Press release

Spur Corporation increases headline EPS by 19%

September 14, 2006

Cape Town – Spur Corporation, the listed family restaurant franchisor, lifted headline earnings per share by 18.9% to 65.76 cents (55.32 cents) in the year ended June 2006 as the group opened a record number of new restaurants and increased restaurant turnover past the R2 billion mark.

Headline earnings grew by 15.4% to R58.0 million (R50.2 million) while diluted headline earnings per share rose by 17.7% to 65.10 cents (55.32 cents).

Group managing director, Pierre van Tonder, said the group has continued to capitalise on buoyant trading conditions to further entrench its position in the family sit-down restaurant market in South Africa.

“During the year we added a record number of 34 new restaurants across our three brands which saw our restaurant base pass the 300 mark to reach 321. Spur Corporation now has 289 restaurants in South Africa and 32 internationally,” he said.

“Spur Steak Ranches accounted for 15 additional restaurants, Panarottis Pizza Pasta nine and John Dory’s Fish & Grill 10 extra outlets. Sixteen restaurants were revamped and this has resulted in strong revenue growth in all these businesses.”

Restaurant turnover, which reflects in the franchise fee income received from franchisees, increased by 17.7%. The turnover of existing restaurants, excluding new restaurants opened during the year, was 10.7% higher.

Group revenue declined by 8.9% to R182.7 million (R200.6 million) as a result of the lower wholesale and distribution sales following the outsourcing of the national distribution of restaurant supplies from the group’s central kitchens to an independent distributor. “The outsourcing of this function is already proving beneficial for the group and will continue to have a positive effect on profitability and operating margins,” said Van Tonder.

Operating profit grew by 17.2% to R77.4 million (R66.1 million), benefiting from disciplined cost control and restaurant revenue growth.

Shareholders will receive a distribution of 47 cents per share for the year, up 17.5% on the previous year.

Black economic empowerment at both a shareholder and franchisee level is a corporate imperative for Spur Corporation, said Van Tonder. The group has facilitated funding of R30 million from the Industrial Development Corporation to finance black franchisees in opening their own restaurants.

The group plans to open at least 20 restaurants in the year ahead, while continuing its programme of revamping and relocating identified restaurants to improved quality trading areas. Internationally, three new restaurants are scheduled to open in Australia, two in Namibia and one in Botswana.

On the group’s prospects, Van Tonder said the recent interest rate increases, together with further anticipated hikes in the year ahead, are likely to result in a slowdown in discretionary consumer spending. “This creates an opportunity for the group to make further market share gains across the three franchise brands as consumers become more price sensitive and value-for-money conscious.”

“The continued expansion of our restaurant footprint will bolster revenue and translate into sustained earnings growth for 2007,” he added.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact

Pierre van Tonder / Ronel van Dijk
Spur Corporation
Tel (021) 466-8200

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

 

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