Press release

Spur Corporation lifts headline earnings by 17.2%

March 1, 2007

Cape Town – Spur Corporation, the listed family sit-down restaurant group, has produced a strong financial performance for the six months to 31 December 2006, with buoyant trading over the Christmas period boosting revenue growth.

Headline earnings increased by 17.2% to R34.4 million (2005: R29.4 million) while diluted headline earnings per share were also up 17.2% to 38.44 cents per share (2005: 32.79 cents per share).

Restaurant turnover, which reflects in the royalty income received by the group from franchisees, increased by 21.7%. The turnover of existing restaurants, excluding new outlets opened during the reporting period, grew by 17.1%, indicating that the group has continued to grow its market share.

Group revenue increased by 13.6% to R110.1 million (2005: R96.9 million).

The group lifted operating profit by 22.5% to R46.4 million (2005: R37.9 million) on the back of strong restaurant revenue growth and disciplined management of expenses.

Group managing director, Pierre van Tonder, said Spur Corporation has grown its restaurant base to 334 locally and internationally across its three brands – Spur Steak Ranches, Panarottis Pizza Pasta and John Dory’s Fish & Grill – following the opening of a net 13 outlets during the half year.

“We have increased our international portfolio to 35 restaurants, with new Spur restaurants having opened in Gaborone, Windhoek and Swakopmund and a Panarottis outlet having opened in Blacktown, Australia.”

“A further 16 restaurants were refurbished as part of the group’s ongoing upgrading programme and five outlets were relocated to improved trading environments to increase customer volumes.”

He said the outsourcing of the national distribution of restaurant supplies from the group’s central kitchens, which was completed during 2006, has impacted positively on operating margins. “This outsourcing process is aimed at ensuring the consistency of all products in our restaurants and the maintenance of the ‘cold chain’ from manufacturer to delivery at the franchise outlet.”

Executive chairman Allen Ambor said Spur Corporation is committed to a black economic empowerment strategy that encompasses all elements of transformation. “The recent finalisation of the Codes of Good Practice on Black Economic Empowerment has provided the necessary clarity for the group to continue with the development of its empowerment strategy.”

“During 2006 a R30 million funding facility was secured from the Industrial Development Corporation to finance black franchisees and the group is actively seeking applications for funding from potential black franchisees,” added Ambor.

The group is planning to open six restaurants in South Africa in the remainder of the financial year.

Van Tonder said the group continues to focus on measured expansion in Africa, Australia and the United Kingdom and is negotiating with strategic alliance partners to capitalise on new opportunities in these markets. Two Spur restaurants will be opened in London, with new outlets also planned for Kampala (Uganda) and Erina Fair (Australia). Panarottis opened a restaurant in Harare in February.

On the outlook for the group, Van Tonder said the trading momentum during the first half year has continued into the first two months of 2007. “We do not expect the 200 basis points increase in interest rates in 2006 to have a major impact on our revenue owing to the high levels of customer loyalty that we enjoy across our three restaurant brands.”

“Spur’s positioning as a family restaurant for the growing middle class market should lead to continued growth in market share as consumers become more quality and value-for-money conscious,” he said.

Ends

Issued on behalf of Spur Corporation by Tier 1 Investor Relations

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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