DURBAN - Grand Parade Investments (GPI) saw its earnings improve by 176 percent in the six months to end December after the investment holding company exited its loss-making restaurants, Dunkin Donuts and Baskin-Robbins.
The group said on Friday that the decision to liquidate Dunkin Donuts and Baskin-Robbins in February 2019 continued to improve the group's overall profitability after these loss-making businesses contributed a total loss of R24 million last year.
GPI turned a loss of R36.4m reported last year into a profit after tax of R6.4m during the period.
Its headline earnings per share surged by 176 percent to 10.35cents a share compared to 3.75c reported last year, and headline earnings also increased by 176 percent to R44.1m, up from R16m, driven by a R14.7m increase in contributions from the food assets compared to last year.
The group's gaming assets, which remain the largest contributor to earnings, contributed R71m to headline earnings, but were down by 4percent compared to last year. The gaming assets include Sunwest, Sun Slots and Worcester. Group revenue from continuing operations increased by 19percent to R844.4m.
Last month, GPI also announced the sale of Burger King SA and Grand Foods Meat plant for R697million to Emerging Capital Partners, a private equity group with more than $3.2billion (R56.22bn) in funds raised.
GPI also reduced its shareholding in Spur Corporation through the sale of its broad-based black economic empowerment (B-BBEE) shares during the period. The group received a total dividend of R14.1m with a related finance charge of R6.9m, resulting in a R7.2m reported net profit contribution for the period. This allowed the group to significantly reduce its debt exposure with the payment of the Spur secured funding and a reduction in the SunWest preference share facility, resulting in the group decreasing its gearing levels to 11.8percent, down from 30.3percent.
Chief executive Mohsin Tajbhai said the past 18 months had been a challenging period for GPI and it was extremely rewarding to see positive results following the successful implementation of their strategic plan, which aimed at reducing debt, increasing efficiency and improving the overall profitability of the group. Looking ahead, Tajbhai said the group had made excellent progress in improving overall profitability of the business and reducing gearing.
“With the planned sale of Sun Slots, Burger King and Grand Foods Meat Plant we will be in a favourable position with low debt levels and excess cash. We have initiated a process of returning capital to shareholders in order to unlock the inherent discount at which the group trades to intrinsic net asset value. We expect this process to unfold in the next 18 to 24 months,” Tajbhai said.
Grand Parade Investments shares closed 0.33percent lower at R2.99 on the JSE on Friday.