Lesaka Technologies will seek shareholder approval for a proposed B-BBEE transaction in which the Group will sell a 3% stake in the company (2,49 million shares) to qualifying employees for c.R212,6 million. The approximate number of participants in the ESOP will be 2,400. The shares will be vendor funded by the company through a notional vendor funding structure which will have a seven-year term.
Brimstone Investment has disposed of 43,565,057 STADIO shares (a 5.14% stake) to ThembiSA Fund 1, a black private equity fund managed by ThembiSA Equity Investments, at a price per share of R5.90 for an aggregate R257 million. Brimstone acquired 78% of the sale shares as part of STADIO’s B-BBEE private placement in 2017 and a further 22% in 2018 through a share swap agreement with STADIO. The shares were subject to a lock-in period of 4 December 2024 and 22 March 2025 respectively. ThembisSA has assumed the original lock-in arrangements. Brimstone will use the proceeds to meet funding obligations.
Though its subsidiary Castellana Properties, Vukile Property Fund has negotiated an improved offer price of €8.30 per share (up from €8.10) for its 28.8% stake in BME-listed Lar España Real Estate. The purchasing consortium of Hines European Real Estate Partners III and a vehicle controlled by Grupo Lar Inversiones Inmobiliarias, will pay €199,95 million in cash for the stake reflecting an internal rate of return of c.45% per annum since January 2022 in ZAR terms. The proceeds will be used to invest in financially accretive opportunities with significantly lower operational and execution risks.
African Dawn Capital has released details of its disposal of a 50% stake in its wholly-owned subsidiary Elite Group, a credit provider with a national footprint in South Africa. EXG Partners has invested R5 million for the stake through the subscription of ordinary shares and has provided a long-term commercial loan of R15 million to Elite. The audited loss attributable to Elite as at the last audited financials of the African Dawn Capital was R11,9 million. The disposal is categorised as a category 1 disposal, requiring shareholder approval.
ADvTECH has purchased FNB’s (FirstRand) former training and conference centre in Sandton for an undisclosed sum. The company will create a new University campus, investing in new lecture facilities and a new sports centre and will relocate the IIE’s Varsity College Sandton and Vega Bordeaux to the site for the start of the 2026 academic year.
As part of its preparation ahead of the reverse takeover by Swiss investment group ESGTI AG, Kibo Energy PLC has negotiated the partial settlement of the RiverFort Loan (of £462,871) with the sale of its remaining 19.52% interest in Mast Energy Development PLC (MED) to RiverFort Global Opportunities for £120,074. The 19.52% stake comprises 83,211,746 MED shares (listed on the LSE) at £0.001443 per MED share calculated as at the volume weighted average price per share on 27 September 2024.
NEPI Rockcastle has entered into a binding agreement to acquire Kasama Investments, which owns Magnolia Park situated in Wroclaw in Poland. The property has been acquired from Union Investment Real Estate GmnH for an aggregate purchase consideration of €373 million, including the full settlement of Magnolia Park’s outstanding debt. The transaction is classified as a category 2 transaction by the JSE and as such does not require shareholder approval.
Following the listing of We Buy Cars and the disposal of Nutun Australia and Nutun Transact, Transaction Capital (TC) has now disposed of a 64.5% stake in the Mobalyz Group (previously known as SA Taxi). The company will continue to hold a minority stake in the business. Prior to the disposal, TC disposed of RC Value Added Services to its wholly owned SATH for a purchase price of R160 million which will remain as a subordinated loan. TC will continue to hold a minority stake in SATH of 26% via its shareholding in Mobalyz. Following the disposal of a majority stake in Mobalyz, TC’s sole operating business will be Nutun South Africa and will at its shareholder meeting in March 2025 look to changing its name to Nutun.
MultiChoice and Canal+ have advised that they have made a joint merger control filing pertaining to the offer announced in March 2024, to the Competition Commission. The deal is classified as a ‘large merger’ and as such requires approval from the Competition Tribunal.
Delta Property Fund has disposed of two properties to Currolink Investments for an aggregate R33 million. The properties – 63 Maitland Street in Bloemfontein and 95 Du Toitspan Street in Kimberley are in regions Delta has earmarked for exit.
Unlisted Companies
South African card issuing orchestration and Infrastructure-as-a-Service enabler Scale, has completed a pre-seed funding round raising US$700,000. The round was led by early-stage investors 54 Collective and First Circle Capital, with participation from Sunny Side Venture Partners and prominent angels from the industry. The fundraise will be used to accelerated Scale’s market entry into Kenya, Zambia and Cote d’Ivoire.
TMF Group, a global provider of compliance and administrative services, has acquired the corporate services business in South Africa of the Stonehage Fleming Group, an international Multi-Family Office. The Stonehage Flemming Corporate Services South Africa (SFCS South Africa) acquisition expands TMF’s local presence and affords SFCS access to a global platform with large global clients and capabilities. Financia details were undisclosed.
TUNL, a South African parcel shipping platform which helps e-commerce merchants on international shipping costs, has raised a seed round led by E4EAfrica, together with Jonathan Smit, Jozi Angels and an SPV arranged by Utopia Capital Management. The new funding will continue to fuel its expansion in South Africa by removing the barriers to international selling and shipping faced by local SMEs.
Founded in 2021, Littlefish, a local fintech company empowering and enabling commerce, particularly for nano, micro, and small business has closed a seed investment round led by TLcom Capital, with Flourish Ventures as a co-investor. The funds will be used to accelerate its plan to empower banks to more efficiently service small and medium-sized companies. The investment is a first for TLcom in SA, which sees the potential for Littlefish to help bridge the financial services gap for the more than 80 million SMEs across Africa.
Petrobras, the Brazilian state-owned oil company, is to acquire a 10% stake in the offshore Deep Western Orange basin oil block in South Africa after a competitive process held by TotalEnergies. The French oil major will retain a 40% stake in the block. Other parties include QatarEnergy (30%) and Sezigyn (20%).
AltVest Capital, which is in the process of moving its listing from the Cape Town Stock Exchange (CTSE) to the JSE’s AltX, has announced the results of its capital raise. The company raised R18,2 million (from a potential R116,9 million) and will issue 1 million Ordinary shares, 1,619,224 A shares, 409,695 B shares and 1,339,416 C shares. The Ords, A, B and C shares were offered at the following price per share – R6.50, R1.80, R11.00 and R3.20 respectively. Each of the equity offerings (A-C shares) are linked to an investee company – Umganu Lodge, Bambanani Family Group and Altvest Credit Opportunities Fund. The shares will commence trading on AltX from 14 October 2024.
Efora Energy’s suspension on the JSE, implemented in October 2020, has been lifted as of trading on 30 September 2024. The company was suspended for failure to submit its annual financial statements in the required time frame in accordance with the JSE Listing Requirements.
Companies still suspended on the JSE and providing updates to shareholders include Chrometco, Conduit Capital and PSV.
This week the following companies repurchased shares:
South32 announced in its annual financial statements released in August that it would increase its capital management programme by US$200 million, to be returned via an on-market share buy-back. This week 925,327 shares were repurchased for an aggregate cost of A$3,39 million.
In line with its share buyback programme announced in March, British American Tobacco this week repurchased a further 447,913 shares at an average price of £27.51 per share for an aggregate £12,3 million.
Prosus and Naspers continued with their open-ended share repurchase programmes. During the period 23 – 27 September 2024, a further 4,382,351 Prosus shares were repurchased for an aggregate €162,3 million and a further 155,863 Naspers shares for a total consideration of R596,6 million.
Two companies issued profit warnings this week: Insimbi Industrial and Balwin Properties.
During the week, five companies issued cautionary notices: Tongaat Hulett, TeleMasters, African Dawn Capital, Clientèle and PSV.
Nigerian agritech, Winich Farms, has completed a US$3 million debt and equity pre-series A funding round. The round was supported by Acumen Resilient Agriculture Fund, Climate Resilient Africa Fund, Marula Square, Plug and Play, Tekedia Capital and Sahel Capital. The funding will be used to scale operations, enhance its digital platform and expand its financial services to more farmers.
Afreximbank’s development impact invest arm, The Fund for Export Development in Africa (FEDA) and Africa Finance Corporation (AFC) have made a US$443 million investment in Dubai-based Arise IIP. FEDA invested $300 million for their equity stake and AFC increased their shareholding by $143 million. Arise IIP is a pan-African developer and operator of industrial parks. The funding will be used to accelerate expansion and operational efficiency across its 12-country portfolio which includes Malawi, Cameroon, Sierra Leone, Benin, Togo, Ivory Coast, Rwanda, Gabon, DRC, Republic of Congo, Chad and Nigeria.
Apple Orchards, a Kenyan agriculture enterprise specialising in apple seedling cultivation, has received a US$1 million term and working capital loan from Sahel Capital’s Social Enterprise Fund for Agriculture in Africa (SEFAA).
The Saudi Investment and Industrial Development Company, a subsidiary of the Saudi Paper Manufacturing Company, has sold its entire stake in Moroccan Paper Manufacturing Company to Omar Al-Nasi for MAD19 million.
Injaro Investments subsidiary, Investment Capital Partners, via the Pro Impacto Fund, has announced an undisclosed investment in AGRA, Lda in Cabo Verde. AGRA is a producer of poultry and animal feed and is the fund’s second investment in the West African island country. The funding will enable AGRA to modernise its operations and increase production capacity.
Kenya-based Dhamana Guarantee Company will start operations to mobilise private sector finance to support the development of sustainable businesses, following investments from InfraCo Africa, the African Devlopment Bank and CPF Group, with support from Cardano Development and FSD Africa. Dhamana will issue guarantees to commercially viable projects, businesses and institutions that tackle the climate crisis.
Prudential plc has agreed to acquire the remaining shares in its Nigeria joint venture business, Prudential Zenith Life Insurance. The value of the deal was not disclosed but will be paid in cash and includes a performance-based element. In 2017, Prudential acquired a 51% stake in the then Zenith Life Insurance.
AJN Resources has entered into an agreement with Lord Purus Trading (LPT) to acquire up to a 70% stake in the Dabel Gold Project, situated in Marsabit County. The project lies within the Adola Gold Belt which hosts the Lega Dembi gold mine. AJN can acquire up to a 70% interest in the project through the issue 5,000,000 shares in the share capital of AJN to LPT within 10 days of signing the agreement, conducting a 90-day due diligence, following which, if they wish to continue, they will acquire a 60% stake and issue 19.9% of its share capital to LPT, make a payment of US$50,000 on signing the Agreement, a further $50,000 on completion of a fundraise and $250,000 after six months from signing the agreement. AJN will also pay an additional $500,000 on the anniversary of the $250,000 payment for the duration of the exploration phase. AJN can acquire an additional 10% interest in the Dabel Gold Project by paying $10,000,000 to LPT within two years from the commencement date or paying $15,000,000 within three years from the commencement date.
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Brimstone has sold its stake in STADIO – one of its best assets (JSE: BRT | JSE: SDO)
The buyer is also a B-BBEE investment group, so the empowerment credentials are preserved for now
Due to the level of financial assistance typically given by a company in structuring a B-BBEE deal, it is common in the market that the shares are subject to a lock-up i.e. minimum investment period. Companies simply cannot afford to do a new B-BBEE deal every couple of years. Lock-ups tend to be between 7 years and even 10 years, thereby matching the investment period that is often used in the private equity industry.
Sometimes, an investor needs to wriggle out of a lock-up. In such a case, the company might be OK with this provided there’s a suitably empowered buyer waiting in the wings to take the stake. Whilst I doubt that this would be the case for most of the stuff in Brimstone’s portfolio, STADIO is an exception due to the excellent recent performance.
Of course, this means that Brimstone is selling off one of its few crown jewels to help the group meet its funding obligations for the near- to medium-term. That’s not an ideal way to raise R257 million.
The purchaser is ThembiSA InvestCo 2, an investment entity managed by ThemsiSA Equity Investments and PSG Group. They will honour the remaining lock-up period until March 2025.
Things can’t be great at Brimstone if they went to all this effort just to buy themselves a few months.
Something is happening at Clientèle (JSE: CLI)
The cash cow is considering an acquisition
Clientèle is one of the best examples on the JSE of the importance of looking at total return, not just share price return. Despite not being a property group, Clientèle offers a very juicy dividend yield. They are seen as a cash cow rather than a growth story. I hope that whatever they are up to here isn’t going to be an attempt to change that situation, possibly to the detriment of shareholders.
For now, all we know is that Clientèle is the preferred bidder to acquire 100% in a financial services entity of some kind. They don’t even mention the products or services offered by the entity, so we are very light on details at the moment.
The share price closed 8% higher in response to this cautionary announcement.
Delta agrees to sell two properties for R33 million (JSE: DLT)
Fixing this balance sheet is like digging a hole with a spoon
Delta Property Fund is selling two properties, one in Bloemfontein and the other in Kimberley, for R33 million. That’s good news. As a reminder of just how much work the company still needs to do to rescue the balance sheet, this will only reduce the loan-to-value ratio by 10 basis points from 60.9% to 60.8%. Vacancy levels will reduce by 50 basis points to 32.9%.
These are government office buildings and one of them has a vacancy rate of a whopping 90.7%, so good luck to the purchaser! An independent valuation on the properties put them at a combined R38.6 million, so Delta is getting them off the balance sheet at a modest discount.
Lesaka closes the acquisition of Adumo (JSE: LSK)
This is a major step for the group
I think that Lesaka is one of the most interesting stories that you’ll find on the local market. In fact, we hosted the management team on Unlock the Stock recently, where I peppered them with questions and was left feeling very impressed. Here’s the full presentation and Q&A:
Key to the strategy is the acquisition of fintech businesses (like payments processers) that give Lesaka more reach into its markets of choice. The acquisition of Adumo is a major step in this regard, with the R1.67 billion acquisition now closed. They paid R232.2 million in cash and the rest in Lesaka shares, which tells you that the sellers believe in the combined story. One of those sellers happens to be African Rainbow Capital.
Adumo is South Africa’s largest independent payments processer and has been at it for over two decades. The beauty of a solid M&A strategy is that it accelerates a growth story tremendously. Nobody has the time or patience for Lesaka to try and build its own Adumo from scratch. Rather buy the thing and unlock the benefits of rolling it into a bigger group.
This is by no means Lesaka’s first acquisition. The group previously acquired Connect, Kazang and Touchsides. This is why the group talks about having a “connected ecosystem” in give countries.
Here’s an interesting nuance to the deal: due to a group of Adumo shareholders being unable to accept shares in Lesaka because of their investment mandates and Lesaka falling outside of the definition of what they are allowed to hold, Lesaka is repurchasing its shares to the value of R207.2 million from those investors. This means that the cash portion of the deal is effectively R439.4 million.
The Lesaka share price is up 23% this year.
Powerfleet completes Fleet Complete – now say it faster (JSE: PWR)
We have a new tongue twister
Powerfleet has closed the deal to acquire Fleet Complete with an effective date of 1 October. That’s a big step for them, with $15 million paid by the issuance of stock to a major seller and $60 million in cash funded by a private placement of stock. The remainder has been funded by a term loan facility with RMB.
The facility is for a term loan of $125 million. This is a bullet facility repayable after 5 years i.e. no capital is repaid until then. It bears interest at 5% per annum. Banks just love a deal structuring fee and this one is no different, with a $1.25 million fee payable as part of the package.
Nibbles:
Director dealings:
A variety of Adcock Ingram (JSE: AIP) directors sold shares received under share awards to the value of R27.6 million. The announcement doesn’t explicitly say that this is to cover taxes, so I assume that it isn’t.
A director of a subsidiary of AVI (JSE: AVI) received bonus shares and sold the whole lot for R737k.
The numbers are small, but it’s worth mentioning that several Anglo American (JSE: AGL) directors reinvested the interim dividend in shares.
Oando (JSE: OAO) has not met the previously communicated deadline of 30 September for its 2023 annual financial statement. They expect to file them by 23rd October,
Derek Cohen is stepping down as lead independent director of Octodec (JSE: OCT) for personal reasons. I usually ignore non-executive director changes, but lead independent is an important role. He will be replaced by Pieter Strydom, an existing independent non-executive director on the board.
Numeral (JSE: XII) has opened a Biotech subsidiary in South Africa to pursue acquisitions in that space. I don’t think I’ve ever seen a company announce that they’ve successfully registered a pty ltd, but I guess it’s about the small wins over there.
We must invest to ride the wave that is transforming global auditing.
When it comes to technology, the early bird often misses out on the juiciest worm. Take the way in which Africa’s comically dire communications infrastructure, plagued by decades of non-investment, positioned it to leapfrog straight to mobile, unhampered by legacy investments in copper cabling that needed to be sweated.
While one wouldn’t recommend this as a strategy, a similar kind of serendipity gives the continent another opportunity to leverage the experience and insights of the developed world when it comes to using artificial intelligence (AI) in auditing.
At present, Africa’s auditing profession is immature when it comes to technology. One factor is that skilled human resources are typically cheaper relative than in more advanced economies, so it can seem to make sense to keep on with manual processes.
A second factor is the expense of investing in the new technologies – African auditors typically do not have the large IT budgets that their global peers do.
In truth, though, there is no option. As auditing globally becomes more proficient at using AI, and as AI itself approaches the Holy Grail of artificial generative intelligence (AGI, or AI that more closely resembles human intelligence), African auditors will have to follow suit. Their clients will demand it.
In addition, by using AI, auditors can do more with fewer people. AI enables even a small audit firm to process all the available data and to automate much of the work.
There is a lot of hype about AI in the business community, and it’s clear that companies see AI as a game changer. AI is thus receiving an increasing proportion of companies’ ICT spend, and this trend is particularly evident when it comes to the finance department. Gartner research shows that CFOs are planning to increase their technology spend largely thanks to the demand for AI. Ninety percent of respondents projected higher budgets, and none planned a reduction. They are particularly enthused about generative AI, which more closely mimics human intelligence.
IBM research indicates that CFOs are looking to AI to help them turn data into actionable insights, and help the finance workforce work more productively.
In tandem with these developments, it follows that CFOs and CEOs will increasingly expect their auditors to use AI effectively to deliver better value for money. Key expectations include audits that are more efficient, using fewer man hours and more accurate, and audits that do not just look backwards but that can predict trends.
While AI is by no means routinely used even in the developed world, but it is definitely being piloted by the majority of them. The Big Four auditors are already making massive AI investments, and the rest of the industry is following suit.
It’s a way off, but AI is on track to become as common as Excel spreadsheets in the finance world as a whole, including auditing. The revolution has already begun with Microsoft’s innovation of embedding its CoPilot AI app into Power BI. Now, finance teams will be able to summarise and identify trends in financial data using simple prompts.
African companies, and international companies with African offices, will come to insist that they get the same level of auditing excellence via AI as their competitors elsewhere in the globe.
Understanding the challenges
In short, the writing is on the wall. For African audit firms, the first step is to understand what their challenges are, and then to begin finding ways of overcoming them.
Budget. New technology is expensive, as a rule, exacerbated by the relative weakness of African currencies. For example, the inclusion of Copilot in most Microsoft applications makes better analysis of data much easier, but it costs around $30 per user per month. Similarly, workflow automation software can cost around €3,000 per licence. On the positive side, by keeping tabs on how global peers do it, African audit firms can avoid misallocating budgets to technologies that will ultimately prove to be disappointing.
Overall, African auditors should see AI as a long-term investment that will result in substantial savings and enhance their competitiveness.
Security. Large amounts of data will inevitably contain a great deal of sensitive data. Audit clients will rely on their auditors to have the right security protocols in place – another significant cost. Exposing sensitive client or company data on public AI platforms, for example, is a massive risk.
Skills shortages. While African talent will remain relatively less expensive than equivalent talent in the developed world, the specific skills needed for a more data-intensive, automated audit environment are in short supply everywhere. African audit firms will have to invest in growing their own timber.
For example, Forvis Mazars South Africa has invested in a data school that trains new graduates in software development and no/ low-code software, as well as the automation of continuous auditing.
Many of the bigger audit firms are undertaking similar initiatives, which will see more of these rare skills coming onto the market – a benefit to the industry and the ecosystems in which these firms operate. In fact, one could see potential for smaller firms to enter into formal agreements with the larger firms with their own training establishments.
There is a clear and present need to invest in AI but, as noted above, African firms can proceed cautiously with one eye on the experiences of more advanced companies outside of the continent. And, despite being competitors, there is a good argument to be made for the African auditing industry – or perhaps “ecosystem” would be a better term – to collaborate in the drive to build a bigger talent pool.
We became the mobile-first continent by accident; could we become the AI-first continent by design?
The Ghost Wrap podcast is proudly brought to you by Forvis Mazars, a leading international audit, tax and advisory firm with a national footprint within South Africa. Visit the Forvis Mazars website for more information.
This episode covers:
Nampak and a pretty heroic turnaround for the balance sheet.
Spar’s troubles, including Switzerland as what could easily be the next major headache.
Metair’s balance sheet pressures and the need for the Turkish disposal to go through quickly.
Transaction Capital and the plan to focus on Nutun going forward, with the controlling stake in Mobalyz (SA Taxi) being sold.
Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:
ADvTECH is building a new university in Sandton (JSE: ADH)
Private tertiary education is growing at pace in South Africa
ADvTECH has announced some exciting news for its tertiary education division. The company has purchased a training and conference centre from FNB and will use the site to build a new university campus. The IIE’s Varsity College Sandton and Vega Bordeaux will relocate to the new campus ahead of the 2026 academic year, so they have a busy year ahead to get it ready.
There’s plenty of money earmarked for this, with a plan to invest R419 million over two years. The business case is that it will double student capacity from the current Varsity College and Vega campuses, with an offering spanning undergraduate to postgraduate qualifications.
Remember all those #FeesMustFall protests and how they severely disrupted the academic year for so many students? Like it or not, that’s one of the reasons why the private sector has a gap here. Parents aren’t so keen to pay for easily disrupted years and neither are students taking out student loans for their studies.
Extraordinary growth at Capitec (JSE: CPI)
How does a growth rate of 36% sound to you?
For a group the size of Capitec to be achieving growth in HEPS and the interim dividend of 36% is incredible. Return on equity has jumped from 24% to 29%, which means they are running at roughly double the level of some competitors.
The one metric that has worried me a bit is the cost-to-income ratio, which has moved from 38% to 41%. The trajectory needs to be managed carefully for Capitec to avoid becoming a lumbering giant like competitors, but 41% is still a great level. As a reminder, lower is better on that ratio. Operating expenses excluding the impact of the AvaFin acquisition grew by 24%, not least of all because of staff incentives to reward success. There are other major areas of investment, like a 36% increase in IT costs.
The major driver of this performance wasn’t just the net interest income growth of 20%, but also the 15% decrease in credit impairments. The net effect was a 72% jump in net interest income after credit impairments. Add on 22% growth in non-interest income (an excellent result in and of itself) and you end up with operating profit up by 41%.
On the business banking side, customer numbers increased by 31% over 12 months. They seem to be doing an excellent job of taking the lessons from the retail bank and rolling them out there, even if headline earnings in that segment fell by 12% as Capitec takes an aggressive approach to fees and winning market share. Here’s another data point for you: after launching a life cover product in June 2024, it contributed R8 million to the insurance result by the end of August.
Here’s a little reminder of what the best business success story of democratic South Africa looks like on a chart:
As a final point, the share price only closed 1.3% higher for the day despite this incredible set of numbers. Although Capitec had previously indicated that the numbers would be strong, it still tells you a lot about just how much is being priced in here.
Unsurprisingly, Kibo Energy is partially settling Riverfort with the shares in MED (JSE: KBO)
The mezzanine funding structure was always going to end like this
At some point, I remember writing that Kibo shareholders should be aware that the value in the group (what little there is) was heading directly to Riverfort as the mezzanine finance provider into the structure. The process has been accelerated by the planned reverse listing of assets into Kibo, with part of the outstanding balance of £463k to Riverfort being settled by the sale of Kibo’s remaining 19.25% interest in Mast Energy Developments (MED).
This takes the loan down to £343k, with the balance attracting interest at 10% per annum. It will be payable on the earlier of the listing suspension being lifted, completion of the reverse takeover or 31 March 2025. Kibo has the choice to settle the remainder in cash or shares.
All the value going forward is going to be in the new assets coming into the structure.
Trencor is looking at winding up during 2025 – if all goes well (JSE: TRE)
The cash shell has received dispensation to remain listed until 31 December 2025
Trencor is nothing more than a legal entity with a bunch of cash on the balance sheet and various legal relationships that need to run their course before the cash becomes available for distribution to shareholders.
The company expects to commence the winding up process as soon as practically possible after 31 December 2024. To buy time for this, they had to get a dispensation from the JSE to remain listed until 31 December 2025. This is not necessarily a guarantee that the winding up will be completed by then, so be cautious with that.
Nibbles:
Director dealings:
An associate of Christo Wiese loaded up on Brait (JSE: BAT) convertible bonds with a purchase price of £2.6 million (around R60 million).
A director of a major subsidiary of Oceana Holdings (JSE: OCE) has sold shares worth R688k.
Buried deep down in a Santam (JSE: SNT) announcement about share awards, we find a note that a director acquired shares worth R645k in an on-market trade (i.e. unrelated to the awards).
Pick n Pay (JSE: PIK) achieved all the shareholder approvals required to separately list Boxer on the JSE later this year. It remains a great pity that they intend to exclude retail investors from that opportunity, with only institutional investors able to participate in the placement at what will likely be an appealing price.
Vukile (JSE: VKE) has already announced the transaction that will see Castellana Properties acquire three shopping centre assets in Portugal. To make the deal happen, Vukile is lending €108 million to its subsidiary in two tranches. The tranche intended to be converted to equity is priced at 5.5% and the rest is at 7.75%. Both loans should be sorted out by the time that RMB Investments and Advisory becomes a 20% shareholder in the entity making the acquisition.
African Dawn Capital (JSE: ADW), which is currently suspended, announced that subsidiary Elite Group has attracted investment of R5 million from EXG Partners, as well as R15 million in the form of a long-term commercial loan. They aim to “revolutionise the credit industry” – I’m not sure how much of the revolution there will be with that balance sheet.
Pan African Resources (JSE: PAN) announced that Marileen Kok has been appointed as the Financial Director of the company. She has been with the company since January 2020, so this is an internal appointment which is always great to see.
Europa Metals (JSE: EMI) has scheduled the general meeting of shareholders for 25 October. This will be for the vote for the sale of the subsidiary EMI to Denarius Metals Corp.
OUTsurance Group (JSE: OUT) has received approval from the SARB for the special dividend of 40 cents per share.
Wesizwe Platinum (JSE: WEZ) advised that its financials are late but will be published before 14 October, so luckily they are only a couple of weeks off.
Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:
Ethos Capital’s year was heavily impacted by Brait (JSE: EPE)
And not in a good way
Ethos Capital has reported a 17.9% decline in group net asset value per share for the year ended June. That’s a nasty outcome, with the precipitous decline in the Brait share price of 73% as the major driver of the problem. The Brait hot potato was subsequently passed to shareholders in the form of an unbundling, but the damage was done in the FY24 results.
At least the unlisted portfolio put in a better performance, with revenue growth of 12% and EBITDA growth of 18% when viewed overall. Optasia is the biggest investment in the group and achieved EBITDA growth of 10% in USD. The valuation has unfortunately been impacted by the Nigerian currency issues.
There were various sales of underlying assets in the year under review. The disposals were achieved at a premium to carrying values, so that does give some support to the director’s valuations of the assets.
The net asset value per share at the end of June was R7.03. Adjusting for the Brait unbundling, it would drop to R6.58. The current share price is R5.00, so the discount to net asset value has reduced considerably.
MC Mining focuses on the future with Kinetic Development Group (JSE: MCZ)
The numbers for the year ended June show why this capital raise is necessary
MC Mining has attracted investment from Kinetic Development Group, a company listed in Hong Kong. When all is said and done and assuming all approvals are obtained, Kinetic will hold 51% in the company. The appeal is definitely the underlying mining assets and what they could achieve in future rather than what they are achieving today.
This is confirmed by the loss after tax of $14.6 million in the year ended June, of which non-cash charges were $5.9 million. If you can believe it, revenue was $36.7 million and cost of sales was $36.5 million. It’s not every day that you’ll a company that is barely break even at gross profit level!
Going forward, it’s all about the Makhado Project and what can be achieved with the substantial foreign investment.
Nampak has successfully refinanced its group (JSE: NPK)
This is a major achievement after plenty of hard work and asset disposals
Blood, sweat and more tears than usual – that’s surely been the story of Nampak’s journey to refinance the balance sheet. Lenders required the company to repay R720 million in net debt by the end of September 2024 and this was achieved through various asset disposals. The disposal of the Nigerian Beverage business is still underway and wasn’t required to achieve that specific debt milestone. There are still other assets classified as discontinued operations as well.
Thanks to these heroics, Nampak has managed to conclude the refinancing of the group with a simplified funding structure that has only a small foreign debt element to it. Standard Bank has financed it in full, but Nampak has the option to include other lenders in the structure by 25 March 2025. Debt covenants have also been reset.
Results for the year ended September are due for release on 2 December.
Netcare is on track to meet full-year guidance (JSE: NTC)
This income statement shape looks encouraging
Netcare has released a voluntary update on how things looked for the year ended September. Overall, it sounds pretty decent, with the group believing that full-year guidance was met and strategic project goals were achieved.
Group revenue is expected to have increased by between 5.5% and 6%, while normalised EBITDA margin should be up by between 25 and 60 basis points thanks to a decent effort on costs and the level of investment in new projects. It also helped that diesel costs more than halved year-on-year thanks to reduced load shedding. Total capex of R1.4 billion is expected to be in line with guidance.
This implies an encouraging shape to the income statement, with margins up and cash flows hopefully following suit. To add to what should be a good outcome for HEPS, the group repurchased 60 million shares during the year. Since September 2023, they have repurchased 5.9% of total shares in issue at an average price of R12.27 per share (well below the current price of R 15.35).
As has been the recent theme, growth in the mental health business has been stronger than in the acute hospital business. As another sign of the times, the trend of declining maternity cases is continuing.
On the topic of NHI, government has requested Business Unity South Africa to put forward specific proposals on issues of concern. There’s still much uncertainty in this sector going forward.
GNU-related benefits are taking their sweet time to get to PPC (JSE: PPC)
The recent months have been disappointing and the outlook doesn’t sound very bullish
PPC is a name that came up pretty often on stock picking lists for an environment of improved South African sentiment. Alas, the share price is actually flat for the year, although it did indeed get quite the bump in the aftermath of elections:
The earnings haven’t caught up to the recent exuberance in the slightest. In fact, for the four months to July, group revenue fell by 2.1%! SA and Botswana were down 1% and Zimbabwe fell 4.5%. Zimbabwe is an important part of the group with a 30% revenue contribution over the four months, so the dip there is a worry. Remember that PPC recently sold the business in Rwanda, hence why you won’t see any further references to that country.
Cement contributes 90% of group revenue at PPC, so that is clearly the key product. Although selling prices increased, sales volumes were 5.3% lower than the comparable period. In South Africa and Botswana, cement volumes were down 4.6% and selling prices increased 5.5%, so revenue was up 1.6%. In Zimbabwe, cement volumes were down 10.9% and prices increased 4% in dollars, helping to mitigate the pain in revenue.
Remember that South Africa and Botswana saw a revenue decrease of 1% overall, so this tells you that the materials business (which includes the readymix products) had a tough period.
At least the materials business managed to improve its EBITDA to be slightly positive vs, slightly negative in the base period. That trajectory is more than we can say for cement, where EBITDA declined by 10.4%, with EBITDA margin down from 11.6% to 10.3%. The South African cement business is the focus of turnaround efforts. As for Zimbabwe, EBITDA margin fell from 29.8% to 29.0%.
Due to these underlying pressures, group EBITDA margin declined from 15.9% in the comparable period to 13.7% in this period. This means that EBITDA has fallen year-on-year. Despite this, cash generation increased from R129 million to R192 million as working capital improved, particularly on the inventory line. This helped group cash balances increase despite the payment of an ordinary dividend in this period. Group debt sits at R775 million and cash is at R969 million.
Zimbabwe is an important part of the group with a 30% revenue contribution over the four months, so the dip there is a worry. A $4 million dividend has been declared by the Zimbabwe business in September 2024, so cash is still making its way to the mothership.
The outlook section isn’t hugely comforting, with PPC noting that there is “still no clear evidence of large-scale infrastructure or retail developments” – these things take time, but it would be nice to see momentum. The overall outlook for South Africa and Botswana is described as subdued, while Zimbabwe’s outlook is positive only thanks to cost containment, with volumes under pressure there due to imports.
A bright Rainbow indeed (JSE: RBO)
Full details of a strong turnaround year are now available
Rainbow Chicken has released results for the year ended June 2024. Although revenue was only up 7.9%, it was enough to help them move through the inflection point at earnings level. For example, EBITDA increased by R599.9 million to R629.7 million! When people talk about revenue “dropping to the bottom line” in a business with high fixed costs and low variable costs, this is what they mean.
We’ve seen these numbers before, as they were included in the RCL Foods earnings release because Rainbow was still part of RCL as at the reporting date. To give shareholders more information and to make sure the performance is clear, Rainbow has now released its own set of financials that are effectively an extract from the RCL results. You’ll find them here.
There really aren’t many highlights at Spar (JSE: SPP)
The Switzerland business is looking like the next headache in line after Poland
As you may recall from recent announcements, Spar is literally paying to get rid of its business in Poland. That’s not something you’ll see too often, with the group having to raise debt facilities just to be able to get out of there! It’s a proper mess.
With the business in Switzerland reporting a 5.8% decrease in turnover in local currency for the 47 weeks to 23 August, I’m starting to wonder if that might be next on the list of problems. People in Switzerland literally travel across the border to buy groceries because it’s a cheaper option. That doesn’t sound like a great business, with Spar “assessing” the business and deciding what to do next.
At least BWG Group in Ireland and South West England was up, with turnover growth of 2.6% in EUR and 7.0% in ZAR. The business in England suffered a decline in volumes.
This leaves us with the South African business as the only other potential source of good news. There are a couple of highlights, like pharmaceutical business S Buys up 14.9% and liquor sales up 10.5%. Thanks to Build it managing just 1.2% growth and core grocery putting in a pretty soft performance, total sales in South Africa only increased by 3.5%.
Overall, this is a slowdown from the numbers we saw for the first half of the year. They have a lot of work to do to sort the business out. Prepare yourself for more IT drama, as they are planning their rollout of SAP at the remaining distribution centres. Somehow, I’m not confident that it will go well after the catastrophe in KZN.
York’s numbers are all over the place (JSE: YRK)
Revenue up, adjusted EBITDA and cash flows down, yet there’s a swing into headline profits
The first thing to understand about York Timber is that the accounting rules for biological asset valuations lead to some pretty huge swings. For example, the fair value adjustments on those assets was positive R250 million in the year ended June vs. negative R386 million in the comparable year. That’s a casual swing of over R630 million!
In the context of a net profit for the year of R136 million this year vs. a loss of R313 million in the prior year, you’re hopefully starting to see the problem here in terms of earnings consistency. The biggest driver by far is the underlying valuation of the plantations, which in turn is impacted by various economic factors.
This is why I tend to look at metrics like revenue (up 5%), adjusted EBITDA before the fair value movements (down 17.9%) and cash generated from operations (down by a nasty 78%). I find that more useful than getting excited about a move from a headline loss per share of 75.89 cents to HEPS of 30.11 cents that was mainly driven by fair value moves.
Nibbles:
Director dealings:
The group COO of Woolworths (JSE: WHL) sold shares worth a whopping R38 million. The group company secretary sold shares worth R3.9 million and directors of major subsidiaries sold shares worth R12.6 million. I’ve excluded the one sale in the batch that was related to tax obligations.
The CFO as well as a prescribed officer of WBHO (JSE: WBO) sold shares worth a total of R7.3 million.
A director of Sun International (JSE: SUI) sold shares worth nearly R4.5 million.
A director of Anglo American (JSE: AGL) bought shares in the company worth around R2.6 million.
Directors of Goldrush Holdings (JSE: GRSP) participated in the swap to receive Astoria (JSE: ARA) shares in exchange for Goldrush shares to the value of R1.4 million. Over half of that amount relates to directors who are also on the board of Astoria and so there is a director dealings announcement for both companies.
A non-executive director of Metrofile (JSE: MFL) has added to the recent buying of shares by directors at the company, this time to the value of R335k.
MultiChoice (JSE: MCG) announced that the merger control filing for the Canal+ deal has been submitted on a joint basis to the Competition Commission. They are also engaging with ICASA and other relevant regulatory authorities.
Burstone (JSE: BTN) has released the circular dealing with the proposed sale of a majority stake in the Pan-European Logistics portfolio to Blackstone. Support from holders of 50.27% of shares in issue has already been received. Burstone incurred a massive R159 million in transaction costs, with the overseas advisors charging an absolute fortune. The circular is available here.
In other circular news, Metair (JSE: MTA) released the circular dealing with the disposal of the shareholding in the Turkish business. The bill there is R55.4 million, with RMB getting the lion’s share with a R25.4 million fee. You’ll find the circular here.
Renergen (JSE: REN) released a quarterly update that doesn’t have much in the way of fireworks. The focus now is on achieving stable LNG and helium production over a meaningful time period. Annual maintenance was completed in September and the key will be to avoid any production issues. The company also spent R8.3 million on drilling two high helium concentration wells in the Free State.
TeleMasters (JSE: TLM) is a step closer to potentially being the subject of a mandatory offer. In a previous announcement, they noted that the two largest shareholders had been approached by a B-BBEE investor to sell their shares. If they do, it’s big enough to trigger a mandatory offer for the rest of the shares by that investor. The legal and financial due diligence is done and the investor has submitted a funding application to a financial institution. If that goes well, then there could be an offer on the table. There are absolutely no guarantees of this.
Insimbi Industrial Holdings (JSE: ISB) reminded the market that earnings for the six months to August are expected to decrease by at least 20%. The company has been negatively impacted by difficult local and international trading conditions.
Mantengu Mining (JSE: MTU) announced that subsidiary Meerust Chrome has installed and dry commissioned its JIG plant that is expected to produce 7,500 tonnes per month of chrome chips. They are aiming to complete the cold and hot commissioning within 45 and 60 days respectively. This coincides with various upgrades to the existing chrome beneficiation plant.
Junior mining group Southern Palladium (JSE: SDL) is busy with completing a pre-feasibility study for the Bengwenyama PGM project. This means that their annual financials at the moment are all about cash burn, as there is no revenue. The operating loss for the year was A$6.7 million, which is below A$7.2 million in the prior year. The group has cash of A$5.4 million.
Sasfin’s (JSE: SFN) results are delayed due to the audit not being finalised in time. The annual financials for the year ended June are expected to be released by 14 October.
In great news, the suspension of the listing of Efora Energy (JSE: EEL) was lifted today, so trade can finally take place in the shares once more. From time to time, companies do make it back from being suspended.
Here’s a perfect example of a company that is struggling to get its listing back on track: PSV Holdings (JSE: PSV) has been suspended for ages and has renewed its cautionary regarding negotiations with DNG Energy and a potential recapitalisation of the company. I can never find PSV’s website, which tells you how long this suspension has been going on for.
Chrometco (JSE: CMO) is getting closer to getting its suspension lifted at least, with the audits of 2022 to 2024 underway. The group also noted that the business rescue practitioner for subsidiary Black Chrome Mine is following a Mine Restart and Trade Out Plan approach, with that mine being restructured into an integrated chrome producer and processor with a low risk strategy.
In the fourth and final example for the day of a suspended company, Conduit Capital (JSE: CND) noted that work is underway on the accounts for the six months to December 2022. Thanks to the mess around its subsidiaries, they really are that far behind. There are a bunch of moving parts, ranging from attempted sales of underlying businesses through to efforts to enforce an award of R50 million that was made in favour of the company against a business in the Trustco group.
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.
In the 42nd edition of Unlock the Stock, CA Sales Holdings returned to the platform to update the market on recent numbers and the strategy going forward. The Finance Ghost co-hosted this event with Mark Tobin of Coffee Microcaps and the team from Keyter Rech Investor Solutions.
Get the latest recap of JSE news in the Ghost Wrap podcast, brought to you by Mazars:
Gemfields is walking a risky path – but there’s no reward without risk (JSE: GML)
The group is investing heavily in expansion at a time when the market seems to have cooled
Trying to balance capital expenditure against the various stages in the cycle is nothing new for mining companies. They often end up in situations where the capex bill is highest when revenue is under pressure, requiring some bravery to see through the cycle.
Gemfields is experiencing this now, with revenue having decreased from $154 million to $128 million for the six months to June 2024 and EBITDA down from $73 million to just below $50 million. Goodness knows they are still profitable, except the cash situation tells a different story. Thanks to extensive investment in the underlying operations (capex of $34.6 million for the period) and a challenging working capital situation as well (inventory and trade receivables moved much higher), they are now sitting in a net debt position of $44 million vs. net cash of $62 million in the comparable period.
Inflationary pressures on costs were significant in this period, particularly in labour and fuel costs. Although expenses look lower year-on-year, it’s because of the expenses that were capitalised to intangible assets. If we just focus on the cash expenses rather than whether they landed on the income statement or the balance sheet, there’s clearly pressure there.
Particularly after the disappointing results of the recent auction (which happened after the end of this reporting period), there are some nerves around whether the market will stay strong enough to support the capital expenditure programme without Gemfields having to make some tough decisions. The share price is down 16% in the past 12 months, which tells you how the market feels about the risks.
Momentum’s earnings are much higher, but the dividend growth is modest (JSE: MTM)
IFRS 17 makes this a far more complicated result than usual
As I’ve mentioned a few times in Ghost Bites this year, IFRS 17 has had a significant impact on the insurance industry and the comparability of recent results to the prior year. This encourages me to look at simple metrics like growth in the dividend per share, although Momentum would probably prefer me to look elsewhere as the dividend is only 4% higher for the year ended June 2024. This is despite a 32% increase in normalised HEPS.
The company has a dividend policy of paying 33% to 50% of normalised HEPS as a dividend. With such a wide range, you can see these kind of dislocations between dividend growth and earnings growth. The payout ratio for this financial year was 40%, which is below the mid-point of the guided range. The good news is that a R500 million share buyback programme was completed this year, with shares repurchased at a 43% discount to the embedded value per share. It’s important to look at share buybacks alongside dividend decisions.
There are various highlights of course, like the claims ratio in Momentum Insure improving from 77% to 67%. Still, the overall story is one of new business profitability being below desired levels, so that’s an important thing to watch going forward. Value of new business margin deteriorated from 0.9% to 0.7%. This margin is a function of actuarial assumptions and the pricing achieved on new business being written.
Other interesting nuggets include fair value losses in venture capital funds, as well as a nasty increase in the operating loss in India from R223 million to R275 million. I think India is an exciting market, but this shows the risks and difficulties. There are new regulations coming in for pricing lags on products like health insurance. This should improve the story in India.
NEPI Rockcastle makes another major acquisition in Poland (JSE: NRP)
This is the largest single asset shopping centre deal in the region since 2022
NEPI Rockcastle continues its conquest of high growth markets around Europe, with a deal to acquire Magnolia Park in Wroclaw (the third largest city in Poland by population) for €373 million. That’s a substantial transaction.
Wroclaw has a growing population and average spending power per citizen that is well ahead of the national average in Poland. I haven’t travelled to Poland yet myself, but I’ve seen the value of these modern centres in high growth areas in Europe. Even without getting your passport stamped, you can see the value of this strategy in NEPI Rockcastle’s recent results.
NEPI Rockcastle will fund the transaction from its existing cash resources and debt facilities. There are no conditions to the deal other than payment, so it is expected to close on 1 October.
With expected net operating income at the property of €26.9 million after some savings from integration with NEPI Rockcastle, the purchase yield is 7.2%. For reference, the Poland 10-year government bond is currently trading at 5.28%, so that sounds decent to me.
PSG Financial Services’ model shines once more (JSE: KST)
A strong distribution business seems to be the way to win in this sector
PSG Financial Services isn’t just focused on managing money. No, they also happen to be very good at going out there and finding the money to manage thanks to an army of advisors. This is the right strategy, as sitting back and hoping for advisors to bring you assets feels less lucrative to me based on the recent performance of both types of strategies.
For the six months to August, PSG Financial Services expects HEPS to be up by between 27% and 30%. They also expect recurring HEPS to be between 25% and 28% higher. Either way, that’s excellent.
Detailed results are expected to be released on 17 October.
Transaction Capital will focus on Nutun going forward (JSE: TCP)
It’s still incredible to think how exciting the SA Taxi story used to be
Before Transaction Capital made that great acquisition of WeBuyCars, everyone talked about how great SA Taxi was. Nutun (or Transaction Capital Risk Services as it was then known) didn’t get tons of attention. Today, WeBuyCars is separately listed, Nutun is the future of Transaction Capital and SA Taxi (now called Mobalyz) will no longer be controlled by the group.
Instead, Transaction Capital will hang onto a non-controlling stake in Mobalyz. They will sell 64.5% in the Mobalyz holding company to a combination of Mobalyz management and the Oberholster Family Trust, with a substantial portion being warehoused for the time being while a suitable third party shareholder is identified. This takes the Transaction Capital portion down to 35.5% in Mobalyz Holdings and thus 26.6% on a look-through basis into Mobalyz, as SANTACO will still hold 25% in Mobalyz.
In other words, the direct shareholding into SA Taxi is no different. It’s still a combination of Mabalyz Holdings and SANTACO. The action is happening further up.
There’s still one more round of financial pain coming, as Transaction Capital needs to make a final financial commitment to SA Taxi as part of this. No amount has been given yet, but they will need to fund it with debt. This is the definition of throwing good money after bad, but they need to do something to bring the nightmare to a close.
As part of the overall deal, there’s also a piece dealing with the disposal of Road Cover to SA Taxi for R160 million. The amount will be left on loan account and will be interest free. This is a business focused on membership-based services for Road Accident Fund claims. It therefore makes sense that it belongs in the Mobalyz stable rather than what is left of Transaction Capital.
Speaking of which, the only thing left (apart from a minority stake in Mobalyz when all is said and done) is Nutun. The business is raising R1 billion in funding, of which R700 million has been secured. It’s a really good business that has been made better by recent disposals of certain divisions. Nutun has two primary business lines: debt collection (on a primary and agency basis) and business process outsourcing.
As Nutun is firmly the focus going forward, Transaction Capital intends to change its name to Nutun Limited. There will also be major changes to the board, with the Transaction Capital founders moving back to non-executive board positions after being dragged out of retirement to help fix the mess. There are various other changes as well, including the current CFO of Nutun (Rob Huddy) being appointed as CFO of the group.
The share price closed 3.9% higher on the news.
Trellidor’s numbers are much better, but still no dividend (JSE: TRL)
The focus is on reducing debt
The good news at Trellidor is that HEPS has jumped from 4.2 cents in the prior period to 36.1 cents in the year ended June. For reference, 2021 was the last good year before things went terribly wrong, with HEPS of 40.8 cents in that period. Although they’ve gotten a lot closer to those levels than before, they are still running well behind them and the past couple of years created quite the hole in the balance sheet.
This hole is why shareholders still aren’t getting a dividend. Net debt has been reduced from R146.7 million to R115.7 million, but that’s still far too high for a group making consolidated EBITDA of R84 million. Trellidor operates in a tough market and the scars of 2023 (operating profit of R22 million that only just covered finance costs of R18.2 million) are still fresh for management.
Hopefully they can keep hammering that debt lower, with net cash from operations of R51.1 million having worked wonders in the 2024 financial year. Another year like that and the balance sheet will look a lot better. After breaching covenants in 2023 and getting a lifeline from lenders, Trellidor has now met its covenants.
Looking deeper, it was Trellidor itself that did well, oddly enough thanks to the UK market! I bet you weren’t expecting that. Demand in South Africa was actually rather weak, perhaps because more people are living in security complexes and thus feel that they don’t need an unattractive security gate? Whatever the reason, this segment grew revenue by 22.6% to R329.6 million and saw operating profit jump from R15.9 million to R57.8 million.
In Taylor, which is focused on much prettier upmarket products, revenue fell by 5% to R133.2 million and operating profit was just R2.5 million. That’s the kind of profit margin that a poultry business would be familiar with!
NMC is the smallest segment, with revenue down 11.1% to R29.7 million and operating profit down from R3.3 million to R0.9 million. Again, really marginal stuff.
The group definitely made progress in the last 12 months, but the modest Price/Earnings multiple of 5.8x is probably deserved based on how easily some of those profits could swing into losses. Still, if you fancy a speculative play, this could be an interesting one over the next year. Generating cash from operations of R51 million on a market cap of R200 million is interesting.
Nibbles:
Director dealings:
The CEO of Sirius Real Estate (JSE: SRE) sold a large chunk of shares worth over R85 million.
A director of a subsidiary of Growthpoint (JSE: GRT) sold shares worth R1.2 million.
A non-executive director of Discovery (JSE: DSY) sold shares worth R433k.
Rex Trueform (JSE: RTO) had a period to forget, with HEPS for the year ended June down by 90.6%. This was driven by a 1% decrease in revenue, a deterioration in gross profit margin from 49.9% to 46.2% and a substantial jump in operating expenses to add insult to injury. Parent company African & Overseas Enterprises (JSE: AOO) saw HEPS decline by 85.4%. There’s just about no liquidity in either stock anyway.
Goldrush (JSE: GRSP) didn’t take long to place its Astoria (JSE: ARA) shares in the market, with strong applications from shareholders who were happy to take Astoria shares in exchange for their Goldrush preference shares at an appealing price. This removes the legacy cross-holding between the companies once and for all. The placement was oversubscribed, with applicants receiving a pro-rate allocation of 19.7% of the Astoria shares applied for.
As is common for large funds with various types of debt in the market, Hammerson (JSE: HMN) has launched a tender offer in respect of three types of bonds. Simply, this means that the company is looking to reduce debt and is inviting holders of the debt to sell it back to the company. The focus is on 2026 and 2028 bonds, with some capacity for 2025 bonds as well if they meet the full intended amount on the longer-dated bonds. They are doing some work to reshape the balance sheet as well, with a separate announcement noting that a new Sterling-denominated issuance of bonds is being considered. Although retail investors can’t invest in any of this stuff, it’s good to keep an eye on what companies are doing with their balance sheets.
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