Back to the future The proposed sale of Prescient’s financial services interests to Stellar Capital will leave behind a hub of technology operations that will remain listed on the JSE under PBT.
The irony, of course, is that these developments restore an old order in that Prescient’s financial services operations were reversed into PBT some years ago. Truth be told, the Prescient transaction — aside from regular dividend flows — did not generate wonderful returns.
The leftover PBT may not spark much market interest, at least not initially. But one might question the market’s neglectful suggestion that the leftover technology bits (plus two investment properties) are worth roughly 11c/share — meaning an inferred market capitalisation of around R180m for PBT.
When PBT was reverse-listed into the old Wooltru shell, the market capitalisation was around R400m.
The market may well be overlooking a little technology gem, considering that Prescient reported in its last set of financial results that PBT continued its unbroken trend of growing its income year-on-year since its inception. In the year to end-March, PBT’s revenue grew 10% to R533m. Profit after tax had also grown every year since inception — until it dropped from R41m to R28m after the weaker rand caused foreign currency losses of more than R9m (thanks to forward exchange contracts on half of the company’s anticipated income from the Africa/Middle East region).
A mispricing opportunity . . . maybe?
Quantum of solace?
Finally, some news on long-suspended Quantum Property Group (QPG) — a specialist real estate contender that developed and owned the upmarket 15 On Orange Hotel in Cape Town as its only asset.
Unfortunately, the event is not going to see any value being realised for long-suffering shareholders. Nor will it give investors much-needed closure in this drawn-out saga.
Readers may remember that QPG got into a financial tangle when the 15 On Orange property was not able to generate the cash flows needed to service the borrowings from Absa that were required to undertake this sizeable development. This made the company lose its grip on this attractive asset.
For those shareholders still bitter at developments, there may be some solace in the fact that QPG director Peter Shaff has been convicted of contraventions of the Companies Act, and has been fined R40,000 (of which R15,000 was suspended for five years). The fine stems from a shareholder complaint around the company not calling an AGM or publishing annual financial statements for the 2012 financial year. QPG did not respond to a compliance notice, and the matter was referred to the National Prosecuting Authority for prosecution.
Unfortunately for QPG shareholders, corporate closure does not seem imminent. Since the suspension of QPG’s shares in 2012 — following the liquidation of its main asset owning subsidiary, A Million Up Investments (AMU) — the company has issued regular notices to shareholders advising of engagements with its legal advisers “to assess the impact of the liquidation of AMU”. The last such notice was issued in July.
Four years seems like an awfully long time to assess such an impact on what essentially is a single property asset. The hotel has long been under new ownership, and perhaps it’s time for the remaining QPG directors to offer a more detailed (and frank) assessment of any possible remnants of value.
When your shares are trading at 2c and your business model revolves around malnourished operations generating less than R40m in revenue, the last thing you need is for your proposed “bulk-up” acquisition to fall away.
That is what has transpired at Nutritional Holdings — which has the appropriate share code of NUT. The company has cancelled the acquisition of Kairos Nutrition, announced in late April, after uncertainty arose around achieving targets set as part of the suspensive conditions.
This is the difficulty with penny stocks looking for reinvention. There is simply not much that can be done when there’s little currency in your paper, and when operational traction is elusive.
At this stage it will take a stroke of mad corporate genius to ensure a semblance of viability at NUT.