Today in business: Ruling against Guardrisk, Netflix appoints Zim billionaire to its board
Rand gets boost from US optimism
The rand was last at R14.70/$ after the US market closed at record highs overnight on news that a $900 billion US fiscal stimulus bill will be announced soon.
Ruling against Guardrisk, big win for restaurants
In a landmark ruling for restaurants, the Supreme Court of Appeal has ordered Guardrisk, which is owned by Momentum Metropolitan, to pay a Cape Town restaurant's lockdown insurance claims.
This is expected to set a precedent, and will allow all restaurants with "business interruption" claims to get money for lockdown losses.
The Court found that the lockdown is a covered claim event because the outbreak of Covid-19 in Cape Town was the cause of Café Chameleon’s business interruption. The Western Cape High Court also made the same ruling in July, but Guardrisk decided to appeal it at the SCA, hoping for a different outcome.
Manuel wins against the EFF
The Supreme Court of Appeal also upheld a high court finding that the EFF's statements about former finance minister Trevor Manuel were "false, defamatory and unlawful". The EFF issued false claims that Manuel oversaw a "corrupt" process to appoint new SARS commissioner Edward Kieswetter.
Netflix appoints Zim billionaire to its board
Netflix appointed Zimbabwean billionaire Strive Masiyiwa to its board, adding its first African director as it looks to new markets for future growth.
Masiyiwa is the founder and executive chairperson of the mobile phone group Econet Global
SA misses vaccine payment deadline
South Africa reportedly missed its deadline for the payment of a deposit to secure a Covid-19 vaccine through the Covax coalition.
Bloomberg reports that South Africa missed a December 15 deadline to make a deposit to secure vaccines to fight the pathogen, and hasn't arranged a guarantee to make the full payment.
SA gets climate change commission
President Cyril Ramaphosa appointed a 22-member climate change commission yesterday, which includes the head of Eskom's Just Energy Transition Office Mandy Rambharos and head of the United Democratic Movement Bantu Holomisa.
MTN under pressure to audit Nigerian users
MTN said it must verify all its users in Nigeria by year end or the local regulator will block its SIM cards. Earlier this month, the Nigerian regulator ordered service providers to stop selling and activating new SIM cards.
Warning of fuel price hikes in January
Markets trended lower overnight amid concerns about new lockdown measures. Germany and Netherlands announced new lockdowns, and New York City Mayor Bill de Blasio cautioned that the city should prepare for another full shutdown to slow the virus's spread. The rand was last at R15.04/$.
But oil prices climbed after a tanker exploded in a Saudi Arabian port. Brent crude was last trading almost 2% higher at above $50 per barrel. This morning, the AA warned that petrol prices could climb by up to 34c per litre next month, with diesel’s expected to increase by 52c.
Fuel prices have been fallen for three straight months thanks to new rand strength, and continued pressure on oil prices.
Eskom pays R15 billion in finance costs in six months
Eskom released its results for the six months to end-September, with sales volumes down 10% due to the lockdown.
Its half-year revenue remained stagnate at around R108.7 billion, thanks to an 8.76% tariff increase. Eskom posted a net profit after tax of R83 million in half-year.
It paid interest and finance costs of R15.3 billion on its debt burden of R463.7 billion for the six months.
Eskom Highlights(do we call it -lights while they cant keep them on? ??)*#ESKOM 1H REV R108.7B VS R107.5B Y/Y*SEES FIN PERFORMANCE DETERIORATING IN 2H*SEES FY21 NET LOSS OF R22B*DEBT AND BORROW R463.7B AS OF END-SEP*EXPECTS TO RAISE R40.7B IN FUNDING BY MAR(Bloomberg) pic.twitter.com/FbT1MrBa1D— JC Louw (@jc_louw) December 14, 2020
Ramaphosa calls 'family meeting'
President Cyril Ramaphosa will address the nation tonight, amid fears of renewed lockdown measures. On Sunday night, almost 8,000 new Covid cases were recorded in a single report.
Eskom suspends load shedding
After a day of load shedding on Saturday, Eskom suspended outages on Sunday, but warned that the power system remained severely constrained.
MTN slumps 10%
MTN shares plummeted by more than 10% on Friday after the Nigerian regulator ordered service providers to stop selling and activating new SIM cards. The regulator is currently auditing SIM cards to check whether the companies are complying witn registration rules.
Tongaat's loss shrinks
The embattled sugar producer Tongaat Hulett has reported much improved half-year results – with its revenue from continuing operations up 37% to R8.2 billion and its headline loss improving from R517 million a year ago to a loss of R6 million. This was due to restructuring and a “stand-out performance" from its sugar operations.
Load shedding alert
Eskom warned yesterday there was a "high probability" of load shedding should any further capacity be lost. The system was severely constrained. This was caused by the loss of multiple generation units and high load losses, as well as generation units that were already in planned maintenance - the latter alone amounting to over 7 500 MW. Over 10 800 MW of capacity was out on unplanned maintenance, Eskom said.
#PowerAlert 1Eskom urges the public to reduce the usage of electricity as the system is severely constrained, with a high probability of loadshedding@News24 @SABCNews @NewzroomAfrika @eNCA @IOL @ewnupdates @SundayTimesZA @SowetanLIVE pic.twitter.com/BMArYD2cu3— Eskom Hld SOC Ltd (@Eskom_SA) December 10, 2020
Standard Bank coal call under fire
After Standard Bank said yesterday it will continue to fund coal operations under strict conditions – the decision came under fire from a shareholder group who says this is in opposition with the Paris Agreement.
Discover Bank gets new CEO
Hylton Kallner has been appointed as the new CEO of Discovery Bank, replacing Barry Hore “as the bank has completed its build and migration phase, during which several important milestones were achieved”. The bank now has more than 500,000 accounts and R5bn in retail deposits.
Second wave hits SA
Last night, Health Minister Zweli Mkhize announced that SA has entered its second wave of the coronavirus pandemic, with almost 7,000 new infections in a single report. This has sparked fears of a new lockdown.
McKinsey to pay back R650m, but Transnet wants more
McKinsey & Company has committed to paying back the fees it earned on nine contracts where Regiment worked with the consultancy at Transnet, and one where Regiment worked with McKinsey at SAA. But while McKinsey says it anticipates a payment of around R650 million, Transnet says it wants over R1.2 billion.
Stop playing games with us McKinsey. Publish the list of looting contracts,names of those involved, we will then openly calculate: a)total sum stolen,b)interest payable,c) reparation due. Not you, SA team must decide amount payable. You cannot be the looter & the assessor-surely!— Iraj Abedian (@IrajAbedian) December 10, 2020
MTN to sell towers
MTN Group is looking to sell and lease back part of its portfolio of 13 000 South African telecom towers, new Chief Executive Officer Ralph Mupita said in an interview yesterday.
Sanlam warns of profit drop as Covid death claims reach R229m
In an operational update, Sanlam warned of a 33% drop in its operational profit. Mortality claims where Covid-19 has been specified as cause of death amounted to R229 million.
SAA gets new board members
Six non-executive directors have been appointed to the interim board of South African Airways, including a new chairperson Geoff Qhena, who is a former CEO of the Industrial Development Corporation and a chartered accountant.
Rand rallies to 10-month high
The rand is at its strongest levels since February this morning, at R14.93/$, R19.97/pound and R18.11/euro. This after US markets – including the S&P 500, Nasdaq composite, and Dow Jones indices - closed at record highs overnight as US Congress inched closer to a $908 billion stimulus compromise and coronavirus vaccinations began in the UK. This has increased traders’ risk appetite for emerging-market currencies.
The currency also received a boost from stronger-than-expected economic growth numbers. SA’s economy expanded by 13.5% compared to the previous quarter. This followed a 17.5% contraction in the second quarter (at the height of lockdown).
Barloworld wants to sell dealerships
Barloworld announced that it is in talks to sell its car dealership business. Barloworld holds franchises for Mercedes, Audi, BMW, Ford, Volkswagen and Toyota dealerships.
Anglogold's Pityana resigns suddenly
Former Absa CEO Maria Ramos is AngloGold Ashanti’s new chairman, after Sipho Pityana resigned with immediate effect on Tuesday without giving a reason. AngloGold has faced controversy after its CEO, Kelvin Dushnisky also quit suddenly earlier this year. While this was ostensibly for personal reasons, the revelation of a $800,000 sign-on cash payment when he joined the company in 2018 may also have had something to do with it.
Sygnia posts profit rise
The fund manager Sygnia reported annual results, which showed that its assets under management rose almost 6% to R241.8 billion and its headline profit grew by two-thirds.
Tensions at NEC
As the ANC’s National Executive Committee meeting continues, President Cyril Ramaphosa admitted that divisions run deep. The committee is contemplating whether those found to be implicated on allegations of wrongdoing should step aside.
PPC sees 'robust' cement sales
PPC reported its half-year results this morning, which shows that group revenue increased by 1% to R5 billion, thanks to “robust” cement sales following the lockdown. But while the company also cut costs, its headline profit declined.
Blow to public protector
The Gauteng High Court in Pretoria has set aside Public Protector Busisiwe Mkhwebane's report into the so-called SARS rogue unit – and has issued a punitive costs order against Mkhwebane and describing her conduct as "egregious".
Impala Platinum jumped 10% on Monday following the news that it will pay almost R6 billion to buy back up some of its bonds – which will help scrap debt on its balance sheet. Other platinum shares also rallied, with Northam up almost 5%. Platinum posted its biggest monthly gain last month since 2008.
Telkom's financial boss moves to MTN
Telkom’s chief financial officer Tsholofelo Molefe has resigned to join MTN. She has been Telkom's CFO for two years, and joined the company in 2016.
She will be joining recently appointed CEO, Ralph Mupita's team. Mupita took over as CEO of the mobile operator in September this year after the departure of Rob Shuter
Glasenberg to retire
South African Glencore CEO Ivan Glasenberg has announced that he will retire early next year after 36 years with the company. He will be succeeded by Gary Nagle, who is currently head of the company's coal division. Nagle is a South African, and according to The Sydney Morning Herald, known as a "mini Ivan" - like Glasenberg, he also studied accounting at the University of Witwatersrand, for example.
Nagle will have his work cut out for him - Glencore is currently being investigating by regulators for alleged corruption and bribery. The company - which is one of the world's biggest polluters - has also pledged to cut its greenhouse gas emissions to net zero by 2050.
Pick n Pay, Shoprite wants to help with vaccine
Pick n Pay and Shoprite have confirmed that they can play a part in distributing vaccines in South Africa.
Govt wants $400m for SAA stake
Government wants to raise $400 million from the sale of a stake in SAA, Bloomberg reports. This looks doubtful.
Strong sales for Oceana
The fishing group Oceana saw its annual revenue increased by 9% thanks to by increased fishmeal sales volumes, and sustained demand for canned fish.
Alex Forbes sees profit slump, says retrenchments climbed
Alexander Forbes reported a fall of 41% in its half-year headline profit of all operations, but assets under administration (AuA) increased 3% year on year to R353 billion, thanks in part to stronger markets.
It lost a number of retirement fund members due retrenchments. “Retrenchments and business closures were experienced within our umbrella funds, which are primarily small, medium and micro enterprises. Our standalone client base, comprising larger corporates, while reporting low levels of retrenchments, were impacted by reductions and suspensions in their payroll as well as low levels of employment.” Active members of umbrella fund fell 1.4% since March to 367,406 owing to retrenchments.
Nedbank more positive on SA economy in 2021
In a trading update, Nedbank maintained its forecast that its headline profit will decline by more than 20% for the year to end-December. But it upgraded its outlook for the SA economy – it now expects that GDP will shrink by 8.1% this year, not 9.2% – and that it will grow by 3.0% next year, not 2.5%. It expects interest rates to increase by 50 basis points in the first half of next year.
It has also reduced its expected credit loss ratio – an indication of bad-debt write-offs – from 194 basis points after the first half to between 150 bps to 185 bps.
Santam increases claims provision by R1.7bn after court ruling
Santam has set aside another R1.7 billion to make provision for the impact of a court ruling that says it is liable to pay for business interruption losses related to the Covid-19 lockdown. Santam is appealing the decision.
It has already set aside R1.3 billion for lockdown claims in June.
Work-from-home boosts Italtile sales
Italtile’s headline profit will be up at least 20% for the six months to end-December. The company says sales the current work-from-home trend bolstered demand for home improvement products. Also, lower interest rates and payment holidays have supported spending on their houses. “In addition, with restrictions on travel and leisure activities, some funds previously allocated to transport and recreational pastimes were reallocated to home improvements.”
Govt wants wage dispute hearing postponed
Government has asked that a hearing on its wage dispute with civil servants - scheduled for today - be postponed until next year. The state wants to rather reach an out of court settlement with unions.
Sasol closes deal
Sasol confirmed that its sale of a 50% interest in Sasol’s Base Chemicals business at Lake Charles to LyondellBasell has been completed.
Sasol announces that lake Charles 50% sale has happened. This was the money pit investment in usa. Banks also agreed to new debt covenants. All points to less likelihood of big rights issue. Lake Charles valued at $4bn. I think they spent $12bn. So a $8bn loss or 120bn rand— Wayne McCurrie (@WayneMcCurrie) December 2, 2020
Sygnia profit up
Fund manager Sygnia expects its headline profit to increase by between 62% and 67% for the year to end-September.
Grim times in property
The large property group Redefine has reported that its distributable income for the year halved, and that its vacancy rate increased by more than 40% to 7.3% of its portfolio as the economic cost of the pandemic, and the move to work-from-home hit its properties. Leases were renewed during the year at an average rental decrease of 4.6%. Net arrears amounted to R161 million, representing 23% (from 11% last year) of gross monthly rentals. An independent valuation found the group’s property portfolio was now worth R7.2 billion less than a year before.
Redefine owns shopping centres including the East Rand Mall, various large office buildings in Sandton and elsewhere as well as other commercial developments.
Gordhan grilled at Zondo
During a tense hearing at the Zondo commission, Public Enterprises Minister Pravin Gordhan was grilled by former SARS boss Tom Moyane's lawyer, advocate Dali Mpofu about his claims during his previous testimony before the commission that Moyane was complicit in state capture. Among the issues that came up during Monday's cross-examination include the so-called rogue unit at SARS, claims that Moyane had "connections" with the Hawks and National Prosecuting Authority, and whether Gordhan was racist towards Moyane.
Comair CEO quits
Wrenelle Stander has resigned as CEO of Comair, which owns kulula.com and manages the British Airways franchise in SA.
Glenn Orsmond, who is part of the consortium which will take over Comair following its business rescue process, will be the new CEO. Kirsten King has been appointed chief financial officer.
Some clients struggling as retrenchments increase, Standard Bank warns
In a trading update, Standard Bank says its group headline profit will be down more than 20% for the year to end-December. This indicates a strong recover in the past few months - in the first nine months of the year, its profit was down 39%.
It still hasn't decided yet whether it will pay a final dividend for the year.
Clients who represent some 8% - or R47 billion – of its total credit portfolio in personal and business banking are still receiving relief for payments. This is down from 18% at the end of June. Approximately 80% of the current client relief portfolio is for home loans and vehicle finance.
“The lapsed client relief portfolio continues to reflect strong payment behaviour and has performed in line with our previous expectations,” the bank said in a statement. But it warned of “pockets of pressure”, particularly within personal unsecured lending, and that there is a continued increase in retrenchments.
Requests for relief from its corporate and investment banking clients have tapered off. Total relief provided – including additional credit, as well as interest and/or capital holidays – reached R24 billion at the end of October, from R21 billion at the end of June. The group’s credit loss ratio for the ten months to 31 October 2020 was lower than the 169 basis points reported at June, but Standard warned that the outlook remains very uncertain.
Standard Bank's share price took a beating on Monday morning, falling almost 4.5% - along with other banks, including Absa, which also fell by more than 4%.
Barloworld suffers loss, despite strong equipment sales growth overseas
The logistics and fleet management company Barloworld saw its revenue fall by 17% to below R50 billion, while it suffered a normalised headline loss for 30c per share from the year, versus a profit of R11.67 last year. The company cut overhead costs by more than R400 million.
Barloworld, which distributes CAT equipment, says its equipment sales fell 14% - but fared better than expected. Its equipment division in Europe and Asia saw revenue rise by 22% thanks to strong mining sales, particularly in the gold sector.
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