famous brands ar 2015 · as well as a quality solution to a wide range of consumers. our design and...

Contents

Flap About our Integrated Annual Report

IFC About Famous Brands

IFC Group profile

IFC Financial highlights

1 Highlights

2 Our business model

4 Our business approach

4 Supporting South Africa’s economic growth

6 Milestones

8 Our brands

10 Trading footprint and franchise network

12 Performance overview

14 Chairman’s statement

18 Group Chief Executive’s report

25 Value Added Statement

26 Performance at a glance

27 Six-year review

28 Strategic imperatives, Material issues and Sustainability

30 Strategic imperatives and Material issues

32 Our key relationships

34 Human Capital

36 Transformation

37 Corporate Citizenship

38 Safety, Health and the Environment

40 Governance and Remuneration

42 Board of Directors

44 Executive Leadership

46 Corporate Governance report

52 Remuneration report

53 Social and Ethics Committee’s report

54 Summarised consolidated financial statements and other information

56 Directors’ report

58 Audit and Risk Committee’s report

58 Company Secretary’s certificate

59 Approval of the summarised consolidated financial statements

60 Summarised consolidated financial statements

68 Shareholder spread

69 Shareholders’ diary

70 Notice to shareholders

75 Form of proxy

IBC Administration

MaterialityOur Integrated Annual Report focuses on information that is material to our business. It provides a concise overview of our performance, prospects and ability to create value for our key stakeholders on a sustainable basis. The 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.

AssuranceThe Board of Directors of the company (the Board), as assisted by the Audit and Risk Committee, is responsible for ensuring the integrity of the Integrated Annual Report. Accordingly, the Group applies the combined assurance model by using a combination of external and internal audit assurance, as well as assurance obtained from executive management. The audit opinion expressed by the external auditors on the Group’s Annual Financial Statements 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.

Introduction and scope of the reportWe are pleased to present our 2015 Integrated Annual Report. The report covers 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 for the year ended 28 February 2015.

Our Integrated Annual Report contains summarised consolidated financial statements for the year ended 28 February 2015. A full set of the Group’s audited 2015 Annual Financial Statements and the King Code of Corporate Governance for South Africa, 2009 (King III) checklist are available on the company’s website at www.famousbrands.co.za. Feedback on our Integrated Annual Report can be emailed to us on [email protected].

About our Integrated Annual Report

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.

Approval of the Integrated Annual ReportThe following reporting frameworks were applied and complied with in preparing this report:• The Companies Act of South Africa;• The Listings Requirements of the

JSE Limited (JSE Listings Requirements);

• King III;• International Financial Reporting

Standards (IFRS), in particular IAS 34 Interim financial reporting; and

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

The Board acknowledges its responsibility to ensure the integrity of this report, 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.

Santie BothaIndependent Chairman

Kevin HedderwickGroup Chief Executive

22 May 2015

Integrated Annual Report 2015

CELEBRATING 20 YEARSON THE JSE

About Famous Brands

Headline earnings per share (cents)

2010 2011 2012 2013 2014 2015

206 242339

278

406467

Operating profit up to R672 million

+19%Operating profit (Rm)

2010 2011 2012 2013 2014 2015

308 358466413

566672

Operating margin up to record high of

20.5%Headline earnings up to 467 cents per share

+15%

Group profile

Famous Brands Limited is a holding company listed on the JSE Limited under the category Consumer Services: Travel and Leisure, and is Africa’s largest branded food service franchisor. The company was listed in November 1994 at a price of R1 per share, equating to a market capitalisation of R25 million. The past two decades have witnessed the Group expand almost beyond recognition from the business it was then, comprising only the Steers brand and a limited Supply Chain component, to the enterprise it is now, with a market capitalisation in excess of R11 billion, positioned within the JSE’s top 100 companies. At 08 March 2015 Famous Brands’ vertically integrated business model comprised a portfolio of 25 brands represented by a franchise network of 2 545 restaurants across South Africa, Rest of Africa, the United Kingdom and the Middle East, underpinned by substantial Logistics and Manufacturing operations. The Group’s franchise brand portfolio is detailed on page 8.

Revenue (Rm)

2010 2011 2012 2013 2014 2015

1 685 1 8782 516

2 1562 826

3 283

Revenue up to R3.3 billion

+16%

Dividends per share (cents)

2010 2011 2012 2013 2014 2015

114155

250200

300355

Dividends per share up to 355 cents per share

+18%

Operating margin (%)

2010 2011 2012 2013 2014 2015

18.3 19.1 18.519.1 20.0 20.5

Financial highlights

Famous BrandsIntegrated Annual Report 2015

Page 1

Highlights

Group Brands

• 14th consecutive year of record turnover and profits

• Vision 2015 successfully executed

• Acquired 75% of Cater Chain Food Services*

• Subject to Botswanan Competition Commission approval, acquired controlling stake in Master Licence partner, Retail Group Botswana*

• Embarked on ambitious 2020 growth strategy

• Record number of new stores opened: 258

• Franchise network now in excess of 2 500 restaurants

• Successful launch of Total/Thrupps pilot model

• Debonairs Pizza opened the brand’s 500th restaurant

Logistics

• Implemented centralised demand planning function

• Rolled out centralised route planning programme

• Commissioned Famous Brands’ Crown Mines Distribution Centre*

Manufacturing

• Take-on of KwaZulu-Natal region’s bakery products

• Take-on of Wimpy bakery and choice meats products

• Commissioned automated pie plant in Nigeria

• Implementation of new Food Safety and Quality Management System based on latest international best practice

This report contains icons and cross-references

to assist the reader with navigating the

information contained in this document, and are

devised to prevent repetition in cases where an

item is referred to in more than one section.

The following icons relate to our strategy and material issues:

Brands

Manufacturing

Logistics

Africa and selected international markets

Transformation

People

Information technology

Environment

Potential growth opportunities

* Subsequent event.

About Famous Brands continued

Our business model

Brand capabilities

Over the years we have deliberately embarked upon a strategy whereby we have developed a portfolio of brands, all of which are designed to be best in their class, offering a compelling business proposition to our franchise partners as well as a quality solution to a wide range of consumers.

Our Design and Development division provides a full turnkey service to all of our brands and their respective franchise partners.

Our central Marketing division is charged with ensuring that brands are properly positioned, are relevant and remain contemporary. All of our brands are supported via a wide range of through-the-line strategic marketing initiatives.

Below-the-line marketing services are provided by Sauce Advertising which is an associate company.

Our brand portfolio comprises (refer page 8):

• Steers• Wimpy• Debonairs Pizza• FishAways• Mugg & Bean• Milky Lane• Europa• Fego Caffé• Net Café• House of Coffees• Coffee Couture• Giramundo• Vovo Telo

South Africa

• Steers• Wimpy • Debonairs Pizza• FishAways• Mugg & Bean• Milky Lane

• WakaberryTM

• Europa• Fego Caffé• Mr Bigg’s• Pubs:

– KEG – O’Hagan’s

Africa and selected international markets

Franchise network and Retail

Retail

The core thrust of this division is the extension of the Group’s trademarks into the FMCG retail and wholesale markets. A secondary market comprises supplying selected food service and catering customers where spare manufacturing capacity exists to do so.

The brands through which we compete in the retail and food services space include:

• Steers • Wimpy • TruFruit • Aqua Monte• Mugg & Bean • Milky Lane • Baltimore

• tashas• Turn ‘n Tender• The Bread Basket

• WakaberryTM

• Thrupps• Pubs:

– KEG – The Brewers Guild – O’Hagan’s


Page 3

Logistics capabilities

The Logistics division represents the Group’s route-to-market, delivering to the franchise network a comprehensive basket of products required to cater for brand-specific menus. The Logistics function represents a key strategic and competitive advantage to the Group in terms of its overall franchise system.

The division is supported by six Centres of Excellence which are based in:

• Midrand (including Crown Mines DC)• Western Cape• Eastern Cape• Mpumalanga• KwaZulu-Natal• Free State

The Centres of Excellence enable us to get closer to our customers (our franchise partners) by aligning our Franchising and Logistics businesses.

The Centres also provide training to our employees and franchise partners.

Manufacturing capabilities

The Manufacturing division represents a key part of the Group’s backward integration model, and is tasked with manufacturing a range of licensed products for use by both the franchise network and selected food service and retail customers.

Supply Chain

Our Brand, Logistics and Manufacturing capabilities are supported by a range of Corporate Services which include: Finance, Human Resources, Information Technology, Legal, Procurement, Logistics Services and Operations Services.

entres also provide training to ouryees and franchise partners.

Midrand

KwaZulu-NatalFree State

Mpumalanga

Eastern Cape

Western Cape

Crown Mines

Manufacturing

Wholly owned

Product Location

Meat and chicken Gauteng and Western Cape

Bakery Gauteng and Western Cape

Sauces and spices Gauteng

Ice-cream Gauteng and KwaZulu-Natal

Fruit juice KwaZulu-Natal

Joint venture

Product Location

Coffee Gauteng

Cheese Eastern Cape (Coega)

Speciality breads Gauteng

Choice meat cuts Gauteng

Red meat, chicken, ribs and frozen storage

Gauteng (City Deep)

Our business is focused on building capability and scale across Brands, Logistics and Manufacturing to position ourselves to compete aggressively in the leisure and consumer product sectors.

Our strategic intent To become one of the leading branded leisure and consumer product businesses in Africa and selected international markets by 2020.

Our vision

Our guiding principlesSustainable growth, Speed, Agility, Quality, Innovation, Integrity, Humility.

Supporting South Africa's economic growth

Famous Brands makes a substantial contribution to economic and social growth in South Africa through creating economic value and employment, providing training and skills development, upholding the country’s transformation agenda and supporting local communities.

This contribution is achieved through continued investment in the Group’s key relationships, particularly with our franchise partners and consumers.

Contribution to South Africa’s gross domestic product

Wealth createdDirect - Famous Brands Group R1.1 billion (refer Value Added Statement, page 25)

Indirect - Franchise partners R1.7 billion

Tax revenue paid to the South African Revenue Services by Famous Brands Group:• Corporate Tax R195 million

• Value Added Tax R148 million

• Pay As You Earn R75 million

• Skills Development Levy R4 million

Tax revenue paid to the South African Revenue Services by our franchise partners:• Corporate Tax R448 million

• Value Added Tax R1.3 billion

Tax revenue

paid

35%

17%

29%1%

18%Salaries, wages and related benefits

Dividends to shareholders

Finance costs

Government (corporate tax)

Retained for future expansion and growth

Employment createdDirect employment - Famous Brands employees* 1 472

Indirect employment - Employees of our franchise partners over 40 000

* Excluding ten Famous Brands employees in the UK.

for the year ended 28 February 2015

Our business approach

Distribution of direct wealth created


Page 5

• We are about building capability and scale across Brands, Logistics and Manufacturing.

• We are obsessed with being close to our franchise partners and consumers.

• We are passionate about flawless execution and continuous improvement.

• We are a team of result-oriented people, characterised by a culture of high performance.

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

Our growth agenda

Supporting local communities (refer page 37)

R8.8 million

Sports sponsorships

R530 thousand

Donation of product

R2.1 million

Other corporate social investment initiatives

Training and skills development (refer page 37)

Franchise workshops

10 018 delegates

Brand product training

14 747 delegates

Fundamentals Restaurant Management training

2 792 delegates

121delegates

Employees of Famous Brands trained - certified training

Employees of our franchise partners trained

Other ad-hoc training

2 153 delegates

Purchases from local suppliers R2.6 billion

Supporting South Africa’s transformation agenda(refer page 36)

* Black as defined by the Department of Trade and Industry Codes of Good Practice relating to B-BBEE.

Cases delivered by

Owner-drivers

Permanent female

employees

Permanent black*

employees

35% 29% 79%

Scale of our business operations

Raw materials and finished goods Beef ..............................................................................................................................6 520 Kgs (000)

Cheese .....................................................................................................................5 720 Kgs (000)

Pork ..............................................................................................................................4 479 Kgs (000)

Chicken ....................................................................................................................3 879 Kgs (000)

Fish................................................................................................................................1 416 Kgs (000)

Milk used in cheese production Coega Cheese plant Approximately 90% of the milk is procured from local farmers in Port Elizabeth.

27 million litres

Energy consumptionElectricity ......................................................................................... 12 191 033 Mwh

Diesel .........................................................................................................................1 152 Kilolitres

Petrol ................................................................................................................................567 Kilolitres

Savings from water-saving initiatives ...............2 364 000 Litres

Packaging waste recycled .....................................................165 559 Tons

Environmental awareness (refer page 39)

Milestones

About Famous Brands

Eastern Cape Franchising Master Licence

20022

Pleasure Foods (Pty) LtdWimpy and Whistle Stop

House of Coffees, Brazilian and ESP Illy

20032

TruFruit and Baltimore

20052

Wimpy UK (Venus Solutions)

20072

Western Cape Franchising Master Licence

20082

Steers Holdings lists on JSE

19941

Steers Holdings

Debonairs Pizza and KZN Master Licence

19971

FishAways

20002

Longhorn brand19951

Mighty Pies19961

Churches Chicken 20012

Mountain Rush Trading 4 (Pty) Ltd – tashas

20092

Page 6


Share price at financial year-end (Rand per share)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

0

20

40

60

80

100

120

1.0

112

Famous Brands Great Bakery Company (Pty) Ltd

– The Bread Basket

Pink Potato Trading 103 (Pty) Ltd– Turn ‘n Tender

UAC Restaurants Limited

– Mr Bigg’s

Sauce Advertising (Pty) Ltd

20142

WakaberryTM Holdings (Pty) Ltd

20152

Mugg & Bean Franchising (Pty) Ltd

20102

d

20112Souldance Holdings 11 (Pty) Ltd – Giramundo

O’Hagan’s

McGinty’s

KEG

Vovo Telo Bakery and Café (Pty) Ltd

20122

Milky Lane

Juicy Lucy

2013222

Fego Caffé

Europa

Coega Cheese (Pty) Ltd

Famous Brands Coffee Company (Pty) Ltd

Creative Coffee Franchise Systems (Pty) Ltd

Page 7

Page 8

Our brands



Page 9Page 9


CELEBRATING 20 YEARSON THE JSE

CEELLEEBBBBRR RRAARRSSCELEBRATING 20 YEARSOONN TTHTHH

BRABRATTIINGNGINNINEEON THE EE

0 YYYYEEAEA JJS

G 2200G 20 JSE

CELCELEEBBBRBRRRAARATTTIIINNNGGG 22200NNGG 20IINNIN YYYYEEAAERARATTIINGNGINNIN 0 YYYYEEAEG 2200G 20RRAARATTIIII RRARARSS00 YYYYEAE

Domestic International Total

Steers 538 49 587

Steers UK 1 1

Wimpy 501 32 533

Wimpy UK 83 83

Debonairs Pizza 431 78 509

FishAways 202 13 215

House of Coffees 6 – 6

tashas 13 1 14

Mugg & Bean 169 11 180

O’Hagan’s 2 2 4

KEG 14 2 16

Giramundo 21 – 21

Vovo Telo 15 – 15

Milky Lane 53 11 64

Juicy Lucy 2 – 2

Thrupps 1 – 1

WakaberryTM 36 1 37

The Brewers Guild 6 – 6

Creative Coffees 11 – 11

Net Café 15 – 15

Europa 20 1 21

Fego Caffé 33 1 34

Turn ‘n Tender 6 – 6

Mr Bigg’s 153 153

The Bread Basket 5 6 11

Total number of restaurants 2 100 445 2 545

Trading footprint and franchise network



Page 11

UK 84

India 2

Kenya 11

Malawi 6

Mauritius 20

Mozambique 3

Swaziland 7

South Africa 2 100

Namibia 51

Zimbabwe 8

Zambia 37

DRC 2

Angola 1

Ivory Coast 5

Nigeria 162

Sudan 6

Botswana 29

Egypt 6

UAE 5

Total restaurants2015: 2 545

Performance overview

When our company listed on the JSE in 1994 the business comprised a single brand – Steers. Today the Group is represented by a portfolio of 25 brands, many of them strong, much-loved South African icons.

represented through household names such as Steers, Wimpy and Mugg & Bean.

In the business community, strong strategic alliance partnerships have been established with global and local players such as Engen, Shell, Total, SANPARKS, ACSA and Netcare, which ensures the Group caters for consumers at work, at play, on holiday, in hospital, and at home.

Empowerment and enterprise developmentIt is also gratifying to report on the joint venture partnerships which have been developed, helping aspiring entrepreneurs to unlock their ambitions through brands such as tashas, Vovo Telo, Giramundo, Creative Coffees, WakaberryTM, Turn ’n Tender, The Bread Basket, Famous Brands Coffee Company, Thrupps and Sauce Advertising.

The Group’s endeavours to advance empowerment are well demonstrated by the Owner-driver programme launched in 2010. Today, 35% of all cases delivered (equating to 11 million cases) are transported by Famous Brands’ Owner-drivers.

The groundbreaking broad-based black economic empowerment (B-BBEE) joint venture partnership, Coega Cheese, is another example of Famous Brands’ commitment to transformation at community level. Established in conjunction with local dairy farmers, and factory and farm employees in Port Elizabeth to supply cheese products to the Group, this business continues to outperform management’s expectations and deliver rewarding results for all stakeholders.

Market recognitionOver the years Famous Brands has won almost every “best of” consumer award there is to win, and has been recognised by the franchising industry as a role model franchisor. In the financial community the Group is commended as a much respected business, evidenced by

Famous Brands – 20 years onToday, the integrated business model consists of two key pillars: the franchised Brand Portfolio and the Supply Chain (which incorporates Manufacturing and Logistics).

The Franchise business consists of 25 brands, most of them strong South African icons. With 2 545 restaurants spread across South Africa, 16 African countries, the United Kingdom and the Middle East, the Group is by far the leading branded food service franchisor in Africa.

Famous Brands has also built significant strategic logistics capability by way of six regional Centres of Excellence designed to deliver an optimal service to its franchise partners. Total warehousing space consists of 20 046 square metres under roof and an average of 1 609 line items are held in warehouses. The fleet has grown to 111 trucks.

Substantial strategic manufacturing capability has also been built, manifested by 13 manufacturing sites producing meat and chicken products, bread and bakery products, sauces and spices, ice-cream, fruit juice, coffee and cheese.

The forward integration of branded products into the retail market is now a business valued at R140 million per annum,

Overview

In November 2014 Famous Brands celebrated the company’s 20th anniversary since listing. This momentous occasion gave me cause to reflect on how the business has evolved over the past two decades and to consider the contribution which the Group has made to the South African economy and its people during that period.

Santie Botha Independent Chairman

Chairman’s statement

Page 14

Net capital expenditure of R96 million (2014: R112 million) was incurred on the acquisition of the WakaberryTM Frozen Yoghurt Bar business, Supply Chain expansion, fleet upgrade and enhancement of IT systems.

The Group remained ungeared and has net cash on hand of R126 million (2014: R91 million), positioning the business to capitalise on organic and acquisitive growth opportunities as they arise.

Broad-based black economic empowermentIn pursuit of the Group’s transformation targets, the formulation of a B-BBEE ownership transaction is under way. An expert external financial institution has been retained to assist management in shaping the scope, implications and costs of this project. A proposal in this regard will be presented to the Board in due course and shareholder approval will be sought in 2016.

The Group has achieved a level 6 certification (2014: level 7) in terms of its compliance with relevant B-BBEE legislation, and further opportunities will continue to be investigated to improve this rating.

Labour relationsManagement’s relationship with the workforce is positive and open dialogue is practised from the shop floor through to executive level. On 28 May 2015 management concluded a new two-year wage agreement with worker representatives and nominated officials from SCMAWU.

Human Capital developmentThe Group has implemented ‘Managers’ Challenge’, a management-level development programme which has successfully contributed to building human resource capability internally. The programme will continue in the new financial year and will be expanded to include a leadership development programme at executive management level.

the strong external shareholder support enjoyed and the continued interest expressed by potential investors both locally and abroad. In the business press the Group has frequently featured in the Financial Mail and Business Times Top 100 companies awards.

These commendable achievements are matched by the business’s unbroken 14-year growth track record.

ResultsIn my 2014 statement I noted that a long-term strategic programme had been implemented across the Group which would effect a major step change in the business. The intention of this programme is to ensure the continued robust growth of the company over the next five years in an increasingly competitive environment. I am satisfied that this programme has started to gain momentum, reflected in the pleasing results which we report for the year.

Revenue grew by 16% to R3.3 billion (2014: R2.8 billion) and operating profit rose 19% to R672 million (2014: R566 million). Headline earnings per share improved 15% to 467 cents per share (2014: 406 cents per share).

Net interest paid decreased 92% to R269 thousand (2014: R3 million).

Cash generated by operations before changes in working capital improved by 19% to R717 million (2014: R602 million). Working capital requirements absorbed R4 million (2014: R8 million). After changes in working capital, cash generated by operations grew by 20% to R713 million (2014: R594 million).

After tax payments of R202 million (2014: R167 million) and dividend payments of R327 million (2014: R271 million), totalling R529 million (2014: R438 million), net cash retained from operations increased to R184 million (2014: R152 million).

No bank finance was raised.

Highlights

• Employed 1 482 people directly and over 40 000 indirectly

• Reported R466 million in attributable profit to shareholders

• Contributed R5 billion in GDP • Embarked on a visionary 2020 growth strategy

• Created Wealth of over R2 billion


Page 15

Chairman’s statement continued

Page 16

Mr Khumo Shuenyane resigned as an Independent non-executive director and as a member of the Audit and Risk Committee. I would like to thank him for his contribution and wish him well for the future.

Dividends and dividend policyThe final gross dividend of 200 cents per share, together with the interim gross dividend of 155 cents per share, equates to total dividends of 355 cents per share (2014: 300 cents per share) declared for the year, an increase of 18%. The dividend has been declared from income reserves. The dividend cover is 1.3 times (2014: 1.4), and is considered sustainable in light of Famous Brands’ strong cash generating ability. In considering future dividend declarations, the Board will be guided by the Group’s cash requirements based on future cash flow forecasts.

OutlookThe Group’s compelling 2020 vision and strategic intent centre on Famous Brands becoming a leading branded leisure and consumer product business in Africa and selected international markets, through building capability and scale across the key pillars of its business. I and my fellow directors are enthusiastic about the growth potential which these initiatives will realise and have full confidence in management’s ability to pursue and achieve the Group’s ambitious goals.

Notable investment has been made in senior management and executive appointments in the review period, aligned with the strategic imperative to build management capability and depth to ensure the business is optimally structured to keep pace with its growth goals.

Corporate social investmentThe Group has successfully concluded its second year of association with Varsity Sports. The current sporting codes continue to align well with key community engagement principles within the portfolio of brands. As assurance in this sponsorship continues to grow, further investment will be made in the programme.

DirectorateThe Group has committed to transform the composition of the Board to improve compliance with JSE Listings Requirements and related legislation and to co-opt a wider range of expertise and experience to better equip the business to achieve its strategic ambitions.

In this regard, I am delighted to announce that during the period Mr Norman Adami was appointed as an Independent non-executive director and a member of the Audit and Risk Committee. He was formerly Executive Chairman of SAB (Pty) Ltd and Partnership Director for SABMiller’s global relationship with The Coca-Cola Company. We welcome someone of Norman’s stature to the Board and look forward to his contribution.

AppreciationI would like to pay tribute to everyone who has contributed to the success that Famous Brands has enjoyed over the past 20 years.

I would also like to thank our shareholders for recognising the Group’s investment proposition and for their continued confidence in the business.

My sincere gratitude goes to my fellow directors for their wise counsel and support of our growth strategies, and to the management team which has performed superbly to implement these strategies and unlock the value inherent in this business. In particular, the Group Chief Executive, Kevin Hedderwick, is to be commended and congratulated on successfully leading this exceptional business in the current turbulent economic climate.

Santie BothaIndependent Chairman


Page 17

• consumers’ spending behaviour was underpinned by their focus on premiumisation, customisation, convenience and value. Increasingly innovation in technology is regarded as important by customers, and there is also an emerging focus on wellbeing (healthier food options and ethical and sustainable business practices);

• margin pressure intensified as industry participants continued to absorb costs in an effort to support price-conscious consumers with reduced disposable income; and

• competitor activity amongst both local and international brands increased, evidenced by the introduction of unrelenting every-day discounting strategies and ritual promotions to win customers.

Review of the Group’s performanceAt the conclusion of the prior year I outlined a range of strategic initiatives aimed at building capability across the Group, the Brand portfolio and the Manufacturing and Logistics businesses to achieve our growth plans. I am satisfied that these goals have been met, and in most cases exceeded; this accomplishment is in keeping with Famous Brands’ high performance culture of which I am exceptionally proud.

In preparation for the next five years of planned growth, we have launched our 2020 strategy which centres on positioning Famous Brands to compete aggressively as one of the leading branded leisure and consumer product businesses in Africa and selected international markets. The key tenet of this strategy is diversification of the Group through leveraging our capabilities across the core pillars of our business.

ResultsIt is a privilege to report on another consecutive year of record turnover and profit growth. Group revenue increased by 16% to R3.3 billion (2014: R2.8 billion), while operating

Industry overviewOut-of-home consumption continues to gain traction in South Africa, confirmed by industry statistics which state that 79% of all South Africans aged 15+ visited a quick service (QS) or casual dining (CD) restaurant in the past month – a trend which has been growing steadily over the past few years. One of the key factors underlying this phenomenon is the migration of consumers from lower to higher income status, particularly evident in the growth of the black middle class.

During the past year a range of trends characterised the QS and CD landscape:• while the fast/casual food services category continues to

attract a greater number of customers, consumers are visiting slightly less frequently, but spending more – largely a function of market inflation;

• there has been a decline in the number of brands visited by consumers from an average of three brands in 2012 to an average of 2.5 brands in 2014, illustrating that more consumers have a smaller repertoire of preferred brands that they frequent;

• QS consumption grew by 9% year-on-year compared with 6% in the CD environment which lost market share to QS restaurants, specifically those which cater for both take-away and sit-down occasions;

Macro-economic environment

During the review period household income grew at its slowest rate in more than ten years, resulting in decade-low consumer spending. Within this context, the dichotomy between income groups became increasingly apparent, with higher income households proving far less susceptible to current difficult economic conditions than lower and middle income households.

Kevin A Hedderwick Group Chief Executive

Group Chief Executive’s report

Page 18

I am pleased to report that relationships at franchise level are good, with franchise partners responding well to the Group’s efforts to combat competitive threats across the various market segments. Our programme of decentralisation through six Centres of Excellence is starting to pay dividends as closer relationships with franchise partners enable us to react quicker to evolving market conditions.

Market penetrationIn the year under review, 213 restaurants were opened (2014: 144). We surpassed our 2 000th South African restaurant mark in June 2014; Debonairs Pizza opened the brand’s 500th restaurant in October 2014; and FishAways opened its 200th restaurant in December 2014. Notably, the Group launched Debonairs Pizza and Mugg & Bean into a range of promising new and formerly under-serviced rural and semi-rural markets.

The development of malls in outlying areas continues to accelerate and affords the Group opportunities to extend the brands to our target markets in regions where we previously had little or no representation.

A particular highlight for the year was the opening of six franchised restaurants in the Kruger National Park, namely one Debonairs Pizza, one Wimpy and four Mugg & Bean outlets.

In September 2014 we announced that the Group had expanded its existing relationship with strategic alliance partner, Total South Africa, to introduce a new offering to the upper-end metropolitan service stations in the petroleum supplier’s network. We selected Thrupps as our retail partner in this venture based on the brand’s unique positioning as ‘Grocers of distinction’, with a history spanning 122 years. The pilot Thrupps offering was opened at an existing Total site in Bedfordview, in Gauteng at the end of October to significant acclaim.

profit rose 19% to R672 million (2014: R566 million). The best-ever operating margin of 20.0% achieved last year was exceeded this year at 20.5%. This phenomenal set of results, delivered in extremely testing trading conditions, is a reflection of strong system-wide sales in the franchise Brand business and continued improvement in efficiencies and cost containment in the Logistics and Manufacturing divisions.

Divisional reportFranchisingThe Group’s Franchising division consists of three regions: South Africa, Rest of Africa and International (United Kingdom (UK), the Middle East, India and Mauritius).

Across the Group’s total franchise network system-wide sales (which include new restaurants opened) increased 10%, while like-on-like sales grew 4%.

A record number of 258 new restaurants were opened across the brand portfolio, bringing the Group’s total restaurant network to 2 545. During the period 160 restaurants were revamped.

The performance of the Group’s three independent franchise regions is reviewed below:

South AfricaOverviewRevenue increased 14% to R615 million (2014: R538 million); operating profit rose in line with turnover growth to R365 million (2014: R325 million). The operating profit margin declined to 59.4% from 60.4% in the prior year, reflecting slightly softer performances reported by Wimpy and Steers given constrained discretionary spend in the mainstream middle income market.

System-wide sales increased 10% while like-on-like sales improved by 4%.

Highlights

• Revenue up 16% to R3.3 billion • Dividend up 18% to 355 cents per share

• Operating profit up 19% to R672 million • Record number of new restaurants opened: 258

• Operating margin at record high of 20.5% • Vision 2015 successfully executed

• Headline earnings per share up 15% to 467 cents


Page 19

Group Chief Executive’s report continued

Page 20

growing trends of premiumisation and customisation and illustrates the relative robustness of high-end LSM consumers.

Net Café, the preferred restaurant and retail supplier to the Netcare Hospital business grew like-on-like sales by 19% and opened seven new restaurants in the period, exceeding the expectations of all stakeholders.

In line with global trends, the frozen yoghurt category has matured rapidly and the explosion of activity experienced in its start-up phase has subsided noticeably, resulting in a challenging trading environment and the exit of numerous industry participants. In this context the Group’s WakaberryTM brand is the subject of intensive re-engineering to ensure that the restaurant format and network footprint are optimally structured to capitalise on current conditions.

Building brand capabilityThe Group’s ambition is to expand its presence in the table service evening dining environment, which affords strong growth opportunities for the business. A number of interventions have already been identified in this regard and are in the process of being implemented: as a starting point, appropriately located tashas’ day-time restaurants will extend trading hours and re-engineer menus to cater for evening trade, as will the Europa brand. Greater emphasis will also be placed on rolling out Turn ’n Tender’s restaurant footprint given the brand’s predominantly evening dining bias. Supplementing this internal focus, management will also continue to explore suitable acquisition opportunities related specifically to this dining occasion.

The Group has set a target of 202 new restaurants for the year ahead.

Rest of AfricaOverviewWith 20 years of experience and representation in 16 countries, Famous Brands has a strong presence in the Rest of Africa, and robust ambitions to up-weight that position.

System-wide sales improved 18%, while like-on-like sales grew 5%. This region’s contribution to total system-wide Group sales is 9%.

This tripartite venture has proved very successful for all of the partners, and given the enthusiastic endorsement from the management of Total Paris, plans are well advanced to extend the model into other forecourts in Gauteng. This project is aligned with the Group’s strategy to expand our business into the broader leisure market, which includes the retail sector.

Brand highlightsMainstream brandsIn the context of continued pressure on consumers’ discretionary spend, solid results were reported across this portfolio:• the stand-out performance among the mainstream

brands was recorded by Mugg & Bean which delivered an increase in like-on-like sales of 10% and opened 26 new restaurants in response to growing market demand;

• Debonairs Pizza’s growth among middle class black consumers continued unabated and the brand opened 53 restaurants during the period;

• FishAways also delivered an excellent performance despite the inconsistent supply of a key menu item, hake, during the year. The brand opened 50 restaurants locally notwithstanding the competitive landscape which saw further consolidation of industry participants; and

• in line with the deliberate strategy to improve the Group’s participation in the chicken on the bone category, Steers rolled out its flame grilled chicken offering to 220 restaurants, to positive consumer response. It is planned to expand this offering across the brand’s network.

Emerging brandsResults reported by the brands in this portfolio were generally sound.

Both Milky Lane and Europa underwent Intellectual Property revamps which met with favourable consumer response. Milky Lane’s same store sales showed an encouraging seven percent improvement, while Europa grew like-on-like sales by 16%.

Vovo Telo opened three restaurants during the period, a significant addition to the existing 12 restaurant footprint, while tashas opened the brand’s 14th restaurant. Strong consumer demand for these brands is centred on the

outright or take a controlling stake in existing Master Licence territories in neighbouring countries whereby the Group can exercise complete influence over our brands, and secondly, to test our mettle in company-owned stores in advance of a potential broader foray into that arena.

InternationalUnited KingdomOverviewWhile the economy showed signs of improvement, consumers remained cautious in the allocation of discretionary spend; in addition, the competitive climate in the QS/CD category intensified as new global offerings aggressively entered the market.

In this context I am pleased to report that the division reported its best-ever performance based on intensified management of the cost base and right-sizing the business in alignment with current economic conditions.

Furthermore, the franchise network is in good health, with positive relationships enjoyed with franchisees and strong performances delivered by new and revamped restaurants.

Revenue in Sterling decreased by 3% while revenue in Rand terms improved 11% to R102 million (2014: R92 million). The foreign currency translation gain amounted to R12 million. Operating profit rose 60% to R21 million (2014: R13 million).

The operating profit margin improved to a record high of 20.1% from 14.0% in the comparative period.

Market penetrationDuring the period two new Wimpy restaurants were opened, in Oxfordshire and Surrey, and three revamps were completed.

Steers’ maiden UK restaurant, in Clapham, continues to perform well, and a second Steers was opened in Twickenham in April 2015. While there is growing interest from prospective franchisees, the further roll-out of the brand will take place at a measured pace.

Building brand capabilityIt is planned to open two further Wimpy restaurants in the forthcoming year.

The best performing brand in the territory was Debonairs Pizza, which recorded an increase in system-wide sales of 19%, while like-on-like sales improved 12%. Almost 20% of Debonairs Pizza’s total global turnover is currently derived from this region.

In Nigeria, where the Group is represented by amongst others, 153 Mr Bigg’s restaurants, trading was generally hampered by adverse economic, political and public health conditions.

During the review period the major initiatives implemented in the Mr Bigg’s business included the improvement of back-end support systems; cost-engineering in the context of the weaker economy; a major upgrade in the pastry manufacturing facility in Lagos, and an ongoing programme to improve the in-store experience for customers.

Market penetrationThe Group opened 41 (2014: 16) new restaurants in the region, of which 15 were Debonairs Pizza restaurants, including the brand’s maiden offering in Benguela in Angola.

We also opened the first WakaberryTM restaurant outside of South Africa, in Windhoek, Namibia.

After several years’ absence, the Steers brand re-entered Botswana, opening a restaurant in Gaborone.

Building brand capabilityThe focus in the year ahead in the Mr Bigg’s business will be on restaurant upgrades to improve the overall image and relevance of this network.

In pursuit of our stated strategy to win the race to Africa, the target for new restaurants in the year ahead is 35. Plans are advanced for the Group’s maiden entry into Ghana with a Debonairs Pizza restaurant.

Subsequent eventIn June 2015 the Group acquired, subject to Botswanan Competition Commission approval, a 51% controlling stake in Retail Group (Pty) Ltd, Botswana, Famous Brands’ Master Licence partner in Botswana. This marks the commencement of a new strategic thrust in our growth programme. This strategy is twofold: to either acquire


Page 21


Divisional reportLogisticsRevenue reported by this division increased 15% to R2.2 billion (2014: R1.9 billion), while operating profit rose 16%. The operating profit margin remained in line with the prior year at 4.0%.

A number of highlights were achieved during the period, including:• the commissioning of Famous Brands’ Crown Mines

Distribution Centre, which commenced distribution of product in April 2015 and is expected to have significant economic benefit for the business. Capital expenditure of R15 million was invested in this facility which has enabled the division to take on frozen and chilled product business in Gauteng previously outsourced to third-party vendors. The facility also provides capacity to store bulk frozen beef stocks, formerly housed elsewhere in rented space. The commissioning of the Distribution Centre was completed subsequent to year-end;

• the Group’s demand planning function is now centrally planned and co-ordinated. Albeit in its initial phase, the benefits of this programme are evident, illustrated by inventory levels which increased by five percent relative to an increase in revenue of 15%, validating that the right product is being delivered to the right place at the right time; and

• Plato, the Group’s central distribution route planning programme, has been rolled out to all regions. This initiative is designed to improve service to franchisees and enhance fleet utilisation.

Building Logistics capabilityThe following projects will be prioritised in the year ahead:• capacity will be added to the Midrand facility through

investment in a re-racking project; and • a new online replenishment platform will be implemented

for franchisees.

The division has budgeted capital expenditure of R36 million for the forthcoming year.

Divisional reportManufacturingThis division delivered an outstanding performance in the review period, derived from substantial improvements in yields, further enhancements in cost management and a very strong full-year contribution from the Coega Cheese business.

Our stated intent has always been that the Wimpy UK platform will be used as a beachhead to grow Famous Brands’ footprint in the years ahead. Based on the health of the Group’s UK business, management is considering opportunities to expand activities and unlock the value of its investment, either via acquisition or joint ventures with suitable food services operators in the country.

Shareholders will be apprised as developments unfold in this regard.

IndiaAfter committing extensive resources to evaluating the Group’s continued presence in this market, management concluded that the commercial case for investment was no longer viable. Accordingly, in consultation with our partner, the Master Licence agreement was terminated in April 2015 and the two Debonairs Pizza restaurants in Mumbai closed.

Middle EastFamous Brands continued to expand its footprint in this region with the opening of our maiden Steers restaurant in Dubai. In addition, our premium brand, tashas, opened its first restaurant in the emirate. Customer response to this brand has been extraordinary, recording trading densities four times higher than experienced in the South African operation. Significant interest has been expressed by prospective landlords and franchisees in this region, and opportunities to grow the brand will be considered carefully.

Debonairs Pizza’s performance in the United Arab Emirates continued to gain momentum, with the brand reporting an increase in like-on-like sales of 15%.

Supply ChainThe Group’s Supply Chain consists of its Logistics and Manufacturing businesses, which are managed and measured separately.

Both divisions recorded exceptional results for the review period. Consolidated revenue increased by 17% to R2.5 billion (2014: R2.1 billion), while operating profit rose 29% to R262 million (2014: R204 million). The operating margin improved to 10.4% from 9.5% in the comparative period.

business’ needs and facilitates its long-term growth objectives. Management is in the process of investigating this proposed intervention. It is anticipated that the capital expenditure required for this project will be employed in fiscal 2017.

Subsequent eventIn April 2015, the Group acquired a controlling 75% stake in Cater Chain Food Services, a local business which manufactures and distributes primarily red meat products to customers across South Africa and into certain markets in Africa. This transaction affords Famous Brands the opportunity to integrate currently outsourced business into the facility and provides additional storage capacity in terms of the Group’s bulk beef requirements.

The purchase consideration fell below the threshold of a categorised transaction in terms of the Listings Requirements of the JSE and was settled from cash reserves.

The futureBuilding Group capabilityWe are unwavering in our focus on building capability and scale across all three pillars of our business: Brands, Logistics and Manufacturing. While our brand component has always been a powerful contributor to performance and will continue to be so, our deliberate strategy to grow capability across our Logistics and Manufacturing operations is increasingly delivering significant rewards for the business, to the extent that these divisions contributed nearly 40% of total operating profit for the review period. This result confirms that our vertically integrated business model is optimally structured for growth across the Group, and we will continue to make the necessary investment in people, processes and systems as required.

ProspectsThe forecast for income growth in the year ahead is conservative and continued uncertainty in the economic, political and labour environments will weigh further on consumer confidence.

Notwithstanding this context, I am comforted that our business is sufficiently resilient, agile and innovative to surmount the challenges we face.

Revenue grew by 24% to R1.3 billion (2014: R1.0 billion), while operating profit increased by a remarkable 36% to R173 million (2014: R127 million). The division’s operating margin improved to 13.7% from 12.5% in the prior year.

Several integration and food safety projects were successfully implemented during the year, including:• take-on of the KwaZulu-Natal region’s previously

outsourced bakery products. This initiative will increase our Midrand bakery volumes by 30%;

• take-on of Wimpy’s speciality bakery products;• take-on of Wimpy’s choice meat products; • expansion of Mugg & Bean’s retail range, including the

manufacture of espresso capsules; and• implementation of a new Food Safety and Quality

Management System based on the latest international best practice, which will be rolled out across the company and is scheduled for completion in 2016.

Building Manufacturing capabilityTo accommodate planned growth in the business a range of capacity projects will be undertaken in the year ahead, including:• extending the Coega Cheese plant to enable

manufacturing of cream cheese, and in the longer term, sliced cheese;

• commissioning a serviette production unit to supply the entire franchise network;

• installing a new ice-cream production plant to improve efficiencies, and preparing to take on the manufacture of frozen yoghurt products; and

• concluding the integration of the recently acquired Cater Chain business (referred to in the “subsequent event” paragraph below).

Capital expenditure of R18 million has been budgeted for the year ahead.

Information technologyA number of significant IT projects were initiated during the year, centred on upgrading the technology used to support the integration processes between the Group’s core business systems.

Further substantial investment in IT will be required in order to supplant the existing technology platform with a comprehensive ERP system which better meets the


Page 23

During the period we welcomed new joint venture partners into the business, and I would like to thank them for recognising the investment potential which Famous Brands affords.

Our business is supported by a network of strong external relationships. I would like to express my gratitude to our strategic alliance partners, suppliers, financiers, property developers and landlords for their contribution to our success.

Our Board of Directors continues to be transformed as we position the Group to achieve our long-term strategic goals. In this regard I am particularly honoured that Norman Adami, a long-standing and highly respected associate, has joined us, bringing with him a wealth of insight and experience. Over the past year, as we have wrought our 2020 vision, my fellow directors have also provided support and guidance, for which I am grateful.

In a sector where consumers are spoilt for choice, we enjoy loyal support from our traditional and growing new customer base. We appreciate their enthusiasm for our best-of-breed offerings and undertake to ensure we continue to deserve their custom.

Kevin A HedderwickGroup Chief Executive

Over the 15 years of my tenure with Famous Brands I have overseen the evolution of this business from two brands – Steers and Debonairs Pizza – supported by a limited Supply Chain component, to the enterprise it is today: Africa’s largest branded food service franchisor.

At this pivotal point on its trajectory, I am confident that the Group is ideally poised to go from winning in food service franchising to winning in the leisure and consumer product space – on a bigger stage than we have previously played.

Our outlook for the future regarding this diversification scenario is optimistic, and we foresee sustainable revenue and margin growth opportunities. By focusing on the Group’s core competencies, leveraging its strong balance sheet and continuing to build our skills and scale we are amply equipped to capitalise on them.

Our track record shows that Famous Brands’ strategy has delivered in the short-term and I am satisfied that it is built for the long-term.

AppreciationAt Famous Brands we pride ourselves on our hard work, honest endeavour and high performance culture, which will continue to give us a head start in a notoriously competitive industry. I would like to thank my executive managers and every member of our staff for their contribution to this gratifying set of results, delivered in a very challenging trading environment. Their dedication to achieving our stretch goals is exceptional.

Our strategic partnerships with our franchisees are invaluable to the success of this business. Their commitment is appreciated and they have our assurance that we will continue to strive to meet their expectations.

Page 24


Value Added Statementfor the year ended 28 February 2015

The Value Added Statement shows the wealth that the Group has created through its activities and how this wealth has been distributed to stakeholders. The statement reflects the amounts retained and reinvested in the Group for the replacement of assets and the development of future operations.

2015R000 %

2014R000 %

Wealth createdTurnover 3 283 342 2 825 979 Cost of materials and services (2 171 390) (1 879 944)Share of profits from associates 7 608 5 140 Other income 13 281 9 223

1 132 841 100 960 398 100

Wealth distributedEmployeesSalaries, wages and related benefits 398 039 35 342 092 36

Providers of capitalDividends to shareholders 327 389 29 270 946 28Finance costs 13 550 1 12 435 1

340 939 30 283 381 29

GovernmentCorporate tax 194 651 17 161 985 17

Wealth retained for future expansion and growthAmortisation of intangibles and depreciation of property, plant and equipment 41 889 38 426 Retained income 157 323 134 514

199 212 18 172 940 18

1 132 841 100 960 398 100

35%

17%

30%

18%

Employees

Retained for futureexpansion and growth

Government

Providers of capital

36%

17%

29%

18%

Employees

Government

Providers of capital

Retained for futureexpansion and growth

20142015

Distribution of wealth created:


Page 25

Performance at a glance

2015 2014

Financial measuresRevenue R000 3 283 342 2 825 979Operating profit margin % 20.5 20.0Cash realisation rate % 99.9 98.3Net debt/equity % (8.9) (2.1)Headline earnings per share cents 467 406Dividends per share cents 355 300Wealth created R000 1 132 841 960 398Return on net assets % 50.0 46.1Return on equity % 35.1 36.0

Non-financial measuresNumber of restaurants 2 545 2 378

Domestic 2 100 1 935International 445 443

Number of employees 1 630 1 453Permanent 1 482 1 406Non-permanent 148 47

Accidents frequency rate* 1.16 1.06Disabling injury frequency rate* Nil NilFatalities* Nil Nil

*Safety record with respect to Occupational Health and Safety.

Six-year review

Growth%* 2015 2014 2013 2012 2011 2010

Statement of profit or loss and other comprehensive income and cash flowsRevenue 14.3 R000 3 283 342 2 825 979 2 516 287 2 155 615 1 878 036 1 684 840 Operating profit before impairment losses 16.9 R000 672 024 565 517 465 842 412 656 358 453 307 947 Operating profit margin % 20.5 20.0 18.5 19.1 19.1 18.3 Profit after taxation R000 484 712 405 460 331 052 268 054 230 999 191 640 Cash generated by operations R000 713 235 593 559 482 279 398 710 396 929 351 961 EBITDA R000 713 913 603 943 499 397 441 692 384 486 331 572 Cash realisation rate % 99.9 98.3 96.6 90.3 103.2 106.1 Headline earnings for the year 19.1 R000 465 201 401 942 330 188 267 438 230 502 194 307 Statement of financial positionTotal assets R000 1 852 260 1 692 839 1 510 467 1 221 169 1 139 312 1 070 829 Total equity 19.4 R000 1 417 154 1 234 948 1 000 088 840 370 708 594 583 926 Net assets R000 1 388 519 1 300 070 1 152 796 985 227 871 200 815 363 Net debt R000 (126 228) (25 699) 81 091 81 572 101 389 160 665 Profitability and asset managementReturn on total assets % 37.9 35.3 34.1 35.0 32.4 29.0 Return on net assets % 50.0 46.1 43.6 44.5 42.5 38.2 Return on equity % 35.1 36.0 35.9 34.5 35.7 36.1 Net asset turn times 2.4 2.3 2.4 2.3 2.2 2.1 Interest cover times 2 498.2 176.1 117.4 38.7 24.0 14.9Net debt/equity % (8.9) (2.1) 8.1 9.7 14.3 27.5 Shareholders’ ratiosBasic earnings per share cents 467.7 405.9 337.6 277.6 241.8 202.5 Headline earnings per share cents 467.2 406.2 339.1 278.3 242.0 205.6 Dividends per share 25.5 cents 355 300.0 250.0 200.0 155.0 114.0 Dividend cover times 1.3 1.4 1.4 1.4 1.6 1.8 Net tangible asset value per share cents 495.5 358 204 151 51 (31)Net asset value per share cents 1 420 1 244 1 022 874 740 615 Stock exchange statisticsMarket value per share– at year-end cents 11 200 9 700 8 350 4 405 3 850 2 560 – highest cents 11 518 11 095 8 350 4 650 4 525 2 560 – lowest cents 9 550 8 072 4 431 3 510 2 456 1 325 Closing dividend yield % 3.2 3.1 3.0 4.5 4.0 4.5 Closing earnings yield % 4.2 4.2 4.1 6.3 6.3 8.0 Closing price to earnings ratio times 24.0 23.9 24.7 15.9 15.9 12.6 Number of shares issued (excluding treasury shares) 99 807 435 99 242 435 97 827 435 96 192 435 95 817 596 94 894 596 Market capitalisation 35.7 Rm 11 178 9 627 8 169 4 237 3 689 2 429

*Five-year compound growth % p.a.

DefinitionsBasic earnings per share: Net profit for the year divided by the weighted average number of ordinary shares in issue during the year.

Cash realisation rate: This ratio is calculated by expressing cash generated by operations as a percentage of EBITDA and reflects the proportion of cash operating profit realised after working capital movements.

Closing dividend yield: Dividends per share as a percentage of market value per share at year-end.

Closing earnings yield: Headline earnings per share as a percentage of market value per share at year-end.

Closing price to earnings ratio: Market value per share divided by headline earnings per share at year-end.

Dividend cover: Headline earnings per share divided by dividends per share declared out of earnings for the year.

EBITDA: Earnings before interest, tax, depreciation, amortisation and impairment losses.

Headline earnings: Net profit for the year adjusted for profit/loss on sale of property, plant and equipment, investments and impairment losses.

Headline earnings per share: Headline earnings divided by the weighted average number of ordinary shares in issue during the year.

Interest cover: Operating profit divided by net finance costs. (Measures the capability to service borrowing obligations from current profit.)

Net assets: Total assets other than cash, bank balances and deferred tax assets less interest-free trading liabilities.

Net asset turn: Revenue divided by average net assets.

Net asset value per share: Ordinary shareholders’ equity divided by number of shares in issue.

Net debt: Total interest-bearing borrowings less cash. It is calculated by adding current and non-current interest-bearing borrowings and bank overdrafts and deducting positive cash balances.

Net tangible asset value per share: Ordinary shareholders’ equity less intangible assets divided by the number of shares in issue.

Operating profit: Profit before impairment losses, interest and tax.

Operating profit margin: Operating profit as a percentage of revenue. (Measures the return on revenue of the operating activities of the Group.)

Return on equity: Headline earnings as a percentage of average shareholders’ interest. (Measures the return earned on the capital provided by the shareholders.)

Return on net assets: Operating profit as a percentage of average net assets. (Measures the effectiveness with which the net assets were utilised.)

Return on total assets: Operating profit as a percentage of average total assets. (Measures the effectiveness with which the total assets were utilised.)


Page 27

Strategic imperatives, Material issues and Sustainability

Over the past two decades our Logistics business has grown to comprise six Centres of Excellence situated nationwide, designed to deliver an optimal service to our franchise partners. Total warehousing space consists of 20 046 square meters under roof and an average of 1 609 line items are held in our warehouses at any one time. Our fleet now numbers 111 trucks.

Strategic imperative

1. Fortify the foundation which exists within Manufacturing and Logistics

2. Shape the brand portfolio and ensure our key brands resonate across all consumer touch points

3. Engage the competition by strengthening our gorilla brands

4. Build superior routes-to-market and drive lowest cost producer status

5.Win the race to conquer Africa

6. Execute on all aspects of B-BBEE

7. Ensure strong focus on leadership and succession planning

8. Expand the business through diversification

9. Manage the transition from the existing outdated information technology platform

10. Continue to drive the Group’s culture of high performance

The table opposite outlines the Group’s key Strategic imperatives, identifies the Material risks and issues which might impact the implementation of those imperatives, and specifies the mitigating actions and responses which are employed to counter such risks.

Strategic imperatives and Material issues

Page 30

Material risk/issue Our response

Restricted access to capital to fund activities The business is highly cash generative and has a strong balance sheet

Under-representation in the casual sit-down evening dining segment

• Extend trading hours of appropriate existing restaurants

• Pursue acquisition opportunities which specifically cater for this evening dining occasion

Underperformance of the Wimpy and Steers brands Conclude 360 degree evaluation of both brands in terms of all consumer touch points

Group Channel Services and/or Logistics Services functions stall

Continued up-weighting of investment in people and processes

Global competitors intensify focus on expansion into Africa

• Leverage first-to-market and narrow-and-deep expansion strategies

• Pursue maiden entry into Ghana• Continue with UACR repair process• Acquire controlling equity stake in existing Botswana

Master Licence business

B-BBEE ownership transaction currently under development fails to secure shareholder approval

Utilise industry experts to assist with structuring the transaction based on their extensive best practice experience

• Affordability of key personnel, resulting in margin pressure

• Existing share option scheme proves unattractive in terms of retention

• Acknowledge that this intervention is key to sustainability and needs to be regarded as an investment not an expense

• Convert to Share Appreciation Scheme and secure shareholder approval

Absence of suitable targets that align with our strategy Network with leading reputable financial institutions which have access to extensive investment opportunities

• Cost of investment• Sub-optimal management of existing system while

transition is under way

• Identify best-of-breed information technology partners• Prepare a comprehensive investment case for the

Board

Existing human resource diagnostic interventions are not optimally employed

Robustly manage and measure implementation of the Group’s integrated performance management programme across the business


Page 31

Our key relationships

Stakeholder group How we engage with our stakeholders

Shareholders, market analysts and

funding institutions

• JSE SENS announcements• Media releases covering key developments within the Group• Integrated Annual Reports• Annual General Meetings• Company’s website• Results presentations• One-on-one interactions with investors and funding institutions

Customers (franchisees) • National franchisee forums• Personal contact• Operations audits and reviews• Operations campaigns• Web and call-in support • Annual brand conferences

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

Suppliers and business partners • Regular procurement interactions

Employees and unions • Business feedback sessions• Employee surveys• Performance reviews and development discussions

Government and regulatory bodies • Regular interactions with the relevant government institutions and

regulatory bodies

We are committed to creating value for our key stakeholders in the short, medium and long-term. Our Value Added Statement on page 25 sets out the value the Group created for our stakeholders for the year ended 28 February 2015.


Page 33

Our stakeholder groups’ key interests and concerns Further information

• Return on investment and dividends• Sustainable earnings growth through acquisitive and organic growth• Corporate Governance, ethical and competent leadership

• Page 30, Strategic imperatives and

Material issues• Page 46, Corporate Governance report

• Strong brands• Efficient, effective and competitive Supply Chain• Marketing spend• Location of restaurants• Franchise and business management support• Product quality


Material issues

• , Transformation (skills development) • Page 38, Safety, Health and the Environment

(food safety)

• Strong brands and value offering• Location accessibility, convenience and positive total consumer

experience• Sponsorships and other corporate social investments


Material issues • Page 37, Corporate Citizenship

• Timely payment• Continuity of supply• Fair treatment • B-BBEE compliance

• Page 37, Transformation (preferential

procurement and enterprise development)

• Job security• Remuneration and recognition• Equal opportunities and career development• Training and skills development• Safe working environment

• Page 34, Human Capital• Page 30, Strategic imperatives and

Material issues• Page 38, Safety, Health and the Environment

(employee health and safety)

• Tax revenues• Compliance with legislation and other regulatory frameworks• Transformation• Supporting communities• Responsible usage of natural resources

• Page 25, Value Added Statement• Page 46, Corporate Governance report• Page 36, Transformation• Page 37, Corporate Citizenship• Page 39, Safety, Health and the Environment

(environment)

Our key stakeholders’ interests and concerns are important to us. We have taken these into account in determining material issues and risks set out on page 30, as well as other matters that are material for inclusion in this Integrated Annual Report. The table below provides an overview of our key stakeholder groups, how we engage with them, and their key interests and concerns.

Human Capital

Empowerment and talent management Human 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. At Famous Brands, we believe that true empowerment gives people responsibility and also the freedom to live up to that responsibility.

Talent management (performance and potential) is measured through our bi-annual Human Capital reviews. Performance is assessed through a scorecard measurement process against clearly defined accountability criteria or goals set out at the commencement of the year. Potential is identified through ranking employees and managing training and development opportunities arising from that intervention. Remuneration recommendations including discretionary performance-based bonuses are linked to the assessment process.

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 1:2 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, in the long-term. Key performance indicators (KPIs) are included in executive and management scorecards in support of this sustainability imperative. Famous Brands believes in motivating the entire workforce and has an annual

recognition ceremony (Growth Champions) where appreciation is shown to those specific employees who have demonstrated dedication, devotion and commitment to their work beyond the norm.

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.

Employee satisfaction and moraleAnnual 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 successfully utilising this tool as the “people barometer” of the business. Our most recent surveys which were conducted in June 2014 for Bargaining Unit employees and August 2014 for Administration employees indicated a high level of employee engagement and motivation.

Legislative complianceThe Group continues to comply with legislation governing the employment relationship in line with the requirements of the Departments of Labour and Culture, Arts, Tourism, Hospitality, Sport and Education Training Authority. This includes the Labour Relations Act, Employment Equity Act and the Skills Development Act. There are systems in place to monitor changes to legislation and if changes occur, the implications on our operations are assessed and communicated to relevant stakeholders.


Page 35

Labour relationsThe Group’s workforce comprises 911 (2014: 901) employees belonging to the Bargaining Unit, of whom 77% (2014: 71%) are unionised. The table below sets out trade union representation with respect to the number of unionised employees.

2015 2014

Union name

Abbreviated union name

Number of

employees

% of unionised

employees

% of total Bargaining

Unit employees

Number of

employees

% of unionised

employees

% of total Bargaining

Unit employees

Security, Cleaning, Manufacturing and Allied Workers Union SCMAWU 667 95.4 73.3 610 95.9 67.7Hotel, Liquor, Catering Commercial and Allied Workers Union of South Africa HOTELICCA 11 1.6 1.2 15 2.4 1.7National Security Commercial and General Workers Union NASECGU 3 0.4 0.3 6 0.9 0.7Food and Allied Workers Union FAWU 2 0.3 0.2 2 0.3 0.2Metal and Electrical Workers Union of South Africa MEWUSA 2 0.3 0.2 2 0.3 0.2South African Transport and Allied Workers Union SATAWU 13 1.9 1.4 – – –Professional Transport and Allied Workers’ Union of South Africa PTAWU 1 0.1 0.1 1 0.2 0.1

Number of Bargaining Unit employees belonging to a union 699 100.0 76.7 636 100.0 70.6

Number of Bargaining Unit employees not belonging to a union 212 23.3 265 29.4

Total number of Bargaining Unit employees 911 100.0 901 100.0

The Group Human Resources Executive, together with two appointed line executives, engages with the unions regarding negotiations and various other Bargaining Unit employee-related matters. The Group has a grievance policy, which together with the disciplinary procedures manual, is contained in the staff services manual. The content of the staff services manual is covered during employee induction and copies are available to employees electronically or in hard copy. During the 2015 financial year, there were no incidents of industrial action in the Group.

Transformation

Famous Brands supports the principles of Broad-Based Black Economic Empowerment (B-BBEE) and measures its transformation progress against the Generic Tourism Sector Code and targets aligned to the Department of Trade and Industry’s B-BBEE Codes of Practice. Through its main operating wholly-owned subsidiary, the Group holds a level 6 (2014: level 7) B-BBEE status, which was independently verified by Empowerdex, an economic empowerment rating agency.

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 has 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, Darren Hele (Chief Executive Officer – Food Services), reports on the Group’s transformation progress to the Social and Ethics Committee.

OwnershipThe Group’s score of 0.92/20 remained unchanged during the year under review. The Board believes that improving the scorecard with regard to the ownership element is a business imperative in context of the Group’s growth agenda, and is in the process of exploring opportunities to address this. A proposal in this regard will be presented to the Board in due course and shareholder approval will be sought in 2016.

Management controlWhile the Board acknowledges that management control is one of the key transformation challenges it is faced with, as reflected in the Group’s score of 1.18/12 (2014: 0.33/12), progress has been made over the past few years with regard to Board transformation. The Nominations Committee takes Board transformation into account when recommending new appointments to the Board.

Employment equityThe objectives of the Group’s employment equity policy and plan are 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 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.

The Group employs 1 472 (2014: 1 395) permanent employees in South Africa and 148 (2014: 47) non-permanent employees. Our female employees constitute 29% (2014: 27%) of our total permanent workforce. The table below sets out the racial and gender profile of our permanent workforce by occupation level:

2015 2014Occupational level Male Female Total Black* White Male Female Total Black* White

Top management 3 – 3 – 3 3 – 3 – 3Senior management 34 13 47 3 44 30 11 41 2 39Professionally qualified and experienced specialists and mid-management 70 71 141 51 90 65 55 120 28 92Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 138 152 290 148 142 133 141 274 127 147Semi-skilled and discretionary decision-making 505 101 606 580 26 585 118 703 679 24Unskilled and defined decision- making 302 83 385 385 – 197 57 254 253 1

Total permanent employees 1 052 420 1 472** 1 167 305 1 013 382 1 395** 1 089 306

* Black as defined by the Department of Trade and Industry Codes of Good Practice relating to B-BBEE.** Excludes 10 (2014: 11) Famous Brands employees in the UK.


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Skills developmentWe are committed to creating a culture of learning. The Group has a forum in place whose objective is to enforce implementation of the Employment Equity and Skills Development Acts. Compliance is monitored via accepted procedures and guidelines. Reporting to the Social and Ethics working group is a nominated skills representative who is responsible for monitoring targets and progress against our committed plans.

Our registered Skills Development Facilitator is tasked with the submission of plans and reports (including workplace skills plan and actual 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 accordingly, and deviations from the set plan are managed. During the course of the year, 93 (2014: 46) black employees, of whom 14 (2014: 13) were female, received certified training in the following areas: financial management, information technology, customer care, and health and safety.

Over and above developing the skills of our employees, we conduct extensive training for our franchisees and their employees via our Centres of Excellence in each of our six regions. The table below sets out the number of delegates trained during the year under review:

Number of delegates trained

RegionFranchisee

workshops

Brand product training

Fundamentals Restaurant

ManagementAd-hoc

training

Gauteng 871 8 700 2 170 2 153Mpumalanga 1 422 651 80Free state 2 047 822 87KwaZulu-Natal 2 449 1 299 180Eastern Cape 1 082 2 016 64Western Cape 2 147 1 259 211

Total number of delegates trained 10 018 14 747 2 792 2 153

While the table above reflects the Group’s commitment to training its franchise partners and their employees, franchisee training does not count towards the Group’s skills development score as the delegates are not direct employees of the Group. The Group’s skills development score improved from 3.61/18 in the prior year, to 4.82/18 in the financial year under review as a result of our continued efforts to strengthen the skills of our employees.

The company undertook an internship initiative with the Nelson Mandela Metropolitan University in the prior financial year and we retained the two interns who graduated from the programme as permanent employees of Famous Brands.

Preferential procurementThe Group’s procurement processes take into account the B-BBEE status of all our suppliers and potential suppliers. Our score of 17.77/20 improved from 15.58/20 in the prior year.

Enterprise developmentThe Group maintained its score of 10/10 with respect to enterprise development, which is attributable to its commitment to supporting the growth of small business enterprises.

Socio-economic developmentThe Group maintained its score of 10/10 with respect to socio-economic development, which is reflective of our

commitment to being a responsible corporate citizen. Our corporate social investments are set out below.

Corporate Citizenship

We believe that the communities we serve should be better off as a result of our presence.

Consequently, our franchisees invest in locality projects, and our employees are engaged in voluntary community service initiatives, which included visits to various charity organisations during the year under review.

In addition to this, the Group supported a range of community-based projects as set out in the table below:

2015 R

2014 R

Sports sponsorships 8 813 251 3 306 400Donation of products 529 565 211 316Other corporate social investment initiatives 2 083 190 1 037 328

Total 11 426 006 4 555 044

Safety, Health and the Environment

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. The Group has policies and controls in place to measure and monitor its 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, Darren Hele (Chief Executive Officer – Food Services), and to the Audit and Risk Committee where appropriate.

Employee health and safetyThe 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 and reported on.

Health and safety risk assessments are conducted by an approved inspection authority every three years. The latest inspection was conducted during the financial year ended 2014. The assessments highlight areas for improvement and the required corrective actions are incorporated into management Key Performance Indicators for ongoing monitoring. The Group has programmes and procedures in place to mitigate key health and safety risks. All necessary precautions and measures are taken to ensure the safety of employees. Management is committed to adhering to strict guidelines in terms of monitoring and implementing health and safety requirements at all its premises. This is done through SHEQ committees as well as appointed responsible people in terms of the Occupational Health and Safety Act. Health and safety training in respect of fire prevention and fire fighting, as well as basic first aid, is mandatory for all staff. The Group uses the industry standard Disabling Injury Frequency Rate (DIFR) and Accidents Frequency Rate to measure its safety record. The Group maintained a Nil DIFR record for both the year under review and the prior year. The Accidents Frequency Rate was 1.16 (2014: 1.06). There were no fatalities during the year (2014: Nil fatalities).

There is recognition that HIV/Aids, among other challenges faced by South African businesses, is a serious concern and thus Famous Brands is in full support of the government in the fight against the pandemic. In alignment with the Employment Equity Act, No. 55 of 1998, which focuses on non-discrimination against employees diagnosed with the disease, Famous Brands ensures a high level of confidentiality in this regard. We partner with an outsourced third party,

Occupational Care South Africa, a level 4 empowered supplier, to address the wellness needs of our employees. Assistance takes the form of on-site primary and occupational care in addition to external referrals for professional and medical support. This service includes the management of life- threatening diseases where the company is committed to providing education and, in instances, medication to improve the quality of life of affected employees.

The benefits of this confidential programme are:• the Group bears the costs of this intervention;• referrals to general practitioners are paid for by the Group;• costs of medication are paid for by the Group;• assistance with access to and delivery of medication

to affected employees;• employees are attended to by experienced counsellors

who educate the patient and the family about the disease; and

• treatment and monitoring during pregnancy to reduce the risk of mother to child transmission.

Food safetyThe Group is committed to the highest food safety standards as embodied in our corporate Total Quality and Food Safety and Management (TQFSM) commitment policies supported at the highest level. Famous Brands has developed a documented TQFSM system based on the internationally recognised Global Food Safety Initiative-benchmarked Food Safety System Certification (FSSC) 22000 standard for all its business units. This system is in the process of being implemented company-wide.

Our coffee manufacturing facility will be the first to obtain FSSC 22000 certification in May 2015. Two further facilities, which are currently Hazard Analysis and Critical Control Points (HACCP) certified, will be converted to FSSC 22000 in the 2016 financial year. The Group’s aim is to ensure that all manufacturing facilities are FSSC 22000 certified by 2017.

All of our manufacturing facilities, with the exception of one where implementation is still in progress, were successfully audited by an independent, accredited auditing body against the strict food safety assessment retail audit standard that covers food safety management systems, prerequisite programmes and HACCP criteria.

The TQFSM system is centrally managed by a highly competent technical team supported by skilled quality and food safety co-ordinators who manage the day-to-day aspects of food safety and quality at plant level.


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Environment The 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. During the year under review, the Social and Ethics working group developed an Environmental and Climate Change policy, which will be rolled out to the business during the 2016 financial year. The policy sets out the Group’s 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;• on-going review and implementation of energy saving

initiatives;• conversion of paraffin fuelled boilers to Compressed

Natural Gas (CNG);• investigating alternative cleaner fuel and energy options

(with lower GHG emission factors);• efficient water usage and effluent management; and• maximising recycling opportunities for our general waste as

part of our waste management initiatives.

EnergyThe sources of energy primarily utilised in our business operations include electricity, paraffin, diesel and Liquefied Petroleum Gas used at our manufacturing facilities and our corporate premises. The Group owns a fleet of trucks and motor vehicles which use diesel and petrol.

During the year under review, management identified and quantified energy savings projects, including an energy efficient lighting project which will be implemented during the 2016 financial year. An independent party was contracted to perform a baseline energy audit in order to identify further energy savings opportunities. Management has also embarked on an energy efficiency initiative to convert the

Group’s paraffin fuelled boilers to natural gas by the end of the 2016 financial year. The Group’s energy consumption during the year under review is represented in the table below:

2015

Source of energyUnit of

measureNumber of units

Emissions(Tons)

Electricity Mwh 12 191 033 13 044 406Diesel Kilolitres 1 152 3 075Petrol Kilolitres 567 1 321Paraffin Kilolitres 490 1 225

Total carbon emissions Tons 13 050 027

WaterManagement commenced with water-saving initiatives during the 2014 financial year which aimed to reduce underground water leakage. This initiative resulted in savings of 2.4 million litres during the 2015 financial year. A water reduction awareness initiative aimed at behavioural changes is also in place. As part of this initiative, our irrigation water requirements are met using ground water.

Packaging and waste managementThe Group’s waste management procedures are well entrenched across its manufacturing facilities. The table below sets out the percentage of packaging waste recycled at our Gauteng manufacturing sites:

Packaging waste

2015

Recycled(Tons)

Recycled(%)

Cardboard 147 560 89Plastic 7 725 5General waste 10 274 6

165 559 100

Governance and Remuneration

Twenty years on since listing, we have built substantial strategic manufacturing capability, manifested by 13 manufacturing sites producing meat and chicken products, bread and bakery products, sauces and spices, ice-cream, fruit juice, coffee and cheese.

Governance and Remuneration continued

Non-executive directors

Santie Botha (50)BEcon HonoursChairman of the Board and Independent non-executive director

Bheki Lindinkosi Sibiya (58)BAdmin, MBAIndependent non-executive director

Appointed to the Board in June 2012Chairman of the Nominations CommitteeMember of the Remuneration CommitteeAttends the Audit and Risk Committee meetings by invitation

Directorships in other listed entities:Curro Holdings Chairman and non-executive

directorLiberty Holdings Non-executive directorTelkom Non-executive directorTiger Brands Non-executive director

Santie is currently the Chancellor of the Nelson Mandela Metropolitan University in Port Elizabeth. She 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).

Appointed to the Board in March 2004Member of the Remuneration Committee (Chairman)Member of the Audit and Risk Committee Member of the Social and Ethics CommitteeMember of the Nominations Committee

Directorships in other listed entities:Pinnacle Holdings Non-executive directorPretoria Portland Cement Chairman and

non-executive directorTiger Brands Deputy Chairman and

non-executive director

Bheki 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.

Christopher Hardy Boulle (43)BCom, LLB, LLMNon-executive director

Khumo Shuenyane (43)BEcon and International Studies, CA (England and Wales)Independent non-executive director

Appointed to the Board in December 2011Member of the Audit and Risk Committee (Chairman)Member of the Social and Ethics Committee (Chairman)Member of the Remuneration Committee Member of the Nominations Committee

Directorships in other listed entities:Advtech Non-executive directorAmalgamated Electronic Corporation Non-executive director

Chris 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. He commenced his legal career at HR Levin Attorneys where he is now one of the two senior partners.

Appointed to the Board in February 2014Member of the Audit and Risk Committee Member of the Social and Ethics Committee Member of the Nominations Committee

Khumo is a business executive with extensive experience in finance, mergers and acquisitions, private equity and corporate strategy. He served at MTN Group Limited as Group Chief Mergers and Acquisitions Officer between June 2007 and June 2013, and was previously head of Principal Investments at Investec Bank Limited, where he commenced his career in 1998 within the Corporate Finance division.

Khumo resigned from the Board and related Board Committees with effect from 26 February 2015.

Norman Adami (61)Bachelor of Business Science (Hons), MBAIndependent non-executive director

Appointed to the Board in February 2015Member of the Audit and Risk Committee Member of the Nominations Committee

Directorships in other listed entities:Allied Electronics Corporation Limited (Altron) Non-executive director

Norman has had an extensive career with SABMiller, which commenced at SAB (Pty) Ltd 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.

He is also 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.

Board of Directors


Page 43

Founding members of the companyExecutive directors

Kevin Alexander Hedderwick (62)Group Chief Executive

Appointed to the Board in March 2001Attends the Audit and Risk Committee meetings by invitationAttends the Remuneration Committee meetings by invitationAttends the Nominations Committee meetings by invitation

Directorships in other listed entities:Holdsport Limited Non-executive director

Kevin joined the Group in February 2000 as Managing Director of the Steers brand. He has an excellent business record, combining food, beverage and franchising expertise. Kevin has held senior executive positions in a number of blue-chip companies including SA Breweries, Distell and Foodcorp. In March 2001, Kevin was appointed Chief Operating Officer, a position he held for nine years, before being appointed Chief Executive of Famous Brands in May 2010. With effect from 1 March 2014, Kevin assumed the role of Group Chief Executive.

Darren Paul Hele (43)BComChief Executive Officer – Food Services

Appointed to the Board in January 2013Attends the Social and Ethics Committee meetings by invitation

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

Norman Richards (61)FCIS, MBAGroup Financial Director

Appointed to the Board in July 2013 Attends the Audit and Risk Committee meetings by invitationAttends the Social and Ethics Committee meetings by invitation

Norman joined Famous Brands in September 2012 as Change Management Executive, responsible for managing and driving the Fit 4 Purpose business model transformation intervention. Norman is a 21-year veteran of SA Breweries Beer division, where he held a number of executive positions in finance, both locally and internationally. Prior to joining Famous Brands, Norman founded and managed two consulting companies and a software services company, all within the supply chain field. Norman assumed the role of Group Financial Director with effect from 1 July 2013.

Panagiotis (Peter) Halamandaris (68)Non-executive director

Attends the Audit and Risk Committee meetings by invitationMember of the Nominations Committee

Peter has made an important contribution to the Famous Brands Group since 1974. He has served on various portfolio committees over the years, assuming the position of Chairman of the company upon listing in November 1994. As from March 2007, Peter assumed the position of non-executive Chairman. On 24 October 2013, Peter retired as non-executive Chairman. He has remained on the Board as a non-executive director.

Theofanis Halamandaris (64)Non-executive director

Member of the Nominations Committee

Theofanis has made a significant contribution to the Group since 1974 through the fulfilment of various responsibilities. He assumed the position of Chief Executive Officer in March 2001, after serving as the Group Managing Director for three years. After retiring as Chief Executive Officer in May 2010, Theofanis took over from John Lee Halamandres as Deputy Chairman of the Group. In 2014, he became a non-executive director.

Periklis Halamandaris (60)Non-executive director


Periklis was one of the original founding members of the Group and has in excess of 20 years’ experience in the food and franchising industry. He was appointed to the Board of Famous Brands Limited in 1994 and was responsible for expanding the operations of the Group beyond the borders of South Africa. Periklis resigned from the Board during the course of 1999 to concentrate on his private business. In March 2001, he was re-appointed to the Board as a non-executive director.

John Lee Halamandres (61)Non-executive director


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. John continues to serve on the Famous Brands Board in the capacity of non-executive director.


Arlene Botha (52)Group Human Resources Executive

Arlene has extensive experience in the human resources field, having started her career in the brewing industry while completing her postgraduate Diploma in Management – Human Resources at Wits Business School. She later joined the soft drinks industry and thereafter spent some time with a multi-national tobacco company, before joining Famous Brands in October 2008.

Bruce Layzell (44)Managing Executive – International Markets

Bruce has a Bachelor of Science in Construction Management from the University of Natal and an MBA from the University of Southern Queensland. He worked in various roles in the construction and property industry before joining the mobile telecommunications industry in 1996. He joined Vodafone Plc in the United Kingdom as part of their global leadership programme in 2004 and led a range of strategic projects. Bruce joined Yum! Restaurants International in 2006 as an operations executive and in 2008 was appointed to head the organisation’s expansion into new African markets. He joined Famous Brands in April 2015 to lead the International business.

Chris Botha (56)Group Information Technology Executive

Chris’s career in Information Technology spans 30 years, with 20 of those being in a senior management role. During his career he has facilitated the design and implementation of business systems for organisations operating in the financial, utilities, mining and FMCG business sectors, including the evaluation, selection and implementation of ERP solutions. Before joining Famous Brands Chris managed his own IT consultancy for six years, assisting clients to define their IT governance frameworks based on King III and establishing IT strategies to support their business objectives. Chris was appointed Famous Brands Group IT Executive in July 2012.

Darryl Denton (47)Group Manufacturing and Technical Executive

Darryl has extensive experience in the manufacturing field. He began his career in the brewing industry in which he served for 20 years. He subsequently worked for five years in the household and cosmetics FMCG manufacturing field. He has a diploma in Supply Chain Management, as well as a Certification in Production and Inventory Management. Darryl joined Famous Brands in January 2013.

Derrian Nadauld (42)Managing Executive – Debonairs Pizza

Derrian joined Famous Brands in May 2000 as a member of the Debonairs Pizza’s operations team. Over the past 15 years, he has held various operational, management and executive roles within Debonairs Pizza, Steers, Coffee Brands and Wimpy. Between November 2008 and December 2011, Derrian served as Managing Executive of Debonairs Pizza and was appointed Managing Executive of Wimpy in January 2012. In March 2013 he was appointed Chief Marketing Officer, whereafter he served as Managing Executive – International Markets. In March 2015 Derrian was appointed Managing Executive of Debonairs Pizza.

Johann Krige (54)Managing Executive – Operations and Logistics

Johann joined Famous Brands in May 2014. Prior to that he had an extensive 25-year career with a blue chip beverage organisation. Johann’s experience includes Sales, Distribution, Supply Chain, Trade Marketing, Production and General Management at both strategic and operational levels.

Executive Leadership


Page 45

Kelebogile (Lebo) Ntlha (32)Group Financial Executive and Company Secretary

Lebo is a Chartered Accountant (SA) and holds an MBA degree (awarded cum laude) from Wits University. 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 has had responsibility for various functions within finance, including ensuring compliance with the JSE Listings Requirements. She made a considerable contribution in the area of Integrated Reporting in her previous role as a result of insights gained from her research report on Integrated Reporting. Lebo joined Famous Brands in July 2014.

Linda Thomas (42)Chief Marketing Officer

After completing her Bachelor of Social Science degree at the University of Natal, Linda joined the pharmaceutical industry and for ten years held various sales management and marketing positions. In 2000 she joined Adcock Ingram, a division of Tiger Brands, as a brand manager. Whilst at Tiger Brands, Linda was promoted to Category Marketing Manager on the Condiments and Ingredients portfolio. In 2007 she joined Famous Brands as Marketing Executive for Debonairs Pizza and has managed various Marketing Executive portfolios since then. In 2015, Linda was appointed Chief Marketing Officer.

Mark Hedderwick (54)Managing Executive – Channel Services

Mark has extensive experience in the retail industry. In 1989 he joined the mainstream food retail sector and became one of the pioneering members of the Spar group’s entry into the Eastern Cape whereafter he was appointed to the Spar National Guild Board of Directors in 1995. In 2001 he and his family emigrated to Australia where they owned and ran a franchised restaurant. On returning to South Africa in 2003, he rejoined the Spar group and was appointed as Divisional Marketing and Merchandise Director in the Eastern Cape region and subsequently the Northern and Southern Inland regions. Mark joined Famous Brands in March 2010 as Managing Executive of the Wimpy brand. In March 2013 he was appointed Managing Executive – Emerging Markets and in March 2015 he was appointed Managing Executive – Channel Services.

Pedja Turanjanin (47)Group Procurement Executive

Pedja began his career in a family business with his father, whilst studying engineering at Sarajevo University. Upon arrival in South Africa in 1991 he joined Steers Holdings. After gaining experience at Steers Restaurants he moved into operations and thereafter into Manufacturing and Logistics. Pedja was appointed Group Procurement and Quality Assurance Executive and later Managing Executive – Developing Brands and Markets. In November 2012 he resumed the position of Group Procurement Executive.

Susan Venter (52)Operations Executive – Finance

Susan holds a Bachelor of Commerce degree from the University of North West. After a successful career at The Cold Chain (ICS Group, Barlows) where she was General Manager for one of the branches, she joined Famous Brands as Logistics Financial Manager in July 2008. Susan was promoted to an executive role in August 2010. She played a critical role in managing the accounting system project when the company’s Manufacturing and Logistics divisions were combined into the Supply Chain division, as well as in the restructuring of Operations Finance as part of implementing the Fit 4 Purpose business model.

Steven Dike (45)Managing Executive – Joint Venture Business Units

Steven completed his Bachelor of Architecture at the University of the Witwatersrand in 1994 and thereafter completed his professional registration as an Architect. He managed his own architectural practice before joining a listed restaurant franchisor as a Design Manager in 1998. Steven joined Famous Brands in 2002 and has 17 years’ experience in the franchising and restaurant industry. He held the position of Group New Business and Development Executive until 2014 when he was appointed to the role of Managing Executive – Joint Venture Business Units. In his current role he is responsible for the management of the Joint Venture and Emerging Brands Business Units at Famous Brands.


Statement of commitmentThe Board of Directors of Famous Brands is fully committed to business integrity, fairness, transparency and accountability in all of its activities. In support of this commitment, the Group’s executive leadership subscribes to sound corporate governance in all aspects of the business and to the ongoing development and implementation of best practices. In line with our guiding principles of sustainable growth and integrity, Famous Brands has a code of ethics (the code) in place which articulates the Group’s commitment to doing business ethically. The code is included in the Group’s Board induction pack and is distributed to new employees when they join the Group. The code requires all directors and employees to act with honesty and integrity, and to maintain the highest ethical standards. It deals with compliance with laws and regulations, conflicts of interest, relationships with customers and suppliers, remuneration, outside employment and confidentiality. The code further prohibits employees

Corporate Governance report

from accepting bribes, provides guidelines with respect to receiving gifts and informs directors and employees about the Group‘s confidential reporting service to which unlawful or fraudulent activity can be reported. The Group does not make donations to political parties.

Governance frameworkThe Board takes guidance from the following regulatory and good governance frameworks in defining the Group’s governance and compliance framework:• King III; • The Companies Act of South Africa;• JSE Listings Requirements; and • IIRC Integrated Reporting Framework.

Details of our King III compliance can be found on the company’s website at www.famousbrands.co.za.

Our governance structureThe Board and Board Committees are supported by appropriate management structures and governance processes, which are reviewed continually to ensure that they remain effective in delivering against the company’s strategic objectives.

BOARD

Executive directorsGroup Chief Executive: Kevin Hedderwick

Chief Executive – Food Services: Darren HeleGroup Financial Director: Norman Richards

Audit and Risk Committee

Social and Ethics Committee

Remuneration Committee

Nominations Committee

Management structures

Executive Leadership (refer page 44)

IT Steering Committee

Safety, Health and Environment Committee

Social and Ethics working group


Page 47

Board composition As at 28 February 2015, the Board comprised eight non-executive directors and three executive directors. Of the eight non-executive directors, four are founding members of the company. Although five of the non-executive directors are not independent in terms of the King III independence criteria, the company has a unitary Board and no individual member of the Board has unfettered powers of decision making. Future appointments to the Board will be proposed mindful of King III independence criteria. The company has an Independent non-executive Chairman, whose role is separate from the role of the Group Chief Executive, thus ensuring that there is a balance of authority with regard to the Board’s decision-making processes. A separation of these roles achieves the necessary segregation of duties between the Chairman’s duty to provide overall leadership to the Board, which has responsibility for approving the company’s strategy, and the Group Chief Executive’s role, which has responsibility for the execution thereof. The Group Chief Executive is guided by an approvals framework, which sets out the respective responsibilities of the Board and executive management.

The composition of the Board is reviewed continually to ensure that the Board, collectively, has a balance of the necessary skills, knowledge and experience to assist in effectively discharging its duties and responsibilities.

Board appointment, retirement and rotation Appointments to the Board are made in a formal and transparent manner and are a matter for the Board as a whole, as assisted by the Nominations Committee. The Nominations Committee is guided by an approved policy document. Taking into consideration the skills and expertise required by the Board, any of the directors may propose an individual to serve on the Board. Such a nomination will only be effective once approved by a majority of directors passed in a properly constituted manner. Appointments made by the directors require approval by shareholders at the next Annual General Meeting (AGM).

A tailored induction programme for newly appointed directors is in place.

There are no service contracts with non-executive directors. Executive directors’ service agreements may be terminated with three months’ notice.

In terms of the Memorandum of Incorporation (MOI), at least one-third of the Board must retire by rotation at each year’s

AGM. The retiring directors may offer themselves for re-election. Brief curricula vitae of the directors retiring by rotation and offering themselves for re-election are set out on pages 42 and 43 of this Integrated Annual Report. The appointment of new directors is subject to confirmation by shareholders at the first AGM after their appointment.

Board charterThe Board’s general powers and terms of reference are outlined in the company’s MOI and the company’s Board charter. The primary functions of the Board are to:• review and approve corporate strategy;• determine the Group’s purpose and values;• retain full and effective control of the Group;• approve and oversee major capital expenditures,

acquisitions and disposals;• review and approve annual budgets and business plans;• monitor operational performance and management;• endeavour to ensure that information technology (IT)

governance is appropriate for the size and complexity of the business;

• endeavour to ensure that the Group complies with sound codes of business behaviour;

• endeavour to ensure that appropriate control systems are in place for the proper management of risk, financial control and compliance with all laws and regulations;

• appoint the Group Chief Executive and ensure succession planning for executive management is in place;

• regularly identify and monitor key risk areas;• oversee the company’s disclosure and communication

process; and• ensure that enlightened practices are in place to attract

talent and provide meaningful employment in a transforming society.

Board committees and chartersTo enable the Board to discharge its numerous responsibilities and duties, certain of these responsibilities have been delegated to Board Committees. The following committees have been constituted:• Audit and Risk Committee;• Remuneration Committee;• Social and Ethics Committee; and• Nominations Committee.

Charters approved by the Board govern the activities of these Committees. All are chaired by non-executive directors and are directly responsible to the Board, which retains ultimate responsibility.


Corporate Governance report continued

Audit and Risk CommitteeCompositionAs at 28 February 2015, the Audit and Risk Committee comprised three directors, all of whom are non-executive. The committee meets at least three times a year. The Group Chief Executive, Group Financial Director, as well as internal and external auditors attend meetings as invitees. Both internal and external auditors have unfettered access to the Chairman of the Audit and Risk Committee.

Audit and Risk Committee membersChris Boulle* Chairman and non-executive director Bheki Sibiya Independent non-executive directorNorman Adami^ Independent non-executive directorKhumo Shuenyane^^ Independent non-executive director * Meets independence criteria as defined in the Companies Act of

South Africa ^ Appointed 24 February 2015 ̂ ^ Resigned 26 February 2015

Roles and responsibilitiesThe Committee provides support to the Board on good corporate governance and on the risk profile and risk management of the Group. While the Committee is responsible for overseeing the Group’s risk management policy, management is responsible for the identification, evaluation and mitigation of the Group’s risks. This entails formulating a risk management plan and monitoring implementation and compliance thereto.

In addition, the role of the Committee is, inter alia:• to review the effectiveness of the Group’s systems of

internal controls, including financial controls and business risk management, and to endeavour to ensure that effective internal control systems are maintained;

• to satisfy itself of the expertise, resources and experience of the company’s finance function;

• to monitor and supervise the effective functioning and performance of the internal audit function;

• to ensure that the scope of the internal audit function has no limitations imposed by management and that there is no impairment of its independence;

• to evaluate the independence, effectiveness and performance of the external auditors and obtain assurance from the auditors that adequate accounting records are being maintained;

• to appoint the external auditors on an annual basis;• to ensure that the respective roles and functions of

external audit and internal audit are sufficiently clarified and co-ordinated; and

• to review financial statements and the Integrated Annual Report for proper and complete disclosure of timely, reliable and consistent information and to confirm that the accounting policies used are appropriate.

Group Financial Director evaluationThe Committee is entirely satisfied with the competence and expertise of the Group Financial Director and has reported as such to the Board, which endorses the recommendation.

Social and Ethics CommitteeCompositionThe Social and Ethics Committee comprised three non-executive directors for the year under review. The Committee meets at least twice a year. The Chief Executive Officer – Food Services, the Group Financial Director, the Human Resources Executive and the Transformation Manager are invitees to the Committee meetings.

Social and Ethics Committee membersChris Boulle Chairman and non-executive director Bheki Sibiya Independent non-executive directorKhumo Shuenyane^ Independent non-executive director^ Resigned 26 February 2015

Roles and responsibilitiesThe duties of the Committee are to:• review and approve the policy, strategy and structures to

manage social and ethics issues within the Group;• oversee the monitoring, assessment and measurement of

the company’s activities relating to good corporate citizenship, including the Group’s promotion of equality, prevention of unfair discrimination, reduction of corruption, 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;

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

• 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;


Page 49

• as a business substantially invested in South Africa, develop a skilled and motivated workforce whose profile is representative of the demographics of the country;

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

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

• oversee the monitoring of the Group’s labour and employment practices, including the Group’s 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 educational development of its employees; and

• consider the implications of and compliance with the JSE’s Socially Responsible Investment (SRI) Index.

Remuneration CommitteeCompositionAs at 28 February 2015, the Remuneration Committee comprised three directors. The Committee meets at least twice a year.

Remuneration Committee membersBheki Sibiya Chairman and Independent

non-executive directorSantie Botha Chairman of the Board and

Independent non-executive directorChris Boulle Non-executive director

Roles and responsibilitiesThe key mandate of the Committee is to compile emolument proposals in accordance with the Group’s remuneration strategy. This is designed and tailored to:• continue to attract, retain and motivate executives of the

highest calibre;• enable the Group to remain an employer of choice; and• ensure a blend of skills that consistently achieves

predetermined business objectives and targets.

The Committee approves the appointment terms and remuneration for all executive directors. It is also responsible for making recommendations to the Board on all fees payable by the company to non-executive directors for membership of both the Board and Board Committees. Impartial directors consider such recommendations prior to submission to shareholders for approval. The Committee plays an integral role in succession planning, particularly in respect of the Group Chief Executive and executive management.

Nominations CommitteeCompositionAs at 28 February 2015, the Nominations Committee comprised eight non-executive directors. The Committee meets at least twice a year.

Nominations committee membersSantie Botha Independent Chairman of

the Board and the Nominations Committee

Bheki Sibiya Independent non-executive director

Norman Adami Independent non-executive director

Chris Boulle Non-executive directorJohn Lee Halamandres Non-executive directorPanagiotis (Peter) Halamandaris Non-executive directorPeriklis Halamandaris Non-executive directorTheofanis Halamandaris Non-executive director

Roles and responsibilitiesThe mandate of the Committee includes assisting the Board with:• the identification and evaluation of suitable candidates

for appointment to the Board;• the annual evaluation of the performance and

effectiveness of the Board, Board Committees and individual directors; and

• succession planning.


Board meetings and procedures The Board meets at least quarterly. The Board and Board Committee meetings are guided by formal agendas which are distributed to the Board and Board Committee members prior to the meetings. The Company Secretary assists the Chairman of the Board and the Chairmen of the Board Committees with the drafting of the agendas. Board and Board Committee packs are distributed to the Board and Board Committee members prior to the meetings.

During the year under review, the Board met as follows:

Date Key objective for the meeting

May 2014 Approval of the Group’s Annual Financial Statements and Integrated Annual Report for the year ended 28 February 2014

October 2014 Approval of the Group’s interim financial results for the six months ended 31 August 2014

November 2014 Strategy session

February 2015 Approval of the budget for the year ending 28 February 2016

Attendance at Board and Board Committee meetings during the year ended 28 February 2015

Board

Audit and Risk

committee

Social and Ethics

CommitteeNominations

CommitteeRemuneration

Committee

Number of meetings 4 3 2 2 2Board/Committee membersNJ Adami (appointed 24 February 2015) 1/1 – – – –A Botha (HR Executive) n/a n/a 2/2^ n/a 2/2^

SL Botha 4/4 n/a n/a 2/2 2/2CH Boulle 4/4 3/3 2/2 2/2 2/2P Halamandaris 3/4 2/3^ n/a 2/2 n/aP Halamandaris (junior) 4/4 n/a n/a 2/2 n/aT Halamandaris 3/4 n/a n/a 2/2 n/aJL Halamandres 4/4 n/a n/a 2/2 n/aKA Hedderwick 4/4 3/3^ n/a 1/2^ 2/2^

DP Hele 4/4 n/a 2/2^ n/a n/aK Ntlha (Company Secretary – appointed 1 August 2014) 2/2 2/2 1/1 n/a n/aJ Legote (Transformation Manager) n/a n/a 2/2^ n/a n/aJG Pyle (Company Secretary – resigned 31 July 2014) 1/1 1/1 1/1 n/a n/aNS Richards 4/4 3/3^ 2/2^ n/a n/aBL Sibiya 4/4 2/3 1/2 2/2 2/2

KL Shuenyane (resigned 26 February 2015) 4/4 3/3 2/2 2/2 n/a^ By invitation

Corporate Governance report continued


Page 51

Conflicts of interest and other directorshipsThe company’s directors comply with the provisions of the Companies Act of South Africa with respect to the declaration of personal financial interests and a register of directors’ declarations of interests is maintained.

Company SecretaryMs Kelebogile Ntlha was appointed as Company Secretary with effect from 1 August 2014. The directors have unlimited access to the advice and services of the Company Secretary. The Board is satisfied that the Company Secretary has maintained an arm’s length relationship with the Board, is competent and has the appropriate qualifications and experience required by the Group. Her biographical details and curriculum vitae are set out on page 45 of this Integrated Annual Report.

Ms Ntlha replaced Mr JG Pyle who held office as Company Secretary and resigned with effect from 31 July 2014. The Board is grateful to Mr Pyle for his valuable contribution to the company over the past five years and wishes him the best for the future.

Dealings in the company’s securities and insider tradingIn compliance with the JSE Listings Requirements and good governance, the company has a policy in place with respect to dealings in the company’s securities. The policy requires directors and the Group’s Company Secretary to obtain prior written clearance from the Chairman of the Board before dealing in the securities of Famous Brands during an open period. The policy further prohibits the company’s directors, the Company Secretary and senior employees from dealing in the company’s securities during closed periods, and at any time when in possession of inside information as defined in the Financial Markets Act, 2012.

The Company Secretary assists the Chairman of the Board with the enforcement of the policy and maintains a record of requests for dealings and clearances therefore. Dealings by directors in the company’s securities are published in line with the JSE Listings Requirements on the JSE’s Securities Exchange News Service via the company’s sponsor.


Remuneration philosophyThe Remuneration Committee (the Committee) has adopted a remuneration policy. Famous Brands has an ambitious growth objective that requires the Group’s remuneration strategies to be sufficiently robust and innovative to attract and retain people with the requisite skills. The remuneration policy and practices support the vision, mission and strategies of the Group.

This policy has as its objectives to:• continue to attract, retain and motivate employees of the

highest calibre;• enable the Group to remain an employer of choice;• ensure that appropriately talented and trained people are

available to achieve the business strategy;• determine the package of executives above a certain level

using the policy as a guideline; and• align the Group with relevant and related market data and

practices.

Responsibility for governing remunerationThe primary role of the Committee is to assist the Board in fulfilling its corporate governance responsibilities with regard to remuneration. The Committee sets and closely monitors executive remuneration for the Group. In allocating awards, the Committee is guided by actual individual performance delivered against individual scorecard goals. Management is guided by the remuneration policy and is responsible for its implementation. The Committee revises the policy when necessary and as circumstances change.

Service contractsThere are no service contracts with non-executive directors. Executive directors’ service agreements may be terminated with three months’ notice.

Remuneration of directorsThe remuneration of directors for the financial year ended 28 February 2015 is set out in Note 26 to the full set of the audited Annual Financial Statements which is available on the company’s website at www.famousbrands.co.za.

Remuneration of key management and employeesThe Committee approves the remuneration packages of key management, including the total discretionary bonus pool available for distribution to management. Executive compensation comprises a guaranteed cost to company pay package paid monthly and two variable elements:• short-term cash incentives in the form of performance

bonuses expressed as a percentage of total package; and• longer-term in the form of the Share Options Scheme and

the new Long-Term Incentive (LTI) Scheme.

Remuneration report

Both variable incentives have been created within the Group for the purposes of executive retention and to enable executives to create individual long-term wealth as they align their personal interests with those of the company. Performance is measured via a three plus one scorecard mechanism. The scorecard comprises three technical goals plus one development goal. The technical goals include Operational profit, HEPS growth at CPI plus 50% of CPI, EBITDA growth at CPI plus 50% of CPI, market share and customer service components.• The Long-term Incentive has performance and retention

elements. For the performance Share Appreciation component, rights are allocated and for the retention component Full Shares are allocated.

• The allocation of shares will be based on a multiple of the Executive’s package at base. This multiple may be altered for superior company or individual performance.

• Vesting conditions are proposed in line with King III and international best practice whereby vesting takes place in three equal tranches, with the first tranche vesting at the end of the third year. Upon vesting an executive will have had to score an average Performance Score of at least three for the Share Appreciation Rights to vest. This ensures that performance is consistent and aligned with shareholder interests.

• Full Shares will vest regardless of the average performance score as these are issued with a retention purpose. Therefore if the employee is still employed by the company after three years the purpose has been achieved.

• Superior achievement over the three-year period results in a vesting improvement aligned to the allocation methodology.

The amended LTI Scheme replaces the Share Options Scheme (refer Note 27 to the full set of the audited Annual Financial Statements).

The 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 enjoy a “basic plus benefits remuneration scheme” where Famous Brands contributes to their provident fund. They also qualify for a guaranteed bonus. Famous Brands remains committed to equitable and competitive pay practices when compared to the national market and regular benchmarking with credible institutions confirms this. The Committee is accountable for ensuring that enlightened remuneration objectives are achieved.


Page 53

Social and Ethics Committee’s report

The Social and Ethics Committee (the Committee) is constituted as a formal Committee of the Board in terms of the Companies Act (the Act) and this report is prepared in compliance with the requirements of the Act.

The composition, roles and responsibilities of the Committee are set out on page 48 of this Integrated Annual Report.

The Committee met twice during the financial year ended 28 February 2015 and focused on the following areas:• the Group’s transformation performance;• the Group’s performance against the JSE’s Socially

Responsible Investment (SRI) Index criteria with the aim of addressing disclosure areas inhibiting the Group’s inclusion in the SRI Index; and

• monitoring performance against the Committee’s mandate as set out in the Companies Act Regulation 43 and the Committee’s charter, a summary of which is set out on page 48 of this Integrated Annual Report.

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

CH BoulleChairman of the Social and Ethics Committee22 May 2015

Summarised financial statements and other information

We firmly believe that the communities in which we operate must benefit from our activities, and we commit significant resources to empowerment and enterprise development. Community engagement also takes place through a range of initiatives including sponsorships such as Varsity Sports.

Directors’ report

The directors have pleasure in submitting their report for the year ended 28 February 2015.

Nature of businessFamous 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 brands represented by a franchise network of 2 545 restaurants across South Africa, the Rest of Africa, the United Kingdom, and the Middle East, underpinned by substantial Logistics and Manufacturing operations.

Directors’ responsibilitiesThe responsibilities of the company’s directors are detailed on page 59 of this report.

Financial statements and resultsThe Group’s results and financial position are reflected in summarised consolidated financial statements on pages 60 to 68 as well as in the full set of the audited Annual Financial Statements which are available on the company’s website at www.famousbrands.co.za.

Corporate GovernanceThe Corporate Governance report is set out on pages 46 to 51.

Tangible and intangible assetsThere was no major change in the nature or the use of the property, plant and equipment and intangible assets owned by the company or any of its subsidiaries during the year under review.

DividendsThe following information relates to the dividends in respect of the year under review:

Interim dividendThe directors declared an interim gross ordinary dividend number 40 of 155 cents per ordinary share, which was paid on 8 December 2014 to ordinary shareholders recorded in the books of the company at the close of business on 5 December 2014.

Final dividendThe directors declared a final gross ordinary dividend number 41 of 200 cents per ordinary share, payable on 13 July 2015 to ordinary shareholders recorded in the books of the company at the close of business on 10 July 2015.

Share capitalThe authorised and issued share capital of the company at 28 February 2015 is set out in Note 9 to the full set of the audited Annual Financial Statements which are available on the company’s website at www.famousbrands.co.za.

Issued during the yearThe company issued 570 000 (2014: 1 415 000) ordinary shares for a cash subscription of R24 million (2014: R38 million) to participants of the Famous Brands Share Incentive Scheme.

Shareholder spread and material shareholdersIn terms of the JSE Listings Requirements, Famous Brands complies with the minimum shareholder spread requirements, with 70% (2014: 66%) of ordinary shares being held by the public at 28 February 2015. Details of the company’s shareholder spread and material shareholders are set on page 68 of this report.

Staff Share Incentive SchemeDetails are reflected in Note 27 to the full set of the audited Annual Financial Statements which are available on the company’s website at www.famousbrands.co.za.

Directors and Company SecretaryThe names of the directors and the Company Secretary at the date of this report are detailed on pages 42 to 43 and 45.

Changes to the Board during the year under review were as follows:• 24 February 2015: Appointment of Mr N Adami to the Board

as Independent non-executive director and to the Audit and Risk Committee as a member of the Committee.

• 26 February 2015: Resignation by Mr K Shuenyane from the Board and related Board Committees.

• 22 May 2015: Appointment of Mr M Kgosana to the Board as Independent non-executive director and to the Audit and Risk Committee as a member of the Committee.


Page 57

Subsidiaries and associatesDetails of the Group’s investments in associates and subsidiaries are set out in Note 3 and Note 4 to the full set of the audited Annual Financial Statements which are available on the company’s website at www.famousbrands.co.za.

AcquisitionsDuring the year under review, the Group acquired a 70% stake in the Wakaberry™ Frozen Yoghurt Bar business effective 1 April 2014.

Subsequent eventsThe Group acquired a controlling stake in the following companies:• 75% in Cater Chain Food Services, a local business

distributing primarily red meat products across South Africa and into certain markets in Africa. The acquisition was effective from 1 April 2015.

• 51% in Retail Group (Pty) Ltd, Botswana, Famous Brands’ Master Licence partner in Botswana, marking the commencement of a new strategic thrust in our growth programme. The acquisition is pending approval by the Botswanan Competition Commission.

Special resolutionsOn 24 July 2014, shareholders approved the following special resolutions:• approval of non-executive directors’ remuneration for

services as directors;• general authority to repurchase shares of the company; and• general authority to provide financial assistance to related

or inter-related entities.

At the next AGM to be held on 31 August 2015 shareholders will be asked to renew the above three approvals as set out in the notice to shareholders (refer page 70).

Borrowing powersThe company has unlimited borrowing powers in terms of its Memorandum of Incorporation.

The Audit and Risk Committee is entirely satisfied with the competence and expertise of the Group Financial Director.

The Audit and Risk Committee recommended the summarised consolidated financial statements and the full set of the audited Annual Financial Statements for the year ended 28 February 2015 for approval to the Board. The Board has subsequently approved the financial statements which will be open for discussion at the forthcoming Annual General Meeting.

CH BoulleChairman of the Audit and Risk Committee

22 May 2015

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.

During the financial year ended 28 February 2015 in addition to the duties set out in the Audit and Risk Committee’s charter (a summary of which is provided on page 48 of this report) the Audit and Risk Committee carried out its functions, inter alia, as follows:• determined the fees to be paid to RSM Betty & Dickson

(Johannesburg) and its terms of engagement;• ensured that the appointment of RSM Betty & Dickson

(Johannesburg) complied with the legislation relating to the appointment of auditors; and

• approved a non-audit services policy which determines the nature and extent of any non-audit services which RSM Betty & Dickson (Johannesburg) may provide to the Group.

During the year under review, the Audit and Risk Committee pre-approved non-audit services provided by RSM Betty & Dickson (Johannesburg), including tax administration services.The Audit and Risk Committee has satisfied itself through enquiry that RSM Betty & Dickson (Johannesburg) and Ms J Kitching, the designated auditor, are independent of the Group.

In my capacity as the Company Secretary, I hereby certify that Famous Brands Limited has lodged with the Companies and Intellectual Property Commission for the financial year ended 28 February 2015, all such returns and notices as are required of a public company in terms of the Companies Act of South Africa and that all such returns are to the best of my knowledge and belief true, correct and up to date.

K NtlhaCompany Secretary

22 May 2015

Company Secretary’s certificate

Audit and Risk Committee’s report


Page 59

Approval of the summarised consolidated financial statements

The directors are required by the Companies Act of South Africa to maintain adequate accounting records and are responsible for the content and integrity of the summarised consolidated financial statements and related financial information included in this report. It is their responsibility to ensure that the summarised consolidated financial statements and the full set of the audited Annual Financial Statements present fairly the state of affairs of the Group as at the end of the financial year and the results of its operations and cash flows for the year then ended, in conformity with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Council, the Companies Act of South Africa and the Listings Requirements of the JSE Limited.

The external auditors are engaged to express an independent opinion on the Annual Financial Statements. The Annual Financial Statements are prepared in accordance with IFRS and are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates. The summarised consolidated financial statements were derived from the full set of the audited Annual Financial Statements for the year ended 28 February 2015 available on our website at www.famousbrands.co.za.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the Board of Directors sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a

manner that, in all reasonable circumstances, is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The Audit and Risk Committee, together with the internal auditors, perform an oversight role in matters related to financial and internal controls.

The directors are of the opinion that, based on the information and explanations given by management, the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the Annual Financial Statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the Group’s cash flow forecast for the subsequent year and, in light of this review and the current financial position, they are satisfied that the Group has access to adequate resources to continue in operational existence for the foreseeable future.

The summarised consolidated financial statements and the full set of audited Annual Financial Statements, which have been prepared on the going concern basis, were approved by the Board of Directors on 22 May 2015 and are signed on its behalf by:

Santie Botha Kevin HedderwickIndependent Chairman Group Chief Executive

22 May 2015

Summarised consolidated financial statements

Summarised consolidated statement of financial positionat 28 February 2015

2015

R000

2014Restated*

R000

AssetsNon-current assets 1 196 839 1 139 928 Property, plant and equipment 208 951 196 244 Intangible assets 922 576 879 675 Investments in associates 57 568 52 934 Deferred tax 7 744 11 075 Current assets 655 421 552 911 Inventories 186 513 177 511 Trade and other receivables 316 276 277 867 Current tax assets 26 404 6 834 Cash and cash equivalents 126 228 90 699

Total assets 1 852 260 1 692 839

Equity and liabilitiesEquity attributable to owners of Famous Brands Limited 1 389 388 1 224 365 Non-controlling interests 27 766 10 583

Total equity 1 417 154 1 234 948

Non-current liabilities 58 702 53 735 Deferred tax and lease liabilities 58 702 53 735 Current liabilities 376 404 404 156 Trade and other payables 331 256 298 278 Non-controlling shareholder loans 24 449 29 344 Short-term portion of interest-bearing borrowings – 65 000 Current tax liabilities 20 699 11 534

Total liabilities 435 106 457 891

Total equity and liabilities 1 852 260 1 692 839

* Computer software has been reclassified from Property, plant and equipment to Intangible assets in order to enhance disclosure. Refer restatement Note 6.


Page 61

Summarised consolidated statement of profit or loss and other comprehensive incomefor the year ended 28 February 2015

2015R000

2014R000

%change

Revenue 3 283 342 2 825 979 16 Cost of sales (1 832 522) (1 598 583)

Gross profit 1 450 820 1 227 396 18 Selling and administrative expenses (778 796) (661 879) 18

Operating profit 672 024 565 517 19 Net interest expense (269) (3 212) (92)Share of profit of associates 7 608 5 140

Profit before tax 679 363 567 445 20 Tax (194 651) (161 985)

Profit for the year 484 712 405 460 20

Other comprehensive income, net of tax:Exchange differences on translating foreign operations* (2 957) 59 029

Total comprehensive income for the year 481 755 464 489

Profit for the year attributable to:Owners of Famous Brands Limited 465 756 401 637 Non-controlling interests 18 956 3 823

484 712 405 460

Total comprehensive income attributable to:Owners of Famous Brands Limited 462 799 460 666 Non-controlling interests 18 956 3 823

481 755 464 489

Earnings per share (cents)Basic earnings per share 468 406 15 Diluted earnings per share 468 405 16

* This item may be reclassified subsequently to profit or loss.

Summarised consolidated financial statements continued

Summarised consolidated statement of changes in equityfor the year ended 28 February 2015

2015R000

2014R000

Balance at the beginning of the year 1 234 948 1 000 088 Group total comprehensive income for the year 481 755 464 489 Group dividends to shareholders (327 389) (270 946)Share-based payments 1 992 3 248 Issue of share capital and share premium 24 106 37 775 Non-controlling interest arising on business combination 1 742 508 Disposal of non-controlling interest – (214)

Balance at the end of the year 1 417 154 1 234 948


Page 63

Summarised consolidated statement of cash flowsfor the year ended 28 February 2015

2015

R000

2014Restated*

R000

Cash generated before changes in working capital 716 902 601 756 Increase in inventories (5 066) (9 955)Increase in receivables (36 694) (22 674)Increase in payables 38 093 24 432

Cash generated from operations 713 235 593 559 Net interest paid (269) (3 212)Tax paid (201 524) (166 748)

Cash available from operating activities 511 442 423 599 Dividends paid (326 969) (271 125)

Net cash inflow from operating activities 184 473 152 474

Cash flow from investing activitiesAdditions to property, plant and equipment (46 124) (38 637)Intangible assets acquired (9 382) (12 925)Proceeds from disposal of property, plant and equipment 3 098 1 809 Proceeds from disposal of intangible assets 375 250 Dividends received from associates 2 975 –Net cash outflow on disposal of subsidiary – (221)Net cash outflow on acquisition of business operations – (5 500)Net cash outflow on investment in subsidiary (47 334) (9 022)Net cash outflow on investment in associates – (47 794)

Net cash outflow from investing activities (96 392) (112 040)

Cash flow from financing activitiesBorrowings repaid (65 000) (100 827)Proceeds from issue of equity instruments of Famous Brands Limited 24 106 37 775 Cash (repaid to)/contributed by non-controlling shareholders (4 895) 17 061

Net cash outflow from financing activities (45 789) (45 991)

Net increase/(decrease) in cash and cash equivalents 42 292 (5 557)Foreign currency effect (6 763) 11 520 Cash and cash equivalents at the beginning of the year 90 699 84 736

Cash and cash equivalents at the end of the year 126 228 90 699


Primary (business units) and secondary (geographical) segment reportfor the year ended 28 February 2015

2015R000

2014R000

%change

RevenueFranchising and Development 615 038 537 817 14Supply Chain* 2 506 610 2 145 105 17

Manufacturing 1 257 691 1 010 541 24Logistics 2 223 196 1 937 787 15Eliminations (974 277) (803 223) 21

Corporate 1 740 1 355

South Africa 3 123 388 2 684 277 16International 159 954 141 702 13

Rest of Africa 57 484 49 786 15UK 102 470 91 916 11

Total 3 283 342 2 825 979 16

Operating profitFranchising and Development 365 353 324 925 12Supply Chain* 261 725 203 513 29

Manufacturing 172 538 126 663 36Logistics 89 187 76 850 16

Corporate 1 349 1 248

South Africa 628 427 529 686 19International 43 597 35 831 22

Rest of Africa 23 013 22 959 –UK 20 584 12 872 60

Total 672 024 565 517 19

* The Retail business within the Supply Chain segment has been reclassified from Logistics to Manufacturing.



Page 65

Statistics and ratiosfor the year ended 28 February 2015

2015 2014%

change

Earnings per share (cents)Basic earnings per share 468 406 15Diluted earnings per share 468 405 16Headline earnings per share 467 406 15Diluted headline earnings per share 467 405 15

Dividends per share (cents) 355 300 Interim 155 130 19Final 200 170 18

Ordinary shares (000)In issue (excluding treasury shares of 5 000 (2014: Nil)) 99 807 99 242 Weighted average 99 581 98 942 Diluted weighted average 100 236 99 577

Operating profit margin (%) 20.5 20.0 Dividend cover on headline earnings (times) 1.3 1.4

Notes to the summarised consolidated financial statementsfor the year ended 28 February 2015

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 investments in associates.

1. Statement of complianceThese summarised consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), the presentation as well as disclosure requirements of IAS 34 Interim financial reporting applied to year-end reporting, the SAICA financial reporting pronouncements issued by the Financial Reporting Standards Council, 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 www.famousbrands.co.za.

The Group’s audited Annual Financial Statements and the summarised consolidated financial statements as at and for the year ended 28 February 2015 were prepared on the going concern basis. The accounting policies applied in the presentation of the summarised consolidated financial statements are consistent with those applied for the year ended 28 February 2014, except for new standards that became effective for the Group’s financial period beginning 1 March 2014, refer to Note 3.

The summarised consolidated financial statements were prepared on the historical cost basis, under the supervision of Norman Richards, Group Financial Director.

3. Changes in accounting policiesThe Group has adopted all the new, revised or amended accounting standards (refer to Accounting policy Note 22 of the audited Annual Financial Statements available on our website at www.famousbrands.co.za) which were effective for the Group from 1 March 2014, none of which had a material impact on the Group.

2015R000

2014R000

4. Earnings and headline earnings per shareReconciliation between earnings and diluted earningsProfit attributable to equity holders of Famous Brands Limited 465 756 401 637 Adjustment for:After tax interest receivable on future share placements 3 348 1 487

Diluted earnings 469 104 403 124

Earnings per share (cents)Basic 468 406 Diluted 468 405

Reconciliation between headline earnings and diluted headline earningsProfit attributable to equity holders of Famous Brands Limited 465 756 401 637 After tax loss on disposal of property, plant and equipment (526) 433 After tax remeasurements included in equity-accounted earnings of associates (29) (128)

Headline earnings 465 201 401 942 Adjustment for:After tax interest receivable on future share placements 3 348 1 487

Diluted headline earnings 468 549 403 429

Headline earnings per share (cents)Basic 467 406 Diluted 467 405



Page 67

2015R000

2014R000

5. Capital expenditure and commitmentsInvested* 55 506 51 562 Property, plant and equipment 46 124 38 637Intangible assets 9 382 12 925Authorised, not yet contracted* 83 265 52 389 Property, plant and equipment 68 028 39 965Intangible assets 15 237 12 424


6. Restatement of comparative figuresThe carrying amount of computer software was reclassified from property, plant and equipment to intangible assets. The impact of the reclassification is set out below:

Previously reported

R000 Adjustment

R000 Restated

R000

Statement of financial positionat 28 February 2014Property, plant and equipment 205 575 (9 331) 196 244 Intangible assets 870 344 9 331 879 675

1 075 919 – 1 075 919

Statement of cash flowsfor the year ended 28 February 2014Cash flow from investing activitiesAdditions to property, plant and equipment (44 070) 5 433 (38 637)Intangible assets acquired (7 492) (5 433) (12 925)

(51 562) – (51 562)

7. 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. The Group’s related party transactions are detailed in Note 28 to the audited Annual Financial Statements available on our website at www.famousbrands.co.za.

8. Financial instrumentsThere is no material difference between the fair values of the Group’s financial instruments and their carrying amounts. The Group’s financial instruments are detailed in Note 30 to the audited Annual Financial Statements available on our website at www.famousbrands.co.za.

9. Business combinationsDuring the year under review, the Group acquired a 70% stake in the Wakaberry™ Frozen Yoghurt Bar business, effective 1 April 2014.

10. Subsequent eventsThe Group acquired a controlling stake in the following companies:• 75% in Cater Chain Food Services, a local business distributing primarily red meat products across South Africa and into

certain markets in Africa. The acquisition was effective from 1 April 2015; and• 51% in Retail Group Proprietary Limited, Botswana, Famous Brands’ Master Licence partner in Botswana, marking the

commencement of a new strategic thrust in our growth programme. The acquisition is pending approval by the Botswanan Competition Commission.

28 February 2015 28 February 2014

Number of share-

holders %Number

of shares %

Number of share-

holders %Number

of shares %

Analysis of shareholdersHoldings1 – 10 000 8 990 95.06 10 388 284 10.41 6 983 94.60 8 560 026 8.6210 001 – 50 000 335 3.54 7 053 569 7.07 290 3.93 5 897 628 5.9450 001 – 100 000 61 0.65 4 577 352 4.59 33 0.45 2 408 370 2.43100 001 – 1 000 000 59 0.62 17 958 955 17.99 64 0.87 21 714 172 21.881 000 001 and more 12 0.13 59 834 275 59.94 11 0.15 60 662 239 61.13

9 457 100.00 99 812 435 100.00 7 381 100.00 99 242 435 100.00

Analysis of holdingIndividuals 7 378 78.02 35 166 449 35.23 5 877 79.62 39 934 901 40.25Insurance companies 16 0.17 654 378 0.66 16 0.22 1 165 424 1.17Investment trusts 1 132 11.97 15 550 785 15.58 839 11.37 12 972 459 13.07Other companies and corporate bodies 931 9.84 48 440 823 48.53 649 8.79 45 169 651 45.51

9 457 100.00 99 812 435 100.00 7 381 100.00 99 242 435 100.00

Major shareholders (holding more than 5% of the shares in issue) excluding directors

Public Investment Corporation 9 369 087 9.39 7 221 104 7.28Arisaig Africa Consumer Fund 9 175 293 9.19 12 797 657 12.90Pictet and Cie (Europe) SA AIF 5 254 405 5.26 * *Coronation Life Managers Limited * * 6 426 642 6.48

23 798 785 26 445 403

Shareholder spreadPublic 9 450 99.93 70 242 088 70.37 7 375 99.92 65 405 557 65.90Non-public 7 0.07 29 570 347 29.63 6 0.08 33 836 878 34.10Directors’ holdings 6 0.06 29 565 347 29.62 6 0.08 33 836 878 34.10Own holdings (Treasury shares) 1 0.01 5 000 0.01 – – – –

9 457 100.00 99 812 435 100.00 7 381 100.00 99 242 435 100.00

* Below 5% holding of the company’s shares in issue.

Shareholder spread


Page 69

Shareholders’ diary

Financial year-end 28 February Annual General Meeting Monday, 31 August 2015 Reports Announcement of annual results for the year ended 28 February 2015 Monday, 25 May 2015Posting of the Integrated Annual Report for the year ended 28 February 2015 Thursday, 30 July 2015 Announcement of interim results for the half-year ended 31 August 2015 Monday, 26 October 2015 Final dividend Dividend declaration date Friday, 22 May 2015Last day to trade cum-dividend Friday, 3 July 2015Shares commence trading ex-dividend Monday, 6 July 2015Record date Friday, 10 July 2015Payment of dividend Monday, 13 July 2015

Share certificates may not be dematerialised or rematerialised between Monday, 6 July 2015 and Friday, 10 July 2015, both dates inclusive.

Notice to shareholders

Famous Brands Limited(Registration number 1969/004875/06)(Incorporated in the Republic of South Africa)(Famous Brands or the company)JSE share code: FBR ISIN: ZAE000053328

Notice is hereby given that the 21st Annual General Meeting (AGM) of shareholders of the company will be held at the offices of the company, 478 James Crescent, Halfway House, Midrand, on Monday, 31 August 2015 at 14:00 for the purpose of (i) dealing with such business as may lawfully be dealt with at the meeting, and (ii) considering and, if deemed fit, passing, with or without modification, the resolutions set out hereunder in the manner required by the Companies Act of South Africa (the Act), which meeting is to be participated in and voted at by shareholders recorded in the company’s securities register as at the record date of 21 August 2015.

Kindly note that meeting participants (including proxies) will be required to provide reasonably satisfactory identification before being entitled to attend or participate in the meeting. Forms of identification include valid identity documents, driver’s licences and passports.

Ordinary resolutionsThe percentage of voting rights required for an ordinary resolution to be adopted is more than 50% (fifty percent) of the voting rights exercised on the resolution at a quorate meeting.

1. Ordinary resolution No. 1: Adoption of the Annual Financial Statements and reports

“RESOLVED THAT the Annual Financial Statements of the Group and the company for the year ended 28 February 2015, together with the directors’ report, the report of the independent auditors, and the reports of the Audit and Risk Committee and the Social and Ethics Committee, be and are hereby received and adopted.”

2. Ordinary resolution No. 2: Appointment of auditors

“RESOLVED THAT Deloitte & Touche be appointed as the independent auditors of the company, it being noted that S Nelson is the registered individual auditor who will undertake the audit. The Audit and Risk Committee is authorised to determine the auditor’s remuneration for the past year.”

3. Ordinary resolution No. 3: Re-election and appointment of directors

“RESOLVED to individually re-elect or appoint the following directors (ordinary resolutions 3.1 to 3.5). The Board recommends the election of these directors, who retire by rotation in terms of the Memorandum of Incorporation (MOI) and being eligible, thereto make themselves available for re-election.”

3.1 Ordinary resolution No. 3.1: Re-election of Theofanis Halamandaris.

3.2 Ordinary resolution No. 3.2: Re-election of John Lee Halamandres.

3.3 Ordinary resolution No. 3.3: Re-election of Bheki Lindinkosi Sibiya.

3.4 Ordinary resolution No. 3.4: “RESOLVED that the appointment of Norman Adami as an Independent non-executive director effective 24 February 2015, be and is hereby confirmed.”

3.5 Ordinary resolution No. 3.5 “RESOLVED that the appointment of Moses Kgosana as an Independent non-executive director effective 22 May 2015, be and is hereby confirmed.” Moses Kgosana, CA(SA), is the outgoing Chief Executive of KPMG Southern Africa as well as Chairman of KPMG Africa. He also served as a member of the KPMG International Board as Lead director. Moses has 33 years of Accounting, Auditing and Advisory experience within the Public and Private Sectors. Previously, he was Chairman of the Policy Board and Executive director of Consumer Markets for KPMG South Africa.

Brief curricula vitae of the directors who have offered themselves for appointment or re-election in terms of ordinary resolutions No. 3.1 to 3.4 are included on pages 42 to 43 of this Integrated Annual Report.

4. Ordinary resolution No. 4: Re-election and appointment of the Chairman and members of the Audit and Risk Committee

“RESOLVED to individually re-elect or appoint the following directors (ordinary resolutions No. 4.1 to 4.4) of the company as the Chairman or members of the Audit and Risk Committee until the conclusion of the next AGM of the company. The Board recommends the re-election and appointment of these members.”

4.1 Ordinary resolution No. 4.1: Re-election of Christopher Hardy Boulle as Chairman and member of the Audit and Risk Committee.


Page 71

4.2 Ordinary resolution No. 4.2: Re-election of Bheki Lindinkosi Sibiya as a member of the Audit and Risk Committee.

4.3 Ordinary resolution No. 4.3: Appointment of Norman Adami as a member of the Audit and Risk Committee.

4.4 Ordinary resolution No. 4.4: Appointment of Moses Kgosana as a member of the Audit and Risk Committee.

5. Ordinary resolution No. 5: To place 3% (three percent) of the unissued shares under directors’ control

“RESOLVED THAT 3% (three percent) of the authorised but unissued share capital of the company, from time to time, be placed under the control of the directors of the company until the next AGM with the authority to allot and issue all or part thereof for the purposes of issuing shares which have vested in terms of share scheme grants, subject to section 38 of the Act, and the JSE Listings Requirements and the company’s MOI.”

6. Ordinary resolution No. 6: Authority for directors or Company Secretary to implement resolutions

“RESOLVED to authorise and empower any two directors or the Company Secretary and any director signing together, to do all such things and sign all such documents and take all such actions as they consider necessary, to implement the resolutions set out in the notice convening the 21st AGM of the company.”

7. Ordinary resolution No. 7: Adoption of the Famous Brands Share Incentive Scheme (2015)

“RESOLVED THAT the Famous Brands Share Incentive Scheme (2015) be and is hereby adopted in accordance with the rules as initialled by the Chairman of the AGM for purposes of identification. The rules will be available for inspection at the registered office of the company from 31 July 2015 until 31 December 2015.”

In terms of the JSE Listings Requirements this ordinary resolution No. 7 must be passed by a 75% (seventy-five percent) majority of votes cast by shareholders present or represented by proxy at the AGM, excluding all votes attached to treasury shares.”

8. Non-binding resolution No. 1: Endorsement of remuneration policy

“RESOLVED THAT shareholders endorse, through a non-binding advisory vote to ascertain the shareholders’ view of Famous Brands’ remuneration

policy and its implementation. The Remuneration report is set out on page 52 of this Integrated Annual Report.”

Explanatory note In terms of the King Code of Governance Principles, an

advisory vote should be obtained from shareholders on the company’s annual remuneration policy. The vote allows shareholders to express their view on the remuneration policies adopted and their implementation, but will not be binding on the company.

Special resolutionsThe percentage of voting rights required for a special resolution to be adopted is at least 75% (seventy-five percent) of the voting rights exercised on the resolution at a quorate meeting.

9. Special resolution No. 1: Approval of non-executive directors’ remuneration for their services as directors

“RESOLVED THAT in terms of section 66(9) of the Act, payment of the remuneration for the services as non-executive directors of Famous Brands is approved for the period from 1 June 2015 as set out in the following table.”

Proposed non-executive directors’ fees Payment per attendance at meetings only

Per meetingFrom June

2015Rand

Per meetingFrom June

2014Rand

BoardChairman 84 800 80 000 Board member 58 300 55 000 Audit and Risk CommitteeChairman 26 500 25 000 Member 26 500 25 000 Other Committees*Chairman 21 200 20 000 Member 21 200 20 000

* Social and Ethics Committee and Remuneration Committee.

Explanatory note This resolution is proposed in order to comply with the

requirements of the Act. In terms of section 65(11)(h) of the Act, read with sections 66(8) and 66(9), remuneration may only be paid to directors for their services as directors in accordance with a special resolution approved by the shareholders within the previous two years.

Notice to shareholders continued

10. Special resolution No. 2: General authority to repurchase shares

“RESOLVED THAT the company approves, as a general approval contemplated in section 48 of the Act, the acquisition by the company (or by a subsidiary of the company) of ordinary shares issued of the company on such terms and conditions and in such amounts as the directors of the company may decide, but subject always to the provisions of the Act and the JSE Listings Requirements, which general approval shall endure until the next AGM of the company (when this approval shall lapse unless it is renewed at that AGM, provided that it shall not extend beyond 15 (fifteen) months from the date of registration of this special resolution), subject to the following limitations:

(a) the repurchase of securities is implemented through the order book of the JSE’s trading system, without any prior understanding or arrangement between the company and the counterparty;

(b) the company is so authorised by its MOI; (c) the general purchase is limited to a maximum of

10% (ten percent) in aggregate of the company’s issued share capital in any one financial year;

(d) the general purchase by the subsidiaries of the company is limited to a maximum of 10% (ten percent) in aggregate of the company’s issued share capital;

(e) the general purchase is not made at a price greater than 10% (ten percent) above the weighted average of the market value for the securities for the five business days immediately preceding the date on which the transaction was effected;

(f) the repurchase does not take place during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements unless there is a repurchase programme in place and the dates and quantities of shares to be repurchased during the prohibited period are fixed (not subject to any variation) and has been submitted to the JSE in writing prior to the commencement of the prohibited period. The issuer must instruct an independent third party, which makes its investment decisions in relation to the issuer’s securities independently of, and uninfluenced by, the issuer, prior to the commencement of the

prohibited period to execute the repurchase programme submitted to the JSE;

(g) the company publishes an announcement after it or its subsidiaries has cumulatively acquired 3% (three percent) of the number of ordinary shares in issue at the time that the shareholders’ authority for the purchase is granted and for each 3% (three percent) in aggregate of the initial number acquired thereafter; and

(h) the company appoints only one agent at any point in time to effect any repurchases on its behalf.

“After considering the aggregate effect of the maximum repurchase, the directors of the company are of the opinion that for a period of 12 (twelve) months after the date of this notice of the AGM:• the company and the company’s subsidiaries (the

Group) shall satisfy the solvency and liquidity test in the manner contemplated by the Act and the JSE Listings Requirements;

• the company and the Group will be able, in the ordinary course of business, to repay their debts;

• the assets of the company and the Group, fairly valued in accordance with IFRS, will be in excess of the liabilities of the company and the Group;

• the share capital and reserves of the company and the Group will be adequate for ordinary business purposes;

• the working capital of the company and the Group will be adequate for ordinary business purposes; and

• the company’s sponsor will confirm the adequacy of the company’s working capital for the purposes of undertaking the repurchase of shares in writing to the JSE prior to the company (or any subsidiary) entering the market to proceed with the repurchase.”

Explanatory note The reason for and effect of special resolution No. 2 is

to authorise the company and its subsidiaries, by way of general approval, to acquire the company’s issued ordinary shares on terms and conditions and in amounts to be determined by the directors of the company, subject to certain statutory provisions and the JSE Listings Requirements.


Page 73

11. Special resolution No. 3: General authority to provide financial assistance to related or inter-related entities

“RESOLVED THAT the Board of Directors of the company be and is hereby authorised, to the extent required by and subject to sections 44 and 45 of the Act and the requirements, if applicable of (i) the MOI; and (ii) the JSE Listings Requirements, to cause the company to provide direct or indirect financial assistance to a related or inter-related company or to a shareholder of a related or inter-related company, provided that no such financial assistance may be provided at any time in terms of this authority after the expiry of two years from the adoption of this special resolution No. 3.”

Explanatory note Notwithstanding the title of section 45 of the Act, being

“Loans or other financial assistance to directors”, on a proper interpretation, the body of the section may also apply to financial assistance provided by a company to related or inter-related companies, including, among others, its subsidiaries, for any purpose. Furthermore, section 44 of the Act may also apply to the financial assistance so provided by a company to related or inter-related companies, in the event that financial assistance is provided for the purposes of, or in connection with, the subscription of any option, or any securities, issued or to be issued by the company or a related or inter-related company, or for the purchase of any securities of the company or a related or inter-related company. Both sections 44 and 45 of the Act provide, among others, that the particular financial assistance must be provided only pursuant to a special resolution of the shareholders, adopted within the previous two years, which approved such assistance whether for the specific recipient, or generally for a category of potential recipients, and the specific recipient falls within that category and the Board of Directors must be satisfied that (a) immediately after approving the financial assistance, the company would satisfy the solvency and liquidity test; and (b) the terms under which the financial assistance is proposed to be given are fair and reasonable to the company.

In the normal course of business the company is often required to grant financial assistance, including but not limited to loans, guarantees in favour of third parties, such as financial institutions, service providers and counterparties (in respect of the provision of banking facilities, acquisition transactions and debt capital) for the obligations of the company or a related or inter-related company, or to a shareholder of a related or inter-related company, or to a person related to any such company. Special resolution No. 3 will enable the company to provide such financial assistance to subsidiaries and juristic persons in the Famous Brands Group or other person that is or becomes related or inter-related to the company for any purpose in the normal course of business.

Directors’ statement regarding the utilisation of the authority sought

The directors of the company have no specific intention to effect the provisions of this special resolution, but will, however, continually review the company’s position, having regard for the prevailing circumstances and market conditions, in considering whether to effect the provisions of this special resolution.

Other disclosures in terms of section 11.26 of the JSE Listings Requirements

The following additional information, some of which may appear elsewhere in the Integrated Annual Report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of this general authority:• major beneficial shareholders – page 68; and• share capital of the company – page 68.

Litigation statement The directors of the company whose names appear on

pages 42 to 43 of the Integrated Annual Report of which this notice forms part, are not aware of any legal or arbitration proceedings including proceedings that are pending or threatened, that may have or had in the recent past (being at least the previous 12 months) a material effect on the Group’s financial position.

Notice to shareholders continued

Material changes Other than the facts and developments reported on

in the Integrated Annual Report, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report and up to the date of this notice.

Voting and proxiesA shareholder of the company entitled to attend, speak and vote at the AGM is entitled to appoint a proxy or proxies to attend, speak and on a poll to vote, in his/her stead. The proxy need not be a shareholder of the company. A form of proxy is attached for the convenience of any certificated shareholder and “own name” registered dematerialised shareholder who cannot attend the AGM, but who wishes to be represented.

Additional forms of proxy may also be obtained on request from the company’s registered office. The completed forms of proxy must be deposited at, posted or faxed to the transfer secretaries at the address set out on the inside back cover to be received by no later than 14:00 on Thursday, 27 August 2015. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the AGM should the shareholder subsequently decide to do so.

On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share held in the company by such shareholder.

Shareholders who have dematerialised their ordinary shares through a Central Securities Depository Participant (CSDP) or broker, other than “own name” registered dematerialised shareholders, and who wish to attend the AGM must request their CSDP or broker to issue them with a letter of representation. Alternatively, dematerialised shareholders other than “own name” registered dematerialised shareholders, who wish to be represented, must provide their CSDP or broker with their voting instructions in terms of the custody agreement between them and their CSDP or broker in the manner and timeframe stipulated.

By order of the Board

K NtlhaCompany Secretary

30 July 2015


Page 75

Form of proxy

Famous Brands Limited(Registration number 1969/004875/06)(Incorporated in the Republic of South Africa)(Famous Brands or the company)Share code: FBR ISIN: ZAE000053328

For use by the holders of the company’s certificated ordinary shares (certified shareholders) and/or dematerialised ordinary shares held through a Central Securities Depository Participant (CSDP) or broker who have selected “own name” registration (own name dematerialised shareholders) at the 21st Annual General Meeting of the company to be held at 478 James Crescent, Midrand, on Monday, 31 August 2015 at 14:00 and at any adjournment thereof.

Not for the use by holders of the company’s dematerialised ordinary shares who are not “own name” dematerialised shareholders. Such shareholders must contact their CSDP or broker timeously if they wish to attend and vote at the Annual General Meeting and request that they be issued with the necessary authorisation to do so, or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the Annual General Meeting in order for the CSDP or broker to vote thereat in accordance with their instructions.

I/We

of (address)

being the registered owner/s of ordinary shares in

the company hereby appoint

or failing him/her

or failing him/her, the Chairperson of the Annual General Meeting, as my/our proxy to act for me/us and on my/our behalf at the Annual General Meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name(s), in accordance with the following instructions:

* Please indicate with an “X” in the appropriate spaces below how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.

Number of votesFor* Against* Abstain*

1. Ordinary resolution No. 1:Adoption of the Annual Financial Statements and reports

2. Ordinary resolution No. 2:Appointment of auditors

3. Ordinary resolution No. 3:Re-election and appointment of directors

3.1 Re-election of Mr Theofanis Halamandaris

3.2 Re-election of Mr John Lee Halamandres

3.3 Re-election of Mr Bheki Lindinkosi Sibiya

3.4 Appointment of Mr Norman Adami

3.5 Appointment of Mr Moses Kgosana

4. Ordinary resolution No. 4:Re-election and appointment of the Chairman and members of the Audit and Risk Committee

4.1 Re-election of Christopher Hardy Boulle as Chairman and member of the Audit and Risk Committee

4.2 Re-election of Bheki Lindinkosi Sibiya as a member of the Audit and Risk Committee

4.3 Appointment of Norman Adami as a member of the Audit and Risk Committee

4.4 Appointment of Moses Kgosana as a member of the Audit and Risk Committee

5. Ordinary resolution No. 5:To place 3% (three percent) of the unissued shares under directors’ control

6. Ordinary resolution No. 6:Authority for directors or Company Secretary to implement resolutions

7. Ordinary resolution No. 7:Adoption of the Famous Brands Share Incentive Scheme (2015)

8. Non-binding resolution No. 1:Endorsement of remuneration policy

9. Special resolution No. 1:Approval of non-executive directors’ remuneration for their services as directors

10. Special resolution No. 2:General authority to repurchase shares

11. Special resolution No. 3:General authority to provide financial assistance to related or inter-related entities

Signed this day of 2015

Signature

Assisted by (if applicable)

Please read the notes on the reverse.

Notes to the form of proxy

1. This form of proxy is to be completed only by those shareholders who:

(a) hold shares in a certificated form; or (b) are recorded in the sub-register in electronic

form in their “own name”.

2. Shareholders who have dematerialised their shares and wish to attend the Annual General Meeting must contact their CSDP or broker who will furnish them with the necessary authority to attend the Annual General Meeting, or they must instruct their CSDP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the shareholders and their CSDP or broker.

3. Each shareholder is entitled to appoint one or more proxies (who need not be a shareholder(s) of the company) to attend, speak and, on a poll, vote in place of that shareholder at the Annual General Meeting.

4. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space provided, with or without deleting “the Chairperson of the Annual General Meeting”. The person whose name stands first on the form and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow.

5. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate box(es) provided. Failure to comply with the above will be deemed to authorise the Chairperson of the Annual General Meeting, if the Chairperson is the authorised proxy, to vote in favour of the resolutions at the Annual General Meeting, or any other proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit, in respect of all the shareholder’s votes exercisable thereat.

6. A shareholder or his/her proxy is entitled but not obliged to vote in respect of all the ordinary shares held by such shareholder. The total number of votes for or against the resolutions and in respect of which any abstention is recorded may not exceed the total number of shares held by such shareholder.

7. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the company’s transfer secretaries or waived by the Chairperson of the Annual General Meeting.

8. The Chairperson of the Annual General Meeting may accept or reject any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he shall not accept a proxy unless he is satisfied as to the manner in which a shareholder wishes to vote.

9. Any alterations or corrections to this form of proxy must be initialled by the relevant signatory(ies).

10. The completion and lodging of this form of proxy does not preclude the relevant shareholder from attending the Annual General Meeting and speaking and voting in person to the exclusion of any proxy appointed by the shareholder.

11. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the company’s transfer secretaries.

12. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.

13. Forms of proxy must be lodged at, posted or faxed to Link Market Services South Africa, 13th floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000) to reach the company by no later than 14:00 on Thursday, 27 August 2015.

BASTION GRAPHICS

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, P Halamandaris, P Halamandaris (Jnr), T Halamandaris, JL Halamandres, RM Kgosana, KA Hedderwick (Group Chief Executive)*, DP Hele (Chief Executive Officer – Food Services)*, NS Richards (Group Financial Director)* and BL Sibiya.*Executive

Company SecretaryK Ntlha

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 secretariesLink Market Services Proprietary LimitedRegistration number: 2000/007239/07Rennie House, 19 Ameshoff Street, Braamfontein, 2001PO Box 4844, Johannesburg, 2000

SponsorThe Standard Bank of South Africa Limited Registration number: 1969/017128/0630 Baker Street, Rosebank, 2196

AuditorsRSM Betty & Dickson (Johannesburg)

BankersAbsa Bank LimitedBidvest Bank LimitedFirstRand Bank LimitedInvestec Bank LimitedNedbank LimitedStandard Bank Limited

Contact informationTel: +27 11 315 [email protected]

478 James CrescentHalfway House, South Africa, 1685

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