Scintillating results and Hedderwick appointed as CEO
FAMOUS BRANDS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1969/004875/06)
Share code: FBR
ISIN code: ZAE000053328
Revenue up 8% to R1.7 billion (2009: R1.5 billion)
Operating profit up 17% to R305 million (2009: R262 million)
Headline earnings per share up 29% to 206 cents (2009: 159 cents)
Cash generated by operations up 25% to R346 million (2009: R277million)
Total dividends per share for the year up 50% to 114 cents (2009:76 cents)
Famous Brands (FBR), Africa’s leading Quick Service Restaurant (QSR) and Casual Dining franchisor, has delivered an outstanding set of results for the year ended 28 February 2010. “Trading conditions remained extremely tough, however, the effects of the recession continued being offset in our case by the performance of our growing repertoire of best-in-class brands. It is a well known phenomenon that South African consumers gravitate towards familiar, reputable brands when faced with limited disposable income and we have benefited from that trend,” says Kevin Hedderwick, Chief Executive Officer of Famous Brands.
The Group’s brand portfolio includes Steers, Wimpy, Debonairs Pizza, FishAways, Mugg & Bean, tashas, House of Coffees, Brazilian Café and Blacksteer, with a presence in Africa, United Kingdom and Mauritius representing a global footprint of 1,779 restaurants. The Group also manufactures and supplies its franchisees, the retail trade and broader hospitality industry with a wide range of meat, sauce, bakery, ice cream, fruit juice and mineral water products.
Hedderwick comments that consumer research continues to reveal a decline in the frequency of visits across the total QSR and Casual Dining markets, a trend which accelerated during the second half of 2009. While much of the Group’s growth, in recent years has been driven by the emerging middle class, growth in this market was curtailed significantly in the last year as a direct result of some 900,000 jobs being shed in the South African economy. Competition across the QSR and Casual Dining landscape continues to intensify, particularly in brand clusters with similar competitive sets where there has been a fierce battle for market share as consumers are driven to frequent more than one restaurant type.
In the year under review, Group revenue rose 8% to R1.7 billion, lifting operating profit to R305 million, up 17% from R262 million achieved in 2009. This translated into a 1.3% increase in the operating profit margin to an impressive 18.2% (2009: 16.9%). “This higher margin is a direct result of improved efficiencies, better asset utilisation, astute just-in-time stock management and a lower diesel price within the Supply Chain division where profitability has exceeded our expectations,” explains Hedderwick. Strong cash flows, more effective cash management, restructured foreign debt and lower interest rates all contributed to a sharply lower interest bill which was R26 million lower than last year’s R44 million. After accounting for an unchanged tax rate and minority interests, headline earnings per share rose 29% to 206 cents per share and earnings per share by 27% to 202 cents per share. Cash generated from operations remained exceptionally strong at R346 million and the Group has declared a final dividend of 64 cents per share. The total dividend distribution to shareholders for the year amounts to 114 cents per share, equating to a 50% increase from the total 2009 dividend of 76 cents per share.
Board changes Kevin Hedderwick, who has served as Chief Operating Officer of Famous Brands for the past nine years, is appointed as Chief Executive Officer (CEO) of the Group with immediate effect. Mr Panagiotos Halamandaris, Non-Executive Chairman of Famous Brands, comments, “We have full confidence in Kevin’s ability to continue to strategically lead the Group in the outstanding manner that he has done to date.” Mr Theofanis Halamandaris, outgoing CEO, will take over as Executive Deputy Chairman. Mr John Halamandres, formerly Non-executive Deputy Chairman, will continue to serve Famous Brands as a non-executive director. “I value the continued trust that the Board has bestowed on me with this appointment. I am delighted also that the Halamandaris family remain committed shareholders as the Group embarks on the next stage of its development,” says Hedderwick.
Prospects “Extensive preparations have been undertaken to benefit from the 2010 FIFA World Cup in June and July of this year. This has included measures to ensure the uninterrupted supply of product to our franchise partners supported by a range of national marketing and promotional activities. Given our strong presence at national airports, transient motorway sites, shopping centres and coastal resorts we are well positioned to benefit from the upside of this major sporting event,” says Hedderwick. Hedderwick concludes that, “With few positive signs of any sustained economic recovery in the year ahead, it is likely that consumer spend will remain under pressure. However, with the Group’s sound business model, complemented by an excellent management team, strong cash flows and our growing portfolio of best-in-class brands, we believe that we are well positioned for future growth in the long term and to benefit from any short term recovery in the economy.”
Notes to editors:
The Group’s brand portfolio includes Steers (524], Wimpy including UK (642), Debonairs Pizza (315), FishAways (112), Mugg & Bean (108), tashas (6), House of Coffees (19), Brazilian/Brazilian Café (48), Blacksteer (12), Giramundo (6), Keg (27) and McGinty’s (5), Vovo Telo (3) and O’Hagan’s (26).The Group also manufactures and supplies its franchisees and the retail trade with a wide range of meat, sauce, bakery, ice cream, fruit juice and mineral water products.
For further information:
Chief Executive Officer
Famous Brands Ltd
Telephone: 011 651 5812
Mobile: 083 395 8608