[miningmx.com] — I’ve written more than once in recent weeks about unheralded departures of chief executives, but a tiny announcement last week reminds us that they’re not the only ones at risk.
A terse SENS announcement Friday afternoon from Sentula notified us of the departure of Jason Holland, finance director until July 2007 and subsequently finance manager, and “acknowledge[d] Jason’s long association with the business.’ That’s really rough: “acknowledges,’ not “expresses its appreciation for’ and “association’, not “contribution.’
In corporate speak, nuances of language like that carry a depth of meaning.
Holland, incidentally, cashed in 100,000 shares at 2,300c in February, so he’s not exactly walking away empty-handed.
Now it’s not surprising that somebody should be walking the plank at Sentula, which under the guise of Scharrighuisen Mining was for many years one of the favourite stocks of many knowledgeable investors – and myself, for that matter, though I never bought any shares.
But just as it used to be considered bad luck to change the name of a ship, so things seem to have started to go wrong as soon as Scharrig changed its name.
Only a few months ago I attended a splendid breakfast function at Wits University’s Origins of Mankind Centre (and for me to call any breakfast function splendid, you must know it has to be pretty good) to celebrate the change of name and the appoinment of Robin Berry, who had joined as COO at the beginning of 2007, as CEO to succeed Caspar Scharrighuisen.
Berry’s appointment was warmly welcomed by well-known West African mining magnate Sir Sam Jonah, who had assumed Scharrig’s chair after a company associated with him took up 15 million Scharrig shares at 525c late in 2006.
Since then, it’s been downhill all the way, though you won’t have been told all the bad news by Sentula itself.
You won’t, for instance, have been told by Sentula that Merafe Resources decided not to take up its right to 50% of the 49.998% stake in the Koornfontein coal mine that Sentula acquired for R150m cash in January. The move was interpreted by analysts as meaning that Merafe thinks Sentula overpaid, though Merafe has said it was because it didn’t want to be a minority shareholder in a minority holding.
Early this month a trading update provided a range of earnings projections for the year to March: basic earnings of 98c-117c, HEPS of 74c-89c and core earnings of 100c-120c. All this in terms of the JSE requirement to publish an update as soon as it’s apparent that earnings will show a 20% or more variation from the previous comparable period.
But anyone hoping to compare these figures with those published for FY2007 was disappointed, as that year’s earnings are to be restated because of “errors’ in showing the effective date and fair value of an acquisition – which wasn’t identified but is universally understood to have been contract miner and earthmover Benicon.
For what it’s worth, last year the then Scharrig claimed HEPS of 99c and core EPS of 104c. But just what we should be comparing the figures in the update with is unknown.
A fortnight later came the resignation as non-executive director of Treve Hendry, well-regarded CEO of Argent Industrial. The reason stated was that he wants to devote all his time to Argent and the announcement acknowledged not just his “long association’ but also his “dedicated service’.
At least this throws light on why Hendry sold 50,000 shares for R948,000 in February; he may have been preparing for his exit. In March he took up 39,000 options at 53c, and who could blame him?
Hendry, by the way, was said to have changed from a non-exec to an exec director in December 2006, and I’m not sure when he reverted to his previous status.
Nor have you been told by Sentula that the Financial Services Board has launched an inquiry into possible insider trading in the share. Between 17 January and 20 May Sentula posted no fewer than 15 SENS announcements on directors’ dealings, mostly relating to sales, though Berry exercised an option on 276,000 shares at 1, 000c in April.
You will, though, have read on Miningmx of institutional investors’ unhappiness that the Jonah interests and Coronation (which was represented on the board by Alan Joffe), who’d both been thought to be long-term holders and respectively held 33 million shares and 21 million shares, decided to “realign their portfolios’ in March and jointly sold 31.25 million shares at 2,175c in a bookbuild with institutions, conducted by BJM.
At the current 1,120c, these buyers are collectively losing R330m of the R640m they shelled out just three months ago. Ouch.
Sentula has admitted that it knew there may have been unquantified accounting “problems” before the sale, but Coronation for one has denied that it was in possession of price-sensitive information.
Sentula is due to present its 2008 results, and presumably revised 2007 results, tomorrow. Only then will we learn just how serious the setback in the past two years has been.
There could – indeed, should – be some searching questions from analysts at the briefing. I’ll be there, too, so watch this space.
