Wrap Text
Unaudited Condensed Group Interim Results for the six months ended 31 August 2017
GOLD BRANDS INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2015/168426/06)
JSE code: GBI
ISIN: ZAE000212791
("Gold Brands" or "the Company" or "the Group")
UNAUDITED CONDENSED GROUP INTERIM FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2017
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2017 2016 2017
R R R
Revenue 27 595 828 100 613 053 142 785 184
Cost of sales (14 554 930) (69 537 159) (126 516 074)
Gross profit 13 040 898 31 075 894 16 269 110
Other income 1 332 521 1 254 720 3 783 417
Impairment of non-current assets
held for sale and assets of disposable groups (3 625 482)
Operating expenses (19 414 986) (25 924 345) (62 189 361)
(Loss)/Earnings before interest, taxation,
depreciation and amortisation (5 041 567) 6 406 269 (45 762 316)
Depreciation and amortisation (1 100 545) (1 298 432) (1 946 311)
(Loss)/Profit before interest and taxation (6 142 112) 5 107 837 (47 708 627)
Investment revenue 4 622 907 69 806 3 560 594
Finance costs (1 250 104) (328 954) (4 072 103)
(Loss)/Profit before taxation (2 769 309) 4 848 689 (48 220 136)
Taxation 73 330 (1 345 761) (292 439)
(Loss)/Profit for the year (2 695 979) 3 502 928 (48 512 575)
Other comprehensive income - - -
Total comprehensive (loss)/ income
for the year (2 695 979) 3 502 928 (48 512 575)
Attributable to:
Equity holders of the company (2 695 979) 3 502 928 (48 512 575)
(Loss)/Earnings per share attributable to
equity holders of the company
Basic (loss)/earnings per share (cents) (2.45) 3.18 (44.10)
Headline (loss)/ earnings per share (cents) (2.29) 3.18 (40.89)
Diluted basic (loss)/earnings per share (cents) (2.45) 3.18 (44.10)
Diluted headline (loss)/earnings per share (cents) (2.29) 3.18 (40.89)
CONDENSED GROUP STATEMENT OF FINANCIAL POSITION
Restated
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
R R R
ASSETS
Non-current assets 18 737 042 23 715 924 20 609 491
Property, plant and equipment 6 899 065 10 806 312 8 777 577
Goodwill 5 931 416 5 931 416 5 931 416
Intangible assets 5 885 112 5 885 112 5 885 112
Deferred taxation 21 449 1 093 084 15 386
Current assets 31 144 373 63 187 345 32 988 878
Inventories 3 107 899 10 093 998 3 063 835
Other financial assets 9 547 178 11 712 125 14 672 941
Current tax receivable 1 882 765 1 833 059 1 882 765
Trade and other receivables 16 528 451 38 962 900 13 226 983
Cash and cash equivalents 78 079 585 263 142 354
Non-current assets held for sale and
assets of disposal groups 6 054 682 9 850 000 6 523 071
Total assets 55 936 097 96 753 269 60 121 440
EQUITY AND LIABILITIES
Equity 2 822 327 57 333 808 5 318 306
Share capital 45 077 000 44 877 000 44 877 000
Retained income (42 254 673) 12 456 808 (39 558 694)
Non-current liabilities 2 260 072 4 113 049 4 027 498
Instalment sale obligations 2 260 072 4 062 738 3 784 337
Deferred taxation - 50 311 243 161
50 853 698 35 306 412 50 775 636
Current liabilities
Current tax payable 2 407 423 4 505 696 2 231 529
Instalment sale obligations 1 610 885 1 584 544 1 608 940
Operating lease liability 713 279 369 682 717 985
Trade and other payables 39 872 427 28 822 278 40 916 953
Provisions 1 178 427 850 000
Bank overdraft 5 071 257 24 212 4 450 229
Total equity and liabilities 55 936 097 96 753 269 60 121 440
Number of ordinary shares in issue at year-end 110 200 000 110 000 000 110 000 000
Net asset value per share (cents) 2.56 52.12 4.83
Net tangible asset value per share (cents) (8.16) 41.38 (5.91)
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
R R R
Balance at beginning period 5 318 306 53 830 880 53 830 880
(Loss)/Profit for the period (2 695 979) 3 502 928 (48 512 574)
Other comprehensive income - - -
Total comprehensive (loss)/income for the period (2 622 327) 3 502 928 (48 512 574)
Issue of shares 200 000 - 0
Balance at end of period 2 822 327 57 333 808 5 318 306
CONDENSED GROUP STATEMENT OF CASH FLOWS
Restated
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
Cash flows from operating activities: R R R
Cash used in operations (5 231 767) (1 354 337) (6 517 509)
Interest Income 2 577 69 806 3 428
Finance costs (595 156) (328 954) (1 354 616)
Net cash generated from/ (utilised in)
operating activities (5 824 345) (1 613 485) (7 868 697)
Purchase of property, plant and equipment - (79 102)
Proceeds on disposal of property,
plant and equipment 1 000 000 67 806 390 090
Cash flows from non-current assets
held for sale 6 485 (5 951 368) (4 197 185)
Decrease in other financial assets 5 654 878 5 967 592 7 185 402
Cash flows generated from investing activities 6 661 363 84 030 3 299 205
Cash flows from financing activities
Finance lease payments (1 522 320) (1 016 800) (2 845 689)
Cash utilised in financing activities (1 522 320) (1 016 800) (2 845 689)
Net decrease in cash and cash equivalents (685 303) (2 546 255) (7 415 181)
Cash and cash equivalents at the beginning
of the period (4 307 875) 3 107 306 3 107 306
Cash and cash equivalents at the end
of the period (4 993 178) 561 051 (4 307 875)
NOTES TO THE FINANCIAL INFORMATION
Reconciliation of headline earnings for the period
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
R R R
(Loss)/Earnings attributable to
ordinary shareholders (2 695 979) 3 502 928 (48 512 575)
Adjusted for:
Profit on disposal of property,
plant and equipment (net of taxation) (159 864) (95 159)
Loss on non-current assets held for
sale (net of taxation) 332 570 3 625 482
Headline (Loss)/earnings attributable
to ordinary shareholders (2 523 273) 3 502 928 (44 982 252)
Weighted average shares in issue (number) 110 038 043 110 000 000 110 000 000
Weighted average diluted shares in issue (number) 110 038 043 110 000 000 110 000 000
Basic earnings per share (cents) (2.45) 3.18 (44.10)
Diluted earnings per share (cents) (2.45) 3.18 (44.10)
Headline earnings per share (cents) (2.29) 3.18 (40.89)
Diluted headline earnings per share (cents) (2.29) 3.18 (40.89)
OVERVIEW
Due to our successful rollout of Chesanyama as a franchise brand in South Africa over the past five years, we believe
that to achieve our growth strategy, Chesanyama had to be remodelled to international standards, presenting the South
African traditions in look and feel, tastes and experience. This will successfully compete with any national or
international brand in the QSR market. With this said, we will see the launching of Chesanyama UK in the first quarter
of 2018 and, using the existing client base received at our HSBC presentation, we will pursue to identify potential
sites to open 4 Chesanyama stores in the UK during 2018.
South African consumers will see the rolling out of the larger new-look casual dining Chesanyama stores as well as the
drive-thru concepts.
With the finalisation of the Development Agreement with the UK's Casual Dining Group's brands in South Africa, two
initial sites have been identified for the launch of the Latin-American restaurant Las Iguanas and the French Bistro
Café Rouge in the first quarter of 2018.
In addition to our franchise model, we intend to open limited company owned high-end brands over the next 2 years in
high visibility locations.
More focus has been placed on improving the 1+1 Pizza brand, through menu improvement and this brand already has two
more stores opening in the three months after this reporting period.
The Group's focus in the six months to 31 August 2017 continued successful enhancing of internal supply chain
controls, collection of debtors, and tighter control of operating expenditure.
Against this backdrop, the group was proactive in implementing a number of initiatives to manage its input costs
and sales mix. It is evident that the prevailing market volatility and uncertainty are exposing businesses to an
increasing number of risks and therefore we are mitigating our risks by the use of an outsourced prepaid online
ordering platform. Stricter controls of licenced products to our stores from our Distribution Centre has resulted
in the consistency of good quality products to our customers adding increased profits and promoting our brand
standards.
The business had seen a slowdown due to the economic situation in South Africa as at February 2017, with a halt
in new franchisee sign-on and store openings during the first quarter of this year. Slow debtor collections
forced the company to limit the sales of products on credit to our franchisees. A turn-around in new business
since February 2017 together with a better sales mix has resulted in improved gross margins adding value to
our bottom line.
This, coupled with the roll-out of the UK based Casual Dining Group's high turnover brands in South Africa, and
our recently announced acquisition of the well-known American themed Ed's Diner restaurants, will add higher sales
to our Distribution Centre.
OPERATIONAL OVERVIEW
Following the losses experienced from store closures due to lease expiries, Management has and is continuously
re-evaluating the potential of the demographics of existing stores. The group has continued to implement more
stringent processes and selection requirements for its locations and business partners. The brand image has
been re-engineered and the business model is now moving into the newly identified market gap.
Hands-on franchisee selection has shown a successful turnaround where new business partners are showing profitable,
brand-enhancing stores with increased customer satisfaction and dedication. Extended franchisee training programmes
developed and provided by head office continue to enhance franchisee ability to run successful businesses while
maintaining high brand standards. This support is further enhanced by the continued consultation, support and
advanced training programmes within the QSR industry by our approved service providers.
We have successfully re-opened 12 stores and new store sales have taken an upswing in the period after this
reporting period, bringing the total number of operating franchisees to 190 at the date of this report. The group
is confident that these initiatives will reposition its brands to continue growing profitably nationally, on the
African continent and internationally.
With our focus being on our customers, the key driver in this transformative year for Gold Brands is our
owner-operator business partnerships which add value to our brands and satisfaction to our customers. We continue
to source tasty, quality products for our end users.
FINANCIAL OVERVIEW
While revenue for the period was down 72.6% to R27.6 million year-on-year, the gross profit margin increased from
30.9% to 47.3% due to a more aligned sales mix and an ongoing revision and implementation of stricter controls.
The significant decline in revenue was due to a slow-down in the economy as well as Management's restructuring of
Gold Brands portfolio, internal restructuring of Management's supply chain to further reduce risks and relocating
our remodelled Chesanyama stores into higher demographical areas.
The benefits of streamlining Gold Brands' procurement arrangements with selected suppliers, including the
innovative introduction of a prepaid online meat supplier, contributed to a 79.1% reduction in cost of sales
year-on-year. Continued improvement in internal controls and procedures also supported the higher gross margin,
which increased by 16.4% in the comparable period. A continuous increase of in-house production of spices and
sauces also contributed to the increased profitability.
Operating expenses declined year-on-year by 25.1% to R19.4 million. The group continued to achieve lower transport
costs as a result of better route planning and tighter controls which resulted in a reduction of our fleet, which
further reduced costs on fuel, insurance, finance charges and wear and tear. Continued tighter internal control
of operating expenses remains beneficial.
SEGMENTAL REPORTING
IFRS 8 requires an entity to report financial and descriptive information about its reportable segments, which
are operating segments or aggregations of operating segments that meet specific criteria. Operating segments are
components of an entity about which separate financial information is available that is evaluated regularly by
the chief operating decision maker.
The Chief Executive Officer of the Group, is the chief operating decision maker. She evaluates the financial
information of the Group as one operating unit. Separate operating segment financial information is not
available.
Therefore IFRS 8 was not implemented.
RELATED PARTY BALANCES
Shareholder with significant influence: E Nathanael
Holdings of members of key management Sydiveda Proprietary Limited
Members of key management E Nathanael
T C Ballard
Unaudited Unaudited Audited
31 August 31 August 28 February
2017 2016 2017
R R R
Sydiveda (Pty) Ltd* 9 547 178 11 712 125 14 672 941
TC Ballard 733 004 224 363 698 004
10 280 182 11 936 488 15 370 945
* This balance has been reduced by a further R4.5 million since this reporting period
The Group also entered into a few other transactions with related parties which were in the ordinary
course of business, and on an arm's length basis, and which was consistent with the previous period
and not significant.
ISSUE OF SHARES
200 000 ordinary shares were issued at 100 cents per share on 28 July 2017 resulting in the total
number of ordinary shares issued of 110 200 000.
CHANGES IN PROPERTY PLANT AND EQUIPMENT
The Group disposed of leased vehicles at a carrying value of R777 966 due to changes in operational
requirements. No additional assets were acquired.
PROVISION FOR IMPAIRMENT OF TRADE RECEIVABLES
Management have assessed the recoverability of debtors and have provided for impairment of debtors
of R3 559 530, which provision is included in Operating Expenses for the period under review.
INVESTMENT IN NON-CURRENT ASSETS HELD FOR SALE
Management have successfully sold a Blacksteer franchise, which had a carrying value of R438 097.
RESTATEMENT
The Group, who is the franchisor, occasionally acquires a store from a franchise operator. The intention
of management is to immediately resell the store to a new business partner.
These stores acquired, were classified as inventory in August 2016, which was an error, as it should have
been classified as non-current assets held for sale and assets of disposal groups, as it meets the
recognition criteria of non-current assets held for sale and assets of disposal groups.
The comparative amounts for August 2016 have been restated.
The error had no impact on the Statement of Comprehensive Income and Statement of Changes in Equity for
the 2016 financial year.
The effect of the reclassification on the financial results have been summarised below:
Statement of Financial Position Unaudited
31 August
2016
R
Increase in non-current assets
held for sale and disposal groups 9 850 000
Decrease in inventory (9 850 000)
Statement of cash flows
Increase (inflow) in cash generated
from operations 5 951 368
Decrease (outflow) in cash flows from
non-current assets held for sale and
disposal groups (5 951 368)
BASIS OF PREPARATION
The condensed Group financial results for the period ended 31 August 2017 included in this announcement
have been prepared in accordance with the recognition and measurement criteria of International Financial
Reporting Standards ("IFRS"), and have been prepared in accordance with the presentation and disclosure
requirements of IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, and Financial Pronouncements as issued by the Financial Reporting Standards
Council, the Listings Requirements of the JSE Limited, and the requirements of the South African Companies
Act.
The accounting policies applied in the preparation of the condensed Group financial results are consistent
with those applied in the preparation of the previous Group financial results.
The condensed Group financial results are prepared in accordance with the going concern principle under
the historical cost basis. These condensed Group financial results are presented in the South African Rand,
which is the Group's functional and presentation currency.
These condensed Group financial results incorporate the financial results of the company and its subsidiaries.
Results of subsidiaries are included from the effective date of acquisition. All significant transactions and
balances between group enterprises are eliminated on consolidation.
The preparation of the condensed Group financial results for the period ended 31 August 2017 was supervised
by the Financial Director, Terrence Ballard.
The Directors take full responsibility for the preparation of the condensed Group financial results for the
period ended 31 August 2017.
GOING CONCERN
The financial results indicate that the Group incurred a net loss for the period of R2 695 979, and the
current liabilities exceeded the current assets by R19 709 325 at the end of the period.
These conditions indicate that a material uncertainty exists that may cast a significant doubt on the
Group's ability to continue as a going concern.
The introduction of our new themed brands into our portfolio makes the Group unique in the food industry and
hence attracting interest from investors participating in our unique concepts. This new portfolio of brands
will give a higher return on investment driving new business sales as well as sales through our Distribution
Centre.
Internal restructuring on our supply chain and Management's strategic interventions continue to improve
revenue, profitability and liquidity position of the Group.
The ability of the Group to fund short term operations in the foreseeable future is largely dependent on the
outcome of these strategic interventions.
Furthermore, after performing a thorough review of the Group strategies implemented, and performing a review
of the Group's cash flow forecasts and budgets, and considering the uncertainties described above, the
directors have a reasonable expectation that the Group has adequate resources to continue operations for
the foreseeable future.
For these reasons, and the effects of the interventions above on the first half of 2018, the board continue
to adopt the going concern basis of accounting to prepare the financial results.
CONTINGENCIES
The directors are not aware of any material contingent liability which existed at the reporting date and up
to the date of this report requiring disclosure.
FINANCIAL INSTRUMENTS RECOGNISED AT FAIR VALUE
The Group doesn't recognise any of its financial instruments at fair value. The carrying values of the
group's financial instruments however approximates their fair values.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the reporting date which would have
a material effect on the condensed group interim financial results.
DIVIDEND POLICY
No ordinary dividends were declared, and no ordinary dividend is proposed for the interim period.
FORWARD LOOKING STATEMENTS
This report may contain certain forward-looking statements concerning Gold Brands' operations, economic
performance and financial condition, plans and expectations. Such views involve both known and unknown
risks, assumptions, uncertainties and other important factors that could materially influence the actual
performance of the company. No assurance can be given that these will prove to be correct and no
representation or warranty expressed or implied is given as to the accuracy or completeness of such
views or as to any of the other information in this report.
PROSPECTS
The Group's distinctive advantage in South Africa is its diverse array of authentic themed Quick Service
Restaurants:
- our South African "braai" themed Chesanyama;
- the traditional Blacksteer legendary ribs and gourmet burgers;
- Ed's Classic American diners with its timeless retro-nostalgic décor mixed with modern consumer trends;
- the Latin American styled Las Iguanas with their own unique Brazilian bottled Las Iguanas Magnifica
Cachaça beer and awesome cocktails;
- Café Rouge's French Bistros;
- Italian casual dining at Bella Italia; and
- Mediterranean offerings at Opa! Pitaland.
The roll out of the updated Chesanyama branding has commenced, to capitalise on increasing demand for
Chesanyama in the middle market. This is in line with the changing perception of the brand, expanding from
its emerging market roots into more affluent market segments. This, coupled with the launching of
Chesanyama UK during the first quarter of 2018, will see this brand becoming a household name
internationally. At BlackSteer, the look and feel of the restaurants and menus has been upgraded to ensure
that the chain maintains its position as a premium brand.
The conclusion of the Master Franchise Licence with Casual Dining Group and our recently-announced
acquisition of Ed's Diner sees us extending our portfolio of brands and appealing to a more diversified
customer, business partner and supplier while seeing our brands in a wider demographical area.
CHANGES TO THE BOARD OF DIRECTORS
The following changes in directors have taken place to date:
Name Designation Appointment Date
Mr Christopher Hlekane Chairman of the Board 1 September 2017
Member - Social and Ethics Committee 1 September 2017
Member - Audit and Risk Committee 1 September 2017
Member - Remuneration and Nomination Committee 1 September 2017
Ms Glory Isaacs Chairperson - Social and Ethics Committee 1 September 2017
Chairperson - Remuneration and Nomination Committee 1 September 2017
Member - Audit and Risk Committee 1 September 2017
Name Designation Resignation Date
Mr C Raphhiri Chairman of the Board 23 August 2017
Member - Social and Ethics Committee 23 August 2017
Member - Audit and Risk Committee 23 August 2017
Member - Remuneration and Nomination Committee 23 August 2017
By order of the Board
16 November 2017
Efpraxia Nathanael Terrence Ballard
Chief Executive Officer Financial Director
CORPORATE INFORMATION
Non-executive directors: Christopher Hlekane; Christos Kassianides; Glory Isaacs.
Executive directors: Efpraxia Nathanael ("Praxia"); Terrence Craig Ballard
Registration number: 2015/168426/06
Registered address: 195 Witch-Hazel Avenue, Highveld Technopark, Centurion, 0046
Postal address: PO Box 290, Cornwall Hill, Irene, 0178
Company secretary: River Group
Telephone: (012)346 8540
Transfer secretaries: Trifecta Capital Investor Service (Pty) Limited
Designated Adviser: River Group
These results will be available on the Company website from Thursday, 16 November 2017.
16 November 2017
Johannesburg
Corporate and Designated Adviser
River Group
Date: 16/11/2017 11:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
