Ghost Bites (Jubilee Metals | Markus Jooste | PSG Financial Services | Redefine | Rex Trueform)

Listen to the latest episode of Ghost Wrap here, brought to you by Mazars:

Jubilee reports record production figures (JSE: JBL)

But revenue could only increase by 1%

Jubilee Metals dropped 15% on Wednesday after releasing results for the year ended June 2023. The company is dealing with commodity price decreases and infrastructure challenges in its markets, an uncomfortable combination.

Despite this, there were record production figures across the PGM, chrome and copper operations. There were various technical breakthroughs in the operations. As the PGM prices fell away though (down 22% in US dollars), revenue from operations could only increase by 1%. Chrome saved the day here, albeit barely.

Gross profit fell because of inflationary pressures on costs and the need for back-up power systems. EBITDA fell nearly 40% in dollars!

Headline earnings from continuing operations is reported in pence and fell by roughly 35%. Probably the only good news here is that the balance sheet looks reasonable and the group was profitable despite tough conditions.

Those silver linings weren’t enough to save the share price, though.

Markus Jooste gets a R15 million fine from the JSE

This is barely a drop in the ocean for him, sadly

Back in January 2023, the JSE announced two public censures against Markus Jooste, both of which would carry the maximum permissible fine of R7.5 million each. Further to this, he would be disqualified from being a director or officer of a listed company for 20 years. I’m personally hoping that he will still be in jail by then, but I’m probably too optimistic.

Of course, he disagreed with this outcome and applied to the Financial Services Tribunal for a suspension and reconsideration. The wheels of justice slowly turned and eventually the Tribunal dismissed the reconsideration application on 10 October, so the censures and related penalties are enforceable.

This number is literally pocket change for him, but it was the maximum permissible amount. I’m not sure if it gets recognised as revenue for the JSE or if it is ring-fenced for a greater purpose. I hope it’s the latter.

It’s hard to find fault in PSG’s results (JSE: KST)

Dividend growth of 23% says it all, really

PSG Financial Services (previously PSG Konsult) has released results for the six months to August. They are strong to say the least, with return on equity of 22.5% (that’s better than local banks and up from 19.8% in the comparable period) and growth in recurring HEPS of 21% (that’s better than just about everything). The dividend per share increased by 23%, rounding off the excellent numbers.

It says a lot that assets under management grew by 19% in this period, with PSG’s powerful local distribution really coming to the fore here. PSG Insure increased gross written premium by 12%, another strong performance.

As a sign of the times, performance fees were 2.5% of headline earnings, down from 3.7% in the comparable period.

Although there were some major risk events in the insurance business, like the Boksburg earthquake (I swear I missed that one in the chaos of the past year) and the Western Cape storms, the reinsurance program did its job by protecting underwriting results against these events.

Technology and infrastructure spend increased by 12% (and they expense everything rather than capitalise the costs) and fixed remuneration also grew 12%. This is below core income growth of 15%, hence why recurring HEPS did so well.

And as a final tick in the box, all three underlying divisions posted strong growth in recurring headline earnings. PSG Wealth is the largest (65% of headline earnings) and grew by 18%. PSG Asset Management is almost 21% of headline earnings and grew 23%. PSG Insure is the smallest segment and also had the slowest growth, but was still up 12%.

This is a great reminder that there are high quality companies on the local market.

Redefine won the arbitration in Poland (JSE: RED)

Metro’s claims have been dismissed

When Redefine announced interim results for the six months to February, the company noted that a request for arbitration had been filed by Metro Properties against 11 Polish companies owned by M1 Group (which in turn is 50% owned by the Redefine Group). The claim was to reduce the rental payable by Metro under the lease agreements.

The International Court of Arbitration dismissed Metro’s claims against the M1 joint venture and this award is final and binding on all parties. That’s good news for Redefine.

Rex Trueform flags a significant jump in earnings (JSE: RTO)

Detailed results are due later this week

You might recognise Rex Trueform based on the recent news of the acquisition of a streaming group that has particular specialisation in school sports. There’s obviously a lot more to the group than that, with other recent acquisitive activity being focused on properties as well.

For the year ended June 2023, HEPS increased by 52.2% to 399.4 cents. Annoyingly, the company released a trading statement in the morning and results in the afternoon. Somebody there needs a tough talk about how a trading statement is meant to go out a lot earlier.

The increase in HEPS was supported by revenue growth of 35.1% and operating profit growth of 61.0%. Expenses were up 28.2%, thankfully well below revenue growth.

Gross profit margin actually declined from 54.7% to 49.3% and yet they still managed to increase operating profit margin. When you dig into the numbers, it’s because of a big spike in media and broadcasting income that sits below the gross profit line. In other words, that gross margin pressure doesn’t apply to all the revenue.

And in case you’re wondering, given the recent activity around properties in the group, property revenue is 7.8% of group revenue. Media and broadcasting significantly higher at 14% and looks set to be a focus area based on the recently announced deal.

Related listed group African and Overseas Enterprises (JSE: AOO) reported HEPS growth of 78.2%. The company consolidates Rex Trueform as this is the holding company, so the underlying results are much the same.

Little Bites:

• Director dealings:
  • A director of Sabvest Capital (JSE: SBP) sold shares worth R641k. The sale was by Lindiwe Mthimunye, not Chris Seabrooke, in case you’re wondering.
  • In a surprise to absolutely nobody, Des de Beer bought shares worth R116k in Lighthouse Properties (JSE: LTE).

• Anglo American (JSE: AGL) is pushing the ESG angle hard at the moment. This is leading to SENS announcements that actually say very little of relevance to investors. This isn’t because environmental stuff isn’t important, but rather because this is the kind of thing that is effectively business as usual and that belongs in the normal reporting cycle. The latest example is Anglo American and Mitsubishi Materials collaborating on a responsible copper value chain. Well yes, I should hope it’s responsible!

• Northam Platinum (JSE: NPH) announced that GCR Ratings reaffirmed the long-term and short-term credit ratings, with the outlook maintained as stable.

INVEST IN SHARES