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Ghost Stories #106: Load shedding to load sharing – South Africa’s energy market evolves

The Finance Ghost
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Ghost Stories #106: Load shedding to load sharing – South Africa’s energy market evolves

Listen to the podcast here:

The Finance Ghost sits down with Tokollo Tau from Nedbank CIB to unpack how South Africa’s energy landscape is evolving beyond the dark days of load shedding. What once felt like a permanent crisis has receded into the background, but the real story now is what’s being built in its place (like power wheeling and aggregation).

Against the backdrop of the Africa Energy Forum, the conversation explores the infrastructure and commercial models that are reshaping how electricity is generated, moved and sold across the country, unlocking new levels of flexibility and opportunity for businesses.

With practical examples like the multi‑billion‑rand Notsi Solar Project, Tokollo explains how aggregators are bridging the gap between generators and large energy users, helping to solve coordination challenges and accelerate investment in the sector. The discussion also highlights Eskom’s evolving role as an enabler of this ecosystem, and what a truly tradable electricity market could look like in South Africa.

The result is a compelling look at a market in transition and why this could mark the start of a far more competitive, efficient and investable energy future.

Key topics covered:

  • What power wheeling and energy aggregation actually mean (without the jargon)
  • How projects like Notsi Solar demonstrate the new energy ecosystem in action
  • Why aggregators are critical to unlocking investment and reducing project risk
  • Eskom’s shifting role in a more open, competitive electricity market
  • The long-term outlook: towards a tradable electricity market and greater energy choice

Transcript:

The Finance Ghost: Welcome to this episode of the Ghost Stories podcast.

Isn’t it amazing how it feels so long ago that we were checking apps? We were planning our dinner times and weekends, and if it was still the case, we’d be wondering if we’d be able to watch Bafana at the World Cup, if we’d have electricity!

Feels like years ago. And in some respects, I guess it was years ago because thankfully, the words “load shedding” have largely been banished to the history books, which is awesome.

It means that businesses are feeling a whole lot better about actually operating in South Africa. And thank goodness for that, because obviously we need all the boosts we can get to our GDP. But the local energy market has actually gotten much more exciting than us just saying, “well, load shedding is a thing of the past”.

We also now have market infrastructure in place that allows for concepts like power wheeling, energy aggregation – something that I’m certainly looking forward to learning more about.

And with Africa Energy Forum taking place essentially as we speak, we’ve got Tokollo Tau from Nedbank to help us make sense of it all. And to understand a little bit more about the evolution of the electricity market in South Africa.

So, Tokollo, thanks so much for doing this with me and I’m looking forward to these insights.

Tokollo Tau: Thank you for having me, Ghost. And a warm welcome to the listeners.

The Finance Ghost: Let’s jump straight into a little bit of jargon busting, because we’ve got concepts like power wheeling and aggregation.

For those who are not necessarily in the renewable energy space (like me, to be honest), it’s not necessarily obvious what these things are actually referring to. So maybe you can just kick us off by just explaining what power wheeling is, what aggregation is?

And then just confirming whether or not power wheeling is actually needed for aggregation. These things essentially depend on each other, right?

Tokollo Tau: That’s a fantastic place to start. Wheeling, in its simplest form, is the ability to move electricity across the grid from where it’s generated, to where it is consumed. This is done via transmission network. It’s owned by Eskom and municipalities.

You can think of this as the toll that one would pay to use the highway.

Aggregation, on the other hand, is a commercial model. It’s when an intermediary player buys power from multiple generators and sells that power to multiple customers in a structured manner.

Wheeling opens up choice, and aggregation helps efficiently organise that choice.

The Finance Ghost: So it’s safe to say that wheeling is the technology that allows us to have a scenario where there’s a windy part of South Africa or a very sunny part of South Africa, that is suitable for some kind of renewable energy that can be built there – and that can supply mines right on the other side of the country, right?

That’s the power of this thing.

Tokollo Tau: A good way for the listeners maybe is if I provide an example. We recently closed the Notsi Solar Project (Notsi), which is a large project that’s located in the Free State. The project was brought to life by Anthem, which is a private player in the energy space. The project had Discovery Green and Noah as the off takers.

Discovery Green is a good example of an aggregator that we’re discussing today, because it serves a diverse base of customers. Some of these are names that one might be aware of, such as Afrox, UCT and Impala Platinum. All of these are located across various locations in the country.

Notsi isn’t just being built for a single customer. The project illustrates how electricity can be generated and supplied to different customers and businesses across different sectors and parts of the country. This is how wheeling is making aggregation possible.

The Finance Ghost: It’s super interesting. You get these utility scale projects like the one you’ve just mentioned there.

It reminds me when there was this proliferation of these grocery apps. Just when everyone started with on-demand grocery, and I think there was one, I’ve forgotten its name, but their whole claim to fame was that they could run around and buy whatever you wanted from whichever shop you wanted.

So, you weren’t just ordering from a Checkers or a Woolworths, or a Pick n Pay, they were running around and you could buy from each of these different stores, and they would bring everything to you.

Feels a little bit like that’s what the aggregator’s role is, right? There are all these different power options out there. There’s power wheeling, there’s these projects and they focus on delivering these power sources to the customer, right?

Tokollo Tau: Yes, I would say your take is correct. The role that aggregators play, is that they’re able to source, for instance, in your example, the vegetables from one shop and then source cleaning equipment from another source and be able to deliver it all to customers.

This makes the life of the customer much easier because they never have to leave their home. It provides them with a lot more choice.

The Finance Ghost: So understandably, this spreads the load around power generation, right? Because historically that’s been our problem.

We have the transmission infrastructure, as I understand it, but generation is where we’ve struggled because Eskom just couldn’t keep up with the needs of the country’s power.

And what we’ve now seen is this big investment in electricity generation, and a whole bunch of just infrastructure-type developments to then make it possible for things to happen this way. And the way that Nedbank is then participating in this, is across both public and private sector opportunities.

So, what are the shifts that you’ve then seen in the market that are really driving this underlying evolution? Power availability must be one of them, surely cost is another. What is driving all this activity that we’re seeing?

Tokollo Tau: I would certainly say that the biggest shift that we are seeing is that businesses are moving from crisis response to strategic procurement. If I think about the conversations that we were having a few years ago with our clients, the conversations were centred around how do businesses survive load shedding.

But what we are increasingly seeing now, is they’re asking the question, how do they secure long-term, cost-effective and lower-risk power? This is a far more mature market discussion, in my opinion.

The Finance Ghost: So, Tokollo, you’ve referenced a maturing conversation and it does sound a whole lot better. We’d much rather have a world where businesses are seeing this as an investment that brings down their costs, for example, and those sort of things, rather than, “oh my goodness, do I even have power to actually operate?”

Because clearly that’s a disaster. We know the impact that had on our economy, whereas here it’s more like, “this is a business decision, we want to bring that cost down.”

So, what does that mean then in terms of us moving towards a more tradable electricity market in South Africa? Because I’ve heard this term used, but obviously as someone who’s not really in the space, I’m not exactly sure what that practically looks like. Maybe you can explain that concept of a tradable electricity market?

Tokollo Tau: Tradable electricity market simply means that customers have choice of who they buy their power from. Currently, the only choice that we have is whoever has been assigned as your distributor. This can be Eskom and in some cases, this can be municipalities.

Once you’re in a tradable market, clients can buy from multiple generators, similar to how you have the choice between MTN and Vodacom. It would be similar in that regard, in that one would have flexibility to decide who to purchase their power from.

The Finance Ghost: This is, at the end of the day, all part of Eskom’s broader reforms, right? Because they are, at the end of the day, roughly 80% of South Africa’s power generation. And they are also the transmission infrastructure to a very large extent. So, Eskom is still at the centre of all of this.

Going back over the years, I’ve heard many times about Eskom’s different business lines and how they’re focusing on different things. And this is really the transmission piece coming through.

Because technically, the power generators, these renewable energy programs, etc. – they “compete with Eskom” but actually, Eskom can participate in that ecosystem by providing the transmission, and just improving the overall South African electricity market, right?

Would that be a fair statement on how Eskom is actually thinking about this and how it all kind of works together?

Tokollo Tau: I would say you’re on the right path, Ghost. One of the biggest mistakes that people make is viewing this as a choice between Eskom and private generation.

This simply isn’t true. Eskom remains the backbone of the system. And many of the developments that we’re discussing here are only possible because of the infrastructure that’s in place. This is why I don’t see this as a story of Eskom versus private generation. It’s actually a story of how different participants are contributing to a broader, more flexible market.

I would agree with you that in today’s terms, Eskom still supplies the majority of the electricity. But the key change that we’re seeing, is its gradual move towards facilitating a more open system.

This is done by allowing third-party access to the grid and supporting the development of transmission frameworks. Eskom, by doing this, has effectively enabled others to generate and trade electricity.

The Finance Ghost: And the benefit of these aggregators, right, is they are ultimately that commercial bridge between the power-generation-type project and then the energy users on the other side, which would be large industry. In this case, they would typically be the ones engaging, I would think, with the aggregators?

And I would imagine that this unlocks projects a lot faster than perhaps some of the more traditional ways in which large projects would have come to bear fruit?

So, perhaps you can just explain the extent to which these aggregators are actually bringing some efficiency to the story as well, in terms of helping to get projects across the line and just making them economically viable and attractive?

Tokollo Tau: I would say that the main issue that the aggregators are solving is a coordination problem in the market. This is because they make it easier for supply and demand to come together quickly and efficiently.

Aggregators make it easier for large projects, such as the Notsi project, to connect with multiple customers, rather than them relying on a single buyer.

If you think of it this way, not every business needs power at the same time. And not every solar and wind project produces power in exactly the same way.

Aggregators help connect those moving parts. By working with multiple projects and multiple customers, they make the market more flexible, and they help ensure that electricity reaches where it’s needed most.

I would say that without aggregators, every company would need to effectively find its own power source.  This is not efficient, in my opinion. And aggregators providing choices to customers as they bring electricity from multiple projects and connect it with multiple customers.

This has created flexibility and has made the market easier to navigate.

The Finance Ghost: And it helps to de-risk the project, right? Because the project is now not having to go and find just one customer (on the other side of the country, potentially) and do all that work. They just need to deal with the aggregator.

And the aggregator says “Okay, cool, don’t worry, we’ve got this, we’ve got customers”. And like you say also different times in the year, seasonality – it’s almost like how a tech company will have different needs at different times of year, different times of day, where they’ve got a different load on their system and the amount of data they’re pulling. It’s a very similar situation.

These companies don’t always need the power at exactly the same time. And that’s the role that aggregators help play.

And like I say, de-risking projects which for you from a banking perspective makes their role very important, I’m sure?

Tokollo Tau: Yes. When the market was initially opened up, what we’re seeing was that the private generators that we were funding, they were entering into bilateral agreements with certain mines.

And this process was slow and cumbersome, because a mine is not necessarily versed in contracting for long-term electricity and a generator is not necessarily being efficient by looking for multiple customers. Their efficiency comes from the ability to permit, get the project constructed, get it to financial close, and get it operational.

So, it is efficient that they have an intermediary which is this aggregator, that they can contract to as the generator. And then on the other side you also have the buyers, the mines, the smelters. They simply can come to an aggregator, and an aggregator can offer them, instead of 20-year contracts, they can enter into 5-year, 10-year contracts in order to secure their power.

And because the aggregator has access to multiple generators, they can essentially tell the customer “I can give you a different load profile, I can give you electricity during the day from the sun, I can give you electricity from the wind during night times” – which then better matches the customer’s demand.

So yes, I would say it has helped the market quite credibly in my opinion.

The Finance Ghost: Yeah, it’s pretty interesting. It’s like taking a traditional business which would have product and then marketing and sales and everything else that would all normally live in one business.

But in this value chain, because of how specialised it is, because of all the regulations, because of the extent of infrastructure, it almost splits it out. It’s like the aggregators are the route to market. And the product is coming from someone else.

It just makes sense to then have these different players in the market solving different things, right?

I’m aware of examples elsewhere in Africa. For example, Africa GreenCo in Zambia. Perhaps there are some lessons that South Africa can learn from what is going on elsewhere on our continent.

Maybe you can just talk us through a little bit of what some of those lessons might be as we start to bring this to a close and talk about what the future looks like for South Africa.  

What lessons can we maybe learn from something like that in Zambia?

Tokollo Tau: I would say that the biggest lesson is that credible intermediaries matter.

In Zambia, for instance, GreenCo has replaced the need for plants to contract with the Eskom equivalent, which is ZESCO. This means that you have a party that is more bankable from a banking perspective, and it allows projects to reach financial close.

So, whether you’re looking at aggregators in South Africa or whether you’re looking at GreenCo in Zambia, I think the common theme is that the markets are becoming more investable when someone can stand in-between generators and the users of power.

And by managing the complexity and creating confidence on both sides, aggregators have made this possible. And in my opinion, this is how the transactions have moved forward and have created a real market for the power.

The Finance Ghost: So, Tokollo, we’re talking big numbers here, right? Obviously this is Nedbank CIB, so you guys are investing in – and funding – very large projects. That’s the nature of the CIB business. That’s where you’re focused.

And these are multi-billion-rand projects that we’re talking about, of which I’ve seen a couple in the headlines recently.

Perhaps you can just give a quick overview of the types of numbers we’re looking at here? This is what’s needed to move the dial, right? This is where Nedbank makes a difference and participates.

Tokollo Tau: The projects are indeed large. I mean, if you look at the Notsi project which closed earlier this year, the project is a 470-megawatt solar project, and it is close to R10 billion from a quantum perspective, because lenders only have access to the projects. So, we funded the project through project finance, which is limited recourse.

And where this is important is that the only source of repayment that lenders will have will come from the cash flows that the project generates. We are not taking any balance sheet support from anyone. The only form of repayment that we can place an emphasis on, is the project’s ability to generate cash flows in the future.

And we’ve then taken a view that we will get repaid from Discovery and Noah, who are the aggregators, and they are getting their money from the customers in the background.

So, from a bankability perspective, instead of Notsi having to source and contract with over 20 customers, for instance, it only needed to focus on two customers. This provided a lot of comfort to the lenders.

The Finance Ghost: And these are very long-term projects. This, at least, is my wheelhouse, not necessarily understanding the actual electricity side, but certainly the sort of returns you need on things and what tenure we’re looking at.

These are long-term projects and that means that you need to feel good about not just South Africa, but also the electricity infrastructure in South Africa. You’re running models that go out for a long time; and yes, you’re a debt provider, but still, you’re exposed to whether or not this thing is actually a success.

So, I guess we can safely assume that based on the level of activity here, the size of these transactions: you must be feeling quite optimistic about where the energy market is heading in South Africa?

Tokollo Tau: I would say that I’m partly optimistic, Ghost. A few years from now, what we’ll probably start to see is that businesses are going to have a lot more choice in where they buy the power from, as opposed to Eskom remaining the central person, and the only option that they have.

Private generation and wheeling, will probably start to play a bigger role than what we are seeing now.

It’s encouraging for me because we’re starting to see a lot of those building blocks already in place today, where we’re seeing projects such as Notsi come to light.

For businesses, it’s important because it’s going to give them greater flexibility in the future and it’s going to give them more certainty around energy costs and stronger long-term competitiveness in the international market.

The Finance Ghost: What I’m excited about is it also just taps into our country’s natural endowment, right? We have really windy parts of the country, but that might not be where the big power user actually is.

We have areas where the sun just doesn’t stop shining. Once again, the power user might be somewhere else. So, between wheeling and aggregation, it just makes sense. It just connects the dots here and it really helps to create a far more efficient market, which is exciting.

So perhaps a last question then, and then I’ll let you go off and do this conference and do all these important things that you’re doing for our country – do you feel like we’ll perhaps look back on this as a period that was the beginning of what is a fundamentally different energy market in Southern Africa? It sounds like the answer would be yes, but I want to hear it from you.

Is this the beginning of something big?

Tokollo Tau: I’d like to believe so, Ghost. I think we’re headed in the right direction. If one just looks at where the South African electricity market is right now and where it’s headed relative to a few years ago, there’s a lot of appetite on the Southern African power pool. There’s a lot of movement in the Zambia region with the emergence of your GreenCos and Solarcentury.

I would say I’m very optimistic that we’re headed in the right directions and we are beginning to see a more liberal electricity market as we head towards the future.

The Finance Ghost: Fantastic, Tokollo. Thank you so much. I would encourage anyone who wants to reach out to you or connect to go and find you on LinkedIn. And of course, people can also go and visit cib.nedbank.co.za, go and look through all of the solutions there and many of the deals that Nedbank has been involved in.

There’s always been a strong renewable energy slant to the Nedbank business. They are the green bank, not just in colour and in brand, but also in spirit.

I have some experience in working in the banking sector to be able to say that, and it’s great to see this coming through.

So, Tokollo, thank you so much and enjoy the conference.

Tokollo Tau: Thank you, Ghost, and thank you to our listeners.

Ghost Bites (BHP | Brait | enX | Libstar | Reinet | Sephaku | STADIO)

The Finance Ghost
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Ghost Bites (BHP | Brait | enX | Libstar | Reinet | Sephaku | STADIO)

In this edition of Ghost Bites:

  • BHP flags worsening economics at the Jansen Project
  • Brait’s creative use of the words “value unlock”
  • enX attracts an international buyer for New Way Power
  • Libstar flags a disappointing interim period
  • Reinet is starting to return cash to shareholders
  • Sephaku grew earnings despite pressure at Sephaku Cement
  • STADIO’s contact learning growth strategy shines through

BHP flags worsening economics at the Jansen Project (JSE: BHG)

First it was delayed – now it’s also going to cost far more than planned

There are two measures of success for large capital projects: on time and on budget. Sadly, BHP’s Jansen Stage 2 project is going to be neither of those things.

When they approved the project in October 2023, the intention was for first production to be in 2029. Understandably, there’s a lot of forecasting risk attached to these estimates.

In 2025, they announced that first production would only be two years later than initially planned, i.e in 2031. That doesn’t do great things for net present value (NPV) calculations.

Now it gets worse, as the initial project cost estimate of $4.9 billion has been blown out of the water by an increase to $6.9 billion. That’s a casual 40% overrun for shareholders to stomach in addition to the two-year delay.

The end result will be a project that contributes 10% of global potash output. That sounds impressive, but the internal rate of return is now only expected to be 11%. This would be in hard currency, but that’s still not an exciting return for a mining project.

And based on the recent trend, how can we be sure that there won’t be further delays and overruns?

Ghost Bite: The Jansen project is being impaired by $2.3 billion. When we are still five years away from production and there are already impairments, the alarm bells are ringing.

Brait’s creative use of the words “value unlock” (JSE: BAT)

I don’t think I’ve ever seen a rights offer alongside promises of a value unlock being in its final stages

According to Brait, they are in the final stages of their value unlock strategy. Goodness knows they still have a lot to do, including the sale of New Look, the listing or sale of Virgin Active and the repayment of residual debt in Brait.

For a company that is close to unlocking value, it’s very unusual to see a capital raise from shareholders. That’s the exact opposite of a value unlock!

The reason is that Virgin Active needs to raise £175 million from shareholders to repay existing debt and achieve a net debt / EBITDA ratio of 2.0x. This is despite EBITDA growing by 37% year-on-year in Virgin Active.

Brait is looking to contribute £108 million of this capital raise. To do it, they need to raise R2.5 billion from existing shareholders at a discount of 25% to the theoretical ex-rights price. This is a massive discount of 43% to the net asset value post the rights offer!

In a shock to absolutely nobody, Titan (Christo Wiese’s company) has underwritten the full rights offer. At least letters of allocation will be tradeable, so shareholders who don’t want to follow their rights might be able to sell those rights to somebody else.

Shareholders will also no doubt be thrilled to learn that Brait will take a further step to facilitate the value unlock strategy by redeeming its convertible bonds for £138 million. This will be done through the residual rights offer proceeds, the cash Brait proceeds from the sale of Premier (JSE: PMR) and the use of a revolving credit facility.

Replacing one type of debt with another is an unusual way to describe a “value unlock” strategy.

At least New Look is making some progress, with the shift to a more digital model contributing to EBITDA of £37 million for the year to March 2026.

Ghost Bite: The share price fell roughly 10% on the news. Value is being unlocked, but in the wrong direction.

enX attracts an international buyer for New Way Power (JSE: ENX)

But with only a small part of the immense cash pile

The enX value unlock continues. The company has announced the potential sale of New Way Power (NWP), the largest remaining asset in the enX portfolio. The deal is far more advanced than merely the negotiation stage, as enX has released a firm intention announcement that sets out the key terms.

This is the business that focuses on generators and renewable energy. For obvious reasons, this was a far more lucrative business during load shedding. Still, they’ve attracted Generac as a buyer, a company listed on the New York Stock Exchange.

I suspect that Generac is primarily interested in the IP, manufacturing capacity and our position as a gateway to Africa, rather than the revenue opportunity in South Africa itself. That’s quite the show of faith in our local economy and particularly our design and manufacturing base!

Together with the property occupied by the business, the price on the table is R220 million. It could go up to R260 million, depending on how adjustments to the purchase price pan out. The initial price is based on R130 million for the business and R90 million for the property.

For context, the balance sheet as at 28 February 2026 reflects net assets in the business of R156.7 million and the property at R93.5 million. Considering they suffered a loss before tax of R4.5 million in the business and generated a profit before tax of only R2.4 million in the property company, getting out of this business at a price this close to net asset value is a good outcome in my view.

Due to the size of the deal, it triggers numerous Takeover Regulation Panel requirements. This includes the appointment of an independent expert to opine on the fairness and reasonableness of the deal. BDO has been appointed and the opinion will be included in the circular once it goes out to shareholders.

Before shareholders count their money, there’s an incentive deal with the CEO of NWP that needs to be settled. It looks like this could be as high as 30% of the adjusted proceeds from the sale of the business (not the property).

It’s a suspensive condition for the entire deal, so shareholders have no choice but to approve it if they want the rest of the deal to go ahead.

Ghost Bite: I don’t think this is an easy business to sell, so shareholders will need to think carefully here about being too greedy. The BDO report should be interesting.

Libstar flags a disappointing interim period (JSE: LBR)

They are running below expectations and profits are under pressure

Libstar has released a voluntary trading update dealing with the 21 weeks to 31 May 2026. They’ve excluded the fresh mushroom operations from the numbers to make things more comparable on a year-on-year basis, as this business was disposed of on 1 December 2025.

They’ve unfortunately come in below expectations, with revenue growth of just 0.9% vs. the prior period. Volumes were up 0.3%, with the rest coming from price and mix effects.

Aside from relatively modest consumer demand (low-single digit growth in the group’s retail basket), they also struggled with production disruptions at the Dickon Hall Foods business. These disruptions were driven by labour challenges and water shortages.

As a further challenge, the Dry Condiments export business was hit by the strength of the rand, the impact of shipment timing and overall weakness in demand in Australia and Asia.

Other areas of the business (like dairy and meat) did well, but not to the extent required to achieve a net growth position for the group. If you exclude Dickon Hall Foods, group revenue was up by 3.5%.

With flat revenue, the group’s profits were a sitting duck in an inflationary environment. Production costs go up and recovery of overheads is weaker when throughput is below expectations (like at Dickon Hall Foods). You also have to consider the spike in fuel prices and related costs of packaging and distribution.

Gross profit margin was down by between 100 and 150 basis points at group level. This is despite margin improvements in the dairy business and a flat performance in meats.

Although operating expense growth was below inflation, it’s clear that this is going to be an unhappy set of interim results for investors.

Despite this pressure, the ongoing generation of cash flow means that Libstar is continuing with share repurchases.

The net debt to EBITDA ratio (calculated using EBITDA on a last-twelve-months basis) is 1.3x, an improvement from 1.6x in the prior period. There are a couple of potential asset disposals that could give further support to the balance sheet if they go ahead.

Ghost Bite: Libstar has disappointed investors many times. It’s a pity that the interim period is going this way.

120
Libstar - value trap or opportunity?

What is your view on Libstar?

Reinet is starting to return cash to shareholders (JSE: RNI)

But with only a small part of the immense cash pile

As I jokingly posted on X at the end of May, Reinet has enough cash to acquire both Pepkor and The Foschini Group! I just plucked these names out of the air to show you what a cash balance of R110 billion is capable of buying.

We have no idea what Reinet was actually looking at buying, but we know that they were considering a “potentially very significant investment opportunity” with their mountain of money. The deal isn’t going to happen though, so they are commencing a share buyback programme instead.

The current net asset value (NAV) per share at the fund is €36.31, or around R684 at current exchange rates. Reinet is trading at only R453 per share, so buybacks should be accretive to shareholders.

It’s just a pity that only €500 million (R9.4 billion) is being earmarked for this programme. It’s a start, but it doesn’t make much of a dent in this lazy balance sheet. It’s also going to take time, with only €75 million expected to be used by mid-August 2026.

Ghost Bite: The announcement came out after the market was closed. I expect to see a positive response from the share price once the market can trade on this news.  

Sephaku grew earnings despite pressure at Sephaku Cement (JSE: SEP)

Métier Mixed Concrete did the heavy lifting

Sephaku Holdings has two major business interests: wholly-owned subsidiary Métier Mixed Concrete and associate Dangote Cement (known as Sephaku Cement).

In the year ended March 2026, the former was the star of the show. We don’t have all the details yet, but the group has flagged strong growth in both revenue and profit at Métier Mixed Concrete. The same certainly can’t be said for Sephaku Cement, where revenue was down 4% and EBITDA fell by 9%.

Thankfully, the pressure on Sephaku Cement was more than offset by the wholly-owned subsidiary moving in the right direction in this period. This is why group HEPS has increased by between 17% and 22% for the year.

Ghost Bite: We will know more when results are released on 2 July 2026. But the market celebrated in the meantime, with the share price up 8%. I must note that this was on weak volumes, so don’t give too much credit to that move.

STADIO’s contact learning growth strategy shines through (JSE: SDO)

They are on track to meet the 2026 goal

At STADIO’s AGM, company management gave an update on the recent trading performance. As at June 2026, they’ve managed year-on-year growth of 8% in distance learning students and 15% in contact learning. This combines into growth of 9% at group level.

The contact learning numbers have been boosted by the STADIO Durbanville campus, with over 1,300 students. The STADIO Centurion campus sits at more than 2,300 students.

It can’t all be good news, of course. Milpark is lagging, which creates a negative impact on growth in distance learning numbers. In Namibia, there’s the announcement of free higher education at state-owned facilities that they need to contend with. Difficulties in the film industry also impacted student numbers in related courses.

But with 55,854 students on the books, STADIO is on track to achieve the promise made in the pre-listing statement of having 56,000 students by 2026. The bigger goal is to reach 80,000 students by 2030. They believe that they can grow to more than 100,000 students.

Ghost Bite: With the share price up 40% over 12 months and a P/E multiple of almost 30x, the STADIO growth story isn’t exactly an uncovered gem. The market puts a lot of faith in this management team and the track record of delivery shows you exactly why that is. Interestingly, the stock is nearly 16% off the 52-week high.

Results of previous poll:

Nibbles:

  • Director dealings:
    • The CEO of Life Healthcare (JSE: LHC) bought shares worth R11.3 million. The company has been struggling to get positive investor attention recently, so this is an important show of faith by the CEO.
    • The Deputy CEO of WeBuyCars (JSE: WBC) and an associate bought shares worth a total of around R436k.
    • Not a traditional director dealing, but still worth noting – the CEO of Fortress Real Estate (JSE: FFB), who is also a non-executive director of NEPI Rockcastle (JSE: NRP), has a loan for which shares in both companies are pledged. He’s increased the size of that facility from R34 million to R50 million. No additional shares in either company have been pledged.
  • Marshall Monteagle (JSE: MMP), one of the more obscure names on the JSE, released a trading statement for the year ended March 2026. HEPS has jumped tremendously from 2.2 US cents to 25.6 US cents. They attribute this to the equity portfolio and to currency movements. Detailed numbers are due for release on 26 June.
  • Balwin (JSE: BWN) still needs to release the circular related to the offer to shareholders by Bidco (backed by the PIC). The Takeover Regulation Panel (TRP) has granted an extension for the circular to be posted by no later than 17 July 2026. It’s not uncommon to see extensions like these.
  • The acquisition of Bank Zero by Lesaka Technologies (JSE: LSK) is taking longer than planned. The parties have agreed to extend the long-stop date from 6th August 2026 to 31st January 2027. Whenever a banking licence is involved, there are complex regulatory hurdles to jump over.
  • In a significant milestone for Capitec (JSE: CPI), Dr Chris Otto (one of the founding directors) will be retiring from the board on 31 July 2026. He’s literally been on the board since the very beginning, most recently in a non-executive capacity. What an extraordinary career!
  • Shuka Minerals (JSE: SKA) has reported another set of drilling results. They had to terminate the fourth drill hole at a shallower depth than planned due to the risk of losing equipment. Still, the CEO seems happy with the results in terms of the grades of the ore body.
  • I’m not convinced that it’s even worth mentioning, but Novus (JSE: NVS) has bought another R401.7k worth of shares in Mustek (JSE: MST). This takes the directly held stake from 50.39% to 50.44%. Inch by inch, hey.
  • If you are a shareholder in Visual International (JSE: VIS), then be aware that the company has scheduled the general meeting of shareholders for the RAL Trust transaction for 16th July. The circular should also be available, but I couldn’t find it on the website.

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?

Listed Companies

enX is to dispose of the New Way Power (NWP) business and the related manufacturing site to GPR South Africa, a subsidiary of PRI, the ultimate beneficial owner of which is Generac, a company listed on the NYSE. The NWP sale business constitutes the largest asset in the enX portfolio. The purchase consideration of R220 million is subject to potential upward adjustment and is capped at R260 million to ensure a category 2 transaction. Power O2 which forms part of the broader power segment will be wound down and assets disposed of separately. The transaction is an opportunity for enX to realise value from the power segment at a time when market conditional and reduced levels of loadshedding have moderated earnings in the sector.

CA Sales is to acquire a collective 30% stake in The Digital Media Consultancy (TDMC) with the option to increase this shareholding by a further 21% to acquire control. TDMC is a local digital-marketing and e-commerce consultancy specialising in assisting the growth of consumer and retail brands. Financial details were undisclosed for the uncategorised transaction with the purchase consideration being paid from internal cash resources.

Mantengu has released a detailed cautionary on a proposed transaction which will see the disposal by Mantengu and the Blue Ridge minorities of their 70% and 30% shareholding in Blue Ridge to Afresources Mining, a diversified mining group owned and controlled by Gani Bros Equity. The R50 million disposal is a category 2 transaction and remains subject to completion of a due diligence as well as the conclusion of legal agreements.

Lesaka Technologies has extended the long-stop date for its 2025 R1,09 billion acquisition of digital lender Bank Zero. The deadline of 6 August 2026 has been extended to 31 January 2027 to allow the parties to obtain remaining outstanding regulatory consents.

The Takeover Regulation Panel has granted Balwin and Bidco an extension in terms of the distribution of the Scheme Circular to Balwin shareholders to no later than Friday, 17 July 2026.

Unlisted Companies

Pan-African private equity fund manager, ARM-Harith Infrastructure Investments, has announced the first close of its Successor Fund at c.$76 million. The fund, a multi-currency blend finance platform, is designed to unlock African institutional capital at scale and accelerate investment in energy transition and climate resilient infrastructure across sub-Saharan Africa.

South African USP&E, a power generation company delivering flexible power solutions has, together with BAM Energy, a local engineering consultancy, launched BridgePower Nuclear (BPN) – a power infrastructure model built around Africa’s industrial economy requirements. BPN’s proposed technology platform, the Pearl reactor, is to be phased in during 2029. The transportable unit is designed to address the barriers that have delayed small modular reactor programmes, namely the dependence on enriched fuel, reliance on heavy forgings and complex on-site construction.

Business Rescue practitioners for the SA Post Office (SAPO) announced this week that formal application had been made for the state-owned entity to exit its business rescue process. SAPO entered business rescue in July 2023. The caveat, however, is that the exit from the process will occur without the R3,8 billion in recapitalisation funds from National Treasury with the practitioners warning that the absence of the capital injection has resulted in certain aspects of the turnaround strategy being incomplete.

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

Brait has announced its intention to undertake a R2,5 billion rights offer as part of its strategy to unlock value for its shareholders by eliminating historical debt constraints and making way for the unbundling and distribution of its remaining assets. Brait will issue shares at R1.51 per share, representing a 25% discount to the five-day VWAP of R2.23 recorded prior to the announcement. The company has secured undertakings from Titan and its affiliates, who between them hold 39.3% of Brait’s ordinary shares, to underwrite the rights offer.

Following the results of the scrip dividend election, Dipula Properties will issue 19,041,044 new ordinary shares in the company in lieu of an interim dividend, resulting in a capitalisation of the distributable retained profits in the company of R128,53 million. The shares were based on a reinvestment price of R6.75 per share.

This week Novus acquired an additional 26,780 Mustek shares at R15.00 per share on the open market (outside of the Mandatory Offer) for R401,700. The company now holds 29,02 million Mustek shares constituting 50.44% of the issued shares in Mustek. Together with concert parties this shareholding increases to c.70.73%.

Numeral has received approval from the Stock Exchange of Mauritius to change its listing classification to the investments category. The approval provides the company with greater strategic flexibility to pursue its investment holding strategy, including the acquisition, incubation, management and development of operating businesses and strategic investments across multiple sectors and jurisdictions.

The JSE has advised shareholders of Brikor, Mantengu and Visual International that the companies have failed to submit their financial statements within the three months period as stipulated by the Listing Requirements. Should these companies fail to submit their financial statements before 30 June 2026, their listings may be suspended.

Business Rescue Practitioners have withdrawn the application for provisional liquidation of Tongaat Hullet which was filed on 12 February 2026. This follows a binding agreement by the parties involved to restructure the group. The Industrial Development Corporation, Tongaat’s largest creditor, will convert its R2,5 billion claim into equity, becoming a significant shareholder in Vision. In addition it will extend post-commencement finance to end-September 2026 to support Tongaat’s continued trading during the restructuring. The Vision consortium comprises Terris Sugar, Remoggo and Almoiz. Tongaat Hullet remains in Business Rescue.

This week the following companies announced the repurchase of shares:

Reinet Investments intends to repurchase its shares for an aggregate maximum amount of €500 million and a maximum of 16,5 million shares over a period up to the 2027 AGM. The implementation will be through a number of successive and separate programmes. Under the programme, Reinet will first commence a purchase programme for an aggregate €75 million subject to a maximum of 2,5 million shares over a period commencing 22 June 2026 and ending 19 August 2026. The Rupert family will not dispose of any shares during the duration of the programme.

ADvTECH has repurchased 5,740,128 shares on the open market over the period 30 March 2026 to 10 June 2026. The repurchase represents c.1.04% of the company’s issued share capital. The shares were repurchased in a price range of R40.47 to R44.90 per share for an aggregate R250 million. The shares will be cancelled.

Bytes Technology has announced in May 2026 its intention to implement a new share repurchase programme to purchase the company’s shares for an aggregate value of up to £25,0 million. This week the company repurchased 575,000 shares at an average price per share of £3.69 for an aggregate £2,12 million.

In December 2025, British American Tobacco extended its share buyback programme by a further £1.3 billion for 2026. The shares will be cancelled. Over the period 8 – 12 June 2026, the company repurchased a further 617,131 shares at an average price of £45.33 per share for an aggregate £27,96 million.

To reduce the share capital of the company and return capital to shareholders, Quilter commenced a £100 million share buyback programme. During the period 8 to 12 June 2026, Quilter repurchased a further 917,907 shares on the LSE with an aggregate value of c.£1,75 million and 234,470 shares on the JSE with an aggregate value of R9,81 million.

Ninety One plc announced an increase in the repurchase programme from £30 million to £55 million to be completed by 21 July 2026. The shares to be purchased on the open market will be cancelled to reduce the Company’s ordinary share capital. This week the company repurchased a further 898,835 ordinary shares at an average price 217 pence for an aggregate £1,95 million.

GreenCoat Renewables has implemented a share buyback programme totalling €100 million over 12 months with a first tranche amounting to €25 million beginning on 5 March 2026 – representing 13% of the issued share capital. This week 1,108,090 shares were repurchased for and aggregate €817,601.

Anheuser-Busch InBev’s US$6 billion share buy-back programme continues. 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 8 to 12 June 2026, the group repurchased 532,602 shares for €37,24 million.

During the period 8 – 12 June 2026, Prosus repurchased a further 2,373,260 Prosus shares for an aggregate €94,5 million and Naspers, a further 904,340 Naspers shares for a total consideration of R795,78 million.

One company issued a profit warning this week: Crookes Brothers.

Two companies issued or withdrew a cautionary notice: Mantengu and Numeral.

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

Navigating contested takeovers

Sibonelo Mdluli
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Navigating contested takeovers

The Warner Bros. Discovery bidding war through a South African lens

The recent bidding war for Warner Bros. Discovery (WBD) – which pitted Netflix against Paramount Skydance and ultimately produced a US$110,9bn deal – is an interesting case study in contested takeover dynamics. While it played out under US takeover rules, the structural and governance tensions at its core are strikingly relevant to South African corporates.

  1. The WBD bidding war – a chronological overview

WBD entered 2025 burdened by substantial legacy debt and declining television revenues. In June 2025, management announced plans to split the business into two entities. The announcement signalled, explicitly or not, that the company was “in play”.

Following the announcement, multiple parties – including Netflix and Paramount Skydance – submitted formal proposals. In October 2025, WBD confirmed it was reviewing unsolicited offers and subsequently entered into exclusive negotiations with Netflix, culminating in a definitive agreement in December 2025.

The agreement with Netflix seemed to have closed the door on Paramount and other bidders. It had not.

Paramount did not withdraw. Instead, it launched what effectively became a protracted hostile campaign. By January 2026, Paramount had launched a hostile tender offer to WBD shareholders at $30 per share (a premium of about 139% to the undisturbed Netflix share price). WBD’s board rejected this bid and reaffirmed its support for Netflix.

Facing mounting shareholder pressure and governance scrutiny regarding whether it had adequately discharged its fiduciary obligations, WBD’s board opened a seven-day negotiating window with Paramount in late February 2026. Paramount responded with its ninth revised offer: $31 per share, all-cash, for the entire company, with a ‘ticking fee’ of $650 million per quarter for closing delays beyond 31 December 2026. On 26 February 2026, the WBD board determined that Paramount’s revised $110,9bn offer constituted a “superior proposal”. Netflix declined to increase its bid and withdrew, leaving Paramount as the winning bidder.

  1. Lessons for SA target company Boards

Lesson 1: Early constitution of the Independent Board
South Africa’s Takeover Regulations mandate that an “Independent Board” – comprising directors who have no conflicting interests in relation to the transaction – be constituted in relation to “affected transactions” to evaluate bids and make recommendations to shareholders. Affected transactions include control transactions and disposals of all or a greater part of a regulated company’s assets or undertaking. Whilst every situation has its own unique considerations, constituting the Independent Board early, with genuinely independent and commercially astute directors, is critical. Its composition will be scrutinised by the Takeover Regulation Panel (“TRP”), which is the primary regulator for affected transactions. Appointing directors who have pre-existing relationships with a bidder, or who hold material equity interests that skew their incentives, will attract TRP scrutiny and undermine the legitimacy of its ultimate recommendation.

As a matter of practicality, when strategic interest from potential acquirers is first identified – even at preliminary, non-binding stages – the board should already be mapping conflicts and identifying the Independent Board designates.

Lesson 2: Engage the TRP proactively, not reactively
The TRP is not merely a box-ticking regulator. It has broad supervisory powers over affected transactions. Boards that engage proactively with the TRP – briefing it on process, seeking guidance on novel structural questions, and ensuring key approvals are lined up in advance of key decision points – are in a far stronger position than those who appear before it under fire.

Lesson 3: ‘No-Shop’ does not mean ‘No-Engage’
One of the clearest lessons from the WBD saga is the risk of a board appearing to be a passive gatekeeper for the preferred bidder, rather than an active steward of shareholder value. In the WBD deal, WBD had signed up to market standard “no-shop” undertakings (i.e. undertakings to negotiate exclusively with Netflix and not to actively solicit interest from third parties). WBD’s board, while within its contractual rights to rebuff Paramount’s early bids, faced legitimate criticism that it was slow to test the market properly.

Under South African law, this tension is resolved by statute: the board cannot, as a matter of law, prevent a bona fide competing bidder from accessing information or from putting its case to shareholders. A board that attempts to entrench a preferred deal by refusing to engage with a higher competing offer risks not only regulatory sanction from the TRP, but also personal liability exposure for its directors under the Companies Act.

The fiduciary duty is to the company and ultimately its shareholders – not to the preferred bidder, however well-negotiated the initial deal was.

Lesson 4: Structure deal protections to survive a superior offer landscape
South African target boards and their advisers should ensure that deal protection mechanisms are carefully calibrated:
•Rights to match should have reasonable exercise periods – long enough to allow a genuine response, short enough not to chill competing interest.
•Break fees should compensate the preferred bidder for its transaction costs without being so large as to deter third-party interest. The TRP will not generally permit break fees in excess of 1% of deal value.
•“Fiduciary-out” provisions must be expressly preserved – these allow the board to change its recommendation or terminate an agreed transaction if a superior proposal emerges, when sticking with the original deal would breach its fiduciary duties.

Lesson 5: Shareholder engagement is not optional
A recurring theme in the WBD saga was the voice of institutional shareholders.

South African institutional investors have become significantly more activist. In a contested takeover, boards that communicate early, transparently and substantively with their major institutional shareholders will be better positioned to maintain trust and manage the process effectively.

Lesson 6: Secure the regulatory pathway before recommending
Anti-trust clearance is a mandatory step for South African M&A above applicable thresholds. The South African competition authorities have demonstrated a willingness to impose merger-specific and other public interest conditions relating to employment, localisation and supplier development, amongst others. In evaluating competing offers, target companies must assess the likely regulatory pathway for each. A higher offer that faces greater competition or public interest risk may deliver less certain value than a lower-priced offer with a cleaner regulatory profile. In South Africa, the length of time it has historically taken to obtain regulatory approvals has effectively acted as an impediment to hostile transactions. Understanding this dynamic, and designing the transaction in a way that mitigates it, is therefore essential to potential bidders looking to launch deals on an unsolicited basis.

Sibonelo Mdluli is a Senior Transactor | RMB Corporate Finance

This article first appeared in DealMakers, SA’s quarterly M&A publication.

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

Rethinking Africa portfolios: How multinationals can navigate divestments

Daniel Outré
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Rethinking Africa portfolios: How multinationals can navigate divestments

Too many multinational exits in Africa fail – not because of weak demand, but because the process is not adapted to the buyer universe.

Drawing on our experience as M&A advisors, we share practical reflections on what it takes to execute successful multinational exits from Africa, with a particular focus on how to manage the specificities of such processes in an African context.

A quiet but structural shift in Africa’s corporate landscape

Not long ago, Unilever was, by far, the leading distribution player in French-speaking West Africa, with large fleets of trucks serving small shopkeepers across the region. The group operated asset-heavy, vertically integrated businesses, combining manufacturing facilities with extensive palm plantations for edible oil and soap production. Two decades later, most of these assets have been divested to local players, following a series of headquarters-driven decisions, culminating in a near-complete exit from the region by 2026. Unilever is now largely absent from West Africa, including key markets such as Ghana and Nigeria, where subsidiaries have either been sold or wound down. Across these markets, the group has shifted from a dominant mass-market player – with 20% to 50% market shares, strong local brands and deep operational presence – to a lighter, more selective model focused on distributing a limited range of international brands targeting higher-income consumers.

The Unilever story is just one illustration of a broader structural trend, and this evolution is neither isolated nor cyclical. Similar dynamics can be observed across sectors. While the underlying drivers may differ – including capital allocation, regulatory complexity, foreign exchange constraints and compliance considerations – the overall direction is consistent. In banking, European institutions that once held significant market shares across North and West Africa have substantially reduced their presence following the disposal of subsidiaries by Société Générale, BNP Paribas and Crédit Agricole. In the manufacturing space, groups such as Air Liquide have divested multiple African operations – including the sale of 13 subsidiaries in 2024 – as part of broader portfolio rationalisation efforts. Comparable trends are visible in other sectors, including insurance, energy and cement, where several European players have scaled back or exited their positions.

Against this backdrop, divesting multinational assets in Africa has become both more frequent and more complex, requiring processes that are carefully structured and actively managed to succeed. The remainder of this note focuses on how such processes can be adapted to local market dynamics, based on our experience advising on these transactions.

Taking stock of the actual buyer universe for multinationals in Africa

A key starting point is that multinational assets in Africa are generally attractive and marketable, and can generate meaningful investor interest. The challenge is not the absence of demand – it is the structure of that demand. Yet many processes are delayed or weakened by recurring pitfalls, despite strong in-house M&A capabilities on the seller side. These transactions, therefore, require a specific approach, taking into account their African context.

A defining feature of the private sector in many sub-Saharan African countries is the relative lack of M&A market liquidity. A large portion of potential buyers are family-backed groups of limited to mid-scale size, and with varying degrees of sophistication and formalisation. Private equity funds and more structured regional players are also active, but few are structured to take controlling stakes, and even fewer are equipped to manage complex carve-out situations. In practice, this means that local family groups often constitute the most credible buyer universe for multinational divestments, requiring adjustments to both the positioning of the asset and the execution process. Local family groups tend to place significant value on the reputation, compliance standards and operational rigor associated with multinational assets. These assets often include long-established operations with valuable real estate, strong legacy brands and underexploited potential. Larger family groups with exposure to adjacent sectors are typically those best positioned to generate synergies and to submit the most compelling offers, particularly where assets require repositioning.

In Africa, the question is not whether there are buyers – it is whether the process is designed for them.

To address this reality, M&A advisors need to deploy a tailored toolbox. Their role is not limited to running a process, but also to designing a transaction perimeter that the market can effectively absorb. Multinational assets are often sizeable, relative to the financial capacity of local buyers, which may require restructuring the perimeter – through partial disposals, leverage optimisation or asset separation – to enhance affordability. This is particularly relevant for transactions with a significant real estate component, valuable intellectual property or a multi-country footprint, where a piecemeal approach may unlock greater value. While this increases execution complexity for the seller, it can significantly broaden the buyer universe and improve outcomes. Equally important, the gap in working cultures, transaction experience and M&A language between buyers and sellers can lead to misunderstandings and mistrust, which can, in turn, result in misinterpretations on both sides (e.g. information requests perceived as hesitation, or process discipline perceived as mistrust). In this context, the role of the advisor extends beyond execution to include active facilitation and, at times, buyer education. This is particularly true for technical aspects, such as Transition Services Agreements (TSAs), which are often critical in carve-out situations but may be unfamiliar to certain buyer profiles.

Navigating through other local parameters

Equally important, the seller must be fully aligned internally – across local management, regional teams and headquarters – on key parameters such as perimeter, valuation expectations, approval processes and fallback options. Misalignment at this level can quickly undermine execution. Other recurring aspects include the difficulty of transferring and repatriating funds, particularly for locally based buyers, with direct implications on transaction structuring, conditions precedent, escrow arrangements and timing. Regulatory frameworks may also lack clarity, increasing legal uncertainty around approvals and closing mechanics. These constraints can result in protracted timelines, with processes sometimes extending up to two years end-to-end – often twice as long as comparable transactions in more developed markets. Finally, confidentiality is also often an issue, as it is more difficult to preserve in an African context, with information leakages occurring more frequently. This is particularly sensitive for multinational sellers, who may be exposed to political interference or operate listed subsidiaries, increasing the potential impact of premature disclosures. In this context, communication planning should be treated as a core transaction workstream, rather than an afterthought.

Overall, Africa remains a distinct and sometimes challenging M&A environment for multinational companies. The key takeaway, however, is that the success of a divestment is rarely driven by the intrinsic quality of the asset alone, but by the ability to anticipate local constraints and structure the process accordingly.

The difference between a failed process and a successful exit is not the asset; it is the quality of the preparation.

Daniel Outré is a Partner | Enexus

This article first appeared in DealMakers AFRICA, the continent’s quarterly M&A publication.

DealMakers AFRICA is a quarterly M&A publication
www.dealmakersafrica.com

Ghost Bites (CA Sales | Premier | Stor-Age | Vukile Property)

The Finance Ghost
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Ghost Bites (CA Sales | Premier | Stor-Age | Vukile Property)

In this edition of Ghost Bites:

  • CA&S dips into digital
  • Chuckles all around for Premier investors
  • Stor-Age is struggling in the UK
  • Vukile is doing well everywhere – but especially in South Africa

CA&S dips into digital (JSE: CAA)

This is an interesting acquisition!

CA Sales Holdings (JSE: CAA) (known as CA&S) has earned a solid reputation for making excellent use of bolt-on acquisitions to bolster their operations across Africa.

We are used to seeing them acquire route-to-market companies. This helps FMCG players reach customers through a combination of distribution and merchandising services.

But the latest deal is quite different, as CA&S has stepped into the digital and eCommerce space. Omnichannel retail is becoming an increasingly important element of the retail landscape and this has been a blind spot for CA&S.

To address this gap, they’ve taken a 30% stake in The Digital Media Consultancy (TDMC), a company that offers services from Shopify development right through to email marketing and even influencer management. This is an interesting step!

In classic CA&S style, the deal includes a pathway to control. They are able to take a further 21% stake via call options, which would give them a total of 51%.

There’s no indication of the financial value of the deal. All we know is that it is too small to be categorised for the JSE or the Botswana Stock Exchange.

Ghost Bite: It’s great to see CA&S dipping their toes into the future. Bricks-and-mortar retail has a long way to go (especially in Africa), but bringing in an omnichannel skillset can only be valuable over the long term.

Chuckles all around for Premier investors (JSE: PMR)

Hopefully a new era at the company won’t leave a bad taste

Premier continues to be a wonderful example of the power of operating leverage. Revenue increased by 6.6% in the year ended March 2026, which you wouldn’t exactly classify as an exciting growth story. But once you work your way down the income statement and find HEPS growth of 27.7%, you might feel differently!

Premier is a food business with extensive exposure to bakery categories (Millbake was 81% of revenue in this period). This means that there are many factors at play here, including external commodity prices like maize. If price deflation is met by strong enough growth in volumes, then manufacturing efficiencies can be realised.

With group EBITDA margin up by 130 basis points to 13.1%, as well as operating profit margin up 150 basis points to 11.1%, there’s plenty for shareholders to feel good about here. The chef’s kiss for HEPS was a 27.5% decrease in net finance costs, driven by reduced debt levels.

When your cash generated from operations increases by 39.5%, chances are good that the health of your balance sheet will improve as well. The group leverage ratio is just 0.5x, so most of the uplift in growth between revenue and HEPS is thanks to operating leverage (fixed costs) rather than financial leverage (debt).

Digging deeper, Millbake achieved revenue growth of 5.1% and EBITDA growth of 18.3%, so the bakery team deserves plenty of credit (as usual).

The Groceries and International segment was skewed by the acquisition of RFG in March 2026. Although the results were only included for less than a month, this still bumped up growth in this division, as Premier essentially bought more earnings. Groceries and International grew revenue by 13.5% and EBITDA by 29.6%.

The shape of the group will change given the recent acquisitions. Millbake is expected to be two-thirds of EBITDA going forwards. My hope is that they don’t dilute the elements of the Premier business model that make it so special. The history books are filled with FMCG companies that tried too hard to diversify and ended up diworsifying instead.

Ghost Bites: On top of all the other good news, Premier also took on the chocolate range at Woolworths. With the share price up 34% over 12 months, it’s Chuckles all round for investors. But I must be honest that I can taste a difference in Chuckles (other than the red pack, which hasn’t changed), while a quick online search reveals that I’m not the only one. I suspect I’m heading back to Whispers for my chocolate fix.

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Chuckles or tears?

Has the taste of Chuckles at Woolworths changed for you?

Stor-Age is struggling in the UK (JSE: SSS)

The UK economy can be unforgiving

Stor-Age has a more even split across SA and the UK than most people realise. These days, they have 64 properties at home and 46 in the UK. Stor-Age isn’t thought of as an example of a major offshore expansion strategy, but they probably deserve more credit for their growth ambitions.

The UK market hasn’t delivered great numbers in the latest period though. For the year ended March 2026, the SA portfolio achieved rental income growth of 10.5%, while net property operating income was up 11.1%. In the UK, rental income was up by just 1.1% and net property operating income dipped by 0.8%!

This is why the blended group results aren’t going to set anyone’s hair on fire. There was an increase in the number of shares in issue (they raised R500 million in December 2025), so growth of 8.4% in distributable earnings was diluted into dividend per share growth of 5.1%. It’s ahead of inflation, but not by much.

The net tangible asset value per share is up by 3.9%, so that at least that adds to the growth story alongside the dividend. With a loan-to-value ratio of 29.7%, the balance sheet is a decent story overall.

There’s clearly a lot of work to do in the UK, particularly as the occupancy rate is only 81.6% in that market vs. 93.4% in SA. They talk about a “tougher cyclical environment” for the UK platform.

Investors will hope that these are cyclical rather than structural issues, otherwise Stor-Age might start to be used as an example of offshore expansion for all the wrong reasons!

These difficulties mean that guidance for FY27 is distributable income per share growth of just 5.0%, much the same as we’ve seen in FY26.

Ghost Bite: The market didn’t love these numbers, with the share price down 3% on the day. At R16.70, Stor-Age is a long way off the 52-week high of R19.32 achieved in late February (before the macroeconomic situation changed thanks to the Iran conflict).

Vukile is doing well everywhere – but especially in South Africa (JSE: VKE)

These results are the perfect foundation for the expansion into Italy

Vukile Property Fund has released excellent numbers for the year ended March 2026. The total dividend for the year was up by 9.3%, offering investors a strong real return (the return ahead of inflation).

This growth was underpinned by exceptional numbers in South Africa. The local portfolio achieved like-for-like retail net operating income growth of 10.3%, with trading density up by an impressive 5.3%. This means that the shops are busier, so tenants are making money. And if tenants are doing well, the same is true for the landlord!

Aside from turnover clauses, the benefit also comes through in rental reversions, a measure of how the rental amount changed on a new lease vs. the previous lease. Reversions increased from +2.4% to +37%. The “+” signs are important there, as reversions can turn negative – just ask office property funds!

These solid numbers drove a 12.3% like-for-like increase in the value of the retail portfolio in South Africa.

Then, in Iberia (Spain and Portugal – for those who didn’t take geography), Castellana achieved like-for-like net operating income growth of 7.9%. Rental reversions were excellent at +9.1%, driving a like-for-like valuation increase of 6.6%. That’s a solid outcome when you consider the difficult macroeconomic environment in the developed world.

Vukile’s balance sheet is healthy, with a loan-to-value ratio of 38.4%. They make extensive use of green loans, with solar installations now generating 29% of electricity in the portfolio. The credit ratings for both Vukile and Castellana were recently upgraded as well.

When they need equity for growth, there’s no shortage of interest from investors. Vukile had no problems raising R2.8 billion in an oversubscribed equity issuance in May 2026 (i.e. after this reporting period). This enabled their entry into Italy, with Vukile’s European portfolio starting to sound like something out of a travel brochure!

For FY27, they are forecasting growth in funds from operations (FFO) per share of between 8% and 10%. By slightly increasing the dividend payout ratio, they expect to grow the dividend per share by between 10% and 12%.

Ghost Bite: Vukile is an excellent example of the high quality companies available on the JSE. The total return over 12 months (i.e. including the dividend) is 35%!

Results of previous poll:

Nibbles:

  • Director dealings:
    • A director of Nu-World (JSE: NWL) acquired shares worth R2.4 million.
    • An independent non-executive director of NEPI Rockcastle (JSE: NRP) bought shares worth R281k.
    • A person closely associated with the CEO of Sirius Real Estate (JSE: SRE) bought shares worth around R110k.
  • Powerfleet (JSE: PWR) has released results for the year ended March 2026. Although revenue was up 22%, they still reported a headline loss of $20.6 million vs. a loss of $51 million in the prior period. At least they were profitable at operating profit level, with positive $19.6 million vs. a loss of $25.9 million in the prior period. Like all good US-based tech companies, adjusted EBITDA went in the right direction, up by 44% to $97 million.
  • Brikor (JSE: BIK) released results for the year ended 28 February 2026. They are late, with the JSE having fired a warning shot a few days ago regarding this release not being on time. Revenue fell by 16.6% and they experienced a nasty swing from positive HEPS of 0.5 cents to a headline loss of 1.1 cents per share. They were impacted by weak demand in the bricks sector as well as lower coal production volumes. To give you an idea of how tough it is, the gross margin in the bricks segment was just 13.6% (vs. 29.2% in the prior period). Gross indeed! As a reminder, the board of Brikor is currently weighing up the delisting of the company.
  • Holders of 46.12% of Dipula (JSE: DIB) shares elected the dividend re-investment option. This allowed Dipula to retain R128.5 million in equity, as shares were issued to these investors in lieu of cash dividends. Property funds love these outcomes, as it’s like executing a little capital raise without going through nearly as much admin.
  • Advtech (JSE: ADH) has been busy with share repurchases. Between 30 March 2026 and 10 June 2026, they’ve invested R250 million in repurchasing 1.04% of shares in issue. The share price has been doing very well, up 42% over 12 months and 17% year-to-date.
  • Investec (JSE: INP | JSE: INP) announced that Fitch has upgraded their credit rating on long-term debt from BB- to BB, with a stable outlook. This is related to Fitch’s decision to upgrade South Africa’s sovereign debt earlier this month. When a country’s financials are in better shape, banks can access cheaper funding. These benefits then flow through the economy.
  • AB InBev (JSE: ANH) announced that existing independent director Dirk Van de Put has been appointed as the new Chairman of the Board, having already served on the board for three years. Interestingly, Van de Put is the current Chairman and CEO of Mondelez International. How does he find the time for this role as well?
  • There’s a change to the governance structure at MAS (JSE: MSP), with Martin Slabbert resigning as a director and Chairman of MAS and being appointed as Chairman of PKM Development (the joint venture company). This is after Mihail Vasilescu moved from Chairman of PKM Development to CEO of MAS. Dewald Joubert has been appointed as Chairman of MAS, stepping into that role from his current position as Lead Independent Non-Executive Director.
  • Clientèle (JSE: CLI) has confirmed that the final offer price is R19.90 per share. This will be structured as a dividend, so shareholders accepting the offer will need to take that into account in their tax considerations. Dividend tax of 20% will apply for shareholders who are not exempt from this tax.
  • Numeral (JSE: XII) has changed its classification on the Stock Exchange of Mauritius (SEM). They are moving to the Investments category, reflecting the plan to build a portfolio of business interests beyond the biotechnology, healthcare and pharmaceutical businesses. Essentially, this just gives them the flexibility to execute investments in a wider variety of sectors. The results for the year ended February 2026 are still in the audit process, with the SEM granting an extension until mid-July 2026 for their release.
  • A couple of companies are late in the release of their financial statements. Financials are supposed to be filed no more than three months after the end of a period. Mantengu (JSE: MTU) and Visual International (JSE: VIS) are in the naughty corner. For now, they are just on the radar of the JSE – the listings haven’t been suspended at this stage.
  • Oando (JSE: OAN) is still trying to get its 2025 financial statement released. They are falling behind, as the Q1 2026 numbers are also due. The delay is related to a regulatory review of the 2025 financials by the Financial Reporting Council of Nigeria.

The Finance Ghost Plugged in with Capitec: Purpose and profit

The Finance Ghost
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The Finance Ghost Plugged in with Capitec: Purpose and profit

In Season 2 of this podcast, The Finance Ghost talks to South African entrepreneurs about the ideas, choices and turning points behind building a business from scratch.

Listen to the podcast:

What does it really take to build a business from nothing in South Africa? Founder of Universal Kitchens, Clinton Van Breda, shares the unfiltered story of how he dedicated two decades to turning a R500 000 loan into a business employing over 200 people.

There was no single breakthrough moment or overnight success. Instead, his story is one of discipline, reflection and relentless execution over two decades, driven by a strong sense of purpose.

From reviewing his diary line by line each year to making tough sacrifices early on (including skipping his honeymoon), Clinton reveals the mindset and habits that compound into long-term success.

This episode dives into the realities of entrepreneurship – the chaos, doubt and faith it demands. It also unpacks why focusing on the process, not the money, is what ultimately builds a lasting business.

Episode 2 covers:  

  • Why there’s rarely a ‘big break’ and what actually drives growth
  • The power of daily reflection and disciplined execution
  • Building a family business without compromising long-term scalability
  • Why chasing money is the fastest way to lose focus
  • Lessons from growing a team to more than 200 employees
  • How to navigate uncertainty, risk and tough decisions
  • The difference between ‘cheap’ and ‘value’ when building a premium brand

The Finance Ghost plugged in with Capitec is made possible by the support of Capitec Business. All the entrepreneurs featured on this podcast are clients of Capitec. Capitec is an authorised Financial Services Provider, FSP number 46669.

Read the transcript:

The Finance Ghost: Welcome to this episode of The Finance Ghost plugged in with Capitec. This is episode two of season two, which means there are a number of shows for you to go back and listen to if you are new to this series. So please do go and do that. There are lots of great entrepreneurs to learn from.  

And certainly today’s guest on the show is going to bring us some fantastic insights about building a business from scratch in South Africa. That is Clinton Van Breda, and he is the founder and CEO of Universal Kitchens.  

Really impressive business. He’s been building it for roughly two decades. I’m excited to tap into that story.  

So, Clinton, welcome to the show, and thank you for agreeing to do this. 

Clinton Van Breda: Ghost, thanks for reaching out to me, and it’s quite an honour and a privilege. I’m actually emotional that people watch us, how we play out in business. I’m excited to chat about our journey. 

The Finance Ghost: When we were getting to know each other a bit before this podcast, something you mentioned to me is that you started this business with roughly a R500,000 loan all those years ago.  

We won’t disclose your turnover today, but you’ve got more than 200 staff. So I think that is a remarkable story, to go from basically half a million bucks in debt to get this thing off the ground, through to providing for 200 households. That is really, really impressive. 

How often do you honestly just sit and think back to how everything started? Or is that so long ago now that you kind of forget about it and you just focus on what you need to do today, what you did last week, what’s coming next week? 

What does a journey like that actually look like? 

Clinton Van Breda: For any entrepreneur, regardless of his age, that’s starting a business, sometimes you don’t know how it will play out. And quite an interesting story I want to mention: I watched a video interview with the great Mr Christo Wiese. He said that sometimes us as entrepreneurs, in Afrikaans, he said that, “ons is van ons lotjies getik”. 

What that means is, sometimes, if you as an entrepreneur start a business, if you know of all the challenges that you must face with your business, I don’t think you will take it on.  

Whether that is a new business within your business or whether it is a new division, whatever it relates to within your business, making your business more profitable or innovative, bringing in new machinery. There are a lot of moving parts running a smooth-line business. 

If you must think back at what you went through, and yet you did it, I think sometimes we as entrepreneurs, we’ve got a lot. Sometimes we’re “by our lotjie getik”: sometimes we’re mad.  

And if I look back at where we are today, 20 years later, I would never have imagined that we would be where we are today. 

And first of all, I would like to say to the Heavenly Father that I pray and believe in, that is giving me the wisdom and the courage and the empowerment, vision that is in me to take the business 20 years later and still have the drive and the passion of the business today. 

I started off with my dad, and that played a big role. I started in a business household where my dad was a good entrepreneur. We discussed that I was supposed to be a golfer, and we all know how golf plays out. There was much more for me in a business career. 

I started off with a R500,000 loan. I’ll never forget it. I still signed a cheque to one of our machine suppliers. I started off in an overdraft of minus R500,000. And today, with my wife being the financial director, we try and run the business in the smoothest possible way we can. 

If I reflect back, from when we started till today, it’s a dream come true. But yet, I’m excited about what’s coming. I’ve met a lot of people within our business, and I’ve created many friends through the business. 

The Finance Ghost: So, I think let’s go back to that beginning period and just unpack it a little bit more. You thought you might become a professional golfer. What you’ve alluded to there is that that’s the high-risk decision.  

If you become Ernie Els or a Retief Goosen or any of the younger guys that we have today, then great. But obviously, if you spend your life on the Sunshine Tour, that’s a very hard way to actually make any kind of living. I guess that’s what drew you away from there. 

Maybe just unpack a little bit more – that early journey with your dad, working in the business, some of the lessons learned there, and then how that actually led you to go and start what you’re doing today, which is Universal Kitchens? 

Clinton Van Breda: I was a very young guy, and I was always good at rugby and cricket, and I had a lot of leadership in me. And I obviously wanted to become a professional golfer. I did my part. I’ve invested: eat, sleep, and played golf – that’s what I did. And obviously, each person’s life turns out differently.  

So obviously I quickly decided, you know what, golf is not for me. And as I said, I was brought up in a household where there was always business with my dad. Through the ups and downs with him, I’ve learned a lot.  

And I think when I decided that I wanted to do something myself, yet I didn’t know what to do. At that stage in my dad’s business career, he started building spec houses; building four or five houses a year on his own pace, doing his own finishes, etc. 

And I thought I could run that side of the business for him, because he was originally in the aluminium industry, and there was family involved, and we took separate paths. 

So my dad started building big estate projects, selling houses for R3 million-plus. 

When I was on site, I saw the people doing his kitchens at that time. It drew my attention, and it was a clean job. It caught me, and probably the design of it, of how it looked. If you think about it, where the kitchen is the heart of the house, obviously, that caught my attention, and we started with it. 

At that time, I was very young. I met my wife; we’re still married to this day. Blessed marriage, I will never forget it. My dad said, “Okay, right, well, now you need to buy yourself a bakkie.” I was 19 at that stage. I thought, jissee, I’m going to get a double-cab bakkie, or at least a club cab.  

And my dad said, “No, no, no, you’re getting a long-wheelbase.” We call it a long horse. It was a Colt, bottom-range bakkie. It was a work bakkie. It was my church bakkie. At that time, I just met my girlfriend, my wife, now, and did it. I was focused on my goals. 

Yes, we went through a lot in the business. I’ve restructured the business. It was exciting when I started. 

The advice I can give is – I was really into it. I was dreaming about my business. I was visualising my business. How do I operate the next day? 

I had a to-do list. I was not just coming in in the morning, whatever comes my way, take it, and leave at five or six o’clock at night. I was not very clever. I just focused on my end goal, and I did it. 

The Finance Ghost: So Clinton, I think let’s start to dig into this journey of actually building this thing, because it’s been two decades. You’ve come out the other end with a really  

substantial business that does some very interesting stuff. 

And maybe just to touch on some of that, you’ve done some pretty big collaborations with celebrities. I mean, the website is beautiful. You’ve done a lot of really premium kitchens. The work looks amazing. And I’m so fascinated by how someone actually incrementally builds that bit by bit. 

So you’ve touched on a few points there about how you basically eat, sleep, and live your business. I think that any business owner will fully understand what that is like. It does tend to take over your life. That also tends to be the case for a number of years. 

When I worked in corporate advisory, a lot of the businesses that we would sell on behalf of people had often been around for about two decades. So where you are in your business journey now, is similar to where a lot of entrepreneurs, the really successful ones, get to. It takes, like I say, 20 years of work, which is an incredible journey. 

And I just wanted to highlight one of my favourite quotes here. It’s by Brian Armstrong, the CEO of Coinbase. I’m not much of a crypto guy, but I definitely love this quote, which is: “Action produces information”. I first heard it on the Founders podcast with David Senra, which I highly, highly recommend. I’ll just say it again: “action produces information”. 

What does that mean? It means that in order to figure out where to go, you basically just have to start moving. You have to start walking in a particular direction, and you’re going to learn some stuff along the way, and then you’ll know what to do next. One foot in front of the other. 

Would you say that that has been your journey over the 20 years? Is it just incremental growth over time, or did you find that there was a really big bang moment? There was a particularly lucky break? Or was it more of a grind? 

Clinton Van Breda: If I reflect on my journey so far, I was focused. Every year, I would start my year with my diary of the previous year, and I would go through each and every day in my hardboek diary (although my management moves in calendar sharing, etc).  

I look at where I’ve maybe slipped up, or I reflect on a meeting that I’ve had. I start my new year diary with the things I’ve slipped up on. I will make notes of it, that’s to my importance, and I will then physically mark it down, and I will then run it through. 

So, to get to the bottom of all this, we as entrepreneurs have a lot of plans. We wake up at night and think about this, think about that, and where I will take a day at a time and try to run through it or try and plan it.  

Yes, our business has grown in such a big turnaround from a staff point of view, from a total business point of view. Our business has upscaled in the last five years.  

I didn’t get a business breakthrough as such. I was just dedicated. I was goal-driven. I worked in my diary. I aligned myself with the right management team around me, making sure our marketing strategies were correct in certain time frames.  

As we move in on our Cape Town market as well, more aggressively, I would pinpoint it and I would just run through it, whether it now takes a week or a month. I’m an executor. I don’t just leave things. 

The Finance Ghost: It sounds like a bit of a snowball, right? You do a lot of things well for a long time, and then suddenly the business just takes off, it just starts to scale. You’ve alluded there it’s quite rapid growth in recent years.  

I guess Covid would have helped, right? People were “staying home and staying safe” and they were spending a lot of money renovating their homes. Did you find that Covid was a really important boost for the business? 

Clinton Van Breda: In 2020 Covid, that February was Covid, I think, or March lockdown. Prior to that, in November 2019, I signed a five-year lease in George with our first showroom we were expanding across the country, not just in Gauteng. And when I went through Covid, I was not anxious or I didn’t look around me, I was focused.  

I know that that was a good area for us, and it still is today, that whole Garden Route area. As an entrepreneur, your brain switches on differently, your angle is different, and you think on your feet. I think way ahead of this in our A/B/C/D plans, which you must always have. Covid, we went through it. We had one of our brilliant years because we were active, we were alert.  

The staff thought, “Are they going to lose their jobs?” There were a lot of things happening within the economy in all of South Africa and the whole world. In fact, no one knew what is going to play out. We were on the ball. After Covid, it was good, but we carried on as normal. 

The Finance Ghost: So I have a really interesting question for you, actually. As I listen to this backstory, you’ve made it pretty clear that obviously, your faith is very important to you. A lot of it is just like getting on with it and just working towards that future and everything else.  

Do you think that in the tough times, having strong faith, which is obviously a feature of your life, has helped you believe that actually, it’s all going to be okay?  

And the reason I ask is that entrepreneurs will go through this crisis of confidence pretty often, right? Where something goes a little bit wrong in the business or something scary happens, like signing a lease ahead of this global pandemic, as you’ve described there.  

And I guess you’ve got to have something that you cling to that lets you believe that long term it’s going to be okay. And maybe in some respects, that’s slightly easier if you are a person of faith. Then that’s what you would cling to.  

Without going into the details of that, it’s more just an interesting thought experiment, which is to what extent do you believe that’s actually helped you to just keep your mindset where it needs to be? 

Clinton Van Breda: Any entrepreneur that makes 100 calls-plus a day, I can’t make all the calls all the time that are right, or spot on. People will say: Clinton is born with a golden spoon in his mouth. It’s not that.  

The faith, I don’t want to go too deep into it. But if you look at boxers, when does a trainer throw in a towel? When he’s really man down on the ground, and he’s got nowhere to go, then it’s when the trainer will throw in the towel. 

You must make sure you surround yourself with the right people, that you don’t get distracted from your goals. Be quiet about your finances, your assets, etc. Be personal in your life, in your business, so that people can’t ruin it.  

Be positive, don’t throw in a towel. It doesn’t matter what. Think through things. I don’t just make an impulsive decision. I will know what the right answer is, and I will know when to pull the trigger. 

The Finance Ghost: I think it really comes down to purpose. For me personally, it’s my kids that probably get me out of bed in the morning. Well, sometimes literally, but certainly emotionally as well. To just understand that I’m building something bigger and providing for them helps. 

And I think for entrepreneurs, you’ve got to make sure you have a purpose that goes beyond just, “Oh, I want to make money.” And for some people, it’s the purpose of actually just creating jobs and having all these families that are being supported.  

And if you build a big enough business, as you’ve done, then that purpose actually starts to become a whole bunch of things. So thank you for sharing that. I think that’s really helpful. 

Clinton Van Breda: Just to add to what you just said there, I think in any entrepreneurship, as you start, you think about money. When I started my business (and I will still today remind my children, my wife, my close family), when my wife and I got married, we didn’t go on honeymoon because it was crunch time. I’d just started my business. We only went in that December, when it was the builders’ holiday.  

Your focus mustn’t be on the money, because if you’re going to focus on the money, you’re going to get many disappointments throughout. Look after the cents, and the rands will look after themselves. I do focus on the small things, but I’m not the kind of person who sits and calculates “how much did we make on this”.  

There are checks and balances throughout, and as the business has grown as well, there are things that we do quarterly. I’m sitting at the moment in our De Waterkant showroom. As we started with the shop fitting, there was a small, little space.  

We opened up a coffee shop, Manna Cafe by Universal Kitchens. It’s not about the money, it’s about the passion. It’s about how it came our way, and it’s just as if we’ve done coffee shops, and it is our first coffee shop! 

I’m proud that my daughter is running this side of it, but it is so incorporated with our business and where we are, that it’s just amazing. It just came naturally our way. So I just wanted to mention that as well. 

The Finance Ghost: So, Clinton, I know that this has really been built as a family business from the start, and I love that story about how you couldn’t go on honeymoon after you got married. Having an extremely supportive partner is one of the most important ingredients for any successful business. So kudos to you and your wife for achieving that along this tough journey. It’s very hard for entrepreneurs, and well done. 

I know your kids are involved as well. So I guess you’ve always got to balance off building a family business versus building something that one day becomes a legacy business, where it survives you.  

It gets other investors on board down the line potentially, or someone buys the whole thing. Those jobs are then secured going forward. And it sounds like that’s what you’ve done. If you’ve gotten to over 200 staff, then this business has certainly grown beyond you doing it all yourself every day. 

How do you do that? Because that’s honestly the hardest thing for entrepreneurs. That’s the struggle that is so consistent, is: “How do I build a business from just me, through to just me and some trusted people, and then into something that someone can actually come along and potentially invest in?”  

What would you say has been your biggest learning and your approach to doing that? 

Clinton Van Breda: I started this business, and I’ve grown it, and I still do. And I’m still passionate.  

My daughter is now in first-year interior design. She’s in Stellenbosch. My son finished matric last year. He’s already slowly but surely getting involved in the business from a groundwork point of view. And obviously, my wife runs the finances, and then we’ve got a lot of other staff that’s also family. 

So at the end of the day, I don’t sit back and say, right, I’ve built up this business. Who’s there to invest in us? We play the game, and I take things on. Recently did De Waterkant, which is a brilliant showroom, after 18 months.  

We’ve got the Joburg showroom. We’ve got our head office factories in Boksburg, where we manufacture 90% of our things. The George showroom. We’ve got a George factory as well. And then we’ve got a Paarl showroom, and then we’ve recently opened up our factory in Malmesbury. We’re also going to start manufacturing that side.  

The family knows where they are within the business, and they know where my head is going. They support me 100%. Whoever comes along and knocks on my door, we will address it, and we’ll take it as it comes. 

The Finance Ghost: Yeah, that makes a lot of sense. It’s a difficult thing to get right, but you obviously have achieved a degree of scale there. Congratulations on doing that.  

I know that part of that would have been the marketing strategy, and it’s something you alluded to earlier, is that marketing has been quite an important driver of the story for you.  

So maybe just talk to us a little bit about the brand collaborations you’ve done with local celebs. I know you’ve done some interesting stuff on TV. To what extent has that played a role in the success of the business? 

Clinton Van Breda: Minki van der Westhuizen was our brand ambassador for four years, and we’ve really reached out in her market. We’ve tapped into her audience, and we actually became friends through the journey. Even her husband, Ernst Joubert. They’re good people. Once a year we recap. We didn’t even have a real contract in place because we trust one another and honour her for what she did for our brand. 

We’ve done a lot of other things with other celebs. Bok van Blerk. Yeah, there were so many. We’re chatting to a few rugby players as well. 

I make sure that we align ourselves with the right audience, the right people. 

I was very lucky in a way that I’ve got a lot of networks and a lot of resources from the years of doing business. We are busy in negotiations, signing up a new brand ambassador.  

I don’t rush it. If it comes, it comes. If it doesn’t, then we move on. We do what we need to do. 

The Finance Ghost: Let’s talk about some of the business history you’ve got with Capitec. And I know that you banked with Mercantile for many years before Capitec went and acquired Mercantile and turned that into Capitec Business.  

My understanding is you were actually quite involved in that process, even. So perhaps just talk to us a little bit about the importance of having the right financial backing for what you’re doing. And the extent to which the access to the services that a bank will bring you has really made a difference to what you’ve built. 

Clinton Van Breda: I’m not a very clever person. I’ve learned the hard ways also and the good ways, and I’m a very loyal person, to such an extent that only now that I’ve been here four months more permanently, I’ve now got a barber that actually cuts my hair.  

If I go to a barber, he is my go-to. If I buy a certain brand car, like we love Toyota as our dailies, I will buy from one dealership. That’s the same with my CA. Our company CA has been with us for 15 years. Gerhard van Graan.  

Mercantile Bank, we’ve banked with them. It was very well known as a small business centre or bank. It was a Portuguese bank. I had a manager there looking after our account by the name Johann Kraft, still today with Capitec, in a very senior role. He guided me through business, through how we must look at our financial obligations, our management accounts.  

I didn’t even know about management accounts back at that time. I was not worried about all the bank boxes etcetera. I was just driven. I knew I must pay VAT over, and there we play the game. I was not worried about that because I knew that it would be sorted out. 

Johann Kraft, with my company CA, really nurtured me and played a huge role in today’s business climate that we are in, to understand the financial side of the business. Provisional tax, your VAT. There are so many things that play a role. And with Mercantile at that time, we were very small, but they were still willing to do it. 

Capitec bought over Mercantile, and through the process, my wife and I, we went into a panic stage because we were used to Mercantile’s banking online. We were used to who we speak to when we buy an HP vehicle or order a machine.  

We had a meeting, and Capitec explained the process to me, and I could actually understand why they did the deal: to get into the business sector more aggressively. 

Through the Capitec process, I also realised that I look at Capitec Business, as we are standing today, as actually my business partners. Truly. We make sure we’re transparent with them, with our financial statements, our management accounts on a quarterly basis.  

We really try and make their lives easy so that when we need to buy a machine (we’ve just imported machines now, for a few million) it’s not a blink of an eye. It was a few emails up and down. 

And within 24 hours, we got approval. We bought a building in Boksburg. They backed me, and they are my business partners. They’re there to look after me, and I’m there to look after them. Yes, they make their money, but it’s not an issue for me. We show the growth because we’ve got a business bank that’s actually involved in our business. 

I talk weekly with Jack Neethling, who’s my manager. And whether we talk around a coffee or just over the phone, we’ve become close. I can see the Capitec guys, they know what they are doing. They get involved in the business. They know my business. They back my brand.  

Sometimes I must give a little bit more of an explanation to them or a business plan on where we are and where we’re going, etc. And they back us 100%. 

I can only do so much. We invest in our own business as well, but so does Capitec. So I’m grateful for that. 

The Finance Ghost: Just a final question from me. Any advice you’ve got for people listening to this who might be thinking of taking on some kind of kitchen renovation project? Obviously, that’s your bread and butter.  

And unfortunately, this industry has a reputation for having a lot of contractors who are nowhere near as ethical as the way that you do business. So what sort of advice would you give people to help protect them from that situation? 
 
 

Clinton Van Breda: It always boils down to “goedkoop koop is duurkoop”. What that means in English is, don’t try and get the cheapest possible quote for your kitchen. There’s a lot that entails us doing our work professionally. 

For example, our 3D designs, our renders. It’s what we showcase to our clients from the first appointment or the second appointment when they come to our showroom. It includes their kitchen or bedroom cupboards, walk-in closets, wine cellars, their bathroom vanities, studies, and wall cladding.  

We do all the joinery within the house. And if they come to our showroom to look at it, that’s an important part. We pay a lot of money monthly, nationally, for all my staff, all my designers to have that program, but it’s the best program available. Yes, we can go and save cost and get cheaper designing programs out there, but we use the best. 

The hardware we use is the best. I know it. I was in Austria myself. They invited me to Austria to their headquarters in Germany and Austria. 

So I make sure that all our suppliers are aligned with our vision and what we stand for on quality and on service. It’s very important. And all that boils down to an end result price because there are so many hands that go through the process and there are so many things that are happening. 

In five years’ time or in 10 years’ time, you must pick up the phone and say, listen here, there’s something wrong with my kitchen. And Universal Kitchens will be there because we honour – we say what we do, and we do what we say. I live for that. My people, my staff know the client comes first, always. The client must be happy. You pay for that at the end of the day. 

My personal involvement in the business, my phone number is all over the media, and it’s on our website, etc. Search on Google for Clinton Van Breda. We’re transparent. We’ve got an open mandate, and we try to keep to that.  

It’s not easy to deal with people and staff. There’s a lot of moving parts. But we try our best, and we communicate with our clients. And I feel that’s priceless. If I look at my personal life and I deal with business people, I will pay the premium of buying something from someone I know and I can trust, and I know my money is safe. And I know if he says tomorrow, it’s tomorrow.  

If I want to go for the cheapest, I don’t know if my money is safe. I don’t know how they operate. There’s nothing to reference back to me.  

People tend to just go for the cheapest. And I always say to the market and to everyone, and even with our staff today on our quarterly trainings with our sales staff, I say, “Remember guys, we as Universal Kitchens, we’ve got a national footprint”.  

We try to do bespoke work. So we really try to take your investment or your budget into consideration, and build your design, of the look and the feeling, around that. We can manufacture a 3-Series BMW, a 5-Series BMW or a 7-Series BMW.  

Where do you want to fit in? We don’t just want to sell the 7-Series, because there’s a place for a 3-Series. So we’ve made sure within our business that we don’t cater just for the 7-Series BMWs.  

We actually take your budget into consideration, and when we do the consultation process, we guide you. 

The Finance Ghost: Clinton, thank you so much for your time today, and just congratulations on everything that you’ve built. All the best for the future and all that it brings to you. 

I’ll include some links to Universal Kitchens in the show notes so that people can go and find it and see what you’re all about. No doubt they’ll find you on the socials as well. And all the best for the future. 

Clinton Van Breda: Thanks, Ghost, and thanks for the opportunity. And please watch us. There are many more to come, many more exciting things. Thanks. 

Real stories and real people. Yours could be next. Plugged In with Capitec. Capitec is an authorised financial services provider, FSP 4669. 

Ghost Bites (Clientèle | Crookes Brothers | KAP | Mantengu | Novus | Vunani | Vodacom – YeboYethu)

The Finance Ghost
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Ghost Bites (Clientèle | Crookes Brothers | KAP | Mantengu | Novus | Vunani | Vodacom – YeboYethu)

In this edition of Ghost Bites:

  • Clientèle shareholders give the green light to the offer and delisting transactions
  • Profitability at Crookes Brothers has collapsed
  • KAP: an unexpected boost from the Middle East conflict
  • Mantengu is looking to dispose of Blue Ridge Platinum
  • Novus has plenty of work to do in its business
  • Vunani swings into profits
  • Vodacom gave YeboYethu a great year

Clientèle shareholders give the green light to the offer and delisting transactions (JSE: CLI)

The deal is now much closer to meeting all conditions

Financial services group Clientèle is a big step closer to adding its name to the list of companies that have delisted from the JSE due to a stubbornly low valuation.

After an offer and proposed delisting was announced at the end of April this year, the circular was released in mid-May and the meeting was scheduled for 12th June. At that meeting, shareholders voted strongly in favour of the various resolutions required to execute the transaction.

The remaining condition relates to maximum acceptances. When the deal was announced, it looked like Clientèle had irrevocables in place to make sure that this condition would be met. There’s a difference between having irrevocable undertakings and actually achieving the condition though, so investors will have to wait until later this month to know for sure that everything is going ahead.

Ghost Bite: Assuming all goes as planned, the payment date of 29 June will see shareholders (who accepted the offer) paid R19.90 per share. It’s a discount to embedded value, but it’s also significantly higher than the range of R14.00 – R17.00 that the share was stuck in for months before the offer was announced.

Profitability at Crookes Brothers has collapsed (JSE: CKS)

This is another reminder of how tough the agri sector is

Crookes Brothers is one of the very few companies on the JSE that offer exposure to the primary agriculture sector. This is an extraordinarily volatile way to make money, as Mother Nature can be cruel and unpredictable.

The latest numbers prove once more that farming isn’t a guaranteed route to riches. For the year ended March 2026, Crookes Brothers saw its HEPS collapse spectacularly, down by between 93% and 99%!

This leaves them with HEPS of between 2.35 cents and 27.85 cents vs. 425.1 cents in the comparable period. There’s very little trade in the stock, so the share price decline of 27% over the past 12 months probably isn’t the best example of price discovery in action. There’s also an element of the market looking through the wild swings and taking a more moderate approach to the valuation.

The company attributes this decline to lower earnings across all segments. Sugar prices are under pressure, land sales have been delayed and the Macadamia segment is also struggling, as evidenced by a capital impairment of around R256 million in that business. Remember that the impairment isn’t a cash item and is excluded from HEPS, so it’s just an indicator of how tough things are in the underlying business.

Ghost Bite: Farming is an extremely difficult industry. It sits way beyond my personal risk tolerance levels.

KAP: an unexpected boost from the Middle East conflict (JSE: KAP)

Safripol has been helped tremendously by fewer imports

It’s great to see KAP’s earnings moving in the right direction for once. This group tends to always have a headache or two to worry about, leading to a disappointing outcome for investors.

The share price might be up 43% year-to-date, but the total return over 5 years is -28% (yes, including dividends)!

As KAP is a useful barometer for the “real” economy in South Africa, I would love to see a more consistent positive performance from them.

FY26 looks a lot better, with the performance for the 11 months to May 2026 giving the group confidence to indicate that HEPS for the full year will increase by more than 50%.

The base effect is important here. FY25 was awful, with the ramp-up of PG Bison’s new MDF line and major challenges in the local vehicle OEM market. We can confirm this simply by looking at FY24, when KAP generated HEPS of 45.3 cents before plunging to 24.1 cents in FY25.

This means that FY26 is best framed as a partial recovery year. But that’s still a big step in the right direction.

We must touch on Safripol first, as this is arguably the trickiest part of the group for investors to consider. Global overcapacity is a structural issue, with such cheap imports being available that Safripol had to execute two commercial shutdowns at the PET plant in Durban. The sudden improvement in fortunes is thanks to the Middle East conflict, as it reduced imports and improved polymer prices. The second half mitigated some of the pain in the first half, but this doesn’t address the underlying structural risks.

PG Bison increased volumes and made progress in redirecting sales towards higher margin markets. They describe both revenue and operating profit as being “meaningfully higher” than in the prior period. This is a critical growth area for the group, as they’ve increased production capacity by 33% and need to deliver returns on that capex.

Unitrans has been focused on profits rather than revenue, with deliberate decisions to move away from lower margin activities. Although revenue was down, they describe operating profit as having increased “meaningfully”. They believe that there is still room to go here to improve the performance at Unitrans.

Feltex enjoyed an increase in domestic new vehicle assembly volumes. There were also major problems in the base period that didn’t repeat in this financial period, including operational constraints at two local OEMs and the costs of a model changeover. Revenue and operating profit were both higher this year, albeit with a slowdown in the second half relative to the first half.

Sleep Group is the headache this time around, with subdued customer demand and only a marginal increase in revenue despite higher marketing costs. This resulted in a moderate decline in profits.

Optix feels like a chronic problem rather than a headache you can fix with some pills. Although they grew subscriptions, there were lower hardware sales and thus revenue actually declined. Having invested in sales, the operating loss has now increased vs. the prior period.

KAP would do themselves a favour by getting out of Optix. It’s beyond me why that business is even in this group. It just confuses investors and usually has a negative impact on profits as well.

On the balance sheet, management’s target is a net debt reduction of R500 million for FY26. They are plannning a further reduction in FY27, but they didn’t give any specifics.

Ghost Bite: The Middle East situation gave Safripol a very helpful boost. But this is clearly not a structural improvement, and it doesn’t address the risk of imports returning with a vengeance once things normalise. The share price has rallied strongly in recent months, but KAP still has tons of work to do to start delivering consistent earnings growth to investors.

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Feelings on KAP

Do you believe that the positive momentum at KAP can continue?

Mantengu is looking to dispose of Blue Ridge Platinum (JSE: MTU)

This is in anticipation of the potential Averi Finance transaction

Mantengu is currently working towards the large Averi Finance transaction that was announced in May. They are happy to streamline the group in the meantime though, including the potential disposal of Blue Ridge Platinum.

The deal isn’t guaranteed at this stage, but Mantengu has received an offer from Afresources Mining for the entire shareholding and related claims in Blue Ridge. The offeror is not a related party to Mantengu.

If my understanding of the announcement is correct, the offer values 100% of Blue Ridge at R50 million. Mantengu has a 70% stake in the asset.

This would be a Category 2 transaction, so shareholders wouldn’t be asked to vote.

Ghost Bite: It was only a year ago that Mantengu was singing the praises of this asset. Times have certainly changed at the company.

Novus has plenty of work to do in its business (JSE: NVS)

Especially with the Mustek distraction almost out of the way

With Novus having run the regulatory gauntlet and come out the other end with a controlling stake of 50.39% in Mustek (JSE: MST), management (and the market) will be able to pay more attention to the rest of the Novus group.

Importantly, the stake in Mustek was only 39.96% at the end of this reporting period, so Novus equity accounted earnings of R26.4 million. Going ahead, they will no doubt account for Mustek on a consolidated basis, especially as they still need to complete the mandatory offer to Mustek shareholders.

The rest of the Novus group needs some love, as performance wasn’t encouraging in the year ended March 2026. Revenue was down 0.7% and adjusted EBITDA was down by 15.2%. To give you a sense of the operating leverage at play here, revenue dipped by R27 million and adjusted EBITDA was down R101 million!

Diluted HEPS is the right metric to consider here, as there are share conversions coming down the line in relation to the Maskew Miller Learning deal. This metric was down 4.4% to 76.59 cents.

Despite the earnings pressure, Novus followed the textbook approach of putting the dividend ahead of everything else. They kept it at 55 cents per share.

If we dig into the divisions, the Print, Publishing & Distribution division increased revenue by 6.8% and operating profit fell by 28.6%. This was despite an improvement in gross margin in this business. I must also note that the divisional performance was skewed by the Publishing & Distribution side being included for the full 12 months vs. just 5 months in the prior year. If you isolate the Print side, revenue was down by 9.9%.

The Education business is looking increasingly like a problem, with revenue down by 18.1% after orders from provincial departments were below expectations. Although adjusted operating profit managed to tick up by 4.4%, this was mainly due to reduced amortisation on intangible assetss.

The Packaging segment saw revenue fall by 5.1%. Thanks to an increase in gross margin, adjusted operating profit increased by 8.9%.

The highlight here is the increase in the closing cash balance from R812 million to almost R1.02 billion. There were improved net working capital inflows in the Print and Education segments as they collected debtors. The net cash increase at year-end was all earmarked for the Mustek deal, so they’ve effectively turned better working capital into a new investment!

Ghost Bite: With numbers like these, I’m not surprised that the share price has been under pressure. Novus will need to show the market a much better story in FY26 if they hope to drive a higher Price/Earnings multiple.

Vunani swings into profits (JSE: VUN)

Full details will be available later this month

Vunani has released a trading statement dealing with the year ended 28 February 2026. There’s very good news for investors, as the company has moved from a loss-making position into profitability.

HEPS is expected to be between 10.9 cents and 11.5 cents, a huge improvement over the headline loss per share of -2.8 cents in the previous period.

The share is trading at R2.00, so there’s still an unrealistically high P/E multiple at play here. But at least earnings have moved in the right direction.

Ghost Bite: It’s always important to wait for detailed results before jumping to any major conclusions about performance. The results are due for release on 23 June.

Vodacom gave YeboYethu a great year (JSE: YYLBEE)

In this case, financial leverage has worked in favour of the structure

YeboYethu is the Vodacom (JSE: VOD) B-BBEE structure. Its only asset is an investment in listed Vodacom shares. This means that the net asset value of the fund changes every single day based the observable price of Vodacom shares.

The value of the debt in the structure (in this case structured as two classes of preference shares) ticks up based on the funding rate attached to those instruments. At YeboYethu, the Class A shares are priced at 68% of prime and the Class B shares are at 70% of prime.

For tax reasons, preference shares are priced as a discount to prime that is usually in line with the effective tax rate. You can essentially think of this as being comparable to traditional debt priced roughly at the prime rate.

Borrowing money to buy shares is risky, but that’s how these B-BBEE structures were all historically structured (to allow for participants who don’t have deep pockets to invest in shares).

The end result? A volatile net asset value in a highly leveraged structure. When Vodacom does well, YeboYethu does extremely well. Conversely, when the Vodacom share price suffers, YeboYethu gets an amplified version of that pain.

The year ended March 2026 is an example of the former, as Vodacom’s share price increased by 15% between March 2025 and March 2026. This is well ahead of the prime lending rate, so the underlying net asset value in YeboYethu increased by a juicy 42%.

Due to the extent of debt, dividends in these structures tend to increase by a more consistent rate. YeboYethu’s final dividend grew by 5%.

Ghost Bite: Analysing these structures is actually more complicated than the underlying shares, as you need a view on Vodacom and then on the balance sheet of YeboYethu itself. More effort could go into actually explaining these economics properly to the market, particularly as these structures are focused on including investors with limited capital and experience.

Results of previous poll:

Nibbles:

  • Director dealings:
    • A director of AVI (JSE: AVI) received share awards and sold the whole lot worth R7.8 million.
    • An independent non-executive director of Pepkor (JSE: PPH) bought shares worth R397k.
    • A director of a subsidiary of Santova (JSE: SNV) sold shares worth R160k.
    • A prescribed officer of Advtech (JSE: ADH) sold shares worth R51k.
  • AngloGold Ashanti (JSE: ANG) wants to move forward with the previously announced share repurchase programme of up to $2 billion. Shareholders need to approve it before that happens, with the meeting scheduled for 23 July. The current market cap is R705 billion, so this share buyback would be for roughly 4.5% of shares in issue.
  • A new board has been constituted at RMB Holdings (JSE: RMH). The market already knew that the existing directors were planning to stand down in the aftermath of the AttBid offer. The new CEO is Gideon Oosthuizen, with Adriaan van Rooyen joining as CFO – both from Atterbury Property Group. The three independent non-executives are Andrew Brooking (of Java Capital fame), Nicolaas Kruger (ex-CEO of Momentum Metropolitan) and Dr Pine Pienaar (a highly experienced engineer).
  • There’s a significant change in the shareholder register of Insimbi Industrial Holdings (JSE: ISB). New Seasons Equity Fund has sold its entire stake in the company. An investment entity called Sugarfields Fund I has bought a 30.41% stake, so they are going straight to a level that is only a few percentage points below the threshold for a mandatory offer! The director representing New Seasons Equity Fund has also resigned from the board. A replacement non-executive director hasn’t been named as yet, but it’s likely that it would be a Sugarfields Fund representative.
  • Trustco (JSE: TTO) has received a demand to call a shareholders’ meeting from Riskowitz Capital Management. There’s clearly still no love lost between the board and that investor, with the agenda for the proposed meeting being to appoint a new board of directors. The board is considering the content and validity of the demand and will make a further announcement in due course.
  • Sebata Holdings (JSE: SEB) released results for the year ended March 2025. Yes, they really are that far behind in their financial reporting. If you can believe it, HEPS swung from a loss of 102.20 cents to a profit of 100.66 cents! The swing in the numbers is thanks to the company regaining 100% control of the software and water divisions, with effect from 1 July 2024. They previously held 40% in these assets.

How Thomas Edison accidentally created Hollywood

Dominique Olivier
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How Thomas Edison accidentally created Hollywood

Thomas Edison wanted to own American film. Instead, through essentially operating a cartel, he drove it 5,000 kilometres west and gave the world Hollywood.

In 1886, a devout couple from Kansas bought 49 hectares of farmland northwest of Los Angeles and named it Hollywood. Their dream was to grow figs and build a sober, God-fearing community of like-minded Christians. It is one of history’s better jokes that this particular patch of earth would instead become the global byword for vice, glamour, and manufactured dreams… and that the man most responsible for its transformation never wanted it to happen.

That man was Thomas Edison. And to understand how the inventor of the light bulb accidentally founded the movie capital of the world, we have to start with a running horse.

A racehorse, a shutter, and the birth of an industry

In 1872, photographer Eadweard Muybridge (yes, that’s the right spelling) was determined to help the governor of California, Leland Stanford, with an irritating problem. Stanford owned a racehorse and wanted it photographed in motion, but was frustrated that every picture taken of the horse failed to capture its speed clearly. The primitive cameras of that age could only translate a galloping horse’s legs into motion blur. Muybridge experimented with faster mechanical shutters for his camera, and eventually set up a row of 12 cameras next to the racetrack. The result was not just one clear image of a running horse, but a sequence of 12. 

Inspired by his results, Muybridge loaded the images into a device he called a zoopraxiscope (essentially a hand-cranked round projector) and with the turn of a handle, shattered the wall between still and moving images. 

Muybridge’s trick of stitching stillness into motion sent inventors everywhere scrambling to build devices that could do the same thing better.

Thomas Edison, characteristically, was among the first to get there. But here it’s worth pausing on who Edison actually was, because the popular image we have of the man – kindly genius, friend to mankind, the man who lit up the world – is really only half the story.

The other half

Thomas Alva Edison was a titan of invention, and that’s not an overstatement. The phonograph, the motion picture camera and the electric light bulb all came out of his laboratories and reshaped the industrialised world. He more or less invented the modern research lab itself, gathering teams of researchers under one roof in Menlo Park, New Jersey. By the end of his life he held 1,093 US patents. 

All that success was not won by being a pushover. Edison was shrewd, fiercely competitive and, by most accounts, not someone you wanted as an enemy.

Some of the texture of his character showed up early. At the age of 15, he saved a child from being struck by a runaway train. The child’s father was so grateful that he trained Edison as a telegraph operator. Edison began working as a telegrapher in a local general store before moving to Stratford Junction, Ontario, where he worked as a night telegrapher for the Grand Trunk Railway.

As a night telegrapher, he was supposed to be awake and alert. Instead, he would tire himself out by running chemistry experiments on the job and then sleeping through his shifts. After causing a near-collision of two trains, he decided it was time to put the telegraph behind him and set his sights on something bigger. The boy who cut corners on the night shift would grow into a man with a very particular attitude toward rules.

The camera and the prize behind it

Decades of invention and reinvention passed. By 1888, Edison had established himself as a household name and made a fortune in the process. While running an experimental mining operation, his mind turned to moving pictures. He set his employee William Kennedy Laurie Dickson (a miner who happened to be a gifted photographer) to work on a machine that would “do for the eye what the phonograph does for the ear”. 

Edison handled the electromechanical side, while Dickson did the hard optical and film work. By 1891 they had a working prototype (publicly demonstrated that May) and eventually a patent for the motion picture camera Edison called the Kinetograph. Edison’s name went on it, but most of the actual credit (historians agree) belonged to Dickson. This is a pattern that would repeat multiple times over the course of Edison’s life.

But the camera wasn’t even the prize Edison wanted. His real obsession was synchronised sound. He dreamed of a machine that would record picture and audio together and play them back in unison. Dickson shot the first sound film, starring himself, in the spring of 1890. But keeping picture and sound aligned proved maddeningly difficult, and Edison, ever the businessman, shelved the concept.

Instead he built the Kinetoscope, a peephole viewer that let one person at a time watch a short, silent film for a penny, and installed the machines in arcades.

By this point he had invented the camera and the “screen”, but what about the content? Well, naturally Edison had an answer for that too. In 1893, he built America’s first film studio in New Jersey – a cramped, tar-papered black box that the staff nicknamed “Black Maria”. Out of it came nearly 1,200 short films featuring acrobats, parades, a fire crew answering a call, a man sneezing (Fred Ott’s Sneeze, 1894), a couple kissing (The Kiss, 1896), and eventually the first-ever Frankenstein film in 1910. 

Edison had not just helped invent the movie camera. He had built the first factory for making movies. He was, for a brief moment, the entire American film industry.

And he intended to keep it that way.

The Trust and the men with the lead pipes

In 1908, Edison gathered the major patent holders in the budding film industry into a single conglomerate: the Motion Picture Patents Company, known to everyone as the Edison Trust. 

On paper it was nine studios pooling their patents. In practice it was a cartel with a chokehold on every essential piece of the filmmaking process, from cameras to raw film stock. If you wanted to make a movie in America, you went through Edison, or you got buried in lawsuits. Universal Studios alone fielded 289 separate legal complaints.

Where the courts weren’t enough, the Trust got creative. The MPPC was not above hiring mobsters to pay visits to filmmakers working outside its blessing, intimidating them and destroying their cameras. The courts of the eastern United States, meanwhile, seemed perfectly content to enforce the monopoly. Edison had become the king of the movies, and he ruled the way kings often do: with lawyers in the front and muscle in the back.

How to escape a king

If you were an independent filmmaker around 1910, working with equipment you technically had no right to use, New York was hostile territory. It sat right next to Edison’s headquarters and crawled with his agents, who had a habit of showing up to seize or destroy cameras mid-shoot.

Los Angeles, by contrast, had everything a fugitive industry could want. The weather allowed year-round filming. The landscape offered deserts, mountains, ocean, and ranchland within a day’s drive, so a studio could fake almost any setting on Earth. Land was cheap, labour was mostly non-union, and locals threw incentives at anyone willing to set up shop. As an added bonus, Californian courts seemed less enthusiastic about Edison’s filmmaking monopoly and less likely to blindly sway in his favour. 

The pioneers trickled in and then poured. William Selig opened a studio in Echo Park in 1909. In 1911, a New Jersey producer named David Horsley founded the first studio inside the little farming hamlet that the fig-farming Wilcoxes had named Hollywood. Others stampeded after him, clustering together into what they called a “movie colony”. A rural community of 5,000 souls in 1910 swelled to 35,000 by 1920. By 1915, three out of every five American films were being made in Hollywood. 

The king dethroned

The monopoly didn’t last either. In 1913, William Fox joined the owners of Paramount and Universal in bringing a complaint to the US government, arguing that the Edison Trust violated the Sherman Anti-Trust Act. The government agreed. In 1915 the court found that the MPPC was an illegal conspiracy in restraint of trade, and in 1917 the Supreme Court ordered it disbanded entirely. The cartel was broken, but by then the damage, from Edison’s point of view, was permanent. The filmmakers he had hounded out of New York had built something almost 5,000 kilometres away that no patent could touch.

That’s the story of how Thomas Edison – genius inventor, but also patent bully, monopolist, and employer of hired thugs – was probably the single biggest individual influence on the existence of Hollywood as we know it. Had he been a more generous man, a fairer competitor, or simply content to share the industry he helped create, there’s a good chance the film capital of the world would today be a stretch of West Orange, New Jersey, and Hollywood would be just another sleepy suburb of Los Angeles, perhaps still growing figs.

About the author: Dominique Olivier

Dominique Olivier uses her love of storytelling and ideation to help brands solve problems.

Her first book, Lessons from Loss, has been published by Penguin Random House.

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.

You can learn more about her work at dominiqueolivier.com and she can be reached on LinkedIn here.

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