year ahead. The expansion will focus mainly on Africa where new outlets will be opened in Zambia (eight), Namibia (two) and Botswana (one). The group's first restaurant will be opened in India (RocoMamas) with a further two outlets planned for Saudi Arabia (RocoMamas and The Hussar Grill). The group is also in advanced negotiations to expand into Cyprus (RocoMamas) and Pakistan (Spur) where potential sites are currently being assessed. Based on the performance of the operations in Australia and the related impairments, the group is re-evaluating the business model in that territory with the aim of implementing technology solutions to reduce labour costs while actively engaging with landlords and franchisees to reduce restaurant sizes to ensure the sustainability of the business. After the financial year-end the group expanded its restaurant portfolio with the acquisition of a 51% shareholding in Nikos Coalgrill Greek, effective from 1 August 2018. Spur Corporation has an option to acquire an additional 19% shareholding after three years. Nikos currently operates six franchised restaurants and four new outlets are confirmed to open in the year ahead. Management believes the brand has the potential to expand to around 50 restaurants nationally in the medium term.