19BUSINESS REPORT Thursday, May 24 2012

Companies

CONSOLIDATED AUDITED FINANCIAL RESULTS

FOR THE YEAR ENDED 31 MARCH 2012

Copies of the full text of the results announcement are available from the Company’s website: www.reinet.com

or from: Computershare Investor Services (Pty) Limited, Registration number 2004/003647/0770 Marshall Street, Johannesburg 2001

Telephone: (011) 370 5000 Telefax: (011) 688 5200 Internet: www.computershare.com

Reinet Investments S.C.A. Depository Receipts (issued by Reinet Securities SA)

Share code: REI ISIN: CH0045793657

The Board of Reinet Investments Manager S.A. announces the results of Reinet Investments S.C.A. for the year ended 31 March 2012.

Key financial data

• Net asset value at 31 March 2012: a 3 649 million, an increase of 31 per cent from 31 March 2011

• Net asset value per ordinary share at 31 March 2012: a 18.62 (31 March 2011: a 14.21)

• British American Tobacco p.l.c.: fair value increased by a 803 million during the year, reflecting strong growth in the underlying share price

• Profit for the year: a 865 million

• £ 300 million medium-term borrowing facility linked to options over BAT shares entered into

• New investments with funding commitments of a 248 million closed during the year

Sponsor

Rand Merchant Bank (A division of FirstRand Bank Limited)

Cnr Fredman Drive and Rivonia Road, Sandton 2196 Telephone: (011) 282 1847 Telefax: (011) 282 4184

23 May 2012

Sales growthslips at Lewisas consumerdebt pinchesSamantha Enslin-Payne

LEWIS Group reported like-for-like sales growth of just1 percent for the year to Marchas high fuel and food prices,and an increase in consolidatedloans, depressed consumerspending. These are factorsthat will continue to place thegroup and its competitors un-der pressure in the year ahead.

Chief executive Johan En-slin said trading conditions be-came increasingly challengingduring the year as consumersfelt the pressure of risingtransport and utility costs.“Lower disposable income im-pacted both our sales andcredit collections.”

Lewis Group reported yes-terday that revenue increasedby 6.1 percent to R4.9 billion.Merchandise sales grew3.3 percent to R2.37bn, butgrowth excluding new storeswas just 1 percent. Credit salesas a percentage of total saleswere steady at 71.4 percent.

An analysis of the group’sdebtors book shows that72.1 percent of customers werein the “satisfactory paid” cate-gory compared with 74.5 per-cent in the previous year.

Non-performing accountsincreased from 11.2 percent to13 percent at year end.

The group’s operating profitmargin increased by 50 basispoints to 23.5 percent and re-sulted in 8.2 percent growth inoperating profit to R1.14bn.Headline earnings increased13.3 percent to R781 million.

Enslin said consolidatedloans, which competitors be-gan marketing aggressively inSeptember last year, were alsoaffecting the business.

Through these loans, sev-eral store accounts are consol-idated into one loan on ex-tended terms – in some caseover 84 months – to make therepayments more affordable.

Enslin said the effect wasthat when Lewis extendedcredit it took 35 percent of a

consumers’ disposable income,while a consolidated loan couldtake as much as 90 percent. Theextended terms meant that“these consumers are taken outof circulation, in some casesfor as long as seven years”.

Syd Vianello, an analyst atNedbank Capital, said Lewis’sresults were in line with expec-tations and were a reflection ofthe entire industry being underpressure. “Good retailers arefinding consumers are not ableto take on more credit.”

He added that furniture re-tailer Ellerines, a part ofAfrican Bank, which reportedits results earlier this week,showed an increase in compa-rable store sales growth only bycontracting retail space.

Other businesses are alsoaffected, with fast-moving con-sumer goods manufacturerTiger Brands saying con-sumers were trading downfrom more pricey, branded fooditems to cheaper products, in-cluding private label goods.

Vianello said the situationfaced by retailers would onlyimprove when a significantnumber of jobs were created.

He said although the num-ber of retrenchments wasfalling and many consumersstill had jobs, their obligations,in terms of paying off debt andcoping with the rising costs offuel and food, meant they werespending more than theyearned by using credit andloans. Personal loans took timeto pay off and it was likely thatfor the next two years, retailerswould be under pressure untilthe number of loans extendedand jobs created stabilised.

Enslin said the group’sstrategy to counter depressedconsumer spending includedintroducing new ranges andopening smaller, leaner stores.

During the year 17 Lewisand 12 Best Home and Electricoutlets were opened, bringingthe store footprint to 602.

Shares in Lewis rose 0.4 per-cent to R74.50 yesterday.

Interest in JSE’sFacebook futuresremains mutedAsha Speckman

THE JSE’S Facebook investment instrument hadfailed to attract large trading volumes, the boursereported yesterday.

According to the JSE, which had listed a singlestock future on Facebook, only 2 000 contracts hadbeen traded by South African investors to date.Most interest came from individual investors.

Magnus de Wet, who manages the derivativesspecialist unit at the JSE, said: “Despite great in-vestor interest, trading volumes have not been ashigh as expected.”

De Wet cited several possible reasons, includingthat professional investors had tapped directlyinto international markets and bypassed the JSEinstrument.

“This would mean that this product is designedmore for the non-professional investors who usu-ally prefer to go long (assume a ‘buy’ regardless ofwhether the share price goes up or down) believingthat the underlying share will go up,” he said.

The investor would realise a profit when the con-tract expired, if the share price had appreciated.

“But unfortunately this investment appetite hasbeen dampened as the news coming out of the Face-book stable has not been good.

“These investors could still decide that theywould want to go short, anticipating that the under-lying share will go down.”

Bloomberg reported that Facebook plunged19 percent on Monday and Tuesday, but by 12.31pmin New York yesterday, it had gained 2.8 percent totrade at $31.87 (R268.85). It listed on Friday at $38.

Taste heats up growth with 50 new storesNompumelelo Magwaza

TASTE Holdings, the owner of theMaxi’s, Scooters Pizza, St Elmo’sand NWJ brands, plans to open50 outlets in the next six months,taking the number of sites coun-trywide to more than 600.

With the focus on KwaZulu-Natal and the Western Cape,Taste said yesterday that itwanted to increase the numberof the company’s recently ac-quired Fish & Chip Co outlets inthese two provinces.

The company reported a20 percent rise in profit beforetax to R30.3 million for the yearto February. Headline earningsa share increased 16 percent to12.4c while headline earningsjumped 17 percent to R21.4m.

Chief executive Carlo Gon-zaga said the 50 new outlets

would be in addition to thestores the company had openedsince the February 29 year end.

“KwaZulu-Natal and theWestern Cape are a bit under-represented for now and ourfocus is to open more stores inthese areas,” Gonzaga said.

The acquisition of The Fish &Chip Co for R66m in Februarycontributed significant criticalmass to its food franchise.

Gonzaga said the opening of50 outlets was “a bold butachievable target given thatthe brand has opened over 25outlets since year end”and itwould capitalise on Taste’smarket leadership position.

The company was also focus-ing on expanding its distribu-tion centres, which would in-clude an addition to the group’sown-produced sauces and

spices for the Fish & Chip Co.Analyst Jean Pierre Verster

at 36One Asset Managementsaid it was clear that TasteHoldings was rationalising itsfootprint and focusing on moreprofitable stores. He added thatdiversification and footprinthad been aided by the acquisi-tion of The Fish & Chip Co,which included franchise agree-ments for 202 outlets.

Verster said there was a lotof potential for the fish outletsmainly because of its healthbenefits compared with redmeat and other fast foods.

Gonzaga said despite a poorperformance by the NWJ fran-chisee division, the companywould not change its businessmodel. He said some of thefranchises were struggling tomake reinvestments because of

the increasing price of gold andother precious metals.

Verster agreed that the highprice of gold had put pressureon jewellers over the past year.

“Lower consumer discre-tionary spending and the highprice of gold and other preciousmetals have put jewellerystores’ profits under pressure.

“However, should the priceof these commodities ease, thestores will benefit, as long asthey manage to hold on to theirprice points.”

He said Taste Holdings waswell-positioned for the longterm because it catered mostlyto middle-income earners, whowere benefiting from migrationto higher living standardsmeasure categories and biggerwage increases. The sharesleapt 6.36 percent to R23.40.

Mr Price is confident of year ahead after posting ‘very good’ resultsSamantha Enslin-Payne

MR PRICE delivered a 10.3 per-cent rise in like-for-like retailsales for the 52 weeks to March31 compared with the samenumber of weeks a year earlierand, in contrast to other retail-ers, had no cautionary tale totell – rather it is confidentabout the year ahead.

The chief executive declined

to give interviews, but in a writ-ten commentary, released on theStock Exchange News Serviceyesterday, the group said it “hasmany reasons to look to thefuture with confidence”.

The group, which owns ap-parel, sport and home chainsincluding Miladys, Sheet Streetand Mr Price, said in the yearahead it intended to grow spaceby 5 percent by opening 70 new

stores, expanding top perform-ing stores and reducing the sizeof poorly performing stores.

Mr Price intends to launchan online capability later thisyear, which it says will providefurther opportunity to growmarket share. It opened anapparel test store in Nigeria inMarch and it is expected toopen the first corporate-ownedstore in Ghana in June.

Retail sales for the 52 weeksto March 31 rose 10.2 percentfrom the previous year, whichhad 53 trading weeks, whilesales in comparable locationswere up by 8.2 percent. On a 52week on 52 week basis totalsales increased 12.6 percentand comparable sales were up10.3 percent.

The company said salesgrowth exceeded overall South

African retail sales growth, aswell as the sales growthachieved by retailers of tex-tiles, clothing and footwear, asreported by Statistics SA, in allfour trading quarters.

The group opened 46 newstores during the year, butweighted average trading spaceremained flat due to plannedspace reductions and the clo-sure of 21 stores.

Abri du Plessis, the chiefinvestment officer at GryphonAsset Management, said MrPrice’s results were very good,with better sales growth thanother competing clothing re-tailers, such as Woolworths andEdgars.

The shares fell 5.41 percentto close at R96.48, comparedwith a decline of 2.84 percent inthe general retailers index.

❚❚ IN BRIEF

Aquarius Platinum, theAustralian mining house thatreported a fire at a jointventure with Impala Platinumin Zimbabwe on Tuesday,expects to lose 75 000 tons of orebecause of the incident andwill cover the shortfall bytapping stockpiles. Output atthe Mimosa mine, expected toresume by Monday, would be at70 percent of normalproduction for the following 19days, the company saidyesterday. Losses could becovered by a stockpile of about140 000 tons, it said. Aquariusfell to a seven-year low on theJSE, losing 10.19 percent toclose at R9.69. – Bloomberg

Long-standing and significant payments owing to Sanyati fromcertain government clients, which had affected the group’s liquidity,resulted in the company reporting yesterday that it had requestedthe suspension of its JSE listing with immediate effect. Theconstruction and engineering group said its operations had beenmaterially affected by these outstanding payments; it did not identifythe government clients involved. The firm said it had requested thesuspension of its listing to sustain shareholder value and providemanagement with the opportunity to finalise negotiations aboutfunding. Earlier this month Sanyati said it expected to report a head-line loss a share of 4.5c for the year to February. The firm is expectedto publish its annual financial results on Monday. – Roy Cokayne

SANYATI

Stock suspended to protect value

AQUARIUS

Stock plunges10% after fire

Sanlam and AtterburyInvestment Holdings havepurchased an 85 percent stakein Ghana’s Accra Mall fromemerging markets investmentcompany Actis. The mallhoused South African retailersShoprite and Game, along withGhanaian brands such as KikiClothing and Nallem, Actissaid yesterday. Thomas Reilly,the managing director ofSanlam Properties, said theAccra Mall, which opened in2008, was the first purchase fora sub-Saharan Africanproperty fund being built bySanlam. Sanlam shares closed0.6 percent lower at R32.25.– Bloomberg

SANLAM

Mall in Ghanastarts portfolio

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❚❚ Same-store figures rise 1%

Customers enjoy ameal at The Fish &Chip Co outlet inBraamfontein,Johannesburg.Taste Holdingsplans to increasethe number ofstores of therecently acquiredchain in KwaZulu-Natal and theWestern Cape.

PHOTO: LEON NICHOLAS

Some illegal miners trapped at a Harmony Gold operation in the FreeState have been rescued, while two bodies were found at a mineowned by De Beers. Nine people had been pulled up from under-ground at the Harmony mine yesterday, said Sam Makhele, aspokesman for the SAPS in Welkom. “They have gone for a medicalcheck-up and they are fine,” Makhele said. Rescuers had not yetdetermined how many others were underground. At least sevenpeople were trapped at De Beers’ Namaqualand Mines in the North-ern Cape after an illegally excavated tunnel collapsed, the companysaid yesterday. One person was pulled out on Tuesday. – Bloomberg

HARMONY, DE BEERS

Searches still on for illegal miners

TasteShare price, rand Feb 23-May 23

2.50

2.20

2.35

Source: Bloomberg

Apr MayMar

Close R2.34

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