Johannesburg; Monday, 30 May 2016: Famous Brands has reported record turnover and profits for the period ended 29 February 2016, the Group’s fifteenth consecutive year of strong growth.
Outgoing Group Chief Executive, Kevin Hedderwick, says, “The stellar results and accomplishments achieved during the period are irrefutable evidence of how the business continues to flourish, despite the current adverse climate. The commitment required to turn in consecutive sets of record results in challenging conditions is a function of the unwavering culture of competitiveness and desire to win, combined with the relentless energy and audacious ambition of the management team and the people of Famous Brands.”
FINANCIAL RESULTS: Group revenue increased by 31% to R4.3 billion (2015: R3.3 billion) attributable to organic and acquisitive growth, including healthy system-wide sales in the franchise Brand portfolio and integration of new business in the Logistics and Manufacturing operations.
Operating profit rose 18% to R792 million (2015: R672 million), while the operating margin was 18.4% (2015: 20.5%). Headline earnings per share improved 16% to 541 cents per share (2015: 467 cents per share).
Cash generated by operations before changes in working capital increased by 22% to R875 million (2015: R717 million). Working capital grew by R156 million (2015: R4 million) as a result of the acquisition of Cater Chain Food Services and Retail Group Botswana (Pty) Ltd, as well as organic growth. After changes in working capital, cash generated by operations increased by 1% to R718 million (2015: R713 million).
Total cash utilised in investing activities of R202 million (2015: R96 million) was incurred on acquisitions, Supply Chain expansion, fleet upgrade and enhancement of information technology systems.
A final gross dividend of 215 cents (2015: 200 cents) per ordinary share has been declared bringing the total cash dividend to 405 cents (2015: 355 cents) for the 2016 financial year, an increase of 14%.
OPERATING REVIEW: FRANCHISING
Consolidated revenue across the division improved 11% to R681 million (2015: R615 million), while operating profit grew by 7% to R389 million (2015: R365 million). Across the total franchise, system-wide sales (which include new restaurants opened) increased 12%.
A total of 184 new restaurants were opened across the brand portfolio, bringing the total restaurant network to 2 614. During the period 205 restaurants were revamped.
“Stand-out performances were recorded by our mainstream brands, Steers, Wimpy, Debonairs Pizza, Mugg & Bean, FishAways and Milky Lane. Our emerging brands also delivered satisfying results, with a particularly strong performance reported by Turn ’n Tender,” comments Hedderwick.
He adds, “We furthered our goal to expand the Group’s presence in the casual evening dining trade segment by launching new brand concepts and establishing a number of key joint ventures.”
Subsequent to year-end the Group acquired 51% stakes in Lupa Osteria, an authentic Italian restaurant business trading in the family casual dining segment, Salsa Mexican Grill, a Fast-Casual dining concept centered on traditional Mexican food and beverages, and Catch, a premium seafood and sushi brand.
The Group also opened its pilot craft beer restaurant, 14 on Chartwell, in the review period and signed a ground-breaking agreement with global brand, PAUL, to become their South African Licensed Partner for a ten-year period. PAUL is a family-owned French chain of bakery-cafés established in 1889 in Northern France.
OPERATING REVIEW: SUPPLY CHAIN
The Group’s Supply Chain consists of its Logistics and Manufacturing businesses.
“It is pleasing to report that notwithstanding setbacks experienced in the first half of the year, both divisions have made strides in incorporating additional new volumes, and recorded encouraging results for the full period,” remarks Hedderwick.
Consolidated revenue grew by 34% to R3.4 billion (2015: R2.5 billion), while operating profit increased 33% to R348 million (2015: R262 million).
Hedderwick comments, “In the period subsequent to year-end, and further to our stated strategy to build capability across the business, we acquired outright Lamberts Bay Foods, a business which produces French fries and other value-added potato products for sale to wholesalers, retailers and restaurant chains. The transaction is subject to Competition Commission approval.”
“Significantly,” says Hedderwick, “This strategic acquisition will enhance the Group’s capability to manufacture licensed product for our franchise network and retail clients, as well as provide security of supply in respect of a key menu item.”
PROSPECTS: “Management has identified a multitude of initiatives to continue building capability and capacity across the three pillars of its business, Franchising, Logistics and Manufacturing. In addition to organic growth opportunities, exciting new prospects are presented by the planned opening of 292 franchise restaurants in the year ahead; assimilating the new joint venture brands, PAUL, Lupa Osteria, Catch and Salsa Mexican Grill; and integrating the manufacturing operation of Lamberts Bay Foods,” notes Hedderwick.
Famous Brands will continue to pursue further upstream manufacturing prospects and explore opportunities to grow the Group’s presence in the casual evening dining trade segment, as well as outside of the traditional food service secton.
Hedderwick concludes, “The Board is satisfied that the platform for continued growth is firmly in place, comprising an accomplished executive management team, optimally structured business model and a pipeline of opportunities to continue to meet stakeholder expectations.”