close

Вход

Забыли?

вход по аккаунту

?

Finweek English Edition - April 12, 2018

код для вставкиСкачать
PERSONAL FINANCE
PROPERTY
SHARE VIEWS ON:
15 EASY STEPS INSIDE VUKILE’S
TO MANAGE
R4BN SHOPPING
YOUR MONEY
SPREE IN SPAIN
WOOLWORTHS
NETCARE
SASFIN
FIND US AT:
fin24.com/finweek
ENGLISH EDITION
12 April - 25 April 2018
EVERY TWO WEEKS
INVEST
OFFSHORE
FROM R500
PER MONTH
+
■ INVESTING IN RANDS vs
9 771024 740005
SA: R30.20 (incl. VAT)
NAMIBIA: N$30.20
16123
HARD CURRENCY
■ A GUIDE TO OFFSHORE ETFs
■ SHOULD YOU GET A
BANK ACCOUNT ABROAD?
CAREERS: HOW TO TAKE CONTROL OF YOUR TIME
contents
Opinion
6 No better time to be alive
w
JANA MARAIS
a possible trade war brewing between the world’s two
perpowers, the US and China, and technology stocks taking a
ating partly due to US President Donald Trump’s continuous
attacks on Amazon, global markets have been jittery. European
stocks fell to near two-year lows in the last week of March, while the Dow Jones,
the S&P 500 and Nasdaq also saw sell-offs.
Should this matter? I’m finally reading Carl Richards’s acclaimed book The
Behavior Gap, which aims to equip us to stop making the same – and often very
predictable – money mistakes over and over again. Why do we keep buying high
and selling low? Why, in the light of this issue’s cover story, do we opt to take money
offshore when South Africa is in the doldrums and the rand is trading at R15
against the dollar, rather than now, when we can buy dollars for less than R12?
Most people are guided by fear or greed, letting emotion get in the way of making
smart financial decisions, Richards explains in his book. Another challenge is that
we’re often so obsessed with making the perfect money decision that we end up
making none at all. Using several examples from his career as a certified financial
planner and lessons from his own money mistakes, the author tries to get us to
simplify our financial planning and stop making short-term, emotional decisions.
This could be a handy skill this year, with markets looking set for a bumpier
ride. Four trading days in the last week of March saw an average price move of 541
points for the Dow Jones Industrial Average, for example, while the average daily
move in 2017 was just 68 points, ft.com reported. There were also only three days
in the whole of last year with moves of at least 300 points, it said.
Richards’s advice would be to keep the emotions out of it, and keep a long-term
perspective. As the financial advice firm The Motley Fool tweeted: “There will be
days when you look at your portfolio in horror. But there won’t be decades.”
Matter of fact
In the cover story on state-owned enterprises in our 29 March issue, we used the
image of a train manufactured by French company Alstom for the Passenger Rail
Agency of South Africa (Prasa), and not the controversial locomotives bought from
Spain’s Vossloh España, as indicated in the caption. We regret the error. ■
The week in brief
8 News in numbers
10 The great Minerals Amendment Bill mystery
12 Investing in the future of food
Marketplace
13
14
15
16
18
19
20
21
Fund in Focus: A safe and conservative option
House View: Tax-free ETFs, Clicks
Killer Trade: Netcare, Group Five
Simon Says: Netcare, VAT, Naspers, Capitec,
Choppies, Top40 Index, South Ocean, Murray &
Roberts, Gold Fields, Sasfin
Invest DIY: Don’t follow the herd into low-quality
earnings
Outlook: JSE downturn is widespread
Personal Finance: 15 simple steps to manage
your money
Directors & Dividends: Dealing and payouts
Cover
22 Offshore investing: How to take your money
abroad
In depth
31 Political economy: The tough tasks on the
president’s to-do list
34 Property: Vukile goes property shopping in Spain
On the money
38 Spotlight: A business with a conscience
40 Entrepreneur: Bringing movable luxury to the bush
43 Book review: Is humankind on the cusp of a
second Renaissance?
44 Careers: How to manage time in a distracting
world
45 Crossword and quiz
46 Piker
Seeing the bigger picture
gives you the advantage.
We offer both local and offshore securities so your money can grow all around the world.
Please visit psg.co.za to find an adviser near you.
For more information contact your financial adviser, call 0860 000 368 or email wealth@psg.co.za
Affiliates of the PSG Konsult Group are authorised financial service providers.
Wealth
Asset Management
Insure
PUBLICISMACHINE 907209/ E
from the editor
opinion
By Johan Fourie
ADVANCEMENT
No better time to be alive
o
ne of my favourite scenes in Love Actually is right at the
beginning of the movie. The setting is an airport arrivals
terminal. As travellers arrive through the gates, they
are welcomed by family and friends, smiling, laughing,
hugging and kissing. Whenever I have to pick someone up at the
international terminal, I try to arrive early, to witness the joy of family
and friend reunions.
Another setting in which you’re guaranteed to be uplifted is
graduation ceremonies. I attended one of these at the end of March
where hundreds of students received their degrees, with thousands
of friends and family watching on. Each applause and ululation tells a
story; stories often coupled with hardship, sacrifice and perseverance,
but also with hope, faith and, ultimately, success. There are few things
than seeing a father or mother, proud and captivated as their child walks
across the stage, holding back the tears.
Several of my own economics students graduated too, each with
their own stories. Thokozire Gausi graduated with an honour’s degree.
She is from Malawi and part of a network of students who self-finance
their studies in South Africa, often with very little institutional support.
Master’s degree graduate Omphile Ramela, who grew up in Soweto,
wrote his dissertation while playing professional cricket for the Cape
Cobras and now the Highveld Lions, while balancing the demands of a
young family.
Abel Gwaindepi received his PhD in economics. He grew
up in Zimbabwe with 16 siblings, many of whom he had
to support with his meagre scholarships course an
undergrad degree at Fort Hare, a postgraduate at
Rhodes and, ultimately, a PhD at Stellenbosch.
Imagine what that moment of graduation
must have felt like for Abel and the
Gwaindepi family.
At the same ceremony, Patrice
Motsepe and Jannie Mouton received
honorary doctorates, and had the chance
to say a few words. Motsepe noted
SA’s amazing people, and our duty to
ensure that each has the opportunity
to live a life of dignity and prosperity. We
underestimate our own abilities, Motsepe
said, to make a success of SA.
Mouton highlighted the wealth of
opportunities in the country. Focus, he said, on
the opportunities instead of being an expert on
the problems. “Build a business, employ people, pay
taxes – contribute.”
Negativity pervades our society, and can be incredibly debilitating.
A few minutes on Twitter and you’ll find discussions that turn into
slurs and slanders, which will only end in the furthering of ignorance
and intolerance. But – and this I repeat to myself and my students
frequently – Twitter is not the real world.
Despite all the negativity that surrounds us, there is one undeniable
6
finweek 12 April 2018
truth: there has never been a better time to be human than now.
The story we do not tell often enough – one that still surprises each
new cohort of students I teach – is that life is getting better. Yes, we
have tremendous challenges in SA, in Africa and globally, but we are
making good progress tackling these head-on.
Six of the 10 fastest-growing economies in 2018 will be in Africa.
And not only incomes are improving. Steven Pinker, in his new book,
Enlightenment Now, provides a summary of the trends in health,
happiness, and living standards, as well as inequality, the environment,
safety and democracy. In each case, the evidence suggests that we live
in a much better world than our parents and grandparents.
This good story did not just happen for no reason. It is humankind’s
ability to use the resources of nature and transform them into food,
clothing and shelter, through an ever-increasing understanding of
science, our complex technologies and sophisticated institutions, which
have allowed us to build a more prosperous world.
I like the way Pinker explains this: “Poverty needs no explanation.
In a world governed by entropy and evolution, it is the default state of
humankind. Matter does not arrange itself into shelter or clothing, and
living things do everything they can to avoid becoming our food. As
Adam Smith pointed out, what needs to be explained is wealth. Yet
even today, when few people believe that accidents or diseases have
perpetrators, discussions of poverty consist mostly of arguments about
whom to blame for it.”
That our world is getting better shouldn’t mean that
we can get complacent.
As we’ve seen in several countries around
the world, in places like Syria, Venezuela and
Zimbabwe, when things fall apart, living
standards quickly plummet as poverty and
chaos take hold. Unless as we understand
that investment in better knowledge
about how the world works lies at the
heart of our story – therefore investing
in innovation, science and technology –
such an outcome is unlikely for SA.
The worrying thing about our recent
Budget is that the allocation towards this
category will grow at less than the inflation
rate. Our politicians seem to not understand
that our wealth is not dependent on
connections, mineral resources or land. Instead,
it is the result of innovation-led improvements in
productivity that explains the huge progress of the past
two centuries.
Motsepe and Mouton are both correct: we have amazing people and
amazing opportunities. But we will only be able to tell a good story if we
invest in those amazing people – like Thokozire, Omphile and Abel – to
use their better knowledge to take advantage of those opportunities. ■
editorial@finweek.co.za
Johan Fourie is associate professor in economics at Stellenbosch University.
www.fin24.com/finweek
Gallo/Getty Images/Tang Yau Hoong
Local politicians would do well to recognise that improvements in South Africans’ standard of living will
require increased investment in innovation, science and technology.
SUBSCRIBE
NOW
FINWEEK IS SOUTH AFRICA’S LEADING
INVESTMENT AND FINANCIAL MAGAZINE.
WE DELIVER IN-DEPTH REPORTING ON BUSINESS AND
THE ECONOMY, EQUIPPING OUR READERS TO MAKE
SOUND INVESTMENT AND BUSINESS DECISIONS.
MINING
PRINT EDITION
SUBSCRIPTION OPTIONS*:
7 ISSUES (3 MONTHS) = R190
13 ISSUES (6 MONTHS) = R314
25 ISSUES (1 YEAR) = R566
Offer expires on 31 May 2018.
*Includes all postage or delivery costs, South Africa only.
DIGITAL EDITION
SINGLE ISSUE: R24.20
MONTHLY: R46
3 MONTHS ONCE OFF = R147
6 MONTHS ONCE-OFF = R293
1 YEAR MONTHLY = R504
Offer expires on 31 May 2018.
TEL: 087 740 1019
FAX: 086 298 3809
SUBS@FINWEEK.CO.ZA
TEL: 087 741 3177
WWW.MYSUBS.CO.ZA
W AT
BUY NOS.C
O.ZA
MYSUB
in brief
EDITORIAL & SALES
Editor Jana Marais Deputy Editor Anneli Groenewald
Journalists and Contributors Simon Brown, Lucas
de Lange, Johan Fourie, Moxima Gama, Lloyd Gedye,
Mariam Isa, Niel Joubert, Marcia Klein, Glenneis
Kriel, Schalk Louw, David McKay, Melusi Tshabalala,
Amanda Visser, Glenda Williams Sub-Editors Stefanie
Muller, MA Farquharson, Joey Kok Editorial Assistant
Thato Marolen Layout Artists Tshebetso Ditabo,
David Kyslinger, Beku Mbotoli Senior Sales Executive
Paul Goddard 082 650 9231/paul@fivetwelve.co.za
Marita Schoonbee 082 882 7375/marita.schoonbee@
newmediapub.co.za Sales Executive Tanya Finch
082 961 9429/tanya@fivetwelve.co.za Publisher
Sandra Ladas sandra.ladas@newmediapub.co.za
General Manager Dev Naidoo Production Angela Silver
angela.silver@newmediapub.co.za, Rae Morrison rae.
morrison@newmediapub.co.za
Published on behalf of Media24 by New Media Publishing
(Pty) Ltd Johannesburg Office: Ground floor, Media Park, 69
Kingsway Avenue, Auckland Park, 2092 Postal Address: PO Box
784698, Sandton, Johannesburg, 2146 Tel: +27 (0)11 713 9601
Head Office: New Media House, 19 Bree Street, Cape Town, 8001
Postal Address: PO Box 440, Green Point, Cape Town, 8051 Tel:
+27 (0)21 417 1111 Fax: +27 (0)21 417 1112 Email: newmedia@
newmediapub.co.za Managing Director: Aileen Lamb Chief
Executive Officer: Bridget McCarney Executive Director: John
Psillos Non Executive Director: Irna van Zyl
Printed by Paarlmedia and Distributed by On The Dot
Website: http://www.fin24.com/finweek
Overseas Subscribers: +27 21 405 1905/7
ENQUIRIES
Fax
0864-575-918
SHOPS
0861-888-989
assistance@onthedot.co.za
Share your thoughts with us on:
@finweek
finweek
finweek 12 April 2018
- The Chinese ministry of commerce commented in a 1 April statement, in which
it announced import tariffs of as high as 25% on 128 American-made products.
The ministry said the tariffs were intended to pressure the Trump administration to
back down from a simmering trade war, nytimes.com reported. “We hope that the
US will rescind its measures that violate World Trade Organization rules as quickly as
possible,” the ministry said, referring to US President Donald Trump’s imposition of
tariffs on Chinese steel and aluminium.
“MORE ‘HEADS I WIN,
TAILS YOU LOSE’ OUT
OF STELLENBOSCH.”
- Piet Viljoen, chairperson of asset manager RECM,
comments on Twitter after Steinhoff said it planned to reward
directors for having to do more work than usual. Steinhoff, which has seen its market
value decline by $12bn since an accounting scandal erupted in December, wants
to pay Steve Booysen, head of Steinhoff’s audit and risk committee and part of the
supervisory board’s independent committee, an additional €200 000 (R2.9m) for
“additional work undertaken”, Moneyweb reported. Heather Sonn and Johan van Zyl,
also members of the independent committee, should receive an extra €200 000
and €100 000 respectively, Steinhoff proposed. However, critics believe the directors
should have picked up the fraud earlier.
“It’s the eighth-largest company in the world.
They have 2bn users. They are in uncharted
waters, and they have not comported themselves
in a way that makes people feel good about
Facebook and secure about their own data.”
finweekmagazine
FINWEEK SUBSCRIBES TO THE SOUTH AFRICAN PRESS CODE WHICH COMMITS US TO JOURNALISM THAT IS
TRUE, ACCURATE, FAIR AND BALANCED. IF YOU THINK WE ARE NOT COMPLYING WITH THE CODE, CONTACT THE
PRESS OMBUDSMAN AT 011-484-3612 OR ombudsman@presscouncil.org.za © FINWEEK 2011 ALL RIGHTS
RESERVED. TO INQUIRE ABOUT PERMISSION TO REPRODUCE MATERIAL CALL OUR ARCHIVE AT 021-406-3232.
8
“CHINA AND THE US ARE THE WORLD’S TWO
BIGGEST ECONOMIES, AND COOPERATION
IS THE ONLY CORRECT CHOICE.”
- Scott Stringer, who oversees New York’s pension fund investments which have a
stake of almost $1bn in Facebook, comments in an interview with US broadcaster
CNBC after data from 50m users of the social network leaked to political consulting
firm Cambridge Analytica. Stringer said Facebook needed an independent
chairperson and three new independent directors with expertise in data and ethics to
ensure the social network protects privacy, ft.com reported. Facebook’s co-founder
Mark Zuckerberg is the chairperson, CEO and controlling shareholder of the company.
www.fin24.com/finweek
Supplied
SUBSCRIBERS
087-740-1019
subs@finweek.co.za
>> Mining: The Minerals Amendment Bill mystery p.10
>> Potash: Investing in food security p.12
DOUBLE TAKE
BY RICO
THE
GOOD
The department of energy has finally
signed agreements for 27 renewableenergy independent power producer
(IPP) projects, unlocking an investment of
R55.92bn. The signing has been delayed
since 2016, when Eskom indicated that
it was unwilling to enter into new power
purchase agreements with renewable
IPPs, as it had excess capacity, reports
Engineering News. “With this important
milestone, government re-confirms its
commitment not only to renewable energy,
but also to a solid partnership with the
private sector as it pursues energy’s core
position in the South African economy,” the
department of energy said in a statement.
THE
BAD
The South African Revenue Service (SARS)
has collected R1.2tr in the 2017/18 tax
year, reflecting a shortfall of R700m of
the estimated tax revenue announced in
the February Budget speech. However,
it reflects growth of 6.3%, or R72.4bn,
compared to the 2016/17 tax year. Personal
income tax contributed the bulk of the
revenue, adding R462.5bn (or 38%) to the
fiscus, followed by VAT with 24.5% and
company income tax with 18.1%. SARS
said its special voluntary offshore-wealth
disclosure programme raised R2.9bn
in taxes in the financial year, from 827
processed applications. In total, 2 024
applications were received, it said.
THE
UGLY
Struggling furniture retailer Steinhoff has
warned that some of its real-estate assets in
Europe may be worth €1.1bn (R14.5bn) less
than previously thought – half of what it was
originally valued at as recently as February,
ft.com reported. The portfolio in question,
which has since been independently
valued, consists of 140 stores, warehouses,
offices and production sites across Austria,
Germany, the Netherlands, Switzerland,
the UK and Eastern Europe. The group’s
results for the year to end September
remain outstanding subject to investigations
after “accounting irregularities” came to
light in December, leading to the departure
of former CEO Markus Jooste and chief
financial officer Ben la Grange.
@finweek
finweek
JOBS FOR YOUTH
ANGLO SUSPENDS MINAS-RIO
1 000 000 529km
The Youth Employment Service (Yes) initiative,
18 months in the making and launched at the end
of March by President Cyril Ramaphosa, aims to
create 1m jobs over the next three years for young
people, Ramaphosa said. Participating businesses
– which include Unilever, Sasol, Investec, Absa and
Netcare – will create one-year paid positions for
youth aged between 18 and 35 with a minimum
stipend of R3 500 a month. “By providing
one-year paid work experience opportunities to
thousands of unemployed young people, these
companies will not only be measurably improving
their prospects to find employment, but will be
helping to build a more inclusive, more sustainable
economy,” Ramaphosa said.
LOYALTY PAYMENTS TO KEY STAFF
Anglo American has suspended operations at
its Minas-Rio mine in Brazil for an estimated
90 days after two leaks were discovered in the
pipeline that carries the iron ore in slurry form
from the mine to the port of Açu, 529km away.
The whole pipeline will now be scrutinised to
identify other areas of potential weakness.
The cost of the outage is estimated at around
$100m, sources told ft.com. Mining firms
are facing increased scrutiny in Brazil following
the 2015 Samarco disaster, in which at least
19 people died after a ruptured tailings dam
operated by BHP and Vale sent tens of
millions of litres of sludge into a river valley,
ft.com reported.
SPOTIFY DEBUTS ON NYSE
R156m
$26.5bn
Barclays Africa Group executives have been
granted restricted share awards (RSAs) worth
R156m “to retain skills critical during the separation
[from Barclays plc] and beyond”, Moneyweb
reported. The RSAs were awarded to 53 key
employees on 1 October 2017, with a two-year
performance period, according to the group’s latest
annual report. This is the second tranche of RSAs
granted – the first was awarded in 2016, when 74
key employees were granted RSAs worth R191m,
and run until 30 September, Moneyweb said. CEO
Maria Ramos was granted R8m under the new
plan, similar to her award in 2016, it reported.
Music, podcast and video streaming site Spotify
listed on the New York Stock Exchange on 3 April,
closing the first day with a valuation of $26.5bn.
This makes it one of the top 10 US technology listings at the end of the first day of trading, ft.com
reported. The Swedish start-up, which recently
launched in South Africa, had 71m paying subscribers at the end of 2017, and expects to reach
up to 100m by the end of this year. This compares
with 36m subscribers to Apple’s streaming service, and Amazon, who said it had “tens of millions”
of subscribers to its paid music service, ft.com
reported.
finweekmagazine
finweek 12 April 2018
9
in brief in the news
By David McKay
The great Minerals Amendment
New legislation is a ‘priority’, says the government, but no one knows what changes have been made to it during
its three years in limbo.
Gallo/Getty Inmages
t he hullabaloo over the Mining Charter
in the last month has distracted attention from the equally important issue of
the Minerals and Petroleum Resources
Development Amendment (MPRDA) Bill, the
last known location of which was in the halls
of Parliament’s upper house, the National
Council of Provinces (NCOP).
This is the legislation that says minerals
are the patrimony of South African citizens,
so mining companies have to rent mining
properties from the state – once the
operations have met the conditions of
transformation, environmental protection,
and labour and social plans.
The Bill will be the bedrock on which the
Mining Charter rests and will help align the
interests of international and national mining
firms. So it’s pretty big news that attorneys
who specialise in mining law have mixed
views on the kinds of amendments that will
be made to the Act. The government has said
the promulgation of the Amendment Bill –
which was sent back to Parliament by former
president Jacob Zuma in January 2015 –
would be made a priority.
Speaking at a press conference in
March, mineral resources minister Gwede
Mantashe said: “The MPRD Amendment
Bill is currently before Parliament. We are
considering appropriate ways of ensuring
urgent progress at that level.” So the Bill
looks as if it will proceed – but what, exactly,
will it amend of the existing Act?
Gwede Mantashe
Minister of mineral resources
Mosebenzi Zwane
Former minister of mineral resources
Zuma’s reason for refusing to sign the
MPRD Amendment Bill into law was that
it had failed certain constitutional tests;
one of which was that there had not been
sufficient consultation, especially in the
NCOP. No sooner had the Bill been returned
to Parliament than rumours began circulating
that trade and industry minister Rob Davies
wanted to introduce new elements to the
legislation. And then, during the Bill’s three
years in limbo, former mineral resources
minister Mosebenzi Zwane also shopped it
around, allegedly asking for fresh input.
Even before Zwane’s alleged fiddling,
questions were asked as to whether it would
cut the mustard. Of particular concern
was an amendment declaring that mining
companies intending to export minerals
from South Africa would first have to apply
for a licence from the mineral resources
minister, who might apply certain conditions.
These conditions might include quotas
on export volumes, or even a preferential
domestic supply quota if the mineral was
deemed “strategic”. Iron ore and coal were
generally the minerals supposed to fall under
this taxonomy.
Confusion reigns
Peter Leon
A partner at professional services
business Herbert Smith Freehills
Says Peter Leon, a partner at professional
services business Herbert Smith Freehills: “The
Bill remains as problematic as ever, with the
same troublesome provisions over designated
minerals and what is clearly a non-WTO [World
Meanwhile, Zimbabwe says it’s
As SA tinkers with more state controls of mining, its northern neighbour makes business-friendly noises.
The chit-chat around the water cooler at a recent conference about mining in
Zimbabwe – called the Harare Indaba – was on the sceptical side. Involving
a prominent mining and resources banker, a buy-side analyst and a sell-side
analyst, the view was that the southern Africa country was saying all the right
things, but evidence was needed of real change.
The new mines minister, Winston Chitando, declared that the country was
“open for business”, echoing the refrain of President Emmerson Mnangagwa
since he deposed former president and despot Robert Mugabe. Since the
November coup, Zimbabwe has relaxed rules on “indigenisation” – its homegrown empowerment legislation – which now doesn’t demand state control of
10
finweek 12 April 2018
foreign businesses except in the case of platinum and diamonds.
It even appears as if nationalisation of these critical industries is also being
relaxed. In an interview with finweek, Chitando said the country’s National
Empowerment Act would allow for the suspension of state control for a 10
or 15-year period by means of a legislated waiver. Apparently, the option of a
waiver has always been there.
It was a well-managed message, ably supported by the chairperson of
Zimbabwe’s mineral resources portfolio committee, Temba Mliswa, who
had nearly every member of the committee at the conference. Mliswa was
articulate and refreshingly thorough in his criticism of corruption: “Land reform
www.fin24.com/finweek
in brief in the news
Shutterstock
Bill mystery
Trade Organisation] compliant export licensing
system for such minerals.”
Attorneys don’t agree if any new
provisions were actually added, but there is
enough confusion to cause concern. “I doubt
it will be changed,” says Jonathan Veeran,
a partner at Webber Wentzel. “It was not
radically changed under Zwane.”
Leon is not so sure, however: “If the
Bill is passed as promised, it is likely to
face a constitutional challenge as the
DMR [Department of Mineral Resources]
should never have introduced additional
amendments to it following Zuma’s referral
back in January 2015.” Such changes were
not permitted under the Constitution, he said.
Dimitri Cavvadas, a partner at
Fasken, a Canadian law firm operating in
Johannesburg, said that since the Bill had
been submitted to the NCOP, any changes
would be unconstitutional. But changes have
been attempted. And it would be interesting
to know what they are, even if – in Cavvadas’s
view – they have little chance of success.
“During the course of 2017, the DMR
introduced additional amendments to the
Bill, and some of these amendments included
provisions that mining permits will only be
granted to majority black-owned South
African companies,” he says. A breach of
this would therefore “permit the minister to
suspend or cancel rights”.
As to how legislation – should it ever be
promulgated – identifying coal (and iron ore)
“The authority of the
minister to declare certain
minerals as ‘designated
minerals’ must be clearly
defined and set out in
either the Bill or in
the regulations.”
as a designated mineral would work, all eyes
would fall on the regulations accompanying
the Bill, Cavvadas says. “In our view, the
authority of the minister to declare certain
minerals as ‘designated minerals’ must be
clearly defined and set out in either the Bill or
in the regulations.”
Asked by finweek for its interpretation of
the MPRD Amendment Bill’s potential effect
on the country’s coal sector, the Chamber
of Mines was circumspect. “The Chamber
hasn’t had an opportunity to engage the new
DMR leadership on the MPRDA amendments
and how the former president’s referrals to
Parliament are to be dealt with,” says Tebello
Chabana, senior executive for public affairs
and transformation. ■
editorial@finweek.co.za
reversing course
[Mugabe’s land grab policy] was a political move, and we are glad that’s
behind us now,” he said.
“Now, there needs to be commitment from the government for a new
dispensation. We also need to see consistency from President Mnangagwa.
He is a lawyer, and so we expect him to stick to the law. We will do our work
to show you your money is safe. Indigenisation became an individual error,
as sometimes too much power is given to a minister. When we give too much
power to an individual, there is bound to be corruption.”
And so it went. Exhortations to invest, exhortations not to corrupt: “For
every corrupt official, there’s a corruptor. Don’t corrupt our people,” he
@finweek
finweek
finweekmagazine
said, in the general direction of the conference audience, most of whose
members were suspicious of Zimbabwe anyway, but which nonetheless drew
enthusiastic applause from the committee members.
The view on the ground was that although mention of a waiver, the fight
against corruption and other pro-business comments were to be lauded,
there was still too much red tape and bad policy in Zimbabwe. These included
difficulties such as repatriating money from the country, difficulty exporting
minerals, especially through Beit Bridge, and the general opposition to expatriate
work that, one sell-side analyst commented, had to be ironed out. “You want the
CEO of your company to be able to work in Zimbabwe, or what’s the point?” ■
finweek 12 April 2018
11
in brief in the news
By David McKay
Investing in the future of food
Kore and Kropz, miners of potash and plant nutrient minerals respectively, are taking the long view in the fertiliser business.
f 60%
65m
12
finweek 12 April 2018
Ian Harebottle
New CEO of Kropz
As with water 30
years ago, fertilisers
are somewhat underappreciated for their
strategic importance.
David Hathorn
Non-executive chairman of
Kore Potash
www.fin24.com/finweek
Images: Kore Potash www.kropz.com
ood security is of increasing interest
for Kore Potash despite being its
to investors. According to Ian
non-executive chairman following the
Harebottle, the new CEO of Kropz,
announcement that CEO Sean Bennett
farmers are expected to produce
is to step down. That may seem a
more food over the next 50 years than has
somewhat inauspicious way to start life
in Johannesburg, but the fact is that
been grown in the previous 10 000; which
Kore is fairly well established. It has been
is to say, since time immemorial.
investigating a potash project in the
Population growth, diminishing arable
Republic of Congo (RoC), known as Kola,
land partly owing to climate change,
since at least 2012, when it completed a
and dietary changes with people eating
pre-feasibility report, and it already has an
more meat, which in turn requires the
established Sydney listing. In addition to
production of more cattle fodder, are some
the inward secondary in South Africa, the
of the main drivers of this industry.
firm has taken an AIM listing in London,
Unfortunately, it doesn’t look as
where it was re-domiciled a few years ago.
if Kropz – which explores, mines and
The listing in Johannesburg is to raise
develops plant nutrient minerals – is
some capital as well as tap into the investor
going to make a public debut, even if it
base that Hathorn knows well from his time
does eventually overcome some rather
with Mondi (he was CEO for 17 years) and,
shrill environmental opposition to its
before that, Anglo American.
Elandsfontein project near the Langebaan
Lagoon on the West Coast.
In Kore Potash, however, there’s a
In an interview in February, Harebottle
variation in that although it’s an “extractive
told finweek that Kropz was investigating
commodity”, potash is a bit different to bulk
private equity finance and debt to
products such as iron ore or coal.
finance the mine. In any event, there’s
“It’s a very big market, and it’s growing,”
probably some reluctance for 70%
Hathorn says. “The growth rates are
shareholder Mike Nunn to release shares
consistent, and there’s a consistent
at the moment, while uncertainty over
demand scenario.” He adds that the
Elandsfontein is a factor. The only way in
market is calibrated to world population
for investors is through African Rainbow
growth, expanding at about 2% to
Capital, which has a 20% stake, but that
3% annually.
is very marginal access.
The supply side of the equation also
The good news is that last month,
points to some interesting potential – it’s
advanced stage mineral exploration and
highly concentrated. Three companies
development company Kore Potash, which
hold about 60% of the production of about
is incorporated in the UK, took an inward
65m tonnes/year.
secondary listing on the JSE.
Does it compare to other strategic
Potash is also used in
commodities such as
The supply side of the equation also
fertiliser production, but it’s
uranium or even oil?
points to some interesting potential
a different product to the
Not a bit of it, Hathorn
– it’s highly concentrated. Three
companies hold about
phosphates Kropz wants
says. Prices used to be
to produce. Nonetheless,
monopolistically controlled,
it “feeds” into the same
but the sector has
human need and is nonliberalised in the last
renewable, non-recyclable,
10 years.
of the production of about
and – at the moment –
A typical end user for
there’s no real prospect of
potash is Brazil. Although
fertilisers being engineered
an enormous country, its
out, which often happens
soils are poor in quality and
when supply is controlled,
need potash – made from
tonnes/year.
as it is in potash, by a highly
potassium – to develop
concentrated supplier group. As with
successful crops. “We have an advantage
water 30 years ago, fertilisers are underbecause in the RoC there is relatively good
appreciated for their strategic importance.
geographical access to Brazil,” he says. ■
David Hathorn is doing the talking
editorial@finweek.co.za
market
place
>> House View: Anchor Capital, Woolworths p.14
>> Killer Trade: Netcare, Group Five p.15
>> Simon Says: Netcare, Capitec, Naspers, Choppies, South Ocean, Sasfin,
Murray & Roberts, Gold Fields, Top 40 p.16
>> Invest DIY: Don’t follow the herd into low-quality earnings p.18
>> Technical study: JSE downturn widespread p.19
>> Personal finance: 15 steps to manage your money p.20
FUND IN FOCUS: ASHBURTON STABLE INCOME FUND
By Niel Joubert
A safe and conservative option
The objective of the portfolio is to maximise the level of income while providing high capital stability and predictable
income distributions.
FUND INFORMATION:
Fund manager insights:
Benchmark:
STeFI Composite Index – Measured over a one-year period
Fund managers:
Albert Botha and Arno Lawrenz
Fund classification:
South African – Interest Bearing – Short Term
The fund is intended to be a safe vehicle for conservative investors who are looking to
earn more than they do from money-market funds. It is ideal for the investor looking for
safety, security and a little bit of an extra return from their low-risk investments.
“Furthermore, this type of cash investment is in a sweet spot at the moment in
the South African economy and investment landscape,” says Albert Botha, head of
fixed income portfolio management at Ashburton Investments.
“With the low inflation expectations in South Africa, this fund will give you
worthwhile returns above inflation for the next 18 to 24 months.”
According to Botha, the fund is appropriate for both short-term parking of capital
and long-term conservative investing. “This fund is for everyone, whether you are
looking for a safe space to park your money, a conservative investment option as part
of a larger portfolio, or even if you are a corporate treasurer looking for a highly liquid
alternative to bank deposits,” he says.
It differs from a money-market fund in that the investment manager is able to
put money in income-generating instruments that have a slightly longer maturity
than a traditional money-market fund. Such funds are limited to providing debt to
banks and corporations for 13 months or less and in the sense that their average
debt term may not be longer than 120 days.
The Stable Income Fund does not have this restriction, however, and is allowed
longer-term instruments. As a result, the average debt term is three years, he explains.
Ashburton believes that the investment environment is primarily driven by
large global macro forces, he says. Whether it is interest rates, inflation or the local
currency, the primary factors driving their valuations are long-term in nature and
driven by global forces.
“Understanding these global drives helps steer our investments into everything
from cash to bonds and equities,” Botha says.
Total investment charge:
0.57%
Fund size:
R4.32bn
Minimum lump sum/
subsequent investment:
Contact details:
R1 000 (monthly debit order) or R25 000
(single premium) or subject to LISP minimums
087 335 6900 or info@atlanticam.com
TOP HOLDINGS AS AT 28 FEBRUARY 2018:
1
FirstRand Bank
17.2%
2
Standard Bank
13.3%
3
Investec
9.5%
4
Absa
7.9%
5
Nedbank
6.9%
6
Ashburton HQ Fund
4.3%
7
Ashburton HY Fund
3.4%
8
Land Bank
3.2%
9
iNguza
2.8%
10
KAP
2.8%
TOTAL
71.3%
PERFORMANCE (ANNUALISED AFTER FEES)
Why finweek would consider adding it:
As at 28 February 2018:
■ Ashburton Stable Income Fund
■ Benchmark
10
8
8.7%
7.48%
6.65%
6
6.65%
4
2
0
1 year
@finweek
finweek
Since inception in January 2009
finweekmagazine
The fund, previously named the Atlantic BCI Stable Income Fund, was named Best
South African Interest-Bearing Short-Term Fund on a risk-adjusted basis at the
Raging Bull Awards earlier this year – for the second consecutive year.
The fund is designed to provide investors with increased yield compared to moneymarket funds, while at the same time retaining as many of the desirable qualities of
money-market funds as possible. It invests in securities that have a stable pay-off
profile, and historically this has allowed it to maintain its stability regardless of shocks
or shifts in the economy or exchange rates.
This is apparently in the Stable Income Fund’s track record – the fund has not had
a negative month for more than seven years. It has also outperformed its benchmark
over one-, three- and five-year periods. ■
editorial@finweek.co.za
finweek 12 April 2018
13
house view
marketplace
BUY
ANCHOR GROUP
SELL
HOLD
Take aim at this
massive miss again
This is a stock I liked – and recommended –
at a listing of 200c back in September 2014,
and it initially delivered, hitting 1 899c a little
over a year later.
Then the wheels started to fall off. Two
years back I was expecting headline earnings
per share (HEPS) of at least 100c for the
year ending December 2017, yet some of
Anchor’s acquisitions turned sour, and HEPS
came in at 38c. A massive miss.
The share price has hence been under
pressure, with a 308c low in January. But
since then it is up some 50%, because the
Last trade ideas
market takes the view that the company’s
troubles are behind it and the group can start
to grow HEPS again.
I agree with that sentiment. The evidence
can be seen in the results, with the troubled
subsidiary Capricorn seemingly back to
better performance and performance fees.
Anchor should be able to do 50c HEPS
for this year and a fair forward price/earnings
ratio (PE) is around 15 times, indicating a
price of around 750c – if the HEPS target is
hit. So there is still upside left for those who
haven’t yet jumped into the share. ■
BUY
WOOLWORTHS
SELL
Clothing and food retailer Woolworths
is evidence that shareholders are regaining
has been under pressure, with a nearly
confidence in Woolworths’s strategy.
R7bn impairment
The group said in
of its David Jones
February that there are
business in Australia
signs of improvement,
dragging the group
including in the economic
into a net loss position
climate in South Africa. At
for the 26 weeks
the time, CEO Ian Moir said:
to end December.
“In Australia, many of the
Notwithstanding the
transformation initiatives
write-down and the
at David Jones are moving
decline in headline
towards completion, and
earnings, which strips
the Country Road Group
out once-off items, my
remains resilient and
view on Woolworths has changed to bullish.
increasingly profitable in a tough market. We
Particularly now since it has retained firm
believe we have the right strategies in place
support at 5 765c/share on the charts, which
to build on these improved conditions.”
is a higher trough than its prior low at 5 225c/
share. The embattled Woolworths
How to trade it:
is weathering the storm in
If support remains firm at 5 765c/
this tough economy, where
share, upside through 6 500c/
consumer confidence
share could follow – presenting a
remains low.
good buying opportunity, with
Its net profit margins
the short-term upside objective
are superior compared
situated at 7 660c/share. My
to its peers, irrespective
bullish call would change below
of its bad call on the
5 600c/share as the steeper
David Jones Australian
bear trend would be resumed,
acquisition. Fundamentals
and Woolworths could fall through
aside, the up-tick in current
5 225c/share. ■
Ian Moir
CEO of Woolworths
bearish momentum on the charts
editorial@finweek.co.za
14
finweek 12 April 2018
Gallo/Getty Images
BUY
Metrofile
29 March issue
BUY
Shoprite
15 March issue
BUY
Tax-free ETFs
1 March issue
HOLD
Capitec
15 February issue
HOLD
Starting to make its Oz
acquisitions work
The up-tick in current
bearish momentum on
the charts is evidence
that shareholders are
regaining confidence in
Woolworths’s strategy.
By Simon Brown
By Moxima Gama
Last trade ideas
BUY
Exxaro Resources
29 March issue
BUY
Famous Brands
15 March issue
HOLD
CAUTION
Clicks Group
1 March issue
Sappi
15 February issue
www.fin24.com/finweek
marketplace killer trade
By Moxima Gama
NETCARE
Signs of a recovery
p
rivate healthcare
group Netcare
will be exiting the
UK market, where
declining demand for its services
and escalating rental costs have
rendered it uncompetitive.
Outlook: Netcare was a star
performer on the JSE until March
2015, when it declined after
testing a high at 4 435c/share.
Challenges in its UK business
have weighed on investor
confidence, however, with the
share price testing 2014 lows of
2 140c/share at the end of last
year. Netcare says its business
model in South Africa “remains
sound” and that it is expecting
“good growth in profitability
in this financial year” from the
South African operations.
On the charts: Netcare has been
consolidating in the form of an
NETCARE
52-week range:
R21.44 - R29.98
Price/earnings ratio:
25.4
1-year total return:
10.74%
Market capitalisation:
R41.03bn
Earnings per share:
R1.10
Dividend yield:
3.24%
Average volume over 30 days:
3 610 323
SOURCE: IRESS
inverted head-and-shoulders
pattern for the past year. It
recently breached the neckline
and retested the resistance
trendline of its long-term bear
trend. Though Netcare is still
trading in bearish territory,
breaching the neckline of this
bullish reversal pattern displays a
change in sentiment.
How to trade it:
Go long: With the three-week
relative strength index (RSI) in
SOURCE: Sharenet
overbought territory, a near-term
pullback may be on the cards.
However, firm support retained
at 2 660c/share would increase
the chances of Netcare breaching
its resistance trendline and
confirming a positive breakout
above 2 950/share. Netcare
would enter medium-term bullish
territory, with potential upside
toward 3 740c/share. Go long
above 2 950c/share when the
daily RSI is not overbought.
Go short: A false break of the
neckline would be signalled
below 2 660c/share and
downside to 2 315c/share could
follow. In this instance, refrain
from going long, as Netcare
could consolidate further
between 2 660c/share and
2 140c/share. ■
GROUP FIVE
Little room to fall further
t roubled construction firm
Group Five, with operations
in Africa and Europe,
has seen its share price
plummet to levels last tested
in 2005, as its engineering and
construction unit in particular
remains under pressure.
Outlook: Group Five warned in a
trading update that it expects to
report a loss of 773c per share in
the six months to end December,
mainly due to further delays and
additional costs expected at the
$410m Kpone power project
in Ghana. The expected loss
is R371m more than the initial
guidance provided in December.
The company has also missed
the deadline for the submission of
its financial results, with the JSE
granting a further extension until
the end of April, and the results
are now expected on 12 April.
@finweek
finweek
52-week range:
Price/earnings ratio:
1-year total return:
Market capitalisation:
Loss per share:
Dividend yield:
Average volume over 30 days:
GROUP FIVE
R7.50 - R21
-60.6%
R855m
R8.53
203 626
SOURCE: IRESS
On the charts: Group Five is still
trading in its long-term bear
trend and is showing little sign
of recovery. However, it’s stocks
like these, which have reached
rock bottom, that usually make
a good gradual comeback in the
long term.
How to trade it:
Go long: Group Five is likely to
consolidate between 750c/
share and 1 450c/share. The
trading strategy would be to buy
finweekmagazine
SOURCE: Sharenet
into the bear trend and increase
positions at every key resistance
level breakout. The first resistance
trendline would be breached
above 1 030c/share, and buying
opportunity would be presented
through 1 450c/share, with
potential upside to 2 110c/share.
The second trendline would be
breached through 2 110c/share,
possibly triggering further gains
toward 2 900c/share.
Go short: Breaching current levels
could see it form new lows at
500c/share. In this instance, do
not invest. ■
editorial@finweek.co.za
Moxima Gama has been rated as one of the
top five technical analysts in South Africa.
She has been a technical analyst for 10 years,
working for BJM, Noah Financial Innovation
and for Standard Bank as part of the research
team in the Treasury division of CIB.
finweek 12 April 2018
15
marketplace Simon says
By Simon Brown
Investment website JustOneLap.com’s
founder and director, Simon Brown, is
finweek’s resident expert
on the stock markets. In this column
he provides insight into recent
market developments.
Weak excuse
Netcare is finally throwing in the towel on its UK
operations after 12 disastrous years that never
really saw any return from BMI Healthcare in
the UK. Netcare is in large part blaming a rental
agreement signed back in 2006 that now sees
rentals being some 20% of revenue. It’s a weak
excuse. Overall, this has been another horror
of an offshore acquisition by a South African
company that has cost shareholders a fortune.
VALUE ADDED TAX
Who absorbs
the VAT hike?
An interesting stat from the announcement
of a rate cut by the Reserve Bank’s Monetary
Policy Committee was that the one percentage
point VAT increase to 15% effective 1 April
would temporarily add 0.6% to inflation.
Considering that the increase is effectively
0.87%, it implies that some will be absorbing
the increase. Of interest to me is how the fastmoving consumer goods retailers are going to
manage the VAT hike. Take a product retailing
at R9.99. With the new VAT rate, the price
would be R10.08, a figure no retailer is going to
be happy with. Do they absorb the extra 9c, or
up the price to R10.49? If you’re a food retailer
with already thin operating margins, swallowing
the 0.87% will seriously dig into profit. I suspect
it’ll be a mix of absorbing and increasing, but it
certainly does create an opportunity to move
the thin operating margins a little higher.
16
finweek 12 April 2018
Too expensive
Capitec* results came in at the top end of
the trading statement range with headline
earnings per share (HEPS) and the dividend
up 18%. The bank now has just under 10m
accounts and has reacted to the Viceroy report
by making a more detailed disclosure in its
results. Cost-to-income is at 36%, which is
up from 34% and likely to continue higher,
probably ending up in the low to mid 40s. But
still, the share remains expensive, with my fair
value (and buying price) increasing following
these results. For me, it is at R686, and as
such I am not adding to my position.
NASPERS
Hard work
lies ahead
The Naspers* decision to sell 6% of its
Tencent holding to raise some R120bn
is a smart move. It comes as Tencent is
starting to mature as a business. But, more
importantly, it also starts a process of
reducing the perception that Naspers is only
about Tencent. The local share price moves
pretty much in sync with the Tencent share
price and trades at a significant discount
to the Tencent state, effectively seeing
the other businesses as a negative value.
The sale gives management a large pile of
cash to grow existing businesses and buy
or start new ones that, in time, can help
dilute the Tencent influence. That said,
Naspers is still a long way from being seen
as anything other than a Tencent proxy, and
management will have its work cut out to
convince the market otherwise.
Is starts the process of
reducing the perception
that Naspers is only about
Tencent.
CHOPPIES
Bad news
for Choppies
Choppies’ withdrawal of its trading update
is extraordinary and certainly something I
don’t recall ever seeing. The reason given
is that the supermarket company wants
to “perform more detailed procedures on
verification and valuation of inventory”.
The most likely outcome is that inventories
will be lower and, while this won’t impact
revenue, it will hurt cost of sales and hence
margins and, ultimately, profits. The company
changed auditors at the end of January, as it
has an audit rotation policy. Maybe the new
auditors didn’t like the process of recording
inventories, which could then also impact
previous years’ results? Either way, this is bad
news for a stock I have always suggested you
stay away from.
www.fin24.com/finweek
www.netcarehospitals.co.za
Netcare's Christiaan
Barnard Memorial Hospital
in Cape Town.
CAPITEC
Images: Supplied
NETCARE
Simon’s
stock tips
marketplace Simon says
MURRAY & ROBERTS
TOP40 INDEX
Still optimistic
about 2018
As I write this on the Easter weekend, the
first quarter of the year is finished, and the
Top40 index has lost just over 7%... when
most commentators (myself included) are
expecting a positive 2018. In part, the South
African market has been hit by sell-offs in
other global markets as well as by some of
the heavyweights being under pressure.
Naspers* is down over 16% for the quarter,
effectively contributing a little over half of the
Top40’s decline for the period. In my bullish
2018 predictions I cautioned about a global
sell-off hurting our markets, but thus far I
am not concerned, because this looks like a
normal correction. I am still optimistic for a
positive 2018.
SOUTH OCEAN
Always go for
the winner
South Ocean Holdings’ results showed an
increasing loss of 19.5c to a headline loss
per share of 35.9c. The company makes
and distributes electrical cables and imports
and distributes light fittings and lamps. This
is pretty much the same space in which
ARB Holdings operates. ARB is an electrical
wholesaler and “imports and distributes light
fittings”. Yet ARB results in February saw
HEPS increase 34% (which drops to 13.1%
when a once-off International Financial
Reporting Standards charge is removed).
In addition, ARB has some R227m in cash,
which management has been very cautiously
spending over the years. Some investors may
be tempted to look at South Ocean as the
larger of the two stocks, but I caution against
this. I like winners: ARB has demonstrated the
ability to do well and will generally continue to
do so, but South Ocean needs things to turn
around before it can start doing well. Chances
are that it will take time – if it happens at all.
@finweek
finweek
finweekmagazine
Murray & Roberts’
offices in Germiston.
Can M&R make
sustained
profits?
German ATM Holding acquired some 30% in
Murray & Roberts early last year. At the time
I wrote that it was surely the prelude to an
eventual takeover. Back then the share was
trading at around 1 000c before shooting
to some 1 600c on the ATM buying. ATM
is now back with its offer pitched at 1 500c
– which the Murray & Roberts board has
rejected as being too low. With a stated net
asset value (NAV) of 1 400c for the period
ending December 2017, it would seem a
low-ball offer, and I suspect ATM may return
with a better proposal. The question for
shareholders is whether they believe the
Murray & Roberts board can turn the group
around and start making sustained profits?
Naturally, the board says it will, but it is not
an easy task. If I were a shareholder, I would
seriously consider a higher revised offer from
ATM that could be around 1 700c/share.
A fair share price to net asset value
should be closer to at least 1.4 to
1.5
6 800c.
times, suggesting a share price of 6 500c to
GOLD FIELDS
Expanding
its presence
in Ghana
Gold Fields’s joint venture (JV) with Asanko
in Ghana sees the former buying a 50% stake
of the latter’s 90% of the mine and 9.9% of
Asanko itself for just over $200m (R2.3bn).
The JV mines at an all-in cost of about $860/
ounce and a life of mine of some 15 years. The
market has been selling the share lower, but
the JV does seem like a good acquisition in a
country Gold Fields already operates in.
SASFIN
Investment
case still
remains, but…
Sasfin results saw HEPS falling 41.8%, as the
result of a large default by a single client as
well as some tax charges. Back in October, I
suggested a buy on Sasfin, as the stock was
trading at around NAV. I also expected the
share price to move closer to around 1.5x NAV
and, coupled with an increase in NAV and
dividends, one that could potentially offer
a healthy return. The share has been pretty
much flat over this period, although there was
a 160.42c dividend last October. But the two
bigger issues are a reduced dividend in these
results – not surprising and hopefully a once-off
due to the single client default. Furthermore,
NAV has also dropped from 5 137c for the June
2017 results to 4 586c in these results. With the
share trading at around 4 879c as I write, the
investment thesis remains. It’s a little weaker
than in October. A fair share price to NAV should
be closer to at least 1.4 to 1.5 times, suggesting
a share price of 6 500c to 6 800c, excluding
dividends and potential increase in NAV. ■
editorial@finweek.co.za
*The writer holds shares in Capitec
*finweek is a publication of Media24, a subsidiary of Naspers.
finweek 12 April 2018
17
marketplace invest DIY
By Simon Brown
FUNDAMENTALS
Don’t follow the herd into
low-quality earnings
Avoid cyclical businesses, such as construction, for long-term investments, decide on the price
that you’re prepared to pay – and don’t spend a cent more.
Shutterstock
i n light of a possible takeover of Murray &
Roberts (at 1 500c and rejected by the
board), shareholder activist Albie Cilliers
(@albie_cilliers) tweeted the following stats
for construction companies: Losses from
highs in 2007/8: Group Five -98.6%; Murray
& Roberts -91.2%; Aveng -98.6%; and Basil
Read -99.5%. Not forgetting a number who
have not survived (Sanyati, RBA, Buildmax
and Protech). A bleak picture. We can also
add some recent share price collapses in
other sectors – Aspen Pharmacare off 44%
since the highs of early 2015 and shoppingmall owner and developer Resilient down 67%
since the highs of January.
This can do serious damage to your
portfolio, damage that we need to try and
prevent, because investing is as much about
finding winners as it is about avoiding
losers. Now, as I have written before,
one of the secrets of investing is that
our upside is unlimited, as stocks
can go up multiples of 100%,
while the downside is capped
at a 100% loss. But avoiding
the 100% losses make a
huge difference to our
overall returns.
Considering the stats
above, there are two key
points worth making.
The first is about
the sectors you invest
in. Construction is always
going to be highly cyclical;
the boom in the lead-up to
the 2010 Soccer World Cup was
never sustainable and the profits of
these companies had to come down
dramatically – which they did. Furthermore,
construction is not a sector in which a
company can really have a significant moat.
Your edge against competitors bidding for the
same work is really about price, which means
a price war that drives down profits.
Buying at the highs was really just
blindly following the herd, buying lowquality, unsustainable earnings with no true
18
finweek 12 April 2018
Investing is as
much about
finding winners
as it is about
avoiding losers.
competitive edge. Low-quality and/or cyclical
sectors are never long-term buy-and-hold
investments. They are for trading – you buy
them when they start to move and hold until
the party starts to end. This is easy to type,
but incredibly hard to do, as many who have
been buying construction stocks in the past
few years have learnt.
The second issue concerns Aspen and
Resilient. Both have solid moats in that they
own either solid medical brands or properties.
Neither is cyclical, as we always need
medicines or are always going shopping.
Here the mistake was in not using the one
piece of power that investors have at their
disposal – the price they paid. The companies’
future earnings, deals etc. are beyond
investors’ control, but what we pay is within
our control and we must exercise it.
So, it is critically important when we’re
buying quality for a long-term buy-andhold portfolio that we decide what price
we’re prepared to pay – and don’t
spend a cent more. In the case of
Aspen, that would have meant
never paying the R440 price the
share traded at. You would have
started buying at some point
when the price started falling,
and probably would have paid
more than the price the share
eventually reached. But at least
you have a much lower average
and therefore much less pain.
Taking it a step further: If I think
R100 is a good price, for example, I
will use that as a starting point for my
buying, but will buy in chunks from R100
to maybe 7 500c. So, if the share keeps on
falling, I keep averaging in and getting the
better price.
The risk here is that the share price
continues below 7 500c or only drops to
9 000c before moving higher again. Neither
is ideal, and, truthfully, both will happen
at times, but you’ll have quality stock at
quality prices. ■
editorial@finweek.co.za
www.fin24.com/finweek
marketplace technical study
By Lucas de Lange
OUTLOOK
JSE downturn is widespread
But analysts are detecting buy opportunities.
t he downturn on the JSE is quite
widespread, as shown by 55%
of the top 100 shares, by market
cap, now below their 200-day
exponential moving averages (EMAs),
compared with 42% last month.
There is speculation over how far the
JSE could fall. The important market
analysts don’t believe we are facing a
bear market, but it’s clear that the current
volatility is typical of an advanced bull
market that is experiencing its last (third)
phase. Most analysts believe there are
now buy opportunities, in property shares
among others, where there have been
some big price drops. Important here is
the quality of the underlying property
portfolios and their expected returns.
A survey among fund managers by
Bank of America Merrill Lynch gives a
useful indication of how they see things.
No one is predicting an international
bear market in the foreseeable future,
although the possibility of a trade war
triggered by President Donald Trump
with America’s major trading partners
could create serious problems. As far
as local fund managers are concerned,
there is general agreement that the
Ramaphosa rally is over. While 73%
believed in February that the JSE would
improve in the following six months, only
30% thought so in March.
An interesting fact is that most fund
managers feel the earnings forecasts
for resources companies are too low.
Many mining companies are earning
good money at present. Another result
of the South African survey is that
most of the fund managers – about
60% – are overweight in cash, which
could of course provide good support for
the JSE when the next market upturn
occurs. That there is potential for such
an upturn is shown by the fact that
50% of fund managers are positive
about the market, compared with only
27% in February, confirming that price
decreases tend to encourage certain
buyers. About 80% predict that the
economy will improve slightly, and 40%
are overweight in shares, while only 10%
are overweight in bonds.
@finweek
finweek
As is shown by the list of the strongest
shares, half of the top 10 are retailers,
that is TFG, Mr Price, Truworths, Lewis
and Massmart. The shares have become
expensive and some fund managers
predict that the retail sector could in future
become a laggard. Apparently priceearnings multiples of up to about 30 are
worrying in the midst of consumers under
pressure. Sectorwise, fund managers’ top
choices are chemicals, tobacco, food and
drug retailers. The importance of the views
of fund managers is shown by the fact
that institutions account for 80%-90% of
all transactions.
Only one bank, Standard Bank,
appears among the top 10 strongest
shares, although about 80% of managers
are overweight in the sector. Naspers**,
which has sold about 2% of its interest
in Tencent for $9.8bn, has fallen by 29%
since its peak in November last year and
is now also under its 200-day EMA, the
second time within a year that this has
happened. On the previous occasion, it
recovered strongly, backed by Tencent’s
continued excellent performance.
Among the weakest shares, Steinhoff
remains at the top. It is 91% below its
EMA. There is much discussion about
criminal charges against Markus Jooste
and some of the other chief executives.
Unfortunately, the National Prosecuting
Authority has a poor record when it
comes to complicated financial cases.
Usually the accused are financially strong
and can therefore hire the best legal
brains. For example, in the case of Brett
Kebble and his associates at mining
groups such as JCI, Western Areas and
Randgold, there was fraud involving
about R26bn more than a decade ago,
and to date there has still not been a
successful prosecution.
Given the market conditions, it is not
surprising that only one share, Grindrod,
shows promise in the “Breaking Through”
column. KAP is also interesting, because
it is sitting on its 200 EMA, which can be
seen as a support level. ■
editorial@finweek.co.za
STRONGEST SHARES*
% ABOVE 200-DAY
COMPANY
EXPONENTIAL MA
ASTRAL FOODS
38.9
MR PRICE
27.5
TFG
25.1
LEWIS
24.8
TRUWORTHS
20.5
SANTAM
18.8
MASSMART
18.7
STANDARD BANK
17.1
RCL
15.6
JSE
15.6
CLICKS
14.2
NEDBANK
12.3
PPC
12.1
ADCOCK INGRAM
12.0
CITY LODGE
12.0
BARLOWORLD
11.2
BARCLAYS AFRICA
10.6
CORONATION
9.8
BIDVEST
9.4
SHOPRITE
9.3
HARMONY
9.1
THARISA
8.7
GROWTHPOINT
8.6
EMIRA
8.2
DIS-CHEM
7.8
VUKILE
7.8
REDEFINE
7.2
FIRSTRAND
7.0
M&R HOLDINGS
6.4
NETCARE
5.9
RMB HOLDINGS
5.8
ANGLO AMERICAN
5.8
MPACT
5.6
TRANSACTION CAPITAL
5.6
SPAR
5.6
IMPERIAL
5.3
DISCOVERY
5.3
ATTACQ
4.7
SANLAM
4.5
AVI
4.5
OLD MUTUAL
4.2
LIBERTY
3.3
GRINDROD
2.0
PICK N PAY
1.6
WBHO
1.6
MMI HOLDINGS
1.3
KAP
1.1
WEAKEST SHARES*
COMPANY
STEINHOFF
FORTRESS-B
RESILIENT
PAN AFRICAN
ARCELORMITTAL SA
GROUP FIVE
SIBANYE-STILLWATER
IMPLATS
LONMIN
NORTHAM
EXXARO
RBPLAT
BAT
ANGLOGOLD ASHANTI
MEDICLINIC
REBOSIS
ARM
RHODES
AB INBEV
TONGAAT HULETT
SAPPI
MERAFE
BIDCORP
SUPER GROUP
ASPEN
AMPLATS
SOUTH32
PSG
TIGER BRANDS
PIONEER FOODS
SUN INTERNATIONAL
MTN GROUP
NASPERS-N
OCEANA
FAMOUS BRANDS
RMI HOLDINGS
TELKOM
SA CORPORATE
FORTRESS-A
RICHEMONT
WOOLIES
HYPROP
BHP
INVESTEC PLC
GOLD FIELDS
GLENCORE
SASOL
VODACOM
BREAKING THROUGH*
KUMBA IRON ORE
% ABOVE 200-DAY REMGRO
COMPANY
EXPONENTIAL MA CAPITEC
TSOGO SUN
GRINDROD
2.0
ASSORE
KAP
1.1
LIFE HEALTHCARE
RAUBEX
*Based on the 100 biggest market caps
MONDI LTD
**finweek is owned by Media24, a
MONDI PLC
subsidiary of Naspers.
NAMPAK
% BELOW
200-DAY
EXPONENTIAL MA
-90.2
-62.8
-55.7
-46.1
-45.8
-37.5
-30.9
-30.3
-29.2
-24.2
-19.7
-17.6
-17.6
-14.9
-14.7
-14.6
-13.3
-13.1
-11.7
-11.3
-10.9
-10.9
-9.8
-9.7
-9.1
-9.0
-8.8
-8.8
-8.7
-8.3
-8.2
-8.2
-7.9
-7.1
-6.8
-6.7
-6.7
-6.6
-6.6
-6.4
-6.2
-5.7
-5.6
-5.5
-4.8
-4.3
-4.1
-4.1
-3.7
-3.2
-3.0
-2.9
-2.6
-2.6
-2.5
-2.4
-2.3
-1.4
Lucas de Lange is a former editor of finweek and an
author of two books on investment.
finweekmagazine
finweek 12 April 2018
19
marketplace personal finance
By Schalk Louw
BUDGETING
15 simple steps to manage
your money
a
s we try to navigate the waters of our own finances, we
frequently have to resist siren calls. In Greek mythology,
sirens – beasts with the head of a woman and the body of
a bird – lured sailors to their doom with their enchanting
singing. Unable to resist the beautiful voices of these creatures, sailors
would steer towards the sound, smashing their ships on the rocks
surrounding the island on which the sirens lived.
Even though we all know that debt is bad and that we should not
spend money we don’t have, easy loan availability is a temptation few
can resist, much like the sirens’ song.
Many make the mistake of believing that a personal
budget can be memorised, and that putting it on
paper is a mere formality. Unfortunately, you have
already lost half the battle if this is your strategy.
And I don’t think people have quite grasped
the enormity of the increase in VAT – by one
percentage point as from 1 April 2018 – which
was announced in February’s Budget Speech.
Most of us have only considered the effect
of this increase on groceries: we have failed
to realise that it will also affect other monthly
expenses such as insurance premiums,
cellphone and telephone accounts, utility bills
and even bank charges, to name a few.
If we really have to, we can still cut back on a few
luxuries when grocery shopping to save costs, but the
effect of the VAT increase on fixed, compulsory monthly
expenses will not be as easy to control. So for this reason, it is
absolutely crucial for South Africans to revisit their personal budgets (or
get cracking if you don’t have one) to make sure that they don’t end up
shipwrecked because of the increase in VAT.
A personal budget is easy to set up and it shouldn’t take you more than
15 minutes a week to update. Below, I share my 15-point budget plan:
1. Start with a clean Excel sheet or a piece of paper on which you can
draw columns.
2. Categorise your expenses by working through
a bank transactional statement or your bills for
the past month.
3. Don’t forget to include your hobbies, habits
and/or any other extras you treat yourself to
every now and then.
4. All funds flowing into your account should
be identified clearly in order to determine your
average monthly income.
5. Remember that saving comes first. Saving should not be an
afterthought, so make sure you set aside a fixed amount in a separate
savings facility every month.
6. Set yourself realistic goals when you try to cut back on the expenses
listed in each of your columns in an attempt to save, or save more if
you’re already on the right track.
7. When you’re happy that you have included all the possible expense
categories that apply to you, you can start to add up these expenses
in each column. This is exactly where you will need to take the VAT
increase into account when planning ahead.
8. Be sure to include all cash withdrawals in your budget on a weekly
basis as well.
9. Next, it’s time to calculate the subtotals of your income
and expenses.
10. Subtract your expenses from your income in order to
determine your net income.
11. If you have a negative net income (i.e. your
expenses exceed your income), you will have
to seriously re-evaluate your expenses and
spending habits.
12. If you are lucky enough to have some funds
to spare, transfer as much as possible of this
amount to your savings account, unit trust or
other savings facility. Leaving spare money in
your bank account will tempt you to spend it on
things you don’t need at some point.
13. Take stock of your expenses intensively for
at least a month or two in order to identify and
quantify your monthly expenses. You can then go
back and see whether there are any additional places to
make cuts.
14. Again, set yourself realistic goals to reduce the abovementioned expenses by starting with your biggest expenses first.
15. Be sure to keep your budget up to date, and to evaluate it on a
monthly basis.
The story of the siren song continues:
Orpheus, a talented musician in ancient times, was called in by the
Argonauts to assist them on an expedition that would lead them past the
sirens’ island. As they approached the island, Orpheus heard the creatures’
voices, immediately took out his lyre and sang
and played so beautifully that the sailors weren’t
tempted by the sirens and managed to pass the
island safely.
In this context, the lyre is nothing more
than a well-executed budget. It is extremely
important to take a realistic approach to your
budget, to help you to stay within its confines as
comfortably as possible. With the prospect that
things will not be getting any easier for South
Africans from an economic perspective, it will be the only way for you to
sail safely past the tempting “song” of unnecessary expenses and debt. ■
editorial@finweek.co.za
Saving should not be an
afterthought, so make sure
you set aside a fixed amount
in a separate savings facility
every month.
20
finweek 12 April 2018
Schalk Louw is a portfolio manager at PSG Wealth.
www.fin24.com/finweek
Gallo/Getty Images/erhui1979
With value-added tax having increased by one percentage point, now is a good time to re-evaluate your budget. If
you’ve never had one, here are some pointers on how to keep track of your expenses.
marketplace directors & dividends
DIRECTORS’ DEALINGS
COMPANY
DIRECTOR
DATE
TRANSACTION TYPE
VOLUME
PRICE (C)
VALUE (R)
DATE MODIFIED
ANCHOR
M Teke
27 March
Purchase
20,000
440
88,000
29 March
BASIL READ
P van Buuren
29 March
Purchase
229,297
22
50,445
29 March
BEST AND WORST
PERFORMING
SHARES
SHARE
WEEK
PRICE
(c)
CHANGE
(%)
BIDVEST
NT Madisa
27 March
Sell
30,178
22935
6,921,324
28 March
BEST
CAPITEC
R Stassen
29 March
Exercise Options
12,500
19852
2,481,500
29 March
Hwange Colliery
80
CAPITEC
R Stassen
29 March
Sell
12,500
88970
11,121,250
3 April
Imbalie Beauty
3
50.00
CONDUIT
WN Thorndike Jr.
22 March
Purchase
2,000,000
200
4,000,000
29 March
WG Wearne
6
50.00
CSG
BT Ngcuka
23 March
Sell
151,780
122
185,171
28 March
M&R Holdings
1380
43.15
CSG
BT Ngcuka
28 March
Sell
50,950
120
61,140
3 April
Finbond
400
29.03
CSG
BT Ngcuka
29 March
Sell
17,483
120
20,979
3 April
DRDGOLD
DJ Pretorius
26 March
Purchase
5,000
317
15,850
27 March
ELB GROUP
SJ Meijers
28 March
Sell
509,900
1899
9,683,001
29 March
30,000
1899
569,700
29 March
-42.86
AMM Pinto
Sell
4
ELB GROUP
28 March
Visual International
ELB GROUP
CJ Smith
28 March
Sell
75,000
1899
1,424,250
29 March
African Dawn Capital
20
-28.57
FAIRVEST
BJ Kriel
27 March
Sell
14,934
239
35,692
3 April
Tiso Blackstar
515
-25.90
GEMGROW PROP
AI Basserabie
27 March
Purchase
20,000
1015
203,000
3 April
Indequity
700
-20.90
GEMGROW PROP
AI Basserabie
29 March
Purchase
30,000
1015
304,500
3 April
Taste
45
-19.64
GROWTHPOINT
MG Diliza
28 March
Purchase
8
2850
228
3 April
GROWTHPOINT
LA Finlay
28 March
Purchase
3,640
2850
103,740
3 April
GROWTHPOINT
JC Hayward
28 March
Purchase
3,335
2850
95,047
3 April
GROWTHPOINT
JF Marais
28 March
Purchase
4,584
2850
130,644
3 April
GROWTHPOINT
INVESTEC PLC
INVESTEC PLC
E Taylor
S Elliot
S Elliot
3 April
27 March
27 March
Purchase
Sell
Purchase
594
30,907
34,718
2850
£5.65
£5.65
16,929
£174,624
£196,156
3 April
29 March
29 March
JSE ALL SHARE
55 474.52
-1.65
ITALTILE
L Foxcroft
27 March
Sell
545,000
1486
8,098,700
29 March
JSE FINANCIAL 15
17 553.48
-1.36
ITALTILE
BG Wood
26 March
Sell
160,000
1475
2,360,000
29 March
LONG4LIFE
B Joffe
29 March
Exercise Options
250,000
500
1,250,000
29 March
LONMIN
T Chikanza
27 March
Exercise Options
83,757
$0
$0
29 March
JSE INDUSTRIAL 25 71 778.12
JSE SA LISTED
545.50
PROPERTY
LONMIN
M da Costa
27 March
Exercise Options
143,874
$0
$0
29 March
LONMIN
B Magara
27 March
Exercise Options
370,994
$0
$0
29 March
LONMIN
T Ncube
27 March
Exercise Options
55,557
$0
$0
29 March
LONMIN
K Ngcwembe
27 March
Exercise Options
57,287
$0
$0
29 March
CAC 40
LONMIN
B van der Merwe
27 March
Exercise Options
193,831
$0
$0
29 March
DAXX
MMG
RB Dick
29 March
Exercise Options
108,333
235
254,582
3 April
MMG
RB Dick
29 March
Exercise Options
100,000
800
800,000
3 April
MMG
RB Dick
28 March
Sell
384,454
990
3,806,094
3 April
MMG
C Kemp
29 March
Exercise Options
12,000
235
28,200
29 March
MONDI
V McMenamin
27 March
Exercise Options
2,270
0
0
29 March
PHUMELELA
WA du Plessis
29 March
Purchase
12,905
1470
189,703
3 April
SAFARI
K Pashiou
28 March
Sell
11,000
675
74,250
29 March
SASOL
VD Kahla
26 March
Sell
5,014
38599
1,935,353
28 March
SIBANYE
C Farrel
26 March
Purchase
16,697
1165
194,520
29 March
SIBANYE
C Farrel
26 March
Purchase
30,025
1165
349,791
29 March
SIBANYE
C Farrel
26 March
Purchase
1,760
1165
20,504
29 March
SIBANYE
C Farrel
26 March
Sell
41,300
1200
495,600
29 March
SIBANYE
NJ Froneman
27 March
Purchase
449,627
1165
5,238,154
29 March
SIBANYE
NJ Froneman
27 March
Purchase
232,772
1165
2,711,793
29 March
SIBANYE
NJ Froneman
27 March
Purchase
13,648
1165
158,999
29 March
SUN INT
AM Leeming
26 March
Purchase
6,294
5931
373,297
27 March
TFG
AD Murray
22 March
Sell
77,517
23355
18,104,095
28 March
TFG
R Stein
22 March
Sell
200,000
23522
47,044,000
28 March
TFG
R Stein
22 March
Sell
160,430
23875
38,302,662
28 March
TFG
WOOLIES
27 March
28 March
R Stein
SAR Rose
All data as at 17:00 on 3 April 2018. Supplied by IRESS.
@finweek
finweek
finweekmagazine
Sell
Purchase
1,118
5,061
23153
5961
258,850
301,686
28 March
29 March
233.33
WORST
INDICES
WEEK CHANGE*
VALUE
(%)
INDEX
-2.83
-0.64
JSE SA RESOURCES 19 562.18
0.23
JSE TOP 40
-1.93
FTSE 100
48 794.50
516 730
1.41
1 209 673
1.77
705 661
1.95
HANG SENG
3 009 338 -0.71
NASDAQ
706 344
1.01
COMPOSITE
NIKKEI 225
2 115 908 2.63
*Percentage reflects the week-on-week change.
DIVIDEND RANKING
F’CAST
DPS (C)
F’CAST
DY (%)
STEINHOFF
201
60.9
TEXTON
103
17.4
FORTRESS-B
187
15.7
REBOSIS
129
15.0
RESILIENT
616
12.3
REBOSIS A
253
10.4
GREENBAY
10
10.0
SA CORPORATE
47
9.6
EMIRA
147
9.5
FORTRESS-A
142
8.9
SHARE
finweek 12 April 2018
21
cover story offshore investing
By Mariam Isa
HOW TO
TAKE YOUR
MONEY
ABROAD
There’s a huge variety of investment options beyond
South Africa’s borders. In this comprehensive guide,
finweek provides an overview of the vehicles you
can use to do just that. We also consider which asset
classes you should look at and what the risks are, as
well as which countries and regions look promising.
22
finweek 12 April 2018
www.fin24.com/finweek
cover story offshore investing
s
Gallo/Getty Images
outh Africa’s political and
economic fortunes may have
turned the corner, and the strong
rally in global equities seen over
the past decade appears to have ended.
But the case for investing offshore is as
compelling as ever – particularly as the
rand’s strong gains over the past year means
investors will get more value for money.
However, there is broad consensus that
taking money offshore primarily to hedge
against possible rand weakness is a mistake,
as the volatile currency repeatedly defies
expectations – its appreciation of more than
8% since early 2017 took asset managers,
analysts and currency traders by surprise.
The main reason for investing in foreign
markets remains the fact that they offer
more opportunities to diversify assets
and mitigate risks, as the structure of the
JSE is highly concentrated in a few large
companies, asset managers point out.
@finweek
finweek
finweekmagazine
finweek 12 April 2018
23
cover story offshore investing
“If you invest offshore now, you do it from
a position of rand strength,” says Rhynhardt
Roodt, the co-head of Investec Asset
Management’s 4Factor global equity team.
“But it’s more about diversification – people
often miss how small the South African
investment market is – there’s a whole world
out there.”
Another factor to consider is that for the
first time since the global financial crisis in
2008, there is synchronised global growth,
the main factor that drives corporate profits
and share prices.
Attractive opportunities
WHERE ARE THE RAND AND IN
Investor sentiment shot up when Cyril Ramaphosa took the reins from Jac
the country’s growth outlook remains questionable.
The ousting of former president Jacob Zuma
at the start of this year and the swift action
taken by his successor, Cyril Ramaphosa, to
root out corruption and address government
mismanagement sparked a surge in business
confidence, which has significantly improved
South Africa’s growth outlook.
But the dramatic turnaround in sentiment
has yet to translate into the reforms needed to
generate enough private investment to make
significant inroads into unemployment, restore
social cohesion and put the economy on a
sustainable path of much faster growth.
The decision by Moody’s Investors
Service to keep the country’s sovereign credit
rating at investment grade and change the
outlook on its assessment to stable from
negative has removed the threat of a foreign
sell-off in government bonds, boosting the
rand and prompting a welcome interest rate
cut by the Reserve Bank. (Also see page 31.)
But minister of finance Nhlanhla Nene
has cautioned against the groundswell
of euphoria. “I would want to call this a
honeymoon phase, and it is for that reason
we cannot be complacent about it […] We do
need to take our agenda forward,” he said in
an interview on the radio station 702 on
26 March.
Standard & Poor’s made that point in
a report released the following day, even
though it doubled its growth forecast for
the country this year to 2% – well above the
Reserve Bank’s latest forecast – and boosted
its estimate for next year to 2.1% from 1.7%.
The rating agency questioned how
quickly reform efforts would ease the
structural constraints to economic growth
Although markets are likely to remain
volatile this year after a spectacular plunge in
January, the trend in global equities is likely
to remain upwards – so if your investment
horizon is more than 10 years, the best place
to be is in equities, Roodt adds.
Hywel George, director of investments
at Old Mutual Investment Group, says he
believes that equity market valuations
are generally not “unduly expensive”,
particularly outside the US, towards which
most South African investors gravitate.
He shares the broad view that European
markets are more attractive, both in terms
Emerging markets will drive global
of price and the fact that they are exporteconomic growth this year. The World Bank
oriented. “If global growth is going to be
forecasts their pace of growth at between
strong, you want someone who can export
4.3% and 4.5% this year and next, compared
into that very effectively. I think profits are
with just 2.3% and 2.2% in
going to surprise on the
developed economies over the
upside in Europe.”
“People often miss
same period.
Germany is the accepted
Old Mutual Investment Group
favourite on the continent,
how small the South
SA says global equity remains
with what is arguably the
African investment
its preferred asset class, with an
best-managed economy,
expected real return of 4.5% over
industrial sophistication,
market is – there’s a
each of the next five years. In SA,
productivity, and the euro
– which is expected to
whole world out there.” it anticipates real returns lower
than the average of 6.1% over
continue strengthening
the past five years. Nonetheless,
against the dollar this year.
the ability of government to implement its
Asset managers are also keener on
planned growth-enhancing reforms could
emerging markets than they have been in the
boost returns over the next few years.
past, with inflows so far this year undisturbed
Although the JSE rose by 21% last year,
by rising US interest rates, which normally
when large multinational companies like
signal a risk-off environment and trigger
Naspers are stripped out, local stocks have
capital flight from developing economies.
24
finweek 12 April 2018
Mark Lindhiem
Head of strategy at Alexander
Forbes Investments
Adrian Saville
Chief executive of Cannon
Asset Managers
www.fin24.com/finweek
cover story offshore investing
NTEREST RATES HEADED?
ob Zuma, but until government implements drastic economic reforms,
Gallo/Getty Images
– notably labour and product-market
inefficiencies, poor education outcomes and
a skills shortage. Nonetheless, the rating
agency said it no longer saw SA as among
the “fragile five” emerging markets, which
would be most vulnerable to higher interest
rates in developed economies.
Reserve Bank governor Lesetja Kganyago
was also circumspect when he announced
the monetary policy committee’s (MPC)
decision on 28 March to trim its key repo
rate to 6.5%, warning that while the growth
outlook was more positive, it was “still
challenging”, as it was driven mainly by
increased confidence.
He also noted that the rand, which had
appreciated by 4.8% to the dollar in the past
two months, was “somewhat overvalued”
and further strengthening potential was
probably limited. He told reporters after the
announcement that there had been “heated
debate” over the decision to cut the repo
rate, with four members of the MPC arguing
for the step and three in favour of holding
it steady. That means further interest rate
cuts are unlikely this year, and there could
even be hikes in 2019, which will dampen
business and consumer optimism.
“The private sector underinvested for the
last three years,” said Stanlib chief economist
Kevin Lings. “Because the currency is strong,
this is a good time to upgrade machines –
there is restocking of inventory levels across
most sectors.
“What we are not hearing is significant
expansion plans. The government balance sheet
prevents it from stimulating the economy – it
has to come from the private sector.” ■
gone “nowhere” and therefore offer better
value, says Mark Lindhiem, head of strategy at
Alexander Forbes Investments.
“SA is a much more attractive place now
than it was three to four months ago,” he adds.
Emerging markets are widely seen as the
place to invest this year – even though SA is
part of this asset class, it only accounts for
about 7% of the emerging-market benchmark,
so you would get 90% of your exposure on
other emerging markets, says George.
Asset managers favour China over India,
as the Indian market has performed better
on the back of faster growth, and valuations
are much more expensive as a result.
They also see good opportunities in South
America and Mexico.
“The best thing to do is to buy an
emerging-markets fund and get that
diversified exposure. It’s a highly technical
call, so it’s an area where you would really like
@finweek
finweek
finweekmagazine
Asset managers estimate the
amount that investors should hold
offshore at between
35%
50%.
and
Nhlanhla Nene
Minister of finance
Lesetja Kganyago
Reserve Bank governor
RAND/DOLLAR
16
14
12
10
8
2014
2015
2016
2017
2018
SOURCE: IRESS
to entrust a professional investment firm to
make those calls for you,” George says.
The big question, as always, is how
much of your portfolio to invest offshore.
There is no magic formula, as this depends
on your goals – which country you plan to
retire in, whether you will send your children
overseas and whether you like going on
overseas holidays.
Adrian Saville, chief executive of Cannon
Asset Managers, has the contrarian
view that this makes currency the most
important consideration in your allocation.
“You must choose a currency that is likely
to do better than your own currency in time
– choose countries and currencies that are
well managed,” he recommends.
Although they are reluctant to provide
general guidelines, asset managers
estimate the amount that investors should
hold offshore at between 35% and 50%.
finweek 12 April 2018
25
cover story offshore investing
Key risks
But there are big risks. At present, the biggest
threat is that US interest rates will rise faster
than expected as momentum in the economy
builds and inflation climbs. This will hit
treasuries hard and have a negative impact
on global equities – including those in SA and
other emerging markets, so no market will
escape the fallout.
Most asset managers advise against
investing in global bonds. This is because they
are expected to deliver negative returns over
the next five years despite the understanding
that they're less volatile.
The other big threat to investing offshore
– although it will also affect SA – is the risk of
a global trade war sparked by US President
Donald Trump, who slapped tariffs on all steel
and aluminium imports at the start of March
and then announced an additional $60bn in
tariffs on some Chinese imports.
The Chinese have since retaliated, saying
they plan to impose tariffs on roughly $50bn
of imports from the US.
On the upside, Trump secured a trade
deal with South Korea – the type of bilateral
arrangement that he wants.
At the same time, the US stock markets
have clawed back much of the losses triggered
by mounting concern over the impact of
Trump’s threats.
It might be a good idea, however, to avoid
the technology sector – at least in the short
term – which has suffered amid concerns
over regulatory oversight, especially in
terms of advertising revenue following the
backlash against Facebook after the dataharvesting exposé. ■
Gallo/Getty Images
Donald Trump
US President
26
finweek 12 April 2018
But what
about taxes?
Dividends from offshore investments are taxed the same
way they are locally, but there are some things to consider
if you want to invest in a tax-smart way.
s
outh Africans must pay the same level of tax on
dividends, interest income and capital gains on offshore
investments as they do for assets within the country, but
there are factors to consider when deciding whether to
use the rand or a foreign currency in the investment.
Any offshore dividends are taxed at 20%, the same level as
within South Africa, while offshore interest earnings are taxed at
the individual’s marginal tax rate. Capital gains tax of 18% is also
levied when individuals dispose of foreign assets.
However, in the case of a direct holding in an offshore fund,
the gain is converted into rands at the spot market rate and
taxed accordingly, while in a rand-denominated South African
feeder fund, the currency movement is taken into account when
calculating the capital gain. This means that if the rand weakens,
it is more tax efficient to have
Any offshore dividends are taxed at invested directly in an offshore unit
trust, while if it strengthens, you will
pay less tax in a rand-denominated
feeder fund.
The same tax considerations
the same level as within South
apply to individuals who invest
Africa, while offshore interest
in unit trusts through a linked
earnings are taxed at the
investment service providers
individual’s marginal tax rate.
(LISP) platform, an institution that
packages multiple unit trusts together, giving the investor a
single entry into a selection of funds with different risk profiles.
The difference, however, is that the asset will not go into probate
in the foreign country, which is the legal process through which a
will is reviewed for authenticity.
Estate duties can be an issue for South Africans with assets
abroad – although it is levied at 20% on worldwide assets of less
than R30m and 25% on assets of more than R30m. If the assets
are domiciled in places such as the US or Great Britain, they can
also be subject to a foreign inheritance tax or estate duty.
Individuals with high tax rates can have a tax advantage if
they invest in insurer endowments or sinking funds through the
offshore branch of an SA Life office. Investors must use their
foreign investment allowance, but the assets are taxed in the
individual policyholder fund of the SA insurer, where income tax
is 30% and capital gains are 12%.
SA investors over the age of 18 can take R1m offshore for
investment each year without a tax clearance certificate from
the SA Revenue Service, but for higher amounts of up to R10m
they need to apply for one. ■
20%,
www.fin24.com/finweek
cover story offshore investing
How do I start
investing offshore?
I WANT TO INVEST
i @finweek
finweek
finweekmagazine
Tamryn Lamb
Allan Gray's head of
retail distribution and
Orbis in South Africa
Sonia du Plessis
Investment planner at
Brenthurst Wealth
with the unit trust using that money to
invest offshore. The money has to be
repatriated to SA eventually and will be
paid out in rand.
Du Plessis says that investors who are
dealing in large amounts tend to use the
hard currency exchange, while investors
with smaller amounts tend to go the randdenominated route via a unit trust.
Political uncertainty and the exchange
rate may also have an influence on
whether investors pick direct or indirect
offshore investments, adds De Wet.
“Politically risk-averse investors will
prefer to make use of direct offshore
investing, as with this option the investor
never has to repatriate or convert their
investment back to rands,” he says.
“With a weakening rand, direct offshore
investing would be the preferred
investment approach.”
According to De Wet, in theory, the
returns from either investment option
should be the same, with only a difference
in cost and capital gains taxes when you
dispose of the investment.
“The difference in the capital gains tax
between a direct and indirect offshore
investment lies in the method that is used
to translate the capital gains or losses into
rand,” he explains.
If you opt to go the hard currency
route, it’s important to note the exchange
control limits.
South Africans are allowed to take R1m
out of the country every calendar year
without a tax clearance certificate, and up
to R10m a year with tax clearance. ■
Most foreign-denominated currency
investments have a minimum investment
requirement of $10 000 or more, leaving those
who want to set aside small amounts every
month forced to invest in a rand-denominated
offshore product, says Magnus de Wet, director
of Vista Wealth Management.
In addition, investing offshore using a debit
order is difficult and expensive, as you’d have
to convert rands into US dollars every time
your debit order goes off, explains Warren
Ingram, executive director of Galileo Capital.
The transaction costs will make up a larger
percentage of the money you’re investing.
A rand-denominated offshore investment is
therefore much more user friendly if you want to
invest as little as R500 a month, Ingram says.
De Wet says that investors who have
R500 a month to spare can set up a debit order
investment on a linked investment service
provider platform.
“The investment can be a normal
discretionary investment or even a tax-free
investment account,” he adds. The current annual
limit on tax-free investments is R33 000 per tax
year, and no interest, dividend or capital gains tax
is payable on the product.
“The underlying investment vehicle in the
above discretionary or tax-free accounts can
be a rand-denominated feeder fund, fund of
funds, index fund or an exchange-traded fund,”
De Wet says. “These vehicles in turn could have
100% exposure to foreign equity, commodity,
real estate, bonds and/or money market
instruments.” ■
– Lloyd Gedye
Shutterstock
nvesting offshore can be a “very
daunting exercise”, and it is vitally
important to make use of the correct
vehicle and underlying investments
in order to maximise the effectiveness
and growth of your offshore investment,
advises Magnus de Wet, director of Vista
Wealth Management.
He explains that the reasons people
invest offshore can vary: “With SA
currently only contributing 1% of global
GDP, other markets can provide investors
with access to industries and sectors
that are not well represented by the
SA economy.” Examples include the
biochemical, aerospace and medical
device sectors.
Tamryn Lamb, Allan Gray’s head of
retail distribution and Orbis in South
Africa, agrees. She says South Africans
need to make sure they are investing
offshore for the “right reasons”. These
include the need to diversify your portfolio
and broaden your exposure and not
a weakening rand or negative news
headlines, she cautions.
“Investing offshore should never be a
knee-jerk reaction to events, but rather
a decision taken as part of an overall
financial plan,” she says.
Sonia du Plessis, investment planner
at Brenthurst Wealth, stresses that
most important is that the investor’s risk
profile allows for offshore investments.
Brenthurst Wealth recommends an
investment horizon of eight to 10 years
for offshore investments, as these can
be “volatile”.
As an investor you have two options
when you want to invest offshore: You
can either take money out of the country
by converting it into hard currency such
as pounds, euros or US dollars, and then
invest it overseas, or you can choose
a rand-denominated investment via a
South African unit trust, says Maarten
Ackerman, chief economist and advisory
partner at Citadel.
The investor’s money is placed in a
rand-denominated asset-swap fund,
A MONTH OFFSHORE.
ARE THERE ANY
OPTIONS AVAILABLE?
– Lloyd Gedye
finweek 12 April 2018
27
cover story offshore investing
What are my options if I want a direct
offshore non-rand-denominated investment?
Shutterstock
I f you want to physically take your rands offshore in a
personal tax liability or administration.
foreign-denominated currency investment, you first
However, Du Plessis stresses that this is only for
have to decide if you want to invest directly in shares
investors in the highest tax brackets: “This is only for
or exchange-traded funds (ETFs), or if you want
individuals who are being taxed at a rate higher than
to invest in foreign unit trusts, says Magnus de Wet,
30%. Otherwise it will increase your tax liability.”
director of Vista Wealth Management.
The offshore endowment will protect your estate
“When directly investing in shares or ETFs on a
against foreign inheritance tax, which can be as high
foreign stock exchange, the investor would be required
as 40% and doesn’t require the creation of an offshore
to pick the share/ETFs themselves or make use of a
estate, an offshore will and is not subject to executor
stockbroker,” he explains. “By investing in unit trusts,
fees. “You can nominate beneficiaries, and upon death
the investor leaves the hard decisions like foreign
the money will be paid out to the beneficiaries,” says
country weightings and asset allocation to the foreign
Du Plessis. “It doesn’t go through the estate.”
unit trust manager.
The potential savings on executor’s fees can
“By investing directly in foreign shares, the
be almost 4% of the investment value in SA.
investor, however, saves the asset manager
Wet adds: “Offshore investment not in an
“By investing in unit De
fee, which could be substantial,” De Wet says.
endowment structure could even attract two
“But be aware: unlike our local stock market,
trusts, the investor sets of executors’ fees, in both the foreign and
there are scores of shares and ETFs to pick
local country.”
leaves the hard
from when you go international.”
He adds that, in the case of an offshore estate,
You can also consider an offshore
difficulties often arise after the investor dies.
decisions like foreign
endowment policy, where you pay tax within
“These problems occur because many
the product at a flat rate of 30%, says Sonia
country weightings overseas jurisdictions do not recognise your
du Plessis, investment planner at Brenthurst
South African will,” he says. “With an offshore
and asset allocation endowment structure, these problems and the
Wealth. These endowment structures, also
known as “offshore life wrappers”, are issued by
need for an offshore executor are removed as
to the foreign unit
local life insurance companies.
the proceeds of the offshore endowment policy
The life company is responsible for the
will be paid out to the beneficiaries you name in
trust manager.”
calculation, collection and administration of any
the policy or into your local estate.” ■
– Lloyd Gedye
tax due, and this frees the investor of additional
28
finweek 12 April 2018
www.fin24.com/finweek
cover story offshore investing
Should you consider opening
a bank account abroad?
y
ou don’t need an
overseas bank account
to invest abroad,
says Warren Ingram,
executive director of Galileo
Capital. “You can convert your
rands into dollars and put the
money straight into the bank
account of your product provider,”
he explains. “I don’t see the benefit,
in all honesty.”
For South African citizens with
no connections overseas it is
extremely difficult to open a bank
account abroad, says Magnus
de Wet, director of Vista Wealth
Management. An easier and more
cost-efficient option is to open a
foreign currency bank account with
a South African bank, he says.
While most offshore
investment platforms have
minimums with regard to initial
and top-up investments, there
are no minimums involved with
converting your rands to your
foreign currency bank account,
says De Wet.
“We advise clients wanting to
invest directly offshore to open
a foreign currency bank account
as the first step towards an
offshore direct investment,” he
says. “These days you can open
a foreign-denominated currency
bank account electronically within
three days.”
Some banking providers would
provide you with a rand- and a
foreign-denominated currency
bank account, adds De Wet: “The
investor would then first pay
their rands into their rand bank
account with this institution.”
Once the rands are deposited,
the investor just contacts their
conversion agent to convert their
rand payment and put it into their
foreign-denominated currency
bank account.
@finweek
finweek
finweekmagazine
This holds several benefits
for investors:
Time:
“As this is the first step in the offshore
investment process, it gives investors
more time to do homework on where
and how they want to invest while
already locking in the exchange rate,”
De Wet says. However, he stresses
that due to the interest rates in
these accounts being zero, it is not
recommended to leave money in a
foreign-denominated currency bank
account for an extended period.
Transparency:
There is a cost involved with
converting your rands to a foreigndenominated currency, and the
process is transparent, he adds.
The conversion fee is “mostly a
percentage-based fee and is collected
by adding a few cents to the price
you’re paying for the foreign currency”.
Warren Ingram
Executive director of
Galileo Capital
Staggering:
Having a foreign currency bank
account allows you to stagger the
conversion of your rands into a
foreign-denominated currency, De
Wet explains. “With the volatility
of the rand, we recommend that
investors stagger their buying of
foreign currency and not convert all
at once, as no one knows whether
the rand is at that point at its top/
bottom,” he says.
“These days you
can open a foreigndenominated currency
bank account
electronically within
three days.”
Flexibility:
“Once your funds are in your own
foreign currency bank account,
you can invest in multiple financial
institutions and are therefore not tied
to one specific institution,” De Wet
adds. “You can also use your foreign
currency bank account for debtors,
creditors or other expenses you might
have outside the country.” ■
Magnus de Wet
Director of Vista
Wealth Management
– Lloyd Gedye
finweek 12 April 2018
29
cover story offshore investing
By Simon Brown
ETFs: Get offshore easily
with diverse options
Exchange-traded funds are a cheap and simple way to get money offshore. They track a variety of indices, and you
can invest in them according to which countries, regions or sectors appeal to you.
Shutterstock
w
hen I was first learning how to invest in
Dividend Aristocrats, which has virtually the same
the 1980s, the only way to invest offshore
geographic split as the first two mentioned but has
was to be a smuggler. South Africa
consumer staples as the top sector at around 21%. Tech
had a crazed finger-wagging president,
is a modest 5%, and financials come in at just over 9%.
a dual currency exchange rate (the financial rand was
The sector differences in this ETF are due to consistent
quoted differently for corporates), sanctions and
dividends being the key metric.
severe exchange controls. So anyone who
For example, US stocks need 25 years
wanted to get money offshore had to slip
of dividend payments to be considered
Krugerrands in their toothpaste or stick
for inclusion, and most of the large
R20 notes in their underwear before
tech stocks haven’t even been in
heading on an overseas trip.
existence for that long.
But luckily times have changed,
As JSE investors we can also
and since Deutsche Bank's launch
get more niched, with global
of offshore exchange-traded
property ETFs and two recently
funds (ETFs) in 2009, it literally
listed global bond ETFs. There are
just takes a few clicks. The past
also country- or regional-specific
year has seen an explosion of
offshore ETFs with the geography
new offshore ETFs being listed,
being a factor of listing, rather
with over 20 across a wide range of
than where revenue is earned.
assets and geographies now available
Itrix offers a European ETF that is
for investors.
dominated by stocks listed in Germany
The most popular are the S&P500 and
and France, but again these are global
MSCI World ETFs, with the former having
businesses earning profits all over the world.
issued four and the latter two. These two indices are
Staying with niche products, there are also
largely the same – while the S&P500 tracks the largest US
two ETFs from Cloud Atlas focusing on Africa, excluding
stocks and the MSCI tracks developed-market exchanges
SA. The first is a general equity ETF, while one with a
with some 1 600 stocks, they’re all global companies. A
property focus has just been launched. An emergingS&P500 stock is not only doing
market ETF from Satrix tracking the
business in the US. If we look at the
The past year has seen an MSCI Emerging Market Index is also
geographical breakdown for revenue
available. Here a quarter of the index is
explosion of new offshore made up by China, with South Korea at
between the two indices, we end
up with pretty much the same split,
15% and India at 10%. This ETF makes
ETFs being listed, with over a great addition to a more generic
with the US at some 55%. In terms
of sectors, the S&P500 has tech as
20 across a wide range of developed-market ETF such as the
the largest with just over 25% and
S&P500 or MSCI World.
financials at around 15%, while the
Lastly, we have a recently listed
assets and geographies now
MSCI has both tech and financials at
S&P Tech ETF, which focuses
available for investors.
around 18%.
exclusively on technology stocks, and
Another general offshore ETF is
this would fit well with the tech-light
the global ETF from Ashburton, which covers the largest
Global Dividend Aristocrats.
1 200 stocks, representing 70% of the global market cap.
So the smuggling days are over – we can get money
This ETF also includes a smattering of emerging markets
offshore cheaply and easily from the comfort of a local
but no direct African exposure, and also has tech and
JSE trading account. Of course, another advantage is that
financial stocks at about 18% each.
we can buy ETFs within a tax-free savings account. ■
editorial@finweek.co.za
Lastly, in the general space is the newly listed Global
30
finweek 12 April 2018
www.fin24.com/finweek
in depth political economy
MORE THAN ‘JUST’ ECONOMIC REFORM:
THE TOUGH TASKS ON THE
PRESIDENT’S TO-DO LIST
The confusion caused by President Cyril Ramaphosa’s handling of the land reform issue has raised questions
the
about his ability to bring about positive change in government. He will have to dig deep in order to address
burning issues that have a huge impact on the country’s economy and the well-being of its people.
Images: Supplied
Gallo/Getty Images/Alet Pretorius
www.danielsilke.com
s
By Marcia Klein
omewhere between the euphoric prospect
immediate consequences of his promise to expropriate
of a “new dawn” without Jacob Zuma and
land without compensation.
the polarising debates about issues like land
The land issue has become “a real fly in the ointment”
expropriation without compensation lies the early on for the Ramaphosa administration, says Daniel
path South Africa is going to take this year.
Silke, director of Political Futures Consultancy.
Since Zuma’s resignation, the momentum has been
“The land issue is very far from being resolved. It
undeniably positive.
has to go through a parliamentary review process,
Ratings agency Moody’s affirmed SA’s
and there are conflicting bodies of research on
investment-grade credit rating and revised
land ownership,” he says, adding that even
its outlook to stable from negative,
within the ANC, there is no agreement
while Standard & Poor’s, which
on the issue.
retained SA’s junk status rating,
At the moment, it looks as if the
revised the country’s growth
EFF controls the debate relating to
forecast for 2018 from 1% to 2%.
the ownership and effective use of
Growth forecasts have
land, Silke says. “He [Ramaphosa]
increased across the board
let the EFF run away with this
to 2% or more, the rand has
issue – they are being the arbiters,
strengthened, interest rates
at least in the short term, and
are coming down, and investor
he hasn’t regained control of the
confidence is rebounding.
debate, not to mention that the ANC
President Cyril Ramaphosa has
itself doesn’t speak with one voice and
encouraged engagement and reaching
the fact that his position as leader of the
The EFF has wrested control ANC is fragile.”
consensus on major issues, a move
of the emotive issue of land
welcomed by business, which has been
The land issue is being raised so
ownership from the ANC.
largely ignored when it came to having a
vehemently because it is an emotive one for
say in decisions and policymaking over the past few
the majority of South Africans who don’t have access
years. This all points to the start of a collective and
to other opportunities, says Lumkile Mondi, senior
consensual effort to make SA work.
lecturer at the School of Economic and Business
Sciences at Wits University.
Burning issues
But land reform is not simple and requires
But Ramaphosa might have stumbled at the
significant state assistance. Successful programmes
first hurdle: he appeared to be unprepared for the
have included state provision of cheap supplies and
@finweek
finweek
finweekmagazine
Daniel Silke
Director of Political
Futures Consultancy
Lumkile Mondi
Senior lecturer at the School
of Economics and Business
Sciences at Wits University
finweek 12 April 2018
31
in depth political economy
access to assistance. If not handled correctly, “anyone
who has a cheque” can eventually purchase the land.
On another burning issue, that of a mining charter,
the government has been a little more successful, with
new mineral resources minister Gwede Mantashe
opening consultation on a charter that initially did
not consider industry views. However, the outcome
remains unclear.
The industry has been asking for clarity and policy
stability for years. Even if the mining companies
have to make some uncomfortable compromises, a
renegotiated charter will be easier to manage than
constant uncertainty and change.
Fixing the mess
well be reversed. It is in the interest of SA that there is
this extension of the social compact,” he added.
“It may take time to flesh out, but it is in the broader
interest of SA that that takes place and that the
consensus approach can take SA beyond the narrow
and myopic views of successive ANC conferences.
“This changes the dynamic and broadens input into
government thinking.”
Policy reforms
Gwede Mantashe
Minister of
mineral resources
Without exception, commentators talk about the need
for structural policy reform.
Old Mutual Investment Group’s head of economic
research, Johann Els, told a recent investment
briefing that 2018 may see GDP growth reaching
2.3%, the strongest since 2013, but that “it remains
part of a cyclical upswing that needs to be converted
to strong structural growth through policy reforms to
remove bottlenecks to growth”.
He says there is a “hugely improved economic
policy balance [a tighter fiscal policy that should
allow for looser monetary policy], better growth data
and forecast upgrades, the likely avoidance of further
ratings downgrades, strong global economic support
for the South African economy and likely rate cuts”.
(Expectations around interest rates were reinforced
last month by a 0.25 percentage point reduction.)
While these are elements of a cyclical upswing,
sustained growth requires “clear structural policy to
support and further improve the current confidence
boost”, and Els suggested implementing the National
Development Plan.
Mondi says the focus of the ANC since 1994 has
been more on politics than on the economy, but it
needs to shift its focus to facilitate an economy that
will redress the past at the same time as it allows for
the development of a vibrant private sector.
“In the past [the ANC] did not deal adequately
with the core issues of the SA economy in order
to grow and absorb millions who don’t have
work,” he says, adding there has never been any
acknowledgement of the influence of business to
create jobs.
There are a myriad of other hurdles to overcome.
Speaking at the Bloomberg Future of South Africa
conference last month, Investec CEO Stephen Koseff
said SA has “to eliminate some of the barriers causing
the country to limp along”.
These are considerable, with responsibility falling
on the shoulders of the government, the private sector
and ordinary citizens.
But the government has the biggest task. The
only reasonable chance the country has is to fix
state-owned entities (SOEs) and stop corruption and
bloated government and wasteful expenditure that
Johann Els
collectively became the vortex into which taxpayers’
Head of economic
research at Old Mutual
money has disappeared. It also needs to bring policies
Investment Group
in line with the country’s growth priorities.
The apartheid government used SOEs as engines
for employment and infrastructure development and
this was continued post-1994, Mondi says.
Although the role of SOEs has changed completely
in today’s economy, we have not responded and
adapted to dealing with old infrastructure companies,
specifically by opening up sectors such as rail or
energy to other players.
Management of SOEs and government
expenditure are the two areas of government
The focus of the ANC since
performance that specifically need to change,
Silke says. Equally important is “fleshing out a
mutually agreeable economic framework, for which
various advisory committees and panels need to
be constituted and enabled to do their work”.
How to boost SA’s economy
has been more on politics than on the
economy, but it needs to shift its focus to
Ramaphosa’s approach – to work things
Ramaphosa may reignite investor confidence,
facilitate an economy that will redress the which is critical to economic growth, but SA’s big
out through consultation and consensus via
past at the same time as it allows for the
committees and panels, reminiscent of his role
challenge is that there is no magic bullet to take
development of a vibrant private sector.
at the Codesa negotiations to end apartheid –
the economy to the next level.
may not sit well with fed-up South Africans who are
Minister of public enterprises Pravin Gordhan told
desperate to see change and action after years of
the Bloomberg conference that SA needs to deal
destruction under the Zuma administration.
with, among other things, job creation and growth,
But Silke says he believes society would generally
but his ideas for a growth plan includes agriculture,
be happy that Ramaphosa has taken a consultative
a renewed mining sector, the potential in the ocean
approach once again. “The breakdown in the
economy and re-industrialisation.
relationship between business and government may
It is true that if these were reinvigorated, the
1994
32
finweek 12 April 2018
www.fin24.com/finweek
in depth political economy
Images: Gallo Getty Images
Gallo Getty Images/Jeffrey Greenberg/UIG
Gallo Getty Images/Waldo Swiegers/Bloomberg
“The breakdown in the relationship between business and government may
well be reversed. It is in the interest of South Africa that there is this extension
of the social compact.”
economy would grow and create jobs. But these are
not innovative ideas, nor are they areas where SA has
any real competitive advantage.
In mining, it will take monumental effort, and
billions in investment, to get the industry back on its
feet, and even then, resources are fewer and more
difficult and expensive to extract.
However, there is room for growth. Mark Cutifani,
Anglo American’s CEO, told the Bloomberg
conference that the industry should be twice the size
it is today, and it is possible to turn that around with
policy certainty and collaboration.
He said the country’s platinum group metals are
“wonderful resources that are quite unique”. SA could
be a world leader in those resources and associated
technologies, but opportunities are being missed.
According to Silke, under the circumstances the
government is right to target mining, manufacturing,
agribusiness and tourism, which offer the best prospect
of job creation.
“The big problem is what to do about job creation
– how to start to make a dent, and there are not that
many options for an economy like SA,” Silke says. The
country simply doesn’t have significant innovative or
technological capacity.
“What else do you fall back on? You can create
jobs by hiring physical labour, so re-industrialising
does absorb some of these jobseekers into
the economy.”
However, says Mondi, it is an issue of
capacity and capability.
What is encouraging, he says, is
that we do have companies that are
world class and play a role in creating
infrastructure and services for the Fourth
Industrial Revolution. But they have a
limited impact, given our high levels of
unemployment.
South Africans are also reluctant to accept
low paid jobs in sectors like hospitality and
security, which are then taken by people from
other countries.
There is a limit to how much we can do in
industries such as agriculture and mining, Mondi
says. “In fact, SA has very few massive opportunities.
The world is shifting to using technology – there is
a different economy that is coming. I don’t think SA
will rise from its unemployment problem. What we
need is a plan to ensure there is a safety net for those
@finweek
finweek
finweekmagazine
Mark Cutifani
CEO of Anglo American
that will never see an employment opportunity rather
than create expectation.”
Pick n Pay CEO Richard Brasher told the
Bloomberg conference that the retail sector requires
few skills for entry-level jobs. “We are looking for
basic literacy and numeracy, and we give them the
skill. There are opportunities to take large numbers of
people off the state structure and to work.”
In the medium term, SA could attract investment
by using special economic zones and incentives for
job-creating businesses to expand their operations in
the country.
The private sector
Richard Brasher
CEO of Pick n Pay
Pick n Pay’s Richard Brasher
says the retail sector offers
opportunities to employ large
numbers of people.
The private sector, which has arguably been on an
investment strike (and possibly even a tax strike)
and has been scrambling offshore, has shown the
first signs of willingness to work more closely with
government and renew interest in local investment.
Silke says investors “will come to the party” if
incentives are meaningful enough. Among local
businesses, there is a willingness to work with
Ramaphosa – he has the ability to reel in captains of
industry. “But ultimately, business is going to have to
see a greater flexibility from government in policy.”
But as much as there is positivity, Ramaphosa’s
hold on the future of SA is tenuous. The land issue
makes this clear.
Silke says there have been “increases in
the use of racial invective in the broader
political and economic debate over recent
months that threatens to undermine
the goodwill of the Ramaphosa social
compact philosophy.
“This is a test for Ramaphosa to take a
lead and shut it down – which he seems
either unable or unwilling to do at present.”
The ANC’s policies of inclusion have
been supported across race lines, but lately,
says Mondi, the ANC itself has been unable to
articulate itself to create a promise for all South
Africans, with the Zuma regime worsening relations
with its views on white monopoly capital.
A huge challenge facing Ramaphosa is to reverse
the slide into unconstitutional populist feeling; he
needs to emerge as that leader who embraces a new
SA without racism. “That project will carry so much
clout and support,” Mondi says. ■
editorial@finweek.co.za
finweek 12 April 2018
33
in depth property
By Glenda Williams
T
R
E
P
O
R
P
S
E
O
G
E
L
I
VUK
it can benefit from rising
The real estate investment trust believes
Mike Potts
Financial director of Vukile
Last year,
€8.9bn
was ploughed into Spain’s
commercial property market, a
quantum leap from the €1.5bn-odd
in
2012.
Building a business in Spain
But why Spain? Why not central and
Eastern Europe, where many other
SA property investment trusts, such
as Growthpoint and Redefine, have
focused their offshore efforts?
CEO Laurence Rapp tells finweek
that aside from an offshore strategy of
investing in developed markets, Vukile
is not going to add anything to the SA
investor base by going into central Eastern
Europe. “There is already more than enough
choice for investors.”
The macro play of rising interest rates also plays
a part, Rapp says. “When interest rates start rising
[in the developed world], we think you will see a
34
finweek 12 April 2018
The central plaza in Granada's
Kinepolis Leisure Centre, which
is being remodelled.
risk off-trade from emerging markets to developed
markets. Exposure to a developed market is a good
counterbalance to our SA company [exposure] to an
emerging market.”
Spain is seen as one of the more stable markets
in Europe, says Steven Weaving, executive director
of Retail Partners Europe. Even risk-averse German
investors are back in the market. “It is a good, stable
market to be in, offering good medium- to longterm growth.” In 2017, retail investment volume in
property reached €2.4bn, up from €75m in 2012.
Spain has the fourth-largest economy in Europe
and is undergoing an economic recovery. (See box.)
Says Rapp: “I think it’s a sustainable recovery.
While the yield compression that you see in
most markets has come about in Spain, rental
growth has yet to come through. We’ve taken the
view that this is a long-term play based on pure
property fundamentals, good macroeconomics and
anticipation of rising rentals.”
Governance
Much of the capital coming into Spain, says Rapp,
is from “briefcase” investors flying in to do a deal.
It is private equity money looking for yield with no
on-ground presence.
Vukile is doing things differently, building Castellana
as a standalone, internally managed REIT with an
experienced team of Spanish property experts. It is
also going above and beyond the level of corporate
governance required of REITs in Spain. In essence, it is
replicating much of the SA REIT model.
“REIT legislation in Spain is relatively new,
driven more by institutional shareholders
as opposed to REIT shareholders,”
says Rapp. “The sophistication and
development of the SA REIT market is
not yet apparent in the Spanish market.
“What we do in South Africa is run
REITs very well. Our model works. We
are setting up Castellana to operate
on the same basis as which we operate
in SA. Ultimately, we are backing local
knowledge and expertise and giving
the Spanish team the infrastructure and
background to build a business that stands on
its own in Spain,” adds Rapp.
The Vukile model includes acquiring property
for yield as an income vehicle and aiming for yield
players rather than capital growth investors.
Vukile’s timing looks to be spot on, because
www.fin24.com/finweek
Images: Supplied
w
ith the enormous amount of data
now available, one can speculate
with some confidence about the
health of a country’s economy and
investor appeal. But the mood is best judged when
one’s feet are actually on the ground.
And Spain is vibrant; the signs of the financial
crisis that pulled the rug from under its feet between
2008 and 2013 are all but erased. Restaurants,
shops and hotels are buzzing, and the pristine streets
bustle with people and traffic.
It’s the mark of a thriving economy so, not
surprisingly, investment in recent years has been
bountiful. Last year, €8.9bn was ploughed into
Spain’s commercial property market, a quantum leap
from the €1.5bn-odd in 2012.
Retail-focused South African real estate
investment trust (REIT) Vukile Property Fund was
one of those investors, putting about R4bn (€290m)
into 13 properties last year, mainly retail parks, via
its subsidiary, Spanish REIT Castellana Properties
SOCIMI SA. Vukile, whose SA assets include malls in
the East Rand, Gugulethu, Atlantis and Dobsonville,
owns 98% of Castellana.
More is to come, the first being a €83modd single asset acquisition that, if realised,
will take Castellana’s portfolio value to around
€380m/€400m and boost Vukile’s total asset value
from R21.95bn-odd to around R23bn.
Offshore exposure has also been boosted to 28%
– 22% in Spain through Castellana and 6% in the
UK through Vukile’s investment in Atlantic Leaf.
Offshore earnings now represent around 27%,
says Vukile’s financial director Mike Potts.
rentals and capital growth.
in depth property
N
I
A
P
S
N
I
G
N
I
P
P
O
TY SH
the Spanish market is starting to see a shift away
create a differentiator in Spain, given that REITs
from investors concentrating on capital growth and
there tend to have diverse portfolios across all
toward those that are yield driven.
property sectors.
Keillen Ndlovu, head of listed property funds at
Only two of Castellana’s 13 assets are nonStanlib, comments: “By forming a REIT, Vukile aligns retail, acquired from SA property entrepreneur and
itself with other Spanish property companies. REITs
Castellana dealmaker Lee Morze in late 2016. Now
come with tax benefits as well as a better regulated
100%-owned by Castellana, the office buildings in
environment, and this is all good for shareholders.
Madrid and Seville are fully tenanted by Konecta. But
“Management is experienced and knowledgeable the focus is on retail, so there is no intention to buy
with on-the-ground presence, and Spain is currently
any more office buildings, says Rapp.
benefitting from growing tourism, GDP growth and
The 177 756m2 Spanish portfolio does not
positive retail sales growth,” he adds.
have any exposure to the politically troubled
Castellana is due to be listed
region of Catalonia. Its assets,
“When interest rates mainly retail parks, cover
on the junior board of the Madrid
stock exchange on 28 June 2018,
between 5 559m2 and 32
start
rising
[in
the
with a governance approach to
074m2 and are concentrated
meet requirements for an intended
in key commercial hubs such
developed world],
listing on the main board. However,
as the capital, Madrid, as well
says Rapp, Castellana would need
we think you will see as Granada in the south and
to have around €1.2bn worth of
Asturias in the north.
a risk off-trade from
assets to make that viable.
Anchor tenants include
Vukile is also considering listing
consumer electronics stores
emerging markets to MediaMarkt and Worten;
on the JSE’s AltX, which would give
the company additional options if it
developed markets.” supermarket Mercadona; DIY
needs to raise capital. However, the
and gardening outlet Aki; pet care
intention is to raise capital primarily in Spain.
specialist Kiwoko; Bricomart, which provides building
“We need around €400m of free float to be able supplies; and furniture retailer Conforama.
to get the market interested from a capital raise
The portfolio is characterised by long leases of
viewpoint,” Rapp says.
around 17 years (with five-year breaks), negligible
vacancies that for the 2019 financial year are
Retail focus
projected at 1%, and multiple accretive opportunities.
Like its SA parent, Vukile, the intention is for
Typically, Spain’s retail parks consist of
Castellana to remain a specialised retail fund. That, independent boxes (stores) with independent
believes Rapp, will not only drive the rating, it will
owners. The retail parks in the Castellana portfolio
Laurence Rapp
CEO of Vukile
Keillen Ndlovu
Head of listed property
funds at Stanlib
COMPARISON OF GDP GROWTH
COMMERCIAL PROPERTY INVESTMENT MARKET VOLUME
Growth of 3.1% in 2017 versus 2.5% European
average, stronger than Germany, France & UK
3.5
Spain
3.3
France
Italy
9 000
8 000
UK
3.1
2.5
2.6
1.9 1.9
1.5
2.1
2.0
1.8
1.8
1.5
1.2
2.1
1.8
1.5
Offices
Retail
Hotel
6 000
2.3
2.2
2
1
Germany
£ '000
3
Strong growth in investment volumes
4 000
1.4
1.2
0.9
1.1
2 000
0.5
0
0
2016
2017
2018
2019
SOURCE: Eurostat, March 2018
@finweek
finweek
finweekmagazine
2002
2004
2006
2008
2010
2012
2014
2016 2017
SOURCE: RPE
finweek 12 April 2018
35
in depth property
Spain: A positive economic backdrop
(2017 figures unless otherwise stated)
are either 100% owned by Vukile, or Vukile owns
more than 50% of the retail parks.
Says Stanlib’s Ndlovu: “While this gives some
element of control, Castellana does have to work
with other parties to ensure a strong retail dynamic
at the various retail parks. Sometimes, interests
may not be fully aligned between all parties.”
The multi-ownership model is a common one
in the US and Europe, says Stanlib analyst Ahmed
Motara, although not popular in SA. “The owners
form a strong association, and all work together for
the benefit of the centre. But, if you don’t own the
anchor, that could be a problem.”
While somewhat concerned about Vukile not
having full ownership of all the boxes in some
of the retail parks, Mohamed Kalla, director and
portfolio manager at Sesfikile Capital, believes this
presents an opportunity for Vukile to acquire the
additional units.
46.5m inhabitants
4th-largest economy in the Eurozone
2nd-most visited country in the world after France
15.3% unemployment (2018)
3.1% GDP growth in 2017 versus 2.5% European average (2.6% 2018)
7.4% five-year annualised consumer confidence index growth
4.8% e-commerce retail market share
Export ranking: 15 ($282bn) out of 135 countries
STRONG DEMAND FOR RETAIL PROPERTY
4th-largest retail investment market in Europe by volume
€2.4bn Spanish retail investment volume
38% Spanish retail investments outside of Barcelona and Madrid
73% international capital (share in Spanish commercial real estate)
76.3% shopping centre transactions of retail investments
28% retail investment share in Spanish commercial real estate
SOURCE: Retail Partners Europe
Unlocking value
The portfolio comes with multiple value-add
opportunities. These include redevelopment and
Retail assets in Spain are new and modern
expansion, the first of which is the reconfiguration
and, unlike regions such as the US and UK, not
of Kinepolis Leisure Centre in Granada, a shopping
oversupplied. This is because the development of
centre that abuts two other Castellana assets –
commercial property dropped sharply after the 2008
Kinepolis Retail Park and Alameda Retail Park.
financial crisis. According to Retail Partners Europe,
The remodelling of Kinepolis, a popular
at the end of 2017 there was 16.5m square metres of
8 000m2 centre that is home to 15 cinemas,
retail space, equivalent to 355m2 per 1 000 people.
includes adding 300m2 of mostly retail and
By comparison, SA has 23.4m square metres of
restaurant space, improving the façade and
retail space, equivalent to 417m2 per 1 000 people,
interior, creating a children’s playground, and
according to MSCI data.
improving pedestrian areas and connection to the
Retail parks in Spain can be acquired at yields
Kinepolis Retail Park and parking.
of around 5.75% to 6.5%, with low interest rate
Kinepolis’s refurbishment, for which up to €4.5m
Mohamed Kalla
funding of around 2.5% to yield returns of around
has been approved, is projected to yield in excess
Director and portfolio manager
9%. Kalla tells finweek: “There is not a huge supply
of 10% and increase the centre’s rental income by
at Sesfikile Capital
of new retail space in Spain. The fundamentals
€475m yearly, says Brunet.
in the Spanish market are quite strong, and the
A future profit driver comes with the ability to
price they paid is fair in our view. They didn’t pay
access debt capital markets internationally that will
for vacant space and, given where rental levels are,
bring further compression, although the REIT first
Vukile can expect decent growth as leases are
to get to the right size.
Ultimately though, the hasBut,
renewed.”
says Rapp, it’s not about having to bulk
The portfolio’s rentals, says Castellana
up
for
the
sake of it.
objective is to build a
CEO Alfonso Brunet, average €7/m2 to
What’s important, he says, is that the
business that can be
€9/m2 compared to a market average of
Spanish REIT drives growth in earnings
€10 m2 to €12/m2.
and quality of earnings. Reducing Castellana’s
sustainable even without gearing from 48.2% to 40% is also on
According to Ndlovu: “The assets are
currently showing positive rental growth
the agenda.
Vukile.
and could see capital appreciation from
Ultimately though, the objective is to build
acquisition prices. Active asset management
a business that can be sustainable even without
opportunities are also quite evident and should, if
Vukile. The SA REIT is therefore not intent on
implemented well, improve the anticipated yields.
maintaining its almost 100% level of shareholding
“In the longer term, however, we are concerned
in Castellana.
around concentration risk to certain types of
“At some point we will look to bring in external
tenants (such as MediaMarkt and Worten, from
shareholders, and that should drive significant value
which around a quarter of the income is derived)
for Vukile shareholders,” says Rapp. ■
and the broader impact of e-commerce and
editorial@finweek.co.za
competing retail offerings in the vicinity,” he adds.
The writer was a guest of Vukile Property Fund in Spain.
Attractive supply dynamics
36
finweek 12 April 2018
www.fin24.com/finweek
Don’t fall foul
of the law!
The Occupational Health and Safety Act aims to provide for the health and safety of persons at
work and for the health and safety of persons in connection with the activities of persons at work
and to establish an advisory council for occupational health and safety.
The Occupational Health and Safety Act applies to all employers and workers, but not to:
• Mines, mining areas or mining works (as defined in the Minerals Act);
• Load line ships, fishing boats, sealing boats, whaling boats (as defined in the Merchant
Shipping Act) and floating cranes – whether in or out of water – and people in or on these
areas or vessels.
By law companies are expected to adhere to South African standards and regulations. The
framework for these standards is set in the Occupational Health and Safety Act of 1993. Having
an efective and accurate Occupational Health and Safety System in place allows you to be on
top of safety within your working environment and have control of your contractors.
New Media Publishing publishes full versions of the Occupational Health &
Safety Act and Regulations to enable South African businesses to comply
with the law.
If you employ five or more persons at your workplace, ensure
that you have a copy of this book available at all times!
If you want to easily comply with all health and safety laws, prevent accidents before they
happen, get your employees to always wear their PPE and avoid unnecessary expensive
consultant fees, then you should be using New Media’s Occupational Health & Safety Act
and Regulations to assist you.
Don’t waste any more time – place your order today at R179.95
per copy inclusive of VAT and delivery!
Or you could order more than one copy at the discounted rates of:
5 + copies = R699.75 inclusive of VAT and delivery
10 + copies = R1 299.50 inclusive of VAT and delivery
If you order 10 or more copies we can personalise them with your
company details on the outside front cover at no extra cost!
This is a perfect corporate gift for your clients or alternatively an
exceptionally useful publication for your HR department.
To place your order today or for more information,
contact Natalie Da Silva on 011 877 6281 or
Natalie.dasilva@newmediapub.co.za.
on
the
money
>> Entrepreneur: Hayward’s brings movable luxury to the bush p.40
>> Book review: Are we on the cusp of a second Renaissance? p.43
>> Careers: How to make the most of your time p.44
CEO INTERVIEW
By Glenneis Kriel
A business with a conscience
Spier Wine Farm is one of only a few wineries in the country to have grown despite the tough economic conditions of
the past few years. We caught up with Spier CEO Andrew Milne to find out more about its business strategy.
t he South African wine industry has
struggled with severe challenges over the
past few years, resulting in only one in seven
wine producers making a profit. Spier Wine
Farm belongs to this small minority, but, even
more impressively, it has achieved this success
with socially and environmentally responsible
business practices.
Andrew Milne, who took over as CEO at Spier
10 years ago, ascribes this to the company’s strong
brand. “Spier Wine Farm has been going since
1692, making it one of the oldest wine estates in
the country. Great efforts have been made to
restore the old farm buildings, and we are
investing in landscaping to create an
environment that better resembles
what the farm used to look like back
in the day.
“While history creates a
great cultural experience, the
biggest selling point is the
brand’s delivery on quality.
People who drink our wines
or make use of our hotel or
conferencing facilities are used
to getting good value. That is
most probably the secret to any
successful business; you have to
offer both good quality and value in
your products,” he says.
At the same time, the brand is
associated with ethical business principles.
“Spier has been investing in sustainable farming
practices and the local community for a long time,”
says Milne. “For us, ethical trade is a part of our DNA,
not a corporate responsibility or a marketing tool.
Our community projects and sustainability goals are
38
finweek 12 April 2018
“We expect wine grape
production to be down by
20%
25%
to
because of the drought.”
The farm offers the
entire field-to-fork
experience – guests
can enjoy meals at its
restaurants or opt for a
picnic basket.
budgeted for and set at the start of each financial year.
They are an integral part of the way we do business.”
Waste management
Spier’s water-saving journey started in 2007, with
the installation of water-saving taps and an ecofriendly wastewater treatment plant that cleans
sewage and grey water. This water is then used
to irrigate the farm gardens and grounds and for
flushing toilets in the busiest guest restrooms.
In the company’s vineyards, situated at Spier in
Stellenbosch, as well as in Helderberg and Wellington,
smart irrigation technologies are used to ensure
accurate and efficient water usage. Biological
farming practices are also in operation,
such as planting cover crops and laying
down mulch to improve the waterholding capacity of the soil, reduce
evaporation and keep soil cool. And
Spier Hotel and Conferencing has
managed to slash its water usage
by 50% over the past year to
mitigate the impact of the drought
in the Western Cape.
“We expect wine grape
production to be down by 20% to
25% because of the drought," Milne
says. “The company, however, is okay
for now, as we are completely selfsufficient when it comes to water. Another
year of drought would, however, be a problem.”
Over the past few years, Spier has also
significantly reduced its solid-waste footprint. “We
educate our employees by making them more aware of
the large volumes of waste generated on the farm, the
use of recyclable products and recycling, and even take
them to landfill sites to illustrate the problem. Today,
www.fin24.com/finweek
on the money spotlight
less than 2% of the farm’s solid waste ends up at the
landfills; almost everything is recycled,” Milne says.
Supplied
Investing in people
Spier has developed various ways of
uplifting people in its community. For one,
the company provides the base for the
Tree-preneurs project in the Western
Cape, which supplies seedlings
of indigenous trees to people in
impoverished communities. The “treepreneurs“ nurture the trees to a height
of 30cm, after which the saplings
are exchanged for vouchers that may
be used for food, clothing, educational
support, bicycles and other necessities.
“Tree-preneurs in the Western Cape have
grown more than 100 000 trees since the
project started here in 2009,” says Milne. “Many
of these trees have been planted on the farm or in
disadvantaged areas that are in need of greening.”
The company has also empowered some
employees by helping them establish their own
businesses. “We have, for example, supported
the start of a laundry and transportation
services businesses. These projects are not
funded by us, but having a secure client like
us helps prospective business owners secure
loans,” he explains.
Milne says one of the biggest challenges for
all South African companies, not just Spier, is to
be accessible to new jobseekers, while creating
an environment in which employees can reach
their potential. “Businesses have a role to play
in society. It is no longer enough to create
employment – we need to equip people with
skills, especially young people.”
Juggling different divisions
Spier has various business divisions, with wine
production being the main generator of
income. Then, in addition to its restaurant,
hotel and conferencing services, the
company donates land to projects
that share Spier’s values, such as
the bird rehabilitation group Eagle
Encounters, and rents some of its
property to entrepreneurs at the
craft market and organic farmers.
“Managing these versatile
offerings is not difficult, as food and
wine really pair well together,” says
Milne. “The tourism division actually
helps to add value and build the wine
brand. It is all about providing people a
field-to-fork experience that may be enjoyed
on multiple levels, with activities such as openair theatre performances and concerts, outdoor
Hotel facilities at Spier
have slashed their water usage
movie nights, Segway tours of the farm and
by 50% over the past year.
vineyards, picnics and even trail running.”
He adds that it is no longer just the food
market that is demanding ethical trade, but that
“Businesses have a tourists are becoming more environmentally
socially conscious. “More and more people
role to play in society. and
no longer want to invest in activities or products
It is no longer enough that are harmful to the earth or other people;
they want to support companies that are into
to create employment more than just making a profit.”
To make it in this market, Milne says, a
– we need to equip company needs to be aware of new trends and
what competitors are doing: “The company
people with skills,
needs to position itself to be able to
quickly respond to new market
especially young
developments.” ■
people.”
editorial@finweek.co.za
Getting to know Andrew Milne
Do you have a mentor?
Before coming to Spier, I used to work at M-Net,
MultiChoice and MWEB. Each of these companies
was very young when I started there, giving me
opportunities to work with many different people
and to see what works and what not. I would say
the collective inspired me, rather than singling out
one person for his or her influence.
How did you find the switch from broadcasting
to the wine and tourism industry?
It was an easy switch, as I have always enjoyed
travelling and good food. Some people say you
should not pursue a career in something you are
passionate about, as doing so might destroy the
@finweek
finweek
finweekmagazine
passion. I don’t agree. Most jobs are about selling
something. It is easier to sell something you feel
passionate about.
How would you describe your
management style?
I have always responded best to managers who
agreed with me on certain targets and then left
me to get on with the job. I like this management
style, because it allows people to use initiative, be
creative and seek out opportunities. People tend to
deliver when they feel they are genuinely trusted.
What are you reading at the moment?
Sapiens – A Brief History of Humankind, by Yuval
Noah Harari. It is a
fascinating book about
how humans became
the dominant species on
the planet and how we all need
to work together to address the challenges the
earth is facing. According to the book, humans are
one of the only species who can actually work
together based on myths – in other words, beliefs
that unite them.
What do you do for relaxation?
I love travelling. It does not really matter where.
There is nothing like a change of scenery to reload
the batteries and give one perspective. ■
finweek 12 April 2018
39
on the money entrepreneur
By Jana Marais
Bringing movable luxury
to the bush
At the age of 37, Peter Hayward quit a successful career in the financial services industry to develop what he calls a “fivestar hotel without an address”. His luxury tented safaris have won numerous global accolades over the years, and have
hosted dignitaries from Nelson Mandela and Oprah Winfrey to the king and queen of the Netherlands.
Supplied
b
arely a 30-minute drive
north of Pretoria lies the
Bobbejaansberg Nature
Reserve near Dinokeng, home
to the Hayward’s Grand Safari Company.
Grand it certainly is, with no expense or
trouble spared to offer guests a luxurious
Out of Africa experience. On the day of
finweek’s visit, Peter Hayward and his team,
without appearing to break a sweat, were
preparing to host a big corporate group
for a five-star celebratory dinner in the
company’s gin tent with adjacent library,
cigar lounge and bar. With all the offerings of
a luxury hotel, it’s hard to imagine that the
whole set-up can be packed up and moved
within a few days, leaving not a trace.
Inspired by the great grand safaris
of days gone by, such as Simon van der
Stel’s expedition to Namaqualand in 1685,
Hayward’s aims to offer its clients a true
adventure, with menus and activities
tailor-made to suit their tastes, right down
to the last coffee bean. And for those
groups looking for a more economical
option, or who prefer a shorter experience
closer to home, the company’s 1 000ha
property near Dinokeng offers a multitude
of activities, while still feeling a million miles
from Johannesburg.
Hayward’s today is voted as the World’s
40
finweek 12 April 2018
Hayward’s offers a five-star hotel experience without the bricksand-mortar in exquisite wilderness areas like the Kruger National
Park, Okavango Delta and iSimangaliso Wetland Park.
Leading Operator by the World Travel
Awards, Best in Africa by The Safari
Awards, and Best Five-star Lodge by
Sanlam Top Destinations.
How did the business come about?
doing small camps for documentary teams
and treasure hunters and the like, and then a
mate in the movie industry phoned me and
said: “We’ve got a biggie; Americans coming
out with a director who does all Madonna’s
filming, and they want us do the Lexus car
launch.” The full launch budget was $120m,
and we were part of that launch budget.
We were the first people to take on
big productions in places like the
Namib desert and the Kalahari,
mainly for the ad industry.
I had a bit of army experience with tents,
like all of us in our age group. I ended
up becoming part of an infantry
engineering team that goes in
and establishes big camps
for battalions, makes sure
the water’s in, the place is
de-mined and safe, and sort
How did you fund the
of able to work and operate.
business initially?
I did a bit of that training,
We couldn’t get a loan
hated it of course, but army
because no bank thought you
was enforced and it wasn’t
could run a hotel without bricks
anything any of us thought we’d Founder Peter Hayward with and mortar. How can you put
ever use again.
up tents and run a hotel? The
Celia du Preez, production
executive at Hayward’s Grand fact is, our bedrooms have the
In my days working
Safari Company.
underground in the gold mines,
same furniture that a hotel’s got,
we’d go fishing, and I’d go and do camps
but because the structures are made out of
for 10 or 12 people; put up little hunting
canvas, you can’t get a loan. I was able to
trips for Anglo’s top clients.
put up a 200-bed camp within two or three
In the 1990s, the Namib desert became
years and charge it out at a bricks-andvery popular for ad shoots, as production
mortar rate, without having to have bricks
costs were relatively low, it was easy to get
and mortar. And I just built it as the money
to from Cape Town, and they could do all
came in. It was never designed to become
these weird and wonderful things like IBM’s
a franchise or a big lumbering giant. We
elephants coming out of eggs. I was already
often get calls for 600 beds and 800 beds
www.fin24.com/finweek
on the money entrepreneur
Each safari tent is furnished like
any five-star bricks-and-mortar
hotel room and comes with a
separate bathroom and breakfast
nook at the front.
– and you just know it’s not going to work.
Now we’re getting into the army barracks
space. We’re not going there. We put up 100
bedrooms, which has space for 200 people
sleeping, and tents for 90 staff.
What makes your offering unique?
What really sets us apart is that we are
offering clients what we would term a
blue-blood safari. In other words, a pure
expedition based on their needs and
their wants.
It’s very exclusive, it’s one-on-one.
We don’t mix groups. A lot of other
styled tented operators do what we call
scheduled departures: “I’ve got a camp
leaving on the 15th of Feb, going to X,
it’s a six-day tour, we’re going to provide
your meals, etc.” We don’t do that. We only
focus on groups and often our groups
are not necessarily tourism-focused, but
also product-focused, such as product
launches. Sometimes those are quite big
events. It could be 10 nights of back-toback groups, basically running a tented
camp as you would run a five-star hotel.
It’s a massive production; the logistics
are mind-boggling. That’s where we also
stand apart – we have the ability to run
these things back-to-back over long
periods, without dropping the ball.
What group sizes do you cater for?
We don’t really have a minimum –
economically speaking, we normally look
at about 40 people. At home base [in
Bobbejaansberg], we can do a one-nighter;
it’s easy to do as we’re already set up. But
when we go cross-border, or when we go
into Kruger or places like that, you know
you’re looking for 40 minimum for four to
five nights; you want a proper safari.
How do the logistics work?
Everything is brought in; generators,
fridges, truck fridges. Each camp
is specifically designed for the
group. You’ve got to be realistic as an
operator and know your stuff, and never
compromise your clients. It’s not about
how many people you can get in a camp.
You also have to be honest and say to a
client sometimes: “Look, 200 people in the
Okavango for five nights is just not going
to work because of danger factors and
other things you have to consider.” We can
do 40 in the Okavango; we’ve done 200
in the Kruger in a wilderness area. You’ve
got to do very particular site inspections;
you’ve got to look at the lay of the land;
how do you get your vehicles in; how do
you get them out; where do you hide
them? No client wants to walk into a camp
and there are 16 trucks standing around;
it’s all got to disappear.
Who are your clients?
Our clients are a mix of local multinationals
doing international launches, large
incentive groups touring the country,
private events and brand product
launches, and large private family safaris.
South Africa works. We’re always in
combinations with other products. Clients
might Rovos Rail in to us; they might be
in a nice hotel the night before. You want
this tour to be positioned at a very bespoke
level at each point. You don’t want them
to arrive in your space disgruntled from the
bad service in the place before.
Relationships with the agents are
paramount; you really need great agents.
Because that calms the client down and
you can have an exceptional event.
What is your capacity?
How is the economy affecting
your business?
We can do somewhere between 12 and 16
major jobs a year. But some of the jobs are
these big back-to-back jobs, so it will run for
five weeks. We look at at least one every 10
days to three weeks on average. It depends
on if they are away safaris – a three-night
away safari is a 21-day process for us.
You’ve got to keep on going; you’ve got
to spread your product offering around;
you can’t just focus on one type of group.
We’ve learnt when times are tough, to
offer more. If they’ve bought a product for
R100, give them R150 worth of value, just
go for it. You charge a client R100, times
@finweek
finweek
finweekmagazine
“Our clients are a mix of
local multinationals doing
international launches,
large incentive groups
touring the country, private
events and brand product
launches, and large private
family safaris.”
are tough, he walks into camp and he’s
getting a R50 product, but he paid R100.
That’s a very bad business formula.
It’s like taking your car in for a service
and you know for a fact they didn’t do an
oil change, but they charge you for the oil
change. It is very, very bad, especially when
the economy is tough. You’ve got to have
the ethics and the discipline to say: “Let’s
still go the extra mile.” That’s actually the
only way to run a solvent operation.
Who do you see as your big
competitors?
We don’t really have a global competitor;
nobody else is really doing a Hayward’s
at the Hayward’s level. There are a
few glamping operators, and there
are operators who are focused on the
individual tourism market. We’ve gone
more the original grand safari model.
A couple of guys have come and gone,
because it’s very tough. I’m doing this
out of passion; not because we’re making
lots of money, believe you me. We do it
because it’s a lifestyle.
finweek 12 April 2018
41
on the money entrepreneur
If you want to set up a camp like this today, I
suppose you’ll spend R30m-plus. It’s a lot of
money, although it’s not a lot of money for
200
R300m.
beds. A 200-bed hotel will cost you
Sunset at the company’s
Bobbejaansberg property near Pretoria.
How many people do you employ?
Full-time, we’re a team of 16.
What is the biggest thing that’s
gone wrong?
Miscommunication with agents. The
production times needed to plan a huge
expedition and put it together and make
sure you’ve taken everything into account
– that takes a huge effort.
We’ve had some interesting safaris. We
had an Italian group once who were still
trying to pay us our deposits while we were
going through the gates of Kruger. They
still hadn’t told us the menu design. That’s
very precarious with a production like this.
You’re sitting in the middle of nowhere;
it’s not like there’s a Woolies on the corner
and you can quickly make a plan. If it’s not
in the truck, there is no Plan B. So I think
that’s where my grey hair has developed.
What are your plans to grow
the business?
The biggest problem is the sourcing
of like-minded people to run it. You’re
running this thing with absolute passion
and dedication. You don’t sleep, you eat
badly sometimes; you’re trying to keep
guys going 18-hour shifts.
You need that sort of a guy that is
maybe retiring out of mainstream business
at the age of 40, wants to do something
different, and has got the money to buy
into the programme, because it’s not
something banks are going to necessarily
fund. If you want to set up a camp like this
today, I suppose you’ll spend R30m-plus.
42
finweek 12 April 2018
You may be in the
bush in a tent,
but no effort is
spared to offer
exceptional food
and service.
have a five- to six-month cushion. In
our business, you also have a lot of wear
and tear on your equipment. And you’re
buying that cash, or maybe you can take
an overdraft on your house and buy a tent
with it. But traditionally, if you want to buy
a new gin tent like the one we’re doing
dinner in – well, you must find R350 000
cash. You haven’t decorated it yet; that’s
just the tent. It’s a tent, it’s material,
this stuff doesn’t last forever. So your
replacement costs are there all the time.
What is the biggest lesson
you’ve learnt?
It’s a lot of money, although it’s not a lot of
money for 200 beds. A 200-bed hotel will
cost you R300m.
It’s not like buying a franchise. You
can’t really give people these absolutes in
terms of figures. The tourism industry is
volatile. About 10 years ago we were ready
to go into a multiplication of the concept,
and then 2008 hit. What do you say to a
new investor now: “Hello, here’s your new
business, no one’s coming”?
If you haven’t built up cash reserves,
how do you get through that year?
You must have the strictest financial
principles you can ever imagine in this
business. You don’t rush off and buy
a Porsche.
What kind of cash buffer do you have?
I think you need a minimum of a three- to
four-month cushion, but really you should
You must understand every element
of your business. You can never give an
instruction to anyone if you yourself can’t
do it. If you want to tell someone that the
toilet isn’t clean, then you had better show
him/her how to clean a toilet. If your chef,
for instance, is not quite up to scratch,
then go into the kitchen and show him
exactly what you mean. You must have
the know-how at every level.
In that, you’re instilling passion into
ordinary people. We get amazing ratings
on our staff; I’m gobsmacked every time.
We rate our camp every single morning
on 22 things on a one-to-10 basis. We
average 9.7, 9.8 across 22 points, across
70 000, 80 000 responses so far. And
that’s because each person’s given the
responsibility, and we have enough faith
in them. We instil that faith and that
confidence in them to act on our behalf –
to go out and do it. ■
editorial@finweek.co.za
www.fin24.com/finweek
on the money book review
INFORMATION AGE
Is humankind on the cusp of a
second Renaissance?
Individuals will have to learn from the past and become outward-focused future gazers in order to adapt to a
changing future.
h
ow do we win in this time of acceleration, a time
categorised as much by risk as by opportunity? What
lessons can we learn from the first Renaissance to
navigate the second?
These are the critical questions posed in Age of Discovery, a
formative work by South African-born author Ian Goldin, a director
of the Oxford Martin School at Oxford University and a former
vice-president of the World Bank, and Chris Kutarna, a consultant,
entrepreneur and fellow of the Oxford Martin School.
At the recent USB Executive Development (USB-ED) and
finweek We Read For You (WRFY) event, André Roux, economics
professor at the University of Stellenbosch Business School
(USB), shared some of the deeper insights in the book,
drawing parallels between the first Renaissance and
what is taking place today, in our globalised world and
at home in SA.
Supplied
The first Renaissance
placing more and more people at greater risk.
We’re on the precipice, hovering between the bright and dark
sides of discovery. As we go through this evolution and the Fourth
Industrial Revolution takes hold, the question is: What we can take
from the past to inform our decision-making today?
The authors argue that now – in the information age, where
human health, wealth, literacy and education are flourishing – “is
the best time to be alive”. But as in the time of the Renaissance,
we are living in an anxious and divided world.
While we are evolving as a society through scientific gains,
more of us are being alienated – stressed by social disparity,
political division and the unintended consequences of our modern
discoveries and the rapid pace of change.
Within this context, our all-too-connected and
disrupted world does not offer guarantees – but it does
present possibilities, and as Goldin and Kutarna point
out, it is up to each of us to realise them. To navigate
the future, we must learn from our past.
The advancements in exploration, science and art
made by the pioneers and the great thinkers of the
How do we become winners in the
past – from Columbus, Copernicus and Da Vinci to
second Renaissance?
Gutenberg, who invented the printing press – hurtled
Roux believes Age of Discovery encourages people
medieval man through an age of enlightenment and
to become smarter risk takers. To survive and thrive, we
André Roux
into an era of knowledge, literacy and understanding.
need to be open to ingenuity and prize the generation of
Economics professor
The original European Renaissance, beginning in about
ideas, support the arts, reconceptualise smart cities, and
at the USB
1400 and lasting almost two centuries, was a time of
have the means of offering sustainable safety nets for
advancement, but also of great upheaval. The “rebirth” led to the
the dispossessed.
questioning of long-held values and beliefs and heralded a fresh
Ultimately, Roux argues that the onus is on the individual to
approach to learning and thinking.
take ownership of the future. And, while we need to learn from our
past, we also need to become outward-focused future gazers: we
The second Renaissance
each need to act decisively in order to adapt.
Fast forward to the present day: We’ve gone from Gutenberg
Above all, we should reignite the idea of the “Renaissance
to Zuckerberg, and from Venice and Antwerp to Wall Street and
Person” – the polymaths who collectively enhance the emerging
Dubai – and our world is arguably witnessing a similar explosion of opportunities, and mitigate the potential risks, by taking a
intellectual innovation. We are more connected than ever before.
multi- and interdisciplinary view of the world. This means having
In fact, in our globalised existence, we have become integrated
more than a working knowledge of science, medicine, botany,
and tangled together. In a time of unprecedented trade and
economics, the fine arts, music, psychology, and the like.
global opportunity, there’s also the social friction and upheaval
Collectively, we need to be agile. With these high stakes come
synonymous with the first Renaissance.
the opportunity for humanity to give of its best and leave a
Medicine is gaining nature’s power to design life and prolong
positive legacy for future generations. ■
editorial@finweek.co.za
it; engineering is going beyond what was previously thought
possible; and the global flows of commerce, finance, people and
finweek is the USB-ED’s media partner in its We Read For You series. The next event will be held on
ideas are redefining economies and communities. But where
Friday, 13 April 2018. Carl Kies, CEO of Reutech, will discuss The Boys in the Boat by Daniel James
Brown. To register, please visit www.usb-ed.com/WRFY. Admission is free.
there are positive gains, poor political and social choices are
@finweek
finweek
finweekmagazine
finweek 12 April 2018
43
on the money careers
By Amanda Visser
How to manage time in a
distracting world
With the rapid changes associated with technological advancement, we are expected to do more faster – and
distractions are everywhere. Fortunately, there are skills and tools we can use to meet this challenge.
44
finweek 12 April 2018
www.fin24.com/finweek
Images: Supplied
t echnology and new inventions have freed up
to actually transform a system or process or to create or
people’s time so they can do other things – but
innovate,” says Craig. “People need to find or craft out
this progress has also made life more frenetic.
spaces for themselves to be able to do that.”
Technological advances are occurring at
an exponential rate. Our ability to keep up with the
2. Managing emotions and stress
changes and to remain relevant is being challenged
People are beginning to feel increasingly
on a daily basis.
overwhelmed. More and more people will start
According to Randy Milanovic, CEO of Kayak
feeling this way as life continues to speed up.
Online Marketing, we are expected to do and
Often, we hear our colleagues uttering phrases
be more than at any other point in history. “Even
like, “Life is chaotic”, “It’s crazy”, “It’s becoming
though each new development is in itself timeunmanageable” and “The demands are way bigger
saving, people tend to be busier and busier from one
than my coping resources”. This is a sign that they
Randy Milanovic
generation to the next,” he writes in an article published
are distressed.
CEO of Kayak
by SocialMediaToday.
According to Craig: “The stress puts us into flightOnline Marketing
This has made people aware of the importance of
or-fight reaction. This fundamentally limits our ability to
better time management and decision-making.
think cognitively and compassionately.”
Debbie Craig, founder of Catalyst Consulting, says
the Fourth Industrial Revolution is changing the way we
3. Planning and prioritising
see time. “Our linear perspective of time, as in past,
People battle to plan and prioritise because they
present and future, and our perception of how long
struggle to balance what requests or tasks to say
things take, have to be challenged.”
yes to, what to say no to and what they will be able
She explains that individuals have to ask
to get to, but not right now, she says.
continually how they can change their thinking
This is a process in which people need to be able
and their perceptions and perspectives to be
to manage stakeholders and their expectations. This
“exponential”. This means we have to reinvent how we
is starting to become a very important skill.
perceive the world and concepts such as time, money
“I am finding people are not as skilled as I thought
Debbie Craig
and relationships, she says.
they might be, perhaps because it has not been as
Founder of
The ability of people to fast-track their learning in an
important before,” says Craig.
Catalyst Consulting
exponential world is going to be critical, she believes.
“These skills have become absolutely critical – not
Recent studies show that individuals have only 1% of
only in terms of health and survival, but in terms of
their working week available for learning.
remaining relevant.”
People require three essential skills to keep up –
Learning these skills requires individuals to be
the ability to focus in a distractive world, the ability to
committed and to set goals so that they can become a
manage our emotions and stress, and the
part of our daily lives.
“If we are continually distracted, Milanovic says that as we spend more
ability to plan and prioritise, she says.
more time online, it is also necessary
we never get into that powerful and
1. Focusing in a distractive world
to be mindful of how we spend that time.
Individuals are struggling the most with
Most people have experienced those
thinking and learning space that
the ability to balance deep learning or
moments when they realise they have
we need to actually transform a revisited the same web page two or three
thinking with the need to scan and keep
up to date with everything else that is
times. It is a waste of time, says Milanovic.
system or process or to create
going on.
“Devise a filing and bookmark system
People need at least 45 minutes if
that
is consistent throughout your devices
or innovate.”
they are to obtain deep learning or a
to be able to reach and access details
“concentration space” to be able to do their best work.
when you need them.”
“If we are continually distracted, we never get into
He also advises individuals to become good at
that powerful thinking and learning space that we need
scanning information: “The fact is that most of us get
on the money quiz & crossword
Apps and tools to help
manage your time
1. RESCUE TIME: This app sends
weekly reports indicating what
things are stealing your time and
how much time you are wasting.
2. REMEMBER THE MILK: An
app that helps manage your
to-do list across devices and
other applications, such as Gmail,
Google calendar and Evernote,
another productivity tool that
allows you to capture your ideas
or lists in pictures, voice notes or
attachments.
3. POMODORO TECHNIQUE:
This was developed by university
student Francesco Cirillo in the
1980s. He found that the best way
to manage time is to break work
into focused blocks of at least 25
minutes, followed by a five-minute
break. After four consecutive
working blocks, you can take a
20-minute break. Focus Booster is
based on the Pomodoro Technique,
where you set yourself an alarm
when it’s time to go into deep focus
for a specific period.
4. UNIVERSAL PASSWORD
MANAGER: It keeps all your
passwords on one encrypted
database, protected by one
password. This is a real time saver
for people serious about their
digital security.
5. FOCUS@WILL: This app
combines neuroscience and music
to boost productivity. It is helpful for
those who find it difficult to focus
when they are reading, working
or studying. ■
SOURCES: Shaun Kennedy, product marketer at
Zapier; Kirstin O’Donovan, CEO of TOPResults Coaching,
accessed from www.lifehack.org
more information and detail than we can realistically deal
with on any given day.”
Milanovic says many busy professionals tend to think
that spending time learning a new application or skill is a
waste. But educational time is never wasted, he believes.
The working environment is also changing and
employees are becoming more creative in managing
their time, says Craig.
Home days: Executives are using “home days” to do
focused work without distractions. This may mean they
go into the office later, leave earlier or take a whole day
away from the office.
Desk signs: Those who are not fortunate enough to have
home days put up signs on their desks that may read:
“Deep focus required. Please come back at 12:00.” This is
especially helpful in open-plan offices, where managing
your space can be challenging.
Mindfulness practice: This trains the mind to quickly
shift from a highly excitable, distracted mode into a calm,
focused and aligned (mind, body and soul) stage to allow
for new thoughts and ideas.
Being mindful also reduces blood pressure, stress
levels and negative hormones, so that people can
manage their time and reduce stress.
Some blue-chip companies are teaching their leaders
about neuroscience and mindfulness. Says Craig: “Make
a commitment in your mind that you are not going to
be distracted by beeps, inboxes and people coming
and going.”
Time is truly like water. If it runs out, there is no
substitute. Use it wisely. ■
editorial@finweek.co.za
@finweek
finweek
finweekmagazine
Congratulations to Liam Graham, who won a book in our
recent giveaway. Well done! This week we have a collection
of articles from the Harvard Business Review, entitled On
Leadership Lessons from Sports, up for grabs. For a chance to
win this book, complete the online version of this quiz, which
will be available on fin24.com/finweek from 9 April.
1 A section of a certain highway was
closed on 2 April due to violent
protests. Name the highway.
2 True or false? The networking and
cellular equipment manufacturer
Huawei is headquartered in
Japan.
3 Which South African political
party does Athol Trollip belong to?
6 What is Mar-a-Lago?
■ A resort in Florida
■ The capital city of the Maldives
■ A US battleship
7 True or false? Steve Mitchell is the captain of the
Australian cricket team.
8 Fill in the missing word: AfCFTA stands for
African __________________ Free Trade Area.
4 True or false? North Korean
leader Kim Jong-un visited China
recently.
9 Which country’s flag features the image of a star?
■ Kenya
■ Cuba
■ Indonesia
5 How long has Vicki Momberg
effectively been sentenced to jail
for crimen injuria?
10 True or false? Solly Kramer Snr, who founded a
large liquor store chain in SA, originally hailed
from Scotland.
CRYPTIC CROSSWORD
NO 705JD
ACROSS
DOWN
1 Holy Roman Empire was first one to have
men only assembly (9)
8 Pound letter in Arabic (3)
9 Dupes prisoner out of million to make hit (11)
11 Becomes a member to evidence pride (5,2)
12 This bird lops top of flower (5)
13 Acerbic Channel Islands detective joins
athletic club (6)
15 Good look one girl gives another (6)
17 Lions nosed about, we hear (5)
18 Female convert heard to be obstinately
resistant to change (3-4)
20 Contracting a rigor, by the sound of it (11)
22 Have nothing left when man leaves (3)
23 Genocidal is made up of both pain and
pleasure (9)
2 Distress signal starting from a different
direction at dawn (3)
3 Scores after flurry of shots (5)
4 Three to one, French female goes to Trinity (6)
5 Regular doctor exchanged note for student (7)
6 Appeal lawyers win legal discussion (4-7)
7 A man person nonetheless makes for a
character (9)
10 Very important indication provided by silly
antic (11)
11 Like Milton’s elm – impervious to the night
light, and celebrities? (4-5)
14 I retain shaky neutrality (7)
16 Supplementing summer’s assignment (6)
19 Stole a head start on Penny (5)
21 Character in first part of book (3)
Solution to Crossword NO 704JD
ACROSS: 1 Broody; 4 Checks; 9 Plea-agreement; 10 Salvage; 11 Inter; 12 Antre; 14 Aggro;
18 Orris; 19 Astride; 21 Daughter-in-law; 22 Exempt; 23 Lessee
DOWN: 1 Bypass; 2 Overland route; 3 Drama; 5 Heeding; 6 Chesterfields; 7 Saturn; 8 Ariel;
13 Rosehip; 15 Coddle; 16 Naked; 17 Peewee; 20 Tripe
finweek 12 April 2018
45
Piker
On margin
Shock, horror, habe
This issue’s Zulu word is habe.
Pronounced ha-beh, it is an expression
of shock and surprise.
This reminds me of the time I started a business with a weird guy.
There were three of us, yet he wanted us to have a MANCO, an OPCO and
an EXCO.
He then wanted us to have separate
meetings for all of these committees, and we wouldn’t discuss stuff
pertaining to one committee in another
committee’s meeting. Habe!
You can also use habe as a response
whenever someone makes a ridiculous
request or demand. Especially when
you have no idea why they think you
would agree or oblige.
A colleague says you should speak
English because she doesn’t understand your language, even though you
were not even talking to her: habe.
A metro cop says you must give
him “cool drink” even though you’re
willing to take the ticket: habe.
Your traitor son says you must take
him to the soccer stadium to watch
Orlando Pirates, even though he is
the only one in the family who doesn’t
support Kaizer Chiefs: habe.
Your neighbour wants you to
continue giving him lifts to work, even
though he doesn’t ever assist you with
petrol money: habe.
A potential client wants you to do
work on spec, and if she likes it, she’ll
pay you: habe.
The president wants to thuma
(send) you, but his government has
raised VAT and taxes, so we have less
money and can’t afford the petrol to
run his errands: habe.
A colleague expects you to greet
him every time you bump into him in
the corridor, kitchen, boardroom, bathroom and anywhere else: habe.
Never be shy to say habe when people are being unreasonable. Whether
it’s in your work or private life, people
must know when you’re unhappy about
their actions. Habe!
– Melusi’s Everyday Zulu
by Melusi Tshabalala
Verbatim
The Native @Zuko_Godlimpi
A headline of one Nigerian news website
reads: “South African president travels
economy while Nigeria’s president shuts
down the entire economy”
Tom Eaton @TomEatonSA
I see some newcomers to cricket
wondering how long people have been
roughing up the ball to make it swing
more. OK, let me help. About 4.6bn
years ago, the Earth was formed. About
14 minutes after that, a captain told his
fielders to throw the ball in on the bounce.
Shit Academics Say @AcademicsSay
The difference between procrastination
and “productive procrastination” is
one Netflix episode vs. binge watching
a series.
lonelyboyrecords @WILLESTILIOS
Tetris teaches us that if we fit in
we disappear.
Amelia Tait @ameliargh
Please know that I have replied to your
email in my heart.
VeryBritishProblems @SoVeryBritish
“That’s the good thing about a roast,
you just chuck it all in the oven” –
Translation: This has taken me five
hours of immense stress.
“Many people take no care
of their money till they come
nearly to the end of it, and
others do just the same with
their time.”
– Johann Wolfgang von Goethe, German
writer and statesman (1749-1832)
46
finweek 12 April 2018
www.fin24.com/finweek
HOW TO PLAY
The Best Instruction.
WHAT TO PLAY
Hot List Gear Reviews.
WHERE TO PLAY
Top 100 Courses.
Best Places to Play.
SUBSCRIBE NOW
FOR YOUR MONTHLY
DEFINITIVE GUIDE
CALL 087 405 2004 OR
SMS "GD" TO 40573.
www.golfdigest.co.za
Документ
Категория
Журналы и газеты
Просмотров
20
Размер файла
6 788 Кб
Теги
finweek, journal
1/--страниц
Пожаловаться на содержимое документа