GPI on recovery road as it narrows annual losses and cuts debt
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JSE-LISTED Grand Parade Investments (GPI), an empowered investment company, paired down debt and reduced headline loss in the year to June 30, despite the challenging trading conditions resulting from Covid-19 and associated restrictions on restaurant, casino and hotel operations.
GPI’s headline loss per share decreased to 6.3 cents from 8.2 cents. It posted revenue from continuing operations of R1.67 billion, an increase of 27 percent from the prior year, and operating profit from continuing operations of R57.6 million, an increase of 38 percent.
No dividends were declared during the financial year.
“This improved financial performance was driven by an increase in the earnings contribution from the gaming businesses, particularly Sun Slots, and a significant reduction in losses from the food businesses,” the group said.
The main contributors to the reduction in headline loss were Burger King’s headline contribution which improved by R11.8m during the year from a loss of R25.5m in the prior period to a loss of R13.7m.
Mac Brothers’ loss contribution for the period improved by R18m from R41m in the prior period, to R23m in the current period, despite a significant decrease in sales due to the pandemic.
The gaming assets’ headline earnings contribution increased by R4m to R73m. The increase in earnings was largely due to the recovery of Sun Slots and Infinity Gaming in the current year against the prior year, which was offset by a deterioration of earnings from Sunwest.
GPI also reduced its debt balance from R258m to R232m, which led to an improvement in the debt to equity ratio from 15.3 percent to 13.8 percent.
Mohsin Tajbhai, the chief executive of GPI, said: “Despite trading under strict trading conditions including capacity restrictions, a ban on the sale of alcohol and early curfews, GPI’s Gaming businesses proved resilient, especially the fast-growing Sun Slots.
“Furthermore, the work done by management over the last three years in exiting unprofitable businesses, reducing debt, improving the profitability of operational businesses, and reducing head office costs has positioned the group to deliver on its objective of unlocking value for shareholders. The imminent sale of Burger King South Africa and Grand Foods Meat plant will unlock more than R1.15 per share in value,” he said.
The company said looking at its prospects ahead, although the economy had recovered off a low base, overall economic activity was now only back to 2017 levels and only expected to recover to pre-Covid levels by the end of 2022.
In June, the competition authorities prohibited the sale of Burger King South Africa (BKSA) due to public interest concerns. However, the parties subsequently filed a request for reconsideration, resulting in the Competition Tribunal approving the transaction with conditions. As the major condition precedent was not met at June 30, these assets have not been classified as discontinued operations.
Following the sale of BKSA, GPI said the way forward for the group centred on maximising the value of the business through the sale of non-core assets, further reducing head office costs and reducing dividend leakage as well as returning capital to shareholders by resuming dividend payments.
BUSINESS REPORT ONLINE