FAMOUS BRANDS LIMITED - Famous Brands Ground -Breaking Dairy Partnership

Famous  Brand’s Ground -Breaking  Dairy Partnership

Famous Brands Limited
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR ISIN code: ZAE000053328
(“Famous Brands” or “the Group”)

FAMOUS BRANDS’ GROUND-BREAKING DAIRY PARTNERSHIP
BOOSTS ITS BUSINESS AND BENEFITS BLACK FARMERS


Johannesburg; Tuesday, 09 October 2012: In pursuit of the Group’s deliberate strategy to build and
expand its manufacturing capability and leverage opportunities in the supply chain, Famous Brands
has entered into a ground-breaking joint-venture partnership with the Coega Dairy Company (Coega
Dairy), an existing dairy manufacturing business in Port Elizabeth owned by local farmers, factory
and farm employees, regarding the supply of cheese products to the Group.

Famous Brands Cheese Manufacturing Company, the new joint-venture entity, (entirely independent
from the existing dairy business), has been established for this purpose. Famous Brands will control
51% of the company’s shares, while shareholders of Coega Dairy will hold the balance of 49%. In
terms of the agreement, a new state-of-the-art cheese manufacturing plant will be constructed
adjacent to Coega Dairy’s existing dairy facility (whose primary business is the production of UHT*
long life milk and butter). Coega Dairy will supply milk to the new company, which in turn will
produce Mozzarella, cheese slices and cheese spread for the Group. In the immediate term,
Debonairs Pizza will be the company’s single biggest customer, with the intention to expand supply
over time to the Group’s other brands.

Famous Brands’ CEO, Kevin Hedderwick says, “We have signalled to the market that our goal is to
grow the back-end of the business by enhancing our manufacturing capability and capacity, and this
is another strategic step in that process.” He continues, “This partnership is compelling for two
reasons: the transaction comprises a straightforward greenfield investment with significant earnings
potential and a short payback period, and equally importantly, it is an enterprise which will deliver
tremendous benefits for those black farmers who partner with us via Coega Dairy, whereby they
gain an instant, robust market for their product, and the potential to grow that market over time.”

Coega Dairy’s ownership comprises 19 producer shareholder farms, of which six are community and
black-owned. The 225 farm employees employed by the shareholder farms are all historically
disadvantaged individuals, as are Coega Dairy’s factory employees. They are also all shareholders in
the dairy through the Coega Dairy Empowerment Trust, which has been funded by the Industrial
Development Corporation.

Latest-technology equipment, budgeted at R35 million, will be imported from Italy for the custom-
designed plant and will be funded by the joint-venture partners in direct proportion to their
shareholding in the business. The day-to-day operations of the cheese manufacturing business will
be managed by Coega Dairy for an agreed management fee.

In terms of the agreement, the Coega Development Corporation (CDC) will fund construction of the
2 600m² facility and lease the premises to the new company. Construction is planned to commence
in November 2012, and is expected to cost in the order of R20 million.
Hedderwick comments, “By locating this business within the CDC node, which was specifically set up
by government to attract investment, Famous Brands is helping to contribute to the economy of the
Eastern Cape, one of the poorest provinces in the country. We are delighted to have the
opportunity to make a meaningful difference in an area of real need.”

“Significantly,” notes Hedderwick, “this transaction is anticipated to create 49 jobs in the new
cheese manufacturing company as well as a further five jobs in the existing Coega Dairy business. ”

Coega Dairy CEO, Dr Hennie Kleynhans, says, “This transaction is a fantastic coup for the farmers
who own Coega Dairy; it guarantees a market for at least 38 million litres of milk per annum and will
in time establish the dairy as one of the biggest in South Africa.”

Hedderwick says, “Coega Dairy’s management team has a collective 106 years of experience in this
industry, so we are in good hands. The business has achieved an admirable track record since it was
founded in 2011, and is now the preferred supplier of UHT milk and butter to a leading retail group,
the largest exporter of UHT milk, and the fastest growing dairy company in South Africa. Coega
Dairy is also the first South African dairy to receive the ISO 22000 food safety system certification.”

Kleynhans concludes, “Coega Dairy’s joint-venture with Famous Brands in the new cheese
manufacturing business is great reward for the courage and vision which our founding shareholder
producers demonstrated in the early days in overcoming financial and regulatory obstacles to invest
in their own factory, and start farms which have empowered black farmers, managers and
employees. This momentous partnership will have important economic benefits for all of the people
of Coega Dairy and the wider community in which we operate.”

Famous Brands Cheese Manufacturing Company is anticipated to commence supply and distribution
of Mozzarella cheese to the Debonairs Pizza franchise network in May 2013. The business’s first-
year annualised turnover is expected to be in the order of R180 million.

ends

NOTES TO EDITORS
Coega Dairy’s products and processes are keenly aligned with environmentally-friendly principles. In a first for
this country, the company invested in a plant design that is significantly more efficient than conventional UHT
milk processing solutions available in other local plants. This modern technology negates various steps in the
production process, with subsequent cost savings and environmentally-friendly results. In addition, the UHT
processing plant has the smallest carbon footprint compared to its peers in the Southern hemisphere. The
existing dairy facility was set up at a cost of R90 million.
*UHT: Ultra Heat Treated describes milk that has been heated to a very high temperature to keep it fresh
longer in a sealed container.

For further information:
Kevin Hedderwick                            Del-Maree English
Chief Executive Officer                     Investor Communications
Famous Brands                               Mobile: 083 395 8608
Telephone: 011 651 5812

Sponsor
The Standard Bank of South Africa Limited

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