Dumping of chicken hit group's performance, says RCL Foods CEO
RCL Foods saw earnings before interest, tax, depreciation and amortisation (ebitda) plunge 21.9% for the six months ended December 2016, with the related margin falling 2% to 6.9%.
Headline earnings per share plummeted 44.8% in the period.
“The single biggest impact on financial performance has been chicken [dumping],” CEO Miles Dally said on Thursday.
The group had laid off 1,355 workers — or half the workforce — at its large Hammarsdale operations in KwaZulu-Natal.
Dally said it was well known that the dumping of chicken products was taking place in South African markets.
This had mostly been blamed on the EU and had caused the government to implement a 13.9% safeguard duty that the industry considered to be substantially inadequate.
The group had initiated a number of strategies to ensure its remaining chicken operations would be more profitable and sustainable in future. This included reducing volumes.
Meanwhile, producers and workers were engaged in a series of talks with the government over what had been dubbed a “crisis in the industry”.
The company’s earnings before ebitda, excluding the chicken business, were up 8.4% to R974m, with a margin of 11% — up from a margin of 10.3% in the period in 2015.
This was largely due to a recovery in sugar profits and progress made in turning around the group’s bakeries in Gauteng.
However, the company had to impair R142m of plant and equipment related to the decision to reduce commodity chicken volumes.
RCL Foods also had to recognise a R52m provision for restructuring costs and fair value adjustments on biological assets associated with the reduction in chicken volumes.
Source:Business DayDate: 2017/02/24
Massmart surges ahead
tronger-than-expected fullyear earnings in the 12 months to end December 2016 saw the Massmart share price surge 10.28% on Thursday to close at a six-month high of R145.25.
Head-office cost-cutting and improved merchandising helped to counter the bottomline effect of muted South African consumer demand and the relatively strong rand, which dulled profit contribution from outside SA. Diluted headline earnings were up 13% to 630.9c per share.
Total sales were up 7.7% on the year to R91.3bn. Product inflation of 6.7% and an increase in stores meant like-for-like sales declined in real terms.
Trading profit, excluding foreign exchange movements and interest, rose 12% to R26bn.
In SA, food and liquor sales grew 11.7%, while general sales increased by only 1.5%.
“Very low discretionary spending by consumers” continued to affect general merchandise, the management said.
In the rest of Africa, where slightly more than 50% of the group’s sales are general merchandise and home improvement, total sales increased by 3.1% on a like-for-like basis in rand terms. In local currency terms, sales growth in Nigeria and Mozambique were strong.
Just under 10% of sales are generated outside SA. CEO Guy Hayward said over the next two years the group’s African footprint would be increased by 25%. “We’re hoping to add five stores a year, with each store contributing R200m a year.”
The biggest overall improvement came from Massdiscounters, which is Game and DionWired. The division reported a 55% trading profit surge to R364.3m on the back of a 5.3% increase in sales to R20.5bn.
Given the underlying product inflation was 4.8% the real increase in sales was 1.5%.
Profit surged as the management had put more of the right merchandise into Game stores and had tightened up on in-store and supply chain costs.
The introduction of a new SAP point-of-sales system towards the end of financial 2017 should help to sustain the margin improvement during the current financial year.
Sasfin analyst Alec Abraham said the results were better than he had expected. The investment in information technology and the implementation of the SAP system had generated strong returns for other retailers and should also help Massmart.
Masswarehouse, the largest division in terms of sales and profit, had a disappointing year with an 11% sales increase to R26.3bn and a 4.4% advance in trading profit to R1.2bn.
Massbuild’s sales were up 5.6% to R12.7bn and trading profit was up 2.7% to R712.6m.
Good cost control at Masscash converted a 7.5% sales increase (to R31.7bn ) into a 28% trading profit hike (to R284.7m).
Company Comment: page 21
PROFIT SURGED AS THE MANAGEMENT HAD PUT MORE OF THE RIGHT MERCHANDISE INTO GAME STORES
Source:Business DayDate: 2017/02/24
Distell eyes acquisitions
Acquisitions are key to fortifying growth prospects and duty-free access to China could be a game changer for the local wine market, liquor conglomerate Distell has indicated.
Boasting Remgro and the Public Investment Corporation (PIC) as major shareholders, Distell has a presence in the wine, cider, spirits and readyto-drink market. Its best- known brands are Savanna, Hunters Dry, Bernini, Nederburg, Durbanville Hills, 4th Street, JC Le Roux, Klipdrift, Viceroy, Amarula, Bisquit and Scottish Leader.
At an investment presentation covering the interim results to end-December on Thursday, CEO Richard Rushton noted that acquisitions were crucial to enhance existing markets and unlock new markets.
“There is a strong pipeline with interesting potential for diversification and step change. But we will be responsible in terms of what we are willing to pay for acquisitions.”
Opportune Investments CEO Chris Logan argued that duty- free access to China could be a great opportunity to market Distell’s wine.
Australia-based Treasury Wines was earning a 36% ebit (earnings before interest and tax) margin in China – facilitated by duty-free access into that country, he said.
South African wine producers were disadvantaged by the ad valorem tax on South African wines brought into China, Rushton said. But he conceded there would be a lot of opportunity to market premium local African wines. “Duty-free access to China would be a game changer for SA’s wine industry.”
Distell already has a foothold in China via a joint venture company which has been marketing Savanna cider since last December. Plans are to introduce ready-to-drink brand Bernini from April, while Distell plans to break ground on local production shortly.
Distell’s interim numbers showed the effects of tough consumer conditions and added competition. Revenue was up only 2.4% to R12.5bn on a sales volume decline of 3.1%. This is the first time since 2004 that Distell has reported a volume decline. Cider, Distell’s reliable profit spinner for more than two decades, was affected by trade down as disposable incomes come under pressure in SA.
Rushton also noted intensified competition from beer pricing as well as recent readyto-drink launches. Beer giant Heineken relaunched Strongbow cider into SA recently.
“We will defend our cider position in SA with innovation and investments.”
Looking ahead, Rushton said Distell was evaluating its operating model in a bid to reduce costs and enhance efficiencies as the company chased growth domestically and in selected global markets. “We will invest more resources in fewer brands and play to our strengths.
“We will also increase efficiency by building fewer brands in validated priority markets.”
Source:Business DayDate: 2017/02/24
Evander faces job cuts or closure
Pan African Resources has told its workforce at the Evander gold mine that the operation was under severe financial stress and could be shut if it did not cut jobs. It warned that 2,000 jobs were at risk if the mine closed.
In a section 189 notice issued in terms of the Labour Relations Act, Pan African said the mine had made losses for seven months and faced a two-month shutdown to refurbish its two shafts at a cost of R40m and the loss of R240m in revenue from halting gold production. It would spend another R60m thereafter at the mine and spend R50m a month on wages.
Pan African said the closure of the mine, coupled with the losses, meant “the mine is now financially unsustainable”.
“Consequently, unless the mine’s operating costs are materially reduced and the sustainability of its infrastructure is substantially enhanced … the mine will need to be placed on indefinite care and maintenance,” the company said.
Of the 2,435 employees at the mine, Pan African warned that the total underground workforce and some support services totalling 2,000 people could be affected if the mine was placed on care and maintenance. It did not indicate how many employees it needed to retrench.
The number of jobs at risk if Evander cannot become sustainable and is placed on care and maintenance
Source:Business DayDate: 2017/02/24
Barclays Africa wins R12.8bn fee
Barclays plc has pleasantly surprised the market by agreeing to pay a R12.8bn “divorce settlement” to subsidiary Barclays Africa, in which it is selling down its majority interest.
The payout is expected to significantly reduce the financial pressure on the African subsidiary caused by the separation.
Barclays Africa CEO Maria Ramos plans to spend some of the proceeds from the “divorce settlement” on rebranding the group and investing in its operations outside SA.
The two groups have agreed on a £765m (R12.8bn) separation fee to be paid by Barclays plc to allow Barclays Africa to cover the costs of investing in technology, rebranding, the termination of service level agreements between the two companies, and other separation expenses.
The largest share of the amount, R8.6bn, is set aside for technology, rebranding and related projects. “The agreement now is we have three years to change the brand,” Ramos said after the release of the group’s results for the year to December 2016. “We have to change the brand from Barclays.”
While the group’s retail bank in SA bears the red Absa logo, its other operations have borne Barclays plc’s blue logo for more than 100 years, even after the former Absa group took over the British banker’s African franchise and renamed it Barclays Africa in 2013.
Ramos does not yet know what the new name will be, but said the three-year grace period was granted so the group could proceed carefully with its rebranding. “The brand is very well established…. That is why we have to do [the rebranding] with care. We will ensure that customers will continue to get the same levels of service.
“It is important to note that they get this service from Barclays Africa and have done so for the past few years.”
Adrian Cloete, portfolio manager at PSG Wealth, said Barclays plc’s decision to pay the separation costs was a “positive surprise”.
“[It] does reduce most of the concerns around the financial impacts on Barclays Africa from the separation process,” he said.
“Barclays Africa expects that the financial contributions will neutralise the capital and cash- flow impacts of separation on the group over time. This is good news on a net basis, as the market was concerned about the financial impact from [the] separation and now Barclays Africa is receiving quite a large financial remedy for this.”
Jaap Meijer, head of equity research at Arqaam Capital, expected an overhang over the company’s shares as the shadow of Barclays’ sell-down of its 50.1%, to under 20%, loomed over the group. “The unwinding of [Barclays] plc is not helping growth so far, while potentially increasing costs.”
The African banking group saw its return on equity decline to 16.6% from 17% as higher bad debts, which rose 26% to R8.7bn, hit earnings.
Ramos said credit losses had occurred, mainly in retail banking, with corporate and investment banking seeing credit losses driven by singlename provisions for bad debts. Credit extensions inched up 2% to R720bn. “I think the weaker economic environment is reflected across the board in the retail space,” Ramos said.
“What we saw was a slowdown in loans and advances.”
Reserve Bank data show the banking sector’s credit extensions grew 5.59% in the year to December 2016, compared with 8.93% the year before.
Headline earnings rose 5% to R14.9bn, or 1,769c per share.
“Barclays Africa produced a solid set of results considering the very weak economic backdrop in SA during the [financial year],” Cloete said. “The headline earnings increased by 4.9% … which was very marginally below the consensus expectations of 6% and slightly below the [first half] increase of 7.4%.”
Source:Business DayDate: 2017/02/24
'Relief rally' boosts Discovery
Investors rushed to buy Discovery shares on Thursday, relieved that no imminent rights issue would dilute their stock and encouraged by the group’s emerging businesses, which finally looked near profitable.
Shares in Discovery rose as much as 7.92% to R127.99, despite the group missing earnings forecasts. The share price closed 4.35% higher at R124.70.
The share-price jump was partly a “relief rally”, with shareholders pleased that no rights issue was announced to raise capital for new business funding, said analysts.
Delivering the group’s results for the six months to December 2016, CEO Adrian Gore said the group had more than R1bn to fund new business growth.
Spend on new initiatives fell 36% to R244m, accounting for 7% of operating profit, which rose 13% to R3.4bn.
The share was further buoyed by news that operating losses in emerging businesses — Ping An Health, Discovery Insure and the Vitality Group — were substantially lower.
“We hope these businesses will be profitable in the next six months,” Gore said.
Discovery Insure would offer commercial insurance to small and medium-sized businesses, said CEO Anton Ossip. As with Discovery’s other businesses, the product would reward positive behaviour for sound risk management, he said.
Ping An Health posted an operating loss of R9m — an 88% improvement on the previous period. Profitability would depend on the quantum of growth and associated new business strain, Gore said.
“The Ping An Group’s intention is to build a considerable health business.” Ping An Health has about 1-million clients.
China’s private health insurance market was expected to be a 1-trillion yuan (145bn) industry by 2020, Gore said.
“Ping An Health, Discovery Insure and Vitality Group all look like they will turn the corner to profitability over the next few years…. These assets all have substantial potential in our estimation, particularly Ping An Health,” said Justin Floor, portfolio manager at Kagiso Asset Management.
Discovery would launch an umbrella fund in its Invest unit and expand into the UK investment market, said Gore.
It expected to launch its bank in 2018.
“Discovery’s impressive growth ambitions are cashhungry and I would expect ongoing scrutiny around the balance sheet, which is looking increasingly stretched,” commented Floor.
The groups’ embedded value was flat at R53.3bn, hurt by record low interest rates in the UK and the effect of the stronger rand on offshore earnings.
Low UK interest rates were the biggest risk facing the group, Gore said. If rates increased, Vitality UK would be significantly more profitable, he said.
Source:Business DayDate: 2017/02/24
Bidcorp open to acquisitive and organic growth opportunities
By Pericles Anetos
Food services group Bid Corporation (Bidcorp)‚ which was unbundled from industrial conglomerate Bidvest Group‚ grew its interim revenue 5% to R67.8bn‚ the company said on Thursday.
Net profit after tax grew 21% to R2bn from R1.5bn in the matching period.
Bidcorp indicated that it saw its future as a food service provider‚ as opposed to a logistics operator.
“Our financial position is strong‚ cash generation is expected to remain robust and we retain significant headroom to accommodate expansion opportunities‚ both acquisitive and organic‚” the company said in its results statement.
The group said that it remained alert to opportunities for growth through acquisitions to expand its geographic reach and product range as well as via larger acquisitions to enter new markets.
Bidcorp said that it made small bolt-on acquisitions in Australia‚ Brazil‚ Belgium‚ Italy and Fresh UK‚ which amounted to R495.8m during the period under review.
“Management remain firmly of the view that over the medium term‚ overall returns on our internationally diversified businesses will far outstrip the negative effects of global volatility‚” the group said.
Bidcorp said that overall the global food service industry remained positive.
Bidcorp declared an interim cash dividend of R2.50 per share.
Sibanye Gold returns R1.3bn to shareholders as platinum swells profit
By Allan Seccombe
Sibanye Gold‚ which has become a major platinum producer‚ reported a steep increase in annual profit and paid a handsome dividend as higher gold prices and the inclusion of platinum profits buoyed the company’s results.
Sibanye‚ which during 2016 added the whole of Aquarius Platinum and Anglo American Platinum’s Rustenburg mines to its portfolio‚ declared a total dividend of R1.45 per share for the year‚ returning R1.3bn to shareholders.
It declared a second-half dividend of 60c per share‚ equating to R560m‚ compared with a 90c final dividend the year before.
Sibanye reported a profit for the year to end-December of R3.3bn compared with R538m a year earlier.
Net debt in the group grew to R6.3bn from R1.3bn a year earlier as its gross debt shot up to R8bn from R1.8bn a year earlier‚ as a result of its aggressive growth in platinum.
The two standout weak performances in the year were the Cooke gold mines‚ which recorded a loss of R2bn‚ and the Rustenburg mines‚ which had a R649m loss for the two months — November and December — that Sibanye owned them.
The operating cost at the Rustenburg mines averaged R11‚485/oz of the four platinum group metals the mine produced during the two months and was “unsustainable and highlights the necessity and importance of realising the operating and cost synergies” that Sibanye wants to extract from combining the assets with those of Rustenburg.
Sibanye is undergoing a job-cutting process and restructuring of the assets.
Overall‚ the group had a record operating profit of R10.5bn‚ and headline earnings grew 269% to R2.5bn.
“The gold division benefited from a relatively high rand gold price for most of the year. Unfortunately margins towards the end of the year have shrunk considerably due to a substantially lower rand gold price‚” Sibanye CEO Neal Froneman said.
Sibanye realised R586‚319/kg for its gold sales during the year compared with R475‚508/kg the year before.
All-in sustaining costs grew to R450‚152/kg from R422‚472/kg the year before.
Gold production dipped slightly to 1.51-million ounces from 1.54-million ounces.
Sibanye closed its underperforming Cooke 4 mine during the year.
The average rand gold price fell by 9% in the second half of last year compared with the first half‚ but operating profit in the company’s gold division was still 60% higher at R10.16bn compared with the previous year‚ Froneman said.
Sibanye has in recent weeks warned that it is reviewing a number of its growth projects because of shrinking profit margins in the gold division‚ and that it could defer some of those projects.
The platinum division generated 238‚662oz of platinum during the year and made an operating profit of R376m.
Glencore returns to profit, capping turnaround
ZURICH - Mining giant Glencore on Thursday reported a swing back into profit, completing a dramatic turnaround driven by aggressive cost-cutting and helped by rising commodities prices.
The Switzerland-based company posted a 2016 profit of $1.4 billion (1.3 billion euros), compared to a staggering $5 billion loss the year prior.
When commodity prices nosedived in 2015, investors turned on Glencore amid concerns that the company's towering debt, which had hit $30 billion, could prove unsustainable with the value of its assets in decline.
Chief executive Ivan Glasenberg, seen as a maverick in the mining world, acted boldly to get debt under control.
He scrapped dividends, sold assets and reined in production in a campaign that trimmed debt to $15.5 billion, according to Thursday's results.
That strategy combined with "increasingly favourable fundamentals" in the commodities market has fuelled a much rosier outlook for Glencore's shareholders, Glasenberg said in a statement.
The company was weighing a special 2017 payout to reward investors who stuck with Glencore during darker days, Glasenberg said on a conference call, according to the Bloomberg news agency.
Shares were trading at 333.50 pence on the London exchange in mid-morning, a rise of 2.4 percent.
Mondi financial year underlying profit up 3% to EUR981m
By Staff Writer
Paper and pulp group Mondi reported on Thursday low single-digit growth in full-year underlying operating profit‚ restricted by maintenance closures at its Richards Bay mill and volatility in the foreign exchange market.
Lower average selling prices in paper packaging also weighed on the financial performance. Underlying profit was up 3% to €981m in the year to December‚ from a year ago‚ as revenue fell 2% to €6.62bn.
Underlying operating profit was reduced by €75m due to the maintenance closures. “Based on prevailing market prices‚ we estimate that the impact of planned maintenance closures on underlying operating profit in 2017 will be about €80m‚” the company said in a statement. Volatility in foreign exchange rates had a net negative effect on underlying operating of €31m
The weakening of a number of emerging market currencies‚ particularly the Russian rouble‚ Turkish lira‚ Polish zloty and Mexican peso‚ affected the translation of the profits of fibre packaging and saw Russian uncoated fine paper operations focus domestically.
Underlying operating profit was off 8% to €361m while that of fire packaging rose 3% to €123m. Underlying operating profit in consumer packaging rose 12% to €121m‚ while that of uncoated fine paper rose 25% to €264m.
The company declared a final dividend of €38.19 a share‚ bringing the total to 57c‚ which was up 10% on the prior comparable period.
Massmart FY headline earnings up 15.6% to R1.3bn
By Andries Mahlangu
Tight cost control helped Massmart fend off tough trading conditions in the year to end-December as it lifted its trading profit 11.9% to R2.6bn.
Africa’s second-largest retailer grew its headline earnings 15.6% to R1.3bn from the year-earlier period.
Total sales were up 7.7% to R91.3bn while comparable store sales rose 5.4%. Product inflation as at 6.7%.
Nineteen stores were opened and 10 closed‚ which resulted in a total of 412 stores at December 2016. Gross margin inched up to 19% from 18.9%.
Operating expenses were tightly controlled‚ increasing 7.7% over the previous year‚ and great expense control resulted in comparable expense growth of only 5.4%.
The group is split into four divisions:
• Masswarehouse‚ which houses Makro‚ grew sales 11%‚ outpacing product inflation of 6.5%. Excluding new stores‚ Masswarehouse grew sales 7.6%. Trading profit was up 4.4%.
• Masscash‚ whose brands include Cambridge Food and Jumbo Cash‚ grew sales 7.5%‚ while comparable sales rose 7.9%. Trading profit was up 28%.
• Massdiscounters‚ which houses Game and Dion Wired‚ grew sales 5.3% against product inflation of 4.8%. Excluding new stores‚ sales growth was 1.5%. Trading profit rose 54.8%.
• Massbuild grew sales 5.6% against production inflation of 4.7%. Comparable store growth was 1.7%. Trading update was up 2.7%.
The company declared a final dividend of 224.8c per share.
Discovery 1H undiluted HEPS up 12% to 314c
Discovery announced on Thursday that undiluted headline earnings per share (HEPS) for the six months to end-December had increased 12% to 314c from 280.6c in the year-earlier period.
New business was up 15% to R8.24bn‚ excluding the new closed schemes that Discovery Health took on. Normalised profit from operations increased 13% to R3.4bn.
Normalised operating profit rose 12% to R1.18bn at Discovery Health.
At Discovery Life‚ new business grew 9% to R1.05bn compared with the year-earlier period‚ largely driven by individual new business which grew by 10.2%.
At 10.21am Discovery was up 1.79% to R121.64.
Barclays in UK will pay billions towards cost of separation from Absa
By Robert Laing
UK bank Barclays has agreed to contribute R13bn to the cost of divorcing itself from Absa‚ the South African bank it married with much fanfare in 2005.
The announcement was made after both the UK principal and its JSE-listed subsidiary‚ Barclays Africa‚ released their 2016 financial results on Thursday morning.
Following its cut to 50.1% from 62.3% shareholding in May 2016‚ Barclays applied to the South African Reserve Bank to reduce its shareholding in Barclays Africa to less than half‚ Absa’s holding company said in a statement on Thursday.
The UK principal had agreed to pay a total of £765m to cover three expenses involved in the separation from its South African subsidiary.
Furthermore‚ Barclays will contribute 1.5% of Barclays Africa’s market capitalisation — which stood at about R134bn at Thursday’s share price of R158 — towards the establishment of a larger broad-based black economic empowerment scheme (B-BBEE).
Barclays Africa said it had already received £27.5m of the £765m in December.
Barclays’ contribution to rebranding (presumably back to Absa)‚ technology and other separation projects will be £515m.
The UK parent will contribute £195m to terminate agreements made when Barclays Africa acquired its “rest of Africa” operations in 2013.
A further £55m will be paid to cover separation-related expenses.
Implats falls into loss as costs outpace rising output and prices
By Allan Seccombe
Impala Platinum‚ the world’s second-largest producer of the metal‚ reported an interim loss‚ withheld its interim dividend payment and lowered its full-year production and refined metal forecasts.
Implats reported a R328m loss for the six months to end-December compared with a profit of R218m a year earlier.
This was despite revenue for the year increasing by 8% to R18.2bn on improved metal prices and higher production.
The cost of sales was‚ however‚ higher‚ rising to R18.5bn from R16.8bn the year before.
The reason for the increase in costs stemmed from operating costs rising by 5% to R11.5bn‚ which was below mining inflation of 5.8% at its South African and Zimbabwean mines combined. Implats paid R717m for metal purchased by its refining division.
“Given the severe impact of safety stoppages at Impala Rustenburg and the community disruptions at Marula in the first half of the financial year‚ the full-year production estimates for these operations have been revised to 650‚000 refined platinum ounces and 80‚000 platinum ounces in concentrate‚ respectively‚” Implats said.
Implats said at the end of its 2016 financial year it expected the Impala Rustenburg mines to produce up to 710‚000oz and Marula 90‚000oz for the 2017 financial year.
The Rustenburg mines had 58 safety stoppage notices issued at the operations during the six-month period‚ resulting in lost production of 25‚000oz of platinum and R570m in revenue.
The notices‚ called Section 54 notices and which are issued by the Department of Mineral Resources‚ “posed a significant challenge for the Rustenburg team”‚ Implats said‚ adding it was in talks with the department.
Four people were killed at the Rustenburg mines during the period.
Implats lost 39‚000oz of platinum as it repaired its fire-damaged 14 Shaft during the interim period and expected the mine to return to production in March this year.
BAT sells more cigarettes in 2017 driven by Rothmans’ brand appeal
By Robert Laing
Despite government efforts to curb smoking‚ British American Tobacco (BAT) increased the number of cigarettes it sold in 2016 slightly to 665-billion.
Though only 0.2% more than in 2015‚ BAT said it achieved this while the overall cigarette market suffered a 3% decline in volumes.
BAT shareholders will receive a final dividend of 118.1p‚ taking the total for 2016 to 169.4p‚ a 10% increase from the previous year.
But shareholders appeared to disagree with chairperson Richard Burrows’s comment that “the group delivered exceptional earnings‚ volume and market share growth”‚ by sending its share price down 1.6% to R801‚ after the results were released on Thursday morning.
The group’s overall revenue grew 12.6% to £14.75bn and operating profit 2.2% to £4.66bn.
In Australia — the country at the forefront of forcing cigarette companies to sell their products in plain packaging — BAT said its “market share returned to growth‚ driven by Rothmans”.
Rothmans appears to be the group’s best-performing brand‚ increasing volumes sold by 36.9% and market share 70 basis points. The result said this was driven by sales in Russia‚ Ukraine‚ Italy‚ Nigeria‚ Turkey and South Korea.
Dunhill’s overall market share was flat. Volume fell 3.3%‚ driven mainly by industry declines in Malaysia and Brazil‚ more than offsetting growth in South Korea‚ Romania and the continued growth in Indonesia.
Kent volume increased 1%‚ with market share up 10 basis points‚ driven by Chile‚ Turkey and Japan.
Lucky Strike grew market share‚ higher by 10 basis points‚ and volume‚ up 13.5%‚ with growth in Indonesia‚ Colombia‚ Egypt‚ France‚ Germany and Croatia‚ more than offsetting lower volume in Argentina and Russia.
Pall Mall market share grew 10 basis points‚ with volume marginally higher than in the prior year as growth in Venezuela‚ Poland‚ Mexico and Romania more than offset reductions in Pakistan and the migration to Rothmans in Italy.
Maria Ramos mum on imminent announcement from Absa's UK parent
By Robert Laing
Will Barclays Africa Group soon be Absa again?
When the group released its results for the year to end-December on Thursday morning‚ it said its UK parent Barclays would be making an announcement later in the day.
Barclays reduced its stake in its South African subsidiary to 50.1% in May by selling 12.2% of its shares for R13bn‚ and has said it intends divesting of its remaining stake.
During a conference call‚ CEO Maria Ramos said the group had completed a three-year plan to transform itself into a standalone pan-African bank. She declined to comment on the Barclays announcement before its release.
The contribution from the rest of Africa grew to 23% of the group’s R72.4bn net income‚ up from 21% in the year-earlier period. Barclays Africa reported net income growth of 7.7% and headline earnings growth of 5% to R15bn.
Barclays Africa declared a final dividend of R5.70‚ which‚ when added to its R4.60 interim dividend‚ took the total for the year to R10.30‚ a 3% increase on the previous year’s R10.
The group splits itself into three segments: retail and business banking (RBB)‚ which accounts for 72% of net income and 62% of headline earnings; corporate investment baking (CIB)‚ which contributes 22% to income and 34% to earnings; and wealth‚ investment management and insurance (WIMI)‚ which contributes 7% to group income and 9% to earnings.
Somewhat alarming were Barclays Africa’s head office costs‚ which grew 17% to R1.1bn‚ meaning overheads outpaced the growth of its three income generating divisions.
Financial director Jason Quinn said the rise in head office costs was due to investment in technology‚ adding that the competitive advantage the group would gain from its new data centres should pay off in time.
Ramos said stemming losses in its South African retail and business banking division was a key component of the three-year plan‚ and the group had achieved this. It had added 2.5-million customers since 2013.
The segmental breakdown in the results showed the RBB division grew income 6% to R52bn‚ but its contribution to headline earnings was down 3% to R9bn.
The group’s best performer was CIB‚ which grew income 17% to R16bn and headline earnings 27.5% to R5bn.
WIMI’s income contribution remained flat at R5.2bn and its contribution to headline earnings declined 4% to less than R1.4bn.
The group’s total assets declined 4% to R1.1-trillion over the year.
Credit impairments were up 26% to R8.8bn‚ resulting in a 1.08% credit loss ratio from 0.92%. Ramos said this had been expected in this part of the credit cycle.
Regarding the Competition Commission’s investigation into collusive behaviour by foreign exchange traders at numerous banks‚ Barclays Africa said in the results statement it had brought the conduct of two of its traders to the attention of the commission in applying for leniency.
Capco is aiming at consistent returns
Capital & Counties (Capco) is well-positioned to provide consistent returns for shareholders over the next three years, regardless of uncertainty about Brexit, says its management.
CEO Ian Hawksworth, speaking after the release of financial results for the year to December on Wednesday, said “despite macroeconomic uncertainty and challenging market conditions, Capco’s strategy remains clear and focused”.
“London is an outstanding global city and we have two of its best estates.
“Capco’s strong balance sheet and unique assets are well placed for management to create and deliver long-term value for shareholders,” he said.
The owner of two of London’s most iconic assets, Earls Court and Covent Garden, was one of the biggest losers in 2016 after the referendum vote in favour of the UK leaving the EU.
It saw its share price collapse 51.7%, from R102.50 at the end of 2015, to R49.50 at the end of 2016. The share price increased more than 2% in mid-afternoon trading on Wednesday It was trading at R49.85 at 2.30pm.
Like-for-like, the total property value of Capco’s assets fell 4.4%, to £3.7bn in the period.
This was largely due to devaluation in residential properties in London, which affected Earls Court. Capco’s Covent Garden retail centre performed well during the year.
The group proposed a final dividend for the 2016 financial year of 1p per share providing a full-year dividend of 1.5p per share. This meant the group matched 2015’s dividend.
“Capco has made significant progress at its two central London estates during 2016.
“Covent Garden has introduced high-quality retailers and restaurants, resulting in a record year of leasing transactions, producing an uplift in value of 6% to £2.3bn and an increase in estimated rental value of 8%,” said Hawksworth.
“At Earls Court, the first phase of demolition is now complete, de-risking the site and preparing the land for future development. Weakened sentiment in the residential market, following changes to stamp duty and political uncertainty, particularly in the first half of 2016, led to a valuation decline at Earls Court Properties of 20% to £1.1bn. As a result, Epra [European Public Real Estate Association] net asset value declined by 6% to 340p per share,” Hawksworth said.
Evan Robins, listed property manager of Old Mutual Investment Group’s MacroSolutions boutique, said Capco’s results were impressive.
“The results were notably better than the market and [what] we expected. Covent Gardens continued to shine and the Earls Court valuation was more forgiving than we anticipated,” Robins said.
Hawksworth said that Capco’s residential properties had started 2017 well after a difficult 2016. “The first residents have moved into Lillie Square and additional units will be released over the coming months now that the first release of phase two is predominantly sold.
“Land enablement will continue at Earls Court,” he said.
Source:Business DayDate: 2017/02/23
Lower sales hit Transpaco results
hares in plastics and packaging group Transpaco fell 3.33% in Wednesday trading on the back of the company’s decline in halfyear earnings.
Transpaco, which makes, recycles and distributes plastic and paper packaging, said its headline earnings per share for the six months to December fell 7% to 117.9c.
Turnover also declined to R903.6m from R912.5m.
Group margins remained under pressure from lowerthan-expected sales volumes and macroeconomic factors, said CEO Phil Abelheim.
He said management “kept expenses well-contained and controlled working capital to ensure a continued strong balance sheet.”
Abelheim said that despite falling volumes, all operations made a positive contribution to group operating profits, with some units outperforming the prior year.
The group declared an interim dividend of 48c, down from 52c the previous period.
Source:Business DayDate: 2017/02/23
Pan African reports record dividend as profit increases
A tough second half awaits Pan African Resources in its 2017 financial year after the gold miner reported an interim dividend and higher profits that masked operational difficulties.
The overriding task facing management in the six months to end-June will be the R40m refurbishment of two shafts at its Evander mine that will entail the underground workings to be shut for up to two months.
The mine will produce 14,000oz less of gold in the year and drag the company’s annual output down to 181,000oz.
Pan African wants to get the all-in sustaining cost at Evander to $1,100/oz after they ballooned to $1,769/oz in the interim period due to lower output due to safety stoppages and difficulties with its ore hoisting shaft.
Pan African must secure R740m for its R1.74bn Elikhulu tailings retreatment project at Evander, which will add 56,000oz a year of low-cost gold to the company.
The firm has secured R1bn in funding for the project that it hopes will begin producing gold by the end of 2018.
Pan African has two other tailings operations at its Barberton gold mine and Evander and they “shot the lights out” in the half-year to end-December, CEO Cobus Loots said.
“South African mining companies have for many years traded at a discount to their international peers and until we resolve uncertainty around the regulatory regime, I believe this will continue to be the case.
“The only way Pan African can reduce this discount is to diversify outside the country,” he said at a results presentation.
Pan African, which mines gold, coal and extracts platinum group metals from chrome tailings, reported a profit of R250m for the six months to endDecember, a 10% increase compared with a year earlier. It reported a R300m dividend payment, its largest yet, equating to R0.1544 per share compared with R0.1147 before.
“Given the strength of operational cash generation and the available headroom in the facilities, we continue not to be overly concerned about the balance sheet for the moment,” said Yuen Low from Shore Capital.
Source:Business DayDate: 2017/02/23
Day clinic group slides into loss
Private day clinics group Advanced Health, which operates in SA and Australia, swung into a loss in the six months to December 2016, despite a 45% increase in revenue.
The group reported a diluted headline loss per share of 10.52c compared with headline earnings per share of 0.51c in the same period in the previous year. The company said many of its recently opened hospitals would begin to show profitability only in the next three years and the headline loss for the year was due to a rapid rise in costs as the company brought new hospitals online.
“Key performance indicators aptly reflect the strong growth in new facilities, which require up to 36 months to achieve profitability. Eight South African facilities are still in ramp-up, as are the new and merged facilities in Australia. Revenue and patient numbers have increased in both operating regions and in SA steps have been taken to expedite the achievement of capacity and profit,” said CEO Carl Grillenberger.
Australian operations contributed 74% of income in the first six months of the year, compared with 86% for the six months to December 2015.
The company intends for its South African and Australian operations eventually to contribute 50% each to its total annual income.
Revenue increased 45% to R149.7m from R103.6m.
In January, PresMed Australia, in which Advanced Health holds a 94.65% interest, opened the largest ophthalmic and ENT (ear, nose, throat) day hospital in Australia, the Chatswood Private Hospital. It merged its Sydney ENT day surgery centre with an ophthalmic surgery centre into the Chatswood hospital.
“Locally, the business achieved its first growth objective, namely to manage 10-day hospitals. This first phase of growth provides us with a base for further growth.
“In the next 12 months, the focus will remain on increasing utilisation and the marketing team has been strengthened,” said Grillenberger.
Source:Business DayDate: 2017/02/23