Spur Corporation Ltd (SUR) Earnings Call Transcript & Summary

Good morning, and welcome to the year-end financial results of Spur Corporation. On behalf of my team, I'd like to first welcome all the investor community that are online today and our Chairman, Mike Bosman, who's in the audience, together with other members of the Board, our executives and our team. A warm welcome also to Cristina Teixeira on my left, who's our Chief Financial Officer, who will be presenting the results with me today. Welcome, Cristina. Welcome back, Cristina. It is with gratitude that I stand here today knowing that we have survived and are in good health through this pandemic that we're all experiencing. So really grateful to be moving on and presenting the results on behalf of the team. The first thing I'd like to do is acknowledge the people that help us with our business, our customers, our valued customers who have shown their loyalty through every Click & Collect, with every step into our restaurants, with every swipe of their loyal family club cards. We thank them for their support. Without them, we would not have a business. I also acknowledge our franchise partners, the people that invest in our franchise brands locally and internationally. We thank you for your commitment and your resilience over this difficult period. You are valued partners, and we look forward to the continuing journey. To the Spur Corp team, and a lot of them are here today and many online, you guys have been amazing, going through so much change in the organization in a short space of time. Thank you. I extend my heartfelt appreciation for your commitment and your ability to move forward as we take Spur Corporation into the new generation. Before we continue with the results, I think it is important for us to pay tribute to Pierre van Tonder. We salute you, Pierre. Rest in peace. Pierre departed on the 9th of May and was a significant and instrumental individual to help grow the Spur Corporation business. He was with the business for [ just on ] 34 years. As part of our tribute to Pierre, we will be introducing a new award, an internal award, the Pierre van Tonder award for enterprise development. It will be called the Pivot Award, and it will be launched to our team today and awarded towards the end of the year. Also focusing on the importance of enterprise development, Pierre himself is an example of that, who started as a waiter in his humble beginnings and grew successfully into the CEO of Spur Corporation for over 24 years. Rest in peace, Pierre. Okay. This morning, we're going to cover 4 main topics. We'll first touch on the trading overview. We'll move on to the financial and segmental review, the numbers that you're waiting for and then give you a brief outline on how we're progressing on our strategy. And we'll end the session today with question and answers. Just to start with the trade -- the year at a glance and the performance, we can see that our revenue declined by 10.5% and that cascaded down into a decline of profit of minus 16 if we take out the marketing fund. But if we look towards the right, we can see cash balances increased by ZAR 96 million. We'll be uncovering the details of these results, but clearly, the second half performed a lot better than the first half, showing a slow but improved indication of some hope out there. In terms of the COVID-19 impact, I think it's mapped out there. We all know it very well, and we know what has happened in the industry, particularly the restaurant industry that has been impacted. We look back and we know that these things will pass. They don't always pass at the time we want them and how we want them. The COVID pandemic and all the lockdown legislations basically determined the way we traded. As those lockdown regulations tightened, our turnover decreased. As they were relaxed, we saw an improved performance. The first part of the financial year was the main implication of COVID and the lockdown restrictions. And in the latter part of the year, we saw an improvement. Through this time, we continue to support our franchisees, not only with concessions but supporting them with cost reformulations, landlord negotiation and any support to keep them in business. We also thank our franchisees again for their resilience over this difficult trading period. Then came the surprise at the start of our new financial year, fiscal '22. We had the civil unrest in KZN, unexpected by all of us, but we had to deal with the situation, the first week being the most critical, as it's outlined on your screen. At Spur Corporation, while we had many stores closed, and you can see the closure numbers nationally, we had 9 Spur restaurants looted, and that was a franchisee loss of around ZAR 30 million, loss of stock. And in that one week, across all our brands in the KZN, a loss of revenue of ZAR 4.5 million. But the impact was throughout the network and for the whole month of July, a loss of approximately ZAR 16.4 million. If we look at what's actually happened with the consumer, and we look at this picture of people dining in the way things should be, a normal manner, and we consider the things that have changed in the marketplace and how we need to embrace those changes. First of all, if we look at what's happened on the COVID front, we know that there's been a big impact on business. We're dealing with a fragile economy and even a greater impact on the restaurant industry, which had to deal with lockdown regulations such as limited seating, shorter trading hours and, of course, the ban of alcohol through this period. However, we also know that we've got an enhanced attention and drive for safety and sanitization in the organization. And our restaurants have been really fanatical at ensuring they meet all the protocols required. However, in the industry, and if we use Euromonitor stats, we can see that from the period 2015 to 2020, the South African limited service industry dropped by 27%. However, we are hopeful because the projections are that on a compounded annual growth, they're predicting that the industry will grow at about 4.5% leading up to 2025. On the convenience factor, our consumer, who was faced with a lot of anxiety through this difficult period, for a lot of us, we may have read the Deloitte study, which talks about the anxiety measure globally, of which India is the most anxious community, second is South Africa at 12%, and we know that most of these reasons are because our own consumers, our customers are worried about their families' well-being, their personal well-being, how they're going to pay their bills, worried about their jobs in this very difficult climate. That in itself has presented a different opportunity as consumers are seeking for better solutions, contactless experiences, food that's really prepared, that's easier to access. So all that has moved us on to a more connected society, and the reliance on technology has increased, not only because of the consumers' demands for better solutions but also for our remote working. So these are 3 important streams that we've seen in the business with a trading environment that's changed but also presents a lot of opportunities. In the light of this health awareness, we've seen that the need for plant-based food, healthier options will remain a critical part of the menu mix going forward. So we do look with hope despite the difficulties that we've all experienced through COVID. Just to fill you in on just a few top line stats regarding the convenience factor. Spur Corporation brands are predominantly casual dining and fast casual. But over the year, we've managed to become more robust with our takeaway service, and a lot of our franchisees have embraced this very effectively. In fact, for the second half of this year, our restaurants were more poised to deal with takeaway especially when the lockdown Level 4 was introduced at the end of June. So our marketing teams very actively promoted our Click & Collect, and you can see that represents 44% of our takeaway sales with Mr D and Uber following. Very significant is that our takeaway sales are now sitting at ZAR 1 billion with RocoMamas leading, Panarottis doing a very good job on takeaway pizza, which is just a great category to eat at home and 11% takeaway at Spur. As the restaurants opened, the Spur takeaway contribution did reduce to 11% but still there and growing as we continue. On our virtual kitchen brands, it's something that is quite topical in our business. We call them our VKs. They've really performed well. You'll recall that we launched last year with a bigger portfolio, and these are actually our winners at the moment, Pizza Pug doing an amazing job in the pizza category at 20% (sic) [ 27% ] contribution of the total VKs; BENTO's Burger, an awesome product, you've got to try, at 19%; and Reel Sushi just showing the importance of a healthier option that people want to consume at home. We'll be showing you some examples later of how we've taken RibShack RocoFellas and Bento's into one of our latest restaurants in Dainfern. So it's a single point collection point for ease of access for the likes of the consumer, Uber Eats and Mr Delivery. So really exciting stuff going forward in terms of our VK brands. In terms of our global and local network, overall, 624 restaurants. Obviously, our dominance is still in South Africa at 539. We operate in 16 countries at the moment with 85 outlets, and we'll talk a little bit more about that shortly. In terms of our brands, our dominant brands remain Spur, Panarottis, John Dory's and RocoMamas with our specialty portfolio, which presents a lot of opportunity going forward in the future. 53% contribution is Spur, and we've seen that contribution because the pie is growing because of the growth of RocoMamas at 15%. In terms of the number of restaurants, you can see the numbers there yourself. What I wanted to highlight are the new restaurants and the closed restaurants. So we did close 7 restaurants and net 7 in South Africa and net 1 in international. This was mainly due to problem sites and not able to sustain the business through these difficult trading conditions. We are encouraged, however, that we managed to revamp and relocate some restaurants during this period. A bit later, I'm also going to be talking about a new strategy that we've adopted in the business to drive the development of our network. If we have a look at the turnover, the one that you're interested in, if we look at fiscal '21 versus 2020, a growth of 1.5% overall, the main growth coming from our mother and foundation brand, Spur, at 2.7%, so the biggest contributor there but also sterling performance by RocoMamas, showing a 13.1% growth. RocoMamas clearly as a burger brand and a fast casual is better poised for takeaway, so has produced great results and is still opening a lot of new stores. So well done to the RocoMamas team. If we move along, restaurants internationally, 85. If we look at the turnover growth there, also 1.1%. Africa, obviously, been our most prominent region and one that we know well, addressing the Australasia challenges, and Cristina will go into that in a little bit more detail. And Mauritius, obviously, a disappointing decline of 6%, but we all know that Mauritius, with 17 of our restaurants, has been closed or locked down on an extended period but, thankfully, has now started to reopen. So if we look at the total turnover by brand, those are the increases per brand, but I'd like to draw your attention to the like-on-like performance, which delivered a decline of 12.3%. Okay. We now move on to the financial and segmental review.

Thank you, Val. Good morning, ladies and gentlemen. We'll begin with the income statement. Revenue for Spur Corp, you'll see it's reported at ZAR 681 million, a 10.5% decrease over the prior year. Since franchise operations contribute -- if you look at the franchise fees and marketing fees, contribute 62% of the group revenue. It's relevant to just reflect on what Val explained earlier when we look at turnover sales from our stores that had increased by overall 1% and 1.5% in South Africa. So we have a store turnover in South Africa increasing by 1%, group by 1.5%, and we've got a percentage change of revenue down by 10.5%. And the reason for that, from a franchise operations perspective, is the fact that through a lot of the year, at least 8 months of the financial year, the group continued to support through discounted or at least concessions, discounts to standard franchise and manufacturing fees -- sorry, franchise and marketing fees that were provided as discounts to the standards for franchisees to help them through a very difficult trading condition and that extended through to about February. And from March onwards, we were able to reinstate our standard fees. And that, therefore, describes why a flat turnover from a store turnover perspective resulted in a net 6.7% decrease in revenue from South Africa franchise operations. Looking at our other segments, our manufacturing business was able to increase revenue by 4.7%. And if we then look at our company-owned stores, which contribute 6% of total revenue, the revenue decreased by 22%. And the reason for that is because those stores are the specialty stores, which are dependent on sit-down trade. They were very impacted by the restrictions in terms of capacity and alcohol trade and also dependent on the international tourism and trade. So they were more hardly hit than others, and that's the reason for the 10.5% decrease in revenue overall. We'll unpack the operating profits per segment on the next couple of slides. When I maybe move on to net finance income, you'll see a lower number of ZAR 3 million relative to ZAR 14 million of the prior year. The reason for that is lower interest rates in the current period, lower cash balance on hand on average through the period through a decreased trade and also the utilization of cash to -- in the prior period to repurchase shares, which then decreased our overall cash balance on hand and, therefore, our interest income. Our effective tax rate is at 32%, better than the 44% of the prior year. And that's because in the prior year, we included withholding tax of about ZAR 11 million that was charged to the income statement, increasing the tax rate. So we have a healthy 41% increase in profit for the year. I think it should be noted at this stage, before we move into the segmental, that included within the profit for the period is a manufacturing surplus, which we'll see a little bit later, as well as a one-off business interruption insurance claim payout that was accrued for by year-end and received post year-end, which then positively impacted these results. Thus, the profit before income tax at 16% increase, if you take out those marketing and the business interruption claims and look at a comparable profit before income tax, it's actually a reflective 16% down, which then can be compared to our top line of 10.5% down on revenue. Similarly, our profit for the period, a 41% increase, converts to a 17% decrease if you look at it from a comparable perspective like-for-like. Segmental overview. This is a one-pager that just breaks down the contribution of each of the segments to the South African environment. You'll see that South Africa contributes 95% of revenue of the entire group and, of course, the franchise operations and the marketing, as I mentioned earlier, contributing to circa 60% of that group revenue. As Val mentioned, a great performance from Spur. It continues to be our big mother brand, contributing 23% of South African operations, and you'll see RocoMamas climbing in terms of their contribution, too. Looking at the percentage change in revenue, you'll see the positive numbers, as Val mentioned, RocoMamas revenue, a positive increase year-on-year at a revenue level of 12.9% and generating some good margins as well, which we'll cover under the segmental. The important line item to note is if you cast your eye down to, like, middle of the page and you look at retail company stores and look at the change in net profit, which shows a positive 411%, and that's due to the inclusion of the business interruption claims that I mentioned, the ZAR 14 million, and we'll show you the impact of that later on. Starting with the Spur segment. To the left, you have store turnover, so our restaurant sales through our network and just beneath that the revenue for the period. On the right, you have the profit before tax and all slides for the segmental will repeat in a similar format. So if you can see the trend, we've depicted it in H1 period and H2 period. So you can see the impact, not just year-on-year but for each of the halves. So you've got the 4 halves. What you can see from Spur is that the revenue has decreased by 7%, even though the store sales have increased by 2.7% year-on-year, and that is the impact of the concessions that I mentioned earlier. You'll see a healthy margin on the right-hand side, 75%. So the team are operating effectively with an appropriate overhead structure, supporting their network of 296 stores. Spur does represent 69% of our franchise revenue. And during the period, this main brand in South Africa opened up 6 stores and closed 5. So a good performance by the Spur team, in our view.

We are pleased to announce and mention that research conducted by Kantar TNS in the category has revealed that Spur has firmly -- is still established as a leading brand in its category and performed above all category benchmarks for this period of the research. So well done to all our franchisees and our customers who support our brand. If we look at the Sanchez Spur, which is KwaDukuza, Stanger, that was one of our looted stores. We had 9 looted restaurants. 5 rebuilds are completed already. We're hoping that the next 3 will be done by the end of the year, and 2 are still relying on the landlords. And we don't know when they will reopen. If we look at the focus on takeaway, our marketing teams have aggressively done dominant marketing activity to drive click & Collect, to drive core categories that Spur are known for. If we look at our Spur drive-thru, and we'll talk a little bit more about that later, it was something that we spoke about 6 months ago. It materialized into reality. Drive-thru launched in June 2021 and has surpassed all expectations. For 3 months running, it has -- it's had a turnover of -- in excess of ZAR 1 million per month. So a fantastic response. What is encouraging to see is that the team at the Spur drive-thru have managed to deliver a good delivery time, a drive-thru time of around -- just around 5 minutes. So that's really very competitive considering that the consumers are selecting what Spur is known for, its ribs, its chicken wings and its burgers. And then finally, the Spur brand that did produce 81% growth from year 1 to -- half year 1 to half year 2 in terms of turnover. It's also dependent on our Spur loyal family members who continue to celebrate at Spur. In the last period, when we had the tighter lockdown, we missed about 600,000 consumers' birthdays just to recognize the importance of Spur being the environment where consumers come and flock in to celebrate. So our mother brand remains healthy, and we look forward to taking it into its new generation.

If we move on to the next segment, and Panarottis, Casa Bella, again, you'll see revenue down 15% year-on-year. The actual store turnover was down 6%. Again, that indicates the extent of concession support that was provided on the franchise fees to this brand. It represents 10% of the franchise revenue. And on the right-hand side, you'll see that, although profitability has increased in the second half and as volume has improved, the margins are lower than what you would have seen in Spur, really, as an impact of a lower recovery on overheads just due to the scale or reduced scale of Panarottis relative to the Spur brand. With Panarottis, there were 6 openings and 6 closures. It was conversions of a separate brand through -- into our Panarottis brand, and [indiscernible] closures.

If we look at Panarottis, also showed an improved performance from half 1 to half 2, 63.5%, a big focus on takeaway and a lucrative category for takeaway consumption. The brand was also impacted by lockdown regulations and the KZN unrest, particularly major malls where the foot count has dropped. However, Panarottis delivered a takeaway sales of 37% of total takeaway sales and Pizza Pug, the VK brand, is leading the way with 27% of the VK group turnover. Casa Bella 5 restaurants also impacted as we had the tight lockdowns, being a more specialty dining environment where consumers are expecting to linger on, have a glass of wine, that unfortunately was impacted as well as high-traffic sites such as casinos, Sun City, et cetera. So we're hoping that with the relaxed lockdown levels now, we should see those restaurants gaining traction and customers visiting again.

If we move on to John Dory's, revenue for the year, 19% down. If we look at the store turnover, it was down 9%, so again showing you the extent of support from a concession perspective, represents 5% of the franchise revenue. And we can see improvements in trading in the second half of this financial year. On the right, you will see though that the margin is 17%. So again, this John Dory's brand is probably -- is the brand with sort of the lowest margin, and that's relative to having only 49 stores within its grouping. But we do see improvements. It was a net closure brand. So we did close 5 stores, and we opened up 2 stores in the period.

If we look at John Dory's, also an improved second half performance, a brand that trades in a very lucrative category where the consumer is looking for a lighter, healthier option, also directly impacted on the lockdown restrictions. In terms of the KZN civil unrest, 40% of our John Dory's turnover is generated from that region. So it had a direct impact. Sushi remains a key focus. You can see the growth of sushi takeaway. We have a big commitment from our consumers who visit us weekly to consume sushi. And there's a big drive internally for a revitalized marketing activity, which is gaining traction. In terms of John Dory's, who also support the environmental positioning, they supported the International Coastal Cleanup Day. This was at Bloubergstrand. And on that point, I think it is important to note that as an organization and as a brand of John Dory's, our continued commitment and importance of the environmental sustainability need cannot be understated.

Moving on to The Hussar Grill, one of our specialty brands, you'll see that revenue is down 5.7%. And so the specialty brand has seen increased revenue, ZAR 84 million, over ZAR 70 million for the first half. It represents only 2% of our franchise revenue, but you can see that it provides some healthy margins through to the organization and is trading at 64% for the second half of the financial year. It had 2 net closures in the year.

Okay. So The Hussar Grill is certainly the leading grill house experience. And if we look at their performance, also impacted by the lockdown regulations because of no seating -- no seated dining and alcohol restrictions, but thankfully, the restaurants have opened up again for trade. The Stellenbosch store has opened a Tapas bar, which opened in April this year, and we're getting a good response from consumers, a complementary experience before a dine-in experience. In our Waterfall store in Gauteng, we've introduced a private dining room, which is appealing for business and special celebrations, especially in a time where consumers want to contain their dine-in experience away from the general public. And hot off the press, a new restaurant opened in Blueberry Square in Honeydew this week, which brings our count now to 21 Hussar Grills, a brand that certainly leads the way in our specialty portfolio and one that we believe will hold its own and grow as we move into the market with a lot of interest on the international front for expansion.

We then move on to RocoMamas. It's a very strong brand in our portfolio of brands, a growing brand. We've reported a bit earlier in the presentation that store turnover increased by 13.1% year-on-year. And you can see that revenue increased by 12.9%, so a brand that did not actually require extensive support in any way with respect to concessions, growing brand in terms of its contribution to the group, 12.8% of franchise revenue. Pleasingly, on the right, you'll see the margin. Even with only 78 stores, although growing, we were able to achieve a margin of 71.9%. So it's a really pleasing performance, a great recovery on overheads, and a profitability increase of 20%. And this was a net increased opening stores with 6 stores opened and 2 closed in the period, so a net 4 increase with respect to the main RocoMamas brand.

Okay. RocoMamas, just the visuals speak for themselves, an energetic, vibrant, fast casual brand. Certainly, a rising star in the organization, still showing a growth and a lot of appeal in the marketplace locally and internationally. At the moment, we have 17 RocoMamas on the international front, so really exciting to see how they're growing, so sterling performance despite the lockdown regulations. This is a brand that also trades in a very competitive environment in terms of the burger category, but our recent research confirms once again the brand health and the acceptancy from consumers to embrace the brand. It resonates with the consumers, and they're enjoying it frequently. Also had an impact on turnover through KZN. Click & Collect and drive-thru are the innovations in the pipeline. The Click & Collect one central point has launched at Dainfern, as I mentioned earlier. Drive-thru was a little bit delayed because of City Council approval, but it's on its way. And the exciting prospects for fiscal '22 is that we will be opening 10 local RocoMamas and 6 international. So well done to the team.

Moving on to Nikos, again, one of our specialty brands. Still a small brand but growing. We have 7 stores at the end of the year. We did have 2 closures during the year. You'll see revenue down 29%, which is a bit higher than what the store turnover down was at 12%. But it is a small contributor to our group of franchise at 0.7% of franchise revenue, but a brand that we're very excited about. It is running at a very, very lean cost structure due to its need to in the context of its small size, but we obviously see positive increases in the period off a very low base, generating a 42% margin.

Okay. Nikos, in the casual dining category, also struggled because of the lockdown restrictions. Casual dining is the best for sharing occasions, but with alcohol restrictions, it did have an impact. The VK brand in this portfolio is chargrill chicken, a quality product that's gaining interest from consumers. We're also pleased to announce that our new iconic store opened on the 21st of September in Montecasino, and we'll show you some visuals a bit later. At this point, we also would like to acknowledge Peter Triandafillou, the founder and partner of Nikos, our partnering business, who passed away in June this year, but he has been succeeded by his son, Nicholas, who will be driving the brand supported by his family. But we really are committed to growing this brand into a portfolio of specialty casual dine-in where people can enjoy a more interactive opportunity of sharing and enjoying continental tastes.

Our company-owned stores, which you know we have 4 Hussar Grills and 1 RocoMamas, 4 in the Cape and 1 in Johannesburg. You'll see a decrease year-on-year at 22.9% on revenue. But first -- second half is obviously an improved position over the first half as trading restrictions were improved or slightly better for us in the second half over the first. It does represent 6% of the group, as I mentioned earlier. If we look at the profitability slide on the right, you'll see a material increase of 13.6% in the second half, and that is a reminder. The footnote reflects the fact that we received business interruption claims with respect to our COVID lockdown period for the period of March 2020 through to March 2021. We received a net ZAR 14 million, and as you would, from a comparability perspective, reduce the ZAR 13.6 million by the ZAR 14 million to give an idea of underlying trading. It is a segment of our business, which has grown nicely relative very much to The Hussar Grill environment, specifically as conditions have improved. Looking at international, you'll see a decrease of revenue of 11.5%. And as Val mentioned a bit earlier, revenue internationally on a like-for-like basis, slightly increased from a store turnover perspective. But we did see revenue going down from ZAR 364 million in the first half down to ZAR 304 million in the second half. And the reason for it, as Val mentioned, is that the trading restrictions in the rest of Africa specifically, including Mauritius, were a little more onerous in the second half than what we experienced in South Africa. So there was a disproportionate impact in the rest of Africa's trade relative to our South African trade. If we then -- we show you the stores per region. You'll see the concentration within Africa and Mauritius. As Val mentioned, with Australia now being a smaller proportion of our business, and we have been exiting those stores during the period as well as converting some of the stores from franchise into license agreement, so we're left with really 2 in Australia and 1 in New Zealand as at year-end. Profitability, on the right-hand side, you'll see the first half delivered a profit of ZAR 3.5 million and then the second half delivered another ZAR 1.5 million, closing of ZAR 5 million. Just to confirm that the drop in the second half was not as a result of overheads increasing. In fact, overheads were very similar first half to second half. It was the impact of the decreased trade, which then affected the profitability in the second half.

The international market plays an important role in our business, and we will continue to grow the footprint internationally. We know that some of the key brands that trade in the international market are RocoMamas, Spur and Panarottis. The smaller formats have gained traction. RocoMamas RocoGo, which is a more QSR format with a very limited seating and Panarottis Express really doing well in key markets. And the dominance in Africa is paving the way for sustainable expansion. We're very aware of the consumer in the African continent. The brands resonate with that market, we understand the market, and we really are very forward-thinking about the opportunities that exist to grow the network into the future in Africa.

Moving on to our next segment, so beyond the franchise and the company-owned stores, of Manufacturing and Distribution. You'll see revenue for the second half quite flat, ZAR 97 million first half and second half. On the profitability side, you'll see a slight increase with margins of 34%. A reminder that the Manufacturing and Distribution segment is a combination of income that we earn from the procurement activities that we deliver as well as the profitability on retail sales, which is the distribution of sale of our sauces that we manufacture and sell through into the retail market and the sauces that we manufacture and distribute through our franchise network for use in restaurants. What we -- what I can add is that the second half saw a higher contribution from the retail sauces as well as the [ potential ] kitchen. So the kitchen sauces we sell into restaurants, a higher contribution relative to prior periods in the total population of our profit for the period. If we then continue to the other smaller segments. On the left, you'll have the segment that's called Other. To give context as to what is Other, Other is really support services that are executed on behalf of or in support of the franchise operations. The footnote at the bottom indicates to you that this segment comprises the decor activity, the training activity, various sundry restaurants' invoicing that we do, export department for international operations and our call center. Of noting is the comparable operating loss right at the bottom. We're reporting a ZAR 6.5 million loss for 2021 relative to the prior year of ZAR 2 million and, in essence, that is the under-recovery from our trading department. So we have an expenditure not recovered, and the bulk of that is within the ZAR 6.5 million. On the right-hand side, what we call Shared Services is really more the corporate services related items. We show you the breakdown. I think what's most relevant is what we call our shared overheads line. So you'll see, last year, we incurred a cost of ZAR 102 million; this year, ZAR 126 million. The slide that follows -- I think it's the slide that follows or it's in the appendix includes a complete breakdown of what the Shared Services numbers are of ZAR 126 million, and that's really the corporate office and its running. If we do a reconciliation, if we provide a reconciliation at least of the shared overheads, the ZAR 126 million on the previous slide, and we reconcile that to what we call comparable. Just to give you some context of the maybe unusual numbers that appear within F 2020 as well as F 2021 such that we can give you a like-for-like comparable, you will see, and I'll maybe not spend too much time on the numbers that you've seen before in our previous presentation, but you'll see that what we had in the prior year was a profit of ZAR 10.8 million relating to a reversal of an impairment on the GPI funding transaction. So that obviously decreased costs, and we're adding it back for the calculation of comparability. In the current year, we explained in our first half presentation that the ZAR 8.5 million represented the net present value of a liability due with respect to Pierre van Tonder on his retirement. And so that was an additional cost recorded in the first half of this financial year, which we then add back for comparability perspective. The next material item, the Nikos contingent consideration, refers to the fair value adjustments that we do on the Nikos consideration value, and that is a profit of ZAR 1 million that we back out. The ECL, which is expected credit losses, those -- that environment has improved, as one would expect, a very difficult environment last year with a slightly improved environment. This year means an increased ECL last year, a decreased ECL this year, so we adjust for that to remove that from the cost. And then we mentioned to you a net retrenchment cost of ZAR 2.8 million in the first half of the financial year. Thus, a comparable overhead, in our view, is the ZAR 117 million compared to the ZAR 111 million, which is a 5% increase. Marketing fund, just one slide on that. As investors, you are aware and know that the marketing funds are consolidated from an accounting perspective into our financial results. In 2021, you'll see there was an underspent -- sorry, in 2020, there was an overspend of ZAR 12 million, which means that -- as a result of decreased marketing fees that we received in 2020 due to a very difficult COVID environment and the marketing needed to continue in order to be able to support the brand and the trading. In the current year, there's been an underspend of ZAR 24 million, as additional revenue has come through, and it was required to underspend to be able to ensure the deficit was closed out. That in itself represents a ZAR 14 million move year-on-year on our earnings and is the reason why we were explaining how profitability of 16% year-on-year increase could convert to a 16% decrease when you extract the marketing funds and the business interruption claims. Comparable profit. It's a very busy slide. I'll try not to go through each one of them. I think I've actually just covered the key items of the slide in my previous mentioning. You'll see profit starts -- profit before tax starts at ZAR 148 million. There is the positive ZAR 16 million that I said as you back out the impacts of marketing funds because those are for funds on behalf of our franchisees. They're included in our accounts for consolidation purposes only. If you extract the impact of marketing, as I said, and underspend current year and overspend last year, you land up with a profit before tax year-on-year decrease of 16%. You then adjust for a number of line items, the ECLs, I've mentioned earlier, the employee benefit obligation that I've mentioned earlier. They did some development costs in the period of ZAR 14 million. We've backed out the business interruption insurance as well, so the ZAR 14 million I mentioned. And as you make your way down to this reconciliation because most of these had been recorded already in H1, you'll see a comparable profit of ZAR 127 million, which then represents an 18.6% down. So obviously important -- I think this slide is a very important slide for us to demonstrate and illustrate to investors because these results do look unusual, where you have a decreased revenue of 10%, and you land up with a 40% increase in earnings and a 16% increase in profits. It is important that we just acknowledge the marketing backout as well as the material business interruption insurance, which then results in a net 18% down on profit, which can be compared to the revenue number of 10% down. From a balance sheet perspective, firstly, the key message is of a largely unchanged balance sheet. I believe a healthy balance sheet, ungeared. Some cash on the balance sheet. Starting at the top key items, property, plant and equipment, all our own property, right-of-use assets is really leases for our rented properties, including Woodmead as well as our motor vehicles that we have on lease. Our intangible assets and goodwill, we've had a good look at it, ZAR 365 million. It forms the bulk of our balance sheet and mostly supported by the Spur brand. So we keep track of, obviously, the Spur performance in order to support this intangible. Taxation of ZAR 25 million. And the trade receivable number is up. And that makes sense relative to June 2020 when we were in hard lockdown and barely able to sort of trade in a normal manner. We would have, obviously, seen now increasing trade receivables as at 30 June 2021. Our contract liabilities represent the license fees that are recorded over the life of the franchise agreement as opposed to the point in time. Our lease liabilities, normal lease liabilities through right-of-use assets. And I think what's key to note is our shareholder for dividend of ZAR 66 million net. And I think you would have seen our results on SENS that indicates that the Board has approved the payment of the ZAR 70 million, net ZAR 66 million out to shareholders on the 25th of October, following our solvency and liquidity review that we performed as a Board and concluded on -- that we were able to pay the shareholders accrued dividend in the latter part of October. From a cash flow perspective, you'll see operating profit at ZAR 171 million, enhanced over the profit that you see in the income statement of ZAR 148 million. And the reason for the biggest entry is really just the add-back of noncash items of depreciation of ZAR 20 million. So an enhanced operating performance at ZAR 171 million. Working capital, negative. You'll see it coming through in the trade and other receivables for the reasons that I described earlier. Higher receivable values on 30th of June 2021 relative to 30 June 2020, which makes sense due to higher volumes of trading. The rest of our cash flow statement. You'll see taxation paid of ZAR 41 million that all represents really South African tax that was paid. The dividend of ZAR 2 million, that is, minority dividends that were paid out during the year. So a small amount of ZAR 2 million. Our investing activities of ZAR 1 million, just a little bit of CapEx and computer equipment and then repayments of loans that we received. Financing activities of ZAR 7 million is repayment of leases. So that results in a movement of cash of ZAR 96 million, which then allows us to report an unrestricted cash balance of ZAR 261 million and a total cash of ZAR 273 million with net gearing at 0. I'm going to hand over to Val to cover the progressing the strategy.

Thank you, Cristina. If we look at our business model, and it was one that we revealed to you in the last interims. Our core focus continues to be brands leading experience all for the greater good. So our strategy is in play already. It's very robust, and it's incredible to see how the teams have embraced this new focus in the business, a lot of energy and commitment in building our network together with our franchisees. So just to give you a quick update, there's been a lot of collaboration with our franchise network, our franchise councils and our franchisees who are looking to invest and to continue investing in our business to grow the brands with us and lead this organization into its next generation. The business has embarked on a new R8 strategy, which is focused around the network development. Every brand has embraced the strategy. So it's around revitalizing, reinvigorating, revamping, relocating restaurants and opening new restaurants, and we're trying to do all this between the lockdown legislations. But that strategy is in effect as we talk now with a lot of growth as seen in the business. The innovation commitment continues. The innovations in the pipeline to be announced shortly around product, channel and format. So the team has embraced the need for innovation across the brands and across the overall business. We remain committed to our transformation drive, which is happening on 3 main streams: the one on a societal difference we can make in the organization; the second, the environmental and sustainability stream; and the final one on the employment equity stream. So we are really pleased to see that teams and our franchise network have embraced the importance of transforming the organization into an employer of choice, a leading organization that gives a return on our franchisees' investments and our stakeholder investments. I wanted to show you a few of our stores that have opened recently. This one was earlier in the year, which is Santee Spur in Rustenburg, the drive-thru in Karenpark, Pretoria. We've had a lot of interest from franchisees looking at sites that they currently have, where there's adequate space. So this is a new format that has proved to be successful in its proof-of-concept stage, and we're looking to expand it. More recently as well, we've opened -- relocated our Carletonville store, Carletonville restaurant; a Yellowstone Spur, a beautiful restaurant, well positioned in a new mall adjacent to a pick and pay. Jabulani Mall Soweto was another store that was looted, entirely looted. This is a rebuild that was opened this week, which is really awesome, Wild Spear. Dainfern, our new RocoMamas restaurant, and you can see the picture on the top right shows you that one central collection point. I'm sure a lot of franchise restaurants have been challenged at the moment with the hustle and bustle of what's happening with the delivery guys and Click & Collect at their doorsteps. We've now designed the restaurants suitable for an ease of collection, whether it's by the consumers or by the third-party aggregators. Vaal Mall. This is an important opening for us, also opened this week. This now represents all 4 main brands represented in the Vaal Mall. Our 3 other brands have been successfully run in the Vaal Mall for many years and RocoMamas completes that suite in a very lucrative category as well. And then in Montecasino, our iconic Nikos restaurant. We had shown you the architect's impression 6 months ago. We waited until the casinos opened a little bit more. So when legislation was relaxed a bit, we opened it. A great environment. You'll spot in the distance the Greek street food. So this restaurant not only will attract dine-in customers that want to linger on longer but for those that are walking around the premises or just casually strolling around the casino, have the opportunity to pick up on the move Greek street food. So really exciting, and we wish our franchisees all the best with the opening. One of our highlights this week as well. It's been a busy week for the team. New Hussar Grill, as I mentioned earlier, which makes a 21 Hussar Grills, Blueberry Square, Honeydew. These are premium restaurants with great finishes, a big investment, and we acknowledge our franchisees for these kind of commitments to build and embrace these kind of brands and offer our consumers in that neighborhood this great dine-in experience. And then today, and this was coincidental, we didn't know it was going to open doors today, but Midway Crossing is a new mall in KZN. And we're very pleased to announce that Mountain Cove Spur has opened. Our franchisee is a BE appointment, Sam Clarman, who was a previous owner, a restaurant operator, who now is a 100% franchise owner, and we wish her and her team all the best as she embarks on this new journey. So in closing, before we go on to question and answers, I'd like to just thank our franchisees and our teams for their investment and also for their commitment to our business going forward. Our fiscal '22 business plan is in effect already. There's a lot happening behind the scenes. There's a lot of energy in this business. Our brands remain important in the consumer sector, very appealing even though we've had a growth in takeaway and delivery. The minute the lockdown regulations are relaxed, we see customers streaming into our restaurants. Despite the KZN unrest in July, our financial year has continued well. August turnover was positive, and September the trend continues. So let's hope that as we navigate our way through these difficult market conditions in the country that Spur Corporation can remain a leading business that offers casual dine-in to the consumers. I'll now open up the floor for questions and answers. I'd like to just wish everyone a good trading period for the rest of this calendar year. Look after yourselves, stay safe, and we look forward to seeing you in one of our restaurants. Thank you.