Wrap Text
Summarised Unaudited Interim Results For The Six Months Ended 31 December 2018
GRAND PARADE INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1997/003548/06)
Share code: GPL
ISIN: ZAE000119814
('GPI' or 'the company')
GRAND PARADE INVESTMENTS LIMITED (GPI)
SUMMARISED UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
SALIENT FEATURES
REVENUE
Up 28%
GROUP
CENTRAL COSTS
Down 39%
excluding net
finance charges
GROSS PROFIT
Up 26%
EBITDA
Up 11%
from continuing
operations
EPS
Down 11 cents
due to impairment of
discontinued operations
HEPS from continuing
operations
Up 1.28 cents
OPERATIONAL HIGHLIGHTS
- Opened 4 Burger King outlets and closed one increasing the total
to 84 corporate owned restaurants as at 31 December 2018
- Closed the unprofitable Dunkin Brands and placed the businesses
in liquidation
- Reduced central costs' headline loss contribution by 39% to
R15.4 million for the period under review
INTRODUCTION
During the past six months, the company adopted a value-based strategy which included an
aggressive plan with the primary objective of maximising the inherent value of its underlying
assets. This strategy is aimed at slowing down the growth of its operational assets whilst
concentrating on improving profitability. In addition, the Group rationalised operations and
improved efficiencies to drive down central costs.
The first half of 2018 was a particularly tough year for consumer facing businesses where
the residual effects of the Health Promotion Levy (Sugar tax), increase in VAT from 14% to
15%, effects of the drought and the implementation of the minimum wage, continued to
adversely affect the consumer and businesses operating in the food and retail sectors.
Notwithstanding the effects of the continued depressed environment, the Group, weathered
these tough trading conditions evidenced by good growth in revenue of 28% and an increase
in headline earnings from continuing operations of 1.28c. In these challenging economic
conditions, the Group remains focused on its tactical plan to improve operations which will
continue to grow earnings over the next 6 months.
INVESTMENT ACTIVITIES
Despite a tough trading environment Burger King (Burger King South Africa) managed to
generate impressive top line growth with a significant increase in revenue. During the last
6 months BKSA slowed down restaurant growth to focus on improving the profitability of its
poor performing restaurants and marginally grew its net restaurant count by 3 restaurants,
opening 4 new restaurants and closing 1 over the period. The slowdown is in line with the
Group's tactical plan to improve the profitability of its operational businesses.
Dunkin' Donuts and Baskin-Robbins continued to experience a challenging six months with
the 2nd quarter having the most significant impact on trading. The Group decided to exit
these brands based on the continued poor performance and a sustained period of losses.
During the 2nd half of 2018, GPI engaged with several potential buyers through a lengthy
due diligence process which yielded no serious offers within the set timeline. Subsequent to
31 December 2018, GPI's Board of Directors resolved to voluntary liquidate the brands in
order to reduce losses within the businesses. The exit of Dunkin' Donuts and Baskin-Robbins is
the first step of a broader strategy to revert back to an investment holding company.
GROUP FINANCIAL REVIEW
The Group uses headline earnings to assess the underlying investment contributions to the
Group's earnings. The reason for using headline earnings is that it eliminates the once-off
effects of the Group's investment activities and therefore provides a comparable view of the
Group's continuing earnings.
Notwithstanding the tough trading environment, the Group managed to increase its
headline earnings from R13.7 million in the prior period to R16.0 million in the current period.
The increase was largely driven by an increase in contributions from the gaming and leisure
assets. This amounted to an increase of R9.9 million on prior period which was offset by the
food sector with a greater loss contribution of R0.4 million and an increase in interest charges
compared to the prior period.
The table below shows the contribution each investment made to Group headline earnings:
Unaudited Unaudited
31 December 31 December Var
2018 2017
R'000s R'000s R'000s %
Continuing operations
Food (11 636) (11 246) (390) (3%)
Burger King (9 488) (5 721) (3 767) (66%)
Bakery (5 273) (3 063) (2 210) (116%)
Spur 177 557 (380) (127%)
Mac Brothers 1 912 887 1 025 116%
Grand Food Meat Plant 1 036 (3 906) 4 942 127
Gaming and Leisure 74 171 64 271 9 900 15%
SunWest 43 198 42 656 542 1%
Sun Slots 30 326 19 971 10 355 52
Worcester Casino 647 1 644 (997) (61%)
Other (27 102) (21 721) (5 381) (25%)
Corporate costs net of finance charges (15 440) (25 466) 10 026 39%
Net finance cost (10 195) 279 (10 474) (3754%)
GPI Properties (1 467) 3 466 (4 933) (142%)
Headline earnings for the period from
continuing operations 35 433 31 304 4 129 13%
Discontinued operations
Dunkin' Donuts (13 167) (10 891) (2 276) (21)
Baskin-Robbins (6 250) (6 665) 415 (6%)
Headline earnings for the period 16 016 13 748 2 268 16%
DIVIDENDS
No dividends have been declared for the interim period.
CAPITAL STRUCTURE
The Group has recognised that whilst Burger King is still in its growth phase, the Group will
continue to adopt a conservative approach on its gearing to meet its Master Franchise
obligations.
Over the past 6 months the Group decreased its gearing levels from 30.5% to 30.3% as a result
of a repayment of preference shares, term loans and finance lease liabilities amounting to
R48.5 million.
The Group remains focused on reducing debt further through the disposal of non-core assets,
such as its properties, a process which is still ongoing. The aim of the Group is to ultimately
reduce gearing to below 25%.
31 December 31 December 30 June
Var 2018 2017 2018
R'000s R'000s R'000s R'000s
Holding company debt facilities
Security Type of Facility
SunWest Preference Shares 229 990 251 828 251 673
Spur Preference Shares 255 440 247 815 255 445
Subsidiaries facilities 485 430 499 643 507 118
Subsidiary Type of Facility
GPI Properties Term Loans 61 570 70 891 67 229
Mac Brothers Finance Lease 6 253 10 889 8 704
GF Meat Plant Finance Lease 9 946 19 952 14 645
Burger King Finance Lease 988 1 768 1 710
Dunkin' Donuts Finance Lease 573 - 124
Baskin-Robbins Finance Lease 115 - 153
GPI Management Services Finance Lease 59 - 70
79 504 103 500 92 635
Total facilities 564 934 603 143 599 753
Debt equity ratio 30.3% 29.3% 30.5%
* For terms of these preference shares refer to the Consolidated Annual Financial Statements
on the GPI website
FOOD
BURGER KING
The total number of Burger King restaurants at 31 December 2018 was 90 restaurants of which
84 are corporate owned and 6 are franchisees. During the period under review, Burger King
increased its net restaurant count by 3 restaurants which included the opening of 4 new
restaurants and one closure. Burger King's total revenue for the year increased by 35% from
R365.6 million in the prior period to R494.6 million in the current period driven primarily by new
restaurant growth as well as an increase in the Average Revenue per Store (ARS). The ARS
increased by 8.1% from R0.949 million last December to R1.026 million this period, largely as
a result of positive restaurant comparative sales of 7.63% (2017: 4.50%). The increase in ARS is
a positive indicator that restaurants opened in the last 12 months are performing well and a
sign that the objective of achieving an ARS of R1.2 million by June 2019 is attainable.
Burger King continued to focus on market share growth by actively managing menu pricing
architecture to increase traffic through its restaurants. This resulted in an increase in average
tickets per month from 12 143 to 12 250 as well as an increase in the average ticket price
which increased from R78 to R84. Despite the strong growth in revenue, the effects of higher
raw material prices, sugar tax and the increase in VAT continued to erode overall margins
which led to a marginal increase in EBITDA for the period of R0.7 million from R20.8 million
to R21.5 million. The decrease in gross margin percentage was particularly severe during
the first half of 2018 where margins decreased from a high of 58% to 52%. Subsequent to
this, management secured favourable supplier pricing adjustments which assisted in driving
margins back to 54% in December 2018. The group anticipates this margin improvement to
continue over the next 6 months.
GRAND FOODS MEAT PLANT
Grand Foods Meat Plant increased its revenue by 33% compared to prior year from
R59.8 million to R79.6 million off the back of good revenue growth (35%) in Burger King as
well as a higher demand from Spur restaurants. Revenue attributed to Spur increased 14%
compared to prior year. The higher revenue coupled with tight operational expense controls
resulted in a net profit for the period of R1.0 million compared to a loss in the prior period
of R3.9 million. The plant is currently running at 35% capacity utilisation and has sufficient
capacity to accommodate the growth of Burger King with no major additional capital
expenditure anticipated within the next five years. The plant continues to search for third
party sales outside of Burger King and is currently exploring export opportunities to the Middle
East through Wesgro's Halaal export programme.
Dunkin' Donuts
During the current period no new restaurants were opened, as the Group tried to mitigate
further losses in Dunkin' Donuts.
The business reported a revenue of R12.9 million and a gross profit of R6.3 million for the
period, which is down on prior period revenue of R15.7 million and gross profit of R6.3 million.
The poor performance can be attributed to the challenges of launching a premium brand
in a tough trading environment where consumers have been under financial pressure and
general consumer spending has declined.
BASKIN-ROBBINS
Baskin-Robbins opened no new stores during the period. Total revenue for the 6 stores
amounted to R5.3 million with a gross profit of R2.1 million. The gross profit percentage of 40%
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 R1.1 million for the period. Baskin-
Robbins reported a Company EBITDA loss for the period of R4.8 million compared to
R5.6 million in the prior period.
SPUR
GPI maintained its shareholding in Spur and acquired no new shares. A total dividend of
R11.6 million was received during the period with a related finance charge of R11.3 million
resulting in a R0.3 million reported net profit contribution for the period.
REVIEW OF INVESTMENT OPERATIONS
MAC BROTHERS CATERING EQUIPMENT
A satisfactory first half of the year for Mac Brothers in what continues to be an extremely
challenging local trading environment. Revenue of R118 million for the 6 month period was
R18m (13%) lower than reported last period. Positive sales growth in the second quarter driven
by higher sales into the rest of Africa made for an encouraging end to the period which
bodes well for the remainder of the year. During the period, Mac Brothers started seeing
some success of its product diversification strategy into the hospital equipment industry with
the launch of its Mac Care product line.
Gross profit margins improved by 3% from 28% in the prior year to 31% in the current period
driven by more efficient factory throughput, better purchasing mix and a stronger Rand.
Furthermore, an innovative sales commission structure implemented at the beginning of the
financial year, improved sales efficiency by compensating higher gross margins rather than
overall sales. Despite a 13% decrease in sales versus prior period, gross profit was only down
9% (R3.5 million). Plans have been implemented to build a more efficient back office support
structure with systems to help drive and monitor sales and operating efficiencies.
Mac Brothers reported a Net profit after tax of R1.8 million for the period which is R1.6 million
lower than the previous 6 months.
OTHER
CENTRAL COSTS
The Group's net central costs for the period amounted to R15.4 million, which is 39% lower
than the central costs of R25.5 million last period. This is a direct result of management's efforts
to reduce central cost in line with its value-based strategy.
SHARE CAPITAL
No new shares were issued or bought back during the period.
TREASURY SHARES
At 31 December 2018 a total of 43.8 million (2018: 43.8 million) GPI shares were held as treasury
shares by the Grand Parade Share Incentive Trust, GPI Management Services and the GPI
Women's BBBEE Empowerment Trust. These entities are controlled by the Group, with the
Grand Parade Share Incentive Trust holding 4.98 million treasury shares, GPI Management
Services holding 24 million shares and the GPI Women's' BBBEE Empowerment Trust holding
14.82 million treasury shares.
PREFERENCE SHARES
During the current year, the Group redeemed R32 million worth of preference shares.
CHANGE IN DIRECTORS
Colin Priem was appointed as Financial Director with effect from 1 July 2018. Colin Priem was
previously a Non-Executive Director and stepped down from all the Board Sub-Committees.
Prabashinee Moodley was appointed as Chief Executive Officer of the Group on 1 August
2018 and she resigned as Chief Executive Officer and director of the Company with
effect from 14 December 2018. Mohsin Tajbhai was appointed as an executive director of
the Company on 28 November 2018 and he was subsequently promoted to the position
of Acting Chief Executive Officer of the Group. On 5 December 2018 Nombeko Mlambo
and Rasheed Hargey were removed as directors of the Company and on the same date
Ronel van Dijk and Mark Bowman were appointed as directors of the Company.
Particulars of the present Directors and Company Secretary are given on the inside back
cover.
GOING CONCERN
These Unaudited Interim Financial Statements have been prepared on the going concern
basis.
The Board has performed a review of the Group's ability to continue trading as a going
concern in the foreseeable future and, based on this review, consider that the presentation
of the Unaudited Interim Financial Statements on this basis is appropriate.
There are no pending or threatened legal or arbitration proceedings which have had or may
have a material effect on the financial position of the Group.
SUBSEQUENT EVENTS
Subsequent to 31 December 2018, the Board resolved to place Dunkin' Donuts and Baskin-
Robbins into voluntary liquidation after all other exit options were explored. The liquidation
will reduce the negative impact on the Group's cash resources and allow management to
focus on the growth of Burger King.
RELATED PARTIES
The Group entered into various transactions with related parties, in the ordinary course of
business, consistent with those as reported at 30 June 2018.
PROSPECTS
The last year has been challenging for GPI and, in particular, its food businesses which have
been affected by tough economic conditions. Despite this, the group has proved to be
resilient and has managed to weather the storm. The focus over the last 6 months (and for the
next 6 months) is to improve profitability of the entire group and to maximise the value of its
underlying businesses. The Group has performed an investigation into all assets to understand
the drivers of value. The objective is to improve the economic profit of each of the underlying
assets to ensure positive contributions to the overall value of the Group.
Although Burger King had decent top line growth over the period management has been
focused on improving the profitability of all poor performing restaurants. Many of these
restaurants have come to an end of their rental terms and it is the Group's intention to
either renegotiate better rental terms or to relocate these restaurants in order to improve
performance. The growth in ARS over the period of 8.1% is evident that the efforts to improve
the site selection process has resulted in better performing restaurants. The Groups objective
is to grow the overall restaurant count by 15 stores a year over the next 3 years with a focus
on drive thru restaurants as opposed to in-line and or food court restaurants. Grand Foods
Meat Plant has performed extremely well off the growth in Burger King. The future expansion
of Burger King will further improve bottom line profitability and allow volume discounts to be
passed to Burger King which will improve overall gross profit margins.
The change in focus over the last 6 months from growth to value creation has set a promising
course for the group. GPI remains committed to executing the subsequent phases of the
strategic plan which is to ultimately maximise total shareholder return.
For and on behalf of the board
H Adams
Executive Chairman
18 March 2018
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Restated Restated
Unaudited unaudited unaudited
6 months 6 months 12 months
ended ended ended
31 December 31 December 30 June
2018 2017 2018
Note R'000s R'000s R'000s
Continuing operations
Revenue 4. 707 328 554 170 1 101 707
Cost of Sales (372 354) (288 417) (570 547)
Gross Profit 334 974 265 753 531 160
Operating costs (315 379) (238 944) (517 012)
Profit from operations 19 595 26 809 14 148
Profit from equity-accounted investments 73 825 56 683 109 360
Impairment of property, plant, equipment
and intangible assets (431) - -
Impairment of other receivables - - (9 500)
Depreciation (36 441) (33 961) (54 757)
Amortisation (2 521) (2 229) (4 510)
Profit before finance costs and taxation 54 027 47 302 54 741
Finance income 2 810 2 554 8 264
Finance costs (30 349) (20 573) (48 753)
Profit before taxation 26 488 29 283 14 252
Taxation 7 959 (626) (3 392)
Profit for the period from continuing operations 34 447 28 657 10 860
Discontinued operations
Loss for the period from discontinued operations 5.1. (70 829) (17 417) (60 727)
(Loss)/profit for the period (36 382) 11 240 (49 867)
Other comprehensive (loss)/income
Items that will be reclassified subsequently to
profit or loss
Unrealised fair value adjustments on investments
held at fair value through OCI, net of tax 8. - (11 054) (35 303)
Items that will not be reclassified subsequently
to profit or loss
Unrealised fair value adjustments on investments
held at fair value through OCI, net of tax 8. (65 448) - -
Total comprehensive (loss)/income for the period (101 830) 186 (85 170)
Profit/(loss) for the period from continuing
operations attributable to:
- Ordinary shareholders 35 772 29 965 10 663
- Non-controlling interest (1 325) (1 308) 197
Profit/(loss) for the period from discontinued
operations attributable to:
- Ordinary shareholders (70 829) (17 417) (60 727)
- Non-controlling interest - - -
(36 382) 11 240 (49 867)
Total comprehensive (loss)/income from
continuing operations attributable to:
- Ordinary shareholders (29 676) 18 911 (24 640)
- Non-controlling interest (1 325) (1 308) 197
Total comprehensive (loss)/income discontinued
operations attributable to:
- Ordinary shareholders (70 829) (17 417) (60 727)
- Non-controlling interest - - -
(101 830) 186 (85 170)
Cents Cents Cents
Basic and diluted (loss)/earnings per share 7. (8.23) 2.92 (11.66)
Continuing operations 7. 8.39 6.97 2.48
Discontinued operations 7. (16.62) (4.05) (14.14)
Headline and diluted headline earnings per share 7. 3.75 3.20 (11.18)
Continuing operations 7. 8.53 7.25 2.96
Discontinued operations 7. (4.78) (4.05) (14.14)
Ordinary dividend per share - - -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2018
Restated Restated
Unaudited unaudited unaudited
31 December 31 December 30 June
2018 2017 2018
Note R'000s R'000s R'000s
ASSETS
Non-current assets 2 295 473 2 418 057 2 428 528
Investments in jointly controlled entities 634 485 620 437 625 882
Investments in associates 377 561 361 322 376 762
Investments held at fair value through OCI 8 428 825 518 522 494 273
Investment properties 6 742 6 821 7 014
Property, plant and equipment 567 032 623 715 633 617
Intangible assets 30 473 45 796 48 584
Goodwill 92 508 92 508 92 508
Deferred tax assets 157 847 148 936 149 888
Disposal group classified as held-for-sale 6 13 632 - -
Current assets 300 117 412 100 355 223
Inventory 84 408 102 617 85 804
Trade and other receivables 78 391 62 469 101 706
Related party loans 21 689 23 132 21 467
Cash and cash equivalents 110 614 219 498 136 287
Income tax receivable 5 015 4 384 9 959
Total assets 2 609 222 2 830 157 2 783 751
EQUITY AND LIABILITIES
Capital and reserves
Total equity 1 894 861 2 092 976 1 995 855
Ordinary share capital 798 586 806 707 798 586
Treasury shares (166 286) (166 286) (166 286)
Accumulated profit 1 395 969 1 494 627 1 431 892
Investments held at fair value reserve (143 795) (54 098) (78 347)
Share based payment reserve 10 387 12 026 10 010
Non controlling-interest (30 882) (31 062) (29 557)
Total shareholder's equity 1 863 979 2 061 914 1 966 298
Non-current liabilities 551 730 581 531 560 430
Preference shares 482 578 489 447 501 939
Interest-bearing borrowings 30 000 63 750 29 931
Finance lease liabilities 3 254 22 331 10 578
Deferred tax liabilities 35 264 5 310 17 351
Provisions 634 693 631
Liabilities associated with disposal group
held-for-sale 6 604 - -
Current liabilities 192 909 186 712 257 023
Trade and other payables 106 818 109 040 148 936
Provisions 9 503 8 679 13 193
Bank overdraft 17 852 31 636 25 603
Preference shares 2 852 9 900 5 179
Interest-bearing borrowings 31 570 7 436 37 298
Finance lease liabilities 13 472 10 277 14 442
Dividends payable 10 405 9 744 10 416
Income tax payable 437 - 1 956
Total equity and liabilities 2 609 222 2 830 157 2 783 751
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Financial
Ordinary asset Share based Non-
share Treasury Accumulated fair value payment controlling Total
capital shares profits reserve reserve interest equity
R'000s R'000s R'000s R'000s R'000s R'000s R'000s
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 year - - 12 548 (11 054) - (1 308) 186
- Profit/(loss) for the year from
continuing operations - - 29 965 - - (1 308) 28 657
- Profit/(loss) for the year from
discontinued operations - - (17 417) - - - (17 417)
- Other comprehensive loss - - - (11 054) - - (11 054)
Dividends declared (50 282) - (50 282)
Share based payment expense - - - - 617 - 617
Balance at 31 December 2017 806 707 (166 286) 1 494 627 (54 098) 12 026 (31 062) 2 061 914
Total comprehensive income/
(loss) for the year - - (62 612) (24 249) - 1 505 (85 356)
- Profit/(loss) for the year from
continuing operations - - (19 302) - - 1 505 (17 797)
- Profit/(loss) for the year from
discontinued operations (43 310) (43 310)
- Other comprehensive loss - - - (24 249) - - (24 249)
Dividends declared - - (123) - - - (123)
Shares cancelled (*) (8 121) - - - - - (8 121)
Share based payment expense - - - - (2 016) - (2 016)
Balance at 30 June 2018 798 586 (166 286) 1 431 892 (78 347) 10 010 (29 557) 1 966 298
Adoption of IFRS 9 Financial
Instruments - - (866) - - - (866)
Total comprehensive income/
(loss) for the year - - (35 057) (65 448) - (1 325) (101 830)
- Profit/(loss) for the year from
continuing operations - - 35 772 - - (1 325) 34 447
- Profit/(loss) for the year from
discontinued operations - - (70 829) - - - (70 829)
- Other comprehensive loss - - - (65 448) - - (65 448)
Share based payment expense - - - - 377 - 377
Balance at 31 December 2018 798 586 (166 286) 1 395 969 (143 795) 10 387 (30 882) 1 863 979
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Restated Restated
Unaudited unaudited unaudited
31 December 31 December 30 June
2018 2017 2018
R'000s R'000s R'000s
Cash flows from operating activities
Net cash utilised from operations (7 750) (28 743) (64 231)
Income tax paid (2 872) 2 264 (3 090)
Finance income 2 841 2 605 8 387
Net cash outflow from operating activities (7 781) (23 874) (58 934)
Cash flows from investing activities
Acquisition of land and buildings (118) (64 736) (109 029)
Acquisition of plant and equipment (17 516) (30 865) (27 523)
Acquisition of investment properties - - (193)
Acquisition of intangibles (1 692) (4 521) (10 210)
Proceeds from disposal of property, plant and equipment 223 62 988 71 080
Loan repayment received - 21 973 13 816
Investments made - (9 225) (9 141)
Dividends received 76 005 60 751 104 962
Net cash inflow from investing activities 56 902 36 365 33 762
Cash flows from financing activities
Dividends paid (11) (50 357) (49 733)
Redemption of Preference shares (32 000) - -
Shares bought back for cancellation - - (8 121)
Loans received - 251 828 251 673
Repayment of finance lease liabilities (9 034) - -
Repayment of loans (5 344) (10 475) (21 730)
Finance costs (20 654) (13 062) (33 670)
Net cash (outflow)/inflow from financing activities (67 043) 177 934 138 419
Net (decrease)/increase in cash and cash equivalents (17 922) 190 425 113 247
Cash and cash equivalents at the beginning of the year 110 684 (2 563) (2 563)
Total cash and cash equivalents at the end of the year 92 762 187 862 110 684
Total cash and cash equivalents at year end
comprises of: 92 762 187 862 110 684
Cash and cash equivalents 110 614 219 498 136 287
Overdraft (17 852) (31 636) (25 603)
NOTES TO THE CONSOLIDATED SUMMARISED
UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
1. Statement of compliance
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.
2. Basis of preparation
The condensed consolidated interim financial statements are prepared on the going concern
basis. 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 2018, except for the new standards that became effective for the Group's financial
period beginning 1 July 2018, refer to Note 3.
The interim financial statements have been prepared under the supervision of the Financial Director,
CM Priem.
The interim financial statements have not been audited or reviewed by the Group's auditors.
3. Changes in accounting policies
The Group has adopted all the new, revised and amended accounting standards which were
effective for the Group from 1 July 2018.
The adoption of significant new standards' impact on the Group's financial results or position
are presented below:
- IFRS 9 Financial Instruments; and
- IFRS 15 Revenue from Contracts with Customers
3.1. IFRS 9 Financial Instruments
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. The effects of
the adoption of IFRS 9 on 1 July 2018 is presented below:
Classification and measurement of financial assets
IFRS 9 introduces new classification and measurement bases, a new impairment model and
revised guidance on hedge accounting. Based on the new classification and measurement
requirements, debt instruments are subsequently measured at fair value through profit or loss
(FVTPL), amortised cost, or fair value through other comprehensive income (FVOCI), on the
basis of their contractual cash flows and the business model under which the debt instruments
are held. Equity instruments are generally measured at FVTPL, FVOCI can be irrevocably
elected. Equity instruments' gains and losses through other comprehensive income is never
reclassified to profit and loss.
The transition to IFRS 9 has had no significant impact on the Group's classification of financial
assets which fall within the scope of IFRS 9.
The company has elected to continue classifying it's investments held at fair value as at fair
value through other comprehensive income (OCI), the only difference between IAS 39 and
IFRS 9 on financial assets at fair value through OCI is that under IFRS 9 the unrealised fair value
adjustments on these investments are never recycled to profit and loss.
Impairment of financial assets
The impairment requirements are based on an expected credit loss (ECL) model that replaces
the IAS 39 incurred loss model. For trade receivables, a simplified approach may be applied
whereby the lifetime ECL are always recognised. The Group's trade receivables qualify for
use of the simplified approach, and as the standard has been implemented prospectively,
comparative information has not been restated and the cumulative effect of initial application
has been recognised in opening accumulated profit.
The Group applies the simplified approach permitted by IFRS 9 and has implemented the
standard prospectively. Comparative information has not been restated and the cumulative
impact of the initial application has been recognised in opening accumulated profit.
As at 1 July 2018, the directors reviewed and assessed the Group's existing financial assets,
for impairment using reasonable and supportable information that is available without undue
cost or effort in accordance with the requirements of IFRS 9 to determine the credit risk of the
respective items.
An additional credit loss allowance of R0.9 million, net of tax, as at 1 July 2018 has been
recognised against retained earnings.
Trade
and other
receivables
Loss allowance as at 30 June 2018 under IAS 39 (12 959)
Amount restated through accumulated profit (1 200)
Opening loss allowance at 1 July 2018 under IFRS 9 (14 159)
The additional loss allowance recognised upon the initial application of IFRS 9 as disclosed
above resulted entirely from a change in the measurement attribute of the loss allowance
relating to trade and other receivables.
Classification and measurement of financial liabilities
The classification categories for financial liabilities under IFRS 9 has mainly remained
unchanged. The significant change introduced by IFRS 9 relates to the accounting for changes
in the fair value of a financial liability designated as at fair-value-through-profit-and-loss (FVTPL)
attributable to changes in the credit risk of the issuer.
The Groups' financial liabilities are all measured at amortised cost therefore the transition to IFRS
9 has no material impact on the measurement of financial liabilities in the prior or current year.
Hedge accounting
IFRS 9 introduces a new model for hedge accounting that aligns the accounting treatment with
the risk management activities of the entity.
The Group does not apply hedge accounting and as such this has had no impact on the
Group's financial position or results in the prior or current year.
3.2. IFRS 15 Revenue from Contracts with Customers
IFRS 15 replaces IAS 18 Revenue. The effects of the adoption of IFRS 15 on 1 July 2018 is
presented below:
IFRS 15 replaces all existing revenue requirements in IFRS and applies to all revenue arising from
contracts with customers, unless the contracts are in the scope of other standards, such as IAS
17. Its requirements also provide a model for the recognition and measurement of gains and
losses on disposal of certain non-financial assets, including property, plant and equipment and
intangible assets. The standard outlines the principles an entity must apply to measure and
recognise revenue. The core principle is that an entity will recognise revenue at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for transferring
goods or services to a customer. Under IFRS 15, revenue is recognised as the Group satisfies
performance obligations and transfers control of goods or services to its customers as opposed
to the use of the risks and rewards criteria under IAS 18.
The principles in IFRS 15 must be applied using a five-step model:
1. Identify the contract(s) with a customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when (or as) the entity satisfies a performance obligation
IFRS 15 is more prescriptive than the current IFRS requirements for revenue recognition and
provides more application guidance. The disclosure requirements are also more extensive.
The transition to IFRS 15 has had no significant impact on the Group's recognition or
measurement of Revenue.
4. Revenue
Restated Restated
Unaudited unaudited unaudited
31 December 31 December 30 June
2018 2017 2018
R'000s R'000s R'000s
Revenue from contracts with customers
Food sales 494 591 365 680 755 089
Meat sales 81 362 60 617 126 321
Equipment sales 111 118 108 344 171 895
687 071 534 641 1 053 305
Other revenue
Dividends received 11 577 11 569 23 726
Other revenue 8 680 3 313 22 320
Rental income - 4 647 2 356
20 257 19 529 48 402
Total revenue 707 328 554 170 1 101 707
5. Discontinued Operations
As at 31 December 2018 management has decided to dispose of its subsidiaries, Grand Coffee
House (operating Dunkin' Donuts) and Grand Ice Cream (operating Baskin-Robbins), therefore at
the reporting date these met the definition of a disposal group held for sale. Subsequent to the
reporting date management has decided to liquidate these companies.
Restated Restated
Unaudited unaudited unaudited
31 December 31 December 30 June
2018 2017 2018
R'000s R'000s R'000s
5.1 Results of discontinued operations
Revenue 18 260 22 549 42 931
Cost of Sales (11 325) (14 087) (25 814)
Gross Profit 6 935 8 462 17 117
Operating costs (23 260) (21 824) (60 556)
Loss from operations (16 325) (13 362) (43 439)
Impairment of property, plant, equipment, intangible
assets and inventory (50 038) - -
Depreciation (3 278) (3 579) (6 256)
Amortisation (1 195) (575) (1 195)
Loss before finance costs and taxation (70 836) (17 516) (50 890)
Finance income 31 99 162
Finance costs (24) - -
Loss before taxation (70 829) (17 417) (50 728)
Taxation - (9 999)
Loss for the period (70 829) (17 417) (60 727)
5.2 Cash flows from/(used in) discontinued
operations
Net cash used in operating activity (14 735) (13 772) (32 612)
Net cash used in investing activity (542) (9 263) (13 935)
Net cash used in financing activity 18 465 26 035 46 535
Net cash flow for the year 3 188 3 000 (12)
5.3 Impairment of property, plant, equipment, intangible assets and inventory
Asset classes such as property, plant, equipment and inventory has been impaired as their value will
not be realised through use.
Intangible assets have been fully impaired as the value will not be recovered other than through use.
Restated Restated
Unaudited unaudited unaudited
31 December 31 December 30 June
2018 2017 2018
R'000s R'000s R'000s
6. Non-current assets held for sale
As at 31 December 2018 management has decided to dispose of its subsidiaries, Grand Coffee House
(operating Dunkin' Donuts) and Grand Ice Cream (operating Baskin-Robbins) therefore at reporting
period it has been disclosed as non-current assets held for sale. Subsequent to the reporting date
management has decided to liquidate these companies.
The assets and liabilities included in assets classified
as held-for-sale are as follows:
Assets
Non-current assets
Property, plant and equipment 13 632 - -
Non-current liabilities
Finance leases 607 - -
7. Basic and diluted earnings per share
Basic earnings per share amounts are calculated by dividing the net profit for the year attributable
to ordinary equity holders of the Company by the weighted average number of ordinary shares
(WANOS) in issue during the year.
Diluted earnings per share amounts are calculated by dividing the net profit for the year attributable
to ordinary shareholders by the diluted WANOS in issue.
Headline earnings per share amounts are calculated by dividing the headline earnings for the year
attributable to ordinary shareholders by the WANOS in issue for the year.
Diluted headline earnings per share amounts are calculated by dividing the headline earnings for
the year attributable to ordinary shareholders by the diluted WANOS in issue for the year.
7.1 Reconciliation of the profit/(loss) for the period
Basic and diluted earnings per share reconciliation
- Continuing operations 34 447 28 657 10 860
- Discontinued operations (70 829) (17 417) (60 727)
Non-controlling interest 1 325 1 308 (197)
Profit for the year attributable to ordinary
shareholders (35 057) 12 548 (50 064)
7.2 Reconciliation of headline earnings for the
period
Profit for the year attributable to ordinary
shareholders (35 057) 12 548 (50 064)
Continuing operations
Impairment of property, plant, equipment,
intangibles and inventory 431 - -
(Profit)/loss on disposal of property, plant
and equipment - (6 388) (5 671)
Adjustments by jointly-controlled entities 173 7 588 7 716
- Impairment of investment 7 588 7 551
- Loss on disposal of plant and equipment 173 - 165
Discontinued operations
Impairment of property, plant, equipment,
intangibles and inventory 50 469 - -
Headline earnings 16 016 13 748 (48 019)
Headline earnings for the period:
- Continuing operations 36 376 31 165 12 708
- Discontinued operations (20 360) (17 417) (60 727)
16 016 13 748 (48 019)
7.3 Reconciliation of WANOS
- net of treasury shares
Shares in issue at beginning of the year 426 223 429 988 429 988
Shares repurchased and cancelled during
the year weighted for period held by Group - - (569)
426 223 429 988 429 419
000s 000s 000s
7.4 Reconciliation of diluted WANOS
- net of treasury shares
WANOS in issue - net of treasury shares 426 223 429 988 429 419
Effects of dilution from:
- Share options - - -
Diluted WANOS in issue - net of treasury shares 426 223 429 988 429 419
Cents Cents Cents
7.5 Statistics
Basic and diluted earnings per share (8.23) 2.92 (11.66)
- Continuing operations 8.39 6.97 2.48
- Discontinued operations (16.62) (4.05) (14.14)
Headline and diluted headline earnings per share 3.75 3.20 (11.18)
- Continuing operations 8.53 7.25 2.96
- Discontinued operations (4.78) (4.05) (14.14)
8. 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 2018
Investments at fair value through OCI
- Spur (i) 188 384 - 234 655 423 039
Investments at fair value through OCI
- Atlas Gaming - - 5 786 5 786
Total 188 384 - 240 441 428 825
Level 1 Level 2 Level 3 Total
31 December 2017 R'000s R'000s R'000s R'000s
Investments at fair value through OCI
- Spur (i) 232 312 - 280 423 512 735
Investments at fair value through OCI
- Atlas Gaming - - 5 787 5 787
Total 232 312 - 286 210 518 522
Level 1 Level 2 Level 3 Total
30 June 2018 R'000s R'000s R'000s R'000s
Investments at fair value through OCI
- Spur (i) 217 529 - 270 957 488 486
Investments at fair value through OCI
- Atlas Gaming - - 5 787 5 787
Total 217 529 - 276 744 494 273
i) Investment at fair value through OCI - Spur
The carrying value of the investment in Spur at 31 December 2018 of R423.0 million is made up
of the original acquisition price of R569.0 million and fair value adjustments of R65.4 million (2017:
R56.4 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 ap-
plied 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 (2017: R2.4 million). There were no additions to
level 3 instruments in the current year.
9. 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 madethere. Listed below is a detailed segment analysis:
External Revenue Inter-segment revenue(1) EBITDA
Restated Restated Restated Restated Restated
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Restated
31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December Unaudited
2018 2017 2018 2018 2017 2018 2018 2017 30 June 2018
R000's R000's R000's R000's R000's R000's R000's R000's R000's
Food 707 237 548 359 1 095 031 11 124 27 720 52 968 34 105 32 187 32 714
Burger King 504 949 368 607 774 999 - - - 21 425 20 757 22 876
Mac
Brothers 111 118 108 344 171 895 9 533 27 663 52 275 2 956 4 947 (5 063)
Bakery - 56 - 1 591 57 693 (5 713) (2 898) (7 622)
Spur 11 577 11 569 23 726 - - - 11 496 11 533 23 586
Grand Food
Meat Plant 79 593 59 783 124 411 - - - 3 941 (2 152) (1 063)
Gaming
and leisure - - - - - - 73 557 56 683 109 360
SunWest - - - - - - 42 757 35 142 70 188
Sun Slots - - - - - - 30 153 19 897 36 621
Worcester
Casino - - - - - - 647 1 644 2 551
Group costs 91 5 811 6 669 15 148 67 281 96 130 (14 673) (5 378) (18 566)
GPI
Properties 91 5 811 6 297 10 353 8 130 21 359 3 107 15 106 19 521
Central
costs - - 372 4 795 59 151 74 771 (17 780) (20 484) (38 087)
Non-core - - - - - - - - (9 500)
GTM - - - - - - - - (9 500)
Continuing 707 328 554 170 1 101 700 26 272 95 001 149 098 92 989 83 492 114 008
Dunkin'
Donuts 12 895 15 659 30 523 - - - (46 390) (8 350) (24 857)
Baskin
Robins 5 365 6 889 12 408 - - - (19 973) (5 012) (18 582)
Dis-
continued 18 260 22 548 42 931 - - - (66 363) (13 362) (43 439)
(1) Transactions between segments are concluded at arms length.
(2) These figures are shown after central group eliminations.
Net profit/(loss) after tax Total Assets Total Liabilities
Restated Restated Restated Restated Restated
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Restated
31 December 31 December 30 June 31 December 31 December 30 June 31 December 31 December Unaudited
2018 2017 2018 2018 2017 2018 2018 2017 30 June 2018
R000's R000's R000's R000's R000's R000's R000's R000's R000's
Food (13 023) (13 413) (45 480) 1 184 782 1 182 517 1 266 514 (407 503) (389 805) (544 783)
Burger King (9 559) (7 887) (26 577) 554 333 499 112 608 019 (45 428) (66 118) (210 585)
Mac
Brothers 1 459 887 (7 849) 92 639 98 147 90 612 (43 867) (37 687) (42 807)
Bakery (6 136) (3 063) (8 172) 10 271 13 548 10 420 (2 207) - (3 514)
Spur 177 557 608 433 916 512 736 499 510 (255 290) (247 699) (255 559)
Grand Food
Meat Plant 1 036 (3 907) (3 490) 93 623 58 974 57 953 (60 711) (38 301) (32 318)
Gaming
and leisure 73 557 56 054 109 360 1 012 045 981 758 1 002 644 (232 360) (251 828) -
SunWest 42 757 34 513 70 188 634 484 620 437 625 882 (232 360) (251 828) -
Sun Slots 30 153 19 897 36 621 348 357 331 481 348 205 - -
Worcester
Casino 647 1 644 2 551 29 204 29 840 28 557 - -
Group costs (26 087) (13 984) (43 520) 384 213 569 565 441 680 (86 368) (133 973) (260 824)
GPI
Properties (1 467) 9 899 10 774 183 735 203 580 187 628 (69 839) (77 837) (73 208)
Central
costs (24 620) (23 883) (54 294) 200 478 365 985 254 052 (16 529) (56 136) (187 616)
Non-core - - (9 500) - - - - - -
GTM - - (9 500) - - - - - -
Continuing 34 447 28 657 10 860 2 581 040 2 733 840 2 710 838 (726 231) (775 606) (805 607)
Dunkin'
Donuts (49 324) (10 820) (36 244) 19 657 67 844 53 109 (10 176) (10 346) (7 957)
Baskin
Robins (21 505) (6 597) (24 483) 8 525 28 473 19 804 (8 835) (2 291) (3 889)
Dis-
continued (70 829) (17 417) (60 727) 28 182 96 317 72 913 (19 011) (12 637) (11 846)
COMPANY INFORMATION
DIRECTORS
H Adams (Executive Chairman)
M Tajbhai (Chief Executive Officer)
appointed 1 November 2018
C Priem (Group Financial Director)
appointed 1 July 2018
A Abercrombie, W Geach, M Bowman,
NV Maharaj, R van Dijk
NATURE OF BUSINESS
Investment Holding Company
COMPANY SECRETARY
Statucor (Pty) Ltd
6th Floor, 119 - 123 Hertzog Boulevard,
Foreshore, Cape Town, 8001
PUBLIC OFFICER
C Priem
TRANSFER SECRETARIES
Compushare Investor Services (Pty) Ltd
PO Box 61051, Marshalltown, 2107
AUDITORS
Ernst & Young Inc.
PO Box 656, Cape Town, 8000
ATTORNEYS
Cliffe Dekker Hofmeyr, PO Box 695,
Cape Town, 8000
BANKERS
The Standard Bank of South Africa Limited
SPONSORS
PSG Capital (Pty) Ltd
PO Box 7403, Stellenbosch, 7600
REGISTERED OFFICE
10th Floor, 33 on Heerengraght,
Heerengraght Street, Cape Town, 8001
REGISTRATION NUMBER
1997/003548/06
DOMICILE AND COUNTRY
OF INCORPORATION
South Africa
LISTING
JSE Limited
Sector: Financial Services
Grand Parade Investments Limited:
("GPI" or "the company" or "the group")
Registration number: 1997/003548/06
ISIN: ZAE000119814
Share code: GPL
PREPARER OF THE FINANCIAL STATEMENTS
The unaudited interim financial statements were prepared under supervision of Grand
Parade Investments (GPI) Group Financial Director, C Priem.
Date: 18/03/2019 07:05:00 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 
