Operating environment

Our 2025 financial year was characterised by low consumer spending, especially in the first half, and an overall sales performance at restaurants that remained below expectations. Nevertheless, revenue grew by 3% to R3.3 billion and our operating profit by 12.6% to R914 million.

These constrained trading conditions demanded that we make careful trade-offs throughout the business. This involved determining which costs to absorb in our Supply Chain to provide competitive pricing to franchise partners and which costs to pass on. It also meant

striking a balance between offering our franchise partners sustainable margins and ensuring that consumers receive value for their money. Our vertically integrated model combined with our scale and agility is what enables us to make these decisions. We also took a cautious approach to our investment decisions, considering both the immediate benefits and the potential long-term consequences of not investing immediately.

Our franchise partners face pressures from higher input costs, including electricity and labour, as well as infrastructure failures. Yet, they continue to demonstrate resilience and optimism about the future, as evidenced by pleasing new restaurant growth and revamp activity. We have a healthy pipeline of new restaurant openings planned for 2026. This investment by our franchise partners, despite unfavourable trading conditions, is testament to the enduring appeal and the investment case of our trusted brands over independent restaurants.

South Africa's elections were peaceful, with major political parties demonstrating maturity and a spirit of compromise and acceptance of an unusual result. It is the first time in the history of our country that there is not a single political party which is able to unilaterally govern. While the formation of the Government of National Unity (GNU) has improved business and investor confidence, South Africa still requires major structural reforms to overcome persistent low growth and lack of investment and create jobs and opportunities.

The electricity situation has improved; however the trajectory of expected electricity hikes will most probably dampen consumer spending and economic growth. A step change is required to bring new, affordable electricity generation online and lay the foundation for sufficient investment and economic growth to counter continued high unemployment numbers.

Strategy highlights

Famous Brands' vision is to be the leading, innovative, branded franchised and food services business in South Africa and selected markets. We have a focused strategy to achieve greater scale by building our core brands and growing our margins while ensuring the sustainability of the business. The Board reviewed the Group's strategy at the Board strategy day held in November 2024. We are confident that the strategy remains fit for purpose and will support the Group in delivering both growth and carving out greater operational efficiencies.

In June 2025, we opened the new cold storage facility at our Midrand Campus. The project, delivered on time and within budget, marks the culmination of our multi-year programme to optimise our Logistics footprint. We also completed the last implementation of the warehouse management system replacement project. The system has already yielded significant productivity and space utilisation benefits, allowing for greater insights and responsiveness.

Technology is a major strategy enabler. We continued to invest in technologies to enhance our back end, enabling us to deliver better support to our front end. Cost efficiencies unlocked at the back end will make our products more affordable and appealing to franchise partners. This is part of our broader initiative to modernise our Manufacturing plants, which will be delivered over the next three years in a measured approach.

We are also excited about the opportunities in consumer-facing technology. These include improving our e-commerce offering, simplifying our technology ecosystem to reduce costs and complexity and providing personalised engagement with consumers. This year, we determined the roadmap for building our data analytics and business intelligence insights. Over time, this will enable the provision of insight-led, differentiated offerings for franchise partners and consumers.

ESG performance

A highlight for 2025 was achieving a Level 1 B-BBEE status. This is a remarkable achievement, thanks to the considerable attention invested, which moved us from a non-compliant status in 2018. We do not have control over the B-BBEE scorecard’s ownership pillar, which accounts for 27 points out of an overall 110 points. This means that our status may fluctuate between Level 1 and Level 2 depending on changes to shareholding. We must also carefully manage our performance across the other four scorecard pillars.

ESG remains a significant theme in a world grappling with climate change and severe environmental crises. Despite cost-of-living pressures, consumers increasingly seek to support sustainably produced and sourced goods. Since 2019, Famous Brands has been on a journey to enhance its ESG performance. We introduced new environmental policies, improved our natural resource management practices and embraced innovation to provide more environmentally friendly packaging options.

In 2024, we developed an ESG Framework that provides a structure and focus for our ESG activities, along with a set of key performance indicators (KPIs) linked to the SDG targets. This year, we operationalised the ESG Framework across the Group and began tracking our performance against the KPIs. Our SDG selection, SDG targets and related KPIs are well aligned with our core business activities and allow us to have a meaningful contribution to our chosen impact areas.

This report includes an expanded sustainability chapter, which provides greater detail on our ESG performance across the three major themes of environmental sustainability, social responsibility and corporate governance. We are committed to maintaining a focus on ESG, which we believe will support our business performance by reducing costs, particularly in energy and water, fostering innovation, and enhancing our reputation. Additionally, it safeguards the Group against anticipated regulatory pressures and compliance costs related to sustainability.

It is our view that in South Africa, investing in the ‘S’ in ESG is of paramount importance. South Africa faces a youth unemployment crisis with a 45.5% unemployment rate among individuals aged 15 to 34 years¹. We take pride in our positive social impact both as a Group and through our franchise partners. Our brand networks in South Africa provide significant employment opportunities, including numerous entry-level positions. In 2025, through our fourth year of supporting the YES Programme, we are providing 300 work opportunities to young South Africans. This initiative provides vital first job opportunities and work readiness training for many young South Africans. We are particularly pleased with our absorption rate, or the success we have had in securing positions for young people. In our third year, which was completed in September 2024, our overall absorption rate was 87.86%, significantly higher than the YES Programme’s average of 47%. The absorption rate for Leading Brands for restaurant positions was 92.78%.

Engaging shareholders on remuneration

At our AGM held in July 2024, some shareholders expressed concerns about our remuneration decisions, voting against the Remuneration Policy and implementation report. As the Remuneration Policy and implementation report resolutions did not achieve 75% shareholder support, we engaged shareholders extensively to understand these concerns and adapt our Remuneration Policy accordingly. We are committed to balancing the interests of various shareholders and making remuneration decisions that are supported by the majority of our investor base.