INCE|Connect News

Newsflash: Malusi Gigaba resigns 'for the sake of our country'. Malusi Gigaba's resignation as Home Affairs minister brings to an end a torrid

month that started with a leaked solo sex tape and worsened when his last bid

to appeal a court finding that he lied under oath was dismissed by the

Constitutional Court. Then the public protector told President Cyril Ramaphosa

he had 14 days to take disciplinary steps against Gigaba as lying under oath

was a contravention of the Executive Ethics Act and codes.

That deadline for presidential action was Wednesday. And after a widely

reported meeting between the president and the minister on Friday, it seems

Gigaba made a last-ditch attempt to file legal papers to take the public

protector report on review.

If that had been successful, Gigaba would have been able to stay off any

disciplinary action from the president on the argument that the report and

remedial action were still under review, and thus not final. It is reliably

understood the process of filing the legal papers did not proceed without

hiccups.

In a statement the Presidency confirmed that Gigaba, in his letter of

resignation, indicated he "was stepping aside for the sake of our country and

the movement to which he belongs".

It went on to say the reasons Gigaba gave also included "to relieve the

president from undue pressure and allow him to focus on improving the lives of

the people of South Africa and for him to do the best he can to serve the

country and save it from this economic meltdown".

Transport Minister Blade Nzimande has been appointed to act as Home Affairs

minister until a permanent appointment is made, Presidency spokesperson

Khusela Diko said in the statement.

Ramaphosa, who is due to leave for a working visit to the European Union, now

has at least two vacancies in his Cabinet, that of Gigaba and the vacancy

created by the death of Edna Molewa. Whether he would take this opportunity to

announce a reshuffle remains to be seen.

Gigaba, who not long ago was touted as a future president of the country, must

now decide on his future. While he resigned from Cabinet, he is still an MP

and may decide to take up that post on the ANC parliamentary benches. DM

Zapiro: Pravin Delayed.

Recession Proof US Shares worth researching Part 4: Back Testing. Last week I decided to run a back test to see how the selection of recession

proof stocks discussed in my previous 3 three articles would have performed

over the last 20 years. I chose 20 years because it would cover the last 3

major market downturns 1998, 2002 and 2008. The test was run for the period of

Jan 1998 to October 2018.

Part 1, 2 & 3 of this series can be found here in the #SharePicksUSA section:

I made the following assumptions for this test:

All 15 shares were equally weighted at 6.66% of the portfolio to begin with.

Dividends were reinvested.

No adjustments were made to the portfolio for the entire period.

I used the S&P500 index as a benchmark.

My main objective for a Recession Proof portfolio is:

Market value must decline less than the S&P 500 during market downturns so that I can SWAN (Sleep Well At Night)

Market value must equal or better the performance of the S&P 500 over the long term

Produce an increasing dividend income, even during market downturns

The results are as follows:

Performance during the last 3 significant market declines:

July to October 1998 The portfolio decline was 13.6% when the S&P dropped 15%

March 2000 to October 2002. The portfolio decline was 17.64% when the S&P 500 dropped nearly 45%

November 2007 to March 2009. The portfolio decline was 30.42% compared to the S&P500 drop of 51%

The dividends increased every year without any declines during the entire

period. With an initial investment of $10,000 dividend for the first year were

$1,900 and ended up at $12,016 in 2017.

Graph of the portfolio growth with an initial investment of $10,000 compared

to the S&P500.

The portfolio grew from $10,000 to $73,532 The S&P500 grew to $40,520 during

the same period.

Annual returns compared to S&P500 are as follows:

This test was simulated as a "Buy and Hold" portfolio, that is, there were no

adjustments made during the 20 years of the simulation. As you can see this

portfolio significantly outperformed the S&P500 during the market downturns

over the last 20 years. This portfolio had a Beta of 0.64 compared to the

S&P500.

Please note the above graphs like all back testing, suffer from selection

bias. Had I set the start date in the middle of the 2008 crash the S&P500

would have gained more than the portfolio. I selected these dates to

illustrate that Dividend Growth Investing portfolios ride through market

declines with less fluctuations than the total market. Past performance is not

a guarantee of future returns and data and other errors may exist.

Disclaimer: Please note that I am not a Registered Financial Planner. The

articles I write are based on my own personal research and for my own use and

is not to be construed as financial planning advice. At all times readers are

urged to exercise caution when investing in any financial instruments, to do

their own research

Follow @Bruce Ingram

...back to Share Picks USA

Pierre De Vos: Regardless of the politics, Public Protector's pursuit of

Gordhan is legally flawed and fails the honesty test. In June 2017, Julius Malema, leader of the Economic Freedom Fighters (EFF),

confessed that the party had "made a terrible mistake" to support the

appointment of Busisiwe Mkhwebane as Public Protector. (Mr Malema does not

appear to be a particularly good judge of character as he previously also

apologised for supporting Jacob Zuma.)

As it turns out, this confession was well made, as the High Court found a few

months later that the Public Protector "does not fully understand her

constitutional duty to be impartial and to perform her functions without fear,

favour or prejudice" and does not appreciate that her office requires her to

be honest.

Unfortunately, some of her recent actions have raised further worries about

her impartiality, knowledge of the law, and honesty. Because these actions

relate to her decision to subpoena Public Enterprises minister, Pravin

Gordhan, to answer questions about the granting of early retirement to former

SARS acting Commissioner, Ivan Pillay, some politicians may prefer to ignore

this new evidence that Mkhwebane is not fit for office.

Gordhan has made powerful enemies within and outside the governing party,

partly because of his haughty manner, but largely because of his ruthless

clean-up of state-owned enterprises which has the looters and their political

backers running scared and fighting back.

In a recent column, Daily Maverick's Professor Balthazar delves into the

politics of the matter, pointing out that the Public Protector recently told a

court that she had not investigated senior politicians like Ace Magashule

implicated in the looting of public funds in the Free State because of a

complete lack of resources, yet has funds to pursue a case that, at best,

appears to be inconsequential and legally weak.

However, I will leave the politics of the matter to others and, instead, will

focus on the legal issues surrounding the latest moves against Gordhan to

illustrate that the Public Protector is still struggling to grasp the extent

and limits of her powers and continues to act in ways that cast doubt on her

honesty.

In response to criticism of her recent move against minister Gordhan by some

of minister Gordhan's supporters, her office tweeted that she had written to

minister Gordhan four times between February 2018 and July 2018, requesting a

response to the allegations levelled against him.

"When the responses were not forthcoming, she issued a subpoena."

As it turns out, this claim was at best misleading and at worse false. Tebogo

Malatji, minister Gordhan's lawyer, pointed out that he had responded to the

Public Protector on behalf of the minister, asking to be provided with the

particulars and evidence of the alleged dishonesty and impropriety on the part

of minister Gordhan that is being investigated.

Section 7(3)(a) of the Public Protector Act states that the Public Protector

may, at any time prior to or during an investigation, request any person to

assist her with an investigation.

The Act does not impose a legal duty to respond to such requests by the Public

Protector, but sections 23 to 25 of the Rules Relating to Investigations by

the Public Protector and Matters Incidental Thereto do purport to impose legal

duties on state officials to co-operate with the Public Protector. However,

these rules were promulgated in September 2018, which means they were not in

effect when the Public Protector requested the minister to respond to

allegations made against him and do not apply in this case.

The main weapon the Public Protector has at her disposal to obtain evidence

from a witness or from an implicated person is her power to subpoena

individuals. This power does not relate to preliminary investigations and

cannot be used to force an individual to testify before a decision is taken to

start a proper investigation. However, it is clear from sections 20 and 21 of

the rules quoted above that the Public Protector may conduct a preliminary

investigation - although her powers during this stage of the proceedings are

limited.

Nothing in the Act or the rules permit the Public Protector to subpoena a

witness during the preliminary investigation and limits it to cases where the

Public Protector is in fact "conducting an investigation". Once a decision is

made that a full investigation will be conducted (after a preliminary

investigation), the Public Protector can use her power of subpoena to great

effect.

This power is contained in section 7(4)(a) the Public Protector Act (read with

section 5 of the Act) and empowers the Public Protector "to direct any person

to submit an affidavit or affirmed declaration or to appear before him or her

to give evidence or to produce any document in his or her possession or under

his or her control which has a bearing on the matter being investigated".

Section 5 states that:

"A direction referred to in subsection (4)(a) shall be by way of a subpoena

containing particulars of the matter in connection with which the person

subpoenaed is required to appear before the Public Protector and shall be

signed by the Public Protector and served on the person subpoenaed either by a

registered letter sent through the post or by delivery by a person authorised

thereto by the Public Protector."

As the subpoena power is a powerful weapon that could easily be abused,

certain safeguards are built into the Act to protect individuals against the

potential abuse of power by the Public Protector.

Thus, section 7(8) of the Act states that any person appearing before the

Public Protector after being subpoenaed may be assisted at such examination by

an advocate or an attorney "and shall be entitled to peruse such of the

documents or records... as are reasonably necessary to refresh his or her

memory". This right to peruse documents before appearing before the Public

Protector is confirmed by section 16(4) of the rules.

This is where it gets odd. The Public Protector has claimed that her

engagement with minister Gordhan is a "preliminary investigation" and that

"her office has no evidence implicating minister Gordhan of any wrongdoing".

In her most recent press statement she states that "he investigation into the

alleged conduct of minister Gordhan is therefore at a preliminary stage",

which is (deliberately?) ambivalent as it could either mean that no decision

has been taken to actually investigate minister Gordhan (and this is just a

preliminary investigation to decide that), or that the formal investigation is

proceeding but is at a preliminary stage.

Be that as it may, either the Public Protector lied when she claimed this was

still a preliminary investigation, or she has abused her subpoena power by

forcing the minister to appear before her in a matter that is still at a

preliminary stage and on which she has no evidence of wrongdoing on his part.

If this is a preliminary investigation as the Public Protector claimed, she is

not legally permitted to subpoena the minister to force him to answer

questions. It would constitute a grave abuse of power for her to use her

subpoena power if she has not completed a preliminary investigation yet.

She is also not permitted to subpoena the minister without providing him with

particulars of the allegations against him and all relevant documents on which

she relied to decide to proceed with an investigation.

This is an important safeguard to prevent the Public Protector from abusing

her subpoena power to go on a fishing expedition. If you do not know what the

allegations are that you are being investigated for and if you are not

provided with the relevant documents on which the Public Protector relied to

make a decision that a full investigation was warranted, the subpoena power

could be abused to harass and humiliate individuals who may not be implicated

in any wrongdoing at all.

It is therefore clear from the Act and the relevant rules that the Public

Protector is not permitted to subpoena the minister to force him to answer

questions under oath unless she has decided to investigate him. If she has

decided to investigate him and subpoenaed him, she is legally obliged to

provide him with the particulars of and evidence of the alleged dishonesty and

impropriety for which he is being investigated. If Mr Malatji is correct that

this information was never provided, the Public Protector is in breach of the

legislation governing her office.

There is one further unseemly twist to this sorry saga. After Mr Malatji

pointed out that it was false for the Public Protector to claim that no

response was forthcoming from Gordhan after the initial request, the Public

Protector further muddied the waters by issuing a statement that looks

suspiciously as if it was drafted with the specific aim of misleading the

public.

In her follow-up statement she again states that "the minister failed to

provide the Public Protector with a response to these allegations as requested

in the preceding correspondences". This claim is misleading as the minister

did respond to the request, albeit through his legal representative. The

statement contains the following paragraph that appears to be aimed at fudging

the issue and to cover up the initial misleading statement:

"Regarding the use of attorneys and advocates during appearances before the

Public Protector, the law provides for legal assistance and not legal

representation. This means that attorneys or advocates cannot speak on behalf

of the person appearing before the Public Protector."

This is an odd claim for a lawyer to make because it appears to state the

obvious. A bit like a professor making a statement that a student only passes

a course if she obtains a pass mark.

Legal representatives do not testify on behalf of their clients. They

represent them, among other things by corresponding on behalf of their

clients. To the extent that this non-sequitur was included in the statement to

suggest that minister Gordhan's lawyer was not legally entitled to correspond

with the Public Protector on behalf of his client, the statement is

deliberately misleading.

It may well be read as a ham-handed attempt to create the false impression

among ordinary citizens not versed in the law that minister Gordhan's lawyer

was not permitted to respond to the Public Protector on his behalf and hence

that the initial statement from the Public Protector that "responses were not

forthcoming" was not the outright lie that it may appear to have been.

I have no idea what will come of this investigation, whether a finding will be

made against minister Gordhan, or whether a court will review and set aside

any such finding. Neither can I say with absolute certainty that facts may not

be uncovered to implicate minister Gordhan in wrongdoing of some sort. But

what I can say with firm conviction is that the Public Protector has been

acting in an unprofessional and less than honest manner in pursuit of the

minister. DM

Indluplace maintains dividend despite tough year. The real estate investment trust saw a rise in vacancies after Eskom cut back

on activity in Witbank, resulting in the non-renewal of residential contracts

Indluplace has kept its dividend unchanged for the year to end-September,

despite an operating environment characterised by high unemployment and a big

increase in the cost of living. As the only residential-focused REIT (real

estate investment trust) on the JSE, the state of the consumer has a direct

impact on Indluplace. It said this had affected its ability to grow dividends

in the short term and also made accurate forecasting difficult.

To make matters worse, a cutback in Eskom's activity in Witbank has resulted

in less demand for accommodation in the areas, with the non-renewal of bulk

residential contracts with contractors who had been working for the utility.

That pushed vacancies up to 8.4%, largely due to a single Witbank property:

Highveld View. Excluding Highveld View, Indluplace said the vacancy rate for

the remainder of its portfolio was 5.2%. It expects vacancies rep remain

around these levels. It says it's looking at various options for Highveld View

and plans to dispose of the property in the medium term.

Contractual income rose 71% to 563 rand million in the year to end-September,

boosted by the acquisition of Diluculo Properties and the Buffet portfolio in

July and October 2017. The acquisitions also boosted Indluplace's residential

portfolio of 9,788 units to 4.3 rand billion after adding 2,803 units last year.

The REIT is paying a final distribution of 49.19c per share, taking its total

dividend to 97.75c per share.

Due to the non-renewal of bulk contracts at Highveld View and the expected

slow take-up of individual units at lower market rentals than previously

obtained, Indluplace expects next year's dividends to be down by between 3%

and 10%. It plans to dispose of non-performing and non-core assets, including

gradually reducing its exposure to the remaining head leases and positioning

its position for long-term, sustainable growth.

Indluplace remains positive about the investment case for the rental

residential market in the longer term and will continue to look for

opportunities in South Africa," the REIT said.

Its shares closed unchanged at 8.49 rand.

Discovery banks on good behaviour. Through Vitality Money, customers will get interest rates in line with their

behaviour.

Discovery has finally launched what it says is the world's first behavioural

bank, incentivising customers to become financially fit.

The new branchless bank is currently busy beta testing on its staff and will

open for customers in March. It says the fully digital bank will leverage the

group's shared-value model and will do for banking what Vitality did for

insurance in the context of financial risk and banking systems. It will try

and do this by encouraging customers to spend less than they earn, save

regularly, have insurance in place, pay off their property, and invest for the

long term. This will alleviate unaffordable debt, exposure to unexpected

expenses, and insufficient income in retirement. Customers will receive

interest rates directly linked to their financial behaviour.

The banking system in South Africa is world class and our competitors are

brilliant," Discovery chief executive Adrian Gore said. "We did, however, see

a gap in-between the traditional offerings and Fintech offerings - a third

entry point that is essentially a new category of banking and a first of its

kind globally: a behavioural bank."

The new bank is up against stiff competition, however, with a number of other

new entrants competing in the branchless space. Apart from incumbent Investec,

Discovery Bank will be competing for customers with the likes of Patrice

Motsepe's Tyme Digital and Bank Zero, co-founded by former FNB CEO Michael

Jordan.

Last week, Discovery sold new shares to raise the 1.85 rand billion it needed to

buy FirstRand's 25% stake in Discovery Bank, a requirement of the Registrar of

Banks when it granted Discovery a banking licence last year.

It said 10% of the bank's shares would be owned by its black depositors.

Discovery's shares closed 1.5% up at 164.76 rand yesterday.

Wow! Black depositors to own a stake in Discovery Bank. If they said this at

the beginning of the presentation I may have paid some attention

#Discoverybank

-- Craig Gradidge (@gradidgec) November 14, 2018

So now we've got to Discover a bank Zero? Or is there Zero to Discover in a

new bank? #whotochoose @MichaelJordaan @Discovery_SA

-- Jaco Els (@mynameisjaco) November 14, 2018

Talking to Adrian Gore at the launch of @Discovery_SA 's new #DiscoveryBank.

Not sure what made him laugh but you can hear it all on @CliffCentralCom

tomorrow morning. pic.twitter.com/8ezpXXNGBH

-- Gareth Cliff (@GarethCliff) November 14, 2018

Imperial Logistics prepares to go it alone. Imperial Holdings says the restructuring and separation of Imperial Logistics

and Motus was "among the most complex and ambitious undertaken in the SA

market in recent times".

Imperial Logistics will start its standalone future a week from today after it

cleared the final hurdle to the unbundling of automotive group Motus.

Parent company Imperial Holdings said yesterday that the Takeover Regulation

Panel had given the go-ahead ahead for the unbundling of Motus to shareholders

on 22 October. Following that, Imperial will start trading as Imperial

Logistics on 5 December.

The changes are the culmination of a four-year restructuring programme, which

acting chief executive Mohammed Akoojee said was "among the most complex and

ambitious undertaken in the SA market in recent times".

The separation of its automotive and logistics businesses is aimed at giving

shareholders the opportunity to participate directly in either group as

Imperial had discovered there was an absence of operational synergies between

the two. While Imperial Logistics counts businesses as clients, Motus is

primarily consumer-facing. The two are already managed and reported on

independently and the unbundling will allow them to access debt and equity

markets separately.

Imperial Logistics has diverse operations across the continent and Europe and

is expected to deliver sustainable revenue growth, enhanced profitability and

a stable dividend. It's ranked in the top 25 global third-party logistics

providers. It has an established infrastructure and networks in 38 countries

on five continents, with about 30,000 employees. It says its geographical

spread and strong leadership make it a trusted partner to multinational

clients and that its leading positions in regional markets provide a platform

for sustainable growth. The enhanced financial flexibility a separate listing

will give will also underpin its potential for acquisitions.

"As we look forward to a new chapter with Imperial Logistics and Motus being

listed as separate entities, the key priorities of both management teams are

to continue to position their companies as market leaders in their respective

industries and to ensure that each delivers on its strategic, financial and

operational objectives and targets over the next three to five years," Akoojee

said.

Standard Bank, which together with JP Morgan advised on the restructuring,

said the separation had created "two new blue-chip standalone businesses,

appropriately capitalised and focused on generating enhanced value for

shareholders".

Spar benefits from rand weakness. Positive growth in Ireland and a weaker rand helped offset continued weakness

at the group's Swiss operations.

The weakness of the rand this year has provided a fillip to Spar, boosting its

foreign currency earnings. While the retail environment remains tough in South

Africa, Spar's operations in Ireland have done well and the rand's

depreciation has flattered it even more.

Spar's Southern African operations grew turnover by 6.7% to 68.8 rand billion,

boosted by the inclusion of pharmaceutical wholesaler S Buys. Excluding S

Buys, the comparable business increased turnover by 5.3%. It credits strong

liquor turnover growth of 13% and a 7.5% increase at its building materials

business for the improvement, despite weakness in the building sector. While

food and liquor growth came in at 5%, Spar says this needs to be viewed

against internal food inflation of 1.4%.

Irish business BWG Group reported euro-denominated turnover growth of 4.2% to

"1.5 billion, with comparable growth of 2.8%. Rand weakness in the second half

of the year resulted in a 9.6% rise in rand turnover to 22.5 rand billion. It said

extreme weather in March and the above average warm summer resulted in

consumers buying larger quantities of food and beverages.

Spar Switzerland reported a 5.8% decline in turnover to 9.8 rand billion but

operating profit increased by 80.6% to 124.6 rand million. Spar said low economic

growth in the retail market were behind the lower turnover, with consumers

continuing to cross into the European Union to do their shopping. Spar said it

would maintain its focus on driving strategic initiatives it had identified to

improve turnover in Switzerland. It's already closed a number of unprofitable

corporate retail stores.

Overall revenue rose 6% to 103 rand billion in the year to end September and

operating profit grew by 7.9% to 2.78 rand billion. Higher finance costs including

foreign exchange losses left basic earnings per share 0.4% up at 948.9c, while

headline earnings per share were 1.4% higher at 965.7c. It's raised its

dividend by 8% to 729c per share.

Against the backdrop of subdued consumer and business confidence in Southern

Africa, the trading environment is expected to remain largely unchanged in the

medium term," Spar said. "The Irish business outlook, still influenced by

Brexit uncertainties, remains positively cautious in both territories where

they operate."

Its shares closed 1.2% up at 177.33 rand yesterday.

Stan Lee, Marvel legend and father of superheroes, dies at 95. by Javier Tovar with Leo Mouren in Washington

Lee, the face of comic book culture in the United States, died early Monday in

Los Angeles, according to US entertainment outlets including The Hollywood

Reporter. He had suffered a number of illnesses in recent years. "My father

loved all of his fans," his daughter JC told Hollywood celebrity news portal

TMZ. "He was the greatest, most decent man." The New Yorker, known for his

distinctive tinted glasses and impish grin, ended up in the comics business by

accident, thanks to an uncle who got him a job when he was a teenager filling

artists' inkwells and fetching coffee. "I felt someday I'd write the 'Great

American Novel' and I didn't want to use my real name on these silly little

comics," Lee once said, explaining why he had forsaken his given name, Stanley

Lieber. Lee rose through the ranks to become a comics writer -- making

millions of superhero fans dream of his fantastic universes and humans with

extraordinary powers -- and eventually led the Marvel empire for decades as

its publisher. "Stan is right up there with Walt Disney as one of the great

creators of not just one character, but a whole galaxy of characters that have

become part of our lives," George RR Martin, the "Game of Thrones" author,

said in April 2018. From Spidey to Black Panther to the X-Men and the

Fantastic Four, Lee collaborated with other authors and illustrators to put

his lively imagination on the page. Iron Man, Thor and Doctor Strange would

follow -- and today, all three heroes have multi-film franchises that rake in

hundreds of millions of dollars. Lee has appeared in cameo roles in nearly

every movie in the Marvel Cinematic Universe -- including as a bus driver in

"Avengers: Infinity War," a film that united many of the indelible characters

he brought to life. "I used to be embarrassed because I was just a comic book

writer while other people were building bridges or going on to medical

careers," Lee said. "And then I began to realize: entertainment is one of the

most important things in people's lives. Without it, they might go off the

deep end." - 'The King' and 'The Man' - Born on December 28, 1922 to Jewish

immigrants who migrated to the United States from Romania, Lee got that first

assistant's job at age 17 at Timely Comics and began rising through the ranks.

After a stint in the US Army during World War II Lee returned to Timely, which

by then had become Atlas Comics, had taken to copying its rival DC Comics,

home of Superman and Batman. He teamed up with illustrator Jack Kirby to

invent the Fantastic Four in 1961 and, the following year, Spider-Man. It was

a partnership for the ages -- Kirby, the artist, was "The King" and Lee, the

writer, was "The Man." Together they would pioneer new ways to tell stories,

with deeply flawed heroes and serious themes -- all while maintaining the

wonder of traditional superhero lore. Even villains showed complicated

feelings. "When the time came to create a teenaged hero for Marvel Comics, I

decided to depict him as a bumbling real-life teenager who by some miracle had

acquired a super power," Lee wrote in a 1977 column, "How I Invented Spider-

Man." "If you suddenly gained the muscle power of a hundred men and could

outwrestle King Kong, it doesn't mean you still wouldn't have to worry about

dandruff or acne, right? - The Marvel Universe - Lee and his collaborators

churned out hit after hit and he took over at Marvel in the 1960s, becoming

the chief storyteller, editor-in-chief and then publisher. A marketing genius,

he created the "Marvel Universe" -- all of the heroes existed in the same time

and story crossovers were frequent. It's a model now adopted by the Hollywood

producers beyond the Marvel Cinematic Universe -- which releases its 21st

film, "Captain Marvel," in March next year. Lee formally left Marvel in the

1990s but remained chairman emeritus. He was the brand's most recognizable

face, giving lectures and speaking at comics conventions. In recent years, as

Lee reached his 90s, he ran into legal troubles and scandal. A massage

therapist sued him for sexual assault, accusing him of inappropriate touching

during two sessions in 2017. Lee denied the allegations. There were also

claims that people around the Marvel legend -- who was worth tens of millions

of dollars -- were trying to access his wealth, and that he was the victim of

elder abuse at the hands of his manager and his daughter. Lee's wife of nearly

70 years, Joan, died in 2017. Hollywood quickly took to social media to pay

tribute to the late superhero of comics. "My youth wouldn't have been the same

without him. So grateful to have met the guy, and told him how thankful I was

for his work," tweeted Australian filmmaker James Wan. Edgar Wright, the

British director of "Shaun of the Dead" and "Baby Driver" used Lee's

catchphrase in his eulogy: "Thanks for inspiring so many of us to pick up a

pen or pencil and put your dreams onto paper." "Excelsior!" DM

Offshore exposure cushions Investec Property Fund. The fund has held back on local acquisitions due to a microeconomic

environment that remains challenging and is unlikely to improve in the short

term.

Investec Property Fund says the macroeconomic environment remains challenging

and has continued to deteriorate since it last reported. And it doesn't expect

conditions to improve in the short term. With little to no growth, demand for

space has fallen, putting pressure on rentals. It also costs more to attract

and retain clients.

As a result, it has limited local acquisition activity over the past six

months to a 71.3 rand million investment into empowerment fund Izandla to finance

development opportunities.

It is, however, capitalising on offshore growth offshore, helping to support

first-half earnings. Most recently, its "71.9 million investment in May into a

Pan-European logistics portfolio has outperformed the initial acquisition

budgeted income return of 10.5%, delivering 11.6% over the period. It is also

in the process of recycling capital through the sale of seven properties

valued at 600 rand million at an average yield of 7.5% which are classified as

held-for-sale. The proceeds are earmarked to reduce debt levels, and to be

deployed into the European platform that generates cash on cash returns in

excess of 10% or other value enhancing investment opportunities.

In Australia, it said it supported plans to dual-list the Investec Australia

Property Fund on the Australia Securities Exchange by next August. It said

distributions received for its 20.9% investment in the Australian fund were

flat year-on-year, in line with guidance.

It credits the performance of its offshore property investments for a 2.9%

improvement in its net asset value over the period. While gearing increased to

36.3% at the end of September from 32.6% in March due to the increased

investment in Europe, its cost of funding has declined to 8% from 8.6% as a

result of euro funding.

For the six months to end-September, revenue rose 1.3% to 917 rand million while

operating profit fell 3.1% to 698 rand million. It increased its normalised

distribution per share by 5.4% to 68.81c per share.

Vacancies declined to 3.1% from 4% in March. That excludes space hold vacant

for development. It says the decrease in vacancy in a market that favours

tenants rather than landlords is testament to the quality of its assets and

the relationship with tenants.

While the fund is looking offshore for growth, for now, it said it had a

positive view on SA for the medium to long-term. It expects to deliver

normalised growth of between 5% and 5.5% in its distribution for the full

year.

Recent proactive reforms and initiatives by government in the form of the jobs

and investment summits are welcome and inform our positive views on South

Africa for the medium- to long-term," the fund said.

Its shares closed 0.7% higher at 15.66 rand. Investec Australia Property Fund,

which also released interim results, ended 0.5% up at 12.25 rand.

Investec Prop Fund (IPF): Vacancies at 4.8% and SA arrears at 3.6% are not a

train smash. Investec are excellent property managers and have performed well

in probably the most difficult environment in more than a decade. Highly

geared to any future uptick in the SA economy.

-- Karin Richards (@Richards_Karin) November 12, 2018