Press release

Spur Corporation lifts revenue by 37%

September 11, 2008

Strong international performance; resilient trading locally

Cape Town – Franchise restaurant group Spur Corporation has lifted revenue by 37% to R296 million in the year to June 2008, driven by strong turnover growth in the group’s international operations. International restaurants accounted for 30% of turnover (2007: 11%) as the benefits of the investment in group-owned outlets in the United Kingdom over the past two years start to be realised.

Spur Corporation has also continued to show solid restaurant turnover growth locally despite the current economic climate impacting on disposable income levels in the group’s target market.

Group managing director, Pierre van Tonder, said the Spur brand in particular had shown its resilience, with restaurant turnover increasing by 8.6%. Despite food price inflation of about 17.6% for the year, the price impact on customers was minimised through innovative menu engineering.

Franchise fee income in Spur Steak Ranches rose by 10.3% to R111.4 million, Panarottis Pizza Pasta by 3.9% to R11.8 million and John Dory’s Fish & Grill by 35.9% to R5.6 million.

The results were negatively impacted by operational losses and an impairment of assets totalling R9.2 million in an unsuccessful fish and grill pilot outlet in Australia. This resulted in a 4.5% decline in operating profit to R85.5 million (2007: R89.6 million). The group does not plan to continue with this fish and grill concept.

Earnings in the prior year benefited from a tax credit of R16.6 million in the group’s international operations. This impacted headline earnings in the current year which declined by 16.5% to R67.4 million (2007: R80.7 million). Excluding this tax impact, headline earnings for the year increased by 5.1%.

Spur Corporation expanded its presence to 343 restaurants locally and internationally following the opening of 17 new restaurants. These comprised 14 Spur Steak Ranches, one Panarottis and two John Dory’s restaurants.

A further 29 restaurants were upgraded and eight relocated to improved trading areas.

Internationally the group has continued its measured expansion in the UK and Africa, with Spur restaurants opening in Newry and Belfast, Northern Ireland, and in Kampala, Uganda.

On the outlook for the new financial year, Van Tonder said slower consumer spending and high food prices will continue to be a challenge.

“Strategies have been developed to continuously improve the customer value proposition and we are launching a new children’s loyalty programme to further enhance the Spur experience for the whole family. We will continue to assist franchisees by sourcing quality products at competitive prices though the group’s procurement division. We anticipate that the group will deliver increased revenue and profitability in the year ahead,” he said.

Management expects to open 16 restaurants in South Africa in the 2009 financial year. “Opportunities are being investigated across Africa including Ghana, Kenya, Nigeria, Tanzania and Zambia. We are also looking at further locations in the UK and Ireland,” said Van Tonder.

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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