GPI Performance Improves Despite COVID-19 Restrictions

GPI Performance Improves Despite COVID-19 Restrictions

Revenue from continuing operations increased by 27% to R1.67-billion · Operating profit from continuing operations increased by 38% to R57.6-million · Headline loss per share decreased from 8.2c to 6.3c · Debt to equity ratio improved from 15.3% to 13.8%

GRADE PARADE Investments (GPI), one of South Africa’s longest-standing empowered investment companies, released its results for the year to end June 2021. GPI reported a significant improvement in its financial performance and a reduction in debt, despite the challenging trading conditions resulting from COVID-19 and the associated restrictions on restaurant, casino and hotel operations.

GPI posted revenue from continuing operations of R1.67-billion, an increase of 27% from the prior year, and operating profit from continuing operations of R57.6-million, an increase of 38% from the prior year. Headline loss per share decreased from 8.2c to 6.3c. This improved financial performance was driven by an increase in the earnings contribution from the Gaming businesses, particularly Sun Slots, and a significant reduction in losses from the Food businesses.

In addition to the improved financial performance, GPI reduced its debt balance from R258-million to R232-million. This led to a reduction in finance costs and an improvement in the debt t equity ratio from 15.3% to 13.8%.

Mohsin Tajbhai, CEO of GPI, said: “Despite trading under strict trading conditions including capacity restrictions, a ban on the sale of alcohol and early curfews, GPI’s Gaming businesses have proved resilient, especially the fast-growing Sun Slots.

“Furthermore, the work done by management over the last three years in exiting unprofitable businesses, reducing debt, improving the profitability of operational businesses, and reducing head office costs has positioned the Group to deliver on its objective of unlocking value for shareholders. The imminent sale of Burger King South Africa and Grand Foods Meat plant will unlock more than R1.15 per share in value.”

In June 2021, the competition authorities prohibited the sale of Burger King South Africa due to public interest concerns. However, the parties subsequently filed a request for reconsideration, resulting in the Competition Tribunal approving the transaction with conditions.

Following the sale of BKSA, the way forward for GPI centers on three major themes: 1. To maximise the value of the business through the sale of non- core assets. 2. To further reduce head office costs and reduce dividend leakage. 3. To return capital to shareholders by resuming dividend payments.