Grand Parade Investments’ value unlock strategy pays dividends
Grand Parade Investments (GPI), which has mainly gambling interests in the Western Cape, lifted headline earnings a share to 9.9 cents in the six months to December 31, from 4.8 cents in the prior period, as the recovery in the hospitality sector gained momentum.
In GPI’s investment portfolio sits SunWest, which owns 100% of GrandWest Casino and Entertainment World, Sun Slots and Worcester Casino.
The company declared an interim dividend of 12 cents per share on September 30, 2022. In the prior period an 88 cents a share special dividend was declared.
Revenue from continuing operations fell by R4.6 million to R3.8m. Group central costs fell 10% to R13.2m excluding legal and transaction fees. Taxed profit increased to R42.7m from R17.5m.
Directors said GPI had performed well, driven mainly by improvement of the hospitality sector and the associated performance of the group’s gaming investments, and lower corporate head office costs.
In 2019, GPI went on a strategy to unlock value, which included exiting non-performing investments, and reducing head office costs and debt.
“These initiatives put the group in a strong financial position with relatively low debt and positive cash balances,” directors said.
During the interim period debt was reduced by a further R38.5m, from R135.9m to R97.4m.
Cash and its equivalents as at the end of December amounted to R124.8m, putting the group in a positive net cash position.
The group’ directors said the previous 30% discount to net asset value that its share used to trade at had improved through the value unlock strategy, and now traded at a 27% premium to net asset value.
“The group has successfully reduced debt, exited most of its non-performing and non-core assets and has effectively reverted back to its gaming roots. The group has also resumed dividend payments to shareholders after a prolonged period of not paying dividends,” it said in the results statement.
“GPI shareholders have also received a mandatory offer from GMB to purchase all the issued shares of GPI. The offer by GMB of R3.33 per share is a 27% premium to net asset value and has been determined to be fair and reasonable by both the appointed independent expert and the independent board,” the group said.
The share price ended static at R3.33 on the JSE on Friday.
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