If you have a taste for risk
TASTE TEST: Which fast-food operator is a buy?
The choice is between Famous Brands, Spur and Taste. The problem is none of them is doing particularly well
Famous Brands took a huge leap of faith when it closed a £120m deal that brought UK premium burger group Gourmet Burger Kitchen (GBK) into its fold in October. The tie-up was greeted without much enthusiasm by the market, which has trimmed 13% off the group’s share price since its announcement. Now, Famous Brands, which has big ambitions with GBK, is trumpeting that it has all but transformed its business, which for almost two decades has been built on power brands such as Steers, Debonairs Pizza, Wimpy and Mugg & Bean. What definitely has transformed is Famous Brands’ balance sheet, which has swung from being virtually ungeared to sporting a net debt-to-equity ratio of 165% at the end of its financial year to February. It sent interest charges ballooning from R17.3m in the first half of the year to R184m in the full year, and together with costs of R106m incurred in the acquisition of GBK, headline EPS (HEPS) down 21%. If the extra costs could be wished away, HEPS would have risen ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.