SOUTH AFRICA – Gold Brands Investments, a franchising company and owner of ChesaNyama and Bella Italia brands has been suspended on the Johannesburg Stock Exchange (JSE) after the subsidiaries failed to submit their annual reports.
Business Day has reported that prior to its suspension, the company’s share price had fallen 81% from its listing price of $0.075, the company reporting a headline loss of 12.27c per share, from a 44.10c loss before
The micro-cap franchising company has struggled since listing in February 2016 with significant restructuring of the business.
Scaling down on multiple losses
Gold Brands reported US$1.20 million loss during the full-year period to the end of February from 3.63m it recorded last year despite having embraced partnerships with a strengthened portfolio.
The group said revenue dipped to US$3.01m, down from US$10.71m, while headline loss a share was 12.27cents a share, compared with last year’s headline loss of 40.89c a share.
In an attempt to raise capital, the family-owned company decided to sell its steakhouse chain Black Steer to Laudian for US$240,146.50 contrary to initial plans to expand the Black Steer brand globally, along with its flagship ChesaNyama franchise.
Restructuring that occurred in February 2016 saw it move its headquarters to smaller premises, cutting staff and closing underperforming stores, amid rising debt and mounting legal challenges from creditors.
ChesaNyama is reported to have been hit by an economic downturn shortly after its listing, and Gold Brands closed half of its ChesaNyama stores in the 2017 financial year.
Considering a disposal
Moved by insufficient capital, the company confirmed the possible sale of one of its subsidiaries to secure the needed cash flows.
Its 2017 financial results showed the company’s current assets of US$1.38m compared to US$3.52m in liabilities.
Competitive market dynamics coupled with dwindling consumer appetites in the fast food and restaurant sector have seen even larger players such as Spur Corporation and Famous Brands turn around their profitable outlook.