Loading...
See More

Saab to boost Sekunjalo cash flow

Jun 04 2010 14:14 Marc Hasenfuss

Company Data

SEKUNJALO INVESTMENTS LIMITED [JSE:SKJ]

Last traded 0.85
Change 0
% Change 0.00
Cumulative volume 31348
Market cap 417.64m

Last Updated: 20/10/2014 at 03:33. Prices are delayed by 15 minutes. Source: McGregor BFA

Related Articles

Sekunjalo angles for big second half

Sekunjalo subscribes for up to 25% in Saab SA

Sekunjalo leaks cash

Sekunjalo advises on earnings

Sekunjalo reinstates CEO

Sekunjalo scraps govt deal

 
Cape Town - Empowerment group Sekunjalo [JSE:SKJ] said the acquisition of a strategic stake in the South African arm of Swedish multinational Saab will boost cash flows.

While there was not a surfeit of financial information accompanying the deal, which was announced on Thursday, Sekunjalo CEO Khalid Abdullah stressed the investment in Saab SA would yield dividends from year one.

"The company has been operating in SA for around 10 years, through about seven subsidiaries."

Abdullah explained that Sekunjalo could not disclose too much detail around the deal (turnovers and profits) because of competitive issues affecting Saab SA.

The deal entails Sekunjalo taking 25% of Saab SA's voting rights and a 5% economic interest. There is an option for Sekunjalo to extend the economic interest to 25% - depending on Saab SA's performance over five years.

Saab SA's offerings include command and control solutions and tactical communciation as well as aerospace, surveillance and sensor systems.

While a Stock Exchange News Service (Sens) announcement indicated the Sekunjalo investment - subscribing for 372 Saab SA shares - was for a nominal amount, the deal made a significant impact on the company's pro forma financial results for the six months ending February 2010.

Had the Saab deal been effective at end-February 2010, interim earnings for Sekunjalo would have increased from 0.71 cents per share to 5c/share. Headline earnings would have shifted from 0.23c/share to 4.58c/share.

Perhaps more critical is the deal's effect on Sekunjalo's tangible net asset value (NAV), which would have increased from 65c/share to 69c/share.

Abdullah said the Saab deal took Sekunjalo the best part of a year to negotiate, and was in line with the company's promise of seeking out partnerships with major corporations.

"I think a key to our success was that while we are only a partner at Saab SA, they realised that did have experience in running our own businesses."

Sekunjalo also has a strategic partnership with telecommunications giant BT.

Abdullah felt the Saab deal would provide further momentum to Sekunjalo's deal flow. "We think we can deliver a few more deals of this nature."

 - Fin24.com
sekunjalo  |  [jse:skj]
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

Retailers of any shape and size can now unlock the power of mobile transacting.
 

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...