| Wednesday 01 December 2021 Good morning Voornaam,
Nampak has released a trading statement for the year ended September 2021. The company has achieved a stunning turnaround and has made significant progress with its balance sheet. HEPS is expected to be between 55.1 and 64.9 cents per share, a major swing from the headline loss of 87.7 cents in the comparable period. The share price jumped 6% in morning trade to R4.08 per share.
The Volaris - Adapt IT offer is taking a long time to be concluded because of the joys of dealing with regulatory bodies. Amazingly, the current delay is because of the Zimbabwean competition authorities. A revised timetable has been released with an expected last day to trade for the scheme of 24 December. This may still change.
Alexander Forbes is set to acquire 100% of EBS International, a business that primarily enables retireme nt funds to perform self-administration functions. This greatly adds to Alexander Forbes' service offering in the retirement funding market. ARC Financial Services holds 39.9% in Alexander Forbes and 25% in EBS, so this is a small related party deal under JSE rules. EBS generated profit for the year ended August 2020 of R8 million and the purchase price is R142 million.
Pan African Resources has a new R1 billion revolving credit facility that became effective on 25 November. It consolidates two loans for the group and is priced at 275bps over JIBAR, vs. the loans it replaces which were 380bps and 330bps over JIBAR. The group hopes to be debt free in the next year, so this facility builds some breathing space on the balance sheet by giving the company access to debt if needed.
FirstRand has released a trading statement for the six months ending December 2021. HEPS is expected to increase by at least 30% vs. the prior cor responding period, so it will be at least 258.6 cents. The banking group has seen an uptick in advances (mainly in the mortgages and agriculture portfolios) but corporate demand for debt remains subdued. The UK has seen strong growth in vehicle and asset finance and modest growth in other lines. Encouragingly, credit impairments have trended down as the economy recovers from the worst of the pandemic.
Aspen has signed a non-binding term sheet with pharmaceutical companies in the Johnson & Johnson group for the manufacture and sale of an Aspen branded Covid-19 vaccine throughout Africa. The "Aspenovax" vaccine would be based on licensed intellectual property and drug supply from Johnson & Johnson until December 2026. The agreement has scope for expansion for new versions of the drug or boosters.
MTN has launched the public offer of shares in MTN Nigeria to retail investors. Up to 575 million shares are being made availab le at a price of N169 per share. MTN is making an effort to deepen capital markets in major African countries, which is a smart strategy as it puts the group in the good books of regulators and government officials. Given the painful history in Nigeria, that's an important point. MTN plans to reduce its stake in MTN Nigeria to 65% over time.
Chrometco released interim results for the six months to August. Although revenue decreased 43.6%, the headline loss improved from -2.95 cents last year to -2.02 cents this year.
Ayo Technology reported a decrease in revenue of 41% in the year ended August 2021 and a massive negative swing in profitability from R104 million last year to a loss of R201 million this year. Despite this, the company has declared a dividend of 30 cents per share.
There was a flurry of announcements confirming that Questco has being appointed as JSE sponsor of a number of c ompanies. This is because the corporate finance and advisory firm has acquired the sponsor book of Sasfin.
Today's feature articles include Capital Appreciation Group's excellent earnings update, Vukile Property Fund declaring a dividend and maintaining its balance sheet position and Luxe Holdings reporting improved operating profits but not enough to move the group into the green.
There's also an update from Currency Assist. Finally, in case you haven't listened to it yet, Ep 53 of Magic Markets was a discussion on bad balance sheets. We talked about Turkey as a fiscal example and local company examples like Tongaat, EOH and Brait. Listen to it here.
Have fun in the markets today!
The Finance Ghost
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