Stock Exchange News Services (SENS)

What is a SENS and why should you care as a JSE investor?

Stock exchanges have many rules and regulations. This can often overwhelm investors. In this article I want to focus on the SENS process. This is the communication tool between companies and their stakeholders. As an investor or potential investor, you need to read SENS announcements. Many of them are just tickboxes, but some are critical for investment decisions.

When must a SENS be issued?

The SENS process is simply the JSE communication channel. The only manner in which companies are allowed to communicate with stakeholders is via the SENS Announcements. In theory, all stakeholders should receive information that can move the share price, at exactly the same time.

The JSE website lists over 40 instances of when SENS announcements must be issued. For those who like to read here is the link https://sens.jse.co.za/webhelp/webhelpeu/announcement_types.htm

The most important announcements are:

1. The Interim and Annual Financial Statements
2. Trading Statements
3. Corporate Actions/Cautionaries
4. Voluntary Updates
5. Dealings by related parties (See my previous article on Insiders Selling)

The Interim and Annual Financial Statements

JSE listed entities must report their financial results twice a year. Depending on when the companys financial year-end is, you can expect 2 sets of numbers a year. It really helps to make investment decisions based on recent information. 

US-listed companies issue financial statements four times a year.

Trading Statements

A company must issue a trading statement when there is a reasonable degree of certainty that financial results will differ by at least 20% from the results for the corresponding prior period.

Example: If a company had a full-year profit of R100m in 2021 and they know with reasonable certainty that the 2022 profit will be less than R80m or more than R120m, they need to let investors know via a trading statement. The timing of this can often be tricky because WHEN do you truly know with reasonable certainty?

An added complication with trading statements is once the company tells you that results will differ by more than 20%, they must give you a range and they cannot deviate from that range without issuing a second trading statement.

Example: Lets say in the above the R100m of 2021, now becomes R72m in 2022. A trading statement must be issued as soon as they are certain. They will not tell you it will be R72m in the trading statement. They will say We expect profits to be between R68m and R75m for example. If they then pick up anything that makes the profit R65m, they need to issue another trading statement. That makes them look incompetent to stakeholders and thus they hold off on the trading statement till almost immediately before the final results are released.

Corporate Actions/Cautionaries

A corporate action is any event initiated by a listed company that has a material effect on its shareholders. Cautionaries are warnings. The company is requesting shareholders to take caution in trading the share (hold, buy or sell).  The company warns shareholders that there is information that could have an effect on the share price and that they should take caution in trading in the share. Examples of cautionaries could be company announcements such as mergers, take-overs, acquisitions. Anything that can move the share price substantially.

Voluntary updates

Companies are allowed to release any information they feel will be relevant to shareholders. Renergen is popular for doing this. Giving updates on safety measures, progress on gas extractions or drilling, etcetera. Retailers can also do this for sales performance monthly or quarterly. Vehicle manufacturers will often report monthly sales and deliveries.

 

If a company is going through a major turnaround, they often let the market know how things are progressing. Tip: Go and check the number of SENS announcements Ascendis has issued in the last 18 months alone, because they are restructuring their debt.

Where to find the SENS?

This is updated in real time https://clientportal.jse.co.za/communication/sens-announcements