Contents - Famous Brands

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Contents - Famous Brands
Contents
Flap
About our Integrated Annual Report
IFC
About Famous Brands
IFC
Group profile
IFC
Financial highlights
1
Highlights
2
Our business model
4
Our business approach
4
Supporting South Africa’s economic growth
6
Milestones
8
Our brands
10
Trading footprint and franchise network
12
Performance overview
14
Chairman’s statement
18
Group Chief Executive’s report
25
Value Added Statement
26
Performance at a glance
27
Six-year review
28
Strategic imperatives, Material issues and Sustainability
30
Strategic imperatives and Material issues
32
Our key relationships
34
Human Capital
36
Transformation
37
Corporate Citizenship
38
Safety, Health and the Environment
40
Governance and Remuneration
42
Board of Directors
44
Executive Leadership
46
Corporate Governance report
52
Remuneration report
53
Social and Ethics Committee’s report
54
Summarised consolidated financial
statements and other information
56
Directors’ report
58
Audit and Risk Committee’s report
58
Company Secretary’s certificate
59
Approval of the summarised consolidated financial statements
60
Summarised consolidated financial statements
68
Shareholder spread
69
Shareholders’ diary
70
Notice to shareholders
75
Form of proxy
IBC
Administration
About our Integrated Annual Report
Introduction and scope of the report
We are pleased to present our 2015 Integrated Annual Report. The report covers
the performance of Famous Brands Limited (Famous Brands or the company)
and its subsidiaries (together referred to as the Group) as well as its associates
for the year ended 28 February 2015.
Our Integrated Annual Report contains summarised consolidated financial
statements for the year ended 28 February 2015. A full set of the Group’s audited
2015 Annual Financial Statements and the King Code of Corporate Governance
for South Africa, 2009 (King III) checklist are available on the company’s website
at www.famousbrands.co.za. Feedback on our Integrated Annual Report can
be emailed to us on [email protected]
Materiality
Our Integrated Annual Report focuses
on information that is material to our
business. It provides a concise
overview of our performance,
prospects and ability to create value
for our key stakeholders on a
sustainable basis. The legitimate
interests of all our key stakeholders
were taken into account in
determining information that is
considered to be material for
inclusion in this report.
Assurance
The Board of Directors of the
company (the Board), as assisted by
the Audit and Risk Committee, is
responsible for ensuring the integrity
of the Integrated Annual Report.
Accordingly, the Group applies the
combined assurance model by using
a combination of external and internal
audit assurance, as well as assurance
obtained from executive
management. The audit opinion
expressed by the external auditors
on the Group’s Annual Financial
Statements is available online.
Forward-looking
statements disclaimer
This report contains forward-looking
statements which are based on
assumptions and best estimates
made by management with respect
to the company’s performance in the
future. Such statements are, by their
nature, subject to risks and
uncertainties which may result in the
company’s actual performance in
future being different from that
expressed or implied in any forwardlooking statements. These statements
have not been audited by the
company’s external auditors.
The company neither accepts any
responsibility for any loss arising from
the use of information contained in
this report, nor undertakes to publicly
update or revise any of its forwardlooking statements.
Approval of the Integrated
Annual Report
The following reporting frameworks
were applied and complied with in
preparing this report:
• The Companies Act of South Africa;
• The Listings Requirements of the
JSE Limited (JSE Listings
Requirements);
• King III;
• International Financial Reporting
Standards (IFRS), in particular IAS 34
Interim financial reporting; and
• International Integrated Reporting
Council (IIRC) Integrated Reporting
Framework.
The Board acknowledges its
responsibility to ensure the integrity
of this report, and has applied its
collective mind in the preparation
thereof. The Board believes that the
report has, in all material respects,
been presented in accordance with
the IIRC Integrated Reporting
Framework.
Santie Botha
Independent Chairman
Kevin Hedderwick
Group Chief Executive
22 May 2015
Integrated Annual Report 2015
CELEBRATING 20 YEARS
ON THE JSE
About Famous Brands
Group profile
Famous Brands Limited is a holding company listed on the JSE Limited under the category Consumer Services: Travel and Leisure,
and is Africa’s largest branded food service franchisor. The company was listed in November 1994 at a price of R1 per share,
equating to a market capitalisation of R25 million. The past two decades have witnessed the Group expand almost beyond
recognition from the business it was then, comprising only the Steers brand and a limited Supply Chain component, to the
enterprise it is now, with a market capitalisation in excess of R11 billion, positioned within the JSE’s top 100 companies. At
08 March 2015 Famous Brands’ vertically integrated business model comprised a portfolio of 25 brands represented by a franchise
network of 2 545 restaurants across South Africa, Rest of Africa, the United Kingdom and the Middle East, underpinned by
substantial Logistics and Manufacturing operations. The Group’s franchise brand portfolio is detailed on page 8.
Financial highlights
Revenue up to R3.3 billion
+16%
Operating profit up to R672 million
+19%
Operating margin up to record high of
20.5%
Headline earnings
up to 467 cents per share
+15%
Dividends per share
up to 355 cents per share
+18%
Revenue (Rm)
1 685
1 878
2010
2011
2 156
2 516
2012
2013
466
2 826
2014
3 283
2015
Operating profit (Rm)
566
672
308
358
413
2010
2011
2012
2013
2014
2015
Operating margin (%)
18.3
19.1
19.1
18.5
20.0
20.5
2010
2011
2012
2013
2014
2015
Headline earnings per share (cents)
206
2010
242
278
2011
2012
339
2013
406
2014
467
2015
Dividends per share (cents)
114
2010
155
2011
200
2012
250
2013
300
2014
355
2015
Famous Brands
Integrated Annual Report 2015
Highlights
Group
• 14th consecutive year of record turnover
and profits
Brands
• Record number of new stores opened: 258
• Vision 2015 successfully executed
• Franchise network now in excess of
2 500 restaurants
• Acquired 75% of Cater Chain Food Services*
• Successful launch of Total/Thrupps pilot model
• Subject to Botswanan Competition Commission
approval, acquired controlling stake in Master
Licence partner, Retail Group Botswana*
• Debonairs Pizza opened the brand’s 500th
restaurant
• Embarked on ambitious 2020 growth strategy
Manufacturing
Logistics
• Take-on of KwaZulu-Natal region’s bakery products
• Implemented centralised demand planning
function
• Take-on of Wimpy bakery and choice meats
products
• Rolled out centralised route planning programme
• Commissioned automated pie plant in Nigeria
• Commissioned Famous Brands’ Crown Mines
Distribution Centre*
• Implementation of new Food Safety and Quality
Management System based on latest international
best practice
* Subsequent event.
This report contains icons and cross-references
to assist the reader with navigating the
information contained in this document, and are
devised to prevent repetition in cases where an
item is referred to in more than one section.
The following icons relate to our strategy and material issues:
Brands
Manufacturing
Logistics
Africa and selected international markets
Transformation
People
Information technology
Environment
Potential growth opportunities
Page 1
About Famous Brands continued
Our business model
Franchise network and Retail
Brand capabilities
Over the years we have deliberately embarked upon a strategy whereby we have developed a portfolio of brands, all
of which are designed to be best in their class, offering a compelling business proposition to our franchise partners
as well as a quality solution to a wide range of consumers.
Our Design and Development division provides a full turnkey service to all of our brands and their respective
franchise partners.
Our central Marketing division is charged with ensuring that brands are properly positioned, are relevant and remain
contemporary. All of our brands are supported via a wide range of through-the-line strategic marketing initiatives.
Below-the-line marketing services are provided by Sauce Advertising which is an associate company.
Our brand portfolio comprises (refer page 8):
South Africa
•
•
•
•
•
•
•
•
•
•
•
•
•
Africa and selected international markets
• tashas
• Turn ‘n Tender
• The Bread Basket
Steers
Wimpy
Debonairs Pizza
FishAways
Mugg & Bean
Milky Lane
Europa
Fego Caffé
Net Café
House of Coffees
Coffee Couture
Giramundo
Vovo Telo
•
•
•
•
•
•
• WakaberryTM
• Thrupps
• Pubs:
– KEG
– The Brewers Guild
– O’Hagan’s
•
•
•
•
•
Steers
Wimpy
Debonairs Pizza
FishAways
Mugg & Bean
Milky Lane
WakaberryTM
Europa
Fego Caffé
Mr Bigg’s
Pubs:
– KEG
– O’Hagan’s
Retail
The core thrust of this division is the extension of the Group’s trademarks into the FMCG retail and wholesale
markets. A secondary market comprises supplying selected food service and catering customers where spare
manufacturing capacity exists to do so.
The brands through which we compete in the retail and food services space include:
•
•
Page 2
Steers
Mugg & Bean
•
•
Wimpy
Milky Lane
•
•
TruFruit
Baltimore
•
Aqua Monte
Famous Brands
Integrated Annual Report 2015
Supply Chain
Logistics capabilities
Manufacturing capabilities
The Logistics division represents the Group’s routeto-market, delivering to the franchise network a
comprehensive basket of products required to cater
for brand-specific menus. The Logistics function
represents a key strategic and competitive advantage
to the Group in terms of its overall franchise system.
The Manufacturing division represents a key part of the
Group’s backward integration model, and is tasked with
manufacturing a range of licensed products for use by
both the franchise network and selected food service
and retail customers.
The division is supported by six Centres of
Excellence which are based in:
Manufacturing
• Midrand (including Crown Mines DC)
• Western Cape
• Eastern Cape
• Mpumalanga
• KwaZulu-Natal
• Free State
Wholly owned
Product
Location
Meat and chicken
Gauteng and Western Cape
The Centres of Excellence enable us to get closer
to our customers (our franchise partners) by aligning
our Franchising and Logistics businesses.
Bakery
Gauteng and Western Cape
Sauces and spices
Gauteng
The Centres
entres also provide training to our
yees and franchise partners.
employees
Ice-cream
Gauteng and KwaZulu-Natal
Fruit juice
KwaZulu-Natal
Crown Mines
Midrand
Joint venture
Mpumalanga
Free State
KwaZulu-Natal
Product
Location
Coffee
Gauteng
Cheese
Eastern Cape (Coega)
Speciality breads
Gauteng
Choice meat cuts
Gauteng
Red meat, chicken, ribs
and frozen storage
Gauteng (City Deep)
Eastern Cape
Western Cape
Our Brand, Logistics and Manufacturing capabilities are
supported by a range of Corporate Services which include:
Finance, Human Resources, Information Technology, Legal,
Procurement, Logistics Services and Operations Services.
Page 3
Our business approach
Our vision
To become one of the leading branded leisure
and consumer product businesses in Africa and
selected international markets by 2020.
Our guiding principles
Sustainable growth, Speed, Agility, Quality,
Innovation, Integrity, Humility.
Our strategic intent
Our business is focused on building capability
and scale across Brands, Logistics and
Manufacturing to position ourselves to
compete aggressively in the leisure and
consumer product sectors.
Supporting South Africa's economic growth
for the year ended 28 February 2015
Famous Brands makes a substantial contribution to economic and social growth in South Africa
through creating economic value and employment, providing training and skills development,
upholding the country’s transformation agenda and supporting local communities.
This contribution is achieved through continued investment in the Group’s key relationships,
particularly with our franchise partners and consumers.
Contribution to South Africa’s gross domestic product
Wealth created
Direct - Famous Brands Group R1.1 billion (refer Value Added Statement, page 25)
Indirect - Franchise partners R1.7 billion
Tax revenue paid to the South African
Revenue Services by Famous Brands Group:
• Corporate Tax
R195 million
• Value Added Tax
R148 million
• Pay As You Earn
R75 million
• Skills Development Levy
Tax
revenue
paid
Tax revenue paid to the South African
Revenue Services by our franchise partners:
R4 million
• Corporate Tax
R448 million
• Value Added Tax
R1.3 billion
Distribution of direct wealth created
Retained for future
expansion and growth
18%
35%
Government
(corporate tax)
17%
1%
Finance costs
Salaries, wages
and related
benefits
29%
Dividends to
shareholders
Employment created
Direct employment - Famous Brands employees* 1 472
Indirect employment - Employees of our franchise partners over 40
* Excluding ten Famous Brands employees in the UK.
Page 4
000
Famous Brands
Integrated Annual Report 2015
Our growth agenda
• We are about building capability and scale across Brands, Logistics and Manufacturing.
• We are obsessed with being close to our franchise partners and consumers.
• We are passionate about flawless execution and continuous improvement.
• We are a team of result-oriented people, characterised by a culture of high performance.
• We are focused on organic and acquisitive growth in Africa and selected international markets.
Training and skills development (refer page 37)
Employees of Famous Brands trained
- certified training
121
delegates
Employees of our franchise
partners trained
Franchise
workshops
Brand product
training
Fundamentals Restaurant
Management training
10 018 delegates
14 747 delegates
2 792 delegates
Other ad-hoc
training
2 153
delegates
Supporting local communities (refer page 37)
Sports sponsorships
Donation of product
Other corporate social
investment initiatives
R8.8 million
R530 thousand
R2.1 million
Supporting South Africa’s
transformation agenda
Scale of our business operations
(refer page 36)
Coega Cheese plant
Milk used in cheese production
27 million litres
Approximately 90% of the milk is procured from local farmers in Port Elizabeth.
Raw materials and finished goods
35%
29%
79%
Cases
delivered by
Owner-drivers
Permanent
female
employees
Permanent
black*
employees
* Black as defined by the Department of Trade and Industry Codes
of Good Practice relating to B-BBEE.
Purchases from
local suppliers
R2.6 billion
Beef ..............................................................................................................................6
Cheese .....................................................................................................................5
Pork ..............................................................................................................................4
Chicken....................................................................................................................3
Fish................................................................................................................................1
520 Kgs (000)
720 Kgs (000)
479 Kgs (000)
879 Kgs (000)
416 Kgs (000)
Environmental awareness
(refer page 39)
Energy consumption
Electricity ......................................................................................... 12 191 033
Mwh
Diesel......................................................................................................................... 1 152 Kilolitres
Petrol ................................................................................................................................567 Kilolitres
Savings from water-saving initiatives ............... 2 364 000
Litres
Packaging waste recycled ..................................................... 165 559
Tons
Page 5
About Famous Brands
Milestones
1
1994
Steers Holdings lists on JSE
2
2005
2
2001
Churches Chicken
TruFruit and Baltimore
2
2002
1
1995
Longhorn brand
1
1996
Mighty Pies
Eastern Cape Franchising
Master Licence
2
2003
Pleasure Foods (Pty) Ltd
Wimpy and Whistle Stop
2
2007
Wimpy UK (Venus Solutions)
1
1997
2
2008
Western Cape Franchising
Master Licence
Debonairs Pizza and
KZN Master Licence
House of Coffees, Brazilian and
ESP Illy
2
2000
FishAways
2
2009
Mountain Rush Trading 4 (Pty) Ltd
– tashas
Page 6
Famous Brands
Integrated Annual Report 2015
2
2012
Milky Lane
2
2010
2
2014
Juicy Lucy
Mugg & Bean
d
Franchising (Pty) Ltd
Famous Brands Great Bakery
Company (Pty) Ltd
2
2013
– The Bread Basket
Creative Coffee
Franchise Systems (Pty) Ltd
Pink Potato Trading 103 (Pty) Ltd
– Turn ‘n Tender
Famous Brands
Coffee Company (Pty) Ltd
2
2011
UAC Restaurants Limited
– Mr Bigg’s
Souldance Holdings 11 (Pty) Ltd
– Giramundo
Coega Cheese (Pty) Ltd
Sauce Advertising (Pty) Ltd
Europa
2
2015
Vovo Telo Bakery
and Café (Pty) Ltd
WakaberryTM Holdings (Pty) Ltd
Fego Caffé
KEG
McGinty’s
Share price at financial year-end (Rand per share)
120
112
100
80
O’Hagan’s
60
40
20
1.0
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Page 7
About Famous Brands continued
Our brands
Page 8
Famous Brands
Integrated Annual Report 2015
CE
CELEBRATING
CELE
CEL
ELEBR
BRAT
BRA
B
R
RA
RAT
ATIIN
NG
N
G 20
20 Y
YEARS
EAR
EA
ARS
ARS
ON THE
ON
THE JSE
TH
JSE
Page 9
About Famous Brands continued
Trading footprint and franchise network
Steers
Domestic
International
Total
538
49
587
1
1
32
533
83
83
Steers UK
Wimpy
501
Wimpy UK
Debonairs Pizza
431
78
509
FishAways
202
13
215
House of Coffees
6
–
6
tashas
13
1
14
Mugg & Bean
169
11
180
O’Hagan’s
2
2
4
KEG
14
2
16
Giramundo
21
–
21
Vovo Telo
15
–
15
Milky Lane
53
11
64
Juicy Lucy
2
–
2
Thrupps
1
–
1
WakaberryTM
36
1
37
The Brewers Guild
6
–
6
Creative Coffees
11
–
11
Net Café
15
–
15
Europa
20
1
21
Fego Caffé
33
1
34
Turn ‘n Tender
6
–
6
153
153
5
6
11
2 100
445
2 545
Mr Bigg’s
The Bread Basket
Total number of restaurants
Page 10
Famous Brands
Integrated Annual Report 2015
UK
84
Egypt
Sudan
Nigeria
6
6
UAE
5
162
Ivory Coast
5
Kenya
Zambia
DRC
2
Angola
1
8
2
Malawi
6
11
37
Zimbabwe
India
Mauritius
20
Mozambique
Namibia
3
51
Swaziland
South Africa
7
2 100
Botswana
29
Total
restaurants
2015: 2 545
Page 11
Performance overview
When our company listed on the JSE in 1994 the business comprised a single brand – Steers. Today the
Group is represented by a portfolio of 25 brands, many of them strong, much-loved South African icons.
Page 12
Page 13
Chairman’s statement
Overview
In November 2014 Famous Brands celebrated the company’s 20th anniversary since listing. This
momentous occasion gave me cause to reflect on how the business has evolved over the past two
decades and to consider the contribution which the Group has made to the South African economy
and its people during that period.
represented through household names such as Steers,
Wimpy and Mugg & Bean.
In the business community, strong strategic alliance
partnerships have been established with global and local
players such as Engen, Shell, Total, SANPARKS, ACSA and
Netcare, which ensures the Group caters for consumers at
work, at play, on holiday, in hospital, and at home.
Empowerment and enterprise development
Santie Botha Independent Chairman
Famous Brands – 20 years on
Today, the integrated business model consists of two key
pillars: the franchised Brand Portfolio and the Supply Chain
(which incorporates Manufacturing and Logistics).
The Franchise business consists of 25 brands, most of them
strong South African icons. With 2 545 restaurants spread
across South Africa, 16 African countries, the United
Kingdom and the Middle East, the Group is by far the
leading branded food service franchisor in Africa.
Famous Brands has also built significant strategic logistics
capability by way of six regional Centres of Excellence
designed to deliver an optimal service to its franchise
partners. Total warehousing space consists of 20 046 square
metres under roof and an average of 1 609 line items are
held in warehouses. The fleet has grown to 111 trucks.
Substantial strategic manufacturing capability has also been
built, manifested by 13 manufacturing sites producing meat
and chicken products, bread and bakery products, sauces
and spices, ice-cream, fruit juice, coffee and cheese.
The forward integration of branded products into the retail
market is now a business valued at R140 million per annum,
Page 14
It is also gratifying to report on the joint venture
partnerships which have been developed, helping aspiring
entrepreneurs to unlock their ambitions through brands
such as tashas, Vovo Telo, Giramundo, Creative Coffees,
WakaberryTM, Turn ’n Tender, The Bread Basket, Famous
Brands Coffee Company, Thrupps and Sauce Advertising.
The Group’s endeavours to advance empowerment are well
demonstrated by the Owner-driver programme launched in
2010. Today, 35% of all cases delivered (equating to
11 million cases) are transported by Famous Brands’
Owner-drivers.
The groundbreaking broad-based black economic
empowerment (B-BBEE) joint venture partnership, Coega
Cheese, is another example of Famous Brands’
commitment to transformation at community level.
Established in conjunction with local dairy farmers, and
factory and farm employees in Port Elizabeth to supply
cheese products to the Group, this business continues to
outperform management’s expectations and deliver
rewarding results for all stakeholders.
Market recognition
Over the years Famous Brands has won almost every
“best of” consumer award there is to win, and has been
recognised by the franchising industry as a role model
franchisor. In the financial community the Group is
commended as a much respected business, evidenced by
Famous Brands
Integrated Annual Report 2015
Highlights
• Employed 1 482 people directly and over
40 000 indirectly
• Reported R466 million in attributable profit to
shareholders
• Contributed R5 billion in GDP
• Embarked on a visionary 2020 growth strategy
• Created Wealth of over R2 billion
the strong external shareholder support enjoyed and the
continued interest expressed by potential investors both
locally and abroad. In the business press the Group has
frequently featured in the Financial Mail and Business Times
Top 100 companies awards.
These commendable achievements are matched by the
business’s unbroken 14-year growth track record.
Results
In my 2014 statement I noted that a long-term strategic
programme had been implemented across the Group which
would effect a major step change in the business. The
intention of this programme is to ensure the continued
robust growth of the company over the next five years in an
increasingly competitive environment. I am satisfied that
this programme has started to gain momentum, reflected in
the pleasing results which we report for the year.
Revenue grew by 16% to R3.3 billion (2014: R2.8 billion)
and operating profit rose 19% to R672 million (2014:
R566 million). Headline earnings per share improved 15% to
467 cents per share (2014: 406 cents per share).
Net interest paid decreased 92% to R269 thousand (2014:
R3 million).
Cash generated by operations before changes in working
capital improved by 19% to R717 million (2014: R602 million).
Working capital requirements absorbed R4 million (2014:
R8 million). After changes in working capital, cash generated
by operations grew by 20% to R713 million (2014:
R594 million).
After tax payments of R202 million (2014: R167 million) and
dividend payments of R327 million (2014: R271 million),
totalling R529 million (2014: R438 million), net cash retained
from operations increased to R184 million (2014:
R152 million).
No bank finance was raised.
Net capital expenditure of R96 million (2014: R112 million)
was incurred on the acquisition of the WakaberryTM Frozen
Yoghurt Bar business, Supply Chain expansion, fleet
upgrade and enhancement of IT systems.
The Group remained ungeared and has net cash on hand of
R126 million (2014: R91 million), positioning the business to
capitalise on organic and acquisitive growth opportunities
as they arise.
Broad-based black economic empowerment
In pursuit of the Group’s transformation targets, the
formulation of a B-BBEE ownership transaction is under
way. An expert external financial institution has been
retained to assist management in shaping the scope,
implications and costs of this project. A proposal in this
regard will be presented to the Board in due course and
shareholder approval will be sought in 2016.
The Group has achieved a level 6 certification (2014: level 7)
in terms of its compliance with relevant B-BBEE legislation,
and further opportunities will continue to be investigated to
improve this rating.
Labour relations
Management’s relationship with the workforce is positive
and open dialogue is practised from the shop floor through
to executive level. On 28 May 2015 management concluded
a new two-year wage agreement with worker
representatives and nominated officials from SCMAWU.
Human Capital development
The Group has implemented ‘Managers’ Challenge’, a
management-level development programme which has
successfully contributed to building human resource
capability internally. The programme will continue in the
new financial year and will be expanded to include a
leadership development programme at executive
management level.
Page 15
Chairman’s statement continued
Notable investment has been made in senior management
and executive appointments in the review period, aligned
with the strategic imperative to build management
capability and depth to ensure the business is optimally
structured to keep pace with its growth goals.
Mr Khumo Shuenyane resigned as an Independent
non-executive director and as a member of the Audit and
Risk Committee. I would like to thank him for his
contribution and wish him well for the future.
Dividends and dividend policy
Corporate social investment
The Group has successfully concluded its second year of
association with Varsity Sports. The current sporting codes
continue to align well with key community engagement
principles within the portfolio of brands. As assurance in
this sponsorship continues to grow, further investment will
be made in the programme.
Directorate
The Group has committed to transform the composition of
the Board to improve compliance with JSE Listings
Requirements and related legislation and to co-opt a wider
range of expertise and experience to better equip the
business to achieve its strategic ambitions.
In this regard, I am delighted to announce that during the
period Mr Norman Adami was appointed as an Independent
non-executive director and a member of the Audit and Risk
Committee. He was formerly Executive Chairman of SAB
(Pty) Ltd and Partnership Director for SABMiller’s global
relationship with The Coca-Cola Company. We welcome
someone of Norman’s stature to the Board and look
forward to his contribution.
Page 16
The final gross dividend of 200 cents per share, together
with the interim gross dividend of 155 cents per share,
equates to total dividends of 355 cents per share (2014:
300 cents per share) declared for the year, an increase of
18%. The dividend has been declared from income reserves.
The dividend cover is 1.3 times (2014: 1.4), and is
considered sustainable in light of Famous Brands’ strong
cash generating ability. In considering future dividend
declarations, the Board will be guided by the Group’s cash
requirements based on future cash flow forecasts.
Outlook
The Group’s compelling 2020 vision and strategic intent
centre on Famous Brands becoming a leading branded
leisure and consumer product business in Africa and
selected international markets, through building capability
and scale across the key pillars of its business. I and my
fellow directors are enthusiastic about the growth potential
which these initiatives will realise and have full confidence
in management’s ability to pursue and achieve the Group’s
ambitious goals.
Famous Brands
Integrated Annual Report 2015
Appreciation
I would like to pay tribute to everyone who has contributed
to the success that Famous Brands has enjoyed over the
past 20 years.
I would also like to thank our shareholders for recognising
the Group’s investment proposition and for their continued
confidence in the business.
My sincere gratitude goes to my fellow directors for their
wise counsel and support of our growth strategies, and to
the management team which has performed superbly to
implement these strategies and unlock the value inherent in
this business. In particular, the Group Chief Executive,
Kevin Hedderwick, is to be commended and congratulated
on successfully leading this exceptional business in the
current turbulent economic climate.
Santie Botha
Independent Chairman
Page 17
Group Chief Executive’s report
Macro-economic environment
During the review period household income grew at its slowest rate in more than ten years, resulting in
decade-low consumer spending. Within this context, the dichotomy between income groups became
increasingly apparent, with higher income households proving far less susceptible to current difficult
economic conditions than lower and middle income households.
Kevin A Hedderwick Group Chief Executive
Industry overview
Out-of-home consumption continues to gain traction in
South Africa, confirmed by industry statistics which state
that 79% of all South Africans aged 15+ visited a quick
service (QS) or casual dining (CD) restaurant in the past
month – a trend which has been growing steadily over the
past few years. One of the key factors underlying this
phenomenon is the migration of consumers from lower to
higher income status, particularly evident in the growth of
the black middle class.
During the past year a range of trends characterised the
QS and CD landscape:
• while the fast/casual food services category continues to
attract a greater number of customers, consumers are
visiting slightly less frequently, but spending more –
largely a function of market inflation;
• there has been a decline in the number of brands visited
by consumers from an average of three brands in 2012 to
an average of 2.5 brands in 2014, illustrating that more
consumers have a smaller repertoire of preferred brands
that they frequent;
• QS consumption grew by 9% year-on-year compared with
6% in the CD environment which lost market share to
QS restaurants, specifically those which cater for both
take-away and sit-down occasions;
Page 18
• consumers’ spending behaviour was underpinned by
their focus on premiumisation, customisation,
convenience and value. Increasingly innovation in
technology is regarded as important by customers,
and there is also an emerging focus on wellbeing
(healthier food options and ethical and sustainable
business practices);
• margin pressure intensified as industry participants
continued to absorb costs in an effort to support
price-conscious consumers with reduced disposable
income; and
• competitor activity amongst both local and international
brands increased, evidenced by the introduction of
unrelenting every-day discounting strategies and ritual
promotions to win customers.
Review of the Group’s performance
At the conclusion of the prior year I outlined a range of
strategic initiatives aimed at building capability across the
Group, the Brand portfolio and the Manufacturing and
Logistics businesses to achieve our growth plans. I am
satisfied that these goals have been met, and in most cases
exceeded; this accomplishment is in keeping with Famous
Brands’ high performance culture of which I am
exceptionally proud.
In preparation for the next five years of planned growth, we
have launched our 2020 strategy which centres on positioning
Famous Brands to compete aggressively as one of the leading
branded leisure and consumer product businesses in Africa
and selected international markets. The key tenet of this
strategy is diversification of the Group through leveraging our
capabilities across the core pillars of our business.
Results
It is a privilege to report on another consecutive year of
record turnover and profit growth. Group revenue increased
by 16% to R3.3 billion (2014: R2.8 billion), while operating
Famous Brands
Integrated Annual Report 2015
Highlights
• Revenue up 16% to R3.3 billion
• Dividend up 18% to 355 cents per share
• Operating profit up 19% to R672 million
• Record number of new restaurants opened: 258
• Operating margin at record high of 20.5%
• Vision 2015 successfully executed
• Headline earnings per share up 15% to 467 cents
profit rose 19% to R672 million (2014: R566 million). The
best-ever operating margin of 20.0% achieved last year was
exceeded this year at 20.5%. This phenomenal set of
results, delivered in extremely testing trading conditions, is
a reflection of strong system-wide sales in the franchise
Brand business and continued improvement in
efficiencies and cost containment in the Logistics and
Manufacturing divisions.
I am pleased to report that relationships at franchise level
are good, with franchise partners responding well to the
Group’s efforts to combat competitive threats across the
various market segments. Our programme of
decentralisation through six Centres of Excellence is
starting to pay dividends as closer relationships with
franchise partners enable us to react quicker to evolving
market conditions.
Divisional report
Across the Group’s total franchise network system-wide
sales (which include new restaurants opened) increased
10%, while like-on-like sales grew 4%.
Market penetration
In the year under review, 213 restaurants were opened
(2014: 144). We surpassed our 2 000th South African
restaurant mark in June 2014; Debonairs Pizza opened the
brand’s 500th restaurant in October 2014; and FishAways
opened its 200th restaurant in December 2014. Notably, the
Group launched Debonairs Pizza and Mugg & Bean into a
range of promising new and formerly under-serviced rural
and semi-rural markets.
A record number of 258 new restaurants were opened
across the brand portfolio, bringing the Group’s total
restaurant network to 2 545. During the period
160 restaurants were revamped.
The development of malls in outlying areas continues to
accelerate and affords the Group opportunities to extend
the brands to our target markets in regions where we
previously had little or no representation.
The performance of the Group’s three independent
franchise regions is reviewed below:
A particular highlight for the year was the opening of
six franchised restaurants in the Kruger National Park,
namely one Debonairs Pizza, one Wimpy and four
Mugg & Bean outlets.
Franchising
The Group’s Franchising division consists of three regions:
South Africa, Rest of Africa and International (United
Kingdom (UK), the Middle East, India and Mauritius).
South Africa
Overview
Revenue increased 14% to R615 million (2014: R538 million);
operating profit rose in line with turnover growth to
R365 million (2014: R325 million). The operating profit margin
declined to 59.4% from 60.4% in the prior year, reflecting
slightly softer performances reported by Wimpy and Steers
given constrained discretionary spend in the mainstream
middle income market.
System-wide sales increased 10% while like-on-like sales
improved by 4%.
In September 2014 we announced that the Group had
expanded its existing relationship with strategic alliance
partner, Total South Africa, to introduce a new offering to
the upper-end metropolitan service stations in the
petroleum supplier’s network. We selected Thrupps as our
retail partner in this venture based on the brand’s unique
positioning as ‘Grocers of distinction’, with a history
spanning 122 years. The pilot Thrupps offering was opened
at an existing Total site in Bedfordview, in Gauteng at the
end of October to significant acclaim.
Page 19
Group Chief Executive’s report continued
This tripartite venture has proved very successful for all of
the partners, and given the enthusiastic endorsement from
the management of Total Paris, plans are well advanced to
extend the model into other forecourts in Gauteng. This
project is aligned with the Group’s strategy to expand our
business into the broader leisure market, which includes
the retail sector.
growing trends of premiumisation and customisation and
illustrates the relative robustness of high-end
LSM consumers.
Net Café, the preferred restaurant and retail supplier to the
Netcare Hospital business grew like-on-like sales by 19%
and opened seven new restaurants in the period, exceeding
the expectations of all stakeholders.
Brand highlights
Mainstream brands
In the context of continued pressure on consumers’
discretionary spend, solid results were reported across this
portfolio:
• the stand-out performance among the mainstream
brands was recorded by Mugg & Bean which delivered an
increase in like-on-like sales of 10% and opened 26 new
restaurants in response to growing market demand;
• Debonairs Pizza’s growth among middle class black
consumers continued unabated and the brand opened
53 restaurants during the period;
• FishAways also delivered an excellent performance
despite the inconsistent supply of a key menu item, hake,
during the year. The brand opened 50 restaurants locally
notwithstanding the competitive landscape which saw
further consolidation of industry participants; and
• in line with the deliberate strategy to improve the Group’s
participation in the chicken on the bone category, Steers
rolled out its flame grilled chicken offering to
220 restaurants, to positive consumer response. It is
planned to expand this offering across the brand’s
network.
Emerging brands
Results reported by the brands in this portfolio were
generally sound.
Both Milky Lane and Europa underwent Intellectual Property
revamps which met with favourable consumer response.
Milky Lane’s same store sales showed an encouraging
seven percent improvement, while Europa grew like-on-like
sales by 16%.
Vovo Telo opened three restaurants during the period, a
significant addition to the existing 12 restaurant footprint,
while tashas opened the brand’s 14th restaurant. Strong
consumer demand for these brands is centred on the
Page 20
In line with global trends, the frozen yoghurt category has
matured rapidly and the explosion of activity experienced in
its start-up phase has subsided noticeably, resulting in a
challenging trading environment and the exit of numerous
industry participants. In this context the Group’s
WakaberryTM brand is the subject of intensive re-engineering
to ensure that the restaurant format and network footprint
are optimally structured to capitalise on current conditions.
Building brand capability
The Group’s ambition is to expand its presence in the table
service evening dining environment, which affords strong
growth opportunities for the business. A number of
interventions have already been identified in this regard and
are in the process of being implemented: as a starting point,
appropriately located tashas’ day-time restaurants will
extend trading hours and re-engineer menus to cater for
evening trade, as will the Europa brand. Greater emphasis
will also be placed on rolling out Turn ’n Tender’s restaurant
footprint given the brand’s predominantly evening dining
bias. Supplementing this internal focus, management will
also continue to explore suitable acquisition opportunities
related specifically to this dining occasion.
The Group has set a target of 202 new restaurants for the
year ahead.
Rest of Africa
Overview
With 20 years of experience and representation in
16 countries, Famous Brands has a strong presence in
the Rest of Africa, and robust ambitions to up-weight
that position.
System-wide sales improved 18%, while like-on-like sales
grew 5%. This region’s contribution to total system-wide
Group sales is 9%.
Famous Brands
Integrated Annual Report 2015
The best performing brand in the territory was Debonairs
Pizza, which recorded an increase in system-wide sales of
19%, while like-on-like sales improved 12%. Almost 20% of
Debonairs Pizza’s total global turnover is currently derived
from this region.
outright or take a controlling stake in existing Master
Licence territories in neighbouring countries whereby the
Group can exercise complete influence over our brands,
and secondly, to test our mettle in company-owned stores
in advance of a potential broader foray into that arena.
In Nigeria, where the Group is represented by amongst
others, 153 Mr Bigg’s restaurants, trading was generally
hampered by adverse economic, political and public health
conditions.
International
During the review period the major initiatives implemented
in the Mr Bigg’s business included the improvement of
back-end support systems; cost-engineering in the context
of the weaker economy; a major upgrade in the pastry
manufacturing facility in Lagos, and an ongoing programme
to improve the in-store experience for customers.
Market penetration
The Group opened 41 (2014: 16) new restaurants in the
region, of which 15 were Debonairs Pizza restaurants,
including the brand’s maiden offering in Benguela in Angola.
We also opened the first WakaberryTM restaurant outside
of South Africa, in Windhoek, Namibia.
After several years’ absence, the Steers brand re-entered
Botswana, opening a restaurant in Gaborone.
Building brand capability
The focus in the year ahead in the Mr Bigg’s business will
be on restaurant upgrades to improve the overall image
and relevance of this network.
In pursuit of our stated strategy to win the race to Africa,
the target for new restaurants in the year ahead is 35. Plans
are advanced for the Group’s maiden entry into Ghana with
a Debonairs Pizza restaurant.
Subsequent event
In June 2015 the Group acquired, subject to Botswanan
Competition Commission approval, a 51% controlling
stake in Retail Group (Pty) Ltd, Botswana, Famous Brands’
Master Licence partner in Botswana. This marks the
commencement of a new strategic thrust in our growth
programme. This strategy is twofold: to either acquire
United Kingdom
Overview
While the economy showed signs of improvement,
consumers remained cautious in the allocation of
discretionary spend; in addition, the competitive climate
in the QS/CD category intensified as new global offerings
aggressively entered the market.
In this context I am pleased to report that the division
reported its best-ever performance based on intensified
management of the cost base and right-sizing the business
in alignment with current economic conditions.
Furthermore, the franchise network is in good health, with
positive relationships enjoyed with franchisees and strong
performances delivered by new and revamped restaurants.
Revenue in Sterling decreased by 3% while revenue in Rand
terms improved 11% to R102 million (2014: R92 million). The
foreign currency translation gain amounted to R12 million.
Operating profit rose 60% to R21 million (2014: R13 million).
The operating profit margin improved to a record high of
20.1% from 14.0% in the comparative period.
Market penetration
During the period two new Wimpy restaurants were
opened, in Oxfordshire and Surrey, and three revamps
were completed.
Steers’ maiden UK restaurant, in Clapham, continues to
perform well, and a second Steers was opened in
Twickenham in April 2015. While there is growing interest
from prospective franchisees, the further roll-out of the
brand will take place at a measured pace.
Building brand capability
It is planned to open two further Wimpy restaurants in the
forthcoming year.
Page 21
Group Chief Executive’s report continued
Our stated intent has always been that the Wimpy
UK platform will be used as a beachhead to grow Famous
Brands’ footprint in the years ahead. Based on the health
of the Group’s UK business, management is considering
opportunities to expand activities and unlock the value of
its investment, either via acquisition or joint ventures with
suitable food services operators in the country.
Shareholders will be apprised as developments unfold in
this regard.
India
After committing extensive resources to evaluating the
Group’s continued presence in this market, management
concluded that the commercial case for investment was no
longer viable. Accordingly, in consultation with our partner,
the Master Licence agreement was terminated in April 2015
and the two Debonairs Pizza restaurants in Mumbai closed.
Middle East
Famous Brands continued to expand its footprint in this
region with the opening of our maiden Steers restaurant in
Dubai. In addition, our premium brand, tashas, opened its
first restaurant in the emirate. Customer response to this
brand has been extraordinary, recording trading densities
four times higher than experienced in the South African
operation. Significant interest has been expressed by
prospective landlords and franchisees in this region, and
opportunities to grow the brand will be considered carefully.
Debonairs Pizza’s performance in the United Arab Emirates
continued to gain momentum, with the brand reporting an
increase in like-on-like sales of 15%.
Supply Chain
The Group’s Supply Chain consists of its Logistics and
Manufacturing businesses, which are managed and
measured separately.
Both divisions recorded exceptional results for the
review period. Consolidated revenue increased by
17% to R2.5 billion (2014: R2.1 billion), while operating profit
rose 29% to R262 million (2014: R204 million).
The operating margin improved to 10.4% from 9.5% in
the comparative period.
Page 22
Divisional report
Logistics
Revenue reported by this division increased 15% to
R2.2 billion (2014: R1.9 billion), while operating profit rose
16%. The operating profit margin remained in line with the
prior year at 4.0%.
A number of highlights were achieved during the period,
including:
• the commissioning of Famous Brands’ Crown Mines
Distribution Centre, which commenced distribution of
product in April 2015 and is expected to have significant
economic benefit for the business. Capital expenditure of
R15 million was invested in this facility which has enabled
the division to take on frozen and chilled product
business in Gauteng previously outsourced to third-party
vendors. The facility also provides capacity to store bulk
frozen beef stocks, formerly housed elsewhere in rented
space. The commissioning of the Distribution Centre was
completed subsequent to year-end;
• the Group’s demand planning function is now centrally
planned and co-ordinated. Albeit in its initial phase, the
benefits of this programme are evident, illustrated by
inventory levels which increased by five percent relative
to an increase in revenue of 15%, validating that the right
product is being delivered to the right place at the
right time; and
• Plato, the Group’s central distribution route planning
programme, has been rolled out to all regions. This
initiative is designed to improve service to franchisees
and enhance fleet utilisation.
Building Logistics capability
The following projects will be prioritised in the year ahead:
• capacity will be added to the Midrand facility through
investment in a re-racking project; and
• a new online replenishment platform will be implemented
for franchisees.
The division has budgeted capital expenditure of R36 million
for the forthcoming year.
Divisional report
Manufacturing
This division delivered an outstanding performance in the
review period, derived from substantial improvements in
yields, further enhancements in cost management and a
very strong full-year contribution from the Coega Cheese
business.
Famous Brands
Integrated Annual Report 2015
Revenue grew by 24% to R1.3 billion (2014: R1.0 billion),
while operating profit increased by a remarkable 36% to
R173 million (2014: R127 million). The division’s operating
margin improved to 13.7% from 12.5% in the prior year.
Several integration and food safety projects were
successfully implemented during the year, including:
• take-on of the KwaZulu-Natal region’s previously
outsourced bakery products. This initiative will increase
our Midrand bakery volumes by 30%;
• take-on of Wimpy’s speciality bakery products;
• take-on of Wimpy’s choice meat products;
• expansion of Mugg & Bean’s retail range, including the
manufacture of espresso capsules; and
• implementation of a new Food Safety and Quality
Management System based on the latest international
best practice, which will be rolled out across the
company and is scheduled for completion in 2016.
Building Manufacturing capability
To accommodate planned growth in the business a range
of capacity projects will be undertaken in the year ahead,
including:
• extending the Coega Cheese plant to enable
manufacturing of cream cheese, and in the longer term,
sliced cheese;
• commissioning a serviette production unit to supply the
entire franchise network;
• installing a new ice-cream production plant to improve
efficiencies, and preparing to take on the manufacture of
frozen yoghurt products; and
• concluding the integration of the recently acquired Cater
Chain business (referred to in the “subsequent event”
paragraph below).
Capital expenditure of R18 million has been budgeted for
the year ahead.
business’ needs and facilitates its long-term growth
objectives. Management is in the process of investigating
this proposed intervention. It is anticipated that the capital
expenditure required for this project will be employed in
fiscal 2017.
Subsequent event
In April 2015, the Group acquired a controlling 75% stake in
Cater Chain Food Services, a local business which
manufactures and distributes primarily red meat products
to customers across South Africa and into certain markets
in Africa. This transaction affords Famous Brands the
opportunity to integrate currently outsourced business into
the facility and provides additional storage capacity in terms
of the Group’s bulk beef requirements.
The purchase consideration fell below the threshold
of a categorised transaction in terms of the Listings
Requirements of the JSE and was settled from
cash reserves.
The future
Building Group capability
We are unwavering in our focus on building capability and
scale across all three pillars of our business: Brands,
Logistics and Manufacturing. While our brand component
has always been a powerful contributor to performance
and will continue to be so, our deliberate strategy to grow
capability across our Logistics and Manufacturing
operations is increasingly delivering significant rewards for
the business, to the extent that these divisions contributed
nearly 40% of total operating profit for the review period.
This result confirms that our vertically integrated business
model is optimally structured for growth across the Group,
and we will continue to make the necessary investment in
people, processes and systems as required.
Prospects
Information technology
A number of significant IT projects were initiated during the
year, centred on upgrading the technology used to support
the integration processes between the Group’s core
business systems.
Further substantial investment in IT will be required in order
to supplant the existing technology platform with a
comprehensive ERP system which better meets the
The forecast for income growth in the year ahead is
conservative and continued uncertainty in the economic,
political and labour environments will weigh further on
consumer confidence.
Notwithstanding this context, I am comforted that our
business is sufficiently resilient, agile and innovative to
surmount the challenges we face.
Page 23
Group Chief Executive’s report continued
Over the 15 years of my tenure with Famous Brands I have
overseen the evolution of this business from two brands
– Steers and Debonairs Pizza – supported by a limited
Supply Chain component, to the enterprise it is today:
Africa’s largest branded food service franchisor.
At this pivotal point on its trajectory, I am confident that the
Group is ideally poised to go from winning in food service
franchising to winning in the leisure and consumer product
space – on a bigger stage than we have previously played.
Our outlook for the future regarding this diversification
scenario is optimistic, and we foresee sustainable revenue
and margin growth opportunities. By focusing on the
Group’s core competencies, leveraging its strong balance
sheet and continuing to build our skills and scale we are
amply equipped to capitalise on them.
Our track record shows that Famous Brands’ strategy has
delivered in the short-term and I am satisfied that it is built
for the long-term.
Appreciation
At Famous Brands we pride ourselves on our hard work,
honest endeavour and high performance culture, which will
continue to give us a head start in a notoriously competitive
industry. I would like to thank my executive managers and
every member of our staff for their contribution to this
gratifying set of results, delivered in a very challenging
trading environment. Their dedication to achieving our
stretch goals is exceptional.
Our strategic partnerships with our franchisees are
invaluable to the success of this business. Their
commitment is appreciated and they have our assurance
that we will continue to strive to meet their expectations.
Page 24
During the period we welcomed new joint venture
partners into the business, and I would like to thank them
for recognising the investment potential which Famous
Brands affords.
Our business is supported by a network of strong
external relationships. I would like to express my gratitude
to our strategic alliance partners, suppliers, financiers,
property developers and landlords for their contribution
to our success.
Our Board of Directors continues to be transformed as
we position the Group to achieve our long-term strategic
goals. In this regard I am particularly honoured that
Norman Adami, a long-standing and highly respected
associate, has joined us, bringing with him a wealth of
insight and experience. Over the past year, as we have
wrought our 2020 vision, my fellow directors have also
provided support and guidance, for which I am grateful.
In a sector where consumers are spoilt for choice, we enjoy
loyal support from our traditional and growing new
customer base. We appreciate their enthusiasm for our
best-of-breed offerings and undertake to ensure we
continue to deserve their custom.
Kevin A Hedderwick
Group Chief Executive
Famous Brands
Integrated Annual Report 2015
Value Added Statement
for the year ended 28 February 2015
The Value Added Statement shows the wealth that the Group has created through its activities and
how this wealth has been distributed to stakeholders. The statement reflects the amounts retained
and reinvested in the Group for the replacement of assets and the development of future operations.
2015
R000
Wealth created
Turnover
Cost of materials and services
Share of profits from associates
Other income
%
3 283 342
(2 171 390)
7 608
13 281
2014
R000
%
2 825 979
(1 879 944)
5 140
9 223
1 132 841
100
960 398
100
Wealth distributed
Employees
Salaries, wages and related benefits
398 039
35
342 092
36
Providers of capital
Dividends to shareholders
Finance costs
327 389
13 550
29
1
270 946
12 435
28
1
340 939
30
283 381
29
Government
Corporate tax
194 651
17
161 985
17
Wealth retained for future expansion and growth
Amortisation of intangibles and depreciation of property,
plant and equipment
Retained income
41 889
157 323
38 426
134 514
199 212
18
172 940
18
1 132 841
100
960 398
100
Distribution of wealth created:
2015
2014
Retained for future
expansion and growth
Retained for future
expansion and growth
18%
18%
36%
35%
Government
Employees
17%
Government
Employees
17%
29%
30%
Providers of capital
Providers of capital
Page 25
Performance at a glance
2015
Financial measures
Revenue
Operating profit margin
Cash realisation rate
Net debt/equity
Headline earnings per share
Dividends per share
Wealth created
Return on net assets
Return on equity
Non-financial measures
Number of restaurants
Domestic
International
Number of employees
Permanent
Non-permanent
Accidents frequency rate*
Disabling injury frequency rate*
Fatalities*
*Safety record with respect to Occupational Health and Safety.
Page 26
R000
%
%
%
cents
cents
R000
%
%
2014
3 283 342
20.5
99.9
(8.9)
467
355
1 132 841
50.0
35.1
2 825 979
20.0
98.3
(2.1)
406
300
960 398
46.1
36.0
2 545
2 100
445
1 630
1 482
148
1.16
Nil
Nil
2 378
1 935
443
1 453
1 406
47
1.06
Nil
Nil
Famous Brands
Integrated Annual Report 2015
Six-year review
Growth
%*
Statement of profit or loss and other
comprehensive income and cash flows
Revenue
Operating profit before impairment losses
Operating profit margin
Profit after taxation
Cash generated by operations
EBITDA
Cash realisation rate
Headline earnings for the year
Statement of financial position
Total assets
Total equity
Net assets
Net debt
Profitability and asset management
Return on total assets
Return on net assets
Return on equity
Net asset turn
Interest cover
Net debt/equity
Shareholders’ ratios
Basic earnings per share
Headline earnings per share
Dividends per share
Dividend cover
Net tangible asset value per share
Net asset value per share
Stock exchange statistics
Market value per share
– at year-end
– highest
– lowest
Closing dividend yield
Closing earnings yield
Closing price to earnings ratio
Number of shares issued
(excluding treasury shares)
Market capitalisation
14.3
16.9
19.1
19.4
25.5
35.7
2015
2014
2013
2012
2011
2010
R000
R000
%
R000
R000
R000
%
R000
3 283 342
672 024
20.5
484 712
713 235
713 913
99.9
465 201
2 825 979
565 517
20.0
405 460
593 559
603 943
98.3
401 942
2 516 287
465 842
18.5
331 052
482 279
499 397
96.6
330 188
2 155 615
412 656
19.1
268 054
398 710
441 692
90.3
267 438
1 878 036
358 453
19.1
230 999
396 929
384 486
103.2
230 502
1 684 840
307 947
18.3
191 640
351 961
331 572
106.1
194 307
R000
R000
R000
R000
1 852 260
1 417 154
1 388 519
(126 228)
1 692 839 1 510 467
1 234 948 1 000 088
1 300 070 1 152 796
(25 699)
81 091
1 221 169
840 370
985 227
81 572
1 139 312
708 594
871 200
101 389
1 070 829
583 926
815 363
160 665
%
%
%
times
times
%
37.9
50.0
35.1
2.4
2 498.2
(8.9)
35.3
46.1
36.0
2.3
176.1
(2.1)
34.1
43.6
35.9
2.4
117.4
8.1
35.0
44.5
34.5
2.3
38.7
9.7
32.4
42.5
35.7
2.2
24.0
14.3
29.0
38.2
36.1
2.1
14.9
27.5
cents
cents
cents
times
cents
cents
467.7
467.2
355
1.3
495.5
1 420
405.9
406.2
300.0
1.4
358
1 244
337.6
339.1
250.0
1.4
204
1 022
277.6
278.3
200.0
1.4
151
874
241.8
242.0
155.0
1.6
51
740
202.5
205.6
114.0
1.8
(31)
615
cents
cents
cents
%
%
times
11 200
11 518
9 550
3.2
4.2
24.0
9 700
11 095
8 072
3.1
4.2
23.9
8 350
8 350
4 431
3.0
4.1
24.7
4 405
4 650
3 510
4.5
6.3
15.9
3 850
4 525
2 456
4.0
6.3
15.9
2 560
2 560
1 325
4.5
8.0
12.6
Rm
99 807 435
11 178
99 242 435 97 827 435 96 192 435 95 817 596 94 894 596
9 627
8 169
4 237
3 689
2 429
*Five-year compound growth % p.a.
Definitions
Basic earnings per share: Net profit for the year divided by the weighted average
number of ordinary shares in issue during the year.
Cash realisation rate: This ratio is calculated by expressing cash generated by
operations as a percentage of EBITDA and reflects the proportion of cash operating profit
realised after working capital movements.
Closing dividend yield: Dividends per share as a percentage of market value per share
at year-end.
Closing earnings yield: Headline earnings per share as a percentage of market value per
share at year-end.
Closing price to earnings ratio: Market value per share divided by headline earnings
per share at year-end.
Net assets: Total assets other than cash, bank balances and deferred tax assets less
interest-free trading liabilities.
Net asset turn: Revenue divided by average net assets.
Net asset value per share: Ordinary shareholders’ equity divided by number of shares
in issue.
Net debt: Total interest-bearing borrowings less cash. It is calculated by adding current
and non-current interest-bearing borrowings and bank overdrafts and deducting positive
cash balances.
Net tangible asset value per share: Ordinary shareholders’ equity less intangible
assets divided by the number of shares in issue.
Operating profit: Profit before impairment losses, interest and tax.
Dividend cover: Headline earnings per share divided by dividends per share declared out
of earnings for the year.
Operating profit margin: Operating profit as a percentage of revenue. (Measures the
return on revenue of the operating activities of the Group.)
EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment losses.
Return on equity: Headline earnings as a percentage of average shareholders’ interest.
(Measures the return earned on the capital provided by the shareholders.)
Headline earnings: Net profit for the year adjusted for profit/loss on sale of property,
plant and equipment, investments and impairment losses.
Headline earnings per share: Headline earnings divided by the weighted average
number of ordinary shares in issue during the year.
Interest cover: Operating profit divided by net finance costs. (Measures the capability to
service borrowing obligations from current profit.)
Return on net assets: Operating profit as a percentage of average net assets. (Measures
the effectiveness with which the net assets were utilised.)
Return on total assets: Operating profit as a percentage of average total assets.
(Measures the effectiveness with which the total assets were utilised.)
Page 27
Strategic imperatives, Material issues and Sustainability
Over the past two decades our Logistics business has grown to comprise six Centres of Excellence
situated nationwide, designed to deliver an optimal service to our franchise partners. Total warehousing
space consists of 20 046 square meters under roof and an average of 1 609 line items are held in our
warehouses at any one time. Our fleet now numbers 111 trucks.
Page 28
Page 29
Strategic imperatives and Material issues
The table
opposite outlines
the Group’s
key Strategic
imperatives,
identifies the
Material risks
and issues which
might impact the
implementation of
those imperatives,
and specifies
the mitigating
actions and
responses which
are employed to
counter such risks.
Strategic imperative
1.
2.
Shape the brand portfolio and ensure our
key brands resonate across all consumer
touch points
3.
Engage the competition by strengthening
our gorilla brands
4.
Build superior routes-to-market and drive
lowest cost producer status
5.
6.
7.
8.
9.
10.
Page 30
Fortify the foundation which exists within
Manufacturing and Logistics
Win the race to conquer Africa
Execute on all aspects of B-BBEE
Ensure strong focus on leadership and
succession planning
Expand the business through diversification
Manage the transition from the existing
outdated information technology platform
Continue to drive the Group’s culture of
high performance
Famous Brands
Integrated Annual Report 2015
Material risk/issue
Our response
Restricted access to capital to fund activities
The business is highly cash generative and has a strong
balance sheet
Under-representation in the casual sit-down evening
dining segment
• Extend trading hours of appropriate existing
restaurants
• Pursue acquisition opportunities which specifically
cater for this evening dining occasion
Underperformance of the Wimpy and Steers brands
Conclude 360 degree evaluation of both brands in terms
of all consumer touch points
Group Channel Services and/or Logistics Services
functions stall
Continued up-weighting of investment in people and
processes
Global competitors intensify focus on expansion into
Africa
• Leverage first-to-market and narrow-and-deep
expansion strategies
• Pursue maiden entry into Ghana
• Continue with UACR repair process
• Acquire controlling equity stake in existing Botswana
Master Licence business
B-BBEE ownership transaction currently under
development fails to secure shareholder approval
Utilise industry experts to assist with structuring the
transaction based on their extensive best practice
experience
• Affordability of key personnel, resulting in margin
pressure
• Existing share option scheme proves unattractive in
terms of retention
• Acknowledge that this intervention is key to
sustainability and needs to be regarded as an
investment not an expense
• Convert to Share Appreciation Scheme and secure
shareholder approval
Absence of suitable targets that align with our strategy
Network with leading reputable financial institutions
which have access to extensive investment
opportunities
• Cost of investment
• Sub-optimal management of existing system while
transition is under way
• Identify best-of-breed information technology partners
• Prepare a comprehensive investment case for the
Board
Existing human resource diagnostic interventions are
not optimally employed
Robustly manage and measure implementation of the
Group’s integrated performance management
programme across the business
Page 31
Our key relationships
We are committed to creating value for our key stakeholders in the short, medium and long-term. Our
Value Added Statement on page 25 sets out the value the Group created for our stakeholders for the year
ended 28 February 2015.
Stakeholder group
How we engage with our stakeholders
Shareholders, market analysts and
• JSE SENS announcements
• Media releases covering key developments within the Group
funding institutions
• Integrated Annual Reports
• Annual General Meetings
• Company’s website
• Results presentations
• One-on-one interactions with investors and funding institutions
Customers (franchisees)
• National franchisee forums
• Personal contact
• Operations audits and reviews
• Operations campaigns
• Web and call-in support
• Annual brand conferences
Consumers and communities
• Web and call-in support
• Digital and social media
• Integrated Annual Reports
Suppliers and business partners
• Regular procurement interactions
Employees and unions
• Business feedback sessions
• Employee surveys
• Performance reviews and development discussions
Government and regulatory bodies
• Regular interactions with the relevant government institutions and
regulatory bodies
Page 32
Famous Brands
Integrated Annual Report 2015
Our key stakeholders’ interests and concerns are important to us. We have taken these into account in
determining material issues and risks set out on page 30, as well as other matters that are material for
inclusion in this Integrated Annual Report. The table below provides an overview of our key stakeholder
groups, how we engage with them, and their key interests and concerns.
Our stakeholder groups’ key interests and concerns
Further information
• Return on investment and dividends
• Sustainable earnings growth through acquisitive and organic growth
• Page 30, Strategic imperatives and
• Corporate Governance, ethical and competent leadership
• Strong brands
• Efficient, effective and competitive Supply Chain
• Marketing spend
• Location of restaurants
• Franchise and business management support
• Product quality
• Strong brands and value offering
• Location accessibility, convenience and positive total consumer
experience
• Sponsorships and other corporate social investments
• Timely payment
• Continuity of supply
Material issues
• Page 46, Corporate Governance report
• Page 30, Strategic imperatives and
Material issues
• Page 37, Transformation (skills development)
• Page 38, Safety, Health and the Environment
(food safety)
• Page 30, Strategic imperatives and
Material issues
• Page 37, Corporate Citizenship
• Page 37, Transformation (preferential
procurement and enterprise development)
• Fair treatment
• B-BBEE compliance
• Job security
• Remuneration and recognition
• Page 34, Human Capital
• Page 30, Strategic imperatives and
• Equal opportunities and career development
• Training and skills development
Material issues
• Page 38, Safety, Health and the Environment
• Safe working environment
(employee health and safety)
• Tax revenues
• Compliance with legislation and other regulatory frameworks
• Page 25, Value Added Statement
• Page 46, Corporate Governance report
• Transformation
• Supporting communities
• Page 36, Transformation
• Page 37, Corporate Citizenship
• Responsible usage of natural resources
• Page 39, Safety, Health and the Environment
(environment)
Page 33
Human Capital
Empowerment and talent management
Human Capital is considered a core corporate asset at
Famous Brands, with the calibre of our people being a key
ingredient to our success. This means hiring the best and
helping them fulfil their potential thus building management
capability. Key competitive advantages arise from a team of
motivated, well-trained employees passionate about what
they do. At Famous Brands, we believe that true
empowerment gives people responsibility and also the
freedom to live up to that responsibility.
Talent management (performance and potential) is measured
through our bi-annual Human Capital reviews. Performance is
assessed through a scorecard measurement process against
clearly defined accountability criteria or goals set out at the
commencement of the year. Potential is identified through
ranking employees and managing training and development
opportunities arising from that intervention. Remuneration
recommendations including discretionary performance-based
bonuses are linked to the assessment process.
Key to the sustainability and future of our business is
managing the succession pipeline, in particular, of senior and
executive employees. Our target is to ensure a 1:2 succession
cover ratio of the leadership level, meaning that each leader
has at least two potential successors. One who can fill the
position within a short time span and the second, in the
long-term. Key performance indicators (KPIs) are included in
executive and management scorecards in support of this
sustainability imperative. Famous Brands believes in
motivating the entire workforce and has an annual
Page 34
recognition ceremony (Growth Champions) where
appreciation is shown to those specific employees who have
demonstrated dedication, devotion and commitment to their
work beyond the norm.
Internal recruitment and promotion is a natural part of our
growth culture whereby employees are positioned to align
their capabilities with our business plan. Where additional
skills are needed they are recruited externally in an efficient,
rigorous and cost-effective process. Sourcing suitable talent
from the external market remains a challenge.
Employee satisfaction and morale
Annual morale measurements serve as an indicator of overall
organisational health. Our climate survey scores translate into
Business Unit action plans and our effectiveness is monitored
by successfully utilising this tool as the “people barometer” of
the business. Our most recent surveys which were conducted
in June 2014 for Bargaining Unit employees and August 2014
for Administration employees indicated a high level of
employee engagement and motivation.
Legislative compliance
The Group continues to comply with legislation governing the
employment relationship in line with the requirements of the
Departments of Labour and Culture, Arts, Tourism, Hospitality,
Sport and Education Training Authority. This includes the
Labour Relations Act, Employment Equity Act and the Skills
Development Act. There are systems in place to monitor
changes to legislation and if changes occur, the implications
on our operations are assessed and communicated to
relevant stakeholders.
Famous Brands
Integrated Annual Report 2015
Labour relations
The Group’s workforce comprises 911 (2014: 901) employees belonging to the Bargaining Unit, of whom 77% (2014: 71%) are
unionised. The table below sets out trade union representation with respect to the number of unionised employees.
2015
Union name
Security, Cleaning, Manufacturing
and Allied Workers Union
Hotel, Liquor, Catering Commercial
and Allied Workers Union of
South Africa
National Security Commercial and
General Workers Union
Food and Allied Workers Union
Metal and Electrical Workers Union
of South Africa
South African Transport and Allied
Workers Union
Professional Transport and Allied
Workers’ Union of South Africa
2014
Number
of
employees
% of
unionised
employees
% of total
Bargaining
Unit
employees
Abbreviated
union
name
Number
of
employees
% of
unionised
employees
% of total
Bargaining
Unit
employees
SCMAWU
667
95.4
73.3
610
95.9
67.7
HOTELICCA
11
1.6
1.2
15
2.4
1.7
NASECGU
FAWU
3
2
0.4
0.3
0.3
0.2
6
2
0.9
0.3
0.7
0.2
MEWUSA
2
0.3
0.2
2
0.3
0.2
SATAWU
13
1.9
1.4
–
–
–
PTAWU
1
0.1
0.1
1
0.2
0.1
Number of Bargaining Unit
employees belonging to
a union
699
100.0
76.7
636
100.0
70.6
Number of Bargaining Unit
employees not belonging
to a union
212
23.3
265
29.4
Total number of Bargaining
Unit employees
911
100.0
901
100.0
The Group Human Resources Executive, together with two appointed line executives, engages with the unions regarding
negotiations and various other Bargaining Unit employee-related matters. The Group has a grievance policy, which together with
the disciplinary procedures manual, is contained in the staff services manual. The content of the staff services manual is covered
during employee induction and copies are available to employees electronically or in hard copy. During the 2015 financial year,
there were no incidents of industrial action in the Group.
Page 35
Transformation
Famous Brands supports the principles of Broad-Based
Black Economic Empowerment (B-BBEE) and measures its
transformation progress against the Generic Tourism Sector
Code and targets aligned to the Department of Trade and
Industry’s B-BBEE Codes of Practice. Through its main
operating wholly-owned subsidiary, the Group holds a level 6
(2014: level 7) B-BBEE status, which was independently
verified by Empowerdex, an economic empowerment
rating agency.
Management control
While the Board acknowledges that management control is
one of the key transformation challenges it is faced with, as
reflected in the Group’s score of 1.18/12 (2014: 0.33/12),
progress has been made over the past few years with regard
to Board transformation. The Nominations Committee takes
Board transformation into account when recommending new
appointments to the Board.
Employment equity
The Group has a transformation policy and strategy in place.
Our executive leadership is responsible for the
implementation of the strategy in their respective functional
areas. Progress is monitored by the Group’s Transformation
Manager, who has ongoing executive support, to ensure that
transformation initiatives are carried out across the
organisation with integrity and conviction. The Chairman of
the Social and Ethics working group, Darren Hele (Chief
Executive Officer – Food Services), reports on the Group’s
transformation progress to the Social and Ethics Committee.
Ownership
The Group’s score of 0.92/20 remained unchanged during the
year under review. The Board believes that improving the
scorecard with regard to the ownership element is a business
imperative in context of the Group’s growth agenda, and is in
the process of exploring opportunities to address this.
A proposal in this regard will be presented to the Board in due
course and shareholder approval will be sought in 2016.
The objectives of the Group’s employment equity policy and
plan are to achieve equity in the workplace through the
promotion of equal opportunities for and fair treatment of its
workforce, as well as applicants for employment by:
• eliminating unfair discrimination that may exist in policies,
practices, procedures and the work environment;
• implementing affirmative action measures to redress
the disadvantages experienced by designated groups in
the past;
• promoting diversity and respect for all employees; and
• achieving equitable representation of all demographic
groups at all levels and in all categories of the workforce as
the ultimate tangible objective.
The Group employs 1 472 (2014: 1 395) permanent employees in South Africa and 148 (2014: 47) non-permanent employees. Our
female employees constitute 29% (2014: 27%) of our total permanent workforce. The table below sets out the racial and gender
profile of our permanent workforce by occupation level:
Occupational level
Top management
Senior management
Professionally qualified and
experienced specialists and
mid-management
Skilled technical and
academically qualified workers,
junior management, supervisors,
foremen and superintendents
Semi-skilled and discretionary
decision-making
Unskilled and defined decisionmaking
Total permanent employees
Male Female
2015
Total
Black* White
Male
Female
2014
Total
3
34
–
13
3
47
–
3
3
44
3
30
–
11
3
41
–
2
3
39
70
71
141
51
90
65
55
120
28
92
138
152
290
148
142
133
141
274
127
147
505
101
606
580
26
585
118
703
679
24
302
83
385
385
–
197
57
254
253
1
1 052
420
1 472**
1 167
305
1 013
382
1 395**
1 089
306
* Black as defined by the Department of Trade and Industry Codes of Good Practice relating to B-BBEE.
** Excludes 10 (2014: 11) Famous Brands employees in the UK.
Page 36
Black* White
Famous Brands
Integrated Annual Report 2015
Skills development
We are committed to creating a culture of learning. The Group
has a forum in place whose objective is to enforce
implementation of the Employment Equity and Skills
Development Acts. Compliance is monitored via accepted
procedures and guidelines. Reporting to the Social and Ethics
working group is a nominated skills representative who is
responsible for monitoring targets and progress against our
committed plans.
Our registered Skills Development Facilitator is tasked with
the submission of plans and reports (including workplace
skills plan and actual training report) to the Departments of
Labour and Culture, Arts, Tourism, Hospitality, Sport and
Education Training Authority on an annual basis. The budget
for skills development is measured accordingly, and
deviations from the set plan are managed. During the course
of the year, 93 (2014: 46) black employees, of whom 14
(2014: 13) were female, received certified training in the
following areas: financial management, information
technology, customer care, and health and safety.
Over and above developing the skills of our employees, we conduct extensive training for our franchisees and their employees
via our Centres of Excellence in each of our six regions. The table below sets out the number of delegates trained during the year
under review:
Number of delegates trained
Region
Gauteng
Mpumalanga
Free state
KwaZulu-Natal
Eastern Cape
Western Cape
Total number of delegates trained
Franchisee
workshops
Brand
product
training
Fundamentals
Restaurant
Management
871
1 422
2 047
2 449
1 082
2 147
8 700
651
822
1 299
2 016
1 259
2 170
80
87
180
64
211
2 153
10 018
14 747
2 792
2 153
Ad-hoc
training
While the table above reflects the Group’s commitment to
training its franchise partners and their employees, franchisee
training does not count towards the Group’s skills
development score as the delegates are not direct employees
of the Group. The Group’s skills development score improved
from 3.61/18 in the prior year, to 4.82/18 in the financial year
under review as a result of our continued efforts to
strengthen the skills of our employees.
commitment to being a responsible corporate citizen. Our
corporate social investments are set out below.
The company undertook an internship initiative with the
Nelson Mandela Metropolitan University in the prior financial
year and we retained the two interns who graduated from the
programme as permanent employees of Famous Brands.
We believe that the communities we serve should be better
off as a result of our presence.
Preferential procurement
The Group’s procurement processes take into account the
B-BBEE status of all our suppliers and potential suppliers. Our
score of 17.77/20 improved from 15.58/20 in the prior year.
Enterprise development
The Group maintained its score of 10/10 with respect
to enterprise development, which is attributable to its
commitment to supporting the growth of small business
enterprises.
Socio-economic development
The Group maintained its score of 10/10 with respect to
socio-economic development, which is reflective of our
Corporate Citizenship
Consequently, our franchisees invest in locality projects, and
our employees are engaged in voluntary community service
initiatives, which included visits to various charity
organisations during the year under review.
In addition to this, the Group supported a range of
community-based projects as set out in the table below:
Sports sponsorships
Donation of products
Other corporate social
investment initiatives
Total
2015
R
2014
R
8 813 251
529 565
3 306 400
211 316
2 083 190
1 037 328
11 426 006
4 555 044
Page 37
Safety, Health and the Environment
The Group is committed to sustainable business practices
and acknowledges its responsibility for providing a healthy
and safe working environment for its employees, adhering to
high food safety standards and conducting business in an
environmentally responsible manner. The Group has policies
and controls in place to measure and monitor its
sustainability performance. Where necessary, material issues
and risks related to employee health and safety, food safety
and the environment are escalated to the Social and Ethics
Committee via the Chairman of the Social and Ethics working
group, Darren Hele (Chief Executive Officer – Food Services),
and to the Audit and Risk Committee where appropriate.
Employee health and safety
The Group complies with the requirements prescribed by the
Occupational Health and Safety Act. Safety, Health,
Environment and Quality assurance (SHEQ) Committees are in
place across the Group’s operations and conduct monthly
meetings. All accidents and/or occupational diseases
associated with our production and/or manufacturing
activities are recorded and reported on.
Occupational Care South Africa, a level 4 empowered supplier,
to address the wellness needs of our employees. Assistance
takes the form of on-site primary and occupational care in
addition to external referrals for professional and medical
support. This service includes the management of lifethreatening diseases where the company is committed to
providing education and, in instances, medication to improve
the quality of life of affected employees.
The benefits of this confidential programme are:
• the Group bears the costs of this intervention;
• referrals to general practitioners are paid for by the Group;
• costs of medication are paid for by the Group;
• assistance with access to and delivery of medication
to affected employees;
• employees are attended to by experienced counsellors
who educate the patient and the family about the
disease; and
• treatment and monitoring during pregnancy to reduce the
risk of mother to child transmission.
Food safety
Health and safety risk assessments are conducted by an
approved inspection authority every three years. The latest
inspection was conducted during the financial year ended
2014. The assessments highlight areas for improvement and
the required corrective actions are incorporated into
management Key Performance Indicators for ongoing
monitoring. The Group has programmes and procedures in
place to mitigate key health and safety risks. All necessary
precautions and measures are taken to ensure the safety of
employees. Management is committed to adhering to strict
guidelines in terms of monitoring and implementing health
and safety requirements at all its premises. This is done
through SHEQ committees as well as appointed responsible
people in terms of the Occupational Health and Safety Act.
Health and safety training in respect of fire prevention and fire
fighting, as well as basic first aid, is mandatory for all staff. The
Group uses the industry standard Disabling Injury Frequency
Rate (DIFR) and Accidents Frequency Rate to measure its
safety record. The Group maintained a Nil DIFR record for
both the year under review and the prior year. The Accidents
Frequency Rate was 1.16 (2014: 1.06). There were no fatalities
during the year (2014: Nil fatalities).
There is recognition that HIV/Aids, among other challenges
faced by South African businesses, is a serious concern and
thus Famous Brands is in full support of the government in
the fight against the pandemic. In alignment with the
Employment Equity Act, No. 55 of 1998, which focuses on
non-discrimination against employees diagnosed with the
disease, Famous Brands ensures a high level of confidentiality
in this regard. We partner with an outsourced third party,
Page 38
The Group is committed to the highest food safety standards
as embodied in our corporate Total Quality and Food Safety
and Management (TQFSM) commitment policies supported at
the highest level. Famous Brands has developed a
documented TQFSM system based on the internationally
recognised Global Food Safety Initiative-benchmarked Food
Safety System Certification (FSSC) 22000 standard for all its
business units. This system is in the process of being
implemented company-wide.
Our coffee manufacturing facility will be the first to obtain
FSSC 22000 certification in May 2015. Two further facilities,
which are currently Hazard Analysis and Critical Control
Points (HACCP) certified, will be converted to FSSC 22000 in
the 2016 financial year. The Group’s aim is to ensure that all
manufacturing facilities are FSSC 22000 certified by 2017.
All of our manufacturing facilities, with the exception of one
where implementation is still in progress, were successfully
audited by an independent, accredited auditing body against
the strict food safety assessment retail audit standard that
covers food safety management systems, prerequisite
programmes and HACCP criteria.
The TQFSM system is centrally managed by a highly
competent technical team supported by skilled quality and
food safety co-ordinators who manage the day-to-day
aspects of food safety and quality at plant level.
Famous Brands
Integrated Annual Report 2015
Environment
The Social and Ethics working group is responsible for
monitoring the Group’s environmental practices and reports
to the Social and Ethics Committee on its activities. During the
year under review, the Social and Ethics working group
developed an Environmental and Climate Change policy,
which will be rolled out to the business during the 2016
financial year. The policy sets out the Group’s commitment to
responsible environmental practices and identifies key areas
of focus and objectives with respect to climate change, air
pollution reduction and eco-efficiency. These objectives
include:
• optimisation of transport efficiencies with regard to our
Logistics fleet;
• on-going review and implementation of energy saving
initiatives;
• conversion of paraffin fuelled boilers to Compressed
Natural Gas (CNG);
• investigating alternative cleaner fuel and energy options
(with lower GHG emission factors);
• efficient water usage and effluent management; and
• maximising recycling opportunities for our general waste as
part of our waste management initiatives.
Energy
The sources of energy primarily utilised in our business
operations include electricity, paraffin, diesel and Liquefied
Petroleum Gas used at our manufacturing facilities and our
corporate premises. The Group owns a fleet of trucks and
motor vehicles which use diesel and petrol.
During the year under review, management identified and
quantified energy savings projects, including an energy
efficient lighting project which will be implemented during
the 2016 financial year. An independent party was contracted
to perform a baseline energy audit in order to identify further
energy savings opportunities. Management has also
embarked on an energy efficiency initiative to convert the
Group’s paraffin fuelled boilers to natural gas by the end of
the 2016 financial year. The Group’s energy consumption
during the year under review is represented in the
table below:
2015
Unit of
Source of energy measure
Electricity
Diesel
Petrol
Paraffin
Total carbon
emissions
Number
of units
Emissions
(Tons)
Mwh
Kilolitres
Kilolitres
Kilolitres
12 191 033 13 044 406
1 152
3 075
567
1 321
490
1 225
Tons
13 050 027
Water
Management commenced with water-saving initiatives during
the 2014 financial year which aimed to reduce underground
water leakage. This initiative resulted in savings of 2.4 million
litres during the 2015 financial year. A water reduction
awareness initiative aimed at behavioural changes is also in
place. As part of this initiative, our irrigation water
requirements are met using ground water.
Packaging and waste management
The Group’s waste management procedures are well
entrenched across its manufacturing facilities. The table
below sets out the percentage of packaging waste recycled at
our Gauteng manufacturing sites:
2015
Packaging waste
Cardboard
Plastic
General waste
Recycled
(Tons)
Recycled
(%)
147 560
7 725
10 274
89
5
6
165 559
100
Page 39
Governance and Remuneration
Twenty years on since listing, we have built substantial strategic manufacturing capability, manifested by
13 manufacturing sites producing meat and chicken products, bread and bakery products, sauces and
spices, ice-cream, fruit juice, coffee and cheese.
Page 40
Page 41
Governance and Remuneration continued
Board of Directors
Non-executive directors
Santie Botha (50)
Bheki Lindinkosi Sibiya (58)
BEcon Honours
Chairman of the Board and Independent non-executive director
BAdmin, MBA
Independent non-executive director
Appointed to the Board in June 2012
Chairman of the Nominations Committee
Member of the Remuneration Committee
Attends the Audit and Risk Committee meetings
by invitation
Appointed to the Board in March 2004
Member of the Remuneration Committee
(Chairman)
Member of the Audit and Risk Committee
Member of the Social and Ethics Committee
Member of the Nominations Committee
Directorships in other listed entities:
Curro Holdings Chairman and non-executive
director
Liberty Holdings Non-executive director
Telkom
Non-executive director
Tiger Brands
Non-executive director
Directorships in other listed entities:
Pinnacle Holdings
Non-executive director
Pretoria Portland Cement Chairman and
non-executive director
Tiger Brands
Deputy Chairman and
non-executive director
Santie is currently the Chancellor of the Nelson
Mandela Metropolitan University in Port Elizabeth.
She served as an executive director of the MTN
Group (2003 to 2010) and prior to that, of Absa Bank
(1996 to 2003). She commenced her career at
Unilever. Santie has received a range of awards
including Marketer of the Year (2002) and Business
Woman of the Year (2010).
Bheki brings to the Board a wealth of expertise
in BEE, employment equity, change management
and corporate governance gained as former Chief
Executive of the Chamber of Mines, Chief Executive
Officer of Business Unity South Africa, director of
the Wits Business School, and from experience
attained in a range of positions held at companies
including Transnet, Tongaat Hulett Sugar,
SA Breweries and Ford Motor Company.
Christopher Hardy Boulle (43)
Khumo Shuenyane (43)
BCom, LLB, LLM
Non-executive director
BEcon and International Studies, CA (England and Wales)
Independent non-executive director
Appointed to the Board in December 2011
Member of the Audit and Risk Committee
(Chairman)
Member of the Social and Ethics Committee
(Chairman)
Member of the Remuneration Committee
Member of the Nominations Committee
Appointed to the Board in February 2014
Member of the Audit and Risk Committee
Member of the Social and Ethics Committee
Member of the Nominations Committee
Khumo is a business executive with extensive
experience in finance, mergers and acquisitions,
private equity and corporate strategy. He served at
MTN Group Limited as Group Chief Mergers and
Acquisitions Officer between June 2007 and June
2013, and was previously head of Principal
Investments at Investec Bank Limited, where he
commenced his career in 1998 within the Corporate
Finance division.
Directorships in other listed entities:
Advtech
Non-executive director
Amalgamated
Electronic Corporation Non-executive director
Chris is a commercial, corporate finance, tax and
trust attorney and his expertise includes
cross-border transactions, mergers and
acquisitions, BEE transactions and advising on stock
exchange listings both locally and internationally.
His experience as a non-executive director of listed
companies spans over a decade. He commenced
his legal career at HR Levin Attorneys where he is
now one of the two senior partners.
Khumo resigned from the Board and related Board
Committees with effect from 26 February 2015.
Norman Adami (61)
Bachelor of Business Science (Hons), MBA
Independent non-executive director
Appointed to the Board in February 2015
Member of the Audit and Risk Committee
Member of the Nominations Committee
Directorships in other listed entities:
Allied Electronics Corporation Limited (Altron)
Non-executive director
Norman has had an extensive career with SABMiller, which commenced at SAB (Pty) Ltd in 1979. He was appointed Managing Director of SAB in
1994 and Chairman in 2000. In 2003, he was installed as President and Chief Executive Officer of the newly acquired Miller Brewing Company.
In 2006, he was appointed President and Chief Executive Officer of SABMiller Americas. In this position he was responsible for Miller Brewing
Company and SABMiller’s South and Central American business units. In October 2008, he once again took on the role of Managing Director and
Chairman of SAB Limited. He retired from SABMiller on 31 October 2014.
He is also a partner in Stud Game Breeders, one of the pre-eminent groups leading the emergence of South Africa’s burgeoning game breeding
industry, which has made great strides in revitalising threatened animal species and in creating sustainable employment in many rural areas.
Page 42
Famous Brands
Integrated Annual Report 2015
Executive directors
Founding members of the company
Kevin Alexander Hedderwick (62)
Panagiotis (Peter) Halamandaris (68)
Group Chief Executive
Non-executive director
Appointed to the Board in March 2001
Attends the Audit and Risk Committee meetings
by invitation
Attends the Remuneration Committee meetings
by invitation
Attends the Nominations Committee meetings
by invitation
Attends the Audit and Risk Committee meetings
by invitation
Member of the Nominations Committee
Peter has made an important contribution to the
Famous Brands Group since 1974. He has served
on various portfolio committees over the years,
assuming the position of Chairman of the company
upon listing in November 1994. As from March
2007, Peter assumed the position of non-executive
Chairman. On 24 October 2013, Peter retired as
non-executive Chairman. He has remained on the
Board as a non-executive director.
Directorships in other listed entities:
Holdsport Limited
Non-executive director
Kevin joined the Group in February 2000 as
Managing Director of the Steers brand. He has
an excellent business record, combining food,
beverage and franchising expertise. Kevin has held
senior executive positions in a number of blue-chip
companies including SA Breweries, Distell and
Foodcorp. In March 2001, Kevin was appointed
Chief Operating Officer, a position he held for nine
years, before being appointed Chief Executive of
Famous Brands in May 2010. With effect from
1 March 2014, Kevin assumed the role of Group
Chief Executive.
Theofanis Halamandaris (64)
Non-executive director
Member of the Nominations Committee
Theofanis has made a significant contribution to the
Group since 1974 through the fulfilment of various
responsibilities. He assumed the position of Chief
Executive Officer in March 2001, after serving as the
Group Managing Director for three years. After
retiring as Chief Executive Officer in May 2010,
Theofanis took over from John Lee Halamandres as
Deputy Chairman of the Group. In 2014, he became
a non-executive director.
Darren Paul Hele (43)
BCom
Chief Executive Officer – Food Services
Appointed to the Board in January 2013
Attends the Social and Ethics Committee meetings
by invitation
Darren commenced his career at Pleasure Foods
Limited while studying for and completing a BCom
degree. After participating in the management
buyout of Pleasure Foods in 1996 he held executive
roles at Whistle Stop and Wimpy before joining
Famous Brands in 2003. He served as Managing
Director of Wimpy in South Africa and later the
United Kingdom. He was appointed Chief Operating
Officer – Franchising division in May 2011 and in
January 2013 assumed the position of Chief
Operating Officer for the Group. With effect from
1 March 2014, Darren assumed the role of Chief
Executive Officer – Food Services.
Periklis Halamandaris (60)
Non-executive director
Member of the Nominations Committee
Periklis was one of the original founding
members of the Group and has in excess of
20 years’ experience in the food and franchising
industry. He was appointed to the Board of
Famous Brands Limited in 1994 and was
responsible for expanding the operations of the
Group beyond the borders of South Africa. Periklis
resigned from the Board during the course of 1999
to concentrate on his private business. In March
2001, he was re-appointed to the Board as a
non-executive director.
Norman Richards (61)
FCIS, MBA
Group Financial Director
Appointed to the Board in July 2013
Attends the Audit and Risk Committee meetings
by invitation
Attends the Social and Ethics Committee meetings
by invitation
Norman joined Famous Brands in September 2012
as Change Management Executive, responsible for
managing and driving the Fit 4 Purpose business
model transformation intervention. Norman is a
21-year veteran of SA Breweries Beer division,
where he held a number of executive positions in
finance, both locally and internationally. Prior to
joining Famous Brands, Norman founded and
managed two consulting companies and a software
services company, all within the supply chain field.
Norman assumed the role of Group Financial
Director with effect from 1 July 2013.
John Lee Halamandres (61)
Non-executive director
Member of the Nominations Committee
With experience in all aspects of Famous Brands’
business, John retired from executive management
in March 2001. A founding member of the company,
he served as Managing Director from November
1994 until March 1997, after which he assumed the
role of Chief Executive Officer until his appointment
as non-executive Deputy Chairman in March 2001,
a position he held until May 2010. John continues to
serve on the Famous Brands Board in the capacity
of non-executive director.
Page 43
Governance and Remuneration continued
Executive Leadership
Page 44
Arlene Botha (52)
Darryl Denton (47)
Group Human Resources Executive
Group Manufacturing and Technical Executive
Arlene has extensive experience in the human
resources field, having started her career in the
brewing industry while completing her postgraduate
Diploma in Management – Human Resources at
Wits Business School. She later joined the soft
drinks industry and thereafter spent some time with
a multi-national tobacco company, before joining
Famous Brands in October 2008.
Darryl has extensive experience in the
manufacturing field. He began his career in the
brewing industry in which he served for 20 years. He
subsequently worked for five years in the household
and cosmetics FMCG manufacturing field. He has
a diploma in Supply Chain Management, as well
as a Certification in Production and Inventory
Management. Darryl joined Famous Brands in
January 2013.
Bruce Layzell (44)
Derrian Nadauld (42)
Managing Executive – International Markets
Managing Executive – Debonairs Pizza
Bruce has a Bachelor of Science in Construction
Management from the University of Natal and an
MBA from the University of Southern Queensland.
He worked in various roles in the construction
and property industry before joining the mobile
telecommunications industry in 1996. He joined
Vodafone Plc in the United Kingdom as part of
their global leadership programme in 2004 and led
a range of strategic projects. Bruce joined Yum!
Restaurants International in 2006 as an operations
executive and in 2008 was appointed to head the
organisation’s expansion into new African markets.
He joined Famous Brands in April 2015 to lead the
International business.
Derrian joined Famous Brands in May 2000 as
a member of the Debonairs Pizza’s operations
team. Over the past 15 years, he has held various
operational, management and executive roles
within Debonairs Pizza, Steers, Coffee Brands and
Wimpy. Between November 2008 and December
2011, Derrian served as Managing Executive of
Debonairs Pizza and was appointed Managing
Executive of Wimpy in January 2012. In March
2013 he was appointed Chief Marketing Officer,
whereafter he served as Managing Executive –
International Markets. In March 2015 Derrian was
appointed Managing Executive of Debonairs Pizza.
Chris Botha (56)
Johann Krige (54)
Group Information Technology Executive
Managing Executive – Operations and Logistics
Chris’s career in Information Technology spans
30 years, with 20 of those being in a senior
management role. During his career he has
facilitated the design and implementation of
business systems for organisations operating in
the financial, utilities, mining and FMCG business
sectors, including the evaluation, selection and
implementation of ERP solutions. Before joining
Famous Brands Chris managed his own IT
consultancy for six years, assisting clients to define
their IT governance frameworks based on King
III and establishing IT strategies to support their
business objectives. Chris was appointed Famous
Brands Group IT Executive in July 2012.
Johann joined Famous Brands in May 2014. Prior to
that he had an extensive 25-year career with a blue
chip beverage organisation. Johann’s experience
includes Sales, Distribution, Supply Chain, Trade
Marketing, Production and General Management at
both strategic and operational levels.
Famous Brands
Integrated Annual Report 2015
Kelebogile (Lebo) Ntlha (32)
Pedja Turanjanin (47)
Group Financial Executive and Company
Secretary
Group Procurement Executive
Lebo is a Chartered Accountant (SA) and holds
an MBA degree (awarded cum laude) from
Wits University. She completed her articles with
PricewaterhouseCoopers in 2007, after which
she gained extensive experience in International
Financial Reporting Standards (IFRS) in her roles
as Group Technical Accounting Adviser at Eskom
and Group Reporting Manager at African Oxygen
Limited. Lebo has had responsibility for various
functions within finance, including ensuring
compliance with the JSE Listings Requirements.
She made a considerable contribution in the area
of Integrated Reporting in her previous role as a
result of insights gained from her research report on
Integrated Reporting. Lebo joined Famous Brands
in July 2014.
Linda Thomas (42)
Chief Marketing Officer
After completing her Bachelor of Social Science
degree at the University of Natal, Linda joined the
pharmaceutical industry and for ten years held
various sales management and marketing positions.
In 2000 she joined Adcock Ingram, a division of
Tiger Brands, as a brand manager. Whilst at Tiger
Brands, Linda was promoted to Category Marketing
Manager on the Condiments and Ingredients
portfolio. In 2007 she joined Famous Brands as
Marketing Executive for Debonairs Pizza and has
managed various Marketing Executive portfolios
since then. In 2015, Linda was appointed Chief
Marketing Officer.
Mark Hedderwick (54)
Managing Executive – Channel Services
Mark has extensive experience in the retail
industry. In 1989 he joined the mainstream food
retail sector and became one of the pioneering
members of the Spar group’s entry into the
Eastern Cape whereafter he was appointed to the
Spar National Guild Board of Directors in 1995.
In 2001 he and his family emigrated to Australia
where they owned and ran a franchised restaurant.
On returning to South Africa in 2003, he rejoined
the Spar group and was appointed as Divisional
Marketing and Merchandise Director in the Eastern
Cape region and subsequently the Northern and
Southern Inland regions. Mark joined Famous
Brands in March 2010 as Managing Executive of
the Wimpy brand. In March 2013 he was appointed
Managing Executive – Emerging Markets and in
March 2015 he was appointed Managing Executive
– Channel Services.
Pedja began his career in a family business with
his father, whilst studying engineering at Sarajevo
University. Upon arrival in South Africa in 1991 he
joined Steers Holdings. After gaining experience
at Steers Restaurants he moved into operations
and thereafter into Manufacturing and Logistics.
Pedja was appointed Group Procurement and
Quality Assurance Executive and later Managing
Executive – Developing Brands and Markets. In
November 2012 he resumed the position of Group
Procurement Executive.
Susan Venter (52)
Operations Executive – Finance
Susan holds a Bachelor of Commerce degree from
the University of North West. After a successful
career at The Cold Chain (ICS Group, Barlows) where
she was General Manager for one of the branches,
she joined Famous Brands as Logistics Financial
Manager in July 2008. Susan was promoted to an
executive role in August 2010. She played a critical
role in managing the accounting system project
when the company’s Manufacturing and Logistics
divisions were combined into the Supply Chain
division, as well as in the restructuring of Operations
Finance as part of implementing the Fit 4 Purpose
business model.
Steven Dike (45)
Managing Executive – Joint Venture
Business Units
Steven completed his Bachelor of Architecture at
the University of the Witwatersrand in 1994 and
thereafter completed his professional registration
as an Architect. He managed his own architectural
practice before joining a listed restaurant franchisor
as a Design Manager in 1998. Steven joined Famous
Brands in 2002 and has 17 years’ experience in the
franchising and restaurant industry. He held the
position of Group New Business and Development
Executive until 2014 when he was appointed to the
role of Managing Executive – Joint Venture Business
Units. In his current role he is responsible for the
management of the Joint Venture and Emerging
Brands Business Units at Famous Brands.
Page 45
Governance and Remuneration continued
Corporate Governance report
Statement of commitment
The Board of Directors of Famous Brands is fully committed
to business integrity, fairness, transparency and
accountability in all of its activities. In support of this
commitment, the Group’s executive leadership subscribes to
sound corporate governance in all aspects of the business
and to the ongoing development and implementation of best
practices. In line with our guiding principles of sustainable
growth and integrity, Famous Brands has a code of ethics (the
code) in place which articulates the Group’s commitment to
doing business ethically. The code is included in the Group’s
Board induction pack and is distributed to new employees
when they join the Group. The code requires all directors and
employees to act with honesty and integrity, and to maintain
the highest ethical standards. It deals with compliance with
laws and regulations, conflicts of interest, relationships with
customers and suppliers, remuneration, outside employment
and confidentiality. The code further prohibits employees
from accepting bribes, provides guidelines with respect to
receiving gifts and informs directors and employees about
the Group‘s confidential reporting service to which unlawful
or fraudulent activity can be reported. The Group does not
make donations to political parties.
Governance framework
The Board takes guidance from the following regulatory and
good governance frameworks in defining the Group’s
governance and compliance framework:
• King III;
• The Companies Act of South Africa;
• JSE Listings Requirements; and
• IIRC Integrated Reporting Framework.
Details of our King III compliance can be found on the
company’s website at www.famousbrands.co.za.
Our governance structure
The Board and Board Committees are supported by appropriate management structures and governance processes, which are
reviewed continually to ensure that they remain effective in delivering against the company’s strategic objectives.
BOARD
Management structures
Audit and Risk
Committee
Executive Leadership
Social and Ethics Committee
IT Steering Committee
Remuneration
Committee
Safety, Health and
Environment Committee
Nominations
Committee
Social and Ethics working group
(refer page 44)
Executive directors
Group Chief Executive: Kevin Hedderwick
Chief Executive – Food Services: Darren Hele
Group Financial Director: Norman Richards
Page 46
Famous Brands
Integrated Annual Report 2015
Board composition
As at 28 February 2015, the Board comprised eight nonexecutive directors and three executive directors. Of the
eight non-executive directors, four are founding members
of the company. Although five of the non-executive directors
are not independent in terms of the King III independence
criteria, the company has a unitary Board and no individual
member of the Board has unfettered powers of decision
making. Future appointments to the Board will be proposed
mindful of King III independence criteria.
The company has an Independent non-executive Chairman,
whose role is separate from the role of the Group Chief
Executive, thus ensuring that there is a balance of authority
with regard to the Board’s decision-making processes.
A separation of these roles achieves the necessary
segregation of duties between the Chairman’s duty to
provide overall leadership to the Board, which has
responsibility for approving the company’s strategy, and the
Group Chief Executive’s role, which has responsibility for the
execution thereof. The Group Chief Executive is guided by an
approvals framework, which sets out the respective
responsibilities of the Board and executive management.
The composition of the Board is reviewed continually to
ensure that the Board, collectively, has a balance of the
necessary skills, knowledge and experience to assist in
effectively discharging its duties and responsibilities.
Board appointment, retirement and rotation
Appointments to the Board are made in a formal and
transparent manner and are a matter for the Board as a
whole, as assisted by the Nominations Committee. The
Nominations Committee is guided by an approved policy
document. Taking into consideration the skills and expertise
required by the Board, any of the directors may propose an
individual to serve on the Board. Such a nomination will only
be effective once approved by a majority of directors passed
in a properly constituted manner. Appointments made by the
directors require approval by shareholders at the next Annual
General Meeting (AGM).
A tailored induction programme for newly appointed
directors is in place.
There are no service contracts with non-executive directors.
Executive directors’ service agreements may be terminated
with three months’ notice.
AGM. The retiring directors may offer themselves for
re-election. Brief curricula vitae of the directors retiring by
rotation and offering themselves for re-election are set out
on pages 42 and 43 of this Integrated Annual Report. The
appointment of new directors is subject to confirmation by
shareholders at the first AGM after their appointment.
Board charter
The Board’s general powers and terms of reference are
outlined in the company’s MOI and the company’s Board
charter. The primary functions of the Board are to:
• review and approve corporate strategy;
• determine the Group’s purpose and values;
• retain full and effective control of the Group;
• approve and oversee major capital expenditures,
acquisitions and disposals;
• review and approve annual budgets and business plans;
• monitor operational performance and management;
• endeavour to ensure that information technology (IT)
governance is appropriate for the size and complexity of
the business;
• endeavour to ensure that the Group complies with sound
codes of business behaviour;
• endeavour to ensure that appropriate control systems are
in place for the proper management of risk, financial
control and compliance with all laws and regulations;
• appoint the Group Chief Executive and ensure succession
planning for executive management is in place;
• regularly identify and monitor key risk areas;
• oversee the company’s disclosure and communication
process; and
• ensure that enlightened practices are in place to attract
talent and provide meaningful employment in a
transforming society.
Board committees and charters
To enable the Board to discharge its numerous
responsibilities and duties, certain of these responsibilities
have been delegated to Board Committees. The following
committees have been constituted:
• Audit and Risk Committee;
• Remuneration Committee;
• Social and Ethics Committee; and
• Nominations Committee.
Charters approved by the Board govern the activities of these
Committees. All are chaired by non-executive directors and
are directly responsible to the Board, which retains ultimate
responsibility.
In terms of the Memorandum of Incorporation (MOI), at least
one-third of the Board must retire by rotation at each year’s
Page 47
Governance and Remuneration continued
Corporate Governance report continued
Audit and Risk Committee
Composition
As at 28 February 2015, the Audit and Risk Committee
comprised three directors, all of whom are non-executive.
The committee meets at least three times a year. The
Group Chief Executive, Group Financial Director, as well as
internal and external auditors attend meetings as invitees.
Both internal and external auditors have unfettered access to
the Chairman of the Audit and Risk Committee.
• to review financial statements and the Integrated Annual
Report for proper and complete disclosure of timely,
reliable and consistent information and to confirm that the
accounting policies used are appropriate.
Audit and Risk Committee members
Chris Boulle*
Chairman and non-executive director
Bheki Sibiya
Independent non-executive director
Independent non-executive director
Norman Adami^
Khumo Shuenyane^^ Independent non-executive director
Social and Ethics Committee
Composition
The Social and Ethics Committee comprised three nonexecutive directors for the year under review. The Committee
meets at least twice a year. The Chief Executive Officer –
Food Services, the Group Financial Director, the Human
Resources Executive and the Transformation Manager are
invitees to the Committee meetings.
* Meets independence criteria as defined in the Companies Act of
South Africa
^
Appointed 24 February 2015
^^
Resigned 26 February 2015
Roles and responsibilities
The Committee provides support to the Board on good
corporate governance and on the risk profile and risk
management of the Group. While the Committee is
responsible for overseeing the Group’s risk management
policy, management is responsible for the identification,
evaluation and mitigation of the Group’s risks. This entails
formulating a risk management plan and monitoring
implementation and compliance thereto.
In addition, the role of the Committee is, inter alia:
• to review the effectiveness of the Group’s systems of
•
•
•
•
•
•
internal controls, including financial controls and business
risk management, and to endeavour to ensure that
effective internal control systems are maintained;
to satisfy itself of the expertise, resources and experience
of the company’s finance function;
to monitor and supervise the effective functioning and
performance of the internal audit function;
to ensure that the scope of the internal audit function has
no limitations imposed by management and that there is
no impairment of its independence;
to evaluate the independence, effectiveness and
performance of the external auditors and obtain assurance
from the auditors that adequate accounting records are
being maintained;
to appoint the external auditors on an annual basis;
to ensure that the respective roles and functions of
external audit and internal audit are sufficiently clarified
and co-ordinated; and
Page 48
Group Financial Director evaluation
The Committee is entirely satisfied with the competence and
expertise of the Group Financial Director and has reported as
such to the Board, which endorses the recommendation.
Social and Ethics Committee members
Chris Boulle
Chairman and non-executive director
Bheki Sibiya
Independent non-executive director
Independent non-executive director
Khumo Shuenyane^
^
Resigned 26 February 2015
Roles and responsibilities
The duties of the Committee are to:
• review and approve the policy, strategy and structures to
manage social and ethics issues within the Group;
• oversee the monitoring, assessment and measurement of
the company’s activities relating to good corporate
citizenship, including the Group’s promotion of equality,
prevention of unfair discrimination, reduction of corruption,
contribution to development of the communities in which
its activities are predominantly conducted or within which
its services are predominantly marketed, and record
sponsorship, donations and charitable giving;
• determine clearly articulated ethical standards (code of
ethics) to be adopted by the Group, thus achieving a
sustainable ethical corporate culture;
• assisted by the Social and Ethics working group, regularly
review the Group’s code of ethics and compliance
therewith;
• review the adequacy and effectiveness of the Group’s
engagement and interaction with its stakeholders;
• research, evaluate and make recommendations to the
Board regarding the appropriate nature, extent and
methods of implementation of transformation at all levels
within the Group;
• create an enabling environment within the Group which
encourages and develops a new way of doing business
which embraces and celebrates diversity;
Famous Brands
Integrated Annual Report 2015
• as a business substantially invested in South Africa,
develop a skilled and motivated workforce whose profile
is representative of the demographics of the country;
• report to the Board on the transformation work
undertaken, and the extent of any action taken by
management to address areas identified for
improvement;
• oversee the monitoring, assessment and measurement
of the Group’s consumer relationships, including the
Group’s advertising, public relations and compliance with
consumer protection laws;
• oversee the monitoring of the Group’s labour and
employment practices, including the Group’s standing in
terms of the International Labour Organisation Protocol
on decent work and working conditions, the Group’s
employment relationships and its contribution towards
the educational development of its employees; and
• consider the implications of and compliance with the
JSE’s Socially Responsible Investment (SRI) Index.
Remuneration Committee
Composition
As at 28 February 2015, the Remuneration Committee
comprised three directors. The Committee meets at least
twice a year.
Remuneration Committee members
Bheki Sibiya
Chairman and Independent
non-executive director
Santie Botha
Chairman of the Board and
Independent non-executive director
Chris Boulle
Non-executive director
Roles and responsibilities
The key mandate of the Committee is to compile
emolument proposals in accordance with the Group’s
remuneration strategy. This is designed and tailored to:
• continue to attract, retain and motivate executives of the
highest calibre;
• enable the Group to remain an employer of choice; and
• ensure a blend of skills that consistently achieves
predetermined business objectives and targets.
The Committee approves the appointment terms and
remuneration for all executive directors. It is also
responsible for making recommendations to the Board on
all fees payable by the company to non-executive directors
for membership of both the Board and Board Committees.
Impartial directors consider such recommendations prior to
submission to shareholders for approval. The Committee
plays an integral role in succession planning, particularly in
respect of the Group Chief Executive and executive
management.
Nominations Committee
Composition
As at 28 February 2015, the Nominations Committee
comprised eight non-executive directors. The Committee
meets at least twice a year.
Nominations committee members
Santie Botha
Independent Chairman of
the Board and the
Nominations Committee
Bheki Sibiya
Independent non-executive
director
Norman Adami
Independent non-executive
director
Chris Boulle
Non-executive director
John Lee Halamandres
Non-executive director
Panagiotis (Peter)
Halamandaris
Non-executive director
Periklis Halamandaris
Non-executive director
Theofanis Halamandaris Non-executive director
Roles and responsibilities
The mandate of the Committee includes assisting the
Board with:
• the identification and evaluation of suitable candidates
for appointment to the Board;
• the annual evaluation of the performance and
effectiveness of the Board, Board Committees and
individual directors; and
• succession planning.
Page 49
Governance and Remuneration continued
Corporate Governance report continued
Board meetings and procedures
The Board meets at least quarterly. The Board and Board Committee meetings are guided by formal agendas which are distributed
to the Board and Board Committee members prior to the meetings. The Company Secretary assists the Chairman of the Board and
the Chairmen of the Board Committees with the drafting of the agendas. Board and Board Committee packs are distributed to the
Board and Board Committee members prior to the meetings.
During the year under review, the Board met as follows:
Date
Key objective for the meeting
May 2014
Approval of the Group’s Annual Financial Statements and
Integrated Annual Report for the year ended 28 February 2014
October 2014
Approval of the Group’s interim financial results for the
six months ended 31 August 2014
November 2014
Strategy session
February 2015
Approval of the budget for the year ending 28 February 2016
Attendance at Board and Board Committee meetings during the year ended 28 February 2015
Number of meetings
Board/Committee members
NJ Adami (appointed 24 February 2015)
A Botha (HR Executive)
SL Botha
CH Boulle
P Halamandaris
P Halamandaris (junior)
T Halamandaris
JL Halamandres
KA Hedderwick
DP Hele
K Ntlha (Company Secretary – appointed
1 August 2014)
J Legote (Transformation Manager)
JG Pyle (Company Secretary – resigned
31 July 2014)
NS Richards
BL Sibiya
KL Shuenyane (resigned 26 February 2015)
^
By invitation
Page 50
Board
Audit
and Risk
committee
Social and
Ethics
Committee
Nominations
Committee
Remuneration
Committee
4
3
2
2
2
1/1
n/a
4/4
4/4
3/4
4/4
3/4
4/4
4/4
4/4
–
n/a
n/a
3/3
2/3^
n/a
n/a
n/a
3/3^
n/a
–
2/2^
n/a
2/2
n/a
n/a
n/a
n/a
n/a
2/2^
–
n/a
2/2
2/2
2/2
2/2
2/2
2/2
1/2^
n/a
–
2/2^
2/2
2/2
n/a
n/a
n/a
n/a
2/2^
n/a
2/2
n/a
2/2
n/a
1/1
2/2^
n/a
n/a
n/a
n/a
1/1
4/4
4/4
1/1
3/3^
2/3
1/1
2/2^
1/2
n/a
n/a
2/2
n/a
n/a
2/2
4/4
3/3
2/2
2/2
n/a
Famous Brands
Integrated Annual Report 2015
Conflicts of interest and other directorships
The company’s directors comply with the provisions of the
Companies Act of South Africa with respect to the declaration
of personal financial interests and a register of directors’
declarations of interests is maintained.
Company Secretary
Ms Kelebogile Ntlha was appointed as Company Secretary
with effect from 1 August 2014. The directors have unlimited
access to the advice and services of the Company Secretary.
The Board is satisfied that the Company Secretary has
maintained an arm’s length relationship with the Board, is
competent and has the appropriate qualifications and
experience required by the Group. Her biographical details
and curriculum vitae are set out on page 45 of this Integrated
Annual Report.
Ms Ntlha replaced Mr JG Pyle who held office as Company
Secretary and resigned with effect from 31 July 2014. The
Board is grateful to Mr Pyle for his valuable contribution to
the company over the past five years and wishes him the
best for the future.
Dealings in the company’s securities and
insider trading
In compliance with the JSE Listings Requirements and good
governance, the company has a policy in place with respect
to dealings in the company’s securities. The policy requires
directors and the Group’s Company Secretary to obtain prior
written clearance from the Chairman of the Board before
dealing in the securities of Famous Brands during an open
period. The policy further prohibits the company’s directors,
the Company Secretary and senior employees from dealing
in the company’s securities during closed periods, and at any
time when in possession of inside information as defined in
the Financial Markets Act, 2012.
The Company Secretary assists the Chairman of the Board
with the enforcement of the policy and maintains a record of
requests for dealings and clearances therefore. Dealings by
directors in the company’s securities are published in line
with the JSE Listings Requirements on the JSE’s Securities
Exchange News Service via the company’s sponsor.
Page 51
Governance and Remuneration continued
Remuneration report
Remuneration philosophy
The Remuneration Committee (the Committee) has adopted
a remuneration policy. Famous Brands has an ambitious
growth objective that requires the Group’s remuneration
strategies to be sufficiently robust and innovative to attract
and retain people with the requisite skills. The remuneration
policy and practices support the vision, mission and
strategies of the Group.
This policy has as its objectives to:
• continue to attract, retain and motivate employees of the
highest calibre;
• enable the Group to remain an employer of choice;
• ensure that appropriately talented and trained people are
available to achieve the business strategy;
• determine the package of executives above a certain level
using the policy as a guideline; and
• align the Group with relevant and related market data and
practices.
Responsibility for governing remuneration
The primary role of the Committee is to assist the Board in
fulfilling its corporate governance responsibilities with regard
to remuneration. The Committee sets and closely monitors
executive remuneration for the Group. In allocating awards,
the Committee is guided by actual individual performance
delivered against individual scorecard goals. Management is
guided by the remuneration policy and is responsible for its
implementation. The Committee revises the policy when
necessary and as circumstances change.
Service contracts
There are no service contracts with non-executive directors.
Executive directors’ service agreements may be terminated
with three months’ notice.
Both variable incentives have been created within the Group
for the purposes of executive retention and to enable
executives to create individual long-term wealth as they align
their personal interests with those of the company.
Performance is measured via a three plus one scorecard
mechanism. The scorecard comprises three technical goals
plus one development goal. The technical goals include
Operational profit, HEPS growth at CPI plus 50% of CPI,
EBITDA growth at CPI plus 50% of CPI, market share and
customer service components.
• The Long-term Incentive has performance and retention
elements. For the performance Share Appreciation
component, rights are allocated and for the retention
component Full Shares are allocated.
• The allocation of shares will be based on a multiple of the
Executive’s package at base. This multiple may be altered
for superior company or individual performance.
• Vesting conditions are proposed in line with King III and
international best practice whereby vesting takes place in
three equal tranches, with the first tranche vesting at the
end of the third year. Upon vesting an executive will have
had to score an average Performance Score of at least
three for the Share Appreciation Rights to vest. This
ensures that performance is consistent and aligned with
shareholder interests.
• Full Shares will vest regardless of the average performance
score as these are issued with a retention purpose.
Therefore if the employee is still employed by the company
after three years the purpose has been achieved.
• Superior achievement over the three-year period results in
a vesting improvement aligned to the allocation
methodology.
The amended LTI Scheme replaces the Share Options
Scheme (refer Note 27 to the full set of the audited Annual
Financial Statements).
Remuneration of directors
The remuneration of directors for the financial year ended
28 February 2015 is set out in Note 26 to the full set of the
audited Annual Financial Statements which is available on
the company’s website at www.famousbrands.co.za.
Remuneration of key management and
employees
The Committee approves the remuneration packages of key
management, including the total discretionary bonus pool
available for distribution to management. Executive
compensation comprises a guaranteed cost to company pay
package paid monthly and two variable elements:
• short-term cash incentives in the form of performance
bonuses expressed as a percentage of total package; and
• longer-term in the form of the Share Options Scheme and
the new Long-Term Incentive (LTI) Scheme.
Page 52
The remuneration process for other employees is as follows:
• management assesses performance of Administration
employees against measurable scorecards aligned with the
business objectives on an annual basis;
• employee rewards are influenced by individual and
company performance and employees are recognised by
way of a discretionary performance bonus; and
• aggregate bonus pool amounts are reported to the
Committee.
Bargaining Unit employees enjoy a “basic plus benefits
remuneration scheme” where Famous Brands contributes to
their provident fund. They also qualify for a guaranteed
bonus. Famous Brands remains committed to equitable and
competitive pay practices when compared to the national
market and regular benchmarking with credible institutions
confirms this. The Committee is accountable for ensuring that
enlightened remuneration objectives are achieved.
Famous Brands
Integrated Annual Report 2015
Social and Ethics Committee’s report
The Social and Ethics Committee (the Committee) is
constituted as a formal Committee of the Board in terms of
the Companies Act (the Act) and this report is prepared in
compliance with the requirements of the Act.
The composition, roles and responsibilities of the Committee
are set out on page 48 of this Integrated Annual Report.
The Committee met twice during the financial year ended
28 February 2015 and focused on the following areas:
• the Group’s transformation performance;
• the Group’s performance against the JSE’s Socially
Responsible Investment (SRI) Index criteria with the aim of
addressing disclosure areas inhibiting the Group’s inclusion
in the SRI Index; and
• monitoring performance against the Committee’s mandate
as set out in the Companies Act Regulation 43 and the
Committee’s charter, a summary of which is set out on
page 48 of this Integrated Annual Report.
The Committee is satisfied that Famous Brands is committed
to ensuring that the Group is sustainable in the short,
medium and long-term, and embraces its responsibilities
with regard to the health and safety of its employees, the
Group’s impact on the community and the environment.
CH Boulle
Chairman of the Social and Ethics Committee
22 May 2015
Page 53
Summarised financial statements and other information
We firmly believe that the communities in which we operate must benefit from our activities, and we
commit significant resources to empowerment and enterprise development. Community engagement
also takes place through a range of initiatives including sponsorships such as Varsity Sports.
Page 54
Page 55
Directors’ report
The directors have pleasure in submitting their report for the
year ended 28 February 2015.
Nature of business
Famous Brands Limited (Famous Brands) is a holding company
listed on the JSE Limited (JSE) under the category Consumer
Services: Travel and Leisure. The Group is Africa’s leading
branded food services franchisor.
Famous Brands’ vertically integrated business model
comprises a portfolio of 25 brands represented by a franchise
network of 2 545 restaurants across South Africa, the Rest of
Africa, the United Kingdom, and the Middle East, underpinned
by substantial Logistics and Manufacturing operations.
Final dividend
The directors declared a final gross ordinary dividend
number 41 of 200 cents per ordinary share, payable on
13 July 2015 to ordinary shareholders recorded in the books
of the company at the close of business on 10 July 2015.
Share capital
The authorised and issued share capital of the company
at 28 February 2015 is set out in Note 9 to the full set of
the audited Annual Financial Statements which are available
on the company’s website at www.famousbrands.co.za.
Issued during the year
Directors’ responsibilities
The company issued 570 000 (2014: 1 415 000) ordinary shares
for a cash subscription of R24 million (2014: R38 million) to
participants of the Famous Brands Share Incentive Scheme.
The responsibilities of the company’s directors are detailed on
page 59 of this report.
Shareholder spread and material shareholders
Financial statements and results
The Group’s results and financial position are reflected in
summarised consolidated financial statements on pages 60 to
68 as well as in the full set of the audited Annual Financial
Statements which are available on the company’s website
at www.famousbrands.co.za.
In terms of the JSE Listings Requirements, Famous Brands
complies with the minimum shareholder spread requirements,
with 70% (2014: 66%) of ordinary shares being held by the
public at 28 February 2015. Details of the company’s
shareholder spread and material shareholders are set on page
68 of this report.
Staff Share Incentive Scheme
Corporate Governance
The Corporate Governance report is set out on pages 46 to 51.
Details are reflected in Note 27 to the full set of the audited
Annual Financial Statements which are available on the
company’s website at www.famousbrands.co.za.
Tangible and intangible assets
There was no major change in the nature or the use of the
property, plant and equipment and intangible assets owned
by the company or any of its subsidiaries during the year
under review.
Dividends
The following information relates to the dividends in respect of
the year under review:
Interim dividend
The directors declared an interim gross ordinary dividend
number 40 of 155 cents per ordinary share, which was paid
on 8 December 2014 to ordinary shareholders recorded in
the books of the company at the close of business on
5 December 2014.
Page 56
Directors and Company Secretary
The names of the directors and the Company Secretary at the
date of this report are detailed on pages 42 to 43 and 45.
Changes to the Board during the year under review were as
follows:
• 24 February 2015: Appointment of Mr N Adami to the Board
as Independent non-executive director and to the Audit and
Risk Committee as a member of the Committee.
• 26 February 2015: Resignation by Mr K Shuenyane from the
Board and related Board Committees.
• 22 May 2015: Appointment of Mr M Kgosana to the Board as
Independent non-executive director and to the Audit and
Risk Committee as a member of the Committee.
Famous Brands
Integrated Annual Report 2015
Subsidiaries and associates
Special resolutions
Details of the Group’s investments in associates and
subsidiaries are set out in Note 3 and Note 4 to the full set of
the audited Annual Financial Statements which are available
on the company’s website at www.famousbrands.co.za.
On 24 July 2014, shareholders approved the following special
resolutions:
• approval of non-executive directors’ remuneration for
services as directors;
• general authority to repurchase shares of the company; and
• general authority to provide financial assistance to related
or inter-related entities.
Acquisitions
During the year under review, the Group acquired a 70% stake
in the Wakaberry™ Frozen Yoghurt Bar business effective
1 April 2014.
Subsequent events
The Group acquired a controlling stake in the following
companies:
• 75% in Cater Chain Food Services, a local business
distributing primarily red meat products across South Africa
and into certain markets in Africa. The acquisition was
effective from 1 April 2015.
• 51% in Retail Group (Pty) Ltd, Botswana, Famous Brands’
Master Licence partner in Botswana, marking the
commencement of a new strategic thrust in our growth
programme. The acquisition is pending approval by the
Botswanan Competition Commission.
At the next AGM to be held on 31 August 2015 shareholders
will be asked to renew the above three approvals as set out in
the notice to shareholders (refer page 70).
Borrowing powers
The company has unlimited borrowing powers in terms of its
Memorandum of Incorporation.
Page 57
Audit and Risk Committee’s report
In terms of section 94 of the Companies Act of South Africa,
the report by the Audit and Risk Committee, which is chaired
by Mr CH Boulle, is presented below.
During the financial year ended 28 February 2015 in addition
to the duties set out in the Audit and Risk Committee’s charter
(a summary of which is provided on page 48 of this report) the
Audit and Risk Committee carried out its functions, inter alia,
as follows:
• determined the fees to be paid to RSM Betty & Dickson
(Johannesburg) and its terms of engagement;
• ensured that the appointment of RSM Betty & Dickson
(Johannesburg) complied with the legislation relating to the
appointment of auditors; and
• approved a non-audit services policy which determines the
nature and extent of any non-audit services which RSM
Betty & Dickson (Johannesburg) may provide to the Group.
The Audit and Risk Committee is entirely satisfied with the
competence and expertise of the Group Financial Director.
The Audit and Risk Committee recommended the summarised
consolidated financial statements and the full set of the
audited Annual Financial Statements for the year ended
28 February 2015 for approval to the Board. The Board has
subsequently approved the financial statements which will
be open for discussion at the forthcoming Annual
General Meeting.
CH Boulle
Chairman of the Audit and Risk Committee
22 May 2015
During the year under review, the Audit and Risk Committee
pre-approved non-audit services provided by RSM Betty &
Dickson (Johannesburg), including tax administration services.
The Audit and Risk Committee has satisfied itself through
enquiry that RSM Betty & Dickson (Johannesburg) and
Ms J Kitching, the designated auditor, are independent of
the Group.
Company Secretary’s certificate
In my capacity as the Company Secretary, I hereby certify that Famous Brands Limited has lodged with the Companies and
Intellectual Property Commission for the financial year ended 28 February 2015, all such returns and notices as are required of a
public company in terms of the Companies Act of South Africa and that all such returns are to the best of my knowledge and belief
true, correct and up to date.
K Ntlha
Company Secretary
22 May 2015
Page 58
Approval of the summarised consolidated financial statements
The directors are required by the Companies Act of South
Africa to maintain adequate accounting records and are
responsible for the content and integrity of the summarised
consolidated financial statements and related financial
information included in this report. It is their responsibility to
ensure that the summarised consolidated financial statements
and the full set of the audited Annual Financial Statements
present fairly the state of affairs of the Group as at the end of
the financial year and the results of its operations and cash
flows for the year then ended, in conformity with International
Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices
Committee and Financial Reporting Pronouncements as
issued by the Financial Reporting Council, the Companies Act
of South Africa and the Listings Requirements of the JSE
Limited.
The external auditors are engaged to express an independent
opinion on the Annual Financial Statements. The Annual
Financial Statements are prepared in accordance with IFRS
and are based on appropriate accounting policies consistently
applied and supported by reasonable and prudent judgements
and estimates. The summarised consolidated financial
statements were derived from the full set of the audited
Annual Financial Statements for the year ended 28 February
2015 available on our website at www.famousbrands.co.za.
The directors acknowledge that they are ultimately responsible
for the system of internal financial control established by the
Group and place considerable importance on maintaining a
strong control environment. To enable the directors to meet
these responsibilities, the Board of Directors sets standards for
internal control aimed at reducing the risk of error or loss in a
cost-effective manner. The standards include the proper
delegation of responsibilities within a clearly defined
framework, effective accounting procedures and adequate
segregation of duties to ensure an acceptable level of risk.
These controls are monitored throughout the Group and all
employees are required to maintain the highest ethical
standards in ensuring the Group’s business is conducted in a
Famous Brands
Integrated Annual Report 2015
manner that, in all reasonable circumstances, is above
reproach. The focus of risk management in the Group is on
identifying, assessing, managing and monitoring all known
forms of risk across the Group. While operating risk cannot
be fully eliminated, the Group endeavours to minimise it
by ensuring that appropriate infrastructure, controls,
systems and ethical behaviour are applied and managed
within predetermined procedures and constraints. The Audit
and Risk Committee, together with the internal auditors,
perform an oversight role in matters related to financial and
internal controls.
The directors are of the opinion that, based on the information
and explanations given by management, the system of internal
control provides reasonable assurance that the financial
records may be relied on for the preparation of the Annual
Financial Statements. However, any system of internal financial
control can provide only reasonable, and not absolute,
assurance against material misstatement or loss.
The directors have reviewed the Group’s cash flow forecast for
the subsequent year and, in light of this review and the current
financial position, they are satisfied that the Group has access
to adequate resources to continue in operational existence for
the foreseeable future.
The summarised consolidated financial statements and the full
set of audited Annual Financial Statements, which have been
prepared on the going concern basis, were approved by the
Board of Directors on 22 May 2015 and are signed on its
behalf by:
Santie Botha
Independent Chairman
Kevin Hedderwick
Group Chief Executive
22 May 2015
Page 59
Summarised consolidated financial statements
Summarised consolidated statement of financial position
at 28 February 2015
2015
R000
2014
Restated*
R000
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in associates
Deferred tax
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
1 196 839
208 951
922 576
57 568
7 744
655 421
186 513
316 276
26 404
126 228
1 139 928
196 244
879 675
52 934
11 075
552 911
177 511
277 867
6 834
90 699
Total assets
1 852 260
1 692 839
Equity and liabilities
Equity attributable to owners of Famous Brands Limited
Non-controlling interests
1 389 388
27 766
1 224 365
10 583
Total equity
1 417 154
1 234 948
Non-current liabilities
Deferred tax and lease liabilities
Current liabilities
Trade and other payables
Non-controlling shareholder loans
Short-term portion of interest-bearing borrowings
Current tax liabilities
58 702
58 702
376 404
331 256
24 449
–
20 699
53 735
53 735
404 156
298 278
29 344
65 000
11 534
Total liabilities
435 106
457 891
1 852 260
1 692 839
Total equity and liabilities
* Computer software has been reclassified from Property, plant and equipment to Intangible assets in order to enhance disclosure.
Refer restatement Note 6.
Page 60
Famous Brands
Integrated Annual Report 2015
Summarised consolidated statement of profit or loss and other comprehensive income
for the year ended 28 February 2015
2015
R000
Revenue
Cost of sales
Gross profit
Selling and administrative expenses
Operating profit
Net interest expense
Share of profit of associates
Profit before tax
Tax
Profit for the year
Other comprehensive income, net of tax:
Exchange differences on translating foreign operations*
2014
R000
%
change
3 283 342
(1 832 522)
2 825 979
(1 598 583)
16
1 450 820
(778 796)
1 227 396
(661 879)
18
18
672 024
(269)
7 608
565 517
(3 212)
5 140
19
(92)
679 363
(194 651)
567 445
(161 985)
20
484 712
405 460
20
(2 957)
59 029
Total comprehensive income for the year
481 755
464 489
Profit for the year attributable to:
Owners of Famous Brands Limited
Non-controlling interests
465 756
18 956
401 637
3 823
484 712
405 460
462 799
18 956
460 666
3 823
481 755
464 489
468
468
406
405
Total comprehensive income attributable to:
Owners of Famous Brands Limited
Non-controlling interests
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
15
16
* This item may be reclassified subsequently to profit or loss.
Page 61
Summarised consolidated financial statements continued
Summarised consolidated statement of changes in equity
for the year ended 28 February 2015
2015
R000
2014
R000
Balance at the beginning of the year
Group total comprehensive income for the year
Group dividends to shareholders
Share-based payments
Issue of share capital and share premium
Non-controlling interest arising on business combination
Disposal of non-controlling interest
1 234 948
481 755
(327 389)
1 992
24 106
1 742
–
1 000 088
464 489
(270 946)
3 248
37 775
508
(214)
Balance at the end of the year
1 417 154
1 234 948
Page 62
Famous Brands
Integrated Annual Report 2015
Summarised consolidated statement of cash flows
for the year ended 28 February 2015
2015
R000
Cash generated before changes in working capital
Increase in inventories
Increase in receivables
Increase in payables
2014
Restated*
R000
716 902
(5 066)
(36 694)
38 093
601 756
(9 955)
(22 674)
24 432
Cash generated from operations
Net interest paid
Tax paid
713 235
(269)
(201 524)
593 559
(3 212)
(166 748)
Cash available from operating activities
Dividends paid
511 442
(326 969)
423 599
(271 125)
Net cash inflow from operating activities
184 473
152 474
Cash flow from investing activities
Additions to property, plant and equipment
Intangible assets acquired
Proceeds from disposal of property, plant and equipment
Proceeds from disposal of intangible assets
Dividends received from associates
Net cash outflow on disposal of subsidiary
Net cash outflow on acquisition of business operations
Net cash outflow on investment in subsidiary
Net cash outflow on investment in associates
(46 124)
(9 382)
3 098
375
2 975
–
–
(47 334)
–
(38 637)
(12 925)
1 809
250
–
(221)
(5 500)
(9 022)
(47 794)
Net cash outflow from investing activities
(96 392)
(112 040)
Cash flow from financing activities
Borrowings repaid
Proceeds from issue of equity instruments of Famous Brands Limited
Cash (repaid to)/contributed by non-controlling shareholders
(65 000)
24 106
(4 895)
(100 827)
37 775
17 061
Net cash outflow from financing activities
(45 789)
(45 991)
42 292
(6 763)
90 699
(5 557)
11 520
84 736
Net increase/(decrease) in cash and cash equivalents
Foreign currency effect
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
126 228
90 699
* Computer software has been reclassified from Property, plant and equipment to Intangible assets in order to enhance disclosure.
Refer restatement Note 6.
Page 63
Summarised consolidated financial statements continued
Primary (business units) and secondary (geographical) segment report
for the year ended 28 February 2015
2015
R000
2014
R000
%
change
Revenue
Franchising and Development
Supply Chain*
Manufacturing
Logistics
Eliminations
Corporate
615 038
2 506 610
1 257 691
2 223 196
(974 277)
1 740
537 817
2 145 105
1 010 541
1 937 787
(803 223)
1 355
14
17
24
15
21
South Africa
International
Rest of Africa
UK
3 123 388
159 954
57 484
102 470
2 684 277
141 702
49 786
91 916
16
13
15
11
Total
3 283 342
2 825 979
16
Operating profit
Franchising and Development
Supply Chain*
Manufacturing
Logistics
Corporate
365 353
261 725
172 538
89 187
1 349
324 925
203 513
126 663
76 850
1 248
12
29
36
16
South Africa
International
Rest of Africa
UK
628 427
43 597
23 013
20 584
529 686
35 831
22 959
12 872
19
22
–
60
Total
672 024
565 517
19
* The Retail business within the Supply Chain segment has been reclassified from Logistics to Manufacturing.
Page 64
Famous Brands
Integrated Annual Report 2015
Statistics and ratios
for the year ended 28 February 2015
Earnings per share (cents)
Basic earnings per share
Diluted earnings per share
Headline earnings per share
Diluted headline earnings per share
Dividends per share (cents)
Interim
Final
Ordinary shares (000)
In issue (excluding treasury shares of 5 000 (2014: Nil))
Weighted average
Diluted weighted average
Operating profit margin (%)
Dividend cover on headline earnings (times)
2015
2014
468
468
467
467
355
155
200
406
405
406
405
300
130
170
99 807
99 581
100 236
20.5
1.3
99 242
98 942
99 577
20.0
1.4
%
change
15
16
15
15
19
18
Page 65
Summarised consolidated financial statements continued
Notes to the summarised consolidated financial statements
for the year ended 28 February 2015
Famous Brands Limited (the company) is a South African registered company. The summarised consolidated financial statements
of the company comprise the company and its subsidiaries (together referred to as “the Group”) and the Group’s investments in
associates.
1.
Statement of compliance
These summarised consolidated financial statements have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards (IFRS), the presentation as well as disclosure
requirements of IAS 34 Interim financial reporting applied to year-end reporting, the SAICA financial reporting
pronouncements issued by the Financial Reporting Standards Council, the JSE Listings Requirements, and the Companies
Act of South Africa.
2.
Basis of preparation
The summarised consolidated financial statements do not include all the information and disclosures required for the full
set of audited consolidated financial statements, and should be read in conjunction with the full set of the audited Annual
Financial Statements which are available on our website at www.famousbrands.co.za.
The Group’s audited Annual Financial Statements and the summarised consolidated financial statements as at and for the
year ended 28 February 2015 were prepared on the going concern basis. The accounting policies applied in the
presentation of the summarised consolidated financial statements are consistent with those applied for the year ended
28 February 2014, except for new standards that became effective for the Group’s financial period beginning 1 March 2014,
refer to Note 3.
The summarised consolidated financial statements were prepared on the historical cost basis, under the supervision of
Norman Richards, Group Financial Director.
3.
4.
Changes in accounting policies
The Group has adopted all the new, revised or amended accounting standards (refer to Accounting policy Note 22 of the
audited Annual Financial Statements available on our website at www.famousbrands.co.za) which were effective for the
Group from 1 March 2014, none of which had a material impact on the Group.
2015
R000
2014
R000
Earnings and headline earnings per share
Reconciliation between earnings and diluted earnings
Profit attributable to equity holders of Famous Brands Limited
Adjustment for:
After tax interest receivable on future share placements
465 756
401 637
3 348
1 487
Diluted earnings
469 104
403 124
468
468
406
405
Earnings per share (cents)
Basic
Diluted
Reconciliation between headline earnings and diluted headline earnings
Profit attributable to equity holders of Famous Brands Limited
After tax loss on disposal of property, plant and equipment
After tax remeasurements included in equity-accounted earnings of associates
465 756
(526)
(29)
401 637
433
(128)
Headline earnings
Adjustment for:
After tax interest receivable on future share placements
465 201
401 942
3 348
1 487
Diluted headline earnings
468 549
403 429
467
467
406
405
Headline earnings per share (cents)
Basic
Diluted
Page 66
Famous Brands
Integrated Annual Report 2015
5.
Capital expenditure and commitments
Invested*
Property, plant and equipment
Intangible assets
Authorised, not yet contracted*
Property, plant and equipment
Intangible assets
2015
R000
2014
R000
55 506
46 124
9 382
83 265
68 028
15 237
51 562
38 637
12 925
52 389
39 965
12 424
* Computer software has been reclassified from Property, plant and equipment to Intangible assets in order to enhance disclosure. Refer
restatement Note 6.
6.
Restatement of comparative figures
The carrying amount of computer software was reclassified from property, plant and equipment to intangible assets. The
impact of the reclassification is set out below:
Statement of financial position
at 28 February 2014
Property, plant and equipment
Intangible assets
Statement of cash flows
for the year ended 28 February 2014
Cash flow from investing activities
Additions to property, plant and equipment
Intangible assets acquired
Previously
reported
R000
Adjustment
R000
Restated
R000
205 575
870 344
(9 331)
9 331
196 244
879 675
1 075 919
–
1 075 919
(44 070)
(7 492)
5 433
(5 433)
(38 637)
(12 925)
(51 562)
–
(51 562)
7.
Related party transactions
The Group entered into various sale and purchase transactions with related parties, in the ordinary course of business, on
an arm’s length basis. The nature of related party transactions is consistent with those reported previously. The Group’s
related party transactions are detailed in Note 28 to the audited Annual Financial Statements available on our website at
www.famousbrands.co.za.
8.
Financial instruments
There is no material difference between the fair values of the Group’s financial instruments and their carrying amounts. The
Group’s financial instruments are detailed in Note 30 to the audited Annual Financial Statements available on our website
at www.famousbrands.co.za.
9.
Business combinations
During the year under review, the Group acquired a 70% stake in the Wakaberry™ Frozen Yoghurt Bar business, effective
1 April 2014.
10.
Subsequent events
The Group acquired a controlling stake in the following companies:
• 75% in Cater Chain Food Services, a local business distributing primarily red meat products across South Africa and into
certain markets in Africa. The acquisition was effective from 1 April 2015; and
• 51% in Retail Group Proprietary Limited, Botswana, Famous Brands’ Master Licence partner in Botswana, marking the
commencement of a new strategic thrust in our growth programme. The acquisition is pending approval by the
Botswanan Competition Commission.
Page 67
Shareholder spread
28 February 2015
Analysis of shareholders
Holdings
1 – 10 000
10 001 – 50 000
50 001 – 100 000
100 001 – 1 000 000
1 000 001 and more
Analysis of holding
Individuals
Insurance companies
Investment trusts
Other companies and corporate
bodies
28 February 2014
Number
of shares
%
Number
of shareholders
95.06 10 388 284
3.54 7 053 569
0.65 4 577 352
0.62 17 958 955
0.13 59 834 275
10.41
7.07
4.59
17.99
59.94
6 983
290
33
64
11
94.60
3.93
0.45
0.87
0.15
8 560 026
5 897 628
2 408 370
21 714 172
60 662 239
8.62
5.94
2.43
21.88
61.13
9 457 100.00 99 812 435 100.00
7 381
100.00
99 242 435
100.00
7 378
16
1 132
78.02 35 166 449
0.17
654 378
11.97 15 550 785
35.23
0.66
15.58
5 877
16
839
79.62
0.22
11.37
39 934 901
1 165 424
12 972 459
40.25
1.17
13.07
931
9.84 48 440 823
48.53
649
8.79
45 169 651
45.51
9 457 100.00 99 812 435 100.00
7 381
100.00
99 242 435
100.00
7 221 104
12 797 657
*
6 426 642
7.28
12.90
*
6.48
Number
of shareholders
8 990
335
61
59
12
%
%
Number
of shares
%
Major shareholders (holding
more than 5% of the shares
in issue) excluding directors
Public Investment Corporation
Arisaig Africa Consumer Fund
Pictet and Cie (Europe) SA AIF
Coronation Life Managers Limited
9 369 087
9.39
9 175 293
5 254 405
*
9.19
5.26
*
23 798 785
Shareholder spread
Public
Non-public
Directors’ holdings
Own holdings (Treasury shares)
9 450
7
6
1
70.37
29.63
29.62
0.01
7 375
6
6
–
99.92
0.08
0.08
–
65 405 557
33 836 878
33 836 878
–
65.90
34.10
34.10
–
9 457 100.00 99 812 435 100.00
7 381
100.00
99 242 435
100.00
* Below 5% holding of the company’s shares in issue.
Page 68
99.93 70 242 088
0.07 29 570 347
0.06 29 565 347
0.01
5 000
26 445 403
Shareholders’ diary
Financial year-end
Annual General Meeting
Reports
Announcement of annual results for the year ended 28 February 2015
Posting of the Integrated Annual Report for the year ended 28 February 2015
Announcement of interim results for the half-year ended 31 August 2015
Final dividend
Dividend declaration date
Last day to trade cum-dividend
Shares commence trading ex-dividend
Record date
Payment of dividend
Famous Brands
Integrated Annual Report 2015
28 February
Monday, 31 August 2015
Monday, 25 May 2015
Thursday, 30 July 2015
Monday, 26 October 2015
Friday, 22 May 2015
Friday, 3 July 2015
Monday, 6 July 2015
Friday, 10 July 2015
Monday, 13 July 2015
Share certificates may not be dematerialised or rematerialised between Monday, 6 July 2015 and Friday, 10 July 2015, both dates
inclusive.
Page 69
Notice to shareholders
Famous Brands Limited
3.
(Registration number 1969/004875/06)
(Incorporated in the Republic of South Africa)
(Famous Brands or the company)
JSE share code: FBR ISIN: ZAE000053328
Notice is hereby given that the 21st Annual General Meeting
(AGM) of shareholders of the company will be held at the
offices of the company, 478 James Crescent, Halfway House,
Midrand, on Monday, 31 August 2015 at 14:00 for the purpose
of (i) dealing with such business as may lawfully be dealt with
at the meeting, and (ii) considering and, if deemed fit, passing,
with or without modification, the resolutions set out hereunder
in the manner required by the Companies Act of South Africa
(the Act), which meeting is to be participated in and voted at
by shareholders recorded in the company’s securities register
as at the record date of 21 August 2015.
3.1
3.2
3.3
3.4
Kindly note that meeting participants (including proxies) will be
required to provide reasonably satisfactory identification
before being entitled to attend or participate in the meeting.
Forms of identification include valid identity documents,
driver’s licences and passports.
3.5
Ordinary resolutions
The percentage of voting rights required for an ordinary
resolution to be adopted is more than 50% (fifty percent) of the
voting rights exercised on the resolution at a quorate meeting.
1.
2.
Page 70
Ordinary resolution No. 1: Adoption of the
Annual Financial Statements and reports
“RESOLVED THAT the Annual Financial Statements of
the Group and the company for the year ended
28 February 2015, together with the directors’ report,
the report of the independent auditors, and the
reports of the Audit and Risk Committee and the
Social and Ethics Committee, be and are hereby
received and adopted.”
Ordinary resolution No. 2: Appointment of
auditors
“RESOLVED THAT Deloitte & Touche be appointed as
the independent auditors of the company, it being
noted that S Nelson is the registered individual auditor
who will undertake the audit. The Audit and Risk
Committee is authorised to determine the auditor’s
remuneration for the past year.”
Ordinary resolution No. 3: Re-election and
appointment of directors
“RESOLVED to individually re-elect or appoint the
following directors (ordinary resolutions 3.1 to 3.5). The
Board recommends the election of these directors,
who retire by rotation in terms of the Memorandum of
Incorporation (MOI) and being eligible, thereto make
themselves available for re-election.”
Ordinary resolution No. 3.1: Re-election of
Theofanis Halamandaris.
Ordinary resolution No. 3.2: Re-election of
John Lee Halamandres.
Ordinary resolution No. 3.3: Re-election of
Bheki Lindinkosi Sibiya.
Ordinary resolution No. 3.4: “RESOLVED that the
appointment of Norman Adami as an
Independent non-executive director effective
24 February 2015, be and is hereby confirmed.”
Ordinary resolution No. 3.5 “RESOLVED that the
appointment of Moses Kgosana as an
Independent non-executive director effective
22 May 2015, be and is hereby confirmed.”
Moses Kgosana, CA(SA), is the outgoing Chief
Executive of KPMG Southern Africa as well as
Chairman of KPMG Africa. He also served as a
member of the KPMG International Board as
Lead director. Moses has 33 years of Accounting,
Auditing and Advisory experience within the
Public and Private Sectors. Previously, he was
Chairman of the Policy Board and Executive
director of Consumer Markets for KPMG South
Africa.
Brief curricula vitae of the directors who have offered
themselves for appointment or re-election in terms of
ordinary resolutions No. 3.1 to 3.4 are included on
pages 42 to 43 of this Integrated Annual Report.
4.
Ordinary resolution No. 4: Re-election and
appointment of the Chairman and members of
the Audit and Risk Committee
“RESOLVED to individually re-elect or appoint the
following directors (ordinary resolutions No. 4.1 to 4.4)
of the company as the Chairman or members of the
Audit and Risk Committee until the conclusion of the
next AGM of the company. The Board recommends the
re-election and appointment of these members.”
4.1 Ordinary resolution No. 4.1: Re-election of
Christopher Hardy Boulle as Chairman and
member of the Audit and Risk Committee.
Famous Brands
Integrated Annual Report 2015
4.2
4.3
4.4
5.
6.
7.
Ordinary resolution No. 4.2: Re-election of
Bheki Lindinkosi Sibiya as a member of the Audit
and Risk Committee.
Ordinary resolution No. 4.3: Appointment of
Norman Adami as a member of the Audit and
Risk Committee.
Ordinary resolution No. 4.4: Appointment of
Moses Kgosana as a member of the Audit and
Risk Committee.
Ordinary resolution No. 5: To place 3%
(three percent) of the unissued shares under
directors’ control
“RESOLVED THAT 3% (three percent) of the authorised
but unissued share capital of the company, from time
to time, be placed under the control of the directors of
the company until the next AGM with the authority to
allot and issue all or part thereof for the purposes of
issuing shares which have vested in terms of share
scheme grants, subject to section 38 of the Act,
and the JSE Listings Requirements and the
company’s MOI.”
Ordinary resolution No. 6: Authority for directors
or Company Secretary to implement resolutions
“RESOLVED to authorise and empower any two
directors or the Company Secretary and any director
signing together, to do all such things and sign all such
documents and take all such actions as they consider
necessary, to implement the resolutions set out in the
notice convening the 21st AGM of the company.”
Ordinary resolution No. 7: Adoption of the
Famous Brands Share Incentive Scheme (2015)
“RESOLVED THAT the Famous Brands Share Incentive
Scheme (2015) be and is hereby adopted in accordance
with the rules as initialled by the Chairman of the AGM
for purposes of identification. The rules will be available
for inspection at the registered office of the company
from 31 July 2015 until 31 December 2015.”
In terms of the JSE Listings Requirements this ordinary
resolution No. 7 must be passed by a 75% (seventy-five
percent) majority of votes cast by shareholders
present or represented by proxy at the AGM, excluding
all votes attached to treasury shares.”
8.
Non-binding resolution No. 1: Endorsement of
remuneration policy
“RESOLVED THAT shareholders endorse, through a
non-binding advisory vote to ascertain the
shareholders’ view of Famous Brands’ remuneration
policy and its implementation. The Remuneration
report is set out on page 52 of this Integrated
Annual Report.”
Explanatory note
In terms of the King Code of Governance Principles, an
advisory vote should be obtained from shareholders
on the company’s annual remuneration policy. The
vote allows shareholders to express their view on the
remuneration policies adopted and their
implementation, but will not be binding on the
company.
Special resolutions
The percentage of voting rights required for a special
resolution to be adopted is at least 75% (seventy-five percent)
of the voting rights exercised on the resolution at a quorate
meeting.
9.
Special resolution No. 1: Approval of nonexecutive directors’ remuneration for their
services as directors
“RESOLVED THAT in terms of section 66(9) of the Act,
payment of the remuneration for the services as
non-executive directors of Famous Brands is approved
for the period from 1 June 2015 as set out in the
following table.”
Proposed non-executive directors’ fees
Payment per attendance at meetings only
Board
Chairman
Board member
Audit and Risk
Committee
Chairman
Member
Other
Committees*
Chairman
Member
Per meeting
From June
2015
Rand
Per meeting
From June
2014
Rand
84 800
58 300
80 000
55 000
26 500
26 500
25 000
25 000
21 200
21 200
20 000
20 000
* Social and Ethics Committee and Remuneration Committee.
Explanatory note
This resolution is proposed in order to comply with the
requirements of the Act. In terms of section 65(11)(h)
of the Act, read with sections 66(8) and 66(9),
remuneration may only be paid to directors for their
services as directors in accordance with a special
resolution approved by the shareholders within the
previous two years.
Page 71
Notice to shareholders continued
10.
Page 72
Special resolution No. 2: General authority to
repurchase shares
“RESOLVED THAT the company approves, as a general
approval contemplated in section 48 of the Act, the
acquisition by the company (or by a subsidiary of the
company) of ordinary shares issued of the company on
such terms and conditions and in such amounts as the
directors of the company may decide, but subject
always to the provisions of the Act and the JSE Listings
Requirements, which general approval shall endure
until the next AGM of the company (when this approval
shall lapse unless it is renewed at that AGM, provided
that it shall not extend beyond 15 (fifteen) months
from the date of registration of this special resolution),
subject to the following limitations:
(a)
the repurchase of securities is implemented
through the order book of the JSE’s trading
system, without any prior understanding or
arrangement between the company and the
counterparty;
(b)
the company is so authorised by its MOI;
(c)
the general purchase is limited to a maximum of
10% (ten percent) in aggregate of the company’s
issued share capital in any one financial year;
(d)
the general purchase by the subsidiaries of the
company is limited to a maximum of 10% (ten
percent) in aggregate of the company’s issued
share capital;
(e)
the general purchase is not made at a price
greater than 10% (ten percent) above the
weighted average of the market value for the
securities for the five business days immediately
preceding the date on which the transaction was
effected;
(f)
the repurchase does not take place during a
prohibited period as defined in paragraph 3.67 of
the JSE Listings Requirements unless there is a
repurchase programme in place and the dates
and quantities of shares to be repurchased
during the prohibited period are fixed (not
subject to any variation) and has been submitted
to the JSE in writing prior to the commencement
of the prohibited period. The issuer must instruct
an independent third party, which makes its
investment decisions in relation to the issuer’s
securities independently of, and uninfluenced by,
the issuer, prior to the commencement of the
(g)
(h)
prohibited period to execute the repurchase
programme submitted to the JSE;
the company publishes an announcement after
it or its subsidiaries has cumulatively acquired
3% (three percent) of the number of ordinary
shares in issue at the time that the shareholders’
authority for the purchase is granted and for
each 3% (three percent) in aggregate of the
initial number acquired thereafter; and
the company appoints only one agent at
any point in time to effect any repurchases
on its behalf.
“After considering the aggregate effect of the
maximum repurchase, the directors of the company
are of the opinion that for a period of 12 (twelve)
months after the date of this notice of the AGM:
• the company and the company’s subsidiaries (the
Group) shall satisfy the solvency and liquidity test in
the manner contemplated by the Act and the JSE
Listings Requirements;
• the company and the Group will be able, in the
ordinary course of business, to repay their debts;
• the assets of the company and the Group, fairly
valued in accordance with IFRS, will be in excess of
the liabilities of the company and the Group;
• the share capital and reserves of the company and
the Group will be adequate for ordinary business
purposes;
• the working capital of the company and the Group
will be adequate for ordinary business purposes;
and
• the company’s sponsor will confirm the adequacy of
the company’s working capital for the purposes of
undertaking the repurchase of shares in writing to
the JSE prior to the company (or any subsidiary)
entering the market to proceed with the
repurchase.”
Explanatory note
The reason for and effect of special resolution No. 2 is
to authorise the company and its subsidiaries, by way
of general approval, to acquire the company’s issued
ordinary shares on terms and conditions and in
amounts to be determined by the directors of the
company, subject to certain statutory provisions and
the JSE Listings Requirements.
Famous Brands
Integrated Annual Report 2015
11.
Special resolution No. 3: General authority to
provide financial assistance to related or
inter-related entities
“RESOLVED THAT the Board of Directors of the
company be and is hereby authorised, to the extent
required by and subject to sections 44 and 45 of the
Act and the requirements, if applicable of (i) the MOI;
and (ii) the JSE Listings Requirements, to cause the
company to provide direct or indirect financial
assistance to a related or inter-related company or to
a shareholder of a related or inter-related company,
provided that no such financial assistance may be
provided at any time in terms of this authority after the
expiry of two years from the adoption of this special
resolution No. 3.”
In the normal course of business the company is often
required to grant financial assistance, including but not
limited to loans, guarantees in favour of third parties,
such as financial institutions, service providers and
counterparties (in respect of the provision of banking
facilities, acquisition transactions and debt capital) for
the obligations of the company or a related or
inter-related company, or to a shareholder of a related
or inter-related company, or to a person related to any
such company. Special resolution No. 3 will enable the
company to provide such financial assistance to
subsidiaries and juristic persons in the Famous Brands
Group or other person that is or becomes related or
inter-related to the company for any purpose in the
normal course of business.
Explanatory note
Notwithstanding the title of section 45 of the Act, being
“Loans or other financial assistance to directors”, on a
proper interpretation, the body of the section may also
apply to financial assistance provided by a company to
related or inter-related companies, including, among
others, its subsidiaries, for any purpose. Furthermore,
section 44 of the Act may also apply to the financial
assistance so provided by a company to related or
inter-related companies, in the event that financial
assistance is provided for the purposes of, or in
connection with, the subscription of any option, or any
securities, issued or to be issued by the company or a
related or inter-related company, or for the purchase of
any securities of the company or a related or interrelated company. Both sections 44 and 45 of the Act
provide, among others, that the particular financial
assistance must be provided only pursuant to a special
resolution of the shareholders, adopted within the
previous two years, which approved such assistance
whether for the specific recipient, or generally for a
category of potential recipients, and the specific
recipient falls within that category and the Board of
Directors must be satisfied that (a) immediately after
approving the financial assistance, the company would
satisfy the solvency and liquidity test; and (b) the terms
under which the financial assistance is proposed to be
given are fair and reasonable to the company.
Directors’ statement regarding the utilisation of the
authority sought
The directors of the company have no specific
intention to effect the provisions of this special
resolution, but will, however, continually review the
company’s position, having regard for the prevailing
circumstances and market conditions, in considering
whether to effect the provisions of this special
resolution.
Other disclosures in terms of section 11.26 of the
JSE Listings Requirements
The following additional information, some of which
may appear elsewhere in the Integrated Annual Report
of which this notice forms part, is provided in terms of
the JSE Listings Requirements for purposes of this
general authority:
• major beneficial shareholders – page 68; and
• share capital of the company – page 68.
Litigation statement
The directors of the company whose names appear on
pages 42 to 43 of the Integrated Annual Report of
which this notice forms part, are not aware of any legal
or arbitration proceedings including proceedings that
are pending or threatened, that may have or had in the
recent past (being at least the previous 12 months) a
material effect on the Group’s financial position.
Page 73
Notice to shareholders continued
Material changes
Other than the facts and developments reported on
in the Integrated Annual Report, there have been no
material changes in the affairs or financial position of
the company and its subsidiaries since the date of
signature of the audit report and up to the date of
this notice.
Voting and proxies
A shareholder of the company entitled to attend, speak and
vote at the AGM is entitled to appoint a proxy or proxies to
attend, speak and on a poll to vote, in his/her stead. The proxy
need not be a shareholder of the company. A form of proxy is
attached for the convenience of any certificated shareholder
and “own name” registered dematerialised shareholder who
cannot attend the AGM, but who wishes to be represented.
Additional forms of proxy may also be obtained on request
from the company’s registered office. The completed forms of
proxy must be deposited at, posted or faxed to the transfer
secretaries at the address set out on the inside back cover to
be received by no later than 14:00 on Thursday, 27 August
2015. Any shareholder who completes and lodges a form of
proxy will nevertheless be entitled to attend and vote in
person at the AGM should the shareholder subsequently
decide to do so.
On a show of hands, every shareholder of the company
present in person or represented by proxy shall have one vote
only. On a poll, every shareholder of the company present in
person or represented by proxy shall have one vote for every
share held in the company by such shareholder.
Shareholders who have dematerialised their ordinary shares
through a Central Securities Depository Participant (CSDP) or
broker, other than “own name” registered dematerialised
shareholders, and who wish to attend the AGM must request
their CSDP or broker to issue them with a letter of
representation. Alternatively, dematerialised shareholders
other than “own name” registered dematerialised
shareholders, who wish to be represented, must provide their
CSDP or broker with their voting instructions in terms of the
custody agreement between them and their CSDP or broker in
the manner and timeframe stipulated.
By order of the Board
K Ntlha
Company Secretary
30 July 2015
Page 74
Famous Brands
Integrated Annual Report 2015
Form of proxy
Famous Brands Limited
(Registration number 1969/004875/06)
(Incorporated in the Republic of South Africa)
(Famous Brands or the company)
Share code: FBR ISIN: ZAE000053328
For use by the holders of the company’s certificated ordinary shares (certified shareholders) and/or dematerialised ordinary shares held through a
Central Securities Depository Participant (CSDP) or broker who have selected “own name” registration (own name dematerialised shareholders) at
the 21st Annual General Meeting of the company to be held at 478 James Crescent, Midrand, on Monday, 31 August 2015 at 14:00 and at any
adjournment thereof.
Not for the use by holders of the company’s dematerialised ordinary shares who are not “own name” dematerialised shareholders. Such
shareholders must contact their CSDP or broker timeously if they wish to attend and vote at the Annual General Meeting and request that they be
issued with the necessary authorisation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to
attend the Annual General Meeting in order for the CSDP or broker to vote thereat in accordance with their instructions.
I/We
of (address)
being the registered owner/s of
ordinary shares in
the company hereby appoint
or failing him/her
or failing him/her, the Chairperson of the Annual General Meeting, as my/our proxy to act for me/us and on my/our behalf at the Annual General
Meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed
thereat and at any adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares
registered in my/our name(s), in accordance with the following instructions:
* Please indicate with an “X” in the appropriate spaces below how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may
vote as he/she thinks fit.
For*
1.
Ordinary resolution No. 1:
Adoption of the Annual Financial Statements and reports
2.
Ordinary resolution No. 2:
Appointment of auditors
3.
Ordinary resolution No. 3:
Re-election and appointment of directors
Number of votes
Against*
Abstain*
3.1 Re-election of Mr Theofanis Halamandaris
3.2 Re-election of Mr John Lee Halamandres
3.3 Re-election of Mr Bheki Lindinkosi Sibiya
3.4 Appointment of Mr Norman Adami
3.5 Appointment of Mr Moses Kgosana
4.
Ordinary resolution No. 4:
Re-election and appointment of the Chairman and members of the Audit and Risk Committee
4.1 Re-election of Christopher Hardy Boulle as Chairman and member of the Audit and Risk
Committee
4.2 Re-election of Bheki Lindinkosi Sibiya as a member of the Audit and Risk Committee
4.3 Appointment of Norman Adami as a member of the Audit and Risk Committee
4.4 Appointment of Moses Kgosana as a member of the Audit and Risk Committee
5.
Ordinary resolution No. 5:
To place 3% (three percent) of the unissued shares under directors’ control
6.
Ordinary resolution No. 6:
Authority for directors or Company Secretary to implement resolutions
7.
Ordinary resolution No. 7:
Adoption of the Famous Brands Share Incentive Scheme (2015)
8.
Non-binding resolution No. 1:
Endorsement of remuneration policy
9.
Special resolution No. 1:
Approval of non-executive directors’ remuneration for their services as directors
10.
Special resolution No. 2:
General authority to repurchase shares
11.
Special resolution No. 3:
General authority to provide financial assistance to related or inter-related entities
Signed this
day of
2015
Signature
Assisted by (if applicable)
Please read the notes on the reverse.
Page 75
Notes to the form of proxy
1.
This form of proxy is to be completed only by those
shareholders who:
(a)
hold shares in a certificated form; or
(b)
are recorded in the sub-register in electronic
form in their “own name”.
2.
Shareholders who have dematerialised their shares
and wish to attend the Annual General Meeting must
contact their CSDP or broker who will furnish them
with the necessary authority to attend the Annual
General Meeting, or they must instruct their CSDP or
broker as to how they wish to vote in this regard. This
must be done in terms of the agreement entered into
between the shareholders and their CSDP or broker.
3.
4.
5.
6.
Page 76
Each shareholder is entitled to appoint one or more
proxies (who need not be a shareholder(s) of the
company) to attend, speak and, on a poll, vote in place
of that shareholder at the Annual General Meeting.
A shareholder may insert the name of a proxy or the
names of two alternative proxies of the shareholder’s
choice in the space provided, with or without deleting
“the Chairperson of the Annual General Meeting”. The
person whose name stands first on the form and who
is present at the Annual General Meeting will be
entitled to act as proxy to the exclusion of those
whose names follow.
A shareholder’s instructions to the proxy must be
indicated by the insertion of the relevant number of
votes exercisable by that shareholder in the
appropriate box(es) provided. Failure to comply with
the above will be deemed to authorise the Chairperson
of the Annual General Meeting, if the Chairperson is
the authorised proxy, to vote in favour of the
resolutions at the Annual General Meeting, or any
other proxy to vote or to abstain from voting at the
Annual General Meeting as he/she deems fit, in
respect of all the shareholder’s votes
exercisable thereat.
A shareholder or his/her proxy is entitled but not
obliged to vote in respect of all the ordinary shares
held by such shareholder. The total number of votes
for or against the resolutions and in respect of which
any abstention is recorded may not exceed the total
number of shares held by such shareholder.
7.
Documentary evidence establishing the authority of a
person signing this form of proxy in a representative
capacity must be attached to this form of proxy, unless
previously recorded by the company’s transfer
secretaries or waived by the Chairperson of the Annual
General Meeting.
8.
The Chairperson of the Annual General Meeting may
accept or reject any form of proxy which is completed
and/or received other than in accordance with these
instructions, provided that he shall not accept a proxy
unless he is satisfied as to the manner in which a
shareholder wishes to vote.
9.
Any alterations or corrections to this form of proxy
must be initialled by the relevant signatory(ies).
10.
The completion and lodging of this form of proxy does
not preclude the relevant shareholder from attending
the Annual General Meeting and speaking and voting
in person to the exclusion of any proxy appointed by
the shareholder.
11.
A minor must be assisted by his/her parent/guardian
unless the relevant documents establishing his/her
legal capacity are produced or have been registered by
the company’s transfer secretaries.
12.
Where there are joint holders of any shares, only that
holder whose name appears first in the register in
respect of such shares need sign this form of proxy.
13.
Forms of proxy must be lodged at, posted or faxed to
Link Market Services South Africa, 13th floor, Rennie
House, 19 Ameshoff Street, Braamfontein, 2001
(PO Box 4844, Johannesburg, 2000) to reach the
company by no later than 14:00 on Thursday,
27 August 2015.
Administration
Famous Brands Limited
Transfer secretaries
Incorporated in the Republic of South Africa
Registration number: 1969/004875/06
JSE share code: FBR
ISIN code: ZAE000053328
Link Market Services Proprietary Limited
Registration number: 2000/007239/07
Rennie House, 19 Ameshoff Street, Braamfontein, 2001
PO Box 4844, Johannesburg, 2000
Directors
Sponsor
NJ Adami, SL Botha (Independent Chairman),
CH Boulle, P Halamandaris, P Halamandaris (Jnr),
T Halamandaris, JL Halamandres, RM Kgosana,
KA Hedderwick (Group Chief Executive)*,
DP Hele (Chief Executive Officer – Food Services)*,
NS Richards (Group Financial Director)* and BL Sibiya.
*Executive
The Standard Bank of South Africa Limited
Registration number: 1969/017128/06
30 Baker Street, Rosebank, 2196
Auditors
RSM Betty & Dickson (Johannesburg)
Bankers
Company Secretary
K Ntlha
Registered office
478 James Crescent, Halfway House, Midrand, 1685
PO Box 2884, Halfway House, 1685
Telephone:
+27 11 315 3000
Email:
[email protected]
Website address: www.famousbrands.co.za
Absa Bank Limited
Bidvest Bank Limited
FirstRand Bank Limited
Investec Bank Limited
Nedbank Limited
Standard Bank Limited
BASTION GRAPHICS
Contact information
Tel: +27 11 315 3000
[email protected]
478 James Crescent
Halfway House, South Africa, 1685