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FAMOUS BRANDS LIMITED - Voluntary performance update

Release Date: 16/08/2018 17:40
Code(s): FBR     PDF:  
Wrap Text
Voluntary performance update

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


The Group’s results for the six months ending 31 August 2018
will be published on or about 29 October 2018.

In the interim, a brief voluntary performance update for the
business is provided below.

This update is based on information available to date related
to the five-month period ended 31 July 2018 for the Group’s
South Africa (SA) and rest of Africa and Middle East (AME)
regions. The United Kingdom (UK)operation information relates
to our Gourmet Burger Kitchen (GBK) Restaurants Limited business
for the 22-week period ended 29 July 2018. Collectively this
reporting period is referred to as the “review period” below.

Difficult trading conditions persisted across all our markets
during the review period, with common features including
intensified competitor activity and margin pressure in the
context of economic hardship and constrained discretionary
spend.   Despite this, segments of the South African consumer
base showed early indications of optimism and improved
confidence in the wake of recent positive developments in
government leadership and outlook for the country.

The results for the review period are in line with the trend
reported in the year-end results announcement published on 24
May 2018, reflecting a solid performance delivered by the SA and
AME business, while the GBK operation underperformed the Board
and management’s expectations.


The Group’s restaurants trade in three primary markets, SA, AME
and the UK.
As predicted in the February 2018 year-end results announcement,
growth in the local market was driven by our Leading (mainstream)
brands, underpinned by prudent commitment of resources to
entrench their leadership position in their respective trading
categories. In addition, we continued to gain momentum from our
strategic focus on upweighting the portfolio’s online, digital
and social media capability.

Growth reported by our Signature (niche) brands was primarily
derived from opening new restaurants and entering new markets.

Across both our Leading and Signature brands, system-wide sales*
increased 6.7% (2017: 7%), while like-for-like sales** grew by
2.8% (2017: 1.8%). Independently, Leading brands’ system-wide
sales rose 6.6%, with like-for-like sales up 3.6%. Signature
brands’ system-wide sales increased 7.5%, while like-for-like
sales declined by 2.9%.

In the February 2018 year-end results announcement we stated
that we remain optimistic about our AME operations and are
satisfied that with time and patience we will derive good returns
from investments made over recent years. Our focus during the
review period was on growing the contribution of our four Leading
brands in the region (Debonairs Pizza, Steers, Wimpy and Mugg &
Bean). System wide sales rose 10.9% in Rand terms (2017: decrease
of 0.2%).

We are pleased to report that across the Group’s restaurants in
SA and the AME region, combined system-wide sales increased by
7.1% (2017: 6.3%).

During the review period, system-wide sales (Sterling) in the
UK decreased by 6.4% (2017: increase of 12.1%), while like-for-
like sales declined by 10.6% (2017: decrease of 2.6%).      The
business reported an operating loss of GBP2.24 million (2017:
operating loss of GBP680 000).

We are mindful that GBK’s contribution to Group profitability
has taken longer than initially anticipated, hampered by the
adverse trading environment.

The Group’s integrated Logistics and Manufacturing businesses
reported volume growth in line with management’s expectations.
The sustained drive to improve efficiencies continued to enhance
performance across the operations.


The Group expects that its results for the full six months ending
31 August 2018 will be stronger than those reported in the prior
comparable period to 31 August 2017 (“prior comparable period”).
In the context of the difficult trading conditions it is
anticipated that the SA and AME operations will report a solid
improvement in PBIT compared to the prior comparable period,
however, GBK will report a larger operating loss than the prior
comparable period.

If required, a Trading Statement will be issued in accordance
with the Listings Requirements of the JSE Limited as soon as the
Board is satisfied that a reasonable degree of certainty exists
with regard to the Group’s results for the six months ending 31
August 2018.

The financial information on which this performance update is
based has not been reviewed or reported on by the Group’s
external auditors.

16 August 2018

The Standard Bank of South Africa Limited

* System-wide sales refer to sales reported by all restaurants
across the network, including new restaurants opened during the
** Like-for-like sales refer to sales reported by all restaurants
across the network, excluding restaurants opened or closed during
the period.

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