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Integrated Annual Report 2018

Famous Brands Integrated A

nnual Report 2018

ContentsIFC About our Integrated Annual Report

1 Key performance indicators2 About Famous Brands2 Vision3 Operating segments: Famous Brands Group4 Our global footprint6 Our value creation process8 Business model

10 Creating value using our Capitals10 Manufactured capital11 Intellectual capital12 Natural capital13 Social and Relationship capital16 Human capital18 Operating context20 Our strategy21 Managing our material matters22 Building relationships: Our key stakeholders26 Chairman’s statement30 Chief Executive Officer’s report35 Operational review35 Brands44 Logistics45 Manufacturing47 Associates48 Group Financial Director’s report52 Social and Ethics Committee report54 Board and management58 Governance65 Remuneration65 Remuneration Committee report66 Remuneration report76 Directors’ report78 Audit and Risk Committee report80 Summarised consolidated financial statements 86 Notes to the summarised consolidated financial

statements95 Shareholder spread96 Shareholder diary97 Administration

FeedbackWe are striving to improve the quality of our reporting and feedback on this IAR can be emailed to us at [email protected].

NavigationThis report contains icons to assist with navigating the information contained in the document.

Brands Logistics Manufacturing

Cross-reference to supporting information in the report

Information which can be found online on our website: www.famousbrands.co.za

Improving our operational efficiencies

Developing and transforming our people

Enhancing our financial performance

Optimising capital management

Leading in a competitive landscape

Regulatory compliance

Famous Brands Integrated Annual Report 2018

Introduction

About our Integrated Annual Report

We are pleased to present our 2018 Integrated Annual Report (IAR).

This is our primary report to our shareholders and other stakeholders.

Scope and boundary of this reportThe report covers the period from 1 March 2017 to 28 February 2018. It addresses 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 in all territories where the Company operates, being South Africa, the rest of Africa, the Middle East and the United Kingdom.

We have endeavoured to report more transparently across a wider range of performance indicators than in prior years. While every effort has been made to disclose as extensively as possible, we are cognisant that further improvements are possible and the intention is to enhance this reporting over time.

For the most part, statistics in this document relate to the South African business (excluding our associates); where information refers to a specific geographic territory we have denoted it as such.

We report on our three operations: Brands, Logistics and Manufacturing (the latter two comprising our integrated supply chain). The report provides a concise overview of our performance, prospects and ability to create value for our key stakeholders on a sustainable basis.

There has been no material change in the scope and boundary of the IAR compared to the prior year or to historical financial data.

MaterialityThe 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. Our key stakeholder information is contained in the report.

Building relationships – page 22

We define material matters as those which are most material to our formulation and execution of strategy and those that have the potential to significantly affect our ability to create stakeholder value and contribute to the future sustainability of the Group.

Material matters – page 7

Combined assuranceWe have adopted the principles of King IV on corporate governance thereby recognising the Board, Board Committees, Management, Internal Assurance Providers and External Assurance Providers as key assurance role players in ensuring that the business continues to have an effective control environment and a strong ethical climate. The Board, with the support of the Audit and Risk Committee, is ultimately responsible for combined assurance by setting the direction concerning the arrangements for assurance services and functions. The assurance role players ensure that ethics and effective risk management are embedded in our internal Growing Champions growth agenda.

Internal and external audit plans are approved by the Audit and Risk Committee to ensure risk areas in the Group are covered in a co-ordinated manner. Key risks facing the Group are identified and the necessary internal controls are

>Famous Brands Integrated Annual Report 2018

About our Integrated Annual Report continued

implemented. While our assurance providers cover key controls and accounting matters in the course of their audits, other levels of external assurance are obtained as and when required.

As part of the combined assurance model, internal audit has embarked on a process of collaborating with other assurance providers on providing assurance on food safety risks and health, safety and environment risks to ensure that the Board continues to have line of sight of current and emerging risks.

Set tone

Inde

pendent assurance

Reinforce tone

Manage risk

Objective assurance

Board

Exte

rn

al assurance

Internal assurance

Senior managem

ent

Management

CombinedAssurance

Model

Financial informationWe have provided summarised consolidated financial statements in this printed report in accordance with the recognition and measurement criteria of International Financial Reporting Standards. These summarised financial statements have been derived from the consolidated financial statements and are consistent in all material respects. A full set of the Group’s audited 2018 Annual Financial Statements (AFS) is available on the Company’s website.

www.famousbrands.co.za

An independent audit was performed by Deloitte & Touche. Their audit opinion on the full set of the Group’s consolidated financial statements, from which these summarised consolidated financial statements have been derived, is available online.


Forward looking statements disclaimerThis 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 forward-looking 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 forward looking statements.

Reporting suiteWe are committed to reporting transparently to our stakeholders. The following reporting frameworks were applied and complied with in preparing this report:

• The Companies Act, No 71 of 2008, as amended (the Companies Act)

• The Listings Requirements of the JSE Limited (JSE Listings Requirements)

• The Report on Corporate Governance for South Africa 2016 (“King IV”)*

• International Financial Reporting Standards (IFRS), in particular IAS 34 Interim Financial Reporting; and

• International Integrated Reporting Council (IIRC) Integrated Reporting Framework.

* We have commenced aligning our disclosure in this report against King IV which was incorporated as part of the JSE Listings Requirements during the year under review. The intention is to over time enhance and improve on this alignment.

Board responsibility statementThe Board of Directors, assisted by the Audit and Risk Committee and Social and Ethics Committee, acknowledges its responsibility for ensuring the integrity of the IAR, 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.

The Board authorised this report for release on 28 June 2018.

Santie Botha Darren HeleIndependent Chairman Chief Executive Officer

>>>Famous Brands Integrated Annual Report 2018

About Famous BrandsPerformance OverviewGovernance ReviewSummarised Consolidated Financial StatementsShareholder Information

Key performance indicators

Revenue up to R7 billion

2 516 2 826 3 2834 308

5 720

7 023

Rm

2013 2014 2015 2016 2017 2018

á23%

Operating margin before non-operational items

18.520.0 20.5

18.416.4

12.7

%

2013 2014 2015 2016 2017 2018

12.7%

Operating pro�t before non-operational items R890 million

466566 672

792

938 890

Rm

2013 2014 2015 2016 2017 2018

â�%

Headline earnings per share 393 cents

339406

467541

428 393

Cent

s

2013 2014 2015 2016 2017 2018

â8%

Brands Strong organic performance in SA business

Positive local currency growth achieved in the AME region

Underperformance by GBK business

Manufacturing Strong volume growth

Logistics Improved performance as a result of increased capacity and enhanced efficiencies

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Our business

About Famous Brands

Our core values

Growth

Inte

grity

InnovationAgility

Speed

Quality

Humility

What drives us

We are deeply passionate about innovative branded food service solutions

Our economic engine is driven by sustainable like-for-likegrowth

We can be the best in the world at delivering unique consumer experiences

Who we are Famous Brands is Africa’s largest branded food services franchisor. We are a holding company listed on the JSE Limited in the Travel and Leisure sector.

The Group listed in 1994, with a market capitalisation of R25 million and comprised one brand and a limited supply chain. Today our enterprise consists of an extensive vertically integrated business model, with a market capitalisation in excess of R10 billion.

What we do Our vertically integrated business model comprises three pillars: Brands, Manufacturing and Logistics. The Brands portfolio consists of 25 restaurant brands, represented by a network of 2 853 restaurants across South Africa, the rest of Africa, the Middle East and the United Kingdom. The portfolio is segmented into Leading (mainstream) brands and Signature (niche) brands. The Leading brands are further categorised as Quick Service, Fast Casual and Casual Dining.

Our brand network comprises both franchised and company-owned restaurants.

Our integrated supply chain consists of Manufacturing and Logistics operations which support the Brand business in South Africa and selected markets in the rest of Africa. Our core pillars are supported by a range of corporate services.

Vision To be the leading innovative branded franchised and food services business in South Africa and selected international markets by 2020.


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Our portfolio of best-in-class brands is designed to offer a compelling business proposition to our franchise partners and a quality solution to our wide range of consumers.

The portfolio comprises our Leading (mainstream) brands and our Signature (niche) brands, which may be either franchised or company-owned.

Our central Marketing division ensures that our brands are optimally positioned in the marketplace and remain relevant and contemporary. Our brands are supported by a wide range of through- and below-the-line marketing initiatives.

We operate Centres of Excellence at six of our nine distribution centres which provide training to our employees and franchise partners.

Certain of our Leading brands also compete in the retail, wholesale and food services space.

This division provides our route-to-market, delivering to our franchise network a comprehensive basket of products required to cater for brand-specific menus.

Our Logistics operation in South Africa is supported by nine distribution centres (DCs) nationwide which enable us to get closer to our customers (franchise partners) by aligning our Brands and Logistics businesses.

This division is a key component of the Group’s backward integration model. It manufactures a range of licensed products for consumption by both the franchise network and selected food service and retail customers.

The operation comprises both wholly owned and joint venture businesses. We operate 15 manufacturing facilities.

Brands Logistics Manufacturing

Operating segments: Famous Brands GroupThe three main pillars of our business are our Brands, Logistics and Manufacturing operations, which are supported by a range of corporate services. Business model – page 8

Our Brands and supply chain operations are supported by a range of corporate services which include: Finance, Human Resources, Information Technology, Legal, Procurement and Design

Our global footprint – page 4Our global footprint – page 4

Operational review – page 44Operational review – page 35

Our global footprint – page 4

Operational review – page 45

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SouthAfrica

Number of restaurants

2 346Manufacturing plants

15Logistics sites

9Employees

2 156

UK and other


179Employees

1 953

Rest ofAfrica and

Middle East


328Employees

704

Ireland

UK

Greece

NigeriaGhana

Sudan

Ethiopia

Saudi ArabiaUAE

Kenya

Malawi

Mozambique

Zimbabwe

Namibia

Angola

Botswana

Zambia

Mauritius

SwazilandSouth Africa

1095

1

1

6

172

111

9

1

478

496

368

321

2 346

13

2 853Total restaurants

R253m2017

R249 million

R5 190m*2017

R4 767 million

R1 581m2017

R704 million

2018

2017

Revenue Africa

Europe

Middle East

About Famous Brands continued

Our global footprint

Areas of operation

Our global footprint

* Excludes contribution from associates.


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SouthAfrica


2 346Manufacturing plants

15Logistics sites

9Employees

2 156

UK and other


179Employees

1 953

Rest ofAfrica and

Middle East


328Employees

704

Ireland

UK

Greece

NigeriaGhana

Sudan

Ethiopia

Saudi ArabiaUAE

Kenya

Malawi

Mozambique

Zimbabwe

Namibia

Angola

Botswana

Zambia

Mauritius

SwazilandSouth Africa

1095

1

1

6

172

111

9

1

478

496

368

321

2 346

13

2 853Total restaurants

R253m2017

R249 million

R5 190m*2017

R4 767 million

R1 581m2017

R704 million

2018

2017

Revenue Africa

Europe

Middle East

KwaZulu-Natal – juice plant, ice cream plant Western Cape – meat plant, potato products plantGauteng – bakery, meat plants, serviette plant, sauce and spice plant, coffee plant, ice cream plantEastern Cape – tomato paste plant, cheese plant

Manufacturing capabilities

Logistics capabilities

Western Cape

Eastern Cape

Free State

Longmeadow

MpumalangaCrown Mines

Polokwane

Midrand

KwaZulu-Natal


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Our relationships with our stakeholders are key to informing our

strategy and creating value for them.

3

2 Our resources (inputs) are the six Capitals which help us to deliver on our strategy and generate value for all stakeholders. They are:

Building relationships – page 22

We analyse our operating environment to assess which factors will have the greatest impact on our ability to create value in the short, medium and long term.

1

Operating context report – page 18

Governance Ethical culture Risk management Remuneration Compliance

Grow capability and capacity to position us to deliver unique consumer experiences in the branded franchised and food services space

Manufactured Capital

Financial Capital

Intellectual Capital

Social and Relationship Capital

Natural CapitalHuman Capital

The land and buildings we operate out of; our manufacturing equipment; logistics fleet; and IT infrastructure

Equity and debt financing; cash generated from operations and investments

Our experience, operational, marketing and procurement skills, and our proprietary systems and licensed trademarks

Our local communities

Environmental resources we depend on including food products for preparation and sale, clean air and water, electricity, gas and fuel

The expertise, wellbeing, attitude and innovation of our employees, franchise partners, suppliers and business partners

Our value creation process

Creating value using our Capitals – page 10


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Our material matters are those economic, social, environmental and governance matters that have the potential to significantly affect our ability to deliver on our strategy to create sustainable value for the Group’s stakeholders in the short, medium and long term. The interests, concerns and expectations of our key stakeholders are important in the identification and prioritisation of our material matters.

Operatingcontext

1

Resources

2

Stakeholders

3Materialmatters

4

Our v

alue creation process

Valuecreation

5

4







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Brands

Manufacturing

Logistics

Ourprocesses

andactivities

Supply Chain

Human

Natural

Social and relationship

Intellectual

Financial

Manufactured

OUR CA

PITA

LS

Business model

Our value creation process continued

Inputs

Our Brands, Logistics and Manufacturing operations are supported by a range of corporate services





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Outputs Outcomes

2 853franchised restaurants

Total restaurants

2 727company-owned

126

Natural Capital

Social and Relationship Capital

Intellectual Capital

Human Capital

South African operations – consumption:Diesel: 2 916 (2017: 1 932) kl Petrol: 729 (2017: 761) kl Paraffin: 568 (2017: 502) klLPG: 56 (2017: 51) tonsNatural gas: 488 842 (2017: 464 601) M^3

Electricity: 36 024 (2017: 24 931) MWh CO2 emissions (metric tons): Direct 27 891 (2017: 9 754)Indirect 35 304 (2017: 24 931)Water used to support operations: 514 859 kl*

Packaging waste recycled: 6 565 (2017: 2 338) tons

UK and Ireland operations – consumption#:GBK (UK and Ireland):Electricity: 13 722 MWhCO2 emissions (metric tons): 7 368Natural gas: 1 576 583 M^3

CO2 emissions (metric tons): 3 077Water: 67 864 kl

Botswana operations (Retail Group) – consumption#:Electricity: All company-owned restaurants = 3 125 MWhHeadquarters = 29 MWhWater: All company-owned restaurants = 24 970 klHeadquarters = 76 kl

Charitable fundraising and other CSI initiatives: R1.5 million Sports sponsorships: R20.4 million Donation of product: R1.1 million

Employees of franchise partners trained: 8 424Corporate employees trained: 284

Financial Capital

Revenue: R7.0 billion (2017: R5.7 billion)Operating profit: R890 million (2017: R938 million)Operating margin: 12.7% (2017: 16.4%)Wealth created: R2.5 billion (2017: R2.0 billion)Company tax: R207 million (2017: R235 million)

Group FD’s report – page 48

Manufactured Capital

Capex incurred on manufacturing plants: R31 millionPreferential procurement: R1.65 billion

Manufactured Capital report – page 10

Direct employees: 4 813R1.3 billion paid in direct salaries and benefits

Human Capital report – page 16

9distribution centres serving our franchise partners.

Logistics operations

Global footprint – page 4Operational review – page 44

15plants manufacturing or processing a wide range of products for our restaurant network and retail customers including: meat, chicken, bread and pastries, coffee, juice, sauces, spices, ice cream, cheese, French fries, tomato products and serviettes.

Manufacturing



The carbon footprint/energy/waste reporting for FY2018 included Longmeadow, LBF, Coega Cheese and Coega Concentrate for the first time. These sites were not in the base for FY2017. * No data collected for water in FY2017.# No comparative 2017 data available.

Intellectual Capital report – page 11

Social and Relationship Capital report – page 13

Natural Capital report – page 12

Group operations SA operations9 ➜


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Creating value using our Capitals(excludes our associate companies)

Manufactured CapitalOur Manufactured Capital is the land and buildings we operate out of (our head office, franchised or company-owned restaurants, warehouses and manufacturing plants); our manufacturing equipment; logistics fleet and our IT infrastructure. We rely on public infrastructure to transport our raw materials and processed products. Continued investment in our restaurants, facilities, equipment, fleet and IT infrastructure enables us to remain appealing to our customers, more efficient to our franchise partners, and reduce our impact on the environment, thereby creating social, economic and environmental value.

Operational review – page 45, Business model – page 8

Capital expenditure

INPUTS2018Units

2017Units OUTCOMES

2018Rm

2017Rm

Land under management* Land area enhancedRestaurants: 2 853 2 782 – Warehouses expanded 0 12.3Opened 182 192 – Manufacturing plants

commissioned0 34

Revamped 255 220 Size of logistics fleet is aligned with growing demand from expanded franchise network

1.0 11.2

Logistics centres 9 6 Manufacturing plants that are FSSC 22000 or FSA certified 62% 62%Manufacturing plants 15 8

Logistics fleet (trucks) 107 117 Improved integration of IT systems in core pillars of the business, enhanced analytics and reporting capability

22.0 27.7

IT infrastructure New ERP system implemented

* This information pertains to the Group’s total operation.

OUTPUTS • New and revamped restaurants that are contemporary,

fresh and appealing to customers • Efficient manufacturing, logistics and distribution

operations that provide good service to our franchise partners

• Reduced impact on the environment by using new

generation technology and equipment • IT efficiency in all our departments and restaurants

HOW WE ACHIEVED THESE OUTPUTS AND OUTCOMES • The Group’s store design business was converted into a joint venture partnership with two of our former employees. The new

business, DHQ, designs restaurants for the Group as well as other third-party clients. Albeit in its infancy, the company has performed ahead of our forecasts, delivering good results in the restaurant roll out and revamp programme and is expected to add further efficiencies in future

• Our manufacturing operations are managed by highly qualified food technologists and specialists and our manufacturing processes are regularly audited to ensure compliance with relevant regulations and prevention of potential food contamination. Most of our plants are FSSC 22000 or FSA-certified

• Our fleet is well maintained and continually upgraded to ensure optimum reliability and safety • Regular reviews of IT requirements and risk assessments inform our systems updates

TRADE-OFFSOur investment in property, plant and equipment reduces our Financial Capital but is vital to improving our efficiency and competitiveness and increasing our capacity to generate stronger longer-term returns.


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Intellectual CapitalIntellectual Capital refers to our experience, operational, marketing and procurement skills, and our proprietary systems and licensed trademarks. Our business model relies on having the right people with the right skills in the right jobs to create value. It is also vital that our best-in-class brands instil confidence among our stakeholders, and that we protect those brands with the appropriate legal framework.

Business model – page 8

INPUTS

OUTCOMES (delegates trained)Franchisees and franchise employees

Franchise workshops Brand product training

Fundamental Restaurant Management training

Other ad hoc training

Skills development facilitator and qualified training instructors

Bespoke training courses for Group and franchised employees

2017: 14 6022018: 8 424

2017: 13 5782018: 8 057

2017: 1 3532018: 1 336

2017: 5372018: 7 073

Group employeesTotal training 2017: 148

2018: 284Black employees2017: 202018: 214

Black women2017: 92018: 83

Managers’ Challenge* Candidates2017: 152018: 20

Graduates2017: 152018: 20

Executive Development Programme (EDP)*

Candidates2017: 22018: 4

Graduates2017: 22018: 4

International Executive Development Programme (IEDP)*

Candidates2017: 22018: 2

Graduates2017: 22018: 2

The information in this table pertains to the South African operation specifically.* Formal leadership development initiatives are implemented on an ongoing basis annually. The EDP and IEDP are conducted in conjunction with the Wits Business

School and contribute to the business’s overall succession planning measures.

OUTPUTSOur training and development initiatives deliver a workforce that is fit-for-purpose, while the trained candidates benefit from improved skills and better career development opportunities

HOW WE ACHIEVED THESE OUTPUTS AND OUTCOMES IN SA • We are committed to creating a culture of learning. The Group has a forum in place to implement the Employment Equity and Skills

Development Acts. Compliance is monitored via accepted procedures and guidelines • Our nominated skills representative is responsible for monitoring targets and progress against our committed plans and reports

to the Social and Ethics working group • In the South African operation, our registered Skills Development Facilitator submits plans and reports (including a workplace

skills plan and 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 according to our plan, and deviations from the plan are managed • In addition to developing the skills of our employees, we conduct extensive training for our franchisees and their employees

through our centres of excellence in six of our nine regions • Proprietary systems and licensed trademarks are managed on an ongoing basis by our legal department and appropriate action

is taken to defend infringement as well as secure new trademarks as brands evolve

TRADE-OFFSWe recognise that reducing investment in staff training to bolster short-term profits would have potential long-term negative consequences on our employees’ productivity and engagement, as well as our brand reputation. To manage this we ensure our training and skills development is targeted and delivers the maximum return on investment.

In a challenging economic environment, investing in marketing, brand building and maintaining a best-in-class brand portfolio impacts on our Financial Capital, but failure to do so will damage our leading role in the industry and our investment proposition. We are mindful that remaining top of mind among our consumers is vital to creating economic and social value for all stakeholders.

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Creating value using our Capitals continued(excludes our associate companies)

Natural CapitalOur Natural Capital refers to the environmental resources we depend on to create economic value, including food products for preparation and sale, clean air and water, electricity, gas and fuel.

Our 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.The Group’s Environmental and Climate Change policy sets out our 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; • ongoing review and implementation of energy saving initiatives; • conversion of paraffin-fuelled boilers to compressed natural gas; • investigating alternative cleaner fuel and energy options (with lower greenhouse gas emission factors); • efficient water usage and effluent management; and • maximising recycling opportunities for our general waste.

Business model – page 8 , Operational review – pages 44 to 46, Social and Ethics report – page 52

INPUTS UOM

2018Number of units

2017Number of units OUTCOMES UOM

2018Number of units

2017Number of units

Raw materials used include: Processed productProteins Tons 13 823 12 980 Proteins Tons 14 668 13 559Dairy Tons 50 400 45 377 Cheese Tons 7 787 6 200Grains Tons 2 768 2 564 Bread products Tons 3 749 3 436Vegetables Tons 37 097 34 782 Vegetable products Tons 17 798 18 360Fruit concentrates Kilolitres 803.5 993.6 Juice Tons 1 928 2 190Coffee beans Tons 1 119 1 093 Coffee Tons 918 888

Sauces and spices Tons 15 652 15 065Ice cream Tons 8 774 8 233

Energy consumed Distance travelled Km 6 930 823 6 988 471Electricity MWh 36 024 24 931 Product delivered Cases 17 516 037 18 367 331Diesel Kilolitres 2 916 1 932Petrol Kilolitres 729 761Paraffin Kilolitres 568 502LPG Tons 56 51Natural gas M3 488 842 464 601Water Kilolitres 514 859 *Packaging used in manufacturing plants Packaging waste recycledCardboard Boxes 4.4 m 4.2 m Cardboard and paper Tons 769 565Plastic Bottles 12.2 m 12.2 m Plastic Tons 2 764 167Paper – serviette plant Tons 600 586 General waste to landfill Tons 3 032 1 606The information in this table pertains to the South African operation specifically.* No data collected for water in FY2017.

OUTPUTSCO2 emissions (metric tonnes CO2e) Direct 27 891 (2017: 9 754) Indirect 35 304 (2017: 24 931)

HOW WE ACHIEVED THESE OUTPUTS AND OUTCOMES • Our 15 manufacturing plants across South Africa processed a wide range of products • Our nine distribution centres managed the distribution of those products to our franchise network • Our team of drivers (including 36 owner-drivers) delivered the products to our restaurants nationwide • The milk used in our cheese plant is sourced from a BBBEE joint venture partnership in the Eastern Cape • The steam used to run equipment in our cheese plant is supplied by excess steam from our tomato plant • A water reduction programme resulted in a 50% saving in our Western Cape distribution and manufacturing environment. Our irrigation water

requirements are met using ground water; we also strive to monitor underground water leakage • Our waste management processes are entrenched across our manufacturing facilities • We will continue to prioritise awareness around behaviours and usage of all utilities in all regions

TRADE-OFFSOur use of non-renewable resources and our emissions and waste have a negative impact on Natural Capitals, however, by converting Natural Capitals into services and products, we add value to our other Capitals. We will continue to focus on reducing our carbon footprint through more efficient use of Natural Capitals and management of negative outputs.


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Social and Relationship CapitalOur Social and Relationship Capital refers to our relationship with our local communities. We believe that the communities we serve should be better off as a result of our presence, and helping to uplift them will support the sustainability of our business.


INPUTS OUTCOMES 2018R000

2017R000

• Support by our Leading brands for Varsity Sports and FNB Varsity Cup • Fundraising activities conducted by our franchised restaurants • Excess food produced by our restaurants is managed and

re-distributed • Outreach activities by our staff with community charities/

organisations • Youth empowerment via learnerships for unemployed youth in local

communities

Sports sponsorships 20 496 13 802Funds raised for charities 1 568 3 679Donation of products 1 179 380

Total 23 243 17 861

The information in this table pertains to the South African operation specifically.

OUTPUTS • Our promotional activities raise the profiles of recipient charities/funding campaigns • The funds we raise enable charities to expand their activities • Local communities benefit from our outreach activities, funding and donated product • Eligible student athletes benefit from funding support after leaving school and before turning professional • Our sponsorships promote the development of future sporting stars in South Africa • Development of unemployed youth improves their access to the job market, creates a talent pipeline for the business and

promotes the Group as an employer of choice

HOW WE ACHIEVED THESE OUTPUTS AND OUTCOMESDuring the year, our Leading brands’ CSI projects included:

• Debonairs Pizza’s Doughnation which encourages our restaurants to use the extra dough from pizzas to make pizza flat breads which are then donated to charities across South Africa on an ongoing basis

• Steers’ headline sponsorship of the Let’s Play Physical Education challenge in conjunction with SuperSport Let’s Play reached over 600 schools and 660 000 children, and encouraged teachers and kids to become active and live healthy lifestyles. The winning school, Jan van Riebeeck Primary in Gauteng, received a R1.3 million multi-purpose sports facility

• Steers, in conjunction with the SHOUT Foundation, launched the SHOUT Burger Combo in 2016. The R2 million raised was used to build four libraries, in Tembisa, Soshanguve, Bushbuckridge and Knysna over the past two years

• Wimpy’s participation in the Reach for a Dream “Slipper Day” raised R1.2 million for this charity • Mugg & Bean’s support for the Cupcakes for Kids with Cancer initiative raised R368 000 through the sale of lemon meringue

cupcakes in the month of September. Proceeds were donated to the Cupcakes for Hope Foundation • Varsity Sports sponsorships: Debonairs Pizza (football), Steers (7s rugby, beach volley ball and cricket), Wimpy (athletics and

netball) and Mugg & Bean (hockey) • Steers co-sponsored the FNB Varsity Rugby Cup • The Group hosted 12-month learnership and internship/graduate programmes for unemployed learners

TRADE-OFFSReducing our financial investment in CSI would improve our Financial Capital in the short term but would have a negative impact on the communities we serve (our target market), which in turn would damage our brand. Over the long term, our investment creates goodwill in our trading markets and has a positive impact on our Financial Capital.

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>OurCSI initiatives

Steers Varsity Sports Volleyball

Wimpy Varsity Sports Athletics

Steers Varsity Sports Cricket

Steers Let’s PlaySteers Varsity Sports Rugby

Debonairs Pizza Doughnation

Mugg & Bean Cupcakes for Cancer

D

ebonairs P

izza V

arsit

y Sp

orts

Foo

tbal

l

Wim

py Slipper Day

Wimpy Varsity Sports Netball

Mugg & Bean Varsity Sports Hockey

Steers SHOUT Library

Creating value using our Capitals continued >>>Famous Brands Integrated Annual Report 2018

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Famous Brands Cheese Company (FBCC) and Coega Dairy empower local communities

FBCC was established in 2012 when we entered into a ground-breaking joint-venture partnership with Coega Dairy to supply cheese products to the Group. FBCC is co-owned by Famous Brands (51%) and Coega Dairy (49%). The shareholders in Coega Dairy are milk producers (62%) and the Coega Empowerment Trust (38%). The beneficiaries of the Empowerment Trust are five black-owned community farms (40%), factory workers (40%) and farm workers (20%).

FBCC procures its milk requirements from Coega Dairy to produce Mozzarella, cheese slices, cheese spread, grated cheese and cream cheese for our restaurant network. The plant processes nine million kilograms of cheese products per year. Together the businesses employ 275 people.

CASE STUDY Making our mantra ‘you’re in good company’ meaningful

Assist community farmers to gain access, participation and ownership in the value chain

Ensure security of supply of raw milk to FBCC and Coega Dairy

Outcome

Mutually beneficial

partnership

Five black-owned community dairy farms in the Eastern Cape

Recipients

Local communities

Funding to finance the purchase of 300 dairy cows. The cows and future offspring will produce in excess of 10 million litres of milk over a five-year period

Contribution

R3 million over three years

Wim

py Slipper Day

Wimpy Varsity Sports Netball

Mugg & Bean Varsity Sports Hockey

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Creating value using our Capitals continued(excludes our associate companies)

Human CapitalOur human capital refers to the wellbeing, attitude and innovation of our employees, franchise partners, suppliers and business partners. We require this input to generate value.


INPUTS OUTCOMES 2018 2017

• An experienced executive leadership team • A diverse, skilled and motivated workforce • Supportive contracted business partners and

service providers with aligned goals • Good engagement with unionised and

non-unionised workforce • A safe working environment and fair labour

practices

Full-time permanent employees* 4 813 4 793Non-permanent employees 105 209Region of origin of employees SA 2 156 SA 2 075

AME 704 AME 782UK 1 953 UK 1 939

Unionised employees SA 895 SA 818Non-unionised employees 259 SA 281

Gender of employeesM

2 753F

2 060M

2 767F

2 029Employee turnover % 5.7 8.4Engagement score % 24 26Wages and salaries paid Rm 1 229 831Accident frequency rate % 0.041 0.085Fatalities 0 0Two-year wage agreement and cordial relations with workforce* Excludes: Associates, non-permanent and outsourced staff.

HOW WE ACHIEVED THESE OUTPUTS AND OUTCOMES • Talent management (performance and potential) is measured through our bi-annual Human Capital reviews • 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 utilising this tool as the “people barometer” of the business. Our most recent surveys which were conducted in 2017 for Bargaining Unit employees and for Administration employees indicated a high level of employee engagement and motivation

• Our Growing Champions programme centres on motivating the entire workforce and recognises specific individuals who demonstrate dedication, devotion and commitment to their work beyond the norm

• We improved the capacity and calibre of our HR function and enhanced our senior level capability in several key departments, which has had important benefits for the business

• We continued to engage openly with our union partners and encourage an open-door policy • The Group’s workforce includes 1 154 (2017: 1 099) employees belonging to the Bargaining Unit, of whom 77.56% (2016: 74.5%)

are unionised

TRADE-OFFSRemuneration paid to employees increased by 47%, primarily due to the inclusion of GBK and other acquired businesses not reflected for the full 12 months in the prior year. Given the inclusion of GBK, this figure is impacted on by exchange rate differences. In the core SA business, remuneration to employees increased by 9%.

While higher remuneration costs impacted on our Financial Capital, we believe the investment in our workforce is fair and appropriate recognition and reward for their contribution. Costs incurred in recruiting additional expertise has strengthened our operating capability and succession planning, which will create long-term value and offset the short-term impact.

The three-week industrial action undertaken by members of the Bargaining Unit had a negative impact on our Financial Capital, but ultimately resulted in a cordial two-year wage agreement which improved our Human and Social and Relationship Capitals.


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Our Human Capital policiesEmpowerment, talent management, employment equity and successionHuman 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. We believe that true empowerment gives people responsibility and also the freedom to live up to that responsibility.

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.

The Group strives 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 particularly in South Africa 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.

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 2:1 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, over the long term. Key performance indicators are included in executive and management scorecards in support of this sustainability imperative.

TransformationIn our South African operations we support the principles of broad-based black economic empowerment and measure our transformation progress against the Generic Tourism Sector Code and targets aligned to the Department of Trade and Industry’s BBBEE Codes of Practice.

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 receives 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 reports on the Group’s transformation progress to the Social and Ethics Committee.

Chairman’s statement – page 26CEO’s report – page 30Social and Ethics Committee report – page 52

Employee health and safetyAcross our operations, 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. We have policies and controls in place to measure and monitor the Group’s 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 and to the Audit and Risk Committee where appropriate.

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, reported and acted on.

Health and safety risk assessments are conducted by an approved inspection authority every two years. The latest inspection was conducted in 2016.

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Operating context

Our ability to deliver on our strategy and create value is affected by the context in which we operate.

The period under review was characterised by: • Socio-political uncertainty, a weak macro-economic environ-

ment, restricted disposable income, and subdued consumer sentiment, which translated into constrained spend

• Low levels of business confidence which had a negative impact on investment and capital projects including property- and new-restaurant development

• The heavily traded industry has resulted in finite skills resources and requires significant investment in training and development.

These conditions influenced the matters most material to us, namely to:

• Improve our operational efficiencies • Enhance our financial performance • Lead in the categories we compete in • Develop and transform our people • Optimise capital management.

Specific to our industry, certain key trends continued and others emerged and/or grew. In order to achieve our growth strategy, we developed tactical responses to manage these trends, as detailed adjacent.

Continued market trends

Trend Impact Our response

Time-poor consumers • Demand for convenience and ease of access has resulted in a reduction in footfall in medium and major malls and a significant expansion of online ordering and delivery offerings

• Rolled out smaller format convenience-centred outlets • Expanded into new outlying markets • Up-weighted our online and home delivery offering

Constrained consumer discretionary spend and aggressive competitor pricing

• Intensified value scrutiny and expectation of value heightened • Continued to review our menu price bands and portion sizes to ensure optimal value

• Continued to provide Loyalty offerings and value bundles

Increased number of brandsincluding entry of international brands

• Cluttered competitive environment • Reframed consumers’ expectations who increasingly seek out

new offerings and exciting deals

• Focused on our core competencies and refrained from being distracted by short-term trends

• Rewarded our loyal customers and succeeded in gaining market share

Frequency of customer visits stagnant in middle and upper income market but declining among lower income group

• Margin pressure on entry level offerings • Continued to ensure accessible offerings across the price value spectrum

Technological advancements • Credit card usage and access to smartphones and the internet continues to increase, impacting on online retail

• We up-weighted our technological capability in the digital and social media arenas. Our delivery and online offering will remain a key focus

Growing urban commuter numbers • Out of home consumption has increased • Our sites are located at consumer hubs including transit sites and we continue to assess/roll out convenient formats

Sustained focus on mindful dining – including a demand for farm to fork provenance, healthier eating and sustainable food security

• Consumers are driving campaigns to support the planet and advance key social issues

• We implemented an ongoing menu review and continued to introduce a variety of healthier meal options on our standard and children’s menus

Premiumisation and authentic cuisine • Small independent outlets offering personalised experience growing

• Our niche Signature brands are deliberately positioned to capitalise on this trend

Traditional meal times blurring • Meal times have blurred (e.g. all day breakfasts), whilst snacking both in-store and take away is growing

• Menu innovation on smaller value portions and convenient take away offerings remained a key focus

E-commerce • Demand for seamless integration of brick and mortar stores with e-commerce

• We continued to develop our offering with faster delivery times and convenient online payments

Emerging and/or growing market trends


Move to informality in dining • Reframes store design and furnishings • Encourages buffet/informal eating

• Our niche Signature brands are by nature more flexible in their ability to cater for this trend

In-store experience is key – social media contributing to this trend

• Increased customer focus on store design, furnishings, add-ons (Wi-fi), in-store displays, etc

• Our store designs and revamp programmes are continually mindful of remaining relevant and contemporary and increasingly appealing to the Millennial market

Rise of Artificial Intelligence and immersive technology such as Augmented Reality aided by smartphone penetration

• Technology is moving from customisation to personalisation. Data will drive customised marketing to hyper-personalised menu suggestions

• The restaurant of the future will use technology throughout the customer journey. We are mindful of the need to continually upgrade our delivery and pre-ordering services, and evolve towards connecting better to customers in-store to offer customisable menus and dynamic pricing

Return to ‘simple’ food • Demand for fresher/healthier and more elegant simplified food and ingredients

• Our premium-end brands specifically remain constantly aware of emerging trends, new flavours and ingredients.

Chairman’s statement – page 26, CEO’s report – page 30 Operational review – page 35


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Continued market trends


Time-poor consumers • Demand for convenience and ease of access has resulted in a reduction in footfall in medium and major malls and a significant expansion of online ordering and delivery offerings

• Rolled out smaller format convenience-centred outlets • Expanded into new outlying markets • Up-weighted our online and home delivery offering

Constrained consumer discretionary spend and aggressive competitor pricing

• Intensified value scrutiny and expectation of value heightened • Continued to review our menu price bands and portion sizes to ensure optimal value

• Continued to provide Loyalty offerings and value bundles

Increased number of brandsincluding entry of international brands

• Cluttered competitive environment • Reframed consumers’ expectations who increasingly seek out

new offerings and exciting deals

• Focused on our core competencies and refrained from being distracted by short-term trends

• Rewarded our loyal customers and succeeded in gaining market share

Frequency of customer visits stagnant in middle and upper income market but declining among lower income group

• Margin pressure on entry level offerings • Continued to ensure accessible offerings across the price value spectrum

Technological advancements • Credit card usage and access to smartphones and the internet continues to increase, impacting on online retail

• We up-weighted our technological capability in the digital and social media arenas. Our delivery and online offering will remain a key focus

Growing urban commuter numbers • Out of home consumption has increased • Our sites are located at consumer hubs including transit sites and we continue to assess/roll out convenient formats

Sustained focus on mindful dining – including a demand for farm to fork provenance, healthier eating and sustainable food security

• Consumers are driving campaigns to support the planet and advance key social issues

• We implemented an ongoing menu review and continued to introduce a variety of healthier meal options on our standard and children’s menus

Premiumisation and authentic cuisine • Small independent outlets offering personalised experience growing

• Our niche Signature brands are deliberately positioned to capitalise on this trend

Traditional meal times blurring • Meal times have blurred (e.g. all day breakfasts), whilst snacking both in-store and take away is growing

• Menu innovation on smaller value portions and convenient take away offerings remained a key focus

E-commerce • Demand for seamless integration of brick and mortar stores with e-commerce

• We continued to develop our offering with faster delivery times and convenient online payments

Emerging and/or growing market trends


Move to informality in dining • Reframes store design and furnishings • Encourages buffet/informal eating

• Our niche Signature brands are by nature more flexible in their ability to cater for this trend

In-store experience is key – social media contributing to this trend

• Increased customer focus on store design, furnishings, add-ons (Wi-fi), in-store displays, etc

• Our store designs and revamp programmes are continually mindful of remaining relevant and contemporary and increasingly appealing to the Millennial market

Rise of Artificial Intelligence and immersive technology such as Augmented Reality aided by smartphone penetration

• Technology is moving from customisation to personalisation. Data will drive customised marketing to hyper-personalised menu suggestions

• The restaurant of the future will use technology throughout the customer journey. We are mindful of the need to continually upgrade our delivery and pre-ordering services, and evolve towards connecting better to customers in-store to offer customisable menus and dynamic pricing

Return to ‘simple’ food • Demand for fresher/healthier and more elegant simplified food and ingredients

• Our premium-end brands specifically remain constantly aware of emerging trends, new flavours and ingredients.

Chairman’s statement – page 26, CEO’s report – page 30 Operational review – page 35

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Our vision informs our strategic intent and strategic thrusts.

Strate

gic t

hrus

ts

Stra

tegic thrusts Strategic thrusts Strategic thrusts Strategic thrusts

Strategic intent

Stra

tegi

c in

tent

Strategic intent Strategic intentVisio

n

Visi

on Vision Vision

Our vision is to be the leading innovative branded franchised and food services business

in South Africa and selected international markets by 2020.

Our strategic intent is to focus on growing capability and capacity to position ourselves to deliver unique consumer experiences in the branded franchised and food services space.

Our strategic thrusts1. We are intent on growing capability, capacity

and scale across manufacturing, branded franchised and food services spaces.

2. We are obsessed with being close to our trading partners and consumers across premium and mainstream markets.

3. We are passionate about unique consumer experiences through innovation, flawless execution and continuous improvement.

4. We are a team of results orientated people characterised by a unique culture of high performance.

5. We are focused on organic and acquisitive growth in South Africa and selected international markets.

Our strategy2018


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Managing our material matters

Strategic imperatives arising from material mattersWe have developed a range of strategic imperatives to manage the material matters we consider to be most relevant to our business:

Material matter Strategic imperative


• Develop and roll out a programme to standardise systems and performance across all manufacturing plants

• Develop and implement a logistics upgrade programme to address short, medium and long-term capacity needs

• Implement a group-wide behaviour step-change plan for utilities consumption Operational review – page 35


• Apply a brutal filter to unclutter and grow the business including improving our measurement and evaluation models

• Continue to improve financial reporting quality and timeliness through leveraging our new ERP investment

CEO’s report – page 30, Operational review – page 35


• Review our site format portfolio to address trading relevance, rental viability, and changes in footfall and competitor activity

• Prioritise resources to support our Leading brands in the campaign to ensure BIG BOLD ideas are a way of life

• Intensify our evolution of marketing in a digital and convenience-driven world by improving analytics and developing appropriate strategies

• Continue to drive deep and narrow strategy in our AME region through reviewing new and existing markets; establish region-specific management teams



• Our HR function has been restructured to deliver a fundamental difference to our people capability, succession, transformation and happiness factor. This process should result in closer alignment with the KPIs demanded of this vital business unit

Achieve level 7 BBBEE – robust monthly monitoring of scorecard progress will be conductedChairman’s statement – page 26, CEO’s report – page 30, Human Capital report – page 16, Social and Ethics Committee report – page 52


• Given higher levels of gearing than in prior years, intensified focus on management of capital allocation and working capital

CEO’s report – page 30, Group FD’s report – page 48


• Our management teams are constantly alert to evolving industry and other wider legislation and the need to remain compliant. Current topical industry issues are sugar and salt consumption and bacterial contamination (Listeria). We will continue to monitor these issues closely and respond appropriately

Chairman’s statement – page 26, CEO’s report – page 30

Our value creation process – page 6

Identify

Prioritise

Respond

Report

Monitor We continuously monitor and evaluate against performance targets, competitor activities and in consultation with stakeholders

We provide updates at our regular Board and sub-committee meetings; in shareholder reports; in formal communication with employees and through interactions with regulatory/industry bodies

We evaluate the potential impact as well as our risk tolerance, and implement strategies to mitigate against negative outcomes

We prioritise our material matters based on their potential impact

We review and identify relevant information from Board and Exco meetings; from engagements with key management and stakeholders; we monitor industry developments and relevant regulations; we track economic research and pertinent media reports

The process of managing our material matters

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Building relationships: Our key stakeholders

Our stakeholders are those individuals or groups that have an impact on, or are affected by, our operations.We believe that good relationships with our stakeholders underpin our ability to create value for them in the short, medium and long term. In line with the inclusive approach recommended by King IV, we strive to engage constructively with our stakeholders to understand their interests and concerns and address these where possible.

Shareholders, market analysts and potential investors

HOW WE ENGAGE Key interests and concerns Related material matter Our response and further information

• JSE SENS announcements

• Media releases • Integrated Annual

Report • Annual General Meeting • Company’s website • Results presentation • One-on-one interactions

with investors and potential investors

• Return on investment • Resumption of

dividends • Sustainable earnings

growth • Judicious capital

allocation • Corporate governance,

ethical and competent leadership

Management has extensive experience in our industry.

The Long-Term Incentive Plan and other remuneration and reward structures serve to align management’s interests with those of shareholders.

Remuneration report – page 66

Management has a conservative approach to debt management.


Management endeavours to lead by example and through behaviour and policies instil good corporate governance practices throughout the business.

Governance report – page 58

Funding institutions


• One-on-one interactions • Ensuring compliance with covenants

• Hedging interest costs

Ensure we manage our future debt repayment obligations.


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Customers (franchisees)


• National franchisee forums

• Personal contact • Operational audits and

reviews • Operations campaigns • Web and call-in support • Annual brand

conferences

• Return on investment • Strong brands • Efficient and

competitive supply chain

• Marketing spend • Location of restaurants • Ongoing business

management support • Product quality

We regard our franchisees as our valued customers. We have dedicated operations teams which ensure franchisees receive support in all aspects of managing a successful restaurant, namely finance, marketing, design and development, training and procurement.

Our vertically integrated Manufacturing and Logistics operations strive to consistently supply high quality product timeously.

Customers and prospective customers


• Web and call-in support • Digital and social media • Integrated Annual

Reports • Loyalty programmes

• Strong brands and value offering

• Location accessibility, convenience and positive total consumer experience

Management is cognisant that for our brands to maintain and gain market share they must remain relevant, contemporary, and accessible and offer value.

Our mantra is “We are passionate about unique consumer experiences through innovation, flawless execution and continuous improvement”.

Accordingly, we conduct regular restaurant reviews and audits to ensure our high standards are maintained; we prioritise food quality and safety in all components of the supply chain; we conduct an ongoing restaurant revamp programme to continue to meet our customers’ expectations and we strive to innovate across all areas of our business to meet evolving trends in the industry.

We value the feedback of our consumers and operate a 24-hour call centre to manage queries and complaints.

Operating context – page 18


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Building relationships: Our key stakeholders continued

Civil society and communities


• CSI initiatives and other sponsorships

• Sustained support Our leading brands conduct extensive CSI fundraising programmes to support worthy charities. We also invest in a sponsorship alliance with Varsity Sports to promote the development of future sporting stars in South Africa.


Suppliers and business partners


• Regular procurement interactions

• Supplier audits, assessments and reviews

• Recognition of and awards for excellence

• Timely payment • Continuity of supply • Fair treatment • BBBEE compliance

Contractual agreements facilitate quality and food safety adherence, and transparent, healthy relationships with suppliers.

Our procurement team interacts on a frequent basis with suppliers to ensure mutually beneficial partnerships.

Employees


• Open-door policy • Business feedback

sessions • Employee morale

surveys • Performance reviews

and development discussions

• Core values

• Job security • Fair remuneration and

recognition • Equal opportunities and

career development • Training and skills

development • Safe working

environment

We regard Human Capital as a core asset. Our HR policies ensure our employees are appropriately remunerated, incentivised and offer career development opportunities.

Human Capital report – page 16

We support the principles of BBBEE and our transformation policy and strategies are aimed at uplifting historically disadvantaged individuals.

Human Capital report – page 16Social and Ethics Committee report – page 52

We are committed to creating a culture of learning and invest significant resources in this regard. In addition to training our own employees, we conduct extensive training for our franchisees and their employees. Our centres of excellence located nationwide offer training facilities.

Human Capital report – page 16Intellectual Capital report – page 11


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Trade unions


• Open-door policy • Regular interactions • Wage recognition

agreements

On behalf of their members:

• Job security • Fair remuneration and

recognition • Equal opportunities and

career development • Training and skills

development • Safe working

environment

We recognise and respect the role of unions and engage professionally and respectfully to find common ground on all matters.

Human Capital report – page 16Intellectual Capital report – page 11

Government and regulators


• Interactions with the relevant authorities

• Tax revenues • Compliance with

legislation and regulations

• Transformation • Supporting

communities • Responsible use of

natural resources

We recognise that business sustainability is advanced by complying with relevant regulatory and legislative frameworks including:

• The Companies Act • JSE Listings Requirements • King Codes • IIRC Integrated Reporting Framework • BBBEE, employment equity and labour

legislation • Competition Act • Consumer Protection Act • Tax legislation and • All relevant food industry regulations.

We have systems and structures in place to monitor changes to legislation, assess the implication of any changes on our operations and communicate this to relevant stakeholders.

Achieving a level 7 BBBEE status is a key management priority and the following areas have been prioritised for improvement: procurement; and equity and skills development.

Chairman’s statement – page 26CEO’s report – page 30

Human Capital report – page 16Social and Ethics Committee report – page 52

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Chairman’s statement

Santie BothaIndependent Chairman

>>>

“Optimum resourcefulness and innovation were management’s key watchwords as the trading environment became increasingly more challenging.”


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Overview

In my 2017 report I noted that optimum resourcefulness and innovation would need to be management’s key watchwords as the trading environment became increasingly more challenging.

These words proved to be prescient.

Challenging trading conditions persisted in the year under review. Common to all our markets (South Africa, the rest of Africa, the Middle East and the United Kingdom), the industry featured a highly competitive landscape, limited discretionary spend and subdued consumer sentiment.

Consistent with this environment, consumers’ scrutiny of value intensified, resulting in aggressive pricing pressure among competitors and further margin squeeze. In general, subdued like-for-like sales growth was reported by the industry across our trading territories.

Operating context report – page 18 Operational review – page 35, CEO’s report – page 30

Group performanceAfter several consecutive years of intense acquisition activity, management’s deliberate strategic focus during the year was on entrenching sustainable organic growth, and despite the testing operating conditions, our South African operations performed well across the value chain.

The solid results delivered by our mainstream Leading brands portfolio underpinned good growth in our Logistics and Manufacturing businesses. Significantly, in the current weak economic environment, while solid like-for-like growth was reported by some of our brands, most derived improved results from footprint expansion into previously under-serviced markets, attracting new customers and menu price inflation.

Our Signature brands portfolio underperformed our expectations. Investment in this portfolio over recent years has exerted pressure on margins, but we are satisfied that this impact should be reversed in time when the benefits of corrective actions start filtering through.

In the AME region we pursued our deep and narrow strategy, continuing to invest in and extend our presence in those markets with proven sustainable potential and exiting those which have consistently underperformed over a lengthy period, such as Egypt.

In the UK market, the food services sector continued to face difficulties, with businesses subjected to notably higher property rates (up 33% in London between 2016 and 2017), and increased labour and food costs. Despite this, Wimpy reported satisfactory results. While the Gourmet Burger Kitchen (GBK) operation made some progress in adapting to the challenges experienced in that economy and industry, and notwithstanding operational improvements reported in the period, impairments recognised in GBK considerably reduced the carrying value of the business, as discussed further in the Directors’ report.

Directors’ report – page 76

Results and dividend

Consolidated revenue for the period increased 23% to R7.0 billion (2017: R5.7 billion), while operating profit before non-operational items decreased 5% to R890 million (2017: R938 million). Headline earnings per share declined by 8% to 393 cents.

Following the acquisition of a number of businesses in the 2017 financial year, undertaken to meet robust growth targets, the Group’s gearing is substantially higher than in prior years. In the interim results announcement published on 30 October 2017, it was advised that the Board and management were reviewing the options available to ensure that the allocation of capital reserves would optimise the return on investment for shareholders in the future.

In this light and following a capital structure review to ensure appropriate levels of debt and prudent capital allocation practices, the Board has resolved that no dividend is declared for the period under review.


Renewing our strategic focusThe Group’s strategic intent is clearly defined: to grow capability, capacity and scale across branded franchised, manufacturing and food services spaces. After sustained acquisitive activity over the past decade, the business comprises 25 brands represented by a local and international network of 2 853 restaurants, 15 manufacturing sites, 25 586m² of logistics warehousing capacity, and a fleet of 107 trucks. Aligned with our ambitious growth agenda, we believe that our key future focus must be on those of our businesses which add most value and which deliver the best return on investment. In light of higher gearing than in previous years, prudent capital allocation is also a major priority. Therefore in the period ahead, management will intensify its focus on our Leading (mainstream) brand portfolio, and those opportunities in our Manufacturing and Logistics operations which will make the most significant contribution to profitability.

Issues facing our industryDroughtThe sustained drought in the Eastern and Western Cape is likely to have an impact on local consumers’ behaviour in future and it is incumbent on our business to respond appropriately to the water shortage specifically, but also to improve awareness of all utilities usage across the Group in all regions. During the review period we introduced programmes in our Western Cape distribution and manufacturing operations which reduced water consumption by 50%. While the nature of our business requires ongoing water consumption, we will continue to be receptive and responsive to opportunities to sensitise behaviour and limit usage wherever practicable.

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Chairman’s statement continued

Food safetyOur food safety assuranceOur customers’ safety and their satisfaction with our products are of primary importance to us, and we treat food safety as a key priority at all times. In this regard, our limited range of ready-to-eat meat products are manufactured in a world-class FSSC 22000-certified processing plant and we have strong internal processes to manage any potential food safety risks to the consumer. Our operations are managed by highly qualified food technologists and specialists and our manufacturing processes are regularly audited to ensure compliance with relevant regulations and prevention of potential food contamination.

ListeriaOn 5 March 2018 the Minister of Health made a public announcement regarding the outbreak of Listeriosis in South Africa and evidence of the Listeria bacteria in the products of certain other local manufacturers.

While Listeria occurs globally in raw (uncooked) meat and chicken, it is eliminated through cooking these proteins at high temperatures. All the meat served in our restaurants is cooked at high temperatures prior to consumption which mitigates against the risk of bacterial infection (including Listeria). Furthermore, on 5 March when the Minister of Health made the public announcement regarding the Listeria bacteria, management took voluntary precautionary measures to withdraw all other ready-to-eat meat products (i.e. those not cooked at high temperatures during the cooking process in our restaurants), from the menu with immediate effect. These products were also immediately isolated at restaurant level across the restaurant network, thus no ready-to-eat meat products produced prior to 5 March have been sold or consumed by customers in our restaurants. Management is therefore satisfied that there is no risk to the health or safety of our consumers.

In line with the Group’s routine and uncompromising food safety regime all menu items that have been withdrawn will not be reintroduced until further notice, and only once we are entirely satisfied that the products meet specified internal and external standards.

Consumer activismWe are mindful of operational practices which may have a negative impact on our stakeholders and the environment in general. In support of the growing global consumer campaign against plastic pollution, we are currently withdrawing plastic straws from our restaurants in SA and the UK and replacing them with biodegradable paper straws. The programme will be completed by December 2018.

Building the sustainability of our businessStrategic oversight, corporate governance and remunerationThe Board is responsible for the strategic direction of the Group, to oversee and monitor performance and compliance, and ensure that there is appropriate accountability by executive management and non-executive directors. For the first time since the introduction of King IV, we have detailed our compliance and

adherence with the 16 relevant principles outlined in the report. Our checklist, which describes how the principles were applied, including specific disclosure on key areas of focus, measures taken and planned areas of focus, is contained in this document.


Famous Brands’ remuneration policy is robust and aims to align with the Group’s strategy, while delivering on both internal and external stakeholder requirements in the context of prevailing market conditions. Our goal is to consult regularly with shareholders to obtain feedback on any concerns they might have and to strive to improve transparency in terms of our remuneration policy and the calculation of incentive metrics.

Remuneration report – page 66

Stakeholder engagement and material mattersOur stakeholders’ interests and concerns provide important feedback on our strategy and we recognise that building good relationships with them is an important strategic differentiator. Our report on our key stakeholder relationships is more extensive than in previous years and details how we respond to the issues raised by them.

Building relationships report – page 22

Employee relationshipsDuring the year, unionised members of the Group’s Bargaining Unit in the Logistics operation and certain Manufacturing plants conducted industrial action regarding wage increases. The three week strike was confined to these divisions. While comprehensive work stoppage contingency plans limited severe disruption of operations, related costs were incurred, which impacted on margins in those operations.

Ultimately, the strike was resolved through constructive negotiations and a two-year wage agreement was concluded. Relations with the Bargaining Unit were cordial during the year and the most recent climate survey conducted among Bargaining Unit and Administration employees indicated a good level of employee engagement and motivation, with an improvement in score on the prior year.

Community relationshipsThe Group’s corporate social investment programmes are designed to make a meaningful difference to the communities in which our business operates. Implemented through our Leading mainstream brands, Steers, Wimpy, Debonairs Pizza and Mugg & Bean, the initiatives take two forms: a sponsorship alliance with Varsity Sports, which bridges athletes’ funding gap between competing at school level and turning professional, and fundraising programmes to assist worthy charities and feeding schemes.



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Risk analysisDuring the review period, the Board identified gaps in our current risk management process and in order to remain abreast of best practice, we have commissioned an extensive risk management review. The goal of this review will be to identify and assess the real risks which are most likely to have a significant impact on our business. Emanating from this exercise, we will be in a position to examine our capabilities to respond to the key risks, as well as the opportunities which exist in our operating context, resources and our stakeholder relationships, and better determine and refine our strategic approach.

Changes to the composition of the Board There were changes in Board membership over the reporting period.

With effect from 9 November 2017, Messrs Panagiotis (Peter) Halamandaris, Theofanis Halamandaris and Periklis Halamandaris retired from the Board. On behalf of my colleagues, I would like to record our appreciation for their vital contribution to the Company since it was founded by them in 1971, as well as to the Board over the past 23 years since the business listed in 1994.

It has been a privilege to work with Peter, Theofanis and Periklis, and while they have retired from the Board, their legacy at Famous Brands will endure. We wish them well on their retirement.

Other Board changes made during the period: • Resignation of Mr RM Kgosana, independent non-executive

director (effective 29 September 2017) • Appointment of Mr CH Boulle as interim chairman of the Audit

Committee (effective 2 October 2017) • Appointment of Mr Nicolaos (Nik) Halamandaris as a non-

independent non-executive director (effective 9 November 2017)

• Appointment of Ms Emma Mashilwane as an independent non-executive director (effective 1 December 2017)

• Retirement of Mr Kevin Hedderwick, independent non-executive director (effective 16 January 2018). After an accomplished 18-year career with the Group, Kevin retired during the period. I would like to thank Kevin for the enormous role he played in building Famous Brands into the business it is today

• Re-appointment of Mr Ian Isdale as Company Secretary (effective 1 March 2018 to 28 February 2019).


Broad based black economic empowerment

The Group is committed to continuing to transform the composition of the Board to enhance the expertise and experience available to the business and ensure compliance with JSE listing rules.

Transformation throughout the business is also a key priority and we identify it as one of our most material matters. While our BBBEE rating was negatively affected by the reconfiguration of the codes, resulting in a downgrade, we remain committed to achieving at least a level 7 rating in the year ahead. We further believe that the ownership element is a business imperative in

the context of the Group’s growth agenda, and we are in the process of exploring opportunities to address this.

Material Matters – page 21 and CEO’s report – page 30 Social and Ethics Committee report – page 52

The future Trading conditions are expected to remain challenging.

A degree of optimism is evident in South Africa following recent leadership changes in government, the strengthening of the local currency, the decline in interest rates and stabilisation of our credit ratings status. However, consumers’ discretionary spend will remain constrained with the recent increase in VAT to 15%, and as low wage increases, personal indebtedness and high levels of unemployment persist in our economy. I am confident however, that our leadership team has the energy, skills, resourcefulness and commitment to continue to deliver the commendable performances which have been their trademark over many consecutive years.

In the UK market, uncertainty will continue to prevail as the Brexit process unfolds and this is likely to subdue consumer sentiment. Operational improvements introduced in the GBK business are expected to have a positive impact on performance, although we are mindful that the headwinds facing that economy, and category specifically, will remain challenging.

The Board and management are resolute in our strategy to focus on the three key pillars of the business, namely Brands, Logistics and Manufacturing. Our priority will be to ensure that the projects we expend the most energy and effort on deliver a proportional return on investment.

AppreciationThe executive team, management and all other staff members once again embodied their high performance culture through their dedication to achieving the Group’s ambitious growth plans in a difficult environment. I am confident that the people of Famous Brands will continue to ensure that this business remains at the forefront of our industry.

I would also like to express my gratitude to my colleagues on the Board. Their sage counsel and constructive contribution is valued.

Our wide spectrum of stakeholders plays an important role in the success of Famous Brands and we appreciate their continued interest, support and commitment.

Invitation to attend the Annual General MeetingShareholders are invited to attend the twenty-fourth Annual General Meeting of shareholders to be held on 27 July 2018, 14:00, 478 James Crescent, Halfway House, Midrand as is outlined in the Notice of the Annual General Meeting.


Santie BothaIndependent Chairman

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Chief Executive Officer’s report

In line with best practice requirements, my report focuses primarily on assessing the progress we made over the past year in implementing the strategic imperatives outlined in the 2017 report.

Detailed information regarding our operating context and our response to trends impacting on the industry and our business are contained in the Operating Context report, while the comprehensive operational information regarding the performance of our core pillars, Brands, Logistics and Manufacturing is discussed in the Operational review which follows this report.

Operating context – page 18 Operational review – page 35

Year in review: our performance We made good progress in tightening our execution against our vision and strategy, and remained firmly focused on organic growth, through building scale and capability across our operations.

Our primary strategic imperative during the period was to focus on the fundamentals, being our Brands, Logistics and Manufacturing operations and our growth agenda was defined by the following key considerations:

• What are we deeply passionate about? Innovative branded food service solutions

• What can we be best at in the world? Delivering unique consumer experiences

• What drives our economic engine? Sustainable like-for-like growth at restaurant level.

To ensure we remained focused on the fundamentals, we prioritised the following:

• Judicious capital allocation accompanied by high sweat-potential of every capital investment

• Concentrate on core competencies and avoid being swayed by constantly evolving trends

• Pursue only those opportunities that move the business’s needle significantly.

Progress on our 2017 key strategic imperativesFocus on growthThe difficult trading environment we experienced is best illustrated by the 0.5% real growth reported by the food and beverage category in South Africa, and the 1.5% to 2% growth recorded in the restaurant and café sector in the UK for 2017.

In general, our SA and AME business performed solidly, while the UK operation (specifically GBK) underperformed our expectations.

Results: Our Brands division, comprising our operations in SA, reported revenue of R851 million (2017: R781 million), an improvement of 9%. Operating profit increased 1% to R431 million (2017: R427 million), while the operating profit margin decreased to 50.7% (2017: 54.7%).

Our supply chain’s revenue grew 9% to R4.3 billion (2017: R4.0 billion), while operating profit increased 12% to R509 million (2017: R455 million). The operating profit margin improved to 11.8% (2017: 11.4%).

◗ Leading brands: We noted in the 2017 report that our goal was to fortify this portfolio, which in our view was under-represented relative to the size of South Africa’s population and furthermore, behind target on revamps and restaurant openings. We committed to rectify this through building on strategic alliance partnerships, growing our presence in our core market segments and evolving our existing brands’ trading formats.

Disappointingly, the weak economic environment in all our trading markets dictated against a robust expansion programme. We opened a net of 146 Leading brand restaurants during the period and revamped 238 sites. On a positive note, we strengthened our alliances with our strategic partners. We also continued to evolve our trading formats (Mugg & Bean On the Move). Given the adverse economic conditions and lack of appropriate acquisition targets, our goal to grow our presence in the evening dining category remains an ongoing project.

◗ Signature brands: We expressed concern in the 2017 report that this portfolio was under-developed and the roll out of its footprint slower than market demand. We undertook to grow, repair and exit brands as appropriate, in line with an overall business review. We also stated our goal to expand our company-owned footprint through brands such as GBK and PAUL.

During the year we grew the footprint, adding three Turn ’n Tenders, four tashas, three Mythos and five Salsa restaurants, however the roll-out programme is behind plan and remains a work in progress, largely determined by the weak economy. We also continued to repair and rationalise certain of the brands (Europa) and exited others that despite remedial efforts offer no potential for growth under our stewardship (Giramundo, The Bread Basket, Juicy Lucy, Brewers Guild and McGinty’s).

In terms of growing our company-owned footprint through GBK and PAUL, we have put expansion plans on hold in the short term, in line with our strategy to ensure prudent capital allocation and pending the improvement of the trading environments in SA and the UK.

✓ Leverage synergies in our manufacturing operationsGood progress was achieved and we successfully turned around the Lamberts Bay Foods business and significantly enhanced capacity at our Cheese Company, which resulted in another stellar performance from this business.

✓ Achieved ◗ Underway ✘ Not achieved Key:


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Darren HeleChief Executive Officer

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"Our primary strategic imperative was to focus on the fundamentals, being our Brands, Logistics and Manufacturing operations."

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Chief Executive Officer’s report continued

◗ Address logistics constraintsThe Longmeadow Distribution Centre situated in Gauteng was commissioned late in 2016 and continued to significantly enhance the performance of this division. However, capacity constraints in the Free State and Western Cape regions remained a concern and will be the subject of a major review which we have embarked on to optimise current efficiencies and accommodate planned growth over the next decade. We are confident that this undertaking will provide significant stimulus and margin improvement for this business unit.

✓ Deliver a fit-for-purpose ERP systemThis 15-month, R50 million project was concluded on schedule and within budget. While the business took slightly longer than anticipated to fully integrate the new system, the changeover has substantially enhanced our Logistics, Manufacturing, Procurement and Finance divisions’ systems platform.

✓ Fortify leadership structures and address successionEnhancing our Human Capital portfolio was a major focus during the year and we have made good progress in up-weighting this business unit. Among our actions, we reviewed and restructured the operations, which will have a positive impact on supporting the CEO’s position and attaining the KPIs demanded of this critical portfolio. We have also made a range of senior appointments in our Finance, Manufacturing and Technical departments which have enhanced our leadership capability.

✘ Achieve level 7 BBBEE certificationContinuing to transform the composition of the Board and our employees remains a key priority in this business. While the Board acknowledges that management control is one of the key transformation challenges it is faced with, progress has been made over the past few years with regard to Board transformation.

Preferential procurementDuring the reporting period, the Group‘s Preferential Procurement Policy was amended to consider BBBEE requirements. An analysis of our suppliers‘ database was conducted which will enable the Group to redirect spend to exempt micro-enterprises, qualifying small enterprises, 51% black-owned suppliers and 30% black women-owned suppliers, and where appropriate optimise spend with BBBEE accredited suppliers.

Social and Ethics Committee report – page 52

✓ Adjust to new normal of gearingThe Group’s higher level of gearing has played a key role in our capital allocation decisions regarding dividends, debt reduction, acquisitions and capital expenditure. As at 28 February 2018, the net debt/equity ratio was 126% (2017: 165%).

✓ Execute the out-of-home and food service strategyOur joint venture partnership with By Word of Mouth, the premium-end commercial catering company, made good progress with the opening of the Frozen for You flagship retail store and online offering in March 2018. We will roll out this offering as suitable sites become available.

✓ Develop leading capability in digital and social mediaSignificant resources were committed to improving our capability in this sphere, with the investment delivering good returns. Our stake in associate company, Sauce Advertising, has provided a strategic advantage and enabled us to respond nimbly in this rapidly evolving space. Illustrative of our growing brand awareness in this space is the double digit fan growth recorded by our Leading brands.

✓ Lead the home delivery categoryIntense focus was directed at upscaling our home delivery offering both through in-house capability and third-party delivery service providers, and all of our brands enjoyed notably improved levels of participation. We do not disclose specific information in this regard for competitive reasons.

We will be trialling the implementation of a structured platform across the Group’s offering during the year ahead, which is expected to deliver improved efficiencies.

✘ Pursue acquisition strategyIn our 2017 report we noted that we would continue to pursue opportunities to leverage the business model by exploring synergistic acquisitions in the manufacturing sector as well as local brands of scale in the franchise segment. While we assessed several prospects during the period, neither the targets nor the timing were appropriate.

✓ Review participation strategy in AME Our deep and narrow strategy continues to work well for us. We invested further in our strong markets (for example in the UAE with four new tashas restaurants) and exited those markets and brands that have consistently underperformed, including The Bread Basket in Egypt (five sites). Our programme to repair the Mr Bigg’s network resulted in us closing 17 non-performing sites, however we remain optimistic that our remedial efforts will start delivering good results in the forthcoming year. Our focus will remain on growing the footprint and contribution of our four leading brands in the region (Debonairs Pizza, Steers, Wimpy and Mugg & Bean). Priority initiatives will include trialling a delivery capability, strengthening the marketing function and aligning social media platforms with our SA brands.

✓ Achieved ◗ Underway ✘ Not achieved Key:


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◗ Consolidate and elevate the UK businessIn the context of the GBK acquisition in October 2016, we noted in our 2017 report that the UK operation must continue to grow its contribution to Group results. We also stated that our new mainstream presence would provide opportunity to cautiously explore leveraging the Group’s footprint in the UK market.

GBK After consistently outperforming the market since 2011, GBK’s like-for-like sales growth has trended down over the past year, and as from Q2 2017 the business has underperformed the sector.

The prevailing adverse economic and socio-political environment in the UK is widely acknowledged, as is the downturn in the Fast Casual dining category.

Among the major factors are: • The weaker economy and declining consumer confidence in

the context of Brexit, which has caused consumers to become more price sensitive and value conscious (GBK is perceived as an expensive offering)

• Difficult market conditions (including the decline in footfall in malls, and online and delivery sales growing at the expense of eat-in sales)

• Rapid expansion of the competitive set. The number of premium burger restaurants has grown from 213 in 2014 to 401 in 2017 at a CAGR of 23%. With the entry of new participants, first movers have lost their advantage and market share, as consumers seek out new novelty offerings.

While GBK’s disappointing financial performance over the past year is partly attributable to these trading conditions, we recognise that fundamental operational improvements need to be made to return the business to profitability.

What we can change • Focus on customer satisfaction (the quality of food and

condition of our restaurants) resulting in more visits and an increase in advocacy

• Re-establish a leading position in online delivery – ensure that online delivery is positioned as a growth channel and not a strain on in-store operations

• Improve operational standards (prioritise training) • Review our sites to ensure we are optimally aligned with our

consumers and reinstitute the restaurant revamp programme • Stabilise and support the leadership. The acquisition process

was disruptive and a distraction to the GBK leadership, resulting in a decline in oversight. Following the departure of a layer of management, new leaders have been appointed, which will improve engagement with staff, and re-establish GBK’s high-performance culture and discipline.

In the year ahead our focus will be on those key initiatives which will ensure optimal allocation of our resources and deliver the best return on investment. We are optimistic that improvements

will be derived from re-engaging with our customers and our staff, re-establishing GBK’s gold standard, and streamlining and investing in core operations.


Prospects We anticipate that the trading environment across our markets will remain challenging in the forthcoming period, but we are satisfied that our resilient business model, high performance culture and steadfast focus on the fundamentals of our business will continue to serve us well.

Intense competition will remain a key feature of all our markets, while sustained demand from consumers for value and deals will continue to squeeze margins.

South AfricaOur growth will be driven by our Leading brands, feeding through to our Logistics and Manufacturing operations. In the South African market, opportunities for growth will arise as consumer sentiment continues to improve.

AMEWe are also optimistic about our AME operations and recognise that with time and patience we will derive good returns from investments made over recent years.

UKConsumer sentiment is likely to remain subdued in the inflationary and uncertain economic and political Brexit environment. Declining foot traffic in malls will be exacerbated by the oversupply of restaurants as landlords continue to replace failing retailers with more food offerings; online competition will increase due to the low barriers to entry; and labour supply challenges may arise as tighter immigration rules make it more difficult for operators to hire EU citizens.

Despite this context, the remedial measures outlined in this report are expected to deliver improvements in the GBK business. With the new management and intensified oversight of the business in place we are satisfied that we can reverse recent declines over the medium term.

Future areas of focus We have identified our material matters as being to improve our operational efficiencies; enhance our financial performance; lead in the categories we compete in; develop and transform our people and optimise capital management. We have also outlined the key strategic imperatives arising from those material matters.

We will benchmark our performance against those imperatives and disclose our progress in the 2019 IAR.

Strategic imperatives arising from material matters – page 21

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Chief Executive Officer’s report continued

AppreciationI would like to express my sincere gratitude to my colleagues on the management team, our employees and franchise partners – the commendable achievements we report on this year are a testament to your extraordinary efforts in challenging times.

My appreciation is extended to the Board for their considered guidance, and in particular to the founding family members for their unstinting support and encouragement as the Group continues to evolve and move into the future. Having worked closely with Peter, Theofanis and Periklis Halamandaris over the past 15 years, I will miss their unique insight into our business,

their innate understanding of humanity and their special brand of humour. Famous Brands is truly proud of the heritage they have created and on behalf of all of us, I wish them a fulfilling retirement.

We appreciate the support of our stakeholders: investors, customers, franchise partners, service providers, strategic alliance partners, financiers, property developers, landlords and the broader communities in which we operate. Thank you for your valuable contribution to our business.

Darren HeleChief Executive Officer

Peter, Theofanis and Periklis Halamandaris


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Operational review

Our Brands portfolio comprises our Leading brands and our Signature brands.

The Leading (mainstream) brands portfolio is segmented into Quick Service (QS), Fast Casual (FC) and Casual Dining (CD) brands.

2 853franchised and company-owned restaurants in South Africa, the rest of Africa and the Middle East (AME) and the United Kingdom (UK).

Our brands are represented through a network of

Several of our Signature (niche) brands are joint venture partnerships with the founders of the respective brands.

Salient features Leading brands Signature brands

Segment revenue (%) 87.8 12.2

Like-for-like sales growth (%) 4.1 (1.5)

Operating margin (%) 58.2 15.1

Total number of restaurants 2 484 164

New restaurants opened 146 23

Number of restaurants revamped 238 2

Number of restaurants closed 76 20

South Africa

Quick Service (QS)

Fast Casual (FC)

Casual Dining (CD)

Brands – South Africa

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Number of restaurants 2018: 581 2017: 561Key developments and initiatives

• Retained market share: a loss of share in the upper income segment was offset by gains among middle income consumers

• Delivered pleasing like-for-like growth in the fiercely traded burger category, which also saw key competitors growing

• Aggressive price promotions in the second half reversed the first half slump in sales, delivering improved sales for the full year. Menu price increases were contained to support cash-strapped consumers

• An improved online ordering and delivery offering resulted in notably higher sales in both segments • Extended the flame grilled chicken offering to 23 additional restaurants, contributing to revenue growth

Awards • Won Best Take Away Burger and Best Chips awards in the Best of Joburg, Pretoria, Ekurhuleni, Mbombela and Bloemfontein surveys

• Won Best Take Away in Mpumalanga and the Pretoria News Readers’ Choice Award • Won the most viral digital campaign in the GenNext survey • Awarded a Silver Pendoring print award and a Bronze Loerie award

What we will focus on

• Retain and gain market share through improved product price/value offerings • Develop a sustainable loyalty programme underpinned by leading technology • Advance the Steers Diner revamp programme with Shell Ultra City • Continue to drive the roll out of flame grilled chicken as the offering gains traction


• Gained market share, despite the entry of new international brands, which continued to grow the category rather than erode our share

• Continued our focus on up-weighting the remote convenience offering and grew the number and value of delivery and online transactions

• Innovation in menu development and price/value promotions was well received

Awards • Won Best Pizza award in Best of Joburg, Pretoria, Bloemfontein and Mbombela surveys • Won the Home Delivery Category (third consecutive year) in the 2017/18 Icon brands survey • Achieved third position in the GenNext’s Coolest Fast Food Place survey and the Sunday Times Top Brands

2017 survey • Received the highest customer satisfaction score of ALL brands measured in the Customer Satisfaction Index

survey 2017


• Offering real value will remain a central theme • Driving and maintaining customer loyalty through tactical CRM strategies will be key • Owning the remote convenience category through our mobile app and new driver tracking technology will

be prioritised

Our Leading Quick Service brands are those that prioritise take-away and delivery offerings. While these restaurants offer a limited sit-down option, their focus is on quick service. The brands in this segment are: Steers, Debonairs Pizza, Fishaways, Milky Lane, WakaberryTM and Giramundo.

Leading brands portfolio

Operational review continued

Brands – South Africa continued


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• Retained market share: a loss of share in the upper income segment was offset by gains among middle income consumers

• Grew like-for-like sales • Highly competitive promotions and local store marketing initiatives found traction with lower and middle

income consumers • Solid new restaurant growth; revamp programme progressed – with 22 sites completed • Online sales grew strongly. Fishaways is the only brand in its category with an online ordering platform • Accessibility was improved with the launch of a third-party delivery service • Sampling activations were a key focus, growing the existing customer base and winning over new customers

Awards • Won the Star Readers’ Best Fish Take Away award • Won Best of Bloemfontein award for Best Fish & Chips shop


• Continue to develop menu innovations to cater for the growing trends of snacking, sharing and healthier eating

• Enhance the value proposition • Launch a strong digital strategy and progress the remote convenience offering • Continue to drive trials of the brand and category

Number of restaurants 2018: 72 2017: 68Key development and initiatives

• Retained market share • Grew like-for-like sales – attributable to menu innovation, improved in-store displays and strong communication

with consumers across mainstream and digital media • Completed the roll out of the new corporate identity across the network, including a new crockery range and

uniform. Revamp closures affected sales, but these should be recouped and increased as a result of the new look and feel

• Three national promotions linked to the holiday periods proved successful, as did the Tuesday Treats campaign which grew Tuesday sales by 7% on the prior year

Awards • Won the Pretoria News Readers’ Choice Best Ice Cream Shop award • Awarded Bronze in the New Generations Awards survey: Corporate Awards Best Below-Budget Campaign


• Continue to build on our successful social media campaigns across all channels • Milky Lane will be celebrating its 60th anniversary and will roll out related activities

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Our Leading Casual Dining restaurant brands are those that offer patrons a full-service, sit-down experience. The brands in this segment include: Wimpy, Mugg & Bean and Fego Caffé.


• Retained market share: a loss of share in the upper income segment was offset by a gain among middle income consumers

• Like-for-like sales grew in an extremely competitive landscape. Strong performances were delivered by airport and transit-site restaurants

• Core focus remained on breakfast and burgers, supported by successful promotions • Our bespoke-design flagship restaurant was launched at the V&A Waterfront

Awards • Won an Orchid for the #MakeTime advert • Awarded third place for the Coolest Coffee Shop category and also the Coolest Eat Out Place in the Sunday

Times GenNext’s survey


• Maintaining and growing market share will be prioritised • Continue to drive the concepts of shared occasions and moments for the South African family. This will

include disruptive value promotional offers, additional media exposure and a strong focus on CRM via digital platforms

• New menu innovations and enhanced food preparation and plating will be prioritised to improve perceptions of the brand’s food credentials, quality and value offering


• Reported like-for-like growth, reversing the negative trend recorded in the prior year. The category remains over-traded and the value offering is a key influencer for consumers

• We introduced a delivery offering through a third-party partner, which improved accessibility to the brand • Aligned to our flexible trading formats (captive, transit and mall), we launched customised locality marketing

packages to assist franchisees with tailored promotions suited to their specific environment

Awards • We launched a Best Barista competition throughout stores, which served to raise our coffee credentials


• Menu and value/price innovation supported by national and local promotions will be prioritised • Continue to build on our strategic partnership with Kaap Agri, which currently comprises ten restaurants



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Key developments and initiatives

• Gained market share after several years of decline, a good performance given that the brand derives 60% of its revenue from medium and major malls, which continued to experience reduced footfall. Like-for-like growth was attributable to menu development, relevant consumer communication and key strategic partnerships

• Partnered with Discovery Vitality on their Active Rewards programme which rewards consumers who achieve their fitness goals with a Mugg & Bean drink of their choice. The high redemption rate illustrated the success of this programme

• The partnership with Total continued to strengthen. The strong increase in like-for-like sales is a reflection of the appeal of convenient grab and go coffee offerings

• The Bottomless Wi-fi rolled out to all restaurants has been well received and provides a current customer database for CRM campaigns

• The OTM Limited Service format was launched in KZN catering for the fast-casual trend

Awards • Won Best Brunch award in the Best of Pretoria survey • Won the Coffee/Sandwich Bar Category in the 2017/18 Ask Afrika Icon Brands survey • Won the Coffee Shop category in the 2017/18 Ask Afrika Youth Brands survey


• Continue to roll out the new CI revamp programme which to date has delivered double-digit growth for revamped restaurants

• Build on the partnership with Total to expand the brand’s current footprint • Leverage the recently launched Generosity app • A Gifting and Payment platform introduced post year-end, offering additional benefits for loyal customers,

will be monitored and assessed

Wakaberry™ and Giramundo not reported on, but remain part of Leading brand reporting.

Number of restaurants 2018: 219 2017: 203

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Our Signature brands portfolio comprises a wide range of niche bespoke Casual Dining offerings, including tashas*, Turn ‘n Tender*, PAUL, Vovo Telo, Mythos*, NetCafé, Coffee Couture, Salsa*, Lupa Osteria*, Catch*, 14 on Chartwell, Europa, Keg, House of Coffees and O’Hagan’s. Some of these brands are wholly owned, while others are joint venture* partnerships with the founders of the respective brands. In the testing economic climate, our Signature brands found it difficult to grow like-for-like sales; those that reported improved sales largely benefited from opening new restaurants and entering new markets.

CEO's report – page 30

Number of restaurants 2018: 21 2017: 16Key developments • While sales in the local market declined slightly, the brand performed well with the opening of four new

restaurants • Won Best of Joburg Awards for Best Breakfast, Brunch and Business Lunch • Won Best Fine Dining Newcomer for 2018 (for the Flamingo Room by tashas in the UAE) • Won Harper’s Bazaar’s Best Regional Interior Design Award (for the Flamingo Room by tashas in the UAE) • Awarded runner-up in the F&B Leaders Awards, Best Restaurateur

Number of restaurants 2018: 18 2017: 15Key developments • Expanded the footprint into KZN and the Western Cape

• Won the Diner’s Club Platinum Award for wine list • Won Luxury Travel Awards’ Gastronomic Excellence Award • Won Best Steak Award in the Best of Joburg, Mbombela, and Ekurhuleni surveys


Brand 2018 2017

Paul 1 –Vovo Telo 12 15Mythos 13 10NetCafé and Coffee Couture 41 39Salsa 8 3Lupa Osteria 6 4Catch 2 2The Bread Basket 2 11Thrupps 5 514 on Chartwell 1 1Europa 12 16Keg 13 14House of Coffees 4 4O’Hagan’s 3 3




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The Group is represented in 15 countries in this region.

Salient features 2018 2017 Salient features

Segment revenue (Rm) 253 249 New restaurants opened 21Operating profit (Rm) 45 50 Number of restaurants revamped 9Operating margin (%) 17.6 19.9 Number of restaurants closed 24System-wide sales growth (%) 10 8.3 Number of corporate employees 40Contribution to total Group system-wide Brand sales % 9.5 9.3


• Our four leading brands in the AME region (Debonairs Pizza, Steers, Wimpy and Mugg & Bean) contributed 91% of revenue

• Continued focus on our deep and narrow strategy in the region through additional deployment of in-country resources in Zambia, Malawi and Mauritius delivered good results

• Only 50% of planned new restaurants opened, with franchisees constrained by limited access to capital and cash flow constraints

• Although slower than anticipated, the strategic alliance with Total gained traction with the opening of Mugg & Bean OTMs in Kenya

• In line with Debonairs Pizza’s innovative positioning, we opened our first new container-format site in Kenya • We strengthened our marketing capability and achieved better alignment of social media platforms with our

SA brands


• We will pursue our deep and narrow strategy in key markets. In addition to our core markets of Zambia, Malawi and Mauritius we are optimistic about the potential that Ghana, Angola, Sudan and Zimbabwe offer

• Albeit in the start-up stage, Debonairs Pizza’s delivery sales grew strongly and we will prioritise expansion of this capability in select markets

Brands – Rest of Africa and the Middle East (AME)

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Our brand portfolio in the UK is segmented into Fast Casual (GBK) and Casual Dining (Wimpy).CEO's report – page 30

Gourmet Burger Kitchen Wimpy

Salient features 2018 2017 2018 2017

Revenue (Rm) 1 479 599 102 105EBITDA operating profit (Rm)* 52 78 17 22EBITDA operating margin (%)* 3.5 13 16.4 21.3Total number of restaurants 106 97 78 81New restaurants opened (UK) 10 8 1 1Number of restaurants revamped 2 – 4 1Number of restaurants closed 1 – 4 1Number of corporate employees 57 65 12 10

* Incorrect disclosure, modified 4 July 2018.


• Wimpy recorded an 8.6% increase in revenue in Sterling despite three restaurants closing during the period • We entered the delivery market, partnering with two leading suppliers; early results reported by the

12 participating restaurants have been positive, with higher sales and improved margins recorded • Collaboration with GBK to leverage purchase volumes achieved lower prices for core products and enabled

us to contain menu price increases to a minimum


• The delivery offering has significant upside for Wimpy and we will be accelerating the roll out of this capability • Further opportunities to leverage our relationship with GBK will be pursued where appropriate


Brands – United Kingdom


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• System-wide sales grew, despite new restaurant sales failing to meet management’s expectations • Like-for-like sales declined by 6.8%, largely due to the over-supply of restaurants in the category, the difficult

economic environment and some operational shortcomings • In line with the growing demand for convenience, delivery sales continued to grow strongly – however, at the

expense of dine-in restaurant sales • Our operations team was restructured to align resources with the restaurant network to facilitate more management

time in restaurants • In collaboration with our delivery partner, we successfully opened three trial “dark store” concept stores. This format

trades purely on a delivery customer base and no traditional bricks and mortar shopfront exists. Sales have been steady and in line with expectations

• The Ireland business which comprises five company-owned and one franchised restaurant was fully integrated into the UK business. The operation delivered pleasing results and further work on menu alignment and supply chain integration will deliver additional efficiencies

• Our CRM system introduced in September 2017 now has a database of one million customers

Awards • Our Southport restaurant won the “Best Designed Casual Dining Restaurant of the Year” accolade (Casual Dining Restaurant & Pub Awards)


• Our new simplified menu was launched in April. The rationale is to streamline and optimise the operation and supply chain to deliver improved efficiencies and enable staff to focus on up-weighting the customer experience

• The new management structure is designed to enable more time spent in restaurants and we will prioritise closer relationships with our teams and customers

• Key consumer trends are emerging which we will strive to capitalise on in the year ahead. These include: a shift to healthier eating; informal and experiential dining; an increased focus on provenance and sustainability and increased use of digital technology

Operating context – page 18

CASE STUDY Turning an economic challenge to our advantage

Reach of+15 million =

ROI cost per contact of 0.01 pence

25 million PR reach

Our Brisket means Brisket burger campaign – referencing the tumultuous Brexit undertaking – was the best performing special in GBK history and won the “Best new menu item” accolade at the fiercely contested Menu Innovation and Development Awards 2018

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Salient features 2018 2017

Segment revenue (Rm) 3 780 3 416Segment operating profit (Rm) 104 125Operating margin (%) 2.7 3.6Number of trucks 107 117% of cases delivered by owner drivers 50.6 50Energy consumption (diesel, petrol, other) (L) 2 956 434 2 661 339CO₂ emissions 8 792.65 7 839.4Owner drivers 36 37Capex (Rm) 10 32

The information in this table pertains to the South African operation specifically.

Business model – page 8 Global footprint – page 4


Key initiatives and developments

• Longmeadow DC, commissioned late in 2016, continued to create efficiencies, with the division’s second half of the year improving on the first half

• Commissioned a satellite logistics cross-dock facility in Polokwane • Two successful distribution projects were implemented to reduce costs but also improve health and safety.

These two projects, in Polokwane and East London, have both been extremely well received by staff and franchisees as cost, health and safety and service levels have been improved

• Given water shortage concerns in the Western Cape, we introduced programmes which resulted in a 50% saving in water in our local DC and manufacturing environment

Chairman’s report – page 26

• Capex was confined to fleet enhancement • While revenue increased 11%, net operating profit was affected by contingency activities implemented to

ensure continuity of service to our franchisees during industrial action which took place over three weeks • While the financial costs of the work stoppage were a set-back, we derived important learnings from the

event, resulting in an enhanced drive for efficiencies


• We will continue to leverage efficiencies in the Longmeadow DC • We have begun work on various models to explore the capacity constraints for our other logistics distribution

centres, with particular focus on the Western Cape and Free State

Logistics – Supply chain


➜

44

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The majority of our manufacturing plants are wholly owned, but we also operate certain joint venture partnerships, as outlined on page 46.

Business model – page 8 Global footprint – page 4

Salient features 2018 2017

Segment revenue (Rm) 2 851 2 300Segment operating profit (Rm) 405 330Operating profit margin (%) 14.2 14.3Capex (Rm) 31 29

Key initiatives and developments

• Strong growth was reported by Famous Brands Cater Chain and Cheese Company, both plants benefiting from significant capex investments in the prior year which facilitated take-on of new and previously outsourced products

• The three-week work stoppage during the year impacted on profitability in the short term, but triggered a drive for efficiencies which will enhance the business

• Our BB1 meat plant invested in waste and effluent management equipment, the former providing a blueprint for our other meat plants in future

• In the prior year we committed to implement strategies in Lamberts Bay Foods to ensure adequate stock levels; improve capacity and ramp up production to meet demand. Good progress was achieved in all respects

• We undertook to establish a sustainable procurement base to ensure sustained full use of capacity at Coega Concentrate tomato plant. This remains a long-term project. In the interim, the plant has been integrated with the cheese plant to enable it to supply excess steam


• We will be investing in equipment in the meat, cheese and coffee plants aimed at improving efficiencies and enhancing capacity

• We will be prioritising awareness around behaviours and usage of all utilities (this applies specifically to the Western Cape but all other regions as well)

• Following a successful pilot trial in three of our plants, we will be rolling out a standardised system and approach to managing all facilities focusing on teamwork, work flow, problem solving and attainment of KPIs

Manufacturing – Supply chain

45 ➜


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Plant statistics ProductPlant

size m2

Revenue growth

year-on-year

(%)

Famous Brands Bakery# Rolls and subs 1 065 21

Famous Brands Coffee Company^ Espresso, filter and powdered coffee 1 850 (2)

Famous Brands Juice plant#† Trufruit house brand juice 1 650 (4.8)

Famous Brands Meat Company BB1# Patties, boerewors, chicken cubes, ground beef and pizza toppings 6 045 15

Famous Brands Meat Company BB2# Brand-specific choice-cut meat products 75 30.9

Famous Brands Cater Chain^ Beef, lamb, mutton, chicken, bacon and ham 8 950 37.4

Famous Brands Sauce & Spice plant# Steers, Wimpy and Debonairs Pizza sauces, sugar and seasoning sachets 2 970 12.4

Famous Brands Ice cream Plant# Soft serve, hard ice cream and milkshake flavours 980 13.9

Famous Brands Fine Cheese Company^ Mozzarella, cheese slices, cheddar cheese and spread 5 200 36

Famous Brands Great Bakery Company^ Specialised breads, baked and frozen products, pastries and confectionaries 652 (0.3)

Lamberts Bay Foods# French fries and other value-added potato products 13 000 3.5

Coega Concentrate*# Licensed, processed tomato products 4 121 n/a

Famous Brands serviette plant# Serviettes 244 2.7

* No year-on-year comparison available. # Wholly owned. ^ Joint venture.Subsequent events†

In 2005 the Group acquired Trufruit Pty Limited, to produce fruit juice in various formats for the Group’s restaurant network and third-party customers. The business continued to be managed by the founder, Evan Antel. Subsequent to the year ended 28 February 2018, and with effect from 1 April 2018, the Group concluded a joint venture agreement with Mr Antel, whereby a 30% stake in the business was sold back to him. Mr Antel will manage the new entity, Coolsite Trading Pty Limited. The nature of business will remain unchanged. The transaction outlined will not have a material impact on the performance of the Group.

CASE STUDYOperational improvement enhances our Financial and Natural Capitals

Positive impact on Financial Capital:● R1m meat-loss saving per annum● Quicker, more predictable defrosting process facilitates:

● lower stock holding and enhances working capital● reduced downtime and more efficient plant operation

Positive impact on Natural Capital: ● Energy consumption reduced

This learning will provide a blueprint for our other meat plants in future.

BB1 invested R2.1 million in meat

defrosting equipment to manage the meat

defrosting process better

Manufacturing – Supply chain continued


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46

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The Group holds strategic stakes in the following entities: UAC Restaurants Limited – more popularly known as Mr Bigg’s (49%); By Word of Mouth (49.9%) and Sauce Advertising (35%).

l im i ted Number of restaurants 2018: 99 2017: 113

Key initiatives • Our key focus was on achieving higher levels of operational compliance and reducing historical debt • The weak economy and security challenges in the north and south east of the country impacted on sales;

significantly higher electricity tariffs eroded profitability; and the devaluation of the local currency resulted in revamp delays and the cancellation of certain projects. Seventeen restaurants were closed during the year

• The manufacturing division was overhauled resulting in improved margins and the distribution division performed strongly


• A recently appointed new Managing Director has started to play an important role in improving the business • Expand Debonairs Pizza’s strong presence in the market • Our priority focus will continue to be on consolidation, building strong local market identification and

regaining a voice among consumers for the Mr Bigg’s brand

FamousBrandsIntegratedAnnualReport2018FrontsectionandsustainabilitysectioncombinedDraft4 2May2018 Time:11h05

InvestorCommunications0833958608english@investorcommunications.co.zaPage53of58

MrBigg’s

Numberofrestaurants 2018: 2017:Keyinitiatives • Ourkeyfocuswasonachievinghigherlevelsofoperational

complianceandreducinghistoricaldebt.• TheweakeconomyandsecuritychallengesintheNorthand

SouthEastofthecountryimpactedonsales;significantlyhigherelectricitytariffserodedprofitability;andthedevaluationofthelocalcurrencyresultedinrevampdelaysandthecancellationofcertainprojects.17restaurantswereclosedduringtheyear.

• Themanufacturingdivisionwasoverhauledresultinginimprovedmarginsandthedistributiondivisionperformedstrongly.

Whatwewillfocuson • ArecentlyappointednewManagingDirectorhasstartedtoplayanimportantroleinimprovingthebusiness

• Ourpriorityfocuswillcontinuetobeonconsolidation,buildingstronglocalmarketidentificationandregainingavoiceamongconsumersfortheMrBigg’sbrand

ByWordofMouth

Inour2017reportweoutlinedourgoaltoenterthepremiumhomemealreplacementretailspacethroughhigh-end stand-alone storesofferingbespokeproducts. This goalwasachieved inMarch2018,with the launchof our first “Frozen for You” retail store inDainfern Square,Gauteng. Theconcept comprises a retail offering (product is bought in store) or an online component (orderedonlineanddeliveredtothecustomer’sdoor). Thepremiumproducthasbeenfavourablyreceivedbyconsumersandpendingavailabilityofsuitablesites,plansare inplacetoopenadditional retailoutletsoverthecourseoftheyear.

Opportunities to increase thebusiness’spresence in thehigh-endcorporate catering segmentarealsobeingexplored,howeverthelongertermgoaltogrowthefootprintintoCapeTownandDurbanwillonlybepursuedonceeconomicconditionsimprove.

SauceAdvertising

Ourstrategicstakeinthisbelow-the-lineadvertisingagencyiscentredonenhancingtheGroup’smarketingcapabilitiesandleveragingmarketingspend.

_____________________________________

In our 2017 report we outlined our goal to enter the premium home meal replacement retail space through high-end stand alone stores offering bespoke products. This goal was achieved in March 2018, with the launch of our first “Frozen for You” retail store in Dainfern Square, Gauteng. The concept comprises a retail offering (product is bought in store) or an online component (ordered online and delivered to the customer’s door). The premium product has been favourably received by consumers and pending availability of suitable sites, plans are in place to open additional retail outlets over the course of the year.

Opportunities to increase the business’s presence in the high-end corporate catering segment are also being explored, however the longer-term goal to grow the footprint into Cape Town and Durban will only be pursued once economic conditions improve.

Our strategic stake in this below-the-line advertising agency is centred on enhancing the Group’s marketing capabilities and leveraging marketing spend.

Associates

47 ➜


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Group Financial Director’s report

Kelebogile (Lebo) NtlhaGroup Financial Director

“Revenue increased by 23% across the divisions to R7.0 billion.

The cash realisationrate improved to 103%.”


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48

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Highlights • SA business grew operating profit before non-operational items 7% to R890 million (2017: R833 million) • Cash generated from operations increased 41% to R1.1 billion (2017: R795 million) • Improvement in the cash realisation rate to 103% (2017: 84%) • Commenced de-gearing the balance sheet towards short to medium-term target of two times gross debt:EBITDA

Group performanceThe Group’s results for the 2018 financial year reflect a generally strong organic performance by our SA business, notwithstanding the R20 million loss reported by Coega Concentrate (the Group’s tomato paste facility acquired in June 2016). In the UK, our operation underperformed expectations primarily due to weaker results delivered by GBK (the Group’s UK business acquired in October 2016).

Organic versus acquisitive growth

2018 2017 % changeR000 R000 Organic Acquisitive Total

Revenue 7 023 095 5 720 363 5 18 23Operating profit before non-operational items 890 258 938 048 5 (10) (5)

Revenue and operating profit before non-operational items both grew 5% organically. During the 2017 financial year, five businesses were acquired, namely, GBK, Lamberts Bay Foods, Salsa, Lupa and Coega Concentrate. These businesses contributed 18% of the total 23% growth in revenue for the period.

■ Operating pro�t (Rm)

Group operating pro�t

466

18.5

566

20.0 20.5

672

18.4

792

938

16.4

890

12.7

Rm %

2013 2014 2015 2016 2017 2018

■ Operating margin (%)

The Group’s operating profit and operating margin were negatively affected by the £3.6 million operating loss arising from GBK during the current financial year, relative to GBK’s operating profit of £2.2 million for the five months since acquisition reported in our 2017 results. The Group’s operating profit margin declined to 12.7% (2017: 16.4%). Headline earnings per share decreased by 8% to 393 cents (2017: 428 cents).

Divisional performance: South AfricaThe Group’s SA business comprises its Brands, Manufacturing and Logistics operations.

BrandsThis division’s revenue increased by 9% to R851 million (2017: R781 million), while operating profit grew 1% to R431 million (2017: R427 million).

The operating profit margin decreased to 50.7% (2017: 54.7%), primarily as a result of the lower operating profit margin contributed by our Signature brands relative to the Leading brands’ higher operating profit margins.

Also contributing to the decrease in the current year’s margin are once-off costs relating to the restructuring of the Group’s restaurant development business into a JV partnership structure, as well as an investment in resources to further enhance the Group’s marketing and operations services functions.


Brands operating pro�t

287

60.1

325

60.4 59.4

365

57.1

389

427

54.7 431

50.7Rm %

2013 2014 2015 2016 2017 2018


49 ➜


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Group Financial Director’s report continued

ManufacturingThis division’s revenue increased by 24% to R2.9 billion (2017: R2.3 billion), while operating profit grew by 23% to R405 million (2017: R330 million).

The operating profit margin decreased to 14.2% (2017: 14.3%), negatively impacted by a R20 million operating loss arising in the Coega Concentrate business.


Manufacturing operating pro�t

98

12.5

127173

247

330

13.6 13.7 13.7

14.3 14.2

405

Rm %

2013 2014 2015 2016 2017 2018


LogisticsThis division’s revenue increased by 11% to R3.8 billion (2017: R3.4 billion), while operating profit decreased by 17% to R104 million (2017: R125 million).

The operating profit margin declined to 2.7% (2017: 3.6%), negatively impacted by work stoppage contingency costs relating to the strike that took place during the year under review; the annualisation effect of costs relating to the relatively new Longmeadow Distribution Centre which was commissioned in October 2016; and a reallocation of costs relating to Logistics Services and Central Planning to the Logistics division (previously allocated to Corporate).


Logistics operating pro�t

6377

89

3.54.0 4.0

3.43.6

100125

2.7

104Rm %

2013 2014 2015 2016 2017 2018


Divisional performance: InternationalThe Group’s International business comprises the UK and the Africa and Middle East (AME) region.

UKWhile Wimpy reported satisfactory results, the overall decline in the operating profit and operating profit margin in the UK operation arises from underperformance by our GBK business.


5

136.5

14.020.1

21

28.2

33

55

7.9 (45)

(2.8)Rm %Rm

2013 2014 2015 2016 2017 2018

■ Operating profit (Rm)

AMEThe decrease in the AME region’s operating profit margin to 17.6% (2017: 19.9%) is mainly due to the impact of exchange rate fluctuations, and underperformance by Retail Group Botswana, the Group’s company-owned restaurant business acquired in Botswana during the 2016 financial year.


12 23 23

34.8

46.140.0

23.3

34

50 45

19.9 17.6Rm %

2013 2014 2015 2016 2017 2018


Financial covenantsThe Group’s borrowings (refer to page 93) are subject to the following financial covenants, which the Group is in compliance with:

2018 2017Actual Required Actual Required

Gross debt: EBITDA 2.56 <3.00 2.83 <3.25Interest cover 3.58 >3.25 5.60 >3.00Free cash flow to debt service 1.48 >1.20 1.97 >1.20


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50

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Balance sheetSalient features

2018 2017 %R000 R000 change

Cash and cash equivalents Rm 717 405Net assets# Rm 4 403 4 651Net debtˆ Rm 2 064 2 450Net debt/equity % 126 165 39Total equity Rm 1 632 1 485Return on equity** % 25 28 (3)Return on net assetsˆˆ % 20 29 (9)# Total assets other than cash and cash equivalents and deferred tax assets, less interest-free trading liabilities.ˆ Total interest-bearing borrowings less cash.**Headline earnings as a percentage of average total equity.ˆˆOperating profit before non-operational items as a percentage of average net assets.

The Group’s closing net cash position as at 28 February 2018 was R717 million (2017: R405 million). The decrease in the Group’s net assets to R4.4 billion (2017: R4.7 billion) is mainly attributable to the R373 million impairment recognised in the GBK business.

During FY2018, the de-gearing of the balance sheet commenced in line with our debt reduction obligations. Hence the improvement in the debt/equity ratio to 126% (2017: 165%). The Group’s short to medium-term debt level target is a gross debt/EBITDA ratio of two times. As at 28 February 2018, the gross debt/EBITDA ratio was at 2.56 times.

Return on equity decreased by 3% mainly as a result of the negative impact of GBK’s £3.6 million operating loss recorded during FY2018, relative to the operating profit of £2.2 million reported in the FY2017 results, as well as the annualisation effect of finance costs incurred on the Group’s borrowings raised in October 2016.

Cash flow

Cash �ow movement during the year under review

405

1 123

(274)(207)

(201) (108) (17) (4)

717

Ope

ning

ca

sh

Clos

ing

cash

Cash

from

op

erat

ions

Fina

ncin

g ac

tiviti

es

Cape

x an

d ot

her i

nves

ting

activ

itiesTax

Inte

rest

Div

iden

d

Fore

x

Rm

Net cash inflow from operating activitiesCash generated from operations before working capital changes increased to R1.1 billion (2017: R932 million). Working capital changes improved to a negative R12 million (2017: negative R137 million). Overall, net cash inflow from operating activities increased to R624 million (2017: R269 million).

Net cash outflow utilised in investing activitiesAdditions to property, plant and equipment and intangible assets were R231 million (2017: R323 million). There were no new business acquisitions during the year under review (2017: R1.9 billion). Overall, net cash outflow utilised in investing activities decreased to R201 million (2017: R2.3 billion).

Net cash outflow from financing activitiesDuring the 2017 financial year, the Group raised borrowings of R2.5 billion. In line with the debt repayment schedule, R107 million was repaid during the current financial year. Overall, net cash outflow from financing activities was R108 million (2017: net cash inflow of R2.4 billion).

Key focus areas for the year ahead • Prudent capital allocation as the Group continues to meet its

debt reduction obligations and optimises returns on capital employed

• Leverage the investment made in the new ERP system implemented during the year under review

• Review current debt structure in line with optimal capital structure considerations

Kelebogile (Lebo) NtlhaGroup Financial Director

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Social and Ethics Committee report

IntroductionThe Social and Ethics Committee (the Committee) is constituted as a formal Committee of the Board in terms of the Companies Act (the Companies Act) and this report is prepared in compliance with the requirements of the Companies Act. The Committee operates according to a formal Charter which contains the terms of reference, composition, role, responsibilities and duties of the Committee. The Charter is reviewed from time to time.

Attendance and compositionThe Committee met four times during the year under review and comprised three non-executive directors.

• Chris Boulle* – Chairman and Independent non-executive Director

• Bheki Sibiya – Independent non-executive Director • Thembisa Skweyiya – Independent non-executive Director

Other executives who attended by invitation included the Chief executive Officer, Chief Marketing Officer, HR executive, Transformation Manager and Group Commercial executive. The Company Secretary minuted the meetings.

* With effect from 1 March 2018, Mr Chris Boulle resigned from the Committee to fulfil new additional duties on other Group Committees. Ms Thembisa Skweyiya replaced him as Chairman and Mr Nicolaos Halamandaris was appointed to the Committee.

Reporting framework

SOCIAL AND ETHICSCOMMITTEE

SOCIAL AND ETHICS WORKING GROUP BOARD

Comprises executive

management

Comprises three non-executive

directors and invited executive

managers

Chairman of the Committee

sits on and reports to the Board


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52

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Roles and dutiesThe duties of the Committee as outlined in the Companies Act include the following:

Social and ethics responsibilities • Review and approve the Group’s policy, strategy and structures

to manage social and ethics issues • Oversee the monitoring, assessment and measurement of the

Group’s activities relating to good corporate citizenship, including the promotion of equality, prevention of unfair discrimination, and 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

• Monitor and oversee reporting and reduction of fraud and corruption

• Review the adequacy and effectiveness of the Group’s engagement and interaction with its stakeholders

• Oversee the monitoring, assessment and measurement of the Group’s consumer relationships including its advertising, public relations and compliance with consumer protection laws

• Oversee the monitoring of the Group’s labour and employment practices, including its 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 education development of its employees

• Monitor and oversee sustainability matters including environment, health and public safety, and

• Oversee the implementation of King IV.

Transformation responsibilities • 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

• Develop a skilled and motivated workforce whose profile is representative of the demographics of this country, and

• Report to the Board on the transformation work undertaken, and the extent of any action taken by management to address areas identified for improvement.

Functions conductedDuring the review period, the Committee carried out, inter alia, the following:

• Approved the Charter of the Committee • Reviewed and reported to the Board on the Group’s

Employment Equity performance relative to the Group’s Employment Equity Plan

• Reviewed and accepted management’s feedback regarding the Group’s activities, having regard to the relevant legislation and best practice, matters relating to:– social and economic development;– good corporate governance;– the environment, health and public safety;– consumer relationships; and– labour and employment.

• Reviewed, updated and approved the Group’s Code of Ethics • Reviewed and reported to the Board on the Group’s detailed

BBBEE strategy, targets and budget, as well as progress made aligned to the scorecard

• Approved the Group’s CSI policy as pertaining to the South African operations, and provided the Board with updates on existing projects and progress achieved, as well as made recommendations regarding new proposed projects, and

• Reviewed and recommended to the Board for approval the non-financial disclosures contained in the IAR. These include, inter alia, the Sustainability disclosures as well as the Governance report.

The Committee’s priority focus throughout the year was on improving the Group’s BBBEE status from non-compliant to compliant. I am pleased to report that resulting from concerted efforts on increasing enterprise and supplier development, skills development, preferential procurement and employing individuals with disabilities, the Group attained BBBEE compliance, at level 8. Notwithstanding this improvement, we will continue to strive for a better rating.

As noted in various reports in this IAR, our goal is to achieve a level 7 status in the forthcoming year through various opportunities, including preferential procurement, enterprise and supplier development (ESD), equity and skills development.

In this regard, a joint venture partnership has been concluded with Foodconnect, a distribution business which acquired the rights to the Group’s Baltimore ice cream brand and will distribute and sell the product on to third parties. Once the business is well established, other Group products will be added to the basket. This will qualify as a level 2 BBBEE enterprise.

The Committee is satisfied that the Group is committed to ensuring its sustainability in the short, medium and long term and embraces its responsibilities with regard to the health and safety of its employees, its impact on the community and on the environment.

As Chairman of this Committee, I will be available at the Group’s AGM to respond to any enquiries regarding the statutory obligations of the Committee.

T SkweyiyaChairman of the Social and Ethics Committee

22 June 2018

Natural capital – page 12Social and relationship capital – page 13Human capital – page 16 Material matters and strategic imperatives – page 21Chairman’s statement page 26, CEO’s report – page 30

53 ➜


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Board and management

Thembisa Skweyiya (45)

Independent non-executive director

Appointed to the Board on 27 May 2016

Qualifications BProc, LLB, LLM, H Dip Tax

Role at Famous Brands • Member of the Audit

and Risk Committee• Chairman of the Social

and Ethics Committee• Member of the

Nominations Committee

Bhekokuhle Lindinkosi (Bheki) Sibiya (61)


Appointed to the Board on 1 March 2004

Role at Famous Brands • Chairman of the

Remuneration Committee• Member of the Social

and Ethics Committee

Nicolaos (Nik) Halamandaris (43)

Non-independent non-executive director

Appointed to the Board on 9 November 2017

Role at Famous Brands • Member of the Social and

Ethics Committee• Attends the Audit and Risk

Committee meetings and Investment Committee meetings by invitation

Santie Botha (53)

Independent Chairman

Appointed to the Board on 1 June 2012

Qualifications BEcon (Hons)

Role at Famous Brands • Chairman of the

Nominations Committee• Member of the

Remuneration Committee• Member of the Investment

Committee• Attends the Audit and Risk

Committee meetings by invitation

Kelebogile (Lebo) Ntlha (35)

Group Financial Director

Appointed to the Board on 1 July 2016

QualificationsCA(SA), MBA, PGD Tax

Role at Famous Brands • Attends the Audit and Risk


• Attends the Investment Committee meetings by invitation


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54

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John Lee Halamandres (64)

Non-independent non-executive director

Appointed to the Board on 9 November 1994

Role at Famous Brands • Member of the

Remuneration Committee• Member of the Investment

Committee

Darren Paul Hele (46)

Chief Executive Officer

Appointed to the Board on 1 June 2012

QualificationBCom

Role at Famous Brands • Member of the Social and

Ethics Committee• Attends all Committee

meetings by invitation and attends all active subsidiary and associate company Board meetings as a director

Norman Joseph Adami (64)


Appointed to the Board on 24 February 2015

QualificationsBachelor of Business Science (Hons), MBA

Role at Famous Brands • Member of the Audit and

Risk Committee• Member of the

Nominations Committee• Member of the Investment

Committee

Christopher Hardy Boulle (46)


Appointed to the Board as an alternative non-executive director in December 2011 and as a non-executive director on 27 February 2014

QualificationsBCom, LLB, LLM

Role at Famous Brands • Interim Chairman of the

Audit and Risk Committee • Member of the Investment

Committee• Attends the Remuneration


Thetele Emmarancia (Emma) Mashilwane (42)


Appointed to the Board on 1 December 2017

QualificationsCA(SA), BCompt, BCom (Hons)/CTA, Global Executive Development Programme (GIBS)

Role at Famous Brands • Member of the Audit and

Risk Committee• Member of the Investment

Committee

55 ➜


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Board and management continued

Thembisa Skweyiya

Directorships in other listed entities• Imperial Holdings Limited

– non-executive directorThembisa is a qualified attorney, admitted to the New York State Board in 1998. She obtained her BProc and LLB qualifications from the University of Natal, a Master of Laws (LLM) degree from Harvard University and a Higher Diploma in Taxation from the University of the Witwatersrand.Thembisa is Executive Director of Skweyiya Investment Holdings. She was formerly a Board member of the Development Bank of Southern Africa.

Areas of expertise• Law and tax, governance,

strategy, risk.

Bhekokuhle Lindinkosi (Bheki) Sibiya

Directorships in other listed entities• Pinnacle Holdings – non-

executive directorBheki 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.

Areas of expertise• Governance, strategy, risk,

stakeholder relationships.

Nicolaos (Nik) Halamandaris

Has been appointed to the Board as a non-independent non-executive director to represent the interests of the retiring directors (Messrs Panagiotis, Theofanis and Periklis Halamandaris), with effect from 9 November 2017. Nik has extensive experience in the food services industry, having been a franchisee of many of the Group’s mainstream brands over the past two decades up until 2010. He is currently an Executive Director of several non-listed property development and construction companies with primary responsibility for strategy and new business development.

Areas of expertise• General management,

strategy, franchise management, food services.

Santie Botha

Directorships in other listed entities• Curro Holdings –

Independent Chairman• Liberty Holdings – non-

executive director• Telkom – non-executive

director Santie 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).

Areas of expertise• Governance, marketing,

strategy, consumer insight, stakeholder relationships.

Kelebogile (Lebo) Ntlha

Lebo is a Chartered Accountant (SA) and holds an MBA degree (awarded cum laude) from the University of the Witwatersrand and a Post-graduate Diploma in Tax. 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 joined Famous Brands in July 2014 as the Group Financial Executive and Company Secretary, and was appointed to the Board as Group Financial Director effective 1 July 2016.

Areas of expertise• Finance, risk, strategy.


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56

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John Lee Halamandres

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.


franchise management, governance, strategy.

Darren Paul Hele

Darren commenced his career at Pleasure Foods Limited while studying for and completing a BCom. 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.Darren was appointed Chief Operating Officer – Franchising division in May 2011 and in January 2013 assumed the position of Chief Operating Officer of the Group. With effect from 1 March 2014, Darren assumed the role of Chief Executive Officer – Food Services. Darren was appointed Chief Executive Officer with effect from 1 March 2016.


franchise management, marketing, strategy, stakeholder relationships.

Norman Joseph Adami

Directorships in other listed entities• CCB Africa

– non-executive directorNorman had an extensive career with SABMiller, which commenced at SAB (Pty) Limited 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.Norman is 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.


risk, strategy, marketing, operational management, mergers and acquisitions.

Christopher Hardy Boulle

Directorships in other listed entities• Advtech – Chairman and

non-executive directorChris 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 and a half.

Areas of expertise• Law, governance, strategy,

risk, corporate finance.

Thetele Emmarancia (Emma) Mashilwane

Directorships in other listed entities• Board member and

member of the Audit Committee – Tiger Brands

• Board member and member of the Risk Committee and Audit and Sustainability Committee – Murray & Roberts

Areas of expertise• Internal and external

audit, risk management, financial management, corporate governance, strategy and general management.

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Governance

The Board of Famous Brands holds ultimate responsibility for governance, the setting of strategy, the monitoring of strategy and the setting of short to medium-term operational objectives for executive management. The Board holds responsibility for setting the ethical tone and creation of a culture of integrity and compliance.

King IVIn recognition of the need to conduct the affairs of the Group according to the highest standards of corporate governance and in the interests of investor protection, the Group’s commitment to good governance is formalised in its policies and operating procedures. These are intended to cover all aspects of the organisation’s activities wherever situated, and in its reporting internally and externally to stakeholders.

The Board is committed to achieving high standards of corporate governance, business integrity and ethics across all of its activities.

The principles and structures for facilitating good corporate governance are in place throughout the Group and are operating well. The directors are satisfied that the Group substantially complies with the principles and spirit of King IV.

Principle Focus areas in review period Actions in review period

Governance outcome: Ethical culture

1. Ethical leadership The governing body

should lead ethically and effectively.

The Board of Famous Brands accepts the responsibility for ensuring that the tone which is set for the Group is one of integrity, fairness, transparency and accountability. The Board Charter includes this responsibility.

The Board Charter is reviewed annually. The amendments made were in line with the requirements of King IV. New appointments made to the Board are made on the understanding that new members subscribe to and accept the responsibility for the highest level of ethical leadership.

2. Organisation values, ethics and culture

The governing body should govern the ethics of the organisation in a way that supports the establishment of an ethical culture.

The Board sets the direction of the values and ethics and culture. The implementation of the ethics policy is delegated to management which incorporates day-to-day issues such as recruitment, employee remuneration, supplier selection and whistleblowing. The code of ethics is reviewed annually. Stakeholders are made aware of the code by making it available on the website and ongoing communication to employees.

The Audit and Risk Committee reviewed and approved the code of ethics. During the period an employee survey was conducted in order to assist in assessing the application of the code, the results of which were considered by the Audit and Risk Committee.

An independent whistleblowing line was established in June 2016 and the Audit and Risk Committee assesses the details of all reports and recommends appropriate action where needed. The Committee is assisted in this regard by the Internal Audit function.

3. Responsible corporate citizenship

The governing body should ensure that the organisation is and is seen to be a responsible corporate citizen.

The Board has a zero tolerance for non-compliance with legislation and delegates to executive management the responsibility for compliance with the Company’s own policies and procedures. Material breaches are reported to the Board or its Committees. The Board accepts that the Company has a responsibility of ensuring that it is acknowledged as a good corporate citizen. Being a good corporate citizen infers responsibility to its employees, franchisees, suppliers, consumers and for ensuring that its operations are environmentally friendly.

The Audit and Risk Committee reviews any breaches of legislation and recommends action. No significant breaches to legislation were brought to its attention. Increasing focus has been given to environmental issues, details of which are outlined elsewhere in this Integrated Annual Report.


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Governance outcome: Performance and value creation

4. Strategy, implementation and performance

The governing body should appreciate that the organisation’s core purpose, its risks and opportunities, strategy, business model, performance and sustainable development are all inseparable elements of the value creation process.

The Board sets the direction, purpose and strategy of the organisation and delegates to management the responsibility for the formulation and the approval of the strategy. The Board approves operational strategic plans including key performance measures and targets as proposed by executive management and oversees the implementation and reporting on such plans.

The Board is aware on an ongoing basis of the need to ensure the Company is viable, the reliance on its six capitals and its going concern status.

The Board sets aside one day each year to focus on and approve the strategy for the following five years. During the year executive management reports to the Board on the implementation of strategy and the meeting of targets outlined in the strategic plan. The Board and executive management are now sensitive to the six capitals as outlined in King IV and the need to oversee an ongoing assessment of the business in the context of the six capitals.

5. Reports and disclosure The governing body

should ensure that reports issued by the organisation enable stakeholders to make informed assessments of the organisation’s performance, and its short, medium and long-term prospects.

The Board sets the direction, approach and conduct for the reporting to its stakeholders and approves the frameworks to be used. The frameworks are in compliance with regulatory requirements including the Companies Act, the Listings Requirements of the JSE Limited (JSE) which include the adherence to the provisions of King IV. The Board approves the Integrated Annual Report, approves the basis of materiality within the report, and the integrity of any external reports used.

The Board has approved all reporting required in terms of the Listings Requirements of the JSE and approved the Integrated Annual Report.

Governance outcome: Adequate and effective control – governing structures and delegation

6. Role of the governing body

The governing body should serve as the focal point and custodian of the corporate governance in the organisation.

The Board exercises its leadership role, has a Charter for itself and each of the Committees of the Board has its own Charter which is reviewed annually.

The Board met five times in the period under review. The Board has historically met four times during the year, being three regular Board meetings and a strategic planning meeting. There was an additional extraordinary Board meeting held in August. It has been agreed that in future there will be four regular Board meetings and a strategic planning meeting. Details of the meetings and those who attended are reflected on page 64.

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Governance continued


Governance outcome: Adequate and effective control – governing structures and delegation continued

7. Composition of the governing body

The governing body should comprise the appropriate balance of knowledge, skills, experience, diversity and independence for it to discharge its governance role and responsibilities objectively and effectively.

The Board now comprises a majority of independent non-executive directors. The Nominations Committee regularly considers whether the size, knowledge, skills, diversity, experience and independence of the Board are appropriate for the Company. The CEO and CFO are executive directors of the Company. The Board supports diversity including gender, race, age, culture and fields of expertise. It has adopted a gender policy. Details of the diversity of the Board are reflected on page 63. Rotation of Board membership is outlined in the Company’s Memorandum of Incorporation.

The process for the nomination and approval of new members of the Board is outlined in the Charter of the Nominations Committee. Conflicts of interests are declared at least annually and any conflict is addressed within the requirements of the Companies Act. The Chairman is independent. The Chairman is not the Chairman of the Audit and Risk Committee, the Chairman of the Remuneration Committee, nor the Chairman of the Social and Ethics Committee.

An internal Board evaluation took place conducted by the Company Secretary.

Three of the founding members of the Company resigned in November and the former CEO resigned from the Board in January. An independent director and a director who was not independent were appointed. As a consequence of these changes the majority of the Board was independent.

The Nominations Committee is satisfied that Mr B Sibiya who has served on the Board for over 13 years, is to be regarded as independent.

8. Committees of the governing body

The governing body should ensure that its arrangements for delegation within its own structures promote independent judgement, and assist with balance of power and the effective discharge of its duties.

The Company has established the statutory Committees of Audit and Risk and Social and Ethics. It was considered appropriate that risk also be the responsibility of the Audit Committee.

The other Committees are the Remuneration Committee and the Nominations Committee. An Investment Committee was established to meet on an ad hoc basis when considered appropriate.

Each Committee has a Charter that governs its responsibilities that are reviewed annually.

The Committees met regularly during the year. Details of the composition of the Committees and their meeting dates are reflected elsewhere in this report.

All Charters were reviewed.

9. Performance evaluations

The governing body should ensure that the evaluation of its own performance and that of its Committees, its chair and its individual members, support continued improvement in its performance and effectiveness.

The Board accepts the need for a regular evaluation of its performance, the performance of its Committees and their individual participants.

The Company Secretary conducted a Board evaluation. The key findings of the evaluation were:

• the need for the majority of Board members to be independent; and

• the need for a more formalised focus on risk issues.


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Governance outcome: Adequate and effective control – governing structures and delegation continued

10. Delegation to management

The governing body should ensure that the appointment of, and delegation to, management contribute to role clarity and effective exercise of authority and responsibilities.

The Board accepts that a CEO is required to lead strategy implementation and operational management and to ensure that appropriate succession for the CEO is considered. The Board has delegated the approval of a delegation of authority framework to the Audit and Risk Committee. The Board has delegated the responsibility of ensuring that key management functions are appropriately resourced and remunerated to the Remuneration and Nominations Committees.

Board members are entitled to seek independent professional and legal advice.

The delegation of authority framework was reviewed by the Audit and Risk Committee.

The Nominations Committee considered succession for the CEO and all senior management positions. The Remuneration Committee reviewed the remuneration of the CEO and senior management. A detailed Remuneration Policy and Implementation Report is reflected on pages 66 to 75 in this report and in Note 28 of the AFS and will be submitted to the shareholders in non-binding advisory resolutions.


Governance outcome: Adequate and effective control – governance functional areas

11. Risk and opportunity governance

The governing body should govern risk in a way that supports the organisation in setting and achieving its strategic objectives.

The Board accepts the responsibility for the governance of risk and has placed the responsibility with the Audit and Risk Committee. The implementation of risk management has been delegated to executive management. The Board accepts that no decision making is without risk and consequently risk forms an integral part of decision making.

The Board has considered what are the top risks facing the Company. It has been agreed that a more structured approach to the management of risk would be advantageous through the identification and implementation of best practice. An external expert has been contracted to review and make recommendations with regard to the Company’s management of risk processes. The report and recommendations will be finalised during the forthcoming financial year.

12. Technology and information governance

The governing body should govern technology and information in a way that supports the organisation setting and achieving its strategic objectives.

The Board accepts that the role of technology is a key enabler for success and competitive advantage, as well as being a key risk in the management of the Company and its operations. The Board has delegated to management the implementation of effective technology and information practices. Management has created an Information Technology Steering Committee to manage this element of the business operations.

In July 2017 the Company successfully implemented an enterprise planning (ERP) upgrade.

13. Compliance governance

The governing body should govern compliance with applicable laws and adopted, non-binding rules, codes and standards in a way that supports the organisation being ethical and a good corporate citizen.

The Board sets the requirement for all operations to comply with relevant legislation, codes, standards and policies. The Board delegates to management the responsibility for such compliance.

Compliance is an ongoing responsibility for the Board and all employees, franchisees and suppliers. Any material breaches are brought to the attention of the Board through the Audit and Risk Committee. No material breaches have been brought to the attention of the Audit and Risk Committee.

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Governance outcome: Adequate and effective control – governance functional areas continued

14. Remuneration governance

The governing body should ensure that the organisation remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term.

The Board through the Remuneration Committee sets the direction and approach for remuneration practices throughout the organisation.

The Remuneration Policy and Implementation Report are outlined on pages 66 to 75 of this Integrated Annual Report and in Note 28 of the AFS. Shareholder voting by special resolution on non-executive remuneration is conducted annually. The Remuneration Policy and Implementation Report will be placed before shareholders each year so that they can vote by way of non-binding indicative resolutions.


The Board is sensitive to the relevance and importance of sound and competitive remuneration practices that meet the reasonable expectations of the shareholders. To this end particular focus has been given to updating the Remuneration Policy and Implementation Report that will be placed before shareholders at the forthcoming Annual General Meeting.

15. Assurance The governing body

should ensure that assurance services and functions enable an effective control environment, and that these support the integrity of information for internal decision making and of the organisation’s external reports.

The Board has delegated the responsibility for oversight of direct assurance services and functions to the Audit and Risk Committee. The Audit and Risk Committee is responsible for this oversight to ensure an effective internal control environment and thus the integrity of information for management decision making. The Audit and Risk Committee is responsible for ensuring that an applied assurance model is implemented that covers significant risks and material matters through the use of internal and external assurance providers.

The Board has delegated the oversight of the Internal Audit function to the Audit and Risk Committee. There is an Internal Audit Charter that is reviewed annually and the Internal Audit Executive has a direct reporting line to the Chairman of the Audit and Risk Committee in addition to his day-to-day internal management reporting line. The Internal Audit Executive is not a member of executive management.

The Audit and Risk Committee has addressed the assurance issues in compliance with its Charter and duties to the Board. The Internal Audit Charter was reviewed and Internal Audit reports form part of the agenda of each meeting of the Audit and Risk Committee.

Governance outcome: Trust, good reputation and legitimacy

16. Stakeholders In the execution of its

governance roles and responsibilities, the governing body should adopt a stakeholder-inclusive approach that balances the needs, interests and expectations of material stakeholders in the best interests of the organisation over time.

The Board accepts that stakeholder management is a key responsibility of the Board and has delegated this responsibility to management. Stakeholders include shareholders, consumers, suppliers, franchisees, employees and government.

The Board has encouraged proactive engagement with shareholders. Management has developed a more structured approach with regard to investor relations.


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62

Governance framework

Board statistics

■ Male ■ Female

Gender

4

6

The Nominations Committee Charter includes a policy of gender diversity at Board level which obliges the Company to ensure that females are fairly represented at Board and Committee level.

4

6

■ Black ■ White

Demographics

■ Executive ■ Non-executive ■ Independent non-executive

Board balance

6

2

2

■ Less than one ■ One to four■ More than nine

■ Five to nine

Tenure (years)

20%20%

30% 30%

BoardAudit

and Risk Committee

Social and Ethics

CommitteeRemuneration

CommitteeNominations Committee

InvestmentCommittee

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Board and Committee attendanceAttendance at Board and Board Committee meetings during the year ended 28 February 2018

BoardAudit and

Risk Committee

Social and Ethics

CommitteeNominations

CommitteeRemuneration

CommitteeInvestment Committee

Number of meetings 5 3 3 3 3 4Board/Committee MembersNJ Adami 4/5 1/3 n/a 3/3 n/a 3/4SL Botha 5/5 3/3* n/a 3/3 3/3 2/4*CH Boulle 5/5 3/3 3/3 n/a 3/3* 4/4P Halamandaris (retired 9 November 2017) 3/5 2/3* n/a 2/3 n/a n/aP Halamandaris (junior) (retired 9 November 2017) 1/5 n/a n/a n/a n/a n/aT Halamandaris (retired 9 November 2017) 2/5 n/a n/a n/a n/a n/aN Halamandaris (appointed 9 November 2017) 1/5 1/3* n/a n/a n/a 1/4*JL Halamandres 4/5 n/a n/a n/a 3/3 4/4KA Hedderwick (retired 15 January 2018) 4/5 n/a n/a 2/2 n/a 2/4*DP Hele 5/5 3/3* 3/3* 3/3* 3/3* 4/4*RM Kgosana (resigned 29 September 2017) 2/5 1/3 n/a 1/3 n/a 2/4E Mashilwane (appointed 1 December 2017) 1/5 1/3 n/a n/a n/a 1/4*K Ntlha 5/5 3/3* n/a n/a n/a 4/4BL Sibiya 4/5 n/a 3/3 n/a 3/3 n/aT Skweyiya 5/5 3/3 3/3 n/a n/a n/a* By invitation

Changes to the composition of the BoardDetails of the members of the Board are outlined on page 77.

Company Secretary assessmentThe Company Secretary is IWM Isdale who was reappointed for a further period to 28 February 2019. Mr Isdale holds the degrees of BA, LLB (Natal) and EDP (Wits) and has served as Company Secretary of listed companies for over 25 years. The Board of Directors is satisfied that the Company Secretary has the experience and expertise to fulfil the role and that there is an arm’s length relationship between the Company Secretary and Board members.

Board and Committee ChartersThe Board and its Committees have Charters that are reviewed on an annual basis. The latest reviews took place during the period under review. The changes primarily were to align the Charters with the provisions of King IV.

Code of ethicsThe Company has a code of ethics that is reviewed on an annual basis and the compliance with the code is a requirement of employment.

REGULATORY ISSUESIn August 2017 the Company issued a voluntary trading update. Immediately prior to the trading update a SENS announcement had been released by the Company outlining a share transaction conducted by non-executive director J Halamandres. This

understandably gave rise to concern and enquiries were initiated by the FSB and the JSE. On conclusion of their investigation, the FSB advised the Company that it was not pursuing the matter when it became clear that the share transaction in question was in respect of a funding transaction concluded two years previously and that the agreement had a predetermined repayment date based on a predetermined share price. The JSE ultimately concluded that neither J Halamandres nor the Company had breached any of the listings requirements. The JSE requested the Company to release an explanatory SENS announcement, which it did on 7 December 2017.

In January 2018 the FSB notified the Company that it was investigating share trades that had taken place in the first days of October 2017 prior to the release of a trading statement on 9 October 2017. The Company has fully co-operated with the FSB and has provided all information that had been requested. There has been no further communication from the FSB.


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Remuneration Committee report

Chairman’s letter

Dear shareholders and other stakeholders,

I am pleased to provide you with the Remuneration report, which includes the Remuneration Policy and Implementation Report as is required by the provisions of King IV that will be considered and voted upon at the forthcoming Annual General Meeting of shareholders.

The Remuneration Committee (the Committee) at Famous Brands is governed by its Charter that is reviewed annually.

The Committee has during the year under review complied with its obligations as reflected in its Charter and in terms of the policy which is outlined hereunder.

The Committee is chaired by myself. Other Committee members are Santie Botha and John Halamandres, respectively Chairman and a non-executive director of the Company. The independent non-executive director Chris Boulle, the CEO Darren Hele and the senior executive, Norman Richards, attend by invitation. Darren and Norman recuse themselves from the meeting when a conflict of interest arises. The Company Secretary is the also the secretary of the Committee.

The Committee met on three occasions during the year under review.

The decisions of the Committee are reflected in the Policy and Implementation Report which reflect an improved level of disclosure compared to previous years.

The principal objectives of the Committee are to ensure that remuneration practices are fair, market-related and are linked to the longer-term strategic objectives and the short-term performance targets of the Company. The achievement of these objectives will ensure an alignment of the interests of all parties.

We would seek the support of shareholders for the non-binding resolutions that will be considered at the Annual General Meeting of shareholders. If any shareholders are inclined not to support the resolutions, we would ask that the reasons for such decision be communicated to the Company so that consideration can be given to those reasons. Please send any comments to the Company Secretary at [email protected]. Our commitment is to enhance transparent communication to our shareholders and stakeholders, which is a goal that we intend improving upon each year.

Bheki SibiyaChairman: Remuneration and Human Resources Committee

22 June 2018

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Remuneration report

Throughout this report the term ‘Executive directors’ is used to refer to both the Chief Executive Officer (CEO) and the Group Financial Director (Group FD), while the executive Committee (excluding the executive directors) is referred to as Exco. Reference to the Executive management team includes the executive directors and Exco. The Committee is responsible for the governance of the remuneration associated with these roles and this report will refer to both categories or separately highlight individual roles where appropriate.

Remuneration policyAt Famous Brands our remuneration policy is aligned to the longer-term strategic objectives of the Company and shorter-term operational financial and other targets while ensuring that remuneration levels are competitive with the market. This is accomplished through a governance and application framework that primarily aims to retain and where necessary attract employees through fair, transparent and competitive remuneration.

Key principles of the remuneration policyIn order to continue to support our remuneration approach we have a remuneration policy which is based on the following key principles:

• The remuneration policy will support the business strategy, objectives, core beliefs and long-term interests of Famous Brands

• We reward for value created, contribution and performance and to ensure alignment to shareholder interests

• We aim to provide competitive rewards to attract, motivate and retain the highest calibre of individuals through the payment of industry-competitive packages and incentive awards which ensure alignment with key stakeholders in our business

• Performance metrics are set that are demanding, sustainable and cover all aspects of the business

• The remuneration policy will guide the structure of remuneration to ensure that our core beliefs are upheld, and the correct governance frameworks are applied across our remuneration decisions and practices

• In setting remuneration, appropriate remuneration benchmarks will be applied.

Remuneration design and pay mixWhen determining appropriate remuneration, the Committee considers:1. The potential maximum total remuneration that each Executive

could earn2. External influences primarily being:

• shareholder views and recommendations • economic trends • competitive pressure and • the labour market and the pay gap between Executive

management and the rest of the employee population in the Company.

3. Market benchmarks, choosing the appropriate benchmarks in a market with similar attributes including: complexity, size and geographic spread

Shareholder feedbackFamous Brands will consult regularly with shareholders to obtain feedback on any concerns and will strive to improve transparency in terms of the remuneration policy and the determination of the incentive metrics.

Remuneration mixBase salary is targeted at the 50th percentile of the market benchmark.

Bonus for the CEO at threshold is 45% and is capped at 60% while bonus for the Group FD at threshold is 25% and is capped at 40% of base pay.

On the LTI scheme, shares are targeted at maintaining a multiple of base salary in line with the JSE market benchmark as follows:

• CEO: SARs at four times base salary at target and Retention Shares at 1.2 times base salary at target

• Group FD: SARs at three times base salary at target and Retention Shares at 0.9 times base salary at target.

However, the actual value of the shares in the LTI scheme can only be determined at the time of vesting dependent on the prevailing share price at that time. The first vesting of shares on the new scheme takes place in November 2018.

Components of remunerationThe remuneration of the directors for the financial year ended 28 February 2018 is set out in Note 28 of the full set of the AFS which is available on the Company’s website. Each component of the remuneration is linked to the Company’s strategy, objective, measurement and the maximum performance associated with each component as reflected on pages 67 to 70 of this document.



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66

Remuneration element and link to strategy Operation and objective Maximum opportunity Performance measures

Base salary

A competitive salary awarded to executives to ensure that their experience, contribution and the appropriate market comparisons are fairly reflected.

Base salaries are reviewed annually and are effective on 1 March each year. In the case of executives, salaries are reviewed in May (post audited results) and increases are backdated to March.

The executive base salaries are determined by considering the executive’s performance; market conditions; companies with a similar geographic spread, market complexity, size and industry; and internal peer comparisons.

The CEO makes recommendations in respect of the Exco but does not make any recommendations on his own base salary, which is reviewed by the Committee.

Executive base salary increases and increases for all non-Bargaining Unit employees are aligned and this is informed by the inflation percentage, which has an upward or downward adjustment to recognise individual performance (the overall increase pool being limited to a percentage agreed by the Committee).

Individual performance is reviewed on a scale of 1 to 3, measured against specific key performance indicators (KPIs) approved by the Committee. The 1-3 performance rating determines the percentage of the CPI increase pool which an executive will receive.

Retirement fund

Provides a retirement benefit aligned to the schemes in the respective country in which he or she operates.

The funds vary depending on jurisdiction and legislation (some countries have national insurance).

All Company-related funds are defined contribution funds.

Any Company contribution towards the employee’s membership of a retirement fund shall form part of the total guaranteed package.

In South Africa, tax deductible contributions to retirement funds are capped at R350 000 per annum in line with current legislation.

Not applicable.

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Medical insurance

Provides medical aid assistance aligned to the schemes in the respective country in which he or she operates.

The funds vary depending on jurisdiction and legislation (some countries have national insurance).

Any Company contribution towards the employee’s membership of a medical aid fund shall form part of the total guaranteed package.

All contributions to medical aid funds form part of the total guaranteed package, in line with Company policy.

Not applicable.

Benefits

Provided to ensure broad competitiveness in the respective markets.

Benefits are provided based on local market trends and can include items such as life assurance, disability and accidental death insurance, assistance with tax filing, cash in lieu of leave not taken (above legislated minimum leave requirements) and occasional spousal travel as per the executive travel guidelines.

In line with Company policy. Not applicable.

Remuneration report continued


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Short Term Incentive Plan (STIP)

The STIP is designed to focus the participating executives on delivering on the key priorities for the year through achieving defined Company objectives.

The performance objectives are reviewed and selected annually based on their short to medium-term impact on the Company.

STIP metrics are defined annually and weightings are applied to each of the measures. The metrics are defined against the objectives that most strongly drive Company performance and are heavily weighted to EBITDA and HEPS achievements.

Each metric is weighted and has a target and stretch definition based on the Company budget and the desired stretch targets for the year.

The STIP is delivered as a cash bonus which is paid after Company financial results have been externally audited (usually in June).

CEO • Maximum award: 60% of

base salary • Threshold award: 45%.

Group FD • Maximum award: 40% of

base salary • Threshold award: 25%.

Executives • Maximum award: 40% of

base salary for customer-centric executives and 30% for corporate support executives

• Threshold award: 25%.

CEO and Group FDPerformance measures:

• 70% Company objectives • 30% individual KPIs (as

reviewed by the Committee).

Other executivesPerformance measures:

• 30% Company objectives • 70% individual KPIs (as

reviewed by the Committee)

• Divisional performance and non-financial measures (Transformation/BBBEE targets, employee engagement, etc.) are contained in the individual scorecards of executives

• Both Company and individual performance are assessed over the financial year.

The Company metrics measured are:

• Growth in EBITDA • Growth in HEPS.

The executive directors are measured on Group performance while the SA-based executives are measured on SA business performance and the UK-based executives are measured on UK business performance.

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Long Term Incentive Plan (LTIP)

The primary intention of the LTIP is to ensure that the medium to long-term interests of the executive and the shareholders are aligned, providing reward to the executive and wealth creation to the shareholders when the strategic performance drivers are achieved.

The strategic drivers are used in defining the LTIP metrics.

The LTIP metrics are reviewed and defined annually in accordance with the strategy. It is important to note that any amendment would be applied on a go-forward basis to newly allocated awards with no retrospective metric changes to existing awards.

Weightings are provided to the metrics which must be achieved over a three, four and five-year period for the first allocation and over a three-year period for subsequent allocations.

Long-term incentives are granted annually to employees in CEO, executive directors, executive and senior management (Paterson Grade UD) roles, and by exception, to a small number of roles requiring scarce skills on a grade LD on the Paterson Grading system.

The Company operates the following LTIP:

• Retention Shares (RS) and • Share Appreciation Rights

(SARs).

Shares are usually allocated in the ratio of 25% RS : 75% SARs.

The shares are awarded with a first allocation and top-ups annually and vesting occurs as follows:

• First allocation: targeted to 50th percentile of JSE benchmarked levels

• Vesting is staggered in equal portions in years 3, 4 and 5 from date of allocation

• Subsequent allocations: to top up to the 50th percentile of JSE benchmarked levels as required. Top-ups cliff vest at 100% after three years.

The SARs are issued at a price determined by the 30-day VWAP1 and the RS are issued at a zero-strike price. The range of benchmarked levels which guide initial allocations and any subsequent annual top-up to maintain market alignment are:

CEO • SARS: 4 times base salary at

target • RS: 1.2 times base salary at

target.

Group FD • SARs: 3 times base salary at

target • RS: 0.9 times base salary at

target.

Exco • SARs: 2.25 times base salary

at target • RS: 0.75 base salary at

target.

The individual grants will not exceed the maximum allocations allowed per level and subsequent top-ups will be done to maintain alignment with the market levels and will be the same for all qualifying employees of each level in the business. Annual allocations will not exceed 1% of shares in issue per year.

Performance and service conditions are attached to the SARs.

Performance conditions are attached to the allocation of Retention Shares but only service conditions are attached to vesting (retention objective).

Group financial measures include HEPS and EBITDA, and individual performance metrics include divisional and Business Unit performance measures.

1 VWAP = Volume Weighted Average Price.



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Recruitment policyWhen recruiting Executives, a comparative benchmarking exercise is done to determine the size, nature and complexity of the role and also the skills availability in the market prior to making a competitive offer. For new appointments, the Committee may compensate for remuneration forfeited by the appointee. The intention is to not grant more than what the executive would have received from the Company in a 12-month period. The Committee does have the discretion to compensate higher values if through a fair-value valuation it can be demonstrated that the forfeited amounts exceed the grants. The Committee will compensate the forfeits through a combination of equity and cash.

Termination policyThe executive management team does not have fixed term contracts and thus contracts are all open-ended (except where prescribed retirement ages apply) but do have termination notice periods defined. In addition, the incentive scheme rules are clear on the termination provisions by termination category. In the event of a termination the Company has the discretion to allow the executive to either work out his or her notice or to pay the base pay for the stipulated notice period in lieu of notice.

Reason for termination

Voluntary resignation

Dismissal/ termination for cause

Normal and early retirement, retrenchment

and death

Mutual separation

Base salary Paid over the notice period or as a lump sum.

Base pay is paid up to date of dismissal (exit date).

Base pay is paid up to date of retirement or death or for a defined period based on policy and legislation governing retrenchment conditions. Death benefits would be paid to spouse (if relevant).

Paid over the notice period or as a lump sum or per agreement to remain on Famous Brands’ payroll until agreed date.

Retirement fund

Provident fund contributions for the notice period will be paid; the lump sum would not include provident fund contributions unless it is contractually agreed.

Contributions to provident fund will be paid until such time that employment ceases.

Contributions to provident fund will be paid until such time that employment ceases.

Provident fund contributions for the notice period will be paid; the lump sum will be excluding provident fund contributions and risk benefits.

Medical provisions

Where applicable medical provision for the notice period will be paid.

Medical provision/ payment will be provided until such time as employment ceases.

Medical provision/ payment will be provided until such time as employment ceases. Subject to the medical aid rules, the employee can become a direct paying member to the medical aid.

Where applicable medical provision for the notice period will be paid; the lump sum can include medical fund employee contributions if it is contractually agreed.

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Reason for termination

Voluntary resignation

Dismissal/ termination for cause

Normal and early retirement, retrenchment

and death

Mutual separation

Benefits Applicable benefits may continue to be provided during the notice period but will not be paid on a lump-sum basis.

Tool of trade benefits to be returned on last working day.

Benefits will fall away at such time as employment ceases.

Benefits will fall away at such time as employment ceases.

Applicable benefits may continue to be provided during the notice period.

Short-term performance bonus

Forfeit, no bonus. No bonus. No bonus, but Remuneration Committee has discretion to pro rata for period worked during the financial year.

No bonus, but Remuneration Committee has discretion to pro rata for period worked during the financial year.

Sign-on or retention deferred bonuses

Deferred bonuses lapse.

Sign-on bonus work-back clause will apply – i.e. if not worked back in full, pro rata repayment.

Lapse all deferred bonuses.

Sign-on bonus work-back clause will apply – i.e. if not worked back in full, pro rata repayment.

Pro rata deferred bonuses based on the length of employment from date of allocation.

Sign-on bonus – work-back clause will apply.

Remuneration Committee determines whether a pro rata portion may be granted, and work-back clause may not apply.

LTIP Unvested long-term shares will lapse in their entirety and all rights will lapse immediately.

Lapse of all long-term shares (both unexercised and unvested). Vested shares will be unaffected.

Pro rata unvested long-term incentives based on the length of employment from date of offer. Performance conditions tested over the full performance period and vest on the normal vesting dates. (In case of death, test performance as per the latest results apply immediate vesting).

Remuneration Committee determines whether a pro rata portion may be granted (or the Board in the case of the executive directors). Performance conditions tested over the full performance period and vest on the normal vesting dates.


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Service contracts All members of the executive management team have permanent employment contracts which entitle them to standard Group benefits as defined by their specific region and participation in the Company’s bonus share plan, and the LTIP. The executive management team’s contracts are reviewed annually and include a three-month notice period.

NON-EXECUTIVE DIRECTORS’ REMUNERATION POLICYRemuneration policy The Company’s non-executive directors are paid based on their role and the policy is applied using the following principles:

• A Board fee is paid for the five Board meetings, one of which is a strategic planning meeting, held each year and the Committee members receive Committee fees for participation. The fees are split with a base fee of 20% and the remaining 80% paid based on meeting attendance, each director’s fee paid quarterly in arrears

• Fees are reviewed annually, and increases implemented in June after approval by shareholders at the AGM. The level of fees is set using a benchmark comparable group which is derived from companies with similar size, complexity and geographic spread

• The non-executive directors are not eligible to receive any short or long-term incentives.

Remuneration consultantsWhere appropriate, the Committee obtains advice from independent remuneration consultants. The consultants are employed directly by the Committee and engage directly with them to ensure independence.

Each year an independent remuneration consultancy performs a bespoke executive survey and their advice primarily relates to salary benchmarking for both executive and non-executive remuneration.

Implementation report

The second part of the report relates to the actual implementation of our policies through providing details of the remuneration paid to the executive and non-executive directors for the period ended 28 February 2018. This information is contained in Note 28 of the AFS.


As part of the objectives of increased transparency and ongoing engagement with stakeholders, subsequent to the release of the results in May, the Company Secretary and Human Resource executive have met with several of the principal shareholders in order to obtain the views of the shareholders on remuneration issues. The meetings were welcomed by shareholders and the discussions were frank and constructive. The views of the shareholders are being communicated to the Remuneration Committee who will give consideration to the issues raised in the development of the remuneration policy going forward.

Executive payAfter taking Company performance and market surveys into account, increases were calculated on a principle of performance ranges equating to overall CPI in their respective regions.

Famous Brands conducts an annual bespoke executive remuneration survey through Deloitte. For FY2018 the Committee reviewed the comparable peer group to ensure that changes in the market and the impact on both Famous Brands and the original peer group had not led to variances that made the current matches inappropriate.

During FY2018 there were five changes to the executive team, these were:

• The appointment of JP Renouprez as Managing executive Manufacturing and Technical on 1 May 2017

• The appointment of A Mundell as COO Enterprise Development on 1 June 2017

• The transfer of D Nadauld the current Managing executive for Franchising and Logistics to the UK operations and the appointment (internal promotion) of his replacement G Morrison on 1 January 2018

• A Murdoch resigned as CEO of GBK Restaurants Limited, effective 31 December 2017.

The table on pages 67 to 72 of the IAR summarises the executive directors’ remuneration for the review period. It comprises a full overview of all the pay elements available to the executives in the 12-month period. Increases for executives were effective 1 March 2018 and averaged 5.5% in line with increases given to general staff in South Africa.

The strategic focus of the Company and the STIP and LTIP metrics have been designed to deliver on these key areas:

• Unclutter and grow the business. Concentrate efforts on growth opportunities which deliver the highest return on investment, with particular focus on our Leading mainstream brands

• Intensify focus on prudent management of capital allocation and working capital

• Pursue a local acquisitive strategy including brands and upstream manufacturing opportunities

• Achieve a level 7 BBBEE rating • Fortify leadership structures in the business, while also

addressing leadership succession • Develop and roll out a programme to standardise systems and

performance across all manufacturing plants • Develop and implement a logistics upgrade programme to

address short, medium and long-term capacity needs • Continue to improve financial reporting quality and timelines. • Continue to drive our deep and narrow strategy in the AME

region • Implement a Group-wide behaviour step-change plan for

utilities consumption • Drive continuous improvement in health and safety across the

business.

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Short Term Incentive Performance (STIP) outcomesThe CEO and Group FD’s performance measures for the STIP are:

• 70% Company objectives • 30% individual KPIs (on a balanced scorecard format, and as

reviewed by the Committee).

Other Executive Committee members’ performance measures are: • 30% Company objectives • 70% individual KPIs (on a balanced scorecard format as reviewed

by the CEO).

The Group financial metrics on the STIs are HEPS growth (at CPI plus 50 of CPI), and EBITDA growth (at CPI plus 50% of CPI) each of which count 50% of the Group metrics. Individual scorecards contain KPIs on business plan performance, other financial metrics, market share performance and customer service, people performance and strategic projects.

The CEO and Group FD are measured on Group performance while the SA-based executives are measured on SA business performance and the UK-based executives are measured on UK business performance.

While the performance in the South African business was generally strong, the poor performance of the GBK business in the UK impacted the Group HEPS target not being achieved and in much lower individual performance ratings for both the CEO and the Group FD.

This resulted in the following bonus outcomes for the CEO and Group FD:

STI bonuses – CEO

2.50

1.42 1.57

2.25

Rm

Bonusfor 2017

Bonus for 2018

Threshold bonus for 2018

Possible maximum

bonus for 2018


STI bonuses – Group FD

0.60 0.49 0.55

0.77

Rm

Bonusfor 2017

Bonus for 2018

Threshold bonus for 2018

Possible maximum bonus

for 2018

For FY2019 the committee will receive the Company metrics for the year based on the shareholder feedback received. Individual scorecards contain KPIs and metrics which are grouped in the following categories: business plan performance, financial performance, market share performance and customer measures, people performance and transformation and environmental, social and governance measures.

Long Term Incentive Plan (LTIP)The LTIP replaced the share options scheme during the year ended 29 February 2016 and the first tranche of a five-year scheme with staggered vesting will be 1 November 2018.

FY2019 LTIP The CEO, the Group FD and the remainder of the Executive Committee members will receive an LTIP award in respect of FY2019 to top up to the 50th percentile of the respective JSE benchmarked levels if required. The shares will be in the ratio of 25% retention shares to 75% SARs and the SARs awards are all subject to meeting the scheme performance conditions. While the first allocation in the new scheme vests in equal portions in years 3, 4 and 5, the new shares granted as top-ups in the scheme cliff-vest at 100% three years from the date of allocation.

Non-executive directors’ fees and allowancesAn increase of 5.5% on the current directors’ fees is being proposed to shareholders at the Annual General Meeting of shareholders. Details of the proposed remuneration are outlined in the notice of the Annual General Meeting. Each fee will be completed by a separate resolution in accordance with best practice. A fee is being proposed in terms of Resolution 2.12 for payment to S Botha as Chairman of GBK Restaurants Limited.

A summary of the directors’ fees paid is set out in Note 28 in the AFS.



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Gender pay gap legislation: GBK UKIn the UK, Gender Pay Reporting is a regulation under the Equality Act 2010. With effect from 4 April 2018, all UK employers with 250 or more employees are required to publish statistics relating to the pay rates and pay gaps of their male and female workforce. The data detailed below is derived from those employed on 5 April 2017 and excludes our operations in Ireland.

• Mean average pay gap: 12.26% • Median average pay gap: 12.79% • The proportion of male and female employees according

to quartile pay bands is: • Upper quartile: 33% women/67% men • Upper middle quartile: 40% women/60% men • Lower middle quartile: 48% women/52% men • Lower quartile: 64% women/36% men • 23% of male employees received a bonus compared to

13% of female employees

While our gap is below the UK average national median pay gap of 18.4% (April 2017), we are committed to continuing to ensure that fairness and equality are at the centre of GBK’s business. In this regard we recognise that we have a responsibility to attract more women into managerial positions as well as to provide clear career pathways to achieve those top positions.

www.GBK.co.uk https://bit.ly/2IrJQdx

Other employeesThe 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 are subject to the terms of wage agreements and enjoy a ‘basic plus benefits’ remuneration scheme whereby Famous Brands contributes to their provident fund. They also qualify for a guaranteed bonus equal to a thirteenth cheque.

Famous Brands remains committed to equitable and competitive pay practices.

In South Africa, we conduct pay audits in terms of the Equal Pay for Work of Equal Value code of good practice under the Employment Equity Act 1998 (as amended). In the UK, we conduct gender pay audits under the terms of the Equality Act 2010.

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Directors’ report

The directors have pleasure in submitting their report for the year ended 28 February 2018.

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 restaurant brands represented by a network of 2 853 restaurants across South Africa, the rest of Africa, the United Kingdom, and the Middle East, underpinned by substantial Logistics and Manufacturing operations.

Directors’ responsibilities The responsibilities of the Company’s directors are detailed in the Annual FinancialFinancial Statements (AFS).

Financial statements and results The Group’s results and financial position are reflected on pages 80 to 94.

Impairments and provision for property expenses A decision has been taken by the Board of Directors of Famous Brands (the Board) to recognise the following amounts in relation to the Company’s investment in GBK Restaurants Limited (GBK), a wholly owned subsidiary incorporated in the United Kingdom:

• an impairment of intangible assets at Group level of R304 million (2017: Rnil)

• an impairment of property, plant and equipment at GBK of R69 million (2017: Rnil)

• a provision for property-related expenses at GBK of R33 million (2017: Rnil).

Corporate governance The Governance report is set out on pages 58 to 64 of this document.

King IV Report on Corporate Governance (King IV)King IV was published on 1 November 2016 and is effective for year-ends commencing on or after 1 April 2017. However, the JSE requires the application and disclosure of the King IV corporate governance amendments on all documents, including annual reports, published on or after 1 October 2017. The necessary disclosures in this regard are included in the Governance report as set out on page 58 of this document.

Tangible and intangible assets Movements in the Group’s tangible and intangible assets are set out in Note 1 and Note 2 in the AFS.


Dividends Following the acquisition of a number of businesses in the 2017 financial year, undertaken to meet robust growth targets, the Group’s gearing is substantially higher than in prior years. In the interim results announcement published on 30 October 2017, it was advised that the Board and management were reviewing the options available to ensure that the allocation of capital reserves would optimise the return on investment for shareholders in the future. In this light and following a capital structure review to ensure appropriate levels of debt and prudent capital allocation practices, the Board has resolved that no dividend is declared for the period under review.

Share capital The authorised and issued share capital of the Company at 28 February 2018 is set out in Note 10 in the AFS.


Issued during the yearThe Company issued 115 000 (2017: 50 000) ordinary shares for a cash subscription of R14 million (2017: R6 million) to participants of the 2012 Famous Brands Share Incentive Scheme.

Shareholder spread and material shareholders In terms of the JSE Listings Requirements paragraphs 3.37 and 4.28 (e), Famous Brands complies with the minimum shareholder spread requirements, with 89% (2017: 65%) of ordinary shares being held by the public at 28 February 2018. Details of the Company’s shareholder spread and material shareholders are set out on page 95.

Staff Share Incentive Scheme Details are reflected in Note 29 in the AFS.



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Directors and Company Secretary The names of the directors and the Company Secretary at the date of this report are detailed on the inside back cover of this document.

Changes to the BoardThe following Board changes took place during the period:

• Resignation of Mr RM Kgosana, independent non-executive director (effective 29 September 2017)

• Appointment of Mr CH Boulle as interim chairman of the Audit Committee (effective 2 October 2017)

• Retirement of Messrs Panagiotis (Peter) Halamandaris, Theofanis Halamandaris and Periklis Halamandaris (effective 9 November 2017)

• Appointment of Mr Nicolaos (Nik) Halamandaris as a non-independent non-executive director (effective 9 November 2017)

• Appointment of Ms Emma Mashilwane as an independent non-executive director (effective 1 December 2017)

• Retirement of Mr Kevin Hedderwick, independent non-executive director (effective 16 January 2018)

• Re-appointment of Mr Ian Isdale as Company Secretary (effective 1 March 2018 to 28 February 2019).

Special resolutions The special resolutions passed by the Company at its Annual General Meeting held on 28 July 2017 are detailed on page 79 of the 2017 IAR.

At the next AGM to be held on 27 July 2018 shareholders will be requested to approve special resolutions detailed on pages 3 to 5 of the Notice of Annual General Meeting of Shareholders and summarised results.


Events after the reporting period In 2005 the Group acquired Trufruit Pty Limited, to produce fruit juice in various formats for the Group’s restaurant network and third-party customers. The business continued to be managed by the founder, Evan Antel. Subsequent to the year ended 28 February 2018, and with effect from 1 April 2018, the Group concluded a joint venture agreement with Mr Antel, whereby a 30% stake in the business was sold back to him. Mr Antel will manage the new entity, Coolsite Trading Pty Limited. The nature of business will remain unchanged. The transaction outlined will not have a material impact on the performance of the Group.

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Audit and Risk Committee 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.

Composition of the Audit and Risk Committee • Mr CH Boulle (appointed 2 October 2017 as Interim Chairman) • Mr NJ Adami • Mr RM Kgosana (resigned 29 September 2017) • Ms TE Mashilwane (appointed 1 December 2017) • Ms T Skweyiya.

Responsibilities of the Audit and Risk CommitteeDuring the financial year ended 28 February 2018 the Audit and Risk Committee met on three occasions. The attendance at the Audit and Risk Committee meetings is set out on page 64 of this document.

In addition to the duties set out in the Audit and Risk Committee’s charter the Audit and Risk Committee carried out its functions, inter alia, as follows:

• nominated the re-appointment of Deloitte & Touche as the registered independent auditor after satisfying itself through enquiry that Deloitte & Touche and Ms S Nelson are independent as defined in terms of the Companies Act of South Africa and Independent Regulatory Board for Auditors

• determined the terms of engagement and fees to be paid to Deloitte & Touche

• ensured that the appointment of Deloitte & Touche complied with the legislation relating to the appointment of auditors

• considered the tenure of Deloitte & Touche and the engagement partner and deem it appropriate

• considered the appropriateness of the other auditors engaged to perform audits within the Group, being Rees Pollock Chartered Accountants in the UK and PKF Botswana

• understood and assessed the procedures performed by Deloitte & Touche to place reliance on the work performed by the other auditors

• reviewed the external auditors’ report on the year-end audit and the key audit matters

• reviewed the internal audit reports and processes • reviewed and approved the internal audit business plan,

budget and audit plan • annual review and approval of the Internal Audit Charter • annual review and approval of the Audit and Risk Committee

charter • reviewed the IT governance • reviewed an assessment prepared by management of the

going concern status of the Company and made recommendations to the Board. The Committee concurs that the adoption of the going concern premise in the preparation of the financial statements is appropriate

• reviewed the financial and general covenants applicable to the Group based on the current lending structure and the current capital structure, which was found to have been complied with and appropriate

• evaluated and reported to the Board on the effectiveness of risk management controls and governance processes

• reviewed and recommended the short and long-form announcements to the Board for approval

• reviewed and recommended the interim and Annual Financial Statements to the Board for approval

• considered the appropriateness of the accounting policies adopted and changes thereto

• considered accounting treatments, significant unusual transactions and key accounting judgements

• reviewed and recommended the Integrated Annual Report to the Board for approval

• considered the reports of the internal auditor and external auditor on the Group’s systems of internal control including financial controls, business risk management and maintenance of effective internal control systems

• received assurance that proper and adequate accounting records were maintained and the systems safeguard the assets against unauthorised use or disposal thereof.

Based on the above, the committee formed the opinion that there were no material breakdowns in internal control, including financial control, business risk management and maintenance of effective material control systems.

The Audit and Risk Committee is satisfied with the experience and expertise of the Group Financial Director; and the competence, qualification and experience of the Company Secretary.

The Audit and Risk Committee is satisfied with the competence of the Head of Internal Audit.

Key accounting judgement areasIn considering key accounting judgement areas, the Audit and Risk Committee considered the key audit matters as per below:

Impairment of GBK goodwill and indefinite life intangible assetsThe Audit and Risk Committee spent time understanding the significant estimates and judgements in the valuation model of the GBK cash-generating unit. The committee is satisfied that the impairment of R304 million recognised results in the goodwill and the indefinite life intangible asset being reflected at its expected recoverable amount.

Impairment assessment of property, plant and equipment of GBK storesThe GBK business has stores, which have not performed to the expected level and the property, plant, and equipment is required to be assessed for impairment. Management have applied


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78

judgement in assessing the store portfolio and the recoverability of the assets. An impairment of R69 million has been recognised. The committee is satisfied with the impairment recognised and disclosure thereof.

Completeness and valuation of lease obligations and onerous contracts associated with leases in GBKGBK stores has obligations related to contracts where the costs of meeting the contracts exceed the expected economic benefits. Management have applied judgement and estimates in calculating the provision. The committee is satisfied with the value of the provision for property expenses raised in the financial statements.

The Audit and Risk Committee has further considered the remaining significant judgements and sources of estimation

uncertainty per Accounting Policy Note 4 in the AFS and is satisfied that appropriate judgement has been made and processes followed.

The Audit and Risk Committee recommended the Annual Financial Statements for the year ended 28 February 2018 for approval to the Board. The Board has approved the Annual Financial Statements which will be open for discussion at the forthcoming annual general meeting of shareholders.

CH BoulleInterim Chairman of the Audit and Risk Committee

22 June 2018

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Summarised consolidated statement of financial positionas at 28 February 2018

Note2018R000

2017R000

ASSETSNon-current assets 3 983 129 4 315 513 Property, plant and equipment 5 1 339 789 1 397 601 Intangible assets 6 2 547 845 2 818 755 Investments in associates 80 926 83 083 Deferred tax 14 569 16 074 Current assets 1 922 662 1 570 940 Inventories 436 102 454 656 Current tax assets 99 132 38 174 Trade and other receivables 670 440 649 290 Cash and cash equivalents 716 988 428 820

Total assets 5 905 791 5 886 453

EQUITY AND LIABILITIESEquity attributable to owners of Famous Brands Limited 1 505 598 1 383 509 Non-controlling interests 126 429 101 805

Total equity 1 632 027 1 485 314

Non-current liabilities 3 014 460 3 407 380Borrowings 14 2 513 489 2 740 744 Derivative financial instruments 32 370 196 469 Lease liabilities 86 355 80 122 Deferred tax 382 246 390 045 Current liabilities 1 259 304 993 759Non-controlling shareholder loans 7 500 22 130 Derivative financial instruments 159 555 23 381 Lease liabilities 11 125 6 548 Trade and other payables 770 720 790 891 Provisions 7 32 851 –Shareholders for dividends 2 221 2 221 Current tax liabilities 8 068 10 109 Borrowings 14 267 071 114 853 Bank overdrafts 193 23 626

Total liabilities 4 273 764 4 401 139

Total equity and liabilities 5 905 791 5 886 453


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Summarised consolidated statement of profit or loss and other comprehensive incomefor the year ended 28 February 2018

Note2018R000

2017R000

%change

Revenue 7 023 095 5 720 363 23Cost of sales (3 254 591) (2 948 744)

Gross profit 3 768 504 2 771 619 36Selling and administrative expenses (2 878 246) (1 833 571) 57

Operating profit before non-operational items 890 258 938 048 (5)Non-operational items 9 (372 592) (120 755)

Operating profit including non-operational items 517 666 817 293 (37)Net finance costs (251 345) (131 557)

Finance costs (304 687) (184 389)Finance income 53 342 52 832

Share of profit of associates 3 906 4 314

Profit before tax 270 227 690 050 (61)Tax (206 876) (235 246)

Profit for the year 63 351 454 804 (86)

Other comprehensive income, net of tax:Exchange differences on translating foreign operations* 21 440 (245 603)

Pre-tax exchange differences on translating foreign operations 22 754 (252 681)Tax effect on translating foreign operations (1 314) 7 078

Movement in hedge accounting reserve* (3 920) (2 704)Effective portion of fair value changes of cash flow hedges (5 445) (3 867)Tax on movement in hedge accounting reserve 1 525 1 163

Total comprehensive income for the year 80 871 206 497

Profit for the year attributable to:Owners of Famous Brands Limited 21 618 413 747 (95)Non-controlling interests 41 733 41 057

63 351 454 804

Total comprehensive income attributable to:Owners of Famous Brands Limited 39 138 165 440 Non-controlling interests 41 733 41 057

80 871 206 497

Basic earnings per share (cents)Basic 8.1 22 414 (95)

Diluted 8.1 22 413 (95)

* This item may be reclassified subsequently to profit or loss.

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Summarised consolidated statement of changes in equityfor the year ended 28 February 2018

2018R000

2017R000

Balance at the beginning of the year 1 485 314 1 550 599 Issue of capital and share premium 13 635 6 121 Share-based payment charge to profit or loss 26 600 26 306 Put-options over non-controlling interests* 42 716 (73 233)Total comprehensive income for the year 80 871 206 497 Payment of dividends (17 182) (227 512)Non-controlling interest arising on business combination – 1 033 Change in ownership interests in subsidiaries 73 (2 929)Contingent consideration – (1 568)

Balance at the end of the year 1 632 027 1 485 314

* Related to put-options forfeited during the year (2017: related to put-options raised on non-controlling interests).


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2018R000

2017R000

Cash generated before working capital changes 1 135 121 931 852 Working capital changes (12 201) (136 590)

Decrease/(increase) in inventories 18 768 (91 118)Increase in trade and other receivables (12 730) (16 033)Decrease in trade and other payables (18 239) (29 439)

Cash generated from operations 1 122 920 795 262 Net interest paid (207 440) (84 628)Tax paid (274 386) (214 715)

Cash available from operating activities 641 094 495 919 Dividends paid (17 182) (227 164)

Net cash inflow from operating activities 623 912 268 755

Cash utilised in investing activitiesAdditions to property, plant and equipment (192 588) (282 440)Intangible assets acquired (38 531) (40 807)Proceeds from disposal of property, plant and equipment 29 171 10 004 Net cash outflow on acquisition of subsidiaries (2 589) (1 897 991)Net cash outflow on acquisition of associate – (50 573) Dividends received from associate 3 149 4 550

Net cash outflow utilised in investing activities (201 388) (2 257 257)

Cash flow from financing activitiesBorrowings raised – 2 484 979 Borrowings repaid (106 667) –Underwriting and participation fees paid on borrowings raised – (62 073)Repayment of amounts due to non-controlling shareholders (14 630) (2 315)Proceeds from issue of equity instruments of Famous Brands Limited 13 635 6 121 Acquired from non-controlling interests in subsidiaries – (2 929)

Net cash (outflow)/inflow from financing activities (107 662) 2 423 783

Net increase in cash and cash equivalents 314 862 435 281 Foreign currency effect (3 261) (35 971)Cash and cash equivalents at the beginning of the year 405 194 5 884

Cash and cash equivalents at the end of the period* 716 795 405 194

* Comprises cash and cash equivalents of R717 million (2017: R429 million) and bank overdrafts of R0.2 million (2017: R24 million).

Summarised consolidated statement of cash flowsfor the year ended 28 February 2018

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Primary (business units) and secondary (geographical) segment reportfor the year ended 28 February 2018

Note2018R000

2017R000

%change

RevenueBrands* 851 021 780 887 9Supply Chain 4 327 642 3 983 297 9

Manufacturing 2 850 530 2 300 418 24Logistics 3 779 812 3 415 746 11Eliminations (2 302 700) (1 732 867) 33

Corporate** 10 878 2 800

South Africa 5 189 541 4 766 984 9International 1 833 554 953 379 92

United Kingdom (UK) 1 580 947 704 182 125Rest of Africa and Middle East (AME) 252 607 249 197 1

Total 7 023 095 5 720 363 23

Operating profit before non-operational itemsBrands* 431 170 426 755 1Supply Chain 509 114 454 671 12Manufacturing 405 171 330 103 23Logistics 103 943 124 568 (17)

Corporate (49 873) (48 463)

South Africa 890 411 832 963 7International (153) 105 085 (100)

UK (44 671) 55 468 (181)AME 44 518 49 617 (10)

Total 890 258 938 048 (5)

UK (68 592) –Impairment 5 (68 592) –

Corporate (758 315) (483 244)Non-operational items, excluding impairment 9 – (100 755)Impairment 6 (304 000) (20 000)Net finance costs (251 345) (131 557)Share of profit of associates 3 906 4 314 Tax (206 876) (235 246)

Profit for the year 63 351 454 804 (86)

* Previously categorised as Franchising and Development.** Includes restaurant development revenue generated through a non-wholly owned subsidiary established during the year under review.


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Statistics and ratios

2018R000

2017R000

%change

Basic earnings per share (cents)Basic 22 414 (95)Diluted 22 413 (95)

Headline earnings per share (cents)Basic 393 428 (8)Diluted 392 426 (8)

Ordinary shares (000)in issue 99 977 99 862 weighted average 99 872 99 842 diluted weighted average 100 231 100 092 Operating profit margin (%) 12.7 16.4 Net/debt equity (%) 126 165 Net asset value per share (cents) 1 632 1 487

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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 interest in associates.

1. Statement of complianceThese summarised consolidated financial statements have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board in issue and effective for the Group at 28 February 2018, and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by Financial Reporting Standards Council, and as a minimum contains the information required by IAS 34: Interim Financial Reporting, the JSE Listings Requirements, and the Companies Act of South Africa.

2. Basis of preparationThe 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

The Group's audited Annual Financial Statements and the summarised consolidated financial statements as at and for the year ended 28 February 2018 were prepared on the going concern basis. The accounting policies applied in the presentation of the summarised consolidated financial statements are in terms of IFRS and are consistent with those applied for the year ended 28 February 2017, except for new standards that became effective for the Group's financial period beginning 1 March 2017, refer Note 3.

The consolidated financial statements were prepared on the historical cost basis, under the supervision of Kelebogile (Lebo) Ntlha, Group Financial Director.

3. Changes in accounting policiesThe Group has adopted all the new, revised or amended accounting standards which were effective for the Group from 1 March 2017, none of which had a material impact on the Group.

2018R000

2017R000

4. Capital expenditure and commitmentsInvested 231 119 326 274Property, plant and equipment 192 588 285 467Intangible assets 38 531 40 807 Authorised, not yet contracted* 205 648 426 163 Property, plant and equipment 178 346 419 760 Intangible assets 27 302 6 403

* Authorised capital expenditure has reduced in line with the revised GBK store roll-out plan.


Notes to the summarised consolidated financial statementsfor the year ended 28 February 2018 >>>Famous Brands Integrated Annual Report 2018

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2018R000

2017R000

5. Property, plant and equipmentOpening balance 1 397 601 286 448 Additions 192 588 285 467 Acquired in business combinations – 992 605 Government grant – (2 992)Foreign currency translation 21 102 (64 489)Disposals (21 496) (5 091)Depreciation (181 414) (94 347)Impairment (68 592) –Closing balance 1 339 789 1 397 601

ImpairmentAn impairment of R69 million (2017: Rnil) was recognised during the year under review related to various categories of property, plant and equipment at a GBK restaurant level.

To determine the impairment to be processed, the affected property, plant and equipment was valued using value-in-use calculations at a site level. The recoverable amount for sites where impairment indicators were identified was determined to be R18 million. The key assumptions used in calculating the recoverable amount include the discount rate and the long-term growth rate. The long-term (beyond 10 years) growth rate is 2.2%, but some sites with leases expiring in less than 10 years have varied growth rate assumptions which range between 3% and 6%. The discount rate used in measuring value-in-use was 5% per annum. Refer to page 33 for events leading to the impairment. Judgement has been exercised in determining which stores to impair. Should other stores’ performance not be in line with that forecast, additional impairments may arise. Similarly, if impaired stores perform better than expected, the impairment recognised may be reversed.

Sensitivity analysisAn increase/(decrease) of 1% in the discount rate would result in an increase/(decrease) in the impairment charge of R15 million (R18 million). An increase/(decrease) in the long-term growth rate of 1% in the forecast profits will result in a decrease in the impairment charge of R6 million (increase R6 million).

2018R000

2017R000

6. Intangible assetsOpening balance 2 818 755 1 095 888 Additions 38 531 40 807 Acquired in business combinations – 1 888 402 Foreign currency translation 21 920 (186 787)Disposals (5 963) (3 955)Amortisation (21 398) (15 600)Impairment (304 000) –Closing balance 2 547 845 2 818 755

ImpairmentThe GBK business acquired in the prior period was assessed as a cash-generating unit. The goodwill amounting to R40 million (2017: R342 million) and brand name amounting to R1.38 billion (2017: R1.37 billion) which arose on the acquisition of the business was allocated to this cash-generating unit’s carrying amount for the purpose of its impairment assessment. The recoverable amount of the cash-generating unit was determined on the basis of fair value less cost to sell, which amounted to R1.9 billion. The fair value used in determining the recoverable amount of the cash-generating unit is based on an income approach valuation method including a present value discounting technique using level 3 inputs. Key assumptions used in the valuation includes the probability that the cash-generating unit will achieve the set profit forecasts which includes like-for-like growth rates, the discount rate and the store roll-out plan.

Like-for-like growth rates have been based on past performance adjusted for current and expected economic conditions. The discount rate is determined based on current market rates and observable input, adjusted for risk associated with the business. The future profits were forecast over a period of 10 years applying like-for-like sales growth rates which start at 0% increasing to 3% over the 10-year period. A long-term growth rate of 2.2% per annum was set for the years subsequent to the forecast. A discount rate of 8.0% (2017: 9.3%) was applied.

An impairment of R304 million was recognised during the current year for the cash-generating unit. The impairment was recognised as a result of the unexpected poor GBK performance and continued subdued market in the UK.

Sensitivity analysis on fair value less costs to sell• An increase/(decrease) of 1% in the discount rate will result in a decrease/(increase) in the recoverable amount of R299 million

(R393 million). • A decrease/(increase) in the like-for-like growth of 1% in the forecast sales will result in a decrease/(increase) in the recoverable

amount of R637 million (R663 million). • An increase/(decrease) of one store per year in the roll-out plan results in an increase/(decrease) in the recoverable amount of

R59 million (R53 million).

Changes in key assumptions as well as the actual cash flows achieved compared to those forecast can result in further impairments in the GBK business. The model is reliant on a certain level of economic recovery post-Brexit.

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2018R000

2017R000

7. ProvisionsOpening balance – –Amounts raised during the year 32 851 –

Closing balance 32 851 –

The provisions relate to property-related expenses at GBK restaurant level.

The provision has been made for the lower of the costs of closure or the cost of continued operation of certain stores in GBK. This amounted to R33 million (2017: Rnil). The key assumptions in determining the provision include the expected time until the lease can be assigned and the discount to standing rent which will have to be paid in order to attract an assignee.

Judgement has been exercised in determining which stores require property-related provisions. Should other stores’ performance not be in line with that forecast, additional provisions may be required. Similarly if the identified stores perform better than anticipated, the provision raised may be reversed.

8. Basic and headline earnings per share

2018 2017

Gross amount

R000

Income tax

R000Net

R000

Gross amount

R000

Income tax

R000Net

R000

8.1 Basic earnings per shareProfit attributable to equity holders of Famous Brands Limited 21 618 – 21 618 413 747 – 413 747

Basic and diluted earnings 21 618 – 21 618 413 747 – 413 747

Basic earnings per share (cents)Basic 22 414 Diluted 22 413

2018 2017

Note

Gross amount

R000

Income tax

R000Net

R000

Gross amount

R000

Income tax

R000Net

R000

8.2 Headline earnings per shareBasic earnings 8.1 21 618 – 21 618 413 747 – 413 747 Adjustments: 370 881 479 371 360 12 829 268 13 097 Profit on disposal of property, plant and equipment (1 711) 479 (1 232) (958) 268 (690)Gain on bargain purchase – – – (6 213) – (6 213)Impairment 372 592 – 372 592 20 000 – 20 000

Headline earnings and diluted headline earnings 392 499 479 392 978 426 576 268 426 844

Headline earnings per share (cents)Basic 393 428

Diluted 392 426

Notes to the summarised consolidated financial statements continuedfor the year ended 28 February 2018 >>>Famous Brands Integrated Annual Report 2018

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2018R000

2017R000

9. Non-operational itemsImpairment* 372 592 20 000 Arising from business acquisitions – 100 755

Derivative loss on call option utilised to hedge purchase price – 33 253 Foreign exchange loss on initial recognition of investment – 23 295 Professional fees – 50 420 Gain on bargain purchase – (6 213)

372 592 120 755

* The impairment is not deductible for tax purposes. This has impacted the Group’s effective tax rate.

10. Related-party transactionsThe 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.

11. Financial instrumentsAccounting classifications and fair valuesThe table below sets out the Group's classification of each class of financial assets and liabilities, as well as a comparison to their fair values. The different fair value levels are described below:

Level 1: quoted prices (adjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date.

Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: unobservable inputs for the asset or liability.

Level

2018 Carrying amount

R000

2018 Fair

valueR000

2017Carrying amount

R000

2017 Fair

valueR000

Financial assetsLoans and receivables:Trade and other receivables 568 514 568 514 518 116 518 116Cash and cash equivalents 716 988 716 988 428 820 428 820

1 285 502 1 285 502 946 936 946 936

Financial liabilitiesMeasured at amortised cost:Trade and other payables 599 941 599 941 648 162 648 162 Shareholders for dividends 2 221 2 221 2 221 2 221 Lease liabilities 7 446 7 446 6 290 6 290Non-controlling shareholder loans 7 500 7 500 22 130 22 130 Borrowings 2 780 560 2 780 560 2 855 597 2 855 597 Bank overdraft 193 193 23 626 23 626 Fair value through profit or loss:Derivative financial instruments (put options over non-controlling interests) 3 176 186 176 186 211 239 211 239 Derivative financial instruments (foreign currency swaps and foreign exchange contracts) 2 1 028 1 028 102 102 Designated as hedge itemsDerivative financial instruments (interest-rate swaps) 2 14 711 14 711 8 509 8 509

3 589 786 3 589 786 3 777 876 3 777 876

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11. Financial instruments continuedLevel 3 sensitivity informationThe fair values of the level 3 financial liabilities of R176 million (2017: R211 million) were determined by applying an income approach valuation method including a present value discount technique. The fair value measurement includes inputs that are not observable in the market. Key assumptions used in the valuation of these instruments include the probability of achieving set profit targets and the discount rates applied. An increase/(decrease) of 1% in the discount rate would result in a decrease/(increase) of R3 million (2017: R7 million). An increase/(decrease) of 10% in the profit forecasts would result in an increase/(decrease) of R17 million.

Movements in level 3 financial instruments carried at fair valueThe following table illustrates the movements during the year of level 3 financial instruments carried at fair value:

2018 Carrying amount

R000

2018 Fair

valueR000

2017Carrying amount

R000

2017 Fair

valueR000

Put options over non-controlling interests:Carrying value at beginning of the year 211 239 211 239 124 821 124 821 Initial recognition in equity for new acquisitions – – 73 233 73 233 Unwinding of discount 13 481 13 481 14 813 14 813 Derecognition in equity (42 716) (42 716) – –Remeasurements (5 818) (5 818) (1 628) (1 628)

Carrying value at end of the year 176 186 176 186 211 239 211 239

2018R000

2017R000

12. Business combinationsSummary of cash outflow on acquisition of subsidiariesBC Hospitality (Pty) Ltd (Lupa Osteria) – 3 958 Chilango (Pty) Ltd (Salsa Mexican Grill)* 2 589 4 985 Lamberts Bay Foods Limited – 73 530 GBK Restaurants Limited (GBK) – 1 815 518

Total cash outflow on acquisition of subsidiaries 2 589 1 897 991

* Relates to contingent consideration.


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12. Business combinations continued12.1 Purchase price allocation

There were no business combinations during the year under review. Details of the fair value of identifiable net assets acquired in the prior year are set out below:

2017

Lupa Osteria

R000

Salsa Mexican

Grill R000

Lamberts Bay

Foods R000

Gourmet Burger

Kitchen* R000

Acquisition date 1 May 2016 31 May 2016 1 Aug 2016 7 Oct 2016Interest acquired 51% 51% 100% 100%Fair value of assets and liabilities acquiredProperty, plant and equipment – 2 566 48 188 941 813 Intangible assets – – 16 277 1 495 809 Inventory – 137 38 361 25 034 Trade and other receivables – 34 36 932 122 622 Provision for doubtful debt – – – (14 332)Receivables from shareholders – – – –Cash and cash equivalents 42 1 197 8 11 275 Current tax assets – – 1 314 –Borrowings – – – (427 301)Deferred lease liabilities – – – –Deferred tax – – (16 218) (315 146)Trade and other payables 89 (1 952) (45 110) (375 471)Bank overdraft – – (3 538) –Current tax liabilities (5) – – (2 130)Amounts due to shareholders – – – –

Net assets acquired 126 1 982 76 213 1 462 173 Non-controlling interests measured at their share of the fair value of net assets (62) (971) – –

Amount capitalised 64 1 011 76 213 1 462 173

Goodwill/(bargain purchase price gain) 3 936 7 760 (6 213) 364 620 Purchase price 4 000 8 771 70 000 1 826 793 Contingent consideration – (2 589) – –Cash and cash equivalents (42) (1 197) 3 530 (11 275)

Cash outflow on acquisition of subsidiary 3 958 4 985 73 530 1 815 518

* Transaction costs related to the GBK acquisition are disclosed in non-operating items (refer note 9).

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12. Business combinations continued12.2 Goodwill and gain on bargain purchase

There was no goodwill arising from the year under review. Goodwill recognised in the prior year arose from anticipated scale and merger benefits related to franchising, manufacturing and logistics capability.

Gain on bargain purchase arising from the Lamberts Bay Foods acquisition is attributable to fair value adjustments relating to Property, plant and equipment and Intangible assets.

12.3 Performance of acquired businessesThere were no businesses acquired during the year under review. The table below sets out the performance of businesses acquired in the prior year.

2017

Lupa Osteria

R000

Salsa Mexican

GrillR000

Lamberts Bay Foods

R000

Gourmet Burger

KitchenR000

Gourmet Burger

KitchenGBP000

Results since acquisition to reporting dateRevenue 3 768 15 029 165 721 598 848 35 241 Operating profit/(loss) 95 3 678 (339) 36 926 2 173

Proforma results from beginning of the reporting period to the reporting dateRevenue 3 971 19 498 271 429 1 532 785 81 014 Operating profit/(loss) 173 4 535 (4 765) 67 015 3 542

13. UK business segmental resultsThe table below sets out the performance of the UK business segment in GBP and ZAR respectively.

2018 2017 % change

Revenue £000 92 064 40 722 125Operating (loss)/profit £000 (2 689) 3 217 (184)Operating (loss)/profit margin* % (2.9) 7.9 (11)

Revenue R000 1 580 947 704 182 125Operating (loss)/profit R000 (44 671) 55 468 (181)Operating (loss)/profit margin* % (2.8) 7.9 (11)

* The difference in operating margin is due to translation of property-related expenses at transaction date rate versus average rate.


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14. Borrowings

2018 2017 2018 2017

CurrencyMaturity

date Nature

Interest rate

Margin % Rate % % R000 R000

UnsecuredLong-term borrowings 2 513 489 2 740 744 Short-term portion of borrowings 267 071 114 853

2 780 560 2 855 597

Interest is paid quarterly in arrears.The Company has unlimited borrowing powers in terms of its Memorandum of Incorporation.Terms of repaymentSyndicated facility: 3-year bullet ZAR Sep 19 variable 2.35

3-month JIBAR 7.16 7.36 720 000 720 000

Syndicated facility: 4-year bullet ZAR Sep 20 variable 2.55

3-month JIBAR 7.16 7.36 720 000 720 000

Syndicated facility: 5-year amortising ZAR Sep 21 variable 2.45

3-month JIBAR 7.16 7.36 853 333 960 000

2 293 333 2 400 000 Syndicated facility: revolving credit* GBP 11 Oct 19 variable 2.15

3-month LIBOR 0.52 0.34 422 799 485 553

Syndicated facility: revolving credit* GBP 11 Oct 19 variable 2.15

1-month LIBOR 0.49 65 046 –

Transaction costs (37 727) (55 035)Interest accrued 37 109 25 079

2 780 560 2 855 597

Maturity analysis – capitalPayable within one year 267 071 114 853 Payable between two and five years 2 513 489 2 740 744

2 780 560 2 855 597

* Relates to the £30 million facility referred to below.

Sensitivity analysisA change of 1% in interest rates at the reporting date would have increased/(decreased) profit or loss by R28 million (2017: R10 million).

Interest risk managementThe Group utilises interest rate swap contracts to hedge its exposure to the variability of cash flows arising from unfavourable movements in interest rates.

FacilitiesTotal ZAR overdraft facility in place: R80 million (2017: R190 million). Unutilised portion at year-end: R80 million (2017: R166 million).

Total GBP borrowings facility in place: £30 million (2017: £30 million). Unutilised portion at year-end: £nil (2017: £nil).

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Notes to the summarised consolidated financial statements continuedfor the year ended 28 February 2018

14. Borrowings continuedGuaranteesFamous Brands Limited, Famous Brands Management Company (Pty) Ltd, Mugg and Bean Franchising (Pty) Ltd, Venus Solutions Limited, Famous Brands UK Limited, GBK Franchises Limited, Lamberts Bay Foods Limited, Famous Brands Logistics Company (Pty) Ltd, GBK Restaurants Limited, Gourmet Burger Kitchen Limited and GBK Retail Limited have guaranteed in terms of the syndicated loan agreement: • Punctual performance by the Group of amounts due in the syndication agreement• Immediate payment of amounts due which the Group has not paid• To indemnify the finance parties against any cost, loss or liability it incurs as a result of the Group not paying amounts that are

due.

Borrowing restrictionsThere are certain restrictions on the financial activities of other covenant subsidiaries within the Group, who are not obligors, such as restrictions on the ability to raise additional financing.

Underwriting and Participation feesThe unamortised portion of underwriting and participation fees paid have been recognised in the above long-term borrowings balance. The amortised portion is included within finance costs.

15. Capital managementThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern, to provide sustainable returns for shareholders, benefits for other stakeholders and to maintain, over time, an optimal structure to reduce the cost of capital.

The capital structure of the Group consists of cash and cash equivalents, borrowings (note 14) and equity as disclosed in the statement of financial position. There are no externally imposed capital requirements.

Financial covenantsThe Group's borrowings (refer note 14) are subject to the following financial covenants with which the Group is in compliance:

2018 2017

Gross debt/EBITDA* <3.00 <3.25Interest cover >3.25 >3.00Free cash flow to debt service >1.20 >1.20

* EBITDA excludes non-operational items.

GearingThe Group's gearing ratio is set out below:

2018R000

2017R000

Borrowings 2 780 560 2 855 597 Bank overdrafts 193 23 626 Cash and cash equivalents (716 988) (428 820)

Net debt 2 063 765 2 450 403 Equity 1 632 027 1 485 314

Gearing ratio** 126% 165%

** Calculated as net debt divided by equity.

16. Contingent liabilities• The Company and its South African subsidiaries have issued an unlimited suretyship in favour of FirstRand Bank Limited to

secure the banking facilities entered into by certain subsidiary companies• Guarantees issued by banks in favour of trade creditors totalled R7 million (2017: R9 million)• The Group’s borrowings are unsecured, no pledges have been issued• Refer to note 14 for other guarantees and facilities in the Group.

17. Subsequent eventsIn 2005 the Group acquired Trufruit Pty Limited, to produce fruit juice in various formats for the Group’s restaurant network and third-party customers. The business continued to be managed by the founder, Evan Antel. Subsequent to the year ended 28 February 2018, and with effect from 1 April 2018, the Group concluded a joint venture agreement with Mr Antel, whereby a 30% stake in the business was sold back to him. Mr Antel will manage the new entity, Cool Site Trading Pty Limited. The nature of business will remain unchanged.


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Analysis of ordinary shareholders for the year ended 28 February 2018

Shareholder spread

2018 2017

Numberof share-holdings

% oftotal

share-holdings

Numberof shares

% ofissuedcapital

Numberof share-holdings

% oftotal

share-holdings

Numberof shares

% ofissuedcapital

1 – 10 000 6 690 94.17 3 826 686 3.83 10 326 95.10 10 780 911 10.8010 001 – 50 000 270 3.80 6 095 321 6.10 359 3.31 7 806 411 7.8250 001 – 100 000 42 0.60 3 003 218 3.00 56 0.52 3 803 295 3.81100 001 – 1 000 000 82 1.15 26 744 202 26.75 104 0.96 30 157 526 30.20Over 1 000 000 20 0.28 60 308 008 60.32 13 0.12 47 314 292 47.38

Total 7 104 100.00 99 977 435 100.00 10 858 100.00 99 862 435 100.00

Distribution of shareholdersIndividuals 5 816 81.87 24 716 778 24.72 8 424 77.58 29 742 785 29.78Insurance companies 10 0.14 328 100 0.33 12 0.11 203 682 0.20Investment trusts 555 7.81 9 259 598 9.26 1 333 12.28 11 577 385 11.59Other companies and corporate bodies 723 10.18 65 672 959 65.69 1 089 10.03 58 338 583 58.42

Total 7 104 100.00 99 977 435 100.00 10 858 100.00 99 862 435 100.00

Shareholder typeNon-public shareholders 9 0.13 10 908 120 10.91 17 0.16 34 703 520 34.75Directors and associates 9 0.13 10 908 120 10.91 13 0.12 23 450 356 23.48Government Employees Pension Fund (holders > 10%) – – – – 4 0.04 11 253 164 11.27Public shareholders 7 095 99.87 89 069 315 89.09 10 841 99.84 65 158 915 65.25

Total 7 104 100.00 99 977 435 100.00 10 858 100.00 99 862 435 100.00

Fund managers greater than 5% of the issued sharesCoronation Fund Managers 14 448 186 14.45 6 075 661 6.08Public Investment Corporation 9 022 596 9.02 8 839 996 8.85LGM Investments 8 367 790 8.37

Total 31 838 572 31.84 14 915 657 14.93

Beneficial shareholders greater than 5% of the issued shares (excluding directors)Government Employees Pension Fund 10 230 408 10.23 11 253 164 11.27Coronation Fund Managers 8 492 531 8.49 LGM Investments 7 755 676 7.76 Halamandaris Theofanis Mr 7 017 598 7.02

Total 33 496 213 33.50 11 253 164 11.27

Total number of shareholdings 7 104 10 858

Total number of shares in issue 99 977 435 99 862 435

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Shareholder diary

FINANCIAL YEAR-END 28 February ANNUAL GENERAL MEETING 27 July 2018 REPORTS Announcement of annual results for the year ended 28 February 2018 24 May 2018Posting of the Integrated Annual Report for the year ended 28 February 2018 28 June 2018 Announcement of interim results for the half-year ended 31 August 2018 29 October 2018

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Administration

FAMOUS BRANDS LIMITED Incorporated in the Republic of South AfricaRegistration number: 1969/004875/06JSE share code: FBRISIN code: ZAE000053328

DIRECTORS NJ Adami, SL Botha (Independent Chairman), CH Boulle, N Halamandaris, JL Halamandres, DP Hele*, ET Mashilwane, K Ntlha*, BL Sibiya, T Skweyiya*Executive.

COMPANY SECRETARYIWM Isdale

REGISTERED OFFICE478 James Crescent, Halfway House, Midrand, 1685PO Box 2884, Halfway House, 1685Telephone: +27 11 315 3000Email: [email protected] address: www.famousbrands.co.za

TRANSFER SECRETARIESComputershare Investor Services Proprietary LimitedRegistration number: 2004/003647/07Rosebank Towers, 15 Biermann AvenueRosebank, 2196, South AfricaPO Box 61051, Marshalltown, 2107

SPONSORThe Standard Bank of South Africa LimitedRegistration number: 1969/017128/06

AUDITORSDeloitte & Touche

About Famous BrandsPerformance OverviewGovernance ReviewSummarised Consolidated Financial StatementsShareholder InformationFamous Brands Integrated Annual Report 2018

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Contact informationTel: +27 11 315 [email protected]

478 James CrescentHalfway House, South Africa, 1685

Famous Brands Integrated A

nnual Report 2018

integrated annual report 2018 - famousbrands.co.za · the performance of famous brands limited...

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