INCE|Connect News

Omnia sinks after flagging a half-year loss. All three main areas of the chemical and fertilizer group's business performed

poorly in the six months to end-September.

Omnia has warned of a sharp fall in first-half earnings due to a tough period

for all segments of its business. Its shares fell as much as 16%.

In a trading statement, the chemicals group said margins in its fertilizer

sales had suffered due to the pressure facing farmers, while its Mining

business was also operating under tight conditions, as was its Chemicals

business.

It expects to report a loss of much as 114 rand million for the six months to end-

September, with basic earnings likely to be in a range of 120% to 140% lower.

It said headline earnings per share for the period would be down by the same

margin at a loss of between 84c and 168c.

Omnia said its Agriculture division would report lower profit due to the

delayed planting in certain territories. In its mining division, margin

pressure on emulsions, detonators and accessories, as well as a further write-

down of a problematic debtor in Angola of 44 rand million where the client

defaulted on the payment arrangements committed to in the prior reporting

period would affect earnings. Its Chemicals division had been impacted by a

constrained manufacturing and mining sector. Foreign exchange losses and a

bigger interest bill were also to blame, it said.

Shareholders are reminded of the cyclical nature of the group's Agriculture

business which constitutes approximately half of Group revenue," the person

who said it here which is red "Profitability for the first six months of the

financial year is historically low with this business peaking during the South

African summer planting season that typically runs from September to December

each year."

It said Protea Chemicals, which forms part of its Chemicals division,

continued to face deteriorating market conditions and was being restructured

following a review of its business strategy.

Omnia's shares closed 10.7% down at 103.60 rand.

Nightmare trading update from Omnia. Profit becomes a loss. Everything going

against it. Bids have disappeared. This stock is going to tank badly today..

-- Keith McLachlan (@keithmclachlan) November 12, 2018

Omnia now loss making. Just a further sign of continued weakness in SA

economy.

-- Dave Hazelwood (@hazelwood_dave) November 12, 2018

Torre attracts buyers as it prepares to delist. A consortium of private equity funds plans to separate Torre's industrial and

analytical services businesses if the R771m deal proceeds.

Private equity firms Ethos and Apex Partners have proposed an offer to buy

Torre Industries and delist it from the JSE. The joint bid comes as Torre

takes its own steps to go private.

In a statement yesterday Torre said it had received a firm intention to make

an offer from Main Street 1641, a special purpose vehicle established by the

private equity funds. They plan to offer Torre shareholders 1.05 rand a share, as

well as a cash dividend of 35c and a maximum deferred, top-up cash payment of

10c a share if the scheme becomes operative. That values the offer at 771 rand

million, or 1.50 rand a share. The cash dividend and offer consideration

represents a 44.7% premium to the 30-day volume weighted average traded price

of Torres shares as at 7 November.

Torre held off on paying a final dividend for the year to end-June after it

told shareholders that it planned to delist as a precursor to raising black

ownership in the group. It supplies parts and components to the mining,

construction, industrial and automotive sectors and provides analytical and

testing services to mining and construction. It also sells and rents branded

capital equipment. In July it said increasing black ownership above 51% was a

business imperative.

The buyers plan to separate Torre's industrial businesses (TI) from the

analytical services businesses (TAS), which they say will improve the

operational performance of the two units.

The consortium believes that the transaction and subsequent separation of TAS

and TI will unlock value by allowing the businesses to operate independently

and receive focused management attention, strategy implementation and enhanced

empowerment credentials," Torre said.

Torre's shares ended 18.5% higher at 1.28 rand. Stellar Capital, which owns 57% of

Torre, gained 9.1% to 60c.

Ethos and Apex Partners are taking Torre Industries private in a deal worth

over 770 rand million. That's 10.8x EBITDA multiple - looks very steep. Torre will

be delisted from JSE. I guess they are playing the SA Inc narrative, hoping

macro economic fundamentals will improve

-- The Northerners (@trevmuchedzi) November 12, 2018

Brait narrows losses on New Look recovery. A turnaround strategy helped the UK womenswear chain post a first-half profit

as it regained market share and cut costs.

Brait reported smaller losses for the six months to end-September thanks to an

improvement at ailing UK womenswear chain New Look.

The investment group reported 3.59 rand billion in investment losses for the

period, less than half last year's 7.98 rand billion loss. Its headline loss

reduced to 668c per share from 1,577c a year ago. Its net asset value declined

by 1.1% to 55.23 rand per share.

It reduced the carrying value of New Look to zero last year and said it would

keep it there until its turnaround strategy had taken shape. At the time, it

said the chain had moved away from its core market and its value proposition.

It was also late to introduce certain trends and was unable to clear some of

its ranges as a result. New Look's CEO Anders Kristiansen stepped down last

September and Alistair McGeorge, who oversaw a turn-around and recovery

between 2011 and 2014, returned to the group as executive chairman. Founder

Tom Singh also agreed to a more active product role.

For the period, New Look more than doubled earnings before interest, tax,

depreciation and amortisation (EBITDA) to 49.8 million as it increased market

share and focused on more profitable online sales. It said annual cost savings

of 70 million had been identified and it had recognised 31.7 million in its

interims results. New Look is busy exiting China, which Brait says will allow

it to focus on core trading. A review of other international markets is

ongoing.

Among its other investments, Virgin Active reported a 6% decline in EBITDA

after it opened more gyms and had to recognise increased commission costs and

start-up expenses up front. Food group Premier grew EBITDA by 10%. Iceland

Foods in the UK reported a 21.5% decline in EBITDA due to increased staffing

costs due to regulatory wage increases, higher fuel prices and improvements to

its distribution network.

New Look continues to make good progress in delivering improved operational

and financial stability with increasing UK market share demonstrating its

strengthened breadth of appeal," Brait said. "Although womenswear clothing

performance is improving, key challenges in footwear and accessories remain."

Brait's shares declined 1% to 38.10 rand yesterday.

Rebosis sags as it cuts dividend. The property fund reported a loss for the year to August following a

revaluation of its properties.

Rebosis has trimmed its full-year dividend after a drop in the value of its

property portfolio pushed the property fund into a full-year loss. The

revaluations resulted in the value of Rebosis's underlying portfolio declining

by 3.9% to 18.1 rand billion. Its shares sank as much as 25%.

Rebosis owns six shopping malls, 42 office properties and a warehouse. Like-

for-like growth in the underlying retail portfolio amounted to 4.6% in the

year to end-August, 5.1% for the commercial portfolio and 7% for the

warehouse. Property expenses increased year-on-year, with an average net cost

to income ratio rising to 15.2% from 13.8%.

For the period, the fund reported a 20% rise in revenue to 20% to 2.26 rand

billion while net operating income increased by 48% to 840 rand million. However,

a 1.77 rand billion reduction in fair values resulted in a 924 rand million loss for

the year. It increased the dividend on its A shares by 5% to 252.86c but cut

the dividend on its B units by 27.7% to 92.83c.

It said it had made good progress in its strategy to be a retail-focused fund

and was well advanced with the disposal of its commercial properties.

Following a rise in its loan-to-value to 51.6%, it said the ratio would

decrease to 49.4% following the sale of its Boxwood property.

While the commercial portfolio is defensive in nature, management is focused

on the disposal program to achieve a loan-to-value ratio of less than 40%,"

CEO Sisa Ngebulana said. "Our portfolio's average escalation is 7%, however

growth in distribution for the year ahead will be dependent on improved

economic conditions in the retail sector."

Its shares closed 23.5% down at 4.60 rand.

Rebosis B units show 27% drop in distributions. Ltv now 51.6%. LFL rents

grow 4.7% and vacancies now 5.5%. Not a great result for unit holders - share

price down 21%

-- Sesfikile Capital (@Sesfikile_Cap) November 12, 2018

Here's what you should know about Sisa Ngebulana, who founded Rebosis, the

first black-owned JSE-listed property group.https://t.co/0GT8g9RNKn

-- SME South Africa (@SMESouthAfrica) November 12, 2018

Tiger Brands warns of lower profit. The fast-moving consumer goods group has been hit by rising costs and the

impact of last year's listeriosis outbreak.

Tiger Brands has warned that full-year profit will be up to 30% lower, sending

its shares as much as 4.6% lower on Friday.

In an updated trading statement, the fast-moving consumer goods group said

headline earnings per share (HEPS), including Kenyan subsidiary Haco Tiger

Brands which was sold last year, would be between 25% and 30% over than the

2,161c it reported last year. Excluding Haco, HEPS would also be 25% to 30%

down from 2,155c in the comparative period.

The group gave no further details but said in August that rising costs and the

impact of a recall of products that may have been contaminated with listeria

at some of its factories late last year and early this year were behind the

drop in earnings. The volatile rand, fuel price increases, labour settlements

and higher administrative prices had resulted in big cost increases which it

hadn't been able to pass through to customers. It had also impaired intangible

assets in the Person Care category.

Last month, Tiger resumed production at its Germiston meat processing factory

more than half a year after it closed the factory due to the listeriosis

outbreak. The Enterprise meat canning operation in Polokwane, which was also

implicated in the listeriosis outbreak, recommenced production in September

after it received a Certificate of Acceptability from the Capricorn

Municipality on 31 August.

The group's shares turned around to close 0.3% higher at 280.86 rand. They're down

39% this year.

Google outlines steps to tackle workplace harassment. by Glenn CHAPMAN

"We recognize that we have not always gotten everything right in the past and

we are sincerely sorry for that," chief executive Sundar Pichai said in a

message to employees, a copy of which was shared with AFP. "It's clear we need

to make some changes." Arbitration of harassment claims will be optional

instead of obligatory, according to Pichai, a move that could end anonymous

settlements that fail to identify those accused of harassment. "Google has

never required confidentiality in the arbitration process and it still may be

the best path for a number of reasons (e.g. personal privacy, predictability

of process), but, we recognize that the choice should be up to you," he said

in the memo. Pichai promised that Google will be more transparent with how

concerns are handled, and provide better support and care to those who raise

such issues with the company. Google will provide "more granularity,"

regarding sexual harassment investigations and their outcomes, according to

Pichai. A section of an internal "Investigations Report" will focus on sexual

harassment to show numbers of substantiated concerns as well as trends and

disciplinary actions, according to the California-based company. He also said

Google is consolidating the complaint system and that the process for handling

concerns will include providing support people and counselors. Google will

update its mandatory sexual harassment training, and require it annually

instead of every two years as had been the case. - Less booze - Google is

also putting the onus on team leaders to tighten the tap on booze at company

events, on or off campus, to curtail the potential for drunken misbehavior.

"Harassment is never acceptable and alcohol is never an excuse," Google said

in a released action statement. "But, one of the most common factors among the

harassment complaints made today at Google is that the perpetrator had been

drinking." Google policy already bans excessive consumption of alcohol on the

job; while on company business, or at work-related events. Some teams at the

company have already instituted two-drink limits at events or use ticket

systems, Google said. Google executives overseeing events will be expected to

strongly discourage excessive drinking, according to the company, which vowed

"onerous actions" if problems persisted. The company also promised to

"recommit" to improving workplace diversity through hiring, retention, and

career advancement.' - 'Googleplex' walkout - Thousands of Google employees

joined a coordinated worldwide walkout a week ago to protest the US tech

giant's handling of sexual harassment. A massive turnout at the "Googleplex"

in Silicon Valley was the final stage of a global walkout that began in Asia

and spread to Google offices in Europe. Some 20,000 Google employees and

contractors participated in the protest in 50 cities around the world,

according to organizers. Demma Rodriguez, head of equity engineering and a

seven-year Google employee, said during the walkout that it was an important

part of bringing fairness to the technology colossus. "We have an aspiration

to be the best company in the world," Rodriguez said. "But we also have goals

as a company and we can't decide we are going to miss those." The protest took

shape after Google said it had fired 48 employees in the past two years --

including 13 senior executives -- as a result of allegations of sexual

misconduct. Demands posted by organizers included an end to forced arbitration

in cases of harassment and discrimination for all current and future

employees, along with a right for every Google worker to bring a co-worker,

representative, or supporter when filing a harassment claim. In a statement

organizers commended Google for the response, but said more changes are

needed. "We demand a truly equitable culture, and Google leadership can

achieve this by putting employee representation on the board and giving full

rights and protections to contract workers," organizer Stephanie Parker said

in the statement. Along with sexual harassment, Google needs to address racism

and discrimination that includes inequity in pay and promotions, organizers

said. "They all have the same root cause, which is a concentration of power

and a lack of accountability at the top," Parker said. DM

Richemont’s first-half earnings disappoint. The luxury goods group reported operating profit that missed expectations due

to the cost of acquisitions and disposals.

Richemont's shares fell to their lowest on a year and a half on Friday,

dropping as much as 6.7% after it reported first-half profit that missed

expectations.

The luxury goods group's online push has come at a cost after it consolidated

its new Online Distributors business and acquisition and disposal charges.

During the six months to end-September, it bought the remainder of online

retailer Yoox Net-a-Porter (YNAP) and watch specialist Watchfinder. It sold

Lancel.

The inclusion of 100% of YNAP and Watchfinder boosted sales by 21% "6.8

billion for the six months to end-September. Excluding Online Distributors,

sales grew by 6% at actual exchange rates and by 8% at constant exchange

rates, driven by its Jewellery Maisons and double-digit increases in the

Maisons' directly operated boutiques and online stores. All regions with the

exception of the Middle East and Africa reported higher sales, with double-

digit increases in Hong Kong, Korea and the US.

Operating profit declined 3% to "1.13 billion, missing expectations for a rise

to "1.3 billion. Its operating margin declined to 16.6%. Excluding Online

Distributors it improved to 21.1%.

Profit for the year rose to "2.25 billion, assisted by a post-tax non-cash

gain of "1.38 billion on the revaluation of existing shares in YNAP. Net cash

declined to "1.58 billion after a "3.75 billion cash outlook related to the

acquisition of YNAP and Watchfinder, as well as dividend payments.

Amidst growing volatility in consumer demand, partly attributable to an

uncertain economic and geopolitical environment, we maintain confidence in our

ability to realise our long-term ambitions, supported by the strength of our

balance sheet," chairman Johann Rupert said. "so it stands out better."

Last month, Richemont announced a joint venture with Chinese online retail

giant Alibaba that will target YNAP's products at Chinese consumers.

Its shares closed 6.4% down at 96.78 rand on Friday.

Richemont: PE is around 18.4x. Probably the cheapest it has been since 2009.

I just have a bad feeling about this online caper, but there again my tech

savvy is zero. (PE calculates to 17.7x if is cash removed, but this is

becoming a lot less relevant.)

-- Karin Richards (@Richards_Karin) November 9, 2018

Serious miss by CFR with operating profit expected to be 1.3 and coming in

at 1.13 billion. Operating margin dropping from 19% to 16.6%. With these

luxury stocks being hammered on misses lately as China future not looking so

good , can't see this not being hammered.

-- Daniel Airey (@DanielAirey) November 9, 2018

Richemont technical update on long term chart on the back of earnings - now

looks to be firmly below the 103/104 level. GM and OM -310bps & 400bps

respectively. Needs to hold 90.60 rand or 78.54 rand opens up as a new target. Long

term triple top still looks to be in play. pic.twitter.com/59bgvMqtoI

-- Lester Davids (@Davids) November 9, 2018

No dividend as Tongaat swings to a loss. While sugar prices remained under pressure over the six months to end-

September, they've since recovered due to increased duty protection.

Tongaat Hullett has had a tough first half on all fronts after land sales

failed to materialise and its sugar operations in South Africa and Mozambique

faced tough operating conditions. While lower maize costs benefited its start

and glucose operation, this wasn't enough to counter weakness elsewhere.

The group said its sugar operations reported a 13% decline in combined

operating profit to 1.14 rand billion before cane valuations. Although sugar

production increased by 12.5%, raw sugar prices were 22% lower on average over

the six months. It also took a higher charge of 796 rand million in respect of its

cane valuations. Its Zimbabwe sugar operations reported a 7.4% decline in

operating profit to 537 rand million.

Tongaat said local sugar prices were cut in July last year and March this year

by a cumulative 22% in response to competition from imports, resulting in

lower margins. After extensive engagement with the government and the

International Trade Administration Commission, the dollar-based reference

price, used in the calculation of the import duty, was increased in August to

$680 per ton from $566. Subsequent reviews and adjustments to the tariff have

also been implemented. This has resulted in a sharp decline in imported sugar

volumes and a return of local prices to pre-July 2017 levels.

Its starch and glucose operation grew operating profit by 25$ to 300 rand million,

helped by lower maize prices after a surplus crop.

Land conversion and development activities recorded an operating loss of 30 rand

million from a profit of 441 rand million last year. It said negotiations around

some transactions weren't concluded and substantial commercial engagements

were continuing with a number of prospects. It only generated revenue from the

sale of 0.6 developable hectares in Bridge City north of Durban. Last year, it

sold 68 developable hectares across various areas.

Revenue increased by 9% to 8.8 rand billion in the six months to end-September.

Operating profit fell 64% to 530 rand million. It reported a headline loss of 87 rand

million from earnings of 661 rand million last year and a headline loss per share

of 74.1c from earnings of 573.8c. It's not paying an interim dividend after

paying 100c a year ago.

Tongaat Hulett remains focussed on improving its financial performance,

notwithstanding the current operating environment, with progress on

establishing a platform for earnings growth beyond 2018/19," the group said.

Its shares declined 6.1% on Friday to close at 61.30 rand.

Tongaat terrible trading update but expected. Making a loss . Poor local

conditions and land sales that did not happen. Very difficult and volatile

industry

-- Wayne McCurrie (@WayneMcCurrie) November 9, 2018

Ailing rand aids Life Healthcare. The private hospitals group says its full-year results will be better than

previously expected, helped by the weak rand and a better performance from

Alliance Medical in the UK.

Life Healthcare has been given a boost by rand weakness this year. In a

trading statement on Friday, the private healthcare group said its results for

the year to end-September would be better than previously expected after the

rand weakened against the pound, the euro and Poland's zloty. It also credited

better than expected results from the UK's Alliance Medical, which will be

included for the full year.

The group expects to report a 67% to 77% increase in earnings per share (EPS),

while headline EPS will be 35% to 45% higher. It said its results would

reflect a gain of about 74 rand million relating to the acquisition of the

minority shareholding in Alliance Medical, from a 65 rand million loss last year.

The comparative numbers also included transaction and funding costs of 694 rand

million related to the acquisition and a 167 rand million impairment of Polish

business Scanmed Multimedis.

Life bought Alliance Medical in late 2016 and results of the UK diagnostics

specialist were only included for part of its 2017 financial year. It said

Alliance delivered a strong performance in its Irish, Italian and northern

Europe diagnostics businesses. The UK molecular imaging business (PET-CT)

continued to experience good scan volume growth with 2018 volumes up by 12%

from last year.

In August, the group sold its 49.7% stake in India's Max Healthcare to

investment firm Kohlberg Kravis Roberts & Co. (KKR) for 4.3 rand billion before

costs and taxes. Max's book value at the end of March amounted to 2.9 rand billion

and it's expected to report a net loss of between 115 rand million and 135 rand

million for the year.

Life's results are scheduled for release on 23 November. Its shares ended

trade 0.8% lower at 25.84 rand on Friday.

Morgan Stanley Sues Morgan Stanley for Wrongful Use of Name. The Wall Street titan accused Morgan Stanley Capital LLC of improperly using

the 83-year-old investment bank's trademark and name. The entity, MSC,

allegedly filed for a charter in Delaware in 2015 and tried to register itself

in China. "Morgan Stanley greatly values its name and trademarks, and protects

them to maintain its reputation as one of the most respected companies in

financial services worldwide," according to the lawsuit, filed Nov. 5 in the

Delaware Chancery Court. Goldman Sachs Group Inc. had a similar issue in 2015,

when it insisted it had no relation to a Chinese firm using a nearly identical

English and Chinese name. For Morgan Stanley, the issue is especially

confusing because the bank has used the word "capital" in a number of its own

subsidiaries. MSC also tried to use the Morgan Stanley name in job postings on

the internet, according to the lawsuit. A phone number for MSC couldn't

immediately be found, and there's no lawyer listed for the company in court

records. To be sure, Morgan Stanley doesn't have a complete lock on its name.

Until earlier this year, one of its own employees happened to be named Morgan

Stanley. The case is Morgan Stanley v. Morgan Stanley Capital LLC, Case No.

2018-0801-JTL, Delaware Chancery Court (Wilmington). DM