A taste sensation

Country of incorporation and domicile South Africa

Nature of business and principal activities The main object of the company is to carry on business as restaurateurs and franchisors.

Directors Carlo Ferdinando GonzagaDuncan John CrossonJay Bayne CurrieKevin UtianLouis Stephanus Minnaar – resigned 4 June 2007Luigi GonzagaRamsay L’Amy DalyTrevor Doyle Edwards – resigned 31 July 2007

Registered office c/o Routledge Modise2nd Floor Wanderers BuildingThe Campus 57 Sloane StreetBryanston2021

Business address 12 Gemini StreetLinbro Business ParkSandton2065

Postal address PO Box 78333Sandton City2146

Auditors BDO Spencer Steward (Johannesburg) IncorporatedChartered Accountants (SA)Registered Auditors

Secretary Duncan John Crosson

Company registration number 2000/002239/06

ADMINISTRATION

A taste sensation

ANNUAL REPORT 2008

Taste Ho

ldings Annual R

eport 2008

www.tasteholdings.co.za

VISION STRATEGIC INTENT

M o r e t h a n j u s t a m e a l

.H o t . T a s t y . F a s t .

A

tasteTo become the preferred franchising company in Africa by 2010 “the preferred franchising company” – we may not become the biggest but we will certainly be the best in the areas where we trade.

Being the best includes giving franchisees and stakeholders great returns on their investments.

Taste is a South African-based management group that is invested in a portfolio of mostly franchised, category specialist and formula driven, quick-service restaurant and retail brands that have the following characteristics:

They are sustainably and compellingly branded, where the brand itself is an important differentiating factor.

They can reasonably be developed to be the South African customer’s first choice in the categories in which they trade.

They maintain value leadership through operational excellence supported by high volumes relative to the category in which they trade.

They offer good quality, great value products to customers in the broad middle market.

On balance, they offer sustainable returns to franchisees commensurate with the capital investment, risk, and effort incurred to own and operate an individual outlet.

Each format is appropriately differentiated but complementary, relative to the balance of the Taste portfolio.

Each format offers opportunities for vertical integration such that material profit streams can reasonably be expected from sourcing and distribution, franchise management royalties and company store ownership.

Each format will both add and derive value from being part of the Taste portfolio greater than would be possible as a stand-alone entity.

CONTENTS

Vision AMilestones CFinancial highlights 1Directorate 2Chairman’s report 4CEO’s report 6Corporate governance 14Financial statements 19Shareholders’ analysis 48Shareholders’ diary 49JSE performance 49Notice of annual general meeting 50Form of proxy 53Administration IBC


.

taste

MILESTONES WHAT WE BELIEVE – THE TASTE HOLDINGS WAy...

> 2000– September – The first Scooters Pizza outlet

opens in Durban

> 2001– Scooters Pizza buys Chess Pizza, converting

10 outlets and expanding into Johannesburg– Scooters Pizza Winner: FASA* Newcomer

Franchisor of the year– Scooters Pizza Winner: FASA* KwaZulu-Natal

Franchisee of the year– Scooters Pizza Finalist: FASA* Brand Builder

of the year

> 2002– Scooters Pizza Finalist: FASA* Newcomer

Franchisor of the year– Scooters Pizza Winner: FASA* Brand Builder

of the year– Scooters Pizza included in the Deloitte & Touche

“One of the most promising companies in South Africa” publication

– Scooters Pizza included in the Deloitte & Touche “One of the best companies to work for in South Africa” publication

– DTI selects Scooters Pizza as one of South Africa’s top 300 national companies

> 2003– Scooters Pizza opens its first store in the

Western Cape

> 2005– Scooters Pizza Winner: FASA* Brand Builder

of the year– Scooters Pizza Finalist: FASA* Franchisor

of the year– Scooters Pizza Winner: FASA* KwaZulu-Natal

Franchisee of the year– Scooters Pizza purchases Maxi’s in April 2005

> 2006– Taste Holdings lists its shares on the AltX** –

21st June 2006– Scooters Pizza opens 100th store

> 2007– Scooters Pizza Winner: FASA* Brand Builder

of the year– Maxi’s launches “Life” image

> 2008– Maxi’s purchases key BJ’s sites and enters into an

exclusive agreement with Chevron

*FASA – Franchise Association of Southern Africa**AltX – Alternate Exchange

Our behaviour> We are competitiveThere are winners and losers

> We executeIt’s all about speed and discipline, getting things done fast and effectively

> We are a teamThis is a commitment to act as one company, plain and simple

Our principles– We strive to make our customers’ lives easier– Place yourself in the shoes of the customer– Manage for success and high performance– Be performance driven and measured– Value diversity of ideas and opinions– Be principle driven– Attack the process not the person– Be decisive and move forward with urgency

Our characteristics> Personal leadershipWe lead from the front

> ExecutionWe get the job done

> FocusWe keep the main thing the main thing

Our cultureWe have a sense of missionWe demand accountabilityWe pursue high-speed innovationWe are self-inspiredWe have a product/customer visionWe act as if our lives depend on itWe know the measure of success

We focus on the core

C

OPERATIONAL HIGHLIGHTS

> Scooters Pizza launches revolutionary new-look store

> Scooters Pizza wins the FASA* Brand Builder of the Year award for the 3rd time

> Maxi’s launches the new “Life” image store and “Lets meet at Maxi’s” TV campaign

> Maxi’s starts to revamp existing network to “Life” image

> Scooters Pizza and Maxi’s receive B-BBEE contributor levels of 2 and 3 respectively

> Taste opens 24 new outlets during the year

> Taste continues with IDC wholesale funding for BEE franchisees

> Scooters Pizza open the first low-cost outlet

> Taste Holdings hosts four MIT MBA students in a research project to align human resources with Taste strategy

> Franchise operating margin improves from 44% to 48%

> Scooters Pizza introduces a delivery charge

> Maxi’s signs an exclusive agreement with Chevron to open in forecourts on the highway network

> Maxi’s enters into an agreement to buy key BJ’s sites, effective 1 March 2008

FINANCIAL HIGHLIGHTS

System-wide sales

21%to R373 million(2007: R309 million)

Cash earnings per share

21%to 8,3 cents(2007: 6,8 cents)

Tangible net asset value per share

41%to 22,7 cents(2007: 16,1 cents)

Franchising operating margin

9%to 48%(2007: 44%)

*FASA: Franchise Association of Southern Africa

1

taste

FINANCIAL HIGHLIGHTSTaste Holdings Annual Report 2008

R million

- 35 000

- 31 500

- 28 000

- 24 500

- 21 000

- 17 500

- 14 000

- 10 500

- 7 000

- 3 500

- 0

07

06

08

Revenue

R million

- 12 000

- 10 800

- 9 600

- 8 400

- 7 200

- 6 000

- 4 800

- 3 600

- 2 400

- 1 200

- 0

07

06

08

R million

- 10 000

- 9 000

- 8 000

- 7 000

- 6 000

- 5 000

- 4 000

- 3 000

- 2 000

- 1 000

- 0

07

06

08

- 90

- 80

- 70

- 60

- 50

- 40

- 30

- 20

- 10

- 0

07

06

08

Operating profit

Headline earnings

Headline earnings per sharecents

20,9 million

29,5 million

33,8 million

10,6 million

11,7 million

4,4 million

2,9 million

7,8 million

10 million

6,6 cents

8,0 cents

3,0 cents

Revenue

15%to R33,8 million(2007: R29,5 million)

Operating profit

10,4%to R11,7 million(2007: R10,6 million)

Headline earnings

28%to R10 million(2007: R7,8 million)

Headline earnings per share

21%to 8,0 cents(2007: 6,6 cents)

2

DIRECTORATETaste Holdings Annual Report 2008

Bill Daly (65)BA, LLB

Non-executive Director Chairman of the BoardChairman of the Remuneration and Nominations committee

Bill is an attorney and practises as a director of RL Daly Inc., which manages a large call centre specialising in the collection of debt on behalf of large national corporates, retailers and banks. Bill is a director of a number of companies including HBZ Bank Limited and has been the Chairman of the board since its inception in 2000.

Duncan Crosson (42)BCompt (Hons)

Chief Financial Officer

Duncan obtained his BCompt (Hons) whilst serving articles with Morrison Murray in Durban. Duncan gained valuable experience in a manufacturing and distribution environment servicing the retail and fast-moving consumer goods industry. Duncan progressed to Chief Financial Officer and shareholder of the group of companies. Duncan joined Scooters Pizza in 2000 when he took an equity stake in the business, and was appointed to the board in 2001. Duncan has been instrumental in the successful management and control of the significant growth of the group over the past six years.

Luigi Gonzaga (64)

Executive Director

In 1996 Luigi opened a pizza franchise with Carlo and within four years owned four outlets in the Durban region. Prior to that, Luigi was involved in the construction industry in South and East Africa for some 40 years. During the four years with the group, the stores that Luigi owned were used as benchmarks for the rest of the group due to standards and profitability. Achievements during this time included Franchisee of the Year and Marketer of the Year awards on four occasions, and finalist for the First National Bank Entrepreneur of the Year award in 1998.

Luigi is a key member of the executive team and his years of experience have been invaluable as the company grows. Luigi specifically ensures that strategies are implemented in the coastal region, as well as growing the region strategically with site and franchisee recruitment. Luigi has owned six food franchises in the last 10 years. He is a vital contributor to the success of the group and currently owns three of the group’s outlets.

Carlo Gonzaga (34)BSocSci, LLB

Chief Executive Officer

Carlo completed a law degree, after which he and his father, Luigi, owned four franchised pizza outlets in the Durban region. Carlo was Chairman of the Franchisee Council for three years, and during this time he won Marketer of the Year, and the Franchisee of the Year awards twice. In 1999 Carlo sold his interests and commenced the ground work to create a new pizza delivery concept which became Scooters Pizza in September 2000. Since 2000 Carlo has headed the team that has driven the chain to win many prestigious awards; to acquire the Maxi’s brand in 2005 and list as Taste Holdings in 2006. Carlo guides the strategic direction of the company and oversees the growth strategy of the company.

3

taste

The board comprises three executive directors and three non-executive directors. The non-executive directors are fully independent of management and free to make their own decisions and independent judgements.

They enjoy no benefits from the company for their services as directors, other than their fees and potential capital gains and dividends on their interests in ordinary shares.

Jay Currie (34)(BSc)

Non-executive DirectorChairman of the Audit and Risk committeeMember of the Remuneration and Nominations committee

Jay commenced his working career managing the Mala Mala Game Reserve before starting a private venture in the IT industry, and then joined Comparex Africa in 1998. He started with the Massdiscounters division of the listed South African retailer, Massmart, in 1999, where he led a major re-investment in the Game & Dion chain IT systems and approach to supply chain management. He left his position as Systems & Supply Chain Director of Massdiscounters in 2006 to join the holding company, Massmart Holdings Limited, as Group Commercial Executive, where he is currently responsible for all areas of collaboration between the various businesses of the R30 billion retailer.

Kevin Utian (40)BCom, BAcc, CA(SA)

Non-executive DirectorMember of the Remuneration and Nominations committee

Kevin is currently Managing Director of Nando’s South Africa. Kevin is a chartered accountant by profession and provides key access to resources within the Nando’s group. This extends from operational performance, site selection and access to strategies and research. Kevin has been a board member from the inception of Scooters Pizza in 2000. The experience that Kevin brings to the group within the South African and growth contexts, is invaluable.

An acquired taste

4

In good taste

CHAIRMAN’S REPORTTaste Holdings Annual Report 2008

That tastes better …

I am pleased to report that Taste Holdings Limited has once again recorded a financial year of growth in revenue and profits, notwithstanding the difficult trading conditions in the second half of the financial year.

Financial overview

Our revenue grew by 15% and the headline earnings increased 28% to R10 million. Group sales improved by 21% to R373 million, while new store openings grew our total to 161 outlets. It is particularly noteworthy that our headline earnings were 28% higher in this challenging second period, largely due to the opening of new stores, an intensified marketing campaign and the image revamp of Maxi’s outlets.

Brand operations

Taste’s current two brands, Scooters Pizza and Maxi’s, are positioned in the highly competitive quick-service food sector. Our brands must offer excellent value and be marketed effectively to achieve good results. Our results show that we offer good value and are getting our marketing mix right.

Scooters Pizza again won the prestigious Franchise Association of Southern Africa’s “Brand Builder of the Year” award in October 2007.

Although Scooters Pizza remains our largest brand with 115 outlets, the group devoted considerable resources, time and creative energy to raise Maxi’s

profile and performance. A thorough revamp of the brand resulted in the roll-out of new “Life” stores from April 2007. Existing outlets also began converting to the new “Life” look and feel. A new advertising campaign was also launched.

Maxi’s splendid results for the last four months of the financial year show clearly that our efforts are paying off. Maxi’s energetic and creative executive team must be heartily congratulated.

A bright future beckons

I am convinced that the Maxi’s brand is on the point of taking off to a new level. We concluded a deal with Chevron South Africa (Pty) Ltd to install Maxi’s outlets in place of the existing BJ’s outlets at eight of their highway service stations. Not only do we gain eight new outlets, but in addition these high profile sites will introduce a whole segment of new customers to the Maxi’s product offering.

Prospects

The outlook for the convenience and home meal replacement market is expected to slow down in the forthcoming financial year. The impact of interest rate hikes, substantially higher fuel prices, a downturn in the property market and inflationary pressures, will lead to a slow down in the demand for our products and a more challenging operating environment.

The group continued to generate strong cash flows from core operations

I am convinced that the Maxi’s brand is on the point of taking off to a new level

In good taste5

tasteAppreciation

Our staff have again shown their commitment and dedication and for this I would like to thank them most sincerely.

I also wish to extend my appreciation and thanks to my fellow board members for their guidance, loyalty and wisdom.

Bill Daly

Chairman

There are attractive acquisition opportunities in the sector and the group will investigate the acquisition of further brands and the vertical integration of its business.

6

A burst of taste

CEO’S REPORTTaste Holdings Annual Report 2008

OverviewThis report reflects the efforts of team members, franchisees and network partners to provide consumers with memorable and delightful experiences.

It reflects the ambition of ordinary people to become entrepreneurs through franchising; and to have a hand in their own destiny, yet accepting a hand of support. It is this support and ambition that makes franchising the success that it is; that makes it sustainable, and gives it the competitive edge over other business formats.

This report reflects the tangible value of brands, particularly when trading conditions become challenging or when consumers are spoilt for choice.

FinancialWhile the detailed financial commentary is contained in the latter part of this report, the highlights deserve mention. The revenue increase of 15% to R33,8 million (2007: R29,5 million) was entirely due to organic growth within the brands – via new store openings and year-on-year sales increases. Although the group operating margin declined to 35% (2007: 36%), the franchising division’s operating margin improved to 48% (2007: 44%) as further economies within the brands are leveraged as they grow. The margin improvement from August 2007 (31%) was due to the opening of more new stores in the second half of the year, compared to the first half of the year, as well as better cost containment during the second half of the year. Operating costs included a once-off expense of approximately R400 000 for the due diligence in respect of the cautionary issued on 26 April 2007, which was subsequently withdrawn on 13 July 2007.

Headline earnings increased 28% from the previous period to R10,0 million (2007: R7,8 million), and attributable earnings increased 19% from the previous period to R10,0 million (2007: R8,4 million). Headline earnings per share increased 21% to 8 cents (2007: 6,6 cents).

The group continued to generate strong cash flows from core operations, although these were impacted by higher taxation payments of R6 million during the course of the 2008 year (2007: R0,9 million). The group also utilised R3,4 million to acquire or convert strategic sites in shopping malls to Maxi’s outlets.

The group ended the year with 161 outlets nationally.

Taste’s business modelThe revenue stream is based primarily on annuity income derived from royalties as a percentage of sales, which accounts for approximately 75% of revenue. There is a secondary, once-off stream, which is linked to the opening of new stores, as well as stores that are sold, which accounts for approximately 15% of revenue. The remaining 10% of revenue is attributable to company-owned retail outlets. While it is not a strategy for either Scooters Pizza or Maxi’s to own and operate outlets, a franchise company will invariably own retail outlets. An implication of owning outlets is that they lower the group margin as they trade at lower margins than the franchise division.

New store growth is funded entirely by franchisees who raise their own capital for the development of an outlet and new store growth is, therefore, not capital intensive insofar as Taste Holdings is concerned. This

The franchising division’s operating margin improved to 48% (2007: 44%)

A business model that is highly cash generative

PROOF 2 - 30 MAY 2007

A burst of taste

characteristic of the franchising business model, along with the high margin in the franchising segment, results in a business model that is highly cash generative as indicated by the cash earnings per share of 8,3 cents for the period.

Although the group does not own its own new-store development function, it manages the process in its entirety, including the cash flows relevant to a, new store opening. The group also manages the marketing funds of the brands and, in some cases, pre-pays certain expenditure, recoverable during the year. As such, trade and other payables, which also include advertising and store development creditors, may fluctuate significantly in the short- to medium-term depending on the number and timing of new store openings, as well as advertising commitments. At year-end, approximately R8 million of development creditors and debtors arose from new stores opened during the month of February.

taste7

How to be an entrepreneur:

“Invent a business that smiles on the world. Discover what is needed that you believe in with all your heart. A service you are really good at and love to do. Let it be your classroom. Try new ideas. Play with everything. Dive in. Cherish good people including yourself. Get negative people out of your life. Romp on the floor with your dog. Make friends with trees, listen to their stories. Believe in butterflies… if they can fly a thousand miles, think what you can do. Earn enough for what you need but not for your greed, leaving a heritage so that when you die, you will be missed.”

8

Taste successOverview Maxi’s underwent an extensive revamp during 2006, culminating in the opening of the revolutionary new store design in June 2007 in Cape Town. The design was inspired by taking the brand back to the core values that have made it successful since 1993. Warm and inviting, the unique colours and features form part of the new design and make Maxi’s the meeting place for people from all walks of life.

All subsequent stores have opened in this image and have performed above expectations, as have existing stores that were revamped into this imagery. These re-imaged stores have seen increases in turnover of between 15% and 35% from their previous trading levels. The year saw four existing stores re-image, and a further six revamps are planned in the coming year. During the year the brand actively sought to exit or relocate under-performing locations to more favourable trading environments, and this resulted in an improvement in the quality of the royalty stream and, in turn, earnings. The brand continued its stated strategy of targeting A-grade, high-traffic sites that cater predominantly for the breakfast, lunch and dinner consumer. The new image also carries a lower set-up cost than does the previous image, thereby improving the franchisees’ return on investment and improving the profitability of the outlet. The in-store experience and imagery are key attributes of success in this sector and the response to date from consumers and landlords has been overwhelmingly positive.

Christo Calitz continues to drive the brand to new heights, reflected in the positive like-on-like sales growth, particularly in the four months to March 2008. Having focused on the store image and in-store experience during the year, the brand launched its “Let’s meet at Maxi’s” television marketing campaign in April 2008 to complement the in-store experience and imagery.

Convenience and home meal replacements have become ingrained as a way of life as consumers find themselves increasingly time starved through longer working hours and the prevalence of dual-income families among the emerging middle class.

CEO’S REPORT continued

Taste Holdings Annual Report 2008

Hence, despite a toughening economic climate for consumers, consumers continue to eat out, although they are being more selective about where they eat, opting for trusted brands that provide good value for money.

On 1 March 2008, the brand acquired the exclusive right to open Maxi’s outlets in all Caltex forecourts on the country’s highway network – an opportunity of some 13 sites – as well as a non-exclusive right to open in all other suitable Caltex forecourts. The acquisition included eight existing BJ’s sites located in high-profile locations which will be converted to Maxi’s outlets. The first site to be converted will be the iconic bridge site over the N1 freeway between Johannesburg and Pretoria. Revenue from these eight existing sites accrued to Maxi’s from 1 March 2008, regardless of whether they have converted or not. The Maxi’s management team will oversee the support of these sites within their current infrastructure without any incremental costs in human resources. This agreement provided an immediate boost to the Maxi’s system in terms of revenue as well as store numbers, and opens up a new market to penetration for the Maxi’s brand in the future.

ProspectsThe Maxi’s brand is well set to make significant gains during 2008 through new store openings and year-on-year sales increases. The new store opportunities that the Caltex agreement and the new store image are creating, place Maxi’s in a strong position to increase its footprint significantly. Maxi’s will continue to seek opportunities to acquire and convert independent operators in high-traffic shopping malls. The existing-store revamp programme, strong value proposition and relatively large marketing fund, will position Maxi’s competitively to achieve positive sales growth for the year despite forecasts of constrained consumer spending.


These re-imaged stores have seen increases in turnover of between 15% and 35%

The brand acquired the exclusive rights to open in all Caltex forecourts on the highways

PROOF 2 - 30 MAY 2007

Taste success taste9

1. Maxi’s chefs cooking mouth-watering burgers at the Teddy Bear Clinic party

2. Maxi’s donates R2 000 to the Teddy Bear Clinic after the party. Volunteers at the Teddy Bear Clinic with brand manager, Amy Menzies

3. Maxi’s holds a birthday party at Teddy Bear clinic

4. Maxi’s Secunda sponsors 150 meals for children from places of safety on Youth Day!

1

2 3 4

The repositioning of the Maxi’s brand over the past 12 months has created new growth opportunities for the brand and allowed Maxi’s to enter into new and existing developments.After being around for 15 years, Maxi’s is entering a very exciting phase with a highly motivated team and a high level of interest from developers and landlords; supported by a franchise network that is excited about the future.

10



The year saw Scooters Pizza exceed the 100-store mark as well as launch a new, more energetic store image, which had remained unchanged since 2000. This store image will be rolled back into the system over the next few years with existing stores converting. The store image will also drive growth into markets in which Scooters Pizza does not currently trade.

OverviewThe Scooters Pizza brand continued its vision of becoming the leading pizza delivery chain in South Africa through a concentrated focus on its three strategic business drivers: becoming the pizza delivery experts; excitement through innovation, and great value for money. All this is delivered to the consumer in a brand experience that is unique to Scooters; whether it be the memorable advertising of the delivery driver deploying his parachute to stop in time, or simply the unique combination of red and yellow that makes the brand instantly recognisable.

As recognition for its advertising, the brand won the coveted FASA “Brand Builder of the Year” award for 2007, winning it for the third time – the only brand to have done so in the history of the award. The year also saw the launch of the new image Scooters Pizza outlet, which keeps the brand relevant to consumers. Existing stores started converting to this image from early 2008. In response to rising building and forecast steel costs, the brand also introduced a store format in early 2008 that costs approximately 20% less than previous outlets. Given the forecast trading environment and input costs forecasts, this lower cost outlet gives Scooters Pizza a competitive advantage in recruiting new franchisees.

With the forecast increase in fuel costs, and its impact on the store-level economics, the brand, after conducting market research, introduced a nominal delivery charge in December 2007. The implications of this charge are two-fold: the store-level economics for franchisees remains stable as the delivery cost can be adjusted if required, and

the cost of delivery does not have to be subsidised through the cost of pizza, thereby ensuring that Scooters Pizza can continue to offer great value relative to all fast food offerings. Scooters Pizza continues to be the only national chain with an “if it’s late, it’s free” delivery promise and with, on average, less than 1% of its orders late, this level of efficiency has ensured that Scooters Pizza leads with delivery innovations and service.

Through its local store marketing programmes, Scooters Pizza reaches thousands of children each year, and 2007 saw the sixth anniversary of the national Whizzkid Week, wherein each store “teaches” approximately 100 children about the basics of making and baking pizza. Additionally the “Scooters Pizza Party Patrol” added some Christmas cheer across the country. Through initiatives like these, Scooters Pizza gives back to the areas in which the stores trade and creates long-standing relationships with its customers.

ProspectsWhile trading conditions will continue to be challenging in the twelve months ahead, through a combination of a squeeze on consumer spending and rising input costs, the management team is at its strongest and the brand is well known within South Africa.

Recent research (February 2008) conducted by the brand has validated the conclusion that home meal replacement has become a way of life: of respondents surveyed, 68% said they ate take-away more than once a week and 74% said they ordered pizza more than three times a month. The revitalised image and lower cost store have resulted in the brand having the highest number of franchise fees for new stores in the last twelve months, both positive factors in respect of new store openings.

Delivering taste

The year saw the brand exceed the 100 store mark since Sept 2000 – a new store every 24 days

Home meal replacement has become a way of life rather than an occasional “treat”


taste11

The brand has a concentrated focus on its three strategic business drivers: becoming the pizza delivery experts; excitement through innovation; and great value for money.

Delivering taste1. FASA Brand Builder of the Year 2007 – We are officially the most awarded brand

2. Party Patrol Project 2007 – Scooters Pizza spreads some festive season joy

3. Whizzkid Week 2008 – Pizza fanatics in training

4. Smile Foundation 2007 – At Scooters Pizza sharing is caring

1

2 3 4

12

Taste HoldingsA perennial focus of the Taste Holdings strategy is the creation of capacity and opportunity within the organisation such that opportunities for both organic and acquisitive growth can be exploited efficiently.

During the year, both of Taste’s companies undertook a voluntary assessment of their B-BBEE status. Pursuant to this, Scooters Pizza is a level 2 contributor and Maxi’s a level 3 contributor, with the objective to move up to a level 2 contributor within 12 months. Furthermore, Taste has a second tranche of wholesale funding from the IDC at preferential rates for black franchises, which it is currently drawing down. Combined, these factors open up new opportunities for both brands in sites that require tender processes to be fulfilled that include BEE requirements.

Prospects

Both of the group’s brands have exciting prospects in the year ahead, and while there may be volatility in the trading environment, both brands remain flexible and have the resources to respond appropriately.

Franchising remains one of the least risky ways for individuals to enter the business arena and is consequently well supported by government and lending institutions. For this, and reasons mentioned elsewhere in this review, group new store growth is expected to exceed that of the last period. Both brands have large marketing funds and are consequently able to market aggressively in these tougher trading times. The flexible nature of the current supply chain structure of Scooters Pizza



Franchising remains one of the least risky ways for individuals to enter the business arena and is consequently well supported by government and lending institutions

and Maxi’s has limited the input cost increases, allowing the brands to offer strong value propositions to consumers relative to competitors.

Taste management will continue to pursue acquisition opportunities within the food sector as well as opportunities to unlock value through vertical integration.

Appreciation

As the results contained in this report reflect the efforts of team members, franchisees and network partners, my appreciation must go to them. To my team members: for your winning spirit in what is sometimes a seemingly thankless task. To our franchisees: for the trust you place in us to give you a supporting hand, and for taking that bold step into the world of the entrepreneur. To our network partners: for putting up with all of us and for always finding a way to “get it

13

tasteTaste Holdingsdone”. A special thanks to my fellow directors and board for the guidance and support during the year. On behalf of everybody above, a special thanks to all those consumers who trust us to make an every day event a special one.

In entrepreneurship

Carlo Gonzaga

14

Taste leaderOverviewTaste Holdings is committed to complying with the highest standards of corporate governance in order to safeguard the interests of the company and all its stakeholders. The directors recognise that good governance assists shareholders in assessing the quality of the group and its management, and supports investors in their decision-making processes. The group endorses the Code of Corporate Practices and Conduct contained in the King Committee Report on Corporate Governance (King ll) and embraces the principles of integrity, transparency and accountability. The directors believe that Taste Holdings complies with the principles and spirit of King ll and the provisions of the Listings Requirements of the JSE Limited. Governance structures and processes are, however, reviewed regularly to take account of changes within the group and best practices in the corporate governance arena.

Board of directorsThe board of directors sets the company’s overall policy and provides guidance and input in areas relating to strategic direction, planning, acquisitions, performance measurement, resource allocation, key appointments, standards of conduct and communication with shareholders, and meets quarterly to review the operational performance of the company and strategic issues.

The board comprises three non-executive directors and three executive directors. The non-executive directors are fully independent of management and free to make their own decisions and independent judgements. They are not independent in terms of the King II definition as they own Taste Holdings shares, although none provides professional services to the group for a fee. They enjoy no benefits from the company for their services as directors, other than their fees and potential capital gains and dividends on their interests in ordinary shares.

The board retains full and effective control over the company. Apart from regular meetings, additional meetings are arranged annually to review strategy, planning, operations, financial performance, risk and capital expenditure, human resource and environmental management. The board is also responsible for monitoring the activities of the executive management.

Detailed board packs, including minutes of previous meetings, a detailed agenda and relevant proposals and information, are distributed timeously to directors to enable effective decision-making at board meetings. The daily management of the group’s affairs is the responsibility of the Chief Executive Officer who co-ordinates the implementation of board policy through the group Executive Committee, which he chairs.

The company’s corporate philosophy is consistent with the principles of the King II Report on Corporate Governance, in that, inter alia:

• the roles of Chairman and Chief Executive Officer are separated;

• the company has a non-executive Chairman;

• service contracts of executive directors do not exceed five years in duration; and

• this division of responsibilities ensures a balance of authority and power, with no one individual having unrestricted decision-making powers. The group has adopted a decentralised approach to managing and controlling the business and implementation is monitored through a structured reporting approach. The directors are apprised of progress through both regular reporting at board meetings and ongoing communications.

CORPORATE GOVERNANCETaste Holdings Annual Report 2008

Taste Holdings is committed to complying with the highest standards of corporate governance.

15

Taste leader tasteThe daily management of the group’s affairs is the responsibility of the Chief Executive Officer.

Board attendanceThe attendance at board and sub-committee meetings was as follows:

BoardAudit

and RiskRemuneration and

Nominations

Number of meetings 4 2 1

Ramsay L’Amy Daly (Bill) 3 1

Carlo Gonzaga 3

Duncan Crosson 4

Luigi Gonzaga 4

Jay Currie 4 2 1

Trevor Edwards – resigned 31 July 2007 – –

Kevin Utian 4 1

Louis Minnaar – resigned 4 June 2007 1

Ernst Klynsmith 2

Designated adviser 2

Board committeesThe directors have delegated specific responsibilities to two sub-committees to assist the board in the discharge of its duties. Each committee has a clearly defined mandate and the directors confirm that the committees have functioned in accordance with these written terms of reference during the year.

Remuneration and Nominations committee Ramsay L’Amy Daly (Bill) (Chairman)

Kevin Utian

Jay Currie

Trevor Edwards – resigned 31 July 2007

If directors are unable to attend board meetings they are required to provide feedback on the documentation circulated prior to the meeting and this comment is then incorporated into the meeting. This ensures that the group still receives the benefit of the absent member’s knowledge, despite him not being able to attend.

16

Going strong

Audit and Risk committee Jay Currie (Chairman)

Ernst Klynsmith

Designated Adviser

Audit

The Audit Committee meets at least semi-annually and comprises one independent non-executive director, an independent representative and an executive director. The role of the Audit Committee is to assist the board by performing an objective and independent review of the organisation’s finance and accounting control mechanisms. The company maintains accounting and administrative control systems required for the current levels of operations. The Audit Committee will review and monitor the following:

• the effectiveness of the group’s information systems and other systems of internal control;

• the effectiveness of the internal audit function;

• the reports of both the external and internal auditors;

• the annual report, and specifically the annual financial statements included therein;

• the accounting policies of the group and any proposed revisions thereto;

• the external audit findings, reports and fees and the approval thereof;

• compliance with applicable legislation and requirements of regulatory authorities; and

• the setting of the principles for recommending the use of external auditors for non-audit services.

Remuneration

The Remuneration Committee, which has been in place since 2000, is responsible for, inter alia, the remuneration of the senior executives and the remuneration policy relating to all employees. The remuneration policy is based on the premise that fair and competitive remuneration should motivate individual achievement and enhance the company’s overall performance. This will be achieved through a combination of fixed and performance-enhancing incentives to attract and retain competent and experienced employees in the group. The Remuneration Committee meets annually. Details of the directors’ remuneration are disclosed in note 31 on page 44 of the annual report.

The Chief Executive Officer attends meetings at the invitation of the committee but is not entitled to vote and does not participate in discussions regarding his own remuneration.

The primary functions of the committee are to:

• establish a formal and transparent procedure for developing a policy on executive remuneration;

• determine remuneration for executive directors and senior management;

• propose fees for non-executive directors;

• assess and review remuneration policies, employee share incentive schemes, performance bonuses and service contracts; and

• determine the award of shares to executives and staff.

Nominations

The role of the committee is to:

• identify and nominate qualified candidates to the board;

• ensure that the board has an appropriate balance of skills, experience and diversity;

• advise on the composition of the board, ensuring a balance between executive and non-executive directors; and

• ensure effective succession planning for senior management.

CORPORATE GOVERNANCE continued


The role of the Audit Committee is to assist the board by performing an objective and independent review of the organisation’s finance and accounting control mechanisms.

17

Going strong The company maintains accounting and administrative control systems required for the current levels of operations.

tasteThe board is satisfied that no material breaches of ethical behaviour occurred during the year and confirms that the group continues to comply with the highest standards of business practices.

CommunicationThe company has a policy of open and transparent communication with its ordinary shareholders and other stakeholders and will meet regularly with institutional shareholders, investment analysts and other stakeholders.

The internal and external auditors have unrestricted access to the Audit Committee and its Chairman with a view to ensuring that their independence is not impaired. The directors are satisfied that an adequate system of internal control was in place for the year under review and until the time of the approval of the annual report.

In light of the Corporate Laws Amendment Act the committee reviewed its composition in 2008.

Risk

The committee reports to the board formally on an annual basis. It is tasked with ensuring that major risks are identified and managed through a formalised process and frequency. The Chief Executive Officer and Chief Financial Officer regularly assess risk to the group in accordance with agreed principles.

The Risk Management Committee, together with the internal audit function, provides assurance to the board of directors that information presented to them is accurate, complete and reliable. The board is satisfied that an adequate process for identifying, evaluating and managing significant risk was in place for the year under review and until the time of the approval of the annual report.

Code of ethicsThe company adheres to a code of ethics and commits employees to high standards of integrity, behaviour, good faith and accountability in dealing with stakeholders. The group promotes education and training of employees on the implications of corporate governance, and the King II report. The company further invests in education of all employees on matters specific to being a listed entity, including closed periods and the principles of shares traded on a stock exchange.

18



19

Directors’ responsibilities and approval 20Declaration by Company Secretary 20Report of the independent auditors 21Directors’ report 22Balance sheet 24Income statement 25Statement of changes in equity 26Cash flow statement 27Notes to the annual financial statements 28

CoNteNtS

Annual financial statements 2008

ANNUAL FINANCIAL StAteMeNtS 2008Taste Holdings Annual Report 2008

20

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 external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and 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 sets standards for internal control aimed at reducing the risk of error or loss in a cost‑effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the 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 2009 and, in the 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 auditors.

The external auditors are 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 auditors and their report is presented on page 21.

The annual financial statements set out on pages 22 to 47, which have been prepared on the going‑concern basis, were approved by the board of directors on 29 April 2008 and were signed on its behalf by:

Carlo Ferdinando Gonzaga Duncan John CrossonChief Executive Officer Chief Financial Officer

Randburg29 April 2008

The Company Secretary certifies that the company has lodged with the Registrar of Companies all such returns as are required of a public company, in terms of the Companies Act, No 61 of 1973, and that all such returns are true, correct and up to date.

Duncan John Crosson Company Secretary

Randburg29 April 2008

DIReCtoRS’ ReSpoNSIBILItIeS AND AppRovALTaste Holdings Annual Report 2008

DeCLARAtIoN By CoMpANy SeCRetARyTaste Holdings Annual Report 2008

21

To the shareholders of Taste Holdings LimitedWe have audited the accompanying annual financial statements and group annual financial statements of Taste Holdings Limited, which comprise the directors’ report, the balance sheet as at 29 February 2008, the income statement, the statement of changes in equity and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 22 to 47.

Directors’ responsibility for the financial statementsThe company’s directors are responsible for the preparation and fair presentation of these annual financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibilityOur responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the annual financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the annual financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the annual financial statements and group financial statements present fairly, in all material respects, the financial position of the company and of the group as of 29 February 2008, and of their financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Companies Act of South Africa.

BDo Spencer Steward (Johannesburg) IncorporatedRegistered AuditorsChartered Accountants (SA)

Per: Stephen Shaw

29 April 200813 Wellington RoadParktown2193

RepoRt oF the INDepeNDeNt AUDItoRSTaste Holdings Annual Report 2008

22

The directors have pleasure in submitting their report for the year ended 29 February 2008.

Nature of businessTaste Holdings Limited is an investment holding company listed on the Alternative Exchange (AltX) of the JSE. The company’s subsidiaries are consumer brand holding companies engaged in the franchising of consumer‑branded trademarks in the quick‑service restaurant and retail stores. The company is involved in the establishment of new business, marketing and advertising of the brands and the operational control of the franchised outlets to ensure consistency and compliance across the chains.

Events subsequent to year-endSubsequent to year‑end, the company, subject to shareholder approval and certain conditions precedent, acquired NWJ Holdings (Proprietary) Limited for a base purchase price of R120 million. The final purchase consideration will be determined with reference to the audited results of NWJ Holdings (Proprietary) Limited for the year ended 30 April 2008. NWJ Holdings (Proprietary) Limited is a vertically integrated, predominantly franchised chain of outlets that retails a wide range of quality jewellery and watches. It does so via 70 outlets situated in major shopping centres around South Africa.

Subsequent to year‑end, a subsidiary of the company concluded a transaction, effective 1 March 2008, with BJ’s Franchising (Proprietary) Limited and Chevron South Africa to take over all the BJ’s sites located within Caltex service station forecourts along the national highways within South Africa.

Authorised and issued share capitalDuring the period the company issued 1 720 000 ordinary par value shares of R0,00001 at a value of R0,90 to Taste Holdings Share Trust, for the purposes of the furtherance of an employee share incentive scheme.

As a result of the above issue, share premium of R1 547 828 was raised after accounting for share issue costs.

The authorised and issued share capital of the company at 29 February 2008 is set out in note 15 to the annual financial statements.

Borrowing limitationsIn terms of the articles of association of the company, the directors may exercise all the powers of the company to borrow money, as they consider appropriate.

Non-current assetsThere was no major change in the nature or the use of the property, plant and equipment and intangible assets owned by the company or any of its subsidiaries during the year under review.

DividendsNo dividends were declared or paid to shareholders during the year.

DirectorsThe directors of the company during the year and to the date of this report are as follows:

Name Nationality Change in appointment

Carlo Ferdinando Gonzaga South AfricanDuncan John Crosson South AfricanJay Bayne Currie South AfricanKevin Utian South AfricanLouis Stephanus Minnaar South African Resigned 4 June 2007Luigi Gonzaga South AfricanRamsay L’Amy Daly (Bill) South AfricanTrevor Doyle Edwards South African Resigned 31 July 2007

In terms of the company’s articles of association, Jay Bayne Currie and Kevin Utian retire at the forthcoming annual general meeting. These gentlemen, both being eligible, offer themselves for re‑election. Service agreements with the directors of Taste Holdings Limited at the date hereof do not impose any abnormal notice periods on the company.

Shareholders will be asked to confirm these re‑appointments at the forthcoming annual general meeting.

DIReCtoRS’ RepoRtTaste Holdings Annual Report 2008

23

SecretaryThe secretary of the company is Duncan John Crosson of:

Business address 12 Gemini Street Linbro Business Park Sandton 2065

postal address PO Box 78333 Sandton City 2146

SubsidiariesDetails of the company’s subsidiary companies are contained in note 5 to the financial statements. The company had an interest in its subsidiaries’ aggregate profit after taxation of R10 215 145 (2007: R8 755 299) and in their losses after taxation of R35 780 (2007: R5 450).

Special resolutionsAt a general meeting of the shareholders on 31 July 2007 the following resolution was passed:– General approval to directors to acquire the company’s shares.

Directors’ interestsNo contracts in which directors or officers of the company or group had an interest and that significantly affected the affairs or business of the company or any of its subsidiaries were entered into during the year.

At 29 February 2008 Number of shares held

DirectorBeneficially

directBeneficially

indirect total %

Carlo Gonzaga and associates 9 376 260 9 376 260 7,40Duncan Crosson 7 293 082 7 293 082 5,76Luigi Gonzaga and associates 6 099 722 6 099 722 4,81Ramsay L’Amy Daly (Bill) 4 582 909 4 582 909 3,62Jay Currie 10 661 768 10 661 768 8,41

17 954 850 20 058 891 38 013 741 30,00

At 28 February 2007 Number of shares held

DirectorBeneficially

directBeneficially

indirect total %

Carlo Gonzaga and associates 9 306 260 9 306 260 7,45Duncan Crosson 7 293 082 7 293 082 5,83Luigi Gonzaga and associates 9 529 722 9 529 722 7,62Louis Minnaar – resigned 4 June 2007 3 698 904 3 698 904 2,96Trevor Edwards – resigned 31 July 2007 7 964 722 2 210 000 10 174 722 8,14Ramsay L’Amy Daly (Bill) 4 582 909 4 582 909 3,67Jay Currie 10 661 768 10 661 768 8,53

29 618 476 25 628 891 55 247 367 44,20

The company has not been advised of any changes in the above interests of the directors during the period up to the date of this report.

DIReCtoRS’ RepoRt continued


24

Group Company

Notes2008

R’0002007 R’000

2008 R’000

2007 R’000

ASSetSNon-current assetsProperty, plant and equipment 3 1 028 296 319 –Intangible assets 4 16 122 14 760 – –Investments in subsidiaries 5 – – 16 002 16 002Other financial assets 8 – 463 – –Deferred tax 9 452 516 150 102 Deferred lease charges 10 1 004 315 – –

18 606 16 350 16 471 16 104

Current assetsInventories 12 67 – – –Loans to group companies 6 – – 4 744 63 Loans to shareholders – Minorities 7 89 89 – – Other financial assets 8 999 198 – –Advertising levies 11 1 982Trade and other receivables 13 13 702 5 174 11 – Cash and cash equivalents 14 27 960 27 232 26 005 23 300

44 799 32 693 30 760 23 363

total assets 63 405 49 043 47 231 39 467

eqUIty AND LIABILItIeSequityequity attributable to equity holders of parentShare capital 15 25 078 25 078 26 626 25 078Retained income 19 758 9 757 455 1 188Minority interest – 31 – –

44 836 34 866 27 081 26 266

LiabilitiesNon-current liabilitiesLong‑term employee benefits 16 276 300 206 266Borrowings 17 – 595 – –

276 895 206 266

Current liabilitiesLoans from group companies 6 – – 19 543 12 038Current tax payable 1 141 3 047 – – Borrowings 17 595 2 380 – –Trade and other payables 19 16 557 7 855 401 897

18 293 13 282 19 944 12 935

total liabilities 18 569 14 177 20 150 13 201

total equity and liabilities 63 405 49 043 47 231 39 467

BALANCe Sheetas at 29 February 2008


25

Group Company

Notes2008

R’0002007 R’000

2008 R’000

2007 R’000

Revenue 20 33 793 29 507 5 623 4 087Cost of sales 21 (1 466) (1 402) – –

Gross profit 32 327 28 105 5 623 4 087Other income 58 927 – 934 Operating expenses (20 670) (18 383) (8 620) (6 374)

operating profit/(loss) 22 11 715 10 649 (2 997) (1 353)Investment revenue 23 2 458 1 188 2 297 1 170Finance costs 24 (37) (42) (6) –

profit/(loss) before taxation 14 136 11 795 (706) (183)Taxation 25 (4 166) (3 381) (27) 102

profit/(loss) for the period 9 970 8 414 (733) (81)

Attributable to:Equity holders of the parent 10 001 8 417 (733) (81)Minority interest 31 (3) – –

INCoMe StAteMeNtfor the year ended 29 February 2008


26

SharecapitalR’000

Sharepremium

R’000

Accumulatedprofit/(loss)

R’000

Minorityinterest

R’000

totalequityR’000

GroupBalance at 1 March 2006 1 – 1 340 34 1 375Changes in equityProfit for the year – – 8 417 (3) 8 414

Issue of shares (net of costs) – 25 077 – – 25 077

Total changes – 25 077 8 417 (3) 33 491

Balance at 1 March 2007 1 25 077 9 757 31 34 866

Changes in equity

Profit for the year – – 10 001 (31) 9 970

Total changes – – 10 001 (31) 9 970

Balance at 29 February 2008 1 25 077 19 758 – 44 836

Note 15 15

CompanyBalance at 1 March 2006 1 – 1 269 – 1 270Changes in equityLoss for the year – – (81) – (81)Issue of shares (net of costs) – 25 077 – – 25 077

Total changes _ 25 077 (81) – 24 996

Balance at 1 March 2007 1 25 077 1 188 – 26 266Changes in equityLoss for the year – – (733) – (733)Issue of shares (net of costs) – 1 548 – – 1 548

Total changes – 1 548 (733) – 815

Balance at 29 February 2008 1 26 625 455 – 27 081

Note 15 15

StAteMeNt oF ChANGeS IN eqUItyfor the year ended 29 February 2008


27

Group Company

Notes2008

R’0002007 R’000

2008 R’000

2007 R’000

Cash generated from/(used in) operations 27 10 216 6 995 (2 931) (3 119)Interest income 2 458 1 188 2 297 1 170Finance costs (37) (42) (6) –Income tax paid 28 (6 008) (901) (74) (19)

Net cash from operating activities 6 629 7 240 (714) (1 968)

Cash flows from investing activitiesPurchase of property, plant and equipment 3 (1 162) (153) (428) – Sale of property, plant and equipment 3 54 1 816 – 168Purchase of intangible assets 4 (1 362) – – – Deferred lease charges (689) – – – Loans advanced to group companies – – 2 299 9 362Loans granted (338) (420) – –

Net cash from investing activities (3 497) 1 243 1 871 9 530

Cash flows from financing activitiesProceeds from issues of equity shares 15 – 25 078 1 548 25 078Increase in long‑term employee benefits – 300 – 266Shareholders’ loans repaid – (10 334) – (10 325) Borrowings repaid (2 404) (2 592) – (5 350)

Net cash from financing activities (2 404) 12 452 1 548 9 669

total cash movement for the period 728 20 935 2 705 17 231Cash at the beginning of the period 27 232 6 297 23 300 6 069

total cash at the end of the period 15 27 960 27 232 26 005 23 300

CASh FLow StAteMeNtfor the year ended 29 February 2008


28

1. Accounting policies presentation of annual financial statements The annual financial statements have been prepared in accordance with International Financial Reporting Standards, and the

Companies Act of South Africa. The annual financial statements have been prepared on the historical cost basis, except for the measurement of certain financial instruments at fair value, and incorporate the principal accounting policies set out below.

These accounting policies are consistent with the previous period.

Basis of consolidation The consolidated annual financial statements incorporate the annual financial statements of the company and entities

(including special purpose entities) controlled by the company or its subsidiaries. Control is achieved where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the annual financial statements of subsidiaries to bring their accounting policies into line with those used by other members of the group.

All intra‑group transactions, balances, income and expenses are eliminated in full on consolidation.

Minority interests in the net assets excluding goodwill of consolidated subsidiaries are identified separately from the group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority’s share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority’s interest in the subsidiary’s equity are allocated against the interests of the group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses.

1.1 Significant estimates and judgements In preparing the annual financial statements, management is required to make estimates and assumptions that affect

the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include:

trade receivables and loans and receivables The group assesses its trade receivables and loans and receivables for impairment at each balance sheet date. In

determining whether an impairment loss should be recorded in the income statement, the group makes judgements as to whether there are observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Impairment testing The recoverable amounts of cash‑generating units and individual tangible and intangible assets have been determined

based on the higher of value‑in‑use calculations and fair values. These calculations require the use of estimates and assumptions. It is reasonably possible that the discount rate assumption may change which may then impact estimations and may then require a material adjustment to the carrying value of goodwill and tangible assets.

The group reviews and tests the carrying value of tangible and intangible assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwill is tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of goodwill, tangible and intangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including store growth, location and supply and demand, together with economic factors such as fluctuations in exchange rates, inflation and interest.

taxation Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are

many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

NoteS to the ANNUAL FINANCIAL StAteMeNtSfor the year ended 29 February 2008


29

NoteS to the ANNUAL FINANCIAL StAteMeNtS continued

for the year ended 29 February 2008


1. Accounting policies (continued) 1.1 Significant estimates and judgements (continued) The group recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable

that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the group to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the group to realise the net deferred tax assets recorded at the balance sheet date could be impacted.

provisions Provisions are raised when the company has a present obligation as a result of a past event, and a reliable estimate

can be made of the obligation. Judgement is required in estimating the obligation.

property, plant and equipment Management has applied their judgement based on past experience to determine expected useful lives and residual

values of property, plant and equipment. Refer to note 1.2.

1.2 Property, plant and equipment

Property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses.

The cost of an item of property, plant and equipment is recognised as an asset when: • itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtothecompany;and • thecostoftheitemcanbemeasuredreliably.

Costs include costs incurred initially to acquire an item of property, plant and equipment and costs incurred subsequently to add to it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Depreciation commences when an asset is available for use. Depreciation is charged so as to write off the depreciable amount of items, to their residual values over their estimated useful lives, on a straight‑line basis, being a method that reflects the pattern in which the asset’s future economic benefits are expected to be consumed by the group.

Where an item comprises major components with different useful lives, the components are accounted for as separate items of property, plant and equipment and depreciated over their estimated useful lives.

Item Average useful life Furniture and fixtures 6 years General equipment 6 years IT equipment 3 years Kitchen equipment 10 years Leasehold improvements 5 years Motor vehicles 4 years Office equipment 6 years

The residual value and the useful life of each asset, as well as the method of depreciation, are reviewed at each financial period‑end.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

30




1. Accounting policies (continued) 1.3 Goodwill Goodwill is initially measured at cost, being the excess of the business combination over the company’s interest in

the net fair value of the identifiable assets, liabilities and contingent liabilities.

Subsequently goodwill is carried at cost less any accumulated impairment.

The excess of the company’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of the business combination is immediately recognised in profit or loss.

Internally generated goodwill is not recognised as an asset.

1.4 Intangible assets An intangible asset is recognised when: • itisprobablethattheexpectedfutureeconomicbenefitsthatareattributabletotheassetwillflowtotheentity;and • thecostoftheassetcanbemeasuredreliably.

Intangible assets are initially recognised at cost.

Intangible assets are subsequently carried at cost less any impairment. Intangible assets are not amortised as they are considered to have an indefinite life.

1.5 Investments in subsidiaries Group annual financial statements The group annual financial statements include those of the holding company and its subsidiaries. The results of the

subsidiaries are included from the date of acquisition or from the date control is achieved. The results of subsidiaries are included to the date of disposal or the date control is relinquished.

On acquisition the group recognises the subsidiary’s identifiable assets, liabilities and contingent liabilities at fair value, except for assets classified as held‑for‑sale, which are recognised at fair value less costs to sell.

Company annual financial statements In the company’s separate annual financial statements, investments in subsidiaries are carried at cost less any

accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of: • thefairvalue,atthedateofexchange,ofassetsgiven,liabilitiesincurredorassumed,andequityinstrumentsissued

by the company; plus • anycostsdirectlyattributabletothepurchaseofthesubsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.6 Financial instruments Initial recognition The group classifies financial instruments, or their component parts, on initial recognition as a financial asset,

a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes party to the contractual provisions of the instrument.

The group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire; or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the group retains substantially all the risks and rewards of ownership of a transferred financial asset, the group continues to recognise the financial asset and also recognises a collateralised borrowing for proceeds received.

trade and other receivables Trade and other receivables are classified as loans and receivables are measured at initial recognition at fair value, and

are subsequently measured at amortised cost using the effective interest‑rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

31




1. Accounting policies (continued) 1.6 Financial instruments (continued) trade and other payables Trade and other payables are classified as financial liabilities, and are initially measured at fair value, and are

subsequently measured at amortised cost, using the effective interest‑rate method.

Cash and cash equivalents Cash and cash equivalents are classified as financial assets at fair value through profit and loss, and comprise cash on

hand and demand deposits, and other short‑term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value.

Loans and receivables These financial assets are initially measured at fair value plus direct transaction costs.

At subsequent reporting dates these are measured at amortised cost using the effective interest‑rate method, less any impairment loss recognised to reflect irrecoverable amounts. An impairment loss is recognised in profit or loss when there is objective evidence that the asset is impaired, and is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition. Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

Financial assets that the group has the positive intention and ability to hold to maturity are classified as held‑to‑maturity.

1.7 Taxation Current tax assets and liabilities Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid

in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax

liability arises from: • theinitialrecognitionofgoodwill;or • theinitialrecognitionofanassetorliabilityinatransactionwhich: – is not a business combination; and – at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

A deferred tax liability is recognised for all taxable temporary differences associated with investments in subsidiaries, except to the extent that both of the following conditions are satisfied:

• theparentisabletocontrolthetimingofthereversalofthetemporarydifference;and • itisprobablethatthetemporarydifferencewillnotreverseintheforeseeablefuture.

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset arises from the initial recognition of an asset or liability in a transaction that:

• isnotabusinesscombination;and • atthetimeofthetransaction,affectsneitheraccountingprofitnortaxableprofit(taxloss).

A deferred tax asset is recognised for all deductible temporary differences arising from investments in subsidiaries, to the extent that it is probable that:

• thetemporarydifferencewillreverseintheforeseeablefuture;and • taxableprofitwillbeavailableagainstwhichthetemporarydifferencecanbeutilised.

A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused STC credits can be utilised.

32




1. Accounting policies (continued) 1.7 Taxation (continued) Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the

asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet date.

tax expenses Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period,

except to the extent that the tax arises from: • atransactionoreventwhichisrecognised,inthesameoradifferentperiod,directlyinequity;or • abusinesscombination.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity.

1.8 Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A

lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

operating leases – lessor Operating lease income is recognised on a straight‑line basis over the lease term.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

Income for leases is disclosed under revenue in the income statement.

operating leases – lessee Operating lease payments are recognised as an expense on a straight‑line basis over the lease term. The difference

between the amounts recognised as an expense and the contractual payments is recognised as an operating lease asset or liability. This asset or liability is not discounted.

1.9 Inventories Inventories are measured at the lower of cost and net realisable value on the first‑in‑first‑out basis and include

ingredients and promotional items held for resale to the retail outlets.

The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write‑down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write‑down or loss occurs. The amount of any reversal of any write‑down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

1.10 Employee benefits Short-term employee benefits The cost of short‑term employee benefits (those payable within 12 months after the service is rendered, such as

paid vacation leave and sick leave, bonuses, and non‑monetary benefits such as medical care) is recognised in the period in which the services are rendered and is not discounted.

Long-term employee benefits Long‑term employee benefits are employee benefits (other than post‑employment benefits and termination benefits)

which do not fall due wholly within 12 months after the end of the period in which the employees render the related service. The cost of long‑term employee benefits is recognised in the period in which the service is rendered, and are carried at amortised cost.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non‑accumulating absences, when the absence occurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

The company is not a member of any pension or provident fund, and has no post‑retirement pension or medical obligations.

33




1. Accounting policies (continued) 1.11 Revenue Revenue from the sale of goods is recognised when all the following conditions have been satisfied: • thegrouphastransferredtothebuyerthesignificantrisksandrewardsofownershipofthegoods; • thegroupretainsneithercontinuingmanagerialinvolvementtothedegreeusuallyassociatedwithownershipnor

effective control over the goods sold; • theamountofrevenuecanbemeasuredreliably; • itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtothegroup;and • thecostsincurredortobeincurredinrespectofthetransactioncanbemeasuredreliably.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the balance sheet date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:

• theamountofrevenuecanbemeasuredreliably; • itisprobablethattheeconomicbenefitsassociatedwiththetransactionwillflowtothegroup; • thestageofcompletionofthetransactionatthebalancesheetdatecanbemeasuredreliably;and • thecostsincurredforthetransactionandthecoststocompletethetransactioncanbemeasuredreliably.

Franchise fees are recognised on the accrual basis as services are rendered or the rights used in accordance with the substance of the related franchise agreements.

Franchise joining fees are recognised in the month when the outlet opens for trading.

1.12 Cost of sales When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in

which the related revenue is recognised. The amount of any write‑down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write‑down or loss occurs. The amount of any reversal of any write‑down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

The related cost of providing services recognised as revenue in the current period is included in cost of sales.

1.13 Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred.

1.14 Advertising levies The group receives advertising levies from franchisees which are utilised in the advertising and promotion of the

group’s brands. Advertising expenditure incurred in excess of the levies received is carried forward as a prepaid expense to be set off against future levies.

Any amounts not expended are carried forward as liabilities to be set off against future advertising expenditure.

1.15 Deferred lease charges Deferred lease charges represent the premium paid for the securing of key sites. Deferred lease charges are carried

at cost less accumulated amortisation less any impairment losses. Deferred lease charges are amortised over the period of the underlying lease agreements not exceeding five years.

2. Statements and interpretations not yet effective At the date of authorisation of these annual financial statements, the following Standards and Interpretations

applicable to the group were in issue but not yet effective: • IFRS8Operating segments – effective date 1 January 2009 • IFRS2(amended)Share-based payments – vesting conditions and cancellation – effective date 1 January 2009 • IAS1(AC101)Presentation of financial statements – effective date 1 January 2009 • IAS23(amended)Borrowing costs – effective date 1 January 2009 • IAS27(revised)Consolidated and separate financial statements – effective date 1 July 2009 • IAS32(amended)Financial instruments – effective date 1 January 2009

Management anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the results of the group. The adoption of IAS1 will only have impact on presentation.

IFRS 2 (amended) Share Based Payment Management anticipate that the adoption of IFRS 2 (amended) in future will have no material impact on the annual

financial statements of the company.

34




3. Property, plant and equipment

2008 2007

CostR’000

Accumulateddepreciation

R’000

CarryingvalueR’000

CostR’000


R’000


GroupFurniture and fixtures 834 (311) 523 264 (182) 82 Motor vehicles 16 (9) 7 50 (23) 27 Office equipment 103 (59) 44 74 (21) 53IT equipment 988 (549) 439 472 (342) 130Kitchen equipment 15 (3) 12 – – –General equipment 6 (3) 3 6 (2) 4

total 1 962 (934) 1 028 866 (570) 296

CompanyIT equipment 428 (109) 319 – – –

total 428 (109) 319 – – –

Reconciliation of property, plant and equipment – Group 2008

openingbalance

R’000Additions

R’000Disposals

R’000Depreciation

R’000total

R’000

Furniture and fixtures 82 570 – (129) 523Motor vehicles 27 – (17) (3) 7Office equipment 53 29 – (38) 44IT equipment 130 547 (8) (230) 439Kitchen equipment – 15 – (3) 12General equipment 4 – – (1) 3

total 296 1 161 (25) (404) 1 028

Reconciliation of property, plant and equipment – Company 2008

openingbalance

R’000Additions

R’000Disposals

R’000Depreciation

R’000total

R’000

IT equipment – 428 – (109) 319

total – 428 – (109) 319

35




4. Intangible assets

2008 2007

CostR’000


R’000


CostR’000


R’000


GroupPatents, trademarks and other rights 16 122 – 16 122 14 760 – 14 760

Reconciliation of intangible assets – Group 2008

opening balance

R’000Additions

R’000total

R’000

Goodwill 14 760 1 362 16 122

Reconciliation of intangible assets – Group 2007

Opening balance

R’000Additions

R’000Total

R’000

Patents, trademarks and other rights 14 760 – 14 760

other information

Group2008

R’000

Company2007R’000

Maxi’s brand 14 760 14 760

Indefinite life trademarks are assessed as such, as management believes there is no foreseeable limit to the period over which the group will continue to generate revenues from their continued use. Supporting this assumption is the fact that the brand held is established, well known and, reasonably can be expected to generate revenues beyond the group’s strategic planning horizon. In addition, the group can continue to renew legal rights attached to such trademarks without significant cost and intends to do so for the foreseeable future.

5. Investments in subsidiaries

Name of company Directly held% holding

2008% holding

2007

Carrying amount

2008

Carrying amount

2007

Maxi’s Grill Marketing (Proprietary) Limited Taste Holdings Limited 100 100 16 000 000 16 000 000Scooters Western Cape Retail (Proprietary) Limited Taste Holdings Limited 100 100 100 100Scooters Pizza Fordsburg (Proprietary) Limited Taste Holdings Limited 100 100 1 000 1 000Scooters Pizza Wierda Park (Proprietary) Limited Taste Holdings Limited 100 100 100 100Scooters Pizza Pietermaritzburg (Proprietary) Limited Taste Holdings Limited 51 51 51 51Scooters Pizza Grosvenor Crossing (Proprietary) Limited Taste Holdings Limited 100 100 200 200Scooters Pizza (Proprietary) Limited Taste Holdings Limited 100 100 100 100Taste Holdings Share Trust Taste Holdings Limited 100 100 – –

16 001 551 16 001 551

The carrying amounts of subsidiaries are shown net of impairment losses of Rnil (2007: Rnil).

36




Group Company2008

R’0002007R’000

2008R’000

2007R’000

6. Loans to/(from) group companiesSubsidiariesMaxi’s Grill Marketing (Proprietary) Limited – – 3 640 (1 964)Scooters Pizza (Proprietary) Limited – – (19 372) (9 918)Scooters Pizza Grosvenor Crossing (Proprietary) Limited – – 67 63Scooters Pizza Wierda Park (Proprietary) Limited – – (154) (147)Scooters Pizza Pietermaritzburg (Proprietary) Limited – – (17) (9)Scooters Pizza Fordsburg (Proprietary) Limited – – 5 –Taste Holdings Share Trust – – 1 032 –

All the above loans are unsecured, interest‑free and have no fixed terms of repayment.

– – (14 799) (11 975)

Current assets – – 4 744 63Current liabilities – – (19 543) (12 038)

– – (14 799) (11 975)

7. Loans to shareholdersLoan to minority shareholder in subsidiary 89 89 – –The loan is unsecured, bears interest at prime and has no fixed terms of repayment.

89 89 – –

8. Other financial assetsLoans and receivablesSo Fresh Foods CCThe loan is unsecured, bears interest at prime interest rate and is repayable in 54 equal instalments.

999 587 – –

Dreamteam Trading 232 CCThe loan is unsecured, bears interest at prime rate +2% levied only in the event of default and is repayable in 35 instalments of R7 258 and one instalment of R7 270.

– 74 – –

999 661 – –Non-current assets –Loans and receivables – 463 – –Current assetsLoans and receivables 999 198 –

999 661 –

37




Group Company2008

R’0002007R’000

2008R’000

2007R’000

9. Deferred taxDeferred tax assetTax losses available for set off against future taxable income 46 67 – 49Non‑deductible temporary differences 406 408 150 53Receipts in advance – 41 – –

452 516 150 102Reconciliation of deferred tax assetAt beginning of the year 516 818 102 579Decrease in tax losses available for set off against future taxable income (21) (83) (49) (38)Movement in other temporary differences (43) (219) 97 (439)

452 516 150 102

10. Deferred lease chargesThis amount represents a premium paid for the securing of key sites, it is amortised over the underlying lease agreements ranging over periods not exceeding five years 1 004 315 – –

11. Advertising leviesThis amount represents advertising expenditure incurred in excess of the levies received from franchisees (refer note 1.14) 1 982 – – –

12. InventoriesIngredients and promotional items 67 – – –

13. Trade and other receivablesGross trade receivables 14 403 6 263 11 –Provisions for doubtful debt (914) (1 298) – –Net trade receivables 13 489 4 965 11 –Prepayments – 20 – –Deposits 28 36 – –

VAT 51 80 – –

Store development in advance 134 73 – –

13 702 5 174 11 –

The directors consider that the carrying amount of trade and other receivables approximate their fair value.

38




13. Trade and other receivables (continued)The table below illustrates the ageing analysis of trade receivables impaired and provided for and trade receivables past due and note provided for :

2008 2007Gross tradereceivables

R’000

provision forimpairment

R’000

Net tradereceivables

R’000

Gross tradereceivables

R’000

Provision forimpairment

R’000

Net tradereceivables

R’000

GroupLess than 30 days 11 742 (36) 11 706 3 525 (40) 3 48431 to 60 days 540 (22) 518 239 (35) 20461 to 90 days 392 (122) 270 612 (56) 55691 to 120 days 182 (50) 132 181 (28) 153Over 120 days 1 547 (684) 863 1 706 (1 139) 568

total 14 403 (914) 13 489 6 263 (1 298) 4 965

Trade and other receivables impaired.As of 29 February 2008, trade and other receivables were impaired and provided for.The amount of the provision as of 29 February 2008 as R914 198 (2007: R1 297 567)

Group Company2008

R’0002007R’000

2008R’000

2007R’000

Reconciliation of provision for impairment of trade and other receivables is as follows:Opening balance 1 298 901 – –Provision for impairment 538 379 – –Amounts written off as uncollectable (922) – – –

914 1 298 – –The maximum exposure to credit risk at the reporting date is the fair value of each class of trade receivables mentioned above.

The group does not hold any collateral as security.

CompanyCredit quality of trade and other receivablesNo credit rating has been obtained from the bank. The majority of the trade and other receivables are intercompany receivables.

Fair value of trade and other receivablesThere is no material difference between the fair value of trade and other receivables and their book value.

trade and other receivables past due and not impaired. There are no trade and other receivables past due and not impaired.

trade and other receivables impairedAt 29 February 2008, there were no trade and other receivables impaired or provided for.

The maximum exposure to credit risk at the reporting date is the fair value of each class of trade receivables mentioned above. The company does not hold any collateral as security.

39




Group Company2008

R’0002007R’000

2008R’000

2007R’000

14. Cash and cash equivalentsCash and cash equivalents consist of:Cash on hand 6 5 – –Bank balances 1 949 3 982 – 55Short‑term deposits 26 005 23 245 26 005 23 245

27 960 27 232 26 005 23 300

The directors consider that the carrying value of cash and cash equivalents approximate their fair value.

15. Share capitalAuthorised500 000 000 ordinary shares of R0,00001 each 5 5 5 5

373 280 000 000 unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last annual general meeting. This authority remains in force until the next annual general meeting.

IssuedOrdinary 1 1 1 1Share premium (net of costs) 25 077 25 077 26 625 25 077

25 078 25 078 26 626 25 078

16. Long-term employee benefitsheld at amortised costLong‑term performance incentive scheme. This incentive scheme is awarded to eligible employees by the Remuneration Committee conditional upon certain performance targets and minimum employment periods. 276 300 206 266Non-current liabilitiesAt amortised cost 276 300 206 266

17. BorrowingsNon‑current liabilities – 595 – –Current liabilities 595 2 380 – –

595 2 975 – –

It is group policy to finance certain acquisitions using debt finance.

Secured loan from Nedbank Limited bearing interest at the prime rate. At year‑end the prime rate was 14,5%. The loan is repayable in monthly instalments commencing on 7 June 2005 with a final instalment on 7 May 2008. The current instalment is R198 365.

The group’s obligations under these loan agreements have been secured as follows:1. Unrestricted cession of debtors2. Unrestricted suretyship with loan funds by Scooters Pizza (Proprietary) Limited in favour of Maxi’s Grill Marketing

(Proprietary) Limited.

18. Employee benefitsThe group and company have no post‑employment obligations to any employee with respect to medical aid, pension, retirement annuity or life insurance after leaving employment of Taste Holdings Limited or any of its subsidiaries.

40




Group Company2008

R’0002007R’000

2008R’000

2007R’000

19. Trade and other payablesTrade payables 14 357 3 882 59 124Amounts received in advance 1 235 1 785 – –VAT 425 384 43 42 Payroll accruals 108 1 343 114 731Other accrued expenses 406 15 185 –Advertising levies in advance – 140 – –Other payables 26 306 – –

16 557 7 855 401 897

20. RevenueServices rendered and franchise revenue 29 048 25 130 – –Development 865 1 268 – – Gross receipts 27 657 33 711 – –Gross expenditure 26 792 (32 443) – –Management fees – – 5 623 4 087Retail outlet sales 3 880 3 109 – –

33 793 29 507 5 623 4 087

21. Cost of sales

Cost of goods sold 1 466 1 402 – –

22. Operating profitOperating profit for the year is stated after accounting for the following:

Income from subsidiariesAdministration and management fees – – 5 623 4 087

– – 5 623 4 087

operating lease chargesPremises 1 229 704 – 275Motor vehicles 217 54 110 18

Equipment 28 27 – –

1 474 785 110 293

Profit on sale of property, plant and equipment 28 (891) – –Advertising contribution by franchisor – 1 751 – – Advertising royalties invoiced to franchisees (18 811) (15 487) – – Advertising paid on behalf of franchisees 18 811 17 238 – – Depreciation on property, plant and equipment 404 231 109 –Employee costs 10 405 8 404 5 699 4 702Research and development 152 253 80 –Impairment on loans to group companies – – 525 –

41




Group Company2008

R’0002007R’000

2008R’000

2007R’000

23. Investment revenueInterest revenueBank 2 458 1 188 2 297 1 170

24. Finance costsBank 7 15 6 – Other interest paid 30 27 – –

37 42 6 –

25. TaxationMajor components of the tax expense/(income)CurrentLocal income tax – current period 4 044 3 079 – – Local income tax – recognised in current tax for prior periods 58 – 75 –

4 102 3 079 75 –

DeferredBenefit of unrecognised tax loss/tax credit/temporary difference used to reduce deferred tax expense – 14 – (49)Movement in provisions 64 288 (48) (53)

64 302 (48) (102)

4 166 3 381 27 (102)

Reconciliation of the tax expense

Reconciliation between applicable tax rate and average effective tax rateApplicable tax rate 29,00 29,00 29,00 29,00Impairment/reversal of impairment of loans – – (25,19) 26,74Disallowable expenses 0,47 – – –

Effective rate 29,47 29,00 3,81 55,74

26. Auditors’ remuneration R’000 R’000 R’000 R’000

Fees 385 140 39 – Other services 41 22 8 3

426 162 47 3

42




Group Company2008

R’0002007R’000

2008R’000

2007R’000

27. Cash generated from/(used in) operationsProfit (loss) before taxation 14 136 11 795 (707) (183)Adjustments for:Depreciation and amortisation 404 231 109 – Profit on sale of assets (28) (891) – – Interest received (2 458) (1 188) (2 297) (1 170)Finance costs 37 42 7 – Impairment loss – – 525 –Changes in working capital:Inventories (67) 78 – –Trade and other receivables (10 510) (749) (11) 3 259Prepayments – (315) – – Trade and other payables 8 702 (2 008) (557) (5 025)

10 216 6 995 (2 931) (3 119)

28. Tax (paid) refundedBalance at beginning of the period (3 047) (868) – (598)Current tax for the period recognised in income statement (4 102) (3 079) (74) – Adjustment for deferred tax – – – 579Balance at end of the period 1 141 3 046 – –

(6 008) (901) (74) (19)

29. Commitmentsoperating leases – as lesseeMinimum lease payments due– within one year 1 606 705 351 275– in second to fifth year inclusive 70 1 676 – 351

1 676 2 381 351 626

Operating lease payments represent rentals payable by the group for certain of its office properties, motor vehicles and equipment. Leases are negotiated for an average term of five years. No contingent rent is payable.

43




Group Company2008

R’0002007R’000

2008R’000

2007R’000

30. Related partiesRelationshipsSubsidiaries Refer to note 5Shareholder with significant influence

Chickenland (Proprietary) Limited

Members of key management

Carlo Ferdinando GonzagaDuncan John CrossonLuigi GonzagaLouis Stephanus Minnaar – resigned 4 June 2007

Related-party transactions The group, in the ordinary course of business, entered into various transactions with related parties. These transactions occurred under terms and conditions no more favourable to those entered into with third parties.

Franchise agreementDirectors of the group have interests in six franchised outlets. Franchise fees and product sales have been charged under terms and conditions no more favourable than those entered into with third parties.Loan accounts – owing (to) by related partiesGroup companies – Refer to note 6 above – – (14 799) (11 975)Shareholders – Refer to note 7 above 89 89 – –Rent received from related partiesScooters Pizza (Proprietary) Limited – – – 165Maxi’s Grill Marketing (Proprietary) Limited – – – 110Management fees received from related partiesScooters Pizza (Proprietary) Limited – – 4 106 2 452Maxi’s Grill Marketing (Proprietary) Limited – – 1 517 1 635Cost recoveries received from related partiesScooters Pizza (Proprietary) Limited – – – 47Maxi’s Grill Marketing (Proprietary) Limited – – – 359Royalty income received from related partiesMaxi’s Grill Marketing (Proprietary) Limited – Rosebank Store

– – – 112

It Management fees received from related partiesScooters Pizza (Proprietary) Limited – – 241 –

Maxi’s Grill Marketing (Proprietary) Limited – – 218 –

44




31. Directors’ emoluments

executive

year ended2008

BasicR’000

MotorvehicleR’000

Medicalaid

R’000

IncentivebonusR’000

otherallowances

R’000

Long-termemployee

benefitsR’000

totalR’000

Carlo Gonzaga 824 84 36 – 6 – 950Duncan Crosson 620 72 48 – 10 – 750Luigi Gonzaga 480 84 36 – – – 600Louis Minnaar – resigned 4 June 2007

153 28 11 – 42 – 234

2 077 268 131 – 58 – 2 534

Year ended2007Carlo Gonzaga 603 78 33 78 18 78 888Duncan Crosson 532 79 44 71 13 71 810Luigi Gonzaga 397 78 54 57 12 57 655Louis Minnaar 441 78 27 59 60 665

1 973 313 158 265 43 266 3 018

Non-executive

2008R’000

2007R’000

Bill Daly 79 55Trevor Edwards – resigned 31 July 2007 26 55Jay Currie 70 55Chickenland (Proprietary) Limited 57 56

232 221

32. Risk management

The company and group’s trading and finance activities expose them to various financial risks.

These financial risks are categorised separately according to their different risk characteristics as follows:

Liquidity riskThe group’s exposure to liquidity risk is that insufficient funds will be available to meet future obligations as they fall due.

Cash flow forecasts are prepared and adequate unutilised borrowing facilities are maintained.

The following table represents the company and group’s outstanding contractual maturity profile. The analysis presented is based on the undiscounted contractual obligation, including any interest that will accrue.

Group<1 year 1 – 2 years 2 – 5 years 5+ years total

2008/R’000Borrowings 595 – – – 595Long‑term employee benefits – 69 207 – 276Trade and other payables 16 738 – – – 16 738Tax payable 1 141 – – – 1 141

18 474 69 207 – 18 750

45




Group

<1 year 1 – 2 years 2 – 5 years 5+ years total

32. Risk management (continued)2007/R’000

Borrowings 2 380 595 – – 2 975

Long‑term employee benefits – 75 225 – 300

Trade and other payables 7 855 – – – 7 855

Tax payable 3 047 – – – 3 047

13 282 670 225 – 14 177

Company


2008/R’000Borrowings 595 – – – 595


Trade and other payables 401 – – – 401

996 69 207 – 1 272

2007/R’000Borrowings 2 380 595 – – 2 975


Trade and other payables 897 – – – 897

3 277 670 225 – 4 172

Interest-rate risk

The company and group hold cash and cash equivalents, which earn interest at variable rates. Consequently the company and group are exposed to cash flow interest‑rate risk.

Cash and cash equivalents comprise cash on hand, current bank accounts and short‑term deposits.

The company and group only deposit cash and cash equivalents with major banks with high‑quality credit standing and limits exposure to any one counter‑party.

A fluctuation of 1% in the interest rate would have impacted the earnings for the year by R222 335 (2007: R152 084).

Credit risk

Credit risk arises on cash deposits, cash equivalents and trade receivables. The company and group only deposits cash with major banks with high‑quality credit standing and limits exposure to any one counter‑party.

Trade receivables comprise in majority royalties and marketing fees receivable from franchisees. Management evaluates credit risk relating to customers on an ongoing basis.

The granting of credit is made on application and is approved by the directors. At year‑end, the company and group did not consider there to be any significant concentration of credit risk.

46




32. Risk management (continued)

The following table represents the company and group’s exposure to credit risk. The analysis presented is based on the undiscounted benefit, including any interest that will accrue.

Group


2008/R’000

Cash and cash equivalents 27 960 – – 27 960

Trade and other receivables 15 242 – – 15 242

Other financial assets 999 – – 999

Loan to shareholder 89 – – 89

44 290 – – 44 290

2007/R’000


Trade and other receivables 5 174 – – 5 174

Other financial assets 198 463 – 661

Loan to shareholder 89 – – 89

32 693 463 – 33 156

Company


2008/R’000


Trade and other receivables 11 – – 11

26 016 – – 26 016

2007/R’000


Trade and other receivables – – – –

23 300 – – 23 300

To the extent that recoverable amounts are estimated to be less than their associated carrying values, impairment charges have been recorded in the income statement and the carrying values have been written down to their recoverable amounts.

Foreign exchange riskThe company and group operate and transact solely in South Africa, except for levying of franchise revenue against a single franchisee operating in Lesotho. As Lesotho currency is on parity to the South African rand, the company and group are not exposed to any foreign exchange risk.

47




33. Capital managementThe company and group review their total capital employed on a regular basis and make use of several indicative ratios which are appropriate to the nature of the group’s operations and consistent with conventional industry measures. The principle ratios used in this review process are: – gearing, defined as net debt dividend by total capital employed; and – return on capital employed, defined as underlying operating profit before special items dividend by average capital

employed.

34. Segment reportingThe primary reporting format of the group is by business segment. As the group operates as a vertically integrated franchisor, there is only one business segment as identified by IAS14 – Segment reporting.

The relevant disclosure is given in the annual financial statements.

Group Company2008

R’0002007R’000

2008R’000

2007R’000

35. Earnings and headline earnings per shareEarnings per share (cents) 8,0 7,2 – –Diluted earnings per share (cents) 8,0 6,7Headline earnings per share (cents) 7,9 6,6 – –Diluted headline earnings per share (cents) 7,9 6,2

Basic attributable earnings per share are calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year.

The calculation of earnings per ordinary share is based on a profit for the group of R10 001 080 (2007: R8 416 685) and a weighted average number of ordinary shares of 126 720 000 (2007: 117 260 000) for the year.

The calculation of headline earnings per ordinary share is based on a profit for the group of R9 972 732 (2007: R7 783 685) and a weighted average number of ordinary shares of 126 720 000 (2007: 117 260 000) for the year.

There are no instruments in issue or other obligations that have a dilutive effect on earnings.Headline earnings have been computed as follows:Profit attributable to ordinary shareholders 10 001 8 417 – –Adjusted for profit on sale of property, plant and equipment (39) (892) – –

Gross measurements excluded from headline earnings (39) (892) – –

Taxation on profit on sale of property, plant and equipment 11 259 – –

Net measurements excluded from headline earnings 28 633 – –

Headline earnings 9 973 7 784 – –

48

Shareholder information at 29 February 2008

Number of shareholders

% of shareholders

Number of shares

% of issued capital

1. Range of shareholdersRange1 – 999 18 3,75 8 464 0,011 000 – 9 999 124 25,83 560 927 0,4410 000 – 99 999 241 50,21 6 860 844 5,41100 000 shares and over 97 20,21 119 289 765 94,14

total 480 100,00 126 720 000 100,00

2. Categories of shareholdersMajor shareholders (over 10 000 000 shares) 1 0,21 28 227 632 22,28Directors 5 1,04 38 013 741 30,00Other individuals and trusts 421 87,71 38 116 251 30,08Institutions and other companies 53 11,04 22 362 376 17,65

total 480 100,00 126 720 000 100,00

3. Beneficial shareholders holding 5% or more of the share capitalChickenland (Pty) Limited 28 227 632 22,28Directors 38 013 741 30,00S. Whitfield 9 550 882 7,54

36one 6 728 337 5,31

4. Shareholder spreadpublic 471 98,12 88 356 259 69,72Non-public 9 1,88 38 363 741 30,28Directors 7 1,46 38 013 741 30,00Designated advisers 2 0,42 350 000 0,28

total 480 100,00 126 720 000 100,00

ShARehoLDeRS’ ANALySISTaste Holdings Annual Report 2008

49

ShARehoLDeRS’ DIARyTaste Holdings Annual Report 2008

Annual general meeting 21 July 2008

Announcement of interim results September/October

Financial year‑end 28 February

Announcement of final results May

JSe peRFoRMANCeat 29 February 2008


Closing price (cents) 60

High for the year (cents) 154

Low for the year (cents) 51

Volume of shares traded (’000) during the year 34 486 580

Value of shares traded (R’000) during the year 35 208 771

50

NOTICE is hereby given that the annual general meeting of shareholders of Taste will be held at the offices of the company at 12 Gemini Street, Linbro Business Park, Sandton on Monday, 21 July 2008 at 10:00 for the following purposes:

1. To consider the annual financial statements of the company for the year ended 29 February 2008;2. To transact such other business as may be transacted at the annual general meeting of the company including the

re‑appointment of the auditors and the re‑election of retiring directors; and3. To consider and, if deemed fit, to pass, with or without modification, the following special and ordinary resolutions set out

below, in the manner required by the South African Companies Act, 1973, as amended:

Special resolutionSpecial resolution number 1:Share repurchases “Resolved, as a special resolution, that the directors be authorised pursuant inter alia to the company’s articles of association, until this authority lapses at the next annual general meeting of the company, unless it is then renewed at the next annual general meeting of the company and provided that this authority shall not extend beyond 15 months from date of passing this special resolution, for the company or any subsidiary of the company to acquire shares of the company, subject to the Listings Requirements of JSE Limited (JSE), provided that:

1. any repurchase of securities must be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counter‑party;

2. the company may appoint only one agent to effect any repurchases on its behalf;3. the number of shares which may be acquired pursuant to this authority in any financial year (which commenced 1 March

2007) may not in the aggregate exceed 20% (twenty percent) of the company’s issued share capital as at the date of passing of this special resolution;

4. repurchases of shares may not be made at a price greater than 10% (ten percent) above the weighted average of the market value of the securities for the five business days immediately preceding the date on which the transaction was effected;

5. repurchases may not be undertaken by the company or one of its wholly owned subsidiaries during a prohibited period (as defined in the Listings Requirements of the JSE), unless a repurchase programme is in place where the dates and quantities of securities to be traded during the relevant period are fixed and full details of the programme have been disclosed in an announcement on SENS prior to the commencement of the prohibited period;

6. repurchases may take place only if, after such repurchase, the shareholder spread of the company still complies with the Listings Requirements of the JSE;

7. after the company has acquired shares which constitute, on a cumulative basis, 3% (three percent) of the number of shares in issue (at the time that authority from shareholders for the repurchase is granted), the company shall publish an announcement to such effect, or any other announcements that may be required in such regard in terms of the Listings Requirements of the JSE which may be applicable from time to time; and

8. the company’s Designated Advisor shall confirm the adequacy of the company’s working capital for purposes of undertaking the repurchase of shares in writing to the JSE prior to entering the market to proceed with the repurchase.

In accordance with the Listings Requirements of the JSE, the directors record that:

Although there is no immediate intention to effect a repurchase of securities of the company, the directors would utilise the general authority to repurchase securities as and when suitable opportunities present themselves, which opportunities may require expeditious and immediate action.

The directors, after considering the maximum number of securities which may be purchased and the price at which the repurchases may take place pursuant to the repurchase general authority, are of the opinion that for a period of 12 months after the date of notice of this annual general meeting:• thecompanyandthegroupwillbeabletopaytheirdebtsintheordinarycourseofbusiness;• theassetsofthecompanyandofthegroupfairlyvaluedinaccordancewithgenerallyacceptedaccountingpracticeandin

accordance with the accounting policies used in the latest audited annual financial statements, will be in excess of the liabilities of the company and of the group;

• thesharecapitalandreservesareadequatefortheordinarybusinesspurposesofthecompanyandthegroup;and• theworkingcapitalofthecompanyandthegroupwillbeadequateforordinarybusinesspurposes.

The following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of paragraph 11.26 of the Listings Requirements of the JSE for purposes of this general authority:• Directors–page22;• Majorbeneficialshareholders–page48;• Directors’interestsinordinaryshares–page23;and• Sharecapitalofthecompany–page39.

NotICe oF ANNUAL GeNeRAL MeetINGTaste Holdings Annual Report 2008

TASTE HOLDINGS LIMITED(Incorporated in the Republic of South Africa)

(Registration number: 2000/002239/06)JSE code: TAS

ISIN: ZAE000081162(“Taste” or “the company”)

51

Litigation statementThe directors, whose names appear on page 22 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings including proceedings that are pending or threatened that may have or have had in the recent past (being at least the previous 12 (twelve) months) a material effect on the group’s financial position.

Directors’ responsibility statementThe directors whose names appear on page 22 of the annual report collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information required in terms of the Listings Requirements of the JSE.

Material changesOther than the facts and developments reported on in the annual report, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report for the year ended 29 February 2008 and up to the date of this notice.

Reasons for and effects of special resolution number 1The reason for special resolution number 1 is to afford the directors of the company or a subsidiary of the company a general authority to effect a repurchase of the company’s shares on the JSE. The effect of the resolution will be that the directors will have the authority, subject to the Listings Requirements of the JSE, to effect repurchases of the company’s shares on the JSE.”

Ordinary resolutionsOrdinary resolution number 1:Issue of shares for cash “Resolved that the directors be authorised pursuant inter alia to the company’s articles of association, until this authority lapses at the next annual general meeting of the company, unless it is then renewed at the next annual general meeting of the company provided that it shall not extend beyond 15 months, to allot and issue any ordinary shares for cash subject to the Listings Requirements of the JSE Limited (JSE) on the following conditions:

1. the allotment and issue of the shares must be made to persons qualifying as public shareholders as defined in the Listings Requirements of the JSE;

2. the shares which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such shares or rights that are convertible into a class already in issue;

3. the number of shares issued for cash shall not in the aggregate in any one financial year exceed 50% (fifty percent) of the company’s issued share capital of ordinary shares. The number of ordinary shares which may be issued shall be based on the number of ordinary shares in issue at the date of such application less any ordinary shares issued during the current financial year, provided that any ordinary shares to be issued pursuant to a rights issue (announced, irrevocable and fully underwritten) or acquisition (concluded up to the date of application including announcement of the final terms) may be included as though they were shares in issue at the date of application;

4. the maximum discount at which ordinary shares may be issued is 10% (ten percent) of the weighted average traded price on the JSE of those shares over the 30 business days prior to the date that the price of the issue is determined or agreed between the company and the party subscribing for the security; and

5. that an announcement giving full details, including the impact on net asset value, net tangible asset value, earnings and headline earnings per share and, if applicable, diluted earnings and headline earnings per share, be published at the time of any issue representing, on a cumulative basis within a financial year, 5% or more of the number of securities in issue prior to the issue/s.

In terms of the Listings Requirements of the JSE the approval of a 75% (seventy‑five percent) majority of the votes cast by shareholders present or represented by proxy at the general meeting must be cast in favour of ordinary resolution number 1 for it to be approved.”

Ordinary resolution number 2:Unissued ordinary shares“Resolved that the authorised and unissued ordinary share capital of the company be and is hereby placed under the control of the directors of the company which directors are, subject to the Listings Requirements of the JSE Limited (JSE) and the provisions of section 221 and 222 of the Companies Act, 1973 as amended, authorised to allot and issue any of such shares at such time or times, to such person or persons, company or companies and upon such terms and conditions as they may determine, such authority to remain in force until the next annual general meeting of the company.”

NotICe oF ANNUAL GeNeRAL MeetING continued


52

Ordinary resolution number 3:Re-election of directors“To re‑elect the following directors who, in terms of the company’s articles of association, retire at the annual general meeting, but, being eligible offer themselves for re‑election: Jay Bayne Currie and Kevin Utian. Such re‑elections are to be voted on individually unless a resolution is agreed to by the meeting (without any vote against it) that a single resolution be used.”(Refer to page 3 for relevant Curricula Vitae).

Ordinary resolution number 4:Directors’ remuneration“Resolved that the remuneration of the non‑executive directors, as set out on page 44 of the annual report of which this notice forms part, be and is hereby confirmed and ratified.”

Ordinary resolution number 5:Signature of documentation“Resolved that any director or the company secretary of the company be and is hereby authorised to sign all such documentation and do all such things as may be necessary for or incidental to the implementation of special resolution number 1 and ordinary resolutions numbers 1, 2, 3, 4 and 6 which are passed by the members in accordance with and subject to the terms thereof.”

Ordinary resolution number 6:Re-appointment of auditors“Resolved that BDO Spencer Steward (Jhb) Inc. be re‑appointed as auditors of the company.”

Voting and proxiesA shareholder of the company entitled to attend and vote at the annual general meeting is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak in his/her stead.

On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share held in the company by such shareholder.

A form of proxy is attached for completion by registered certificated shareholders and dematerialised shareholders with own‑name registration who are unable to attend the annual general meeting in person. Forms of proxy must be completed and received by the transfer secretaries, Computershare Investor Services (Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61501, Marshalltown, 2107) no later than 48 hours prior to the meeting. Registered certificated shareholders and dematerialised shareholders with own‑name registration who complete and lodge forms of proxy will nevertheless be entitled to attend and vote in person at the annual general meeting to the exclusion of their appointed proxy/(ies) should such member wish to do so. Dematerialised shareholders, other than with own‑name registrations, must inform their CSDP or broker of their intention to attend the annual general meeting and obtain the necessary Letter of Representation from their CSDP or broker to attend the annual general meeting or provide their CSDP or broker with their voting instructions should they not be able to attend the annual general meeting in person. This must be done in terms of the agreement entered into between the shareholder and the CSDP or broker concerned.

By order of the board

Duncan CrossonCompany Secretary27 June 2008

Registered address transfer Secretaries2nd Floor, Wanderers Building, The Campus Computershare Investor Services (Proprietary) Limited57 Sloane Street 70 Marshall StreetBryanston, 2010 Johannesburg, 2001 (PO Box 78333, Sandton City, 2146) (PO Box 61051, Marshalltown, 2107)

NotICe oF ANNUAL GeNeRAL MeetING continued


53

TASTE HOLDINGS LIMITED(Incorporated in the Republic of South Africa)(Registration number: 2000/002239/06)JSE code: TAS ISIN: ZAE000081162(“Taste” or “the company”)

Form of proxy for the annual general meeting of the company to be held at 10:00 on Monday, 21 July 2008 at the company’s offices, 12 Gemini Street, Linbro Business Park, Sandton (“the annual general meeting”).

For use by certificated shareholders, nominee companies of Central Securities Depository Participants (“CSDP”), brokers’ nominee companies and shareholders who have dematerialised their shares and who have elected own‑name registration, who wish to vote on the ordinary and special resolutions per the Notice of the Annual General meeting to which this form is attached.

Shareholders who have dematerialised their shares through a CSDP or broker must not complete this form of proxy and must provide their CSDP or broker with their voting instructions, except for shareholders who elected own‑name registration in the sub‑register through a CSDP, which shareholders must complete this form of proxy and lodge it with Computershare Investor Services (Proprietary) Limited. Holders of dematerialised shares other than with own‑name registration, wishing to attend the annual general meeting, must inform their CSDP or broker of such intention and request their CSDP or broker to issue them with the necessary Letter of Representation.

I/we (name in block letters)

of (address)

Being the holder/s of ordinary shares in the company, do hereby appoint

1. or failing him/her

2. or failing him/her

3. The chairperson of the annual general meeting

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting of the company, or any adjournment thereof, which will be held for the purpose of considering and, if deemed fit, of passing, with or without modification, the ordinary and special resolutions as detailed in the Notice of Annual General Meeting, and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s, in accordance with the following instructions (refer notes):

Number of votes on a poll (one vote per ordinary share)

In favour Against AbstainTo pass special resolution:1. To provide the directors with a general authority to effect share repurchasesTo pass ordinary resolutions:1. To provide the directors with a general authority to issue shares for cash2. To place the unissued shares under the control of the directors3. To re‑elect the following directors: Jay Bayne Currie Kevin Utian4. To ratify the non‑executive directors’ remuneration5. To authorise the signature of documentation6. To re‑appoint BDO Spencer Steward (Jhb) Inc. as auditors of the company

Signed at on 2008

Signature

Assisted by (if applicable)

FoRM oF pRoxy(For use by certified shareholders and own‑name dematerialised shareholders)

54

1. Each shareholder is entitled to appoint one or more proxies (none of whom need to be a shareholder of the company) to attend, speak and vote in place of that shareholder at the annual general meeting.

2. Shareholder(s) that are certificated or own‑name dematerialised shareholders may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space/s provided, with or without deleting “the chairperson of the meeting”, but any such deletion must be initialled by the shareholder(s). The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow. If no proxy is named on a lodged form of proxy the chairperson shall be deemed to be appointed as the proxy.

3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy, in the case of any proxy other than the chairperson, to vote or abstain from voting as deemed fit and in the case of the chairperson to vote in favour of the resolution.

4. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder, but the total of the votes cast or abstained from may not exceed the total of the votes exercisable in respect of the shares held by the shareholder.

5. Forms of proxy must be lodged at or posted to Computershare Investor Services (Proprietary) Limited, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) to be received no later than 48 hours prior to the meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so. Where there are joint holders of shares, the vote of the first joint holder who tenders a vote, as determined by the order in which the names stand in the register of members, will be accepted.

7. The chairperson of the annual general meeting may reject or accept any form of proxy which is completed and/or received otherwise than in accordance with these notes, provided that, in respect of acceptances, the chairperson is satisfied as to the manner in which the shareholder concerned wishes to vote.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company or Computershare Investor Services 2004 (Proprietary) Limited or waived by the chairperson of the annual general meeting.

9. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies.

10. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by Computershare Investor Services (Proprietary) Limited.

11. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.

NoteSTaste Holdings Annual Report 2008

Country of incorporation and domicile South Africa

Nature of business and principal activities The main object of the company is to carry on business as restaurateurs and franchisors.

Directors Carlo Ferdinando GonzagaDuncan John CrossonJay Bayne CurrieKevin UtianLouis Stephanus Minnaar – resigned 4 June 2007Luigi GonzagaRamsay L’Amy DalyTrevor Doyle Edwards – resigned 31 July 2007

Registered office c/o Routledge Modise2nd Floor Wanderers BuildingThe Campus 57 Sloane StreetBryanston2021

Business address 12 Gemini StreetLinbro Business ParkSandton2065

Postal address PO Box 78333Sandton City2146

Auditors BDO Spencer Steward (Johannesburg) IncorporatedChartered Accountants (SA)Registered Auditors

Secretary Duncan John Crosson

Company registration number 2000/002239/06

ADMINISTRATION

A taste sensation

ANNUAL REPORT 2008

Taste Ho

ldings Annual R

eport 2008


A taste sensation

Documents

Transcript of A taste sensation