News / Industry

Monday 09 - 13 October 2017

 

CORPORATE NEWS

Super Group said on Friday that it had raised R500m‚ which would be channeled to funding several acquisitions. Earlier in 2017‚ the company acquired the Slough Motor Company‚ which owns a network car dealerships in the UK‚ as well as Servicios Empres‚ based in Europe. Super Group raised the funds by placing 12‚422‚360 of its ordinary shares at R40.25 per share‚ which represented a 3.2% discount to the closing price on Thursday. The share price was off 3.18% to R40.24 in early afternoon trade on the JSE‚ valuing the company at R14.5bn.

 

Kumba rallied 6% to R249.60 and Assore 4% to R294.95‚ following the release of Chinese balance of trade data which showed record imports of the base metal. Chinese imports grew 18.7% in September from the same month in 2016‚ far higher than an economists’ consensus of 13.5% from a poll by Trading Economics. The data showed Chinese iron ore imports reached a record 102.8-million tons in September‚ 10.5% higher than the 93-million tons imported in September 2016.The rally by iron ore miners also buoyed steel maker ArcelorMittal whose share price rose 4.2% to R5.43.While China’s imports beat forecasts‚ its exports grew disappointing 8.1% vs the expected 8.8%. The lower-than-expected export growth saw China’s trade surplus in September fall toUSD28.47bn from USD40.94bn in the same month in 2016‚ and far below the expected USD39.5bn.

 

Stadio is buying Milpark Business School for R320m in partnership with Brimstone‚ the recently listed tertiary education group announced on Friday. Brimstone said it would pay R96m for a 30% stake in Milpark‚ to be settled from existing cash resources. Stadio will pay R224m for its 70% of Milpark. The group announced shortly after it was unbundled from Curro on October 3 that it intended raising R640m via a rights offer of 57 new shares for every 100 held at R2.50 each. The stock was trading at R6.50 at 10.44am on Friday‚ down 0.76% from Thursday’s closing price. Brimstone’s N shares gained 2.46% to R12.50 while its less liquid ordinary shares remained untraded at R13.

 

Sales growth of 6% from Taste Holdings’ fast food outlets failed to offset a 15% drop in sales from its jewellery stores‚ dragging the group’s interim revenue down 9% to R483m. Taste said in its results for the six months to end-August‚ released on Thursday morning‚ that after “inter-segment eliminations” were accounted for‚ its food division’s revenue declined by 1%. Before inter-segment eliminations‚ food revenue grew 6% to R282m while jewellery sales fell 15% to R253m.The jewellery division swung from a pretax profit of R14m in the matching period to a loss of R9m. The food division’s loss widened to R71m from R64m.The group’s overall aftertax loss nearly doubled to R66m from R34m.

 

Verimark blamed advertising spending for its interim profit falling by more than half. Sales for the six months to end-August grew 14% to R210m‚ but after-tax profit plunged 56% to R1.1m from R2.5m in the matching period. The retailer said its advertising costs increased by 85.7% to support an increased number of products introduced during the reporting period. No interim dividend was declared. Verimark last paid an interim dividend in 2006.

 

Mondi increased underlying operating profit for the third quarter to EUR245m‚ a rise of 8% from the comparable period a year earlier. The group said on Wednesday that it had benefited from higher average selling prices‚ partly offset by higher costs and negative currency effects. Costs were generally higher than the comparable prior-year period and the previous quarter. Currency movements had a net negative effect on operating profit compared with a year ago‚ mainly because of a weaker dollar‚ the group said. Strong cash generation from operating activities more than offset the cash outflows related to capital expenditure programmes and financing activities‚ resulting in a reduction in net debt during the quarter.

 

Echo Polska Properties is doubling its retail assets with the R11.1bn acquisition of a portfolio of 12 properties. The company’s plan is to own only retail assets. The 12 new properties include eight are shopping centres and four retail parks with more than 620 stores. They are located in strong regional cities across Poland‚ EPP said. The portfolio has a gross lettable area of about 450‚000m².The portfolio will be sold in three separate tranches. EPP is one of the major shopping centre owners in Poland‚ alongside Nepi Rockcastle‚ which is also listed on the JSE.

 

Two CEOs of Rand Merchant Investment (RMI) subsidiaries will be leaving at the end of 2017‚ the group said on Wednesday. Outsurance CEO Willem Roos has given notice that he intends relocating to Stellenbosch where he will become an executive of technology start-up Rain. RMI Investment Managers CEO Chris Meyer intends relocating to Sydney‚ Australia. Their replacements have not yet been selected‚ and RMI’s board will inform shareholders as soon as new appointments are made‚ the statement said.

 

Exxaro has raised USD474m‚ or R6.53bn‚ after trimming its stake in the New York-listed titanium products company Tronox. In a statement on Wednesday‚ the diversified miner said it had completed the sale of 22‚425‚000 of Tronox’s class A ordinary shares. The deal reduces Exxaro’s ownership of Tronox’s total outstanding voting shares from about 51.2 million to 28.7 million. This would about 24% of Tronox’s total outstanding voting shares. The funds would be used for capital projects‚ debt repayment and to return capital to shareholders. Tronox entered SA in 2011 when it merged its mineral sands business with Exxaro’s operations in KwaZulu-Natal and the Western Cape.

 

Cartrack‚ a South African company with ambitions to be a global player in the technology used by insurance companies to monitor clients’ driving habits and to recover stolen vehicles‚ reported 21% growth in interim aftertax profit to R144m. But the company cut its interim dividend for the six months to end-August to 18c from 20c in the matching period‚ its results released on Wednesday morning showed.  Cartrack said it needed to “invest in operational‚ service and distribution capacity‚ plus an accelerated investment in research and development”. The group’s interim revenue grew 14% to R630m.

 

Famous Brands shares fell as much as 14% as markets reacted to a restaurant chain’s trading update indicating a decline in first-half earnings. Famous Brands has Wimpy‚ Mugg & Bean and Europa in its portfolio of brands. In a statement late on Monday‚ after the market close‚ the company said headline earnings per share were expected to decline by up to 63% to R1.87 in the six months to August‚ from R4.11 a year ago. Higher finance costs and recently acquired UK-based Gourmet Burger Kitchen were the main drag in the overall performance. Finance costs rose to R138m‚ from R8m‚ while Gourmet Burger Kitchen recorded a loss £872‚000. But the company said it was “fixing” the UK-business‚ which‚ it said would return to profit in the next financial year.

 

Retailer TFG has dropped KPMG as its external auditor. It joins a growing list of JSE-listed companies that have cut ties with the auditing firm‚ which admitted to shoddy conduct in its dealings with Gupta-linked companies. In a terse statement on Monday‚ TFG said it had appointed Deloitte & Touch as its external auditor with immediate effect.AVI‚ Sasfin‚ Sygnia and a few others have already dumped KPMG‚ which is battling to restore public faith in its local operations. After conducting its own internal probe KPMG found that the work it did for the controversial Gupta-owned companies fell short of its own standards.

 

Petra Diamond’s share price fell more than 4% to 80p on Monday morning after it told shareholders it had warned its lenders of a “likely breach” of its debt covenants. In September‚ Petra said strikes were underway at its Finsch‚ Kimberley Ekapa‚ and Koffiefontein mines in SA. In Monday’s statement‚ Petra said the labour disruptions at three of its SA mines along with the Tanzanian government blocking exports of diamonds from its Williamson mine meant its ebitda would probably not meet the level demanded by its lenders.

 

Tharisa reported increased full-year production of both commodities‚ with higher chrome prices received for the period. Tharisa‚ which is listed in Johannesburg and London‚ reported an 8.3% increase in PGM production to 143‚600oz for the year to end-September‚ while chrome concentrate was up 7% to 1.3-million tons. Speciality grade chrome output grew 20% to 323‚100 tons. In its production report for the year‚ Tharisa noted the received price for the basket of PGMs it produced fell by 3.6% to R10‚492/oz‚ while the price of its chrome was 52% higher at R2‚667 a ton. In dollar terms‚ the chrome price was up 67% at $200 a ton. Its speciality grade chrome receives a premium of about $30 a ton on top of the chrome price.

 

 

ECONOMIC NEWS

SAA will face a new debt crisis at the end of October when the repayment of loans of R5bn made by domestic banks falls due on the last day of the month. The Treasury has already bailed out SAA twice since June: first to repay a Standard & Chartered loan of R2.2bn and then to repay a Citibank loan of R1.76bn. Both had refused requests to roll over their loans to the airline. The news that domestic funders have also set a deadline for repayment‚ subject to certain conditions‚ comes a day after it emerged that the Treasury has abandoned its plan to sell its R13bn stake in Telkom‚ which had been intended to fund SAA’s debt and capital requirements. A question now hangs over how the funds for SAA will be sourced as the government has committed to assisting state-owned enterprises in a “deficit-neutral way”‚ which precludes the option of raising additional debt funding.

 

Eskom has received permission from the Department of Environmental Affairs to build a second nuclear power station neighbouring its existing plant at Koeberg‚ the utility announced on Friday morning.The area neighbouring Koeberg‚ Duynefontein‚ was one of five that Eskom investigated as potential sites for future nuclear power stations. Eskom said only one of the five sites — an area in the Northern Cape on the west coast between Kleinzee and Hondeklip Bay called Brazil and Schulpfontein — had been crossed off the list.

 

Telkom share rose to a two-week intraday high on Thursday‚ after the telecoms group withdrew its cautionary notice. The cautionary related to a potential sale of the government’s 39% interest in the company‚ valued at R11.8bn at current prices. Cash-strapped state-owned airline SAA was tipped to be in line to benefit from the proceeds of the sale. The share price was up 0.62% to R56.81 in midmorning on the JSE‚ giving Telkom a market value of R29.8bn.

 

Security concerns have precluded the names of witnesses relating to Parliament’s pending probe into state capture at Eskom from being publicised‚ the portfolio committee on public enterprises revealed on Wednesday. The inquiry‚ which is due to get underway next week‚ will look into state capture and the abuse of public resources particularly at Eskom. It will have an experienced legal practitioner as an evidence leader‚ as was the case in the SABC inquiry. On Wednesday‚ the committee met behind closed doors to discuss the inquiry process with the evidence leader. Witnesses will be called from October 17‚ acting committee chairperson Zukiswa Rantho said.

 

Competition Commission said on Wednesday it had charged 14 fresh produce market agents and their association for price fixing‚ in violation of the Competition Act. This followed search and seizure operations conducted by the commission at the premises of the agents in Pretoria‚ Johannesburg‚ Cape Town and Durban in March. The investigation found a fixed commission fee had been charged to farmers as follows: 5% to 6% for potatoes and onions; 7.5% for all other fruits and vegetables; and up to 9.5% for all fruits and vegetables delivered to them by farmers‚ without pallets. The fresh produce market agents were all members of the Institute for Market Agents of SA and the charging of a fixed commission fee was enforced by the institute‚ with the practice having been in place for over 50 years and ongoing‚ according to the competition watchdog.

 

Treasury’s chief procurement office has reported to Parliament that government departments and state-owned companies had requested deviations from normal procurement processes amounting to more than R37bn in the 2016-17 financial year.  The report‚ presented by acting chief procurement officer Willie Mathebula‚ also shows power utility Eskom accounted for the largest chunk of requests to depart from regular procurement processes‚ accounting for deviations to the tune of R31.3bn. He said planning‚ lack of skills and capacity‚ and weak contract management were among the reasons departments and SOEs asked to depart from normal procurement processes such as open tendering at the last minute.

 

Reserve Bank is likely to remain independent and credible‚ despite recent rhetoric undermining its independence‚ says S&P Global Ratings. Public Protector Busisiwe Mkhwebane’s recommendation that the constitutional mandate of the Reserve Bank be changed‚ contained in her June Absa/Bankorp report‚ at the time elicited a warning from S&P Global that attacks on the central bank’s independence would be negative for SA’s credit rating. The ratings agency downgraded the country’s foreign currency credit rating to noninvestment grade in April‚ following President Jacob Zuma’s Cabinet reshuffle. This negatively affects the country’s ability to borrow and the costs of borrowing.

 

Corruption Watch has identified a number of shortcomings in the awarding of mining and prospecting rights‚ which it believes facilitate corruption. It said problems in the mining application process gave rise to corruption between mining companies‚ government authorities and community leaders‚ often to the detriment of mining-affected communities. The advocacy group said one of the problems identified was the low usage and unreliable accessibility of the online portal to submit mining applications which is administered by the South African Mineral Resource Administration System (Samrad). This results in the manual lodging of applications — itself a corruption risk.

 

Credit data company Experian launched a consumer default index on Tuesday to help pinpoint where South Africans are experiencing financial stress. According to the index‚ which measures the rate of first-time consumer defaults across home‚ vehicle‚ personal and credit card product accounts in SA‚ the total consumer debt value in SA between May and July was R13.6bn. The index reflecting a reading of 3.57%‚ an improvement 0.24 percentage points from 3.81% in July 2016. This means 3.57% of loans that had never before experienced defaults‚ were defaulted for the first time.

 

There was hardly anything the late former president Nelson Mandela could have done to change the status of SA’s economy to favour the black majority during the transition from apartheid‚ says former British MP Lord Peter Hain. He was speaking at a panel discussion‚ titled SA: Hero to Zero‚ held in Johannesburg on Tuesday. The talk focused on the role of business amid SA’s political climate. Hain stressed that business leaders could not turn a blind eye to the politics. Highlighting this point‚ he mentioned UK-based PR company Bell Pottinger‚  which found itself at the “centre of the construction of the Gupta family’s propaganda empire”‚ aimed at hiding the family’s alleged growing enrichment at the expense of South African citizens and taxpayers.

 

SARS has collected just over R1bn from the Special Voluntary Disclosure Programme (SVDP). This programme‚ launched by former finance minister Pravin Gordhan in his 2016 budget speech‚ gave noncompliant taxpayers a one-off opportunity to voluntarily disclose offshore assets and income. According to SARS‚ the programme allows taxpayers to “regularize their unauthorized foreign assets and income by voluntary disclosing tax and exchange control defaults specifically in relation to offshore assets”. SARS recently announced tax revenue of R275.4bn in the first quarter of the financial year to end-June — which was R13.1bn less than the printed estimate — and there is concern that tax revenue for the year will fall short of the target. SARS said on Tuesday that more than 2‚000 taxpayers had used the SVDP between October 2016 and August 2017. The total tax liability stands at R1.18bn.

 

Manufacturing sector surprised in August with strong growth despite economists’ expectations of a contraction. After falling 1.4% year on year in July‚ manufacturing production rose by 1.5% y/y in August. This comes after four months of contractions. The boost came from higher production in the basic iron and steel‚ non-ferrous metal products‚ metal products and machinery division which contributed two percentage points. Seasonally adjusted manufacturing production rose by 1.3% in the three months ended August 2017 compared with the previous three months‚ with six of the 10 manufacturing divisions reporting positive growth. Last week‚ FNB economist Mamello Matikinca said August was expected to break the slow growth trend and show marginal positive growth.

 

“Indigent township families” experience the most debt stress‚ particularly for people between the age of 25 and 29. According to the consumer default index (CDI)‚ which measures the rate of first-time consumer defaults across home‚ vehicle‚ personal and credit card accounts in SA‚ the total consumer debt value in SA between May and July was R13.6bn‚ with the index reflecting a reading of 3.57%‚ up 0.24 percentage points from July 2016. The index was released by Experian for the first time on Tuesday. People in the worst-performing segment make up 3.86% of the population‚ have limited education‚ earn less than R38‚200 a year per household‚ and stay in rented‚ informal homes.This segment had a CDI of 12.35% for credit cards and a CDI of 11.8% for personal loans.

 

Parliament will convene an urgent joint meeting of the portfolio committees on co-operative governance and traditional affairs‚ public enterprise and finance on Tuesday to discuss the crisis between Eskom and indebted municipalities. Eskom is owed billions in unpaid power bills by local councils‚ most of which are in financial distress. The power utility has used scheduled electricity cuts as a bargaining chip and as a means to get municipalities to the negotiating table to settle their debts.

 

In a victory for the Gupta family‚ the High Court in Pretoria has interdicted the Bank of Baroda from closing 20 Gupta-linked bank accounts pending the final outcome of their main application. The companies approached the court in September in a bid to have the date of the main application‚ which was meant to be heard in December‚ brought forward. Judge Tati Makgoka on Monday ordered that the bank not deactivate or close the companies accounts in the meantime. He also ordered that the Gupta companies lodge their final application within 15 days of his judgment.

 

Black Business Council (BBC) said the leadership changes at Eskom threatened economic growth. Speaking at the council’s offices in Illovo‚ president Danisa Baloyi said: “State-owned entities [SOEs] are very crucial and very important. Leadership at these institutions are critical for economic growth.… We’re pushing for radical economic transformation and the programme of the black industrialists. It affects economic growth.” The briefing was in response to the announcement that acting CEO of Eskom Johnny Dladla was removed from his position on Friday and replaced with Sean Maritz. 

SOURCE: BD PRO

Banner

More insight & research

This site uses cookies to store information on your computer. By using our site you accept the terms of our cookies policy. Accept