Pallinghurst swings into full-year profit

By Robert Laing

Pallinghurst swung to a net profit of $44.57m in 2016 from a loss of $149.13m in 2015‚ it reported on Wednesday.

The R3.3bn market capitalisation mining group’s share remained untraded at R4.35 after releasing its results for the year to end-December.

Chairman Brian Gilbertson said Pallinghurst’s 47.13%-owned associate Gemfields “made tangible strides towards becoming the ‘De Beers for coloured gemstones’.

“The company is now the world’s largest emerald and ruby producer‚ supported by its unique and industry-leading auction platform‚” Gilbertson said.

Gemfields had the potential of entering other emerald areas in Ethiopia and Colombia‚ which would further cement its position as the world’s leading gemstone producer.

Its platinum mine Sedibelo produced 165‚000oz during the year‚ a 6% drop from the previous year’s record 175‚000oz.

“Whilst other producers have been required to raise equity to survive‚ including some at large discounts to enforce participation‚ we have avoided doing so‚ due to our strategy of avoiding debt and implementing significant cost reductions‚” Gilbertson said.

Pallinghurst was making good progress on its Kell technology‚ which could become an industry-transforming beneficiation process‚ he said.

Tshipi mine‚ in which Pallinghurst has a stake via its Perth-based subsidiary Jupiter‚ sold 2.3-million tons of manganese ore in its financial year‚ benefiting from a fivefold increase in manganese prices over the year.

“Notwithstanding a steep drop in the manganese price in the first quarter of 2017‚ the company was able to distribute R1bn to its shareholders‚ allowing Jupiter to complete its own $55m share buyback. Through our successful partnership with Ntsimbintle‚ Tshipi has become a large‚ long-life and low-cost operator of a world-class mine. We are exploring all strategic alternatives to realise shareholder value from this asset‚” Gilbertson said.

Source:AFPDate: 2017/03/29

Life Healthcare share price plummets 9% on issuing of nil-paid letters

By Robert Laing

Life Healthcare’s share price fell as much as 9% to R30.69 after it issued nil-paid letters on Wednesday.

Shareholders received 34 nil-paid letters for every 100 Life Healthcare shares held. The letters traded in a range of R6.97 and R6.40‚ with more than 1-million changing hands for a total of R7.7m by 11:45am.

With the value of the nil-paid letters added in‚ Life Healthcare shares remained at about Tuesday’s R33.70 closing price.

Each nil-paid letter allows its holder to buy a Life Healthcare share for R24.50 in the group’s R9bn rights offer. The capital is being raised to pay for Life Healthcare’s acquisition of the UK’s Alliance Medical Group‚ announced in November. Life Healthcare agreed to pay an initial £553m cash and up to a further £40m if the UK group meets financial targets.

Life Healthcare described Alliance Medical as one of Western Europe’s leading providers of complex molecular and diagnostic imaging services with strong market positions in the UK‚ Italy and Ireland.

“Alliance Medical is well positioned in attractive growth markets underpinned by favourable structural drivers including: aging populations; growing disease burden; capacity constraints in public health systems; and the demand for improved access to diagnostics‚” Life Healthcare said in November.

Source:BDproDate: 2017/03/29

Jubilee begins platinum concentrate production

By Staff Writer

Jubilee Platinum‚ the AIM/AltX-listed mine-to-metals company‚ has commenced production of platinum concentrate at its Hernic operations.

On Wednesday‚ the company said the commissioning and ramp-up of the fully integrated chrome and platinum Hernic operation began in March. The ramp-up of the operation remained on schedule with the commencement of the first platinum concentrate production‚ it said.

“The first platinum production is a significant milestone for the company and confirms its strategy to become a significant player in the platinum industry‚” Jubilee said.

It said further details of the company’s projects and performance would be included in its unaudited interim results for the six months ended December 31 2016‚ which were due for release before the end of March.

Source:BDproDate: 2017/03/29

AngloGold set on mine despite local rejection

AngloGold Ashanti is not giving up on its La Colosa project in Colombia after a referendum among local residents showed they were overwhelmingly against the building of a mine.

In Colombia, mining and environmental laws are unclear and conflicting. Local communities are often hostile to mining, particularly by foreign companies, because it is seen as competition for agricultural land and a potential source of pollution.

Although it is doubtful that a local referendum against mining would have any legal force, popular sentiment against the mine would make it difficult for AngloGold to operate.

According to local Colombian media, a vote held on Saturday among residents of the town of Cajamarca in Tolima, 14km from where AngloGold’s La Colosa project is located, showed 6,165 people voted no to the mine against about 100 who voted yes.

AngloGold vice-president: group communications Chris Nthite said the group was “respectful of any legal means by which citizens can participate in the responsible use of their country’s natural resources”. It believed responsible mining would be an important engine of growth for Colombia’s economy over the long term.

The group would evaluate the result of the vote, “while continuing the often painstaking work required to build consensus around the creation of a modern, environmentally responsible gold mining industry in Colombia”.

AngloGold was studying three discoveries before making decisions over their future development, he said.

According to the annual report, these are La Colosa, Gramalote and Nuevo Chaquiro.

La Colosa is a 600km² concession in the Andes, which could become Colombia’s biggest gold mine.

It has a mineral resource of about 28-million ounces of lowgrade gold, which is likely to be mined from open pits.

This is not the first news of popular opposition to La Colosa. A delegation from Colombia visited SA in 2016. Their concerns ranged from AngloGold’s use of the Colombian army to provide security at the La Colosa site to the use of agricultural land for mining.

AngloGold’s shares were trading 1% higher at R148.20 on Tuesday on a stronger gold price and weaker rand/dollar rate, but later reversed direction to end the day softer.

Source:Business DayDate: 2017/03/29

Capitec keeps to growth path

Banker Capitec’s gross loans and advances for the financial year to February rose 10%, even as the banking sector as a whole pared credit extensions to households in response to the weak economy.

Gross loans and advances grew to R45.1bn from R40.9bn previously, with growth marking a change from rivals, whose loan books grew an average 4.1% in the 2016 financial year – the lowest in five years, according to professional firm EY.

The main reason for the increase was Capitec’s continued exposure to the unsecured lending market, which continued to grow in value in the third quarter even as credit agreements declined, while other banks had a higher exposure to secured products such as mortgages, which declined in value.

Capitec CEO Gerrie Fourie said the National Credit Regulator’s statistics showed worse declines across the sector. Credit granted fell 5%, mortgages fell 7%, secured credit 4%, and credit facilities 22% year on year. In contrast, unsecured credit extensions rose 9.64%.

“These sectors are moving in different directions, given the state of the economy,” he said.

The bank classifies people earning less than R5,000 a month as low-income customers. It granted fewer loans during the financial year, although the loans were larger at an average amount of R7,761.

Fourie said Capitec had not picked up customers rejected by other banks. “There are a lot of clients we reject. The number of people approved [for] and taking up loans fell from 42% to 31%.”

Capitec also cut the term of its loan book from 40 months to 38 months, a result of customers’ weaker credit profiles and its lower risk appetite.

The bank signed up a record 1.3-million new retail customers and launched a credit card offering during the course of the year that analysts welcomed along with the lowering risk in its loan portfolio.

“[These] serve to move perceptions from unsecured lender to fully fledged bank and, with a marked share of just 5% in SA, we see plenty of growth opportunities,” Arqaam Capital analysts Jaap Meijer and Leen Antonios said.

The bank also delivered an 18% rise to R3.8bn in earnings, while return on earnings (shareholder investment as a percentage of profit) reached 27%.

Fourie said Capitec’s growth in earnings was thanks to the growth in customer numbers, which reached 8.6-million.

Primary banking customers, who make regular depositssuch as salaries, numbered 3.9-million.

The increase in customers, coupled with the expansion in the ATM and branch network, and customers’ increased use of self-service channels have resulted in a 30% increase to R3.9bn in transaction income.

Source:Business DayDate: 2017/03/29

African Rainbow buys 20% stake in planned A2X exchange

Patrice Motsepe’s African Rainbow Capital (ARC) is getting behind aspirant stock exchange A2X Markets through the acquisition of a 20% share.

The transaction allowed ARC to increase its share to 25%, conditional upon A2X securing its exchange licence, the companies said on Tuesday.

ARC is a fully black-owned and controlled investment company with stakes in various financial services businesses.

A2X hoped to secure its stock exchange licence in the next month or two, said CEO Kevin Brady. It would be operational by the end of 2017 and was in talks with 10 to 15 “quality issuers”, Brady said.

A2X was targeting the 50 to 65 largest and most liquid stocks on the JSE, to which it would provide a platform for secondary listings.

A2X was actively trying to break the JSE’s “long-standing monopoly” and would introduce primary listings in time, he said.

Competition would improve the liquidity and quality of the market via better price formation, Brady said.

He said ARC’s investment imparted a massive vote of confidence in what A2X was trying to do.

Motsepe said: “We are proud to be able to bring broad-based black-controlled capital to an initiative that will bring competition in an industry traditionally dominated by one player.”

“Competition drives market efficiencies and this benefits all users, including individual investors and pensioners.”

ARC’s “industry relationships” would unlock significant opportunities for A2X, said ARC co-CEO and former Sanlam chief Johan van der Merwe. “We are excited to play a role in building an alternative stock exchange in SA with strong BEE [black economic empowerment] credentials.”

A2X will become the third new stock exchange to launch in 2017 in 80 years, alongsideZAR X and 4 Africa Exchange.

Source:Business DayDate: 2017/03/29

Mara Delta launches island subsidiary

Pan-African property fund Mara Delta is setting up a subsidiary to house its strongly performing hospitality assets, which it will list on the Stock Exchange of Mauritius. The group wants to offer exposure to hotels, which are booming in Mauritius, and pay investors regular dollardenominated dividends.

CEO Bronwyn Corbett said the subsidiary would be able to invest in properties, directly or indirectly, with triple net, longterm leases in the hospitality sector, focusing on Indian Ocean islands, including Madagascar, Seychelles and Mauritius.

“Mara Delta is in the process of setting up a subsidiary in Mauritius as an entity holding a category 1 global business licence. The subsidiary will shortly thereafter apply for a listing of its class B shares or preference shares on the official market of the Stock Exchange of Mauritius,” she said.

The subsidiary would list by the end of June.

The company also announced that the National Pension Fund Mauritius would be a new key investor in the Mauritian subsidiary. The fund would invest 12.84m through a nonredeemable preference share issue at a coupon rate of 6.25% per annum.

Proceeds from the transaction had been allocated exclusively to fund the acquisition of the Tamassa Resort in Mauritius from Néréide, a wholly owned subsidiary of Lux Island Resorts. The resort is under transfer and is expected to contribute to the group’s income with effect from April 1 2017.

The company’s board said Mara Delta intended to proceed with a rights offer at $1.40 per share. The proceeds would be used to finance investments that Mara Delta had announced in recent months as well as other yield-accretive assets.

Mara Delta is the only panAfrican real estate investment trust (Reit) on the JSE. It has grown its assets more than threefold since listing in mid2014, from less than $140m to about $504.4m.

The company has interests in assets in Mozambique, Morocco, Mauritius, Zambia and Kenya. Corbett said that Mara Delta intended to list its Moroccan assets separately as a Reit in the near future.

Chris Segar, of Ivy Asset Management, said Mara Delta had a clear strategy but was facing some challenges.

“Mara Delta have carried out their mandate effectively, achieving long-dated leases from blue-chip tenants, and have shown they can achieve dollar-based distribution growth of a few percent.

“On the flip side they have to contend with higher sociopolitical risks in some of the countries they are invested in, the counter’s liquidity is poor and we would be more comfortable with a lower loan to value target,” he said.

Source:Business DayDate: 2017/03/29

AB InBev bets on renewables for future energy

Anheuser-Busch InBev (AB InBev), the largest beer group in the world, has committed itself to secure 100% of its purchased electricity from renewable sources within eight years. On Tuesday the group, which controls about one-third of the global beer market, said the commitment will shift 6 terawatt-hours of electricity annually to renewable sources in the markets where AB InBev is operating.

The move will make the beer group the largest corporate direct purchaser of renewable energy in the global consumer goods sector. It will have the same effect as removing 500,000 cars from the roads.

“Climate change has profound implications for our company and for the communities where we work,” said AB InBev CEO Carlos Brito.

“Cutting back on fossil fuels is good for the environment and good for business and we are committed to helping drive positive change.”

AB InBev’s plan is to secure 75%-85% of electricity through direct power purchasing agreements. The remaining 15%-25% will come mainly from onsite technologies such as solar panels. At this stage there appears to be no major renewable plans for SA.

Through Belgian beer brand Stella Artois the group is also driving a water-related conservation programme with Water. org, founded by US actor Matt Damon. The partnership aims to help bring clean water to more than 3.5-million people in the developing world.

the purchased electricity that will come from renewable sources within eight years


the number of people to get help from partnership

Source:Business DayDate: 2017/03/29

AfroCentric stake hits Sanlam

anlam’s investment in AfroCentric Investment Corporation has cost the investment holding company dearly — it posted a 4.86% decline in headline earnings for the interim period to end-December.

The insurer’s R703m subscription for 28.7% of ACT Healthcare Assets, AfroCentric’s wholly owned subsidiary that, in turn, holds the group’s operating assets such as the Medscheme health administrator, had strings attached including a requirement that AfroCentric achieve a certain level of profits for the year to June 2017.

If AfroCentric failed to reach the profit target, Sanlam had the right to give back its stake to AfroCentric at cost plus interest.

This “put option” resulted in R23m conditional interest for the group during the period. AfroCentric had not responded to requests for comment by the time of publication.

The group’s revenue from healthcare services — its largest source of income — rose 15.9% to R1.3bn as it took new customers on board including the Polmed healthcare administration contract that Medscheme won from rival Metropolitan. It also worked on merging with Bonitas the Liberty Medical Scheme that Medscheme administers.

It made a R219.8m pretax profit, 45.8% better than the previous comparative period.

Keith McLachlan, who manages the small-cap fund at AlphaWealth, said AfroCentric had performed better than expected. The group is among the fund’s top 10 holdings.

“If you strip out the accounting-based adjustments, the group’s operations grew dramatically over the period,” McLachlan said.

Source:Business DayDate: 2017/03/29

CPS gives its assurance that no grant beneficiaries will be 'prejudiced'

By Ernest Mabuza

Net1 subsidiary Cash Paymaster Services (CPS) has assured the public that payments will be made to 10.5-million eligible grant recipients on April 1.

CPS also said that no beneficiaries would be “prejudiced”‚ a legal expression meaning disadvantaged. The company has been accused of passing on beneficiaries’ personal information to other companies owned by its parent company‚ offering them airtime‚ electricity‚ microloans‚ and insurance.

“As at [Monday]‚ day seven of the 12 days required to process the payments‚ CPS is on track with this commitment. The Constitutional Court ruled [on March 17 2017] that CPS’s contract for the issuing of social grants will be renewed for a further 12 months‚” the company said in a statement issued on Monday night.

It said the bank accounts of all eligible grant recipients would be credited on April 1.

“Grant recipients will be able to access their grants through the same channels that have been available to them during the last five years. ATMs and the retail infrastructure will be available on the 1st April.”

The company said grant recipients who chose to make use of the pay-point infrastructure would be able to access their grants in accordance with the dates provided to them during the March 2017 payment cycle.

The company was ordered to process grant payments for the next 12 months following a Constitutional Court judgment two weeks ago. This came as a result of the failure by the South African Social Security Agency (Sassa) to pay recipients on its own‚ as it had promised the court in 2015.

The court had‚ in 2014‚ declared that the 2012 contract between Sassa and CPS for the payment of grants was invalid.

However‚ the court extended the invalid contract to give Sassa time to open a new tender process for social grant payments.

The court discharged its supervisory role in November 2015 after Sassa informed the court it would not open a new tender and would undertake the payments of grants in-house.

But the Department of Social Development and Sassa informed the court only in March that it would be unable to pay the grants in-house from April 1.

Two weeks ago‚ the Constitutional Court ordered that CPS‚ performing as an organ of the state‚ continue to pay social grants for the next 12 months.

CPS said it had engaged with Sassa over the past 12 months‚ with the intention of demonstrating the urgency‚ complexity and timeframe required for Sassa or a new service provider to take over from CPS.

“[Parent company] Net1 and CPS remain fully committed to assist the government and Sassa to ensure that no grant beneficiaries are prejudiced.”

Source:BDproDate: 2017/03/28

Oakbay makes a concession in Gordhan's court case over Gupta bank accounts

By Genevieve Quintal

Oakbay Investments has agreed that the allegation that Finance Minister Pravin Gordhan conspired with the banks to close the company’s bank accounts be struck out.

The company’s advocate‚ Cedric Puckrin‚ told the High Court in Pretoria on Tuesday that his client conceded that some arguments made by them were not relevant to the matter.

Gordhan had asked the court to strike out the accusation that there was a conspiracy to the close the accounts. Oakbay has agreed.

Oakbay‚ however‚ still wants the FIC certificate attached to Gordhan’s founding affidavit struck out‚ claiming it also had no relevance to the matter.

The FIC certificate details 72 “suspicious transactions”.

Jeremy Gauntlett for Gordhan argued that the FIC certificate showed the dimensions of the seriousness of the matter.

Following the court’s tea break on Tuesday‚ Matthew Chaskalson for President Jacob Zuma asked to be excused from the case.

This was after the court earlier dismissed an application by Zuma to be added as an interested party.

Source:BDproDate: 2017/03/28

No-frills Capitec makes move into higher-end malls

By Robert Laing

No-frills bank Capitec grew its account holders by 18% to 8.6-million during the year to end-February‚ it reported on Tuesday morning.

The bank declared a final divided of R8‚ taking its total for the year to R12.50‚ an 18% increase from the previous year’s R10.55.

What Capitec terms “primary banking clients” — those who make regular deposits‚ usually salaries — made up 46% of its active client base.

“These primary banking clients are less likely to move their banking elsewhere and‚ on average‚ do five times more transactions than a regular banking client‚” the results statement said.

Capitec opened 76 new branches during the financial year‚ many in “higher-end shopping malls” in its drive to draw wealthier customers from SA’s traditional big four banks.

It launched a credit card in September. “So far‚ it has performed within our risk appetite. Clients earn interest of at least 5.35% per year on a positive balance‚” Capitec said.

The bank grew the total amount of money loaned by 10% to R45bn‚ although the number of loan requests approved declined by 5% to 3.5-million.

“We granted lower-risk‚ higher-value loans to better-quality clients this year‚” the bank said in its results statement.

The average value of short-term loans (less than six months) was R1‚905 and long-term loans R26‚605.

The group’s total lending and investment income grew by 15% to R16bn. A change in accounting saw loan fee income nearly double to R1.1bn thanks to the addition of loan origination fees.

Despite the change in accounting‚ net transaction fee income jumped 30% to R3.9bn.

Capitec attributed this to “increasing financial awareness of our clients on the best way to bank”.

Self-service banking transactions grew 46% to 728-million‚ while automated teller machine and branch transactions grew 15% to 330-million‚ Capitec said.

Source:BDproDate: 2017/03/28

No dividend payout by Sun International

By Marc Hasenfuss

Gaming giant Sun International resisted paying a dividend and focused on easing gearing as tough trading conditions persist in its main markets in SA and Latin America.

Sun CEO Anthony Leeming said difficult trading conditions and the need to complete strategic group initiatives and curb debt levels had prompted the board not to declare a dividend.

Results released on Monday showed Sun‚ which has changed its financial year-end to December‚ finished the six months to end December 2016 with borrowings of R14.5bn. This was R455m more than at the end of June 2016.

The increase in borrowings stems mainly from acquisition of another 19.9% interest in GPI Slots for R262m and expenditure on the soon-to-be-opened casino at Times Square near Pretoria (R1.2bn).

Sun still has unutilised borrowing facilities of R1.6bn and available cash balances of R767m. But projected capital expenditure was almost R1.7bn for the financial year to December 2017‚ mainly related to further developments at Time Square and revamps at Sun City. Sun’s operational cash flow in the trading period remained strong at more than R2.4bn before working capital changes.

Sun has already disposed of certain African leisure investments and portions of its holdings in the GrandWest and Worcester casinos.

There has also been ongoing speculation that the company might sell off certain smaller casino properties.

Kagiso Asset Management’s associate portfolio manager‚ Dirk van Vlaanderen‚ said bundling the smaller casinos into a separate vehicle and selling these remained a strategic option for Sun‚ especially in light of its stretched balance sheet. “Interestingly‚ these casinos were the best performers in the group and are decent cash generators with relatively low capital requirements‚” he said.

Sun’s biggest casino‚ GrandWest in Cape Town‚ reported revenue and profits down slightly at R1.1bn and R440m respectively. But Sibaya in Durban and Carnival City in Gauteng were harder hit‚ reporting revenue down to R581m (R602m) and R526m (R561m) respectively and profits decreasing to R186m (R201m) and R141m (R171m). The Golden Valley Casino in Worcester increased profits to R17m from R13m previously.

The star performers were Sun’s 70%-owned limited payout machine operation‚ GPI Slots‚ and sports betting business SunBet. These alternative gaming operations increased revenue 12% to R540m and profits to R129m.

The results for the full financial year to December 2017 will be more interesting to gauge with the Times Square casino in Menlyn opening this week.

This will be the second-largest casino in SA and it is expected to have a marked influence on Sun’s bottom line in the years ahead.

Leeming said Times Square casino would open on time and in line with its R4.2bn budget.

“The Arena [at Times Square] will open in September [2017] and the hotel and conference centre in April 2018. Times Square will be key to our portfolio and to our growth in SA.”

Van Vlaanderen said Sun’s management team had guided for an additional earnings before interest‚ tax‚ depreciation and amortisation of R750m from the new Times Square complex once the casino‚ arena and hotel were all open in March 2018.

Source:Business DayDate: 2017/03/28

Bidcorp’s Joffe to bow out and list new firm

By Mark Allix

Bidcorp executive chairman Brian Joffe will step down at the end of June 2017, taking up the role of nonexecutive director of the foodservice company unbundled from Bidvest Group in mid-2016.

Bidcorp said Joffe had informed the board he would be launching a new listed JSE investment vehicle which would not be in competition with Bidcorp’s foodservice business. Bernard Berson would continue as group CEO.

"Brian has agreed to continue, if necessary, in a nonexecutive chairman role after this date until the appropriate process for the appointment of an independent nonexecutive chairman has been completed," Bidcorp said in a statement on Monday.

"As soon as the appointment of the new chairman is finalised, Brian will then assume the role of a nonexecutive director.

Joffe is the founder and recently retired CEO of Bidvest Group, from which Bidcorp was split in May 2016.

The former is now a separately listed JSE industrial company mainly with assets in SA.

Speculation has been rife that Joffe is contemplating bringing a new investment company to the JSE, having already met with potential investors to raise capital for the new venture.

The group declined to confirm this on Monday, only saying announcements would be made in due course. Earlier in March, Joffe had told the Financial Mail that it was premature to respond to inquiries about a new business venture.

Mark Hodgson, an industrial stocks and corporate governance analyst at Avior Capital Markets, said on Monday he had "no insight into this investment vehicle which was commented upon by the Financial Mail".

The Financial Mail had said Joffe had previously been involved in investment activities outside Bidvest, having joined former SABMiller boss Meyer Kahn and Netcare founder Motty Sacks in turning deciduous fruit producer WB Holdings into a new-look investment counter under Afrocentric Investment.

Joffe’s new JSE venture is rumoured to involve former CEO of Famous Brands, Kevin Hedderwick.

Source:Business DayDate: 2017/03/28

Dawn to oppose decision

Distribution and Warehousing Network (Dawn) will appeal against a Competition Tribunal decision that one of its subsidiaries colluded with Sangio Pipe between 2007 and 2012.

Dawn held 49% in the maker of high-density polyethylene (HDPE) pipe at the time.

The JSE-listed construction, building materials and fixtures supplier said it would appeal once a penalty had been determined by the tribunal.

The tribunal ruled last Thursday that Dawn Consolidated Holdings (DCH), a subsidiary of Dawn, through its wholly owned subsidiary DPI Plastics, had engaged in market allocation with Sangio. DCH bought the remaining 51% of Sangio in June 2014. Dawn says Sangio’s turnover then was R363m. It said on Monday the tribunal would weigh a number of variables in setting a penalty.

“The tribunal has not at this stage determined any financial penalty and this has been held over to a later date,” it said.

“In such cases, penalties are usually determined as a percentage of affected turnover [which] is usually that related to the market allocation arrangement in question.”

The Competition Commission, which referred the case to the tribunal in May 2015, welcomed the finding. “[The] tribunal said it is apparent that Dawn undertook not to manufacture HDPE piping for as long as it or its associates held shares in Sangio. Dawn also undertook to procure all its HDPE piping from Sangio,” it said.

Dawn’s share price plunged more than 31% on the JSE last Wednesday. This was attributed to a R350m rights issue, which had been priced at a steep discount. In February, Dawn signed a R200m bridging-loan facility with Investec.

Source:Business DayDate: 2017/03/28

Gore sings praises of finance minister

Discovery founder and CEO Adrian Gore said that Finance Minister Pravin Gordhan had done a great job “stabilising the ship” and that all members of the Cabinet needed to execute their duties excellently.

“Pravin Gordhan is a remarkable leader. If there is a cabinet reshuffle, I hope the people appointed discharge their duties excellently,” Gore said on Monday, as rumours swirled that Gordhan and his deputy, Mcebisi Jonas, were due to lose their jobs after President Jacob Zuma abruptly recalled them back home from an international investor road show set to take place this week.

“The country is in a very good spot; it is on the mend. We have an opportunity to capture lost ground, which we need to do,” said Gore at the graduation ceremony for the faculty of commerce, law and management at Wits. Gore was awarded an honorary doctorate in commerce in recognition of his achievements in business and contribution to society.

He graduated from Wits in 1986 with an actuarial science degree and went on to be founder of Discovery in 1992 at the age of 27.

He and his co-founders had established the business during a volatile time in SA’s history, requiring them to be positive when others were negative.

Amid speculation that Gordhan was on his way out, prompting an earlier slide in the rand, Gore urged the Wits graduates to be positive, saying it was easy to think that the country was getting worse, but that this was not the case.

“The black middle class is bigger than the entire white population and the number of people in LSM (living standards measure) 1-4 has halved. We are doing better.”

Source:Business DayDate: 2017/03/28

South32 intends to return USD500m to shareholders

By Staff Writer

Mining group South32 said on Monday that it intends to return $500m to shareholders‚ equating to 4.5% of its market value.

The diversified miner‚ which was spun out of BHP Billiton several years ago‚ said the capital programme would initially take the form of an on-market share buyback in Australia.

“Our net cash balance continues to build‚ giving us the financial strength and flexibility to invest in our existing operations‚ pursue opportunities where we can create value and return excess capital to shareholders‚” CE Graham Kerr said in a statement.

“This $500m capital management programme meaningfully increases shareholder returns and follows the recent announcement of our $192m interim dividend.”

Listed in Australia‚ London and the JSE‚ the company returned to profitability in the six months to December and declared its first interim dividend since its listing in 2015.

The share price was down 0.97% at R25.55 on the JSE on Monday morning‚ giving the company a market value of R136bn.

Source:BDproDate: 2017/03/28

Acquisitive growth lifts Sun International

By Robert Laing

Acquisitive growth helped hotel and casino group Sun International’s interim revenue jump 31% to R7.67bn‚ but attributable profit declined 29% to R229m.

No interim dividend was declared.

“Given the difficult trading conditions and the need to complete strategic group initiatives‚ particularly Time Square‚ and the need to reduce debt levels‚ the board has decided not to declare a dividend for the period under review‚” Sun International said on Monday morning.

These will be Sun International’s last interim results covering the six months to end-December. The current financial year will end on December 31 to comply with Chilean regulations following the creation of Sun Dreams by merging Sun International’s Latin American business with Chilean group Dreams.

“Revenue growth in Chile has slowed over the past six months with Sun Dreams’ revenue up 1% in local currency. Monticello was impacted by the relocation of the toll road to the Santiago side of Monticello‚ making it more costly to reach the property‚ whilst Iquique‚ which is located in a copper mining region‚ was impacted by the weak copper price‚” the results statement said.

Acquisitive growth in the reporting period also came from raising its stake in GPI Slots to 70% by acquiring a further 19.9% from Grand Parade Investments.

But overall gambling revenue from its South African casinos fell 2.7%.

“The group’s South African revenue continues to be affected by difficult trading conditions linked to an uncertain macroeconomic environment and reduced consumer spend. South African comparable revenue (excluding GPI Slots) was flat off the back of lower casino revenue. Sun City and Table Bay continued to benefit‚ however‚ from an increase in international tourism‚ which helped boost rooms’ revenue by 14%‚” Sun International said.

Source:BDproDate: 2017/03/28

Creamfinance deal fails to help Capitec's share price

By Hanna Ziady

Capitec’s first foray into international markets — with the acquisition of a 40% stake in European online lender‚ Creamfinance — proved too small to move its share price on Friday‚ but has created an opportunity for the bank to grow lending outside SA.

Capitec will pay €21m (R282m) for the acquisition. The deal will be done in three tranches at nine-month intervals‚ subject to certain performance targets being met‚ the group said on Friday.

Creamfinance was one of the top five online lenders in Central and Eastern Europe‚ with a gross loan book of €90m (R1.2bn)‚ according to a recent investment presentation on its website.

Capitec had a gross loan book of R42.8bn as at August 2016.

Weak economic growth had constrained loan growth among SA’s big four banks‚ Investec and Capitec‚ which was up just 4.1% in 2016 — the weakest growth in five years‚ according to EY.

Consumer fintech was a high-growth industry and the transaction would create a potential revenue source from a diverse pool of foreign currencies‚ Capitec CEO Gerrie Fourie said.

The partnership also gave Capitec a chance to gain experience in foreign markets‚ as well as insight into advanced technology and credit models that it might be able to use in SA‚ he said.

That Creamfinance was a pure online lender provided a possible glimpse into the way Capitec saw future opportunity in lending in international markets‚ said Neelash Hansjee‚ senior investment analyst at Old Mutual Equities.

Capitec would assist Creamfinance to grow its international business by providing strategic input and giving access to skills in IT‚ credit management and the development of term loan products‚ Fourie said.

Founded in 2012‚ Creamfinance uses digital technology and online data to assess credit risk and provide online loans to consumers. It is headquartered in Poland and also operates in Latvia‚ Czech Republic‚ Georgia‚ Denmark and Mexico.

Its locally customised credit scorecards resulted in loss ratios of between 6%-8%‚ which was 20% below competitors‚ according to Creamfinance.

“It seems like a good acquisition and a sound strategy‚ given the limited ability to extend credit rapidly in SA‚” said an analyst who declined to be named. “Capitec bulls would no doubt see this as blue sky and another reason not to worry about the valuation.”

Capitec’s gravity-defying share price and heady valuation appears to have made some analysts nervous‚ with six rating the share a “sell”‚ three a “hold” and two a “buy”.

It is up nearly 16% this year‚ even as its parent bank’s index is up just 2%. Capitec’s price-to-earnings ratio‚ meanwhile‚ is more than double that of the banks index.

Still‚ the consensus forecast among analysts is for 16.8% growth in adjusted earnings per share for the year to February 2017‚ according to Bloomberg data. This is significantly ahead of what rivals recently reported.

Capitec said it did not intend to become a controlling shareholder‚ but could increase its stake to 49% if existing shareholders exercised a put option on their shares.

CEO Matiss Ansviesulis and his co-founder‚ Davis Barons‚ would maintain an interest of at least 10% each. Whirlon Investments‚ Basic Group and other small shareholders would hold the balance of the shares.

Capitec was due to report full-year results on Tuesday.

Source:BDproDate: 2017/03/28

Dawn will appeal fine Competition Tribunal imposes

By Robert Laing

Distribution and Warehousing Network (Dawn) said on Monday it intended appealing a fine once it had been set by the Competition Tribunal.

Dawn’s share price plummeted 30% on March 22 when the Tribunal decided to proceed with a case referred to it by the Competition Commission in May 2015. Dawn’s share has fallen 41% from R1.90 on Friday March 17 to R1.13 on Monday.

The case revolves around the Commission’s claim that a wholly owned subsidiary of Dawn‚ DPI Plastics‚ had colluded with a 49%-owned associate‚ Sangio Pipe.

Sangio subsequently also became a wholly owned subsidiary of Dawn in June 2014‚ when its annual turnover was reported as R363m.

“In such cases penalties are usually determined as a percentage of affected turnover and affected turnover is usually that related to the market allocation arrangement in question‚” Dawn said on Monday.

On Sunday‚ the Commission issued a statement saying it welcomed the Tribunal’s finding that two manufacturers of regular high-density polyethylene (HDPE) pipes colluded between 2007 and 2012 to divide markets in SA.

In its decision‚ the Tribunal said it was apparent that Dawn undertook not to manufacture HDPE piping for as long as it or its associates held shares in Sangio. Dawn also undertook to procure all its HDPE piping from Sangio.

“Dawn has‚ after consulting its legal advisers‚ decided to appeal the Tribunal’s decision once the penalty has been determined‚” Dawn said.

“Once the appeal proceedings have been finalised‚ Dawn will advise shareholders of the Tribunal’s ruling in this regard.”

Source:BDproDate: 2017/03/28

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