Spur Corporation Limited · JSE:SUR

Spur — H1 FY2019 Earnings Presentation

46 slides from Spur's earnings presentation, 2019

  1. Slide 1: Interim Results for the Six Month Period Ended 31 December 2018

    INTERIM RESULTS RESULTS FOR THE INTERIM YEAR ENDED RESULTS FOR THE PERIOD ENDED FOR THE SIX30 JUN 2017 MONTH PERIOD ENDED 31 DECEMBER 2017 31 DECEMBER 2018

  2. Slide 2: Governance Update

    GOVERNANCE UPDATE

  3. Slide 3: Governance Update

    GOVERNANCE UPDATE  Executive chairman, Allen Ambor, retires 28 February 2019  Mike Bosman, appointed independent non-executive chairman, effective 1 March 2019  Muzi Kuzwayo to replace Mike Bosman on the Audit Committee, effective 1 March 2019

  4. Slide 4: Slide 4

  5. Slide 5: Trading Environment

    TRADING ENVIRONMENT  Low economic growth in South Africa and Australia  Increasing demands on disposable income  Weakening consumer sentiment Restaurant Drop in sales shopping centre foot traffic up 129%  Continuous strategic focus to drive product quality, service excellence and value across a

  6. Slide 6: Financial Results for the Six Month Period Ended 31 December 2018

    FINANCIAL RESULTS FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2018

  7. Slide 7: The Period at a Glance

    THE PERIOD AT A GLANCE  Revenue 5.3%  Profit before tax 0.8%  Comparable profit before tax 12.4%  Profit attributable to ordinary shareholders 11.2%  Comparable net profit attributable to ordinary shareholders 11.2%  Effective tax rate 32.5% (HY 2018: 25.6%)  Dividend per share 63.0 cents

  8. Slide 8: Restaurant Turnovers – South Africa

    RESTAURANT TURNOVERS* – SOUTH AFRICA R’000 Brand HY 2019 HY 2018 % change (# of outlets) (# of outlets) Spur Steak Ranches 2 378 138 (296) 2 241 595 (292) 6.1 Pizza Pasta 410 388 (93) 416 479 (90) (1.5) John Dory’s Fish Grill Sushi 236 888 (53) 238 824 (51) (0.8) The Hussar Grill 102 652 (20) 90 172

  9. Slide 9: Adoption of New Standards

    ADOPTION OF NEW STANDARDS  IFRS 15 – effect on recognition of initial licence fees and classification of certain items  IFRS 9 – effect on loans and expected credit loss recognised in income statement

  10. Slide 10: SA Trading Brands

    SA TRADING BRANDS Brand % of % change in % change in % margin – % margin – segment revenue operating CY PY revenue profit Spur 68.9 12.2 11.6 83.7 84.1 Pizza Pasta 11.2 5.4 9.4 63.4 61.1 John Dory’s 6.2 2.6 4.3 47.3 46.5 The Hussar Grill 2.6* 6.2* 12.3 59.6 56.4 RocoMamas 10.2* 7.6* 8.2 72.3 71.9 Ni

  11. Slide 11: South Africa Retail

    SOUTH AFRICA RETAIL* R’000 HY 2019 HY 2018 % change Revenue 34 354 35 144 (2.2) Operating profit 4 171 3 571 16.8 Operating margin 12.1% 10.2% 2.0 * Comprises four The Hussar Grill restaurants and one RocoMamas

  12. Slide 12: Manufacturing & Distribution

    MANUFACTURING & DISTRIBUTION R’000 HY 2019 HY 2018 % change (margin) (margin) Revenue – Manufacturing 48 364 46 353 4.3 Revenue – Retail 31 276 32 407 (3.5) Revenue – Distribution 22 377 22 580 (0.9) Revenue – Total 102 017 101 340 0.7 Operating profit – Manufacturing 11 068 (22.9) 10 472 (22.6) 5.7

  13. Slide 13: Other South Africa

    OTHER SOUTH AFRICA* R’000 HY 2019 HY 2018 % change Revenue 31 142 31 568 (1.3) Operating loss (3 338) (2 311) (44.4) Retrenchment costs (Décor) 1 410 - Comparable operating loss (1 928) (2 311) 16.6 Comparable operating margin (6.2%) (7.3%) 1.1 * Comprises décor, training, restaurant sundries, expor

  14. Slide 14: Corporate Services South Africa

    CORPORATE SERVICES SOUTH AFRICA R’000 HY 2019 HY 2018 % change Revenue 12 390 11 046 12.2 Operating loss (36 426) (25 934) (40.5) Revenue 12 390 11 046 Net interest income 16 639 15 395 Shared overheads (65 455) (52 375) (25.0)

  15. Slide 15: Corporate Services South Africa

    CORPORATE SERVICES SOUTH AFRICA R’000 HY 2019 HY 2018 % change Shared overheads (65 455) (52 375) (25.0) IFRS2 charge (net of hedge) - 2 283 Braviz profit - (17 500) Spur Foundation (301) (79) Nikos/RocoMamas contingent (50) 10 607 consideration FV adjustment Impairment of GPI funding (specific) 4 3

  16. Slide 16: Restaurant Turnovers – International

    RESTAURANT TURNOVERS – INTERNATIONAL Location HY 2019 (R’000) HY 2018 (R’000) % change % change* (# of outlets) (# of outlets) Australasia 97 971 (11) 119 590 (10) (18.1) (16.8) Africa 217 060 (47) 176 550 (40) 22.9 22.3 India 98 (1) - - - Mauritius 88 272 (13) 70 809 (11) 24.7 21.2 Middle East 27 3

  17. Slide 17: Australasia

    AUSTRALASIA R’000 HY 2019 HY 2018 % change Restaurant turnover 97 971 119 590 (18.1) Number of restaurants 11 10 Revenue 2 613 3 876 (32.6) Net loss (4 094) (399) Impairment of loans 3 163 - Other IFRS9 ECL (movement) (250) - Foreign exchange loss - 9 Adjusted operating loss (1 181) (390)

  18. Slide 18: Other International

    OTHER INTERNATIONAL* R’000 HY 2019 HY 2018 % change Total Revenue 15 000 11 876 26.3 Operating profit 6 768 5 405 25.2 Operating margin 45.1% 45.5% (0.4) Made up of: Africa Revenue 10 144 8 502 19.3 Operating profit 4 717 3 822 23.4 Operating margin 46.5% 45.0% 1.5% * Includes Africa, Mauritius, Mid

  19. Slide 19: Other International

    OTHER INTERNATIONAL R’000 HY 2019 HY 2018 % change Mauritius Revenue 2 940 2 291 28.3 Operating profit 1 544 1 174 31.5 Operating margin 52.5% 51.2% 1.3 Middle East Revenue 1 460 785 86.0 Operating profit 705 409 72.4 Operating margin 48.3% 52.1% (3.8)

  20. Slide 20: Other International

    OTHER INTERNATIONAL R’000 HY 2019 HY 2018 % change Other^ Revenue 97 - - Operating profit (198) - - Operating margin (204.1%) - - ^ Includes Cyprus, Pakistan and India

  21. Slide 21: International Corporate Services

    INTERNATIONAL CORPORATE SERVICES R’000 HY 2019 HY 2018 % change Operating loss (4 654) (3 191) (45.8) Zambian settlement 1 566 - Legal cost related to Zambia legal 75 - matter Other IFRS 9 ECL (movement) (45) - Foreign exchange loss 432 174 Adjusted operating loss (2 626) (3 017) 13.0 * Applying a c

  22. Slide 22: Comparable Profit

    COMPARABLE PROFIT R’000 HY 2019 HY 2018 % change Profit before tax 129 973 131 045 (0.8) Impact of “old” share scheme (cash-settled) - 1 025 Nikos/RocoMamas contingent consideration FV (50) 10 607 adjustment Financial instruments impairments 7 798 - Profit on disposal of Braviz - (17 500) Spur Found

  23. Slide 23: Comparable Headline Earnings

    COMPARABLE HEADLINE EARNINGS R’000 HY 2019 HY 2018 % change Headline earnings 83 899 94 440 (11.2) Impact of “old” share scheme (cash-settled) - 738 Nikos/RocoMamas contingent consideration FV (50) 10 607 adjustment Disposal of Braviz - (20 757) Retrenchment costs 1 410 - Financial instruments impai

  24. Slide 24: Financial Position

    FINANCIAL POSITION R’000 HY 2019 HY 2018 ASSETS Intangible assets and goodwill 368 508 361 870 Loans receivable 131 219 151 068 Loans receivable – LT 20 773 133 970 Loans receivable – ST 110 446 17 098 Trade and other receivables 124 579 150 078 Contingent consideration receivable 594 - LIABILITIES

  25. Slide 25: Cash Flow

    CASH FLOW R’000 HY 2019 HY 2018 Cash flow from operations 130 166 122 623 Net interest received 11 465 10 191 141 631 132 814 Distributions paid (61 294) (61 236) Taxation paid (37 937) (33 513) Working capital changes (30 043) (65 512) Net investment in fixed and intangible assets (2 595) (3 305) P

  26. Slide 26: Slide 26

  27. Slide 27: Operational Overview for the Six Month Period Ended 31 December 2018

    OPERATIONAL OVERVIEW FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2018

  28. Slide 28: Spur Steak Ranches

    SPUR STEAK RANCHES  289 Spur Steak Ranches in South Africa  7 Spur Grill & Go restaurants in South Africa  6.1% increase in restaurant turnover  Menu price increases  1.1% December 2017  5.3% April 2018  3.0% December 2018

  29. Slide 29: Spur Steak Ranches

    SPUR STEAK RANCHES  Strategy for the six months ahead  Focus on core quality products - in-house manufacturing  Continuous training to achieve service excellence  Further innovation by franchisees to enhance kids’ experience  New advertising agency – food quality focused advertising  Roll-out

  30. Slide 30: Pizza Pasta

    PIZZA PASTA  86 Panarottis restaurants in South Africa  7 Casa Bella restaurants in South Africa  Store turnover declined 1.5%  Very competitive market – competitors relying on discounting  UberEats/Mr D – beneficial to maintain market share  Menu price increases: Date of increase Panarottis C

  31. Slide 31: Pizza Pasta

    PIZZA PASTA Strategy for the six months ahead  Continued installation of rotating wood-fired pizza ovens to enhance product authenticity and franchisee profitability – successful (17 installed, plans for 10 more to June 2019)  Basic operational fundamentals – more compact footprint, labour and ene

  32. Slide 32: Fish Grill Sushi

    FISH GRILL SUSHI  53 restaurants in South Africa  0.8% decline in turnover  Menu price increases  4.0% December 2017  4.6% May 2018  3.2% November 2018  Impacted by temporary closure of two large outlets – reopened in December 2018  Making in-house products to improve margins and quality  I

  33. Slide 33: The Hussar Grill

    THE HUSSAR GRILL  20 restaurants in South Africa  13.8% turnover growth  Menu price increase  5.0% May 2018  No increase in the current period  Still showing resilience despite economic conditions  New menu launched – well accepted  Established nationally now in specific strategic areas  Kn

  34. Slide 34: RocoMamas

    ROCOMAMAS  70 restaurants in South Africa  Menu price increase  3.9% September 2017  4.3% April 2018  2.8% November 2018  Focus on franchisee profitability  Product innovation  TV ad – grow market reach  Lessons learnt from the fast tracked roll out – ensuring delivery areas do not encroach

  35. Slide 35: Nikos Coalgrill Greek

    NIKOS COALGRILL GREEK  51% acquired 1 August 2018  8 restaurants in South Africa  2 new restaurants opened since acquisition – trading well  Only AAA sites to enhance success  Prudent view under current economic conditions in South Africa

  36. Slide 36: Brand Development in South Africa

    BRAND DEVELOPMENT IN SOUTH AFRICA Brand Opened to 31 To open to # of outlets December 2018 30 June 2019 30 June 2019 Spur Steak Ranches 8 5 301 Pizza Pasta 4 4 97 John Dory’s Fish Grill Sushi 5 - 53 The Hussar Grill 3 - 20 RocoMamas 5 2 72 Nikos 2 1 9 Total 27 12 552

  37. Slide 37: International

    INTERNATIONAL  Africa  Opened 12 restaurants since January 2018 and closed 2  Volatile trading conditions but our restaurants have traded well in most territories  Entering areas where we are able to reach critical mass – partnering with franchisees able to expand  Smaller footprint more viable

  38. Slide 38: International

    INTERNATIONAL  Australasia  11 restaurants  Turnovers disappointing - labour costs exorbitant  Concessions to aid franchisees  Re-evaluating position in the region  Mauritius  13 restaurants  3 RocoMamas restaurants – turnovers exceeding expectations  Highest turnover Panarottis worldwide –

  39. Slide 39: Brand Development - International

    BRAND DEVELOPMENT - INTERNATIONAL Country # of outlets Opened to To open to # of outlets 1 July 2018 31 Dec 2018 30 June 2019 30 June 2019 Botswana 2 1 - 3 Cyprus - - 1 1 Egypt - - 1 1 India - 1 - 1 Kenya 6 - 1 7 Mauritius 11 2 1 14 Middle East 2 2 - 4 Namibia 11 1 1 13 Zambia 5 7 3 15 Total 14 8 To

  40. Slide 40: Manufacturing & Distribution

    MANUFACTURING & DISTRIBUTION  Sauce factory  4% price increase in December 2018  Revenue from sauce sales grew by 4.3%  Decision made, due to economy, to refurbish existing facility  New equipment  Utilise existing facilities more efficiently  Looking to expand range of sauces produced  Outs

  41. Slide 41: Prospects / Outlook

    PROSPECTS / OUTLOOK

  42. Slide 42: Prospects

    PROSPECTS  Cautiously optimistic  Focus on product quality, innovation, value and making our products relevant  Innovative targeted marketing and business opportunities  Sauce factory  New opportunities/Acquisitive  International expansion  Key focus areas:  Maintain franchisee margins  Pru

  43. Slide 43: Disclaimer

    DISCLAIMER • Spur Corporation has acted in good faith and has made every reasonable effort to ensure the accuracy and completeness of the information contained in this presentation, including all information that may be defined as 'forward-looking statements' within the meaning of United States secu

  44. Slide 44: Thank You Questions?

    THANK YOU QUESTIONS?

  45. Slide 45: Contact Details

    CONTACT DETAILS CEO – Pierre van Tonder pvt@spur.co.za CFO – Phillip Matthee phillipm@spur.co.za Tier 1 Investor Relations 021 702 3102

  46. Slide 46: Brand Family

    BRAND FAMILY CjphsDary ROCOMAIMAS NIKQ> e're not normal COALGRILL GREEK SPUR? A 8

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