Press release

Spur Corporation restaurant sales up 12.6%

February 25, 2016

Cape Town – Restaurant franchise group Spur Corporation delivered a resilient performance in the six months to December 2015 as total restaurant sales increased by 12.6% to R3.5 billion.

South African restaurant sales grew by 13.2% as trading conditions became increasingly difficult in the latter stages of the 2015 calendar year.

Panarottis Pizza Pasta produced another strong performance and grew restaurant sales by 21.6%. The Hussar Grill, which targets higher income customers, increased restaurant sales by 36.9%, John Dory’s by 20.2% and Spur Steak Ranches by 6.8%. International restaurant sales increased by 8.3%.

Group chief executive, Pierre van Tonder, said the RocoMamas chain has exceeded expectations since being acquired by the group in March 2015.

“Customers and franchisees have responded incredibly positively to the trendy brand image of RocoMamas and the quality product offering of hand-made ‘smash-style’ burgers, ribs and wings. In the past six months 23 restaurants have been opened, bringing the RocoMamas restaurant base to 32,” he said.

The group continued to expand its presence across all brands in South Africa, despite the slowing economy, opening 12 Spur, six Panarottis, three John Dory’s, five Captain DoRegos, three The Hussar Grill and 22 RocoMamas outlets.

Internationally, additional franchised Spur outlets were opened in Zambia and Kenya, a further Panarottis in Mauritius, the first Captain DoRegos in Botswana, the first international outlet for The Hussar Grill in Zambia and the first international outlet for RocoMamas in Namibia.

The worldwide restaurant base now stands at 572, including 62 restaurants outside South Africa.

The group’s earnings benefitted from the accounting in the prior period for the broad-based black economic empowerment equity transaction with Grand Parade Investments Limited in October 2014. The transaction resulted in the issue of 10.8 million new ordinary shares and a share-based payment expense of R33 million for the period to 31 December 2014.

Comparable profit before income tax, excluding the impact of the GPI transaction and exceptional and one-off items, increased by 5.8%.

Headline earnings increased by 79.6% to R97.9 million with headline earnings per share (HEPS) 66.7% higher at 101.96 cents. Comparable HEPS, excluding the GPI transaction and other exceptional and one-off items, increased by 1.4%.

The interim dividend was increased by 8.1% to 67 cents per share.

International revenue declined by 38.6% relative to the prior period. This is mainly due to the closure of two retail (company-owned) restaurants in the United Kingdom during the period and one during the previous financial year, as well as the disposal of the remaining three retail outlets in Australia in the previous financial year.

Van Tonder said trading in most African markets remained buoyant, “although the group faces the perennial challenges of operating with a US dollar denominated cost base (while revenue is generated in local currencies) as well as ongoing distribution and logistics hurdles.”

The group continued to rationalise its operations in the United Kingdom, closing the company-owned restaurants in Lakeside and Aberdeen during the period, in addition to the closure of the Wandsworth restaurant in the second half of the 2015 financial year. Management continues to evaluate options to dispose of underperforming operations in the UK.

On the outlook for the remainder of the 2016 financial year, Van Tonder said consumer spending will come under further pressure as South Africans face higher inflation and rising debt servicing costs.

“In this environment, we will remain competitive through aggressive, value focused marketing campaigns to attract cash-strapped consumers,” he said.

The group plans to open 31 restaurants in the second half of the financial year, including 17 RocoMamas restaurants. Six new franchised outlets will be opened internationally including the first outlet in Ethiopia and additional restaurants in Kenya, Nigeria, Zimbabwe and Australia.

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact:
Pierre van Tonder, Spur Corporation (021 555 5100)
Graeme Lillie, Tier 1 Investor Relations (082 468 1507)