Spur Corporation Limited · JSE:SUR

Spur — FY2019 Earnings Presentation

51 slides from Spur's earnings presentation, 2019

  1. Slide 1: Results for the Year Ended 30 June 2019

    RESULTS FOR THE YEAR ENDED 30 JUNE 2019

  2. Slide 2: Governance Update

    GOVERNANCE UPDATE SPUR3

  3. Slide 3: Governance Update

    GOVERNANCE UPDATE  Executive chairman, Allen Ambor, retired on 28 February 2019  Mike Bosman, appointed independent non-executive chairman, effective 1 March 2019  Keith Getz, Dean Hyde and Keith Madders – all retired on 6 December 2018  New non-executive directors appointed 17 June 2019:  Shir

  4. Slide 4: 1

    1

  5. Slide 5: Trading Environment

    TRADING ENVIRONMENT  Challenging trading conditions in South Africa  Weak economy and high operating costs in Australia  Increasing demands on disposable income  Weakened consumer sentiment Restaurant sales Maintained volumes and market share – resilience of brands up  Community 129% involveme

  6. Slide 6: Financial Results for the Year Ended 30 June 2019

    FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2019

  7. Slide 7: The Year at a Glance

    THE YEAR AT A GLANCE  Revenue 5.9% (excluding marketing funds 6.2%)  Profit before tax 13.9% (excluding marketing funds 7.3%)  Comparable profit before tax 15.9%  Profit attributable to ordinary shareholders 6.8%  Comparable profit attributable to ordinary shareholders 16.6%  Margin 27.4% (PY:

  8. Slide 8: Restaurant Turnovers – South Africa

    RESTAURANT TURNOVERS* – SOUTH AFRICA R’000 Brand 2019 2018 % change (# of outlets) (# of outlets) Spur Steak Ranches 4 585 811 (299) 4 351 067 (290) 5.4 Pizza Pasta 799 421 (91) 792 548 (92) 0.9 John Dory’s Fish Grill Sushi 474 551 (52) 453 808 (49) 4.6 The Hussar Grill 209 059 (20) 184 298 (17) 13.

  9. Slide 9: Adoption of New Standards

    ADOPTION OF NEW STANDARDS  IFRS 15 – effect on recognition of initial licence fees, marketing funds and classification of certain items  IFRS 9 – effect on loans and expected credit loss recognised in income statement  Reminder IFRS 16 – effective 2020, modified retrospective approach to be taken

  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 69.3 9.7 9.1 83.4 83.9 Pizza Pasta 11.3 5.6 7.9 62.4 61.1 John Dory’s 6.4 8.0 5.0 46.4 47.7 The Hussar Grill 2.1* 10.3* 18.2 60.8 56.7 RocoMamas 10.1* 7.5* 13.5 71.1 67.4 Ni

  11. Slide 11: South Africa Retail

    SOUTH AFRICA RETAIL* R’000 2019 2018 % change Revenue 69 753 69 534 0.3 Operating profit 8 576 6 785 26.4 Operating margin 12.3% 9.8% 2.5 * Comprises four The Hussar Grill restaurants and one RocoMamas

  12. Slide 12: Manufacturing & Distribution

    MANUFACTURING & DISTRIBUTION R’000 2019 (margin) 2018 (margin) % change Revenue – Manufacturing 88 746 87 402 1.5 Revenue – Retail 62 107 57 665 7.7 Revenue – Distribution 51 081 41 157 24.1 Revenue – Total 201 934 186 224 8.4 Operating profit – Manufacturing 19 924 (22.5) 19 053 (21.8) 4.6 Operatin

  13. Slide 13: SA Marketing Funds

    SA MARKETING FUNDS R’000 2019 2018 % change Revenue – Spur Advertising 182 445 169 295 7.8 Revenue – Other Funds 62 667 62 567 0.2 Revenue – Total 245 112 231 862 5.7 Under/(over) spend – Spur Advertising 7 654 (5 238) 246.1 Underspend – Other Funds 4 901 4 001 22.5 Under/(over) spend – Total 12 555

  14. Slide 14: Other South Africa

    OTHER SOUTH AFRICA* R’000 2019 2018 % change Revenue 51 807 60 284 (14.1) Operating loss (6 208) (4 953) (25.3) Retrenchment costs (Décor) 1 410 - Comparable operating loss (4 798) (4 953) 3.1 Comparable operating margin (9.3%) (8.2%) (1.1) * Comprises décor, training, restaurant sundries, export, c

  15. Slide 15: Corporate Services South Africa

    CORPORATE SERVICES SOUTH AFRICA R’000 2019 2018 % change Revenue 2 319 1 329 74.5 Operating loss (74 143) (65 352) (13.5) Admin fees income (22 503) (20 706) GPI dividend (9 530) (8 736) Net interest income (23 259) (21 801) Shared overheads (129 435) (116 595) (11.0)

  16. Slide 16: Corporate Services South Africa

    CORPORATE SERVICES SOUTH AFRICA R’000 2019 2018 % change Shared overheads (129 435) (116 595) (11.0) IFRS2 charge (net of hedge) - 2 283 Braviz profit - (17 500) SARS dispute 86 1 692 Spur Foundation (408) 1 040 Nikos/RocoMamas contingent 1 555 12 745 consideration FV adjustment Impairment of GPI fu

  17. Slide 17: Restaurant Turnovers – International

    RESTAURANT TURNOVERS – INTERNATIONAL Location 2019 (R’000) 2018 (R’000) % change % change* (# of outlets) (# of outlets) Australasia 176 236 (9) 205 366 (11) (14.2) (15.9) Africa 420 148 (49) 346 600 (38) 21.2 18.3 Cyprus & India 5 361 (2) - - - Mauritius 173 875 (13) 133 865 (11) 29.9 21.2 Middle E

  18. Slide 18: Australasia

    AUSTRALASIA R’000 2019 2018 % change Restaurant turnover 176 236 205 366 (14.2) Number of restaurants 9 11 Revenue 4 349 6 560 (33.7) Net loss (16 992) (10 980) IFRS 9 Impairment of loans 8 686 7 230 RocoMamas Australia 3 357 2 253 impairment/setup costs Foreign exchange loss 10 44 Adjusted operatin

  19. Slide 19: Other International

    OTHER INTERNATIONAL R’000 2019 2018 % change Total Revenue 29 618 22 993 28.8 Operating profit 12 663 10 378 22.0 Operating margin 42.8% 45.1% (2.4) Made up of: Africa & Mauritius Revenue 26 190 21 056 24.4 Operating profit 11 796 9 901 19.1 Operating margin 45.0% 47.0% (2.0)

  20. Slide 20: Other International

    OTHER INTERNATIONAL R’000 2019 2018 % change The Middle East, Cyprus & India Revenue 3 428 1 937 77.0 Operating profit 867 477 81.8 Operating margin 25.3% 24.6% 0.7

  21. Slide 21: International Marketing Funds

    INTERNATIONAL MARKETING FUNDS R’000 2019 2018 % change Revenue 7 266 7 814 (7.0) Under/(over) spend 917 (107) 957.0 Cumulative underspend 2 155 1 238

  22. Slide 22: International Corporate Services

    INTERNATIONAL CORPORATE SERVICES R’000 2019 2018 % change Operating loss (8 823) (6 492) (35.9) Zambian settlement & related 2 350 - costs Other IFRS 9 ECL (movement) (53) - Foreign exchange loss 592 357 Adjusted operating loss (5 934) (6 135) 3.3 * Applying a constant exchange rate, corporate costs

  23. Slide 23: Comparable Profit

    COMPARABLE PROFIT R’000 2019 2018 % change Profit before tax 257 077 225 613 13.9 Exclude: Marketing funds (13 472) 1 344 243 605 226 957 7.3 Impact of “old” share scheme (cash-settled) - 2 283 Nikos/RocoMamas contingent consideration FV 1 555 12 745 adjustment Financial instruments impairments 16 7

  24. Slide 24: Comparable Headline Earnings

    COMPARABLE HEADLINE EARNINGS R’000 2019 2018 % change Headline earnings 165 110 149 799 10.2 Exclude: Marketing funds (9 957) 1 009 155 153 150 808 2.9 Impact of “old” share scheme (cash-settled) - 1 644 Nikos/RocoMamas contingent consideration FV 1 555 12 745 adjustment Financial instruments impair

  25. Slide 25: Comparable Headline Earnings per Share

    COMPARABLE HEADLINE EARNINGS PER SHARE R’000 2019 2018 % change Comparable headline earnings 181 206 155 349 16.6 Comparable HEPS (cents per share) 190.61 162.53 17.3 WANOS 95 065 95 680 (0.5)

  26. Slide 26: GPI Transaction

    GPI TRANSACTION  GPI RF  10.8m Spur shares at market value: R238.7m (R22/share)  External funding: R150.2m  Spur funding: R110.2m (carrying value R99.4m)  Net exposure: R21.7m  IFRS 9 impairment provided for:  R4.1m in opening retained earnings (1 July 2018)  R6.7m in 2019 profit or loss  T

  27. Slide 27: GPI Transaction

    GPI TRANSACTION  Proposed buy-back  Circular published 27 August 2019  Meeting scheduled for 25 September 2019  Spur to acquire 10.8m shares at R24/share: R260.4m  Debt repaid: R110.2m  Shortfall, if any, to be funded by GPI  Updated pro forma financial information to be published on 13 Septe

  28. Slide 28: GPI Transaction

    GPI TRANSACTION  Potential outcome 1 – shareholders approve  Impairment reversal in profit or loss in 2020: R10.8m  Potential outcome 2 – shareholders reject  Minimum additional impairment in profit or loss in 2020: R10.9m  Excluding current year impairment of R6.7m  Increase in EPS increases

  29. Slide 29: Financial Position

    FINANCIAL POSITION R’000 2019 2018 ASSETS Intangible assets and goodwill 369 092 362 709 Interest in associate - 3 461 Loans receivable 111 352 130 968 Loans receivable – LT 5 391 118 483 Loans receivable – ST 105 961 12 505 Inventory 10 299 15 702 Trade and other receivables 106 011 99 997 Cash and

  30. Slide 30: Cash Flow

    CASH FLOW R’000 2019 2018 Cash flow from operations 260 804 221 062 Net interest received 21 978 21 154 282 782 242 216 Distributions paid (123 826) (124 250) Taxation paid (81 408) (60 646) Working capital changes (15 885) (19 527) Net investment in fixed and intangible assets (10 767) (11 913) Pur

  31. Slide 31: Slide 31

  32. Slide 32: Operational Overview for the Year Ended 30 June 2019

    OPERATIONAL OVERVIEW FOR THE YEAR ENDED 30 JUNE 2019

  33. Slide 33: Spur Steak Ranches

    SPUR STEAK RANCHES  291 Spur Steak Ranches in South Africa  8 Spur Grill & Go restaurants in South Africa  5.4% increase in restaurant turnover  Menu price increases  1.1% December 2017  5.3% April 2018  3.0% December 2018

  34. Slide 34: Spur Steak Ranches – Strategy for the Year Ahead

    SPUR STEAK RANCHES  Strategy for the year ahead  Focus on core quality products and enhancing presentation with new crockery  Continuous training  Enhance kids’ experience  Food quality focused advertising  Progressing Grill & Go in suitable locations  Continuous focus on franchisee profitabi

  35. Slide 35: Pizza and Pasta

    PIZZA and PASTA  84 Panarottis restaurants in South Africa  7 Casa Bella restaurants in South Africa  Restructured to create a solid foundation for the future  Move away from discounting  Call-and-collect assisted to maintain takeaway market share  Loyalty programme enjoying continued growth 

  36. Slide 36: Pizza and Pasta – Strategy for the Year Ahead

    PIZZA and PASTA Strategy for the year ahead  Focus on value over discounting, and competitive menu pricing  Bottomless pizza – to be discontinued  Continued installation of rotating wood-fired pizza ovens to enhance product authenticity and franchisee profitability  Roll out of new crockery enha

  37. Slide 37: John Dory's Fish Grill Sushi

    FISH GRILL SUSHI  52 restaurants in South Africa  4.6% increase 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  Focused on new local marketing initiatives and change in b

  38. Slide 38: The Hussar Grill

    THE HUSSAR GRILL  20 restaurants in South Africa  13.4% turnover growth  Menu price increase  5.0% May 2018  No increase in the current period  Maintained and strengthened positioning as 1st choice premier grill room at affordable prices  Established nationally now in specific strategic areas

  39. Slide 39: RocoMamas

    ROCOMAMAS  70 RocoMamas restaurants in South Africa  2 RocoGo restaurants in South Africa  Menu price increase  3.9% September 2017  4.3% April 2018  2.8% November 2018  Focus on franchisee profitability  TV ad – growing market reach  Community involvement  Focus on growing existing turnov

  40. Slide 40: Nikos Coalgrill Greek

    NIKOS COALGRILL GREEK  51% acquired 1 August 2018  9 restaurants in South Africa  1 smaller model in Rosebank  3 new restaurants opened since acquisition – trading well  Aim for Nikos brand name to be synonymous with Greek food in South Africa  Detailed marketing plans for each restaurant  On

  41. Slide 41: Brand Development in South Africa

    BRAND DEVELOPMENT IN SOUTH AFRICA Brand Opened to 30 To open to June 2019 30 June 2020 Spur Steak Ranches 13 2 Pizza Pasta 7 - John Dory’s Fish Grill Sushi 6 1 The Hussar Grill 3 - RocoMamas 7 4 Nikos 3 4 Total 39 11

  42. Slide 42: International

    INTERNATIONAL  Africa  Delivered strong growth  Opened 12 restaurants during the year  Certain countries unstable with challenging trading environments  Strategy to enter areas where critical mass is attainable  Smaller footprint showing encouraging results  Mauritius  Sound operations  Ope

  43. Slide 43: International

    INTERNATIONAL  Australasia  9 restaurants - 3 closures  Trading conditions continue to deteriorate  Concessions to aid franchisees  Re-evaluating position in the region – legal, ethical and moral obligations  RocoMamas Australia – sustained trading losses  Middle East  4 restaurants – 3 Roco

  44. Slide 44: Brand Development - International

    BRAND DEVELOPMENT - INTERNATIONAL Country Opened to 30 June 2019 To open to 30 June 2020 Australia 1 - Botswana 1 - Cyprus 1 - India 1 - Kenya 1 2 Mauritius 3 1 Middle East 2 3 Namibia 2 - Nigeria - 2 Zambia 8 1 Zimbabwe - 1 Total 20 11 Total international footprint at 30 June 2020 84

  45. Slide 45: Manufacturing & Distribution

    MANUFACTURING & DISTRIBUTION  Sauce factory  4% price increase in December 2018  Revenue from sauce sales grew by 1.5% - under pressure  R11.5m refurbishment of existing facility  Further improve operational standards  Utilise existing facilities more efficiently/more storage capacity  Expand

  46. Slide 46: Prospects / Outlook

    PROSPECTS / OUTLOOK SPUR3

  47. Slide 47: Prospects

    PROSPECTS  Pressure on consumer discretionary spending to persist  Focus on product quality, innovation, value and making our products relevant  Finalise and implement Digital Transformation Strategy  Launch click-and-collect option  Innovative targeted marketing  New opportunities/Acquisition

  48. Slide 48: Thank You – Questions?

    THANK YOU QUESTIONS? SPUR3

  49. Slide 49: 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

  50. Slide 50: 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

  51. Slide 51: Brand Family

    BRAND FAMILY CjphsDary ROCOMAMAS NIKQ> e're not normal COALGRILL GREEK SPUR: A 8

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