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FAMOUS BRANDS LIMITED - Provisional Summarised Results for the year ended 28 February 2018

Release Date: 24/05/2018 07:05
Code(s): FBR     PDF:  
Wrap Text
Provisional Summarised Results for the year ended 28 February 2018

Famous Brands Limited 
Incorporated in the Republic of South Africa
Registration number: 1969/004875/06
JSE share code: FBR
ISIN: ZAE000053328

PROVISIONAL SUMMARISED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018 

Highlights

Brands
- Strong organic performance in SA business
- Positive local currency growth achieved in the AME region
- Underperformance by GBK business

Logistics
- Improved performance as a result of increased capacity and enhanced efficiencies

Manufacturing 
- Strong volume growth

- Revenue up to R7 billion
  Up 23%
  
- Operating profit before non-operational items R890 million
  Down 5% 
  
- Operating margin before non-operational items
  12.7%
  
- Headline earnings per share 393 cents
  Down 8%


Commentary
Operating environment
Challenging trading conditions persisted in the year under review. Common to all our markets (South Africa, the rest
of Africa, the Middle East and the United Kingdom), the industry featured a highly competitive landscape, limited
discretionary spend and subdued consumer sentiment.

Consistent with this environment, consumers' scrutiny of value intensified, resulting in aggressive pricing pressure
among competitors and further margin squeeze. In general, muted like-for-like sales growth was reported by the industry
across our trading territories. 

Group performance
After several consecutive years of intense acquisition activity, management's deliberate strategic focus during the
year was on entrenching sustainable organic growth through growing capability and capacity across our core operations,
Brands, Logistics and Manufacturing operations. The following fundamentals were prioritised: judicious capital allocation
accompanied by high-sweat potential of every capital investment; focus on core competencies, avoiding the influence of
constantly evolving trends and pursuit of only those opportunities that moved the business's needle significantly.

- South Africa
  Despite the testing trading conditions, our South African operations performed well across the value chain. The solid 
  results delivered by our mainstream Leading brands portfolio underpinned a pleasing performance in our Logistics and
  Manufacturing businesses, improved efficiencies and strong volume growth respectively.

- Rest of Africa and the Middle East (AME)
  In the AME region we pursued our deep and narrow strategy, continuing to invest in and extend our presence in those
  markets with proven sustainable potential and exiting those which have consistently underperformed over a lengthy
  period. 

- United Kingdom (UK)
  In the UK market, the food services sector continued to face difficulties, with businesses subject to notably higher
  property rates and increased labour and food costs. Despite this, Wimpy reported satisfactory results. While the
  Gourmet Burger Kitchen (GBK) operation made some progress in adapting to the challenges experienced in that economy 
  and industry, and notwithstanding operational improvements reported in the period, impairments recognised in GBK 
  considerably reduced the carrying value of the business. 

Financial results 
                                                                                                             %    
                                                                                2018          2017      change    
Statement of profit or loss and other comprehensive income                                                        
Revenue                                                             Rm         7 023         5 720          23    
Operating profit before non-operational items                       Rm           890           938          (5)   
Operating profit margin                                              %          12.7          16.4        (3.7)   
Impairments                                                         Rm           373            20                
EBITDA before impairment losses                                     Rm         1 093           947          15    
Headline earnings per share (HEPS)                               Cents           393           428          (8)   
Statement of cash flows                                                                                           
Cash generated by operations before working capital changes         Rm         1 135           932                
Working capital changes                                             Rm           (12)         (137)               
Net cash outflow utilised in investing activities                   Rm          (201)       (2 257)               
Net cash (outflow)/inflow from financing activities                 Rm          (108)        2 424                
Cash realisation rate*                                               %           103            84          19    
Statement of financial position                                                                                   
Cash and cash equivalents                                           Rm           717           405                
Net assets#                                                         Rm         4 403         4 651                
Net debt^                                                           Rm         2 064         2 450                
Net debt/equity                                                      %           126           165          39    
Total equity                                                        Rm         1 632         1 485                
Return on equity**                                                   %            25            28          (3)    
Return on net assets^^                                               %            20            29          (9)   
*  Cash generated by operations as a percentage of EBITDA.
#  Total assets other than cash and cash equivalents and deferred tax assets, less interest-free trading liabilities.
^  Total interest-bearing borrowings less cash.
** Headline earnings as a percentage of average total equity.
^^ Operating profit before non-operational items as a percentage of average net assets.

The Group's gearing has improved relative to prior year. Debt management is a key priority, and is proceeding
according to agreed financing commitments. In line with the repayment schedule, the Group continues to meet its debt 
reduction obligation. 

Attainment of strategic imperatives
We made good progress in tightening execution of our vision to be the leading innovative branded franchised and food
services business in South Africa and selected international markets by 2020. With our overriding theme being to focus 
on the fundamentals, (our Brands, Logistics and Manufacturing operations), we successfully implemented opportunities to
build scale across our Brands and Manufacturing divisions; leveraged synergies to contain costs across the operations;
pursued constant innovation and improvement to deliver unique customer experiences; up-weighted our human resources
capability and fortified the depth of leadership to achieve our growth ambitions.

While we had forecast higher levels of capital expenditure in line with our goal to open more company-owned restaurants, 
particularly in the UK, these plans were put on hold in the short term, in line with our strategy to ensure prudent
capital allocation and pending the improvement of the trading environments in SA and the UK. 

Operational reviews
Brands
This portfolio consists of 25 restaurant brands, represented by a network of 2 853 restaurants across South Africa,
the rest of Africa, the Middle East and the United Kingdom. The portfolio is segmented into Leading (mainstream) brands
and Signature (niche) brands, strategically positioned to appeal to a wide range of consumers across the income and
demographic spectrum and across meal preferences and value propositions. The Leading brands are further categorised as 
quick service, fast casual and casual dining. Our brand network comprises both franchised and company-owned restaurants.

This division reported revenue of R851 million (2017: R781 million), an improvement of 9%. Operating profit increased
1% to R431 million (2017: R427 million), while the operating profit margin decreased to 50.7% (2017: 54.7%).

Disappointingly, the weak economic environment in all our trading markets dictated against a robust expansion
programme. We opened a net of 182 restaurants during the period (2017: 192) and revamped 248 sites (2017: 231).

System-wide sales rose 8.1% (2017: 11.5%). Significantly, in the subdued economy, while sound like-for-like growth was
reported by some of our brands, most derived improved results from footprint expansion into previously underserviced
markets, attracting new customers and menu price inflation.

- Leading brands portfolio
  Solid results were delivered by our mainstream Leading brands portfolio (Steers, Debonairs Pizza, Wimpy, Mugg & Bean, 
  Fishaways, Milky Lane, Fego Caffé and Wakaberry). During the period, intense focus was directed at upscaling our 
  delivery offering both through in-house capability and third-party delivery service providers, and all of our brands 
  enjoyed notably improved levels of participation. Significant resources were also committed to enhancing our capability 
  in the digital and social media sphere, with the investment recording good returns. 

- Signature brands portfolio
  Our Signature brands portfolio underperformed our expectations. Investment in this portfolio over recent years has
  exerted pressure on margins, but we are satisfied that this impact should be reversed in time when the benefits of
  corrective actions start filtering through. During the year we grew the footprint, however the roll-out programme 
  is behind plan and remains a work in progress, largely determined by the weak economy. We also continued to repair 
  and rationalise certain of the brands (Europa) and exited others that despite remedial efforts offer no potential 
  for growth under our stewardship (Giramundo, The Bread Basket, Juicy Lucy, Brewers Guild and McGinty's). 

- Rest of Africa and AME
  This region's revenue grew in local currency terms, but declined in Rand terms. Combined revenue reported rose 1% to
  R253 million (2017: R249 million). Operating profit decreased by 10% to R45 million (2017: R50 million), while the
  operating margin decreased to 17.6% (2017: 19.9%). System-wide sales grew by 10.0% (2017: 8.3%). The region contributed 
  9.3% (2017: 9.3%) to the Group's total system-wide Brands division sales. 

  Our deep and narrow strategy continued to work well for us. We invested further in our strong markets including Zambia, 
  Malawi and Mauritius and exited those markets and brands that have no prospects of rehabilitation, including The Bread 
  Basket in Egypt (five sites). 

  Our four Leading brands in the AME region (Debonairs Pizza, Steers, Wimpy and Mugg & Bean) contributed 91% of revenue.

  In total, 21 restaurants were opened and nine revamped during the period, substantially behind target and largely 
  a function of the sluggish regional economy and limited access to capital and foreign exchange for prospective
  franchisees. The Group is represented in 15 countries in the region. 

- United Kingdom 
  Our UK operation comprises Wimpy UK and GBK (acquired effective 7 October 2016). The businesses are managed and
  report independently of each other.

  During the review period the average ZAR/GBP exchange rate was GBP1:ZAR17.15 versus GBP1:ZAR18.92 in the prior
  comparable period.

  - Wimpy UK 
    Revenue in Rand terms reported for the period decreased to R102 million (2017: R105 million), primarily as a
    function of foreign currency translation. Operating profit declined by 20% to R15 million (2017: R19 million), 
    while the operating margin reduced to 15.0% (2017: 18.1%).

    Wimpy recorded a 8.6% increase in revenue in Sterling despite closing three restaurants during the period. This
    growth is largely attributable to the brand's entry into the delivery market, with higher sales and improved margins
    recorded in the preliminary results reported by the 12 participating restaurants. In addition, collaboration with GBK 
    to leverage purchase volumes achieved lower prices for core products and enabled menu price increases to be contained 
    to a minimum.

    During the period one restaurant was opened. The network comprises 78 restaurants.

    - GBK
      The Group's results for the year ended 28 February 2018 include the full-year results of GBK for the first time
      since the business was acquired in October 2016. GBK's results reported in this announcement are for the 52 weeks 
      from 26 February 2017 to 25 February 2018.

      An operating loss before non-operational items of GBP3.6 million was reported for the period, while the operating
      margin declined to (4.2)%. System-wide sales in the UK (excluding Ireland) were 4.9% higher, but after consistently
      outperforming the market since 2011, GBK's like-for-like sales growth trended down over the past year, and as from 
      Q2 2017 the business underperformed the sector. Like-for-like sales (Sterling) decreased 6.8% compared to the 
      previous period.

      During the year 10 restaurants were opened in the UK and two revamped in Ireland. The total network comprises 106
      restaurants.

  The prevailing adverse economic and socio-political environment in the UK is widely acknowledged, as is the downturn
  in the fast casual dining category. Among the major factors are:
  - deteriorating consumer confidence in the context of Brexit, which has caused consumers to become more price sensitive
    and value conscious;
  - difficult market conditions (including the decline in footfall in malls, and online and delivery sales growing at 
    the expense of eat-in sales); and 
  - rapid expansion of the competitive set. The number of premium burger restaurants has grown from 213 in 2014 to 401 
    in 2017 at a CAGR of 23%. With the entry of new participants, first movers have lost their advantage and market 
    share, as consumers seek out new novelty offerings.

Despite this environment, the GBK operation made progress in meeting the challenges experienced. A number of highlights 
were recorded for the period, including the restructuring of our operations team to align resources with the network to 
facilitate more management time in restaurants. The business also successfully opened three trial "dark store" concept 
stores. (This format trades purely on a delivery customer base and no traditional bricks and mortar shopfront exists.)
Sales have been steady and in line with expectations. In addition, the Ireland business which comprises five company-owned 
and one franchised restaurant was fully integrated into the UK business. This unit delivered pleasing results and further 
work on menu alignment and supply chain integration will deliver additional efficiencies. 

While GBK's disappointing financial performance over the past year is largely attributable to testing trading conditions, 
we recognise that fundamental operational improvements need to be made to return the business to profitability. Among the 
key strategic imperatives we will undertake in the forthcoming period are:
- focus on customer satisfaction (the quality of food and condition of our restaurants);
- re-establish a leading position in online delivery;
- improve operational standards;
- review our sites to ensure we are optimally aligned with our consumers and reinstitute the restaurant revamp
  programme; and
- stabilise and support the leadership. Following the departure of a layer of management, new leaders have been
  appointed, which will improve engagement with staff, and re-establish GBK's high performance culture and discipline.

Supply chain
The Group's integrated strategic Supply Chain division comprises its Logistics and Manufacturing operations, which are
managed and measured independently. Revenue grew 9% to R4.3 billion (2017: R4.0 billion), while operating profit
increased 12% to R509 million (2017: R455 million). The operating profit margin improved to 11.8% (2017: 11.4%). The
three-week work stoppage which took place in the Logistics operation and certain Manufacturing plants during the year 
impacted on profitability and margins in the short term, but triggered a drive for efficiencies which will enhance the 
business.

Logistics
This division grew revenue by 11% to R3.8 billion (2017: R3.4 billion). Operating profit decreased 17% to R104 million
(2017: R125 million), while the operating margin declined to 2.7% (2017: 3.6%). 

The Longmeadow distribution centre, commissioned late in 2016, continued to create efficiencies, with the division's
second half performance improving on the first half. During the year, we also commissioned a satellite Logistics
cross-dock facility in Polokwane. Notwithstanding these capacity enhancements, constraints in our Western Cape and Free 
State regions still exist and corrective action has been prioritised for the year ahead.

Capital expenditure of R10 million (2017: R32 million) was incurred primarily on fleet upgrades.

Manufacturing
Revenue for the period rose by 24% to R2.9 billion (2017: R2.3 billion). Operating profit grew by 23% to R405 million
(2017: R330 million), while the operating margin declined to 14.2% (2017: 14.3%). 

Strong growth was reported by Famous Brands' Cater Chain and Cheese Company, both plants benefiting from significant
capital expenditure investments in the previous year which facilitated take-on of new and previously outsourced products.
When we acquired Lamberts Bay Foods in August 2016, we committed to implement strategies to improve inventory management, 
reduce capacity constraints and ramp up production to meet demand. Good progress has been achieved in all respects and 
during the review period we successfully turned around the business. 

The Manufacturing division incurred capital expenditure of R31 million (2017: R29 million) on machinery, equipment and
plant upgrades.

Associates
The Group holds strategic stakes in the following entities: UAC Restaurants Limited - more popularly known as Mr Bigg's 
(49%), By Word of Mouth (49.9%) and Sauce Advertising (35%).

    - UAC Restaurants Limited
      During the period our key focus was on achieving higher levels of operational compliance and reducing historical
      debt in the operation. A range of factors had a negative impact on results, including the weak economy, security
      challenges in the north and south east of the country and significantly higher electricity tariffs. The devaluation 
      of the local currency resulted in revamp delays and the cancellation of certain projects. Our programme to repair 
      the Mr Bigg's network resulted in us closing 17 non-performing sites, bringing the network to 99 restaurants.

      Our continued priority focus in the forthcoming period will be on consolidation, building strong local market
      identification and regaining a voice among consumers for the Mr Bigg's brand. We remain optimistic that our remedial 
      efforts will start delivering good results in the forthcoming year.

    - By Word of Mouth  
      In our 2017 report we outlined our goal to enter the premium home meal replacement retail space through high-end
      standalone stores offering bespoke products. This goal was achieved in March 2018, with the launch of our first 
      "Frozen for You" retail store in Dainfern Square, Gauteng. The concept comprises a retail offering (product is 
      bought in store) or an online component (ordered online and delivered to the customer's door). The premium product 
      has been favourably received by consumers and pending availability of suitable sites, plans are in place to open 
      additional retail outlets over the course of the year.

Issues facing our industry 
- Drought
  In light of the sustained drought in the Eastern and Western Cape it is incumbent on our business to respond
  appropriately to the water shortage specifically, but also to improve awareness of all utilities usage across the 
  Group in all regions. During the review period we introduced programmes in our Western Cape distribution and 
  manufacturing operations which reduced water consumption by 50%. While the nature of our business requires ongoing 
  water consumption, we will continue to be receptive and responsive to opportunities to sensitise behaviour and limit 
  usage wherever practicable.

- Food safety
  Our food safety assurance
  Our customers' safety and their satisfaction with our products is of primary importance to us, and we treat food
  safety as a key priority at all times. In this regard, our limited range of ready-to-eat meat products is manufactured 
  in a world-class FSSC 22000-certified processing plant and we have strong internal processes to manage any potential 
  food safety risks to the consumer. Our operations are managed by highly qualified food technologists and specialists 
  and our manufacturing processes are regularly audited to ensure compliance with relevant regulations and prevention of 
  potential food contamination.

  On 4 March 2018 the Minister of Health made a public announcement regarding the outbreak of Listeriosis in South Africa 
  and evidence of the Listeria bacteria in the products of certain other local manufacturers.

  All the meat served in our restaurants is cooked at high temperatures prior to consumption which mitigates against
  the risk of bacterial infection (including Listeria). Furthermore, on 5 March following the Minister of Health's
  announcement, management took voluntary precautionary measures to withdraw all other ready-to-eat meat products 
  (i.e. those not cooked at high temperatures during the cooking process in our restaurants), from the menu with 
  immediate effect. These products were also immediately isolated at restaurant level across the restaurant network, 
  thus no ready-to-eat meat products produced prior to 5 March have been sold or consumed by customers in our restaurants. 
  Management is therefore satisfied that there is no risk to the health or safety of our consumers. In line with the 
  Group's routine and uncompromising food safety regime all menu items that have been withdrawn will not be reintroduced 
  until further notice, and only once we are entirely satisfied that the products meet specified internal and external 
  standards.

Changes to the composition of the Board 
With effect from 9 November 2017, Messrs Panagiotis (Peter) Halamandaris, Theofanis Halamandaris and Periklis Halamandaris 
retired from the Board. We would like to record our appreciation for their vital contribution to the Company since it was 
founded by them in 1971, as well as to the Board over the past 23 years since the business listed in 1994. While they have 
retired from the Board, their legacy at Famous Brands will endure. 

Other Board changes made during the period were:
- resignation of Mr RM Kgosana, independent non-executive director (effective 29 September 2017);
- appointment of Mr CH Boulle as interim chairman of the Audit Committee (effective 2 October 2017);
- appointment of Mr Nicolaos (Nik) Halamandaris as non-independent non-executive director (effective 9 November 2017);
- appointment of Ms Emma Mashilwane as independent non-executive director (effective 1 December 2017);
- retirement of Mr Kevin Hedderwick, independent non-executive director (effective 16 January 2018). After an
  accomplished 18-year career with the Group, Kevin retired during the period. The Board wishes to thank him for the 
  enormous role he played in building Famous Brands into the business it is today; and
- reappointment of Mr Ian Isdale as Company Secretary (effective 1 March 2018 to 28 February 2019).

Subsequent events
In 2005 the Group acquired Trufruit (Pty) Ltd, to produce fruit juice in various formats for the Group's restaurant
network and third-party customers. The business continued to be managed by the founder, Evan Antel. Subsequent to the 
year ended 28 February 2018, and with effect from 1 April 2018, the Group concluded a joint venture agreement with 
Mr Antel, whereby a 30% stake in the business was sold back to him. Mr Antel will manage the new entity, Cool Site 
Trading (Pty) Ltd. The nature of business will remain unchanged. The transaction outlined will not have a material 
impact on the performance of the Group.

Looking forward
The Group's strategic intent is clearly defined: to grow capability, capacity and scale across branded franchised,
manufacturing and food services spaces. To achieve this, we will apply an uncompromising filter to unclutter the 
business and advance targeted growth. 

- Brands
  A further 211 restaurants are planned for opening in the current financial year and 306 revamps are planned. 

  South Africa 
  Growth will be driven by our Leading brands. In line with our strategy to allocate investment in proportion to the
  anticipated return, we will commit further resources to entrenching our leadership position in the categories we 
  trade in through supporting sustained groundbreaking campaigns, expanding our home delivery offering and enhancing 
  our digital and social media presence. We will continue to monitor our site portfolio to ensure our footprint is 
  optimally aligned with our market.

  AME  
  Our focus will remain on growing the footprint and contribution of our four Leading brands in the region (Debonairs
  Pizza, Steers, Wimpy and Mugg & Bean). Priority initiatives will include trialling a delivery capability, strengthening 
  the marketing function and aligning social media platforms with our SA brands. The Mr Bigg's operation will remain the 
  subject of ongoing rehabilitation.
  
  UK 
  Consumer sentiment is likely to remain subdued in the inflationary and uncertain economic and political Brexit
  environment. Declining foot traffic in malls will be exacerbated by the oversupply of restaurants as landlords continue 
  to replace failing retailers with more food offerings; online competition will increase due to the low barriers to entry 
  and labour supply challenges may arise as tighter immigration rules make it more difficult for operators to hire EU 
  citizens. 
  
  Despite this context, the remedial measures outlined in this report are expected to deliver improvements in the GBK
  business. With the new management and intensified oversight of the business in place we are satisfied that we can reverse
  recent declines. In the year ahead our focus will be on those key initiatives which will ensure optimal allocation of our 
  resources and deliver the best return on investment. We are optimistic that improvements will be derived from re-engaging 
  with our customers and our staff, re-establishing GBK's gold standard, and streamlining and investing in core operations.
  
  We recognise that GBK's contribution to profitability may take longer than initially anticipated, but we remain
  optimistic that our long-term investment strategy was sound and that the operation will add value to the Group in time. 

- Logistics
  We have commenced developing and will implement a logistics upgrade programme to address short, medium and long-term
  logistics capacity needs, with immediate focus on the Western Cape and Free State.

Manufacturing
Further investment in our meat, cheese and coffee plants will be made, aimed at improving efficiencies and enhancing
capacity. Following a successful pilot trial in three of our plants, we will also be rolling out a standardised system
and approach to managing all facilities, which will leverage additional efficiencies.

Prospects
Trading conditions are expected to remain challenging. Intense competition will remain a key feature, while sustained
demand from consumers for value will continue to squeeze margins.

A degree of optimism is evident in South Africa following recent leadership changes in government, the strengthening of 
the local currency, the decline in interest rates and stabilisation of our credit rating status. However, consumers'
discretionary spend will remain constrained with the recent VAT increase to 15%, low wage increases, personal
indebtedness and high levels of unemployment persist in our economy. 

We are optimistic about our AME operations and recognise that with time and patience we will derive good returns from
investments made over recent years.

In the UK market, operational improvements introduced in the GBK business are expected to have a positive impact on
performance, although we are mindful that the headwinds facing that economy and category specifically will remain
challenging.

We, the Board and management are resolute in our growth strategy to focus on the three key pillars of the business, namely
Brands, Logistics and Manufacturing. Our priority will be to ensure that the projects we expend the most energy and
effort on deliver a proportional return on investment. Our resilient business model, high performance culture and 
steadfast focus on the fundamentals of our business will continue to serve us well.

Dividend
Following the acquisition of a number of businesses in the 2017 financial year, undertaken to meet robust growth targets, 
the Group's gearing is substantially higher than in prior years. In the interim results announcement published on 
30 October 2017, it was advised that the Board and management were reviewing the options available to ensure that the
allocation of capital reserves would optimise the return on investment for shareholders in the future. In this light and 
following a capital structure review to ensure appropriate levels of debt and prudent capital allocation practices, the 
Board has resolved that no dividend is declared for the period under review.

A live webcast of the Group's results presentation will be held at 11:30 (SAST) on 24 May 2018.

To pre-register link to: http://themediaframe.eu/links/famousbrands180524.html

On behalf of the Board

SL Botha                           DP Hele
Independent Chairman               Chief Executive Officer

24 May 2018


Audit opinion
These summarised consolidated financial statements for the year ended 28 February 2018 have been derived from the
audited consolidated financial statements of Famous Brands Limited for the year ended 28 February 2018, on which the
auditors, Deloitte & Touche, 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 are available 
on the company's website (www.famousbrands.co.za).

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.


Summarised consolidated statement of financial position
as at 28 February 2018
                                                                                      2018              2017    
                                                                    Note              R000              R000    
ASSETS                                                                                                          
Non-current assets                                                               3 983 129         4 315 513    
Property, plant and equipment                                          5         1 339 789         1 397 601    
Intangible assets                                                      6         2 547 845         2 818 755    
Investments in associates                                                           80 926            83 083    
Deferred tax                                                                        14 569            16 074    
Current assets                                                                   1 922 662         1 570 940    
Inventories                                                                        436 102           454 656    
Current tax assets                                                                  99 132            38 174    
Trade and other receivables                                                        670 440           649 290    
Cash and cash equivalents                                                          716 988           428 820    
Total assets                                                                     5 905 791         5 886 453    
EQUITY AND LIABILITIES                                                                                          
Equity attributable to owners of Famous Brands Limited                           1 505 598         1 383 509    
Non-controlling interests                                                          126 429           101 805    
Total equity                                                                     1 632 027         1 485 314    
Non-current liabilities                                                          3 014 460         3 407 380    
Borrowings                                                            14         2 513 489         2 740 744    
Derivative financial instruments                                                    32 370           196 469    
Lease liabilities                                                                   86 355            80 122    
Deferred tax                                                                       382 246           390 045    
Current liabilities                                                              1 259 304           993 759    
Non-controlling shareholder loans                                                    7 500            22 130    
Derivative financial instruments                                                   159 555            23 381    
Lease liabilities                                                                   11 125             6 548    
Trade and other payables                                                           770 720           790 891    
Provisions                                                             7            32 851                 -    
Shareholders for dividends                                                           2 221             2 221    
Current tax liabilities                                                              8 068            10 109    
Borrowings                                                            14           267 071           114 853    
Bank overdrafts                                                                        193            23 626    
Total liabilities                                                                4 273 764         4 401 139    
Total equity and liabilities                                                     5 905 791         5 886 453    


Summarised consolidated statement of profit or loss and other comprehensive income
for the year ended 28 February 2018
                                                                                      2018              2017           %    
                                                                    Note              R000              R000      change    
Revenue                                                                          7 023 095         5 720 363          23    
Cost of sales                                                                   (3 254 591)       (2 948 744)                
Gross profit                                                                     3 768 504         2 771 619          36    
Selling and administrative expenses                                             (2 878 246)       (1 833 571)         57    
Operating profit before non-operational items                                      890 258           938 048          (5)   
Non-operational items                                                  9          (372 592)         (120 755)                
Operating profit including non-operational items                                   517 666           817 293         (37)   
Net finance costs                                                                 (251 345)         (131 557)                
Finance costs                                                                     (304 687)         (184 389)                
Finance income                                                                      53 342            52 832                
Share of profit of associates                                                        3 906             4 314                
Profit before tax                                                                  270 227           690 050         (61)   
Tax                                                                               (206 876)         (235 246)                
Profit for the year                                                                 63 351           454 804         (86)   
Other comprehensive income, net of tax:                                                                                     
Exchange differences on translating foreign operations*                             21 440          (245 603)                
Pre-tax exchange differences on translating foreign operations                      22 754          (252 681)                
Tax effect on translating foreign operations                                        (1 314)            7 078                
Movement in hedge accounting reserve*                                               (3 920)           (2 704)                
Effective portion of fair value changes of cash flow hedges                         (5 445)           (3 867)                
Tax on movement in hedge accounting reserve                                          1 525             1 163                
Total comprehensive income for the year                                             80 871           206 497                
Profit for the year attributable to:                                                                                        
Owners of Famous Brands Limited                                                     21 618           413 747         (95)   
Non-controlling interests                                                           41 733            41 057                
                                                                                    63 351           454 804                
Total comprehensive income attributable to:                                                                                 
Owners of Famous Brands Limited                                                     39 138           165 440                
Non-controlling interests                                                           41 733            41 057                
                                                                                    80 871           206 497                
Basic earnings per share (cents)                                                                                            
Basic                                                                8.1                22               414         (95)   
Diluted                                                              8.1                22               413         (95)   
* This item may be reclassified subsequently to profit or loss.


Summarised consolidated statement of changes in equity
for the year ended 28 February 2018
                                                                                      2018              2017    
                                                                                      R000              R000    
Balance at the beginning of the year                                             1 485 314         1 550 599    
Issue of capital and share premium                                                  13 635             6 121    
Share-based payment charge to profit or loss                                        26 600            26 306    
Put-options over non-controlling interests*                                         42 716           (73 233)    
Total comprehensive income for the year                                             80 871           206 497    
Payment of dividends                                                               (17 182)         (227 512)    
Non-controlling interest arising on business combination                                 -             1 033    
Change in ownership interests in subsidiaries                                           73            (2 929)    
Contingent consideration                                                                 -            (1 568)    
Balance at the end of the year                                                   1 632 027         1 485 314    
* Related to put-options forfeited during the year (2017: related to put-options raised on 
  non-controlling interests).


Summarised consolidated statement of cash flows
for the year ended 28 February 2018
                                                                                      2018              2017    
                                                                                      R000              R000    
Cash generated before working capital changes                                    1 135 121           931 852    
Working capital changes                                                            (12 201)         (136 590)   
Decrease/(increase) in inventories                                                  18 768           (91 118)    
Increase in trade and other receivables                                            (12 730)          (16 033)    
Decrease in trade and other payables                                               (18 239)          (29 439)    
Cash generated from operations                                                   1 122 920           795 262    
Net interest paid                                                                 (207 440)          (84 628)    
Tax paid                                                                          (274 386)         (214 715)    
Cash available from operating activities                                           641 094           495 919    
Dividends paid                                                                     (17 182)         (227 164)    
Net cash inflow from operating activities                                          623 912           268 755    
Cash utilised in investing activities                                                                           
Additions to property, plant and equipment                                        (192 588)         (282 440)    
Intangible assets acquired                                                         (38 531)          (40 807)    
Proceeds from disposal of property, plant and equipment                             29 171            10 004    
Net cash outflow on acquisition of subsidiaries                                     (2 589)       (1 897 991)    
Net cash outflow on acquisition of associate                                             -           (50 573)    
Dividends received from associate                                                    3 149             4 550    
Net cash outflow utilised in investing activities                                 (201 388)       (2 257 257)    
Cash flow from financing activities                                                                             
Borrowings raised                                                                        -         2 484 979    
Borrowings repaid                                                                 (106 667)                -    
Underwriting and participation fees paid on borrowings raised                            -           (62 073)    
Repayment of amounts due to non-controlling shareholders                           (14 630)           (2 315)    
Proceeds from issue of equity instruments of Famous Brands Limited                  13 635             6 121    
Acquired from non-controlling interests in subsidiaries                                  -            (2 929)    
Net cash (outflow)/inflow from financing activities                               (107 662)        2 423 783    
Net increase in cash and cash equivalents                                          314 862           435 281    
Foreign currency effect                                                             (3 261)          (35 971)    
Cash and cash equivalents at the beginning of the year                             405 194             5 884    
Cash and cash equivalents at the end of the period*                                716 795           405 194    
* Comprises cash and cash equivalents of R717 million (2017: R429 million) and bank overdrafts of R0.2 million 
  (2017: R24 million).


Primary (business units) and secondary (geographical) segment report
for the year ended 28 February 2018
                                                                                      2018              2017           %    
                                                                    Note              R000              R000      change    
Revenue                                                                                                                     
Brands*                                                                            851 021           780 887           9    
Supply Chain                                                                     4 327 642         3 983 297           9    
Manufacturing                                                                    2 850 530         2 300 418          24    
Logistics                                                                        3 779 812         3 415 746          11    
Eliminations                                                                    (2 302 700)       (1 732 867)         33    
Corporate**                                                                         10 878             2 800                
South Africa                                                                     5 189 541         4 766 984           9    
International                                                                    1 833 554           953 379          92    
United Kingdom (UK)                                                              1 580 947           704 182         125    
Rest of Africa and Middle East (AME)                                               252 607           249 197           1    
Total                                                                            7 023 095         5 720 363          23    
Operating profit before non-operational items                                                                               
Brands*                                                                            431 170           426 755           1    
Supply Chain                                                                       509 114           454 671          12    
Manufacturing                                                                      405 171           330 103          23    
Logistics                                                                          103 943           124 568         (17)   
Corporate                                                                          (49 873)          (48 463)                
South Africa                                                                       890 411           832 963           7    
International                                                                         (153)          105 085        (100)   
UK                                                                                 (44 671)           55 468        (181)   
AME                                                                                 44 518            49 617         (10)   
Total                                                                              890 258           938 048          (5)   
UK                                                                                 (68 592)                -                
Impairment                                                             5           (68 592)                -                
Corporate                                                                         (758 315)         (483 244)                
Non-operational items, excluding impairment                            9                 -          (100 755)                
Impairment                                                             6          (304 000)          (20 000)                
Net finance costs                                                                 (251 345)         (131 557)                
Share of profit of associates                                                        3 906             4 314                
Tax                                                                               (206 876)         (235 246)                
Profit for the year                                                                 63 351           454 804         (86)   
*  Previously categorised as Franchising and Development.
** Includes restaurant development revenue generated through a non-wholly owned subsidiary established during the 
   year under review.


Statistics and ratios
                                                                                      2018              2017           %    
                                                                                      R000              R000      change    
Basic earnings per share (cents)                                                                                            
Basic                                                                                   22               414         (95)   
Diluted                                                                                 22               413         (95)   
Headline earnings per share (cents)                                                                                         
Basic                                                                                  393               428          (8)   
Diluted                                                                                392               426          (8)   
Ordinary shares (000)                                                                                                       
in issue                                                                            99 977            99 862                
weighted average                                                                    99 872            99 842                
diluted weighted average                                                           100 231           100 092                
Operating profit margin (%)                                                           12.7              16.4                
Net/debt equity (%)                                                                    126               165                
Net asset value per share (cents)                                                    1 632             1 487                


Notes to the summarised consolidated financial statements
for the year ended 28 February 2018

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 framework concepts 
    and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and its
    interpretations adopted by the International Accounting Standards Board in issue and effective for the Group at 
    28 February 2018, 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 as a minimum contains 
    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 are available on our website at www.famousbrands.co.za.

    The Group's audited Annual Financial Statements and the summarised consolidated financial statements as at and for
    the year ended 28 February 2018 were prepared on the going concern basis. The accounting policies applied in the
    presentation of the summarised consolidated financial statements are in terms of IFRS and are consistent with those 
    applied for the year ended 28 February 2017, except for new standards that became effective for the Group's financial 
    period beginning 1 March 2017, refer note 3.

    The consolidated financial statements were prepared on the historical cost basis, under the supervision of
    Kelebogile (Lebo) Ntlha, 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 2017, none of which had a material impact on the Group.

                                                                    2018            2017    
                                                                    R000            R000    
4.  Capital expenditure and commitments                                                     
    Invested                                                     231 119         326 274    
    Property, plant and equipment                                192 588         285 467    
    Intangible assets                                             38 531          40 807    
    Authorised, not yet contracted*                              205 648         426 163    
    Property, plant and equipment                                178 346         419 760    
    Intangible assets                                             27 302           6 403    
    * Authorised capital expenditure has reduced in line with the revised GBK store roll-out 
      plan.

                                                                    2018            2017    
                                                                    R000            R000    
5.  Property, plant and equipment                                                           
    Opening balance                                            1 397 601         286 448    
    Additions                                                    192 588         285 467    
    Acquired in business combinations                                  -         992 605    
    Government grant                                                   -          (2 992)    
    Foreign currency translation                                  21 102         (64 489)    
    Disposals                                                    (21 496)         (5 091)    
    Depreciation                                                (181 414)        (94 347)    
    Impairment                                                   (68 592)              -    
    Closing balance                                            1 339 789       1 397 601    
    
    Impairment
    An impairment of R69 million (2017: Rnil) was recognised during the year under review related to various categories 
    of property, plant and equipment at a GBK restaurant level.

    To determine the impairment to be processed, the affected property, plant and equipment was valued using value-in-use 
    calculations at a site level. The recoverable amount for sites where impairment indicators were identified was determined 
    to be R18 million. The key assumptions used in calculating the recoverable amount include the discount rate and the 
    long-term growth rate. The long-term (beyond 10 years) growth rate is 2.2%, but some sites with leases expiring in 
    less than 10 years have varied growth rate assumptions which range between 3% and 6%. The discount rate used in measuring 
    value-in-use was 5% per annum. Refer to page 3 for events leading to the impairment. Judgement has been exercised in 
    determining which stores to impair. Should other stores' performance not be in line with that forecast, additional 
    impairments may arise. Similarly, if impaired stores perform better than expected, the impairment recognised may be 
    reversed.

    Sensitivity analysis
    An increase/(decrease) of 1% in the discount rate would result in a decrease/(increase) in the impairment charge of 
    R15 million (R18 million). An increase/(decrease) in the long-term growth rate of 1% in the forecast profits will 
    result in a decrease in the impairment charge of R6 million (increase R6 million).

6.  Intangible assets
    Opening balance                                            2 818 755       1 095 888    
    Additions                                                     38 531          40 807    
    Acquired in business combinations                                  -       1 888 402    
    Foreign currency translation                                  21 920        (186 787)    
    Disposals                                                     (5 963)         (3 955)    
    Amortisation                                                 (21 398)        (15 600)    
    Impairment                                                  (304 000)              -    
    Closing balance                                            2 547 845       2 818 755    
    
    Impairment
    The GBK business acquired in the prior period was assessed as a cash-generating unit. The goodwill amounting to 
    R40 million (2017: R342 million) and brand name amounting to R1.38 billion (2017: R1.37 billion) which arose on 
    the acquisition of the business was allocated to this cash-generating unit's carrying amount for the purpose of 
    its impairment assessment. The recoverable amount of the cash-generating unit was determined on the basis of fair 
    value less cost to sell, which amounted to R1.9 billion. The fair value used in determining the recoverable amount 
    of the cash-generating unit is based on an income approach valuation method including a present value discounting 
    technique using level 3 inputs. Key assumptions used in the valuation includes the probability that the 
    cash-generating unit will achieve the set profit forecasts which includes like-for-like growth rates, the discount 
    rate and the store roll-out plan.

    Like-for-like growth rates have been based on past performance adjusted for current and expected economic conditions. 
    The discount rate is determined based on current market rates and observable input, adjusted for risk associated 
    with the business. The future profits were forecast over a period of 10 years applying like-for-like sales growth 
    rates which start at 0% increasing to 3% over the 10-year period. A long-term growth rate of 2.2% per annum was 
    set for the years subsequent to the forecast. A discount rate of 8.0% (2017: 9.3%) was applied.

    An impairment of R304 million was recognised during the current year for the cash-generating unit. The impairment 
    was recognised as a result of the unexpected poor GBK performance and continued subdued market in the UK.

    Sensitivity analysis on fair value less costs to sell
    - An increase (decrease) of 1% in the discount rate will result in a decrease (increase) in the recoverable amount 
      of R299 million (R393 million).
    - A decrease (increase) in the like-for-like growth of 1% in the forecast sales will result in a decrease (increase)
      in the recoverable amount of R637 million (R663 million).
    - An increase (decrease) of 1 store per year in the roll-out plan results in an increase (decrease) in the 
      recoverable amount of R59 million (R53 million).

    Changes in key assumptions as well as the actual cash flows achieved compared to those forecast can result in further 
    impairments in the GBK business. The model is reliant on a certain level of economic recovery post-Brexit.

                                                                    2018            2017 
                                                                    R000            R000 
7.  Provisions
    Opening balance                                                    -               - 
    Amounts raised during the year                                32 851               - 
    Closing balance                                               32 851               - 
    The provisions relate to property-related expenses at GBK restaurant level.

    The provision has been made for the lower of the costs of closure or the cost of continued operation of certain 
    stores in GBK. This amounted to R33 million (2017: Nil). The key assumptions in determining the provision include 
    the expected time until the lease can be assigned and the discount to standing rent which will have to be paid 
    in order to attract an assignee.

    Judgement has been exercised in determining which stores require property-related provisions. Should other stores' 
    performance not be in line with that forecast, additional provisions may be required. Similarly if the identified 
    stores perform better than anticipated, the provision raised may be reversed.

8.  Basic and headline earnings per share

                                                                        2018                                  2017
                                                           Gross      Income                      Gross       Income          
                                                          amount         tax        Net          amount          tax         Net    
                                                            R000        R000       R000            R000         R000        R000        
8.1 Basic earnings per share
    Profit attributable to equity holders                                                      
    of Famous Brands Limited                              21 618           -     21 618         413 747            -     413 747    
    Basic and diluted earnings                            21 618           -     21 618         413 747            -     413 747    
    Basic earnings per share (cents)                                                                                                
    Basic                                                                            22                                      414    
    Diluted                                                                          22                                      413    

                                                            2018                                             2017
                                                           Gross      Income                      Gross       Income
                                                          amount         tax        Net          amount          tax         Net    
                                                Note        R000        R000       R000            R000         R000        R000
8.2 Headline earnings per share                                                                                                     
    Basic earnings                               8.1      21 618           -     21 618         413 747            -     413 747    
    Adjustments:                                         370 881         479    371 360          12 829          268      13 097    
    Profit on disposal of property, plant and                                  
    equipment                                             (1 711)        479     (1 232)           (958)         268        (690)    
    Gain on bargain purchase                                   -           -          -          (6 213)           -      (6 213)    
    Impairment                                           372 592           -    372 592          20 000            -      20 000    
    Headline earnings and diluted headline earnings      392 499         479    392 978         426 576          268     426 844    
    Headline earnings per share (cents)                                                                                             
    Basic                                                                           393                                      428    
    Diluted                                                                         392                                      426    

                                                                          2018          2017    
                                                                          R000          R000    
                                                                                                
9.  Non-operational items                                                                       
    Impairment*                                                        372 592        20 000    
    Arising from business acquisitions                                       -       100 755    
    Derivative loss on call option utilised to hedge purchase price          -        33 253    
    Foreign exchange loss on initial recognition of investment               -        23 295    
    Professional fees                                                        -        50 420    
    Gain on bargain purchase                                                 -        (6 213)    
                                                                                                
                                                                       372 592       120 755    
    * The impairment is not deductible for tax purposes. This has impacted the Group's 
      effective tax rate.

10. 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.

11. Financial instruments
    Accounting classifications and fair values
    The table below sets out the Group's 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.

                                                                             2018           2018             2017          2017     
                                                                         Carrying           Fair         Carrying          Fair     
                                                                           amount          value           amount         value    
                                                            Level            R000           R000             R000          R000    
    Financial assets                                                                                                               
    Loans and receivables:                                                                                                         
    Trade and other receivables                                           568 514        568 514          518 116       518 116    
    Cash and cash equivalents                                             716 988        716 988          428 820       428 820    
                                                                        1 285 502      1 285 502          946 936       946 936    
    Financial liabilities                                                                                                          
    Measured at amortised cost:                                                                                                    
    Trade and other payables                                              599 941        599 941          648 162       648 162    
    Shareholders for dividends                                              2 221          2 221            2 221         2 221    
    Lease liabilities                                                       7 446          7 446            6 290         6 290    
    Non-controlling shareholder loans                                       7 500          7 500           22 130        22 130    
    Borrowings                                                          2 780 560      2 780 560        2 855 597     2 855 597    
    Bank overdraft                                                            193            193           23 626        23 626    
    Fair value through profit or loss:                                                                                             
    Derivative financial instruments (put options                                   
    over non-controlling interests)                             3         176 186        176 186          211 239       211 239    
    Derivative financial instruments (foreign currency                              
    swaps and foreign exchange contracts)                       2           1 028          1 028              102           102    
    Designated as hedge items                                                                                                      
    Derivative financial instruments (interest-rate swaps)      2          14 711         14 711            8 509         8 509    
                                                                        3 589 786      3 589 786        3 777 876     3 777 876    

    Level 3 sensitivity information
    The fair values of the level 3 financial liabilities of R176 million (2017: R211 million) 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 profits targets and the discount rates applied. 
    An increase/(decrease) of 1% in the discount rate would result in a decrease/(increase) of R3 million (2017: 
    R7 million). An increase/(decrease) of 10% in the profit forecasts would result in an increase/(decrease) of 
    R17 million.

    Movements in level 3 financial instruments carried at fair value
    The following table illustrates the movements during the year of level 3 financial instruments carried at fair 
    value:

                                                               2018          2018            2017        2017     
                                                           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                 211 239       211 239         124 821     124 821    
    Initial recognition in equity for new acquisitions            -             -          73 233      73 233    
    Unwinding of discount                                    13 481        13 481          14 813      14 813    
    Derecognition in equity                                 (42 716)      (42 716)              -           -    
    Remeasurements                                           (5 818)       (5 818)         (1 628)     (1 628)    
    Carrying value at end of the year                       176 186       176 186         211 239     211 239    

                                                                             2018            2017    
                                                                             R000            R000    
12. Business combinations                                                                            
    Summary of cash outflow on acquisition of subsidiaries                                           
    BC Hospitality (Pty) Ltd (Lupa Osteria)                                     -           3 958    
    Chilango (Pty) Ltd (Salsa Mexican Grill)*                               2 589           4 985    
    Lamberts Bay Foods Limited                                                  -          73 530    
    GBK Restaurants Limited (GBK)                                               -       1 815 518    
    Total cash outflow on acquisition of subsidiaries                       2 589       1 897 991    
    * Relates to contingent consideration.    

12.1 Purchase price allocation
     There were no business combinations during the year under review. Details of the fair value of identifiable net 
     assets acquired in the prior year are set out below:
                                                                                   Salsa        Lamberts          Gourmet     
                                                                   Lupa          Mexican             Bay           Burger     
                                                                Osteria            Grill           Foods          Kitchen*     
     2017                                                          R000             R000            R000             R000    
     Acquisition date                                        1 May 2016      31 May 2016      1 Aug 2016       7 Oct 2016    
     Interest acquired                                              51%              51%            100%             100%    
     Fair value of assets and liabilities acquired                                                                           
     Property, plant and equipment                                    -            2 566          48 188          941 813    
     Intangible assets                                                -                -          16 277        1 495 809    
     Inventory                                                        -              137          38 361           25 034    
     Trade and other receivables                                      -               34          36 932          122 622    
     Provision for doubtful debt                                      -                -               -          (14 332)    
     Receivables from shareholders                                    -                -               -                -    
     Cash and cash equivalents                                       42            1 197               8           11 275    
     Current tax assets                                               -                -           1 314                -    
     Borrowings                                                       -                -               -         (427 301)    
     Deferred lease liabilities                                       -                -               -                -    
     Deferred tax                                                     -                -         (16 218)        (315 146)    
     Trade and other payables                                        89           (1 952)        (45 110)        (375 471)    
     Bank overdraft                                                   -                -          (3 538)               -    
     Current tax liabilities                                         (5)               -               -           (2 130)    
     Amounts due to shareholders                                      -                -               -                -    
     Net assets acquired                                            126            1 982          76 213        1 462 173    
     Non-controlling interests measured at their share    
     of the fair value of net assets                                (62)            (971)              -                -    
     Amount capitalised                                              64            1 011          76 213        1 462 173    
     Goodwill/(bargain purchase price gain)                       3 936            7 760          (6 213)         364 620    
     Purchase price                                               4 000            8 771          70 000        1 826 793    
     Contingent consideration                                         -           (2 589)              -                -    
     Cash and cash equivalents                                      (42)          (1 197)          3 530          (11 275)    
     Cash outflow on acquisition of subsidiary                    3 958            4 985          73 530        1 815 518    
     * Transaction costs related to the GBK acquisition are disclosed in non operating items (refer note 9).

12.2 Goodwill and gain on bargain purchase
     There was no goodwill arising from the year under review. Goodwill recognised in the prior year arose from 
     anticipated scale and merger benefits related to franchising, manufacturing and logistics capability.

     Gain on bargain purchase arising from the Lamberts Bay Foods acquisition is attributable to fair value adjustments 
     relating to Property, plant and equipment and Intangible assets.

12.3 Performance of acquired businesses
     There were no businesses acquired during the year under review. The table below sets out the performance of 
     businesses acquired in the prior year.
                                                                       Salsa                         Gourmet       Gourmet     
                                                          Lupa       Mexican       Lamberts           Burger        Burger     
                                                       Osteria         Grill      Bay Foods          Kitchen       Kitchen    
     2017                                                 R000          R000           R000             R000        GBP000    
     Results since acquisition to reporting date                                                                              
     Revenue                                             3 768        15 029        165 721          598 848        35 241    
     Operating profit/(loss)                                95         3 678           (339)          36 926         2 173    
     Proforma results from beginning of the 
     reporting period to the reporting date                                            
     Revenue                                             3 971        19 498        271 429        1 532 785        81 014    
     Operating profit/(loss)                               173         4 535         (4 765)          67 015         3 542    

13.  UK business segmental results
     The table below sets out the performance of the UK business segment in GBP and ZAR respectively.

                                                        2018          2017      % change    
     Revenue                              £000        92 064        40 722           126    
     Operating (loss)/profit              £000        (2 689)        3 217          (184)   
     Operating (loss)/profit margin*         %          (2.9)          7.9           (11)    
     Revenue                              R000     1 580 947       704 182           125    
     Operating (loss)/profit              R000       (44 671)       55 468          (181)   
     Operating (loss)/profit margin*         %          (2.8)          7.9           (11)    
     * The difference in operating margin is due to translation of property-related expenses at 
       transaction date rate versus average rate.

14. Borrowings
                                                                                                                                                       
                                                                                                                                                       
                                                                                      Interest rate           2018    2017        2018         2017    
                                            Currency   Maturity date      Nature      Margin %       Rate        %       %        R000         R000    
    Unsecured                                                                                                                                          
    Long-term borrowings                                                                                                     2 513 489    2 740 744    
    Short-term portion of borrowings                                                                                           267 071      114 853    
                                                                                                                             2 780 560    2 855 597    
    Interest is paid quarterly in arrears.                                                                                                             
    The company has unlimited borrowing                                                                                                   
    powers in terms of its Memorandum of                                                                                                  
    Incorporation.                                                                                                                        
    Terms of repayment                                                                                                                                 
    Syndicated facility: 3-year bullet           ZAR          Sep 19    variable          2.35    3-month     7.16    7.36     720 000      720 000    
                                                                                                    JIBAR                                              
    Syndicated facility: 4-year bullet           ZAR          Sep 20    variable          2.55    3-month     7.16    7.36     720 000      720 000    
                                                                                                    JIBAR                                              
    Syndicated facility: 5-year amortising       ZAR          Sep 21    variable          2.45    3-month     7.16    7.36     853 333      960 000    
                                                                                                    JIBAR                                              
                                                                                                                             2 293 333    2 400 000    
    Syndicated facility: revolving credit*       GBP       11 Oct 19    variable          2.15    3-month     0.52    0.34     422 799      485 553    
                                                                                                    LIBOR                                              
    Syndicated facility: revolving credit*       GBP       11 Oct 19    variable          2.15    1-month     0.49              65 046            -    
                                                                                                    LIBOR                                              
    Transaction costs                                                                                                          (37 727)     (55 035)    
    Interest accrued                                                                                                            37 109       25 079    
                                                                                                                             2 780 560    2 855 597    
    Maturity analysis - capital                                                                                                                        
    Payable within one year                                                                                                    267 071      114 853    
    Payable between two and five years                                                                                       2 513 489    2 740 744    
                                                                                                                             2 780 560    2 855 597    
    * Relates to the £30 million facility referred to below.
    
    Sensitivity analysis
    A change of 1% in interest rates at the reporting date would have increased/(decreased) profit or loss by 
    R28 million (2017: R10 million).
    
    Interest risk management
    The Group utilises interest rate swap contracts to hedge its exposure to the variability of cash flows arising from 
    unfavourable movements in interest rates.
    
    Facilities
    Total ZAR overdraft facility in place: R80 million (2017: R190 million). Unutilised portion at year-end: R80 million 
    (2017: R166 million).
    
    Total GBP borrowings facility in place: £30 million (2017: £30 million). Unutilised portion at year-end: £nil 
    (2017: £nil).

    Guarantees
    Famous Brands Limited, Famous Brands Management Company (Pty) Ltd, Mugg and Bean Franchising (Pty) Ltd, Venus 
    Solutions Limited, Famous Brands UK Limited, GBK Franchises Limited, Lamberts Bay Foods Limited, Famous Brands 
    Logistics Company (Pty) Ltd, GBK Restaurants Limited, Gourmet Burger Kitchen Limited and GBK Retail Limited have 
    guaranteed in terms of the syndicated loan agreement:
    - Punctual performance by the Group of amounts due in the syndication agreement.
    - Immediate payment of amounts due which the Group has not paid.
    - To indemnify the finance parties against any cost, loss or liability it incurs as a result of the Group not 
      paying amounts that are due.
    
    Borrowing restrictions
    There are certain restrictions on the financial activities of other covenant subsidiaries within the Group, 
    who are not obligors, such as restrictions on the ability to raise additional financing.

    Underwriting and Participation fees
    The unamortised portion of underwriting and participation fees paid have been recognised in the above long-term 
    borrowings balance. The amortised portion is included within finance costs.

15. Capital management
    The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going 
    concern, to provide sustainable returns for shareholders, benefits for other stakeholders and to maintain, 
    over time, an optimal structure to reduce the cost of capital.
    
    The capital structure of the Group consists of cash and cash equivalents, borrowings (note 14) and equity as 
    disclosed in the statement of financial position. There are no externally imposed capital requirements.
    
    Financial covenants
    The Group's borrowings (refer note 14) are subject to the following financial covenants, which the Group is 
    in compliance with:
                                                                   2018            2017    
    Gross debt/EBITDA*                                            <3.00           <3.25    
    Interest cover                                                >3.25           >3.00    
    Free cash flow to debt service                                >1.20           >1.20    
    * EBITDA excludes non-operational items.
    
    Gearing
    The Group's gearing ratio is set out below:

                                                                   2018            2017    
                                                                   R000            R000    
    Borrowings                                                2 780 560       2 855 597    
    Bank overdrafts                                                 193          23 626    
    Cash and cash equivalents                                  (716 988)       (428 820)    
    Net debt                                                  2 063 765       2 450 403    
    Equity                                                    1 632 027       1 485 314    
    Gearing ratio**                                                126%            165%    
    ** Calculated as net debt divided by equity.

Shareholder spread
16. Contingent liabilities
    - The Company and its South African subsidiaries have issued an unlimited suretyship in favour of FirstRand Bank 
      Limited to secure the banking facilities entered into by certain subsidiary companies.
    - Guarantees issued by banks in favour of trade creditors totalled R7 million (2017: R9 million).
    - The Group's borrowings are unsecured, no pledges have been issued.
    - Refer to note 14 for other guarantees and facilities in the Group.

17. Subsequent events
    In 2005 the Group acquired Trufruit Pty Limited, to produce fruit juice in various formats for the Group's 
    restaurant network and third-party customers. The business continued to be managed by the founder, Evan Antel. 
    Subsequent to the year ended 28 February 2018, and with effect from 1 April 2018, the Group concluded a joint 
    venture agreement with Mr Antel, whereby a 30% stake in the business was sold back to him. Mr Antel will manage 
    the new entity, Cool Site Trading Pty Limited. The nature of business will remain unchanged.

                                                                              2018                                              2017                                                  
                                                                      % of                                                % of                      
                                                      Number         total                       % of        Number      total                     % of    
                                                   of share-        share-          Number     issued     of share-     share-        Number     issued    
                                                    holdings      holdings       of shares    capital      holdings   holdings     of shares    capital                        
1 - 10 000                                             6 690         94.17       3 826 686       3.83        10 326      95.10    10 780 911      10.80    
10 001 - 50 000                                          270          3.80       6 095 321       6.10           359       3.31     7 806 411       7.82    
50 001 - 100 000                                          42          0.59       3 003 218       3.00            56       0.52     3 803 295       3.81    
100 001 - 1 000 000                                       82          1.15      26 744 202      26.75           104       0.96    30 157 526      30.20    
Over 1 000 000                                            20          0.28      60 308 008      60.32            13       0.12    47 314 292      47.38    
Total                                                  7 104        100.00      99 977 435     100.00        10 858     100.00    99 862 435     100.00    
Distribution of shareholders                                                                                                                               
Individuals                                            5 816         81.87      24 716 778      24.72         8 424      77.58    29 742 785      29.78    
Insurance companies                                       10          0.14         328 100       0.33            12       0.11       203 682       0.20    
Investment trusts                                        555          7.81       9 259 598       9.26         1 333      12.28    11 577 385      11.59    
Other companies and corporate bodies                     723         10.18      65 672 959      65.69         1 089      10.03    58 338 583      58.42    
Total                                                  7 104        100.00      99 977 435     100.00        10 858     100.00    99 862 435     100.00    
Shareholder type                                                                                                                                           
Non-public shareholders                                    9          0.13      10 908 120      10.91            17       0.16    34 703 520      34.75    
Directors and associates                                   9          0.13      10 908 120      10.91            13       0.12    23 450 356      23.48    
Government Employees Pension Fund (holders > 10%)          -             -               -          -             4       0.04    11 253 164      11.27    
Public shareholders                                    7 095         99.87      89 069 315      89.09        10 841      99.84    65 158 915      65.25    
Total                                                  7 104        100.00      99 977 435     100.00        10 858     100.00    99 862 435     100.00    
Fund managers greater than 5% of the issued shares                                                                                                         
Coronation Fund Managers                                                        14 448 186      14.45                              6 075 661       6.08    
Public Investment Corporation                                                    9 022 596       9.02                              8 839 996       8.85    
LGM Investments                                                                  8 367 790       8.37                                                      
Total                                                                           31 838 572      31.84                             14 915 657      14.93    
Beneficial shareholders greater than 5% of the                                                                                    
issued shares (excluding directors)                                                                                               
Government Employees Pension Fund                                               10 230 408      10.23                             11 253 164      11.27    
Coronation Fund Managers                                                         8 492 531       8.49                                                      
LGM Investments                                                                  7 755 676       7.76                                                      
Halamandaris Theofanis Mr                                                        7 017 598       7.02                                                      
Total                                                                           33 496 213      33.50                             11 253 164      11.27    
Total number of shareholdings                          7 104                                                 10 858                                        
Total number of shares in issue                                                 99 977 435                                        99 862 435               


Administration

Directors 
NJ Adami, SL Botha (Independent Chairman), CH Boulle, N Halamandaris, JL Halamandres, 
DP Hele (Chief Executive Officer), ET Mashilwane, K Ntlha (Financial Director), 
BL Sibiya, T Skweyiya

Company Secretary
IWM Isdale

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

Transfer secretaries
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
Rosebank Towers, 15 Biermann Avenue
Rosebank, 2196, South Africa
PO Box 61051, Marshalltown, 2107

Sponsor
The Standard Bank of South Africa Limited
Registration number: 1969/017128/06

Auditors
Deloitte & Touche

Contact information
Tel: +27 11 315 3000
investorrelations@famousbrands.co.za
companysecretary@famousbrands.co.za

Website address: www.famousbrands.co.za
Date: 24/05/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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