It is like asking a barber if you need a haircut. Why are they great? Because they say so and who are you to disagree.
Management made it clear that they will not invest in SME' as per their vision before the SARS issue has been resolved; the cautionary still stands. (now 10 weeks since SARS communicated a settlement with Afdawn)
Secondly they focus on the Grindstone model of 'nurturing' free of charge scale-up companies; the Wikipedia definition of a scale-up is a Scale-up company or Scale-up is a business looking to grow/expand in terms of: market access, revenues, added value or number of employees – in particular, identifying and realizing win-win opportunities for collaboration between market leaders and market disruptors.. Their main source of potential income is ad hoc fees from these scale-ups i.e. exits or funding arrangements. This may be anything from R 1 million to R 2 million for the year.
Thirdly it has been stated on many occasions that they will first get Elite market ready before they will endeavour to sell it. They did mentioned the possibility of asset stripping this ‘dog’. I actually think that the CEO is enjoying the ‘financial services’ element off Elite and the above is just to keep shareholders at bay.
It is up to each shareholder to decide if the above is the making of a ‘sexy’ business model? Regarding the KC vendors getting their shares for 10 cents per share; this is not the total story as they are getting R 1.4 million in cash impacting on the share consideration price and the management of KC also got salary increases of 50% when joining Afdawn – for their special expertise, they are thus double dipping.
All the above can be found in the various SENS announcements and what was presented at the AGM and private discussions. Also that there are other pending risks such as NHCF etc.
