Not quite up to gold standard
After a string of ill-fated moves since listing, Gold Brands is set to approach shareholders for funds
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