Press release

Spur Corporation lifts revenue and earnings by 10.5%

September 10, 2009

Cape Town – Restaurant group Spur Corporation demonstrated the strength of its brands as it increased revenue by 10.5% to R326.8 million (2008: R295.8 million) for the year to June 2009 in the most difficult trading conditions experienced locally and internationally in many years.

Headline earnings for the year increased 10.5% to R74.5 million (2008: R67.4 million), with diluted headline earnings per share growing 12.3% to 83.12 cents (2008: 73.99 cents).

Group managing director, Pierre van Tonder, said Spur Corporation had produced a sound financial performance in an environment where the restaurant industry continued to face pressure from reduced consumer spending and high food price inflation.

“While lower disposable income levels resulted in reduced frequency of visits to restaurants, the value-for-money offering of our brands sustained customer loyalty and resulted in restaurant turnover growth of 7.3%.”

Restaurant turnover in the Spur Steak Ranches brand increased 8.6% while Panarottis Pizza Pasta grew turnover by 4.4% and John Dory’s Fish & Grill by 18.2%. International restaurant turnover for existing business increased by 3.1%, with company-owned restaurants (retail outlets) increasing turnover by 11.5%.

Operating profit for the period increased by 14.2% to R97.7 million (2008: R85.5 million).

Van Tonder said the restaurant industry in Australia was particularly hard hit by the economic downturn. While three of the restaurants (two franchised and one retail) in the country delivered solid results, there were disappointing performances from two of the retail outlets. This resulted in an impairment charge of R10.0 million against these two restaurants.

Eleven restaurants were opened in South Africa and a further 28 outlets were refurbished or relocated to improved trading locations. Internationally, one new retail Spur restaurant was opened in Derby (England) and one new franchised Spur outlet in Nairobi (Kenya). The group now has 312 outlets in South Africa and 35 restaurants in the international operations across Africa, Australia, the United Kingdom and Ireland.

Spur has developed a signature store concept for high profile locations, with the first outlets in this format being the revamped restaurant in the V&A Waterfront in Cape Town, and new restaurants in Bryanston and the Bloemfontein Waterfront. A fourth signature store will be opened at Cape Town International Airport in late 2009. Further enhancements to the Panarottis’ décor and design are being added, while the roll out of sushi belts and décor upgrades in John Dory’s is proving successful. Franchisees are benefiting from continuing improvements in procurement and distribution efficiencies.

On the outlook for the group, Van Tonder said recessionary trading conditions are expected to remain a challenge in the year ahead. “However, we are well placed to continue to withstand the impact of the current economic climate. The value propositions of our brands are key in this environment.”

Van Tonder said while rising costs, including electricity and property rates and taxes, will put pressure on franchisees, strategies have been implemented to maintain franchisee profitability. This includes the ongoing improvement in procurement and distribution efficiencies, customer-focused menu engineering and enhancing operational standards and training.

The group plans to open at least 15 new franchised restaurants across the three brands in South Africa in the year ahead. In the international division, a new Spur retail outlet will be opened in Aberdeen (Scotland) in October 2009, and two new franchised outlets in Perth (Australia) and Dubai (United Arab Emirates), the group’s first outlet in the Middle East.

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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