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Who’s doing what in the African M&A space? Weekly summary of all M&A activity from across Africa (excluding South Africa)...

Who’s doing what in the South African M&A space? Weekly summary of M&A activity by South African companies...

Pierre De Vos: On the many ways those implicated in corruption defend themselves without ever denying the accusations against them. One of the most telling signs that a person implicated in wrongdoing is guilty of the wrongdoing, is when that individual fails to deny the specific allegations or findings made against him or her, and instead complains about procedural irregularities in the investigation against them or raise counter-complaints about the behaviour of others in a transparent attempt at "whataboutery". Most politicians and businesspeople in South Africa are past masters of this technique which they use to distract attention from the original findings or allegations made against them. It is important for citizens not to be misled by this.

Diversification supports Afrimat through slowdown. The building materials supplier says its bulk commodities business helped offset weakness in the construction sector.

ArcelorMittal SA benefits from rising exports. The steel producer says strong international demand and the weaker rand have supported exports of its steel.

Murray cashes in on mining upturn. The engineering and construction group's underground mining book has jumped 12% since June and it's the preferred bidder for other large contracts.

Sibanye tumbles on earnings slide. The precious metals miner said deferred platinum sales in the US and ongoing challenges at its SA gold mines resulted in lower Q3 core earnings.

Cartrack sees clear road ahead. The telematics company says markets for its vehicle tracking devices remain largely underpenetrated despite strong growth over the past six months.

Cartrack says the South African market for car tracking systems remains underpenetrated by companies and consumers alike, despite the country having one of the highest telematic penetration rates in the world.

The telematics company managed to grow local subscriptions by 30% in the six months to end-August from a year earlier, lifting its total global subscriber base by 28% to 849 000. As the subscriber base continues to grow, it says it will realise greater economies of scale and operating efficiencies. It also adds to its annuity income, which rose 27% over the six months and now makes up 93% of total revenue. Cartrack says it has strong predictable future annuity revenue as 73% of its subscriber base joined Cartrack in the past 36 months.

For the period, it reported a 21.6% increase in total revenue to R766 million. Earnings per share (EPS) increased by 245 to 57.9c, while headline EPS rose 25% to 57.8c. Its operating profit margin improved to 34% from 32% and its EBITDA margin rose to 50% from 47%.

The group says its first-half results aren't strictly comparable with last year as it has now adopted new accounting standards that treat cash sales the same as rental sales. However, it says the new standards better align its reporting to that of its competitors and will allow for better year-on-year comparisons in the future.

It says its SA business will deliver stronger bottom-line results in the next 18 months as it upgrades its platform which will result in more efficiencies.

Outside of South Africa, its subscriber base in the rest of Africa declined by 2%, which annuity revenue increased by 7%, largely due to the weaker rand. At constant exchange rates, it said revenue would have been flat. Its European segment grew subscribers by 23% following investment in distribution and operating capacity over the past two years. Annuity revenue from Europe jumped 28% to R67.3 million.

Asia Pacific, which is now Cartrack's second-biggest segment based on revenue contrition, grew annuity revenue by 54% to R71.7 million as its subscriber base expanded by 43%. In the US, where investment to date has been largely in research and development, it reported annuity revenue of R2 million from 1 400 subscribers. However, it says it is positioned to roll out in the US in the future.

As the demand for telematics data continues to increase, there will be lucrative growth opportunities to market across all channels and in each operating region," Cartrack said. "As such, opportunities to develop further vertically aligned revenue streams remain at the forefront of Cartrack management's short and medium-term strategy."

The company's shares rose 3.6% to R14.49 yesterday.

Cartrack looks good. Like the concept and they seem on top of technology and could do very well in USA as competition has very old tech. Earnings up nicely. Big capital expenditure and need new loan but underlying business very cash flow generative

-- Wayne McCurrie (@WayneMcCurrie) October 31, 2018

Non-financial Performance Indicators. Painting the Whole Picture - Highlighting the Importance of Non-Financial Performance Indicators.

It has become common place to evaluate an organisation based on its ability to generate soaring revenues, profits and shareholder dividends. In today's free market era, the language of capital accumulation has become synonymous with that of success and progress. It should, therefore, come as no surprise that financial performance indicators have historically been given priority by investors in ascertaining the value of an organisation. However, when one takes cognisance of recent financial crashes and the rise of alternative political movements, definitions of "value" are beginning to span beyond the confines of static financial information.

The Limitation of Financial Performance Indicators

Financial performance indicators provide a snapshot of an organisation's immediate financial position. Metrics such as market capitalisation, headline earnings and operating profit are often devoid of any historical reflection, or future outlook. As an organisation exists in an environment that is a product of its past and a pre-cursor to its future, the short-termism of financial performance indicators becomes problematic. For example, in the context of managerial remuneration, linking short-term incentives and rewards to immediate financial performance may inadvertently result in managers making decisions that improve short-term financial performance but have a negative impact on an organisation's environmental, social and governance outcomes, which will begin to hamper financial performance in the long-term.

Broadening the Language of Performance

The way value is articulated requires a level of nuance that is congruent with the complexities that exist in the world today. A growing trend, especially in the financial reporting sphere, is the disclosure of non-financial performance indicators. These indicators are gaining more use as information becomes proliferated to a wider audience of investors and stakeholders. In many instances, non-financial performance indicators can be better indicators of future financial performance. For example, an organisation disclosing how it is progressing in pursuit of its strategic objectives, can offer some useful insight into the potential value an organisation can create in future. One study examined the ability of non-financial indicators of "intangible assets" to explain the differences in the stock market values of large US companies . The study found that indicators that related to innovation, management capacity, employee, reputation and brand value explained a significant proportion of an organisation's value. These kinds of indicators, however, have some detractors. It is argued that non-financial performance indicators lack comparability - as most of these indicators are organisation-specific and can't be compared with peers. It would, perhaps, be more useful for organisations to use a blended approach, inclusive of both financial and non-financial indicators, in reporting their performance and ultimately value created.

A Blended Approach

As the world changes, there is a new cohort of discerning stakeholders and shareholder activists that have wider criterions to measure the performance of an organisation. While traditional financial indicators have the closest linkages to financial returns and profitability, non-financial indicators often offer the tacit knowledge that contextualises an organisation's financial performance. In a world that is becoming increasingly cognisant of the tangible and intangible dimensions of value, financial and non-financial information should be given the same level of salience when companies speak the language of "good performance".

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Sanlam raises empowerment stakes. The insurance giant is selling an additional 5% stake to black investors including anchor empowerment shareholder Ubuntu-Botho for between R7.4 billion and R8.6 billion.

Sanlam has announced a new empowerment deal that will raise black ownership of the group to above 35%, placing it in a "marketing-leading position".

The insurance group is selling a 5% stake to black investors, including professional women, rural and urban women groups, youth groups, business partners and employees. Anchor empowerment shareholder Ubuntu-Botho, which first bought a stake in Sanlam in 2004, will select the participants and beneficiaries of the Beneficiary Trusts, with input from Sanlam. It will also take a fifth of the 5% stake through a subsidiary.

Sanlam said it would issue 111.3 million new shares to the investors. The price will be determined after all the conditions have been met and is likely to cost between R7.4 billion and R8.6 billion after a 10% discount to the prevailing share price at the time. Sanlam will use the proceeds to redeem short-term debt facilities incurred as partial funding to acquire its 53.4% stake in Morocco's SAHAM Finances. It said this would enable it to retain its balance sheet flexibility and strength.

While its combined direct and indirect black ownership will be in excess of 35%, it said direct black economic ownership would be over 18%.

In a separate transaction, it's granting a R2 billion loan facility to Ubuntu-Botho, which will be invested in some of the group's SA subsidiaries to help boost empowerment at an operational level.

Sanlam said while the recent purchase of an increased stake in SAHAM Finances had strengthened its position in Africa outside of SA, some 70% of its net result from financial services was still generated from SA and would continue to be for the foreseeable future.

The proposed transactions will support Sanlam to grow and consolidate its position in this important market, whilst also building on the Sanlam philosophy of mutually beneficial partnerships in pursuit of shareholder value creation," Sanlam said.

Its shares rose 3.3% to R74.26 yesterday.

yeah @sanlam is doing a bad job by not including the broader public in this deal. This is their 2nd chance to make things right but they're avoiding going the extra mile. Really disappointing that it's a business build on policy holders and those too have been totally ignored!

-- Brillant el Matador aka Dividend Papi (@briteless) October 31, 2018