Integrated Annual Report Content
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TWENTY 19 INTEGRATED ANNUAL REPORT CONTENT About this report 2 ABOUT GRAND PARADE INVESTMENTS 5 About GPI 6 Chairman’s review 8 Board of directors 10 GPI timeline 12 OUR STRATEGIC BUSINESS CONTEXT 15 Vision, mission and values 16 Guiding principles 17 Business model 18 Mapping our value creation process 20 Material risks 21 Critical relationships and risk management 22 OUR INVESTMENT PERFORMANCE 25 Chief Executive Officer’s review 28 Group Financial Director’s review 32 Our investments 39 Food and gaming 40 CORPORATE GOVERNANCE 53 Corporate Governance Report 54 Board committees and reports 58 Audit and Risk Committee Report 58 Remuneration and Nomination Committee Report 60 Remuneration Policy 61 Implementation Report 62 Directors’ emoluments 63 Social and Ethics Committee Report 66 GENERAL INFORMATION RELATING TO SHAREHOLDERS 67 GLOSSARY OF TERMS 68 CORPORATE INFORMATION 69 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 1 ABOUT THIS REPORT REPORT SCOPE, BOUNDARY REPORTING PRINCIPLES TARGET Grand Parade Investments Ltd’s (GPI or the Group) integrated annual report 2019 (this report) provides a succinct review This report was prepared in accordance with International Financial Reporting Standards (IFRS), the JSE Listings of our strategy and business model, operating context, material stakeholder interests, key risks, and performance and Requirements and the Companies Act, No. 71 of 2008, as amended (the Companies Act), where relevant. The report governance practices, covering the financial year ending 30 June 2019. This report is supplemented by our separate has sought to apply the International <IR> Framework of the International Integrated Reporting Council (IIRC). GPI has Consolidated Annual Financial Statements 2019 (AFS). The report focuses on the activities of GPI as an investment applied the majority of the principles and recommendations outlined in the King IV Report on Governance for South holding company, and includes an analysis of our underlying investments, both in the Executive Reviews section Africa 2016™ (King IV); a summary of those principles that were not fully applied is presented on the Company’s website. (pages 28 – 37) and the Investment Reviews section (pages 39 – 45, focusing on the most material investments only). Since last year there have been no significant changes to the Group’s organisational structure, and no material restatements of data during the year. FORWARD-LOOKING STATEMENT TARGET AUDIENCE AND MATERIALITY This report contains certain forward-looking statements that relate to the financial position and results of the operations This report has been prepared primarily for current and prospective investors, although it is also relevant for any other of GPI and its investments. These statements, by their very nature, involve risk and uncertainty as they relate to future stakeholder who has an interest in GPI’s performance and prospects. This report focuses on those issues that we have events and depend on circumstances that may or may not occur in the future. Factors that could cause actual identified as being most material to our capacity to create value and deliver on our strategic growth objectives. In results to differ materially from those in the forward-looking statements include, but are not limited to, global and addressing these material issues, we review what we do (page 6), describe our business model (page 18), identify the national economic conditions, interest rates, exchange rates and regulatory delays or changes. The forward-looking material interests of priority stakeholders, assess the principal risks and opportunities arising from the operating context statements have not been reviewed or reported on by the Group’s external auditors. and review our performance and governance practices (pages 54 – 57) aimed at ensuring value. APPROVAL OF THE INTEGRATED ANNUAL REPORT EXTERNAL ASSURANCES The Board acknowledges its responsibility to ensure the integrity of the integrated annual report. The directors confirm they have collectively assessed the content of the report and believe that it is a fair representation of the Independent external auditors, EY, audited the AFS in accordance with the International Standards on Auditing. Group’s material issues, performance and prospects. The Board has therefore approved the integrated annual The opinion of the external auditors is provided in the full AFS. The Group has not sought external assurance on the report 2019 for release to stakeholders. contents of this report. 2 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 3 NON-EXECUTIVE FINANCIAL NON-EXECUTIVE NON-EXECUTIVE LEAD NON-EXECUTIVE NON-EXECUTIVE CHAIRMAN DIRECTOR DIRECTOR DIRECTOR INDEPENDENT DIRECTOR DIRECTOR DIRECTOR ABOUT GRAND PARADE INVESTMENTS 4 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 5 ABOUT GPI BURGER KING GRAND FOODS Grand Parade Investments (GPI) is an SOUTH AFRICA MEAT PLANT empowering investment holding company that actively manages investments in its INVESTMENT & EFFECTIVE HOLDING: INVESTMENT & EFFECTIVE HOLDING: 91.1% 100% current focus areas of food and gaming. The Company was founded in 1997 for the purpose of partnering with Sun International South Africa (Pty) Ltd as its primary black economic empowerment MAC BROTHERS SPUR CORPORATION partner in the Western Cape. R28 million CATERING EQUIPMENT was raised from over 10 000 previously INVESTMENT & EFFECTIVE HOLDING: INVESTMENT & EFFECTIVE HOLDING: disadvantaged community members. 100% 17.79% Since then we have grown our investment portfolio within the gaming industry, and in recent years have diversified into food, having acquired the South African master ®. GPI SUNWEST WORCESTER franchise licences for BURGER KING CASINO listed on the main board of the JSE in 2008. Our current investment portfolio comprises INVESTMENT & EFFECTIVE HOLDING: INVESTMENT & EFFECTIVE HOLDING: 15.1% 15.1% the following investments: SUN SLOTS GPI PROPERTIES INVESTMENT & EFFECTIVE HOLDING: INVESTMENT & EFFECTIVE HOLDING: 30.0% 100.0% 6 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 GRAND PARADE INVESTMENTS LIMITED INTEGRATED ANNUAL REPORT 2019 7 CHAIRMAN’S REVIEW ‘GPI has entered a new dawn where we have applied a “get real strategy” which means that we will apply all the principles in terms of our ppp-philosophy (people, planet and profit) and be guided by good corporate governance to instil long-term sustainability in a responsible way.’ HASSEN ADAMS mean that we are now entering the On the home front, whilst the country The economic climate has forced us to phase where GPI will become a pure has gone through a recessionary embark on austerity measures which investment company. period, with daily reports of blood on is seen in reduction of head office costs, the sale of non-core assets and These initiatives must be guided by a the streets in the economy, we have increased productivity. In Burger King, philosophy where we introduce 21st flown the GPI flag up high and have produced positive results during these we are continuously achieving this Century thinking by ensuring that we and have introduced new point-of- ‘The future is looking bright and our attempts extremely difficult times. The underlying embrace value creation, sustainability sale kiosks and increased our revenue businesses are showing good traction to focus on being an investment company and good corporate governance. The through home deliveries. error of corporate leaders has been and in Burger King, we have achieved will re-rate our share price closer to our to focus on maximising shareholder the magic billion Rand mark in sales We continue to invest in people intrinsic net asset value.’ profit, even at the cost of marginalising with great upward mobility to increase to ensure a well-developed staff the stake-holders and destroying the EBITDA and profitability. GrandWest component that deals with 21st century environment. This is not in the best interest Casino remains flat in an environment digital applications. of shareholders and is destructive. This where others in the country are trading This initiative has shown good traction The end of June 2019 marked my fund manager activism and litigation. concept was re-enforced by the Noble negatively. in a well-defined GPI development to retirement as an executive Chairman I have served Grand Parade Investments Laureate economist, Milton-Friedman, drive the business with efficient and Not withstanding this, GrandWest still after many years at the operational since inception as a director and who in the 1970s wrote “the sole effective people. achieved a Npat (net profit after tax) helm of Grand Parade Investments. founding shareholder and continue purpose of the corporation is to make In conclusion, it has been a difficult I will continue as the non-executive to do so without fail. It has been an profit without deception or fraud”, but of a half-a-billion Rand and continues year for me in dealing with my health, Chairman and will use my best honour and privilege to serve GPI and Mervin King makes it quite clear that to distribute excellent dividends but more so for GPI in adapting to a endeavours to give strategic direction I am thankful for the support that I have shareholders don’t have the primacy to shareholders. Management very difficult economic climate in South and policy implementation and ensure received from my fellow