The ANC urges government to approve changes to laws for the oil and gas industry to speed up development and resolve power shortages.]]> |||
Pretoria - South Africa’s ruling African National Congress urged the government to approve planned changes to laws for the oil and gas industry to help speed up development and resolve power shortages.
President Jacob Zuma in January sent changes to the 2002 Mineral and Petroleum Resources Development Act back to parliament because of concerns the amendments weren’t in line with the constitution.
The bill included proposals to give the state a free 20 percent stake in all new oil and natural-gas projects and the option to buy an unspecified additional share at an “agreed price.”
South Africa has the potential to install as much as 20 gigawatts of gas-fired plants by 2030 to reduce reliance on coal-based generation, Enoch Godongwana, chairman of the ANC’s economic transformation committee, said in an opinion piece in the Johannesburg-based Business Report on Tuesday.
While Eskom Holdings the state-owned power utility, is building new capacity to alleviate current shortages, more shortfalls are expected between 2025 and 2030, Godongwana said.
“While we see the potential for oil and gas discoveries in our country, none of this is proven until the companies commit risk capital to drill exploration wells,” Godongwana said. “This will not happen if there is no enabling environment.”
South Africa’s gross domestic product fell for the first time in more than a year in the second quarter, declining an annualized 1.3 percent as the economy grapples with power constraints and a slump in prices of platinum, copper and other commodities.
“South Africa’s electricity shortages continue to constrain growth,” Godongwana said. “The potential oil and gas discoveries present the democratic government with a unique and historic opportunity.”
Business Connexion CEO Isaac Mophatlane reflects on the company’s past, and its future.]]> |||
Midrand - 24 August 2015 marked a historic day in the history of Business Connexion Group and for Isaac Mophatlane, group CEO, as the company delisted from the Johannesburg Stock Exchange, following the successful acquisition by Telkom and after trading for over 11 years as an independent listed company. The journey for 23-year-old twin brothers Benjamin and Isaac began with their vision to start an IT company, coupled with their ambitious drive to make it succeed. Isaac Mophatlane, CEO of Business Connexion reflects on the journey and what they have achieved.
“Ben and I discovered computers at the age of 12 and were immediately fascinated,” says Mophatlane. “We had tremendous support from our parents who were always very clear about education opening the door to success, so we worked hard and finished high school with high enough marks to secure bursaries from South African Breweries (SAB) to study accounting.” He believes they were lucky in this regard. “Our generation was the last to really experience apartheid, but we knew that the only way we would make it in business was through education, so we embraced that.”
The dawn of the IT era
The Mophatlane brothers witnessed the dawn of the IT era. “We both got part-time sales jobs with a company called Software Connection, which gave us the opportunity to further develop our passion for technology. Back then Windows 95 was considered cool, with one million copies sold within four days. Microsoft’s Office 97 was made available in December 1996 on either CD-ROM or on a set of 45 3,5-inch floppy discs. Google launched the same year, but very few people outside of Stanford knew about Google. For us these were exciting times.”
He believes the work they did part-time while studying laid the foundation for what was to come. “We had access to a number of highly qualified and talented individuals and managed to develop great relationships that would serve us well in the future. There are very few entrepreneurs that get access to funding for their ideas, but it was different for us.
By the time we were ready to start our own IT reseller company in 1996, we had been working part-time at Software Connection’s Pretoria branch for 18 months. We had proven ourselves through hard work and dedication, and when we approached the owners of the chain, Connection Group, they were willing to take a chance on us. It was at a time when procurement policies were changing and it was the perfect time for two young black men to stake their claim in an industry about to boom.”
Mophatlane believes, at the tender age of 23, they were far too young to be afraid of taking risks and this was probably their saving grace. “We were confident in our abilities and had established a great relationship with a company that was built on entrepreneurial spirit and allowing us to focus on gearing the business up for growth.
“That doesn’t mean that it was easy though. Having the cash did not make it any easier – even leasing office space was a headache as no-one believed that we had the money.
“What we did have, though, was a large network as a result of the work we did with Software Connection and that helped us to secure our first clients. Our focus was on customer service and this remains a core value for us today in Business Connexion.”
Gearing for growth
While Business Connection earned revenues of R100 000 in the first year, the Mophatlane twins had no intention of staying small, which resulted in them moving away from being a reseller to becoming a software integrator. By 1997 they started focusing on becoming a specialist Microsoft Certified Solution Provider and one of a small number of local Microsoft Large Account Resellers.
The relationship with Microsoft proved to be a fruitful one and resulted in a big turning point for the company – a three-year R100 million contract was awarded to them by Telkom to supply their entire user base with Microsoft licenses.
“This deal suddenly put us in a new league. We had to employ additional, experienced staff and had to do so quickly. The deal was a great success and look where we are today.”
Growth through mergers and acquisitions
The first merger took place in 1999 with Dutch-based Getronix, and then joining forces with Seattle Solutions in 2001. The brothers continued on their journey to become a force to be reckoned with, building on an already well-known and respected brand.
Mophatlane says that their pursuit of growth and sustainability highlighted the need to diversify.
“We dominated the Microsoft market at that stage and knew that in order to remain sustainable and relevant we would need to move into other areas. In 2004 we merged with Comparex Africa, creating a black-empowered ICT giant with annual revenues in excess of R3-billion.” The new Business Connexion was born and listed in April that year. It was three years later, in 2007 that Telkom first tried to acquire it, a bid that proved unsuccessful.
In 2007 Benjamin Mophatlane became the CEO of Business Connexion Group and on the foundation of a corporate restructure, started an exciting period of organic and acquisitive growth for the company. Large acquisitions included UCS, the listed retail focused ICT solution provider, Canoa, a provider of Canon’s print solutions and Integr8, a focused mid-tier ICT systems integrator. During this period the business grew revenues to over R7 billion with almost 7 000 employees in offices in Africa, the Middle East and the UK.
Where to from here?
2015 now sees the successful conclusion of two truly South African companies coming together. This not only heralds a new beginning for Business Connexion, but also for Telkom.
“The convergence between IT and telecoms is a global phenomenon which cannot be avoided. This deal is in line with this and will bear benefits for both Telkom and Business Connexion. We will continue to exist as an independent subsidiary of Telkom, but by working together we will improve our customer value proposition through a greater ability to provide integrated end-to-end ICT solutions and a more global and competitive offering, particularly on the African continent and beyond.”
Looking back Mophatlane says that it has been an emotional ride and Benjamin was hugely instrumental in ensuring that this deal succeeded. When Benjamin tragically passed away just over a year ago, Isaac stepped into his place as CEO of the group. “The conclusion of the deal is testimony to the hard work that Benjamin put into making this deal a reality and this would have been a very proud moment for him.”
Both brothers have been instrumental in the tremendous growth of the organisation. In the collective 11 years that they have been at the helm of Business Connexion, the company has grown from R3 billion to over R7 billion in revenues and has increased its footprint on the African continent, something which will be a key benefit to Telkom. Since August 2014, after the passing of Benjamin, Isaac took the baton and continued the race. This resulted in the company increasing revenues by 16% in the first half of the 2016 financial year, driven by new client wins.
Isaac Mophatlane is CEO of Business Connexion, a post he has held for about a year. He writes in his personal capacity and IOL does not necessarily endorse his comments.]]>
The group is buying P&L Hardware and continuing to add new stores, and refurbish others.]]> |||
Johannesburg - Cashbuild - which supplies building materials to cash-paying customers - is set to expand its footprint through the addition or news stores, and an acquisition.
The group on Tuesday published its results for the year to June and noted the 24 stores it has added since July 2013 helped it grow revenue in a tough trading environment. In the first six weeks of the new trading year, revenue has gained 11 percent year-on-year, leaving management “positive” about its prospects.
Cashbuild, listed on the JSE, currently has 222 outlets, having added 24 since the middle of 2013 - of which nine were opened in the past year.
It notes overall revenue gained 13 percent to R7.7 billion, while operating profit jumped 30 percent to R464.5 million - an increase Cashbuild says is thanks to it containing operating expenses at 11 percent.
Cashbuild notes revenue from stores that existed before july 2013 gained 8 percent, while the 24 new outlets added 5 percent. “This increase for the year has been achieved in tough trading conditions, with selling price inflation of 2 percent.”
Basic earnings per share increased 36 percent to 1 556.8c and headline earnings per share grew 34 percent as headline earnings gained to R352 million.
During the year, the company opened 9 outlets, refurbished 24 stores and relocated 6 stores. It notes 2 stores trading in close proximity to other Cashbuild stores were closed.
Retailers often close or move stores that are close to other outlets to avoid cannibalisation - a process in which foot traffic diverts to the alternative outlet.
It notes its do-it-yourself pilot continues with 11 Cashbuild DIY pilot stores (not included in the 222 total stores number). “Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.”
In addition to opening new stores, the group is buying P&L Hardware from André Prinsloo Trust and FJP Beleggings for R350 million, plus R80 million if certain profit targets are achieved during a three-year period.
Cashbuild said, when it made the deal announcement last month, that it will expand its footprint and market share, bringing “quality building materials at the lowest prices to the communities in which it trades”.
P&L comprises 39 retail building material and hardware outlets situated mostly in the Limpopo and Mpumalanga provinces of South Africa. The deal is subject to customary conditions.
Joblessness in the 19-nation eurozone bloc falls below 11 percent for the first time since February 2012.]]> |||
Brussels - Unemployment in the eurozone fell to 10.9 percent in July, the first time it has dipped below 11 percent since February 2012, raising hopes that economic recovery is taking hold, official data showed on Tuesday.
Joblessness in the 19-nation currency bloc fell from 11.1 percent in June, the EU statistics agency Eurostat said, but with youth unemployment at a still high 21.9 percent.
As usual, the level of joblessness varied widely across the eurozone, but the sharp fall will boost hope that Europe is emerging from its prolonged debt crisis.
Unemployment in powerhouse Germany was unchanged at 4.7 percent, the lowest rate in the currency bloc.
The highest rate was in debt-stricken Greece, at 25 percent in May, the latest data available, but down from 25.6 percent a month earlier.
Youth unemployment in Greece stood at 51.8 percent and at a still huge 48.6 percent in Spain, another country struggling to reignite job creation after the crisis.
In welcome news, Italy, the eurozone's third biggest economy, saw joblessness fall to 12 percent, snapping two consecutive months of increases despite a wave of job reforms.
Youth unemployment in Italy still stood at a high 40.5 percent.
EU-wide, unemployment in the 28 member states fell by 0.1 percent to 9.6 percent in June, the lowest level since June 2011.
Zimbabwe’s Hwange coal-fired power station and its Kariba hydro plant are set to undergo routine maintenance.]]> |||
Harare - Zimbabwe's two biggest electricity generation plants will start annual routine maintenance on Tuesday, leading to even deeper power cuts in the southern African nation, the state-owned utility said.
At best, Zimbabwe produces 1 345 megawatts (MW), half its peak demand, forcing local industries to use costly diesel generators to keep operations running. Electricity shortages have been blamed for keeping away potential investors.
The two power stations set for maintenance are Hwange, a coal-fired station in the west and Kariba hydro plant in the north, which jointly produce 90 percent of Zimbabwe's power.
The Zimbabwe Electricity Supply Authority (ZESA) said Hwange would undergo maintenance until October 7, while Kariba, which has cut back on generation due to low water levels, would see its maintenance stretch to January 28.
“Consumers will experience suppressed power supplies until generation is brought back to normal levels,” ZESA said in a statement.
Hwange has a capacity of 920 megawatts but ageing and frequent breakdown of equipment has kept its production around 496 MW.
Zimbabwe Power Company, ZESA's subsidiary, last week said it would cut electricity generation by a third to 475 megawatts (MW) at Kariba due to low dam water levels.
ZESA said it would import electricity from neighbouring countries if it is available. However most of them, including South Africa and Zambia, are also grappling with power supply shortages of their own.
On Monday, Africa's richest man, Nigeria's Aliko Dangote, said he plans to open a $400 million cement plant in Zimbabwe and would also look at investing in coal and power generation.
Lee Rochford will step down as the British lender’s chief financial officer with immediate effect.]]> |||
London - British lender Virgin Money Holdings said Lee Rochford will step down as chief financial officer and executive director of the company with immediate effect.
Rochford joined the company in October 2013 to lead it through its initial public offering which was completed last November.
He will be replaced by Strategy Director Dave Dryer on an interim basis, Virgin Money said.
Rochford will remain on contract and serve his notice period until the end of August next year, the company said.
The search for a permanent replacement for Rochford has started.
Virgin Money, which counts itself among the bigger challenger banks in Britain, reported a 37 percent jump in first-half profit.
Shares in the company were down 5 percent at 402.8 pence on Tuesday on the London Stock Exchange.
European stocks extend the losses of recent weeks after manufacturing data from China again raises concerns over the health of its economy.]]> |||
London - European stocks fell on Tuesday, extending the losses of recent weeks after weak manufacturing data from China again raised concerns over the health of its economy.
The pan-European FTSEurofirst 300 was down 2.4 percent at 1,397.39 points by 08h05 GMT, with basic resources stocks down 3.9 percent, making them the top sectoral losers. Asian markets also fell.
Activity in Chinese manufacturing contracted at its fastest pace for three years in August, an official survey showed on Tuesday, reinforcing fears of a sharper slowdown in the world's No. 2 economy despite a flurry of government support measures.
China's official manufacturing Purchasing Managers' Index (PMI) fell to 49.7 in August, denoting contraction, after scoring 50.0 in July.
“The PMI was below 50, which is a psychologically important level and puts into real focus the fact that China is contracting,” ETX Capital senior sales trader, Joe Rundle, said.
“With the weak data coming out, we're going to see the negative sentiment from the last few weeks continuing,” he said.
Investor fears over Chinese growth contributed to a drop in European shares in August, with the FTSEurofirst 300 chalking up its biggest monthly loss in four years on Monday.
Germany's DAX, which has substantial exposure to China, fell 2.8 percent, underperfoming despite data that showed factory activity at a 16-month high and a jobless rate at a record low.
In aggregate, euro zone manufacturing growth eased last month, with Italian and French factory PMIs falling.
The biggest individual decline on the STOXX Europe 600 was in Man Group shares. They fell 5.3 percent. The hedge fund fell after Bloomberg reported that the boss of its China unit was taken into custody as part of an investigation into recent market volatility.
Bucking the trend, Sweden's Elekta rose 5.8 percent after reporting first quarter earnings, making it the biggest riser on the STOXX Europe 600. Traders cited an upbeat sales forecast as supporting the health-care firm.
UK shares look set for their worst one-day fall in over a week, with miners hit by a slump in the manufacturing sector.]]> |||
London - UK shares fell more than 2 percent on Tuesday, set for their worst one-day fall in over a week and with miners hit hardest after a slump in the manufacturing sector in China - the world's biggest commodity consumer - rattled global markets.
Declines were broad-based, with only two FTSE 100 stocks were in positive territory at 08h15 GMT on Tuesday, London's first trading day of the week after a public holiday on Monday.
Policymakers worldwide have turned more interventionist with a surge in market volatility to levels not seen since the 2008 financial crisis. China's central bank has already repeatedly intervened to stabilise the yuan since its August 11 devaluation sent shockwaves through global markets.
“We are sellers across the board,” said Mark Ward, head of execution trading at London-based Sanlam Securities. “People are getting back from holidays and trying to make sense of what is going on.
“The China headlines are not helping but I would say it's probably more down to sentiment than a huge shift in the actual economic outlook.”
The FTSE 100 was down 2.3 percent, a touch better than the pan-European FTSEurofirst 300, down 2.6 percent. Miners Glencore, Anglo American and BHP Billiton were down more than 4 percent as metals prices fell on China demand fears.
China worries also hit shares of hedge-fund manager Man Group, down 5.8 percent after the boss of its China unit was reported taken into custody as part of a probe into recent market volatility.
Rentokil got a lift, meanwhile, from its biggest deal in 10 years with an agreement to buy pest control business Steritech for $425 million. Its shares rose 3 percent.
Canada's Valeant Pharmaceuticals International said it is buying rights to AstraZeneca’s late-stage experimental psoriasis drug brodalumab after it was dropped by Amgen in May. AstraZeneca shares were down 2.6 percent.
The group is holding onto extra cash to enable it to restructure its balance sheet for future growth.]]> |||
Johannesburg - Listed leasing and capital equipment company Eqstra saw revenue come down fractionally in the year to June, but its operating profit gained 10.6 percent to R1 billion.
The group, which has recently been through top level changes including a new CEO on an interim basis after Walter Hill retired, saw revenue drop 5.2 percent to R9.5 billion.
Eqstra explains revenue declined because of “sub-optimal utilisation of revenue-generating assets and the conclusion of loss making contracts in the contract mining and plant rental division”.
In addition, fleet management and logistics’ closure of used vehicle retail branches and termination of subcontractor agreements resulted in lower revenue, although profitability increased.
Its industrial equipment division grew its forklift market share, but low mining truck unit sales reduced distribution revenue.
Operating profit gained thanks to strong performances from fleet management and logistics as well as its industrial equipment unit. Eqstra adds contract mining and plant rental also benefited from improved efficiencies and cost reductions.
Eqstra says in its results commentary that it bolstered capital adequacy and its liquidity buffer during the year. It also trimmed excess assets to R645 million and cut capex 23.2 percent to R1.9 billion.
However, its key challenges included that its cost of excess assets amounted to R147 million, it had an impairment of R97 million on yellow equipment and did not declare a dividend.
Headline earnings per share, a key performance indicator, gained 2.6 percent to 78.7c as overall group performance marginally improved in a subdued market.
Despite the impairment of leasing assets, earnings per share gained 1.2 percent to 61.3 cents per share.
The board decided not to declare a dividend in order to preserve cash and increase the capital adequacy ratio of the group in line with its future strategy to restructure the balance sheet.
Eqstra says it is confident its new 2020 strategy of restructuring the balance sheet, to become less capital intensive and more services orientated, will rebase its platform for growth.
It notes it is expending its footprint in the UK, which is expected to gain marginally, through deals.
The chain is profitable at an operational level, but is still making a net loss as it is in expansion phase.]]> |||
Johannesburg - Grand Parade Investments (GPI) has plugged R231.8 million into expanding the Burger King franchise in SA, yet the American product is still running at a loss.
Overall, the company reported revenue up substantially higher, at R502 million from R135 million in the year to June, and said net profit also leapt, growing from R63 million to R661.7 million.
The results, its says, highlight the “strength and quality” of its investment portfolio, despite pressures in the local economy. GPI has stakes in SunWest International, GPI Slots, Spur and Burger King.
Presenting its results for the year to June today, the company noted its total investment in Burger King SA, which was formed between GPI and Burger King Worldwide, with the first store opening in Cape Town in the second half of 2013, is now at R411.8 million.
GPI notes its store footprint is now at 44, as it opened 26 outlets during the year. The listed investment company adds its focus will remain on expanding Burger King to make sure that it reaches its critical mass during the upcoming year, “which will allow the investment to sustain its expansion without the support of GPI”.
The group is also set to identify and unlock synergies between its investments in Burger King and Spur, “as the potential to create value between these two investments is significant”.
Currently, Burger King SA is running at a loss and contributed a R55.1 million loss to GPI’s group headline earnings - a 38.2 percent increase year-on-year.
“The past two years have been the initial start-up and expansion phase for Burger King and the losses that have been contributed are in line with management expectations.”
GPI says the burger chain achieved “significant” milestones during the year as it has now localised 92% of its food inputs, which has significantly de-risked the business from currency fluctuations, stock losses and increased the food margin.
The rand, hovering near 14-year lows, has been increasingly volatile over the past while.
On an operational level, profit came in at R3.7 million between April and June, notes GPI.
Burger King’s burger patty production unit, Excellent Meat Burger Plant , contributed a R800 000 loss to headline earnings. Meanwhile Mac Brothers, which earns 32% of its sales from providing equipment to Burger King, contributed a R2 million loss.
GPI added its investment in Spur contributed a R5.9 million loss because of interest expenses. It says dividends and interest will balance out going forward.