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SUR - Spur Corporation Limited - Reviewed condensed consolidated results and
cash dividend declaration for the year ended 30 June 2011
Spur Corporation Limited
(Registration number 1998/000828/06)
Share code: SUR
ISIN: ZAE000022653
REVIEWED CONDENSED CONSOLIDATED RESULTS AND CASH DIVIDEND DECLARATION
for the year ended 30 June 2011
Revenue UP 15.9%
Dividend per share UP 10.0%
PREPARED UNDER THE SUPERVISION OF THE GROUP FINANCIAL DIRECTOR, RONEL VAN DIJK
CA(SA)
TRADING PERFORMANCE
Spur Corporation reported a stronger second half trading performance in an
environment of improving consumer sentiment in South Africa and increased
revenue by 15.9% to R403.4 million for the year.
The Spur Steak Ranches brand again showed its resilience and increased turnover
by 9.9% as higher customer traffic saw the brand gain market share. Growth has
been driven by value-added promotional campaigns and price-driven advertising
focusing on contemporary and humourous elements of broader South African
society.
Spur`s very successful entry into the breakfast market through the Spur Unreal
Breakfast promotion has created an additional revenue stream and captured market
share from other national chains who have previously dominated this market.
Panarottis Pizza Pasta grew turnover by 4.5% as the repositioning of the brand
is gaining traction with customers. John Dory`s Fish & Grill responded well
to the tough trading environment in the highly competitive fish market and
increased revenue by 9.8%.
FINANCIAL PERFORMANCE
Franchise fee income in Spur increased by 10.1% to R137.0 million, Panarottis by
7.2% to R11.5 million and John Dory`s by 10.6% to R9.8 million.
International revenue, comprising franchise fee income and restaurant turnover,
grew by 25.8% to R116.3 million, lifted by the opening of two new outlets
(including one group-owned outlet) and the consolidation of three additional
outlets.
Retail trading conditions remain difficult in the foreign markets in which the
group operates, particularly in the United Kingdom and Ireland. Owing to the
uncertain economic environment the board has taken a prudent decision to impair
the assets of the group-owned restaurants in Wandsworth and Gateshead, which was
opened in August 2010, in England. The impact of the impairments on the group`s
profit is R18.5 million. These restaurants are currently trading in a cash-flow
neutral position and management believes both outlets remain viable. Operational
and marketing plans have been implemented to improve performance and turnover in
both outlets has been encouraging for the past three months. The appointment of
a full-time resource to head the group`s operations in the UK is anticipated to
assist in improving ongoing performance. The tough trading conditions have also
resulted in the closure of the franchised restaurants in Newry and Limerick in
Ireland during the period.
The Australian business has started to turn around following last year`s
consolidation and reported improved profitability for the period. The
restaurants in Africa have generally traded well and growth prospects remain
positive, although the group continues to encounter challenges in specific
markets and some planned restaurant openings were postponed owing to delays in
the completion of retail developments.
Manufacturing and distribution revenue increased by 16.0% to R109.0 million. The
group`s manufacturing operations were consolidated into one facility in Cape
Town during the first half of the year and the benefits of improved efficiencies
are expected to be realised in the new financial year. The group continues to
expand the basket of merchandise which is centrally procured to enhance quality
standards and secure better pricing to benefit franchisee profitability. The
building housing the Johannesburg manufacturing facility was sold for R16.8
million while a building for decor production and warehousing in Cape Town was
purchased for R10.0 million.
The group`s profit before income tax declined by 5.0% to R116.8 million,
reflecting the impact of the impairments of the two UK restaurants. Headline
earnings increased by 0.8% to R85.8 million, with diluted headline earnings per
share growing by 2.9% to 97.4 cents.
A final dividend of 33.0 cents per share has been declared, bringing the total
dividend for the year to 66.0 cents per share, an increase of 10.0% on the
previous year.
RESTAURANT EXPANSION
The South African restaurant base was expanded with the opening of 10 new Spur,
seven Panarottis and three John Dory`s outlets. A total of 25 restaurants were
refurbished and nine were relocated to improved trading sites.
Internationally, a new franchised Spur restaurant opened in Ezulwini
(Swaziland) in the first half of the year.
The Spur in Belfast (Northern Ireland) was converted from a franchised to a
group-owned outlet and the group also purchased the remaining 50% shareholding
of the Spur in Penrith (Australia). The Panarottis outlet in Mingara
(Australia), in which the group had a minority interest, was relocated to a
better trading site in Tuggerah and the group now has a majority interest in the
outlet which is trading well.
A summary of the group`s restaurant footprint at 30 June 2011 is as follows:
Franchise brand South Africa International Total
Spur Steak Ranches 249 31 280
Panarottis Pizza Pasta 52 5 57
John Dory`s Fish & Grill 27 - 27
Total 328 36 364
PROSPECTS
The group plans to increase its investment in value-added marketing campaigns
with suppliers and build on the momentum created in the breakfast market. Brand
loyalty will be entrenched through the aggressive marketing of the Spur Family
Card.
Consumers are under renewed pressure owing to rising electricity, fuel and food
costs. Franchisees face inflationary pressures from higher wages, property rates
and utility costs and management will focus on stringent compliance with
operating standards and continuous repositioning of the menu to manage the
profitability of franchisees.
Addressing the performance of the group-owned restaurants in the UK is a
priority for management.
In the year ahead 11 Spur, two Panarottis and two John Dory`s restaurants are
planned for South Africa, while the ongoing refurbishment and relocation
programme should also generate increased revenue. International expansion will
be focused primarily on Africa where new restaurants are expected to be opened
in Malawi, Tanzania, Namibia, Nigeria and Mauritius.
The group will not be investing in further company-owned restaurants in the year
ahead.
CASH DIVIDEND
In accordance with a general authority given to the directors at the annual
general meeting held on 10 December 2010, shareholders are advised that the
board of directors of the company has approved and declared a final cash
dividend of R32.2 million for the year ended 30 June 2011, which equates to 33.0
cents per share.
The cash dividend will be paid on Monday, 10 October 2011, to those shareholders
of the company who are recorded in the company`s register on Friday, 7 October
2011 ("the record date").
The last day to trade (cum dividend) in the company`s shares for purposes of
entitlement to the dividend will be Friday, 30 September 2011. The shares will
commence trading ex dividend on Monday, 3 October 2011.
Share certificates may not be dematerialised or rematerialised between Monday, 3
October 2011 and Friday, 7 October 2011, both days inclusive.
For and on behalf of the Board
A Ambor (Executive Chairman) Cape Town
P van Tonder (Managing Director) 7 September 2011
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
year ended year ended %
R`000 30/06/11 30/06/10 Change
Revenue 403 396 348 024 15.9
Operating profit before finance income 111 969 118 549 (5.6)
Net finance income 4 861 4 380
Profit before income tax 116 830 122 929 (5.0)
Income tax expense (48 742) (44 562)
Profit for the year 68 088 78 367 (13.1)
Other comprehensive income/(losses): 860 (14 093)
Foreign currency translation differences
for foreign operations 2 406 (21 719)
Foreign exchange (loss)/gain on net
investments in foreign operations (2 075) 10 236
Tax on foreign exchange gain/(loss) on
net investments in foreign operations 529 (2 610)
Total comprehensive income for the year 68 948 64 274
Profit attributable to:
Owners of the company 70 789 77 557 (8.7)
Non-controlling interest (2 701) 810
Profit for the year 68 088 78 367 (13.1)
Total comprehensive income attributable to:
Owners of the company 71 648 63 540
Non-controlling interest (2 700) 734
Total comprehensive income for the year 68 948 64 274
Per share (cents)
Basic earnings 80.65 88.27 (8.6)
Diluted earnings 80.37 86.25 (6.8)
RECONCILIATION OF HEADLINE EARNINGS
Profit attributable to ordinary shareholders 70 789 77 557 (8.7)
Headline earnings adjustments:
Impairment of property, plant and equipment 11 169 7 994
Impairment of goodwill 4 948 -
Profit on disposal of property, plant
and equipment (net of tax) (1 147) (484)
Headline earnings 85 759 85 067 0.8
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
R`000 at 30/06/11 at 30/06/10
ASSETS
Non-current assets 371 486 382 609
Property, plant and equipment 70 387 75 184
Intangible assets and goodwill 281 477 279 609
Investments and loans 5 857 14 533
Deferred tax 11 967 11 128
Leasing rights 1 798 2 155
Current assets 184 477 148 116
Inventories 5 621 6 389
Tax receivable 4 410 3 600
Trade and other receivables 58 480 53 499
Cash and cash equivalents 115 966 84 628
TOTAL ASSETS 555 963 530 725
EQUITY
Total equity 408 236 403 295
Ordinary share capital 1 1
Share premium 6 6
Shares repurchased by subsidiaries (38 941) (29 910)
Foreign currency translation reserve (4 270) (5 129)
Retained earnings 450 507 434 015
Total equity attributable to equity holders of the
parent 407 303 398 983
Non-controlling interest 933 4 312
LIABILITIES
Non-current liabilities 73 090 64 569
Long-term loans payable 2 923 7 181
Employee benefits 555 -
Other financial liability 2 627 -
Operating lease liability 6 531 3 328
Deferred tax 60 454 54 060
Current liabilities 74 637 62 861
Bank overdrafts 2 256 3 596
Tax payable 6 622 4 832
Trade and other payables 65 147 53 969
Shareholders for dividend 612 464
TOTAL EQUITY AND LIABILITIES 555 963 530 725
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Reviewed Audited
year ended year ended
R`000 30/06/11 30/06/10
Operating profit before working capital changes 144 655 134 474
Working capital changes 2 631 3 394
Cash generated from operations 147 286 137 868
Net interest received 4 861 4 948
Tax paid (41 149) (49 528)
Distributions paid (54 785) (80 708)
Net cash flow from operating activities 56 213 12 580
Cash flow from investing activities (23 567) (13 574)
Cash flow from financing activities 48 771
Net movement in cash and cash equivalents 32 694 (223)
Effect of foreign exchange fluctuations (16) 221
Net cash and cash equivalents at beginning of year 81 032 81 034
Net cash and cash equivalents at end of year 113 710 81 032
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Ordinary share capital
& share premium (net Other
R`000 of treasury shares) reserves
Balance at 1 July 2009 (25 342) 29 442
Total comprehensive (losses)/income for the year - (14 017)
Profit for the year - -
Other comprehensive losses - (14 017)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (4 561) (20 554)
Distributions to equity holders - -
Impact of incentive scheme (including tax) (4 561) -
Share-based payments transactions net of tax - 1 211
Transfer of share-based payment reserve to
retained earnings - (21 765)
Balance at 30 June 2010 (29 903) (5 129)
Total comprehensive income for the year - 859
Profit for the year - -
Other comprehensive income - 859
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (9 031) -
Distributions to equity holders - -
Impact of incentive scheme (including tax) - -
Purchase of own shares (9 031) -
Changes in ownership interests in subsidiaries that
do not result in a loss of control - -
Acquisition of minority interest in subsidiary - -
Total transactions with owners (9 031) -
Balance at 30 June 2011 (38 934) (4 270)
Retained earnings
and non-controlling
R`000 interest Total
Balance at 1 July 2009 430 220 434 320
Total comprehensive (losses)/income for the year 78 291 64 274
Profit for the year 78 367 78 367
Other comprehensive losses (76) (14 093)
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (70 184) (95 299)
Distributions to equity holders (53 442) (53 442)
Impact of incentive scheme (including tax) (38 507) (43 068)
Share-based payments transactions net of tax - 1 211
Transfer of share-based payment reserve to
retained earnings 21 765 -
Balance at 30 June 2010 438 327 403 295
Total comprehensive income for the year 68 089 68 948
Profit for the year 68 088 68 088
Other comprehensive income 1 860
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners (54 997) (64 028)
Distributions to equity holders (54 298) (54 298)
Impact of incentive scheme (including tax) (699) (699)
Purchase of own shares - (9 031)
Changes in ownership interests in subsidiaries that
do not result in a loss of control 21 21
Acquisition of minority interest in subsidiary 21 21
Total transactions with owners (54 976) (64 007)
Balance at 30 June 2011 451 440 408 236
CONDENSED CONSOLIDATED OPERATING SEGMENT REPORT
Reviewed Audited
year ended year ended
R`000 30/06/11 30/06/10
External revenues
Manufacturing and distribution 109 043 94 008
Franchise - Spur 137 004 124 411
Franchise - Panarottis 11 526 10 751
Franchise - John Dory`s 9 782 8 847
Other South Africa 19 710 17 554
Total South Africa segments 287 065 255 571
Unallocated - South Africa 39 -
Total South Africa 287 104 255 571
United Kingdom 65 936 56 080
Australia 43 464 30 013
Other International 6 892 6 360
Total International segments 116 292 92 453
TOTAL EXTERNAL REVENUES 403 396 348 024
Profit/(loss) before income tax
Manufacturing and distribution 49 633 44 714
Franchise - Spur 118 712 107 339
Franchise - Panarottis 6 837 6 560
Franchise - John Dory`s 4 543 4 567
Other South Africa (896) (691)
Total South Africa segments 178 829 162 489
Unallocated - South Africa (34 022) (28 220)
Total South Africa 144 807 134 269
United Kingdom* (27 688) (12 396)
Australia (1 279) (1 807)
Other International 5 226 5 287
Total International segments (23 741) (8 916)
Unallocated - International (4 236) (2 424)
Total International (27 977) (11 340)
TOTAL PROFIT BEFORE INCOME TAX 116 830 122 929
* Includes impairment of property, plant and equipment of R13.534 million (2010:
R7.994 million) and impairment of goodwill of R4.948 million (2010: Rnil).
SUPPLEMENTARY INFORMATION
Reviewed Audited
year ended year ended %
30/06/11 30/06/10 Change
Shares in issue (000`s) (note 2) 87 214 87 865
Weighted average number of shares in
issue (000`s) 87 777 87 865
Diluted weighted average number of shares
in issue (000`s) 88 084 89 929
Headline earnings per share (cents) 97.70 96.82 0.9
Diluted headline earnings per share (cents) 97.36 94.60 2.9
Net asset value per share (cents) 468.09 458.99 2.0
Dividend per share (cents) 66.00 60.00 10.0
NOTES
1. Review report
The consolidated statement of financial position at 30 June 2011 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 report is available for inspection
at the company`s registered office.
Basis of Preparation
The financial statements for the year ended 30 June 2011 have been prepared in
accordance with the recognition and measurement principles of IFRS, the
presentation and disclosure requirements of IAS 34 Interim Financial Reporting,
the AC 500 Standards as issued by the Accounting Practices Board, the
requirements of the South African Companies Act of 2008 and the JSE Listing
Requirements. 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 2010.
2. Shares in issue less shares repurchased by a wholly owned subsidiary company
and share incentive special purpose entity.
Directors
Executive Chairman: A Ambor
Managing Director: P van Tonder
Executive: M Farrelly, P Joffe, K Robertson, R van Dijk
Non-executive: K Getz, D Hyde, M Kuzwayo, K Madders MBE (British), M Morojele
Company secretary: R van Dijk
Registered Office: 1 Waterford Mews, Century Blvd, Century City, 7441
Transfer Secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall
Street, Johannesburg, 2001
Sponsor: Sasfin Capital (A division of Sasfin Bank Ltd)
www.spurcorporation.co.za
Date: 08/09/2011 12:00:02 Supplied by www.sharenet.co.za
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