Gourmet Burger Kitchen write-down pushes Famous Brands into the red
The company has also chosen to ‘cease operations’ at Coega Concentrate, a tomato sauce factory it bought in 2016
As Famous Brand warned, a R874m write-down of its UK chain Gourmet Burger Kitchen knocked the restaurant franchiser into an interim loss of R544m for the six months to end-August from a R192m net profit in the matching period.
Famous Brands said in Monday’s interim results statement it had “elected to cease operations until further notice” of another acquisition it made during its 2016 buying spree, Coega Concentrate. The tomato sauce factory contributed a R17.8m operating loss.
“Management is pleased to advise shareholders that subsequent to the review period, a prospective buyer for the business has been identified and negotiations regarding the sale are in progress,” the company said in Monday’s interim results statement.
“The past growing season proved to be an extremely challenging one, with drought playing a significant role in the outcome. Despite the best efforts by the plant’s management team and growers, production was substantially off the targeted volumes for viable operation of the plant,” Famous Brands said.
Regarding placing Gourmet Burger Kitchen under the UK’s “company voluntary arrangement” laws, Famous Brands said this requires 75% support from unsecured creditors, and it will update shareholders as this process evolves.
The restaurant franchiser grew its overall interim revenue by 5.4% to R3.6bn.
Revenue from its South African operations grew 7.2% to R2.7bn and operating profit by 10.4% to R434m.
“While the influx of new international operators has slowed, the competitive landscape remained intense,” the group said regarding SA.
“Despite this context, segments of the South African consumer base showed early indications of optimism and improved confidence in the wake of recent positive developments in government leadership.”
In the UK, Gourmet Burger Kitchen's 6.8% drop in revenue and £2.6m operating loss was partly offset by good performance from Wimpy.
“The business reported a 13.6% increase in sterling revenue for the review period, while revenue in rand terms improved 18.2% to R57.4m, primarily as a function of foreign currency translation,” the company said.