Group Financial Director’s report
" Against a challenging backdrop, consumers continue to choose our brands. Our financial position is sound and provides the scope to innovate, plan and invest in cementing our position as a world-class branded food services business. "
Nelisiwe Shiluvana
First half of our financial year, consumer spending was weighed down by pre-election uncertainty and poor economic conditions. GDP growth for the first half of the calendar year 2024 was underwhelming; year-on-year, the first six months of the year saw the economy expanding by 0.5%. Several markets outside of South Africa experienced challenges related to higher inflation and economic and political turbulence.
Second half, we were cautiously optimistic as consumer confidence rebounded, buoyed by the formation of the GNU, progress in halting load shedding, the introduction of the two-pot retirement system and the first interest rate cuts. Importantly, food inflation, a major theme for several years, began to moderate and generally remained within the 3% to 6% inflation target bracket between March 2024 and February 2025. Following a contraction of 0.1% in the third quarter of 2024, the South African GDP expanded by 0.5% in the fourth quarter¹.
However, these tailwinds did not translate into higher expected consumer spending. In addition, local and international tourism in South Africa remains subdued. A weaker than anticipated Brands' revenue performance flowed through to both our Manufacturing and Logistics divisions' results. While our revenue grew marginally, operational efficiency gains made in our Supply Chain operations protected our operating profit and margins. We exercised prudence over our cost base but also continued to invest to secure future growth and further operational efficiencies.
¹ GDP growth figures according to Statistics South Africa.
Financial performance overview
The key drivers of value creation for our shareholders showed positive momentum in 2025.
Revenue (R million)
Operating profit (R million)
Cash generated from operations (R million)
HEPS (cents)
Net Debt to EBITDA (times)
Dividend (cents)
This report should be read with the AFS available online at:
https://famousbrands.co.za/investor-centre/Revenue
Revenue increased by 3.2% to R8.3 billion (2024: R8.0 billion) despite constrained consumer discretionary spending. Revenue growth can be attributed to the continued strong performance of Leading Brands in South Africa and inflationary increases.
| Group revenue |
2025 R million |
2024 R million |
2024 vs 2025 |
|---|---|---|---|
| Sales-based royalties | |||
| Franchise fees** | 1 030 | 1 152 | (11) |
| Marketing fees | 691 | 678 | 2 |
| Revenue at a point in time | |||
| Manufacturing* | 198 | 166 | 19 |
| Logistics | 5 358 | 5 021 | 1 |
| Retail | 344 | 369 | (1) |
| Company-owned restaurants | 617 | 596 | 3 |
| Joining fees | 12 | 13 | (11) |
| Revenue over time | |||
| Services revenue | 33 | 29 | 12 |
| Revenue | 8 283 | 8 024 | 3 |
- * Manufacturing revenue after intercompany eliminations.
- ** Franchise fee for F2025 excludes UK revenue which is now included in Logistics revenue.
Leading Brands increased by 4% to R979 million (2024:R938 million) while Signature Brands achieved consistent performance at R52 million (2024: R52 million) due to restaurant closure and lower consumer spend. The decline was due to exclusion of Wimpy UK revenue in the current year.
Manufacturing revenue increased by 2.5% to R3.4 billion (2024: R3.3 billion) due to weaker demand, including lower volumes for core products.
Logistics revenue marginally increased from R5.0 billion. While logistics case volumes increased, changes in product mix led to a shift toward lower value case categories.
Retail revenue decreased by 1% to R344 million (2024: R369 million). Revenue was negatively impacted by weaker sales volumes of frozen potato chips due to resurgent competitor activity.
Read more about the performance of our Brands here and our Supply Chain on page here.
Operating profit
The Group’s operating profit improved by 12.6% to R914 million (2024: R812 million). The operating profit was positively impacted by the cessation of load shedding. This reduced the financial relief offered to franchise partners to R1 million (2024: R21.6 million), and lowered our diesel and generator maintenance expenses. We also benefited from lower food inflation, although pricing remains high for several key commodities.
In April 2024, the price of electricity in South Africa increased by 12.7%, which drove up input costs for our Supply Chain. Higher electricity pricing offset some of the gains of lower diesel generator costs, with our electricity costs increasing 21% to R97 million (2024: R80 million). Our solar installations at 3 Manufacturing and 3 Logistics sites saved an estimated R3.9 million in energy costs in 2025. Our investments in improving efficiencies helped shield our Supply Chain from higher input costs, including electricity expenses. We were circumspect with capital investments and reduced our bonus pool to protect our performance results.
Our 2024/2025 insurance renewal cycle was completed in June 2024, and pleasingly, due to our investments in reducing risk, our PDBI premium declined by 6% to R21 million (2024: R22 million). This compares to a 464% escalation in this type of cover in 2024.
Our Retail operating profit declined 80% to R1 million (2024: R6 million) due to lower sales volumes of frozen potato chips, a major contributor to our Retail offering. A major competitor re-entered the market in early 2024, after a prior-year stock shortage. In addition, imported frozen potato chips entered the South African market in early 2024 at discounted prices. Retailers bought these in large quantities due to discounts, depressing Retail sales. This began to normalise at the end of the financial year. We experienced strong demand for other Retail products, including meat and sauce.
Operating profit margins
The Group’s operating profit margin remained resilient at 11.0% (2024: 10.1%), supported by Leading Brands’ growth, cost containment initiatives and Supply Chain efficiencies.
Our operating profit margins benefited from lower food inflation in South Africa but remain under pressure due to poor consumer spending. In SA, our margin improved to 11.8% (2024: 10.4%). SADC reported a margin of 11.2% (2024: 13.4%). The AME region’s margin declined to -60.5% mainly due to loss of revenue from exited markets. The UK operating environment remains depressed, with Wimpy UK reporting an operating profit margin of 5.4% (2024: 11.4%).
The Logistics’ operating profit margin declined to1.4% (2024: 1.9%) due to changes in the product mix of the top line and costs associated to system implementations. Our Retail operating profit margin declined to 0.4% (2024: 1.7%) as lower sales volumes increased unit production costs.
| Operating profit margins (%) | ||
|---|---|---|
| 2025 | 2024 | |
| SA | 11.8 | 10.4 |
| SADC | 11.2 | 13.4 |
| UK | 5.4 | 11.4 |
| AME | (60.5) | (26.0) |
| Group | 11.0 | 10.1 |
| 2025 | 2024 | |
|---|---|---|
| Leading Brands | 53.3 | 50.3 |
| Signature Brands | (5.7) | (1.9) |
| Manufacturing | 11.0 | 9.0 |
| Logistics | 1.4 | 1.9 |
| Retail | 0.4 | 1.7 |
| SA | 11.4 | 10.4 |
Headline earnings per share (HEPS) and basic earnings per share (BEPS)
HEPS increased by 11.9% to 520 cents (2024: 465 cents), and BEPS increased to 547 cents (2024: 457 cents). This improvement in earnings was primarily driven by savings in operational expenses and the reduction in our finance costs.
Financial position
The Group has a robust balance sheet with net assets of R1 292 million (2024: R1 079 million). The Group’s gearing ratio was 0.77 times (2024: 1.08 times) and leverage improved significantly by 21.5% from 1.13 times to 0.89 times and remains within our primary lender’s covenants. Our return on capital employed was 34% (2024: 31%).
|
2025 R000 |
2024 R000 |
2024 vs 2025 |
|
|---|---|---|---|
| Non-current assets | 1 956 | 1 956 | 1 |
| Current assets | 1 664 | 1 597 | 4.2 |
| Inventories | 556 | 573 | (3) |
| Trade and other receivables | 611 | 584 | 4.7 |
| Other current assets | 497 | 440 | 13 |
| Total assets | 3 640 | 3 553 | |
| Total equity | 1 292 | 1 079 | 20 |
| Equity attributable to owners of Famous Brands Limited | 1 176 | 952 | 24 |
| Non-controlling interests | 117 | 127 | (8.1) |
| Non-current liabilities | 1 222 | 1 410 | 13.3 |
| Borrowings | 907 | 1 076 | 15.7 |
| Other non-current liabilities | 316 | 334 | 5.4 |
| Current liabilities | 1 125 | 1 064 | (5.7) |
| Borrowings | 233 | 126 | (85.6) |
| Trade and other payables | 768 | 806 | 4.8 |
| Other current liabilities | 124 | 132 | 6.1 |
| Total equity and liabilities | 3 640 | 3 553 |
Net working capital of R399 million (2024: R350 million) increased by R49 million (2024: R24 million). Our inventory holdings are similar to 2024 despite changes in the product mix. The levels also reflect our strategic procurement initiatives of our commodities.
Trade receivables increased in line with our increase in revenue.
Our strategic choices have supported the growth of our asset base as we ensure our business is efficient and competitive.
The Group's borrowings decreased by 5.1% to R1 140 million. We secured a project financing facility to fund the development of our new cold storage facility in Midrand.
The decrease in trade and other payables was driven by lower levels of inventory holding.
Gearing and debt structure
We are focused on reducing our legacy debt in the medium term. This includes adhering to stringent working capital measures and funding our expansion through internally generated cash flow. Since 2018, the Group has reduced debt levels by R1.8 billion. In 2025, we made a voluntary additional payment of R20 million to our primary lender to further reduce our debt.
In October 2024, we secured project financing for the development of our new cold storage facility at our Midrand Campus. We had R450 million due for repayment in August 2025. At year end, this was deferred for repayment in August 2026.
Brands, trademarks and impairments
Our sustainability and business models rely on healthy brands that generate attractive returns for Famous Brands and our franchise partners. Every year at annual and interim results, we assess each brand to determine that they are reflected at the right value. This comprehensive valuation process is guided by management and the Board. As at 28 February 2025, our brand portfolio carrying value is R346 million (2024: R351 million).
In Nigeria, our associate, UAC, is facing challenging conditions, including high inflation and a depreciating Naira. While steps have been taken to stabilise and protect the business, we have decided to impair the remaining R12 million capital advanced to UACR.
Cash flows
Our cash flow forecasts show that the Group has adequate overall liquidity to meet its working capital and capex requirements for the foreseeable future. At year-end, our liquidity headroom was R674 million (2024: R572 million), comprising R441million in cash balances and R233 million in committed, undrawn facilities.
| Salient features | 2025 | 2024 |
|---|---|---|
| Cash generated by operations | 1 121 | 1 086 |
| Net cash outflow from investing activities | (167) | (183) |
| Net cash outflow for financing activities | (48) | (48) |
| Cash realisation rate* | 100 | 105 |
We continue to be a highly cash generative business. Net working capital of R399 million (2024: R350 million) increased by R49 million due to lower inventory holdings. Our warehouse management system provides greater insights to the business with inventory management benefits. Robust cash flow management procedures remain in place.
The Group allocated capex across its markets in line with the Group strategy, including developing and expanding Leading brands in SA, SADC and selected AME countries and enhancing our Supply Chain infrastructure.
The Group's finance costs decreased by 7%. We benefited from lower interest rates and our focus on paying down debt. Some of our debt pricing is linked to the performance of sustainability targets, which we strive to achieve.
Capital management
We continued to invest in growing capability and capacity across our Brands and Supply Chain, creating memorable consumer experiences through innovation, flawless execution and continuous improvement.
The Group generated R1.1 billion (2024: R1.1 billion) in cash from operations, and this funded the following:
Dividend payments of R345 million;
Capex of R214 million;
Debt repayments of R160 million, including a voluntary payment of R20 million;
Acquisition of the non-controlling 38% shareholding in the Famous Brands Coffee Company (Pty) Ltd, making this a wholly owned Manufacturing plant.
The Group's free cash flow was R753 million (2024: R674 million). Our cash realisation rate, a measure of how EBITDA is converted into cash, was 100% (2024: 105%). Our cash realisation rate remains stable as our trade receivables have moved in line with our revenues.
Our expected credit loss is in line with expectations and within reasonable levels.
Dividend
The Board declared a final dividend of 195 cents per share (2024: 164 cents per share) to the amount of R195.4 million, reflecting the Group’s stable financial position and cash flows. In light of the challenging economic environment in which our business currently operates, we acknowledge its impact on earnings growth. Nevertheless, we maintain an optimistic outlook for the future. The final dividend will be paid out of current year profits for a total amount of R345.7 million (2024: R302 million). In August 2024, the Board declared an interim dividend of 150 cents per share.
Outlook and priorities
We have the right brands and strategy to grow our footprint and maintain margins. We continue to invest in securing future growth while unlocking further efficiencies and cost savings.
Lower economic growth and uncertainty in South Africa and several other markets will continue to dampen consumer sentiment and spending. In South Africa, consumers will feel the impact of the fuel levy increase and no adjustments to the income tax brackets. While inflation has moderated in South Africa, this is likely to increase post the national budget 3.0 and 12.7% increase in electricity prices in April 2025. Downside risks include higher fuel costs, uncertainty on further interest rate cuts, increase in prices of protein and currency depreciation due to increasingly volatile global geopolitics. In this environment, we remain focused on our purpose of nurturing our franchise partners to sustainably impact our communities.
Capital investment of R373 million is planned for the 2026 financial year. Our capital allocation decisions align with our strategic objectives and position the Group to respond to difficult trading conditions. Investments in our Brands and Supply Chain will support our franchise partners’ profitability and sustainability.
Dividend payments of R345 million;
Capex of R214 million;
Debt repayments of R160 million, including a voluntary payment of R20 million;
Acquisition of the non-controlling 38% shareholding in the Famous Brands Coffee Company (Pty) Ltd, making this a wholly owned Manufacturing plant.
The Group's free cash flow was R753 million (2024: R674 million). Our cash realisation rate, a measure of how EBITDA is converted into cash, was 100% (2024: 105%). Our cash realisation rate remains stable as our trade receivables have moved in line with our revenues.
Our expected credit loss is in line with expectations and within reasonable levels.
We have the following six key priorities for 2026:
Brand expansion
Leading Brands is the real engine of our business. We will continue to expand our Leading Brands footprint in SA, SADC and selected AME markets. This will be supported by investments in brand development and consumer-facing technology to enhance the overall consumer experience.
Unlocking greater Supply Chain efficiencies
As our topline comes under pressure, we must operate more efficiently and improve our margins. Investments in modernising our Manufacturing plants and introducing technologies to lower production costs, increase yields, boost capacity and reduce waste.
Reducing legacy debt
We are committed to reducing our debt over the medium term and maintaining a sustainable debt profile. We also strive to meet our ESG targets to benefit from better lending terms.
We will be undertaking a refinance process during 2026 with the objective of securing a debt structure that is aligned to the Group's strategy.
Enhancing financial management practices
Our strong procurement capabilities ensure that we secure competitive pricing for commodities. We continue to enhance our credit risk management process and to align the production levels in the Supply Chain with restaurant requirement.
Divest from non-core assets
In the medium term, we will divest from non-core assets to simplify our business and reduce distraction. We seek optimal disposal and/or acquisition opportunities to unlock value for shareholders.
Return value to shareholders
As always, we seek to provide reliable and attractive returns to our shareholders. This includes responsibly protecting and developing our assets and growing the cash available for dividends.
A word of thanks
I am thankful for the support from Darren Hele, my fellow Exco members and Finance colleagues across the Group. As a Finance team, we are driving a culture of continuous improvement, and I am pleased with the improvements in the quality and frequency of financial information. We are making progress in shifting finance to be a business partner. It is vital that Finance provides the business with insights, backed by data, to support strategy execution in difficult trading conditions.
I also thank our Audit and Risk Committee Chairman, Busi Mathe, for her ongoing support and guidance. We delivered our first annual results together for February 2025, and I look forward to future collaboration. Finally, I thank our Board members, shareholders, funders and auditors for their support and fruitful engagements.
Nelisiwe Shiluvana
Group Financial Director
20 June 2025