Famous Brands makes R462m in profits

A final dividend of 142 cents a share was declared‚ bringing the total cash dividends to 250 cents for the year.

Revenue improved by 17% to R2.52bn‚ while profit before tax rose 15% to R462m‚ exceeding the group's goal of R450m.

"Despite the subdued macro-economic climate experienced in the year, the group delivered a strong performance‚" said chief executive Kevin Hedderwick.

"Robust results were reported across our franchising‚ manufacturing and logistics businesses. In addition‚ key acquisitions were made and joint venture partnerships established to bolster both our brand portfolio and supply chain capability," he added.

He said that the group succeeded in surpassing its four-year goal to double the size of the business.

Net capital expenditure of R162m was incurred‚ which included R85m for the acquisition of the Europa and Fego Caffé trademarks‚ R7m for the acquisition of Java Lava Beverage Manufacturers - subsequently renamed 'Famous Brands Coffee Company' - together with coffee roasting equipment worth R5m. Famous Brands paid R33m for the Coega Cheese plant‚ as well as supply chain expansion activities.

Domestic franchising

The domestic franchising division‚ which comprises operations in South Africa and 15 other African countries‚ performed well‚ with each one of the brands delivering satisfying results.

Combined revenue increased 12% to R495m while operating profit rose to R300m

System-wide sales across the group's total brand portfolio‚ including new restaurants‚ increased 13.1%‚ comprising an improvement of 11.2% in the South African operations and a 45% increase in the rest of Africa region.

Like-on-like sales for the group grew 8.9%‚ with a 7.7% increase in SA sales‚ while the rest of Africa turnover grew by 28%.

The group's Africa division comprised 7.3% of total sales.

"A total of 140 new restaurants were opened across our brand portfolio during the period‚ 110 of them in South Africa.

"In addition‚ 130 restaurants were revamped or relocated in South Africa and a further six in Africa. This is a creditable performance given the general slow-down in new property developments," said Hedderwick

"We are particularly pleased with our entry into new rural South African markets in which we were previously under-represented‚" he added.

International expansion

Wimpy United Kingdom experienced another challenging year and reported a 9% decrease in its Sterling revenue but a 1% increase in rand terms to R83m.

"This division is a very small component of the business‚ making only a nominal contribution to group revenue and operating profit‚ namely 3.3% and 1.2% respectively," Hedderwick said.

"In terms of international expansion‚ the group is currently preparing for the maiden launch of our Steers brand in the UK market‚ in Clapham‚ London‚ scheduled for July this year.

"Famous Brands is also expanding to India with the launch of a pilot Debonairs Pizza restaurant scheduled for opening in Mumbai in July‚" he added.

Consolidated revenue for the supply chain business grew by 19% to R1.92bn‚ while operating profit rose 14% to R161m. The operating margin was 8.4%.

The manufacturing division reported a 25% improvement in turnover to R715m‚ derived from increased revenue contributions from the coffee company‚ ice-cream and chicken fillet plants along with first-time revenue from the new boerewors and lamb sausage plant and significantly increased beef patty volumes. Operating profits improved 11% to R98m.

The logistics division increased both revenue and operating profit by 20% to R1.8bn and R63.1m respectively.

Looking ahead‚ Hedderwick said: "There is little evidence to indicate that current trading conditions will improve materially in the foreseeable future. We expect the general economic uncertainty to continue to hamper sentiment so value will remain the key watchword in our business with intense margin pressure and more competition likely."