FAMOUS BRANDS LIMITED - Trading statement for the six months ended 31 August 2017

Trading statement for the six months ended 31 August 2017

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”)


TRADING STATEMENT FOR THE SIX MONTHS ENDED 31 AUGUST 2017

Famous Brands is satisfied that a reasonable degree of certainty
exists with regard to the financial results of the Group for the six
months ended 31 August 2017 (“the review period”) and thus is in a
position to issue this trading statement in terms of Section
3.4(b)(i) of the Listings Requirements of the JSE Limited.

BUSINESS PERFORMANCE

On 16 August 2017, the Group published a voluntary performance update
(“the update”) for its South African (SA) and Rest of Africa and
Middle East (AME) regions for the 20-week period ended 31 July 2017,
as well as for the recently acquired UK business, Gourmet Burger
Kitchen (GBK), for the 22-week period ended 31 July 2017.

The update noted that trading conditions in these markets had
deteriorated over the specified period as a result of weak consumer
confidence levels, macro-economic pressure on disposable income,
socio-political uncertainty and an intensification of competition.
Unfortunately, these conditions persisted over the balance of the
review period between 31 July and 31 August 2017.

In this context, the Group’s SA business (comprising its Franchise
and Development, Logistics and Manufacturing divisions) will report
a satisfactory improvement in Profit Before Interest and Tax (“PBIT”)
compared to the prior period.

Disappointingly, GBK recorded a PBIT loss of GBP872 000 for the
period.   This loss is primarily attributable to the prevailing
adverse trading environment in the UK, however, as noted in the
update, the Board of Directors (“the Board”) is confident that
innovative interventions currently being implemented in the business
by management will have a positive impact on future performance.
These measures include intensified focus on the management of new
restaurants   opened,   improving   operational   efficiencies,   and
enhancing cost controls - including curtailing the opening of further
restaurants in the short term given the high pre-opening capital
costs, averaging GBP1 million per store.

In the current macro-economic environment, the Board is of the
opinion that GBK’s return to profitability will only be achieved in
the next financial year, however it remains optimistic that the
operation will add value to the Group in time.

RESULTS
As cautioned in the update, the Group’s consolidated results for the
six months under review are weaker than those reported in the prior
comparable period, negatively affected by:

- the increase in net finance costs from R8 million in the prior
  comparable period to R138 million in the current period; and
- the operating loss incurred by the GBK business.

The following non-operational exceptional items were included in the
results for the six months ended 31 August 2016, but had no bearing
on the current results under review, namely:

- a derivative gain of R141 million on the call option utilised to
  hedge the purchase price of the acquisition of GBK; and
- a R20 million impairment of the investment made in 2013 in UAC
  Restaurants Limited in Nigeria.

For the six months ended 31 August 2017, headline earnings per share
(“HEPS”) compared to the prior comparable period are expected to
decrease to within the range of 153 cents per share to 187 cents per
share (2016: 411 cents per share), being an approximate 54% to 63%
decrease when compared to the prior comparable HEPS.

Basic earnings per share (“EPS”) compared to the prior comparable
period are expected to decrease to within the range of 154 cents per
share to 188 cents per share (2016: 391 cents per share), being an
approximate 52% to 61% decrease when compared to the prior comparable
EPS.

The financial information on which this trading statement is based
has not been reviewed or reported on by the Company’s external
auditors.

The results for the review period will be released on SENS on or
about Monday, 30 October 2017.

Midrand
09 October 2017

Sponsor
The Standard Bank of South Africa Limited

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