News / Industry

Monday 04 December - 08 December 2017 

BUSINESS NEWS

President Jacob Zuma said on Thursday that transformation in the energy sector was paramount and international investors would have to partner with South Africans in the future. Zuma was addressing the Energy Indaba held in Midrand on Thursday. Zuma praised the success of SA’s renewable energy independent power producer procurement programme (REIPPP)‚ which he described as “one of the most successful in the world”. The programme has attracted more than R190bn in investment‚ much of it from large European energy companies. While these companies do have empowerment partners‚ there has been disquiet in government circles for some time that the benefits are not spread widely enough. SA favoured an energy mix that included coal‚ renewable energy‚ nuclear and hydro‚ Zuma said. He noted that there had been lots of debate on the type of energy.

 

A total of 506 employees left SARS this year‚ according to Finance Minister Malusi Gigaba. Replying to a parliamentary question by the DA’s deputy finance spokesman‚ Alf Lees‚ Gigaba said 128 of these staff members who had departed had university degrees and 58 came from the audit division. The average age of those who left was 43.38 years and the average length of service was 14.78 years. Of those who left‚ 344 resigned‚ 83 retired and the services of 40 were terminated.

 

Sub-Saharan Africa is missing out on a global shipping boom because of poor infrastructure‚ Transnet Group CEO Siyabonga Gama said at a conference on Tuesday. Worldwide shipping container volumes are set to break the 200m twenty-foot equivalent unit (TEU) threshold for the first time in 2017‚ Gama said at the inaugural two-day Terminal Operators Conference Africa 2017 at the Durban International Convention Centre. But the poor and inadequate state of much of Africa’s transport network was holding many countries back from sharing this bonanza.

 

The call for private-sector investment in the water sector does not mean the state has changed its policy‚ Water and Sanitation Minister Nomvula Mokonyane told the Water Infrastructure Investment Summit in Sandton on Tuesday. The summit was the first such conference calling for investment in water and sanitation infrastructure‚ showcasing opportunities in bulk-water supply and municipal reticulation. The minister committed her department to restoring the operational integrity of dysfunctional water supply and sanitation‚ and to provide capacity support to municipalities.

 

People are quick to blame their medical scheme for “not paying enough” towards their annual medical expenses. But a report by Alexander Forbes Health entitled Diagnosis‚ released on Monday‚ shows that most SA medical schemes are‚ for the third year‚ paying out more in claims than they earned in premiums. At the same time‚ consumers’ medical premiums will again increase above inflation in 2018‚ as Alexander Forbes noted has happened for 17 years in a row.

 

CORPORATE NEWS

Steinhoff International’s crash resumed on Friday morning‚ with the share falling another 45% to R5.50‚ taking its plunge over the week to 90% from Monday’s opening price of R55.80. On Thursday night‚ Moody’s cut Steinhoff’s credit rating from investment grade Baa3 to four notches into junk at B1‚ placing it straight into “highly speculative” without passing through the three rungs of “speculative”. Moody’s also warned that it was placing Steinhoff on review for a further downgrade.

 

African Phoenix‚ which rose out of the ashes of Abil in February‚ reported on Friday it turned to a profit for continuing operations for the year to end-September. HEPS for continuing operations was 13.7c from the prior year’s headline loss of 6.5c. But its HEPS for both continuing and discontinued operations of 13c was nearly a third of the prior year’s 34c. The group reported an after-tax profit of R186m‚ which was mainly from Stangen‚ but also from a R48m “fair value recognition” of the RDS bonds it owns and R45m from “fully impaired claims” against Ellerines.

 

Barloworld‚ Atterbury and African Rainbow Capital have partnered as co-investors in the redevelopment of the prime Barlow Park Campus, which is located in Sandton. The joint-venture property investment and development deal was signed this week. The next step is the re-zoning of the property‚ which is expected to take at least a year‚ and will see the new Barlow Park Campus grow to be worth more than R3bn.The investment value will climb to well over R3bn when the total redevelopment of the sprawling corporate park is rolled out into a vibrant 130‚000m² mixed-use precinct.

 

Steinhoff International issued a statement on Thursday morning saying it “wishes to provide additional comfort on the company’s liquidity”. The furniture group said its supervisory board believed it could recover EUR6bn in “certain non-South African assets”‚ which would be more than its EUR4.76bn market capitalisation on the Frankfurt Stock Exchange following Wednesday’s 62% share price crash to EUR1.14. Steinhoff also said it would gain EUR2bn from its recently unbundled subsidiary Steinhoff Africa Retail.

 

PPC’s share price fell 3.5% to R6.65 on Thursday morning after it informed shareholders it had been jilted on Monday by one of its three suitors‚ Dublin-based CRH. The cement maker said CRH‚ after conducting an initial due diligence‚ advised it on December 4 that it had decided not to proceed with an offer to buy the company. This still leaves Fairfax and LafargeHolcim as potential acquirers.

 

Famous Brands said on Thursday that the JSE had determined the company had not breached any rules regarding the sale of 150‚000 shares by one of its directors in August‚ but that the local bourse should have been informed earlier. The company said the JSE should have been told in July that non-executive director John Halamandres had taken an option to settle a loan through a sale of share options‚ not in August when the transaction took place. Halamandres had informed the finance institution in July that a loan agreement entered into in 2015 would be settled through shares‚ as opposed to cash.

 

Hammerson said on Wednesday it had offered to acquire Intu Properties‚ in a GBP3.4bn deal. The proposed deal‚ which has the blessing of the Intu board‚ would create a GBP21bn pan-European portfolio of high-quality retail and leisure destinations‚ the companies said in a joint statement. Markets cheered the news‚ with Intu’s share price jumping 22% to R44.19 in early trade on the JSE. The deal represented a 27.6% premium to the closing price of Intu shares of 199 pence on Tuesday. Hammerson shareholders would own 55% of the enlarged group‚ while Intu shareholders would get the balance.

 

Steinhoff International CEO Marcus Jooste resigned on Tuesday night‚ ahead of the furniture retailer’s results scheduled for release on Wednesday. The group’s chairman‚ retail tycoon Christo Wiese‚ alongside former Pepkor CEO Pieter Erasmus‚ would run Steinhoff until a new CEO was appointed‚ a statement issued at 10.45pm on Tuesday night said. Jooste had tendered his resignation with immediate effect‚ and the board had accepted it.

 

Sappi said on Tuesday it would acquire speciality paper business assets from Cham Paper Group Holding AG (CPG)‚ in a USD149m deal that would be settled in cash. Swiss-based CPG produces coated speciality papers used in a variety of applications including industrial goods‚ consumer goods and digital imaging. The company said the transaction‚ which is expected to close in the Q1‚ represented an opportunity to grow its speciality and packaging paper business.

 

African Rainbow Capital (ARC) said on Tuesday it had spent about half of the R4.2bn in cash it held when it listed on the JSE two months ago. ARC’s invested net asset value had increased to about R6.6bn after acquisitions in the agriculture‚ financial services and mining sectors. ARC listed on the JSE on September 7‚ with a net asset value of R8.7bn at the time‚ and has since acquired a 24.8% interest in short-term insurance group Bluespec for R509m and a R1bn commitment for 20% in telecoms startup Rain. The company had also invested R93m in the Last Mile Fund.

 

Alexander Forbes reported on Monday that H1 profit from operations before non-trading and capital items was up 5% to R455m. The institutional clients division delivered R916m of operating income in the six months to end-September‚ up 5% from a year ago. The administrator of pension funds said that operating income from consulting business rose 11%‚ outstripping expenses in the segment that rose 3%. Retirements’ operating income was up 16%‚ driven by new business growth as well as growth in the existing client base. The company declared an interim dividend of 18c/share.

 

Star‚ the JSE-listed holding company of Pep‚ Ackerman and other retailers unbundled from Steinhoff on September 20‚ released its first financial results as a standalone group on Monday morning. Star’s first results compare 12 months against 15 months because it changed its financial year end to September from June. Comparing the year to end-September 2017 against the matching period in 2016‚ Star said its revenue grew 13.2% to R58.6bn. Star’s revenue declined 5% if compared with the 15 months in the comparable period‚ but after-tax profit nearly tripled to R3.6bn from R1.3bn. HEPS grew 121% to 133.6c for the 12 months from 60.4c for the 15 months.

 

ECONOMIC NEWS

Mining sector recorded exceptionally strong growth in October after a contraction in September‚ indicating a strong beginning to the Q4. Mining production expanded by a significant 5.2% y/y in October‚ having contracted 0.9% y/y in September. Seasonally adjusted mining production increased by 3.4% in October 2017 compared with September. The biggest positive contributors were iron ore which contributed 2.4 percentage points; and coal which contributed 1.5 percentage points. FNB economist Mamello Matikinca expected a reversal of September’s contraction.

 

Business confidence is improving ahead of the ANC elective conference in December‚ Sacci reported on Thursday. The BCI measured 95.1 points in November 2017‚ up from 92.9 in October. It increased by 1.2 index points compared with the same period a year ago. The average for the BCI in the first 10 months of 2017 was 94.1 compared with 93.4 for the corresponding period of 2016‚ and 101.2 for the first 10 months of 2015. Four of the 13 sub-indices of the BCI reflected positive m/m movements in the business climate between October 2017 and November 2017‚ while seven reflected negative changes.

 

SA has registered another quarter of strong economic growth‚ driven by an improvement in agriculture. According to statistician-general Risenga Maluleke‚ growth in GDP was a higher than expected 2% in the Q3 compared with the Q2. Compared with the Q3 of 2016‚ GDP grew 0.8%. The Bloomberg consensus was for q/q growth of 1.7%, while Investec had expected 1.5%. The largest contributor to GDP growth in the Q3 was the agriculture‚ forestry and fishing sector‚ which increased by 44.2% and contributed 0.9 percentage points. Manufacturing contributed 0.5 percentage points‚ as did mining and quarrying.

SOURCE: BDPro

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