FINANCIAL RESULTS - Famous Brands · 2019-05-28 · GBK’s property portfolio consists of 98...

FINANCIAL RESULTSF19 H1

AGENDA

GBK update Outlook for thesecond six months

Questions

Key Metrics Progress onF19 H1 plans

(Brands, Hospitality, Logistics, Manufacturing)

Financial resultsF19 H1

01 02 03

04 05 06

2

KEY METRICS

Strong resultsSA and AME business

4

Revenue

5.4%

5

F19 H1 R3.58bn (F18 H1 R3.40bn)

Operating profit beforenon-operational items

3.9%

Operating loss afternon-operational items

6

211.3%F19 H1 R421.8m

(F18 H1 R406.1m)

F19 H1 Loss R452.1m

(F18 H1 Profit R406.1m)

Cash generatedfrom operations

7

16.6%F19 H1 R540.4m (F18 H1 R463.0m)

Group under-performed

due to GBK UK

Coega Concentrateand

8

PROGRESS ON F19 H1 PLANS

GROWING BRAND CAPABILITY – SA & AME

F19 H1 BRAND CAPABILITY

DOMESTIC AME SA & AME TOTAL

7.3%

12.8%

7.8%

SYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)

11

F19 H1 BRAND CAPABILITYLIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)

DOMESTIC AME SA & AMETOTAL

3.4%

1.0%

3.1%

12

F19 H1 BRAND CAPABILITYSYSTEM-WIDE RESTAURANT SALES GROWTH (RANDS)

SIGNATURE BRANDS LEADING BRANDS

8.6%7.1%

13

F19 H1 BRAND CAPABILITYLIKE-FOR-LIKE RESTAURANT SALES GROWTH (RANDS)

SIGNATURE BRANDS LEADING BRANDS-2.3%

4.1%

14

2 782Restaurants

5.7bnRevenue increase of

33% across the

divisions

F19 H1 BRAND CAPABILITYTOTAL RESTAURANTS OPENED

59

16

4

15

Total

79

Steers Wimpy DebonairsPizza

FishAways Mugg &Bean

Mr Biggs GBK Milky Lane Fego Giramundo Wakaberry SignatureBrands

630574

664

257 244

97 100 8434 6 13

171

TO BE UPDATED WITH

INFORMATION FROM DARREN

F19 H1 BRAND CAPABILITYTOTAL RESTAURANT NUMBERS

16

Total

2 874

GROWINGBRAND CAPABILITY

17

GOALS

Drive margin

improvement on

Signature brands

Not achieved Underway Achieved

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

18

GOALS

Drive margin

improvement on

Signature brands


Open Debonairs Pizza

in Saudi Arabia

under license

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

19

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

20

Prioritise

Leading brands

with resources to

drive growth

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas

21

Prioritise

Leading brands

with resources to

drive growth

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas

Pipeline of branded offers

developed in-house

ready to launch

22

Prioritise

Leading brands

with resources to

drive growth

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas


developed in-house

ready to launch

23

Prioritise

Leading brands

with resources to

drive growth

Leading brands to

deliver BIG BOLD

initiatives

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING

Further entrench home

delivery offering across

all brands

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas


developed in-house

ready to launch

24

Prioritise

Leading brands

with resources to

drive growth

Leading brands to

deliver BIG BOLD

initiatives

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING



all brands

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas


developed in-house

ready to launch

25

Expand tashas

footprint in UAE

Prioritise

Leading brands

with resources to

drive growth

Leading brands to

deliver BIG BOLD

initiatives

GOALS

Drive margin

improvement on

Signature brands



in Saudi Arabia

under license

GROWING



all brands

Review Signature

brand portfolio

BRAND CAPABILITY

Rapidly grow

capability in

digital arenas


developed in-house

ready to launch

26

Expand tashas

footprint in UAE

Prioritise

Leading brands

with resources to

drive growth

Leading brands to

deliver BIG BOLD

initiatives

Get more

entrenched in

key AME markets

GOALS

Drive margin

improvement on

Signature brands


GROWING HOSPITALITY CAPABILITY – SA

Grow presencein premium

corporate market

28

HOSPITALITY CAPABILITYGROWING

GOALS


Expand home meal replacement space through

“bricks” and “clicks”

Grow presencein premium

corporate market

29

HOSPITALITY CAPABILITYGROWING

GOALS


GROWING LOGISTICS CAPABILITY

– SA & EXPORTS

F19 H1 LOGISTICS CAPABILITYREVENUE GROWTH

7.1%

3.4%

7.7%

10.0%

6.9%7.9%

6.8%

31

Embark onProject Decade

LOGISTICS CAPABILITY

• Refer to supplementary slides for additional info

32

GROWINGGOALS


GROWING MANUFACTURING CAPABILITY

- SA

F19 H1 MANUFACTURING CAPABILITYREVENUE GROWTH – OWN PLANTS

9.5%

21.2%

4.7%

-0.6%

-6.5%

14.2% 11.4%

34Note: Coega Concentrate and KZN Ice cream plant data not provided. Western Cape Bakery closed in July 2017

26.1%

-7.0%

1.8%

-5.1%

10.0% 9.5%

F19 H1 MANUFACTURING CAPABILITYREVENUE GROWTH – JV PLANTS

2.5%

35*New - formerly TruFruit

*

Secure sustainable tomato supply

or exit

MANUFACTURING CAPABILITY

36

GROWINGGOALS



or exit


37

GROWINGGOALS

New routes to market for LBF



or exit


38

GROWINGGOALS


Take on previously outsourced grated cheese volumes at

FB Cheese Company



or exit


39

GROWINGGOALS



FB Cheese Company

Focus onefficiencies

“ManufacturingWay”



or exit


40

GROWINGGOALS

Drive new“FoodConnect”

partnership



FB Cheese Company





or exit


Leverage Juice Plant Joint

Venture

41

GROWINGGOALS

Drive new“FoodConnect”

partnership



FB Cheese Company




FINANCIAL RESULTS F19 H1

SALIENT FEATURES

HY F 2019 HY F 2018 % Change

Revenue (Rm) 3 583.6 3 401.2 5.4

Operating profit before non-operational items (Rm) 421.8 406.1 3.9

Operating (loss)/profit after non-operational items (Rm) (452.1) 406.1 (211.3)

Cash generated from operations (Rm) 540.4 463.0 16.6

EPS (cents) (572) 171 (434.5)

HEPS (cents) 188 170 10.6

Net debt : equity (%) 133.9 145.3 11.4

43

INCOME STATEMENT

Rm HY F 2019 HY F 2018 % Change

Revenue 3 583.6 3 401.2 5.4

Gross profit 1 916.2 1 816.9 5.5

Selling and administrative expenses (1 494.4) (1 410.8) (5.9)

Operating profit before non-operational items 421.8 406.1 3.9

Non-operational items (873.9) -

Net finance costs (105.8) (138.2)

Share of profit from associates 0.2 1.7

(Loss)/profit before tax (557.7) 269.6 (306.8)

Tax 14.1 (77.6)

(Loss)/profit for the year (543.6) 192.0 (383.1)

44

45

SEGMENTAL ANALYSIS | OPERATING PROFIT

Rm % of Total HY F 2019 HY F 2018 % Change

Brands 52.7 222.5 202.5 9.9

Leading brands 51.8 218.6 193.3 13.1

Signature brands 0.9 3.9 9.2 (58.1)

Supply Chain 60.7 256.0 221.1 15.8

Manufacturing 48.1 203.0 184.3 10.1

Logistics 12.6 53.0 36.8 44.2

Corporate (10.4) (44.2) (30.3) (46.0)

South Africa 103.0 434.3 393.3 10.4

International (3.0) (12.5) 12.8 (198.2)

UK (8.8) (36.8) (6.3) (481.9)

AME 5.8 24.3 19.1 27.2

Total Operating Profit before non-operational items 100.0 421.8 406.1 3.9

SEGMENTAL ANALYSIS | OPERATING MARGIN

% HY F 2019 HY F 2018

Brands 51.5 48.8

Leading brands 59.6 55.2

Signature brands 5.9 14.3

Supply Chain 11.4 10.5

Manufacturing 13.8 13.4

Logistics 2.7 2.0

South Africa 16.1 15.6

International (1.4) 1.4

UK (4.9) (0.8)

AME 18.0 15.5

Total Group 11.8 11.9

46

STATEMENT OF FINANCIAL POSITION


ASSETS

Property, plant and equipment 1 166.7 1 465.2 (20.3)

Intangible assets 2 236.7 2 844.1 (21.3)

Investments in associates 79.9 83.1 (3.6)

Inventories 483.7 530.6 (8.9)

Trade and other receivables 788.3 798.7 (1.4)

Cash and cash equivalents 924.7 493.0 87.6

Other assets 127.6 84.8 51.2

TOTAL ASSETS 5 807.6 6 299.5 (7.8)

EQUITY AND LIABILITIES

Equity 1 374.9 1 667.2 (17.5)

Borrowings 2 765.1 2 900.6 (4.7)

Derivative financial instruments 183.8 244.7 (24.9)

Lease liabilities 112.3 96.8 15.5

Trade and other payables 970.9 943.5 3.0

Other liabilities 400.6 446.7 (10.1)

TOTAL EQUITY AND LIABILITIES 5 807.6 6 299.5 (7.8)

47

CASH FLOW

Opening Cash Cash fromOperations

Forex FinancingActivities

Interest Tax Capex & OtherInvestingActivities

Dividend Closing cash

716.8924.7

48

540.4

34.5 (102.1)(100.0)

(98.4)(47.6) (18.9)

GBK UPDATE

F19 H1 BRAND CAPABILITY

SYSTEM-WIDE LIKE-FOR-LIKE

-6.8%

-9.7%

GBK UK RESTAURANT SALES DECLINE (STERLING)

50

F19 H1 BRAND CAPABILITY8 WEEK GBK UK RESTAURANT SALES DECLINE SINCE HALF YEAR CLOSE

51

SYSTEM-WIDE LIKE-FOR-LIKE

-5.3%

-2.2%

GBK’s property portfolio consists of98 leases related to 85 trading sites

52

OVERVIEW OF PROPERTY PORTFOLIO

Total numberof leases

98

Number oftrading sites

85

Number ofnon trading leases

12

Leases in other GBK entity

3

GBK’s property portfolio consists of98 leases related to 85 trading sites

Management, with assistance from Deloitte and CBRE, have categorised each site into one of four categories

53

OVERVIEW OF PROPERTY PORTFOLIO

Total numberof leases

98

Number oftrading sites

85

Number ofnon trading leases

12

Leases in other GBK entity

3

Category A

Profitable or strategically

important sites where GBK

expects to see growth

Category B(B1 & B2)

Under-performing sites

which can become viable

with appropriate rent

reduction

Category C

Sites which cannot be made viable even with a significant rent

reduction

54

CVA RESTRUCTURE STRATEGY

Launched on 24 October 2018

Creditors meeting on9 November 2018

Sites are categorised intofour categories, with different

terms for each

The terms of the CVA willremain in place for three years

Launched on 24 October 2018

Creditors meeting on9 November 2018

Sites are categorised intofour categories, with different

terms for each

The terms of the CVA willremain in place for three years

55

CVA RESTRUCTURE STRATEGY

Category Aleases

37

Category B1leases

16

Category B2leases

13

Category Cleases (17 trading)

29

GOALS

KEY IMPERATIVESGOING FORWARD

56

Commencemeasured new store opening programme

(2 sites plannedfor 2018)


GOALS


Re-establish the gold standard across the

entire value chain andcustomer journey,

i.e. product & experience

57




GOALS





58



Commence targeted refurb and high street

brand facelift programme


GOALS





59





Simplify menu design,entry and exit pricing,simplify supply chain


GOALS





60






Targeted closure programme fordistressed sites

(6 restaurants in 2018)


GOALS





61





Launch multi-vendor delivery platform

(from 1 to 3)





GOALS





62





Strengthen leadershipcore team


(from 1 to 3)





GOALS





63





Re-establish theGBK brand assets

and leverage

Strengthen leadershipcore team


(from 1 to 3)





OUTLOOK FOR THE SECOND SIX MONTHS

OUTLOOK

65

Local and global trading

conditions remain

challenging

Focus onlong term

growth levers

Appropriate acquisitions

will be pursued in brands and

upstream manufacturing

segments

Complete CVA restructure strategy in

the UK

IMPERATIVESFOR THE FUTURE

66

Definitive allocation of

corporate costs and admin fees to business units



67



Prospects remain positive



68



Tighter growthagenda

Prospects remain positive


69

OUR STRATEGIC

INTENTOur business is focused on growing capability and capacity to position

ourselves to deliver uniqueconsumer experiences in the

branded franchised andfood service space.

70

OUR STRATEGIC

INTENTOur business is focused on growing capability and capacity to position

ourselves to deliver uniqueconsumer experiences in the

branded franchised andfood service space.

OURVISION

To be the leading innovativebranded franchised and food

services business in South Africaand selected international markets

by 2020.

QUESTIONSThank you

SUPPLEMENTARY INFORMATION

South Africa 2 365AME 338United Kingdom 164Other 7

Total Restaurants

2 874

F19 H1 BRAND CAPABILITYTRADING FOOTPRINT

73

74

PROJECT DECADE

First updated Shareholders in May 2018 on Project Decade, which refers to a managed focus on addressing capacity constraints. This is the second update

Logistics business requires a planned investment programme over the next decade

Need to address immediate capacity constraints and seek out efficiencies over the medium term

Margin will improve over time but will be ‘lumpy’ over the reinvestment period

We will apprise the market as appropriate

75

INDICATIVE IMPLEMENTATION TIMING

FY2019

FY2020

FY2021

FY2022

FY2023

FY2024

FY2025

FY2026

New WMS Implementation

CM DCExpansion

MPUExpansion

KZNRelocation

Gauteng Consolidation

ECP Expansion

WCPRelocation

03/2018 - 02/2019 03/2019 - 02/2020 03/2020 - 02/2021 03/2021 - 02/2022 03/2022 - 02/2023 03/2023 - 02/2024 03/2024 - 02/2025 03/2025 - 02/2026

FSRelocation

orExpansion

WCPRelocation

ECP Expansion

FSRelocation or

Expansion

Original date Planned date Movement

76

SHAREHOLDER ANALYSIS

Morgan Stanley Investment Management4.3%

PIC/GEPF10.2%

Panagiotis Halamandaris7.7%

Coronation Fund Managers

14.4%

Theofanis Halamandaris7.0%

Other36.9%

LGM Investments8.4%

Periklis Halamandaris4.0%

John Lee Halamandres2.8%

Arisaig Partners4.3%

As at end August 2018 Source: Sponsor

77

DOMESTIC CONSUMER TRENDS

Source: Famous Brands Central Marketing

The accelerated growth of technology in the

retail space is shifting consumer expectations

of convenience, specifically regarding

online and mobile ordering platforms,

door-to-door delivery and electronic payments

Consumers are increasingly

knowledgeable about the impact of the food

industry on the environment and are

starting to hold brands accountable for sourcing practices, materials and ingredients (for example

use of plastic straws)

The traditional distinction between

Quick Service Restaurants and Casual

Dining Restaurants is becoming less clear as

category blurring continues. Home

delivery and third party online ordering

platforms are further contributing to the new definition of ‘eating out’

Consumers continue to seek out value

offers as disposable income remains

under pressure. Expressions of value are increasingly complex

as, along with value promotions, experience starts

contributing heavily to the overall value perception.

Customer experience through service, food quality and

convenient channels (such as delivery and touch screens), in

addition to value offers

Proliferation of the market is driven by aggressive expansion of both local

and international competitors through new

store openings despite the number of category visits

remaining flat

In the era of CRM, targeted consumer marketing, big data

and artificial intelligence, consumers expect brands to ‘know them’ and to speak to

them in a relevant manner. As more brands are engaging with

consumers through personalised and customized messaging,

expectations around communication are changing

78

DOMESTIC CONSUMER ENVIRONMENT

YOY FOOD AND BEVERAGE INCOME CHANGE AT CONSTANT PRICING VERSUS CURRENT PRICES

Source: Food and Beverage Report, StatsSA, August 2018

Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18

2.4

3.9

-2.3

1.8

-2-2.8

1.5

6

0.9

3.4

7.2

0.1

8.3

9.9

3.5

8.7

3.93.2

7.7

12.7

8.8

11

15.6

6.7

Full Year1.7

Full Year8.3

Constant 2015 pricing Current pricing

79

GBK GROUP EBITDA INSIGHTS

GBK £’000

Operating loss (2 628)

Depreciation & amortisation 3 113

EBITDA 485

Source: Management disclosure

BUSINESS UNIT ACTUAL F19 H1

Manufacturing including Retail 16

Logistics 3

Leading brands 6

Signature brands 1

Consolidated Corporate 1

SA business 27

AME 2

UK business 19

TOTAL GROUP 48

80

CAPEX BY BUSINESS UNIT

(RAND) MILLION


81

SEGMENTAL ANALYSIS | REVENUE


Brands 432.2 415.0 4.1

Leading brands 366.5 350.4 4.6

Signature brands 65.7 64.6 1.6

Supply Chain 2 253.9 2 101.2 7.3

Manufacturing 1 466.1 1 377.4 6.4

Logistics 1 955.2 1 830.5 6.8

Eliminations (1 167.4) (1 106.7) (5.5)

Corporate 13.2 1.4

South Africa 2 699.3 2 517.6 7.2

International 884.3 883.6 -

UK 749.1 760.6 (1.5)

Rest of Africa and AME 135.2 123.0 9.9

Total Revenue 3 583.6 3 401.2 5.4

82

MINORITY PROFIT ALLOCATIONS BY SEGMENT


Signature brands15.3%

Manufacturing81.9%

Corporate2.8%

83

PUT OPTIONS OVER MINORITY INTERESTS ALLOCATION BY SEGMENT

Signature brands21.7%

Manufacturing47.5%

AME30.8%


84

REVENUE BREAKDOWN

Royalties Company Store Sales Project Management Once off Fees

1.9%1.4%

61.7%35.0%

1.0%1.8%

97.2%

2.4%0.8%

22.0%

74.8 %

Signature brands Leading brands


SA AME

32.2%

7.8%

43.4%

22.5%32.8%

-8.0%

1.4% 1.3%

-9.8%

96.6%

5.6%

53.7%

21.3% 24.3%

85

SYSTEM-WIDE SALES IN AME BY COUNTRY

SYSTEM-WIDE TURNOVER GROWTH % LOCAL CURRENCY


86

MONTHLY EXCHANGE RATE USED

UK EUR USD Nigeria Zambia Botswana Dubai

Exchange ratesZAR/GBPYTD Ave

ZAR/EUROYTD Ave

ZAR/USDYTD Ave

ZAR/NGNYTD Ave

ZAR/ZMWYTD Ave

ZAR/BWPYTD Ave

ZAR/AEDYTD Ave

Period end 31.08.2017 16.78 14.67 13.13 24.47 0.70 1.26 3.58

Period end 31.08.2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50

31-Mar-201816.52

14.59 11.83 30.11 0.81 1.22 3.22

30-Apr-2018 16.75 14.71 11.96 29.85 0.80 1.22 3.26

31-May-2018 16.79 14.74 12.15 29.42 0.80 1.23 3.31

30-Jun-2018 16.97 14.92 12.42 28.81 0.79 1.24 3.38

31-Jul-2018 17.12 15.07 12.62 28.41 0.78 1.25 3.43

31-Aug-2018 17.29 15.27 12.86 27.93 0.77 1.26 3.50

Note: Average is "Financial year to date" averageSource: Oanda

CONTACT INFORMATIONDarren HeleChief Executive Officer +27 11 651 5812

Lebo NtlhaGroup Financial Director +27 11 847 6491

Instinctif PartnersInvestor Relations +27 11 447 3030

87

Ian IsdaleCompany Secretary +27 11 847 6394

[email protected]

This presentation contains forward looking statements about the company’s operations and financial position, whichreflect the Company’s bona fide expectations at the date of this presentation.

They are based on best estimates and expectations. Actual performance may differ materially from the current estimatesand expectations and thus may prove to be inaccurate.

Caution should be exercised in placing any undue reliance on this information as unanticipated events will occur andactual future performance may differ materially from current expectations.

Famous Brands assumes no obligation to update or revise any forward looking statements other than may be required bylegislation and/or regulation and assumes no responsibility whatsoever for any loss or damage as a result of any relianceplaced on the forward looking statements.

DISCLAIMER

88

FINANCIAL RESULTS - Famous Brands · 2019-05-28 · GBK’s property portfolio consists of 98...

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Transcript of FINANCIAL RESULTS - Famous Brands · 2019-05-28 · GBK’s property portfolio consists of 98...