Blue Label doubles its first-half net profit

By Andries Mahlangu

Blue Label Telecoms more than doubled its net profit in the six months to end-November‚ after acquiring shares in Cell C and smartphone distributor 3G Mobile.

Net profit rose to R1.4bn‚ from R563.96m year ago‚ the company said in a statement on Thursday.

Blue acquired 45% of the Cell C‚ which is mulling a public listing‚ for R5.5bn. In the same review period‚ it also acquired 3G Mobile for R900m.

Blue‚ which distributes prepaid products such as airtime and electricity‚ grew its revenue 2% to R13.2bn after expanding its distribution channels.

Amounts generated on what it called “PINless top-ups” increased by R1.2bn to R4bn‚ from R2.8bn.

Net commissions earned on the distribution of prepaid electricity rose by R21m to R124m. This flowed from an increase in revenue generated on behalf of the utilities from R6.9bn R8.4bn.

Source:BDproDate: 2018/02/22

David Jones impairment drags Woolworths into a net loss

By Robert Laing

Woolworths cut its interim dividend by 18% to 108.5c from the 133c it paid in the first half of its previous financial year.

A R6.9bn impairment of its Australian department store chain David Jones dragged the retailer into net loss of R4.86bn for the 26 weeks to December 24 from a net profit of R3.32bn in the comparative period‚ its interim results released on Thursday morning showed.

Headline earnings per share (HEPS)‚ which excluded the impairment of David Jones‚ fell 15% to 206.3c.

The group’s overall interim revenue grew 3% to R36.3bn‚ thanks to its South African food division growing sales 9.3% to R14.5bn.

Its food division managed to mitigate a 5.3% decline in sales from David Jones to R7.6bn and a 0.2% decline in sales by its South African clothes division to R7.2bn.

The dip in its clothing sales was blamed on “underperformance of womenswear”.

“In SA‚ trading conditions are expected to remain challenging in the second half‚ but should then improve‚ as the impact of the new political leadership resonates through the economy and consumer sentiment‚” CEO Ian Moir said.

“We are confident that our food business will continue to grow ahead of the market‚ and that recent changes made to design and buying structures in fashion‚ beauty and home are expected to improve the womenswear offering.”

Source:BDproDate: 2018/02/22

Intu’s shares gain after it releases strong result

By Wilson Johwa

JSE-listed European shopping mall owner Intu’s share price rose 2% to R35.59 after reporting a strong leasing performance in 2017.

Intu‚ which was spun off from the Liberty stable a decade ago‚ owns and manages prime shopping centres in the UK and Spain‚ offering a safe-haven investment option.

The company’s UK portfolio is made up of 17 centres‚ including 10 of the top 25‚ and in Spain it owns three of the country’s top 10 centres‚ with advanced plans to build a fourth.

Its results released on Thursday morning showed net rental income rose from £447m to £460m in the year to end-December. Adjusted diluted net asset value per share (NAV) rose to 411 pence‚ from 404p the year before.

Underlying earnings per share were 15p‚ the same as in 2016. At 14p‚ the dividend per share was also at the same level as in 2016.

During the year the company signed 217 long-term leases in the UK and Spain‚ as retailers continued to focus on increasing their space in prime‚ high footfall retail and leisure locations.

Rent reviews during the year were on average 9% higher‚ compared with 8% in 2016. Occupancy rose marginally to 96.1% from 96%.

The company reported that major flagship brands increased and optimised their presence in its shopping centres. This leasing activity drove a third successive year of net rental income growth.

Rental income rose 0.5% during the year‚ compared with an increase of 1.8% in 2015 and 3.6% in 2016.

The group was expecting rental income growth of 1.5%-2.5% in 2018‚ rising to 2%-3% in three to five years.

A further investment of £562m is planned in the UK over the next three years after an investment of £184m during the year.

Source:BDproDate: 2018/02/22

Massmart downplays revenue growth‚ pointing to extra week in 2017 financial year

By Robert Laing

Walmart’s South African subsidiary Massmart declared a final dividend of R2.17‚ taking its total for its 2017 financial year to R3.47‚ a 16% increase on the previous year’s R2.99.

Massmart downplayed its revenue and profit growth in a depressed consumer environment‚ stressing its 2017 financial year had 53 weeks whereas its 2016 financial year had 52.

Total sales came to R93.7bn‚ which was 2.7% higher than 2016’s R91.3bn. But excluding the extra week‚ sales growth was 1%‚ Massmart said in its results released on Thursday morning.

Net profit grew 13.6% to R1.5bn. Without the extra week‚ profit grew 1.4%.

“Whilst SA’s new political leadership and direction will‚ in the short to medium term‚ undoubtedly improve many economic factors‚ the structural‚ policy and public sector impediments remain long-term challenges‚” CEO Guy Hayward said in the results statement.

“This is undoubtedly SA’s best shot in recent memory at reinvigorating our own social‚ economic and political progress and prowess‚ and restoring our place as a key actor on the African continent. We are an excited and proud South African company.”

On Tuesday‚ Walmart’s share prince plunged more than 10% on the New York Stock Exchange after it reported it was reaping disappointing returns from its heavy investment in e-commerce.

“During the year‚ investment spend was focused on new IT infrastructure‚ store openings and the refurbishment of existing stores. As a result‚ the net book value of property‚ plant and equipment increased by 8.8% over the prior year‚” Massmart said in its results.

“Total capital expenditure was R1.8bn. Expansionary expenditure was R1.1bn and included the rebuild of the Jumbo Crown Mines store‚ the new Makro Riversands store‚ the Massfresh meat plant and investments in IT systems.”

Massmart described itself as Africa’s second-largest retail group‚ with 423 stores across 13 sub-Saharan countries. Shoprite is presumably the largest.

Its 42 stores outside SA produce 8.3% of the group’s sales.

Hayward said that its stores outside SA averaged four times higher sales that its South African competitors.

Source:BDproDate: 2018/02/22

Sibanye-Stillwater withholds final dividend as it plunges into loss

By Allan Seccombe

Sibanye-Stillwater withheld its final dividend for the first time as it posted a deep plunge into an annual loss and ballooning debt‚ and instead opted to issue shares to its investors as it bedded down a number of costly acquisitions.

Sibanye‚ which had boasted of setting itself apart from its peers by paying industry-leading dividends‚ reported an attributable loss of R4.4bn for the year to end-December compared with attributable earnings of R3.5bn a year earlier.

“In the near term‚ cash preservation is prudent and as a result no final dividend is being declared‚” it said.

Sibanye will issue four shares for every 100 shares held by investors in lieu of a dividend. At the half way mark of 2017‚ it withheld its interim dividend and gave investors two shares per 100 held.

Sibanye’s cash holdings at the end of the year fell by nearly two-thirds to R2.2bn from R6.5bn the year before‚ primarily because of a R2.2bn loan repayment.

Sibanye has embarked on an aggressive growth strategy in platinum group metals‚ snapping up the Rustenburg mines from Anglo American Platinum‚ the whole of Aquarius Platinum and a $2.2bn cash purchase of all of US-based Stillwater Mining. It has launched an all-share bid for Lonmin in SA‚ making it one of the world’s largest platinum producers.

Looking at headline earnings‚ which strip out one-off items and give a like-for-like comparison of annual results‚ Sibanye recorded a headline loss of R224m compared with headline earnings of R1.4bn the year before.

Net debt for the year was R23.2bn. Sibanye said it had “sufficient liquidity” with unutilised debt facilities of R3.7bn.

“Sibanye-Stillwater maintains its prudent approach to capital management‚ with balance sheet deleveraging and preservation of long-term financial flexibility remaining key priorities‚” it said.

It said it would refinance and “upsize” by March this year a $350m revolving credit facility falling due in August 2018 to “maintain adequate liquidity” and give it an extra $250m of available facilities.

“The development and growth of the company has been rapid and as such‚ the strategic imperative for 2018 is one of consolidation‚” Sibanye said‚ pointing out its priorities were to reduce debt as quickly as possible and to ensure its operations were firing on all cylinders to do so.

Sibanye lauded the political changes in SA‚ its home base‚ with Cyril Ramaphosa replacing the corruption-tainted Jacob Zuma as president of the country.

Ramaphosa almost immediately on taking up office called a meeting with the Chamber of Mines‚ resulting in the postponement of a court case to review and set aside a damaging third version of the Mining Charter that steers transformation of the industry.

“While structural changes are yet to be seen‚ general sentiment around the country’s prospects for economic stability and growth is more positive‚” said CEO Neal Froneman‚ noting the strengthening of the rand against the dollar‚ which eroded mining profit margins.

“While the political and regulatory outlook appears more positive‚ and suggests upside for the beleaguered mining industry‚ we continue to adopt a cautious and measured approach‚” he said.

For Sibanye‚ the closure of its three unprofitable Cooke shafts meant gold production from SA would fall to between 1.24-million and 1.29-million ounces for 2018. It expects to spend R3.5bn on its gold mines this year.

Its platinum mines in SA are forecast to deliver up to 1.15-million ounces of the four platinum group metals‚ namely platinum‚ palladium‚ rhodium and gold‚ with an all-in sustaining cost of up to R11‚250/oz. Capital expenditure in the division was pegged at R1.5bn.

In the US‚ at the Stillwater mines‚ output of palladium and platinum was forecast at up to 610‚000oz at an all-in sustaining cost of up to $690/oz. Capital expenditure was set at $222m.

Source:BDproDate: 2018/02/22

Anglo American reaps benefits of restructuring with solid results

By Allan Seccombe

Anglo American‚ which has been through an extensive restructuring‚ delivered annual results showing the benefit of the exercise‚ nearly halving net debt‚ doubling free cash flow and paying a total $1.02 per share dividend‚ the highest in a decade‚ CEO Mark Cutifani said.

Anglo‚ a major diversified mining company with controlling stakes in leading diamond and platinum companies as well as copper‚ coal‚ nickel and iron ore interests‚ doubled attributable profit to $3.2bn for the year to end-December‚ and operating profit grew to $5.5bn from $1.7bn the year before.

Net debt fell by half to $4.5bn. A few years ago it was $13bn in a low commodity price environment‚ prompting Anglo to dispose of a number of assets and work hard on improving productivity and cost reductions across its portfolio.

“Anglo American is a fundamentally different business. We are more resilient‚ we are more competitive‚ we are delivering solid returns and the good news is we see a lot more opportunities to improve‚” Cutifani said.

Anglo had 47% fewer assets than it did in 2012 yet it was generating 9% more product‚ he said‚ while productivity per person had improved by 80% over that time.

“Dividends remain a key priority for us‚” he said. Anglo returns 40% of underlying earnings to shareholders.

Anglo was looking at internal growth options and was likely to bring a partner into the undeveloped Quellaveco copper project in Peru‚ which could cost up to $6bn to develop.

Anglo was in talks with various parties and would take a decision to the board in June‚ Cutifani said.

The closely watched Minas Rio iron ore mine‚ which has cost $13bn to buy and build and put Anglo’s balance sheet under immense pressure‚ secured licences in January to allow it to expand its mining footprint and ramp up to full production of 26.5-million tonnes in 2020‚ he said.

There were a number of internal project in metallurgical coal and diamonds in Namibia that Anglo was looking at for growth‚ including options in platinum in SA.

Anglo was cautious when it came to growth‚ Cutifani said.

“Growth has been a dirty word in the industry for some time‚ and so it should be because of the stupid things people have done‚” he said‚ adding that Anglo would match production to market demand and not overproduce it minerals.

In 2017‚ Anglo benefited from strong price improvements of 57% and 29% for metallurgical coal and copper respectively‚ while palladium realised a 44% increase.

Diamond prices were 13% lower.

Source:BDproDate: 2018/02/22

Afrox reports slower earnings growth

By Andries Mahlangu

Gases and welding products group African Oxygen (Afrox) on Thursday reported slower earnings growth in the year to end-December‚ partly due to a windfall in 2016 when ArcelorMittal paid Afrox R165m to settle a law suit.

Thus‚ headline earnings per share (HEPS) for the review period were up just 6% to R2.01. Adjusting for the litigation settlement‚ HEPS were up about 32%.

Group revenue was up a modest 2.8% to R5.7bn‚ partly mirroring low levels of economic growth.

Afrox makes the bulk of its income in SA‚ making its susceptible to the performance of the local economy.

It has also operations in other parts of Africa‚ including Malawi‚ Mozambique and Botswana.

Revenue from atmospheric gases rose 6%‚ after adjusting for the effect of the litigation settlement‚ driven by what it said were better volumes and price cost management.

Revenue from liquefied petroleum gas (LPG) rose 11% as volumes rose 10.4%‚ despite a decrease in market prices. The company said the continuation of its LPG import strategy proved effective.

The company declared a final dividend of 54c per share‚ which was marginally down from 56c a year ago.

Source:BDproDate: 2018/02/22

Hyprop buys two shopping centres in Croatia through co-owned Hystead

By Alistair Anderson

Hyprop Investments has continued its offshore push by acquiring an interest in two shopping centres in Croatia.

Hyprop and its partner PDI Investment Holdings co-own Hystead‚ which announced it had acquired a 90% interest in City Centre one West and City Centre one East in the capital Zagreb.

The purchase consideration net of €154.4m asset-based finance is €129.1m‚ of which Hyprop’s effective share is approximately €77.5m‚ or R1.12bn. The transaction is conditional on approval by the Croatian competition authority and is expected to close at the end of March 2018.

Hyprop’s south-eastern Europe strategy is to acquire dominant shopping centres through Hystead. Hyprop has a 60% interest in Hystead and PDI‚ a company associated with Louis Norval‚ a non-executive director of Hyprop‚ holds the remaining 40%. After the completion of this transaction Hystead will own six shopping centres in five countries‚ with a gross asset value exceeding €740m.

Hyprop wants to secure a separate listing of Hystead on the Euro MTF market of the Luxembourg Stock Exchange and on the main board of the JSE within the next six months.

The other 10% would be retained by WKB 3‚ an Austrian-based company that developed‚ and has been the property and asset manager of‚ the two shopping centres‚ through their operating company CC Real.

Hyprop CEO Pieter Prinsloo said the deal was positive for Hyprop shareholders. “The shopping centres were acquired at a combined property yield of approximately 7%. Asset-based funding with a loan-to-value of 55% has been secured on a five-year term‚ and a bridge loan facility for the purchase consideration‚ payable by Hystead‚ has been secured until the listing occurs.”

City Centre one West has potential to add 13‚600m² gross leasable area (GLA); City Centre one East has an additional 10‚000m² GLA.

Croatia’s economy is supported by a strong tourism sector‚ rising real wages and improving regional trade‚ according to Prinsloo. “This is Hystead’s second entry into an EU country‚ following our acquisition in Bulgaria last year‚ and further enhances the overall quality and profile of the Hystead portfolio.”

After the completion of the transaction Hystead would own six properties in south-Eastern‚ the other four being Delta City Podgorica in Montenegro; Delta City in Belgrade‚ Serbia; Skopje City Mall in Macedonia; and The Mall in Sofia‚ Bulgaria.

Source:BDproDate: 2018/02/22

Profit bounty for MMI and Santam

Insurers MMI and Santam expect to report higher earnings for the period to the end of December 2017, lifted by strong investment performances as markets staged a recovery from 2016’s post-Nenegate hangover.

On Wednesday, MMI said it anticipates headline earnings per share between 20% and 30% higher for the six months to December, compared with 64c previously, as it benefited from more favourable fair value gains on its shareholder funds and positive investment variances.

Santam’s story was pretty much the same, with the insurer reporting that it expects headline earnings per share between 29% and 34% higher, or up to R14.55, for the year to December. This was driven by improved investment results and the foreign currency gains from winding up Santam International.

The all share index delivered an 18% total return in 2017, outclassing its performance in 2016 when it could only muster 3%.

Steinhoff International’s collapse, which resulted in the retailer shedding more than 90% of its market value, did not do much to detract from the market’s overall performance.

“Despite Steinhoff’s massive price fall in December, the overall equity market was still up by about 18% in 2017, driven by exceptional performances of shares like Kumba, Exxaro, and Naspers,” said Adrian Cloete, portfolio manager at PSG Wealth. Both insurers had investments in Steinhoff.

“No company — like no particular person — is so important that life does not go on without them,” said Rahima Cassim, portfolio manager at Ashburton Investments. “Steinhoff isn’t in the same sector and doesn’t have the same drivers. It also had its own legacy issues the market was or should have been aware of as potential risks.”

Cassim said while the insurers’ investment returns were a key earnings driver, operational earnings were important. “While Santam had a boost from investment returns and forex gains, the true measure of performance — the underwriting margin — is close to the midpoint of the 4-8% targeted range.

“While not the main driver of the strong earnings growth close to the midpoint, it is a resilient number given the catastrophe events that they faced,” Cassim said.

During 2017, Santam’s customers claimed R800m for damage caused by wildfires in Knysna and freak storms in Cape Town. This was described as the “worst catastrophe event in South African insurance history”. Santam was still to quantify damages in Gauteng and KwaZulu-Natal.

“MMI’s [diluted core headline earnings] range of 0-5% down is negative, especially if investment returns would have helped to stem a more negative number,” said Cassim. “We can only hope the new CEO [Hillie Meyer] can turn the business around.”

the amount Santam paid out to clients in fire and storm damage claims in 2017

Source:Business DayDate: 2018/02/22

Adcock considers expansion to mitigate risks

Pharmaceutical company Adcock Ingram is considering exports to the Asia-Pacific and South America as it looks to build its international business, CEO Andy Hall says.

While growing the business in other parts of Africa was an immediate focus, Hall said the company was “starting to look outside of the continent at some potential distributorships”.

“Maybe within a year or so we will be able to give feedback on those initiatives,” Hall said in an interview on Wednesday.

There could be opportunities to export consumer brands to Australia and Southeast Asia, while a number of South American countries were potentially attractive “if we can get over regulatory hurdles”.

The group remains highly concentrated on the South African market, though it has a relatively small but fast-growing rest-of-Africa business.

Its businesses in Zimbabwe and Kenya account for about 4% of sales while exports to other African countries make up another 3% of turnover.

Expansion “is certainly a focus for us”, Hall said.

“Most of our business comes from [SA] and that links us to economic risk in the country and rand risk. So we do encourage our divisions, where possible, to look for export markets.”

Hall said Adcock wanted to grow its personal care portfolio and the company planned to enter the baby-care segment.

“That’s where we’re currently focusing our efforts in the acquisition universe, but assets are scarce – most of the big personal-care players are multinational companies [that] don’t dispose of brands easily – similarly in baby-care.”

That meant Adcock was looking for bolt-on deals whereby it would acquire ownermanaged businesses.

The company had net cash of R492m at the end of December. Hall said Adcock would pay about R120m of that in dividends to shareholders, while the bulk of the balance would be used to settle the Genop acquisition.

“We are still cash generative so as we build up that cash again over the next year, our intention is to put it into acquisitions should we find attractive assets,” he said.

Adcock’s balance sheet “is strong”, says Aslam Dalvi, associate portfolio manager at Kagiso Asset Management. “We would expect the group to complement its organic growth opportunities through strategic partnerships and smaller bolt-on acquisitions,” he said.

In the six months to December, Adcock grew turnover by 7.4% to R3.2bn, while trading profits rose 25% to R428m.

“It’s been a good six months for us,” said Hall.

“We’ve kept up the momentum of the past 18 months or so and continued with margin expansion” the CEO said.

Dalvi said: “Adcock delivered a strong result,” and the rand’s gains “should act as a buffer for margins and offset any negative impact of the low ‘single exit price’ [state-set maximum prices for medicines] increase”.

Source:Business DayDate: 2018/02/22

JSE hoping for a better year

JSE CEO Nicky Newton-King is hopeful 2018 will be better for Africa’s largest exchange than 2017, as local sentiment improves and key technology projects are delivered.

“When the national sentiment is more positive that is good for capital raising, for entrepreneurs feeling like there’s an opportunity to do something and investors feeling that they should back people who are prepared to put some effort in,” Newton-King said on Wednesday after the release of underwhelming annual results.

The JSE Ltd reported a 5% decline in operating revenue to R2.2bn for the year to December 2017, as trading values and volumes fell. Group earnings were down 9% to R836m, while cash equities trading revenue slid 11% to R507m.

The political and economic uncertainty that plagued SA in 2017, coupled with credit ratings downgrades, weak growth and a loss of business confidence, led to a decline in long-term capital market investing by locals and foreigners.

But the situation had already improved, said Newton-King. Foreigners were net buyers of South African equities to the tune of R30bn in December and R11bn in January. “You would expect that to get better as soon as investors have confidence that the country is on a growth trajectory,” she said.

The JSE, which listed 21 issuers in 2017 (18 in 2016), had traded R510bn in January, an average of about R23bn a day.

Additional capital-raising activity in 2017, such as Sibanye Gold’s $1bn rights offer to purchase Stillwater Mining in the US, had led to a 10% increase in the JSE’s primary market revenue to R181m.

A 24% year-on-year reduction in headcount as a result of retrenchments and a hiring freeze had helped the JSE save costs, said Newton-King.

Capital expenditure fell to R187m from R205m, as the JSE made progress on its integrated clearing and settlement platform and the exchange-traded platform for government bonds, both targeted for delivery in the first half of 2018.

Once these were implemented, the JSE would revisit projects it had “put on ice”, such as its mooted township exchange, Umnotho. The bourse would also focus on more effectively monetising its post-trade and information services, which had disappointed in 2017.

On the effect the December collapse of Steinhoff’s share price had had on the JSE’s image, Newton-King said that with “reports and rumours” about other companies, the debacle had “certainly shaken peoples’ confidence”.

Stocks such as Capitec, Discovery and Resilient, actual and suspected targets of reports published by short sellers, have experienced sell-offs in 2018.

“The fact that people reacted to rumours in particular is a function of the really fragile trust [in SA] at the moment. The reaction is far more emotional than one built on substantive issues.”

While the JSE has faced criticism over inaction regarding potential market abuse, she said “where activity requires investigation” it would investigate.

“Those of us who are custodians of governance really have to look at what else we can do to help investors feel more confidence,” said Newton-King.

The JSE Ltd declared a dividend of R6,05 per share, an 8% increase on the previous period.


Source:Business DayDate: 2018/02/22

Steinhoff's early bond sale plan falls short

teinhoff International’s plan to redeem R7.6bn of its randdenominated bonds that trade on the JSE has fallen R500m short as holders of one block of notes voted against an early redemption resolution.

On Wednesday the company announced that 99.65% of holders of 11 of the medium-term notes issued under the Steinhoff Services R15bn programme voted in favour of early redemption. The programme comprised 12 issues, of which maturities varied from April 2018 to November 2022.

However, 54.55% of holders of the 12th issue, the SHS34 notes, voted against the early redemption resolution. Those notes had a maturity date of November 2022.

Steinhoff initially informed shareholders in January that it was considering an early redemption. Analysts said the move was designed to release the company from restrictions on its ability to sell off attractive South African assets.

The move is also expected to enable Steinhoff Africa Retail to issue its own bonds. The credit rating on Steinhoff’s bonds was cut to junk by Moody’s ratings agency after the shock December 5 announcement that the management was looking into accounting irregularities.

The South African bonds have held up significantly better than Steinhoff’s international bonds, which were trading as low as 20c-30c to the euro.

Ahead of the initial shareholder announcement in January the South African notes were trading around 80c-90c in the rand. The relative strength reflected the fact the bonds were backed by a relatively strong South African balance sheet that includes holdings in PSG, Steinhoff African Retail and Investec Private Equity.

Steinhoff announced in January it had sold 29.5-million of its PSG shares for R7.1bn. It is expected to use the proceeds to fund the early redemption.

Source:Business DayDate: 2018/02/22

NTP Radioisotopes resumes production after three-month shutdown

By Charlotte Mathews

NTP Radioisotopes (NTP)‚ the subsidiary of state-owned South African Nuclear Energy Corporation (Necsa) that produces medical isotopes used in diagnostic imaging and treatment‚ has resumed production after a three-month shutdown‚ Necsa said on Wednesday.

The business is one of only a handful of global producers and its shutdown raised fears of local shortages‚ and that it might lose its market share to competitors. It also raised questions about SA’s ability to maintain high standards of nuclear safety.

The National Nuclear Regulator shut down NTP on November 17 because of safety procedure violations. Its hydrogen monitoring systems failed on October 27‚ but it only notified the regulator on October 30. NTP’s MD and two senior executives were put on special leave.

Necsa said in a statement that NTP had dispatched its first batch of nuclear medical isotopes for the domestic market on Wednesday and has begun working on a shipment for international customers.

Necsa Group CEO Phumzile Tshelane said staff had worked long hours to ensure problems were addressed and systems improved. Necsa’s media department declined to respond to the question of whether NTP’s executives remained suspended‚ insisting that all questions be submitted in writing.

Source:BDproDate: 2018/02/22

Capital & Counties drops 4% despite weathering Brexit fall-out

By Alistair Anderson

Despite London-based property group Capital & Counties (CapCo)‚ which is also listed on the JSE‚ weathering a difficult 2017and managing to maintain its dividend growth amid fall-out from Brexit‚ proposed investors were unimpressed at the lack of dividend growth‚ and the company’s share price had fallen 4% by late trade on Tuesday.

CapCo proposed a final 2017 dividend of 1p per share resulting in a full-year dividend of 1.5p per share‚ according to financial results for the year to December 2017. This represented no dividend growth for the second year in a row.

Speaking on the sidelines of the release of the financial results‚ CEO Ian Hawksworth said its Covent Garden estate‚ which now represents more than 70% of its portfolio‚ was experiencing strong trade in the heart of London. It balanced the company’s performance because its other asset‚ a residential Earl’s Court property‚ lost value after the Brexit vote‚ slipping from £1.14bn to £989m because of “economic and political uncertainty”‚ according to Hawksworth.

Naeem Tilly of Catalyst Fund Managers said Earl’s Court valuations were impacted by the price of comparable sales of land in London. “There is also political risk at the site with calls for more affordable housing to be added. [The] Earl’s Court’s valuation is now about 30% down since its peak.”

But Covent Garden was a strong performer. “Covent Garden‚ now valued at more than £2.5bn‚ delivered another strong year of rental and value growth ... securing a record £15m of rental income at a premium of 10% to December 2016’s estimated rental value‚” said Hawksworth.

Hawksworth said the Earl’s Court’s redevelopment was on track. The 31ha site in west London‚ where the old Earl’s Court exhibition centres originally stood‚ is scheduled for redevelopment but has suffered a number of devaluations since 2015‚ when it was valued at £1.4bn.

A creative asset management strategy and investment into the shopping estate had produced a high quality and vibrant environment for the consumer‚ driving growth of 18% in rental


Estimated rental value increased to £105m‚ demonstrating progress towards the target of £125m by December 2020.

Hawksworth said residential asset Earl’s Court’s redevelopment was on track.

The 31 hectare site in west London‚ where the old Earl’s Court exhibition centres originally stood‚ is scheduled for redevelopment and has suffered a number of de-valuations since 2015 when it was valued at £1.4bn.

“The Earls Court masterplan is one of the most important mixed-use development opportunities in London‚ with the potential to create a new district‚ delivering homes‚ jobs and investment at scale. This strategic scheme has a planning consent in place‚ existing transport infrastructure and the ability to grow with the needs of London‚” he said.

“While political and macro-economic conditions have impacted the residential market resulting in a further valuation decline‚ a number of operational milestones have been achieved and as a long-term investor‚ Capco will continue to engage with partners and stakeholders to evolve and bring forward the masterplan‚” said Hawksworth.

Source:BDproDate: 2018/02/22

Higher metal prices allow Assore room to issue big dividend

By Andries Mahlangu

Higher commodity prices helped Assore in the six months to December‚ offsetting the effect of a stronger rand.

The diversified miner reported a 12% rise in headline earnings to R2.4bn‚ as the basket of commodities it sells increased‚ save for chrome ore.

The company said the markets for its commodities remained buoyant‚ with world economic growth estimated at 3.6% for 2017 and China’s growth at 6.9% over the same period.

Assore is in a 50-50 mining and processing joint venture with African Rainbow Minerals (ARM)‚ called Assmang‚ producing iron ore and manganese. It also owns 100% of the Dwarsrivier Chrome Mine‚ after buying out African Rainbow Minerals’s stake in 2016.

Assmang grew headline earnings 21.7% in the review period‚ more than compensating for the lower earnings in the rest of the group’s operations.

The interim dividend was increased by hefty 67% to R10 share‚ as result of what the company said was a “strong balance sheet and good operational cash generation”.

The share price was up 8% to R317 in early trade on the JSE on Wednesday‚ valuing Assore at R44.5bn.

Source:BDproDate: 2018/02/22

JSE Ltd revenue down 5%‚ earnings down 9%

By Hanna Ziady

Shares in the JSE Ltd weakened on Wednesday‚ after the exchange’s holding company reported a drop in operating revenue and earnings.

A decline in values and volumes traded caused operating revenue to fall 5% to R2.2bn for the year to December 2017‚ the JSE said.

Group earnings fell 9% to R836m‚ with earnings per share falling by a similar margin.

Shares in the JSE Ltd closed 1.96% weaker at R183‚50.

The year had been a challenging one for both the JSE and its clients‚ said CEO Nicky Newton-King.

Cash equities trading revenue fell 11% to R507m on a decline in value traded.

The primary market recorded a 10% increase in revenue to R181m‚ on additional capital-raising activity. There were 21 new listings in 2017‚ up from 18 in the prior year.

“We are pleased that‚ in this environment‚ we were able to grow the ordinary dividend to shareholders and continue to make year-on-year reductions in certain of our fees in order to find ways to make it more affordable for our clients to do business with us‚” she said.

Strong cash generation and a robust balance sheet‚ following cost-cutting and careful operational management‚ enabled the JSE to increase its ordinary dividend by 8% to R6.05 per share.

“We are excited by the change in local sentiment‚” said Newton-King.

“We look forward to being a constructive part of the renewal of our battered country as we build momentum towards inclusive growth.”

Source:BDproDate: 2018/02/22

Sibanye-Stillwater falls 5% on steep drop in attributable loss for 2017

By Allan Seccombe

Shares in Sibanye-Stillwater‚ a gold and platinum group metals miner‚ fell by 5% on Wednesday morning after it warned of a steep drop into an attributable loss for its 2017 financial year.

Sibanye‚ which has assets in SA‚ Zimbabwe and the US‚ warned investors less than 24 hours ahead of its full-year results release that it would report an attributable loss of R4.4bn or $333m compared to attributable earnings of R3.5bn or $237m the year before.

The shares fell to a session low of R12.70 before recovering slightly to trade at R13.04‚ a 5% decline on the previous day’s closing price. The shares are a long way from the R70 high reached in August 2016.

The loss largely stemmed from developments in the company in the first half of its year when it reported an attributable interim loss of R4.8bn on the back of impairments‚ a provision for an occupational lung disease settlement‚ restructuring and transaction costs as it concluded the $2.2bn cash purchase of Stillwater Mining in the US.

Changes in commodity prices and exchange rates also played a role in swinging the company to a loss.

The issuance of shares towards funding the $2.2bn price tag would skew the earning and headline earnings per share (HEPS) numbers‚ Sibanye said‚ forecasting a basic loss per share of R2.29 and a headline loss per share of 12c against earnings and headline earnings per share of R2.25 and R1.62‚ respectively‚ compared to the year before.

Sibanye said the headline loss of 12c per share was better than the R1.10 loss it had warned of in October after favourable tax reforms in the US and a better-than-expected operational performance at Stillwater‚ the palladium and platinum miner and recycler.

Source:BDproDate: 2018/02/22

Glencore declares dividend after strong results from better trading conditions

By Allan Seccombe

Glencore‚ a major mining‚ farming and commodities trading company‚ recorded a strong set of results for 2017 as a result of improved prices and trading conditions.

Glencore declared a 20 US cents dividend for the year‚ paid out in equal parts in May and September 2018‚ representing a $2.9bn return to shareholders.

“The dividend surprised positively with 20c/share to be paid in 2018 versus our estimate of 14c …‚” Barclays said in a note.

It reduced its net debt by 31% to $10.7bn — the bottom end of its $10bn to $16bn range — largely as a result of increased inventories rather than cash‚ which decreased during the year.

Net attributable income was $5.8bn from $1.4bn the year before.

“These strong results were fuelled by solid underlying global economic growth‚ which combined with overall industry capital discipline and generally muted production growth‚ resulted in commodity markets tightening over the year‚ with a corresponding increase in prices and premiums‚” CEO Ivan Glasenberg said.

“Going forward‚ those commodities where primary market balances are in deficit or trending towards deficit‚ such as zinc‚ copper‚ nickel and thermal coal should see positive price divergence versus potentially oversupplied markets‚” he said.

Market sentiment and commodity prices continued to improve during 2017 after the cyclical lows of 2016‚ he said‚ noting average price increases of 108% in cobalt‚ 38% in zinc‚ 34% in coal and 27% in copper year-on-year.

Glencore produces and markets more than 90 commodities‚ while it has 150 mines‚ metal processing sites‚ oil production assets and interests in agriculture.

“We continue to argue that perceptions of inferior asset quality versus peers are hard to justify with among other things the lowest coal and copper cash costs of the diversifieds‚” Barclays said‚ referring to other large diversified mining companies.

Glasenberg pointed out the commodities produced and sold by Glencore were “becoming less dependent on demand generated by infrastructure-related investment in developing markets”.

He singled out electric vehicles as an example of driving demand for copper‚ nickel and cobalt to make batteries. An independent study commissioned by Glencore noted that if electric vehicles made up a third of vehicle sales by 2030 then the market would need an extra 4-million tonnes of copper‚ 1-million tonnes of nickel and 314‚000 tonnes of cobalt.

“These potentially significant new demand sources offer compelling fundamentals‚ particularly when coupled with persistent supply challenges‚” Glasenberg said.

“Our resource base is well positioned to supply into this likely energy and mobility evolution‚ particularly given our anticipated strong production growth in copper (25%) nickel (30%) and cobalt (133%) over the next three years‚” he said.

Source:BDproDate: 2018/02/21

Cell C eyes public listing in 2019 or 2020

Mobile operator Cell C aims to go public in late 2019 or in early 2020, CEO Jose Dos Santos says.

“The intention is to list [Cell C] in the fourth quarter of 2019 or the first quarter of 2020,” Dos Santos said in an interview in Johannesburg on Tuesday.

Cell C’s ownership structure changed in 2017 after it received an equity injection that slashed debt. JSE-listed Blue Label Telecoms and Net1 bought 45% and 15%, respectively.

On Tuesday, the company said it grew service revenue by 12% to R13.1bn in the year to December, but recorded a net loss of R26m after stripping out a R4.1bn debt haircut.

“We’re still net negative in terms of cash flow, but we think that will come right towards the end of the year or first quarter of next year,” Dos Santos said.

The company would use its cash injection and strengthened balance sheet to grow revenues, and this would “filter down to free cash flow”.

Cell C would spend R3bn to R3.5bn a year on capital expenditure over the next three years. The firm, which has a roaming agreement with Vodacom, would focus on building its network in urban areas.

Capex dipped to R1.2bn in 2017, from R2.3bn a year before, owing to funding constraints in the months leading up to the recapitalisation. Dos Santos said Cell C wanted to become the “number two or number one” provider of fibre-to-home services in SA.

The company had acquired two fibre businesses and was in discussions with other potential targets in the sector.

“There’s a lot of consolidation [in fibre], it’s a capital-intensive business. The smaller [operators] are feeling the heat and that gives us the opportunity to go out there and buy those subscribers and customers.”

Dos Santos said the fibre-tohome market would grow as more infrastructure was rolled out and as older generations warmed to the idea of having uncapped internet.

Meanwhile, Cell C wanted the government to “fast track” the release of spectrum.

Dos Santos said Cell C supported a proposal in the Electronic Communications Amendment Bill that mobile operators share resources.

The bill proposes the establishment of a wholesale openaccess network (Woan) to house shared spectrum. Dos Santos said he saw “more pros” with the Woan than negatives.

“You are never really going to get cost efficiencies unless you do infrastructure sharing.

“In most part of the western world, networks share infrastructure, but in SA we still don’t,” he said.

Dos Santos said the Woan entity would eliminate the duplication of resources, and this would help drive down prices for customers.

Cell C said while “effective” data prices fell 36% in 2017, data revenue had risen 29% on increased usage.

Data now accounted for 40% of revenues.


Source:Business DayDate: 2018/02/21

Bidcorp reaps most of its profits from Australia and New Zealand

By Robert Laing

Bid Corporation (Bidcorp) earns most of its revenue in Europe‚ but most of its profit from Australia and New Zealand.

The geographically diverse food conglomerate unbundled from Bidvest in 2016 reported on Wednesday morning that its revenue for the six months to end-December grew 8% to R61.5bn.

At Tuesday’s closing price of R264.15‚ Bidcorp had a market capitalisation of R88.6bn‚ placing it ahead of Tiger Brands’s R85.5bn and making it the JSE’s largest food group.

Bidcorp segments its results into four geographic regions.

Its Europe division‚ which excludes the UK‚ grew revenue 20% to R19.6bn‚ contributing nearly a third of the group’s total sales.

The results refer to a “free trade horeca business” — horeca is an abbreviation used in Europe for the hotel‚ restaurant and café industries — which Bidcorp serves on the continent.

“Belgium’s revenue growth continued to beat expectations and trading profit growth was pleasing. The catering segment maintained volumes in the face of pressure‚ while the horeca and institutional channels exceeded budget. The ‘My BidOne’ e-commerce platform was successfully introduced‚” CEO Bernard Berson said in the results statement.

Bidcorp views its expertise in e-commerce as a key strength.

“Our investment in digital interaction with our customers is being leveraged off our ability to intelligently interpret our significant data sets. The development of BidOne‚ our bespoke global e-commerce and customer relationship management platform‚ continues to ensure our best worldwide innovations are leveraged for the greater benefit of the group‚” Berson said.

The UK was Bidcorp’s second-largest revenue generator at R16.2bn‚ narrowly beating Australasia’s R15.9bn.

Although Australasia’s contribution was only the third-biggest revenue source‚ it contributed 31% of the group’s profit.

“Overall progress in Australia was highly satisfactory for a business that recently opened three additional metro sites in Sydney‚ Melbourne and Brisbane‚” Berson said.

“New Zealand put in a strong second-quarter performance‚ offsetting a slow start to the half year. Performance was driven by steady revenue growth‚ supplemented by ongoing focus on imports and margin management.”

In SA‚ Bidcorp formed a joint venture with Belgium confectionery group Puratos.

“The new Chipkins Puratos joint venture made excellent progress. Puratos’s knowledge and best practice are being implemented across the business‚” Berson said.

Bidcorp raised its interim dividend by 12% to R2.80 from R2.50 in the matching period.

Source:BDproDate: 2018/02/21

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