- Capital Appreciation Group is a fascinating tech company. It was the first special purpose acquisition company (SPAC) ever listed on the JSE and has gone from strength to strength. In the year ended March 2022, revenue jumped by 34.1% and EBITDA increased by 45.5% with an EBITDA margin of 30.3%. Headline earnings per share (HEPS) increased by 29.6% to 13.40 cents and the annual dividend was 7.50 cents. For more details on this exciting business, read this feature article.
- Harmony Gold has at least added some much-needed positive news to the gold sector narrative this week. The first phase of Harmony’s renewable energy journey is a 30MW solar energy plant in the Free State. Phase 2 is a lot more exciting, with 137MW across various longer-life mines. By FY25 when Phase 2 is fully operational, Harmony anticipates R500 million in annual cost savings. Phase 1 is where the action currently is, with three plants being built in a deal with various technical and funding partners. Beyond the obvious benefit of cost savings and emissions reductions, these projects unlock “green funding” from banks. In a syndication led by Absa and Nedbank, Harmony has raised a R1.5 billion term loan (ring-fenced for Phase 2) and sustainability-linked loans consisting of a R2.5 billion revolving credit facility, a $300 million revolving credit facility and a $100 million term loan. The sustainability-linked loans have KPIs related to emissions, energy consumption and potable water consumption. If Harmony meets the targets, the interest rate drops. If it misses them, the rate rises. This is a really great example of how financial structures can be used to incentivise sustainable behaviour.
- Oceana Group has released its interim results for the six months ended March 2022. Shareholders are desperate for some stability here, after wholesale executive management changes and the resignation of the auditors. Revenue fell by 11% and overheads increased by 7%, including a R42 million impact from legal and incremental audit costs related to the delay in the September 2021 year-end audit. Considering the insurance proceeds for a hurricane and the KZN riots were R63 million and R9 million respectively, accounting is practically a natural disaster. Operating profit fell by 37% and HEPS tanked by 51%. The good news is that the group still generated positive cash flow and net debt was reduced by 8%, for which shareholders will be thanking their Lucky Stars. A dividend of 55 cents per share has been declared as a result, half of last year’s interim dividend.
- African Media Entertainment is highly illiquid and has a significant bid-offer spread, so the drop of 15% in the share price on thin volumes is a function of that. The company released results for the year ended March 2022, reflecting revenue up 25%, operating profit up 80% and HEPS coming in at 371.6 cents. A final dividend of 200 cents per share has been declared, taking the total for the year to 280 cents. The share price closed at R33.99.
- If you are a shareholder in Datatec, the JSE-listed technology firm with extensive global reach, look out for a circular dealing with the cash vs. scrip dividend decision. A scrip dividend allows shareholders to reinvest the dividends (i.e. receive more shares) instead of cash dividends. There is usually an incentive given to choose the shares, in this case a 10% discount to the volume weighted average price (VWAP). The benefit to the company is that cash is retained for growth if shareholders elect the scrip dividend alternative.
- Lewis Group has continued with its share buyback program that has been a great driver of shareholder returns. Since the general authority granted in October 2021, 9.9% of shares in issue have been repurchased, leaving just 0.1% left under that authority. The last 6.6% has been repurchased at an average price of R49.89, lower than the current share price of R51.00.
- There have been some grumblings at the Mpact AGM, with special resolutions related to share repurchases, financial assistance to group companies and non-executive directors’ remuneration failing to pass. The financial assistance resolution passed in June 2021 lasts for two years, so the group is unaffected for now. Non-executive directors have agreed to serve without remuneration while shareholder consultations are conducted. Caxton voted against the resolutions, using its significant minority position to achieve this outcome. There have been noises around Caxton making an offer for the company or pushing for a merger, but that hasn’t happened yet. Minority shareholders in Mpact need to keep a careful eye on this.
- Steinhoff Investment Holdings has released a trading statement. Many people get confused when it comes to this company, as there are two listed Steinhoff entities. This is JSE:SHFF and the instrument is a variable rate, cumulative, non-redeemable, non-participating preference share. If you think that’s a mouthful, I was once in a deal negotiation where people discussed such an instrument in Afrikaans. Trust me, THAT’S a mouthful. To be clear, this is a subsidiary of Steinhoff International Holdings (JSE:SNH) and the earnings aren’t reflective of group earnings.
- Irongate Property Fund shareholders will be pleased to learn that the New Zealand Overseas Investment Office has consented to Charter Hall’s proposed acquisition of Irongate. This is just one condition out of a long list that needs to be met.
- Brikor Limited has broken ground at the Grootfontein mine in Nigel, which lies adjacent to Brikor’s Ilangabi coal mine. The mine is expected to create 300 new jobs over the next five years and produce 50,000 tons per month with the potential to increase this further.
- Many South African corporates have announced an update to credit rating outlooks from stable to positive. This is a result of an improvement in the sovereign position. Not many have received outright upgrades though, with Sappi Southern Africa announcing that Global Credit Ratings has revised the firm from AA(ZA) to AA+(ZA) with a positive outlook. The short-term rating has moved from a stable to positive outlook as well. Again, this is a measure of risk rather than potential equity gains, but is still a trend in the right direction.
- Christo Wiese is known for using leveraged positions to turbocharge his wealth. I guess there’s no such thing as “enough” – which is why an entity in his group has rolled a single stock futures position on Shoprite Holdings worth nearly R425 million and added another R1.2 million of exposure to it for good measure.
- Transaction Capital took some pain yesterday, presumably based on an announcement of directors (the group CFO and a director of a major subsidiary) selling shares that were received under a conditional share plan. By afternoon trade, it had recovered some of the losses to be 3.75% down.
- Mantengu Mining is a company that you can easily be forgiven for not knowing anything about. The company is technically insolvent and just operated as a cash shell this year, with no revenue. The board is pursuing the acquisition of Langpan Mining Co and issued a circular on 30 May for this opportunity. This is effectively a reverse listing of assets into the cash shell. Although the latest news is that Mantengu has released financial results for the year ended February, they are almost pointless. Full focus is on the Langpan deal.
