Grand Parade Investments : Group Condensed Consolidated Results

CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

AT 30 JUNE 2022

CONTENTS

2

3

8

Commentary

Group Financial Review

Independent Auditor's Review Report

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10	Condensed Consolidated Statement of Profit or Loss
and Other Comprehensive Income
11	Condensed Consolidated Statement of Financial Position
12	Condensed Consolidated Statement of Changes In Equity
13	Condensed Consolidated Statement of Cash Flows
14	Notes to the Condensed Consolidated Financial Statements
28	Company Information

GPI LIMITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2022  1

COMMENTARY

FOR THE YEAR ENDED 30 JUNE 2022

NATURE OF THE BUSINESS

The Company is an investment holding company and derives income mainly from dividends and interest.

The condensed consolidated financial statements of the Group incorporates the equity accounted profit or loss of associated companies and joint ventures.

Group earnings				30 June
		30 June	2021
Year ended		Note	2022	Restated*
Headline earnings/(loss)	(R'000)	4	(13 749)	(27 028)
- Continuing	(R'000)		1 647	12 777
- Discontinued	(R'000)		(15 396)	(39 805)
Adjusted Headline earnings/(loss)**	(R'000)		47 928	(27 028)
Adjusted Headline earnings/(loss) per share**	(cents)		11.14	(6.29)
Headline and diluted headline earnings/(loss) per share	(cents)	4	(3.20)	(6.29)
- Continuing	(cents)		0.38	2.97
- Discontinued	(cents)		(3.58)	(9.26)
Basic loss - net profit/(loss) for the year (R'000s)		4	(11 736)	(28 993)
- Continuing	(R'000)		(25 350)	13 762
- Discontinued	(R'000)		13 614	(42 755)
Basic and diluted earnings/(loss) per share (cents)		4	(2.73)	(6.75)
- Continuing	(cents)		(5.89)	3.20
- Discontinued	(cents)		3.16	(9.95)
Dividends net of treasury shares	(R'000)		531 946	-
Special dividend per share	(cents)		125	-

• Restated for discontinued operations.
• Adjusted to exclude Expected Credit Loss and the write-off of receivables related to Mac Brothers.

Grand Parade Investments (GPI) performed well over the financial year with headline loss for the year improving by R13.3 million (49%) from a loss of R27.0 million to a loss of R13.7 million. The loss in the current year includes an impairment against the inter company loan with Mac Brothers (expected credit loss) and a write-off of receivables, which was realised when control of the subsidiary was lost, as a result of the liquidation of the company. The total adjustments amount to R61.7 million and if this amount is excluded from the headline loss, it would result in an adjusted headline earnings of R47.9 million, a R74.9 million improvement from a R27.0 million loss posted in the prior year.

The positive performance of the Group was underpinned by the turnaround of the gaming assets which had been impacted by COVID-19 and the related lock down restrictions in the prior year. On the 1st of October 2021, South Africa moved to alert level 1 which allowed businesses to trade with no curfew. Capacity restrictions remained in place for the most part of the year which together with rising inflation and sustained power outages prevented a full recovery of the gaming businesses. Despite this the gaming assets contributed R107.9 million to headline earnings over the year, an increase of R34.9 million (48%), compared to the prior year.

During the year, GPI made good progress on the implementation of its strategy to unlock value, which was showcased by the completion of the Burger King South Africa (BKSA) sale and the unbundling of the Group's interest in Spur Corporation (Spur). Together these initiatives allowed the Group to return R1.25 per share to shareholders and reduce debt by 41% or R95.9 million. Mac Brothers continued to perform poorly, resulting in the decision to place the business under voluntary liquidation on the 4th of April 2022.

Management's continued efforts to reduce costs also contributed to the improvement in the Group's performance. Central costs decreased by a further 12% over the year. Corporate costs excluding transaction and finance related costs decreased by 18% over the year, while finance costs decreased by 56% due to the decrease in overall debt.

The improvement in adjusted headline earnings from continuing operations was offset by losses from discontinued operations which relate to the Mac Brothers business. Mac Brothers posted a loss of R31.4 million for the period up to liquidation which includes a loss of R21.6 million related to the impairment on inventory (sold during the liquidation proceedings) and other liquidation costs. These losses are not expected in the next financial year as the business is being liquidated.

2 GPI LIMITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2022

GROUP FINANCIAL REVIEW

The Group uses headline earnings to assess the underlying investment contributions to the Group's earnings. The reason for using headline earnings is that it eliminates the once-off effects of the Group's investment activities and therefore provides a comparable view of the Group's continuing earnings. In the current financial year, included in headline earnings is the impairment of the intercompany loan with Mac Brothers (expected credit loss) and write- off of receivables which are once off non-reoccurring events and thus the Group reported an Adjusted Headline Earnings which excluded these losses and write-offs. In the current financial year the Group disposed of BKSA and in the process of liquidating Mac Brothers. Both these businesses have been classified as discontinued operations.

GPI reported an improvement in its adjusted headline earnings (excludes impairment of loan and write-off of receivables) from a loss of R27.0 million to a profit of R47.9 million.

The major contributors to adjusted headline earnings are:

• BKSA's headline earnings contribution improved by R25.8 million during the year from a loss of R13.7 million in the prior year to a profit of R12.1 million during the four months of trading before ownership transferred to Emerging
  Capital Partners (ECP).
• The gaming assets' headline earnings contribution increased by R34.9 million from R73.0 million in the prior year to R107.9 million in the current year. The increase in earnings is largely due to the recovery of Sun Slots and SunWest in the current year due to the easing of the COVID-19 related restrictions and the improvement in trading conditions during the year.
• Spur resumed dividends during the year which accounted for a positive contribution to headline earnings of
  R9.3 million from a loss in the prior year.
• Grand Foods Meat Plant (GFMP) reduced its headline loss contribution by R6.8 million and contributed positively for the four months of trading.
• Central costs decreased by R6.6 million in the current year largely as a result of reduced finance costs, which reduced by R5.9 million and a reduction in Corporate costs which decreased by R5.8 million due to aggressive cost saving initiatives implemented during the year.
• The improvements in earnings listed above were offset by Mac Brothers' loss contribution for the year which deteriorated by R8.4 million from R23.0 million in the prior year to a loss of R31.4 million in the current period. This loss includes an impairment of inventory amounting to R21.6 million realised after the assets were auctioned off by the liquidator.

GPI LIMITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 2022  3