News


CMH sees H1 HEPS up 5%-15%‚ EPS up 30%-40%

By Staff Writer


Combined Motor Holdings expects headline earnings per share (HEPS) for the six months to end-August to increase by between 5% and 15%‚ the group said on Friday.


HEPS are expected to come in at between 122.4c and 134.1c per share‚ compared with 116.6c per share for the comparative period in 2016.


Earnings per share (EPS) are expected to increase by between 30% and 40%‚ resulting in an EPS of between 124.8c per share and 134.4c per share compared with 96c per share for the previously comparative period.


The results are expected to be released on October 16.


Source:BDproDate: 2017/09/22

Steinhoff confident of victory in Dutch court case over accounting fraud claims

By Staff Writer


Steinhoff International said on Friday it had presented its argument to the Dutch court and was confident of a victory in a dispute with its former joint venture partner regarding accounting fraud allegations.


The retail group said the verdict of the petition‚ brought by OM Handels and MW Handels‚ was expected in the next two months.


Steinhoff’s shares came under pressure in August when a German magazine reported that CEO Markus Jooste and other executives were under investigation for accounting fraud.


Steinhoff strenuously denied the allegations‚ and said the source of that story was a former joint venture partner embroiled in litigation with Steinhoff subsidiaries.


“Steinhoff … presented its position to the court and remains confident that the arguments‚ supported by independent lawyers and legal opinions‚ will lead to the rejection of the petition‚” it said in a statement on Friday.


It first alerted the market to Andreas Sieferts’s petition to the Dutch court on Monday‚ two days before the JSE debut of Steinhoff Africa Retail (Star).


Aside from the Sens announcements on Monday and Friday‚ Steinhoff executives have refused to comment on the legal battle.


Source:BDproDate: 2017/09/22

Tharisa takes control of maturing Brits mine from contractor MCC

By Allan Seccombe


Tharisa Minerals is buying the fleet of equipment and employing the staff deployed by MCC Contracts at its chrome and platinum group metal mine near Brits‚ as the company takes full control of a maturing asset.


Avoiding the high up-front cost of buying a mining fleet and employing a large staff complement at the start of the project‚ Tharisa opted to use a contractor to start its opencast mine.


Now the mine has been in operation and is at steady state production‚ the company has opted to take a firmer hold of the operational side of the business.


Setting its sights on 1.4-million tonnes of chrome concentrate and 150‚000oz of platinum group metals this year‚ Tharisa said taking in-house control of mining would allow it to hit that target. It had said in May it intended embarking on this course of action.


“The contractor mining model was appropriate while the Tharisa Mine was in development since it reduced the upfront capital spend on a fleet‚ enabled Tharisa Minerals to understand its ore body fully and allowed the company to determine the optimal fleet requirements for mining its specific ore body‚” said Tharisa CEO Phoevos Pouroulis.


At the start of October‚ 900 MCC staff will go onto the Tharisa payroll‚ lifting the staff complement to 1‚700 people‚ to exploit 18 years of open-pit mining and an extra 40 years of underground mining.


Tharisa did not put a value to the transaction with MCC‚ nor did it say how big the fleet was that it was buying.


“The company has secured the necessary funding through bridge loan facilities and original equipment manufacturers’ finance to fund the purchase. As part of the agreement‚ Tharisa Minerals will also take cession and assignment of certain leases currently entered into by MCC Contracts‚” Tharisa said.


Source:BDproDate: 2017/09/22

A2X's value to top R14bn on Peregrine, ARC listings

A2X Markets will provide a secondary listing to African Rainbow Capital (ARC) Investments and Peregrine Holdings on October 6, giving the JSE rival a market value of more than R14bn on its first day of trade — a fraction of the JSE’s R11.8-trillion market capitalisation but many multiples larger than fledgling peers.


A2X had signed on Peregrine Securities, SA’s second-largest stockbroker, and anticipated signing the country’s largest stockbroker, RMB Morgan Stanley, in the coming weeks, said CEO Kevin Brady.


The exchange was on track for a soft launch on October 6, which meant it was “going live but gently” in terms of broker trades, he said on Thursday.


Nedgroup Securities, Avior Capital Markets and Sinayo Securities had applied to be members on the exchange, while Investec Securities and Standard Bank Group Securities had expressed the intent to do so, Brady said.


A2X will be the third new exchange to go live in SA and challenge the JSE’s decades-old dominance. ZAR X went live in February and 4 Africa Exchange (4AX) is due to go live on September 28, listing agricultural co-operative NWK.


ZAR X, which has listed agribusinesses Senwes, Senwesbel and TWK Investments, has a market capitalisation of R3.3bn.


The Financial Services Board granted a fourth exchange licence to Equity Express Securities Exchange (EESE) in September. EESE was born out of over-the-counter trading platform Equity Express, used by large broad-based black economic empowerment schemes, including Phuthuma Nathi.


EESE, which would not begin trading before December, would target B-BBEE schemes and smaller companies that wanted to list their shares, said CEO Anthony Wilmot.


Its strategy is similar to ZAR X and 4AX, which are targeting restricted schemes, companies that trade over the counter and smaller issuers.


A2X’s strategy is distinct in that it plans to provide a secondary listing platform for the JSE’s largest stocks.


Chairman Ashley Mendelowitz and nonexecutive director Sean Melnick are part of the founding team of Peregrine Holdings. ARC Investments, which debuted on the JSE on September 7, has a 20% share in A2X, with the option to increase this to 25%.


A2X hoped to sign on additional issuers before October 6, but there was still a natural caution to “see what happens on day one”, Brady said.


“We will have a nice pipe-line once the exchange is upand running.”


Time would tell whether the South African market could support so many exchanges, Wilmot said. “If not, I think we will see some consolidation.”


ziadyh@businesslive.co.za


Source:Business DayDate: 2017/09/22

Huge Group interim earnings to rise at least 20%

By Staff Writer


Telecoms services specialist Huge Group said on Friday headline earnings per share (HEPS) for the six months to August would be at least 20% higher than the previous period.


Huge Group declared HEPS and EPS of 10.05c in the prior period‚ when it also reported total by 8.4%and gross profit margins improved from 41.6% to 45.1%. No dividend was declared.


Huge Group Limited began as a consolidation between corporate telecommunications company TelePassport Limited and Centracell Limited in 2007‚ evolving into a diversified telecommunications group.


The company’s share price was down 1.88% at R7.85 shortly after midday on Friday.


The stock has risen 1.95% so far this year‚ and has grown 161% since its launch in 2007‚ including a 275% gain in 2014.


Huge said it would publish a further trading statement as soon as it could provide precise guidance.


Source:BDproDate: 2017/09/22

Going the Reit route could help Attacq

Attacq, which owns the Waterfall development precinct, anchored by the 131,000m² Mall of Africa near Midrand, last week reported foreign exchange and impairment losses of R280m on its European and African interests.


In addition, Attacq took a R183m knock on the sale of its stake in German shopping centre Nova Eventis. A stronger rand also wiped out most of the gains made by the sale of Attacq’s investments in Serbia and Cyprus.


Around 15% of Attacq’s R27.2bn portfolio is made up of offshore property interests, including a R2.7bn stake in JSE-listed MAS Real Estate and a R1.2bn portfolio of seven malls in African cities including Accra (Ghana), Lagos (Nigeria), Lusaka (Zambia) and Windhoek (Namibia).


Speaking at the company’s results presentation last week, Attacq CEO Morné Wilken said it operated in a challenging environment, which has prompted management to take a hard look at its strategy and simplify its business model.


The latter will include the conversion to a real estate investment trust (Reit) structure in 2019. Attacq will start paying its first dividend next year. Unlike income-paying JSE-listed property companies, Attacq has until now been a pure capital growth play.


Wilken said the disposal of R1.9bn worth of properties over the past year forms part of the restructuring process. It will allow Attacq to reduce debt in preparation for the Reit conversion as well as consolidate its offshore interests into one offshore entry point, MAS.


The latter recently shifted its focus from the UK and Germany to Eastern Europe following a joint venture with Prime Kapital, a development company founded by the highly regarded exdirectors of New Europe Property Investments.


Attacq’s intention to become a Reit has been widely welcomed — the share price is up 10% since the June announcement. But it seems some investors are adopting a wait-and-see approach, judging by the sizeable 22% discount to adjusted net asset value (NAV) at which the share price is still trading.


Peter Clark, portfolio manager at Investec Asset Management, said while Investec supports Attacq’s conversion into what will be a quality retail Reit in time to come, the market may take some time to digest the conversion.


In addition, the ramp-up in dividends may come at the expense of NAV growth, he said.


Meago Asset Managers director Anas Madhi has an equally cautious view, saying Attacq’s slowdown in NAV to 3.2% for the 12 months ending June (against a three-year rolling growth rate of 11.95%) is not only due to foreign exchange losses and impairments of the company’s offshore assets.


“It also relates to the general slowdown in the SA economy and its knock-on effects, which reflect in a significant slowdown in new office take-up within the Waterfall development and low single-digit trading density growth across Attacq’s retail portfolio.”


Madhi said large, regional malls were under pressure, particularly in highly competitive nodes such as Sandton, Midrand and Centurion.


“Mall of Africa will be significantly tested once the first rental reversionary cycle occurs in around two years’ time.”


Besides its 80% stake in Mall of Africa, Attacq owns a stake in Lynnwood Bridge, Brooklyn Mall and Glenfair Shopping Centre in Pretoria, Newtown Junction in the Johannesburg CBD, Garden Route Mall in George, MooiRivier Mall in Potchefstroom and Eikestad Mall in Stellenbosch.


Attacq is targeting a maiden dividend payment from its income-producing assets, including the existing SA portfolio and MAS investment, of 73c/share for the year ending June 2018, with dividends forecast to grow 20%/year for the next three years.


Madhi said based on these forecasts, Attacq was trading at a two-year forward yield of 4.9%, which he believed makes the stock look expensive relative to the rest of the sector.


The latter is trading at an average dividend yield of around 7%.


However, Wilken argued that Attacq was undervalued at a current share price of around R18.60. “If the sum of all its parts is considered, Attacq should be trading closer to R23.” He believed analysts should be valuing Attacq on a total return basis instead of purely as an NAV play.


“We believe there is still a lot of value on the table, especially regarding the potential upside that will be unlocked at the Waterfall precinct over the next 10-15 years.”


Wilken felt analysts were being too conservative in their Waterfall valuation projections. He said there was still around 1mm² of developable bulk left at Waterfall.


“The weak economy and political instability is playing in our favour as it supports the consolidation trend among corporates, who are keen to cut costs by vacating a number of smaller offices in favour of one, centrally located head office between Pretoria and Johannesburg.”


He referred to, among others, large auditing firms PwC and Deloitte, whose new regional head offices are under construction at Waterfall.


The advent of another Gautrain station on the doorstep of WaterfallCity will encouragefurther bulking-up of the precinct, he said.


“Our projections show potential capital expenditure of R3.7bn at the node over the next few years, which will lead to a development profit of R440m. These numbers are not reflected in our current NAV.”


Source:Financial MailDate: 2017/09/22

KPMG International meets Gordhan, Jonas

and Carol Paton


KPMG International continued its bid to defuse the crisis around its South African operations on Thursday, with international chairman John Veihmeyer holding a meeting with former finance minister Pravin Gordhan in Johannesburg.


Gordhan, who was fired from his post partly as a result of KPMG’s South African Revenue Service (SARS) report and who saw many of his former SARS colleagues dismissed because of it, rejected the apology made by Veihmeyer last week, when he withdrew the 2015 report, and threatened legal action.


Gordhan said that KPMG’s “regret” did not come close to acknowledging the damage the report had done to SARS and the livelihoods of honest and professional public servants.


He asked why the firm had not approached him to offer a personal apology and urged it to declare that the SARS “rogue unit” had been legal.


Gordhan was accompanied by his former deputy Mcebisi Jonas. In a statement issued after the meeting, they said they had agreed to meet KPMG but reserved their legal rights.


“We shared our strong feelings and disapproval of the manner in which KPMG SA has been involved in the validation of state capture and corruption in respect of both SARS and the Gupta companies,” they said.


They had also insisted on a full and proper disclosure of the role of various parties in state capture and the manner in which KPMG staff seemed to have colluded in this, Gordhan and Jonas said. This included the complete disregard shown by KPMG management, they said.


Business Day understands former SARS employees implicated in the report on the “rogue unit” were compiling court papers in a bid to sue KPMG.


Gordhan and Jonas said the KPMG delegation had asked that they “recognise their commitment” to SA. “Clearly, given the inadequacy of their earlier statement on Friday last week, further steps needed to be taken by KPMG to be more open and frank with South Africans.


“This will determine whether KPMG can earn the respect and confidence of both corporates and the audit profession on the one hand, and the South African public on the other,” Gordhan and Jonas said.


South African Reserve Bank governor Lesetja Kganyago confirmed at a briefing in Johannesburg that the Bank was to meet representatives of financial institutions out of concern that a possible closure of KPMG SA could affect the country’s financial stability.


“We will engage banks and auditing firms primarily to understand the context so that we are better placed to manage any potential financial stability risks that may arise from the issues around KPMG.”


He also took the opportunity to deplore KPMG’s conduct, describing it as having shown “regrettable auditing practices and serious errors of judgment”, which had led to enormous damage inflicted on individuals, organisations and the country.


Source:Business DayDate: 2017/09/22

Dark Fibre boost for Remgro

Investment conglomerate Remgro has again experienced a scintillating performance from its strategic holding in fibre optic cable specialist Dark Fibre Africa (DFA).


Remgro holds a 51% stake in Community Investment Venture Holdings (CIV), which has DFA as its main operating asset.


Three-quarters of the company’s intrinsic value is tucked up in JSE-listed counters such as Mediclinic International, RMI, Distell, FirstRand, RCL Foods and Grindrod.


In an investment presentation on Thursday, Remgro CEO Jannie Durand said the group was pleased with the performance of DFA, which was only launched in 2008 as a start-up company.


DFA pumped up turnover 37%, to R1.63bn in the year to end-March with earnings before interest, tax, depreciation and amortisation (ebitda) 24% higher at R1bn.


DFA’s contribution to Remgro’s headline earnings was up 72%, to R110m.


The intrinsic value of Remgro’s investment in CIV and DFA was increased more than 50%, to R4.8bn.


Durand said the improved performance by DFA stemmed mainly from a solid 29% yearon-year growth in annuity income. DFA’s annuity income was flowing in at more than R115m per month.


Durand also revealed that DFA’s book value of the fibre optic network was more than R6.6bn and the future value of the current annuity contract base topped R11.5bn.


A total 9,854km of fibre network was completed in major metropolitan areas and on longhaul routes at the end of March.


Although DFA was the standout performer for Remgro in the year to end-June, other smaller parts of the group’s unlisted investment portfolio also performed commendably.


Most surprising was that 100%-owned aluminium building products specialist Wispeco pushed up revenue 6%, to R2.2bn and operating profit 9.4%, to R233m — defying the dour trading conditions prevailing across most South African industries. Net profits surged 23.5%, to R168m after reduced debt levels meant lower finance costs for the trading period.


Durand attributed Wispeco’s revenue growth to higher average selling prices with sales volumes remaining flat.


Profitability was helped by continued improvements in efficiencies and productivity. Durand cautioned that intense price competition was prevalent at all levels of the industry.


The 50%-owned industrial gases group Air Products also held its own despite subdued trading conditions as volumes and pricing came under pressure, particularly in the manufacturing and resource minerals sectors. Air Products increased revenue about 7%, to R2.8bn, with operating profit 5%, higher at R857m.


Remgro’s biggest unlisted investment, the 25.8% stake in consumer brands giant Unilever SA, took some strain.


Unilever — which owns brands such as Surf, Joko, Lux, Omo, Sunlight, Flora and Robertsons — reported a 2.6% decline in its headline earnings contribution to R449m.


Durand said Unilever’s performance was hampered by lower tax allowances following the completion of manufacturing investments as well as the weak trading environment.


hasenfussm@fm.co.za


the figure by which DFA increased turnover in the year to end-March


29%


the year-onyear growth in annuity income underpinning DFA’s performance


Source:Business DayDate: 2017/09/22

Texton ‘is ripe for takeover’

Texton Property Fund, which has exposure to quality assets in the South African and UK real estate markets, but has lagged behind its peers in terms of performance, may be a takeover target for larger groups.


Rebosis Property Fund, the diversified real estate group founded by East London businessman Sisa Ngebulana, has been tipped as a likely suitor.


Rebosis already owns a stake in the UK group New Frontier Properties and may be looking to snap up some properties to enhance its UK portfolio.


Texton, which has 61% of its portfolio in SA and 39% in the UK — where it focuses on malls in secondary nodes outside of London — has been an underperformer for some years.


Last Friday, shareholders voted to internalise Texton’s management company (manco), in line with many real estate investment trusts (Reits) around the world, at a cost of R180m. Some shareholders are upset as manco owners had to be paid out despite criticisms about how much value they have added.


Texton said the manco internalisation held advantages for the fund. “As denoted … the cancellation consideration represents a circa 16% discount to the fair market value of the asset management contract,” said CEO Nosiphiwo Balfour.


The transaction would adhere to local and international Reit best practice, align staff and management interests with Texton shareholders and remove conflicts of interest arising from the external management model, according to Balfour.


Texton Property Fund was formerly called Vunani Property Investment Fund.


A consortium led by industry stalwart Angelique de Rauville bought the management company from the office-dominated Vunani for R117m in 2014. De Rauville soon after became CEO of Texton Property Fund, but has since left her position — as has her successor, Nic Morris.


Texton’s share price hit a high of R13.40 on March 6 2015. Its shares were trading at about R7.10 on Thursday afternoon.


Texton’s board said the fund had made progress since the deal with the consortium.


“Texton Property Investments has been instrumental in growing the property portfolio by value, from R2.2bn in 2014, to the current R5.5bn over a threeyear period,” the board said.


Garreth Elston of Golden Section Capital said that Texton had been a potential target for a while, and that Rebosis might be an acquirer. Rebosis’s incoming CEO, Andile Mazwai, declined to comment, saying the company was in a closed period.


Paul Duncan of Catalyst Fund Managers said Texton would pose some challenges for any would-be suitor. “I think a lot of companies may have had a look. I suspect they would have walked away when they realised there is no free lunch — in fact, far from it,” said Duncan.


“Shareholders are upset they have to pay R180m to internalise the manco and pay a management team that in their view have destroyed value.... ”


andersona@businesslive.co.za


the price of Texton Property Fund shares on March 6 2015


R7.10


the price of Texton Property Fund shares on Thursday


Source:Business DayDate: 2017/09/22

New platform offers matchmaking service

Telkom’s subsidiary BCX has launched a platform that will connect technology entrepreneurs to potential buyers and resellers. The platform, SpliceWorks, aims to unearth disruptive technologies that could transform businesses.


SpliceWorks CEO Floris Buys said the company’s aim was “to connect amazing innovations from tech entrepreneurs to the opportunities and partnerships that can scale them to transform the future”.


As it stands, the platform is by invitation only and, so far, 70 start-ups are working with SpliceWorks with the potential of joining the platform.


SpliceWorks will work with companies from the concept stage to commercial launch. It will work closely with FutureMakers, a Telkom-led initiative that helps start-ups turn their ideas into commercial products.


“SpliceWorks is more than a traditional incubator,” said Buys. “Think of us as a matchmaking service between tech entrepreneurs and big business.”


In the first three stages of the concept, SpliceWorks will tap into FutureMakers’s expertise to develop that idea into a product. To be listed on SpliceWorks, the product would have to, among other things, be commercially viable and meet other requirements before approval. Once the company has been certified, SpliceWorks will look for commercial opportunities within the Telkom group and also its business partners. Of the 70 companies that have applied to be on SpliceWorks, eight are in the final stages of approval. The companies provide products in areas such as fintech and logistics. Some of the products could be resold by BCX as standalone offerings, or be incorporated in the technology group’s portfolio of products, Buys said.


In a recent report, consulting firm Accenture said the next decade would see the awakening of an entrepreneurial spirit among industry leaders.


In SA, digital collaboration could help elevate current GDP by more than 3%.


A report released in July by global technology firm Dell into digital disruption, said in 2030, every organisation would be a technology group and businesses needed to start thinking today about how to future-proof their infrastructure and workforce.


“To leap ahead in the era of human-machine partnerships, every business will need to be a digital business, with software at its core,” Dell said.


mochikot@bdlive.co.za


SOME OF THE PRODUCTS COULD BE RESOLD BY BCX AS STANDALONES OR INCORPORATED IN ITS PORTFOLIO


Source:Business DayDate: 2017/09/22

Pallinghurst to be hit by fall in Gemfields share

Gemstones, platinum and steelmaking materials company Pallinghurst Resources will report an increased headline loss of R1.39 a share for the six months to June, from a loss of 67c in the same period last year, mainly because of the drop in the Gemfields share price, it said on Thursday.


Pallinghurst made a contested offer earlier in 2017 to take over all the Gemfields shares it did not already own. At the time, it held 47.09% of Gemfields, which was listed in London.


It offered 1.91 of its shares for each Gemfields share, whichan independent committee appointed by Gemfields’ board described as “derisory”.


Fosun Gold, a Chinese mining firm, made a cash offer but Pallinghurst secured the necessary support to drive home its deal and delist Gemfields.


Pallinghurst said its net asset value (NAV) had fallen to R4.7bn at end-June from R5bn at end- December, which was equivalent to R4.36 a share (December: R6.61). This is lower than the most recent estimate from an analyst, who asked not to be named. He calculated a conservative NAV of R5.18 per share for Pallinghurst, on a conservative basis. This included about R3.16 per share for Gemfields based on the price that Fosun Gold was prepared to pay and the additional shares Pallinghurst issued to Gemfields shareholders.


Tshipi manganese mine, based on the Pallinghurst stake in the asset through 18.45% of Jupiter, was worth about R1.30 per Pallinghurst share plus another 72c per share for the marketing rights, he said. Jupiter also has two good undeveloped iron ore prospects in Australia, which were difficult to value but could realise quite good prices if sold, he said. He put no value on Sedibelo Platinum Mines.


At Pallinghurst’s current share price of R2.60, it was clear former Gemfields shareholders were willing to sell at the equivalent of 26p-27p, since they had no interest in being part of a diversified mining firm, he said.


Gemfields peaked at 57.50p in December and was at 32p when it was delisted at the end of July. Pallinghurst’s shares have declined steadily from 472c in March.


Although Pallinghurst’s total issued shares at the end of June were 1.09-billion after the extra shares issued for Gemfields, the weighted average for this period was 768.9-million.


Pallinghurst will release its interim results on September 26, it said.


mathewsc@fm.co.za


Source:Business DayDate: 2017/09/22

Building activity tapers off

The Afrimat construction index fell for a second quarter in a row, but only marginally, due to political events, said economist Roelof Botha.


Afrimat has open-pit mines that provide industrial minerals and construction materials.


Since hitting an eight-quarter high of 127 in the fourth quarter of 2016, Afrimat’s index has declined steadily to reach a level of 117 in the second quarter.


The composite index of activity levels in the building and construction sectors is compiled by Botha on behalf of Afrimat.


The index is calculated from nine constituent indicators including the FNB/Bureau for Economic Research building confidence index.


Botha said the index had been affected by low business and consumer confidence during the second quarter, mainly influenced by a series of political shocks, including major changes to the executive leadership at the Treasury and the fiscal threat imposed by significant losses at a number of stateowned enterprises.


Botha said policy uncertainty was a constraint on the expansion of productive capacity in the economy.


Spending by households on durable consumer goods continues to decline in real terms.


“The construction sector nevertheless remains on a stronger footing than seven years ago, with the [index] having expanded 17.7% since the third quarter of 2010, the base period, almost 50% higher than the growth rate of the economy … over this period,” said Botha.


points was the two-year high achieved by the index in the fourth quarter of 2016


117


points was the index level in the second quarter


Source:Business DayDate: 2017/09/22

Beer supply will not dry up in drought‚ brewing giant promises

By Farren Collins


Science is coming to the rescue of the world’s second-largest brewer as drought ravages its barley-producing heartland.


John Rogers‚ director of agricultural procurement for Africa at SAB and AB InBev‚ said new technologies and techniques were being introduced to reduce water use.


“We look at drought resistance within agricultural production systems in a couple of different ways‚” Rogers said at the company’s Growers Appreciation Day held for barley producers in the Overberg region of the Western Cape. The province‚ which produces more than 80% of SA’s barley‚ is in the grip of its worst drought in a century.


“First it starts with genetics and the development of varieties [of barley] that are more efficient with the water that’s available to them. So we are developing cultivars that can handle higher temperatures and that require less water to be productive.


“We also look at improved techniques of managing the crops. One of the programmes that we use globally that we are bringing into SA is called Smart Barley‚ which is leveraging new technology in data analytics to bring better information to farmers to manage decisions that can impact [yield].”


Rogers said they had been able to reduce water use through irrigation by more than 30% in parts of the country.


Since being bought by international beverage and brewing company AB InBev in October‚ SAB has announced investments of more than R3bn into the local economy for agricultural development and to expand production.


The Africa zone president for SAB and AB Inbev‚ Ricardo Tadeu‚ said the company had also undertaken to create 10‚000 local jobs within five years.


“We have [had] a public commitment to keep the number of jobs stable since the beginning‚” said Tadeu.


The company also hopes to stop importing barley within five years. It plans to increase the number of local growers to 1‚200 by incorporating 800 emerging farmers into its hops‚ barley and maize supply chains.


Tadeu said the move would increase barley production from 300‚000 tonnes to 475‚000 tonnes annually‚ creating at least 2‚600 jobs in agriculture.


Source:BDproDate: 2017/09/22

Pallinghurst flags deeper first-half loss

By Staff Writer


Pallinghurst Resources expects to sink deeper into the red when it reports its financial results for the six months to June.


Headline loss per share for the period is expected to be R1.39‚ up from loss of 67c a year ago‚ the investment group said in a statement on Thursday.


The company attributed the poor performance to decreases in the valuation of its investments.


“The fall in the Gemfields share price accounts for the majority of the unrealised loss for the six-month period‚” the company said.


Net asset value fell to R4.7bn from R5bn as at December‚ while net asset value per share dropped to R4.36 from R6.61.


The share price was off 2.28% to R2.57 in mid-morning trade on the JSE‚ giving the company a market value of R3.68bn.


Source:BDproDate: 2017/09/21

Luxury goods group Richemont sharpens online focus with two new appointments

By Tammy Foyn


Luxury goods retailer Richemont has signalled a shift in focus with the creation of a new role — chief technology officer.


The first incumbent is Jean-Jacques van Oosten‚ a retail industry veteran who has held the post of chief information officer at several companies including Tesco‚ Kingfisher‚ EDS and Unilever.


Van Oosten is also a doctor of molecular genetics and a London Business School graduate.


Richemont chairman Johann Rupert said of the move: “The creation of the chief technology officer position and Jean-Jacques van Oosten's appointment reaffirms Richemont's commitment to meet the demands of today's environment.”


Van Oosten “brings over 15 years of experience in scaling‚ transforming and internationalising online and multichannel businesses.”


Richemont recently issued a better than expected trading update for the first five months of the current year.


That follows a tough prior year‚ when earnings were hit by stock buybacks of underperforming luxury watch brands.


Richemont also announced a new head of human resources.


Sophie Guieysse is a former HR director at Richemont rival LVMH‚ who also spent 10 years at Canal + in asimilar role.


“Since 2016‚ Ms Guieysse had been advising Dior on the future of luxury in a connected world‚“ Richemont said in its statement on Thursday.


She replaces Thomas Lindermann‚ a 20-year Richemont veteran.


Source:BDproDate: 2017/09/21

AfriSam upbeat on PPC merger

AfriSam is confident that its proposed merger with SA’s largest cement maker, PPC, has the potential to create significant benefits for all stakeholders.


African cement markets have changed drastically in the past decade, with global and regional cement powerhouses negatively affecting PPC and AfriSam operations, it says.


“Both companies have recently commenced new businesses or commissioned new capacity in the rest of Africa. This provides significant growth opportunities and market diversity but does present start-up risks and liquidity challenges,” Phuthuma Nhleko, AfriSam chairman, said on Wednesday.


Consolidation in world cement markets had included the merger of Holcim-Lafarge and Heidelberg-ItalCementi. “This is why we believe that a merged South African national champion, with strong empowerment credentials from AfriSam and PPC’s existing black shareholders, will not only be competitive in this changing market but will be able to pursue empowerment and social agendas that are critical to its success,” he said.


PPC said last week it had received a nonbinding “communication of interest” from Nigerian company Dangote Cement to buy the entire share capital of the company.


PPC’s share price fell 2.05% on Wednesday to close at R6.21. It jumped as much as 5.7% to about R6.40 last Thursday after the Dangote announcement.


Earlier in September, AfriSam submitted a revised merger proposal to PPC in tandem with an undertaking by Canada’s Fairfax Africa Investments to buy R2bn in ordinary shares at R5.75 a share.


The revised merger proposal included a R4bn recapitalisation of AfriSam before any merger.


“We believe that the combined entity, with a significant equity commitment of R6bn from Fairfax, can build an even better future for its shareholders, Rob Wessels, AfriSam acting CEO, said on Wednesday.


allixm@bdfm.co.za


Source:Business DayDate: 2017/09/21

Vukile has to make Atlantic Leaf offer

Vukile Property Fund was forced to make a formal mandatory offer for Atlantic Leaf Properties on Wednesday after its shareholding in the UK-focused real estate group exceeded 34%.


But Vukile has no intention of taking control of Atlantic Leaf, saying that it would prefer that the group, which it viewed as a strategic offshore investment, grows independently.


Vukile, which has investments in Spain and the UK, increased its stake in Atlantic Leaf through a bookbuild last week by the UK-focused owner of industrial real estate.


Atlantic Leaf undertook an accelerated bookbuild in order to fund its recent acquisition of a portfolio of 11 assets tenanted by sofa maker DFS. Vukile was allocated about 23-million new shares at a subscription price of R17.60 per share.


“Pursuant to this allocation, Vukile’s shareholding in Atlantic Leaf would increase to 34.90% of the enlarged issued share capital, thereby triggering the requirement for Vukile to make a mandatory offer in accordance with the securities takeover rules of Mauritius,” Atlantic Leaf said.


But Vukile reported that shareholders holding 52% of the shares in Atlantic Leaf had agreed not to take up the mandatory offer.


“The waiver by the majority of the institutional shareholders, including all shares held by the management team sends a further strong message of support for the company. Many of the shareholders who provided Vukile with waivers to the offer also participated in the bookbuild,” said Atlantic Leaf CEO Paul Leaf-Wright.


“Our management team works closely with Vukile CEO Laurence Rapp and his team to source new opportunities and in growing Atlantic Leaf into a stronger and larger business. We believe that Vukile’s circa 35% shareholding will underpin any future initiatives we undertake,” said Leaf-Wright.


Rapp said his group was “strongly supportive of Atlantic Leaf’s strategy of investing in quality assets in the UK with an attractive forward yield”.


andersona@businesslive.co.za


shareholding percentage that Vukile Property Fund holds in Atlantic Leaf Properties, after the Mauritianbased company undertook a bookbuild to fund an acquisition


Source:Business DayDate: 2017/09/21

ELB back to profit on strong order book

ELB Group, a JSE-listed engineering solutions provider and capital equipment supplier, posted an R82m profit for the year ended-June 2017, after a difficult 12 months previously.


Headline earnings of 243c per share from a loss of 519c per share in financial 2016 were helped by a stronger order book and the award of delayed projects.


The group operates mainly in mining, power, ports, construction and industrial markets in Australasia and Africa. Cash generation from operations was R198m in the period. “The return to profitability this year can be attributed to improved market demand — mainly in the equipment segments — the strengthening of some commodity prices, the commencement of previously delayed projects, further inroads into the industrial sector, as well as the favourable effects of a stronger rand,” CEO Stephen Meijers said on Wednesday.


The right-sizing and repositioning of the group in the previous financial year had enabled the turnaround, Meijers said. Many initiatives and projects in recent years had caused positive outcomes in the latest period. These included the award of the Vedanta Zinc Gamsberg mining project near Aggeneys, Northern Cape, one of the world’s biggest undeveloped zinc ore bodies.


ELB also recently announced a strategic partnership for minerals and metals-processing projects in sub-Saharan Africa with China ENFI Engineering, providing better project execution capability.


The implementation of the Asanko gold mine conveyor project in Ghana that was awarded in the second quarter, had been deferred to financial 2018. ELB had also further diversified into “alternative energy” sector projects providing power plants of up to 50MW, and said it had gained expertise in the fast-moving consumer goods sector.


With China ENFI, it had a partnership with Germany’s Haver & Boecker, which made packing and screening machines for raw-material processing, including for minerals, cement, building materials, chemicals and fertiliser.


ELB said global commodity prices had stabilised and were underpinned by the positive effects of a stronger rand.


allixm@bdfm.co.za


Source:Business DayDate: 2017/09/21

Agarwal to boost his Anglo share

Anglo American will soon have a new dominant shareholder after Indian billionaire Anil Agarwal’s family owned Volcan Investments said it would top up its 12.43% holding in the diversified miner by a further £1.25bn to £1.5bn.


At prevailing prices this would take Volcan’s stake to 20%, but the company, which is issuing a bond to pay for the shares, insisted this was not a takeover play for the miner of platinum, diamonds, copper and bulk commodities such as iron ore, coal and manganese.


“In relation to the UK takeover code, Volcan confirms it does not intend to make an offer to acquire Anglo American plc. Accordingly, Volcan and all persons acting in concert with Volcan, including Vedanta Resources plc, will be bound by the restrictions in rule 2.8 of the code,” Volcan said in a statement on Wednesday evening.


Under UK laws, a share holding of 30% triggers a takeover offer


Anglo declined any comment on the latest announcement from Volcan.


Volcan’s wholly owned subsidiary, Volcan Holdings II, will issue a three-year mandatory exchangeable bond in London, led by JP Morgan as the sole bookrunner.


The coupon on the bonds would be set in London later on Wednesday.


The bond, which will be issued on October 10, would be secured against Anglo shares owned by Volcan. Volcan said it would buy Anglo’s shares in the market “via a combination of purchases from investors in the mandatory exchangeable bond and on market purchases, subject to certain conditions, until or close to the closing date”.


Agarwal has said in the past that he favours Anglo’s asset suite and exposure to SA where Vedanta, which is a diversified Indian mining company 69% owned by Volcan, has zinc mines which were once owned by Anglo.


In March, Agarwal caused a ripple of excitement among Anglo American investors, spending £2bn to buy the 12.43% stake. It prompted widespread speculation on what exactly his intentions with Anglo were, after it had undergone a hefty restructuring and debt reduction programme. “We are encouraged by the performance of Anglo American since our original investment earlier this year.


“The company has made good progress in its operational and financial performance and remains an attractive investment for our family trust,” Agarwal said.


Agarwal has to date refused to take a seat on Anglo’s board and it is not clear whether as a one-fifth holder of the company he would want some say in its strategy and direction.


He has in the past spoken of wanting to merge assets owned by Vedanta with Anglo, a suggestion Anglo has rejected.


seccombea@bdlive.co.za


Source:Business DayDate: 2017/09/21

Not much joy for Sasol Inzalo investors

The majority of black shareholders in Sasol’s Inzalo — the R28bn empowerment structure launched by the oil and chemicals group in 2008 to hold 10% of its shares — will have gained nothing but a portion of dividend distributions when the scheme matures in 2018, unless the shares appreciate rapidly.


This underlines the hazards of heavily geared equity ownership structures in volatile commodities companies for new black shareholders with no capital. Although a few Sasol Inzalo shareholders bought in using their own money, most of the 270,000 participants — who included the public, customers and suppliers, employees and an educational foundation — were funded by debt designed to be repaid from dividends and appreciation in the share price.


Inzalo’s participants earned R2.5bn of R7.6bn paid in dividends over 10 years, while R5.1bn went to service debt.


Sasol’s shares, at R370 on Wednesday, are barely above the R366 at which the scheme was priced. The shares largely track oil prices and the rand.


Sasol’s other shareholders are likely to be asked to support an accelerated bookbuild to raise R12bn-R13bn to repay the banks that financed Inzalo.


Joint CEO Bongani Nqwababa said other fundraising options would be considered.


Sasol shareholders will be diluted 1.5% more than the 4% dilution agreed to in 2008.


They will also be diluted 1%1.3%, depending on the share price, when Sasol launches a replacement black economic empowerment structure, Sasol Khanyisa, which will cost the group R7.3bn over 10 years, half of which will be borne in the 2018 financial year.


Sasol shares fell 7% on the JSE as shareholders reacted to the costs and dilution of Inzalo and its replacement.


Sasol chief financial officer Paul Victor said lessons learnt from Sasol Inzalo were being applied to the design of the R21bn Sasol Khanyisa.


Khanyisa will be fully funded by Sasol, not banks, and will hold a 25% stake in the South African operations, which include synfuels, chemicals and gas businesses.


The international operations, where huge capital projects are under way at Lake Charles in Louisiana and in southern Mozambique, are excluded. So too are Sasol Mining and Sasol Oil, which have existing empowerment structures.


Bright Khumalo, portfolio manager at Vestact, said Sasol was not the only group to have to assist a geared empowerment scheme. Naspers had done the same with Welkom Yizani.


Khumalo said the structure of Khanyisa was more solid than Inzalo, since the local operations were efficient and costcompetitive. It was quite likely they would repay debt in the structure in less than 10 years.


Victor said Khanyisa’s debt would be repaid from free cash flow from operations, not share price appreciation.


Khanyisa will not offer shares to the public. It will issue shares to Inzalo participants who choose to move into the new structure and the employee share ownership plan.


mathewsc@fm.co.za


the amount that Sasol’s Inzalo participants earned out of R7.6bn paid in dividends over 10 years, while R5.1bn went to service debt


Source:Business DayDate: 2017/09/21

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