Gold Brands Investments to raise R25m with JSE AltX listing

Praxia Nathanael
Gold Brands Investments Limited (“GBI”) has confirmed that it has been granted approval by the Johannesburg Stock Exchange for the listing of its ordinary shares on the AltX board, under the abbreviated name Gold Brands and share code GBI, with the commencement of trading on Friday, 12 February 2016. This will make it the only listed food and franchising share currently on the AltX. 

The approval comes close on the heels of the announcement of Gold Brands R100-million BEE partnership with Circle Food Group, which will control 41,02% of the shares in issue at listing. The balance of the shares will be held by founders Praxia and Stelio Nathanael with the remaining 17,96% being held by the public which largely includes its suppliers and franchisees. The R25-millon cash raised via the BEE transaction and the private placement will immediately be used to fund working capital and expansion.

Gold Brands Investments CEO, Praxia Nathanael says that the group is looking to expand its brands further into Africa specifically in Botswana, Zimbabwe, Zambia, Namibia, Swaziland and Mozambique. 

She says that the Centurion-based company which has a turnover of over R210-million is also looking for opportunities globally; as it is already successfully expanding into Africa and this will expansion will continue on the continent.

Says Praxia:  “We have recently expanded our central kitchen and enhanced our refrigeration installation. We run all our own distribution to keep our supply chain costs low, and as we pass the benefits of this cost management on to the franchisees and ultimately the consumers, we believe that it is wise to invest in the efficiency of our supply chain.” 

As far as logistics are concerned, the company plans on expanding its fleet as well as its production facilities. It could also consider the benefits of a further decentralised distribution centre.

At the date of the commencement of the listing, the authorised share capital of Gold Brands will comprise of 1 000 000 000 authorised ordinary shares of which there will be 110 000 000 issued and listed ordinary shares.

Gold Brands is a platform that drives the aggressive expansion of high grossing, fast moving franchises and it is best-known for its fast-growing Chesa Nyama, flame-grilled braai take-out chain which now has over 300 stores. With the founders of the company having over 34 combined years of franchising experience it provides potential franchisees with unrivalled knowledge, experience, opportunities and support. 

With five strong brands to choose from, managed by Franchising to Africa and manufacturing, production and distribution of products by Gold Brands Food Services, Gold Brands has developed a unique model that has to date enhanced its strong growth in the highly competitive food franchising industry, whilst keeping its franchise setup cost-effective and its menu pricing amongst the most affordable on the market. 

Says Gold Brands Chief Operating Officer, Stelio Nathanael: “The listing adds value to Gold Brands’ proposition to its franchise owner-operators, to our BEE partners and staff as well as for prospective future partners. In addition, with shares publicly traded, this provides a way for the man in the street to access the fast food industry in South Africa and Africa. It is very much aligned to our company mission of empowering and uplifting individuals.”

The company’s policy has been to develop business models that provide all potential franchisees, including those from previously disadvantaged sectors of the economy a business model that they can own and utilise to empower themselves and those around them in their community. 

Says Stelio: “Many franchisees have gone on to become multiple franchise owners, either purchasing a second store in the Chesa Nyama chain or co-locating one of the other brands such as 1+1 Pizza or Pitaland, thereby expanding their business interests, employing more people in their community and delivering affordable healthy take-out food.” 

Head Office currently employs 142 staff, 122 of which are from previously disadvantaged backgrounds. Of the 289 Chesanyama franchisees (as at October 2015), 85% were from previously disadvantaged backgrounds, and each employ on average ten previously disadvantaged people per store resulting in the group having provided permanent employment to over 2 900 people over the last three years. Since October, it has grown to more than 300 stores. 

All the business of the group up to 28 February 2015 was conducted through Franchising to Africa and was subsequently reconstituted into the current group structure. 

For the six months up to 31 August 2015, the operating results of Gold Brands reflect a net profit for the six months of R2, 9-million. The net asset value per share amounts to 26.87 cents, while the earnings per share is 3.50 cents. 

Boasting cash reserves, at balance sheet date, of R1.9 million and a current asset ratio of 1.15:1, the company is secured with available working capital to maintain and grow operations in the coming six months. 

Whilst access to capital was not one of the primary reasons for the listing, because of the strong retained cash position, this nevertheless places Gold Brands in a position where it is easier to access additional capital for future growth.  

Says non-executive director, Valentine Nichas: “The fast-food franchise industry remains one of the fastest growing and most successful segments of the retail sector. The franchising model is a lucrataive option and the preferred business model for many entrepreneurs, because being part of a franchise chain affords the franchisee access to more specialised services such as an established supply chain and marketing expertise as well as the opportunity to leverage the brand equity of a ready-made brand.

“It appears that the current economic climate does little to deter South African families from visiting fast food franchises, which strengthens their popularity. However, in order to attract and sustain a strong customer base, fast food franchisors need to ensure that the menus offer their customers value for money. 

“It’s clear with the success of Chesa Nyama if you get the brand right and deliver South African favourites with A-grade meat quality at a great price that the growth opportunity is there.” 

Val is a respected leader and visionary in the franchise, retail and marketing space, with solid business experience spanning nearly 30 years, given her career track record, which includes: Marketing Director for Edgars and Debonairs Pizza; Senior Vice President (Company Strategy, Sales, Marketing & Innovation) Rich Products Corporation of S.A.; MD of Tequila/TBWA and in recent years Managing Executive of quick service restaurant brands such as Wimpy and Steers in the Famous Brands group.