GRAND PARADE Investments’ (GPI) share price took an almost 6 percent nosedive yesterday after it posted a decline in its revenue driven by the slow recovery of the construction and manufacturing sectors.
The share hit a low of R254.00 after the company released its interim results for the six months ended December 31, 2021.
According to the company, revenue from continuing operations decreased by R9.6 million to R49.4m from R58.9m in the prior corresponding period.
GPI reported that headline earnings per share increased to 4.77 cents per share, from a loss of 0.99 cents per share in the prior corresponding period.
Headline earnings per share from continuing operations increased to 3.84 cents per share, from 0.61 cents per share in the prior corresponding period.
The company also declared a special dividend of 0.88 cents per share. “No dividends were declared in the prior corresponding period,” it said.
The company said the primary drivers of its financial performance were Mac Brothers and GPI’s investments in Spur, SunWest, Sun Slots, and Worcester Casino. It said Burger King South Africa and Grand Foods Meat Plant were regarded as discontinued operations in the current period.
The group finalised the sale of its struggling Burger King SA and Grand Foods Meat Plant in November.
“The primary driver of the decline in revenue during the period was Mac Brothers, which has been negatively affected by the slow recovery of the construction and manufacturing sectors. Over the last six months the business has struggled to grow its top line with revenue for the period down 25 percent on the prior interim period,” it said.
The company said management was taking urgent steps to stop the losses in Mac Brothers.
“Mac Brothers’ revenue of R43.5 million for the 6-month period was 25 percent lower than the R58.3 million reported for the same period last year. All revenue channels were down on the prior period in particular local catering equipment sales,” it said.
Tougher local trading conditions, further exacerbated by Covid-19 trade restrictions, affected the business’s core market during the period.
Mac Brothers reported negative earnings before interest, taxes, depreciation, and amortisation of R7.08m for the period.
The company said the most significant development during the period was the completion of the sale of Burger King South Africa and Grand Foods Meat Plant on November 3, 2021.
“The proceeds from this sale enabled GPI to reduce debt by R102 million during the period and declared a dividend of 88c per share, the largest in GPI’s history. This has left GPI in a strong financial position with gross debt of R140 million and net debt of R32 million as of 31 December 2021,” it said.
GPI said the primary drivers of the improved profitability during the period were the recoveries in Spur, SunWest, Sun Slots, and Worcester Casino, including the resumption of dividends by these entities.
“The earnings contribution of GPI’s Gaming assets improved by 51 percent, with a particularly strong performance in Sun Slots,” it said.
According to the group, SunWest struggled under lockdown regulations with Covid-19 related restrictions continuing to impact revenue generation.
“Although SunWest has shown recovery over the period the business still trades below pre Covid-19 levels. Revenue is 48 percent less than reported for the period ended December 31, 2019,” GPI said.
BUSINESS REPORT ONLINE