Wrap Text
Summarised results for the year ended 29 February 2016
Famous Brands Limited
Incorporated in the Republic of South Africa
Registration number: 1969/004875/06
JSE share code: FBR
ISIN code: ZAE000053328
Summarised results for the year ended 29 February 2016
Financial highlights
Financial highlights
Revenue up 31% to R4.3 billion
Operating profit up 18% to R792 million
Operating margin 18.4%
Headline earnings per share up 16% to 541 cents per share
Dividends up 14% to 405 cents per share
Net asset value per share up 9.4% to 1 554 cents per share
Highlights
Unabated stellar growth
Bold acquisitions
Pioneering new brands
Innovative new categories
Significant vertical integration gains
Capability and scale built to advance 2020 vision
Group performance
The Group’s 2020 strategic intent is to become a leading branded leisure and consumer product business in Africa and
selected markets, through building capability and scale across the key pillars of the business. The rewarding
performance reported for the year under review is a reflection of the momentum which this programme has gained to date
and demonstrates its potential for growth in the run up to 2020.
While the current adverse trading environment is widely acknowledged and reported on, Famous Brands remains
optimistic and enthusiastic about the opportunities presented by the food service industry in the country. The Group’s
stellar results and accomplishments achieved during the period are irrefutable evidence of how the business continues
to flourish, despite the current climate. The commitment required to turn in consecutive sets of record results in
challenging conditions is a function of the unwavering culture of competitiveness and desire to win, combined with the
relentless energy and audacious ambition of the management team and the people of Famous Brands.
Financial results
In this, the Group’s fifteenth consecutive year of record turnover and profits, revenue increased by 31% to R4.3
billion (2015: R3.3 billion) comprising organic and acquisitive growth. Operating profit grew 18% to R792 million
(2015: R672 million). The operating margin was 18.4% (2015: 20.5%).
The strong increase in revenue is attributable to healthy system-wide sales in the Franchise Brand portfolio and
integration of new business in the Logistics and Manufacturing operations. This integration of new high-volume
lower-margin business is reflected in the relatively lower Group operating margin percentage.
Headline earnings per share improved 16% to 541 cents per share (2015: 467 cents per share). Net interest expense
rose to R6.9 million (2015: R269 thousand), as a function of unwinding the discount related to the put option
liabilities recognised during the year.
Cash generated by operations before changes in working capital increased by 22% to R875 million (2015: R717 million).
Working capital grew by R156 million (2015: R4 million) as a result of the acquisition of Cater Chain Food Services
(Cater Chain) and Retail Group (Pty) Ltd Botswana (Retail Group), as well as organic growth. After changes in
working capital, cash generated by operations increased by 1% to R718 million (2015: R713 million).
Tax payments of R244 million (2015: R202 million) and dividend payments of R398 million (2015: R327 million),
totalled R642 million (2015: R529 million). Net cash retained from operations reduced to R72 million
(2015: R184 million).
Total cash utilised in investing activities of R202 million (2015: R96 million) was incurred, R99 million of which
was utilised on the acquisition of the Mythos trademark and controlling stakes in the businesses of Cater Chain and
Retail Group. The balance of R103 million was incurred on Supply Chain expansion, fleet upgrade and enhancement of
information technology systems.
The Group has net cash on hand of R6 million (2015: R126 million).
OPERATIONAL REVIEWS
Franchising
The Group’s Franchising division consists of the following regions: South Africa, Rest of Africa and the Middle
East, and the United Kingdom.
Across the total franchise network system-wide sales (which include new restaurants opened) increased 12%, while
like-on-like sales grew 6.9%.
A total of 184 new restaurants were opened across the brand portfolio, bringing the total restaurant network to
2 614. During the period 205 restaurants were revamped.
The performance of the Group’s three franchise regions is reviewed below:
South Africa
Revenue grew 11% to R681 million (2015: R615 million). Operating profit grew by 7% to R389 million
(2015: R365 million), while the operating profit margin reduced to 57.1% from 59.4% in the prior year. This
decrease is primarily due to an investment in resources to build capability and capacity across our Franchising
division.
System-wide sales increased 11.2% while like-on-like sales improved by 7.3%.
In the year under review, 151 restaurants were opened (2015: 221).
Furthering the Group’s goal to expand its presence in the casual evening dining trade category, new brand concepts
were launched and a number of key joint ventures established:
Partnerships were created with four emerging franchise restaurant brands, Mythos, Catch, Lupa Osteria and Salsa
Mexican Grill. The Group also opened its pilot craft beer restaurant, 14 on Chartwell in the review period.
A groundbreaking agreement was signed with global brand, PAUL, to become their South African licensed partner for
a 10-year period. PAUL is a family-owned French chain of bakery-cafés established in 1889 in Northern France.
Mainstream brands
In general this portfolio performed extremely well in a challenging environment. Stand-out performances were
recorded by the Group’s mainstream brands, Steers, Wimpy, Debonairs Pizza, and Mugg & Bean. FishAways and Milky Lane
also delivered strong results for the period.
Emerging brands
Across this portfolio the majority of brands delivered improved results. Turn ’n Tender in particular, reported an
outstanding performance.
While Wakaberry™ remains the clear brand leader in the frozen yoghurt category and continues to enjoy strong
consumer appeal, it was not unscathed by the continued contraction of this market segment, mirroring the decline
experienced globally. In response, the business model is undergoing a stringent review of key components, including
store locations, format size and extent of the offering.
The Group will continue to build capability across its South African brand portfolio with the opening of 235
planned new restaurants for the year ahead.
Rest of Africa
The Group has a strong presence in the Rest of Africa, with representation in 19 countries and over 20 years’ of
experience in the region.
System-wide sales increased 20.1%, while like-on-like sales improved 2.6%. This region’s contribution to total
system-wide Group sales is 9.6% (2015: 9.0%).
During the period the Group opened 33 (2015: 47) new restaurants in the region. Debonairs Pizza made its debut in
Ethiopia, to encouraging response, and opened a further four restaurants in Angola, in conjunction with partner,
Shoprite Checkers. Mugg & Bean entered Malawi for the first time with an On-The-Move offering in conjunction with
partner, Total.
In August 2015, the Group acquired a 51% controlling stake in its master licence partner, Retail Group. During the
year this business was fully integrated into Famous Brands’ structures. To date the unit’s trading performance has
exceeded expectations; highlights include the opening of two Mugg & Bean restaurants and the opening of a second
Steers restaurant.
The Group’s target is to open a total of 48 new restaurants in the Rest of Africa region in the year ahead.
Middle East
In the period under review, the Debonairs Pizza and Steers restaurants in this region continued to deliver solid
results. tashas’ maiden restaurant, opened in Dubai in 2015, traded strongly over the past year, and plans are
well advanced to open the brand’s second restaurant in Dubai in F2017.
Management will be renewing its focus on this region in F2017 with a view to growing the Group’s presence.
United Kingdom (uk)
In the context of slightly improved consumer sentiment and spend, the UK business reported record profits and
margins. The business is healthier than it has ever been, positioning the operation for future growth.
Revenue in Sterling decreased by 2% while revenue in Rand terms grew 13% to R116 million (2015: R102 million).
The foreign currency translation gain amounted to R15 million (2015: R12 million). Operating profit increased
59% to R33 million (2015: R21 million) and the operating profit margin rose to 28.2% from 20.1% in the comparable
period.
It is planned to open five Wimpy and one Steers restaurants in the year ahead.
The Group’s goal continues to be to deploy the existing UK platform as a beachhead to grow Famous Brands’
footprint and improve its opportunities to earn hard currency in the years ahead.
Supply chain
The Group’s Supply Chain consists of its Logistics and Manufacturing businesses, which are managed and measured
separately.
At the half-year it was noted that the Group had undertaken a range of ambitious projects to integrate new high-volume
lower-value business into its Manufacturing and Logistics operations, which had proved more onerous than anticipated.
In this regard, it is pleasing to report that notwithstanding the setbacks experienced in the first half of the year,
both divisions have made strides in incorporating the additional volumes, and recorded encouraging results for the
full period.
Consolidated revenue grew by 34% to R3.4 billion (2015: R2.5 billion), while operating profit increased 33% to
R348 million (2015: R262 million). The operating margin was 10.33% compared to 10.44% in the prior period due to the
newly integrated product mix, which includes a larger basket of lower margin business.
DIVISIONAL REPORT
Logistics
Revenue improved strongly by 31% to R2.9 billion, while operating profit rose 12% to R100 million. The operating
profit margin declined to 3.4% from 4.0% but management is confident that as integration of additional new business
gains momentum, historical margins will be achievable.
Manufacturing
This division delivered an excellent performance in the review period. Revenue grew by 43% to R1.8 billion (2015:
R1.3 billion), while operating profit increased by a remarkable 43% to R247 million (2015: R173 million). The
division’s operating margin remained at 13.7%.
Subsequent events
Acquisition of 51% stakes in Catch, Lupa Osteria and Salsa Mexican Grill, and 100% of Lamberts Bay Foods Limited
Outlined in 2015, the Group’s stated intent is to expand its presence in the full-service casual dining category.
In this regard, three acquisitions were made in the period subsequent to year-end, as follows:
On 9 March 2016, the Group acquired a 51% stake in Catch, a premium seafood and sushi brand.
Effective 1 May 2016, the Group acquired a 51% controlling stake in Lupa Osteria, an authentic Italian restaurant
business trading in the family casual dining segment.
With effect from 1 June 2016, the Group would acquire a 51% controlling stake in recently launched Salsa Mexican
Grill, a Fast-Casual dining concept centered on traditional Mexican food and beverages.
Further to the Group’s strategy to build capability across the business, and as announced on SENS, a strategic
manufacturing business was acquired in the period subsequent to year-end.
Subject to Competition Commission approval, the Group acquired 100% of the business of Lamberts Bay Foods Limited,
a wholly owned subsidiary of JSE-listed Oceana Group Limited. The business produces French fries and other
value-added potato products at its factory in Lambert’s Bay for sale to wholesalers, retailers and restaurant
chains.
This acquisition will enhance the Group’s capability to manufacture licensed product for both its franchise
network and retail clients, as well as provide security in respect of a significant menu item.
With regard to the above mentioned acquisitions, the purchase consideration was below the threshold of a
categorised transaction in terms of the Listings Requirements of the JSE Limited.
Directorate
After 16 years of exceptional service to Famous Brands, Group Chief Executive, Kevin Hedderwick, retired on 29
February 2016. His services have been retained as Strategic Advisor to the Group from 1 March 2016, for a 12-month
period. As part of this role, Kevin has responsibility for pursuing and evaluating new growth opportunities for the
Group and overseeing execution of new acquisitions. The Board values his unique talent and passion for M&A activity
and welcomes his continued management of this portfolio.
On Kevin’s retirement, Darren Hele, formerly Chief Executive: Food Services, was appointed Group Chief Executive.
Darren joined Famous Brands in 2003 and brings to his new role extensive experience in the Group and the industry.
With Darren’s appointment, the Board is satisfied that the planned management transition will be seamless and will
ensure the business is optimally prepared for the next phase of its growth.
Effective from 22 May 2015, Moses Kgosana was appointed as an Independent non-executive director to the Board. Moses
is a Chartered Accountant (SA), with more than 30 years of accounting, auditing and advisory experience within the
public and private sectors. Moses has subsequently also been appointed as chairman of the Group’s Audit and Risk
Committee.
Prospects
South Africa will remain an attractive destination for global competitors, but having contended with international
entrants for over 20 years, the Group has the determination, experience and energy to continue to flourish in this
challenging environment.
Management has identified a multitude of initiatives to continue building capability and capacity across the three
pillars of this business, Franchising, Logistics and Manufacturing. In addition to organic growth opportunities,
exciting new prospects are presented with the opening of 292 franchise restaurants in the year ahead; assimilating
the new joint venture brands, PAUL, Lupa Osteria, Catch and Salsa Mexican Grill; and integrating the manufacturing
operation of Lamberts Bay Foods.
In line with its acquisitive nature and in pursuit of Vision 2020, Famous Brands will continue to pursue further
upstream manufacturing prospects and explore opportunities to grow the Group’s presence in the casual evening
dining segment, as well as outside of the traditional food service sector.
The Board is satisfied that the platform for continued growth is firmly in place, comprising an accomplished
executive management team, optimally structured business model and a pipeline of opportunities to continue to meet
stakeholder expectations.
The information and any forward-looking statements as set out in this announcement have not been reviewed or
audited.
On behalf of the Board
SL Botha KA Hedderwick
Independent chairman Group Chief Executive
27 May 2016
Notice of final dividend declaration number 43 and salient features
Notice is hereby given that a final gross dividend of 215 cents (2015: 200 cents) per ordinary share, payable
out of income, has been declared in respect of the financial year ended 29 February 2016.
This will bring the total cash dividends to 405 cents (2015: 355 cents) per share for the 2016 financial year,
an increase of 14%.
The salient dates for the payment of the final dividend are detailed below:
Dividend declaration date Monday, 30 May 2016
Last day to trade cum-dividend Friday, 1 July 2016
Shares commence trading ex-dividend Monday, 4 July 2016
Record date Friday, 8 July 2016
Payment of dividend Monday, 11 July 2016
Share certificates may not be dematerialised or rematerialised between Monday, 4 July 2016 and Friday, 8 July 2016,
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 182.75 cents (2015: 170 cents) per share for shareholders liable to pay the
dividends tax and 215 cents (2015: 200 cents) per share for shareholders exempt from paying the dividends
tax.
The issued share capital of Famous Brands is 99 812 435 (2015: 99 807 435) ordinary shares.
Famous Brands’ tax reference number is 9208085846.
By order of the Board
K Ntlha
Company Secretary
Midrand
27 May 2016
Summarised consolidated statement of financial position
as at 29 February 2016
2016 2015
R000 R000
ASSETS
Non-current assets 1 436 377 1 196 839
Property, plant and equipment 286 448 208 951
Intangible assets 1 095 888 922 576
Investments in associates 52 746 57 568
Deferred tax 1 295 7 744
Current assets 971 906 655 421
Inventories 301 625 186 513
Current tax assets 60 786 26 404
Derivative financial instruments 100 -
Trade and other receivables 463 261 316 276
Cash and cash equivalents 146 134 126 228
Total assets 2 408 283 1 852 260
EQUITY AND LIABILITIES
Equity attributable to owners of Famous Brands Limited 1 474 780 1 389 388
Non-controlling interests 75 819 27 766
Total equity 1 550 599 1 417 154
Non-current liabilities 214 690 58 702
Derivative financial instruments 124 821 -
Lease liabilities 10 858 2 937
Deferred tax 79 011 55 765
Current liabilities 642 994 376 404
Non-controlling shareholder loans 24 988 24 449
Lease liabilities 1 689 -
Trade and other payables 462 481 329 769
Shareholders for dividends 1 873 1 487
Current tax liabilities 11 713 20 699
Bank overdrafts 140 250 -
Total liabilities 857 684 435 106
Total equity and liabilities 2 408 283 1 852 260
Summarised consolidated statement of profit or loss and other comprehensive income
for the year ended 29 February 2016
Note 2016 2015 %
R000 R000 change
Revenue 4 308 318 3 283 342 31
Gross profit 1 838 371 1 450 820 27
Selling and administrative expenses (1 046 263) (778 796) 34
Operating profit before impairment loss 792 108 672 024 18
Impairment loss (12 000) -
Operating profit after impairment loss 780 108 672 024 16
Finance costs** (27 375) (13 550)
Finance income** 20 466 13 281
Share of (loss)/profit of associates (622) 7 608
Profit before tax 772 577 679 363 14
Tax (221 011) (194 651)
Profit for the year 551 566 484 712 14
Other comprehensive income, net of tax:
Exchange differences on translating
foreign operations* 65 753 (2 957)
Total comprehensive income for the year 617 319 481 755
Profit for the year attributable to:
Owners of Famous Brands Limited 527 699 465 756
Non-controlling interests 23 867 18 956
551 566 484 712
Total comprehensive income attributable to:
Owners of Famous Brands Limited 593 452 462 799
Non-controlling interests 23 867 18 956
617 319 481 755
Earnings per share (cents)
Basic earnings per share 5 529 468 13
Diluted earnings per share 5 528 468 13
* This item may be reclassified subsequently to profit or loss
** These amounts have been disclosed gross
Summarised consolidated statement of changes in equity and cash flows
for the year ended 29 February 2016
2016 2015
R000 R000
Balance at the beginning of the year 1 417 154 1 234 948
Issue of capital and share premium 217 24 106
Recognition of share-based payments 10 173 1 992
Recognition of put-options over
non-controlling interests (118 426) -
Total comprehensive income for the year 617 319 481 755
Payment of dividends (398 389) (327 389)
Additional non-controlling interest
arising on business combination 24 889 1 742
Change in ownership interests in subsidiaries (3 906) -
Contingent consideration 1 568 -
Balance at the end of the year 1 550 599 1 417 154
Summarised consolidated statement of cash flows
for the year ended 29 February 2016
2016 2015
R000 R000
Cash generated before working capital changes 874 733 716 902
Increase in inventories (84 357) (5 066)
Increase in trade and other receivables (131 452) (36 694)
Increase in trade and other payables 59 446 38 093
Cash generated from operations 718 370 713 235
Net interest paid (205) (269)
Tax paid (243 993) (201 524)
Cash available from operating activities 474 172 511 442
Dividends paid to owners of Famous
Brands Limited (398 003) (326 969)
Net cash inflow from operating activities 76 169 184 473
Cash utilised in investing activities
Additions to property, plant and equipment (82 199) (46 124)
Intangible assets acquired (42 749) (9 382)
Proceeds from disposal of property,
plant and equipment 2 527 3 098
Proceeds from disposal of intangible assets - 375
Net cash outflow on acquisition of subsidiaries (83 989) (47 334)
Dividends received from associates 4 200 2 975
Net cash outflow from investing activities (202 210) (96 392)
Cash flow from financing activities
Borrowings repaid - (65 000)
Cash contributed by/(repaid) to
non-controlling shareholders 539 (4 895)
Proceeds from issue of equity instruments of
Famous Brands Limited 217 24 106
Acquired from non-controlling interest in subsidiaries (18 084) -
Net cash outflow from financing activities (17 328) (45 789)
Net (decrease)/increase in cash and cash equivalents (143 369) 42 292
Foreign currency effect 23 025 (6 763)
Cash and cash equivalents at the beginning of the year 126 228 90 699
Cash and cash equivalents at the end of the year 5 884 126 228
Comprising:
Cash and cash equivalents 146 134 126 228
Bank overdrafts (140 250) -
5 884 126 228
Primary (business units) and secondary (geographical) segment report
for the year ended 29 February 2016
2016 2015 %
R000 R000 change
Revenue
Franchising and Development 681 364 615 038 11
Supply Chain 3 363 929 2 506 610 34
Manufacturing 1 799 958 1 257 691 43
Logistics 2 911 061 2 223 196 31
Eliminations of inter-segment revenue (1 347 090) (974 277) 38
Corporate 2 562 1 740
South Africa 4 047 855 3 123 388 30
International 260 463 159 954 63
UK 115 696 102 470 13
Rest of Africa 144 767 57 484 152
Total 4 308 318 3 283 342 31
Operating profit
Franchising and Development 389 282 365 353 7
Supply Chain 347 653 261 725 33
Manufacturing 247 455 172 538 43
Logistics 100 198 89 187 12
Corporate (11 239) 1 349
South Africa 725 696 628 427 15
International 66 412 43 597 52
UK 32 640 20 584 59
Rest of Africa 33 772 23 013 47
Total operating profit before impairment loss 792 108 672 024 18
Franchising and Development (12 000) -
Impairment loss (12 000) -
Corporate (228 542) (187 312)
Net finance costs (6 909) (269)
Share of (loss)/profit of associates (622) 7 608
Tax (221 011) (194 651)
Profit for the year 551 566 484 712
2016 2015
% %
Operating margin
Franchising and Development 57.1 59.4
Supply Chain 10.3 10.4
Manufacturing 13.7 13.7
Logistics 3.4 4.0
South Africa 17.9 20.1
International 25.5 27.3
UK 28.2 20.1
Rest of Africa 23.3 40.0
Operating profit 18.4 20.5
Statistics and ratios
for the year ended 29 February 2016
%
2016 2015 change
Earnings per share (cents)
Basic earnings per share 529 468 13
Diluted earnings per share 528 468 13
Headline earnings per share 541 467 16
Diluted headline earnings per share 540 467 16
Dividends per share (cents) 405 355
Interim 190 155 23
Final 215 200 8
Ordinary shares (000)
In issue 99 812 99 807
Weighted average 99 810 99 581
Diluted weighted average 99 892 100 236
Operating profit margin (%) 18.4 20.5
Net debt/equity (%) (0.4) (8.9)
Net asset value per share (cents) 1 554 1 420
Dividend cover on headline earnings (times) 1.3 1.3
Notes to the summarised consolidated financial statements
for the year ended 29 February 2016
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 provisional summarised consolidated financial statements have been prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting
Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, and contains at
a minimum the information required by IAS 34 Interim financial reporting, 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 on 24 June 2016.
The Group’s audited Financial Statements and the summarised consolidated financial statements as at and for
the year ended 29 February 2016 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 2015, except for new standards that became effective for the Group’s financial
period beginning 1 March 2015, 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 2015, none of which had a material impact on the Group.
2016 2015
R000 R000
4. Capital expenditure and commitments
Invested 142 154 55 506
Property, plant and equipment 82 199 46 124
Intangible assets 59 955 9 382
Authorised, not yet contracted 169 815 83 265
Property, plant and equipment 156 917 68 028
Intangible assets 12 898 15 237
2016 2015
R000 R000
5. Earnings and headline earnings per share
Reconciliation between earnings and diluted earnings
Profit attributable to equity holders of Famous
Brands Limited 527 699 465 756
Adjustment for:
After tax interest receivable on future share placements - 3 348
Diluted earnings 527 699 469 104
Earnings per share (cents)
Basic 529 468
Diluted 528 468
Reconciliation between headline earnings and diluted headline earnings
Profit attributable to equity holders of Famous
Brands Limited 527 699 465 756
After tax profit on disposal of property, plant
and equipment (88) (526)
After tax re-measurements included in equity-accounted
earnings of associates - (29)
Impairment loss 12 000 -
Headline earnings 539 611 465 201
Adjustment for:
After tax interest receivable on future share placements - 3 348
Diluted headline earnings 539 611 468 549
Headline earnings per share (cents)
Basic 541 467
Diluted 540 467
6. 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.
7. Financial instruments
Accounting classifications and fair values
The table below sets out the classification of each class of financial assets and liabilities, as well
as a comparison to their fair values. The different fair value levels are described below:
Level 1: Quoted prices (adjusted) in active markets for identical assets or liabilities that the Group
can access at the measurement date.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
Group
2016 2016 2015 2015
Carrying Fair Carrying Fair
amount value amount value
Level R000 R000 R000 R000
Financial assets
Loans and receivables:
Trade and other receivables 444 069 444 069 309 065 309 065
Cash and cash equivalents 146 134 146 134 126 228 126 228
Fair value through profit or loss:
Derivative financial instruments (foreign 100 100 - -
currency options) 2 590 303 590 303 435 293 435 293
Group
2016 2016 2015 2015
Carrying Fair Carrying Fair
amount value amount value
Level R000 R000 R000 R000
Financial liabilities
Measured at amortised cost:
Trade and other payables 367 494 367 494 263 337 263 337
Non-controlling shareholder loan 24 988 24 988 24 449 24 449
Shareholders for dividends 1 873 1 873 1 487 1 487
Lease liabilities 12 547 12 547 2 937 2 937
Bank overdrafts 140 250 140 250 - -
Fair value through profit or loss:
Derivative financial instruments
(put options over non-controlling interests) 3 124 821 124 821 - -
671 973 671 973 292 210 292 210
Level 3 sensitivity information
The fair values of the level 3 financial liabilities of R125 million (2015: Rnil) were
determined by applying an income approach valuation method including a present value
discount technique. The fair value measurement includes inputs that are not observable
in the market. Key assumptions used in the valuation of these instruments include the
probability of achieving set profit targets and the discount rates. An increase/(decrease)
of 1% in the discount rate would result in decrease/(increase) of R5 million.
Movements in level 3 financial instruments carried at fair value
The following tables illustrate the movements during the year of level 3 financial
instruments carried at fair value:
Group
2016 2016 2015 2015
Carrying Fair Carrying Fair
amount value amount value
R000 R000 R000 R000
Put options over non-controlling interests:
Carrying value at beginning of the year - - - -
Initial recognition in equity for new acquisitions 118 426 118 426 - -
Unwinding of discount 6 395 6 395 - -
Carrying value at end of the year 124 821 124 821 - -
2016 2015
R000 R000
8. Business combinations
Summary of cash outflow on acquisition of subsidiaries
Cater Chain Food Services and City Deep Cold Storage 38 082 -
Retail Group 45 907 -
WakaberryTM Holdings - 47 334
Total cash outflow on acquisition of subsidiaries 83 989 47 334
Effective 1 April 2015, a 75% share was acquired in both Cater Chain Food Services and
City Deep Cold Storage, for a consideration of R30 million. R15.1 million was allocated
to goodwill because of anticipated scale and merger benefits related to franchising,
manufacturing and logistics capability.
Fair value of assets and liabilities acquired
2016 2015
R000 R000
Property, plant and equipment 21 245
Intangible assets 6 609
Trade and other receivables 19 471
Inventories 28 970
Current tax assets 787
Bank overdraft (8 082)
Deferred tax (3 871)
Trade and other payables (45 296)
Net assets acquired 19 833
Non-controlling interests measured at their share
of the fair value of net assets (4 958)
Amount capitalised 14 875
Goodwill 15 125
Purchase price 30 000
Bank overdraft 8 082
Cash outflow on acquisition of subsidiary 38 082
Effective 1 August 2015, a 51% interest was acquired in Retail Group (Pty) Ltd
(Botswana), for a consideration of R61.8 million. R40.9 million was allocated to
goodwill because of anticipated scale and merger benefits related to franchising,
manufacturing and logistics capability.
Fair value of assets and liabilities acquired
2016 2015
R000 R000
Property, plant and equipment 16 781
Trademarks 27 515
Trade and other receivables 2 473
Inventories 1 519
Receivables from shareholders 56
Current tax assets 1 942
Cash and cash equivalents 15 918
Borrowings (1 232)
Deferred lease liabilities (923)
Deferred tax (6 159)
Trade and other payables (16 923)
Non-controlling shareholder loans (75)
Net assets acquired 40 892
Non-controlling interests measured at their share
f the fair value of net assets (20 038)
Amount capitalised 20 854
Goodwill 40 971
Purchase price 61 825
Cash and cash equivalents (15 918)
Cash outflow on acquisition of subsidiary 45 907
The business combinations have been accounted for on a provisional basis.
Effective 1 April 2014, a 70% interest was acquired in both WakaberryTM Holdings
(Pty) Ltd and 4E Holdings (Pty) Ltd, the company in which WakaberryTM trademark
is registered, for a consideration of R49.4 million. R45.4 million was allocated
to goodwill because of anticipated scale and merger benefits related to franchising,
manufacturing and logistics capability.
Fair value of assets and liabilities acquired
2015
R000
Property, plant and equipment 979
Trademarks 12
Trade and other receivables 3 823
Inventories 3 979
Cash and cash equivalents 2 082
Deferred tax (1)
Trade and other payables (3 160)
Current tax liabilities (1 910)
Net assets acquired 5 804
Non-controlling interests measured at their share
of the fair value of net assets (1 740)
Amount capitalised 4 064
Goodwill 45 352
Purchase price 49 416
Cash and cash equivalents (2 082)
Cash outflow on acquisition of subsidiary 47 334
9. Subsequent events
- Effective 1 May 2016 the Group acquired a 51% controlling stake in Lupa
Osteria, an authentic Italian restaurant business trading in the family
casual dining segment. Founded in 2013, and franchised in 2014, Lupa
Osteria comprises three restaurants in KwaZulu-Natal: Hillcrest,
Westville and Durban North. In the short term, a further three restaurants
will be opened in KwaZulu-Natal; over the long term, management is
satisfied that a network of 35 restaurants in South Africa and select
African countries is achievable.
- The Group has announced that with effect from 1 June 2016, it would
acquire a 51% controlling stake in recently launched Salsa Mexican Grill, a
fast-casual dining concept centered on traditional Mexican food and beverages.
The brand is currently represented by its maiden restaurant, opened in
June 2015, in Fourways, Gauteng. Two additional franchised outlets are
scheduled to open during the course of 2016. Over the longer term the
intention is to grow the brand’s footprint nationally.
- Subject to Competition Commission approval, the Group has acquired 100% of
the business of Lamberts Bay Foods Limited, a wholly owned subsidiary of
JSE-listed Oceana Group Limited. The business produces French fries and
other value-added potato products at its factory in Lambert’s Bay for sale
to wholesalers, retailers and restaurant chains. This acquisition will serve
to enhance the Group’s capability to manufacture licensed product for its
franchise network and retail clients, as well as provide security of supply
in respect of a significant strategic menu item.
- With effect from 9 March 2016, the Group acquired a 51% stake in Catch, a
premium seafood and sushi brand.
Due to the timing of these acquisitions, the initial accounting for these business
combinations is incomplete and therefore the disclosure of the acquisition date
fair values and related impact cannot be made at this time.
10. Audit opinion
These summarised consolidated financial statements for the year ended
29 February 2016 have been derived from the audited consolidated financial
statements of Famous Brands Limited for the year ended 29 February 2016, on
which the auditors, Deloitte & Touche, have expressed an unmodified audit
opinion. These summarised consolidated financial statements have themselves
not been audited.
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) on 24 June 2016.
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.
Directors and administration
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,
RM Kgosana, DP Hele (Group Chief Executive )*,
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
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
70 Marshall Street, Marshalltown, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
The Standard Bank of South Africa Limited
Registration number: 1969/017128/06
30 Baker Street, Rosebank, 2196
Auditors
Deloitte & Touche
Bankers
Absa Bank Limited
Bidvest Bank Limited
FirstRand Bank Limited
Investec Bank Limited
Contact information
Tel: +27 11 315 3000
investorrelations@famousbrands.co.za
478 James Crescent
Halfway House, South Africa, 1685
30 May 2016
Date: 30/05/2016 07:05:00 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 
