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Altron prints a smart disposal

The Finance Ghost
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Altron prints a smart disposal

Altron is in a “value unlock” phase of its life. The best indicator of this is when a company has a “2.0” strategy. You only have such a strategy when the 1.0 version of yourself wasn’t terribly popular.

Altron unbundled Bytes at the end of 2020 and the divergence in share price performance has been breathtaking, with Bytes as a strong performer and Altron as a significant disappointment for shareholders. I was a shareholder at the time of the unbundling as I had bought into the turnaround plan, so I’ve seen the divergence of the stocks in my own portfolio.

While Bytes is busy blazing a trail in the UK market, Altron is trying to focus on its core ICT businesses, so anything outside of that strategy needs to be sold off if the company can get a decent price.

The latest news is that Altron Document Solutions (ADS) is being sold to Xerotech, a subsidiary of Bi-Africa Investment Holdings. The deal includes ADS’ subsidiary in the Eastern Cape, Genbiz.

This is an office printer business that has been a strategic partner for Xerox in the sub-Saharan Africa region. The business also distributes other printing-related equipment. This is a capital-intensive model that is not a good fit with Altron’s core operating model.

The ADS business (excluding working capital) has been valued at R20.1 million for this transaction. There’s a debtors’ balance of R346 million which will be collected by Xerotech and paid across to Altron. The inventory balance of R316 million is a bit more complicated, as 49% of it is considered “not slow moving” and will be paid off to Altron over three months, with the rest paid when sold at the lower of cost or 90% of net realisable value as at the effective date. The various liabilities in the business will be settled by Altron (R191 million as at 31 August 2021).

Genbiz is much simpler. The value for the 57.7% stake has been valued at R14.6 million. There’s also a shareholder loan from Altron of R9.9 million that will be repaid in four monthly instalments.

There are also amounts payable for the book values of computer equipment etc. The total price for the deal has been capped at R715 million (the amounts disclosed above are R706.6 million in total).

Altron’s net cash inflow will be somewhere around R520 million after settling the liabilities. The net book value of the business at 31 August 2021 was R538 million, so the deal has effectively been done at nearly net book value. The net cash will be used to reduce Altron’s debt.

For the six months to August 2021, ADS (including Genbiz) generated interim revenue of R500.1 million, EBITDA of R5.2 million, operating profit of R0.4 million and an attributable loss after tax of R11.2 million.

The deal will close by 31 May, with a few operational hurdles to clear along the way
As an Altron shareholder, I’m very happy to see this business go out the door. Anything with an EBITDA margin of 1% isn’t something I want to own.

Disclaimer: I hold shares in Altron

ARC Investments makes it Rain

The Finance Ghost
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ARC Investments makes it Rain

In the six months to December 2021, ARC Investments’ intrinsic investment value in the ARC Fund grew by 16.8% to nearly R13.5 billion. The net asset value (NAV) per share reported under IFRS rules increased by 16.5% to R10.31, so yesterday’s closing price of R6.16 is a discount to NAV of around 40%. This is higher than the discount seen in some other investment holding companies on the JSE.

ARC Investments holds a 99.95% stake in ARC Fund. The ARC Fund holds 49.9% in ARC Financial Services Holdings, which in turn holds 75% in ARC Financial Services Investments. ARC Fund also holds 100% in a portfolio of diversified investments. To make this diagram even more complicated, ARC Fund also holds 7.2% in ARC Investments.

This is so tricky to understand that I’ve included a screenshot from the interim results below:

ARC investments (the third block in the middle) is the listed company that we are talking about here.

The annualised growth in the portfolio value of 36.2% is way above the modest performance participation hurdle of just 10%. For that reason, a provisional amount of R311 million has been recognised for the issue of performance participation shares to UBI. These types of “management fees” (in whatever form they take) are why these structures trade at a discount to the underlying portfolio value.

The plan is to relook at the fee structure by the time of the next annual general meeting. In the meantime, UBI is laughing all the way to the bank with a performance structure that has had no shortage of critics in the market.

The group refers to “early-stage businesses” that comprise 53% of the ARC Fund’s intrinsic portfolio value. These aren’t exactly small startups run by your friendly local hipster, as this category includes the likes of Rain, TymeBank, TymeGlobal and Kropz. More on those to come. Examples of established businesses in the portfolio would include Alexander Forbes and Afrimat.

Notable portfolio moves included R496 million raised through the disposal of shares in Afrimat (ARC Fund still has a 10% stake in Afrimat) and another R115 million through the sell-down of property business Majik. Much of this cash landed in the bank and stayed there, as the cash in ARC Fund increased from R339 million at 30 June 2021 to R538 million at 31 December 2021.

Cash that did leave the building included R182 million invested in Kropz Group, R64 million in ARCH Emerging Markets Funds and R56 million in Rain.

In the Financial Services portfolio, ARC Financial Services Holdings acquired 37.33% of Crossfin for R415 million and invested a further R257 million into TymeBank and TymeGlobal. The ARC Fund has an effective look-through interest of 25% in TymeBank.

The largest individual exposure is Rain, contributing 24.1% of fund value. The company broke even in the last 12 months and has accelerated quickly from there, with an expectation of R1 billion EBITDA for the year ended February 2022. The company is participating in the spectrum auction, with the result outstanding at the time ARC Investments finalised its report. During the opt-in round of the auction, Rain bid R1.15 billion.

The second largest exposure is Kropz Plc (15.2% of fund value), a phosphate developer with an advanced development-stage phosphate mine in South Africa and exploration assets in the Republic of Congo. Having finally made significant progress at Elandsfontein, ARC Fund recognised a R860 million fair value gain on this asset.

The third asset I’ll highlight is TymeBank, which contributes 10.1% of fund value. The bank has 4.2 million customers with 1.2 million active accounts. TymeBank recently attracted investment from Tencent and the CDC, which allowed ARC Investments to recognise a valuation uplift. The strategy includes the roll-out of similar banking operations in other emerging and frontier markets, with the technology white-labelled by TymeGlobal. Philippines is the first market outside of South Africa where the TymeBank technology will be launched in mid-2022.

There are many more companies in the portfolio. If you are interested in this group, you should refer to the full result and read carefully through the list of portfolio investments. It’s not easy finding the right website of the listed company, so here’s the link.

The share price is still well below its original listing price, having lost 26.7% of its value since 2017. Over the past year, the price has jumped 62.5%.

Growthpoint really wants you back in the office

The Finance Ghost
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Growthpoint really wants you back in the office

Growthpoint, the largest South African primary JSE-listed REIT, has released its results for the six months to December 2021. With a portfolio of 421 directly owned properties in South Africa and stakes in healthcare and student accommodation funds, it’s a great barometer for the overall property market in South Africa (other than one-bedroom flats in Fourways).

Growthpoint also has substantial investments in Australia and in London. The value split is 56.9% South Africa and 43.1% offshore.

Perhaps the most iconic investment is a 50% stake in the V&A Waterfront, which suffered a significant write-down in value in this period as Covid restrictions continued to bite. The beautiful property is highly reliant on tourism.

The overall property sector staged a huge comeback in 2021 after a terrible time during the worst of the pandemic. Office properties have continued to struggle though, with elevated vacancies that have continued to deteriorate. Growthpoint’s office portfolio vacancies increased from 19.9% to 21.2% in this period.

Growthpoint’s portfolio mix means that revenue fell by 4.8% in this interim period and headline earnings per share (HEPS) fell by 23.4%. The movement in HEPS deserved a deeper look – I discovered that this was driven by huge swings in the investment property valuations.

The better measure is probably funds from operations per share, which increased by 17.4% to 77.40 cents. This is significantly higher than HEPS of 56.55 cents. The dividend per share increased by 5.1% to 61.5 cents.

The loan to value ratio improved from 40% to 39.2% and the interest cover ratio increased from 2.9x to 3.0x.

The net asset value (NAV) per share increased by 6.2% to R21.48 per share. Yesterday’s closing price of R13.23 means that Growthpoint is trading at a discount to NAV of around 38.5%.

Growthpoint needs tourists to return to the V&A and the workforce to return to offices. I think one of those is a certainty and the other is never going to be the same again.

RMI investors get something OUT

The Finance Ghost
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RMI investors get something OUT

This is proving to be a watershed year for investment holding companies on the JSE. Some of the most famous names of all are unbundling the assets that made them famous in the first place.

The market has been valuing such companies at painful discounts to the underlying value of the investments in the portfolio. There are good reasons for this (like the head office costs of such structures) and arguably cyclical reasons (like a souring of sentiment towards these structures in recent years).

Since listing in 2011, RMI has achieved a compound shareholders’ return of 17.9%. This is an extremely impressive number.

Back in September 2021, Rand Merchant Investment Holdings (RMI) announced an intention to unbundle its investments in Discovery and Momentum Metropolitan to shareholders. After all, these are listed companies that investors can access directly, so why should they continue to sit in RMI?

At the time, RMI envisaged a R6.5 billion rights offer to help bring debt down to an appropriate level in the new, smaller group. Thankfully, this was negated by the sale of the group’s 30% interest in Hastings Group, which was announced in December 2021. The proceeds of R14.6 billion represented the creation of “significant shareholder value” in the words of RMI and paid off the preference share funding.

These proceeds have taken the group into a net asset position and have supported the declaration of a special dividend. The total dividend (special and ordinary) for the six-month period to December 2021 is 165.5 cents per share, far higher than 22.5 cents in the comparable period.

At the time of the unbundling announcement, the group stated an intention to follow an active investment strategy going forward. In a display of capital discipline that could be a lesson to many other management teams, RMI has elected not to pursue such a strategy and will instead focus on its core asset OUTsurance, an existing platform that is still growing.

The investments in RMI Investment Managers and the AlphaCode portfolio of fintech companies are under discussion with a view to finding the optimal way forward for these businesses.

Holding company and personnel costs of RMI of between R25 million and R30 million will be reduced over the next six to twelve months. This gives great insight into why these investment holding companies tend to trade at a discount.

In the results for the six months to December 2021, the intrinsic net asset value of the portfolio has increased 14%. Over the same period, the market capitalisation increased 41%. This means the share price increased much faster than the value of the underlying investments, so the discount closed considerably based on these value unlocking efforts.

RMI highlights this point in the announcement, noting that the share is trading at a discount of just 2% to the intrinsic net asset value vs. a discount of 30% before the announcements.

Interestingly, the continuing operations in the group didn’t have a great period. OUTsurance earnings fell by 23% and RMI Investment Managers and AlphaCode investments fell by 16%.

OUTsurance grew annualised new premiums written by 18% but the South African operations were hit by higher claims, including the normalisation of motor claims as South Africans returned to the roads. At Australian business Youi, the sharp increase in the claims ratio from 53.4% to 62% was due to natural catastrophe events like the earthquake in Melbourne.

Inflation is good for OUTsurance in terms of revenue growth, as the group has suffered a long period of low premium inflation. This will help in 2022.

The comparative period for RMI Investment Managers included a significant amount for performance fees earned which was not repeated in this period. Assets under management increased 24%, of which net inflows contributed just over half of the growth.

RMI Investment Managers will continue its strategy of being a “value-adding but non-interfering shareholder of choice” for the independent asset management industry. The portfolio is largely complete, so the focus is on offering affiliates access to strategic support.

The announcement doesn’t give any significant details on the AlphaCode performance, merely noting that it continues to perform in line with expectations. The AlphaCode Explore and Incubate programmes supported 45 entrepreneurs in 2021 and helped the cohort achieve an average of 43% revenue growth. The startups created 46 jobs in the process.

The internal valuation of OUTsurance increased by 16% year-on-year to almost R39.7bn. The RMI Investment Managers and AlphaCode valuation increased by 31% to nearly R1.9bn, so OUTsurance is clearly the core asset. These valuations have increased despite the negative earnings results.

RMI closed 11% higher on the day as the market applauded the news of the discount being closed, hopefully once and for all.

Famous Brands: uncertainty around earnings

The Finance Ghost
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Famous Brands: uncertainty around earnings

Famous Brands, purveyor of fine calories in the form of burgers, pizzas and many other types of yumminess, has given a voluntary update for the year ended February 2022. The share price dropped nearly 8% in response but managed to claw it back in late trade to close 3.2% down on the day.

The take-away brands you know and love are grouped under the Leading segment (as in, Leading brands) and increased system-wide sales by 35.8%. Famous Brands is a franchisor and wholesaler, so system-wide sales (the actual restaurant sales through the till) is an important measure but not necessarily a perfect indication of revenue growth for the listed company. More on that to follow.

The fancier restaurants (like Turn ‘n Tender, Salsa and others) increased system-wide sales by around 55.1%. One would expect to see a sharper recovery in those restaurants than the take-away formats as they took a much harder hit from alcohol restrictions over the pandemic. You can’t buy a beer at Steers (perhaps unfortunately).

The AME region (rest of Africa and Middle-East) had less stringent trading restrictions during the pandemic. System-wide sales increased by 19.8%, a reflection of a less volatile trading period under those lockdown rules.

Wimpy UK revenue has increased by around 19.5% in this period.

Moving on to the core revenue of Famous Brands as a listed company, manufacturing revenue (the products supplied to the restaurant) increased by 30.8% and logistics revenue (effectively a food service business) increased by 35.3%. The retail division supplies products for third-party retailers (like a Steers sauce in the supermarket) and grew revenue by 46.9%, a really strong result.

The board isn’t sure yet whether a trading statement would be required for the year ended February 2022. This would be triggered by a 20% jump in earnings, so it’s a bit surprising to see that such an earnings increase is in doubt despite such significant increases in revenue.

This may be why the market reacted in this way to the announcement, with a sharp drop that improved towards the end of the session. Another risk I’m keeping in mind is related to fuel price and soft commodity price shocks, which would cause substantial input cost pressures for Famous Brands.

Can those pressures be passed on to consumers? Do you want a King Steer burger that badly?

As investors, these are the questions we need to ask. Trading at around R60, Famous Brands has dropped back to where it was in April 2021 and would need to climb 30% to get back to pre-pandemic levels.

Blue Label Telecoms throws more money at Cell C

The Finance Ghost
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Blue Label Telecoms throws more money at Cell C

Blue Label has concluded a non-binding term sheet that they colourfully refer to as an Umbrella Restructure Term Sheet. I’m confident that neither Santam nor Rihanna were involved at any stage in this, although Blue Label shareholders may want insurance and music to make them feel better about the complexities here.

The purpose of this fancy document is to facilitate the restructuring and refinancing of Cell C, the telecommunications network that has just never found a way to successfully compete in the market.

Nevertheless, another attempt is about to be made, despite Cell C posting a net loss of R849 million in the six months to November 2021 and boasting a balance sheet with net negative assets of R13.7 billion.

At least Cell C generated a profit before finance costs and forex losses of R862 million, so perhaps there is some hope with a sustainable balance sheet. Blue Label believes that Cell C has implemented a turnaround strategy, which means it has reduced costs and achieved efficiencies.

Arguably the biggest change is the move to a variable operational expenditure model vs. trying to own a fixed cost infrastructure and scale the business to the point where that model is viable.

The proposed restructure of Cell C’s balance sheet is extremely complicated. Prepare yourself.

Cell C owes certain secured lenders around R7.3 billion. They are in for a rude awakening, as this deal would see Blue Label lend R1.46 billion to Cell C, an amount that will be offered to those lenders as a compromise (20 cents in the rand). The actual funding obligation for Blue Label will be just over R1 billion.

In perhaps the ultimate example of buying the dip, certain secured lenders want to take the 20 cents in the rand and loan it back to Cell C under a new loan arrangement. The aggregate face value will be equal to 2.75 times the amount advanced. In other words, if Cell C ever makes money and can pay this back, the lenders would receive 55 cents for every 20 cents. In addition, they can share pro-rata in a fresh issue of ordinary shares in Cell C at a nominal value.

Blue Label is participating at that level, by acquiring the reinvestment rights from certain lenders. This will enable them to invest R110 million into Cell C in this ratcheted face value structure. On top of this, Blue Label is buying debt notes in a shareholder in Cell C for USD5 million and R16 million (there seem to be two different types of notes denominated in different currencies, but the SENS isn’t clear on this) and a credit claim of USD6 million against Cell C for USD4 million. Blue Label will also buy trade claims against Cell C for R16 million and USD4.5 million.

Blue Label is also owed R1.1 billion by Cell C under a separate loan. This will be repaid in equal instalments over 60 months.

Cell C will undertake a rights issue at nominal value as well as various other issuances, with the net result that Blue Label will hold 49.3% of Cell C.

To help inject some life into Cell C, Blue Label will purchase R1.2 billion in pre-paid airtime from Cell C. Blue Label’s business is built around distributing pre-paid airtime, so this makes sense. There will be additional quarterly airtime purchases by Blue Label of R300 million.

To make this all happen, Blue Label will raise R1.6 billion of the required funds from financial institutions through an airtime purchase transaction and will be obligated to repurchase the airtime over a 24-month period in equal monthly instalments. I’m no expert on a structure like this, but it seems as though banks are essentially financing the purchase of airtime and taking ownership of it over the loan period to manage their risk.

As any long-suffering shareholder of Blue Label will tell you, the company’s dealmaking track record isn’t great at all. Blue Label has tried to do many exotic things, both in South Africa and abroad. The share price is down nearly 69% in the past 5 years.

The share price fell 11.3% yesterday after the announcement came out at 3:30pm. Punters didn’t wait long to hit the sell button.

In summary, Blue Label has effectively refinanced Cell C through pre-selling airtime. That’s an interesting strategy, provided there is enough demand for the airtime of course. Only time will tell.

Ascendis: more info on the businesses for sale

The Finance Ghost
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Ascendis: more info on the businesses for sale

Ascendis Health has given further information on the financial information of the businesses that form part of the proposed disposal plan.

As a refresher, Ascendis needs to sort out its balance sheet and emerge on a sustainable footing. The current proposal is to achieve this by disposing of three distinct businesses.

The first is Ascendis Medical, with a net asset value of R289 million and a loss after tax for the six months to December of R259 million. This business is earmarked for disposal to Apex Management Services (one of the holders of debt in Ascendis) for a R550 million base price, with downward adjustments for the backlog of capital expenditure (R200 million) and excess rental incurred of up to R25 million.

The second is Ascendis Pharma, with a net asset value of R117 million and profit after tax for the six months to December 2021 of R22 million. This business is to be disposed of to Pharma-Q (another debt holder in Ascendis) and Imperial Logistics for a total price of R375 million.

The third and final business is Nimue, with a net asset value of R32 million and profit after tax for the six months to December 2021 of R5 million. Nimue is being sold for R102 million to Amka Products.

Further details will be provided in the circular to shareholders, which is expected within 60 calendar days from the date of the first announcement regarding these disposals. That announcement was released on 1 February 2022.

If you plan to work out multiples on the above numbers, remember that profitability is always disclosed with reference to a period of time. To estimate a multiple, interim profit needs to be doubled or you are only taking half the earnings into account. In a perfect world, you would want the numbers for the second half of the previous financial year for these businesses, so that you can work out a “last twelve months” (LTM) multiple by combining the second half of the previous year with the first half of this year.

When working out a premium or discount to net asset value (NAV), remember that NAV is a balance sheet concept and is thus a snapshot of a point in time. You never double this, even when working with an interim financial report.

Sun International looks much brighter

The Finance Ghost
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Sun International looks much brighter

The tourism and hospitality group has released results for the year ended December 2021, signing off on a year that was much better for the industry than 2020. That’s hardly a tough benchmark though, let’s face it.

Perhaps the most important thing about this performance is that the group managed to reduce debt in this period by R541 million, assisted greatly by sustainable cost savings of R650 million that were implemented in a time of great need. R180 million in annual savings was achieved at Sun City alone!

Income from continuing operations increased by 29% to R7.8 billion and headline earnings swung favourably from a loss of R409 million to a profit of R265 million. This means that the group has still lost money over the pandemic period overall. The encouraging news is that the adjusted EBITDA margin in South Africa has improved from 28% in 2019 to 34% in 2021.

The casino operations and alternate gaming businesses make up 80% of group revenue. Sun International claims to have defended or grown market share at most urban casinos, while enjoying a strong rebound in the slots business (which benefits from alcohol trading and the removal of curfews) and record income in the sports and online betting business known as SunBet.

New player acquisitions in SunBet were 88% higher than 2019 and turnover was 66% higher than that year. Due to the significant marketing spend required in SunBet, the division recorded a small adjusted EBITDA loss.

The resorts and hotels division can only dream of a return to pre-Covid levels. Income was up 39% in 2021 vs. 2020 but remains 39% below 2019 levels. This division is still loss-making, with an adjusted EBITDA loss of R56 million in 2021 vs. a loss of R158 million in 2020.

Management’s focus is to keep reducing debt to create capacity for dividends to return over the short to medium term and for “disciplined investment” in the right opportunities. The debt levels are well within lender covenants.

Performance in January and February 2022 has been strong. Gaming income was in line with 2019 and EBITDA was higher. Sun International can only do its best under the circumstances of Covid and other global disruptions.

At yesterday’s closing price of R23.59, Sun International is still 40% lower than where it traded at the beginning of 2020.

STADIO declares a maiden dividend

The Finance Ghost
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STADIO declares a maiden dividend

Tertiary education business STADIO has released results for the year ended December 2021.

The core driver of revenue is student numbers, which increased by 9% to 35,031. Distance learning students are around 84% of the total. In the second semester, distance learning students grew 13% year-on-year and contact learning students decreased by 7%, so it’s not difficult to figure out that the mix of students is changing.

This trend will be accelerated by the Milpark business transitioning away from contact learning to distance learning only. With one of the Milpark students placing first in the SAICA ITC board examinations, the brand seems to be strengthening.

We will have to wait for a post-COVID world before we know the extent to which contact learning will recover.

In an effort to keep the revenue line ticking over, STADIO is growing its short course business and acquired Intelligent Africa in October 2021. This can be a lucrative way to tap into corporate budgets for learning and development.

Thanks to the mix effect of different qualifications and price increases on top of student number growth, revenue was up 18% for the year.

With the fair value adjustment for CA Connect in the prior year of R207 million excluded, EBITDA increased by 23% to R310 million.

This result was impacted by STADIO having entered into an early settlement agreement with the CA Connect shareholders, which led to a dilution in STADIO’s shareholding in Milpark from 87.2% to 68.5%. When all is said and done, that acquisition cost STADIO R258 million and made loads of money for the sellers thanks to a really strong performance in the CA Connect business.

There were also impairments related to changes in strategy around certain properties. STADIO recognised an impairment of R17 million on the leased Milpark campus in Gauteng and an impairment on the STADIO Montana property of R10 million based on a deal to sell the property for R52 million (the carrying value was R62 million). The base year also had substantial impairments (R51 million on intangible assets) so earnings per share isn’t a great tool for comparison of 2021 to 2020 (as is so often the case).

Without any adjustments, headline earnings per share (HEPS) swung from a loss of 8.5 cents the previous year to a profit of 17 cents per share. Core HEPS excludes the impact of non-recurring or non-cash items and increased by 24% to 17.6 cents per share.

To add to the good news, STADIO has declared its first ever dividend in the amount of 4.7 cents per share. This is encouraging considering that the group had substantial capital expenditure needs for projects like STADIO Centurion and STADIO Durbanville.

The balance sheet has R66 million in cash and STADIO has access to a revolving credit facility of R185 million of which only R15 million has been drawn down.

The share price closed 3.3% higher at R3.40. The dividend represents a yield of 1.4% on yesterday’s closing price.

Absa got the basics right in 2021

The Finance Ghost
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Absa got the basics right in 2021

Banking results season is well underway, with Absa as the latest company to report on the year ended December 2021.

If you thought the swings at group level over the past two years can be significant, wait until you read deeper and see the individual business unit performance. For example, the Vehicle and Asset Finance unit swung from a loss of R927 million in 2020 to a profit of R605 million in 2021!

Gross loans and advances increased 7% and deposits were 12% higher, so the bank has followed a cautious strategy in getting money out the door. Interestingly, credit card loans only increased by 1%! To give context to that, instalment credit grew 9% and mortgages grew 8%.

Linked to the balance sheet strategy, credit impairments fell by 59%, resulting in a credit loss ratio of 0.77%. This is way down from 1.92% in the Covid-infested 2020 financial year.

Revenue increased by 5%, with the growth driven entirely by net interest income increasing 9%. Non-interest income was flat vs. the prior year. Net interest margin improved from 4.17% in 2020 to 4.46% in 2021 as interest rates stabilised.

To give an idea of how sensitive the banks are to interest rate movements, Absa’s net interest income would change by approximately R600 million if interest rates changed by 1%. To be clear, interest rate increases are positive for banks.

Operating expense growth was just 1%, so that’s a feather in Absa’s cap for cost control, although a major contributor was high non-recurring advisory fees in the base. This helped drive an improvement in the cost-to-income ratio from 59% to 56.6%. Further down the income statement, pre-provision operating profit increased by 11%.

Thanks to the improved credit loss ratio, diluted headline earnings per share jumped by 193% and the net asset value (NAV) per share increased by 12% to R156.41. Yesterday’s closing price of R177.45 represents a 13.5% premium to NAV per share.

Absa hopes to improve return on equity to over 17% by 2024. In 2021, return on equity was 14.6%, so there’s a long way to go.

The bank declared dividends of 785 cents per share in 2021, of which the final dividend is 475 cents per share. Based on the full year dividend and yesterday’s closing price, the trailing dividend yield is 4.4%.

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