FAMOUS BRANDS LIMITED - Voluntary Performance Update

Voluntary Performance Update

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


VOLUNTARY PERFORMANCE UPDATE

The Group’s results for the six months ended 31 August 2019 will be published on or about 28 October
2019. In the interim, it is appropriate to provide shareholders with a brief voluntary performance
update on the business.

This update pertains to the six months ended 31 August 2019 for the Group’s South Africa (“SA”) and
rest of Africa and Middle East (“AME”) regions. The United Kingdom (“UK”) operation’s narrative
relates to the Gourmet Burger Kitchen Restaurants Limited (“GBK”) business for the 26-week period
ended 25 August 2019. Collectively this reporting period is referred to below as the “review period”.

Difficult trading conditions persisted across the Group’s primary markets in SA and the UK, featuring
subdued consumer sentiment and spend, and intense competitor activity and margin pressure.

Revenue reported for the review period is in line with management’s expectations. Growth was
recorded across the Brands division in SA and AME, however the Supply Chain division fared less well.
The Manufacturing business reported a marginal decline in sales, and while the Logistics business
delivered revenue growth, Logistics profits will be negatively impacted by both internal and external
factors as discussed below.

BRANDS

The Group’s restaurants trade in three markets, SA, AME and the UK. The brand portfolio is
categorised into Leading (mainstream) and Signature (niche) brands.

SA

Leading brands’ system-wide sales*# grew 6.0%, while like-for-like sales** rose 4.0%. Signature
brands’ system-wide sales? improved 14.0%, largely reflecting the opening of a number of new stores
in the network during the period; like-for-like sales increased by 1.4%.

AME

System-wide sales in this region improved by 10.3% (2018: 12.8%).

GBK UK

The results reported by GBK for the review period are in line with management’s projections. As
anticipated, the business continued to benefit from the extensive range of operational improvements
implemented, together with the Company Voluntary Arrangement (CVA) restructuring programme
completed over the past year.

System-wide UK sales (Sterling) decreased by 12.5% (2018: decrease of 6.8%), reflecting the closure
of stores as part of the CVA process. Like-for-like sales rose by 8.6% (2018: decrease of 9.7%).

* System-wide sales refer to sales reported by all restaurants across the network, including new restaurants
opened during the period.

** Like-for-like sales refer to sales reported by all restaurants across the network, excluding restaurants opened
or closed during the period.
#
    Leading brands' sales refer to sales of the Leading brands trading in SA.

?
 Signature brands' sales refer to SA sales as well as sales cross-border only where the brand is a Joint Venture
partnership and the brand is not managed by its AME management team.

AME sales are denominated in Rand terms.

SUPPLY CHAIN

Management cautioned at the year-end that softer sales and persistently lower food inflation had
started to impact on this component of the business.

Manufacturing

The loss of a major client at Lamberts Bay Foods resulted in a 39% decline in sales at the plant. This
contributed significantly to the marginal decline in revenue for the Manufacturing division relative to
the prior comparable period.

Logistics

This division produced weaker results relative to the prior comparable period, recording a 3.0%
increase in revenue, but a material decline in margins. This performance is attributable to several
factors, including flat case sales in the domestic market and lower export sales; planned once-off
expenditure related to the relocation of the Free State facility; reallocation of internal costs to this
division; and higher fuel costs. Furthermore, in the context of constrained consumer income,
sustained low food inflation inhibited opportunities to increase prices. This, together with the Group’s
deliberate strategy to trim margins to maintain the competitiveness of our Supply Chain also served
to erode profits.

OUTLOOK

On balance, the Group will deliver satisfactory results for the review period.

If required, a Trading Statement will be issued in accordance with the Listings Requirements of the JSE
Limited as soon as the Board of Directors of Famous Brands (“Board”) is satisfied that a reasonable
degree of certainty exists with regard to the Group’s results for the six months ended 31 August 2019.

For the purposes of comparison to the prior comparable period, supplementary information regarding
the operating profit numbers will be published in the results announcement for the review period and
will include the impact of IFRS 16 Leases.

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

11 September 2019
Midrand

Sponsor
The Standard Bank of South Africa Limited

Date: 11/09/2019 09:14:00
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