• Famous Brands told shareholders it will write down, in total, as much as R449 million against its Gourmet Burger Kitchen (GBK) operation in the UK.
  • It expects the impairment to decrease its earnings per share by more than a fifth.
  • Famous Brands bought GBK for R2.1 billion in 2016. Despite promises of a turnaround, it has been nothing but trouble ever since.

In total it could write down a combined R449 million on its books against Gourmet Burger Kitchen (GBK), Famous Brands said in a mandatory note to shareholders on Thursday morning.

The impact on its results will be so big that it was required to make the disclosure as soon as it became aware of it.

The impairments will see a decrease of at least 20% in its earnings per share compared to the previous year when it reports on its results to the end of February, Famous Brands said.

The company's share price dropped more than 8% after the announcement.

Most of the write-down is in intangible assets, but Famous Brands is also reevaluating the value of GBK's property, plant and equipment, and making a nearly R50 million provision for "property related expenses" it did not further explain.

The exact values "will be determined as part of the year-end process", it said.

Famous Brands was very impressed with itself when it bought GBK in 2016. At R2.1 billion it was the biggest ever acquisition for the group, which owns burger joints Steers and Wimpy, plus 25 other food retail brands. It "saved" a great deal of money when the pound devalued compared to the rand because of Brexit concerns – and Famous Brands predicted great things from GBK.

Later Famous Brands would come to blame Brexit, and various other financial woes in the United Kingdom, for GBK's continuing poor performance – which saw an exodus of unhappy shareholders.

Wimpy sells a standard burger for R50. Steers make a huge three-patty burger (with cheese) for R87. At Gourmet Burger Kitchen a speciality buffalo-meat burger, with "baconnaise" and Red Leicester cheese, is £11.35, or just under R190.

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