Not quite up to gold stan­dard

Af­ter a string of ill-fated moves since list­ing, Gold Brands is set to ap­proach share­hold­ers for funds

Financial Mail - - MONEY&INVESTING - Colleen Goko gokoc@bdlive.co.za

Gold Brands In­vest­ments will ap­proach share­hold­ers for funds of any­where be­tween R15m and R50m fol­low­ing a dis­as­trous fi­nan­cial year dur­ing which the com­pany re­ported a net loss of R48m.

The fast-food fran­chiser, which has been listed on the JSE’S Altx for a lit­tle less than 18 months, is in an un­favourable po­si­tion, with cur­rent li­a­bil­i­ties ex­ceed­ing cur­rent as­sets by al­most R18m.

On list­ing in Fe­bru­ary 2016, Gold Brands, un­der the lead­er­ship of Praxia Nathanael, was op­ti­mistic about its prospects for ex­pand­ing the com­pany’s lo­cal and global foot­print.

At the time, the group had about 300 Ch­e­sanyama stores and a few stores un­der the Black Steer, Wild Wings and 1+1 Pizza brands.

Since list­ing, the group has been in­volved in a num­ber of seem­ingly ill-fated moves. First was a me­moran­dum of un­der­stand­ing with US play­ers Red Horn­bill and White Fam­ily Part­ner­ship to take the Ch­e­sanyama brand off­shore.

Then, Gold Brands said it would bring UK fish and chips brand Harry Rams­den to SA.

In June 2016, it an­nounced it had ac­quired Mama Chakas — but that trans­ac­tion was ter­mi­nated by Oc­to­ber.

In Fe­bru­ary this year Gold Brands said it had se­cured a fran­chis­ing deal with Uk-based Ca­sual Din­ing Group (CDG). CDG’S brands in­clude Café Rouge, Bella Italia and Las Igua­nas.

A month later, share­hold­ers were no­ti­fied that a 50% stake in Hot Hot Burger had been added to the menu.

In its lat­est re­sults, the group says it shut 155 un­der­per­form­ing fran­chise stores. Turnover fell to R143m from R235m. Nes­tled in the in­for­ma­tion is also the dec­la­ra­tion that the Hot Hot Burger deal has gone frosty.

“The due dili­gence com­pleted in June 2017 was in­con­clu­sive and the trans­ac­tion has been can­celled,” the com­pany says in its re­sults.

In an in­ter­view with the Fi­nan­cial

Mail, group COO Ste­lio Nathanael

In a note, Clark says the fast-food seg­ment is highly com­pet­i­tive. He says the three big listed play­ers — Fa­mous Brands, Spur Corp and Taste Hold­ings — have all re­cently said the lowend seg­ment of fast food has been strug­gling, and in many cases wors­en­ing, as the dire eco­nomic con­di­tions be­set­ting SA fur­ther con­strict con­sumer spend­ing.

“Now, in the height of this mael­strom, we are ex­pected to back a small fast-food en­trant whose man­age­ment has a ‘colour­ful’ track record . . . ” Clark told the Fi­nan­cial Mail.

When asked about the share move­ments, Gold Brands in an e-mail said: “The com­pany is un­aware of why the shares traded as you say they did.

“The only ex­pla­na­tion we would have is that the shares are very thinly traded and the dif­fer­ence be­tween the bid and of­fer prices is quite

An­thony Clark: The fast-food seg­ment is highly com­pet­i­tive

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