Johannesburg - Grand Parade Investments, which has stakes in the food, gaming and leisure sectors, returns to profitability as its food investments improve their performance.
GPI grew revenue 54 percent to R772.3 million as it pushed along with its strategy of growing in the food sector.
The company reported a 120 percent increase in headline earnings a share from continuing operations to 1.99 cents per share, from a loss last year, while basic earnings per share from continuing operations gained 521 percent, to 43.01c a share. Headline earnings are seen as a key measure of profitability as they strip out once-off items.
GPI also paid down its debt during the year.
CEO Alan Keet says the Group showed a pleasing return to profitability as a result of significant improvement in the operating performance of the food related investments, in particular, Burger King.
However, Burger King still made a R30 million loss, although this is half what 2015’s loss was.
Read also: Burger King loss grows
GPI also reported a profit of R192.5 million from continuing operations after tax, a 448 percent increase from the R55.2 million loss reported in the previous year.
Keet says “GPI’s investments have held their own in extremely tough trading conditions and have yielded significantly better results compared to the prior year. The strong improvement in results from continuing operations is commendable, as this was achieved in the context of a perfect storm for consumers who faced headwinds of rising food prices, fuel prices and interest rates, coupled with a low-growth economy.”
GPI’s CEO adds the groups improved results indicate that the early stage food investments are migrating towards profitability, having reached a level of maturity where the scale of the business and resultant synergies allow for better efficiencies.
GPI’s active investment during the year has resulted in a significant realisation of its investments, it says. A further 25 percent of GPI Slots was sold to Sun International for R270.3 million and a 10 percent holding of Sunwest and Worcester Casino to Tsogo Sun for R675.0 million, which resulted in a net of R858.7 million in cash from the two disposals. The proceeds from the disposals to Tsogo Sun will be received in equal installments of R37.5 million per month until September 2017.
It says these proceeds, which will account for the difference between earnings and headline earnings per share, will be used to pay down debt. GPI took more debt on board to fund its Burger King expansion.
During the year, GPI also bought the master franchise licences for Dunkin Donuts and Baskin-Robbins for a combined cost of R12.3 million.
Roll-out of these operations will take place in the last quarter of the year.
“GPI will focus on delivering on its strategy to grow its food business, which includes the continued improvement in the profitability of Burger King, launching Dunkin Donuts and Baskin-Robbins and unlocking synergies between the various food investments. In addition the Group will look to continue investing in food businesses via premium restaurant brands and supply chain services and products to support the restaurant brands,” says Keet.
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