Wrap Text
Unaudited Interim Results Of Grand Parade Investments Limited For The Six Months Ended 31 December 2017
Grand Parade Investments Limited
Registration number: 1997/003548/06
Share code: GPL
ISIN: ZAE000119814
("GPI" or "the Company" or "the Group")
UNAUDITED INTERIM RESULTS OF GRAND PARADE INVESTMENTS LIMITED (GPI)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
FINANCIAL HIGHLIGHTS
- 281% Increase in headline earnings per share
- 14% Increase in revenue to R576 million
- 135% Increase in profit from operations including equity earnings to R69 million
- 546% Increase in Burger King profit from operations from R3.2 million to R20.7 million
OPERATIONAL HIGHLIGHTS
- Opened 10 Burger King outlets increasing to a total of 71 outlets at 31 December 2017
- On track to meet Burger King 80 store target of which 35 stores will be drive throughs by 30 June 2018
- Reduced central costs by 18% to R25.5 million for the period under review
- Sold 51% stake in Grand Tellumat Manufacturing (Pty) Ltd for proceeds of R15 million
- Cash dividends from investments totalling R48.8 million (R18 million from Sun Slots and R30.8 million from SunWest)
GRAND PARADE INVESTMENTS LIMITED
for the six months ended 31 December 2017
OVERVIEW
FOOD
GPI's results for the six months ended 31 December 2017 have clearly demonstrated its commitment to growing its food brands.
Burger King
Whilst the quick service restaurant market continues to experience low growth as result of weak consumer spending, GPI has managed to grow results from its leading
food brand, Burger King, substantially with profit from operations increasing by 546% to R20.7 million during the period.
The growth in Burger King profit was driven by a more aggressive store rollout in order to meet the target of 80 corporate stores set for 30 June 2018. During the period
under review, 10 new stores were opened and there were no store closures. The focus on value meal offerings over the past two years has yielded positive results,
which was evident in the significant traffic growth seen through the stores during the period.
Dunkin' Donuts and Baskin-Robbins
GPI continued with the expansion of its existing food investment portfolio during the period with the further rollout of five new Dunkin' Donuts stores and one new
Baskin-Robbins store in the Western Cape, bringing total stores to 11 and 5 respectively.
The supply chain of these brands remain a focus and a new, world class, bakery and freezer facility has been constructed to produce doughnuts and store ice-cream
locally.
GAMING AND LEISURE
The gaming and leisure investments have performed in line with GPI's expectations of low growth within the casino segment of the gaming industry.
SunWest International (Pty) Ltd (SunWest) revenues increased marginally by 1.86% offset by higher operating costs, which ultimately resulted in a 6.15% decrease in
GPI's equity earnings recognised for the period from this investment. Dividends totalling R30.8 million were received from SunWest during the period.
Worcester Casino (Pty) Ltd (Worcester) has continued to deliver on its operational improvement plans and has shown growth in EBITDA of 37.57% for this period.
Worcester has paid its first dividend to shareholders since commencing operations, with GPI receiving R0.4 million in dividends from this investment.
Growth in the Limited Payout Machine (LPM) segment of the gaming industry outperformed the casino segment with Sun Slots RF (Pty) Ltd (Sun Slots) increasing revenue
by 7.95% for the period. GPI's share of equity earnings for the period increased by 18.26% when compared to the prior period.
Sun Slots also paid its first dividend to shareholders since commencing operations and GPI received dividends totalling R18m during the period from this investment.
DIVESTMENTS
GPI divested from selected non-core investments during the period, concluding the sales of Grand Tellumat Manufacturing (Pty) Ltd (GTM) for proceeds of R15 million
and two vacant properties in the Western Cape and Gauteng for R64 million.
PROFITABILITY
Overall profit before tax excluding once off items in respect of the sale of businesses, has increased by 190% from a loss of R13.2 million in the prior period to a
profit of R11.8 million in the current period.
The turnaround is as a result of significant resources and management time being invested into the food business, with a focus on creating sustainable, profitable
operations.
ANNUAL DIVIDEND
GPI paid its 2017 annual dividend of 11.5 cents per share on 27 December 2017.
Total dividend paid, net of treasury shares amounted to R50.3 million (43.8 million GPI shares held in treasury).
REVIEW OF RESULTS
for the six months ended 31 December 2017
GPI reported an increase in headline earnings of 267% or R10.0 million for the period under review. Headline earnings for the period was R13.7 million compared to
R3.7 million in the comparative period. The main contributors to the increase in headline earnings were:
- Grand Sport and Grand Tellumat, which in the prior period contributed losses of R3.1 million and R4.6 million to headline earnings, respectively. This has
been reduced to Rnil due to the sale of these investments.
- Burger King has reported a R2.7 million (32%) improvement in their reported headline loss with a loss contribution to headline earnings of R5.7 million
compared to R8.4 million in the prior period.
- GPI Properties increased its headline earnings contribution by R4.3 million, from a loss of R0.8 million in the prior period to a profit of R3.5 million in
the period under review. The increase was due to a reduction in net finance costs of R2.8 million as a result of a reduction in the property secured debt for the period.
- Sun Slots reported a 19% improvement in its contribution to Headline Earnings with earnings of R20.0 million for the period compared to R16.8 million in the prior period.
- SunWest reported a 14% increase in its contribution to Headline Earnings with earnings of R42.7 million for the period compared to R37.4 million in the prior period.
- Worcester Casino reported a 68% improvement in its earnings contribution to Headline Earnings of R1.6 million for the period compared to R1 million in the prior period.
- Corporate costs, before net central finance income, were reduced by 18% to R25.5 million compared to the prior period costs of R30.9 million.
The table below details each investments' contribution to the Group's headlines earnings for the period:
UNAUDITED UNAUDITED
31 December 31 December
2017 2016 Var Var
R'000s R'000s R'000s %
Food (28 801) (25 285) (3 516) 14
Burger King (5 720) (8 376) 2 656 32
Dunkin' Donuts (10 891) (8 723) (2 168) (25)
Baskin-Robbins (6 665) (5 007) (1 658) (33)
Bakery (3 063) - (3 063) -
Spur 557 (2 992) 3 549 119
Mac Brothers 887 2 267 (1 380) (61)
Grand Food Meat Plant (3 906) (2 454) (1 452) (59)
Gaming and Leisure 64 271 55 270 9 001 16
SunWest 42 656 37 443 5 213 14
Sun Slots 19 971 16 849 3 122 19
Worcester Casino 1 644 978 666 68
Other (21 722) (18 536) (3 186) 17
Corporate costs (25 467) (30 953) 5 486 18
Net finance income 279 13 233 (12 954) (98)
GPI Properties 3 466 (816) 4 282 525
Non-core - (7 707) 7 707 (100)
Grand Sport - (3 058) 3 058 (100)
Grand Tellumat - (4 649) 4 649 (100)
Headline earnings for the period 13 748 3 742 10 006 267
REVIEW OF INVESTMENT ACTIVITIES
Disposal of loss-making non-core investments
During the period under review, GPI concluded its divestment of non-core loss-making investments. The sale of Grand Tellumat was finalised on the 2nd November 2017
for a total consideration of R15 million. The settlement of the proceeds was deferred over four months with an initial upfront payment of R2.5 million paid at
fulfilment of all the conditions precedent, and the balance to be paid by the end of March 2018.
Sale of properties
On 9 March 2017, the Group entered into a sales agreement with UBUD Developments (Pty) Ltd to sell its property, situated at 1 Heerengracht for R52.5 million.
The property was accounted for at a cost of R40.2 million and was transferred on 18 August 2017, realising a profit of R9.5 million after CGT.
On 19 July 2017, the Group entered into a sale agreement to dispose of its property situated on Sandton Drive, accounted for at a cost of R11.3 million, for
R11.5 million. The property was transferred on the 9 November 2017, realising a loss of R0.2 million after CGT.
Acquisition of Spur shares
Since 30 June 2017, GPI has acquired a further 330 000 Spur shares for R9.1 million. The shares were acquired in the open market at an average price of R27.70 per share
and increased GPI's effective overall holding in Spur to 17.79%.
Debt facilities
GPI obtained preference share funding of R251.8 million (after related cost). This has resulted in the debt equity ratio increasing to 29.3% from 16.8%. The table
below shows the Group's debt facilities split between Holding Company Facilities and Facilities held by subsidiary companies:
31 December 31 December 30 June
2017 2016 2017
R'000s R'000s R'000s
HOLDING COMPANY FACILITIES
Security Type of facility
SunWest and Sun Slots Preference Shares 251 828 - -
Spur Preference Shares 247 815 237 558 240 401
499 643 237 558 240 401
SUBSIDIARIES FACILITIES
Subsidiary Type of facility
GPI Properties Term Loans 70 891 78 357 74 641
Mac Brothers Finance Lease 10 889 14 986 12 880
GF Meat Plant Finance Lease 19 952 28 341 24 246
Various companies Finance Lease 1 768 2 340 2 206
103 500 124 024 113 973
TOTAL FACILITIES 603 143 361 582 354 374
DEBT EQUITY RATIO 29.3% 16.5% 16.8%
The new funding facility comprises preference shares issued, with SunWest and Sun Slots shares provided as security. This is for a five-year period and
attracts interest at 85% of prime, with the interest being repaid semi-annually and the capital repayments commencing on 31 December 2020.
INTRINSIC NET ASSET VALUE (INAV)
Management's assessment of the Group's INAV at 31 December 2017 amounts to 693 cents per share, which is five cents less than the 698 cents per share reported
at 30 June 2017.
The valuation methods used to determine the INAV remained consistent to those applied in the 30 June 2017 assessment.
Intrinsic NAV summary at 31 December 2017
Related
100% GPI holding
Equity GPI Equity co Intrinsic
value holding value borrowings NAV % of
Company Valuation methodology (R'000s) % (R'000s) (R'000s) (R'000s) portfolio
FOOD INVESTMENTS 1 542 771 (248 156) 1 294 615 43
Burger King DCF 908 486 91.1 827 631 - 827 631 28
Dunkin' Donuts NAV 30 417 100 30 417 - 30 417 1
Baskin-Robbins NAV 13 784 100 13 784 - 13 784 0
Spur Traded price 2 889 219 17.8 514 281 (248 156) 266 125 9
Mac Brothers DCF 107 983 100 107 983 - 107 983 4
Grand Foods Meat Plant DCF 50 232 96.9 48 675 - 48 675 2
GAMING AND LEISURE 1 573 643 - 1 573 643 53
SunWest International EV/EBITDA 5 739 397 15.1 866 649 - 866 649 29
Worcester Casino EV/EBITDA 204 914 15.1 30 942 - 30 942 1
Sun Slots EV/EBITDA 2 253 507 30 676 052 - 676 052 23
OTHER INVESTMENTS 185 000 (71 186) 113 814 4
GPI Properties Various 185 000 100 185 000 (71 186) 113 814 4
Other Group companies' cash and cash equivalents 211 696
Other Group companies' net liabilities (214 316)
INAV: Ordinary shareholders (pre-head office costs) 2 979 452
Number of issued ordinary shares ('000s) excluding treasury shares 429 988
INAV per share (cents) 693
The table below reflects a sensitivity analysis of the Group's INAV to head office costs and CGT discount.
Head office cost discount (as % of INAV)
CGT discount 10% 11% 12% 13% 14% 15%
(as % of INAV) 10% 554 547 540 534 527 520
11% 547 540 534 527 520 513
12% 540 534 527 520 513 506
13% 534 527 520 513 506 499
14% 527 520 513 506 499 492
15% 520 513 506 499 492 485
REVIEW OF OPERATIONS
FOOD
Burger King (Effective holding 91.1%)
Burger King opened 10 new restaurants during the period, with the number of restaurants on 31 December 2017 totalling 71 corporate restaurants and seven
Sasol franchised restaurants.
The average CAPEX for the 10 new corporate restaurants amounted to R5.9 million split between eight drive throughs at R6.1m and two In-Line stores at R5.2m.
The reduction in the average CAPEX spend was driven through the utilization of recycled equipment from stores closed in the prior period.
Sales for the period from corporate restaurants amounted to R365.6 million, up 15.1% from R317.6 million. More encouragingly, for the six months, like-for-like
compound growth increased by 4.5% versus negative 3.41% for the corresponding period.
The increase in sales is due to positive traffic growth of 5.51% versus negative growth of 6.98% in the corresponding period, marginally offset by reduced negative
check basket growth of 0.83% versus 3.59% respectively. Burger King's significant improvement in traffic was a result of the improved menu, which factors in a
constrained consumer environment where customers are spending less and are looking for value.
The 10 new corporate restaurants achieved average monthly restaurant sales of R1.277 million for the six months to 31 December 2017. This was 34.52% above the
network average of R0.95 million and also 10.16% above our drive through only average of R1.159 million. 80% of the new restaurants are drive throughs - in line with
our strategy - and we believe improved site feasibility analysis contributed to the result.
The Burger King Operations team continued to build on the initiatives introduced during the last financial year. The focus is on optimising the restaurant operating
model which resulted in a 38.6% increase in the Restaurant EBITDA from R27.2 million to R37.7 million in the period under review.
Burger King also achieved profitability at a Company EBITDA level of R20.7 million which was 546% higher than the R3.2 million Company EBITDA profit reported in the
prior period.
Depreciation for the period amounted to R31.3 million, which is in line with the prior period.
As a result of new restaurant openings Burger King reported a reduced EBIT loss of R10.7 million for the period, which is 71% lower than the loss of R37 million
reported in the corresponding period.
Dunkin' Donuts (Effective holding 100.0%)
Dunkin' Donuts opened its first outlet on 13 October 2016. During the current period Dunkin' Donuts opened five outlets bringing the total number of outlets to 11 stores
with one drive through as at 31 December 2017. All the outlets are currently corporate-owned.
The outlets reported sales of R15.7 million and a gross profit of R6.3 million for the six months ended 31 December 2017 with over one million doughnuts sold in the
period under review. The gross profit percentage of 40.56% is below the target due to the doughnuts being imported during the period.
The Restaurant EBITDA loss for the period was R1.5 million, however after head office and marketing costs, a Company EBITDA loss of R8.3 million was reported for the
period compared to a R11.6 million loss for the prior period.
Depreciation for the period amounted to R2 million resulting in an EBIT loss for the period of R11 million.
Baskin-Robbins (Effective holding 100.0%)
Baskin-Robbins opened one new store during the period. Total revenue for the five stores amounted to R6.9 million with a gross profit of R2.1 million. The gross
profit percentage of 30.6% is below target due mainly to high inventory holding costs in respect of the minimum required flavours for each store.
Restaurant EBITDA for the period amounted to a loss of R0.4 million for the period. Baskin-Robbins reported a Company EBITDA loss for the period of R5.6 million
compared to R5.8 million in the prior period.
Depreciation for the period amounted to R1 million resulting in an EBIT loss for the period of R6.6 million.
SPUR (Effective holding 17.79%)
GPI increased its stake in Spur during the current period with a cash purchase of 330,000 shares for a consideration of R9.1 million. This increased the effective
holding to 17.79%. Total dividends of R11.5 million were received during the period, which was offset by related finance charges of R10.9 million, resulting in a
R0.6 million profit contribution for the period related to the investment in Spur.
Grand Foods Meat Plant (Effective holding 96.9%)
Grand Foods Meat Plant increased its revenue by 22% to R59.8 million and its EBITDA decreased from a R0.1 million profit in the prior period to a R2.1 million loss in
the current period. The decrease is a result of increased meat prices with an average increase across all raw materials of 17% during the period. This increase was
only passed on to Burger King in December 2017.
Grand Bakery (Effective holding 100%)
During the current period GPI constructed a world class bakery facility in order to reduce costs and ensure the security of the supply of doughnuts to Dunkin Donuts.
The total cost of the facility, including the purchase of a property by GPI Properties, amounted to R43 million. The facility includes two bulk storage freezers and
has a blast freezing capability which will enable production and supply of long-life doughnuts for up to six months. The initial operating loss of R3.1 million is due
to product testing and related setup costs of operating the facility.
Mac Brothers (Effective holding 100.0%)
Tough trading conditions continued in the period under review.
As a result, revenue only increased by R2.6 million to close at R136.0 million, compared to the previous year's revenue of R133.4 million.
EBITDA for the period amounted to R8.18 million compared against R12.23 million for the prior comparable period.
EBIT for the period amounted to R6.13 million compared to the EBIT for the prior period of R5.11 million.
Mac Brothers' forward order book at 31 December 2017 is very encouraging and the management team is confident that they will recover lost revenue during the second
half of the financial year.
GAMING AND LEISURE
SunWest (Effective holding 15.1%)
SunWest's revenue marginally increased by 1.86% to R1.3 billion, but remains under pressure as a result of continued slow down in consumer spending. Net profit after
tax decreased by 6% to R232 million mainly due to an impairment of R51 million in respect of the investment held in the Cape Town International Convention Centre.
The total ordinary dividend reduced from R240 million to R200 million in the current period.
GPI recognised R35.0 million in equity accounted earnings for the period and received R30.8 million in dividends.
Sun Slots (Effective holding 30.0%)
Sun Slots continued to outperform the overall gaming market and reported a R135 million EBITDA, a 4.57% improvement when compared to the prior period. Revenue for
the period increased by 7.95% to R555 million and net profit after tax increased by 34.78% to R66.3 million.
GPI recognised R19.9 million in equity accounted earnings, which is up by 18% from R16.8 million in the prior period. GPI received its first cash dividend from
Sun Slots during the period of R18 million.
Worcester (Effective holding 15.1%)
Worcester's revenue increased by 5.37% to R94 million and its EBITDA improved by 37.57% to R23.8 million as a result of the continued improvements made in its
operating model.
During the period GPI recognised R1.6 million in equity accounted earnings, which is up strongly on the prior period equity accounted earnings of R1 million. GPI received
its first cash dividend from Worcester during the period of R0.4 million.
RELATED PARTY TRANSACTIONS
The Group, in the ordinary course of business, entered into various transactions with related parties consistent with those as reported at 30 June 2017.
SUBSEQUENT EVENTS
Subsequent to the six months ended 31 December 2017, an agreement was entered into to dispose of the building situated at 33 Heerengracht for a consideration of
R225.0 million. This is subject to certain conditions precedent.
DIRECTORATE
Tasneem Karriem was appointed to the GPI Board on 9 September 2016 and was appointed as Chief Executive Officer of GPI on 1 July 2017.
Shaun Barends was appointed as the Financial Director on 1 July 2017.
Dylan Pienaar resigned from the board of GPI on the 8 November 2017.
PROSPECTS
GPI continues its journey to build a formidable food group. With the new management team in place, new and innovative ways are constantly being sought to drive
efficiencies throughout the Group.
While GPI sees itself as an active investor, the Group is preparing to reshape its overall structure by repositioning itself into a fully fledged investment holding
company. Management remains confident that within GPI there is value to be unlocked.
For and on behalf of the board
H Adams T Karriem
Executive Chairman Chief Executive Officer
15 March 2018 15 March 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 December 2017
Unaudited Unaudited Audited
six months six months 12 months
ended ended ended
31 December 31 December 30 June
2017 2016 2017
Note R'000s R'000s R'000s
Revenue 576 718 506 757 962 998
Cost of sales (302 504) (266 554) (508 724)
Gross profit 274 214 240 203 454 274
Operating costs (261 891) (262 246) (515 342)
Profit/(loss) from operations 12 323 (22 043) (61 068)
Profit from equity-accounted investments 56 683 50 596 96 094
Profit on disposal of investments 3 - 83 086 91 929
Impairment of property, plant, equipment and intangible assets - (18 389) (18 549)
Impairment of investment - - (8 271)
Impairment of loans - - (4 701)
Depreciation (36 417) (33 692) (66 083)
Amortisation (2 803) (2 290) (4 906)
Profit before finance costs and taxation 29 786 57 268 24 445
Finance income 2 605 24 227 31 583
Finance costs (20 525) (30 045) (50 093)
Profit before taxation 11 866 51 450 5 935
Taxation (626) (23 922) 5 018
Profit for the period 11 240 27 528 10 953
Other comprehensive income/(loss)
Items that will be reclassified subsequently to profit or loss
Unrealised fair value adjustments on available-for-sale investments, net of tax 11 054 7 324 (51 099)
Total comprehensive income/(loss) for the period 186 34 852 (40 146)
Profit/(loss) for the period attributable to:
- Ordinary shareholders 12 548 31 585 19 281
- Non-controlling interest (1 308) (4 057) (8 328)
11 240 27 528 10 953
Total comprehensive income/(loss) attributable to:
- Ordinary shareholders 1 494 38 909 (31 818)
- Non-controlling interest (1 308) (4 057) (8 328)
186 34 852 (40 146)
Cents Cents Cents
Basic earnings per share 4 2.92 7.07 4.39
Diluted earnings per share 4 2.92 7.07 4.39
Headline earnings per share 4 3.20 0.84 (4.59)
Diluted headline earnings per share 4 3.20 0.84 (4.59)
Ordinary dividend per share 11.5 25.00 25.00
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
Note R'000s R'000s R'000s
ASSETS
Non-current assets 2 418 057 2 215 001 2 361 016
Investments in jointly controlled entities 620 437 617 918 616 099
Investments in associates 361 322 345 724 358 157
Available-for-sale investment 518 522 374 595 520 435
Investment properties 6 821 46 981 6 821
Property, plant and equipment 623 715 575 288 575 789
Intangible assets 45 796 46 050 44 079
Goodwill 92 508 92 508 92 508
Deferred tax assets 148 936 115 937 147 128
Assets classified as held-for-sale 2 - 22 817 40 175
Current assets 412 100 592 877 230 023
Inventory 102 617 86 144 88 763
Trade and other receivables 62 469 100 095 64 135
Related party loans 23 132 48 215 44 774
Cash and cash equivalents 219 498 354 039 22 911
Income tax receivable 4 384 4 384 9 440
Total assets 2 830 157 2 830 695 2 631 214
EQUITY AND LIABILITIES
Capital and reserves
Total equity 2 092 976 2 244 242 2 141 147
Ordinary share capital 806 707 839 465 806 707
Treasury shares (166 286) (169 495) (166 286)
Accumulated profit 1 494 627 1 549 027 1 532 361
Available-for-sale reserve at fair value (54 098) 15 379 (43 044)
Share-based payment reserve 12 026 9 866 11 409
Non controlling-interest (31 062) (25 483) (29 754)
Total shareholders' equity 2 061 914 2 218 759 2 111 393
Non-current liabilities 581 531 350 975 337 912
Preference shares 489 447 236 973 238 390
Interest-bearing borrowings 63 750 70 131 67 238
Finance lease liabilities 22 331 35 308 25 023
Deferred tax liabilities 5 310 7 614 4 469
Provisions 693 949 2 792
Current liabilities 186 712 260 961 181 909
Trade and other payables 109 040 154 778 103 877
Provisions 8 679 11 944 17 833
Bank overdraft 31 636 6 707 25 474
Preference shares 9 900 1 311 2 011
Interest-bearing borrowings 7 436 7 500 7 403
Finance lease liabilities 10 277 10 360 14 309
Dividends payable 9 744 8 419 9 744
Income tax payable - 59 942 1 258
Total equity and liabilities 2 830 157 2 830 695 2 631 214
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2017
Available-
Ordinary for-sale Share-based Non-
share Treasury Accumulated reserve payment controlling Total
capital shares profits at fair value reserve interest equity
R'000s R'000s R'000s R'000s R'000s R'000s R'000s
Balance at 30 June 2016 859 517 (105 971) 1 626 255 8 055 9 636 (28 038) 2 369 454
Total comprehensive income/(loss) for the period - - 31 585 7 324 - (4 057) 34 852
- Profit/(loss) for the period from continuing operations - - 31 585 - - (4 057) 27 528
- Other comprehensive loss - - - 7 324 - - 7 324
Dividends declared - - (111 998) - - - (111 998)
Shares repurchased and cancelled (20 052) - - - - - (20 052)
Share-based payment reserve expense - - - - 1 838 - 1 838
IFRS 2 charge relating to equity accounted investments - - - - 153 - 153
Treasury shares acquired - (69 317) - - - - (69 317)
Decrease of interest in subsidiary - - 104 - (104) 6 612 6 612
Treasury shares allocated to employees - 5 793 3 081 - (1 657) - 7 217
Release of capital redemption reserve - - - - - - -
Balance at 31 December 2016 839 465 (169 495) 1 549 027 15 379 9 866 (25 483) 2 218 759
Total comprehensive income/(loss) for the period - - (12 304) (58 423) - (4 271) (74 998)
- Profit/(loss) for the period from continuing operations - - (12 304) - - (4 271) (16 575)
- Other comprehensive loss - - - (58 423) - - (58 423)
Dividends declared - - (1 072) - - - (1 072)
Shares cancelled (*) (32 758) - - - - - (32 758)
IFRS 2 charge relating to equity accounted investments - - - - (153) - (153)
Share-based payment reserve expense - - - - 1 615 - 1 615
Sale of subsidiary - - (104) - 104 - -
Treasury shares allocated to employees - 3 209 (3 186) - (23) - -
Balance at 30 June 2017 806 707 (166 286) 1 532 361 (43 044) 11 409 (29 754) 2 111 393
Total comprehensive income/(loss) for the period - - 12 548 (11 054) - (1 308) 186
- Profit/(loss) for the period from continuing operations - - 12 548 - - (1 308) 11 240
- Other comprehensive loss - - - (11 054) - - (11 054)
Dividends declared - - (50 282) - - - (50 282)
Share-based payment reserve expense - - - - 617 - 617
Balance at 31 December 2017 806 707 (166 286) 1 494 627 (54 098) 12 026 (31 062) 2 061 914
Notes
* Shares bought back are deducted from share capital at cost.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2017
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000s R'000s R'000s
Cash flows from operating activities
Net cash utilised from operations (28 743) (26 503) (95 787)
Income tax received/(paid) 2 264 4 283 (60 501)
Finance income 2 605 24 227 31 583
Net cash (outflow)/inflow from operating activities (23 874) 2 007 (124 705)
Cash flows from investing activities
Acquisition of plant and equipment (64 736) (47 779) (80 941)
Acquisition of land and buildings (30 865) - (7 799)
Acquisition of investment properties - - (15)
Acquisition of intangibles (4 521) (4 397) (8 694)
Proceeds from disposal of property, plant and equipment 62 988 21 002 61 862
Proceeds from disposal of investment property - 59 500 56 000
Loans advanced - (5 901) (6 849)
Loan repayment received 21 973 1 137 1 128
Investments made (9 225) (57 800) (266 555)
Consideration received from the disposal of subsidiaries - 262 492 10 215
Consideration received from the disposal of equity accounted investment - 528 445 790 937
Dividends received 60 751 44 159 87 829
Net cash inflow/(outflow) from investing activities 36 365 800 858 637 118
Cash flows from financing activities
Dividends paid (50 357) (112 405) (112 152)
Treasury shares acquired - (20 052) (52 810)
Shares bought back for cancellation - (69 317) (69 317)
Loans received 251 828 - -
Repayment of loans (10 475) (288 280) (301 754)
Finance costs (13 062) (23 154) (36 618)
Net cash inflow/(outflow) from financing activities 177 934 (513 208) (572 651)
Net (decrease)/increase in cash and cash equivalents 190 425 289 657 (60 238)
Cash and cash equivalents at the beginning of the period (2 563) 57 675 57 675
Total cash and cash equivalents at the end of the period 187 862 347 332 (2 563)
Total cash and cash equivalents at period-end comprises: 187 862 347 332 (2 563)
Cash and cash equivalents 219 498 354 039 22 911
Overdraft (31 636) (6 707) (25 474)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 December 2017
1 Basis of preparation
The condensed consolidated interim financial statements are prepared in accordance with the requirements of the JSE Limited (JSE) Listings Requirements and the
requirements of the Companies Act, No. 71 of 2008. The Listings Requirements require condensed interim financial statements to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS); the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee; Financial Pronouncements as issued by the Financial Reporting Standards Council; and to also, as a minimum, contain the
information required by IAS 34 - Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated financial statements
are in terms of IFRS and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements for the
year ended 30 June 2017.
The interim financial statements have been prepared under the supervision of the Financial Director, Shaun Barends CA(SA).
The consolidated interim financial statements have not been audited or reviewed by the Company's auditors.
During the period, various new and revised accounting standards became effective, however, their implementation had no impact on the results of either the current or
prior year.
2. Assets held for sale
The assets and liabilities included in assets classified as held-for-sale are as follows:
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000s R'000s R'000s
Assets
Non-current assets
Investment property (1 Heerengracht) - - 40 175
Investment property (Atlantis) - 22 815 -
Assets classified as held-for-sale - 22 815 40 175
Net assets - 22 815 40 175
On 30 June 2017, the Group entered into an agreement with UBUD Developments (Pty) Ltd to dispose of its property situated at 1 Heerengracht for R52.5 million. The
transfer of the property was affected on 18 August 2017. The property was previously disclosed as investment property. Non-current assets held-for-sale are measured
at the lower of carrying amount and fair value less cost of sale.
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000s R'000s R'000s
3. Disposal/Acquisition of businesses
Profit/(loss) on disposal of investments
Profit on disposal of Sun Slots - 90 986 90 588
Loss on disposal of Grand Linkstate - (7 900) (7 900)
Profit on disposal of Grand Sport - - 9 241
- 83 086 91 929
4. Basic and diluted earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the period attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares (WANOS) in issue during the period.
Diluted earnings per share amounts are calculated by dividing the net profit for the period attributable to ordinary shareholders by the diluted WANOS in issue.
Headline earnings per share amounts are calculated by dividing the headline earnings for the period attributable to ordinary shareholders by the WANOS in issue for
the period.
Diluted headline earnings per share amounts are calculated by dividing the headline earnings for the period attributable to ordinary shareholders by the diluted
WANOS in issue for the period.
Unaudited Unaudited Audited
31 December 31 December 30 June
2017 2016 2017
R'000s R'000s R'000s
4.1 Reconciliation of the profit for the period
Basic and diluted earnings per share reconciliation
Profit for the period 11 240 27 528 10 953
Non-controlling interest 1 308 4 057 8 328
Profit for the year attributable to ordinary shareholders 12 548 31 585 19 281
4.2 Reconciliation of headline earnings for the period
Profit for the period attributable to ordinary shareholders 12 548 31 585 19 281
Profit on sale of investments - (40 656) (59 819)
Impairment of investments - 8 271 4 490
Reversal of impairments - - -
(Profit)/loss on disposal of property, plant, equipment and intangibles (6 388) 4 518 12 910
Remeasurement of investment - - -
Adjustments by jointly-controlled entities 7 588 24 3 012
- Impairment of investment 7 588 - 2 889
- Loss on disposal of plant and equipment - 24 123
Headline earnings 13 748 3 742 (20 126)
4.3 Reconciliation of WANOS - net of treasury shares
Shares in issue at beginning of the period 429 988 461 732 461 732
Shares repurchased during year weighted for period held by Group - (15 424) (17 020)
Shares repurchased and cancelled during the period weighted for period held by Group - (376) (7 148)
Shares issued during the period weighted for period in issue - 557 1 271
429 988 446 489 438 835
4.4 Reconciliation of diluted WANOS - net of treasury shares
WANOS in issue - net of treasury shares 429 988 446 489 438 835
Effects of dilution from:
- Share options - 118 -
Diluted WANOS in issue - net of treasury shares 429 988 446 607 438 835
Cents Cents Cents
4.5 Statistics
Basic earnings per share 2.92 7.07 4.39
Diluted earnings per share 2.92 7.07 4.39
Headline earnings per share 3.20 0.84 (4.59)
Diluted headline earnings per share 3.20 0.84 (4.59)
5. Fair value measurements
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value and are observable, either directly or indirectly.
Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
As at 31 December, the Group held the following instruments measured at fair value:
Level 1 Level 2 Level 3 Total
R'000s R'000s R'000s R'000s
31 December 2017
Available-for-sale investment - Spur (i) 232 312 - 280 423 512 735
Available-for-sale investment - Atlas Gaming - - 5 787 5 787
Total 232 312 - 286 210 518 522
31 December 2016
Available-for-sale investment - Spur (i) 55 885 - 316 391 372 276
Available-for-sale investment - Atlas Gaming - - 2 319 2 319
Total 55 885 - 318 710 374 595
30 June 2017
Available-for-sale investment - Spur (i) 228 108 - 286 540 514 648
Available-for-sale investment - Atlas Gaming - - 5 787 5 787
Total 228 108 - 292 327 520 435
(i) Available-for-sale investment - Spur
The carrying value of the investment in Spur at 31 December 2017 of R512.7 million is made up of the original acquisition price of R294.7 million, acquisition
during prior and current year of R274.4 million and fair value adjustments of R56.4 million (2016: R21.7 million). The Group's initial investment in Spur is subject
to a trading restriction linked to the Group's empowerment credentials. The restriction expires on 29 October 2019, after which the instrument may be traded without
restriction. The fair value of the investment has been measured by applying a tradability discount of 3% per year remaining on the restriction against the market
price of Spur, as quoted on the JSE. The tradability discount was determined with reference to the agreements which govern the trading restrictions and industry
standards applied to empowerment transactions. As the terms of the trading restrictions are unobservable the instrument has been classified under level 3, had the
trading restrictions not been in place, the instrument would have been classified under level 1. A change of 1.0% in the discount rate used to determine the fair
value at the reporting date would have increased/decreased other comprehensive income after tax by R2.4 million (2016: R2.6 million). There were no additions to level
3 instruments in the current period.
6. Segment anAlysis
The chief decision-makers are considered to be the members of the GPI Executive Committee, who review the Group's internal reporting firstly by industry and secondly
by significant business unit. The chief decision-makers do not review the Group's performance by geographical sector and therefore no such disclosure has been made.
During the period, the chief decision-makers re-assessed the segments. The prior period has been restated to reflect these changes. Listed below is a detailed segment
analysis:
External revenue Inter-segment revenue(1) EBITDA
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun
2017 2016 2017 2017 2016 2017 2017 2016 2017
R'000s R'000s R'000s R'000s R'000s R'000s R'000s R'000s R'000s
Food 570 907 500 078 948 853 27 663 18 671 27 919 18 825 (8 546) (32 119)
Burger King 368 607 317 637 628 897 - - - 20 757 (6 907) 249
Mac Brothers 108 344 113 389 181 434 27 663 18 671 27 919 4 947 8 731 (3 780)
Bakery 56 - - - - - (2 898) - -
Spur 11 569 7 919 16 859 - - - 11 533 7 874 16 786
Grand Food Meat Plant 59 783 49 002 92 087 - - - (2 152) 53 (4 598)
Dunkin' Donuts 15 659 11 244 24 035 - - - (8 350) (11 599) (25 460)
Baskin-Robbins 6 889 887 5 541 - - - (5 012) (6 698) (15 316)
Gaming and leisure - - - - - - 56 683 56 089 101 580
SunWest - - - - - - 35 142 38 286 71 190
Sun Slots - - - - - - 19 897 16 825 27 861
Worcester Casino - - - - - - 1 644 978 2 529
Group costs 5 811 6 040 13 506 67 281 199 860 247 042 (6 502) 70 324 46 037
GPI Properties 5 811 5 645 10 887 8 130 10 457 17 106 15 106 9 286 16 826
Central costs - 395 2 619 59 151 189 403 229 936 (21 608) 61 038 29 211
Non-core - 639 639 - - - - (24 617) (20 064)
GTM(4) - - - - - - - (12 920) (17 621)
Grand Linkstate - - - - - - - (8 884) (8 875)
Grand Sport - 639 639 - - - - (2 813) 6 432
Continuing 576 718 506 757 962 998 94 944 218 531 274 961 69 006 93 250 95 434
1 Heerengracht - - - - - - - - -
Atlantis - - - - - - - - -
Sun Slots - - - - - - - - -
Held-for-sale - - - - - - - - -
(1) Transactions between segments are concluded at arm's length.
(2) Certain costs are presented pre-elimination of intergroup charges and therefore net profit is after these eliminations.
(3) The income tax expense is based on the net profit before tax and pre-elimination of intergroup charges.
(4) During the period GPI's 51% interest in Grand Tellumat Manufacturing was sold.
Net profit/(loss) after tax Total assets Total liabilities
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun 31 Dec 31 Dec 30 Jun
2017 2016 2017 2017 2016 2017 2017 2016 2017
R'000s R'000s R'000s R'000s R'000s R'000s R'000s R'000s R'000s
Food (30 830) (36 357) (86 123) 1 278 834 1 129 504 1 297 578 (402 442) (444 498) (479 264)
Burger King (7 887) (20 506) (29 149) 499 112 533 626 544 657 (66 118) (104 165) (101 918)
Mac Brothers 887 3 324 (8 051) 98 147 101 918 90 609 (37 687) (32 782) (32 577)
Bakery (3 063) - - 13 548 - - - - -
Spur 557 (2 992) (4 939) 512 736 373 271 527 672 (247 699) (242 457) (288 586)
Grand Food Meat Plant (3 907) (2 454) (7 979) 58 974 56 284 54 747 (38 301) (49 231) (51 354)
Dunkin' Donuts (10 820) (8 723) (22 389) 67 844 45 534 54 978 (10 346) (12 846) (3 587)
Baskin-Robbins (6 597) (5 006) (13 616) 28 473 18 871 24 915 (2 291) (3 017) (1 242)
Gaming and leisure 56 054 54 082 101 580 981 758 963 643 974 256 (251 828) - -
SunWest 34 513 36 279 71 190 620 437 617 918 616 099 (251 828) - -
Sun Slots 19 897 16 825 27 861 331 481 318 702 329 583 - - -
Worcester Casino 1 644 978 2 529 29 840 27 023 28 574 - - -
Group costs (13 984) 34 665 15 805 569 565 694 319 304 205 (133 973) (166 768) (40 557)
GPI Properties 9 899 2 293 (1 978) 203 580 264 575 234 208 (77 837) (81 423) (83 464)
Central costs (23 883) 32 372 17 783 365 985 429 744 69 997 (56 136) (85 345) 42 907
Non-core - (24 862) (20 309) - 20 412 15 000 - (668) -
GTM(4) - (12 920) (17 621) - 18 640 15 000 - - -
Grand Linkstate - (8 884) (8 875) - - - - - -
Grand Sport - (3 058) 6 187 - 1 772 - - (668) -
Continuing 11 240 27 528 10 953 2 830 157 2 807 878 2 591 039 (788 243) (611 934) (519 821)
1 Heerengracht - - - - - 40 175 - - -
Atlantis - - - - 22 817 - - - -
Sun Slots - - - - - - - - -
Held-for-sale - - - - 22 817 40 175 - - -
(1) Transactions between segments are concluded at arm's length.
(2) Certain costs are presented pre-elimination of intergroup charges and therefore net profit is after these eliminations.
(3) The income tax expense is based on the net profit before tax and pre-elimination of intergroup charges.
(4) During the period GPI's 51% interest in Grand Tellumat Manufacturing was sold.
Corporate information
Directors
H Adams Executive Chairman
T Karriem Chief Executive Officer
S Barends Group Financial Director
A Abercrombie Non-executive
Dr N Maharaj Lead Independent Non-executive Director
W Geach Independent Non-executive
R Hargey Independent Non-executive
N Mlambo Independent Non-executive
C Priem Independent Non-executive
Registered office
10th Floor, 33 on Heerengracht
Heerengracht Street, Foreshore, Cape Town, 8001
(PO Box 6563, Roggebaai, 8012)
Transfer secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street, Johannesburg, 2001
Attorneys
Cliff Dekker Hofmeyr Inc.
Auditors
Ernst & Young Inc.
Sponsor
PSG Capital (Pty) Ltd
Company Secretary
Statucor (Pty) Ltd
Date: 15/03/2018 05:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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