Spur Corporation Limited · JSE:SUR

Spur — FY2015 Earnings Presentation

53 slides from Spur's earnings presentation, 2015

1. Slide 1: Results for the Year to 30 June 2015

   RESULTS FOR THE YEAR TO 30 JUNE 2015 ) ER: CORP.

2. Slide 2: Agenda

   AGENDA  Highlights  Financial Overview  Operational Review  Outlook  Questions and Answers

3. Slide 3: Trading Environment

   TRADING ENVIRONMENT  Household income under pressure  Continued constrained consumer spending  Trading environment affected by load shedding  Depreciating rand affected input costs in all areas  Consumer confidence increasingly fragile – lowest in 16 years  Rand weakest level ever (against £)

4. Slide 4: Key Transactions

   KEY TRANSACTIONS 522 Total number 0 of Transactions: restaurants at 30 June 2015  GPI transaction  Acquisition of 51% of RocoMamas Franchise Co  Sale of Panarottis Blacktown, Silver Spur and Panarottis Penrith (all in Australia)  Closure of Mohawk Spur (UK)  Opening of first RBW in UK

5. Slide 5: Restaurant Count

   RESTAURANT COUNT South Inter- Franchise brand Total Africa national Spur Steak Ranches 277 43 320 Panarottis Pizza Pasta 75 12 87 John Dory’s Fish Grill Sushi 38 1 39 Captain DoRegos 57 2 59 The Hussar Grill 8 - 8 RocoMamas 9 - 9 Total 464 58 522

6. Slide 6: Financial Overview for the 2015 Year

   FINANCIAL OVERVIEW FOR THE 2015 YEAR

7. Slide 7: Overview – Highlights

   OVERVIEW – HIGHLIGHTS Comparable R6.2 billion HEPS restaurant up 14.3% 0 turnover reached Restaurant Comparable Dividend per sales up profit share up 9.1% 12.1% before tax to 132 cents up 10.8%

8. Slide 8: Franchise – South Africa

   FRANCHISE — South Africa SA Store Turnover 6 000 000 000 5 000 000 000 4000000000 § Rocomamas s A ® Hussar Grill @ Captain DoRegos R 3000000000 | John Dory's : @ Panarottis d @ Spur 2000000000 F 1.000 000 000 2011 2012 2013 2014 2015

9. Slide 9: Franchise – International

   FRANCHISE — International International Store Turnover 800 000 000 700 000 000 600 000 000 vw 500 000 000 > 400 000 000 300 000 000 vasa 2 200 000 000 100 000 000 2011 2012 2013 2014 2015 Africa @Australia ® UK Mauritius ™ Middle East

10. Slide 10: Franchise – Spur SA

    FRANCHISE – SPUR SA R’000 2015 2014 % change Revenue 217 276 198 498 9.5 Operating profit 194 037 176 552 9.9 Operating margin 89.3% 88.9%

11. Slide 11: Franchise – Panarottis SA

    FRANCHISE – PANAROTTIS SA R’000 2015 2014 % change Revenue 27 575 20 932 31.7 Operating profit 18 904 13 117 44.1 Operating margin 68.6% 62.7%

12. Slide 12: Franchise – John Dory's

    FRANCHISE – JOHN DORY’S R’000 2015 2014 % change Revenue 16 220 14 271 13.7 Operating profit 9 119 7 736 17.9 Operating margin 56.2% 54.2%

13. Slide 13: Franchise – Captain DoRegos

    FRANCHISE – CAPTAIN DOREGOS R’000 2015 2014 % change Revenue 6 077 8 185 (25.8) Operating profit (11 821) 2 158 (647.8) Trademark impairment 13 905 - Adjusted operating profit 2 084 2 158 (3.4) Adjusted operating margin 34.3% 26.4%

14. Slide 14: The Hussar Grill

    THE HUSSAR GRILL (acq. 1 January 2014) R’000 2015 2014 % change Franchise Revenue 2 417 700 245.3 Operating profit 1 298 471 175.6 Operating margin 53.7% 67.3% Retail Revenue 30 760 14 988 105.2 Operating profit 4 645 2 354 97.3 Operating margin 15.1% 15.7%

15. Slide 15: Franchise – RocoMamas

    FRANCHISE – ROCOMAMAS (acq. 1 March 2015) R’000 2015 Revenue 2 175 Operating profit 1 386 Operating margin 63.7%

16. Slide 16: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION R’000 2015 2014 % change Revenue 173 924 176 576 (1.5) Captain DoRegos depot revenue - (22 724) Adjusted revenue 173 924 153 852 13.0 Operating profit 67 339 58 520 15.1 Exceptional items Captain DoRegos depot closure costs - 1 326 Adjusted operating profit

17. Slide 17: Corporate Services & Other SA

    CORPORATE SERVICES & OTHER SA R’000 2015 2014 % change Revenue 60 581 46 553 30.1 Operating loss (81 491) (60 180) (35.4) Exceptional items 16 481 4 988 IFRS 2 (net of related hedge) 4 941 10 195 GPI preference dividend (4 125) - IFRS 2 charge (GPI deal) 32 957 - Transaction costs (GPI deal) 301 - I

18. Slide 18: United Kingdom

    UNITED KINGDOM R’000 2015 2014 % change Revenue 147 657 157 565 (6.3) Operating loss (4 714) (2 232) (111.2) Exceptional items (3 949) 3 553 Impairment of Mohawk Spur franchise - 3 478 rights and prepaid rent Partial impairment of Cheyenne Spur PPE 1 054 Release of minority shareholder loan (5 173)

19. Slide 19: Australia

    AUSTRALIA R’000 2015 2014 % change Revenue 55 729 79 366 (29.8) Operating profit 4 488 (157) Exceptional items (261) 432 Profit on sale of subsidiaries (280) (2 154) Impairment of Panarottis Blacktown - 2 496 International structure & tax query costs - 82 Foreign exchange loss 19 8 Adjusted operatin

20. Slide 20: Africa and Mauritius

    AFRICA and MAURITIUS R’000 2015 2014 % change Revenue 19 668 14 750 33.3 Operating profit 10 906 8 711 25.2 Operating margin 55.5% 59.1%

21. Slide 21: International Corporate Services

    INTERNATIONAL CORPORATE SERVICES R’000 2015 2014 % change Operating loss (6 496) (4 918) (32.1) Exceptional items 661 (1 025) Recycling of FCTR to profit 1 920 (3 386) International structure & tax query costs 829 1 674 Foreign exchange (gain)/loss (2 088) 687 Adjusted operating loss (5 835) (5 943)

22. Slide 22: Comparable Profit

    COMPARABLE PROFIT R’000 2015 2014 % change Profit before tax 205 421 201 871 1.8 Exceptional items 29 717 10 319 Captain DoRegos depot closure costs - 1 326 Share appreciation rights cost (net of related 4 941 10 195 hedge) Share appreciation rights cost (actual net cost (7 768) (6 073) amortised on

23. Slide 23: Comparable Headline Earnings

    COMPARABLE HEADLINE EARNINGS R’000 2015 2014 % change Headline earnings 141 511 135 203 4.7 Exceptional items 23 940 9 851 Captain DoRegos depot closure costs - 955 Share appreciation rights cost (net of related 3 558 7 340 hedge) Share appreciation rights cost (actual net cost (5 593) (4 373) amort

24. Slide 24: Financial Position

    FINANCIAL POSITION R’000 2015 2014 ASSETS Property, plant & equipment 86 481 77 289 Intangible assets & goodwill 384 610 359 742 Loans receivable 142 996 53 450 Trade & other receivables 97 828 82 650 LIABILITIES Contingent consideration – long term 31 409 - Contingent consideration – short term 15

25. Slide 25: GPI Transaction

    GPI TRANSACTION  10 848 093 additional shares issued at a 10% discount  5 year lock in  IFRS 2 charge R32.957m  Transaction costs R301 000  Estimated additional interest and preference dividend R13.7m  Comparable headline earnings per share excluding GPI transaction and one off and exceptional

26. Slide 26: Cash Flow

    CASH FLOW R’000 2015 2014 Cash from operations 222 786 198 644 Net interest received 16 825 6 313 239 611 204 957 Distributions paid (114 345) (96 682) Taxation paid (83 666) (66 891) Working capital changes (12 883) 3 971 Net investment in fixed assets (30 706) (8 891) Purchase of treasury shares (

27. Slide 27: Depreciation & Capex

    DEPRECIATION & CAPEX  Depreciation  R14.0m to June 2015  Plans for 2016 year  Total R10.2m projected for year to  Extension of Cape Town building June 2016 (R35m)  Continued investment in BI and  Spent during the year IT (R4.2m)  R13.3m on land and buildings  UK RBW investment (£0.75m for 

28. Slide 28: Operational Overview for the 2015 Year

    OPERATIONAL OVERVIEW FOR THE 2015 YEAR

29. Slide 29: Trading Performance

    TRADING PERFORMANCE  7.3% existing store turnover growth  9.0% turnover growth  Menu price increases  3.4% November 2013  3.9% May 2014  2.9% December 2014  2.6% June 2015  Load shedding – impact on turnover estimated at 3%; 205 Spur Steak Ranches (74%) have installed generators (R82m invest

30. Slide 30: Trading Performance

    TRADING PERFORMANCE  15.8% existing store turnover growth  25.4% overall growth  Menu price increases  3.1% July 2013  4.7% December 2013  5.0% June 2014  3.2% in December 2014  5.5% May 2015  More focused menu; franchisee profitability  Opened 11 new restaurants; relocated three and revam

31. Slide 31: Trading Performance

    TRADING PERFORMANCE  5.7% existing store turnover growth  12.0% overall growth  Menu price increases  3.7% June 2013  7.5% December 2013  11.6% April 2014  8.3% July 2014  2.9% December 2014  New design (Somerset West)  Kids’ areas in 81% of restaurants  Six new restaurants opened and two

32. Slide 32: Trading Performance

    TRADING PERFORMANCE  Restaurant turnover R143.0 million  5.7% like for like turnover decline  13.2% overall turnover decline  Menu price increase / decrease  8.1% December 2013  8.2% May 2014  -1.4% December 2014  Market highly affected by economic environment  Opened 12 new restaurants; on

33. Slide 33: Trading Performance

    TRADING PERFORMANCE  Restaurant turnover R71.8m  Menu innovation – quality and generosity  Load shedding  Two new franchised restaurants opened  National roll out planned but cautious  Need to ensure the correct franchisees and locations are identified

34. Slide 34: Trading Performance

    TRADING PERFORMANCE  51% acquired 1 March 2015  Fast-casual dining  Five franchised restaurants at 1 March 2015  Target market – the Millennials  Restaurant turnover for three months since acquisition R24.3m  Social media plays extensive role in this market  National roll-out planned  Opened

35. Slide 35: International

    INTERNATIONAL 58 restaurants outside of Captain South African borders John Dory's 1 DoRegos 2 RBW 1  Five new Spur restaurants Panarottis opened 12  Three in Namibia  One in Tanzania  One in Australia 58  One Panarottis in Tanzania  One RBW in UK Spur 42  One John Dory’s in Zambia

36. Slide 36: International

    INTERNATIONAL  Australia  Fully franchised  Store turnover up 37.3% (in  UK & Ireland  Eight restaurants AU$)  Store turnover down 10.7% (in GBP)  One new Spur Steak & Grill  Disappointing opened in Drovers  Pressure on food cost, labour and  Substantial improvement in occupancy costs the

37. Slide 37: International

    INTERNATIONAL  Africa & Mauritius  41 restaurants  Turnover strong  Exciting prospects  Marketing fund for each country  Set up office in Namibia New territories  Dedicated resource appointed in Angola Nigeria Ethiopia Mozambique

38. Slide 38: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Sauce Manufacturing  Slight decline in margins 8.6% 0  Significant increase in R&M costs increase in sauce  Increased raw material costs sales  Price increases  4.5% January 2013  4.1% June 2014  HACCP certification maintained  Emphasis, as always,

39. Slide 39: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Vector delivery well managed by Procurement department  Turnover – R1.3 billion (PY: R1.1 billion)  Number of cases delivered 5.4 million (PY: 5.2 million)  All depots ISO22000 certified  Braviz facility operational

40. Slide 40: Marketing & Loyalty

    MARKETING & LOYALTY  Combined marketing funds managed R201.2 million  Moved towards media sponsorships rather than generic marketing  Increase in exposure and share of voice  New TV ads – very well received  Family card – great success (1.9 million active members)  Loyalty spend 29% higher tha

41. Slide 41: Outlook

    OUTLOOK

42. Slide 42: Brand Strategy

    BRAND STRATEGY  Smaller units for smaller towns  Spur Grill & Go  Continue to offer great value weekday specials  Improving on gains made in breakfast market  Targeted television marketing campaigns  Model efficiencies / menu engineering – ensuring franchisee profitability  Continuous retrain

43. Slide 43: Brand Strategy

    BRAND STRATEGY  Major focus on family and quality  Hand-pressed pizza to be introduced  Basic operational fundamentals and service  Continue to refine the menu using menu engineering techniques  Continue to build on relationships with landlords ensuring A grade sites  Improve margins - ultimat

44. Slide 44: Brand Strategy

    BRAND STRATEGY  Grow footprint and turnover  Advertising to shift to value-added campaigns  Grow loyalty  Roll-out of updated in-store look and feel  Procurement of product and availability of product remains a challenge  Improve margin from 56.2% to 60% - ultimately 70%  Five new stores

45. Slide 45: Brand Strategy

    BRAND STRATEGY  Maintain product quality  Standardising the brand’s “look and feel”  New signage  Simplify the menu/offering  Investigating opportunities in malls and food courts  Marketing  Focus on value added campaigns  Local store marketing  Four new stores

46. Slide 46: Brand Strategy

    BRAND STRATEGY  Entrenching brand values from franchisee perspective  Entrench excellent meat quality credentials  Create memorable brand experiences – Nederberg Cook-off Challenge  Standardise the product presentation nationally  Four new restaurants to open – all outside of Western Cape; one

47. Slide 47: Brand Strategy

    BRAND STRATEGY  Roll-out nationally – projecting to open 13  Digital marketing to be continued  Campaigns planned to spread the word via “word of thumb” with adrenalised, jaw- dropping activities  Maintain franchisee profitability  Sauce factory in Johannesburg

48. Slide 48: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Grow Vector basket in order to increase Cost of Integration income  Current Vector basket – almost 70%  Vertical integration – core products  Sauce manufacturing  Grow product lines  Increase retail market share with retail partners

49. Slide 49: Trading Outlook

    TRADING OUTLOOK  Economic and trading headwinds facing the food and restaurant sector are not expected to abate  Depreciating currency, continued load-shedding and rising operating costs  Impact on consumer spending unlikely to improve markedly  Lower fuel price and lower inflation not sustainab

50. Slide 50: Spur Corporation Outlook

    SPUR CORPORATION OUTLOOK  Well positioned across all market segments  Value add and experience/entertainment  Look beyond traditional business model  Vertical integration  Core products  Africa expansion – exciting  RBW in Australia and UK  Acquisitions / Joint ventures

51. Slide 51: 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

52. Slide 52: Thank You Questions?

    THANK YOU QUESTIONS?

53. Slide 53: Contact Details

    CONTACT DETAILS CEO – Pierre van Tonder pvt@spur.co.za CFO – Ronel van Dijk ronelv@spur.co.za Tier 1 Investor Relations 021 702 3102

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