Press release

Spur Corporation increases first half revenue by 13%

March 3, 2011

Cape Town – Franchise restaurant group Spur Corporation increased revenue by 13.3% to R203.3 million in the six months to 31 December 2010.

Diluted headline earnings per share for the period grew by 9.5% to 55.28 cents and an interim dividend of 33.0 cents per share was declared.

Managing director, Pierre van Tonder, said the group’s performance benefited from new restaurant openings locally and internationally, the launch of the Spur Family Card loyalty programme and value-based promotional campaigns.

“It is also pleasing that we have seen an increase in the frequency of customer visits across our three brands.”

He said food prices had been relatively stable for most of the period and there were no menu price increases during the past six months in South Africa.

Discussing the trading performance, he said Spur Steak Ranches increased restaurant turnover by 11.1%, Panarottis Pizza Pasta by 5.3% and John Dory’s Fish & Grill by 11.3%. Franchise fee income in Spur increased by 11.3% to R70.2 million, Panarottis by 6.8% to R6.0 million and John Dory’s by 10.8% to R5.0 million.

International revenue grew by 16.3% to R57.5 million, boosted by the opening of two new restaurants and the consolidation of three additional outlets.

“Trading conditions in the international markets were more challenging than the local environment. This was compounded by the extreme weather conditions in the United Kingdom in December which impacted our trading in several locations.”

Manufacturing and distribution revenue was 14.4% higher at R54.9 million. The manufacturing operations were consolidated into one facility in Cape Town, with the Johannesburg building being sold for R16.8 million in January 2011.

The group’s profit before tax for the six months increased by 6.5% to R72.9 million. Comparable operating profit before finance income, excluding exceptional one-off items, grew by 11.5%. One-off items include the start-up costs of international company-owned restaurants of R3.5 million and costs related to the centralisation of the manufacturing facilities of R1.1 million.

Spur Corporation’s restaurant base was expanded to 367, with 328 outlets in South Africa and 39 across the international operations.

Internationally a group-owned Spur restaurant was opened in Gateshead (England) and a new franchised Spur restaurant in Ezulwini (Swaziland). The Spur in Belfast (Northern Ireland) was converted from a franchised to a group-owned outlet.  In Australia the group purchased the remaining 50% shareholding of the Spur in Penrith and relocated the Panarottis outlet in Mingara to Tuggerah, acquiring a majority equity interest in the outlet at the same time.

In the months ahead the group will continue its restaurant expansion and refurbishment programme in South Africa, while a new Spur outlet will be opened in Lilongwe in Malawi. No new restaurants are planned for the United Kingdom or Australia in the remainder of the financial year.

On the outlook for the group, Van Tonder said although consumer optimism has improved in recent months, heavy debt burdens, increasing fuel, utility and food prices and the anticipated increase in inflation remain a challenge.

“In this environment, sales growth in our restaurants will be driven by continued value-added and innovative promotions. These include a breakfast offering in Spur, week-day value specials in Panarottis and family weekend specials in John Dory’s,” he said.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact

Pierre van Tonder
Spur Corporation
Tel 021 555 5100

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

 

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