Spur Corporation Ltd (SUR) Earnings Call Transcript & Summary

Okay. Good morning to Shareholders, Analysts, Auditors, and Non-Executive Directors, our Chairman. Welcome to my Co-Directors, and also welcome to all the team players from Spur who are here today. Okay. I think we've beaten this drum, and you'll probably hear in the marketplace continuously about challenging economic conditions in South Africa and to a big degree in Australia. And I'll share with you later in terms of what we think about the impact of that has been in our results. Okay. We also know that the consumer out there is taking serious strain. And at the same time, has got the psyche of what he's going to do with his disposable income, and I'll share a little bit that with you later as well as we go through the brands. Be aware that they're going to switch a power off tomorrow. They've just kept it going for a few days whilst we've been past the budget. So now we pass the budget, part of the state information address. So they're going to switch to tomorrow, so enjoy that. And hopefully, some of you got batteries or generators or anything else. Okay. Weaken consumer sentiment. I think it speaks for itself. Again, as I go through the brands, I'll share with you in terms of the brand profiles where we are. I think -- well, not I think, we know for a fact that when we go through the results with you that there's been gains in market share. And the old man of the group in terms of Spur has really done well in the past year to 18 months and has regained substantial market share, and I'll share that with you a little bit later as well. In today's market, we were talking to one of our analysts this morning. And the market has definitely gone into what I would call a more quality conscious in terms of what they're spending, the demand from the consumer is a lot more today than it was probably 5 or 6 years ago, which is a good thing. And it depends how you want to compete to that and how you want to play the game from a quality and a value perspective as well. And the focus on franchisee profit margins, you've heard me beat this drum before that it's critical to our success and the franchisee success that we look at their returns very, very carefully and continuously look across all brands in terms of what those guys are making and making sure that they got profit generating units that they get the necessary returns. It comes with its difficulties. But as long as you bring them inside the tent and you work with them, we believe that we have a clear strategy going forward in terms of our franchisee and franchisor base that we can deliver the necessary profitability and at the same time, drive our top line from a consumer perspective with regards to quality and value. And I'd like to hand over to Phillip to go through the numbers. Thank you.

Thanks, Pierre. So Pierre is one of those people that likes abiding to fit on one page. It's not always possible. So what do you do, you shrink the fund size. So if you look at my first slide, it's a little bit busier than what it usually is. But I think all of it is relatively important and gets context to the remaining presentation. We all good here with the mic, okay, cool. And so just at the outset, the single biggest transaction that had an influence on the first half results with the GPI transaction. I think most of you are probably aware of what that related to. But for those of you who aren't, just a quick summary. So in October 2019, we reacquired the 10.8 million shares that we had issued to GPI back in 2014 as part of the broad-based black economic impairment transaction. And we reacquired them at a price of ZAR 24 a share. So there was a total ZAR 260 million that left the group to reacquire those shares. We partially funded that transaction back in 2014 to the extent of about 25% of the value of the transaction through loan funding to GPI. And as part of unwinding that transaction, GPI repaid us that full receivable. So there was an inflow of ZAR 113 million. So the net outflow to the group was ZAR 147 million. And also then the consequence of that is the reduction in the number of shares in issue. And you'll see that has a significant impact on all our earnings per share numbers. So if we look at the numbers at a headline level, revenue up 8.4%. You'll see, as I did at year-end, I've highlighted the impact, excluding the marketing funds. Why did I do that? I'm not sure if I'm allowed to say this, but the absurdity of IFRS and IFRS 15, in particular, required us to change the way in which we had previously accounted for the marketing funds. So just very quickly, we established marketing funds on behalf of the franchisees. We collect money, and we have to spend that for their benefit. We previously accounted for that as a trust fund on the balance sheet. It never impacted on our profit numbers. Introduce IFRS 15, we now have to recognize those inflows as revenue and the relating marketing costs as costs. The reason why it's absurd is because if there's any profit or any surplus, we cannot distribute that as a dividend or use it for anything other than the purpose of marketing for the benefit of franchisees. So at year-end, I made a bit of a song and dance. I'm doing it again. I'm going to continue to do it until everyone is familiar with the concept of why we need to exclude the marketing funds. But revenue up 10.3%, which as Pierre said, in this current climate, we're exceptionally proud of, and we think it's a job well done. Profit before tax up 19.5%. Excluding the marketing funds, up 22%, and diluted headline earnings per share up 35.6%, and you see the kick of the impact of the reduction in the weighted average number of shares in issue following the GPI transaction. Included in the reported numbers related to GPI indirectly is a movement in impairment losses. So what that means is last year, we had IFRS 9, which we had to apply for the first time, which required us to provide full future expected credit losses. And in the first half last year, we had to provide ZAR 4.3 million worth of impairment losses related to that receivable -- the loan that we had advanced to GPI. So that was a cost in the first half last year. That impairment provision increased to ZAR 10.8 million by 30 June 2019, this is in the past. And as a result of the GPI transaction that we included in the current year, they repaid us the full amount. So that impairment allowance wasn't necessary and we could reverse the ZAR 10.8 million to profit. So in essence, there's a ZAR 15 million swing in profit that if you like, isn't real, that's purely related to IFRS and how we account for expected credit losses. So stripping that out as well as the impact of the marketing funds, comparable profit up 8.2% and comparable diluted headline earnings per share up 14.6%. The biggest contributor to that was the improvement in the wholesale and distribution segment that you would have seen in the results and with specific reference to the back to commissions or the distribution commissions that we earn on our outsourced distribution network, and I'll talk to that when we get to the segment information. That had an impact on our margins. So excluding the marketing funds, we saw a nice improvement in margins. The effective tax rate, I just wanted to highlight there because we do often get asked what's going on in the effective tax rate. And that's related to those doubtful debt -- bad debt allowances relating to the GPI receivable. So because it's a capital loan, that loss of ZAR 4.3 million last year was nontax deductible. The return of that loss or the release of that provision of ZAR 10.8 million in the current year is nontaxable. And our dividend per share is up to ZAR 0.78 at -- up at 23.8%. So that should be my job done. I think I've covered the bulk of it, but unfortunately, not so lucky for you or me. If we just unpack that a little bit more, we went in the same boat as much as many of the retailers who had these massive but millions and, in some cases, billions of rands of leased assets and liabilities. Fortunately, we were spared from that. And we did have an impact on IFRS 16, though, relating to our fleet of vehicles and some corporate offices, and obviously, the 5 -- not obviously, but the 5 company-owned restaurants that we do own. And just to record you that we did not apply this on a fully retrospective basis. So what that means is the comparatives have not been restated. It's resulted in the recognition of leased assets and lease liabilities to the tune of ZAR 46 million at implementation date. The impact on our numbers in the current year on a net basis is not significant. But if you're looking at the cash flow, you'll see some movements there. It resulted in an additional depreciation charge of ZAR 7 million for the half and an additional interest cost of ZAR 2.4 million relating to the lease liabilities. So those are additional costs. Obviously, we don't have the operating lease cost anymore that we would have had in the previous year. So the net impact is only ZAR 1.7 million reduction in profit. So not a massive impact on our numbers. If we look at the trading performance, Pierre spoke a little bit and introduced that just where we are in the state of consumer and the local economy. Spur remains the mateship and is the biggest contributor to revenue. You should be familiar with this slide in terms of the revenue numbers or the turnover numbers as well as the little numbers in brackets being the number of restaurants just to try and put things into context. So Spur brand at 4.5%, we're very pleased with our performance, pretty much in line with our expectations. Pizza and pasta, a little bit on the low side, we would have liked higher just to give that context. Obviously, Pizza and Pasta is an incredibly competitive segment of the market with lots of incredible discounting happening in there, which we kind of away from. We've kept our focus on product quality and the value propositions to the customer. We have, for example, though, done away with all you can eat pizza on a Thursday night. And all of those factors have led to not a fantastic growth in revenue, but pretty much also kind of what we were expecting and anticipating because we knew that, that was going to happen. John Dory’s brand at 6.6%, a good performance. Just to highlight, I did mention at year-end that we had 2 rather large restaurants that only traded for 1 month in the comparable period. They were closed for 5 months due to renovations. So that has boosted the 6.6%. Hussar, doing well, benefiting from 2 additional restaurants relative to the comparable period. And if there was going to be a brand that there's going to be resilient in these kind of economic conditions, it's going to be Hussar, at the top end. RocoMamas, growing at 6.4%, and 7 additional restaurants relative to last year. We are seeing a bit of a flattening off on existing business. We mentioned at year-end that we are in a bit of a consolidation phase following that significant growth in the first 3 years that we acquired that business. So that's work in progress. How does that translate into the financial performance? So again, Spur is the single biggest contributor to revenue and profit and remains and will for a while I'm sure. Revenue growing at 3.8%, lagging the growth in restaurant turnover slightly. That's got nothing to do with the cost of concessions, the franchise fee concessions that we've spoken about in the past, that's pretty much leveled out and is normalized. That the reason why it's lagging slightly is more relating to initial franchise fees on new franchises or new franchise agreements. We managed to contain costs. So the margin is pretty much flat and an improvement in operating profit, slightly ahead of revenue. Pizza and Pasta that's Panarottis and Casa Bella, and that revenue of 0.5%, we have had to assist franchisees from a franchise fee concession perspective so that growth in revenue is lagging the growth and turnover. And with such low growth in revenue, the bulk of the operating costs are employment-related costs, which do increase at CPI and slightly above. So we have seen a decline in profitability there and a slight reduction in the margin. John Dory’s, revenue growing at 3.3%, also lagging slightly turnover growth, again, a slight increase in the cost of temporary franchise fee concessions. In the prior year, we had the additional operating costs to support the relocation or the refurbishment of those 2 restaurants that I spoke about previously. But because we don't have those costs this year, we have improved by 6.6% and an improvement in the margin there. The Hussar Grill, great performance there, growing revenue at 9.5%, ahead of the turnover growth, and that's due to the initial license fees that we've recognized on new restaurants. And they've got a relatively small cost base, but there's one less person in that team relative to the comparable period, which is the reason why we've got that 15.2% growth in profit and a nice improvement in margin. RocoMamas, revenue also lagging slightly behind turnover for 2 reasons. The first one is we have had an increase in the cost of franchise fee concessions. But secondly, there's also an increase in the number of RocoGo restaurants, which is the smaller format of RocoMamas. Pierre will talk to that a bit later. And they are on a standard franchise fee of 4% as opposed to 5% for growth in RocoMamas. If we look at our South African retail operations, just to remind you, that's the 5 company-owned restaurants that we own, the 4 Hussar Grills as well as the RocoMamas in Green Point. And it doesn't look rosy, but there is an explanation. So give me a minute or 2. Revenue declined by 0.2%. The main reason for that -- in fact, the only reason for the decline is the single biggest restaurant that we own is The Hussar Grill in Camps Bay, and it was closed for a month for a major refurb. So that impacted on the revenue. If we move to the operating profit, the same thing, so they were closed for a month, no revenue, but we incurred operating costs of around ZAR 470,000 for that month, employment costs, occupancy costs, those kinds of things. In addition to that, we couldn't capitalize all the costs. It's a small amount. We spent about ZAR 4.3 million in total. Of that, about ZAR 170,000 we had to expense, we couldn't capitalize that. And then this is one of the divisions that were impacted more by the implementation of IFRS 16. So there's an incremental cost, if you like, relative to the prior year of ZAR 826,000 purely relating to IFRS 16. Manufacturing and distribution. I think we unpacked this for the first time for you in a little bit more detail at year-end. In essence, there's 3 primary components to wholesale and distribution. The first one up there is our own source manufacturing facility, the central kitchens. The second is our retail source business where we don't actually manufacture. We're buying product and we sold to the likes of Pick n Pay and others. And the third element there, the distribution income is the commission that we earn on supplies through our sourced distributor. Revenue from manufacturing up at 2.8%. We did have a price increase of around 4% across the board in December 2018. So it was in effect for a full period this year. And you'll see that, that growth in turnover is lagging slightly the growth in turnover in Spur specifically, which is its biggest customer. And so volumes are under pressure. And Pierre will talk in his presentation a bit later around the thinking around central kitchens, we need to introduce new lines there in order to make those assets sweat. And we're aware of it and it's work in progress. We managed to maintain our GP margins in central kitchens. The profit went backwards there because, hopefully, you'll recall at year-end, we spoke about the refurb that was required to maintain operating standards in the central kitchens. We spent about ZAR 12 million, ZAR 3.5 million in the prior year and ZAR 8.5 million in cash in the current year. Of that ZAR 1.7 million, ZAR 1.8 million, we couldn't capitalize. So that went directly into costs. They are one-off related specifically to that refurb. So if you take that out in profit growth in manufacturing in the central kitchens is up 2.4%. So a slight reduction in the net margin. And the reason for that is because as part of the refurb, we've taken up more space in our buildings. So there's increased occupancy, utilities costs and also increased depreciation as a result of those capital costs that we capitalized. Retail. I'm not going to spend too much time on. It doesn't make a significant contribution to profit. I did mention at year-end that we are growing this business, and it is getting to a point where we believe that there is opportunity to leverage it more from a profit perspective. But up until recently, it's been more on marketing and a brand-building exercise than a real profit opportunity. Distribution is what I spoke about on my very first slide. That's one of the biggest contributors to the improvement in the comparable profit. That is the commission that we earn by the outsource distribution network. And we mentioned at year-end that we increased that in January 2019 from 3% of sales to 4% of sales. So there was a big kick in the second half of last year. There's a similar kick of around ZAR 11.6 million in the first half of this year. It's now being annualized into the system. So please don't expect another 51.8% increase in revenue in the second half. That's not going to happen. I'm not going to spend too much time on the marketing funds. This is just -- in your booklet, it's just to kind of illustrate the impact of that IFRS 15 absurdity. Other South African segments, you'll see a mass swing there, even though it's not big numbers. The biggest 2 contributors to this division are our décor manufacturing facility and our export business. You will recall from year-end, our décor business had been making losses for a few years. We unfortunately had to go through a retrenchment exercise. There was a one-off cost last year of ZAR 1.4 million. And I'm pleased to say that, that business is now making a modest profit. The other big contributor there is our export business, as I said, which is very dependent on international store openings. And we have 9 new restaurants in Africa and the Middle East, which contributed to revenue and profit there. Corporate services. We had a lot of questions around this because it's a big number, and we often quite light on the detail. Just to unpack that a little bit. So included in the net operating loss at the bottom there of the ZAR 28 million, we've got a recovery of overheads from the marketing fronts. So as a corporate, we provide IT, HR, finance, legal and a whole host of other support services to the marketing funds. We recover those costs from the marketing funds, and that recovery is calculated as a percentage of the inflows into the marketing funds. The GPI finance income is what I spoke to on my first slide. So the loan was repaid in mid-October. And obviously, the interest has declined as a result. Net interest income down for 2 reasons: one, because of the net outflow of ZAR 147 million relating to the GPI transaction. Obviously, less interest on less cash in the bank, and also the impact of IFRS 16. Shared overheads, don't get too excited. We didn't manage to reduce our shared overheads by 17.7%. If we click over to the next slide, there is the impact of that ZAR 15 million swing in the expected credit losses for GPI. So if you strip that out, the rest is relatively small change. We're looking at comparable shared overheads increasing at around 5.8%. In your booklets, I haven't put it in this presentation. But in the booklet, there's a bit of an analysis of what makes up those shared overheads. Just a couple of things to note. So included in there is our IFRS 2 long-term incentive scheme charge, which increased from ZAR 1.5 million to ZAR 2.9 million. And we've had an increase in IT costs just as we start gearing up for fourth industrial revolution and digitization and all those kind of good things. We had some savings and executive, and you'll point out why was that? We don't have an Executive Chairman anymore. So we managed to save some costs there. And just a note of caution, you will see in some of those line items. We do have some vacancies in finance and legal and HR and some of the other business units, which I mentioned at year-end as well. We are in the process of recruiting, so there will be a slight correction once those vacancies are filled. For international, I'm going to let Pierre deal with Australia. But in essence, nothing much has really changed, not a great place to trade in. We have closed a few restaurants in the first half of last year, and that's the impact on the turnover there. Africa, a mixed bag, but we are certainly gaining traction in certain territories, things like Zambia, which I'll talk to you shortly. We've really started to get to that critical massive tipping point where it really starts making sense to trade in some of the countries. So growth on a constant exchange rate basis at 8.2%. It's not -- nothing to sneeze at. And Mauritius is the other business that's doing nicely for us there. You'll see 5 extra businesses relative to the same period last year. Australasia, just that net loss, it looks like an improvement. If you look at the reported numbers, that's not 100% correct because included in the ZAR 4 million loss that we reported last year were impairment losses relating to certain loans to franchisees. So if you strip out some of those funds -- sorry, just on the second line, we did have that 45% investment in RocoMamas in Melbourne. It wasn't a major success. We did have to take a small impairment this year, but we disposed of that investment. So we will not be funding any further operating losses in that restaurant. And we have made some efforts to reduce the costs. So we did only have 2 people in Australia on a permanent full-time basis. They were operating out of a small office. We did have to retrench one of the people, and we don't have an office anymore, the remaining guys working out of these [indiscernible]. So we are trying to cut costs. But in reality, we are still incurring a loss there. Other international. Total revenue up 9.3%, mainly coming from Africa and Mauritius. And you'll see a nice improvement in the operating margin there. And as we start -- as I mentioned before, we started to get to critical mass in Zambia, where we have 16 restaurants. Mauritius, we've got 18 restaurants, it starts making sense. So we're getting there. International corporate services. Just -- I'm not going to spend too much time on this. Just again, it looks like there's an improvement, which isn't really the case. Last year, we had a Zambian legal matter which cost us ZAR 1.6 million. So if you strip that out, the costs are going up to 21.4%. That looks very scary as a percentage. In rand value, it's quite small. And there's actually a very simple explanation might be mildly amusing. We have 3 people in our Dutch office, one of the ladies was on maternity leave. And in Holland, as your maternity leave, the state pays you, not the company. So -- and she is not on maternity leave this year. So that's... Comparable profit. I'm going to spare you going through all of that detail because I think I've touched on everything. Just in the interest of transparency, I wanted to show you how we got from the actual IFRS numbers to what we reported as comparable and the same with comparable headline earnings. Financial position. I think we've touched on the increase in the property, plant and equipment related to the refurbishment of the central kitchens and Camps Bay, Hussar Grill. The loans receivable has decreased there because of the GPI amount that was repaid. Trade receivables in line with trading performance. Just a quick note on the tax receivable, if you're interested. You'll recall, we've been in an ongoing battle with SAR over a dispute regarding our 2004 share incentive scheme. We've had to pay tax of ZAR 22 million, which is sitting on the balance sheet there. We've gone to ADR, which failed. We've had a tax case, which we won. SAR has appealed that to a full bench of the income tax court, we won that one. They are now trying for leave to appeal to the Supreme Court of Appeals [indiscernible] May. And we have opposed that application, and we're waiting for a ruling. If they are successful, it could take another year or 2 before that's eventually resolved. Just to remind you what the restricted cash is, that's the cash that's sitting in the marketing funds that we can't really touch for any purpose other than marketing. I'll talk to the production in cash flow. Contract liabilities. Just to remind you, that is relating to IFRS 15 and the fact that we can't recognize all our initial franchise fees upfront. When we sign a franchise agreement, even though we received them in cash and then nonrefundable, we have to recognize them over the period of the -- sorry, of the franchise agreement and the lease liabilities is IFRS 16. Just cash flow, I think we wanted to highlight that, again, given Pierre's introduction and where we are from a state of economy and the trading environment, the fact that we managed to generate an additional ZAR 27 million from operating cash flows, certainly something that we're very proud of. I just need to point out one thing. And Pierre reminds me, I'm the glass half empty, the hole in the donut, I don't know what else he calls me. But included in the prior year, they were operating lease costs of ZAR 7.5 million, which aren't included in the current year because of IFRS 16. Instead, the cost is sitting in net interest received and the payment of lease liabilities. So of the ZAR 27 million improvement, ZAR 7.5 million is purely accounting changes. Still a ZAR 19.5 million improvement in cash flow is still very positive for us. And the bulk of that is the distribution income as well as the increase in Spur income and the other trading brands. The rest, I don't think is -- I've touched on most of it. Just to say and preempt the question, we are still sitting with ZAR 147 million in the bank on the balance sheet. And we are assessing a number of business acquisition opportunities as well as a couple of capital projects. And we've got the Board meeting this week. We started looking at some of those. And obviously, the Board is very stringent return on investment and criteria to make sure that we're allocating our capital appropriately. And so over the coming months, we're really going to be doing some more work on some of those projects. We have another Board meeting in June. And if for whatever reason, we can't get to investments that give us the returns, a return of cash to shareholders is not off the cards. But we'll wait for year-end after we've had another Board meeting or 2. And that's my story. I hope I didn't bored. Pierre, back to you.

Myself and Phil's relationship is not personal. It's just that a case of I fail to understand the accounting principles that come in the results. But anyway, be that as it may, Phil [indiscernible] is not person, it's just bugbear that I have... If you look at the restaurant count in totality, we currently trade in total with 642. That's including the international stores of 83. I'm not going troll you through this slide. So to the extent that I will get to the other slide just now in terms of the restaurant openings and the international openings as well, which is, again, we are at the cusp of getting into the next level of international regarding getting that margin up and getting that profit up as well. Okay. Spur steak ranches, I think it's opportune to say that Mark and his guys and Kevin have done a wonderful job in taking Spur into a new market. There's 295 Spurs in South Africa. The Grill & Go initiative is starting to gain a little bit of momentum. But again, if you're working with the fuel stations and like working with accounts like Porridge, okay? So it takes a bit of time, but we will -- we think we will get there. And the one grilling guys -- the grilling guys that we have at the moment are above our expectations in terms of trading densities. 4.5% increase in restaurant turnover, that might not look like it's shooting the light side. But again, if you go back to my first slide and you look at what we've achieved here, I think Spur has done enormously well in terms of the initiatives that it's done. Much to the heart of our customers, we've gone into the vegan business as well. So on the first page of our menu, is that right, Mark? Second page?

Third, okay? Here you go. So I think, again, making Spur relevant in today's market, as the guys have done a really great job there. Menu price increases because you guys all do your spreadsheets and so forth and tap into what we have achieved and what we haven't achieved. So that's just to give you an indicator of what Spur is about. I think before I just go on to the next slide, we must make mention that Spur, and I will get to just now in terms of its new format, look and feel, it's menu that's highly relevant, okay? It's obviously chipped away at certain of our other brands inside our stable, but it's also chipped away at the rest of the guys in the marketplace. And I think Mark and his team can be very proud of what they've achieved in the spread. Okay. The new menus, I've spoken about. The new crockery, I know it's up there, but it's a hell of a investment for franchisees. If you change your crockery from the [indiscernible] plates what we had, into the new plates that we've got, it doesn't come as an inexpensive exercise. And again, I think the management team of Spur has done extremely well in getting all of the new crockery into Spurs. Yes, we assisted franchisees for a repayment period of about 3 or 4 months. But it's, again, in terms of the look that we have and the look and the feel, a great job and more contemporary look. Continuous investment in growing market presence and brand awareness in simple English, I think the continuation of revamps and the look and feel and the relocations again has stood Spur in a great space. And again, to make the point that don't discount the revamps when you do your spreadsheets because existing businesses in terms of revamps are still showing the percentage increases that we experienced in the past. And at the same time, also creating that new look and feel for the consumer who's coming in, who's noticing it. So the continuous investment by franchisees in our existing business is one of the indicators that we have that truly goes a long way to increasing our market share in certain of the towns where we trade and the cities where we trade as well. Okay. And the investment in technology and in the family club members, I mean, it's Sacha and his team and Dom and her team play a big role, okay, in making sure that Spur is relevant in the social media's place. They leave the rest to me where you want a negative in the social media place. Let me not remind you about that one. But I think in terms of our family club members today, I think it's 1.2 million, Sacha?

[indiscernible]

Okay. So you can see that we -- and that we again leveraged to its full capacity in terms of recognizing the consumer who comes into our store who uses our family club as well. And we've seen in the tight economic times, one can see the relevance of what happens in store. I mean, with regards to this family club membership where people are actually using it, and I think that I can say it quite openly, I think that Clicks have really made this market move in terms of their club card and so forth. And we're seeing it in a lot more smaller basis the impact of what they can do for us going forward. The installation of generators, 85. I think the percentage is slightly wrong. I think it's 92% average countrywide, Mark?

[indiscernible]

93. Okay. So there you got it from the voice of mouth in terms of where we are with generators. So when they do switch the lights off, I think we do benefit from a turnover increase because the opposition maybe don't have it. And again, if you do want to go out because you're getting depressed because the lights are off, your Spur [indiscernible] and the lights are on, okay? So -- and of course, in the other brands as well. Next. Okay. Panarottis and Casa Bella. As Phillip said, it's a very competitive market, and the guys are doing huge discounts in that market. We've seen -- the Casa Bellas have finally enough proved quite resilient in the top end of the market. I know we only got 7 restaurants, but the increase in turnover and the impact of what that brand is starting to have in the top end of the market is kind of giving us a little bit of impetus going forward. Panarottis. The students are very depressed that we've taken away Thursday Nights. They can't gauge anymore themselves to death. So we kind of also took a decision, we've taken 17 items off the menu. Again, simplifying the operation, making sure that the consumer is happy with the deliveries because every time you go into a pizza place, they're going to tell you it's going to take 25 minutes to deliver a product. Nonsense, okay? You can be a lot more efficient in your operational side of the business franchisee and enhance their profitability because they don't have a litany of products in their storeroom and storerooms are all about cash flow. So yes, we're fairly confident that the platform that we've put Panarottis onto will stand us in good stead and for the franchisees and for the consumer going forward. Okay. It's all in your book. Next. Okay. I think I've spoken about the plan going forward in terms of market presence. The interesting thing is, obviously, wood-fired pizza ovens help us and assist us when the lights go off. And again, we are on a mission to roll that out as much as possible. It's not an inexpensive exercise. So we need to persuade franchisees that it's good for their business. So we have 29 installed at the moment. And every year, we want to increase that as much as we can. But again, taking into consideration the franchisees don't have the growth at the moment that happened in the good days. And at the same time, we've got to make sure that it enhances their business from a profitability point of view and an efficiency level. Loyalty program. We're up to 300,000. Again, Sacha and his team on the loyalty side of kind of leveraging that as much as possible. And again, I think in the tough times, that's definitely an instrument that we have to own. We have to own that particular space because it's good business practice. Simple as that. Okay. Premium quality pizza, still at the forefront. We don't give our pizzas away. But at the same time, again, delivering the value in terms of quality, quality, quality, that will bring the customer back. John Dory’s. Again, the fish market in terms of available product is tough. It's not easy because the guys have fished everything out of the ocean, so you just sit with a hake and more hake and more king clip and more calamari. The days of having other products is very, very difficult. Salmon, for instance, you've got to import it. And they are not kind on the price, okay, that they ask for salmon. It forms the basis of your Sushi bars as well because, again, we still -- in John Dory’s, we can't get out of this situation, but we're working on different platforms of on the Wednesday Nights and so forth because the guys also take advantage of the generosity that we have in this brand. But again, we're trying to -- Mark and his team are having a look at how we can kind of get out of that particular rut that we been for a certain amount of time. The 2 outlets that we've opened, again, as Phillip pointed out, have had an impact on the results to the end of December. But going forward, we will also have an impact in our second term as well because they were closed last year. The menu price increases, again, just to plug into your spreadsheets. We -- the brand ad, we've done Sacha, we're going to be launching it when?

Next month.

Next month, okay? So we've done a new brand ad. And again, when it comes to TV advertising and new brands, you'll see that I know we won the World Cup. And we've got a great captain. And we've really leveraged that opportunity with DStv. And people thought that Spur was a sponsor -- well, sorry, but not we weren't. We just owned a particular space on DStv and I think Sacha and his team did a hell of a job for us there in terms of getting the brand out there in the marketplace. Okay. Next. Hussar. Justin and his team again have also done some great innovation within this brand. We've done a new menu. We've had a menu price increase goes without saying because the product in itself meat is not inexpensive at the moment. And I can tell you all the sad stories about drought and about the impact of load shedding even in this neck of the woods, also the issue about sustainability going forward and what the meat impact is in the pricing. So it's not an easy market to trade in, but we've maintained market share. We've established some new business in new areas. The menu innovation, again, Justin and his team launched a new menu towards the end of last year. And again, that's been taken up by the consumer. And I mean, we're really excited about the revenues we do in Camps Bay and especially, you guys underneath the mountain here. We're really impressed with what we've achieved from Hussar point of view. Yes, it's been around since 1964, but it's a good business for us. And we keep on enhancing this business going forward. Next. Yes, RocoMamas. It looks very impressive. And I want to be very careful how I say this. I think we had a trajectory that really was a steamroller ahead in terms of the 3 years to 4 years, I think we're now fifth year now, I think, corrected. But this brand is consolidating at the moment. And as I said to you, we've got to be careful in terms of overextending this brand in terms of the numbers. And at the same time, remember, the Spur slide. Spur got that market share from somewhere. It didn't just drop out the sky. So it came from -- I'm not allowed to mention it, but other brands in the marketplace who are in the Gourmet Burger business. Spur is very well established in terms of the TV advertising we've done in our Gourmet Burger range. We've also got vegan burgers as well. So that's also done us a big favor in Spur. And although this brand is also very, very wide in terms of its offering and what we're doing with it, the 6 Roco guys is a smaller format where we can get it into 75 square meters and between 50 and 75, and it's proved very successful. Anthony, is that correct?

Correct.

Okay. So we're looking at those to carry on the development, extending the brand into the South African market. It's also proved to be successful for us in international markets. I'm not happy to tell you, but I am happy to tell you that we disengaged ourselves from the one in Melbourne, and they went on their own, and they've doubled the turnover and they're making a lot more money than in terms of our partnership, but that's life for you, okay? The menu price increases, consolidation of the brand, the Gourmet Burger market is really becoming like a plethora of oaks, who think that there's so much money in this and they keep on opening. So it's not an easy market. Deliveries are playing a huge impact on the margins of franchisees. So we've got to be real careful how we marry the delivery aspirations with what we're doing in-store. And again, we're going to come out with certain initiatives over the next 12 to 18 months. Not to circumvent the likes of Mr Delivery or Uber Eats, but at the same time, to remain competitive in terms of how we deliver to the consumer and what quality issues that go with it, and I'm sure I'm not going to sit here and slate other companies, but service or deliveries out of a restaurant in terms of what you get in your house, you have to make sure that they are parallel in terms of quality. And sometimes deliveries don't do that for you. So be careful. Okay. And our rollout is expected to slow down. We're not going to have these big numbers. But internationally, we've also got a plan to roll out the numbers, and I'll share that with you just now. Next. Full flipped over quickly Nikos in terms of the numbers. I don't think the material impact for Nikos is relevant at the moment in terms of the numbers, but we're reexamining what we're doing with Nikos and how we're dealing with it going forward. It's not a wonderful success at this particular time, but we are looking going forward that once the economy turns maybe, we will have a sustainable brand here going forward. but it's not material in our overall set of results. Thank you. Brand development in South Africa. I think if you look at those numbers, we're proud of those numbers. In a very difficult market to achieve that is good going. John Dory’s, we still got a bit of work to do. And the Panarottis, we -- as I told you, with the rollout of the ovens and so forth, again, making it attractive for franchisees to participate in the platform going forward. And internationally as well, we've done particularly well in Africa with this brand and in Mauritius. Hussar. Okay. Don't worry, full going. It doesn't matter. RocoMamas, the slowdown, I told you about. Africa. We've opened 3 new restaurants. I'll do the development with you going forward. Malawi, again, in terms of our overall strategy, where we don't have the opportunity to grow in international markets in terms of development, we'll shut them down because at the end of the day, they cost you money and they affect your margin. If you've got one store in a territory, it don't work, okay? You've got to get to 3 to 5 stores to make the volumes attractive for you from a franchise fee point of view and a return on your head space and return on your human capital input to franchisees, okay? The smaller footprint we're doing in Africa, which is showing us some great results. That means I've spoken to you before. We'll be taking 450 square meters and we're doing in 300 square meters or even to a lesser degree, like in Kenya, we were doing on 250 square meters and you're doing the same volumes. So one can kind of work out the [indiscernible]. Mauritius. We opened 6 new restaurants in this period. We've got a great franchisee. He's is a MFA. He's a master franchise and I won't expense the detail to, but he's really done well for us in Mauritius. He used to be an ex that franchisee, but he's now been in our stable for 5 to 6 years, and he's really doing a great job for us. 18 restaurants in the island, people think Mauritius is very small, but we build very small stores. And Phillip's gone through the numbers with you. It's a very attractive business for us. We currently also have the RocoMamas there. And we're actually trading particularly well. But franchisees, we've got a few challenges, but we'll get there. Okay. Middle East. We are -- we have the 2 existing businesses, the -- or 3 existing business, the 2 RocoMamas and the The Hussar. The brands are well accepted, and we're currently on-site with our 3 new restaurants to open in Riyad, okay, which is the capital of restaurants in Saudi. So we're looking forward to particular growth in that business, and that will open by the end of March. We've been a little bit delayed. But we've got our act together, so we hope to open by the end of March. Australia. I talked about this, okay? We've got 8 restaurants currently. We've got concessions to 8 franchisees. We definitely under the whip in terms of the current model as it stands. And RocoMamas Australia is the one highlight I've told you about, but we have a plan for Australia. If you look at what we've achieved in New Zealand, we've only got 1 business there, but we've managed to able to persuade the franchisee to go into a master franchise agreement. So what it really means for us at the end of the day, we have no more overhead going into New Zealand. And anything that they require from us, they pay for. We don't have the same situation in Australia. We've got a current employee. We're going to current commitment to franchisees. So we need to disengage from that. We can't do it overnight, but we have a plan now to disengagement over a period of time. Please don't misquote me in the press or -- we're not running away from Australia, okay? The franchisees had almost a heart attack the last time and I was misquoted in the press. We are not running away from Australia. We're looking at a different platform that will cut our overheads down substantially in terms of putting money into this territory. Okay. We want to get to what I call a zero-based situation where it doesn't cost us money. And if they do need our assistance in any way that we have a methodology going forward, where they will pay for the services, not like we currently have, where we just chip in money all the time, okay? Brand development international. Again, we've -- as you've seen, I've been through these numbers. Zimbabwe, believe it or not, we've got another business opening there soon. Zambia has been a nice territory for us as is Mauritius. And Kenya is also trading well, even with its economic circumstances that's battling against, we are trading reasonably well. We have closed one business there, but that's going to reopen when the guys have redone the hotel. Okay. Next. Our manufacturing and source distribution, Phillip has been through the numbers. This is one of the areas where we're looking at to expand our investment and at the same time, looking at what we sell, whether it'd be retail sources or extend our current range of what we manufacture for our restaurants. And at the same time that we've got third-party service providers who are manufacturing for us, we're looking at trying to bring certain of those inside our own network so that we can change these numbers going forward. Because I stood here for years saying, listen, we've had to absorb the costs because we can't pass them on to franchisees. So at the same time, we can't keep on singing the same old drum and beating the same guitar. We've got to look at this going forward of how we increase our volumes and how we increase our margins. And certainly, there are attractive options for us going forward. I think we're very proud of the outsourced distribution and well done to Mark and his team as well, that we did increase the percentage. There's self-evident in the numbers. However, the service that we provide to franchisees and the increase in basket size that our franchisees have bought into the principle of Vector. Why? Because it's a lot more efficient for them. And there are real opportunities for us here to grow this basket going forward and becoming a lot more efficient in our deliveries, and we work very close with Vector and our franchisees to ensure that we can improve, okay, the margins on this business and at the same time, not to the detriment of franchisees because we want to build the efficiency levels as well. Okay. Next. We're very proud of this, okay. With people talk about corporate social investment, I think we call it the Spur Foundation. And I haven't bought you a video, but we want to feed as many hungry children in South Africa as we can because it's self-evident again that the problems in the poverty line in South Africa are terrible. Let me not comment on politics or anything of that nature, but we have a mission to really extend and nothing. Mark, when did you do the menu -- the kids menu where you collected the 2 red when you just started.

We started just over a year ago.

A year ago. Where every kid's meal that you purchased that we take certain of those funds or the sales of those funds and franchisees give it back to us, which we invest into the Spur Foundation. We've gone from the full tummy fund. It's now the Spur Foundation because we reckon, we can leverage the brand equity to get more money in. So we can feed more hungry kids in South Africa. We invested in 20 women-owned businesses through training and resources. We see an opportunity here to franchise this business going forward as well. It's where you have a lady who looks after 8 to 10 kids a day and they are trained properly in first aid and in literacy and so forth. And we are in Alexandra in Joburg. And we've also got Cape Town where we're doing it as well, feed 817 children a day through our association with JAM and teacher training, delivering a school readiness program to 800 children. That's the one I've just spoken about now as well. We also do some with franchisees as well because they are now participating in this foundation, and they're contributing to it. So their strategy is also to say, listen we want some local initiatives as well, whether we'd be in Benoni, Brakpan, Polokwane, or in Cape Town or in P and Durban, we also want to participate in this initiative so that we can extend our brand equity into these markets as well. And it's a good thing for our business, and it's not even being an investment. It's what you need to do in South Africa. Thank you very much. Thank you. Questions. Profit. Sorry. Okay. I've spoken about quality and innovation. There's no question that Mark and his team will continuously look at this and making our offering relevant and up to speed. And he's just been in overseas to come back with a few fangled ideas, but I'm sure that we're going to encompass them and embrace them going forward because you kind of have to be out there and continues to looking at all brands within our stable that they're relevant and at the same time, delivering quality and consistency to our consumer base. That will themself insole cascade into driving loyalty and growing market share. And you can grow your market share in these difficult times. You can stick your head in the ground and say, listen, we're going backwards at a rapid rate or you can look at it and say, how do I grow myself at a reasonable percentage, which is relevant in today's marketplace so that we can grow our market share not by discounting, not by giving inferior quality, but taking those principles and flicking them over and saying, quality, giving the customers value. Okay. I've spoken about the royalty programs. Again, we're investing substantially over the next 2 years in that area. We've got approvals yesterday from our Board to probably invest in the vicinity of ZAR 13 million to ZAR 14 million over the next 2 years in this area and specifically to target the loyalty of our customers and to give them value and to obviously get the [ data ] as well. New opportunities. We will still remain acquisitive. There are brands in South Africa that are doing well, and we will continue to engage with them to see where a deal can be struck, and we will continue being acquisitive. -- okay? International expansion. We're not going to focus on Australia, just to put those guys who are falling asleep here. We will be doing Africa and the Middle East, okay? And we've got a man that's been relocated. So we're looking for another 2 businesses there. There are 2 territories where we're not trading particularly well. We give them a certain amount of time. And then if they don't perform or we can't increase the numbers from a store opening point of view, we cut the water off in conjunction with the franchisees because he's funding the losses, not us. Okay. Any questions? Paul, do you want to comment or can I comment? You've got...

It's one of the...

So I mean, that's one of several opportunities that we're looking at. So we're going to see what's going to give us the best returns, whether it's some of the acquisitions that we're looking at, whether it's some of the other capital projects, whether it might just be better to do a special dividend [indiscernible]. So yes, it's certainly on the cards. We do have approval from the Board to be able to continue to do that. It is certainly earnings enhancing. It's just about capital allocation, whether it's the best thing to do at a time depending on what other options are available. Okay. We do believe that the share is undervalued. So not mention [indiscernible].

I want to talk to -- I just want to say to that there's something that's out of control is we're not in control of the share price. I mean -- I've been in this business for many years. We come up with bad results, the share price goes up. You come up with good results, your share price goes down. Somebody explained that to me. Okay. I never understood it. So I think, yes, we are very aware of the share price. But going back to Phillip's point, again, what is the best -- in the best interest of shareholders and stakeholders in terms of what we do to cash very much at the forefront of our minds. Okay.