In this edition of Ghost Bites:
- Alexforbes posts single-digit growth
- Good news from Master Drilling: there’s a dividend
- MC Mining is raising debt from two shareholders
- A small decline in earnings at Novus
- Trematon has found a buyer for Generation Education
Alexforbes posts single-digit growth (JSE: AFH)
The underlying asset growth is far more exciting than profits
Alexforbes released results for the year ended March 2026. HEPS from continuing operations increased by just 2.8%, while the dividend was up by 4%. When the payout ratio has a bit of wiggle room, companies will try hard to avoid a disappointing dividend story.
HEPS as reported was down 5%, while normalised HEPS was flat. There are clearly a few complexities at play here.
Before we touch on the detailed results, it’s worth reminding you just how enormous this group is. The umbrella fund alone has assets under management of R197.7 billion. Total group assets increased by 22% to R733.2 billion!
The institutional business is by far the biggest slice of the assets, although retail assets under management increased by 21% to R112.3 billion. I get a kick from seeing that the retail segment generated a 32.7% increase in normalised profit before tax. The strength of retail investors should never be underestimated!
Despite these substantial growth rates in assets, operating income (defined as revenue less direct expenses) only grew by 10%. Operating expenses were up 9%, so they locked in a small margin uplift. An IFRS 16 adjustment was a major pressure point in expenses, so the underlying margin improvement is better than these numbers may suggest.
But between operating profit and HEPS, there are clearly a few things that moved against the group. One was normalised investment income, which fell from R229 million to R184 million. Another issue was an increase in the effective tax rate. Once those are taken into account, profit from continuing operations was up by 9%.
A sharp fall in profits from discontinued operations completely wiped out this growth, leading to perfectly flat normalised profit for the year. You need to be careful here though, as this relates to insurance businesses that are no longer in operation.
So, in this case, working with profit from continuing operations is probably the right approach. But of course, it’s even safer to work with the HEPS number, especially as this also adjusts for non-controlling interests and other factors. As mentioned, HEPS from continuing operations was up by just 2.8%, so Alexforbes is struggling to turn a strong increase in assets into meaningful growth for investors.
Ghost Bite: I like investing in simple businesses where it’s clear how revenue growth makes its way down the income statement. Alexforbes doesn’t fall into that category. With the share price down 17% in the past year, the market isn’t exactly rushing to buy this stock either.
Good news from Master Drilling: there’s a dividend (JSE: MDI)
But the underlying reason is the bigger highlight
When Master Drilling released their year ended December 2025 results back in March, they took the cautious approach of not declaring a dividend. The conflict in Iran was very fresh, so they weren’t sure how the oil price spike and other issues would play through the system.
At the time, they acknowledged that if things turned out better than expected, then a special dividend would be on the cards. The good news for shareholders is that a dividend of R0.40 per share has been declared.
It’s small in the context of the share price of R17.43, so it’s more of a delayed ordinary dividend than a special dividend in the traditional sense. Most special dividends are a function of excess cash on the balance sheet.
The underlying narrative is the most encouraging part of this update, as the decision to pay the dividend is based on all key initiatives progressing as scheduled.
Ghost Bite: The mining sector is clearly behaving as though the oil spike will pass. It always does, as the world doesn’t function very well at high oil prices. The sooner it drops back down, the better!
MC Mining is raising debt from two shareholders (JSE: MCZ)
Welcome to the world of mezzanine finance
MC Mining has announced a $9.94 million debt capital raise in the form of unsecured convertible promissory notes. The investors are Kinetic Development Group (the controlling shareholder) and Eagle Canyon International (a minority shareholder).
Kinetic will subscribe for $6.14 million in notes and Eagle Canyon is signing up for $3.8 million.
The capital will of course be used for the Makhado hard coking coal project, which is the only asset that anyone really cares about at MC Mining.
The notes mature after just one year of being issued. They may be converted into shares at $0.2089 per share. At current exchange rates, that’s around R3.40 per share vs. the current spot price of R3.28.
Shareholders will need to approve this transaction, with a circular to be sent out in due course. The conversion price seems pretty fair to me under the circumstances, with holders of 25% of MC Mining’s voting shares already acknowledging that they will vote in favour of the raise.
Ghost Bite: As I’ve written many times, the only guarantee in the world of junior mining is that your stake will be diluted over time. There are many different ways that this happens in practice, but it’s the inevitable outcome of a company needing to raise capital in creative ways to get a project across the line.
A small decline in earnings at Novus (JSE: NVS)
Detailed results should be available before the weekend
Novus has released a trading statement for the year ended March 2026. It doesn’t give us any operational detail unfortunately, but it does confirm that HEPS will be down by between 0% and 8% for the period.
One of the contributing factors is the impairment of a related party loan of R19.9 million. We will have to wait for detailed results to know for sure what has happened at the company.
Separately, Mustek (JSE: MST) confirmed via SENS that Novus now has 50.39% in the company. This is outright control.
In case you’re wondering, it’s possible to control a company with a smaller stake, as no shareholder meeting ever has 100% attendance. But once you tip the scale over 50%, there’s no debate around it anymore: you control the company.
The only thing you aren’t guaranteed to get across the line is a special resolution, which needs 75% approval. This is where you’ll often see the impact of concert parties and voting arrangements that include the controlling shareholder. The true voting power of a controlling shareholder can be much higher than the direct stake suggests.
Ghost Bite: It’s been a regulatory process of note to get to this point. Novus will now need to show growth to its investors, as the share price is down 26% over 12 months.
Trematon has found a buyer for Generation Education (JSE: TMT)
As expected, it’s an impact fund
Trematon has previously told the market that they are looking to sell the Generation Education business. Full details are now available, with a category 1 circular on the way.
The price on the table is R172 million and the buyer is the Education Investment Impact Fund of South Africa, which is managed by Old Mutual Alternative Investments.
The buyer has more than just a profit motive, as the mandate includes a desire to improve the quality of education in South Africa. This is practically a prerequisite for school assets these days, as the low birth rate has stripped growth out of the sector.
In the announcement, Trematon acknowledges that Generation has not lived up to growth expectations. This despite the school group being focused on the Western Cape, where there has been a population explosion. The model may simply be too niche to reach the scale required to generate economic returns.
To be clear, this doesn’t mean that the schools aren’t profitable. It simply means that they can’t grow quickly enough to justify a purely for-profit motive. We saw a similar thing play out at Curro.
Ghost Bite: Generation Group made profit after tax of just R3 million for the six months to February. This selling price is based mainly on the replacement cost of the schools and the existing footprint, rather than the profit it can actually generate. I’ll be very surprised if the independent expert doesn’t opine that the deal is fair and reasonable to shareholders. We will have to wait for the circular in August to know for sure.
Results of previous poll:
Nibbles:
- Director dealings:
- The obliteration of The Foschini Group (JSE: TFG) share price has finally reached a point where we are seeing massive purchases by directors. That’s a good thing. An associate of Michael Lewis bought shares worth nearly R30 million. The spouse of a non-executive director bought shares worth almost R900k. That’s bullish, but it would still be good to see more executive directors buying shares as a show of faith.
- The CEO of Mr Price (JSE: MRP) received share awards and sold 82% of them for R24 million. This is significantly more than he needed to sell just to cover the tax, so that’s a sale in my books. Not a great look when the share price is still way off the pre-NKD levels.
- The CEO of Oceana (JSE: OCE) bought shares worth R1.25 million and the CFO joined in with a purchase worth R375k.
- The company secretary of Santam (JSE: SNT) sold shares worth R685k.
- A director of Sebata Holdings (JSE: SEB) bought shares worth R5k.
- As a fun reminder of what real money looks like, the Wiese family entered into a scrip borrowing arrangement over Shoprite (JSE: SHP) shares worth almost R2 billion. This doesn’t tell you anything about the Shoprite share price – I just include it for entertainment value to make us all feel poor.
- Sirius Real Estate (JSE: SRE) has placed €185.1 million worth of notes through tap issues in two existing corporate bonds. Essentially, this means that they’ve just increased the size of these bond programmes by issuing more notes (under the same terms and conditions and at current traded prices). They’ve done this to refinance existing debt and for “general corporate purposes” – which would mean either acquisitions or capex projects in the portfolio.
- There’s a change to top management at Bell Equipment (JSE: BEL). Ashley Bell is resigning as CEO, as he wishes to return to his own business interests. His resignation is effective from 31 August 2026, although he remains available to assist in a transition period. Ashley will also be appointed as a non-executive director, which makes sense given the family interests here. Izak Jacobus Marthinus van Niekerk has been named as his replacement, having previously worked for Bell from 2003 to 2016.
- Pan African Resources (JSE: PAN) is making progress on the acquisition of Emmerson Resources. Emmerson shareholders still need to vote on the deal, with the meeting scheduled for 15th June. But in the meantime, the Australian Stock Exchange (ASX) has confirmed that Pan African will be admitted to the official list subject to certain conditions. In other words, if Emmerson shareholders give it the green light, Pan African will be able to execute the planned additional listing on the ASX. This won’t affect the JSE and LSE listings.
- enX Group (JSE: ENX) has received approval from the SARB for the special dividend of R1.92 per share. The payment date is 29 June, based on a last day to trade of 23 June. The current share price is R4.40, so they are paying out over 40% of the value of the company!
- Copper 360 (JSE: CPR) shareholders just can’t catch a break. In yet another setback to rebuilding investor confidence, CFO Ferdinand Nel has resigned with immediate effect. This means that no successor has been named as yet, not even on an interim basis.
- At long last, the suspension of trade in Wesizwe Platinum’s (JSE: WEZ) shares has been lifted. The share price promptly increased by 80%!
- Visual International (JSE: VIS) has received an extension from the JSE for the posting of the RAL Trust circular. The new date is 17 June 2026.
- If you are a shareholder or warrantholder in Marshall Monteagle (JSE: MMP), then be aware that the company wants to make some changes to the terms and conditions of the warrants. There’s a shareholder meeting scheduled for 25th June.
