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FESCO In Growth Mode, Significant Investments Set To Spur Future Growth And Profitability

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Jeremy Barnes Chief Executive Officer For Future Energy Source Company Limited (“FESCO”) Has Released The Following Unaudited Fourth Quarter Results To March 2024.

Executive Summary

We are pleased to report that the Company has achieved its best year to date as it relates to gross profit, J$1,455,217,297, operating profit (EBIT) J$672.3 million, up 18.7 % from J$566.4 million, earnings before interest, taxes, depreciation and amortization (EBITDA) J$846.9 million up 42.3% from J$595.4 million.

Shareholder’s equity of J$2.15 billion as at March 2024 is up 64.7% or J$842.9 million year over year from J$1.30 billion as at March 2023 which is almost seven times (7X) the Company’s shareholder’s equity of J$318.4 million as at March 2021.

For the year, the Company was able to achieve its main targets to:

1. Create brand awareness for FESGAS™ and establish an accretive and sustainable LPG business;

2. Increase service station network foot print and increase fuel sales measured in litres;

3. Increase profitability, specifically as it relates to operating profit (EBIT) and operating cash flow (EBITDA)

4. Execute significant investments in capital expenditure (CAPEX); which does not yet reflect in sales or profit but for which the Company forecasts sustainable returns in the medium term and whilst having generated ROE after tax of 30%.

Net profit after tax (NPAT) of J$515.1 million slipped 9.8% or J$56.2 million year over year from the Company’s record profit achieved last year of J$571.3 million.

The slippage in Net profit reflects a significant increase year over year for:
1. Interest expense (net) +J$165.3 million;
2. Depreciation +J$136.7 million and;
3. Advertising expense +J$31.4 million.

The increase in interest expense, depreciation and advertising, in the main, is reflective of and is attributable to our medium to long-term vision to expand our network foot print, our expansion into LPG distribution and to increase brand awareness for both FESCO and FESGAS.

The Company’s discrete quarterly (Q4: 3 months) performance reflects the booking of outstanding supplier invoices relating to previous quarters within the year. Normalised net profit for the 4th quarter (Q4) would have been approximately J$112 million versus the reported J$49.1 million. Accordingly, for a more meaningful discussion we will focus our analysis and reporting on the full year’s (12 months) performance instead of the three months ended March 31, 2024.
The Company’s annual performance reflects an increase in gross profit, operating profit (EBIT) and EBITDA.

All whilst acquiring, establishing and distributing LPG via our FESGAS™ brand, which includes two (2) company operated LPG filling plants, increasing our network foot print by three (3) service stations: FESCO Kitson Town, FESCO May Pen, and FESCO Port Maria, improving brand awareness, and increasing its advertising, depreciation and interest expenditures.

For the year, the Company achieved:
1. Gross profit: J$1,455.2 million up J$567.4 million or 63.9% vs year ended March 2023
2. EBIT: J$672.3 million up J$105.9 million or 18.7% vs year ended March 2023
3. EBITDA: J$846.9 million up J$251.6 million or 42.3% vs year ended March 2023
4. Net profit: J$515.1 million down J$56.2 million or 9.8% vs year ended March 2023
5. Book value of equity: J$2.15 billion, up 64.9% since March 31, 2023.

FESCO has no control over the supply price of fuel and, instead, focuses more on quantity of fuel sold and gross profit.

Financial Highlights:

For the year ended March 31, 2024, FESCO recorded Turnover/Revenues of J$28,777.3 million which reflects a 9.49% or J$2,495.1 million year over year increase. Several factors affect revenue/turnover with the supply price of fuel being a major component.

For quarters Q1 and Q2 all fuel prices fell significantly versus the previous year, and for Q3 and Q4 diesel prices fell significantly while gasoline prices increased negligibly. Accordingly, FESCO’s growth in Turnover for the year ended March 2024 reflects significant growth in litres of fuel sold.

Again, the Company’s discrete quarterly (Q4: 3 months) performance reflects the booking of outstanding supplier invoices relating to previous quarters within the year.

Normalised net profit for the 4th quarter (Q4) would have been approximately J$112.0 million versus the reported J$49.1 million. Accordingly, for a more meaningful discussion we will focus our analysis and reporting on the full year’s (12 months) performance instead of the three months ended March 31, 2024.

FESCO recorded gross profit of J$1455.2 million for the year which reflects growth of 63.9% or J$567.4 million year over year. The improvement in gross profit reflects both increasing throughput (measured in litres of fuel sold) and diversification of product offerings (fuel types including LPG) and services (increased retail presence).

Operating Expenses of J$784.5 million, for the year, is up J$477.2 million versus last year or 155.3%. This expansion of expenses directly reflects the expanded:
1. Operating locations including the additions of: FESCO Kitson Town, FESGAS Bernard Lodge and FESGAS Naggo Head;
2. Asset base which includes increased operating LPG and service station assets; Operational scope (which now includes increased retailing and manufacturing);
4. Early stage new business costs including but not limited to:
a. business acquisition;
b. property acquisition and development costs; and
c. business integration costs.

The Company is committed to and has expanded its Marketing and Advertising expenditure to create brand awareness for its “FESGAS” branded LPG products, among other initiatives. For the year, the Company’s advertising expenditure was J$47.0 million which is up 201.3% or J$31.4 million for the year.

Staff costs for the year of J$270.7 million, which is up J$155.1 million from J$115.7 million last year, reflects the expansion of our staff complement (up from 68 to 131) and is consistent and reflective of our expanded operations, operating locations and operating scope and remains relatively efficient as it is just 34.6% of overall expenditure (2024: 34.6% vs 2023: 35.6%) and just 18.6% of gross profit (2024: 18.6% vs 2023: 13.0%).

Other Expenses which includes but is not limited to security, insurance, listing fees and trust services (JSE and JCSD), motor vehicle expenses, and irrecoverable GCT for the year of J$184.4 million, which is up J$132.1 million from J$52.3 million last year, reflects the Company’s expanded operations, growing asset base as well as one-off charges. Other Expenses is 23.6% of overall expenditure (2024: 23.6% vs 2023: 16.1%), and is 12.7% of gross profit (2024: 12.7% vs 2023: 5.9%).

The Company’s LPG operation is capital intensive as it relates to its fixed asset requirements to establish and fulfil the business’ services and operation. Accordingly, depreciation and interest expense will in the forming period outweigh its medium and long term “weight” relative to gross profit exemplified by depreciation for the year totalling J$164.7 million versus J$28.4 million last year. Similarly, interest expenses (net) for the year of J$157.2 million has increased year over year by J$165.3 million.

In summary, staff costs, bank charges, advertising, and asset based expenses including but not limited to depreciation, insurance, and security continue to be our main expense items.

Our operations continue to be efficient, represented by our total operating expenses being approximately 53.8% of gross profit. Notably, for this stage of our LPG business development, the Company’s total operating expenses excluding depreciation is just 42.5% of gross profit.

The Company’s expense profile is changing and will reflect its expanded and evolving scope of operations. The Company’s expenditure and revenue targets are in line with its internal forecast and mix of established and early stage business expenses.

For the year, FESCO recorded operating profit or EBIT of J$672.3 million which reflects 18.7% or J$105.9 million, year over year increase. Earnings before interest, taxes, depreciation and amortisation EBITDA was J$846.9 million up J$251.6 million or 42.3% from J$595.4 million earned in the previous year ended march 2023.

For the year, FESCO incurred finance costs (net) of J$157.2 million which reflects interest costs related to its debt/bonds etc., net of interest income and foreign exchange gains.

For the year ended March 2024 profit after taxes of J$515.1 million reflects a slight decline of 9.8% or J$56.2 million, year over year.

Book Value or Shareholders’ Equity as at March 2024, has increased to sum J$2,147.1 million, up from J$1,301.9 million as at March 31, 2023 which reflects increased profitability, profit retention and revaluation reserve increase of J$330.1 million.

The Company remains significantly, and sufficiently liquid represented by net current assets of J$330.2 million (March 2023 J$302.0 million) and cash and cash equivalent balances of $282.4 (March 2023 J$287.9 million).

As at March 31, 2024, the Company’s Debt to Equity (D/E) (long term-static) is 0.72 versus 1.36 from March 31, 2023. The improved ratios (current ratio and D/E) reflect long term debt repayment of both principal and interest, and increased shareholder’s equity (both undistributed profits and revaluation reserve increases).

A Look Ahead

FESCO continues to monitor the moderating inflationary forces within the economy, the recent interest “freeze” by the central bank, the near full employment in many sectors of the economy, a resilient and expanding tourism product among other factors affecting consumer consumption as well as our allocation of investment capital.

The Company must also navigate industry-related margin contractionary forces and consolidation within the industry. The Company remains mindful of opportunities for growth and further investment. Internal or self-funding via profit generation, profit retention, at this time, has proven to be the most efficient and cost effective source of capital to fund growth.

The Company opened its twenty third 23rd service station, FESCO Hayes (DOCO) in April 2024. FESCO expresses gratitude to its staff and contractors who participated in the project’s execution. Valued stakeholders, you are invited to patronise the station and it is hoped that you will experience great fuelling services and other conveniences at all FESCO branded service stations.

FESCO recently received approval for its proposed service station on Spanish Town Road, “FESCO Oval”. FESCO Oval will be a company owned and company operated service station (COCO) and will facilitate increased retail presence within the Kingston and St Andrew (KSA) region. FESCO Oval intends to showcase the creativity, forward thinking, mindfulness, commitment to community and the immense potential of Jamaica and Jamaicans; we believe it will embody our tag line and motto, “Proudly Jamaican”. The development will take approximately fifteen (15) months to execute and we anticipate its opening during Q2 2025 (i.e. July 2025 – September 2025).

We are in growth mode, and during the year ended March 2024 we have made significant investments that do not yet reflect in sales or profit but will spur the Company’s future growth and profitability in the medium term. Further, the Company will continue to make investments in real assets and equipment to support expanding its service station businesses and network, its industrial client base, and LPG business.

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Sygnus Real Estate Finance Strategically Increases Stake In One Belmont From 70% To 86%

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Results of Operations

SRF continued the transition between its first and second investment life cycles with a number of key initiatives, namely:

  • Strategically increased its stake in the 9-storey One Belmont commercial tower asset from 70% to 86%;
  • Increased its investment in income generating third-party real estate investment notes (REINs) by 25.3% to J$2.30 billion; exited J$1.72 billion of investments;
  • Paid its first dividend of J$0.2012 per ordinary share in December 2024.

Primarily as a result of the increased stake in One Belmont, SRF generated a net profit for Q2 2025 versus a loss in the similar period last year, and a lower loss for 6 Months FY 2025 versus the similar period last year.

Book value per share increased 5.0% to J$24.05 compared to J$22.91 last year, given a J$372.06 million or 13.5% increase in retained earnings to J$3.13 billion as at the end of the period.

SRF continued to advance the ongoing execution of interior build-out works for some tenants of the One Belmont property, and the monetization of its partial exit from the One Belmont investment; and advancing the value creation process for the Mammee Bay hospitality asset in St. Ann and the Lakespen industrial asset in St. Catherine.

The Group remains dedicated to executing its strategy of unlocking value in real estate assets to enhance shareholder value.

For Q2 2025, total investment income or core revenues was J$152.25 million compared to negative J$24.35 million for the three months ended February 29, 2024 (“Q2 2024”). While total investment income or core revenues was J$26.59 million for 6 Month FY 2025 compared to negative J$55.31 million for the six months ended February 29, 2024 (“6 Month FY 2024”). This was primarily due to increased lease and other income, a gain on disposal of financial instruments of J$33.73 million, a gain on acquisition of shares in Joint Venture of J$162.20 million, and share of gain on joint ventures of J$39.26 million. The gain on acquisition of shares in Joint Venture resulted from SRF’s strategic decision to increase its exposure to the One Belmont commercial tower. On a net basis, SRF’s overall income from this asset was J$209.95 million for 6 Month FY 2025.

The weighted average fair value yield on REINs was 8.7% compared with 4.3% last year, with the weighted average yield on REINs measured at amortised cost being 14.4% vs 13.5% last year. The increases noted were due to the redeployment of capital into higher yielding real estate investment notes. The weighted average fair value yield on REINs is expected to improve significantly during the current financial year as SRF continues to substantially increase its exposure into third-party income-generating assets.

The weighted average cost of debt was 9.0% compared with 7.6% last year. This result was due to a higher interest rate environment as well as SRF securing longer duration debt. One of the tranches of SRF’s 2024 capital raise has a variable interest rate structure, which becomes effective after the first year which SRF expects to benefit from as market interest rates move downwards.

The share of gain on joint ventures amounted to J$15.63 million for the quarter ending February 28, 2025, compared to a nominal loss of J$0.51 million last year, while the share of gain on joint ventures was J$39.26 million for 6 Month FY 2025 compared to a loss of J$0.81 million last year. This was mainly driven by SRF’s increased ownership stake of 86% of the Audere Holdings Limited joint venture and SRF’s 71.0% ownership in the newly formed joint venture company referred to as 5658 LMR Limited, whose underlying assets are two (2) resort villa properties located in Ocho Rios, Saint Ann.

SRF’s total investment income consisted of various activities aimed at unlocking value from its real estate investment portfolio, namely: interest income, lease income and commitment fees related to REINs; gain or loss on property investments or on exited real estate assets; and share of gain or loss on its joint venture investments.

Due to the nature of its business model, SRF may experience fluctuations or “lumpiness” in total investment income and net profits during interim reporting periods, which usually stabilizes by the end of each financial year, as evidenced by the FYE Aug 2024 results relative to the interim quarterly performance. The Group uses independent appraisers to value its investment assets annually. All investment properties are USD investment assets which are converted to JMD for financial reporting purposes. SRF’s key strategic assets are held via wholly owned subsidiaries or joint ventures.

For the three months ended February 28, 2025, net investment income or core earnings was J$66.75 million versus negative J$113.22 million last year. While for the six months ended February 28, 2025, net investment income or core earnings was negative J$160.21 million versus negative J$228.10 million last year. The increase recorded during the quarter was mainly attributable to SRF’s gain on its acquisition of additional shares in Audere Holdings Limited, increasing its stake in the joint venture from 70% to 86%. For FYE August 2024, SRF generated J$508.50 million in net investment income.

Net profit for Q2 2025 amounted to J$38.24 million relative to a loss of J$187.15 million last year, while net loss for 6 Month FY 2025 amounted to J$197.45 million vs a loss of J$320.13 million in the corresponding period last year. The improvement for both periods was mainly due to gains on investments executed during the quarter. SRF generated an average annual return on equity (ROE) of 19.1% over the past five years of its first investment life cycle through the end August 2024.

Basic earnings per share (EPS) was J$0.12 for Q2 2025 relative to negative J$0.57 last year, while diluted EPS was identical to basic compared to negative J$0.53 last year.

Basic earnings per share (EPS) was negative J$0.60 for 6 Month FY 2025 relative to negative J$0.98 last year, while diluted EPS was identical to basic compared to negative J$0.91 last year.

Similarly, basic core earnings or net investment income per share (NIIPS) was J$0.20 for Q2 2025, compared with negative J$0.35 last year. For 6 Month FY 2025, basic core earnings or net investment income per share (NIIPS) was negative J$0.49, compared with negative J$0.70 last year.

Dr. Ike Johnson Director Sygnus Real Estate Finance Limited 

For More Information on Sygnus Real Estate Finance Limited (SRF) Unaudited Financial Statements Quarter Ended February 28, 2025(Q2-2025) CLICK HERE

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Express Catering’s Outlook Is For An Excellent Summer Season

The winter season is now ending but the outlook is for an excellent summer season and we are ready to serve our many patrons.

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Ian Dear CEO and Director Of Express Catering Limited (ECL) Has Released The Following Third Quarter Interim Report On The Operations Of The Company For Fiscal 2025. The Report Is For The Quarter And Nine Months Ending February 28, 2025.

Total passengers accessing the post security departure lounge of the Sangster International Airport during the Third Quarter was 652,656. This generated revenue of US$7.43 million for a spend rate per passenger of US11.38.

For the similar Quarter in the prior year, 705,116 passengers accessed the departure lounge. Total revenue of US$7.04 million was earned at a spend rate per passenger of US$10.05.

Despite the decline in passenger totals, total revenue and spend rate improved. The improvement in spend rate is particularly important as the increase was significant and is a result of the strategic measures that the company has been implementing over time.

Net profit earned for the Quarter was US$1.77 million for an EPS of 0.108 US Cents per share. This is compared to a net profit of US$1.06 million for an EPS of 0.065 US Cents for the similar period in the prior year.

For the nine months to date, the passenger total was 1.80 million. This generated revenue of US$18.89 million for a spend per passenger rate of US$10.49. The metrics for the similar nine months in the prior year were passenger total of 1.96 million passengers, revenue of US$18.67 million and spend rate of US$9.53.

Net profit for the nine months was US$3.22 million for an EPS of 0.197 US Cents. Net profit earned for the similar period in the prior year was US$2.09 million, for an EPS of 0.127 US Cents. Dividend declared and paid for the fiscal year to date was just over US$1.00 million.

Of all the cost categories, Cost of Sales (COS) continues to be our best area of savings for the Quarter and year-to-date positions.  This category registered just under seven percentage points improvement for the Quarter and just under five percentage points improvement for the nine months. The improvement was a combination of price increases, better portion controls, as well as improved supply chain agreements. The team intends to build on the trend for the rest of the year.

Savings were also recorded in Salaries and Wages, in line with the previously stated intention to better utilize this resource. There was also a shift in cost allocation from property rental expenses to lease amortization, in line with the increase in Lease Obligation under IFRS 16 rules. The team continues to review all cost categories for additional savings.

The winter season is now ending but the outlook is for an excellent summer season and we are ready to serve our many patrons.

For More Information CLICK HERE

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Knutsford Express Charts Strategic Course Amid Profit Decline and Operational Investments​

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Knutsford Express Services Limited (KEX) has released its unaudited financial statements for the third quarter ended February 28, 2025, revealing a nuanced financial landscape. While the company experienced a modest revenue uptick, net profits have seen a significant decline, prompting strategic shifts in operations and investments.​

Financial Performance Overview

For the third quarter, KEX reported revenues of J$593 million, marking a 4.8% increase from J$566 million in the same period last year. Over the nine-month period, revenues rose by 7.3%, reaching J$1.643 billion compared to J$1.531 billion previously.

Despite these gains, net profit for the quarter plummeted by 54.9% to J$49 million, down from J$111 million in 2024. The nine-month net profit also declined by 36.8%, settling at J$170 million from J$269 million in the comparative period.​

The company attributes the profit downturn to lingering effects of subdued passenger arrival numbers in Jamaica. Additionally, increased administrative expenses, particularly in staff costs, have impacted profitability. In the first quarter of 2025, administrative expenses rose to J$520 million, affecting net profits despite a revenue increase to J$592 million.

Strategic Investments and Operational Enhancements

In response to these challenges, KEX is investing heavily in fleet expansion and digital transformation. The company plans to inject J$500 million over the next three years to upgrade its bus fleet and implement advanced digital systems . This includes the introduction of airport-style departure gateways and digital ticket-checking kiosks, aimed at enhancing operational efficiency and customer experience.​

The Drax Hall depot in St. Ann has become a focal point for these innovations, serving as a prototype for the new passenger processing model. CEO Oliver Townsend emphasized the importance of these investments, stating, “We’re redoubling our investments and efforts on the core business and on initiatives that will improve our customer’s satisfaction”

Service Portfolio Adjustments

KEX is also refining its service offerings to align with market demands. The company announced the discontinuation of its international shipping and e-commerce service effective October 7, 2024, due to a 10% decline in revenue from overseas courier services . This strategic move allows KEX to focus on its core transportation and local courier services, which continue to be significant revenue streams.

Outlook

Despite current profitability challenges, KEX maintains a strong asset base, which grew by over 10.7% in the third quarter, reaching J$2.113 billion from J$1.926 billion the previous year. The company’s commitment to enhancing operational efficiency and customer satisfaction positions it for potential recovery and growth as market conditions improve.​

Conclusion

Knutsford Express is navigating a complex financial environment with strategic investments in infrastructure and technology. By focusing on core services and operational excellence, the company aims to bolster its market position and return to robust profitability in the coming periods.

For More Information CLICK HERE

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One on One Educational Services remains focused on strengthening One Academy

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Michael Bernard Chairman One on One Educational Services Limited has released the following unaudited financial statements for the 2nd quarter ended February 29, 2025.

Statement of Comprehensive Income Summary: 

Over the six months ending February 2025, company revenue was J$169.9 million, up from J$111.4 million for the six months ended February 2024. This represents a 52.5% increase over the comparative period, primarily due to the expansion of One Academy, which provides personalized educational solutions for schools, teachers and students. Additionally, the company retained its core annual recurring business from existing contracts, further strengthening revenue growth.

For the second quarter of 2025, revenue reached J$78.0 million, reflecting a 37.6% increase over the same period in the prior year. This growth was attributed to the expansion of One Academy and its ability to deliver personalized solutions through advanced technology, enhancing the accessibility and effectiveness of digital education.

Direct costs for the second quarter amounted to J$22.5 million, an increase of J$4.5 million compared to the previous year. This resulted in a gross profit of J$55.5 million, up 43.5% yearover-year. The increase in direct costs was primarily driven by expenditures related to One Academy’s live streaming of classes across the island  from the company’s central studio. Over the six-month period, direct costs also saw a 45.3% uptick due to one off investments in hosting infrastructure services and the installation of equipment and accessories to facilitate One Academy’s implementation of live classes. While these expenses have contributed to short-term cost increases, they are a strategic investment aimed at driving long-term value creation.

Administrative and selling expenses decreased by J$24.2 million, or 21.5%, over the six-month period, while the second quarter recorded a 19% decline over the comparable 2024 quarter. This reflects the benefits of cost-cutting initiatives aimed at improving operational efficiencies and financial discipline.

A taxation charge of J$226 thousand was recognized for the second quarter, primarily due to deferred taxation, bringing the six-month tax charge to J$894 thousand. The quarter closed with a net profit of J$7.2 million, a significant improvement compared to the net loss of J$19.9 million recorded in the same quarter last year. For the six-month period, net profit reached J$18.4 million, a strong turnaround from the J$41.4 million net loss over the comparative period.

Statement of Financial Position Summary:

Total assets grew to J$662.6 million at the end of the six-month period, reflecting an 8.2% increase from J$612.3 million in the prior year. This growth was primarily driven by investments in non-current assets, particularly the development of intangible assets. Total equity also strengthened, rising to J$423.4 million from J$362.6 million, supported by the company’s improved financial performance. This shift has allowed the company to move from an accumulated deficit of J$51 million to an accumulated surplus of J$9.5 million compared to the previous year. While, total liabilities reduced marginally by 3% year over year.

Statement of Cash Flow Summary:

The cash flow summary for the second quarter of 2025 highlights a substantial improvement in financial performance compared to the same period in 2024. Operating activities generated J$121.5 million in cash flow, while investing activities had reduced outflows. Additionally, financing activities reflected the company’s efforts to pay down loan obligations. These factors contributed to a net cash increase of J$66.7 million, leading to a stronger closing cash balance of J$110.0 million. This improvement underscores the company’s enhanced cash flow management and liquidity position.

During the quarter, the company remained focused on strengthening its One Academy suite of product offerings. This included the continued live streaming of lessons into high schools in Jamaica. Furthermore, the company leveraged its personalized solutions by developing a testing mechanism that allows schools to assess student performance effectively. This solution empowers schools with comprehensive student assessments, enabling the creation of targeted intervention strategies to improve learning outcomes.

In addition, investments continued in enhancing software architecture, particularly the further development of the integrated Education Management Information System (EMIS) and Learning Management System (LMS). These strategic initiatives reinforce the company’s commitment to advancing education delivery through technology, fostering impactful and accessible learning solutions.

These results reflect the company’s commitment to financial sustainability and operational efficiency while positioning itself for continued expansion and long-term success

For More Information CLICK HERE

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JSE launches Green Bond Plus Platform

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