Grand Parade Investments Limited · JSE:GPL
Grand Parade Investments — H1 FY2016 Earnings Presentation
43 slides from Grand Parade Investments's earnings presentation, March 2016
Slide 1: Grand Parade Investments Unaudited Interim Results
GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 THE JOURNEY CONTINUES
Slide 2: Business Overview
BUSINESS OVERVIEW GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Slide 3: Strategy
STRATEGY Established Current portfolio of Continues to be a Empowerment company assets stands testament dividend-active to objective of being an company, notwithstanding Food, Gaming and active investor and its aggressive and Leisure investment operator of premium determined pursuit of holdings comp
Slide 4: Our Journey
OUR JOURNEY 1997 2001 2002 2004 2007 Incorporated Acquired an Increase Acquired Increase to conduct initial 8,53% holding in 25.1% of holding in business as stake in SunWest to GrandSlots as SunWest to an SunWest 19.12% the 26.41% investment International, empowerment holding which was partner to co
Slide 5: A GPI Slots Case Study
A GPI SLOTS CASE STUDY Until 2010, GPI was a passive partner. Seeing its potential, the Group took control in 2011 and started active management. GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 5
Slide 6: GPI Slots: A Case Study
GPI SLOTS: A CASE STUDY PHASE 1: REVIEW PHASE 2: ACTIVE PHASE 3: MATURITY AND MANAGEMENT NEXT STEPS Fledgling business limited by a Introduced financial discipline, formal business Search for strategic partner highly regulated industry practices and reporting Capex intensive Extract value at appropr
Slide 7: Our Journey
OUR JOURNEY 2013 2014 2015 2016 Acquired the South Acquired a second Acquired 10% Acquired the South African Master LPM licence in holding in Spur as African Master Franchise licence Gauteng (Hot BEE shareholder Franchise for BURGER KING Slots) licences for Acquired a second Dunkin’ Donuts Acquired
Slide 8: Investment Holdings
INVESTMENT HOLDINGS INVESTMENT EFFECTIVE HOLDING FOOD Burger King 91.1% Grand Foods Meat Plant 96.9% Spur Corporation 10.0% Mac Brothers Catering Equipment 100.0% GAMING AND LEISURE SunWest 25.1% Worcester Casino 25.1% GPI Slots 74.9% Grand Sport 100.0% OTHER Grand Tellumat Manufacturing 51.0% Atlas
Slide 9: Investments
INVESTMENTS FOOD GAMING AND OTHER LEISURE GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 9
Slide 10: Executive Directors
EXECUTIVE DIRECTORS Experienced team with proven deal-making ability and a track record of unlocking value Qualified engineer A chartered Qualified chartered Hassen has been accountant by accountant and instrumental in a profession, Alan joined member of the number of successful the Group in 2012 as
Slide 11: Group Financial Overview
GROUP FINANCIAL OVERVIEW GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
Slide 12: Salient Features
SALIENT FEATURES INTRINSIC NAV 615 cents per share COMPARABLE HEADLINE EPS 2.05 cents 122% increase BASIC EPS FROM CONTINUING OPERATIONS 5.67 cents DEBT EQUITY 157% increase RATIO 36.7% 5% reduction * Comparable headline EPS contains an adjustment to the prior period’s reported headline EPS so as to
Slide 13: Headline Earnings by Investments
HEADLINE EARNINGS BY INVESTMENTS 6 MONTHS 6 MONTHS UNAUDITED AND UNAUDITED RESTATED 31 Dec 2015 31 Dec 2014 Variance Variance R000’s R000’s R000’s % FOOD (7 463) (45 048) 37 585 83% BURGER KING (9 180) (38 473) 29 293 76% Spur Corporation (2 353) (3 177) 824 26% GF Meat Plant (122) - (122) - Mac Bro
Slide 14: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME 6 MONTHS UNAUDITED REVENUE – R’m 6 MONTHS AND UNAUDITED RESTATED 400,0 363,2 31 Dec 2015 VAR 31 Dec 2014 R000’s % R000’s 350,0 300,0 Revenue 363 156 53% 237 248 237,2 250,0 200,0 150,0 Loss from operations (24 186) 74% (92 214) 100,0 43,1 5
Slide 15: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME 6 MONTHS UNAUDITED LOSS FROM OPERATIONS – R’m 6 MONTHS AND UNAUDITED RESTATED 31-Dec-13 31-Dec-14 31-Dec-15 31 Dec 2015 VAR 31 Dec 2014 - R000’s % R’000s -10,0 -20,0 Revenue 363 156 53% 237 248 -30,0 -24,2 -40,0 -50,0 -42,5 Loss from operat
Slide 16: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME 6 MONTHS EQUITY-ACCOUNTED EARNINGS – R’m UNAUDITED 6 MONTHS AND UNAUDITED RESTATED 70,0 68,7 31 Dec 2015 VAR 31 Dec 2014 68,0 R000’s % R000’s 66,0 Revenue 363 156 53% 237 248 64,0 62,0 61,2 60,0 58,9 58,0 Loss from operations (24 186) 74% (
Slide 17: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME RE-MEASUREMENT OF INVESTMENT 6 MONTHS UNAUDITED 6 MONTHS AND UNAUDITED RESTATED 31 Dec 2015 VAR 31 Dec 2014 • IFRS 5 adjustment as a result of R000’s % R000’s acquiring control of GF Meat Plant Revenue 363 156 53% 237 248 • Fair value adjus
Slide 18: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME 6 MONTHS PROFIT/ (LOSS) FROM CONTINUING 6 MONTHS UNAUDITED OPERATIONS – R’m UNAUDITED AND 31 Dec RESTATED 2015 140,0 VAR 31 Dec 2014 117,3 R000’s % R000’s 120,0 100,0 Revenue 363 156 53% 237 248 80,0 60,0 40,0 24,0 20,0 Loss from operations
Slide 19: Extracts: Condensed Group Statement of Comprehensive Income
EXTRACTS: CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME BASIC EARNINGS PER SHARE – cents COMMENTS 160,00 DISCONTINUED OPERATIONS 140,00 • 31 December 2014, comparative basic earnings 120,00 contain a R611.4 million gain on the loss of control of GPI Slots as a result of the first tranche disposa
Slide 20: Group Debt Facilities
GROUP DEBT FACILITIES UNAUDITED AUDITED UNAUDITED AUDITED 31 Dec 2015 30 Jun 2015 31 Dec 2014 30 Jun 2014 R000’s R000’s R000’s R000’s HOLDING COMPANY FACILITIES 662 603 662 211 732 086 157 691 SunWest Preference shares 132 892 132 880 132 758 132 691 SunWest Credit facilities 300 000 302 000 377 000
Slide 21: Group Debt Facilities
GROUP DEBT FACILITIES Look to move Will use proceeds Upper limit toward the lower Target Debt- from Slots breached due to end of the range Equity Range disposal to reduce delayed proceed into the future to between 20% and debt equity to from Slots eliminate risk of 35% within target disposal rising
Slide 22: Unaudited Intrinsic NAV at 31 Dec '15
UNAUDITED INTRINSIC NAV AT 31 DEC ‘15 Valuation Methodology 100% Equity GPI GPI Equity Related Intrinsic NAV % of Value Holding Value Holding Co Portfolio Borrowings R000’s % R000’s R’000s R000’s % FOOD INVESTMENTS 1 158 804 (314 628) 844 176 29% Burger King DCF 719 775 91.10% 655 715 (31 639) 624 0
Slide 23: Review of Investment Operations
REVIEW OF INVESTMENT OPERATIONS GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTH ENDED 31 DECEMBER 2015
Slide 24: Food
FOOD GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 24
Slide 25: Achievements
ACHIEVEMENTS BURGER KING near profitability Acquisition of Dunkin’ Donuts and Baskin-Robbins Acquisition of meat production facility (GF Meat Plant) Establishment of a shared services company (GF Management Services) GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS END
Slide 26: Strategy: Creating an Alternative in the Listed Food Industry
STRATEGY CREATING AN ALTERNATIVE IN THE LISTED FOOD INDUSTRY WHY? HOW? Growth in emerging middle class An integrated food services company Trend towards convenience Acquire world-class QSR Brands Urbanisation and Africa opportunity Create cost efficiencies through supply chain Time pressures Focused
Slide 27: Operational Review
OPERATIONAL REVIEW INTEGRATED FOOD BURGER KING® MAC BROTHERS NEW BRANDS BUSINESS PROFITABILITY MAC BROTHERS PROFITABILITY BURGER KING® • 61 restaurants • Launch Dunkin • Gross Margin Dunkin’ Donuts Burger King • 61 - 55 Corporate Outlets (31/12/15) Donuts FY16 improvement • Launch Dunkin Donut
Slide 28: Journey to Profitability & Beyond
JOURNEY TO PROFITABILITY & BEYOND 28
Slide 29: Review
REVIEW Lessons learnt Review of restaurants: Save costs/CAPEX, Internal historic allocate capital to targets unrealistic better stores/sites Key areas identified with legacy issues • Site selection Build on successes: • Store CAPEX Focus on Local offerings • Marketing focus profitability and • Store
Slide 30: Dunkin' Donuts roll-out plans
Dunkin’ Donuts has over 11 500 locations globally, selling around 1.7 billion cups of coffee per year. GPI plans to roll out 250 Dunkin’ Donuts restaurants. 30
Slide 31: Dunkin' Donuts Salient Terms
DUNKIN’ DONUTS SALIENT TERMS ELEMENT TERMS Exclusive Master Franchise Term 10 Years + a non-binding option to extend for a further 10 years Territory South Africa ROFR Territories Namibia; Botswana; Zambia; Mauritius Market Entry Fee USD 500 000-00 (ZAR 7 515 000-00 @ R15.03) Royalties – Corporate C
Slide 32: Baskin-Robbins roll-out plans
Baskin-Robbins has over 70 years of experience and more than 7 600 locations globally. GPI intends to roll out 70 shops in the following years. Grand Foods will target retail channels to generate two revenue streams and allow the brand to appeal to consumers at various access points. 32
Slide 33: Baskin-Robbins Salient Terms
BASKIN-ROBBINS SALIENT TERMS ELEMENT TERMS Exclusive Master Franchise Term 10 years + a non-binding option to extend for a further 10 years Territory South Africa ROFR Territories Namibia; Botswana; Zambia; Mauritius Market Entry Fee USD 250 000-00 (ZAR 3 757 500-00 @ R15.03) Royalties – Corporate C
Slide 34: Outlook
OUTLOOK Food • Value inflation Unutilised offering and • Local New production improved • Proactively production • Pricing model entrants capacity marketing participate, (export and focus and supplier • Ability to relationships engage and • Highlight import Consumer influence differentiators replacem
Slide 35: Gaming
GAMING GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 35
Slide 36: Overview
OVERVIEW GAMING PORTFOLIO STRATEGY RECENT DEVELOPMENTS • Partner with world-class operators • Disposal of SunWest cancelled • Minority holdings • Continue to explore options to resolve • Not actively involved in operations GrandWest’s expired exclusivity in Cape • Mature stage, high-yielding busines
Slide 37: Other Investments
OTHER INVESTMENTS GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 37
Slide 38: Strategy
STRATEGY Focus on core Exit non-core Manage head industries and investments office costs realise values GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2015 38
Slide 39: Next Steps
NEXT STEPS GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTH ENDED 31 DECEMBER 2015
Slide 40: Group Outlook
GROUP OUTLOOK Focus on FOOD Exit non-core assets Disciplined head office costs Manage debt equity within target range Continue to review opportunities Exit of gaming investments will be considered for adequate returns GRAND PARADE INVESTMENTS LIMITED - UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS EN
Slide 41: Q&A
Q&A GRAND PARADE INVESTMENTS LIMITED UNAUDITED INTERIM RESULTS FOR THE SIX MONTH ENDED 31 DECEMBER 2015
Slide 42: Disclaimer
DISCLAIMER This presentation includes forecasts, projections and other predictive statements that represent assumptions and expectations in light of currently available information. These forecasts are based on industry trends, circumstances involving clients and other factors, and they involve risk
Slide 43: Thank You!
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