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Burger King impacts GPI results

Feb 25 2014 13:18

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Company Data

GRAND PARADE INVESTMENTS LIMITED [JSE:GPL]

Last traded 3
Change 0
% Change 0
Cumulative volume 50
Market cap 0

Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Cape Town - Grand Parade Investments [JSE:GPL], a player in the South African tourism, leisure and gaming industry, has reported a 36% increase in revenues to R328.19m for the year ended December 2013.

Headline earnings per share (Heps) for the six month period ended December 2013 increased by 2%, while adjusted Heps decreased by 5.8%.

The main reason for the decrease, when compared to the prior period, is the additional establishment costs incurred in Burger King, which is consistent with the growth phase of a business.

“GPI continues to show good growth and favourable returns,” said Alan Keet, CEO of Grand Parade Investments (GPI).

The first half of the year saw the roll out of new stores of the Burger King franchise for South Africa.

The group also concluded the acquisition of two route operator licences (in Mpumalanga and Gauteng respectively), rolled out the first locally assembled limited payout machine (LPM) and concluded the acquisition of 100% of Akhona GPI.

The board declared a final dividend of 15 cents per share. No special dividend was declared in respect of the 2013 financial year.

Casino investments

While the South African economy takes time to emerge from the tough trading environment of the last few years, GPI’s casino investments continued to perform well with continued growth in revenues and net profit after tax.

In the casino investment division of the business, GrandWest’s revenue increased by 7.6% when compared to the previous period and its Ebitda increased by 4.8% to R408m.

Although the absolute Ebitda value increased, the Ebitda percentage decreased by 0.9% to 40.8%.

This was exclusively due to an increase of 2% in the gaming taxes. These increases translated to a 4.9% increase in profit after tax to R248.7m.

“As our anchor investment, we are very pleased with the results for the period,” said Keet.

The Table Bay Hotel incurred a R14.3m loss after tax for the period, 46.8% lower than the loss reflected in the prior period.

GPI owns and operates five LPM gaming licences since the acquisition of Hot Slots.

Together with its other four licences - Grandslots in the Western Cape, Kingdomslots in KwaZulu-Natal, Grand Gaming in Mpumalanga and Grand Gaming Gauteng - the group’s gaming revenue increased by 19.2% from R230.3m in December 2012 to R R274.5m for the six month period ended December 2013.

The number of active LMPs also increased by 11.9% from 2 267 in the previous period to 2 539 in the period under review.

As in previous periods, Grandslots in the Western Cape remained the best performing LPM business in the country with an increase in gaming revenue of 14.7% to R 160.4m.

“A key focus for the remainder of the year is on growing revenue and profitability of our Slots businesses – primarily through continued good site selection and management, maintaining a good product mix and cost saving measures,” said Keet.

Burger King

In the Food group, activity was again dominated by the Burger King Franchise.

In the period under review, Burger King South Africa had five stores in the Western Cape. Trade remains brisk and turnover is exceeding budget by 65%.

Construction of five new stores in Gauteng commenced in December, three of which opened their doors on February 1 2014, and the remainder opening by March.

The development pipeline remains strong, with plans to expand the Sasol franchise, open several drive-through stores and a new store in Kwazulu-Natal in the coming year.

Although margins remain under pressure, the group is on track to localise the supply of as many products as possible by the financial year end which will reverse the situation.

“Through these financial results, GPI has demonstrated our ability to operate certain assets, exert significant influence on others and to venture successfully into completely new territory," said GPI executive chair Hassen Adams.

"We will continue to look for new opportunities to deliver growth and shareholder value and we have quite a few new developments which will take us on this path.”

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