News


Tiger Brands reports interim HEPS up 7% to R10.36

Fast moving consumer goods group Tiger Brands on Thursday reported a 7% increase in interim headline earnings per share (HEPS) to R10.36 for the period to end-March.


The company declared a dividend of R3.78 per share‚ an increase of 4% from the previously comparable period.


Group operating profit was up 10% to R2.2bn.


The company said a strong domestic performance


was partially diluted by “tough trading conditions in exports” and its international business‚ coupled with a “decline in income from associates”.


Group turnover from continuing operations increased 7% to R16.4bn.


The company overall volumes declined 3% attributing its growth in turnover to‚ in part‚ an increase in prices.


Source:BDproDate: 2017/05/25

TFG to buy Australian menswear group

By Robert Laing


TFG‚ the JSE-listed holding company of fashion chain Foshini‚ is acquiring Australian menswear group Retail Apparel Group (RAG) for up to R3bn.


TFG said it would pay cash‚ and the agreed price was seven times RAG’s audited normalised earnings before interest‚ tax‚ depreciation and amortisation (ebitda) for the year to end-June 2017‚ up to a maximum of A$302.5m.


The South African retailer is buying 100% of the Australian chain from private equity group Navis Capital and RAG’s founder Stephen Leibowitz along with other members of management.


RAG operates 400 stores trading under five brands: Tarocash‚ yd‚ Connor‚ Johnny Bigg and Rockwear.


“TFG believes that the product and value offerings of RAG are well aligned with the current brand and value offering of TFG. In conjunction with TFG’s recent value-enhancing acquisitions of Phase Eight and Whistles‚ the acquisition will further diversify its international expansion into its chosen geographies. RAG’s strong store and online platform is expected to catalyse the expansion of TFG’s brands into Australia‚” the company said.


“We are excited to be able to realise our ambition to expand into Australasia through the very successful RAG business and its well-established and experienced management team‚” TFG CEO Doug Murray said.


Source:BDproDate: 2017/05/25

Esor reports increase in final order book but reports losses on several projects

By Staff Writer


Civil engineering and construction group Esor has reported revenue of R1.4bn to end-February 2017.


In it’s final results released on Thursday‚ it reported an increase in its order book to R1.54bn from R1.4bn at the end of its first half.


The company said profitability had been “severely impacted” by losses of R102m incurred on its Northern Aqueduct project‚ impairment of goodwill of R50m and the write down/fair value adjustment of R51m of the Franki Africa contingent consideration following losses


incurred by Franki Africa.


“The Northern Aqueduct remains an onerous contract to complete given the challenges of addressing the legacy quality issues‚ which remain the key factor to getting off site.


Initially set for completion in August 2015 the project was delayed due to quality issues and rain and community unrest.


It said the delays had resulted in a total loss of R147.1m over the past two financial years.


It now expects the project to be completed in December 2017.


“East Coast revenue was further hard hit by three delayed contract awards‚ with revenue


losses amounting to R100m. We had already reallocated resources in preparation for


contract starts‚ which were then delayed‚” it said.


Source:BDproDate: 2017/05/25

Schroder REIT reports interim profit of EUR4.2m to end-March

By Staff Writer


Schroder REIT which owns property in Western Europe has reported an interim profit of EUR4.2m for the period ended March 31.


The company said on Thursday net asset value provided a total return on 2.5% on the previous period‚ which ended on September 30 2016.


During the period the company bought an office building in Paris for EUR30m. The investment is expected to yield income of 9.5%.


The company said its portfolio was now valued at 6.7% above its purchase price.


It declared a dividend of 2.2 euro cents per share‚ which represented a 29% increase on the previous half-year period.


Nonexecutive board chairman Sir Julian Berney said it had been a period “of good progress for the company‚ against a background of political and economic uncertainty”. He said the company was targeting a dividend yield of 5.5%.


The company said its portfolio was set to benefit “from structural trends of urbanisation‚ demographics‚ infrastructure improvements and economic recovery in Europe”‚ adding that 100% of its portfolio was “located in winning cities and regions”.


Source:BDproDate: 2017/05/25

IDC gives Renergen loan for natural gas project in Free State

Junior energy company Renergen has secured an eight-year, R218m loan from the Industrial Development Corporation (IDC) to help fund a 107km pipeline and associated installations for its Tetra4 natural gas project near Virginia in the Free State.


The IDC’s decision to grant the loan was in line with its strategy of supporting gas as a cleaner energy source, said Hilton Lazarus, the IDC’s head of base and speciality chemicals.


Renergen CEO Stefano Marani said on Wednesday that the company would decide in due course whether the equity component of the loan would take the form of mezzanine capital or a share issue. It would depend on what was in the best interests of shareholders.


Lazarus said the IDC would consider taking shares in Renergen in future.


Conditions to the loan include completion of an environmental impact assessment, a final review of the geology and an equity contribution from Renergen.


The environmental impact assessment had been completed without objections and was waiting for a final decision from the regulators, said Marani.


Lazarus said the Tetra4 project was situated in an undeveloped area and its development would encourage job creation and local entrepreneurship. The IDC was keen to promote greater gas use in industries such as power-generation.


Marani said gas from Tetra4 was classified as a renewable resource because it was generated as methane from bacterial consumption of carbonaceous rock deep underground.


Construction of the pipeline would begin before the end of 2017 if all regulatory approvals were received and it should be in operation before the end of June 2018.


The pipeline would be 2m underground, below farmland. There were no plans at this stage to extend the pipeline to industrial and municipal customers in the area, Marani said.


Renergen's share price was unchanged on Wednesday at R10, which was well below the R77 a share valuation of the 100billion cubic feet of proven and probable gas reflected in its latest reserves and resources statement. The company will publish its year-end financial report before the end of May.


mathewsc@fm.co.za


Source:Business DayDate: 2017/05/25

Vukile eyes UK and Spain deals

Vukile Property Fund has a R1.5bn war chest that it intends to use for offshore projects in the UK and Spain.


The group, which reported 7.1% growth in its dividend per share for the year to March, has plans to invest more intensively in Spain, one of Europe’s best performing economies.


CEO Laurence Rapp said at the release of the results for the year to March that the company had positioned itself as a reliable income payer that was defensive in nature for investors.


“Vukile has successfully transformed into a high-quality, low-risk retail real estate investment trust. It has also established an excellent platform for more international investment. As we launch our next strategic phase with exciting new horizons, Vukile expects to deliver growth in dividends of between 7% and 8% in the coming year,” he said.


Vukile purchased 86.89% of the shares in Castellana, an unlisted Spanish real estate investment trust, for R193m in December 2016. It also invested a further £10.7m in UK-focused Atlantic Leaf, growing its stake in the group to 29.6%.


Stanlib head of listed property funds Keillen Ndlovu said Spain’s real estate markets were performing well due to an improving economy and booming tourism sector.


Rapp said the decision to diversify offshore looked set to benefit the group given SA’s underperforming economy.


andersona@businesslive.co.za


Source:Business DayDate: 2017/05/25

Lewis opts for share buyback

truggling furniture and household goods retailer Lewis Group will take advantage of poor sentiment for its stockby embarking on a share buyback exercise.


Speaking after the release of results for the year to March on Wednesday, CEO Johan Enslin said the company was only lightly geared and that Lewis’ shares were trading at a substantial discount to net asset value (NAV).


Lewis, which struggled to maintain operating margins in the past financial year, has slashed its gearing from 25.5% to just 2.9%.


An investor presentation document shows Lewis aims to have no gearing in the financial year ahead although the medium-term target still pencils in gearing of less than 25%.


The company’s NAV was reflected at R61.33 per share, meaning the share price is offering a 45% discount.


Mark Hodgson, an analyst at Avior Capital Markets, said retail stocks traditionally traded at substantial premiums to NAV, but added that Lewis was not a typical retailer with its strong financial services offering.


“Lewis can – at this stage – only buy back 3% of its issued shares. But directors could ask permission to increase this at the annual meeting in August.”


Lewis reported revenue down 3.3% at R5.6bn with Enslin saying that the company’s customer base was adversely affected by the affordability assessment regulations, high levels of unemployment and the protracted drought hurting the rural economy. Merchandise sales, which increased slightly in the first half, slowed in the second half, ending the financial year 2% lower. The company’s like-for-like merchandise sales dropped 9%.


The gross profit margin expanded by 360 basis points to 41.6%, thanks to more competitive procurement of locally sourced product, tight stock control and an increased sales contribution from the higher margin furniture category.


Furniture accounted for 56.3% of total sales compared with 54.4% the previous year.


But Lewis’s operating margin was down to 10% from 14%.


Margins at Lewis Stores fell from 15.3% to 10.3%, while Best and Home Electronic crimped from 18% to15.3%.


There was some good news in that Beares moved from a unprofitable position to operate off a margin of 4.1%. Enslin hoped that the margin would continue to show improvement in the next few years.


Overall, Lewis — according to its investor presentation — is targeting a medium-term operating margin of 12%-15%.


Enslin confirmed that there would probably be store closures, especially in rural areas, in the next financial year.


“We won’t close stores but look at leases when they come up for renewal. About 150 leases come up for renewal this year, and about 15 are considered marginal. If trading does not improve we will close them.”


Lewis paid a final dividend of 100c, bring the total payout for the year to 200c. This is half of the payout of 517c per share made the previous year.


Enslin stressed that the company remained strongly cash generative with cash generated from operations coming in at more than R1.1bn.


Cash generated from operating and investing activities was used to repay borrowings of R1bn and to fund dividend payments of R357m, he said.


At financial year-end Lewis’s cash and cash equivalents topped R789m.


Looking ahead, Enslin said he believed trading conditions would not improve in the short term. Management would remain focused on tight expense control, improving collections productivity, driving sales growth and sourcing innovative merchandise ranges that appealed to the company’s target market.


hasenfussm@fm.co.za


Source:Business DayDate: 2017/05/25

Steel maker closes R4.5bn loan facility

ArcelorMittal SA has closed a revolving R4.5bn structured commodity-trade finance facility over 36 months to finance working capital, as part of its balance sheet restructuring.


The announcement came after the group’s annual general meeting in Joburg on Wednesday. SA’s largest steel producer said the facility had been signed between itself and subsidiary Saldanha Steel, and Deutsche Bank, Absa and other lenders.


The amount is R1bn more than the R3.5bn it said in April it would borrow as part of a new capital-raising plan. But it is not part of a recent R4.5bn rights issue that had lowered debt considerably. The group said the facility was increased to R4.5bn as it was oversubscribed. The interest rate was confidential.


“We previously advised our shareholders that ArcelorMittal SA was exploring options to strengthen our balance sheet,” CEO Wim de Klerk said on Wednesday. “The facility ensures that the company is appropriately funded.”


Like many steel producers globally, ArcelorMittal SA has been hit by cheap Chinese imports and rising costs. Apart from 10% tariffs imposed on various imported steel products, De Klerk said he expected a further safeguard tariff of 12% to be implemented on hot-rolled coil products by mid-year.


Trade and Industry Minister Rob Davies — announcing R1bn worth of agro-processing incentives during his budget vote address in Parliament this week — also said Economic Development Minister Ebrahim Patel would announce further incentives for the downstream steel industry on Thursday.


allixm@bdfm.co.za


Source:Business DayDate: 2017/05/25

Tsogo Sun falters in Gauteng

Gaming and leisure giant Tsogo Sun, which owns three casinos in the competitive Gauteng province, is dealing well with the opening of rival Sun International’s new Time Square casino in Menlyn near Pretoria.


Time Square, which opened in April, is the second-largest casino in SA and was expected to markedly shuffle casinomarket shares in Gauteng.


Speaking at the release of the year to March results on Wednesday, Tsogo CEO Marcel von Aulock said the company’s Gauteng casinos — comprising Montecasino, Gold Reef City and Silverstar — had felt the effect of the Time Square opening.


“But it’s been less than we anticipated. The initial opening is always busy and then things tend to stabilise.”


The company’s Gauteng casinos were expected to take a R200m hit in the new financial year, he said. “But April was a tough month for the industry… so it’s difficult to know whether the revenue loss was caused by trading conditions or the opening of Time Square.”


Dirk van Vlaanderen, associate portfolio manager at Kagiso Asset Management, said it was too early to quantify the effect that the opening of the new Menlyn casino would have on the existing Gauteng casinos. He said a revenue loss of R200m would represent only around 4% of Tsogo’s Gauteng-based casino revenues.


Tosgo’s individual casino performances, which ranged from a 7% best increase and 4% worst fall in revenue, reflected the prevailing tough trading conditions in which consumer discretionary spending has been curbed markedly.


Total revenue for Tsogo’s gaming division increased 3% to R9.1bn with gaming win growth only 2% to almost R7.5bn.


The Gauteng casinos gaming win rose 2% to almost R4bn.


Montecasino — the biggest casino property in Tsogo’s portfolio — increased revenue 1% to almost R2.7bn with earnings before interest, tax, depreciation, amortisation and rental (ebitdar) up marginally at about R1.2bn. The ebitdar margin was 44.4%, only slightly down from last year’s 44.7%.


Gold Reef City increased revenues and ebitdar 5% to R1.45bn and R549m respectively, while Silverstar saw static revenues at R735m and ebitdar dropping 2% to R248m.


Tsogo’s SunCoast casino in Durban performed solidly with revenue and ebitdar up 2% to more than R1.7bn and R791m respectively. SunCoast’s ebitdar margin of 46.8% was the highest in the casino portfolio.


Von Aulock said a weak economy in SA and many of the commodity-focused countries in which Tsogo operated meant trading was expected to remain under pressure. “Our gaming and hotel focus leave us highly geared towards both the South African consumer and corporate markets. However, the high level of operational gearing presents significant growth potential to the group should these sectors of the economy improve in the future.”


hasenfussm@fm.co.za


Source:Business DayDate: 2017/05/25

SA and Namibia lift Mediclinic revenue

Private healthcare group Mediclinic reported growth in their southern African operations for the year to March, but underperformed in the Middle East.


Mediclinic is the third-largest hospital group in the country. It operates 49 hospitals and two day clinics in SA and has three hospitals in Namibia and more than 8,000 inpatient beds.


Southern African revenue grew 7% to R14.3m, accounting for 28% of group revenue, which was 30% higher at £2,749m.


The hospital group’s operating platforms are in SA and Namibia, Switzerland and the United Arab Emirates.


CEO Danie Meintjes said the group experienced growing demand for quality healthcare services, underpinned by an ageing population, a growing disease burden and technological innovation. Its southern African revenue increase was driven by a 0.8% rise in bed days sold and a 5.8% increment in the average revenue per bed day. The hospital group had a 0.6% boost in admissions and patients stayed in hospitals longer, increasing the average stay duration by 0.2%.


Gryphon Asset Management portfolio manager Reuben Beelders said while the firm generated a good profit in southern Africa, it was strugglingin the Middle East, which accounted for 24% of revenue.


Meintjies said business and operational challenges affected volumes in Abu Dhabi, including the introduction of a 20% copayment system in July 2016, five months after Mediclinic acquired Al Noor Hospital Group for about £1.5bn.


It reported a 19% drop in pro forma revenue in Abu Dhabi where inpatient admissions fell 4.8% while outpatient numbers fell 9.7%. Subsequently, bed days fell 6.2% as a result of the copayment system.


“I believe management have their work cut out for them in the Middle East. The low oil price is going to place growth under pressure,” said Beelders.


gumedem@businesslive.co.za


Source:Business DayDate: 2017/05/25

Asset injection by gaming giant invigorates Hospitality’s performance

Hospitality Property Fund (HPF) has undergone a substantial transformation in the past nine months, with Tsogo Sun taking over the group and injecting an assortment of 10 hotels into it. The company is now a bellwether for SA’s hotels and hospitality sector.


The group declared a distribution of 44.92c per share for the three months to the end of March 2017, resulting in a total distribution for the nine months to March of 101.01c per share, financial results showed on Wednesday. Distributable earnings rose 56.8% to R345m compared with the nine months to March 31 2016.


HPF now owns 24 properties from 15 on June 30 2016. It has a market capitalisation of about R4.7bn and is the only property company listed in SA that is focused on hospitality.


Last week, Tsogo Sun said it had agreed to sell 29 more hotels to HPF for R3.6bn.


Since Tsogo took over HPF in 2016 and injected a slew of assets, the company’s fortunes have improved substantially.


The fund’s hotel properties are predominantly located in the Western Cape and Gauteng, and these properties generate more than 75% of the fund’s rental income.


The Western Cape properties, mostly in central Cape Town, performed well during the reporting period. Room occupancy grew 4.8% to 71.1% while the average daily rate grew 7.4% to R1,751 and resulted in revenue per available room growth of 12.6% to R1,245.


Occupancy in Gauteng properties increased 1.9% to 60.4%. The average daily rate grew 4%, resulting in revenue per available room growth of 6%.


Tsogo CEO Marcel von Aulock said HPF’s name would change. After Tsogo became a majority shareholder, the board proposed to change the name from Hospitality Property Fund to Tsogo Sun Property Fund.


andersona@businesslive.co.za


Source:Business DayDate: 2017/05/25

Transaction Capital interim earnings jump

Transaction Capital reported double-digit growth in interim headline earnings as the weak economy yielded opportunities to buy distressed debtors’ books, while demand for finance from minibus taxi operators supported robust loan growth.


For the six months to March, the financial services group grew earnings 21% to R254m. Transaction Capital Risk Services grew core earnings 33% to R93m. It bought 13 debtors’ books for R210m in the period — the same number of books it had bought for the year to September 2016.


A difficult consumer environment made it more difficult for banks and retailers to collect on nonperforming loans, said group CEO David Hurwitz. Transaction Capital bought these books, which were often already heavily provided for or written off, for less than 10c in the rand, Hurwitz said.


It collected on average 2.5 times that amount, or 25c in the rand, from consumers by using analytics about consumers’ propensity to pay, the right time to call and the right day to pay, he said. With data on 94% of SA’s 9.8-million nonperforming borrowers, Transaction Capital planned to next provide claimsrecovery services to insurance companies. It estimated there was a book of R8bn-R10bn in claims from insurance companies against uninsured thirdparty drivers. It would use intellectual property from Recoveries Corporation Group, a business it bought in Australia in 2016 that collected for insurance companies, to launch this business in SA.


This would reduce Transaction Capital’s reliance on SA, said Keith McLachlan, fund manager at Alpha Wealth. While many South African companies had come unstuck in Australia, Transaction Capital was “sticking to its knitting”, which was positive, he said.


SA Taxi, meanwhile, grew gross loans and advances 16% to R7.8bn, indicating high usage of minibus taxis among South African commuters and the defensive positioning of the business in a weak economy.


This loan growth had come while banks were growing loans in low-single digits, said Liam Hechter, an analyst at Anchor Capital.


SA Taxi provided an inflationary hedge, since rand weakness increased the value of the loan book, due to the increased cost of imported parts, said Hechter.


SA Taxi’s nonperforming loans ratio improved from 18% in the previous comparable period to 17.2%, while its credit loss ratio improved to 3.3% from 3.4% in 2016.


The business planned to offer customers by the end of 2017 credit life insurance that it had earlier discontinued, but for which there had since been demand, Hurwitz said. It would also offer extended-warranty products to these customers.


Transaction Capital’s earnings growth over time had come from the management’s ability to allocate capital effectively into its businesses, whether for organic or acquisitive growth, at very high marginal returns, said McLachlan. “[The stock] has positively rerated over the last couple of years.


“My sense is that the vast majority of the upward rerating of the stock is over and further share-price growth will come from earnings growth,” he said.


Hechter estimated earnings would grow 16%-18% a year for the next three years. “Growth prospects are largely baked into the stock’s current valuation,” Hechter said.


Transaction Capital declared an interim dividend of 15c per share, a 25% increase on the previous period.


ziadyh@businesslive.co.za


MANY COMPANIES HAD COME UNSTUCK IN AUSTRALIA, BUT TRANSACTION WAS STICKING TO ITS KNITTING


Source:Business DayDate: 2017/05/25

Steadfast Arrowhead sets sights on double-digit dividend growth

By Alistair Anderson


Arrowhead Properties is likely to reach about double-digit dividend income growth in the next two years‚ as long as political and economic shocks do not persist in SA.


This is according to Imraan Suleman the diversified company’s chief financial officer.


Arrowhead holds 60% of Indluplace Properties‚ its JSE-listed residential subsidiary with a market capitalisation of R2.4bn‚ and 55% of Gemgrow Properties.


Gemgrow is a high-yield‚ high-growth fund with a market capitalisation of R3.3bn. Arrowhead also owns 19% of Rebosis Property Fund as well as an 11% interest in Dipula Income Fund.


The group managed to grow its dividend per share by 6.01% in the six months to March‚ in line with market expectations. It declared a dividend of 43.24c per share.


Suleman said the company had managed to perform in a tough market. Revenue rose to R959m‚ from R743m in the previous comparable period.


Arrowhead’s portfolio of 51 retail‚ industrial and office properties is valued at R5.6bn‚ with an average value per property of R111m as at March 31‚ more than double the average of R49m at the financial year ended September 2016.


The substantial growth in revenue was due to the Gemgrow transaction concluded during the period under review as well as annual escalations to existing leases.


“Acquisition opportunities have been limited due to the current macroeconomic environment‚” Suleman said. “The economic conditions also impacted the ability to implement acquisitions due to a misalignment of pricing expectations between vendors and acquirers.”


Suleman added: “We have‚ however‚ found that the gap between vendors and acquirers has recently been narrowing‚ resulting in funding costs moving in the right direction. This has resulted in a potential acquisition pipeline particularly in Indluplace and Gemgrow.”


Lungile Luvuno‚ property analyst at Old Mutual’s MacroSolutions boutique‚ said Arrowhead had achieved steady results‚ which were in keeping with expectations‚ and guided 6%-8% dividend per share growth. However‚ “the like-for-like growth was slightly disappointing at 3.28%‚” Luvuno said.


Arrowhead had warned investors that a number of tenants had left its office building at 1 Sturdee Avenue in Rosebank‚ Johannesburg. It decided to move its head office‚ along with Gemgrow and Indluplace’s‚ to the building. The company was also set to sign up a new tenant to take up about 6‚000m² of 1 Sturdee in the next few weeks.


“Arrowhead is well-diversified by sector and province‚ which we are optimistic will work to their advantage. We see drivers for growth‚” Luvuno said.


Source:BDproDate: 2017/05/25

Glencore questioned over fatalities‚ unions and environment

By Charlotte Mathews


Global commodities miner and marketer Glencore fielded a number of questions from shareholders‚ trade unionists and environmentalists at its AGM in Switzerland on Wednesday‚ including about the 16 fatalities at its operations last year.


Chairman Anthony Hayward opened the meeting with condolences to the families of the employees who died‚ which included 10 people in two separate incidents in the Democratic Republic of Congo and Zambia. He said management had visited the sites and families to try to understand the causes and apply the lessons learned across the operations.


Local corporate activist Theo Botha asked what the causes of the 16 fatalities were and whether anyone was held to account. Peter Coates‚ chair of the health and safety committee‚ said management was held accountable and some lessons from successful‚ mature businesses‚ such as ways to identify potentially fatal hazards‚ were introduced to other operations. The next step would be to introduce behavioural change in developing country operations.


CEO Ivan Glasenberg said Glencore operated in countries such as Kazakhstan‚ the DRC and Zambia where safety was not a way of life and it was working towards a target of zero harm in those countries. So far this year‚ there have been two fatalities across the global operations.


Botha also questioned the compensation made to families. Glasenberg said the company took care of the families of the bereaved to ensure their income was maintained despite the death of their breadwinner. But there was no global compensation norm. Compensation to families is site-specific.


Hayward also had to defend the company’s coal-demand projections from criticisms by climate change activists and was questioned by the representative of a global mineworkers trade union about the group’s current labour disputes in countries such as Australia‚ Canada and Peru‚ on issues such as wages and unfair dismissals.


Hayward said many Glencore employees chose not to join trades unions so there would be no global negotiations. It would continue to follow a site-by-site approach.


Glasenberg said China was moving towards consumption of mid-cycle commodities such as copper‚ zinc‚ nickel and aluminium which were key in Glencore’s portfolio. If the roll-out of electric vehicles followed projections over the next few years‚ there would be a substantial increase in demand for copper‚ cobalt and nickel mined by Glencore.


Source:BDproDate: 2017/05/25

Mediclinic profit soars one-third after Middle East and UK expansion

By Robert Laing


Private hospital group Mediclinic International’s expansion into the Middle East and UK resulted in both its revenue and profit jumping 30% in the year to end-March.


Measured in pounds‚ Mediclinic’s Swiss subsidiary Hirslanden contributed 48% of the group’s £2.7bn revenue and 58% of its £243m net profit‚ its results released on Wednesday morning showed.


Its Southern African division contributed 28% of revenue and 34% of profit‚ and its Middle East division 24% of revenue and 9% of profit.


Revenue from its 29.9%-owned UK hospital group Spire Healthcare was not added to Mediclinic’s top line‚ but its British associate’s net profit contribution doubled to £12m from £6m‚ accounting for 5% of the group’s total.


Mediclinic’s merger with Abu Dhabi’s Al Noor in February helped its Middle East division nearly double revenue to £648m from £328m. However‚ its woes with the government requiring state medical aid users to pay 20% of private hospital bills resulted in net profit from the Middle East plunging 62.5% to £21m from £56m.


In SA and Namibia‚ Mediclinic operated 52 hospitals and two day clinics at the end of its financial year.


With a total of 8‚095 beds and 16‚848 employees‚ Mediclinic said it was the third-largest private hospital provider in Southern Africa.


But measured by market capitalisation‚ Mediclinic’s R106bn makes it far larger Life Healthcare at R41bn and Netcare at R39bn.


Mediclinic said its Southern African division grew revenue 7% to R14.4bn. Bed days sold and average revenue per bed day increased 0.8% and 5.8%‚ respectively.


“Admissions increased 0.6% with growth in medical cases partially offset by a decrease in surgical day cases as the outmigration trend continues. The average length of stay increased by 0.2%‚” the results statement said.


Subsequent to its financial year end‚ on April 28‚ Abu Dhabi’s crown prince reversed the 20% co-payment rule with immediate effect‚ which should improve Mediclinic’s coming interim results.


“A key focus during the year has been integrating the Abu Dhabi-based Al Noor hospitals group with the established Mediclinic Middle East business in Dubai‚” the results statement said.


“The regional management team successfully addressed a number of key issues including the establishment of a clear operational and clinical strategy in Abu Dhabi‚ doctor vacancies‚ integrating the functional departments of the two businesses‚ conforming revenue cycle management with the Middle East business‚ identifying synergies in procurement and headcount and consolidating the two corporate offices and executive management teams.”


Mediclinic declared a final dividend of 4.7 pence‚ maintaining its total for the year at 7.9p.


Source:BDproDate: 2017/05/24

Sibanye's shares fall as nil-paid letters begin to trade

By Robert Laing


Sibanye Gold’s share price fell as much as 35% to a low of R18.39 on Wednesday after the nil-paid letters associated with its rights issue started trading.


Sibanye shareholders received nine nil-paid letters for every seven Sibanye shares held.


At about R19.60 per Sibanye share and R8.32 per-nil paid letters‚ Sibanye shareholders were effectively 7% richer on Wednesday. At Tuesday’s closing price of R28.26‚ seven Sibanye shares were worth R197.82. On Wednesday seven Sibanye shares plus nine nil-paid letters were worth R212.08.


The nil-paid letters traded in a range between R10 and low of R7.80. At 11:20am‚ the nil-paid letters were trading at R8.32‚ by which time 2.51-million had traded for a total value of R20.45m.


Each Sibanye nil-paid letter gives the holder the right to buy a new Sibanye share at R11.28 each.


The mining group unbundled from Gold Fields is issuing more than 1-billion new shares to raise nearly R13.5bn to partly fund its $2.2bn acquisition of US platinum miner Stillwater‚ meaning the R18bn market capitalisation South African mining group is acquiring a US group worth about R30bn.


It is important for Sibanye shareholders to either sell their nil-paid letters or inform their stockbrokers that they intend to subscribe for their rights offer shares.


Any rights offer shares not subscribed for would go to underwriters Citigroup‚ HSBC‚ JP Morgan and Rand Merchant Bank.


Source:BDproDate: 2017/05/24

Hotels offset flat income from Tsogo's casinos

By Robert Laing


Tsogo Sun managed to offset flat income growth from its casinos with better performance from its hotels‚ the company said in its results statement on Wednesday morning.


The group’s overall income grew 8% to R13.2bn. Rooms revenue grew 11% to R3bn and food and beverages revenue 6% to R1.4bn.


“The hotel industry in SA continues to experience a recovery from the dual impact of depressed demand and oversupply. Overall industry occupancies have improved to 65.2% in 2017 from 63.8% in 2016‚” Tsogo said.


“Trading for the group’s South African hotels for the year recorded a system-wide revenue per available room growth of 6% on the prior year due mainly to an increase in average room rates by 5% to R1‚067.”


Gambling‚ which at R7.5bn contributed 57% of total income‚ grew 2% in the year to end-March from the previous year’s R7.4bn.


Montecasino contributed R2.7bn‚ or 20%‚ of the group’s income. Tsogo’s next biggest operation is Suncoast‚ which contributed R1.7bn‚ followed by Gold Reef City‚ which contributed R1.45bn.


The group has grown to 13 casino and hotel complexes following a string of deals during the reporting period.


It expanded in the Cape Town casino market via a R1.3bn deal with Sun International and Grand Parade whereby it bought 20% of SunWest and Worcester Casino.


“We continue to push for the opportunity to relocate one of the smaller Cape-based casinos into an untapped area in the metropole‚ despite significant delays by the province on this matter‚” the company said in its results statement.


Other deals included buying Liberty’s 40% share of Cullinan Hotels and 50.6% of JSE-listed Hospitality Property Fund by exchanging 10 hotels for shares.


Its parent‚ Hosken Consolidated Investment‚ is in the process of moving the gambling assets in Niveus to Tsogo in exchange for shares and cash.


Tsogo declared a final dividend of 70c‚ taking the total to R1.04‚ a 6% increase on the previous year’s 98c.


Source:BDproDate: 2017/05/24

Lewis slashes dividend as full-year earnings drop

Lewis slashed its final dividend drastically as the furniture retailer reported a drop in its full-year profit‚ which it attributed to tough trading environment‚ magnified by stringent affordability assessment.


Group credit sales accounted for 65.2% of total sales in the year to March‚ up from 64.3% in the year earlier period‚ the company said in a statement on Wednesday.


Credit sales in Beares accounted for 56.6% of the brand’s sales while 67.2% of Lewis‚ and Best Home and Electric sales are on credit.


The retailer on Wednesday declared a final dividend of 100c per share in year to March‚ which down from 302c in the year-earlier period‚ bringing the total to 200c from 517c.


Group revenue was down 3.3% to R5.6bn as merchandise sales dropped 2%. On a like-for-like basis‚ merchandise sales dropped 9%. Stores outside SA contributed 24.1% of merchandise sales from 17.4%.


The weaker revenue growth and higher operating and debtor costs contributed to the group’s operating margin contracting to 10.1% from 14.1%.


Debtor cost growth increased by 6% for the year‚ reflecting an improvement from the 17% growth last year.


Headline earnings declined to R355m‚ from R552.1m in the year-earlier period and headline earnings per share (HEPS) dropped 35.6% to 400.1c.


At year-end‚ the group traded out of 761 stores across its three retail brands.


Source:BDproDate: 2017/05/24

Transaction Capital H1 core headline earnings rise 21% to R254m

Minibus taxi financier and debt collector Transaction Capital on Wednesday reported a 21% growth in first-half core headline earnings to R254m‚ boosted by the strong performances of its two main operating divisions.


SA Taxi grew headline earnings 22% to R144m in the six months to end-March and generated a return on equity of 24.1%.


SA Taxi’s loans and advances portfolio consists of 27‚142 vehicles‚ about one in every three of the financed national minibus taxi fleet‚ the company said. The number of loans originated during the first half of 2017 was up 11% and it now finances more than 40% of local new Toyota minibus taxi sales compared with 38% in 2015. SA Taxi’s loans and advances portfolio grew 16% to R7.8bn in the period under review.


The other division‚ Transaction Capital Risk Services (TCRS)‚ increased core headline earnings by 33% to R93m and generated a return on equity of 20.6%. TCRS incurred one-off acquisition costs of R22m during the period.


“Although SA Taxi and TCRS perform better in a positive economic environment‚ they are also defensive businesses able to withstand difficult economic conditions‚” the company said in its results statement.


The company increased its interim dividend by 25% to 15c per share.


Source:BDproDate: 2017/05/24

E.tv's holding company swings into profit

By Robert Laing


The woes of its state-owned competitor SABC appear to have helped private-sector broadcaster e.tv swing to profit in year to end-March.


Its holding company‚ eMedia‚ reported a profit of R161m from the R89m loss it reported in its first results as an independently listed company in 2016.


Income grew 7% to R2.6bn‚ which the company said was primarily driven by an increase in advertising revenue.


The results statement said e.tv’s overall market share remained constant‚ but it managed to increase its ad rates by growing its audience share of higher-income households.


“This has seen e.tv’s advertising revenue increase by 6%‚ or R74m‚ year on year. A shift to include ‘high-end’ international series and movies and recent deals concluded with Warner‚ Disney‚ Sony and CBS have assisted in clawing back and maintaining the market share that had been lost previously. This has‚ however‚ seen an 8% increase in programming costs ending the year on R603.5m‚” the company said in its results statement.


“ESat.tv (eNCA) continues to perform well and is the most-watched 24-hour news channel on DStv with over 50% market share.”


Parent group Hosken Consolidated Investments (HCI) created eMedia in 2016 by unbundling the media assets held in Seardel‚ which was subsequently renamed Deneb. Deneb also released its results on Wednesday along with other members of the HCI family.


EMedia did not declare a dividend for the year.


Source:BDproDate: 2017/05/24

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