Anyone who attended last year’s annual general meeting (AGM) at JD Group won’t be too surprised by yesterday’s stock exchange announcement warning shareholders that it would be reporting a loss of between 65c and 70c a share for the last six months of last year.
At the AGM last November, shareholder activist Theo Botha queried whether management was making adequate provisions. Botha reckoned that JD Group’s management was too aggressive in growing the business and that this aggression was particularly inappropriate given the extremely difficult trading conditions.
“I’m not convinced that the JD Group is providing enough against its debtors’ book. We saw what happened at African Bank and this concerns me,” Botha told the meeting, according to Moneyweb reports at the time.
Botha was assured at the AGM that the group followed appropriate provisioning processes and that the board was comfortable with the current level of provisions.
Botha may have been discouraged from pushing the issue too far by memories of a previous outing at a JD Group AGM when he was dismissed by long-serving director Len Konar for being a “failed CA”.
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How is it possible that they thought they could ride it out,” Botha said to Business Report yesterday. He said that for most of the past year there had been clear evidence of the difficulties facing credit retailers across the country.
JD Group’s apparently inappropriately lax approach to provisioning is surprising given that its early history and impressive growth was so reliant on a conservative approach to provisioning.
Perhaps management forgot about Rusfurn and Profurn, which disappeared in the dust created by their strategy of chasing sales at any cost and destroying considerable amounts of shareholder funds in the process. Their disappearance benefited JD Group enormously at the time.
This time around, was Botha the only shareholder watching out?
Employment figures
No one has actually said that the Statistics SA quarterly labour force survey figures, released yesterday, have been fiddled with, but there are plenty of questions being asked about their accuracy.
Global investment bank HSBC slipped in a cheeky comment towards the end of its prepared statement on the released figures yesterday, saying that while some argued South Africa suffered from “jobless growth” the latest data suggested the country was experiencing a period of “growth-less job creation” instead.
Economist are not wont to use words like “incredible” to describe statistics – unless of course they are not credible.
But such were the words of Econometrix chief economist Azar Jammine when responding to Stats SA’s latest unemployment figures. “I cannot believe so many jobs were created last year. Who does the sampling?” he said.
According to Stats SA, employment increased by 653 000 jobs last year – the biggest year-on-year gain since the recession, but economic growth was still hovering at just 1.8 percent. Most of these jobs were probably in the informal sector.
But at major issue are questions over Stats SA’s capacity to carry out its mandate.
These have been hovering for some time, given the fight between statistician-general Pali Lehohla and senior statisticians Jairo Arrow and Marlize Pistorius, who both faced disciplinary action for expressing concerns over the large margin of error during the 2011 census.
Jammine expressed reservations yesterday over whether those carrying out labour bulletin surveys were properly capacitated to carry these out so that the sampling was correct.
He pointed out that Stats SA’s own quarterly employment survey, which interviews businesses as opposed to households, produced “constantly much weaker” employment figures.
Why? Apparently they have different ways of collecting statistics.
As Stats SA considers whether it will monitor the efficacy of the employment tax incentive, perhaps it’s time it let us in on its “methodology” for the quarterly labour force surveys. page 18
Edited by Peter DeIonno. With contributions from Ann Crotty and Shanti Aboobaker.