* Ditches dividend payout for FY to conserve cash
* Will resume dividend payout in FY 2018
* Operating profit up 18 pct, revenue up 33 pct
* Opened 192 restaurants in 2016
* Shares fall more than 3 pct
(Adds CEO comment, results details)
By Nqobile Dludla
JOHANNESBURG, May 29 South African food services
franchising company Famous Brands scrapped its dividend
on Monday for the first time in 13 years seeking to conserve
capital after a series of acquisitions boosted its debt.
Chief Executive Darren Hele said Famous Brands abandoned the
payout for the year which ended in February because the group's
gearing is substantially higher than in prior years following
seven acquisitions in 2016.
"Looking at our net debt to equity ratio now, we've taken on
some debt that we've not typically had and just want to make
sure that before we resumed the dividend that the cash
positioning is strong again and we did it for the right
reasons," Hele told Reuters over the phone.
The company's gearing ratio relative to its market
capitalisation as at February 28 was 16 percent.
Famous Brands shares, which have fallen by more than 19
percent year to date, were down 3.47 percent to 121.15 rand.
"It is anticipated that, subject to future acquisitions and
operating requirements, payment of dividends will resume in the
2018 financial year," the company said in a statement.
The dividend announcement accompanied an increase of 18
percent in full-year operating profit to 938 million rand
Revenue grew 33 percent to 5.7 billion rand, including 20
weeks of turnover from its newly acquired Gourmet Burger Kitchen
The company bought Britain's GBK for 2.1 billion rand ($163
million), one of seven acquisitions last year, which owns Wimpy
UK, Steers and Debonairs.
As part of its 2020 strategy, the firm is expanding at home,
across Africa and in the United Kingdom through acquisitions in
casual dining and fast food.
During the year, 192 restaurants were opened and 220 were
refurbished. The company operates almost 2,800 outlets.
Basic headline earnings per share fell 21 percent to 428
cents per share as a result of one-off non-operational items
related to the GBK acquisition.
"The Group will remain strongly focused on growth, however
management does not envisage an improvement in the local economy
in the near future, and in the UK market, continued short-term
uncertainty is anticipated as Brexit negotiations proceed,"
Famous Brands said.
($1 = 12.9212 rand)
(Editing by Mark Potter and Jason Neely)