FINANCIAL RESULTS F19 H1 AGENDA 01 02 03 Key Metrics Progress - - PowerPoint PPT Presentation

FINANCIAL RESULTS

F19 H1

AGENDA

GBK update Outlook for the second six months Questions Key Metrics Progress on F19 H1 plans

(Brands, Hospitality, Logistics, Manufacturing)

Financial results F19 H1

01 02 03 04 05 06

2

KEY METRICS

Strong results

SA and AME business

4

Revenue

5.4%

5

F19 H1 R3.58bn (F18 H1 R3.40bn)

Operating profit before non-operational items

3.9%

Operating loss after non-operational items

6

211.3%

F19 H1 R421.8m (F18 H1 R406.1m) F19 H1 Loss R452.1m (F18 H1 Profit R406.1m)

Cash generated from operations

7

16.6%

F19 H1 R540.4m (F18 H1 R463.0m)

Group under-performed

due to GBK UK

Coega Concentrate

and

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PROGRESS ON F19 H1 PLANS

GROWING BRAND CAPABILITY – SA & AME

F19 H1 BRAND CAPABILITY

DOMESTIC AME SA & AME TOTAL

7.3% 12.8% 7.8% SYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)

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F19 H1 BRAND CAPABILITY

LIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)

DOMESTIC AME SA & AME TOTAL

3.4% 1.0% 3.1%

12

F19 H1 BRAND CAPABILITY

SYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)

SIGNATURE BRANDS LEADING BRANDS

8.6% 7.1%

13

F19 H1 BRAND CAPABILITY

LIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)

SIGNATURE BRANDS LEADING BRANDS

• 2.3%

4.1%

14

2 782

Restaurants

5.7bn

Revenue increase of 33% across the divisions

F19 H1 BRAND CAPABILITY

TOTAL RESTAURANTS OPENED 59 16 4

15

Total

79

Steers Wimpy Debonairs Pizza FishAways Mugg & Bean Mr Biggs GBK Milky Lane Fego Giramundo Wakaberry Signature Brands

630 574 664 257 244 97 100 84 34 6 13 171

TO BE UPDATED WITH INFORMATION FROM DARREN

F19 H1 BRAND CAPABILITY

TOTAL RESTAURANT NUMBERS

16

Total

2 874

Open Debonairs Pizza in Saudi Arabia under license

GROWING

Further entrench home delivery offering across all brands Review Signature brand portfolio

BRAND CAPABILITY

Rapidly grow capability in digital arenas Pipeline of branded offers developed in-house ready to launch

17

Expand tashas footprint in UAE Prioritise Leading brands with resources to drive growth Leading brands to deliver BIG BOLD initiatives Get more entrenched in key AME markets

GOALS

Drive margin improvement on Signature brands

GROWING HOSPITALITY CAPABILITY – SA

Expand home meal replacement space through “bricks” and “clicks” Grow presence in premium corporate market

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HOSPITALITY CAPABILITY

GROWING

GOALS

GROWING LOGISTICS CAPABILITY – SA & EXPORTS

F19 H1 LOGISTICS CAPABILITY

REVENUE GROWTH

7.1% 3.4% 7.7% 10.0% 6.9% 7.9%

6.8%

21

Embark on Project Decade

LOGISTICS CAPABILITY

• Refer to supplementary slides for additional info

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GROWING

GOALS

GROWING MANUFACTURING CAPABILITY

• SA

F19 H1 MANUFACTURING CAPABILITY

REVENUE GROWTH – OWN PLANTS 9.5% 21.2% 4.7%

• 0.6%
• 6.5%

14.2%

11.4%

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Note: Coega Concentrate and KZN Ice cream plant data not provided. Western Cape Bakery closed in July 2017

26.1%

• 7.0%

1.8%

• 5.1%

10.0% 9.5%

F19 H1 MANUFACTURING CAPABILITY

REVENUE GROWTH – JV PLANTS

2.5%

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*New - formerly TruFruit

*

Secure sustainable tomato supply

• r exit

MANUFACTURING CAPABILITY

Leverage Juice Plant Joint Venture

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GROWING

GOALS

Drive new “FoodConnect” partnership New routes to market for LBF Take on previously

• utsourced grated

cheese volumes at FB Cheese Company Focus on efficiencies “Manufacturing Way”

FINANCIAL RESULTS F19 H1

SALIENT FEATURES

HY F 2019 HY F 2018 % Change Revenue (Rm) 3 583.6 3 401.2 5.4 Operating profit before non-operational items (Rm) 421.8 406.1 3.9 Operating (loss)/profit after non-operational items (Rm) (452.1) 406.1 (211.3) Cash generated from operations (Rm) 540.4 463.0 16.6 EPS (cents) (572) 171 (434.5) HEPS (cents) 188 170 10.6 Net debt : equity (%) 133.9 145.3 11.4

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INCOME STATEMENT

Rm HY F 2019 HY F 2018 % Change Revenue 3 583.6 3 401.2 5.4 Gross profit 1 916.2 1 816.9 5.5 Selling and administrative expenses (1 494.4) (1 410.8) (5.9) Operating profit before non-operational items 421.8 406.1 3.9 Non-operational items (873.9)

• Net finance costs

(105.8) (138.2) Share of profit from associates 0.2 1.7 (Loss)/profit before tax (557.7) 269.6 (306.8) Tax 14.1 (77.6) (Loss)/profit for the year (543.6) 192.0 (383.1)

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SEGMENTAL ANALYSIS | OPERATING PROFIT

Rm % of Total HY F 2019 HY F 2018 % Change Brands 52.7 222.5 202.5 9.9 Leading brands 51.8 218.6 193.3 13.1 Signature brands 0.9 3.9 9.2 (58.1) Supply Chain 60.7 256.0 221.1 15.8 Manufacturing 48.1 203.0 184.3 10.1 Logistics 12.6 53.0 36.8 44.2 Corporate (10.4) (44.2) (30.3) (46.0) South Africa 103.0 434.3 393.3 10.4 International (3.0) (12.5) 12.8 (198.2) UK (8.8) (36.8) (6.3) (481.9) AME 5.8 24.3 19.1 27.2 Total Operating Profit before non-operational items 100.0 421.8 406.1 3.9

SEGMENTAL ANALYSIS | OPERATING MARGIN

% HY F 2019 HY F 2018 Brands 51.5 48.8 Leading brands 59.6 55.2 Signature brands 5.9 14.3 Supply Chain 11.4 10.5 Manufacturing 13.8 13.4 Logistics 2.7 2.0 South Africa 16.1 15.6 International (1.4) 1.4 UK (4.9) (0.8) AME 18.0 15.5 Total Group 11.8 11.9

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STATEMENT OF FINANCIAL POSITION

Rm HY F 2019 HY F 2018 % Change

ASSETS Property, plant and equipment 1 166.7 1 465.2 (20.3) Intangible assets 2 236.7 2 844.1 (21.3) Investments in associates 79.9 83.1 (3.6) Inventories 483.7 530.6 (8.9) Trade and other receivables 788.3 798.7 (1.4) Cash and cash equivalents 924.7 493.0 87.6 Other assets 127.6 84.8 51.2 TOTAL ASSETS 5 807.6 6 299.5 (7.8) EQUITY AND LIABILITIES Equity 1 374.9 1 667.2 (17.5) Borrowings 2 765.1 2 900.6 (4.7) Derivative financial instruments 183.8 244.7 (24.9) Lease liabilities 112.3 96.8 15.5 Trade and other payables 970.9 943.5 3.0 Other liabilities 400.6 446.7 (10.1) TOTAL EQUITY AND LIABILITIES 5 807.6 6 299.5 (7.8)

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CASH FLOW

Opening Cash Cash from Operations Forex Financing Activities Interest Tax Capex & Other Investing Activities Dividend Closing cash

716.8 924.7

33

540.4 34.5 (102.1) (100.0) (98.4) (47.6) (18.9)

GBK UPDATE

F19 H1 BRAND CAPABILITY

SYSTEM-WIDE LIKE-FOR-LIKE

• 6.8%
• 9.7%

GBK UK RESTAURANT SALES DECLINE (STERLING)

35

F19 H1 BRAND CAPABILITY

8 WEEK GBK UK RESTAURANT SALES DECLINE SINCE HALF YEAR CLOSE

36

SYSTEM-WIDE LIKE-FOR-LIKE

• 5.3%
• 2.2%

GBK’s property portfolio consists of 98 leases related to 85 trading sites Management, with assistance from Deloitte and CBRE, have categorised each site into one of four categories

37

OVERVIEW OF PROPERTY PORTFOLIO

Total number

• f leases

98

Number of trading sites

85

Number of non trading leases

12

Leases in other GBK entity

3

Category A

Profitable or strategically important sites where GBK expects to see growth

Category B

(B1 & B2)

Under- performing sites which can become viable with appropriate rent reduction

Category C

Sites which cannot be made viable even with a significant rent reduction

Launched on 24 October 2018 Creditors meeting on 9 November 2018 Sites are categorised into four categories, with different terms for each The terms of the CVA will remain in place for three years

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CVA RESTRUCTURE STRATEGY

Category A leases

37

Category B1 leases

16

Category B2 leases

13

Category C leases (17 trading)

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GOALS

KEY IMPERATIVES

GOING FORWARD

Re-establish the gold standard across the entire value chain and customer journey, i.e. product & experience

39

Commence measured new store

• pening programme

(2 sites planned for 2018) Commence targeted refurb and high street brand facelift programme Re-establish the GBK brand assets and leverage Strengthen leadership core team Launch multi-vendor delivery platform (from 1 to 3) Simplify menu design, entry and exit pricing, simplify supply chain Targeted closure programme for distressed sites (6 restaurants in 2018)

OUTLOOK FOR THE SECOND SIX MONTHS

OUTLOOK

41

Local and global trading conditions remain challenging Focus on long term growth levers Appropriate acquisitions will be pursued in brands and upstream manufacturing segments Complete CVA restructure strategy in the UK

IMPERATIVES

FOR THE FUTURE

42

Definitive allocation of corporate costs and admin fees to business units Tighter growth agenda Prospects remain positive

43

OUR STRATEGIC INTENT

Our business is focused on growing capability and capacity to position

• urselves to deliver unique

consumer experiences in the branded franchised and food service space.

OUR VISION

To be the leading innovative branded franchised and food services business in South Africa and selected international markets by 2020.

QUESTIONS

Thank you

SUPPLEMENTARY INFORMATION

South Africa 2 365 AME 338 United Kingdom 164 Other 7

Total Restaurants

2 874

F19 H1 BRAND CAPABILITY

TRADING FOOTPRINT

46

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PROJECT DECADE

First updated Shareholders in May 2018 on Project Decade, which refers to a managed focus on addressing capacity constraints. This is the second update Logistics business requires a planned investment programme over the next decade Need to address immediate capacity constraints and seek out efficiencies over the medium term Margin will improve over time but will be ‘lumpy’ over the reinvestment period We will apprise the market as appropriate

48

INDICATIVE IMPLEMENTATION TIMING

FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026

New WMS Implementation CM DC Expansion MPU Expansion KZN Relocation Gauteng Consolidation ECP Expansion WCP Relocation

03/2018 - 02/2019 03/2019 - 02/2020 03/2020 - 02/2021 03/2021 - 02/2022 03/2022 - 02/2023 03/2023 - 02/2024 03/2024 - 02/2025 03/2025 - 02/2026 Original date Planned date

FS Relocation

• r

Expansion WCP Relocation ECP Expansion FS Relocation or Expansion

Movement

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SHAREHOLDER ANALYSIS

Morgan Stanley Investment Management 4.3% PIC/GEPF 10.2% Panagiotis Halamandaris 7.7% Coronation Fund Managers 14.4% Theofanis Halamandaris 7.0% Other 36.9% LGM Investments 8.4% Periklis Halamandaris 4.0% John Lee Halamandres 2.8% Arisaig Partners 4.3%

As at end August 2018 Source: Sponsor

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DOMESTIC CONSUMER TRENDS

Source: Famous Brands Central Marketing The accelerated growth

• f technology in the

retail space is shifting consumer expectations

• f convenience,

specifically regarding

• nline and mobile
• rdering platforms,

door-to-door delivery and electronic payments Consumers are increasingly knowledgeable about the impact of the food industry on the environment and are starting to hold brands accountable for sourcing practices, materials and ingredients (for example use of plastic straws) The traditional distinction between Quick Service Restaurants and Casual Dining Restaurants is becoming less clear as category blurring

• continues. Home

delivery and third party

• nline ordering

platforms are further contributing to the new definition of ‘eating out’ Consumers continue to seek out value

• ffers as disposable income

remains under pressure. Expressions of value are increasingly complex as, along with value promotions, experience starts contributing heavily to the

• verall value perception.

Customer experience through service, food quality and convenient channels (such as delivery and touch screens), in addition to value offers Proliferation of the market is driven by aggressive expansion of both local and international competitors through new store openings despite the number of category visits remaining flat In the era of CRM, targeted consumer marketing, big data and artificial intelligence, consumers expect brands to ‘know them’ and to speak to them in a relevant manner. As more brands are engaging with consumers through personalised and customized messaging, expectations around communication are changing

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DOMESTIC CONSUMER ENVIRONMENT

YOY FOOD AND BEVERAGE INCOME CHANGE AT CONSTANT PRICING VERSUS CURRENT PRICES

Source: Food and Beverage Report, StatsSA, August 2018

Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 2.4 3.9

• 2.3

1.8

• 2
• 2.8

1.5 6 0.9 3.4 7.2 0.1 8.3 9.9 3.5 8.7 3.9 3.2 7.7 12.7 8.8 11 15.6 6.7

Full Year 1.7 Full Year 8.3

Constant 2015 pricing Current pricing

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GBK GROUP EBITDA INSIGHTS

GBK

£’000 Operating loss including impairment (2 628) Depreciation & amortisation 3 113 EBITDA 485

Source: Management disclosure

BUSINESS UNIT ACTUAL F19 H1 Manufacturing including Retail 16 Logistics 3 Leading brands 6 Signature brands 1 Consolidated Corporate 1 SA business 27 AME 2 UK business 19 TOTAL GROUP 48

53

CAPEX BY BUSINESS UNIT

(RAND) MILLION

Source: Management disclosure

54

SEGMENTAL ANALYSIS | REVENUE

Rm HY F 2019 HY F 2018 % Change Brands 432.2 415.0 4.1 Leading brands 366.5 350.4 4.6 Signature brands 65.7 64.6 1.6 Supply Chain 2 253.9 2 101.2 7.3 Manufacturing 1 466.1 1 377.4 6.4 Logistics 1 955.2 1 830.5 6.8 Eliminations (1 167.4) (1 106.7) (5.5) Corporate 13.2 1.4 South Africa 2 699.3 2 517.6 7.2 International 884.3 883.6

• UK

749.1 760.6 (1.5) Rest of Africa and AME 135.2 123.0 9.9 Total Revenue 3 583.6 3 401.2 5.4

55

MINORITY PROFIT ALLOCATIONS BY SEGMENT

Source: Management disclosure

Signature brands 15.3% Manufacturing 81.9% Corporate 2.8%

56

PUT OPTIONS OVER MINORITY INTERESTS ALLOCATION BY SEGMENT

Signature brands 21.7% Manufacturing 47.5% AME 30.8%

Source: Management disclosure

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REVENUE BREAKDOWN

Royalties Company Store Sales Project Management Once off Fees 1.9% 1.4% 61.7% 35.0% 1.0% 1.8% 97.2% 2.4% 0.8% 22.0% 74.8 %

Signature brands Leading brands

Source: Management disclosure

SA AME

32.2% 7.8% 43.4% 22.5% 32.8%

• 8.0%

1.4% 1.3%

• 9.8%

96.6% 5.6% 53.7% 21.3% 24.3%

58

SYSTEM-WIDE SALES IN AME BY COUNTRY

SYSTEM-WIDE TURNOVER GROWTH % LOCAL CURRENCY

Source: Management disclosure

59

MONTHLY EXCHANGE RATE USED

UK EUR USD Nigeria Zambia Botswana Dubai Exchange rates ZAR/GBP YTD Ave ZAR/EURO YTD Ave ZAR/USD YTD Ave ZAR/NGN YTD Ave ZAR/ZMW YTD Ave ZAR/BWP YTD Ave ZAR/AED YTD Ave Period end 31.08.2017 16.78 14.67 13.13 24.47 0.70 1.26 3.58 Period end 31.08.2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50 31-Mar-2018 16.52 14.59 11.83 30.11 0.81 1.22 3.22 30-Apr-2018 16.75 14.71 11.96 29.85 0.80 1.22 3.26 31-May-2018 16.79 14.74 12.15 29.42 0.80 1.23 3.31 30-Jun-2018 16.97 14.92 12.42 28.81 0.79 1.24 3.38 31-Jul-2018 17.12 15.07 12.62 28.41 0.78 1.25 3.43 31-Aug-2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50

Note: Average is "Financial year to date" average Source: Oanda

CONTACT INFORMATION

Darren Hele

Chief Executive Officer +27 11 651 5812

Lebo Ntlha

Group Financial Director +27 11 847 6491

Instinctif Partners

Investor Relations +27 11 447 3030

60

Ian Isdale

Company Secretary +27 11 847 6394

email

investorrelations@famousbrands.co.za

This presentation contains forward looking statements about the company’s operations and financial position, which reflect the Company’s bona fide expectations at the date of this presentation. They are based on best estimates and expectations. Actual performance may differ materially from the current estimates and expectations and thus may prove to be inaccurate. Caution should be exercised in placing any undue reliance on this information as unanticipated events will occur and actual future performance may differ materially from current expectations. Famous Brands assumes no obligation to update or revise any forward looking statements other than may be required by legislation and/or regulation and assumes no responsibility whatsoever for any loss or damage as a result of any reliance placed on the forward looking statements.

DISCLAIMER

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