Press release

Spur Corporation restaurant sales up 14%

February 26, 2015

Cape Town – Restaurant franchise group Spur Corporation today reported a “highly competitive” trading performance for the six months to December 2014 with total restaurant sales growing 14.1% to R3.2 billion.

Sales in South African restaurants grew by 12.6% while international restaurant sales benefited from the depreciating Rand and increased by 25.8%. Based on a constant exchange rate, international restaurant sales grew by a creditable 19.1%.

The group’s profitability for the period was, however, impacted by a share-based payment expense of R32.96 million relating to the black economic empowerment transaction concluded with Grand Parade Investments in October 2014, as well as the increased number of shares in issue post this transaction.

The group’s comparable profit before tax, excluding the impact of the GPI transaction and exceptional and one-off items, increased by 15.3%.

Headline earnings declined 25.2% to R54.5 million with diluted headline earnings per share 28.2% lower at 61.2 cents per share. Excluding the impact of the GPI transaction, diluted HEPS increased by 17.0%.

The interim dividend was increased 8.8% to 62.0 cents per share. This equates to a dividend payment of R67.3 million, an increase of 20.9% on the prior period.

Discussing the trading performance, group chief executive Pierre van Tonder said Panarottis Pizza Pasta continued its strong recent growth trend and lifted sales by 25.4%, with the flagship Spur Steak Ranches chain growing by 11.1%.

“Our Spur Family Card continues to drive sales and customer loyalty, and we are adding over 16 000 new members each month. The loyalty programme now has 1.8 million active members who account for 41% of Spur’s restaurant sales.”

John Dory’s Fish Grill Sushi increased sales by 10.6% while Captain DoRegos declined by 18.2%.  The Hussar Grill, which was acquired from 1 January 2014, performed in line with expectations in its first year in the group.

“Trading over the all-important festive season was adversely impacted by Eskom load shedding. Continued load shedding is likely to impact local restaurant turnover into the future and we are working with our franchisees to install generators to limit trading disruption,” he said.

The group’s global restaurant base increased to 503 following the opening of a net 19 new outlets. The group has 56 restaurants outside of South Africa where three additional Spur Steak Ranches were opened in Namibia and a further franchised outlet opened in Perth, Australia.

Van Tonder said trading in Africa has generally been strong and supported by new restaurant openings in the current and prior periods. “The United Kingdom restaurant market remains fiercely competitive, while restaurant sales in Australia have been encouraging and benefited from the opening of two new outlets in the past 12 months,” he said.

In January the group announced it had concluded negotiations to purchase a 51% stake in RocoMamas, a trendy, niche brand offering hand-made “smash-style” burgers, ribs and wings through its chain of five franchised restaurants in Gauteng. The RocoMamas brand can be extended to a national chain of 30 to 40 outlets in the next few years, he said.

On the outlook for the group, Van Tonder said consumer spending in the middle income market is unlikely to improve markedly in the next 12 to 18 months. “The financial pressures on our customer base are being compounded by uncertainty in the country, which is weighing on consumer sentiment,” he said.

The group plans to open 21 restaurants in South Africa over the next six months, while in the international operations additional Spur stores will be opened in Nigeria, Zambia and Tanzania, a Panarottis in Tanzania and the first international John Dory’s will be opened in Zambia.

Ends

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   021 702 3102 / 082 468 1507

 

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