SellC Restructuring Boosts Visibility, Dividend Policy Reinstated

The company has successfully restructured and listed SellC, a move that has significantly de-risked its exposure and improved earnings visibility. This strategic maneuver is expected to bolster financial performance in the coming periods.

Following the restructuring, the company has resumed dividend distributions and implemented a formal dividend policy. This policy aims to distribute 30-50% of core headline earnings to shareholders, signaling a commitment to returning value.

Despite a challenging consumer landscape characterized by high unemployment (32%) and significant household debt service costs, the company's core platforms have demonstrated resilience. Normalized EBITDA reached R923 million, underscoring operational strength.

Furthermore, the Blue Energy division holds a promising 400 MW opportunity, with 180 MW already identified through contracted PPAs and secured sites. Concurrently, CGCell's revenue assurance programs have yielded substantial results, including R450 million in cash collections for municipalities.

However, the consumer environment remains difficult, exerting pressure on affordability. Electricity commission income saw a 13% decline due to margin compression, despite an increase in gross revenue. Normalized EBITDA also experienced a sharp fall in the second half of the fiscal year (R387 million compared to R535 million in the first half), raising concerns about earnings stability.

Complex accounting resulting from the SellC restructuring introduced volatility and obscured core performance metrics. Additionally, the SellC share price is reportedly suffering from low float and potential overhang, with management subject to a lockout period until November 2026.

Regarding share buybacks, the board intends to continue purchasing shares if deemed accretive to shareholders, viewing the current price as highly favorable. The Sasanki loan refinance is on track for completion by the end of November 2026, as promised to the market.

Finance income related to SellC debt funding instruments has been excluded from normalization efforts. Similarly, CellC's interest income of R159 million has been eliminated from calculations. All recapitalization transactions and listing costs have been removed from the normalized core headline earnings of R681 million.