Press release

Spur Corp restaurant sales up 12% in tough consumer climate

February 27, 2014

Cape Town – Restaurant franchisor Spur Corporation today reported a 10% increase in revenue to R376 million for the six months to December 2013, driven by a 16% increase in international restaurant sales and strong performances locally by the Spur, Panarottis and John Dory’s franchise chains.

Total restaurant sales increased by 12% to R2.8 billion, with sales at Spur increasing 10%, Panarottis by 26% and John Dory’s by 19%.

Profitability for the period was, however, impacted by exceptional and one-off items. This resulted in headline earnings declining by 6.1% to R72.9 million, with diluted headline earnings per share 5.5% lower at 85.1 cents. The interim dividend was increased by 3.6% to 57.0 cents per share.

Comparable profit before tax, excluding these exceptional and one-off items, increased by 5.5%. The items include increased foreign exchange losses of R2.2 million, closure costs of R1.2 million for the Captain DoRegos distribution centre and an unfavourable swing of R11.3 million in the accounting treatment of the cost of the group’s long-term share incentive scheme.

Chief executive Pierre van Tonder said the sales performance was pleasing in the current consumer environment.

“Innovative marketing campaigns, promotions, dynamic branding and menu improvements have contributed to the group’s ability to appeal consistently to a range of consumers,” he said. “At the same time our franchisees across the portfolio have continued to invest in restaurant refurbishments, upgrades and children’s entertainment facilities.”

Sales in Captain DoRegos outlets, which account for 3% of group restaurant sales, declined by 9.2%, reflecting the economic pressure being experienced by its lower LSM target market. Six redundant outlets were closed and four opened during the period, bringing the total number of outlets in South Africa to 70.

International restaurant sales sustained positive growth and Spur franchised outlets were opened in Tanzania and Swaziland. Van Tonder said the group continues to expand in countries where it has an existing presence, with Namibia being the strongest performer over the reporting period.

A net 13 new restaurants were opened across the four brands in the past six months, increasing the restaurant base to 492, including 49 operating outside of South Africa.

Spur Corporation bought the Western Cape-based Hussar Grill steakhouse chain for R35 million, effective from 1 January 2014. The chain comprises six restaurants and was started in 1964 in Rondebosch in Cape Town.

“Hussar Grill gives the group exposure to an upmarket specialist steakhouse chain and provides a strong growth opportunity with the potential for national expansion,” he said.

On the outlook for the remainder of the financial year, Van Tonder said financial pressures on consumers are expected to continue in the months ahead, compounded by the recent increase in interest rates.

“In this environment we will continue to focus on rewarding our customers with great value and an excellent dining experience to maintain and grow our market share,” he said.

Fourteen new restaurants will be opened across the four brands in South Africa while seven outlets will be opened internationally. These include additional franchised Spur restaurants in Nigeria, Zambia and Tanzania, and two further Spur and two Captain DoRegos outlets in Namibia.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact

Pierre van Tonder, Spur Corporation: 021 555 5100

Graeme Lillie, Tier 1 Investor Relations: 021 702 3102 / 082 468 1507

 

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