Famous Brands Limited · JSE:FBR
Famous Brands — FY2024 Earnings Presentation
62 slides from Famous Brands's earnings presentation, May 20, 2024
Slide 1: Annual Results Presentation 2024
Annual Results Presentation 2024 FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024
Slide 2: Strong portfolio of 16 distinctive brands
Strong portfolio of 16 distinctive brands Our strong brands, franchised model and diverse menu options provide ample scope for expansion Leading Brands are Our marketing Exposure to Quick category leaders in Signature Brands offer and branding decisions Service and Casual South Africa with bespoke C
Slide 3: Growing our brand networks
Growing our brand networks Number of Net restaurants Number of restaurants 2023 movement 2024 701 18 31 13 714 810 19 50 31 841 253 11 6 -5 248 106 5 10 5 111 545 10 9 -1 544 269 9 10* 16 17 286 49 18 -18 31 146 11 8 1* 4 -14 132 Other 8 1 -1 7 Total 2 887 Closures Conversions Openings 27 2 914 * 10
Slide 4: Agenda
Operating environment Slide 5 Brand performance review Slide 9 Supply Chain review Slide 22 Financial results Slide 26 Strategy update and outlook Slide 34 Appendices Slide 40 FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 4
Slide 5: Operating environment
Operating environment FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 5
Slide 6: Unpredictable trading conditions
Unpredictable trading conditions The year was characterised by weak economic growth, load shedding and low consumer demand COST INCREASES SUPPLY CHAIN DISRUPTIONS A DEMANDING CONSUMER - Inflation - El Niño weather conditions - A highly competitive landscape - Currency volatility disrupting transport
Slide 7: Keeping doors open during load shedding
Keeping doors open during load shedding We continue to support our franchise partners to prosper during load shedding conditions Percentage of SA Leading Brands restaurants with alternative power LOAD SHEDDING IMPACT OUR RESPONSE 95 - Around 15% of SA restaurant - Franchise partners receive a sales
Slide 8: Energy resilience in our Supply Chain
Energy resilience in our Supply Chain We continue to lessen our dependence on Eskom through efficient generators and solar installations Diesel costs and usage LOAD SHEDDING IMPACT OUR RESPONSE (Rands) 25.0 - Higher costs from suppliers - Investment in solar and larger - Supplier delivery failure ef
Slide 9: Brand performance review
Brand performance review FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 9
Slide 10: South Africa
South Africa Our strong brands continue to enjoy consumer support and growth Recovery in Highly successful Rollout of 6.0 6.4 6.1 mall environments loyalty programmes ‘drive thrus’ in QSR 4.3 4.4 2.5 Load shedding Poor economic Slow down Signature Brands Signature Leading SA conditions and below exp
Slide 11: Leading Brands
Leading Brands Retail selling price (RSP) increase (%) 14.0 13.9 13.6 11.8 12.0 11.0 12.1 10.6 10.6 10.6 10.6 10.6 8.7 9.0 8.3 8.5 9.9 8.1 7.2 8.0 7.4 7.4 7.4 7.4 4.8 4.8 4.9 4.9 4.9 4.9 4.9 4.9 4.5 4.5 4.5 4.0 4.3 3.8 3.8 3.8 3.8 3.8 3.8 3.5 3.5 3.5 3.5 3.5 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23
Slide 12: Leading Brands
Leading Brands Like-on-like and system-wide turnover growth for South Africa by province (%) System-wide Like-on-like National Average National Average 6.4 4.3 9.0 8.5 8.5 8.1 6.7 6.0 6.1 7.7 5.2 6.9 7.0 4.3 4.0 4.2 4.1 3.5 2.9 0.7 Eastern Cape Free State Gauteng KwaZulu-Natal Limpopo Mpumalanga Nor
Slide 13: Leading Brands
Leading Brands System-wide quarterly turnover growth (%) System-wide National Average 6.4 11.1 7.9 7.1 7.2 6.0 5.3 5.6 2.8 Q1 Q2 Q3 Q4 Casual Dining Restaurants Quick Service Restaurants Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 13
Slide 14: Leading Brands
Leading Brands Like-on-like quarterly turnover growth (%) Like-on-like National Average 11.0 4.3 7.7 5.6 4.3 4.4 3.3 3.3 0.2 Q1 Q2 Q3 Q4 Casual Dining Restaurants Quick Service Restaurants Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 14
Slide 15: Signature Brands
Signature Brands System-wide quarterly turnover growth (%) System-wide National Average 6.2 2.5 4.5 0.4 (1.1) Q1 Q2 Q3 Q4 Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 15
Slide 16: Signature Brands
Signature Brands Like-on-like quarterly turnover growth (%) Like-on-like National Average 6.0 9.9 9.5 2.8 2.0 Q1 Q2 Q3 Q4 Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 16
Slide 17: A focused approach to growth outside SA
A focused approach to growth outside SA A new management structure allows for transparent reporting on AME performance Growth priorities SADC AME - Managed by our SA Leading - Managed by our AME team in - A focused set of brands in select countries Brands team Dubai or in-country - Build own deliver
Slide 18: SADC
SADC Well-established and profitable franchised operations Considered Developing own Continued restaurant management of delivery capabilities expansion menu prices Weak economic conditions and Currency weakness inflation in several markets against the dollar 22 restaurants opened 57.5% operating pro
Slide 19: Botswana
Botswana A large restaurant footprint and a successful Company-owned model Inflation, including food Implemented and beverage inflation, delivery hub model has eased significantly Revenue growth limited Supply Chain pressures due to Economic growth by a slowdown in tourism the government’s restricti
Slide 20: AME
AME Diverse growth potential in challenging markets Regular menu Opened first Store growth Acquired 10 price increases restaurant primarily in restaurants in required in some in Côte d’Ivoire the UAE Mauritius markets Difficult economic Restructuring of UACR conditions and Closure* of stores busines
Slide 21: Political and economic uncertainties persist
UK Political and economic uncertainties persist Focus on revamps and Improvements in targeted growth Supply Chain challenges Cost-of-living-crisis and poor A drop in take aways but consumer confidence improved in-dining 1 restaurant opened 11.4% operating profit margin 3 restaurants closed FAMOUS BR
Slide 22: Supply Chain review
Supply Chain review FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 22
Slide 23: Supply Chain
Supply Chain - Price increases - Weaker demand - Increased overhead costs: load shedding impact and ingredient increases Revenue Production Operating profit up 9% to volumes margin down to R3.3 billion up 0.3% 9.0% Operating profit Insurance premiums Diesel costs for non-fleet usage down 1.7% to up
Slide 24: Supply Chain
Supply Chain - Revenue growth and case volumes up - Poor economic conditions limiting revenue growth - Operating profit weighed down by higher expenses (fuel, employee increases, insurance) - Regular route disruptions and protests - Improved fuel consumption - Roll out of a new warehouse management
Slide 25: Supply Chain
Supply Chain - Strong growth in sales volumes and distribution footprint - Continue to benefit from increased at-home consumption - Excellent performance from the potato chip range - Strong recovery in coffee sales volumes - No material product write-offs Revenue Operating profit up 35% to up to R36
Slide 26: Financial results
Financial results FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 26
Slide 27: Revenue growth in a tough economic environment
Revenue growth in a tough economic environment Continued consumer support of our brands HEPS REVENUE OPERATING PROFIT ↓ 5% ↑ 8% ↓ 6% 465 cents R8.0 billion R812 million per share CASH GENERATED DIVIDENDS NET DEBT/EBITDA FROM OPERATIONS ↓ 17% ↑ 0.5% ↑ 13% to 302 cents 1.13 times R1.1 billion per shar
Slide 28: Revenue growth across all our operations
Revenue growth across all our operations We benefited from expansion of restaurant numbers, restaurant turnovers and price increases 2024 2023 2024 Revenue highlights R million R million % change Brands 1 162 1 107 5 - Revenue growth due to innovative Leading Brands 954 904 6 consumer value offering
Slide 29: Trading conditions impact profitability
Trading conditions impact profitability Overhead cost pressure on operating profit 2024 2023 2024 Insights into operating profit Segment operating profit R million R million % change Brands 489 475 3 - Higher overheads and load shedding Leading Brands 480 461 4 impacting profitability in SA Signatur
Slide 30: Operating margins under pressure
Operating margins under pressure Greater focus on margin improvements Group operating margin over five years (%) Operating profit margin (%) 2024 2023 Brands 42.1 42.9 Leading Brands 50.3 51.0 11.7 10.6 Signature Brands (1.9) 4.0 9.7 10.1 Supply Chain 7.1 8.1 Manufacturing 9.0 10.0 Logistics 1.9 2.4
Slide 31: Sound financial position
Sound financial position We have strong cash-generative operations, a healthy balance sheet and an effective debt structure Trade and other Trade and other Inventories R573 million receivables R584 million payables R806 million - Inventory holdings increased by 8% to lock in - 6% increase in line wi
Slide 32: Responsible cash flow management
Responsible cash flow management Strong cash generation to meet working capital and investment requirements Cash flow commentary - Increased dividends - Debt repayment of R126 million - Bond financing secured for Midrand Campus - Investment in capital assets - Undrawn debt facilities of R219 million
Slide 33: Investing to deliver on our strategy
Investing to deliver on our strategy Capex allocation aligned with strategy: Lead in categories we compete in and create Supply Chain of the future Capex per SA division (R million) Capex per region (R million) Capex overview 1 4 - Tangible and intangible assets: 23 32 47 › Expansion: R182 million ›
Slide 34: Strategy update and outlook
Strategy update and outlook FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 34
Slide 35: Our strategy, vision and purpose
Our strategy, vision and purpose Vision: To be the leading innovative branded franchised and food services business in SA and selected markets Strategic intent Supported by our 4 key strategic matters: Grow capability and capacity to deliver great customer experiences in the branded franchised Creat
Slide 36: Steady execution against strategy
Steady execution against strategy HEALTHY PROGRESS WITH FAMOUS BRANDS FINANCIAL METRICS LONG-TERM INITIATIVES Famous Brands is growing IS GROWING - Maintain revenue growth in - Digital enablement in our - 137 new restaurants unpredictable trading restaurants - 27 net restaurant growth conditions - 1
Slide 37: Capital allocation and returns to shareholders
Capital allocation and returns to shareholders Invest in Leading Brands in SA and selected Improve and maintain free cash flow and optimise 1 SADC and AME markets 4 working capital management 2 Divest from non-core assets 5 Reward shareholders through dividends 3 Manage debt levels and debt pricing
Slide 38: Consumer-facing technology
Consumer-facing technology Enhancing consumer experience through technology adoption and insights Digital enablement Payments and POS Insights and loyalty Own delivery - Digital menu boards - Contactless payment - Successful Mugg & Bean - Successful delivery hub - Self-service terminals solutions co
Slide 39: Outlook and priorities
Outlook and priorities We have the right brands and strategy to grow, increase market share and maintain our margins How we respond HEADWINDS TAILWINDS - Persistent low economic growth - Market favours category leaders - Grow Leading Brands in South Africa, SADC and AME markets - Inflation and high
Slide 40: Appendices
Appendices FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 40
Slide 41: Group profile
Group profile Founded in the 1960s by George Halamandres, Famous Brands has grown to become Africa’s largest restaurant franchisor, known for its distinctive brands and reputation as a responsible franchisor - Exposure to growth markets - A strong trade record with 29 years as a JSE-listed company -
Slide 42: Group profile: key milestone moments
Group profile Key milestone moments Lists on the JSE in In 1963, the first The first Steers 1994 under the name Acquired the Seven Steer opened franchised restaurant Steers Holdings Limited Debonairs Pizza in Highlands North, opened in 1965 at the initial public offer brand in 1997 Johannesburg pric
Slide 43: Our compelling investment case
Our compelling investment case 1 2 3 4 5 6 Established Strategic Strong brands Competent Sound financial ESG market leader business model and excellent leadership and position mindfulness franchise partners clear strategies - Largest franchise - A vertically - A compelling - An experienced - A stron
Slide 44: Our geographic footprint
Our geographic footprint Angola 13 Botswana 48 South Africa is our largest market, with 88% of our restaurant network based there. Côte d'Ivoire 1 Eswatini 7 Ethiopia 4 Kenya 16 In 2024, we generated R409 million from our Lesotho 7 SADC operations, with our biggest markets being Malawi 8 Botswana an
Slide 45: Brand awards in 2024
Brand awards in 2024 - A Silver Pendoring in the packaging print design category - A Platinum Award in the City Press Readers’ Choice Awards 2023 - Best Chips, Best Takeaway and Best Burger in the Best of 2023 - A Platinum Award in the Rapport Jou Keuse Awards 2023 Pretoria Awards - Ranked fourth in
Slide 46: Leadership
Leadership Alexander Maditse Fagmeedah Petersen-Cook William Mzimba Thabo Mosololi Nicolaos Halamandaris Santie Botha Lead Independent Independent non-executive Independent non-executive Independent non-executive Non-executivedirector Independent Chairman non-executive director director director dir
Slide 47: Board changes
Board changes The following changes to the composition of the Board took place during the year: - On 8 March 2023, Norman Adami stepped down from the Audit and Risk Committee. He remains a member of the Nomination and Investment Committees. - John Halamandres, a non-executive director, retired from
Slide 48: Transactions
Transactions Famous Brands acquires Point of Sale (POS) capabilities On 16 October 2023, Famous Brands acquired a 45% strategic shareholding in Munch Software (Pty) Ltd. The business operates in the POS software industry, offering a modern cloud-based platform. The partnership will support the Group
Slide 49: Income statement
Income statement 2024 2023 R million R million % change Revenue 8 024 7 444 8% Gross profit 3 384 3 176 7% Other income 28 126 (78%) Expected credit loss 10 (3) 440% Administration expenses (191) (165) (15%) Marketing expenses (660) (614) (7%) Operations expenses (1 747) (1 619) (8%) Impairment of i
Slide 50: Revenue
Revenue 2024 2023 R million R million % change Sale of goods 6 165 5 729 8 Manufacturing revenue 166 174 (5) Owned 30 29 4 Subsidiary 136 145 (7) Logistics revenue 5 021 4 705 7 Retail revenue 368 273 35 Company-owned stores 596 564 6 Leading Brands 441 412 7 Signature Brands 156 152 2 Joining fees
Slide 51: Statement of financial position
Statement of financial position 2024 2023 R million R million % change ASSETS Property, plant and equipment 924 904 2% Intangible assets 869 850 2% Investments in associates 51 34 47% Deferred tax 100 92 9% Current tax assets 11 8 34% Inventories 573 531 8% Trade, lease and other receivables 589 560
Slide 52: Logistics
Logistics Local revenue vs exports 2% 1.9% 2024 2023 98% 98.1% SA Logistics revenue Export revenue SA Logistics revenue Export revenue FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 52
Slide 53: SA environment
SA environment YOY food and beverage income change at constant pricing versus current prices (%) Full year Full year 9.6 1.8 17.0 13.9 11.9 11.3 11.3 9.7 9.5 8.8 6.6 6.9 7.5 6.5 6.4 5.2 3.9 3.5 3.7 2.6 2.1 (0.2) (0.2) (2.9) (3.9) (3.9) Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 D
Slide 54: SA environment
SA environment YOY change in food and beverage income at current price by type of enterprise (%) Full year Full year 10.1 8.9 15.0 12.3 9.2 16.4 13.8 10.9 17.0 9.0 14.9 5.9 4.6 13.5 11.4 10.4 8.8 9.2 9.7 8.0 8.5 2.7 8.3 5.7 1.8 1.2 Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 Nov 23 Dec 2
Slide 55: SA environment
SA environment YOY change in food and beverage income at constant 2015 price by type of enterprise (%) Full year Full year 2.2 1.8 6.7 1.8 4.3 10.4 5.8 6.9 6.5 6.8 2.6 3.5 1.5 2.7 2.5 3.0 1.8 1.8 0.7 (4.4) (5.1) (1.4) (1.8) (3.1) (1.4) (4.7) Mar 23 Apr 23 May 23 Jun 23 Jul 23 Aug 23 Sep 23 Oct 23 No
Slide 56: System-wide restaurant sales
System-wide restaurant sales Split between domestic sales for Signature Brands and Leading Brands (%) 8% 92% Leading Brands SA Signature Brands SA Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 56
Slide 57: SADC system-wide sales
SADC system-wide sales SADC system-wide sales turnover growth by country (local currency) (%) 70.9 48.4 29.7 19.0 11.4 9.0 5.9 4.7 (5.1) Angola Botswana eSwatini Lesotho Malawi Mozambique Namibia Zambia Zimbabwe Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024 57
Slide 58: AME system-wide sales
AME system-wide sales In 2024, Famous Brands exited Sudan AME system-wide sales turnover growth by country (local currency) (%) and Oman. 36.1 29.4 3.4 0.0 (0.9) (5.4) (4.2) Ethiopia Côte d'Ivoire Kenya Mauritius Nigeria Saudi Arabia UAE Source: Management disclosure FAMOUS BRANDS | ANNUAL RESULTS P
Slide 59: Exchange rates
Exchange rates UK EUR US Nigeria Zambia Botswana Dubai Exchange rates ZAR/GBP ZAR/EUR ZAR/USD NGN/ZAR ZAR/ZMW ZAR/BWP ZAR/AED As at 29 February 2024 24.31 20.81 19.22 84.03 0.82 1.39 5.23 As at 28 February 2023 22.21 19.50 18.40 25.00 0.93 1.38 5.01 YTD average 2024 23.39 20.24 18.68 40.32 0.89 1.39
Slide 60: Our contacts
Our contacts Darren Hele Chief Executive Officer +27 11 651 5929 Neli Shiluvana Group Financial Director +27 11 554 4561 Celeste Appollis Company Secretary +27 11 554 4563 companysecretary@famousbrands.co.za Investor relations investorrelations@famousbrands.co.za.a FAMOUS BRANDS | ANNUAL RESULTS PRE
Slide 61: Disclaimer
Disclaimer This presentation contains forward looking statements, which the Board of Directors takes full responsibility for, about the Company’s operations and financial position, which reflect the Company’s bona fide expectations at the date of this presentation. They are based on best estimates a
Slide 62: FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024
FAMOUS BRANDS | ANNUAL RESULTS PRESENTATION 2024