| Mon 17 May 2004, 9:27 | | Results For The Year Ended 29 Feb 04 |
|
Famous Brands Limited - Audited Group Results For The Year Ended 29
Release Date: 17/05/2004 07:00:45 Code(s): FBR
FAMOUS BRANDS LIMITED - AUDITED GROUP RESULTS FOR THE YEAR ENDED 29
FEBRUARY 2004
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code FBR ISIN code ZAE0000053328
("Famous Brands" or "the company")
AUDITED GROUP RESULTS FOR THE YEAR ENDED 29 FEBRUARY 2004
* Gross revenue +24%
* Operating profit +70%
* Headline EPS +47%
OVERVIEW
On the tenth anniversary as a JSE Securities Exchange listed company, Famous
Brands Limited is proud to report a performance that provided exceptional
returns to shareholders and culminated in the realisation of a vision penned in
2000. With over 1 000 branded outlets under franchise, Famous Brands is
undoubtedly one of Africa"s leading franchise success stories. Competing in the
demanding Quick Service Restaurant ("QSR") sector, Famous Brands is represented
via its best in class brands of Steers, Wimpy, Debonairs Pizza, FishAways, House
of Coffees Coffee Shops, Brazilian Coffee Shops and Whistle Stop restaurants. In
addition the Group, through its centralised procurement and production
operations, provides the franchised network with a wide range of products,
ranging from bakery products, butchery products and sauces.
FINANCIAL RESULTS
The macro environment experienced this past year has certainly been one of the
more favourable in recent times. Characterised by low food inflation and low
interest rates, which translated into enhanced disposable income for consumers,
environmental factors served to provide the context for extremely pleasing
results. Gross revenue for the period under review increased 24% from R292,0
million to R363,0 million. Net income after taxation increased by 47% to R 24,0
million. Headline earnings per share of 38,2 cents reflect a 47% increase over
the previous period.
SEGMENT REPORT
Gross revenue
2004 2003 Growth
R000 R000 %
Franchising 83 751 56 656 48
Food Services 280 928 239 514 17
Corporate Services 19 696 16 221 21
Less: Inter segment revenue (21 387) (20 335) 5
Total 362 988 292 056 24
Operating profit
2004 2003 Growth
R000 R000 %
Franchising 22 941 10 899 +100
Food Services 17 289 13 232 31
Corporate Services 711 104 +100
Eliminations (121) (201) (40)
Total 40 820 24 034 70
FRANCHISING DIVISION
The Group"s philosophy of promoting brand stewardship and encouraging
competition between brands continues to deliver exceptional results. The
Franchising Division reported revenue of R83,8 million an improvement of 48%
from R56,7 million in the prior period. Operating profit increased 110% to R22,9
million from R10,9 million.
Having conducted intensive market research over the past year the Group is
satisfied that the opportunities for sustained growth in the QSR market are
substantial. Currently the Group"s brands are accessible to a relatively limited
portion of the potential consumer audience, but as more South Africans enter the
mainstream economy, the Group is confident that it will be able to capitalise on
these opportunities. By maximising on the trend towards convenience and quality
home-meal replacement, the Group foresees strong potential for organic growth
from existing restaurants. Numeric growth of restaurants is also far from
saturation, with the Group planning to add a further 90 new sites across its
brand portfolio during the forthcoming fiscal year.
As at 29 February 2004, the Group"s franchised network was as follows:
South Africa Rest of Africa Total
Steers 296 40 336
Wimpy 368 16 384
Debonairs Pizza 152 27 179
FishAways 33 1 34
House of Coffees 35 - 35
Brazilian Coffee Shops 13 - 13
Whistle Stop 34 2 36
Church"s Chicken 12 1 13
Market Cafe 10 - 10
Total 953 87 1 040
FOOD SERVICES DIVISION
Gross revenue in the Food Services Division improved 17% from R239,5 million to
R280,9 million, while operating profit increased 31% to R17,3 million up from
R13,2 million.
Key to the rationale for the acquisition of Pleasure Foods are the synergies to
be extracted from backward integrating the food supply chain into the Famous
Brands food services business. By supplying product from within the group, it is
envisaged that this division has the potential to double its current gross
revenue. A specialised task team representing all key parties has been appointed
to carefully manage the backward integration of the Wimpy and Whistle Stop
supply chain to ensure that quality and standards are not compromised. Supply of
product is scheduled to commence towards the latter part of this calendar year,
with full implementation expected over a two to three year period.
ACQUISITIONS
During the year under review, the Group acquired the entire issued share capital
of Creative Coffee Franchise Systems (Pty) Ltd, a company licensed to develop
franchised coffee outlets under the House of Coffees, Brazilian Coffee Shop and
Illy Boutique branded trademarks.
In addition, the acquisition of the entire issued share capital of Pleasure
Foods (Pty) Ltd, comprising the Wimpy and Whistle Stop trademarks and related
franchise business, was approved by the company in a general meeting on the 12
November 2003.
It is with great satisfaction that the Group is able to report that the
integration of the acquired entities has taken place seamlessly, due primarily
to the fact that the businesses acquired represent strong alignment with the
group"s core competencies.
CHANGE OF NAME
With the evolution of the company over recent years, culminating in the Pleasure
Foods acquisition, and the transformation of the Group into a widely diversified
yet highly integrated business, the demand grew to differentiate the corporate
name, Steers Holdings, from the Steers brand. Hence management elected to adopt
a name which more accurately reflects the full diversity of the holding
company"s brand portfolio, namely Steers, Wimpy, Debonairs Pizza, FishAways,
Whistle Stop, House of Coffees, Brazilian and Pouyoukas Foods.
The new company name Famous Brands, is an aspirational name which sums up the
desire not only to be successful, but also to be admired. The Group"s vision for
the future reinforces this: to become a world class integrated food and beverage
company by the year 2008, with a single-minded focus on growth, customers,
quality, leadership and cost management.
EVENTS AFTER BALANCE SHEET DATE
No items subsequent to the end of the year, material to the appreciation of the
results for the period and the financial position of the company as at the end
of the year, have come to the attention of the company or its directors.
PROSPECTS
The Group"s intensive focus over recent years on products, people and processes
continues to pay dividends. The Group"s brands are highly pedigreed and
aspirational, and are positioned to capitalise on those trends which currently
shape our industry: the desire for convenience, the demand for quality in the
light of increasing awareness of the nutritional value of food, and the dramatic
burgeoning of the middle income market. The Group"s competitive advantage rests
in its best-in-class brand repertoire and the strategic imperative of actively
encouraging competition between brands which comprises a cornerstone of our
business model.
The Group continues to refine its franchise system model and benchmark against
industry best practice. The acquisitions undertaken over the past year
complement the inherent strength of the Group"s existing brand portfolio, food
service function and franchise network, and the Group is now in a position to
consolidate and build for the future. Management is confident that performance
will be significantly enhanced in the coming financial period.
DIVIDENDS
The Board of Directors have resolved to declare a final dividend (number 22) of
4,0 cents per ordinary share. The last date to trade in order to participate in
the dividend will be Friday 2 July 2004. The shares will commence trading "Ex"
dividend from Monday 5 July 2004. The dividend will be payable to all
shareholders recorded in the books of the Company at the close of business on
Friday 9 July 2004 ("record date"). The dividend will be payable on Monday 12
July 2004. No dematerialisation or rematerialisation of share certificates may
take place between Monday 5 July 2004 and Friday 9 July 2004, both days
inclusive.
On behalf of the Board
P. Halamandaris T. Halamandaris
Chairman Chief Executive Officer
17 May 2004
CONSOLIDATED INCOME STATEMENT
29 February 28 February
2004 2003 %
R000"s R000"s change
Gross revenue 362 988 292 056 24%
Operating profit 40 820 24 034 70%
Net interest (paid)/received ( 2 997) 112
Net income before taxation 37 823 24 146 57%
Taxation ( 13 848) ( 7 836)
Net income after taxation 23 975 16 310 47%
Attributable to minority shareholders
Attributable profit 23 975 16 310 47%
Adjusted for:
Amortisation of goodwill 2 786 695
Impairment loss on intangible assets 1 468 -
Profit on disposals of non current assets ( 1 474) ( 221)
Headline earnings 26 755 16 784 59%
Weighted average number of shares in issue 70 127 912 64 513 599
Operating margin 11.2% 8.2% 37%
Earnings per share - cents 34.2 25.3 35%
Fully diluted earnings per share - cents 33.7 25.3 33%
Headline earnings per share - cents 38.2 26.0 47%
Fully diluted headline earnings
per share - cents 37.6 26.0 45%
Dividend declared for the period - cents
- interim 6.5 6.0
- final 4.0 -
Total dividend declared for the year 10.5 6.0
CONSOLIDATED BALANCE SHEET
29 February 28 February
2004 2003
R000"s R000"s
ASSETS
Non-current assets 205 246 60 580
Tangible fixed assets 15 835 13 850
Intangible fixed assets 180 254 37 943
Deferred taxation 2 114 2 775
Loans 7 043 6 012
Current assets 88 264 68 218
Inventory 27 287 22 162
Trade and other receivables 60 977 36 244
Bank balances and cash - 9 812
Total assets 293 510 128 798
EQUITY AND LIABILITIES
Share capital and reserves 137 921 83 959
Ordinary shareholders" interest 137 778 83 816
Minority shareholders" interest 143 143
Non-current liabilities 89 287 10 597
Interest bearing borrowings
and provisions 89 287 10 597
Current liabilities 66 302 34 242
Trade and other payables 57 529 29 529
Taxation 2 954 4 713
Bank overdraft 5 819 -
Total equity and liabilities 293 510 128 798
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
29 February 28 February
2004 2003
R000"s R000"s
Balance at beginning of year 81 300 75 515
Change in accounting policies 2 516 2 378
Restated balance 83 816 77 893
Net loss not recognized in the income
statement - currency translation
differences ( 820) ( 2 597)
Attributable profit 23 975 16 310
Dividends ( 4 193) ( 8 387)
Net movement in Share Capital 35 000 597
Ordinary shareholders" interest 137 778 83 816
CONSOLIDATED CASH FLOW
29 February 28 February
2004 2003
R000"s R000"s
Net cash flow from operating activities 3 472 15 127
Cash generated by operations 32 996 31 373
Net interest (paid)/received ( 2 997) 112
Taxation paid ( 22 334) ( 7 984)
Dividends paid ( 4 193) ( 8 374)
Net cash flow from investing activities ( 100 318) ( 15 440)
Expended on non-current assets 8 847 ( 15 918)
Proceeds from disposal of
non-current assets 3 888 478
Investment in subsidiaries (95 359) -
Net cash flow from financing activities 81 215 9 036
Movement in share capital and reserves 35 000 597
Increase in interest bearing borrowings 46 215 8 439
Change in cash and cash equivalents ( 15 631) 8 723
Cash and cash equivalents at
beginning of year 9 812 1 089
Cash and cash equivalents at
end of year ( 5 819) 9 812
Notes
1. These financial statements have been prepared in conformity with South
African Statements of Generally Accepted Accounting Practice, and the accounting
policies are consistent with those applied in the previous year ended 28
February 2003, except as detailed below in note 2.
2. As a result of the acquisition of Pleasure Foods (Pty) Ltd, the company
changed its accounting policy for the recognition of franchise fee income. The
group now acrues franchise fee revenue in the month in which the originating
sale is effected at the franchised outlet, and not in the following month as was
done previously.
3. These financial results have been audited by RSM Betty & Dickson and their
unqualified audit opinion is available for inspection at the company"s
registered office.
Registered Office
478 James Crescent
Midrand 1685
PO Box 2884 Halfway House 1685
E-mail: investorrelations@famousbrands.co.za
Website: www.famousbrands.co.za
Transfer Secretaries
Ultra Registrars (Pty) Ltd
(Registration number 2000/007239/07)
11 Diagonal Street Johannesburg
PO Box 4844 Johannesburg 2000
Directors
P. Halamandaris (Chairman), T. Halamandaris
(Chief Executive Officer), K.A. Hedderwick,
J.L. Halamandres*, H.R. Levin*, P. Halamandaris (jnr)*, B. Sibiya*
* Non-executive
