may 2016 chamber bulletin
DESCRIPTION
Articles include: How to solve the Biggest Problems with a Business Plan; The 8 best resources for Website Maintenance; How to insure that you internal Disciplinary Processes are in order; Overtime: Is it compulsory? and many more...TRANSCRIPT
MAY 2016
HOW TO SOLVE THE
BIGGEST PROBLEMS
WITH A BUSINESS PLANpg 7
FINANCIAL MAILSHAREHOLDERS: CORPORATE
SKIRMISHESpg 19
NEWS MARKETS:
HOW TO TRADE
THE FTSE 100
pg 53
OVERTIME -IS IT COMPULSORY?
pg 32
How does Eskom affect LabourWhat is Statutory DeductionsOccupational Health and Safety Act14 Benefits of having a business plan forecastThe importance of soft skills training courses in the workplaceB-BBEE Dissent is NOT RacismValidity period of WarningsHelp with budgeting
14
I N D E XMay Issue
28
B-BBEE Verification Agency
Tel:�011�814�2752011�814�2753
Cell:�083�268�5114Fax:�086�513�0744
For�more�informationwww.cenfed.co.za
We want to encouragemembers of the East
Rand Chamber ofCommerce & Industry to
submit any and all material we can publishwithin out next Chamber
Bulletin.
The purpose of theChamber Bulletin is to
give you the opportunityto put your company,your products and orservices into a well
compiled document,being sent out to all ourmembers and newsletter
subscribers.
We also want toencourage members to
make sure that theirwebsites are up to date,
if you have new information, or photos,
send them [email protected] or arrange for acompany representativeto come visit you. He willalso be able to take somephotographs we can use
in both the ChamberBulletin and as updates
within your website.
Make use of the servicesyou have at your
disposal.
If you are unsure whatexactly the extent of theservices are you qualify
for as an ERCOCmember, please let us
know and we will get youup to date.
With 2016 well underway,make sure that you havecovered all the necessaryangles of your companyand that everything is upto date so that you can
run at full speed.
page 7 How to solve the Biggest Problems with a Business Plan
page 11 The 8 best resources for Website Maintenance
page 13 How to Ensure that your Internal Disciplinary Processes arein order
page 16 AHI Nuusbrief
page 19 Financial Mail - Shareholders: Corporate Skirmishes
page 25 Financial Mail - Randgold: As good as gold
page 32
Die Strandloper
page 42 Company Report for Klatrade 803
page 45 Financial Mail - Markets: Competition for JSE
page 49 News Markets - The End of Alchemy: Money, Banking andthe Future of the Global Economy
page 53 News Markets - How to trade the FTSE 100
Business News
page 34
Overtime - Is it compulsory?
page 55 Financial Mail - PWC: Hard Times
Business News
CLAIM YOUR ERCOC SUBSIDYTO START YOUR OWN
INBOUND MARKETINGDEPARTMENT
Interest free for 5 yearsThe East Rand Chamber of Commerce and Industry (ERCOC) and their American Inbound Marketing partner HubSpot, has embarked on a job- creation project by subsidising member companies to start their own Inbound or Electronic Marketing Department.
They believe that if a business entity earns more revenue they will obviously have to employ more staff, and due to the fact that the buying process now starts on the internet, it stands to reason that the astute business owners will want to increase their exposure in Cyber space.
Marketing Departments is a luxury that smaller enterprises cannot afford. To employ an Electronic Marketing Consultancy Company, at budgets of in access of R 400,000.00 per annum is in most instances not an option.
This limited offer to 10 membersonly, is as follows
www.chamberlink.co.za
R2688 per month excl. VATfor 24 months
The following services will be performed:1. Target market analysis, creating buyer persona to properly direct marketing efforts. 2. A complete competitor analysis.3. K eyword research to ensure that correct keywords may be used to direct traffic to the newly designed website.4. C urrent website analyses to assist in the development of the new or altered website.5. R esearch and development of prime content (downloadable E-books) offer to be downloaded by website visitors.6. W riting of 4 Blog posts per month with market related content aimed at enhancing the image and expertise of the member in their related field of business.7. D esigning of a landing page to convert visitors into leads when downloading prime content.8. D esign and research Call to action to entice visitors to download prime content offer.9. D evelopment of a fully responsive website, capable to impress visitors.
07 Bulletin Blogswritten by Koot van der Walt
As any good manager will confirm, a well-structured business plan is crucial to the success of a business. A business plan is essentially a document which sets out the goals of a business and how to achieve them. It's a kind of roadmap – plotting the route to profit and growth. It has been described as a business's DNA. It could be anything from a few simple paragraphs to hundreds of pages – with the average seeming to fall in the region of 15-20. Time should be invested in drawing up a business plan, as it not only serves as a guide for the company, but can also be used to solve serious problems along the way, as discussed in this article.
There are certain elements that a business plan should contain. These include: a description of the business, mission and vision, goals, a business model, timeline, market and industry analyses, a comprehensive risk analysis, an analysis of competitors, marketing strategies, a budget plan and forecast, an exit strategy and an operations and management guide. Additional sections may include a handbook containing company information for new employees, and a formal company review which can be given to potential clients, partners, suppliers and so on.
A business plan that includes all of the above elements can ensure that a company is prepared for potential setbacks and losses, even if they are unforeseen. Where there is no set contingency plan in place, turning to the detailed business vision and values can point a company in the right direction.
Issues arise for all businesses as they expand and move forward. It is often the case that a business becomes overwhelmed by options for production and marketing – and it is never possible to do everything, as tempting as it may be to try. It is here that the mission espoused in the business plan can be very useful, helping keep managers focused. Similarly, where a poor decision has been made in the areas of production and marketing, and a product or customer base has been unsuccessful, returning to the business plan can help a business to assess where they went wrong and get back on track.
Another area where a business plan can prove useful for resolving issues is staffing. Disputes over job positions can potentially become destructive for a business. If the desired management structure and employment categories are detailed in the business plan, such issues can be resolved relatively easily. Furthermore, businesses may have potential investors who are interested but wish to see a business plan to make sure that what they will be committing to is stable and safe. Having a business plan on hand meets this need and conveys a sense of professionalism.
In a worst-case scenario where the business fails, a business plan can once again come to the rescue. Remember the section on exit strategies? Whether to merge, sell or opt for another move should already be detailed in the document, reducing pressure on the business.
Templates for business plans can be found online for free, making work easier for businesses large and small.
How toSolve the
Biggest Problemswith a
Business Plan
11 Bulletin Blogswritten by Christiaan Swanepoel
The 8 Best Resources forWebsite Maintenance
Website maintenance is broader than most people think. It's not just about keeping a website up and running; it's about enhancing and monitoring its performance and keeping content fresh and relevant. Maintenance comprises many different aspects and may involve several different people or departments. Here is an overview of the best resources for website maintenance to help you get a better understanding of what is needed and how it can be achieved.
1) Your technical teamThis is by far your most important resource in website maintenance. The technical team generally handles the bulk, if not all, of the maintenance work. They may be based in your company offices or elsewhere – but regardless of their location, they are key to the success of your website. First and foremost, they manage site infrastructure and keep everything running smoothly. For any queries, the technical team should be your first point of contact. They also tweak the site to keep it current – often by performing many of the tasks below.
2) Your content creatorsThe idea that a website is “finished” is a misconception. A website is never complete; it continuously needs existing content to be updated, or removed or archived if it is no longer relevant, and new content to be added. This helps a website to stay high up in search engine rankings. Your bloggers or copywriting team thus actually play a key, if hidden role in website maintenance.
3) Your content management systemYour web publishing platform or content management system, such as WordPress, is central to the maintenance of your website. Whether you are doing basic tweaks or leaving everything up to your technical team, a well-configured system is essential for ease of updates and adjustments.
4) Monitoring programmesPart of maintenance involves keeping track of traffic to your website – looking at numbers, patterns and trends. Use of monitoring programmes like Google Analytics and Google Search Console (previously known as Google Webmaster Tools) allow you to see how well your pages are performing – and which ones may need to be changed.
5) Visitor feedbackYour customers and other visitors to your website can be an invaluable resource for website maintenance. Their comments and queries can tip you off to broken links or other issues, as well as indicate which posts and pages are popular and engaging.
6) A maintenance scheduleWebsite maintenance should not be performed on a reactive, haphazard basis. A fixed schedule with daily, weekly and yearly tasks is an effective way to ensure thorough preventative maintenance takes place.
7) A maintenance checklistBecause maintenance work covers such a wide variety of areas and tasks, it is important to have a checklist for staff to run through. This will ensure that nothing slips through the cracks. Checklists can double as records of work done.
8) Security featuresHacking is a risk for all websites. Having good passwords, security patches and other security tools is essential – and making sure they stay up to date is part of your website maintenance.
Even in the most open and progressive of companies, misconduct and disputes arise from time to time. In order to deal with these issues smoothly and effectively, while ensuring the protection of both yourself and your employees, it is imperative that you as an employer have your internal disciplinary processes in order.
A reactive or haphazard approach to disciplinary processes could land you at the CCMA for a claim of unfair dismissal or discrimination, causing unnecessary stress and potential monetary losses. Having a clear, detailed disciplinary system in place can minimise the risk of that happening. It needs to be preventative and in line with South African Labour Legislation.
Section 3 of Schedule 8 of the Labour Relations Act 66 of 1995 stipulates that all employers must adopt clear disciplinary rules that set out the standard of conduct required from their employees. This Disciplinary Code must be communicated to all employees in writing, in a language that they can understand. The Code needs to describe what constitutes minor transgressions, and serious and very serious offences, as well as what disciplinary action may be imposed. Grounds and processes for dismissal need to be detailed.
The latter point is of crucial importance, because if an organisation does not follow the established Disciplinary Code it will result in an unfair dismissal. The Disciplinary Code is binding on the employer – and it is the first thing the CCMA will consider during a matter in front of it.
Employers are able to use their discretion when drawing up their Disciplinary Code, but should ensure that it contains a degree of flexibility to avoid having their hands tied. This is often achieved by keeping prescribed disciplinary processes broad.
It is of the utmost importance that you, as the employer, and the relevant HR and managerial staff, have a firm understanding of your Disciplinary Code and each procedure it outlines. Disciplinary processes should be corrective and progressively become more serious. They tend to start with verbal warnings, then move to written warnings and then disciplinary hearings. Everyone involved needs to know what each step entails.
Any internal disciplinary process requires that you warn the employee of the possible consequences of the disciplinary action, explain the accusations clearly, and allow them the opportunity to state their case in response to the allegations. Written warnings need to contain certain basic information (the identity of both parties, the nature of the misconduct, the date and the time of the offence, the corrective action required, the consequences of non-compliance, the validity period and the terms of the warning) and be signed.
The East Rand Chamber of Commerce provides assistance with reference to basic templates when issuing warnings as well as support for queries with reference to issuing of warnings in order to ensure consistency. Records must be kept of all written warnings issued, and any other more serious disciplinary actions taken. We also assist in ensuring that you adhere to procedure by chairing disciplinary hearings. As part of his process we provide you with minutes of the hearing (and we also record the hearing for record purposes).
Making sure that your internal disciplinary processes are in order will not only protect you as the employer, but can also assist in a fair and harmonious working environment.
13 Bulletin Blogswritten by Christine du Plessis
How to Ensure thatYour Internal Disciplinary
Processes are in Order
R 2500.00
R 6312 (12 x R526)
To receive all the services from the Chamber,
member companies Pay a Once off fee of R 2500 and receive these services annually
A monthly fee of R526 for the total 1st year value of R23250.00
Geagte AHI lid
Ons kondig met groot blydskap aan dat die AHI oor die afgelope klomp maande hard daaraan gewerk het om tasbare voordele vir lede te beding. Ons praat veral met ons korporatiewe lede soda tons saam kan uitwerk watter voordele hulle vir ons lede kan aanbied. Terselfdetyd kyk ons ook hoe die korporatiewe daarby kan baat sodat ons ‘n wen-wen situasie vir almal kan skep. Dit is vir ons baie belangrik om die unieke waarde-aanbod van ons korporatiewe lede te bevorder.
Sanlam is ʼn langjarige en erkende stigters- en korporatiewe lid van die AHI en het besluit om ‘n nog meer betekenisvolle rol binne die AHI te speel.
Sanlam het ʼn elektroniese opsomming, wat hulle klein tot medium grootte besigheidswaarde-aanbod aan AHI-lede in ʼn maklik verstaanbare formaat opsom, saamgestel. Klik hier vir meer inligting. ʼn PDF-dokument met dieselfde inhoud word ook ingesluit.
Die waarde-aanbod sal oor die komende weke stuksgewys uitgepak word.
FOKUS-ELEMENT VIR APRIL 2016
In hierdie kommunikasie bring ons die Besigheidsoptimaliseringsontleding van Sanlam onder kwalifiserende AHI-lede se aandag. Die gratis diens is tot die beskikking van 20 AHI-lede wat besighede met ʼn jaarlikse omset van groter as R5 miljoen in Gauteng en Kaapstad besit. Dit is voorlopig hoe ons die projek gaan begin.
Wanneer ons met besigheidseienaars praat, vertel hulle vir ons presies wat hulle nodig het om die toekomstige sukses van hulle besighede ten opsigte van besigheidskontinuïteit, werknemerswelstand en welvaartskepping te verseker.
Die meeste van hulle volg nie noodwendig al die vereiste prosedures nie en het nie al die nodige dokumente in plek nie.
Om besighede met hierdie behoefte behulpsaam te wees, het Sanlam ʼn besigheidsoptimaliseringspesialis aangestel. In ʼn enkele vergadering met die besigheidseienaar, sal die spesialis vasstel watter prosedures en dokumente steeds uitstaande is.
Die besigheidsoptimaliseringspesialis sal dan met spesialiste in elke kategorie reël om die besigheidseienaar te help om die uitstaande vereistes te finaliseer.
Die proses en kwalifiserende vereistes:
Skakel Sanlam Besigheidsmark by 0860 100 539 of klik hier indien jy van die gratis diens gebruik wil maak. Dorothy Carstens of Debbie Buys sal jou versoek ontvang en verdere aksie van stapel stuur. Gaan jy een van die 20 besighede wees wat van die diens gebruik gaan maak?
Besigheidsoptimiseringsanalise:
Hierdie ontleding is ontwerp om aan die behoeftes van besighede met ‘n jaarlikse omset van meer as R5 miljoen te voldoen.
Dit is beskikbaar vir besighede in Gauteng en Kaapstad. Die ontleding behels die volgende:
‘n Onafhanklike besigheidsadviseur(wat deur Sanlam betaal word) voer‘n persoonlike onderhoud met diebesigheidseienaar.
Daarna word die inligting verwerk en ‘n Besigheidsoptimaliseringsverslagopgestel.
Die besigheidsadviseur bespreek dandie verslag persoonlik met die eienaarvan die besigheid, waarna die besigheidseienaar besluit watter aanbevelings hy/sy in sy/haar besigheidwil implementeer
NUUSBRIEF
Tel: 011 397 7729/1271
Fax: 011 397 1139
Email: [email protected]
Web: www.exval.co.za
Unit 9 & 10
Gateway Industrial Park
Graniet Street
Jetpark, Gauteng
THE operational profiles of poultry group Sovereign Food Investments and cellular services provider Cell C are a million miles apart. But there is a common denominator in that both companies are contending with feisty minority shareholders that appear completely at odds with the majority on key strategic matters.
Though the majority will probably prevail in both instances, the determined resistance by minority shareholder groupings should at least get investors thinking about the longer-term investment potential of both Sovereign and Cell C — assuming the latter is a candidate for a JSE listing in the longer term.
In both instances there is significant value and potential to be unlocked, though these fundamentals are clouded by ongoing corporate controversies at the respective companies.
Corporate spats — especially among shareholders that are alienated and hostile — can do serious damage to value and derail strategies. But the Financial Mail believes Sovereign and Cell C (via JSE-listed Blue Label Telecoms) might be worthwhile longer-term punts for investors that can hold their nerve.
Sovereign — once one of the simplest businesses for investors to contemplate — has become gut-wrenchingly convoluted. Since kicking up a fuss at an annual general meeting last August around controversial (perhaps undeserved) bonuses paid to management, minorities, mustered by irrepressible investor activist Chris Logan, have been engaged in numerous skirmishes with Sovereign’s board and a handful of supportive institutional shareholders..
MONEY & INVESTING
Companies
Shareholders: Corporate skirmishesBY MARC HASENFUSS
Chris Logan: Mustered minorities to question bonuses. Picture: HETTY ZANTMANChris Logan: Mustered minorities to question bonuses. Picture: HETTY ZANTMAN
>>>>>
With that in mind, it would be incredibly naive to think that members of Sovereign’s executive management — headed by Chris Coombes — have not sought to fortify their positions by participating in an empowerment deal that, by no stretch of the imagination, can be considered broad-based.
Still, the deal has the support of large institutions such as Prudential, Old Mutual and Sanlam, who presumably still back Sovereign’s low-cost and value-adding poultry model as well as the management team.
Disgruntled minority shareholders, on the other hand, might feel they are being set up for a double blow. First, minorities sacrificed earnings in the 2015 financial year when the bottom line was shaved by the controversial bonus scheme. And now the recipients of the contested bonuses are mobilising these proceeds to strengthen their position in the company —arguably at the expense of minorities.
The conflict has become rather complex, as minority shareholders are now split into various factions — though one senses there remains a loose alliance of unhappy parties. On the one side there is a group of “dissenting” shareholders that seem to favour being bought out at fair value (a tag of 850c/share has been bandied about) — either by an appraisal rights clause contained in the original empowerment deal proposals or by an offer from a competitor.
Then there are entities linked to poultry personality Kevin James and his company, Country Bird Holdings (CBH), who now holds a significant minority stake in Sovereign for the second time in eight years.
For prospective investors Sovereign is at a fascinating juncture.
These corporate conflicts are playing out as the local poultry sector faces a particularly tough time. Sovereign’s shares are trading well below the “fair value” indicated in a recent circular relating to the (subsequently revised) empowerment deal as well as the tangible net asset value (NAV) of more than R10/share.
In a further twist, an urgent legal intervention by CBH stopped Sovereign’s general meeting from voting on a revised empowerment transaction last week. The meeting has now been rescheduled for the end of the month.
This certainly buys CBH and James some valuable time.
The question, though, is whether CBH should or, perhaps more pertinently, can afford to make a general offer to Sovereign shareholders.
When CBH delisted from the JSE early last year, the company still held substantial debt on its balance sheet.
There is virtually no chance of CBH successfully pitching an offer to any of the institutional shareholders. All have given irrevocable undertakings to support Sovereign’s empowerment scheme.
What CBH can continue doing is picking up small parcels of shares from minority shareholders that want to exit without further delay. But in the longer term — and in the absence, at the time of writing, of a trading statement for the year to end-February — the price that potential sellers would demand for their Sovereign shares might be problematic. Some investors believe a price of R12.50/share — almost double the current share price — fairly reflects Sovereign’s longer-term prospects. Others would be happy with NAV or even the 850c/share fair value indicator.
>>>>>
Of course, some might argue there is increased operational risk at Sovereign — which, aside from the ill-founded executive bonus payment, has been a well-managed company with solid margins and reassuring cash flows.
The distraction of determined dissenting shareholders and a potential rival making a takeover swoop could easily take management’s eyes off the operational ball. This is a critical time for management — not only because of tougher trading conditions but also in having to bed down a significant new asset in the recently acquired Gauteng production facility.
For punters able to stomach further upheaval, Sovereign — at current levels — could well be worth a punt. There is the NAV underpin, the value-added strategy, which should insulate the company from cheaper imports, and the potential for an offer from James/CBH. Should investors also contemplate a potential curve ball in the form of Sovereign’s top executives — with empowerment participation — leading a management buyout?
The Cell C situation is equally intriguing, and should hold the attention of the more adventurous telecoms investors.
In parent company 3C Telecommunications, majority shareholder Oger Telecom and minority shareholder, empowerment group CellSAf, are at serious odds over a proposed recapitalisation exercise of their only asset, Cell C. The recapitalisation of SA’s third-largest cellular services operation is being spearheaded by listed telecoms specialist Blue Label, with Oger and staff also set to participate meaningfully in the exercise.
Though there is a paucity of audited financial information available, court documents filed around an application by CellSAf to liquidate 3C hint that Cell C’s fortunes might be on the up.
While CellSAf is pushing for liquidation of 3C, there are indications — despite allegations that the holding company is “both financially and commercially insolvent” — that the empowerment company is in essence fighting for a more equitable share of the recapitalised Cell C.
The recapitalisation exercise will effectively dilute CellSAf from a 25% shareholder in Cell C to a 9% shareholder. Court documents suggest CellSAf, via an entity called Ebony Eight, has previously shown interest in buying out Oger’s stake in Cell C and, more recently, indicated a willingness to match Blue Label’s recapitalisation investment. Reading between the lines of the liquidation application, CellSAf, which has been invested in Cell C for a decade-and-a-half, clearly thinks there is value in remaining a significant part of a recapitalised cellular services entity —or being bought out of the company at an acceptable price.
As indicated earlier, the exact financial position of Cell C cannot be determined. CellSAf, rightfully, gripes that it has not seen audited financial statements for yonks.
Presumably Blue Label was in a more privileged position of having viewed audited statements or, at the very least, detailed management accounts. Blue Label’s R4bn investment garners it a useful 35.9% stake. This implies a valuation of about R14.4bn on Cell C — meaning the company is much smaller, in terms of market capitalisation, than listed rivals MTN and Vodacom (which each carry market values of about R240bn).
But the potential of Cell C, which might be eyeing a listing on the JSE in the medium term, is evident in the share-price movements of Blue Label.
Since announcing its intention to participate in the recapitalisation of Cell C, the share has appreciated more than 50%. Considering that Blue Label is investing a sum that is equivalent to about 40% of its market capitalisation into Cell C, the market’s pronouncement cannot be easily discounted.
>>>>>
A shareholder in Blue Label — who contends that prime movers Brett and Mark Levy understand the dynamics of the local telecoms market better than most — reckons a de-geared Cell C recapitalisation might be well timed ahead of a significant and sustainable profit lift that should pave the way for an eventual listing.
Blue Label, in a Sens announcement detailing the Cell C recapitalisation, seemed to hint at an operational turnaround in noting a subscriber base jump from about 9m in 2012 to more than 22m.
Ultimately, the outcome of CellSAf’s legal thrust — which will be heard in June, though most likely settled out of court before that — will be telling for investors thinking of using Blue Label as a proxy for engaging with Cell C’s potential.
It would be a serious underwriting of Blue Label’s strategy at Cell C if the combative CellSAf capitulates and concedes that owning a smaller stake in a de-geared company with serious profit potential is better than holding a larger stake in a debt-laden disaster.
MONEY & INVESTING
CompaniesBY MARC HASENFUSS
CEILINGDRYWALLERECTORS
9 Geduld RoadGeduld Ext.Springs, 1559
P.O. Box 1290Strubenvale
Springs, 1560
Web:http://klatrade803.co.za
MONEY & INVESTING
Mining
Randgold: As good as goldBY CHARLOTTE MATTHEWS
Mark Bristow. Picture: SUPPLIEDMark Bristow. Picture: SUPPLIED
WEST African gold miner Randgold Resources has demonstrated the leverage to gold price cycles that gold miners are in theory meant to deliver. In practice, they rarely do because of operational issues.
Randgold shares, which are listed in London and on the Nasdaq, are currently around £63, having appreciated almost 50% since January.
In the same period, gold rose 20% to US$1 230/oz, as investors piled into gold exchange-traded funds after a year of shunning them.
Out of nine analysts whose recommendations are listed on the Nasdaq website, two rate Randgold a buy and seven a hold.
Andrew Breichmanas, an analyst at BMO Nesbitt Burns Inc, in a note on Randgold two weeks ago, downgraded the company to “market perform” (in line with market return) from “outperform” (better than the market return).
He said it had been one of the firm’s preferred gold stocks since 2013.
In the past three years Randgold had differentiated itself from its peers by growing production anddividends while avoiding the impairments and corporate restructurings across much of the gold sector, Breichmanas said. >>>>>
Though the company still offered above-average asset quality, the current environment favoured companies that had gone through a period of adaptation to lower prices and now offered more attractive growth potential or value.
Randgold’s executive management includes two South Africans, CE Mark Bristow and CFO Graham Shuttleworth, but it has no operations or listing in the region.
It owns stakes in mines in West Africa: the Loulo-Gounkoto complex and Morila in Mali; Tongon in Côte d’Ivoire; and Kibali in the Democratic Republic of Congo, where AngloGold Ashanti is its partner.
The group achieved record production of 1.2moz of gold in the year to December, at cash costs of $679/oz, though total profits fell because of a weaker gold price.
The dividend was raised by 10% and in the annual report released last week the board committed to continue paying a progressive dividend.
More diversified global companies like BHP Billiton and Anglo American have abandoned progressive dividend policies because of the commodities price squeeze.
Bristow forecasts Loulo-Gounkoto and Kibali will each produce about 600 000oz/year for 10 and 12 years respectively, at a cash cost of about $600/oz or less, while Tongon will produce about 300 000oz/year for five years.
Morila, the oldest mine, is treating stockpiles as it moves towards closure in 2019.
In a presentation delivered at the PDAC conference in Canada on March 8 and posted on Randgold's website, Bristow said the market capitalisation of senior gold producers had fallen 66% over the past five years, from $495bn to $175bn.
He said the best way gold companies could create value was through exploration success, rather than mergers and acquisitions.
Since 2006, the amount of new gold discovered has plunged and ore grades have been declining since 2000.
But exploration budgets had been cut as the industry was in survival, not investment mode, and companies were also selling assets at a fraction of their purchase price.
Bristow says since inception Randgold has made some good acquisitions, including the properties in Mali where it discovered Morila, and it will continue to look at opportunities.
But its filter is that it will look only at a mineable deposit of 3moz or more that can deliver a 20% return at a gold price of $1 000/oz.
Bristow says Randgold is continuing its exploration programme and when it does discover its next new mine it can afford to develop it without recourse to the market.
>>>>>
The company held $213m in cash at end-December and Shuttleworth says in the annual report it intends to build its cash up to $500m to provide flexibility for a new mine or other opportunities.
Randgold spent $45.1m on exploration and corporate costs last year. It is exploring around existing mines for reserve replacement and in new areas. It is doing a feasibility study on the Massawa resource in Senegal, but that deposit does not yet meet its investment criteria, partly because it is refractory ore, which is costly to process.
There is a potentially more attractive satellite deposit near Massawa called Sofia, which Randgold is investigating. The prime greenfields destination for Randgold is Côte d’Ivoire, Bristow says.
The country is not well explored and because it has developed infrastructure the cost of building a mine is reduced. Randgold’s most promising target in Côte d’Ivoire is Gbongogo, which shows signs of being a large and shallow deposit.
Randgold clearly has growth prospects, and some analysts are seeing more positive trends in the gold price. London-based consultancy Metals Focus said in a report last week that gold could reach $1 350/oz by the end of this year.
Randgold shares may be more expensive than other gold companies. But for investors who believe mining companies can outperform gold and want a long-term position, it is worth paying a premium now for a good share that will deliver in the long run.
MONEY & INVESTING
MiningBY CHARLOTTE MATTHEWS
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For many employers and employees alike, this is the big question. The answer as to whether overtime is
compulsory or not varies by country – but in South Africa, there is no ambiguity. The answer is no – overtime
is not compulsory. However, as with any law, some qualifications and explanations are in order.
What is “overtime”?
For companies who do not belong to a Bargaining Council, overtime is regulated by the Basic Conditions of
Employment Act 75 of 1997, which sets out working conditions for employees. In terms of the legislation,
overtime is defined as any hours worked outside of normal daily or weekly working hours. These hours are
determined an employment contract, or on the following basis:
● hours falling beyond a 45-hour per week limit;
● work performed beyond nine hours a day where an employee works five days or fewer a week or
● work performed beyond eight hours a day where an employee works more than five days a week.
Meal and tea breaks are excluded from calculations.
According the law, an employee cannot be required or even allowed to work more than three hours of
overtime a day, or a more than ten hours of overtime per week, unless a special agreement is in place (but
even then, overtime is limited to 12 hours per week).
Overtime is always voluntary, unless there is a clear overtime agreement in an employee's contract of
employment. If it forms part of an employee's employment contract and an instruction is given, within a
reasonable time that overtime has to be worked, and the employee refuses to do so without good cause,
then it can be considered as misconduct.
Contractual agreements to do overtime lapse after 12 months, and it is the duty of the employer to re-confirm
them. Employees have the right to refuse to work overtime on short notice.
32Bulletin Blogswritten by Christine du Plessis
Overtime - Is it Compulsory?
Compensation for overtime
Not all employees are entitled to payment for overtime hours worked. Depending on the what the
employee's annual remuneration is, as well as what position he or she holds in the company, will
determine whether they are eligible to be remunerated for overtime.
Employees who earn more than the threshold of R205 433.30 a year, are not entitled to overtime payment.
Remuneration that does not exceed this amount is subject to overtime payment.
Employees who earn below the threshold are entitled to 1.5 times their hourly wage for every hour of
overtime worked, except on Sundays and public holidays, where they are entitled to double pay.
It is possible to be compensated with time off instead of a monetary amount – employers and employees
can agree to either 30 minutes for every hour of overtime worked, plus normal wages, or 90 minutes with
no wages. The compensatory time off must be allowed to be taken within a month of the overtime, unless
otherwise agreed – in which case it may be taken within 12 months.
Workers who earn above the threshold are neither entitled to increased pay for overtime, nor time off – but
they are entitled to negotiate with their employer for some sort of additional compensation. They are also
entitled to refuse to work overtime.
It is important that employers be aware of their legal position regarding overtime. Contractual agreements
need to be negotiated carefully and employer's actions should always be considered as “fair and
reasonable”.
At the East Rand Chamber of Commerce we offer an extensive list of policies and procedures that are
tailor made for your organization. Included in these policies is an overtime policy. Should you require any
assistance as a Labour member with reference to working hours or overtime please remember to give us a
call.
33 Bulletin Blogswritten by Christine du Plessis
Company Report:
1. History
Klatrade803 (Pty) Ltd started in 2006 with just 10 carpenters and two vehicles. Since then the family business has expanded to 15 teams – which include 35 carpenters, 10 plaster men, five truck drivers, five site managers and seven subcontractors. There are also five admin staff members who keep operations running smoothly.
Klatrade803 has grown through what the owners call a spirit of grace and endurance, and the business continues to flourish. Proof of their success is in the substantial number of large contracts they have secured over the years.
2. Nature of the Business
Klatrade803 are dedicated ceiling and drywall specialists who focus on houses, factories, offices, low-cost housing, shopping centres, commercial buildings, and more. They specialise in designer bulkheads and detailed ceilings.
The industry is very competitive, and Klatrade803 keeps their pricing on par with their rivals. They are a company known for their high standard of work and efficient time frames, and it is these two characteristics that set them apart from the rest.
In the Meyersdal, Alberton area Klatrade803 currently has about 60% of the market, and in the Gauteng and greater Southern Africa areas about 30%. Klatrade803 cannot be compared with small companies doing under 50m² jobs. 3. Industry Expertise
60% of Klatrade803's employees have been with the company for years, some right from the start. The carpenters and plasterers have many years of onsite experience between them. The senior director himself has more than 19 years of experience in the industry.
4.Motivation
The people at Klatrade803 are motivated by the growing success of the business, as well as their obligations and commitments. They are family-oriented and work to leave a legacy for future generations.
5. Security
Klatrade803 takes security very seriously and has a number of protective measures in place. These include comprehensive equipment insurance, and tracking systems in company vehicles.
6. Marketing Strategy
The company mainly relies on their reputation – they have found that word-of-mouth is a powerful marketing tool. In terms of specific visible branding strategies, Klatrade803 recently revamped their logo and installed new sign boards on the outside of their office building. They have also redone company vehicles with their new branding. 7. After Sales Service
Klatrade803 follows up after each job, as well as throughout the erection period. Upon completion, each project site is re-measured and a snag list made where necessary.
Web:http://klatrade803.co.za
Company Report:
8. Professionalism
Staff members are well qualified and continuously seek to improve their skills. The in-house interior designer has a degree in the field, while the junior and senior management are certified in business and management courses.
Employees undergo regular training and certification in a wide range of areas. For example, workers take part in training courses run by suppliers.
9. Human Resources Priorities
The company has a health and safety programme in place and takes advantage of occupational health and safety training courses that are offered by the East Rand Chamber of Commerce and Industry. Other types of in-house and external training are provided for employees.
10. Transparency
Klatrade803 believes in transparency and displays all relevant legislative Acts in easily accessible places on the premises. Company goals and strategies are discussed with staff, and all employees know that, as part of an open-door policy, they are able to discuss work and personal issues with management at any time.
11. Company Goals
Klatrade803 has plans to expand further, focussing initially on shop fitting. Overall annual growth for the company is envisaged to be 10% over the next five years, with a 5% increase in employment.
12. Company Achievements
Klatrade803 has achieved large contracts with Stefnutti Stocks, Raubex Housing, SKT, Group 5, Crazy Plastics, Riverwalk Trading, Coenbuilt, Gotz construction and Nelprop. Notable projects have been completed in Bloemfontein, Kuruman, Pietermaritzburg, Nelspruit, Pretoria, and Midrand - such as Equestrian Estate, Waterfall Estate, and Nature and Eco Estate. In addition, the company has performed work on commercial buildings like ABSA, and has been featured in Home Owner Magazine and Droomhuis on DSTV.
13. Flexibility
While the company has a high degree of flexibility, materials are imported, leaving a measure of vulnerability to the Rand exchange rate. In addition, the rainy seasons have an effect on the whole building industry, including the work that Klatrade803 undertake. However, they work hard to minimise negative impacts. When it comes to client data, this is well protected in various back-ups.
14. Engagement with Social issues
Klatrade803 is committed to contributing to social justice and is a Level 4 BBBEE certified company.
Tel: (011) 811 6030 / 4675Fax: (011) 811 3176
Willie (Jnr): 083 393 6010Willie (Snr): 083 393 6016
Email: [email protected]
Web:http://klatrade803.co.za
Physical Address:4 Geduld RoadGeduld Ext., Springs1559
Postal Address:P.O. Box 1290
Springs1559
FM FOX
Stock Exchange
Markets: Competition for JSEBY STAFFORD THOMAS
Etienne Nel: Overwhelming response. Picture: SUPPLIEDEtienne Nel: Overwhelming response. Picture: SUPPLIED
FOR 58 years from the time the Union Stock Exchange closed, the JSE has had it all its own way. But this came to an end with the licensing of rival exchange ZAR X by the Financial Services Board.
There is little doubt that alternatives to the JSE have been needed. “The [positive] response we have received from brokers, banks and investment managers has been overwhelming,” says ZAR X founder Etienne Nel.
The new exchange brings with it some unique features, including settlement of transactions on the same day. Termed T+0, this compares with the JSE’s T+5 (days) and global best practice of T+3, says Nel. Also unique to ZAR X is free safe custody.
Due to begin trading on September 1, the bourse has a main board for new company listings through introductory offers, and a restricted board. The latter will be a formalised version of previous over-the-counter trading platforms, which fell foul of the Financial Services Board in 2014.
The strategy to be followed by another looming JSE rival, A2X, which could be licensed as soon as midyear, is different. It wants its share of trade in big-cap JSE-listed companies.
“Our focus will be on the top 50-65 shares listed on the JSE,” says A2X co-founder and CE Kevin Brady. “We are following the European MTF [multilateral trading facility] model.”
The MTF model, which was introduced in the EU in 2007, enables the formation of regulated trading platforms on which shares and other instruments with primary listings on another exchange can be traded.
“It will give investors a choice of where to execute trades,” says Brady. “Without the burden of legacy systems we will be able to offer a huge reduction in trading costs. It could be 30%-50%, depending on the broker.”
Also awaiting licensing is 4 Africa Exchange (4AX). With strong BEE credentials, this exchange will be targeting the listing of companies with market caps of R100m-R8bn.
compliant
NEWS.MARKETS
Former Bank of England governor Mervyn King discusses his book ‘The End of Alchemy: Money, Banking and the Future of the Global Economy’, described as possibly the most important book to come out of the financial crisis of 2007-08.
The End of Alchemy: Money, Banking and the Future of the Global Ecomony
Video Hub
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NEWS.MARKETS
The FTSE 100 is susceptible to anything from international politics to global climate change. How can we trade such movements? Leroy Lawrence from Quadron Capitalexplains.
How to trade the FTSE 100
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FM FOX
The Investment Week
PWC: Hard TimesBY STEPHAN CRANSTON
Victor Muguto: Challenges. Picture: SUPPLIEDVictor Muguto: Challenges. Picture: SUPPLIED
LAST year marked the end of business as usual for life insurers, says Victor Muguto, head of the long-term insurance practice at PWC.
It is no longer easy to make money in the African continent, with average real growth in premiums falling from 3% in the five years before the global financial crisis to less than 2% ever since. Yet Muguto says there should be potential as Africa accounts for just 1,7% of global premiums, less than the small Australia and New Zealand markets.
He says a storm of macro-economic factors have hit the local life offices, including depressed commodity markets, volatile bond and equity markets, rand depreciation and (inevitably) political uncertainty. Life offices earn fees on investment products and their income is hit by the level of the JSE, which was just 1,9% up over the 12 months to December 2015.
Muguto says some of the headline numbers still look good: in aggregate the life assurers’ earnings were up 18%, and return on average equity was 21%. But embedded value profits, which look at net worth and the present value of the life book, were down 16%. The discount rate used to measure present value is linked closely to the long bond rate, in which yields rose by 1,14%. As this increased the discount rate no less than R7bn was wiped off industry embedded value. The total value of new business written was down 0.2%, though it was a mixed picture. Old Mutual’s grew by 25%, MMI’s by 19% and Discovery’s by 5%, while Liberty’s fell by 13% and Sanlam’s by 8%.
Sanlam, however, has the highest portion of its value of new business sourced from the rest of Africa, at 20%, Old Mutual is next with 10%, followed by MMI with 8% and Liberty with 6%. Discovery has no plans, at least officially, to operate in the rest of Africa.
Muguto says the life industry has grown despite challenging circumstances. It faces increasing costs and pressure on margins.
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