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UNLOCK THE STOCK: Astoria Investments

The Finance Ghost
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UNLOCK THE STOCK: Astoria Investments

Unlock the Stock is a platform designed to let retail investors experience life as a sell-side analyst. Corporate management teams give a presentation and then we open the floor to an interactive Q&A session, facilitated by the hosts.

We are grateful to the South African team from Lumi Global, who look after the webinar technology for us, as well as EasyEquities who have partnered with us to take these insights to a wider base of shareholders.

In the 53rd edition of Unlock the Stock, Astoria Investments returned to the platform to discuss the recent numbers and the growth strategy. Mark Tobin of Coffee Microcaps hosted this event with the team from Keyter Rech Investor Solutions.

Watch the recording here:

Ghost Bites (Alexander Forbes | Ethos Capital | Gemfields | Nutun | Renergen | Sasol | Stefanutti Stocks)

The Finance Ghost
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Ghost Bites (Alexander Forbes | Ethos Capital | Gemfields | Nutun | Renergen | Sasol | Stefanutti Stocks)

Alexander Forbes marches on (JSE: AFH)

Results for the year ended March will be in line with expectations

Alexander Forbes has released a trading statement for the year ended March. From continuing operations, they expect HEPS to grow by between 5% and 15% – decent growth overall. There was much higher growth in the discontinued operations (due to a successful legal claim related to a subsidiary that was sold ages ago), leading to total group HEPS increasing by between 10% and 20%.

This is in line with the group’s expectations, with the key drivers being higher average AUM, solid client retention, inflationary increases in fees and higher than expected two-pot claims volumes, which are a revenue driver for the group. The timing of consolidation of previous acquisitions also made a difference here.

Ethos Capital is enjoying a higher valuation of Optasia (JSE: EPE)

As they are planning an exit of that investment, they hopefully aren’t overcooking their expectations

Ethos Capital focuses on measuring its performance using net asset value per share. All investment holding companies should do this of course, but that doesn’t mean that they actually do.

The company has given a voluntary update on growth in that metric. Net asset value per share is up 3.2% over the past quarter and has increased 23.1% since June 2024 (excluding the effect of the unbundled Brait shares).

The increase is mainly due to the higher valuation of Optasia, which they indicate is thanks to its last-twelve-months EBITDA increasing to $84 million. They are implying that they haven’t increased the valuation multiple. Still, as they are looking to go to market with this asset (including via a potential IPO), I hope that their valuation expectations are in line with the feedback they are getting from potential investors. With a recent growth rate of roughly 47% for both revenue and EBITDA, it’s clearly an interesting growth asset.

This is all part of the broader strategy of returning capital to shareholders. With a net asset value per share of R8.10 and a share price of just R5.55, you can see that the market is still pricing in a hefty discount.

Gemfields has released the rights offer prospectus (JSE: GML)

Although the fully underwritten offer is a foregone conclusion at corporate level, it’s still important for shareholders to make a decision

The beauty of a fully underwritten rights offer is that from the company’s perspective, they are definitely going to get the capital that they need. This allows the management team to move forward with the all-important strategies to get things back on track. But for each existing shareholder, they have to decide whether to follow their rights or to try and trade their nil paid letters in the market.

To help with this decision, Gemfields has released a prospectus in line with the strict regulations that govern the capital raising process for public companies. It includes a wealth of information on the company, including an overview of the risks. As the disruption by lab-grown diamonds has fascinated me (regular readers know this), I couldn’t help but look at the extent to which this is noted as a risk for emeralds and rubies. The answer is that although the company does mention that they exist, it’s only raised as part of a narrative that diamonds have suffered to a far greater extent than coloured gemstones that have different supply and demand dynamics. In other words, they are heavily downplaying it. To be fair, lab-grown gems are nothing new and if rampant disruption was going to happen, it probably would’ve already. Still, consumer tastes can be fickle – just ask De Beers.

The prospectus deals with the four key issues facing Gemfields at the moment (on page 50 of the document, for those who want to read in detail). These include the oversupply of Zambian emeralds, the lower production of rough rubies in Mozambique, prevailing uncertainty in the luxury goods and gemstone market (including in China) and general risks in Mozambique related to civil unrest and other issues. With all these issues experienced against a backdrop of heightened capital expenditure, the balance sheet buckled under the pressure.

The risks aren’t over yet, particularly regarding the waiver of covenants under debt facilities. Banks aren’t in the habit of switching the lights off for companies that still have support from equity investors, but stranger things have happened and the underlying operations in Africa are risky.

You’ll find the full prospectus at this link. If you’re a shareholder or if you’re thinking of becoming one, I strongly suggest you read it.

Nutun gives full details of its earnings – and the market didn’t like it (JSE: NTU)

The share price closed 12% lower

Nutun is the debt and business process outsourcing business that used to be part of Transaction Capital. After that group imploded thanks to SA Taxi and cut WeBuyCars loose to go off and flourish without the contamination of the rest of the group, Nutun was left behind like the ash at the bottom of the braai. Even with a new name, there’s a lot of rebuilding to do.

In South Africa, Nutun acts as both principal and agent when it comes to unsecured non-performing loans. They also have international clients, in which case they act as a business process outsourcing solution for a variety of services from customer acquisition and retention through to collection and recovery services. This is essentially a fancy way to say that they are a call centre.

The six months to March 2025 was an unhappy time. Revenue in Nutun South Africa was down 6% and in Nutun International was up 1%. Group EBITDA fell by 17%. Once you take off the amortisation of purchased book debts and the net interest cost, you’re left with a “continuing core loss” off R71 million, which is at least not as bad as R104 million in the prior year.

Is there any good news? Well, they are now focusing on bigger clients, which hopefully means a more efficient business going forwards. Worryingly though, they have an ageing portfolio based on the lack of recent purchases of books, which I interpret to mean that the underlying recoverability of the books is getting worse. It’s fine to have fewer clients, but they need to improve the books they are trying to collect.

To do this, they have funding lines in place until at least September 2027. This should support a renewed focus on acquiring unsecured loan portfolios, as well as the ability to invest in business process outsourcing opportunities.

The group still has a positive medium-term outlook (although practically all executive teams say that). They have indicated that the near-term story is far less ideal, as it will take them a while to rebuild their positioning in the market. The fallout from the association with the broken Transaction Capital balance sheet continues, as Nutun was essentially starved of capital for a while.

There’s no love for this story in the market right now, with the share price down 37% year-to-date. Perhaps this chart of Nutun vs. WeBuyCars tells the story best:

Renergen: throwing cautionaries to the wind (JSE: REN)

The ASP Isotopes deal is very interesting, but the JSE needs to act here

Let me start off by saying that in hindsight, having hosted ASP Isotopes on Unlock the Stock (watch it here) and gotten to know the CEO in that session, I’m not surprised by this deal. Paul Mann is a razor-sharp international dealmaker and he is almost certainly viewing Renergen in the same light that he originally viewed ASP Isotopes: a technical dream wrapped up in a commercial nightmare. This deal is another roll of the dice and if you want to make it big in this world, you better be prepared to keep rolling. I want to make it absolutely clear that there was no (and I mean no) indication in that session of what they were planning regarding Renergen. I was caught by surprise, just like you were.

Here’s the thing that I find astounding: Renergen moved straight to firm intention announcement stage without putting out a cautionary announcement. Now, the technical rule is that you don’t need a cautionary if you can be absolutely sure that no news of the deal has leaked anywhere. Still, it’s good practice to put one out, particularly once you start engaging advisors and the like. And as you’ll see, they are a long way down the road with this deal despite having no cautionary announcement.

I genuinely cannot think of another single example where a company went straight to firm intention announcement without a cautionary. If the JSE doesn’t fully investigate this and make its findings known to the public (regardless of what those findings are), then cautionary announcements have officially become a joke overnight and there’s no point in ever bothering with them again.

I must say, another thing that is on my mind is whether the ASP Isotopes listing on the JSE was always intended to facilitate a deal like this. The official story is that the business is South African and the staff are South African etc. and hence the need for a local listing, but I really can’t help but wonder…

Regardless of the back story, the deal on the table is that ASP Isotopes wants to acquire all the Renergen shares in issue, in exchange for shares in ASP Isotopes. This will be structured as a scheme of arrangement, which means that the board of Renergen is in favour of the deal as a scheme has to be proposed by the board (as opposed to a hostile takeover which is an offer made directly to shareholders). Again, seeing a fully constituted independent director committee and no cautionary announcement is a wildly aggressive application of the rules.

It gets much better (i.e. worse) though. Here’s the list of shareholders who have already given irrevocable undertakings to vote in favour of the deal, once again without a cautionary announcement in sight:

It still gets better. In the absence of any kind of cautionary announcement, Renergen and ASP Isotopes entered into an exclusivity agreement on 31 March 2025 (that’s almost 2 months ago!) that saw Renergen receive an exclusivity payment of R10 million. That was the first step in what has become a bridging loan of $30 million to help Renergen avoid default. The Takeover Regulation Panel has made it clear in this case that they don’t like this element of the deal and this has led to a change in the repayment terms on that loan, otherwise it becomes a coercive element of the deal i.e. a gun to the head of shareholders to support the deal or watch the funding dry up. Oh yes – as you can now see, they’ve also engaged the regulator, sans cautionary announcement.

As for the price, the offer implies a premium of 41.3% to the 30-day VWAP of Renergen. Of course, this premium is going to change every day as this is a share-for-share deal rather than a cash deal. For each Renergen share, 0.09196 ASP Isotopes shares will be issued. The Nasdaq price of ASP Isotopes ($ASPI) will have to be your guide here, as the JSE listing hasn’t been completed yet.

At the very bottom of the firm intention announcement, Renergen thought that it was maybe time to do this:

In the world of corporate disclosure, even Trump and his tariff team would probably describe this as an aggressive approach.

Renergen’s share price closed 38.9% higher, absolutely mutilating any short sellers along the way. And if I was one of those short sellers, I would be all over the JSE’s regulatory department regarding lack of disclosure here. Ditto for any major shareholders who sold in good faith after the release of Renergen’s financials, oblivious to what was really going on. This is how investors lose faith in public markets.

Sasol’s capital markets day is worth a look (JSE: SOL)

This is where the market gets medium-term targets from

A capital markets day is a big deal. This is an opportunity for corporates to allow their management team to shine, while speaking to the medium-term targets that the market will (hopefully) hold them accountable for. Sasol is the latest such example.

Now, a lot of the language becomes pretty consistent when you’ve seen enough of these things, like “resetting the business” as a fancy way of saying “wow this isn’t good, we must fix it” – you get the idea.

I just focus on the numbers. For example, they are promising an EBITDA margin of at least 15% in the International Chemicals business by FY28. That implies EBITDA of $750 – $850 million. I’ll believe it when I see it, as that part of the business has disappointed people more often than the Proteas in crunch games.

Interestingly, they indicate that the break-even level for the South African value chain is an oil price of $50/barrel by FY28. Now, the bad news is that the oil price hasn’t exactly been a story of steady growth, as you can see:

This shows you the problem for Sasol: like all energy companies, they are ultimately beholden to what happens with global commodity prices. On top of this, they are dealing with major South African risks like local infrastructure challenges. This slide from the deck really tells the story, as it shows that the growth at Sasol is based entirely on the International Chemicals business, with the Southern Africa business expected to go sideways:

If you are interested in getting the full details, then you’ll find the presentation and the transcripts here.

A massive positive swing in profits at Stefanutti Stocks (JSE: SSK)

You won’t see percentage moves like this very often

When it comes to year-on-year moves in HEPS, Stefanutti Stocks isn’t playing around. For the year to February 2025, they expect HEPS from continuing operations to improve by between 2,355% and 2,375%. That’s obviously a daft range, so it’s more useful to tell you that HEPS is expected to be between 124.48 cents and 125.58 cents vs. a headline loss per share of 5.52 cents in the comparable period.

If you look at total operations, which includes SS-Construcoes (Mocambique) Limitada (currently under disposal) and Stefanutti Stocks Construction Limited (held for sale), then HEPS came in at between 77.43 cents and 79.33 cents. This shows you that the discontinued operations are making significant losses. Still, it’s a vast improvement on the headline loss per share from total operations of 55.73 cents in the comparable period.

Notably, despite winning in court in Zambia regarding the Kalabo-Sikongo-Angola border gate road, the recoverability of the R148 million they’ve recognised is so in doubt that they’ve raised an expected credit loss of R109 million in addition to a tax charge of R12 million. Something is better than nothing, I guess.

The share price closed 12.4% higher at R3.71. They expect to release full results on 27 May.

Nibbles:

  • Director dealings:
    • Although the CEO of CA Sales Holdings (JSE: CAA) and his family members acquired shares worth roughly R3 million in off-market transactions, there was also a much larger sale of R36 million in shares by the CEO in another off-market transaction. Some of this is due to restructuring, but there’s diversification of wealth here as well. The CEO and associates own 2.6% of the company.
    • In a share-based incentive deal that goes back to 2015, various Northam Platinum (JSE: NPH) execs received a total cash award of R53.3 million in addition to shares worth a mildly astonishing R553 million (pre-tax). All the execs have chosen to commit 100% of their post-tax shares to a new voluntary incentive mechanism.
  • Anglo American (JSE: AGL) will be distributing 110 Anglo American Platinum (JSE: AMS) shares for every 1,075 Anglo American shares. To then provide consistency in the Anglo American share price before and after the demerger, they will proceed with a share consolidation that will see each shareholder have 96 Anglo American shares for every 109 shares currently held. The idea here is to prevent a scenario where the share price drops sharply due to Anglo American Platinum no longer being in the group. They’ve done the maths regarding the reduction of shares in issue to avoid that happening. As for the change of name from Anglo American Platinum to Valterra Platinum, this will be effective from 28 May 2025.
  • Southern Palladium (JSE: SDL) has received the environmental authorisation for the Bengwenyama Project from the Department of Mineral and Petroleum Resources (DMPR). This is an important milestone on the path towards being awarded a mining right. They are also working on an updated pre-feasibility study, focusing on a smaller-scale (and thus less capex-intensive operation), with the results scheduled to be announced in June. The last version of the pre-feasibility study came out in October 2024 and reflected an internal rate of return (IRR) of 28%. Basket prices are off 6% since then, so efforts to downscale the planned operations will hopefully keep the expected IRR at appealing levels.
  • Wesizwe Platinum (JSE: WEZ) has updated the market on the commissioning of the processing plant at the Bakubung Platinum Mine. A number of defects were identified in the initial test runs in 2023, leading to expert help being brought in during 2024. The good news is that the plant rectification is on track and they’ve commenced with hot commissioning. The teething issues that mining houses deal with seem to be a feature of the industry rather than a bug.
  • The seemingly cursed deal for Conduit Capital (JSE: CND) to dispose of CRIH and CLL has finally fallen over. The regulators simply weren’t having it, blocking the deal and leading to a court process. The purchaser eventually reached deal fatigue and elected not to challenge the Prudential Authority’s decision, which means that the deal has lapsed. The parties have no claims against each other as a result of the lapse, so the lawyers on both sides did their jobs properly in the agreements. Of course, this doesn’t help Conduit Capital in the slightest.
  • The formal death of Murray & Roberts (JSE: MUR) in its current corporate form has moved a step closer. The holding company is insolvent and the business rescue plan envisages a scenario in which they have no operating companies or prospects to generate cash by the third quarter of this year. Thus, the board is proposing a resolution for a voluntary wind-up of the company to put it out of its misery. Like so many endings, this one is with just a small puff of smoke from the broken remains of an iconic South African company.

Ghost Bites (Adcorp | Astral Foods | Famous Brands | Netcare | Prosus – Naspers | Renergen | Tharisa | Vodacom)

The Finance Ghost
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Ghost Bites (Adcorp | Astral Foods | Famous Brands | Netcare | Prosus – Naspers | Renergen | Tharisa | Vodacom)

A focus on margins has paid off at Adcorp (JSE: ADR)

The market loved this news

Adcorp tends to have a wide bid-offer spread, but that’s not the reason why the share price was trading 34% higher by the late afternoon. Volumes were almost 5x the average daily volume and all the action came after the release of an exciting trading statement.

For the year ended February 2024, Adcorp expects HEPS to come in between 51.6% and 71.6% higher. This means a range of 127.0 to 143.8 cents, so it’s not a surprise that the share rallied in response. It was trading at R4.10 at the start of the day, which suddenly became a modest P/E ratio even by Adcorp’s standards. Even at the closing price of R5.50 per share, that’s a P/E of just over 4x.

The low P/E is a function of the lack of growth in this space, with Adcorp’s resourcing businesses dealing with a tough economy and a bunch of other factors, like the impact of AI on white-collar jobs. This has forced the group to focus on costs and margins, with clearly visible results.

Full results are due for release on 29th May.

Profits more than halve at Astral Foods (JSE: ARL)

Aah, the joys of poultry margins

The margins in chicken farming are the stuff of legend. It takes just a few changes further up the income statement to cause huge swings in net profit and thus profit margin. This is evidenced by results at Astral Foods for the six months to March 2025, where revenue was up 3.5% but operating profit fell by a nasty 50.7%. This took net margin down from 5.3% to 2.5%. Ouch!

At least the balance sheet is a lot stronger these days, supporting an interim dividend of R2.20 per share (a decent payout ratio vs. HEPS of R4.09). For context, the share price is over R186, so you definitely aren’t buying this for the dividend.

Trying to guess how the broader industry will perform truly is a game of chicken. For example, with SAFEX yellow maize prices up 28%, you would expect there to have been margin pressure in the Feed division. But instead, thanks to a significant drop in soymeal prices (and chickens presumably having more flexible tastes than the average toddler), they managed to not just maintain margins in the Feed division, but improve them by 10 basis points to 5.6%.

The same can’t be said for the Poultry division, where revenue was up just 1.5% and Astral was on the wrong side of the increase in feed costs. Once again, Astral is subsidising the cost of producing chicken, with a loss of R26 million for this division in the period. To add insult to injury, a cybersecurity incident cost the division R20 million.

The outlook statement by the company is essentially a laundry list of risks. And yet, the Astral share price is up 20.7% in the past 12 months. I genuinely don’t understand how anyone can do a reasonable valuation of the companies in this industry, hence I avoid it entirely.

Famous Brands: a scrappy set of numbers, but margins went up at least (JSE: FBR)

And margins are what really matter right now

The year ended February 2025 saw an acceleration in the second half by Famous Brands, as they took advantage of a period that saw practically no load shedding. HEPS for the six months to August was up 9.5% and the full-year result was an increase of 11.9%, so that’s encouraging momentum for the group.

This was firmly a story of margin rather than revenue, as revenue was up just 3.2% and operating profit increased by 12.6%. That’s a 90 basis point improvement in operating profit margin, from 10.1% to 11.0%. This has driven an improvement to the balance sheet, with net debt to EBITDA down from 1.13x to 0.89x.

We begin with the Brands part of the business, which means the franchised restaurants that you know and possibly love. There are various sub-categories here.

Leading Brands, the part of the business with the takeaway businesses that have been the foundation of the group, increased its revenue by 1.6% and operating profit by 7.5%. That’s not exciting on the revenue line, but it’s a lot better than Signature Brands (the fancy restaurants) where revenue fell by 4.4% and the operating loss margin worsened from -1.9% to -5.7%. Looking beyond the South African business, the SADC region grew revenue by 10.0% but suffered a slightly dip in operating profit and thus a contraction in margin from 13.4% to 11.2%. The Africa and Middle East business may have grown revenue by 27.7%, but their operating loss jumped from R14 million to R43 million, a nasty margin of -60.5%. And finally, Wimpy UK had a horrible time, with revenue down 18.5% and the operating margin more than halving from 11.4% to 5.4%.

The Manufacturing side of the business only increased revenue by 2.5%, yet they increased operating profit by 25% and improved the margin from 9.0% to 11.0%. This was the star of the show for Famous Brands in this period.

In the Logistics business, revenue may have been up 4.1%, but operating profit margin declined from 1.9% to 1.4%. Those are paper-thin margins.

As for the Retail division, the margins are even worse. Revenue dipped by 6.6% to R344 million and operating profit fell from R6 million to R1 million. That is a truly horrible return on capital, as the working capital required to support those sales to retailers is substantial.

The group expects a low growth year in 2026. Trading on a P/E of 11.3x, I’m just not sure that there’s enough in this story to keep the multiple at that level.

Margins on the up at Netcare (JSE: NTC)

And a 20% increase in the dividend

Netcare released results for the six months to March 2025. Although revenue was up just 5.3%, they managed to convert this into operating profit growth of 11.5% and a jump in HEPS of 20.9% (or 20% on an adjusted basis). Cash quality of earnings is strong, with the interim dividend also up 20%.

This means that Return on Invested Capital (ROIC) has improved from 10.9% to 11.9%. It’s still too low of course, with hospital groups having quite the reputation for earning sub-par return on capital. At least this metric is trending in the right direction. The group has followed a sensible approach of executing share buybacks, which is what you want to see in terms of capital allocation discipline.

And in line with the recent trend, maternity cases continue to decline. Humanity just isn’t in a particularly great space right now when it comes to making more humans. I always contrast this trend to mental health, where demand is “robust” – another indication of how people are doing at the moment.

Prosus launches the all-cash offer for Just Eat Takeaway.com (JSE: PRX | JSE: NPN)

Bloisi’s growth strategy continues

News of this transaction first broke in March this year. I went into it in some detail at the time in my weekly Moneyweb podcast (you’ll find that episode here and I would love it if you became a regular listener).

Food delivery is one of the verticals that Prosus / Naspers really likes. It’s a familiar space for CEO Fabricio Bloisi, as he cut his teeth by scaling a food business in South America. Europe is certainly not the same place as South America, hence it will need a strategy around efficiencies rather than outright growth. Of course, being able to deliver a product with more efficiency is also a way to drive growth, as it can become more cost competitive.

The offer price of EUR 20.30 per share is a 63% premium to the closing share price on 21 February 2025. It has been unanimously recommended to shareholders by Just Eat Takeaway.com’s board. Top executives including the CEO have agreed to accept the offer.

The timing is clever, as Just Eat Takeaway.com has been through a tough period in which they made mistakes and eventually got out of the US market. This makes it perfect for the Prosus / Naspers crew, as it means that (1) it fits the strategy of building a non-US platform and (2) they can get it for a good price.

The deal is worth EUR 4.1 billion. Revenue over the last twelve months was EUR 3.6 billion. That’s a price/sales multiple of just over 1.1x, which is a bit of a joke for a platform business like this (in a good way). It’s not surprising that some minority shareholders have launched a public campaign to discredit the offer price, calling it far too cheap.

This is how markets work – successful companies get to buy unsuccessful ones and fix them. Here’s a share price chart of Prosus vs. Just Eat Takeaway.com based on their European listings (and thus in comparable currency):

Unlike his predecessor who loved deploying as much capital as possible at the very top of the cycle, Bloisi is able to execute opportunistic deals that take advantage of the broken growth stories in a post-pandemic environment. This is one of the reasons why I’m now long Prosus.

Pressure on Renergen after the release of financials (JSE: REN)

The share price fell 5% on strong volumes

Renergen’s financial performance for the year ended February 2025 wasn’t exactly a secret. The company had previously published a preliminary report that gave a strong indication of what was coming. Despite this, there was a strongly negative market reaction to the detailed financials.

Renergen’s revenue may have increased by 79.7%, but that’s off a tiny base relative to the expenses in the company. This is why the headline loss per share jumped from 75.07 cents to 159.15 cents.

LNG production may have increased by 70% for the year, but that’s not really what the market is interested in. The value lies in helium, which only achieved its first delivery in March 2025 (after the end of this period). This makes the 2026 financial year absolutely critical, as any missteps in the helium story could literally sink the company.

Why is that the case? Well, Renergen is burning through cash and is reliant on ongoing support from funders and investors. That support is based entirely on the expectation of helium successfully being produced and sold. This is why 2026 is the make-or-break year, as I can’t see the market having any further patience.

And here’s the kicker that the market may have particularly hated: as of February 2025, Renergen is in default with the United States Development Finance Corporation. This paragraph from the results should make the risks pretty clear to you:

Tharisa has suffered a huge drop in earnings (JSE: THA)

Chrome prices and the weather were major negative impacts

Tharisa released a trading statement dealing with the six months to March 2025. There’s no good news here I’m afraid, with HEPS expected to drop by between 76.6% to 84.3%. As a reminder, the company reports in US dollars.

This substantial decrease has been attributed to weather-related operational challenges and weakness in chrome prices. Although PGM prices have at least stopped sliding, they also haven’t exactly been on the up. The combination means that operating conditions remain tough in the sector.

With interim HEPS of between 2 and 3 US cents, that share price of R14.50 looks very high.

Vodacom: stretching the term “normalised” as far as possible (JSE: VOD)

This kind of reporting is nonsense

There are many companies out there that distinguish between “reported” and “constant currency” numbers. There are good reasons for this, as it helps investors distinguish between underlying, in-country growth vs. the impact of converting the results into the reporting currency.

It’s also not unusual to see “normalised” numbers, as companies have often undertaken large corporate actions that introduced additional costs into the system.

But I can’t recall another example of seeing constant currency numbers presented as being normalised, particularly when I know that the currency impact is significant. For the year ended March 2025, Vodacom has reported revenue growth of 1.1% and operating profit growth of 1.3%, yet these magically turn into 10.9% (both of them) on a “normalised” basis.

If you are deeply invested in Africa, you cannot tell me that the constant currency basis is “normalised” in the way that most people would understand that term. They shouldn’t be allowed to report numbers like this. I fully understand that companies will try and put the best story forward, but just look at this example of where they are putting the emphasis:

Every small percentage increase is in black. Every large one is in red. Skim readers, beware.

The South African business achieved revenue and EBITDA growth of 2.3%, so margins have been consistent locally. Egypt grew very strongly in constant currency, up 45.2% in revenue and 70.4% in EBITDA. This is where the currency really plays a role, as the numbers reported in rand reflect an 8.2% decrease in service revenue and just 2.9% growth in EBITDA.

The rest of the African business (Tanzania / DRC / Mozambique / Lesotho) saw a 10.4% increase in reported revenue, yet a 13.8% drop in EBITDA. Finally, Safaricom in East Africa grew revenue by 21% as reported and EBITDA by 15.3% on the same basis, making it the genuine standout result.

Credit where credit is due: the fintech business is growing solidly, including in Egypt where it was up 14.1% as reported or 80.1% on a constant currency basis.

There are actually some good news stories in Vodacom. It’s just a pity that they are wrapped up in such a clumsy attempt to gloss over the currency risks that the group faces. How different our continent would look if the macroeconomic situation just needed to “normalise”…

WeBuyCars impacted by the listing structure, but the core business is growing (JSE: WBC)

All the important metrics are going the right way

I have a long position in WeBuyCars for two reasons. The first is that I was a Transaction Capital shareholder at the time when it blew up, so my resultant WeBuyCars stake is essentially the corporate equivalent of a PS: I’m Sorry chocolate bar. The second is that WeBuyCars is a really good business that is consistently winning market share in South Africa. I would much rather be exposed to churn of the existing national car parc than rely on selling new cars to local consumers.

My theory is working out just fine, with revenue for the six months to March up by 15.2%. Growth companies always have to be careful of their working capital, so it’s encouraging to see that cash generated from operating activities was up 6.4%. The growth mindset also comes through in the target dividend payout ratio of just 25% to 33% of headline earnings per share, resulting in an interim dividend of 30 cents. They are hanging onto plenty of capital for growth purposes.

The comparable dividend is of no help, as it reflects the huge pre-IPO dividend that was payable as part of WeBuyCars being separated from its toxic host. This process also significantly impacted the number of shares in issue, which is why HEPS is up by just 1.6% despite core headline earnings being 26.4% higher.

The group remains firmly on a growth path. The impact of the additional number of shares will normalise soon and although the impact on HEPS is frustrating, I’m certainly not complaining about the share price being up roughly 125% since listing in April last year.

Nibbles:

  • Back in September 2024, Grindrod (JSE: GND) announced an intention to acquire the remaining 35% in Terminal de Carvão da Matola Limitada (TCM), the Maputo dry bulk terminal that has been taking advantage of South Africa’s infrastructure failings. All conditions precedent to the deal have been met and they will now move to closing. A deal is never done until all the conditions have been met, so this is important.
  • Gemfields (JSE: GML) achieved strong support at its Extraordinary General Meeting for the fully underwritten rights issue. This isn’t a surprise, as they are in somewhat desperate need of the capital. Interestingly, although 94.41% of votes were cast in favour of the issuance of shares, only 86.33% were in favour of the underwriting issue. That’s still an approval, but it does show some discomfort among shareholders.
  • AYO Technology (JSE: AYO) announced that a potential offeror (at this stage unnamed) has expressed a firm intention to make an offer for all the shares in the company not already held by that offeror. The announcement is currently under review by the Takeover Regulation Panel (TRP) and will be released in due course.
  • MTN (JSE: MTN) announced that Moody’s has affirmed its credit rating with a stable outlook. This gives further support to the overall narrative of how well things have stabilised there.

Sony’s stuck in a Spider-Man spiral

Dominique Olivier
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Sony’s stuck in a Spider-Man spiral

Sony, once a post-war electronics wunderkind best known for pioneering devices like the Walkman and the Trinitron TV, now finds itself tangled in a web of its own making – one spun not from copper wire or silicon wafers, but from red spandex and Hollywood contracts.

To understand how Sony found itself in this tangle of tights and legal timelines, we have to go back (way back) to post-WWII Tokyo. Founded in 1946 as Tokyo Tsushin Kogyo by Masaru Ibuka and Akio Morita, the company that would become Sony was at the forefront of Japan’s economic recovery. It launched Japan’s first transistor radio, helped bring video recording into homes, and changed global pop culture with innovations like the Trinitron television and, later, the Walkman.

Sony wasn’t just good at making things; it was good at predicting the way people wanted to consume media. That foresight led it into music and movies in the 1980s, when it acquired Columbia Records (1988) and Columbia Pictures (1989), giving the company control of both content and the devices that played it. The dream was vertical integration: own the sound, own the screen, own the experience.

And for a while, it worked. Until the business of owning stories got a lot more complicated.

One man’s bankruptcy is another man’s gold rush

While Sony was riding high on its global expansion, Marvel was barely staying afloat. Founded in 1939, the comic book icon introduced a constellation of memorable characters including Captain America, Iron Man, the X-Men, the Fantastic Four, and of course, Spider-Man. But by the 1990s, comic book sales were in freefall, and Marvel found itself on the brink of bankruptcy.

To stay solvent, the company began licensing its intellectual property at bargain-bin prices. Toy Biz got the action figures. 20th Century Fox got the X-Men. Universal Studios took a swing at the Hulk. And in 1999, Sony Pictures swooped in and claimed the big-ticket item, buying the rights to Spider-Man’s film and TV appearances for a reported $7 million – a deal that would go down in entertainment history as one of the most consequential licensing agreements ever signed.

Sony wasted no time turning their new property into box office gold. The first Spider-Man film, directed by Sam Raimi and starring Tobey Maguire, was released in 2002 and shattered opening weekend records. It was followed by two more films in 2004 and 2007. Critics and fans largely embraced the trilogy, though Spider-Man 3, with its surplus of villains and eyeliner, showed early signs of franchise fatigue.

Then came the reboot era. In 2012, Sony reset the franchise with The Amazing Spider-Man, starring Andrew Garfield. It performed well, but the sequel in 2014 underwhelmed audiences and critics alike. Sony, aware they had a box office titan in Spider-Man but no larger universe to support him, began searching for a way out of their creative cul-de-sac. Fortunately, just across the lot, Marvel Studios had cracked the code on interconnected storytelling and was building a little cinematic empire of their own.

Meanwhile, at Marvel

I did a deep dive on Marvel’s big bet – the cinematic universe model – back in October last year. If you’re feeling foggy on the details, you can find that piece here. The short version: while Sony was busy squeezing as much value as it could out of their Spider-Man rights, Marvel was quietly rewriting the playbook. Instead of standalone blockbusters, they introduced the Marvel Cinematic Universe (or MCU, if you’re on nickname terms), built on the same crossover DNA that made their comic books work – recurring characters, shared worlds, and storylines that echoed across films like dominoes. The blueprint was simple: solo hero movies would build to an ensemble Avengers climax, then reset for the next phase.

Fans caught on quickly. Reddit lit up. Theory threads exploded. But one big question kept surfacing: Spider-Man is a core Avenger – so how was Marvel planning to assemble the full team without him, now that Sony owned him?

A marriage of convenience

In 2015, Sony and Marvel Studios (by then owned by Disney) struck an historic deal, allowing Spider-Man to join the MCU on what is essentially a complicated loan. Sony would continue to finance and distribute solo Spider-Man films, while Disney could feature the character in ensemble MCU projects. It was a win-win creatively and financially.

This third iteration of Spider-Man, played by Tom Holland, joined the MCU in Captain America: Civil War and quickly became a fan favourite. He’s since appeared in six MCU films, including Spider-Man: No Way Home, which pulled off a multiverse hat-trick by uniting Holland, Maguire, and Garfield (three generations of Spider-Men!) on screen – a dazzling nostalgic spectacle that really is a testament to the intricacy of this IP dance.

But the partnership hasn’t always been smooth. In 2019, negotiations between Sony and Disney broke down, and Sony threatened to pull Spider-Man out of the MCU entirely. As you can probably imagine, the internet lost its collective mind. Hashtags trended, and Tom Holland reportedly cried on the phone with Disney CEO Bob Iger. Eventually, fan pressure (and logic) prevailed. A new deal was signed, and development began on Spider-Man: Brand New Day, starring Holland and due in 2026.

Can Sony keep spinning?

To Sony’s credit, some of its Spider-Man output has been brilliant. Into the Spider-Verse, the animated Sony film that followed Spider-Man’s stint in the MCU, is widely regarded as one of the best animated films ever made, with its groundbreaking visuals and emotionally rich storytelling. Its sequel, Across the Spider-Verse, doubled down on that performance. But other Spider-adjacent efforts – Morbius, Venom: Let There Be Carnage, and Madame Web – have landed with a thud, critically and often also commercially.

The company seems torn between genuine creative ambition and IP survivalism. Some projects feel like strategic world-building, while others feel like filler meant to hit a legal word count. And there’s a very good reason for that. 

The 71-page licensing agreement between Sony and Marvel, which was unearthed in the infamous 2014 Sony hack, reads less like a casual IP deal and more like the cinematic equivalent of a hostage negotiation. Among the more revealing clauses is a strict set of deadlines. Under the terms of the agreement, Sony must begin production on a new Spider-Man film within 3 years and 9 months of the last release, and must get it into theatres within 5 years and 9 months. Miss either deadline, and the rights to one of the most valuable characters in pop culture automatically revert to Marvel.

There is some breathing room: if Sony manages to crank out three Spider-Man films within eight consecutive years, the timeline extends, but only slightly. They get up to 5 years to start the next production and 7 years to release it. Still, the fundamental rule stands: use it or lose it. And Sony, well, Sony really doesn’t want to lose it.

That ticking clock is a big part of why Sony’s Spider-Man output hasn’t slowed, even when reviews (and memes) suggest they maybe should’ve taken a beat. This is less about passion projects and more about portfolio management. Every film, whether good, bad, or baffling, resets the rights countdown. That’s why you’ve seen the studio invest not just in Peter Parker-led stories, but also in increasingly obscure spin-offs featuring in-universe characters like Venom, Morbius, and Madame Web. Even when a film flops critically (Morbius managed to tank twice), it still counts as another notch on the production timeline. From Sony’s perspective, that’s less of a failure and more of a renewal notice.

Unless the contract is radically renegotiated, Sony will keep making Spider-Man content (animated, live-action, cameo-laden, or otherwise) every few years to maintain its grip. It might be artistically uneven, but it’s commercially inevitable. One day, the rights may revert to Marvel. Or perhaps a more permanent partnership with Disney will emerge. But until then, Sony’s stuck in the Spider-Man spiral, forever climbing, spinning and rebooting.

About the author: Dominique Olivier

Dominique Olivier is the founder of human.writer, where she uses her love of storytelling and ideation to help brands solve problems.

She is a weekly columnist in Ghost Mail and collaborates with The Finance Ghost on Ghost Mail Weekender, a Sunday publication designed to help you be more interesting. She now also writes a regular column for Daily Maverick.

Dominique can be reached on LinkedIn here.

Ghost Bites (Blue Label | Collins Property Group | Finbond | MAS | Nampak | NEPI Rockcastle | Newpark | Nutun | Pepkor | Primary Health Properties – Assura | Richemont | Tiger Brands)

The Finance Ghost
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Ghost Bites (Blue Label | Collins Property Group | Finbond | MAS | Nampak | NEPI Rockcastle | Newpark | Nutun | Pepkor | Primary Health Properties – Assura | Richemont | Tiger Brands)

Blue Label could list Cell C separately on the JSE (JSE: BLU)

If we are really lucky, the accounting might even become simpler as well

Aside from being an excellent case study for sadistic lecturers looking for ideas for impossible IFRS questions, Blue Label has been the best punt in the telecoms sector in recent times. Those who were willing to ride the momentum are up 130% in the past 12 months! I have a firm rule of not buying things I don’t fully understand, so I missed out on this.

For the few who actually understood the structure and the many who followed their lead, this is a winner that keeps on winning. The next step in the dance is a potential separate listing of Cell C on the JSE, thereby giving investors the option between exposure to Cell C or Blue Label’s distribution business. If you think about how long Cell C has been around for and how often it has failed to implement a sustainable business model, this step is a big deal.

As you would expect, such a transaction would require a complex restructure of the group. I just hope that above all, they take an approach of simplifying things as much as possible. Having two groups with clean balance sheets and as little cross-exposure as possible should be the goal here.

The market didn’t like something about the Collins Property Group update (JSE: CPP)

Perhaps lack of growth in the final dividend was the problem?

Collins Property Group closed 12.9% lower on Friday after releasing results. When you see something like this, it’s worth checking what time the announcement came out and whether the market had time to properly consider it. As this was a late morning announcement, we can tick that box. The next thing to consider is traded volumes, particularly for smaller companies. The volume on the day was over 6x more than an average day, so this drop was driven by strong volumes. In other words, you should take it seriously.

The share price drop tells us that the market didn’t like something about the numbers, even though distributable income per share was up 16% for the year to February 2025. Although the total dividend for the year was up 11%, all the growth was in the interim dividend, as the final dividend was flat at 50 cents per share. I think this was probably one of the issues, as investors don’t enjoy seeing a decrease in the payout ratio at REITs

The loan-to-value ratio also remains high, having improved by just 100 basis points from 50.8% to 49.8%. Although they make the argument that their asset valuations are conservative, the reality is that the market will benchmark this ratio against other REITs in the sector and Collins won’t be seen in a favourable light based on the current level. This could be another reason for the share price move.

Vacancies have improved in both the industrial and logistics as well as retail portfolios. Although it did go the right way in office as well, it remains very high at 18.4% (vs. 4.7% in retail and just 0.9% in industrial and logistics). They are looking to sell the office properties.

I must point out that despite the negative response to earnings, the share price is still up 27% over the past year.

Losses have worsened at Finbond (JSE: AFT)

Shareholders won’t have to wait long for full details

Finbond’s share price is up 95% over 12 months. Despite this, they are reporting headline losses – and the losses are getting worse!

In a trading statement for the year ended February 2025, the headline loss per share is expected to be between 1.86 cents and 1.94 cents. This compares to a loss of 0.4 cents in the comparable period.

Full details will be available on 30 May.

An interesting potential acquisition of MAS is on the table (JSE: MSP)

It could involve an inward listing of new preferred shares

PKM Development already holds 21.8% in MAS. If the name sounds familiar, its because PKM development is a joint venture between MAS and Prime Kapital Holdings. So, MAS holds 40% in a joint venture that in turns holds 21.8% in MAS (among other assets). Sometimes I’m reminded that the convoluted questions in my Fin Acc IV papers at varsity weren’t so crazy after all!

It gets even more complicated. The subsidiary of PKM Development that holds the MAS shares has now sent an offer to the MAS board for all the remaining shares in MAS. The board of MAS has confirmed that they had no input into the terms of the letter, despite being a 40% holder in the joint venture.

The offer gives shareholders in MAS the option to receive either cash (EUR 0.85 per share) or 5 year redeemable non-voting preferred shares (or a combination of the two). The deal is subject to shareholders not electing to receive more than EUR 40 million in cash, although the offeror reserves the right to increase this amount as required. The MAS market cap is R14.4 billion and even once we take into account the portion already held by the offeror, that seems like a very light cash cap. The deal relies on most shareholders taking the preferred equity.

To try and encourage that choice, they would inward list the preferred equity on either the JSE or the Cape Town Stock Exchange. Will this be enough?

There’s a whole complicated story in the announcement about what the future redemption value would be, with one of the key inputs to the calculation being the face value of each instrument, which increases by 7% per annum (in EUR).

My overall reaction to this offer is: why bother? The price of EUR 0.85 per share works out to around R17.15 at current exchange rates. MAS is trading at R18.77, so the offer price is at a discount to the current traded price. On top of that, it has a limited cash portion and creates a far more complex instrument that is likely to have little in the way of liquidity.

This seems clumsy and opportunistic to me. Perhaps I’m missing something, in which case I’m always happy to be challenged with opposing views!

Nampak is achieving modest growth (JSE: NPK)

Under the circumstances, that’s pretty good

Nampak has released a trading update for the six months to March. They were up against a tough base period for comparative purposes, as well as all the macroeconomic noise that has been a feature of the first few months of this year. Despite this, earnings went in the right direction.

Although they don’t give specific revenue growth at this stage, Nampak has indicated that operating profit is up 7%. That’s a solid outcome.

There are some distortions in headline earnings regarding a medical aid gain, a pension fund surplus and a COVID insurance claim, which is a useful reminder that even HEPS isn’t a perfect measure of sustainable earnings. The net after tax effect of these items is a benefit of R165 million in this period vs. R290 million in the comparable period, so it actually impacts growth in HEPS. This is why guided HEPS growth is only 1% to 8% from continuing operations, despite there being lower net finance costs vs. the prior period.

From total operations, HEPS will jump by between 98% and 114%, impacted by Bevcan Nigeria.

Full details will be available when results are released on 23rd May.

NEPI Rockcastle: why per-share metrics matter (JSE: NRP)

Total growth is less important than distributable income per share

NEPI Rockcastle released an update for the first quarter of 2025. Group net operating income increased by 12.6%, boosted by two large acquisitions in Poland in the second half of 2024. If you split those out and look at like-for-like earnings, they were only up by 5%.

Although footfall was down year-on-year with the timing of Easter to blame, tenant sales were up 3.7% thanks to a 9.7% jump in average basket size. This suggests that the markets of focus in Central and Eastern Europe remain healthy. This supports the decision by NEPI Rockcastle to continue expanding in the area, with various developments in progress.

The balance sheet is extremely healthy, with a loan-to-value ratio of 31.2%. That’s well below the 35% level that the company is comfortable to operate at.

All of this sounds great, until we get to what this translates to on a per-share basis. Due to the increase in the number of shares in issue due to strategies like accelerated bookbuilds to raise new equity capital, the growth in distributable earnings per share for the year ended February 2025 is expected to be just 1.5%. This is why it is very important to take into account capital raising activity (including things like dividend reinvestment plans) and how they affect returns.

Newpark has ramped up its payout ratio (JSE: NRL)

But this doesn’t fix the underlying challenge in the portfolio

Newpark has a focused portfolio with just a few properties in it, including the JSE building in Sandton and 24 Central next door, where I spent many a Friday evening in my early career. They also have a property in Linbro Business Park and one in Crown Mines. Not exactly a coherent selection, is it?

In the year ended February 2025, this portfolio could only manage a 1.5% increase in revenue. That’s nowhere near enough to offset inflationary pressures on costs, so funds from operations decreased by 3.4%. Despite this, the total dividend per share increased by 11.4%. They essentially ramped the payout ratio to 100% of funds from operations per share, which means the dividend growth is no indication of how the underlying portfolio did in this period.

With the loan-to-value ratio up from 41.1% to 43.1%, I’m not sure why they ramped the dividend here. That’s not an overly comfortable level of debt.

Earnings are also going to get a lot worse, as a major negative reversion on the lease with the JSE is going to hit funds from operations per share for the year ended February 2026 by between 41.3% and 50.2%! This implies forward earnings of between 39 and 46 cents per share, which tells me that the current share price of R4.80 is way too high. There’s very little volume in the share, which is why the share price isn’t reflecting the current economic realities.

Nutun isn’t out of the woods yet (JSE: NTU)

The charred remains of Transaction Capital are now loss-making

The sad and sorry tale of what used to be Transaction Capital continues, with Nutun (the renamed group that is now just the old TCRS business) reporting losses for the six months to March 2025.

This is a now a business process outsourcing group that is still primarily focused on collection and debt acquisition services. It always used to make money when Transaction Capital was still in one piece, but there have been considerable restructuring processes underway. There’s little doubt that the broader chaos in the Transaction Capital group negatively impacted Nutun, especially in terms of its access to capital to execute its strategy.

The group notes that this is only the first year of a two-year restructuring process, so it’s going to be messy for a while. Despite a significant reduction in overheads, the expected headline loss per share from continuing operations is -14.6 cents to -16.5 cents, a significant negative swing from positive HEPS of 2.3 cents in the comparable period.

For context, the share price is R1.99, having shed 26% of its value in the past 12 months. As this announcement came out after market close on Friday, I doubt it will be a happy Monday for this share price.

Solid double-digit growth at Pepkor (JSE: PPH)

This is what shareholders want to see

Pepkor has good news for shareholders based on the six months to March 2025. With solid numbers in the traditional retail and fintech operations, the expected increase in normalised HEPS from continuing operations is between 13% and 23%. That’s strong!

In case you’re wondering, the discontinued operation is The Building Company in the base period. There were no discontinued operations in this period. But it’s still critical to look at continuing operations, otherwise you have The Building Company in the base period and not in this one, which limits comparability.

As for the reference to normalised HEPS rather than just HEPS, this is due to changes to the effective tax rate because of a tax settlement. Even without normalising for the tax impact, HEPS was up by between 8% and 18%.

Detailed results are due on 27 May.

Primary Health Properties is still making a play for Assura (JSE: PHP | JSE: AHR)

Until now, the board has been in favour of the private equity offer

As things stand, the board of Assura has been supportive of an offer by KKR and Stonepeak to take the property fund private. Primary Health Properties has been throwing its hat in the ring, but they haven’t won the support of the board. I don’t blame the board, as my view is that the private equity option has been the superior offer.

Nonetheless, Primary Health Properties is going ahead with a firm off to shareholders. It comprises 12.5 pence in cash and 0.3769 new shares in Primary Health Properties for each share in Assura. This is a merger of two listed companies rather than a take-private by private equity investors.

The Primary Health offer represents a 4.7% premium to the offer of 49.4 pence put forward by the private equity consortium. That’s better than what we’ve seen before, when the offer was for 9.08 pence and 0.3848 new shares in Primary Health Properties. At the time, that was an implied value of 46.2 pence for Assura. The updated offer implies 51.7 pence.

But will it be enough of a premium? Mergers are reliant on synergies and there are a zillion examples in the market of deals that failed to achieve the promised benefits. This is why shareholders tend to prefer cash wherever possible, which Primary Health has responded to by increasing the cash component of the offer.

For now, Assura announced that the board is considering the offer and will make a further announcement in due course. It’s all going to come down to whether a 4.7% premium is worth the risk of accepting a mix of cash and shares, rather than just cash. Personally, I don’t think it’s enough of a premium, but let’s see what the UK-based board and its advisors will say.

The market found some highlights in the Richemont numbers (JSE: CFR)

It seems as though sales momentum and dividend growth were good enough for investors to get excited

Richemont’s results for the year ended March 2025 don’t actually tell a positive story. For the full year, sales increased just 4% and gross margin contracted by 120 basis points to 66.9%. Operating profit fell by 7%, so operating margin was down by 240 basis points to 20.9%. It’s not exactly a highlights reel, is it? Profit from continuing operations fell 1%, so they were in the red overall. Despite this, the dividend per share was up 9% and the share price closed 7.2% higher.

Management’s confidence in raising the dividend must be part of why the shares had a good day. The other reason must be sales momentum in the second half of the year, particularly outside of China. In fact, even China had a better second half than first half of the year, although in that region we are talking about a slower rate of decline rather than a faster rate of growth.

Will 2026 be a better year for Richemont? With Asia Pacific contributing 33% of sales in 2025 despite suffering negative growth of -13%, it mostly depends on China. The strong result in key regions Europe (+10%) and the Americas (+16%) is quickly offset by weakness in Asia Pacific. The fastest growing region was actually Japan (+25%), now representing 10% of total sales.

The retail vs. online vs. wholesale mix is always interesting to look at as well. The retail channel (directly-operated boutiques) is 70% of group sales and grew sales by 6% this year. Online was stronger, up 11% (excluding YNAP) off a small base of 6% of group sales. Wholesale struggled, declining 3% and contributing 24% of group sales.

The other way to slice and dice Richemont is by type of product. Jewellery Maisons grew sales by 8% and operating profit by 4% for the year. Interestingly, the recent rise in the gold price actually hurts them here, as it represents higher input costs and thus makes their products even more expensive! Specialist Watchmakers suffered a 13% decline in sales and a particularly ugly 69% drop in operating profit, which shows how much operating leverage there is in this industry i.e. the extent of fixed costs. And although there is a significant Other segment at Richemont, it includes so many unrelated things that I’m not sure we can draw useful conclusions from looking at it.

So, despite a weak year overall, the market is taking encouragement from the growth outside of China, the momentum in the second half of the year and the balance sheet strength that has supported growth in the dividend. The share price is now up 26% year-to-date and 22.8% over 12 months.

Tiger Brands is doing the responsible thing with the Langeberg & Ashton Foods business (JSE: TBS)

This hasn’t been an easy issue to manage

Tiger Brands has finally figured out how to navigate the social-economic disaster that is the Langeberg & Ashton Foods business. If you’ve ever driven through Ashton (and over its unnecessarily fancy bridge), you’ll know that it’s a relatively small town that is largely dependent on this business for its economic viability. Employing over 3,000 permanent and seasonal staff, the impact on the surrounding area of its closer would be the severe.

Having said that, Tiger Brands also has a responsibility to all its stakeholders, including shareholders, which means they can’t hang onto a financially problematic business purely for social reasons. They are a for-profit company, not a governmental organisation.

Is there a happy medium? It seems so, with Tiger announcing the disposal of the business for a nominal R1 to a consortium of parties with a vested interest in the community and the viability of the business, including a local co-operative of fruit growers in the region. That sounds pretty sensible to me. On top of this, Tiger Brands will commit R150 million towards establishing a community trust for the broader Langeberg Community, allowing that trust to beneficially hold 10% of the business. I’m not exactly sure how the back-end structuring is working, as the equity is being sold for a nominal value rather than R1.5 billion. And as a further commitment, Tiger will complete a R31 million effluent plant upgrade.

Either way, what definitely isn’t a nominal value is the extent of working capital required. This seasonal business sucks R900 million per annum in working capital, so offloading it will take pressure off the Tiger balance sheet.

In terms of the impact on Tiger’s supply chain, they will enter into a contract manufacturing agreement with the purchaser for canned fruit under the KOO brand. This is also critical to ensure the sustainability of the business.

Under the circumstances, it’s hard to see how a better outcome was possible.

Nibbles:

  • Director dealings:
    • A few directors and officers of AngloGold Ashanti (JSE: ANG) executed trades in relation to share options. Although one director sold only the taxable portion, two officers sold a total of $765k in shares and part of this was in excess of the taxable portion.
    • A director of African Rainbow Investments (JSE: AIL) accepted the offer to shareholders to the value of R650k.
  • Vunani (JSE: VUN) confirmed that all conditions precedent for the sale of 30% in Fairheads Benefit Services and Fairheads Financial Services to Old Mutual (JSE: OMU) have been met and the deal has now closed.
  • ArcelorMittal (JSE: ACL) corrected an error in a previous announcement (and even in the associated legal documents). The IDC has provided a facility to the group to defer the wind down of the long steel business for a period of six months. That should’ve meant up until the end of September, but the initial announcement and the legal docs referenced the end of August. They’ve corrected the error and confirmed that they have until the end of September.

PODCAST: No Ordinary Wednesday ep100 – a world in flux

Investec No Ordinary Wednesday
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PODCAST: No Ordinary Wednesday ep100 – a world in flux

Listen to the podcast here:

From a global pandemic to fractured supply chains, energy shocks, inflation spirals, rate hikes, AI disruption, war, and geopolitical realignment – the last four years have been anything but dull.

As we celebrate the 100th episode of the No Ordinary Wednesday podcast, we pause the relentless churn of the news cycle to reflect on the macro themes that have defined our world since this show first aired in May 2021. In this episode, we’ve gathered a veritable global panel of Investec leaders from Johannesburg, London, Mumbai, and Dubai to share their insights on what has shaped their regions and the critical forces they will be monitoring in the coming years.

Hosted by seasoned broadcaster, Jeremy Maggs, the No Ordinary Wednesday podcast unpacks the latest economic, business and political news in South Africa, with an all-star cast of investment and wealth managers, economists and financial planners from Investec. Listen in every second Wednesday for an in-depth look at what’s moving markets, shaping the economy, and changing the game for your wallet and your business.

Also on Apple Podcasts, Spotify and YouTube:

https://www.youtube.com/watch?v=xDvLCYsiyqs

Ghost Bites (Afrimat | Barloworld | Equites | Karooooo | Netcare | PPC | Sanlam | Southern Sun)

The Finance Ghost
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Ghost Bites (Afrimat | Barloworld | Equites | Karooooo | Netcare | PPC | Sanlam | Southern Sun)

Afrimat – brave dealmaking drives short-term pain (JSE: AFT)

Despite the jump in revenue, it was actually a very tough year

In the year ended February 2025, Afrimat’s revenue was up 36.7%. That sounds incredible, except the increase was because of the inclusion of the Lafarge business in the numbers. There’s a big difference between revenue and profits, with the cement business incurring losses throughout the year.

Why would Afrimat buy a business that negatively impacts results? Simply, they are playing the long game here. If you can buy and successfully improve distressed assets, then you make a killing. And if you don’t get it right, you get killed. Risk / reward, right?

To add to the risk, there were large additional finance costs from the transaction. This is why the debt:equity ratio has jumped from 1.4% to 48.9%. The balance sheet was in a position to take on a large transaction and Afrimat was brave enough to do it, with Lafarge being the largest acquisition in the company’s history.

One of the other risks that became very apparent in the past year is the exposure to ArcelorMittal as a major customer. Revenue from that group was R963.4 million this year, which is surprisingly up from R879.3 million in the prior year despite all the troubles there. For context, Afrimat’s group revenue was R8.3 billion in this period, so ArcelorMittal was around 11.6% of group revenue.

Although group HEPS fell quite spectacularly from 567.3 cents to 72.3 cents in this period, it’s important to look deeper to understand why. Lafarge was a major contributor, but certainly wasn’t the only reason.

For example, the aggregates business within Construction Materials (which includes part of Lafarge) grew operating profit by 40.2% to R383.5 million. The cement business lost R285.4 million, with many operational challenges during the year that hopefully won’t repeat in the coming year.

In the Bulk Commodities segment, which is even more important, operating profit unfortunately fell by 70.1%. Iron ore sales were a severe drag, impacted by commodity price decreases, higher shipping costs and challenges in rail volumes.

Moving on to Industrial Minerals, operating profit was over 4x higher at R58.8 million. Finally, the Future Materials and Metals segment incurred start-up losses of R35 million.

Against this backdrop, it won’t surprise you to learn that the group dividend is a tenth of what it used to be – R24 million instead of R245.9 million. I’m actually slightly surprised that there’s a dividend at all, given the amount of debt!

Afrimat’s share price is down 25% in the past year, with essentially the entire drop happening in 2025. The Lafarge deal was very brave and the deteriorating macroeconomic situation hasn’t helped them. Still, this management team’s reputation is there for a reason, so I wouldn’t bet against them to get this right.

The numbers keep dropping at Barloworld (JSE: BAW)

Surely that offer is looking juicier and juicier for major shareholders?

I’ve said from the start with this Barloworld take-private that I think shareholders are being too greedy here. Much like we saw with Bell Equipment, there’s no guarantee that a follow-on deal comes in at a better price. Particularly when earnings are washing away due to where we are in the cycle, the next offer might be 5 years away (or more).

As things stand at Barloworld, there haven’t been enough acceptances of the offer for it to go ahead. The offerors have the right to walk away if they don’t achieve a 90% acceptance. Although I’m pretty sure they would be happy with far less, they’ve made it clear that the current acceptance level (below 50%) just isn’t going to cut it.

And in the background to all this, Barloworld’s numbers are dropping. A trading statement reveals that for the six months to March 2025, Barloworld’s HEPS will be down by between 18.9% and 22.7%. This puts them on interim HEPS of 411.5 cents to 431.5 cents. At the mid-point and assuming we simply annualise this number, the forward P/E of the office price of R120 per share is around 14.2x. For a cyclical business with problematic exposure to Russia, I would take that price and run for the hills if I was a shareholder here.

Speaking of Russia, this is where Barloworld lays the blame for the latest drop in the numbers. Due to ongoing sanctions, trading activities at Vostochnaya Technica’s have decreased.

Equites Property Fund flags higher growth going forwards (JSE: EQU)

Despite rental growth, UK property valuations are under pressure

Equites has been on an extensive asset recycling programme recently, which is just a fancy way of saying that they’ve been selling off properties. They disposed of R2.4 billion worth of properties in the latest financial year, which is a beefy number in the context of a total portfolio value of R21.1 billion.

They’ve focused on getting out of smaller, specialised or non-ESG compliant assets. This leaves them with a portfolio of larger, more dependable assets. Although they don’t bluntly say it, this also gives them better access to ESG-flavoured funding, which often comes at a discount to non-ESG funding so that banks can tell a great ESG story.

The South African portfolio grew like-for-like rentals by 5.9% and valuations by 6.0%, so that’s a decent outcome. The UK portfolio hasn’t been as kind to them, with just a 1% uplift in GBP terms despite uplifts on rent reviews of between 19% and 69%.

The loan-to-value ratio is 36% (down from 39.6%), so there are no concerns there despite the development programme in the group. This is why there’s a dividend payout ratio of 100% of distributable earnings per share.

Distributable earnings were up 8.9%, but the dividend per share was up just 2.1%. The net asset value per share was down 3.8%. This is the impact of a dividend reinvestment plan. It’s great for the strength of the balance sheet, but it dilutes shareholders over time unless they reinvest their dividends. A dividend reinvestment plan is essentially a miniature rights offer.

Karooooo delivers another strong quarter (JSE: KRO)

I’m loving the consistency of delivery

Karooooo is one of my great frustrations, as I sold part of my stake when they were having a serious wobbly a couple of years ago. It was completely the wrong call. Although I obviously made the decision based on the information I had at the time (including Karooooo’s strange adventure with selling cars in Carzuka), the correct thing to do was to sit on my hands and trust that my large position (in the context of my portfolio) would be fine. Many investors have learnt that lesson and will continue to learn that lesson. Hindsight is perfect!

The other thing that is just about perfect is the way that this group keeps growing. Thank goodness I only sold part of my stake, as I thought there was still a decent chance of them getting the global expansion done. With the latest quarter reflecting growth in Cartrack subscribers of 17% and subscription revenue growth of 16%, they are still doing really well. Importantly, the number of net additions was up 25%, so the rate of growth is increasing.

The even better news is that operating profit margin expanded from 30% to 34%, which means operating profit was up by a delightful 30% year-on-year.

If we lift our heads from the fourth quarter and look at the full-year numbers instead, we find 17% growth in subscribers, 15% growth in subscription revenue and 26% growth in operating profit. The contribution of the logistics deliver-as-a-service segment shouldn’t be underestimated, as it grew 33% for the full year to R420 million. For context, Cartrack’s subscription revenue was just over R4 billion.

Earnings per share increased 25% for the year. Adjusted earnings per share (taking out some once-off and non-operating items) increased 33%.

Looking ahead, they expect some margin pressure in the coming year as they are anticipating another period of investment in sales and marketing. Cartrack’s subscription revenue is expected to grow by between 16% and 21%, but earnings per share is only expected to grow by between 7.3% at the midpoint of guidance (vs. adjusted EPS) or 14% vs. reported EPS.

I’ll hang on for that ride. I’ve learnt my lesson.

Just what the doctor ordered at Netcare (JSE: NTC)

HEPS has shown strong growth

Hospital groups haven’t generally been great places to make money over the years. They tend to earn a return below their cost of capital. Still, the recent trend has been one of improvement, with Netcare adding a trading statement for the six months to March to the mix.

Adjusted HEPS will be up by between 18% and 22%, coming in at 49.0 cents. In case you’re wondering, HEPS without any adjustments is almost identical at 48.9 cents, with a similar growth range.

They attribute the improvement to increased activity and efficiencies in the operations. Full results are due soon (19 May) and will then give all the details.

Earnings have roughly doubled at PPC (JSE: PPC)

A focus on cost control and efficiencies is working

When a company operates in an industry with weak demand, as has been the case in the local cement industry for years now, they have little choice but to focus on efficiencies. PPC has done exactly that and with much success.

For the year ended March 2025, PPC has guided that HEPS will be between 37.30 and 41 cents. This is approximately double the comparable period, when HEPS was 19 cents. The company attributes this success to cost control and savings from operational initiatives. They didn’t just managed to constrain the growth in costs – they actually achieved lower costs than in the comparable period!

Sanlam banks another strong quarter (JSE: SLM)

This financial services group just keeps winning

Sanlam is a great example of local corporate excellence. As financial services firms go, Sanlam seems to be one of the most consistent in terms of delivering appealing financial results.

The latest quarter is no different, with the net result from financial services up by 15% as reported (or 18% in constant currency – they have a large emerging and frontier markets business). Net operating earnings grew 22% as reported (26% in constant currency). Those are excellent numbers that were achieved despite just 4% growth in life insurance new business volumes. Diversification played a major role here, as group new business volumes were up 15%.

It was a busy period for corporate actions as well. They completed the disposal of 60% of the A1 ordinary shares in NMS Insurance Services (the MultiChoice insurance business) to Santam, which means the life and short-term insurance offerings at NMS are each sitting in the logical place within the Sanlam group. Shortly after the end of the quarter, they finished off the SanlamAllianz deal that achieves a split of 51% Sanlam – 49% Allianz in that joint venture. And finally, Sanlam completed its subscription to take its stake in Shriram Wealth in India from 26% to 49.7%. Looking ahead, they also achieved the required approvals to take the effective economic shareholding in Shriram Asset Management Company from 16.3% to 35.5%.

As you can see, Sanlam just doesn’t sit still. This is why they’ve built such a juggernaut of a thing, with a variety of business interests.

Due to the broader uncertainty around global trade and economic conditions at the moment, the group isn’t making any changes to its earnings guidance. They have indicated an intention to keep a larger capital buffer than normal though, which is a sign of conservatism in this environment. It also means that if the economy does fall out of bed, they might have the firepower for opportunistic deals. The serious money gets made by those who are liquid at the bottom of the cycle, not at the top.

Southern Sun is shining brightly (JSE: SSU)

The Western Cape is a particular highlight

Southern Sun is due to release its results for the year ended March 2025 on 21 May. In the meantime, they’ve released a further trading statement that gives a tighter range for earnings.

Unsurprisingly, the Western Cape has been the best region for the group. They do also flag growth in Gauteng, particularly around the Sandton Convention Centre. The conferencing and events industry is key to the Southern Sun strategy and South Africa remains an appealing venue.

This has resulted in adjusted HEPS for the year of 74.4 cents to 76.7 cents, an increase of 32% to 36% vs. the comparable period. This gives some support to the share price move of 66% over the past 12 months, although it also shows that roughly half of the increase is due to improved sentiment rather than banked profits.

Nibbles:

  • The previously announced acquisition of Despegar by Prosus (JSE: PRX) / Naspers (JSE: NPN) has now closed. This is part of the “digital lifestyle ecosystem” that the group is talking about building in markets outside of the US. As I’ve written several times recently, it’s a strategy that I like!
  • Newpark REIT (JSE: NRL) has disclosed a few related party transactions. They fall below the mandatory reporting threshold, so this is purely a voluntary announcement. They relate to the outsourcing of lease renewals, capital projects, financial management and cash management services. None of the fees seem unreasonable to me. In fact, the REIT is in all likelihood getting a better deal because of the related parties.
  • There is just about no liquidity in the stock of Cafca Limited (JSE: CAC), so the results get just a mention down here. The financials are reported in Zimbabwean Gold (not a currency you’ll see every day!) and reflect a drop in HEPS of 73%.
  • Deutsche Konsum (JSE: DKR) is another example of a totally illiquid stock on the JSE. The property is trying to get its balance sheet to sustainable levels, so a stable trading performance in the interim period is helpful. The loan-to-value ratio dropped from 57.2% in September 2024 to 52.5% as at the end of March 2025 – but that’s still much too high.

DealMakers AFRICA – Analysis Q1 2025

Marylou Greig and Vanessa Aitken
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DealMakers AFRICA – Analysis Q1 2025

The return of Donald Trump to the U.S. presidency early in the quarter introduced uncertainty and recalibration in US-Africa investment dynamics, which is clearly reflected in the data captured by DealMakers AFRICA.

In the three months to end March 2025, deals on the continent (excluding South Africa and failed deals) numbered 75, valued at US$2,17 billion – this against 125 deals ($3,7 billion) in 2024, 133 deals ($3,69 billion) in 2023, and 202 deals ($9,8 billion) in 2022 – a noteable decrease over the period. Private equity investment, a key driver in M&A on the continent, fell 40% in Q1 year-on-year.

On a regional level, East and North Africa were the most active, accounting for 55% of deals captured in the quarter. Kenya remains the anchor for deal activity (12 deals) in the East African region, with the focus on financial services, healthcare and agritech. Tanzania and Uganda saw increased investor interest in infrastructure, manufacturing and logistics. East Africa’s energy transition saw an increase in M&A deals in the solar, wind and hydro sectors. Egypt remained the most active country in North Africa (14 deals), followed by Morocco (4 deals) and Tunisia (3 deals), with activity in the financial services, logistics and consumer goods sectors, and venture capital and private equity interest in fintech, healthcare and renewable energy. M&A activity in West Africa was dominated by Nigeria, which accounted for c.65% of deals announced in the region.

Africa represents a hotbed for fintech innovation. In fact, fintech was (by far) the dominant sector, accounting for c.50% of total investment for the quarter. Mobile connectivity and creative business models are leapfrogging traditional solutions, and one such fintech deal was LemFi’s $53 million raise which ranked in the top deals by value for the period. Interestingly, and unusually, the top deals by value reflect a broad range of sectors from mining to heavy industrials, fund raising and agriculture.

In the remaining quarters of 2025, M&A is likely to be influenced by whether the US clearly defines its Africa policy; but until such time, will likely remain subdued and inconsistent. However, sectors such as energy independence, critical minerals and digital infrastructure may still see interest, with dry powder waiting to be deployed in sectors with strong fundamentals and resilience to macroeconomic volatility. Despite global politics and potential trade wars, Africa provides massive market potential with good demographics and rapid urbanisation.

DealMakers AFRICA is Africa’s corporate finance magazine.
www.dealmakersafrica.com

Who’s doing what this week in the South African M&A space?

Marylou Greig
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Who’s doing what this week in the South African M&A space?

Exchange-Listed Companies

Coal miner Exxaro Resources has invested in the manganese sector with the announced acquisition of select assets from Ntsimbintle and OMH (Mauritius) Corp, a subsidiary of Australian OM Holdings. The move is in line with Exxaro’s stated strategy to diversify beyond coal. The target assets from Ntsimbintle Holdings include – a 74% stake in Ntsimbintle Mining (SA’s largest single mine manganese exporter), 19.9% of Jupiter Mines, 51% of Mokala Manganese (in the Khalahari Manganese Field), 9% of Hotazel Manganese Mines and 100% of Ntsimbintle Marketing and Trading Private. From OMH (Mauritius), Exxaro will acquire a further 26% stake in Ntsimbintle Mining. The cash consideration payable is R11,67 billion but is subject to pre-emptive and tag-along rights which may see the final consideration payable decrease to R9 billion or escalate to a maximum of R14,64 billion.

4Sight has announced the disposal of a 30% stake in its South African operations in a B-BBEE transaction with newly formed 4Bonela Pele Education Trust. The Trust will support and fund development programmes focussing on higher education and formal training opportunities to support skills development relevant to the ICT sector, with 50% of the beneficiaries being black women. Shareholder approval is not required.

Grindrod and co-investor Vitol B.V have commenced exiting their 50% investments in the marine fuel trading business Cockett Group, CMOG Fuel DMCC and Cockett Marine South Africa following an agreement between the parties to proceed with a solvent winddown. In terms of the agreement Grindrod will receive US$22 million, being 61% of the carrying value of the investment as of 31 December 2024. Cockett was the only material asset remaining in Grindrod’s non-core asset portfolio.

Sanlam Private Equity (Sanlam) has acquired a stake in Boston City Campus for an undisclosed sum. Founded in 1991, the institution operates 47 campuses across South Africa.

In response to market speculation, Hammerson has confirmed that it is in the process of acquiring the units in the abrdn UK Shopping Centre Trust which holds the 59% stake in Brent Cross not already held by Hammerson for a net cash consideration of c.£200 million. Hammerson has an economic interest in Brent Cross of over 90%. Further details will be released in due course.

Europa Metals has been unable to identify suitable projects in which to invest or raise funds for and as such the Board has resolved to proceed with the return of the assets of the company to its shareholders. The company’s shares were suspended on the AIM market of the LSE and the company is currently engaging with the JSE.

Dimopoint, a wholly owned subsidiary of Collins Property, has disposed of letting enterprises to Trident Property via a series of inter-conditional agreements. The industrial properties, situated in Durban, Roodekop and Gqeberha, have been disposed of for an aggregate consideration of R649,75 million. The transaction forms part of Collins’ strategy to recycle capital, the net proceeds of which have been earmarked to fund investments in the Netherlands. The deal is a category 2 transaction in terms of the JSE Listings Requirements and as such, shareholder approval is not required.

Prosus has announced the completion of its December 2024, US$1,7 billion acquisition of Despegar, the Latin American online travel agency. Shareholders received $19.50 per Despegar share.

Barloworld and Newco jointly advised shareholders that the date, at which Newco would advise if it was to waiver the acceptance condition for the acquisition (standby offer) of Barloworld, would be extended from 9 May to 30 June 2025.

Unlisted Companies

Fuel Ventures, a UK-based early stage venture capital fund, has led a £340,000 investment round into Community Wolf, a SA startup providing public safety through its WhatsApp-based platform. The investment will be used to accelerate platform evolution and innovation and to scale the development and distribution of the Community Wolf platform including expanded marketing efforts from digital campaigns to out-of-home visibility into countries such as Nigeria, Brazil and wider South America.

DealMakers is SA’s quarterly M&A publication.
www.dealmakerssouthafrica.com

Weekly corporate finance activity by SA exchange-listed companies

Marylou Greig
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Weekly corporate finance activity by SA exchange-listed companies

Greencoat Renewables, a renewable energy infrastructure company investing in European renewable energy generation assets, has applied for an inward secondary listing on the JSE. The company is currently listed on the Euronext Growth Market in Dublin and the Alternative Investment Market in London. The listing is expected to become effective in H2 2025 at which time the company will not place or issue any new shares as part of the listing.

Shareholders of Bytes Technology will receive a special dividend of 10 pence per share as announced in the release of the Group’s annual results, distributing £24,1 million to shareholders.

The publication by Raubex of the Group’s audited financial results for the year ended 28 February 2025 has been delayed with the company not able to provide a definitive revised date for the publication. The delay is the result of the company receiving an anonymous whistleblower report containing allegations of unlawful conduct concerning the group and into which it is investigating.

This week the following companies announced the repurchase of shares:

In October 2024, Anheuser-Busch InBev announced a US$2 billion share buy-back programme to be executed within the next 12 months which will result in the repurchase of c.31,7 million shares. The shares acquired will be kept as treasury shares to fulfil future share delivery commitments under the group’s stock ownership plans. During the period 7 to 9 May 2025, the group repurchased 2,760,000 shares for €162,63 million.

On March 6, 2025, Ninety One plc announced that it would undertake a repurchase programme of up to £30 million. The shares will be purchased on the open market and cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 948,898 ordinary shares at an average price of 157 pence for an aggregate £1,49 million.

On 19 February 2025, Glencore plc announced the commencement of a new US$1 billion share buyback programme, with the intended completion by the time of the Group’s interim results announcement in August 2025. This week the company repurchased 16,750,000 shares at an average price per share of £2.64 for an aggregate £44,13 million.

Hammerson plc continued with its programme to purchase its ordinary shares up to a maximum consideration of £140 million. The sole purpose of the buyback programme is to reduce the company’s share capital. This week the company repurchased 387,539 shares at an average price per share of 258 pence for an aggregate £999,339.

In line with its share buyback programme announced in March 2024, British American Tobacco plc this week repurchased a further 670,216 shares at an average price of £31.22 per share for an aggregate £20,91 million.

During the period 5 to 9 May 2025, Prosus repurchased a further 3,394,728 Prosus shares for an aggregate €146,21 million and Naspers, a further 276,340 Naspers shares for a total consideration of R1,39 billion.

Two companies issued profit warnings this week: Santova and Barloworld.

During the week two companies issued cautionary notices: Santova and AH-Vest.

DealMakers is SA’s M&A publication.
www.dealmakerssouthafrica.com

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