Monday August 31

Ramaphosa hits back against 'choreographed campaign'

In a briefing to the media following the ANC's NEC meeting, president Cyril Ramaphosa said that there was a "choreographed campaign" against him, amid attempts to "confront the scourge of corruption.

Commenting on Tony Yengeni's demand that Ramaphosa should resign, ANC national chairperson Gwede Mantashe said Yengeni was alone in the suggestion. 'Nobody supported it.' 

Ramaphosa also dismissed the scathing open letter by former president Jacob Zuma, saying he 'won't publicly entertain his (Zuma's) criticism' 

Another trade surplus for SA

South Africa exported more than it imported in July - and recorded a trade surplus for the fifth month this year.

This is despite a 22% increase in imports from June. Exports grew by 6.1%.

For the first seven months of the year, South Africa has now recorded a surplus of R95.6bn.This is mostly due to weak demand for import products in the struggling domestic economy.

However, a trade surplus is good for the rand, as countries which import goods from South Africa have to buy the local currency.

Source: NKC Economics

Sasol’s Lake Charles to remain shut after hurricane

Sasol is keeping its Lake Charles facility closed after a hurricane resulted in widespread electrical blackouts and other damage.

The company says it doesn’t look as if there are damage to process equipment and no flooding damage has been seen as a result of storm surge. But the high wind speeds caused damage to the project’s cooling towers.

“Start-up of the plants will depend on the availability of electricity, industrial gases, other feedstocks and the restoration process,” Sasol says.

The company is currently looking for a partner to buy a stake in the embattled Lake Charles plant.

“We do not envisage that the hurricane will have an adverse impact on any potential divestment transaction related to Sasol’s base chemical portfolio in the United States,” the company said.

Sasol’s share price fell by more than 3% on Monday.

Diesel cheaper, but slight rise in petrol

Diesel price will fall by 21c a litre on Wednesday, while 93 and 95 grades of petrol will increase by 1c.

Sun International wants to retrench 2,300 SA workers

Sun International has suffered a loss of R885 million for the year to end-June as its income slumped by 56% to R3.7 billion as its casinos were forced to close during lockdown.

The companies wants to cut 2,300 jobs in South Africa - which will mainly be at Sun City, the Maslow Sandton hotel, the Boardwalk casino and hotel in PE, The Table Bay hotel and Wild Coast resort, Reuters reports.

Income has started to recover as SA started to lift restrictions on casinos, and in July, income was at 39% of a year before. In the first 27 trading days of August, this increased to 56%.

Sun International has lodged a business interruption claim with its insurer.

Rand retreats after monster rally

After the rand saw its biggest one-day rally in almost three years - since President Cyril Ramaphosa won the ANC presidency – on Friday, the currency gave back much of its gains on Monday. It was last trading 2% lower at R16.94/$. 

Friday’s rally was mostly due to dollar weakness. Last week, the head of the Federal Reserve, Jerome Powell, announced a big shift in its policy to deal with inflation, which could mean delays in hiking interest rates. The Fed will tolerate higher levels of inflation, through "average inflation targeting" going forward, he said.

The Fed will aim for an average 2% inflation rate. Powell also indicated that interest rates will remain at or near zero, as the US economy struggled to recover from the coronavirus crisis.

Lower interest rates can be negative for a currency, because traders earn less when they hold the currency.

The rand’s retreat on Monday came as new statistics from the JSE show that foreigners were the net sellers of almost R1 billion in SA shares last week, while they also sold off a net R106 million in South African bonds.

Life Healthcare says July income still 14% below last year

In a trading update, hospital group Life Healthcare warned that the pandemic has “significantly impacted” its performance in the second half of its financial year.

In April, fewer than 40% of its acute hospital beds were occupied in southern Africa, due to lockdown level 5 and no elective cases. The occupancy levels have improved to around 61% currently.

Its revenue for April was some 40% below April 2019. This has recovered, but last month’s revenue was still around 14% below July 2019.

Spur COO quits, short on the heels of CEO 

Spur's Chief Operating Officer, Mark Farrelly, has resigned only six weeks after the company's CEO Pierre van Tonder said he will retire.

Farrelly has been Spur's COO since 2012, and will focus on his own restaurant interests. He's the master franchisee for Spur International in New Zealand where he owns the Spur restaurant in Auckland.

Update from the ANC NEC gathering 

At this weekend's NEC meeting, President Cyril Ramaphosa seemingly disarmed those calling for his resignation by offering to approach the ANC's integrity committee to account for the funding of his presidential campaign.

Meanwhile, finance minister Tito Mboweni denied rumours that he resigned, after he was reprimanded by Ramaphosa for his criticism of the Zambian government.

Sea Harvest sees good growth in exports

Sea Harvest posted a 7% increase in revenue to almost R2 billion in the six months to end-June. Its headline profit remained flat.

Its export revenue increased 9%, thanks in part to the weak rand, and now represents 54% of total revenue, with Europe remaining Sea Harvest’s largest export market.

The company also saw sales of its frozen fish via local retailers increasing by 31% thanks to “increased in-home consumption”.

RCL hurt by fall in demand for fast-food chicken

RCL Foods - owner of brands like 5 Star Maize Meal, Bobtail, Rainbow, Selati and Yum Yum - suffered a loss of R959 million for the year ended June 2020.The closure of fast-food restaurants during the first stage of lockdown hit its chicken sales, but the company says sales of pet food, peanut butter and rusks grew. The company declared a dividend of 10c per share

ARM bolstered by weak rand, platinum

African Rainbow Minerals posted a 6% increase in headline earnings to R5.5 billion for the year to end-June.

Higher platinum and iron ore prices more than offset the negative impact of lower manganese ore, manganese alloys and thermal coal prices.

The weaker rand – which dropped 11% against the dollar during the year – also assisted its results.

AngloGold sells Mali mine

AngloGold Ashanti and Barrick Gold will sell their 80% stake in the Morila Gold Mine in Mali, to Australian company Mali Lithium for between $22 million and $27 million (R447 million).

Morila Gold Mine halted mining operations last year, and is currently processing only ore stockpiles.

'Hiring standstill' in SA hits ADvTECH 

ADvTECH – owner of private schools like Crawford Schools, as well as tertiary institutions like Varsity College and Vega – reported a 13% increase in revenue to R2.8 billion, while its headline earnings fell by 8% in the six months to end-June.

While pre-primary and primary school enrolments declined, its numbers of high school and tertiary students were flat or higher. School fee collections for the period were 8% higher than last year, but 5% below its target.

ADvTECH also owns recruitment firms, which was hit by a “hiring standstill” in South Africa in the second quarter. The unit’s revenue fell by 21% to R99 million, and it has had to resort to salary cuts, temporary layoffs and retrenchments.

Friday August 28

SA's national finances aren't looking great right now

A high-level national financial statement until end July, published on Friday afternoon, showed year-to-date revenues nearly R90 billion behind those recorded at the same time in 2019. That is a decrease of 23%.

Expenditure, meanwhile, was R14.6 billion ahead of the same time last year, an increase of 2.7%, according to the state of the budget release, which tracks actual income and expenditure.

In July alone, servicing debt cost R33.8 billion.

Ackermans and Pep did okay despite Covid-19

Value brands with a focus on essentials in various countries did relatively okay despite Covid-19, Steinhoff International reported on Friday, and that includes Pep and Ackermans.

In euro terms Pepkor Africa reported a 10% decrease in revenue in the nine months to the end of June, but in constant currency terms the decrease was only 2% – similar to results from Europe.The African unit took a hard hit in the third quarter, though, dropping 17% of revenue in constant currency.In total, Steinhoff says, Pepkor Africa lost €285 million (R5.7 billion) in revenue due to lockdowns.As soon as stores reopened though, Pep and Ackermans saw positive sales levels, Steinhoff said.“Trading was resilient due to the defensive discount and value market positioning, with consumers prioritising apparel spending in areas such as babies’ and children’s clothing and focusing on basic and replenishment products.”

ANC NEC meets amid corruption turmoil

The ANC’s national executive committee meets today, and News24 reports that the meeting will comb through a list of its leaders and members who have been implicated in corruption.

Meanwhile, the ANC's integrity commission wants an audience with secretary-general Ace Magashule to discuss his comments that he will not step aside due to corruption allegations.

And former Eskom CEO Brian Molefe has subjected himself to the committee in an effort to clear his name. He is being sued by the Special Investigating Unit (SIU) and Eskom for his role in the looting of R3 billion from its coffers.

Northam sees massive profit jump

Northam Platinum reported an increase in sales revenue of more than 67% to R17.8 billion for the past year, thanks to a 61% increase in the prices of platinum, palladium and other metals – as well as the rand’s weakening of more than 10% against the dollar.

Headline earnings rocketed more than 1,000% to 619.5c per share (from 15.8c previously). ("Normalised" headline earnings jumped 150%).

Thursday August 27 

Sasol shuts its US project as Hurricane Laura hits

Sasol has closed its $13 billion Lake Charles Chemicals Project after Hurricane Laura made landfall in the US.

The hurricane slammed into the Gulf Coast on Thursday, bringing "catastrophic storm surge, extreme winds and flash flooding" according to the US National Hurricane Centre

Sibanye profitable again

Sibanye-Stillwater returned to profit in the half year to end-June, posting headline earnings of 350c per share, compared to a loss of 54c a year earlier. 

Sibanye-Stillwater is the world's largest primary producer of platinum, second largest primary producer of palladium and third largest producer of gold.

The company also declared an interim dividend of 50c per share.

Aspen profit to increase by up to 7%

Pharmaceutical group Aspen expects its headline profit to increase by up to 7% for the year to end-June. Its net borrowings declined to R35.2 billion, from R37.9 billion at the end of December.

Aspen says that it benefited from a demand for its clinical products to treat Covid-19, as well the "stockpiling of everyday healthcare products" ahead of the lockdown. But this was more than offset by delays in the recovery of elective surgeries during the pandemic and the absence of a flu season in South Africa.

JSE fines Iqbal Surve's AYO 

The JSE has fined AYO Technologies R6.5 million for "material" errors and misstatements in its financial results since 2018.

"AYO’s previously published financial information did not comply with IFRS and was incorrect, false and misleading in material aspects and this incorrect information was disseminated to shareholders, the JSE and the investing public," the JSE found.

AYO said in a statement that it "acknowledges and respects" the JSE’s findings - "notwithstanding AYO being of the opinion that the relevant IFRS [accounting] rules can be interpreted differently".

In 2017, the Public Investment Corporation, which manages civil-servant pensions, spent R4.3 billion on a 29% stake in Iqbal Surve’s AYO Technology.

This was based on a valuation of AYO at R13 billion when in fact the company had total assets worth only R292 million.

Massmart loses more than R1bn in lockdown

Massmart suffered a headline loss of more than R1 billion for the past six months, as its total sales declined by 9.7% - despite a doubling in online sales. The company wants to save R1.9 billion in costs over the next three years.

Massmart's share price. Source: Google

Blue Label back in the black - despite Cell C

Blue Label Telecoms, key shareholder of the embattled Cell C and a provider of payment solutions for electricity, airtime and data, reported a headline profit for the year to end-May after steep losses last year. This is despite Cell C losing R3.6 billion over the period.

Alcohol ban cost Distell more than R4bn

Distell - which owns brands like Hunter's, Savanna, Klipdrift and Amarula- saw its headline profit fall by 64% due to the months-long alcohol ban in SA.The ban cost the group 100 million litres in sales volumes and R4.3 billion in revenue. Its contribution to excise duty in SA fell 11.3% to R6.3 billion. 

It also struggled with exports due to backlogs at the Cape Town harbour. Group revenue fell 14.6% to R22.4 billion on 22.5% lower volumes. 

Covid-19 tender winners revealed

In a move to increase transparency, the presidency has confirmed that a register of all companies who received Covid-19 tenders have been published online.

Wednesday, August 26

ArcelorMittal's KZN furnace breaks down

Reuters reports that a blast furnace at its Newcastle works in KwaZulu-Natal broke down and suffered thermal damage. It will be offline for an estimated three weeks for repairs.

Murray & Roberts suffers loss

The construction company Murray & Roberts says it took a R622 million hit from the impact of Covid-19, which resulted in a headline loss of 88c per share, from a 114c profit in the previous year.

"Even though the FY2020 financial performance was disappointing, the platform has done well by broadening its market focus and establishing strong positions in the specialist infrastructure and resources growth sectors in Australia, which are expected to remain buoyant over the next decade," the company said. It has an order book of R54,2 billion and near orders of R11,4 billion. 

UK bookmaker wants to buy SA’s biggest horse racing business for almost R1 billion

The UK bookmaker Betfred has launched a bid for SA’s Phumelela Gaming and Leisure, which is currently in business rescue.

Founded in 1997 and based at the Turffontein racecourse in Johannesburg, Phumelela is SA’s biggest horse racing business. It operates four racecourses, more than 200 tote outlets and online sites, as well as a telephone-betting centre. It also owns Betting World, which has nearly 70 retail outlets and an online platform.

It filed for business rescue during lockdown, but received R100 million in emergency funding from the Oppenheimer family to keep afloat.

In a letter sent to the business rescue practitioners, BetFred proposed an offer of between R875m and R925m for all of Phumelela’s assets. In addition, it will make a loan of R650 million to save the businesses.

Betfred is a large bookmaker in the UK, which was founded more than half a century ago and has an annual turnover of more than R16 billion.

DRDGold profit up by more than 600%

DRDGold expects a 660% increase in its headline earnings thanks to a 52% boost to its revenue, which reached almost R4.2 billion in the year to end-June.

Over the period, the gold price jumped by 33% - which offset the impact of loadshedding on its SA mines, as well as mine closures in the first phase of lockdown. 

DRDGold says its Covid-19 infection rate has been low, and the 50-bed quarantine facility established at its Ergo mine is presently vacant.

DRDGold doesn’t have any bank debt, the company added. Its results will be published on September 1. DRDGold's share price has jumped almost 200% since the start of the year.

DRDGold's share price. Source: Google

Nedbank takes 70% profit hit, but says demand for home loans, car finance is on the rise

Nedbank has reported an almost 70% decline in its headline profit to R2.1 billion as bad-debt provisions and a slowdown in “client activity” hit its bottom line.

Its impairment provision for bad debt has increased by 202% in the six months to end-June.

Nedbank has suspended dividends as well as “cash bonus payments to certain individuals”.

READ | SA banks are reporting a bad-debt bloodbath - but it may look worse than it really is

The bank says that demand for home loans and vehicle finance has started to strengthen, thanks in part to the steep cut in interest rates in recent months, as well as “reduced asset prices”, with customers switching to used vehicles.

Nedbank’s home loan approval rate has marginally increased to 52%, while its vehicle finance approval rate is down 4% to 32%.

Double-digit growth in sales of Corenza, Allergex - but Adcock hit by lower prescription sales

Pharmaceutical company Adcock Ingram reported a 1.2% increase in headline profits to almost R710 million for the year to end-June.

The company grew its over-the-counter sales by almost 2% to more than R2 billion thanks to double-digit growth in sales of Corenza C and Allergex.

However, the lack of SA's flu season impacted sales of medicines which are usually in hot demand this time of year.

Also, its sales of prescription medicines were under pressure as fewer South Africans went to the doctor during the lockdown period, and elective surgeries were postponed.

Adcock did not declare a final dividend given the uncertainty in the market. "In the absence of relief on the Single Exit Price, margin compression in the Group is inevitable at current exchange rate levels. In addition, the longer the pandemic persists, the greater the risk that current levels of weak demand in parts of the Group's portfolio will continue," Adcock added.

Enterprise name stays, says Country Bird

Enterprise polony

Country Bird Holdings says it won’t change the name of the Enterprise meat brand – despite it being tainted by the listeriosis outbreak. Country Bird is buying the brand from Tiger Brands for R153 million.

Read more.

Tuesday, August 25

Rand hits best level since July

The rand is still on a tear, hitting R16.79/$ by lunchtime and remaining below R20/euro, at R19.85/euro. Global investors are in a buoyant mood, with the S&P 500 hitting another record close overnight after US authorities gave emergency approval for blood plasma from recovered patients to be used as a coronavirus treatment option. Also, there are reports that the US and China are making progress in trade negotiations.

Super Group warns of 34% fall in profit

Super Group has warned that its revenue fell by up to 10% due to constrained consumer demand in South Africa and “political uncertainties” in Europe and the United Kingdom, in addition to the Covid-19 pandemic. Super Group is involved in a range of sectors, including supply chain and fleet management as well as car hire and vehicle dealerships.

Earnings before interest, taxation, depreciation and amortisation for the financial year is expected to decrease between 32% and 34% from R3.7 billion.

Dis-Chem sales jump almost 9%

For the 24 weeks from 1 March to 15 August, Dis-Chem saw revenue growth of 8.8% to R11.7 billion compared to the same period last year.

This is despite the fact that the company couldn't sell 20% of its products during Level 5 of lockdown - which represented lost revenue of around R200 million. Also, the lack of a flu season in South Africa (due to Covid-19 related precautions like wearing masks and social distancing) hit its over-the-counter medicine sales. "

Strong chronic drug adherence due to health education, awareness and higher patient risk, partially offset the impact." Healthcare and nutrition sales rose 19%, while personal care and beauty sales rose almost 5%. The only category that saw a decline in sales was baby care (-2.6%) due in part to families stocking up before the lockdown started.

READ | Clicks' pharmacies hit as flu season goes AWOL - usually 10 million South Africans end up sick

Nedbank's finance boss quits to join Vodacom

Raisibe Morathi
Raisibe Morathi

Nedbank's chief financial officer since 2009, Raisibe Morathi, has resigned to join Vodacom in the same position.

She will be followed up by another Nedbank exec, Mike Davis.

Nebank CEO, Mike Brown, said "whilst we are disappointed that she has decided to pursue new opportunities outside of the group, we thank her for her valued contribution to Nedbank over the past decade."

Morathi will leave the company at the end of September and join Vodacom at the start of November.

Davis is currently group executive of balance sheet management and is an existing member of the group exco.

Lewis sees rising sales despite lockdown 

This morning, furniture retailer Lewis reported a 30% fall in headline profit for the past year, but saw revenue rise by more than 5% despite the impact of the pandemic. It declared a dividend of 185c for the year.

Pandemic didn't hit Italtile's debtors' book 

Italtile (which also owns CTM) also posted solid results given the circumstances. While sales fell 7% to R9.3 billion, and headline profit was down 22%, it saw double-digit growth in June and July and the company also declared a dividend. "It is also pleasing to report that the pandemic has had no material impact on our debtors' book, which remains healthy," the company said.

Imperial profits down 

The logistics company Imperial reported a 65% fall in headline profit in the year to end-June, while revenue rose by 5% to R46.4 billion thanks to new contracts and acquisitions. The company sold its European shipping business for R3.4 billion in recent months.

Imperial declared an interim cash dividend of 167c per share.

Monday, August 24

Blue Label swings to profit

Blue Label Telecoms, controlling shareholder of the embattled Cell C and a provider of payment solutions for electricity, airtime and data, expects to report a profit for the year to end-May after steep losses last year. 

"The lockdown regulations and the downturn in economic activity have not impacted negatively on airtime, data and electricity sales volumes." The company generated R1.3 billion in cash from its operations.

It expects to post a headline profit of up to 58.47c per share, compared to a loss of 312.49c last year.

Tongaat fined R20 million for accounting irregularities

The Financial Sector Conduct Authority (FSCA) has imposed a R20 million administrative penalty on Tongaat Hulett after its probe into the sugar producer found significant accounting irregularities.

The watchdog initially proposed a sanction of R118 million. This was later reduced to R20 million because of cooperation from Tongaat as it sought to avoid further penalising shareholders. Read more.

Aspen rallies after news of talks

Aspen's share price jumped 7% on Monday morning, after announcing that it is in discussions related "to a possible transaction in respect of a segment of its European commercial business".

Ramaphosa reprimands Mboweni

Tito Mboweni
Finance minister Tito Mboweni delivering the supplementary budget speech on Wednesday. (Parliament of SA)

In a statement on Monday, President Cyril Ramaphosa branded finance minister Tito Mboweni's comments about the axing of Zambia's central bank governor "unfortunate". 

Over the weekend, Mboweni lashed out at the Zambian government following the removal of Denny Kalyalya by President Edgar Lungu.

Ramaphosa sought to assure the Zambian government that Mboweni's views do not reflect that of the SA government. Read more.

Big demand for new City Lodge shares

Shareholders have applied for more than 97% of the shares issued as part of City Lodge’s new R1.2 billion rights offer – an attempt by the company to shore up its finances amid the coronavirus crisis.

“The capital raised will bring much needed stability to our financial standing and allow management to focus fully on operational matters as we continue to navigate these highly uncertain times,” says City Lodge CEO Andrew Widegger. The rights offer is the first equity capital raise since the company listed on the JSE in 1992.

Two weeks ago, Sun International shareholders applied for 94.52% of the shares that were on offer as the hotel group seeks to raise capital to stay afloat during the Covid-19 pandemic.

‘More than 10’ bids now for SAA and its subsidiaries – including Mango

As of the beginning of August it had received “more than 10 unsolicited interests for SAA and its subsidiaries Air Chefs, South African Airways Technical, and Mango Airlines,” the department of public enterprises said in a statement on Monday.

It did not identify the interested parties, or provide any information on their proposals.

The expressions of interests had come from funders, equity investors, and “partners”, it said.

It reiterated that the state foresees “maintaining a certain level of presence in the ownership of the new carrier” it wants to succeed SAA.

Edgars sale agreement signed 

Retailability, a retail chain which owns the Legit brand, has signed the sale agreement to buy some Edgars shops.

Previously, Edcon CEO Grant Pattison said that Retailability has committed to buying a “minimum” number of stores as part of the new deal.

“You can’t force a buyer to buy something. They make an offer for what they want to buy.”

He says the company has done intensive due diligence of the entire Edgars business.

“They want to – which makes sense – buy the profitable bits of Edgars. Some stores make a profit and some stores make a loss.”

The closing of the transaction is targeted for September and is still subject to various conditions and regulatory approvals, including the competition authorities. 

Famous Brands is selling out of restaurant chain Tashas, after building it up from just two stores

Famous Brands, owner of Steers and Wimpy, announced it is selling its 51% stake in the Tashas chain of more up-market restaurants.

The money involved "falls below the threshold of a categorised transaction" which would require disclosure, Famous Brands told shareholders, feature no suspensive conditions, and will be effective as of 1 August.

"The sale is in line with the group’s three year-strategic roadmap which includes a narrower focus of investment of resources in the Signature brands portfolio," it said.

The better-known brands in that portfolio include Europa, House of Coffees, and Keg pubs.

Famous Brands bought the controlling stake from the founding Sideris family in 2008, three years after the creation of the chain – which at the time consisted of two restaurants. There are now 18, not counting the eight in the United Arab Emirates.

The Sideris family are buying back the shares. 

Bidcorp took a R1.5 billion Covid-19 hit

Food services company Bidcorp warned shareholders that the annual results it plans to release later this week will not be pretty, thanks to what it bluntly described as "the catastrophic economic and social consequences" of Covid-19 and associated lockdowns.

It its last quarter, the company said, sales were down 28% year on year, while it also saw huge new costs: R248 million worth of "inventory obsolescence", R470 million in restructuring costs, and R785 worth of "additional receivables provisioning" it categorises among the abnormal coronavirus costs.

That is not counting R940 worth of asset impairments, of which Bidcorp says the most significant is on its Spanish operation.

Old Mutual warns of loss

Old Mutual expects to suffer a basic loss of between 128.5cc and 154.2c for the six months to end-June.  

New business sales slumped as most of its advisers were unable to sell during the first part of the lockdown period.

Despite the easing of the lockdown, sales levels remain below prior year levels. “This impact was most severe in the Mass and Foundation Cluster, where sales volumes were too low to cover the largely fixed initial expenses and this resulted in negative Value of New Business for H1 2020 for this segment.”

The company also saw an increase in business interruption (BI) claims in Old Mutual Insure during the second quarter due to the lockdown. Its results will be announced on September 1st.

Absa profit down 93% as bad debts on home loans rocket by 1,090%

ABSA's new logo. (Photo: Supplied)
ABSA's new logo. (Photo: Supplied)
Supplied

On Monday, Absa reported a 93% fall in headline earnings to R559 million in the six months to end-June, and says it probably won't pay a dividend this year.

The bank was hit by a massive increase in credit impairments (write-offs on bad debts).

Credit impairments rose by 297%. Home loans’ impairment charge grew 1,090% to R1.750bn, while vehicle and asset finance credit impairments rose 289% to R2.129bn. The impairment charge on credit cards and overdrafts grew 156% to R5.107bn.

Absa gave payment relief on loans to customers representing R217bn, or 22% of total loans.  

The steep cuts in interest rates also hit its profit margins. "We believe there could be another 25 bps rate cut in South Africa this year. Our annual sensitivity to further policy rate cuts in South Africa is a R250m(pre-tax) reduction per 50 bps."

Still, the bank managed to grow its revenue by 3% to R40.355bn, with net interest income growing 6% and non-interest income declining 1%.

Government invites bidders to provide emergency power

On Sunday, government launched the bidding process to procure for 2 000 MW of emergency power from independent power providers.

This comes amid a warning from the Council for Scientific and Industrial Research that 2020 will be a worst year yet for load shedding - projected to reach 1383 GW hours this year, compared to last year’s 1352, which was a record.

Under the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP), bidders are expected to "alleviate the current electricity supply constraints, but also, to reduce the utilisation of dieselbased peaking electrical generators".

All power procured under this programme is expected to be fully operational by not later than the end of June 2022, government says.

The projects are expected to be worth R40 billion.

Prospective bidders need to pay a nonrefundable documentation fee of R25 000.

Friday, August 21

Cell C to close more than half of its stores

Cell C plans to shut more than half of its stores, around 128 outlets as it, Reuters reports. The mobile operator announced recently that it would retrench almost 1,000 workers. 

Cell C has been struggling with its debt in recent years and, earlier this year, defaulted on a R2,7 billion loan that was due at the end of December.

The rand on a run

The rand has strengthened 1.5% so far this week, trading at R17.11/$ on Friday afternoon

The US Dollar Index fell to its lowest level since May 2018 this week as investors grew more bearish toward the currency.

The dollar began its decline in March as the virus slammed the economy and forced widespread lockdowns. The drop worsened through the summer as premature reopenings kicked off a second wave of infections. With legislators failing to agree on new fiscal stimulus and outbreaks continuing to cripple economic activity, the US currency stands to worsen compared to nations containing the virus.

 READ | US dollar slides to lowest level in 2 years as nation grapples with lasting pandemic fallout

Tiger Brands takes a profit hit 

Tiger Brands expects its headline profit to fall by 40% over the year to end-June.The company said it suffered a poor first half, but that sales picked up over the past months.

The company saw strong volume growth, particularly in rice, pasta, Jungle (breakfast oats), groceries and home and personal care categories.

Revenue from continuing operations for the three months to June rose by 11% to R7.2 billion. 

Tiger Brands chair Khotso Mokhele will step down at the end of the year, and will be replaced by Geraldine Fraser-Moleketi, a former cabinet minister. 

Ex-CFO of Transnet, Eskom booted out of accountant body

Anoj Singh Photo; Netwerk24

The South African Institute of Chartered Accountants (SAICA) has made a final ruling to suspend Anoj Singh’ s membership, finding him guilty of 12 of the 18 charges proffered against him.

While Transnet's chief financial officer, Singh has been implicated in wrongdoing in Transnet's controversial procurement of 1,064 locomotives for more than R38 billion in 2014.

Singh stands accused of colluding with Regiments Capital, which is associated with the Gupta family, in the transaction. In 2015 he left Transnet for Eskom.

Saica also found that Singh has to pay half of the costs incurred by the organisation in respect of his disciplinary case.

Sun International sells Latin American business

Sun International's share price. Source: Google

Sun International will sell its stake in its Latin American casino operator Sun Dreams to a partner for $160 million (almost R2.8 billion).

"Although Sun Dreams has an attractive portfolio of assets and a number of opportunities for growth, it is, at the     same time, facing several challenges," Sun International said in a statement. Among these are "political and social reforms" in Chile, new licensing renewals and the need to secure funding for a new projects.

Furthermore, its Latin American unit is involved in arbitration with its partner in Sun Dreams, Pacifico, which the Parties wish to resolve. Pacifico will buy the stake from Sun International.The proceeds from  the transaction will be used to help reduce Sun International's debt in South Africa. Its share price jumped almost 8% on Friday morning.

RCL Foods takes 70% profit hit

RCL Foods, which owns brands like 5 Star Maize Meal, Ouma and Rainbow, has warned that its headline profit for the year to end-June will fall by up to 70% due to the impact of the pandemic and lockdown.

The company is writing down R1.5 billion on the value of its property, plant and equipment, goodwill and trademarks.

Dis-Chem abandons appeal against price-gouging ruling 

The Competition Commission reported this morning that Dis-Chem withdrew its appeal after it was found guilty of excessive mask pricing, and fined R1.2 million.

The Commission Tribunal found that the pharmacy chain contravened the Competition Act by charging excessive prices for three types of surgical face masks: SFM 50, SFM 5 and Folio50, which was to the detriment of consumers during March.

"One such increase took place on the very day that South Africa's first Covid-19 case was announced," the tribunal noted. It found that Dis-Chem failed to show the price increases were reasonable.

"In our view, Dis-Chem's massive price increases of surgical masks during the complaint period; are utterly unreasonable and reprehensible," it said. "Poorer customers would have been excluded from accessing the masks by such exorbitant increases, other customers would have spent more on these items as a percentage of their disposable income."

Eskom suspends load shedding

After a "difficult week of load shedding", Eskom has suspended power cuts after generators returned to service. No load shedding is expected over the weekend.

Thursday 20 August

Nedbank profit takes hit 

In a trading update on Thursday, Nedbank warned that its headline profit could be between 67% and 72% lower for the six months to end-June."The largest impact of the Covid-19 pandemic on the group's financial performance in the six months to30 June 2020 has been a significant increase in the impairment or expected credit loss charge," Nedbank said. The bank agreed to restructure R119 billion in loan agreements for 375,000 clients.The bank benefited from very strong trading income growth given increased market volatility. Nedbank says client transactional activity in May and June improved from the lows in April, but remained below March levels. The company did not declare an interim dividend.

Gold Fields CEO to retire

Nick Holland
Nick Holland of Gold Fields

After 13 years as CEO, and 24 as an executive director, Nick Holland (61), will retire at Gold Fields in September 2021. 

Chair Cheryl Carolus said this was in line with the company’s retirement policy. 

Massmart warns of R1 billion loss, may sell Masscash stores

Walmart-controlled Massmart, which owns Makro, Game, Builders Warehouse and others, has seen sales decline by almost 10% to R39.6 billion for the six months to end-June. Prices were 3.7% higher than the same period in 2019.

In June, however, sales were actually almost one percent higher than the year before – Massmart says this is due to “pent-up consumer demand”, presumably for alcohol, following the most stringent period of the lockdown.

The company is expecting to suffer a headline loss of more than R1 billion, due in part to the cost of closing all of its Dion Wired and 11 Masscash stores.

Massmart also said that the possible sale of the Masscash stores is currently under review. Masscash contains the wholesale division of Massmart, as well as its retail outlets for lower LSM groups. It includes brands like CBW, Jumbo Cash and Carry, Trident and Shield.

Implats expects 400% jump in profit

Implats expects headline earnings of up to R16.2 billion for the year to end-June - an increase of up to 433% from the previous years.This was thanks to a significant increase in the dollar prices of platinum and palladium, together with rand depreciation.

Implats share price. Source: Google

Standard Bank profit falls by 44%, bad debts write-offs double

For the six months to end-June, Standard Bank saw a 44% fall in its headline earnings to R7.5 billion.

Impairment charges for bad debts in its personal and business banking division rose to R8.6 billion - 2.3 times more than the charge for the same period in 2019.

"Client behaviour" after the expiry of payment holidays and other relief measures will be key, Standard Bank notes. 

"Forecast risk remains high and should the outcome be worse than expected, additional provisions will be required."

The bank didn't declare an interim dividend.

Sanlam to launch black-owned asset manager 

Sanlam plans to launch a South African black-owned asset management company. 

This will involve the creation of a new investment holding company (“NewCo”), which will hold 100% of Sanlam Investment Holdings. SIH owns Sanlam Investment Group’s interests in third-party asset management businesses in South Africa.

Patrice Motsepe's African Rainbow Capital Financial Services will buy shares in NewCo for around R800 million, which will give it a stake of 25% in SIH.

Mr Price ditches plan to raise billions

Mr Price has abandoned plans to raise more than R3 billion in the market as it can’t find suitable takeover targets, and its balance sheet recovered faster than expected after the initial knock from the lockdown.

But the company has warned that its headline profit will be 20% lower for the past six months, with clothing sales down 22% compared to the previous year, and home goods sales 15% lower.

After Mr Price couldn’t sell any clothing during the first part of lockdown, it initially experienced “a high level of pent-up consumer demand” from May. But sales growth slowed in June and July, and some stock shortages were experienced.

But in the first two weeks of August, inventory increased and the group reported double digit sales growth.

Customers continue to favour cash, which now represents 86% of total sales. Credit sales have fallen in lockdown.

Online sales grew 75%, with average weekly sales above the levels reported in the week of Black Friday in 2019.

Mr Price Sport has been hit by the closure of gyms, as well as restrictions on school activities and team sports, as well as gym closures. Milady’s also saw a slump in sales.

But Mr Price’s home segment benefited from customers working from home and wanting to “update their living spaces”.

Cellular (handsets and accessories) recorded growth of 49.7% in the period and are now available online, adding further opportunity for growth, Mr Price said.

While Mr Price was planning to issue shares to strengthen its balance sheet, “as well as to take advantage of opportunistic acquisitions”.

But it now says its balance sheet has recovered well from the initial impact of the level 5 lockdown, and it hasn’t found acquisition targets that met its “strict criteria”. Accordingly, it won’t go ahead with raising capital.

Mr Price is gloomy about future prospects in SA. “Disposable income levels will weaken further as mortgage holidays end, emergency savings are depleted, unemployment grows and low to no wage inflation takes effect.”


Gold Fields profit quadruples

Gold Fields has seen a 300% increase in its headline profit in the six months to end-June thanks to booming gold prices.

It will pay an interim dividend of R1.60 per share - from 60c last year.

Despite the lockdown, gold production rose marginally over the past six months. Its South African mine, South Deep, generated a net cash inflow of R79m, compared to an outflow of R238m last year.


Wednesday, August 19

Sanlam to write off R6.8 billion amid coronavirus crisis

Sanlam has warned that its headline profit will fall by up to 15% in the six months to end-June. It was hit by an increase in bad debts at its finance businesses due to the coronavirus crisis, and negative investment returns at the height of the crisis. 

The company will also write down around R7.8 billion, mostly relating to its takeover of SAHAM Finances, a Moroccan-based insurance group.

Its share price fell by 1.5% to R60.33.

Sanlam's share price

In its trading update, the insurer Santam said that its half-year profit will fall by up to 38%.

Provisions for Covid-19 related claims have hit the company, but this was offset “to some extent” by fewer car insurance claims. The stringent lockdown in South Africa resulted in fewer car accidents and lower crime rates.


Murray & Roberts takes R622 million hit from pandemic

The construction group Murray & Roberts has warned of a “perfect storm” that hit its finances as a result of the coronavirus crisis.

While the majority of its projects have now resumed operations, few were unaffected by the crisis, some were suspended andothers were placed on care and maintenance.

The direct profit impact of this pandemic on projects during the year is estimated at R622 million.

“This negative impact, combined with the impairment of an R80 million vendor loan relating to the sale of Genrec, now in business rescue, the impairment of R63 million relating to goodwill on two Group companies due to market uncertainty, and the impairment of R46 million of uncertified revenue on a claim, created a perfect storm for the Group. Execution challenges on a few projects also disappointed.

It now expects its full-year headline profit to fall by up to 86%.  Murray & Roberts has an order book of R54.2 billion. Its share price was up almost 2% on Wednesday.


Rand at its best level in two weeks

By late afternoon on Wednesday, the rand strengthened to around R17.20/$ - close to its best level in almost two weeks. As recently as last week it weakened to above R17.75.

The rand was at R22.76/pound and R20.56/euro by early afternoon.

The rand received a boost as market sentiment improved after South Africa moved to Level 2 of the coronavirus-enforced lockdown, with the sale of tobacco and alcohol being permitted for the first time in five months, says Anchor Capital in a note. 

Business Insider US reports that the greenback slid to a two-year low on Tuesday as investors grew increasingly concerned about how a stimulus deadlock could exacerbate the coronavirus' economic scarring.

The US Dollar Index - which tracks the dollar's value against a basket of other currencies - fell as much as 0.8% to its lowest since May 2018. The gauge has fallen for five days straight, bringing its year-to-date drop to around 4.2% as the US continues to grapple with the pandemic.

The dollar began its decline in March as the virus slammed the economy and forced widespread lockdowns. The drop worsened through the summer as premature reopenings kicked off a second wave of infections. With legislators failing to agree on new fiscal stimulus and outbreaks continuing to cripple economic activity, the US currency stands to worsen compared to nations containing the virus.

Dollar index. Source: Markets Insider


CNA sales at 60% of last year's levels

cna
A CNA store at the Woodlands Boulevard mall, Gauteng. (Photo: Woodlands Boulevard)

CNA – which is under new ownership – is back to 60% of sales a year ago.This has emerged from a trading update by listed group RECM and Calibre Limited, which – via the investment company Astoria – now owns the majority stake in CNA. Astoria bought a 70% stake in CNA earlier this year from the now near-liquidated Edcon, which also recently sold its Jet and Edgars stores in two separate deals.

Benjamin Trisk, the former CEO of Exclusive Books, now heads CNA and also has a stake in the company.

READ | The former CEO of Exclusive Books now owns part of CNA – here’s how he wants to change the shops

“CNA has completed the first 100 trading days under the new management team and is trading at about 60% of comparable previous year levels. It is still early in the life of this investment, and a number or risks remain, including the successful establishment of its own technology and logistical systems. The skill with which the management team has navigated the first three months bodes well for the future,” RECM and Calibre said in a statement.

The company said that 90% of its underlying investments are now unlisted, and it has not revalued these investments following Covid-19. “It is therefore pointless to calculate an updated [net asset value] per share at this time.” The NAV will be updated during its interim results in November.


Former AngloGold CEO dumps R5 million in shares

Kelvin Dushnisky.
Getty Images

After his unexpected departure as AngloGold Ashanti CEO, Kelvin Dushinsky this week sold more than R5.1 million in shares in the company.

Dushinsky cited personal reasons for his resignation. But Bloomberg reported the company's biggest shareholder, the Public Investment Corporation (PIC), might have pushed him out, following a probe into an undisclosed bonus payment Dushnisky received from his former employer, Barrick Gold.

READ | Investors still puzzled by AngloGold CEO's abrupt and sudden departure


MTN's new CEO looks forward to 'unlock value'

Ralph Mupita

MTN has a new CEO - Ralph Mupita, previously the company’s chief financial officer. Mupita has been with MTN since 2017, and was previously the CEO of Old Mutual Emerging Markets for five years.

MTN’s current CEO, Rob Shuter, is leaving the company at the end of August to head the enterprise unit of UK telecommunications giant British Telecom. 

"Ralph’s experience as the group CFO, strong knowledge of our businesses and markets, as well as successful background in financial services, M&A and emerging markets, place him in an excellent position to lead the growth and sustainability of the business going forward," said MTN chair Mcebisi Jonas 

For his part, Mupita said that he is looking forward to driving "growth and unlocking value for shareholders and broader stakeholders”. MTN announced recently that it plans to exit its businesses in the Middle East and focus on a "pan-African strategy". 

READ | MTN’s leaving the Middle East after 15 years of controversies. Here are the biggest.

Mupita studied engineering at the University of Cape Town, and also has an MBA.


Curro takes a profit hit - and is converting nurseries into primary schools

Curro is converting some of its nurseries into primary schools as the coronavirus crisis hits pre-school demand. “Due to market conditions, the nursery school market has remained subdued as this is considered a non-compulsory phase of schooling. Curro is addressing this by converting selected nursery schools to primary schools and assisted learning facilities," CEO Andries Greyling said in the company's half-year results. Curro reported a 23% fall in its headline profit to R160 million for the half year to end-June. Learner numbers rose by 5% to 59 967. 

While the company hiked school fees by 15% this year - the coronavirus crisis meant it had to increase discounts to parents from 7.5% to 12.6% of its revenue. This included the launch of a R60 million Covid-19 relief fund, which was set up. Curro extended its focus to address the financial impact on its parents. Its revenue increased by 7% to R1.590 billion.  

Greyling says that Curro will complete the academic year and all learners will be assessed by the end of the year.

As of the end of July, over 400 learners had enrolled for Curro Online – Curro’s new online school. 

READ | Here’s how much Curro’s new online school will cost and what grades are on offer when it opens


Truworths writes off billions as UK business falters

Truworths expects its headline profit to be down by up to 33% for the past year to end-June. The company is writing off almost R2.8 billion from the value of its struggling UK shoes business, Office. Still, Truworths' share price rallied 6% on Wednesday morning.


Grindrod's share price jumps despite warning of loss

The shipping and logistics group Grindrod expects to suffer a headline loss of up to R247 million for the six months to end-June. But the company's share price was up almost 3% in opening trading, as it reported that it generated cash of more than R500 million from its operations "well up on the prior year" - despite the impact of Covid-19.

its seafright and container operations achieved profit growth, and the company said it is benefiting from its presence in the northern Mozambique gas region, with four barges now on charter. Some 150 trillion cubic feet of gas reserves can potentially be exploited in Mozambique.

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