Famous Brands Limited · JSE:FBR
Famous Brands — FY2013 Earnings Presentation
54 slides from Famous Brands's earnings presentation, Feb 28, 2013
Slide 1: Results Presentation for the year ended February 2013
RESULTS PRESENTATION for the year ended 28 February 2013
Slide 2: Agenda
• Performance highlights • Building capability - Group - Brands - Logistics - Manufacturing • Financial results • Strategy • Prospects 2
Slide 3: Performance Highlights
o famous|brands PERFORMANCE HIGHLIGHTS
Slide 4: Performance Highlights
PERFORMANCE HIGHLIGHTS • Strong results during a period of extreme margin pressure • 12th consecutive year of record turnover and profits • Exceeded four-year vision of doubling the size of our business • Headline earnings per share increased 23% • Total dividends to shareholders 250 cents per share
Slide 5: Performance Highlights
PERFORMANCE HIGHLIGHTS • Opened 140 new restaurants and revamped 136 • Rest of Africa gains traction - 45% growth in system-wide sales • Concluded comprehensive Fit 4 Purpose business model transformation project • Concluded ground breaking sports sponsorship agreement with Varsity Sports – across s
Slide 6: Building Group Capability
o famous| brands _ BUILDING GROUP CAPABILITY
Slide 7: Context
CONTEXT • Preparing for another decade of growth y Getting closer to customers 2 key stakeholders y Getting closer to consumers • Separated International business from South Africa • Created six decentralised SA regional centres of excellence • Centralised all marketing 7
Slide 8: Business Model
BUSINESS MODEL SA Operations International Central Office and Logistics Operations Marketing Manufacturing Corporate 8
Slide 9: Building Brand Capability
o famous| brands BUILDING BRAND CAPABILITY
Slide 10: System-wide Sales Growth
SYSTEM–WIDE SALES GROWTH 44.7% 13.1% 11.2% Domestic Rest of Total Africa 10
Slide 11: Like-on-like Sales Growth
LIKE-ON-LIKE SALES GROWTH 28.3% 8.9% 7.7% Domestic Rest of Total Africa 11
Slide 12: New Restaurants Opened
NEW RESTAURANTS OPENED Total 140 45 41 40 35 30 28 25 24 20 20 15 15 12 10 5 0 Fishaways Wimpy Emerging Debonairs Mugg & Bean Steers Brands Pizza 12
Slide 13: Franchise Network
FRANCHISE NETWORK Total 2 163 600 546 519 500 404 400 302 300 200 141 141 110 100 0 Wimpy Fishaways Debonairs Steers Wimpy UK Emerging Mugg & Bean Brands Pizza 13
Slide 14: Trading Footprint
TRADING FOOTPRINT South Africa 1 881 Rest of Africa 172 United Kingdom 110 110 UK Dubai 3 5 Sudan 8 Nigeria 4 Ivory Coast Kenya 13 27 Zambia Tanzania 3 8 Zimbabwe Malawi 4 28 Botswana 27 Namibia Mauritius 28 1 881 South Africa Mozambique 3 Swaziland 8 Lesotho 3 14
Slide 15: Brand Highlights
BRAND HIGHLIGHTS • Aggressive everyday value offering delivers double digit growth • Solid like-on-like turnover performance – breakfast consumption growth fuelled by new entrants and aggressive pricing • Growth in Rest of Africa surges, now accounts for 15.9% of brands total sales • Trading format
Slide 16: Brand Highlights
BRAND HIGHLIGHTS • Continues to record both strong organic and numeric growth, a function of increased category activity • Intellectual property re-engineered • Artisan baking category gaining traction • Readiness for export progressing 16
Slide 17: Brand Highlights
BRAND HIGHLIGHTS Strategy to pursue growth in new markets is progressing 17
Slide 18: Building Logistics Capability
BUILDING LOGISTICS CAPABILITY
Slide 19: Gross Revenue % Growth - Logistics
GROSS REVENUE % GROWTH - LOGISTICS Total 19.5 23.0 20.4 15.8 16.4 9.5 Gauteng & KwaZulu Natal Western Cape Eastern Cape Free State Mpumalanga 19
Slide 20: Logistics Highlights
LOGISTICS HIGHLIGHTS • Commissioned Nelspruit logistics centre • Relocated Bloemfontein logistics centre • 9% increase in price of diesel and 16.5% increase in electricity tariffs • Overall margin unchanged at 3.5%, an outstanding achievement 20
Slide 21: Building Manufacturing Capability
BUILDING MANUFACTURING CAPABILITY
Slide 22: Gross Revenue % Growth - Manufacturing
GROSS REVENUE % GROWTH - MANUFACTURING Total 24.8* 42.3 23.9 15.9 15.1 7.2 -3.3 -12.2 Meat Bakery Sauces WCP Meat WCP Fruit Ice-Cream Plant & Spices Plant Bakery Juice * Includes Famous Brands Coffee Company acquisition 22
Slide 23: Manufacturing Highlights
MANUFACTURING HIGHLIGHTS • Strong growth fuelled by soft serve, chicken fillet, beef patty, boerewors and lamb sausage volumes • 16.5% increase in electricity tariffs and volatile beef prices • Overall margin declined to 13.6% (15.3%) due to deliberate margin absorption in Meat Processing Plant 23
Slide 24: Financial Results
o famous | brands F INANCIAL RESU LTS
Slide 25: Salient Features
SALIENT FEATURES % F 2013 change Revenue (Rm) 2 516 17 Operating profit (Rm) 466 13 Cash generated before changes in working capital (Rm) 503 11 Earnings per share (cents) 338 22 Headline earnings per share (cents) 339 22 Total dividends per share (cents) 250 25 Net debt / equity (%) 8 10 (py) Divid
Slide 26: Income Statement
INCOME STATEMENT % Rm F 2013 F 2012 change Revenue 2 516 2 156 17 Cost of sales (1 463) (1 233) Gross profit 1 053 923 14 Selling and administrative expenses (587) (510) 15 Operating profit 466 413 13 Net interest paid (4) (11) Profit before tax 462 402 15 Taxation (131) (134) Profit for the year 33
Slide 27: Revenue (Rm)
REVENUE (Rm) 3000 2516 2500 2156 2000 1878 1685 1549 1500 1190 1000 500 0 2008 2009 2010 2011 2012 2013 27
Slide 28: Operating Profit
OPERATING PROFIT Rm % 500 19.5 450 19.0 19.1 19.1 400 18.5 18.5 350 18.3 18.3 300 18.0 250 17.5 16.9 466 200 413 358 17.0 150 308 262 16.5 100 217 50 16.0 0 15.5 2008 2009 2010 2011 2012 2013 28
Slide 29: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION Rm F 2013 F 2012 Move Assets Property, plant and equipment 194 156 38 Intangible assets 800 695 105 Working capital 135 128 7 1 129 979 150 Funding Equity 1 000 840 160 Net borrowings 81 82 (1) Deferred liabilities and current tax balances 48 57 (9) 1 129 979 150 29
Slide 30: Cash Flow (Rm)
CASH FLOW (Rm) 600 550 4 500 Interest 450 137 Tax 400 350 300 482 Cash from 223 250 operations Dividends 200 150 100 162 50 Capex (net) 88 Funding 85 41 raised (net) 0 -50 Opening cash Closing cash 30
Slide 31: Segmental Analysis
SEGMENTAL ANALYSIS % % of total F 2013 F 2012 change Revenue (Rm) Franchising – Domestic 20 495 440 12 Supply Chain 76 1 919 1 614 19 United Kingdom 3 83 82 1 Corporate 1 19 20 100 2 516 2 156 17 Operating Profit (Rm) Franchising – Domestic 64 300 265 13 Supply Chain 35 161 141 14 United Kingdom 1 5
Slide 32: Productivity and Margin Ratios
PRODUCTIVITY AND MARGIN RATIOS % 50 45.5 42.5 43.3 42.8 41.8 45 40.7 40 35 30 27.2 23.8 24.2 24.2 23.7 23.3 25 20 15 18.3 18.3 19.1 19.1 18.5 16.9 10 5 0 2008 2009 2010 2011 2012 2013 Gross Profit Margin (%) Expense to Turnover (%) Operating Margin (%) 32
Slide 33: Ratios
RATIOS Debt/ NAV Equity % 12 50 45.8 10.2 45 10 40 8.7 7.4 35 8 30.3 6.2 30 6 5.2 25 4.3 27.5 20 4 14.3 15 9.7 8.1 10 2 5 0 0 2008 2009 2010 2011 2012 2013 Net asset value per share NAV - (R) Debt/Equity (%) 33
Slide 34: Strategy
o famous | brands re STRAT EGY
Slide 35: Strategy
STRATEGY BUILD GROUP BUILD BRAND CAPABILITY CAPABILITY • Execute and implement • Unlock potential of recent Fit 4 Purpose acquisitions • Launch Steers in Clapham, London • Launch Debonairs Pizza, Mumbai • Leverage Varsity Sports and SA National Hockey sponsorships • Leverage centralisation of market
Slide 36: Strategy
STRATEGY BUILD BUILD LOGISTICS MANUFACTURING CAPABILITY CAPABILITY • Re-locate and commission • Conclude take-on of all Famous Port Elizabeth logistics Brands coffee roasting business centre • Commission Coega Cheese • Explore potential of new • Integrate Famous Brands Great Polokwane logistics depo
Slide 37: Prospects
2. | brands PRO SPECTS
Slide 38: Prospects
PROSPECTS • Constrained consumer spending • Competitive climate will intensify • Margin pressure will remain an industry “battle cry” • Value, convenience and accessibility will continue to drive volumes • Brands will win • Rest of Africa has become the new “playground” • Restructured for further gr
Slide 39: Another Decade of Growth
ANOTHER DECADE OF GROWTH Our business is focused on building capability across brands, logistics and manufacturing, providing a total solution to our investment partners and consumers 39
Slide 40: Results Presentation for the year ended February 2013
RESULTS PRESENTATION for the year ended 28 February 2013
Slide 41: Brand Portfolio
Prupe ™ Bread Basket Fie Turn nTender Somabchcncoe BREWERS GUILD ¢ be Wa famous | brands
Slide 42: Board of Directors
BOARD OF DIRECTORS Panagiotis Halamandaris Theofanis Halamandaris Periklis Halamandaris Stanley Aldridge John Halamandres Kevin Hedderwick Bheki Sibiya Hymie Levin Christopher Boulle Santie Botha Darren Hele 42
Slide 43: Shareholder Analysis February 2013
SHAREHOLDER ANALYSIS FEBRUARY 2013 Coronation Life Other Managers 30.3% 20.2% Peter Halamandaris 11.1% Enderle SA (Pty) Ltd 5.0% John Theofanis Halamandres Halamandaris 5.5% 10.2% Periklis Arisaig Africa Halamandaris Consumer Fund 8.0% 9.7% 43
Slide 44: Macro Environment
MACRO ENVIRONMENT • Subdued growth in consumer spending • Fiercely competitive • Margin pressure a common denominator 44
Slide 45: Shifting Consumer Profile
SHIFTING CONSUMER PROFILE • In 2004 the black middle class comprised 1.6 million people, now 4.2 million • The spending power of black middle class is R400 billion while white spend is estimated at R380 billion • Since 2004 black middle class disposable income has increased by 35% Source: UCT Unilev
Slide 46: Value Is the New Black
VALUE IS THE NEW BLACK • Consumers have been trained to look for value • Value is about price, quality, relevance and convenience 46
Slide 47: Convenience Matters (A Lot)
CONVENIENCE MATTERS (A LOT) • The market no longer eats three meals a day • Traditional three are degenerating into “nibbles and bites” • Snacks account for one in five eating occasions • Accessibility and speed are key • “If it fits into your car cup holder, if you can eat it with one hand or even
Slide 48: Breakfast and Coffee (All the Time)
BREAKFAST AND COFFEE (ALL THE TIME) • Breakfast and coffee are key drivers of growth • “All Day Breakfast” is the future • Coffee drinkers are more discerning • Coffee increasingly purchased as a “snack” 48
Slide 49: Operating Profit – Domestic Franchising
OPERATING PROFIT – DOMESTIC FRANCHISING Rm % 350 62.5 64.0% 64 62.0 300 62.0% 62 60.2 60.9 60.6 60.0% 60 250 58.0% 58 200 54.8 56.0% 56 150 300 265 54.0% 54 235 100 186 204 52.0% 52 142 50 50.0% 50 0 48.0% 48 2008 2009 2010 2011 2012 2013 Operating Profit (Rm) Operating Margin (%) 49
Slide 50: Operating Profit – Supply Chain
OPERATING PROFIT – SUPPLY CHAIN Rm % 180 10% 10 8.7 9 160 7.8 8.4 9% 8.1 140 8.4 8% 8 7% 7 120 5.7 6% 6 100 5% 5 80 161 141 4% 4 60 116 3% 3 94 40 2% 2 61 61 20 1% 1 0 0% 0 2008 2009 2010 2011 2012 2013 Operating Profit (Rm) Operating Margin (%) 50
Slide 51: Operating Margins by Division
OPERATING MARGINS BY DIVISION % 70 62.0 62.5 60.9 60.2 60.6 60 54.8 50 40 30 18.3 16.9 18.3 19.1 19.1 18.5 20 10.9 9.6 10.1 11.3 9.2 8.4 10 8.1 7.8 8.4 8.7 0 5.7 6.5 2008 2009 2010 2011 2012 2013 Domestic Franchising Group 51
Slide 52: Operating Margins – Supply Chain
OPERATING MARGINS – SUPPLY CHAIN % 18 16 15.3 15.3 13.6 14 12.4 11.8 12 9.6 10 8 6 3.0 3.0 3.5 3.5 4 2.4 2.1 2 0 2008 2009 2010 2011 2012 2013 Manufacturing Logistics 52
Slide 53: Ratios
RATIOS % Times 50 4.0 45.2 44.5 42.5 43.6 45 37.4 38.2 3.5 40 35 38.0 36.1 35.7 35.9 3.0 30 33.4 34.5 2.5 25 2.4 2.5 2.3 2.2 2.2 20 2.1 2.2 2.0 15 2.1 10 1.8 1.5 1.6 5 1.4 1.4 0 1.0 2008 2009 2010 2011 2012 2013 RONA (%) ROE (%) Net Asset Turn (times) Dividend Cover (times) 53
Slide 54: Contact Information
CONTACT INFORMATION Kevin Hedderwick Chief Executive +27 11 651 5812 Stan Aldridge Group Financial Director +27 11 651 5902 Del-Maree English Investor Communications +27 83 395 8608 www.famousbrands.co.za 54