Spur Corporation Limited · JSE:SUR

Spur — H1 2015 Earnings Presentation

52 slides from Spur's earnings presentation, 2015

  1. Slide 1: Spur Corporation Limited

    A ql ‘SPUR | Corporation Limited

  2. Slide 2: Agenda

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

  3. Slide 3: Trading Environment

    TRADING ENVIRONMENT  Continued constrained consumer spending  Lower and middle income consumers – the group’s target market – under most pressure  Spikes in spending at mid month and month end pay days  Consumer confidence increasingly fragile  Load shedding in November and December adversely i

  4. Slide 4: Overview – Highlights

    OVERVIEW – HIGHLIGHTS 503 Total number 0 of restaurants at 31 December 2014  Transactions:  Rib manufacturing facility  GPI transaction  Sale of Panarottis Blacktown (Australia)  Acquisition of remaining 50% of Panarottis Penrith (Australia)

  5. Slide 5: Restaurant Count

    RESTAURANT COUNT South Inter- Franchise brand Africa national Total Spur Steak Ranches 275 43 318 Panarottis Pizza Pasta 71 11 82 John Dory’s Fish Grill 33 - 33 Sushi Captain DoRegos 60 2 62 The Hussar Grill 8 - 8 Total 447 56 503

  6. Slide 6: Financial Overview for the Six Months to December 2014

    FINANCIAL OVERVIEW FOR THE SIX MONTHS TO DECEMBER 2014

  7. Slide 7: Overview – Highlights

    OVERVIEW – HIGHLIGHTS R3.2 billion restaurant 0 turnover Dividend per reached share up 8.8% Restaurant Comparable profit to 62 cents sales up before tax (net of finance 14.1% income) up 15.3%

  8. Slide 8: SA Brand Contributions to Turnover

    SA BRAND CONTRIBUTIONS TO TURNOVER HY 2014 3.7% 6.1% 9.0% Spur Panarottis John Dory's Captain DoRegos 81.2% The Hussar Grill

  9. Slide 9: SA Brand Contributions to Profit

    SA BRAND CONTRIBUTIONS TO PROFIT HY 2015 0.9% 0.7% 4.0% 7.8% HY 2014 4.2% 1.9% 6.6% 86.6% Spur Panarottis John Dory's Captain DoRegos 87.4% The Hussar Grill

  10. Slide 10: International Turnover Split

    INTERNATIONAL TURNOVER SPLIT HY 2015 10.3% 39.2% 21.4% HY 2014 1.7% 29.1% 9.3% 38.1% Africa 26.2% Australia Europe/UK Mauritius 24.6% Middle East

  11. Slide 11: Contribution to SA Turnover

    CONTRIBUTION TO SA TURNOVER HY 2015 40.1% 59.9% HY 2014 45.3% 54.7% Franchise SA Manufacturing & Distribution

  12. Slide 12: Contribution to SA Profit

    CONTRIBUTION TO SA PROFIT HY 2015 23.8% HY 2014 23.0% 76.2% 77.0% Franchise SA Manufacturing & Distribution

  13. Slide 13: Franchise – Spur SA

    FRANCHISE – SPUR SA R’000 HY 2015 HY 2014 % change Revenue 112 669 100 737 11.8 Operating profit 100 856 89 919 12.2 Operating margin 89.5% 89.3%

  14. Slide 14: Franchise – Panarottis SA

    FRANCHISE – PANAROTTIS SA R’000 HY 2015 HY 2014 % change Revenue 13 476 10 826 24.5 Operating profit 9 144 6 754 35.4 Operating margin 67.9% 62.4%

  15. Slide 15: Franchise – John Dory's

    FRANCHISE – JOHN DORY’S R’000 HY 2015 HY 2014 % change Revenue 8 126 7 192 13.0 Operating profit 4 672 4 225 10.6 Operating margin 57.5% 58.7%

  16. Slide 16: Franchise – Captain DoRegos

    FRANCHISE – CAPTAIN DOREGOS R’000 HY 2015 HY 2014 % change Revenue 3 262 4 690 (30.4) Operating profit 973 1 903 (48.9) Operating margin 29.8% 40.6%

  17. Slide 17: The Hussar Grill

    THE HUSSAR GRILL (acq. 1 January 2014) R’000 HY 2015 Franchise Revenue 1 226 Operating profit 759 Operating margin 61.9% Retail Revenue 14 579 Operating profit 1 985 Operating margin 13.6%

  18. Slide 18: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION R’000 HY 2015 HY 2014 % change Revenue 93 035 102 270 (9.0) Captain DoRegos depot revenue - (22 696) Adjusted revenue 93 035 79 574 16.9 Operating profit 36 391 30 708 18.5 Exceptional items Captain DoRegos depot closure costs - 967 Adjusted operating profit

  19. Slide 19: Corporate Services & Other SA

    CORPORATE SERVICES & OTHER SA R’000 HY 2015 HY 2014 % change Revenue 34 296 22 630 51.6 Operating loss (67 911) (29 430) (130.8 ) Exceptional items 41 474 5 146 IFRS 2 (net of related hedge) 11 835 4 818 GPI preference dividend (1 043) - IFRS 2 charge (GPI deal) 32 957 - Transaction costs (GPI deal)

  20. Slide 20: Australia

    AUSTRALIA R’000 HY 2015 HY 2014 % change Revenue 37 932 42 754 (11.3) Operating profit 4 252 825 415.4 Exceptional items Profit on sale of subsidiary (1 506) - Foreign exchange loss 16 2 Adjusted operating profit 2 762 827 234.0 Add back: Depreciation 836 1 358 Interest (26) (143) Adjusted cash flow

  21. Slide 21: United Kingdom

    UNITED KINGDOM R’000 HY 2015 HY 2014 % change Revenue 80 107 77 795 3.0 Operating (loss) / profit (2 418) 2 206 (209.6) Exceptional items Acquisition of 10% of Trinity Leasing - (45) Foreign exchange loss 68 246 Adjusted operating (loss) / profit (2 350) 2 407 (197.6) Add back: Depreciation 3 562 3

  22. Slide 22: Africa and Mauritius

    AFRICA and MAURITIUS R’000 HY 2015 HY 2014 % change Revenue 9 974 7 094 40.6 Operating profit 5 966 4 151 43.7 Operating margin 59.8% 58.5%

  23. Slide 23: International Corporate Services

    INTERNATIONAL CORPORATE SERVICES R’000 HY 2015 HY 2014 % change International Corporate Services Operating loss (2 176) (6 495) 66.5 Exceptional items International restructure costs - 127 Foreign exchange (gain) / loss (485) 3 075 Adjusted operating loss (2 661) (3 293) 19.2

  24. Slide 24: Comparable Profit

    COMPARABLE PROFIT R’000 HY 2015 HY 2014 % change Profit before tax 92 139 104 766 (12.1) Corporate services and other exceptional 41 474 5 146 items International exceptional items (1 506) 82 Procurement, manufacturing exceptional - 1 224 items Loss from associate 354 - Foreign exchange (gain) / los

  25. Slide 25: Financial Position - Assets

    FINANCIAL POSITION - ASSETS R’000 HY 2015 HY 2014 Property, plant & equipment 83 077 80 495 Intangible assets & goodwill 359 169 324 166 Investments & loans 130 689 16 142 Deferred tax 5 926 11 603 Leasing rights 3 149 5 483 Derivative financial asset 10 586 28 725 Inventory 10 448 13 512 Taxation r

  26. Slide 26: Financial Position – Equity & Liabilities

    FINANCIAL POSITION – EQUITY & LIABILITIES R’000 HY 2015 HY 2014 Equity 834 153 508 712 Long-term loans - 459 Operating lease liability 1 338 3 564 Other non-current liabilities 6 869 6 021 Deferred tax 69 552 71 535 Bank overdrafts 2 833 2 147 Taxation 2 766 2 390 Trade & other payables 116 315 122

  27. Slide 27: Cash Flow

    CASH FLOW R’000 HY 2015 HY 2014 Cash from operations 109 407 92 721 Net interest received 5 589 3 590 114 996 96 311 Distributions paid (54 732) (47 909) Taxation paid (38 635) (34 740) Working capital changes (15 448) 3 182 Net investment in fixed assets (15 305) (3 565) Purchase of treasury shares

  28. Slide 28: Depreciation & Capex

    DEPRECIATION & CAPEX  Depreciation  R7.1m to December 2014  Plans for next six months  Total R13.2m projected for full year  Extension of Cape Town building to June 2015 (R35m – R40m)  Continuous investment in BI and  Spent during the year IT (R1.5m)  R8.2m on land and buildings  UK RBW inv

  29. Slide 29: Operational Overview for the Six Months to December 2014

    OPERATIONAL OVERVIEW FOR THE SIX MONTHS TO DECEMBER 2014

  30. Slide 30: Trading Performance

    TRADING PERFORMANCE  9.3% existing store turnover growth  11.1% turnover growth  Menu price increase  3.4% November 2013  3.9% May 2014  2.9% December 2014  Load shedding – new restaurants to all have generators; encouraging existing restaurants to install generators  Opened five new restaur

  31. Slide 31: Brand Strategy

    BRAND STRATEGY  Smaller units for smaller towns  Family card  1.8m active members  Gift cards (total sales since launch in Dec 2013 – R6.2m)  Continuous enhancements in family friendly market differentiators  New kitchen design  Model efficiencies  Analysing menu content  Improving footprin

  32. Slide 32: Trading Performance

    TRADING PERFORMANCE  19.0% existing store turnover growth  25.4% overall growth  Menu price increase  4.7% December 2013  5.0% June 2014  3.2% in December 2014  Advertising highlighting the use of authentic products - well received  Opened six new restaurants; relocated three and revamped tw

  33. Slide 33: Brand Strategy

    BRAND STRATEGY  Major focus on family and quality  Improved kitchen efficiencies and flows  Refining the menu using menu engineering techniques  Continue to build on relationships with landlords  Introduce loyalty and online ordering (scoping stage - 18 months)  Improve margins - ultimately at

  34. Slide 34: Trading Performance

    TRADING PERFORMANCE  8.7% existing store turnover growth  10.6% overall growth  Menu price increase  7.5% December 2013  11.6% April 2014  8.3% July 2014  2.9% December 2014  Delay in new store openings  One new restaurant opened; one relocation and five revamped (R7.0m spent by franchisees

  35. Slide 35: Brand Strategy

    BRAND STRATEGY  Grow footprint and turnover  Maintain franchisee profitability  Key to expansion  Procurement of product and availability of product remains a challenge  Grow loyalty – John’s Club  Now digital  Currently 207 000 members  Improve margin from 57.5% to 60% - ultimately 70%  Fi

  36. Slide 36: Trading Performance

    TRADING PERFORMANCE  Restaurant turnover R75.1 million  8.6% like for like turnover decline  18.2% overall turnover decline  Menu price increase / decrease  8.1% December 2013  8.2% May 2014  -1.4% December 2014  Market very affected by economic environment  Assisting franchisees to have st

  37. Slide 37: Brand Strategy

    BRAND STRATEGY  Increase footprint  Four new stores to June 2015  One refurbishment  New design in store  Set up costs reduced  Continuously analysing sales mix and simplify the menu / offering  Marketing  Focusing on value added campaigns  Introducing more quality products onto the menu

  38. Slide 38: Trading Performance

    TRADING PERFORMANCE  Acquired 1 January 2014  Higher LSM - more resilient  50 years of trading experience  Restaurant turnover R33.6 million  Load shedding – affects over the festive season  Two new franchised restaurants opened  Cautious roll-out  Need to ensure the correct franchisees and

  39. Slide 39: Brand Strategy

    BRAND STRATEGY  Entrenching brand values from franchisee perspective  Site selection  Franchisee selection  20% operating partner  Improve margins  Improving footprint  Currently negotiating four new sites

  40. Slide 40: International Restaurant Footprint

    INTERNATIONAL RESTAURANT FOOTPRINT Panarottis Pizza Total as at 31 Dec Location Spur Steak Ranches Captain DoRegos Pasta 2014 Australia 5 4 9 UK & Ireland 8 8 Botswana 4 4 Kenya 2 2 Lesotho 1 1 Malawi 1 1 Mauritius 3 5 1 9 Namibia 9 1 1 11 Nigeria 2 2 Swaziland 2 2 Tanzania 2 2 Uganda 1 1 Zambia 2 2

  41. Slide 41: International Restaurant Footprint Overall

    INTERNATIONAL RESTAURANT FOOTPRINT OVERALL 56 restaurants outside of South African borders  Four new Spur 56 restaurants opened in the period  Three in Namibia  One in Australia

  42. Slide 42: International

    INTERNATIONAL  Australia  Five Spur Steak Ranches; four  UK & Ireland Panarottis Pizza Pasta  Eight restaurants  Plan to be fully franchised by  Revenue down 6.8% in GBP June 2015  Negotiations underway to dispose  Disappointing of Silver Spur and Panarottis  Pressure on food cost and Penri

  43. Slide 43: International

    INTERNATIONAL  Africa  39 restaurants  Turnover strong  Great prospects  Planned openings for the next four months: Spur Victoria Island in Lagos, Nigeria New territories Spur in Kitwe, Zambia Angola John Dory’s in Lusaka, Zambia Ethiopia Spur in Arusha, Tanzania Mozambique Panarottis in Arusha

  44. Slide 44: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Segment consists of:  Sauce manufacturing  Rebates from suppliers (no cost of sales)  Cost of integration – Central distribution (no cost of sales)  Comparable operating margin 39.1%  Dependent on mix between cost of integration and sauce manufacturin

  45. Slide 45: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Sauce Manufacturing  Margin decline due to: 16.7% 0  Reduced margin from external retail sauces increase in sauce  Significant increase in R&M costs sales  Increased input costs (foreign exchange)  Price increase  4.5% January 2013  4.1% June 2014)

  46. Slide 46: Procurement, Manufacturing & Distribution

    PROCUREMENT, MANUFACTURING & DISTRIBUTION  Continue with central distribution model (Vector)  Health and Safety  Franchisee profitability  Grow Vector basket in order to grow Cost of Integration  Current Vector basket – 60%  Vertical integration – core products  Sauce manufacturing  Grow thi

  47. Slide 47: Outlook

    OUTLOOK

  48. Slide 48: Trading Outlook

    TRADING OUTLOOK  Consumer spending unlikely to improve markedly in next 12 to 18 months  Lower fuel price and lower inflation not sustainable – little respite for consumers  Current economic uncertainty weighing on consumer sentiment  Load shedding continues to impact restaurant turnover – engag

  49. Slide 49: Spur Corporation Outlook

    SPUR CORPORATION OUTLOOK  Intended acquisition of 51% of RocoMamas  Effective 1 March 2015  Five franchised restaurants  Exciting prospects (four confirmed)  Well positioned across all market segments  Value add and experience/entertainment  Look beyond traditional business model  Vertical i

  50. Slide 50: 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

  51. Slide 51: Thank You Questions?

    THANK YOU QUESTIONS?

  52. Slide 52: 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

Spur — H1 2015 Earnings Presentation on 6ix