Grand Parade Investments (GPI) has released results for the six months ended December 2021.

This was a watershed period for the group, as the sale of Burger King South Africa and Grand Foods Meat Plant was finally completed on 3 November 2021 after a horribly protracted process with the Competition Commission. The sustainability of that business looks encouraging, with a profit of R4.15 million after a loss of R7.35 million in the comparable period, so the buyer will be pleased with that. The sale led to a special dividend of 88 cents per share, the largest dividend ever declared by GPI.

Burger King and Grand Foods have been presented as discontinued operations in the latest result. The focus for investors must be on continuing operations, which includes the gaming businesses (GPI’s stakes in SunWest, Sun Slots and Worcester Casino) and the remaining food investments (Spur and Mac Brothers).

Interestingly, revenue from continuing operations went in the wrong direction (down 16%) and profit after tax went the right way (up by R8.8 million).

Mac Brothers is where the pain is being felt, with the company’s revenue down 25% due to the slow recovery of the construction and manufacturing sectors. I know Mac Brothers to be a catering equipment business, so I’m not entirely sure how those sectors have such an impact. I even tried to check the Mac Brothers website to improve my understanding, but it doesn’t work – it says that the domain has been suspended!

Well, perhaps a working website is a good place to start in executing a revenue recovery.

Mac Brothers contributed a loss of R13.7 million to headline earnings in 2021, a significant deterioration from the loss of R5.5 million in 2020.

The rest of the investments have recovered and resumed dividends. The gaming assets contributed R50.7 million to earnings in 2021, a sharp increase from R33.6 million in 2020. SunWest is still trading well below pre-pandemic levels and Sun Slots has almost recovered to 2019 levels.

Investors will be pleased to note that debt has decreased substantially. Debt / Equity is just 2.4% now, way down from 13.8% in June 2021.

Headline earnings per share (HEPS) from continuing operations was 3.84 cents per share.

The share price closed 5.2% lower at R2.55 per share. The price is down slightly over the past year but the special dividend would need to be added back for a full analysis of shareholder returns. The special dividend was over 34% of the current share price.