Famous Brands predicts steep climb of earnings

By Sandile Mchunu Time of article published May 15, 2020

Share this article:

DURBAN - Famous Brands said yesterday that it expected its earnings to climb as high as 179percent for the year to end February as a result of the absence of once-off costs, which negatively impacted Africa’s largest branded food services franchisor a year earlier.

Famous Brands said in the trading update yesterday that it was likely that its earnings per share (Eps) would increase by 165percent and 179percent, to be between 312cents a share and 382c, improving on last year’s loss of 484c.

“The anticipated increase in Eps relates to the costs and impairments recognised in the previous comparable period, none of which reflect in the current review period,” the group said.

In last year’s results, Famous Brands was impacted by once-off costs of R17.2million for professional fees and redundancy costs related to the company voluntary arrangement (CVA) completed at Gourmet Burger Kitchen (GBK) restaurants in the UK.

The group also suffered an impairment of R873.9m pre-tax relating to GBK recognised at group level as well as an impairment of R25.5m recognised in an associate company in which the group has a minority stake.

The group was faced by economic and political uncertainty in its major markets in last year’s results, both locally and in the UK, as the Brexit process continued to unfold.

Last month Famous Brands said that it was reviewing its investment in GBK and had decided not to provide any further financial assistance to the business.

Its basic headline earnings per share (Heps) is expected to increase by 15percent and 40percent, to be between 362c to 442c during the period, up from last year’s Heps of 316c.

The group said the expected Eps and Heps were inclusive of the impact of IFRS 16 leases, which became effective for the group during the review period.

Famous Brands consists of leading and signature brands.

The leading brands consist of Steers, Mugg & Bean, Wimpy and Debonairs Pizza, while signature brands include Tasha, Mythos and Lupa Osteria.

The group has operations in South Africa, the rest of Africa, the Middle East and the UK.

Famous Brands results will be released on May 26.

The share price of Famous Brands closed 2.29percent lower at R34.20 on the JSE yesterday.

BUSINESS REPORT 

Share this article: