| Wed 27 Oct 2004, 10:06 | | INTERIM RESULTS |
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FAMOUS BRANDS LIMITED - UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX
MONTHS ENDED 31 AUGUST 2004
FAMOUS BRANDS LIMITED
Unaudited Consolidated Interim Results
for the six months ended 31 August 2004
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR ISIN: ZAE000053328
(`Famous Brands` or `the company`)
Operating profit +144%
Gross revenue +35%
Headline EPS +69%
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2004
Consolidated balance sheet
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2004 2003 2004
R000`s R000`s R000`s
Assets
Non-current assets 201 900 61 907 202 872
Tangible fixed assets 21 565 13 849 15 835
Intangible fixed assets 175 124 41 394 180 254
Deferred taxation 1 500 1 463 2 114
Loans 3 711 5 201 4 669
Current assets 100 882 67 879 82 477
Inventory 32 507 24 152 27 287
Accounts receivable 53 060 31 366 61 009
Bank/(overdraft) 15 315 12 361 (5 819)
Total assets 302 782 129 786 285 349
EQUITY AND LIABILITIES
Share capital and reserves 151 601 90 031 135 561
Ordinary shareholders`
interest 151 458 89 888 135 418
Outside shareholders`
interest 143 143 143
Non-current liabilities 75 576 11 898 86 801
Long-term liabilities 75 576 11 898 86 801
Deferred taxation - - -
Current liabilities 75 605 27 857 62 987
Accounts payable 45 672 19 533 40 939
Short-term portion of
long-term liabilities 22 195 1 948 18 939
Shareholders for dividend 155 155 155
Taxation 7 583 6 221 2 954
Total equity and
liabilities 302 782 129 786 285 349
Consolidated cash flow statement
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2004 2003 2004
Net cash flow from
operating activities 36 192 10 833 3 672
Cash generated by
operations 43 892 18 339 50 003
Change in working capital 7 462 (5 005) (17 008)
Net interest paid (6 638) (179) (2 997)
Taxation paid (5 122) (2 322) (22 333)
Dividends paid (3 402) - (3 993)
Net cash flow from
investing activities (7 089) (6 028) (100 914)
Expended on non-current
assets (8 832) (8 571) (7 816)
Proceeds from disposal of
non-current assets 785 1 730 3 891
Investment in subsidiaries - - (95 360)
Decrease/(increase) in
loans receivable 958 813 (1 629)
Net cash inflow from
financing activities (7 969) (2 255) 81 612
(Decrease)/increase in
share capital and reserves - (3 556) 35 396
(Decrease)/increase in
long-term liabilities (7 969) 1 301 46 216
Change in cash and cash
equivalents 21 134 2 550 (15 630)
Cash and cash equivalents
at beginning of period (5 819) 9 811 9 811
Cash and cash equivalents
at end of period 15 315 12 361 (5 819)
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 29
February 2004, except as detailed below in note 2.
2. The group has changed its accounting policy with regard to the consolidation
of the Steers Share Incentive Trust (`the Trust`) in order to comply with the
requirements as set by the JSE Securities Exchange of South Africa and AC132
Consolidated Financial Statements.
With effect from 1 March 2004 the Trust has been treated as a wholly owned
subsidiary in the consolidated statements. All intercompany loans and
transactions are eliminated on consolidation. The shares held by the Trust are
treated as treasury shares and are disregarded for purposes of determining
earnings per share, headline earnings per share, diluted earnings per share and
diluted headline earnings per share.The comparative results for the period ended
31 August 2003 have been accordingly restated.
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2004 2003 2004
R000`s R000`s R000`s
Increase in net profit
for the period
Gross 82 200
Tax - - -
Net 82 - 200
Restatement of opening
retained earnings
in respect of prior year
adjustment
Gross 531 331 331
Tax - - -
Net 531 331 331
Consolidated income statement
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2004 2003 Change 2004
R000`s R000`s % R000`s
Gross revenue 220 757 163 472 35 362 988
Operating profit before
depreciation 44 539 18 779 137 48 461
Depreciation (7 987) (3 828) (7 641)
Operating profit 36 552 14 951 144 40 820
Net interest
received/(paid) (6 638) (179) (2 997)
Net income before
taxation 29 914 14 772 103 37 823
Taxation (10 365) (5 144) (13 848)
Net income after
taxation 19 549 9 628 103 23 975
Attributable to outside
shareholders - - -
Attributable profit 19 549 9 628 103 23 975
Adjusted for:
Amortisation of
goodwill 3 283 537 2 786
Impairment loss on
intangible fixed
assets - - 1 468
Profit on disposal of
tangible fixed assets (540) (552) (1 183)
Profit on disposal of
group owned outlets - - (291)
Headline earnings 22 292 9 613 132 26 755
Interest 422 - 220
Fully diluted headline
earnings 22 714 9 613 136 26 975
Weighted average numbers
of shares in issue 85 043 249 61 995 604 68 076 917
Weighted average diluted
numbers of shares in
issue 90 977 040 61 995 604 69 655 869
Operating margin - % 16.6 9.1 81 11.2
Earnings per share
- cents 22.9 15.5 48 35.2
Fully diluted earnings
per share - cents 21.9 15.5 41 34.7
Headline earnings
per share - cents 26.2 15.5 69 39.3
Fully diluted headline
earnings per share
- cents 24.9 15.5 61 38.7
Consolidated changes in equity
Six months Six months Year
ended ended ended
31 August 31 August 29 February
2004 2003 2004
R000`s R000`s R000`s
Restated balance at
start of period 135 418 80 860 80 860
Net loss not recognised
in the income statement
- currency translation
differences (107) (600) (820)
Attributable earnings 19 549 9 628 23 975
Dividends (3 402) - (3 993)
Net movement in share
capital - - 35 396
Balance at end of period 151 458 89 888 135 418
Segment report
Gross revenue
Six months ended
31 Aug 31 Aug
2004 2003 %
R000`s R000`s growth
Franchising 72 480 31 677 128.8
Food Services 148 789 132 609 12.2
Management Services 15 241 11 174 36.4
Inter Divisional
Transactions (15 754) (11 988) 31.4
220 756 163 472 35.0
Segment report (continued)
Operating profit before taxation
Six months ended
31 Aug 31 Aug
2004 2003 %
R000`s R000`s growth
Franchising 24 509 6 078 303.2
Food Services 10 655 8 464 25.9
Management Services 611 586 4.3
Inter Divisional
Transactions 777 (177) (539.0)
36 552 14 951 144.5
Commentary
Overview: Famous Brands, Africa`s leading Quick Service Restaurant (QSR)
franchisor, has reported outstanding results for the six months ended 31 August
2004. The group is represented via a repertoire of premium brands including
Steers, Wimpy, Debonairs Pizza, FishAways, House of Coffees, Brazilian and ESP
Coffee Shops, and Whistle Stop.
The 1 044 branded restaurants under franchise are supported by the group`s
centralised Food Services Division, which supplies the franchise network with a
wide range of products including sauces, butchery and bakery products and dry
goods.
Financial Results: Gross revenue for the review period increased 35% to R220.8
million from R163.5 million, while operating profit improved 144% to R36.6
million from R15.0 million. Headline earnings per share grew 69% to 26.2 cents,
up from 15.5 cents in the prior period.
It should be noted that results for the six months ended 31 August 2004 are not
directly comparable with the same period last year due to inclusion in the
current period of earnings derived from the acquisition of the Pleasure Foods
business.
The group continued to benefit from extremely favourable trading conditions
characterised by low food inflation, reduced interest rates and enhanced
disposable income.
The Famous Brands best-in-their-class product offerings enjoy appeal across the
total QSR and casual dining spectrum and continue to benefit from the demand for
convenience, sustained shift to home meal replacement, and growth in consumption
by the emerged middle class.
Franchising Division: Despite operating in a densely traded, competitive
environment, the group`s brands have turned in another excellent performance.
The franchising division reported gross revenue of R72.5 million, an improvement
of 129% from R31.7 million. Operating profit increased 303% to R24.5 million
from R6.08 million.
A comprehensive review of the architecture of the Steers, Wimpy and Debonairs
Pizza brands has been undertaken to ensure that these brands, which will
spearhead the group`s growth into the future, remain contemporary, relevant and
differentiated in categories where there are high degrees of parity.
Significant progress has also been achieved regarding the group`s emerging brand
portfolio, with specific reference to the Coffee brands, namely House of Coffees
and Brazilian Coffee Shops, and FishAways. Substantial investment was made in
terms of people, processes and marketing, in order to optimise the potential of
these brands.
At present, 55 restaurants across the Famous Brands portfolio are currently
under construction and will commence trading over the next three months, timed
to capitalise on the QSR industry`s key trading period.
Management is confident that the favourable environmental factors, aspirational
nature of the group`s brands, and strategic brand stewardship model will ensure
sustained organic growth from existing restaurants and the opportunity for
numeric growth of up to approximately 80 new restaurants per annum across the
group over the next three years.
With regard to international expansion, the group`s strategy remains focused on
retaining dominance in Africa and growing its network within existing markets.
Food Services Division: Gross revenue in the Food Services Division increased
12.2% from R132.6 million to R148.8 million, while operating profit improved 26%
to R10.7 million from R8.5 million.
Key to the rationale for the acquisition of Pleasure Foods are the synergies to
be extracted from backward integrating the food supply chain, which was
previously outsourced, into the group`s Food Services Division.
During the review period several expansion projects designed to enhance the
group`s manufacturing, warehousing and distribution capacity were undertaken,
aimed at absorbing the former Pleasure Foods business.
New rented warehousing of 5 000 m2 is currently under construction; the existing
meat processing facility will be relocated to a newly acquired 2 500 m2
facility; and extensions to the bakery are in the planning process. Furthermore,
an additional sauce production line has been commissioned. It is anticipated
that capex totalling R20 million will be invested in the aforementioned
projects.
To date, significant progress has been made regarding take-on of the sauce
manufacturing component of the former Pleasure Foods business, with benefits
anticipated to accrue in the short term.
Additionally, substantial advancements are being achieved in the area of
supplier rationalisation, aimed at enhancing the franchisee profitability model.
After concerted re-engineering, Pouyoukas Foods is starting to show signs of
recovery and should contribute to profits in the forthcoming fiscal year.
Conversion to Hazard Analysis Critical Control Points (HACCP) compliance is on
target and will be in place prior to formal legislation of the standard in 2005.
Empowerment: Reflecting the group`s commitment to transformation, a Black
Economic Empowerment (BEE) task team, represented at Executive Committee level,
has been established. This body is mandated to assess the business across key
BEE criteria, namely: ownership, management, employment equity and procurement.
Prospects: Management is confident that the group has the capability and
capacity to complete full integration of the former Pleasure Foods business by
the first quarter of 2006, some 18 months earlier than was originally envisaged.
At current values and excluding the contribution of further new restaurant
growth, this integration should significantly enhance turnover of the group`s
Food Services Division.
Notable cost savings in the areas of administration and office accommodation are
currently being extracted and further synergies in other sectors of the business
will flow through over time.
In line with conventional trading patterns, the group will deliver an enhanced
performance in the forthcoming six months based on the industry`s traditionally
strong holiday trading period.
Management is confident that the group will maintain its current level of
earnings.
Dividends: The Board of Directors has resolved to declare a final dividend
(number 23) of 8 cents per ordinary share. The last date to trade in order to
participate in the dividend will be Friday, 12 November 2004. The shares will
commence trading `Ex` dividend from Monday, 15 November 2004. The dividend will
be payable to all shareholders recorded in the books of the Company at the close
of business on Friday, 19 November 2004 (`record date`). The dividend will be
payable on Monday, 22 November 2004. No dematerialisation or rematerialisation
of share certificates may take place between
Monday, 15 November 2004 and Friday, 19 November 2004, both days inclusive.
On behalf of the Board
P Halamandaris T Halamandaris
Chairman Chief Executive Officer 27 October 2004
Directors
P Halamandaris (Chairman), T Halamandaris (Chief Executive Officer), KA
Hedderwick, JL Halamandres*, HR Levin*, P Halamandaris (junior)*, B Sibiya*
*Non-executive
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) Limited
(Registration number 2000/007239/07)
11 Diagonal Street, Johannesburg 2001
PO Box 4844, Johannesburg 2000
