Integrated Annual Report

Transcription

1 Integrated Annual Report

2 OUR VISION OUR MISSION We are clearly focused on becoming the preferred Taste is a South African-based management group that owns or licensees a porfolio of mostly franchised, category specialist and formula-driven, quick-service restaurant and retail brands that have the following characterisics: verically integrated franchisor and licensee in Africa not by size but by excelling in our chosen areas of diversiied operaion. We believe being the best means that superior returns for franchisees and stakeholders are just as important as responsible governance and corporate ciizenship. Food They are sustainably and compellingly branded, where the brand itself is an important difereniaing factor. They can reasonably be developed to be the South African customer s irst choice in the categories in which they trade. They maintain value leadership through operaional excellence supported by high volumes relaive to the category in which they trade. They have common customers in the broad middle market and ofer these customers strong value proposiions relaive to their segment. The value proposiion and brand equity is driven by relaively large markeing funds within their segment. On balance, they ofer sustainable returns to franchisees commensurate with the capital investment, risk and efort incurred to own and operate an individual outlet. Jewellery Each format is appropriately difereniated but complementary, relaive to the balance of the Taste porfolio. STERLING Each format ofers opportuniies for verical integraion such that material proit streams can reasonably be expected from sourcing and distribuion, franchise management royalies and company store ownership. Each format both adds and derives value from being part of the Taste porfolio greater than would be possible as a standalone enity.

3 Financial highlights Revenue EBITDA Ope ai g p oit Dividend 15% 17% 16% 22% to R582.7 million to R60.6 million to R49.7 million to 6.2 cents per share (2013: R506.4 million) (2013: R51.8 million) (2013: R42.9 million) (2013: 5.1 cents per share) No alised headli e ea i gs pe sha e Headli e ea i gs pe sha e Headli e ea i gs ste - ide sales 12% 20% 21% 7.2% to 16.9 cents to 16.0 cents to R31.2 million to R1.48 billion (2013: 15.1 cents) (2013: 13.3 cents) (2013: R25.9 million) (2013: R1.38 million) INTEREST COVER 1 % 5 i es : i es DIVIDEND COVER. GEARING2 :. Ta get:.. : % OPERATING PROFIT MARGIN % : % CASH CONVERSION 3. : :. : Ta get:. : COSTS % OF REVENUE 4 % : % Key features and achievements Dist i uio business turned a p oit ate sta t-up losses in prior year Acquired Zebro s Chicken 1 March. Ea i gs efo e i te est, ta a d dep e iaio EBITDA, di ided et i te est paid.. I te est- ea i g o o i gs less ash, di ided total sha eholde i te est.. Cash ge e ated ope aio s di ided EBITDA. NWJ corporate stores sa e-sto e sales exceed 10% for third o se ui e ea. Ope ai g osts e p essed as a pe e tage of e e ue.. Gea i g is % if ou i lude R illio o o ed t o o ths efo e ea -e d to pu hase fou NWJ sto es i Ja ua. 1

4 Growing and diversifying R1.48 b R1.38 b ste - ide sales* f o 900 R909 m R752 m R676 m R567 m R373 m 300 R308 m 200 R241 m R121 m 100 * ste - ide sales a e sales f o all sto es to usto e s. ** / Fe ua ea h ea. B eakdo ** R86 m R34 m R4.3 m R170 m of s ste - ide sales Food: R1.2 billion Jewellery: R284 million Eight- ea e ie Key indicators Revenue Ope ai g p oit Total stores System sales HEPS (cents) * Co pou d a 2 28 February 28 February 29 February 28 February 28 February 28 February 29 February ual g o th ate this is al ulated f o audited igu es f o Fe ua February 28 February ea CAGR* 52% 35% 23% 25% 23%

5 Milestones Scooters Pizza was the fou di g e it of Taste Holdings. The i st sto e ope ed i September 2000, in Westville, Durban Scooters Pizza opened seven outlets in three months Scooters Pizza acquires Chess Pizza and converts seven outlets Scooters Pizza expands to Gauteng, opening three stores in one day Scooters Pizza wins FASA Newcomer Franchisor of the Year and the FASA Brand Builder of the Year Scooters Pizza becomes a member of the proudly South African campaign 2004 Scooters Pizza opens their outlet in just 48 months NWJ wins FASA Newcomer Franchisor of the Year Scooters Pizza ope s i st outlet in Western Cape 2005 Scooters Pizza acquires Maxi s, with 28 stores Builds Ma i s to thi dlargest player in its category Scooters Pizza wins FASA Brand Builder of the Year, an award it i s fou i es 2009 Scooters Pizza renamed Taste Holdings to pursue the strategy of a di e siied f a hiso Taste Holdings lists o the Alte ai e Exchange of the JSE Scooters Pizza wins FASA Brand Builder of the Year for the thi d i e Scooters Pizza opens outlet Acquired NWJ Quality Jewellers with 58 outlets, builds NWJ to se o d-la gest jewellery group in SA Launched Buon Gusto Food Services Acquired strategic BJ s sites and converted them to Maxi s Scooters Pizza voted best pizza in Jo burg i the Leisu e Opio s Readers Choice Awards 2011 Aquired St Elmo s Woodi ed Pizza, a the - ea -old pizza brand Declared maiden dividend of 3 cents per share Move to main board of JSE Maxi s and NWJ i alists i FA A Franchisor of the Year Awards Acquired The Fish and Chip Co., largest Fish brand in SA, by units Declared dividend of 5.1 cents per share Scooters Pizza e-lau h - i ute delivery promise Acquires Zebro s Chi ke, a - ea old chicken brand Maxi s win FASA Franchisor of the Year Scooters Pizza 10 years young Exceed R750 million s ste - ide sales Scooters Pizza wins FASA Brand Builder of the Year Declared dividend of 4 cents per share 27% compound annual growth rate for last six years in HEPS Launch NWJ credit card facility ig ed a - ea master franchise agreement with Domino s Pizza 3

6 Board of directors No -e e ui e di e to s RAM AY L AMY BILL DALY ANTHONY BERMAN BA, LLB I depe de t No -e e ui e Chai a Chai a of the oa d Me e of the so ial, ethi s a d e u e aio o itee Appoi ted: Ma h CA A I depe de t No -e e ui e Di e to Chai a of the audit a d isk o itee Chai a of the so ial, ethi s a d e u e aio o itee Appoi ted: Ap il Bill is a BA LLB g aduate of telle os h U i e sit. He as ad ited as a ato e, ota a d o e a e a d p a ised as the Chai a of L Dal I o po ated, a ato e s i hi h spe ialises i the p o isio of all e t e se i es to aio al o po ates, etaile s a d a ks. He was one of the founding shareholders and the Chairperson of Scooters Pizza P op ieta Li ited a d has, si e i epio, ee the Chai pe so of Taste Holdings Limited. Bill is a director of a number of companies including a Director and the Deputy Chairperson of HBZ Bank Limited, and brings a wealth of business experience to the group which has proved i alua le, pa i ula l i the last u e of ea s. GRANT MICHAEL PATTI ON WE EL PETRU VAN DER MERWE B E g Ele I depe de t No -e e ui e Di e to Appoi ted: Ma h CA A I depe de t No -e e ui e Di e to Me e of the audit a d isk o itee Appoi ted: No e e Grant graduated from UCT in 1992 with a BSc degree in Electrical Engineering, ate hi h he as e plo ed A glo A e i a G oup as a a age e t trainee. In 1993, Grant moved to Monitor Group as a consultant. A chance e ou te ith Mass a t CEO, Ma k La e i, i the e epio at Mass a t House paved Grant s route to a career in retail with Massmart in July He sta ted his etail a ee i the ole of E e ui e Assista t to the CEO, a posiio hi h he o upied fo t o ea s efo e ei g appoi ted Ma agi g Director of Game Stores in October This was followed two years later ith his appoi t e t as G oup Co e ial E e ui e i. G a t as appoi ted to the e e ui e o itee i, to the oa d o De e e a d to the posiio of Deput Chief E e ui e Oi e o Jul. I Jul, he e a e Chief E e ui e Oi e Desig ate a d as appoi ted CEO of Massmart Holdings on 1 July With 15 years experience working for Massmart, Grant has played an integral part in forming and leading its lo g-te st ateg. This has i luded leadi g the Mass a t-wal a t a uisiio a d i teg aio, e pa di g g o th i to the Af i a o i e t a d introducing retail food into the Massmart business. Grant was appointed as Co-Chai of the Co su e Goods Cou il of outh Af i a i. 4 As a ha te ed a ou ta t A, To p a ised i Du a ithi the audii g p ofessio his e i e o ki g life. To is also a F B ualiied Fi a ial Pla e ei g a di e to of a d su sta ial sha eholde i Ple us Wealth, a i a ial pla i g usi ess ope ai g i Du a, telle os h, Joha es u g a d Po t Eliza eth. He se ed a i les ith G. Ha k e, Be & Co, to hi h i he etu ed ate a fe ea s o his o, e ai i g ith the, o G a t Tho to, u il Ma h he he ei ed as a pa t e. To as Ma agi g Pa t e of the Du a oi e f o fo i e ea s, a d o i ues to o sult fo the i he e ui ed. To has had e te si e e pe ie e as Ta Pa t e, i a ial o suli g, e ge s a d a uisiio s, estate pla i g, aluaio s, e ha ge o t ol a d is a experienced consultant in corporate and general business. Befo e sta i g his o usi ess i, Wessel o pleted his a i les i 1996 at Arthur Anderson and joined Gensec Investment Bank for a period of two years. He gained valuable experience in investment banking, deal st u tu i g, p i ate e uit a d u de ii g. Du i g, he sta ted a o po ate i a e usi ess a d uilt it i to o e of the iggest ad iso businesses for small and medium companies. The business was ranked deal ake s i the top o po ate ad iso i s fo o e tha i e ea s. He as i ol ed i o e tha lisi gs, a ious o po ate i a e t a sa io s a d p i ate e uit t a sa io s. He pa i ipated a i el i more than 22 boards as a Designated Adviser or sponsor over the last few years and gained valuable experience as an adviser to the various oa ds. He sold his usi ess du i g to a la k-o ed i a ial services group where he headed up the corporate advisory business. Wessel is o a i el i ol ed as a o -e e ui e e e i i e listed companies.

7 HYLTON ROY RABINOWIT) KEVIN UTIAN No -e e ui e Di e to Appoi ted: August BCo, BA, CA A I depe de t No -e e ui e Di e to Me e of the so ial, ethi s a d e u e aio o itee Appoi ted: epte e H lto ega his a ee i the je elle i dust he he i st ope ed Hylton s Jewellers in The second store followed in the same year and the name changed to Natal Wholesale Jewellers. In 1988, Hylton went on to extend the brand when he purchased a share in one of the oldest jewellery manufacturers in Durban, Durban Manufacturing Jewellers, which supplied NWJ with the majority of its locally manufactured je elle gi i g NWJ the a ilit to ofe e elle t ualit je elle at o peii e p i es. H lto has pla ed a sig ii a t ole i i lue i g the je elle i dust i outh Af i a. H lto ei ed i No e e, ut sill se es as a o -e e ui e di e to a d is fo used o sha i g his immeasurable wealth and experience with the team. Ke i is the CEO of Co i at P op ieta Li ited, ha i g take up this posiio i Ap il. P io to this he spe t ea s at Na do s fo ai el as Ma agi g Di e to of Na do s outh Af i a a d the eate as a director of the Nando s global group. Kevin is a chartered accountant p ofessio, a d has ee a oa d e e f o the i epio of Scooters Pizza in Kevin s experience of the franchise model and e posu e to i te aio al a kets akes his o t i uio i alua le to the group. EBA TIAN PATEL BBus i UCT I depe de t No -e e ui e Di e to Me e of the audit a d isk o itee Appoi ted: Ma h e asia is a Ma agi g E e ui e at B i sto e I est e t Co po aio Li ited B i sto e, hi h posiio he took up i Jul. e asia fo uses o e aluai g p ospe i e i est e t oppo tu iies fo B i sto e as well as helping to manage Brimstone s current investments. Prior to joi i g B i sto e, e asia spe t si a d a half ea s at Ned a k Capital p i a il i the Co po ate Fi a e di isio. e asia is a Fello of the I situte of A tua ies. 5

8 Board of directors E e ui e di e to s o i ued CARLO FERDINANDO GON)AGA EVANGELO EVAN tsatsa olakis B o i, LLB Chief E e ui e Oi e Chai a of the e e ui e o Appoi ted: Ma h CA A Chief Fi a ial Oi e Me e of the e e ui e o Appoi ted: epte e itee Carlo completed a postgraduate LLB degree at the University of Natal ate hi h he a d his fathe, Luigi, o ed fou f a hised pizza outlets i the Durban region. In 1999, Carlo sold his interests and commenced the groundwork to create a new pizza delivery concept which became Scooters Pizza in September Since 2000, Carlo has headed up the team that has d i e the oote s Pizza hai to i a p esigious a a ds; to a ui e the Ma i s a d i ; the eaio a d lisi g of Taste Holdi gs i a d the su se ue t a uisiio of NWJ Qualit Je elle s i, St Elmo s in 2010 and The Fish and Chip Co. in Carlo guides the st ategi di e io of the o pa, its g o th st ateg a d hu a apital de elop e t. He hai s the e e ui e o itee. itee E a ualiied as a ha te ed a ou ta t i ate o plei g his a i les ith P i e ate housecoope s. He let PWC a d spe t se e ea s ith the J E-listed pu G oup he e he gai ed e te si e e pe ie e ithi the food f a hisi g i dust ha i g ee e posed to the i a ial, ope aio al a d suppl hai aspe ts of the usi ess. He the se ed as Fi a ial Di e to ithi a logisi s g oup of o pa ies. E a joi ed Taste Holdings in April 2009 and was appointed to the board in September 2009 as Chief Fi a ial Oi e. E a a ts i a o -e e ui e apa it to the management boards of the food and jewellery divisions and is a member of the e e ui e o itee. DUNCAN JOHN CRO ON JAY BAYNE CURRIE BCo pt Ho s Chief E e ui e Oi e Je elle di isio Me e of the e e ui e o itee Appoi ted: No e e B Chief E e ui e Oi e Food di isio Me e of the e e ui e o itee Appoi ted: Ma h Du a o tai ed his BCo pt Ho s hile se i g a i les ith Mo iso Murray in Durban. Duncan gained valuable experience in a manufacturing a d dist i uio e i o e t se i i g the etail a d fast- o i g o su e goods i dust. Du a p og essed to Chief Fi a ial Oi e and shareholder of the group of companies. Duncan joined Scooters Pizza in 2000 and has been a member of the board of directors of Scooters Pizza si e a d Taste Holdi gs Li ited si e i epio. Du a as appoi ted Chief Ope ai g Oi e of NWJ Fi e Je elle i epte e a d su se ue tl Chief E e ui e Oi e i Ap il. Du a as appointed to the board of the Jewellery Council of South Africa in April a d has se ed o the Je elle Cou il s e e ui e o itee since February Duncan has been instrumental in the successful a age e t a d o t ol of the sig ii a t g o th of the g oup o e the past ea s. Du a is a e e of the e e ui e o itee a d hai s the je elle di isio a age e t o itee. Jay started with the Massdiscounters division of the listed South African retailer, Massmart, in He joined the holding company, Massmart Holdi gs Li ited, as G oup Co e ial E e ui e i he e he as espo si le fo all olla o ai e fu io s et ee the a ious su sidia ies of the g oup. I this posiio, he also held a o -e e ui e posiio o ea h of the di isio al oa ds of Ga e, Mak o, Builde s Warehouse and Massmart s food wholesale businesses, Masscash. In 2009, Jay took up the challenge of leading and building Cambridge Food, a aio al etail food usi ess fo used o lo -i o e usto e s, fo Mass a t. I, he ha ged oles a d as espo si le fo fa ilitai g a d e e ui g o a e- o e e st ateg fo the Mass a t g oup. Ja as a e e of the Mass a t g oup e e ui e o itee hi h led the sale of a o t olli g stake i Mass a t to the uli aio al gia t Walmart. In 2013, Jay resigned from Massmart and joined the Taste Holdi gs e e ui e tea i epte e a d e ai ed o the oa d of Taste Holdi gs. Ja s e e ui e e pe ie e i a glo al, uli- a ded, listed retailer is invaluable to the group.

9 Group at a glance Taste has a aste li e e lusi e - ea e fo se e Af i a ou t ies i l A Wo lds la gest pizza deli e a d outlets i ou t ies Built o - i ute deli e

10 Leadership review Chai a s lete to sha eholde s RAM AY L AMY BILL DALY I believe we have served our stakeholders well and delivered against our declared strategy of excelling in our chosen areas of ope aio Dear Shareholder Good governance is a cornerstone of a successful and sustainable company. I am privileged to lead a board whose di e to s, oth e e ui e a d o -e e ui e, a e as o ited to good governance as the directors of Taste Holdings are. This commitment results in the board taking its responsibility for leade ship, sei g the o pa s alues a d esta lishi g a d maintaining a strong ethical culture very seriously. It also makes jo of e su i g that ou a age e t tea is o ited to achieving the best results in the most responsible, principled way, much easier. Ou o -e e ui e oa d e e s a e e pe ie ed o pa di e to s ho ha e a i -depth u de sta di g of hat o situtes good corporate governance and its value to the sustainability and p oita ilit of a usi ess. At Taste the e is a lea sepa aio et ee ole as a i depe de t o -e e ui e hai a a d that of ou hief e e ui e oi e a d the e is a health deg ee of te sio et ee ou e e ui e a d ou i depe de t o -e e ui e di e to s he it o es to oa d de isio - aki g a d the i te ogaio of proposals the management team bring to the board. A e ie of the p oiles of ou oa d e e s ill gi e ou a i di aio of the ala ed ealth of e pe ie e, k o ledge a d skills they contribute to the board s rigorous debates. This ea G a t Paiso, the CEO of Mass a t, joi ed ou oa d as a i depe de t o -e e ui e di e to. His e pe ie e of egoiai g a d o ki g ith a A e i a usi ess a d a agi g a uli a ded, uli aio al usi ess, hi h also se ed lo e income consumers, further strengthens the direct business skills of our board. A balance of skills on the board is achieved through the st o g i a ial, legal a d o po ate i a e skills, e pe ie e and wisdom that our other directors provide. We recognise that while we have a very skilled and experienced board it lacks diversity in terms of gender and race. We remain o ited to add essi g this gap. I te s of o e ship e ha e the highest percentage of HDSA ownership in our sector at 12.5% a d it is ou i te io to i ease this to %. It has been my privilege to head up the Taste board since our lisi g o the J E s AltX in While not everything we have done in the eight years since we listed on the AltX and then moved to the ai oa d of the J E i has ee a u ualiied success, I believe we have served our stakeholders well and delivered against our declared strategy of excelling in our chosen a eas of ope aio. We ha e deli e ed good i a ial etu s to our shareholders and our brands have been recognised for the e elle t e o o i de elop e t oppo tu iies the p o ide ou f a hisees; the e plo e t oppo tu iies the eate a d the quality and value our 637 stores (as at 30 April ) provide to our customers. The awards our brands have won over the years are testament to this. Ou CEO, Ca lo Go zaga, ill tell ou a out a e ii g di e io in our strategy which the board approved this year and our a age e t tea ega i ple e i g he the sig ed a - ea e lusi e aste f a hise ag ee e t ith Do i o s Pizza, the world s leading pizza delivery brand, to develop the a d i se e southe Af i a ou t ies. Ou o e io ith Domino s requires us to meet certain United States governance requirements which will only add to our level of governance. We ha e so e i te esi g halle ges ahead of us eddi g do our new Zebro s Chicken brand and introducing the Domino s a d. Also, I ha e o dou t that t adi g o diio s ill o i ue to be challenging. However, the board believes that, based on its past performance, our management team has the ability to o i ue deli e i g alue to all ou stakeholde s. All that remains is for me to thank all our board members for the i alua le o t i uio the ake to ou de isio - aki g. O behalf of the board our thanks go to the Taste Holdings team and our franchisees for the excellent work they did this year to ensure our success. Bill Dal Chai a Fo o e i fo aio o ou f a hises a d ou sto es see g oup at a gla e o the i side f o t o e a d fo details of ou ag ee e t ith Do i o s Pizza see the CEO s lete to sha eholde s o page.

11 Chief E e ui e Oi e s lete to sha eholde s CARLO FERDINANDO GON)AGA We ill o k i elessl to o i ue to uild a usi ess that ot o l deli e s the i a ial performance that we desire, but also a business that we are all proud to be part of Dear Shareholder Ate eight ea s of % o pou d a ual g o th i e e ue, the Taste g oup is fulilli g the aspi aio s e had he e listed ou sha es o the Altx i. Ou st ategi i te t to e e i all integrated is unfolding and we are realising the i a ial a d o -i a ial e eits of this st ateg, pa i ula l i the food di isio. Ou i te t to ofe customers the best brands possible has developed into licensing leading brands in certain consumer segments, where previously we only owned brands directly. We now have some 350 outlets directly ta gei g o su e s i the fast-g o i g lo e income groups, whereas in 2006 we had no such ofe i gs. Lastl, ou i te t to oth o o po ate stores and to franchise outlets has borne fruit in our jewellery division, which now owns some 45% of the total outlets. As a consequence of our g o th e o sta tl se se- he k ou i te al structures to ensure that both our structures and people grow with the business. We have not always got this perfectly right, but we constantly strive to recruit leaders ahead of our needs, leaders that improve our succession pipeline and leade s that uplit the ualit of o e saio a d de isio - aki g ith the leade ship tea s. I a best sum up the year under review as one during which we have: o solidated a d est u tu ed ou food di isio to align the food services with the brands they serve and to accommodate both historical and ou futu e g o th aspi aio s; o i ued to i ple e t ou st ategi i te t of e pa di g ou f a hise ofe i g i the fastestgrowing living standards measure (LSM) groups of 4 to 6 with our purchase of Zebro s Chicken on 1 March. We are now represented by the market leading The Fish & Chip Co. and Zebro s Chicken brands in this important o su e seg e t; take the i st step i i ple e i g ou strategy of owning the strongest brand where brand is important in the customer s hierarchy of pu hasi g o side aio s, sig i g a - ea e lusi e aste f a hise ag ee e t to develop the world s largest leading pizza delivery brand, Domino s Pizza, in seven southern African ou t ies, i ludi g outh Af i a; a d i eased ou NWJ sto e o e ship to outlets by acquiring net eight NWJ outlets during the year. We owned 16 outlets 24 months ago. % Revenue Fi a ial e ie Ke featu es: e e ue up % to. illio EBITDA up % to. illio Ea i gs ate ta up % to. illio Headli e ea i gs pe sha e up % to 16.0 cents No alised headli e ea i gs pe sha e up % to 16.9 cents ste - ide sales up. % to. illio Di ide d up % to. e ts pe sha e Both our jewellery and food divisions contributed equally to our 15% increase in group revenue to R583 million from the prior year (2013: illio. The je elle di isio i pa i ula achieved another pleasing result of a 10% increase i sa e-sto e sales at o po ate sto es. This as o top of 14% increases in each of the prior years. Our food di isio a hie ed a. % g o th i s ste wide sales and increased its revenue 15% both pleasing results in the face of weakening consumer de a d a o g lo e -i o e o su e s i the % EBITDA % Headline earnings 9

12 Leadership review o i ued Chief E e ui e Oi e s lete to sha eholde s late half of the ea. Ou food se i es usi ess posted a ope ai g p oit this ea, a ste li g tu a ou d f o its sta t-up elated ope ai g losses it i u ed i its i st ea of ope aio. % Headline earnings per share. % G oup s ste wide sales Ea i gs efo e i te est, ta aio, dep e iaio a d a o isaio EBITDA i eased % ea -o - ea to. illio :. illio a d elai el lo e i a e a d ta aio a gi s o t i uted to a 21% increase in headline earnings from the prior year. We o i ue to dist i ute di ide ds to sha eholde s, albeit what we perceive to be on an appropriately o se ai e di ide d o e of. i es asi earnings per share. Consequent to this dividend policy the board declared a gross dividend of 6.2 cents per share, which is an increase of 22% over the previous period. Our major social challenge in South Africa is that a large number of South Africans are unemployable in a modern economy through lack of marketable skills, primarily driven by a lack of literacy and poor basic edu aio. While outh Af i a is a e t ep e eu ial populaio, the e is a disi io et ee e essit d i e e t ep e eu ship a d oppo tu it -d i e entrepreneurship. Oppo tu it -d i e e t ep e eu ship akes a fa o e sig ii a t o t i uio to sustai a le jo eaio a d e o o i g o th. O e of the barriers to successful entrepreneurship is the lack of meaningful support in the early stages of a new usi ess due pa iall to the histo i al la k of a ess to edu aio fo the ajo it of the populaio, who are our future small business owners and employers. 62% of our franchisee base comes from histo i all disad a taged o u iies, a d has i eased f o % the ea p io. We i l elie e that ou e usi ess odel he ei e afo d franchisees the opportunity to own the assets that eate alue; a d e plo i g people i to jo s that e ui e spe ii, lifelo g t a spo ta le skills is si pl the greatest social impact a business can have in our pa i ula so iet. Ope ai g e ie % Dividend As with other franchise businesses our food and je elle di isio s oth ofe thei f a hisees ope aio al a d a kei g suppo t, p oje t a age e t, e site g o th a d de elop e t; as ell as aio al a d- uildi g st ategies i etu for a royalty. While most food franchise businesses have a royalty based on turnover, our The Fish & Chip Co. usi ess has a i ed o thl o alt, hi h escalates at 10% per annum. Food di isio During the year under review, our food division s po folio o sisted of fou o su e a ds: Ma i s, 10 o i ued oote s Pizza, t El o s Woodi ed Pizza a d The Fish and Chip Co, which operate across South Africa, Namibia, Zimbabwe and Botswana. Buon Gusto, our branded food service business, which manufactures sau es, spi es, dough p e i es a d added- alue meat products and distributes these and other products to all the food outlets in the group. ste - ide sales i this di isio i eased. % to. illio despite the oi ea le de li e i sa e-sto e sales i the se o d half of the ea as lo e -i o e o su e s, afe ted the ighte i g of edit i ida d food i laio, edu ed the frequency of their purchases. This trend has o i ued i the e i a ial ea. Apposite to this pe fo a e ou a ds ta gei g highe -i o e o su e s, i pa i ula oote s Pizza, t El o s, a d NWJ, ha e sho posii e sa e-sto e g o th during the same period. To accommodate our growth over the past two years, as well as to prepare for our future growth and the i teg aio of )e o s Chi ke a d Do i o s Pizza see the Futu e fo us se io of lete fo o e i fo aio, e ha e est u tu ed the di isio to create scalable capacity and alignment between a ds to allo ete uilisaio of ou sha edse i es plafo. We ha e o i ed a ou ta ilit fo a ufa tu i g, dist i uio a d o su e -fa i g food brands under one divisional CEO and recruited suita l e pe ie ed a d skilled e e ui e leade s to head up ea h of the food a ds. I addiio, a highl le e aged sha ed-se i es plafo is taki g shape, hi h i ludes o solidai g ou a ufa tu i g i to o e u it i Gaute g du i g last ea. This late i est e t has ge e ated sa i gs i t a spo t; e t alised a age e t a d ualit o t ol; a d i eased oth sau e a d spi e p odu io apa it. The i teg aio of the )e o s Chi ke a d i to Taste s suppl hai a d ope aio s ega o Ma h a d has p o eeded ete tha e o igi all fo e ast: i e e tal osts of dist i uio to these sto es as lo e tha e a i ipated a d u -i f o f a hisees had ee highe tha e a i ipated. Buildi g skills a d eai g jo s We recognise that we need to ensure our ope aio al leade ship tea has the e essa skills to e su e ou usi ess g o s a d lou ishes. We a e i esi g i upskilli g ou e plo ees ith the ai of developing a succession pipeline that will support and sustain the development of our business. The i eased e e ui e apa it i ou food di isio has created capacity for myself and our small corporate oi e tea to pu sue g o th oppo tu iies su h as the Domino s Pizza licence agreement. (See the Hu a apital se io of this epo t o page fo addiio al i fo aio.

13 We also provide training for our franchisees and their employees before a new outlet is opened, and ongoing training once the outlet is ope ai g. I the past t o ea s e ha e eated o e new jobs and provided training for all these people. With ea h sto e e ope e eate e e t -le el jo s i the community in which an outlet has been opened. We also provide addiio al suppo t to assist f a hisees hose i a ial skills a e limited to build capacity in this area. Ofe i g the lo est ost food f a hises The Fish & Chip Co. provides franchisees with the opportunity to purchase a franchise for R , and the Zebro s Chicken f a hise is the lo est-p i ed hi ke f a hise i outh Af i a at R Taste Holdings has assisted 29 of our The Fish & Chips Co. franchisees who could not raise the full purchase p i e fo thei f a hise ith i te est-f ee loa s a ou i g to over R6 million since we bought the business in During, the percentage of our franchises owned by historically disadvantaged franchisees increased to 62%. We understand that these f a hisees ote e ui e o e f e ue t suppo t, espe iall i espe t of i a ial a d people a age e t. We do not always get this level of support perfectly right, but I know that ou tea s a e o ited to e o i g the f a hiso of hoi e i this segment. Je elle di isio NWJ, the thi d-la gest je elle a d i outh Af i a, e ded the period under review with 77 outlets, 34 of which are corporate stores. The NWJ s ste - ide sales i ease of % to illio : illio as e lusi el f o sa e-sto e sales g o th, a a ket-leadi g a hie e e t. Ou o po ate sto es a hie ed sa e-sto e sales g o th i e ess of % fo the thi d o se ui e ea, highlighi g the g oup s a ilit to su essfull ope ate these sto es. O e of the di isio s ke o je i es fo the ea as to o k to a ds gei g f a hisee sa e-sto e sales more closely matching those of our corporate store performance. We e e pleased that th ough ou i teg ated i fo aio systems and franchisee commitment we narrowed the gap to just a fe pe e tage poi ts dife e e. NWJ s dist i uio usi ess dist i utes all the goods sold in NWJ outlets. Approximately 45% of these are manufactured by the NWJ manufacturing facility in Durban, a further 38% are sourced locally and 22% are imported. The NWJ business model ofe s i -house apa it to i o ate, fast outes to a ket a d reduced input costs through purchasing economies of scale. The di isio has the a ilit, th ough its dist i uio a d a ufa tu i g apa it, to eithe t a sfe slo - o i g o returned stock to an outlet where there is known demand for the item or to rework the stock in its manufacturing facility with negligible yield loss. The NWJ- a ded edit ofe i g lau hed i Ju e, hi h is u de ite a thi d pa t, has at a ted e usto e s a d has a su sta iall highe spe d pe t a sa io tha its e isi g cash business. Credit sales currently make up less than 10% of our total sales. NWJ does not have any exposure to credit card defauli g o to the ad i ist aio of the edit a d. Futu e fo us Food di isio Ou ost e e t a uisiio, )e o s Chi ke, is a - ea -old f a hise hai that a tuall aais its hi ke i -sto e ooked o e a BBQ, fo ou i te aio al sha eholde s. This u i ue p epa aio ethod, o i ed ith its p op ieta BBQ la ou, akes it su sta iall dife e iated to o su e s f o a othe u e t ofe i g i the a ket. While hi ke is a highl o peii e seg e t it is ou ie that this dife e iaio i the e e of the o su e, o i ed ith the lo est set-up osts fo f a hisees a i g to e te this a ket, ill gi e us the oppo tu it to le e age ou e isi g f a hisee ase to eate a la ge aio al footp i t. This a uisiio, hi h ta gets lo e income consumers, is in line with our strategy of growing our ep ese taio a o g lo e -i o e o su e s e o ha e outlets i this a ket a d it o ple e ts ou e isi g brand in this segment, The Fish & Chip Co. It will also provide us ith addiio al lea i g oppo tu iies i this a ket. I addiio, we can use the same sites for both franchises which will reduce the al ead lo set-up osts. We e pe t )e o s Chi ke ill o k out ell fo ou g oup, ut e a e a a e that e a e o pei g i the ost o peii e seg e t of ou a ket. Adapted thi ki g We believe that our change in strategic thinking to one of a i g to o the st o gest a d he e a d is i po ta t in the customer s hierarchy of purchasing, will play a major role i ou futu e g o th. ig i g a e lusi e - ea aste li e e ag ee e t to de elop the i te aio al Do i o s Pizza a d i southe Af i a is ou i st step i the i ple e taio of this st ateg. Not o l is the pizza a ket the thi d-la gest etail food segment globally, but it is also a growing segment). Do i o s Pizza - ea -old a d is the o ld s leadi g pizza delivery brand in both store numbers and unit sales. It has over outlets in more than 70 countries and we have been licensed to develop the brand in seven southern African countries including South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe and Mozambique. You can expect that we ill o i ue to seek out li e si g glo al a ds hose usi ess odel is p oita le a d hose ofe i g ould e at a i e to South African consumers. Je elle di isio i e ou a uisiio of the NWJ usi ess i, e o i ue to le e age its u i ue le els of e i al i teg aio a d u i ue h id f a hisee/ o po ate-o ed odel to i ease ou o a ket sha e. The di isio pla s to o i ue assessi g o po ate-o ed outlets, whether they be acquired or new outlets. This division has built a remarkable leadership team in the last few years, and it is with great pleasure that our interference in this business is i i al, ith the e epio of apital allo aio de isio s. It is opi io that this di isio has apa it to efe i el appl their skills and scale to other related brands, either licensed or owned, and it is in this trajectory that some focus will be applied 11

14 Leadership review o i ued Chief E e ui e Oi e s lete to sha eholde s i the e t fe pe iods. The Af i a oppo tu it that see s to apply to all retailers of any sorts, appears to apply to the jewellery segments. We do, however, have some work to do to understand ho NWJ a pla a ole i this de a d o the o i e t i the futu e. I pla to ha e a o e i fo ed ie i su se ue t lete s. I o lusio I a p i ileged to lead su h tale ted a d skilled e e ui es a d managers at Taste. I believe that with our recent appointees a oss all ou di isio s, I a su eedi g i o je i e of ei g the least ualiied pe so at the leade ship ta le. You ha e, at Taste, o ited, lo al people ho use thei o i ed efo ts a d i telle t to do g eat thi gs. This tea i ludes ou f a hisees ho ot o l o it pe so all, ut also i a iall, and extends to our network partners, some of whom have been supplie s of ou s si e i epio ea s ago. M tha ks go to all of ou ho o ked i elessl to ake su e e a hie ed results of which we can be proud. My thanks also go to our customers for recognising the quality and value their hard work delivers through our brands and for choosing our brands when you have so many to choose from. My thanks must too go to you, our shareholders, for choosing to invest in us. We are proud that 12.5% of our shareholders are historically disadvantaged South Africans and we hope to increase this percentage to 25% in the coming years. M last tha ks go to o e of ou o-fou de s, Luigi Go zaga. Luigi, o tu i g i Ja ua this ea, ei ed f o his e e ui e director capacity, and from the board. Only those of us who have been fortunate enough to work with Luigi will appreciate the pi otal ole that Luigi has had i the eaio of this g oup i the last 14 years. As is my commitment to shareholders, so too to Luigi: e ill o k i elessl to o i ue to uild a usi ess that ot o l deli e s the i a ial pe fo a e that e desi e, but also a business that we are all proud to be part of. Warm regards Ca lo Go zaga Chief E e ui e Oi e 12 o i ued

15 Ma ket leade i the fish seg e t Se i es lo -i o e o su e s, L M O e of the lo est set-up osts fo a food f a hise 13

16 Business model Colla o aio a d e i al i teg aio Taste Holdi gs g oup The Taste management model empowers divisions to grow their p oit a d ge e ate ope ai g le e age th ough ope aio al auto o ithi a ag eed st ategi a d ope aio al f a e o k. The group is responsible for the approval of brand and divisional st ategies a d the a o pa i g ope aio al f a e o k; the ide ii aio, de elop e t a d ete io of hu a apital a oss the g oup; a agi g the ash lo s a d i a ial st u tu es of the di isio s to the est ad a tage of the g oup; a d p o oi g a d i e i isi g olla o aio et ee the di isio s a oss ke usi ess d i e s a d sha ed plafo s. The odel is e e uted th ough a de e t alised de isio - aki g e e ui e o itee, hai ed the CEO. The o itee o p ises the CEO, CFO a d E e ui e Di e to s of Taste Holdi gs. Taste olla o aio ha el The olla o aio ha el o sists of fo u s he e oth est p a i e a d olla o aio ideas a e sha ed et ee di isio s and brands. Forums are focused on topics that relate to: the ke usi ess d i e s of the di isio s; p ope t po folio a age e t; etail outlet desig a d i age; a kei g ha els to o o o su e s i the L M* atego ; f a hise est p a i e i ple e taio a d f a hisee pe fo a e a age e t; o o ost e t es a oss di isio s that a e ot a dife e iai g fa to i the o su e ofe i g a d that edu e osts to the di isio ; a d usto e a d f a hisee saisfa io o ito i g. * L M Li i g sta da ds easu e. MANUFACTURING LOGI TIC FRANCHI ING RETAIL Ve i al I te g aio Value Chain Pla i g a d fo e asi g Qualit assu a e Po ue e t ou i g Wa ehousi g Dist i uio Ma kei g a d merchandise Ope aio al management Ne site de elop e t P ope t a age e t Co pa -o ed outlets located in metro areas and key sites Food Segment Currently manufacture 100% of sauces and spices for all brands Manufacture selected pizza toppi gs a d alueadded meat products HACCP and Halaal accredited Plans for centralised dough p odu io We own 50% of the leet, the ala e is rented Invested R25 million over last 24 months Halaal accredited De elop e t a d maintenance of intellectual property spe ii to ea h a d O e ship of sto es is not a core strategy in the medium term Currently manufacture 45% of what NWJ stores sell ele i g f o o e tha unique and owned desig s, NWJ s i -house manufacturing capability allo s fo i o aio, edu ed o de lead i es and quick turnaround Manufactures 45%, source 38% locally and import 22% of all stock that stores sell We distribute 100% of what stores sell to ensure opi al sto k de sit De elop e t a d maintenance of intellectual property spe ii to ea h a d Cu e tl o s % of the outlets. Will consolidate ownership into three metro areas in future Jewellery Segment 14

17 to e dist i uio as at 30 April to es Total u e of sto es 120 Scooters Pizza Maxi s 63 St Elmo s The Fish and Chip Co. Zebro s 41 NWJ 77 Total outlets Food Distribution 2 Food Manufacturing 1 Jewellery Manufacturing 1 )i a e 2 Li popo 44 2 Bots a a 1 Mpu ala ga Gaute g 43 No th West azila d Na i ia F ee tate K a)ulu-natal 23 No the Cape Easte 2 Weste Lesotho 1 Cape Cape

18 Why invest in Taste Holdings Taste s earnings are underpinned by leading owned and licensed brands trading across diverse categories, led by entrepreneurial people with established track records who are incentivised on both group and di isio al pe fo a e. The g oup has st o g i te al g o th le e s, is u de pi ed good- ualit ea i gs a d ash flo s, a d has a e o d of good go e a e a d dis losu e, a d a - ea t a k e o d. Great brands Di e sii aio Entrepreneurial people Track record Growth Cash ge e ai e Good governance record With de o st ated a ilit to g o o ga i all ; p o oted large marketing fu ds; a d led e t ep e eu ial people ith t a k e o ds of su ess. The portfolio of brands targets 85% of SA consumers from LSM 4 (C income) upwards with propositions that are u de pi ed st o g alue-fo - o e offerings. The founding directors and divisional CEOs are all shareholders, and have all owned and grown businesses i the past. O e -led a d p ofessio all managed with strong experience in the southern African consumer market. Although the group has been listed for eight years, the brands that underlie the business have a combined trading history of over 100 years. Proven record of financial strength and management. The eight- ea e ie lea l highlights the g oup s a ilit to g o o ga i all a d through acquisition. An eight- ea a ual o pou d g o th ate i HEP of %, and revenue of 52% reflects this. The hybrid franchise model in both divisions yields high levels of cash generation with minimal capital expenditure required for growth due to franchisees funding new store growth. The g oup has al a s had a i depe de t o -e e uti e hai pe so, a d su o ittees hi h a e led o -e e uti e di e to s. Taste has a good e o d of disclosure and shareholder communication and complies with foreign laws due to its international licensing.

19 Group at a glance - ea -old authe ti oodfi ed pizza hai Lo ated p edo i a tl i the Weste Cape

20 Stakeholders To make sure we understand what our customers want and to make sure we are delivering what they want, we regularly check customer saisfa io th ough su e s a d esea h the ele a e of ou p odu ts, se i es a d a d pe epio s. We also eet egula l ith ou f a hisees a d o du t f a hisee saisfa io su e s. We ask ou e plo ees fo feed a k du i g thei pe so al assess e ts. To e su e the ualit of the p odu ts a d se i es p o ided ou supplie s the a e e ui ed to p o ide us ith i fo aio ega di g thei quality management processes and we visit their premises regularly to check on their quality management. We regularly communicate ith ou i esto s, pote ial i esto s, a al sts a d the edia th ough p ese taio s a d i -pe so i te a io s. Fo o e i fo aio o ou stakeholde e gage e t see the so ial a d elaio ship apital se io of this epo t o pages to. Ou stakeholde s a d elated ate ial issues

21 The things that are most material to Taste Holdings We dei e ate ial issues as those hi h ould su sta iall i pa t ou a ilit to eate a d sustai alue fo ou stakeholde s. We ide if these issues th ough oa d a d e e ui e-le el dis ussio s du i g hi h e o side i a ial a d o -i a ial i fo aio, the issues driving our sustainability and their possible impact. During this process we consider the impact they could have on the sustai a ilit a d p oita ilit of ou usi ess, ou e plo ees, f a hisees, supplie s a d usto e s. We also use the feed a k e e ei e f o i te a io ith ou stakeholde s a d the su e s e u de take ith ou f a hisees a d ou usto e s. I the ta le elo issues raise. e ha e listed ou top te issues a d dis ussed ho e ha e espo ded to the isks a d oppo tu iies these Des ipio of pote ial issue Ou espo se to the isks a d oppo tu iies this issue aises Reputaio al da age A customer complaint on a social media site regarding one of our franchises could very quickly damage that a d s eputaio. Negai e a d pu li it ould i pa t sales, edu e f a hisee p oita ilit a d de a d fo p odu ts f o ou dist i uio e t es. It ould also edu e the Taste Holdings royalty income. We employ live monitoring of all social networks and have dedi ated usto e o plai t ha els, ith ag eed esoluio i es a d es alaio p oto ols. A pu li elaio s o pa is e plo ed to add ess a pote ial isk to a a d. Pu li elaio s t ai i g is o du ted fo ea h f a hise o e a d e procedures are disseminated periodically to stores. To e su e the s ste ai assess e t of all the steps i ol ed i ou food a ufa tu i g e t es, the a e e iied the outh African Bureau of Standards (SABS) against the hazard analysis a d ii al o t ol poi t HACCP food safet a age e t s ste ee the Health a d safet se io o page of this epo t fo o e i fo aio o HACCP. This allo s us to t a e the o igi of all ou i put p odu ts. I addiio, e o ito ou leet of ehi les i eal i e a d e ei e ale ts i ediatel he the cold chain is broken. We are busy reviewing our product recall procedures and addiio al i su a e o e o e dist i uio a i iies elated to the cold chain. Public liability insurance is in place at store level and for our food manufacturing facility. While the possible impact of this issue is high, we have assessed that, because of all the steps we have taken to build the eputaio of ou a ds to p ote t the f o egai e pu li it, the probability of it occurring is low. F a hisee p oita ilit the erosion of franchisee margins a i ease i i put osts esuli g i a sha p i ease i ost of sales o i ed ith lo e -tha -pla ed sales g o th ould esult i the o -pa e t of a age e t o alies, hi h ould afe t ou i o e a d a kei g fu d o alies. U p oita le sto es a e ot sustai a le a d ould ha e to lose, hi h ould egai el afe t a d a a e ess a d e e ue, a d i tu ould egai el i pa t e sto e g o th. To ou te these possi iliies e: ha e st o g fo used ope aio al tea s; a i el d i e i put osts do he e possi le; st ategi all set e u p i i g to e su e g oss p oit a d ost of sales a e i li e ith set ta gets a d a ket e pe taio s; o i ue to d i e edu io s i e sto e set-up osts; fa ai all o u i ate, easu e a d t a k i a ial e h a ks a oss the s ste a d ide if poo pe fo i g sto es a d p oa i el add ess thei pe fo a e; e plo e p odu t i o aio ; e su e ou e sto e desig s a e i li e ith a d ahead of a ket t e ds; a d e plo agg essi e aio al a d egio al a kei g st ategies. 19

22 The things that are most material to Taste Holdings o i ued Des ipio of pote ial issue Ou espo se to the isks a d oppo tu iies this issue aises ste do i e Our divisions operate highly integrated i a ial a ufa tu i g, a ehousi g a d poi t of sale s ste s. The efo e IT/se e - elated issues that esult i s ste do i e afe t the usi ess o i uit. I o de to iigate this isk e: pe fo dail a kups oth o site a d of site; ha e sta d se e s a aila le; ha e se i e le el ag ee e ts i pla e ith all ou ajo s ste / sot a e se i e p o ide s to assist ith ui k tu a ou d to a oid le gth do i e; ha e ofsite fa iliies he e e ould o e to i the e e t of a p olo ged dis upio to i oi i g; ha e a ual o de i g a d pi ki g p o esses i pla e to e su e that deli e ies a e ot dela ed; ha e a kup li ks fo all ke se i es to p e e t et o k outages eg. Fi e li ks, WiMa a d satellite li ks, G; ha e outsou ed e- ail to a o ld lass se i e p o ide ; ha e up to date sot a e, i ludi g a i- i us sot a e; ha e i e alls o all WAN li ks; a d use a es a d pass o ds o all o pute s. The p o a ilit of s ste do i e o u i g is and its impact is assessed as medium. Thet ould esult i a loss i ea i gs a d p oita ilit. ediu to high I ou food di isio, to p ote t ou o ga isaio f o thet, e ha e i stalled addiio al a e a s ste s i ou ope aio s and we closely monitor incoming and outgoing stock. We have also improved our stock receiving and dispatch systems, which i lude a ea l - a i g s ste. We also put addiio al se u it measures in place and have a reward structure in place that e ou ages e plo ees to epo t thet a o ousl. The likel i pa t of thet is ated lo, hile its p o a ilit of o u i g is high. I ou je elle di isio, the p o a ilit of thet o u i g is high, and the resultant impact is rated medium to high due to the value placed on jewellery stock. Security measures are constantly being evaluated, updated and improved in this division as pe p ofessio al e te al e o e daio s. A sto e e a p p og a is o goi g ith e e t e a p o elo aio of ke isk sites. e a pi g of sto es edu es the isk of sto k thet as the new store layout has increased security over stock on display. The di isio also ai tai s ade uate i su a e o e fo thet. Fi e at a p odu io a d/o dist i uio fa ilit could interrupt It is u likel that the e ould e i es at oth ou food a d a ufa tu i g a d/o dist i uio. je elle a ufa tu i g a d dist i uio e t es at the sa e i e. We ha e i e p ote io e uip e t a d safet easu es i pla e at these e t es a d e also ha e a kup p odu io arrangements in place for all our products. Any losses that might o u ould e o e ed the usi ess i te upio i su a e cover we have in place. Again, while the impact of such an incident would be high, the probability of it occurring is considered low. 20

23 Des ipio of pote ial issue Po e i te upio ould i te fe e ith ou p odu io schedule and, depending on the length of the outage, could esult i the dete io aio of f eeze a d hille sto k sto ed fo dist i uio. Ou espo se to the isks a d oppo tu iies this issue aises I ou food di isio, hile e ould o e sto k to a alte ai e lo aio ith ou dist i uio fa iliies o o -site, this ould e a e te si e e e ise. A addiio al alte ai e ould e to sto e stock in available refrigerated vehicles. We also have backup manufacturing arrangements in place with a strategic partner. We ha e i su a e o e fo possi le sto k dete io aio. Ou Culli a dist i uio e t e is o the sa e a le et o k as the Cullinan diamond mine. As a result it is less likely to have extended po e outages. We a e i the p o ess of i alisi g a ess to the mine s generator. In our jewellery business the impact is low due to the i dei ate shelf life of sto k a d the sto k da s o e e keep. In our food business the impact is rated as high and the probability is medium. t ike a i it at p odu io a d/o dist i uio fa iliies would We t to ai tai good e plo ee elaio s i oth ou i te upt a ufa tu i g a d dist i uio. di isio s. The e is u e tl u io ep ese taio i ou Cape To p odu io a d dist i uio fa ilit ut ot at ou Culli a ope aio, hi h is likel to ha ge i the e i a ial ea. Currently we assess the impact of a strike as high, but the probability of a strike is assessed as low. In the event of a strike we would hire temporary labour and, if necessary, use backup a ufa tu i g fa iliies hi h a e i pla e ith st ategi pa t e s. E posu e to head leases which we have in strategic sites and hi h e su lease to f a hisees, ould egai el i pa t ope ai g p oit if a f a hisee failed to ho ou the te s of its sublease. To edu e this isk e a e o l e e i g ke head leases. No strategic site leases are handed over to franchisees as and when our leases come up for renewal. We assess the impact of this issue could be high and that the probability of it occurring is medium to high. A o e p otei sho tage ould de ease f a hisee p oita ilit in two of our brands that are dependent on a single protein. Currently these brands are the The Fish and Chips Co. and Zebro s Chicken. We constantly assess supply and are able to invest in holding months of stock should the need arise. Across both chicken a d ish e o k to se u e supplies ell ahead of the de a d. Uli atel he this has happe ed e ha e ee a le to uilise p odu t i o aio to ofe usto e s alte ate p odu ts that a e alig ed to thei afo da ilit. outh Af i a e ha ge ate esuli g i ish supplie s e po i g highe olu es of ish fo e ha ge ate e eits, which would esult i highe -tha -usual de a ds o the outh Af i a ish suppl hai, hi h ould push up p i es a d lead to ish falli g out of the price range of the LSM market served by The Fish and Chip Co. franchises. The isk is that f a hisee p oita ilit ould de ease a d the f a hise ould lose a ket sha e a d p oita ilit. Taste is i esigai g the possi ilit of usi g fa ed ish a d supplie elaio s to sou e alte ai e p odu ts that ould sustai demand. We have assessed the likely impact of this risk as medium and its probability also as medium. 21

24 - ea -old hi ke a d o ated p edo i a tl i the LWeste Cape U i ue p epa atio ethod: ou hi ke Ai ed at L M, alue fo 22 e o e aai

25 Group at a glance a d i i g asual di -i eag -old a estau a t d la gest a d i it s atego i Thi outh Af i a a hiso of the ea FA A F i e 23

26 Performance A e gi e fo sustai a le jo s % Ne sto e ope i gs eated o e jo s i t o ea s % G o th i Taste Holdi gs o kfo e i just th ee ea s, eai g e head oi e jo s. A e age sala of all Taste e plo ees is R pe a u % I % Of ou iddle a age s a e histo i all disad a taged outh Af i a s HD As Of ou total pe a e t o kfo e is HD As a d HD A fe ales ake up % of ou o kfo e I ease f o i ou ju io a age e t e plo ees, f o people to people % ease i se i-skilled e plo ees, as e esta lished ou food dist i uio usi ess Of ou ju io a age s a e histo i all disad a taged outh Af i a s HD As % I t odu io All o ga isaio s depe d o a ious fo s of apital so ei es efe ed to as esou es a d elaio ships fo thei su ess. These fo s of apital a e sto es of alue that, i o e fo o a othe, e o e i puts to a o ga isaio s usi ess odel. The a e i eased, de eased o t a sfo ed th ough the a i iies a d outputs of the o ga isaio. As a e a ple, ou i a ial apital i eases he e ake a p oit a d the ualit of ou hu a apital i p o es he e t ai ou e plo ees, o e plo e plo ees ith oade di e sit and skills. I this se io of ou epo t e p o ide ou ith i fo natural capital. Hu a apital aio o ou pe fo a e i te s of ou hu a, so ial a d elaio ship, a d The e eits e p o ide ou full-i e e plo ees, o e a d a o e the legall a dated e plo e t e eits, i lude pa i g a o e i i u ages a d sala ies. We also pa addiio al o uses a uall, the dete i aio of hi h is ased o pe fo a e agai st both individual criteria and company performance. 24

27 Taste Holdi gs G oup di e t Male Fe ale e i-skilled a d u skilled Total permanent workforce eakdo White Total A o kfo e 4 White 7 11 Indian 7 28 Colou ed 30 9 Af i a 5 1 Indian Colou ed Af i a of Taste o kfo e i Total o kfo e Males 23% Fe ales Ge de eakdo 19% 29% 53% 51% 12% Disa led % fe ale HD A1 ep ese taio 1 Junior management White 1 1 Ra ial a d ge de Indian Af i a 22 Middle management A le- odied % HD A1 ep ese taio Senior and top management Colou ed Disa led White Indian Colou ed Af i a A le- odied 34% 66% 50% 14% 10% 14% 17% 8% African Coloured Indian White Males Females G oup f a hisees Fe ale Ra ial a d ge de eakdo % fe ale HD A1 ep ese taio 28 % HD A1 ep ese taio 13 Total A o kfo e 1 56 White Indian 32 1 Af i a 113 White Total permanent workforce Indian 1 Colou ed Af i a Af i a White 32 Disa led White Indian 113 A le- odied Indian Colou ed Franchisees Colou ed Af i a Disa led Colou ed Male A le- odied of f a hisee o kfo e Total o kfo e Males Fe ales 27% 29% 38% Ge de 34% 28% 41% 37% 72% 8% 8% eakdo 8% 25% African 17% 28% Coloured Indian White Males Females Histo i all disad a taged outh Af i a s. 25

28 Performance o i ued T ai i g a d de elop e t As a esult of histo i i u sta e the le el of asi edu aio a o g se i-skilled e plo ees is elai el poo a o gst the outh Af i a o kfo e. Fo si ila easo s e i d the le el of i a ial lite a a o g ou ou g HD A1 franchisees requires improvement to successfully manage a small business. Lastly, the g o th of ou usi ess i the last i e ea s has pla ed de a ds on senior management to develop themselves at the pace of the business units they manage, lest their skills become unsuitable for that larger business. These three factors make the transfer of skills to both direct employees and franchisees not only a o e ial i pe ai e, ut a so ial o e too. Co se ue t to these th ee ealiies, i esi g i the de elop e t of ou people is a priority. We need to develop the appropriate skills to support our strategy, which includes developing future business unit leade s. E plo ees that e ha e ide iied as ha i g leade ship pote ial ate d a a ge of e te al t ai i g ou ses, a e assessed annually in a thorough peer and manager review process, which results in an annual development plan. Managers have access to pe so al oa hes to assist ith the fulil e t of thei pe so al de elop e t pla. All se io a age s also ate d J E di e to i du io ou ses, a d to date people ha e ate ded. u essful de elop e t i te e io s e a el o u th ough si ple ate da e at e te al ou ses a d it is o se ue tl inappropriate to measure this development on money spent. We the efo e ofe i e i es it e a ds to those ho ualif at the end of their training. Our health and safety training includes training all our employees in basic hygiene and HACCP procedures. Employees also received training in: i st aid; health a d safet ep ese tai e t ai i g; fo klit ope aio ; pest o t ol; sta da d ope ai g p o edu es; ii al o t ol poi ts CCPs a d i e ighi g; haza d ide ii aio a d isk a al sis HI A t ai i g; a d health a d safet a age e t t ai i g. Other training our employees received this year included: te pe atu e o ito i g a d o t ol oth u ial i o t olli g p odu t ualit ; food fa to a d pe so al h gie e; t ai i g i the use of pastel e oluio sot a e; sta da d ope ai g p o edu es; ele t ode oile ope aio ; ii al o t ol poi t CCPs t ai i g; a d spe ta k t ai i g fo all e plo ees i asi he i al usage, diluio s, he i al safet, asi h gie e a d ha d ashi g. Histo i all disad a taged outh Af i a s. o ial a d elaio ship apital takeholde e gage e t Ou oa d is espo si le fo o u i ai g ith ou sha eholde s hose u e has i eased % ea -o - ea to at 28 February. It does so mainly via several e e ui es a d depa t e t heads ho ha e ee gi e responsibility for engaging with analysts, investors and individual sha eholde s a d pote ial i esto s. Ou CEO a d CFO fo all present to shareholders and analysts in Durban, Cape Town and Johannesburg every year. Both the CEO and the CFO also make the sel es a aila le fo telepho i a d i -pe so i te a io s with shareholders. Our CEO also makes himself available to the media. E gagi g ith ou e plo ees To keep our employees informed so they can understand the usi ess s st ateg a d goals a d ake a alua le o t i uio to our business, our CEO presents the group strategy and results to all ou e plo ees at the sa e i e as ou esults a e eleased to shareholders annually. Ou ua te l e slete, The Taste Ti es, is circulated to all ou e plo ees a d f a hisees. It p o ides eas -to-u de sta d e pla aio s of the g oup s i a ial esults, the easo s ehi d our strategy and what we need to do to achieve it. It also includes news, employees experiences and insights. To assess how well our employees understand our strategy and what is required from them to achieve it, we also draw on employee feedback during their personal assessments. This provides Taste with insight into how our senior managers are t a slai g ou st ateg to thei di e t epo ts. E gagi g ith ou f a hisees While each division has its own channels of engaging with its own f a hisees, e sha e e tai o o p a i es a oss all ou divisions. These include: o du i g egula f a hisee eei gs th oughout the ea ; o du i g a saisfa io su e a o g f a hisees; p o idi g fo used t ai i g to e isi g f a hisees; a f a hisee a kei g ou il a d f a hisee ad iso ou il; a ual a a ds p ese taio to high-pe fo i g f a hisees, a d; i ulai g The Taste Ti es to all f a hisees a d a age s; a d e ou agi g feed a k a d e s o lo al e e ts fo i lusio i The Taste Ti es. E gagi g ith ou usto e s Taste and its brands are all premised on exceeding our customers e pe taio s. F a hisees uilise ou outsou ed all e t e to give us feedback on the service levels that we deliver to the. Addiio all, e d- o su e s ha e the a ilit to log thei comments with an outsourced call centre, which comments are ai tai ed i a e t al data ase, i addiio to ei g a ted upo

29 as e ui ed. We also u de take egula usto e saisfa io surveys and research the relevance of our products, services and a d pe epio s. E gagi g ith ou supplie s We recognise that Taste and its suppliers depend on each other a d fo ge st o g elaio ships ith the. We a age supplie pe fo a e agai st o -i e deli e spe ii aio s, p i e consistency and adherence to audits that ensure compliance ith the latest est p a i e. We ha e adopted a t a spa e t pricing policy which allows for mutual understanding of the key drivers of price, availability and quality. While we prefer to use local suppliers, the group s manufacturing division imports certain input products directly. We ensure that no individual has sole po e to egoiate p i i g o appoi t e supplie s, hi h iigates the isk of hidde osts i the suppl hai a d e su es that ou p o u e e t poli ies a d p a i es a e fai a d transparent and are conducted at arm s length. We use a supplie ualit assu a e uesio ai e, hi h e ui es ou supplie s to p o ide us ith i fo aio ega di g thei quality management system, prerequisite programmes, building structure, pest control and various other factors that could have a efe t o the ualit of the p odu t the a e suppl i g to us. We also visit our suppliers regularly. Suppliers must provide us with supplier quality assurance e ii ates, e ii ates of Halaal app o al if e ui ed a d supplie p odu io spe ii aio s. E gagi g ith the edia We e og ise the i po ta t ole the edia pla s i epo i g on social issues and providing a balanced view. The group is o ited to ei g a essi le to the edia a d i ludes e e s of the edia i its a ual p ese taio s to sha eholde s. A so iall espo si le usi ess Jo eaio a d e te p ise de elop e t a e top of the list he it comes to what is required to develop the South African economy. Our franchising business model not only provides enterprise de elop e t oppo tu iies fo s all usi esses that a e likel to succeed and become sustainable because of the support a tried and tested franchising model provides the franchisee, but it also creates employment. (See our Human capital achievements on page fo i fo aio o the e plo e t e ha e eated. I many cases the opening of a new Taste franchise store provides people ith thei i st jo. I addiio, the gai po ta le skills through the skills training they receive in our outlets. Our corporate social responsibility programme focuses on esta lishi g a so ial i f ast u tu e a d upliti g hild e sufe i g f o life-th eate i g diseases a d life halle ges. We do this o t i ui g to the Just Footp i ts Fou daio, hi h is a egiste ed o -p oit o ga isaio fou ded i ith the ai of eei g the eed fo a u i ue, safe a d se u e outdoo camping experience for children with serious health and life halle ges. The Fou daio suppo ts ha iies su h as CHOC, Reach for a Dream, Cotlands and Ithemba Trust. afet a d health We ha e a o al a d legal o ligaio to safegua d a d p ote t ou employees and our customers against injury, disease and risks to thei health a d safet. Ou health a d safet o itees hold o thl health a d safet eei gs at hi h a pote ial isks a d issues afe i g the health a d safet of ou e plo ees a e addressed. Taste Holdi gs is o ited to p o idi g safe food p odu ts to its ailiated f a hise estau a ts. The state-of-the-a t food dist i uio e t es e esta lished i i lude high- olu e a ufa tu i g fa iliies p odu i g spi es, sau es, dough p e i es a d added- alue eat p odu ts. Ou ai o je i e is to ope ate u de the haza d a al sis a d ii al o t ol poi t HACCP food safet a age e t s ste hi h e su es the s ste ai assessment of all the steps involved in our food manufacturing e t es, hi h a e e iied the outh Af i a Bu eau of Standards (SABS) against the HACCP criteria. The system allows us to t a e the o igi of all ou i put p odu ts. I addiio, e o ito ou leet of ehi les i eal i e a d e ei e ale ts if the cold chain is broken. We apply benchmark hygiene principles throughout our manufacturing process and our food technologist ensures that all the products we produce comply with our spe ii aio s efo e the a e despat hed to usto e s. We ha e a number of robust food safety systems in place, all of which we regard as being high priority, these include employing good a ufa tu i g p i iples a d ualit a age e t i elaio to our HACCP system. There were no health or safety issues in any of our divisions during the year under review. Natu al apital Be o i g o e e e g ei ie t Ou ost ate ial i pa t o atu al apital is ou o su pio of energy, both in the form of electricity used in our outlets to cook and prepare food and manufacture jewellery, and fuel o su ed ou leet of ehi les. Not o l do e seek to edu e the g ee house gas e issio s esuli g f o ou o su pio of electricity produced using fossil fuels and diesel fuel, but we also seek to i i ise the egai e i pa t of the high p i es of ele t i it a d diesel fuel o the p oita ilit of ou sto es. Both fuel a d ele t i it p i es o i ue to i ease a o e the ate of i laio. We set ou sel es a ta get of edu i g ou e e g o su pio % o e fou ea s, ho e e, it has p o ed dii ult to easu e due to o -sta da d ete i g f o a ious u i ipaliies a d landlords.

30 Performance o i ued Not ithsta di g that, e took the follo i g steps to edu e ele t i it o su pio i outlets: I stalled light-e ii g diode LED lights hi h o su e o l % of the po e o su ed the haloge la ps e used p e iousl. epla ed ai o diio i g u its ith e apo ai e oole s hi h o su e o l % of hat ele t i al ai o diio e s o su e. edu ed o su pio i stalli g i e s o ge se s a d e te al sig age. I po ted a d i stalled e e g -ei ie t o e s i ou e pizza outlets. I stalled the latest i e e g -ei ie t ef ige aio i ou e dist i uio e t es a d used la ge p e- ef ige ated ool o es i stead of refrigerated trucks on short trips. To edu e ou fuel o su pio e: se d ulk o de s to pallets at a i e i o e t u k i stead of se di g th ee sepa ate deli e ies of to pallets at a i e; a d edu e the u e of t u ks e use fo lo al deli e ies %. HACCP AFETY MANAGEMENT Y TEM HACCP is a food safety management system that enables food processing and catering industries to introduce and maintain a ost-efe i e, o goi g food safet p og a e. HACCP i ol es the s ste ai assess e t of all the ai steps i ol ed i a food a ufa tu i g ope aio a d the ide ii aio of those steps that a e ii al to the safet of the p odu t. HACCP is based on seven principles: 1. Analyse hazards Pote ial haza ds asso iated ith food a d the biological, chemical and physical contaminants. easu es e ui ed to o t ol those haza ds a e ide iied i ludi g. Ide ify rii al o trol poi ts These a e poi ts i a food s p odu io at hi h pote ial haza ds a e o t olled o eli i ated.. Esta lish pre e i e easures ith rii al li its for ea h o trol poi t These a e i i u sta da ds e ui ed fo the safe p epa aio of food.. Esta lish pro edures to o itor the rii al o trol poi ts These procedures include determining how and by whom processing standards are to be monitored.. Esta lish orre i e a io s to e take he o itori g has sho that a rii al li it has ot ee et Either reprocess or dispose of foods if the minimum processing standards have not been met.. Esta lish pro edures to erify that the syste is orki g properly Tesi g a d ali ai g e uip e t to e su e its p ope fu io i g is ut o e of the t pi al e ui e e ts.. Esta lish efe i e re ord keepi g i order to do u e t the HACCP syste This ould i lude e o ds of haza ds a d thei o t ol a io s take to eithe p e e t p o le s o esta lish ho ethods, o ito i g of safet e ui e e ts a d o e i e o - o fo a es a e to e p e e ted f o e u i g.

31 Group at a glance - ea -old pizza a d d la gest pizza deli e hai i A e i e of the FA A B Foua -tid Builde of the Yea a a d - i ute deli e o Foouussed o o de f ee 29

32 C eai g lasi g jo s Ou la gest o t i utio to ou so iet is the dig it that o es ith o k. This is o l possi le th ough skills t a sfe a d sustai a le e plo e t. A ual g o th of HD A1 e plo ees skill t pe % % % % 0 0% 0 Senior Middle management management Junior management Annual % growth plit e iskilled Total workforce The multiplier effect changing our country one job at a time The g oup o kfo e has g o % i just th ee ea s f o to 662 direct employees. esea h has i di ated, fo e e se i-skilled, ju io a age e t, o e t -le el sto e ased e plo ee the e a e app o i atel eight depe da ts, pote iall e te di g ou o e all i pa t to o e tha people in South Africa. Th ough o e e sto e ope i gs alo e i the last t o ea s e ha e created over jobs. Nominal annual growth A skill t pe ual g o th skill t pe 80 69% ,6% 50% 50 4,2% 4,5% 47% 40 71,6% % 0 e i- a d unskilled Junior management Middle management HDSA1 o kfo e as a % of total 70 Senior Middle Junior management management management e iskilled Total workforce HDSA1 f a hisees as a % of total % 80 - % Senior and top management 61.73% % 54.42% % % % % HDSA1 Employees 2013 Female HDSA1 Employees Histo i all disad a taged outh Af i a s. 30 HDSA1 franchisees 2013 Female HDSA1 franchisees

33 The Muliplie efe t Jo Dist i uio to e plo ees % % 14% eaio a d a e age ea i gs G oss dist i uio to di e t employees R million Edu aio is the ost po e ful eapo - Nelso Ma dela Nu e of e jo s eated pe Total Number of direct employees G oss dist i uio % to group revenue Average annual o pe saio pe e plo ee hi h ou a use to ha ge the o ld ea Total Total New corporate staf 2013 New store managers New front line/service New store p odu io This is ased o a e age staf e plo e t sto e type and is based on the number of new stores opened. 31

34 We care u ess is t a out ho u h o ey you ake, it s a out the difere e you ake i people s li es First Lady Mi helle O a a Taste Holdi gs o po ate so ial espo si ilit a i iies fo us o esta lishi g so ial i f ast u tu e a d o t i ui g to the uplit e t of hild e ith lifeth eate i g diseases a d life halle ges of ou o u it. Just Footp i ts Fou daio is a egiste ed o -p oit o ga isaio hi h as fou ded i, spe ii all to eet the need for a unique outdoor camping experience that would provide safe and secure adventures for children. The Just Footp i ts Fou daio suppo ts ha iies su h as CHOC, ea h fo a D ea, Cotla ds a d Ithe a T ust. At these a ps, disad a taged a d disa led hild e a d hild e ith life-th eate i g ill esses a d life halle ges lea e skills, de elop o ide e a d e ha e thei self-estee i a suppo i e fu a p e i o e t. A pla e he e ph si al isks a e a aged app op iatel a d pa i ipa ts a e a ed fo e oio all. Ou i st a p as held i. We hosted si in August and November this year. o e a ps si e the a d a e looki g fo a d to t o o e a ps We e e tl i ple e ted a oui g as pa t of the p og a e fo the hild e to a old-age ho e at a ea village. Here they interact with the aged and provide them with a meal and entertain them with song and dance. 32

35 Ou a ds suppo t a ious ha iies a d ha it e e ts su h as: This way the children also learn to give back to the community. We feel honoured to be involved with Just Footprints, as their cause is one that all members of Taste Holdings feel deeply passionate about and o ited to. E e e e t that e partner with Just Footprints is so rewarding. Seeing the joy on the children s faces is an experience that cannot be summed up in words. Cha it he ue spo so ships at sto e ope i gs Whizzkids eek ele ai g Youth Da a d eek Deo Glo ia soup kit he i K uge sdo p Just Footp i ts a p pa i ipa t Hout Ba Valle hool a d astle Co peiio Ha itat fo Hu a it Ithe a P es hool, Cap i o Pa k UCT E t ep e eu s Da Hol C oss iste hool Food Fai Deo Glo ia soup kit he i K uge sdo p Just Footp i ts a p pa i ipa t iss Bo A a ds Mo o a Oil p odu t lau h Just Footp i ts a p pa i ipa t Wheel hai gi ea a, Polok a e Ba i o s C e he i Da ille, P eto ia Ch ist as Pa t TB a d i Ki g Geo ge hospital i Du a A i al a i- uelt lu h plate s fo people ho o k i thei oi es Deo Glo ia soup kit he i K uge sdo p Fa e ook o peiio s fo usto e s ha it /fa of the o th Ju e Just Footp i ts a p pa i ipa t Deo Glo ia soup kit he i K uge sdo p Just Footp i ts a p pa i ipa t ABF Ad e isi g Be e ole t Fu d Golf Da West ille Bo s High Golf Cha ps WI)O Je ish Ne Yea a ket Jes Foo d Fou daio 33

36 Group at a glance o Dist i utio fa ilities i Cape To a d TP eto ia, Culli a d Halaal-a edited sau e Ha ACAAP a d spi e fa ilit i Cape To e outlets eekl i Dfi elie Afe to o i a ou t ies ufa tu e p e- i es, a ious p otei s, Ma spi es a d sau es of all a ds 34

37 ea -old a a d i i g je - elle hai gest a d o l e ti all i Thitegd laated f a hised je elle hai i A Value fo o e al a s % off

38 Corporate governance Ho e go e ou usi ess o e s a d p io iies of ou ide stakeholde e i o its st ategi guida e a d de isio - aki g p o ess. Ou app oa h to go e a e Taste Holdings believes that good corporate governance, which includes transparency and accountability, is key to the integrity of ou o ga isaio a d ou a ilit to a age isk a d pe fo at opi u le els. U de pi i g ou dis ipli ed app oa h to go e a e is ou dete i aio to e su e e ai tai a ala e between good governance and the spirit of entrepreneurship that has built our business. e ti To e su e that e o siste tl p a ise efe i e o po ate governance throughout the Taste Holdings group, our board ate iall applies the p i iples of Ki g III a d the Lisi gs e ui e e ts of the J E ee the Ki g III I de a d ou epo i g i te s of e io. of the J E Lisi gs e ui e e ts o ou website). We recognise that strategy, performance, sustainability and risk a e i sepa a le. Ou oa d also takes i to o side aio the Ou oa d go e a e st u tu e ha eholde s a d othe stakeholde s Boa d of di e to s Co pa Boa d o G oup e e ui e o itee se eta itees Audit a d isk o itee o ial, ethi s a d e u e aio o itee T o di isio al e e ui e a age e t o itees Taste Holdi gs oa d i depe de e as at Fe ua Total 45% 45% 9% E e ui e di e to s No -e e ui e di e to s I depe de t o -e e ui e di e to s Go e a e a d a age e t s ste s Good governance is the cornerstone of the Taste Holdings g oup s oa d a d o itee st u tu e. Ou oa d e og ises its leadership role in taking responsibility for the governance of the group and it sets the company s values and is responsible for establishing and maintaining a strong ethical culture throughout the group. Ou oa d pe fo s its go e a e espo si iliies ithi a f a e o k of poli ies a d o t ols hi h p o ide fo efe i e isk assessment and management of our economic, environmental a d so ial pe fo a e. The oa d s espo si iliies a e outli ed in its charter which the board reviews and adopts annually. Mandates, charters and terms of reference governing the board a d its o itees a e a aila le f o ou o pa se eta. The oa d also pla s a i po ta t ole i sei g ethi al sta da ds of conduct for the group. The board charter, which is closely aligned with the e o e daio s of Ki g III, details the espo si iliies a d duies of the oa d, hi h a e also add essed i ou e o a du of i o po aio. Shareholders are required to elect the members of our audit o itee, hi h is a statuto o itee i te s of the Co pa ies A t, at ou a ual ge e al eei g. The e e s of ou so ial a d ethi s o itee, hi h is also a statuto o itee, a e eappoi ted a uall the oa d at its i st oa d eei g follo i g the a ual ge e al eei g.

39 The oles, espo si iliies a d Me e e ship of ou e ship oa d a d its o itees as at Fe ua Ate da e Roles a d espo si iliies Boa d I depe de t No e e ui e Chai a Ramsay L Amy (Bill) Daly 2/3 Role a d espo si iliies of the hai a : The chairman ensures: the o e all efe i e ess of the oa d a d its o itees; that the oa d p o ides efe i e leade ship, ai tai s ethi al sta da ds a d is espo si le, a ou ta le, fai a d t a spa e t; and that st ategies a e de eloped a d i ple e ted ith the o je i e of a hie i g sustai a le e o o i, so ial a d environmental performance. To a hie e this he e ou ages o st u i e de ate a d dis ussio ithi the oa d th ough a ultu e of ope ess a d o st u i e challenge. He makes himself available to shareholders for dis ussio o o po ate go e a e ate s a d ate s of concern to shareholders and other stakeholders. Boa d eets at a i i u of th ee i es a ea. It also o e es addiio al eet ith oa d e e s at least th ee i es a ea. Co posiio of the oa d: Anthony Berman Fi e i depe de t o e e ui e di e to s Ke i Uia (including the chairman)* Wessel van der O e o -e e ui e Merwe***** director** e asia Patel**** Fi e e e ui e directors*** Hylton Rabinowitz Carlo Gonzaga (CEO) 3/3 3/3 3/3 3/3 3/3 3/3 Evan Tsatsarolakis (CFO) 3/3 * ** *** **** ***** Duncan Crosson 3/3 Luigi Gonzaga*** 2/3 Jay Currie** 3/3 eei gs as e essa. I addiio, the CEO a d CFO Board members are accountable to shareholders and they owe a duty of care and diligence to the company. They act in the best i te ests of the o pa a d its sha eholde s. To fulil thei ole oa d e e s pa i ipate i igo ous a d o st u i e de ate and discussion. The board is responsible for: st ateg, st ategi de isio - aki g a d e e uio ; go e i g the o pa o ehalf of its sha eholde s; e gagi g ith stakeholde s; Taste Holdi gs app oa h to o po ate iize ship, safet, health, the e i o e t, ethi s a d isk; Its o go e a e, i ludi g the otaio of di e to s, t ai i g of di e to s, o li ts of i te est a d the appoi t e t of di e to s; a d Mo ito i g a d assessi g Taste Holdi gs eputaio i the marketplace. G a t Paiso joi ed the oa d as a i depe de t o -e e ui e di e to o Ma h. Ja Cu ie s status ha ged f o o -e e ui e di e to to e e ui e di e to i epte e. M Cu ie ate ded o e audit a d isk o itee eei g a d o e so ial, ethi s a d e u e aio o itee as a o -e e ui e di e to, ut esig ed f o these o itees he he took up a e e ui e posiio ith the g oup. He joi ed the g oup e e ui e o itee i epte e. Luigi Go zaga, hose ei e e t as a ou ed i O to e, esig ed f o the oa d o Fe ua a d also esig ed f o the e e ui e o itee. e asia Patel joi ed the audit a d isk o itee o Ja Cu ie s appoi t e t as e e ui e di e to. Wessel a de Me e joi ed the so ial, ethi s a d e u e aio o itee i Fe ua.

40 Corporate governance Me Audit a d isk o e ui ed. The o e ship o i ued Ate da e Roles a d espo si iliies itee The o itee eets a i i u of th ee i es a ea ith spe ial eei gs alled as a d he itee also eets ith the g oup s e te al audito s a d Taste Holdi gs e e ui e a age e t pe iodi all. Co posiio : Th ee i depe de t o e e ui e di e to s* The CEO and CFO who ate d eei gs i itaio do ot ha e a vote. Anthony Berman 3/3 Wessel van der Merwe 3/3 e asia Patel**** 2/3 The external auditor also ate ds eei gs i itaio. The audit o itee e su es that app op iate he ks a d ala es a e i pla e to e su e o ust, i depe de t a d ei ie t audit p o esses a d that i a ial epo i g th oughout the g oup is accurate and reliable. The o itee: e ie s a d o e sees Taste Holdi gs i teg ated epo i g a d its s ste of i te al o t ols; e ie s the i di gs of the e te al audito s a d o e ou i te al audit fu io is esta lished ill e ie its i di gs a d o e see the i te al audit fu io ; o tai s e te al assu a e o the i a ial state e ts i luded in Taste Holdings integrated report and recommends them to the oa d fo app o al; a ies out its statuto duies set out i se io of the Co pa ies A t, ; saisies itself as to the e pe ise a d e pe ie e of the g oup s i a ial di e to a d its i a ial fu io. Du i g the i a ial ea u de e ie the o itee ag eed to a a io pla i espe t of a eas of the g oup he e i a ial skills a d/o p o edu es a e i ade uate; saisies itself that a age e t egula l o ito s the g oup s o plia e ith the F a hise Asso iaio s ode of o du t; assists the oa d ith its espo si ilit fo IT go e a e e su i g that the g oup a ages its i fo aio assets efe i el, that a IT go e a e f a e o k is i pla e a d that a age e t is i ple e i g the f a e o k; a d o ito s a d e aluates sig ii a t IT i est e t a d expenditure. The risk o itee: o side s isk i its idest se se; ide iies a d assesses st ategi isks, thei i pa t a d the p o a ilit of the o u i g; o ito s the pe ei ed efe i e ess of the g oup s e isi g o t ols a d s ste s a d assesses thei i teg it ; e su es the o pa s isk poli ies a d st ategies a e efe i e a d efe i el a aged; esta lishes a d ai tai s a o o u de sta di g of the od of risks that need to be addressed if the company is to achieve its o po ate o je i es; e ie s a d o i s the o pa s le els of isk tole a e a d its isk p oile at least t i e a ea ; oo di ates the g oup s isk a age e t efo ts, e ie s the esults a d e su es app op iate a io is take ; o ito s e te al de elop e t elai g to o po ate a ou ta ilit, i ludi g e e gi g a d p ospe i e isks a d oppo tu iies; a d e ie s a d dis usses the g oup isk egiste, hi h is agg egated from the risk registers prepared by the divisions once a year in February. I Fe ua, the audit a d isk o itee fo all e aluated the pe fo a e a d efe i e ess of the e te al audito i te s of Ki g III a d the J E Lisi gs e ui e e ts. It o i ed the suita ilit a d efe i e ess of the e te al audito a d o i ated BDO South Africa Inc. for reappointment as external auditor for the o i g i a ial ea, ha i g saisied itself that the o pa a d its individual auditors are properly accredited and independent. The o itee also dete i es a d a efull o ito s the use of the e te al audito fo o -audit- elated se i es. The fo al policy in place precludes the auditor from providing services that could impair audit independence.

41 Me o ial, ethi s a d e u e aio Co posiio : Fou i depe de t o e e ui e di e to s The CEO ate ds po io s of these eei gs i itaio. He does not have a vote, nor does he pa i ipate i discussion regarding his e u e aio. e ship o itee The o Ate da e Roles a d espo si iliies itee Anthony Berman (Chairman) 2/2 Bill Daly 2/2 Ke i Uia 2/2 Wessel van der Merwe***** 1/2 eets t i e a ea a d alls addiio al eei gs as a d he e ui ed. The o itee i ites e e ui es a d se io a age s of the g oup to ate d eei gs i itaio i o de to pe fo its mandate. o ial a d ethi s respo si iliies: The p i a ole of the o itee is to supple e t, suppo t, ad ise a d p o ide guida e o the efe i e ess o othe ise of a age e t s efo ts i espe t of so ial, ethi s a d sustai a le de elop e t- elated ate s hi h i lude: e eddi g a ethi al ultu e; safet, health a d ell ess; so io-e o o i de elop e t; hu a esou e de elop e t; e plo e t e uit a d t a sfo aio ; the g oup s e po e e t ede ials; the g oup s o po ate so ial espo si ilit ; p ote io of o pa assets; a d stakeholde e gage e t. Re u eraio respo si iliies i lude: app o i g, guidi g a d i lue i g hu a esou e poli ies a d st ategies; e su i g app op iate t a spa e t dis losu e of e u e aio skills de elop e t; e o e di g app op iate le els of e u e aio to e paid to the e e s of the Boa d of di e to s; upholdi g, e ie i g a d a e di g, if app op iate, the o pa s e u e aio philosoph a d poli ith pa i ula efe e e to the e u e aio of e e ui e di e to s a d se io a age e t; e su i g that e e ui e di e to s a d se io a age e t a e fai l e a ded fo thei i di idual o t i uio s to the company s overall performance, having regard to the interests of stakeholde s a d the i a ial o diio of the g oup; app o i g e u e aio pa kages to at a t, etai a d oi ate high-pe fo i g e e ui e di e to s a d se io a age e t; a d e h a ki g e u e aio agai st o peito o pa ies a d thi d-pa t sala su e s. No i aio respo si iliies i lude: sei g the ite ia fo oa d o i aio s a d e su i g the appoi t e t of di e to s is t a spa e t; ide if i g, e aluai g a d e o e di g suita le a didates fo appoi t e t to the oa d; su essio pla i g; e su i g Taste Holdi gs leade ship is ep ese tai e of all a e groups and is in accordance with the spirit and targets set by the di Codes of Good P a i e; a d e su i g di e to s ei e a d a e e-ele ted i a o da e ith the o pa s e o a du of i o po aio. * ** *** **** ***** G a t Paiso joi ed the oa d as a i depe de t o -e e ui e di e to o Ma h. J a Cu ie s status ha ged f o o -e e ui e di e to to e e ui e di e to i epte e. M Cu ie ate ded o e audit a d isk o itee eei g a d o e so ial, ethi s a d e u e aio o itee as a o -e e ui e di e to, ut esig ed f o these o itees he he took up a e e ui e posiio ith the g oup. He joi ed the g oup e e ui e o itee i epte e. Luigi Go zaga, hose ei e e t as a ou ed i O to e, esig ed f o the oa d o Fe ua a d also esig ed f o the e e ui e o itee. e asia Patel joi ed the audit a d isk o itee o Ja Cu ie s appoi t e t as e e ui e di e to. Wessel a de Me e joi ed the so ial, ethi s a d e u e aio o itee i Fe ua. 39

42 Corporate governance Me E e ui e o itee*** o i ued e ship Roles a d espo si iliies Carlo Gonzaga (CEO and chairman of the o itee Evan Tsatsarolakis (CFO) Duncan Crosson Jay Currie Co pa The e e ui e o itee, hi h also a ts as a i est e t o itee, eets at least o e a o th, assists the CEO ith the pe fo a e of his duies, a d is espo si le fo : de elopi g st ateg, ope aio al pla s, poli ies, p o edu es a d udgets fo o side aio the oa d; i ple e i g the g oup s st ateg ; a i g out the oa d s a dates a d di e i es; the ope aio al a i iies of the Taste Holdi gs g oup; o ito i g ope aio al a d i a ial pe fo a e agai st set o je i es; e e ui g Taste Holdi gs o plia e a d dis losu e o ligaio s; a d de idi g o apital allo aio a oss the g oup, i ludi g replacement and investment capital, based on proposals su ited the di isio s i te s of ou oa d-ag eed investment mandate. se eta The group s company secretary is responsible for administering the p o eedi gs a d afai s of the di e to ate, the o pa a d, he e app op iate, o e s of se u iies i the o pa, in accordance with the relevant laws. The company secretary is available to assist all our directors with advice on their espo si iliies, thei p ofessio al de elop e t a d a othe relevant assistance they may require. Ms Monika Pretorius, the duly appointed company secretary of Taste Holdings, is neither a director nor a shareholder of Taste Holdings or any of its subsidiaries and on that basis the board is comfortable that Ms Pretorius has maintained an independent elaio ship ith the e e ui e tea, the oa d a d the i di idual di e to s i te s of e io. j of the J E Lisi gs Requirements. The Board has unlimited access to the Company Secretary, ho ad ises the Boa d a d its o itees o issues including compliance with Group policies and procedures, statuto egulaio s a d ele a t go e a e p i iples a d e o e daio s. The Co pa e eta ate ds Boa d a d Repo i g i te s of se io. Co itee eei gs to e su e that o p ehe si e eei gs a e e o ded. i utes of The company secretary has provided the board with documentary e ide e of he le els of o pete e i te s of fulilli g he espo si iliies as o pa se eta, hi h i luded he ualii aio s a d e pe ie e. Ms P eto ius has o e se e ea s experience as the company secretary of a listed company and has a BCo LLB ualii aio. he has e e ee e su ed the J E, pe alised o i ed fo a is o du t. The oa d, ha i g assessed he a iliies ased o he ualii aio s, e pe ie e a d the level of competence she has demonstrated as Taste Holdings o pa se eta as e ui ed i te s of e io of. i of the J E Lisi gs e ui e e ts, ag eed that Ms P eto ius is sui ie tl ualiied, o pete t a d e pe ie ed to a t as Taste Holdi gs o pa se eta. This as e do sed a d o i ed the Taste Holdi gs oa d at its eei g held i Ma. Ms P eto ius e used he self f o that po io of the eei g while the board deliberated on her suitability to act and perform the ole a d duies of the Taste Holdi gs g oup o pa se eta. Our policies and terms of reference are available through the company secretary. of the J E lisi gs e ui e e ts o oa d go e a e p o esses Re ui e e t P i iple App oa h 3.84(a) There must be a policy detailing the procedures for the appointment to the board. Our directors are appointed by means of a transparent and formal procedure, governed by the mandate and te s of efe e e o ou so ial, ethi s a d e u e aio o itee a d the oa d ha te. The oa d adhe es to a formal board policy in this regard. Appointments must be formal and transparent and a ate fo the oa d as a hole, assisted he e app op iate a o i aio o itee. If a o i aio o itee is appoi ted, su h o itee ust o l o situte o -e e ui e di e to s a d the ajo it ust e i depe de t. The o itee must be chaired by the chairman of the board. The so ial, ethi s a d e u e aio o itee s espo si iliies i lude sei g the ite ia fo oa d o i aio s, ide if i g, e aluai g a d e o e di g to the board suitable candidates for appointment to the Taste Holdings board, as well as succession planning. The o 3.84(b) There must be a policy evidencing a clear balance of power and authority at board level to ensure that no o e di e to has u fete ed po e s. 40 e e s of the so ial, ethi s a d e u e aio itee a e all i depe de t o -e e ui e di e to s. Our board charter demonstrates that there is a clear balance of power and authority at board level and that o o e di e to has u fete ed po e s. De isio s, if ot unanimous, are taken by a simple majority with one vote pe di e to. The hai a does ot ha e a asi g ote.

43 Re ui e e t P i iple App oa h 3.84(c) Issuers must have a CEO and a chairman and these posiio s ust ot e held the sa e pe so. The CEO a d hai a posiio s i Taste Holdi gs a e held dife e t people a d the hai a is a i depe de t o -e e ui e di e to. This p i ipal is documented in the board charter. The chairman must either be an independent director or the issuer must appoint a lead independent director as dei ed i the Ki g Code. 3.84(d) Issue s ust appoi t a audit o with the King Code. Issue s ust appoi t a e u e aio compliance with the King Code. itee i o o plia e itee i Taste Holdi gs has a o i ed audit a d isk o itee. Its membership is set out on page 38 of this report. The o itee u e tl has th ee e e s all of ho a e i depe de t o -e e ui e di e to s, as set out i the Ki g Code. The hai a of the oa d is i ited to ate d o itee eei gs. The board has appointed a combined social, ethics and e u e aio o itee, hi h has fou e e s all of ho a e i depe de t o -e e ui e di e to s. Where appropriate, issuers must appoint a risk and o i aio o itee. As already explained Taste Holdings has a combined audit a d isk o itee a d a o i ed so ial, ethi s a d e u e aio o itee, hi h is tasked ith the espo si iliies of a o i aio o itee. The o pa do ot ha e sepa ate isk a d o i aio o itees. The o posiio of su h o itees, a ief des ipio of thei a dates, the u e of eei gs held a d a othe ele a t i fo aio ust e dis losed i the annual report. B ief des ipio s of the a dates of these o itees a d the u e of eei gs held du i g the ea a e available on pages 37 to 40 of this report. 3.84(e) B ief CV of ea h di e to sta di g fo ele io o eele io ust a o pa ele a t oi e of eei g. I fo 3.84(f) Capa it of di e to s i elaio to e e ui e, o e e ui e a d i depe de t ust e atego ised a d dis losed i the ele a t do u e taio. This i fo aio is also o tai ed i the u i ulu itae e io ed i. e. The o posiio of ou o itees is i a o da e ith the e ui e e ts of the Companies Act and the King Code. 3.84(g) Issue s 3.84(h) The audit o itee ust o side, o a a ual asis, a d saisf itself of the app op iate ess of the e pe ise a d e pe ie e of the i a ial di e to a d epo t thereon in the annual report. Ou audit a d isk o itee a uall o side s a d saisies itself of the app op iate ess of the e pe ise a d e pe ie e of the Chief Fi a ial Oi e a d has epo ted o its i di gs i its Audit a d isk Co itee epo t o page of ou a ual i a ial state e ts. 3.84(i) The p o isio deals ith the o pete e, ualii aio s and experience of the company secretary and the board of di e to s espo si ilit i elaio the eto. We would refer you to page 40 of this report where the o pa se eta s o pete e, ualii aio s a d experience are set out, as are the board s assessment of he a iliies to a out he espo si iliies. 3.84(j) The p o isio deals ith the a s le gth elaio ship between the board of directors and the company secretary and the board of directors responsibility in elaio the eto. We would also refer you to page 40 of this report where it is stated that the company secretary maintains an a s le gth elaio ship ith the e e ui e tea, the board and the individual directors. aio appea s o pages to of this epo t. ust ha e a full i e e e ui e i a ial di e to. Taste Holdi gs has a full-i e Chief Fi a ial Oi e ho does ot hold a othe posiio o does he ha e a othe o it e ts that ould e o side ed as full- o pa t-i e e plo e t. 41

44 Corporate governance o i ued Ou appli aio of Ki g III E e ea e o side the o po ate p i iples of Ki g III. We ha e p o ided a update elo of ou a io s i te s of the p i iples we listed in 2013 as not yet fully applied by Taste Holdings. A comprehensive assessment of all of the 75 principles can be found on our e site u de the go e a e se io. Ki g III p i iple Cu e t a d futu e a io s I te al audit fu io A i te al audit fu io fo the hole g oup e ai s u de e ie the e e ui e a age e t tea a d the oa d. Boa d e aluaio s We o du ted self-e aluaio s of the oa d a d its o itees du i g the ea u de e ie. These e aluaio s o i ed that the e e s of oth the oa d a d its o itees elie ed the a e fu io i g efe i el. A suggesio s that e e s ade that the elie ed ould fu the i p o e thei fu io i g e e acted on. tate e t of i te al o t ol The board acknowledges overall responsibility for the group s system of internal controls. This includes the establishment of an appropriate control environment and framework, as well as e ie i g the efe i e ess, ade ua a d i teg it of this system. Our system of internal control is based on an ongoing process desig ed to ide if the p i ipal isks to the a hie e e t of poli ies, ai s a d o je i es, to e aluate the atu e a d e te t of those isks a d to a age the ei ie tl, efe i el a d economically. Our system of internal controls is designed to manage rather than eliminate risk. Accordingly, the system can only provide reasonable and not absolute assurance against the occurrence of any material misstatement or loss. The g oup has a o goi g p o ess fo ide if i g, e aluai g, o ito i g a d a agi g the p i ipal isks afe i g the a hie e e t of ou usi ess o je i es, hi h is e edded i the group s processes and structures. Delegaio of espo si iliies The g oup has lea l dei ed the delegaio of espo si iliies fo oth e e ui e a d ope ai g a age e t, hi h i ludes autho isaio le els, fo all aspe ts of the usi ess. The delegaio of these espo si iliies is e ie ed a uall. Poli ies a d p o edu es Clearly documented policies and procedures are set out in the Taste Holdings policies which are subject to regular review and updai g. Di isio al e ie eei gs Di isio al a d ope ai g u it e ie eei gs a e held o thl. The a e hai ed the di isio al CEO a d ate ded the CEO a d CFO at least o e a ua te. Ope aio al, i a ial a d ke a age e t issues a e ide iied, dis ussed a d a io ed at these eei gs. Mo ito i g of esults ales f o outlets a d th ough the dist i uio e te ae o ito ed dail a d eekl. Mo thl o ito i g of i a ial results against budget takes place at both divisional and board level. Major variances against the budget are followed up by a age e t a d a io is take. Code of ethi s The g oup adhe es to the st i ge t F a hise Asso iaio ode of ethics, which commits our employees to high standards of integrity, behaviour, good faith and accountability in dealing with our stakeholders. 42 We expect our directors, employees, employees of companies p o idi g outsou ed fu io s a d ou supplie s to o pl with the principles of this code and to act in accordance with it. The so ial, ethi s a d e u e aio o itee o ito s ethi al eha iou i the g oup. Whe e the e is a o - o plia e ith this ode of o du t, dis ipli a a io is take a d o siste tl enforced across the group to discourage a recurrence. The Taste Holdings group does not engage or condone the pe pet aio of a illegal a ts i the o du t of its usi ess. It is the poli of the Taste Holdi gs oa d to a i el pu sue a d p ose ute pe pet ato s of f audule t o othe illegal a i iies of which they become aware. Re u e aio epo t Ou e u e aio philosoph The g oup s e u e aio poli is ased o the p e ise that fai a d o peii e e u e aio oi ates i di idual a hie e e t and enhances a company s general performance. We achieve hat e elie e is fai a d o peii e e u e aio th ough o i i g i ed a d pe fo a e-e ha i g i e i es ith the ai of at a i g a d etai i g o pete t a d e pe ie ed employees. Ou ase pa fo e e ui e di e to s a d se io a age e t is benchmarked annually against direct industry peers, comparable listed companies and at least one salary survey specialist o pa. We also take i to o side aio the e e ue, p oit a d the number of employees and assets under that person s control. Where no adjustment is due to an employee, salary increases a e guided a o i aio of the o su e p i e i de a d prevailing trends among listed companies, based on surveys carried out by specialist companies. Base e u e aio poli As pa t of its st ateg to at a t a d etai top i di iduals i thei a ea of e pe ise Taste s st ateg is to pa ase sala ies i the th pe e ile, as pe e te al sala su e s. Du i g the ea, o e g aia pa e ts e e ade to di e to s, e e ui e o itee o a age e t o itee e e s. Rete io a d i e i e poli The ai pu pose of ou e u e aio poli a d st u tu e is to align management and shareholder interests. At the core of this alig e t a e the ete io of ke e plo ees a d the linking of management performance measures to shareholder and enterprise value. To this end the group uses two structures to etai e plo ees. Ou sho t-te ash i e i e p og a e e a ds i eases i o pa p oita ilit, hile ou lo g-te i e i e s he e e a ds i eases i e te p ise alue.

45 ho t-te ash i e i e p og a e Me e s of the e e ui e o itee pa i ipate i a sho tte ash i e i e p og a e. This p og a e is ased o a i e i e pool i hi h e e s of the e e ui e o itee sha e p opo io atel to thei ost to o pa. The a e i e i ised o audited p oit efo e ta g o th ta gets o e the p e ious ea, a d these i e i es a e paid a uall i ash. Ea h a d fu the i e i ises its tea e e s i te s of thei performance against targets, which contribute to the group s g o th o je i es. While the sho t-te i e i e pool s he e has se ed the g oup well during the past four years, it will be reviewed during the u e t i a ial ea, to i ease its alig e t ith the a ket value and cost to company of each individual. Lo g-te sha e i e i e s he e The e a e u e tl t o lo g-te s he es i pla e: A sha e opio s he e as i iiated i Ma fo those ho e e e e s of the e e ui e o itee at that i e. The s he e ga e pa i ipa ts the ight to a ui e o di a sha es at a st ike p i e of e ts pe sha e ei g the -da olu eweighted average of Taste shares on the grant date of 6 May 2010). Opio s est i th ee t a hes f o to. O e esi g of a t a he has ee t igge ed, a thi d of the opio s ithi the t a he a e e e ised o e ea ate esi g as t igge ed, a fu the thi d, t o ea s ate the esi g as t igge ed a d the i al thi d, th ee ea s ate the esi g as t igge ed. The opio s ust e e e ised ithi i e ea s of esi g ei g t igge ed. Upo essaio of e plo e t, opio s that ha e ee g a ted and accepted but which have not yet vested are forfeited, unless app o al fo the e plo ee to etai his/he opio s is o tai ed f o the t ustees. All opio s ust e e e ised o late tha the eighth anniversary on which they were granted unless approval is obtained from trustees. Due to a ious o st ai ts i this lo g-te sha e i e i e s he e, the e u e aio o itee app o ed a e sha e opio s he e that as p i ipall d i e du i g the ea e ded February The scheme is based on the following principles: ha e opio s a e issued a uall i a o siste t, t a spa e t and principled manner linked to cost to company. The ua tu of opio s g a ted is li ked to the a ket alue of the individual, being the sum of the cost to company and the sho t te i e i e g a ted the p e ious ea. The ua tu is al ulated as a uliple of the a ket alue of an individual, taking into account seniority, responsibility a d o t i uio to the g oup alue. The uliples a ge f o. i es a ual ost to o pa to. i es a ual ost to company. The ualif i g fa to fo the issue of sha e opio s is u e tl cpi + 6% at the headline earnings per share (HEPS) level. The opio s ill est o e a i e- ea pe iod i % t a hes a d the i st t a he a o l e e e ised ate o ths. All opio s ust e e e ised ithi i e ea s. The st ike p i e of the opio s is the -da olu e p i e p io to the g a i g date of the opio s. Dis losu e of e u e aio King III recommends that a company should disclose the salaries paid to the top th ee e e ui es, e ludi g e e ui e di e to s. The Taste Holdings board has decided that because of the value of these e plo ees to the o pa a d the highl o peii e nature of the South African retail environment it is not in the interests of the company to disclose the individual salaries of these th ee e e ui es. I stead, e a e dis losi g the o i ed sala ies paid to these th ee e e ui es i the i a ial year. Including their basic salaries, motor vehicle allowance, edi al aid e eits a d o uses the e e paid a total of,. The e u e aio paid to di e to s is dis losed o page of the i a ial state e ts o tai ed i this epo t. No -e e ui e di e to s fees I a o da e ith Taste Holdi gs poli of e su i g that o e e ui e di e to s fees a e a ket elated, the o pa e h a ks a uall agai st di e t o peito s a d o pa a le listed o pa ies. The fees fo ou o -e e ui e di e to s a e paid in the context of good governance and in line with our st ateg of at a i g a d etai i g high- ali e i di iduals as custodians of the company s business. The fees are based on a methodology which takes into account e e ship o hai a ship of a su - o itee. The a a o di g to the dife e t oles, su h as hai a, that o e e ui e di e to s u de take i the oa d su o itees. To a oid a o li t of i te est, o -e e ui e di e to s do ot a d ill ot pa i ipate i a sha e- ased i e i e s he e o a othe i e i e s he e that the o pa a i ple e t. No -e e ui e di e to s fees a e ta led a uall fo app o al the o pa s sha eholde s. The o -e e ui e di e to s fees paid i the i a ial ea a e set out elo. The e u e aio o itee p oposed that the fees of o -e e ui e di e to s a e ot i eased i the i a ial ea. Board chairman Board members Audit a d isk o itee chairman Audit a d isk o itee members o ial, ethi s a d e u e aio o itee hai a o ial, ethi s a d e u e aio o itee e e s Paid R P oposed fee o i ease p oposed R eighted The pu pose of this lo g-te sha e i e i e s he e is to oi ate a o i uous i p o e e t i e te p ise alue. ha eholde s a e efe ed to o di a esoluio o page of this report where shareholders are requested to approve an i ease i the esi g pe iod f o i e to si ea s. 43

46 ANNUAL FINANCIAL STATEMENTS These annual financial statements have been audited in compliance with the applicable requirements of the Companies Act of South Africa. These annual financial statements were authorised on 21 May by the board of directors. 46 Directors responsibility and approval 46 Declaration by company secretary 46 Preparation of financial statements 47 Report by audit and risk committee 48 Directors report 51 Report of the independent auditor 52 Statement of financial position 53 Statement of comprehensive income 54 Statement of changes in equity 55 Statement of cash flows 56 Notes to the annual financial statements 93 Shareholders analysis 94 Shareholders diary 94 JSE performance 95 Notice of annual general meeting 101 Annual general meeting Explanatory notes 104 Annexure 1 Amendments to the Taste Holdings Share Trust 105 Form of proxy 106 Notes to the form of proxy 45

47 Directors responsibility and approval for the year ended February 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 fairly present the state of affairs of the company and group as at the end of the financial year and the results of their operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the requirements of the Companies Act of South Africa and the Listing Requirements of the JSE Limited. The external auditors are engaged to express an independent opinion on the annual financial statements. These annual financial statements are based upon 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 company and group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors set 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 company and group and all employees are required to maintain the highest ethical standards in ensuring the company and group s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company and group is on identifying, assessing, managing and monitoring all known forms of risk across the company and group. While operating risk cannot be fully eliminated, the company and group endeavour to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints. The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the annual 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 year to 28 February 2015 and, in light of this review and the current financial position, they are satisfied that the group has, or has access to, adequate resources to continue in operational existence for the foreseeable future. Although the board of directors is primarily responsible for the financial affairs of the company and group, they are supported by the group s external auditor. The external auditor is responsible for independently reviewing and reporting on the group s annual financial statements. The annual financial statements have been examined by the group s external auditor and the report is presented on page 51. The annual financial statements set out on pages 52 to 92, which have been prepared on the going concern basis, were approved by the board of directors on 21 May and were signed on its behalf by: Ramsay L Amy Daly Non-executive Chairman Carlo Ferdinando Gonzaga Chief Executive Officer Sandton 21 May De la aio o pa se eta In terms of section 88(2)(e) of the Companies Act, No 71 of 2008, I certify that to the best of my knowledge all returns and notices as are required by the Companies Act for a public company have been lodged with the Companies and Intellectual Properties Commission and that all such returns and notices are true, correct and up to date. Monika Pretorius Company Secretary Sandton 21 May P epa aio of i a ial state e ts The financial statements set out on pages 45 to 94 have been prepared and supervised by the Chief Financial Officer, Evangelos Tsatsarolakis CA(SA). 46

48 Repo t audit a d isk o itee for the year ended February The composition of the audit and risk committee is in line with the provisions of the Companies Act of South Africa and is chaired by Anthony Berman. During the financial year ended 28 February, in addition to the duties set out on page 38, the audit and risk committee: has e ie ed the ualit a d effe ti e ess of the s ope of the e te al audit; has o i ated BDO South Af i a I o po ated BDO as the egiste ed i depe de t audito afte satisf i g itself th ough e ui that BDO is i depe de t as defi ed i te s of the Co pa ies A t; has satisfied itself th ough e ui that the audit pa t e, M Ga ie Ma ais, is i depe de t; has app o ed the te s of e gage e t a d fees paid to BDO; has e ie ed the atu e of o -audit se i es p o ided the e te al audito s i o de to e su e that the fees fo su h se i es do not become so significant as to call to question their independence. BDO provides non audit services to the company and the audit a d isk o ittee has p eapp o ed the o t a t fo ta ad i ist atio BDO; o epo ta le i egula ities e e ide tified a d epo ted BDO to the o ittee; the e as o ate ial eak ess i fi a ial o t ols hi h esulted i ate ial fi a ial loss du i g the ea u de e ie ; the audit a d isk o ittee has o side ed a d satisfied itself of the app op iate ess of the e pe tise a d e pe ie e of the financial director, Evangelos Tsatsarolakis, and is unanimously satisfied of his continuing suitability for the position. The committee has further assessed the appropriateness of the expertise and adequacy of resources of the finance function and experience of the se io e e s of a age e t espo si le fo the fi a e fu tio a d o ludes that these a e ade uate; a d the audit a d isk o ittee e o e ded the a ual fi a ial state e ts fo the ea e ded Fe ua fo app o al to the board. The board has subsequently approved the annual financial statements which will be open for discussion at the forthcoming annual general meeting. Anthony Berman Chairman audit and risk committee Sandton 21 May 47