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FINANCIAL RESULTSF19 H1
AGENDA
GBK update Outlook for thesecond six months
Questions
Key Metrics Progress onF19 H1 plans
(Brands, Hospitality, Logistics, Manufacturing)
Financial resultsF19 H1
01 02 03
04 05 06
2
KEY METRICS
Strong resultsSA and AME business
4
Revenue
5.4%
5
F19 H1 R3.58bn (F18 H1 R3.40bn)
Operating profit beforenon-operational items
3.9%
Operating loss afternon-operational items
6
211.3%F19 H1 R421.8m
(F18 H1 R406.1m)
F19 H1 Loss R452.1m
(F18 H1 Profit R406.1m)
Cash generatedfrom operations
7
16.6%F19 H1 R540.4m (F18 H1 R463.0m)
Group under-performed
due to GBK UK
Coega Concentrateand
8
PROGRESS ON F19 H1 PLANS
GROWING BRAND CAPABILITY – SA & AME
F19 H1 BRAND CAPABILITY
DOMESTIC AME SA & AME TOTAL
7.3%
12.8%
7.8%
SYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)
11
F19 H1 BRAND CAPABILITYLIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)
DOMESTIC AME SA & AMETOTAL
3.4%
1.0%
3.1%
12
F19 H1 BRAND CAPABILITYSYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)
SIGNATURE BRANDS LEADING BRANDS
8.6%7.1%
13
F19 H1 BRAND CAPABILITYLIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)
SIGNATURE BRANDS LEADING BRANDS-2.3%
4.1%
14
2 782Restaurants
5.7bnRevenue increase of
33% across the
divisions
F19 H1 BRAND CAPABILITYTOTAL RESTAURANTS OPENED
59
16
4
15
Total
79
Steers Wimpy DebonairsPizza
FishAways Mugg &Bean
Mr Biggs GBK Milky Lane Fego Giramundo Wakaberry SignatureBrands
630574
664
257 244
97 100 8434 6 13
171
TO BE UPDATED WITH
INFORMATION FROM DARREN
F19 H1 BRAND CAPABILITYTOTAL RESTAURANT NUMBERS
16
Total
2 874
Open Debonairs Pizza
in Saudi Arabia
under license
GROWING
Further entrench home
delivery offering across
all brands
Review Signature
brand portfolio
BRAND CAPABILITY
Rapidly grow
capability in
digital arenas
Pipeline of branded offers
developed in-house
ready to launch
17
Expand tashas
footprint in UAE
Prioritise
Leading brands
with resources to
drive growth
Leading brands to
deliver BIG BOLD
initiatives
Get more
entrenched in
key AME markets
GOALS
Drive margin
improvement on
Signature brands
Not achieved Underway Achieved
GROWING HOSPITALITY CAPABILITY – SA
Expand home meal replacement space through
“bricks” and “clicks”
Grow presencein premium
corporate market
19
HOSPITALITY CAPABILITYGROWING
GOALS
Not achieved Underway Achieved
GROWING LOGISTICS CAPABILITY
– SA & EXPORTS
F19 H1 LOGISTICS CAPABILITYREVENUE GROWTH
7.1%
3.4%
7.7%
10.0%
6.9%7.9%
6.8%
21
Embark onProject Decade
LOGISTICS CAPABILITY
• Refer to supplementary slides for additional info
22
GROWINGGOALS
Not achieved Underway Achieved
GROWING MANUFACTURING CAPABILITY
- SA
F19 H1 MANUFACTURING CAPABILITYREVENUE GROWTH – OWN PLANTS
9.5%
21.2%
4.7%
-0.6%
-6.5%
14.2% 11.4%
24Note: Coega Concentrate and KZN Ice cream plant data not provided. Western Cape Bakery closed in July 2017
26.1%
-7.0%
1.8%
-5.1%
10.0% 9.5%
F19 H1 MANUFACTURING CAPABILITYREVENUE GROWTH – JV PLANTS
2.5%
25*New - formerly TruFruit
*
Secure sustainable tomato supply
or exit
MANUFACTURING CAPABILITY
Leverage Juice Plant Joint
Venture
26
GROWINGGOALS
Drive new“FoodConnect”
partnership
New routes to market for LBF
Take on previously outsourced grated cheese volumes at
FB Cheese Company
Focus onefficiencies
“ManufacturingWay”
Not achieved Underway Achieved
FINANCIAL RESULTS F19 H1
SALIENT FEATURES
HY F 2019 HY F 2018 % Change
Revenue (Rm) 3 583.6 3 401.2 5.4
Operating profit before non-operational items (Rm) 421.8 406.1 3.9
Operating (loss)/profit after non-operational items (Rm) (452.1) 406.1 (211.3)
Cash generated from operations (Rm) 540.4 463.0 16.6
EPS (cents) (572) 171 (434.5)
HEPS (cents) 188 170 10.6
Net debt : equity (%) 133.9 145.3 11.4
28
INCOME STATEMENT
Rm HY F 2019 HY F 2018 % Change
Revenue 3 583.6 3 401.2 5.4
Gross profit 1 916.2 1 816.9 5.5
Selling and administrative expenses (1 494.4) (1 410.8) (5.9)
Operating profit before non-operational items 421.8 406.1 3.9
Non-operational items (873.9) -
Net finance costs (105.8) (138.2)
Share of profit from associates 0.2 1.7
(Loss)/profit before tax (557.7) 269.6 (306.8)
Tax 14.1 (77.6)
(Loss)/profit for the year (543.6) 192.0 (383.1)
29
30
SEGMENTAL ANALYSIS | OPERATING PROFIT
Rm % of Total HY F 2019 HY F 2018 % Change
Brands 52.7 222.5 202.5 9.9
Leading brands 51.8 218.6 193.3 13.1
Signature brands 0.9 3.9 9.2 (58.1)
Supply Chain 60.7 256.0 221.1 15.8
Manufacturing 48.1 203.0 184.3 10.1
Logistics 12.6 53.0 36.8 44.2
Corporate (10.4) (44.2) (30.3) (46.0)
South Africa 103.0 434.3 393.3 10.4
International (3.0) (12.5) 12.8 (198.2)
UK (8.8) (36.8) (6.3) (481.9)
AME 5.8 24.3 19.1 27.2
Total Operating Profit before non-operational items 100.0 421.8 406.1 3.9
SEGMENTAL ANALYSIS | OPERATING MARGIN
% HY F 2019 HY F 2018
Brands 51.5 48.8
Leading brands 59.6 55.2
Signature brands 5.9 14.3
Supply Chain 11.4 10.5
Manufacturing 13.8 13.4
Logistics 2.7 2.0
South Africa 16.1 15.6
International (1.4) 1.4
UK (4.9) (0.8)
AME 18.0 15.5
Total Group 11.8 11.9
31
STATEMENT OF FINANCIAL POSITION
Rm HY F 2019 HY F 2018 % Change
ASSETS
Property, plant and equipment 1 166.7 1 465.2 (20.3)
Intangible assets 2 236.7 2 844.1 (21.3)
Investments in associates 79.9 83.1 (3.6)
Inventories 483.7 530.6 (8.9)
Trade and other receivables 788.3 798.7 (1.4)
Cash and cash equivalents 924.7 493.0 87.6
Other assets 127.6 84.8 51.2
TOTAL ASSETS 5 807.6 6 299.5 (7.8)
EQUITY AND LIABILITIES
Equity 1 374.9 1 667.2 (17.5)
Borrowings 2 765.1 2 900.6 (4.7)
Derivative financial instruments 183.8 244.7 (24.9)
Lease liabilities 112.3 96.8 15.5
Trade and other payables 970.9 943.5 3.0
Other liabilities 400.6 446.7 (10.1)
TOTAL EQUITY AND LIABILITIES 5 807.6 6 299.5 (7.8)
32
CASH FLOW
Opening Cash Cash fromOperations
Forex FinancingActivities
Interest Tax Capex & OtherInvestingActivities
Dividend Closing cash
716.8924.7
33
540.4
34.5 (102.1)(100.0)
(98.4)(47.6) (18.9)
GBK UPDATE
F19 H1 BRAND CAPABILITY
SYSTEM-WIDE LIKE-FOR-LIKE
-6.8%
-9.7%
GBK UK RESTAURANT SALES DECLINE (STERLING)
35
F19 H1 BRAND CAPABILITY8 WEEK GBK UK RESTAURANT SALES DECLINE SINCE HALF YEAR CLOSE
36
SYSTEM-WIDE LIKE-FOR-LIKE
-5.3%
-2.2%
GBK’s property portfolio consists of98 leases related to 85 trading sites
Management, with assistance from Deloitte and CBRE, have categorised each site into one of four categories
37
OVERVIEW OF PROPERTY PORTFOLIO
Total numberof leases
98
Number oftrading sites
85
Number ofnon trading leases
12
Leases in other GBK entity
3
Category A
Profitable or strategically
important sites where GBK
expects to see growth
Category B(B1 & B2)
Under-performing sites
which can become viable
with appropriate rent
reduction
Category C
Sites which cannot be made viable even with a significant rent
reduction
Launched on 24 October 2018
Creditors meeting on9 November 2018
Sites are categorised intofour categories, with different
terms for each
The terms of the CVA willremain in place for three years
38
CVA RESTRUCTURE STRATEGY
Category Aleases
37
Category B1leases
16
Category B2leases
13
Category Cleases (17 trading)
29
GOALS
KEY IMPERATIVESGOING FORWARD
Re-establish the gold standard across the
entire value chain andcustomer journey,
i.e. product & experience
39
Commencemeasured new store opening programme
(2 sites plannedfor 2018)
Commence targeted refurb and high street
brand facelift programme
Re-establish theGBK brand assets
and leverage
Strengthen leadershipcore team
Launch multi-vendor delivery platform
(from 1 to 3)
Simplify menu design,entry and exit pricing,simplify supply chain
Targeted closure programme fordistressed sites
(6 restaurants in 2018)
Not achieved Underway Achieved
OUTLOOK FOR THE SECOND SIX MONTHS
OUTLOOK
41
Local and global trading
conditions remain
challenging
Focus onlong term
growth levers
Appropriate acquisitions
will be pursued in brands and
upstream manufacturing
segments
Complete CVA restructure strategy in
the UK
IMPERATIVESFOR THE FUTURE
42
Definitive allocation of
corporate costs and admin fees to business units
Tighter growthagenda
Prospects remain positive
Not achieved Underway Achieved
43
OUR STRATEGIC
INTENTOur business is focused on growing capability and capacity to position
ourselves to deliver uniqueconsumer experiences in the
branded franchised andfood service space.
OURVISION
To be the leading innovativebranded franchised and food
services business in South Africaand selected international markets
by 2020.
QUESTIONSThank you
SUPPLEMENTARY INFORMATION
South Africa 2 365AME 338United Kingdom 164Other 7
Total Restaurants
2 874
F19 H1 BRAND CAPABILITYTRADING FOOTPRINT
46
47
PROJECT DECADE
First updated Shareholders in May 2018 on Project Decade, which refers to a managed focus on addressing capacity constraints. This is the second update
Logistics business requires a planned investment programme over the next decade
Need to address immediate capacity constraints and seek out efficiencies over the medium term
Margin will improve over time but will be ‘lumpy’ over the reinvestment period
We will apprise the market as appropriate
48
INDICATIVE IMPLEMENTATION TIMING
FY2019
FY2020
FY2021
FY2022
FY2023
FY2024
FY2025
FY2026
New WMS Implementation
CM DCExpansion
MPUExpansion
KZNRelocation
Gauteng Consolidation
ECP Expansion
WCPRelocation
03/2018 - 02/2019 03/2019 - 02/2020 03/2020 - 02/2021 03/2021 - 02/2022 03/2022 - 02/2023 03/2023 - 02/2024 03/2024 - 02/2025 03/2025 - 02/2026
Original date Planned date
FSRelocation
orExpansion
WCPRelocation
ECP Expansion
FSRelocation or
Expansion
Movement
49
SHAREHOLDER ANALYSIS
Morgan Stanley Investment Management4.3%
PIC/GEPF10.2%
Panagiotis Halamandaris7.7%
Coronation Fund Managers
14.4%
Theofanis Halamandaris7.0%
Other36.9%
LGM Investments8.4%
Periklis Halamandaris4.0%
John Lee Halamandres2.8%
Arisaig Partners4.3%
As at end August 2018 Source: Sponsor
50
DOMESTIC CONSUMER TRENDS
Source: Famous Brands Central Marketing
The accelerated growth of technology in the
retail space is shifting consumer expectations
of convenience, specifically regarding
online and mobile ordering platforms,
door-to-door delivery and electronic payments
Consumers are increasingly
knowledgeable about the impact of the food
industry on the environment and are
starting to hold brands accountable for sourcing practices, materials and ingredients (for example
use of plastic straws)
The traditional distinction between
Quick Service Restaurants and Casual
Dining Restaurants is becoming less clear as
category blurring continues. Home
delivery and third party online ordering
platforms are further contributing to the new definition of ‘eating out’
Consumers continue to seek out value
offers as disposable income remains
under pressure. Expressions of value are increasingly complex
as, along with value promotions, experience starts
contributing heavily to the overall value perception.
Customer experience through service, food quality and
convenient channels (such as delivery and touch screens), in
addition to value offers
Proliferation of the market is driven by aggressive expansion of both local
and international competitors through new
store openings despite the number of category visits
remaining flat
In the era of CRM, targeted consumer marketing, big data
and artificial intelligence, consumers expect brands to ‘know them’ and to speak to
them in a relevant manner. As more brands are engaging with
consumers through personalised and customized messaging,
expectations around communication are changing
51
DOMESTIC CONSUMER ENVIRONMENT
YOY FOOD AND BEVERAGE INCOME CHANGE AT CONSTANT PRICING VERSUS CURRENT PRICES
Source: Food and Beverage Report, StatsSA, August 2018
Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18
2.4
3.9
-2.3
1.8
-2-2.8
1.5
6
0.9
3.4
7.2
0.1
8.3
9.9
3.5
8.7
3.93.2
7.7
12.7
8.8
11
15.6
6.7
Full Year1.7
Full Year8.3
Constant 2015 pricing Current pricing
52
GBK GROUP EBITDA INSIGHTS
GBK £’000
Operating loss including impairment (2 628)
Depreciation & amortisation 3 113
EBITDA 485
Source: Management disclosure
BUSINESS UNIT ACTUAL F19 H1
Manufacturing including Retail 16
Logistics 3
Leading brands 6
Signature brands 1
Consolidated Corporate 1
SA business 27
AME 2
UK business 19
TOTAL GROUP 48
53
CAPEX BY BUSINESS UNIT
(RAND) MILLION
Source: Management disclosure
54
SEGMENTAL ANALYSIS | REVENUE
Rm HY F 2019 HY F 2018 % Change
Brands 432.2 415.0 4.1
Leading brands 366.5 350.4 4.6
Signature brands 65.7 64.6 1.6
Supply Chain 2 253.9 2 101.2 7.3
Manufacturing 1 466.1 1 377.4 6.4
Logistics 1 955.2 1 830.5 6.8
Eliminations (1 167.4) (1 106.7) (5.5)
Corporate 13.2 1.4
South Africa 2 699.3 2 517.6 7.2
International 884.3 883.6 -
UK 749.1 760.6 (1.5)
Rest of Africa and AME 135.2 123.0 9.9
Total Revenue 3 583.6 3 401.2 5.4
55
MINORITY PROFIT ALLOCATIONS BY SEGMENT
Source: Management disclosure
Signature brands15.3%
Manufacturing81.9%
Corporate2.8%
56
PUT OPTIONS OVER MINORITY INTERESTS ALLOCATION BY SEGMENT
Signature brands21.7%
Manufacturing47.5%
AME30.8%
Source: Management disclosure
57
REVENUE BREAKDOWN
Royalties Company Store Sales Project Management Once off Fees
1.9%1.4%
61.7%35.0%
1.0%1.8%
97.2%
2.4%0.8%
22.0%
74.8 %
Signature brands Leading brands
Source: Management disclosure
SA AME
32.2%
7.8%
43.4%
22.5%32.8%
-8.0%
1.4% 1.3%
-9.8%
96.6%
5.6%
53.7%
21.3% 24.3%
58
SYSTEM-WIDE SALES IN AME BY COUNTRY
SYSTEM-WIDE TURNOVER GROWTH % LOCAL CURRENCY
Source: Management disclosure
59
MONTHLY EXCHANGE RATE USED
UK EUR USD Nigeria Zambia Botswana Dubai
Exchange ratesZAR/GBPYTD Ave
ZAR/EUROYTD Ave
ZAR/USDYTD Ave
ZAR/NGNYTD Ave
ZAR/ZMWYTD Ave
ZAR/BWPYTD Ave
ZAR/AEDYTD Ave
Period end 31.08.2017 16.78 14.67 13.13 24.47 0.70 1.26 3.58
Period end 31.08.2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50
31-Mar-201816.52
14.59 11.83 30.11 0.81 1.22 3.22
30-Apr-2018 16.75 14.71 11.96 29.85 0.80 1.22 3.26
31-May-2018 16.79 14.74 12.15 29.42 0.80 1.23 3.31
30-Jun-2018 16.97 14.92 12.42 28.81 0.79 1.24 3.38
31-Jul-2018 17.12 15.07 12.62 28.41 0.78 1.25 3.43
31-Aug-2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50
Note: Average is "Financial year to date" averageSource: Oanda
CONTACT INFORMATIONDarren HeleChief Executive Officer +27 11 651 5812
Lebo NtlhaGroup Financial Director +27 11 847 6491
Instinctif PartnersInvestor Relations +27 11 447 3030
60
Ian IsdaleCompany Secretary +27 11 847 6394
This presentation contains forward looking statements about the company’s operations and financial position, whichreflect the Company’s bona fide expectations at the date of this presentation.
They are based on best estimates and expectations. Actual performance may differ materially from the current estimatesand expectations and thus may prove to be inaccurate.
Caution should be exercised in placing any undue reliance on this information as unanticipated events will occur andactual future performance may differ materially from current expectations.
Famous Brands assumes no obligation to update or revise any forward looking statements other than may be required bylegislation and/or regulation and assumes no responsibility whatsoever for any loss or damage as a result of any relianceplaced on the forward looking statements.
DISCLAIMER
61
