Famous Brands Audited Annual Financial Statements 2017

Audited Annual Financial Statements 2017

Annual Financial Statements and other information

The reports and statements set out below were prepared under the supervision of Mrs K Ntlha (CA(SA)), Group Financial Director, and comprise the Annual Financial Statements presented to the shareholders.

Contents 1 Directors' report 2 Audit and Risk Committee's report 2 Company Secretary's certificate 3 Approval of the Audited Annual Financial Statements 4 Independent auditor's report 8 Accounting policies

18 Statements of financial position 19 Statements of profit or loss and other comprehensive income 20 Statements of changes in equity 21 Statements of cash flows 22 Primary (business units) and secondary (geographical) segment report 23 Notes to the Audited Annual Financial Statements 64 Shareholder spread IBC Administration Below Exchange rates

Level of assurance

These Audited Annual Financial Statements have been audited in compliance with the applicable requirements of the Companies Act of South Africa.

Exchange rates

The following significant exchange rates were applied in the preparation of the Group's results:

Group

2017

Average

Closing

2016

Average

Closing

Rand to GB Pound Rand to Euro Rand to US Dollar Euro to GB Pound Rand to Zambian Kwacha Rand to Nigerian Naira Rand to Botswana Pula

18.92 15.71 14.26

1.20 1.35 0.04 1.31

16.19 13.80 13.02

1.17 1.37 0.04 1.22

20.37 14.86 13.49

1.37 1.39 0.08 1.27

22.25 17.47 16.03

1.27 1.4

0.08 1.39

Directors' report

The directors have pleasure in submitting their report for the year ended 28 February 2017.

Nature of business

Famous Brands Limited (Famous Brands) is a holding company listed on the JSE Limited (JSE) under the category Consumer Services: Travel and Leisure. The Group is Africa's leading branded food services franchisor.

Famous Brands' vertically integrated business model comprises a portfolio of 27 brands represented by a franchise network of 2 782 restaurants across South Africa, the Rest of Africa, the United Kingdom, and the Middle East, underpinned by substantial Logistics and Manufacturing operations.

Directors' responsibilities

The responsibilities of the Company's directors are detailed on page 3.

Financial statements and results

The Group's results and financial position are reflected in page 18 to page 63.

Corporate governance

The corporate governance report is set out in the 2017 Integrated Annual Report.

Tangible and intangible assets

Movements in the Group's tangible and intangible assets are set out in Note 1 Property, plant and equity and Note 2 Intangible assets.

Dividends

In order to achieve its robust growth targets, the Group has made a number of acquisitions, including its largest ever, Gourmet Burger Kitchen (GBK), in the UK. In this regard, the Group's gearing is

substantially higher than in prior years, and the Board has therefore resolved that no dividend will be declared for the period. It is anticipated that subject to future acquisitions, payment of dividends will resume in the 2018 financial year.

Share capital

The authorised and issued share capital of the Company at 28 February 2017 is set out in Note 10.

Issued during the year

The Company issued 50 000 (2016: nil) ordinary shares for a cash subscription of R6 million (2016: Rnil) to participants of the 2012 Famous Brands Share Incentive Scheme.

Shareholder spread and material shareholders

In terms of the JSE Listings Requirements, Famous Brands complies with the minimum shareholder spread requirements, with 65% (2016: 61%) of ordinary shares being held by the public at 28 February 2017. Details of the Company's shareholder spread and material shareholders are set out on page 64.

Staff Share Incentive Scheme

Details are reflected in Note 28.

Directors

The names of the directors and the Company Secretary at the date of this report are detailed on page 46 to 48 of the 2017 Integrated Annual Report, which is available on the Company's website at famousbrands.co.za.

Famous Brands Audited Annual Financial Statements 2017

1

Audit and Risk Committee's report

for the year ended 28 February 2017

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 RM Kgosana, is presented below.

During the financial year ended 28 February 2017 the Audit and Risk Committee met on three occasions. In addition to the duties set out in the Audit and Risk Committee's charter (a summary of which is provided on page 52 of our Integrated Annual Report, which is available on the Company's website at famousbrands.co.za) the Audit and Risk Committee carried out its functions, inter alia, as follows: ? nominated the re-appointment of Deloitte & Touche as the

registered independent auditor after satisfying itself through enquiry that Deloitte & Touche and Ms S Nelson are independent as defined in terms of the Companies Act of South Africa; ? determined the terms of engagement and fees to be paid to the external auditors; ? ensured that the appointment of Deloitte & Touche complied with the legislation relating to the appointment of auditors; ? approved and monitored a non-audit services policy which determines the nature and extent of any non-audit services which the external auditors may provide to the Group; ? ensured that the financial reporting to stakeholders fairly presents the state of affairs of the Group. The committee received the external auditor's report and key audit matters included therein and is satisfied that these matters were appropriately addressed through the audit procedures performed; ? reviewed the internal audit reports and processes; ? reviewed and approved the internal audit business plan budget and audit plan; ? reviewed and approved the internal audit charter; ? reviewed and approved a Whistle Blower Policy endorsed by the management of Famous Brands; ? reviewed and approved the anti-fraud policy; ? reviewed and approved a hedging policy; ? reviewed and approved the Audit and Risk Committee charter; ? reviewed an assessment prepared by management of the going concern status of the Company and made recommendations to the Board. The committee concurs that the adoption of the going concern premise in the preparation of the financial statements is appropriate;

? reviewed the status of the Group's tax affairs, which the committee found to be satisfactory;

? evaluated and reported to the Board on the effectiveness of risk management controls and governance processes;

? reviewed and recommended the interim and Annual Financial Statements to the Board for approval;

? reviewed and recommended the Integrated Annual Report to the Board for approval;

? considered the reports of the internal auditor and external auditor on the Group's systems of internal control including financial controls, business risk management and maintenance of effective internal control systems;

? received assurance that proper and adequate accounting records were maintained and the systems safeguard the assets against unauthorised use or disposal thereof; and

? based on the above, the committee formed the opinion that there were no material breakdowns in internal control, including financial control, business risk management and maintenance of effective material control systems.

The Audit and Risk Committee is satisfied with the competence and expertise of the Group Financial Director, Company Secretary and head of internal audit.

The Audit and Risk Committee recommended the Annual Financial Statements for the year ended 28 February 2017 for approval to the Board. The Board has approved the Annual Financial Statements which will be open for discussion at the forthcoming Annual General Meeting.

RM Kgosana Chairman of the Audit and Risk Committee

26 May 2017

Company Secretary's certificate

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 2017, 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.

IWM Isdale Company Secretary

26 May 2017

2

Famous Brands Audited Annual Financial Statements 2017

Approval of the Audited Annual 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 Annual Financial Statements and related financial information included in this report. It is their responsibility to ensure that the Annual 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 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 consolidated and separate financial statements, which have been prepared on the going concern basis, were approved by the Board of Directors on 26 May 2017 and are signed on its behalf by:

Santie Botha Independent Chairman

26 May 2017

Darren Hele Chief Executive Officer

Famous Brands Audited Annual Financial Statements 2017

3

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download