Spur Corporation Limited · JSE:SUR
Spur — FY2020 Earnings Presentation
51 slides from Spur's earnings presentation, Jun 30, 2020
Slide 1: Results for the Year Ended 30 June 2020
RESULTS FOR THE YEAR ENDED 30 JUNE 2020 RESULTS FOR THE YEAR ENDED 30 JUNE 2020
Slide 2: Trading Environment – COVID-19
TRADING ENVIRONMENT – COVID-19 ▪ Material impact on franchisee turnover and profitability ▪ Landlord negotiations ▪ Franchisee employees assisted through TERS ▪Restaurant Significant salesimpact on our corporate performance up ▪ 129% Discounted franchise and marketing fees ▪ Extended credit terms gr
Slide 3: Trading Environment – COVID-19 (cont.)
TRADING ENVIRONMENT – COVID-19 (cont.) 27 March – 30 April Complete prohibition – no trading 1 May – 31 May Trading for delivery only 1 June – 28 June Trading for delivery and collection only 29 June onwards Sit-down trade recommenced, subject to Restaurant sales strict social distancing protocols (
Slide 4: Trading Environment – COVID-19 (cont.)
TRADING ENVIRONMENT – COVID-19 (cont.) ▪ Period to February 2020 – restaurant sales up 6% in South Africa and 4% internationally ▪ Full year total restaurant sales declined 21.7% ▪ The Hussar Grill – hardest hit by restrictions (tourism) Restaurant sales ▪ RocoMamas up – least affected by lockdown;
Slide 5: Restaurants Trading
RESTAURANTS TRADING Brand Active agreements at June October 30 June 2020 2020 2020 Spur 298 210 291 Pizza and Pasta 91 56 83 John Dory’s 52 36 47 The Hussar Grill 22 5 21 Restaurant sales RocoMamas 75 61 75 up Nikos 9 6 7 129% Total South Africa 547 374 524 International 84 80 88 Total group 631 454
Slide 6: Restaurant Sales
RESTAURANT SALES ▪ Turnover as a percentage of prior year per month* Brand March May June July Aug Sept Oct 2020 2020 2020 2020 2020 2020 2020 Spur 54.8 8.8 12.8 34.6 56.2 72.1 93.9 Pizza and Pasta 51.0 11.1 17.2 31.7 49.6 63.2 89.3 John Dory’s 46.3 4.3 11.0 24.8 45.1 71.0 84.6 The Hussar Grill 62.1
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Slide 8: Financial Results for the Year Ended 30 June 2020
FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2020
Slide 9: Financial Impact of COVID-19
FINANCIAL IMPACT OF COVID-19 ▪ Lower restaurant sales and franchise fee rates ▪ Most revenue streams related to restaurant sales ▪ Impairment of intangibles and goodwill ▪ Nikos R5.7m ▪Restaurant salesof international tax receivable (R11.7m) Impairment up ▪ Increased 129% credit risk resulting in in
Slide 10: Financial Impact of COVID-19 (cont.)
FINANCIAL IMPACT OF COVID-19 (cont.) ▪ Reduced workweek and employment costs from June 2020 ▪ Reduced marketing spend ▪ Reduced all discretionary expenditure where possible ▪Restaurant Deferredsales payment of interim dividend; no final dividend up ▪ Reduced cash reserves 129% ▪ Net outflow from Apr
Slide 11: The Year at a Glance
THE YEAR AT A GLANCE ▪ Revenue -19.4% (-17.3%*) ▪ Profit before tax -50.3% (-39.3%*) ▪ Comparable profit before tax -40.9% ▪ Headline earnings -56.1% (-41.5%*) ▪ Comparable headline earnings -43.5% ▪ Cash balances declined R116.7m from R284.0m to R167.3m * Excluding marketing funds: marketing fund s
Slide 12: Adoption of New Standard (IFRS 16)
ADOPTION OF NEW STANDARD (IFRS 16) ▪ Leases of properties, vehicles and machinery ▪ No restatement of comparatives ▪ Recognition of lease liabilities of R52.9m and ROU assets of R41.9m ▪ Additional depreciation R12.3m ▪ Additional net interest expense R4.7m ▪ Net decrease in profit on comparable bas
Slide 13: Restaurant Turnovers – South Africa
RESTAURANT TURNOVERS – SOUTH AFRICA R’000 Brand 2020 2019 % change Spur Steak Ranches 3 552 221 4 585 811 (22.5) Pizza and Pasta 602 338 799 422 (24.7) John Dory’s Fish Grill Sushi 358 081 474 551 (24.5) The Hussar Grill 168 035 209 059 (19.6) RocoMamas 556 627 675 193 (17.6) Nikos 53 278 65 882 (19
Slide 14: SA Franchise Business
SA FRANCHISE BUSINESS Brand % change in Profit 2020 Profit 2019 % change revenue R’000 R’000 in profit Spur (25.9) 134 461 192 361 (30.1) Pizza and Pasta (27.8) 13 202 23 453 (43.7) John Dory’s (28.3) 5 053 9 880 (48.9) The Hussar Grill (21.3) 4 025 5 664 (28.9) RocoMamas (22.5) 17 645 24 380 (27.6)
Slide 15: South Africa Retail
SOUTH AFRICA RETAIL* R’000 2020 2019 % change Revenue 53 694 69 753 (23.0) Operating (loss)/profit (3 761) 8 576 (143.9) IFRS 16 impact 2 049 - Impairment of PPE at THG Morningside 1 322 - THG Camps Bay refurbishment 169 - Comparable operating (loss)/profit (221) 8 576 (102.6) Comparable operating m
Slide 16: Manufacturing & Distribution
MANUFACTURING & DISTRIBUTION R’000 2020 2019 % change Revenue – Manufacturing 68 418 88 746 (22.9) Revenue – Retail sauces 69 446 62 107 11.8 Revenue – Distribution 47 604 51 081 (6.8) Revenue – Total 185 468 201 934 (8.2) ▪ Manufacturing revenue is a function of restaurant sales ▪ Previous price in
Slide 17: Manufacturing & Distribution
MANUFACTURING & DISTRIBUTION R’000 2020 (margin) 2019 (margin) % change Operating profit – Manufacturing 8 022 (11.7) 19 924 (22.5) (59.7) Operating profit – Retail 2 938 (4.2) 2 355 (3.8) 24.8 Operating profit – Distribution 47 604 (100) 51 081 (100) (6.8) Operating profit – Total 58 564 (31.6) 73
Slide 18: SA Marketing Funds
SA MARKETING FUNDS R’000 2020 2019 % change Revenue 184 288 245 112 (24.8) (Over)/under spent (19 115) 12 555 (252.3) Cumulative (over)/under spend (12 918) 7 267 ▪ Marketing fees reduced by 1% for half of March, and from 4%/2% to 1% for May and June ▪ Significant reduction in marketing spend (R30m
Slide 19: Corporate Services South Africa
CORPORATE SERVICES SOUTH AFRICA R’000 2020 2019 % change Marketing admin fees income 16 245 22 503 (27.8) GPI interest income 2 935 9 530 (69.2) Net interest income 15 042 23 259 (35.3) Shared overheads (103 421) (129 435) 20.1 Operating loss (69 199) (74 143) 6.7 ▪ Admin fee income calculated as a
Slide 20: Corporate Services South Africa
CORPORATE SERVICES SOUTH AFRICA R’000 2020 2019 % change Shared overheads (103 421) (129 435) 20.1 Nikos contingent consideration FV (3 977) 1 555 adjustment (Reversal)/impairment of GPI loan (10 812) 6 688 Other IFRS9 ECL 5 367 1 443 Other 752 (408) Comparable shared overheads (112 091) (120 157) 6
Slide 21: Corporate Services South Africa
CORPORATE SERVICES SOUTH AFRICA R’m 2020 2019 Consulting and legal fees 3.5 2.5 Leave pay and bonuses (6.9) 0.1 Executives 24.5 28.5 IT 28.1 25.1 Finance and legal (employment costs) 15.7 17.6 Development and procurement 11.2 9.2 HR 6.5 6.2 Property company costs, rent, utilities, R&M 7.3 6.7 Spur C
Slide 22: Restaurant Turnovers – International
RESTAURANT TURNOVERS – INTERNATIONAL R’000 Location 2020 2019 % change % change* Australasia 114 795 176 236 (34.9) (37.0) Africa (excl. SA) 367 869 420 148 (12.4) (12.6) Mauritius 158 006 173 875 (9.1) (8.0) Middle East 40 501 51 206 (20.9) (28.1) Cyprus & India 7 464 5 361 39.2 30.5 Total 688 635
Slide 23: Australasia
AUSTRALASIA R’000 2020 2019 % change Revenue 1 817 4 349 (58.2) Net loss (9 822) (16 992) IFRS 9 Impairment of loans & lease 6 636 8 686 receivable RocoMamas Australia impairment 436 3 357 Retrenchment costs 308 - Foreign exchange loss (19) 10 Adjusted operating loss (2 461) (4 939) 50.2 ▪ Looking t
Slide 24: Other International
OTHER INTERNATIONAL R’000 2020 2019 % change Total revenue 26 270 29 618 (11.3) Operating profit 12 509 12 663 (1.2) Operating margin 47.6% 42.8% 4.9 Includes: Africa (excl. SA) & Mauritius Revenue 22 351 26 190 (14.7) Operating profit 10 740 11 796 (9.0) Operating margin 48.1% 45.0% 3.0 ▪ Reduced o
Slide 25: International Corporate Services
INTERNATIONAL CORPORATE SERVICES R’000 2020 2019 % change Operating loss (6 644) (8 823) 24.7 Zambian settlement & related costs - 2 350 Other IFRS 9 ECL (movement) 734 (53) IFRS 16 14 - Foreign exchange loss and IFRS 16 126 592 Adjusted operating loss (5 770) (5 934) 2.8 ▪ Costs are being tightly m
Slide 26: Comparable Profit
COMPARABLE PROFIT R’000 2020 2019 % change Profit before tax 127 774 257 077 (50.3) Exclude: Marketing funds’ deficit/(surplus) 20 209 (13 472) 147 983 243 605 (39.3) Australia loan impairments (incl. RocoMamas) 7 072 12 043 Other expected credit losses 6 101 1 390 GPI receivable ECL (10 812) 6 688
Slide 27: Comparable Headline Earnings
COMPARABLE HEADLINE EARNINGS R’000 2020 2019 % change Headline earnings 72 463 165 110 (56.1) Exclude: Marketing funds’ deficit/(surplus) 18 365 (9 957) 90 828 155 153 (41.5) Australia loan impairments 5 909 12 043 Other expected credit losses 4 711 1 343 GPI receivable ECL (10 812) 6 688 Nikos cont
Slide 28: Comparable Headline Earnings per Share
COMPARABLE HEADLINE EARNINGS PER SHARE R’000 2020 2019 % change Comparable headline earnings 102 439 181 206 (43.5) WANOS 87 061 95 065 (8.4) Comparable HEPS (cents per share) 117.66 190.61 (38.3) ▪ GPI share buyback: 10.8m shares repurchased in October 2019 ▪ WANOS reduced by 7.7m
Slide 29: Financial Position
FINANCIAL POSITION R’000 2020 2019 ASSETS Right-of-use assets 41 921 - Intangible assets and goodwill 365 253 369 092 Loans receivable 6 951 111 352 Tax receivable 28 073 36 939 Trade and other receivables 55 619 106 011 Cash and cash equivalents 167 289 283 979 ▪ ROU assets – due to IFRS 16 ▪ Intan
Slide 30: Financial Position
FINANCIAL POSITION R’000 2020 2019 LIABILITIES Lease liabilities 52 948 - Trade and other payables 43 707 66 611 Shareholders for dividend 66 257 714 ▪ Lease liabilities – due to IFRS 16 ▪ Trade and other payables – R14.2m reduction in leave pay and bonus accrual, and lower VAT payable ▪ Shareholder
Slide 31: Cash Flow
CASH FLOW R’000 2020 2019 Cash flow generated from operations 177 749 244 919 Net interest received (excl. GPI) 11 085 21 978 188 834 266 897 Dividends paid (75 350) (123 826) Taxation paid (53 410) (81 408) Net impact of GPI repurchase (149 896) - Net investment in fixed and intangible assets (16 7
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Slide 33: Looking at the Year Ahead
LOOKING AT THE YEAR AHEAD BRN Ee
Slide 34: Governance Update
GOVERNANCE UPDATE SPUR3
Slide 35: Governance Update – Executive Management Changes
GOVERNANCE UPDATE ▪ Executive management changes: ▪ Retirement of CEO – after 38 years service, 24 as CEO ▪ Appointment of Val Nichas as CEO from 1 January 2021 ▪ Resignation of COO – from 31 August 2020, after 30 years ▪ Appointment of Kevin Robertson as COO from 15 October 2020 ▪ Resignation of CF
Slide 36: Governance Update – Board Changes
GOVERNANCE UPDATE ▪ Board changes: ▪ Appointment of three new executive directors from 15 October 2020 ▪ Resignation of two non-executive directors ▪ Appointment of four independent non-executive directors from 15 October 2020 ▪ After appointment of new CEO and CFO board will comprise 50% females an
Slide 37: Brand Family
BRAND FAMILY Rosas GLOCHD \\KOY we're not normal COALGRILL GREEK SN a SPUR: A S
Slide 38: Focus Areas Since Year End
FOCUS AREAS SINCE YEAR END ▪ Focus on operational fundamentals ▪ Franchisee sustainability ▪ Discounted fees ▪ Anticipate being back to full fees by March 2021 ▪ Supply chain management ▪ Ribs and primal cuts ▪ Food inflation ▪ Occupational health and safety in-store ▪ COVID-19 protocols ▪ Customer
Slide 39: Virtual Delivery-Only Brands
VIRTUAL DELIVERY-ONLY BRANDS ▪ Adapting to home consumption ▪ Exposure to different target markets; attract different generations and lifestyles ▪ Four virtual brands launched late in the financial year ▪ Available on-line only ▪ Still in proof-of-concept phase; potential to grow ▪ No additional inv
Slide 40: Virtual Delivery-Only Brands (cont.)
VIRTUAL DELIVERY-ONLY BRANDS (cont.) ▪ Incremental cash flow on top of existing trading ▪ Agile model: ability to pivot fast ▪ Part of strategy to innovate and respond to changing consumer behaviour ▪ Since 30 June 2020 additional virtual brands launched
Slide 41: Virtual Delivery-Only Brands (cont.)
VIRTUAL DELIVERY-ONLY BRANDS (cont.) Fish Burgers, Chicken Mexican Pizza Raw & Ribs and Prepared & Wings Pasta Meals
Slide 42: Brand Development in South Africa
BRAND DEVELOPMENT IN SOUTH AFRICA Brand Opened to 30 To open to June 2020 30 June 2021 Spur Steak Ranches 4 5 Pizza and Pasta 5 6 John Dory’s Fish Grill Sushi 3 2 The Hussar Grill 2 - RocoMamas 6 7 Nikos 1 1 Total 21 21
Slide 43: Restaurant Footprint - International
RESTAURANT FOOTPRINT - INTERNATIONAL Location Spur Panarottis John Dory’s Hussar RocoMamas Total Australasia 4 3 1 8 Botswana 2 1 3 Cyprus 1 1 Eswatini 3 3 India 1 1 Kenya 5 1 2 8 Lesotho 1 1 Mauritius 3 12 2 17 Middle East 1 3 4 Namibia 7 1 2 1 11 Nigeria 5 2 7 Tanzania 1 1 Zambia 3 12 1 1 1 18 Zim
Slide 44: Brand Development - International
BRAND DEVELOPMENT - INTERNATIONAL Country Opened to 30 June 2020 To open by 30 June 2021 Australia 1* - Eswatini - 2 Ghana - 1 Kenya 2 - Mauritius 6 - Middle East 2 1 Nigeria 2 - Zambia 5 3 Zimbabwe - 1 Total 18 8 * Relocation of closed RocoMamas in Melbourne
Slide 45: Outlook
OUTLOOK SPUR3
Slide 46: Outlook
OUTLOOK ▪ Risk of a second wave of infections impacting trading ▪ Protracted period of recovery for restaurant industry ▪ Lack of consumer confidence in a shrinking economy ▪ Increasing unemployment ▪ Low interest rates positive for consumer spending
Slide 47: Our Response
OUR RESPONSE ▪ Customer engagement ▪ Continue to drive value and loyalty ▪ Development of a food delivery solution ▪ Initial focus on areas not currently serviced by third party aggregators ▪ Improve online offering (including apps for all brands) ▪ Loyalty ▪ Order from anywhere (including in-store)
Slide 48: Our Response
OUR RESPONSE ▪ Menu innovation ▪ Vegan trends / plant-based protein ▪ Home meal kits ▪ Evolution of virtual brand portfolio ▪ Continued focus on Health and Safety protocols in-store and at corporate offices
Slide 49: Thank You – Questions?
THANK YOU QUESTIONS? SPUR3
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
Slide 51: 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