Wrap Text
Summarised results for the year ended 28 February 2015
Famous Brands Limited
Incorporated in the Republic of South Africa
(Registration number: 1969/004875/06)
JSE share code: FBR
ISIN code: ZAE000053328
(“Famous Brands” or “the Group”)
Summarised results for the year ended 28 February 2015
Financial highlights
Revenue up to R3.3 billion +16%
Operating margin up to record high of 20.5%
Dividends up to 355 cents per share +18%
Operating profit up to R672 million +19%
Headline earnings per share up to 467 cents +15%
Record number of 258 new restaurants opened
Overview
Group performance
Vision 2015 successfully executed
The Group’s stated goal, set down in 2013, was “To become Africa’s first choice integrated branded food services
franchisor by 2015 by building capability across the business and providing a holistic solution to investment partners
and consumers”. During the reporting period the Group successfully concluded the achievement of this goal through its
ongoing strategy of leveraging skills and scale across the three pillars of its business - Brands, Manufacturing and
Logistics.
FINANCIAL RESULTS
In the year under review, the Group recorded its 14th consecutive year of growth, reporting record turnover and profit.
This strong set of results, delivered in extremely testing trading conditions, is a reflection of strong system-wide
sales in the franchise Brand business and continued improvement in efficiencies and cost containment in the Logistics
and Manufacturing divisions.
Revenue increased by 16% to R3.3 billion (2014: R2.8 billion) and operating profit rose 19% to R672 million (2014:
R566 million). A best-ever operating margin of 20.5% was achieved.
Headline earnings per share improved by 15% to 467 cents per share (2014: 406 cents per share).
Cash generated by operations after changes in working capital grew by 20% to R713 million (2014: R594 million).
After tax payments of R202 million (2014: R167 million) and dividend payments of R327 million (2014: R271 million),
totalling R529 million (2014: R438 million), net cash retained from operations increased to R184 million (2014:
R152 million).
Net capital expenditure of R96 million (2014: R112 million) was incurred on the acquisition of the Wakaberry™ Frozen
Yoghurt Bar business, supply chain expansion, fleet upgrade and enhancement of IT systems.
No bank finance was raised during the period.
The Group remained ungeared and has net cash on hand of R126 million (2014: R91 million), positioning the business
to capitalise on organic and acquisitive growth opportunities as they arise.
OPERATING REVIEWS
Franchising
The Group’s Franchising division consists of three regions: South Africa, Rest of Africa and International (United
Kingdom (UK), the Middle East and Mauritius).
Across the Group’s total franchise network, system-wide sales (which include new restaurants opened) increased by
10%, while like-on-like sales grew by 4%.
A record number of 258 new restaurants were opened across the brand portfolio, bringing the Group’s total restaurant
network to 2 545. During the period 160 restaurants were revamped.
SOUTH AFRICA
Overview
In the context of continued pressure on consumers’ discretionary spend, solid results were reported across the Group’s
mainstream and emerging brands portfolios.
Revenue increased by 14% to R615 million (2014: R538 million), while operating profit rose by 12% to R365 million
(2014: R325 million). The operating profit margin declined to 59.4% from 60.4% in the prior year, reflecting slightly
softer performances reported by Wimpy and Steers given constrained discretionary spend in the mainstream middle income
market.
System-wide sales increased by 10% while like-on-like sales improved by 4%.
In the year under review, 213 restaurants were opened (2014: 144).
Relationships at franchise level are positive, with franchise partners responding well to the Group’s efforts to
combat competitive threats across the various market segments. The programme of decentralisation through six Centres
of Excellence started to pay dividends as closer relationships with franchise partners enabled management to react
quicker to evolving market conditions.
The Group’s ambition is to expand its presence in the table service evening dining environment, which affords strong
growth opportunities for the business. Supplementing an internal focus on existing brands with offerings relevant to
this market, management will also continue to explore suitable acquisition opportunities related specifically to this
dining occasion.
The Group has set a target of 202 new restaurants for the year ahead.
REST OF AFRICA
With 20 years of experience, and representation in 16 countries, Famous Brands has a strong presence in the Rest
of Africa, and robust ambitions to up-weight that position.
System-wide sales improved by 18%, while like-on-like sales grew by 5%. This region’s contribution to total
system-wide Group sales is 9%.
During the period 41 (2014: 16) new restaurants were opened in the region, of which 15 were Debonairs Pizza
restaurants, including the brand’s maiden offering in Benguela in Angola. After several years’ absence, the Steers
brand re-entered Botswana, opening a restaurant in Gaborone.
In pursuit of the Group’s stated strategy to win the race to Africa, the target for new restaurants in the year
ahead is 35, including a maiden entry into Ghana.
INTERNATIONAL
UNITED KINGDOM
While the economy showed signs of improvement, consumers remained cautious in the allocation of discretionary
spend; in addition, the competitive climate in the QS/CD category intensified as new global offerings aggressively
entered the market.
Notwithstanding this context, the division reported its best-ever performance based on intensified management of the
cost base, and right-sizing the business in alignment with current economic conditions.
Revenue in Sterling decreased by 3% while revenue in Rand terms improved by 11% to R102 million (2014: R92 million).
The foreign currency translation gain amounted to R12 million. Operating profit rose by 60% to R21 million (2014:
R13 million). The operating profit margin improved to a record high of 20.1% from 14.0% in the comparative period.
During the period two new Wimpy restaurants were opened and three revamps were completed.
It is planned to open two further Wimpy restaurants in the forthcoming year.
The Group’s stated intent has always been that the Wimpy UK platform will be used as a beachhead to grow Famous Brands’
footprint in the years ahead. Based on the health of the Group’s UK business, management is considering opportunities
to expand activities and unlock the value of its investment, either via acquisition or joint ventures with suitable food
services operators in the country. Shareholders will be apprised as developments unfold in this regard.
INDIA
After committing extensive resources to evaluating the Group’s continued presence in this market, management concluded
that the commercial case for investment was no longer viable. Accordingly, in consultation with the Group’s partner,
the Master Licence agreement was terminated in April 2015 and the two Debonairs Pizza restaurants in Mumbai closed.
MIDDLE EAST
Famous Brands continued to expand its footprint in this region with the opening of its maiden Steers and tashas
restaurants in Dubai.
Supply chain
The Group’s Supply Chain consists of its Logistics and Manufacturing businesses, which are managed and measured
separately.
Both divisions recorded exceptional results for the review period. Consolidated revenue increased by 17% to R2.5
billion (2014: R2.1 billion), while operating profit rose by 29% to R262 million (2014: R204 million). The operating
margin improved to 10.4% from 9.5% in the comparative period.
LOGISTICS
Revenue reported by this division increased by 15% to R2.2 billion (2014: R1.9 billion), while operating profit rose
by 16%. The operating profit margin remained in line with the prior year at 4.0%.
The division has budgeted capital expenditure of R36 million for the forthcoming year.
MANUFACTURING
This division delivered a particularly impressive performance, derived from substantial improvements in yields,
further enhancements in cost management and a very strong full-year contribution from the Coega Cheese business.
Revenue grew by 24% to R1.3 billion (2014: R1.0 billion), while operating profit increased by a remarkable 36% to
R173 million (2014: R127 million). The division’s operating margin improved to 13.7% from 12.5% in the prior year.
Capital expenditure of R18 million has been budgeted for the year ahead to boost capacity and capability in the
business.
Subsequent event
CORPORATE ACTION: ACQUISITION OF 75% IN CATER CHAIN FOOD SERVICES
In April 2015, the Group acquired a controlling 75% stake in Cater Chain Food Services, a local business which
manufactures and distributes primarily red meat products to customers across South Africa and into certain markets
in Africa.
This transaction affords Famous Brands the opportunity to integrate currently outsourced business into the facility
and provides additional storage capacity in terms of the Group’s bulk beef requirements. The purchase consideration
fell below the threshold of a categorised transaction in terms of the Listings Requirements of the JSE Limited and was
settled from cash reserves.
Directorate
The Group has committed to transform the composition of the Board to improve compliance with JSE regulations and
related legislation and to co-opt a wider range of expertise and experience to better equip the business to achieve
its strategic ambitions.
On 24 February 2015 Mr Norman Adami was appointed as an Independent non-executive director and a member of the Audit
and Risk Committee. He was formerly Executive Chairman of SAB Proprietary Limited and Partnership Director for
SABMiller’s global relationship with The Coca-Cola Company. The Group welcomes someone of Norman’s stature to the
Board and looks forward to his contribution.
With effect from 26 February 2015 Mr Khumo Shuenyane resigned as an Independent non-executive director and related
Board Committees. The Board would like to thank him for his contribution and wishes him well for the future.
Prospects
The forecast for disposable income growth in the year ahead is conservative and continued uncertainty in the economic,
political and labour environments will weigh further on consumer confidence.
In this context, growth in the forthcoming period is expected to be muted; however, the business’ strong investment
proposition will continue to afford above-average returns for shareholders. Management is confident that Famous Brands
is sufficiently resilient, agile and innovative to surmount the challenges faced.
In preparation for the next five years of planned growth, the Group has launched its 2020 strategy, which centres on
positioning Famous Brands to compete aggressively as one of the leading branded leisure and consumer product businesses
in Africa and selected international markets. The key tenet of this strategy is the diversification of the Group through
leveraging capabilities and building scale across the core pillars of the business. The necessary investment will
continue to be made in people, processes and systems, as required.
The information and any forward looking statements as set out in this announcement have not been reviewed nor audited.
On behalf of the Board
S L Botha K A Hedderwick
Independent Chairman Group Chief Executive
Notice of final dividend declaration number 41 and salient features
Notice is hereby given that a final gross dividend of 200 cents (2014: 170 cents) per ordinary share, payable
out of income, has been declared in respect of the financial year ended 28 February 2015.
This will bring the total cash dividends to 355 cents (2014: 300 cents) per share for the 2015 financial year,
an increase of 18%.
The salient dates for the payment of the final dividend are detailed below:
Dividend declaration date Friday, 22 May 2015
Last day to trade cum-dividend Friday, 3 July 2015
Shares commence trading ex-dividend Monday, 6 July 2015
Record date Friday, 10 July 2015
Payment of dividend Monday, 13 July 2015
Share certificates may not be dematerialised or rematerialised between Monday, 6 July 2015 and Friday,
10 July 2015, both dates inclusive.
In terms of Dividends Tax legislation, the following additional information is disclosed:
• The local dividend tax rate is 15%.
• The net local dividend amount is 170 cents per share (2014: 144.5 cents per share) for shareholders
liable to pay the Dividends Tax and 200 cents per share (2014: 170 cents per share) for shareholders
exempt from paying the Dividends Tax.
• The issued share capital of Famous Brands is 99 812 435 ordinary shares.
• Famous Brands’ tax reference number is 9208085846.
By order of the Board
K Ntlha
Midrand
22 May 2015
Summarised consolidated statement of financial position
at 28 February 2015
2015 2014
Restated*
R000 R000
Assets
Non-current assets 1 196 839 1 139 928
Property, plant and equipment 208 951 196 244
Intangible assets 922 576 879 675
Investments in associates 57 568 52 934
Deferred taxation 7 744 11 075
Current assets 655 421 552 911
Inventories 186 513 177 511
Trade and other receivables 316 276 277 867
Current tax assets 26 404 6 834
Cash and cash equivalents 126 228 90 699
Total assets 1 852 260 1 692 839
Equity and liabilities
Equity attributable to owners of Famous Brands Limited 1 389 388 1 224 365
Non-controlling interests 27 766 10 583
Total equity 1 417 154 1 234 948
Non-current liabilities 58 702 53 735
Deferred taxation and lease liabilities 58 702 53 735
Current liabilities 376 404 404 156
Trade and other payables 331 256 298 278
Non-controlling shareholder loans 24 449 29 344
Short-term portion of interest-bearing borrowings - 65 000
Current tax liabilities 20 699 11 534
Total liabilities 435 106 457 891
Total equity and liabilities 1 852 260 1 692 839
* Computer software has been reclassified from property, plant and equipment to intangible assets in
order to enhance disclosure. Refer restatement note 6.
Summarised consolidated statement of profit or loss and other comprehensive income
for the year ended 28 February 2015
2015 2014 %
R000 R000 change
Revenue 3 283 342 2 825 979 16
Cost of sales (1 832 522) (1 598 583)
Gross profit 1 450 820 1 227 396 18
Selling and administrative expenses (778 796) (661 879) 18
Operating profit 672 024 565 517 19
Net interest expense (269) (3 212) (92)
Share of profit of associates 7 608 5 140
Profit before taxation 679 363 567 445 20
Taxation (194 651) (161 985)
Profit for the year 484 712 405 460 20
Other comprehensive income, net of taxation:
Exchange differences on translating foreign operations* (2 957) 59 029
Total comprehensive income for the year 481 755 464 489
Profit for the year attributable to:
Owners of Famous Brands Limited 465 756 401 637
Non-controlling interests 18 956 3 823
484 712 405 460
Total comprehensive income attributable to:
Owners of Famous Brands Limited 462 799 460 666
Non-controlling interests 18 956 3 823
481 755 464 489
Earnings per share (cents)
Basic earnings per share 468 406 15
Diluted earnings per share 468 405 16
* This item may be reclassified subsequently to profit or loss.
Summarised consolidated statement of changes in equity
for the year ended 28 February 2015
2015 2014
R000 R000
Balance at the beginning of the year 1 234 948 1 000 088
Group total comprehensive income for the year 481 755 464 489
Group dividends to shareholders (327 389) (270 946)
Share-based payments 1 992 3 248
Issue of share capital and share premium 24 106 37 775
Non-controlling interest arising on business combination 1 742 508
Disposal of non-controlling interest - (214)
Balance at the end of the year 1 417 154 1 234 948
Summarised consolidated statement of cash flows
for the year ended 28 February 2015
2015 2014
Restated*
R000 R000
Cash generated before changes in working capital 716 902 601 756
Increase in inventories (5 066) (9 955)
Increase in receivables (36 694) (22 674)
Increase in payables 38 093 24 432
Cash generated from operations 713 235 593 559
Net interest paid (269) (3 212)
Taxation paid (201 524) (166 748)
Cash available from operating activities 511 442 423 599
Dividends paid (326 969) (271 125)
Net cash inflow from operating activities 184 473 152 474
Cash flow from investing activities
Additions to property, plant and equipment (46 124) (38 637)
Intangible assets acquired (9 382) (12 925)
Proceeds from disposal of property, plant and equipment 3 098 1 809
Proceeds from disposal of intangible assets 375 250
Dividends received from associates 2 975 -
Net cash outflow on disposal of subsidiary - (221)
Net cash outflow on acquisition of business operations - (5 500)
Net cash outflow on investment in subsidiary (47 334) (9 022)
Net cash outflow on investment in associates - (47 794)
Net cash outflow from investing activities (96 392) (112 040)
Cash flow from financing activities
Borrowings repaid (65 000) (100 827)
Proceeds from issue of equity instruments of Famous Brands Limited 24 106 37 775
Cash (repaid to)/contributed by non-controlling shareholders (4 895) 17 061
Net cash outflow from financing activities (45 789) (45 991)
Net increase/(decrease) in cash and cash equivalents 42 292 (5 557)
Foreign currency effect (6 763) 11 520
Cash and cash equivalents at the beginning of the year 90 699 84 736
Cash and cash equivalents at the end of the year 126 228 90 699
* Computer software has been reclassified from property, plant and equipment to intangible assets in
order to enhance disclosure. Refer restatement note 6.
Primary (business units) and secondary (geographical) segment report
for the year ended 28 February 2015
2015 2014 %
R000 R000 change
Revenue
Franchising and Development 615 038 537 817 14
Supply Chain* 2 506 610 2 145 105 17
Manufacturing 1 257 691 1 010 541 24
Logistics 2 223 196 1 937 787 15
Eliminations (974 277) (803 223) 21
Corporate 1 740 1 355
South Africa 3 123 388 2 684 277 16
International 159 954 141 702 13
Rest of Africa 57 484 49 786 15
UK 102 470 91 916 11
Total 3 283 342 2 825 979 16
Operating profit
Franchising and Development 365 353 324 925 12
Supply Chain* 261 725 203 513 29
Manufacturing 172 538 126 663 36
Logistics 89 187 76 850 16
Corporate 1 349 1 248
South Africa 628 427 529 686 19
International 43 597 35 831 22
Rest of Africa 23 013 22 959 -
UK 20 584 12 872 60
Total 672 024 565 517 19
* The Retail business within the Supply Chain segment has been reclassified from
Logistics to Manufacturing.
Statistics and ratios
for the year ended 28 February 2015
2015 2014 %
change
Earnings per share (cents)
Basic earnings per share 468 406 15
Diluted earnings per share 468 405 16
Headline earnings per share 467 406 15
Diluted headline earnings per share 467 405 15
Dividends per share (cents) 355 300 18
Interim 155 130 19
Final 200 170 18
Ordinary shares (000)
In issue (excluding treasury shares of 5 000 (2014: Nil)) 99 807 99 242
Weighted average 99 581 98 942
Diluted weighted average 100 236 99 577
Operating profit margin (%) 20.5 20.0
Dividend cover on headline earnings (times) 1.3 1.4
Notes to the summarised consolidated financial statements
for the year ended 28 February 2015
Famous Brands Limited (the company) is a South African registered company. The summarised consolidated financial
statements of the company comprise the company and its subsidiaries (together referred to as the Group) and the
Group’s interest in associates.
1. Statement of compliance
These summarised consolidated financial statements have been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting Standards (IFRS), the presentation as well
as disclosure requirements of IAS 34 Interim financial reporting applied to year-end reporting, the SAICA
financial reporting pronouncements issued by the Financial Reporting Standards Council, the JSE Listings
Requirements, and the Companies Act of South Africa.
2. Basis of preparation
The summarised consolidated financial statements do not include all the information and disclosures required
for the full set of audited consolidated financial statements, and should be read in conjunction with the
full set of the audited Annual Financial Statements which will be available on our website at
www.famousbrands.co.za from 19 June 2015.
The Group’s audited Annual Financial Statements and the summarised consolidated financial statements as at
and for the year ended 28 February 2015 were prepared on the going concern basis. The accounting policies
applied in the presentation of the summarised consolidated financial statements are consistent with those
applied for the year ended 28 February 2014, except for new standards that became effective for the Group’s
financial period beginning 1 March 2014, refer to note 3.
The summarised consolidated financial statements were prepared on the historical cost basis, under the
supervision of Norman Richards, Group Financial Director.
3. Changes in accounting policies
The Group has adopted all the new, revised or amended accounting standards which were effective for the
Group from 1 March 2014, none of which had a material impact on the Group.
2015 2014
R000 R000
4. Earnings and headline earnings per share
Reconciliation between earnings and diluted earnings
Profit attributable to equity holders of Famous Brands Limited 465 756 401 637
Adjustment for:
After taxation interest receivable on future share placements 3 348 1 487
Diluted earnings 469 104 403 124
Earnings per share (cents)
Basic 468 406
Diluted 468 405
Reconciliation between headline earnings and diluted headline earnings
Profit attributable to equity holders of Famous Brands Limited 465 756 401 637
After taxation loss on disposal of property, plant and equipment (526) 433
After taxation remeasurements included in equity-accounted earnings
of associates (29) (128)
Headline earnings 465 201 401 942
Adjustment for:
After taxation interest receivable on future share placements 3 348 1 487
Diluted headline earnings 468 549 403 429
Headline earnings per share (cents)
Basic 467 406
Diluted 467 405
2015 2014
R000 R000
5. Capital expenditure and commitments
Invested* 55 506 51 562
Property, plant and equipment 46 124 38 637
Intangible assets 9 382 12 925
Authorised, not yet contracted* 83 265 52 389
Property, plant and equipment 68 028 39 965
Intangible assets 15 237 12 424
* Computer software has been reclassified from property, plant and equipment to intangible assets in order
to enhance disclosure. Refer restatement note 6.
6. Restatement of comparative figures
The carrying amount of computer software was reclassified from property, plant and equipment to intangible
assets. The impact of the reclassification is set out below:
Previously Adjustment Restated
reported R000 R000
R000
Statement of financial position
at 28 February 2014
Property, plant and equipment 205 575 (9 331) 196 244
Intangible assets 870 344 9 331 879 675
1 075 919 - 1 075 919
Statement of cash flows
for the year ended 28 February 2014
Cash flow from investing activities
Additions to property, plant and equipment (44 070) 5 433 (38 637)
Intangible assets acquired (7 492) (5 433) (12 925)
(51 562) - (51 562)
7. Related party transactions
The Group entered into various sale and purchase transactions with related parties, in the ordinary course of
business, on an arm’s length basis. The nature of related party transactions is consistent with those reported
previously.
8. Financial instruments
There is no material difference between the fair values of the Group’s financial instruments and their carrying
amounts.
9. Business combinations
During the year under review, the Group acquired a 70% stake in the Wakaberry™ Frozen Yoghurt Bar business,
effective 1 April 2014.
10. Subsequent events
The Group acquired a 75% stake in Cater Chain Food Services, a local business distributing primarily red meat
products across South Africa and into certain markets in Africa. The acquisition is with effect from
1 April 2015.
11. Audit opinion
These summarised consolidated financial statements for the year ended 28 February 2015 have been derived from
the audited consolidated financial statements of Famous Brands Limited for the year ended 28 February 2015, on
which the auditors, RSM Betty and Dickson (Johannesburg), have expressed an unmodified audit opinion.
A copy of the auditor’s report, together with the accompanying financial information, can be obtained from the
company’s registered office. The auditor’s report and the audited consolidated financial statements will be
available on the company’s website (www.famousbrands.co.za) from 19 June 2015.
The information as set out in this announcement has not been audited.
The Board of Directors of Famous Brands takes full responsibility for the preparation of this provisional report
and for ensuring that the financial information has been correctly extracted from the underlying financial
statements.
Famous Brands Limited
Incorporated in the Republic of South Africa
Registration number: 1969/004875/06
JSE share code: FBR
ISIN code: ZAE000053328
Directors
NJ Adami, SL Botha (Independent Chairman), CH Boulle, P Halamandaris, P Halamandaris (Jnr), T Halamandaris,
JL Halamandres, KA Hedderwick (Group Chief Executive)*, DP Hele (Chief Executive Officer - Food Services)*,
NS Richards (Group Financial Director)* and BL Sibiya.
*Executive
Company Secretary
K Ntlha
Registered office
478 James Crescent, Halfway House, Midrand, 1685
PO Box 2884, Halfway House, 1685
Telephone: +27 11 315 3000
Email: investorrelations@famousbrands.co.za
Website address: www.famousbrands.co.za
Transfer secretaries
Link Market Services Proprietary Limited
Registration number: 2000/007239/07
Rennie House, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg, 2000
Sponsor
The Standard Bank of South Africa Limited
Registration number: 1969/017128/06
30 Baker Street, Rosebank, 2196
Auditors
RSM Betty & Dickson (Johannesburg)
Bankers
Absa Bank Limited
Bidvest Bank Limited
FirstRand Bank Limited
Investec Bank Limited
Nedbank Limited
Standard Bank Limited
Contact information
Tel: +27 11 315 3000
investorrelations@famousbrands.co.za
478 James Crescent,
Midrand, South Africa, 1685
www.famousbrands.co.za
Date: 25/05/2015 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
