GRAND PARADE INVESTMENTS LIMITED REPORTS A 36% INCREASE IN REVENUES AT THE HALF YEAR

Highlights:

  • Increase in Group revenue of 36%
  • Increase in Group Gaming Revenue of 19.2%
  • Increase in HEPS of 2%
  • Ordinary dividend of 15 cents per share
  • Continued success and expansion of Burger King Franchise for South Africa
  • Acquired 100% of issued share capital and loan accounts in HotSlots in Gauteng
  • Concluded the acquisition of 100% of Akhona GPI

(Cape Town, 25 February 2014)

Grand Parade Investments Limited (“GPI”), a major player in the South African tourism, leisure and gaming industry, has reported a 36% increase in revenues to R328.19 million for the year ended 31 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® South Africa (Pty) Ltd (“BKSA”), which is consistent with the growth phase of a business

“GPI continues to show good growth and favourable returns,” says Alan Keet, CEO of GPI. The first half of the year saw the continued success and 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 LPM and concluded the acquisition of 100% of Akhona GPI.

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

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, (EBITDA) 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 R408 million. 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 R248.7 million.

“As our anchor investment, we are very pleased with the results for the period,” says Keet.
The Table Bay Hotel incurred a R14.3 million loss after tax for the period, 46.8% lower than the loss reflected in the prior period.

GPI owns and operates five Limited Payout Machine (LPM) gaming licences since the acquisition of Hot Slots. Together with their 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 R230.3 million in December 2012 to R R274.5 million for the six month period ended 31 December 2013. The number of active LMP’s also increased by 11.9% from 2267 in the previous period to 2539 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 160.4 million.

In KwaZulu-Natal, Kingdomslots remained the provincial leader, generating R84.8 million over the period – a 19% increase from R71.3 million in 2012.

In Gauteng, after experiencing hampered and slow LPM rollout in the previous period, Grand Gaming Slots enjoyed good growth and increased machine numbers from 233 to 330 at the end of the period under review. Revenue also increased by 30% from R19.1 million in 2012 to 24.8 million at end December 2013.

A key highlight for the period was the acquisition of 100% of the issued share capital and loan accounts of Hot Slots, licensed as a route operator in Gauteng to operate 1000 LPM’s.

“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,” says Keet.

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 1 February 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.

GPI executive Chairman, Hassen Adams says: “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. 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.”