Press release

Spur lifts headline eps 18% and store base passes 300 mark

March 2, 2006

Cape Town – Family restaurant group, Spur Corporation, increased headline earnings per share by 18.3% to 32.96 cents (27.86 cents) in the six months to December 2005 as positive trading conditions in the domestic market continued into the group’s 2006 financial year.

Diluted headline earnings per share rose by 17.2% to 32.61 cents (27.82 cents).

Group managing director, Pierre van Tonder, said the Spur group continued to increase its share of the highly competitive family sit-down restaurant market and the total store base locally and internationally passed the 300 mark during the period.

“The group’s aggressive store expansion has continued, with an additional 22 stores opening in the first half of the year, comprising seven Spur Steak Ranches, five Panarottis Pizza Pasta and ten John Dory’s Fish & Grill outlets. This brings our number of stores to 309.”

“Our international operations, which account for slightly more than 10% of the stores, continue to offer exciting growth prospects. Three new stores will soon be opened in Australia – two Panarottis Pizza Pasta outlets and one Spur Steak Ranch,” he said.

The group’s operating profit rose 11.3% to R38 million (2004: R34.2 million). “When the effect of a share-based payments charge of R1.1 million following the adoption of International Financial Reporting Standards (IFRS), as well as the impact of a R1.3 million taxation refund in the prior year is excluded, comparable operating profit increased by 19%.”

Revenue declined in line with management’s expectations to R96.6 million (R105.6 million) owing to a decrease in wholesale and distribution sales following the outsourcing of the national distribution of restaurant supplies from the group’s central kitchens to an independent distributor.

The outsourcing of this key function is proving to be beneficial to the group. Sales of goods manufactured from the central kitchens and décor business increased by 25%.

Van Tonder said franchise royalty income, which reflects the growth in store turnover and is the barometer of the group’s trading performance, increased by 19%. “The turnover of comparable stores (excluding new stores opened during the year) was 13% higher, well ahead of the menu price inflation for the period.”

“While expenses have been well-managed, the planned investment in over 40 new stores this year has inevitably increased staff and training costs, and we incurred higher depreciation charges and the IFRS 2 expense,” he said.

On the group’s prospects for the second half, Van Tonder said new store openings and projected openings for the remainder of the financial year highlight the opportunities to increase the national store footprint across the three franchise brands and grow market share.

“The group is planning to open a further 22 stores in the second half of the year, including five new international outlets. New Spur stores will be opened in China (Fuzhou), Australia (Campbelltown) and Botswana (Gaborone), with two further Panarottis stores in Australia (Campbelltown and Blacktown).”

“The current favourable trading conditions are expected to continue and consumer spending has been boosted even further by the tax relief announced in the recent Budget. Assuming a stable interest rate environment, the group is confident of a strong second half performance which will translate into continued solid earnings growth for shareholders,” said Van Tonder.

Ends

Issued by Tier 1 Investor Relations on behalf of Spur Corporation

For further information kindly contact

Pierre van Tonder / Ronel van Dijk
Spur Corporation
Tel (021) 466-8200

Graeme Lillie
Tier 1 Investor Relations
Tel (021) 702-3102 / 082 468 1507

 

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